AID

San BAda Unlvsrsity College of Law - RGCT Sar Operations Center

I OUTLINEOFIIBMEUIES I TAXPAYER'S REMEOIES

1. Assessment:
a. Protest with request for reconsideration or
request for reinvestigation; and
b. Compromise and abatement.
Taxes are the lifeblood of the government and so 2. Collection:
should be collected without unnecessary hindrance. a. Tax Refund; and
However, such collection should be made in
b. Tax Credit.
accordance with law. It is therefore necessary to
reconcile the apparently conflicting interests of the
authorities and the • taxpayers so that the real
purpose of taxation, which is the promotion of
common good, may be achieved (Reyes v.
Almanzar, G.R. Nos. L-49839-46, April 26, 1991). I ASSESSMENTS

TAX REMEDIES Self-assessing system governs Philippine internal

It refers to procedural steps that may be undertaken
by the government or a taxpayer for the resolution of
disputes concerning the levy or imposition,
assessment, collection, and refund of taxes (2-C
DOMONDON, Bar Q&A Taxation: National Taxation
(2018) p. 209 {hereinafter 2-C DOMONDON]).
revenue taxes. Such a system imposes upon the
taxpayer the obligation_to assess himself so he could
determine and declare the amount to be used as tax
basis, any deductions therefrom, and finally, the tax
due (Philippine National Oil Co. v. Court of Appeals,
G.R. No. 109976, April 26, 2005).

GOVERNMENT REMEDIES Power of the Commissioner to Make

1. Administrative Remedies Assessment
a. Assessment; and Pi%riog.Qfl.imitation on Assessment
b. Collection Assessm~nt and Protest
i. Enforcement of a tax lien; Compromi~ and Abatement
ii. Distraint of personal property and Tax Refund and Tax Credit
garnishment of bank deposits;
iii. Levy of real property; • POWE~ OF THE COMMISSIONER TO
iv. Compromise and abatement; MAKE ASSESSMENTS
,,,"•'A ''•••v"'/•s•,•• •••• •

v. Penalties and fines; lnternaf fe:v~m:te':faxes are self-assessing and no

vi. Non-availability of injunction to restrain further assessment by the government is required to
collection of t;:ix; create the tax liability. An assessment, however, is
vii. Forfeiture; and ~le,yiil,Qt,in the proper pursuit of remedies to enforce
viii. Suspension of business operations. faXl}~fii.!ibilities and certain matters that relate to
it, such as the imposition of surcharges and interest,
2. Judicial Remedies in the application of statutes of limitations, and in the
a. Civil; and establishment of tax liens (Tupaz v. Ulep, G.R. No.
b. Criminal. 127777, Octobor 1, 1999).

DOHN ALFRED E. AQUILIZAN, Over-All Chairperson I NICHOLE VANE B. SANTOS, Chairperson for Academics I RONALYN A.
GACULA, Ad Hoc lJ1rector.for Har Matters i MARI.ELLE CU:LO H. llELGIRA, Vice Chairperson }or Finarice IJUAN INIGO S. MIGUEL,
Vice Chairperson for Operations I AL~SSA MARIE D.C. DELOS SANTOS, Vice Chairperson for Audit I CORINA R. TAMPUS, Vice
Chairperson for Secretariat I ARVY KEITH N. CHUNG, Vice Chairperson for Logistics I ANTONIO JUN-JUN C. MANALIGOD IV, Vice
Chairperson for Membership I JORDAN N. CHAVEZ, Vice Chairperson for Electronic Data Processing

JOSE LORENZO C. DA VE, Su/Jiect Chair I LOUJ:SEMARIE C. CONTACTO, A.,.,istant S1ihjr.r:t. <:hairI K ATRYNA ANNF R TOMENlO,
Subject Electronic Data Processing I SUBJECT HEADS: MARY GRACE A. GRANIL, General Principles I SHEENA ROSETTE DG.
DOMINGO, Administration, Enforcement. Remedies and Court of Tax Appeals I JERRI.ITO P. CIJSTODJO, Lncal and Real Property Ta.wtion
I STI,VJE R. ARCILLA and PATRICK MARRION Y. MELENDRES, Income Taxation I MARY ANN C. TAN, Transfer Taxi lVlARILYN
H. MALALUAN, Value-Added Tax I

KATRINA MICHAELA D. DELFIN, ARMANT. PAEZ, ANDREI ANNE lJ. PALOMAR, MARY KATHERINE A. SIMEON, JAMES
KARL DANIEL B. ALVARO, ARIESA JANE V. DOMINGO, JOSEPHINE MARIE T. SALAZAR, YNA MAREI AGUILAR, NERY
ROYCE T. LAZARO, JOHN KENNETH Q. CRISOLOGO, LOIS DANIELLE P. DIMAANO, ANDREI.AM. AQUINO, ANNA LOREN
DC. MANUEL and GILBERT OWEN S. APILADO

Atty. NICASIO C. CABANEIRO, CPA, Atty. DANTE 0. DELA CRUZ, CPA,JusticeJAPAR B. DIMAAMPAO, Atty. EFREN
VINCENT M. DIZON, CPA

It must be stressed that the assessment of internal
revenue taxes is one of the duties of the BIR under
Section 2 of the NIRC. In connection therewith, the
CIR may authorize the examination of any taxpayer
and correspondingly make an assessment
whenever necessary.
Thus, to f:Jivemore teeth to such power of the CIR,
to make an assessment, the NIRC authorizes the
CIR to examine any book, paper, record, or data of
any person. The powers granted by law to the CIR
are intended, among other things, to determine the
liability of any person for any national internal
revenue tax (Commissioner of Internal Revenue v.
Lancaster Philippines, Inc., G.R. No. 183408, July
12, 2017).
EXAMINATION OF RETURNS AND
DETERMINATION OF TAX DUE
After a return has been filed, the Commiss.ioner
(CIR) or his duly authorized representative may
authorize the examination of any taxpayer and the
assessment of the correct amount oftax (NIRC, Sec. •
6(A), as amended by TRAIN LaVy).
NOTE: The fcJilurc to file Q return shall not prevent
the CIR from authorizing the examination of any
taxpayer. l he tax or any defitiency fox so assessed
shall be paid upon notice arid .demand fro Ii) the CIR
or from his duly authorized representative tax (NIRC,
Sec. 6(A), as amended by TRAIN Law).
WHAT DOES NOT ·cqN,STITuii ::AN ••••
ASSESSMENT
1. Awritten communication by a revenue offi9er of
tax liability of the taxpayer, giving. him an
opportunity to contest or di~prove the.BIR
examiner's findings is not an assessm~nt ~irite
it is yet indefinite. The said recommendation
letter served merely as the prima facie basis for
filing criminal information for the violation of the
NIRC (Adamson v. CA, G.R. No. 120935, May
21, 2009).
2. The advice of tax deficiency and preliminary
five-day letter given by the CIR to an employee
of taxpayer are not valid substitutes for the
mandatory notice in writing of the legal and
factual bases of the assessment (Samar-1
Electric Cooperative, Inc. v. Commissioner of
Internal Revenue, G.R. No. 193100, December
10, 2014) ..
3. The revenue officers' Affidavit-Report, which
was attached to the criminal complaint filed with
the Department of Justice, does not constitute
an assessment. Revenue officers' Affidavit
merely con~ined a computation of respondents'
tax liability. It did not state a demand or a period
REMEDIES
Taxation Law
for payment. Worse, it was addressed to the
justice secretary, not to the taxpayers.
(Commissioner of Internal Revenue v. Pascor
Realty and Development Corporation, G.R. No.
128315, June 29, 1999)
WITHDRAWAL OF RETURN,
STATEMENT OR DECLARATION
GENERAL RULE: Any return statement, or
declaration filed in any office authorized to receive
the same shall not be withdrawn.
EXCEPTION: The same may be modified, changed,
or amended provided that:
1. It is done within 3 years from the date of such
filing of the return; and
2. No notice of audit or investigation of such has
been actually served upon the taxpayer (NIRC,
Sec. 6(A), as amended by TRAIN Law).
-. •
ASSESSMENT BASED ON THE BEST
EVIDENCE OBTAINABLE
The CIR shall assess the proper tax based on the
bestE;lvide.nceobtainable in the following gases:
1. Wii~n a report'ri3quired by law as a basis for the
assessment of any national internal revenue tax
shall not be forthcoming (e.g., the records are
lost): within the Ume fixed hy IFJwsor rules and
regulations; or
2. Whfn there iis re~~bn to believe that any such
report is false, incomplete, or erroneous (NIRC,
Sec.: 6(£3))., •
•NOTE:E}y using the best evidence obtainable,
the CIR may make or amend the return from his
own knowledge and from such information as he
..can obtain through testimony or otherwise,
which shall be prima facie correct and sufficient
for al.I legal purposes (NIRC, Sec. 6(8)).
Best Evidence Obtainable
Includes the following:
a. Corporate and accounting records of the
taxpayer who is the subject of the
assessment process;
b. Accounting records of other taxpayers
engaged in the same line of business,
including their gross profit and net profit
sales;
c. Data, record, paper, document, or any
evidence gathered by internal revenue
officers from other taxpayers who had
personal transactions or from whom the
subject taxpayer received any income; and
d. Record, data, document, and information
secured from government offici;is or
agencies, such as the SEC, the Central
Bank of the Philippines, the Bureau of
Customs, and the Tariff and Customs
 EM#¥,P \ / : d 1 ( , < _, :, \;~ / •: ~}!;

MEM:Q~YAID
San Beoa Universrty CoDege of Law - RGCT Bar Operations Center
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Commission (Commissioner of Internal PRESUMPTIVE GROSS SALES OR

Revenue v. Hantex Trading Co., Inc., G.R.
No. 136975, March 31, 2005).
INVENTORY-TAKING, SURVEILLANCE,
AND PRESUMPTIVE GROSS SALES
AND RECEIPTS
Inventory-taking
The CIR may, at any time during the taxable year,
order inventory-taking of goods of any taxpayer as
basis for determining his internal revenue tax
liabilities (NIRC, Sec. 6(C)).
Surveillance
The CIR may place the business operations of any
person, natural or juridical, under observation or
surveillance if there is reason to believe that such
person is not declaring his correct income, sales, or
receipts for internal revenue tax purposes. The
findings may be used as the bases for assessing the
taxes for the other months or quarters of the same
or different taxable years and such assessment shall
be deemed prima facie correct (NIRC, Sec. 6(C)).
OPLAN KANDADO
BIR's program to strengthen the imposition of
prescribed administrative sanctions _Jor non-
compliance with essential requirements ::;t1chas: the
issuance of receipts, filing of returns, dE:ldarationof
taxable transactions, taxpayer registration, and
paying the correct amount of ta,xesas mandated by
the norms/standards of their p~i;titular indystry or
line of business, which may lead to suspension and
temporary closure of business (R.MO\No. 3:..09(I)),:
Types of Surveillance Pursuant to. Oplan
Kandado
a. Covert Surveillance - surreptitious and
undercover watch on the ,blJsjness
operations of a person for a certain period;
b. Overt Surveillance - commences with the
inventory-taking of the business documents
followed by the actual observation and close
monitoring of the business activities of such
person, and is conducted for a minimum
period of 10 days and a maximum period of
30 days, unless otherwise extended in
writing by the authorized signatory; and
c. Short-duration surveillance (Tax
Compliance Check) - business operations
of the target taxpayer are observed for
purposes of detecting non-compliance with
the Bureau's primary and secondary
registration requirements (R.M.O. No. 3-09
(111)(2)).
RECEIPTS
The CIR, after taking into account the sales,
receipts, income or other taxable base of other
persons engaged in similar businesses under similar
situations or circumstances, or after considering
other relevant information, may prescribe a
minimum amount of such gross receipts, sales, and
taxable base in the following cases:
1. When a person has failed to issue receipts and
invoices; or
2. When there is reason to believe that the books
of accounts or other records do not correctly
reflect the declarations made or to be made in a
return (NIRC, Sec. 6(C)).
BENCHMARKING OF TAXPAYERS
Process of setting a standard. to determine the
performance level of taxpayers in a given line of
industry or sector (R.M.O. No. 5-12).
CONSTRUCTIVE METHOD OF INCOME
DETERMINATION
. The following.are the general (constructive) methods
• • d~ifelbJJEldl;>y,elhe
BIR for reconstructing a taxpayer's
income 'wtier1g the taxpayer keeps no record or
inadequate ,re~ords or where there is strong
suspicion fh~t : it has received income from
undisclosed sbu~es: (PNB-CUTS)
1
1. f:erF~rt~9~, ~ethod
--3.{';e~t;fty~j~nf;~f;ij
ratio analysis of percentages
considere8 7 ;fypical of the business under
investigation to indicate potential areas of
... F, 1,revenue .adjustment in examination where
•l+~:'iJ'f.l\{f).nµ~records do not exist; (2-C
,.• ,. ••'DOMONDON, supra at 313).
2. Net Worth Method
=. method of reconstructing income based on
the theory that if the taxpayer's net worth has
increased in a given year in an amount larger
than his reported income, he had understated
his income for that year; presumption of
unreported income; (2-C DOMONDON, supra at
309).
ILLUSTRATION:
As of January 1, 2020, Mia Therese's net worth
was ~150,000.00. At year's end December 31,
2020, her net worth was ~1, 150,000.00.
Presupposing that her 2020 income tax return
showed only a gross income of P700,000.00 and
there is no showing of receipt of excluded income
like gifts, non-taxable winnings, life insurance
proceeds and others of similar character, then it
may be presumed that she has unreported
income of f-300,000.00 (Id.).
 REMEDIES
Taxation Law

Net Worth as at Dec. 31, 2020 P1, 150,000 last day (ordinary or normal assessment) (N!RC,
Less: Net Worth as at Jan. 1, 2020 150,000 Sec. 203).
Presumed increase in net worth in
2020 1"1,000,000 EXCEPTIONS: ,
Less: Reported gross income for 1. In case of false or fraudulent return with intent to
2020 700,000 evade tax or failure to file a return - within 1O
Presumed 2020 unreported years after the discovery of the falsity, fraud or
income P300,000 omission (extraordinary or abnormal
assessment) (NIRC, Sec. 222(a));
3. .!;!ankDeposit Method 2. In case there is valid waiver of the Statute of
- the bank records of tt1e taxpayer are Limitations - up to the extended period agreed
analyzed, and the Revenue Officer estimates upon (NIRC, Sec. 222 (b)).
income based on the total bank deposits after
eliminating non-income items; (2-C CONSTRUCTION OF STATUTORY
DOMONDON, supra at 314). PROVISION ON PRESCRIPTION
For the purpose of safeguarding taxpayers from any
NOTE: It is to be used only where the BIR unreasonable examination, investigation or
allowed legal access to the taxpayer's bank assessment, our tax law provides a statute of
records. The Bank Deposits Secrecy Law limitations in the collection of taxes. Thus, the law on
prohibits inquiry into bank deposits. However, prescription, being a remedial measure, should be
the BIR Commissioner is authorized to lnquire liberally construed in order to afford such protection.
into the bank deposits of any taxpayer who has As a corollary, the exceptions to the law on
filed an application for compromise of his. tax prescription should perforce be strictly construed
liability by reason of financial incapacity (Id). (Cominissionerof Internal Revenue v, B.F. Goodrich
PHL, Inc., G.R. No: 104171, February 24, 1999).
4. fash Expenditure Method
- assumes that the excess of a taxpayer's Computing for the Prescriptive Period
expenditures during a. tax period over his. Both Art. 13 oftHe Civil Code and the Administrative
reported income for that period is taxable to the Code deal with.,the tqmputation of legal periods.
extent not approved otherwise: (2-C Under the Clvil -·code; a year is equivalent to 365
DOMONDON, supra at 313). days wJ'lether it :be a"regular or a leap year. Under
the Administrative C_Qd~,a year is composed of 12
5. !!nit and Value Method ' months ~md the numb~r of days is irrelevant. The
- the determination or verification .of gross Admini~trative'Code being the more recent law, it
receipts may be computecl by applying price and _ shall govern the computation of legal periods. Lex
profit figures to the known ~scertainable quality posteriori derogat priori (Commissioner of Internal
of business done by the taxpayer; (2-C Revenue v. Prime'town Property Group, Inc., GR
DOMONDON, supra at 314). No.1$2155; August 28, 2007).

6. Ihird Party Information or Access to lllustr~tion of the general rule and computation
Records Method of the·3-year period:
- third party contacts are the sources of Atty. Meg Valdez is a corporate lawyer earning
information (Id.); and purely compensation income. As such, she is
required to file her income tax return (!TR) not later
7: §urveillance and Assessment Method than April 15, 2019. If she files her ITR on April 15,
(Handbook on Audit Procedures and 2019, the 3-year prescriptive period shall start to run
Techniques- Vol. I (2000) under RAMO No. 1- from that day. If she files her ITR on a later date, e.g.;
00). June 10, 2019, then the 3-year period shall start from
June 10, 2019. On the other hand, if her ITR was
filed on an earlier date, e.g., February 8, 2019, then
PERIOD OF LIMITATION ON
the 3-year period would start to run from April 15,
ASSESSMENT 2019, the last day prescribed by law for filing the ITR
GENERAL RULE: Within 3 years: (2-C DOMONDON, supra at 234).
1. after the last day prescribed by law for the filing
of the return; or BURDEN OF PROOF THAT A RETURN
2. from the date of actual filing of the return,
WAS FILED
whichever comes later; provided that a return
filed before the last day prescribed by law for the It must be emphasized that in invoking the 3-year
filing thereof shall be considered as filed on such prescriptive period as an affirmative defense, it is
incumbent upon a taxpayer to prove that he

AlD
San Beda University College of Law - RGCT Bar Operations Center
submitted a return. If he fails to do so, the conclusion
should be that no such return was filed, in which
case the Government has 10 years within which to
make the corresponding assessments (M. TECH
Products Philippines, Inc., v. Commissioner of
Internal Revenue, CTA Case No. 9331, December
11, 2018, citing Taligaman Lumber Co., Inc v. The
Collector of Internal Revenue, G.R. No. L-15716,
March 31, 1962).
Requisites in order that a ret1:1rn may be
considered filed for purposes of computing the
prescriptive period:
1. The return must be valid - it must comply
substantially with the requirements of the law;
and
2. The return must be appropriate - it is a return
for the particular tax required by law. Thus, an
income tax return cannot be considered as the
equivalent of a sales (VAT or percentage) tax
return (Butuan Sawmill, Inc. v. Court of Tax
Appeals, G.R. No. L-20601, February 28, 1966).
AMENDMENT OF TAX RETURN
GENERAL RULE: The following shall govern in
case there is an amendment of the return:
1. If the amendment is substanti,al, the c9unting of
the prescriptive period shall be reckoned on the
date the substantial amendment was made; or
2. If the amendment was superficial, the counting
of the prescriptive period is.. still the original
period (Commissioner of Internal Revenue v.
Phoenix Assurance, G.R. No.L-19727,' May 20,
1965).
REASON: To prevent taxpayers from evading
. the payment of taxes by simply reporting in their
original return heavy losses and amending the
same years later when the CIR has lost his
authority to assess the proper tax thereunder.
The object of the NIRC is to impose taxes for the
needs of the Government and not to enhance
tax avoidance to its prejudice (Commissioner of
Internal Revenue v. Phoenix Assurance, G.R.
No. L-19727, May 20, 1965).
EXCEPTION: If the return is sufficiently
complete to enable the CIR to intelligently
determine the proper amount of tax to be
assessed, then the prescriptive period for
assessment starts from the filing of the original
return (A.L. Ammen Transportation v. Collector,
CTA Case No. 540, November 10, 1965).
Examples of substantial amendments:
a. An amendment of an original income tax
return showing a net loss to show more
losses (Commissioner of Internal Revenue
v. Phoenix Assurance, G.R. No. L-19727,
May 20, 1965).
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b. An amendment of a creditable withholding
tax return which reflected an increase in
payment of rental and contractor's income
resulting to an increase in the total amount
of tax due from P3, 784,151.86 to
P3,889,733.24, or a difference in the
amount of f'>105,581.38; it likewise revised
the number of attached pages. Hence, the
amendment is substantial (Central
Azucarera Don Pedro, Inc. v. Commissioner
of Internal Revenue, CTA Case No. 8459,
November 23, 2015).
Examples of superficial amendments:
a. An amendment of the original income tax
return which only changed the amount of
Minimum Corporate Income Tax. Since the
Regular Corporate Income Tax is higher, the
latter was used in the computation of tax
payable. Hence, the amendment is not
substantial (Central Azucarera Don Pedro,
Inc. v. Commissioner of Internal Revenue,
CTA Case No. 8459, November 23, 2015).
b. Amendments of VAT returns and
withholding tax returns which only revised
the :number of attached pages. Hence, the
amendments were not substantial (Central
Azur/?rera Don Pedro, Inc. v. Commissioner
of lnterqal Revenue, CTA Case No. 8459,
NqvefTJber23, 2015).
The change in amount to be paid was based
IJl~rE;ily9!li1he reflection of the payment
• i':i~qj:nptir/iddby the filing of the Original
Return. Hence, the amendment is not
substantial. (Central Azucarera Don Pedro,
Inc. v. Commissioner of Internal Revenue,
CF:A Case No. 8459, November 23, 2015). •
FALSE RETURN
Contains wrong information due to mistake,
carelessness, or ignorance (Aznar v. Commissioner
of Internal Revenue, G.R. No. L-20569, August 23,
1974).
A substantial under-remittance of withholding tax on
compensation constitutes falsity to warrant the 10-
year prescriptive period (Samar-I Electric
Cooperative, Inc. v. Commissioner of Internal
Revenue, G.R. No. 193100, December 10, 2014).
FRAUDULENT RETURN
For the 10-year prescriptive period to apply based
on fraud, such must be proved as a fact by the BIR
(ABAN, Law of Basic Taxation in the Philippines:
Revised Edition (2001), p. 274 [hereinafter ABAN]).
Such fact in a fraud assessment which has already
become final and executory shall be judicially taken
 .,,,-'' ;~ : "~ s 'li "'

318 . ',/ REMEDIES

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. . '' Taxation Law

cognizance of in a civil or criminal action for the Tax Appeals, G.R. No. L-13203, January 28,
collection thereof (NIRC, Sec. 222(a); R.M.O. 26- 1961).
2001).
FALSE RETURN V. FRAUDULENT
Substantial under-declaration of taxable sales, RETURN V. FAILURE TO FILE RETURN
receipts or income, or a substantial overstatement of
deductions constitutes prima facie evidence of a
false or fraudulent return: Provided, further, That
failure to report sales, receipts, or income in an
amount exceeding 30% of that declared per return,
and a claim of deductions in an amount exceeding
Merely Intentional or There is
30% of actual deductions, shall render the taxpayer
implies a deceitful entry omission to file
liable for substantial • under-declaration or
deviation from with intent to a required tax
overstatement. (NIRC, Sec. 248 (B)).
the truth or evade the taxes return within
fact whether due the prescribed
Inadvertence without intent to evade tax does
intentional or period
not make a return false
not
The 10-year prescription applies in case of a false or
fraudulent return with intent to evade tax or of failure
to file a return. However, the Court reiterated that the
entry of wrong information due to r:oistake, ,56% 50% surcharge 50% surcharge
carelessness, or ignorance without the· intent to ·surcharge• penalty applies penalty
evade tax does not constitute a false return,unles? pen~lty does applies
. proven otherwise (Commissioner_ of 'internal not apply
Revenue v. Philippine Daily Inquirer, 7nc., G.R. No,
213943, March 22, 2017). •

INSTANCES NEGATIN.G FRAUD

The following instances neg9te·· tfie exi$tence _of
-fraud and preclude the application of the_10-year
prescriptive period: (IARa-Not2 -ReU) _ __ .
1 The CIR failed to Impute fraud: i.n the
• assessment notice or_,.demand tor payment
(ABAN, supra at 274); . ' • • _
2. The CIR failed to ~liege 'fraud irlpis answer to
the taxpayer's petition for review whE;nth~ case
is appealed to the CTA (AB(\N, suprq at :?74-
275)· ' . / •
3. The 'tact that the CIR Raised th~ '(l\J8$ti0n of.
fraud only for the first time in his mern,9tar_idum
which was filed with the CTA after he had resJed.
his case (Taligaman Lumber v. Commissioner of
Internal Revenue, G.R. No. L-15716, March 31,
1962);
4. The fact that the CIR did Not include the fraud
penalty in his deficiency assessment which was
issued after the filing of the return is an indicatior,
that he himself does not believe that there was
fraud (Gomez v. Domingo, CTA Case No. 1168,
February 15, 1964);
5. In an assessment, where the BIR appeared "Not
so sure" as to the real amount of the taxpayer's
net income, as where the BIR arrived at three
highly different computations (Republic v. Lim
de Yu, G.R. No. L-17438, April 30, 1964);
6. The CIR merely Relied upon an alleged
substantial under declaration of income tax
resulting from his own computation; and
7. Mere Understatement of gross earnings does
not of itself prove fraud (Yutivo Sons v. Coutt of
Taxpayer)s Taxpayer may Taxpayer may
not suljject to be subject to be subject to
criminal crimirfal criminal
_penalty. penalty. penalty ..
(Samar-I Electric C(f()perative, Inc. V. Commissioner
offnterntil Revenue, G.R. No. 193100, December
• 1Q,2014; Secs. 222, 248(8) and 255, NIRC)
FAILURE TO FILE A RETURN
!~stances Constituting Failure to File Return
The following constitutes failure to file return to
warrant the 10-year prescriptive period:
1. A deficient return which prevented the CIR from
computing taxes due. Such defective return is
the same as if no . return is filed at all
(Commissioner of Internal Revenue v.
Gonzales, G.R. No. L-19495, November 24,
1966);
2. Failure to report income in the returns which
were clearly not exempted from tax. The Court
did not treat this as a simple omission as the
same involved substantial sums (Standard
Chartered Bank v. Commissioner of Internal
Revenue, CTA EB Case No. 731, September
13, 2012); and
3. Undeclared VAT-able sales more than 30% of
that declared in Asalus' VAT returns
(Commissioner of Internal Revenue v. Asa/us
 f&SiMMfi \ /
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San Seda UniversityCollege of Law - RGCTBa: Operations Center
Corporation G.R. No. 221590; February 22,
2017).
WAIVER OF STATUTE OF LIMITATIONS
Requisites of a Valid Waiver of Statute of
Limitations (FoSNA-DeDa3)
1. The waiver must be in the proper Form
prescribed by RMO 20- 90. The phrase "butnot
after _____ 19_", which indicates the
expiry date of the period agreed upon to
assess/collect the tax after tho regular three-
year period of prescription, should be filled up;
2. The waiver must be §_igned by the taxpayer
himself or his duly authorized representative. In
the case of a corporation, the waiver must be
signed by any of its responsible officials. In case
the authority is delegated by the taxpayer to a
representative, such delegation should be in
writing and duly notarized;
3. The waiver should be duly Notarized;
4. The CIR or the revenue official authorized by
him must sign the waiver indicating that the BIR
has ~ccepted and agreed to the waiver. The
date of such acceptance by the BIR should be
indicated. However, before signing the waiver,
the CIR or the revenue official authorized by him
must make sure that the waiver is. in the
prescribed form, duly notarized, and·executed
by the .taxpayer or his duly authorized·
representative; • R.D.A.O. No. 05-01 renders the waiver defective.
5. Both the Qate of gxecution by the taxpayer and
Qate of ~cceptance by the Bureau should be
before the expiration of the periodofprescription
or before the lapse of the periqd agreecl upon in
case a subsequent agreement isexecuff:jd;
6. The waiver must be executed in copiras, the
original copy to be attached to the docket of the
case, the second copy for the taxpayer andJhe
third copy for the Office· accepting the waiver.
The fact of receipt by the taxpayer of hi$1herfile
copy must be indicated in the original copy to
show that the taxpayer was notified of the
acceptance of the BIR and the perfection of the
agreement. (Commissioner of Internal Revenue
v, Systems Technology Institute, Inc., G.R. No.
220835, July 26, 2017).
NOTE: These requirements are mandatory and
must strictly be followed. The Court did not·
hesitate to strike down waivers which failed to
strictly comply w,iththe provisions of RMO 20-90
and RDAO 05-01. (Commissioner of Internal
Revenue v. Systems Technology Institute, Inc.,
G.R. No. 220835, July 26, 2017).
Waiver may not be in the form prescribed by
R.M.O, No. 20-90
The taxpayer's failure to follow the aforesaid forms
does not invalidate the executed waiver for as long
as the following are complied with:
1. The Waiver of the Statute of Limitations shall be
executed before the exµimlion of the period lo
assess or to collect taxes. The date of execution
shall be specifically indicated in the waiver;
2. The waiver shall .be signed by the taxpayer
himself or his duly authorized representative. In
the case of a corporation, the waiver must be
signed by any of its responsible officials;
3. The expiry date of the period agreed upon to
assess/collect the tax after the regular three-
year period of prescription should be indicated
(R.MO. No. 14-16).
NOTE: However, in the case of Commissioner
of Internal Revenue v. Systems Technology
Institute, Inc., G.R. No. 220835, dated July 26,
2017, the Supreme Court ruled that the
requirements laid out by R.M.O. 20-90 and
R.D.A.O. 05-01 are mandatory and must strictly
be followed; which is in-conflict with the liberality
and relaxed guidelines of RMO No. 14-2016.
The Court in the aforesaid case did not touch
? upon R.M.O. No. 14-2016 nor mentioned the
same for this R.M.O. was raised by neither party.
J?ef~c.tive \'l((Jiver is Valid When Parties are in
Pano~i{¢toi".
Failure to strjcfly comply with the requirements in the
execution of <1\/Vaiverunder R.M.O. No. 20-90 and
However,,an 'exception to the rule arises when the
parties (Je., 90th t~e taxpayer and the BIR) are in
pari d~/it9;or: ''ip;~yal default". In which case, the
court mayiJptft°rfej-~ahdgrant relief at the suit of one
of them, where public policy requires its intervention,
, . even though the result may be that a benefit will be
: ·de[fy~"dby. one party who is in equal guilt with the
·otfi~l'U:fihe:Eourt upheld the validity of waiver on the
strength of the lifeblood doctrine. Hence, the
taxpayer should not be allowed to question the
defects in its own waivers and benefit from the flaws
to evade responsibility in paying taxes
(Commissioner of Internal Revenue v. Next Mobile
Inc., G.R. No. 212825, December 7, 2015).
Waiver is defective when the f;31R is at fault
The Court ruled that the waivers executed by the
taxpayer were void because the BIR failed to provide
the accepting copies of the First and Second
Waivers executed by Philippine Daily Inquirer.
These were in violation of RMO 20-90 and RDAO
05-01. Further, the Court also ruled that the waivers
executed by the taxpayer were defective since the
BIR did not follow its own rules on waivers. The .
defect was caused by the BIR; thus, the waivers
have no effect and did not extend the three-year
prescriptive period under the NIRC (Commissioner
of Internal Revenue v. Philippine Daily Inquirer, Inc.,
G.R. No. 213943, March 22, 2017).
 ,, • 7 .,.

:~~20 i / ,, ,' ' . • REMEDIES

/:,.,,, 1''j 44 \,.: •;, !, 1 A .,
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REASON: The BIR cannot hide behind the doctrine
of estoppel to cover its failure to comply with RMO
20-90 and RDAO 05-01 which were issued by the
BIR itself. A waiver of the statute of limitations is a
derogation of the taxpayer's right to security against
prolonged and unscrupulous investigations. Thus, it
must be carefully and strictly construed (Id.).
Execution of waiver does not bar the taxpayer to
invoke prescription
A waiver of the statute of limitations, whether on
assessment or collection, should not be construed
as a waiver of the right to invoke the defense of
prescription but, rather, an agreement between the
taxpayer and the BIR to extend the period to a date
certain, within which the latter could still assess or
collect taxes due. Thus; the waiver does not imply
that the taxpayer altogether relinquishes the right to
invoke prescription (Commissioner of Internal
Revenue v. The Stanley Works Sales (PHL) Inc.,
G.R. No. 187589, December 3, 2014).
GROUNDS FOR SUSPENSION OF THE
RUNNING OF PRESCRIPTION: (PRc::oo)
1. When· the CIR is frohibiteci from rrfa~ing the
assessment or beginning the dist~~int drlevy or
a proceeding in court, and ..'for 60 days
t:1ereafter; • •
•
Taxation Law
.
b. The request for reinvestigation must be
granted or acted upon by the CIR (Bank of
the Philippine Islands v. Commissioner of
Internal Revenue, G.R. No. 174942, March
7, 2008).
NOTE: The burden of proof that the
taxpayers request for reinvestigation had
been actually granted shall be on the CIR.
The grant may be expressed in
communications with the taxpayer or
implied from the actions of the CIR or his
authorized BIR representatives in response
to the request for reinvestigation (Bank of
the Philippine Islands v. Commissioner of
_Internal Revenue, G.R. No. 139736,
October 17, 2005).
3. When the taxpayer f.annot be located in the
address given by him in the return, unless he
informs the CIR of any change in his address;
4. Whet') the warrant of Qistraint or levy is duly
served up9n the taxpayer, his authorized
representative, or a member of his household
•.with sufficient discretion, and no property is
IOCqted;and
5. Wh~n the taxpayer is Qut of the Philippines
(NIRC, Sec. -223).°'
. .

ILLUSTRATION: Wheri a ca.s~ is on fuppeal to

the CTA, the CIR is prevented fron1 filing an
ordinary action to colle~t the t1;1xih th~ regular
courts to avoid multiplicity .otsu1\sandth~ rµle of
/is pendens. • • • •
This may happen when °'there is .a pElndJng
petition for review in the CTAJrom the q~cision
on the protested assessment,' tl;)e filing of'suc.h
petition interrupts the running of fhEtpres,crlp;ive
period for collection. The interruption is from' the
time the appeal is filed in the CTA i.ihtil its.
termination in the Supreme Court should there
be an appeal to a higher court (Republic v. Ker
& Co., Ltd., G.R. No. L-21609, September 29,
1966).
This also happens when the CTA suspends the
collection of the tax liability of the taxpayer.
(ABAN, supra at 288).
2. When the taxpayer - Requests for
Reinvestigation which is granted by the CIR;
Requisites:
a. There must be request for reinvestigation
and not a request for reconsideration
(Commissioner of Internal Revenue v.
Philippine Global Communications, G.R.
No. 167146, October 31, 2006); and
ASSESSMENT AN"DPROTEST
NOTE: The 2020/2021 Bar Examination Taxation
Law Syllabus does not include R.R. No. 22-2020
dated Sepfember·15, .2020 which took effect on
October ·2, 20120(15 days after its publication on
September . 17, 2020), but for purposes of
discussion, R.R. NO. 22-2020 was included in the
making of the Memory Aid. For the information of the
- reader, RR: No. 22-2020 provided for a Notice of
fnformaJ,9onterence in the assessment process.
Asses'sment
It is an official action of an administrative officer in
determining the amount of tax due from a taxpayer,
or it may be a notice to the effect that the amount
therein stated is due from a taxpayer as a tax, with
a demand for payment of the tax or any deficiency
stated therein (ABAN, supra at 175).
Requisites for Valid Assessment:
1. The Final Assessment Notice (FAN) contains
a the name, address, and Tl N of the taxpayer; the
kind of tax, period. covered, ·basic tax and
penalties; signed by the authorized BIR official,
and the date of payment of the tax. The demand
letter (DL) contains the computation of the
deficiency tax, the factual and legal bases of the
assessment, and the demand for payment of the
tax. Thus, the FAN and DL must always go
together (R.R. No. 18-13, Sec. 3.1.3);

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2. The FAN/ DL must be issued on account of or
covered by a validly issued letter of authority
(R.MC. No. 75-18; Medicard Phil Inc. v.
Commissioner of Internal Revenue, G.R. No.
222743, April 5, 2017);
3. The FAN/ DL must state the factual and legal
bases of the assessment and jurisprudence on
which it is based; otherwise, the assessment is
void (R.R. No. 18-13, Section 3.1.3);
'1. The FAN/ DL must be signed by the
Commissioner of his duly authorized
representative (R.R. No. 18-13, Section 3.1.3);
5. The FAN/ DL must be issued within the original
prescriptive period as validly agreed between
the BIR and the taxpayer; and served by
personal delivery or by registered mail (R.R. No.
18-13, Section 3.1.6) (NIRC, Sec. 222 (b) and
(d)); and
6. The FAN/ DL must be addressed and served to
correct person in his/ its registered or duly
notified address (R.R. No. 1813 Sec. 3.1.6).
PRINCIPLES GOVERNING
ASSESSMENTS
1. Not all documents coming from the BIR
containing a computation of the tax liability can
be deemed assessments. An assessrn~nf must
be sent to and received by a taxpayer and must
demand payment of the taxes described therein
within a specific period (Commissiooer of
Internal Revenue v. Pascor Realty Development
Corp., G.R. No. 128315, June.29, 1999).
2. All presumptions are in favor of the correctness
of tax assessments. When assessment is.made
by the CIR or his duly authorized agents, the
same is presumed correct and made in good
faith. The taxpayer has the dutY to prove
otherwise. Verily, failure to present proof ot;¢rror
in the assessment will justify judicial affirmance
of said assessment (Commissioner of Internal
Revenue v. Wyeth Suaco Laboratories, Inc.,
G.R. No. 76281, September 30, 1991).
EXCEPTION: .The prima facie correctness of
tax assessment does not apply upon proof that
an assessment is utterly without foundation,
meaning it is arbitrary and capricious. Where the
BIR has come out with a naked assessment, i.e.,
without any foundation character, the
determination of the tax due is without rational
basis (Commissioner of Internal Revenue v.
Hantex Trading Co., G.R. No. 136975, March
31, 2005).
3. Assessments should not be based on
presumptions no matter how logical the
presumption may be. In order to stand the test
of judicial scrutiny, the assessment must be
based on actual facts (Collector of Internal
, .
{ ' "' { C
• · '< •• , •, • ~- >321 '
' '
. 1"'
. -
.
i') -
' '
Revenue v. Bcnipayo, G.R. No. L-13656,
January 31, 1962).
4. Assessment is discretionary on the part of the
CIR. Mandamus will not lie for it will constitute
judicial encroachment on executive functions
(Mera/co Securities Corp. v. Savellano, G.R. No.
L-36181, October 23, 1982).
EXCEPTION: If in the exercise of his discretion,
there is evidence of arbitrariness and grave
abuse of discretion as to go beyond statutory
authority (Mera/co Securities Corp. v. Savel/ano,
G.R. No. L-36181, October 23, 1982).
5. The authority to make tax assessments may be
delegated to • subordinate officers. Said
assessment has the same force and effect as
that issued by the Commissioner ( Oceanic
Wireless Network v. Commissioner of Internal
Revenue, G.R. No. 148380, December 9, 2005).
TAX If the taxpayer denies ever having received an
assessment from the BIR, it is incumbent upon
the latter to prove by competent evidence that
<i~',lch nd,tice was indeed received by the
'· 'racldt~i:!se'~.The onus probandi was shifted to
BIR to prove by contrary evidence that the
taxpayer Jaceived the assessment in the due
course'of;mail.
While a mailecl letter is deemed received by the
agf'.IE~$~e,tQJh'.~i::ourseof mail, this is merely a
disputtitt>!~lpre.stfmptionsubject to controversy
and a· di1~~f denial thereof shifts the burden to
.,, the party favored by the presumption to prove
:=::::tr:th;;;\t
the mailed letter was indeed received by the
,,,,,,{W~o'dre~ee (Commissioner of Internal Revenue
v. Metro Star Superama, Inc. G.R. No. 185371,
December 8, 2010).
How to prove presumption that mailed
matter is received by the addressee
The facts to be proved to raise this presumption
a are:
a. That the letter was properly addressed with
postage prepaid; and,
b. That it was mailed. Once these facts are
proved, the presumption is that the letter
was received by the addressee as soon as
it could have been transmitted to him in the
ordinary course of the mail. But if one of the
said facts fails to appear, the presumption
does not lie (Id.).
7. BIR cannot assess a corporation under
rehabilitation. The Court held that it was
improper for the BIR to have proceeded with the
collection of the deficiency taxes outside the
rehabilitation proceedings. The Court explained

that the corporate rehabilitation is an attempt to
conserve and administer the assets of an
insolvent corporation in the hope of its eventual
return from financial stress to solvency.
Considering that there is already a b) Substantiate all or any of the deductions,
Commencement Order that suspends all
enforcement of claims, the BIR should have
pursued its claim through the rehabilitation court
and not through the usual tax assessment and
collection process (BIR, et al. v. Lepanto
Ceramics, Inc., G.R. No. 224764, April 24,
2017).
KINDS OF ASSESSMENT (SJ-DIED)
1. §elf-assessment
- assessed by the taxpayer himself, reflected in
the return filed by him, and paid on the day of
filing of the return (pay-as-you-file system)
(NIRC, Sec. 56(A); ABAN, supra at 176).
Examples: (DEVI)
a. .Qonor's tax;
b. !;_statetax;
c. ~AT; and
d. Jncome tax.
2. Qeficiency assessment . - ASSESSMENT 1P~OCESS (LAIP-FA)
- made by the tax assessor' himself "o/herethe
correct amount of the tax is determined after an
examination or investiga1iori is . conducted
(NIRC, .Section 56(8); ABAN,' supra, af t°76).
3. !llegal and Void assessment i ...
- An assessment wherein: the tax assessor has
no power to act at all (Victorias Miiling Co:; Inc.
v. Court of Tax Appeals, G.R. No. '-<-242.13, . ·.conducted by.iRevenue Officer, the taxpayer is
March 13, 1968).
4. Erroneous Assessment
:- One wherein the assessor has the powe't to .
assess but errs in the exercise of such power
(ABAN, supra at 176).
5. Qisputed assessment
- takes place when a taxpayer questions an
assessment and asks the Collector to
reconsider or cancel the same because he
believes that he is not liable therefor (St.
Stephen's Association and St. Stephen's
Chinese Girls School. v. Commissioner of
Internal Revenue, G.R. No. L-11238, August 21,
1958). • 1. gives notice to the taxpayer that it is under
6. Jeopardy assessment
- a tax assessment made by an authorized
Revenue Officer without the benefit of complete
or partial audit, in light of the officer's belief that
the assessment and collection of a deficiency
REMEDIES
Taxation Law
tax will be jeopardized hy dP.laycaused by the
taxpayer's failure to:
a) Comply with audit and investigation
requirements to present his books of
accounts and/or pertinent records, or
exemptions or credits claimed in his
return (R.R. No. 30-02, Sec. 3(1)(a)).
A jeopardy assessment is one issued by the
Commissioner if he believes that the collection
of taxes is in jeopardy due to delay or other
causes. It may be issued when the taxpayer is:
(ReL-ReHiP)
a. Retiring from business subject to tax;
b. Intending to:
i. !:eave the Philippines;
ii. Remove his property therefrom; or
iii. Hide or conceal his property;
C,. eertorming any act tending to obstruct the
p'roceedings for the collection of the tax for
tpe past or current quarter or year or to
render the same totally or partially
ineffective, ..unless such proceedings are
begµh imt)le~;Hately.(NIRC, Sec. 6 (d)).
1. lssui')nce of,a_better of Authority (LoA);
2. Tax Audit ot Investigation;
3. Issuance of Ni::iticefor !nformal Conference;
IIIOJE: In. lieu of a Notice of Informal
Conference, a Notlce of Discrepancy shall now
be issued. A Notice of Discrepancy shall be
issuedJf, during the course of an investigation
found Jo, be· Hable for deficiency taxes. The
Nqtic;;El.,
aims to provide ttie taxpayer with an
oppqrttlhity to present his position regarding the
.. discrepancies identified (R.R. No. 22-2020).
4. Issuance of ,Ereliminary Assessment Notice;
5. Issuance of !:ormal Letter of Demand/ Final
Assessment Notice (FLO/FAN);
6. ~dministrative Action/Inaction on Disputed
Assessment.
ISSUANCE OF A LETTER OF
AUTHORITY (LOA)
Letter of Authority
The Letter of Authority:
investigation for possible deficiency tax
assessment: and
2. it authorizes or empowers a designated revenue
officer, to examine, verify, and scrutinize a
taxpayer's books and records, in relation to
internal revenue tax liabilities for a particular
&WWW \ I
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San Seda Uni\lersityColege of Law - RGCTBar Operatior,sCenter
period. (Commissioner of Internal Revenue v.
Lancaster Philippines, Inc., GR. No. 183408,
July 12, 2017).
NOTE: In the absence of such an authority, the
assessment or examination is a nullity. The
Court cannot convert .the Letter Notice into the
LOA required under the law even if the same
was issued by the CIR himself (Medicard
Philippines Inc, v, CIR, GR No, 222743; April 5,
2017),
ElectrQnic Letter of Authority (eloA)
Starting August 16, 2010, only eloAs shall be
issued by the Bureau for the audit or
investigation of tax liabilities, except estate tax
cases (R.MO. No. 69-10).
Requisites of a Valid eloA: (INC-30)
a. It must be !ssued by the proper approving
official. The approving official depends on
the investigating office:
i. Regional Director (RD);
ii. Assistant Commissioner-Large
Taxpayer Service (ACIR-L TS) - LTS
and its Divisions;
iii. Deputy Commissioner-Legal and
Inspection Group Enforcement
Service and its Divisions; and
iv. CIR or any authorized official - Task
Force and Special Teams (R.,~fO. No.
44-10);
b. It must Not contain @St manually~written
character, notation or erasure (f{tytO. No.
44-10); • •.
c. It must ~over only 1 taxable year, except in
tax fraud cases authorized by the CIR or
Deputy Commissioner and excise tax cases
(R.MO. 44-10); and
NOTE: The practice of issuing an.LoA
covering the audit of "unverified prior years"
is prohibited (De La Salle University, Inc. v.
Commissioner of Internal Revenue, CTI\ En
Banc, EB No. 671, June 8, 2011).
d. It must be served to the taxpayer within thirty
@) days (R.AMO. No. 1-00),
Under Sec. 6 (A) of the NIRC, there must be a
grant of authority before any revenue officer can
conduct examination or assessment. Equally
important is that the revenue officer so
authorized must not go beyond the authority
given. In the absence of such authority, the
assessment or examination is a nullity
(Commissioner of Internal Revenue v, Sony
PHL, Inc,, G.R. No. 178697, November 17,
2010).
\ r} , ' '~ },'\'
, , '
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,
,
, • 323 '
.-
TAX AUDIT OR INVESTIGATION
The examination of the books of account and other
accounting records of the taxpayer to determine the
taxpayer's correct internal revenue liabilities,
pursuant to its authority granted in the LoA (BOADO,
Compact Reviewer in Taxation (2018) p. 268
[hereinafter BOADOJ).
Effect of Failure to Complete Audit within 120
Days
Beginning June 1, 2010, there is no need for
revalidation of the LoA if the prescribed audit period
has been exceeded. However, the failure of the
Revenue Officer to complete audit shall be subject
to the applicable administrative sanction (R.M.O.
No. 44-10),
ISSUANCE OF NOTICE OF INFORMAL
CONFERENCE (NIC)
The Revenue Officer who audited the taxpayer's
records shall, among others, state in his report
whether or not the taxpayer agrees with his findings
that the taxpayer is liable for deficiency tax or taxes.
If the taxpayer is not amenable, based on the said
J~fti~er:s . sut,,mitted report of investigation, the
-'tax/:,~yi::T,iJsf!iaJI
be informed, in writing, by the
Revenue Ofstrict Office or by the Special
lnvestigatioi-i Division, as the case may be (in the
case of R1;1ve),u~Regional Offices) or by the Chief
of Divisiqh concerned (in the case of the BIR
NationaLOffice) of';the discrepancy or discrepancies
in the)~~ yer'iu'iay.ment of his internal revenue
0
1
taxes. fi'ir: '.~;'.PJi}:p&eof "Informal Conference," in
order to a Orcrthe taxpayer with an opportunity to
present his side of the case (R.R. No. 7-2018).
?·Vtt
;Jnli'>.rtnal
Conference shall in no case extend
beyond 30 days from receipt of the notice for
informal conference. If it is found that the taxpayer is
still liable for deficiency tax or taxes after presenting
his side, and the taxpayer is not amenable, the
Revenue District Officer or the Chief of the Special
Investigation Division of the Revenue Regional
Office, or the Chief of Division in the National Office,
as the case may be, shall endorse the case within 7
days from the conclusion of the Informal Conference
to the Assessment Division of the Revenue Regional
Office or to the Commissioner or his duly authorized
representative for issuance of a deficiency tax
assessment (R.R. No. 7-2018),
NOTE: With the effectivity of R.R. No. 18-2013 on
December 15, 2013, the issuance of a Notice for
Informal Conference for audit investigations was
discontinued until it was reinstated by R.R. No, 7-
2018 which became effective on March 16, 2018,
However, R.R. No. 22-2020 now provides for the
preparation of a NoD, instead of a NIC.
 REMEDIES
Taxation Law

ISSUANCE OF NOTICE OF ISSUANCE OF PRELIMINARY

DISCREPANCY (NOD) ASSESSMENT NOTICE (PAN)
If a taxpayer is found to be liable for deficiency tax in PAN is issued to the taxpayer informing him of the
the course of an investigation conducted by a findings of the Revenue Officer if after review and
Revenue Officer, the taxpayer shall be informed evaluation of taxpayer's records, there is a sufficient
through a NoD. Such notice aims to fully afford the basis to assess the taxpayer for any deficiency taxes
taxpayer with an opportunity to present and explain (R.R. No. 12-99, Sec. 3.1.1, as amended by R.R.
his side on the discrepancies found through a No. 18-13).
"Discussion of Discrepancy". Said discussion shall
not extend beyond thirty (30) days from the receipt NOTE: Prior to issuance of PAN, the taxpayer may
of NoD (R.R. No. 12-99, as amended by R.R. No. be allowed to make voluntary payments of probable
22-2020, Sec. 3.1.1). deficiency taxes and penalties (R.M. C. No. 11-14).
Voluntary payment of PAN without FAN can be
If the taxpayer disagrees with the discrepancy refunded (Commissioner of Internal Revenue v. 3M
detected during the audiUinvestigation, the taxpayer Philippines, Inc., C. T.A. E.B. No. 1330, November
must present an explanation and provide documents 21, 2016).
to support his explanation within five (5) days from
the date of the receipt of the NoD (R. R. No. 22-2020, Requisites of a Valid PAN (SAWI)
Annex A). The taxpayer has thirty (30) days from 1. Must be §.erved to the taxpayer personally and
receipt of the NoD to submit all necessary if not practicable, by substituted service or by
documents that supports his explanation (R'.'R.No. mail (f?.R. No. 12-99, Sec. 3.1.1, as amended);
12-99, as amended by R.R. No. 22~2020; Sec. 2: The ,Assessment was conducted within the
3.1.1). . scope- of ' authority given by a valid LoA
(Commissioner of Internal Revenue v. Sony PH,
If after the discussion, it is stHI found that the Inc., G.R.'NQ.. 178697, November 17, 2010);
taxpayer is still liable for deficien6 taxes<and the 3. Must be in Writing and contain the facts and the
taxpayer does not agree to the discrepancy or law on wniph the proposed assessment is based
address the same by paying the deficie11cy . .taxes, (NIRC, SeG,'228, Jfar. 2; R.R. No. 12-99, Sec.
the investigating office ShqU,er1dqrse the_case for 3. 1.1, as aihended)J and
issuance of a Preliminary Assessnient Notire within 4. ·-Must be !ss4.edby,t~e CIR or his duly authorized
ten (10) days from the conclusion of the-discussion representatilie. • • !The duly authorized
(Id.). •• - - representatives c!J~:
a.· Revenue Regional Directors;
DIFFERENCES BETWEEN NIC AND b. ACIR-LTS; and
NoD c.•. ACl~~Enforciment and Advocacy Service
(R.R. No. 1,2-99, Sec. 3.1.1, as amended;
.R.M.C. No.' 11-14).
' .
Three Possible Scenarios after Issuance of PAN;
Taxpayer's Remedies (PRI)
The taxpayer has 15 The taxpayer has~f
1. ·-Taxpayer may fay the assessment;
days from receipt of the days from receipt of
2. Taxpayer may file a Reply; or
NIC to respond, failure the NoD to present
3. Taxpayer may !gnore PAN.
to do so will result in and explain his side
default (R.R. No. 12-99, (R. R. No. 22-2020,
SCENARIO 1: Taxpayer Pays the Assessment
Sec. 3.1.1). Annex A).
If the taxpayer, upon receipt of the PAN, accepts and
~t:;'('s·
thihtnu~ber-
~l'.cfays :?
ih~:a1)t~ifi~~: pays the assessment, a FLD/FAN shall be issued to
; r- :concerned 'bas:taendorse thecase.
for tfte• : formalize the assessment, and Payment Form 0605
~:
0
i{ · , ··issuant"1ofarO(ssessmen( :_" : :-:··:. shall be duly prepared, filed and paid to
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acknowledge and provide evidence for the
Within 7 days from the Within 10 days from settlement of the assessment (R.M.O. No. 26-16).
conclusion of the the conclusion of the
Informal Conference Discussion (R. R. No. SCENARIO 2: Taxpayer Files a Reply
(R.R. No. 7-2018). 22-2020). The taxpayer has 15 days from the date of receipt of
PAN to reply (R.R. No. 12-99, Sec. 3.1.1, as
amended).

