REMEDIES OF THE GOVERNMENT

SEC. 202- 231 OF THE TAX CODE I. EXAMINATION/INVESTIGATION 1. POWER OF THE COMMISSIONER EXAMINE SEC 6(A) -- MEMORIZE TO

SEC. 6. Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and Enforcement. (A) Examination of Returns and Determination of Tax Due. - After a return has been filed as required under the provisions of this Code, the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided, however; That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. The tax or any deficiency tax so assessed shall be paid upon notice and demand from the Commissioner or from his duly authorized representative. Any return, statement of declaration filed in any office authorized to receive the same shall not be withdrawn: Provided, That within three (3) years from the date of such filing, the same may be modified, changed, or amended : Provided, further, That no notice for audit or investigation of such return, statement or declaration has in the meantime been actually served upon the taxpayer.

persons, shall be preserved by them for a period beginning from the last entry in each book until the last day prescribed by Section 203 within which the Commissioner is authorized to make an assessment. The said books and records shall be subject to examination and inspection by internal revenue officers: Provided, That for income tax purposes, such examination and inspection shall be made only once in a taxable year, except in the following cases: (a) Fraud, irregularity or mistakes, as determined by the Commissioner; (b) The taxpayer requests reinvestigation; (c) Verification of compliance with withholding tax laws and regulations; (d) Verification of capital gains tax liabilities; and (e) In the exercise of the Commissioner's power under Section 5(B) to obtain information from other persons in which case, another or separate examination and inspection may be made. Examination and inspection of books of accounts and other accounting records shall be done in the taxpayer's office or place of business or in the office of the Bureau of Internal Revenue. All corporations, partnerships or persons that retire from business shall, within ten (10) days from the date of retirement or within such period of time as may be allowed by the Commissioner in special cases, submit their books of accounts, including the subsidiary books and other accounting records to the Commissioner or any of his deputies for examination, after which they shall be returned. Corporations and partnerships contemplating dissolution must notify the Commissioner and shall not be dissolved until cleared of any tax liability. Any provision of existing general or special law to the contrary notwithstanding, the books of accounts and other pertinent records of tax-exempt organizations or grantees of tax incentives shall be subject to examination by the Bureau of Internal Revenue for purposes of ascertaining compliance with the conditions under which they have been granted tax exemptions or tax incentives, and their tax liability, if any.

2. PRESERVATION OF BOOKS OF ACCOUNTS SEC. 235
SEC. 235. Preservation of Books and Accounts and Other Accounting Records. All the books of accounts, including the subsidiary books and other accounting records of corporations, partnerships, or

3. FAILURE TO SUBMIT REQUIRED RETURNS
i) ADMINISTRATIVE SEC. 6 (B)

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SEC. 6. Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and Enforcement. (B) Failure to Submit Required Returns, Statements, Reports and other Documents. - When a report required 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 when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable. In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes. ii) CRIMINAL PROSECUTION SEC. 275 SEC. 275. Violation of Other Provisions of this Code or Rules and Regulations in General. - Any person who violates any provision of this Code or any rule or regulation promulgated by the Department of Finance, for which no specific penalty is provided by law, shall, upon conviction for each act or omission, be punished by a fine of not more than One thousand pesos (P1,000) or suffer imprisonment of not more than six (6) months, or both. iii) SUBPOENA DUCES TECUM RMO 35-90 The Prosecution Division or Legal Branch shall evaluate the recommendation for issuance of subpoena within 2 working days from receipt and may take the following alternative actions: 1) Return the case documentation or action; to its origin for further D. 1)

2) Prepare the corresponding subpoena in three copies for initial and/or signature of the officials concerned, the distribution of which shall be as follows: Original Duplicate Triplicate to be served to the taxpayer attached to the docket of the case under audit action lawyer file

C. Signatories Only the following revenue officials are hereby authorized to issue subpoenas, to wit: National Office a. Assistant Commissioner, Legal Service 2) Regional Office a. Director, or in his absence, the b. Assistant Director This does not however preclude the Commissioner and Deputy Commissioners to exercise their authority under the National Internal Revenue Code to issue subpoena in appropriate cases. Service By Whom Served 1)

Ideally, the service of the subpoena should be effected by the revenue officers assigned to investigate the case. However, such service may be made by any internal revenue officer authorized for the purpose. 2) How Service May Be Effected

a. The subpoena shall be served by handing the original copy thereof to the individual named therein in person, or, if he refuses to receive it, by tendering it to him witnessed by another revenue officer accompanying the server. b. If personal service cannot be made, service may be effected by: 1) Leaving a copy of the subpoena at the taxpayer's dwelling place or residence with some person of suitable age and discretion then residing therein; or

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2) Leaving the copy at taxpayer's office or regular place of business with some competent person in charge thereof. 3) In both situations, the leaving of the copy of the Subpoena with a competent person and or person of sufficient discretion should be witnessed by another revenue officer accompanying the server. 3) Proof of Service Aside from accomplishing the bottom portion of the subpoena, the server shall make a written report setting forth the manner, place and date of service, the name of the person who received the same and such other relevant information. In case of constructive service, the personal relationship and/or official capacity, if any, of the person receiving should be indicated. V. Remedies to Enforce Compliance Where the taxpayer fails, refuses or neglects to comply with the commands of the subpoena, he may be proceeded against by: A. Filing a criminal case for violation of Section 7 , in relation to Sections 17 and 265 of the Tax Code, as amended; and/or B. Initiating proceedings for indirect contempt under Section 3(f), Rule 71 of the Revised Rules of Court. i) CONDUCT OF SURVEILLANCE SEC. 6 (C)

the same or different taxable years and such assessment shall be deemed prima facie correct. When it is found that a person has failed to issue receipts and invoices in violation of the requirements of Sections 113 and 237 of this Code, or when there is reason to believe that the books of accounts or other records do not correctly reflect the declarations made or to be made in a return required to be filed under the provisions of this Code, the Commissioner, after taking into account the sales, receipts, income or other taxable base of other persons engaged in similar businesses under similar situations or circumstances or after considering other relevant information may prescribe a minimum amount of such gross receipts, sales and taxable base, and such amount so prescribed shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person. ii) THIRD PARTY INFORMATION SEC. 5 SEC. 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized: (A) To examine any book, paper, record, or other data which may be relevant or material to such inquiry; (B) To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or -controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint

4. OTHER MODES OF DETERMINING THE TAX

SEC. 6. Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and Enforcement. – (C) Authority to Conduct Inventory-taking, surveillance and to Prescribe Presumptive Gross Sales and Receipts. - The Commissioner may, at any time during the taxable year, order inventory-taking of goods of any taxpayer as a basis for determining his internal revenue tax liabilities, or may place the business operations of any person, natural or juridical, under observation or surveillance if there is reason to believe that such person is not declaring his correct income, sales or receipts for internal revenue tax purposes. The findings may be used as the basis for assessing the taxes for the other months or quarters of

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Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and Enforcement. and such waiver shall constitute the authority of the Commissioner to inquire into the bank deposits of the taxpayer. . as may be relevant or material to such inquiry. further. or any other person. POWER OF THE COMMISSIONER TO MAKE ASSESSMENT SEC 6(A) & (B) SEC. and (2) any taxpayer who has filed an application for compromise of his tax liability under Sec. That no notice for audit or investigation of such return. That failure to file a return shall not prevent the Commissioner from authorizing the examination of any taxpayer. Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and Enforcement. and all persons owning or having the care.Notwithstanding any contrary provision of Republic Act No. and their members. papers. (A) Examination of Returns and Determination of Tax Due. or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax. Any return. 204 (A) (2) of this Code by reason of financial incapacity to pay his tax liability. changed. iii) INQUIRE INTO BANK ACCOUNTS SEC 6 (F) SEC. 1405 and other general or special laws. 2. Page | 4 . and (E) To cause revenue officers and employees to make a canvass from time to time of any revenue district or region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax. the same may be modified. the Commissioner is hereby authorized to inquire into the bank deposits of: MEMORIZE (1) a decedent to determine his gross estate. or other data. ASSESSMENTS 1. the Commissioner or his duly authorized representative may authorize the examination of any taxpayer and the assessment of the correct amount of tax: Provided. . 6. his application shall not be considered unless and until he waives in writing his privilege under Republic Act No. or any officer or employee of such person. management or possession of any object with respect to which a tax is imposed. That within three (3) years from the date of such filing. or any person having possession. or amended: Provided. (D) To take such testimony of the person concerned. under oath. records. 6. The provisions of the foregoing paragraphs notwithstanding. In case a taxpayer files an application to compromise the payment of his tax liabilities on his claim that his financial position demonstrates a clear inability to pay the tax assessed. custody. to appear before the Commissioner or his duly authorized representative at a time and place specified in the summons and to produce such books.After a return has been filed as required under the provisions of this Code. The tax or any deficiency tax so assessed shall be paid upon notice and demand from the Commissioner or from his duly authorized representative. 1405 or under other general or special laws. statement or declaration has in the meantime been actually served upon the taxpayer. and to give testimony. however. nothing in this Section shall be construed as granting the Commissioner the authority to inquire into bank deposits other than as provided for in Section 6(F) of this Code. (C) To summon the person liable for tax or required to file a return.ventures or consortia and registered partnerships. statement of declaration filed in any office authorized to receive the same shall not be withdrawn: Provided. – (F) Authority of the Commissioner to inquire into Bank Deposit Accounts.

(2) WON an assessment is necessary before criminal charges for tax evasion may be instituted. It also signals the time when penalties and interests begin to accrue. it was not meant to be a notice of tax due and a demand to private respondents for the payment thereof. The CIR had. PRESUMPTION ASSESSMENT OF REGULARITY OF Page | 5 . Reports and other Documents. or to do both.  Private respondents filed immediately an urgent request for reconsideration on reinvestigation disputing the tax assessment and tax liability. It did not state a demand or period for payment. and must demand payment of the taxes described therein within a specific period.  The Commissioner filed a criminal complaint for tax evasion against PRDC. and not to private respondent. An assessment must be sent to and received by the taxpayer. PASCOR REALTY & DEV’T CORP 309 SCRA 402 (1999) FACTS:  The CIR authorized certain BIR officers to examine the books of accounts and other accounting records of Pascor Realty. shows that commissioner intended to file a criminal complaint for tax evasion. not to issue an assessment. incomplete or erroneous.  The Commissioner denied private respondent‘s request for reconsideration/reinvestigation on the ground that no formal assessment has been issued which the latter elevated to the CTA on a petition for review. the Commissioner shall assess the proper tax on the best evidence obtainable. The examination resulted in recommendation for the issuance of an assessment.(B) Failure to Submit Required Returns. A criminal charge need not only be supported by a prima facie showing of failure to file a required return. DEFINITION OF ASSESSMENT i) BLACK’S LAW DICTIONARY It is a written notice to a taxpayer to the effect that the amount stated therein is due as tax and containing a demand for the payment. HELD: The filing of the criminal complaint with the DOJ cannot be construed as a formal assessment. which shall be prima facie correct and sufficient for all legal purposes. It was addressed to the Secretary of Justice not to the taxpayer. It is a finding by the taxing agency that the taxpayer has not paid his correct taxes. discretion on whether to issue an assessment. . or to file a criminal case against the taxpayer. Neither the Tax Code nor the revenue regulations governing the protest assessments provide a specific definition or form of an assessment. In case a person fails to file a required return or other document at the time prescribed by law. ISSUES: (1) WON the criminal complaint for tax evasion can be construed as an assessment. They joint affidavit was meant to support the criminal complaint for tax evasion. 2. The revenue officer‘s affidavit merely contained a computation of respondent‘s tax liability.When a report required 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 when there is reason to believe that any such report is false. 3. CIR V. in such tax evasion cases. Note: A notice of assessment contains not only a computation of tax liabilities but also a demand for the payment within a prescribed period. Statements. The fact that the complaint was sent to the DOJ. or willfully or otherwise files a false or fraudulent return or other document. the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise. An assessment is not necessary before criminal charges can be filed. its president and treasurer before the DOJ.

ASSESSMENTS BASED ON ―BEST EVIDENCE OBTAINABLE‖ i) RMC 23-2000 An assessment based on best evidence obtainable is justified when any of the ff grounds are clearly established: (1) The report/s requested from the taxpayer are not forthcoming. ii) ASSESSMENTS BASED ON ACTUAL FACTS CIR V. refusal of taxpayer to submit such records (2) The report/s are false. the assessment shall only be issued after a criminal case has been instituted for failure to obey summons. PROCEDURES IN ASSESSMENTS RR 12-99 i) INFORMAL CONFERENCES PREPARING (1) The Revenue Officer who audited the taxpayer‘s records. records are lost. BIR. HELD: The issues raised are clearly factual and must be resolved on the basis of the evidence adduced before the tax court.R. shall state whether the taxpayer agrees with the findings that he is liable for deficiency tax (2) If not amenable.SY PO V. CIR assessed deficiency income tax and deficiency specific tax. an assessment duly made by the BIR examiner and approved by his superior officers will not be disturbed. NO 96262 (1999) FACTS: CFI issued search warrants for the seizure of certain documents from the offices of Embroidery and Garments. respondent adduced evidence consisting of official records of the Bureau of Customs. All presumptions are in favor of the correctness of tax assessments. BIR recommended the reiteration of the assessments in view of the taxpayer‘s failure to present the books of accounts for examination ISSUE: WON the assessments have a valid and legal basis HELD: Yes. the taxpayer shall be informed by the RDO or Chief of Division of the discrepancies in Page | 6 .R. agents of the Anti-Technical Smuggling Unit. NO 81446 (1988) FACTS: 1) the Secretary of Finance directed the Finance-BIR-NBI team to investigate SCWF. seized various business records and documents from respondent‘s offices. In the absence of proof of irregularities in the performance of duties. 4. 4) CTA held that the assessments were of doubtful validity as they were based on incompetent evidence consisting of an informant‘s report and the sworn statement of a disgruntled former general manager of respondent. EMBROIDERY & GARMENTS INDUSTRIES PHILS G. 1) CIR subsequently issued a revised assessment for deficiency income tax. not imposed based on unverified information supplied by an informant. 3) Petitioner protested the deficiency assessments. CTA G. incomplete or erroneous NOTE: Where a taxpayer is ordered to be examined and he refuses or fails to submit his records giving rise to a subpoena duces tecum. On the other hand. The taxpayer has the duty to prove otherwise. The rule on ―the Best Evidence Obtainable‖ applies when a tax report required by law for the purpose of assessment is not available or when a tax report is incomplete or fraudulent. or disputed presumptions. i. Armed with the warrants. 2) Based on the investigation. The tax assessment by tax examiners are presumed correct and made in good faith. 3) Respondent filed with the CTA a petition for review of the disputed tax assessments.e. 2) respondent filed with the BIR a protest disputing the revised assessments and requesting further investigation which was subsequently denied. 5. The tax court ruled that the assessments must be based on actual facts and proved by competent evidence.

but failed to do so. traded or transferred to non-exempt persons CIR V. the RRO shall issue a Preliminary Notice of Assessment (PAN). vehicles.R.the taxpayer‘s payment of his internal revenue taxes for Informal Conference (3) Purpose: Due process. machineries and spare parts. assessing the petitioner for deficiency taxes 3) Subsequently. Is the failure to strictly comply with notice requirements prescribed by Sec 228 NIRC and RR 12-99 tantamount to denial of due process HELD: FIRST ISSUE: Yes.‖ the absence of which renders VOID any assessment made by the tax Page | 7 . or (e) When an article locally purchased or imported by an exempt person. the taxpayer shall be considered in default (5) Effect of failure to respond: The case shall be endorsed to the Assessment Division of Revenue Regional Office (RRO) or CIR for appropriate review and issuance of deficiency tax assessment ii) PRELIMINARY ASSESSMENT NOTICES (PAN) (1) If after review there is sufficient basis to assess the taxpayer deficiency taxes. law and rules and regulations. However. e. have been sold. RDO sent a final notice of seizure which petitioner received 4) Petitioner denied that it received a PAN and claimed that it was denied due process ISSUES: 1. SECOND ISSUE: Yes. WON Metro Star was denied due process 2. calling for payment of tax deficiency and applicable penalties EXCEPTIONS TO PAN PAN shall not be required: (a) When the finding of any deficiency tax is the result of mathematical error in computing the tax filed by taxpayer (b) When the discrepancy has been determined between tax withheld and amount actually remitted by the withholding agent (c) When a taxpayer has opted to claim a tax credit or refund of excess withholding tax for a taxable period was determined to have carried over and automatically applied the same amount against the estimated tax liabilities for the taxable quarter/s of the succeeding taxable year (d) When the excise tax due on excisable articles has not been paid. Neither did it offer any explanation on why it failed to comply with the requirement of service of PAN. capital equipment. Both Sec 228 and RR 12-99 clearly show that the sending of PAN to a taxpayer to inform him of the assessment made is part of the ―due process requirement in the issuance of a deficiency tax assessment. METRO STAR SUPERAMA G. NO 185371 (2010) FACTS: Regional Director issued a letter authority to examine petitioner‘s books of accounts and other records for income tax and other internal revenue taxes. the RDO proceeded with the investigation based on the best evidence obtainable preparatory to issuance of an assessment notice 2) In 2002. CAB: CIR failed to discharge its duty to present any evidence to show that Metro Star indeed received the PAN. he shall be considered in default (3) Effect: A formal letter of demand and assessment notice shall be sent to taxpayer. and jurisprudence on which the proposed assessment is based (2) If taxpayer fails to respond within 15 days from date of receipt of PAN. petitioner failed to comply with several requests for presentation of records 1) As such.g. to afford the taxpayer an opportunity to present his side (4) Failure to respond within 15 days from date of receipt. petitioner received a formal letter of demand (FAN). It could have presented the registry receipt or the certification from the postmaster that it mailed the PAN. showing in detail: facts.

205 (A) SEC. RMC 5-2001 SEC.Upon the failure of the person owing any delinquent tax or delinquent revenue to pay the same at the time required.000) or less. The civil remedies for the collection of internal revenue taxes. the Commissioner may place under constructive distraint the property of a delinquent taxpayer or any taxpayer who.000. and (d) date of receipt distraint any goods. . bank accounts and interest in and rights to personal property. . upon recommendation of the Commissioner. 206. That the Commissioner or his duly authorized representative shall. b) CONSTRUCTIVE DISTRAINT SEC. have the power to lift such order of distraint: Provided. the revenue officer effecting the constructive distraint shall proceed to 3. iii) FINAL ASSESSMENT NOTICES (FAN) (1) FAN shall state the facts.000). The constructive distraint of personal property shall be effected by requiring the taxpayer or any person having possession or control of such property to sign a receipt covering the property distrained and obligate himself to preserve the same intact and unaltered and not to dispose of the same in any manner whatever. and by levy upon real property and interest in rights to real property. debts. credits. for its failure to send a PAN stating the facts and law on which the assessment was made as required by law. Thus. further. or the Revenue District Officer. chattels or effects. and the personal property. including stocks and other securities. or charge. within ten (10) days from receipt of the warrant. and a) ACTUAL DISTRAINT SEC 207 (A) SEC. is retiring from any business subject to tax. credits. 207. Constructive Distraint of the Property of a Taxpayer. (A) Distraint of Personal Property. if the amount involved is One million pesos (P1. Remedies for the Collection of Delinquent Taxes.000. and to the Revenue Regional Director: Provided. Summary Remedies. (b) signature. be submitted by the distraining officer to the Revenue District Officer. rules and regulations. (c) designation and authority to for taxpayer. together with any increment thereto incident to delinquency. In case the taxpayer or the person having the possession and control of the property sought to be placed under constructive distraint refuses or fails to sign the receipt herein referred to. bank accounts. FAN shall be void (2) It shall be sent only by registered mail or personal delivery (3) If sent by personal delivery: the taxpayer shall acknowledge receipt of the duplicate copy of FAN showing the ff: (a) name. or jurisprudence on which the assessment is based otherwise. debts. law. COLLECTION 1. SUMMARY REMEDIES (1) DISTRAINT OF PERSONAL PROPERTY SEC. or is intending to leave the Philippines or to remove his property therefrom or to hide or conceal his property or to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him. 205. including stocks and other securities. shall seize and Page | 8 . A report on the distraint shall.To safeguard the interest of the Government. in his opinion. without the express authority of the Commissioner. the Commissioner or his duly authorized representative. chattels. subject to rules and regulations promulgated by the Secretary of Finance. or effects. and interests in and rights to personal property of such persons in sufficient quantity to satisfy the tax. and any increment thereto resulting from delinquency shall be: (a) By distraint of goods. That a consolidated report by the Revenue Regional Director may be required by the Commissioner as often as necessary. if the amount involved is in excess of One million pesos (P1. and other personal property of whatever character.authorities. fees or charges. 206. and the expenses of the distraint and the cost of the subsequent sale. the assessment by CIR is void.

— In general.) e. Procedures in Conducting Constructive Distraint.) g. the Commissioner may delegate this power by specific orders since this power is not one of those which cannot be delegated as enunciated in Section 7 of the Tax Code of 1997. and the same are not under any lawful fiduciary or trust capacity. When a taxpayer who is under tax investigation has a record of leaving the Philippines at least twice a year. or intending to remove his property/ies from the Philippines. RMC. leave a copy thereof in the premises where the property distrained is located. unless such trips are justified and/or connected with his business.) Page | 9 . it is only the Commissioner. When the taxpayer keeps bank deposits and owns other property/ies under the name of other persons. or intending to hide or conceal his property/ies. An assessment is huge if the amount thereof is equal to or bigger than the networth or equity of the taxpayer. — In order to safeguard the interest of the government. 5-2001 d.) Persons Who May Conduct the Constructive Distraint. is retiring from any business subject to tax. will have a great tendency to hide or conceal his property/ies. When a taxpayer's big amount of undeclared income is known to the public or to the BIR by credible means and there is a strong reason to believe that the taxpayer. in the presence of two (2) witnessed.prepare a list of such property and. or intending to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him.) When the taxpayer uses aliases in bank accounts. f. Thus.) When to Issue Notice or Warrant of Constructive Distraint on the Property of a Taxpayer. pursuant to aforesaid section. b. profession or employment. who is under tax investigation has a record of transferring his bank deposits and other valuable personal property/ies from the Philippines to any foreign country. or b. whether or not related to him. gross receipts or gross revenue declared per return of a particular taxpayer and there is enough reason to believe that the said information is correct as when the complaint or information is supported by substantial and credible evidence. other than the name for which he is legally and/or popularly known. When the BIR receives information or complaint pertaining to undeclared income in an amount exceeding 30% of gross sales. after which the said property shall be deemed to have been placed under constructive distraint. For this purpose. in his opinion. — The constructive distraint of personal or movable property/ies of a taxpayer shall be effected by requiring him or any person having c. other than a banking institution.) When a taxpayer who applies for retirement from business has a huge amount of assessment pending with the BIR. this power can be delegated to any subordinate official with the rank equivalent to a Division Chief or higher.) any taxpayer who. When a taxpayer. — a. Specific Cases When a Notice or Warrant of Constructive Distraint over the Property/ies of a Taxpayer may be Issued. gross receipts or gross revenue declared per return. in the natural course of events.) a delinquent taxpayer. or intending to leave the Philippines. However. the term "big amount of undeclared income" means an amount exceeding thirty percent (30%) of the gross sales. the Commissioner may place under constructive distraint the personal or movable property/ies of — a.

including stocks and other securities so distrained. He shall thereafter leave a copy of the Notice of Constructive Distraint and the list of such property/ies distrained in the premises where the said property/ies are located in the presence of at least two (2) witnesses. according to rules and regulations prescribed by the Secretary of Finance. the bank shall turn over to the Commissioner so much of the bank accounts as may be sufficient to satisfy the claim of the Government. Stocks and other securities shall be distrained by serving a copy of the warrant of distraint upon the taxpayer and upon the president. company or association. other than the officer referred to in Section 208 of this Code shall.possession or control of such property/ies to sign a receipt covering the property/ies distrained. after which the subject personal or movable property/ies shall be deemed to have been placed under constructive distraint. chattels. manager. the mere service of the notice is sufficient for this purpose. manager. however. Procedure for Distraint and Garnishment. signed by himself. chattels. chattels. which issued the said stocks or securities. who may or may not be revenue officers. . 208. SEC 224. The time of sale shall not be less than twenty (20) days after notice to the owner of possessor of the property as above specified and the publication or posting of such notice . or other personal property. or effects or other personal property were taken. to the highest bidder for cash. SEC 225 SEC. at public auction. a copy of the warrant of distraint. 209. to which list shall be added a statement of the sum demanded and note of the time and place of sale. SEC 211. SEC 212. the Revenue Officer effecting the constructive distraint shall proceed to prepare a list of such property/ies. that if the subject of the constructive distraint is a bank deposit. upon recommendation of the Commissioner. . or at the dwelling or place of business of such person and with someone of suitable age and discretion. shall be left either with the owner or person from whose possession such goods. or with his agent. forthwith cause a notification to be exhibited in not less than two (2) public places in the municipality or city where the distraint is made. d) SALE OF PROPERTY DISTRAINT SEC 209. At the time and place fixed in such notice. Bank accounts shall be garnished by serving a warrant of garnishment upon the taxpayer and upon the president. Debts and credits shall be distrained by leaving with the person owing the debts or having in his possession or under his control such credits. One place for the posting of such notice shall be at the Office of the Mayor of the city or municipality in which the property is distrained. the said revenue officer shall sell the goods.The Revenue District Officer or his duly authorized representative. Provided. He shall obligate himself to preserve the same intact and unaltered and not to dispose of the same in any manner whatever without the express authority of the Commissioner. In case the subject taxpayer or the person having the possession and control of the property/ies sought to be placed under constructive distraint refuses or fails to sign the receipt herein referred to. specifying the time and place of sale and the articles distrained. treasurer or other responsible officer of the corporation. Upon receipt of the warrant of garnishment. effects or other personal property distrained. treasurer or other responsible officer of the bank. or effects. or with Page | 10 . a copy of which. The warrant of distraint shall be sufficient authority to the person owing the debts or having in his possession or under his control any credits belonging to the taxpayer to pay to the Commissioner the amount of such debts or credits.The officer serving the warrant of distraint shall make or cause to be made an account of the goods. c) PROCEDURE IN DISTRAINT SEC 208 SEC. Sale of Property Distrained and Disposition of Proceeds.

205. Property so purchased may be resold by the Commissioner or his deputy. fees or charges.If at any time prior to the consummation of the sale all proper charges are paid to the officer conducting the sale. 211. the officer making the sale shall execute a bill of sale which he shall deliver to the buyer. the goods or effects distrained shall be restored to the owner. shall be returned to the owner of the property sold. including expenses. other manufactured products of tobacco. upon forfeiture. 225. When the amount bid for the property under distraint is not equal to the amount of the tax or is very much less than the actual market value of the articles offered for sale. or destruction. when the sale of the same for consumption or use would be injurious to public health or prejudicial to the enforcement of the law. be sold or destroyed in the discretion of the Commissioner. Distilled spirits. so far as practicable. 224. Report of Sale to Bureau of Internal Revenue. transfer the stocks or other securities sold in the name of the buyer. which have been manufactured or removed in violation of this Code. commodity or stock exchanges.the approval of the Commissioner. liquors. (2) LEVY OF REAL PROPERTY SEC. and no charge shall be imposed for the services of the local internal revenue officer or his deputy. . in the same manner and under the same conditions as the public notice and the time and manner of sale as are prescribed for sales of personal property distrained for the nonpayment of taxes. and a copy thereof furnished the corporation. Purchase by Government at Sale Upon Distraint. be destroyed by order of the Commissioner. and any increment thereto resulting from delinquency shall be: Page | 11 . Any residue over and above what is required to pay the entire claim. e) RELEASE OF DISTRAINT PROPERTY SEC. the corresponding certificates of stock or other securities. the officer making the same shall make a report of his proceedings in writing to the Commissioner and shall himself preserve a copy of such report as an official record. . 210 SEC. The forfeiture of real property shall be enforced by a judgment of condemnation and sale in a legal action or proceeding. and all apparatus used in or about the illicit production of such articles may. cigars. as the case may require. company or association shall make the corresponding entry in its books. .Sales of forfeited chattels and removable fixtures shall be effected. 205 (A) SEC. civil or criminal. Remedy for Enforcement of Forfeitures. When Property to be Sold or Destroyed. Forfeited property shall not be destroyed until at least twenty (20) days after seizure. All other articles subject to excise tax. the Commissioner or his deputy may purchase the same in behalf of the national Government for the amount of taxes. upon forfeiture. SEC. Release of Distrained Property Upon Payment Prior to Sale. the corporation. SEC. 210. through duly licensed In the case of Stocks and other securities. 212. and issue. Remedies for the Collection of Delinquent Taxes. of the specific forfeited property. penalties and costs due thereon.The forfeiture of chattels and removable fixtures of any sort shall be enforced by the seizure and sale. The civil remedies for the collection of internal revenue taxes. company or association which issued the stocks or other securities. subject to the rules and regulations prescribed by the Secretary of Finance. cigarettes. Upon receipt of the copy of the bill of sale. SEC. as well as dies for the printing or making of internal revenue stamps and labels which are in imitation of or purport to be lawful stamps. SEC. if required to do so. or labels may. Within two (2) days after the sale. the net proceeds therefrom shall be remitted to the National Treasury and accounted for as internal revenue. The expenses chargeable upon each seizure and sale shall embrace only the actual expenses of seizure and preservation of the property pending the sale.

and a short description of the property to be sold. b) ADVERTISEMENT AND SALE SEC. simultaneously or after the distraint of personal property belonging to the delinquent. shall then make out and deliver to the purchaser a certificate from his records. At the same time. and by levy upon real property and interest in rights to real property. upon recommendation of the Commissioner. Within five (5) days after the sale.(a) By distraint of goods. That the Commissioner or his duly authorized representative. . or on the premises to be sold. That in case the proceeds of the sale exceeds the claim Page | 12 . showing the proceedings of the sale. credits.Within twenty (20) days after levy. including stocks and other securities. Within ten (10) days after receipt of the warrant. Said certificate shall operate with the force of a legal execution throughout the Philippines. the Commissioner or his duly authorized representative shall. If he does not do so. or if there be none. penalties and interest: Provided. chattels. to his agent or the manager of the business in respect to which the liability arose. the sale shall proceed and shall be held either at the main entrance of the municipal building or city hall. Advertisement and Sale. 213. At any time before the day fixed for the sale. however. The Revenue Collection Officer. the name of the taxpayer against whom taxes are levied. penalties and interest. the Revenue District officer and the Revenue Regional Director. The advertisement shall contain a statement of the amount of taxes and penalties so due and the time and place of sale. 207 (B) SEC. and the personal property of the taxpayer is not sufficient to satisfy his tax delinquency. . or effects. a report on any levy shall be submitted by the levying officer to the SEC. 213 a) PROCEDURE OF LEVY SEC. and Commissioner or his duly authorized representative: Provided. before. the officer conducting the proceedings shall proceed to advertise the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale. real property may be levied upon. 207. Summary Remedies. the taxpayer may discontinue all proceedings by paying the taxes. It shall be effectuated by posting a notice at the main entrance of the municipal building or city hall and in public and conspicuous place in the barrio or district in which the real estate lies and by publication once a week for three (3) weeks in a newspaper of general circulation in the municipality or city where the property is located. and other personal property of whatever character. a return by the distraining or levying officer of the proceedings shall be entered upon the records of the Revenue Collection Officer. (B) Levy on Real Property. In case the warrant of levy on real property is not issued before or simultaneously with the warrant of distraint on personal property. describing the property sold stating the name of the purchaser and setting out the exact amount of all taxes. debts. subject to rules and regulations promulgated by the Secretary of Finance. however. proceed with the levy on the taxpayer's real property. Levy shall be affected by writing upon said certificate a description of the property upon which levy is made. That a consolidated report by the Revenue Regional Director may be required by the Commissioner as often as necessary: Provided. shall have the authority to lift warrants of levy issued in accordance with the provisions hereof. written notice of the levy shall be mailed to or served upon the Register of Deeds of the province or city where the property is located and upon the delinquent taxpayer.After the expiration of the time required to pay the delinquent tax or delinquent revenue as prescribed in this Section. and such advertisement shall cover a period of a least thirty (30) days. to the occupant of the property in question. any internal revenue officer designated by the Commissioner or his duly authorized representative shall prepare a duly authenticated certificate showing the name of the taxpayer and the amounts of the tax and penalty due from him. as the officer conducting the proceedings shall determine and as the notice of sale shall specify. further. bank accounts and interest in and rights to personal property. To this end. in consultation with the Revenue district Officer. or if he be absent from the Philippines. within thirty (30) days after execution of the distraint.

FAILURE OF NOTICE notified also vitiates the proceeding.and cost of sale. Basilia may be criticized for failure to have changed the name in the assessment record. However. in order that he may either make payment before the sale. nevertheless. cannot supplant the absence of notice. or redeem his property within the statutory period." It cannot be Nemesio for the latter's obligation to pay ended where Basilia's liability began. ORDONEZA 102 PHIL 385 It is hardly possible to sanction the tax sale of a property with a description distinct and different from that which appears in its certificate of title. filed a complaint against the Provincial Treasurer and Catigbac attacking the validity of the sale on the grounds that she was not notified. She is the registered owner of the land and had become liable for taxes thereon. The Revenue Collection Officer. which often does not really give the notice demanded by the requirements of due process. For all purposes. Besides. the owner and delinquent taxpayer. and the advertisement and subsequent sale. and thus suspend the same. it is a general and indefinite notice. such circumstance. the taxpayer should at least be apprised of the exact date of the proceeding by which she is to lose her property." Page | 13 . out of his collection.  Basilia Cabrera.  The letter sent to Nemesio Cabrera was returned marked ―Unclaimed‖ for the latter was already dead. CA 273 SCRA 46 (1997) FACTS: "The approval of the court sitting in probate is not a mandatory requirement in the collection of estate taxes. without effecting the essence of the Torrens Systems. including the preservation or transportation in case of personal property. both in cases of personal and real property including improvements found on the latter.  The land was actually sold in a rescheduled public auction sale. the appellee admittedly being not MARCOS II V. among others. even though the property had remained in the assessment book in the name of Nemesio Cabrera." "In case of failure to file a return. PROVINCIAL TREASURER OF TAYABAS 75 PHIL 780 FACTS: The Provincial Treasurer of Tayabas issued a notice for the sale at public auction of the real properties of Nemesio Cabrera forfeited for tax delinquency. hence. CABRERA V. instead of being merely a formality. the advertisement of tax sales prescribed by law would furnished substantially the information and warning it is meant to convey to. Under the law. This suggest the advisability or need of adopting means and ways tending to insure that the records of the assessment for purpose of real estate tax on registered properties contain a description thereof which dovetails with that of the records of the corresponding registration proceedings. she is the delinquent taxpayer "against whom the taxes were assessed. the excess shall be turned over to the owner of the property. In his monthly collection reports. even if the notice state that the sale would take place on a specified date and every day thereafter. advance an amount sufficient to defray the costs of collection by means of the summary remedies provided for in this Code. such advances shall be reflected and supported byreceipts. the registered owner of the land subject to attachment. Thus. the tax may be assessed at anytime within 10 years after the omission. because she became the registered owner thereof when a Torrens Title was issued to her by the Register of Deeds of Tayabas. without impairing the full and credence with the same in meant to command and. DEFECT NAME / DESCRIPTION VELAYO V. In order to protect the taxpayer’s rights. ISSUE: Is there a need for new notices if the land was not sold on the date specified in the previous notice? HELD: Yes. upon approval by the Revenue District Officer may.

Marcos contends that the properties could not be levied to cover the tax dues because they are still pending probate with the court. 215. e) FORFEITURE TO GOVERNMENT 215. together with interest on said purchase rice at the rate of fifteen percent (15%) per annum from the date of purchase to the date of redemption. allowing the same to lapse into finality. to transfer the title of the property forfeited to the Government without the necessity of an order from a competent court. The owner shall not. 214. penalties. d) FAILURE TO REDEEM SEC 202 Issue: WON the proper avenue of assessment and collection was taken by respondent bureau. However the assessment were not protested administratively by Mrs. Page | 14 .In case there is no bidder for real property exposed for sale as hereinabove provided or if the highest bid is for an amount insufficient to pay the taxes. or any one for him. Redemption of Property Sold. Forfeiture to Government for Want of Bidder. be deprived of the possession of the said property and shall be entitled to the rents and other income thereof until the expiration of the time allowed for its redemption. however. 205 of the Tax Code. execute a deed conveying to the purchaser so much of the property as has been sold. and interest thereon from SEC. executory and demandable. petitioner and other Marcos heirs never questioned the assessment served upon them. shall make a return of his proceedings and the forfeiture which shall be spread upon the records of his office. and the deed shall succintly recite all the proceedings upon which the validity of the sale depends. the date of delinquency to the date of sale. penalties and costs. as grantor. the same can now be collected through the summary remedy of distraint and levy pursuant to Sec. and such payment shall entitle the person paying to the delivery of the certificate issued to the purchaser and a certificate from the said Revenue District Officer that he has thus redeemed the property. c) REDEMPTION SEC 214 SEC. and prompting the BIR to collect said taxes by levying upon the properties left by the late President Marcos. 202.    Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals to grant CIR's petition to levy the properties of the late Pres. upon registration with his office of any such declaration of forfeiture. The Notice of Levy upon real property were issued within the prescriptive period and in accordance with Sec. SEC 216. having become final. and settlement of tax deficiencies could not be had. and said property thereafter shall be free from the lien of such taxes and penalties. . The deficiency tax assessment. 222 of the Tax Code. Final Deed to Purchaser. SEC 224 SEC SEC. shall have the right of paying to the Revenue District Officer the amount of the public taxes. Marcos to cover the payment of his tax delinquencies during the period of his exile in the US. free from all liens of any kind whatsoever.Within one (1) year from the date of sale. HELD: Apart from failing to file the required estate tax return within the time required for filing the same. It shall be the duty of the Register of Deeds concerned. . .In case the taxpayer shall not redeem the property as herein provided the Revenue District Officer shall. the Internal Revenue Officer conducting the sale shall declare the property forfeited to the Government in satisfaction of the claim in question and within two (2) days thereafter. The Marcos family was assessed by the BIR after it failed to file estate tax returns. Marcos and the heirs of the late president so that they became final and unappealable after the period for filing of opposition has prescribed. and the Revenue District Officer shall forthwith pay over to the purchaser the amount by which such property has thus been redeemed. unless there is an order by the probate court or until the probate proceedings are terminated. the delinquent taxpayer.

The Commissioner shall have charge of any real estate obtained by the Government of the Philippines in payment or satisfaction of taxes. . . 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. The forfeiture of real property shall be enforced by a judgment of condemnation and sale in a legal action or proceeding. NO L-29059 (1987) FACTS:   CTA decision ordered the petitioner CIR to refund to the Cebu Portland Cement Company overpayments of ad valorem taxes on cement sold by it. SEC. 217 SEC. petitioner filed this petition for review. The CTA. granted private respondent's motion. Further Distraint or Levy. and thusly they were not liable for their alleged tax deficiency." If the payment of taxes could be postponed by simply questioning their validity. 217. upon the giving of not less than twenty (20) days notice. In either case. 218. whereas. Resale of Real Estate Taken for Taxes. fee or charge imposed by this Code. but if the property be not thus redeemed. G. or destruction.The remedy by distraint of personal property and levy on realty may be repeated if necessary until the full amount due. and an accounting of the same shall rendered to the Chairman of the Commission on Audit. Thereby. Remedy for Enforcement of Forfeitures. as the case may require. 1125 is therefore premised on the assumption that the collection by summary proceedings is by itself in accordance with existing laws.No court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax. including all expenses.The forfeiture of chattels and removable fixtures of any sort shall be enforced by the seizure and sale. in the case at bar. together with interest thereon and the costs of sale. contending that cement was adjudged a mineral and not a manufactured product.   ISSUE: WON assessment of taxes can be enforced even if there is a case contesting it. what the respondent Court suspended was the use of CIR V. In fact. 216. ZULUETA 100 PHIL 872 (1957) Section 11 of Republic Act No. SEC.R. . Respondent questioned the assessed tax. is collected. (4) INJUNCTION a) SEC. there was still a P4 M plus balance they owed. and said Commissioner may. of the specific forfeited property. Injunction not Available to Restrain Collection of Tax. save for the exception in RA 1125 . 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. CEBU PORTLAND CEMENT Page | 15 . or with prior approval of the Secretary of Finance. the proceeds of the sale shall be deposited with the National Treasury. dispose of the same at private sale.Within one (1) year from the date of such forfeiture. . the machinery of the state would grind to a halt and all government functions would be paralyzed. penalties or costs arising under this Code or in compromise or adjustment of any claim therefore. sell and dispose of the same at public auction. That is the reason why. Execution of judgment was opposed by the petitioner citing that respondent had an outstanding sales tax liability to which the judgment debt had already been credited. civil or criminal. or any one for him may redeem said property by paying to the Commissioner or the latter's Revenue Collection Officer the full amount of the taxes and penalties. the forfeiture shall become absolute. EXCEPTION: COLLECTOR V. the Tax Code provides that injunction is not available to restrain collection of tax. and then what is suspended is the act of collecting. we hold that the respondent Court of Tax Appeals erred in its order. (3) FURTHER DISTRAINT & LEVY SEC. Thereby. 218 SEC. the taxpayer. 224.

the assessment shall become final. on the same breath. or © 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 quarter or quarters of the succeeding taxable year. Form and Mode of Proceeding in Actions Arising under this Code. SEC. That a preassessment notice shall not be required in the following cases: (a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return. require the petitioner to deposit or file a bond as a pre-requisite of the issuance of a writ of injunction.the method employed to verify the collection which was evidently illegal after the lapse of the three-year limitation period. however. machineries and spare parts. deficiency income tax and residence tax assessments were issued against him. BELOSILLO 20 SCRA 32 (1967) FACTS: Petitioner filed his income tax return. all relevant supporting documents shall have been submitted. otherwise. penalty or forfeiture under this Code shall be filed in court without the approval of the Commissioner. or from the lapse of one hundred eighty (180)-day period. or (b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent. JUDICIAL ACTION (f) CIVIL ACTION SEC 228. SEC 220 SEC. Protesting of Assessment. executory and demandable.  Said assessments not having been disputed BIR filed suit to recover from petitioner the deficiency income tax. 220. the assessment shall be void. Page | 16 . The respondent Court issued the injunction in question on the basis of its findings that the means intended to be used by petitioner in the collection of the alleged deficiency taxes were in violation of law. otherwise. or (d) When the excise tax due on exciseable articles has not been paid. a) APPROVAL OF CIR 2. or is not acted upon within one hundred eighty (180) days from submission of documents. the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision. he shall first notify the taxpayer of his findings: Provided. Within a period to be prescribed by implementing rules and regulations. but not limited to. – Civil and criminal actions and proceedings instituted in behalf of the Government under the authority of this Code or other law enforced by the Bureau of Internal Revenue shall be brought in the name of the Government of the Philippines and shall be conducted by legal officers of the Bureau of Internal Revenue but no civil or criminal action for the recovery of taxes or the enforcement of any fine. such as. 228. vehicles. If the protest is denied in whole or in part. and then. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. It would certainly be an absurdity on the part of the Court of Tax Appeals to declare that the collection by the summary methods of distraint and levy was violative of the law. If the taxpayer fails to respond. ARCHES V. the decision shall become final. Within five years thereafter. capital equipment. Within sixty (60) days from filing of the protest. the taxpayer shall be required to respond to said notice. the Commissioner or his duly authorized representative shall issue an assessment based on his findings. otherwise. The taxpayers shall be informed in writing of the law and the facts on which the assessment is made. or (e) When the article locally purchased or imported by an exempt person. traded or transferred to non-exempt persons. has been sold. – When the Commissioner or his duly authorized representative finds that proper taxes should be assessed.

 Respondent wrote the BIR requesting a reconsideration of her tax deficiency assessment. executory and demandable for failure of the taxpayer to appeal the decision to the CTA within 30 days for receipt of the decision. HIZON 320 SCRA 573 (1999) FACTS:  In 1986. Resorted to: 1. By filing an answer to the petition for review filed by taxpayer with CTA. and no proceeding in court without assessment for the collection of such taxes shall be instituted after the expiration of such (3-year) period. This regulation. in ruling on said question. the petitioner served warrants of distraint and levy to collect the tax deficiency. but one relating to capacity to sue or affecting the cause of action only. although impractical. ten months and three days after the assessments were made.‖ ISSUE: WON the CFI correctly dismissed the petition of the petitioner? HELD: YES. The complaint was signed by the Chief of the Legal Division and verified by the Bureau‘s Regional Director. the action was commenced one year. NIRC. The verification by the Regional Director of the complaint constitutes sufficient approval thereof already. It states that said Director has caused the preparation of the complaint and that he has read the allegations thereof and they are true and correct to the best of his knowledge and belief. The BIR denied the request. approved by the Finance Secretary. 1. Arches moved to dismiss the complaint on the ground that it did not expressly show the approval of the Revenue Commissioner. Lack of approval of the Revenue Commissioner is not jurisdictional. So. wherein the former's functions regarding the administration and enforcement of revenue laws and regulations covering the approval of court actions— were expressly delegated to the Regional Directors. the BIR issued to respondent a deficiency income tax assessment. Respondent not having contested the assessment. When the protest is not acted upon within 180 days from submission of documents and the taxpayer failed to appeal with the CTA within 30 days from the lapse of the 180-day period. has the force and effect of law. or 2. well within the period. 203. 3. hence. or 2. NOTE: JUDICIAL ACTION may be resorted to even before assessment. Page | 17 . The court relied upon Memorandum Order of the Revenue Commissioner. When a protest against assessment is filed and a decision becomes final. the issuance of which was authorized by statute. was merely an error of judgment. Respondent filed a case with the RTC to collect the tax deficiency. When a tax is assessed and the assessment becomes final and unappealable because the taxpayer fails to file an administrative protest with the CIR within 30 days from receipt. whatever error — if any — the municipal court committed. By filing a civil case for collection of a sum of money with proper regular court (MTC or RTC). b) CAN THE POWER TO APPROVE FILING OR CIVIL AND CRIMINAL ACTIONS BE DELEGATED? Two ways to enforce civil liability through civil actions: REPUBLIC v. as stated in SEC. not correctible by certiorari. We have already ruled8 that the proper prescriptive period for bringing civil actions is five years from the date of the assessment. However it did not proceed to dispose of the attached properties. Here.

ISSUES: I. (c) The power to compromise or abate under §204(A) and (B) of this Code. This is erroneous. any tax deficiency. As such. . However. revoke or modify any existing ruling of the Bureau. (b) The power to issue rulings of first impression or to reverse. This pronouncement fins justification in the various laws defining the Office of the Sol Gen. EXCEPT the following: (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance. the trial court stated The NIRC explicitly provides that the absence of the approval of the commissioner in the institution of the action is fatal to the cause of the plaintiff . The request for reconsideration was not filed within the 30 day period hence no request for reconsideration was actually made. they have no binding effect upon the courts for such memorand[a] and circulars are not the official acts of the legislative. and (2) that the action had already prescribed. . Page | 18 . executive and judicial departments of the Philippines . The trial court arrived at this conclusion because the complaint filed by the BIR was not signed by then Commissioner. 2. Petitioner argued that respondent’s request for reinvestigation of her tax deficiency assessment suspended the running of the period of prescription such that the government could still file a case for tax collection.  The trial court granted the motion and dismissed the complaint. 1901) up to the present Administrative Code of 1987. NIRC must not understood as overturning the long established procedure before this court (SC) in requiring the Sol Gen to represent the interest of the Republic. AND Revenue Administrative Order No. None of the exceptions relates to the Commissioner’s power to approve the filing of tax collection cases. . As the complaint filed in this case was signed by the BIR‘s Chief of Legal Division for Region 4 and verified by the Regional Director. This court continues to maintain that it is the Sol Gen who has primary responsibility to appear for the government in APPELLATE proceedings. SC held that. WON the action or collection of taxes had been barred by prescription. NIRC authorizes the BIR Commissioner to delegate the powers vested in him to any subordinate official with the rank equivalent to a division chief or higher. there was compliance with the law. Consequently. and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise tax are produced or kept. So. RE: PARTICIPATION OF THE SOLICITOR GENERAL The Solicitor General is the principal law officer and legal defender of the government – sec. WON the institution of the civil case for collection of taxes was without the approval of Commissioner. NO. circulars and orders are not laws which courts can take judicial notice of. beginning with ACT No. . HELD: 1. The court does not agree with the petitioner. this petition. Revenue Administrative Order No. 5-83 of the BIR provides that the Regional Director is authorized to sign all pleadings which requires the signature of the Commissioner. 220. Respondent moved to dismiss the case on two grounds: (1) that the complaint was not filed upon authority of the BIR Commissioner. the period for prescription was not suspended. YES. the action is barred by the 3 year prescription period. the lower court refused to recognize said Revenue Administrative Order saying that: [M]emorand[a]. 1095 authorizes the Litigation and Prosecution Section of the Legal Division of regional district offices to institute the necessary civil and criminal actions for tax collection. II. . 135 (June 16. Hence.

