CHAPTER IV REMEDIES we relevant information. The registry receipt issue e br the official receipt issued by the prafessional coure’ eemence containing sufficiently identifiable details of the transaction shall constitute sufficient proof of mailing and shall be attached to th case docket e attached to the Service to the tax_agent/practitioner, i ax ctitioner, who is appointed bj the taxpayer under circumstances prescribed in’ the pertinent regulations orracereditation of tax agents, shall be deemed service to the taxpayer. (Revenue Regulations No. 18-2013) Service to Improper Address ‘When the taxpayer had informed the BIR of its new address and despite this fact, the BIR still served the notice of assessment. in the old address, there is a failure to properly serve a notice of assessment. AS a result, the period to assess is not tolled and the right of the government to assess had prescribed. (Commissioner of Internal Revenue v. Bank of the Philippine mei as liquidator of Paramount Acceptance Corporation, G.R. No. 135446, September 23, 2003) COLLECTION ‘The second tax remedy of the government is collection of taxes. In general, the modes of collection of taxes depends on whether the tax is a delinquent tax or a deficiency tax. A delinquent tax is (1) a self-assessed tax by the taxpayer but is not paid at all or only partially paid, or (2) a deficiency tax assessed by the BIR that becomes final and demandable. ‘A deficiency tax, on the other hand, is (1) the amount by which the tax imposed by Tax Code as determined by the Commissioner or his duly authorized representative exceeds the amount shown as tax by the taxpayer upon his return, or (2) if no amount is shown as tax by the taxpayer upon his return is made by the taxpayer, then the amount by which the tax exceeds the amounts previously assessed or collected without assessment as deficiency. Delinquent taxes may be collected by the BIR through the administrative action or judicial action. Administrative action includes issuance of warrant of distraint and/or levy of properties. Judicial action is through the filing of civil or criminal action, These remedies may be pursued simultaneously by the BIR. However, the remedies of distraint-and Tevy shall not be availed of where‘TAXATION LAW _ Volume It the amount of tax involved is not more than P100.00. (Section 295 we I] not only i rhe judgment in the criminal case shall not only impose thy briminal case as finally decided by the Commissioner. AS explaineg in Joel Mendez v. People of the Philippine (CTA EB Crim. No, 014 December 12, 2012), the CTA En Bancaffirmed the decision ofthe (rg Second Division and held that while an assessment is not required in the prosecution of the criminal case, the final determination of the Commissioner as to the tax liability is necessary in order for the court to rule on the civil liability. However, in this case, the prosecution presented no assessment, or any computation made by the Commissioner which can be a proper basis of the grant of civil liabilities sought by the prosecution. Instead, what the prosecution presented are estimates made only by an Revenue Officer. Without an assessment or any computation of an amount finally determined by the Commissioner, there can be no basis for ruling on the civil liability of the accused. eee For deficiency tax, the BIR can also resort to administrative action or judicial action which includes issuance of warrant of distraint and/or levy of properties and the filing of civil or criminal action, However, unlike in delinquency tax, the collection of deficiency tax must go through the process of assessment with the taxpayer given the opportunity to protest the same. Prescriptive Period of Collection ‘The prescriptive period of collection and its reckoning point depend on how the via ent was net was mar - a Collection Under Ordinary Circumstance - Under Section 203 of the Tax Code, an assessment may be made within three (3) years from the deadline of filing or the date of actual filing of the return, whichever is later. Section 203 expressly provides that no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period, ‘Thus, under the Section 203, collection may be made even without an assessment for a period of three (3) years or during the period the government is allowed to make an assessment. After the expiration of the three (3)-year period, judicial collection is not allowed if there is no previous assessment made,CHAPTER TV REMEDIES baad Noticeably, Section 203 of the Tax Code does not provide for the prescriptive period of collection unlike in Section 222 where a five (6)-year period is stated. Tax authorities and literature are in conflict as to the period to collect under the ordinary circumstances. Is it three (3) years, five (6) years, or another period? Jurisprudence, however, provides that the period