Requisites of a Valid Reply:

1. Must be made within the said 15-day period_
(R.R. No. 12-99, Sec. 3.1.1); and
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MEM:v:RYAl D
San Seda Univeralty Coll&ge of Law - RGCT Bar Operations Cente,
2. Must be filed by the taxpayer or his duly •
authorized representative, in person or through
registered mail with return card, with the office of
the duly authorized representative of the CIR
(Regional Director, ACIR-L TS, ACIR-
Enforcement Service) who signed the PAN
(R.M.C. No. 11-14; R.M.C. No. 39-13).
SCENARIO 3: Taxpayer ignores PAN
Taxpayer shall be considered in default and an
FLO/FAN will be issued (NIRC, Sec. 228, Par. 3).
NOTE: Taxpayer can still file a protest to FLO/FAN
(NIRC, Sec. 228, Par. 4).
ISSUANCE OF A FORMAL LETTER OF
DEMAND AND FINAL ASSESSMENT
NOTICE (FLO/FAN)
1. Requisites of a Valid FLO/FAN
2. Period to Issue FLO/FAN
3. When FAN Can be Issued
4. When FAN Deemed Made
5. Three Scenarios After Issuance of FLD/FAN: •
a. Taxpayer Pays Assessment;
b. Taxpayer Fails to File Protest; and
c. Taxpayer Files Protest;
i. Requisites of a Valid Protest;
ii. Reply to PAN v. Protest to FLD/ FAN;
iii. Pro-Forma Protest;
iv. Defenses of Taxpayer;
v. Rules on Payment When Protest is
Filed;
vi. Forms of Protest;
vii. When Assessment Becomes. Final,
Executory, and Demandable.
REQUISITES OF A VALID Fl,.D/FAN
(PANls-BeFS)
1. Must be issued after issuance of a valid PAN,
except for the instances where a PAN is not
required (NIRC, Sec. 228, Pars. 1 and 2; R.R.
No. 12-99, Sec. 3.1.2, as amended);
2. Must be ~sued by the CIR or his duly authorized
representative. The term "duly authorized
representative" refers to the same person who is
authorized to issue PAN (R.R. No. 12-99, Sec.
3.1.3, as amended; R.M.C. No. 11-14);
3. Must be .§_ervedto the taxpayer personally and
if not practicable, by substituted service or by
mail (R.R. No. 12-99, Sec. 3.1.6,' as amended);
4. Must be served to the taxpayer Before the lapse
of the prescriptive period for making assessment
(NIRC, Sec. 203);
5. Must be in writing and contain the £acts and the
law on which the assessment is based (R.R. -No.
12-99, Sec. 3.1.3, as amended); and
NOTE: A taxpayer must be informed in writing
of the legal and factual bases of the tax
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assessment made against him. The use of the
word "shall" in these legal provisions indicates
the mandatory nature of the requirements laid
down therein (Commissioner of Internal
Revenue v. Enron Subic Power Corporation,
G.R No. 166387, January 19, 2009).
However, the Court ruled that although the FAN
and demand letter issued to petitioner were not
accompanied by a written explanation of the
legal and factual bases of the deficiency taxes,
the records showed that BIR sent a letter
explaining at length the factual arid legal bases
of the deficiency tax assessments and denying
the protest to which the taxpayer had the
opportunity to respond. This exchange of
correspondence and documents between the
parties is considered substantial compliance of
the requirements of Section 228. (Samar-I
Electric Cooperative v. Commissioner of Internal
Revenue, G.R. No. 193100, December 10,
2014).
The assessment was conducted within the
.§_cope of authority given by a valid LoA
\ 'rGomm(S?iOner of Internal Revenue V. Sony
PF/i//tE,§ G.R. No. 178697, November 17,
2010). <\
PERIOD;TQ 1$SUE FLO/FAN
FLO/FAN' shall b'e issued 15 days from date of
receipt by. the taxp~yer of the PAN, whether the
same W?~A[Bt~s,t;(\;.ornot (R.M.O. No. 26-16).
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WHEN FAN CAN BE ISSUED
-,.,~J;«E:R,AL RULE: FAN can be issued only after a
:;-p~~w~s1~sued. This is part of the requirements of
due process and failure to comply therewith would
render the assessment void (SVI Information v.
Commissioner of Internal Revenue, CTA Case No.
8496, February 10. 2014).
EXCEPTIONS: In the following instances where
PAN is not required, a FLO/FAN shall be issued
outright: (METER)
1. When the finding for any deficiency tax is the
result of Mathematical error in the computation
of the tax as appearing on the face qf the return;
2. When the gxcise tax due on excisable articles
has not been paid;
3. When a discrepancy has been determined
between the Iax withheld and the amount
actually remitted by the withholding agent;
4. When an article locally purchased or imported
by an gxempt person, such as, bl.it not limited to,
vehicles, capital equipment, machineries and
spare parts, has been sold, traded or transferred
to non-exempt persons; or

5. When a taxpayer who opted to claim a Refund
or tax credit of excess creditable withholding tax
for a taxable period was determined to have
carried over and automatically applied the same
amount claimed against the estimated tax
liabilities for the taxable quarter or quarters of
the succeeding taxable year (R.R. No. 12-99,
Sec. 3.1.2! as amended).
NOTE: The issuance of FAN before the lapse of
the 15-day period for the taxpayer to file its reply
to the PAN inflicts no prejudice on the taxpayer
as long as the taxpayer is properly served the
FAN and it is able to intelligently contest the FAN
by filing a protest within the period allowed by
law (Medtex Corporation v. Commissioner of
Internal Revenue, CTA Case . No. 8508,
September 1, 2014).
REASON: A PAN preparatory to the issuance of
FAN is not, legally speaking, an assessment
even if it contains a computatiori •Of the, tax
liabilities of a taxpayer and a dern.and f<:>f
payment of the computed tax liabiJities"was
made (Oakwood Managem,eht Se_ryices,fgc. •v. •
Commissioner of Internal RefleQue; CTA Case
No. 7989, August 8, 2013). ••
Effect when PAN is not issued;before FAN
If the PAN is not issued bbforR V,e FAN, andthe
taxpayer only received the !attEir,·itlis tantamountto
denial of due process. thf takpayer r:iust be
informed of the facts and• la~s. upon· Whi¢h lhe
assessment is made. It is n6t ;merely, a formal •
requirement but a substantive:pne. Hofeve(, the la.w
recognizes several exception 9 wher'e,ip the ,PAN·.
need not be issued (Commissioner 'of lr(temat
Revenue v. Metro Star SuperamaJ:G.R. No. 1853°71,•
December 8, 2010). • If' 'fti~· taxpayer denies having received an
The PAN is a part of due process and gives"bott\ the
taxpayer and the CIR the opportunity to sett1e·t1ie
case at the earliest possible time without the need
for the issuance of a FAN. On the other hand, a FAN
contains not only a computation of tax liabilities
but also a demand for payment within a prescribed
period.
As soon as it is served, an obligation arises on the
part of the taxpayer to pay the amount assessed and
demanded. It also signals the time when penalties
and interests begin to accrue against the taxpayer
(Commissioner of Internal Revenue v. Transitions
Optical Philippines, Inc., G.R. No. 227544,
November2Z2017).
WHEN FAN DEEMED MADE
The assessment is deemed to have been made on
the date when the demand letter or notice of
assessment is released, mailed, or sent, even
REMEDIES
, Taxation Law
though the same is actually receiw,d by the taxpayer
after the expiration of the prescriptive period (Basilan
Estates v. Commissioner of Internal Revenue, G.R.
No. L-22492, September 5, 1967).
GENERAL RULE: When a mail matter is sent by
registered mail, there exists a presumption that it
was received in the regular course of mail (Republic
v. Court of Appeals, G.R. No. L-38540, April 30,
1987).
For the presumption to apply, the following facts
must be proven:
1. Letter was properly addressed with postage
prepaid; and
2. Letter was mailed (Barcelon Roxas Securities,
Inc. v. Commissioner of Internal Revenue, G.R.
No. 157064, August 7, 2006).
proof of Mailing
Jhe registry receipt issued by the post office, or the
official receipt issued by the professional courier
.company containing sufficiently identifiable details of
the tra_nsaction shall constitute sufficient proof of
mailiQg aQd,shall be attached to the case docket
(R.R. No. 12:99,·Sec. 3.1.6, as amended).
BIR record book is not sufficient (Barcelon Roxas
Sec0nties, Inc. v,.. ·commissioner of Internal
Revenue, G.R. No. 157064, August 7, 2006).
• EXCEPllON: When there is a direct denial of the
receipLThe bur~en.isshifted to the BIR to prove that
the. lefter mailed was received by the addressee
(Ba,:ce/on R9'xas Securities V. Commissioner of
lntemai ReJenue, G.R. No. 157064, August 7,
200(?). • •
'as~essment from the BIR, it then becomes
incttmbent upon the latter to prove by competent
evidence that such notice was indeed received by
the addressee. While it is true that an assessment is
made when the notice is sent within the prescribed
period, the release, mailing, or sending of the same
must still be clearly and satisfactorily proved
(Commissioner of Internal Revenue v. GJM PHL
Manufacturing, Inc., G.R. No. 202695, February 29,
2016). •
THREE POSSIBLE SCENARIOS AFTER
ISSUANCE OF FLO/FAN
1. Taxpayer may pay the assessment;
2. Taxpayer fails to file protest; or
3. Taxpayer may file a protest.
SCENARIO 1: Taxpayer Pays the Assessment.
After the issuance of the FAN/FLO, the taxpayer
accepts and settles or pays the assessment in full,
Payment Form 0605 shall be duly prepared, filed
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Saf1 Seda University College of Law - RGCT Bar Operations Center
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and paid as evidence of the settlement of the viii. Statement of the .E,acts and law in
assessment (R.M.O. No. 26016). support of the protest (R.R. No. 12-85,
Sec. 6; R.R. No. 12-99, Sec. 3.1.3, as
SCENARIO 2: Taxpayer Fails to File Protest amended).
If the taxpayer fails to file a valid protest against the
FLD/FAN within 30 days from date of receipt thereof,
the assessment shall become final, executory, and
demandable. No request for reconsideration or
reinvestigation shall be granted (R.R. No. 12-99,
Sec. 3.1.4, as amended).
15 days from receipt of 30 days from the date of
SCENARIO 3: Taxpayer Protests the FAN the PAN the receipt of the
1. Requisites of a Valid Protest: (WATh-FiCo) FLO/FAN
a. Must be in Writing (R.R. No. 12-99, Sec.
3.1.4, as amended};
b. Must be Addressed to the CIR or his duly
authorized representative (R.R. No. 12-99, Taxpayer generally Sufficient and
Sec. 3.1.4, as amended); does not respond in an comprehensive to
c. Must be submitted within Thirty (30) days adequate manner to the explain the legal and
from receipt of FLD/FAN (R.R. No. 12-99, specific findings of the factual bases why the
Sec. 3.1.4, as amended); and revenue officer. assessment is
d. Must be Filed by the taxpayer or his duly incorrect, and certain
authorized representative, in person or documentary evidence
through registered mail with return card, with not presented during
the Office of the duly authorized the PAN phase and
representative of the CIR (Regional Director, jurisprudence relevant
ACIR-L TS, ACIR-Enforcement Service)Who' to the findings of the
signed the FLD/FAN (R.M.C. No. 11-14; revenue officers are
R.R. No. 39-13); submitted or presented

NOTE: The revenue officials who received

the protests shall subinit a report on all
ofi FLQ/FAN Assessment becomes
protests filed to the CIR,. The Officeof the
CIR shall then create a
database of thi
oilify;L'.
for final, executory, and
.~fitiency demandable. The
protests. If the protest filed is nq\,included in
from such taxpayer is then liable to
the database, the same shallbe considered
pay the deficiency
as not officially filed, hence, withoLtt force
taxes.
and effect (R.R. No. 39-13). •

e. Must Contain the following: (Na;TA~D1,:h

i. Name of the taxpayer and address for
the immediate past 3 taxable years;
ii. Nature of request whether
reinvestigation or reconsideration. If it is
a request for reinvestigation, specify
newly discovered evidence he intends
to present;
iii. Iaxable periods covered;
iv. Assessment number;
v. ,Qate of receipt of assessment notice or
letter of demand and date of
assessment notice;
vi. !temized statement of the findings to
which the taxpayer agrees as a basis for
computing the tax due, which amount
should be paid immediately upon the
filing of the protest;
vii. !temized schedule of the adjustments
with which the taxpayer does not agree;
and
3. Pro-Forma Protest
A pro-forma protest is not valid. The alleged
"protest letter" basically informing CIR that it had
already written or answered the PAN and that it
explained its position to the tax assessment is
neither a request for reinvestigation nor a
request for reconsideration. It must be
emphasized that a protest to the PAN is not the
same as the protest required in reply to the FAN
(Security Bank Corp. v. Commissioner of
Internal Revenue, C. T.A. Case No. 6564,
. November 28, 2006).
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I '< \ ' Taxation Law
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4. Defenses of Taxpayer deficiency taxes attributable thereto (R.R.

a. Prescription
An FLO/FAN must be served to the taxpayer
within the prescriptive period to make a valid
assessment (NIRC, Sec. 203).
The defense may be raised even for the first
time on appeal when it is apparent on the
record that the assessment has already
prescribed (Commissioner of Internal
Revenue v. First Sumiden Realty, Inc., CTA
EB No. 975, January 7, 2014).
b. Legal and Factual Bases. of Tax
Assessment
The details in the assessment notices
issued to the taxpayer must be sufficient to
allow the taxpayer to intelligently answer the
assessment as well as prepare the
documentary evidence for its protest. If the .
BIR merely stated that per computerized
matching, the taxpayer has. tJr1dec[ared
importations, the assessment, is invaljd
(Commissioner of lntemalRevenue v.BASF
PHL, Inc., CTA EB No. 872.' September 12;
2013). • .99; $e,c,3. 1:4, as amended).
No. 12-99, Sec. 3. 1.4, as amended by R.R.
No. 18-2013).
6. Forms of Protest
When a taxpayer protests an assessment, he
must choose between a reconsideration or a
reinvestigation (INGLES, Tax Made Less
Taxing: A Reviewer with Codals and Cases
(2018), p. 448 {hereinafter INGLES, Reviewer]).
a. Request for Reconsideration
- a plea for a re-evaluation of an
assessment on the basis of existing records
without need of additional evidence which
may involve a question of fact or law or both;
and
b. Request for Reinvestigation
- a plea for the re-evaluation of an
assessment on the basis of the newly-
disc.overed or additional evidence that a
tpxpayer intends to present in the
reinvestigation which may also involve a
'qJJestionof law or fact or both (R.R. No. 12-

An assessment based on a Summary List of RECONSJDERATION V.

Purchases (SLP) cannotbe-used a'sthe sole Rl:INVESTIGATION
basis. The SLP is doul;)~ul, inconclusive,
and unreliable. The CIR'. must Jrove the
source of the inforn'tatiorl, otherwise, the
assessment is invalid.- (Cpmmi~iofief of
Internal Revenue V. fax N Parcel, Jnc,; .CTA •lnvbfve~ • re-~valuati~n Involves presentation of
EB No. 883, February 14, 2013). • •
of. a;isess91ent bafed newly discovered or
O_hexistirg· record~ additional evidence
5. Rules on Payment When Protest is Filed
GENERAL RULE: No prior payment ,of the· •
assessed internal revenue tax is.required when·. -
protested or disputed. •• •• D'bes. no( toll the Tolls the Statute of
'statut~of Limitations Limitations because a
EXCEPTIONS: reinvestigation, which
a. If there are several issues involved in the entails mception and
FLO/FAN, but the taxpayer only protests evaluation of additional
against the validity of some of the issues evidence will take more
raised, the assessment attributable to the time than
undisputed issues shall become final, reconsideration
executory, and demandable. The taxpayer (Commissioner of
shall be required to pay the deficiency taxes Internal Revenue v.
attributable thereto (R.R. No. 12-99, Sec. Philippine Global
3.1.4, as amended); and Communications, G.R.
b. If there are several issues involved in the No. 167146, October 31,
disputed assessment and the taxpayer fails 2006)
to state the facts and the law in support of
the protest against some of the several
issues on which the assessment is based,
the same shall be considered undisputed Not required Required within sixty
issues, in which case the assessment shall {60) days from date· of
become final, executory and demandable. filing of protest
The taxpayer shall be required to pay the
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San Beda University College of Law • RGCT Bar Operations Center
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7. When Assessment Becomes Final,

From the filing of the From the submission of
protest the complete supporting
documents
(2-C DOMONDON, supra at 370-371, 374)
NOTE: The distinction is essentinl because the
suspension of the period only occurs when the
taxpayer requests for reinvestigation and is granted
by the CIR (INGLES, Reviewer, supra at 448).
Submission of documents after protest
For requests for reinvestigation, the taxpayer shall
submit all relevant supporting documents in support
of his protest within 60 days from date of filing of
his letter of protest _(R.R.No. 18-13, Sec. 3.1.4).
For reque·stsfor reconsideration, the 60-day period
shall not apply (R.R. No. 12-99, Sec. 3. 1.4, as
amended).
Relevant Supporting Documents
Those documents necessary to support the legal
and factual bases in disputing a tax assessment as
determined by the taxpayer (R.R. No. 12-99, Sec.
3.1.4, as amended).
NOTE: The BIR can only inform the taxpayer to
submit ·additional documents. The BIR cannot
demand what type of supporting documents should
be submitted (Commissioner of Internal Revenue v.
First Express Pawnshop Company, Inc. G. R. Nos.
172045-46, June 16. 2009).
REASON: Taxpayer would be placed at.the mercy
of the BIR which may require production of
documents which taxpayer could not produce
(Standard Chartered Bank v. Commissibner of
Internal Revenue, CTA Case No. 5696, August 16
2001). ,
Effect of Failure to Submit Documents
Non-submission of the documents renders the
assessment final (R.R. No. 12-99, Sec. 3. 1.4, as
amended).
The phrase the assessment shall become final
means that the FLD/FAN shall become final by
operation of law. The taxpayer shall be barred from
?isputin~ the correctness of the FLO/FAN by
introduction of newly discovered or additional
evidence because it is deemed to have lost its
jurisdiction to present this evidence. The BIR shall
~hendeny the request for reinvestigation through the
issuance of a Final Decision on Disputed
Assessment (FDDA) (R.M.C. No. 11-14).
Executory, and Demandable
An assessment shall become final, executory,
and demandable due to, among others, the
following grounds:
a. Failure of the taxpayer to file a valid protest
within 30 days from receipt of the FLD/FAN
(R.R. No. 18-13, Sec. 3.1.4);
b. Failure to submit all relevant documents in
support of his protest by wny of request for
reinvestigation within 60 days from the dale
of filing thereof (R.R. No. 12-99, Sec. 3.1.4,
as amended by R.R. No. 18-2013);
c. Failure of the taxpayer to appeal to the CIR
or the CTA within 30 days from date of
receipt of the FDDA issued by the CIR's duly
authorized representative (R.R. No. 18-13,
Sec. 3.1.4);
d. Failure of the taxpayer to appeal to the CTA
within 30 days from date of receipt of the
FDDA issued by the CIR (R.R. No. 18-13,
Sec. 3. 1.4);
e. Failure of the taxpayer to timely file a motion
for reconsideration or new trial before the
CTA Division; or failure to appeal to the CTA
_ En ;f,3anc and Supreme Court based on
·.exis'ffi1gRules of Procedure (RRCTA, Rule
8, Sec. 3(b) and (c)); or
f. Failore .,of the taxpayer to receive any
assessment notices because it was served
in the address indicated in the BIR's
registration database and the taxpayer
Jransferr~o. to a new address or closed or
-cea_~,e'ii;Jpperations without updating and
transferring, or cancelling its BIR
Registration as the case may be (R.M.O.
No. 26-16).
ADMINISTRATIVE ACTION OR
INACTION ON THE DISPUTED
ASSESSMENT
Final Decision on Disputed Assessment (FDDA)
It is th~ communication issued by the CIR or his duly
authorized representative containing the decision on
the protest to the FAN, whether the taxpayer's
protest is accepted or denied partially or wholly
(R.M.O. No. 26-16).
Three Possible Scenarios After Protest
1. Direct Denial or Grant of Protest through the
FDDA;
a. Requisites of a Valid FDDA
b. Taxpayer's Remedies
c. What Constitutes Final Decision Denying
Protest
2. Indirect Denial of Protest; or
a. Examples
b. Taxpayer's Remedies

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3. Inaction by CIR or
Representative.
a. Taxpayer's Remedies
• Disputed Assessment
It is when the taxpayer indicates its protest against
the delinquent assessment of the Revenue Officer
for reconsideration,. through a letter. After the
request is filed and received by the BIR, the
assessment becomes a disputed assessment (CIR
v. lsabela Cultural Corporation, G.R. No. 135210,
July 11, 2001).
Period To Act Upon the Protest or Administrative
Appeal
1. By CIR - in case of protest, within 180 days from
filing of protest (regardless of the form of
protest); in case of administrative appeal, within
180 days from filing of the administrative appeal.
Administrative Appeal request for
reconsideration filed with the CIR to elevate the
denial of protest made by his duly· authorizecl
representative (INGLES, Reviewer, supra at
458).
2. By Duly Authorized RepreSef!tative ·•·
a. Request for reinvestigation - Within 180
days from submission , of the relevant·
documents. ..
b. Request for reconsideration - 180 days
from filing of protest (R.R. No. 12~99, Sec.
3. 1.4, as amended). •
SCENARIO 1: Direct Denial of Protest
The CIR or his duly authorized representative.
renders a decision through f DOA granting or
denying the protest within the ptesc;ribed period to
act wpon the protest (R.R. No. 12-99, Sec. 3,,1.5, as
amended). • in wildle qr in part
Requisites of a Valid FDDA (ISP)
1. Must be !ssued by the CIR or his duly authorized
representative. The term "duly authorized
representative" refers to the same persons who
are authorized to issue PAN and FLO/FAN (R.R.
No. 12-99, Sec. 3.1.4, as amended; R.M.C. 11-
14);
2. Must be Served to the taxpayer personally and
if not practicable, by substituted service or by
mail (R.R. No. 12-99, Sec. 3.1.6, as amended);
3. Must be in writing and contain the Eacts and the
law on which the assessment is based (R.R. No.
12-99, Sec. 3.1.4, as amended); and
4. Must state that the same is his final decision
(R.R. No. 12-99, Sec. 3.1.5, as amended).
The FAN may be considered as the Final
Decision of the CIR on the Disputed
Assessment - When CIR is in Estoppel
REMEDIES
,~/ "'
Taxation Law
Duly Authorized The CIR as well as his duly authorized
representative must indicate clearly and
unequivocally to the taxpayer whether an action
constitutes a final determination on a· disputed
assessment. Words must be carefully chosen in
order to avoid any confusion that could
adversely affect the rights and interest of the
taxpayer.
A careful reading of the Formal Letter of
Demand (FLO) with Assessment Notices shows
• that an exception to the rule on exhaustion of
administrative remedies is the estoppel on the
part of the administrative agency concerned.
The CIR is estopped from claiming that the filing
of the Petition for Review (with the CTA) was
premature because the taxpayer failed to
exhaust all administrative remedies (Allied
Banking Corp. v. Commissioner of Internal
Revenue, GR. No. 175097, February 5, 2010).
The FLO reads: "This is our final decision based
on investigation. If you disagree, you may
appeal this final decision within 30 days from
receipt hereof., otherwise said deficiency tax
assessment shall become final, ·executory and
demandaQle';: It \appears from the foregoing
demand letter thafthe CIR has already made a
finaldecision on.thElmatter and that the remedy
of P?titioneris to appeal the final decision within
30 days. The taxpayer cannot be blamed for not
filirJg; ;;1, pro,test against the FLD sfnce the
lqnguage u.sed.and the tenor of the demand
Jetterindiqite that:_itis the final decision of the
CIR on the matter (Allied Banking Corp. v.
Commissioner df Internal Revenue, G.R. No.
175097, Febrµliry 5, 2010).
Taxp~er's.Refuedies in case of denial of Protest
i. F,DDA by Duly Authorized Representative -
either:
a. File administrative appeal to the CIR within
30 days from receipt of the FDOA through
request for reconsideration (R.R. No. 12-99,
Sec. 3.1.4, as amended); or
NOTE: No request for reinvestigation shall
be allowed in administrative appeal and only
issues raised in the decision of the CIR's
duly authorized representative shall be
entertained by the CIR (R.R. No. 12-99,
Sec. 3.1.4, as amended).
EFFECT OF FILING THE
ADMINISTRATIVE APPEAL: The
administrative appeal filed with the CIR will
toll the 30-day period to appeal to the CTA
and the denial of the administrative appeal
or the inaction of the CIR thereon is the one
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MEM:Q-RY
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Al D
San Beda University Coiege of Law • RGCT Bar Operations Center
appealable to the CT-A.(Commissioner of
Internal Revenue v. International
Pharmaceuticals, Inc., CTA E.B. No. 608,
October 25, 2011).
b. Appeal to the CTA within 30 days from
receipt of FDDA (R.R. No. 12-99, Sec. 3.1 .4,
as amended).
EFFECT OF FAILURE TO FILE THE
ADMINISTRATIVE APPEAL OR APPEAL
TO THE CTA WITHIN THE 30-DAY
PERIOD: The assessment shall become
final, executory, and demandable (R.R. No.
18-13, Sec. 3.1.4).
2. FDDA by CIR - either:
a. File a motion for reconsideration with the
CIR (R.R. 18-13, Sec. 3.1.4); or
NOTE: The motion for reconsideration of the
decision with the CIR will NOT toll the 30-
day period to appeal to the CTA (R.R. No.
12-99, Sec. 3.1.4, as amended).
b. Appeal to the CTA within 30 days from
receipt of FDDA (R.R. No. 12-99, Sec, 3.1.4,
as amended).
EFFECT OF FAILURE TO APPEAL TO
THE CTA WITHIN THE 30~DAY PERIOD:
The assessment shall •• become final,
executory, and demanciable (R.R. No. 12-
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The Assessment shall become final, executory,
and demandable
What Constitutes Final Decision Denying the
Protest (Tenor of Finality Rule)
If the tenor of the letter shows the firm stand of the
BIR against the reconsideration of the disputed
assessment, the letter should be considered the final
decision of the BIR on the taxpayer's administrative
protest or the FDDA (Cagayan Corn Products Corp.
v. Commissioner of Internal Revenue, CTA Case
No. 8491, July 8, 2013).
That final decision is the letter of denial where the
~IR not only demanded payment of the amount
assessed but wherein, he also gave the warning
that in the event the taxpayer failed to pay the
same, he would be constrained to enforce the
collection thereof by means of the remedies
prescribed by law (Reyes v. Commissioner of
Internal Revenue, CTA Case No. 6124, June 19,
2002).
Example:
..Einal . Notir;e. Before Seizure. The very title
exp'r~islS,,
;\fi-~:Ji9ated
that it was final notice prior to
seizure of p_r9perty.The letter itself clearly stated
that the t~xpayer was being given the last
opportunity to pay; otherwise, its properties would
be subjected ~o distraint and levy (Commissioner of
Internal Revebue v. lsabela Cultural Corp., G.R. No.
13521P,tJMIY.
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it.2.001).
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99, Sec. 3.1.4, as amended). • •

FDDA BY CIR V. FDDA BY
AUTHORIZED REPRESENTATIVE
1. Fi:e a motion for
reconsideration
with the CIR; or
2. Appeal to the CTA
Will not toll the 30-day Will toll the 30-day
period to appeal to the period to appeal to the
CTA CTA
Void FDDA·does not nullify a duly issued FAN:
The decision resulting from a void FDDA is different
.'i,; jr:om an assessment from which· it is based. The
' 'f:1iiiJfitr1ty of one does not necessarily resultto the
invalidity of the other unless the law or regulations
otherwise provide. In tax assessments, the decision
of the CIR evidenced in the FDDA will only give rise
to a disputed assessment, which may then be
appealed to the CTA. Thus, the assailed decision
1. File Administrative
arising from a voided FDDA may still be appealed
Appeal to the CIR
(denial due to inaction) and decided upon, without
through voiding the assessment itself. (Commissioner of
Request for Internal Revenue v. Liquigaz PHL, Corp. G.R. No.
Reconsideration; or
215534,AprH1~ 2016).
2. Appeal to the CTA
SCENARIO 2: Indirect Denial of Protest
Without rendering a FDDA within the prescribed
period to act and on the merits of the protest, the CIR
or his duly authorized representative may
nevertheless execute administrative actions which
the Court considers as denial of protest.
Examples:
1. Civil collection instituted during pendency of
protest (Commissioner of Internal Revenue v.

Union Shipping Corp., G.R. No. 66160, May 21,
1990).
2. Issuance of warrant of distraint and levy to
enforce collection (Commissioner of Internal
Revenue v. International Pharmaceuticals, Inc.,
CTA E.B. No. 608, October 25, 2011).
NOTE: However, when there is a subsequent
civil action for collection instituted after the
service of the warrant, it is the civil action and
not the service of warrant that is considered as
denial of the protest (Commissioner of Internal
Revenue v. Union Shipping Corp., G.R. No.
66160, May 21, 1990).
3. Referral by the CIR of request for reinvestigation
to the Solicitor General (Republic v. Lim Tian
Teng Sons and Co., Inc., G.R. No. L-21731,
March 31, 1966).
Taxpayer's Remedies Available Joi Indirect
Forms of Denial of Protest or Administrative
Appeal (without FDDA)
The remedies available to the taxpayer in case
of direct denial of protesJ or administrative
appeal by the CIR or. his·· duly authorized
representative through PDDA are applicable to
indirect forms of denial. • PERIOD: It will·not result in the finality of the
SCENARIO 3: Inaction by CIR or buly Authorized
Representative • ,
The CIR or such representa,tive does not act upon
the protest within the prescribed period (RR. No, 12-
99, Sec. 3.1.4, as amended)·
Taxpayer's Remedies
1. Inaction by the CIR
- either:
a. Appeal to the CTA within 30 days frpm the
expiration of the 180-day period; or
b. Await the final decision of the CIR on tlie
disputed assessment, and then appeal such
final decision to the CTA within thirty (30)
days after the receipt of a copy of such
decision (R.R. 12-99, Sec. 3.1.4, as
amended).
2. Inaction by Duly Authorized Representative
-either:
a. Appeal to the CTA within 30 days after the
• expiration of the 180-day period counted
from the date of filing of the protest in case
of a request for reconsideration or from the
date of submission by taxpayer of the
required documents within 60 days from
filing of protest in case of a request for
reinvestigation; or
b. Await the final decision of the duly
authorized representative on the disputed
REMEDIES
Taxation Law
assessment (R.R. No. 12-99, Sec. 3.1.4, as
amended).
NOTE: The taxpayer does not have the
option to appeal to the CIR in case the CIR's
representative does not act on the protest.
The taxpayer must choose between the two
options. (PAGCOR v. BIR, G.R. N9.
208731, January 27, 2016).
The options are mutually exclusive and
resort to one bar the application of the other
(R.R. No. 12-99, Sec. 3.1.4, as amended;
Rizal Commercial Banking Corp. v.
Commissioner of Internal Revenue, G.R.
No. 168498, April 24, 2007; Lascona Land
Co. v. Commissioner of Internal Revenue,
G.R. No. 171251, March 5, 2012).
If the taxpayer opted to wait the final
decision of the CIR or his duly authorized
representative, he may later use the
remedies available to him in contesting said
decision; as discussed previously (R.R. 12-
99;~Sec. 3.1.4, as amended).
EFFl:CT OF f Al LURE TO APPEAL THE
INACilON TO THE CTA WITHIN 30-DAY
FLO/FAN, as the taxpayer can wait for the
decision, (Rizal, Commercial Banking Corp.
v. Commissioner of Internal Revenue, G.R.
No. 1684-98,April 24, 2007).
NOTE: Section 229 of NIRC, as worded,
only required that an administrative claim
should first-be filed. The primary purpose of
·filing an _administrativeclaim was to serve as
a notice of warning to the CIR that court
. action would follow unless the tax or penalty
•alleged to have been collected erroneously
or illegally is refunded.
This does not however mean that the
taxpayer must await the final resolution of its
administrative claim for refund, since doing
so would be tantamount to the taxpayer's
forfeiture of its right to seek judicial recourse
should the two-year prescriptive period
expire without the appropriate judicial claim
being filed. It bears stressing that
respondent could not be faulted for resorting
to court action, considering that the
prescriptive period stated therein was about
to expire (Commissioner of Internal
Revenue v. Goodyear Philippines, Inc., G.R.
No. 216130; August 03, 2016).

AID .
San Beda University College of Law - RGCT Bar Operations Center
ILLUSTRATION (1): (BAR 1999)
A Co., a Philippine corporation, received an
income tax deficiency assessment from the
BIR on May 5, 2013. On May 31, 2013, A
Co., filed its protest with the BIR. On July 30,
2013, A Co., submitted to the BIR all
relevant supporting documents. The CIR did
not formally rule on the protest but on
January 25, 2014, A Co., was served a
summons and a copy of the complaint for
collection of the tax deficiency filed by the
BIR with the RTC. On February 20, 2014, A
Co., brought a Petition for Review before
CTA. The BIR contended that the Petition is
premature since there was no formal denial
of the protest of A Co. and should therefore
be dismissed.
i. Does the CTA have jurisdiction over
the case?
YES, because filing of the suit during
the pendency of the protest is
considered a denial of the protest.
ii. Does the RTC have jurisdiction over
the collection case filed by the BIR?
NO, because the petition for review was
seasonably filed With the CTA within a
period of 30 days from .receipt of
summons (4 DOMONDON, foxation:
Tax Remedies (2014), p. 459
[hereinafter 4 DOMONDON]J:.
ILLUSTRATION (2): (BAR 2009)
A taxpayer received an assessment notice
from the BIR on February ..9, 2013, The
following day, he filed a protest, in the form
of a request for reinvestigation, against the
assessment and submitted ail relevant
documents in support of the protest On
September 11, 2013, the taxpayer,
apprehensive because he had not received
notice of a decision by the CIR on his
protest, sought your advice.
What remedy or remedies are available to
the taxpayer?
The remedy available to the taxpayer is to
wait for the decision of the CIR on the
protest he filed. If his protest is denied he
would have a period of 30 days from receipt
of the denial within which to interpose a
petition for review with the CTA (2-C
DOMONDON, supra at 388).
The CIR has a period of 180 days from
submission of the relevant documents on
February 10, 2013, or until August 1, 2013,
after which the taxpayer has the OPTION of
either filing a petition for review with the CTA
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within a period of 30 days from the
expiration of the 180-day period or until
August 31, 2013 or the taxpayer could
choose to wait for the decision on the
protest. In case of denial of his protest the
taxpayer may file the petition for review with
the CT A within a period of 30 days from
receipt of the decision (Id.).
Taxpayer's Judicial Remedies (A-DISC)
1. ~ppf;)al to the CTA; (Please refer to Court of
Tax Appeals chapter)
2. Action for Qamages against a revenue officer
by reason of any act done in the performance of
official duty (NIRC, Sec. 227);
3. !njunction - to be issued by the CTA if
collection may jeopardize the interest of the
government and/or the taxpayer, subject to
certain conditions;
4. By way of §_pecial Civit Action - petition for
certiorari, prohibition, and mandamus to the
Sup·reme Court in cases of grave abuse of its
discretion, lack of jurisdiction or excess of
jurisdiction (RULES OF COURT, Rule 65); and
••• •• 5. Action to ~ontest Forfeiture of Chattel, at any
- . time before the sale or destruction of the
• 0rdperty, 'bring an action against the person
seizing tne property or having possession
thereof,. to recover the same, and upon giving
proper bdnd, enjoin the sale; or after the sale
and within 6 months, an action to recover the net
proceeds may be realized at the sale (NIRC,
St:tf.'..:t:~1F+,
•
COMPROMISE AND ABATEMENT
•CblVIPROMISE
A contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one
already commenced (CIVIL CODE, Art. 2028). In
• case of tax assessment, it is a contract between the
government and the taxpayer to settle the liability.
COMPROMISE V. COMPROMISE
PENALTY
Amount of money paid Amount suggested in
by the taxpayer to settlement of criminal
settle his deficiency liability (R.M.O. No. ?-
taxes 15).
NOTE: It may not
therefore be imposed or
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Instances of Doubtful Validity: (DAF3-A2VA)

exacted on the taxpayer,
a. Qelinquent account or disputed assessment
the violation shall be
is one resulting from jeopardy assessment;
referred to the
b. Assessment seems to be arbitrary in nature
appropriate office for
and there is reason to believe that it is
criminal action in the
lacking in legal and/or factual basis;
event that a taxpayer
c. Eailure to file protest on account of alleged
refuses to pay the
failure to receive notice of assessment and
suggested compromise
there is reason to believe that the
penalty (R.M.O. No. 7-
assessment is l_ackingin legal and factual
15).
basis;
d. ,Eailure to file a protest within the required
30-day period and there is reason to believe
Fixed percentage rate Fixed amount or based that the assessment is lacking in legal and
depending on the on a graduated table factual basis;
ground for depending usually on the e. ,Eailure to elevate to the CTA an adverse
compromise which is gross annual sales, decision of the CIR or his authorized
computed based on earnings or receipts of representative within the required 30-day
the basic assessed the taxpayer (R.M.O. No. period and there is reason to believe that the
~x 1~on assessment is lac~ing in legal and factual
, , basis;
f. Assf;lssments that failed to comply with the
formalit_iesof Sec. 228 of the NIRC.;
g, Assessments made based on Best
1. Enforce the Institute a criminal' action Eyidence Obtainable and there is reason to
compromise; or (R.M.O. Np. fg:01) • ,believeAhahJhe same can be disputed by
2. Treat it as sufficifr;it and competent evidence;
rescinded and h. ~alidity •or, authenticity of Waiver of the
insist upon the Statute of Limitations is at issue and there is
original demand $trong teasOn to believe and evidence to
(CIVIL CODE, Art. prove that itis; n:otauthentic; or
2041). i. . '~ssessrilent involves an issue where a court
NOTE: Compromise discu$seq tie.rein is•<Jif,ferent . rna.de an, adverse decision against the
from compromise penalty: : Please •refer. to • Bureau, but'-fdr which the Supreme Court
Compromise Penalty under fax Administration·and • has not decided upon with finality (R.R. No.
Enforcement on page 311. 30-2002, S~t. 3, as amended by R.R. No.
9.8~04).
APPROVING AUTHORlTIES· ,JN
,Rate: In all the above-mentioned cases, a
COMPROMISE OF TAXES , 'n:iinimum rate of forty percent (40%) of basic
1. CIR - general power to compromise taxUability; ,,,tax assessed or a lower amount subject to
2. National Evaluation Board (NEB) - the basic the approval of the NEB (NIRC, Sec.
tax . involved exceeds P1 million OR the 204(A)(2)).
settlement offered is less than the prescribed
minimum rates; or Offer for Compromise based on Financial
3. Regional Evaluation Board (REB) - with Incapacity may be Accepted upon Showing
respect to offers of compromise of assessments that:
issued by the Regional Offices involving basic a. The corporation ceased operation or is
deficiency taxes of PS00,000 or less or minor already dissolved. Provided, that tax
criminal violations discovered by the Regional liabilities corresponding to the Subscription
and District Offices (NIRC, Secs. 204(A) and Receivable or Assets
l(c); R.R. No. 30-02, Sec. 6(2)). distributed/distributable to the stockholders
representing return of capital at the time of
GROUNDS: (DoFI) cessation of operation or dissolution of
1. Doubtful validity - reasonable doubt as to the business shall not be considered for
validity of claim against the taxpayer exists; and compromise; or
2. Financial incapacity - when the financial b. The taxpayer, as reflected in its latest
position of the taxpayer demonstrates a clear Balance Sheet, is suffering from surplus or
inability to pay the assessed tax (NIRC, Sec. earnings deficit resulting to impairment in
204(A)). the original capital by at least 50%, provided
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San Beda University Coflege of Law • RGCT Bar Operations Center
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that amounts payable or due to stockholders

other than business-related trnnsactions
which are includible in the regular "accounts
payable" are by fiction of law considered as
part of capital and not liability, and provided
further that the taxpayer has no sufficient
liquid asset to satisfy the tax liability; or balance sheet submitted to the
c. The taxpayer is suffering fron, c1 net worth BIR, provided that:
deficit computed by deductinf:Jtotal liabilities 1.ThP.amounts payable or due lu
from total, taken from the latest audited stockholders, other than
financial statements, provided that in the business-related transactions,
case of an individual taxpayer, he has no are considered as part of capital
other leviable properties under the law other and not liability; and
than his family home; or 2.The taxpayer has no sufficient
d. The taxpayer is a compensation income liquid asset to satisfy the tax
earner with no other source of income and liability
the family's gross monthly compensation
income does not exceed the levels of The taxpayer suffers from a net Zero net
compensation income, if single, is P10,500 worth deficit based on the latest worth -
or less, or if married, whose salary together audited financial statements, 10%
with his spouse is P21,000 per month, or provided that in case of individual,
less, and it appears that the taxpayer he has no other leviable properties Negative
possesses no other leviable/distrainable under the law other than his family net worth -
assets, other than his family home of these income. 10%
Regulations, and it appears that the
taxpayer possesses no other leviable or. .,;,\,t The tq~payer is: 10%
distrainable assets, other than his .family 2. ; CompEi.nsationearner;
home; or 3. With no other source income;
e. The taxpayer has been declared by any 4. Whosf:3• monthly income is
competent P10,500:orJess if single and if
tribunal/authority/body/government agency married, combined monthly
as bankrupt or insolvent (R.R. No. 30-2002, income is 1'>21,000or less; and
Sec. 3(2)). • 5. Hc1i;;._.• fl(} •·.other leviable
p'ro~r;lt~~.ptfi~r than his family
FINANCIAL INCAPACITY AND income
COMPROMISE RATE ,JpEl
tcixpayer has been dedared by 20%
1;!ioy<3C· competent
tribunal/authority/body/government
agency as bankrupt or insolvent.
(R.R. No. 30-02, Sec. 4)

NOTE: Lower amount can be granted subject to the

Corporation ceased operation or is Dissolved;
approval of the National Evaluation Board (NEB) if
already dissolved. non-
assessments issued by the regional offices involving
operating
basic deficiency taxes of P500,000 or less, and
companies
minor criminal violations, as may be determined by
for less than
rules and regulations to be promulgated by the
three (3)
Secretary of finance, upon recommendation of the
years - 20%
Commissioner, discovered by regional and district
officials, may be compromised by a regional
Non-
evaluation board which shall be composed of the
operating
Regional Director as Chairman, the Assistant
companies
Regional Director, the heads of the Legal,
for at least
Assessment and Collection Divisions and the
three (3)
Revenue District Officer having jurisdiction over the
years - 10%
taxpayer, as members (NIRC, Sec. 7(C)).
Impairment in the original capital by 40%
at least 50% based on latest
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REQUISITES FOR THE COMPROMISE
OF TAXES: (LODA)
1. The taxpayer has a tax hiability (R.R. No. 30-02,
Sec. 1);
2. There must be an Offer (by the taxpayer or
Commissioner) of an-amount to be paid by the
taxpayer (R.R. No. 30-02, Sec. 3); . requested on the ground of doubtful validity of
3. A reasonable Doubt as to the validity of the claim
against the taxpayer exists; or the financial
position of the taxpayer demonstrates a clear
inability to pay the assessed tax; (R.R. No. 30-
02, Sec. 3) and
4. There must be Approval (by the taxpayer or
Commissioner, as the case may be) of the offer
in settlement of the original claim (R.R. No. 30-
02, Sec. 6).
CASES THAT MAY BE COMPROMISED:
(DAC3)
1. Delinquent accounts;
2. Cases under ~dministrative protest ·after
issuance of the FAN;
3. Civil tax cases being disputed before·the.c6urts;
4. Collection cases filed in courts; and
5. Criminal violations except tMse already filed in
court or those involving criminal tax fraud (R.R.
No. 30-02, Sec. 2).
NOTE: In criminal cases;· oJher th<;1nthose
involving tax fraud, the CIR_has full discretion to
compromise before t!1e information (criminal
• complaint) is filed in court: ,, . . .. _
a. After the case reaches the prosec_utor's
office, the prosecutor must give his consent
before he can enter into compromise. • ,
b. Once the information • is filed' • in court,.
compromise is no longer 1?,ermiUecfwittor
without the consent of •th_e• prosecutor
(People V. Magdalityo, G.R. No. L-16.235,
April 20, 1961). ·-
A compromise can never be entered into
after final judgment, because by virtue of
such final judgment, the Government had
already acquired a vested right (R.R. No.
30-02, Sec. 2).
CASES THAT ARE NOT SUBJECT TO
COMPROMISE: (WiF2S-ReFE)
1. Withholding tax cases, unless the applicant
taxpayer invokes provisions of law that cast
doubt on the taxpayer's obligation to withhold;
2. Criminal tax Fraud cases confirmed as such by
the CIR or his duly authorized representative;
3. Criminal violations already filed in court;
4. Delinquent accounts with duly approved
_§cheduleof installment payments;
REMEDIES
Taxation Law
5. Cases where final Reports of reinvestigation or
reconsideration have been issued resulting to
reduction in the original assessment and the
taxpayer is agreeable to such decision by
signing the required agreement form;
6. Cases which became final and executory after
final judgment of a court, where compromise is
the assessment; and
7. Estate tax cases where compromise is
requested on the ground of financial incapacity
of the taxpayer (R.R. No. 30-2002, Sec. 2).
SOME IMPORTANT APPLICATION
REQUIREMENTS {PW)
1. fayment by the taxpayer of the full amount of his
compromise offer upon filing the application; and
Otherwise, his application for compromise
settlement shall not be processed by the BIR
(R.H No. 30-02, Sec. 2, as amended by R.R.
No. 9'-13),
In case of .disapproval of the application, the
amount paid.ui'>9nfiling the application shall be
deducted fromthe taxpayer's outstanding tax
liabil.ities (R.R.Ncf 30-02, Sec. 2, as amended).
2. Waiver in writing of his privilege of the secrecy
of bank geposits when he enters into
compromise on 'th~ ground of his financial
incapacity (RR. Nb. 30-02, Sec. 3).
GROUNDS.. FOR DENIAL OF
COMPROMISE .BASED ON FINANCIAL
INCA~.ACITY
1.. .1Hhe 'tawc;1yer .has a Tax Credit Certificate,.
i$sLied'under the NIRC; or
2. - tHhetaxpayer has a pending claim for tax refund
-ortax credit with the BIR, Department of Finance
One-Stop-Shop Tax Credit and Duty Drawback
Center (Tax Revenue Group or Investment
Incentive Group) and/or the courts; or
3. If the taxpayer has an existing finalized
agreement or prospect of future agreement with
any party that resulted or could result to •an
increase in the equity of the taxpayer at the time
of the offer for compromise or at a definite future
time; or
4. If the taxpayer failed to execute a waiver of his
privilege of the secrecy of bank deposits under
Republic Act No. 1405 or under other general or
special laws (R.R. No. 30-02).
APPROVAL OF OFFER OF
COMPROMISE
Except for offers of compromise where the approval
is delegated to the REB pursuant to the succeeding
 1
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San Beds University College of Law - RGCT Bar Operations Center , :,,~ ' - ' ~'C h

paragraph, all compromise settlements within the
jurisdiction of the National Office (NO) shall be
approved by a majority of all the members of the
NEB composed of the Commissioner and the 4
Deputy Commissioners. All decisions of the NEB,
granting the request of the taxpayer or favorable to
the taxpayer, shall have the concurrence of the
Commissioner (R.R. No. 30-02 as amended).
COMPROMISE OFFER MUST BE PAID
UPON FILING
The compromise offer shall be paid by the taxpayer
upon filing of the application for compromise
settlement. No application for compromise
settlement shall be processed without the full
settlement of the offered amount (R.R. No. 30-02 as
amended).
In case of disapproval of the application for
compromise settlement, the amount paid upon filing
of the aforesaid application shall be deducted from
the total outstanding tax liabilities (R.R. No. 30-02 as
amended).
EFFECT OF JUDICIALLY APPROVED
COMPROMISE AGREEMENT
When given judicial approval, a compromise
agreement becomes more than a contract binding
upon the parties. Having been sanctioned by the
court, 'it is entered as a determinaHon of a
controversy and has the force ·and effect of a
judgment. It is immediately executory •and not
appealable, except for vices of consent or forgery.
The nonfulfillment of its terms and conditions justifies
the issuance of a writ of execution; in such an
instance, execution becomes a ministerH::i'Iduty of
the court (Metro Manila Shopping Mee¢? Corp.. v.
Toledo, G.R. No. 190818, November 10, 2014, J.
PERLAS-BERNABE).
REMEDIES IN CASE THE TAXPAYER
REFUSES OR FAILS TO FOLLOW THE
TAX COMPROMISE
1. Enforce the compromise (CIVIL CODE, Art.
2041).
NOTE: If it is a judicial compromise, it can be
enforced by mere execution (CIVIL CODE, Art.
2037).
2. Regard it as rescinded and insist upon original
demand (CIVIL CODE, Art. 2041).
ABATEMENT
Cancellation of the entire tax liability of the taxpayer
(NIRC, Sec. 204(8)).
WHO HAS THE AUTHORITY TO ABATE
CIR has the sole authority to abate or cancel internal
revenue taxes, penalties and/or interest (R.R. No.
13-01, Sec. 4 pursuant to Sec. 204 (BJ, in relation to
l(c)).
COVERAGE OF ABATEMENT
GENERAL RULE: The CIR's authority to
compromise is generally applicable to surcharge
and compromise penalties only (R.R. No. 13-01,
Sec. 4)
EXCEPTION: In meritorious instances, the CIR may
abate the interest as well as basic tax assessed,
provided, however, that cases for abatement or.
cancellation of tax, penalties and/or interest by the
CIR shall be coursed through certain officials (R.R.
No. 13-01, Sec. 4).
GROUNDS FOR ABATEMENT: (EC)
1. The tax or any portion thereof appears to be
unjustly or !;xcessively assessed; or
2. The administration and ~ollection costs involved
do not jLJstifythe collection of the amount due
(NIR~, Se.c.204(8)).
Instances When the Penalties and/or Interest
Imposed on The Taxpayer May Be Abated on the
Ground that the Imposition thereof is Unjust or
Excessive: (WE-SIBLO) -
1. Filin~ of the return/payment of tax at the Wrong
venues . :./ ::
2. Ta~p'ayer:'ii·nfstake in payment of tax is due to
grroneous written official advice of a Revenue
Officer;
if ''.J~21payer's failure to file the return and pay the
• faj(brHime is due to §.ubstar;tial losses from
prolonged labor dispute, force majeure,
legitimate business reverses such as in the
following instances:
a. Labor strike for more than six (6) months
which has caused the temporary shutdown
of business;
b. Public turmoil;
c. Natural calamity such as lightning,
earthquake, storm, flood and the like;
d. Armed conflicts such as war or insurgency;
e. Substantial losses sustained due to fire,
robbery, theft or embezzlement;
f. Continuous heavy losses incurred by the
taxpayer for the last two (2) years;
g. Liquidity problem of the taxpayer for the last
three (3) years; or
h. Such other instances which the CIR may
•deem analogous to the enumeration above.
4. Assessment resulted from taxpayer's non-
compliance with the law due to a difficult
!nterpretation of said law;
 REMEDIES
Taxation Law

