Part Ii (Tax Administration and Remedies Under Nirc - Remedial Law)

PART II (TAX ADMINISTRATION AND REMEDIES UNDER NIRC – REMEDIAL LAW)
REFUNDS OR TAX CREDITS OF INPUT TAX

A) ZERO – RATED OR EFFECTIVLY ZERO – RATED SALES
Any VAT – REGISTERED PERSON, whose sales are zero-rated or effectively zero-rated may,
within 2 years after the close of the taxable quarter when the sales were made,
apply for the issuance of a TAX CREDIT CERTIFICATE or REFUND OF CREDITABLE INPUT TAX due
or paid attributable to such sales, except transitional input tax,
to the extent that such input tax has NOT been applied against output tax.
PROVIDED:
1) That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108 (B)(1)
and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP).
2) That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or
exempt sale of goods of properties or services, and the amount of creditable input tax due or paid
CANNOT be directly and entirely attributed to any one of the transactions, it shall be allocated
proportionately on the basis of the volume of sales.
3) That for a person making sales that are zero-rated under Section 108(B) (6), the input taxes shall be
allocated ratably between his zero-rated and non-zero-rated sales. (SECTION 112 (A))
PERIOD WITHIN WHICH REFUND OR TAX CREDIT OF INPUT TAXES SHALL BE MADE
In proper cases, the COMMISSIONER OF INTERNAL REVENUE shall grant a refund for creditable input
taxes within 90 days from the date of submission of the official receipts or invoices and other documents in
support of the application filed in accordance with Subsections (A) and (B) hereof:
1) ZERO – RATED OR EFFECTIVLY ZERO – RATED SALES
2) CANCELLATION OF VAT REGISTRATION
PROVIDED:
That should the COMMISSIONER OF INTERNAL REVENUE find that the grant of refund is NOT proper,
the COMMISSIONER OF INTERNAL REVENUE must state in writing the legal and factual basis for the
denial.
FULL OR PARTIAL DENIAL OF THE CLAIM FOR TAX REFUND

In case of full or partial denial of the claim for tax refund,
the taxpayer affected may,
within 30 days from the receipt of the decision denying the claim,
appeal the decision with the COURT OF TAX APPEALS.
PROVIDED:
That failure on the part of any official, agent, or employee of the BIR to act on the application within the 90
period shall be punishable under Section 269 of this Code. (as amended by RA No 10963) (SECTION 112 (C))
REFUND OR TAX CREDIT OF EXCESS INPUT TAX

claims for refund or tax credit of excess input tax are governed NOT by Section 229, but by Section 112 of the
Tax Code. (G.R. No. 205282)
REVIEW BY APPEAL
The COURT OF TAX APPEALS shall exercise EXCLUSIVE APPELLATE JURISDICTION
to REVIEW BY APPEAL Inaction by the COMMISSIONER OF INTERNAL REVENUE
in cases involving refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, in
which case the inaction shall be deemed a denial. (R.A. NO. 9282, SECTION 7 (2))
PERIOD WITHIN WHICH REFUND OR TAX CREDIT OF INPUT TAXES SHALL BE MADE
By: Caffeinated Wisdom

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In proper cases, the COMMISSIONER OF INTERNAL REVENUE shall grant a refund for creditable input
taxes within 90 days from the date of submission of the official receipts or invoices and other documents in
support of the application filed in accordance with Subsections (A) and (B) hereof:
1) ZERO – RATED OR EFFECTIVLY ZERO – RATED SALES
2) CANCELLATION OF VAT REGISTRATION
PROVIDED:
That should the COMMISSIONER OF INTERNAL REVENUE
find that the grant of refund is NOT proper,
the COMMISSIONER OF INTERNAL REVENUE
must state in writing the legal and factual basis for the denial. (as amended by RA No 10963) (SECTION 112
(C))
FULL OR PARTIAL DENIAL OF THE CLAIM FOR TAX REFUND

In case of full or partial denial of the claim for tax refund,
the taxpayer affected may,
within 30 days from the receipt of the decision denying the claim,
appeal the decision with the COURT OF TAX APPEALS.
PROVIDED:
That failure on the part of any official, agent, or employee of the BIR to act on the application within the 90
period shall be punishable under Section 269 of this Code. (as amended by RA No 10963) (SECTION 112 (C))
RATIONALE:
NATURE OF THE 90 + 30 DAYS PERIOD
GENERAL RULE:
There is NO dispute that the 120 90-day period is mandatory and jurisdictional, and
that the COURT OF TAX APPEALS does NOT acquire jurisdiction over a judicial claim
that is filed before the expiration of the 120 90-day period. (G.R. NO. 209306)
the 30-day period to appeal to the CT A is

dependent on the 120- 90 day period,
both periods are hereby rendered jurisdictional.
Failure to observe 120- 90 days prior to the filing of a judicial claim is
NOT a mere non-exhaustion of administrative remedies,
but is likewise considered jurisdictional.
The period of 120- 90 days is a prerequisite for the commencement of the 30-day period to appeal to the CTA.
In both instances,
whether the CIR renders a decision (which must be made within 120 days) or
there was inaction,
the period of 120- 90 days is material. (G.R. NO. 198485)
EXCEPTIONS:
There are, however, two exceptions to this rule.
1) if the COMMISSIONER OF INTERNAL REVENUE, through a specific ruling,
misleads a particular taxpayer to prematurely file a judicial claim with the COURT OF TAX APPEALS.
Such specific ruling is applicable only to such particular taxpayer.
2) where the COMMISSIONER OF INTERNAL REVENUE,

through a general interpretative rule issued under Section 4 of the Tax Code,
misleads all taxpayers into filing prematurely judicial claims with the COURT OF TAX APPEALS.
In these cases, the COMMISSIONER OF INTERNAL REVENUE

CANNOT be allowed
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to later on question
the COURT OF TAX APPEAL's assumption of jurisdiction over such claim
since equitable estoppel has set in as expressly authorized under Section 246 of the Tax Code. (G.R. NO. 205652)
NON – RETROACTIVITY OF RULINGS

Any revocation, modification or reversal of any of the rules and regulations promulgated in accordance with the
preceding Sections or any of the rulings or circulars promulgated by the COMMISSIONER OF INTERNAL
REVENUE shall NOT be given retroactive application if the revocation, modification or reversal will be
prejudicial to the taxpayers, except in the following cases: (D – MAC)
i. Where the taxpayer Deliberately misstates or omits material facts from his return or any document
required of him by the BUREAU OF INTERNAL REVENUE; (NIRC, SECTION 246)
ii. Where the facts subsequently gathered by the BUREAU OF INTERNAL REVENUE are Materially
different from the facts on which the ruling is based; or (NIRC, SECTION 246)
iii. Where the taxpayer Acted in bad faith. (NIRC, SECTION 246)
iv. Where it is the Court and NOT the COMMISSIONER OF INTERNAL REVENUE which declared null
and void a BUREAU OF INTERNAL REVENUE issuance. (G.R. NO. 112024)
REFUNDS OR TAX CREDITS OF INPUT TAX

A) ZERO – RATED OR EFFECTIVLY ZERO – RATED SALES
Any VAT – REGISTERED PERSON, whose sales are zero-rated or effectively zero-rated may,
within 2 years after the close of the taxable quarter when the sales were made,
apply for the issuance of a TAX CREDIT CERTIFICATE or REFUND OF CREDITABLE INPUT TAX due
or paid attributable to such sales, except transitional input tax,
to the extent that such input tax has NOT been applied against output tax.
PROVIDED:
1) That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108 (B)(1)
and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP).
2) That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or
exempt sale of goods of properties or services, and
the amount of creditable input tax due or paid
CANNOT be directly and entirely attributed
to any one of the transactions,
it shall be allocated proportionately on the basis of the volume of sales.
3) That for a person making sales that are zero-rated under Section 108(B) (6), the input taxes shall be
allocated ratably between his zero-rated and non-zero-rated sales. (NIRC, SECTION 112 (A))
RATIONALE:
NATURE OF THE 2 YEAR PRESCRIPTIVE PERIOD
The 2 YEAR PRESCRIPTIVE PERIOD applies only
to the filing of administrative claims with the BUREAU OF INTERNAL REVENUE and
NOT to the filing of judicial claims with the COURT OF TAX APPEALS. (G.R. NO. 187485)
FAILURE ZERO – RATED TRANSACTION PRINTED IN THE RECEIPT

Failure to print the word “zero - rated” on the invoices or receipts is fatal to a claim for credit of refunds of input
VAT on zero – rated sales. (G.R. NO. 177127)
QUANTUM OF EVIDENCE TO PROVE CLAIM FOR REFUND OR CREDIT

Preponderance of evidence. (G.R. NO. 172129)
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TITLE I ORGANIZATION AND FUNCTION OF THE BUREAU OF INTERNAL REVENUE

POWERS AND DUTIES OF THE BUREAU OF INTERNAL REVENUE
The BUREAU OF INTERNAL REVENUE shall be under the supervision and control of the Department of
Finance and its powers and duties shall:
1) comprehend the assessment and collection of all national internal revenue taxes, fees, and charges, and
2) the enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of
judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts.
BUREAU OF INTERNAL REVENUE shall give effect to and administer the supervisory and police powers
conferred to it by this Code or other laws. (SECTION 2)
CHIEF OFFICIALS OF THE BUREAU OF INTERNAL REVENUE

The Bureau of Internal Revenue shall have:
1) a chief to be known as COMMISSIONER OF INTERNAL REVENUE, and
2) 4 assistant chiefs to be known as DEPUTY COMMISSIONERS. (SECTION 3)
POWER OF THE COMMISSIONER OF THE INTERNAL REVENUE TO INTERPRET TAX LAWS AND
TO DECIDE TAX CASES
POWER TO INTERPRET THE PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE AND
OTHER TAX LAWS shall be under the exclusive and original jurisdiction of the COMMISSIONER OF
INTERNAL REVENUE, subject to review by the Secretary of Finance. (SECTION 4)
Department of Finance Department Order No. 007-02 issued by the Secretary of Finance laid down the procedure
and requirements
for filing an appeal from the adverse ruling of the COMMISSIONER OF INTERNAL REVENUE
to the SECRETARY OF FINANCE.
A taxpayer is granted a period of 30 days

from receipt of the adverse ruling of the COMMISSIONER OF INTERNAL REVENUE
to file with the the OFFICE OF THE SECRETARY OF FINANCE.
a request for review in writing and under oath. (G.R. NO. 213446)
RATIONALE:
The power to decide disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or
other matters arising under the NATIONAL INTERNAL REVENUE CODE or other laws or portions
thereof
administered by the Bureau of Internal Revenue is
vested in the COMMISSIONER OF INTERNAL REVENUE,
subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. (G.R. NO. 213446)
However, the COMMISSIONEROF INTERNAL REVENUE CANNOT,

in the exercise of such power, issue administrative rulings or circulars
inconsistent with the law sought to be applied.
Indeed, administrative issuances must

NOT override, supplant or modify the law,
but must remain consistent with the law they intend to carry out. XXXXX (G.R. NO. 213446)
The COMMISSIONER OF INTERNAL REVENUE’s exercise of its power to interpret tax laws comes in the
form of revenue issuances, XXXXX
These revenue issuances are subject to the review of the Secretary of Finance.

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In relation thereto, Department of Finance Department Order No. 007-02 issued by the Secretary of Finance laid
down the procedure and requirements
for filing an appeal from the adverse ruling of the COMMISSIONER OF INTERNAL REVENUE
to the SECRETARY OF FINANCE.
A taxpayer is granted a period of 30 days

from receipt of the adverse ruling of the COMMISSIONER OF INTERNAL REVENUE
to file with the the OFFICE OF THE SECRETARY OF FINANCE.
a request for review in writing and under oath. (G.R. NO. 213446)
POWER TO INTERPRET THE PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE AND
OTHER TAX LAWS shall be under the exclusive and original jurisdiction of the COMMISSIONER OF
INTERNAL REVENUE, subject to review by the Secretary of Finance. (NIRC, SECTION 4)
PRESUMPTION OF RULING OF THE COMMISSIONER OF THE INTERNAL REVENUE

A ruling by the COMMISSIONER OF THE INTERNAL REVENUE that interpret provisions of the
NATIONAL INTERNAL REVENUE CODE and other tax law
shall be presumed valid unless modified, reverse or superseded by the SECRETARY OF FINANCE.
A TAXPAYER who receives an adverse ruling from the COMMISSIONER OF THE INTERNAL
REVENUE may, within 30 days from the date of receipt of such ruling, seek its review by the SECRETARY
OF FINANCE.
The SECRETARY OF FINANCE may also review the rulings motu proprio. (DOF ORDER 7 – 02)
RATIONALE:
"if superior administrative officers can grant the relief prayed for, then special civil actions are generally
NOT entertained."
The remedy within the administrative machinery must be resorted to first and pursued to its appropriate
conclusion before the court’s judicial power can be sought. (G.R. NO. 198756)
RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES

GENERAL RULE:
If a remedy within the administrative agency can still be resorted to by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his jurisdiction, then such remedy
should be exhausted first before the court’s judicial power can be sought. (G.R. NO. 191590)
EXCEPTIONS TO THE RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES (EPUS – LUD –

DM – MRQ)
1) Where there is Estoppel on the part of the party invoking the doctrine;
2) Where the challenged administrative acts is Patently illegal, amounting to lack of jurisdiction;
3) Where there is Unreasonable delay or official inaction that will irretrievably prejudice the complainant;
4) Where the amount involved is relatively Small as to make the rule impractical and oppressive;
5) Where the question involved is purely Legal and will ultimately have to be decided by the courts of justice;
6) Where judicial intervention is Urgent;
7) Where the application of the doctrine may cause great and irreparable Damage;
8) Where the controverted acts violate Due process;
9) Where the issue of non-exhaustion of administrative remedies has been rendered Moot;
10) Where there is NO other plain, speedy, and adequate Remedy;
11) Where Public interest is involved; and
12) In Quo warranto proceedings. (G.R. NO. 173840)
RATIONALE ON RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES

Rests on the presumption that the administrative agency, if afforded a complete chance to pass upon the matter
will decide the same correctly. (G.R. NO. 191590)
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POWER OF THE COMMISSIONER OF THE INTERNAL REVENUE TO DECIDE TAX CASES

The power to decide: (DROPO)
1) Disputed assessments,
2) Refunds of internal revenue taxes,
3) Fees or Other charges,
4) Penalties imposed in relation thereto, or
5) Other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal
Revenue is vested in the COMMISSIONER OF INTERNAL REVENUE,
subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. (NIRC, SECTION 4)
POWER OF THE COMMISSIONER OF INTERNAL REVENUE TO OBTAIN INFORMATION, AND TO

SUMMON, EXAMINE, AND TAKE TESTIMONY OF PERSONS
In ascertaining the correctness of any return, or in making a return when none has been made, or in
determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in
evaluating tax compliance, the COMMISSIONER OF INTERNAL REVENUE is authorized: (EO – STC)
1) To Examine any book, paper, record, or other data which may be relevant or material to such inquiry;
2) To Obtain on a regular basis from any person other than the person whose internal revenue tax liability is
subject to audit or investigation, or from any office or officer of the national and local governments,
government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-
owned or -controlled corporations, any information such as, but not limited to, costs and volume of production,
receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations,
mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint
accounts, associations, joint ventures or consortia and registered partnerships, and their members.
PROVIDED:
i. That the COOPERATIVE DEVELOPMENT AUTHORITY shall submit to the Bureau a tax
incentive report, which shall include information on the income tax, value-added tax, and other tax
incentives availed of by cooperatives registered and enjoying incentives under Republic Act No. 6938, as
amended;
ii. That the information submitted by the Cooperative Development Authority to the Bureau shall be
submitted to the Department of Finance and shall be included in the database created under Republic
Act No. 10708, otherwise known as ‘The Tax Incentives Management and Transparency Act (TIMTA).’(as
amended by RA No 10963)
3) To Summon the person liable for tax or required to file a return, or any officer or employee of such person,
or any person having possession, custody, or care of the books of accounts and other accounting records
containing entries relating to the business of the person liable for tax, or any other person, to appear before the
Commissioner or his duly authorized representative at a time and place specified in the summons and to produce
such books, papers, records, or other data, and to give testimony;
4) To Take such testimony of the person concerned, under Oath, as may be relevant or material to such inquiry;
and
5) To Cause revenue officers and employees to make a canvass from time to time of any revenue district or
region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax,
and all persons owning or having the care, management or possession of any object with respect to which a tax is
imposed.
The provisions of the foregoing paragraphs notwithstanding, nothing in this Section shall be construed as granting
the Commissioner the authority to inquire into bank deposits other than as provided for in Section 6(F) of this Code.
(NIRC, SECTION 5)

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POWER OF THE COMMISSIONER OF INTERNAL REVENUE TO MAKE ASSESSMENTS AND

PRESCRIBE ADDITIONAL REQUIREMENTS FOR TAX ADMINISTRATION AND ENFORCEMENT
EXAMINATION OF RETURN AND DETERMINATION OF TAX DUE

After a return has been filed, the COMMISSIONER OF INTERNAL REVENUE or
his duly authorized representative may:
1) authorize the examination of any taxpayer and
2) the assessment of the correct amount of tax,
notwithstanding any law requiring the prior authorization of any government agency or instrumentality.
PROVIDED:
the failure to file a return shall NOT prevent the COMMISSIONER OF INTERNAL REVENUE from
authorizing the examination of any taxpayer. (as amended by RA No 10963)
The tax or any deficiency tax so assessed shall be paid upon notice and demand from the COMMISSIONER
OF INTERNAL REVENUE or his duly authorized representative. (NIRC, SECTION 6A)
NO ESTOPPEL AGAINST THE GOVERNMENT RULE

It is a settled rule that in the performance of its governmental functions, the STATE CANNOT be estopped by
the negligent acts of its officers or agents. (G.R. NO. L - 66838)
EXCEPTION:
In the interest of justice and fair play, as where injustice will result to the taxpayer. (G.R. NO. 117982)
EFFECT OF FILING RETURN

Any return, statement of declaration filed in any office authorized to receive the same shall NOT be withdrawn.
PROVIDED:
1) That within 3 years from the date of such filing, the same may be modified, changed, or amended;
2) That NO notice for audit or investigation of such return, statement or declaration has in the meantime been
actually served upon the taxpayer. (NIRC, SECTION 6A)
FAILURE TO SUBMIT REQUIRED RETURNS, STATEMENTS, REPORTS AND OTHER DOCUMENTS

1) When a report required by law as a basis for the assessment of any national internal revenue tax
shall NOT be forthcoming within the time fixed by laws or rules and regulations; or
2) when there is reason to believe that any such report is false, incomplete or erroneous,
the COMMISSIONER OF INTERNAL REVENUE shall assess the proper tax on the best evidence obtainable.
(NIRC, SECTION 6B)
EFFECT OF FAILURE TO SUBMIT REQUIRED RETURNS, STATEMENTS, REPORTS AND OTHER

DOCUMENTS
1) In case a person fails to file a required return or other document at the time prescribed by law, or
2) willfully or otherwise files a false or fraudulent return or other document,
the COMMISSIONER OF INTERNAL REVENUE

shall 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 all legal purposes. (SECTION 6B)
AUTHORITY TO CONDUCT INVENTORY – TAKING, SURVEILLANCE AND TO PRESCRIBE

