Transfer Taxes:
 Imposed on transfer of property on account of
death or by way of gift/donation
 Two kinds
o Estate tax – tax on the gratuitous
transfer from the decedent to the
heirs/beneficiaries
o Donor’s tax – donor to donee by way of
gift
 It is donor who pays the tax on
account of his liberality
 No more inheritance tax and donee’s tax (long
repealed)
Estate Tax and Donor’s Tax
 Estate Tax Rate: 6% for net estate with standard
deduction of 5M to simplify the system +
exemption for the first P10M for the FH.
o Standard deduction – automatic claim
o First 10M of FH is a deductible item from
the Gross Estate on top of the 5M
deductions
o The 5M of your estate is already tax-free
 5M estate – practically you have
0 estate and no tax to pay
o Amnesty up to June 2023 for Estate Tax
purposes – those estate not yet settled
until provided the decedent died prior to
2018
 Those decedent who died
before 2018, the survivors of the
estate could settle the estate by
availing the amnesty until June
2023.
 Donor’s Tax Rate: from 15% to 6% of net
donations/gift in excess of P250K yearly
ET – upon death
DT – during lifetime
As to notice
ET – no ntice of death
DT – no notice of donation required
As to exemption
ET – no exemption but taxable estate entitled to
deductions
DT – taxable gift is subject to an exemption as to the first
250K
As to purpose
ET – prevent undue accumulation or concentration of
wealth
DT – prevent avboidance of estate thru lifetime transfers
of property or to complement estate tax
Where can there be tax savings? Is it in estate or
donor’s tax? Or 6% CGT?
 Mode of transfer is sale – subject to 6% CGT +
1.5 DST = net rate: 7.5%
 Wait for death to come in b4 prop is transferred -
gratuitous transmission still subject to 6%
taxable estate
 Transfer by way of donation – still subject to the
6% of TG less 250K (still have that advantage of
250K deduction before it will be subjected to 6%)
 There is no difference now.
o Before: make a program of donation
before the death of parent
 What about valuation? FMV – zonal value of BIR
(same valuation to all of them – no more
difference to the mode of transfer to pursue tax
savings)
 If you make a donation, if it is a taxable donation
– also subject to DST.
Rates
ET – 6% of taxable estate
DT – 6% of the taxable gift in excess of P250K
Filing + payment
ET – within 1 year from death
DT – within 30 days from donation/gift
GROSS ESTATE
A. CRAD – value (FMV) at the time of the death all
property [all properties within and without]
a. Resident aliens – even if died ABROAD
B. NRAD – all prop located in the PH
PROPERTIES COMPOSING THE TAXABLE ESTATE
(Sections 85 and 104)
1. Decedent’s interest – interest at the time of
death
2. Transfer in contemplation of death
3. Transfer conditioned on survivorship; and
4. Transfer with retention or reservation of rights
Peculiar: decedent made a transfer of prop during his
ilfetime which is outside of the bonafide sale w/c subject
to aconsideration/value. But despite trasnfer, there were
conditions imposed – this transfer will only be effective
upon his death.
During lifetime, they still retain the enjoyment, use, and
possession of property.
The law does not consider this as legit transfer to
exclude it in the taxable estate. Since it is transfer with
condition, it is included in the taxable estate.
5. Revocable transfers
a. If irrevocable – NOT part of estate
6. Property passing under aGPA
a. If SPA – there is a specific person
named in the document who eventually
shall become the owner in the
possession of property – thus excluded
in the taxable estate
b. If GPA – person holding that prop will be
included in the taxable estate of the
person holding that prop under GPA
 7. Proceeds of life insurance – must be one taken
out by decedent
a. Note: not group insurance
b. Beneficiaries: survivors/estate and no
designation of irrevocable beneficiary
8. Prior interests
9. Transfers for insufficient consideration
a. Personal proeprty woth 5M but sold for
100K – there is insufficient
b. In the event of death, that property will
be part of the estate but less the
consideration.
i. Determine FMV at the time of
death less the consideration =
value that will be added to the
taxable estate
Note: capital/exclusive property of SS is excluded from
the gross estate.
[SECTION 104] – intangibles
1. Franchise exercised in the PH;
2. SOB issued by corpo organized in the PH;
3. SOB by a foreign corpo 85% of the business in
the PH;
4. SOB issued by corpo where the SOB have
acquired business stiuys in the PH;
5. Shares in any partnership, business, or
indsutred situated in the PH
PROPERTIES NOT PART OF HIS GE
 Those which are outside the PH
 Intangible personal property – estate NRA
decedents shall NOT be taxable in the PH if their
country does not impose a similar transfer tax to
IPP of decedent Filipinos in that country;
 If foreign country grants exemption to the IPP,
the PH will give a similar exemption to the estate
of the NRA decedent
Valuation: FMV at the time of death
Real properties: CIR (zonal value) at the time of death
After determining the gross estate, then the gross estate
will be entitled to claim deductions.
Deductions allowed to estate of CRAD
1. Standard deduction of 5M
2. Claims against the estate [debts/indebtedness]
3. Claims of the deceased against insolvent person
a. Receivables ni decedents sa kanyang
mga debtor
b. Claim is first added to the GE and them
claim as deduciton
c. Considered as bad debts