5. Taxpayer's failure to file the return and pay the
correct tax on time due to circumstances
§eyond his control;
6. !:ate payment of tax under meritorious
circumstances such as those provided
hereunder:
a. Use of wrong tax form but correct amount of
tax was remitted;
b. Filing an amended return under meritorious
circumstances;
c. Surcharge erroneously imposed;
d. Late filing of return due to unresolved issue
on classification/valuation of real property;
e. Offsetting of taxes of the same kind, i.e.,
overpayment in one quarler/month is offset
against underpayment in another
quarter/month;
f. Automatic offsetting of overpayment of one
•kind of withholding tax against the
underpayment in another kind;
g. Late remittance of withholding tax· on
compensation of expatriates .for services
rendered in the Philippines···pending thEl
issuance by the SEC of the license to the
Philippine branch office.or sul;)sJdjary;
h. Wrong use of Tax CredirCerlificate (TCC)
where Tax Debit Mem'o, (TOM) was not
properly applied for; and ,
i. Other analogous in~tances.
7. Qther similar or analogous cases (R.R. No. 13~
01, Sec. 2 as amended by RR, NoA~12).
NOTE: In all the above-,~entioned cases, the
abatement shall cover surchargJs, interest;and
compromise penalty except Nos. 3.and 5, 6(b),.
and 6(g) in which case the abatement shall not
include interest (R.R. No. 13~01, Sec. 2)..
REPEATED REQUEST FOR
ABATEMENTDOESNOTPREVENTTHE
COLLECTION OF DEFICIENCY TAX
The taxpayer questioned the computation of the
deficiency tax but did not protest the FAN. Instead, it
repeatedly requested to pay the deficiency in
monthly installments. Moreover, due to its sensitive
financial situation, the taxpayer requested for the
reduction, waiver, and abatement of the interest and
compromise penalty.
The Court held that the repeated request of the
taxpayer for reduction, waiver or abatement did not
induce the BIR to postpone its collection nor did it
warrant the suspension of the prescriptive period for
the BIR to collect the assessed taxes (Asia United
Insurance Inc. v. Commissioner of Internal Revenue,
~- T.A. Case No. 8916, May 17, 2017).
APPROVAL OF TAX ABATEMENT MUST
~E SUPPORTED BY A TERMINATION
LETTER
An application for· tax abatement is deemed
approved only upon the issuance of a termination
letter by the BIR. The last step of the tax abatement
process is the issuance of termination letter. The
a
mere issuance of BIR Certification is not sufficient
proof that the taxpayer's application was validly
approved (Asiatrust Dev't Bank, Inc. v.
Commissioner of Internal Revenue, G.R. No.
201680-681, April 19, 2017).
COMPROMISE V. ABATEMENT

Instances of Abatement on Ground that

Collection Costs are More Than Tax Sought:
(AWARD)
1. Abatement of penalties on assessment
confirmed by the lower court but ~ppealed by
taxpayer to a higher court;
2. Abatement of penalties on Withholding tax
assessment under meritorious circumstances;
3. Other ~nalogous instances;
4. Abatement of penalties on assessment reduced
after Reinvestigation but tal.C.payer is still 1. Reasonable doubt 1.The tax or any portion
contesting reduced assessment; and as to validity of thereof appears to be
5. Abatement of penalties on Qelayed installment assessment; or unjustly cir excessively
payment under meritorious circumstances (R.R. 2. Financial assessed; or
No. 13-01, Sec. 3). incapacity of 2. The administration and
taxpayer. collection costs involved
NOTE: For items 1 and 4 above, the abatement do not justify the
of the surcharge and compromise penalty shall collection of the amount
be allowed only upon written application by the due.
taxpayer (R.R. No. 13-01, Sec. 3).
 E•SiMU \ I
MEM:Q~YAID
San Beda University College of Law • RGCT Bar Operations Center
TAX REFUND OR TAX CREDIT
Taxpayer's Remedies aHer Payment
TAX REFUND AND TAX
DEFINITION
1. Tax Refund - actual reimbursement of the tax
(ABAN, supra at 325).
2. Tax Credit - refers to the amount of tax due to
a taxpayer resulting from overpayment of a tax
liability or erroneous payment of a tax due (R.R.
No. 5-00).
The government issues a tax credit certificate (TCC)
or a tax credit memo covering the amount
determined to be reimbursable after proper
verification and the same may be applied against
any sum that may be due and collectible from the
taxpayer (R.R. No. 5-00).
All TCCs issued by the BIR shall not be allowed to
be transferred or assigned to any person (R.R. No.
14-11, Sec. 2).
NOTE: The options of tax refund or tax credit are .·
alternative and the choice of one precludes the
other. However, failure to indicate a choiGe by the
taxpayer will not bar a valid request for a refund,
shoul9 this option be chosen later on. The indica~ion
of the chosen option is only for the purpose of tax
administration (Phi/am Asset Management Inc. v.
Commissioner of Internal R~venue, G.:R Nos.
156637 & 162004, December 14, 2005),, •
TAX CREDIT CERTIFICATE
A certification duly issued to the taxpayer named
therein by the CIR or his duly authorized •
representative, reduced in a BIR Accountable Form
in accordance with the prescribed formalities,
acknowledging that the grantee-taxpayer named
therein is legally entitled to a tax credit.
The money value of the TCC may be used in
payment or in satisfaction of any of his internal
revenue tax liability (except those excluded), or may
be converted as a cash refund, or may otherwise be
disposed of in the manner and in accordance with
the limitations, if any, as may be prescribed by the
provisions of the Revenue Regulations (R.R. No. 5-
00, Sec. 1.B).
AUTHORITY OF THE CIR
1. Credit or refund taxes erroneously or illegally
received, or penalties imposed without authority;
2. Refund the value of internal revenue stamps
when they are returned in good condition by the
purchaser; and
3. In his discretion, redeem or change unused
stamps that have been rendered unfit for use
and refund their value upon proof of destruction
(NIRC, Sec. 204(C)).
NOTE: The NIRC vests upon the CIR, being the
CREDIT, head of the BIR, the authority to credit or refund
taxes which are erroneously collected by the
government. This specific statutory mandate
cannot be overridden by adverse
interpretations made through mere
administrative issuances, such as RMC No.
42-99, which - as argued by the CIR - shifts
to the executing agencies (particularly, NPC in
this case) the power to refund the subject taxes.
Thus, _Item B (3) of RMC No. 42-99, an
administrative issuance directing petitioner to
claim the refund from NPC, cannot prevail over
Sections 204 and 229 of the NIRC, which
provide that claims for refund of erroneously
colle.cted taxes must be filed with the CIR
(Mitsubishi Corp. -Manila Branch v.
Commissioner of Internal Revenue, G.R. No.
175772, June 5, 2017).
AUTHORITY OF THE OMBUDSMAN
•••·jNfiJ;N .. TJ¾ERE IS SUSPICION IN THE
GRAN'f'c:fFTAX REFUND
The determifi~tion of whether to grant a tax refund
falls within the_ exclusive expertise of the BIR.
Nonetheless, )Nhen there is suspicion of even just a
tinge of impropriety in the grant of the same, the
Ombu.ct~9]PQc~puld: rightfully ascertain whether the
deterrhinatio1fwas'donein accordance with law and
identify tne p;e~·6ns who may be held responsible
thereto.
. i)trH~sat'.sensi:l,the Ombudsman could not be accused
• c>f'unlawfiJliyintruding into and intervening with the
BIR's exercise of discretion (Commissioner of
Internal Revenue v. Office of the Ombudsman, G.R.
No. 11510~April11, 2002).
GROUNDS FOR FILING A CLAIM FOR
TAX REFUND OR TAX CREDIT: (EPS)
1. Tax is grroneously or illegally assessed or
collected;
There is erroneous payment of taxes when a
taxpayer pays under a mistake of fact, where he
is not aware of an existing exemption in his favor
at the time the payment was made (51 Am. Jur.,
cited in UST Cooperative Store v. City of Manila,
G.R. No. L-17133, December 31, 1965).
An "erroneous or illegal tax" is defined as one
levied without statutory authority, or upon
property not subject to taxation or by some
person having no authority to levy the tax, or one
which is some other similar respect is illegal

(Commissioner of Internal Revenue v. Pilipinas
Shell Petroleum Corp., G.R. No. No. 188497,
April 25, 2012).
2. fenalty is collected without authority; and
3. §.um collected is excessive or in any manner
wrongfully collected (NIRC, Sec. 229;
Commissioner of Internal Revenue v. Fortune
Tobacco Corp., G.R. Nos. 167274-75, July 21,
2008).
REQUISITES OF TAX REFUND OR TAX
CREDIT: (GroC-Cat-2Proven)
1. There must be a legal Ground or basis for tax
refund or tax credit (NIRC, Sec. 229);
2. There must be a written flaim for refund or
credit filed by the taxpayer with CIR (NIRC, Sec.
229; Vda. de Aguinaldo v Commissioner of
Internal Revenue, G.R. No. L-19927, FeiJruary
26, 1965);
REASON: The claimant must file a written claim
before resorting to an action in court fo: ·
a. Afford the CIR an opportunity to correct the
action of subordinate officers: and
b. Notify the government that such taxes have
been questioned and. the notice should be
borne in mind in estimating the . revenue
available for expenditure (NIRC, Sec. 229;
Commissioner of Internal Revenue v.
Acosta, G.R. No. 154068, August 3,2007).
EXCEPTIONS:
a. A return filed showing an overpayment shall
be considered as a written claim for credit or
refund (NIRC, Sec. 204 (C)); and .. .
b. The CIR may, even without the written claim
therefor, refund or credit any tax where on
the face of the return upon which the
payment was made, such payment appears
clearly to have been erroneously paid
(NIRC, Sec. 229).
3. The claim must be a Categorical demand for
reimbursement (Bermejo v. Collector of Internal
Revenue, G.R. No. L-3029, July 25, 1950);
4. The claim with the CIR and the 30-day period to
appeal to the CTA (R.A. No. 1125, Sec. 2j must
be filed within g years from the date of payment
of the tax or penalty; and
RULE: The administrative claim must be filed
within the said 2-year period, regardless of any
supervening cause (NIRC, Sec. 229).
NOTE: The 2-year period may be suspended for
reasons of equity and other special
REMEDIES
Taxation Law
circumstances (Commissioner of Internal
Revenue v. Philippine American Life Insurance
Co., G.R. No. 105208, May 29, 1995) such as:
a. Assurance on the part of the BIR
(Commissioner of Internal Revenue v.
Philippine National Bank, G.R. No. 161997
October 25, 2005); and
b. Agreement between the BIR and the
taxpayer to await the result of a pending
case involving similar issues raised in refund
(Panay Electric Co., Inc. v. Collector of
Internal Revenue, G.R. No. L-10574, May
28, 1958).
5. Prior payment of the tax must be Proven. There
must be actual collection and receipt by the
government of the tax sought to be recovered
and this requires factual proof (Collector of
Internal Revenue v. Li Yao, G.R. No. L-11861,
December 27, 1963).
REASON: A claim for refund partakes the
nature ofan exemption which cannot be allowed
unless granted in the most explicit and
categorical language (Commissioner of Internal
Revenue v. S.C. Johnson & Son, Inc., G.R. No.
127105, Jurie 25,.1999).
• ESSENTIAL BASIC CONDITIONS IN
ORDER FOR A TAXPAYER TO BE
ENTITLED ro A .REFUND CLAIM OR
ISSUANCE OF A TAX CREDIT
CERTIFJCATE
1. · The •claim is filed with the Com·missioner of
l,nternal Revenue within the two-year period
from the date of payment of the tax;
2. It is shown on the return of the recipient that the
income payment received was declared as part
• of the.gross income; and
3. ,The fact of withholding is established by a copy
of a statement duly issued by the payor to the
payee showing the amount paid and the amount
of the tax withheld therefrom (Commissioner of
Internal Revenue v. Team (Philippines)
Operations Corporation (formerly Mirant Phils.,
Operation Corporation), G.R. No. 179260 April
2, 2014).
TWO-YEAR PRESCRIPTIVE PERIOD
FOR REFUND
GENERAL RULE: The two-year prescriptive period
runs from the p_aymentof the tax (NIRC, Sec. 229).
EXCEPTIONS:
1. Overpaid quarterly income taxes - from the
date the final adjustment return is filed after the
end of the taxable year (Commissioner of
 EEID '
1 •
AID
San Seda University Coltego of Law - RGCT Bar Operations Center
Internal Revenue v Court of Appeals, G.R. No.
117254, January 21, 1999).
REASON: It is at thc:1tpoint where it can already
be determined whether there has been
overpayment (Commissioner of Internal
Revenue v. Court of Appeals, G.R. No. 117254,
.l:1n11nry21, 1999).
2. When the final adjustment return was
actually filed before the last day prescribed
by law for filing - from the date of actual filing
(Commissioner of Internal Revenue v. Court of
Appeals, G.R. No 117254, January 21, 1999).
3. Tax sought to be refunded is illegally or
erroneously collected - from the date the tax
was paid (Commissioner of Internal Revenue v.
Victorias Milling, G.R. No. L-24108, January 3,
1968).
4. Tax is paid only in installments or only in part
- from the date the last or final installment or
payment (Collector v. Prieto, G.R. No. L-11976,
August 29, 1961).
5. Taxpayer merely made a deposit - from the
conversion of the deposit to payment (Union
Garment v. Collector, CTA Case No. 416,
November 17, 1958).
REASON: Merely making a deposit is not
equivalent to payment until the amount is
actually applied to the specific purpose tor which
it was deposited (Union Garment v. Collector of
Internal Revenue, CTA Case No. 416,
November 17, 1958).
6. Tax has been withheld from source (through
the withholding tax system) - from the date it
falls due at the end of the taxable year {2-C,
DOMONDON, supra at 448).
COMPUTATION OF 2-YEAR PERIOD
FOR FINAL AND CREDIT ABLE
WITHHOLDING TAX
The return for final and creditable withholding taxes
shall l.Jeriled and the payment made not later than
the last day. of the month followingj_he clo;zQot t_he
quarter during.which withholding w,is made. (N/RC,
Sec. 58(a))
NOTE: The final withholding taxes are considered as
full and final payment of the income tax due, and
thus, are not subject to any adjustments. Thus, the
2-year prescriptive period commences to run from
the time the refund is ascertained, i.e., the date such
tax was paid, and not upon the discovery by the
taxpayer of the erroneous or excessive payment of
' : jO :~ ' L" 1""•~~: T 1~· /'
t, \ I "
.. ·•. ' , ,, '341',,_'.
""~~
' . ,.. \ ' ;,
taxes (Metropolitan Bank & Trust Co. v.
Commissioner of Internal Revenue, G.R. No.
182582, Apr/I 17, 'LU1/).
PARTIES ENTITLED TO TAX REFUND
OR TAX CREDIT
GENERAL RULE: The person enl11ledlo ask for a
refund/credit is the taxpayer who paid the same.
1. Where tax has been shifted
The person on whom the tax is imposed by lc;1w
and who paid the same is the one entitled to the
credit or refund even if he shifts the burden
thereof to another.
The statutory taxpayer is the proper party who
can claim the refund. The rule applies even if the
tax has been actually shifted by the taxpayer to
his customers and even if the tax has been billed
as a separate item in the delivery receipts and
invoices issued to the customers (Silkair
(Singapore) Pte: Ltd. v. Commissioner of
Internal Revenue, G.R. No. 166482, January 25,
• 2012).
2f Where ylaimant exempted from both
'dir~ct,'and indirect taxes
If the law confers exemption only from direct
taxes, the statutory taxpayer is the proper party
to file the claim for refund/credit. On the other
hand,. if the e~emption conferred applies to both
direct and indirect taxes, a claimant is entitled to
tax. r,efund/qredit even if the applicable tax was
merelyshiMd to it (Silkair (Singapore) Pte. Ltd.
v. Comrrifssi'i:merof Internal Revenue, G.R. Nos.
171383 and 17239, November 14, 2008).
"3.s·Wnere donor's tax was assumed ,by
donee
Where under the terms of donation, the donor's
tax was assumed by the donee but said tax was
advanced by the donor, the donee was the
proper party to claim refund of the donor's tax (2
DE LEON, The National Internal Revenue Code
Annotated (2016), p. 469-470 [hereinafter, 2 DE
LEON,· NIRC]).
TAXPAYER'S REMEDIES WHEN NOl
ACTED UPON OR DENIED
1. If the CIR takes time in deciding t11e dc1irn and
the perrod ot 2 years is about to end, the suit or
proceeding must be started in the CTA before
the enrl of the two-year period without awaiting
the decision of the CIR (/NGLES, supra at 469);
or
2. If the claim is denied by the CIR within the two-
year period, the taxpayer has 30 days from
receipt of the denial within which to appeal to the
CTA (R.A. No. 1125, Sec. 11).
 ,~:v_/~l-
~' , .,.. ,,~':
'"":
."342 • ", , · ·, ,
' ' ' Taxation Law
.,,. ' , { '; i' l, < o >."
SUBMISSION OF DOCUMENTS IN
SUPPORT FOR THE TAX REFUND OR
TAX CREDIT
The submission of complete supporting documents
is necessary to support a claim for refund or for
issuance of tax credit. However, failure to submit
documents in support of a taxpayer's claim for
refund at the administrative level does not prevent
the CTA from entertaining the appeal. Non-
submission of documents in the administrative level
is not fatal to a judicial claim for refund. The cases
filed before the CTA are litigated de nova and party
litigants should prove every minute aspect of their
cases (Commissioner of Internal Revenue v.
Philippine Bank of Communications, CTA EB No.
933 re: CTA Case No. 7915, October 7, 2013).
OFFSETTING OF TAX DEFICIENCY AND
CLAIM OF REFUND
Offsetting of. taxes is allowed only when the
determination of the taxpayer's liability is intertwined
with the resolution of the claim for. tax refuns:!of
erroneously, or illegally collected taxes. under
Section 229 of the NIRC (Com_missibnerof)ntemal
Revenue v. Toledo Power Co., <JR. No. 196415,
December 2, 2015). • •
GOVERNMENT'S
INTEREST
GENERAL RULE: Governmeht ca,nnot be required
to pay interest on taxes ref(jnc:ledfo the taxpayer in
the absence of a statutory provision clearly or
expressly directing or authorizing such payn'lent
(Commissioner of Internal Revenue v. Sweeney,
G.R. No. L-12178, August 21, '1959).
EXCEPTIONS:
1. When the CIR acted with patent arpitrari~¢ss.
Arbitrariness presupposes inexcusable or
• obstinate disregard of legal provisions
(Commissioner of Internal Revenue v. American
Rubber Co., G.R. No. L-19667, November 29,
1966); and
2. Refunds and credits of income taxes withheld on
the wages of the employees (N/RC, Sec. 79
(C)).
Forfeiture of Tax Refund or Tax Credit
a, Forfeiture of refund - a refund check or
warrant which remains unclaimed or
uncashed within 5 years from date of mailing
or delivery shall be forfeited in favor of the
government and the amount thereof shall
revert to the general fund (NIRC, Sec,
••230(A)).
b. Forfeiture of. tax credit - a TCC which
remains unutilized after 5 years from date of
issue, shall, unless revalidated, be invalid
REMEDIES
:, :":
and shall not be allowed as payment for
internal revenue taxes and the amount
covered by the certificate shall revert to the
general fund (NIRC, Sec. 230 (B)).
NOTE: Unutilized TCCs may be converted
into cash refund during the validity period of
the TCC (R.R. No. 5-00).
BURDEN OF PROOF FOR A CLAIM OF
REFUND
The burden of proof to establish entitlement to
refund is on the claimant taxpayer. Being in the
nature of a claim for exemption, refund is construed
in strictissimi juris against the entity claiming the
refund and in favor of the taxing power. This is the
reason why a claimant must positively show
compliance with the statutory requirements provided
for under the NIRC in order to successfully pursue
one's claim (Winebrenner & Inigo Insurance
Broke(s; Inc. v. Commissioner of Internal Revenue,
G,R. No.,206526, January 28, 2015).
•OTHER CONSI_DERATIONS:
1. Payment µnder'protest not required - any suit
or proceed)rig fqr refund or credit may be
maintained whet\ler or not such tax, penalty, or
·sum has been paid under protest or duress
Ll,ABlLITY FOR (NIRC, Sec. 229). '
2. The tem.edyof tax-refund cannot be availed of to
revive . .the figt)t to; contest the validity of an
assessment once the same has been lost not
6nly by fqilure to ~ppeal but by the lapse of the
reglementary period within which appeal could
have ·been tqken (Commissioner of Internal
Re11enu,ev.. Concepcion, G. R. No. L-23912,
Marr;h 15, 1968).
3. ,l\.wifhholding agent has a legal right to file a
claim for refund for the following reasons:
a. He is considered a "taxpayer'' as he is
personally liable for the withholding tax as
well as for deficiency assessments,
surcharges, and penalties, should the
amount of the tax withheld be finally found
• to be less than the amount that should have
been withheld under law; and
b. As an agent of the·taxpayer, his authority to
file the necessary income tax return and to
remit the tax withheld to the government
impliedly includes the authority to file a claim
for refund and to bring an action for recovery
of such claim (Commissioner of Internal
Revenue v. Smart Communication, Inc.,
G.R. Nos. 179045-46, August 25, 2010).
NOTE: While the withholding agent has the
right to recover the taxes erroneously or
 &@'46#& \ I
MEM:Q~YAID
San Beda University College of Law - RGCT Bar Operations Cante;
illegally collected, he nevertheless has the
obligation to remit the same to the principal
taxpayer (Commissioner of Internal
Revenue v. Smart Communication, Inc.,
GR. Nos. 179045-46, August 25, 2010,
supra).
c. Sections 204(A) and 229 (Par. 2) pertain to
the refund of erroneously or illegally
collected taxes, while Section 112(A)(C)
refers only to administrative claims with the
Commissioner of Internal Revenue for
excess input VAT (Commissioner of Internal
Revenue v. Dash Engineering PHL, Inc.,
GR. No. 184145, December 11, 2013).
d. Claim of refund or tax credit for unutilized
creditable input VAT is governed by Section
112 (A) of the NIRC. (Please refer to VAT
chapter).
e. Sec. 229 of the NIRC refers to judicial action
for the recovery of tax, while Sec. 204
applies to administrative claims filed with the
BIR (2 DE LEON, NIRC, supra at 554).
CARRY-OVER EXCESS INCOME
A Corporation may Carry-Over Excess Income
Tax Payments in the succeeding taxai>le years in
lieu of Tax Credit or refund
In case of excess income tax payments, the
corporation is given another option aside from tax
credit or refund. Such excess payments may be
carried-over and credited against the estimated
quarterly income tax liabilities for the •taxable
quarters of the succeeding taxable years (NIRC,
Sec. 76).
··~y~nafte,r,the lapse of 2 years from the taxable
The options are mutually exclusive. Once the option
to carry-over the excess payments is made,. such
shall be considered irrevocable for that taxable
period and no application for refund or issuance of a
tax credit certificate shall be allowed (NIRC, Sec.
76).
NOTE: The irrevocability rule (Sec. 76) is limited
only to the option of carry-over such that taxpayer
is still free to change its choice after electing refund
of its excess tax credit. But once it opts to carry over
such excess creditable tax, after electing refund or
issuance of tax credit certificate, the carry-over
option becomes irrevocable. Accordingly, the
previous choice of a claim for refund, even if
subsequently pursued, may no longer be granted.
xxx Sections 76 and 228, paragraph (c) of the NIRC,
as amended, unmistakably evince that choice of
refund or tax credit certificate is not irrevocable
(University Physicians Services, Inc.
Management, Inc. v. Commissioner of Internal
Revenue, G.R. No. 205955, March 7, 2018).
' ' . . .
' .
~-,
"'
,
, ,'343
"
EXCESS INPUT VAT (SEC. 112) VS.
EXCESSIVELY COLLECTED TAX (SEC.
229)
In a claim for refund or credit of "excess" input VAT
under Section 110(8) and Section 112(A), the input
VAT is not "excessively" collected as understood
under Section 229. At the time of payment of the
input VAT the amount paid is the correct and proper
amount. The person legally liable for the input VAT
cannot claim that he overpaid the input VAT by the
mere existence of an "excess" input VAT. The term
"excess" input VAT simply means that the input VAT
available as credit exceeds the output VAT (Coca-
Cola Bottlers Philippines, Inc. v. Commissioner of
Internal Reve_nue, G.R. No. 222428, February 19,
2018).
From the plain text of section 229, it is clear that what
can be refunded or credited is a tax that is
"erroneously, illegally, excessively or in any manner
wrongfully collected." In short, there must be a
wrongful payment because what is paid, or-part of it,
is legally due (Coca-Co/a Bottlers Philippines, Inc. v.
Commissioner of Internal Revenue, G.R. No.
22:2428, Fef.)ruary 19, 2018).
DISTINCTION BETWEEN THE
APPLICAT1(>,N OF THE 2-YEAR
PRESCRIPTIVE PERIOD UNDER SEC.
112 AND S;EC::,229
Under§~S:- 112, ,the 2-year prescriptive period
applies'of')IY t<lJhe,;administrative claim before the
CIR and noftojudicial claim before the CTA because
the taxpayer always has 30 days from the decision
()f.;tJ:1~
CIR or from the lapse of the 120-day period
quarter where the sales were made. Thus, it is only
the administrative claim that must be filed within the
two-year prescriptive period; the judicial claim need
not fall within the -two-year prescriptive period (CIR
v. Mindanao Geothermal II Partnership, G.R. No.
191498, January 15, 2014).
Under Section 229, the taxpayer need not wait for
the action of the CIR on the claim for refund before
taking his claim to the CTA. Both the claim for refund
and the appeal to the CTA must be done within the
two-year period. Hence if the period is about to
expire, and the CIR has not acted upon the claim,
the taxpayer may file and appeal with the CTA,
without waiting for the CIR. The suit or proceeding
must be started in the CTA before the end of the two-
year period without awaiting the decision of the CIR
(INGLES, Reviewer, supra at 469).
NOTE: Prior to the effectivity of the TRAIN Law, the
Supreme Court, in the case of Commissioner of
Internal Revenue v. Mindanao Geothermal II
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REMEDIES
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Taxation Law

Partnership, held that in case of denial of the claim EXCESS INPUT VAT V. EXCESSIVELY
for VAT refund or failure of the Commissioner to act COLLECTED TAX
on the said claim, the taxpayer affected may appeal
the unacted claim with the CTA.

However, pursuant to TRAIN Law, the inaction of the

Commissioner on the application for refund within
the prescribed period was removed as a ground to
appeal the claim. Further, the BIR has clarified in its
Input VAT available as Input VAT collected is
issuance that failure on the part of the BIR to act on
credit exceeds the more than what is
the application within the ninety (90)-day period shall
output VAT legally due
be punishable under Sec. 269 of the Tax Code. In
the event that the f)0-day period has lapsed without
BIR's decision, the VAT refund claim may still
continu.e to be processed administratively (R.R. Not "excessively" Involves erroneously,
13-18, Sec. 4.112-1, as amended by RR 26-18, collected because at the illegally, excessively or
Sec. 2). time its collection, the in any manner
amount paid is correct wrongfully collected
There seems to be two schools of thought on the and proper. tax.
jurisdiction of the CTA in the refund of excess
creditable input taxes. First, the inaction. of the The term "excess"
Commissioner to act on the claim for refund within simply means that the
the 90-day period will be deemed a denial and input VAT available as
hence, the taxpayer may file a judicial claim i.e. credit exceeds the
appeal to the CTA within 30 days therefrom. output VAT.

Second, the inaction by the Commissioner to act on

the claim for refund within the 90-day peridd will not
be considered a denial of the claim for refUnct.The
taxpayer has to wait for the decision of the Cannot. claim for ref~r\d Can claim for refund or
Commissioner before he can fil.~. an appeai with the or credit of input VAT as credit.
CTA within 30 days from the receipt of the decision "excessively"
'-
collected:
,

denying the claim.

t, ,

The Supreme Court has not yet rendered a decision

Administrative Claim: 2 Judicial claim for refund
which addressed the apparenfconflict brought about
years from the close of is 2 years from the date
by the amendment by the TRAIN Law to Sec. 112 of
the taxable .quarter of payment of the tax
the NIRC. It is believed that the former rule still
when the sale was illegally or wrongfully
applies. This is supported by Sec. 7{a),(2)b(R.A. No.
made by tne person collected.
1125, as amended by R.A. Nos. 345'7, 9282' and
legally liable to pay the
9503.
output VAT. Should the input VAT
be in fact "excessively"
Accordingly, a taxpayer need not wait for the
Judicial claim: within 30 collected, meaning, the
decision of the CIR before elevating the matter to the
days from the receipt of person liable actually
CTA as long as the 120-day (now 90 days under the
the decision of the pays more than what is
TRAIN Law) period has expired. This is
Commissioner denying legally due, he must file
demonstrated in a long line of cases (Site/
fully or partially the claim a judicial claim for
Philippines Corporation v. CIR, G.R. No. 201326,
for tax refund. refund within 2 years
February 8, 2017; Deutsche v. CIR, G.R. No.
from his date of
197980, December 1, 2016; . Coral Bay Nickel
NOTE: In case of payment. In such case,
Corporation v. CIR, G.R. No. 190506, June 13,
inaction by the rules for ordinary tax
2016; Procter and Gamble Asia PTE Ltd. v. CIR,
Commissioner of refund or credit will
GR No. 204277, May 30, 2016).
Internal Revenue in govern (i.e., NJRC,Sec.
cases involving disputed 229)
assessments, refunds of
internal revenue taxes, Both the claim for
fees or other charges, refund and the appeal
penalties in relations to the CTA must be
thereto, or other matters done within the two-

fh&WttiM \ 1
San Seda University Cottege of Law - RGCT Bar Operatio()s Center
arising under the year period (INGLES,
National Internal Reviewer, supra at
Revenue Code or other 469),
laws administered by
the Bureau of Internal
Revenue, where the
National Internal
Revenue Code provides
a specific period of
action, the inaction shall
be deemed a denial
(Sec, 7(a)(2), RA No,
1125, as amended by
RA Nos. 3457, 9282
and 9503).
The judicial claim need
not fall within the two-
year prescriptive periocJ
(CIR v. Mindanao
Geothermal II
Partnership, GR. No.
191498, January 15,
2014).
He is not the taxpayer
who legally paid the
input VAT because of
the shifting of VAT or
indirect tax payment of
the buyer.
GENERAL RULE: A
taxpayer can apply his
input VAT only against
his output VAT.
EXCEPTION: Taxpayer
is expressly "zero-rated
or effectively zero-rated"
under the law because
there is no output VAT
arising from vatable
sales.
(BOADO, supra at 251-25)
I COLLECTION
1. Power to Collect
2. Period of Limitation on Collection
AID
He is the tc1~payer of
the illegaUy or
wrongfully collected
tax.
1. Payment of any
internal revenue tax
liability (except those
excluded);
2. May be converted as
a cash refund; or
3. Other manner and in
accordance with the
limitations, if any, as
may be prescribed by
the provisions of the
Revenue Regulations
(R.R. No. 5-00, Sec.
1.B).
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3. Summary or Administrative Remedies
a. Jax lien
b. Distraint of personal property
c. Levy of real property
4. Judicial Remedies
a. Civil
b. Criminal
5. Injunction
POWER TO COLLECT
Collection
It is the means, process, and method . of
implementing the tax law for the purpose of
satisfying the tax obligation. It is the actual effort in
obtaining payment of the tax (1 DOMONDON, Bar
Q&A Taxation: General Principles of Taxation
(20113)p. 190).
Requisites: (AG-NoWri-Pre-FLo-NoEn)
The following are the requisites before taxpayer may
be.required to pay the assessed:
1. There must be an ~ssessment that has become
final, executory, and collectible;
2. The amount being collected must be part of the
§overnnient's accounts receivable;
3.; The .;:irnquntbeing collected must Not have been
Wfitt~n~off or cancelled;
4. The right.of the government to collect has not yet
Prescribeµ;
5. The pfoper procedure for collection whether
admir;tistrativeor judicial are followed;
6. The ,taxp21yercan still be Located; and
7. T~ggye,f(l!J),J'3ntls Not £!!ioined from collecting
the ta'X)(2;CDO'MONDON, supra at 334).
f,f;RIOD OF LIMITATION ON
'.,Q~~4itGTION
GENERAL RULE: The prescriptive period to collect
the taxes due is 5 years from the date of assessment
(NIRC, Sec. 222 (C)).
EXCEPTIONS:
1. False or fraudulent return with intent to evade
taxes: within 10 years from discovery without
need for prior assessment. The government
may file a proceeding in court (NIRC, Sec. 222
(a)).
2. Failure or omission to file a return: within 10
years from discovery without need for
assessment (NIRC, Sec. 222 (a)).
3. Waiver in writing executed before the 5-year
period expires: period agreed upon (NJRC, Sec.
222 (d)).

ASSESSMENT NECESSARY BEFORE
COLLECTION
GENERAL RULE: Assessment precedes collection
(NIRC, Sec. 203).
EXCEPTION: When the unpaid tax is a tax due per
return as in case of a self-assessed income tax
under the pay-as-you-file system in which case,
collection may be instituted without need of
assessment pursuant to Sec. 56 of the NIRC
(DIMAAMPAO, Tax Principles and Remedies
(2018), p. 175 [hereinafter DIMAAMPAOJ).
NO PROCEEDING FOR COLLECTION
WITHOUT ASSESSMENT
GENERAL RULE: No proceeding in court without
assessment for the collection of such taxes shall be
commenced (NIRC, Sec. 203).
EXCEPTION: A proceeding in court for the G()llection
of tax may be filed without prior assessment in the
following cases: ••
1. False or fraudulent return with intent to evade
tax; or •
2. Failure to file return (NIRC, Sec, 2?2 (a}).
NOTE: A warrant of distraint and/or levy without
issuance of a FAN is void (Golden Harvest Global
Corp. v. Commissioner of Internal Revenue, CTA
Case No. 7503, September 18, 2009).
ASSESSED TAX BECOMES
COLLECTIBLE WHEN:,
The government can collect when the assessment.
becomes final and executory for:
1. Failure to protest FLO/FAN within the pre::;crib'ed
period; • •
2. Failure to appeal FDDA within the. prEiscribed
period; or
3. Failure to appeal an adverse decision of the
court within the prescribed period.
If the assessment has become final and executory,
the assessment is considered correct which may be
enforced by summary or judicial remedies (R.R. No.
12-99, Sec. 3. 1.1, as amended by R.R. No. 18-13,
supra).
A taxpayer who fails to contest the BIR assessment
in the CTA cannot contest the same in an action to
collect (Basa v. Republic, G. R. No. L-45277, August
5, 1985).
TAX IS DEEMED COLLECTED WHEN:
1. If collection is through summary remedies
(distraint and levy)- when government avails of
a distraint and levy procedure prescribed under
the NIRC (ABAN, supra at 283-284).
REMEDIES
Taxation Law
Distraint and levy proceedings are validly begun
or commenced by the issuance of the warrant
and service thereof on the taxpayer (Bank of the
Philippine Islands v. Commissioner of Internal
Revenue, G.R. No. 139736, October 17, 2005).
2. If collection is through judicial remedies (civil or
criminal) - when the government files the
complaint with the proper regular trial court, or
where the assessment is appealed to the CTA,
by filing an answer to the taxpayer's petition for
review wherein payment of the tax is prayed for
(Philippine National Oil Co. v. Court of Appeals,
G.R. No. 109976, April 26, 2005).
Suspension of Running of Statute of Limitations
(Please refer to discussions under Assessment on
page 320.)
ADMINISTRATIVE REMEDIES
1. Taxlien
2. Distraint of personal property
3. Levy of real property
Tax lien,is a'legal claim or charge on property, real
or personal, esta_bliShed_by law as security in default
of the payment of taxe.s (Hongkong and Shanghai
Banking, Corp: , v. Rafferty, G.R. No. L-13188,
Novemb'er 15, 1918). ·•
A tax• lien created in favor of the government is
sup!3riqr to _all dth,~r claims or preferences
(DIMA'AMPAQ'. supra),it 216).
.NATU~E AND. EXTENT OF TAX LIEN
I.f , aliy persor;i/ • corporation, partnership, joint-
account, association or insurance company liable to
P?Y an internal revenue tax, neglects or refuses to
pay the same after demand, the amount shall be a
lien in favor of the Government from the time when
the assessment was made until paid, with interests,
penalties, and costs in addition thereto upon all
property and rights to property belonging to the
taxpayer.
Provided, that this lien 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 (NIRC, Sec. 219).
LIEN IN FAVOR OF THE GOVERNMENT
ARISES:
1. With respect to personal property - from the time
the tax became due and payable; and
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San Beda University Conage of Law - RGCT Bar Operations Center
2. With respect to rnal property - from the time of KINDS OF DISTRAiNT:
registration with the Register of Deed:;
1. Actual Distraint
(Commissioner of Internal Revenue v. National
Labor Relations Commission, G.R. No. 74965,
November 9.. 1994).
GOVERNMENT'S CLAIM PREDICATED
ON TAX LIEN IS SUPERIOR TO CLAIM
BASED ON JUDGMENT
Tax claim must be given preference over any other
2. Constructive Distraint
claim of any other creditor, in respect of any or all
properties of the insolvent.
The tax lien attaches not only from the service of the
warrant of distraint but from the time the tax became
due and payable (Commissioner of Internal
Revenue v. National Labor Relations Commission,
G.R. No. 74965, November 9, 1994).
PROCEDURE FOR ACTUAL DISTRAINT
NOTE: The power of the court in execution of (CSRNS)
judgments extends only to properties 1.
unquestionably belonging to the judgment debtor. 2.
Execution sales affect the rights of the judgment 3.
debtor only, and the purchaser in an auction sale 4.
acquires only such right as the judgment debtor had . .5, .§.911=)
at the time of sale (MAMALATEO, Reviewer on
Taxation (2019), p. 693 [hereinafter MAMALATEO, 1. Commelicement of distraint proceedings by:
Reviewer]).
VALIDITY OF A TAX LIEN
The lien shall be valid against any mortgagee,
purchaser or judgment creditor 'only when notice of
such lien shall be filed by the CIR in the.office .of
the Register of Deeds of the province. or city. where
the property of the taxpayer is situated or located 2.
(NIRC, Sec. 219).
EXTINGUISHMENT OF TAX LIEN!>•
Tax liens may be extinguished as follows: {P2 FD)
1. By fayment or rescission of the tax:
2. By .e_rescriptionof the right of the government to
assess or collect (NIRC, Secs. 203 and 202);
3. By£ ailure to file notice of lien in the office of the
Register of Deeds as against mortgagee,
purchaser or judgment creditor (NJRC, Sec.
219); or
4. By Qestruction of the property subject of the lien.
NOTE: In cases of Nos. 1 & 2, there is no more
tax liability; Under Nos. :l & 4, the taxpayer is still
liable (2 LJELEON, NIRC, supra at 498-499).
DISTRAINT OF PERSONAL PROPERTY
Distraint is a remedy whereby the collection of
delinquent taxes is enforced on the goods, chattels
or effects and other personal property of whatever
character of the taxpayer (NIRC, Sec. 205 (a)).
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Resorted to when at the time required for
payment, a person fails to pay his delinquent tax
obligation (NIRC, Sec. 207 (A)). It consists in the
actual seizure and taking possession of personal
property of the taxpayer (MAMALATEO,
Reviewer, supra at 695).
Issued where no actual tax delinquency of the
taxpayer is necessary before the same is
resorted to by the government (Id.).
It is a preventive remedy to forestall possible
dissipation of the taxpayer's assets when
delinquency takes place (ABAl;J, supra at 238).
fommencement of distraint proceedings;
§.ervice of warrant of distraint;
.Report on the distraint;
Notice of sale of distrained properties; and
al'f:>i;Jblic
auction.
a. CIR or f:lis duly authorized representatives -
where tliJ3 amount involved is in excess of
P,fM;br :
b. Revenue District Officer - where the amount
';jrw:olv:e~d;;~f>1Mor less (NIRC, Sec. 207
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Service of warrant of distraint
lk-,Distraint of Tangible Properties
" "-1:-\Th'e officer serving the warrant of distraint
shall make or cause to be made an account
of the goods, or other personal property
distrained. A signed copy of which shall be
left either with the owner or person from
whose possession such personal property
was taken, or at the dwelling or place of
business of such person, and with someone
of suitable age and discretion, to which list
shnll be added a statement of the sum
demanded and note of the time and place of
sale (NIRC, Sec. 208).
b. Distraint of Intangible Properties
i. Stocks and other securities
shall be distrained by serving a copy of
the warrant of distraint upon the
tnxp8yor and upon the president,
manager, treasurer, or other
responsible officer of the corporation,
company or association, which issued
the said stocks or securities;

ii. Debts and credits
shall be distrained by leaving a copy of
the warrant of distraint with the person,
or his agent, owing the debts or having
in his possession or under his control
such credits; and
iii. 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
(NIRC, Sec. 208).
Garnishment
Refers to a warning to a person in
whose hands the effects of another are
attached, not to pay the money or
deliver the properly or allow withdrawal
of deposits of the defendant in his hands
(MAMALA TEO, Reviewer, supra a_t
696).
By the proGess of garnishment, the
plaintiff virtually sues the garnis\1ee for
a debt due to defendant. -The debtor
stranger becomes a forc~d intervenor
(Director of Bureau of Commerce and
Industry v. Pedro Concf:!pcion, G.R. No.
L-9031, May 22, 1922). In other words,
through the service of the writ of
garnishment, the garnfshee becomes a
"virtual party" to, ora "forced intervenor"
in, the case, and the trial court thereby
acquires jurisdfction tb bind· him to
compliance with all orders and
processes of the trial court_with a.view
to the complete satisfaction of the
judgment of the cou.rt (Bank qf the·
Philippine Islands v. Carlito Lee, GR,
No. 190144, August 1, 2012). • • corre~ponding certificate of stock shall be
Bank accounts may be distrained
notwithstanding the Bank Secrecy Act
(R.A. 1405) which prohibits inquiry into
bank accounts, since in the case of
distraint, no inquiry is made. The BIR
simply seizes so much of the deposit as
is sufficient to discharge the obligation
without having to know how much the
deposits are, or where the money or any
part of it came from (Opinion of Sec, of
Justice, No. 54, s. 1956).
3. Report on the distraint
a. It shall be submitted by the distraining officer
to the Revenue District Officer, and to the
Revenue Regional Director within 10 days
from receipt of warrant.
REMEDIES
Taxation Law
b. The CIR or his duly authorized
representative has the power to lift the order
of distraint (NIRC, Sec. 207 (A)).
4. Notice of sale of distrained properties
a. Notice shall specify the time and place of
sale and the articles distrained;
b. The time of sale shall not be less than 20
days after notice to the owner or possessor
of the property and posting of such notice;
and
c. The posting shall be made in not less than 2
public places in the city or municipality
where the distraint is made. One place for
posting of such notice is at the Office of the
Mayor of such city or municipality in which
the property is distrained (NIRC, Sec. 209).
5. Sale at public auction
a. Sale must be held at the time and place
stated in the notice;
b." It_may be conducted by the R~venue Officer
o·r through a duly licensed commodity or
stock e~'t:hange; ,
.c. The'sale is conducted by officer; other than
the officer Serving the warrant at a public
auction.and the property shall be sold to the
highe1t bidderifor cash;
d. lf sale ls through a licensed commodity or
stock exchange, it must be with the approval
pf the Cl;R; - •
e. ; lif case ,of stocks and other securities, the
..hffic;er rrlaking the sale shall execute a bill of
-·_saie, which shall be delivered to the buyer
·and ,to the/ corporation, company or
ass.oeiation(CCA) which issued the stocks
or other s~urities. Upon receipt of the copy
oMh.ebilkof sale, an entry of transfer should
be , made in the CCA's book, and a
issued if required;
• f. 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; and
NOTE: Expenses chargeable upon seizure
shall include only those actual expenses of
seizure and preservation of the property
pending the sale and does not include
services of the RO (NIRC, Sec. 209).
g. The officer making the sale shall make a
written report of the proceedings to the CIR
within two (2) days after the sale (N/RC,
Sec. 211).
Right of Preemption
If at any time prior to the consummation of the
sale, all proper charges are paid to the officer
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conducting the sale, the distrained properties ACTUAL DISTRAINT V.

shall be restored to the owner (NIRC, Sec. 210). CONSTRUCTIVE DiSTRAINT
Purchase by the Government at Sale upon
Distraint
When the amount bid for the distrained property
is:
a. Not equal to the amount of tax; or
b. Ve1y much less than the actual market value
of the property offered for sale (NIRC, Sec.
212).

