Administrative remedies of the government:
Delinquent accounts
1. To make deficiency assessments
2. To enforce deficiency assessments and collect
taxes through:
a. Distraint of personal property
i. Remedy by which goods,
chattels, or effects and other
personal property either tangible
or intangible, including stocks
and other securities, are actually
seized or taken by the
government to enforce payment
of taxes. If taxpayer fails to
actually pay the taxes, then
properties subject of distraint will
be sold at public auction.
ii. Constructive distraint – making
taxpayer sign a receipt covering
the property distrained and
obligate himself to preserve the
same intact and unaltered and
not to dispose of the same in any
manner without authority from
the commissioner.
b. Levy of real property
i. Enforced on real property of a
delinquent taxpayer.
ii. Property sold may be redeemed
within 1 year from the date of
sale.
c. Enforcement of tax liens
i. Liens on real estate in favor of a
state or local government that
may be foreclosed for non-
payment of taxes.
d. Pursuit of judicial proceeding to collect
e. Enforcement of forfeiture of property
i. If there is no bidder, it shall be
forfeited to the government
ii. May be redeemed within 1 year
from the date of sale.
f. Enforcement of statutory penal
provisions
g. Compromise, abatement, or cancellation
of taxes
i. Compromise
1. when there is
reasonable doubt as to
the validity of the claim;
2. financial position of the
taxpayer demonstrates
a clear inability to pay
the assessed tax;
3. for cases of financial
incapacity, a minimum
compromise rate of 10%
of the assessed tax must
be paid;
4. for other cases, 40%
minimum compromise
rate.
ii. What may be compromised
1.
2. Cases under
administrative protest
after issuance of final
assessment notice
3. Civil tax cases
4. Collection cases filed in
courts
5. Criminal violations
iii. Abatement
1. A cancellation of an
unjust and unreasonable
tax.
2. Diminution or decrease
in the amount of tax
imposed
h. Suspension of business operations
Judicial remedies of the government:
1. File a civil action
2. File a criminal action
Administrative remedies of the taxpayer:
1. Protest against assessment
2. Compromise
3. Redeem property after sale at public auction
4. File a claim for tax refund or tax credit
Judicial remedies of the taxpayer:
1. File an ordinary civil action
2. File a petition before the CTA for refunds and
protest of deficiency tax assessment
Powers of the BIR:
1. To assess and collect all internal revenue taxes,
fees, and charges
2. To enforce all forfeiture, penalties, and fines
connected with the assessment and collection of
all internal revenue taxes
3. To execute judgments in all cases decided in
favor of BIR by the CTA and ordinary courts
4. To effect and administer the supervisory and
police power conferred to BIR
Kinds of assessments
1. Self-assessment – when the taxpayer files a
return
2. Deficiency assessment – done by the BIR after
the conduct of an audit and the latter finds that
the tax return contains an under-declaration of
income or over-deduction of expenses
3. Jeopardy assessment – tax assessment made by
an authorized Revenue Officer without the benefit
of a complete or partial audit
4. Disputed assessment – when a deficiency
assessment made by BIR is contested by the
taxpayer and the latter asks the BIR for
reconsideration or reinvestigation