No. Petitioners asked for a reconsideration of the said assessments alleging that the same are contrary to law and not supported by sufficient evidence and requested a period of 30 days within which to submit their position paper in support of their claim. Petitioners filed 2 separate oppositions alleging that the estate and inheritance taxes sought to be collected have already been settled in accordance with the HELD: 1. may be considered as an outright denial of petitioners' request for reconsideration. However. Prescription of the Government‘s right to assess. exclusive of charges and penalties claimed is 1Million and above. CIR filed a motion for Allowance of Claim against the estates of spouses Teodoro and for an order of payment of taxes in Special Proceeding with the CFI praying that petitioner Dayrit be ordered to pay the BIR the sum of P6Million plus surcharges and interest. In petitioners' MR of the aforementioned assessments. The court notes that it took the respondent Commissioner a period of more than one (1) year and five (5) months.  In reply thereto. Failure of the petitioners to appeal to the Court of Tax Appeals in due time made the assessments final. Anent petitioners' claim that the tax assessments against the estates of the Teodoro spouses are not yet final. petitioners requested then Commissioner for a period of thirty (30) days from October 7. exlcusive of charges and penalties claimed is less than 1Million DEFENSES PRECLUDED BY FINAL AND EXECUTORY ASSESSMENTS: 1. the court finds the claim untenable. DAYRIT ET AL V. This they failed to avail of.   Page | 19 . c) COLLECTION CASE UPON FINALITY OF ASSESSMENT provisions of P. the petitioners have a period of thirty (30) days within which to appeal the case to the Court of Tax Appeals. before finally instituting the action for collection. 67 and that at any rate. P. Such failure to file a position paper may be construed as abandonment of the petitioners' request for reconsideration. 23.R. No.  The notice of deficiency assessments was received by Dayrit. no position paper was ever filed. A taxpayer has to prove otherwise.D. upon a denial thereof. CTA – where the principal amount of taxes and fees.JURISDICTION: 1. No. RTC/MTC/MeTC – where the principal amount of taxes and fees. the assessments have not become final and executory. 2. 23 amended by P. 67 was entitled Proclaiming Tax Amnesty Subject to Certain Conditions. executory and demandable.  Meanwhile. on October 16. the act of the Commissioner in filing an action for allowance of the claim for estate and inheritance taxes. 1972. the Commissioner alleged that petitioners could not avail of the tax amnesty in view of the existence of a prior assessment. and 2. 1972 within which to submit a position paper that would embody their grounds for reconsideration. Under the circumstances of the case. CRUZ G. Tax assessments made by tax examiners are presumed correct and made in good faith. From the date of receipt of the copy of the Commissioner's letter for collection of estate and inheritance taxes against the estates of the late Teodoro spouses. NO L-39910 (1988) FACTS: Dayrit filed with the CFI testate and intestate proceedings for the settlement of the Spouses Teodoro‘s estates. as amended by P. Validity or legality of the assessments.D. petitioners must contest or dispute the same and. 1974.D.D No.

fine not less P30. Attempt to evade or defeat tax.2. adducing reasons in support thereto. *STATUTORY OFFENSES AND PENALTIES Statutory offenses and penalties secs. as the particular situation may require. (sec. subject to the approval of the Commissioner. Failure of a withholding agent to refund excess withholding tax. supply correct and Accurate information. Remedy for Enforcement of Statutory Penal Provisions. 221. (2) CRIMINAL ACTION a) AS A COLLECTION REMEDY SEC. or keep any record or supply information required on the date prescribed. pay tax. Remedies for the Collection of Delinquent Taxes. No. PENALTY. PENALTY. PENALTY. 1972. 250) 2. The civil remedies for the collection of internal revenue taxes. 250-268 1. the respondent Commissioner need not rule on their request.D. P1. fees or charges. statement or list. the court rules that the said decree embraces only those income declared in pursuance thereof within the taxable year 1972.000 for all such failure during a calendar year. 254) 5. 23 was issued on October 16. equal to the amount of the tax not withheld. In the present case where the petitioners did not actually contest the assessments by stating the basis thereof. Provided that the conviction and acquittal obtained shall not be a bar to the filing of a civil suit for the collection of taxes.000 and IMPRISONMENT of not less 2 years but not more than 4 years. and any increment thereto resulting from delinquency shall be: (b) By civil or criminal action. (se. b) AS ENFORCEMENT PENALTIES SEC 221 OF STATUTORY SEC. PENALTY. 251) 3. This Court ruled that "nowhere in the Tax Code is the Collector of Internal Revenue required to rule first on a taxpayer's request for reconsideration before he can go to court for the purpose of collecting the tax assessed.000 but not more than P100. the CFI properly acquired jurisdiction. (sec. Considering that P. withhold and remit tax and refund Page | 20 . Thus. or remitted. 205.000 per failure but the aggregate amount shall not exceed P25.The remedy for enforcement of statutory penalties of all sorts shall be by criminal or civil action. The time frame cannot be stretched to include declarations made prior to the issuance of the said decree or those made outside of the time frame as envisioned in the said decree. 205 (B) (2) SEC. Failure to file return. Petitioners' contention that the absence of a decision on their request for reconsideration of the assessments is a bar to granting the claim for collection is likewise without merit. The judgment in the criminal case shall not only impose the penalty but shall also order payment of the taxes subject of the criminal case as finally decided by the Commissioner. Willful failure to file return. Failure of a withholding agent to withhold and remit tax or aids or abets to evade payment of tax. equal to the amount of refunds not refunded. . The requirement for the Commissioner to rule on disputed assessments before bringing an action for collection is applicable only in cases where the assessment was actually disputed. 252) 4. 3. the estates of the Teodoro spouses which have been declared separately sometime in the 1960's are clearly outside the coverage of the tax amnesty provision. (sec. counted for. The assessments having become final and executory. The petitioners' allegation that the CFI lacks jurisdiction over the subject of the case is likewise untenable.

partners. not less than P10. partnerships. or to make a true and complete translation. IMPRISONMENT. including exhibits. examines and audits books of accounts of taxpayers. not less than P10. English or Spanish. or (b) Certifies financial statements of a business enterprise containing an essential misstatement of facts or omission in respect of the transactions. taxable income. (sec. deduction exemption of his client. or knowingly uses fake or falsified revenue official receipts. or employees. or (b) Offers to sign and certify financial statements without audit. (sec. (sec. OR GENERAL CO-PARTNERSHIP. or Willfully attempts to evade or defeat any tax imposed under this Code. not less than 1year BUT not more than 10years. Attempt to make it appear that a return or statement is actually filed or the withdrawal of a return or statement that actually filed after securing the official receiving seal or stamp of receipt of an internal revenue officer. or whose books of accounts or records kept in a native language. 255) NOTE: in case of CORPORATION. or In any way commits an act or omission. statements. in violation of the provisions of this Section. certificates authorizing registration. companies. PENALTY. records. or (c) Offers any taxpayer the use of accounting bookkeeping records for internal revenue purposes not in conformity with the requirements prescribed in this Code or rules and regulations promulgated thereunder. or (d) Knowingly makes any false or fictitious (e) (f) (g) (h) name in the books of accounts or record mentioned in the preceding paragraphs. or Keeps 2 or more sets of such records or books of accounts. or renders a report.000. and found to be at material variance with books or records kept by him in another language. not less than P50. Making false entries. 255) 6. Letters of Authority.000 7. or Fails to keep the books of accounts or records in a native language. or reports. 257)  Any financial officer or independent CPA engaged to examine and audit books of accounts of corporations.000 but not more than P100. schedules or other forms of accountancy work which has not been verified by him personally or under his supervision or by a member of his firm or by a member of his staff in accordance with sound auditing practices. PENALTY.000 and IMPRISONMENT not less than 1year BUT not less than 3years. PENALTY. or using falsified or fake accountable forms. or persons required to keep book of acconunts who: (a) Willfully falsifies report or statement bearing on any examination or audit.excess taxes withheld on compensation at the time required by law. ASSOCIATION. English or Spanish.000 BUT not more than P20. in addition to the penalties imposed to the responsible corporate officers. Tax Page | 21 . or  and Any person who: (a) Not being an independent CPA or a financial officer.

IMPRISONMENT. (sec. not less than P50. not less than P20. not less than 4years BUT not more than 6years. not less than P30. 261) 12. immediate deportation after serving sentence. (d) If the appraised value is more than P100. PENALTY. not less than P50. Carrying on a business without paying the corresponding annual registration fee. Any person who unlawfully recover or attempt to recover by distillation or other process any denatured alcohol or knowingly sells or offers for sale. IMPRISONMENT. not less than P20. 258) 9. not less than P20. PENALTY. Unlawful use of denatured alcohol. (c) If the appraised value is more than P50.000 BUT not more than P50. (sec. not less than 60days BUT not more than 100 days. not less than 6years and 1day BUT not more than 12 years. not less than 2years BUT not more than 4years. (sec.000 BUT not more than P20. not less than 2years BUT not more than 4years. IMPRISONMENT.000. Unlawful possession or removal of imported articles subject to excise tax without payment of the tax. not less than 6years and 1day BUT not more than 12years.000. conceals or disposes of alcohol so recovered or redistilled shall be subject to the same penalties. IMPRISONMENT. 260) 11. 257) 8. his certificate as a CPA shall be automatically revoked or cancelled upon conviction. not less than P10.000 nor more than P2. Not less than P1. PENALTY. (sec. PENALTY. 67 without having obtained a license therefor.00 BUT not more than P100.000.000. NOTE: Offender is a CPA.000 BUT not more than P100.000 BUT not more than P60. 262) 13. without further proceedings for deportation. repacking.000.000. IF FOREIGNERS.000 BUT not more than P20. PENALTY.000 BUT not more than P100. PENALTY. (b) If the appraised value exceeds P1.000 BUT does not exceed P150.000 BUT not more than P50. for each act or omission. IMPRISONMENT.000. not less than P30. not less than P5. not less than 6years and 1day BUT not more than 12 years. IMPRISONMENT.000. IMPRISONMENT.000.000.000. rectifying. or without complying with its implementing rules and regulations. IMPRISONMENT. not less than 1year BUT not more than 2years. not less than P20. PENALTY.000 BUT not more than P100.000. (sec. not less than 2years BUT not more than 6 years. cigarette tipping paper or cigarette filter tips by any person. 259) 10.000.000. (sec. Possession of cigarette paper in bobbins or rolls. IMPRISONMENT. PENALTY. IMPRISONMENT. PENALTY.000 but not more than P100. Tax Debit Memoranda and other accountable forms. not less than 10years BUT not more than 12 years.Credit Certificates.000. importer. Page | 22 . Shipment or removal of liquor or tobacco products under false name or brand or as an imitation of any existing or otherwise known product name or brand. (a) if the appraised value does not exceed P1.000 BUT does not exceed P50. PENALTY. PENALTY. IMPRISONMENT. Knowingly undertaking the collection of foreign payments as provided under sec. In case of a person engaged in the business of distilling. compounding or manufacturing article subject to excise tax. manufacturer or cigar and cigarettes without the corresponding authority therefor issued by the Commissioner. not less than 6months BUT not more than 2years.

– shall be forfeited. or any person who knowingly aids or abets in the removal of such articles. any die for printing or making stamps. restored or altered stamps. IMPRISONMENT. 16. return or statement containing information which is not true and correct as to every material matter. not less than 1year BUT not more than 2years. or (e) Giving away or accepting from another. summary cancellation or withdrawal of the permit to engage in business as a manufacture of articles subject to excise tax. and business address of the person or entity. or (b) Printing of double or multiple sets of invoices or receipts. not less than 2 years BUT not more than 4 years. Willful filing of a declaration. not less than P20. 264) 15. 18. not less than P5. (d) Selling or offering for sale any box or package containing articles subject to excise tax with false. All articles subject to excise tax stored or allowed to remain in the distillery warehouse. not less than 2years BUT not more than 4years.000. owner or person in charge of article subject to tax who removes or allows or causes the unlawful removal such articles from the place of production or warehouse which the excise tax has not been paid. tags. PENALTY. spurious or counterfeit stamps or labels or selling from any such fraudulent box. IMPRISONMENT. buying or using containers on which the stamps are not completely destroyed.000. machinery and removal of fixtures used in Unlicensed Business of articles subject to excise tax or Dies Used for Printing False Stamps Etc. (a) Making. Manufacturer. PENALTY. PENALTY. (c) Possessing false. selling.Unlawful possession of locally manufactured articles subject to excise tax without payment of the tax. The following acts will have a PENALTY. or selling. bonded warehouse or other place where has been paid or withdrawn from any such place or any article from customs custody or Page | 23 . For each act or commission. counterfeit. IMPRISONMENT.000. or conceals the same after illegal removal shall for the first offense. importing.000 BUT not more than P50. not less than P4years BUT not more than 8years. IMPRISONMENT. (sec. Misdeclaration or misrepresentation of Manufacturers subject to excise tax. 20.000 BUT not more than P10. (sec. labels or tags or causing the commission of any such offense by another. IMPRISONMENT. Failure or refusal to issue receipts or sales or commercial invoices that do not truly reflect or contain all the information required to be shown. Failure to obey summons. package or container as aforementioned. 17.000 BUT not more than P50. Subject to penalties prescribed for PERJURY under RPC. not less than P1. labels. Any person who commits the acts below shall be penalized in the same manner: (a) Printing of receipts or sales or commercial invoices without authority from the BIR. using or processing without express authority from the Commissioner. not bearing the name. not less than 10times the amount of excise tax due on the articles but not less than P1. (b) Erasing the cancellation marks of any stamp previously used. 263) 14. or (c) Printing of unnumbered receipts or sales or commercial invoices. or playing cards. business style. not less than 10times the amount of excise tax due on the articles found BUT not less than P500. taxpayer Identification number. PENALTY.000. not less than 1 year BUT not more than 2 years. 19. PENALTY. or altering the written figures or letters or cancellation marks on internal revenue stamps. Chattels.

It is neither a mere consequence of the felonious acts charged nor is it a mere civil liability arising from crime that could be wiped out by the judicial declaration of non-existence of the criminal acts charged. Whether the lower court erred in not holding that the violation alleged in the information has already prescribed.imported into the country without the payment of the required tax shall be forfeited. Criminal liability in taxation arises as a result of one‘s liability to pay taxes. and although he filed income tax returns for 1951. because it was not contested before the Court of Tax Appeals. The lower court held in favor of Patanao. 1948 and 1949m. c) CIVIL LIABILITY IN CASE OF ACQUITTAL OF CRIMINAL LIABILITY REPUBLIC V. Page | 24 . that notwithstanding repeated demands the defendant refused. 5. It reasoned that the accused once acquitted is exempt from both criminal and civil responsibility because when a criminal action is instituted. in the total amount of Php 10. the same were false and fraudulent because he did not report substantial income earned by him from his business. 431. 2.22. PATANAO In the complaint filed by the Republic of the Philippines.Upon his plea of guilty. in imposing subsidiary imprisonment relative to his civil liability. ISSUES: 1. and that the assessment for the payment of the taxes has become final. ISSUE: WON the acquittal of the taxpayer in a criminal action result in the exoneration of taxpayer from his civil liability to pay taxes? HELD: NO. 4. he was sentenced to pay a fine of Php 300.00. defendant having been acquitted in two criminal cases of the same court. which were prosecutions for failure to file income tax returns and for non-payment of income taxes. failed and neglected to pay said taxes. 1952 and 1955. executory and demandable. 3. that plaintiff sent a letter of demand with enclosed income tax assessment to the defendant requiring him to pay the said amount. Defendant moved to dismiss the complaint that the action is barred by prior judgment. through the Solicitor General. 2. to indemnify the Republic the sum of Php 10. against Patanao. since that duty is imposed by statute prior to and independently of any attempts by the taxpayer to evade payment. civil action arising from the same offense is impliedly instituted unless the offended party expressly waives the civil action or reserves the right to file it separately. that it was ascertained that deficiency of income taxes and additional residence taxes is due from defendant. 431. and.00with subsidiary imprisonment in case of insolvency. defendant failed to file income tax returns for 1953 and 1954. 1947. The Information filed by the government on August 17. The civil liability to pay taxes arises not because of felony but upon taxpayer‘s failure to pay taxes. BALAGTAS 105 PHIL 1362 FACTS: Appeal from a decision of the Court of First Instance of Manila finding appellant guilty of violation of Section 51 of NIRC. It is alleged that: 1. The acquittal in the said criminal cases cannot operate to discharge defendant appellee from the duty of paying the taxes which the law requires to be paid. also with subsidiary imprisonment in case of insolvency. 1954. d) IMPOSITION IMPRISONMENT OF SUBSIDIARY PEOPLE V. alleged that the said appellant failed to pay his income taxes for the years 1946.

of 1950. the same could not have been prosecuted by reason of prescription. to the failure of Appellants to pay his income taxes for 1946. The CIR had. e) IS DEFICIENCY NECESSARY BEFORE CRIMINAL CASE? ASSESSMENT FILING A The recommendation letter of the Commissioner addressed to the DOJ for the filing of a criminal complaint against the taxpayer cannot be considered a formal assessment. Accordingly. CIR V. Provided. 1947. or to do both. an affidavit. CA G. An assessment is not necessary before criminal charges can be filed. but a criminal prosecution for violations of the National Internal Revenue Code which is within the cognizance of CFI. Section 358 is clear that the subsidiary penalty provided therein refers only to non-payment of the fine and not of the taxes due. it appearing that only 4 years and a few days have elapsed when the information was filed. that there is a prima facie showing of a willful attempt to evade taxes or failure to file the required return. While there can be no civil action to enforce collection before the assessment procedures provided in the Code have been followed it is NOT a requirement for the filing thereof that there be a precise computation and assessment of the tax. For want of express provision of law. NO 119322 (1996) Page | 25 . respectively. of the year 1947. 2. cannot be deemed an assessment that can be questioned before the CTA. paragraphs (b) and (c) of the Internal Revenue Code provide that the tax imposed by that title shall be paid on or before the 15th day of May following the close of the calendar year. NO 128315 (1999) The filing of the criminal complaint with the DOJ cannot be construed as a formal assessment. and in case of installment the close of the calendar year. With respect to his tax for 1949 which should have been paid on or before May 15th or August 15th. or to file a criminal case against the taxpayer. which was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a criminal complaint for tax evasion. Before anyone is prosecuted for willful attempt to evade or defeat any tax. Relative to the imposition of subsidiary imprisonment in case of insolvency. 2. in such tax evasion cases. 1948 and 1949. the violation has not yet prescribed. discretion on whether to issue an assessment. Even a cursory perusal of the said letter would reveal three key points: 1. 1949. 3.R. as the case may be. It was not addressed to the taxpayer. A criminal charge need not only be supported by a prima facie showing of failure to file a required return. however.R. CUSI 97 SCRA 877 (1980) On the second issue.PASCOR REALTY G. the second installment shall be paid on or before the 15th day of August of the following year. the fact that a tax is due must first be proved. Section 51. subsidiary imprisonment cannot be imposed in this case. and in case of installment payments. The letter was never mailed or sent to the taxpayer by the Commissioner. since what is involved in the criminal action is not the collection of tax but a criminal prosecution for the violation of the NIRC. 1954 or before more than five years have elapsed counted from August 16. There was no demand made on the taxpayer to pay the tax liability. UNGAB V. nor a period for payment set therein. and 1948 on or before May 15 th or August 15th as the case may be. With respect. Section 354 of the same Code provides that violations of any provision thereof shall prescribe after (5) five years. as the information was filed on August 17.HELD: 1. CIR V. the Court ruled that what is involved here is not the collection of taxes where the assessment of the CIR may be reviewed by the Court of Tax Appeals.

of BIR personnel‘s malfeasance at the very least. much less evidence.    ISSUE: Whether the basis of private respondent‘s tax liability first be settled before any complaint for fraudulent tax evasion can be initiated. ADAMSON V. 1993 assessment of taxes due. State Prosecutor found probable cause. Adamson and Sara S. pendency of a civil case with the Supreme Court. and pendency of their letter-request for re-investigation with the Commissioner.FACTS: Respondent moved for reconsideration of the assessment. NO 120935 (2009) FACTS: Commissioner filed with the DOJ her Affidavit of Complaint against petitioners. Meanwhile the Commissioner filed a complaint with the DOJ against private respondent Fortune for alleged fraudulent tax evasion for non-payment of the correct income. 254 and 256. They filed a Motion to Dismiss or Suspend the Proceedings.R. WON the filing of the criminal complaints against the private respondents by the DOJ is premature for lack of a formal assessment. it cannot be correctly asserted that private respondents have willfully attempted to evade or defeat any tax under Secs. it must have been with the connivance of cooperation of certain BIR officials and employees who supervised and monitored Fortune‘s production activities to see to it that the correct taxes were paid. When fraudulent tax returns are involved as in the cases at bar. there is the presumption that BIR personnel performed their duties in the regular course in ensuring that the correct taxes were paid by Fortune. YES HELD: The law (SEC 269 of NIRC) is clear. HELD: Fraud cannot be presumed.NO 3. But there is no allegation. WON the Commissioner's recommendation letter can be considered as a formal assessment of private respondents' tax liability. ISSUES: 1. In this seminal case. de los Reyes were charged before the RTC. Page | 26 . ad valorem and VAT for 1992. Lucas G.  Petitioners filed with the DOJ a motion to suspend proceedings on the ground of prejudicial question.  Respondents filed a petition that the preliminary investigation be suspended pending determination by CIR of Fortune‘s motion for reconsideration/reinvestigation of the August 13. The trial court granted the petition for a writ of preliminary injunction to enjoin the preliminary investigation on the complaint for tax evasion pending before the DOJ. If there was fraud on willful attempt to evade payment of ad valorem taxes by private respondent through the manipulation of the registered wholesale price of the cigarettes. the Court ruled that there was no need for precise computation and formal assessment in order for criminal complaints to be filed against him. the fact that a tax is due must first be proved. WON t he CTA has jurisdiction to take cognizance of both the criminal and civil cases here at bar. Adamson. CA G. After the preliminary investigation. Therese JuneD. ruling that the tax liability of private respondents first be settled before any complaint for fraudulent tax evasion can be initiated.NO 2. a proceeding in court after the collection of such tax may be begun without assessment. They invoked the grounds that there was yet no final assessment of their tax liability. Before the tax liabilities of Fortune are finally determined. and there were still pending relevant Supreme Court and CTA cases. 1997 NIRC. The complaint was referred to the DOJ Task Force on revenue cases which found sufficient basis to further investigate the charges against Fortune.

and costs that may accrue in addition thereto upon all property and rights to property belonging to the taxpayer: Provided. purchaser or judgment creditor. 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.3. remit them to BIR so that the amount could be applied to the payment of Maritime Co‘s tax liabilities 4) LA denied the motion on the ground that CIR failed to show that the barges had been validly placed under constructive distraint. Besides. For failure to pay the deficiency taxes. Nature and Extent of Tax Lien. b) PREFERENCE OF LIENS NATURE OF TAX LIEN It Is enforced as payment of tax. LA also rejected petitioner‘s contention that the government‘s claim for taxes was preferred under Art 2247 NCC since only taxes and fees which are due on specific movables enjoy preference. joint-account (cuentas en participacion). corporation. costs upon the entire property and rights to the property of the taxpayer. or in the alternative. NLRC 238 SCRA 42 (1994) Page | 27 . There is no question then that at the time of the writ of execution was issued. 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. documentary stamp tax. (1) Preference of Liens – A tax lien created in favor of the government is superior to all other claims or preferences FACTS: CIR sent two demand letters to Maritime Company of the Phils for deficiency common carrier‘s tax. The tax lien attaches not only from the service of the warrant of distraint of personal property but from the time the tax became due and payable. the distraint on the subject properties of Maritime Co as well as the notice of their seizure were made by petitioner CIR long before the writ of execution was issued by RTC Manila. against any mortgagee. 6% Commercial Broker‘s tax. penalties. It is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant predicated on judgment.If any person. the two barges were no longer property of Maritime CIR V. OTHERS (1) TAX LIEN a) SEC 219 SEC. 219. partnership. 2) 4 of the barges placed under constructive distraint by CIR were levied upon execution by the deputy sheriff of Manila to satisfy a judgment for unpaid wages and other benefits of employees of Maritime Co 3) CIR asked the labor arbiter (LA) to annul the sale and enjoin the sheriff from disposing of the proceeds of the sale. fixed tax. with interests. neglects or refuses to pay the same after demand. whereas the taxes claimed by CIR were not due on the 4 barges in question ISSUE: WON the constructive distraint on the barges in question are valid HELD: Yes. association or insurance company liable to pay an internal revenue tax. CIR issued warrants of distraint on personal property and levy of real property of Maritime Co. interest. income tax and withholding tax 1) The assessment became final and executory. . notice of such lien must be filed by CIR with the Registry of Deeds (Sec 219 NIRC) NOTE: A valid assessment is required before a tax lien shall be annotated at the proper registry of property. penalties. to be valid. however.

107. The tax due on such importation shall constitute a lien on the goods superior to all charges or liens on the goods. the importation of cigars and cigarettes. shall be subject to all applicable taxes. shall not be deemed an introduction into the Philippine customs territory. machinery. products. In the case of tax-free articles brought or imported into the Philippines by persons. conformably with the regulations of the Department of Finance and before the release of such articles from the customs house. Cigars and cigarettes. like the DutyFree Philippines (DFP). distilled spirits and wines into the Philippines. other than cigars and cigarettes. or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. who shall be liable for any internal revenue tax on such importation. the Cagayan Special Economic Zone and Freeport. and the purchaser in an auction sale acquires only such right as the judgment debtor had at the time of sale. upon consultation with the Secretary of Tourism and the General manager of the Philippine Tourism Authority.In the case of tax-free importation of goods into the Philippines by persons. c) OTHER LIENS SEC 107 (B). Articles confiscated shall be disposed of in accordance with the rules and regulations to be promulgated by the Secretary of Finance. and shall be liable for the duty and internal revenue tax due on such importation. duties. 131. entitles. and cigarettes. further. shall be labeled "duty-free" and "not for resale":Provided. irrespective of the possessor thereof. SEC. the power of the court in execution of judgments extends only to properties unquestionably belonging to the judgment debtor. even if destined for tax and duty-free shops. the purchasers. or agencies exempt from tax which are subsequently sold. (A) Persons Liable. distilled spirits and wines made directly by a government-owned and operated duty-free shop. entities or agencies exempt from tax where such goods are subsequently sold. Payment of Excise Taxes on Importer Articles. transferred or exchanged in the Philippines to non-exempt persons or entitles. created under Republic Act No. and the Zamboanga City Special Economic Zone.Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers. machinery. The provision of any special or general law to the contrary notwithstanding. That the removal and transfer of tax and duty-free goods. and the perpetrator of such non-labelling or re-selling shall be punishable under the applicable provisions of this code. . . equipment or other similar articles shall constitute a lien on the Page | 28 . transferees or recipients shall be considered the importers thereof. charges. It is also well-settled that the sheriff is not authorized to attach or levy on property not belonging to the debtor. distilled spirits fermented liquors and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and Freeport Zone. That such articles directly imported by a government-owned and operated duty-free shop like the DutyFree Philippines.Co. distilled spirits. still further. This shall apply to cigars. as well as tax and duty-free articles obtained from duty-free shop and subsequently found in a nonduty-free shop to be offered for resale shall be confiscated. upon recommendation of the Commissioner of Customs and Internal Revenue. created under Republic Act No. finally. – (B) Transfer of Goods by Tax-Exempt Persons. distilled spirits and wines within the premises of all duty-free shops which are not labelled as hereinabove required. and such other Freeport as may hereafter established or created by law: Provided. 7903. Execution sales affect the rights of the judgment debtor only. 7922. Value-Added Tax on Importation of Goods. That importations of cigars and cigarettes. transferred or exchanged in the Philippines to nonexempt persons or entities. products. fermented liquors and wines. created under Republic Act No. from one Freeport to another Freeport. including excise taxes due thereon. shall be exempted from all applicable duties only: Provided. 7227. SEC 131 (A) SEC. the purchasers or recipients shall be considered the importers thereof. The tax due on any such goods. equipment and other similar articles.

or (d) The taxpayer failed to file a request for reinvestigation/reconsideration within 30 days from receipt of final assessment notice and there is reason to believe that the assessment is lacking in legal and/or factual basis. or (g) Assessments made based on the "Best Evidence Obtainable Rule" and there is reason to believe that the same can be disputed by sufficient and competent evidence. 2. Financial incapacity. irrespective of the possessor thereof. and such lien shall be superior to all other charges or liens. Doubtful validity of the assessment. or (b) The assessment seems to be arbitrary in nature. a) GROUNDS TO ACCEPT COMPROMISE l. The compromise settlement of any tax liability shall be subject to the following minimum amounts: For cases of financial incapacity. — The offer to compromise a delinquent account or disputed assessment under these Regulations on the ground of reasonable doubt as to the validity of the assessment may be accepted when it is shown that: (a) The delinquent account or disputed assessment is one resulting from a jeopardy assessment (For this purpose.article itself. exemptions. a minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax. 204. . and For other cases. Authority of the Commissioner to Compromise. when: (1) A reasonable doubt as to the validity of the claim against the taxpayer exists. appearing to be based on presumptions and there is reason to believe that it is lacking in legal and/or factual basis. 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. (2) COMPROMISE SEC 204 (A) SEC.000. or his authorized representative. or (e) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of the Commissioner. within 30 days from receipt thereof and there is reason to believe that the assessment is lacking in legal and/or factual basis. or to substantiate all or any of the deductions. a minimum compromise rate equivalent to ten percent (10%) of the basic assessed tax. "jeopardy assessment" shall refer to a tax assessment which was assessed without the benefit of complete or partial audit by an authorized revenue officer. or (f) The assessments were issued on or after January 1. 228 of the Tax Code of 1997. Where the basic tax involved exceeds One million pesos (P1. or credits claimed in his return). or (c) The taxpayer failed to file an administrative protest on account of the alleged failure to receive notice of assessment or preliminary assessment and there is reason to believe that the assessment is lacking in legal and/or factual basis. in some cases.The Commissioner may – (A) Compromise the Payment of any Internal Revenue Tax. Abate and Refund or Credit Taxes. 1998. who has reason to believe that the assessment and collection of a deficiency tax will be jeopardized by delay because of the taxpayer's failure to comply with the audit and investigation requirements to present his books of accounts and/or pertinent records.000) or where the settlement offered is less than the prescribed minimum rates. or (2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax. where the demand notice allegedly failed to comply with the formalities prescribed under Sec. — The offer to compromise based on financial incapacity may be accepted upon showing that: Page | 29 .

Revenue District Offices. Collection Service. or The taxpayer is suffering from a networth deficit computed by deducting total liabilities (net of deferred credits) from total assets (net of prepaid expenses. and it appears that the taxpayer possesses no other leviable/distrainable assets. For purposes of these Regulations. MTC. Large Withholding tax cases. Delinquent accounts. CTA. deferred charges. On the other hand. Delinquent accounts with duly approved schedule of installment payments. it does not include the post reporting notice issued by the head of the investigating unit. Criminal violations already filed in court. pre-operating expenses. Legal Service. 5. Criminal tax fraud cases. b) CASES WHICH MAY BE COMPROMISED 3. SC. and 6. 3. other protested cases shall be handled by the Regional Evaluation Board (REB) or the National Evaluation Board (NEB) on a case to case basis. Cases which become final and executory after final judgment of a court. Cases under administrative protest pending in the Regional Offices. 7. other than his family home. other than those already filed in court or those involving criminal tax fraud. That the following powers of the Commissioner shall not be delegated: (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance. Enforcement Service and other offices in the National Office. 5. 1405 or under other general or special laws. d) DELEGATION OF POWER TO COMPROMISE SEC. as well as appraisal increases in fixed assets). 7 (C) SEC. Civil tax cases being disputed before the courts.1 of these Regulations. c) CASE WHICH COMPROMISED MAY NOT BE 1. upon recommendation of the Commissioner: Provided. 4. 6. or The taxpayer is a compensation income earner with no other source of income and the family's gross monthly compensation income does not exceed the levels of compensation income provided for under Sec. Authority of the Commissioner to Delegate Power. 2. Criminal violations. 8. CA. The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher. or The taxpayer has been granted by the Securities and Exchange Commission (SEC) or by any competent tribunal a moratorium or suspension of payments to creditors. Page | 30 . 4. 7.(a) (b) (c) (d) (e) The corporation ceased operation or is already dissolved. RTC. however. or The taxpayer is suffering from surplus or earnings deficit resulting to impairment in the original capital by at least 50%. subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of finance.. e. 4. and such waiver shall constitute as the authority of the Commissioner to inquire into the bank deposits of the taxpayer. the term "assessment" includes the preliminary assessment notice (PAN) issued as of June 30. taken from the latest audited financial statements.1. or otherwise declared bankrupt or insolvent. The Commissioner shall not consider any offer for compromise settlement by reason of financial incapacity unless and until the taxpayer waives in writing his privilege of the secrecy of bank deposits under Republic Act No.g. 2001 by the appropriate "Review Office". Collection cases filed in courts. and Cases covered by pre-assessment notices but taxpayer is not agreeable to the findings of the audit office as confirmed by the review office. Taxpayer Service (LTS). Cases where final reports of reinvestigation or reconsideration have been issued resulting to reduction in the original assessment and the taxpayer is agreeable to such decision. In fine.

in general. — The following cases may. RTC. SC. — Section 204 of the Tax Code of 1997 provides that "All criminal violations may be compromised except: (a) those already filed in court. Cases covered by pre-assessment notices but taxpayer is not agreeable to the findings of the audit office as confirmed by the review office.(b) The power to issue rulings of first impression or to reverse. and 6. A compromise in extra-judicial settlement of the taxpayer's criminal liability for his violation is consensual in character. Revenue District Offices. viz: 1." This means that. That assessments issued by the regional offices involving basic deficiency taxes of Five hundred thousand pesos (P500. Collection Service. COMPROMISE RR 7-2001 IMPLEMENTING SEC 7(C). Enforcement Service and other offices in the National Office. the Assistant Regional Director. Delinquent accounts. CASES WHICH MAY BE COMPROMISED. the BIR may only suggest settlement of the taxpayer's liability through a compromise. SECTION 3.. 2. under Sec. Large Taxpayer Service (LTS). Civil tax cases being disputed before the courts. upon taxpayer's compliance with the basis set forth under Section 3 of these Regulations. the heads of the Legal. Cases under administrative protest pending in the Regional Offices. Withholding tax cases. and 6. 4. BASIS FOR ACCEPTANCE OF COMPROMISE SETTLEMENT. any tax liability: Provided. and minor criminal violations. The extra-judicial settlement of the taxpayer's criminal liability and the amount of the suggested compromise penalty shall conform with the schedule of compromise penalties provided under Revenue Memorandum Order No. as may be determined by rules and regulations to be promulgated by the Secretary of finance. Legal Service. 5. EXCEPTIONS: 1. e.g. 4. Collection cases filed in courts. revoke or modify any existing ruling of the Bureau. Cases which become final and executory after final judgment of a court. CA. 3. or (b) those involving fraud. Cases where final reports of reinvestigation or reconsideration have been issued resulting to reduction in the original assessment and the taxpayer is agreeable to such decision. Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer. as members. Page | 31 .000) or less. upon recommendation of the Commissioner. however. Criminal tax fraud cases. the taxpayer's criminal liability arising from his violation of the pertinent provision of the Code may be settled extra-judicially instead of the BIR instituting against the taxpayer a criminal action in Court. 2. Criminal violations. hence. Hence. other than those already filed in court or those involving criminal tax fraud. 1-90 or as hereafter revised. other protested cases shall be handled by the Regional Evaluation Board (REB) or the National Evaluation Board (NEB) on a case to case basis. Delinquent accounts with duly approved schedule of installment payments. On the other hand. — The Commissioner may compromise the payment of any internal revenue tax on the following grounds: Suggested Compromise Penalty in Extra-judicial Settlement of a Taxpayer's Criminal Violation. discovered by regional and district officials. (c) The power to compromise or abate. CTA. 204 (A) and (B) of this Code. MTC. be the subject matter of compromise settlement. 204(A) AND 290 NIRC ON COMPROMISE SETTLEMENT SECTION 2. 5. e) IMPOSITION OF PENALTY RR 12-99. may not be imposed on the taxpayer without his consent. Criminal violations already filed in court. 3. may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman.

where the demand notice allegedly failed to comply with the formalities prescribed under Sec. — The offer to compromise based on financial incapacity may be accepted upon showing that: (a) The corporation ceased operation or is already dissolved. deferred charges. in some cases. Financial incapacity. within 30 days from receipt thereof and there is reason to believe that the assessment is lacking in legal and/or factual basis. 4. or his authorized representative. or (e) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of the Commissioner. or (b) The taxpayer is suffering from surplus or earnings deficit resulting to impairment in the original capital by at least 50%. or (c) The taxpayer is suffering from a networth deficit computed by deducting total liabilities (net of deferred credits) from total assets (net of prepaid expenses. taken from the latest audited financial statements. Page | 32 . or otherwise declared bankrupt or insolvent. the term "assessment" includes the preliminary assessment notice (PAN) issued as of June 30. and it appears that the taxpayer possesses no other leviable/distrainable assets. 1405 or under other general or special laws. or (d) The taxpayer failed to file a request for reinvestigation/reconsideration within 30 days from receipt of final assessment notice and there is reason to believe that the assessment is lacking in legal and/or factual basis. 1998. or to substantiate all or any of the deductions. or credits claimed in his return). Doubtful validity of the assessment. and such waiver shall constitute as the authority of the Commissioner to inquire into the bank deposits of the taxpayer. or (b) The assessment seems to be arbitrary in nature. 228 of the Tax Code of 1997. who has reason to believe that the assessment and collection of a deficiency tax will be jeopardized by delay because of the taxpayer's failure to comply with the audit and investigation requirements to present his books of accounts and/or pertinent records. 2. or (g) Assessments made based on the "Best Evidence Obtainable Rule" and there is reason to believe that the same can be disputed by sufficient and competent evidence. The Commissioner shall not consider any offer for compromise settlement by reason of financial incapacity unless and until the taxpayer waives in writing his privilege of the secrecy of bank deposits under Republic Act No.1 of these Regulations. exemptions. For purposes of these Regulations. — The offer to compromise a delinquent account or disputed assessment under these Regulations on the ground of reasonable doubt as to the validity of the assessment may be accepted when it is shown that: (a) The delinquent account or disputed assessment is one resulting from a jeopardy assessment (For this purpose. appearing to be based on presumptions and there is reason to believe that it is lacking in legal and/or factual basis. or (c) The taxpayer failed to file an administrative protest on account of the alleged failure to receive notice of assessment or preliminary assessment and there is reason to believe that the assessment is lacking in legal and/or factual basis. or (d) The taxpayer is a compensation income earner with no other source of income and the family's gross monthly compensation income does not exceed the levels of compensation income provided for under Sec. as well as appraisal increases in fixed assets). or (e) The taxpayer has been granted by the Securities and Exchange Commission (SEC) or by any competent tribunal a moratorium or suspension of payments to creditors. pre-operating expenses. or (f) The assessments were issued on or after January 1.1. "jeopardy assessment" shall refer to a tax assessment which was assessed without the benefit of complete or partial audit by an authorized revenue officer. other than his family home.1.

SECTION 5.3.000 per month. and (b) a sworn statement that he has no other source of income other than from employment. that for applications of compromise settlement based on doubtful validity of the assessment involving an offer lower than the minimum forty percent (40%) compromise rate. whether favorable or otherwise. it does not include the post reporting notice issued by the head of the investigating unit. further.1 hereof. reckoned on a per tax type assessment basis. — 1. request for a compromise rate lower than forty percent (40%): Provided. a copy of the applicant's latest audited financial statements or audited Account Information Form filed with the BIR shall be submitted with the application. Offers of compromise of assessments issued by the Regional Offices involving basic deficiency taxes of Five Hundred Thousand Pesos (P500. all compromise settlements within the jurisdiction of the National Office (NO) shall be approved by the NEB composed of the Commissioner and the four (4) Deputy Commissioners. In fine.3. why he should be entitled to such lower rate: Provided. DOCUMENTARY REQUIREMENTS. PRESCRIBED MINIMUM PERCENTAGES OF COMPROMISE SETTLEMENT.000) or less and for minor criminal violations discovered by the Regional and District Offices.1. With moratorium/suspension of payments.1. if single. For cases of "doubtful validity" — A minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax. comprised of the following Officers of the Region: Page | 33 .1.1. Negative networth computed in accordance with Sec.5. i. APPROVAL OF OFFER OF COMPROMISE. legal and/or factual. Surplus or earnings deficit resulting to impairment in the original capital by at least 50% 20% 1.2(c) hereof 10% 1.3.6.3. that he shall be required to submit his request in writing stating therein the reasons.3.3. The herein prescribed minimum percentages shall likewise apply in compromise settlement of assessments consisting solely of increments. 4. or if married.2001 by the appropriate "Review Office". 3. 4. for situation under Sec. SECTION 4.2(c) hereof 10% 1. a copy of the order granting the moratorium or suspension of payments or of bankruptcy or insolvency shall be submitted. nevertheless. If taxpayer is an individual whose only source of income is from employment and whose monthly salary. DHSCEc SECTION 6. Where the taxpayer is under any of the following conditions: 1. If taxpayer is an individual without any source of income 10% 1.1.1. including allowances. 4.e. — Except for offers of compromise where the approval is delegated to the REB pursuant to the succeeding paragraph.2 hereof. or less 10% 1. the taxpayer-applicant shall submit with his application (a) a certification from his employer on his prevailing monthly salary.1. The taxpayer may.3 hereof. Nonetheless. based on the total amount assessed. shall be subject to the following minimum rates based on the basic assessed tax: 1. the same shall be subject to the prior approval by the NEB.500 or less. declared insolvent or bankrupt 10% 2. the taxpayer-applicant shall submit with his application a sworn statement that he derives no income from any source whatever.4.3 hereof. All decisions of the NEB.6. — The compromise settlement of the internal revenue tax liabilities of taxpayers.3. If the application for compromise is premised under Sec.3. 3. etc. For situation under Sec..3. Already non-operating companies for a period of: (a) three (3) years or more as of the date of application for compromise settlement 10% (b) Less than 3 years 20% 1. Dissolved corporations 20% 1. 2. 4. If the application is premised under Sec. For cases of "financial incapacity" — 1. If the application is premised under Sec. surcharge.3. Zero networth computed in accordance with Sec.2. 3. interest. however. 4.2. whose salary together with his spouse is P21. shall have the concurrence of the Commissioner. the "Notice of Dissolution" submitted to SEC or other similar or equivalent document should likewise be submitted.. is P10. shall be subject to the approval by the Regional Evaluation Board (REB).

. Collection Division • Revenue District Officer having jurisdiction over the taxpayer-applicant Provided. Authority of the Commissioner to Compromise. and all apparatus used in or about the illicit production of such articles may. 4. In this regard.The Commissioner may – (B) Abate or Cancel a Tax Liability. . or (b) those involving fraud. of the specific forfeited property. or labels may. All other articles subject to excise tax. When Property to be Sold or Destroyed. however. SEC 225. cigars. . All criminal violations may be compromised except: (a) those already filed in court. that if the offer of compromise is less than the prescribed rates set forth in Sec. when: (1) The tax or any portion thereof appears to be unjustly or excessively assessed. Page | 34 . and 5 of these Regulations. SEC. SEC 226. Assessment Division • Chief. Remedy for Enforcement of Forfeitures. 204. or destruction. be destroyed by order of the Commissioner. REPORT OF THE COMMISSIONER ON THE EXERCISE OF HIS AUTHORITY TO COMPROMISE TO THE CONGRESSIONAL OVERSIGHT COMMITTEE. as the case may require. SEC 231 SEC. which have been manufactured or removed in violation of this Code. Abate and Refund or Credit Taxes. Legal Division • Chief. every six (6) months of each calendar year. SECTION 7. If the compromise offer meets the conditions for availment set forth in Sections 3. when the sale of the same for consumption or use would be injurious to public health or prejudicial to the enforcement of the law. a report on the exercise of his powers to compromise the tax liabilities of taxpayers. Forfeited property shall not be destroyed until at least twenty (20) days after seizure. 225. civil or criminal. SEC 230. cigarettes. or (2) The administration and collection costs involved do not justify the collection of the amount due. — The Commissioner shall submit to the Congressional Oversight Committee through the Chairmen of the Committee on Ways and Means of both the Senate and House of Representatives. the same shall always be subject to the approval of the NEB. 4 hereof. as well as dies for the printing or making of internal revenue stamps and labels which are in imitation of or purport to be lawful stamps. other manufactured products of tobacco. liquors.Regional Director — Chairman Members: • Assistant Regional Director • Chief.Sales of forfeited chattels and removable fixtures shall be effected. Distilled spirits. in the same manner and under the same conditions as the public notice and the time and manner of sale as are prescribed for sales of personal property distrained for the nonpayment of taxes.The forfeiture of chattels and removable fixtures of any sort shall be enforced by the seizure and sale. 224. so far as practicable. upon forfeiture. be sold or destroyed in the discretion of the Commissioner. the REB should submit to the Commissioner all the necessary reports and data in due time for the latter to be able to submit the required reports to the Congressional Oversight Committee. upon forfeiture. (4) FORFEITURE SEC 224. (3) ABATEMENT SEC 204 (B) a) GROUNDS TO ACCEPT ABATE SEC. The forfeiture of real property shall be enforced by a judgment of condemnation and sale in a legal action or proceeding. the case is considered provisionally closed on the day compromise amount is fully paid and the approval of the compromise offer becomes a matter of course on the part of the approving authority referred to in this Section.

be considered invalid. Therefore. convicting the accused of a violation of Section 57 of Act No.In case of the seizure of personal property under claim of forfeiture. and the furniture ceases to be the property of the debtor for the reason that it has become the property of the creditor. which shall remain unclaimed or uncashed within five (5) years from the date the said warrant or check was mailed or delivered. (C) Transitory Provision. which remains unutilized or has a creditable balance as of said date. or the performance of some other obligation specified therein. in the latter. Forfeiture of Cash Refund and of Tax Credit.all judgments and monies recovered and received for taxes. 148. . the condition being that the sale shall be void upon the seller paying the purchaser a sum of money or doing some other act named. costs. 2339). or after the sale and within six (6) months. and the amount covered by the certificate shall revert to the general fund.A tax credit certificate issued in accordance with the pertinent provisions of this Code. TRINIDAD 41 PHIL 220 Forfeiture is "the divestiture of property without compensation. the land upon which it stands. and except as specially provided. SURLA 20 PHIL 163 FACTS: This is an appeal from a judgment of the Court of First Instance of the Province of Pampanga. . . 230. a tax credit certificate issued by the Commissioner or his duly authorized representative prior to January 1. US V. fines and penalties shall be paid to the Commissioner or his authorized deputies as the taxes themselves are required to be paid. and all other property located therein. 231. Act No. sec. at any time before sale or destruction of the property. Action to Contest Forfeiture of Chattel. shall be presented for revalidation with the Commissioner or his duly authorized representative or on before June 30. 1998. the factory. shall be forfeited in favor of the Government and the amount thereof shall revert to the general fund. fixtures. shall. and ordering the disposition of the goods Page | 35 . 1189 and sentencing him to one year in prison to the payment of the costs of the action.SEIZURE BPI V. and confiscating in favor of the Insular Government of the cigarettes sold in violation of the Internal Revenue Law. 226. and shall not be allowed as payment for internal revenue tax liabilities of the taxpayer. in consequence of an offense. 1998. bring an action against the person seizing the property or having possession thereof to recover the same.A refund check or warrant issued in accordance with the pertinent provisions of this Code. and upon giving proper bond. 2339). shall be accounted for and dealt within the same way. SEC. In the former all the proceeds derived from the sale of the thing forfeited are turned over to the CIR (sec. the owner desiring to contest the validity of the forfeiture may. as a result of the sale. including expenses.SEC. in like manner as the dominion of a thing sold is transferred to the purchaser and ceases to belong to the vendor from the moment of the delivery thereof. the machinery. Disposition of funds Recovered in Legal Proceedings or Obtained from Forfeitures.For purposes of the preceding Subsection. 152. a) FORFEITURE V. the residue of such proceeds over and above what is required to pay the tax sought to be realized. . which shall remain unutilized after five (5) years from the date of issue. SEC. A chattel mortgage is a conditional sale of personal property as security for the payment of a debt. ." There is a great difference between a seizure under forfeiture and a seizure to enforce a tax lien. (B) Forfeiture of Tax Credit. may enjoin the sale. unless revalidated. forfeitures. as long as the mortgage exists. the dominion with respect to the mortgaged personal property rests with the creditor-pledgee from the time of the inscription of the mortgage in the registry. is returned to the owner of the property (second paragraph. – (A) Forfeiture of Refund. Act No. he may bring an action to recover the net proceeds realized at the sale. The effect of such forfeiture is to transfer the title to the specific thing from the owner to the sovereign power.