to collect under.Section 203.is three (3) years from the date theassessment,is made. In Bank of the Philippine Islands" v. Commissioner of Internal Revenue (G.R. No. 139736, October 17, 2005), the Supreme Court ruled that the BIR has three years, counted from the date of actual filing of the return’ or from the last date prescribed by law for the filing of such return, whichever comes later, to assess a national internal revenue tax or to begin a court proceeding for the collection thereof without an assessment. When the BIR validly issues an assessment, within the three (3)-year, period, ther the BIR has another three (3) years after the aSsessment within which to collect the national internal rOVEHIé tax due thereon by distraint, levy, and/or court p¥Oceeding. The assessment of the tax is deemed made SHA Tthe three-year period for collection of the assessed tax begins to run of Thetatethe-assesémeh¢ notice had been. released, mailed or sent by the BIR to the taxpayer, In Commissioner of Internal Revenue-v. United Salvage and Towage (Phils.), Inc. (G.R. No. 197515, July 2, 2014), the Supreme Court held that the statute of limitations on assessment and collection of national internal revenue _ taxes was shortened from five (6) years to three (3) years by virtue of Batas Pambansa Blg. 700. Thus, petitioner has three (3) years from the date of actual filing of the tax return to assess a national internal revenue tax or to commence court proceedings for the collection thereof without an assessment. However, when it validly issues an assessment within the three (3)-year period, it has another three (3) years within which to collect the tax due by distraint, levy, or court proceeding. The assessment of the tax is deemed made and the three (3)-year period for collection of the assessed tax begins to run on the date the ‘assessment notice had been released, mailed, or sent to the taxpayer. aa ar190 ‘TAXATION LAW Volume It In the later case of Commissioner of Internal Revenue v. Standard Chartered Bank (G.R. No. 192173, July 29. 2015), it was held that the period for Commissioner to assess and collect an internal revenue tax is limited only” to three (8) years by Section 203 of the NIRC of 1997; amended. Collection Under Extraordinary Circumstance - In case of a false or fraudulent return with intent % evade tax or of failure to file return, Section 222(c) of the Tax Code provides that any internal revenue tax which has been assessed may be collected by distraint or levy or by a proceeding in court within five (5) years after the assessment is made. When the BIR GHooses to proceed with the collection in court without an assessment, the prescriptive period shall be ten (10) years after the discovery of the falsity, fraud, or omission. Collection Under the Extended Period of Assessment - Section 222(b) of the Tax Code’ allows the Commissioner and the taxpayer to agree in writing to extend the period of assessment, Any internal revenue tax, which has been assessed within the period agreed upon may be collected by distraint or levy or by a proceeding in court within the period agreed upon in writing before the expiration of the 5-year period. The period so agreed upon may be extendéd by subsequent written agreements made before the expiration of the period previously agreed upon. ~ Suspension of Running of Period to Collect The running of the statute of limitations provided in Sections 203 and 222 on the making of assessment and the beginning of distraint or levy a proceeding in court for collection, in respect of any deficiency, shall be suspended for the period during which: the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty (60) days thereafter; when the taxpayer requests for a reinvestigation which is granted by the Commissioner,CHAPTER IV 191 REMEDIES + ¢ when the taxpayer cannot be located in the address given byhim in the return file upon which a tax is being assessed or collected. If the taxpayer informs the Commissioner of any change in address, the running of the Statute of Limitations will not be suspended; 4. when the warrant of distraint or levy is duly served upon the taxpayer, his authorized representative, or a member of his household with sufficient discretion, and no property could be located; and a’ e. when the taxpayer is out of the Philippines. (Section 223, ( IRC) Government Remedies to Enforce Tax Collection ‘The Tax Code provides two types of remedies to enforce the collection of unpaid taxes, to wit: (4) summary administrative remedies, such as the distraint and/or levy of taxpayer's property; and/or @fudicial remedies, such as the filing of a criminal or civil action against the erring taxpayer. Unlike summary administrative remedies, the government's power to~enforce the collection through judicial action is not conditioned upon a previous valid assessment. Section 