PRESUMPTIVE GROSS SALES AND RECEIPTS
The COMMISSIONER ON INTERNAL REVENUE may, at any time during the taxable year:
1) order inventory-taking of goods of any taxpayer as a basis for determining his internal revenue tax liabilities,
or
2) may place the business operations of any person, natural or juridical, under observation or surveillance

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if there is reason to believe that such person is NOT declaring his correct income, sales or receipts for internal
revenue tax purposes. (NIRC, SECTION 6C)
The findings may be:

a) used as the basis for assessing the taxes for the other months or quarters of the same or different taxable
years and
b) such assessment shall be deemed prima facie correct. (NIRC, SECTION 6C)
PURPOSE AND EFFECT OF THE FINDINGS OF THE INVENTORY – TAKING, SURVEILLANCE AND
THE PRESCRIBE PRESUMPTIVE GROSS SALES AND RECEIPTS
1) When it is found that a person has failed to issue receipts and invoices in violation of the requirements for
i. INVOICING AND ACCOUNTING REQUIREMENTS FOR VAT – REGISTERED PERSONS, and
ii. ISSUANCE OF RECEIPTS OR SALES OR COMMERCIAL 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 required to be filed,
the COMMISSIONER OF INTERNAL REVENUE, after:

i. taking into account the sales, receipts, income or other taxable base of other persons engaged in
similar businesses under similar situations or circumstances OR
ii. considering other relevant information may prescribe a minimum amount of such gross receipts,
sales and taxable base, and such amount so prescribed
shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person.
(SECTION 6C)
AUTHORITY TO TERMINATE TAXABLE PERIOD

When it shall come to the knowledge of the COMMISSIONER OF INTERNAL REVENUE that: (RIR – HOP)
1) a taxpayer is Retiring from business subject to tax; or
2) is Intending to leave the Philippines; or
3) to Remove his property therefrom; or
4) to Hide or conceal his property; or
5) is performing any act tending to Obstruct the proceedings for the collection of the tax for the past or current
quarter or year; or
6) to render the Proceedings for the collection of the tax totally or partly ineffective unless such proceedings are
begun immediately,
the COMMISSIONER OF INTERNAL REVENUE shall:

1) declare the tax period of such taxpayer terminated at any time and
2) send the taxpayer a notice of such decision, together with a request for the immediate payment of the tax for
the period so declared terminated and the tax for the preceding year or quarter, or such portion thereof as
may be unpaid, AND
3) said taxes shall be due and payable immediately and shall be subject to all the penalties hereafter
prescribed,
unless paid within the time fixed in the demand made by the COMMISSIONER OF INTERNAL REVENUE.
(SECTION 6D)
AUTHORITY OF THE COMMISSIONER TO PRESCRIBE REAL PROPERTY VALUES

COMMISSIONER OF INTERNAL REVENUE is hereby authorized to divide the Philippines into different zones
or areas and shall:
1) upon mandatory consultation with competent appraisers both from the private and public sectors, and
2) with prior notice to affected taxpayers, determine the fair market value of real properties located in each zone
or area,
3) subject to automatic adjustment once every 3 years through rules and regulations issued by the Secretary of
Finance based on the current Philippine valuation standards:

Page 8
PROVIDED:
1) That NO adjustment in zonal valuation shall be valid unless published in a newspaper of general circulation in
the province, city or municipality concerned, or in the absence thereof, shall be posted in the provincial
capitol, city or municipal hall and in 2 other conspicuous public places therein.
2) That the basis of any valuation, including the records of consultations done, shall be public records open to the
inquiry of any taxpayer.
For purposes of computing any internal revenue tax, the value of the property shall be, whichever is the higher of:
1) the fair market value as determined by the COMMISSIONER OF INTERNAL REVENUE; or
2) the fair market value as shown in the schedule of values of the Provincial and City Assessors.
(as amended by RA No 10963) (SECTION 6E)
AUTHORITY OF THE COMMISSIONER OF INTERNAL REVENUE TO INQUIRE INTO BANK

DEPOSIT ACCOUNTS AND OTHER RELATED INFORMATION HELD BY FINAL INSTITUTIONS
NOTWITHSTANDING THE,
1) SECRECY OF BANK DEPOSITS;
2) SECRECY OF FOREIGN CURRENCY DEPOSITS; AND
3) OTHER GENERAL OR SPECIAL LAWS
the COMMISSIONER OF INTERNAL REVENUE is hereby authorized to inquire into the bank deposits
and other related information held by financial institutions of:
1) A decedent to determine his gross estate; and
2) Any taxpayer who has filed an application for compromise of his tax liability by reason of financial
incapacity to pay his tax liability.
PROVIIDED:
In case a taxpayer files an application to compromise the payment of his tax liabilities on his claim that his
financial position demonstrates a clear inability to pay the tax assessed,
his application shall NOT be considered
UNLESS AND UNTIL he waives in writing his privilege in:

1) BANK SECRECY LAW ;
2) FOREIGN CURRENCY DEPOSIT ACT; AND
3) OTHER GENERAL OR SPECIAL LAWS.
Such waiver shall constitute the authority of the COMMISSIONER OF INTERNAL REVENUE to inquire
into the bank deposits of the taxpayer. (SECTION 6F)
1) SECRECY OF BANK DEPOSITS

2) SECRECY OF FOREIGN CURRENCY DEPOSITS
1) SECRECY OF BANK DEPOSITS

All deposits of whatever nature with banks or banking institutions in the Philippines including investments in
bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and may NOT be examined, inquired or looked into by any
person, government official, bureau or office,
EXCEPTIONS:
a) when the examination is made in the course of a special or general examination of a bank and:
i. is specifically authorized by the Monetary Board
ii. after being satisfied that there is reasonable ground to believe that a bank fraud or serious
irregularity has been or is being committed and
iii. that it is necessary to look into the deposit to establish such fraud or irregularity, or
iv. when the examination is made by an independent auditor hired by the bank to conduct its regular
audit
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PROVIDED:
i. that the examination is for audit purposes only and
ii. the results thereof shall be for the exclusive use of the bank, or
b) upon written permission of the depositor, or
c) in cases of impeachment, or
d) upon order of a competent court in cases of bribery or dereliction of duty of public officials, or
in cases where the money deposited or invested is the subject matter of the litigation. (R.A. NO. 1405 AS
AMENDED BY P.D. NO. 1792, SECTION 2)
2) SECRECY OF FOREIGN CURRENCY DEPOSITS

All foreign currency deposits are hereby declared as and considered of an absolutely confidential nature and,
1) in NO instance shall foreign currency deposits be examined, inquired or looked into by any person,
government official, bureau or office whether judicial or administrative or legislative, or any other entity whether
public or private;
2) That said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body whatsoever.
EXCEPTION:
upon the written permission of the depositor. (R.A. NO. 6426 As amended by PD No. 1035, and PD No. 1246,
SECTION 8)
ADMISSIBILITY OF EVIDENCE OBTAINED IN UNLAWFUL EXAMINATION OF BANK ACCOUNTS

NOWHERE provides that an unlawful examination of bank accounts shall render the evidence obtained
therefrom inadmissible in evidence. Section 5 of R.A. 1405 only states that "[a]ny violation of this law will subject
the offender upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty
thousand pesos or both, in the discretion of the court." (G.R. Nos. 157294-95)
FOREIGN TAX AUTHORITY -- shall refer to the tax authority or tax administration of the requesting
State under the tax treaty or convention to which the Philippines is a signatory
or a party of.
(SECTION 6F)
REQUEST OF TAX INFORMATION FROM FOREIGN TAX AUTHORITY

COMMISSIONER OF INTERNAL REVENUE HAS THE AUTHORITY TO INQUIRE INTO BANK
DEPOSIT ACCOUNTS AND OTHER RELATED INFORMATION of a specific taxpayer or taxpayers
subject of a request for the supply of tax information from a foreign tax authority pursuant to an
international convention or agreement on tax matters to which the Philippines is a signatory or a party of.
PROVIDED:
That the information obtained from the banks and other financial institutions
may be used by the Bureau of Internal Revenue for tax assessment, verification, audit and enforcement
purposes. (SECTION 6F)
PROCEDURE FOR TAX INFORMATION HELD BY BANKS AND FINANCIAL INSTITUTIONS

In case of a request from a foreign tax authority for tax information held by banks and financial institutions, the
exchange of information shall be done in a secure manner to ensure confidentiality thereof under such rules
and regulations as may be promulgated by the Secretary of Finance, upon recommendation of the
COMMISSIONER OF INTERNAL REVENUE. (SECTION 6F)
ESSENTIAL INFORMATION

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THE COMMISSIONER OF INTERNAL REVENUE shall provide the tax information obtained from banks and
financial institutions pursuant to a convention or agreement upon request of the foreign tax authority when such
requesting foreign tax authority has provided the following information to demonstrate the foreseeable
relevance of the information to the request:
1) The identity of the person under examination or investigation;
2) A statement of the information being sought, including its nature and the form in which the said foreign tax
authority prefers to receive the information from the Commissioner;
3) The tax purpose for which the information is being sought;
4) Grounds for believing that the information requested is held in the Philippines or is in the possession or
control of a person within the jurisdiction of the Philippines;
5) To the extent known, the name and address of any person believed to be in possession of the requested
information;
6) A statement that the request is in conformity with the law and administrative practices of the said foreign
tax authority, such that if the requested information was within the jurisdiction of the said foreign tax authority then
it would be able to obtain the information under its laws or in the normal course of administrative practice and that it
is in conformity with a convention or international agreement; and
7) A statement that the requesting foreign tax authority has exhausted all means available in its own territory to
obtain the information, except those that would give rise to disproportionate difficulties. (SECTION 6F)
OBLIGATION OF THE COMMISSIONER OF INTERNAL REVENUE

GENERAL RULE:
COMMISSIONER OF INTERNAL REVENUE shall forward the information as promptly as possible to the
requesting foreign tax authority.
To ensure a prompt response, the COMMISSIONER OF INTERNAL REVENUE shall confirm receipt of a
request in writing to the requesting tax authority and shall notify the latter of deficiencies in the request, if
any, within 60 days from receipt of the request.
EXCEPTION:
If the THE COMMISSIONER OF INTERNAL REVENUE is unable to obtain and provide the information
within 90 days from receipt of the request, due:
1) to obstacles encountered in furnishing the information or
2) when the bank or financial institution refuses to furnish the information,
he shall immediately inform the requesting tax authority of the same, explaining the nature of the obstacles
encountered or the reasons for refusal. (SECTION 6F)
AUTHORITY OF THE COMMISSIONER OF INTERNAL REVENUE TO DELEGATE POWER

GENERAL RULE:
COMMISSIONER OF INTERNAL REVENUE may delegate the powers vested in him to any or such
subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and
restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance,
upon recommendation of the Commissioner:
EXCEPTIONS: (PICA)
Provided, however, That the following powers of the COMMISSIONER OF INTERNAL REVENUE shall NOT be
delegated:
1) The power to recommend the Promulgation of rules and regulations by the Secretary of Finance;
2) The power to Issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau;
3) The power to Compromise or abate any tax liability.

PROVIDED:
That assessments issued by the regional offices involving basic deficiency taxes of P500,000 or less,
and minor criminal violations, as may be determined by rules and regulations to be promulgated by

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the Secretary of finance, upon recommendation of the COMMISSIONER OF INTERNAL REVENUE,

discovered by regional and district officials,
may be compromised by a regional evaluation board which shall be composed of the:

i. Regional Director as Chairman,
ii. the Assistant Regional Director,
iii. the heads of the Legal, Assessment and Collection Divisions and the Revenue District Officer
having jurisdiction over the taxpayer, as members; and
4) The power to Assign or reassign internal revenue officers to establishments where articles subject to excise tax
are produced or kept. (SECTION 7)
RULE MAKING AUTHORITY OF THE SECRETARY OF FINANCE

The SECRETARY OF FINANCE, upon recommendation of the COMMISSIONER OF INTERNAL
REVENUE, shall promulgate all needful rules and regulations for the effective enforcement of the provisions
of THE NATIONAL INTERNAL REVENUE CODE. (SECTION 244)

required of him by the BUREAU OF INTERNAL REVENUE; (NIRC, SECTION 246)
different from the facts on which the ruling is based; or (NIRC, SECTION 246)
iii. Where the taxpayer Acted in bad faith. (NIRC, SECTION 246)
CHAPTER IX RETURNS AND PAYMENT OF TAX

INDIVIDUAL RETURN
A) REQUIREMENTS
(1) Except as provided in paragraph (2) of this Subsection, the following individuals are required to file an income
tax return:
a) Every FILIPINO CITIZEN RESIDING IN the Philippines;
b) Every FILIPINO CITIZEN RESIDING OUTSIDE the Philippines, on his income from sources
within the Philippines;
c) Every ALIEN RESIDING IN the Philippines, on income derived from sources within the
Philippines; and
d) Every NONRESIDENT ALIEN ENGAGED in trade or business or in the exercise of profession in

the Philippines. (SECTION 51 (A) (1))
2) The following individuals shall NOT be required to file an income tax return:
a) An individual whose taxable income does NOT exceed P250,000 under Section 24(A)(2)(a):
PROVIDED:

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That a CITIZEN OF THE PHILIPPINES AND ANY ALIEN INDIVIDUAL in business or practice of
profession within the Philippines shall file an income tax return, regardless of the amount of gross
income;(as amended by RA No 10963)
b) An individual with respect to pure compensation income, derived from sources within the
Philippines, the income tax on which has been correctly withheld under the provisions of Section 79 of
this Code.
PROVIDED:
That an INDIVIDUAL deriving compensation concurrently from two or more employers at any time
during the taxable year shall file an income tax return.
c) An INDIVIDUAL whose sole income has been subjected to final withholding tax pursuant to Section
57(A) of this Code; and
d) A MINIMUM WAGE EARNER as defined in section 22 (HH) of this Code or an INDIVIDUAL who
is EXEMPT FROM INCOME TAX pursuant to the provisions of this Code and other laws, general or
special. (SECTION 51 (A) (2))
THE FOLLOWING INCOME PAYMENTS TO MINIMUM WAGE EARNERS ARE TAXABLE:

i. additional compensation such as commissioners, honoraria, fringe benefits, benefits in excess of the allowable
statutory amount of PHP.90,000, taxable allowances, and other taxable income given to an MINIMUM
WAGE EARNER by the same employer other than those which are expressly exempt.
ii. Other income received by MINIMUM WAGE EARNERS from other sources in addition to compensation
income, such as income from other concurrent employers, from the conduct of trade, business, or practice of
profession, except income subject to final tax, only to the extent of income other than statutory minimum
wage, holiday pay, overtime pay, night shift differential, and hazard pay earned during the taxable year.
(R.R. NO. 11 – 2018, SECTION 6, JANUARY 31, 2018)
3) The foregoing notwithstanding, any INDIVIDUAL NOT required to file an income tax return may
nevertheless be required to file an information return pursuant to rules and regulations prescribed by the
SECRETARY OF FINANCE, upon recommendation of the COMMMISSIONER OF INTERNAL REVENUE.
(SECTION 51 (A) (3))
The income tax return shall be filed in duplicate by the following persons:
a) RESIDENT CITZEN – on his income from all sources;
b) NONRESIDENT CITIZEN – on his income derived from sources within the

Philippines;
c) RESIDENT CITIZEN – on his income derived from sources within the

Philippines; and
d) NONRESIDENT ALIEN ENGAGED IN TRADE on his income derived from sources within the
OR BUSINESS IN THE PHILIPPINES – Philippines.
(5) The income tax return (ITR) shall consist of a maximum of four (4) pages in paper form or electronic form, and
shall only contain the following information:
(A) Personal profile and information;
(B) Total gross sales, receipts or income from compensation for services rendered, conduct of trade or business or
the exercise of a profession, except income subject to final tax as provided under this Code;

Page 13
(C) Allowable deductions under this Code;

(D) Taxable income as defined in Section 31 of this Code; and
(E) Income tax due and payable
(as amended by RA No 10963) (SECTION 51 (A) (5))
B) WHERE TO FILE
Except in cases where the Commissioner otherwise permits, the return shall be filed with:
1) an AUTHORIZED AGENT BANK,
2) REVENUE DISTRICT OFFICER,
3) Collection Agent or
4) duly authorized Treasurer of the city or municipality in which such person has his legal residence or
principal place of business in the Philippines, or
5) if there be NO legal residence or place of business in the Philippines, with the Office of the
COMMISSIONER OF INTERNAL REVENUE. (SECTION 51 (B))
C) WHEN TO FILE RETURN

1) The return of any individual specified above shall be filed on or before the 15th day of April of each year
covering income for the preceding taxable year.
2) Individuals subject to tax on capital gains;
a) From the sale or exchange of shares of stock NOT traded thru a local stock exchange as prescribed under
Section 24(C) shall file:
i. a return within 30 days after each transaction and
ii. a final consolidated return on or before April 15 of each year covering all stock
transactions of the preceding taxable year; and
b) From the sale or disposition of real property under Section 24(D) shall file a return within 30 days
following each sale or other disposition. (SECTION 51 (C))
D) HUSBAND AND WIFE

GENERAL RULE:
Married individuals, whether CITIZENS, RESIDENT OR NONRESIDENT ALIENS, who do not derive
income purely from compensation, shall file a return for the taxable year to include the income of both
spouses,
EXCEPTION:
but where it is impracticable for the spouses to file one return, each spouse may file a separate return of
income but the returns so filed shall be consolidated by the BUREAU OF INTERNAL REVENUE for purposes
of verification for the taxable year. (SECTION 51 (D))
E) RETURN OF PARENT TO INCLUDE INCOME OF CHILDREN

GENERAL RULE:
The income of unmarried minors derived from property received from a living parent shall be included in the
return of the parent,
EXCEPTIONS:
except
1) when the donor’s tax has been paid on such property, or
2) when the transfer of such property is exempt from donor’s tax. (SECTION 51 (E))
F) PERSONS UNDER DISABILITY

If the taxpayer is unable to make his own return, the return may be made by his:
1) duly authorized agent or representative or
2) by the guardian or other person charged with the care of his person or property,
the principal and his representative or guardian assuming the responsibility of making the return and incurring
penalties provided for erroneous, false or fraudulent returns. (SECTION 51 (F))
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G) SIGNATURE PRESUME CORRECT

The fact that an individual’s name is signed to a filed return shall be prima facie evidence for all purposes that
the return was actually signed by him. (SECTION 51 (G))
SUBSTITUTED FILING OF INCOME TAX RETURNS BY EMPLOYEES RECEIVING PURELY

COMPENSATION INCOME
Individual taxpayers receiving PURELY COMPENSATION INCOME, regardless of amount, from only one
employer in the Philippines for the calendar year, the income tax of which has been withheld correctly by the
said employer or tax due equals tax withheld,
shall NOT be required to file an annual income tax return.
The CERTIFICATE OF WITHHOLDING filed by the respective employers, duly stamped ‘received’ by the BIR,
shall be tantamount to the substituted filing of income tax returns by said employees.(as amended by RA No
10963) (SECTION 51 – A)
PAYMENT AND ASSESSMENT OF INCOME TAX FOR INDIVIDUALS AND CORPORATIONS