. the court in its decision refused to impose the same for the alleged reason that as the alcohol in question had been confiscated and as the value of the same was probably greater than the amount of the tax. and it appearing that the accused. The accused asserts that the act.and the rendition of an account of the proceeds of the same in the manner provided by law. he must by virtue of Section 56 of the Internal Revenue Law be punished as a second offender. Section 50 (1189) prescribes the disposition of the property in such cases. in declaring forfeited the factory and all of its contents and the ground upon which stands. which is entirely different from the payment of tax. legally speaking. the fact that in the judgment rendered ins aid case no pronouncement whatsoever as regard said tax had been made. how the property confiscated is disposed of and where. is unconstitutional. Contents that the judgment of the trial court is fatally defective in that it fails to state how the property forfeited shall be disposed of and its proceeds accounted for. was convicted on the 20th of March. The payment of the tax was not sought in the criminal case because the object of the information was the imposition upon the offender of the corresponding penalty for violation of Sec 2727 of the Revised Administrative Code. and its proceeds divided. is entirely inapplicable to forfeited property. the confiscation in the criminal case was an accessory penalty imposed by Art 25 RPC. It is never forfeited and is never on the government unless it becomes a purchaser of the sale. It relates solely to the sale of property distrained to pay taxes of delinquents and the disposition of the proceeds thereof. 133 US. (US vs Stowell. the title and ownership of the convict are absolutely divested and pass to the government. (5) SUSPENSION OF BUSINESS OPERATION OF VAT TAXPAYER SEC 115 SEC. also belong to the Government. as the CIR. The court has arrived at the conclusion that the accused Surla maliciously and criminally transferred to the transfer from his factory of the 42.07 after the latter had been sentenced to a criminal case to pay a fine for having taken 1606 liters of alcohol from the distillery of Suntay without having paid the corresponding specific tax therefor 1) However. b) STILL SUBJECT TO CRIMINAL ACTION GARCIA V. The tax should have been recovered by CIR independently of the criminal action instituted against Garcia. belongs absolutely to the government. it is sufficient to say that it is entirely immaterial to the defendant. Power of the Commissioner to Suspend the Business Operations of a Taxpayer. ISSUE: Whether the form of the judgment of confiscation is proper RULING: As to the form of the judgment of confiscation. 1908. 115. its proceeds go. was no bar to the Government‘s recovering it afterwards. He ceases to have any interest in its proceeds. for a similar infraction of the law. however. Moreover.The Commissioner or his authorized representative is hereby empowered to suspend the Page | 36 . The property being his he is entitled to whatever surplus there may be after the payment of the taxes and all the expenses of the distraint and sale. and the proceeds arising from the disposal thereof. 000 cigarettes in question without paying the tax imposed by law on or before the amount of such transfer. 1). has done. In case of a forfeiture of property of crime. according to Exhibit A. having been forfeited. Section 42 (1189) invoked by the accused for the purpose of demonstrating how the forfeited property should be disposed of. the Government already has had an opportunity to recover it ISSUE: WON Collector is barred from collecting the tax due HELD: No. he asserting that under the terms thereof he is entitled to have the balance returned to him after the liquidation of the unpaid taxes and expenses of sale. COLLECTOR 66 phil 441 FACTS: Collector required respondent Garcia to pay a specific tax of P204. Therefore. The title of such property remains in the delinquent until the sale. The property.

that the payment for lease or use of properties or property rights to nonresident owners shall be subject to twelve percent (12%) withholding tax at the time of payment. shall file a return and pay the tax due thereon within twenty-five (25) days from the date of cancellation of registration: Provided.controlled corporations (GOCCs) shall. (b) Failure of any Person to Register as Required under Section 236. . or 4. or (3) Understatement of taxable sales or receipts by thirty percent (30%) or more of his correct taxable sales or receipts for the taxable quarter. in addition to the basic tax required to be paid. the payor or person in control of the payment shall be considered as the withholding agent. or 4.1. Any person. filing a return with an internal revenue officer other than those with whom the return is required to be filed. . deduct and withhold the value-added tax due at the rate of five percent (5%) of the gross payment thereof: Provided. including government-owned or . (B) Where to File the Return and Pay the Tax. the penalty to be Page | 37 . Return and Payment of Value-Added Tax. or 4. the return shall be filed with and the tax paid to an authorized agent bank. instrumentalities or agencies.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.1.Except as the Commissioner otherwise permits. Revenue Collection Officer or duly authorized city or municipal Treasurer in the Philippines located within the revenue district where the taxpayer is registered or required to register. The value-added tax withheld under this Section shall be remitted within ten (10) days following the end of the month the withholding was made. 4.Every person liable to pay the valueadded tax imposed under this Title shall file a quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the close of each taxable quarter prescribed for each taxpayer: Provided. in any the following cases: 4. (6) ENFORCEMENT OF CIVIL PENALTIES a) RR 12-99 SECTION 4.1.2 Unless otherwise authorized by the Commissioner. a penalty equivalent to twentyfive percent (25%) thereof. Civil Penalties. however. or in case a false or fraudulent return is willfully made.2. before making payment on account of each purchase of goods and services which are subject to the valueadded tax imposed in Sections 106 and 108 of this Code. or the full amount of tax due for which no return is required to be filed. . 114. — 4. (A) In General. (C) Withholding of Creditable Value-Added Tax.1 In case of willful neglect to file the return within the period prescribed by the Code. . That only one consolidated return shall be filed by the taxpayer for his principal place of business or head office and all branches. For purposes of this section. (2) Failure to file a value-added tax return as required under Section 114.The temporary closure of the establishment shall be for the duration of not less than five (5) days and shall be lifted only upon compliance with whatever requirements prescribed by the Commissioner in the closure order.3 Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. — There shall be imposed.1. whose registration has been cancelled in accordance with Section 236. That VAT-registered persons shall pay the value-added tax on a monthly basis.2 50% Surcharge: 4. (1) Failure to issue receipts or invoices. SEC.The Government or any of its political subdivisions.1 25% Surcharge.business operations and temporarily close the business establishment of any person for any of the following violations: (a) In the case of a VAT-registered Person.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. on or before the date prescribed for its payment.

as determined by the Commissioner pursuant to the rules and regulations to be promulgated by the Secretary of Finance. or the full amount of tax due for which no return is required to be filed. statement or declaration has. 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. further. and a claim of deductions in an amount exceeding (30%) of actual deductions. 248. or in case a false or fraudulent return is willfully made. further. . if the said amended tax return. further. been actually served upon the taxpayer. shall render the taxpayer liable for substantial underdeclaration of sales. shall constitute prima facie evidence of a false or fraudulent return: Provided. That a substantial underdeclaration of taxable sales. Conversely. 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. in the following cases: (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. 249. voluntarily files the said return. b) SEC. in addition to the tax required to be paid. in which case. in the meantime. receipts or income or for overstatement of deductions. filing a return with an internal revenue officer other than those with whom the return is required to be filed. as mentioned herein: Provided. as mentioned herein. any payment has been made on the basis of such return before the discovery of the falsity or fraud: Provided." Thus. shall constitute prima facie evidence of a false or fraudulent return: Provided. changed or amended" by the taxpayer "within three (3) years from date of such filing" provided.(A) There shall be imposed.2 Section 6 (A) of the Code provides that any tax return filed by a taxpayer "may be modified.2. or a substantial overstatement of deductions. That failure to report sales. receipts or income. receipts or income. 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. however. as determined by the Commissioner or his duly authorized representative. in case. or (2) Unless otherwise authorized by the Commissioner. (A) In General. in case any payment has been made on the basis of such return before the discovery of the falsity or fraud: Provided. or (3) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment. receipts or income in an amount exceeding thirty percent (30%) of that declared per return. without notice from the Commissioner or his authorized representative.imposed shall be fifty percent (50%) of the tax or of the deficiency tax.There shall be assessed and collected on any unpaid amount of tax. 248 -249 SEC. or a substantial overstatement of deductions. (B) In case of willful neglect to file the return within the period prescribed by this Code or by rules and regulations. the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax. if upon investigation. receipts or income in an amount exceeding thirty percent (30%) of that declared per return. SEC. That failure to report sales. and a claim of deductions in an amount exceeding thirty percent (30%) of actual deductions. however. only 25% surcharge shall be imposed for late filing and late payment of the tax in lieu of the above 50% surcharge. Interest. interest at the rate of twenty percent (20%) Page | 38 . Civil Penalties. That a substantial underdeclaration of taxable sales. that "no notice for audit or investigation of such return. that the term "willful neglect to file the return within the period prescribed by the Code" shall not apply in case the taxpayer. shall render the taxpayer liable for substantial underdeclaration of sales. such taxpayer shall remain liable to the 50% civil penalty regardless that the taxpayer has filed his amended tax return. 4. receipts or income or for overstatement of deductions. a penalty equivalent to twenty-five percent (25%) of the amount due. it is determined that the taxpayer's originally filed tax return is false or fraudulent. on or before the date prescribed for its payment. .

Any deficiency in the tax due. . PRESCRIPTION OF RIGHT TO ASSESS 1. both the Commissioner and the taxpayer have agreed in writing to its assessment after such time.per annum. the tax may be assessed within the period agreed upon by the taxpayer and the commissioner.If any person required to pay the tax is qualified and elects to pay the tax on installment under the provisions of this Code. if the return was filed on or before the deadline for filing – within 3 years after the last prescribed by law. interest at the rate prescribed in Subsection (A) hereof until the amount is fully paid. as the term is defined in this Code. 222 provides: b. if before the expiration of the time prescribed in sec. . The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. or such higher rate as may be prescribed by rules and regulations. a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day. or any part of such amount or installment on or before the date prescribed for its payment. shall be subject to the interest prescribed in Subsection (A) hereof. NOTE: sec. 203. the tax may be assessed within the period agreed upon. there is a leap year which is of 366 days (RMC 48-90).In case of failure to pay: (1) The amount of the tax due on any return to be filed. internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return. there shall be assessed and collected on the unpaid amount. or where the Commissioner has authorized an extension of time within which to pay a tax or a deficiency tax or any part thereof. Period of Limitation Upon Assessment and Collection. but fails to pay the tax or any installment hereof. That in a case where a return is filed beyond the period prescribed by law. or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner. If the return was filed beyond or after the deadline – within 3 years from the date of such filing. SEC. The 3-year period of assessment shall be computed from: 1. (C) Delinquency Interest. 3. For purposes of this Section. and 2. COUNTING THE PRESCRIPTIVE PERIOD a) COUNTING OF THE 3 YEARS RMC 48-90 The 3-year prescriptive period expires on the 1095th day notwithstanding the fact that within the period. (D) Interest on Extended Payment.Except as provided in Section 222. . from the date prescribed for payment until the amount is fully paid. 203 for the assessment of the tax. . or (3) A deficiency tax. there shall be assessed and collected interest at the rate hereinabove prescribed on the tax or deficiency tax or any part thereof unpaid from the date of notice and demand until it is paid. 2. STATUTE OF LIMITATIONS A. (B) Deficiency Interest. the three (3)-year period shall be counted from the day the return was filed. which interest shall be assessed and collected from the date prescribed for its payment until the full payment thereof. and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided. which interest shall form part of the tax. or (2) The amount of the tax due for which no return is required. GENERAL RULE SEC 203 Page | 39 .

the tax may be assessed. 222. (a) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return. the tax may be assessed within the period agreed upon. EXCEPTION SEC 222 SEC. (c) Any internal revenue tax which has been assessed within the period of limitation as prescribed in paragraph (a) hereof may be collected by distraint or levy or by a proceeding in court within five (5) years following the assessment of the tax. Exceptions as to Period of Limitation of Assessment and Collection of Taxes. at any time within ten (10) years after the discovery of the falsity. the counting of the prescriptive period is still the original period c) FAILURE TO FILE RETURN d) WHEN LAW DOES NOT PRESCRIBE FILING OF RETURN The Government has 2 remedies (options) under ABNORMAL assessment and collection: 1.b) DATE OF FILING TAX RETURNS/AMENDED RETURNS/WRONG RETURN 1) 2) 3) Before the deadline On the date of the deadline After the deadline 3. both the Commissioner and the taxpayer have agreed in writing to its assessment after such time. The period so agreed upon may be extended by subsequent written agreements made before the expiration of the period previously agreed upon. The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon. (e) Provided. the SC explained the following rules in case there is an amendment of the return: o If the amendment is substantial. Commissioner (14 SCRA 52). the counting of the prescriptive period shall be reckoned on the date the substantial amendment was made o If the amendment was superficial. may be collected by distraint or levy or by a proceeding in court within the period agreed upon in writing before the expiration of the five (5) -year period. That in a fraud assessment which has become final and executory. Assessment and Collection o Prescriptive Period for Assessment – Within 10 years from the discovery of the non-filing of the return or the fraudulent or false return o Prescriptive Period for Collection – 5 years from the date of the Final Assessment (FAN) 2. Collection without Assessment through Judicial Action o Prescriptive Period for Assessment – There would be NO prescriptive period for assessment as there is no assessment o Prescriptive Period for Collection – 10 years from the date of discovery of the non-filing of the return or the fraudulent or false return Page | 40 . which has been assessed within the period agreed upon as provided in paragraph (b) hereinabove. (d) Any internal revenue tax. the fact of fraud shall be judicially taken cognizance of in the civil or criminal action for the collection thereof. however. (b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax. or a proceeding in court for the collection of such tax may be filed without assessment. That nothing in the immediately preceding and paragraph (a) hereof shall be construed to authorize the examination and investigation or inquiry into In the case of Phoenix v. fraud or omission: Provided.

On March 5. 1880. and 6. in which event the time shall run until the end of the next day which is neither a Sunday or a holiday (Section 1. 1959. Respondent corporation. 1959. 4. Valid form in conformity with RMO 20-90. However. And where the last day for doing an act required by law falls on a holiday. 1959 fell on a Saturday. in computing any period of time prescribed by statute. 3. within which to issue the deficiency assessment. CA absolved the respondent from the assessment however it ruled out that the assessment letter dated March 2. the assessment made by the Commissioner should be maintained. 5. WAIVER OF PRESCRIPTION TO CONSTITUTE A VALID WAIVER. March 2. Consequently. So that on February 28. NO 18804 (1965) FACTS: On March 2. the date of such acceptance by the Bureau should be indicated specify a definite agreed date between the BIR and petitioner. 3. However. 1959 a letter demanding payment within 10 days 7. 1959). The assessment was brought about by the disallowance listed in respondent‘s return as bad debts 1. are concerned. including that of respondent Commissioner. Rule 28. a Sunday. 1959 was a Saturday and the next day. The offices and bureaus concerned are officially closed on those days. REQUIREMENTS MUST BE MET: THE FOLLOWING 1. within which the former may assess and collect revenue taxes. the office of respondent was officially closed. CIR denied the request. The assessment was received by respondent on the same date (March 2. The assessment in question having been issued on March 2. the day of the act after which the designated period of time begins to run is not included. 1959. February 28. (Section 31. 1959 and March 1. claiming that the claim had prescribed and that said items should be considered as allowable deductions 4.any tax return filed in accordance with the provisions of any tax amnesty law or decree. 1959. 4. then. all bureaus and offices of the government. therefore. are constituted public holidays or days of exemption from labor or work as far as government offices. requested that it be allowed until September 25 to submit Page | 41 .R. Rules of Court). on June 29. 1959. 25. On appeal. except schools. 2. it was. CIR denied the request and demanded payment of the same within 30 days from receipt of demand 5. 1959. for the simple reason CIR V. March 1. hospitals and health clinics. unless it is a Sunday or a legal holiday. Notice to the taxpayer or the second copy must be furnished to the taxpayer its formal objections to the assessment. Revised Administrative Code. hold office only five days a week or from Monday to Friday. But the last day of the period so computed is to be included. Before the expiration of the ordinary prescriptive periods for assessment and collection. contrary to the ruling of the CTA. which were Saturday and Sunday. The formal objections submitted by Western Pacific were identical to its former objections and as such. CIR wrote a demand letter with the final breakdown of the assessment. Pursuant to Republic Act No. WESTERN PACIFIC CORP G. 1959. 6. effective July 1. the act may be done on the next succeeding business day. On July 30. respondent had until the next succeeding business day. 1959 was within 5-year prescriptive period ISSUE: WON the assessment had prescribed HELD: No. seasonably made. implemented by Executive Order No. as. For a definite period beyond the ordinary prescriptive periods for assessment and collection. The CIR. signed by the taxpayer and the CIR or authorized RDO indicating that the bureau has accepted and agreed to the waiver. court. 1959. sent on October 28. 2. Western Pacific Corp requested for non-assessment. 1959. respondent Western Pacific Corp was assessed deficiency income tax for the year 1953. 1959. since February 28. Monday. respectively. Saturday and Sunday.) Similarly. on September 19.

that when the petition for review was brought to the CTA by the respondent corporation, the said Court no longer had jurisdiction to entertain the same. The assessment had long become final. A petition for review should be presented, within the reglementary period, as provided for in Section 11, Republic Act No. 1125, which is "thirty (30) days from receipt of the assessment." The thirty (30) day period is jurisdictional. CAB: The assessment was received by the respondent corporation on March 2, 1959. It was only on June 29, 1959, when said corporation formally assailed the assessment, on the grounds of prescription in making the assessment and the impropriety of the disallowance of the listed deductions. From March 3 to June 29, 1959, manifestly more than thirty (30) days had lapsed and the assessment became final, executory and demandable.

6.

CIR V. PHOENIX ASSURANCE CO
G.R. NO L-19127 (1965) FACTS: Phoenix Assurance is a foreign insurance company organized under the laws of Great Britain, is licensed to do business in the Philippines. 1. Through its head office, it entered in London into worldwide reinsurance treaties with various foreign insurance companies. 2. It agree to cede a portion of premiums received on original insurances underwritten by its head office, subsidiaries, and branch offices throughout the world, in consideration for assumption by the foreign insurance companies of an equivalent portion of the liability from such original insurances. 3. Pursuant to such reinsurance treaties, Phoenix Assurance Co., Ltd., ceded portions of the premiums it earned from its underwriting business in the Philippines on the years 1952 to 1954. 4. Upon which the Commissioner of Internal Revenue, by letter of May 6, 1958, assessed the withholding tax for each year from 1952-1954. 5. On April 1, 1951, Phoenix Assurance Co., Ltd. filed its Philippine income tax return for 1950, claiming therein, among others, a deduction of P37,147.04 as net addition to marine insurance reserve equivalent to 40% of the

7.

8.

9. 10. 11.

12.

gross marine insurance premiums received during the year. a. The Commissioner of Internal Revenue disallowed P11,772.57 of such claim for deduction and subsequently assessed against Phoenix Assurance Co., Ltd. the sum of P1,884.00 as deficiency income tax. b. The Commissioner assumed that "ninety and third, days are approximately the length of time required before shipments reach their destination or before claims are received by the insurance companies." On April 1, 1953, Phoenix Assurance Co., Ltd. filed its Philippine income tax return for 1952, declaring therein a deduction from gross income of P35,912.25 as part of the head office expenses incurred for its Philippine business, computed at 5% on its gross Philippine income. On August 30, 1955 it amended its income tax return for 1952 by excluding from its gross income the amount of P316,526.75 representing reinsurance premiums ceded to foreign reinsurers and further eliminating deductions corresponding to the coded premiums. The Commissioner of Internal Revenue disallowed P15,826.35 of the claimed deduction for head office expenses and assessed a deficiency tax of P5,667.00 on July 24, 1958. On April 30, 1954, Phoenix Assurance Co., Ltd. filed its Philippine income tax return for 1953.. On August 30, 1955 it amended its 1953 income tax return. To avoid the prescriptive period provided for in Section 306 of the Tax Code, it filed a petition for review on April 11, 1956 in the Court of Tax Appeals praying for such refund. After verification of the amended income tax return the Commissioner of Internal Revenue disallowed P12,304.10 of the deduction representing head office expenses allocable to Philippine business thereby reducing the refundable amount to P20,180.00. On April 29, 1955, Phoenix Assurance Co., Ltd. filed its Philippine income tax return for 1954.

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13. On August 1, 1958 the Bureau of Internal Revenue released the for deficiency income tax for the years 1952 and 1954 against Phoenix Assurance Co., Ltd. a. The above assessment resulted from the disallowance of a portion of the deduction claimed by Phoenix Assurance Co., Ltd. as head office expenses allocable to its business in the Philippines fixed by the Commissioner at 5% of the net Philippine income instead of 5% of the gross Philippine income as claimed in the returns. b. Phoenix Assurance Co., Ltd. protested against the aforesaid assessments for withholding tax and deficiency income tax. However, the Commissioner of Internal Revenue denied such protest. 14. Subsequently, Phoenix Assurance Co., Ltd. appealed to the Court of Tax Appeals. 15. In a decision dated February 14, 1962, the Court of Tax Appeals allowed in full the decision claimed by Phoenix Assurance Co., Ltd. for 1950 as net addition to marine insurance reserve; determined the allowable head office expenses allocable to Philippine business to be 5% of the net income in the Philippines; declared the right of the Commissioner of Internal Revenue to assess deficiency income tax for 1952 to have prescribed; absolved Phoenix Assurance Co., Ltd. from payment of the statutory penalties for non-filing of withholding tax return. ISSUE: WON the right of CIR to assess the deficiency income tax for 1952 has already prescribed HELD: NO. Phoenix Assurance Co., Ltd. filed its income tax return for 1952 on April 1, 1953 showing a loss of P199,583.93. It amended said return on August 30, 1955 reporting a tax liability of P2,502.00. On July 24, 1958, after examination of the amended return, the Commissioner of Internal Revenue assessed deficiency income tax in the sum of P5,667.00. The Court of Tax Appeals found the right of the Commissioner of Internal Revenue barred by prescription,

the same having been exercised more than five years from the date the original return was filed. On the other hand, the Commissioner of Internal Revenue insists that his right to issue the assessment has not prescribed inasmuch as the same was availed of before the 5-year period provided for in Section 331 of the Tax Code expired, counting the running of the period from August 30, 1955, the date when the amended return was filed. Should the running of the prescriptive period commence from the filing of the original or amended return? Prescriptive period shall commence from the filing of the AMENDED RETURN. The Court of Tax Appeals that the original return was a complete return containing "information on various items of income and deduction from which respondent may intelligently compute and determine the tax liability of petitioner, hence, the prescriptive period should be counted from the filing of said original return. THE SC RULED IN FAVOR OF THE CIR: The changes and alterations embodied in the amended income tax return substantially MODIFIED the original return. Considering that the deficiency assessment was based on the amended return which, as aforestated, is substantially different from the original return, the period of limitation of the right to issue the same should be counted from the filing of the amended income tax return. From August 30, 1955, when the amended return was filed, to July 24, 1958, when the deficiency assessment was issued, less than five years elapsed. The right of the Commissioner to assess the deficiency tax on such amended return has not prescribed. To strengthen our opinion, we believe that to hold otherwise, we would be paving the way for taxpayers to evade the payment of taxes by simply reporting in their original return heavy losses and amending the same more than five years later when the Commissioner of Internal Revenue has lost his authority to assess the proper tax thereunder. The object of the Tax Code is to impose taxes for the needs of the Government, not to enhance tax avoidance to its prejudice.

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BUTUAN SAWMILL INC V. CTA
G.R. NO L-20601 (1966) FACTS: Butuan Sawmill, Inc. (BSI) sold logs to Japanese firms at prices FOB Agusan. The FOB feature of the sales indicated that the parties intended the title to pass to the buyer upon delivery of the logs in Agusan on board the vessels that took the goods to Japan. The sales, being domestic or local, are subject to sales tax under Sec. 186 of the Tax Code as amended. 1. 2. Upon investigation by the BIR, it was ascertained that no sales tax return was filed and neither did BSI pay the corresponding sales tax. For the period Jan. 31, 1951 to June 8, 1953, the CIR assessed initially assessed BSI the amount of P40,004.01 but as a result of reinvestigation, the amount was reduced to P38,917.74, as deficiency sales tax and surcharge due on its sales of logs to the Japanese buyers. 2. The lower court held that the amended assessment of the sales tax and surcharge were domestic or local sales and therefore subject to sales tax and that the assessment thereof was made well within the ten year period prescribed by Sec. 332(a) of the same Code since petitioners herein omitted to file its sales tax returns for the years 1951-53, and this omission was discovered only on Sept. 17.1957. 3. It is clear that the said export sales had been consummated in the Philippines and hence, subject to sales tax. Petitioner allege that the filing of its income tax return, wherein the proceeds of the disputed sales were declared, is substantial compliance with the requirements of filing a sales tax return, and if there should be deemed a return filed, Sec. 331 and not Sec. 332(a) of the Tax Code providing for a five year prescriptive period within which to make an assessment and collection of the tax in question from the time the return was deemed filed, should be applied to the case at bar. 4. Since petitioner filed its income tax returns for the years 1951, 1952 and 1953, and the assessment was made in 1957 only it further contends that the assessment of the sales tax corresponding to the years 1951 and 1952 had already prescribed for having been made outside the five year period prescribed in Sec. 331 of the Tax Code and

should, therefore, be deducted from the assessment of the deficiency sales tax made by the BIR. ISSUE: WON the assessment was made within the prescriptive period provided by the law. HELD: Yes. 1. An income tax return cannot be considered as a return for compensating tax for purposes of computing the period of prescription under Sec. 331 of the Tax Code and that the taxpayer must file a return for the particular tax required by law in order to avail himself of the benefits of Sec. 331 of the Tax Code; otherwise, if he does not file a return, an assessment may be made within the time stated in Sec. 332(a) of the same Code. 2. It is undisputed that petitioner failed to file a return for the disputed sales corresponding to the years 1951, 1952 and 1953, and this omission was discovered only on September 17, 1957, and that under Section 332(a) of the Tax Code assessment thereof may be made within ten (10) years from and after the discovery of the omission to file the return, it is evident that the lower court correctly held that the assessment and collection of the sales tax in question has not yet prescribed.

BISAYA LAND TRANSPORATION CO INC V. CIR
105 PHIL 1338 (1960) DOCTRINE: In order that the filing of a return may serve as the starting point of the period for the making of an assessment, the return must be as substantive complete as to include the needed details on which the full assessment may be made, and appellants have not shown that such was the nature of the return they would infer had been filed by the corporation. When there is no provision in the law requiring the filing of return but the tax is such that its amount cannot be ascertained without the date that is pertinent thereto, the Commissioner may, by appropriate regulations, require the filing of the necessary returns. In any event, with or without such regulations, it is to the interest
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The income tax returns were not introduced in evidence. FACTS: BLTC acquired equipment from US Commercial Co. and common carrier‘ percentage tax were not chargeable. which it used in the operation of its buses without paying the corresponding taxes. Hence. the 1st quarter of 1947. Petitioner argues that while Section 318 and 319 of the National Internal Revenue Page | 45 . petitioner issued freight receipts but the corresponding documentary stamps were not affixed. it cannot be said that the offense been committed as early as 1980 upon filing of the income tax return. When there is no provision in the law requiring the filing of return but the tax is such that its amount cannot be ascertained without the date that is pertinent thereto. for the same alleged non-payment of deficiency of corporate income tax for the year 1979. Petitioner files this petition assailing that respondent Judge committed a grave abuse of discretion in reinstating the information because the offense has prescribed and exposed her to double jeopardy. the Commissioner may. NO 12777 (1999) DOCTRINE: By its nature. In any event. and 4) additional residence tax. The revenue agents who investigated its books discovered that its gross receipts of the transportation business from 1946-1951 were not declared for taxation. and the result of excusable neglect—to which the respondent Judge granted the motion over the objections of the petitioner. and the additional residence tax of 1947 were barred by the statute of limitations. 3. deficiency additional tax was also determined.of the taxpayer to file said return if he wishes to avail himself of the benefits of the three-year prescriptive period. with or without such regulations. then an assessment may be made at anytime within the ten-year prescriptive period. If this notwithstanding. If this notwithstanding. 1955. there was no means to determine what data were included to apprise the BIR that the company should pay the compensating tax. one was raffled to Branch 105 while the other to Branch 86. 3) documentary stamp tax. require the filing of the necessary returns. the same prosecutor filed two (2) informations before Regional Trial Court (RTC). the tax violation can only be committed after service of notice and demand for payment of the deficiency taxes upon the tax payer. he does not file return at all. ISSUE: Has the assessment made by the CIR been barred by Statute of Limitations? HELD: No. But ruled that the deficiency common carrier‘s percentage tax for 1946. by appropriate regulations. then an assessment may be made at anytime within the ten-year prescriptive period. Tupaz and her late husband.. January 11. Respondent Judge Ulep issued an order directing the prosecution to withdraw the information in Branch 86 after discovering that said information was identical to that filed with Branch 105. HON ULEP G. 2. TUPAZ V. therefore. BLTC filed a petition for review with the CTA which upheld the assessment. And from 19451952. Quezon City an information against herein petitioner Petronila C. documentary stamp. he does not file return at all. 2) common carrier‘s percentage tax.91consisting of 1) compensating tax. Jr. The prosecutor withdrew the information but later on filed a motion to reinstate the same. Subsequently. Both parties appealed. Jose J. stating that the motion to withdraw information was made through palpable mistake. CIR assessed and demanded P4. Petitioner alleged that CTA erred in not holding that the compensating and residence tax have also prescribed because the period of prescription should be computed from the filing of its income tax returns. 1.R. it is to the interest of the taxpayer to file said return if he wishes to avail himself of the benefits of the three-year prescriptive period. FACTS: State Prosecutor filed with the Metropolitan Trial Court (MeTC).949. as corporate officers of El Oro Engravers Corporation for nonpayment of deficiency in corporate income tax for the year 1979 but was later dismissed and denied upon reconsideration. And that the compensating. 4. Tupaz.

placed the properties of Matias H. He argues that since the 1946 income tax return could be presumed filed before March 1.77 ISSUE/HELD: Petitioner's contention is that the provision of law applicable to this case is the period of five years limitation upon assessment and collection from the filing of the returns provided for in See. 1989. In this case. the Supreme Court ruled in the negative.P. the July 16. 1947 and the notice of final and last assessment was received by the taxpayer on March 2. whichever comes later. amended the two (2) sections and reduced the period to three (3) years. his net worth had increased every year. Court of Appeals. counted from the last day of filing the return or from the date the return is filed. the assessment would become final and unappealable. The deficiency income tax under consideration is for taxable year 1979. 1952. ISSUES: Whether or not the offense has prescribed HELD: As to the first issue. 1984. Consequently. 700 specifically states that the shortened period of three years shall apply to assessments and collections of internal revenue beginning taxable year 1984. the Bureau of Internal Revenue (BIR) has three (3) years to assess the tax liability. 331 Page | 46 .788. B. whichever comes later. 700 (enacted on February 22. we stated that by its nature the violation could only be committed after service of notice and demand for payment of the deficiency taxes upon the taxpayer.I. under the old law. Hence. Aznar who died on May 18. from the last day of filing the return. during his lifetime as a resident of Cebu City. which increases in net worth was very much more than the income reported during 1946-1951 Based on the above findings of Examiner Guerrero. The offense was committed only after the finality of the assessment coupled with taxpayer's willful refusal to pay the taxes within the allotted period. The shortened period of three (3) years prescribed under B.Code (NIRC) of 1997 provide a five (5) year period of limitation for the assessment and collection of internal revenue taxes. respondent Commissioner. Petitioner was charged with failure to pay deficiency income tax after repeated demands by the taxing authority. the assessment became final and unappealable on August 16. In Lim. Aznar) of the assessed tax delinquency. 1989.R. AZNAR V. v. 1984). Blg.P. filed his income tax returns on the cash and disbursement basis. Aznar for the year 1946 to 1951. B.691. CIR. CIR 58 SCRA 519 Matias H. This is so because prior to the finality of the assessment.. in his letter dated November 28. Batas Pambansa Blg. the period of assessment is still five (5) years. predecessor in interest of herein petitioner. the assessment made on July 1984 was beyond the three (3) year prescriptive period. when the complaint for preliminary investigation was filed with the Department of Justice on June 8. a period of about 8 years had elapsed and the five year period provided by law (Sec. Examiner Honorio Guerrero ascertain the taxpayer's true income and discovered that from 1946 to 1951. Blg. Aznar filed his petition for review of the case with the Court of Tax Appeals. when the notice of assessment was issued on July 16. Blg.64 minus P96. thru the City Treasurer of Cebu. inclusive should be P227. Neither is there prescription for the prescription of criminal action by the BIR on June 8.P. As provided under B. Hence. the criminal action was instituted within the five (5) year prescriptive period. 1984 tax assessment was issued within the prescribed period of five (5) years. notified the taxpayer (Matias H. Thus. 1955. Aznar under distraint and levy to secure payment of the deficiency income tax in question. Since the tax return was filed in April 1980. The income tax return was filed in April 1980. As he did not protest.87 representing the tax credit for 1945. upon filing of the income tax return. 1958. Court of Tax Appeals . the taxpayer still had thirty (30) days from receipt thereof to protest or question the assessment. or from the date the returns is filed. Otherwise. or P227. the taxpayer has not committed any violation for nonpayment of the tax. 700. it cannot be said that the offense has been committed as early as 1980. Sr.the lower court concluded that the tax liability of the late Matias H. 1984. 700 is not applicable to petitioner. 331 of the National Internal Revenue Code.

Negligence. 332 (a) of the NIRC should apply and that the period of ten years within which to assess petitioner's tax liability had not expired at the time said assessment was made. (3) omission. (2) fraud.of the National Internal Revenue Code) had already expired. it would be unfair to treat the mistakes of the petitioner as tainted with fraud and those of the respondent as made in good faith. On July 17. fraudulent return intended to evade payment of tax or failure to file returns. under the inventory method of determining tax liability. 3. as in this case. 332 (a) NIRC. fraud or omission" (Sec. Respondents. or a proceeding in court for the collection of such tax may be begun without assessment. It necessarily follows that a mere mistake cannot be considered as fraudulent intent. (3) failure to file a return. The fraud contemplated by law is actual and not constructive. Lim de Yu protested the assessment and requested a reinvestigation. There being undoubtedly false tax returns in this case. or a proceeding in court for the collection of such tax may be begun without assessment. It must be intentional fraud. (2) fraudulent return with intent to evade tax. which was filed on February 28. the second implies intentional or deceitful entry with intent to evade the taxes due. We affirm the conclusion of the respondent Court of Tax Appeals that Sec. It must amount to intentional wrongdoing with the sole object of avoiding the tax. whether intentional or not. 1956. 1948. "(a) In the case of a false or fraudulent return with intent to evade tax or of a failure to file a return. namely "falsity". BIR assed the taxes due thereon and respondent paid them accordingly 1. Our stand that the law should be interpreted to mean a separation of the three different situations of false return. The lower court's conclusion regarding the existence of fraudulent intent to evade payment of taxes was based merely on a presumption and not on evidence establishing a willful filing of false and fraudulent returns so as to warrant the imposition of the fraud penalty. and the return for 1948. The ordinary period of prescription of 5 years within which to assess tax liabilities under Sec. 4. consisting of deception willfully and deliberately done or resorted to in order to induce another to give up some legal right. on the other hand. but whenever the government is placed at a disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities due to false returns. We believe that the proper and reasonable interpretation of said provision should be that in the three different cases of (1) false return. fraudulent return with intent to evade tax. are of the firm belief that regarding the prescriptive period for assessment of tax returns. 2. Section 332 of the National Internal Revenue Code should apply because. which was filed on March 1. whether slight or gross. from the time of the discovery of the falsity. at any time within ten years after the discovery of the (1) falsity. at any time within ten years after the discovery of the falsity. the tax may be assessed. is not equivalent to the fraud with intent to evade the tax contemplated by the law. That there is a difference between "false return" and "fraudulent return" cannot be denied. LIM DE YU 10 SCRA 738 (1964) FACTS: Respondent Lim de Yu filed her yearly income tax returns from 1948 through 1953. the period of ten years provided for in Sec. "fraud" and "omission". On August 30. Thereafter. and failure to file a return is strengthened immeasurably by the last portion of the provision which segregates the situations into three different classes. 1949. The same argument is advanced on the taxpayer's return for 1947. While the first merely implies deviation from the truth. BIR issued respondent income tax notices for the year 1948 to 1953 amounting to Page | 47 . on July 18. BIR assessed respondent deficiency income tax for the years 1945 to 1953. 332 (a) of the NIRC). 1956. respectively. fraud or omission even seems to be inadequate and should be the one enforced. REPUBLIC V. respondent signed a ―waiver‖ of the statute of limitations under NIRC as a condition to the reinvestigation requested. 1958. the tax may be assessed. 331 of the NIRC should be applicable to normal circumstances. and if both petitioner and respondent Commissioner of Internal Revenue committed mistakes in making entries in the returns and in the assessment.

e. The last assessment included the basic deficiency income tax and 50% surcharge 5. BASILAN ESTATES V. 1949 and 1956 were not assessed on tine. that said Director has caused the preparation of the complaint and that he has read the allegations thereof and they are true and correct to the best of his knowledge and belief. BIR had 10 years from the date of the discovery of the fraud or falsity. G. the waiver was not necessary because the assessment was within the original 5-year period provided by law (July 18. The right to assess or collected for the years 1948 to 1950 had already prescribed when BIR issued the deficiency tax assessment on July 17. although under the waiver Lim consented to the ―assessment and collection‖ if not made later than December 31. Insofar as collection is concerned. The tax years 1948 to 1950 cannot be deemed included in the ―waiver of the statute of limitations under the NIRC‖ executed by the respondent on August 30. V-634 of the Revenue Commissioner. However. It states. As such. 1958) is without merit. The verification by the Regional Director of the complaint constitutes sufficient approval thereof already. such expiration must be deemed to refer only to the extension of the assessment period. Hence.379. 1956.R. The 5-year period assessment. the waiver validly covers the tax years 1951 and 1952. BELLOSILLO The court relied upon Memorandum Order No.P35. BIR had within 5 years from 1958 within which to file his action. May 25. and (2) in dismissing the case. 1958). Fraud not having been proven. Page | 48 . would not be tantamount to whimsical and arbitrary exercise of judgment. approved by the Finance Secretary. CIR. mailed or sent to the taxpayer that constitutes actual assessment (Basilan Estates Inc v. no L-22492) ARCHES V.63. may be extended upon the agreement of the CIR and the taxpayer. CIR‘s right to collect had already prescribed. has the force and effect of law. to assess the taxes or file a collection suit. ISSUE: WON CIR‘s right to collect based on the assessment had already prescribed HELD: As to the years 1948 to 1950. hence. 1958. i. since the 5-year period had not yet elapsed when the said waiver was executed. 1952 and 1953 plus 5% surcharge and 1% monthly interest until full satisfaction. This regulation. which was actually filed in 1959. Assessment and collection are different. the period does not apply because otherwise the effect of the waiver would be to shorten the legal period for that purpose. Respondent‘s theory that collection could be made only up to the end of the period of extension stated in the waiver (December 31. With respect to the tax year 1953. Petitioner claims that the lower court erred in ruling that (1) the deficiency income taxes due from Lim for the years 1049. wherein the former's functions regarding the administration and enforcement of revenue laws and regulations — powers broad enough to cover the approval of court actions as required in the Tax Code — were expressly delegated to the Regional Directors. but such agreement must be made before the expiration of the original period. Petitioner maintains that since the respondent filed false or fraudulent returns (the annual net income reported in the returns were much less than what was computed by BIR). respondent is liable to pay the deficiency income taxes due for the years 1951. Thus. it should also be established. 1955. the period of limitation for assessment was five years from the filing of the return (Sec 331). under Sec 332(a) NIRC. It appears that BIR was not sure as to the amounts of respondent’s net income since it arrived at different computations on 3 different occasions. CIR The reckoning point of prescription would be the date when the demand letter or notice of assessment is released. counted from the date the return is filed. 1956. the issuance of which was authorized by statute. To rely upon it. it had already prescribed. Fraud must not only be alleged in the complaint.

10 each.10. "bailarinas" are the indispensable factor in the operation of the business. be considered as paid on account of the business. petitioner declared in his return only the following gross receipts: o receipts from gate admissions at P0. The owner or operator of a cabaret is required to pay an amusement tax equivalent to 10 % of the gross receipts of his business irrespective of whether or not any amount is charged or paid for admission. Hence. HELD: Section 260 of the Tax Code applies. the action was commenced one year.30 per dance: P0.05 as deficiency amusement tax and surcharge for January 1947 . Petitioner appealed to the CTA which affirmed the contention of respondent holding petitioner liable to pay Page | 49 .20 dance fee. RE PRESCRIPTION: This was not raised as an issue in the petition for review filed in the CTA. and as such it should be considered as part of petitioner's gross receipts. Petitioner failed to declare for tax purposes the P0. RE SURCHARGE: While there is no direct evidence to show actual fraud on the part of petitioner. CTA rejected the P300. COLLECTOR 107 PHIL 428 DOCTRINE: For the purposes of amusement tax. The customers were informed of the fees by means of posters found in conspicuous places of the cabaret stating: 1.00 penalty alleging lack of power or authority to order the payment of such penalty.90.616.20 to be paid to the "bailarinas" after the dance. Dancing is the main business and customers patronize the place attracted by the "bailarinas". the term "GROSS RECEIPTS" embraces all the receipts of the proprietor or operator of the business.197. for the purposes of amusement tax.August 1950. therefore. The three-year period urged by petitioner under Section 51 (d) refers only to the summary remedies of distraint and levy. the circumstances found by the CTA indicate that he has deliberately omitted in his book a sizeable portion of his taxable income which in substance amounts to fraud.Petitioner-appellant would also raise the question of prescription. 2. well within the period.05.160. ISSUES: 1.40. they could not be considered as part of the gross receipts of the cabaret. As a matter of fact. therefore. The law further adds that. 3. Should the gross receipts include the dance fee charged by the cabaret for its "bailarinas"? YES. Again. P59. Prescription is evidentiary in nature. o --. respondent assessed against him a deficiency amusement tax. Petitioner contends that because those dance fees go to the "bailarinas". A cabaret is a place of amusement where customers go because of their desire to dance and where the "bailarinas" are the main attraction.40. Has the collection of the tax in question already prescribed? SC considered that petitioner waived this defense.10 entrance fee and the remaining P0.August. including50 % surcharge of P17. P17. Thus. It was not even touched by him in the memorandum he submitted. We have already ruled that the proper prescriptive period for bringing civil actions is five years from the date of the assessment.00 penalty in settlement of his violation of Section 260 of the Tax Code and the Bookkeeping Regulations. but. FACTS: Petitioner was the owner and operator of the La Loma Cabaret in QC from 1926 to January 1956. o receipts from restaurant sales. enough reason to believethat petitioner has waived this defense and so it SY CHUICO V. this is not jurisdictional. As well as P300. P5. ten months and three days after the assessments were made. From January 1947 . the term "GROSS RECEIPTS" embraces all the receipts of the proprietor or operator of the business.339. 2. And. P47. Here.and paid thereon a 10 % amusement tax of P11. It charged its customers P0. Whatever is paid to them should. There is. hence. 4. this petition.616. o receipts from bar sales. 1950.459.

internal revenue taxes shall be assessed within five years after the return was filed. The same tax code is clear on the matter. in his reply dated April 18. To hold otherwise would be to deprive respondent of his right to show the contrary.Period of Limitations upon assessment and collection. 1982 and November 20. the tax may be assessed at anytime prior to the expiration of the period agreed upon. 1987 and November 19. respectively. 319 of the Tax Code is one which is unilateral nor can it be said that concurrence to such an agreements a mere formality because it is the very signatures of both the Commissioner of Internal Revenue and the taxpayer which give birth to such a valid agreement. and therefore necessitates for its binding effect the concurrence of the Commissioner of Internal Revenue. both the Commissioner of Internal Revenue and the taxpayer have consented in writing to its assessment after such time. (b) the signature of the Commissioner is a mere formality and the lack of it does not vitiate binding effect of the waivers. this matter being evidentiary in nature. NO 115712 (2000) Sec. private respondent's 1981 income and sales taxes could have been validly assessed only until January 14. CIR V. For the purpose of this section. — Except as provided in the succeeding section. . beyond the five-year prescriptive period. However. there is every reason to leave undisturbed the said conclusions. a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day: Provided. 1986. What is more. and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period. admitted that subject waivers executed by Carnation were "for end in consideration of the approval by the Commissioner of Internal Revenue of its request for reinvestigation and/or reconsideration of its internal revenue case involving tax assessments for the fiscal year ended September 30.cannot now be entertained. the waivers in question reveal that they are in no wise unequivocal. the law then applicable reads: Sec 318. 1995. CIR V. 1981 which were all pending at the time". we discern no basis for overruling the aforesaid conclusions arrived at by the Court of Appeals.Exceptions as to period of limitation of assessment and collection of taxes. . 1981.—(a) . representing the Commissioner of Internal Revenue. CA & CARNATION PHILS INC G. That this limitation shall not apply to cases already investigated prior to the approval of this Code. (emphasis ours) Carnation filed its annual income tax and percentage tax returns for the fiscal year ending September 30. Verily.R. The period so agreed upon may be extended by subsequent agreement in writing made before the expiration of the period previously agreed upon. In fact. On this basis neither implied consent can be presumed nor can it be contended that the waiver required under Sec. the Solicitor General. 1981 on January 15. In fact. and (c) that a waiver is not a contract but a unilateral act of renouncing ones right to avail of the defense of prescription and remains binding in accordance with the terms and conditions set forth in the waiver. to wit: Sec. 319. BF GOODRICH PHILS Page | 50 . In accordance with the above-quoted provision of law. Petitioner BIR Commissioner contends that the waivers signed by Carnation were valid although not signed by the BIR Commissioner because (a) when the BIR agents/examiners extended the period to audit and investigate Carnation's tax returns. Petitioner's submission is inaccurate. 1987. the BIR gave its implied consent to such waivers. having in mind the precept that all doubts as to the correctness of such conclusions will be resolved in favor of the Court of Appeals. (b) Where before the expiration of the time prescribed in the preceding section for the assessment of the tax. 318 (now Section 203) of the National Internal Revenue Code. Carnation's income and sales taxes were assessed only on July 29. respectively.