208 ‘and Section 222 of the Tax.Cade expressly allow the institution of court proceedings for collection of taxes without assessment within 3 years from the filing of the tax return and 10 years from the discover) of falsity, fraud, or omission, respectively. (Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 197945, duly 9, 2018) Distraint of Personal Properties ~ Distraint means the seizure or taking of one’s property in order to obtain payment of unpaid taxes. Distraint of personal properties may either be (#“actual distraint; (@fGonstructive distraint; or or" distraint of intangible properties or garnishment. a. Actual_Distraint - The actual or physical taking of the personal property of the taxpayer by the distraining bfficer to satisfy the tax liability. It is only applicable to tangible personal properties because they are the one capable of physical taking.192 ‘TAXATION LAW ‘Volume Tt ‘er Constructive Distraint - In constructive distraint, there is no physical taking of personal property. Instead, the taxpayer or any person having po Seale or control of the personal property shall be required to sign a receipt oe the: property distrained and obligate Hinsett to preserve the same intact and unaltered and not to dispar of the same in any manner whatever, without the expres authority of the Commissioner. vo In case the taxpayer or the person having the possession ‘and control of the property sought to be placed under constructive distraint refuses or fails to sign the receipt herein referred to, the revenue officer effecting the constructive distraint shall proceed to prepare a list of such property and, in the presence of two (2) witnesses, leave a copy thereof in the premises where the property distrained is located, after which the said property shall be deemed to have been placed under constructive distraint, To safeguard the interest of the Government, the Commissioner may place under constructive distraint the property of a delinquent taxpayer or any taxpayer who, in his opinion: }« is retiring from any business subject to tax, or is intending to leave the Philippines, or eto remove his property therefrom, or 4 tohide or conceal his property, or a to perform any act tending to obstruet the proceedings for collecting the tax due or which may be due from him. (Section 206, NIRC) © Distraint of Intangible Properties or Garnishment - Intangible personal properties which can be subject of garnishment aré stocks and other securities, debts and credits, and bank accounts=<——— == ———— Procedure for Distraint and Garnishment ‘The officer serving the warrant of distraint shall make or caus? tobe made an account of the goods, chattels, effects or other person! property distrained, a copy of which, signed by himself, shall be leftCHAPTER IV 193 i REMEDIES : either with the owner or person from whose possession auch goods, | chattels, or effects or ottier personal property were taken, or at the dwelling or place of business of such person and with someone of | suitable age and discretion, to which list shall be added a statement of the sum demanded and note of the time and place of sale. Stocks and other securities shall be distrained by serving a copy of the warrant of distraint upon the taxpayer and upon the president, manager, treasurer or other responsible officer of the corporation, company, ion, which issued the said stocks or securities. Debts and credits shall be distrained by leaving with the person owing the.dgbts or having in his possession or under his control such credits, or with hig agent, a copy of the warrant of distraint. The warrant of distraint shall be sufficient authority to the person owning the debts or having in his possession or under his control any credits belonging to the taxpayer to pay to the Commissioner the amount of such debts or credits. Bank accounts shall be garnished by serving a warrant of garnishment upon the taxpayer and upon the president, manager, treasurer or other responsible officer of the bank. Upon receipt of the warrant of garnishment, thé-bank shall turn over to the Commissioner so much of the bank accounts as may be sufficient to satisfy the claim of the Government. (Section 208, NIRC) Sale of Personal Property Distrained WH Notica ‘The personal property distrained shall be sold in a_public auction. To effect this, notice of public sale shall be postefm not 4ess tHian two (2) public places in the municipality-or city_where | * the distraint is made. The notice shall specify the time and plage, of gale and the articles distrajned. The time of sale shall not be less than twenty (20) days after notice to the owner or possessor of the’ property and the publication or posting of such notice. One place for the posting of such notice shalll be at the Office of the Mayor of the city or municipality in which the property is