A) PAYMENT OF TAX
1) IN GENERAL
The total amount of tax imposed by this Title
shall be paid by the person subject thereto at the time the return is filed.
In the case of tramp vessels, the shipping agents and/or the husbanding agents, and in their absence, the captains
thereof are required to file the return herein provided and pay the tax due thereon before their departure. Upon
failure of the said agents or captains to file the return and pay the tax, the Bureau of Customs is hereby authorized to
hold the vessel and prevent its departure until proof of payment of the tax is presented or a sufficient bond is filed to
answer for the tax due. (SECTION 56 (A) (1))
2) INSTALLMENT OF PAYMENT
When a tax due is in excess of P2,000, the taxpayer other than a corporation, may elect to pay the tax in 2 equal
installments, in which case:
a) the first installment shall be paid at the time the return is filed and
b) the second installment on or before October 15 following the close of the calendar year. (as amended by RA
No 10963) (SECTION 56 (A) (2))
LIABILITY OF NON – PAYMENT

if any installment is NOT paid on or before the date fixed for its payment,
the whole amount of the tax unpaid becomes due and payable together with the delinquency penalties. (as
amended by RA No 10963) (SECTION 56 (A) (2))
3) PAYMENT OF CAPITAL GAINS TAX

The total amount of PAYMENT OF CAPITAL GAINS TAX imposed and prescribed under Section 24 (c),
24(D), 27(E)(2), 28(A)(8)(c) and 28(B)(5)(c) shall be paid on the date the return prescribed therefor is filed by
the person liable thereto:
PROVIDED:
1) That if the seller submits proof of his intention to avail himself of the benefit of exemption of capital gains
under existing special laws, no such payments shall be required.
2) That in case of failure to qualify for exemption under such special laws and implementing rules and
regulations, the tax due on the gains realized from the original transaction shall immediately become due and
payable, subject to the penalties prescribed under applicable provisions of this Code.
3) That if the seller, having paid the tax, submits such proof of intent within six (6) months from the
registration of the document transferring the real property, he shall be entitled to a refund of such tax upon
verification of his compliance with the requirements for such exemption. (SECTION 56 (A) (3))
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PAYMENT OF CAPITAL GAINS TAX THROUGH PAYMENT BY INSTALLMENTS

In case the taxpayer elects and is qualified to report the gain by installments under Section 49 of this Code, the tax
due from each installment payment shall be paid within 30 days from the receipt of such payments.
MANDATORY CERTIFICATION
GENERAL RULE:
NO registration of any document transferring real property shall be effected by the Register of Deeds
EXCEPTION:
unless the COMMISSIONER OF INTERNAL REVENUE or his duly authorized representative has certified that
such transfer has been reported, and the tax herein imposed, if any, has been paid. (SECTION 56 (A) (3))
B) ASSESSMENT AND PAYMENT OF DEFICIENCY TAX

After the return is filed, the COMMISSIONER OF INTERNAL REVENUE shall examine it and assess the correct
amount of the tax.
The tax or deficiency income tax so discovered shall be paid upon notice and demand from the
COMMISSIONER OF INTERNAL REVENUE. (SECTION 56 (B))
DEFICIENCY -- The amount by which the tax imposed by this Title exceeds the amount shown as the tax by
the taxpayer upon his return.
But the amount so shown on the return shall be increased by the amounts previously
assessed (or collected without assessment) as a deficiency, and decreased by the amount
previously abated, credited, returned or otherwise repaid in respect of such tax; or
-- If no amount is shown as the tax by the taxpayer upon this return, or if no return is made
by the taxpayer, then the amount by which the tax exceeds the amounts previously assessed,
or collected without assessment, as a deficiency;
But such amounts previously assessed or collected without assessment shall first be
decreased by the amounts previously abated, credited returned or otherwise repaid in
respect of such tax.
(SECTION 56 (B))
RATIONALE OF WITHHOLDING TAX SYSTEM

The withholding of tax at source was devised for three primary reasons:
1) to provide the taxpayer a convenient manner to meet his probable income tax liability;
2) to ensure the collection of income tax which can otherwise be lost or substantially reduced through failure to
file the corresponding returns; and
3) to improve the government’s cash flow.
This results in administrative savings, prompt and efficient collection of taxes, prevention of delinquencies and
reduction of governmental effort to collect taxes through more complicated means and remedies. (G.R. NO.
198756)
SEC. 90. ESTATE TAX RETURNS

A) REQUIREMENTS
In all cases of transfers subject to the tax imposed herein, or regardless of the gross value of the estate, where the
said estate consists of registered or registrable property such as real property, motor vehicle, shares of stock
or other similar property for which a clearance from the BUREAU OF INTERNAL REVENUE is required
as a condition precedent for the transfer of ownership thereof in the name of the transferee, the executor, or the

Page 16
administrator, or any of the legal heirs, as the case may be, shall file a return under oath in duplicate, setting
forth:
1) The value of the gross estate of the decedent at the time of his death, or
in case of a NONRESIDENT, NOT A CITIZEN OF THE PHILIPPINES, of that part of his gross estate
situated in the Philippines;
2) The deductions allowed from gross estate in determining the NET ESTATE; and
3) Such part of such information as may at the time be ascertainable and such supplemental data as may be
necessary to establish the correct taxes.
PROVIDED:
That estate tax returns showing a gross value exceeding P5,000,000 shall be supported with a statement duly
certified to by a Certified Public Accountant containing the following:
i. Itemized assets of the decedent with their corresponding gross value at the time of his death, or
ii. in case of a NONRESIDENT, NOT A CITIZEN OF THE PHILIPPINES, of that part of his gross
estate situated in the Philippines;
iii. Itemized deductions from gross estate allowed in COMPUTATION OF NET ESTATE; and
iv. The amount of tax due whether paid or still due and outstanding. (SECTION 90 (A)) (as amended by
RA No 10963)
B) TIME FOR FILING

For the purpose of determining the RATES OF ESTATE TAX, the ESTATE TAX RETURN required shall be
filed within 1 year from the decedent’s death. (as amended by RA No 10963) (SECTION 90 (B))
A certified copy of the schedule of partition and the order of the court approving the same shall be furnished the
Commissioner within thirty (30) days after the promulgation of such order. (SECTION 90 (B))
C) EXTENSION OF TIME
The COMMISSIONER OF INTERNAL REVENUE shall have authority to grant, in meritorious cases, a
reasonable extension NOT exceeding 30 days for filing the return. (SECTION 90 (C))
D) PLACE OF FILING
GENERAL RULE:
The ESTATE TAX RETURN required shall be filed with:
i. an authorized agent bank, or
ii. Revenue District Officer,
iii. Collection Officer, or
iv. duly authorized Treasurer of the city or municipality in which the decedent was domiciled at the
time of his death or
v. if there be NO legal residence in the Philippines, with the OFFICE OF THE COMMISSIONER OF
INTERNAL REVENUE.
EXCEPTION:
Except in cases where the COMMISSIONER OF INTERNAL REVENUE otherwise permits,
(SECTION 90 (D))
PAYMENT OF TAX
A) TIME OF PAYMENT
The RATES OF ESTATE TAX imposed shall be paid at the time the return is filed by the executor, administrator or
the heirs. (SECTION 91 (A))
B) EXTENSION OF TIME
GENERAL RULE:

Page 17
When the COMMISSIONER OF INTERNAL REVENUE finds that the payment on the due date of the estate tax
or of any part thereof would impose undue hardship upon the estate or any of the heirs, he may extend the
time for payment of such tax or any part thereof:
i. NOT to exceed 5 years, in case the estate is settled through the courts, or
II. 2 years in case the estate is settled extrajudicially. (SECTION 91 (B))
EXCEPTION:
Where the taxes are assessed by reason of negligence, intentional disregard of rules and regulations, or fraud
on the part of the taxpayer, NO extension will be granted by the COMMISSIONER OF INTERNAL
REVENUE. (SECTION 91 (B))
EFFECT OF EXTENSION OF TIME

In such case, the amount in respect of which the extension is granted shall be paid on or before the date of the
expiration of the period of the extension, and the running of the Statute of Limitations for assessment as
provided in Section 203 of this Code shall be suspended for the period of any such extension. (SECTION 91 (B))
If an extension is granted, the Commissioner may require the executor, or administrator, or beneficiary, as the case
may be, to furnish a bond in such amount, not exceeding double the amount of the tax and with such sureties as the
Commissioner deems necessary, conditioned upon the payment of the said tax in accordance with the terms of the
extension. (SECTION 91 (B))
C) PAYMENT BY INSTALLMENT
In case the available cash of the estate is insufficient to pay the total estate tax due, payment by installment
shall be allowed within 2 years from the statutory date for its payment without civil penalty and interest.(as
amended by RA No 10963) (SECTION 91 (C))
D) LIABILITY FOR PAYMENT

EXECUTOR OR ADMINISTRATOR
The RATES OF ESTATE TAX imposed shall be paid by the executor or administrator before delivery to any
beneficiary of his distributive share of the estate.
BENEFICIARY
Such beneficiary shall to the extent of his distributive share of the estate, be subsidiarily liable for the payment
of such portion of the estate tax as his distributive share bears to the value of the total net estate. (SECTION 91
(D))
EXECUTOR OR -- means the executor or administrator of the decedent, or if there is no executor or

ADMINISTRATOR administrator appointed, qualified, and acting within the Philippines, then any person in
actual or constructive possession of any property of the decedent.
(SECTION 91 (D))
PAYMENT OF TAX ANTECEDENT TO THE TRANSFER OF SHARES, BONDS OR RIGHTS

There shall NOT be transferred to any new owner in the books of any
1) corporation,
2) sociedad anonima,
3) partnership,
4) business, or
5) industry organized or established in the Philippines any:
i. share,
ii. obligation,
iii. bond or right
by way of gift inter vivos or mortis causa, legacy or inheritance, unless a certification from the
COMMISSIONER OF INTERNAL REVENUE that the ESTATE AND DONOR’S TAXES fixed and due
thereon have been paid is shown. (as amended by RA No 10963) (SECTION 97)

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BANK OBLIGATION
If a bank has knowledge of the death of a person, who maintained a bank deposit account alone, or jointly with
another, it shall allow any withdrawal from the said deposit account, subject to a final withholding tax of 6%.
(as amended by RA No 10963) (SECTION 97)
For this purpose, all withdrawal slips shall contain a statement to the effect that all of the joint depositors are still
living at the time of withdrawal by any one of the joint depositors and such statement shall be under oath by the said
depositors.(as amended by RA No 10963) (SECTION 97)
FILING OF RETURN AND PAYMENT OF TAX

(A) Requirements. – any individual who makes any transfer by gift (except those which, under Section 101, are
exempt from the tax provided for in this Chapter) shall, for the purpose of the said tax, make a return under oath in
duplicate. The return shall set forth:
(1) Each gift made during the calendar year which is to be included in computing net gifts;
(2) The deductions claimed and allowable;
(3) Any previous net gifts made during the same calendar year;
(4) The name of the donee; and
(5) Such further information as may be required by rules and regulations made pursuant to law. (SECTION 103
(A))
B) TIME AND PLACE OF FILING AND PAYMENT

TIME OF FILING AND PAYMENT
The return of the donor required in this Section shall be filed within 30 days after the date the gift is made
and the tax due thereon shall be paid at the time of filing.
PLACE OF FILING AND PAYMENT

GENERAL RULE:
the return shall be filed and the tax paid to:
1) an authorized agent bank,
2) the Revenue District Officer,
3) Revenue Collection Officer or
4) duly authorized Treasurer of the city or municipality where the donor was domiciled at the time of the transfer, or
5) if there be no legal residence in the Philippines, with the Office of the Commissioner.
6) In the case of gifts made by a NONRESIDENT, the return may be filed with:
i. the Philippine Embassy or Consulate in the country where he is domiciled at the time of the transfer, or
ii. directly with the Office of the COMMISSIONER OF INTERNAL REVENUE.
EXCEPTION:
Except in cases where the COMMISSIONER OF INTERNAL REVENUE otherwise permits, (SECTION 103 (B))
VOID DONATIONS
VOID DONATIONS are NOT subject to DONOR’S TAX.
However, if it was already paid, taxpayer only has 2 year from the date of payment to file for a claim for
refund, regardless of any supervening event. (SECTION 229)
TITLE VIII REMEDIES

CHAPTER I REMEDIES IN GENERAL
SEC. 202. Final Deed to Purchaser. – In case the taxpayer shall not redeem the property as herein provided, the
Revenue District Officer shall, as grantor, execute a deed conveying to the purchaser so much of the property as has
been sold, free from all liens of any kind whatsoever, and the deed shall succinctly recite all the proceedings upon
which the validity of the sale depends.
AUTHORITY OF THE COMMISSIONER OF INTERNAL REVENUE TO COMPROMISE, ABATE AND

REFUND OR CREDIT TAXES --
The COMMISSIONER OF INTERNAL REVENUE may –
A) Compromise the payment of any internal revenue tax, when:
Page 19
1) A reasonable doubt as to the validity of the claim against the taxpayer exists; or
2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.
(SECTION 204 (A))
The compromise settlement of any tax liability shall be subject to the following minimum amounts:
For cases of financial incapacity, a minimum compromise rate equivalent to 10% of the
basic assessed tax; and
For other cases, a minimum compromise rate equivalent to 40% of the

basic assessed tax.
1) Where the basic tax involved EXCEEDS the compromise shall be subject to the approval of the
P1,000,000; or Evaluation Board which shall be composed of the
COMMISSIONER OF INTERNAL REVENUE and the
2) where the settlement offered is less than the four (4) Deputy COMMISSIONERS.
prescribed minimum rates,
(SECTION 204 (A))
The COMMISSIONER OF INTERNAL REVENUE may –

B) Abate or cancel a tax liability, when:
1) The tax or any portion thereof appears to be unjustly or excessively assessed; or
2) The administration and collection costs involved do NOT justify the collection of the amount due.
(SECTION 204 (B))
COMPROMISE (SECTION 204 (A)) ABATEMENT (SECTION 204 (B))

NATURE
Involves a reduction of the taxpayer’s liability. Involves the cancellation of the entire tax liability of a
taxpayer.
OFFICERS AUTHORIZED TO COMPROMISED / ABATE

COMMISSIONER OF INTERNAL REVENUE, COMMISSIONER OF INTERNAL REVENUE
NATIONAL EVALUATION BOARD AND
REGIONAL EVALUATION BOARD
GROUNDS
1) A reasonable doubt as to the validity of the claim 1) The tax or any portion thereof appears to be unjustly
against the taxpayer exists; or or excessively assessed; or
2) The financial position of the taxpayer 2) The administration and collection costs involved do
demonstrates a clear inability to pay the assessed tax. not justify the collection of the amount due.
(SECTION 204 (A)) (SECTION 204 (B))
COMPROMISE COMPROMISE PENALTY

NATURE
Amount of money paid by the taxpayer to settle his Amount suggested in settlement of criminal liability.
deficiency.
AMOUNT
Fixed percentage rate depending on the ground for Fixed amount or based on a graduated table depending
compromise which is computed based on the basic usually on the gross annual sales, earnings or receipts of
assessed tax. the taxpayer.
REMEDY IN CASE OF NON – PAYMENT BY THE TAXPAYER
1) enforce the compromise; or Institute a criminal action.
2) treat it as rescinded and insist upon the original
demand.
Page 20
(NEW CIVIL CODE, ARTICLE 2041) (R.M.O. NO 19 – 2007)
CRIMINAL VIOLATIONS
GENERAL RULE:
All criminal violations may be compromised
EXCEPTIONS:
except:
a) those already filed in court, or
b) those involving fraud. (SECTION 204 (B))
INSTANCES WHEN THE PENALTIES AND/OR INTEREST IMPOSED ON THE TAXPAYER MAY BE
ABATED OR CANCELLED ON THE GROUND THAT THE IMPOSITION THEREOF IS UNJUST OR
EXCESSIVE (MC – WISE)
1) Late payment of the tax under Meritorious circumstances.
2) When the taxpayer fails to file the return and pay the correct tax on time due to circumstances beyond his Control
provided, however, that abatement shall cover only the surcharge and the compromise penalty and not the interest;
3) When the filing of the return/payment of the tax is made at the Wrong venue;
4) When the assessment is brought about or the result of taxpayer's non-compliance with the law due to a difficult
Interpretation of said law;
5) When the taxpayer fails to file the return and pay the tax on time due to Substantial losses from prolonged labor
dispute, force majeure, legitimate business reverses such as in the following instances, provided, however, that the
abatement shall only cover the surcharge and the compromise penalty and NOT the interest; and
6) When the taxpayer's mistake in payment of his tax due is due to Erroneous written official advice from a revenue
officer; (SECTION 2 OF RR NO. 13 – 2001)
C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value
of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem
or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction.
NO credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the
COMMISSIONER OF INTERNAL REVENUE a claim for credit or refund within 2 years after the payment
of the tax or penalty:
PROVIDED:
1) That a return filed showing an overpayment shall be considered as a written claim for credit or refund.
2) That in proper cases, the COMMISSIONER OF INTERNAL REVENUE shall grant a refund for taxes or
penalties within 90 days from the date of complete submission of the documents in support of the application
filed.
3) That should the COMMISSIONER OF INTERNAL REVENUE find that the grant of refund is NOT proper,
the COMMISSIONER OF INTERNAL REVENUE must state in writing the legal and factual basis for the
denial.
4) That in case of full or partial denial of the claim for tax refund, the taxpayer affected may, within 30 thirty
days from the receipt of the decision denying the claim, appeal the decision with the COURT OF TAX
APPEALS. (as amended by RA No 11534) (SECTION 204 (C))
RECOVERY OF TAX CREDIT OR TAX REFUND OF INTERNAL REVENUE TAXES ERRONEOUSLY

OR ILLEGALLY COLLECTED
PROVIDED:
Page 21
filed.
A Tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal
revenue tax, excluding withholding taxes, for which the taxpayer is directly liable. Any request for conversion into
refund of unutilized tax credits may be allowed, subject to the provisions of Section 230 of this Code: Provided,
That the original copy of the Tax Credit Certificate showing a creditable balance is surrendered to the appropriate
revenue officer for verification and cancellation: Provided, further, That in no case shall a tax refund be given
resulting from availment of incentives granted pursuant to special laws for which no actual payment was made.
The Commissioner shall submit to the Chairmen of the Committee on Ways and Means of both the Senate and
House of Representatives, every six (6) months, a report on the exercise of his powers under this Section, stating
therein the following facts and information, among others: names and addresses of taxpayers whose cases have been
the subject of abatement or compromise; amount involved; amount compromised or abated; and reasons for the
exercise of power: Provided, That the said report shall be presented to the Oversight Committee in Congress that
shall be constituted to determine that said powers are reasonably exercised and that the Government is not unduly
deprived of revenues.
CHAPTER II CIVIL REMEDIES FOR COLLECTION OF TAXES

REMEDIES FOR THE COLLECTION OF DELIQUENT TAXES
The civil remedies for the collection of internal revenue taxes, fees or charges, and any increment thereto resulting
from delinquency shall be:
a) a1) By distraint of: (GECO)
i. Goods,
ii. Effects, or
iii. Chattels, and
iv. Other personal property of whatever character,
including stocks and other securities,
debts,
credits,
bank accounts and
interest in and rights to personal property, and
a2) by levy upon real property and interest in rights to real property; and
b) By civil or criminal action.
Either of these remedies or both simultaneously may be pursued in the discretion of the authorities charged
with the collection of such taxes:
PROVIDED:
Provided, however, That the remedies of distraint and levy shall NOT be availed of where the amount of tax
involve is NOT more than P100.
The judgment in the criminal case shall NOT only impose the penalty but shall also order payment of the taxes
subject of the criminal case as finally decided by the COMMISSIONER OF THE INTERNAL REVENUE.
The Bureau of Internal Revenue shall advance the amounts needed to defray costs of collection by means of civil or
criminal action, including the preservation or transportation of personal property distrained and the advertisement
and sale thereof, as well as of real property and improvements thereon. (SECTION 205)
CONSTRUCTIVE DISTRAINT OF THE PROPERTY OF A TAXPAYER

