Professional Documents
Culture Documents
Custom duties:
Are duties which are one charged upon commodities on their being imported into or exported out of a country.
2.
Tariff:
Means a book of rates, a table or catalogue drawn usually in alphabetical order containing the names of several kinds
of merchandise with the duties to be paid for the same as settled or agreed upon between several states that holds
commerce together.
General Rule: All articles when imported from a foreign country including those previously exported from the
Philippines one subject to duty unless otherwise specifically provided for in the Tariff and Customs Code or other laws.
(Sec. 100, TCS)
2.
Prohibited Importations
Classifications:
A.
B.
weapons of war
2.
gambling devices
3.
4.
5.
Where such conditions as to warrant lawful importation neither do nor exist, the legal effects of the
importation of qualifiedly prohibited articles are the same as those of absolutely prohibited articles. (Auyong
Hian vs CTA, 59 SCRA 110)
2.
Prohibited importations one subject to forfeiture whether the shipper and the consignee are one and the
same person. (UTE PATEROR vs. Bureau of Customs, 193 S 132)
3.
Conditionally-free importations:
These are articles which are exempt from import duties upon compliance with the formalities prescribed with
regulations promulgated by the Commission of Customs with the approval of the Secretary of Finance. (Sec.
105, TCC)
This article includes:
1.
Those prohibited for in Sec. 105 of the Tariff and Customs Code;
2.
3.
Those given to international institutions, entitled to exemption by agreement or special laws; and
4.
1.
2.
Exemption granted to government agencies, instrumentalities with existing contracts, commitment, agreements or
obligations with foreign countries.
3.
4.
2.
A lien upon the imported article while they are in custody or subject to the control of the government.
freight
2.
insurance
3.
cost
4.
expenses, and
5.
Note: Imported goods must be entered into a custom house at their port of entry otherwise they shall be considered as
contraband and the importer is liable for smuggling.
Import entry
It is a declaration in the Bureau of Customs showing particulars of the imported article that will enable the customs
authorities to determine the correct duties.
1.
2.
Note: All imported articles into the Philippines, whether subject to duty or not, shall be entered through a customs house at a port
of entry.
1.
Port of Entry
Means a domestic open to both foreign and continuous trade including airport of entry.
2.
Exportation
It is the bringing out of goods from the Philippines territorial jurisdiction.
3.
Under Executive Order # 26, Series of 1986, Export taxes, except on logs, have been suspended
Advalorem Duty
Duty based on the value of the imported article.
2.
Specific Duty
Duty based on the dutiable weight of goods number or measurement.
B. Special Duties
Imposed in addition to regular or ordinary duties principally in order to protect local industries against unfair competition
from foreign manufacturers or procedures; consumer against possible deceptions; and national interest.
Classifications:
1.
Dumping Duty
Imposed by the secretary of Finance upon the recommendation of the Tariff Commission when:
a.
The price of the imported article is deliberately or continually fixed at less than the fair market value or cost
of production; and
b.
Importation would cause or likely cause and injury to local industries engaged in the manufacture or
production of the same or similar articles or prevent their establishment.
Amount of special duty: extent of the under pricing.
2.
Countervailing duty
Special duty imposed on imported articles which are granted any kind or form of subsidy by the government in the
country or origin or exportation, the importation of which has caused or threatens to cause material injury to a
domestic industry or has materially relaided the growth or, prevents the establishment of a domestic industry. (RA
#8751)
Requisites:
1.
The levy of an excise tax or inland tax or local goods of the same or similar class as the article imported or
the grant of subsidy to the foreign exporter by his government; and
2.
The importation is likely to insure materially established local industries or prevent their establishments.
Marking Duty
Special duty of five percent (5%) advalorem imposed or articles properly marked, collected by the commissioner,
except when such article is exported or destroyed under the customs supervision and prior to final liquidation of
the corresponding entry.
Purpose: To prevent possible deception of the consumers.
4.
Discriminatory/Retaliatory duty
Imposed on imported goods whenever it is found as a fact that the country of origin discriminates against the
commerce of the Philippines in such a manner as to place the commerce of the Philippines at a disadvantage
compared with the commerce of any foreign country.
5.
Duties imposed under the Flexible Tariff Clause (Sec. 401, TCC)
Import duties which are modified by the President upon investigation of the Tariff Commissions and
recommendation of the National Economic Development Authority in the interest of national economy, general
welfare and national security.
The President is given by the Tariff and Customs Code ample powers to adjust tariff rates Sec. 401 of TCC; empowers the
president to:
1.
2.
3.
Impose and additional duty on all imports not exceeding 10% advalorem whenever necessary.