distrained, (Section 209, NIRC) 4. Right of Pre-Emption Prior tothe sale, the owner of thepersonal property may exercise his right’of pre-emption. This means the owner of the property shall [SSS See pean vee eee eee eee194 TAXATION LAW ‘Volume IT pay all the proper charges prior to the consummation of the sale In this case, the goods or effects distrained shall be restored to the owner. (Section 210, NIRC) Public Auetion During the public auction, the following instances may happen; a. There is a bidder and the bid is sufficient to cover the taxes and other charges; b. There is a bidder, but the bid is not sufficient to cover the taxes and other charges; or c. ‘There is no bidder. In the first case, the property shall be sold to the highest bidder./ ‘The proceeds of the sale shall be applied first to the taxes and the charges of the sale. Any residue over and above what is required to pay the entire claim, including expenses, shall be returned to the owner of the property sold. (Section 209, NIRC) Within two (2) days after the sale, the officer making the same shall make a report of his proceedings in writing to the Commissioner and shall himself preserve a copy of such report as an official record. (Section 211, NIRC) d. Purchase of the Government _. In the second and third instances, when the amount bid for the property under distraint is not equal to the amount of the tax or is very much less than the actual market value of the articles offered for sale, the Commissioner or his deputy may purchase the same in behalfof the national Government for the amount of taxes, penalties and costs due thereon, Property so purchased may be resold by the Commissioner * ) his deputy and the net proceeds therefrom shall be remitted to the National Treasury and accounted for as internal revenue. (Sectio® 212, NIRC) Levy of Real Properties Levy means the legal seizure of real property in order to satis!Y the tax liability or the unpaid tax. Unlike personal properties; the?® is no risk of physical disposition, destruction, removal, or hiding the real property,CHAPTER IV ice REMEDIES 2 After the expiration of the time required to pay the delinquent tax or delinquent revenue, real property may be levied upon, before simultaneously or after the distraint of personal property belonging to the delinquent. (Section 207(B); NIRC) Procedure of Levying a Real Property Levy shall be affected by writing upon said certificate a description of the property upon which levy is made, At the same time, written notice of the levy shall be mailed to or served upon the Register of Deeds for the province or city where the property is located and upon the delinquent taxpayer, or ifhe be absent from the Philippines, to his agent’or the manager of the business in respect to which the liability arose, or if there be none, to the occupant of the propeFty in-question, Incase the warrant of levy on real property is not issued before or simultaneously with the warrant of distraint on personal property, and the personal property of the taxpayer is not sufficient to satisfy his tax delinquency, the Commissioner or his duly authorized representative shall, within thirty (30) days. after execution of the distraint, proceed with the levy on the taxpayer's real property. Within ten (10) days after receipt of the warrant, a report on any levy shalll be submitted by the levying officer to the Commissioner or his duly authorized representative: Provided, however, That a consolidated report by the Revenue Regional Director may be required by the Commissioner as often as necessary: Provided, further, That the Commissioner or his duly authorized representative, subject to rules and regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner, shall have the authority to lift warrants of levy issued in accordance with the provisions hereof. (Section 207(B), NIRC) Advertisement and Sale of Levied Real Property a. Notice and Advertisement Within twenty (20) days after levy, the officer conducting the proceedings shall proceed to advertise the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale; and such advertisement shall cover a period of a least thirty (80) days. It shall be effectuated by posting a notice at the main isin nisin nnn |196 ‘TAXATION LAW, ‘Volume I entrance of the municipal building or city hall and in a public ang conspicuous place in the barrio or district in which the real estate lies and by publication once a week for three (3) weeks in a newspaper of general circulation in the municipality or city where the property ig located. The advertisement shall contain a statement of the amount of taxes and penalties so due and the time and place of sale, the name of the taxpayer against whom taxes are levied, and a short description of the property to be sold. (Section 213, NIRC) b. Right of Pre-Emption Like in distraint of personal