4. Unpaid mortgages or indebtedness; taxes;
losses/casualty losses – first, storm, shipwreck,
theft, robbery, etc (not indemnified and not
claimed as deduction – ITR)
a. Property that is part of the estate – EX:
house
b. During settlement of estate, the house
got burned, the losses could be claimed
as a deduction for so long as it has not
been indemnified or covered by
insurance
c. If insurance, then deductions could not
be claimed
d. Indebtedness – P10M
i. Heirs negotiated with the Bank.
ii. Is the 10M deduciton? Yes. But
the bank has to be paid first.
iii. 10M not yet paid, the heirs
negotiated with the bank to
lower the utang and now it
becomes 7M - the heirs paid the
7M
iv. Can the heirs still claim the 10M
deduction even if they only paid
7M? Yes. Even if you paid less,
could still claim the full amount
of the indebtedness as a
deduction.
v. Basis: Date of Death Valuation
vi. Can you claim na 7M lang
deduction? Yes. That is in favor
of BIR – lesser deduction.
vii. BUT note: you could claim
100% deduction even if you
paid less.
5. Property previously taxed (vanishing deduction
of the value of the property)
a. Property is situated in the PH;
b. Transfer to decedent was already taxes
[estate/gift tax];
c. Transfer was made within 5 years
before death
Note: property is still part of the estate BUT can claim
vanishing deduction.
The lesser year you held the property, the higher the
percent.
If more than 5 years from his death – no more VD.
What is the legal fiction?
That there is no full enjoyment of the property held.
6. Transfers for public use
7. The family home – amount not exceeding P10M
a. If FH is 5M – could claim only 5M
b. If FH 15M – could claim only 10M – 5M
is taxable
8. Amounts received under RA 4917 [added first to
the GE and then claim it as deduciton
DEDUCTIONS TO NRA estates:
1. Standard deduction – P500K
2. Proportion of the claim, losses, indebtedness,
Taxes;
3. VD
4. Transfers for public use
 a. ½ share of the surviving
conjugal/community spouses deducted
against the Net conjugal/community
estate
b. Subject to the limitation on credit, the
foreign estate tax paid shall be availed
by way of tax credit against the PH
estate tax due;
c. Exempted acquisitions and
transmissions: non-taxable/tax free
transfers
Notice of death: not required anymore
Estate Tax Returns
 Within one year from death
 Extension of payment (due to undue hardship)
o 5 yrs if Judicial settlement
o 2 years if EJ settlement
 Liability for payment: paid by E/A, but heirs are
subsidiarily liable in proportion to his distributive
share from estate
 Discharge of E/A from personal liability: apply for
discharge
o Submit to BIR properties composing the
estate of the decedent and ask the BIR
for the assessment of the tax – tax is
paid and an estate tax clearance will be
given after that, E/A may now ask for his
discharge or release for further liabilities
 Liability for the ET: if there is no application of
discharge, there is personal and primary liabilty
of E/A
 Administrative restrictions:
o Payment before delivery by E/A to the
beneficiasries of the estate [need of tax
clearance]
[ANSWER TO #2]
Banks upon having knowledge of the death shall
allow withdrawal from the bank deposit subject to
FWT of 6%, with a sworn statement.
[amended by TRAIN] – bank account of decedent
can be withdrawn subject to 6% FWT, deposit not
declared anymore in the Estate Tax Return
 Under TRAIN, banks with knowledge of the
death of a certain decedent/deposit may allow
withdrawal from the bank deposit subject to FWT
of 6% + sworn statement
 Bank account of decedent can be withdrawn by
the heirs and the bank shall subject the
withdrawal to a 6% FWT
 Once the withholding has been done after
withdrawal, the deposit will not be anymore
declared in the estate tax return since it has
already been paid.
 If you want to avail deducitons, you have to
settle the estate – file ETR then claim
deductions so that you will not be hit by 6%
 But if you are rushing, you want to withdraw
because madaming bayaran, then what will be
given back to you [as heirs] will only be 94%
since 6% is being withheld as a final tax to
cover the estate tax
Gross Estate — Deduction = Net Taxable Estate x 6%
EX: executed EJ settlement. 3 sibs 1 mom. Mom waived
hereditary shares in favor of her kids. Not a taxable
donation.
But if she waived the estate which forms part of the
conjugal/community share – taxable donation.
VAT
EX: construction materials/supplies – in the course of
sale of these manufactured materials, that sale will be
subject to the VAT. That’s the regular course of
trade/business
To prmote, meron mga salesman and then the sales
reps are provided with service vechile – 10K sales
representatives – supplyan ng vehicles since they need
transpo to promote products of their ER. After 5 years,
pinalitan ang sakyanan. These cars are sold because 5
years.
Is the sale of these vehicles used in business
subject to the VAT?
Yes! Because that is a transaciton that is incidental to
the business.
It does not mean regular business but also those
incidental thereto.
Or those commercial bldgs/ house and lot used in
business, if used in business - incidental - there is also a
VAT.
Transactions under VAT system:
1. Subject to 12% VAT
2. Subject to zero 0% VAT
3. Exempted transactions
 Destined within or locally – 12%
 Goods or services are destined OUTSIDE – 0%
VAT
 GR: VAT system uses the destination principle –
destination determines the taxation or exemption
from VAT
