TAX REMEDIES

Assessment is the first stage in tax remedies

- Refers to the stage where the government initiates steps to determine whether the taxpayer
has unpaid tax liabilities and therefore assessment withholds audits.
- Audits process starts with the issuance of the letter of authority.
- A letter of authority is a document needing power to the BIR officer particularly the examiners
to conduct an audit on the banks of account and other financial records of the particular
taxpayer.
- A letter of authority has a validity of 30 days from the date of issuance, if it is not serve upon the
taxpayer concern within 30 days, and it will become useless.
- What will happen, it could no longer be used as the basis for the audit of particular estate, for it
be become again, it has re submitted for re-validation, and will issue another letter of authority.
- Once the letter of authority be served to the taxpayer for tax audit, the examiner must have 120
days to complete the audit, if the audit will not completed within the 120 days period, the
examiner cannot continue the audit without having secure of another letter of authority.
- As a rule, a taxpayer can be examined or can be only audited once within a year the following
however are the exceptions or instances that the taxpayer can be subjected to audit more than
once a year:
● When the commissioner determines that there is fraud irregularity or mistakes committed
by the taxpayer
● When the taxpayer himself, request for re-investigation or re-examination of his books of
account.
● That there is a need to verify the taxpayer compliance with withholding and other internal
new taxes
● When the taxpayers capital gains tax liabilities must be verified
● When the commissioner chooses to exercise his power to obtain information relative to
other examination of the taxpayers.
- This is the power granted to the commissioner under section 5 of NIRC of taking information to
others taxpayers with respect to the activities of another taxpayers.
- After the audit is done and there is a finding of tax liabilities, tax deficiencies, and the
taxpayer is bound and the BIR may issue the Pre- Assessment Notice (PAN). And this is when
the section 228 of NIRC applied. The issuance of PAN is mandatory, cannot be done with the
BIR because this is part of due process.
- It is a way of informing the taxpayer about the findings of the BIR regarding of its tax liabilities
and giving him the opportunity to explain or disputes the findings made by the BIR examiner
- In all instances, the issuance of PAN to the taxpayer is mandatory but there are 5 exceptions
enumerated in section 228 of NIRC, these instances enumerated in 228, there is no more need
to issue on the part of the BIR a PAN. What will be issue directly is the FINAL ASSESSMENT
NOTICE (FAN).
- In the PAN the taxpayer is given a period to react on the findings of the BIR which is usually 15
days from the receipt of the PAN.
- If there is no response from the taxpayer or the respond given by the taxpayer is not
satisfactory to the BIR, then the BIR now issued the so-called FORMAL ASSESSMENT NOTICE.
 - After the receipt of the FAN what is supposed to be done by the taxpayer?
● According to section 228 the taxpayer must file an administrative protest and the said
protest has 2 forms: it’s a motion for reconsideration or a motion for re-investigation

Distinction of Motion for reconsideration and re-investigation

1. Motion for reconsideration

● Is avail to the taxpayer when he wants that the BIR to re-visits it’s finding without offering of
evidence. The evidence are already in there hands of the BIR.
2. Motion for re-investigation
● Refers to the taxpayers want to produce a new evidence to dispute the findings of the BIR
he filed a motion for re-investigation. It is a way of disputing the assessment.
- Within what period when the taxpayer should be filed the motion for reconsideration or re-
investigation?
● 30 days from the receipt of FAN
- What happens if the taxpayer failed to file MR?
● The assessment will become final and executory, in other words the taxpayer could no
longer dispute the accuracy or validity of the assessment.
- If the taxpayer was able to file an administrative protest within 30 days from receipt of FAN
he has 60 days from filing of the administrative protest he must submit all relevant documents
in support of his administrative protest, if he fails to do this the assessment is also become
final and executory.
- Suppose the taxpayer is able to submit all relevant documents, what happens next?
● It’s the rendition of the decision on the administrative protest, where under section 228 the
internal revenue has a 180 days from the date of submission of all relevant documents
within which to make the decision, which must be done within the 60 days period from the
filing of administrative protest.
- At this point 2 things can happen or scenario:
● It’s either that the commissioner is able to make a decision within the 180 day period.
1. This is an example of inaction, this is one matters in the appellate jurisdiction of CTA
under section 7 (b), the second in the enumeration is an inaction on the part of the
commissioner.
2. According to 228, if the commissioner is not able to make a decision within 180 day
period, the remedy provided in 228 is an APPEAL TO THE CTA within 30 days from the
end of the 180 day period. And it will go to the division of the CTA in the nature of civil
case emanating for the administrative protest. Section 228 does not have a remedy,
because the remedy provides is to appeal to the CTA. But there is a provision in the
rules of procedure before the CTA allowing the taxpayer instead of appealing
immediately, to wait to the judgment or decision of the commissioner and then
appeal within 30 days from receipt of the decision.
3. And other words therefore, after the lapse of 180 days period the taxpayer has two
remedies.
● Appeal directly to the court of tax appeals and it must be than within 30 days from the
end of the 180 days period
 ● And the other option is to wait of the final decision of the commissioner and then appeal
to the CTA within 30 days from the receipt of the decision.
● Can the taxpayer avail this two option one after the other? No more, because according to
the SC this option available to the taxpayer is mutually exclusive. If one option was already
availed of, the taxpayer can no longer avail the other option.
4. Is it allowed to the taxpayer to wait rather than directly appeal after the lapse of the
5. Is it always mandatory to the taxpayer to appeal immediately to the CTA after the lapse
of 180 day period?
● Such that if he fails to avail this remedy, he could loss his right to appeal. Under section 228
the taxpayer can already appeal to the CTA even without judgment. The basis is there is
implied denial of the administrative protest, since there is implied denial, inaction is
tantamount to implied denial and the taxpayer is already has a right to appeal to the CTA
even if there is no decision.
6. The appeal to the CA form that inaction of BIR on a disputed assessment will go to the
division of the CTA, if the appeal will go to the division, the mode of appeal is RULE 42.
7. Two instances will you invoke the appeal the case en banc directly, DECISION RENDERED
BY THE RTC IN THE EXERCISE OF THEIR APPELLATE JURISDICTION.
8. In case of an adverse judgment, the remedy available if it is a civil case is to file a Motion
for reconsideration or motion for new trial is mandatory. And within 15 days from
receipt of the decision. After the MR, the resolution of MR, next remedy is rule 43
appeal to CTA en Banc, and then ultimate remedy is rule 45 Certiorari also within 15
days.
● That is not able to make a decision within the 180 day period.
1. The remedy is the same, appeal to the CTA within 30 days under rule 42, it will go to division of
the CTA, and the sequence of remedies is the same.