property, a taxpayer has also the right of pre-emption in levy of real properties. This means at any time before the day fixed for the sale, the taxpayer may discontinue all proceedings by paying the taxes, penalties, and interest. In this case, the property shall be restored to the taxpayer. If the taxpayer does not exercise his right of pre-emption, the sale shall proceed and shall be held either at the main entrance of the municipal building or city hall, or in the premises to be sold, as, the officer conducting the proceedings shall determine and as the notice of sale shall specify. (Section 213, NIRC) c Public Auction During the publie auction, the following instances may happen: a, There is a bidder and the bid is enough to cover the taxes and other charges; b. There is a bidder, but the bid is not enough to cover the taxes and other charges; or c. There is no bidder. In the first case, the property shall be sold to the highest bidder. ‘The proceeds of the sale shall be applied first to the taxes and the charges of the sale. In case the proceeds of the sale exceed the claim and cost of sale, the excess shall be turned over to the owner of the Property, Within five (5) days after the sale, a return by the distraining oF levying officer of the proceedings shall be entered upon the records of the Revenue Collection Officer, the Revenue District officer and the Revenue Regional Director. (Section 213, NIRC)CHAPTER IV _ REMEDIES a: Forfeiture of the Government In the second and third instance, in case there is no bidder for real property exposed for sale or if the highest bid is for an amount insufficient to pay the taxes, penalties and costs, the Internal Revenue Officer conducting the sale shall declare the property forfeited to the Government in satisfaction of the claim in question and within two (2) days thereafter, shall make a return of his proceedings and the forfeiture which shall be spread upon the records of his office. It shall be the duty of the Register of Deeds concerned, upon registration with his office of any such declaration of forfeiture, to transfer the title of the property forfeited to the Government without the necessity of an order from a competent court. (Section 215, NIRC) ce. Resale of Real Estate ‘The Commissioner shall have charge of any real estate obtained by the Government of the Philippines in payment or satisfaction of taxes, penalties or costs arising under this Code or in compromise or adjustment of any claim therefore; and said Commissioner may, upon the giving of not less than twenty (20) days notice, sell and dispose of the same of public auction or with prior approval of the Secretary of Finance, dispose of the same at private sale. In either case, the proceeds of the sale shall be deposited with the National Treasury, and an accounting of the same shall be rendered to the Chairman of the Commission on Audit. (Section 216, NIRC) Unlike in distraint of personal property, there is a right of redemption after the sale of real property or forfeiture by the government. Within one (1) year from the date of sale, the delinquent taxpayer, or any one for him, shall have the right of paying to the Revenue District Officer the amount of the public taxes, penalties, and interest thereon from the date of delinquency to the date of sale, together with interest on said purchase price at the rate of fifteen percent (15%) per annum from the date of purchase to the date of redemption, and such payment shall entitle the person paying to the delivery of the certificate issued to the purchaser and a certificate from the said Revenue District Officer that he has thus redeemed the property, and the Revenue District Officer shall forthwith pay over to the purchaser the amount by which such property has thusTAXATION LAW ‘Volume I 198 .d, and said property thereafter shall be free from thy been redeemed, b lien of such taxes and penalties. (Section 214, NIRC) Further within one (1) year from the date of forfeiture of the government, the taxpayer, or any one for him, may redeem said property by paying to the Commissioner or the latter's Revenue Collection Officer the full amount of the taxes and penalties, together with interest thereon and the costs of sale, but if the property be not hus redeemed, the forfeiture shall become absolute. (Section 215, NIRC) Further Distraint and Levy ‘The remedy by distraint of personal property and levy on realty may be repeated if necessary, until the full amount due, including all expenses, is collected. (Section 217, NIRC) Tax Lien If a taxpayer liable to pay an internal revenue tax neglects or refuses to pay the same after demand, the amount. due shall constitute asa lien upon alll property and rights to property belonging to the taxpayer in favor of the Government of the Philippines from the time when the assessment was made by the