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To safeguard the interest of the Government, the COMMISSIONER OF INTERNAL REVENUE may place under
constructive distraint the property of a delinquent taxpayer or any taxpayer who, in his opinion: (HORIR)
1) to Hide or conceal his property or
2) to perform any act tending to Obstruct the proceedings for collecting the tax due or which may be due from him.
or
3) to Remove his property therefrom or
4) is Intending to leave the Philippines or
5) is Retiring from any business subject to tax, (NIRC, SECTION 206)
The constructive distraint of personal property shall be affected by requiring the taxpayer or any person having
possession or control of such property to sign a receipt covering the property distrained and obligate himself to
preserve the same intact and unaltered and not to dispose of the same ;in any manner whatever, without the express
authority of the Commissioner.
In case the taxpayer or the person having the possession and control of the property sought to be placed under
constructive distraint refuses or fails to sign the receipt herein referred to, the revenue officer effecting the
constructive distraint shall proceed to prepare a list of such property and, in the presence of two (2) witnesses, leave
a copy thereof in the premises where the property distrained is located, after which the said property shall be deemed
to have been placed under constructive distraint. (NIRC, SECTION 206)
RELEASE OF DISTRAINED PROPERTY UPON PAYMENT PRIOR TO SALE

If at any time prior to the consummation of the sale all proper charges are paid to the officer conducting the
sale, the goods or effects distrained shall be restored to the owner. (SECTION 210)
DISTRAINT (SECTION 207 (A)) LEVY (SECTION 207 (B))

AS TO PROPERTIES COVERED
Personal property. Real property.
HOW EFFECTED
Distraint is effected by the seizure of the goods, Levy shall be effected by writing upon the duly
chattels or effects. authenticated certificate the description of the
property upon which the levy is made and at the
same time, written notice of the levy shall be mailed
to or served upon the REGISTER OF DEEDS and
upon the taxpayer.
DISTRAINT (SECTION 207 (A)) LEVY (SECTION 207 (B))

ACQUISITION BY THE GOVERNMENT
Purchase by the COMMISSIONER OF INTERNAL The INTERNAL REVENUE OFFICER conducting
REVENUE or his deputy in behalf of the the sale shall declare the property forfeited in favor
NATIONAL GOVERNMENT. of the Government.
RIGHT OF REDEMPTION
The taxpayer is not given the right of redemption with The right of redemption is granted in case of real
respect to distrained personal property. property levied upon and sold, or forfeited to the
government.
FURTHER DISTRAINT OR LEVY

The remedy by distraint of personal property and levy on realty may be repeated if necessary until the full
amount due, including all expenses, is collected. (SECTION 217)
ACTUAL DISTRAINT CONSTRUCTIVE DISTRAINT

AS TO SUBJECT
Made on the property of a delinquent taxpayer. Made on the property of a delinquent taxpayer.

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AS TO POSSESSION OF DISTRAINED PROPERTY

There is a taking of possession. Taxpayer is merely prohibited from disposing of his
property.
AS TO HOW EFFECT
Effected by service of warrant of distraint or leaving Effected by requiring the taxpayer to sign a receipt of
a list of the property. the property or leaving a list of such property.
(2 DE LEON, supra at 484)
INJUNCTION NOT AVAILABLE TO RESTRAIN COLLECTION OF TAX

GENERAL RULE:
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 this Code. (SECTION 218)
EXCEPTIONS:
1) when in the opinion of the COURT OF TAX APPEALS the collection tax may jeopardize the interest of the
Government and/or the taxpayer;
2) the COURT OF TAX APPEALS any stage of the proceeding may suspend the said collection and require
the taxpayer either 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, SECTION 9)
SEC. 219. Nature and Extent of Tax Lien. – If any person, corporation, partnership, joint-account (cuentas en
participacion), association or insurance company liable to pay an internal revenue tax, neglects or refuses to pay the
same after demand, the amount shall be a lien in favor of the Government of the Philippines from the time when the
assessment was made by the Commissioner until paid, with interests, penalties, and costs that may accrue 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.
SEC. 220. Form and Mode of Proceeding in Actions Arising under this Code. – Civil and criminal actions and
proceedings instituted in behalf of the Government under the authority of this Code or other law enforced by the
Bureau of Internal Revenue shall be brought in the name of the Government of the Philippines and shall be
conducted by legal officers of the Bureau of Internal Revenue but no civil or criminal action for the recovery of
taxes or the enforcement of any fine, penalty or forfeiture under this Code shall be filed in court without the
approval of the Commissioner.
REMEDY FOR ENFORCEMENT OF STATUTORY PENAL PROVISIONS

The remedy for enforcement of statutory penalties of all sorts shall be by criminal or civil action, as the
particular situation may require, subject to the approval of the COMMISSIONER OF INTERNAL
REVENUE. (SECTION 221)
KINDS OF ASSESSMENT
1) SELF – ASSESSMENT
2) DEFICIENCY ASSESSMENT
3) ILLEGAL AND VOID ASSESSMENT
4) ERRONEOUS ASSESSMENT
5) DISPUTED ASSESSMENT
6) JEOPARDY ASSESSMENT
1) SELF – ASSESSMENT -- assessed by the taxpayer himself, reflected in the return filed by him, and
paid on the day of the filing of the return. (pay – as – you – file sytem)
(ABAN, supra at 176)
2) DEFICIENCY -- made by the tax assessor himself where the correct amount of the tax is

Page 24
ASSESSMENT determined after an examination or investigation is conducted.

3) ILLEGAL AND VOID -- an assessment wherein the tax assessor has no power to act at all.
ASSESSMENT
(G.R. NO. L – 24213)
4) ERRONEOUS -- an assessment wherein the tax assessor has the power to assess but errs in the
ASSESSMENT exercise of such power.
5) DISPUTED -- takes place when a taxpayer questions an assessment and asks the
ASSESSMENT COLLECTOR to reconsider or cancel the same because he believes he is not
liable therefore.
(G.R. NO. L – 11238)
6) JEOPARDY -- one issued by the COMMISSIONER OF INTERNAL REVENUE when it shall

ASSESSMENT come to his knowledge that:
1) a taxpayer is retiring from business subject to tax; or
2) is intending to leave the Philippines; or
3) to remove his property therefrom; or
4) to hide or conceal his property; or
5) is performing any act tending to obstruct the proceedings for the collection of
the tax for the past or current quarter or year; or
6) to render the proceedings for the collection of the tax totally or partly
ineffective unless such proceedings are begun immediately,
(SECTION 6D)

After a return has been filed, the COMMISSIONER OF INTERNAL REVENUE or his duly authorized
representative may:
2) the assessment of the correct amount of tax, notwithstanding any law requiring the prior authorization of any
government agency or instrumentality.
PROVIDED:
authorizing the examination of any taxpayer. (as amended by RA No 10963) (NIRC, SECTION 6A)
LETTER OF AUTHORITY
The LETTER OF AUTHORITY gives notices to the taxpayer that it is under investigation for possible
deficiency tax assessment.
At the same time, it authorizes or empowers a designated revenue officer to examine, verify, and scrutinize a
taxpayer’s books and records, in relation to internal revenue taxes liabilities for a particular period. (G.R.
NO. 183408)

representative may:

Page 25
PROVIDED:
authorizing the examination of any taxpayer. (as amended by RA No 10963) (NIRC, SECTION 6A)
ABSENCE OF LETTER OF AUTHORITY

In the absence of LETTER OF AUTHORITY, the assessment or examination is a nullity the COURT
CANNOT convert the LETTER NOTICE in the LETTER OF AUTHORITY required under the law even if the
same was issued by the COMMISSIONER OF INTERNAL REVENUE himself. (G.R. NO. 222743)
PERIOD OF COVERAGE OF THE LETTER OF AUTHORITY

GENERAL RULE:
It must cover only 1 taxable year,
EXCEPTION:
Except:
1) in fraud cases authorized by the COMMISSIONER OF INTERNAL REVENUE and
2) excise tax cases. (R.M.O. 44 – 2010)
ASSESSMENT CRIMINAL COMPLAINT

Before an assessment is issued to taxpayer, there is pre – There is no need of a pre – assessment or assessment
assessment notice. proper before a criminal charge is filed against the
taxpayer.
An assessment is sent to the taxpayer. A criminal charged is filed before the DEPARTMENT
OF JUSTICE.
An assessment is a notice and demand to the taxpayer to A criminal complaint is instituted NOT to demand
pay the tax due. payment but to penalize the taxpayer for violation of the
TAX CODE.
The fact of failure to file a return need NOT be proven Criminal charge need only be supported by a prima facie
by an assessment. showing of failure to file a required return.
Aside from tax computation, it also signals the time Criminal complaint for tax evasion CANNOT be
when penalties and interests begin to accrue against the construed as an assessment.
taxpayer. An affidavit of the tax official attached to the criminal
complaint is NOT an assessment.
An affidavit CANNOT be question before the COURT
OF TAX APPEALS, because it is NOT an assessment.
(TAXATION (2020), LIM)
ORDINARY ASSESSMENT EXTRAORDINARY ASSESSMENT

When the return filed is NOT false or fraudulent; When the return filed is fraudulent or omission to file a
tax return and one is required to be filed.
Assessment may be made within 3 years reckoned from Assessment may be made within 10 years from
1 day after due date or actual payment of the tax discovery of fraud or failure / omission to file a tax
whichever is later; return.

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Collection thereafter shall be made within 5 years from Collection may be pursued without assessment within 10
the finality of the assessment. years from discovery of the non – filing of the tax return
or the fraudulent return.
(TAXATION (2020), LIM)
PRELIMINARY ASSESSMENT NOTICE FINAL ASSESSMENT NOTICE

AS TO NATURE
A PAN merely informs the taxpayer of the initial As soon as it is served, an obligation arises on the part of
findings of the Bureau of Internal Revenue. the taxpayer concerned to pay the amount assessed and
demanded.
It also signals the time when penalties and interests

begin to accrue against the taxpayer.
AS TO CONTENT
It contains the proposed assessment, and the facts, law, A FAN contains not only a computation of tax liabilities
rules, and regulations or jurisprudence on which the but also a demand for payment within a prescribed
proposed assessment is based. period.
AS TO REMEDY
It does NOT contain a demand for payment but usually Failure to file an administrative protest within 30 days
requires the taxpayer to reply within 15 days from from receipt of the FAN will render the assessment final,
receipt. executory, and demandable.
Otherwise, the COMMISSION OF INTERNAL

REVENUE will finalize an assessment and issue a FAN.
(G.R. No. 227544)
NATURE OF PRELIMINARY ASSESSMENT NOTICE

A PRELIMINARY ASSESSMENT NOTICE preparatory to the issuance of FINAL ASSESSMENT NOTICE
is NOT an assessment even if it contains a computation of the tax liabilities of a taxpayer and a demand for
payment of the computed tax liabilities was made. (G.R. NO. 185371)
SIGNIFICANCE OF PRELIMINARY ASSESSMENT NOTICE VS. FINAL ASSESSMENT NOTICE

A pre-assessment notice "does not bear the gravity of a formal assessment notice."
A pre-assessment notice merely gives a tip regarding the Bureau of Internal Revenue's findings against a
taxpayer for an informal conference or a clarificatory meeting.
A final assessment is a notice "to the effect that the amount therein stated is due as tax and a demand for
payment thereof."
This demand for payment signals the time "when penalties and interests begin to accrue against the taxpayer
and enabling the latter to determine his remedies."
Thus, it must be "sent to and received by the taxpayer, and must demand payment of the taxes described therein
within a specific period." (G.R. No. 215957)
JEOPARDY ASSESSMENT -- is one that is made by an authorized person without the benefit of complete
or partial audit, in light of the said official’s belief that the assessment and
collection of deficiency tax will be jeopardize by delay caused by the
taxpayer’s failure to:
1) comply with audit and investigation requirements to present his books of
accounts and/or pertinent records, or
2) substantiate all or any of the deductions, exemptions or credits claimed in

Page 27
his return.
(TAXATION (2020), LIM, PAGE 757)
REMEDY
To prevent the issuance of a jeopardy assessment, the taxpayer may be required to execute a waiver of statute
of limitations. (TAXATION (2020), LIM, PAGE 757)
LETTER OF AUTHORITY -- an official document that empowers a revenue officer to examine and
scrutinize the taxpayer’s books of accounts and other accounting records in
order to determine the taxpayer’s correct internal revenue tax liabilities.
PERIOD OF LIMITATION UPON ASSESSMENT AND COLLECTION

Internal revenue taxes shall be:
1) assessed within 3 years after the last day prescribed by law for the filing of the return, and
2) NO proceeding in court without assessment for the collection of such taxes shall be begun after the
expiration of such period.
RATIONALE:
Section 203 of the NIRC of 1997, as amended,
limits the CIR's period to assess and collect internal revenue taxes to 3 years
counted from the last day prescribed by law for the filing of the return or
from the day the return was filed, whichever comes later.
Thus, assessments issued after the expiration of such period are NO longer valid and effective.
the Court explained the primary reason behind the prescriptive period on the COMMISSIONER OF INTERNAL
REVENUE’s right to assess or collect internal revenue taxes:
that is, to safeguard the interests of taxpayers from unreasonable investigation.
Accordingly, the government must assess internal revenue taxes on time

so as NOT to extend indefinitely the period of assessment and
deprive the taxpayer of the assurance that it will
NO longer be subjected to further investigation for taxes
after the expiration of a reasonable period of time. (G.R. NO. 220835)

PROVIDED:
1) That in a case where a return is filed beyond the period prescribed by law, the 3-year period shall be
counted from the day the return was filed.
For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall be
considered as filed on such last day. (SECTION 203)
EXCEPTIONS AS TO PERIOD OF LIMITATION OF ASSESSMENT AND COLLECTION OF TAXES

In the case of a false or fraudulent return with intent to evade tax or of failure to file a return:
i. the tax may be assessed, or
ii. a proceeding in court for the collection of such tax may be filed WITHOUT ASSESSMENT,
at any time within 10 years after the discovery of the falsity, fraud or omission:

Page 28
PROVIDED:
That in a fraud assessment which has become final and executory, the fact of fraud shall be judicially
taken cognizance of in the civil or criminal action for the collection thereof. (SECTION 222 (a))
(c) Any internal revenue tax which has been assessed within the period of limitation OF 10 YEARS as
prescribed in paragraph (a) hereof may be collected by distraint or levy or by a proceeding in court
within 5 years following the assessment of the tax. (SECTION 222 (c))
That nothing in the immediately preceding and paragraph (a) hereof shall be construed to authorize the
examination and investigation or inquiry into any tax return filed in accordance with the provisions
of any tax amnesty law or decree. (SECTION 222 (e))
RATIONALE:
To reiterate, said Section 222 states that an assessment is NOT necessary before a criminal charge can be
filed.
This is the general rule. Private respondents failed to show that they are entitled to an exception.
Moreover, the criminal charge need only be supported by a prima facie showing of failure to file a required
return. This fact need not be proven by an assessment.
The issuance of an assessment must be distinguished from the filing of a complaint. Before an assessment is issued,
there is, by practice, a pre-assessment notice sent to the taxpayer.
The taxpayer is then given a chance to submit position papers and documents to prove that the assessment is
unwarranted.
If the commissioner is unsatisfied, an assessment signed by him or her is then sent to the taxpayer informing
the latter specifically and clearly that an assessment has been made against him or her.
In contrast, the criminal charge need not go through all these.
The criminal charge is filed directly with the DOJ.
Thereafter, the taxpayer is notified that a criminal case had been filed against him, not that the commissioner has
issued an assessment. It must be stressed that a criminal complaint is instituted not to demand payment, but to
penalize the taxpayer for violation of the Tax Code. (G.R. No. 128315)
This mandate governs the question of prescription of the government's right to assess internal revenue taxes
primarily to safeguard the interests of taxpayers from unreasonable investigation by not indefinitely extending
the period of assessment and depriving the taxpayer of the assurance that it will no longer be subjected to
further investigation for taxes after the expiration of reasonable period of time. (G.R. No. 192173)
PERIOD OF LIMITATION ON COLLECTION

GENERAL RULE:
may be collected by distraint or levy or by a proceeding in court within 5 five years following the assessment of
the tax. (SECTION 222 (c))
EXCEPTIONS:
1) In the case of a false or fraudulent return with intent to evade tax or of failure to file a return a proceeding
in court for the collection of such tax may be filed WITHOUT ASSESSMENT, at any time within 10 years
after the discovery of the falsity, fraud or omission. (SECTION 222 (a))
2) If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the
COMMISSIONER OF INTERNAL REVENUE and the taxpayer have agreed in writing to its assessment
after such time, the tax may be assessed within the period agreed upon.

Page 29
The period so agreed upon may be extended by subsequent written agreement made before the expiration of
the period previously agreed upon. (SECTION 222 (b))
Any internal revenue tax, which has been assessed within the period agreed upon as provided in paragraph (b)
hereinabove, may be collected by distraint or levy or by a proceeding in court within the period agreed upon
in writing before the expiration of the 5 – year period.
The period so agreed upon may be extended by subsequent written agreements made before the expiration of
the period previously agreed upon. (SECTION 222 (d))
WHEN FINAL ASSESSMENT NOTICE 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 though the same is actually received by the taxpayer after the expiration of the
prescriptive period. (G.R. NO. L – 22492)

GENERAL RULE:
EXCEPTIONS:
INSTANCES NEGATING THE EXISTENCE OF FRAUD AND PRECLUDE THE APPLICATION OF

THE 10 – YEAR PRESCRIPTIVE PERIOD
1) COMMISSIONER OF INTERNAL REVENUE failed to impute fraud in the assessment notice or demand
for payment. (ABAN, supra at 274)
2) COMMISSIONER OF INTERNAL REVENUE failed to alleged fraud in his answer to the taxpayer’s
PETITION FOR REVIEW when the case is appealed to the COURT OF TAX APPEALS. (ABAN, supra at 274
– 275)
3) The fact that the COMMISSIONER OF INTERNAL REVENUE raised the question of fraud only for the
first time in his memorandum which was filed with the COURT OF TAX APPEALS after he had rested his
case. (G.R. NO. L – 15716)
4) The fact that the COMMISSIONER OF INTERNAL REVENUE did NOT INCLUDE THE FRAUD
PENALTY in his deficiency assessment which was issued after the filing of the return is an indication that he
himself does NOT believe there was fraud. (CTA CASE NO. 1168)
5) In an assessment, where the BUREAU OF INTERNAL REVENUE appeared not so sure as to the real
amount of the taxpayer’s net income, as where the BUREAU OF INTERNAL REVENUE arrived at three
highly different computations. (G.R. NO. L – 17438)
6) Mere understatement of gross earnings does NOT of itself prove fraud. (G.R. NO. L – 13203)

GENERAL RULE:
EXCEPTIONS:

Page 30
INSTANCES CONSTITUTING FAILURE TO FILE RETURN TO WARRANT THE 10 – YEAR

PRESCRIPTIVE PERIOD
1) A deficient return which prevented the COMMISSIONER OF INTERNAL REVENUE from computing
taxes dues. Such defective return is the same as if no return is filed at all. (G.R. NO. L - 19495)
2) Failure to report income in the return which were clearly not exempted from tax. The COURT did not
treat this a as a simple omission as the same involved substantial sums. (CTA EB CASE NO. 731)
3) Undeclared VAT – able sales more than 30 % of that declared in ASALUS’ VAT returns. (G.R. NO. 221590)
FALSE RETURN FRAUDULENT RETURN

AS TO NATURE
Merely implies a deviation from the truth or fact Intentional or deceitful entry with intent to evade the
whether intentional or not. taxes due.
AS TO IMPOSITION OF SURCHARGE PENALTY

50% surcharge penalty does NOT apply. 50% surcharge penalty applies.
AS TO PERIOD OF PRESCRIPTION
10 year period of prescription applies to both.
AS TO CRIMINAL PENALTY
Taxpayer is NOT subject to criminal penalty. Taxpayer is may be subject to criminal penalty.
(2 – C DOMONDON, supra at 243)
HOW TO ALLEGED FRAUD

Fraud is a question of fact that should be alleged and duly proven.
"The willful neglect to file the required tax return or the fraudulent intent to evade the payment of taxes, considering
that the same is accompanied by legal consequences, cannot be presumed."
Fraud entails corresponding sanctions under the tax law.