For the purpose of safeguarding taxpayers from any unreasonable examination.G. As a corollary. Applying this provision of law to the facts at hand. On April 9. As a condition for approving the manufacture of tires and other rubber products. Section 15 does not provide an exception to the statute of limitations on the issuance of an assessment. it is clear that the October 16. 1980 and the March 1981 assessments were issued by the BIR beyond the fiveyear statute of limitations. 1981. which it duly paid. or when there is reason to believe that any such report is false. interest and compromise penalty. 15 of the NIRC. on the other hand. 1980. 1. by allowing the initial assessment to be made on the basis of the best evidence available. Sec. Siltown Realty. The subsequent assessment made by the respondent Commissioner on October 40. 1980. 1973. ISSUE: WON petitioner's right to assess herein deficiency donor's tax has indeed prescribed as ruled by public respondent Court of Appeals. leased the land to private respondent for a period of 25 years. In accord with the terms of the sale. certain parcels of land and there developed a rubber plantation. incomplete. The returns for the year 1974 were duly filed by the petitioner. the law on prescription. On the basis of this Opinion. including the right to dispose or sell their real estate. income and tax liabilities." Clearly. the justice secretary rendered an opinion stating that. The BIR issued against private respondent on October 10. On August 2. Subsequently. the commissioner could not have been authorized to issue. private respondent contested this assessment. 1974 — was made on April 13. modified by that of March 16. provides that "[w]hen a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by law or regulation. being a remedial measure. 3. 1980. NO 104171 (1999) FACTS: BF Goodrich was an American-owned and controlled corporation. The BIR deemed the consideration for the sale insufficient. 1981. or erroneous. In compliance with this requirement. the exceptions to the law on prescription should perforce be strictly construed. The examination resulted in the April 23. its Basilan landholding for P500. investigation or assessment. an assessment for deficiency in donor's tax in relation to the sale of its Basilan landholdings to Siltown. private respondent sold to Siltown Realty. the returns for which were required to be filed on or before April 15 of the succeeding year. Nor is petitioner's claim of falsity sufficient to take the questioned assessments out of the ambit of the statute of limitations. the ownership rights over public agricultural lands.R. The books and accounts of private respondent were examined for the purpose of determining its tax liability for taxable year 1974. HELD: The petition has no merit. beyond the five-year prescriptive period. our tax law provides a statute of limitations in the collection of taxes. It is possible that real property may be sold for less than adequate Page | 51 . the Commissioner of Internal Revenue shall assess the proper tax on the best evidence obtainable. violates the law. with an extension of another 25 years at the latter's option. would be lost. which increased the amount demanded for the alleged deficiency donor's tax. Thus. Having made its initial assessment in the manner prescribed. 5. 1975 assessment of for deficiency income tax.000. 1975 and acknowledged by Letter of Confirmation terminating the examination on this subject. 1981. 4. 2. On November 24. and assessment of taxes due for such year — including that on the transfer of properties on June 21. Involved in this petition is the income of the petitioner for the year 1974. upon the expiration of the Parity Amendment. it received another assessment dated March 16. 6. it purchased from the Philippine government. the second and the third assessments under consideration before us. surcharge. the BIR also examined Siltown's business. the Central Bank required that it should develop a rubber plantation. 7. should be liberally construed in order to afford such protection. Private respondent appealed the correctness and the legality of these last two assessments.

1946. In February 1947. Page | 52 . The criminal charge is filed directly with the DOJ. considering that the prescriptive period was precisely intended to give them peace of mind. there is. the CIR made an assessment notifying SCMC that is liable for P33k in taxes. Based on the foregoing. Furthermore. It also signals the time when penalties and interests begin to accrue against the taxpayer. However. PROCEDURE: The issuance of an assessment must be distinguished from the filing of a complaint. because Section 222 of the NIRC specifically states that in cases where a false or fraudulent return is submitted or in cases of failure to file a return such as this case. This fact need not be proven by an assessment. To reiterate. 1945. Section 205 mandates that the civil and criminal aspects of the case may be pursued simultaneously. On February 12. This is incorrect. Thereafter. a pre-assessment notice sent to the taxpayer. On November 28. Private respondents failed to show that they are entitled to an exception. Private respondents maintain that the filing of a criminal complaint must be preceded by an assessment. Before an assessment is issued. (NOTE: Under the National Internal Revenue Code prescriptive period for normal assessment is 3 years). Eventually in July 1955. the period for assessments has obviously prescribed. Congress extended the filing of income tax returns for the year 1941. but also a demand for payment within a prescribed period. proceedings in court may be commenced without an assessment. cannot be deemed an assessment that can be questioned before the Court of Tax Appeals. Suyoc Consolidated Mining Company (SCMC) due to lost records requested the Commissioner of Internal Revenue (CIR) for further extension. Since the BIR failed to demonstrate clearly that private respondent had filed a fraudulent return with the intent to evade tax. In contrast. but to penalize the taxpayer for violation of the Tax Code. the taxpayer is notified that a criminal case had been filed against him. Due to SCMC‘s requests. The same was granted and SCMC was allowed to file its return until February 15. Accordingly. in such event. which was executed by revenue officers stating the tax liabilities of a taxpayer and attached to a criminal complaint for tax evasion. It must be stressed that a criminal complaint is instituted not to demand payment. SCMC filed a tentative income tax return. SCMC filed a second final return. Such instances of negligence or oversight on the part of the BIR cannot prejudice taxpayers. an affidavit. of 1997. This time. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. To enable the taxpayer to determine his remedies thereon. the criminal charge need not go through all these. CIR V. PASCOR REALTY An assessment contains not only a computation of tax liabilities. by practice. 1946. If the commissioner is unsatisfied.consideration for a bona fide business purpose. 1946. the CIR had to revise the assessment several times. SCMC questioned the validity of the assessment as it now alleged that it was issued beyond the 5 year prescriptive period. Moreover. What followed was a series of negotiations as SCMC repeatedly asked for reconsideration and reinvestigation. a discussion of the validity and legality of the assailed assessments has become moot and unnecessary. an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. The extension was up to December 31. SUYOC CONSOLIDATED MINING 104 PHIL 819 FACTS: Due to the chaos caused by World War II. the sale remains an "arm's length" transaction. CIR V. the CIR made a final assessment notice (FAN) notifying SCMC that it is liable for P24k in taxes. due process requires that it must be served on and received by the taxpayer. This is the general rule. The CIR gave SCMC 3 months to pay but the latter failed to make payment. or that it had failed to file a return at all. not that the commissioner has issued an assessment. said Section 222 states that an assessment is not necessary before a criminal charge can be filed. the criminal charge need only be supported by a prima facie showing of failure to file a required return.

should be liberally construed in order to afford such protection. It is true that when a request for reinvestigation is made by the taxpayer. The conformity of the BIR must be made by either the Commissioner or the Revenue District Officer. is a derogation of the taxpayers‘ right to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly construed. (Republic of the Phils. It is an agreement between the taxpayer and the BIR that the period to issue an assessment and collect the taxes due is extended to a date certain. to a certain extent. 20-90) VALID WAIVER OF THE STATUTE OF LIMITATIONS. Ablaza) A waiver of the statute of limitations under the NIRC. The applicable principle is fundamental and unquestioned. the law on prescription. This is one case where a taxpayer is barred from setting up the defense of prescription even though there was not a written agreement. CA held that the requirements and procedures laid down in the RMO are only formal in nature and did not invalidate the waiver that was signed even if the requirements were not strictly observed. being a remedial measure. but is a bilateral agreement between two parties to extend the period to a date certain. agents. for the law says to him in effect ―this is your own act.‖ The tax could have been collected. Thus. the exceptions to the law on prescription should perforce be strictly construed. when SCMC requested for a reinvestigation. and therefore you are not damnified . The CTA ruled that the FAN issued in 1955 was already way beyond the 5 year prescriptive period. to the Government because tax officers would be obliged to act promptly in the making of assessment. due to the repeated requests of SCMC which were acted upon by the government for good reasons the government was persuaded to delay the final assessment. law-abiding citizens. in this case. RE RMO NO. The waiver does not mean that the taxpayer relinquishes the right to invoke prescription unequivocally particularly where the language of the document is equivocal. our tax law provides a statute of limitations in the collection of taxes. Unreasonable investigation contemplates cases where the period for assessment extends indefinitely because this deprives the taxpayer of the assurance that it will no longer be PHILIPPINE JOURNALISTS INC V.20-90 (RMO No. For the purpose of safeguarding taxpayers from any unreasonable examination. ‗He who prevents a thing from being done may not avail himself of the nonperformance which he has himself occasioned. the same does not toll the running of the prescriptive period unless there is a written agreement between the CIR and the taxpayer. there was no agreement as to the extension of the prescriptive period. and to citizens because after the lapse of the period of prescription citizens would have a feeling of security against unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers. The law on prescription being a remedial measure should be interpreted in a way conducive to bringing about the beneficent purpose of affording protection to the taxpayer within the contemplation of the Commission which recommend the approval of the law. but to take advantage of every opportunity to molest peaceful. but the government withheld action at the specific request of SCMC. ISSUE: WON the CTA is correct HELD: No. v. However. SCMC is now estopped and should not be permitted to raise the defense of the Statute of Limitations.R. CIR G. that a mere request for reinvestigation does not automatically suspend the running of the prescriptive period. not to determine the latter‘s real liability. Without such a legal defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection subject to harassment by unscrupulous tax Page | 53 . NO 162582 (2004) DOCTRINE: The law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and to its citizens. Sections 203 and 222 of NIRC provides for a statute of limitations on the assessment and collection of internal revenue taxes in order to safeguard the interest of the taxpayer against unreasonable investigation. investigation or assessment.The issue reached CTA and ruled that the assessment issued is void because in the first place. As a corollary. The waiver is not a unilateral act by the taxpayer or the BIR.

the Assessment issued on December 9. WHEREFORE. CA did not think this was important because the petitioner need not have a copy of the document it knowingly executed. The waiver of the statute of limitations is not a waiver of the right to invoke the defense of prescription as erroneously held by the Court of Appeals. This indicates the expiry date of the period agreed upon to assess/collect the tax after the regular 3-year period of prescription. 1997. Under RMO No. The Order supports petitioner‘s argument that the RMO must be strictly followed. The period agreed upon shall constitute the time within which to effect the assessment/collection of the tax in addition to the ordinary prescriptive period. 1998 was invalid because it was issued beyond the (3) year period. the RMO requires the Commissioner of Internal Revenue to sign for the BIR. 1997) is not valid and binding because it does not conform with the provisions of the RMO. CA held that the date of the execution of the waiver on September 22. 1998. RMO No. violating Section 222(b) of the NIRC. The conformity of the BIR must be made by either the Commissioner or the Revenue District Officer. Page | 54 . signed by petitioner‘s comptroller (September 22. 20-90. As found by the CTA. When the petitioner’s comptroller signed the waiver on September 22. 20-90. the instant petition for review is GRANTED. For this. petitioner’s waiver became unlimited in time. event or proceeding. Sarmiento made the acceptance on January 16. as mandated by the NIRC and RMO No. 1998 because "Revenue Officials normally have to conduct first an inventory of their pending papers and property responsibilities. RE DEFECT IN THE DATE OF ACCEPTANCE.Sarmiento) could not have accepted the waiver yet because she was not the Revenue District Officer on such date. Consequently. the Warrant of Distraint and/or Levy is also null and void for having been issued pursuant to an invalid assessment. Sarmiento‘s transfer and assignment to RDO was only signed by the BIR Commissioner on January 16. it was not yet complete and final because the BIR had not assented. Section 319 of NIRC is clear and explicit that the waiver of the 5-year prescriptive period must be in writing and signed by both the BIR Commissioner and the taxpayer." RE PETITIONER WAS NOT FURNISHED A COPY OF THE WAIVER. This case involves taxes amounting to more than P1M and executed almost seven months before the expiration of the threeyear prescription period. CTA noted that it is unlikely as well that Ms. within which the former may assess and collect revenue taxes. It stated that the reason copies are furnished is for a party to be notified of the existence of a document. CA assumes that the waiver is a unilateral act of the taxpayer when it is in fact and in law an agreement between the taxpayer and the BIR. The requirement to furnish the taxpayer with a copy of the waiver is not only to give notice of the existence of the document but of the acceptance by the BIR and the perfection of the agreement. RMO No. the Waiver of Statute of Limitations. The waiver is not a unilateral act by the taxpayer or the BIR. Any revenue official found not to have complied shall be administratively dealt with. but is a bilateral agreement between two parties to extend the period to a date certain. 1998. 20-90 explains the rationale of a waiver: The phrase "but not after _________ 19___" should be filled up. The waiver document is incomplete and defective and thus the 3year rescriptive period was not tolled or extended and continued to run until April 17. There is compliance with the provision only after the taxpayer received a copy of the waiver accepted by the BIR. the waiver must be executed in 3 copies with the 2nd copy for the taxpayer. Petitioner points out however that Revenue District Officer (Ms. It did not specify a definite agreed date between the BIR and petitioner. The waiver is also defective from the government side because it was signed only by a revenue district officer. Thus.subjected to further investigation for taxes after the expiration of a reasonable period of time. NOT the Commissioner. 1997 could reasonably be understood as the same date of acceptance by the BIR. 20-90 implements these provisions of the NIRC relating to the period of prescription for the assessment and collection of taxes. Similarly.

The 5year period refers to an instance where there is an assessment issued on the basis of false or fraudulent return . 414-415) TABLE OF PRESCRIPTIVE PERIODS NORMAL OR ABNORMAL OR COLLECTION ORDINARY EXTRAORDINARY WITHOUT ASSESSMENT ASSESSMENT ASSESSMENT PRESCRIPTIVE PERIOD FOR ASSESSMENT 3 years from the last 10 years from No prescriptive period day prescribed by law discovery of non. 223. Taxation Law Review 2008 ed. when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected : Provided. because the 5-year period places a ―lawabiding‖ taxpayer in the same category as the one who is not ―law-abiding‖ i. 182) b. The running of the Statute of Limitations provided in Sections 203 and 222 on the making of assessment and the beginning of distraint or levy a proceeding in court for collection. when the taxpayer requests for a reinvestigation which is granted by the Commissioner. p. one who files a false or fraudulent return. B. the prescriptive period fro abnormal is 5 years.for assessment when for the filing of the filing of return or the Government opts return.TAXATION : Three-year period within which to assess Internal Revenue Taxes. from the day the return was filed PRESCRIPTIVE PERIOD FOR COLLECTION 3 years from issuance 5 years from the 10 years from of assessment unless date of Final discovery of non-filing there is fraud in which Assessment of the return or filing case it is 5 years. the running of the Statute of Limitations will not be suspended. 223 SEC. hence it can be concluded that the prescriptive period for normal is also 5 yers (Sababan. Under the old Code. when the warrant of distraint or levy is duly served upon the taxpayer. 2nd VIEW: Within 3 years from the issuance of an assessment notice where the was a return filed. or a of fraudulent or false period agreed upon return between the CIR and the taxpayer (which may be less than 7 years) in case of an extended assessment agreed upon under Sec 222 (b) C. the absence of a return [Sec 222(c) in relation to Sec 222(a)] or in the instance of an extended assessment under Sec 222(d). PRESCRIPTION OF RIGHT TO COLLECT 203 & SEC 222 SEC PRESCRIPTIVE PERIOD FOR COLLECTION – The NIRC does not provide for a prescriptive period for the collection of taxes under Sec 203 There are 2 views regarding the prescriptive period for collection a. his authorized representative. p. Under the new Code. SUSPENSION OF RUNNING OF PRESCRIPTION SEC. providing for a shorter period of 3 years from the issuance of an assessment.e. 2008 ed. 1st VIEW: 5 years from FINAL ASSESSMENT. or a Page | 55 . who does not file a return etc (Domondon. Suspension of Running of Statute of Limitations. The interpretation should be in favor of the taxpayer. shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty (60) days thereafter. of if filed filing of false or to collect without beyond the period fraudulent return assessment prescribed by law.. in respect of any deficiency.. if the taxpayer informs the Commissioner of any change in address. the prescriptive period for both normal and abnormal assessment is 3 years. Requisites for Validity. Bar Reviewer in Taxation Vol 1. that. Waiver and Extension.

GROUNDS FOR SUSPENSION OF THE RUNNING OF THE STATUTE OF LIMITATIONS (PRA PO) 1. and Remedies. ISSUE: WON the right to collect has already prescribed.962. Plaintiff appealed from the order of dismissal.R. subsection (c). The corresponding notice of assessment was issued on September 24. 5. which provides for an exemption as to the period of limitation that tax may be collected by distraint or levy or by a proceeding in court. 1. 3.83. The act of requesting a reinvestigation alone does not suspend the period. but only if begun (1) within five years after the assessment of the tax. When the taxpayer requests for REINVESTIGATION which is granted by CIR NOTES: o The above Section is plainly worded in order to suspend the running of the prescriptive periods for assessment and collection.member of his household with sufficient discretion. the request for reinvestigation must be granted by CIR. 2002 ed) a before the expiration of the 5-year period extending the period of limitation (Mamalateo. The court received evidence on the motion. After the defendant filed his answer but before trial started he moved to dismiss on the ground of prescription. 1949.R. When the CIR is PROHIBITED from making the assessment or beginning the distraint or levy or a proceeding in court AND for 60 days thereafter NOTE: This may happen where there is a pending petition for review in the CTA from the decision on the protested assessment. however. which was in 1949. Such grant may be expressed in its communications with the taxpayer or implied from the action of the CIR or his authorized representative in response to the request for reinvestigation (BPI v. no 174942. HELD: YES The statute of limitations which governs this case is Section 332. such is entirely distinct from the civil action (Dimaampao. The burden of proof that the request for reinvestigation had been actually granted shall be on the CIR. The period so agreed upon may be extended by subsequent agreements in writing made before the expiration of the period previously agreed upon. The present suit was not begun within five years after the assessment of the tax. and no property could be located. begun prior to the expiration of any period for collection agreed upon in writing by the Commissioner of Internal Revenue and the defendant before the expiration of such five-year period? NO. The filing o such petition interrupts the running of the prescriptive period for collection. 1961. in order to effect suspension. Tax Reviewer) REPUBLIC V. But the filing not suspend separate and Tax Principles of a criminal case against he taxpayer does the prescriptive period. 2. The request should first be granted. The complaint was filed on December 27. of the National Internal Revenue Code. 4. ACEBEDO G. 1962 issued an order finding the same meritorious and hence dismissing the complaint. Was it. NO L-20477 (1968) FACTS: This is a suit for collection of deficiency income tax for the year 1948 in the amount of P5. 2. and when the taxpayer is out of the Philippines. or (2) prior to the expiration of any period for collection agreed upon in writing by the Collector of Internal Revenue and the taxpayer before the expiration of such five-year period. 2008) o The only agreement that can suspend the running of the prescriptive period for collection of taxes is a WRITTEN agreement by the taxpayer and CIR Page | 56 . March 07. G. CIR. and on September 1.

by such act of payment. the defendant. 1950 the then Collector of Internal Revenue issued a warrant of distraint and levy for the full amount of the assessment at (Exh. on the basis of which the Government makes another assessment. the government is not thereby "persuaded to postpone collection to make him feel that Page | 57 . In the case at bar. the defendant's lawyers wrote the Collector of Internal Revenue informing him that the books of their client were ready at their office for examination (Exh. Likewise. The trial court rejected this contention. and hence prescription had already set in." The last part of the letter was a warning that unless the waiver "was accomplished and submitted within 10 days the collection of the deficiency taxes would be enforced by means of the remedies provided for by law. or on October 4. 1949. asked for a reinvestigation thereof on October 11. 1955. 1954. 1955 the delay in collection could not be attributed to the defendant at all. Capitol Subdivision. CIR V. B). C). the five-year period with which an action for collection may be commenced should be counted from this last assessment. There is no evidence that this request was considered or acted upon. 1955. 1949. the government has been for good reasons. Partial payment would not prevent the government from suing the taxpayer. Because. of the statute of limitations. The reply was dated more than a year later. and there was nothing to impede enforcement of the tax liability by any of the means provided by law. and starts to run again when said request is denied (CIR vs. dated December 17. Nothing came of this request either. on October 23.The only evidence of such written agreement. Consequently. making subsequent events in connection with the said assessment entirely immaterial. when the Collector bestirred himself for the first time in connection with the reinvestigation sought. persuaded to postpone collection." It will be noted that up to October 4. In fact. and required that the defendants specify his objections to the assessment and execute "the enclosed forms for waiver. 1959. saying that a mere request for reinvestigation or reconsideration of an assessment does not have the effect of such suspension. The plaintiff contends that the period of prescription was suspended by the defendant's various requests for reinvestigation or reconsideration of the tax assessment. The next communication of record is a letter signed for the defendant by one Troadio Concha and dated October 6. His requests in fact had been unheeded until then. Inc). after receiving the assessment notice of September 24. By October 4. otherwise there would be no point to the legal requirement that the extension of the original period be agreed upon in writing. but there was no follow up of this warrant. Then on February 9. WYETH SUACO LABORATORIES & CTA 202 SCRA 125 (1991) Settled is the rule that the prescriptive period provided by law to make a collection by distraint or levy or by a proceeding in court is interrupted once a taxpayer requests for reinvestigation or reconsideration of the assessment. D). 1959 could no longer revive the right of action. again requesting a reinvestigation of his tax liability (Exh. for under the law such waiver must be executed within the original five-year period within which suit could be commenced. more than five years had elapsed since assessment in question was made. But this waiver was ineffective because it was executed beyond the original five-year limitation. the request for reinvestigation did not suspend the running of the period for filing an action for collection. 1951. when a taxpayer asks for a reinvestigation of the tax assessment issued to him and such reinvestigation is made. There are certain decisions where the taxpayer may be in estoppel to claim prescription as a defense even if he has not previously waived it in writing: IN the case of CIR vs Consolidated Mining the SC ruled that when by his repeated requests or positive acts. The ruling is logical. Even the written waiver of the statute signed by the defendant on December 17. in the form of a "waiver of the statute of limitations" signed by the defendant.

NO 174942 (2008) The statute of limitations on assessment and collection of national internal revenue taxes was shortened from 5 years to 3 years by Batas PambansaBlg. it was only on 9 August 2002 that the CIR ordered BPI to pay the deficiency. In order to determine whether the prescriptive period for collecting the tax deficiency was effectively tolled by BPI‘s filing of the protest letters dated 20 April and 8 May 1989 as claimed by the CIR. As applied to the present case. The request should first be granted. When it validly issues an assessment within the 3-year period. Section 320 is plainly worded." This is the underlying reason behind the rule that the prescriptive period is arrested by the taxpayer's request for re-examination or reinvestigation . GLOBAL COMMUNICATION Reinvestigation tolls the running of the Statute of Limitations because it entails reception and evaluation of additional. Thus. 2006) REMEDIES OF THE TAXPAYER Page | 58 . no 167146. CIR G.R. Such grant may be expressed in its communications with the taxpayer or implied from the action of the CIR or his authorized representative reinvestigation. The act of requesting a reinvestigation alone does not suspend the period. In order to suspend the running of the prescriptive periods for assessment and collection. Philippine Global Communications Inc. that the CIR had granted the request for reinvestigation filed by BPI.even if he "has not previously waived it (prescription in writing)". which will be limited to the evidence already at hand (CIR v. it has another 3 years within which to collect the tax due by distraint. levy. mailed or sent to the taxpayer. The assessment of the tax is deemed made and the 3-year period for collection of the assessed tax begins to run on the date the assessment notice had been released. the request for reinvestigation must be granted by the CIR. 700. October 31. the CIR had 3 years from the time he issued assessment notices to BPI on 7 April 1989 or until 6 April 1992 within which to collect the deficiency DST. PHIL. the CIR has 3 years from the date of actual filing of the tax return to assess a national internal revenue tax or to commence court proceedings for the collection thereof without an assessment.the demand was not unreasonable or that no harassment or injustice is meant. CIR V. The Court went on to declare that the burden of proof that the request for reinvestigation had been actually granted shall be on the CIR. However. G.R. in order to effect suspension. expressly or impliedly. which will take more time than the Reconsideration. in response to the request for There is nothing in the records of this case which indicates. BPI (FEBTC) V. or court proceeding.

all relevant supporting documents shall have been submitted. . such as. the taxpayer shall be required to respond to said notice. the assessment shall be void. days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. or from the lapse of one hundred eighty (180)-day period. If the taxpayer is not amenable. the Revenue District Officer or the Chief of the Special (d) (e) The taxpayers shall be informed in writing of the law and the facts on which the assessment is made. — The Revenue Officer who audited the taxpayer's records shall. PROTESTING AN ASSESSMENT SEC. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) Page | 59 . as the case may be (in the case Revenue Regional Offices) or by the Chief of Division concerned (in the case of the BIR National Office) of the discrepancy or discrepancies in the taxpayer's payment of his internal revenue taxes. or When the article locally purchased or imported by an exempt person.A. the taxpayer shall be informed. has been sold. in writing. or 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 quarter or quarters of the succeeding taxable year. Within sixty (60) days from filing of the protest. or When the excise tax due on exciseable articles has not been paid. otherwise. executory and demandable. Protesting of Assessment. or is not acted upon within one hundred eighty (180) days from submission of documents. he shall be considered in default. the Commissioner or his duly authorized representative shall issue an assessment based on his findings." in order to afford the taxpayer with an opportunity to present his side of the case. otherwise. 228. If the taxpayer fails to respond within fifteen (15) days from date of receipt of the notice for informal conference. but not limited to. 228. state in his report whether or not the taxpayer agrees with his findings that the taxpayer is liable for deficiency tax or taxes. based on the said Officer's submitted report of investigation. machineries and spare parts. capital equipment. traded or transferred to non-exempt persons.1 Mode of procedures in the issuance of a deficiency tax assessment: 3. — 3.1. If the taxpayer fails to respond. or When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent. Within a period to be prescribed by implementing rules and regulations. That a preassessment notice shall not be required in the following cases: (a) (b) (c) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the return. by the Revenue District Office or by the Special Investigation Division. If the protest is denied in whole or in part. SEC.When the Commissioner or his duly authorized representative finds that proper taxes should be assessed. among others. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. he shall first notify the taxpayer of his findings: Provided. in which case. the decision shall become final. the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision. the assessment shall become final. otherwise. for the purpose of "Informal Conference. vehicles.1 Notice for informal conference. RR 12-99 SECTION 3. however.

The same shall be sent to the taxpayer only by registered mail or by personal delivery. the taxpayer shall be required to pay the deficiency tax or taxes attributable to the undisputed issues. (b) signature. showing in detail. and (d) date of receipt thereof. inclusive of the applicable surcharge and/or interest. vehicles. he shall be considered in default.1. capital equipment. if acknowledged received by a person other than the taxpayer himself. No action shall be taken on the taxpayer's disputed issues until the taxpayer has paid the deficiency tax or taxes attributable to the said undisputed issues.3 Exceptions to Prior Notice of the Assessment. inclusive of the applicable penalties. has been sold.1.1. the law. calling for payment of the taxpayer's deficiency tax liability. 3. 3. the facts and the law. or (ii) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent. rules and regulations. or jurisprudence on which the assessment is based. showing the following: (a) His name. such as. (c) designation and authority to act for and in behalf of the taxpayer. — If after review and evaluation by the Assessment Division or by the Commissioner or his duly authorized representative. as the case may be. shall endorse the case with the least possible delay to the Assessment Division of the Revenue Regional Office or to the Commissioner or his duly authorized representative. 3. — The taxpayer or his duly authorized representative may protest administratively against the aforesaid formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof. the taxpayer or his duly authorized representative shall acknowledge receipt thereof in the duplicate copy of the letter of demand. or the Chief of Division in the National Office. The prescriptive period for assessment Page | 60 . The letter of demand calling for payment of the taxpayer's deficiency tax or taxes shall state the facts. in which case. If the taxpayer fails to respond within fifteen (15) days from date of receipt of the PAN. If sent by personal delivery. in which case. — The formal letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized representative. as the case may be. issuance of the formal assessment notice for the payment of the taxpayer's deficiency tax liability shall be sufficient: (i) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax appearing on the face of the tax return filed by the taxpayer.4 Formal Letter of Demand and Assessment Notice. or jurisprudence on which the proposed assessment is based (see illustration in ANNEX A hereof). but not limited to. or (iii) 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 (iv) (v) against the estimated tax liabilities for the taxable quarter or quarters of the succeeding taxable year. in which case.5 Disputed Assessment. If there are several issues involved in the formal letter of demand and assessment notice but the taxpayer only disputes or protests against the validity of some of the issues raised. for appropriate review and issuance of a deficiency tax assessment. at least by registered mail. as the case may be. if warranted. rules and regulations. — The notice for informal conference and the preliminary assessment notice shall not be required in any of the following cases.Investigation Division of the Revenue Regional Office. the formal letter of demand and assessment notice shall be void (see illustration in ANNEX B hereof). or When an article locally purchased or imported by an exempt person. a Preliminary Assessment Notice (PAN) for the proposed assessment. a formal letter of demand and assessment notice shall be caused to be issued by the said Office. otherwise. or When the excise tax due on excisable articles has not been paid. traded or transferred to non-exempt persons. it is determined that there exists sufficient basis to assess the taxpayer for any deficiency tax or taxes. the said Office shall issue to the taxpayer. machineries and spare parts.2 Preliminary Assessment Notice (PAN).1. 3. a collection letter shall be issued to the taxpayer calling for payment of the said deficiency tax.

Page | 61 . rules and regulations. the applicable law. the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from the lapse of the said 180-day period. If the same is personally served on the taxpayer or his duly authorized representative who. witnessed and signed by at least two (2) revenue officers other than the revenue officer who constructively served the same.or collection of the tax or taxes attributable to the disputed issues shall be suspended. otherwise. otherwise. — The decision of the Commissioner or his duly authorized representative shall (a) state the facts. executory and demandable.6 Administrative Decision on a Disputed Assessment. in which case. however. the assessment shall become final. the applicable law.1. if the protest is denied. of the required documents in support of his protest. executory and demandable. 3. The taxpayer shall submit the required documents in support of his protest within sixty (60) days from date of filing of his letter of protest. and no response is received from the taxpayer within the prescribed period from date of the posting thereof in the mail. the taxpayer shall be required to pay the corresponding deficiency tax or taxes attributable thereto.7 Constructive Service. The revenue officer who constructively served the same shall make a written report of this matter which shall form part of the docket of this case (see illustration in ANNEX D hereof). the assessment shall become final. executory and demandable. in whole or in part. executory and demandable: Provided. otherwise. the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from date of receipt of the said decision. otherwise. the same shall be considered actually or constructively received by the taxpayer. The taxpayer shall state the facts. If the Commissioner or his duly authorized representative fails to act on the taxpayer's protest within one hundred eighty (180) days from date of submission. or jurisprudence in support of his protest against some of the several issues on which the assessment is based. otherwise. his protest shall be considered void and without force and effect. — If the notice to the taxpayer herein required is served by registered mail. however. the protest shall be decided by the Commissioner. or jurisprudence on which such decision is based.1. the same shall be considered undisputed issue or issues. refused to acknowledge receipt thereof. In general. If there are several issues involved in the disputed assessment and the taxpayer fails to state the facts. If the protest is denied. the same shall be constructively served on the taxpayer. in which case. The phrase "submit the required documents" includes submission or presentation of the pertinent documents for scrutiny and evaluation by the Revenue Officer conducting the audit. by the Commissioner. the taxpayer may appeal to the Court of Tax Appeals within thirty (30) days from date of receipt of the said decision. the applicable law. or jurisprudence on which his protest is based. the same shall not be considered a decision on a disputed assessment. in which case. Constructive service thereof shall be considered effected by leaving the same in the premises of the taxpayer and this fact of constructive service is attested to. The said Revenue Officer shall state this fact in his report of investigation. executory and demandable. by the Commissioner or his duly authorized representative. rules and regulations. the assessment shall become final. that if the taxpayer elevates his protest to the Commissioner within thirty (30) days from date of receipt of the final decision of the Commissioner's duly authorized representative. executory and demandable. rules and regulations. the assessment shall become final. and (b) that the same is his final decision. the assessment shall become final. 3. If the taxpayer fails to file a valid protest against the formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof. in whole or in part. otherwise. the latter's decision shall not be considered final. by the taxpayer. the decision shall be void (see illustration in ANNEX C hereof).

respondent filed with CTA petition for review of the petitioner‘s assessment of its deficiency income taxes. filed a collection suit. 1963 petitioner appealed to the CTA. The CTA dismissed the appeal on the ground that the appeal was filed beyond the 30-day period of appeal.  The Commissioner not having clearly signified his final action on the disputed assessment. admitting liability only for the 2% tax franchise tax in accordance with its legislative franchise and not a higher rate of 5% imposed by NLRC.  Respondent received by petitioner. Thus.  The petitioner asked for reconsideration of the assessment. issued a warrant of Distraint and Levy. 1963.  Respondent reiterated its request for reinvestigation of the assessment and for the reconsideration of the summary collection thru the Warrant of Distraint and Levy.  Page | 62 . 1963 which was received by the petitioner on July 16. petitioner‘s decision has long become final and executor. legally the period to appeal has not commenced to run. Neither can respondent be liable for withholding tax since it is not in possession.  13 days after the summons was received.1. Thus. 1963. however.  The petitioner then requested a recomputation of the revised assessment. and respondent Union shipping the total sun of 580K as deficiency income tax.  The Commissioner.  The commissioner opined that respondent being merely a husbanding agent is not liable for the payment of the income taxes due from the foreign ship owners loading cargoes in the Philippines. UNION SHIPPING CORP & CTA FACTS:  COMMISSIONER assessed against YEE Fong Hong Corp. DISPOSITION: DECISION OF CTA AFFIRMED SURIGAO ELECTRIC V. WHAT CONSTITUTE A FINAL DECISION OF THE CIR ON A DISPUTED ASSESSMENT CIR V. Petitioner contends that:  The period to appeal to the CTA commenced to run from receipt of said Warrant so that when respondent sought redress from the Tax Court.  The controversy culminated in a revised assessment dated April 29. custody or control of the funds received by and remitted to Yee Fong Hong. 1963 which was received by petitioner on May 8. without acting on the request for reinvestigation and reconsideration of the Warrant of Distraint and Levy. when respondent filed the appeal with CTA it consumed a total of only 13 days well within the 30-day period to appeal. CTA FACTS: Petitioner Surigao received a warrant of distraint and levy to enforce the collection of a deficiency franchise tax. it was only when respondent received the summons the civil suit for collection of deficiency income that the period to appeal commenced to run. ISSUE: WON the petitioner‘s appeal to the CTA was time-barred? HELD: YES. again. CTA: NOT TIME BARRED ISSUE: WON the respondent’s appeal with the CTA was time-barred? HELD: NO. denied the request for recomputation on June 28.  The request for reinvestigation and reconsideration was in effect considered denied by the petitioner when the latter filed a civil suit for collection of deficiency income.  August 1.  Petitioner without ruling on the protest.  Petitioner.

Hence.  Respondent argued that the Final Notice Before Seizure constitutes its decision on respondent‘s request for reinvestigation. and the failure of a taxpayer to lodge his appeal within the prescribed period bars his appeal and renders the questioned decision final and executor. In this letter. DISPOSITION: DECISION AFFIRMED Teehankee. this petition for review. 1963 unquestionably constitutes the final action taken by the Commissioner on the petitioner’s several requests for reconsideration and recomputation. The 30-day period to file his appeal is a jurisdictional requirement. 1963 being the final ruling reviewable by the tax court.  Feb.  Upon protest by respondent. (c) A letter which contained a demand on the taxpayer fro the payment of the revised or reduced assessment. without substantial variation. 1990 respondent requested a reconsideration of the subject assessment. 23. the said Commissioner would be constrained to enforce the collection by means of the remedies provided by law. the aggrieved taxpayer would then be able to take recourse to the tax court at the opportune time. On the basis of this indicium indubitably showing that the Commissioner’s communicated action is his final decision on the contested assessment. The tenor of the letter. ISABELA CULTURAL CORP FACTS: Commissioner had the preliminary finding that respondent incurred a total income tax deficiency. 1990 respondent received from petitioner an assessment letter demanding payment of the amounts of deficiency income tax. or withdrawal of the original assessment. (b) A letter which denied the request of the taxpayer for the reconsideration. CTA dismissed the petition. failure on its part would constrain petitioner to collect the subject assessment through summary remedies. the said preliminary assessment was reduced. and (d) A letter which notified the taxpayer of a revision of previous assessment. The Notice should be deemed as petitioner‘s last act. Otherwise. petitioner demanded payment of the subject assessment within 10 days from receipt thereof. The revised assessment dated April 29. The following sent by the Commissioner to taxpayers as embodying rulings appealable to the tax court: (a) A letter which stated the result of the reinvestigation requested by the taxpayer and the consequent modification of the assessment. since failure to comply with it would lead to the distraint and levy of respondent‘s properties. the Commissioner not only in effect demanded that the petitioner to pay but also gave a warning that in the event it failed to pay. the day the petitioner received a copy of the said letter. Separate Opinion since petitioner‘s request for recomputation of the revised assessment was but a pro forma and did not adduce new facts or arguments and that a taxpayer may not delay indefinitely a tax assessment by reiterating his original defenses over and over again. CIR V. We deem it appropriate to state that the CIR should always indicate to the taxpayer in clear and unequivocal language whenever his action on an assessment questioned by a taxpayer constitutes his final determination on the disputed assessment. 9. 1963.  Feb.The letter of demand dated April 29. which the respondent may appeal to the CTA. especially statement regarding the resort to legal remedies unmistakably indicates the final nature of the determination made by the Commissioner of the petitioner’s deficiency franchise tax liability. cancellation.  March 22. In said letter. 1995 respondent received from petitioner a Final Notice Before Seizure. Page | 63 . J.  Respondent considered said final notice of seizure as final decision. the 30-day appeal period should be counted from May 8.

CIR. In this case. CTA dismissed for filing it beyond the 30-day period to appeal reckoned from the time when the demand letter of January 24. 24. acting in behalf of the BIR Commissioner. jurisprudence dictates that a final demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment OCEANIC WIRELESS NETWORK INC. CTA and CA FACTS:    Petitioner received from BIR deficiency tax assessment. section 228 of the NILRC states that a delinquent taxpayer may nevertheless directly appeal a disputed assessment. 1991. Petitioner filed its protest against the tax assessments and requested a reconsideration. the final notice before seizure should be considered as the commissioner’s decision disposing of the request for reconsideration. 1990. otherwise. if its request for reconsideration remains unacted upon 180 days after submission thereof. 1990. It was a mere demand that should not have been mistaken for a decision on a protested assessment. stating that it had delinquent taxes due. Furthermore. the said period of 180 days had already lapsed when respondent filed its request for reconsideration on March 23. it sent to the CIR additional documents on April 18. ISSUES: WON final notice before constitutes the final decision of the CIR appealable to the CTA. Thus. The very title indicated that it was a final notice prior to seizure of property. reiterated the tax assessments while denying petitioner‘s request for reinvestigation. otherwise warrants of distraint and levy shall be issued. and it subsequently filed its motion for reconsideration on March 23. Considered that the final notice before seizure had effectively denied petitioner‘s request for a reconsideration of the commissioner‘s assessment. CA denied the petition. 1991 was received by petitioner. ISSUE: WON a demand letter for tax deficiency assessments issued and signed by a subordinate officer who was acting in behalf of the CIR is deemed final and executory and subject to an appeal of the CTA. 1990.  Lastly. 1990 cannot be considered as the final decision of the CIR on its protest because the same was signed by a mere subordinate and not by the Commissioner himself. which was appealable to the CTA. 1990. In support of its request fro reconsideration. Upon petitioner‘s failure to pay the subject tax assessments within the prescribed period. respondent received an assessment letter dated February 9. HELD: YES    Indisputably. petitioner filed a petition for review with the CTA. November 8. PETITTIONER CONTENDS THAT the final notice was a mere reiteration of the delinquent taxpayer‘s obligation to pay the taxes due. 1994. January 24. the Chief of the BIR Accounts Receivable and Billing Division. V.CA reversed the decision of the CTA. Page | 64 . Said letter likewise requested petitioner to pay within 10 days from receipt thereof. 1991. Petitioner filed a MR arguing that the demand letter of Jan. without any action on the part of the CIR. its properties would be subjected to distraint and levy. warrants of distraint and levy was issued on October 10. The next communication respondent received was already the Final notice before seizure dated November 10. The letter itself clearly stated that respondent was being given ―this LAST OPPORTUNITY‖ to pay. 1991. Its content and tenor supported the theory that it was the CIR‘s final act regarding the request for reconsideration.

In this case. Enron disputed the proposed deficiency assessment in its first protest letter. the taxpayer may appeal the same within 30 days after receipt thereof A demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment. ENRON SUBIC POWER CORP. Failure to do so would result in the issuance of a warrant of distraint and levy to enforce its collection without further notice. Here. Enron then received from the CIR a formal assessment notice requiring it to pay the alleged deficiency income tax. For the CTA to acquire jurisdiction. if not reviewed or revised by the latter such as in this case. Enron protested this deficiency tax assessment. The demand letter received by petitioner signified a character of finality. It argued that the deficiency tax assessment disregarded the provisions of sec. 228 of the NIRC and RR 12-99 by not providing the legal and factual bases of the assessment. the letter of demand dated January 1991. Without needless difficulty. unappealable and demandable and cannot be contested. Said assessment has the same force and effect as that issued by the Commissioner himself.HELD: YES. the decision becomes final. The authority to make tax assessments may be delegated to subordinate officers. In addition. On the basis of his statement indubitably showing that the Commissioner‘s communicated action is his final decision on the contested assessment. Therefore. Subsequently. petitioner failed to avail of its right to bring the matter before the CTA within the reglementary period upon the receipt of the demand letter reiterating the assessed delinquent taxes and denying its request for reconsideration which constituted the final determination by the BIR on petitioner‘s protest. The determination on whether or not a demand letter is final is conditioned upon the language used or the tenor of the letter being sent to the taxpayer. the BIR through a preliminary 5-day letter. 2. Due to the non-resolution of its protest within the 180-day period. the letter contained a notation indicating that petitioner’s request for reconsideration had been denied for lack of supporting documents. an assessment must first be disputed by the taxpayer and ruled upon by the CIR to warrant a decision from which a petition fro review may be taken to CTA. the aggrieved taxpayer would then be able to take recourse to the tax court at the opportune time. informed it of a proposed assessment of an alleged deficiency income tax. unquestionably constitutes the final action taken by the BIR on petitioner’s request for reconsideration when it reiterated the tax deficiency assessments due from petitioner and requested its payment. FACTS:   ENRON filed its annual income tax return where he indicated a net loss. the same would have been a proper subject for appeal to the CTA. it was tantamount to a rejection of the request for reconsideration. Where an adverse ruling has been rendered by the CIR with reference to a disputed assessment or a claim for refund or credit. We laid down the rule that the CIR should always indicate to the taxpayer in clear and unequivocal language what constitutes his final determination of the disputed assessment. Being a final disposition by said agency.   Page | 65 . RIGHT TO BE INFORMED IN WRITING CIR V. Enron filed a petition for review in the CTA. the taxpayer would be able to determine when his right to appeal to the tax court accrues. A request for reconsideration must be made within 30 days from the taxpayer’s receipt of the tax deficiency assessment. Regarding the matter as to whether said demand letter indeed attained finality despite the fact that it was issued and signed by the Chief of Accounts Receivable and Billing Division instead of the BIR Commissioner. otherwise.

B. Any request for conversion into refund of unutilized tax credits may be allowed. Such collection should be made in accordance with law as any arbitrariness will negate the very reason for the Government itself.CTA granted Enron‘s petition and ordered the cancellation of its deficiency tax assessment reasoning that the assessment notice failed to comply with the requirements of a valid written notice under sec. This is in keeping with the constitutional principle that no person shall be deprived of property without due process. informing a taxpayer of the existence of a deficiency tax assessment in markedly different from the requirement of what such notice must contain. The requirement for issuing a preliminary or final notice. 204. Just because the CIR issued an advice. In view of the absence of a fair opportunity for Enron to be informed of the legal and factual bases of the assessment against it. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided. Authority of the Commissioner to Compromise. excluding withholding taxes. HELD: A taxpayer must be informed in writing of the legal and factual bases of the tax assessment made against him. as the case may be. the assessment in question was void. redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. A Tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal revenue tax.The Commissioner may – (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority. a preliminary letter during the pre-assessment stage and a final notice. in the order required by law. That a return filed showing an overpayment shall be considered as a written claim for credit or refund. CIR (Moreso) failed to mention the specific provision of the Tax Code or rules and regulations which were not complied with by Enron. however. Abate and Refund or Credit Taxes. In this case. the CIR merely issued a formal assessment and indicated therein the supposed tax. given by the CIR to an employee of Enron. The CIR did not bother to explain how it arrived at such an assessment. refund the value of internal revenue stamps when they are returned in good condition by the purchaser. RECOVERY ILLEGALLY PAID OF TAX ERRONEOUSLY OR SEC. were not valid substitutes for the mandatory notice in writing of the legal and factual bases of the assessment. CA affirmed CIR insists that an examination of the facts shows that Enron was properly apprised of its tax deficiency by informing it of the proposed tax deficiency tax assessment thru a preliminary 5-day letter and furnished Enron a copy of the audit working paper allegedly showing in detail the legal and factual bases of the CIR argues that these steps sufficed to inform Enron of the laws and facts on which the deficiency tax assessments was based. and. interest and compromise penalty due thereon. The advice of tax deficiency. The revenue officers of the CIR in the issuance of the Final Assessment Notice did not provide Enron with the written bases of the law and facts on which the subject assessment is based. . 228 and RR 12-99. These steps were mere perfunctory discharges of the CIR‘s duties in correctly assessing a taxpayer. as well as the preliminary 5-day letter. for which the taxpayer is directly liable. subject to the provisions of Page | 66 . in his discretion. does not necessarily mean that Enron was informed of the law and facts on which the deficiency tax assessment was based. surcharge.