Conduct by the Tariff Commission of an investigation in which a public hearing shall be hold wherein interested parties
shall be afforded reasonable opportunity to be present, produce evidence and to be heard;
2.
The commission shall also hear the views and recommendations of any government office, agency or instrumentality
concerned;
3.
The commission shall submit their findings and recommendations to the NEDA within 30 days after the termination of
the public hearings. The NEDA thereafter, submits its recommendation to the President.
Administrative Aspect of
Tariff and Customs Laws
Agencies directly concerned with Tariff and Customs Administration:
TARIFF COMMISSION
Officials of the Tariff Commission are the chairman and 2 member Commissioners, all appointed by the President.
Functions:
A. Investigative Powers:
1.
Administration and the fiscal and industrial effect of the Tariff and Customs laws of this country now in force or
when hereafter be enacted;
2.
Relations between the rates of duty on raw materials and the finished or partly finished products;
3.
Effects of ad valorem and specific duties and of compound, specific and ad valorem duties;
4.
All questions relative to the arrangement of schedules and classification of articles in several sections of the tariff
law;
5.
Tariff relations between the Philippines and the Foreign countries, commercial treaties, preferential provisions,
economic alliances, the effect of export bounties and preferential transportation rate;
6.
7.
Conditions, causes and effects relating to completion of foreign industries with those of the Philippines, including
dumping and cost of production;
8.
In general, to investigate the operation of customs and tariff laws, including their relations to the national
revenues, their effect upon the industries or labor of the country and to submit reports of its investigation;
9.
Nature and composition and the classification and heading number for customs revenue and other related
purposes.
b.
2.
2.
Select and describe representative articles imported to the Philippines similar to or comparable with those locally
produced
3.
4.
5.
Submit annual reports of these to the President of the Philippines, copies of which shall be furnished to the
NEDA, BSP, Dept. of Finance and the Bureau of Investments.
BUREAU OF CUSTOMS
Composed of one chief and 2 assistant chiefs known as commissioner of customs, appointed by the President
respectively.
2.
Assessment and collection of Revenues from imported articles and all other impositions under the tariff and customs
laws.
3.
Supervision and control over due entrance and clearance of vessels and aircraft engaged in foreign commerce.
4.
5.
Supervision on control over the handling of foreign mails arriving in the Philippines.
6.
Supervise and control all import and export cargos for the protection of the government revenue.
7.
Exclusive original jurisdiction over seizure and forfeiture cases under the tariff and customs laws.
Other Powers:
1.
Supervision of collection districts and ports of entry, coast ruse trade, vessels an aircrafts used in foreign trade;
2.
3.
4.
A.
Assess
B.
Collect
1.
2.
Procedural Aspect of
the Tariff and Customs Laws
Nature of Customs Protest; Seizures and Forfeiture cases
There are two kinds of proceedings in the Bureau of Customs, these are:
a.
Customs protest cases- deal safely with liability for customs, duties, fees and other charges.
b.
Seizure and forfeiture cases- refer to matters involving smuggling or the act of any person who fraudulently imports or
brings into the Philippines, or assists in so doing, any article contrary to law, or shall receive, conceal, buy, sell or in
any manner facilitate the importation, concealment, or sale of such auricles after importation, knowing the same to
have been imported contrary to law smuggling includes the exportation act of articles in a manner contrary to law. (Sec.
3154, TCC).
The collector of customs shall cause all the articles entering the jurisdiction of his district and destined for importation
through his port to be entered at the customs house. He shall appraise and classify such articles, and shall assess and
collect the duties, taxes and other charges thereon. He shall also hold possession of all imported articles upon which
duties, taxes, and other charges have not been paid of secured to be paid.
2.
The importer / owner makes the payment after the final liquidation.
3.
The importer / owner adversely affected by the collectors ruling may file a written protest with the Collector of custom
at the time of payment or within 15 days thereafter.
4.
The Collector of Customs issues an order for hearing within 15 days from receipt of the protest and renders his
decision within 30 days from the termination of hearing.
5.
In case an adverse decision is rendered within the 30-day period from the termination, the importer/owner may appeal
to the Commissioner of Customs within 15 days after notification of decision or lapse of the 30-day period to decide.
The importer/ owner may give written notice to the collector and one copy furnished to the Commissioner of his desire
to have the matter reviewed by the Commissioner. The Collector shall forthwith transmit all the seconds of the
proceedings to the Commissioner.
6.
In case an adverse decision is rendered, the importer/ owner may appeal to the Court of Tax Appeals within 30 days
from receipt of the decision; and
7.
In case an adverse decision is still rendered, the importer/ owner may appeal to the Court of Appeals and the
Supreme Court.