Therefore, it is indispensable for the COMMISSIONER OF INTERNAL REVENUE to include the basis for
its allegations of fraud in the assessment notice. (G.R. No. 215957)
TAX EVASION IS MORAL TORPITUDE

the filing of a "fraudulent return with intent to evade tax" is a crime involving moral turpitude as it entails
willfulness and fraudulent intent on the part of the individual.
The same, however, CANNOT be said for "failure to file a return" where the mere omission already
constitutes a violation.
Thus, this Court holds that even if the conviction of respondent Marcos II is affirmed, the same NOT being a crime
involving moral turpitude cannot serve as a ground for his disqualification. (G.R. Nos. 130371 &130855)

PROVIDED:

Page 31
EXTENSION OF PERIOD OF ASSESSMENT AND COLLECTION OF TAXES:

If before the expiration of the time prescribed in Section 203 for the assessment of the tax, both the
EXTENSION OF PERIOD OF ASSESSMENT AND COLLECTION OF TAXES:

INVALID / DEFECTIVE WAIVER (SCAN – DIED)

the Court declared the waiver invalid because:
1) it was Signed only
by a revenue district officer or
by Assistant Commissioner-Large Taxpayers Service, and
NOT the COMMISSIONER OF INTERNAL REVENUE or a duly authorized representative; (S)
2) the taxpayer was NOT furnished a Copy of the waiver. (C)
3) there was NO date of Acceptance; (A) and
4) the waivers were executed without the Notarized written authority of the taxpayer's representative to sign
the waiver on its behalf; (N)
5) they did NOT specify the kind and amount of the tax Due; (D)
6) the fact of receipt by the taxpayer of its file copy was NOT Indicated in the original copies of the waivers. (I)
7) the waivers speak of a request for Extension of time within which to present additional documents and
NOT for reinvestigation and/or reconsideration of the pending internal revenue case as required under RMO
No. 20-90. (E) and
8) it did NOT specify the Date within which the BIR may assess and collect revenue taxes,
such that the waiver became unlimited in time; (D) (G.R. NO. 220835)
AMENDMENT OF TAX RETURN

GENERAL RULE:
The following shall govern in case there is an amendment of the return:
1) AMENDMENT IS SUBSTANTIAL –
2) AMENDMENT WAS SUPERFICIAL –
1) AMENDMENT IS The counting of the prescriptive period shall be reckoned on the date the substantial
SUBSTANTIAL – amendment was made;

Page 32
2) AMENDMENT The counting of the prescriptive period is still the original period.
WAS SUPERFICIAL –
(G.R. NO. L - 19727)
EXCEPTION:
If the return is sufficiently complete to enable the COMMISSIONER OF INTERNAL REVENUE 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. (CTA CASE NO. 540)
SUSPENSION OF RUNNING OF STATUTE OF LIMITATIONS

The running of the Statute of Limitations provided in Sections 203 and 222 on:
the making of assessment and
the beginning of distraint or levy a proceeding in court for collection,
in respect of any deficiency,
shall be suspended for the period during which the COMMISSIONER OF INTERNAL REVENUE is
prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for 60
days thereafter; (ORAL)
1) when the taxpayer is Out of the Philippines;

2) when the taxpayer Requests for a reinvestigation which is granted by the Commissioner;
3) when the taxpayer CANNOT be located in the Address given by him in the return filed upon which a tax is being
assessed or collected; and
4) when the warrant of distraint or levy is duly served upon the taxpayer, his authorized representative, or a member
of his household with sufficient discretion, and NO property could be Located;
PROVIDED:
That, if the taxpayer informs the COMMISSIONER OF INTERNAL REVENUE of any change in address,
the running of the Statute of Limitations will not be suspended; (SECTION 223)
PROTESTING OF ASSESSMENT
PRE –ASSESSMENT NOTICE
When the COMMISSIONER OF INTERNAL REVENUE or his duly authorized representative
finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is made.
Otherwise, the assessment shall be void. (SECTION 228)
PROVIDED:
Provided, however, That a pre-assessment notice shall NOT be required in the following cases: (P – MODE)
1) When the excise tax due on excisable articles has NOT been Paid; or
2) When the finding for any deficiency tax is the result of Mathematical error in the computation of the tax as
appearing on the face of the return; or
3) 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; or
4) When a Discrepancy has been determined between the tax withheld and the amount actually remitted by the
withholding agent; or
5) When the article locally purchased or imported by an Exempt person, such as, but not limited to, vehicles, capital
equipment, machineries and spare parts, has been sold, traded or transferred to non-exempt persons. (SECTION
228)
MANDATORY NATURE

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The word "shall" in Section 228 of the National Internal Revenue Code and Revenue Regulations No. 12-99
means the act of informing the taxpayer of both the legal and factual bases of the assessment is mandatory.
The law requires that the bases be reflected in the formal letter of demand and assessment notice.
This cannot be presumed.
The rationale behind the requirement that taxpayers should be informed of the facts and the law on which the
assessments are based conforms with the constitutional mandate that no person shall be deprived of his or her
property without due process of law.
an advice of tax deficiency from the COMMISSIONER OF INTERNAL REVENUE to an employee of Enron,
including the preliminary 5 – day letter, were NOT considered valid substitutes for the mandatory written
notice of the legal and factual basis of the assessment. (G.R. No. 215957)
DISPUTABLE PRESUMPTIONS
The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other
evidence:
That a letter duly directed and mailed was received in the regular course of the mail; (RULE 131, SECTION
3)
when a mail matter is sent by registered mail, there exists a presumption, set forth under Section 3(v), Rule 131 of
the Rules of Court, that it was received in the regular course of mail.
The facts to be proved in order to raise this presumption are: (a) that the letter was properly addressed with postage
prepaid; and (b) that it was mailed.
While a mailed letter is deemed received by the addressee in the ordinary course of mail, this is still merely a
disputable presumption subject to controversion, and a direct denial of the receipt thereof shifts the burden
upon the party favored by the presumption to prove that the mailed letter was indeed received by the
addressee. (G. R. No. 157064)
PRE –ASSESSMENT NOTICE

When the COMMISSIONER OF INTERNAL REVENUE or his duly authorized representative
finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is made.
Otherwise, the assessment shall be void. (SECTION 228)
PRELIMINARY ASSESSMENT NOTICE IS GENERALLY MANDATORY

taxpayer must first be informed that he is liable for deficiency taxes through the sending of a PAN.
He must be informed of the facts and the law upon which the assessment is made.
The law imposes a substantive, NOT merely a formal, requirement.
To proceed heedlessly with tax collection without first establishing a valid assessment is evidently violative of the
cardinal principle in administrative investigations - that taxpayers should be able to present their case and adduce
supporting evidence. (G.R. No. 185371)
FAILURE OF THE TAXPAYER

Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to
said notice.
If the taxpayer fails to respond, the COMMISSIONER OF INTERNAL REVENUE or his duly authorized
representative shall issue an assessment based on his findings. (SECTION 228)
DEFENSES OF THE TAXPAYER

1) PRESCRIPTION
2) LEGAL AND FACTUAL BASES OF TAX ASSESSMENT
1) PRESCRIPTION
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PROVIDED:
EXCEPTIONS AS TO PERIOD OF LIMITATION OF ASSESSMENT AND COLLECTION OF TAXES

In the case of a false or fraudulent return with intent to evade tax or of failure to file a return:
i. the tax may be assessed, or
ii. a proceeding in court for the collection of such tax may be filed WITHOUT ASSESSMENT,
at any time within 10 years after the discovery of the falsity, fraud or omission:
PROVIDED:
That in a fraud assessment which has become final and executory, the fact of fraud shall be judicially
taken cognizance of in the civil or criminal action for the collection thereof. (SECTION 222 (a))
(c) Any internal revenue tax which has been assessed within the period of limitation OF 10 YEARS as
prescribed in paragraph (a) hereof may be collected by distraint or levy or by a proceeding in court
within 5 years following the assessment of the tax. (SECTION 222 (c))
That nothing in the immediately preceding and paragraph (a) hereof shall be construed to authorize the
examination and investigation or inquiry into any tax return filed in accordance with the provisions
of any tax amnesty law or decree. (SECTION 222 (e))
PROCEDURAL REQUIREMENT OF THE COMMISSIONER OF THE INTERNAL REVENUE

To avail of the extraordinary period of assessment in Section 222(a) of the National Internal Revenue Code, the
COMMISSION OF INTERNAL REVENUE should show that the facts upon which the fraud' is based is
communicated to the taxpayer.
The burden of proving that the facts exist in any subsequent proceeding is with the Commissioner.
Furthermore, the Final Assessment Notice is NOT valid if it does NOT contain a definite due date for payment
by the taxpayer. (G.R. No. 215957)

expiration of such period. (SECTION 203)
EXTENTION OF PERIOD OF ASSESSMENT AND COLLECTION OF TAXES:


Page 35
EXTENTION OF PERIOD OF ASSESSMENT AND COLLECTION OF TAXES:

INVALID / DEFECTIVE WAIVER (SCAN – DIED)

the Court declared the waiver invalid because:
1) it was Signed only
by a revenue district officer or
by Assistant Commissioner-Large Taxpayers Service, and
NOT the COMMISSIONER OF INTERNAL REVENUE or a duly authorized representative; (S)
2) the taxpayer was NOT furnished a Copy of the waiver. (C)
3) there was NO date of Acceptance; (A) and
4) the waivers were executed without the Notarized written authority of the taxpayer's representative to sign
the waiver on its behalf; (N)
5) they did NOT specify the kind and amount of the tax Due; (D)
6) the fact of receipt by the taxpayer of its file copy was NOT Indicated in the original copies of the waivers. (I)
7) the waivers speak of a request for Extension of time within which to present additional documents and
NOT for reinvestigation and/or reconsideration of the pending internal revenue case as required under RMO
No. 20-90. (E) and
8) it did NOT specify the Date within which the BIR may assess and collect revenue taxes,
such that the waiver became unlimited in time; (D) (G.R. NO. 220835)

expiration of such period. (SECTION 203)
DEFENSE OF ESTOPPEL
that the doctrine of estoppel CANNOT be applied
as an exception to the statute of limitations on the assessment of taxes
considering that there is a detailed procedure for the proper execution of the waiver,
which the BIR must strictly follow.
The BIR CANNOT hide behind the doctrine of estoppel to cover its failure to comply with RMO 20-90 and
RDAO 05-01, which the BIR itself had issued.
Having caused the defects in the waivers, the BIR must bear the consequence.
It CANNOT simply shift the blame to the taxpayer. (G.R. NO. 220835)
FIRST TIME ON APPEAL

The defense may be raised even for the first time on appeal when it is apparent on the record that the
assessment as already prescribed. (CTA EB NO. 975)
2) LEGAL AND FACTUAL BASES OF TAX ASSESSMENT

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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
BUREAU OF INTERNAL REVENUE merely stated that per computerized matching, the taxpayer has undeclared
importations, the assessment is invalid. (CTA EB NO. 872)
An assessment based on the SUMMARY LIST OF PURCHASES CANNOT be used as the sole basis.
The SUMMARY LIST OF PURCHASES is doubtful, inconclusive and unreliable.
The COMMISSIONER OF INTERNAL REVENUE must prove the source of the information otherwise, the
assessment is invalid. (CTA EB NO. 883)
REQUEST FOR -- a plea for a re – evaluation of an assessment on the basis of existing records
RECONSIDERATION without need of additional evidence which may involve a question of fact or law or
both.
(R.R. NO. 12 – 99 AS AMENDED BY R.R. NO.)
REQUEST FOR -- a plea for the re – evaluation of an assessment on the basis of the newly –
REINVESTIGATION discovered evidence or additional evidence that a taxpayer intends to present in the
reinvestigation which may also involve a question of law or fact or both.
(R.R. NO. 12 – 99 AS AMENDED BY R.R. NO.)
REQUEST FOR RECONSIDERATION REQUEST FOR REINVESTIGATION

EFFECT ON THE STATUTE OF LIMITATIONS
Does not toll the STATUTE OF LIMITATIONS. Toll the STATUTE OF LIMITATIONS because a
reinvestigation, which entails reception and evaluation
of additional evidence, will take more time than
reconsideration.
SUBMISSION OF DOCUMENTS
Not required. Required within 60 days from the date of filing of
protest.
WHEN 180 DAY PERIOD COMMENCE

From the filing of the protest. From the submission of the complete supporting
documents.
(2 – C DOMONDON, supra at 448)
STATUTE OF LIMITATIONS
Toll the STATUTE OF LIMITATIONS because a reinvestigation, which entails reception and evaluation of
additional evidence, will take more time than reconsideration. (G.R. NO. 167146)
ADMINISTRATIVE PROTEST
Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation
within 30 days from receipt of the assessment in such form and manner as may be prescribed by implementing
rules and regulations.
Within 60 days from filing of the protest, all relevant supporting documents shall have been submitted.
Otherwise, the assessment shall become final. (SECTION 228)
DENIAL OF PROTEST
1) If the protest is denied in whole or in part, or
2) is NOT acted upon within 180 days from submission of documents,

the taxpayer adversely affected by the decision or inaction may appeal to the COURT OF TAX APPEALS within
i. 30 days from receipt of the said decision, or

Page 37
ii. from the lapse of 180-day period.

Otherwise, the decision shall become final, executory and demandable. (SECTION 228)
INACTION BY THE COMMISSIONER OF INTERNAL REVENUE OR DULY AUTHORIZED

REPRESENTATIVE ON ADMINISTRATIVE PROTEST ON DISPUTED ASSESSMENTS
TAXPAYER’S REMEDIES
1) INACTION BY THE COMMISSIONER OF INTERNAL REVENUE
2) INACTION BY DULY AUTHORIZED REPRESENTATIVE
1) INACTION BY THE COMMISSIONER OF INTERNAL REVENUE – EITHER:

i. may appeal to the COURT OF TAX APPEALS within:
a) 30 days from receipt of the said decision, or
b) 30 days from the lapse of one hundred 180-day period.
ii. Await the final decision of the COMMISSIONER OF INTERNAL REVENUE on the disputed
assessment, and then appeal such final decision to the COURT OF TAX APPEALS within 30 days
after the receipt of a copy of such decision. (R.R. 12 – 99 as amended by R.R. NO. 18 – 2013)
(SECTION 228)

b) 30 days from the lapse of 180-day period counted from the date of the 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
ii. Await the final decision of the DULY AUTHORIZED REPRESENTATIVE on the disputed
assessment. (R.R. 12 – 99 as amended by R.R. NO. 18 – 2013) (SECTION 228)
RATIONALE:
The Court of Tax Appeals’ jurisdiction is NOT limited to cases when the BIR makes an assessment or a
decision unfavorable to the taxpayer.
Because Republic Act No. 1125 also vests the Court of Tax Appeals with jurisdiction over the BIR’s inaction
on a taxpayer’s refund claim, there may be instances when the Court of Tax Appeals has to take cognizance
of cases that have nothing to do with the BIR’s assessments or decisions.
When the BIR fails to act on a claim for refund of voluntarily but mistakenly paid taxes, for example, there is no
decision or assessment involved.
Taxes are generally self-assessed.

They are initially computed and voluntarily paid by the taxpayer.
The government does NOT have to demand it.
If the tax payments are correct, the BIR need NOT make an assessment. (G.R. No. 175410)
EFFECT OF REMEDY AVAILED

The options are MUTUALLY EXCLUSIVE and resort to one bars the application of the other. (G.R. NO.
171251)
APPEAL TO THE COURT OF TAX APPEALS

Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue may file an
appeal with the CTA within 30 days after the receipt of such decision or ruling or after the expiration of the
period fixed by law for action.
MODE OF APPEAL
Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under
Rule 42 of the 1997 Rules of Civil Procedure with the CTA within 30 days from the receipt of the decision or
ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon.

Page 38
DIVISION OF THE COURT OF TAX APPEALS

A DIVISION OF THE COURT OF TAX APPEALS shall hear the appeal.
A party adversely affected by a ruling, order or decision of a DIVISION OF THE COURT OF TAX APPEALS
may file a MOTION FOR RECONSIDERATION OR NEW TRIAL before the same DIVISION OF THE
COURT OF TAX APPEALS within 15 days from notice thereof.
NO appeal taken to the COURT OF TAX APPEALS from the decision of the COMMISSIONER OF
INTERNAL REVENUE shall suspend the payment, levy, distraint, and/or sale of any property of the
taxpayer for the satisfaction of his tax liability as provided by existing law.
PROVIDED:
That when in the opinion of the COURT OF TAX APPEALS:
1) the collection of the taxes may jeopardize the interest of the Government and/or the taxpayer
2) the Court any stage of the proceeding may suspend the said collection and require the taxpayer either:
i. to deposit the amount claimed or
ii. to file a surety bond for NOT more than double the amount with the COURT OF TAX APPEALS.
(Republic Act No. 9282, SECTION 11)
APPEAL TO THE COURT OF TAX APPEALS EN BANC

NO civil proceeding involving matter arising under the NATIONAL INTERNAL REVENUE CODE shall be
maintained, except as herein provided, until and unless an appeal has been previously filed with the COURT
OF TAX APPEALS and disposed of in accordance with the provisions of this Act.
A party adversely affected by a resolution of a DIVISION OF THE COURT OF TAX APPEALS on a

MOTION FOR RECONSIDERATION OR FOR NEW TRIAL,
may file a PETITION FOR REVIEW WITH THE COURT OF TAX APPEALS EN BANC. (Republic Act
No. 9282, SECTION 18)
REVIEW BY CERTIORARI
A party adversely affected by a decision or ruling of the COURT OF TAX APPEALS EN BANC
may file with the SUPRE COURT a verified PETITION FOR REVIEW ON CERTORARI pursuant to
RULE 45 OF THE RULES OF COURT. (Republic Act No. 9282, SECTION 19)
ACTUAL DISTRAINT CONSTRUCTIVE DISTRAINT

There is taking or possession of personal property from No actual taking of personal property of the taxpayer, he
the taxpayer by the government sufficient in quantify to is merely prohibited from disposing of his property.
satisfy the tax liability.
Assessment is necessary. Assessment is NOT necessary.
Made only on the property of a delinquent taxpayer. Made on the property of any taxpayer whether
delinquent or not.
Physical transfer of possession is NOT always required. This is a preventive remedy aimed to forestall a possible
This is true in the case of intangible property such as dissipation of the taxpayer’s assets when delinquency
stocks and credits. takes place.
Effected by leaving a list of distrained property or by Effected by requiring the taxpayer to sign a receipt of
service of a warrant of distraint or garnishment. the property or by the revenue officer preparing and
leaving a list of such property.
An immediate step for collection of taxes. NOT necessarily so.