- Right after the receipt of the PAN, can the taxpayer already appeal to the CTA?
- A decisions of the commissioner of internal revenue on disputed assessment. The laws say
that the CTA will have an appellate jurisdiction over the decision of the commissioner of
internal revenue if the assessment is disputed, and if not disputed the CTA will have no
appellate jurisdiction
- When does the assessment become disputed?
- It becomes disputed when the taxpayer filed a motion for reconsideration or a motion for re-
investigation. In short filed an administrative protest.

Requirements of a valid assessment

It is important for the purpose of determining whether the assessment is already prescribed or
not.

1. That the assessment must be based on facts. In other words there can be no arbitrary
assessment, out of the blue the BIR cannot issue an assessment. The assessment must have
both factual and legal basis.
● it is the duty of the commissioner to inform the taxpayer about the factual and legal basis of
the assessment. An assessment which is not inform the taxpayer to the factual and legal
 basis of that assessment is invalid assessment. And if it is void, it will not stop the running
prescriptive period because there is no assessment done.
● The power of the commissioner to issue an assessment.
a. To obtain data from other sources.
b. The best evidence obtainable.
2. It must be address to the proper party.
● Who is the proper party? The party who is under the law is required to pay tax.
3. That the assessment must be done within the prescriptive period.
● Section 203 for general period and section 202 for exceptions. The general period of 3 years
from the date of filing or due date whichever comes later.
● A rule of facts that must be remember, the date of filing or due date whichever comes later.
● Exceptions when is there a different period of prescription or different from 3 years. Section
222, where there are several instances where the prescriptive period to assess:
1. Failing to file a return it will start from the discovery of the failure to file the return. And
the period to assess is 10 years from the discovery.
2. When what is filed is false or fraudulent return, it is also 10 years from the discovery of
the false or fraudulent of return.
3. When there is a waiver it is within the period agreed upon
● What are the requirement of the valid waiver for a valid assessment:
a. The waiver must be in a form in a prescribed period which must indicate in the form.
b. The waiver must be sign by the taxpayer or his duly authorized representative. If the
taxpayer is a corporation it must be signed by its officer. And in case of delegation of
authority, the delegation must be in writing and it must be notarized.
c. The waiver itself must be notarized.
d. The commissioner or his duly authorized representative must also signed the waiver.
The date when the BIR received must be indicated.
e. The date of execution by the taxpayer and the date of acceptance of the BIR should be
before the expiration of the period of the prescription or if it is renewed period, before
the expiration.
f. The number of copies.
● If the waiver was not in form and not complied with the all requirements, the waiver is
invalid.
4. It must be sent to the taxpayer which must be done within the prescriptive period.
● What is the best proof that the BIR sent it within the prescriptive period?
- If it is personal delivery the acknowledgement receipt.
- If by mail the return card.
● What if the taxpayer says that he didn’t receive any letter to the BIR?
- The burden of proof is in the BIR that the taxpayer receive the assessment. The act of receipt of
assessment by the taxpayer must be also be done within the prescriptive period.
● It is applied only to the act of sending and not to receipt.

Tax refund and VAT

- In section 218 says, that provided that the court cannot restraint the collection of National
Internal Revenue taxes, they have an express provision allowing the court from issuing a writ of
 injunction for contemporary restraining order against the collection of NIRT that is prohibited
which cannot be done to the court. What are the National Internal Revenue taxes, the collection
of which cannot be restraint or enjoined by the court which is enumerated in section 21 of NIRC
enumerated the National internal revenue taxes such as income tax, estate tax, donor tax and
all other tax collected under the NIRC and there is a catch provision there saying that all other
taxes fees and charges been collected by the BIR. Except when the CTA has enjoin the collection
of taxes subject to 2 condition
1. That jeopardy will arise either on the part of the government or the taxpayer, if the tax is
collected
2. Filing of the requisite bond
- It is address on the sound discretion of the CTA, and it is only the CTA granted that power.
Generally, no court can enjoined the collection of NIRT except with respect to the CTA.
- The court is not disallowed under the law to issue a writ of injunction against the collection of
the local taxes.
- With regards to the local taxes, can this provision of injunction apply to other kinds of taxes?
● The provision is very clear that it prohibits the issuance of the writ of injunction against the
collection of NIRT only.
● That provision can found in the NIRC, there is no similar provision in LGC with respect to
local taxes. In other words, the courts disallowed under the law to issue a writ of injunction
against the collection of local taxes.

Tax lien

- Once a taxpayer has the liability, the government automatically a lien over the property and
property rights.
- Which will prevail, it is the provision of the NIRC establishing a lien in favor of the government
over the property and property right of the taxpayer who have the tax liabilities or the lien
establish in section 110 of the LABOR Code in favor of the Employee for their unpaid salary
● The labor code provision shall apply only if there is a bankruptcy proceedings, if there is
none then section 219 the lien in favor of the government will prevail.
● The lien in favor of the government will be effective only with respect to mortgagee,
judgment creditor and purchaser of the property if the lien is recorded in the registry of
deeds concerned.
● It is depend who annotate first, if it is the government then the lien in favor of the
government will prevail or if the judgment creditor then the lien in favor to the judgment
creditor will prevail.