2)
a)
b)
2)
3)
Note: 1) Such power shall extend to the removal of any false bottom, partition, bulkhead or other obstruction. 2)
No proceeding herein shall give rise to any claim fro the damage caused to the article or vessel or aircraft.
1)
2)
The legality of a search can be contested only by the party whose rights have been impaired thereby and that the
objection to an unlawful search and seizure is purely personal and cannot be availed of by third parties. (Nasiad, et al.
vs. CTA, Nov. 29, 1994)
2)
Warrants of seizure and detention issued by the Collector of C covering the seizure of imported goods are not general
warrants issued in violation of Section 3 (now section 4), rule 126 of the Rules of Court. Upon effecting the seizure of
the goods, the Bureau of Customs acquired exclusive jurisdiction not only over the case but also over the goods seized
for the purpose of enforcing the tariff and Customs laws. (Chia vs. Acting Collector of Customs, Sept. 26, 1989)
3)
The proceedings upon search warrants must be absolutely legal, for there is not a description of process known to the
law, the execution of which is more distressing to the citizen. Perhaps there is none which excites such intense feeling
in the consequence of its humiliating and degrading effect. The warrants will always be constured strictly without
however, going the full length of requiring technical accuracy. No presumptions of regularity are to be invoked in aid of
process when an officer undertakes to justify under it. (Uy vs. BIR, Oct. 20, 2000)
If the conveyance has been used for smuggling at least twice before;
2.
If the owner is not in the business for which the conveyance is generally used; and,
3.
Pertinent Cases:
Acting Commissioner of Customs
vs. CTA
The dismissal of the criminal charge in the Fiscals office against respondent Andrulis does not constitute re judicata in
the forfeiture proceedings. Forfeiture is in rem, whereas a criminal action is in personam. Conviction in the criminal
action is not a bar to forfeiture. Results of a criminal proceeding being dependent on the evidence therein will not
necessarily influence judgment in the forfeiture proceedings.
Llamado vs. Commissioner of Customs
123 SCRA 118
A Cessna plane carrying persons engaged in the smuggling of untaxed blue seal cigarettes, landed at an airstrip in
Alabat, Quezon Province. The plane was also used to bring in de gaza kerosene lanterns and kerosene used to light
the airstrip to facilitate the loading of the cigarettes. The plane was subject to forfeiture pursuant to Sec. 2530 (a) of the
Tariff and Customs Code. It is not necessary that the vessel or aircraft must carry the contraband. It is not likewise
essential that the vessel or aircraft must come from a foreign country.
Commissioner of Customs vs.
CTA and Jose Pascual
138 SCRA 581
The Supreme Court ruled that the forfeiture of Pascuals vessel used in the illegal importation of untaxed cigarettes is
justified.
Forfeiture, according to the Citing the case of Vierneya vs. Commissioner of Customs (July 30, 1968), is in the nature
of proceedings in rem and is directed against the res. The fact that the owner of the vessel had no actual knowledge
that the vessel was illegally used does not render the vessel immune from forfeiture. This is so because the forfeiture
action is against the vessel itself.
Note: The said vessel was duly authorized to engage in coasturse trade but has no certificate of public convenience.
Transglobe International Inc.
vs. Court of Appeals
G.R. No. 126634,
January 25, 1999.
Forfeiture of seized goods in the Bureau of Customs is a proceeding against the goods and not against the owner. It is
the nature of a proceeding in rem, i.e. directed against the res or imported article and entails a determination of the
legality of their importation. In this proceeding, it is in legal contemplation the property itself which commits the violation
and is treated as the offender, without reference whatsoever to the character or conduct of the owner.
2.
possession or control even if no warrant of seizure or detention had previously been issued by the collector of the
Customs. Primary jurisdiction is vested in seizures and forfeiture proceedings in the collector and the Commissioner or
the Customs to the exclusion of the regular courts. (Commissioner of Customs vs. Navarro, L-33146, May 31, 1977)
Rationale of the doctrine: It is anchored on the policy of placing no necessary hindrance on the Governments drive
not only to prevent smuggling and other frauds upon Customs but also to render effective the collection of import and
export duties duet to the State. (Jao, et, al. vs. Court of Appeals, et al. G.R. Nos. 104604 and 111223, Oct. 6, 1995).
Pertinent Cases:
3.
1.
Proceedings for the forfeiture of goods illegally imported are civil and administrative not criminal in nature since
they do not result in the conviction of the wrongdoer nor in the imposition upon him of a penalty (Collector vs.
Villaluz, L-34038, June 18, 1976; Commissioner vs. Navarro, supra; Republic vs. Bocar, supra).
2.