 Exports – 0% rated
 Imports – 12% rated
Meaning of consumption as applied to Services
 The consumption contemplated by law does not
imply that the service be done abroad in order to
be zero-rated
 Consumption – the use of a thing in a way that
thereby exhausts it.”
  If applied to services – performance or
successful completion of a contractual duty,
usually resulting in the performer’s release from
any past or future liability
 Zero-rated transaction – even if done or
performed in the PH, but paid for in acceptable
foreign currency and accounted for in
accordance with the rules and regulations of the
BSP
 To be zero-rated:
o Service performed in the PH;
o Service falls under any of the categories
under Sec. 108 [b] of the Tax code;
o Paid in acceptable foreign currency
accounted for in accordance with the
rule of BSP
TRANSACTIONS SUBJECT TO 12% VAT:
a. VAT ON THE SALE OF GOODS AND
PROPERTIES [includes barter or exchange]
b. VAT on transactions “deemed sale” of goods
and properties
a. Transfer, use, or consumption NOT in
the course of business originally
intended for sale or for use in the course
of business;
b. Distribution or transfer to:
i. SH/I as share in the profits of
the VAT registered persons;
ii. Creditors in payment of debt
c. Consignment of goods if actual sale is
NOT made within 60 days following the
date such goods were consigned;
d. RETIREment from or cessation of
business as to inventories of taxable
goods existing as of such retirement or
cessation.
c. VAT on the importation of goods [whether for
personal use or for trade or business]
a. 12% x Dutiable Value = VAT
b. Includes transfer, sale, or exchange of
goods by tax-exempt persons to non-
exempt persons.
i. Consul (exempt person) to
filipino citizen (non-exempt
person) = subject to 12% VAT
rate
d. VAT on the sale of services and use or lease of
properties
a. 12% of gross receipts derived from the
sale or exchange of services, including
the use or lease of properties
Rule: VAT is already deemed included in the selling
price and NOT billed as a separate item from the price.
Formula:
 GSP/1.12 = amount exclusive of VAT
 Amount exclusive of VAT x .12 = VAT Amount
“Sale or exchange of services” – means the performance
of all kinds of services in the PH for others for a fee,
remuneration, or consideration, including those
performed or rendered by construction and service
contractors;
Note:
 Common carriers in the carriage of pax – subject
to percentage tax and not VATable (common
carriers by land)
 Domestic carrier of goods and cargoes – subject
to VAT
ZERO-RATED TRANSACTIONS: VAT AT 0%
1. Export sales
a. Sale and actual shipment of goods from
the PH to a foreign country
2. Vetoed –
3. Sale of raw material to a NR buyer for delivery to
a resident local export-oriented enterprise to be
used in manufacturing, processing, packing or
repacking in the PH of the said buyer’s goods
and paid for in acceptable foreign currency XXX
4. Sale of raw materials to export-oriented
enterprise whose export sales exceed 70% of
total annual production;
5. Those considered export sales under the
Omnibus Investment Code;
6. Sale of goods, supplies, equipment and fuel to
persons engaged in international shipping or int’l
air transport operations
ZERO-RATED – services performed in the PH by
VAT-registered persons
1. Processing, manufacturing, or repacking goods
for other persons doing business outside the PH
which goods are subsequently exported and
paid in acceptable foreign currency
2. Services other than those mentioned in the
preceding paragraph, rendered to a person
engaged in business conducted outside the PH
or to NRA not engaged in business who is
outside the PH when the services are performed
3. Services rendered to persons or entities whose
exemption under special laws or int’l
agreements;
4. Services rendered to persons engaged in int’l
shipping or int’l air transport operations,
including leases of property for use thereof
5. Services performed by subcontractors and/or
contractors in processing, converting, or
manufacturing goods;
6. Transport of passengers and cargo by domestic
air or sea vessels from PH to foreign country;
a. If domestic air or sea within the PH
(whether passengers or cargo) – 12%
VAT
b. If int’l flight of domestic air, sea, vessels
– 0% VAT
7. Sale of power or fuel generated thru renewable
sources of energy such as solar, wind,
hydropower, etc.
 8. Services rendered to offshore gaming licensees
subject to gaming tax by service providers
including accredited service providers
EXEMPTED TRANSACTIONS
 Sale of goods/properties and/or services and the
use or lease of properties, and importation of
goods are not subject to VAT
 Seller being exempted is NOT allowed any input
VAT tax credit
 Threshold for VAT purposes: 3M [Jan. 1, 2018]
 If the VAT taxpayer and the taxpayer has sales
of 3M or less – NONvatable
 Exceed 3M – covered by 12% VAT
Ff. Exempted transactions
a. Sale or importation of agricultural and marine
food products in their orig state, and poultry of or
kind generally used as, or yielding or producing
foodds for human consumption;
a. Considered orig state even if undergone
the simple process for preservation (EX:
freezing, drying, broiling, salting,
roasting, smoking)
b. Raw sugar – exempted
c. Refined sugar – subject to VAT
b. Sale or importation of fertilizers; seeds, seelings,
and fingerlings; fish, prawn, livestock, and
poultry feeds except specialty feeds for race
horses and other animals considered as pets;