Commissioner until paid, with interests, penalties, and costs that may accrue. The lien however shall not be valid against any mortgagee, purchaser or judgment creditor until notice of such lien shall be filed by the Commissioner in the office of the Register of Deeds of the province or city where the property of the taxpayer is situated or located. (See. 219, NIRC) This means if the lien is not registered ot filed with the Registry of Deeds, the claim of a regular mortgages purchaser, or judgment creditor is superior or preferred over the claim of the government. Judicial Action Collection of taxes may also be through judicial action either through civil action or criminal action. Civil and eriminal actio™ and proceedings instituted in behalf of the Government unde the authority of this Code or other law enforced by the Bureat ©! Internal Revenue shall be brought in the name of the Governmet of the Philippines and shall be conducted by legal officers of th? Bureau of Internal Revenue. However, no civil-or criminal acti®®CHAPTER IV oe REMEDIES : for the recovery of taxes or the enforcement of any fin 1 fine, penalt or forfeiture under this Code shall be filed in court without the approval of the Commissioner. (Section 220, NIRC; Republic of the Philippines v. Salud Hizon, G.R. No. 130430, December 13, 1999) Civil Action In Alhambra Cigar & Cigarette Mfg. Co. v. Collector (G.R. No. 1-12026, May 29, 1959), it was held that a judicial action for the collection of a tax is begun by (1) the filing of a complaint with the proper court of first instance, or (2) where the assessment is appealed to the Court of Tax Appeals, by filing an answer ta the taxpayer's petition for review wherein payment of the tax is prayed for. The civil action may be filed before the Regional Trial Court (RTC) or the Municipal Trial Court (MTC) depending upon the amount involved. Criminal Action ‘The criminal actions that may be filed under the Tax Code are as follows: a Section 254 - Attempt to Evade or Defeat Tax, and Section 255 - Failure to File Return, Supply Correct and be Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. Under Sections 254 and 255 of the NIRC, the government can file a criminal case for tax evasion against any taxpayer who willfully attempts in any manner to evade or defeat any tax imposed in the tax code or the payment thereof. ‘The crime of tax evasion is committed by the mere fact that the taxpayer knowingly and willfully filed a fraudulent return with intent fo evade and defeat a part or allof the tax-Itis therefore Wot required that a tax deficiency assésemient-must first be issued for a criminal prosecution for tax evasion to prosper. (Macario Lim Gar, Jr. v. Commissioner of Internal Revenue, G.R. No. 222837, July 23, 2018) Tax Evasion “Tax evasion” is a term that connotes fraud thru the use of pretenses and forbidden devices to lessen or defeat. taxes. (Yutivo ‘Sons Hardware Company v: Court of Tax Appeals, G.R. No. L-13203, January 28, 1961) Tax evasion is a scheme used outside of thoseTAXATION LAW ‘Volume It 200 lawful means and when availed of, it usually subjects the taxpayer to further or additional civil or criminal liabilities. (Jose C. Vitug and Ernesto D. Acosta, Tax Law and Jurisprudence 44, 2nd Edition, 2000) ‘Tax evasion connotes the integration of three factors: the end to be achieved, i.e., the payment of less than that known by the taxpayer to be legally due, or the non- payment of tax when it is shown that a tax is due; (2) an accompanying state of mind which is described as being “evil,” in “bad faith,” “willful,” or “deliberate and not accidental”; and (8) course of action or failure of action which is unlawful (Commissioner of Internal Revenue v. The Estate of Benigno Toda, Jr., G.R. No. 147188, September 14, 2004) ) Assessment Not Necessary Before Filing of Criminal Complaint The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued, there is, by practice, a pre-assessment notice sent to the taxpayer. The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is unwarranted. If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing the latter specifically and clearly that an assessment has been made against him or her. In contrast, the criminal charge need not go through all these. The criminal charge is filed directly with the DOJ. Thereafter, the taxpayer is notified that a criminal case had been filed against him, not that the commissioner has issued an assessment. It must be stressed that a criminal complaint is instituted not to demand payment, but to penalize the taxpayer for violation of the Tax Code. (Commissioner of Internal Revenue v. Pascor Realty and Development Corporation, G.R. No. 128315, June 29, 1999) The civil action filed to question the FDDA is not deemed instituted with the criminal case for tax evasion. Rule 111, Section 1 (a) of the