Proof beyond reasonable doubt is not required to warrant forfeiture (Feeder International vs. CA, 197 SCRA
842).
3.
The Collector of Customs, when sitting in forfeiture proceedings, constitutes a tribunal upon which the law
expressly confess jurisdiction to hear and determine all questions touching on the forfeiture and further disposition
of the illegal imported mechanics (Government of the P.I. vs. Gale, 24 Phil 95; Auyong Hian vs. CTA, 19 SCRA
10).
4.
Jurisprudence is replete with cases which have held that regional trial courts are devoid of any competence to
pass upon the validity of seizure and forfeiture proceedings conducted in the Bureau of Customs and to enjoin, or
otherwise interfere with these proceedings. The Collector of Customs sitting in the seizure and forfeiture
proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture
proceedings of dutiable goods. The regional trial courts are preclude from assuming cognizance over such even
though petition for certiorari, prohibition, or mandamus.
5.
Even if a Customs seizure is illegal, exclusive jurisdiction still belongs to the Bureau of Customs (Jao, et. al vs.
CA, supra).
6.
To seize or not to seize is discretionary on Customs, so mandamus does not lie. However, in case of grave abuse
by customs, petitioner can file certiorari proceedings (Provident Tree Farms, Inc. vs. Batario, Jr. etc et. al G.R. No.
92285, March 28, 1994).
The imported articles are seized and a warrant for the detention of the property is issued by the collector of
Customs;
2.
If the owner or importer desires to secure the release of the property for legitimate, the Collector may surrender it
upon the filing of a sufficient bond; provided that the articles the importation of which is prohibited by law shall not
be released under bond.
3.
The Collector of Customs makes a report of the seizure to the seizure to the Commissioner on Audits.
4.
The Collector shall give the owner or importer of property or his agent a written notice of the seizure and shall
give him an opportunity to be heard;
5.
Notice to an unknown owner shall be effected by posting for fifteen days (15) days in the public corridor of the
custom-house of the district in which the seizures was made, and, in the discretion of the Commissioner by
publication in a newspaper or by other means a he shall consider desirable;
6.
The Collector of Customs schedules the hearing and renders his decision after the hearing is conducted;
7.
In case the decision of the Collector of Customs is adverse to the importer/ owner, within fifteen (15) days after
notification in writing by the collector of his action or decision the importer/ owner may give written notice to the
Collector and one copy furnished to the Commissioner of his desire to have the matter reviewed by the
Commissioner. Thereupon, the collector shall forthwith transmit all the records of the proceeding to the
Commissioner;
8.
In case the decision of the collector of Customs is affirmed by the Commissioner of Customs, or in case of
inaction on the part of the Commissioner of Customs, the importer/ owner may appeal to the court of Appeals
within 30 days from notice of the decision; and
9.
In case an adverse decision is still rendered, the importer/ owner may appeal to the Court of Appeals and the
Supreme Court.
Note: If the Collector renders a decision adverse to the Government, such decision shall automatically, be
elevated to and reviewed by the Commissioner; and if the Collectors decision is affirmed by the Commissioner,
such decision shall be automatically elevated to, and be finally be reviewed by the secretary of Finance.
If within 30 days from receipt of the record of the case by the Commissioner or by the Secretary of Finance, as the
case may be, no decision is rendered by either of them, the decision under review shall become final and
executory.
Settlement of Seizures
Subject to the approval of the commissioner of the district collector may while the case is still pending except when
there is fraud:
a)
Accept the settlement of any seizure case- provided that the owner, importer, exporter or consignee or his agent shall
offer to pay a fine; or
b)
In case of forfeiture- the owner, importer, exporter, consignee or his shall offer to pay for the domestic market value
of the seized article.
Note: The commissioner may accept the settlement of any seizure case on appeal in the same manner.
Effect of Settlement: The property shall be forthwith released and all the liabilities which may or might attack to the
property by virtue of the offense which was the occasion of the seizure and all the liability which might have been
incurred under any cash deposit or bond given by the owner or agent in respect to such property shall be deemed to
be discharged.
Settlement of any seizure case shall not be allowed:
a.
b.
Pertinent Cases:
1)
b)
c)
Where the release of the property would be contrary to law. (Transglobe International, Inc. vs. C.A, supra)
2)
The fraud contemplated by law must be actual and not constructive. It must be intentional fraud, consisting of
deception willfully and deliberately done or resorted to in order to induce another to give up some right. (Farolan
vs. CTA and Bagong Buhay Trading, 217 SCRA 298)
Remit the assessment and collection of customs duties, taxes and other charges where the aggregate amount is less
than ten (10) pesos; and
b)
He may dispense with the seizure of article of the less than ten ( 10) pesos in value except:
1)
2)
Subject to the approval of the Secretary of Finance, the Commissioner of Customs may compromise cases involving
the imposition of fines, surcharges and forfeitures unless otherwise specified by law.