That the said report shall be presented to the Oversight Committee in Congress that shall be constituted to determine that said powers are reasonably exercised and that the government is not unduly deprived of revenues. Recovery of Tax Erroneously or Illegally Collected. amount compromised or abated. That in no case shall a tax refund be given resulting from availment of incentives granted pursuant to special laws for which no actual payment was made. SEC. The CIR moved to dismiss the petition for failure of the respondent to file a mandatory written claim for refund before the CIR. Page | 67 . That the original copy of the Tax Credit Certificate showing a creditable balance is surrendered to the appropriate revenue officer for verification and cancellation: Provided. That the Commissioner may. respondent and her husband filed with the BIR their joint individual Income Tax Return for the year 1996.no suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected. Claiming that the income taxes withheld and paid by Intel and respondent resulted in an overpayment. or of any sum alleged to have been excessively or in any manner wrongfully collected. refund or credit any tax. During that period. The Commissioner shall submit to the Chairmen of the Committee on Ways and Means of both the Senate and House of Representatives. penalty. a report on the exercise of his powers under this Section. but such suit or proceeding may be maintained. It held that respondent failed to file a written claim for refund with the CIR. amount involved. CA reversed CTA ruling that respondent‘s filing an amended return indicating an overpayment was sufficient compliance with the requirement of a written claim for refund. she filed another amended return indicating an overpayment. and reasons for the exercise of power: Provided. . Later. 1. 1996. respondent filed a petition for review with the CTA. 1996 – Dec. where on the face of the return upon which payment was made. ACOSTA FACTS:        Respondent is an employee of Intel Manufacturing and for the period of Jan. 229.Section 230 of this Code: Provided. In any case. October 1997. in June 1997. stating therein the following facts and information. CTA dismissed respondent‘s petition. Petitioner’s avers that an amended return showing an overpayment does not constitute the written claim for refund required under the old tax code. He claims that an actual written claim for refund is necessary before a suit for its recovery may proceed in any court. or of any penalty claimed to have been collected without authority. In March 1997. or sum has been paid under protest or duress. such payment appears clearly to have been erroneously paid. further. no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided. respondent was assigned in a foreign country. however. whether or not such tax. every six (6) months. FILING OF REFUND CIR V. among others: names and addresses of taxpayers whose cases have been the subject of abatement or compromise. a condition precedent to the filing of a petition for review before the CTA. respondent filed an amended return and a Non-resident Citizen Income Tax Return. even without a written claim therefor. Intel withheld the taxes due on respondent‘s compensation income and remitted to the BIR. of any sum alleged to have been excessively or in any manner wrongfully collected without authority. until a claim for refund or credit has been duly filed with the Commissioner.

it cannot be allowed to exist upon a mere vague implication or inference nor can it be extended beyond the ordinary and reasonable intendment of the language actually used by the legislature in granting the refund. The law is clear.Respondent contends that the filing of an amended return indicating overpayment constitutes a written claim for refund pursuant to the clear provision stated in the last sentence of sec. Note that the issue on the retroactivity of sec. ISSUE: 1. to afford the CIR an opportunity to correct the action of subordinate officers. categorically demanding recovery of overpaid taxes with the CIR. A claimant must first file a written claim for refund. and the notice should then be borne in mind in estimating the revenue available for expenditure. unless the language of the statute clearly provides otherwise. and second. 204 (c) of the 1997 NIRC arose because the last paragraph of sec. It could not escape notice that at the time respondent filed her amended return. to notify the government that such taxes have been questioned. 2. 1. c) The claim for refund or tax credit must be filed. A tax refunds involve a return of revenue from the government. Entrenched in our jurisprudence is the principle that tax refunds are in the nature of tax exemptions which are Tax laws are prospective in operation. The applicable law on refund pertaining to the 1996 compensation income is the old tax code. We cannot agree that the amended return filed by respondent constitutes the written claim for refund required by the old tax code. first. Can the 1997 NLRC be applied retroactively? HELD: construed strictissimi juris against the tax payer and liberally in favor of the government. before resorting to an action in court – this obviously is intended. 204 (c) was not found in sec. NO. the claimant must show indubitably the specific provision of law from which her right arises. the 1997 NIRC was not yet in effect. A party seeking an administrative remedy must not merely initiate the prescribed administrative procedure to obtain relief. but also pursue it to its appropriate conclusion before seeking judicial intervention in order to give the administrative agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature resort to court action. 204 (c) of the 1997 NILRC. Revenue laws are not Page | 68 . or the suit or proceeding therefore must be commenced in court within 2 years from the date of payment of the tax or penalty regardless of any supervening cause. Does the amended return filed by respondent indicating overpayment constitute the written claim for refund required by law? 2. NO. respondent had no reason at that time to think that the filing of an amended return would constitute the written claim fro refund required by applicable law. We cannot agree with the CA finding that the nature of the instant case calls for the application of remedial laws. The requirements under the old tax code for claims are as follows: a) A written claim for refund or tax credit must be filed by the taxpayer with the Commissioner. Hence. b) The claim for refund must be a categorical demand for reimbursement. Revenue statutes are substantive laws and in no sense must their application be equated with that of remedial laws. 230 of the Old Code.

CTA ordered the reimbursement. ISSUE: WON the filing of a claim for refund is essential before the filing of the petition for review. interests and penalties charged by the Commissioner upon the estate of the decedent. the CTA dismissed the petition fro lack of jurisdiction.  A petition for review was filed by the executor with the CTA praying that the Commissioner‘s decision be reversed and that a refund of the paid charges be ordered. 7 of RA 1125. The petitioner in that case paid under protest certain amount by way of income tax. Page | 69 . HELD: The case has a striking resemblance to the controversy in Roman Catholic V. and that the petitioner paid the disputed assessments under protest before filing his petition for review with the court a quo. alleging that the CTA‘s jurisdiction was not properly invoked inasmuch as no claim fro a tax refund of the deficiency tax collected was filed with the BIR before the petition was filed in violation of sec. 2. On appeal to this court. Tax laws must be faithfully and strictly implemented. creating the CTA in providing fro appeals from – allows an appeal from a decision of the Collector in cases involving disputed assessments‘ as distinguished from cases involving refunds of internal revenue taxes.  The executor requested the reconsideration of the assessment and waiver of the surcharge. CIR FACTS: Petitioner received a pre-assessment notice from the BIR showing a deficiency estate tax including surcharge. petitioner received from the commissioner Assessment Notice insisting payment of the tax due on or before 30 days upon receipt thereof. interest and penalties. surcharge and compromise penalty and requiring full payment of such charges within 10 days from receipt thereof.  The Commissioner opposed the said petition. 204 & 230 of NIRC. he already protested and refused to pay the same. Moreover. surcharge and interest and then filed a petition for review before the CTA. FELISA VDA DE SAN AGUSTIN V. that the present action involves a disputed assessment. Convinced that the lack of a written claim for refund was fatal to petitioner‘s recourse to it. and other penalties be waived.  The request for reconsideration was not acted upon and the executor received a letter stating that there is no legal justification for the waiver of the interests. its decision was null and void. questioning the correctness and legality of such assessments. the executor filed a letter with the petitioner Commissioner expressing readiness to pay the basic deficiency estate tax (500k) as soon as the RTC approves withdrawal of that sum from the estate but requesting that the surcharge. To hold that the taxpayer has now lost the right to appeal from the ruling on the disputed assessment but must prosecute his appeal under section 306 of the Tax Code. there is no statutory basis for the refund of the deficiency surcharges.  However. the court held: ―we agree with petitioner that sec.intended to be liberally construed. would in effect require of him to go through a useless and DR. which requires a taxpayer to file a claim for refund of the taxes paid as a condition precedent to his right to appeal. one of which was that petitioner had failed to first file a written claim for refund of the amounts paid. Then CIR set up several defenses.  Within the 10-day period given in the pre-assessment notice. interest. because from the time petitioner received assessment disallowing certain deductions claimed by him in his income tax returns. CIR. ALTERNATIVE REMEDIES CA held that CTA did not acquire jurisdiction over the subject matter and that. only to forestall the sale of his properties that had been placed under distraint by the respondent Collector.  The petitioner estate paid the amount said charges under protest. fees or other charges. the tax court‘s ruling was reversed. accordingly.

The Court sees no cogent reason to abandon the above dictum and to require a useless formality that can serve the interest of neither the government nor the taxpayer. It is only when the return. 3. FBTC had a refundable amount representing that year‘s tax credit of 174K and the previous year‘s excess credit of 2M. 1985. it would be absurd for FBTC to wait until the fifteenth day of April. It ruled that the prescriptive period should be counted 30 days after the approval by the SEC of the plan of dissolution in view of sec. CA affirmed the decision of the CTA. Generally speaking. 1985. for the Collector (now Commissioner) would certainly disallow the claim for refund in the same way as he disallowed the protest against the assessment. the period of prescription should be reckoned from the date of filing of the return required by sec. 30. 78 of the Tax Code. 46 (a) applies only to instances in which the corporation remains subsisting and its business operations are continuing. That FBTC after the end of its corporate life should have filed its income tax return within 30 days after the cessation of its business or 30 days after the approval of merger.  FBTC remitted to CIR the creditable withholding taxes. 1985.  Petitioner filed a petition for review in the CTA seeking the refund of the said amount. It thus became necessary for FBTC to file its income tax return within 30 days after approval by the SEC of its plan or resolution of dissolution. this Court has ruled that at the earliest.  It also had an excess credit from the previous year.  FBTC however. suffered a net loss during the period in question. the two-year prescriptive period for claiming a refund commences to run on the date of filing of the adjusted final tax return. Sec. CIR FACTS:  Prior to its merger with petitioner BPI. which is reflective of the results of the operations of a business enterprise. covering the whole year.needless ceremony that would only delay the disposition of the case. Page | 70 . Indeed. 1985 FBTC earned income consisting of rentals from its leased properties and interest from its treasury notes from Jan. Accordingly. upon its dissolution. The situation of FBTC is precisely what was contemplated under §78 of the Tax Code. The law. COUNTING OF 2-YEAR PRESCRIPTIVE PERIOD TO CLAIM FOR REFUND BPI V. is filed that the taxpayer will be able to ascertain whether a tax is still due or a refund can be claimed based on the adjusted and audited figures. 78 of the NIRC. or almost 10 months after it ceased its operations. in which amounts of the gross receipts and deductions have been audited and adjusted. As FBTC did not file its quarterly income tax returns for the year 1985. its taxable year was shortened to six months. 1985 to June 30. should not be interpreted as to result in absurdities. Where one corporation succeeds another both are separate entities and the income earned by the predecessor corporation before organization of its successor is not income to the successor. claimed tax refund but CIR refunded only the tax credit of the previous year leaving a balance of 174K. 1 to Jan.  Thus. it is the Final Adjustment Return. After it ceased operations on June 30. we hold that petitioner‘s claim for refund is barred by prescription. CTA denied its claim for refund on the ground that the claim had already prescribed. ISSUE: WON petitioner’s claim is barred by prescription? When is the 2-year period of prescription started to run? HELD: In case of the dissolution of a corporation. before filing its income tax return. from January 1. there was no need for it to file a Final adjustment Return because there was nothing for it to adjust or to audit. The tax court has aptly acted in taking cognizance of the taxpayer‘s appeal to it.  BPI as successor in interest. on July 1. Hence.

1986. 1985. It can be deduced from the foregoing that. the SEC would not have sufficient time to process the papers considering that §78 also requires the submission of a tax clearance certificate before the SEC. which provides for a two-year period of prescription counted "from the date of payment of the tax" for actions for refund of corporate income tax. As petitioner‘s claim for tax refund before the Court of Tax Appeals was filed only on December 29. In accordance with §292 of the Tax Code. 1986. in the contest of §230. toll the running of the prescriptive period for filing a claim for refund of overpaid income taxes. Nothing in §78 of the Tax Code limited the return to be filed by the corporation concerned to a mere information return. because that is the time of payment of the tax. the two-year period should be computed from the time of actual filing of the Adjustment Return or Annual Income Tax Return. 1988. 1986. 2. CIR V. when the final adjustment return was actually filed. it held that prescription had not set in. within the period contemplated by §78. However. within the meaning of §230 of the NIRC. 30 days after the approval by the SEC of its plan for dissolution. Paramount filed its corporate annual income tax return on April 2. it is clear that the claim is barred by prescription. CA affirmed the CTA’s decision.  BPI filed a letter reiterating its claim for refund. applies to FBTC. the twoyear period of prescription ended on July 30. CTA ruled that the 2-year period of prescription to have commenced to run from April 15. the return showed a refundable amount. 1987. which are required to be submitted together with the plan of dissolution to the SEC. i. 1988 and the action was brought on April 15. This is so because at that point. It maintains that. Petitioner contends that the two-year prescriptive period should be computed from April 2. Both claim and action for refund were thus barred by prescription. Paramount filed its corporate annual income tax return and paid the BIR its quarterly income tax. payment is made at the time the return is filed. Consequently. 1988. Considering that §78 of the Tax Code.e. CTA AND BPI AS LIQUIDATOR FACTS: BPI acts as liquidator of Paramount corporation. July 30. BPI filed the petition to Page | 71 . Petitioner could have asked for an extension of time to file its income tax return under §47 of the NIRC.. ISSUE: WHETHER the 2-year period of prescription for filing a claim for refund is to be counted from the time the corporate income tax was filed or from the final adjustment return could still be filed without incurring any penalty HELD: FROM THE FILING OF FINAL ADJUSTMENT RETURN. the two-year prescriptive period should be counted from July 30. Moreover. April 2. and. in relation to §244 of Revenue Regulation No. Any corporation contemplating dissolution must submit tax return on the income earned by it from the beginning of the year up to the date of its dissolution or retirement and pay the corresponding tax due upon demand by the Commissioner of Internal Revenue. 1984. 1988 and a petition for refund only on April 15. 1987. In the case at bar. under §49(a) of the NIRC. private respondent BPI. the last day for filing the corporate income tax return. as liquidator of Paramount. since the claim for refund was filed on April 14. And on the following day or on April 15. can approve the plan of dissolution. 1988. 1985 should be considered the date of payment by FBTC of the taxes withheld on the earned income.Petitioner contends that it is not feasible for the certified public accountants to complete their report and audited financial statements.  After deducting Paramount‘s total quarterly income tax payments from its income tax. filed a written claim for refund only on April 14. it can already be determined whether there has been an overpayment by the taxpayer. in turn. CA.

 Oct. there is no need for extensive discussion of the second issue. until then it is a mere deposit held by respondent Commissioner for the account of the non-resident alien taxpayer. he is paying his tax liabilities for that year. namely: Whether the withholding tax credits amount to payment for the purpose of determining the two-year period as provided for by Section 306 of the Internal Revenue Code.  Having deemed the above reply as the final decision of the CIR. It is Page | 72 .  Oct. PETITIONER CONTENDS THAT CTA erred in ruling that their petition for review was filed outside the 30-day period because there is neither evidence nor record that the petitioner received a copy of the letter denying their claim for refund and the aforesaid letter is not a denial of their claim for refund. and the 30-day prescriptive period fro the filing of a petition fro review should be computed from the date of such receipt. Allison wrote another letter to CIR reiterating its demand for refund. he stated that if his demand for refund was not effected. Consequently. resident or non-resident. but. does so not really to deposit an amount to the Commissioner of Internal Revenue. in one of his letters to the CIR. he would collect from the said respondent certain charges including certain charges including attorney‘s fees. that in view of our finding that the respondent court had no jurisdiction over the petition for review because it was filed beyond the 30-day period. signing as attorney-in-fact. in truth.  Said letter denying the refund was received by Allison on November 14. 2958.  In the same letter. to perform and extinguish his tax obligation for the year concerned. HELD: ALLISON. A taxpayer. Besides.  Allusion signing as attorney-in-fact acknowledged receipt of the above assessment. 1956. CIR contends that petition for review praying for the credit of said amounts was filed beyond the 2-year prescriptive period. Petitioners also contends that the statute of limitation of two years prescribed in Section 306 of the NIRC does not start to run until respondent Commissioner has acted on the claim for refund or credit by the non-resident taxpayer and so notified the taxpayer because until then the withholding tax cannot be treated as a payment by the alien-resident taxpayer. 1956. 26. hence the court lost its jurisdiction.  CIR denied said request and instead requested to pay the deficiency tax within 10 days from receipt of the order. paid the assessment and likewise formally demanded in writing its refund. acknowledged fro petitioners receipt of the deficient income tax assessment. it may be observed.GIBBS V. In other words. the petitioners filed a petition for review and refund of income tax. Allison wrote CIR and sent a check to cover the deficiency assessment and at the same time demanded the refund of the same. The receipt therefore by Allison of the CIR’s decision denying the claim fro refund was receipt of the same by the petitioners. The foregoing circumstances show that Allison acted not merely as an agent or attorney-in-fact but as their legal counsel.  Sept. CTA ruled in favor of the CIR. 29. 1958. CIR FACTS: CIR issued against the petitioners deficiency income tax assessment notice with the demand that the said amount should be paid on or before March 15. who contributes to the withholding tax system. formally protested the same in writing. 1. a taxpayer whose income is withheld at the source will be deemed to have paid his tax liability when the same falls due at the end of the tax year. Allison questioned the disallowance of the items which gave rise to the deficiency assessment and requested for a correction of it. 1956 CIR denied the said refund.  CIR never replied to this letter. hence. Parenthetically.

Page | 73 . GIBBS V. that is. 1956.  CIR rejected petitioners‘ protest and reiterated his demand. and the dismissal of the same was proper. COLLECTOR FACTS:  Petitioners protested the deficiency income tax assessment issued by CIR on the ground that said deficiency assessment was based on a disallowance of bad debts and losses claimed in their income tax return. must comply with the requirements of both sections. Notice of said denial was received by petitioners on Nov. 27. It is of no consequence whatever that a claim for refund or credit against the amount withheld at the source may have been presented and may have remained unresolved since the delay of the CIR rendering decision does not extend the peremptory period fixed by the statute. 1956. ISSUE: WON the petitioner’s appeal for review and refund from the decision of the CIR was filed with CTA within the statutory period? HELD: NO It is not disputed that petitioners received on November 14. Otherwise. 1125. If. and the period of two years is about to end. his failure to comply with said statutory requirement would bar his appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain or determine the same. respondent court had acquired no jurisdiction to entertain said appeal and the dismissal of the same was proper. 1957. they filed said appeal only on September 27.  CTA dismissed the petition for having filed it more than 10 months . A taxpayer who has paid the tax. they had 30 days from said date within which to file their appeal (petition for review and refund) with respondent court. he must file his appeal with the Court of Tax Appeals within 30 days from his receipt of the Collector's assessment. much beyond the aforementioned 30-day period within which to file the same. as required by said Section 306 of the National Internal Revenue Code. as required by said Section 11 of Republic Act No. the respondent CTA had acquired no jurisdiction to entertain said appeal. may file an appeal in the CTA within 30 days after the receipt of such decision or ruling. Consequently. whether under protest or not. In the case of a taxpayer who has not yet paid the tax and who is protesting the assessment made by the Collector of Internal Revenue. 14.  CIR denied the request for refund. 1125.  CIR filed a motion to dismiss on the ground that the petition was filed beyond the 30-day period. or when the tax liability falls due. he must file a claim for refund with the Collector of Internal Revenue within 2 years from the date of his payment of the tax. petitioner had filed their appeal beyond the 30-day period. Any person adversely affected by a decision or ruling of the CIR. In this case. however. as required by said Section 11 of Republic Act No.  Petitioners then sent a check to CIR as payment of said deficiency assessment and at the same time demanding the immediate refund of the amount paid. However.from this latter date then. petitioners filed a petition for review and refund. 1957. the Collector takes time in deciding the claim. notice of respondent Collector's decision denying their request for a refund of the deficiency assessment paid by them. the suit or proceeding must be started in the Court of Tax Appeals before the end of the two-year period without awaiting the decision of the Collector. and appeal to the Court of Tax Appeals within 30 days from receipt of the Collector's decision or ruling denying his claim for refund. or more than ten (10) months thereafter.  Sept. and who is claiming a refund of the same. Pursuant to the above-quoted provision of Section 11 of Republic Act 1125. that the two-year prescriptive period under Section 306 of the Revenue Code starts to run with respect to payments effected through the withholding tax system. This is so because of the positive requirement of Section 306 and the doctrine that delay of the Collector in rendering decision does not extend the peremptory period fixed by the statute.

when the action. Tecson. was precisely to deny the request for refund and demand the payment of the deficiency tax from petitioners. one calendar month from January 31. Both Article 13 of the Civil Code and Section 31.  Nevertheless. 2008 until February 29. the cited provisions refer to the authority of the Collector of Internal Revenue to compromise. respondent‘s petition. 2000 or within the 730 days. Article 13 of the Civil Code provides that when the law speaks of a year. 1999. Therefore. The purpose is to assure that no improper compromise. Certainly. Thus. In the first place. and if there is not a sufficient number of days in the next month. or to credit or refund taxes erroneously or illegally received. credit.  He explained that the increase in the cost of labor and materials and difficulty in obtaining financing for projects and collecting receivables caused the real estate industry to slowdown. was filed beyond the reglementary period. Chapter VIII. in a manner of speaking. Page | 74 . the action taken by the Deputy Collector in his letter of October 26. CA reversed the decision of the CTA. one calendar month from December 31. Respondent complied but its claim was not acted upon. respondent was entitled to tax refund or tax credit. or refund is made to the prejudice of the Government. we ruled that a year is equivalent to 365 days regardless of whether it is a regular year or a leap year. In such case. because respondent suffered losses. the corresponding numbered day of the next month. 2008 will be from February 1. the authority is vested exclusively in the Collector himself. but not including. then up to and including the last day of that month.Appellants contend that under the above-quoted provisions. ISSUE: How should the two-year prescriptive period be computed? HELD: As already quoted. that is. this is well within the authority of the Deputy Collector and is final and binding unless revoked by the Collector. Yap applied for the refund or credit of income tax which the respondent paid. Under the CIR AND PARCERO V. 2008.  Revenue officer required respondent to submit additional documents to support its claim. That the 2-year prescriptive period was equivalent to 730 days and because the year 2000 was a leap year. Thus. respondent paid its quarterly income tax and remitted creditable withholding tax from real estate sales to the BIR. In National Marketing Corporation v. Petitioner contends that tax refunds being in the nature of an exemption should be strictly construed against claimants and that prescriptive period begins to run on the day claimants file their final adjusted returns. 1998. CTA dismissed the petition as it was filed beyond the 2-year prescriptive period for filing a judicial claim for tax refund or tax credit. CTA found that respondent filed its final adjusted return on April 14. it was not liable for income taxes. It ruled that civil code did not extinguish between a regular year and a leap year. respondent filed a petition for review in the CTA.  According to yap. 2008. is against the Government. But in the case before us. 2008 to January 31. 1956. PRIMETOWN PROPERTY GROUP FACTS:  March 11. 2007 will be from January 1. which was filed 731 days after respondent filed its final adjusted return.‖[29] To illustrate. This is fallacious. it is understood to be equivalent to 365 days. Book I of the Administrative Code of 1987 deal with the same subject matter — the computation of legal periods. A calendar month is ―a month designated in the calendar without regard to the number of days it may contain. its right to claim a refund or credit commenced on that date.‖[28] It is the ―period of time running from the beginning of a certain numbered day up to. only the Collector has the authority to deal in refund cases. reckoned from the time respondent files its final adjusted return. Hence the claim should have been filed on or before April 13.

CTA denied Atlas‘ MR stating that Atlas has failed to substantiate its claim that it has not applied its alleged excess in put taxes to any of its subsequent quarter‘s output tax liability. the purchase invoice/receipts submitted by Atlas as proof of its input taxes cannot be verified as being directly attributable to the goods so exported.Civil Code. Lex posteriori derogat priori.  On January 1994. Atlas filed for a tax refund or tax credit certificate with CIR. September 12. a year is composed of 12 calendar months. Under the Administrative Code of 1987. an application for tax refund or credit must be accompanied by copies of the taxpayer‘s VAT return or returns for taxable quarter or quarters concerned. 5-87. on January 1996. as required.R. as amended by RR No. Needless to state. When claiming tax refund or credit. the VAT-registered taxpayer must be able to establish that it does not have refundable or Page | 75 . Book I of the Administrative Code of 1987. Then. RULING: When claiming tax refund/credit. and the same has not been applied against its output VAT liabilities – information which are supposed to be reflected in the taxpayer‘s VAT returns. an application for tax refund/credit must be accompanied by copies of the taxpayer‘s VAT return/s for the taxable quarter/s concerned. 159471. 172129. No. creditable input VAT. the CTA denied Atlas claim for refund due to Atlas‘ failure to comply with the documentary requirements prescribed under Sec. CIR FACTS: Atlas Consolidated is a zero-rated VAT person for being an exporter of copper concentrates. For this reason. documentary requirements. Thus. G. the number of days is irrelevant. 2011. given that petitioner Kepco's claim involves unutilized input taxes for the3rd quarter of 2000. 2008) . the Supreme Court had ruled that the claim for refund of unutilized input VAT payments must be filed within two (2) years from the close of the taxable quarter when the relevant sales were made. The CA affirmed CTA‘s ruling.    ISSUE: What are the documents required to claim for VAT input refund? W/N Atlas is entitled to claim to a tax refund. CIR (G. Thus. January 26. claim for creditor refund of input value-added tax. 16 of RR No. The formal offer of evidence of Atlas failed to include photocopy of its export documents. governs the computation of legal periods. No. being the more recent law. Hence. Without the export documents. however. the prescriptive period applicable ATLAS CONSOLIDATED V. National Internal Revenue Code. In the recent case of Mirant Pagbilao Corporation V. under the Administrative Code of 1987. however.R.106(a) of the Tax Code. 3-88. Atlas filed its VAT return for the fourth quarter of 1993. Said ruling. and the same has not been applied against its output VAT liabilities-information which are supposed to be reflected in the taxpayer‘s VAT returns. Chapter VIII. There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987. Atlas Consolidated Mining and Development Corporation vs Commissioner of Internal Revenue. showing a total input tax and an excess VAT credit. should not be made to apply to the present case but should be applied prospectively pursuant to and consistent with the numerous rulings of the Supreme Court. However. a year is equivalent to 365 days whether it be a regular year or a leap year. we hold that Section 31. value-added tax. Atlas claim for credit or refund of input taxes cannot be granted due to its failure to show convincingly that the same has not been applied to any of its output tax liability as provided under Sec. the value-added taxpayer must be able to establish that it does have refundable or creditable input value-added tax (VAT).

A memorandum-circular of a bureau head could not operate to vest a taxpayer with shield against judicial action. and the choice of one precludes the other. shall either (a) be refunded to the corporation. CIR. claims for refund or tax credit should be exercised within the time fixed by law because the BIR being an administrative body enforced to collect taxes. ISSUE: Is the contention of the petitioner correct? Is the revenue circular a valid exemption to the NIRC? HELD: No.T. 141104 & 148763. reported profits. or (b) may be credited against the estimated quarterly income tax liabilities for the quarters of the succeeding taxable year.in the instant case would still be the period enunciated in the case of Atlas Consolidated Mining and Development Corporation V. whether to request for a refund or claim for an automatic tax credit for the succeeding taxable year. June 8. However.A. C. Basic is the principle that ―taxes are the lifeblood of the nation. Pending investigation of the respondent CIR.T.785 issued by the CIR itself states that claim for overpaid taxes are not covered by the two-year prescriptive period mandated under the Tax Code.R. 6550). RELIANCE ON AN ADMINISTRATIVE ISSUANCE PBCOM V. Court of Tax Appeals. before any suit in CTA is commenced. and paid income taxes amounting to P5. 5. 528 (C. For there are no vested rights to speak of respecting a wrong construction of the law by the administrative officials and such wrong interpretation could not place the Government in estoppel to correct or overrule the same [Tan Guan V. these remedies are in the alternative. the bank requested from CIR for a tax credit and tax refunds representing overpayment of taxes. CA Page | 76 . CIR(G. Case No. should be computed CITIBANK NA V. 2007). CTA denied its petition for tax credit and refund for failing to file within the prescriptive period to which the petitioner belies arguing the Revenue Circular No. E.1 M. 20 from the time of filing the Adjustment Return and final payment of the tax for the year. Commissioner of Internal Revenue.B. the petitioner likewise reported a net loss of P14.A. Kepco Ilijan Corporation v.Case No. Any excess of the total quarterly payments over the actual income tax computed in the adjustment or final corporate income tax return. 19 SCRA 903 (1967)]. October 14.‖ Due process of law under the Constitution does not require judicial proceedings in tax cases.2M in 1985. petitioner instituted a Petition for Review before the Court of Tax Appeals (CTA). This must necessarily be so because it is upon taxation that the government chiefly relies to obtain the means to carry on its operations and it is of utmost importance that the modes adopted to enforce the collection of taxes levied should be summary and interfered with as little as possible. within two (2) years after payment of tax. In 1988. Nos. CTA & CA FACTS: Petitioner PBCom filed its first and second quarter income tax returns. To ease the administration of tax collection. The rule states that the taxpayer may file a claim for refund or credit with the Commissioner of Internal Revenue. its functions should not be unduly delayed or hampered by incidental matters. 1986. The two-year prescriptive period provided. From the same perspective. and thus declared no tax payable for the year. The corporation must signify in its annual corporate adjustment return (by marking the option box provided in the BIR form) its intention. BASIS OF FILING REFUND: RETURNS? QUARTERLY OR FINAL 4. where it was held that the counting of the two-year prescriptive period is reckoned from the filing of the quarterly VAT returns. at the end of the year PBCom suffered losses so that when it filed its Annual Income Tax Returns for the year-ended December 31.

00 for income tax purposes. showing a net loss of P74. 1985. PHILAMLIFE For VAT refunds. Philippine Branch (CITIBANK) is a foreign corporation doing business in the Philippines.00 representing the alleged overpayment of income tax as computed in its final income tax return for the calendar year ending December 31. as amended) On April 15.532.811. In 1979 and 1980.780. as contradistinguished from a final tax. refundable (or creditable) at the end of the taxable year? RESOLUTION The assailed Decision is hereby REVERSED and the decision of the Court of Tax Appealsis REINSTATED.796. 1981.790. CIR V. CITYTRUST & CTA Citytrust filed a claim for refund with BIR in the amount of P19. TMX The claim for refund has prescribed. Its available tax credit (refundable) at the end of 1980amounting to P11. • For the year ended December 31.071. 1984. GRANT OF REFUND DESPITE EXISTENCE OF TAX LIABILITY CIR V. filed on April 15. pursuant to Sections 292 and 295 of the National Page | 77 . is a creditable withholding tax.00. The OSG in their answer contended that the claim of Citytrust from 1983 was not properly documented and that even if they are entitled for such claim the right to claim the same has prescribed with respect to income tax payments prior to August 28.971. 6.A. The counting of the two year prescriptive periodfor filing a claim for refund is counted not from the date when the quarterly income taxes were paid but on the date when the final adjustment return was filed. CA. ISSUE First Issue : Determination of the Illegality or Error in Assessment or Collection Second Issue : Onus of Disputing a Claim for Refund • The appellate court ruled that it was not enough for petitioner to show its lack of income tax liability against which the five percent withholding tax could be credited. 1984 and 1985.854.745.FACTS: From the pleadings and supporting papers on hand. Citytrust filed a petition with the Court of Tax Appeals. namely: (1) the yearly computation of the corporate income tax and (2) the nature of the creditable withholding tax." In the main. Petitioner should have also shown that the withholding tax was illegally or erroneously collected and remitted by the tenants. when should the illegality or error in its assessment or collection be reckoned: at the time of withholding or at the end of the taxable year? (2) Where the income tax returns show that no income tax is payable to the government. 1979. On the other hand. Citibank's corporate income tax returns. the counting of the two year prescriptive period is counted from the close of the taxable quarter. petitioner thus raises the following issues: (1) for creditable withholding tax to be refundable. The said available tax credits did not include the amounts withheld by Citibank's tenants from rental payments in 1980 but the rental payments for that year were declared as part of its gross income included in its annual income tax returns. claiming the refund of its income tax overpayments for the years 1983. its tenants withheld and paid to the Bureau of Internal Revenue the following taxes on rents due to Citibank. Citibank filed its corporate income tax returns for the year ended December 31. 1980. the same not having been utilized or applied for the reason that the year's operation resulted in a loss. petitioner counters that Respondent Court failed to grasp "two fundamental concepts in the present income tax system.00 was not utilized or applied.00 and its tax credits totalled P6. pursuant to Section 1(c) of the Expanded Withholding Tax Regulations (BIR Revenue Regulations No.855.00 was included in its income declared for the year ended December 31. No costs. even without including the amounts withheld on rental income under the Expanded Withholding Tax System. showed a net loss of P77.257.916. To interrupt the prescriptive period. it can be gathered that Citibank N. 1980. 1979. 13-78. CIR V. The taxes thus withheld by the tenants from rentals paid to Citibank in 1979 were not included as tax credits although a rental income amounting to P7.

Nowhere is the aforestated rule more true than in the field of taxation. since the petition was filed only on August 28. Taxes are the lifeblood of the nation through which the government agencies continue to operate and with which the State effects its functions for the welfare of its constituents." By any reasonable standard. It will be recalled. WHO CAN CLAIM REFUND? CIR V. Petitioner filed a motion for reconsideration contending that Citytrust has an outstanding tax liability amounting to P56M in 1984. to the Solicitor General. PROCTER AND GAMBLE A "person liable for tax" has been held to be a "person subject to tax" and properly considered a "taxpayer. their neglect or omission of public duties as exemplified in this case will not and should not produce that effect. that said corporation is first and foremost a wholly owned subsidiary of Glaro. In the circumstances of this case. The fact that it became a withholding agent of the government which was not by choice but by compulsion under Section 53 (b) of the Tax Code. The petitioner filed a motion to suspend the proceedings but the same was denied. is in the instant case. this Court construing Section 53 (b) of the Internal Revenue Code held that "the Page | 78 . at all times. In the performance of its governmental functions. Thus. the withholding agent is also an agent of the beneficial owner of the dividends with respect to the filing of the necessary income tax return and with respect to actual payment of the tax to the government. it seems particularly unreal to deny the implied authority of P&G-Phil. if justified. WANDER PHILS. such authority may reasonably be held to include the authority to file a claim for refund and to bring an action for recovery of such claim. to bring a suit for refund of taxes he believes were illegally collected from him. the withholding agent is the wholly owned subsidiary of the parent-stockholder and therefore. the State cannot be stopped by the neglect of its agent and officers." 4 The terms liable for tax" and "subject to tax" both connote legal obligation or duty to pay a tax. to claim a refund and to commence an action for such refund. Issue: Whether or not the state is bound to the mistakes committed by its agents Ruling: It is a long and firmly settled rule of law that the Government is not bound by the errors committed by its agents. It is axiomatic that the Government cannot and must not be estopped particularly in matters involving taxes. especially in the case at bar where the amount involves millions of pesos the collection whereof. In any event. If. indeed conceptually impossible. as amended. stands to be prejudiced just because of bureaucratic lethargy. such a person should be regarded as a party in interest. cannot by any stretch of the imagination be considered as an abdication of its responsibility to its mother company. Hence this petition. 1986. as pointed out in Philippine Guaranty. as well as the investigation report thereon. to consider a person who is statutorily made "liable for tax" as not "subject to tax. The errors of certain administrative officers should never be allowed to jeopardize the Government's financial position. Although the Government may generally be estopped through the affirmative acts of public officers acting within their authority. It is very difficult. The case was decided and the Tax court ruled in ordering BIR to refund the overpaid tax for the year 1984 and 1985 only. Wherefore the Judgment of CA is hereby set aside and the case is remanded to CTA 7. or as a person having sufficient legal interest. Both parties filed a motion for reconsideration which was denied by the CA and the court affirmed the decision of CTA. the submission of petitioner that Wander is but a withholding agent of the government and therefore cannot claim reimbursement of the alleged overpaid taxes. The case was submitted for decision based solely on the pleadings and evidence submitted by herein private respondent Citytrust because the petitioner failed to present evidence due to the failure of Tax Credit/Refund Division of the BIR to transmit the records of the case. is untenable. CIR V. This implied authority is especially warranted where. under the effective control of such parentstockholder.Interna lRevenue Code of 1977.

Within 60 days from filing of the protest. Malayan Insurance Co. by aliens who are outside the taxing jurisdiction of this Court (Commissioner of Internal Revenue V. Hence. BIR can only inform the taxpayer to submit additional documents. no reply was received from petitioner. 2. Respondent has complied with the requisites in disputing an assessment pursuant to Section 228 of the Tax Code. The BIR cannot demand what type of supporting documents should be submitted. respondent filed a petition before the CTA. executory and demandable.obligation imposed thereunder upon the withholding agent is compulsory. POWERS AND JURISDICTION OF CUSTOMS Page | 79 . SUBMISSION OF RELEVANT DOCUMENTS CIR V. had until 31 July 2002 to wait for petitioner‘s reply to its protest. FIRST EXPRESS PAWNSHOP An assessment may be protested by filing a request for reconsideration or reinvestigation within 30 days from receipt of the assessment by the taxpayer." It is a device to insure the collection by the Philippine Government of taxes on incomes. APPEAL TO CTA 1. all relevant supporting documents shall have been submitted. WHEN TO ELEVATE ASSESSMENT TO CTA? RCBC V. otherwise the decision shall become final. The term ―relevant supporting documents‖ should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. the tax assessment cannot be considered as final. executory and demandable. C. or is not acted upon within one hundred eighty (180) days from submission of documents. the assessment shall become final. In fact. NLRC). plus penalties consisting of surcharge and interest (Section 54. Otherwise. which may require the production of documents that a taxpayer cannot submit After respondent submitted its letter-reply stating that it could not comply with the presentation of the proof of DST payment.. the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within (30) days from receipt of the said decision. or from the lapse of the one hundred eighty (180)-day period. derived from sources in the Philippines.. Respondent. CIR If the protest is denied in whole or in part. as the Philippine counterpart. Section 228 states that if the protest is not acted upon within 180 days from submission of documents. On 28 August 2002 or within 30 days after the lapse of the 180-day period counted from the filing of the protest as the supporting documents were simultaneously filed. otherwise. The CUSTOMS TAXES AND DUTIES TARIFF AND PHILIPPINES CUSTOMS CODE OF THE 1. Therefore. 21 SCRA 944). a taxpayer will be at the mercy of the BIR. Wander is the proper entity who should for the refund or credit of overpaid withholding tax on dividends paid or remitted by Glaro. having submitted its supporting documents on the same day the protest was filed. Wander may be assessed for deficiency withholding tax at source. Inc. the taxpayer adversely affected by the inaction may appeal to the CTA within 30 days from the lapse of the 180-day period.

The licensing of marine officers who have qualified in the examination required by law to be carried on Philippine vessels. When a vessel becomes subject to seizure by reason of an act done in Philippine waters in violation of the tariff and customs laws. The exclusion. airports. Sec. Functions of the Bureau. and the fixing of the fees which they may charge. and the performance of all the duties pertaining to marine registry. h. — The Bureau of Customs shall have one chief and one assistant chief. The prevention and suppression of smuggling and other frauds upon the customs. The supervision and control over the handling of foreign mails arriving in the Philippines.g. j. powers and jurisdiction of the bureau shall include: a. 603. The general supervision. b. Page | 80 . c. and the vessel may be seized on the high sea. the regulation of this service. a pursuit of such vessel begun within the jurisdictional waters may continue beyond the maritime zone. said bureau shall have the right of supervision and police authority over all seas within the jurisdiction of the Philippines and over all coasts. who shall each receive an annual compensation in accordance with the rates prescribed by existing laws. k. such as explosion of gasoline engines. ports. Section 601. transfers and encumbrances of such vessels. registration. for the purpose of the collection of the lawful duty on dutiable articles thus imported and the prevention of smuggling through the medium of such mails. fees. if the conditions of traffic should at any time so require. Sec. The assessment and collection of the lawful revenues from imported articles and all other dues. The supervision and control over the entrance and clearance of vessels and aircraft engaged in foreign commerce. e. The Assistant Commissioner of Customs shall be appointed by the proper department head. Imported articles which may be subject to seizure for violation of the tariff and customs laws may be pursued in their transportation in the f. berthing or mooring in the Pasig River. The inspection of Philippine vessels. l. control and regulation of vessels engaged in the carrying of passengers and freight or in towage in coastwise trade and in the bays and rivers of the Philippines. the determination of the qualifications of pilots. the recording of sales. the excessive blowing of whistles or sirens. of vessels of more than one hundred and fifty tons from entering. Territorial Jurisdiction. rivers and inland waters navigable from the sea. and supervision over the safety and sanitation of such vessels. documenting and licensing of vessels built or owned in the Philippines. bays. d. fines and penalties accruing under the tariff and customs laws. to be known respectively at the Commissioner (hereinafter known as the "Commissioner") and Assistant Commissioner of Customs. charges. Chief Officials of Bureau of Customs. 602. — For the due and effective exercise of the powers conferred by law and to the extent requisite therefor. rules and regulations relating to the tariff and customs administration. and other needless and disturbing sounds made by water craft in the ports of the Philippines or in parts of rivers included in such ports. — The general duties. The enforcement of the lawful quarantine regulations for vessels entering Philippine ports. The admeasurement. The enforcement of the tariff and customs laws and all other laws. i. harbors. The prohibition and suppression of unnecessary noises.

— When any public wharf. bulkhead or other obstruction. 604. may at anytime enter. 605. Sec. A warehouse. 2209. partition. Right to Search Vessels or Aircrafts and Persons or Articles Conveyed Therein. landing place. 607. or the article. Sec. not previously under the jurisdiction of the Bureau of Customs. 2208. to use all necessary force to compel compliance. Right of Police Officer to Enter Inclosure. contain a compilation of the (a) volume and value of articles imported into the Philippines and the corresponding customs duties assessed and collected thereon itemized in accordance with the tariff classification provided in this Code and (b) volume and value of articles exported from the Philippines for the preceding year. in all cases without prejudice to the general police powers of the city or municipality wherein such premises are situated. Jurisdiction over Premises Used for Customs Purposes. The power of search hereinabove given shall extend to the removal of any false bottom. not being a dwelling house. Sec. 606. Commissioner to Make Rules and Regulations.Philippines by land. by executive order. store or other building. — The Commissioner shall. — For the more effective discharge of his official duties. 608. declare such premises to be under the jurisdiction of the Bureau of Customs. the President of the Philippines may. for customs purposes. Sec. and thereafter the authority of such Bureau in respect thereto shall be fully effective. direction and management of custom-houses. is liable to forfeiture. on board of or imported by such vessel or aircraft. Sec. box or envelope on board. — The annual report of the Commissioner shall. have exclusive control. and to search any person on board the said vessel or aircraft and to this end to hail and stop such vessel or aircraft if under way. package. so far as may be necessary to enable the officer to discover whether any dutiable or forfeitable articles may be concealed therein. upon sworn application showing probable case and particularly describing the place to be searched and person or thing to be seized. Sec. pass through. — Customs officials and employees shall cooperate with the quarantine authorities in the enforcement of the port quarantine regulations promulgated by the Bureau of Quarantine and shall give effect to the same in so far as they are connected with matters of shipping and navigation. — It shall be lawful for any official or person exercising police authority under the provisions of this Code to go abroad any vessel or aircraft within the limits of any collection to go aboard any vessel or aircraft within the limits of any collection district. store or other building or inclosure used for the keeping of storage of articles does not become a dwelling house within the meaning hereof merely by reason of the fact that a person employed as watchman lives in the place. subject to the approval of the department head. among other things. Enforcement of Port Regulation of Bureau of Quarantine. street or land. Annual Report of Commissioner. is necessary or desirable for any proper customs purpose. and other premises in the respective ports of entry. search and examine said vessel or aircraft and any trunk. 2210. or any part thereof. Sec. Search of Dwelling House. wharves. Sec. — A dwelling house may be entered and searched only upon warrant issued by a judge or justice of the peace. any person exercising the powers herein conferred. warehouses. — The Bureau of Customs shall. whereby or in consequence of which such vessels or aircrafts. offices. Power of the President to Subject Premises to Jurisdiction of Bureau of Customs. Page | 81 . nor will the fact that his family stays there with him alter the case. and to inspect. water or air and such jurisdiction exerted over it at any place therein as may be necessary for the due enforcement of the law. make all rules and regulations necessary to enforce the provisions of this Code. in any port of entry. and if it shall appear that any breach or violation of the customs and tariff laws of the Philippines has been committed. to make seizure of the same or any part thereof. or search any land or inclosure or any warehouse.

