Documente Academic
Documente Profesional
Documente Cultură
By
Rem Edcel E. Pasalo
IRRB, SY 2015-2016
Table of Contents
If at the time of issuing/writing the check, the issuer has sufficient funds on his
bank account but when presented for payment thereafter, the funds needed are
insufficient to cover the full amount issued within the period of 90 days from the date
appearing on the check and the occurrence of which would be the reason of dishonoring
of the check for insufficiency of funds.
The check involved in the first offense is worthless at the time of issuance since
the drawer had neither sufficient funds in nor credit with the drawee bank at the time,
while that involved in the second offense is good when issued as drawer had sufficient
funds in or credit with the drawee bank when issued. Under the first offense, the 90-day
presentment period is not expressly provided, while such period is an express element of
the second offense.
In any of these cases, the issuer of the check commits a violation of BP 22, and
may be held liable for imprisonment of thirty days to one year or a fine a double the value
of the check or both at the discretion of the court. Moreover, the issuer of the check may
also be liable for imprisonment, even if only a fine is imposed by the court, if the issuer
has no sufficient property to pay the fine imposed, in which case he or she shall be liable
to serve a prison term at the rate of one day for each eight pesos of the unpaid fine.
Elements of the offense under Section 1 of B.P. Blg.22 are:
(1) Drawing and issuance of any check to apply on account or for value;
(2) knowledge by the maker, drawer, or issuer that at the time of issue he did not have
sufficient funds in or credit with the drawee bank for the payment of such check in full
upon presentment; and
(3) Said check is subsequently dishonored by the drawee bank for insufficiency of funds or
credit, or would have been dishonored for the same reason had not the drawer, without any
valid reason, ordered the bank to stop payment.
Non-imprisonment for debt
It had been argued that BP 22 runs counter to the inhibition in the Bill of Rights which
states, "No person shall be imprisoned for debt or non-payment of a poll tax." Since the
offense under BP 22 is consummated only upon the dishonor or non-payment of the check
when it is presented to the drawee bank, the statute is really a "bad debt law" rather than a
"bad check law." What it punishes is the non-payment of the check, not the act of issuing it.
The statute, it is claimed, is nothing more than a veiled device to coerce payment of a debt
under the threat of penal sanction.
The gravamen of the offense punished by BP 22 is the act of making and issuing a
worthless check or a check that is dishonored upon its presentation for payment. It is not the
non-payment of an obligation which the law punishes. The law is not intended or designed to
coerce a debtor to pay his debt. The thrust of the law is to prohibit, under pain of penal
sanctions, the making of worthless checks and putting them in circulation. Because of its
5
deleterious effects on the public interest, the practice is proscribed by the law. The law
punishes the act not as an offense against property, but an offense against public order.
It may be constitutionally impermissible for the legislature to penalize a person for nonpayment of a debt ex contractu But certainly it is within the prerogative of the lawmaking
body to proscribe certain acts deemed pernicious and inimical to public welfare. Acts mala in
se are not the only acts which the law can punish. An act may not be considered by society as
inherently wrong, hence, not malum in se but because of the harm that it inflicts on the
community, it can be outlawed and criminally punished as malum prohibitum. The state can
do this in the exercise of its police power.
The enactment of BP 22 is a declaration by the legislature that, as a matter of public
policy, the making and issuance of a worthless check is deemed public nuisance to be abated
by the imposition of penal sanctions. It had been reported that the approximate value of
bouncing checks per day was close to 200 million pesos.
It is not for the court to question the wisdom or policy of the statute. It is sufficient that a
reasonable nexus exists between means and end. Considering the factual and legal
antecedents that led to the adoption of the statute, it is not difficult to understand the public
concern which prompted its enactment.
Impairment of freedom of contract
Article III, Section 10 of the Constitution provides that: "No law impairing the obligation
of contracts shall be passed." However, the freedom of contract which is constitutionally
protected is freedom to enter into "lawful" contracts. Contracts which contravene public
policy are not lawful. Checks can not be categorized as mere contracts. It is a commercial
instrument which, in this modem day and age, has become a convenient substitute for
money; it forms part of the banking system and therefore not entirely free from the
regulatory power of the state.
Equal protection of the laws
The challenge is to the effect that BP 22 is discriminatory or is violative of the equal
protection of the laws since it penalizes the drawer of the check, but not the payee. It had
been argued that the payee is just as responsible for the crime as the drawer of the check,
since without the indispensable participation of the payee by his acceptance of the check
there would be no crime. It is settled, however, that the clause "equal protection of the laws"
does not preclude classification of individuals, who may be accorded different treatment
under the law as long as the classification is no unreasonable or arbitrary. The argument
premised on the equal protection of the law is tantamount to saying that, to give equal
protection, the law should punish both the swindler and the swindled.