Administrative Penalties under the Tariff and Customs Code
These include:
a.
a.
Surcharges
b.
Fines
c.
Forfeitures
b.
1.
2.
3.
4.
5.
Any dutiable article is found in the baggage of an arriving passenger which is not included in the baggage
declaration;
2.
breach of bond;
3.
c.
4.
unloading of cargo before arrival at ports of destination, or at improper time or place after arrival; and
5.
The penalty of forfeiture is imposed in the cases enumerated in Section 2530 of the Tariff and Customs Code.
The requisite for forfeiture are:
1.
The wrongful making by the owner, importer, ex-porter or consignee of any declaration or affidavit or the
wrongful making as delivery by the same persons of any invoice, letter or paper touching on the importation
or exportation of merchandise; and
2.
Government Remedies:
a.
Extrajudicial
1.
2.
Seizures
Generally applied when the penalty is fine or forfeiture which is imposed when the importation is unlawful
and it may be exercised even where the articles are not or no longer in Customs Custody, unless the
importation is merely attempted.
In the case of attempted importation, administrative fine or forfeiture may be affected only;
3.
a.
b.
in the hands or under the control of the importer or person who is aware thereof.
Sale of Property
Property in the customs custody shall be subject to sale under the following conditions;
a.
abandoned articles;
b.
c.
seized property, other than contraband, after liability to sale shall have been established by proper
administrative or judicial proceedings in conformity with the provision of this code: and
d.
Any articles subject to a valid lien for customs duties, taxes or other charges collectible by the Bureau
of Customs, after the expiration of the period allowed for the satisfaction of the same.
Note: Goods in the collectors possession or of Customs authorities pending payment of customs duties are
beyond the reach of attachment.
b.
Judicial Action
The tax liability of the importer constitutes a personal debt to the government, enforceable by action (Sec. 1204, TCC)
This is availed of when the tax lien is lost by the release of the goods.
B.
Taxpayers Remedies
Administrative Recourse
Claim for refunda written claim for refund may be submitted by the importer:
1.
2.
on missing packages;
b.
deficiencies in the contents of packages or shortage before arrival of the goods in the Philippines;
c.
d.
e.
f.
Judicial relief
In drawback cases where the goods are re-exported
a.
Protest
see the earlier discussions on Customs Protest Cases
b.
In seizure cases
see earlier discussion on the subject
c)
d)
other matters arising under the customs Law or other laws administered by the Revenue of Customs.
2.
3.
Tax Lien
4.
Compromise
5.
Forfeiture
6.
Judicial
7.
Civil Action
8.
Criminal Action
Actual There is taking of possession of personal property out of the taxpayer into that of the government. In case of
intangible property. Taxpayer is also diverted of the power of control over the property;
b.
property.
Constructive Distraint
May be made on the property of any taxpayer whether
delinquent or not
Taxpayer is merely prohibited from disposing of his
property.
Effected by requiring the taxpayer to sign a receipt of the
Requisites:
1.
2.
3.
4.
Period with in to assess or collect has not yet prescribed. In case of constructive distraint, requisite no. 1 is not
essential (see Sec. 206 TC)
Service of warrant of distraint upon taxpayer or upon person in possession of taxpayers personal property.
2.
Posting of notice is not less than two places in the municipality or city and notice to the taxpayer specifying time and
place of sale and the articles distrained.
3.
4.
1.
2.
RDO
Amount Involved
In excess of P1,000,000.00
P1,000,000.00 or less
2.
Copy of an account of the property distrained, signed by the officer, left either with the owner or person from
whom property was taken, at the dwelling or place of business and with someone of suitable age and
discretion
b.
c.
Serving a copy of the warrant upon taxpayer and upon president, manager, treasurer or other responsible
officer of the issuing corporation, company or association.
b.
c.
Leaving a copy of the warrant with the person owing the debts or having in his possession such credits
or his agent.
2.
Warrant shall be sufficient authority for such person to pay CIR his credits or debts.
Serve warrant upon taxpayer and president, manager, treasurer or responsible officer of the bank.
2.
Bank shall turn over to CIR so much of the bank accounts as may be sufficient.
2.
b.
c.
Prohibit him from disposing the property from disposing the property in any manner, with out the authority of the
CIR.
b.
In the presence of two witnesses of sufficient age and discretion, leave a copy in the premises where property is
located.
2.
3.
4.
5.
Note:
1.