ENRILE V. and only after exhausting administrative remedies in the Bureau of Customs. search and examine any vehicle. JAO V.No proceeding herein shall give rise to any claim for the damage thereby caused to article or vessel or aircraft. MAGO "Petitioner Martin Alagao and his companion policemen had authority to effect the seizure without any search warrant issued by a component court. whose decision. wherever found where he has reasonable cause to suspect the presence therein of dutiable or prohibited article or articles introduced into the Philippines contrary to law. Female inspectors may be employed for the examination and search of persons of their own sex. 2211. envelope or other container. This provision clearly indicates the intention of the law to confine in the Bureau of Customs the determination of all questions affecting the disposal of property proceeded against in a seizure and forfeiture case. Right to Search Vehicles. The judicial recourse of the property owner is not in the Court of First Instance but in the Court of Tax Appeals. — It shall also be lawful for a person exercising authority as aforesaid to open and examine any box. The Tariff and Customs Code does not require said warrant in the instant case. pass through or search any land. CA ISSUE: WON the RTC has jurisdiction over cases questioning the validity of seizure and forfeiture proceedings conducted by the Bureau of Customs HELD: NO. Search of Persons Arriving From Foreign Countries. The Regional Trial Courts are precluded from assuming cognizance over such matters even through petitions of certiorari. It is likewise well-settled that the provisions of the Tariff and Customs Code and RA1125 "An Act Creating the Court of Tax Appeals." specify the proper for a and procedure for the ventilation of any legal objections or issues raised concerning these proceedings. Sec. prohibition or mandamus. The RTC is devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs and to enjoin or otherwise interfere with these proceedings . Section 2303 of the Tariff and Customs Code requires the Collector of Customs to give to the owner of the property sought to be forfeited written notice of the seizure and to give him the opportunity to be heard in his defense. beast or person reasonably suspected of holding or conveying such article as aforesaid. and likewise to stop. The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture cases vested in the Collector of Customs precludes a court of first instance from assuming cognizance over such a matter. The Code authorizes persons having police authority under Section 2203 of the Tariff and Customs Code to enter. in turn. — All persons coming into the Philippines from foreign countries shall be liable to detention and search by the customs authorities under such regulations as may be prescribed relative thereto. Actions of the Commissioner subject to the of Tax Appeals Collector of Customs are appealable to the of Customs. Sec." PAPA V. Page | 82 . is exclusive appellate jurisdiction of the Court and from there to the Court of Appeals. 2212. trunk. Beasts and Persons. subject of a seizure and forfeiture proceeding in the Bureau of Customs HELD NO. VINUYA ISSUE: WON the court of first instance is vested with jurisdiction to entertain a complaint for replevin for the recovery of a Cadillac car.

while the case is yet before the Collector of the district of seizure. conditioned for the payment of the appraised value of the article and/or any fine. — The Collector shall give the owner or importer of the property or his agent a written notice of the seizure and shall give him an opportunity to be heard in reference to the delinquency which was the occasion of such seizure. box or envelope or any person on board. the Collector may surrender it upon the filing of a sufficient bond. But in the search of a dwelling house.inclosure. Description and Appraisal and Classification of Seized Property. or stop and search and examine any vehicle. package. Sec. therefore. 2303. residing at or near the place of seizure. 2301. and. if there are such officials at or near the place of seizure. if the owner or his agent in fact is unknown or cannot be reached. Settlement of Case by Payment of Fine or Redemption of Forfeited Property. 2305. the Collector of the district wherein the seizure is effected shall immediately make report thereof to the Commissioner and to the Auditor General. search and examine any vessel or aircraft and any trunk. the importer. to be selected by him for that purpose. store or building. — The Collector shall also cause a list and particular description of the property seized to be prepared and an appraisement or classification of the same at its wholesale value in the local market in the usual wholesale quantities to be made by at least two appraising officials. — Upon making any seizure. which list and appraisement shall be properly attested to by such Collector and the persons making the appraisal. Sec. Report of Seizure To Commissioner and Auditor. — When a seizure is made for any cause. in an amount to be fixed by him. beast or person suspected of holding or conveying any dutiable or prohibited article introduced into the Philippines contrary to law. Notification to Unknown Owner. 2307. 2306. and if the owner or importer desires to secure the release of the property for legitimate use. That articles the importation of which is prohibited by law shall not be released under bond. shall pay the appraised value of the 2. — If. without mentioning the need of a search warrant in said cases. by publication in a newspaper or by such other means as he shall consider desirable. Sec. consignee or person holding the bill of lading shall be deemed to be the "owner" of the article included in the bill. — If. in case of forfeiture. ADMINISTRATIVE PROCEEDINGS Sec. the latter shall declare the property forfeited to the government to be sold at auction in accordance with law. Sec. the Collector shall issue a warrant for the detention of the property. the Code provides that said "dwelling house may be entered and searched only upon warrant issued by a judge or justice of the peace. expenses and costs which may be adjudged in the case: Provided. Proceedings in Case of Property Belonging to Unknown Parties. Sec. Warrant for Detention of Property — Bond. in the discretion of the Commissioner. 2302. warehouse. the owner or agent shall. not being a dwelling house and also to inspect. Sec. no owner or agent can be found or appears before the Collector. then by two competent and disinterested citizens of the Philippines. pay to such Collector the fine imposed by him or. It is our considered view. within fifteen days after the notification prescribed in section twenty-three hundred and four of this Code. Notification to Owner or Importer. in any seizure case. persons exercising police authority under the customs law may effect search and seizure without a search warrant in the enforcement of customs laws." For the purpose of giving such notice and of all other proceedings in the matter of such seizure. "agent" shall be deemed to include not only any agent in fact of the owner of the seized property but also any person having responsible possession of the property at the (missing) of the seizure. in the absence of such officials. For the same purpose. that except in the case of the search of a dwelling house. — Notice to an unknown owner shall be effected by posting a notice for fifteen days in the public corridor of the customhouse of the district in which the seizure was made. Page | 83 . 2304.

together with the reasons therefor. shall in writing make a declaration of forfeiture or fix the amount of the fine or take such other action as may be proper. and all liability which may or might attach to the property by virtue of the offense which was the occasion of the seizure and all liability which might have been incurred under any bond given by the owner or agent in respect to such property shall thereupon be deemed to be discharged. or. who shall approve. "Single adjustment". — Every protest shall be filed in accordance with the prescribed rules and regulations promulgated under this section and shall point out the particular decision or ruling of the Collector to which exception is taken or objection made. — When a protest in proper form is presented in a case where protest in required. after a hearing. the Collector. a written protest setting forth his objections to the ruling or decision in question. Sec. Such samples shall be verified by the custom official who made the classification against which the protest are filed. supply the Collector with samples of the articles which are the subject matter of the protests. the party adversely affected may protest such ruling or decision by presenting to the Collector at the time when payment of the amount claimed to be due the Government is made. — In all cases subject to protest. or other money charge is determined. Sec. as hereinabove used. — If the nature of the articles permit. 2311. The scope of a protest shall be limited to the subject matter of a single adjustment or other independent transaction. Page | 84 . fees. 2313. or. modify or reverse the action or decision of the Collector and take such steps and make such orders as may be necessary to give effect to his decision. and shall indicate with reasonable precision the particular ground or grounds upon which the protesting party bases his claim for relief. Sec. surcharges or fines incident thereto. fees. within fifteen days after notification in writing by the Collector of his action or decision. upon demand. shall pay the appraised value of the property. the interested party who desires to have the action of the Collector reviewed. Decision or Action by Collector in Protest and Seizure Cases. 2310. he shall enter the appropriate order. in case of forfeiture. In seizure cases. Sec. Redemption of forfeited property shall not be allowed in any case where the importation is absolutely prohibited or where the surrender of the property to the person offering to redeem the same would be contrary to law. No protest shall be considered unless payment of the amount due after final liquidation has first been made. he shall pay to the Commissioner the amount of the fine as finally determined by him. including all duties. the entry reliquidated if necessary. give written notice to the Collector of his desire to have the matter reviewed by the Commissioner. in whole or in part. importers filing protests involving questions of fact must. except as to matters correctible for manifest error in the manner prescribed in section one thousand seven hundred and seven hereof. refers to the entire content of one liquidation. 2308. Form and Scope of Protest. the Collector shall reexamine the matter thus presented. Review by Commissioner. Protest Exclusive Remedy in Protestable Case. otherwise. the action of the Collector shall be final and conclusive against him. — The person aggrieved by the decision or action of the Collector in any matter presented upon protest or by his action in any case of seizure may. but any number of issue may be raised in a protest with reference to the particular item or items constituting the subject matter of the protest. Sec. if after appeal of the case. Sec. except the fixing of fines in seizure cases. shall make a protest.property. Thereupon the Collector shall forthwith transmit all the records of the proceedings to the Commissioner. 2309. — When a ruling or decision of the Collector is made whereby liability for duties. Samples to be Furnished by Protesting Parties. such property shall be forthwith surrendered. and if the protest is sustained. or within thirty days thereafter. Protest and Payment upon Protest in Civil Matters. 2312.

shall be entered through a customhouse at a port of entry. Disposition of Imported Articles Remaining on Vessel After Time for Unlading. may be unladen by the customs authorities and stored at the vessel's expense. Sec. — The owner or importer of any articles may. until they have legally left the jurisdiction of the customs. Importation is deemed terminated upon payment of the duties. The failure of any interested party to file the import entry within fifteen days or any extension thereof from the discharge of the vessel or aircraft. and be withdrawn upon payment of duties. the latter may order a reliquidation. in the opinion of the department head. Sec. the supervisory authority of the department head over the Bureau of Customs shall not extend to the administrative review of the ruling of the Commissioner in matters appealed to the Court of Tax Appeals. he shall be relieved from the payment of duties. and it is implied when. and the Commissioner shall be of the opinion that the ruling was erroneous and unfavorable to the Government. thereupon. an intention to abandon can be clearly inferred. EFFECT OF FAILURE TO FILE ENTRY ABANDONMENT OF IMPORTED ARTICLES Sec. and in seizure cases such notice shall be effected by personal service if practicable. Articles to Be Imported Only Through Customhouse. taxes and other charges due upon the articles. taxes and other charges. and not reported for transshipment to another port. Articles so stored may be claimed and entered at any time within fifteen days after discharge or such longer period not beyond thirty days as the Collector shall approve. and if the ruling of the Commissioner in any unprotested case should. though at any time prior to sale it may be entered for consumption or warehouse. WHEN TERMINATED IMPORTATION BEGINS AND Section 1201. whether subject to duty or not. Any person who abandons an imported article renounces all his interests and property rights therein. Abandonment of Imported Articles. 1202. Abandonment. 1210. or in case said articles are free of duties. or secured to be paid. — If in any case involving the assessment of duties the importer shall fail to protest the ruling of the Collector. 2315. Sec. and expenses. Page | 85 . 1802. — Imported articles remaining on board any vessel after the expiration of the said period for discharge. 1801. the department head may require the Commissioner to order a reliquidation. Sec. from the action or omission of the interested party. When Importation Begins and Deemed Terminated. within ten days after filing of the import entry. Kinds and Effect of— Abandonment is express when it is made direct to the Collector by the interested party in writing. abandon to the Government all or a part of the articles included in an invoice. shall be implied abandonment. If not entered it shall be sold at public auction at the next ensuing regular sale.Sec. — Notice of the decision of the Commissioner shall be given to the party by whom the case was brought before him for review. — Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein. Supervisory Authority of Commissioner And of Department Head in Certain Cases. — All articles imported into the Philippines. That the portion so abandoned is not less than ten per cent of the total invoice and 3. be erroneous and unfavorable to the Government. at a port of entry and the legal permit for withdrawal shall have been granted. Notice of Decision of Commissioner. taxes and other charges. An implied abandonment shall not be effective until the article is declared by the Collector to have been abandoned after notice thereof is given to the interested party as in seizure cases. Except as in the preceding paragraph provided. 2314. and. taxes and all other charges and expenses due thereon: Provided.

or withdrawal thereof from warehouse. as well as CHEVRON CUSTOMS PHILIPPINES V. the Auditor General. however. upon the entry. the amount of duty. That duty based on the weight. 1205. Effective Date of Rates of Import Duty. that the imported article is actually being used by the government or any of its political subdivision concerned. Sec. collect the correct and final amount of customs duties and avoid smuggling of goods into the country. even though previously exported from the Philippines. 205. for which no permit of delivery to the importer or his agent has been issued. COMMISSIOER OF whether ―entry‖ under Section 1301 in relation to Section 1801 of the TCC refers to the IED or the IEIRD? both The filing of the Import Entry Declaration and Import Entry Internal Revenue Declaration has several important purposes: to ascertain the value of the imported articles. taxes. with the approval of Page | 86 . or seized by. fees and other charges provided for in this Code: Provided. 4. volume and quantity at the time of their entry into the warehouse or the date of abandonment. — Imported articles shall be subject to the rate or rates of import duty existing at the time of entry. Imported Articles Subject to Duty. for consumption. fee or charge shall be refunded to the government or the political subdivision which paid it. shall be subject to the duties. transportation. tax. Regular tariff or customs duties . They are imposed for the protection of consumers and manufacturers. On and after the day when this Code shall go into effect all articles previously imported. a foreign country for the purpose of raising revenues.these are taxes imposed or assessed upon merchandise from. or any other purpose. agencies or instrumentalities owned or controlled by the government. Nothing in this section shall be construed as relieving such owner or importer from any criminal liability which may arise from any violation of law committed in connection with the importation of the abandoned article. shall be subject to the rates of duty imposed by this Code and to no other duty. EFFECTIVITY DATE OF RATE OF DUTY Sec. The article so abandoned shall be delivered by the owner or importer at such place within the port of arrival as the Collector shall designate. except as otherwise specifically provided for in this Code or in other laws.these are additional import duties imposed on specific kinds of imported articles under certain conditions. except in cases of articles imported for personal or family use. and upon his failure to so comply. ARTICLES SUBJECT TO DUTY Section 101. the owner or importer shall be liable for all expenses that may be incurred in connection with the disposition of the articles. Special tariffs or custom duties . and all articles previously entered without payment of duty and under bond for warehousing. or corporations. Entry refers to both. or withdrawal from warehouse in the Philippines. the government. 2. when imported from any foreign country into the Philippines. That upon certification of the head of the department or political subdivision concerned. for consumption. forfeiture and/or seizure. — All articles. shall be subject to duty upon each importation. They must be filed within 30 days. and then sold at public auction.is not less than one package. or exported to. the rate of duty and the tariff in force on the date of the auction shall apply: Provided. all importations by the government for its own use or that of its subordinate branches on instrumentalities. — Except as otherwise specifically provided. On articles abandoned or forfeited to. TYPES OF DUTIES kinds of tariffs or customs duties 1. for which no entry has been made. Importations by the Government. volume and quantity of articles shall be levied and collected on the weight.

Verify if the kind or class of articles in question is being sold or is likely to be sold for exportation to. Page | 87 . and the fair value of the article. or his/her alter ego. that a specific kind or class of foreign article. in addition to any other duties. as hereinafter defined. c. or prevent the establishment of. specifically: a. shall conduct an investigation to — 1. SAFEGUARD DUTIES Safeguard measures are defined as ―emergency" actions with respect to increased imports of particular products. could exercise supervisory powers over the Tariff Commission. within fifteen days from the report of the Commission. The Commission. or in. as prescribed in this section. the exporter's sales price. b. c. 2. Congress in enacting the SMA and prescribing the roles to be played therein by the Tariff Commission and the DTI Secretary did not envision that the President. from invoices or other papers or from information made available to him by any government agency or interested party. Authorized person to impose safeguard measures 1. DUMPING DUTIES Sec. at a price less than its fair value. and 3. is being sold or is likely to be sold for exportation to. a. collected and paid. Determine if. an industry in the Philippines is being injured or is likely to be injured or is prevented from being established by reason of the importation or sale of such kind or class of article into the Philippines. as a result thereof. the importation or sale of which might injure. or in. Dumping Duty. decide whether the article in question is being imported in violation of this section and shall give due notice of such finding and shall direct the Commissioner of Customs to cause the dumping duty.the Tariff Commission does not fall under the administrative supervision of the DTI. he shall so advise the Tariff Commission> b. It is a measure provided by the State to protect domestic industries and producers from increased imports which cause or threaten to cause serious injury to those domestic industries and producers. between the purchase price or. Safeguard duties Dumping duties Countervailing duties Marking duties Retaliatory duties B. 301. if any. the Philippines. The factual findings of the Tariff Commission on the existence or non-existence of conditions warranting the imposition of general safeguard measures binding upon the DTI Secretary The positive final determination by the Tariff Commission operates as an indispensable requisite to the imposition of the safeguard measure. in the absence thereof. taxes and charges imposed by law on such article. Secretary of Agriculture – If the article in question is an agricultural product. The Secretary shall. the Philippines at a price less than its fair value. — a. The Commission shall submit its findings to the Secretary within one month after receipt of the aforesaid advice. where such imports have caused or threaten to cause serious injury to the importing Member's domestic industry. to be levied. d. upon receipt of such advice from the Secretary. whether dutiable or duty-free. or is likely to injure an industry in the Philippines. Whenever the Secretary of Finance (hereinafter called the Secretary") has reason to believe. e. 2. Secretary of Trade and Industry – If the article is nonagricultural product.Philippine products from undue competition posed by foreign made products. Ascertain the difference.

which have been rebated. production or sale of the article. by the person by whom or for whose account the article is imported. producer or seller. or which have not been collected. charges and expenses. and the fair value of the article. (b) The amount of any export tax paid in the country of exportation on the exportation of the article to the Philippines. production or sale of the article. including — (a) The cost of all containers and coverings and all other costs. 2. charges and expenses incident to bringing the article from the place of shipment in the country of exportation to the place of delivery in the Philippines and Philippine customs duties imposed thereon shall not be included. incident to bringing the article from the place of shipment in the country of exportation to the place of delivery in the Philippines. (3) An amount equal to the expenses. The "foreign market value" of an imported article shall be the price. in the absence of such value. by or for the account of the exporter. and Philippine customs duties. at the time of exportation of such article to the Philippines. or which have not been collected. producer or seller in respect to the manufacture. if included. or. The "dumping duty" as provided for in subsection "e" hereof shall be equal to the difference between the purchase price or. plus. charges and expenses incident to placing the article in condition. 3. The following amount. prior to the time of exportation. charges and expenses incident to placing the article in condition. in the absence thereof. packed ready for shipment to the Philippines. its cost of production. generally incurred by or for the account of the exporter in the Philippines in selling identical or substantially identical article. 4. when not included in such price — (a) The cost of all containers and coverings and all other costs. which have been rebated. if any. by reason of the exportation of the article to the Philippines. or which have not been collected. for selling in the Philippines the particular article under consideration. shall be deducted — (1) The amount of costs. (c) The amount of any import duties imposed by the country of exportation which have been rebated. The "fair value" of an article shall be its foreign market value. if any. at which such or similar article is sold or freely offered for sale to all purchasers in the principal markets of the country from which exported. packed ready for shipment to the Philippines. and (d) The amount of any taxes imposed in the country of exportation upon the manufacturer. in the usual wholesale quantities and in the ordinary course of trade for home consumption (or.d. The "purchase price" of an imported article shall be the price at which such article has been purchased or agreed to be purchased. by reason of the exportation of the article to the Philippines. For the purpose of this section — 1. Any additional costs. if not Page | 88 . and (c) The amount of any taxes imposed in the country of exportation upon the manufacturer. by reason of its exportation to the Philippines. the exporter's sales price. The "exporter's sale price" of an imported article shall be the price at which such article is sold or agreed to be sold in the Philippines. before or after the time of exportation. and (4) The amount of any export tax paid in the country of exportation on the exportation of the article to the Philippines. (b) The amount of any import duties imposed by the country of exportation which have been rebated. be reason of the exportation of the article of the Philippines. or which have not been collected. (2) The amount of commissions. e. in respect to the manufacture.

shall be released after payment by the party concerned of the Page | 89 . manufacturer or producer. Articles which may have been delivered under the provision of section fifteen hundred and three of this Code prior to the institution of the investigation provided in this section shall. jointly or severally. directly or indirectly. no pretended sale or offer for sale. manufacturer or producer owns or controls. any interest in the business of the exporter. prior to the time of exportation. equal to the profit which is originally added. If the exporter. Pending investigation and final decision of the case. and no sale or offer for sale intended to establish a fictitious market. at a time preceding the date of shipment of the particular article under consideration which would ordinarily permit the manufacture or production of the particular article under consideration in the usual course of business. and (d) An addition for profit not less than 8 per cent of the sum of the amounts determined under subparagraphs (a) and (b) hereof. through stock ownership or control or otherwise. be ordered returned to the custody of the collectors of customs unless released under bond in accordance with this section. through stock ownership or control or otherwise. If any person or persons. in the case of identical or substantially identical articles. g. For the purposes of this section the "exporter" of an imported article shall be the person by whom or for whose account the article is imported into the Philippines — 1. including the cost of all containers and coverings and all other costs. the foreign market value shall be ascertained as of the date of such purchase or agreement to purchase. (b) The usual general expenses not less than 10 per cent of such cost. manipulation or other process employed in manufacturing or producing. and articles of the same specific kind or class subsequently imported under similar circumstances. or 2. (c) The cost of all containers and coverings. importer.sold or offered for sale for home consumption. If such person owns or controls. any interest in any business conducted by such persons. charges and expenses incident to placing the particular article under consideration in condition. identical or substantially identical article. or 4. by manufacturers or producers in the country of manufacture or production who are engaged in the same general trade as the manufacturer or producer of the particular article under consideration. pending final decision. (1) The article. packed ready for shipment to the Philippines. manufacturer or producer. own or control in the aggregate 20 per cent or more of the voting power or control in the business carried on by the person by whom or for whose account the article is imported into the Philippines. charges and expenses incident to placing the article in condition packed ready for shipment to the Philippines. The "cost of production" of an imported article shall be the sum of — (a) The cost of materials of. consignee or agent upon the giving of a bond in an amount equal to the double the estimated value thereof. and also 20 per cent or more of such power or control in the business of the exporter. if it has not been previously released under bond as provided in subsection "g" hereof. then for exportation to countries other than the Philippines). in the case of articles of the same general character as the particular article under consideration. the article in question. except that in the case of articles purchased or agreed to be purchased by the person by whom or for whose account the article is imported. through stock ownership or control or otherwise. directly or indirectly. 5. directly or indirectly. f. shall be released to the owner. manufacturer or producer. In the ascertainment of foreign market value for the purpose of this section. and of fabrication. h. Any aggrieved party may only appeal the amount of dumping duty that is levied and collected by the Commissioner of Customs to the Court of Tax Appeals in the same manner and within the same period provided for by law in the case of appeals from decisions of the Commissioner of Customs. If such person is the agent or principal of the exporter. shall be taken into account. and all other costs. or 3. i.

with the approval of the department head. shall constitute a bounty. upon the production. On articles dutiable under this Code. at his option and expense. should an article be allowed drawback by the country of origin and/or exportation. COUNTERVAILING DUTIES and report of the Commission. as likely to materially injure an established industry. in their opinion. and the Commission shall so certify to the Secretary. only the ascertained or estimated excess of the amount of the drawback over the total amount of the duties and/or internal taxes. The Secretary shall promulgate all rules and regulations necessary to carry out the provisions of this section. It shall be the duty of collectors of customs at all ports of entry to levy and collect the dumping duty in accordance with subsection "d" hereof on the specific kind or class of article as to which the Secretary has made a decision of dumping. Marking of Imported Articles and Containers. subsidy or subvention and shall transmit to the Secretary the amounts so ascertained. k. g. It shall also be their duty to bring to the attention of the Secretary. require action as provided in this section. there shall be levied a countervailing duty equal to the ascertained or estimated amount of such bounty. — Except as hereinafter provided. other parties directly affected. Any investigation to be conducted by the Commission under this section shall include a hearing or hearings where the owner. j. 303. issue rules and regulations to — Sec. — a. subsidy or subvention. and the importation of which has been determined by the Secretary. or prevent or considerably retard the establishment of an industry in the Philippines. importer. Marking duties Sec. determined or estimated. if any. taxes and charges. manufacture or export of which any bounty. The Commissioner of Customs shall. importer. as provided in subsection "b" hereof) imported into the Philippines shall be marked in any official language of the Philippines and in a conspicuous place as legibly. subsidy or subvention within the meaning of this section.corresponding dumping duty in addition to any other duties. indelibly and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the Philippines the name of the country of origin of the article. after investigation Page | 90 . The Commission. determine or estimate the net amount of such bounty. That the exception of any exported article from a duty or tax imposed on like articles when destined for consumption in the country of origin and/or exportation or the refunding of such duty or tax. if any. l. 302. every article of foreign origin (or its container. and such other parties as in the judgment of the Commission are entitled to appear. taxes and charges. c. subsidy or subvention is directly or indirectly granted in the country of origin and/or exportation. The Secretary shall make all rules and regulations necessary to carry out the provisions of this section. or re-exported by the owner. shall ascertain. the party concerned shall be required to pay the corresponding dumping done in addition to any other duties. on its own motion or upon application of any interested party. thru the Commissioner of Customs. if any. any case coming within their notice which may. — a. upon the filing of a bond in an amount equal to double the estimated value of the article. Marking of Articles. the latter shall take the necessary steps to suspend or discontinue the imposition of such duty. as provided in subsection "g" hereof. b. conditioned upon the presentation of a landing certificate issued by a consular officer of the Philippines at the country of destination. consignee or agent of the imported article. however. when in its judgment there is good and sufficient reason therefor. Countervailing Duty. subsidy or subvention: Provided. or (2) If the article has been previously released under bond. shall not be deemed to constitute a grant of a bounty. shall be given an opportunity to be heard and to present evidence bearing on the subject matter. Wherever it is ascertained that the conditions which necessitated the imposition of the countervailing duty have ceased to exist. consignee or agent. f. the local producers of a like article. if any.

(f) Such article is imported for use by the importer and not intended for sale in its imported or any other form. must necessarily know the country of origin of such article even though it is not marked to indicate its origin. (b) Such article cannot be marked prior to shipment to the Philippines without injury.(1) Determine the character of words and phrases or abbreviations thereof which shall be acceptable as indicating the country of origin and prescribe any reasonable method of marking. and a conspicuous place on the article or container where the marking shall appear. (2) Require the addition of any other words or symbols which may be appropriate to prevent deception or mistake as to the origin of the article or as to the origin of any other article with which such imported article is usually combined subsequent to importation but before delivery to an ultimate purchaser. (h) An ultimate purchaser. if any. shall be marked in such manner as to indicate to an ultimate purchaser in the Philippines the name of the country of origin of such article in any official language of the Philippines. Delivery Withheld until Marked. subject to all provisions of this section. seller or shipper to avoid compliance with this section. Page | 91 . examination or appraisement shall be delivered until such articles and/or their containers. as provided in subsection "b" hereof). including the same exceptions as are applicable to articles under subdivision (3) of subsection "a". is not marked in accordance with the requirements of this section. — No imported article held in customs custody for inspection. (e) Such article is a crude substance. stenciling. c. producer. shall have been marked in accordance with the requirements of this section and until the amount of duty estimated to be payable under subsection "c" of this section shall have been deposited. (c) Such article cannot be marked prior to shipment to the Philippines. (d) The marking of a container of such article will reasonably indicate the origin of such article. (i) Such article was produced more than twenty years prior to its importation into the Philippines. Marking Duty for Failure to Mark. branding. destroyed or permanently concealed. and (3) Authorize the exception of any article from the requirements of marking if — (a) Such article is incapable of being marked. the immediate container. of such article. or such other container or containers of such article as may be prescribed by the Commissioner of Customs with the approval of the department head. d. — If at the time of importation any article (or its container. (g) Such article is to be processed in the Philippines by the importer or for his account otherwise than for the purpose of concealing the origin of such article and in such manner that any mark contemplated by this section would necessarily be obliterated. Marking of Containers. The failure or refusal of the owner or importer to mark the articles as herein required within a period of thirty days after due notice shall constitute as an act of abandonment of said articles and their disposition shall be governed by the provisions of this Code relative to abandonment of imported articles. e. whether by printing. except when such article is exported or destroyed under customs supervision and prior to the final liquidation of the corresponding entry. b. — Whenever an article is excepted under subdivision (3) of subsection "a" of this section from the requirements of marking. whether released or not from customs custody. which shall be deemed to have accrued at the time of importation. or (j) Such article cannot be marked after importation except at an expense which is economically prohibitive. by reason of the character of such article or by reason of the circumstance of its importation. there shall be levied. and the failure to mark the article before importation was not due to any purpose of the importer. Nothing in this section shall be construed as excepting any article or its container from the particular requirements of marking provided for in any provisions of law. except at an expense economically prohibitive of its importation. labeling or by any other reasonable method. collected and paid upon such article a marking duty of 5 per cent ad valorem. stamping.

it shall be the duty of the Commission to bring the matter to the attention of the President. Page | 92 . No berthing charges may be collected from vessels moored at municipal/private ports. shall by proclamation specify and declare new or additional duties in an amount not exceeding 50 per cent of the existing rates as hereinafter provided upon articles wholly or in part the growth or product of. upon the disposition in. maintained or increased its said discriminations against the commerce of the Philippines. suspend. to issue a further proclamation directing that such product of said country or such articles imported in its vessels as he shall deem consistent with the public interests. directly or indirectly. g. charged not for the use of any wharf but for a special fund known as the Port Works Fund 3. or imported in a vessel of. Wharfage dues – counterpart of license. It shall be the duty of the Commission to ascertain and at all times to be informed whether any of the discriminations against the commerce of the Philippines enumerated in subsections "a" and "b" of this section are practiced by any country. by or in respect to any customs. fee. Whenever the provision of this section shall be applicable to importations into the Philippines of articles wholly or in part the growth or product of any foreign country. The Secretary shall make such rules and regulations as are necessary for the execution of such proclamation as the President may issue in accordance with the provisions of this section. they shall be applicable thereto whether such articles are imported directly or indirectly. and the President shall. Discrimination by Foreign Countries. supplement or amend any such proclamation. and if and when such discriminatory acts are disclosed. extend to the whole of any foreign country or may be confined to any subdivision or subdivisions thereof. whenever he deems the public interests require. shall be excluded from importation into the Philippines. collection. Other types of fees charged by the Bureau of Customs 1. directly or indirectly. in such manner as to place the commerce of the Philippines at a disadvantage compared with the commerce of any foreign country. prosecuted and condemned in like manner and under the same regulations. b.h. restriction or prohibition. the President is hereby authorized. Berthing fee – are levied on a vessel coming or mooring within specified places or waters of a port. The authority granted herein to the President shall be exercised only when Congress is not in session. as aforesaid but has. if he deems it consistent with the interests of the Philippines. d. by law or administrative regulation or practice. e. classification. restrictions and provisions as may from time to time be established for the recovery. 304. receiving and custody of the imported or exported article or the baggage of the passenger. or transportation in transit through or re-exportation from such country of any article wholly or in part the growth or product of the Philippines any unreasonable charge. Arrastre charge – is the amount due for the handling. c. All articles imported contrary to the provisions of this section shall be forfeited to the Government of the Philippines and shall be liable to be seized. charge. distribution and remission of forfeiture to the government by the tariff and customs laws. The President. f. regulation or limitation which is not equally enforced upon the like articles of every foreign country. after the issuance of a proclamation as authorized in subsection "a" of this section. regulation. any foreign country whenever he shall find as a fact that such country — (1) Imposes. Retaliatory duties Sec. together with recommendation. or (2) Discriminates in fact against the commerce of the Philippines. or port duty. when he finds that the public interest will be served thereby. exaction. if he deems it consistent with the interests of the Philippines. exaction. 2. Any proclamation issued by the President under the authority of this section shall. If at any time the President shall find it to be a fact that any foreign country has not only discriminated against the commerce of the Philippines. — a. condition. revoke. tonnage.

of forcible resistance to any law of the Philippines. advertisements thereof and lists of drawings therein." Marihuana. 102. drawings or other representation of an obscene or immoral character. cigarettes or other articles when such distribution is dependent upon chance. h. or preparation thereof. Opium pipes and parts thereof. g. or alloys thereof. 9135 (a) TRANSACTION VALUE SYSTEM "SEC. ammunitions and other explosives. paintings. for medicinal purposes only. . 201. Any adulterated or misbranded article of food or any adulterated or misbranded drug in violation of the provisions of the "Food and Drugs Act. rebellion. Harbor fee – collected port charges on the different activities of a vessel engaged in foreign trade for entrance into or departure from a port of entry. how or by whom human conception is prevented or unlawful abortion produced. and detached parts thereof. or any printed matter which advertises or describes or gives directly or indirectly information where. intended or adapted for preventing human conception or producing unlawful abortion. insurrection or sedition against the Government of the Philippines. j. except when authorized by law. machines. Any article manufactured in whole or in part of gold silver or other precious metal. — The importation into the Philippines of the following articles is prohibited: a. any compound. d. – Transaction Value. .A. Written or printed articles. b. Dynamite. marked cards. Sec. k.The dutiable value of an imported article subject to an ad valorem rate of duty shall be the transaction value. of whatever material. engravings. loaded dice. i. gunpowder. or in the distribution of money.4. PROHIBITED IMPORTATIONS f. drugs and substances designed. adjusted by adding: Page | 93 e. or containing any threat to take the life of or inflict bodily harm upon any person in the Philippines. Prohibited Importations. manufactured salt. – (A) Method One. 5. which shall be the price actually paid or payable for the goods when sold for export to the Philippines. Basis of Dutiable Value. CUSTOMS VALUATION R. coca leaves. derivative. the stamps brands or marks of which do not indicate the actual fineness or quality of said metals or alloys. except when imported by the Government of the Philippines or any person duly authorized by the Collector of Internal Revenue. c. apparatus or mechanical devices used in gambling. Written or printed article in any form containing any matter advocating or inciting treason. objects. or any other narcotics or synthetic drugs which are or may hereafter be declared habit forming by the President of the Philippines. All other articles the importation of which is prohibited by law. opium poppies. cigars. firearm and weapons of war. instruments. Tonnage dues—collected port charges on the different activities of a vessel engaged in foreign trade for coming to the Philippines from a foreign port or for going to a foreign port from the Philippines. Roulette wheels. including jackpot and pinball machines or similar contrivances. Lottery and sweepstakes tickets except those authorized by the Philippine Government. Articles. gambling outfits. lithographs. photographs.

design work and plans and sketches undertaken elsewhere than in the Philippines and necessary for the production of imported goods. or (d) The buyer and the seller are related to one another. unless an appropriate adjustment can be made in accordance with the provisions hereof. Page | 94 . or (iii) Do not substantially affect the value of the goods. (d) The value. disposal or use of the imported goods that accrues directly or indirectly to the seller.(1) The following 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: (a) Commissions commissions). All additions to the price actually paid or payable shall be made only on the basis of objective and quantifiable data. either directly or indirectly. development. (v) One of them directly or indirectly controls the other. (iv) Any person directly or indirectly owns. dies. controls or holds five percent (5%) or more of the outstanding voting stock or shares of both seller and buyer. (c) Part of the proceeds of any subsequent resale. disposal or use of the goods by the buyer will accrue directly or indirectly to the seller. (iii) There exists an employer-employee relationship between them. moulds and similar items used in the production of imported goods. (ii) Limit the geographical area in which the goods may be resold. artwork. (b) The sale or price is subject to some condition or consideration for which a value cannot be determined with respect to the goods being valued. (b) Cost of containers. (ii) They are legally recognized partners in business. tools. apportioned as appropriate. and engineering. and brokerage fees (except buying No additions shall be made to the price actually paid or payable in determining the customs value except as provided in this Section: Provided. of the following goods and services: materials. That Method One shall not be used in determining the dutiable value of imported goods if: (a) There are restrictions as to the disposition or use of the goods by the buyer other than restrictions which: (i) Are imposed or required by law or by Philippine authorities. (4) Loading. and such relationship influenced the price of the goods. parts and similar items incorporated in the imported goods. (c) The cost of packing. Such persons shall be deemed related if: (i) They are officers or directors of one another‘s businesses. where such goods and services are supplied directly or indirectly by the buyer free of charge or at a reduced cost for use in connection with the production and sale for export of the imported goods. materials consumed in the production of the imported goods. (e) The amount of royalties and license fees related to the goods being valued that the buyer must pay. (3) The cost of transport of the imported goods from the port of exportation to the port of entry in the Philippines. (2) The value of any part of the proceeds of any subsequent resale. components. as a condition of sale of the goods to the buyer. unloading and handling charges associated with the transport of the imported goods from the country of exportation to the port of entry in the Philippines. whether for labour or materials. and (5) The cost of insurance.

of the other shall be deemed to be related for the purposes of this Act if they fall within any of the eight (8) cases above. If neither the imported goods nor identical nor similar imported goods are sold at or about the time of importation of the goods being valued in the Philippines in the conditions as imported. "Identical goods" shall mean goods which are the same in all respects. the costs and charges referred to in subsection (A) (3). the order of application of methods four and five shall be reversed: Provided. The quality of the goods. including physical characteristics. when the dutiable value still cannot be determined under that method. in the same condition as when imported. at or about the time of the importation of the goods being valued. – The dutiable value of the imported goods under this method shall be the deductive value which shall be based on the unit price at which the imported goods or identical or similar imported goods are sold in the Philippines. to persons not related to the persons from whom they buy such goods. although not alike in all respects. the Commissioner of Customs may refuse such a request in which event the dutiable value shall be determined under method four. – Where the dutiable value cannot be determined under method one. except that. or (viii) They are members of the same family. have like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable. be based on the unit price at which the imported goods or identical or similar imported goods sold in the Philippines in the condition as imported at the earliest date after the importation of the goods being valued but before the expiration of ninety (90) days after such importation. "Similar goods" shall mean goods which. quality and reputation. (C) Method Three. under method five. (vii) Together they directly or indirectly control a third person. in the greatest aggregate quantity. – Transaction Value of Similar Goods. Persons who are associated in business with one another in that one is the sole agent. sole distributor or sole concessionaire. – Where the dutiable value cannot be determined under the preceding method. the dutiable value shall be the transaction value of similar goods sold for export to the Philippines and exported at or about the same time as the goods being valued. (2) The usual costs of transport and insurance and associated costs incurred within the Philippines. however. (D) Method Four. (B) Method Two. the dutiable value shall be determined under method four or. – Transaction Value of Identical Goods. and (3) Where appropriate. at the request of the importer. Page | 95 . if it can be so determined. their reputation and the existence of a trademark shall be among the factors to be considered in determining whether goods are similar. the customs value shall. subject to the conditions set forth in the preceding paragraph hereof. That if the Commissioner of Customs deems that he will experience real difficulties in determining the dutiable value using method five. the dutiable value shall be the transaction value of identical goods sold for export to the Philippines and exported at or about the same time as the goods being valued. If the dutiable value still cannot be determined through the successive application of the two immediately preceding methods. including those related by affinity or consanguinity up to the fourth civil degree. (4) and (5). subject to deductions for the following: (1) Either the commissions usually paid or agreed to be paid or the additions usually made for profit and general expenses in connection with sales in such country of imported goods of the same class or kind.(vi) Both of them are directly or indirectly controlled by a third person. however described. Minor differences in appearances shall not preclude goods otherwise conforming to the definition from being regarded as identical. and (4) The customs duties and other national taxes payable in the Philippines by reason of the importation or sale of the goods. – Deductive Value.

however. No dutiable value shall be determined under Method Six on the basis of: (1) The selling price in the Philippines of goods produced in the Philippines. (5) The price of goods for export to a country other than the Philippines. if their values are not included under paragraph (1) hereof. if its value is not included under paragraph (1) hereof. that have been determined for identical or similar goods in accordance with Method Five hereof. The Bureau of Customs shall not require or compel any person not residing in the Philippines to produce for examination. it becomes necessary to delay the final determination of such dutiable value. or to allow access to. If in the course of determining the dutiable value of imported goods. – The dutiable value under this method shall be the computed value which shall be the sum of: (1) The cost or the value of materials and fabrication or other processing employed in producing the imported goods. (F) Method Six. (2) A system that provides for the acceptance for customs purposes of the higher of two alternative values. That goods. (2) The amount for profit and general expenses equal to that usually reflected in the sale of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to the Philippines. it shall be determined by using other reasonable means and on the basis of data available in the Philippines. (E) Method Five. the importation of which is Page | 96 . (4) The cost of production. – Computed Value. any account or other record for the purpose of determining a computed value. (6) Minimum customs values. (3) and (4) hereof. (2). the importer shall nevertheless be able to secure the release of the imported goods upon the filing of a sufficient guarantee in the form of a surety bond. if the importer so requests. – If the dutiable value cannot be determined under the preceding methods described above. and (5) The cost of containers and packing. (4) Any assist. the importer shall be informed in writing of the dutiable value determined under Method Six and the method used to determine such value. (3) The price of goods in the domestic market of the country of exportation. after further processing. information supplied by the producer of the goods for the purposes of determining the customs value may be verified in another country with the agreement of the producer and provided they will give sufficient advance notice to the government of the country in question and the latter does not object to the investigation.If neither the imported goods nor identical nor similar imported goods are sold in the Philippines in the condition as imported. If the importer so requests. However. cash or some other appropriate instrument in an amount equivalent to the imposable duties and taxes on the imported goods in question conditioned upon the payment of customs duties and taxes for which the imported goods may be liable: Provided. subject to allowance for the value added by such processing and deductions provided under Subsections (D)(1). other than computed values. are sold in the greatest aggregate quantity to persons in the Philippines who are not related to the persons from whom they buy such goods. insurance fees and other transportation expenses for the importation of the goods. (3) The freight. the dutiable value shall be based on the unit price at which the imported goods. or (7) Arbitrary or fictitious values. a deposit. then. – Fallback Value.

it may. the Bureau of Customs may. including documents or other evidence. verification and/or investigation of those records either in relation to specific transactions or to the adequacy and integrity of the manual or electronic system or systems by which such records are created and stored. The importers/customs brokers shall allow any customs officer authorized by the Bureau of Customs to enter during office hours any premises or place where the records referred to in the preceding section are kept to conduct audit examination. the customs administration shall communicate to the importer in writing its decision and the grounds therefor. An authorized customs officer is not entitled to enter any premises under this Section unless. the customs administration still has reasonable doubts about the truth or accuracy of the declared value. before so doing. that the declared value represents the total amount actually paid or payable for the imported goods. invoke the aid of the proper regional trial court within whose jurisdiction the matter falls. or in the absence of a response. When a final decision is made. If." Page | 97 . 3515. Unless otherwise provided herein or in other provisions of law. adjusted in accordance with the provisions of Subsection (A) hereof. The records or documents must. Compliance Audit or Examination of Records. or take extracts from any such documents. his grounds for doubting the truth or accuracy of the particulars or documents produced and give the importer a reasonable opportunity to respond. In addition. inspection.prohibited by law shall not be released under any circumstance whatsoever. after receiving further information. the authorized customs officer may make copies of. This is without prejudice to the criminal sanctions imposed by this Code and administrative sanctions that the Bureau of Customs may impose against contumacious importers under existing laws and regulations including the authority to hold delivery or release of their imported articles. in writing if requested. The person occupying or apparently in charge of the premises entered by an officer shall provide the officer with all reasonable facilities and assistance for the effective exercise of powers under this Section. In addition. the fact that the importer/broker denies the authorized customs officer full and free access to importation records during the conduct of a post-entry audit shall create a presumption of inaccuracy in the transaction value declared for their imported goods and constitute grounds for the Bureau of Customs to conduct a re-assessment of such goods. For this purpose. records. The court may punish contumacy or refusal as contempt. A duty authorized customs officer shall be full and free access to all books. the Collector of Customs shall communicate to the importer. in case of disobedience. Before taking a final decision." (b) POST ENTRY AUDIT "SEC. Nothing in this Section shall be construed as restricting or calling into question the right of the Collector of Customs to satisfy himself as to the truth or accuracy of any statement. be returned to the person in charge of such documents. document or declaration presented for customs valuation purposes. When a declaration has been presented and where the customs administration has reason to doubt the truth or accuracy of the particulars or of documents produced in support of this declaration. A copy of any such document certified by or on behalf of the importer/broker is admissible in evidence in all courts as if it were the original. and documents necessary or relevant for the purpose of collecting the proper duties and taxes. without prejudice to an importer‘s right to appeal pursuant to Article 11 of the World Trade Organization Agreement on customs valuation. the officer produces to the person occupying or apparently in charge of the premises written evidence of the fact that he or she is an authorized officer. as soon as practicable after copies of such have been taken. be deemed that the customs value of the imported goods cannot be determined under Method One. the customs administration may ask the importer to provide further explanation.

knowing the same to have been imported contrary to law… PUNISHABLE BY a fine of not less than P600 nor more than P5. paper. – (a) The audit of importers shall be undertaken: (1) When firms are selected by a computer-aided risk management system. or assist in so doing. — Any person who makes or attempts to make any entry of imported or exported article by means of any false or fraudulent invoice. (c) The compliance tract records of the firm. (2) When errors in the import declaration are detected. conceal." "SEC. Unlawful Importation. 3518. affidavit. (b) The company structure. (d) Privileges enjoyed. sell. embraced or referred to in such invoice. (c) Key importations.000 and imprisonment for not less than 6 months nor more than 2years and. or in any manner facilitate the transportation. upon trial for a violation of this section. — Any person who shall fraudulently import or bring into the Philippines. paper. (2) Key officers. subject to the approval of the Commissioner of Customs. (e) Penalties. and (3) Organizational structure. taxes and other charges. he shall be deported after serving the sentence. concealment. 3602. IMPORTATION IN VIOLATION OF TCCP PENAL PROVISION Sec. affidavit. or affected by such act or omission.Where a document in a foreign language is presented to a customs officer in relation to the carrying out of any duty or the exercise of any power of the Bureau of Customs under this Code. Sec. letter. (3) When firms voluntarily request to be audited. unless the defendant shall explain the possession to the satisfaction of the court. 3601. 3517. or by means of any false statement. . Various Fraudulent Practices Against Customs Revenue. (b) Brokers shall be audited to validate audits of their importer clients and/or fill information gaps revealed during an audit of their importers clients."SEC." 6. buy. Records to Be Kept by Customs. the parameters of which are to be based on objective and quantifiable data and are to be approved by the Secretary of Finance upon recommendation of the Commissioner of Customs. or shall be guilty of any willful act or omission by means of whereof the Government might be deprived of the lawful duties. to include but not be limited to: (a) Articles of Incorporation." "Sec. shall. or any portion thereof. such possession shall be deemed sufficient evidence to authorize conviction. and (d) An assessment of the risk to revenue of the firm‘s import activities. The criteria for selecting firms to be audited shall include. (b) The rates of duties of the firm‘s imports. or statement. the following: (a) Relative magnitude of customs revenue from the firm. for each offense… Page | 98 . the defendant is shown to have or to have had possession of the article in question. Documents in Foreign Language. 3516. or shall receive. Scope of the Audit. if the offender is an alien. declaration. accruing from the article or any portion thereof. – The Bureau of Customs shall likewise keep a record of audit results in a database of importer and broker profiles. letter. and (f) Risk category (ies). said document in a foreign language must be accompanied with a translation in the official language of this country. or by means of any false or fraudulent practice whatsoever. declaration. which shall include but not be limited to: (1) Incorporators and Board of Directors. written or verbal. any article. When. or sale of such article after importation. but not be limited to. contrary to law.

PROPERTIES SUBJECT TO FORFEITURE Sec. and any vessel which. which shall be used lawfully in the importation or exportation of articles into or from any Philippine port or place except a port of entry. stress of weather or other necessity and is subsequently approved by the Collector. Any part of the cargo of a vessel or aircraft arriving from a foreign port which is unladen before arrival at the vessel's or aircraft's port of destination and without authority from the proper customs official. including all other packages purportedly containing imported articles similar to those declared in the invoice or entry to be the contents of the misdeclared package. d. including cargo.Property Subject to Forfeiture Under Tariff and Customs Laws. g. Page | 99 . articles and other objects shall. provided the Collector is of the opinion that the misdeclaration was caused with fraudulent intent. k. being of less than thirty tons capacity shall be used in the importation of articles into any Philippine port or place except into a port of the Sulu sea where importation in such vessel may be authorized by the Commissioner. has no knowledge of the unlawful act. Any article of prohibited importation or exportation. b.PUNISHABLE BY a fine of not less than P600 nor more than P5. product or manufacture in excess of the amount necessary for sea stores. together with its equipage and appurtenances. if manifest therefor is required. Any article sought to be imported or exported: (1) Without going through a customhouse. be subject to forfeiture: a. Sea stores or stores for aircraft adjudged by the Collector to be excessive. team or other motive power drawing or propelling the same. cargo. envelopes and other containers of whatever character used as receptacles or as devices to conceal article which is itself subject to forfeiture under the customs and tariff laws or which is so designed as to conceal the character of such article. Any vessel or aircraft. i. in the opinion of the Collector. Any vessel or aircraft into which shall be transferred cargo unladen contrary to law prior to the arrival of the importing vessel or aircraft at her port of destination. Any package of imported article which is found by the examining official to contain any article not specified in the invoice or entry. under the following conditions. — Any vessel or aircraft. Any article which is fraudulently concealed in or removed from any public or private warehouse under customs supervision. h. e. have been used. cases. and all other articles which. are or were intended to be used as instrument in the importation or exportation of the former. the importation or exportation of which is effected or attempted contrary to law. frustrated or attempted. l. with the approval of the department head. but such cargo shall not be forfeited if such unlading was due to accident. trunks. whether the act was consummated. 2530. and any vehicles similarly used. without such article having been properly entered or legally imported. when the duties assessed by the Collector thereon are not paid or secured forthwith upon assessment of the same. j. Any money or thing of value offered as a bribe or for the purpose of exerting improper influence over a customs official or employee.000 and by imprisonment for not less than 6months nor more than 2years and if the offender is an alien. c. Any beast actually being used for the conveyance of article subject to forfeiture under the customs and tariff laws with its equipage or trappings. Any vessel engaging in the coastwise trade which shall have on board any article of foreign growth. he shall be deported after serving the sentence. Unmanifested article found on any vessel or aircraft. Boxes. but the forfeiture shall not be effected if it is established that the owner of the means of conveyance used as aforesaid or his agent in charge thereof at the time. m. f. including the beast.

articles found in the baggage of a person arriving from abroad. original owner. Conditions Affecting Forfeiture of Article. the forfeiture shall be effected only when and while the article is in the custody or within the jurisdiction of the customs authorities or in the hands or subject to the control of the importer. COMMISSIONER OF CUSTOM V. entry or exportation in question. exporter or consignee concerning the importation or exportation of such article. (4) On the strength of a false invoice or other document executed by the owner. exporter. This is the clear and plain meaning of the law. or was the subject of an attempt at importation or exportation. 2531. — As regards imported or exported article or articles whereof the importation or exportation is merely attempted. buy. MANILA STAR FERRY Section 2530(a) of the Tariff and Customs Code in unmistakable terms provides that a vessel engaged in smuggling "in a port of entry" cannot be forfeited. consignee. The absence or lack of actual knowledge of such LOCAL GOVERNMENT TAXATION II. agent or other person effecting the importation.(2) By failure to mention to a customs official. use is a defense personal to the owner himself which cannot in any way absolve the vessel from the liability of forfeiture. (5) Through any other fraudulent practice or device by means of which such articles was entered through a customhouse to the prejudice of the government. importer. we are bound by the words of the statute. Sec. contrary to law. (3) On the strength of a false declaration or affidavit executed by the owner. conceal. sell or transport the same or aid in any such acts. with knowledge that the article was imported. Forfeiture proceedings are proceedings in rem and are directed against the res. exporter or consignee concerning the importation or exportation of such article. LOCAL GOVERNMENT TAXATION Page | 100 . importer. for indeed. It is no defense that the owner of the vessel sought to be forfeited had no actual knowledge that his property was used illegally. or in the hands or subject to the control of some person who shall receive. It is not within the province of the Court to inquire into the wisdom of the law.