The CIR or his deputies may purchase on behalf There is a taking of Taxpayer is merely
of the National Government for the amount of possession prohibited from
taxes, penalties and cost due thereon (NIRC, disposing of his
Sec. 212). property

Property so purchased may be resold by the CIR

or his deputy; the net proceeds shall be remitted
to the National Treasury and accounted as
internal revenue (NIRC, Sec. 212).
CONSTRUCTIVE DISTRAINT
It is issued in the following cases when the taxpayer
is: (B-PRO)
1. Retiring from any ~usiness subject to tax;
2. Intending to leave the fhilippines;
3. Intending to B_emovehis properties therefrom or
to hide or conceal his property; or
4. Intending to perform any act tending to Obstruct
the proceedings for collecting the tax' due or
which may be due from him_(NIRC, Sf;tc. 206).
CONSTRUCTIVE DISTRAINT
EFFECTED:
1. By requiring the taxpayer or any per~on having
possession or control of such property to sign a
receipt covering the property distfained arid
obligate himself to preserve the same intactand
unaltered ·and not to dispose of the same in any
manner whatever, without the express authority
of the CIR (NIRC, Sec. 206).
2. Punishment in Case of Violation:
Upon conviction, fine of not less than twice the
value of the property so sold, encumbered or
disposed of but not less than P5,000, or suffer
imprisonment of not less than 2 years and 1 day
but not more than 4 years, or both (NIRC, Sec.
276). If the taxpayer refuses, the officer will
prepare a list of the properties distrained and will
leave a copy thereof in the premises, in the
presence of 2 witnesses (NIRC, Sec. 206).
Effected by service of Effected by requiring
warrant of distraint or the taxpayer to sign a
leaving a list of the receipt of the property
property or leaving a list of such
property
(2 DE LEON, NIRC, supra at 484).
FURTHER··.QISTRAINT
The remedy by distraint and levy may be repeated if
necessary 'u11til the full amount of the tax
delinquency due~ including all expenses is collected
from the taxpayer (NIRC, Sec. J 17).
LEVYQf'i~EJ\b{f)ROPERTY
IS
Levy
Refers to the seizure of real properties and interest
••)rl;;gr;Ji~_htsto such properties for the satisfaction of
''ta'Xest·'due from the delinquent taxpayer
(DIMAAMPAO, supra at 185).
NOTE: Improvement attached to the land, by
express provision of lavy (CIVIL CODE, Art. 415),
though not physically so united, the sugar quotas are
inseparable therefrom, just like servitudes and other
real rights over an immovable and should be
considered as real property subject to levy, not
distraint (Presbitero v. Fernandez, G.R. No. L-
19527, March 30, 1963).
WHEN LEVY MAY BE EFFECTED
After the expiration of the time required to pay the
delinquent tax obligation, real property may be levied
upon before, simultaneously, or after the distraint of
personal property belonging to the delinquent
taxpayer (NIRC, Sec. 207(8)); and the remedy by
distraint and levy may be repeated, if necessary,
until the full amount, including all expenses, is
collected (NIRC, Sec. 217).
):",:,·i:~:.tj:,.\'"·,<,,
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In case the warrant of levy is not issued before or •
simultaneously with the warrant of distraint, and the
personal property of the taxpayer is not sufficient to
satisfy his tax delinquency, the CIR or his authorized
representative shall, within 30 days after the
execution of the distraint, proceed with the levy on
taxpayer's real property (N/RC, Sec. 207(8)).
PROCEDURE FOR LEVY (ISAP-R 2 F2)
1. !ssuance of Warrant of Levy;
2. §ervice of the Warrant of Levy;
3. hdvertisement of the Sale;
4, fublic Sale of Property under Levy;
5, Redemption of Property sold;
6. ,Eorfeiture to the ·Government;
7, Besale of Real Estate Taken for Taxes; and
8. further Distraint and Levy.
1. Issuance of Warrant of Levy
Preparation of a duly authenticated
certificate containing: (DNA) ••
a. Qescription of the property levied;
b. Name of the taxpayer; and
C. hmount of tax and penalty due from him.
The certificate containing DNA shall operate
with the force of a legal execution..throughout the
Philippines (NIRC, Sec. '207(8)).; • turned over tb th.e pwner of the property (N/RC,
,t
2. Service of the Warrant of l~vy
Levy shall be effected py,writing upon the said
certificate a desGriptiori of thiaproperty upon
which levy is made. AtHhe same time; written
notice of the levy shall be mailed or served uppn:
a. The Register of Deeds of the p~ovince or city
where the property is located; and • of reckoning the one-year period on the
b. Upon the delinquent taxpayer, or if he is •
absent from the Philippines, to hi~ agent or
the manager of the business in respect to
which the liability arose, or if there.be none,
to the occupant of the property in question
(NIRC, Sec. 207 (BJ).
3. Advertisement of the Sale
The advertisement shall contain: (ANTS)
a. ~mount of tax and penalties due;
b, Name of the taxpayer against whom taxes
are levied;
c. Iime and place of sale; and
d. §hort Description of the property to be sold.
The advertisement shall be made within 20
days after the levy, and the same shall be
for a period of at least 30 days (NIRC, Sec.
213).
Advertisement shall be effectuated by:
(PoPu)
a. Posting a notice at the main entrance of the
municipal building or city hall and in a public
REMEDIES
Taxation Law
and conspicuous place in the barrio or
district in which the real property lies; and
b. Publication once a week for 3 consecutive
weeks in a newspaper of general circulation
in the municipality or city where the property
is located. (N/RC, Sec. 213).
4. Public Sale of Property under Levy
Taxpayer is given the right of pre-emption before
sale (N/RC, Sec, 213).
RIGHT OF PRE-EMPTION: The taxpayer may
discontinue all the proceedings by paying the
taxes, penalties and interest at any time before
the day fixed for the sale (NIRC, Sec. 213).
If he does not exercise it, the sale shall proceed
at:
a, Main entrance of the municipal building or
city hall; or •
b. On the premises of the property to be sold,
as the officer conducting the proceedings
shall determine and as the notice of sale
shall specify (N/RC, Sec. 213).
NO'fE: A Certhicate of Sale shall be delivered to
the purchaser)f\he proceeds of the sale exceed
the claim arid cost of sale, the excess shall be
Sec ..213).
5. Redemption of Property (NIRC, Sec. 214)
PERIOD: vyithin 1 year from the date of sale,
.NOTE: In case ot'natural persons, for purposes
for~9losed as$et of natural persons and the
period':Vithin which to pay Capital Gains Tax or
,. Cr~qitable' Withholding Tax and Documentary
Stamp -Tax on the foreclosure of Real Estate
Mortgage, the period shall be reckoned from the
date of registration of the sale in the Office of the
Register of Deeds.
For juridical persons in an extrajudicial
foreclosure, Section 47 of The General Banking
Law of 2000 (RA No. 8791) provides that its
right of redemption shall be until, but not after,
the registration of the certificate of foreclosure
sale with the applicable Register of Deeds,
which in no case shall be more than three
months after foreclosure, whichever is earlier.
The right of redemption shall be reckoned from
the date of approval by the executive judge
(R.M.C. No. 55-11),
WHO MAY REDEEM: The delinquent taxpayer
or anyone on his behalf.
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TO WHOM MADE: To the Revenue District
Officer (RDO).
HOW MADE: Upon payment of the taxes,
penalties, and interest thereon from the date of
delinquency to the date of sale, together with
interest on purchase price at 15% per annum
from the date of sale to the -date of redemption.
NOTE: The owner shall not be deprived of the
possession of said property and shall be entitled
to the rents and other income thereof until the
expiration of the time allowed for its redemption
(NIRC, Sec. 214).
Effects of Redemption of Property Sold:
a. Such payment shall entitle the taxpayer the
delivery of the certificate issued to the
purchaser and a certificate from RDO that
he has redeemed the property; and
b. The RDO shall pay the purchaser the
amount by which such property has been
redeemed and said property shall be fre.e
from lien of such taxes and penalties (NIRC,
Sec. 214).
NOTE: The remedies of distraint and levy as
well as collection by civil and criminal action
may, in the discretion of the CIR, be pursued
singly or independently of each other, or all
of them simultaneously (ABAN, supra at
234).
8. Further Distraint and Levy
The remedy of distraint and levy may be
repeated, if necessary, until the full amount of
the tax delinquency due including all expenses
is collected from the taxpayer (NIRC, Sec. 217).
Otherwise, a clever taxpayer who is able to
conceal most of the valuable part of his property
would escape payment of his tax liability by
sacrificing an insignificant portion of his holdings
(Castro v. Collector of Internal Revenue, L-
12174, Apnl 2~ 1962).
DISTRAINT V. LEVY

6. Forfeiture to the Government (NIRC; Sec.

215)

Grounds:
a. No bidder for real property;-or
b. The highest bid is for anamount insufficient Levy shall be effected by
to pay the taxes, penalties; and costs. ~i+IJr~ ,,: oJ,·'.the writing upon the duly
, ' ;J~fltt~ls or authenticated certificate
The Register of Deeds shall-transfer' title to s. the description of the
the Government upon registration with his property upon which the
office of the declaration of forfeiture {NIRC, levy is made and at the
Sec. 215). same time, written
notice of the levy shall
1 year from forfeiture, the taxpayer may be mailed to or served
redeem the property otherwise, the upon the Register of
forfeiture shall become absolute (NIRC, Deeds and upon the
Sec. 215). taxpayer.

7. Resale of Real Estate Taken for Taxes

The CIR shall have charge of any real estate
obtained by the Government in payment of
taxes, penalties, or costs arising under the
NIRC, or in compromise or adjustment of any
claim (NIRC, Sec. 216). Within 20 days after the
The notice of the sale
shall be exhibited in not levy, the real property
The CIR may: less than 2 public will be advertised for
a. Sell and dispose of the same at a public
places in the sale for a period of at
auction upon giving of not less than 20 days' least 30 days. The
municipality or city
notice; or where the distraint was advertisement shall be
b. Dispose of the same at a private sale with
made. 1 place of effected by posting a
the approval of the Secretary of Finance
posting is the Office of notice at the main
(NIRC, Sec. 216).
the Mayor. entrance of the
municipal building or city
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hall and in a public and 2. Forfeiture (of Confiscated Article)

conspicuous plac.ein the Forfeiture
barrio or district in which The divestiture of property without
the real estate lies and compensation, in consequence of a default or
publication once every offense (Ballantine's Law Dictionary, p. 519).
week for 3 consecutive
weeks in a newspaper of Seizure v. Forfeiture
general circulation. In seizure for the enforcement of tax lien, the
residue, after deducting the tax liat.Jilily and
expenses, will go to the taxpayer (Bank of the
Philippine Islands v. Trinidad, G.R. No. 16014,
Purchase by the CIR or The Internal Revenue October 4, 1941).
his deputy on behalf of Officer conducting the
the National sale shall declare the In forfeiture, all the proceeds of the sale will go
Government (NIRC, property. forfeited in to the coffers of the government (U.S. v. Sur/a,
Sec. 212). favor of the Government G.R. No. 6536, September 2, 1911).
(NIRC, Sec. 215).
A taxpayer in forfeiture or seizure cases to
enforce tax lien may still be subject to criminal
action even if his property has been forfeited
The taxpayer is not The right of redemptioh (Garcia v. Collector of Internal Revenue, G.R.
given the right of is granted in yase of real . : No. 44372, November 3, 1938).
redemption with property levied., upon
respect to distrained and sold ·or fqrfeit~d·t6 Enforcement of the Remedy of Forfeiture:
person~! property. the g9verol'.1~nL • a. In case of personal property - by seizure
and sale, , or destruction of the specific
Both distraint and levy are summary.'remedies and forfeited property; and
cannot be availed of where the , amouht of tax b. In e::aseof real property - by judgment of
involved 1s not more than.P·100 (NIRC, ,Sec.205 condemnatiqn and sale in a ler:ial action or
(BJ). ••• proceeding, civil or criminal, as the case
hlay require(N/RC, Sec. 224).
Real property placed undE¼r1Jv(may be• sold at c. Jhis remedy 1s':differentfrom the provision
public auction for less than its rparket value (NIRC, ·· directing forfeit(!re of real property in certain
Sec. 215) since the taxpayer is given the right to • cases. in the remedy of levy under Sec. 215.
redeem (NIRC, Sec. 214). With respect to disfrairied . Judicisl intervention which is required for
personal property the rule is different because when forfeiture of.lea! property under Sec. 224 is
the amount bid is very much less than the actual not essential since the taxpayer has the right
market value, it is the Government th(:it ,nay of redemption (2 DE LEON, NIRC, supra at
purchase the same (NIRC, Sec. 212); • • ;i22-523).

COMPROMISE AND ABATEMENT •NOTE: The forfeiture need not be for the
(Please refer to discussions under Assessment on whole tax liability which could merely be for
pages 333 to 338.) the amount equivalent to the fair market
value of the property (Castro v. Collector of
Internal Revenue, G.R. No. L-12174, April
PENAL TIES AND FINES 26, 1962).
Increments to the basic tax incident to the taxpayer's
non-compliance with certain legal requirements (see WHEN FORFEITED PROPERTY BE
NIRC, Sec. 248).
SOLD OR DESTROYED (NIRC, SEC. 225)
SURCHARGE, INTEREST AND 1. Sold
- in case of forfeited chattels and removable
COMPROMISE PENAL TY fixt1Jres, so far as practicable, under the same
(Please refer to the Chapter on Tax Administration conditions as the public notice and the time and
and Enforcement on pages 306 to 309.) manner of sale as are prescribed for sales of
personal property distrained for non-payment of
OTHER REMEDIES taxes;
1. Suspension of Business Operations
(Please refer Power to Suspend Business
Operations of a Taxpayer on pages 296 to 297).
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2. Destroyed CIVIL ACTION FOR COLLECTION OF

- in case of distilled spirits, liquors, cigarettes,
other manufactured products of tobafCO and all
apparatus used in or about the illicit production of
such articles, by the CIR when the sale of the
same for consumption or use would be injurious
to public health or prejudicial to the enforcement
of law; and
3. Sold or destroyed
- in cases of all other articles subject to ext;ic;e
tax, which have been manufactured or removed
in violation of the NIRC, dies for printing or
making of internal revenue stamps and labels
which are in imitation of or purport to be lawful
stamps, or labels, in the discretion of the
Commissioner.
NOTE: Forfeited property shall NOT be
destroyed until at least twenty (20) days after
.seizure (NIRC, Sec. 225).
INSTANCES WHEN FORFEITURE
APPROPRIATE: (LADI)
1. h_iquoror tobacco shipped under a false name
or brand (NIRC, Sec. 262);
2. All chattels, machinery, and removable fixtures
;;'tany sort, used in the unlicensed production of
articles (NIAC, Sec. 268 (B)); and ..
3. Dies used for the printing or making .of any
internal revenue stamp, labE:Ior tag which is in
imitation of or purports to. be a lawful stamp,
label or tag (NIRC, Sec. 268 (B));
TAXES IS INSTITUTED:
1. By filing a civil case for collection of a sum of
money with proper regular court (NIRC, Sec.
222); or
2. By filing an answer to the petition for review filed
by taxpayer with CTA (Fernandez Herma nos,
Inc. v. Commissioner of Internal Revenue, G.R.
No. L-21551, September 30, 1969).
Can the BIR file a civil action for collection
pending decision of the administrative
protest?
YES. The request for reinvestigation and
reconsideration was in effect considered denied
by CIR when the latter filed a civil suit for
collection of deficiency income (Commissioner
of Internal Revenue v. Union Shipping, GR No.
L-66160, May 21, 1990).
FORM AND MODE OF PROCEEDING
IS (NOA):
1. Civil actions shall be brought in the Name of the
Government of the Philippines (i.e., Republic of
'the Phil;/versus a delinquent taxpayer).
• • f • rt shalfbe~onducted by legal Qfficers of the BIR.
3. No civil .or criminal action for the recovery of
taxes sh~ll be filed in court without the 8pproval
of the .CIR (NIRC, Sec. 220), butthe latter may
delegate $UChpower to his subordinate officials
in Hie !~gal •.•service through administrative
issuances (NlRC, •Sec. 7).
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4. Goods !llegally Stored or Removed (NIRC, Sec.

268 (C)).
JUDICIAL REMEDIES
Kinds of Judicial Remedies
1. Civil Action
2. Criminal action
NOTE: No civil or criminal action for the recovery of
taxes or the enforcement or any fine, penalty or
forfeiture under the NIRC shall be filed in court
without the approval of the Commissioner of Internal
Revenue (NIRC, Sec. 220).
CIVIL ACTION
When Civil Action, as tax remedy, is resorted
A civil action is resorted to when a tax liability
becomes collectible, that is, the assessment
becomes final and unappealable, or the decision of
commissioner has become final, executory and
demandable (DIMAAMPAO, supra at 200).
PART1c,;X,"10N OF THE souc1TOR
.<?,~NERAL
.. dn'•'yje~".9.fJ!Jeamendment of Sec. 220 of the NIRC,
the wfitt~nconformity of the CIR (and no longer of
the Solicitor General or the Government Corporate
Counsel), should be secured (2 DE LEON, NIRC,
supra at 501).
Sec, 220 of the NIRC must not be understood as
overturning the long-established procedure before
the SC in requiring the Solicitor General to represent
the interest of the Republic. This court continues to
maintain that it is the Solicitor General who has
primary responsibility to appear for the government
in appellate proceedings. (Commissioner of Internal
Revenue v. La Suerte Cigar, GR. No. 144942, July
4, 2002).
JURISDICTION
(Please refer to Cowt of Tax Appeals chapter).
CRIMINAL ACTlON
The remedy of crimir,ial action is resorted to, not only
for collection of taxes, but also for enforcement of
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statutory penalties of all torts (DIMAAMPAO, supra
at 204).
CRIMINAL CASES
All violations of any provision of the NIRC shall
prescribe after 5 years (NIRC, Sec. 281).
WHEN SHALL PRESCRIPTION BEGIN
TO RUN:,
1. From the day of the commission of the violation
of the law (NIRC, Sec. 281); or
In case of willful failure to pay deficiency tax, the
5-year prescriptive period should be reckoned
from the date of the final notice and demand for
payment of the deficiency taxes. This is because
prior to the receipt of the letter-assessment, no
violation has yet been committed by the
taxpayers (Lim, Sr. v. Court of Appeals, G.R.
Nos. L-48134-37, October 18, 1990).
2. If the same be not known at theJi~~ --froin'the
discovery thereof and the institution of judici°al
proceedings for its investigation and punishment
(NIRC, Sec. 281). • (INGU:S, N(RC;csupra at 413).
WHEN CRIMINAL ACTION IS
IMPRESCRIPTIBLE
In case of falsity or fraud witf, intenf to evade the tax.
the right of the governm:ent ·to' collec(through
criminal action is imprescrif)tible fqr as lorig,as the
period from the discovery and institution of judicial
proceedings for its investigation and'punishment,,up
to the filing of the information in court, dqes .riot
exceed 5 years (Lim, Sr. v. Court of Appeals/G'.R..
Nos. L-48134-37, October 18, 1990). - by the G!R(NIRC, Sec, 205).
' , '\
INTERRUPTION OF PRESCRIPTIVE. -
PERIOD
The period shall be interrupted:
1. When proceedings are instituted against the
guilty persons; or
NOTE: The period shall begin to run again if
the proceedings are dismissed for reasons
not constituting jeopardy (NIRC, Sec. 281).
• 2. When the offender is absent from the Philippines
(NIRC, Sec. 281).
TWO COMMON CRIMES PUNISHABLE
1. Attempt to evade or defeat tax (NIRC, Sec. 254);
and
2. Failure to file return, supply correct and accurate
information, pay tax, withhold and remit tax and
refund excess taxes withheld on compensation
(NIRC, Sec. 255).
REMEDIES
Taxation Law
ELEMENTS FOR CONVICTION FOR
FAILURE TO MAKE OR FILE A RETURN
UNDER SECTION 255 OF NIRC: (RFW}
1. The accused was Required to pay any tax, make
a return. keep any record, or supply correct and
accurate information, or withhold or remit taxes
withheld, or refund excess taxes withheld on
compensation. at the time or times required by
law or rules and regulations;
2. The accused Eailed to pay the required tax.
make a return, or keep the required record, or
supply the correct and accurate information; and
3. The accused Willfully failed to pay such tax,
make such return, keep such record, or supply
such correct and accurate information, or
withhold or remit taxes withheld, or refund
excess taxes withheld on compensation, at the
time or times required by law or rules and
regulations (NIRC, Sec. 255).
WIU,.FUL BLINDNESS DOCTRINE
AJaxpayer ccih.no longer raise the defense that the
errors ori thel(t~x returns are not their responsibility
or tha~ it is Jhe fqujt of the accountants they hired
(Please 1refer\o ·siatJfory Offenses and Penalties
•under Tax Adminltration and Enforcement for other
violations on pages 30& to 312.)
Criminal actioni in Siolation of the NIRC also
constitutes ' a tcolle¢tion method because the
Judgm@t,in th¢ crimihal case shall not only impose
the perrahy but shall .also.order the payment of the
taxes subj~ci of the criminal case as finally decided
Any ~ft,011 cohvicted of a crime penalized by the
NIRC 'S~~II', in addition to being liable for the
paymenf of the tax.· be subject to the penalties
imposed therein (NIRC, Sec. 253 (a)).
FORM AND MODE OF PROCEEDING
Same with civil action (N/RC, Sec. 220).
JURISDICTION
(Please refer to Court of Tax Appeals chapter).
IMPORTANT PRINCIPLES ON CRIMINAL
ACTIONS
1. Assessment is not necessary before
filing a criminal action and criminal
action may be f.iled during the pendency
of an administrative protest in the BIR.
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It is not a requirement for the filing thereof that result of one's liability to pay taxes (INGLES,
there be a precise computation and assessment supra at 412).
of the tax, since what is involved in the criminal
action is not the collection of tax but a criminal 3. Effect of Payment of Tax Due After
prosecution for the violation of the NlRC, Apprehension
provided, however, that there is a prima facie
showing of a willful attempt to evade taxes or Any person convicted of a crime penalized by
failure to file the required return (Ungab v. Cusi, the NIRC shall in addition to being liable for the
G.R. Nos. L-41919-24, May 30, 1980 in relation payment of the tax, shall bP. R11bjectto the
to Commissioner of Internal l<evenue v. Court of penalties imposed herein. Payment of the tax
Appeals, G.R. No. 119322, June 4, 1996; due after apprehension shall not constitute a
Commissioner of Internal Revenue v. Pascor valid defense in any prosecution for violation of
Realty Development Corp., G.R. No. 128315, any provision of this Code or in any action for the
June 29, 1999). forfeiture ofuntaxed articles (NIRC, Sec. 253).
Protesting an assessment cannot stop criminal 4. Effect of Subsequent Satisfaction of
prosecution under the NIRC (INGLES,
Civil Liability
Reviewer, supra at 413).

EXCEPTION: The fact that a tax is due is not
proved.
Before one is prosecuted for willful attempt to
evade or defeat any tax under Secs. 253 ahd
255 of the NIRC, the fact that a tax is due must
first be proved (Commissioner of Internal
Revenue v. Court of Appeals, G.R. No. 119322,
June 4, 1996).
Reconciliation
If the tax alleged to have been evaded is
computed based on reports approved by the
BIR, there is a presumption of regularity of the
previous payment of taxes, so that µ11l~ssand.
until the BIR has made a final determination of
what is supposed to be correct •taxes, the
taxpayer should not be placed in the .crucible of
criminal prosecution (Commissioner of Internal
• Revenue v. Court of Appeals, G.R. No. 119322,
June 4, 1996). •• ' •
2. Effect of Acquittal of the.Taxpayer
Criminal Action •
It does not necessarily result in the exoneration
of said taxpayer from his civil liability to pay
taxes.
The subsequent satisfaction of civil liability by
payment or prescription does not extinguish the
taxpayer's criminal liability (People v. Tierra,
G.R. Nos. L-17177-80, December 28, 1964).
5. No Subsidiary Imprisonment
. , Jn case ofJnsolvency on the part of the taxpayer,
:.'•;,iul:>sidj~i,y'
imprisonment cannot be imposed as
regards the tax which he is sentenced to pay
(People ••y:, Jean-Amault, GR. No. L-4288,
November 20, 1952).
i
However;it m~y be imposed in cases of failure
to p;:lyth~ fi•J~ imposed {NIRC, Sec. 280).
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' 6. Crim/ri'~t~'iielion may be filed despite the
lapse of the period to file a civil action for
·;cg~lection of taxes
>:;.:·,;,,i-•t::'·:.:\
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When the civil action arising out of a tax
delinquency is extinguished by the 5-year
prescription period for collection, it is still
in a possible for such tax to be collected by criminal
action because actions of this kind prescribe
only after the lapse of 5 years counted from the
discovery of the crime and the institution of
proceedings for its investigation and punishment
(NIRC, Sec. 281).

REASON: The duty to pay tax is imposed by
statute prior to and independent of any attempt
on the part of the taxpayer to evade payment. It
is neither a mere consequence of the felonious .
acts charged nor is it a mere civil liability derived
from a crime (Republic v. Patanao, G.R. No. L-
14142, May 30, 1961).
The civil liability to pay taxes arises not because
of felony but upon taxpayer's failure to pay
taxes. Criminal liability in taxation arises as a
7. Filing of a criminal action is not an
implied assessment by the CIR
An affidavit, which was executed by revenue
officers stating the tax liabilities of a taxpayer
and attached to a criminal. complaint for tax
evasion, cannot be deemed as an assessment
(Commissioner of Internal Revenue v. Pascor
Realty, G.R. No. 128315, June 29, 1999).
The recommendation letter of the CIR
(addressed to the DOJ for the filing of a criminal
 REMEDIES
Taxation Law

complaint against the •taxpayer) cannot be

considered a formal assessment. A cursory
perusal of the said letter would reveal three key
points:
a. It was not addressed to the taxpayers;
b. There was no demand made on the
taxpayers to pay the tax liability, nor a period
for payment set therein; and
c. The letter was never mailed or sent to the Assessment must be Assessment . is not
taxpayers by the CIR (Adamson v. Court of final and executory necessary before filing a
Appeals, G.R. No. 120935, May 21, 2009). criminal action

In fine, the said recommendation letter served

merely as the prima facie basis for filing
criminal information that the taxpayers had Five (5) years from the Five (5) years from the
violated (penal provisions) of the NIRC date of assessment ay of the commission of
(Adamson v. Court of Appeals, G.R. No. the violation of the law or
120935, May 21, 2009). the discovery of the
crime
8. No Reservation to File Civil Action

Under R.A. 9282, the filing of the criminal case

implies also the filing of the civil case. _No
• reservation for the filing of th~ civil case may be
made under this law, unlike that of a felony
under the RPC (MAMALA Tl;Q, Reviewf.)r, supra
at 724). •

9. Assessment is still Necessary even if the

Accused is Found Guilty Onder Sec. 255
of the NIRC
In case the accused is found guilty beyond
reasonable doubt for violation of Sec. 255 of the
NIRC (for failure to file tax return or to supply
correct information), the imposition of the civil
liability by the CTA is nqt automatic and
assessment notice from the BIR is nece~sary
(People v. Mendez, CTA Crim. Cas_eNos; 013
and 015, January 5, 2011).
REASON: The computation presented by the
prosecution to prove civil liabilities may not be
used because the BIR did not follow the
assessment procedures provided for in the
NIRC and in the implementing regulations
(People v. Mendez, CTA Crim. Case Nos. 013
and 015, January 5, 2011).
INJUNCTION
No Injunction Jo Restrain Tax Collection
G,ENERAL R_ULE:No court shall have the authority
to grant an injunction to restrain the collection of any
national ipternal rev~nue tax, fee or charge imposed
(N/RC, Sec, 218),
EXC.EPTIO.N:
When in the opinion of the CTA:
1. Collection of the tax would jeopardize the
government and/or taxpayer; and
2. Shall thereafter require the taxpayer to deposit
the amount claimed or to file a surety bond for
not more than double the amount with the court
(R.A. No. 9282, Sec. 9).

CIVIL ACTION V. CRIMINAL ACTION

lnstitute.d by the [ Instituted to penalize a

r
QOV!?rnmentto collect taxpayer for violating the
internal revenue taxes
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TABLE OF COMPARISON OF REMEDIES

TABLE 1 - DISTRAINT OF PERSONAL PROPERTY

CIR - If amount of tax due is more than ~1 M Local Treasurer or his deputy (LGC,
Revenue District Officer - If amount of tax Sec_ 175(a))
due is P1 M or less (NIRC, Sec_ 207(A))-

Notification to be exhibited in not less than two
(2) public places in the city or municipality where
distraint is made. One place for posting is the
office of the Mayor of the city or municipality in
which the property is distrained (NIRC, Sec. 209).
Notification to be exhibited in not less
than three (3) public and conspicuous
places in the territory of the LGU where
distraint is made. One place for the
posting of the notice shall be at the
office of the chief executive of the LGU
where the property is distrained (LGC,
Sec, 175(c)).

Within two (2) days after the sale/the officer
making the same shaU make a report of the·
proceedings in writing to the CIR and shall
himself preserve a copy of such report as an
official record (NIRC, Sec, 211). ·.,
Within five (5) days after the sale, the
local treasurer shall make a report of
th·e proceedings in writing to the local
chief executive concerned (LGC, Sec.
-175(e)).

Not less th~n twenty (?0) days after.~otioe to the 'Not/les~

than twenty (20) days after
owner or possessor of the propefty and the notice to the owner or possessor of the
posting of such notice (N/RC Sec. 2Q9). property and the publication or posting
t • of such notice (LGC, Sec. 175(c)).

The CIR may purchase th~ same on behalf of the
National Government if: •
1. The amount of bid is not equal to the amount
of the tax; or
The amount of bid is very much less than the
actual market value of the articles offered for
sale (N/RC, Sec. 212).
Should the property distrained be not
disposed of within one hundred twenty
( 120) days from the date of distraint, the
same shall be considered as sold to the
LGU concerned for the amount of the
assessment made thereon by the
Committee (LGC, Sec. 175(e)).

TABLE 2-LEVY UPON REAL PROPERTY
Within twenty (20) days after the levy, the
officer conducting the proceedings shall
advertise the property or a usable portion
thereof as may be necessary to satisfy the
claim and the cost of sale; and such
a
advertisement shall cover period of thirty
(30) days (NIRC, Sec. 213).
Levy shall be effected by writing upon the
duly authenticated certificate a description
of the property upon which levy is made. At
the same time, written notice of levy shall be
mailed or served upon the:
1. Register of Deeds for the province or
pity where the property is located; and
Delinquent taxpayer, or if he 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 property in
question (NIRC, Sec. 207(b)). • manager of the business in respect to
rostlng:a hotlce at the main entrance ot 1. Posting c1nqtice at the main entrance of
th!;! municipal building or city hall;
In a public and conspicuous place in the ~- In a public ar;idconspicuous place in the
barrio ·or district ih which the real estate
lies· and •
BY~ublication once a•weekfor.three (3) .3. By publicatrbn once a week for three (3)
weeks in •'a. newsfJaper of general
circulation in the mLinicipalify.,or city
where' the property is locf:)ted (NIRC,
Sec. 213), • •
The Revenue Colleptio~ Officer ~ay, upon
approval of the Reven.ue District .Qfficer,,
advance an amount sufficient to defray the
costs of collection by means of summary
remedies (NIRC, Sec. 213).
The Internal Revenue Officer shall declare
the property forfeited to the Government in
satisfaction of the claim if:
1. There is no bidder for real property
exposed for sale, or
The highest bid is for an amount
insufficient to pay the taxes, penalties
and costs.
It shall be the duty of the Register of Deeds
concerned, upon registration with his office
of the declaration of forfeiture to transfer the
title of the property to the Government
without the necessity of court order (NIRC,
Sec. 215).
REMEDIES
Taxation Law
Within thirty (30) days after the levy, the
local treasurer shall proceed to publicly
advertise for sale or auction the property or
a usable portion thereof as may be·
IIec~::;::;arylo satisfy the claim and the cost
of sale; and such advertisement shall cover
a period of thirty (30) days (LGC, Sec. 178).
Levy shall be effected by writing upon th~
duly authenticated certificate the description
of the property upon which levy is made. At
the same time, a written notice of levy shall
be mailed to or served upon the:
1. Assessor and Register of Deeds of the
province or city where the property is
located to annotate the levy on the tax
declaration and the certificate of title;
and
2. Delinquent taxpayer, or if he be absent
frorn the Philippines, to his agent or the
Which the liability arose, or if there be
none, to the occupant of the property in
question (LGC, Soc. 176).
the municipal building or city hall;
barrio or barangay district in which the
. real -estate'lies; and
• weeks in, a newspaper of general
cfrculatio.n in the municipality or city
•where the property is located (LGC,
{3ec. 178).
:fh!;l 16cal treasurer rnay, by ordinance duly
,approved, advance an amount sufficient to
defray the costs of collection by means. of
the remedies provided in the law (LGC, Sec.
178).
The local treasurer conducting the sale shall
purchase the property in behalf of the local
government unit:
1. If there is no bidder for the rec1IprnpP.rty
advertised for sale; or
2. If the highest bid is for ;m amount
insufficient to pay the taxes, fees, or
charges, related surcharges, interests,
penalties, and costs.
It shall be the duty of the Register of Deeds
concerned, upon registration with his office
of the declaration of forfeiture to transfer the
title of the property to the Government
without the necessity of court order (LGC,
Sec. 181).
 .,J "I'> "
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AID
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• 359
San Seda University College of Law - RGCT Bar Operations Center '1 ,:;

Upon giving of not less than twenty (20) The Sanggunian concerned, by an
day notice, the CIR may sell and ordinance duly approved and upon
dispose of the real property. notice of not less than twenty (20) days,
Sale may be at public auction or in a may sell and dispose of the real
private sale (upon approval of the SOF). property.
Proceeds of the s;:ilP.shall be deposited 2. Sale is only by public auction.
with the National Treasurer and an 3. The proceeds of the sale shall accrue to
accounting of the same shall be the general fund of the LGU concerned
rendered to the Chairman of the COA (LGC, Sec. 182).
(NIRC, Sec. 216).

The redemption price shall be: The redemption price shall be:
1. Amount of public taxes, penalties, and 1. Amount of taxes, fees, or charges, and
interest thereon from the date of related surcharges, interests, or
delinquency to the date of sale; and penalties from the date of delinquency
Interest on the purchase price at the to the date of sale; plus
rate of fifteen percent (15%) per annum 2. Interest on the purchase price at the
from the date of purchase to the date of rate of not more than two percent (2%)
redemption (N!RC, Sec. 214). per month from the date of purchase to
the date of redemption (LGC, Sec. 179).
~,,"' ~f " ' ': ~-','~ { ')\;\•,/
,,
'360
',. J
, , 'c',',,
A',, t
' REMEDIES
,' ,' ' ,.
l <>' ~, , ;, " '
TABLE 3 - PERIOD OF COLLECTION AND ASSESSMENT AND SUSPENSION
THEREOF
An assessment is a finding by
the taxing authority that the
taxpayer has not paid his
correct taxes. The ultimate
purpose of assessment is to
ascertain the amount that a
taxpayer should pay. This is
the context in which
assessment is issued for
internal revenue taxation.
Internal revenue taxes shall be
assessed within three (3) years
after the last day prescribed by
law for filing a return or actual
filing of return, • whichever
comes later.(N/RC, .Sec. 203).
In case of false .or
fraudulent return or failure
• to file 'a return - within ten
(10) years after discovery
of falsity, fraud or omission
(NIRC, Sec. 222(a)).
Waiv~r of Statute of
Limitation - up to the
extended perioq agreed
upon (NIRC, Sec, 22,2(q))- •
This is not expressly provided 1.
for in the NIRC; subject to the
opposing view that the 5-year
period applies, whether the
assessment is normal or
otherwise. The prescriptive
period for collection is five (5)
years following the assessment
of the tax.
2.
In case of false or fraudulent
return or non-filing of return, the
BIR may file an ordinary action
to collect even without an
assessment within ten (10)
years from the date of
discovery of falsity or fraud or
non-filing.
Taxatiun Law
Assessment in
property taxation means
the act or process of
determining the value of
the property subject to tax
(LGC, Sec. 199(()).
Local taxes shall be No express provision on
assessed within five (5) prescriptive period for
years from the date assessment.
they . become due
(LGC, Sec .. 194(a)).
When th~re is fraud or
intent to evade the
payment of taxes, fees
or charges - ten (10)
years from discovery cif,
the fraud or intent to
evade the payment
(LGC, Sec. 194(b)) . .,
Loc;3I taxes, fees, and N/A
charges which accn..red
before the effectivity of
ti)e LGC - three (3)
years . from the date
they bec;3me due.
(LGC, Sec. 1'94(a)).
Local taxes, fees, 1. Basic real property tax
or charges may be shall be collected
collected within five within five (5) years
(5) years from the from the date they
date of assessment become due.
by administrative or 2. In case of fraud or
judicial action intent to evade
(LGC, Sec. 194(c)). payment, such action
may be instituted for
In case of fraud or the collection of the
intent to evade same within ten (10)
payment - within years from the
ten (10) years from discovery of such
discovery of fraud fraud or intent to
(LGC, Sec. 194(b)). evade payment (LGC,
Sec. 270).
F=fEM:Q~Y
Al D
San Be;:,da
Univorsti:yCollege of Law~ RGCT Sm Operations Center

In case the taxpayer has ,

waived the Statute of
Limitations, collection shall be
extended within the period
nQrAAr:1 upon (NIRC, Sec. 222).

The CIR is prohibited from The prescriptive The period of prescription

making the assessment or periods (for within which to collect
beginning distraint or levy assessment and shall be suspended for the
or a proceeding in court and collection) shall be time during which:
for 60 days thereafter; suspended during 1. The treasurer is
When the taxpayer which: legally prevented from
requests for reinvestigation 1, The treasurer is collecting the tax;
which is granted by the legally prevented 2. The owner of the
CIR; from making the property or the person
When the taxpayer cannot assessment or having legal interest
be located in the address collection; therein requests for
given by him in the return 2, The taxpayer reinvestigation and
filed upon which the tax is requests for executes a waiver in
being assessed or reinvestigation and writing before the
collected; executes a waiver expiration uf the
When the warrant • o{ in writi% before the period within which to
distraint or levy is duly expiration of the collect; and
served upon the taxpayer, period within which 3. The owner of the
his authorized to assess or collect; property or the person
representative, or a and having legal interest
member·. of his household 3. The taxpayer is out therein is out of the
with sufficient discretion,: of the country or country or otherwise
and no property could be: . other,wise ·. cannot cannot be located
located; and " be rocated (LGC, (LGC, Sec. 270).
When the taxpayer is out of Sec. 194(d)).
the Philippines (N/RC, Sec.
223). •
 '\ : #/,,:\,>~\ .- , ':, ~'J
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• 362 :· .' 'i ,' REMEDIES
.
. (;.'.
'
' '"'
. Taxation Law

Exception: If the taxpayer
only disputes or protests
against the validity of some
of the issues raised, the
taxpayer shall be required
to pay the deficiency tax or
taxes attributable to the
undisputed issues (NIRC,
Sec. 228)
Payment under protest is not
necessary. The LGU concerned
should not supply additional
requirements onerous to the
taxpayers by requiring prior
payment on protest against the
latter's local tax assessment
which is not mandated by Sec.
195 of LGC (Rock Steel
Resources, Inc., v City of Oavflo,
CTl.l. Case AC No. 139, August
11, 2016).
Rule: Yes.
Exception: Where the
question raised is on the
very authority and power of
the assessor to impose the
assessment and of the
treasurer to collect the tax
(LGC, Sec. 252).

assessment in the Notice of Assessment issued by Grounds available to the

Formal Letter of Demand the Local Treasurer (LGC, Sec. taxpayer for protesting the
or Final Assessment 195). payment of the basic real
Notice (FLO/FAN) (NIRC, property tax: (EUDIP)
Sec. 228). 1. The property is §.xempt
from the payment of real
Please note that the property tax under -Sec.
procedure in R.R. No. 18- 234 of the LGC;
13 must first be followed. 2. The assessment on the
property is excessive or
_!!nreasonable, and is
the subject of appeal
pursuant to Sec. 231 of
the LGC.
3. The tax is subject to
.Qiscount authorized
under Sec. 251 of the
LGC;
4. The assessment is
!!legal or erroneous,
pursuant to Sec. 253 of
the LGC.
5. The period within which
to collect the real
property tax has
_erescribed, as provided
in Sec. 270 of the LGC
(Ursa/ on Local
Government Taxation).

The assessment may be Within sixty (60) days from The protest must be filed
protested by filing a receipt of the notice of within thirty (30) days from
request for reconsideration assessment (LGC, Sec. 195). payment of tax.
or reinvestigation within
thirty (30) days from Note: The protest may be
receipt of the filed at the time of payment
assessment (NIRC, Sec. of the tax being protested
228). (LGC, Sec. 252(a))).

of the duly Local Treasurer Local Treasurer

authorized representative (LGC, Sec. 195) (LGC, Sec. 252(a))
of the CIR who signed the
 1
fR&¾l¥Hta '

MEM:Q~YAID
Sun Beda University College of Law - RGCT Bar Oporatlon3 Centor

One hundred eighty Sixty (60) days from receipt of Sixty (60) days from receipt
( 180) days from filing written protest (LGC, Sec. 195). of written protest
of protest in the r,;:isp, of (LGC, Sec. 252(a)).
the CIR.

2. One hundred eighty

(180) days from filing
of protest or
submission of
documents, as the
case may be in the
case of the CIR's duly
authorized
representative (NJRC,
Sec: 228).

CTA Division (NIRC, 1. Court of Competent 1. LBAA (Local Board of

Sec. 228) Jurisdiction (LGC, Sec. 195) Assessment Appeals)
CTA En Banc (MTCor RTC- depending on 2. CBAA (Central Board of
Supreme Court (R.A. jurisdjctional amount) Assessment Appeals)
No. 1125, Sec. 18). 2. Appe~I to: . . 3. CTA En Banc (A.M. No.
a. RTC - decision of MTC 05-11-07-CTA)
(A.M. No. 05-11-07- 4. Supreme Court
CTA);
b. QTA Division- decision.
gf RTC
3. CTA.En Banc (A.M. No. 05-
11-0i~CTA)
4. Supreme Court
·,
 REMEDIES
Taxation Law

ASSESSMENT PROCESS WITH GOVERNMENT ANO TAXPAYER'S REMEDIES

(EXCLUDING R.R. No. 2-2020 WHICH IS NOT YET INCLUDED IN THE 2020/2021 BAR
EXAMS)
If taxpayer does not agree with his
Issuance of Letter of Tax Audit/ Investigation by deficiency taxes and findings of the
Authority the Revenue Officer (RO) RO, a Notice of Informal Conference
(NIC) shall be issued for taxpayer to
present his side of the case

After discussion and presentation of

supporting documents, taxpayer is
It taxpayer is still not amenable, the still liable for deficiency taxes
case shall be forwarded to the
Assessment Division of Regional
Office, or the CIR or the CIR's
authorized representative for [, If taxpayer is amenable for the ':
issuance of PAN, except in cases 1 deficiency taxes, taxpayer pays 1
provided under Sec. 228 of the
amount :
NIRC
---------------------'
,-------~------~------, -----------------
Taxpayer pays
a
'. Taxpayer files reply to the PAN 1 (
1 Taxpayer ignores the PAN
\
1

amount , ____________ --------

: within 15 days I

'-----------------'
I

lfthe taxpayer's reply is If the taxpayer was not able to refute

meritorious, the" the findings in PAN or if he is in
assessrrient shall be default, FLO/FAN shall be issued
dismissed

/'
______
J >
'
, - - - - • - - - - - - ---
• - - *- - - - - - - - - - - - - ' \

: TaxpayerfaH~ to file : Taxpayer protests within 30 days from receipt

Taxpayer pays the
protest, assessment • of assessment.
assessment I
become!; final ·: Note: If protest is a request for reinvestigation,
I
taxpayer must submit documents within 60
I
______________
I .... /
____________
.... _I I
days from filing of protest.
_______________\ ____________ ,
' I

If the decision is in If duly authorized If CIR denied If there is inaction by CIR

favor of the taxpayer, representative protest (FDDA) or authorized
assessment is denied protest representative within 180
dismissed. (FDDA) days

,,.----------- .,- - - - - - - - - ' ; - - - - - - - - .... - - - --

.,,,. - ....' ,,- - - - - - - .- .....\
/ ', Appeal to the :
11
Motion for \ ,' Appeal to the I I
Wait for the
Administrative , , 1
appeal to CIR : : CTA within 1 reconsideration :1 CTA within 30 : decision of
I
within 30 days 30 days with the CIR 1 : days 1 the CIR/
1
Note: This will toll 1 Note: This will :: Note: For 1 :
authorized
I I
the prescriptive not toll the 30- 1 1 inaction after the , 1 representative
period to appeal to day prescriptive :: expiration of the : ', - - _ · - ___ - ,, -
the CTA. period to appeal 1
1 1S0-day period 1 ,,. - - - - - - - ,
, to the CTA. ,' , 1 I If denied,Appeal 1

Note: '---------~ ', __________ ,,,, totheCTAwithin:

30 days from 1
Taxpayer's Remedies
receiptof such '
Government Remedies 1
\ ....__________
rl,ar.ision
.,,,.
San Seda UnJvc-rsityCol~e
AID
of Low - RGCT Ba, Operations Center
PROCEDURE FOR DISTRAINT AND LEVY - NIRC
Delinquent taxpayer fails to
pay tax on time.
If the bid is not equal to the
amount of tax or very much
less than the fair market
value of goods distrained,
the CIR may purchase
property for the National
.------~-·-·-·-·-·-·-·-·----t
Government. The property
may be resold and the net
proceeds shall be remitted
to the National Treasury as
internal revenue (N/RC,
!
! Sec. 212).
If the bid is just right, the
officer sells the goods to the
highest bidder for cash or,
with the CIR's approval,
through commodity/ stock
exchanges (NIRC, Sec.
209)
Internal revenue officer.
designated by the CIR, shall
prepare a certificate with the
force of a nationwide legal
execution(NIRC, Sec. 207(8)).
Levy shall be effected by writing
upon said certificate a
description of the property.
Notice of the levy shall be
served upon the Register of
Deeds of LGU where the
propertyis locatedand upon the
owner (N/RC, Sec. 207(8)). ---
Within 10 days from receipt of
warrant, report must be
submittedto the Commissioner
or his representative, the
Commissioneror his authorized
representative may lift the
warrants (NIRC, Sec. 207(8))
If there is no bidder or the highest bid is
insufficient, the officer conducting sale shall
forfeit the property to the government. Within
two (2) days, he shall make a return of the
forfeiture. The Registrar of Deeds shall transfer
title to the government without need of a court
order, upon registration or forfeiture. Within
one (1) year from forfeiture, taxpayer may
redeem said property by paying full amount of
the taxes and charges (NIRC, Sec. 215). CIR
may, after twenty (20) day notice, sell property
at public auction or at a private sale with
approval of SOF. Proceeds shall be deposited
with the National Treasury (NIRC, Sec. 216).
If the delinquent lax is more than P1 M, Cl R seizes sufficient personal property
to satisfy the tax, charge, and expenses of seizure (NIRC. Sec. 207(A)).
If the delinquent tax is not more than 1"1M, Revenue District Officer seizes
sufficient personal property to satisfy the tax, charges, and expenses of seizure
Rerort on ciistrnint shall, within 10 days from receipt of warrant be submitted to
RUCl ,HH1 RPVPfllle Reuiom,11r>irHr:1,.11provirlf!d ttl;1t IIH·!Co111111issirnrw
l1;1s1111:
power to lift such order (N/RC, Sec. 207(A)).
......
______________
.,~
-----~---.
The distraining officer accounts for the goods distrained (NIRC, Sec. 208).
RDO posts notice in at least two (2) public places in the municipality/ city where
the distraint is•made. One place of posting must be at the mayor's office. Time
of sale shall not be less than twenty (20) days after the notice (NIRC, Sec. 209).
Goods shall be restored to owner if charges are paid (N/RC, Sec. 210).
Otherwise, officer conducts public auction.
Excess proceeds over the entire claim shall be returned to the owner. No charge
shall be imposed for the services of the officer (N/RC, Sec. 209).
Within two (2) d<:1ysafter sale, officer shall report to CIR (NIRC, Sec. 211). Within
five (5) days after sale,.distraining officer shall enter return of proceedings in the
record of Revenue Collection Officer, RDO, and Revenue Regional Director
(NIRC, Sec. 213).
Real property may be levied on before, simultaneously, or after the distraint of
persona·! property (NIRC, Sec. 207(~)).
Within ten (10) days after receipt of the warrant, levying officer shall report to
the CIR who shall have the authdr-ity to· lift the warrant of levy (N/RC, Sec.
207(8)).
Within twenty (20) days after leyy, officer shall post notice at the main entrance
of the municipality/city hall and in a public place in the barrio/district where the
real estate lies for at least 30 days and publish it once a week for 3 weeks.
Owner may prevent sale by paying all charge (NIRC, Sec. 213).
Sale shall-be held at the main entrance of the municipality/ city hall, or on the
premises of the property (NIRC, Sec. 213).
If there is a bidder and the highest bid is sufficient, excess of
proceeds of sale over claim and cost of sale shall be turned over
to the owner. Within five (5) days after sale, levying officer shall
enter return of the proceedings upon the records of the RCO,
RDO, R.R.D (NIRC, Sec. 213). Within one (1) year,from sale,
owner may redeem by paying to RDO amount of the taxes,
penalties, and interest from date of delinquency to the date of
sale, and 15% per annum interest on the purchase price from
the date of purchase to date of redemption. Owner shall not be
deprived of possession and shall be entitled to the fruits until one
(1) year expires (N/RC, -Sec. 214).
Levy and distraint may be repeated until the full amount due and
all expenses are collected (N/RC, Sec. 217).
 REMEDIES
Taxation Law

TABLE 5 - PERIOD OF REFUND

Commissioner of Internal Provincial or city

Revenue (NIRC, Sec.229) treasurer (LGC, Sec.
253)
Exception: VAT
BIR Office (Large Taxpayers
Service (LTS), Revenue District
Office (RDO)) having jurisdiction
over the principal place of
business of the taxpayer. Claims
for input tax refund of direct
exporters shall be exclusively
filed with the VAT Credit Audit
Division (VCAD) (R.[f. No. 13-1{3,
Sec. 4.112-1 (c)).

Within two (2) years after the Within two {2) years from the date of Within two (2) years
payment of the tax. payment of the tax, fee,.or charge, from the date the
or from the _date the taxpayer is taxpayer is entitled to
Exception: Excess input VAT entitled for refund or credit (LGC, such reduction or
2 years from the close of the Sec. 196) adjustment
taxable quarter when the sale
was made _bythe person legally
liable to pay the output VAT.

Note: Only applies to any VAT-

registered person, whose sales
are zero-rated or effectively zero-
rated (Sec. 112 A, NIRC).

The NIRC does not expressly LGC d_oes not expressly provide a Within sixty (60)
provide for a period within which specific period within which the local days from receipt of
to decide for tax refund cases. treasurer must decide tbe written the written claim for
claim for refund or credit. It is, refund
Exception: Excess input VAT therefore;,possible for a taxpayer to
90 days from the filing of the submit. an administrative claim for
application/claim for refund up to refund .very early in the two-year
the release of the payment of the period and initiate the judicial claim
VAT refund (R.R. No. 26-18) already near the end of such two-
year period due to an extended
inaction by the local treasurer. (City
of Manila v. Cosmos Bottling
Corporation, G.R. No. 196681.
June 27, 2018.)

If the CIR takes time in
deciding the claim and the
period of 2 years is about to
end, the suit or proceeding
must be started in the CTA
before the end of the 2-year
period without awaiting the
decision of the CIR (INGLES,
Tax Made Less Taxing: A
The· taxpayer shall have thirty (30) Appeal to the LBAA
days from the receipt of the denial within sixty (60) days
of or inaction on the letter-protest or from receipt of the
claim, not any time later, even if local treasurer's
within two (2) years from the date of denial or the
payment. expir,ation of the 60-
day period (LGC,
REASON: An assessment was Secs. 226 and 253)
made and, if not appealed in court
within 30 days, it becomes
 AlD
Sari B&da Uriiversity Cci!ege of law - QGCT Bar Operat1ons Cente,

Reviewer with Codals and conclusive and unappealable (City Adverse decision of
Cases (2018), p. 469); or of Manila v. Cosmos Bottling the LBAA. may be
If the claim is denied by the Corporation, G.R. No. 196681. appealed to the
CIR within the 2-year period, June 27, 2018). CBAA (LGC, Sec.
the taxpayer has 30 days 229(c)).
from receipt o( rifinic1I to
appeal to the CTA (R.A. No.
1125, Sec. 11).