Page 39
DISTRAINT LEVY
Refers to personal property. Refers to real property.
Forfeiture by the government is NOT provided. Forfeiture is authorized.
The taxpayer is NOT given the right of redemption with The right of redemption is granted in case of real
respect to distrained personal property. property levied upon and sold or forfeited to the
government.
RECOVERY OF TAX CREDIT OR TAX REFUND

PROVIDED:
1) That a return filed showing an overpayment shall be considered as a written claim for credit or refund.
filed.
3) That should the COMMISSIONER OF INTERNAL REVENUE find that the grant of refund is NOT
proper, the COMMISSIONER OF INTERNAL REVENUE must state in writing the legal and factual basis
for the denial.
RECOVERY OF TAX CREDIT OR TAX REFUND

of the tax or penalty: (as amended by RA No 11534) (SECTION 204 (C))
PROVIDED:
filed.
RATIONALE
observance of the 90 + 30 period is mandatory and jurisdictional and
prior to such period, the COURT OF TAX APPEALS has NO competence to entertain such appeal. (G.R.
No. 184823)
RECOVERY OF TAX ERRONEOUSLY OR ILLEGALLY COLLECTED

NO suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax
hereafter alleged: (EMAW)
1) to have been Erroneously or illegally assessed or collected, or
2) of any sum alleged to have been excessively or in any Manner wrongfully collected,
3) of any penalty claimed to have been collected without Authority, or

Page 40
4) of any sum alleged to have been excessively or in any manner wrongfully collected Without authority,
until a claim for refund or credit has been duly filed with the COMMISSIONER OF INTERNAL REVENUE.
but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under
protest or duress.
In any case, NO such suit or proceeding shall be filed after the expiration of 2 years from the date of payment of
the tax or penalty regardless of any supervening cause that may arise after payment.
PROVIDED:
That the COMMISSIONER OF INTERNAL REVENUE may, even without a written claim therefor, refund or
credit any tax, where on the face of the return upon which payment was made, such payment appears clearly
to have been erroneously paid. (SECTION 229)
RATIONALE:
The primary purpose of filing administrative claim was to serve as a notice of warning to the COMMISSIONER
OF INTERNAL REVENUE that court action would follow unless tax or penalty alleged to have been
collected erroneously or illegally is refunded.
This does NOT mean however, 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 2 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.(G.R. NO. 216130)
RECOVERY OF TAX ERRONEOUSLY OR ILLEGALLY COLLECTED

GENERAL RULE:
Suit or proceeding for the recovery of any national internal revenue tax may be maintained, whether or not
such tax, penalty, or sum has been paid under protest or duress. (SECTION 229)
EXCEPTIONS
1) If there are several issues involved in the FINAL LETTER DEMAND / FINAL ASSESSMENT NOTICE but the
taxpayer only protests against the validity of some of the issues raised, the assessment attributable to the
undisputed issues shall become final, executory, and demandable.
The taxpayer shall be required to pay the deficiency taxes attributable thereto.
2) If there are several issues involved in the disputed assessment and the taxpayer fails to state the facts and the
law in support of the protest against some of the several issues on which assessment is based, the same shall
be considered undisputed issues, in which case the assessment shall become final, executory and demandable.
The taxpayer shall be required to pay the deficiency taxes attributable thereto.
(R.R. NO. 12 – 99 AS AMENDED BY R.R. NO. 18 – 2013)
FORFEITURE OF CASH REFUND AND TAX CREDIT

A) FORFEITURE OF REFUND
A refund check or warrant issued in accordance with the pertinent provisions of this Code, which shall remain
unclaimed or uncashed within 5 years from the date the said warrant or check was mailed or delivered, shall
be forfeited in favor of the Government and the amount thereof shall revert to the general fund. (SECTION
230 (A))
B) FORFEITURE OF TAX CREDIT

A tax credit certificate issued in accordance with the pertinent provisions of this Code, which shall remain
unutilized after 5 years from the date of issue, shall:
1) unless revalidated, be considered invalid, and
2) NOT be allowed as payment for internal revenue tax liabilities of the taxpayer, and
3) the amount covered by the certificate shall revert to the general fund. (SECTION 230 (B))
Page 41
SEC. 231. Action to Contest Forfeiture of Chattel. –

In case of the seizure of personal property under claim of forfeiture, the owner desiring to contest the validity of the
forfeiture may, at any time before sale or destruction of the property, bring an action against the person seizing the
property or having possession thereof to recover the same, and upon giving proper bond, may enjoin the sale; or
after the sale and within six (6) months, he may bring an action to recover the net proceeds realized at the sale.
(SECTION 231)

required of him by the BUREAU OF INTERNAL REVENUE;
different from the facts on which the ruling is based; or
iii. Where the taxpayer Acted in bad faith. (SECTION 246)
TAX DEFICIENCY 1) The amount by which the tax imposed by this Title exceeds the amount shown as the
tax by the taxpayer upon his return;
but the amount so shown on the return shall be increased by the amounts previously
assessed (or collected without assessment) as a deficiency, and decreased by the
amount previously abated, credited, returned or otherwise repaid in respect of such
tax; or
2) If no amount is shown as the tax by the taxpayer upon this return, or

if no return is made by the taxpayer, then the amount by which the tax exceeds the
amounts previously assessed (or collected without assessment) as a deficiency;
but such amounts previously assessed or collected without assessment shall first be
decreased by the amounts previously abated, credited returned or otherwise repaid in
respect of such tax.
(SECTION 56 (B))
TAX DELIQUENCY -- refers to the STATE of a person upon whom the personal obligation to pay the tax
has been fixed by lawful assessment and who thereafter fails to pay the tax within the
time limited by law.
(G.R. NO. L - 12362)
JUDICIAL REMEDIES
REMEDY FOR ENFORCEMENT OF STATUTORY PENAL PROVISIONS
The remedy for enforcement of statutory penalties of all sorts shall be by:
1) criminal or
2) civil action,
as the particular situation may require,
subject to the approval of the COMMISSIONER OF THE INTERNAL REVENUE. (SECTION 221)

Page 42
FORM AND MODE OF PROCEEDING IN ACTIONS ARISING UNDER THE NATIONAL INTERNAL
REVENUE CODE
Civil and criminal actions and proceedings
instituted in behalf of the GOVERNMENT OF THE PHILIPPINES
under the authority of:
1) THE NATIONAL INTERNAL REVENUE CODE or
2) other law enforced by the BUREAU OF INTERNAL REVENUE
shall be brought in the name of the GOVERNMENT OF THE PHILIPPINES and
shall be conducted by legal officers of the BUREAU OF INTERNAL REVENUE
BUT NO civil or criminal action for:
1) the recovery of taxes or
2) the enforcement of any fine, penalty or forfeiture
under THE NATIONAL INTERNAL REVENUE CODE
shall be filed in court without the approval of the COMMISSIONER OF INTERNAL REVENUE.
(SECTION 220)
PROCEDURE FOR APPEAL IN CIVIL CASES

WHO MAY APPEAL
A party adversely affected by a
1) DECISION, RULING OR THE INACTION OF THE COMMISSIONER OF INTERNAL REVENUE on
disputed assessments or claims for refund of internal revenue taxes, or
2) RECOVERY OF TAX CREDIT OR TAX REFUND AND INACTION BY THE COMMISSIONER OF
INTERNAL REVENUE OR DULY AUTHORIZED REPRESENTATIVE THROUGH PETITION FOR
REVIEW UNDER RULE 42 OF THE RULES OF COURT
2.1) RECOVERY OF TAX CREDIT OR TAX REFUND ON INTERNAL REVENUE TAXES
2.2) INACTION BY THE COMMISSIONER OF INTERNAL REVENUE OR DULY
AUTHORIZED REPRESENTATIVE ON ADMINISTRATIVE PROTEST ON DISPUTED
ASSESSMENTS
3) WHERE TO APPEAL AND MODE OF APPEAL
4) MOTION FOR RECONSIDERATION OR NEW TRIAL IN COURT OF TAX APPEALS IN DIVISION
5) PETITION FOR REVIEW UNDER RULE 43 OF THE RULES OF COURT
6) MOTION FOR RECONSIDERATION OR NEW TRIAL IN COURT OF TAX APPEALS EN BANC
7) APPEAL TO SUPREME COURT BY PETITION FOR REVIEW ON CERTIORARI UNDER RULE 45
PROCEDURE FOR APPEAL IN CIVIL CASES

WHO MAY APPEAL
2) DECISION, OR RULING of:
i. the Commissioner of Customs,
ii. the Secretary of Finance,
iii. the Secretary of Trade and Industry,
iv. the Secretary of Agriculture, or
v. a Regional Trial Court in the exercise of its original jurisdiction (n) (A.M. No. 05-11-07-CTA, RULE
8, SECTION 3(a))
2) RECOVERY OF TAX CREDIT OR TAX REFUND AND INACTION BY THE COMMISSIONER OF

INTERNAL REVENUE OR DULY AUTHORIZED REPRESENTATIVE THROUGH PETITION FOR
REVIEW UNDER RULE 42 OF THE RULES OF COURT

ERRONEOUSLY OR ILLEGALLY COLLECTED
2.2) INACTION BY THE COMMISSIONER OF INTERNAL REVENUE OR DULY AUTHORIZED
REPRESENTATIVE ON DISPUTED ASSESSMENTS

Page 43

ERRONEOUSLY OR ILLEGALLY COLLECTED
of the tax or penalty: (as amended by RA No 11534) (SECTION 204 (C))
PROVIDED:
filed.
REMEDY FOR INACTION BY THE COMMISSIONER OF INTERNAL REVENUE OR DULY

AUTHORIZED REPRESENTATIVE ON INTERNAL REVENUE TAXES ERRONEOUSLY OR
ILLEGALLY COLLECTED
PETITION FOR REVIEW UNDER RULE 42 OF THE RULES OF COURT
A party adversely affected by the 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 2 year period prescribed by law from payment
or collection of the taxes. (n) (A.M. No. 05-11-07-CTA, RULE 8, SECTION 3(a))
2.2) INACTION BY THE COMMISSIONER OF INTERNAL REVENUE OR DULY AUTHORIZED

REPRESENTATIVE ON ADMINISTRATIVE PROTEST ON DISPUTED ASSESSMENTS
TAXPAYER’S REMEDIES
1) INACTION BY THE COMMISSIONER OF INTERNAL REVENUE
1) INACTION BY THE COMMISSIONER OF INTERNAL REVENUE – EITHER:

b) 30 days from the lapse of one hundred 180-day period.
ii. Await the final decision of the COMMISSIONER OF INTERNAL REVENUE on the disputed
assessment, and then appeal such final decision to the COURT OF TAX APPEALS within 30 days
after the receipt of a copy of such decision. (R.R. 12 – 99 as amended by R.R. NO. 18 – 2013)
(SECTION 228)

b) 30 days from the lapse of 180-day period counted from the date of the 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
ii. Await the final decision of the DULY AUTHORIZED REPRESENTATIVE on the disputed
assessment. (R.R. 12 – 99 as amended by R.R. NO. 18 – 2013) (SECTION 228)
REMEDY FOR INACTION BY THE COMMISSIONER OF INTERNAL REVENUE OR DULY

AUTHORIZED REPRESENTATIVE ON ADMINISTRATIVE PROTEST ON DISPUTED ASSESSMENTS
DECISION, RULING OR THE INACTION OF THE COMMISSIONER OF INTERNAL REVENUE on
disputed assessments or claims for refund of internal revenue taxes,
may appeal to the COURT OF TAX APPEALS IN DIVISION by PETITION FOR REVIEW
filed within 30 days
Page 44
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. (n) (A.M. No. 05-11-07-CTA, RULE 8, SECTION 3(a))
3) WHERE TO APPEAL AND MODE OF APPEAL

An appeal from a
2) DECISION, OR RULING of:
i. the Commissioner of Customs,
ii. the Secretary of Finance,
iii. the Secretary of Trade and Industry,
iv. the Secretary of Agriculture, or
v. a Regional Trial Court in the exercise of its original jurisdiction
shall be taken to the COURT OF TAX APPEALS IN DIVISION by filing before it a PETITION FOR
REVIEW UNDER RULE 42 OF THE RULES OF COURT.
The COURT OF TAX APPEALS IN DIVISION shall act on the appeal. (n) (A.M. No. 05-11-07-CTA, RULE
8, SECTION 4(a))

Any aggrieved party may seek a reconsideration or new trial of any decision, resolution or order of the COURT OF
TAX APPEALS IN DIVISION.
THE aggrieved party shall file a MOTION FOR RECONSIDERATION OR NEW TRIAL within 15 days from
the date he received notice of the decision, resolution or order of the Court in question. (RCTA, Rule 13, sec. 1a)
(A.M. No. 05-11-07-CTA, RULE 15, SECTION 1)
NEWLY DISCOVERED -- Evidence which already exists prior to or during a trial, but whose existence is
EVIDENCE NOT known to the offering litigant, or though know, could NOT have been
secured and presented during the trial despite reasonable diligence.
FORGOTTEN -- Evidence already an existence or available before or during a trial known to

EVIDENCE and could have been presented and offered in a reasonable manner were it NOT
for the sheer oversight of forgetfulness or the party or the counsel.
(G.R. NO. 164460)
GROUNDS OF MOTION FOR NEW TRIAL IN COURT OF TAX APPEALS IN DIVISION

A MOTION FOR NEW TRIAL may be based on one or more of the following causes materially affecting the
substantial rights of the movant: (FAME) (NDE)
1) Fraud, Accident, Mistake or Excusable negligence which ordinary prudence could NOT have guarded against
and by reason of which such aggrieved party has probably been impaired in his rights; (FAME) or
2) Newly Discovered Evidence, which he could NOT, with reasonable diligence, have discovered and produced at
the trial, and which if presented would probably alter the result. (NDE)
A MOTION FOR NEW TRIAL shall include all grounds then available and those NOT included shall be
deemed waived. (Rules of Court, Rule 37, sec. 1a) (A.M. No. 05-11-07-CTA, RULE 15, SECTION 5)
EFFECT OF FILING MOTION FOR RECONSIDERATION OR NEW TRIAL IN COURT OF TAX

APPEALS IN DIVISION
The filing of a MOTION FOR RECONSIDERATION OR NEW TRIAL shall suspend the running of the
period within which an appeal may be perfected. (RCTA, Rule 13, sec. 4a) (A.M. No. 05-11-07-CTA, RULE
15, SECTION 4)
NO MOTION FOR RECONSIDERATION OR NEW TRIAL IN COURT OF TAX APPEALS IN DIVISION

Page 45
NO party shall be allowed to file a second

motion for reconsideration of a decision, final resolution or order; or
for new trial. (Rules of Court, Rule 52, sec. 2a) (RULE 15, SECTION 7)

An appeal to THE COURT OF TAX APPEALS EN BANC in criminal cases decided by the COURT OF TAX
APPEALS IN DIVISION shall be taken by filing a PETITION FOR REVIEW as provided in Rule 43 of the
Rules of Court
within 15 days from receipt of a copy of the decision or resolution appealed from.
THE COURT OF TAX APPEALS EN BANC may, for good cause,

extend the time for filing of the PETITION FOR REVIEW for an additional period NOT exceeding 15 days.

TAX APPEALS EN BANC.

(G.R. NO. 164460)
GROUNDS OF MOTION FOR NEW TRIAL IN COURT OF TAX APPEALS EN BANC

A motion for new trial shall include all grounds then available and those not included shall be deemed waived.
(Rules of Court, Rule 37, sec. 1a) (A.M. No. 05-11-07-CTA, RULE 15, SECTION 5)

APPEALS EN BANC
15, SECTION 4)
NO MOTION FOR RECONSIDERATION OR NEW TRIAL IN COURT OF TAX APPEALS EN BANC

MOTION FOR RECONSIDERATION of a decision, final resolution or order; or
for NEW TRIAL. (Rules of Court, Rule 52, sec. 2a) (RULE 15, SECTION 7)


Page 46
may appeal therefrom by filing with the SUPREME COURT a verified PETITION FOR REVIEW ON
CERTIORARI
within 15 days from receipt of a copy of the decision or resolution, as provided in Rule 45 of the Rules of Court.
If such party has filed a MOTION FOR RECONSIDERATION OR FOR NEW TRIAL
the period herein fixed shall run from the party’s receipt of a copy of the resolution denying the MOTION
FOR RECONSIDERATION OR FOR NEW TRIAL. (n) (RULE 16, SECTION 1)
EFFECT OF APPEAL
The MOTION FOR RECONSIDERATION OR FOR NEW TRIAL filed before the COURT EN BANC shall
be deemed abandoned if, during its pendency, the movant shall APPEAL TO SUPREME COURT BY
PETITION FOR REVIEW ON CERTIORARI UNDER RULE 45. (2002 Internal Rules of the Court of
Appeals, Rule VI, sec. 15a) (RULE 16, SECTION 2)
CRIMINAL ACTIONS
GROUNDS:
ATTEMPT TO EVADE OR DEFEAT TAX
Any person who willfully attempts in any manner to evade or defeat any tax imposed under the NATIONAL
INTERNAL REVENUE CODE or the payment thereof shall,
in addition to other penalties provided by law, upon conviction thereof, be punished with a fine of not less than Five
hundred thousand pesos (P500,000) but not more than Ten million pesos (P10,000,000), and imprisonment of not
less than six (6) years but not more than ten (10) years: Provided, That the conviction or acquittal obtained under
this Section shall not be a bar to the filing of a civil suit for the collection of taxes.(as amended by RA No 10963)
(SECTION 254)
FAILURE TO FILE TO RETURN, SUPPLY CORRECT AND ACCURATE INFORMATION, PAY TAX
WITHHOLD AND REMIT TAX AND REFUND EXCESS TAXES WITHHELD ON COMPENSATION
Any person required under the NATIONAL INTERNAL REVENUE CODE or by rules and regulations
promulgated thereunder to (PKS) Pay any tax make a return, Keep any record, or Supply correct the accurate
information,
who wilfully:
1) fails TO (PKS) Pay any tax make a return, Keep any record, or Supply correct the accurate information,
or
2) fails TO (WRT) Withhold or Remit Taxes withheld, or
3) fails TO refund excess taxes withheld on compensation,
at the time or times required by law or rules and regulations (SECTION 255)
shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine of not less than
Ten thousand pesos (P10,000) and suffer imprisonment of not less than one (1) year but not more than ten (10)
years.
Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement,
or actually files a return or statement and subsequently withdraws the same return or statement after securing the
official receiving seal or stamp of receipt of internal revenue office wherein the same was actually filed shall, upon
conviction therefore, be punished by a fine of not less than Ten thousand pesos (P10,000) but not more than Twenty
thousand pesos (P20,000) and suffer imprisonment of not less than one (1) year but not more than three (3) years.
(SECTION 255)
CIVIL LIABILITY UNDER REVISED PENAL CODE VS.