Remedies provided by the law for the collection of the NIRT in favor of the government

- Distraint
● It involves personal property, it is the taking of the government of the personal property
belonging to the taxpayer to answer their liability
● The government take the property and sell in public auction, after the posting of notice and
the proceed will apply to the tax liability of the taxpayer.
 ● The personal property distraint will be sold to public auction to the highest bidder, if the
amount of bidding is insufficient to cover the amount collected. The personal property will
be deemed forfeited in the favor of the government.
● If there is an excess in the proceeds, then the excess will be given to the taxpayer
concerned.
● In distraint, there is no right of redemption, once the personal property are sold to the
highest bidder the taxpayer can no longer redeem the personal property involved.
● When can he make the redemption?
● He can redeem the personal property before the auction sale.
● There are two kinds of distraint.
1. Constructive distraint
a. The government thus not take the possession of the personal property belonging to
the taxpayer, the taxpayer is merely prohibited from disposing the property without
the permission of the BIR
b. The taxpayer is remain in the custody on personal property but he cannot dispose of
them, if he dispose of them, then the taxpayer will be liable for criminal liability.
c. An official of the BIR can make an inventory of the personal property under the
constructive distraint and give a copy of this list to the taxpayer concerned and at
that time the personal property is under the custody of the BIR.
d. When the government availed the Constructive distraint. In any of the five
instances mention where
● The taxpayer is retiring in business
● Hide or concealed its property
● When he perform any act which will eventually hinder the collection of the tax.
2. Actual distraint
● The government has the actual custody of the personal property belonging to the taxpayer.

LEVY

- In levy, what is involved is real property, the government take the real property belonging to the
taxpayer which subject to a public auction and apply the proceeds of the tax liability of the
taxpayer.
- The initiatory move to this, is the issuance of warrant of levy.
- The availment of the remedy of levy required the issuance of the warrant of levy, this will
annotated in the records of the Registry of Deeds concerned and a copy thereof furnish to the
taxpayer concerned.
- After the annotation of the levy, the property will be go to public auction, prior to the sale there
is a requirement on the posting of the notices and the publication of notice of auction sale in a
newspaper of general circulation in the province and municipality where the property is situated
or 3 weeks, once a week in a consecutive week.
- It must be specifically noted in the publication of auction sale, what are supposed to be
indicated in the publication?
1. The name of the taxpayer
2. The amount of sought to be collected
3. Technical description of the property to be sold.
 4. As well as the date, time of sale
- An auction sale is conducted under the notice which contain the information will be a valid sale.
Any defect on the four matters can be the auction sale made invalid notice.
- If there is no bidder or the amount of the bidding is insufficient to cover the amount sought to
be collected, the property can be declared forfeited in favor of the government.
- Unlike in distraint there is a redemption in levy, the period of the redemption is for 1 year from
sale or forfeiture of the real property concerned.
- After the sale to the highest bidder, the highest bidder has no possession in the property
because the taxpayer have the right of redemption during the 1 year period, the taxpayer
remained in custody of the property. The right of the highest bidder is merely to wait the lapse
of the 1 year period before he can claim ownership.
- The fruits within the 1 year period of redemption it still the owner can collect in the property
and not the highest bidder

Another remedy is Compromise

- It is involved mutual confession on the part of the government and the taxpayer but there is a
limitation to the amount of the compromise, that is provided in section 204(a)
- There are only two grounds allowed to compromise.
1. When there is a reasonable doubt to the validity of the government claim against the
taxpayer.
● The amount of the compromise shall not be less than 40% of the basic tax.
● But there is a compromise which is below 40% or 10% allowed by the law.
● If the amount of the compromise and the basic tax involved is more than a 1 million or if the
amount offered of compromise is below the minimum seeks in the law. The compromise
will be subject for the approval by the evaluation board.
2. When the taxpayer is in a financial incapacity to pay the amount sought to be collected.
● 10%
- The power to compromise is not one of those can be delegated by the Commissioner except
section 7 of the NIRC, With respect to assessment issued by the regional offices where the basic
tax involves is 500,000 or less and minor criminal violation where they can be compromise by
the regional evaluation board.

Criminal Violation

- It is also allowed to compromise except those involved of fraud and those already filed in court.
- Once a case is filed in court, control the criminal case belongs to the court, it could no longer be
subject of discretion of any other person or entity not even the CIR.
- If the taxpayer refused to pay the compromise penalty, the BIR can file a criminal case.

Abatement

- Involved the total reiteration of the tax liability of the taxpayer.

- It is applied with the two instances.
1. Whether there is unjust or excessive assessment of taxes
2. When the cause of assessment and collection of the amount sought to be collected
Civil action for collection

- It is a case filed in court to collect the taxpayer liability.

- Which court will have the jurisdiction
● It could be the CTA, the first level court or the second level court depending on the principal
amount involved.
- If the civil case is filed in MTC, in case of an adverse judgment the appeal procedure is rule 41 an
ordinary appeal.
- In the RTC can appeal in the CTA en Banc under the mode of appeal under rule 43 within 30 days
- The SC under rule 45 within 15 days.
- If the case was originally filed in the RTC the procedure is different the mode of appeal is rule 42
and not ordinary appeal within the period of 30 days, and from the division file a motion for
reconsideration or motion for trial within 15 days which is mandatory in civil cases in the same
division appeal to the CTA en Banc under rule 43 within 15 days and rule 45 and the SC within 15
days.
- If the civil case is within the original jurisdiction of the CTA the case will be raffled to the division
of the CTA in case of judgment the remedy of the adverse party is file a motion for
reconsideration of a motion for new trial within 15 days and then invoke the appellate
jurisdiction of the CTA en Banc under rule 43 within 15 days and SC rule 45 within 15 days.

Criminal action

- It is a remedy because criminal cases have a civil aspect, if it is a tax evasion case once it is
instituted the civil aspect is deemed instituted in criminal aspects.
- It will not render only to the criminal liability of the accused it will also give the finding in the
civil liability of the accused, and that civil liability involved the amount of taxes unpaid by the
taxpayer.
- In case of conviction in the MTC the mode of appeal is ordinary appeal under rule 41 to the RTC,
in case the affirmation of the conviction is to file a motion for reconsideration or motion for new
trial there is no prohibition to file, then appeal to the CTA en Banc under rule 43 within 15 days
- In case the RTC has the original jurisdiction then the mode of appeal is rule 41 an ordinary
appeal because it is a criminal case within 15 days to the CTA division, and then file a motion for
reconsideration or motion for new trial, before go to the CTA en banc under rule 43 within 15
days.

CIR v. CA

It involve the issue whether the prior assessment is necessary before a tax collection case can be filed.

● The earlier case of UNGAB but it was reiterated in the said case CIR v CA, the SC ruled that in
criminal prosecution to proceeds before the assessment or even without assessment there
should be a prima facie showing of a wilful attempt to evade the tax.