. Section 190. certified true copies of all provincial. confiscatory or contrary to declared national policy: Provided. Page | 101 . That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal. further. incentives or reliefs under such terms and conditions as they may deem necessary. Local Taxing Authority. however. Section 192. 132. 186-192. fee. Attempt to Enforce Void or Suspended Tax Ordinances and revenue measures. . Section 187. however.Within ten (10) days after their approval. Authority to Grant Tax Exemption Privileges. That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax. Local government units may. finally. Section 186.The enforcement of any tax ordinance or revenue measure after due notice of the disapproval or suspension thereof shall be sufficient ground for administrative disciplinary action against the local officials and employees responsible therefor. oppressive. That the ordinance levying such taxes. city. HELD: We do not share that view. Mandatory Public Hearings. Power To Levy Other Taxes. Furnishing of Copies of Tax Ordinances and Revenue Measures. fees. the same may be posted in at least two (2) conspicuous and publicly accessible places. fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code.Copies of all provincial. Ordinances and Revenue Measures. as amended.A.The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided. if warranted. to revoke it on either or both of these grounds. and municipal and barangay tax ordinances and revenue measures shall be furnished the respective local treasurers for public dissemination. Publication of Tax Ordinances and Revenue Measures. or charge levied therein: Provided. Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and. city. REQUIREMENTS FOR IMPOSITION OF LOCAL TAXES BY LGUs – SECS. and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation: Provided. grant tax exemptions.The power to impose a tax. That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided. Fees or Charges. or charges shall not be unjust. . Procedure for Approval and Effectivity of Tax. he is not also permitted to substitute his own judgment for the judgment of the local government that enacted the measure. through ordinances duly approved. That in provinces. DRILON V. Section 188.LIM ISSUE: WON the RTC was correct in declaring the ordinance unconstitutional. LGC Section 132. or charge or to generate revenue under this Code shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance. or other applicable laws: Provided. That the taxes. but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under this Code. Section 191. cities and municipalities where there are no newspapers of local circulation. Section 189. When he alters or modifies or sets aside a tax ordinance. That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided.Local government units shall have the authority to adjust the tax rates as prescribed herein not oftener than once every five (5) years. excessive. . . the aggrieved party may file appropriate proceedings with a court of competent jurisdiction. Local government units may exercise the power to levy taxes. fees or charges shall not be enacted without any prior public hearing conducted for the purpose. fee. Authority of Local Government Units to Adjust Rates of Tax Ordinances. . further.

considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. in its Order. that was an act not of control but of mere supervision. and the approved ordinance was published in the Manila Standard and Balita. Branch 21. Neither is there quibbling on the fact that the said Order of the DOJ was never appealed by the City of Manila. in its Decision dated 28 November 2001. The supervisor or superintendent merely sees to it that the rules are followed. We have carefully examined every one of these exhibits and agree with the trial court that the procedural requirements have indeed been observed. reiterated the findings of the DOJ Secretary that respondents failed to follow the procedure in the enactment of tax measures as mandated by Section 188 of the Local Government Code of 1991. It is undisputed from the facts of the case that Tax Ordinance No. but he himself does not lay down such rules. it had attained finality after the lapse of the period to appeal. but this requirement applies to the approval of local development plans and public investment programs of the local government unit and not to tax ordinances. CITY OF MANILA ISSUE: Whether or not Tax Ordinance no. As we see it. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. in his discretion. thus. and no more nor less than this. Furthermore. dated 17 August 2000. the Manila Revenue Code was not translated into Pilipino or Tagalog and disseminated among the people for their information and guidance. 7988 is null and void. HELD: YES. and so performed an act not of control but of mere supervision. He did not say that in his judgment it was a bad law. From the foregoing. In his resolution. No minutes were submitted to show that the obligatory public hearings had been held. he may. that is. The proposed ordinances were published in the Balita and the Manila Standard respectively. order the act undone or re-done by his subordinate or he may even decide to do it himself. Secretary Drilon did precisely this. Finally. It has also not been shown that the text of the ordinance has been translated and disseminated. nor were copies of the proposed ordinance published in three successive issues of a newspaper of general circulation. with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code.Secretary Drilon did set aside the Manila Revenue Code. In the opinion of the Court. Judge Palattao found otherwise. He has no judgment on this matter except to see to it that the rules are followed. but he did not replace it with his own version of what the Code should be. The minutes of the hearings are found in the Exhibits. If the rules are not observed. it is evident that Tax Page | 102 . 7988 has already been declared by the DOJ Secretary. as null and void and without legal effect due to respondents’ failure to satisfy the requirement that said ordinance be published for three consecutive days as required by law. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law. He may not prescribe his own manner for the doing of the act. the RTC of Manila. in that they failed to publish Tax Ordinance No. he may order the work done or re-done but only to conform to the prescribed rules. He declared that all the procedural requirements had been observed in the enactment of the Manila Revenue Code and that the City of Manila had not been able to prove such compliance before the Secretary only because he had given it only five days within which to gather and present to him all the evidence which was later submitted to the trial court. Supervision does not cover such authority. Neither were copies of the measure as approved posted in prominent places in the city. An officer in control lays down the rules in the doing of an act. What he found only was that it was illegal. Notices of the public hearings were sent to interested parties. 7988 for three consecutive days in a newspaper of local circulation. The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity. The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is another matter. nor does he have the discretion to modify or replace them. If they are not followed. COCA-COLA BOTTLERS PHIL V. Secretary Drilon declared that there were no written notices of public hearings on the proposed Manila Revenue Code that were not sent to interested parties.

Ordinance No. 7988 is null and void as said ordinance was published only for one day in the 22 May 2000 issue of the Philippine Post in contravention of the unmistakable directive of the Local Government Code of 1991. Despite the nullity of Tax Ordinance No. 7988, the court a quo, in the assailed Order, dated 8 May 2002, went on to dismiss petitioner‘s case on the force of the enactment of Tax Ordinance No. 8011, amending Tax Ordinance No. 7988. Significantly, said amending ordinance was likewise declared null and void by the DOJ Secretary in a Resolution, dated 5 July 2001, elucidating that "[I]nstead of amending Ordinance No. 7988, [herein] respondent should have enacted another tax measure which strictly complies with the requirements of law, both procedural and substantive. The passage of the assailed ordinance did not have the effect of curing the defects of Ordinance No. 7988 which, any way, does not legally exist." Said Resolution of the DOJ Secretary had, as well, attained finality by virtue of the dismissal with finality by this Court of respondents’ Petition for Review .

the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: (DICE-OtABEV-TR2ExCoopGov) (a) INCOME tax, EXCEPT when levied on banks and other financial institutions; (b) DOCUMENTARY stamp tax (DST); (c) Taxes on ESTATES, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided herein; (d) CUSTOMS DUTIES, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges and dues except wharfage on wharves constructed and maintained by the local government unit concerned; (e) Taxes, fees, and charges and OTHER IMPOSITIONS upon goods carried into or out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees, or charges in any form whatsoever upon such goods or merchandise; (f) Taxes, fees or charges on AGRICULTURAL and aquatic products when sold by marginal farmers or fishermen; (g) Taxes on BUSINESS enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively from the date of registration; (h) EXCISE TAXES on articles enumerated under the national Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products; (i) Percentage OR VALUE-ADDED TAX (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided herein; (j) Taxes on the gross receipts of TRANSPORTATION CONTRACTORS and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code;

B. AUTHORITY TO ADJUST RATES AND GRANT EXEMPTIONS – SECS. 191, 192 LGC
Section 191. Authority of Local Government Units to Adjust Rates of Tax Ordinances. - Local government units shall have the authority to adjust the tax rates as prescribed herein not oftener than once every five (5) years, but in no case shall such adjustment exceed ten percent (10%) of the rates fixed under this Code. Section 192. Authority to Grant Tax Exemption Privileges. Local government units may, through ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as they may deem necessary.

C. COMMON LIMITATIONS ON TAXING POWERS OF THE LGU – SEC. 133, LGC
Section 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein,

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(k) Taxes on premiums paid by way or REINSURANCE or retrocession; (l) Taxes, fees or charges for the REGISTRATION of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, except tricycles; (m) Taxes, fees, or other charges on Philippine products actually EXPORTED, except as otherwise provided herein; (n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and COOPERATIVES duly registered under R.A. No. 6810 and Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known as the "Cooperative Code of the Philippines" respectively; and (o) Taxes, fees or charges of any kind on the National GOVERNMENT, its agencies and instrumentalities, and local government units.

resources extracted from private land, formally contested the same on Dec. 23, 1993. The same was denied by the Provincial Treasurer. RCC filed a petition for declaratory relief with the RTC of Bulacan which ruled that such relief was improper allegedly because a breach of the ordinance had been committed by RCC. 3. RCC then filed a petition for certiorari with the SC seeking to reverse the RTC decusuib, The SC referred the case to the CA. 4. Pending resolution in the CA, the Province of Bulacan (Bulacan) issued a warrant of levy against RCC because of its unpaid tax liabilities. Negotiations between Bulacan and RCC resulted in an agreement and modus vivendi whereby RCC paid P1.2 million under protest, representing 50% of the assessed tax, in exchange for the lifting of the warrant of levy. ISSUE: WON the provincial government could impose and/or assess taxes on quarry resources extracted by RCC from private lands pursuant to the Ordinance. HELD: NO. A province has no authority to impose taxes on stones, sand, gravel and earth and other quarry resources extracted from private lands. The pertinent provisions of the Local Government Code are as follows: Sec. 134. Scope of Taxing Powers. - Except as otherwise provided in this Code, the province may levy only the taxes, fees, and charges as provided in this Article. Sec. 138. Tax on Sand, Gravel and Other Quarry Resources. - The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction. Bulacan claims that the tax imposed is an excise tax, being a tax upon the performance, carrying on or exercise of an activity. A

PROVINCE OF BULACAN V. CA
G.R. NO 126232 (1998) FACTS: On June 26, 1992, the SangguniangPanlalawigan of Bulacan passed Provincial Ordinance No. 3, known as "An ordinance Enacting the Revenue Code of the Bulacan Province," which was to take effect on July 1, 1992. Section 21 of the ordinance provides as follows: Section 21. Imposition of Tax. There is hereby levied and collected a tax of 10% of the fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth and other quarry resources, such, but not limited to marble, granite, volcanic cinders, basalt, tuff and rock phosphate, extracted from public lands or from beds of seas, lakes, rivers, streams, creeks and other public waters within its territorial jurisdiction. 1. The Provincial Treasurer of Bulacan then assessed Republic Cement Corporation (RCC) the amount of P2.5 million for extracting limestone, shale and silica from several parcels of private land in the province during the third quarter of 1992 up to the second quarter of 1993. 2. RCC, believing that the province on the basis of the above ordinance had no authority to impose taxes on quarry

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province may not levy excise taxes on articles already taxed by the NIRC. The NIRC clearly provides a tax on ALL quarry resources, regardless of origin, whether extracted from public or private lands. Section 151. - Mineral Products. -NIRC (A) Rates of Tax. - There shall be levied, assessed and collected on minerals, mineral products and quarry resources, excise tax as follows: (2) On all nonmetallic minerals and quarry resources, a tax of two percent (2%) based on the actual market value of the gross output thereof at the time of removal, in case of those locally extracted or produced; or the values used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax, in the case of importation. Thus, a province may not ordinarily impose taxes on stones, sand, gravel, earth and other quarry resources, as the same are already taxed under the National Internal Revenue Code. The province can, however, impose a tax on stones, sand, gravel, earth and other quarry resources extracted from public land because it is expressly empowered to do so under the Local Government Code. As to stones, sand, gravel, earth and other quarry resources extracted from private land, however, it may not do so, because of the limitation provided by Section 133 of the Code in relation to Section 151 of the National Internal Revenue Code.

PETRON CORP V. TIANGCO
G.R. NO 15881 (2008) FACTS: Petron maintains a depot at the NavotasFishport Complex. Through that depot, it has engaged in the selling of diesel fuels to vessels used in commercial fishing in and around Manila Bay.  1 March 2002, Petron received a tax assessment from the office of Mayor Tiangco covering sale of diesel from 1997 to 2001 amounting to P6,259,087.62, (derived from the gross sales of the depot). The computation sheets that were attached to the letter in reference to Ordinance 92-03 (New Navotas Revenue Code).  Petron filed with Navotas a letter-protest to the notice of assessment pursuant to Section 195 of the Code. It argued that it was exempt from local business taxes in view of : o Art. 232(h) of the IRR of the Code, and

ruling of the Bureau of Local Government Finance of the Department of Finance stating that sales of petroleum fuels are not subject to local taxation.  The letter-protest was denied by the Municipal Treasurer. This was followed by a ―Final Demand to Pay‖ letter from the Mayor requiring Petron to pay the assessed amount within (5) days from its receipt, with a threat of closure of Petron's operations should there be no payment. Petron replied objecting to the threat of closure. The Mayor did not respond to this last letter.  20 May 2002, Petron filed with the Malabon-RTC a Complaint for Cancellation of Assessment for Deficiency Taxes. While the case was pending, respondents refused to issue a business permit, prompting Petron to file a Supplemental Complaint with Prayer for Preliminary Mandatory Injunction against Respondents.  5 May 2003, RTC dismissed Petron's complaint and ordered it to pay the assessed amount. 11 days later, Petron received a Closure Order from the Mayor. Petron sought a TRO from the RTC, but this was denied. MR was also denied.  SC issued a TRO, enjoining the respondents from closing Petron's Navotas plant. The controversy hinges on the correct interpretation of Section 133(h) of the LGC, and the applicability of Article 232 (h) of the IRR. Section 133(h) of the LGC reads as follows: Sec. 133.Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and Barangays shall not extend to the levy of the following:… (h) Excise taxes on articles enumerated under the NIRC, as amended, AND taxes, fees or charges on petroleum products; o ISSUE: Is an LGU empowered under the Local Government Code to impose business taxes on persons or entities engaged in the sale of petroleum products? NO. HELD: Section 133 prescribes the limitations on the capacity of LGU to exercise their taxing powers otherwise granted to them under the LGC. Apparently, paragraph (h) mentions two kinds of taxes which cannot be imposed by LGU, namely: "excise taxes on articles enumerated under the NIRC, as amended;" and "taxes, fees or charges on petroleum products."

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and not business taxes. that a business tax is distinct from an excise tax." Evidently. carrying on. Article X assures that "[e]ach local government unit shall have the power to create its own sources of revenues and to levy taxes. It cites Cordero v. Page | 106 . and "ad valorem tax" which is imposed and based on the selling price or other specified value of the goods. This ability of LGUs to impose business or other local taxes is rooted in the 1987 Constitution. thus: "xxx provided further." The FISCAL AUTONOMY of LGUs has received greater affirmation than ever." but subject to this important qualification. If the phrase actually pertains to excise taxes. but on a nonstatutory definition sourced from a legal paradigm that is no longer applicable in this jurisdiction. argue that what the provision prohibits is the imposition of excise taxes on petroleum products. any business engaged in the production. The enumeration that follows is generally a positive list of businesses which may be subjected to business taxes. RE BUSINESS TAXES BASED ON THE SALE OF PETROLEUM PRODUCTS: The power of a municipality to impose business taxes derives from Section 143 of the Code that specifically enumerates several types of business on which it may impose taxes.The power of a municipality to impose business taxes is provided for in Section 143 of the LGC. but not the imposition of business taxes on the same citing Philippine Petroleum Corporation v. The current definition of an excise tax is that of a tax levied on a specific article. or exercise of an activity. Unless there is another provision of law which states otherwise. any tax ordinance or revenue measure shall be construed strictly against the LGU enacting it. SC concedes that a tax on a business is distinct from a tax on the article itself. rather than one "upon the performance. Respondents assert that the phrase "taxes. manufacture. Conda. Municipality of Pililia. local fiscal autonomy should not necessarily translate into abject deference to the power of local government units to impose taxes. Article 232 of the IRR defines with more particularity the capacity of a municipality to impose taxes on businesses. Section 5." This current definition was already in place when the LGC was enacted in 1991. which if true." Respondents. fees or charges on petroleum products" pertains to the imposition of direct or excise taxes on petroleum products. and liberally in favor of the taxpayer. NIRC categorize two different kinds of excise taxes: "specific tax" which is imposed and based on weight or volume capacity or any other physical unit of measurement. Nonetheless. gasoline and other petroleum products shall not be subject to any local tax imposed on this article." Thus. or the exercise of an activity. including manufacturers. carrying on. or the exercise of an activity. and we can only presume that it was what the Congress had intended as it specified that local government units could not impose "excise taxes on articles enumerated under the [NIRC]. and paragraph (h) of Article 232 does allow the imposition of local business taxes "[o]n any business not otherwise specified in the preceding paragraphs which the sanggunian concerned may deem proper to tax. could invalidate the challenged tax solely on the basis of the phrase "excise taxes on articles enumerated under the NIRC”." at least not to the extent of equating excise with business taxes. EXCISE TAXES as imposed under the NIRC. distribution or sale of oil. on the other hand. dealers of any article of commerce of whatever nature." though the power is "subject to such guidelines and limitations as the Congress may provide . Section 5(b) then proceeds to assert that "[i]n case of doubt. fees and charges. since the preceding phrase already prohibits the imposition of excise taxes on articles already subject to such taxes under the NIRC. carrying on. DO NOT pertain to "the performance. RE BUSINESS TAX: Petron argues that the "business taxes" on its sale of diesel fuels partakes of an excise tax. such as petroleum products. refining. that in line with existing national policy. A municipality is authorized to impose business taxes on a whole host of business activities. wholesalers. as having explained that "an excise tax is a tax upon the performance. Petron's argument concerning excise taxes is founded not on what the NIRC or the Code actually provides. then it would be an exercise in utter redundancy. distributors.

" excepting excise taxes. a specific prohibition is imposed barring the levying of any other type of taxes with respect to petroleum products.However. Respondent then filed a protest on the ground of double taxation. The reality. are prohibited by Section 133(h). No similarly massive trigger effect would ensue upon the imposition of business taxes on other commodities." Accordingly. triggering the chain of increases that normally accompany the increase in oil prices. (4) within the same taxing jurisdiction — within the territorial jurisdiction of the City of Manila. FIRST PHIL INDUSTRIAL CORP V. upward spiral in its price shakes our economic foundation. The City of Manila subsequently amended the ordinance by deleting the provision exempting businesses under the latter section if they have already paid taxes under a different section in the ordinance. Petitioner finally filed the Petition on May 30. (3) by the same taxing authority — petitioner City of Manila. the resulting losses to these enterprises would be passed on to the consumers. fees or charges on petroleum products" does not qualify the kind of taxes. 2007 even if the CTA had earlier issued a resolution dismissing the case for failure to timely file the Petition. (2) for the same purpose — to make persons conducting business within the City of Manila contribute to city revenues. Petitioner filed with the CTA a Motion for Extension of Time to File Petition for Review asking for a 15-day extension or until May 20. While Section 133(h) does not generally bar the imposition of business taxes on articles burdened by excise taxes under the NIRC. CITY OF MANILA V. 2007 within which to file its Petition. so the change in such national policy with the regime of oil deregulation is ultimately of no moment. fees or charges on petroleum products. Where the law does not distinguish. VAT or percentage tax under the Tax Code. 2007. it specifically prohibits local government units from extending the levy of any kind of "taxes. RE OIL DEREGULATION LAW: Respondents argue that since the oil industry is presently deregulated the basis for exempting petroleum products from business taxes no longer exists. 2007. RTC decided in favor of Respondent and the decision was received by Petitioner on April 20. A second Motion for Extension was filed on May 18. Its shortage of supply or a slight. NO 125948 (2000) FACTS: FPIC – grantee of a pipeline concession under Republic Act No. NO 181845 (2009) FACTS: Respondent paid the local business tax only as a manufacturers as it was expressly exempted from the business tax under a different section and which applied to businesses subject to excise. The Code itself does not connect its prohibition on taxation of petroleum products with any existing or future national oil policy. HELD: There is indeed double taxation if respondent is subjected to the taxes under both Sections 14 and 21 of the tax ordinance since these are being imposed: (1) on the same subject matter — the privilege of doing business in the City of Manila. 2007.R. is oil is a political commodity. indeed. CA G. the subject tax assessment is ultra vires and void. including those already subject to excise taxation under the NIRC. 387. cities and provinces were authorized to impose business taxes on manufacturers and retailers of petroleum products. for the phrase "taxes. install and operate oil pipelines Page | 107 . such distinction is immaterial insofar as the latter part of Section 133(h) is concerned. While LGUs are authorized to burden all such other class of goods with "taxes. including business taxes. as amended. COCA-COLA BOTTLERS PHILS G. It can be reasonably presumed that if municipalities. fees and charges. The absence of such a qualification leads to the CONCLUSION that all sorts of taxes on petroleum products. This amending ordinance was later declared by the Supreme Court null and void.R. The reasoning behind singling out petroleum products. and (6) of the same kind or character — a local business tax imposed on gross sales or receipts of the business. we should not distinguish. to contract. as beyond the power of local government units to levy local taxes: There is an inevitable link between the fluctuation of oil prices and the prices of every other commodity. (5) for the same taxing periods — per calendar year. On May 4. among all other commodities. fees or charges that could withstand the absolute prohibition imposed by the provision. this time asking for a 10-day extension to file the Petition.

petroleum products. wire or wireless broadcasting stations and other similar public services (CA No. pontines. which provides that: Art. and. undertakes to carry by the method by which his business is conducted and over his established roads  d. . and done for general business purposes. canal. 86. to all persons who choose to employ its services. municipalities. 3) the City Treasurer illegally and erroneously imposed and collected the said tax. as amended. or transportation by special methods of petroleum. manage. ISSUES: 1. — A pipe line shall have the preferential right to utilize installations for the transportation of petroleum owned by him. but is obligated to utilize the remaining transportation capacity pro rata for the transportation of such other petroleum as may be offered by others for transport. wire or wireless communications systems. . 131 (h). storage. thus meriting the immediate refund of the tax paid. engaged in the transportation of passengers or freight or both. or steamship line. Page | 108 . for hire or compensation. irrigation system gas. that is. either for freight or passenger. FPIC is also a public utility pursuant to Art. electric light heat and power. and transports the goods by land and for compensation. and to charge without discrimination such rates as may have been approved by the Secretary of Agriculture and Natural Resources. Yes. ferries and water craft. Before the permit could be issued. cities. or both.e. and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation. of the Local Government Code which provides that ―Unless otherwise provided herein. wharf or dock. undertakes to carry goods of the kind to which his business is confined  c.holds himself out to the public as engaged in the business of transporting persons or property from place to place. otherwise known as the Public Service Act) FPIC . shipyard. It undertakes to carry for all persons indifferently. operate. 141 (e) and 151 does not include the authority to collect such taxes on transportation contractors for. 1416. the exercise of the taxing powers of provinces. sewerage system. and everything relating to the manufacture. water supply and power petroleum. transportation is for hire common service coincides with public service public service – includes every person that now or hereafter may own. 86 of the Petroleum Act of the Philippines (RA 387). WON FPIC is a common carrier. occasional or accidental. for hire as a public employment. Pipe line concessionaire as common carrier. 2. railroad. i. any common carrier. steamboat. with or without fixed route and whatever may be its classification. for compensation. is hereby declared to be a public utility‖ 2. 7 of RA 387 which states that ―everything relating to the exploration for and exploitation of petroleum .  common carrier . with general or limited clientele. whether permanent.  It applied for a mayor‘s permit with the Office of the Mayor of Batangas City. traction railway. marine repair shop. ice plant. freight or carrier service of any class. Legal basis is Section 133 (j). It filed a complaint for tax refund alleging that 1) the imposition and collection of the business tax on its gross receipts violates Section 133 of the Local Government Code which grants tax exemption to common carriers. 2) the authority of cities to impose and collect a tax on the gross receipts of ―contractors and independent contractors‖ under Sec. engaged in the business of carrying goods for others as a public employment. offering his services to the public generally (see also Art. refining. Yes. as defined under Sec. FPIC is engaged in the business of transporting or carrying goods. 1732)  test for determining whether a party is a common carrier of goods:  a. or control in the Philippines. It paid the tax under protest. it was required by the City Treasurer to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to the Local Government Code. express service.considered a common carrier under Art. ice-refrigeration plant. the term ―contractors‖ excludes transportation contractors. WON it is exempted from paying the taxes required by the City Treasurer      HELD: 1.  b. subway motor vehicle. street railway.

and all proceedings taken pursuant to such assessments. or act excludes all others. and auctioning for public sale the Airport Lands and Buildings. respondents assert that MIAA cannot claim that the Airport Lands and Buildings are exempt from real estate tax. LGUs have the power to regulate the operation of tricycle for hire and to grant franchise for the operation thereof. The Mayor of the City of Parañaque threatened to sell at public auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency. are void. MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA‘s contention: Airport Lands and Buildings are owned by the Republic. NO 131512 (2000) The SC ruled that the registration and licensing functions are vested in the LTO while franchising and regulatory responsibilities are vested in the LTFRB. police authority and the levying of fees and charges. Unless the government instrumentality is organized as a stock or nonstock corporation. Paranaque‘s Contention: Section 193 of the Local Government Code expressly withdrew the tax exemption privileges of ―government-owned and-controlled corporations‖ upon the effectivity of the Local Government Code. MIAA is like any other government instrumentality.  Reason for the exception: to avoid duplication of tax LTO V. except as provided in this Code‖. MIAA is also not a non-stock corporation because it has no members. with prayer for preliminary injunction or temporary restraining order. COURT OF APPEALS G. Airport Lands and Buildings of MIAA are Owned by the Republic Page | 109 . When the law vests in a government instrumentality corporate powers. MIAA exercises ―all the powers of a corporation under the Corporation Law. levying against. A non-stock corporation must have members. MIAA exercises the governmental powers of eminent domain. Thus.R. MIAA has no stockholders or voting shares. MIAA‘s real estate tax delinquency was estimated at P624 million. the only difference is that MIAA is vested with corporate powers. Respondents also argue that a basic rule of statutory construction is that the express mention of one person. MIAA filed with the Court of Appeals an original petition for prohibition and injunction. Ergo. thing. MIAA is not a stock corporation because it has no capital stock divided into shares. MIAA V. it remains a government instrumentality exercising not only governmental but also corporate powers. The reason for tax exemption of public property is that its taxation would not inure to any public advantage. ISSUE: WON Airport Lands and Buildings of MIAA are exempt from real estate tax under existing laws? Yes. HELD: 1.‖ 2. CITY OF BUTUAN G. issued notices of levy and warrants of levy on the Airport Lands and Buildings. An international airport is not among the exceptions mentioned in Section 193 of the Local Government Code. The government cannot tax itself.and barangays shall not extend to the levy of the following: Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air. through its City Treasurer. At the same time.R. NO 155650 (2006) FACTS: MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque for the taxable years 1992 to 2001. land or water. The petition sought to restrain the City of Parañaque from imposing real estate tax on. the instrumentality does not become a corporation. Thus. insofar as these powers are not inconsistent with the provisions of this Executive Order. The City of Parañaque. the real estate tax assessments issued by the City of Parañaque. MIAA is Not a Government-Owned or Controlled Corporation MIAA is not a government-owned or controlled corporation but an instrumentality of the National Government and thus exempt from local taxation. Under the Local Government Code. since in such a case the tax debtor is also the tax creditor.

Airport Lands and Buildings are of Public Dominion The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. Any encumbrance. Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real properties owned by the Republic. MUNICIPALITIES. being outside the commerce of man. MIAA itself is owned solely by the Republic. The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. canals. CITIES AND BARANGAY Page | 110 . For example. to a taxable person following are exempted from payment of the real property tax. torrents. Essential public services will stop if properties of public dominion are subject to encumbrances. its status as a mere trustee of the Airport Lands and Buildings is clearer because even its executive head cannot sign the deed of conveyance on behalf of the Republic. as well as the landing fees MIAA charges to airlines. for consideration or otherwise. the MIAA Airport Lands and Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not.‖ The terminal fees MIAA charges to passengers. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as properties for public use. constitute the bulk of the income that maintains the operations of MIAA. Such fees are often termed user‘s tax. Airport Lands and Buildings are Outside the Commerce of Man The Court has also ruled that property of public dominion. No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code. Properties of public dominion. D. c. However. MIAA is a Mere Trustee of the Republic MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. cannot be the subject of an auction sale. levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Section 48. This means taxing those among the public who actually use a public facility instead of taxing all the public including those who never use the particular public facility b. The purpose was merely toreorganize a division in the Bureau of Air Transportation into a separate and autonomous body. Real Property Owned by the Republic is Not Taxable Sec 234 of the LGC provides that real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted. Article 420 of the Civil Code defines property of public dominion as one ―intended for public use. The collection of such fees does not change the character of MIAA as an airport for public use. No party claims any ownership rights over MIAA‘s assets adverse to the Republic. the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax. n MIAA‘s case. portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. Chapter 12.‖ are owned by the State. Transfer to MIAA was Meant to Implement a Reorganization The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The Republic remains the beneficial owner of the Airport Lands and Buildings.a. This will happen if the City of Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax. foreclosures and auction sale. rivers. d. being for public use. are not subject to levy. like ―roads. Only the President of the Republic can sign such deed of conveyance. ports and bridges constructed by the State. The term ―ports‖ includes seaports and airports. e. SCOPE OF TAXING POWERS OF PROVINCES. encumbrance or disposition through public or private sale. Under Article 420 of the Civil Code. The MIAA Airport Lands and Buildings constitute a ―port‖ constructed by the State.

and charges as provided in this Article. That no such toll fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission.1. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes. certificates. waterway. PROVINCES – SECS.Except as otherwise provided in this Code. Section 136. handbills. LGC Section 151. the sanggunian concerned may discontinue the collection of the tolls. Notaries public shall furnish the provincial treasurer with a copy of any deed transferring ownership or title to any real property within thirty (30) days from the date of notarization. donation. or wharf. Tax on Transfer of Real Property Ownership. Section 135. (b) For this purpose. No. donor. Tax on Business of Printing and Publication. When public safety and welfare so requires. Toll Fees or Charges. 2.Except as otherwise provided in this Code. fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code. . before registering any deed. Service Fees and Charges.The sanggunian concerned may prescribe the terms and conditions and fix the rates for the imposition of toll fees or charges for the use of any public road. Section 154. The provincial assessor shall likewise make the same requirement before cancelling an old tax declaration and issuing a new one in place thereof. pamphlets. fees. bridge. and thereafter the said facility shall be free and open for public use. require the presentation of the evidence of payment of this tax. whichever is higher. COMMON REVENUE-RAISING POWERS – SECS. and others of similar nature. transfer or other disposition of real property pursuant to R. at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year. That the taxes. 6657 shall be exempt from this tax. It shall be the duty of the seller. receipts.Local government units may impose and collect such reasonable fees and charges for services rendered. fees. LGC Section 134. operated and maintained by them within their jurisdiction. the province may levy only the taxes. cards. . pier. Scope of Taxing Powers. . (a) The province may impose a tax on the sale . and disabled citizens who are sixty-five (65) years or older. Scope of Taxing Powers. 134-141. .The province may impose a tax on the business of persons engaged in the printing and/or publication of books. ferry or telecommunication system funded and constructed by the local government unit concerned: Provided. .Local government units may fix the rates for the operation of public utilities owned. Page | 111 . however. . CITIES – SEC. may levy the taxes. or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of the one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial. executor or administrator to pay the tax herein imposed within sixty (60) days from the date of the execution of the deed or from the date of the decedent's death. Public Utility Charges. transferor. LGC Section 153. post office personnel delivering mail. and charges which the province or municipality may impose: Provided. posters. 153-155. the Register of Deeds of the province concerned shall. 3. The sale. leaflets.A. 151. physicallyhandicapped. barter. the city. Section 155.

books of account. (a) The province may levy an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination at such amount and reasonable classification as the sangguniang panlalawigan may determine but shall in no case exceed Three hundred pesos (P300. In the case of a newly started business. as provided herein. (c) Any individual or corporation employing a person subject to professional tax shall require payment by that person of the tax on his profession before employment and annually thereafter. Section 137. Section 139. license. The permit to extract sand. Professional Tax. as amended.00). . Tax on Sand. Professionals exclusively employed in the government shall be exempt from the payment of this tax. plans and Page | 112 . and other quarry resources. the tax shall be based on the gross receipts for the preceding calendar year. or any fraction thereof. receipts. as defined under the National Internal Revenue Code. the tax shall be based on the gross receipts for the preceding calendar year. (b) Every person legally authorized to practice his profession shall pay the professional tax to the province where he practices his profession or where he maintains his principal office in case he practices his profession in several places: Provided. and other quarry resources are extracted . creeks. streams. and (3) Barangay where the sand. The receipts from the printing and/or publishing of books or other reading materials prescribed by the Department of Education. Gravel and Other Quarry Resources. at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt. the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. regardless of when the business started to operate. lakes. Franchise Tax. In the succeeding calendar year. A line of profession does not become exempt even if conducted with some other profession for which the tax has been paid. gravel. Section 138. as provided herein. (2) Component City or Municipality where the sand. the province may impose a tax on businesses enjoying a franchise.Notwithstanding any exemption granted by any law or other special law. .Forty percent (40%). however. pursuant to the ordinance of the sangguniang panlalawigan. gravel. and other quarry resources are extracted . or realized. gravel and other quarry resources shall be distributed as follows: (1) Province . That such person who has paid the corresponding professional tax shall be entitled to practice his profession in any part of the Philippines without being subjected to any other national or local tax. sand. earth. regardless of when the business started to operate. The proceeds of the tax on sand. and other public waters within its territorial jurisdiction. on or before the thirty-first (31st) day of January.Thirty percent (30%).Thirty percent (30%). (d) The professional tax shall be payable annually. however. or any fraction thereon. gravel. within its territorial jurisdiction. In the succeeding calendar year. Any person first beginning to practice a profession after the month of January must. pay the full tax before engaging therein. reports. prescriptions. (e) Any person subject to the professional tax shall write in deeds. rivers.In the case of a newly started business. the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. gravel and other quarry resources shall be issued exclusively by the provincial governor. extracted from public lands or from the beds of seas. Culture and Sports as school texts or references shall be exempt from the tax herein imposed. or fee for the practice of such profession.The province may levy and collect not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary stones.

are hereby withdrawn upon the effectivity of this Code. 3. except local water districts. dramas. painting and art exhibitions. which at the same time gave local government units the power to tax businesses enjoying a franchise on the basis of income received or earned by them within their territorial jurisdiction. 7160 (Local Government Code of 1991). Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers. The franchise tax was paid "in lieu of all taxes on this franchise or earnings thereof" pursuant to R. . Section 141.A. (e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places are located. wholesalers. cooperatives duly registered under R. interest and penalties as it may deem appropriate.designs. literary and oratorical presentations. CITY OF DAVAO FACTS: Petitioner PLDT paid a franchise tax equal to three percent (3%) of its gross receipts. producers. the tax shall first be deducted and withheld by their proprietors. or operators and paid to the provincial treasurer before the gross receipts are divided between said proprietors. whether directly or indirectly. cinemas. Certain Products. flower shows. concert halls. or operators and the distributors of the cinematographic films. cigars and cigarettes. 137. 2. Dealers. manner. wholesalers. Sec. terms and conditions for the payment of tax. lessees. the province may impose a tax on businesses enjoying a franchise. except pop. and other products as may be determined by the sangguniang panlalawigan. producers. 193. surveys and maps. The Local Government Code (LGC) took effect on January 1. FRANCHISE TAX PLDT V. the sangguniang panlalawigan may impose such surcharges. Act. fermented liquors. No. Section 140. No. concerts. within the province in an amount not exceeding Five hundred pesos (P500. — Unless otherwise provided in this Code. or operators of theaters. In case of fraud or failure to pay the tax. whether natural or juridical. recitals. van or any vehicle used by manufacturers. (a) The province may levy an amusement tax to be collected from the proprietors. (a) The province may levy an annual fixed tax for every truck. (c) The holding of operas. (b) In the case of theaters or cinemas. musical programs. A. lessees. tax exemptions or incentives granted to. Wholesalers of. boxing stadia. dealers and retailers referred to in the immediately foregoing paragraph shall be exempt from the tax on peddlers prescribed elsewhere in this Code. as the case may be. No. soft drinks. 6938. dealers or retailers in the delivery or distribution of distilled spirits. or presently enjoyed by all persons.00). No. — Notwithstanding any exemption granted by any law or other special law. (b) The manufacturers. rock. 7082 amending its charter. or similar concerts shall be exempt from the payment of the tax hereon imposed. or realized. or Retailers in. to sales outlets. the number of the official receipt issued to him. within its territorial jurisdiction. or consumers. non-stock and non-profit hospitals and educational institutions. (d) The sangguniang panlalawigan may prescribe the time. 1992. and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts from admission fees. 1. Page | 113 . circuses. Withdrawal of Tax Exemption Privileges. at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt. lessees. The pertinent provisions of the LGC state: Sec. Franchise Tax.A. The exemption from "all taxes on this franchise or earnings thereof" was subsequently withdrawn by R. including government-owned or -controlled corporations. Amusement Tax. 3436.A.

it was required to pay the local franchise tax for the first to the fourth quarter of 1999 which then had amounted to P3. An intent to grant tax exemption cannot even be discerned from the law.4. No. it enacted R. favor. shall ipso factobecome part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises. 519. § 23. Petitioner contends that because their existing franchises contain "in lieu of all taxes" clauses. 5.72. the same grant of tax exemption must be deemed to have become ipso facto part of its previously granted telecommunications franchise. 9. The term refers to exemption from certain regulations Page | 114 .A. there is hereby imposed a tax on businesses enjoying a franchise. § 23 grants tax exemption is the fact that after its enactment on March 16."4 If. 7925." and that the way to achieve this purpose is to grant tax exemption or exclusion to franchises belonging in this industry. No. 2. The records of Congress are bereft of any discussion or even mention of tax exemption. The best refutation of PLDT‘s claim that R. then this runabout way of granting tax exemption to PLDT is not a direct. HELD: NO 1. The contention is untenable.985. notwithstanding the grant of tax exemption to them. or immunity granted under existing franchises.A. or may hereafter be granted. privilege. In 1995." and "financial viability." "growth. 8. a. 7925 mean tax exemption." The law took effect on March 16. The trial court ruled that the LGC had withdrawn tax exemptions previously enjoyed by persons and entities and authorized local government units to impose a tax on businesses enjoying franchises within their territorial jurisdictions. Congress granted several franchises containing both an "equality clause" similar to § 23 and an "in lieu of all taxes" clause. which in pertinent part provides: Notwithstanding any exemption granted by any law or other special law. 1995. "clear and unequivocal" way of communicating the legislative intent.A.681. Nor does the term "exemption" in § 23 of R. 7. In January 1999. 7925 means "tax exemption" and assuming for the nonce that the charters of Globe and of Smart grant tax exemptions. when PLDT applied for a mayor‘s permit to operate its Davao Metro Exchange. § 23 of which provides that "Any advantage. ISSUE: Whether. the word "exemption" in R. 10. The thrust of the law is to promote the gradual deregulation of entry. If the equality clause automatically extends the tax exemption of franchises with "in lieu of all taxes" clauses. Subsequently. No. 1995. exemption. 7925.A. and operations of all public telecommunications entities and thus to level the playing field in the telecommunications industry. at a rate of Seventy-five percent (75%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the income or receipts realized within the territorial jurisdiction of Davao City. as PLDT contends. No. by virtue of R. But the rule is that tax exemptions should be granted only by clear and unequivocal provision of law "expressed in a language too plain to be mistaken. PLDT is again entitled to exemption from the payment of local franchise tax in view of the grant of tax exemption to Globe and Smart. RTC. (Globe)2 and Smart Information Technologies. there would be no need in the same statute for the "in lieu of all taxes" clause in order to extend its tax exemption to other franchises not containing such clause.A. PLDT challenged the power of the city government to collect the local franchise tax and demanded a refund of what it had paid as local franchise tax for the year 1997 and for the first to the third quarters of 1998. 7925 (Public Telecommunications Policy of the Philippines). (Smart)3 franchises which contained "in lieu of all taxes" provisos. No. pricing. Pursuant to these provisions. Congress granted in favor of Globe Mackay Cable and Radio Corp. Series of 1992. Petitioner contends that the legislative intent to promote the development of the telecommunications industry is evident in the use of words as "development. Inc.dismissed the petition. PLDT filed a petition in the RTC. 6. the City of Davao enacted Ordinance No.

A. Congress would have expressly mentioned the exemption from municipal and provincial taxes.10According to PLDT. Currently. R. In this case. It should be noted that the ―in lieu of all taxes‖ clause in R. Section 9 of R. On the burden of grant to Tax exemptions: Tax exemptions are never presumed and are strictly construed against the taxpayer and liberally in favor of the taxing authority. as provided in R. It is clear that the ―in lieu of all taxes‖ clause apply only to taxes under the NIRC and Page | 115 . No. such as the local franchise tax. as amended by the Expanded Value Added Tax Law (R. One can speak of healthy competition only between equals. declares that the tax returns "shall be subject to audit by the Bureau of Internal Revenue. For this reason. SMART COMMUNICATIONS V. PLDT says that the policy of the law is to promote healthy competition in the telecommunications industry.A. No. 8241)."  second paragraph of Section 9. 7294 has become functus officio with the abolition of the franchise tax on telecommunications companies. then the intention of the legislature must be resolved in favor of the State. speaks of tax returns filed and taxes paid to the "Commissioner of Internal Revenue or his duly authorized representative in accordance with the National Internal Revenue Code. No 7294 does not expressly provide what kind of taxes Smart is exempted from. 7294 imposes on Smart a franchise tax equivalent to three percent (3%) of all gross receipts of the business transacted under the franchise and the said percentage shall be in lieu of all taxes on the franchise or earnings thereof. The VAT on sale of services of telephone franchise grantees is equivalent to 10% of gross receipts derived from the sale or exchange of services. It is not even applied to income tax. as shown in the provision itself.A. No. They can only be given force when the grant is clear and categorical. 7294 is not definite in granting exemption to Smart from local taxation.and requirements imposed by the National Telecommunications Commission (NTC). Smart's franchise states that the grantee shall "continue to be liable for income taxes payable under Title II of the National Internal Revenue Code." If Congress intended the "in lieu of all taxes" clause in Smart's franchise to also apply to local taxes."  same paragraph. If the intention of the legislature is open to doubt.A. No.A. What is clear is that Smart shall pay franchise tax equivalent to three percent (3%) of all gross receipts of the business transacted under its franchise. CITY OF DAVAO On ―In lieu of all taxes― Clause in RA 7294: R. But whether the franchise tax exemption would include exemption from exactions by both the local and the national government is not unequivocal. the law seeks to break up monopoly in the telecommunications industry by gradually dismantling the barriers to entry and granting to new telecommunications entities protection against dominant carriers through equitable access charges and equal access clauses in interconnection agreements and through the strict policing of predatory pricing by dominant carriers. 7716. 3. The ―in lieu of all taxes‖ clause applies only to national internal revenue taxes and not to local taxes. No. It is not clear whether the ―in lieu of all taxes‖ provision in the franchise of Smart would include exemption from local or national taxation.A. the doubt must be resolved in favor of the City of Davao. Smart along with other telecommunications companies pays the uniform 10% valueadded tax. the LGC did not repeal the "in lieu of all taxes" provision in its franchise but only excluded from it local taxes. not to local taxes. to wit:  proviso in the first paragraph of Section 9.

What is clear is that ABS-CBN shall be liable to pay 3% percent franchise tax and income taxes under Title II of the NIRC.A. MUNICIPALITIES – SECS. But whether the "in lieu of all taxes provision" would include exemption from local tax is not unequivocal. It is not clear whether the exemption would include both local. The Philippine Congress enacted R. and national tax. sustained the power of Congress to grant tax exemptions over and above the power of the local government's delegated power to tax. assemblers. whether natural or juridical … " there can really be no dispute that the power of the QC Government to tax is limited by Section 232 of the LGC which expressly provides that "a province or city or municipality within the Metropolitan Manila Area may levy an annual ad valorem tax on real property such as land. Scope of Taxing Powers. 147 – 149. 7966 (March 30. Payment of the percentage franchise tax shall be "in lieu of all taxes" on the said franchise. which includes the power to grant tax exemptions. Section 8 imposed on ABS-CBN the duty of paying 3% franchise tax. the power of Quezon City to tax is prescribed by Section 151 in relation to Section 137 of the LGC which expressly provides that notwithstanding any exemption granted by any law or other special law. ABS-CBN was granted the franchise to install and operate radio and television broadcasting stations in the Philippines. 142. .Except as otherwise provided in this Code. the uncertainty in the "in lieu of all taxes" provision should be construed against ABS-CBN. machinery. whether municipal. Section 8 of R.A. city or provincial." Under this law. the right to exemption from local franchise tax must be clearly established and cannot be made out of inference or implications but must be laid beyond reasonable doubt. No. repackers. Page | 116 . Verily. 7966 imposes on ABS-CBN a franchise tax equivalent to 3% of all gross receipts of the radio/television business transacted under the franchise and the franchise tax shall be "in lieu of all taxes" on the franchise or earnings thereof. and other improvement not hereinafter specifically exempted. It must be noted that Section 137 of the LGC does not prohibit grant of future exemptions. On the other hand. distillers. Tax on Business. The burden of proof rests upon the party claiming the exemption to prove that it is in fact covered by the exemption so claimed. rectifiers. ABS-CBN CORP Now to go back to the Quezon City Revenue Code which imposed real estate taxes on all real properties within the city's territory and removed exemptions theretofore "previously granted to. SC in Quezon City v. .QUEZON CITY V. LGC Section 142. processors. and charges not otherwise levied by provinces. 1992). As adverted to earlier. 4. Congress has the inherent power to tax. the City may impose a franchise tax. building. 1995) subsequent to the effectivity of the LGC (January 1. and compounders of liquors.The municipality may impose taxes on the following businesses: (a) On manufacturers. the Legislature highlighted its power to thereafter exempt certain realties from the taxing power of local government units. 143. municipalities may levy taxes. fees. Section 143. or presently enjoyed by all persons. Bayan Telecommunications. ABS-CBN miserably failed in this regard. A claim of tax exemption must be clearly shown and based on language in law too plain to be mistaken. brewers. The "in lieu of all taxes" provision in the franchise of ABSCBN does not expressly provide what kind of taxes ABS-CBN is exempted from.ABS-CBN has the burden to prove that it is in fact covered by the exemption so claimed. Under it. No.

000.00 or more but less than 15.000.00 or more but less than 8.00 15.00 2.000.000.00 or more but less than 1.00 200.00 2.000.000.00 75.00 or more but less than 2.000.200.00 or more but less than 4.00 165.000.000.00 or more but less than 40.00 Page | 117 .000.000.000.00 or more but less than 750.00 or more but less than 3.100.750.000.000.00 4.00 825.00 8.00 or more but less than 20.00 or more but less than 5.00 13.000.00 6.00 3.375. in accordance with the following schedule: With gross sales or receipts for the preceding calendar year in the amount of: Less than 10.00 500.000.000.00 16.00 40.000.000.00 300.00 or more but less than 6.00 or more but less than 7.000.000.000.000.000.000.00 440.000.000.00 3.00 50.000.000.000.000.00 8.00 30.000.000.000.distilled spirits.00 202.00 33.850.00 121.00 10.00 10.00 24.000.00 or more but less than Amount of Tax Per Annum 165.000.00 187.500.00 2.00 or more but less than 200.00 or more but less than 4.000.000.00 P 10.000.00 or more but less than 3.00 72.00 19.00 50.000.000.000.00 5.00 or more at a rate not exceeding thirty-seven and a half percent (37½%) of one percent (1%) (b) On wholesalers.000.000.00 or more but less than 75.00 1.00 143.00 7.000.00 1. or dealers in any article of commerce of whatever kind or nature in accordance with the following schedule: With gross sales or receipts for the preceding calendar year in the amount of: Less than 1.000.000.00 or more but less than 5.000.00 220.00 23.000.00 3.00 or more but less than 500.00 150.320.00 660.00 or more but less than 100.000.000.000.00 or more but less than 300.000.500.00 2.000.000.00 100.00 750. and wines or manufacturers of any article of commerce of whatever kind or nature.00 2.000.000.00 P 1.00 1.000.00 Amount of Tax Per Annum 18.00 or more but less than 10.00 6.000.000.00 or more but less than 6.00 or more but less than 150.650.000.00 100.000.00 20.000.000.000.750.000.00 5.000.500.000.000. distributors.000.00 or more but less than 15.00 4.00 5.00 or more but less than 30.00 or more but less than 50.000.00 220.