Exception: Excess input VAT

Appeal to the CTA:
1. within 30 days from the
receipt of the denial (R.R.
No. 13-18, Sec. 4.112-1 (d);
or
within 30 days. after the
expiratior. of the 90-day
period without any action on
the part of the CIR (BOAOO,
supra at p. 255; Sec. 7(a)(2),
R.A. No. 1125. as amended
by R.A. Nos. 3457. 9282 and
9503).

Note: The taxpayer always has

30 days from the decision of the
CIR or from the lapse of the 120-
day period even after the lapse of
2 years from the taxable quarter
where.the sales were made (CIR
v. Mindanao Geothermal II
Partnership, G.R. No. 191498,
January 15, 2014).
 COURT OF TAX APPEALS
Taxation Law

I COURT OF TAX APPEALS I 5. To promulgate ,Bules and regulations for the

SALIENT FEATURES OF THE COURT OF
TAX APPEALS
1. The Court of Tax Appeals (CTA) is a regular
cciurt vested with exclusive appellate jurisdiction
over those cases arising out of the NIRC and
CMT A (Commissioner of Internal Revenue v.
Coun of Appeals, GR No. 104151, March 10,
1995).
2. CTA is a highly specialized body created for the
purpose of reviewing tax cases (Commissioner
of Internal Revenue v. General Foods (PHL),
Inc., G.R. No. 143672, April 24, 2003).
3. A Court of special or limited jurisdiction and as
such, it can only take cognizance of such
matters as are clearly within its jurisdiction (Ker
& Co., Ltd. v. Cout1 of Tax Appeals, G.R. No. L-
12396, January 31, 1962)
4. The proceedings are judicial in nature although
the CTA is not bound by the technical rules of
evidence (R.A. No. 1125, as amended, Sec. 8).
5. Procedure is governed by the Revised Rules of
the Court of Tax Appeals (RRCTA) - AM. No.
05-11-07-CT A which took effect on December
15, 2005. The Rules of Court apply only
suppletorily.
conduct of its business (R.A. No. 1125 as
amended, Sec. 8);
6. To require froduction of papers or documents
by subpoena duces tecum {R.A. No. 1125, as
amended, Sec. 10);
7. To punish ~ontempt (R.A. No. 1125, as
. amended, Sec. 1O);
8. To ~ummon witnesses by subpoena (R.A. No.
1125, as amended, Sec. 1O);
9. To administer Qaths (R.A. No. 1125,. as
amended, Sec. 10); and
10. To assess Damages against appellant if appeal
to CTA is found to be frivolous or dilatory (R.A.
No. 1125, as amended, Sec. 16).
COMPOSITION AND ORGANIZATION OF
MEMBERS OF CTA
1. Consists of a Presiding Justice and 8 Associate
Justices
a. Each whom appointed by the President; and
b. Upoh nomination by the Judicial and Bar
Council (R.A. No. 9503, Sec.1).
2. It may sit en bane or in 3 Divisions, each Division
composed of 3 Justices' (R.A. No. 9503, Sec.1).
3. The Presiding Justice and the 2 most Senior
Associate Justices shall serve as Chairpersons
of the 3 Divisions (R.A. No. 9503, Sec.1).

POWERS OF THE CTA: (SEDO-RPC- QUORUM REQUIREMENT

SODa)
1. To §.uspend the collection of the tax pending
appeal (RRCTA, Rufe 10, Sec. 1);
2. To receive gvidence (RRCTA, Rule 12, Sec. 2);
3. To render Q.ecisions on cases brought before it
(RRCTA, Rufe 14, Sec. 1); (R.A. No. 9503, Sec. 2)
4. To issue Qrder authorizing distraint of personal
property and levy of real property (R.A. No. VOTE REQUIREMENT
9282, Sec. 13); En bane: The affirmative votes of five (5) members
of the court en bane shall be necessary to reverse a
decision of a division; and only a simple majority of

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GACULA, Ad Hoc Director for Bar Matters I MARIELl,E CIEL0 B. BELG IRA, Vice Chairpmon for Finance! JUAN INIGO S. MIGUEL,
Vice Chairperson for Operations i ALISSA MARIE D.C. DELOS SANTOS, Vice Chairperson fur /\udit I CORINA R. TAMPUS, Vice
Chairperson for Secretariat i ARVY KEITH N. CHUNG. Vice Chairperson for Logistics I ANTONIO JUN-JUN C. MANALIGOD IV, Vice
Chairperson for Membership IJORDAN N. CHAVEZ, Vice Chairperson for Electronic Data Processing

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JOSE LORENZO C. DAVE. Subject Chair! LOUISE MARIE C. CONTACT0, Assistant Subiect Chair I KA TRYNA ANNE R. TO,\-lENIO,
Subject Electronic Data Proce,sing i SUBJECT .HEADS~ MARY GRACE A. GRANIL. General Principles I SHEENA ROSETTE DG.
DOMINGO, Administration, Tonforcement, Remedies and Court of Tax Appeals j JERRLITO P. CUSTODIO, Local and Real Property Taxation
I STEVIE R. ARCILLA and PATRICK 1\-IARRI0N Y. MELENDRES, lnwme Taxation, MARY ANN C. TAN, Transfer Ta."(I MARILYN
H. MALALUAN, Value-Added Tax\

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KATRINA.MIOIAELA D. DELFIN, ARMANT. PAEZ, ANDRJ-:1ANNE U. PALOMAR, MARY KATHERINE A SIMEON, JAMES
KARL DANIEL B. ALVARO, ARIESA JANE V. J;)OMIN<;0, JOSEPHINE MARIE T. SALAZAR, YNA ,'\1AREI AGUILAR, NERY
ROYCE T. LAZARO,J0HN KENNETH Q. CIUS0LOGO, LOIS DANIELLE P. DIMAAN0, ANDRELA M. AQUINO, ANNA J,0REN
DC. MANUEL and GILBERT OWENS. APilAD0

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Atty. NICASI0 C. CABANEIRO, CPA, Atty. DANTE 0. DEi.A CRUZ, CPA, Justice JAPAR B: DIMAAMPAO·, Atty. EFREN
VINCENT M. DIZON, CPA
the justices present is needed to promulgate a
resolution or decision in all other cases (R.A. No.
9503, Sec. 2).
NOTE: The Court shall sit en bane in the exercise of
its administrative, ceremonial and non-adjudicative
functions (RRCTA, Rule 2, Sec. 2).
Division: Concurrence of 2 members of Division
shall be necessary for the rendition of decision or
resolution in Division level (R.A. No. 9503, Sec. 2).
VOTES NECESSARY
Concurrence of 2 a. Clerk of Court;
members
Where the necessary majority vote cannot be had,
the petition shall be dismissed; in appealed cases,
the judgment or order appealed from shall stand
affirmed; and on all incidental matters, the petition or
motion shall be denied (RRCTA, Rule 2, Sec. 3).
When The Required Quorum Cannot Be
Constituted
When the required quorum cannot be constituted ,
due to any vacancy, disqualification, inhibition,
disability, or any other lawful cause, the Presiding
Justice shall designate any Justice of other
Divisions to sit temporarily therein (R.A. No. 9503,
Sec. 2).
POWER TO RECEIVE EVIDENCE
The CTA may receive evidence in the following
cases: {OG)
1. In all cases falling within the Qriginal jurisdiction
of the Court in Division pursuant to Sec. 3, Rule
4 of RRCTA (RRCTA, Rule 12, Sec. 2); and
2. In appeals in both civil and criminal cases where
the Court Grants a new trial pursuant to Sec. 2,
Rule 53 and Sec. 12, Rule 124 of the Rules of
Court (RRCTA, Rule 12, Sec. 2).
NOTE: The power of the Court of Tax Appeals to
exercise its appellate jurisdiction does not preclude
it from considering evidence that was not presented
in the administrative claim in the Bureau of Internal
Revenue. The Court of Tax Appeals is a court or
record, and it may receive new and additional
evidence not presented at the administrative
level. Parties are to litigate and prove their case
anew before the court and formally offer their
evidence (Philippine Airlines, Inc. vs. Commissioner
of Internal Revenue, GR No. 206079-80, January
17, 2018).
Evidence can be taken by a:
1. Justice of the CT A
It may be made motu proprio or upon proper
motion, when:
a. The determim:1tior1 of a questirni of fact
wises al any stage or the proceedings; or
b. The taking of an account is necessary; or
c. The determination of an issue of fact
requires the examination of a long account
(RRCTA, Rule 12, Sec. 3).
Upon completion of the hearing the Justice
concerned shall submit to the Court a written
report .thereon, stating the findings and
conclusion (RRCTA, Rule 12, Sec. 3).
2. Court official
b. Division Clerk of Court;
c. Their assistants Who are members of the
Philippine Bar; and
d. Court attorney (RRCTA, Rule 12, Sec. 3).
PURPOSE: Making comparison with the original
and identification by witnesses of the received
documentary evidence (RRCTA, Rule 12, Sec. 3).
It applies only in default or ex parte or where the
parties agree in writing. The court official shall have
no power to ,rule or\ objections (RRC TA, Rule 12,
Sec. 3).
CTA,~.hall NOT be Governed by the Technical
•Rulesof Evidence
The law creating the CT A specifically provides that
proceeding before it shall not be governed by the
technical rules of evidence. The paramount
consideration remains the ascertainment of truth.
Verily, the quest for orderly presentation of issues is
not an absolute. It should not bar courts from
considering undisputed facts to arrive at a just
determination of controversy (5 DIMAAMPAO, Tax
Principles and Remedies, (2018), p. 274 [hereinafter
DIMAAMPAOJ).
CTA is bound by the Rules on Documentary
Evidence
Under Sec. 8 of RA 1125, the CT A is described as
a court of record. As cases filed before it is litigated
de novo, party litigants should prove every minute
aspect of their cases (DIMAAMPAO, supra at 275).
Indubitably, no evidentiary value can be given the
pieces of evidence submitted by the BIR, not
formally offered, as the rules on documentary
evidence require that these documents must be
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formally offered before the CTA (Dizon v. Court of
Tax Appeals, G.R. No. 140944, April 30, 2008).
JURISDICTION OP THE
COURT OF TAX APPEALS
The CTA has jurisdiction over both civil and criminal
aspects of a tax case. The concentration of tax
cases in one court will enhance the disposition of
these cases since it will take them out of the
jurisdiction of regular courts which, admittedly, do
not .have expertise in the field of taxation
(DIMAAMPAO, supra at 274).
The law intends the CTA to have exclusive
jurisdiction to resolve all tax problems. With respect
to administrative issuances, these are issuecJby the
Commissioner under its power to make rulings or
opinions in connection with the implementation of
the provisions of internal revenue laws. Ti;ixrulings
are official positions of the Bureay on inquiries of
taxpayers. Hence, the determination of the validity of
these issuances clearly falls within the exclusive
appellate jurisdiction of the.., Cou_rtdf Tax,:Appeals.
subject to prior review by the Secretary of Finance
(Commissioner of Internal Revenue vs. Court of Tax
Appeals and Petron Corporatiqn, G.R. No. 207843,
February 14, 2018).
The Court explicitly ruled that the CTA may ta_ke
cognizance of cases directly challenging the
constitutionality or validity of a tax law, regulation or
administrative issuance (such as revenue orders,
revenue memorandum circulars, and rulings)
(Banco De Oro v. Republic, G.R. No.· 198756,
August 16, 2016).
The CTA, by constitutional mandate, is vested
with jurisdiction to issue writs of certiorari in
cas&s falling within its exclusive jurisdiction
The power of the CTA includes that of determining
whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction
on the part of the RTC in issuing an interlocutory
order in cases falling within its exclusive appellate
jurisdiction. It follows that the CTA, by constitutional
mandate, is vested with jurisdiction to issue writs of
certiorari in these cases (City of Manila v. Grecia-
Cuerdo, C.R. No. 17572:J 1ebruary 4, 2014).
The power to issue writs of prohibition and injunction
is supplementary to its appellate jurisdiction
(Commissioner of Internal Revenue v. Yuseco, G.R.
No. L-12518, October 28, 1961).
-,,
COURT OF TAX APPEALS
Taxation Law
JURISDICTION OF CTA OVER CIVIL
CASES
1. Exclusive Original Jurisdiction of CTA
Division
Those involving final and executory
assessments for taxes, fees, charges and
penalties, where the principal amount of taxes
and fees, exclusive of charges and penalties,
claimed is one million pesos (P1,000,000) or
more (RRCTA, Rule 4, Sec. 3(c)(1)).
NOTE: Collection cases where the principal
amount of taxes and fees, exclusive of charges
and penalties cl 9 imed is less than one million
pesos (P1,000,000) shall be tried by the proper
MTC, MeTC, or RTC, depending on their
respective jurisdiction. The jurisdiction of the
CTA in these cases shall be appellate (R.A. No.
9282, Sec. 7(c)(1)).
2. Exclusive Appellate Jurisdiction of CTA
Division (RRCTA, Rule 4, Secs. 3(a), 3(b)(2)
and 3(c)(2)): (DIReCSS)
a. Qecisions of the CIR involving: (ORO)
i. Qisputed assessments;
In cases of undisputed assessments,
being an action for the collection of sum
of money, the CTA has exclusive
original jurisdiction over undisputed
assessments when the amount involved
is P1 million or more. (RRCTA, Rule 4.
Sec. 3(c}.(1)).
ii. Refunds of internal revenue taxes, fees
or other charges, penalties in relation
thereto; or
iii. Qther matters arising under the NIRC,.
or other laws administered by the BIR.
The term "other matters" is limited only
by the qualifying phrase that follows it.
The appellate jurisdiction of the CTA
Division is not limited to cases which
involve decisions of the CIR on matters
relating to assessments or refunds. It
covers other cases that anse out ot the
NIRC or related laws administered by
the BIR. The issue of prescription of the
BIR's right to collect taxes may be
considered as covered by the term
"other matters" over which the CTA has
appellate jurisdiction (Commissioner of
Internal Revenue v. Hambrecht & Quist
PHL, Inc., GR. No. 169225, November
17, 2010). •
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b. !naction by the CIR involving (DROW)
i. Qisputed assessments;
ii. Refunds of internal revenue taxes, fees
-;;-rother charges and penalties imposed
thereto;
iii. Other matters arising under NIRC or
other laws administered by the BIR,
Where the NIRC provides a specItIc
period for action (RRCT A, Rule 4, Sec.
3(a)(2)).
NOTE: The inaction by the CIR within
the 180-day period under Sec. 228 of
the NIRC is deemed a denial for
purposes of allowing the taxpayer to
appeal with the CTA but it does not
necessarily constitute the ClR's formal
decision (RRCTA, Rule 4, Sec. 3(a)(2)).
In case the CIR fails to act on the
disputed assessment within the 180-day
period from date of submission of
documents, a taxpayer can either:
1.) File a petition for review with the
CTA within 30 days after the
expiration of the 180-day period
(NIRC, Sec. 228); or
2.) Await the final decision of the CIR
on the disputed assessments·
beyond the 180-day period: the
taxpayer may appeal such final
decision to the er
A (RRCTA, Rf-!le
4, Sec. 3(a)(2)).
Such taxpayer mciy appeal to the
CTA by petition for review filed
within 30 days after receipt of a
copy of such decision or ruling, or
expiration of the period fixed by law
for the Commissioner of Internal
Revenue to act on the disputed
assessments (RRCTA, Rule 8, Sec.
3(a)). •
NOTE: These options are mutually
exclusive, and resort to one bars
the applicc1tion of the other
(INGLES, Tax Made Less Taxing: A
Reviewer with Codals and Cases, p.
479 [hereinafter ING LES,
Reviewer]).
c. Decisions, Resolutions or Orders of the
RTC in Local Tax Cases decided or
resolved by them in the !;_xerciseof their
Original Jurisdiction (RRCTA, Rule 4,
Sec. 3(a)(3)).
The term "local taxes" in the aforementioned
provision should be considered in its general
Centef
and comprehensive sense, which embraces
real property tax assessments, in line with
the precept 'what is generally spoken shall
be generally understood" (Salva v. Magpile,
G.R. No. 220440, November 8, 2017).
The CTA, sitting as Division, has jurisdiction
to review by appeal the decisions, rulings,
and resolutions of the RTC over local tax
cases, which includes real property taxes
(National Power Corp. v. Municipal
Government of Navotas, G.R. No. 192300,
November 24, 2014).
Before the case can be raised on appeal to
the CTA, the action before the RTC must be
in the nature of a tax case. If the case is
essentially one for recovery of ownership
and possession of the property, with
damages, which is not anchored on a tax
issue, the RTC's ruling could not be
characterized as a local tax case over which
the CTA could have properly assumed
jurisdiction on appeal (Ignacio v. Office of
City. Treasurer of Quezon City, G.R. No.
22162D, September 11, 2017).
1;;< •• '
NOTE: With the passage of R.A. No. 9282,
the. authority to exercise either original or
appell.ate jurisdiction over local. tax cases
depended on the amount of the claim (China
Banking Corp. v. City Treasurer of Manila,
'. GJ~.. No,2(!"1:117, July 1, 2015).
d. Decisions of the f.ommissioner of
Customs involving (DuSe-FO)
f Liability for customs Duties, fees or
••other money charges;
ii. Seizures, detention or release of other
property affected;
iii. fines, forfeitures, or other penalties in
relation thereto; or
iv. Other matters arising under the customs
iawor other laws administered by the
BOC (RRCTA, Rule 4, Sec. 3(a)(4)).
e. • Decisions of the §ecretary of Finance
On Customs cases elevated for automatic
review from decisions of the Commissioner
of Customs which are adverse to the
Government under the CMTA; (RRCTA,
Rule 4, Sec. 3(a)(5)).
REASON AND PURPOSE OF
AUTOMATIC REVIEW: To protect the
Government against corrupt and conniving
customs collector. The owner of the goods
cannot be expected to appeal the collector's
decision when it is favorable to him
(D/MAAMPAO, supra at 277).
 I 11 ' ' , ,'
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"' 7;_'!.t
Instances where decisions of the
Secretary of Finance may be the subject
of an appeal to the CTA in Division
i. Decisions of the Secretary of Finance
in forfeiture cases automatically
elevated for review (CMTA, Sec. 1127);
and,
ii. Decisions of the Secretary of Finance in
other cases automatically elevated for
review where the COC has not rendered
a decision within the prescribed period
or when any decision rendered by the
Commissioner is adverse to the
government (CMTA, Sec. 1128).
NOTE: The decision of the Secretary of
Finance on disputed assessments
involving customs duties and taxes and
other matters related thereto shall be
subject to the exclusive jurisdiction of
the CTA (CMTA, Sec. 201).
f. Decisions of the ~ecretary of Trade and
Industry in the case of non-agricultural
product, commodity or article, and the
~ecretary of Agriculture in_the case of
agricultural product, commodity, or article,
involving dumping (R.A. No. 8752) and
countervailing duties (R.A. No. 8751) and
safeguard measures (R.A. No. 8800), where
either party may appeal the decision to
impose or not to impose said duties:
3. Exclusive Appellate Jurisdiction of CTA
En Banc (RRCTA, Rule 4, Sec. 2).
a. Decisions or Resolutions on Motions for
Reconsideration or New Trial ,of the
Court in Division in the Exercise of its
Exclusive Appellate Jurisdiction over:
(ALT)
i. Cases arising from ~dministrative
agencies - BIR, BOC, DOF, DTI, DA;
ii. !,ocal tax cases decided by the RTCs in
the exercise of their original jurisdiction;
and,
iii. Iax collection cases decided by the
RTCs in the exercise of their original
jurisdiction involving final and executory
assessments for taxes, fees, charges,
and penalties, where the principal
amount of taxes and penalties Claimed
is less than one million pesos
(Ja'1,000,000) (RRCTA, Rule 4, Sec.
2(a)).
b. Decisions, Resolutions or Orders of the
RTCs decided or resolved by them in the
Exercise of their Appellate Jurisdiction
over:
COURT OF TAX APPEALS
i. Local tax cases (RRCTA, Rule 4, Sec.
2(b)); and,
ii. Tax collection cases (RRCTA, Rule 4,
Sec. 2(c))
NOTE: In local tax collection cases, the
amount of the claim determines where the
case should be filed. When the claim does
not exceed t:'300, 000 (or f:>400, 000 in
Metro Manila), the case should be filed to
MTC, not the RTC. The RTC exercises
appellate jurisdiction in those cases (China
Banking Corporation v. City Treasurer of
Manila, G.R. No. 204117, July 1, 2015).
The CTA has jurisdiction to determine if the
warrant of distraint and levy issued by the
BIR is valid and to rule if the Waiver of
Statute of Limitations was validly effected
(Philippine Journalists, Inc. v.
Commissioner of Internal Revenue. G.R.
No. 162852, December 16, 2004).
c. Decisions, Resolutions or Orders on
Motions for Reconsideration or New Trial
of the Court in Division in the Exercise of
its Exclusive Original Jurisdiction
Tax collection cases where the principal
amount of taxes and fees, exclusive of
charges and penalties claimed is one million
pesos- ~1,000,QOO) or more is under the
exclusive original jurisdiction of CTA
division, (RRCTA, Rule 4, Sec. 3(c)(1)).
NOTE: The filing of a motion for
reconsideration or new trial before the CTA
Division is an indispensable requirement for
filing an appeal before the CTA En Banc.
• Failure to file such motion for
reconsideration or new trial is cause for
dismissal of the appeal before the CTA En
Banc (City of Manila v. Cosmos Bottling
Corporation, G.R. No. 196681, June 27,
2018).
The same is true in the case of an amended
decision. Section 3, Rule 14 of RRCTA
defines an amended decision as "any action
modifying or reversing a decision of the
Court en bane or in Division." As explained
in CE Luzon Geothermal Power Company,
Inc. v. Commissioner of Internal Revenue,
an amended decision is a different decision,
and thus, is a proper subject of a motion for
reconsideration (Asiatrust Development
Bank, Inc. v. Commissioner of Internal
Revenue, G.R. No. 201530,'April 19, 2017).
d. Decisions of the CBAA in the Exercise of
its Appellate Jurisdiction over . cases
 fW4hf#M \ 1
MEM:Q~YAID
Sar~ Beda University Co!l&ge of Law - ~GCT Ba, Operations Center
involving the assessment and taxation of
real property originally decided by the
provincial or city board of assessment
appeals (RRCTA, Rule 4, Sec. 2{e)).
JURISDICTION OF THE CTA
CRIMINAL CASES
1. Exclusive Original Jurisdiction of CTA
Division
Those arising from violations of the NIRC or
CMTA and other laws administered by the BIR
or BOC, where the principal amount of taxes and
fees, exclusive of charges and penalties, -
claimed is one million pesos (!'>1,000,000) or
more (RRCTA, Rule 4, Sec. 3(b)(1)).
Regular courts shall have jurisdiction in
offenses or felonies where:
a. The principal amount of taxes and fees,
exclusive of charges and penalties claimed
is less than one million pesos (~1,000,000);
or,
b. No specified amount is claimed (R.A. No.
1125, Sec. 7{b){1)). • Jurisdiction over Criniinal Offenses
Inclusion of Civil Action in Criminal Action
The criminal action and the corresponding civil
action for the recovery of civil liability for taxes
and penalties shall -be deemed jointry instituted
in the same proceeding. The filing of criminal
action shall necessarily carry with it the filing of
civil action. No right to reserve the filing of such
civil action separately from the criminal action
shall be allowed or recognized (RRCTA, Rule 9,
Sec. 11).
2. Exclusive Appellate Jurisdiction of CTA
Division (RRCTA, Rule 4, Secs. 3(a),
3(b)(2) and 3(c)(2))
a. Appeals from the Judgments,
Resolutions or Orders of the RTCs in
their Original Jurisdiction in Criminal
Offenses
Those offenses arising from violations of the
NIRC or CMTA and other laws administered
by the BIR or BOC, where the principal
amount of taxes and fees, exclusive of
charges and penalties, claimed is less than
one million pesos (!'>1,000,000) or where
there is no specified amount claim (RRCTA,
Rule 4, Sec. 3(b)(2)).
b. Criminal Offenses over Petitions for
Review of the Judgments, Resolutions or
Orders of the RTCs in the exercise of
their Appellate Jurisdiction over tax cases
originally decided by the MTCs or MCTCs
(R.A. No. 1125, as amended, Sec.
7(b)(2J(b)).
3. Exclusive Appellate Jurisdiction of CTA
En Banc (RRCTA, Rule 4, Sec. 2(f), (g) and
OVER (h))
a. Decisions, Resolutions or Orders on
Motions for Reconsideration or New Trial
of the Court in Division in the Exercise of
its Exclusive Original Jurisdiction over
cases •nvolving Criminal Offenses arising
from violations of ·the NIRC or CMTA and
other laws administered by the BIR or BOC
(RRCTA. Rule 4, Sec. 2(f)).
b. Decisions, Resolutions or Orders on
Motions for Reconsideration or New Trial
of the Court in Division in the Exercise of
its Exclusive Appellate Jurisdiction over
Criminal Offenses mentioned in paragraph
A (RRCTA, Rule 4, Sec. 2(g)).
c. Decisions, Resolutions or Orders of the
_RTCs in the Exercise of 1heir Appellate
mentioned in paragraph A (RRCTA, Rule 4,
$ei;,'2(h)).
I APPEAL IN GENERAL
I
APPE'Af'rcf'tRE CTA En Banc, NOT CA
Under the modified appeal procedure, the decision
bfJ1.,qivisionof the CTA may be appealed to the CTA
•En Btiiu:;,The decision of the CTA En Banc may in
turn be directly appealed to the SC only on a
question of law DIMAAMPAO, supra at 273, R.A.
9282, Sec. 18 & 19).
SUBJECT OF APPEAL
What is appealable to the CTA are decisions of the
CIR on the protest of the taxpayer against
assessments (Commissioner of Internal Revenue v.
V.Y. Domingo Jewellers, Inc., G.R. No. 221780,
March 25, 2019).
A decision is appealable when it constitutes the final
action taken by him or his authorized deputies with
respect to the taxpayer's liability (PAES):
1. freliminary collection letters, post reporting
notices and pre-assessment notices are not
appealable, because they are not the final
decision of the Commissioner.
2. The Action taken by the Commissioner in
response to the taxpayer's protest on the
 '" ' ',t'~ • '1 l:~i•>-t''
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assessment would constitute an appea!ab!e
decision.
3. An gxchange of communication between the
taxpayer and the Commissioner, and the latter
states that his action is final, then, period for
appeal begins to run (Commissioner of Internal
Revenue v. Bank of the Philippine Islands, GR
No. 134062, April 17, 2007).
4. Commissioner must State that his decision is
final for period of appeal to run (Dy Pac & Co.,
Inc. v. Cowt of Tax Appeals, GR. No. L-31369,,
October 18, 1977).
INSTANCES WHEN DECISIONS ARE
FINAL
1. A demand letter for tax deficiency issued and
signed by an authorized subordinate officer with
the warning that failure to pay would result to
issuance of a warrant of distraint arid levy
without further notice (Oceanic Wireless
Network, Inc. v. Commissioner of Internal
Revenue, G.R. No. 148380, December 9, 2005).
2. A letter of BIR Commissioner reiterating
previous demand to pay an assessment
(Commissioner of Internal R_evenue v. Ayala
Securities Corp., G.R. No. L-29485, November
21, 1980).
3. The filing of a judicial action for collection .may
be treated by the taxpayer as a denial of a
protest (Commissioner of Internal Revenue v.
Union Shipping, G.R. No. La66160, May 21,
1990).
4. A Formal Letter of Demand with Assessment
(FAN) issued by the BIR to' a taxpayer, although
ordinarily must first be administratively protested
by the latter, but the language and the tenor
thereof .indicate that the same is the final
decision of the CIR on the matter (Allied Banking
Corp. v. Commissioner of Internal R1Nenue,
G.R. No. 175097, February 5, 2010).
5. Tenor of finality rule: Where several requests
for reconsideration are filed with the
Commissioner, the appealable decision is that
which affirms the disputed assessment in terms
which clearly indicate the finality of the action
taken by the Commissioner (Dy Pac & Co., Inc.
v. Court of Tax Appeals, G.R. No. L-31369,
October 18, 1977).
6. The Commissioner did not rule on the taxpayer's
motion for reconsideration of the assessment. It
was only when taxpayer received the summons
on the civil action for the collection of deficiency
income tax that the period to appeal
commenced to run (Commissioner of Internal
Revenue v. Union Shipping Corp., G.R. No. L-
66160, May 21, 1990).
7. Preliminary collection letter may serve as the
final assessment notice (Columbia Pictures,
Inc., v. Court of Appeals, G.R. No. 110318,
August 28, 1996).
COURT Of TAX APPEALS
Taxation Law
8. When there is a request for reconsideration,
issuance of warrant of distraint and levy to
enforce collection of deficiency assessment is
tantamount to outright denial of the request for
reconsideration which is appealable to the CT A
(2 CASASOLA, NIRC (2013) p. , 1258
[hereinafter 2 CASASOLA]).
INSTANCES WHERE CTA WOULD HAVE
JURISDICTION EVEN IF THERE IS NO
DECISION
1. If the CIR has not acted in a tax refund case
and the two-year prescriptive period is about to
expire (RRCTA, Rule 8, Sec. 3(a)).
2. If the Commissioner of Customs has not
rendered a decision on an application for refund
of internal revenue taxes and·the suit is about to
prescribe (RRC TA, Rule 4, Sec. 3(a)(4)).
3. Where the CIR has not acted upon a protested
assessment within 180 days from submission
of all relevant documents supporting the protest
(R.R. No: 12-99, Sec. 3.1.5(6)).
,
The jurisdiction of the CT A is to review by appeal
decisions of the CIR on disputed assessments.
When a taxpayer does not protest an assessment
and appeals the assessment itself to the CTA, his
appeal is premature •.(Commissioner of Internal
Revenue v. Villa, G.R. No. L-23988, January 2,
1968).
The authority to make tax assessments may be
deleg~ted to subordinate officers. Said assessment
has the same force and effect as that issued by the
Commissioner himself, if not reviewed or revised by
the latter. Hence, the same would have been a
proper subject for appeal to the Court of Tax Appeals
(Oceanic Wireless.Network, Inc. v. Commissioner of
/ntemal Revenue, G.R. No. 148380, December 9,
2005).
NEW ISSUES CANNOT BE RAISED FOR
THE FIRST TIME ON APPEAL
GENERAL RULE: New issues cannot be raised
for the first time on appeal (Del Rosario v. Bonga.
G.R. No. 136308, January 23, 2001).
REASON: The court which is supposed tci review
would not review but determine and decide for the
first time, a question not raised at the administrative
forum (Commissioner of Internal Revenue v.
Wander PHL, Inc., G.R. No. L-68375, April 15,
1988).
EXCEPTIONS:
1. Defense of Prescription
Prescription is a matter of defense; hence, the
burden is on the taxpayer to prove that the full
 tk&khib@ \ 1
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period limitation has expired, and this requires
him to positively establish the date when the
period started running, and when the same was
fully accomplished (Quero! v. Collector of
Internal Revenue, G.R. No. L-16705, October
30, 1962).
2. Errors of administrative officials
REASON: It is axiomatic that the Government
cannot and must not be estopped particularly in
matters involving laxes. Taxes ale ll18 lif8bloocl
of the nation through which the government
agencies continue to operate and with which the
State effects its functions for the welfare of its
constituents. The errors of certain administrative
officers should never be allowed to jeopardize
the Government's financial position
(Commissioner of Internal Revenue v. Court of
Appeals, G.R. No. 106611, July 24, 1994).
The Government cannot raise the issue of
incapacity for the first time on appeal
While it is axiomatic that the Government can never
be in estoppel for tax purposes, it was held by the
SC that the BIR should not be allowed to defeat an
otherwise valid claim for refund by raising the
question of incapacity for the first time on appeal
before the SC, where it was never raised in the
administrative level and neither was it raised before
the CTA In the absence of explicit statutory
provisions to the contrary, the Government must
follow the same rules of procedure which bind
private parties (Commissioner of Internal Revenue
v. Procter and Gamble, G.R. No. L-66838,
December 2, 1991, Resolution).
BURDEN OF TAXPAYERS ON APPEAL
TOCTA
It is the burden of taxpayers on appeal to CTA to
prove by a full disclosure of data on his possession
that: (WPC)
1. The tax assessment is Wrong;
2. The tax assessment is merely a fresumption
and not based on actual facts; and
3. The correct fomputation of liability, if any (Sy
Po v. Court of Tax Appeals, G.R. No. 81446,
August 18, 1988).
The burden of proof is on the taxpayer contesting the
validity or correctness of the assessment to prove
not only that the one who rendered the assailed
decision is wrong but that the taxpayer is right.
Proving that the assessment is wrong is not enough
(H. Tam.bunting Pawnshop, Inc. v. Commissioner of
Internal Revenue, C. T.A. Case No. 6238, October 8,
2004).
However, although assessments by tax examiners
are presumed correct and made in good faith, prima
facie correctness of a tax assessment does not
apply upon proof that an assessment is utterly
without foundation, meaning that it is arbitrarily and
capriciously made (Keansburg Marketing Corp. vs.
Commissioner of Internal Revenue, CTA Case No.
9076, Jan. 5, 2018).
REASONS:
1. The tax court could settle nothing, and
2. The way is open for subsequent assessments
and appeals. The roots of controversy must be
cut (Sy Po v. Court of Appeals, C.R. No. L-
81446, August 18, 1988).
WITHDRAWAL OF AN APPEAL
RENDERS THE ASSAILED DECISION
FINAL AND EXECUTORY
By withdrawing the appeal, petitioner is deemed to
have accepted the decision of the CTA. And since
the CT A had already denied taxpayer's request for
the issuance of tax credit certificate for insufficiency
of evidence, it may no longer be included in
taxpayer's future claims. Petitioner cannot be
allowed to circumvent the denial of its request for tax
credit by abandoning its appeal and filing a new
cl,:1im(Central Luzon Drug Corp. v. Commissioner of
Internal Revenue, G.R. No 181371, March 2, 2011).
JURISDICTION OF CTA OVER A
SPECIAL CIVIL ACTION FOR
CERTIORARI ASSAILING AN
INTERLOCUTORY ORDER
While there is no express grant of such power with
respect to the crA, the Constitution provides that
judicial power shall be vested in one SC and in such
lower courts as may be established by law and that
judicial power includes the duty to settle actual
controversies and to determine whether or not there
has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.
Thus, the CTA, by constitutional mandate, is vested
with jurisdiction to issue writs of certiorari in these
cases. For any appellate court to effectively exercise
its appellate jurisdiction, it must have the authority to
issue, among others, a writ of certiorari (City of
Manila v: Grecia-Cuerdo, G.R. No. 175723,
February 4, 2014).
Interlocutory Order of CT A Not Appealable
It was ruled that no appeal is proper from an order of
the CTA requiring the filing of a bond to suspend tax
collection during the pendency of the appeal in as
much as the same is interlocutory (Republic v. Juan,
G.R. No. L-24740, July 30, 1979).
Equally settled is the rule that an order denying a
motion to quash, being interlocutory, is not
 :_ ·,' '.·' • ',: ;" ~:/·~;>"
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immediately appealable, nor can it be the subject of
a petition for certiorari. Such order may only be
reviewed in the ordinary course of law by ;m appeal
from the judgment after trial (Judy Anne Santos v,
People, G.R. No. 173176, August 26, 2008).
There is no doubt that the CTA Order granting the
motion to declare in default and allowing the
presentation of evidence ex parte, is an interlocutory
order. Since the CTA Orders arc; rnerc;ly
interlocutory, no appeal can be taken therefrom.
Rules of Civil Procedure, as amended, applies
suppletorily to proceedings before the Court of Tax
Appeals ((;nmmissinner of Internal Revenue v.
Court of Tax Appeals and CBK Power Company
Limited, G.R. No. 2013054, July 29, 2015).
FINDINGS OF FACT OF CTA
REVIEWABLE
The Court will not lightly set aside the conclusions
reached by the CTA which, by the very nature of its
function of being dedicated exclusively to the
resolution of tax problems, has accordingly
developed an expertise on the subject, unless there
has been an abuse or improvident exercise of
authority (Commissioner of lnterr1al Revenue v.
Toledo Power, Inc., G.R. No. 183880, January 20,
2014).
Factual findings made by the CTA can only be
disturbed on appeal if they are supplied by
substantial evidence or there is a showing of gross
error or abuse on the part of the CT A. In the absence
of any clear and convincing proof to the contrary, the
Court must presume· that the CTA rendered a
decision which is valid in every respect
(Commissioner of Internal Revenue v. Toledo
Power, Inc.; G.R. No. 183880, January 20, 2014).
PRINCIPLE OF NON-EXHAUSTION OF
ADMINISTRATIVE REMEDIES APPLY TO
CTA
Before a party is allowed to seek the intervention of
the courts, it is a pre-condition that he avail of all
administrative processes afforded him, such that if a
remedy within the administrative machinery can be
resorted to by giving the administrative officer every
opportunity to decide on a matter that comes within
his jurisdiction, then such remedy must be
exhausted first before the court's power of judicial
review can be sought, otherwise, the premature
resort to the court is fatal to one's cause of action
(Commissioner of Internal Revenue v. Court of Tax
Appeals, G.R. No. 207843, July 15, 2015).
The Secretary of Justice has jurisdiction over tax
cases arising between Government Agencies
and Offices
COURT OF TAX APPEALS
Taxation Law
Under Presidential Decree No. ?4? (P.O. No. 242),
all disputes and claims solely between
government agencies and offices, including
government-owned or controlled corporations, shall
be administratively settled or adjudicated by the
Secretary of Justice, the Solicitor General, or the
Government Corporate Counsel, depending on the
issues and government agencies involved. When
the law says "all disputes, claims and controversies
solely" among government agencies, the law
means all, without exception (Power Sector
Assets and Liabilities Management . Corp. v.
Commissioner of Internal Revenue, G.R. No.
198146, August 8, 2017).
NOTE: The second paragraph of Section 4 of the
1997 NIRC, providing for the exclusive appellate
NOW jurisdiction of the CTA as regards the CIR's
decisions on matters involving disputed
assessments, refunds in internal revenue taxes,
fees or other charges, penalties imposed in relation
thereto, or other matters arising under NIRC, is in
GOnflictwith P.O. No. 242.
To harmonize Section 4 of the 1997 NIRC with P.O.
No. 242, the following interpretation should be
adopted:
1. As regards private entities and the BIR,' the
power to decide disputed assessments, refunds
of internal revenue taxes, fees or other charges,
penalties in relation thereto, or other matters
arising under th~ NIRC or other laws
administered by the BIR is vested in the CIR
subject to the exclusive appellate jurisdiction of
the CTA, in accordance With Section 4 of the
NIRC; and
2. Where the disputing parties are all public
entities. (covers disputes between the BIR and
other government entities), the case shall be
governed by P.O. No. 242 (Id.).
Exception to the rule on exhaustion of.
administrative remedies; Estoppel
The CIR must indicate clearly and unequivocally to
the taxpayer whether an action constitutes a final
determination on a disputed assessment. The fact
that in the Formal Letter of Demand with
Assessment Notices, CIR used the word "appeal"
instead of "protest", "reinvestigation", or
"reconsideration". Although there was no direct
reference for taxpayer to bring the matter directly to
the CT A, it cannot be denied that the word "appeal"
under prevailing tax laws refers to the filing of a
. Petition for Review with the CT A. (Allied Banking
Corporation v. Commissioner of Internal Revenue,
G.R. No. 175097, February 5, 2010).
ISSUANCE OF INJUNCTION OR
TEMPORARY RESTRAINING ORDERS
BY COURTS
No court shall have the authority to grant an
injunction to restrain the collection of any national
internal revenue tax. fee, or charge imposed by
NIRC. By way of exception pursuant to Sec. 11 of
RA no. 1125 as amended, it is only the CTA that
has jurisrliction to suspend the collection of taxt!:s
but only under certain conditions that when in its
opinion, the collection by the BIR may jeopardize the
interest of the government and/or the taxpayer and
which case the CTA may suspend the collection of
taxes and require the taxpayer either to deposit the
amount claimed or to file a surety bond for not more
lhc!n double the amount being assessed (R.M O No.
42-2010).
MANDAMUS DOES NOT LIE AGAINST
THE PERFORMANCE OF A 8, Sec. 3(b) and (c)):
DISCRETIONARY POWER LIKE THE
CIR'S POWER TO ASSESS
Purely administrative and discretionary functions
may not be interfered by the courts. Since the office
of the Commissioner of Internal Revenue is charged
with the administration of revenue laws, which is the
primary responsibility of the executive branch of the
government, mandamus may not be against the
Commissioner to compel him to impose a tax
assessment not found by him to be due or proper for
that would be tantamount to a usurpation of
executive functions (Mera/co Securities Corp.
v. Savellano, G.R. No. L-36181, October 23, 1982).
CTA EN BANC CANNOT ANNUL
JUDGM.ENT OF THEIR DIVISIONS
SC, CA. and CTA en bane cannot annul judgment
of their divisions. Annulment of Judgment (Rule 47
of the Rules of Court) involves exercise of original
jurisdiction and implies power by a superior court
against the final judgment, decision or ruling of an
inferior court based on the grounds of extrinsic fraud
and lack of jurisdiction. The Divisions are not
separate and distinct courts but are divisions of one
and the same court. There is no hierarchy of courts
within the SC, CA, and CTA, for each remain as one
court notwithstanding that they also work in divisions
(Commissioner of Internal Revenue v. Kepco 1/ijan
Corporation, G.R. No. 199422, June 21, 2016).
I APPEAL IN CJVIL CAS:ES I
WHOSE DECISIONS ARE APPEALABLE
1. Appeal to the CTA Division (RRCTA, Rule
8, Sec.3 (a)):
Any party adversely affected by a decision or
ruling or inaction of:
a. The Commissioner of Internal Revenue;
b. The Commissioner of Customs;
c. The Secretary of Finance;
d. The Secretary of Trade and Industry;
e. The Secretary of Agriculture; or
f. The Regional Trial Court in the exercise of
its original jurisdiction.
2. Appeal to the CTA En Banc (RRCTA, Rule
Any party adversely affected by a decision or
ruling of:
a. The CTA in Division in a motion for
reconsideration or new trial;
b. The .CBAA;or
c. The RTC in the exercise of its appellate
jurisdiction.
PERIOD TO APPEAL/MODE OF APPEAL
1. Appeal to the CTA Division
By Petition for Review within 30 days after the
receipt .of. the decision, ruling or after the
expirafion of the period fixed by law for the CIR
to act on the disputed assessments (RRCTA,
,Rule 8, Sec. 3(a)).
'NOTE:' While the GENERAL RULE is that a
taxpayer has 30 days to appeal to the CTA from
the final decision of the CIR, the said rule cannot
be applied if the Assessment Notice itself clearly
states that the taxpayer must file a protest with
the CIR or the Regional Director within 30 days
from receipt of the Assessment Notice (Misnet,
Inc. v. Commissioner of Internal Revenue, G.R.
No. 210604, June 3, 2019).
In case of disputed assessments, the inaction of
the CIR within the 180-day period shall be
deemed a denial for purposes of allowing the
taxpayer to appeal to the Court and does not
necessarily Gonstitute the formal decision of the
former on the tax case. The taxpayer may
instead opt to await the decision of the CIR on
the disputed assessment even beyond the 180-
day period. In this case, the Final Assessment
Notice (FAN) will not become final and
executory. If the taxpayer waits for the decision,
which turns out tc be adverse, only then must he
appeal such adverse decision to the CTA within