Bank accounts may be distrained with out violating the confidential nature of bank accounts for no inquiry is made.
BIR simply seizes so much of the deposit with out having to know how much the deposits are or where the money or
any part of it came from.
2.
If at any time prior to the consummation of the sale, all proper charges are paid to the officer conducting the same, the
goods distrained shall be restored to the owner.
3.
When the amount of the 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 articles, the CIR or his deputy may purchase the distrained property on behalf of the
national government.
a.
Name of taxpayer
b.
c.
Penalty due.
2.
Officer shall write upon the certificate a description of the property upon which levy is made.
3.
b.
4.
5.
6.
b.
c.
d.
Price: Amount of taxes, penalties and interest thereon from date of delinquency to the date of sale together with
interest on said purchase price at 15% per annum from date of purchase to date of redemption.
1.
2.
Both cannot be availed of where amount involved is not more than P100.
3.
4.
5.
Note:
1.
2.
It is the duty of the Register of Deeds concerned upon registration of the declaration of forfeiture, to transfer the title to
the property with out of an order from a competent court
The remedy of distraint or levy may be repeated if necessary until the full amount, including all expenses, is collected.
Nature:
A lien in favor of the government of the Philippines when a person liable to pay a tax neglects or fails to do so upon
demand.\
2.
Duration:
Exists from time assessment is made by the CIR until paid, with interests, penalties and costs.
3.
Extent:
Upon all property and rights to property belonging to the taxpayer.
4.
2.
3.
4.
2.
Attaches not only from time the warrant was served but from the time the tax was due and demandable.
Compromise
Compromisea contract whereby the parties, by reciprocal concessions, avoid litigation or put an end to one already
commenced.
Requisites:
1.
2.
3.
A reasonable doubt as to the validity if the claim against the taxpayer exists;
2.
The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.
3.
b.
Limitations:
1.
2.
b.
b.
Exception: The Regional Evaluation Board may compromise the assessment issued by the regional offices involving
basic taxes of P 500 K or less.
Remedy in case of failure to comply:
The CIR may either:
1.
2.
Compromise Penalty
1.
It is a certain amount of money which the taxpayer pays to compromise a tax violation.
2.
3.
Since it is voluntary in character, the same may be collected only if the taxpayer is willing to pay them.
Enforcement of forfeiture
Forfeitureimplies a divestiture of property with out compensation, in consequence of a default or offense. It includes
the idea of not only losing but also having the property transferred to another with out the consent of the owner and wrongdoer.
1.
Effect: Transfer the title to the specific thing from the owner to the government.
2.
When available:
a. No bidder for the real property exposed for sale.
b.
-
3.
4.
If highest bid is for an amount insufficient to pay the taxes, penalties and costs.
How enforced:
a.
In case of personal property by seizure and sale or destruction of the specific forfeited property.
b.
In case of real property by a judgment of condemnation and sale in a legal action or proceeding, civil or
criminal, as the case may require.
To be destroyed by order of the CIR when the sale for consumption or use of the following would be
injurious to the public health or prejudicial to the enforcement of the law: (at least 20 days after seizure)
1.
distilled spirits
2.
liquors
3.
cigars
4.
5.
playing cards
6.
b.
5.
6.
All other articles subject to exercise tax, (wine, automobile, mineral products, manufactured oils,
miscellaneous products, non-essential items a petroleum products) manufactured or removed in
violation of the Tax Code.
Dies for printing or making IR stamps, labels and tags, in imitation of or purport to be lawful stamps,
labels or tags.
Where to be sold:
a.
b.
Right of Redemption:
a.
b.
c.
Amount to be paid full amount of the taxes and penalties, plus interest and cost of the sale
d.
e.
Note: The Register of Deeds is duty bound to transfer the title of property forfeited to the government with our necessity of an
order from a competent court.
Other Administrative Remedies
1.
2.
b.
Excise taxes
c.
Exporters bond
d.
3.
Giving reward to informers Sum equivalent to 10% of revenues, surcharges or fees recovered and/or fine or penalty
imposed and collected or P1, 000,000.00 per case, whichever is lower.
4.
5.
Limited to violations of any penal law or regulation administered by the BIR, committed with in the view of the Internal
Revenue Officer or EE.
6.
7.
b.
Willfully refuses to pay such tax and its accessory penalties, after decision on his tax liability shall have become
final and executory.
Inspection of books
Books of accounts and other accounting records of taxpayer must be preserved, generally within three years after date
the tax return was due or was filed whichever is later.
8.
9.
b.
b.
Any taxpayer who filed application for compromise by reasons of financial incapacity his tax liability.
2.
3.