CIVIL LIABILITY UNDER THE INCOME TAX CODE
Under the Penal Code the civil liability is incurred by reason of the offender’s criminal act.
Stated differently, the criminal liability gives birth to the civil obligation such that generally,
if one is NOT criminally liable under the Penal Code, he CANNOT become civilly liable thereunder.
The situation under the income tax law is the exact opposite.
Civil liability to pay taxes arises from the fact, for instance, that one has engaged himself in business, and
Page 47
NOT because of any criminal act committed by him.
The criminal liability arises upon failure of the debtor to satisfy his civil obligation.
The incongruity of the factual premises and foundation principles of the two cases
is one of the reasons for NOT imposing civil indemnity on the criminal infractor of the income tax law. (G.R.
NO. L – 22356)
PRESCRIPTION FOR VIOLATIONS ANY PROVISION OF THIS CODE

All violations of any provision of the NATIONAL INTERNAL REVENUE CODE shall prescribe after 5 years.
(SECTION 281)
COMMENCEMENT OF PRESCRIPTION
Prescription shall begin to run
from the day of the commission of the violation of the law, and
if the same be NOT known at the time,
from the discovery thereof and the institution of judicial proceedings for its investigation and punishment.
(SECTION 281)
RECKONING POINT IN CASE OF WILLFUL FAILURE TO PAY DEFICIENCY TAX / CRIMINAL

ACTION MAY BE FILED DESPITE THE LAPSE OF THE PERIOD TO FILE A CIVIL ACTION FOR
COLLECTION OF TAXES
from the day of the commission of the violation of the law, and (SECTION 281)
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. (G.R. NOS. L – 48134 – 37)
PRESCRIPTION SHALL BE INTERRUPTED

The prescription shall be interrupted when proceedings are instituted against the guilty persons and
shall begin to run again if the proceedings are dismissed for reasons NOT constituting jeopardy. (SECTION
281)
PRESCRIPTION SHALL NOT RUN

The term of prescription shall not run when the offender is absent from the Philippines. (SECTION 281)
WHEN CRIMINAL ACTION IS IMPRESCRIPTIBLE

In case of falsity or fraud with intent to evade the tax, the right of the government to collect through criminal
action is imprescriptible for as long as the period from the discovery and the institution of judicial
proceedings, up to the filing of the information in court does NOT exceed 5 years. (G.R. NO. L – 48134 – 37)
WILLFUL BLINDNESS DOCTRINE

A taxpayer can NO longer raise the defense that the errors on their tax returns are NOT their responsibility or
that it is the fault of the accountants they hired. (INGLES, supra at 413)
ASSESSMENT IS NOT NECESSARY BEFORE FILING A CRIMINAL ACTION

IT IS NOT a requirement for the filing thereof that there be a precise computation and assessment of the tax,
since what is involved in the criminal action is NOT the collection of tax but a criminal prosecution for the
violation of the NATIONAL INTERNAL REVENUE CODE,
PROVIDED:
that there is a prima facie showing of a WILLFUL ATTEMPT to evade taxes or failure to file the required
return. (G.R. NOS. L – 41919 – 24)
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EFFECT OF SUBSEQUENT SATISFACTION OF CIVIL LIABILITY

The subsequent satisfaction of civil liability by payment or prescription does NOT extinguish the taxpayer’s
criminal liability. (G.R. NOS. L – 17177 – 80)
NO SUBSIDIARY IMPRISONMENT
In case of insolvency on part of the taxpayer, subsidiary imprisonment CANNOT be imposed as regards the tax
which he is sentenced to pay. (G.R. NO. L – 4288)
FILING OF A CRIMINAL ACTION IS NOT AN IMPLIED ASSESSMENT BY THE COMMISSIONER

OF INTERNAL REVENUE
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. (G.R. NO. 128315)
ASSESSMENT IS STILL NECESSARY EVEN IF THE ACCUSED IS FOUND GUILTY UNDER SECTION
255 OF THE NIRC
FAILURE TO FILE TO RETURN, SUPPLY CORRECT AND ACCURATE INFORMATION, PAY TAX
information,
who wilfully:
or
ILLUSTRATION:
In case the accused is found guilty beyond reasonable doubt for violation of SECTION 255 OF THE NATIONAL
INTERNAL REVENUE CODE, the imposition of the civil liability by the COURT OF TAX APPEALS is NOT
automatic and assessment notice from the BUREAU OF INTERNAL REVENUE is necessary. (CTA CRIM.
CASES NOS. 013 AND 015)
CRIMINAL ACTIONS
GROUNDS:
1) ATTEMPT TO EVADE OR DEFEAT TAX (SECTION 254)
2) FAILURE TO FILE TO RETURN, SUPPLY CORRECT AND ACCURATE INFORMATION, PAY TAX
(SECTION 255)
1) ATTEMPT TO EVADE OR DEFEAT TAX (SECTION 254)

Any person who willfully attempts in any manner to evade or defeat any tax imposed under the NATIONAL
INTERNAL REVENUE CODE or the payment thereof, (SECTION 254)
2) FAILURE TO FILE TO RETURN, SUPPLY CORRECT AND ACCURATE INFORMATION, PAY TAX
(SECTION 255)
information,
who wilfully:
or
Page 49
CRIMINAL JURISDICTION OF THE COURT OF TAX APPEALS (M1,000,000) (L1,000,000 – NA) (RM)
1) Exclusive original jurisdiction over all criminal offenses arising from violations of the NATIONAL
INTERNAL REVENUE CODE or TARIFF AND CUSTOMS CODE and other laws administered by the BUREAU
INTERNAL REVENUE CODE or the BUREAU OF CUSTOMS, where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is P1,000,000.00 or More; (A.M. No. 05-11-07-CTA) and
2) Exclusive appellate jurisdiction over all criminal offenses where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is Less than P1,000,000.00 or where there is No specified Amount
claimed. (L1,000,000 – NA)
3) Exclusive appellate jurisdiction in criminal offenses: (RM)

a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in
the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.
(REPUBLIC ACT No. 1125 as amended by RA3457, RA9503, RA9282)
SOLICITOR GENERAL AS COUNSEL FOR THE PEOPLE AND GOVERNMENT OFFICIALS SUED IN
THEIR OFFICIAL CAPACITY
The SOLICITOR GENERAL shall represent the:
1) PEOPLE OF THE PHILIPPINES and
2) government officials sued in their official capacity
in all cases brought to the COURT OF TAX APPEALS in the exercise of its appellate jurisdiction.
SOLICITOR GENERAL may deputized:

1) the legal officers of the BUREAU OF INTERNAL REVENUE in cases brought under the NATIONAL
INTERNAL REVENUE CODE or
other laws enforced by the BUREAU OF INTERNAL REVENUE, or
2) the legal officers of the BUREAU OF CUSTOMS in cases brought under the TARIFF AND CUSTOMS
CODE OF THE PHILIPPINES or
other laws enforced by the Bureau of Customs,
to appear in behalf of the officials of said agencies sued in their official capacity:
PROVIDED:
Provided, however, such duly deputized legal officers shall remain at all times under the direct control and
supervision of the SOLICITOR GENERAL. (n) (A.M. No. 05-11-07-CTA, RULE 9, SECTION 10)
INCLUSION OF CIVIL ACTION IN CRIMINAL ACTION

In cases within the jurisdiction of the COURT OF TAX APPEALS,
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. (Rules of Court, Rule 111, sec. 1[a], par. 1a) (A.M. No. 05-11-07-CTA, RULE 9, SECTION 11)
PROCEDURE FOR APPEAL IN CRIMINAL CASES

IN CASES DECIDED BY THE REGIONAL TRIAL COURT IN THE EXERCISE OF ITS ORIGINAL
JURSDICTION
1) PERIOD OF APPEAL AND HOW APPEAL TAKEN
Page 50

1) PERIOD OF APPEAL AND HOW APPEAL TAKEN

An appeal to the COURT OF TAX APPEALS in criminal cases decided by a REGIONAL TRIAL COURT in
the exercise of its original jurisdiction shall be taken by filing a notice of appeal pursuant to Sections 3(a) and 6,
Rule 122 of the Rules of Court
within 15 days from receipt of a copy of the decision or final order with the court
which rendered the final judgment or order appealed from and by serving a copy upon the adverse party. (A.M. No.
05-11-07-CTA, RULE 9, SECTION 9)
The COURT OF TAX APPEALS IN DIVISION shall act on the appeal. (A.M. No. 05-11-07-CTA, RULE 9,
SECTION 9)
The appeal to the COURT OF TAX APPEALS IN DIVISION in cases decided by the Regional Trial Court in
the exercise of its original jurisdiction, shall be by notice of appeal filed with the court which rendered the
judgment or final order appealed from and by serving a copy thereof upon the adverse party.
(3a) (A.M. No. 00-5-03-SC, [September 28, 2004]) (RULE 122, SECTION 3)
WHEN APPEAL TO BE TAKEN

THE NOTICE OF APPEAL must be taken
within 15 days from promulgation of the judgment or from notice of the final order appealed from. (RULE
122, SECTION 6)

TAX APPEALS IN DIVISION.

(G.R. NO. 164460)
GROUNDS OF MOTION FOR NEW TRIAL IN COURT OF TAX APPEALS IN DIVISION

A MOTION FOR NEW TRIAL shall include all grounds then available and those NOT included shall be
deemed waived. (Rules of Court, Rule 37, sec. 1a) (A.M. No. 05-11-07-CTA, RULE 15, SECTION 5)

APPEALS IN DIVISION

Page 51
15, SECTION 4)
NO MOTION FOR RECONSIDERATION OR NEW TRIAL IN COURT OF TAX APPEALS IN DIVISION

motion for reconsideration of a decision, final resolution or order; or
for new trial. (Rules of Court, Rule 52, sec. 2a) (RULE 15, SECTION 7)

Rules of Court



(G.R. NO. 164460)


APPEALS EN BANC
15, SECTION 4)


Page 52


may appeal therefrom by filing with the SUPREME COURT
a verified PETITION FOR REVIEW ON CERTIORARI
EFFECT OF APPEAL
PROCEDURE FOR APPEAL IN CRIMINAL CASES

IN CASES DECIDED BY THE REGIONAL TRIAL COURT IN THE EXERCISE OF ITS APPELLATE
JURSDICTION

Rules of Court



(G.R. NO. 164460)

Page 53

APPEALS EN BANC
15, SECTION 4)


may appeal therefrom by filing with the SUPREME COURT
a verified PETITION FOR REVIEW ON CERTIORARI
EFFECT OF APPEAL
CIVIL PENALTIES
There shall be imposed, in addition to the tax required to be paid, a penalty equivalent to 25% of the amount
due, in the following cases: (FODA)
1) Failure to File any return and pay the tax due thereon as required under the provisions of this Code or rules and
regulations on the date prescribed; or
2) Unless otherwise authorized by the Commissioner, filing a return with an internal revenue officer Other than
those with whom the return is required to be filed; or
3) Failure to pay the Deficiency tax within the time prescribed for its payment in the notice of assessment; or
4) Failure to pay the full or part of the Amount of tax shown on any return required to be filed under the provisions
of this Code or rules and regulations, or the full amount of tax due for which no return is required to be filed, on or
before the date prescribed for its payment. (SECTION 248 (A))
WILLFUL NEGLECT TO FILE RETURN WITHIN THE PERIOD PRESCRIBED

1) In case of willful neglect to file the return within the period prescribed by the NATIONAL INTERNAL
REVENUE CODE or by rules and regulations, or
2) in case a false or fraudulent return is willfully made,
the penalty to be imposed shall be 50% of the tax or of the deficiency tax, in case, any payment has been made
on the basis of such return before the discovery of the falsity or fraud:

Page 54
PROVIDED:
1) That:
i. a substantial under-declaration of taxable sales, receipts or income, or
ii. a substantial overstatement of deductions,
as determined by the COMMISSIONER OF INTERNAL REVENUE pursuant to the rules and regulations to
be promulgated by the Secretary of Finance, shall constitute prima facie evidence of a false or fraudulent
return;
2) 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 30% of actual deductions,
shall render the taxpayer liable for substantial under-declaration of sales, receipts or income or for
overstatement of deductions, as mentioned herein. (SECTION 248 (B))
INTEREST
(A) IN GENERAL
There shall be assessed and collected on any unpaid amount of tax, interest at the rate of double the legal
interest rate for loans or forbearance of any money in the absence of an express stipulation as set by the
Bangko Sentral ng Pilipinas from the date prescribed for payment until the amount is fully paid:
PROVIDED:
That in NO case shall the deficiency and the delinquency interest prescribed under Subsections (B) and (C)
hereof, be imposed simultaneously. (as amended by RA No 10963)(SECTION 249 (A))
(B) DEFICIENCY INTEREST

Any deficiency in the tax due, as the term is defined in the NATIONAL INTERNAL REVENUE CODE,
shall be subject to the interest prescribed in Subsection (A) hereof, which interest shall be assessed and collected
from:
1) the date prescribed for its payment until the full payment thereof, or
2) upon issuance of a notice and demand by the COMMISSIONER OF INTERNAL REVENUE,
whichever comes earlier.(as amended by RA No 10963) (SECTION 249 (B))
(C) DELINQUENCY INTEREST

In case of failure to pay:
1) The amount of the tax due on any return to be filed, or
2) The amount of the tax due for which no return is required, or
3) A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand
of the COMMISSIONER OF INTERNAL REVENUE,
there shall be assessed and collected on the unpaid amount, interest at the rate prescribed in Subsection (A)
hereof until the amount is fully paid, which interest shall form part of the tax. (SECTION 249 (C))
(D) INTEREST ON EXTENDED PAYMENT

If any person required to pay the tax is qualified and elects to pay:
1) the tax on installment under the provisions of the NATIONAL INTERNAL REVENUE CODE, but fails to
pay the tax or any installment hereof, or
2) any part of such amount or installment on or before the date prescribed for its payment, or
3) where the COMMISSIONER OF INTERNAL REVENUE has authorized an extension of time within
which to pay a tax or a deficiency tax or any part thereof,
there shall be assessed and collected interest at the rate hereinabove prescribed on the tax or deficiency tax or
any part thereof unpaid from the date of notice and demand until it is paid. (SECTION 249 (D))
RATIONALE
when there is a showing that a taxpayer has substantially underdeclared its sales, receipt or income, there is a
presumption that it has filed a false return.

Page 55
As such, the CIR need NOT immediately present evidence to support the falsity of the return, unless the
taxpayer fails to overcome the presumption against it. (G.R. No. 221590)
SEC. 250. Failure to File Certain Information Returns. – In the case of each failure to file an information return,
statement or list, or keep any record, or supply any information required by the NATIONAL INTERNAL
REVENUE CODE or by the COMMISSIONER OF INTERNAL REVENUE on the date prescribed therefor,
unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall, upon notice and
demand by the Commissioner, be paid by the person failing to file, keep or supply the same, One thousand pesos
(1,000) for each failure:
Provided, however, That the aggregate amount to be imposed for all such failures during a calendar year shall not
exceed Twenty-five thousand pesos (P25,000). (SECTION 250)
FAILURE OF A WITHHOLDING AGENT TO COLLECT AND REMIT TAX

Any person:
1) required to withhold, account for, and remit any tax imposed by the NATIONAL INTERNAL REVENUE
CODE or
2) who willfully fails to withhold such tax, or account for and remit such tax, or aids or abets in any manner
to evade any such tax or the payment thereof,
shall, in addition to other penalties provided for under this Chapter,
be liable upon conviction to a penalty equal to the total amount of the tax not withheld, or not accounted for
and remitted. (SECTION 251)
FAILURE OF A WITHHOLDING AGENT TO REFUND EXCESS WITHHOLDING TAX

Any employer/withholding agent who fails or refuses to refund excess withholding tax
shall, in addition to the penalties provided in this Title,
be liable to a penalty to the total amount of refunds which was NOT refunded to the employee resulting from
any excess of the amount withheld over the tax actually due on their return. (SECTION 252)

representative may:
PROVIDED:
authorizing the examination of any taxpayer. (as amended by RA No 10963)
OF INTERNAL REVENUE or his duly authorized representative. (SECTION 6A)
WHAT DOES NOT CONSTITUTE AN ASSESSMENT

1) A written communication by a revenue officer of tax liability of the taxpayer, giving him an opportunity to
contest or disprove the BUREAU OF INTERNAL REVENUE examiner’s findings is NOT AN ASSESSMENT
since it is yet indefinite.
The said recommendation letter served merely as the prima facie basis for filing criminal information for the
violation of the NATIONAL INTERNAL REVENUE CODE. (G.R. NO. 120935)
2) The advice of tax deficiency and preliminary five – day letter given by the COMMISSIONER OF
INTERNAL REVENUE to an employee of the taxpayer are NOT VALID SUBSTITUTES for the mandatory
notice in writing of the legal and factual bases of the assessment. (G.R. NO. 193100)

Page 56
3) An assessment must be sent to and received by a taxpayer, and must demand payment of the taxes
described therein within a specific period. (G.R. NO. 128315)
NO ESTOPPEL AGAINST THE GOVERNMENT RULE

It is a settled rule that in the performance of its governmental functions, the STATE cannot be estopped by the
negligent acts of its officers or agents. (G.R. NO. L - 66838)
EXCEPTION:
In the interest of justice and fair play, as where injustice will result to the taxpayer. (G.R. NO. 117982)
EFFECT OF FILING RETURN

Any return, statement of declaration filed in any office authorized to receive the same shall NOT be withdrawn.
PROVIDED:
1) That within 3 years from the date of such filing, the same may be modified, changed, or amended;
2) That NO notice for audit or investigation of such return, statement or declaration has in the meantime been
actually served upon the taxpayer. (SECTION 6A)
FAILURE TO SUBMIT REQUIRED RETURNS, STATEMENTS, REPORTS AND OTHER DOCUMENTS

1) When a report required by law as a basis for the assessment of any national internal revenue tax shall NOT be
forthcoming within the time fixed by laws or rules and regulations; or
2) when there is reason to believe that any such report is false, incomplete or erroneous,
the COMMISSIONER OF INTERNAL REVENUE shall assess the proper tax on the best evidence obtainable.
(SECTION 6B)
EFFECT OF FAILURE TO SUBMIT REQUIRED RETURNS, STATEMENTS, REPORTS AND OTHER

DOCUMENTS
1) In case a person fails to file a required return or other document at the time prescribed by law, or
2) willfully or otherwise files a false or fraudulent return or other document,
the COMMISSIONER OF INTERNAL REVENUE shall 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 all legal purposes. (SECTION 6B)
TAX EVASION IS MORAL TORPITUDE

the filing of a "fraudulent return with intent to evade tax" is a crime involving moral turpitude as it entails
willfulness and fraudulent intent on the part of the individual.
The same, however, CANNOT be said for "failure to file a return" where the mere omission already
constitutes a violation.
Thus, this Court holds that even if the conviction of respondent Marcos II is affirmed, the same NOT being a crime
involving moral turpitude cannot serve as a ground for his disqualification. (G.R. Nos. 130371 &130855)
PERSON CONVICTED OF A CRIME PENALIZED BY THE NIRC