30 days from recP.ir>tthereof (RRCT A. Rule 4,
Sec. 3(a)(2); Rizal Commercial Banking Corp. v.
Commissioner of Internal Revenue, G.R. No.
168498, June 16, 2008).
In case of inaction of the Commissioner of
Internal Revenue on claims for refund of internal
revenue taxes erroneously or illegally collected,
the taxpayer must file a petition for review within
the two-year period prescribed by law from
payment or collection of the taxes (RRCTA, Rule
8, Sec. 3(a)).
NOTE: For the CTA to have jurisdiction, the BIR
Commissioner must first render his decision,
otherwise, there is nothing to review, and
jurisdiction would not be acquired
(Commissioner of Internal Revenue v. Takasago
PHL, Inc., CTA EB No. 835, October 15, 2012).
Thirty (30) day Prescriptive Period for Appeal
with the CTA
a. Runs from the date the taxpayer receives
the appealable decision or 30 days 9ftet the
lapse of 180 days (within which the BIR
should act) (INGLES, Reviewer, supra at
479).
The two periods are mutually ,exclusive
(RCBC v. Commissioner of· Internal
Revenue, G.R. No. 168498, June 16, 2006).
NOTE: A motion for reconsideration of the
denial of the administrative protest does not
toll the 30-day period to appeal to the CTA
(Fishwealth Canning Corp. v. Commissioner
of Internal Revenue, G.R. No.. 179343,
January 21, 2010). The thirty (30)~day
period to appeal to the CTA is still reckoned
frorri the date the taxpayer is notified of the
denial of the CIR (INGLES, Reviewer, supra
at 479).
b. The 30-day period is jurisdictional and
mandatory. Failure to comply therewith may
be raised in a motion to dismiss
(Commissioner of Internal Revenue v. First
Express Pawnshop Co., Inc., G.R. Nos.
172045-46, June 16, 2009).
Thirty-day Period to Appeal Subject of a
Motion for Extension of Time
Sec. 11 of RA No. 9282 state that. the
Petition for Review shall be filed with the
CTA following the procedure analogous to
Rule 42 of the Revised Rules of Civil
Procedure (RRC). Sec. 1 of Rule 42 of RRC
provided that the Petition for Review must
be filed with the CA within: (1) the original
15-day period from receipt of the judgement
COURT OF TAX APPEALS
Taxation Law
or final order; (2) an extended period of· 15
days from the lapse of the original period;
and (3) only for the most compelling
reasons, another extended period not to
exceed 15 days from the lapse of the first
extended period (SM Land, Inc. v. City of
Manila, G.R. No. 197151, October 22,
2012).
Following by analogy, the 30-day original
period for filing a Petition for Review with the
CTA, may be extended for a period of 15
days. No further extension shall be allowed
thereafter, except only for the most
compelling reasons, in which case the
extended period shall not exceed 15 days
(SM Land, Inc. v. City of Manila. G.R. No.
197151, October 22, 2012).
Mode of Appeal
Petition for Review under Rule 42 of the
Rules of Court (RRCTA, Rule 8, Sec. 4).
2. Appeal to the CTA En Banc (RRCTA,
R1,1/e8, Sec. 3(b) and (c))
a. Within fifteen (15) days from receipt of the
questioned decision or ruling of CTA in
Division on a motion for reconsideration or
new trial.
NOTE: The Motion for Reconsideration or
• Motion for New Trial is a condition precedent
• before bringing the case to the CT A En Banc
(INGLES, Reviewer, supra at 486). Before
the CTA En Banc could take cognizance of
the petition for review concerning a case
falling under its exclusive appellate
• jurisdiction, the litigant must sufficiently
show that it sought prior reconsideration or
mov·ed for a new trial with the concerned
CT A division (Commissioner of Customs v.
Marina Sales, Inc., G.R. No. 183868,
November 22, 2010).
They may be relaxed only for very exigent
and persuasive reasons to relieve a litigant
of an injustice not commensurate to his
careless non-observance of the prescribed
rules (Commissioner of Customs v. Marina
Sales, Inc., supra).
Upon proper motion and the payment of the
full amount of the docket and other lawful
fees and deposit for costs before the
expiration of the reglementary period, the
CTA may grant an additional period not
exceeding fifteen days from the expiration of
the original period within which to file the
petition for review (RRCTA, Rule 8, Sec.
3(b)).
 f!!SiflJ!!!l!,'3 \ I
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b. Within thirty (30) days from receipt of the
questioned decision or ruling of the CBAA
and RTC in the exercise of their appellate
iurisdiction.
Mode of Appeal: Petition for Review under
Rule 43 of the Rules of Court (RRCTA, Rule
8, Sec. 4)
Effect of Perfection of Appeal (No
Injunction Rule)
GENERAL RULE: No appeal taken to the
Court shall suspend the payment, levy,
distraint, or sale of any property of the
taxpayer for the satisfaction of tax liability
(RRCTA, Rule 10, Sec. 1).
REASON: Lifeblood theory (Angeles City v.
Angeles Electric Corp., G.R. No. 166134,
June 29, 2010)
Thus, tl,e remedy of injunction is not
available to restrain collection (No Injunction
Rule) (N!RC, Sec. 218).
EXCEPTIONS:
i. If in the opinion of the CTA, the
collection of tax may prejudice the
interest of the Government or the
taxpayer (R.A. No. 9282, Sec. 9); AND
ii. If the taxpayer is willing to deposit the
amount being collected or to file a surety
bond for not more than double the
amount of tax to be fixed by the court
(R.A. No. 1125, Sec. 11),
WHEN TO FILE THE MOTION
SUSPEND COLLECTION OF TAX
May be filed together with the petition for review or
with the answer, or in a separate motion filed by the
interested party at any stage of the proceedings
(RRCTA, Rule 10, Sec. 3).
Requisites for Suspension of Collection of Tax:
(DIVA-F)
1. The taxpayer may be required to Qeposit the
amount claimed or to file a surety bond for not
more than double the amount with the Court
(R.A. No. 1125, Sec. 11);
2. !n the opinion of the CTA, the collection may
jeopardize the interest of the Government
and/or the taxpayer (RRCTA, Rule 10, Sec. 2);
3. The motion for the suspension of the collection
of tax shall be Yerified and shall state clearly
and distinctly the fact::j and the grounds relied
upon in support of the motion (RRCT A, Rule
10, Sec. 4);
4. There is an ~ppeal to the CTA from a decision
of the CIR; and
5. That the appeal is not frivolous or dilatory.
Bond may be dispensed with under exceptional
cases, viz:
1. The taxpayer need not file a bond if the method
employed by the Collector of Internal Revenue
in the collection of the tax is not sanctioned by
the law (Sps. Pacquiao v. Court of Tax Appeals,
G.R. No. 213394, April 6, 2016).
2. The order of the Collector of Internal Revenue to
effect collection of the alleged income taxes
through summary administrative proceeding had
been issued well beyond the 3-year period of
limitation (Sps. Pacquiao v. Court of Tax
Appeals, supra).
PURPOSE: To prevent the absurd situation wherein
the court would declare that the collection by the
summary methods of distraint and levy was violative
of law, and then, in the same breath, require the
taxpayer to deposit or file a bond as a prerequisite
for the issuance of a writ of injunction (Sps. Pacquiao
v. Court of Tax Appeals, supra).
APPEAL
I
.. · 1: IN CRIMINAL
_ CASES
PERIOD TO.A,PPEAUMODE OF APPEAL
1. In cl'iij"l1naleases decided by the RTC in the
exercise of its original jurisdiction - file a
notice of appeal pursuant to Sections 3(a) and
TO . 6, Rule 122 of the Rules of Court within 15 days
••• fr'Ohl'.receipt of a copy of the decision or final
order with the court which rendered the final
judgment or order appealed from c:1ndby serving
a copy upon the adverse party (RRCTA, Rule 9,
Sec. 9 (a)).
NOTE: The Court in Division shall act on the
appeal (RRCTA, Rule 9, Sec. 9 (a)).
2. In criminal cases decided by the Court
Division - file a petition for review under Rule
43 of the Rules of Court within 15 days fro~
receipt of a copy of the decision or resolution
appealed from (RRCTA, Rule 9, Sec. 9(b)).
NOTE: The CT A En Banc shall act on the
appeal. The CTA En Banc may, for good cause,
extend the time for filing the petition for review
for an additional period not exceeding 15 days
(RRCTA, Rule 9, Sec. 9(b)).
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3. In cases decided by the RTC in the exercise
of their appellate jurisdiction - file a petition
for review under Rule 43 of the Rules of Court
within 15 days from receipt of a copy of the
decision or final order appealed from (RRCTA,
Rule 9, Sec. 9(c)).
NOTE: The CT A En bane shall act on the
appeal. In criminal actions involving violations of
the NIRC and other laws enforced by the BIR,
the CIR must approve their filing while in those
involving violations of the CMTA and other laws
enforced by the BOC, the COC must approve
their filing (RRCTA, Rule 9, Sec. 2).
SOLICITOR GENERAL AS COUNSEL
FOR THE PEOPLE AND GOVERNMENT
OFFICIALS SUED IN THEIR OFFICIAL
CAPACITY
The Solicitor General shall represent the Peopl'e of
the Philippines and government officials stied in their
official capacity in all cases brought to the Court in
the exercise of its appellate jurisdiction. He may
deputize legal officers of the BIR (cases brought
under the NIRC and other laws enforced by BIR) or
the legal officers of BOC (cases brought under.
CMTA or other laws enforced by BOC), to appear in
behalf of the officials of said agencies in their official
capacity: Provided, the Solicitor General snail have
direct control and supervision atall times over them
(RRCTA, Rule 9, Sec. 10).
EFFECT OF INSTITUTION OF CRIMINAL
ACTION
The institution of the criminal action shall interrupt
the running of the period of prescription (RRCTA,
Rule 9, Sec. 2(2)),
INCLUSION OF CIVIL
CRIMINAL ACTION
In cases within the jurisdiction of the CTA, the
criminal action and the corresponding civil action for
the recovery of civil liability for taxes and penalties
shall be deemed jointly instituted in the same
proceeding. The filing of the criminal action shall
necessarily carry with it the filing of the civil action.
No right to reserve the filing of such civil action
separately from the criminal action shall be allowed
or recognized (RRCTA, Rule 9, Sec. 11).
,,_·:
COURT OF TAX APPEALS
Taxation Law
\ ,
PROCEDURE AFfER
DECISION OF THE CTA
DIVISION
RULES OF PROCEDURE
Pursuant to RA No. 9282, the decision of a
division of CTA is no longer appealable to the Court
of Appeals but to the CTA En Banc.
REMEDIES OF THE PARTY AFFECTED
BY:
1. A ruling, order, or decision of a Division of
the CTA - file a motion for reconsideration or
new trial before the same Division within 15 days
from notice thereof: Provided, however, that in
criminal cases, the GENERAL RULE applicable
in regular courts on matters of prosecution and
appeal shall likewise apply (R.A. No. 1125 as
amended, Sec. 11).
2, The resolution of the Division of the CTA on
a motion for reconsideration or new trial - file
a petition for review with the CTA En Banc
(RRCTA, Rule 8, Sec. 3(b)). •
3. The decisiorr or ruling of the CTA En Banc -
file with the Supreme Court a verified petition
for review on certiorari within 15 days from
receipt of the decision or ruling pursuant to Rule
45 of the Rules of Court (RRCTA, Rule 16, Sec.
1). •
EFFECT OF APPEAL FILED WITH THE
SUPREME COURT
ACTION IN The pending motion for reconsideration or for new
trial in the CTA En Banc shall be deemed
abandoned (RRCTA, Rule 16, Sec. 2).
WHEN MOTION FOR
RECONSIDERATION MAY BE FILED
Any aggrieved party may seek a reconsideration or
new trial of any decision, resolution or order of the
CTA He shall file a motion for reconsideration or
new trial within 15 days from the d2te he received
notice of the decision, resolution or order of the
CTA in question (RRCTA, Rule 16, Sec. 1).
GROUNDS OF A MOTION FOR NEW
TRIAL
1. [raud, ~ccident, Mistake, or _!;xcusable
negligence (FAME) which ordinary prudence
could not have guarded against and by reason
 San Bede Univorsity College of Law
AlD
RGCT Ba! Oporat1oos Cente1
of which such aggrieved party has probably
been impaired in his rights; or
2. Newly discovered evidence;whi.ch he could not,
with reasonable diligence, have discovered and
produced at the trial and which, if presented,
woul_dprobably alter the result (RRCTA, Rule
15, Sec. 5).
Where there is a clear showing of entitlement to
refund, the technical rules may be waived so as to
allow a new trial even if the requisites or grounds are
not met, especially where the failure to present
evidence in the first instance was adequately
explained (Philippine Phosphate Fertilizer Corp. v.
Commissioner of Internal Revenue, G. R. No.
141973, June 28, 2005).
MOTION FOR RECONSIDERATION A
REQUISITE FOR A PETITION FOR
REVIEW OF A DECISION OF A CTA
DIVISION
In order for the CTA En Banc to take cognizance of
an appeal via a petition for review, a timely motion
for reconsideration or new trial must first be filed with
the CTA Division that issued the assailed decision or
resolution. Failure to do so is a ground for the
dismissal of the appeal as the word "must" indicates
that the filing of a prior motion is mandatory, and not
merely directory (Asiatrust Development Bank, Inc.
v. Commissioner of Internal Revenue, G.R. No.
201530, April 19, 2017).
EFFECT OF FILING A MOTION . FOR
RECONSIDERATION OR NEW TRIAL
The filing of a motion for reconsideration or new trial
shall suspend the running of the period within which
an appeal may be perfected (RRCTA, Rule 15, Sec.
4).
NOTE: Rule 37, Sec. 1 of the Rules of Court was
adopted by the RRCTA in Rule 15, Sec. 5. RRCTA
has not included the phrase "motion for
reconsideration." Thus, for tax matters Rule 37
applies only to "motions for new trial" (4
DOMONDON, supra at 784).
OMNIBUS MOTION RULE
A motion for new trial shall include all grounds then
available and those not included shall be deemed
waived (RRCTA, Rule 15, Sec. 5).
OPPOSITION TO MOTION FOR
RECONSIDERATION OR NEW TRIAL
The adverse party may file an opposition to the
motion for reconsideration or new trial within ten
days after his receipt of a copy of the motion for
reconsideration or new trial of a decision, resolution
or order of the CTA (RRCTA, Rule 15, Sec. 2). •
HEARING OF THE MOTION
The motion for reconsideration or new trial, as well
as the opposition thereto, shall embody all
supporting arguments and the movant shall set the
sc.1mefor hearing on the next c1vr1il;:ihlP.
motion rl;:iy.
Upon the expiration of the period, without any
opposition having been filed by the other party, the
motion for reconsideration or new trial shall be
considered submitted for resolution, unless the
Court deems it necessary to hear the parties on oral
argument, in which case, the Court shall issue the
proper order (RRCTA. Rule 15, Sec. 3).
EFFECT OF NON-COMPLIANCE WITH
THE REQUIREMENTS FOR CONTENTS
OF MOTION FOR RECONSID ERATION
AND MOTION FOR NEW TRIAL
It shall be deemed proforma, which shall not toll the
reglementary period for appeal (RRCTA, Rule 15,
Sec. 6).
NO SECOND MOTION FOR
RECONSIDERATION OR FOR NEW
TRIAL
No party shall be .allowed to file a second motion for
reconsideration Cf a decision, final resolution or
order; odor new trial (RRCTA, Rule 15, Sec. 7).
RULING •
The Court shall resolve the motion for
reconsideration or new trial within 3 months from
the •time it is deemed submitted for resolution
(RRCTA, Rule 15, Sec. 8).
In cases falling under the exclusive appellate
jurisdiction of the CTA en bane, the petition for
review of a decision or resolution of the CT A in
Division must be preceded by the filing of a timely
motion for reconsideration or new trial with the
Division (RRCTA, Rule 8, Sec. 1).
JUDICIAL PROCEDURES FOR
COLLECTION OF TAXES
1. Internal Revenue Taxes
The Government may enforce collection of
internal revenue taxes by:
a. Civil action
i. By filing a civil case for collection of a
sum of money with the proper regular
court (NIRC, Secs. 203 and 222);
(MAMALA TEO, Reviewer on Taxation
(2019), p. 709) or
ii. By filing an answer to the petition for
review filed by taxpayer with CTA (id);
 COURT OF TAX APPEALS
Taxation Law

b. Criminal action National Tax

i. Attempt to evade or defeat.tax (NIRC,
Sec. 254); or
ii. Failure to file return, supply correct and
accurate information, pay tax, withhold
and remit tax and refund excess taxes
withheld on compensation {NIRC, Sec.
255).
GENERAL RULE: The period for assessment
prescribes within 3 years:
1. After the last day prescribed by law for the filing
of the return; or
2. After the day the return was filed, if the return
was filed beyond the period prescribed by law,
whichever is later (NIRC, Sec. 203).

NOTE: The judgment in the criniinal EXCEPTIONS:

case shall not only impose the penalty 1. Fcllse, fraudulent return with intent to evade
but shall also order the payment ot taxes taxes: within 10 years from date of discovery of
subject of the criminal case as finally the falsity or fraud; and
decided by the Commissioner (NIRC, 2. Failure to file a return, at any time within 10
Sec. 205). years after the discovery of the omission of the
return (N!RC, Sec. 222 (a)).
Any person convicted of a crime
penalized by the NIRC shall, in addition NOTE: Before the expiration of the 3-year
to being liable for the payment of the tax, prescriptive period, both the Commissioner and the
be subject to the penalties imposed taxpayer may agree in writing to extend the period of
herein (NIRC, Sec 253(a}). assessment (waiver of the prescriptive period). The
period so agreed upon may be further extended by
Form and Mode Proceeding: subsequent Written agreement made before the
Same for both Civil and Criminal actions expiration of the period previously agreed upon
i. It shall be brought ih the name of the {NIRC, Sec. 222 (b)) .•
Government of the Philippines (i.e.,
Republic of the Philippines v. delinquent For the 10-year prescriptive period to apply based
taxpayer). on fraud, such must be proved as a fact by BIR
ii. It shall be conducted by legal officers of (ABAN, supra at 274),
the BIR.
iii. No civil or criminal action for the PRESCRIPTIVE PERIOD FOR THE
recovery of the taxes shall be filed in COLLECTION OF TAX
court without the approval of the CIR
(NIRC, Sec. 220).
Any internal revenue The collection of local
2. LocalTaxes tax which has .been tax shall prescribe
The LGU concerned may enforce the collection
assessed may be within five (5) years
of delinquent taxes, fees, charges and other
collected within 5 years from the date of
revenues by civil action in any court of
following the assessment (LGC, Sec.
competentjurisdiction (LGC, Sec. 183).
assessment of tax 194, Par. c).
a. Court action - The LGU may file ari ordinary
(NIRC, Sec. 222 (c)).
suit for the collection of sum of money
However, any internal
before the MTC, RTC or CTA Division
revenue tax which has
depending upon the jurisdictional amount
been assessed, may be
b. Declaratory relief
collected within the
c. Injunction - to be issued by the CTA if
period agreed upon in
collection may jeopardize the interest of the
writing before the
government and/or the taxpayer, subject to
expiration of the 5-year
certain conditions (R.A. No. 9282, Sec. 9).
period. The period
agreed upon may be
PRESCRIPTIVE PERIOD FOR THE extended by
ASSESSMENT OF TAX subsequent written
Local Tax agreements made
The assessment of local tax shall prescribe within 5 before the expiration
years from the date taxes, fees, or charges become previously agreed upon
due (LGC, Sec. 194(a)). However, in fraud or intent (NIRC, Sec. 222 (d)).
to evade the payment of taxes, fees, or charges, the
same may be assessed within 10 years from the
date of the discove~y thereof (LGC, Sec. 194, Par.
b).
 ffltfbli·&!·D \ 1 ,:,:: <: 1\ ,'\ ..','.,'.-,/
, --~'/:,~:,

MEtf/Q-RYAlD
San Beda University College of Law - RGCTBar Operations Center
.,.:, ·, 1 , ,. 383 ·
,:1~~,:;:~l:,
,<•") '\ •, , . , ••, . ,: ,

GROUNDS FOR THE SUSPENSION OF

THE RUNNING OF THE PRESCRIPTIVE
PERIODS

1, For the reriod during 1. The Trea'surer is

which the le~ally prevented
Commissioner is from the
prohibited from assessment or
making the collection of the
assessment or tax;
beginning distraint or 2, The taxpayer
levy or a proceeding requests for a
in court and for sixty reinvestigation
(60) days thereafter; and executes a
2, When the taxpayer waiver in writing
requests for before the
Reinvestigation expiration of the
which is granted by period within
the Commissioner; which to assess or
3. When the taxpayer collect; and,
fannot be located in 3. The taxpayer is
the address given by out of the country
him in the return filed or otherwise
upon which a tax i~ cannot be· located
being assessed or (LGC, Sec. 194).
collected; except if
the taxp!3yer informs
the Commissioner of
any change in
address;
4. When the warrant of
Qistraint or levy is
duly served upon the
taxpayer, his
authorized
representative, or a
member or his
household with
sufficient discretion,
and no property
could be located; and
5. When the taxpayer
is Qut of the
Philippines (NIRC,
Sec. 223).
 ) ', ' 1-~ :,C ; 1 • f ,,• a ~v

. ' }_ .
384 ; • COURT OF TAX APPEALS
,. ,, ((
,,
' ,
,,~ Taxation Law

SUMMARY OF JURISDICTION IN JUDICIAL TAX CASES

Administrative, ceremonial and non-adjudicative functions

Decisions or resolutions on motions for reconsideration or new trial of the Court in

Division in the exercise of their appellate jurisdiction over: (ALT)
a. Cases arising from ~dministrative agencies - BIR BOC, DOF, DTI, DA;
b. bocal tax cases decided by the RT Cs in the exercise of their original jurisdiction:
and
c. Iax collection cases decided by the RTCs in the exercise of their original
jurisdiction involving final and executory assessments for taxes, fees, charges and
penalties, where the principal amount of taxes and penalties claimed is less than
¥>1Million (RRCTA, Rule 4, Sec. 2(a)).

Decisions, resolutions or orders of the RTCs decided or resolved by them in the

exercise of their appellate jurisdiction over:
a. Local tax cases (RRCTA, Rule 4, Sec. 2(b)); and
b. Tax collection cases where the principal amount of taxes and fees, exclusive of
charges and penalties claimed is less than J!>1Million; (RRCTA, Rule 4, Sec. 2(c)).

Decisions, Resolutions or Orders on Motions for Reconsideration or New Trial of the

Court in Division in the Exercise of its exclusive original jurisdiction (RRCTA, Rule 4,
Sec. 2(d)); and
Decisions of the CBM in the exercise of its appellate jurisdiction (RRCTA, Rule 4, Sec.
2(e)J: •

Criminal Cases
Decisions, Resolutions or Orders on motions for reconsideration or new trial of the court
in division jn the exercise of its exclusive original iurisdiction over cases involving
criminal offenses arising from violations of the NIRC or CMTA and other laws
administered by the BIR or BOC (RRCTA, Rule 4, Sec. 2{f));
Decisions, Resol_utionsor Orders on motions for reconsideration or new trial of the court
in division in the exercise of its exclusive appellate jurisdiction over criminal offenses
mentioned in paragraph A (RRCTA, Rule 4, Sec. 2(g)); and
Decisions, ResolLJtions or Orders of the· in the exercise of their appellate
jurisdiction over criminal offenses mentioned in paragraph A (RRCTA, Rule 4, Sec.
2(h)).

Tax collection cases involving final and executory assessments for taxes, fees, charges
and penalties, where the principal amount of taxes and fees, exclusive of charges and
penalties, claimed is J!>1Million or more (RRCTA, Rule 4, Sec. 3(c)(1)).

Criminal Case
Criminal offenses arising from violations of the NIRC or CMTA and other laws administered
by the BIR or BOC, where the principal amount of taxes and fees, exclusive of charges and
penalties, claimed is ft1 Million or more (RRCTA, Rule 4, Sec. 3(b)(1)).

Civil Case (DIReCSS)

1. Q_ecisionsof the CIR involving:
 AID
S,m Bedo University Col!ege d Low - QGCT Bar Operations Center

a. Disputed assessments;
b. Refunds of internal revenue taxes, fees or other charges.in relation thereto; or
c. Other matters arising under the NIRC or other laws administered by the BIR
(RRCTA, Rule 4, Sec. 3(c)(1)).
!naction by the CIR involvin9:
a. Disputed Assessments;
b. Refunds of internal revenue taxes, fees or other charges and penalties imposed
thereto; and
c. Other matters arising under NIRC or other laws administered by the BIR, Where
the NIRC provides a specific period for acti0n (RRCTA, Rule 4, Sec. 3(a)(2)).
Decisions, Resolutions or Orders of the B,TC in Local Tax Cases decided or resolved
by them in the sxercise of their Original Jurisdiction (RRCTA, Rule 4, Sec. 3(a)(3});
Decisions of the ~ommissioner of ~ustoms involving:
a. Liability for customs Duties, fees or other money charges;
b. Seizures, detention or release of other property affected;
c. Fines, forfeitures or other penalties in relation thereto; or
d. Other matters arising under the customs law or other laws administered by the BOC
(RRCTA, Rule 4, Sec. 3(a)(4)).
Decisions of the .§ecretary of Finance on customs cases elevated for automatic review
from decisions of the Commissiqner of Customs which are adverse to the Government
under the CMTA (RRCTA, Rule 4, Sec. 3(a)(5)); and
Decisions of the §.ecretary ofTrade and Industry in the case of non-agricultural product,
commodity or article, and the Secrefary of Agriculture in the case of agricultural product,
commodity or article, involving dumping and countervailing duties and safeguard
measures under R.A. No. 8800 (Safeguard Measures Act). (RRCTA, Rule 4, Sec.
3(a)(6}). ••

Criminal Cases
Appeals from the judgments, r~solutions ,or orde[s of the RTCs in their original
jurisdiction in criminal offenses where the principal amount of taxes and fees, exclusive
of charges and penalties, claimed is less than P1rv1illion or where there is no specified
amount claim (RRCTA, Rule 4, Sec. 3(b)(2)); and
Criminal offenses over petitions for review of the judgments, resolutions or orders of
the RT Cs over tax cases originally d~cioe~l;>ytbe MT Cs or MCTCs; (R.A. No. 1125, as
amended (Sec. 7(b)(2)(b)). • •

Tax collection cases where the principal amount of taxes and

fees, exclusive of charges and penalties, claimed is less than
~1 Million (RRCTA,Ru/e 4, Sec. 2(a)); and
Local Tax Cases (RRCTA, Rule 4, Sec. 2(b)).

Criminal Case
Criminal offenses arising from violations of the NIRC or CMTA and
other laws administered by the BIR or BOC, where the principal
amount of taxes and fees, exclusive of charges and penalties,
claimed is less than ~1 Million or where there is no specified
amount claimed (RRCTA, Rule 4, Sec. 3(b)(2)). •
 -,
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LOCAL TAXATION
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Taxation Law
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I GENERAL PRINCIPLES I LIMITATIONS IMPOSED UPON

CONGRESS
The Legislature, in providing guidelines and
limitations on the LGU's power of taxation, must still
see that:
LOCAL GOVERNMENT TAXATION 1. The taxpayer will not be overburdened or
It is the power of the Local Government Units (LGUs) saddled with multiple and unreasonable
to impose and collect taxes on their constituents in impositions;
order to raise revenues to enable them to perform 2. Each LGU will have its fair share of available
the functions for which they have been organized (V resources;
DOMONDON, Taxation (2013), p. 1 [hereinafter, V 3. The resources of the National Government will
DOMONDON, Taxation]). not be unduly disturbed; and
4. Local taxation will be fair, uniform, and just
GRANT OF LOCAL TAXING POWER (Manila Electric Co. v. Province of Laguna, G.R.
1. Each local government unit shall have the power No. 131359, May 5, 1999).
to create its own sources of revenues and to levy
taxes, fees, and charges subject to such NATURE OF THE TAXING POWER OF
guidelines and limitations as the Congress may LGUs
provide, consistent with the basic policy of local 1. Not inherent but a direct grant
autonomy. Such taxes, fees, and charges shall
The taxing power of provinces, cities,
accrue exclusively to the local governments
municipalities, and barangays, though not
(CONST. Art. X, Sec. 5).
inherent, is not a mere delegation by the
2. Each local government unit shall exercise its legislative body, but a direct grant from the
power to create its own sources of revenue and Constitution (CONST., Art. X, Sec. 5).
to levy taxes, fees, and charges subject to the
provisions herein, consistent with the basic
The power to tax is no longer vested exclusively
policy of local autonomy. Such taxes, fees, and
on Congress. Local legislative bodies are now
charges shall accrue exclusively to the local
given direct authority to levy taxes, fees, and
government units (LOCAL GOVERNMENT
other charges pursuant to Art. X, Sec. 5 of the
CODE, Sec. 129 {hereinafter, LGC]).
1987 Constitution (Batangas Power Corp. v.
Batangas City, G.R. No. 152675, April 28,
NOTE: Congress cannot abolish the local 2004).
government's power to tax asi it· cannot abrogate
what is expressly granted by the fundamental law. Where there is neither a grant nor a prohibition
The only authority conferred to Congress is to by statute, the taxing power must be deemed to
provide the guidelines and limitations on the local exist although, Congress may provide statutory
government's exercise of the power to· tax (5 limitations and guidelines (Film Development
DIMAAMPAO, Tax Principles and Remedies·(2018), Council of the Philippines v. Colon Heritage
p. 143 {hereinafter, DIMAAMPAO}). Realty Corporation, G.R. No. 203754, June 16,
201'5).

REASON: To safeguard the viability and self-

sufficiency of LGUs (Manila Electric Co. v.

HIU&P 'IN 1 lifflillllL !UIIHJI

DOHN ALFRED E. AQlTILIZAN, Over-All Chairperson I NICHOLE VANE B. SANTOS, Chairperson for Academics j RONALYN A.
GACULA, Ad Hoc Director for Bar Matters I MARIELLE CIELO B. BELGIRA, Vice Chairperso11for Finance I JUAN INIGO S. MIGUEL,
Vice Chairperson for Operations I ALISSA MARIE D.C. DELOS SANTOS, Vice Chairperson for Audit I CORINA R. TAMPUS, Vice
Chairperson for Secretariat I ARVY KEITH N. CHUNG, Vice Chairperson for Logistics I ANfONIO JlJN-JUN C. MANAUGOD IV, Vice
Chairperson for l\!lembership IJORDAN N. CHAVEZ, Vice Chairpcrso11for Electronic Data Processing

II i !Afii!U II i ! HiPfilll.!1l~l!IiiliBl.i:!rna f 5]!1111 illl!ftllllifPII

JOSE LORENZO C. DAVE, Subject Chair I LOUISE MARIE C. CONTACTO, Assistant Subject Chairi KATRYNA ANNE R. TOMENIO,
Subject Electronic Data Processing I ~ffiJECT HEADS: MARY GRACE A. GRANJL, General Principles I SHEENA ROSETTE DG.
DOMINGO, Administration, Enforcement, Remedies and Court of Tax Appeals IJERRI.ITO P. CUSTODIO, Local and Real Property Taxation
I STEVIE R. ARCILLA and PATRICK MARRION Y. MELENDRES, I11comeTaxation I MARY ANN C. TAN, Transfer Taxi MARILYN
H. MALALUAN, Value-Added Tax I

E 4 I ] ] l]lj Nll 1m•1 JJIU •rn: \iii iii!I IJDIIBll!llttiill

KATRINA MICHAELA D. DELFIN, ARMANT. PAEZ, ANDREI MNE lJ. PAI.OMAR, MARY KATHERINE A, SIMEON,JAJ\'1ES
KARL DANIEL B. ALVARO, ARIESA JANE V, DOMINGO, JOSEPHINE MARIE T. SALAZAR, YNA MARE! AGlTILAR, NERY
ROYCE T. LAZARO,j'OHN KENNETH Q. CRJSOLOGO, LOJS DANtELLE P. DIMAANO, ANDRELA M. AQUINO, ANNA LOREN
DC. MANUEL and GILBERT OWENS. APILADO

Atty. NICASIO C. CABANEIRO, CPA, Atty. DANTE 0. DELA CRUZ, CPA,Justicc JAPAR B. DJMAAMPAO,Atty. EFREN
VINCENT M. DIZON, CPA •
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Province of Laguna, G.R. No. 1313b9. May 5,
1999).
2. Umited
It is neither plenary nor absolute. The authority
of the legislature over the taxing authority of
local governments is merely to limit the exercise
thereof (ABAN, Law of Basic Taxation in the
Philippines (Revised 2001 Edition), p. 391-392
[hereinafter, ABANJ).
3. Legislative
It may be exercised by the local legislative
bodies i.e., the Sanggunian Panlalawigan or
Panlungsod, as the case may be (Mactan Cebu
International Airport Authority v. Marcos, et al.,
G.R. No. 120082, September 11, 1996).
4. Territorial
It can only be exercised within the territorial
jurisdiction of the LGU (CONST., Art. X, Sec. 5).
Accrual of Tax: Taxes, fees, and charges collected
shall accrue exclusively to the LGUs (LGC, Sec.
129). The National Sovernment cannot share from
the tax levied by the LGUs. However, LGUs have a
share from National Government taxes through their
Internal Revenue Allotment (IRA) (LGC, Sec. 129).
"JUST SHARE" OF THE NATIONAL
TAXES UNDER SEC. 6, ARTICLE X OF
THE 1987 CONSTITUTION REFERS TO
ALL NATIONAL TAXES
The phrase "national internal revenue taxes" in Sec.
284 is undoubtedly more restrictive than the
term "national taxes" written in Section 6. The lntent
of the people in respect of Section 6 is really that the
base for reckoning the just share of the LG Us should
include all national taxes as opposed to national
internal revenue taxes under Sec. 284. This includes
not only what is enumerated under Sec. 21 of the
NIRC, but also other national taxes like customs
duties which are also taxes because they are
ex;:ictions whose proceeds become public funds
(Congressman Mandanas v. Ochoa, G.R. No.
199802, July 3, 2018).
SCOPE OF LOCAL GOVERNMENT
TAXATION
1. Local Taxation
Imposition of license taxes, fees, and other
impositions, including community tax, as a
means to create its own sources of revenue
(LGC, Secs. 128-196).
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governments to vary the rales of taxation to a
limited extent and within certain parameters
(LGC, Secs. 197-283).
I LOCAL TAXATION
I
LOCAL TAXES
These are taxes that are imposed and collected by
local government units in order to raise revenues to
enable them to perform the functions for which they
have been organized (V DOMONOON, Taxation,
supra at 1).
FUNDAMENTAL PRINCIPLES
GOVERNING LOCAL TAXATION: (UE-
PUL-PRIB-PRO)
1. Taxation shall be .!::!_niform in each LGU;
2. Taxes, fees, charges, and other impositions
shall:
a. be fquitable and based as much as
poss/ble on the taxpayer's ability to pay;
b. be levied and collected for _Eublicpurposes;
i:;. not be .!::!_njust,
excessive, oppressive, or
confiscatory; and
d. not be contrary to !,_aw,public policy,
national economic policy, or in restraint of
trade;
3. Collection of local taxes and other impositions
shalf notbe left to any Private person;
4. Revenues collected under the LGC shall inure
. solely to the ~enefit of and subject to
•.•. • ?disposition by the LGU levying the tax or other
iriiposition unless otherwise specifically
provided therein; and
5. Each LGU shall, as far as practicable, evolve a
Progressive system of taxation (LGC, Sec.
130).
LOCAL TAXING POWER AND
AUTHORITY
The power to impose a tax, fee, or charge or to
generate revenue under this Code shall be
exercised by the Sanggunian of the local
government unit concerned through an appropriate
ordinance (LGC, Sec. 132).
1. Sangguniang Panla/awigan - for provinces.
2. Sangguniang Panlungsod - for cities.
3. Sangguniang Pambayan - for municipalities.
4. Barangay Council - for barangays or barrios
(LGC, Sec. 41 (b)).

2. Real Property Taxation

System of levy on real property imposed on a
country"wide basis, but authorizing the local
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COMPOSITION OF THE SANGGUNIAN
1. Sangguniang Panla/awigan
a. Vice governor as the presiding officer;
b. Regular Sanggunian members;
c. President of the provincial chapter of the /iga
ng mga barangay;
d. President of the panlalawigang pederasyon
ng mga Sangguniang Kabataan;
e. President of the provincial federation of
Sanggunian members of municipalities and
component cities; and
f. Sectoral representatives (LGC, Sec. 467
(a)).
2. Sangguniang Panlungsod
a. City vice mayor as the presiding officer;
b. Regular Sanggunian members,
c. President of the city chapter of the Jiga ng
mga barangay;
d. President of the pan/ungsod na pede,:c1syon
ng mga sangguniang kabataan; and •••
e. Sectoral representatives (LGC, 457 (a)).
• 3. Sangguniang Bayan
a. Municipal vice mayor as presiding officer;
b. Regular Sanggunian members;
C. President of the municipal chapter of the Jiga
ng mga barangay;
d. President of the pambay~ng pederasyon ng
mga sangguniang kabatf}a[I; and
e. Sectoral representatives (LGC, Sec. 446
(a)). • •
• NOTE: There shall be 3 sectoral
representatives: one from the women, one from
the agricultural or industrial_workers, and one
from any of the following sectors: the·urba,:1poor,
indigenous cultural commuhities, • disabled
persons, or any other sector' as m'ay be
determined by the sanggunian concerned (L.GC,
Secs. 467 (b), .457 (b) and 446 (b)). • 2. Pllblication or Posting
The regular members of the Sangguniang
Panlalawigan, Sangguniang Pan/ungsod, and
Sangguniang Bayan shall be elected by district,
as follows:
a. First and second-class provinces - 10
b. Third and fourth class provinces - 8
c. Fifth and sixth class provinces - 6
d. In provinces having more than 5
legislative districts - each district shall
have 2 sangguniang panla/awigan
members (LGC, Sec. 41 (b}).
4. • Sangguniang Barangay
a. Punong barangay as presiding officer;
b. The 7 regular Sangguniang barangay
members elected at large, and
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V
LOCAL TAXATION
I
c. Sangguniang Kabataan chairman (LGC,
Sec. 390).
ILLUSTRATION: (2003 Bar Question)
In order to raise revenue for the repair and
maintenance of the newly constructed City Hall of
Manila, the City Mayor ordered the collection of
~1 .00, called "elevator tax," every time a person
ndes any of the elevators in the city hall. Is the
"elevator tax" a valid imposition?
ANSWER: NO. The imposition of a tax, fee, charge,
or the generation of revenue shall be exercised by
the Sanggunian of the LGU through an appropriate
ordinance (LGC, Sec. 132). The city mayor alone
could not order the collection of tax.
NOTE: The exercise of the power to tax by the local
legislative assembly is subject to the veto power of
th,e local chief executive (LGC, Sec. 55).
LOCAL TAX ORDINANCE
·Local Sanggunians have the authority to enact the
following tax, ordinance:
1. •Imposing taxes, fees, or charges, or to generate
revenue;-
2- Prescribing penalties for violation of tax
ordinance; •
3. Granting local tax exemptions and incentives;
and
4. Condoning tax d~linquencies (V DOMONDON,
Taxation, supra at 95).
PROCEDURE FOR APPROVAL AND
EFFECTIVITY OF TAX ORDINANCE AND
R,EVEfiUE MEASURE:
1. Filjng of proposal (A. 0. No. 270, Art. 276
(b)(1)) [hereinafter, /RR of LGC]).
Within ten (10) days from filing the same, it shall
be posted for three (3) consecutive days in a
newspaper of local circulation or shall be posted
simultaneously in at least four (4) conspicuous
places within the territorial jurisdiction of the
LGU where there are no newspapers of local
circulation (!RR of L~C, Art. 276 (b)(1)).
NOTE: The tax ordinance will be null and void if
it fails to comply with the publication requirement
(Coca-Cola v. City of Manila, G.R. No. 156252,
June 27, 2006).
3. Notification
The Sanggunian shall cause the sending of
written notices of the proposed ordinance
enclosing a copy to interested or affected parties
operating or doing business within the territorial
jurisdiction of the LGU. The notice(s) shall
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San Seda University College of Law - RGCT Bar Operations Center
specify the date(s) and venue of the public
hearing (Coca-Cola v. City of Manila, GR No.
156252, June 27, 2006).
4. Mandatory Public Hearing
The public hearing shall be held no less than ten
(10) days from the time notices were sent out,
posted, or published (LGC, Sec. 187).
5. Reading of the Proposal
A third reading is necessary for an ordinance
unless decided otherwise by a majority of all the
Sanggunian members (/RR of the LGC, Art. 107
(c); Municipality of Parafiaque v. VM Realty
Corporation, GR No. 127820, July 20, 1998).
6. Approval of Ordinances
a. The ordinance must be approved by a
majority of the members of the Sanggunian
present provided that there is a quorum;
b. It shall be presented to the Local Chief
Executive (LCE) who may either approve or
veto the proposed ordinance. The veto shall
be communicated to the Sanggunian within
fifteen ( 15) days (in case of a province) and
ten (10) days (in case of a city or a
municipality); otherwise, the ordinance shall
be deemed approved; and
NOTE: The veto may be based on the
ground that the proposed ordinance is ultra
vires or prejudicial to the.public welfare. The
LCE may veto an ordinance or. resolution
only once.
c. The Sanggunian concerned may override
the veto of the LCE by 2/3 vote of all its
members (/RR of the LGC, Art. 108 and
109), • c.
7. Review of the Approved Ordinance by
Higher Sanggunians
a. By the Sangguniang Pan/alawigan:
Within three (3) days after approval, the
secretary to the Sangguniang
Panlungsod/Bayan shall transmit to the
Sangguniang Panlalawigan for review,
copies of approved ordinances.
If no action has been taken by the
Sangguniang Panlalawigan within thirty (30)
days after submission of such an ordinance,
the same shall be presumed valid.
b, By Sangguniang Pan/ungsod/Bayan
Within ten (10) days after its enactment, the
Sangguniang Barangay shall furnish copies
of the approved ordinance to the
Sangguniang Panlungsod/Bayan for review.
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If the Sanggunian9 Panlungsod/Bayan fails
to take action on barangay ordinances
within thirty (30) days from receipt thereof,
the same shall be deemed approved (/RR of
~GC, Arts. 110-111).
8. Publication and Posting of Tax
ordinances and Revenue Measure$
a. Within Leri (10) days after their approval,
certified true copies of all tax ordinances or
revenue measures shall be:
i. Published for three (3) consecutive days
in a newspaper of local circulation; or
ii. Posted in, at least, two (2) conspicuous
and publicly accessible places where
there are no newspapers of local
circulation (/RR of the LGC, Sec. 276
(a)).
b. If the tax ordinance or revenue measure
contains penal provisions as authorized. in
Art. 280 (Attempt to Enforce Void or
Suspended Tax Ordinances and Revenue
Measures) of !RR of LGC, the gist of such
tax ordinance or revenue measure shall be:
P,ublished in a newspaper of general
°-circulation within the province where the
Sanggunian concerned belongs.
ii. In the absence of any newspaper of
g~neral circulation within the province,
posting of such ordinance or measure
shall 'be made in accessible and
;;ct;:pnspicuous public places in all
municipalities and cities of the province
to which the Sanggunian enacting the
ordinance or revenue measure belongs
(/RR of the LGC, Sec. 276 (a)).
In the case of highly urbanized and
independent component cities, the main
features of the ordinance or resolution duly
enacted or adopted shall:
i. Be posted in at least two (2)
conspicuous and publicly accessible
places (/RR of the LGC, Sec. 276 (a));
and
ii. Be published once in a local newspaper
of general circulation within the city.
NOTE: In the absence thereof, the
ordinance or resolution shall be
published in any newspaper of general
circulation (LGC, Sec. 59).
9. Effectivity
a. Unless otherwise stated in the ordinance,
the same shall take effect after ten (10) days
from the date a copy thereof is posted on a
bulletin board at the entrance of the
provincial capitol or city, municipal, or

barangay hall, as the case may be, and in,
at least, two (2) other conspicuous places in
the local government unit concerned (LGC,
Sec, 59);
b, In case the effectivity of any tax ordinance
or revenue measure falls on any date other
than the beginning of the quarter, the same
shall be considered as falling at . the
beginning of the next ensuing quarter and
the taxes, fees, or charges due shall begin
to accrue therefrom (/RR of the LGC, Sec.
276 (a)).
REQUISITES FOR IMPOSITION OF FEE
OR TAX AUTHORIZED BY THE LGC:
(WUF)
The rate should be:
1. Within the range of rate provided by the LGC;
2. !,!niform throughout the political subdivision; and
3. .Eair and reasonable to the taxpayers (V
DOMONDON, Taxation, supra at 85). •
RESIDUAL TAXING POWER
LGUs may exercise th.e power to levy taxes, fees, or
charges on any base or subject not otherwise
specifically enumerated in the LGC cir taxed under
the provisions of the National Internal Revenue
Code, as amended, or other applicable laws (LGC,
Sec. 186).
Limitations of the Residual Taxing Power:
1. Constitutional limitations on taxing power;
2. • Common limitations on the taxing power of local
government units as prescribed in Sec. 133 of
the LGC;
3. Fundamental principles governing the exercise
of the taxing power by local governments as
prescribed under Sec. 130 • of the LGC,
particularly the requirement that they must not
be "unjust, excessive, oppressive, or
confiscatory";
4. The requirement prescribed in Sec 186 of the
LGC which directs that the ordinance levying
SlJChresidual taxes shall not be enacted without
any prior public hearing conducted for the
purpose; and •
5. The principle of pre-emption (ABAN, supra at
396-397).
PRINCIPLE OF PRE-EMPTION OR
EXCLUSIONARY DOCTRINE
Where the National Government elects to tax a
particular area, it impliedly withholds from the local
government the delegated power to tax the same
field. This doctrine principally rests on the intention
of the Congress. Conversely, should the Congress
allow municipal corporations to cover fields of
taxation it already occupies, then the doctrine of pre-
LOCAL TAXATION
Taxation Law
emption will NOT apply (Victorias Milling Co., Inc. v.
Municipality of Victorias Negros Occidental, G.R.
No. L-21183, September 27. 1968).
NOTE: Upon the advent of the 1987 Constitution,
the taxing power of LGUs is now a direct grant under
Sec. 5, Art. X. The LGC of 1991 is no longer a
delegation, but rather, a limitation (Mactan Cebu
International Airport Authority v Marcos, G.R. No.
120082, September 11, 1996).
ILLUSTRATION:
The Province of Bulacan levied amusement tax,
under Sec. 140 of the LGC, on the cockpit arena
owned by Jua.n dela Cruz, ·a private individual. Juan
questions the authority of the province to impose the
amusement tax under the Principle of Pre-emption.
Is he correct?
ANS: YES. Proprietors of cockpits are subject to
18% percentage tax under Sec. 125 of the NIRC.
The Principle of Pre-Emption states that when the
National Government elects to tax a particular area,
it impliedly withholds from the local government the
delegated power to tax· the same field (Victorias
Milling Co., Inc. v._Municipality of Victorias Negros
Occidental, G.R. No. L-21183, September 27,
1968). Hence, the principle of pre-emption prevents
LGUs from imposing taxes on subjects which are
already subject to taxes• under the NIRC.
COMMON LIMITATIONS
ON LOCAL TAXING
POWERS
LGUs CANNOT LEVY THE FOLLOWING:
(IDEC-PAPI-EX-PET-RMEBG)
1. !ncome tax, except when levied on banks and
other financial institutions;
NOTE: Cities and Municipalities may impose
business taxes on banks and other financial
institutions (LGC, Secs. 143 (f) and 151).
2. Qocumentary stamp tax;
3. Taxes on gstate, inheritance, gifts, legacies, and
other acquisitions mortis causa;
EXCEPTION: When otherwise provided by the
Code (i.e. tax on transfer of real property) (LGC,
Sec. 135). However, transfers made pursuant to
R.A. No. 6657 (Comprehensive Agrarian
Reform Law) shall be exempt from tax on
transfer.
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4. Customs duties, registration fees of vessels and
;harfage on wharves, tonnage dues, and all
other kinds of customs fees, charges and dues;
EXCEPTIONS:
a. Wharfage on wharves constructed and
maintr1ined by the local government unit
concerned; and
b. Issuance of licenses for the opera.tion of
fishing vessels of 3 tons or less by
municipalities (LGC, Sec. 149 (b)(3)) and
cities (LGC, Sec. 151).
Wharfage - it is a fee assessed against the
cargo of the vessel engaged in foreign or
domestic trade based on quantity, weight, or
measure, received and/or discharged by the
vessel (LGC, Sec. 131 (y)).
5. Taxes, fees, charges, and other impositions
upon goods:
a. Carried into;
b. _Out of; or
c. _Eassing through the territorial jurisdictions
of LGUs in the guise of charges for
wharfage, tolls for bridges, or otherwise.
NOTE: LGUs may prescribe the terms and
conditions for the imposition of toll fees or
charges for the use of any public road, pier, or
wharf funded and constructed by them. A
service fee imposed on vehicles using
municipal roads leading to the wharf ·is, thus,
valid. However, Sec. 133 (e) of RA Nb. 7160
prohibits the imposition, in the guise •
of wharfage, of fees - as well as all other taxes
or charges in any form whatsoever on goods
or merchandise. It is, therefore, irrelevant if the
fees imposed are actually for police surveillance
on the goods because any other .form of
imposition on goods passing through the
territorial jurisdiction of the municipality is clearly
prohibited by Sec. 133 (e) (Palma Development
Corp. v. Municipality of Malangas, G.R. No.
152492, October 16, 2003).
6. Taxes, fees, or charges on ~gricultural and
aquatic products when sold by marginal farmers
or fishermen;
Marginal Farmer or Fisherman - refers to an
individual engaged in subsistence farming or
fishing which shall be limited to the sale, barter,
or exchange of agricultural or marine products
produced by himself· and his immediate family
(LGC, Sec. 131 (p)).
7. Taxes on business enterprises that are:
a. Certified by the Board of Investments (BO1)
as Pioneer or non-pioneer; and • are authorized to burden all such other class of
b. For a period of 6 and 4 years, respectively,
from the date of registration.
However, the grant of the Income Tax
Holiday for registered enterprises under
E.O. No. 226 (Omnibus Investment Code of
1987) is subject to the following rules:
i. Fu/Jy exempt - for 6 years from
commercial operation for pioneer firms
and for 4 years for non-pioneer firms.
ii. Proportionate - for a period of 3 years
from commercial operation, registered
expanding firms shall be entitled to
exemption from income tax levied by the
National Government proportionate to
their expansion under such terms and
conditions as the Board may determine
(E.O. 226, Title Ill, Art. 39 as amended
by R.A No. 7918).
8. Excise taxes on articles enumerated under the
NIRC, as amended, and taxes, fees. or charges
on petroleum products;
• ..Thi~_cov~s 2 distinct limitations:
a. Excise taxes on articles enumerated under
the NIRC - only excise taxes are prohibited.
Ther~ s~ould be a mirror image between the
gobds sought to be taxed by the LGU and
the gpods. either under ad valorem tax or
specific tax.
b.'. Tl3Xf?.$,,
0
fe~f$. or charges on petroleum
:,]kkiifd(s.'j
·all kinds of taxes are prohibited.
Since the law does not distinguish, LGUs
are prohibited from imposing not only excise
taxes on petroleum products, but all taxes,
fees,and charges (Petron Corp. v. Tiangco,
G.R. No. 158881, April 16, 2008).
The language of Sec. 133(h) makes plain that
the prohibition with respect to petroleum
products extends not only to excise taxes
thereon, but all "taxes, fees, and charges." The
earlier reference in Par. (h) to excise taxes
comprehends a wider range of subjects of
taxation: all articles already covered by excise
taxation under the NIRC, such as alcohol
products, tobacco products, mineral products,
automobiles, and such non-essential goods
such as jewelry, goods made of precious metals,
perfumes, yachts, and other vessels intended
for pleasure or sports (Petron Corp. v. Tiangco,
GR No. 158881, April 16, 2008).
In contrast, the later reference to "taxes, fees,
and charges" pertains only to one class of
articles of the many subjects of excise taxes,
specifically "petroleum products". While LGUs
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goods with "taxes, fees, and charges," excepting
excise taxes, a specific prohibition is imposed
barring the levying of any other type of taxes with
respect to petroleum products (Petron Corp. v.
Tiangco, G.R. No. 158881, April 16, 2008).
9. Percentage or value added tax (VAT) on sales,
barters, exchanges, or similar transactions on
goods or services;
EXCEPTION: When otherwise provided by the
Code, such as the following:
By Provinces/Cities:
a. Tax on Business of Printing and Publication
Percentage Tax - shall not exceed 50% of
1% (or 0.5%) of their gross receipts, or in
case of newly started business, the rate
shall not exceed 1/20 of 1% of the capital
inve·stment.
b. Amusement tax
Percentage Tax - shall not exceed 10% of
gross receipts from admission fees (LGC,
Secs. 136 and 140).
EXCEPTION: The holding of operl'!S,
concerts, dramas, recitals/painting and art
exhibitions, flower shows, musical •
programs, Hterary and~ratprical
presentations, except pop, rock, or similar
concerts (LGC, Secs. 136 and 140).
By Municipalities or Citie_s:
a. Manufacturer
i. Gross sales of P6,500,000 or more
ii. Percentage Tax - not exceeding 37.5%
of 1% based on the preceding year's
sales
b. Wholesalers, distributors, or dealers
i. Sale receipts for the preceding calendar
year of !'>2,000,000 or 1]1ore
ii. Percentage Tax - not e;,ceeding 50% of
1% (or 0.5%) on the gross sales or
receipts
c. Contractors
i. Gross receipts of f"2,000,000 or more
ii. Percentage tax - not exceeding 50% of
1% (or 0.5%) on their gross receipts
(LGC, Sec. 143).
ff the gross sales or receipts do not exceed the
atrove prescribed amount, the LGU is pre-
empted from imposing any percentage tax
(LGC, Sec. 133 in relation to Sec. 143).
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LOCAL TAXATION
Taxation Law
' '
10. Taxes on the gross receipts of:
a. Iransportation contractors;
b. Persons engaged in the transportation of
passengers or freight for hire; and
c. Common carriers by air, land, or water.
EXCEPTIONS:
i. When otherwise provided by the LGC;
and
ii. On the operation and franchising of
tricycles (/RR of LGC, Art. 221 (j)).
The transport of goods or cargoes by
transportation contractors, persons who
transport for hire, and common carriers is
subject to 12% VAT (NIRC, Sec. 108 (A)).
The transport of passengers by transportation
contractors, persons who transport for hire, and
common carriers is subject to 3% tax on their
quarterly gross receipts (NIRC, Sec. 117).
NOTE: Pipeline concessionaires are considered
as common carriers. The definition of "common
carriers" in the. Civil Code makes no distinction
as to the mear:is.of transporting, as long as it is
by land, water, or air; nor does it provide that the
transportation of ttie passengers or goods be by
motor vehicle (Fir$tPhilippine Industrial Corp. v.
Court of Appeals, G.R. No. 125948, December
29, 1998). • •
11. Taxes on premiums paid by way of Reinsurance
.or retrbcession;
Reinsurance c one by which an insurer
procyres a third person to insure him against
loss or jiaqility by reason of such original
insurance (INSURANCE CODE, Sec. 97).
Retre>cession - transaction whereby one
insurance entity (retrocessionaire) agrees to
indemnify another insurance entity (the
"reinsurer") against all or part of the loss that the
latter sustains under a policy or policies of
reinsurance that it has issued (DIZON, The
Insurance Code of the Philippines (2009), p.
533-534).
12. Taxes, fees, or charges. for the:
a. Registration of .M_otor vehicles; and
b. Issuance of all kinds of licenses or permits
for the driving thereof;
EXCEPTION: Tricycles (LGC, Sec. 133 (i)).
NOTE: Subject to the guidelines prescribed
by the Department of Transportation and
Communication {DOTC, now two separate
entities, DoTR and DoC respectively),
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municipalities and cities can regulate the 4. Taxes, fees, and charges imposed under special -
operation of tricycles-and grant franchises laws (No. 12) (ABAN, supra at 402-406).
for the operation thereof within their
territorial jurisdiction (LGC, Secs. 447(3)(vi)

I
and 458 (3)(vi)).