Powers of the CIR to obtain information:
1. To examine any document relative to the inquiry
2. To obtain from third parties, including the
government, transaction records of a taxpayer
3. To summon any person to determine tax liability
4. To take the testimony of any person relative to a
tax inquiry
5. To cause revenue officers to make a canvass of
tax liabilities
Powers of the CIR to make assessments:
1. Examine returns and determine tax due
2. Assess the proper tax on the basis of best
evidence obtainable under the ff.
circumstances:
a. The report or records requested from the
taxpayer are not forthcoming (lost, or
refuses to submit)
b. The reports submitted are false,
incomplete, or erroneous
3. Conduct inventory and surveillance and to
prescribe presumptive gross sales and
receipts
a. Inventory taking – stock-taking at any
time during the taxable year
b. Open surveillance – monitoring of sales
receipts if there is reason to believe that
the taxpayer is not declaring his correct
income, or sales
c. Benchmarking of taxpayers – process of
setting a standard to determine the
performance level of taxpayers in a given
industry
4. Terminate taxable periods
a. Retiring from a business subject to tax
b. Intending to leave POH or remove his
property or intending to hide property
c. Performing any act tending to obstruct
the proceedings for the collection of tax
5. Prescribe real property values
a. FMV as determined by CIR
b. FMV as shown in schedule of values of
the provincial and city assessors
6. Inquire into bank deposits
a. Decedent to determine his gross estate
b. Taxpayer who filed an application to
compromise on the basis of financial
incapacity
c. A taxpayer subject of a request for the
supply of tax information from a foreign
tax authority
7. Authorize accreditation and registration of tax
agents
8. Prescribe additional procedural or
documentary requirements
PROCEDURE IN THE CONDUCT OF AN
ASSESSMENT AND PROTEST
1. Issuance of LOA after a return is filed –
authorizes an RO to audit/investigate a taxpayer
(must be served within 30 days; 120 days to
audit).
a. Note: Letter Notice is not provided in the
NIRC, it’s just to notify the taxpayer that
there is discrepancy is found.
2. Notice of Informal Conference – informing the
taxpayer of findings of the audit; part of due
process requirement; not to exceed 30 days
3. Issuance of PAN – w/o PAN, assessment is void;
indicates the findings of the audit; reply must be
made within 15 days; but there are circumstances
where PAN isn’t needed:
a. Finding of deficiency is due to
mathematical error in the computation of
the tax
b. When a discrepancy has been
determined between the tax withheld and
the amount actually remitted
c. When a taxpayer who opted to claim a
refund or tax credit was determined to
have carried over and automatically
applied the same amount claimed
against the estimated tax liabilities
d. When the excise tax due on excisable tax
has not been paid
e. When an article locally purchased or
imported by an exempt person has been
sold, traded, or transferred to non-
exempt persons
4. Issuance of FAN/FLD – demands for payment of
the deficiency; issued 15 days after filing a reply
to the PAN; if no protest to FAN, then it becomes
final.
a. Taxpayer may request for
reconsideration (based on existing
records) or reinvestigation (based on
NDE)
b. In case of denial of protest or inaction:
i. Appeal to CTA within 30 days
from receipt of denial of protest
ii. Appeal to CIR through
reconsideration within 30 days
from receipt of protest
c. In case of inaction within 180-days from
date of filing the protest
i. Appeal to CTA within 30 days
from after the expiration of the
180-day period
 ii. Wait for the final decision of the
CIR and appeal it within 30 days