Must be with the approval of the CIR, in case of action, for recovery of taxes, or enforcement of a fine, penalty or
forfeiture.
A. Civil Action
Actions instituted by the government to collect internal revenue taxes in regular courts (RTC or MTCs, depending on
the amount involved)
When assessment made has become final and executory for failure or taxpayer to:
a.
b.
B. Criminal Action
A direct mode of collection of taxes, the judgment of which shall not only impose the penalty but also order payment of
taxes.
An assessment of a tax deficiency is not necessary to a criminal prosecution for tax evasion, provided there is a prima
facie showing of willful attempt to evade.
Effect of Acquittal on Tax Liability:
Does not exonerate taxpayer his civil liability to pay the tax due. Thus, the government may still collect the tax in the
same action.
Reason: Tax is an obligation, does not arise from a criminal act.
Effect of Satisfaction of Tax Liability on Criminal Liability
Will not operate to extinguish taxpayers criminal liability since the duty to pay the tax is imposed by statute,
independent of any attempt on past of taxpayers to evade payment.
This is true in case the criminal action is based on the act to taxpayer of filing a false and fraudulent tax return and
failure to pay the tax.
Note: The satisfaction of civil liability is not one of the grounds for the extinction of criminal action.
Prescriptive Periods /
Statute Of Limitation
Purpose:
For purposes of Taxation, statue of limitation is primarily designed to protect the rights of the taxpayers against
unreasonable investigation of the taxing authority with respect to assessment and collection of Internal Revenue Taxes.
Prescription of Governments Right to Assess Taxes:
General Rule: Internal Revenue Taxes shall be assessed within three (3) years after the last day prescribed by law for the filing
of the return or from the day the return was filed, in case it is filed beyond the period prescribed thereof. (Section 203 of the Tax
Code)
Note:
1.
A return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day.
2.
In case a return is substantially amended, the government right to assess the tax shall commence from the filing of the
amended return (CIR vs. Phoenix, May 20, 1965; Kei & Co. vs. Collector, 4 SCRA 872)
3.
In computing the prescriptive period for assessment, the latter is deemed made when notice to this effect is released,
mailed or sent by the Commissioner to the correct address of the taxpayer. However, the law does not require that the
demand/notice be received within the prescriptive period. (Basilan Estates, Inc. vs. Commissioner 21, SCRA 17;
Republic vs. CA April 30, 1987)
4.
An affidavit executed by a revenue office indicating the tax liabilities of a taxpayer and attached to a criminal complaint
for tax evasion, cannot be deemed an assessment. ( CIR vs. Pascoi Realty Corp. June 29, 1999)
5.
A transcript sheets are not returns, because they do not contain information necessary and required to permit the
computation and assessment of taxes (Sinforo Alca vs. Commissioner, Dec. 29, 1964)
Where no return was filed - within ten (10) years after the date of discovery of the omission.
2.
Where a return was filed but the same was false or fraudulent within ten (10) years from the discovery of falsity or
fraud.
Nature of Fraud:
a.
Fraud is never presumed and the circumstances consisting it must be alleged and proved to exist by clear &
convincing evidence (Republic vs. Keir, Sept. 30, 1966)
b.
The fraud contemplated by law is actual and not constructive. It must amount to intentional wrongdoing with the
sole object of avoiding the tax. A mere mistake is not a fraudulent intent. (Aznar case, Aug. 23, 1974)
c.
A fraud assessment which has become final and executory, the fact of fraud shall be judicially taken cognizance
of in the civil or criminal action for the collection thereof. (Sec. 222 paragraph (a))
b.
c.
When the Commissioner fails impute fraud in the assessment notice/demand for payment.
b.
When the Commissioner failed to allege in his answer to the taxpayers petition for review when the case is
appealed to the CTA.
c.
When the Commissioner raised the question of fraud only for the first time in his memorandum which was filed
the CTA after he had rested his case.
d.
Where the BIR itself appeared, not sure as to the real amount of the taxpayers net income.
e.
A mere understatement of income does not prove fraud, unless there is a sufficient evidence shaving fraudulent
intent.
3.
Where the commissioner and the taxpayer, before the expiration of the three (3) year period of limitation have agreed
in writing to the extension of said period.
Note: Limitations:
4.
a.
The agreement extending the period of prescription should be in writing and duly signed by the taxpayer and the
commissioner.
b.
The agreement to extend the same should be mode before the expiration of the period previously agreed upon.
Where there is a written waiver or renunciation of the original 3-year limitation signed by the taxpayer.
Note: Limitations:
a.
The waiver to be valid must be executed by the parties before the lapse of the prescriptive period.
b.
c.