000. fertilizers.000.00 or more but less than 100.000. equipment and postharvest facilities. and fresh water products.000. detergents. With gross sales or receipts for the preceding calendar year in the amount of: P400. salt and other agricultural.000. whether in their original state or not.300. and medicine.800.000. in the case of cities. (7) School supplies.00 or more but less than P 10.000.00 2.00 or more but less than 300.00 660. insecticides. (6) Poultry feeds and other animal feeds.00 or less more than P400.00 or more but less than 2.00 300. as provided under Section 152 hereof.000.00 330.000.000.000.00 1.00 150.000. processed or preserved food. (4) Laundry soap. wholesalers. and on manufacturers .000.420.00 1.00 or more but less than 20. on gross sales or receipts of the preceding calendar year of Fifty thousand pesos (P50. (d) On contractors and other independent contractors. dairy products.870.00 6.00 200.00 30.00 or more but less than 750. (c) On exporters.00 440. in the case of municipalities. dealers or retailers of essential commodities enumerated hereunder at a rate not exceeding one-half (½) of the rates prescribed under subsection (a).000.00 or more but less than 200.000. (3) Cooking oil and cooking gas.00 10.00 (2) Wheat or cassava flour.00 500.000. and Thirty thousand pesos (P30.000. in accordance with the following schedule: With gross sales or receipts for the preceding calendar year in the amount of: Less than 5.00 Amount of Tax Per Annum 27. distributors.000.000.00 or more but less than 75. locally manufactured.000. (d) On retailers.000.320.00) or less.00 or more but less than 30.000.00 75.000.000.00 1. producers.000.00 or more but less than 40.00 40.60 2.00 275. Page | 118 .000.00 100.00 or more but less than 500.00 750. That barangays shall have the exclusive power to levy taxes.50 61.00 50.000.000. and (8) Cement.00 990.00 P 5.000.00 20.000. pesticides.00 8. (b) and (d) of this Section: (1) Rice and corn. meat.400.00 Rate of Tax Per Annum 2% 1% Provided.00 or more but less than 50. (5) Agricultural implements.000.000.000. millers.00 or more but less than 1.600.00 or more but less than 150.000.00 or more at a rate not exceeding fifty percent (50%) of one percent (1%).00 3.00 4.000. herbicides and other farm inputs.000.00) or less.000.000. marine. sugar.15. however.000.

00 or more but less than 1.000. rentals on property and profit from exchange or sale of property.00 or more but less than 300.000.00 4.00 9.000.000. That on any business subject to the excise.000.000. income from financial leasing.00 75.000.000.00 40.00 8. commissions and discounts from lending activities. Section 147. by appropriate ordinance. The sanggunian concerned shall.00 550.00 or more but less than 75.00 30.00 1.00 or more but less than 200.00 150. (g) On peddlers engaged in the sale of any merchandise or article of commerce.00 100.00 or more but less than 40.00 200.000.10.000.000.000. penalize fraudulent practices and unlawful possession or use of 2.000.000. subject to such guidelines as shall be prescribed by the Department of Science and Technology. (h) On any business.000. insurance premium. at a rate not exceeding fifty percent (50%) of one percent (1%) on the gross receipts of the preceding calendar year derived from interest.00 or more but less than 20. on the practice of any profession or calling. dividends.000.00 300.00 50.000.00 1.00 500.00 or more but less than 2.000.50 165.The municipality may impose and collect such reasonable fees and charges on business and occupation and.00 or more but less than 400. Fees and Charges.00 or more but less than 500.000.00 or more but less than 250. (a) The municipality may levy fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan.000.500.320.00 10.250.00 104. which the sanggunian concerned may deem proper to tax: Provided.000.000.00 or more but less than 750.000.000.160.00 or more at a rate not exceeding fifty percent (50%) of one percent (1%) Page | 119 .00 400.00 385.000.00 or more but less than 150.250.00 or more but less than 100.00 2.00 880.00 (f) On banks and other financial institutions. at a rate not exceeding Fifty pesos (P50. or practice such profession or calling.640.000. as amended. commensurate with the cost of regulation.000.000.000.620. the rate of tax shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year. not otherwise specified in the preceding paragraphs.00 or more but less than 15.000. The sanggunian concerned may prescribe a schedule of graduated tax rates but in no case to exceed the rates prescribed herein.00 15.250.00 275. Section 148.00 3.980.00 20. .00) per peddler annually. (b) The sangguniang bayan shall prescribe the necessary regulations for the use of such weights and measures.000.630. except as reserved to the province in Section 139 of this Code.00 or more but less than 50.00 or more but less than 30.000.000.000.00 250.000.00 6.00 1.000. Fees for Sealing and Licensing of Weights and Measures. value-added or percentage tax under the National Internal Revenue Code.000.00 750.00 11. inspection and licensing before any person may engage in such business or occupation.

reiterating its position that the local business tax should be based on gross receipts and not gross revenue. within a definite zone of the municipal waters. (b) The sangguniang bayan may: (1) Grant fishery privileges to erect fish corrals. finally. (3) Issue licenses for the operation of fishing vessels of three (3) tons or less for which purpose the sangguniang bayan shall promulgate rules and regulations regarding the issuances of such licenses to qualified applicants under existing laws.466. petitioner filed a Protest on January 21. upon payment of a compromise penalty of not less than Two hundred pesos (P200.710. penalize the use of explosives. electricity.00 and P4. Respondent denied the protest. as follows: Page | 120 . by appropriate ordinance. traps or other fishing gears to marginal fishermen free of any rental. as determined by it: Provided. The RTC. muro-ami. other parties may participate in the public bidding in conformity with the above cited procedure.93. and other deleterious methods of fishing and prescribe a criminal penalty therefor in accordance with the provisions of this Code: Provided. canceled and set aside the assessments made by respondent and its City Treasurer. respectively. the applicable provision is subsection (e). however. Section 143 of the same Code covering contractors and other independent contractors. That the sangguniang bayan may require a public bidding in conformity with and pursuant to an ordinance for the grant of such privileges: Provided.instruments of weights and measures and prescribe the criminal penalty therefor in accordance with the provisions of this Code. based on its gross revenues for the years 1999 and 2000. BUSINESS TAX ERICSSON COMMUNICATIONS V.993. charge or any other imposition whatsoever. A.00. Section 149. The CA reversed and set aside the complaint for lack of authority. however. prawn fry or kawag-kawag or fry of other species and fish from the municipal waters by nets. however. based on its gross revenues as reported in its audited financial statements for the years1997 and 1998. The City of Pasig (respondent) issued another Notice of Assessment to petitioner on November 19. CITY OF PASIG FACTS: In an Assessment Notice. The provision specifically refers to gross receipts which is defined under Section 131 of the Local Government Code. Fees and Charges. That the sanggunian concerned shall. That the sanggunian concerned may authorize the municipal treasurer to settle an offense not involving the commission of fraud before a case therefor is filed in court.775. however.682.242. That in the absence of such organizations and cooperatives or their failure to exercise their preferential right. mussels or other aquatic beds or bangus fry areas. Petitioner filed a Protest claiming that the computation of the local business tax should be based on gross receipts and not on gross revenue. 2001.2002.51 and P4. amounting to P4. this time based on business tax deficiencies for the years 2000 and2001. That duly registered organizations and cooperatives of marginal fishermen shall have the preferential right to such fishery privileges: Provided. respectively. That the sanggunian concerned shall have the authority to prosecute any violation of the provisions of applicable fishery laws. (2) Grant the privilege to gather. (a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rentals.00). Fishery Rentals.885. ISSUE: Whether or not the local business tax on contractors should be based on gross receipts or gross revenue. further. petitioner was assessed a business tax deficiency for the years 1998 and 1999 amounting to P9. finally. Provided. oysters. fees or charges therefor in accordance with the provisions of this Section. Again. fee. take or catch bangus fry. Provided. RULING: Insofar as petitioner is concerned. noxious or poisonous substances.665.

(n) ―Gross Sales or Receipts‖ include the total amount of money or its equivalent representing the contract price. When the depository bank withholds the final tax to pay the tax liability of the lending bank. exchanged or leased. including the value of services rendered or articles sold. and charges. and value-added tax (VAT). the payment of which is yet to be received. Thus. interest. is the net interest plus the amount withheld as final tax. . and charges subject to such guidelines and limitations as the Congress may provide. the depository bank deducts the final withholding tax and remits it to the government for the account of the lending bank. we hold that condominium corporations are generally exempt from local business taxation under the LGC. compensation or service fee. sales return. exchanged or leased. as Section 143 of the Local Government Code and Section 22(e) of the Pasig Revenue Code clearly provide that the tax should be computed based on gross receipts. YAMANE V. viz. consistent with the basic policy of local autonomy. From the amount constructively received by the lending bank. they are not liable for such taxes. Gross receipts include money or its equivalent actually or constructively received in consideration of services rendered or articles sold.6M in which the respondents protested contending that condominium does not fall under the definition of a business. liable to pay the correct business taxes. This is in consonance with the International Financial Reporting Standards. BA LEPANTO Facts: Petitioner City Treasurer of Makati holds respondent. Issue: Whether or not the City Treasurer of Makati may collect business taxes on condominium corporations Held: Petition denied. there is prior to the withholding a constructive receipt by the lending bank of the amount withheld. and other assets) arising from the ordinary operating activities of an enterprise (such as sales of goods. which shall exclusively accrue to them: (a) Taxes . when the consideration for the articles sold.which is measured at the fair value of the consideration received or receivable. including the amount charged or materials supplied with the services and the deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person excluding discounts if determinable at the time of sales.On stores or retailers with fixed business establishments with gross sales of receipts of the Page | 121 . The imposition of local business tax based on petitioner‘s gross revenue will inevitably result in the constitutionally proscribed double taxation – taxing of the same person twice by the same jurisdiction for the same thing – inasmuch as petitioner‘s revenue or income for a taxable year will definitely include its gross receipts already reported during the previous year and for which local business tax has already been paid. Scope of Taxing Powers. fees.‖ 5. Thus. both physically and constructively. and dividends). fees. or the services rendered has already been placed under the control of the person who sold the goods or rendered the services without any restriction by the payor. which defines revenue as the gross inflow of economic benefits (cash. exchanged or leased. Actual receipt may either be physical receipt or constructive receipt. The power of the local government units to impose taxes within its territorial jurisdiction derives from the Constitution itself. gross revenue covers money or its equivalent actually or constructively received. receivables. fees and charges totaling to P1. irrespective of any local ordinance that seeks to declare otherwise. royalties. respondent committed a palpable error when it assessed petitioner‘s local business tax based on its gross revenue as reported in its audited financial statements. in a Notice of Assessment. BARANGAY – SEC. thus. excise tax. and with significant degree of comfort. which recognizes the power of these units ―to create its own sources of revenue and to levy taxes. the Court interpreted gross receipts as including those which were actually or constructively received. In contrast. The law is clear. whether actual or constructive. the interest income actually received by the lending bank. Accordingly. LGC Section 152. There is constructive receipt. 152. Bank of Commerce. sales of services. In Commissioner of Internal Revenue v.The barangays may levy taxes. as provided in this Article.: Actual receipt of interest income is not limited to physical receipt.

The application for clearance shall be acted upon within seven (7) working days from the filing thereof. taxes at rates which shall not exceed by fifty percent (50%) the maximum rates prescribed in the preceding Section. . upon termination thereof. signboards. 146. (c) In cases where a person conducts or operates two (2) or more businesses mentioned in Section 143 of this Code which are subject to different rates of tax. If the tax paid during the year be less than the tax due on said gross sales or receipts of the current year. 7. (d) Other fees and Charges. For such clearance. at a rate not exceeding one percent (1%) on such gross sales or receipts. LGC Section 144. (a) The taxes imposed under Section 143 shall be payable for every separate or distinct establishment or place where business subject to the tax is conducted and one line of business does not become exempt by being conducted with some other business for which such tax has been paid.A business subject to tax pursuant to the preceding sections shall. RATES IN METRO MANILA – SEC. in the case of municipalities. (c) Barangay Clearance. In the event that the clearance is not issued within the said period. neon signs. in the case of cities and Thirty thousand pesos (P30. cockfights and cockpits. submit a sworn statement of its gross sales or receipts for the current year.00) or less. PAYMENT OF BUSINESS TAXES – SEC.The barangay may levy reasonable fees and charges: (1) On commercial breeding of fighting cocks. Retirement of Business.Barangays may collect reasonable fees or charges for services rendered in connection with the regulations or the use of barangayowned properties or service facilities such as palay. (b) In cases where a person conducts or operates two (2) or more of the businesses mentioned in Section 143 of this Code which are subject to the same rate of tax. the tax shall be computed on the combined total gross sales or receipts of the said two (2) or more related businesses. LGC Section 145. and outdoor advertisements.000.No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted.000. the sangguniang barangay may impose a reasonable fee. and (3) On billboards. The municipalities within the Metropolitan Manila Area may levy Page | 122 .00) or less. . 6. LGC Section 146. RETIREMENT OF BUSINESS – SEC. the gross sales or receipts of each business shall be separately reported for the purpose of computing the tax due from each business. copra. the city or municipality may issue the said license or permit. (b) Service Fees or Charges. . 8. 145. the difference shall be paid before the business is considered officially retired. 144.preceding calendar year of Fifty thousand pesos (P50. (2) On places of recreation which charge admission fees. or tobacco dryers. Payment of Business Taxes. The tax on a business must be paid by the person conducting the same. Rates of Tax within the Metropolitan Manila Area. .

Since the amount paid is more than the amount computed based on petitioner‘s actual gross sales for 1998. project offices. distillers. plants. assembler. distilled spirits and wines.262.48 to the City Treasurer of Makati as business taxes for the year 1998. In cases where there is no such branch or sales outlet in the city or municipality where the sale or transaction is made. project office.84 for the revenue generated for the year 1998. and (2) Forty percent (40%) to the city or municipality where the plantation is located. and the tax thereon shall accrue and shall be paid to the municipality where such branch or sales outlet is located. is less than the actual tax due based on the current year‘s gross sales or receipts. said seventy percent (70%) mentioned in subparagraph (b) of subsection (2) above shall be divided as follows: (1) Sixty percent (60%) to the city or municipality where the factory is located. Thus. (e) The foregoing sales allocation shall be applied irrespective of whether or not sales are made in the locality where the factory. wholesalers. project offices. plants. producers. project office. or plantations located in different localities. we find that the respondent erroneously treated the assessment and collection of business tax as if it were income tax. and plantations are located in proportion to their respective volumes of production during the period for which the tax is due. or plantation is located. assemblers. rectifiers and compounders of liquor. and other businesses.MOBIL PHIL INC V.84. (d) In cases where a manufacturer. brewers. petitioner upon its retirement is not liable for additional taxes to the City of Makati. project offices. LGC Section 150. repackers.331. plant. dealers. (a) For purposes of collection of the taxes under Section 143 of this Code. exporter or contractor has two (2) or more factories. the seventy percent (70%) sales allocation mentioned in subparagraph (b) of subsection (2) above shall be prorated among the localities where the factories.638. by rendering an additional assessment of P1. assemblers. (c) In case of a plantation located at a place other than the place where the factory is located. petitioner paid a total of P2. contractors. based on the previous year‘s gross sales or receipts. Situs of the Tax. exporters. SITUS OF TAX – SEC. Page | 123 . producer. banks and other financial institutions. distributors. maintaining or operating branch or sales outlet elsewhere shall record the sale in the branch or sales outlet making the sale or transaction. contractors. the sale shall be duly recorded in the principal office and the taxes due shall accrue and shall be paid to such city or municipality. plants. and (2) Seventy percent (70%) of all sales recorded in the principal office shall be taxable by the city or municipality where the factory. plant. 9.331. manufacturers. For the year 1998. and plantations in the pursuit of their business: (1) Thirty percent (30%) of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located. and exporters with factories. The amount of tax as computed based on petitioner‘s gross sales for 1998 is only P1. (b) The following sales allocation shall apply to manufacturers. it would be required to pay the difference in the amount if the tax collected. millers. or plantation is located.122. 150.638. CITY TREASURER OF MAKATI On the year an establishment retires or terminates its business within the municipality. producers.

LINBERG PHILS V. CITY OF MAKATI
FACTS: Linberg is a duly organized corporation, with principal office in Ayala Avenue, Makati City. It is engaged in the business of financing the construction and operation of power plants primarily through "Build Operate -Transfer" (BOT) agreements with its customers. 1. Respondent City of Makati is a public corporation created and existing pursuant to law. Co-respondent Nelia A. Barlis is the incumbent Treasurer of the City of Makati and is impleaded in her official capacity. 2. On March 7, 2003, Linberg received the questioned Notice of Assessment for deficiency business taxes plus surcharges and interests covering the taxable years 2000, 2001 and 2002. The alleged deficiency business taxes arose from respondent's reclassification of petitioner's business from a "holding or investment" company to a "contractor‖. 3. Not in agreement with the questioned assessment, petitioner filed a Letter Protest, but this was denied by respondent City Treasurer. Linberg assailed the denial of the protest before the RTC of Makati City. The case was dismissed for lack of merit. The Motion for Reconsideration was likewise denied. Petitioner appealed the said denial before this Court which partially granted the petition and reduced the deficiency taxes of petitioner. ISSUE: whether or not the Court in Division committed errors of fact or law that would warrant a reversal or modification of it‘s assailed. Petitioner's Arguments Petitioner submits that upholding the taxing jurisdiction of respondent Makati City on thirty percent (30%) of sales made in the locality where petitioner has a branch office is contrary to the situs rules under Section 150 of the Local Government Code and Article 243 of its Implementing Rules and Regulations (IRR). The Court in Division allegedly assumed that petitioner and its customers negotiated and planned the construction of the power

plants in Makati City, and that its sales are recorded in Makati City because its sales invoices are reviewed and approved in its principal office in Makati. However, petitioner contends that these are merely assumptions that are not supported by evidence. If petitioner is classified as a contractor, as respondent Makati City maintains , all if not substantially all, of the controlling or operative acts that constitute petitioner's sale of services, must be done in Makati City . Further, petitioner argues that Section 150 of the Local Government Code and Article 243 of the IRR of said Code clearly provide that if a sale made in a locality where the taxpayer maintains a branch or sales office , the tax thereon shall accrue and be paid to the city or municipality where such branch or sales office is located . It is only in a case when there is no branch office in the locality where the sale transaction is made, that the sale shall allegedly be duly recorded in the principal office, and the taxes due thereon shall be allocated between the principal office and the factory, project office, plant or plantation using the 30-70 formula prescribed in Section 150. Respondents' Counter-arguments Respondents counter-argue that the existence of petitioner's principal office in Makati City, and the admission thereof, constitutes prima facie evidence that it is conducting business in said territorial jurisdiction, and therefore, respondent Makati City has jurisdiction to tax petitioner. Although petitioner has been insistent, contradicting itself at times, that it has not been doing business in Makati City but only in its branch offices, it is necessarily obligated to prove its claim that indeed, the offices maintained outside the City of Makati are branch offices as defined by law, and that, it has been paying its due taxes thereat, otherwise, such bare and naked argument, allegedly stays as it is, bare and naked. THE COURT EN BANC'S RULING Petitioner's arguments are devoid of merit.

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At the outset, petitioner questions the jurisdiction of respondent City of Makati to tax its business. The Court in Division settled this issue by pronouncing that the City of Makati, where petitioner's principal office is found , has the power to tax its business , but as much as only thirty (30%) percent of petitioner's gross sales/receipts . We note that aside from petitioner's admission that its principal office is in Makati City, the Court in Division found that its principal office is in charge of reviewing and approving the correctness of the invoices issued by the branch offices. Such activities done in the principal office is evident of business transactions which should necessarily be recorded. This, petitioner failed to refute as it did not adduce evidence to prove that there are no recorded sales or business transactions in its office in Makati City, and its alleged payments of its business taxes to the municipalities where it has its branch offices were also not proven . It bears emphasizing that petitioner cannot merely deny the fact that it is covered by the taxing jurisdiction of Makati City without adducing evidence to prove otherwise. Petitioner's business involves financing the construction and operation of private power plants through a Built-Operate-Transfer (BOT) arrangements with its customers. Admittedly, under the BOT arrangement, petitioner advances the necessary capital by employing and paying for the services of a contractor which will build the power plant. These transactions, prior to the completion of the power plants and branch offices of petitioner, are considered as activities of doing business, which are necessarily taxable in its principal office, considering that all the documents and deals were arranged in its principal office in Makati City . In this regard, petitioner is correct in invoking the applicability of Section 150 of the Local Government Code for purposes of determining the situs of tax in the instant case. However, we would like to stress the importance of the relevant portion of said provision, to wit: "Section 150.Situs of the Tax .-(a) xxx. In cases where there is no such branch or sales outlet in the city or municipality where the sale or transaction is made, the sale shall be duly recorded in the

principal office and the taxes due shall accrue and shall be paid to such city or municipality." We reiterate that in the ordinary course of business, particularly in the nature of a BOT business, prior to the building and construction of any power plant at any locality, the usual negotiations thereon, until the full completion of the contract of BOT, is usually done in the principal office. Naturally, this transaction is taxable as it is an exercise of a business. Although the power plants, which are subject of petitioner's contract of BOT, are situated at different localities, still the act of financing the construction and operation thereof, are considered as "doing business" which appears to have been performed at petitioner's principal office in Makati City . It is therefore clear that respondent City of Makati has jurisdiction to tax petitioner. We maintain that petitioner is a contractor, and not a financing or holding company. Contractor is referred to in the Local Government Code of 1991 as to include persons, natural or juridical, not subject to professional tax under Section 139 of this Code whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractor or his employees. Finally, on the issue regarding the imposition of surcharge and penalties, we find that the same to be in accordance with law. Consequently, upon discovery by the local government that petitioner misrepresented itself and caused a different tax rate to be applied to it, there is legal basis to impose surcharge and penalties. Even granting for the sake of argument that it was respondent who classified petitioner as a holding or investment company, still, it was petitioner who submitted certain documents which misled or caused respondent to believe that petitioner was engaged in an investment business.

10. COLLECTION OF TAXES – SECS. 165 – 171, LGC

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Section 165. Tax Period and Manner of Payment. - Unless otherwise provided in this Code, the tax period of all local taxes, fees and charges shall be the calendar year. Such taxes, fees and charges may be paid in quarterly installments. Section 166. Accrual of Tax. - Unless otherwise provided in this Code, all local taxes, fees, and charges shall accrue on the first (1st) day of January of each year. However, new taxes, fees or charges, or changes in the rates thereof, shall accrue on the first (1st) day of the quarter next following the effectivity of the ordinance imposing such new levies or rates. Section 167. Time of Payment. - Unless otherwise provided in this Code, all local taxes, fees, and charges shall be paid within the first twenty (20) days of January or of each subsequent quarter, as the case may be. The sanggunian concerned may, for a justifiable reason or cause, extend the time for payment of such taxes, fees, or charges without surcharges or penalties, but only for a period not exceeding six (6) months. Section 168. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. - The sanggunian may impose a surcharge not exceeding twenty-five (25%) of the amount of taxes, fees or charges not paid on time and an interest at the rate not exceeding two percent (2%) per month of the unpaid taxes, fees or charges including surcharges, until such amount is fully paid but in no case shall the total thirty-six (36%) months. Section 169. Interests on Other Unpaid Revenues. - Where the amount of any other revenue due a local government unit, except voluntary contributions or donations, is not paid on the date fixed in the ordinance, or in the contract, expressed or implied, or upon the occurrence of the event which has given rise to its collection, there shall be collected as part of that amount an interest thereon at the rate not exceeding two percent (2%) per month from the date it is due until it is paid, but in no case shall the total interest on the unpaid amount or a portion thereof exceed thirty-six (36) months. Section 170. Collection of Local Revenue by Treasurer. - All local taxes, fees, and charges shall be collected by the provincial, city,

municipal, deputies.

or

barangay

treasurer,

or

their

duly

authorized

The provincial, city or municipal treasurer may designate the barangay treasurer as his deputy to collect local taxes, fees, or charges. In case a bond is required for the purpose, the provincial, city or municipal government shall pay the premiums thereon in addition to the premiums of bond that may be required under this Code. Section 171. Examination of Books of Accounts and Pertinent Records of Businessmen by Local Treasurer. - The provincial, city, municipal or barangay treasurer may, by himself or through any of his deputies duly authorized in writing, examine the books, accounts, and other pertinent records of any person, partnership, corporation, or association subject to local taxes, fees and charges in order to ascertain. assess, and collect the correct amount of the tax, fee, or charge. Such examination shall be made during regular business hours, only once for every tax period, and shall be certified to by the examining official. Such certificate shall be made of record in the books of accounts of the taxpayer examined. In case the examination herein authorized is made by a duly authorized deputy of the local treasurer, the written authority of the deputy concerned shall specifically state the name, address, and business of the taxpayer whose books, accounts, and pertinent records are to be examined, the date and place of such examination and the procedure to be followed in conducting the same. For this purpose, the records of the revenue district office of the Bureau of Internal Revenue shall be made available to the local treasurer, his deputy or duly authorized representative.

E. REMEDIES
A. GOVERNMENT’S REMEDIES, SEC. 172-185, LGC

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. occupation. enforceable by appropriate administrative or judicial action.Section 172. chattels. debts. the local treasurer or his deputy shall issue a duly authenticated certificate based upon the records of his office showing the fact of delinquency and the amounts of the tax. not only upon any property or rights therein which may be subject to the lien but also upon property used in business. Section 174. fee. charge. or exercise of privilege with respect to which the lien is imposed. fee. including stocks and other securities. or charge in question. Local Government's Lien. One place for the posting of the notice shall be at the office of the chief executive of the local government unit in which the property is distrained. bank accounts. a copy of which signed by himself shall be left either with the owner or person from whose possession the goods. (d) Release of distrained property upon payment prior to sale . fee. Page | 127 . charges or encumbrances in favor of any person.The officer shall forthwith cause a notification to be exhibited in not less than three (3) public and conspicuous places in the territory of the local government unit where the distraint is made. Section 173. or charge and penalty due. fee. fees. or charges. upon written notice. (b) By judicial action. chattels or effects are taken. to which list shall be added a statement of the sum demanded and a note of the time and place of sale. . superior to all liens. .Upon failure of the person owing any local tax. Distrained personal property shall be sold at public auction in the manner hereon provided for. .Local taxes. and by levy upon real property and interest in or rights to real property. .The officer executing the distraint shall make or cause to be made an account of the goods. the goods or effects distrained shall be restored to the owner. practice of profession or calling.The remedy by distraint shall proceed as follows: (a) Seizure . and interest in and rights to personal property. Either of these remedies or all may be pursued concurrently or simultaneously at the discretion of the local government unit concerned. Such certificate shall serve as sufficient warrant for the distraint of personal property aforementioned. Civil Remedies. or effects. seize or confiscate any personal property belonging to that person or any personal property subject to the lien in sufficient quantity to satisfy the tax.If at any time prior to the consummation of the sale. specifying the time and place of sale. or charge to pay the same at the time required. the local treasurer or his deputy may. (b) Accounting of distrained goods.The civil remedies for the collection of local taxes. chattels or effects distrained. credits. subject to the taxpayer's right to claim exemption under the provisions of existing laws. Section 175. Application of Chapter. and other personal property of whatever character. charges and other revenues constitute a lien. The lien may only be extinguished upon full payment of the delinquent local taxes fees and charges including related surcharges and interest. Distraint of Personal Property. and the articles distrained. (c) Publication . fees. The time of sale shall not be less than twenty (20) days after the notice to the owner or possessor of the property as above specified and the publication or posting of the notice. and related surcharges and interest resulting from delinquency shall be: (a) By administrative action thru distraint of goods. together with any increment thereto incident to delinquency and the expenses of seizure. or other revenue. or at the dwelling or place or business of that person and with someone of suitable age and discretion. In such case.The provisions of this Chapter and the remedies provided hereon may be availed of for the collection of any delinquent local tax. all the proper charges are paid to the officer conducting the sale.

city or municipal treasurer. Section 178. be submitted by the levying officer to the sanggunian concerned. respectively. the officer conducting the sale shall sell the goods or effects so distrained at public auction to the highest bidder for cash. A report on any levy shall. In case the levy on real property is not issued before or simultaneously with the warrant of distraint on personal property. in like manner. and penalty due from him. To this end. the tax delinquencies shall be cancelled. within ten (10) days after receipt of the warrant. shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount of the tax. fee. the provincial. proceed with the levy on the taxpayer's real property. and no charge shall be imposed for the services of the local officer or his deputy. written notice of the levy shall be mailed to or served upon the assessor and the Register of Deeds of the province or city where the property is located who shall annotate the levy on the tax declaration and certificate of title of the property. or who is found guilty of abusing the exercise thereof by competent authority shall be automatically dismissed from the service after due notice and hearing. shall within thirty (30) days after execution of the distraint.Within thirty (30) days after the levy. any local treasurer who fails to issue or execute the warrant of distraint or levy after the expiration of the time prescribed. Advertisement and Sale. with a representative of the Commission on Audit and the city or municipal assessor as members. and the personal property of the taxpayer is not sufficient to satisfy his delinquency. and such advertisement shall cover a period of at least thirty (30) days. if he be absent from the Philippines. the local treasurer shall make a report of the proceedings in writing to the local chief executive concerned. be distrained until the full amount due. Without prejudice to criminal prosecution under the Revised Penal Code and other applicable laws. real property may be levied on before. or after the distraint of personal property belonging to the delinquent taxpayer. or charge. or if there be none. . the provincial. Said certificate shall operate with the force of a legal execution throughout the Philippines. Where the proceeds of the sale are insufficient to satisfy the claim. Within five (5) days after the sale. including all expenses. simultaneously. city or municipal treasurer. Section 176. . including the surcharges.After the expiration of the time required to pay the delinquent tax. Should the property distrained be not disposed of within one hundred and twenty (120) days from the date of distraint. other property may.(e) Procedure of sale . fee. and other penalties incident to delinquency. the local treasurer shall proceed to publicly advertise for sale or auction the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale. Penalty for Failure to Issue and Execute Warrant. as the case may be. to his agent or the manager of the business in respect to which the liability arose. It shall be effected by posting a notice at the main entrance of the municipal building or city hall. The expenses chargeable upon the seizure and sale shall embrace only the actual expenses of seizure and preservation of the property pending the sale. Section 177. interest. and in a public and Page | 128 .At the time and place fixed in the notice. Levy shall be effected by writing upon said certificate the description of the property upon which levy is made. to the occupant of the property in question. is collected. as the case may be. Said Committee on Appraisal shall be composed of the city or municipal treasurer as chairman. the same shall be considered as sold to the local government unit concerned for the amount of the assessment made thereon by the Committee on Appraisal and to the extent of the same amount.The proceeds of the sale shall be applied to satisfy the tax. and the expenses of the distraint and sale. The balance over and above what is required to pay the entire claim shall be returned to the owner of the property sold. and the delinquent taxpayer or. (f) Disposition of proceeds . or charge. Levy on Real Property. At the same time.

The owner shall not. fees. interests. by ordinance duly approved. If he fails to do so. stating the name of the purchaser and setting out the exact amount of all taxes. and penalties. related surcharges. or charges. city or municipal treasurer or his deputy. and said property thereafter shall be free from the lien of such taxes. city or municipal treasurer or his deputy. After consultation with the sanggunian.Within one (1) year from the date of sale. interests or penalties from the date of delinquency to the date of sale. and penalties. Redemption of Property Sold. or at any other place as determined by the local treasurer conducting the sale and specified in the notice of sale. . interests. the local treasurer shall make and deliver to the purchaser a certificate of sale. describing the property sold. shall forthwith return to the latter the entire purchase price paid by him plus the interest of not more than two percent (2%) per month herein provided for. and related surcharges. however. the name of the taxpayer against whom the taxes. and penalties due thereon. fees. be deprived of the possession of said property and shall be entitled to the rentals and other income thereof until the expiration of the time allowed for its redemption. Such payment shall invalidate the certificate of sale issued to the purchaser and the owner shall be entitled to a certificate of redemption from the provincial. or on the property to be sold. charges. fees. fees. fees or charges. fees. in cases of personal and real property including improvements thereon.In case there is no bidder for the real property advertised for sale as provided herein. Final Deed to Purchaser. or if the highest bid is for an amount insufficient to pay the taxes. That any excess in the proceeds of the sale over the claim and cost of sales shall be turned over to the owner of the property. or charges are levied. free from liens of any taxes. or charges. the local treasurer or his deputy shall make a report of the sale to the sanggunian concerned. Page | 129 . charges. and related surcharges. The local treasurer may. related surcharges. penalties and interests. and the advertisement and subsequent sale. the portion of the cost of sale and other legitimate expenses incurred by him. however.conspicuous place in the barangay where the real property is located. and a short description of the property to be sold. city or municipality where the property is located. the taxpayer may stay they proceedings by paying the taxes. . advance an amount sufficient to defray the costs of collection by means of the remedies provided for in this Title. upon surrender by the purchaser of the certificate of sale previously issued to him. Section 179. interests. penalties and costs. or penalties: Provided. The provincial. Section 180. and by publication once a week for three (3) weeks in a newspaper of general circulation in the province. showing the proceeding of the sale. fees. fees. the delinquent taxpayer or his representative shall have the right to redeem the property upon payment to the local treasurer of the total amount of taxes. and which shall form part of his records. The deed shall succinctly recite all the proceedings upon which the validity of the sale depends. . It shall be the duty of the Registrar of Deeds concerned upon registration with his office of any such declaration of forfeiture to transfer the title of the forfeited property to the local government unit concerned without the necessity of an order from a competent court. At any time before the date fixed for the sale. or charges. The advertisement shall contain the amount of taxes. Section 181. city or municipal building. the local treasurer shall execute a deed conveying to the purchaser so much of the property as has been sold. plus interest of not more than two percent (2%) per month on the purchase price from the date of purchase to the date of redemption. Purchase of Property By the Local Government Units for Want of Bidder. charges. Within thirty (30) days after the sale. related surcharges.In case the taxpayer fails to redeem the property as provided herein. interests. and the time and place of sale. including the preservation or transportation in case of personal property. the sale shall proceed and shall be held either at the main entrance of the provincial. the local treasurer conducting the sale shall purchase the property in behalf of the local government unit concerned to satisfy the claim and within two (2) days thereafter shall make a report of his proceedings which shall be reflected upon the records of his office.

(f) The professional libraries of doctors. . or penalties. Section 184. carabao.000. including crops. shall be instituted after the expiration of such period: Provided. The following property shall be exempt from distraint and the levy. taxes. of a value not exceeding Ten thousand pesos (P10. by the lawful use of which a fisherman earns his livelihood. Section 185.The local government unit concerned may enforce the collection of delinquent taxes. such as he may select. (c) Local taxes. and that of all his family. fees or charges which have accrued before the effectivity of this Code may be assessed within a period of three (3) years from the date they became due. actually provided for individual or family use sufficient for four (4) months. Collection of Delinquent Taxes. by the (d) Household furniture and utensils necessary for housekeeping and used for that purpose by the delinquent taxpayer. engineers.00). fees. by ordinance duly approved. fees. The proceeds of the sale shall accrue to the general fund of the local government unit concerned. (e) Provisions. or charges may be collected within five (5) years from the date of assessment by Page | 130 (b) One (1) horse. fees. and the costs of sale. may redeem the property by paying to the local treasurer the full amount of the taxes. TAXPAYER’S REMEDIES – SECS. If the property is not redeemed as provided herein. or charges. Personal Property Exempt from Distraint or Levy. the taxpayer or any of his representative. Fees. not exceeding the total value of Ten thousand pesos (P10. including the related surcharge and interest: (a) Tools and implements necessarily used delinquent taxpayer in his trade or employment. such as the delinquent taxpayer may select. (b) In case of fraud or intent to evade the payment of taxes. . the same may be assessed within ten (10) years from discovery of the fraud or intent to evade payment. including all expenses. cow. fees. Section 182. charges. fees. fee or charge. whether administrative or judicial. Resale of Real Estate Taken for Taxes. the ownership thereof shall be fully vested on the local government unit concerned. and upon notice of not less than twenty (20) days. or charges shall be assessed within five (5) years from the date they became due.Within one (1) year from the date of such forfeiture. interests.The remedies by distraint and levy may be repeated if necessary until the full amount due. That. lawyers and judges.The sanggunian concerned may. charges or other revenues by civil action in any court of competent jurisdiction. sell and dispose of the real property acquired under the preceding section at public auction. fees. is collected. or other beast of burden. or charges. and necessarily used by him in his ordinary occupation. Fees. and related surcharges. (c) His necessary clothing. Further Distraint or Levy. Section 183. B. (a) Local taxes. The civil action shall be filed by the local treasurer within the period prescribed in Section 194 of this Code. No action for the collection of such taxes.00). and (h) Any material or article forming part of a house or improvement of any real property. Charges or other Revenues through Judicial Action.000. . LGC Section 194. (g) One fishing boat and net. or Charges. Periods of Assessment and Collection. 194-196. attachment or execution thereof for delinquency in the payment of any local tax. .

No case or proceeding shall be entertained in any court after the expiration of two (2) years from the date of the payment of such tax. however. he shall issue a notice cancelling wholly or partially the assessment. (2) The taxpayer requests for a reinvestigation and executes a waiver in writing before expiration of the period within which to assess or collect. The local treasurer shall decide the protest within sixty (60) days from the time of its filing. Municipality of Makati case. v. he shall deny the protest wholly or partly with notice to the taxpayer. the Court agrees with the contention of respondents that petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code. the taxpayer may file a written protest with the local treasurer contesting the assessment. posited in its complaint that the ordinance which was the basis of respondent Makati for the collection of taxes from petitioner was null and void. within 30 days from effectivity thereof. or charges have not been paid. and (3) The taxpayer is out of the country or otherwise cannot be located. or from the date the taxpayer is entitled to a refund or credit. otherwise. or charge. fee. relying on the resolution of the Secretary of Justice in The Philippine Racing Club. Claim for Refund of Tax Credit. However.When the local treasurer or his duly authorized representative finds that correct taxes. the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice. if the local treasurer finds the assessment to be wholly or partly correct. Petitioner. That. fee. the amount of deficiency. JARDINE ALIPOSA DAVIES INSURANCE BROKERS INC V. ISSUE: Whether or not petitioner was proscribed from filing its complaint with the RTC and for a refund of its alleged overpayment. or charge. The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the lapse of the sixty (60) day period prescribed herein within which to appeal with the court of competent jurisdiction otherwise the assessment becomes conclusive and unappealable. the surcharges. HELD: YES The Court agrees with petitioner that as a general precept. or charge erroneously or illegally collected until a written claim for refund or credit has been filed with the local treasurer. Section 195. fees or charges assessed before the effectivity of this Code may be collected within a period of three (3) years from the date of assessment. But if the Page | 131 . However. Within sixty (60) days from the receipt of the notice of assessment. fee. interests and penalties.administrative or judicial action. he shall issue a notice of assessment stating the nature of the tax. . Section 196. a taxpayer may file a complaint assailing the validity of the ordinance and praying for a refund of its perceived overpayments without first filing a protest to the payment of taxes due under the ordinance. If the local treasurer finds the protest to be wholly or partly meritorious. Failure of a taxpayer to interpose the requisite appeal to the Secretary of Justice is fatal to its complaint for a refund. (d) The running of the periods of prescription provided in the preceding paragraphs shall be suspended for the time during which: (1) The treasurer is legally prevented from making the assessment of collection. In case the Secretary decides the appeal. . Protest of Assessment. the assessment shall become final and executory.No case or proceeding shall be maintained in any court for the recovery of any tax. Clearly. a period also of 30 days is allowed for an aggrieved party to go to court. taxes. petitioner having paid without any protest the taxes due to respondent Makati under the ordinance. Inc. No such action shall be instituted after the expiration of said period: Provided. fees.

A. Castro replied that in cases of transfer of real property not involving monetary consideration. the complaint of petitioner with the Regional Trial Court was merely an afterthought. that is.434 shares of stock with a par value of P584. by Deed of Assignment. CASTRO FACTS: Romulo D. Such statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge of judicial functions. a party could already proceed to seek relief in court.340. San Juan (petitioner). HELD: 1. Moreover. Castro (respondent). On June 24. San Juan protested the basis of the tax due. Evidently. registered owner of real properties in Rancho Estate I. A municipal tax ordinance empowers a local government unit to impose taxes.584. it is certain that the fair market value or zonal value of the property is the basis of the tax rate.000. 2004. it is our view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec. 2005. after the lapse of 60 days.340 were placed in the name of his wife. As provided in the Local Government Code (LGC).0 million and not on what is stated in the Deed of Assignment.] with the consent of his wife.Secretary does not act thereon. fair market value is defined as the price at which a property may be sold by a seller who is not compelled to sell and bought by a buyer who is not compelled to buy. Two hundred thousand (200. 187 of R. which is P7. Hence. It is for this reason that protests over tax ordinances are required to be done within certain time frames. informed him that the tax due should be based on the fair market value of the property. Consequently. 1.434 shares of stock therein with a total par value of P2. and prosperity of the people. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. In the instant case. the computation based on fair market value is correct. conveyed on August 24. a taxpayer who disagrees with a tax assessment made by a local treasurer may file a written protest thereof: Page | 132 . The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace. San Juan then filed with the RTC of Marikina a petition for mandamus and damages against Castro in his capacity as City Treasurer of Marikina praying that Castro be compelled to perform a ministerial duty. petitioner even paid without any protest the amounts of taxes assessed by respondents Makati and Acting Treasurer as provided for in the ordinance. Under Section 195 of the Local Government Code which is quoted immediately below. Concepcion II.000 were placed in San Juan‘s name while the remaining 58. 4. any delay in implementing tax measures would be to the detriment of the public. the City Treasurer. the Securities and Exchange Commission approved the Articles of Incorporation of SARC. progress.000) of the said shares of stock with a par value of P2. Ricardo L. San Juan‘s representative thereafter went to the Office of the Marikina City Treasurer to pay the transfer tax based on the consideration stated in the Deed of Assignment. SAN JUAN V. then under the process of incorporation. 3. For this reason the courts construe these provisions of statutes as mandatory. to accept the payment of transfer tax based on the actual consideration of the transfer/assignment. Marikina City covered by Transfer Certificates of Title . the properties to the Saints and Angels Realty Corporation (SARC). 2. 7160 is fatal to their cause. ISSUE: Is Mandamus the proper procedure adopted by San Juan? NO. in exchange for 258.

. he shall issue a notice of assessment stating the nature of the tax. LGC Section 198. The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the lapse of the sixty-day (60) period prescribed herein within which to appeal with the court of competent jurisdiction. however. otherwise the assessment becomes conclusive and unappealable. Protest of Assessment. Local Board of Assessment Appeals. or charge. otherwise. assessment. fee. the taxpayer may file a written protest with the local treasurer contesting the assessment. and (e) The appraisal and assessment of real property shall be equitable B. The appraisal. Within sixty (60) days from the receipt of the notice of assessment. 226. Petitioner should thus have. or charges have not been paid. the assessment shall become final and executory.Any owner or person having legal interest in the property who is not satisfied with the action of the provincial. LOCAL BOARD OF ASSESSMENT APPEALS – SEC. he shall issue a notice cancelling wholly or partially the assessment. the surcharges. He instead opted to file a petition for mandamus to compel respondent to accept payment of transfer tax as computed by him. Respondent‘s argument that ―mandamus cannot lie to compel the City Treasurer to accept as full compliance a tax payment which in his reasoning and assessment is deficient and incorrect‖ is thus persuasive. The local treasurer shall decide the protest within sixty (60) days from the time of its filing.SECTION 195. FUNDAMENTAL PRINCIPLES – SEC. Petitioner did not observe any of these remedies available to him. he shall deny the protest wholly or partly with notice to the taxpayer. That petitioner protested in writing against the assessment of tax due and the basis thereof is on record as in fact it was on that account that respondent sent him the above-quoted July 15. assessment. REAL PROPERTY TAXATION A. (c) Real property shall be assessed on the basis of a uniform classification within each local government unit. the amount of deficiency. (d) The appraisal. if the local treasurer finds the assessment to be wholly or partly correct. ASSESSMENT APPEALS 1. either appealed the assessment before the court of competent jurisdiction or paid the tax and then sought a refund. city or municipal assessor in the Page | 133 . III. levy and collection of real property tax shall not be let to any private person. LGC Section 226. Mandamus lies only to compel an officer to perform a ministerial duty (one which is so clear and specific as to leave no room for the exercise of discretion in its performance) but not a discretionary function (one which by its nature requires the exercise of judgment). 198. following the earlier abovequoted Section 195 of the Local Government Code. interests and penalties. If the local treasurer finds the protest to be wholly or partly meritorious. – When the local treasurer or his duly authorized representative finds that the correct taxes. fees. levy and collection of real property tax shall be guided by the following fundamental principles: (a) Real property shall be appraised at its current and fair market value. However. Fundamental Principles. (b) Real property shall be classified for assessment purposes on the basis of its actual use. 2005 letter which operated as a denial of petitioner‘s written protest.

shall render its decision based on substantial evidence or such relevant evidence on record as a reasonable mind might accept as adequate to support the conclusion. within thirty (30) days after receipt of the decision of said Board. (c) The secretary of the Board shall furnish the owner of the property or the person having legal interest therein and the provincial or city assessor with a copy of the decision of the Board. together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal. and issue subpoena and subpoena duces tecum. within sixty (60) days from the date of receipt of the written notice of assessment. The Board. in the case of municipalities.00) or less. The owner of the property or the person having legal interest therein or the assessor who is not satisfied with the decision of the Board. which shall exclusively accrue to them: (a) Taxes .assessment of his property may. and outdoor advertisements.The barangay may levy reasonable fees and charges: (1) On commercial breeding of fighting cocks. ACTION OF THE LBAA – SEC. fees. In the event that the clearance is not issued within the said period. (d) Other fees and Charges. appeal to the Board of Assessment Appeals of the provincial or city by filing a petition under oath in the form prescribed for the purpose. LGC Section 152. In case the provincial or city assessor concurs in the revision or the assessment.00) or less.On stores or retailers with fixed business establishments with gross sales of receipts of the preceding calendar year of Fifty thousand pesos (P50.The barangays may levy taxes. at a rate not exceeding one percent (1%) on such gross sales or receipts. 3. administer oaths. and (3) On billboards.Barangays may collect reasonable fees or charges for services rendered in connection with the regulations or the use of barangay-owned properties or service facilities such as palay. (c) Barangay Clearance. (b) Service Fees or Charges. Page | 134 . in the case of cities and Thirty thousand pesos (P30. the Board shall have the power to summon witnesses. . 229. after hearing. or tobacco dryers. may. cockfights and cockpits. copra. conduct ocular inspection. Action by the Local Board of Assessment Appeals. the sangguniang barangay may impose a reasonable fee. it shall be his duty to notify the owner of the property or the person having legal interest therein of such fact using the form prescribed for the purpose. . (a) The Board shall decide the appeal within one hundred twenty (120) days from the date of receipt of such appeal. signboards. 152. The application for clearance shall be acted upon within seven (7) working days from the filing thereof. as herein provided. take depositions. PAYMENT UNDER PROTEST – SEC. Scope of Taxing Powers. . The decision of the Central Board shall be final and executory. .No city or municipality may issue any license or permit for any business or activity unless a clearance is first obtained from the barangay where such business or activity is located or conducted. and charges. For such clearance. the city or municipality may issue the said license or permit.000. appeal to the Central Board of Assessment Appeals. The proceedings of the Board shall be conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules applicable in judicial proceedings. LGC Section 229. (b) In the exercise of its appellate jurisdiction. neon signs.000. 2. as provided in this Article. (2) On places of recreation which charge admission fees.

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