after receipt of the decision
Modes of Service for Valid Assessment Notice
1. Personal service
2. Substituted service
3. Service by mail
Requisites for a valid assessment
1. Assessment must be based on actual facts, law,
rules, and regulations or jurisprudence on which
the assessment is made
2. Must be sent to and received by the taxpayer
3. The document must actually be an assessment
(must contain a computation of tax liabilities and
demand to pay)
Rules on the validity of an assessment
1. PAN is always required, without which, the
assessment is null and void.
2. The assessment must contain a computation of
the tax liability, and a demand to pay.
3. Protesting the PAN is dispensable, so if a FAN is
issues before the lapse of the 15-day period to
protest the PAN is not prejudicial to the taxpayer,
as long as the latter is served a FAN.
4. Taxpayer must actually receive the assessment,
but it’s not necessary that this be received within
the prescriptive period, as long as the
assessment was sent within the prescriptive
period.
PRESCRIPTION
Two kinds of prescription
1. Extinctive prescription – extinction of a title or
right by failure to claim or exercise it over a long
period
2. Positive prescription – acquisition of title to a thing
by open and continuous possession over a
statutory period
Benefits
1. Government – tax officer is required to act
promptly in making the assessment, therefore
efficiently generating income for the government.
2. Taxpayer – provides them with peace of mind,
knowing that there is a limit to the period of time
within which the government can make an
assessment or collect taxes.
Prescriptive periods
1. For assessment of tax liability
a. Three years from filing of return
b. 10 years in case of false or fraudulent
assessment with intent to evade tax or no
return filed
2. For collection
a. Five years from final assessment
b. 10 years if without assessment in case of
false or fraudulent return
c. Period agreed upon by the CIR and the
taxpayer
3. Filing of criminal action
a. Five years from commission or discovery
of the violation, whichever is later
4. For refund
a. Two years from payment of the tax or
penalty.
Exceptions to the period of assessment and
collection
1. In case of false or fraudulent return with intent to
evade or failure to file a return – 10 years
2. Waiver
3. Any internal revenue tax which has been assesse
within the period of limitation may be collected by
distraint or levy or by a proceeding in court within
five years from the assessment
Requisites for a valid waiver
1. Must be in the proper form prescribed by the BIR
2. Must be signed by the taxpayer himself or his duly
authorized representative
3. Signature of the proper authority indicating that
the BIR accepted the waiver; if more than
1million, CIR must sign
4. Date of acceptance by the BIR must be indicated
5. Must be executed in three copies
6. Must not cover taxes which had already
prescribed
7. Should be notarized
8. Must be executed before the expiration of the
period to collect or assess taxes
9. Expiry date of the period agreed upon should be
indicated
10. Submit to the CIR
CIR vs. Next Mobile: Exception to the rule that when a
waiver does not comply with the requisites, it is invalid. In
this case, because the parties were in pari delicto, even if
the waivers were invalid, the Court treated such as valid
because:
1. Due to public policy (lifeblood theory)
2. Parties should come to court with clean hands; Next
Mobile should not be allowed to benefit from the
flaws in its own waivers
3. Next Mobile is estopped from questioning the validity
of its waivers, as it executed five waivers. It allowed
BIR to rely on them and did not raise any objection
until they were assessed.