c. Importation of personal and household effects
belonging to the residents of the PH returning
from abroad and NRC coming to resettle in the
PH
d. Importation of professional instruments and
implements, tools of trade, occupation or
employment beloniging to persons coming to
settle in the PH
e. Services subject to percentage tax;
f. Services by agri contract growers and milling for
others;
g. Medical, dental, hospital, and veterinary services
except those rendered by professionals;
h. Educaitonal services rendered by private
educational institutions;
i. Services rendered by individuals pursuant to EE-
ER relationship;
j. Services rendered by regional/area
headquarters established in the PH by
multinaitonal corporations which act as
supervisory, communications, and coordinating
centers for their affiliates;
k. Transactions which are exempt under int’l
agreements to which PH is a signatory;
l. Sales by agri coops;
m. Gross receipts from lending activities by credit or
multi-purpose
n. Sales by non-agricultural, non-electric, and non-
credit cooperatives.
o. Export sales by persons who are Non-vat
registered;
p. Sale of real properties not primarily held for sale
to customers or held for lease in the ordinary
course of trade or business or real property
utlizied for low-cost and XXX
q. Lease of a residential unit with a monthly rental
not exceeding P15K;
r. Sale, importation, printing of books
s. Transport of passengers by int’l carriers;
a. Common carriers by air and sea –
domestic travel – 12%
b. Domestic carriers by air and sea –
desitnation: abroad – passengers and
cargoes but carrier domestic – 0%
c. Int’l carriers transporting passengers
abroad – exempted from the VAT
t. Sale, importantion or lease of passenger or
cargo vessels and aircraft
u. Importaiton of fuel, goods, and supplies by
perosns engaged in int’l shipping/ airtransport
operaitons;
v. Services of bank, non-bank financial
intermediaries performing quasi-banking
functions
w. Sale or lease of goods and service to senior
citiznes;
x. Transfer of property pursuant to Sec 40 of NIRC
y. Association dues, membership fees, and other
assessments, and charges collected by
homeowner’s associations;
z. Sale of golds to BSP;
a. Before – zero-rated but not exempted
aa. Sale or importaiton of prescription drugs and
medicines for diabetes, hypertension, high
cholesterol, cancer, mental illness
bb. Sale or importation of the ff. Beginning jan 1,
2021 to dec. 31, 2023:
a. Capital equipment, its spare parts and
raw materials necessary for the
prodductions of PPE anything to prevent
COVID-19
b. All drugs, vaccines, and medical
devices, specifically prescribed and
directly used for the treatment of COVID
c. Drugs for the treatment of COVID-19
approved by FDA
cc. Sale or lease of goods or properties or the
performance of services other than the
transactions mentione – gross annual
sales/receipts: not exceed P3M
Registration Requirement: VAT and Non-VAT persons
shall register as such and pay registration fee of P500
annually (deadline of annual registration: Jan. 20)
EX: hardware supplier.
 Subject to 12% VAT – must be deemed included
in the selling price
 Suppliers where he gets the supplies that he will
sell to producers
 Suppliers will shift VAT to the purhcase price to
the VAT taxpayer
Sources of Input VAT credit Can the manufactuer/business claim 100% of the
 Input VAT – VAT due or paid by the VAT input VAT to be claimed as a vat credit against the
registered person in the course of trade or output vat?
business on importation of goods or local No. Because the guards – part thereof ginabantay ang
purchase of goods/services, including lease or VAT activity and other guards ginabantay ang nonvat
use of property from a VAT registered person acitvities.
 Output VAT – VAT due on the sale or lease of
taxable goods or properties or services by any Sa non-vat activities, the VAT passed on there, you
person registered or required to register. cannot claim ng input VAT because it is non-vat. What
 Sources: the law allows is that you are allowed to claim input vat
o Purchases or importation of goods directly attributable to the vat transaction
o Purchase of real properties where VAT
is paid If out of 10, 6 ang nagabantay for the VAT activity then
o Purchase of service where VAT is paid the input covering the 6 six guards is directly attributable
to VAT activities. But as to other 4 guards, you cannot
o Transactions deemed sale
claim the input VAT.
o Transitional input VAT
 This occurs when you are non- But business cannot be determined, then there is
vat registered person and you allocation or pro-rating for VAT and NON-vat
elects to be VAT registered or
became VAT registered. Input VAT Returns:
VAT on his beginning inventory
 Monthly returns: VAT monthly declaration –
of goods, materials, and
within 20 days following the end of the month
supplies to 2% of the value of
 Quarterly VAT returns – monthly returns will
such inventory or the actual
cover the first 2 months of quarter while the 3 rd
VAT paid on such goods,
month will be the quarterly vat return to be filed
materials, and supplies
and paid within 25 days from the close of its
whichever is higher
taxable quarter
o Presumptive INPUT vat – persons
engaged in the processing, refining of
sardines, mackerel, milk, refined sugar,
shall be allowed a presumptive input tax
of 4% of the gross value of their
purchases for primary agricultural
products as inputs to their production.