Remedies available to the Taxpayer

1. Compromise
2. Claim for refund or tax credit
 - Tax refund, the government want to pay you and the tax credit is just the government to apply
your excess taxes paid to the other tax credit.
- The general provision on refund in section 219 but there is a separate provision of refund under
section 112 of the NIRC pertaining to the input taxes VAT.

Section 229

● What are the requirement for a valid claim of refund?

1. Have to pay a tax
2. Filing of the written claim for refund
● If the paid of the return, the taxpayer is clearly entitled to a refund, the government can
make a motu propio refund.
3. The written claim for refund must be filed within 2 years from full payment. In case of
the corporation which pay their taxes on quarterly basis, the 2 year prescriptive period
shall commenced at the end of the 4th quarter, when the final adjustment return is filed.
● In case of denial of the claims for refund, the remedies available to the taxpayer are in the
R.A. 9272 section 7 b. is to file an appeal to the CTA within 30 days in the division and the
mode of appeal is rule 42. And if it is a civil case then motion for reconsideration is
mandatory within 15 days, and then CTA en Banc 15 days under rule 43 and then to the SC
within 15 days under rule 45.
● the last paragraph says about that in any case no such proceeding shall be filed beyond 2
years, the proceeding is referring mention in first paragraph in any court.
● That action in court which could not file beyond 2 years is a court action. That the action
before the CTA cannot be filed beyond 2 years form payment. If there is no action from the
CIR and the 2 year period is about to elapse the taxpayer must already appeal to the CTA
otherwise he will loss the remedy to appeal to the CTA.
● Even if there is no period to the CIR to claim for the refund, there can be a situation arise of
inaction in section 229, without waiting the decision from CIR the taxpayer must already
appeal to the CTA if the 2 year period is about to elapse.
● It can happen therefore that the period to appeal in a claim for a refund under section 229
to the CTA can be less than 30 days

Section 112

- It involves VAT
- It is refers to a refund or unutilized input taxes
- Can file a cliam within 2 years but this time this 2 years shall be counted on different reckoning
of time. Which is 2 years from the close taxable quarter when the sale were made
- The commissioner have 12o days to render its decision from the submission of all the needed
document.

Team Sual case

● The appeal for refund can be made beyond 2 years because of the variant in the
phraseology of section 229 and section 112 of the NIRC.
● Where in section 112 the Commissioner will be given 120 days to make a decision, if the
commissioner render a decision 10 days before the end of the 2 year period, the taxpayer
 can appeal in case of full or partial denial of the claim for tax credit or failure of the
commissioner to act on the application within the 120 day, the taxpayer may within 30 days
denying the claim or after the expiration of the 120 day period appeal the decision with the
CTA.

LOCAL GOVERNMENT
- The power to tax Local Government units is now derived directly by them from the constitution.
Section 5 Article X of the Constitution grants them the power to levy taxes, and to raise revenue.
- The postage from which must approve to them exclusively, notwithstanding that the power to
tax that have been granted by the Constitution to the LGU directly. The Constitution still allows
Congress to subject and exercise such power to limitations and guidelines. So even if the power
is now directly derived by the LGU from the Constitution, the Congress still allowed to limit the
exercise of that power. And some of this limitations could be found in the Local Government
Code.
- Section 130, provides for the General limitation
● It contains a principle which are akin to the fundamental principles governing national
taxation.
1. Principle of Uniformity
a. It is also a principle which applicable to national taxation. Taxation should be
uniform. But the rule on uniformity is so far as the LGU is concerned it is only with
respect on each LGU.
b. The implication is that the requirement in the uniformity in local taxation, applies
only to in each locality. If a particular tax is imposed in the province A of 1% and the
same tax imposed by province B the rate of 2% the residence of province B cannot
complain of unequal protection, because they are a LGU separate from province A.
2. Rule on Equitability
a. The taxation must be at once ability to pay. Taxes cannot be arbitrary and it cannot
be confiscatory. Which is the same principle in the national taxation.
3. Public Purpose
4. It must not be unjust, oppressive and confiscatory
5. It must not be contrary to law, public policy
a. Local taxation must be in afford with the national economic policy. The economic
policy of the national government which they cannot be in contravention of the
national economic policy of the government.
6. The prohibition on the delegation of the collection of taxes, fees or other imposition
cannot be delegated to a private person.
a. The collection of the local taxes cannot be delegated to a private person
7. That the revenues collected by the LGU’s must accrue to them, must inure solely and be
subject to a disposition by the LGU revenue tax unless the Local government Code
otherwise.
- Section 5, article 10 of the Constitution there is a provision that it must be accrue to them
exclusively. The LGC says that the revenue collected by the LGU’s must inure solely to the
benefit of the LGU imposing the tax unless specifically provided in the LGC otherwise. The
general principle is, collection of LGU of local taxes, fees and charges must accrue exclusively to
 their benefit but if the law the LGC provides otherwise then the general principle will not apply
that is the implication, what it covered by this exception: instances is by provision of sharing of
revenues.
- It is the provinces allowed under the LGC to imposed and collect tax on quarry resource, if
applying the general principle, this will apply the entire proceeds on the tax quarry resource
should attached exclusively in the province, because that LGU which has the power to imposed
tax and quarry resource and yet the LGC says that the province must share this with the
municipality and the barangays and the other LGU. Thus this is not contravene to the
constitutional provision saying that the tax collections of the LGU must accrue to them
exclusively.
- It proscribe in the constitution is to mandate the LGU to hare their collections with the National
Government that it was prohibited by the constitution.
- The municipality and barangays are still part of the Local government system, sharing among the
local government units is not prohibited. It is the sharing by the LGU with the National
Government is prohibited.
8. Evolution of progressive system of taxation which also a principle in the national
Taxation which is applicable to Local taxation.
● Progressive system of taxation it is one of the direct than indirect taxes.
- Another group of limitations in LGU the power impose taxes can be found in section 133 of the
LGC, the so-called common limitation, it is found an enumeration of taxes, fees and charges
which cannot be imposed and collected by LGU the primary reason being that this taxes, fees
and charges mention are already been collected by the National Government. It is so-called the
power of pre-emption, it is the power of the National Government to reserve certain areas of
taxation to itself to the exclusion of the LGU. What are these:
1. Income tax
2. Documentary stamp tax
3. estate and donor’s taxes
● Exemption: section 135 which allows tax on transfer of real property ownership, this is
similar to estate tax and donor’s tax.
4. Custom duties
5. Taxes, fees and charges on goods in or out of the territorial jurisdiction of local government.
● The Local government cannot imposed taxes on the movements of the goods within the
territorial jurisdiction.
● A goods coming in or out of the LGU is not within the taxing jurisdiction of the LGU.
6. Taxes, fees and charges on agricultural and aquatic products as long as this was sold by
marginal fishermen and farmers.
Note: lumber is not cover by this provision. Because it is neither an agricultural or aquatic products.
7. Tax on pioneer and no pioneer business enterprises which is covered by the Board
Investments they are beyond the taxing authority of the LGU.
8. Excise taxes
● Which is already been collected by the National Government under the NIRC.