13. Taxes, fees, or other charges on Philippine

products actually gxported;

EXCEPTION: When otherwise provided by the

Code (i.e., municipalities may impose taxes on
I TAXING POWERS OF
LGUS

exporters of essential commodities) (LGC, Secs. THE TAXING POWERS OF LG Us MAY

143(c) and 151).
14. Taxes, fees, or charges on
a. Countryside and §_arangay business
enterprises; and
b. Cooperatives duly registered under R.A. No.
6810 (Magna Carta for Countryside and
Barangay Business Enterprises) and R.A.
No. 6938 (Cooperative Code of the
Philippines).
15. Taxes, fees, or charges of any kind on the
National Qovernment, its agencies and
instrumentalities, and local government unit
(LGC, Sec. 133).
ILLUSTRATION: (2016 Bar Question)
In 2014, M City approved an ordinarice Jevying
customs duties and fees on go9ds coming into
the territorial jurisdiction of the city. Said city
ordinance was duly publisned on February 15,
2014 with effectivity date on March 1, 2014. Is
there a ground for opposing said ordinance?
BE CLASSIFIED AS FOLLOWS: (CoS-.
CoR}
1. Common revenue-raising powers (LGC, Secs.
153-155);
2. ~pecific powers (LGC, Secs. 135-143; 147-149;
151-152);
3. Community tax (LGC, Sec. 156); and
4. Residual taxing powers (LGC, Sec. 186).
COMMON REVENUE-RAISING
POWERS: (SPUT)
1. Reasonable fees and charges for ~ervices
.... ; .. rendered. (L GC, Sec. 153);
2. •••Pnolli:tutijltycharges for the operation of public
utilities owned, operated, and maintained by
LGUs within their jurisdiction (LGC, Sec. 154);
and ..
3. Ioli, tees, or' charges for the use of any public
road; pier, or wharf, waterway, bridge, ferry, or
tel~comr:nt,mication system funded and
consfructed: by the LGU concerned (LGC, Sec.
155). ..• •.•• •

ANS: YES. The ordinance is ultra vires. The
taxing powers of LGUs, such as M City, cannot
extend to the levy of taxes, fees, arid charges
already imposed by the national government.
This includings the levy of customs duties under
the Tariff and Customs Code (now the Customs
Modernization and Tarrifs Act of 2016) (LGC,
Sec. 133 (o)).
THE ENUMERATED COMMON
LIMITATIONS MAY BE CLASSIFIED AS
FOLLOWS:
1. Taxes which are levied under the NIRC unless
otherwise provided by the LGC (Nos. 1, 2, 3, 8,
9, 10 above);
2. Taxes, fees, and charges which are imposed
under the Tariffs and Cus1oms Code (No. 4);
3. Taxes, fees, and charges where the imposition
of which contravenes existing governmental
policies or which are violative of the fundamental
principles of taxation (Nos. 5, 6, 7, 11, 13, 14,
15); and
.. Toll - a fee imposed on goods or persons
·- • 1 ti"tii'l.lelling
public roads or bridges (V
DOMONDON, Taxation, supra at 150).
Charges - a pecuniary liability, as rents or fees.
against persons or property (LGC, Sec. 131(g)).
Fee - a charge fixed by law or ordinance for the
regulation or inspection of a business or activity
(LGC, Sec. 131(/)). It includes charges fixed by
law or agency for the services of a public officer
in the discharge of his official duties (/RR of
LGC, Art. 220(/)).
EXCEPTIONS:
1. Officers and enlisted men of the AFP;
2. Members of the PNP on mission;
3. Post office personnel delivering mail; and
4. Physically handicapped and disabled citizens
who are 65 years or older (LGC, Sec. 155, par.
1).
NOTE: When public safety and welfare so
requires,· the Sanggunian concerned may

discontinue the collection of the tolls, and,
thereafter, the said facility shall be free and open
for public use (LGC, Sec. 155, par. 2).
SPECIFIC POWERS OF LGUS TO
IMPOSE TAX
2
1. Provinces (RP -F-SGQ-PAD)
a. Tax on Transfer of Beal Prdperty
Ownershi
-~-------------,
Sale, donation, barter, or any
other mode of transferring
ownership or title of real property
Not more than 50% of 1% (0.5%)
The total consideration involved
or of the fair market value in case
the monetary consideration
involved in the transfer is not
substantial, whichever is higher
Transfer or disposition pursuantto
R.A. No. 6657 (ComprehensiVe
Agrarian Reform Prqgram)
Seller, dbnbr, transferor,
executor, or admin(~trator
Within 60 days· from the date .of
the execution of the deed or from
the date of the decedent's death
(LGC, Sec. 135)
Embassies, consulates, and other
diplomatic offices are deemed part of the
territory of the country they represent and
therefore, are exempt from any national or
local taxes based on the gen~rally accepted
principle that the tax laws of one country.are
not applicable to another. Consequently, the
purchase of property by the Embassy citthe
Islamic Republic of Iran of a real property in
the Republic of the Philippines for official
use as the ambassador's residence was
considered as tax exempt and: the transfer
taxes paid by the buyer under protest was
ordered refunded (DOF 2nd - fndorsement
dated February 10, 1993 to the Treasurer of
Makati).
Conveyance of Shares are NOT
COVERED by Sec. 135 of the LGC
The transfer of Mirant Asia Pacific Ltd.
(MAPL) shares is not a transfer of real
property ownership under Section
135 of the LGC. Clearly, MAPL shares are
equities and, by definition, not real
properties under the
contemplation of Section 135 in relation to
LOCAL TAXATION
Taxation Law
Article 415 of the Civil Code (Province of
Pangasinan v. Team Sual Corp., C. T.A. EB
Case No. 1883 (C. T.A. AC No. 173), August
30, 2019).
b. Tax on Business of _Erintingand
Publication
------------~
Business of printing and/or
publication of books, cards,
posters, etc.
Not more than 50% of 1%; or
In case of a newly started
_business: not morn than 1/20 of
1%
Gross annual receipts for the
preceding year or
In case of a newly started
business: capital investment
Printing of DepEd/CHED/TESDA
prescribed texts or references
(LGC, Sec. 136)
The press is not exempt from the taxing
power of the State and that what the
Constitutional guarantee of free press
prohibits are laws which single out or target
a group'belonging to the press for a special
treatmert or which in any way discriminate
the press on the basis of the content of the
publication (Tolentino v. Secretary of
• Finance, G.R. No. 115455, October 30,
1995).
NOTE: The tax on publications is a
provirn,i9 1 tax separate and distinct from the
business tax imposed by cities and
municipalities (LGC, Sec. 143 (h) in relation
to· Sec 151).
c. Franchise Tax
------------~
Enjoyment of a franchise
(secondary franchise)
Not more than 50% of 1%; or
In case of a newly started
business: not more than 1/20 of
1%.
Gross annual receipts for the
preceding year; or
In case of a newly started
business: capital investment.
REASON: Franchise tax shall be
based on gross receipts precisely
because it is a tax on business,
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rather than on persons or property

(City of lriga v. Camarines Sur Ill
Electric Cooperative, Im:. It is vested on the It is vested in the
(CASURECO Ill), GR Nn. individuals who corporation.
192945, September 5, 2012). compose the
corporation, not in the
Notwithstanding any exemption corporation itself.
granted by any law or other special
law, the province may impose a tax
on businesses enjoying a
franchise ll cannot be conveyed It may ordinarily be
in the absence of conveyed or mortgaged
{LGC, Sec. 137) legislative authority to under a general power
do so. granted to a corporation
Franchise Tax to dispose of its
A franchise tax is a tax on the privilege of property.
transacting business in the state and
exercising corporate franchise granted by (AQUINO, Philippine Corporate Law Compendium
the state. It is not levied on the corporation (2018), p, 39) •
simply for existing as a corporation, upon its
property or its income, but on its exercise of Difference between Franchise Tax
the rights or privileges granted lo it by the Imposed by the NIRC and the LGC
government. It is within this context that the In its general sense, a franchise is a
phrase tax on businesses enjoying a privilege conferred by government authority,
franchise in Sec. 137 of the LGC should be which does not belong to citizens of the
· interpreted and understood (City of lriga v. country generally as a matter of common
Camarines Sur Ill Electric Cooperative, Inc. Ji9.hf_'"n,e right under a prlmary or general
(CASURECO 1/1), GR. No. 192945; franct)ise is vested in the individuals who
September 5, 2012). compo~e the corporation and •not in the
corporation itself.
The tax covers special or secondary
franchises which refer to the right • or In its specific sense, a franchise may refer
privileges conferred upon an existing to a general or primary franchise, or to a
corporation such as the. right to use the ;:$'p$Gi~J.'bf$f:lcondary franchise. In Section
streets of a municipality to lay pipes of f::f1>{n'Wbfthe LGC, Congress defined a
tracks, erect poles, or string wires (National franchise in the sense of a secondary or
Power Corp. v. City of Cabanatuan, GR. special franchise. This is to avoid any
No. 149110, April 9, 2003). • , ,.gonfusion when the word franchise is used
• 'ih the context .of taxation. As commonly
used, a franchise tax is "a tax on ·the
PRIMARY FRANCHISE AND
privilege of transacting business in the state
SECONDARY FRANCHISE' and exercising corporate franchises granted
DISTINGUISHED by the state." It is not levied on the
corporation simply for existing as a
corporation, upon its property or its income,
but on its exercise of the rights or privileges
granted to it by the government. It is within
It is a franchise to exist It is a franchise this context that the phrase "tax on
as a corporation. conforring certain rights l;u:;i110:;:;u:;u11juyi11y
ct frctrH.:tilt:e"in Gcctlon
and privileges upon 137 of the LGC should be interpreted and
existin!1 corporations, understood (National Power Corporation v.
such as the right to use CityofCabanatuan, GR No. 149110, April
the streets of a 9, 2003).
municipality to lay pipes
of tracks, erect poles, or To stresi,, ;:i frnnr.hisP.t;:ix is imposed based
string wires. not on the ownership but on the exercise by
the corporation of a privilege to do business.
The taxable entity is the corporation which
exercises the franchise, and not the
individual stockholders {Id.).
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Requisites to be Liable for Local
Franchise Tax: (ST)
i. That one has a "franchise" in the sense
of a secondary or .§_pecialfranchise; and
ii. That it is exercising its rights or
privileges under this franchise within the
Ierritory of the pertinent local
government unit (City of lriga v.
Camarines Sur Ill Electric Cooperative,
Inc. (CASURECO Ill), G.R No. 192945;
September 5, 2012; National Power
Corp. v. City of Cabanatuan, G.R. No.
149~ 10, April 9. 2003).
Simultaneous Imposition of Franchise
and Local Business Tax
While the 'city or business tax' and the
'franchise tax' are both based on the gross
receipts and sales of petitioner's business,
the 2 taxes, however, are different in terms
of their nature or character (Sky Cable Corp.
v. Quezon City, CTA AC No. 102, February
10, 2014).
A business tax is imposid on the privilege
of engaging in the business of Contracting a
system of communica.tlbns., whereas •a
franchise tax is imposed for the exercise of
enjoying a franchise (Sky Cable Corp. v.
Quezon City, CTA AG No. 102, February 10,
2014).
Clearly, while the city tax and franchise tax
are both imposed • by th~ same taxing
authority, on the same subject matter and •
for the same taxing p~riod, the imposition
thereof, however, does not·· ..constitute
double taxation as they are not of the same
kind or character (Sky Gable Corp. v,
Quezon City, CTA AC No. 102, February 10,
2014).
When an Entity Has No Franchise, LGU
Cannot Assess It With Franchise Tax
Sec. 137 of the Local Government Code
categorically states that franchise tax can
only be imposed on businesses enjoying a
franchise. When the taxpayer has no
franchise, a local government unit cannot
assess him with a franchise tax. Thus, local
franchise tax is imposed on the privilege of
operating a franchise, not a tax on the
ownership of the transmission facilities. It is
clear that such tax is not a liability of the
NPC (National Power Corporation v.
Provincial Government of Bataan, G.R. No.
180654, April 21, 2017).
Taxation Law
Determination of Capital Investment as
Basis of Franchise Tax of a New
Business
The capital investment to be used as basis
of the tax of a newly started business shall
be·determined in the following manner: (AS-
RT)
i. In the locality where the principal office
of the business is located, the paid-up-
capital stated in the 8rticles of
incorporation, in case of corporations, or
in any .§.imilardocument in case of other
types of business organizations or
enterprises shall be considered as the
capital investment;
ii. Where there is a branch or sales office
which commences business operations
during the same year as the principal
office but which is located in another
province or in a city outside the
province, the paid-up capital referred to
• pbove shall be Reduced by the amount
of the capital investment made for the
said branch or sales office which shall
•·be taxable instead by the province or
• city wher~ it is located; or
iii. Where the newly started business is a
branch or sales office commencing
business operations at a year later than
that. of the principal office, capital
investment shall mean the Total funds
invested in the branch or sales office
(/RR ofLGC, 226 (d)).
d. Tax_, on §and, Gravel and other
Quarry ~esources Extracted from
Public Land
--------------,
Extraction of ordinary stones,
gravel, sand, earth and other
quarry resources as defined under
the NIRC, from PUBLIC LANDS
or from the beds of seas, lakes,
rivers, streams, creeks, an·d other
public waters within its territorial
jurisdiction
Not more than 10%
Fair market value in the locality
per cubic meter of the subject
Issued exclusively by the
provincial governor pursuant -to
the ordinance of the Sangguniang
Panlalawigan
a. Province- 30%
b. Component city or
municipality where resources
extracted- 30% •

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c.Barangay where resources
extracted- 40%
The proceeds of the tax on sand,
gravel and other quarry resources
in highly-urbanized cities:
Hignly urbanized city- 60%; and
Barangay where the sand, gravel,
and other quarry resources are
extracted - 40%
(LGC, Sec. 138 and /RR of LGC, Art 239)
NOTE: The authority to impose taxes and
fees for extraction of sand and gravel •
belongs to the province and NOT to the
municipality where they are found
(Municipality of San Fernando La Union v.
Sta. Romana, G.R. No. L-30159, March 31,
1987).
Province has no authority to impose taxes
on stone, sand, gravel, earth, and other
quarry resources extracted from PRIVATE
LANDS because such tax is a tax upon the
performance, carrying on, or exercise of an
activity, hence an excise tax upon an activity
already being taxed under the NIRC. The
common limitations prohibit the LGU from
imposing such tax (V DOMONDON,
Taxation, supra at 103).
A governor's permit is a prerequisite before
one can engage in a quarrying business if
an ordinance is promulgated imposing a
requirement therewith (Province of Cagayan
v. Lara, G.R. No. 188500, July 24, 2013).
e. Professional Tax
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Exercise or practice of profession
requiring government licensure
examination
Not to exceed 1"300
Reasonable classification by the
Sangguniang Panlalawigan
P·rofessionals exclusively
employed in the government
Payable annually on or before
.January 31 or before beginning
the practice of the profession
Province where he practices his
profession or where the principal
office is located
(LGC, Sec. 139)
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NOTE: Employer of a person subject to
professional tax shall require payment by
that person of the tax on his profession
before employment and annually thereafter
(LGC, 139 (c)).
The professionals subject to tax herein
imposed are only those who have passed
the bar examinations, or any board or
other examinations conducted by the
Professional Regulation Commission (PRC)
(/RR of LGC, Art. 228 (f)).
For example, a lawyer who is also a
Certified Public Accountant (CPA) must pay
the professional tax imposed on lawyers and
that fixed for CPAs, if he is to practice both
professions (/RR of LGC, Art. 228 (f)).
A person who has paid the corresponding
professional tax shall be entitled to practice
his profession in any part of the Philippines
without being subjected to any other
national or local tax, license, or fee for the
practice of such profession (LGC, Sec. 139
(b)).
ILLUSTRATION: (2005 Bar Question)
X is a CPA-lawyer engaged in the practice
of.his two professions. He has his main
office in Makati City and maintains a branch
office: in Pl1sig City. X pays his professional
tax . as. a. GPA in Makati City and his
'ptofessiohaf tax as a lawyer in Pasig City.
i. May Makati City, where he has his main
office, require him to pay his
professional tax as a lawyer?
ANS: NO. X has the option of paying his
professional tax as a lawyer in Pasig
City where he practices law or in Makati
City where he maintains his principal
office. The professional tax paid• as a
lawyer in Pasig City will entitle him
to practice his profession in any part of
the Philippines without being subjected
to any other tax for the practice of such
profession.
ii. May X refuse to pay professional tax as
• a CPA since he already paid his
professional tax as a lawyer?
ANS: NO. X must pay the professional
tax imposed on lawyers and that fixed
for CPAs, if he is to practice both
professions.
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f. Amusement Tax basically belong to artistic forms of

-------------
Ow nership, lease, or operation of
theaters, cinemas, concert halls,
circuses, boxing stadium, and
other places of amusement
Not more than 10% (as amended
by RA No. 9640 (An Act
Amending Sec. 140 (A) of the
LGC, May 21, 2009)
Gross receipts from admission
fees
Operas, concerts, dramas,
recitals, painting and art
exhibitions, flower shows,
musical programs, literary and
oratorical presentation
Except (Taxable): Pop, rock, or
similar concerts • (Because The NIRC Already Imposes
Tax shall be shared equally .by
the province and }11UniCipality
where such artiuseinent places
are located
(LGC, Sec. 140)
Amusement is a pleasurable diversion and
entertainment. It . is' synonym<)\JS to
relaxation, avocation, .pastime, orfun (LGC,
Sec. 131 (b)). • • • •
Amusement places ' include theaters,
cinemas, concert halls, circuses and other
places of amusement Where s~eks
admission to entertain oneself b·y seeing or ..
viewing the show or performances (LGC,
Sec. 131 (c)). • , ,·truck or van of manufacturers or
Businesses not Subject to Amusement
Tax:
i. Resorts, swimming pools, bath
houses, hot springs, and tourist
spots - cannot be considered as among
the "other places of amusement'"
contemplated by Sec. 140 of the LGC
and which may properly be subject to
amusement tax (Principle of Ejusdem
Generis) (Pelizloy Realty Corp. v.
Province of Benguet, GR. No. 183137,
April 10, 2013).
ii. Professional basketball games - they
do not fall within the meaning of "other
places of amusement" under the same
category as theaters, cinematographs,
concert halls and circuses which
entertainment, while the former cater
sports and gaming (Principle of
Ejusdem Generis) (Philippine
Basketball Association v. Court of
Appeals, GR No. 119122, August 8,
2000).
It is the intent of the Legislature not to
impose VAT on persons already
covered by the amusement tax. Thus,
the gross receipts derived by
respondents from admission tickets in
showing motion pictures, films, or
movies are subject to the amusement
tax and not VAT under the NIRC
(Commissioner of Internal Revenue v.
SM Prime Holdings, Inc., G.R. No.
183505, February 26, 2010).
places upon which Provinces I Cities
C_an.not Impose Amusement Tax
Amusement Tax):
i: Cockpits;
_ii. \.C9 barets;
iii. Night or day clubs;
iv. Boxin~fexhibitions;
v. Professional basketball games;
vi. Jai-Alai; an<l
vii. RacetracKs'.(NIRC, Sec. 125).
N9TE: Under the principle of pre-emption,
they are not ,subject to amusement tax
•••becayse they are already subject to other
percentage tax under Sec. 125 of the NIRC
(LGC, Sec.. 133(0) in relation to NIRC, Sec.
125).
• 9: ; J,\i:m·ualfixed tax for every Qelivery
producers, wholesalers of, dealers,
or retailers in, certain roducts
Use by manufacturer, producers,
wholesalers, dealers, or retailers of
truck, van, or vehicle in the delivery
or distribution of distilled spirits,
fermented liquors, softdrinks, cigar
and cigarettes, and other products,
determined by the Sangguniang
Panlalawigan, to sale outlets or
consumers, whether directly or
indirectly, within the province
Not to exceed ~500
Every truck, van, or vehicle
(LGC, Sec. 141)
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NOTE: They shall be exempt from the tax c. On _sxporters, and on manufacturers,
on peddlers which may be imposed by millers, producers, wholesalers,
municipalities (LGC, Sec. 141 (b)). distributo,s, dealers or retailers of
essential commodities;
2. Municipalities (MaWD 2 ER-CBP-Not)
A municipality may levy on those taxes, fees, Tax Rate: Not exceeding 1/2 of the rates
and charges not otherwise levied by provinces prescribed under Nos. 1, 2 & 4 (LGC, Sec.
(LGC, Sec. 142). 143 (c)).

Tax on Various Types of Business Essential Commodities (RW-CLAP-SC)

A municipality may impose taxes
following businesses:
a. On Manufacturers, assemblers, re-
packers, processors, brewers, distillers,
rectifiers, and compounders of liquors,
distilled spirits, and wines or
manufacturers of any article of
commerce of whatever kind or nature;
Tax Rate: Graduated scale of P165-P24,
375 per annum or a rate not exceeding
37.5% of 1% (LGC, Sec. 143 (a)).
Tax Base: Gross sales or receipts for the
preceding calendar year (LGC, Sec. 143
(a)).
on the i. Bice and corn;
ii. Wheat or cassava flour, meat, dairy
products, locally manufactured,
processed, or preserved food, sugar,
salt and other agricultural, marine, and
fresh water products, whether in their
original state or not;
iii. fooking oil and cooking gas;
iv. _baundrysoap, detergents, and
medicine;
v. 6gricultural implements, equipment
and post- harvest facilities, fertilizers,
pesticides, insecticides, herbicides, and
other farm inputs;
vi. _Eoultryfeeds and other animal feeds;
. . vii. §choeil supplies; and
,vfit;c:~ement (LGC, Sec 143 (c)).

b. On Wholesalers, Distributors, or Dealers d. On Retailers;

in any article of commerce of v[h°atever
kind or nature; Tax Rate: 2% for P400, 000 or less; 1% for
the excessover P400, 000 (LGC, Sec. 143
Tax Rate: Graduated scEile of tD18 - P10, (1M:7f2J}<:••··
000 per annum or rate not exceeding 50%
of 1% when the gross receipts exceed P2, • Tax Base: Gross sales or receipts for the
000, 000 (LGC, Sec. 143 (b)}; • preceding calendar year (LGC, Sec. 143

Tax Base: Gross sales or receipts for the

preceding calendar year (LGC,. Sec. •143
(b)).
Wholesale - Sale where the purchaser
buys or imports the commodities for resale
to persons other than the end user
regardless of the quantity of the transaction
(LGC, Sec. 131 (z)).
Dealer - One whose business is to buy and
sell merchandise, goods, and chattels as a
merchant. He stands immediately between
the producer or manufacturer and the
consumer (LGC, Sec. 131 (k)).
NOTE: Barangays shall have the exclusive
power to levy the business tax on retailers
as provided under Sec. 152 of the LGC, if
gross sales or receipts do not exceed 1"'50,
000 in case of cities or ~30, 000 in case of
municipalities (LGC, Sec. 143 (d)).
Retail - a sale where the purchaser buys
the commodity for his own consumption,
irrespective of the quantity of the commodity
sold (LGC, Sec. 131 (w)).
e. On fontractors and other independent
contractors;

Tax Rate: Graduated scale of P27.50-P11,

500 per annum or rate not exceeding 50%
of 1% (LGC, Sec. 143 (e)).

Tax Base: Gross sales or receipts for the

preceding calendar year (LGC, Sec. 143
(e)).
 , < 1 > ,
" f' ' ' ', ,
:'402 '-: ", • ·-_ ·,,
I
,
l
. '.. '
" ' <
Contractor - includes persons, natural or
juridical, not subject to professional tax
under Sec. 139 of the LGC, whose activity
consists essentially of the sale of all kinds of
services for a fee, regardless of whether or
not the performance of the service calls for
the exercise or use of the physical or mental
faculties of such contractor or his employees
(LGC, Sec. 131 (h)).
Transportation contractors are not
included in the term "contractor" as defined
in Sec. 131 of LGC. The taxing power of
LGUs does not extend to taxes on the gross
receipts of transportation contractors (LGC,
Sec. 133 (j)).
f. On Banks and other
institutions;
Tax Rate: Not exceeding 50% of 1% (LGC,
Sec. 143 (f)).
Tax Base: Gross sales or receipts for the
preceding calendar year derived from
interests, commissions and discounts from
lending activities, income ftom 'financial
leasing, dividends, rentals on property and
profit from exchan@e qr sale of property,
insurance premium "(LGC,:Sec. 143 (f)).
NOTE: All other income' and re~ipts of
banks and financial institutions not
otherwise enumerated above shall. be
excluded from the faixing authority of the
LGU (/RR of LGC, Art. 232 (f)).. - EXCEPTION: Any bµsiness engaged
Section 143 (f) is premised on the fact
that the persons made liable for such tax
are banks or other financial institutions
by virtue of their being engaged in the
business as such
This is why the LBT under Sec. 143 (f) are
imposed on their gross receipts from
"interest, commIssIons and discounts
from lending activities, income
from financial leasing, dividends, rentals on
property and profit from exchange or sale of
property, insurance premium (City of Davao
v. Randy Allied Ventures, Inc., G.R. No.
241697, July 29, 2019).
In this case, Randy Allied Ventures, Inc.
(RAVI) is not a bank or other financial
institution. Rather, it is a holding company. It
holds San Miguel Corporation (SMC) shares
on behalf of the National Government.
These shares shall be used only for the
benefit of the coconut farmers. Thus, RAVi's
management of the dividends from the SMC
LOCALTAXATION
Taxation Law
preferred shares, including placing the
same in a trust account yielding interest, is
not tantamount to doing business whether
as a bank or ottier financial institution, but
an activity that is essential to its nature as a
Coconut Industry Investment Fund (CIIF)
holding company. Accordingly, it cannot be
held liable for LBT under Section 143 (f) of
the LGC (Id.).
g. On feddlers engaged in the sale of any
merchandise or article of commerce; and
Tax Rate: Not exceeding P50 per peddler
annually (LGC, Sec. 143 (g)).
Peddler- any person who, either for himself
financial or on commission, travels from place to
place and sells his goods or offers to sell
and deliver the same (LGC, Sec. 131 (t)).
h, On any business, Not otherwise
specified in the preceding paragraphs,
which th.e Sanggunian concerned may
deem proper to tax.
CONDITIONS:
i. Business not subject to VAT or
percentage tax under NIRC; or
ii. If the business is subject to VAT or
percentage tax under NIRC, the tax rate
shall not exceed 2% of gross
sales/receipts of the preceding calendar
year (LGC, Sec. 143 {h)).
in the production, manufacture, refining;
cJistribution, or sale of oil, gasoline, and
other petroleum products shall not be
subject to any local tax (/RR of LGC, Art.
232 (h}).
When a municipality or city has already
imposed a business tax on
manufacturers, etc. of liquors, distilled
spirits, wines, and any other article of
commerce pursuant to Sec. 143 (a) of
the LGC, said municipality or city may
no longer subject , the same
manufacturers, etc. to a business tax
under Sec. 143 (h) of the. same LGC.
Sec. 143 (h) may be imposed only on
businesses that are subject to excise
tax, VAT, or percentage tax under the
NIRC, and that are not otherwise
specified in preceding paragraphs (i.e.,
Secs. 143 (a) to 143 (g) of the LGC)
(City of Manila v. Coca-Co/a Bottlers
PHL, Inc., G.R. No. 181845, August 4,
2009).
 \ 1 ,',,' ',, ~,,, i' , : ,:/'·',", ,,,, ,

MEM:Q~YAID
San Beda University College of Law - RGCT Bar Operations Center • , '
• ,- ?, :·,. • • , , 4;03
• "-. ' I I '

another person excluding discounts if

NOTE: In the case of Super Grocers determinable at the time of sales, sales return,
Inc. v. Municipality of San Pedro (CTA excise tax, and VAT (LGC, Sec. 131 (n))
AC No. 86, February 25, 2013),
petitioner challenged their NOTE: There is constructive receipt, when the
reclassification from "retailer of consideration for the articles sold, exchanged or
essential and non-essential leased, or the services rendered has already
commodities" to "owners or operators of been placed under the control of the person who
privately-owned supermarkets, sold the goods or rendered the services without
shopping centers including mini-marts." a'ny restriction by the payor (Ericsson
The CTA opined that petitioner's Telecommunications, Inc. v. City of Pasi9, GR.
business activities - fall under the No. 176667, Nov. 22, 2007).
classification as retailer of both
essential and non-essential goods Gross Revenue - includes those amounts
under Secs. 143 (c) and (d) of the LGC, which have not actually been received yet
therefore, its re-classification cannot be (INGLES, Tax Made Less Taxing (2018), p. 511
allowed as it violates the limitation {hereinafter INGLES, Reviewer]).
provided under par. {h) of Sec. 143 of
the LGC. NOTE: The imposition of local business tax
based on petitioner's gross revenue will
BUSINESS TAX DISTINGUISHED FROM inevitably result in the constitutionally proscribed
INCOME TAX double taxation inasmuch as petitioner's
revenue or income for a taxable year will
definitely include its gross receipts already
reported during the previous year and for which
Business taxes Income tax is a tax on all ,,, !9cal b(J'$iness tax has already been paid
imposed in the exercise yearly profits ansmg • •(EriCS$0'1';Telecommunication v. City of Pasig
of police power for from property, GR. No.176667, November 22, 2007).
regulatory purposes professions, trades, or
are paid for the offices, or as tax on a Rates of ;fax in Municipalities Within Metro
privilege of carrying on person's income, Manila Area .
a business in the year emoluments, profits, The muni$ipalities within Metro Manila may levy
the tax.was paid and the like taxesatrates which shall not exceed by 50% the
maxlii101'f'\i;;r,~tes
prescribed in Sec.143 of the
Paid at the beginning of Due on or before the
LGC for other municipalities (LGC, Sec. 144).
the year as a fee to 15th day oUhe 4th month
allow the business to following the close _ofthe
,: :'t\Condominium Corporations - generally
operate for the rest of taxpayer's tax.able year
:;1>1,/:fxempted from local business taxation under the
the year
LGC, irrespective of any local ordinance that
Prerequisite to the Due when the taxpayer seeks to declare otherwise. They are prohibited
conduct of business has earned income as a from doing activities for profit under the
result of the conduct of Condominium Code, hence, they are not
its business "businesses" under the LGC (Taguig City
Government v. Serendra Condominium
(Mobil Philippines v. City Treasurer of Makati, G.R. Corpototion, C. TA. A. C. No. 229, September
No. 154092, July 14, 2005) 10, 2020, citing Yamane v. BA Lepanto
Condominium Co1p., GR. No. 154993, Oulu/J&r
Tax Base of Local Business Tax 25, 2005).
Gross sales or receipts, not gross revenue
(Ericsson Telecommunication v. City of Pasig EXCEPTIONS: When unit owners of a
G.R. No. 176667, November 22, 2007). condominium would band together to engage in
activities for profit under the shelter of the
Gross Sales or Receipts - include the total condominium corporation, in which, such activity
amount of money or its equivalent representiog would be prohibited under the Condominium
the contract price, compensation, or service fee, Ac:t. Fven though such activities would be
including the amount charged or materials considered as ultra vir.es, since they are
supplied with the services and deposits or engaged in beyond the legal capacity of the
advance payments actually or constructively condominium corporation, the principle of
received during the taxable quarter for the estoppel would preclude the corporation or its
services performed or to be performed for officers and members from invoking the void

nature of its undertakings for profit as a means
of acquitting itself of tax liability (Taguig City
Government v. Serendra Condominium
Corporation, C. T.A. A. C. No. 229, September
10, 2020, citing Yamane v. BA Lepanto
Condominium Corp., G.R. No. 154993, October
25, 2005).
Payment of Business Taxes
a. The taxes shall be payable for every
separate or distinct establishment or place
where business subject to the tax is
conducted and one line of business does not
become exempt by being conducted with
some other business for which such tax has
been paid (LGC, Sec. 146 (a)).
The basis for the computation of business
tax is the gross sales/receipts for the
preceding year and the latest income tax
returns and financial statements for
purposes of verifying the accuracy of the
declarations that they have _ rnade • the
previous year (LGC, Sec. 146 (a)).
Presumptive Income Level Approach
Assessment (PILAA)
The PILAA may be used only if the;taxpayer
is unable to provide proof of its income (First
Planters Pawnshop, Inc. V.·City Treasurer of
Pasay City, CTA EB No. 501, December 10,
2010). - fhe following sales allocation shall apply:
b. The tax on a business niust be paid by the
person conducting the same (LGC, Sec. 146
(a)).
c. In cases where a pers,on conducts or
operates 2 or more of the busJnesses
mentioned in Sec. 143 of LGC which are
subject to:
i. Same rate of tax - the tax shall be
computed on the combined total gross
sales or receipts of the said 2 or more
related businesses (LGC, Sec. 146 (b)).
ii. Different rates of tax - the gross sales
or receipts of each business shall be
separately reported for the purpose of
computing the tax due from each
business (LGC, Sec. 146 (c)).
Situs of Business Tax
a. When there is a branch or sales office or
warehouse in the city or municipality
where the sale was made - tax shall
accrue and shall be paid to the municipality
where such branch or sales outlet is located
(LGC, Sec. 150 (a)).
Branch office - a fixed place in a locality
which conducts operations of the business
LOCAL TAXATION
Taxalion Law
as an extension of the principal office (!RR
of the LGC, Art. 243 (a)(2)).
Offices used only as display areas of the
product where no stocks or items are stored
for sale, although orders for the products
may be received thereat, are not branch or
sales offices as herein contemplated (/RR of
the LGC, Art. 243 (a)(2)). A warehouse
which accepts orders and/or issues sales
invoices independent of a branch with sales
office shall be considered as sales office
(ABAN, supra at 415).
b. • Where there is no branch, sales office, or
warehouse - the sale shall be duly
recorded in the principal office and the taxes
due shall accrue and shall be paid to such
city or municipality (LGC, Sec. 150 (a)).
Principal office - the head or main office
of the business appearing in pertinent
documents submitted to the SEC and
specifically mentioned in the Articles of
Incorporation (/RR of the LGC, Art. 243
(a)(1)).
c. If there is no branch but there is a factory,
projecf office, plant, or plantation in
pursuit-Of business
i. 30% ofa/1 sales recorded in the principal
office -'- taxable by the city or
municipality where the principal office is
located (!RR of LGC, Art. 243 (b)(3));
ii. 70% of all sales recorded in the principal
office - taxable by the city or
municipality where the factory, project
office, plant, or plantation is located
(/RR of LGC, Art. 243(b)(3)); if the
plantation is located in a locality other
than where the factory is located, the
70% sales allocation shall be divided as
follows:
1.) 60% - city or municipality where the
factory is located (/RR of LGC, Art.
243 (b)(4)(i));
2.) 40% - city or municipality where the
plantation is located (/RR of LGC,
Art. 243 (b)(4)(ii)).
Where there are two or more
factories, project offices, plants, or
plantations, located in different
localities, the 70% sales allocation
mentioned above shall be prorated
ME~Q~Y
AID
San Beda UrWershy Colffige of Law - RGCT Bar Oporatiuns Cenre;
among the localities where the
factories, project offices, plants, and
plantations are located in proportion
to their respective volumes of
production during the period for
which the tax is due (/RR of LGC,
Art. 243 (b)(5)).
Plantation - a tract of agricultural land
where trees or seedlings are planted,
whether fruit bearing or not, uniformly
spaced or seeded by broadcast
methods or normally arranged to allow
highest production. Inland fishing
ground shall be considered as
plantation (/RR of LGC, Art. 243 (a)(4)).
ILLUSTRATION: (2010 Bar Question)
F, Inc. maintains its principal office in
. Quezon City. It has branches/sales
offices in Cebu and Davao. Its factory is
located in Marikina City. Its principal
office in QC is also a sales office. Sales
of finished products for calendar year
2009 in the amount of P10, 000, 000
were made at the following locations: i)
Cebu branch - 25%; ii) Davao branch -
15%; and iii) QC branch - 60%. Where
should the applicable local taxes on the
shoes be paid?
ANS:
1.) Twenty-five percent (25%) of the
total sales or ?2,500,000 shall be
taxed in Cebu;
2.) Fifteen percent (15%) of the total
sales or P1 ,500,000 shall be taxed
in Davao; and
3.) The remaining sixty percent (60%)
sales amounting to P6, 000, 000
which are recorded in the principal
office, is divided into the following:
a.) Thirty percent (30%) thereof or
P1 ,800,000 is taxable in
Quezon City where the principal
office is located; and
b.) Seventy percent (70°1 or
F'4,200,000 is taxable in
Marikina City where the factory
is located.
Under the law, manufacturers
maintaining a branch or sales
outlet shall record the sale in
the branch or sales outlet
making the sales and pay the
tax in the city or municipality
where the branch or sales outlet
is located. Since F Inc.
maintains one factory, the sales
recorded in the principal office
shall be allocated and 30% of
said sales are taxable in the
place where the principal office
is located while 70% is taxable
where the factory is located
(LGC, Sec. 150).
d. Where Sales are made by Route
Trucks, Vans, or Vehicles
i. Sale made in the locality where
manufacturer, producer, wholesaler,
retailer, or dealer has a branch, sales
office, or warehouse, the sales are
recorded in the branch, sales office. or
wa_rehouse - tax due is paid to LGU
where such branch, sales office, or
warehouse is located (/RR of LGC. Art.
243 (d)) .
1i. Sale made in the locality where
m,=mufacturer, producer, wholesaler,
retailer, or dealer has no branch, sales
office or warehouse - sales are
recorded in the branch, sales office, or
warehouse from where the route trucks
withdraw their products for sale and tax
due is to be paid to the LGU where such
branch, sales office, or warehouse is
located (/RR of LGC, Art. 243 (d)).
ILLUSTRATIONS:
L Ml is a corporation engaged in the
trading of books. It holds office in Pasig
City, where al! transactions are made
including the issuance of sales invoices.
However, it also maintains a warehouse
in Mandaluyong City which serves as its
/;storage area and no transactions are
made therein. Discuss the situs ol JOcal
taxation.
ANS: Ml should be assessed at
gross sales or re, .c·::ts r:i' -h~ p·eced ng
year by Pasig L - . _ K'c::. Sc Pasig City
rnay co. p-- ··e '.'a_,or's pe{P'.it and
olhe- ·eg_ a:::--_, fees. On the other
hand \'"-~a u, ong City, where the
warehouse is located but where no
trars.a.::-Jonsare made, may only collect
the Mayor's permit fee and other
regu :itory fees provided for under its
e,·sun:: local tax ordinances (DOF
dated - March 29, 1993 letter to
Megastrat, Inc.).
MC is a subsidiary of SMC. It is a
manufacturer with a principal office in
Pasig City maintained for management
and administrative purposes. It has a
factory and sales office in Quezon City,

where said route trucks withdraw their
products for delivery to the customers in
Pasig City. Discuss the situs of local
taxation.
ANS: MC should pay business taxes to
Quezon City and not to Pasig City.
However, Pasig City may levy and
collect the annual fixed tax for every
delivery truck or van of MC delivering
goods within Pasig City. The IRR of the
LGC provides in Art. 243, Par. 2, that
"for route sales made in a locality where
a manufacturer, producer, wholesaler,
retailer, or dealer has no branch, sales
office or warehouse, the sales are
recorded in the branch, sales office, or
warehouse from where the route trucks
withdraw their products for sale, and the
tax due on such sales is paid to the LGU
where such branch, sales office or
warehouse is located" (OOF •dated
February 26, 1993 letter to San Miguel
Corporation).
Sale is recorr' 'd
where·such bran<1'1CY
salei outlet is locatt,cl
'(LGC, Sec, 150(a)).
Sale shall be duly
recorded·. in the
principal office (LGC,
Sec. J50 (a)).
of all sales
in the
principal office
taxable by the city or
municipality where the
principal office is
located;
70% of all sales
recorded in the
principal. office
taxable by the city or
municipality where the
factory, project office,
plant, or plantation is Retirement Of Business
located LGC, Sec. 150 A business subject to tax sha!I, upon termination
(b)). thereof, submit a sworn statement of its gross
sales or receipts for the current year (LGC, Sec.
145).
LOCALTAXATION
Taxation Law
The 70% above shall
be divided as follows:
60% city or
municipality where the
factory is located_;
40% city or
municipality where the
plantation is located
(LGC, Sec. 150 (c)).
the 70%
above among the
localities according to
volume of production
(LGC, Sec. 150 (d)).
sales are
recorded in the
branch, sales office or
warehous!') (/RR of
LGC, Art. 243 (d)(1)).
sales are
recorded in the
branch, sales office, or
warehouse from
where the route trucks
withdraw their
products for sale (/RR
of LGC, Art. 243
(d)(2)).
NOTES:
i. As long as there is a branch, the sale will
be recorded there.
ii. •··The. rules for allocation apply only if
there is no branch.
\ iii.· The sales allocations shall be applied
irrespective of whether or not sales are
made in the locality where the factory,
project office, plant, or plantation is
located.
iv. A city can validly tax orders booked and
paid for in the company's branch office
in the city, even if the orders are
delivered outside the city (Philippine
Match v. City of Cebu, GR. No. L-
30745, January 18, 1978).
Ti!tvfffltif'RJ \ • I
MEM:0-RYAID
Saf1 Boda University College of Law - RGCT Bar Operations Cente1
NOTE: Termination shall mean that business
operations are stopped completely. Any change
in ownership, management and/or name of the
business shall not constitute termination as
contemplated in this Article_ Unless stated
otherwise, assumption of the business by any
new owner or manager or registration of the
same business under a new name will only be
considered by the LGU concerned for record
purposes in the course of the renewal of the
permit or license to operate the business (/RR of
LGC, Art. 241 (a), par. 2).
If the tax paid during the year be less than the
tax due on said gross sales or receipts of the
current year, the difference shall be paid before
the business is considered officially retired
(LGC, Sec. 145).
Procedural Guidelines For Retirement Of
Business
The local treasurer concerned shall sec to it that
the payment of taxes of a business is not
avoided by simulating the termination or
retirement thereof. For this purpose, the
following procedural guidelines shall be strictly
observed:
a. The local treasurer shall assign every
application for the termination or retirement
of business to an inspector in his office who _
shall go to the address of the business on
record to verify if it is · really no_ longer
operating. If the inspector finds that the
business is simply placed under a new
name, manager and/or new owner, the local
treasurer shall recommend to the mayor the
disapproval of the application for th~
termination or retirement of said business.
Accordingly, the business continues to
become liable for the payment of all taxes,
fees, and charges imposed thereon under
existing local tax ordinances; and
b. In the case of a new owner to whom the
business was transferred by sale or other
form of conveyance, said new owner shall
be liable to pay the tax or fee for the transfer
of the business to him if there is an existing
ordinance prescribing such transfer tax (/RR
of LGC, Art. 241 (a) par. 3).
ILLUSTRATION:
In 2012, Mobil's gross receipts were
f"1 ;000,000. The business tax rate imposed by
the City of Makati is 5%. On January 1, 2013,
Mobil paid their business tax of P50, 000, which
was based on their gross receipts of 2012.
However, in October 2013, Mobil decided to
close down their operations. At the end of
October 2013, their gross receipts were f'>700,
000. City of Makati assessed Mobil an additional
of P35, 000 (5% of noo, 000) based on 2013
gross receipts.
a. Is the City of Makati correct?
NO. Payments made by Mobil in 2013
based on 2012 gross receipts nro not
payments for business tax incurred in 2012.
The business taxes paid in the year 2013 is
for the privilege of engaging in business for
the same year, and not for having engaged
in business for 2012. It is paid at the
beginning of the year as a fee to allow the
business to operate for the rest of the year.
The amount of tax computed based on
petitioner's gross sales for 2013 is only
P35,000. Since the amount paid (f"50,000)
is more than the amount computed based
on petitioner's actual gross sales for 2013,
Mobil, upon its retirement, is not liable for
additional taxes (Mobil Philippines v. City
Treasurer of Makati, G.R. No. 154092, July
14, 2005).
, '
0n ;;t~e year an establishment retires or
termiriates its business within the
municipality, it would be required to pay the
difference in the amount if the tax collected,
basecl on previous year's gross sales or
receipts, i9 less than the actual tax due
bas.ed OfJitbe,current year's gross sales or
'r€3oaipt$f(MobilPhilippines v. City Treasurer
of Makati, G.R. No. 154092, July 14, 2005).
In the above example, the taxpayer will be
. entitled to a refund of P15, 000 (f"50, 000 -
~35, 000).
b. Assuming at the end of October 2013,
Mobil's gross receipts amounted to
1"'1,200,000. Are they required to pay
additional tax?
YES. Mobil is required to pay P10,000, the
difference of f"60,000 (f>1,200,000 x 5%)
and f"50,000. If the tax paid during the year
be less than the tax due on said gross sales
or receipts of the current year, the difference
shall be paid before the business is
considered officially retired (LGC, Sec. 145).
Municipal Fees and Charges
a.. The municipality may impose and collect
such reasonable fees and charges on
business and occupation (LGC, Sec. 147);
EXCEPTION: Professional taxes
reserved for provinces on the practice of any
profession or calling, commensurate with
 ' ,, ; ·~
;
408 , .
the cost of regulation, inspection, and
_licensing before any person may engage in
such business or occupation, or practice
such profession or calling (LGC, Sec. 147).
b. Fees for sealing and licensing of weights
kand measures (LGC, Sec. 148); and
c. Fiskhery rentals, fees and charges (LGC,
Sec. 149).
3. Cities
Except as otherwise provided in the LGC, the
city may levy the taxes, fees, and charges which
the province or municipality may impose.
a. The taxes, fees, and charges levied and
collected by highly urbanized and
independent component cities shall accrue
to them and distributed in accordance with
the provisions of the Code.
b. The rate of taxes that the city mayle\iyrnay •
exceed the maximum rates allowed for the
province or municipality by nof more than
50% (LGC, Sec. 151). • ••
EXCEPTION: The rates of professional and
8musement taxes.
Under the LGC, tl)eie are three'ctypes of
cities: Compon~nt .Cities . ' (CCs),
Independent Component Cities (ICCs), and
ICCs.and
Highly Urbanized dities, H-1,LJCs).
HUCs are indeperi9ent of the'. f)roVJnce
(LGC, Secs. 451-452). • of more t,hen five (5) fighting cocks of a
~ ',.
This means that taxes,1cfees,ahd chargi~s
levied and collected by'{C::Cs and HUCs'
accrue solely to them (LGC; 9ec. 151)~ ••
4. Barangays (SR-5B0)
Barangays may levy the following taxes, fees,·
and charges which shall accrue exclusively to
them:
a. Taxes on §tores or ,Retailers
Subject: Stores or retailers with fixed
uu~in8ss establishments with tho gross
sales or receipts for the preceding calendar
year of P50,000 or less (for barangays in
c_ities)and P30,000 or less (for barangays in
municipalities).
Tax Rate and Base: Not exceeding 1% of
the gross sales or receipts (LGC, Sec 152
(a}).
LOCAL TAXATION
Taxation Law
b. §.ervice Fees or Charges
Subject: Service rendered in connection
with the regulation or use of barangay-
owned properties or service facilities such
as pa/ay, copra or tobacco dryers.
Tax Rate: Reasonable fees and charges
(LGC, Sec 152 (b)).
c. §.arangay Clearance
This is a pre-requisite for the issuance of
license or permit to any activity. No city or
municipality may issue any license or permit
for any business or activity unless a
clearance is first obtained from the barangay
where such business or activity is located or
conducted (LGC, Sec 152 (c)).
Tax Rate: Reasonable fee
The application for clearance shall be acted
uponwithin seven (7) working days from the
filing thereof. In the event that the clearance
is n6tissl.ied within the said period, the city
or municipality may issue the said license or
permit (LGC,Sec 152 (c)).
d. Qther fee~ a,id Charges
Subjects:
t Conjmer.cia'Ibreeding of fighting cocks,
cockfights, -~nd cockpits;
Commercial breeding - an annual sale
;duly registered breeder (/RR of LGC,
Art. 24() (d) (1)).
••''<h
'ii. \'Pi.ates of recreation which charge
,·,admissionfees; and
Place of Recreation - include places of
amusement where one seeks
admission to entertain himself by seeing
or viewing the stiow or performance or
those where one amuses himself by
direct participation (/RR of LGC, Art 240
(c)(3)).
iii. Billboards, signboards, neon signs, and
outdoor advertisements (LGC, Sec 152
(d)).
SUMMARY RULES ON DISTRIBUTION
OF TAX PROCEEDS BETWEEN LGUS
GENERAL RULE: Revenues shall inure solely to
the benefit of the LGU levying the tax (LGC, Sec.
130 (d}).
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San Beda University College ot Law - PGCT B~u Operations Center
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EXCEPTIONS: (SAC)
Persons who become 18
1. Tax on §and, gravel and other quarry resources:
years of age on or after July
30% to the Province, 30% to the Component
1 (LGC, Sec. 161);
City or Municipality, 40% to the barangay (LGC,
Persons who cease to
Sec. 138);
belong to an exempt class
2. Amusement Tax: shared equally by the p'rovince
on or after July 1 (LGC, Sec.
and municipality (LGC, Sec. 140 (e)); and
161); and
3. Community Tax (in case the tax is colle.cted by
Corporations established
barangay treasurers): 50% to the municipality,
and organized on or after
50% to the barangay (LGC, Sec. 164 (c)).
July 1 (LGC, Sec. 161).
COMMUNITY TAX P5.00 plus P1 .00 for every
It is a poll or capitation tax imposed upon the P1 ,000 income regardless of
residents of a city or municipality (V DOMONDON, .whether from business,
Taxation, supra at 161). exercise of profession· or from
property (not to exceed P5,
RULES ON COMMUNITY TAX 000)

Cities or municipalities (LGC, NOTE: In case of husband and

Sec. 156) wife, the additional tax shall be
based on the total property,
and Juridical
gross receipts, or earnings
owned or derived by them.
Every inhabitant of the
P500 plus annual additional tax
Philippines (regardless of
(notto exceed 1"10, 000)
citizenship):
1. Who is 18 years or over; and
Annual additional tax in
Has been regularly
accordance with the following
employed on a wage or
schedule:
salary basis for at least 30
For every P5, 000 worth of real
consecutive working days
\property owned by it during the
during any calenqaryear; or
·preceding year based on the
Is engaged in business or
·,valuation used for the payment
occupation ;-or
of the real property tax - P2.00;
Owns a real property wiJh an
and
aggregate assessed value
For every P5, 000 of gross
of P1, 000 or more; or
receipts or earnings derived by
Is required by law to file an
it from its business in the
income tax return.
Philippines during the
Every corporation no matter preceding year - f'2.00.
how created or organized,
Residence of the individual or in
whether domestic or resident
the place where the principal
foreign, engaged in or doing
office of the juridical entity is
business in the Philippines
located.
Absolutely (LGC, Sec. 159):
Accrues on the 1st day of
Diplomatic; and Consular
January of each year which
Representatives.
shall be paid not later than the
last day of February of each
Exempt for the rest of th~
year.
year:·
1. Transient visitors when their
If a person reaches the age of
stay in the Philippines does
18 years or loses the benefit of
not exceed 3 months (LGC,
exemption on or before the last
Sec. 159);
day of March, he shall have 20
2. Persons who come to reside
days within which to pay the
in the Philippines on or after
community tax without
July 1 (LGC, Sec. 161);
becoming delinquent.
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. 410' , · LOCAL TAXATION

Taxation Law
' . ' " '

additional tax, be
Corporations established and considered as part of
organized on or before the last the gross receipts or
day of March shall have 20 days earnings of said
within which to pay the corporation (LGC, Sec.
community tax without 158).
becoming delinquent.