Any person convicted of a crime penalized by the NATIONAL INTERNAL REVENUE CODE shall, in addition
to being liable for the payment of the tax, be subject to the penalties imposed herein.
PROVIDED:
That payment of the tax due after apprehension shall not constitute a valid defense in any prosecution for
violation of any provision of this Code or in any action for the forfeiture of untaxed articles. (SECTION 253 (a))
WILLFULLY AIDS OR ABETS

Any person who willfully aids or abets in the commission of a crime penalized herein or who causes the commission
of any such offense by another shall be liable in the same manner as the principal. (SECTION 253 (b))
Page 57
(c) If the offender is not a citizen of the Philippines, he shall be deported immediately after serving the sentence
without further proceedings for deportation. If he is a public officer or employee, the maximum penalty prescribed
for the offense shall be imposed and, in addition, he shall be dismissed from the public service and perpetually
disqualified from holding any public office, to vote and to participate in any election. If the offender is a Certified
Public Accountant, his certificate as a Certified Public Accountant shall, upon conviction, be automatically revoked
or cancelled. (SECTION 253 (c))
(d) In the case of associations, partnerships or corporations, the penalty shall be imposed on the partner, president,
general manager, branch manager, treasurer, officer-in-charge, and the employees responsible for the violation.
(SECTION 253 (d))
(e) The fines to be imposed for any violation of the provisions of this Code shall not be lower than the fines imposed
herein or twice the amount of taxes, interest and surcharges due from the taxpayer, whichever is higher. (SECTION
253 (e))
PRESCRIPTION FOR VIOLATIONS ANY PROVISION OF THIS CODE

All violations of any provision of this Code shall prescribe after 5 years. (SECTION 281)
from the day of the commission of the violation of the law, and
if the same be NOT known at the time,
from the discovery thereof and the institution of judicial proceedings for its investigation and punishment.
(SECTION 281)
RECKONING POINT IN CASE OF WILLFUL FAILURE TO PAY DEFICIENCY TAX
from the day of the commission of the violation of the law, and (SECTION 281)
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. (G.R. NOS. L – 48134 – 37)
PRESCRIPTION SHALL BE INTERRUPTED

The prescription shall be interrupted when proceedings are instituted against the guilty persons and shall begin
to run again if the proceedings are dismissed for reasons not constituting jeopardy. (SECTION 281)
PRESCRIPTION SHALL NOT RUN

The term of prescription shall not run when the offender is absent from the Philippines. (SECTION 281)
WHEN CRIMINAL ACTION IS IMPRESCRIPTIBLE

In case of falsity or fraud with intent to evade the tax, the right of the government to collect through criminal
action is imprescriptible for as long as the period from the discovery and the institution of judicial
proceedings, up to the filing of the information in court does NOT exceed 5 years. (G.R. NO. L – 48134 – 37)
COUR OF TAX APPEALS

The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters
arising under the National Internal Revenue or other laws administered by the Bureau of Internal
Revenue;

Page 58
2. Inaction by the Commissioner of Internal Revenue in cases involving

disputed assessments,
refunds of internal revenue taxes,
fees or other charges,
penalties in relations thereto, or
other matters arising under the National Internal Revenue Code or other laws administered by the
Bureau of Internal Revenue,
where the National Internal Revenue Code provides a specific period of action, in which case the
inaction shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or
resolved by them in the exercise of their original or appellate jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other
money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in
relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau
of Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over
cases involving the assessment and taxation of real property originally decided by the provincial or city
board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from
decisions of the Commissioner of Customs which are adverse to the Government under Section 2315 of the
Tariff and Customs Code;
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or
article, and the Secretary of Agriculture in the case of agricultural product, commodity or article, involving
dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and Customs
Code, and safeguard measures under Republic Act No. 8800, where either party may appeal the decision to
impose or not to impose said duties. (R.A. NO. 9282, SECTION 7(a))
b. Jurisdiction over cases involving criminal offenses as herein provided:

1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal
Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue
or the Bureau of Customs.
Provided, however, That offenses or felonies mentioned in this paragraph where the principal amount o
taxes and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00)
or where there is no specified amount claimed shall be tried by the regular Courts and the jurisdiction of the
CTA shall be appellate.
Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the
corresponding civil action for the recovery of civil liability for taxes and penalties shall at all times be
simultaneously instituted with, and jointly determined in the same proceeding by the CTA, the filing of the
criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to
reserve the filling of such civil action separately from the criminal action will be recognized.
2. Exclusive appellate jurisdiction in criminal offenses:

originally decided by them, in their respected territorial jurisdiction. (R.A. NO. 9282, SECTION
7(b))
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in
the exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.

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c. Jurisdiction over tax collection cases as herein provided:

1. Exclusive original jurisdiction in tax collection cases involving final and executory assessments
for taxes, fees, charges and penalties.
PROVIDED:
That collection cases where the principal amount of taxes and fees, exclusive of charges and
penalties, claimed is less than One million pesos (P1,000,000.00) shall be tried by the proper
Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court.
2. Exclusive appellate jurisdiction in tax collection cases:

a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in
tax collection cases originally decided by them, in their respective territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial
Courts in the Exercise of their appellate jurisdiction over tax collection cases originally
decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts, in their respective jurisdiction." (R.A. NO. 9282, SECTION 7(b))
COUR OF TAX APPEALS

The COUR OF TAX APPEALS shall exercise:
b. Jurisdiction over cases involving criminal offenses as herein provided:
2. Exclusive appellate jurisdiction in criminal offenses:
originally decided by them, in their respected territorial jurisdiction. (R.A. NO. 9282, SECTION
7(b))
NATURE OF THE CASE

Before the case can be raised on appeal to the COURT OF TAX APPEALS, the action before the
REGIONAL TRIAL COURT 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, as such, the REGIONAL TRIAL COURT’S ruling could NOT be characterized as a
local tax case over which the COURT OF TAX APPEALS could have properly assumed jurisdiction on
appeal. (G.R. NO. 221620)
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 SUPREME
COURT that the BUREAU OF INTERNAL REVENUE 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 SUPREME
COURT, where it was never raised before the COURT OF TAX APPEALS.
In the absence of explicit statutory provisions to the contrary, the Government must follow the same rules of
procedure which bind private parties. (G.R. NOS. L - 66838)
FACTUAL FINDINGS MADE BY THE COURT OF TAX APPEALS NOT REVIEWABLE

FACTUAL FINDINGS MADE BY THE COURT OF TAX APPEALS can only be disturbed on appeal if they
are supplied by substantial evidence or there is showing of gross error or abuse on part of the COURT OF
TAX APPEALS.
In the absence of any clear and convincing proof to the contrary, the SUPREME COURT must presume that
the COURT OF TAX APPEALS rendered a decision which is valid in every respect. (G.R. NO. 183880)
RULE 47 ANNULMENT OF JUDGMENTS OF FINAL ORDERS AND RESOLUTIONS

COVERAGE

Page 60
Judgments or final orders and resolutions in civil actions of Regional Trial Courts may be subject to
ANNULMENT OF JUDGMENTS OF FINAL ORDERS AND RESOLUTIONS by the Court of Appeals
when the: (PANO)
1) Petition for Relief (P)
2) Appeal, (A)
3) Ordinary remedies of New Trial, (N) or
4) Other appropriate remedies (O)
are NO longer available through NO fault of the petitioner. (n) (SECTION 1)
GROUNDS FOR ANNULMENT

The annulment may be based only on the grounds of: (EF) (LJ)
1) Extrinsic Fraud (EF) and
2) Lack of Jurisdiction. (LJ) (SECTION 2)
SUPREME COURT, COURT OF APPEALS AND COURT OF TAX APPEALS EN BANC CANNOT
ANNUL JUDGMENT OF THEIR DIVISIONS
SUPREME COURT, COURT OF APPEALS AND COURT OF TAX APPEALS EN BANC CANNOT
ANNUL JUDGMENT OF THEIR DIVISIONS. ANNULMENT OF JUDGMENT 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 court but are divisions of one and the same COURT.
There is NO hierarchy of COURTS with the SUPREME COURT, COURT OF APPEALS AND COURT OF
TAX APPEALS, for each remains as one COURT NOTWITHSTANDING that they also work in
DIVISIONS. (G.R. NO. 199422)
CERTIORARI POWER OF THE COURT OF TAX APPEALS

PETITION FOR CERTIORARI (TEA – GA)
1) When any Tribunal, Board or Officer (T)
2) Exercising Judicial or Quasi-Judicial Functions (E)
3) has Acted Without or in Excess its or his Jurisdiction, (A) or
4) with Grave Abuse of Discretion Amounting to Lack or Excess of Jurisdiction, (G) and
5) there is NO Appeal, or any Plain, Speedy, and Adequate Remedy in the ordinary course of law, (A)
a person aggrieved thereby may file a VERIFIED PETITION FOR CERTIORARI in the proper court, alleging
the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such
tribunal, board or officer, and granting such incidental reliefs as law and justice may require. (RULE 65, SECTION
1)
WHEN PETITION FILED

GENERAL RULE:
The petition shall be filed NOT later than 60 days from notice of the judgment, order or resolution.
In case a motion for reconsideration or new trial is timely filed, whether such motion is required or NOT, the
petition shall be filed NOT later than 60 days counted from the notice of the denial of the motion. (RULE 65,
SECTION 4)
MOTION FOR RECONSIDERATION AS PRE – REQUISITE:

GENERAL RULE:
MOTION FOR RECONSIDERATION is an essential precondition for the filing of petition for certiorari,
prohibition, or mandamus. (G.R. NO. 193058)
EXCEPTIONS:
These exceptions are: (PLUNDO – RUN)
1) Where the Proceedings were ex parte or in which the petitioner had NO opportunity to object;
2) Where the issue raised is one purely of Law or where public interest is involved.
Page 61
3) Where there is an Urgent necessity for the resolution of the question and any further delay would prejudice the
interests of the Government or of the petitioner or the subject matter of the action is perishable;
4) Where the proceedings in the lower court are a Nullity for lack of due process;
5) Where petitioner was Deprived of due process and there is extreme urgency for relief;
6) Where, in a criminal case, relief from an Order of arrest is urgent and the granting of such relief by the trial court
is improbable;
7) Where the questions raised in the certiorari proceeding have been duly Raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower court;
8) Where, under the circumstances, a motion for reconsideration would be Useless; and
9) Where the order is a patent Nullity, as where the Court a quo has NO jurisdiction; (G.R. No. 141637)
CERTIORARI POWER OF THE COURT OF TAX APPEALS

1987 CONSTITUTION, ARTICLE VIII JUDICIAL DEPARTMENT
The JUDICIAL POWER shall be vested in one Supreme Court and in such lower courts as may be
established by law. (SECTION 1)
RATIONALE:
Courts derive their authority from the CONSTITUTION’S recognition that they shall be the sole and
exclusive investees of judicial power.
This, even as the CONSTITUTION leaves to the legislature the authority to establish lower courts, as well as “ to
define, prescribe, and apportion the jurisdiction of the various courts” except of the SUPREME COURT. (G.R. NO.
187491)
JUDICIAL POWER -- includes the duty of the courts of justice to:

1) settle actual controversies involving rights which are legally demandable and
enforceable, and
2) 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.
(SECTION 1)
On the strength of the above constitutional provisions,

it can be fairly interpreted
that the power of the COURT OF TAX APPEALS 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 REGIONAL TRIAL COURT
in issuing an interlocutory order
in cases falling within the exclusive appellate jurisdiction of the tax court.
It, thus, follows that the COURT OF TAX APPEALS, by constitutional mandate, is vested with jurisdiction to
issue writs of certiorari in these cases.
the Court of Tax Appeals' authority to issue writs of certiorari is inherent in the exercise of its appellate
jurisdiction:
A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it effectively, to
make all orders that will preserve the subject of the action, and to give effect to the final determination of the appeal.
It carries with it the power to protect that jurisdiction and to make the decisions of the court thereunder effective.
The court, in aid of its appellate jurisdiction, has authority to control all auxiliary and incidental matters necessary to
the efficient and proper exercise of that jurisdiction. For this purpose, it may, when necessary, prohibit or restrain
the performance of any act which might interfere with the proper exercise of its rightful jurisdiction in cases pending
before it.

Page 62
The Court of Tax Appeals has undoubted jurisdiction to pass upon

the constitutionality or validity of
a tax law or regulation when raised by the taxpayer
as a defense in disputing or contesting an assessment or claiming a refund.
XXXXX
This Court, however, declares that the Court of Tax Appeals may likewise take cognizance of cases directly
challenging the constitutionality or validity of a tax law or regulation or administrative issuance (revenue
orders, revenue memorandum circulars, rulings). (G.R. NO. 213446)
To add, in recent years, the SUPREME COURT has consistently

acted on direct actions assailing the validity of
various revenue regulations,
revenue memorandum circulars, and
the likes, issued by the COMMISSIONER OF INTERNAL REVENUE. (G.R. NO. 213446)
While the above statute confers on the CTA jurisdiction to resolve tax disputes in general, this does NOT
include cases where the constitutionality of a law or rule is challenged.
Where what is assailed is the validity or constitutionality of a law, or a rule or regulation issued by the
administrative agency in the performance of its quasi legislative function, the regular courts have jurisdiction
to pass upon the same. (G.R. No. 210987)
APPEAL TO THE COURT OF TAX APPEALS EN BANC

NO civil proceeding involving matter arising under the National Internal Revenue Code shall be maintained,
except as herein provided, until and unless an appeal has been previously filed with the CTA and disposed of
in accordance with the provisions of this Act.
A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new
trial, may file a petition for review with the CTA en banc. (Republic Act No. 9282, SECTION 18)
REVIEW BY CERTIORARI
A party adversely affected by a decision or ruling of the CTA en banc may file with the Supreme Court a verified
petition for review on certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure. (Republic Act No.
9282, SECTION 19)
FINDINGS OF FACT BY THE COURT OF TAX APPEALS

Settled is the rule that the Court
will NOT lightly set aside the factual conclusions reached by the COURT OF TAX APPEALS 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. (G.R. NO. 202922)
EFFECT OF DECISION THAT TAX IS BARRED BY STATUTE OF LIMITATIONS

If the assessment or collection of any tax is barred by any statute of limitations, the decisions of the COURT OF
TAX APPEALS that effect shall be considered as its decision that there is no deficiency in respect of such tax.
(R.A. NO. 9282, SECTION 14)
LIBERAL CONSTRUCTION
The Rules shall be liberally construed in order to promote their objective of securing a just, speedy, and
inexpensive determination of every action and proceeding before the Court. (RCTA, Rule 1, sec. 2a)
(REVISED RULES OF THE COURT OF TAX APPEALS, RULE 1, SECTION 2)

Page 63

Part Ii (Tax Administration and Remedies Under Nirc - Remedial Law)

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Part Ii (Tax Administration and Remedies Under Nirc - Remedial Law)

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PART II (TAX ADMINISTRATION AND REMEDIES UNDER NIRC – REMEDIAL LAW)

REFUNDS OR TAX CREDITS OF INPUT TAX

FULL OR PARTIAL DENIAL OF THE CLAIM FOR TAX REFUND

REFUND OR TAX CREDIT OF EXCESS INPUT TAX

By: Caffeinated Wisdom

FULL OR PARTIAL DENIAL OF THE CLAIM FOR TAX REFUND

the 30-day period to appeal to the CT A is

2) where the COMMISSIONER OF INTERNAL REVENUE,

In these cases, the COMMISSIONER OF INTERNAL REVENUE

NON – RETROACTIVITY OF RULINGS

REFUNDS OR TAX CREDITS OF INPUT TAX

FAILURE ZERO – RATED TRANSACTION PRINTED IN THE RECEIPT

QUANTUM OF EVIDENCE TO PROVE CLAIM FOR REFUND OR CREDIT

TITLE I ORGANIZATION AND FUNCTION OF THE BUREAU OF INTERNAL REVENUE

CHIEF OFFICIALS OF THE BUREAU OF INTERNAL REVENUE

A taxpayer is granted a period of 30 days

However, the COMMISSIONEROF INTERNAL REVENUE CANNOT,

Indeed, administrative issuances must

By: Caffeinated Wisdom

A taxpayer is granted a period of 30 days

PRESUMPTION OF RULING OF THE COMMISSIONER OF THE INTERNAL REVENUE

RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES

EXCEPTIONS TO THE RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES (EPUS – LUD –

RATIONALE ON RULE ON EXHAUSTION OF ADMINISTRATIVE REMEDIES

POWER OF THE COMMISSIONER OF THE INTERNAL REVENUE TO DECIDE TAX CASES

POWER OF THE COMMISSIONER OF INTERNAL REVENUE TO OBTAIN INFORMATION, AND TO

By: Caffeinated Wisdom

POWER OF THE COMMISSIONER OF INTERNAL REVENUE TO MAKE ASSESSMENTS AND

EXAMINATION OF RETURN AND DETERMINATION OF TAX DUE

NO ESTOPPEL AGAINST THE GOVERNMENT RULE

EFFECT OF FILING RETURN

FAILURE TO SUBMIT REQUIRED RETURNS, STATEMENTS, REPORTS AND OTHER DOCUMENTS

EFFECT OF FAILURE TO SUBMIT REQUIRED RETURNS, STATEMENTS, REPORTS AND OTHER

the COMMISSIONER OF INTERNAL REVENUE

AUTHORITY TO CONDUCT INVENTORY – TAKING, SURVEILLANCE AND TO PRESCRIBE

By: Caffeinated Wisdom

The findings may be:

the COMMISSIONER OF INTERNAL REVENUE, after:

AUTHORITY TO TERMINATE TAXABLE PERIOD

the COMMISSIONER OF INTERNAL REVENUE shall:

AUTHORITY OF THE COMMISSIONER TO PRESCRIBE REAL PROPERTY VALUES

By: Caffeinated Wisdom

AUTHORITY OF THE COMMISSIONER OF INTERNAL REVENUE TO INQUIRE INTO BANK

UNLESS AND UNTIL he waives in writing his privilege in:

1) SECRECY OF BANK DEPOSITS

1) SECRECY OF BANK DEPOSITS

b) upon written permission of the depositor, or

2) SECRECY OF FOREIGN CURRENCY DEPOSITS

ADMISSIBILITY OF EVIDENCE OBTAINED IN UNLAWFUL EXAMINATION OF BANK ACCOUNTS

REQUEST OF TAX INFORMATION FROM FOREIGN TAX AUTHORITY

PROCEDURE FOR TAX INFORMATION HELD BY BANKS AND FINANCIAL INSTITUTIONS

By: Caffeinated Wisdom

OBLIGATION OF THE COMMISSIONER OF INTERNAL REVENUE

AUTHORITY OF THE COMMISSIONER OF INTERNAL REVENUE TO DELEGATE POWER

3) The power to Compromise or abate any tax liability.

By: Caffeinated Wisdom

the Secretary of finance, upon recommendation of the COMMISSIONER OF INTERNAL REVENUE,

may be compromised by a regional evaluation board which shall be composed of the:

RULE MAKING AUTHORITY OF THE SECRETARY OF FINANCE

NON – RETROACTIVITY OF RULINGS

CHAPTER IX RETURNS AND PAYMENT OF TAX

d) Every NONRESIDENT ALIEN ENGAGED in trade or business or in the exercise of profession in

By: Caffeinated Wisdom