Petron Case:
There was a decision rendered by the SC in the case of Pilela, where the SC made a decision in such a
way made a distinction between the petroleum products themselves and the business engaging in the
selling of petroleum products. Since what is provided in the code according to the SC is just the
petroleum products, so the provision on imposing taxes, fees and charges on petroleum before the
products themselves and not to the business of selling of the petroleum products. In the case of Mayor
Tiangco, the SC made turn around which care even the business of selling a petroleum products which is
in this particular case is not subject to a taxation by the LGU.

9. VAT and percentage taxes

10. Tax in transportation contractor and passengers or cargo
11. Tax and premium rates and reinsurance

LTO v. BUTUAN

The issue there whether the LTO can still the agency which has the authority to derived to the
registration of the tricycle and issuance of licenses for tricycle drivers. And the SC resolved this matter in
affirmative which it is still the LTO which has the authority not the LGU.

12. Exports products and even on Barangay business enterprises and cooperatives
13. Tax on the National Government, agencies, instrumentalities and other LGU.
- Another group of limitation is with respect to a specific tax powers of the LGU. The principle that
taxes, fees and charges be collected by provinces cannot be collected by the Municipalities and
vice versa.
- If the specific tax power is granted to the province, the same could no longer imposed by the
Municipalities. It is a limitation on a power to tax of Municipalities, a specific tax power granted
to Municipalities the same cannot be exercise by the Province. Cities, however, has the broadest
taxing power because they can exercise a specific tax powers granted to both the provinces and
Municipalities.
- Specific tax power granted to the Provinces:
1. Tax on transfer of real property ownership.
● It is the transfer of real property ownership. If it is still no transfer of reals property
ownership, the tax is not check due.
● What are the modes of transferring a real property
a. Sale
b. Donation
c. Succession
d. Foreclosure of mortgage involving real properties
● When thus the tax of transfer of real property ownership approved
a. It must be paid within the 60 days from the execution of the deed or the date of the
decedent’s death. The deed is referring to the transfer of ownership over real property.
b. In case of sale, the deed of sale is needed within 60 days of the execution of the deed of
sale that’s when the tax should be paid.
c. In case of donation, if there is a separate deed for acceptance the 60 days period
therefore will not start from the date of the execution of the deed of execution, because
there is no transfer in real property ownership that will come as a consequence. There
must be still an acceptance on the part of the donee. Unless the acceptance is made on
 the deed of donation in which case the date of execution of the deed of donation will be
the reckoning time because there is already an acceptance in the same date of
donation.
d. In case of succession, the reckoning period is from the moment the decedent’s death.
60 days from the time the property owner dies, the tax on the transfer of real property
ownership must be paid without need of any document in executed.
e. In case of foreclosure, it is not immediately transfer the ownership in case of public
auction because there is a 1 year redemption period. The sheriff after the public auction
must issue a sheriff certificate of sale, but the transfer of ownership is not yet transfer
because there is a redemption. Which is not still counted the 60 day period to pay the
tax from the date the sheriff certificate of sale because there is no transfer of ownership
over the real property. It is start the 60 day period to pay the tax when the document of
sheriff certificate of final share that commenced to run. But it is not only the document,
under the law, the property registration decree says that upon the expiration of the
redemption period can execute an affidavit a non-redemption and consolidation has
registered to the Register of Deeds.
● In mortgage there must be three possible documents which the execution of which will can
start the 60 day period:
a. Sheriff Certificate of Final Sale
b. Affidavit of Non-Redemption and consolidation ko
c. Deed of sale to the person authorized under the deed of mortgage
- Rate of the tax is not more than .5% of the total considerations or the fair market value
whichever is higher.
- What are the sums of the property to be exempt to this provisions:
1. Those covered under the CARP law
2. R.A. 7279 the urban development of 1997.
● Second specific tax power of provinces.
- The tax on the business of printing and publication where it is not more than .5% of the gross
receipt of the preceding year.
● Not covered the books and publication which prescribed by the DepEd textbooks in schools.
- Three is the tax on franchise.
● The franchise being referred here refers to the so-called secondary franchise, it is not the
franchise which gives life to the corporation but it is the franchise which grants the taxpayer
the right to exercise some privileges like the used of pubic properties in connection with
their business. Like water districts, they lay out pipes to the public road to support the
public needs of the people.
● The province can imposed tax on that particular taxpayer enjoying secondary franchise in
exercising the franchise within the territorial jurisdiction of the province. Thre are two
requirement in able the province to collect franchise:
a. The taxpayer must be a grantee of the franchise
b. The taxpayer must be exercising the franchise within the territorial jurisdiction of the
province. Even if the taxpayer is granted the franchise if it is not exercising the franchise
within the province, the province cannot collect the tax on franchise.
- Fourth is tax on quarry resource
 ● It is the governor through an ordinance issued by the Sanggunian Panlalawigan which grants
quarry permit.
● The proceeds is mandated under the LGC the share with the province with the other LGU’s
a. 30% will go to the province
b. 30% will go to the Municipality or component City for the Quarry resource
c. 40% will go to the Barangay where the quarry resource is extracting
● The tax on quarry resource can be collected by the province only if the quarry resource is
extracted from the public property, if the quarry resource is extracted in private property
the tax on quarry resource cannot be collected by the province.
● Regardless of the use of the quarry resource as long as the extraction in Public property the
tax on quarry resource can be imposed and collected. If it is used the quarry purpose on his
personal and not to a business still the tax on quarry resource can be collected.
- Fifth, the tax on professionals
● The professional shall pay their tax after they passing the licensing examination, not all
professional are covered by this provision.
● If you can exercise your profession without having governmental examination, then you are
not covered by section 139.
● Which LGU has the authority to imposed taxes on professionals not covered by section 139,
the municipalities can imposed tax under section 147 of the LGC.
● If you have two profession and exercising both, the professional tax must be collected for
both professions. If they are exercising their profession outside their Province, they pay
their professional tax in a province that they exercise their profession. As long as they pay
their professional tax in Pangasinan, they are not required to pay tax in other province for
they exercise their profession,
● Professional in Government are exempt.
- The tax on amusement
● It is the proprietor, lessee, or the operator of the amusement based who is liable.
● The persons going in an amusement places, cannot make them liable to pay the tax on
amusement.
● Amusement place covered the
1. Theatre
2. Cinema
3. Circuses
4. Boxing stadia
5. Other places of amusement