Rules of Court provides that what is deemed instituted with the criminal action is only the action recover civil liability arising from the crime. Civil liability arisiné from a different source of obligation, such as when the obligationCHAPTERIV 201 REMEDIES created by law, such civil liability is not deemed instituted with the criminal action. It is well-settled that the taxpayer's obligation to pay the tax is an obligation that is created by law and does not arise from the offense of tax evasion, as such, the same is not deemed instituted in the criminal case. In the case of Republic of the Philippines v. Patanao, the Supreme Court held that: Civil liability to pay taxes arises from the fact, for instance, that one has engaged himself in business, and not because of any criminal act committed by him. ‘The criminal liability arises upon failure of the debtor to satisfy his civil obligation. The incongruity of the factual promises and foundation principles of the two cases is one of the reasons for not imposing civil indemnity on the criminal infractor of the income tax law. x x x Considering that the Government cannot seek satisfaction of the taxpayer's civil liability in a criminal proceeding under the tax law or, otherwise stated, since the said civil liability ig not deemed included in the criminal action, acquittal of the taxpayer in the criminal proceeding does not necessarily entail exoneration from his liability to pay the taxes. It is error to hold, as the lower court has held that the judgment in the criminal cases Nos. 2089 and 2090 bars the action in the present case. The acquittal in the said criminal cases cannot operate to discharge defendant appellee from the duty of paying the taxes which the law requires to be paid, since that duty is imposed by statute prior to and independently of any attempts by the taxpayer to evade payment. Said obligation is not a consequence of the felonious acts charged in the criminal proceeding nor is it a mere civil liability arising from crime that could be wiped out by the judicial declaration of nonexistence of the criminal acts charged. x x x. Further, in the more recent case of Proton Pilipinas Corp. v. Republic of the Phils., the Supreme Court ruled that: While it is true that according to the aforesaid Section 4, of Republic Act No. 8249, the institution of the criminal action ‘automatically carries with it the institution of the civil action for the recovery of civil liability, however, in the case at bar, the civil ease for the collection of unpaid customs duties and taxes cannot be simultaneously instituted and determined in the same proceedings as the criminal cases before the Sandiganbayan,202 ‘TAXATION LAW Volume I as it cannot be made the civil aspect of the criminal cases filed before it. It should be borne in mind that the tax and the obligation to pay the same are all created by statute; so are its, collection and payment governed by statute. The payment of taxes is a duty which the law requires to be paid. Said obligation isnot a consequence of the felonious acts charged in the criminal proceeding nor is it a mere civil liability arising from crime that could be wiped out by the judicial declaration of non-existence of the criminal acts charged. Hence, the payment and collection of customs duties and taxes in itself creates civil liability on the part of the taxpayer. Such civil liability to pay taxes arises from the fact, for instance, that one has engaged himself in business, and not because of any eriminal act committed by him. (Macario Lim Gar, Jr. v. Commissioner of Internal Revenue, G.R. No. 222837, July 23, 2018) TAXPAYER'S REMEDIES Under the Tax Code, the taxpayer's remedies are (If administrative remedy in challenging the tax assessment; (2) judicial appeal of tax assessment; (3) recovery of tax erroneously or illegally collected; (4) compromise of tax liability; and (6)abatement or cancellation of tax liability. ADMINISTRATIVE REMEDIES TO CHALLENGE THE ASSESSMENT Challenging the Validity of the LOA When a LOA is issued, the first thing that the taxpayer should do is to check whether or not the LOA has complied with all the requisites under the BIR rules and regulations. In addition, the taxpayer can refuse to accept the LOA if the BIR officer serving the notice is not the one authorized as stated in the LOA or has failed to present any proof of identity that he is in fact a BIR authorized personnel. The taxpayer should immediately file a written request for cancellation of the LOA before the appropriate BIR revenue district office should there be irregularities noted in the LOA and the service thereof, Responding to the NIC After the conclusion of the audit, the BIR issues the NIC together with the result of audit. This is the first time that the ‘axpaver is informed with the deficiency taxes found by the audit.