EX: you make hotdog or processed food product.

Sources: pork. – so these are exempted from VAT.

But the finished product will now be subject to the VAT.

But the source of raw materials is exempted since these
are agri products in their original state.

Upon payment of VAT, you have input from your raw

materials.

EX: employment of security guard to the manufacturing

premises.

Manufacturing premises is engaged in VAT and NONvat

activities. But the secu guard service serve both vat and
nonvat activities in this business entity BUT that
compound is being or engage secu guard to guard the
premises.

Since the secu guard is subject to VAT, agency that

provides secu service, mag bill ng Vat when they now
send a billing to this manufacturer – employment of 10
gaurds and pay 20K/month = P200K per month for the
secu guard services. May input VAT passed on dyan.

ASSESSMENT AND COLLECTION REMEDIES
UNDER THE NIRC
 Phases:
o Levy; - legislative aspect; enact tax
measures
o Assessment;
o Collection/payment
For assessment and collection, tax administration
aspects in the power of taxation. Therefore, it is an
executive function.
a. Self-assessing taxes – government comes in to
check whether the documents and the returns
you filed and submitted are correct
a. Income taxes, estate tax, donor’s tax,
VAT, DST,
b. Non-self-assessing taxes
a. Real property taxes, customs duties,
local taxes
Assessment – once the taxpayer will contest or will file
a claim for refund, or for any other administrative action
relative to the enforcement of the internal revenue laws,
that power is vested, at the onset to the Commissioner.
Rationale of assessment: to determine the accuracy,
truthfulness, and compliance of the tax returns.
 Examiner should have a Letter of Authority
which is an authority given to the revenue
examiner to conduct the assessment
 Without such authority, he cannot conduct an
examination + assessment
PRESCRIPTIVE PERIOD
 As to assessment – GR: the period within which
the BIR can determine whether there is a
deficiency is 3 years from the last day prescribed
by law for the filing of the return
 EX: you filed your final return on income
taxes on April 1 but the deadline is on April
15 – the three-year period is counted from
the last day prescribed by law for the filing of
the returns which is on April 16.
 It does not begin from April 1 [from the filing]
but begins after the last day prescribed by
law [April 16]
 Assessment made is presumed correct.
 XPN: the period to make assessment is 10
years from the discovery in case of:
o False return,
o Fraudulent return, or
o Failure to file a return.
 Can the taxpayer ask for an extension for
the BIR in making assessment?
o Yes! For so long as it is:
 Made in writing;
 Date certain as to when the
extension will end is
indicated;
 It is signed both by
Commissioner and the
taxpayer
 As to collection – GR: government has 5 years
following the assessment of the tax/finality of the
assessment within which to collect
 Extension of the assessment allowed =
extension of the collection also allowed
 XPN: Taxes do not prescribe – there is
suspension of the running of the Statute of
Limitations under the following instances:
o Period for which the commissioner
is prohibited from making the
assessment;
o Taxpayer requests for
reinvestigation granted by the CIR;
o Taxpayer cannot be located in the
address given by him in the return
filed upon which a tax is being
assessed/collected.
o When the warrant of distraint or levy
is duly served upon the taxpayer
and no property could be located;
o When the taxpayer is out of the PH;
Upon finding of deficiencies, there are three (3)
assessment notices that the taxpayer may receive:
1. Notice of Informal Conference
2. Pre-assessment Notice/Preliminary Assessment
Notice (PAN)
3. Final Assessment Notice (FAN)
Note: should any of the assessment notices are served
after the expiration of the assessment period (3 years), it
will be null and void.
Prescriptive Period to Protest the Assessment
 Administrative Protest:
o Request for Reconsideration; or
o Request for Reinvestigation
 When: within 30 days from receipt of the
assessment
 Within 60 days from the filing of the protest, all
relevant supporting documents shall have been
submitted; otherwise, assessment shall become
final.
o When Protest in the Assessment is
Denied;
o Not acted upon within 180 days from
submission of documents
o Or waited for a decision beyond the 180-
day period, and then received a denial
 Taxpayer adversely affected
may appeal to the CTA [division]
within 30 days from receipt of
the said decision or from the
lapse of the 180 days.
  Otherwise, the decision shall ii. Real property
become final, executory, and b. Forfeiture, how enforced:
demandable. i. Seizure —> sale
1. Proceeds will ALL go to
Summary: Filing of Tax Return —> Assessment —> the government
Notice of Informal Conference —> PAN —> FAN/FLD — 2. Even if the proceeds
> Protest of the Taxpayer exceed the tax liability,
the ENTIRE proceeds
Reconsideration/Reinvestigation: - Decision of the CIR will go to the
a. Grant Protest government.
b. Deny the Protest (within the 180-day period) 3. Rationale: forfeiture is
a. Appeal to CTA Div. (30 days from the divestiture of the
receipt) c. Inaction of the CIR within property in favor of
180-day period government by reason
b. Appeal to the CTA Div. (30 days from of violation or default or
lapse of the 180-day period) offense.
c. Deny the Protest (decided beyond the 180-day ii. Seizure —> destruction
period as the taxpayer opted to wait for the 1. When the sale of the
decision beyond said period) same for consumption