Waiver of defense of prescription vs. waiver of
defense of statute of limitations.
1. Waiver of the defense of statute of limitations –
taxpayer by reason of non-compliance can be
barred from asserting the defense of prescription.
2. Waiver of defense of prescription – agreement
between the taxpayer and the BIR that that the
period to issue an assessment and collect taxes
is extended to a date certain.
Suspension of the running of the statute of limitations
1. If the CIR is prohibited from making the
assessment (if there’s an injunction)
2. When the taxpayer has requested for a
reinvestigation granted by the Commissioner
3. When the taxpayer cannot be located in the
address given by him in the return
4. When the taxpayer is out of the country
5. When warrant of distraint or levy is duly served
and no property could be located
False vs. Fraudulent Return
1. False – contains deviations from the truth,
whether intentional or not
2. Fraudulent – intentional and deceitful deviations
Prima facie evidence of fraud
1. Intentional and substantial understatement of the
sales of the taxpayer by 30%
2. Intentional and substantial overstatement of
deductions by 30%
ENFORCEMENT / COLLECTION
Valid collection = valid assessment
Delinquent tax
Result of a self-assessment that was not paid on the way
it was due. This can immediately be collected through
distraint or levy or by judicial action.
Deficiency tax
Tax paid by the taxpayer as stated in the tax return is far
less than the amount determined by the BIR through its
audit. Can be collected after the taxpayer has filed a
protest and denial of such protest.
REFUND OF TAXES
Basis: Solutio indebiti.
Nature: Tax exemption
How construed: Strictissimi juris against the claimant
When filed
1. Claim must be made within two years after the
payment of the tax or penalty. May be a claim for
cash refund or tax credit.
2. The two-year period is counted from the date of
the last or final installment.
3. If tax is withheld from source, the two-year
period is counted from the date the tax falls due
at the end of the taxable year.
Taxes that can be refunded
1. Taxes erroneously or illegally received by the BIR
a. Paid under mistake of fact
b. Payment is done under duress
c. Tax levied without statutory authority
2. Penalties imposed without authority
3. Any sum alleged to have been excessively or
wrongfully collected
4. Value of internal revenue stamps when returned
in good condition by purchaser
5. Value of unused stamps rendered unfit for the use
6. Excess income tax credits against quarterly
income taxes for the next taxable year which were
not used
Requisites for claims of tax refund
1. A written claim for tax refund
2. Must be filed within 2 years after the payment of
tax
3. A tax return filed showing an overpayment shall
be considered a written claim for tax refund
Claimant of tax refund
1. Taxpayer himself
2. Statutory taxpayer
a. The person on whom the tax is imposed
by law and who paid the same even if he
shifts the burden thereof to another
b. Not applicable where the law grants the
party to whom the economic burden of
the tax is shifted by virtue of an
exemption.
i. In this case, such party must be
allowed to claim the tax refund or
tax credit even if it is not
considered as the statutory
taxpayer under the law.
3. Withholding agent
Options for corporate taxpayers
1. File claim for refund
2. Avail a tax credit
a. Tax credit certificate is valid for 5 years
3. Carry over the excess credit to the succeeding
taxable period
VAT refund
1. Arises only from zero-rated or effectively zero-
rated sales.
2. Reckoned from the close of the taxable quarter.
JUDICIAL REMEDIES
Jurisdiction of the CTA
1. Exclusive appellate jurisdiction over civil
violations of tax laws
 a. Cases within the jurisdiction of the
court in division
i. Decisions of the CIR and other
matters
ii. vto inaction of the CIR on
disputed assessments
1. CIR’s failure to act on a
disputed assessment
within 180 days = file
petrev with CTA within
30 days after 180 days;
OR wait for the final
decision of the CIR and
appeal such decision to
the CTA within 30 days
from receipt
iii. Decisions of the RTC on local
tax cases
iv. Decisions of the Commissioner
of Customs appealable to the
CTA
v. Cases from admin agencies
b. Cases within the jurisdiction of the
court en banc
i. Decisions of the CBAA over
cases involving assessment and
taxation of real property
ii. MRs from decisions of the court
in divisions
1. If the case is one which is on appeal from a
decision of the CIR, RTC, treasurer, Sec. of
Finance, Sec. of Trade;
2. If in the opinion of the court, the collection may
jeopardize the interest of the
government/taxpayer.
REVIEW PROCESS
Before a litigant can appeal to CTA en banc, it should
first file a motion for reconsideration or new trial with the
CTA division. This is mandatory and jurisdictional.
MODE OF APPEAL
1. Appeal from a decision or inaction of the CIR
→ Rule 42 filed with the CTA division
2. Appeal from a decision of the court in a division
→ Rule 43 filed with the CTA en banc
3. Appeal from a decision of the CBAA
→ Rule 43 filed with the CTA en banc
4. Appeal from the decision of the CTA en banc
→ Rule 45 filed with the SC

c. Over appeals from the judgments of

the RTC in tax collection cases
d. Petitions for review of the judgments
of the RTC in the exercise of their
appellate jurisdiction over tax
collection cases originally decided by
the MTCs.

2. Exclusive jurisdiction over criminal violations

of tax laws
*assessment of deficiency is not necessary to a
criminal prosecution for willful attempt to defeat and
evade payment of tax; there must be a prima facie
showing of a willful attempt to evade taxes.
a. Exclusive original jurisdiction
i. Delinquent tax amounting to
more than 1M
b. Exclusive appellate jurisdiction in
criminal violations of tax laws
i. Violation of tax laws where the
amount involved is less than 1M
should be filed with the regular
courts, but CTA shall have
appellate jurisdiction.

CTA as a court of record

This means that cases filed before it are litigated de
novo, and party litigants should prove every aspect of
their cases.

When injunction allowed