An interest of 24% per annum

from the due date until it is paid
shall be added to the amount No case shall No case shall exceed ten
due. exceed five thousand pesos (P10, 000)
thousand pesos (LGC, Sec. 158).
(P5, 000) (LGC,
COMMUNITY TAX PAYABLE Sec. 157).

The following are exempt from community tax:

1. Diplomatic and consular representatives; and
2. Transient visitors when their stay in the
They shall pay an It shall pay an ,,,annual . Philippines does not exceed three (3) months
annual community community ta)(,· of ; •five (LGC, Sec. 159).
tax of five pesos hundred pesos (P50o); ah_d
(P5) and an an additional ta~, • in COMMUNITY TAX CERTIFICATE
additional tax of accordance wi_th• the It is issued to every person or corporation upon
one peso (P1) for following: . payment of the community tax. It may also be issued
every one to any person or corporation not subject to the
thousand (F1, 000) 1. For every J Five community tax upon payment of one peso (P1.00)
of income tf,ou$and pesbs (PS; {LGC, Sec. 162),.
regardless of 000) y.,orth 9f •real
whether from property inf, the Certain' occasions·: ,when Community Tax
business, exercise Phillppilles,owQ_edby it Certificate ·'5Required to be Presented:
of profession, or durii;ig.C,the· pr~ceding 1. An • individual subject to community tax
from . property year: based on the acknowledges ahy document before a notary
(LGC, Sec. 157). valuation ~usedJo( the puolic; '
payment • ,_of . re~I 2: Takes the Oath of office upon election or
NOTE: In case of property tax .__unct~r appointment to any position in the government
husband and wife, existing laws, .foun~ iri • service~ ,··
the additional tax the ass~Ssmen(rofl,s'of ·3_ R~ceives any License, certificate, or permit from
herein imposed the city oi'tn4nleipafity any_public authority;
shall be based where the real prop~rty • 4 .. Pays any tax or fees; .
upon the total is situated - Two pesos 5. Receives any money from any public fund;
property owned by (P2.00); and 6. Transacts other official business; or
them and the total 7. Receives any salary or wage from 2ny person or
gross receipts or 2. For every Five corporation (LGC, Sec. 163).
earnings derived thousand pesos (PS,
by them (LGC, 000) of gross receipts The presentation of the community tax certificate
Sec. 157). or earnings derived by shall not be required in connection with the
it from its business in registration of a voter (LGC, Sec. 163 (a)(2)).
the Philippines during
the preceding year - ILLUSTRATION:
Two pesos (P2.00) Ariel Roque Corporation is a domestic corporation
(LGC, Sec. 158). which has the following income and properties
recorded as of the end of the preceding year:
NOTE: The dividends
received by a Gross receipts in the Philippines, P10,000,000 total
corporation from fair market value of properties owned and located in
another corporation the Philippines is P50,000,000. Under its tax
however shall, for the declaration, its properties' assessed value is
purpose of the equivalent to P20,000,000.

MEMJj~y
AID
San 800a Untversrty Coll~ge of Law - RGCTBar Operations Center
The amount of community tax would be:
Basic
Additional Community tax
[(10 million +20 million)/P5,000]xP2
Limit (per LGC, Sec. 158)
Total community tax
(P500 + P10,000 Limit)
COLLECTION OF TAXES
Calendar year, unless
otherwise provided in the LGC
May be paid in lump-sum or
quarterly installments
First (1st ) day of January of each
year. However, new taxes,
charges, and fees.or changes in
the rates thereof shall accrue on
the 1st day of the quarter
following the effectivity of the
ordinance imposing such new
levies or rates.
Within the first 20 davs of
January or of each subsequent
quarter as the case may be.
Only for a perio<;lnot exceE?ding
6 months for j(i'stifiable ·reason
or cause withdut surcfiai:ges or
penalties • Adjustrne~t'9f.tbetax rates should not be more
Surcharge not exceeding 25%
of the amount of taxes nofpaid
on time and an interest at the
rate not exceeding .•2% per
month of the unpaid taxes,
including surcharges, until such
amount is fully paid but in no
case shall total 36 months.
Shall be collected by the
provincial, city, municipal, or
barangay treasurer, or their duly
authorized deputies. The
provincial, city, or municipal
treasurer may designate the
barangay treasurer as his
deputy to collect local taxes,
fees, or charges.
The local treasurer may, by
himself or through any of his
deputies duly authorized in
writing, examine the books,
accounts, and other pertinent
records of any person,
r : • :, ,;'
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partnership, corporation, or
association subject to local
P 500 taxes, fees, and charges in
order to ascertain, assess and
12,000 collect the correct amount of the·
10,000
tax, fee, or charge. Such
examination shall be 'made
during regular business hours,
only once for every tax period.
(LGC, Secs. 165-171)
OTHER POWERS PROVIDED IN THE
LGC
1. Power to Prescribe Penalties for Tax Violations
and Limitations thereon
a. Limited as to the amount of imposable fine
as well as the length or period of
imprisonment;
b. The Sanggunian is authorized to prescribe
fines-or other penalties for violations of tax
ordinances, but, in no case, shall fines be
less than P1,000 nor more than P5,000 nor
shall the imprisonment be less than 1 month
nor more than 6 months;
$49l;J;Jineor other penalty, or both, shall be
impo~d at the discretion of the court; and
d. The,SE!lngguniang Barangay may prescribe
a title cif not less than P100 nor more than
Pf,000 (l;.GC, Sec. 516).
2. Power to Adjust Local Tax Rate
ofterf Ufiin;tHceevery 5 years, and in no case
shall such adjustment exceed 10% of the rates
,fixed under the LGC (LGC, Sec. 191).
~OT~:'Sec. 191 of the LGC presupposes that
the following requirements are present for it to
apply, to wit: (i) there is a tax ordinance that
already imposes a tax in accordance with the
provisions of the LGC; and (ii) there is a second
tax ordinance that made adjustment on the tax
rate fixed by the first tax ordinance. In this case,
Sec. 191 of the LGC will not apply because with
the assailed tax ordinance, there is no outright
or unilateral increase of tax to speak of. The
resulting increase in the tax rate for retailers was
merely incidental (Mindanao Shopping
Destination Corp. v. Duterte, G.R. No. 211093,
June 6, 2017).
3. Power to impose Surcharges and Interest
The Sanggunian may impose a surcharge not
exceeding 25% of the taxes, charges, or fees not
paid on time and an interest rate of not more
than 2% per month of the unpaid tax, charge, or
fee including the surcharge thereon, but in no
case shall the same total 36 months (LGC, Sec.
168).
 '
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ILLUSTRATION:
Mr. A failed to pay the local tax on his business
for the year 2020 in a total amount of !'>1, 000.
He was assessed by the LGU on June 20, 2021.
The Sanggunian imposes a 25% surcharge and
a 2% interest per month as penalties for late
taxpayers. How much is his total tax liability
including surcharges and interests?
Local tax payable fa>1,000
Surcharge: P1,000 x 25% 250
Interest: P1 ,000 x 2% x 5* 100
Total local tax liability P 1,350
*The 5-monih period shall be counted after
January 20, 2021.
4. Power to Grant Local Tax Exemptions
Local government units may, through
ordinances duly approved, grant tax
exemptions, incentives, or reliefs under such
terms and conditions, as they may deem
necessary (LGC, Sec. 192). • texts or references, insofar as receipts from the
The distinction between local business tax and
real property taxes in terms of the power of the
LGU to grant exemptions· is that: For real
property tax, the LGUs cannot add on the
exemptions stated in the'LGC; whereas for local
business tax, the LGtJs are free to grant
exemptions (INGLES, Reviewer, supra at 532-
533).
The power to grant • tax ewmptions, tax
incentives, and tax reliefs shall not apply to
regulatory fees which are levied under the police
power of the LGU (ABAN, supra at 395).
TAX EXEMPTION CERTIFICATE
Tax exemptions shall be conferred through the
issuance of a non-transferable tax exemption
certificate (/RR of LGC, Art. 282).
TAX EXEMPTIONS EXISTING BEFORE
THE EFFECTIVITY OF THE LGC HAS
BEEN ABOLISHED
Unless otherwise provided by the LGC, tax
exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical,
including government-owned or controlled
corporations are withdrawn upon the effectivity of the
LGC (LGC, Sec. 193).•
A general law cannot be construed to have repealed
a special law by mere implication unless the intent to
repeal or' alter is manifest and it must convincingly
demonstrate that the 2 laws are so clearly repugnant
and patently inconsistent that they cannot co-exist.
The provisions of Sec. 137 of the LGC which
\
LOCALTAXATION
Taxation Law
authorizes the province to impose franchise tax
"notwithstanding any execution granted by any law
or other special law" is all encompassing and clear
(City of San Pablo Laguna v. Reyes, G.R. No
127708, March 25, 1999).
EXCEPTIONS:
The following is the exclusive list of entities which
are still exempted from local taxes: (WaCH-B01-
CoP)
1. Local Water districts;
2. .Q_ooperativesduly registered under RA 6938;
3. Non-stock and non-profit Hospitals and
educational institutions.
4. Business enterprises certified by B01 as pioneer
or non-pioneer for a period of 6 and 4 years,
respectively, from the date of registration;
5. Business entity, association, or cooperatives
registered under R.A. No. 6810 (Countryside
and Barangay Business Enterprises); and
6. _Erinter and/or publisher of books or other
reading materials prescribed by DECS as school
printing a11d/orpublishing thereof are concerned
(/RR of LGC, Art. 283).
FRANCHISE GRANTED AFTER
EFFEQTIVITY OF LGC, NOT COVERED
BY THE WITHDRAWAL
The withdrawal: oLJ$X. exemptions or incentives
provided in the LGC cal} only affect those franchises
granted prior to ..tt:i~ effectivity of the law. Here,
petitioner's franchise was granted 2 months after the
effectivity of the said Jaw, it is thus not covered by
the ..said withdrawal, However, the "in lieu of all
taxes" clause applies only to national internal
revenue taxes and not to local taxes. Furthermore,
.the "in lieu oral/ taxes" clause in R.A. No. 7294
(known as SMART's legislative franchise) was
rendered'ineffective by the advent of the VAT Law
(Smart Communications, Inc. v. City of Davao, G.R.
No. 155491, September 16, 2008).
Aside from the national franchise tax, the franchisee
is still liable to pay the local franchise tax, unless it is
expressly and unequivocally exempted from the
payment thereof under its legislative franchise. The
"in lieu of all taxes" clause in a legislative franchise
should categorically state that the exemption applies
to both local and national taxes; otherwise, the
exemption claimed should be strictly construed
against the taxpayer and liberally in favor of the
taxing authority (Smart Communications, Inc. v. City
of Davao, G.R. No. 155491, September 16, 2008).
All realties which are actually, directly, and
exclusively used in the operation of its franchise are
'exempted' from any property tax (City Government
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San Beda University College of Law • RGCT Bar Operations Center ,,>;,·_,·_ '>< • ·: ·,. <

of Quezon City v. Bayan Telecommunications, Inc,, GUIDELINES FOR GRANTING TAX

GR. No. 162015, March 6, 2006). EXEMPTIONS, RELIEFS AND
This franchise tax is "in lieu of income tax and any
INCENTIVES
and all taxes, duties, fees, and charges of any kind, 1. Tax Exemptions and Reliefs:
nature, or description levied, established, or a. Tax exemptions should be conferred via a
collected by any authority whatsoever, local or tax exemption certificate;
national, on its franchise, rights, privileges, receipts, b, May be granted in cases of natural
revenues, and profits, and on properties used in calamities, civil disturbance, general failure
connection with its franchise, from which taxes, of crops, or 3dvcrsc economic conditions
duties, and.charges, the Grantee is hereby expressly such as substantial decrease in prices of
exempted" (National Grid Corporation of the agricultural or agri-based products;
Philippines v. Ofeliam Oliva, City Treasurer of Cebu, c, The grant shall be through an ordinance;
G.R. No. 213157, August 10, 2016). d. Any exemption or relief granted to a type or
kind of business shall apply to all
NOTE: In case of Real property Taxes, the property businesses similarly situated;
must be used in connection with its franchise in order e. 'fhe same may take effect only during the
to be exempt Properties "exclusive of this calendar year not exceeding 12 months as
franchise", or those' held by the corporation in a may be provided in the ordinance; and
capacity that is not related to the exercise of its f. In case of shared revenues, the relief or
franchise, shall be assessed with RPT (National Grid exemption shall only extend to the LGU
Corporation of the Philippines v. Ofeliam Oliva, City granting such (/RR ofLGC, Sec, 282 (b)(1)).
Treasurer of Cebu, GR. No. 213157, August 10,
2016). 2. Tax Incentives:
a. Shall be granted only to new investments in
DIFFERENCE BETWEEN 'SMART V. thetqcality and the ordinance shall prescribe
CITY OF DAVAO' AND 'NGCP V. OLIVA' ttie terms and conditions therefore;
b. The grant shall be for a definite period not
exceeding 1 calendar year;
c, The grant shall be through an ordinance
passed prior to the 1st day of January of any
"in lieu of all taxes" "in lieu of income tax year; and -
applies only to all other and apy and all taxes, , .. d, _Tax)oce,nti_ve granted to a type or kind of
internal revenue taxes local or national" bbsiriesf,shall apply to all businesses
and not to focal taxes simifarly situated (!RR of the LGC, Sec. 282
Franchise does not Franchise categorically (b)(Q)).
categorically grant an states that the franchise
exemption from Local tax shall be in lieu of all
Taxes taxes whether national
or local PRESCRIPTIVE PERIODS
REASON: The grantor REASON: The grantor FOR THE ASSESSMENT
of the Franchise is the of the Franchise, the
National Government It National Government, AND COLLECTION OF
could not be implied that categorically states that LOCALTAXES
'in lieu of all taxes', the franchise tax shall
includes those levied by be 'in lieu of all taxes,
local governments that national or local'
have no say in the grant PRESCRIPTIVE PERIODS FOR
of the franchise. ASSESSMENT:
(Smart Communications, Inc. v, City of Davao, G.R. 1, Local taxes, fees, or charges - 5 years from the
No. 155491, September 16, 2008; National Grid date they became due (LGC, Sec, 194 (a)).
Corporation of the Philippines v, Ofeliam Oliva, City 2. When there is fraud or intent to evade the
Treasurer of Cebu, G.R. No. 213157, August 10, payment of taxes, fees, or charges - 1O years
2016). from the discovery of the fraud or intent to evade
the payment (LGC, Sec. 194 (b)).
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LOCALTAXATION
Taxation Law
' '

PRESCRIPTIVE PERIOD OF
COLLECTION TAX REMEDIES OF THE
Local taxes, fees, or charges may be collected within LOCAL GOVERNMENT
5 years from the date of assessment by
administrative or judicial action. No such action shall UNITS
be instituted after the expiration of such period (LGC,
Sec. 194 (c)).

GROUNDS FOR THE SUSPENSION OF LOCAL GOVERNMENT'S LIEN

THE RUNNING OF THE PRESCRIPTIVE
PERIODS: (PRO)
1. The treasurer is legally .e_reventedfrom the
assessment or collection of the tax;
2. The taxpayer requests for a Reinvestigation and
executes a waiver, in writing, before the
expiration of the period within which to assess or
collect; and • of the delinquent local taxes, fees, and charges,
3. The taxpayer is Qut of the country or, otherwise,
cannot be located (LGC, Sec. 194 (d)).
Local taxes, fees, charges, and other revenues
constitute a lien, superior to all liens, charges, or
encumbrances in favor of any person, enforceable
by any appropriate administrative or judicial action
(LGC, Sec. 173).
How Local Government lien is extinguished
The lien may only be extinguished upon full payment
including related surcharges and interest (LGC, Sec.
173).

I I
OUTLINE OF REMEDIES
ADI\IIINISTRATIVE ACTION
By Administrative Action through Distraint of
Personal Property and by Levy upon Real
Property

1. Distraint of an,y_personal property belonging to

REMEDIES OF THE L~U ... the faxrc1y~r or slibject to the lien (LGC, SRc.
1. Local Government's Lien 175f • ••••.
2. Administrative action·· 1
a. Distraint At any time prior to the consummation of the
b. Levy sale, the taxpayer rf,ay pay the proper charges
3. Judicial Action (LGC,Sec: 175 {d)).
. ..
REMEDIES OF THE TAXPAYER lNhen personal/property considered sold to
1. Administrative LGq: Should the property distrained not be
a. Before Assessment d,isposed of. within one hundred twenty (120)
i. Question the Constituticin9 Iity qr, .. days, the___same shall be considered as sold to
Legality of Tax Ordinances'or Revenue the. LC3U'(LGC,Sec. 175 (e)).
Measures on Appeal
ii. Declaratory Relief Unlike the NIRC, the Local Tax Code does not
b. After Assessment contain any specific provision prohibiting courts
i. Protest from enjoining the collection of local taxes. Such
ii. Claim for Refund or Tax Credit statutory lapse or intent may have allowed
iii. Redemption preliminary injunction where local taxes are
c. Compromise involved, but it cannot negate the procedural
2. Judicial rules and requirements under Rule 58 of the
a. Court Action Rules of Courts (Valley Trading Co. v. CF/ of
b. Declaratory Relief lsabe/a, G.R. No. L-49529, March 31, 1989).
c. Injunction
2. Levy of any real property belonging to the
delinquent taxpayer (LGC, Secs. 176-180).

At any time before the date fixed for the sale, the
t.=ixpayermay stay the proceedings by. paying
the taxes, fees, charges, penalties, and interests
(LGC. Sec. 118).
 • ' '; I ' '

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AID
San Seda University College of Law - RGCT Bar Operations C!-)nter __
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The LGU may purchase the real property JURISDICTION
advertised for sale when:
a. There is no bidder; or
b. The highest bid is for an amount insufficient
to pay the taxes, fees, charges, surcharges,
interests, or penalties (LGC, Sec. 181).

Further Distraint and Levy: The remedies of

distraint and levy may be repeated if necessary
until the full amount due, including all expenses,
is collected (LGC, Sec. 184). Original If principal amount of taxes, fees
exclusive of charges and penalties
Properties Exempt from Distraint and Levy exceeds !"300, 000 or P400, 000 in
1. Tools and implements necessarily used by the Metro Manila.
delinquent taxpayer in his trade or employment;
2. One (1) horse, cow, carabao, or other beast of Provided: The amount is less than
burden, such as the delinquent taxpayer may P1 ,000,000.
select, and necessarily used by him in his
ordinary occupation; Appellate The RTC shall exercise appellate
3. His necessary clothing and that of all his family; jurisdiction over all cases decided by
4. Household furniture and utensils for the MeTCs, MTCs, and MCTCs in their
housekeeping and used for that purpose by the respective territorial jurisdiction
delinquent taxpayer, such as he may select, of a
value not exceeding r>10, 000;
5. Provisions, including crops, actually provided for
individual or family use sufficient for 4 months; If principal amount of taxes, fees
6. The professional libraries of doctors, engineers, • · ;exclusive of charges and penalties is
lawyers, and judges; ?:1,000,000 or above

NOTE: Professional libraries and equipment of Appellate Qver appeals from the judgments,
professionals are exempt from execution not resolutions or orders of the RTCs in tax
exceeding P300, 000 (RULES OF COURT, Rule collect.ion cases originally decided by
39, Sec.13 (g)). themi~ ttleir respective jurisdiction

7. One fishing boat and net, not exceeding the total

value of r>10, 000, by the lawful use of which a
Decisions or resolutions over
fisherman earns his livelihood; and
petitions for review of the CTA
8. Any material or article forming part of a house
Division in the exercise of its
or improvement of any real property.(LGC, Sec.
exclusive appellate jurisdiction
185).
over local taxes decided by the
RTC in the exercise of their
JUDICIAL ACTION original jurisdiction; and
The LGU concerned may enforce the. collection of
delinquent taxes, fees, charges, or other revenues 2. Over petitions for review of the·
by civil action in any court of competent jurisdiction judgments, resolutions, or
within 5 years from the date taxes, fees, or charges orders of the RTCs in the
become due (LGC, Secs. 183 and 194). exercise of their appelfate
jurisdiction over tax collection
The local government may file an ordinary suit for cases originally decided by the
the collection of sum of money before the MTG, MeTCs, MTCs, and MCTCs, in
RTC, or CTA Division depending upon the their respective territorial
jurisdictional amount (V DOMONDON, Taxation, jurisdiction.
supra at 225).
(B.P. Big. 129, Secs. 19 (8), 22, 33(1), as amended
by R.A 7691, Sec. 5; R.A. No. 1125, Sec. 7 (b)(1)
and Sec. 7 (b)(2)(c), as amended by R.A. No. 9282,
Sec. 7; REVISED RULES OF THE COURT OF TAX
APPEALS [hereinafter, RRCTAJ, RULE 4, Sec
2(a)(2), 2(b) and 3(3))
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' LOCALTAXATION
' '
REMEDIES NOT EXCLUSIVE
Either of the remedies through administrative action
or judicial action or all may· be pursued
concurrently or simultaneously at the discretion of
the local government unit concerned (LGC, Sec.
174).
TAX REMEDIES OF THE
TAXPAYER
ADMINISTRATIVE
1. Before Assessment
a. Question the Constitutionality or
Legality of Tax Ordinances or
Revenue Measures on Appeal
i. Within thirty (30) days from effectivity
thereof to the Secretary of Justice;
ii. The decision by the $ecreta'ry of Justice
must be rendered within sixty (60) <;lays
from the date of the receipt of the
appeal; and •&
iii. Taxpayer must file ~n-appropriate action
with a court of competent jurisdiction
within thirty (30) days frnm:
1.) The receipt ofthe decision of the
Secretary of Justice; or
2.) The lapse of the 60-day period to
decide (LGG, Sec, 187). • • In cases where the validity or legality of a tax
NOTE: Court of ~bmpeterit jurisdictlon
refers to the RTC when case is resolved to
determine any question·, . construction, or
validity of a tax law and fcir the declaration
of the taxpayer's liability thereunder (VITUG
& ACOSTA, Tax Law and Jurisprudence
(2014), p. 490; RULES OF COURT, Rule
63, Sec. 1).
Sec. 195 as a taxpayer's remedy is
separate, distinct, and independent from
Sec. 187. A taxpayer's failure to avail of the
remedy under Sec. 187 (appeal to the
Secretary of Justice), does not necessarily
bar recourse to Sec. 195 (appeal with the
court of competent jurisdiction) when the
same is grounded on the illegality of the tax
measure complained of (Michigan Holdings,
Inc. v. City Treasurer of Makati, CTA EB No.
1093, April 13, 2016).
Sec. 187 authorizes the Secretary of Justice
to review only the constitutionality or legality
of the tax ordinance and, if warranted, to
revoke it on either or both of these grounds
Taxation Law
(Drilon v. Mayor Lim. G. R. No. 112497.
August 4, 1994). He cannot replace it with
his own version of what the ordinance
should be, nor can he declare such
ordinance as unjust, excessive, oppressive,
or confiscatory (INGLES, Reviewer, supra
at 537).
When disputing an ordinance, there is no
need for a written protest to be made. The
written protest is only needed when
protesting against an assessment (Id.).
A taxpayer may file a complaint assailing the
validity of the ordinance and praying for a
refund of its perceived overpayments
without first filing a protest to the payment of
taxes due under the ordinance (Jardine
Davies Insurance Brokers v. Aliposa. G.R.
No. 118900, February 27, 2003).
Such appeal shall not have the effect of
suspending the effectivity of the ordinance
and the accrual and payment of the tax
(LGC; Sec. 187).
Whendisputing an ordinance, appeal to the
DOJ is mandatory. If no appeal to the DOJ
is made, the RTC will dismiss the case
(Jardine Davies Insurance Brokers v.
Aliposa, GR No. 118900, February 27.
2003).
ordinance is questioned, the rule that the tax
must first be paid before a protest is lodged
does not apply. Taxpayers must first receive
an assessment before this rule is triggered.
Prior payment under protest is not required
When the taxpayer is questioning the very
•authority of the assessor to impose taxes
(Aala v. Uy, G.R. No. 202781, January 10,
2017).
Illustration (2003 Bar Question):
X, a taxpayer who believes that an
ordinance passed by the City Council of
Pasay is unconstitutional for being
discriminatory against him, wants to know
from you, his tax lawyer, whether or not he
can file an appeal. In the affirmative, he asks
you where such appeal should be made: the
Secretary of Finance, the Secretary of
Justice, the Court of Tax Appeals, or the
regular courts. What would your advice be
to your client X?
ANS: The appeal should be made with the
Secretary of Justice. Any question on the
constitutionality or legality of a tax ordinance
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may be raised on appeal with the Secretary PROCEDURE:

of Justice within thirty (30) days from the
effectivity thereof (Sec. 187, LGC). Protest (within 60 days from receipt of notice of
assessment)
Illustration (2014 Bar Question)
The Sangguniang Panglungsod of Baguio
enacted a tax ordinance imposing tax on all Local Treasurer (Decision: 60 days from the filing
tourists and travellers going the Baguio City of the protest)
to maintain the cleanliness and for the
beautification of the city. Claiming the tax to
be unjust an association of travel agencies
filed a petition for declaratory relief before If the local treasurer
the RTC. The RTC issued a TRO enjoining finds the protest If not meritorious. in
the city a from imposing the local tax. meritorious in whole or whole or in part, he
Aggrieved, Baguio City filed a petition for in part, he shall issue a shall deny the protest,
certiorari before the SC seeking to set aside notice canceling, wholly wholly or partly, with
the TRO on the ground that collection of or partly, the notice to the taxpayer.
taxes cannot be enjoined. Will the petition assessment.
prosper?

ANS: Yes. The RTC has no jurisdiction to Taxpayer shall have 30

entertain any action concerning the validity
of a tax ordinance. Rather, it is the Secretary
of Justice who has jurisdiction on any
question on the legality of the tax ordinan¢e,
but said appeal shall not suspend the
effectivity of the ordinance and the accrual
and payment of the tax levied (LGC, Sec.
187).
b. Declaratory Relief whenever
Applicable. . and unappealable.
When the taxing law or ordinance is
unconstitutional or illegal, a peUtion for .
declaratory relief may be filed withthe RTC
to prevent an impending violation of the
rights of the taxpayer (RULES <;)FCOURT,
Rule 63).
2. After Assessment:
a. Protest
If there is a protest filed: A written protest
must be filed within sixty (60) days from
receipt of notice of assessment (LGC, Sec.
195). Payment under protest is ··not
necessary. This is because the law on local
government taxation, save in the case of
real property tax, does not expressly require ·
"payment under protest" as a . procedure
prior to· instituting the appropriate
proceeding in court (City Treasurer of
Manila v. Philippine Beverage Partners,
Inc., G.R. No. 233556, September 11,
2019).
days from: receipt of
the denial of the
protest or from the
lapse of 60 cjay period
to decide within which
to appeal with the
court of competent
jurisdiction; otherwise,
the assessment
becomes conclusive
If no protest filed: the assessment shall
become final and executory (LGC, Sec.
Clearly, with the passage of RA No. 9282,
the authority to exercise either original or
appellate jurisdiction over local tax cases
depended on the amount of the claim. In
cases where the RTC exercises appellate
jurisdiction, it necessarily follows that there
must be a court capable of exercising
original jurisdiction - otherwise there would
be no appeal over which the RTC would
exercise appellate jurisdiction. The Court
cannot consider the City Treasurer as the
entity that exercises original jurisdiction not
only because it is not a "court" within the
context of Batas Pambansa (B.P.) Blg. 129,
but also because, as explained above, "B.P.
Big. 129 expressly delineates the appellate
jurisdiction of the RTC, confining as it does
said appellate jurisdiction to cases decided
by Metropolitan, Municipal, and Municipal
Circuit Trial Courts" (China Banking
Corporation v. City Treasurer, G.R. No.
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204117, July 1, 2015).
b. Claim for Refund or Tax Credit
In order to be entitled to a refund or credit of
local taxes, the following procedural
requirements must concur:
i. Must file a written claim for refund or
credit with the local treasurer; and
ii. The case or proceeding for refund has
to be filed within 2 years from the date
of the payment of the tax, fee, or charge
or from the date the taxpayer is entitled
to a refund or credit (LGC, Sec. 196).
In Local Taxation, supervening causes are
allowed as reckoning points for prescriptive
period purposes. In national taxes, they are
not considered (INGLES, Reviewer, supra
at541).
Summary of the Remedies of the Taxpayer
Under Sections 195 And 196 of the Local
Government Code
a. Where no payment is made
The taxpayer's procedural remedy is
governed strictly by Section 195. That is, in
case of whole or partial denial of the protest,
or inaction by the local treasurer, the
taxpayer's only recourse is to appeal the
assessment with the court of competent
jurisdiction. The appeal before the court
does not seek a refund but only questions
the validity or correctness of the assessment·
(City of Manila v. Cosmos Bottling
Corporation, G.R. No. 196681, June 27,
2018, cited in City Treasurer of Manila v.
Philippine Beverage Partners, Inc., GR. No.
233556, September 11, 2019).
b. Where payment was made
The taxpayer may thereafter maintain an
action in court questioning the validity and
· correctness of the assessment (LGC,
Section 195) and at the same time seeking
a refund ofthe taxes (Id.).
REASON: It would be illogical for the
taxpayer to only seek a reversal of the
assessment without praying for the refund of
taxes. Once the assessment is set aside by
the court, it follows as a matter of course that
all taxes paid under the erroneous or invalid
assessment are refunded to the taxpayer
(Id.).
The same implication should ensue even if
the taxpayer were to style his suit in court as
an action for refund or recovery of
erroneously paid or illegally collected tax as
pllrsued under Section 196 of the LGC. In
!
LOCALTAXATION
Taxation Law
such a suit for refund, the taxpayer cannot
successfully prosecute his theory of
erroneous payment or illegal collection of
taxes without necessarily assailing the
validity or correctness of the assessment he
had administratively protested (Id.).
NOTES:
a. It must be understood that the suit for refund
is conditioned on the prior filing of a written
claim for refund or credit with the local
treasurer. In this instance, what may be
considered as the administrative claim for
refund is the letter-protest submitted to the
treasurer. Where the taxpayer had paid the
assessment, it can be expected that in the
same letter-protest, he would also pray that
the taxes paid should be refunded to him
(Id.).
b. There is really no particular form or style
necessary for the protest of an assessment
or claim of refund of taxes. What is material
is the substance of the letter submitted to
the local treasurer (Id.).
Judicial Act.ion for Refund; Instituted
Within 30 Days from the Denial of or
Inaction on y!Je Letter Protest
The institution of the judicial action for
refun<;l must be made within thirty (30)
days from the denial of or inaction on
the letter-protest or claim, not any time
later, even if within two (2) years from the
date of payment (LGC; Sec. 196).
Notice that the filing of such judicial claim
for refund after questioning the
assessment is within the two-year
prescriptive period specified. in Section
196. Take note that the filing date of such
judicial action necessarily falls on the
beginnirig portion of the two-year period
from the date of payment. Even though the
suit is seemingly grounded on Section
196, the taxpayer could not avail of the
full extent of the two-year period within
which to initiate the action in court (City
of Manila v. Cosmos Bottling Corporation,
G.R. No. 196681, cited in Treasurer of
Manila v. Philippine Beverage Partners,
Inc., G.R. No. 233556, September 11,
2019).
REASON: This is because an assessment
was made, and if not appealed in court
within thirty (30) days from decision or
inaction on the protest, it becomes
conclusive and unappealable. Even if
the action in court is one of claim •for
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refund, the taxpayer cannot escape
assailing the invalidity or incorrectness of
the assessment because the very
foundation of his theory is that the taxes
were paid erroneously or otherwise
collected from him illegally. Perforce, the
subsequent judicial action, after the local
treasurer's decision or inaction, must be
initiated within thirty (30) days later. It
cannot be anytime thereafter because the
lapse of 30 days from decision or inaction
results in the assessment becoming
conclusive and unappealable (Id.).
c. Right of Redemption
- 1 year from the date of sale (LGC, Sec.
179, par. 1).
The owner shall not be deprived of
possession and shall be entitled to
rentals/income thereof until the expiration of
the time allowed for its redemption (LGC,
Sec. 179).
3. Compromise
The Sanggunian concerned may authorize the
city or municipal treasurer to settle an offense
not involving the commission of fraud before a
case therefor is filed in court, upon tl'le payment
of a compromise penalty of not less. that ~200
. (LGC, Sec. 148 (b} in relation to Sec. 151).
When given judicial approval, a compromise
agreement becomes more than .,a, contract.
binding upon the parties. Having been
sanctiqned by the court, it is 'entered as a
determination of a controversy and has the force
and effect of a judgment. It is irnmediatflly
executory and not appealable, except for vices
of consent or forgery. The nonfulfillment of its
terms and conditions justifies the issuance of a
writ of execution; in such an instance, execution
becomes a ministerial duty of the court (Metro
Manila Shopping Mecca Corp. v. Liberty Toledo
(Resolution}, G.R. No. 190818, November 10,
2014).
JUDICIAL REMEDIES
1. Court Action; when available
a. Within thirty (30) days after receipt of
decision or lapse of sixty (60) days in case
of Secretary of Justice's inaction (LGC, Sec.
187) - before the RTC;
b. Within thirty (30) days from receipt when
protest of assessment is denied or lapse of
sixty (60) days in case of local treasurer's
inaction (LGC, Sec. 195) - before the MTC,
RTC, or CTA Division depending on amount
of tax; and
c. If no action is taken by the treasurer in
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refund cases and the 2-year period is about
to lapse (LGC, Sec. 196) - before MTC,
RTC, or CTA Division depending on the
amount of tax.
Petitioner cannot seek the issuance of a writ
of prohibition to enjoin respondents from
collecting the assessments which have
become final and unappealable on account
of petitioner's failure to appeal the_same with
the RTC within thirty (30) days from the
denial of the protest (Benguet Electric
Cooperative v. Municipality of La Trinidad,
Benguet, CTA EB No. 1091, May 6, 2016).
2. Action for Declaratory Relief
Please see the further discussion in the
Remedial Law Memory Aid (Special Civil
Actions).
3. Injunction
The LGC does not specifically prohibit an
injunction enjoining the collection of taxes
(Angeles City v. Angeles City Corp., G.R. No.
166134, June 29, 2010).
fmusft5~ emphasized that although there is no
express .··prohibition in the LGC,. injunctions
enjoining.- the collection of local taxes are
frowned • upon. Courts, therefore, should
exercise ·•exfteme caution in issuing such
injur1ction~ (Angeles City v. Angeles Elec(ric
GoJJ:.>9.(,1:l_tiP:fl,'.8:if:
No. 166134, June 29, 2010).
With regard to national taxes, the NIRC explicitly
prohibits courts from enjoining the collection of
'· taxes, with the sole exception of the CTA
''(1NGLES, Reviewer, supra at 539).
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LOCAL TAXATION
. . Taxation Law

I TABLE OF TAXING POW~~F LOCAL GOVERNMENT I

PROVINCES Sections 134 -141 of the LGC

any consideration or Comprehensive Agrarian

tr;rnsferring ownership or fair market Reform Progrnm. •
title of real property. valu~ in case
monetary
consideration is
not substantial.

Business of printing and Gross annual Not more Printing of DepEd

publication of books, cards, receipts for the than 50% of (CHED / TESDA)
posters, leaflets, handbills, preceding year. 1% prescribed texts or
certificates, • receipts, -------+------ references.
pamphlets, and· others •of Capital In case of a
similar nature. Investment - In newly
case of a newly started
started business,
business. 1/20 of 1%

Enjoyment ,of a franchise. Gross annual Not more When exemption is

receipts for the than 50%.of expressly granted in the
preceding year. 1% law granting the
1---------1----...;.._-'-l franchise (National Grid
Capital In case of a Corporation v. Ofeliam
Investment - In newly Oliva, G.R. No. 213157,
case of a newly started August 10, 2016).
started business,
business: 1/20 of 1%

of ordinary Fair market Not more Province has no

stones, sand, gravel, earth, value in the· than 10% authority to impose taxes
and other quarry resources locality per on quarry extracted from
as defined under the NJRC cubic meter of PRIVATE LAND. That
from public lands or from the subject. would already be in the
the beds of seas, lakes, nature of an Excise Tax
rivers, streams, creeks, and NOTE: and is, thus, prohibited
other public waters within its Distribution of by the Common
territorial jurisdiction. proceeds of the Limitations of Local
tax: Taxation (V
Province - 30% DOMONDON, Taxation,
Municipality supra at 103).
where
resources are
extracted - 30%
Barangay where
resources are
extracted - 40%

practice of Reasonable Not to Professionals

requiring classification by exceed exctusively employed in
the Sanggunian 1'>300 the government
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licensure

lease, or Gross receipts Not more Operas, concerts,

of theaters, from admission than 10% of dramas, recitals,
cinemas, concert halls, fees. gross painting, and art
circuses, boxing stadia, and receipts exhibitions, flower
other places of amusement. from shows, musical
admission programs, literary, and
fees oratorical presentations
except pop, rock, or
similar concerts.

by manufacturer, Every truck, Not No Exception.

producers, wholesalers, van, or vehicle. exceeding
dealers, retailers, of truck, P500
van, vehicle in the delivery
or distribution of distilled
spirits, fermented liquors,
softdrinks, cigar, and
cigarettes, and other
products, determined by the
Sangguniang
Panlalawigan, to sale
outlets or consumers,
directly or

MUNICIPALITIES SECTIONS 142 - 150 OF THE LGC

Manufacturers, Gross sales or receipts

assemblers, repackers, for the prec;eding.
processors, brewers, calendar year. • ••
distillers, rectifiers, and
compounders of liquors, If the gross sales or
distilled spirits, and receipts amount to
wines or manufacturers P6, 500, 000 or
of any article of more for the
commerce of whatever preceding calendar
kind or nature. year, a percentage
tax not exceeding
37.5% of 1% of
gross receipts is
imposed, instead.

Wholesalers, Gross annual receipts Graduated annual

Qistributors, or Qealers for the preceding fixed tax.
in any article of calendar year. ,________ __,
commerce of whatever If the gross sales or
kind or nature. receipts amount to
f")2, 000, 000 or
more for the
preceding calendar
year, a percentage
tax not exceeding
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'' , . LOCAL TAXATION

42~ • .
Taxation Law

50% of 1% of gross
receipts is imposed,
instead.

_!;xporters and Gross sales or receipts Not exceeding one-

manufacturers, millers, for the preceding half of the rates for
producers, wholesalers, calendar year. sales of articles
distributors, dealers, or mentioned in
retailers of essential paragraphs (a), (b),
commodities. and (d) of Sec. 143
of LGC.

Gross sales or receipts If the gross sales or The barangay has

for the preceding receipts for the exclusive power to
calendar year. preceding calendar tax retailers if the
year is ~400, 000 or gross receipts do not
less - 2%; and exceed: •
.If the gross sales or ~50, 000 or less in
receipts for the cities;
preceding calendar ~30, 000 or less in
year is more than municipalities.
?!'400, 000 ~.1%

fontractors and other Gioss receipts for the Gradl)ated annual Transportation
independent . preceding calendar year. fixed tax. Contractors.
contractors. •
If the gros·s sales or
receipts amou11t to
i-F:2,•.001,}, 000\ or
.. more J for ; the
• •: •preceding cal~ndar
•• year, a perce,ntage
tax.·.not exceeding
50°/oof 1% of gross
...•receipts is imposed,
;instea.d:

and other •Gross· receip~. tor the Rate not exceeding All other income and
preceding calendar year 50% of 1%. receipts of banks and
derived from interests, financial institutions
commIssIons, and not otherwise
discounts from ·lending enumerated (/RR of
activities, income from LGC, Art. 232 (f)).
financial leasing,
dividends, rentals on
property, and profit from
exchange or sale of
property, insurance
premium.

P,eddlers engaged in the Per Peddler. Rate not exceeding

sale of any merchandise f)50.
or article of commerce.

On any business Not The Sanggunian Any b.usiness

otherwise specified concerned may engaged irt the
above. ' impose a schedule production,
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of graduated tax manufacture,

Incidental rates, but in no case refining, distribution,
Activities relative to the to exceed the rates or sale of oil,
are not prescribed in Sec. gasoline, and other
143 of LGC. petroleum products
(/RR of LGC, Art ?3?
(h)).

Municipalities may impose and collect reasonable fees and charges on business and occupation
and, except in case of professional tax [which only provinces & cities may levy], on the practice
of any profession or calling commensurate with the cost of regulation, inspection, and licensing
before any person may engage in such business, occupation, practice of such profession, or
calling (LGC, Sec. 147).

Cities may levy the taxes, fees, and charges which .the province or the municipality may impose.

The rates of taxes that the city may levy may exceed the'cy\aximum rates allowed for the province or municipality
by not more than fifty percent (50%) exceptthe rates ofprofessional anc;lamusement taxes.
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Barangay Taxes on ~tores or Retailers -with fixed With the gross s~les or receipts for the preceding
business establishments. calenda(yeat of PSO, 000 or less (for barangays in
the citj~?},~ndP30, 000 or less (for barangay in
municipalltie$Jt~fa;;rate not exceeding 1% of such
gross sales bf receipts.
§.ervice fees or charges ;SY,c;hreasonatile fees or charges for services
J~1Jt;l§r:1?d)nconnection with the regulation or the
usebf' barangay - owned properties or service
facilities such as palay, copra, or tobacco dryers.
~arangay clearance Such reasonable fee as the Sangguniang
Barangay may impose.
Qther Fees and Charges The barangay may levy reasonable fees and
1. Commercial breeding of fighting cocks, cockfights, charges.
and cockpits;
2. Places of recreation which charge admission fees;
3. Billboards, signboards, neon signs, and outdoor
advertisements
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424 · ,• LOCAL TAXATION

Taxation Law

Upon-failure of the person owing any local tax, fee, or charge to pay the same at the time required to pay, the
LT or his deputy may, upon written noti_ce,seize or confiscate any personal property belonging to that person.

a. The local treasurer or his deputy may, upon written notice, seize or confiscate any personal property
belonging to that person or any personal property subject to the lien in sufficient quantity to satisfy the tax.
b. The local treasurer or his deputy shall issue a duly authenticated certificate (serves as a warrant) showing
the fact of delinquency and the amounts of the tax, fee, or charge and penalty due.

The officer executing the distraint shall make, or caus~ t9 be made, an account of the good, chattels, or effects
distrained, a copy of which signed by himself, stat'einentof sum demanded, and a note of time and place of the
sale shall be left either with: • •
1. The owner;
2. Person from whose possession the goods, Chattels, or effects are taken; or
3. At the place of business of that person and with someone of sui~ble age and discretion
.ij

The officer shall cause a notification to be.exhibited in not less thanthree (3~public'and conspicuous places in
the territory of the LGU where the distrainfis made, specifying:
1. The time and place of 'sale; and •
2. The articles distrained ..

NOTE: The time of sale shal'i not be less than twenty (20) days after th~ notice to the owner and possessor of
the property and the publication or posting of the notice: One place f9rthe posting' of the notice shall be at the
office of the chief executive of the LGU in which the property is dis,tralned.

At any time prior to the consummation of the sale, the taxpayer may pay the proper charges to the officer
conducting the sale. However, should the property distraint be not disposed of within one hundred twenty
(120) days from the date of distraint, the same shall be considered as sold to the LGU concerned.

J.i

Within five (5) days after the sale, the local treasurer shall make a report of the proceedings in writing to the
local chief executive concerned.

The proceeds of the sale shall be applied to satisfy the tax, including the surcharges, interest, and other'
penalties incident to delinquency, and the expenses of.the distraint and sale. The balance over and above what
is required to pay the entire claim shall be returned to the owner of the property sold.
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PROCEDURE FOR LEVY OF REAL PROPERTY LGC, SEC. 176, 178

Notice of Delinquency (LGC, Sec. 175 (a-f). See discussion above on notice of delinquency for distraint.
Levy on Real Property (LGC, Sec. 176). After the expiration of the time required to pay the delinquent tax,
fee, or charge, real property may be levied on before, simultaneously, or c1flerthe distraint of personal
property

The treasurer shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount
of the tax, fee, or charge, and penalty due from him. Said certificate shall operate with the force of a legal
execution throughout the Philippines.

Levy shall be effected by writing upon said certificate the description of the property upon which levy is made.

Written notice shall be mailed and served upon: .

1. the assessor and the Registrar of Dood~ who shall annotate the levy on the tax
declaration and certificate of title of the property; and,
2. delinquent taxpayer or, if he is absent from theH1iHppjnes, to his agent or the manager of the business
in respect to which the liability arose, or if there ~pone, to the occupant of the property in question .
• • 1

Adverti~ement of sale through posting and publication of'notice -wit~in 30 days after the levy and shall cover
a period of at least thirty (30) days'. It shall be effected t:;y: • •,
1. a. posting a notice at the main entrance of the munidp~I buildif19!Pr.cityf1cjlj~nd in a public and conspicuous
place in the barangay where the real property is lo~l~d; and ·!Ti, : ..
2. by publication once a week for three {3) week 9 in a'.newspaper ofg~rierai circulation in the province, city,
or municipality where the property is located. ••

NOTE: The advertisement shall contain the amount of taxe~',·te~s,'or charges, and penalties due thereon, and
the time and place of sale, the name ofthe taxpayer against whom the taxes, fees, or charges are levied, and
a short description of the property to be sold.

At any time before the date fixed for the sale, the taxpayer may stay the proceedings by paying the taxes, fees,
charges, penalties, and interests. If he fails to do so, the sale shall proceed and shall be held either at the main
entrance of the provincial, city, or municipal building, on the property to be sold, or at any other place as
determined by the local treasurer conducting the sale and specified in the notice of sale.

1J

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 LOCAL TAXATION
Taxation Law

Any excess in the proceeds of the sale over the claim and cost of sales shall be turned over to the owner of the
property.

j)

In case the taxpayer fails to redeem the property within 1 year from the date of sale, the local treasurnr shall
P.xecute a deed conveying to tho purchnscr so much of thP. rrnrl:'rty as 118::; l11:H:1nsold, free from licnG of any
taxes, fees, charges, related surcharge$, interests, and penalties (LGC, Sec. 176).
 , .t.fp_l- ' -
1
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,fl~-, • • 427
San Bada Urnversity College of Law - RGCT Bor Operations Center ::!xx:,,-/_:_:-

TAXPAYER'S REMEDIES FROM ASSESSMENT OF

LOCAL TAXES OTHER THAN REAL PROPERTY
TAXES

Local Treasurer (LT) assesses local taxes within

five (5) years from date they become due or ten
(10) years from discovery of fraud or intent to
evade payment (LGC, Sec. 194 (a) and (b)).

LT issues notice of assessment (LGC, Sec. 195)

Taxpayer files written protest with the local

treasurer within 60 days from receipt of
assessment (LGC, Sec. 195).

f,·
IF protest made within ·:prescribed period, LT
decides within 60 days f~~m date of filing (LGC,
Sec. 195). ..
.,
"'?·

• .·

If LT does not decide within 60 days, taxpayer

..

appeals to court of competent jurisdiction (regular

courts) within 30 days trbm lapse of 60 days. If
LT. -issues_ notice cancefHl'lg partially/wholly the
assessment or if LT does.riot grant ptotE;s,1,, ~.arn~
procedure a~ lapse .of 60.,-c!ayperiodttGc).:sec.
195). • c -·-•
1
··•

Appeal to,CTA division via Rull'l'42'ofthe Rules of

Court if the RTC has original jurisdiction (RRCTA,
Rule B, Sec: 4 (a)).

If the CTA Division decides against taxpayer. file a

Motion for Reconsideration within 15 days with the
same division (RRCTA, Rule 8, Sec. 3 (b)).

Appeal to CTA en bane via Rule 43 of the Rules of

Court, if the decision is from an RTC exercising
appellate jurisdiction (RRCTA, Rule 8, Sec. 4 (c)).

!
Appeal to SC via Rule 45 petition for review
(RRCTA, Rule 16, Sec. 1).
 JO • , ::.. "'.. '

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i~ 42~ 0
•• • • LOCAL TAXATION
' •.
Taxation Law

PROCEDURE FOR DISTRAINT AND LEVY FOR '"fHE

PURPOSE OF SATISFYING LOCAL TAXES

Tax constitutes a lien superior to all liens and may

only be extinguished upon payment of the tax and
the related charges (LGC, Sec. 173).

Time for payment of local taxes

expires .

.........
Local Treasurer (LT) shall, upon written notice, seize
sufficient personal property. The LT or his deputy shall Real property may be levied on
issue a certificate showing the fact of delinquency"and before, simultaneously, or after
the amounts of the tax, fee, or charge and penalty due. distraint of personal property (LGC,
Such certificate shall serve as sufficient warrant for the Sec. 176).

I
distraint of personal property ([GG, Se_c.175 (a)).·
.

The officer executing; the distraint_ shall make an r NOTE: See Annex of RPT: The
accounting of the distraihed goods (LGC, Sec: 175). procedure for levying real properties
to satisfy. local taxes is the same as
: .· levy procedure ..for satisfying real
property taxes (LGC, Secs. 258-266)
Officer posts notice iri not less than 3 public arid
conspicuous places in, the L~U where the property is
Except: Publicalion is once a week
. distrained. The time of saleshall not be less than 20
for three weeks for local taxes (LGC,
days after notice to the: owner 9r possessor, ancl the
Sec. 178) and once a week for two
posting or publication of notice (LGC, Sec. 175 (c)). •
weeks for real property taxes.
Before the sale, goods or effects distrained shall be
resorted to the owner if all charges are paid (LGC, Sec.
175 (d)). • •

At the time and place fixed in the notice, the officer

conducting the sale shall sell the goods or effects so
distrained at public auction to the highest bidder for
cash. Within five days, the LT shall report the sale to
the LGU Chief executive. Excess of proceeds shall be
returned to the owner of the property sold (LGC, Sec.
175 (e)).

If property distrained is not disposed within 120 days,

it shall be considered sold to the LGU for the amount
of the assessment made by the Committee on
Appraisal (and to the extent of the same amount); the
tax delinquencies shall be cancelled (LGC, Sec. 175
(e)).

If proceeds of sale are insufficient, other property may

be distrained until full amount due, including all
expenses, is collected (LGC, Sec. 175 (f)).