Case of pelizloy v. province of Benguet

- The SC made an extensive explanation on what is covered on the term any other places of
amusement. The SC says that it must a place that there is a show or a performance because it is
not only visual engagement is material, there must be an act of doing that must be viewed by
the person in going to that place of amusement.
- If one goes to a resort, when there is a visual engagement, there is no act of doing or act of
performance to be viewed, then it is not covered.
 - The proceeds of the tax amusement will be given equally between the province and the
municipality where the amusement is located.

- Delivery of truck is an annual fixed tax.

● Those are the taxes, fees and charges which can be collected by provinces, in other words
they cannot be imposed by the Municipalities.

MUNICIPALITIES

- The tax on business

● It is not an income tax because what is being exercised here is a police power, it is some
kind of the license fee, which is different from a tax. It is for the purpose of regulation and
not for the purpose of raising revenue.
● The municipality can collect to the business. There must a tax ordinance to be enacted by
the Municipality, it is there where the Sanggunian make an enumeration of businesses
which it deemed appropriate to subject tax on business.
- The tax on occupation and professionals
- The fees of the sealing and weight measures
- Fishery rental, fees and charges

BARANGAYS

- Also enumerates a charges, fees which can be imposed by the Barangays.

CIR v. La Salle

Involving a non-stock, non-profit educational institution, when it comes to the said non-stock non-
profit education, there exemption is broad because the constitution says their taxes exempts from
duties. But pointed out the provisions in the NIRC where it involve income tax, that the exemption
of among others of the non-stock non-profit educational institution from income taxation is good
only with the income earned in the pursuit of its primary objective. So the income derived from
other activities not connected with the primary objective with the non-stock non profit educational
institution then the exemption will not apply. The worse thing is, that there is a provision saying that
regardless with the disposition of income. If the income comes from unrelated sources, even if it is
use eventually in connection with the primary objective, the income is not exempt from income tax.
Which is apparently in contradiction which provided in the constitution.

REMEDIES
- With respect to the remedies of the LGU for the collection of local taxes.
● Distraint, levy and a judicial action
- In so far as to the administrative remedies is concerned there are two administrative remedies
to the LGU for the collection of unpaid collection taxes:
● Distraint which is almost identical which is provided in the NIRC.
1. What is involved in distraint is a personal property, then there is no right of redemption.
 ● Levy
1. What is involved is a real property, and there is a right of redemption

City Mayor of Quezon City V. RCBC

That the right of redemption is count or can exercised within 1 year from the date of sale or
forfeiture. That there is a code in Quezon City which provided otherwise where the right of redemption
can be exercised within 1 year from the annotation of the sale of the property at the proper registry.
Which is different from the LGC. So the property owner was affected by this, which will prevail?

The SC ruled that the Code of Quezon City will prevail being a special law, even if it is conflict
with the LGC.

- Another remedy is judicial action, under the NIRC that the judicial action can involve either a
civil action or a criminal action. Under the LGC merely provides for civil action, in other words, a
criminal action is not one of the remedies available to the LGU to collect unpaid local taxes.
- Civil action must be filed the same in the NIRC, must be filed to the first level up to the CTA
depending on the principal amounts involved.

Remedies of the Taxpayer

- Appeal to the secretary of Justice, if you want to raise a question with regards to the legality or
constitutionality of the ordinance within 30 days from the effectivity of the ordinance, otherwise
it will no longer use this remedy.
- In case of adverse decision, the remedy of the taxpayer can file a certiorari under Rule 65 if
there is a grave abuse of discretion or he can avail an action for a declaratory relief which it is in
the jurisdiction of the RTC.
- Is the appeal to the Secretary of Justice is a condition precedent before an action of declaratory
relief can be filed by the taxpayer.
● It is not a condition precedent, in other words the taxpayer can if he opts to directly file an
action for declaratory relief without elevating the case first to the secretary of justice
because what is involved is purely legal.
● One to think remember in declaratory relief, no cause of action should accrued so that the
taxpayer cannot avail this action for declaratory relief, in other words if the violation of
ordinance has been taken place, then the action for declaratory relief is no longer proper
remedy.

Another remedy is the Protest assessment

- when should the taxpayer protest an assessment made by the local treasurer for unpaid local
taxes
● 60 days from receipt of the assessment
- If the taxpayer fails to make the protest within the 60 day period, the assessment shall become
final and executory.
- The local treasurer according to the law has 60 days from filing of the protest within which to
rule on the protest.
 - If the ruling is adverse or the treasurer denies the protest or there is no ruling within the 60 day
period, the remedy of the taxpayer is to appeal which must be made to a competent court with
jurisdiction which could not therefore be the CTA.

Yamani case

The SC ruled that the Competent court of jurisdiction which an appeal from decision of the
treasurer can be elevated to the RTC. The RTC has the appellate jurisdiction because of its certiorari
jurisdiction. Ii means that you filed in the RTC is a rule 65 case and not an appeal where subsequently
the SC clarified that it is not certiorari should file, what should be file is an ordinary civil action. Since it is
an ordinary civil action, the court will treat it as an ordinary civil action, where it will issue summons, the
case will undergo pre-trial, can even undergo mediation, trial and until judgment. It is not like an appeal
that is purely a memoranda.

- In case of appeal, where the appeal go?