The commissioner can not valid agree to reduce the prescriptive period to less than that granted by law.
Imprescriptible Assessments:
1.
Where the law does not provide for any particular period of assessment, the tax sought to be assessed becomes
imprescriptible.
2.
3.
Assessment of unpaid taxes, where the bases of which is not required by law to be reported in a return such as excise
taxes. (Carmen vs. Ayala Securities Corp., Nov. 21, 1980)
4.
Prescription of Governments
Right to Collect Taxes
A. General Rule:
1.
Where an assessment was made Any internal revenue tax which has been assessed within the period of
limitation may be collected by distraint or levy or by proceeding in court within 5 years following the date of
assessment.
2.
Where no assessment was made and a return was filed and the same is not fraudulent or false- the tax should
be collected within 3 years after the return was due or was filed, whichever is later.
B. Exceptions:
1.
Where a fraudulent/false return with intent to evade taxes was filed a proceeding in court for the collection of the
tax may be filed without assessment, at anytime within ten years after the discovery of the falsity or fraud.
Note: The 10-year prescriptive period for collector thru action does not apply if it appears that there was an
assessment. In such case, the ordinary 5-year period (now 3 years) would apply (Rep. vs. Ret., March 31, 1962)
C.
2.
When the taxpayer omits to file a return a court proceeding for the collection of such tax may be filed without
assessment, at anytime within 10 years after the discovery of the omission.
3.
Waiver of statute of limitations any internal revenue tax, which has been assessed within the period agreed
upon, may be collected be distinct or levy of by a proceeding in court within the period agreed upon in writing
before the expiration of 5-year period.
4.
Where the government makes another assessment on the basis of reinvestigation requested by the taxpayer
the prescriptive period for collection should be counted from the last assessment. (Rep. vs. Lopez, March 30,
1963)
5.
Where the assessment is revised because of an amended return the period for collection is counted from the
last revised assessment.
6.
Where a tax obligation is secured by a surety bond the government may proceed thru a court action to forfeit a
bond and enforce such contractual obligation within a period of ten years.
7.
Where the action is brought to enforce a compromise entered into between the commission and the taxpayer
the prescriptive period is ten years.
Collection by summary remedies It is effected by summary methods when the government avail of distraint and
levy procedure.
2.
Collection by judicial action The collection begins by filing the complaint with the proper court. (RTC)
3.
Where assessment of the commissioner is protected & appealed to the CTA the collection begin when the
government file its answer to taxpayers petition for review.
b.
If not known, from the time of discovery and the institution of judicial proceeding for its investigation and punishment.
When it is interrupted:
a.
b.
In civil case If not raised in the lower court, it is bailed permanently; if can not be raised for the first time on appeal.
b.
In criminal case It can be raised even if the case has been decided by the lower court but pending decision on
appeal.
Where before the expiration of the time prescribed for the assessment of the tax, both the commissioner and the
taxpayer have consented in writing to its assessment after such time, the tax may be assessed prior to the expiration of
the period agreed upon.
2.
The running of statute of limitations on making an assessment and the beginning of distraint/levy or a proceeding in
court for collection shall be suspended for the period.
During which the Commissioner is prohibited from making the assessment or beginning distraint/levy or a proceeding
in court and for 60 days thereafter; e.g.
a.
Filing a petition for review in the CTA from the decision of the Commissioner. The commissioner is prevented
from filing an ordinary action to collect the tax.
b.
When CTA suspends the collection of tax liability of the taxpayer pursuant to Section 11 of RA 1125 upon proof
that its collection may jeopardizes the government and /or the taxpayer.
c.
d.
When the taxpayer cannot be located in the address given by him in the return.
Note: If the taxpayer informs the Commissioner of any change in address the statute will not be suspended.
e.
f.
g.
When the warrant of distraint or levy is duly served upon any of the following person:
1.
taxpayer
2.
3.
Member of his household with sufficient discretion and no property could be located.
Note: A petition for reconsideration of a tax assessment does not suspend the criminal action. Reason: No
requirement for assessment of the tax before the criminal action may be instituted.
Nota Bene:
1.
The law on prescription remedial measure should be interpreted liberally in order to protect the taxpayer.
2.
3.
The defense of prescription must be raised by the taxpayer on time, otherwise it is deemed waived.
The question of prescription is not jurisdictional, and as defense it must be raised reasonably otherwise it is deemed
waived.
4.
The prescriptive provided in the tax code over ride the statute of non-claims in the settlement of the deceaseds estate.
5.
In the event that the collection of the tax has already prescribed, the government cannot invoke the principle of
Equitable recumbent by setting- off the prescribed tax against a tax refused to which the taxpayer is entitled.