a. Appeal to CTA Div. (30 days from or use would be
receipt) injurious to public health
d. Decision of the CTA Div. denying protest ----> or prejudicial to the
MR ----> CTA En Banc ----> MR ----> Supreme enforcement of the law.
Court c. Forfeiture proceeding is a proceeding in
rem – not a criminal action.
[Note: Observe 15-day period to file MR]
When Assessment becomes final and executory, Notes: Gov’t may run after
collection proceedings will follow – i.e., administrative  His PP;
and judicial remedies for collection.  His RP; or
 ALL at the same time by pursuing both his
Government Remedies for Collection personal and real properties
1. Administrative
2. Judicial Judicial Remedies
1. Civil action – collection for sum of money to
Assessment collect the final assessed tax
a. Where to file –
i. 1M or more (taxes, fees,
GR: cannot collect without a prior assessment
excluding surcharges) –
exclusive jurisdiction of the CTA
XPN: when the collection of tax is made through filing of
division
a criminal action, no need for prior assessment.
ii. Less than 1M – RTC/MTC
depending on the jurisdictional
After the assessment becomes final, the government
amount.
now will pursue collection remedies.
2. Criminal action + civil liability for tax collection
a. Prescription: all violations of NIRC shall
Collection prescribe after 5 years
GR: injunction is not available to enjoin or restrain the i. Begin to run form the day of the
collection of taxes because taxes are lifeblood of commission of the violation of
government. the law
b. Civil penalties is 25% in addition to the
Administrative Remedies tax that will be paid.
1. Distraint of Personal Property
a. Actual The gov’t may pursue both judicial and administrative
b. Constructive distraint remedies in running after the taxpayer to collect the tax.
2. Distraint/Levy of Real Property
a. If there is an excess – it shall be COURT OF TAX APPEALS
returned to the taxpayer  One presiding justice
3. Forfeiture – implies the divestiture of the  Eight associate justice
property without compensation in consequence
of a default/offense. Jurisdiction
a. Properties subject to forfeiture:  Exclusive appellate jurisdiction [CTA Division]
i. Personal o To review by appeal
 o Decisions of the CIR involving disputed
assessments, refunds of internal
revenue taxes, fees or other charges,
penalties, etc.
o Inaction by the CIR in cases involving
disputed assessments, refunds of
internal revenue taxes, fees, or other
charges
o Decisions, orders, or resolutions of the
RTC in local tax cases originally decided
in their exercise of their original or
appellate jurisdiction.
Original Jurisdiction
 RTC -> CTA Division -> CTA En Banc -> SC
Appellate Jurisdiction
 MTC -> RTC -> CTA En banc
 Exclusive original jurisdiction
o Over-all criminal offenses arising from
the violations of the NIRC, etc.;
o Tax collection cases involving final and
executory assessments.
Steel Corp v. BOC: The CTA has exclusive appellate
jurisdiction on the issue on the waiver of taxes under
Section 19 of FRIA including injunctive relief.
Petitions for writs of certiorari against the acts and
omissions of the said quasi-judicial agencies should,
thus, be filed before the Court of Tax Appeals.
Since this is a tax case, a waiver of taxes under Sec. 19
of the FRIA, then the remedy is to appeal it to the CTA.
This includes an action for an injunctive relief, (ex. to
restrain BIR or BOC to collect). You cannot find this in
the law but in the jurisprudence.
Extent of the CTA Jurisdiction
 Exclusive jurisdiction to resolve all tax-related
issues;
 Pass upon the constitutionality or validity of a tax
law when raised by the taxpayer as a defense in
disputing an assessment or claiming a refund;
 Take cognizance of cases directly challenging
the constitutionality or validity of a tax law;
 Except for local taxes, appeals from the
decisions of quasi-judicial agencies on tax-
related problems must be brought exclusively to
the CTA;
 Within the judicial system, the law intends the
CTA to have exclusive jurisdiction to resolve all
tax problems;
 RA 9282 – provides an exception to the original
jurisdiction of the RTC over actions questioning
the constitutionality of tax law;
 Administrative issuances issued by the CIR
under its power to make rulings or opinions in
connection with the implementation of the
provisions of internal revenue laws. Tax rulings –
official positions of the BIR on inquiries of
taxpayers who request clarification on certain
provisions of NIRC.
o Determination of the validity of therse
issuances clearly falls within the
exclusive appellate jurisdiction of the
CTA subject to prior review by the
Secretary of Finance.
1. My advice for the mother of D for the applicable
deduction in D’s estate is the standard deduction
of 5Million.
Under Section 86 of the National Internal Revenue, it
provides the allowable deductions to the Estate of a
resident citizen:
1. Standard deduction of 5Million;
2. Claims against the estate;
3. Claims of the deceased against an insolvent
persons (bad debts);
4. Unpaid mortgages of indebtedness; taxes;
losses/casualty losses;
5. Property previously taxed (vanishing
deduction);
6. Transfers for public use;
7. The family home in the amount exceeding
P10 Million; and
8. Amounts received under Republic Act No.
4197
Here, it appears from the facts that D died single and left
no debts upon his death. As such, the only allowable
deduction that can be made to his estate is the standard
deduction of 5Million (which already includes funeral
expenses). His net estate will now P10Million subject to
estate tax.