● The appeal must be in CTA division. Then filed a motion for reconsideration or motion for
new trial.
● Then appeal to the CTA en Banc for it appellate jurisdiction under Rule 43 within 15 days
and Rule 45 to the SC within 15 days.
- All provision speaks on appeal that the case filed in the RTC is not considered an appeal, it is a
case considered originally filed with the RTC.

Claim for refund

● One it is important in claiming a refund is, it must be paid. We cannot ask reimbursement
which it is not been paid.
● The payment shall within 60 days from receipt of the assessment. When a taxpayer receives
an assessment from local treasurer he has two available remedies:
1. Can protest the assessment
2. Can pay and then claim for a refund
● The taxpayer has only 2 years to refund from payment.
● If the claim of the taxpayer is denied the remedy is a court action, it is referring to the court
action to recover the excessively paid tax. It is sued by the taxpayer against the LGU
concerned. It must be filed depends on the jurisdiction on purely monetary claims, which
the first level of court amounting to 300,000 or less or 400,000 in Metro Manila. The RTC is
beyond that, the CTA has jurisdiction if the amount is 1 million and above.

Real Property Taxation

- There is no provision in the LGC on what real property is, so the decision of the SC suggest a
possible application on the civil code provision on what real property is.
- When it comes to the machineries and the improvements, when it comes to this, it is the
definition in the LGC will control in so far as what is machineries and improvements is
 considered for real property taxation purposes. And in so far as other real property concerned it
is the civil code definition which will prevail
- Real property which is exempt by the real property taxation
1. Real property owned by the Republic of the Philippines or any of its political subdivision
except when the beneficial use of that real property is given for consideration or otherwise
to a taxable person. If the beneficial use of the real property owned by the LGU or national
government is granted whether onerously or gratuitously to a taxable person, that real
property regardless of its ownership is subject to real property taxation.
2. Charitable institution, churches, parsonages or convent appurtenant thereto, mosque, non-
profit religious cemeteries and all lines, buildings and improvements actually, directly, and
exclusively used for religious charitable or educational purposes which is accord in the
constitutional provision. It is exempt only to real property taxes.
● With respect to religious cemeteries, in the constitution it is only non-profit cemeteries
which are exempt, but under the LGC even the religious cemeteries are exempt from real
property taxation.
3. Property, machineries and equipment actually, directly and exclusively used by Local Water
districts and government owned and controlled corporations for the supply and distribution
of waters and generation and transmission of electric power.
4. All real property owned by duly registered cooperatives provided that cooperative is
registered under R.A. 6938.

PHILRECA v. DILG

The exemption is limited only to a cooperatives under R.A. 6938. If the cooperative is not
registered, the real property owned by that cooperative will not exempt from real property taxation.

5. Machineries and equipment for pollution control and environmental protection.

Note: is the enumeration is exclusive?

● The mere fact that the law made an appropriate to make the enumeration of the properties
exempt from real property taxation, there is an implication that the enumeration is
exclusively. LGU’s do not have the discretion to add more exemption in section 234
● There are nonetheless allowed to condone or reduced the real property taxes.
● There are 3 instances where the LGU can condone or enact an ordinance condoning real
property taxes.
1. When there is a general failure of crops
2. When there is a substantial decrees of the price of the agricultural or products
3. When there is a calamity
4. Also condones the real property taxes to the President of the Philippines, when public
interest is so required, it is subject to the discretion of the President.

Fundamental Principles governing real property taxation

1. Real property must be assess at their current and fair market value.
● Current and fair market value is the prevailing price of the property in the locality where it is
situated.
 2. A classification for assessment of real property taxes must be on the basis on the actual use.
● Actual use refers to the predominant use of initiation of the real property or the main use of
the real property.
● If it is used as partly residential and partly commercial, have to look to the predominant use
of its property. Which the predominant use is the basis of real property.
3. Real property shall be assess on the basis of uniform classification within its local or political
subdivision.
4. The prohibition on the delegation of power to collect real property taxes to private
individuals.
5. Equitability
● Must be based on once own ability to pay
- Which LGU can impose real property tax
● It is only the provinces, cities, and the municipalities within the Metro Manila area, meaning
the real property in Manila are not authorize to impose real property taxes.
● Provinces is not more than 1% of the assess value of the real property
● Cities and municipalities in the Metro Manila area is not more than 2%
- Other than the basic real property taxes, the other imposition can be made in connection with
the real properties
1. Section 235, it is the imposition or special education fund
● Where LGU’s get money for the repair of schools because the collection is go to the Local
School Board.
● It’s 1% of the assess value of the real property
● The provinces, cities and municipalities within Metro Manila Area only, Municipalities
outside Manila cannot imposed for the special education fund.
2. Tax on idle lands
● The LGU can imposed tax to the idle land, the Provinces, cities and municipalities in Metro
Manila only, outside of Metro manila cannot imposed tax on idle land.
● It is not more than 5% of the assess value of the real property
● It will go to the general fund of the LGU concerned, if the LGU is a municipality or city within
the Metro Manila Area the collection will be share equally between the LGU and the Metro
Manila development authority.
● Real properties that are exempt idle lands, those which are unutilized by force majeure, civil
disturbance, natural calamity, and other causes.

Special Levy or Special Assessment

- Special levy is an imposition made on ands benefited by public improvements. Not all real
property are affected it is only lands, and that land to be liable for special levy must be
benefited by public improvement.
- It should not be more than 60% of the actual cause of the project for improvement.
- The real property which is exempt from real property taxes are also exempt form special levy.’
- Other real property which is exempt to a special levy, a portion of a property which is donated
for the use for the LGU in making for improvement.

Remedies on the part of the LGU

There are two remedies:

● Levy
● Civil action
- A civil action filed by the LGU for the collection of unpaid real property taxes. Just an ordinary
civil action for collection of sum of money against the taxpayer who has a delinquent real
property tax liabilities.
- The first level, second level or it could be the CTA depending on the principal amount involved.

Remedies of the Taxpayer

1. The remedy of the taxpayer before payment appeal to the Local Board Assessment Appeal
● It is a board composed of the registry of deeds as the chairperson, and the provincial or City
assessor and the provincial or City Engineers as members. It is a body which act on matters
concerning real property taxes.
● Have 60 days from receipt of the assessment to file an appeal to the Local Board of
Assessment Appeals. The LBAA has 120 days within which to decide, in case of the adverse
decision, must appeal to the Central Board of Assessment Appeals within 30 days from
receipt of the LBAA decision. Then can appeal to the CTA en Banc and the mode of appeal is
rule 43 and have 30 days from receipt of the CBAA decision. Rule 45, SC within 15 days.