2. —
a. My advice for the heirs of E are as
follows:
 Under TRAIN law, banks with
knowledge of the death of a certain
decedent/deposit may allow
withdrawal from the bank deposit
subject to FWT of 6% with sworn
statement
 Bank account of decedent can be
withdrawn by the heirs and the bank
shall subject the withdrawal to a 6%
FWT
 Once the withholding has been done
after withdrawal, the deposit will not
be anymore declared in the estate
tax return since it has already been
paid.
 If you want to avail deductions, you
have to settle the estate – file an
Estate Tax Return then claim
deductions so that you will not be hit
by 6%
b. The tax impact of my advice is that
considering that the heirs of E wants to
 immediately withdraw the money from
the bank in order to settle the debts and
obligations, what will be given to them
as heirs will only be 94% since the 6% is
being withheld as a final tax to cover the
estate tax.
3. It is only the donation mortis causa that is
subject to the estate tax.
Donation inter vivos pertains to gifts that are made
during the lifetime of the donor and is effective during his
lifetime. Thus, such donation inter vivos is subject to
donor/gift’s tax. On the other hand, donations mortis
cause are those donation which are effective only upon
the death of the decedent. As such, it is subject to
estate’s tax.
4. —
a. B should file an administrative claim for
refund with the CIR within two (2) years
after the close of the taxable quarter
when the sales were made or two (2)
years from the date of cancellation of
VAT registration. Furthermore, the
Commissioner of the Internal Revenue
has ninety (90) days to decide from the
date of submission of complete
documents in support of the application.
b. As such, in case the refund is denied,
the zero-rated VAT taxpayer has 30
days from receipt of the denial to appeal
to the Court of Tax Appeals (CTA)
Division. If there an inaction and no
decision within 90 days, the taxpayer
has to wait for the decision without
prejudice to the sanction under Section
269 of the NIRC on the BIR official. The
denial should state the legal and factual
basis.
i. Furthermore, a party adversely
affected by a resolution of the
CTA Division on a motion for
reconsideration or new trial,
may file a petition for review
with the CTA En Banc.
However, no period to file an
appeal is explicitly stated.
ii. Lastly, a party adversely
affected by a decision or ruling
of the CTA en banc may file with
the Supreme Court a verified
petition for review on certiorari
pursuant to Rule 45 of the Rules
of Civil Procedure.
c. The sale of the Nissan Navarra is
subject to VAT.
5. No. The CIR is not correct.
Under the tax law, there are three (3) notices given to
taxpayer and in each notices, the taxpayer is given the
time to respond or protest to such. As such, if the two (2)
first notices are ignored and it is only upon the service of
the Final Assessment Notice that the taxpayer made a
protest, he is given another period of time to
protest/respond to this notice — which is thirty (30) days
from receipt of the assessment.
Here, even if First Order failed to protest the PAN, it did
not result for the assessment to become final and
executory since First Order timely filed its protest when it
received the Final Assessment Notice. Thus, the CIR is
wrong.
6. The CTA is wrong.
Under the Tax Code, administrative issuances are those
that are issued by the CIR under its power to make
rulings or opinions in connection with the implementation
of the provisions of internal revenue laws. Tax rulings, on
the other hand, are official positions of the BIR on
inquiries of taxpayers who request clarification on certain
provisions of the NIRC, other tax laws, or their
implementing regulations.
As such, determination of the validity of these issuances
clearly falls within the exclusive appellate jurisdiction of
the CTA pursuant to Section 7 (1) of Republic Act No.
1125 subject to prior review by the Secretary of Finance
as required Republic Act No. 8424.
In this case, the procedure availed by Marina
Corporation which is to elevate the ruling on certiorari
under Rule 65 before the Court of Tax Appeals because
the correct procedure should be petition for review by
appeal (under Rule 42 of the Rules of Court) under
Republic Act No. 1125, as amended by Republic Act No.
9282.
7. The contention of BIR is wrong.
Section 228 of the National Internal Revenue Code, if
there is a notice of assessment and the taxpayer would
like to protest such.
 if the protest is denied, or
 Is not acted upon within 180 days from
submission of documents, or
 The taxpayer waited for a decision beyond the
180-day period, and then there was a denial of
the protest
The taxpayer has 30 days within which to go to the Court
of Tax Appeals by way of judicial protest.
In this case, even if GM waited for the decision beyond
the 180-day period only for its protest to be denied, it is
not precluded from appealing before the Court of Tax
Appeals.
8. The action to claim for refund and the filing of
the petition for refund with the Court of Tax
appeals is already barred by prescription.
Under Section 229 of the National Internal Revenue
Code, no suit or proceeding shall be maintained in any
court for the recovery of any national internal revenue
tax alleged to have been erroneously collected until a
claim for refund or credit has been duly filed with the
Commissioner. Furthermore, no such suit or proceeding
shall be filed after the expiration of two (2) years from the
date of payment of the tax or penalty regardless of any
supervening cause that may arise after payment.

In other words, the provision states that in a claim for

refund, the reckoning point within which the period of two
(2) years must begin shall from the time the taxpayer
filed his or her return. It must likewise be noted that both
the administrative and judicial claim for refund must be
filed within the two (2)-year period from payment.

In this case, considering that RD, Inc. filed its income tax
return on April 2, 2015, the period of 2 years within which
to file a claim for refund shall be April 3, 2015 until April
2017. Thus, even if the administrative claim for refund
was filed within the prescribed period, however, the
judicial claim for refund was not made within the same
two year period and as such, the prescriptive period has
already set in.

9. —
a. As to the claim that the Regional Trial
Court has no jurisdiction over the case,
Q is correct.

Under Section 7(b) of Republic Act No. 9282, the Court

of Appeals has exclusive original jurisdiction over a
criminal offenses arising from the violations of the NIRC
amounting to one (1) million or more. Thus, if the tax
liability in a criminal offense involves less than 1 million,
the jurisdiction is with the regular courts.

In this case, it is undisputed that the unpaid taxes of Q

amounted to 5Million, thus, the the CTA has jurisdiction
over the criminal offense filed against him and not the
Regional trial Court.

b. However, as to Q’s claim that he was

denied due process since there was no
assessment, Q is wrong.

In filing criminal offenses for violating NIRC and other tax

laws, there is no need for prior assessment. When the
action to collect the tax is by way of a criminal action,
there is no need of an assessment as opposed to filing a
collection case through administrative or judicial means,
prior assessment is required.