2. The taxpayer after payment

● Protest of the assessment
Steps:
1. The payment of the tax of the real property tax assess because this is a remedy available
after payment.
2. The filing of the written protest within 30 days from payment
● Upon payment, it is required a payment under protest, and must indicate it in the receipt as
to the condition for the availment of protest, if it is fail to pay the under protest then it
could no longer avail the remedy.
● The treasurer must have 60 days from receipt of the notice within which to decide, if the
decision of the treasurer is adverse or if there is no decision within the 60 day period, he can
appeal to the LBAA within 60 days from receipt of the treasurer decision or from the end of
the 60 day period. From LBAA then appeal to the CBAA within 30 days and then to the CTA
en Banc within 15 days then SC.

- Refund
Steps:
● The payment of real property tax assess within 2 years from payment.
● File it to the local treasurer, in case of the adverse decision then it will appeal to the LBAA
the same step na yan lahat

Tariff and custom code

Remedies on the part of the government

1. Administrative remedies
 ● The enforcement of the tax lien for unpaid taxes
- It will avail this remedy only when the goods or article are in the customs custody. Once it will
release to the importer then the government could no longer avail this remedy.
● Seizure and forfeiture
- It is resorted by the government when there is irregularity in the importation or when the
importation is done in violation of the customs laws.
Steps in enforcement of the remedy
a. Issuance of the warrant of seizure and detention
- It will issue the warrant by the collector of the customs
- it is with respect to the power of the collector of the customs where the principle of primary
jurisdiction in customs cases comes in. in this principle the determination of whether or not to
issue a warrant of seizure and detention is vested solely to the collector of customs. If the
collector thus not see a probable cause to issue a warrant of seizure and detention, he cannot to
compel to the issuance, not to compel a mandamus, if the collector think that there is no basis
to issue a warrant.
- Once the warrant is issued by the collector of customs, the enforcement of that warrant cannot
enjoined by the court.
- Supposed the collector issue a warrant and there is no basis, then he cannot go to court to ask a
writ of injunction to stop the implementation of the warrant.
- The remedy of the importer can appeal to the Commissioner of Customs.
b. Hearing
- The purpose of the hearing is to give the importer the opportunity to show cause why the
articles should not be forfeited in favor of the government.
- The nature of the proceeding is not against the importer personally but against the imported
articles.
- Acted in good faith or bad faith is immaterial, we do not look to the importer it is the imported
articles
- Seizure proceeding are seizure in nature and not criminal

PHILLIFE INTL. v. CA

Several articles are imported unlawfully and the complements of the vessels executed an
affidavit admitting that there was an illegal importation. During the seizure and forfeiture proceeding.
The government presented the affidavit as an evidence to prove the importation of the vessel. It was
objected on the grounds that it was inadmissible in evidence because it was executed without the
assistance of the counsel.

What is required in the confession is must be done with the assistance of the counsel. Since it is
a seizure of the article and it is a civil not criminal, therefore that affidavit is admissible evidence. It is
not violate the trial.

c. Decision
- The collector made a decision, at this point two things may happen, it is either favorable to the
importer or unfavorable to the importer.
- Favorable to the importer
 ● So therefore the decision of the collector will be automatically review by the Customs, there
is no need to the government to make an appeal to the Custom, because the collection is
under the obligation to transmit the records to the custom for automatic review
● The Custom can acts also in two ways either it may affirmed or reversed the decision of the
collector. If he affirms the decision of the collector, he is therefore rendering a judgment in
favor of the importer. If he reversed the decision of the collector, he is making a judgment
against the importer and in favor of the government.
● If the collector is not favorable to the importer, there is no automatically review. The
remedy of the importer is to appeal to the Commissioner of customs within 15 days from
receipt of the collector decision. The commissioner could either affirm or reversed the
decision of the collector. In case of affirmation, still adverse to the importer, the remedy of
the importer is to appeal to the CTA division under rule 42 within 30 days
● If it is unfavorable to the government, automatic review
● If the Commissioner in customs in that automatic review proceeding affirms the judgment of
the collector which it is adverse to the government will be subject to an automatically
review subject to the Finance, so without the government appealing, the commissioner is
mandated to transmit the entire records to the Secretary Finance on automatic review.
Whatever the decision of the Secretary of Finance, if he reversed the decision of the
Commissioner and it now become adverse to the importer, the remedy of the importer will
appeal to the CTA Division and the mode of appeal is rule 42 and has 30 days, and then filed
a motion for reconsideration and motion for new trial is mandatory, before the affected
party can go to CTA en Banc within 15 days, then CTA en Banc Rule 43 15 days and SC
● Or affirm the decision of the Commissioner, the remedy of the government can appeal to
the CTA division rule 42 and has 30 days

Redemption

- it is allowed except in the following instances:

1. when there is fraud
2. when the importation is absolutely prohibited
3. when the release of the articles will contravene to the law.

Judicial remedies

- civil action for a collection of money

Remedies on the part of the taxpayer

● claim for refund

- it is available only in two instances:
1. drawback cases
- involves a return of the imported articles to the country of the origin, in such a situation
importer is allowed to claim a refund
2. abatement cases
- Involves a diminution in the quantity of the imported articles while in transit form the country of
the origin up to the Philippines and the reduction to the quantity could either be a manmade or
natural causes.
STEPS:
1. He can file a written claim for a refund with the collector of the custom within 15 days from
entitlement thereto because the return can happen several months after payment.
2. If decide adversely, he can appeal to the custom within 15 days, and then to the CTA within
30 days under rule 42 in division, then MR and then CTA en Banc under rule 43 15 Days and
last SC.
● Protest
- He can use this remedy to question the assessment made by the customs duties.
- File a written protest within 15 days from payment or at the time of payment then if it is denied
the remedy is to appeal to the Commissioner of customs 15 days then appeal to the CTA division
under rule 42, the Motion for reconsideration then the same procedure.
- Supposed the collector decides favorably to the protest, then papasok ung automatic review.
● Abandonment
The custom is to sell the articles.