Improper delegation of legislative powers
6
It had been argued that the law violates the Constitutional prohibition against the
delegation of legislative power, on the theory that the offense is not completed by the sole act
of the maker or drawer but is made to depend on the will of the payee -- if the payee does not
present the check to the bank for payment but instead keeps it, there would be no crime. This
argument, however, stretches to absurdity the meaning of "delegation of legislative power."
What cannot be delegated is the power to legislate, or the power to make laws. which means,
as applied to the present case, the power to define the offense sought to be punished and to
prescribe the penalty. By no stretch of logic or imagination can it be said that the power to
define the crime and prescribe the penalty therefor has been in any manner delegated to the
payee. Neither is there any provision in the statute that can be construed, no matter how
remotely, as undue delegation of executive power.
Defect in the enactment of BP 22
It is argued that Section 9 (2) of Article VII of the 1973 Constitution was violated by the
legislative body when it enacted BP 22 into law. This constitutional provision prohibits the
introduction of amendments to a bill during the Third Reading. It is claimed that during its
Third Reading, the bill which eventually became BP 22 was amended in that the text of the
second paragraph of Section 1 of the bill as adopted on Second Reading was altered or
changed in the printed text of the bill submitted for approval on Third Reading. However, it
is clear from the records that the text of the second paragraph of Section 1 of BP 22 is the
text which was actually approved by the body on Second Reading.
We likewise find no reason to sustain petitioners contention that she was not given any
notice of dishonor. Myrna had no reason to be suspicious of petitioner. It will be recalled that
Josefina Dimalanta assured Myrna that petitioner is her "best friend" and "a good payer."
Consequently, when the checks bounced, Myrna would naturally turn to Josefina for help. We
note that Josefina refused to give Myrna petitioners address but promised to inform
petitioner about the dishonored checks.
This ruling would appear to be inconsistent with the required burden of proof and the rule
of interpretation of penal laws, succinctly noted in King vs. People, thus:
We must stress that BP 22, like all penal statutes, is construed strictly against the State
and liberally in favor of the accused. Likewise, the prosecution has the burden to prove
beyond reasonable doubt each element of the crime. Hence, the prosecutions case must rise
or fall on the strength of its own evidence, never on the weakness or even absence of that of
the defense.
10
Sources:
Soriano, Fidelito M. Negotiable Instrument(Law and Application)for business
students.2011.pp.269-277.
Bouncing Check & BP 22. http://www.philippinecriminallawyer.com/?q=bouncingcheck.
Robles, Chan. Batas Pambansa Bilang 22 Chan Robles Virtual Law Library.
http://www.chanrobles.com/bataspambansabilang22.htm#.VvX9mPl97IU. 2010.
Atty.Biron, James. Estafa and Bouncing Checks Law (B.P.22).
http://www.jamesbiron.com/2010/10/estafa-and-bouncing-checks-law-b-p-22/. October
16, 2010.
Bouncing Checks Law. http://wiki.lawcenter.ph/index.php?
title=Bouncing_Checks_Law#Element_2:_Knowledge_of_insufficiency_of_funds.
11
Tax Remedies
12
Constructive Distraint*
Officer effecting the constructive distraint shall proceed to prepare a list of such property, and in
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.
Instances where the taxpayers personal property may be constructively distraint were as follows:
1.
2.
3.
4.
Upon failure of the person owing any delinquent tax or delinquent revenue to pay the
same at the time required, the Commissioner or his authorized representative shall seize and
distraint personal property of such persons in sufficient quantity to satisfy the tax, or charges,
together with any increment thereto incident to delinquency, and the expenses of the distraint and
the cost of the subsequent sale.
The paragraph above shall be summarized as follows:
Amount involved (Delinquent Tax)
More than Php1,000,000.00
Php1,000,000.00 or less
Levy shall be effected by writing upon a duly authenticated certificate showing the name
of the taxpayer and the amount of the tax and penalty due from him a description of the
property upon which levy is made.
Written notice of the levy shall be mailed to or served upon the:
1) Register of Deeds of the province or city where the property is located
2) Delinquent taxpayer
3) If taxpayer is absent from Philippines, to his agent or manager of the business in
respect to which the liability arose.
4) If there is none, to the occupant of the property in question.
There are two (2) cases in which the taxpayer may redeem the property sold:
1. By paying within one year from date of sale:
a. Amount of public taxes
b. Penalties
c. Interest thereon (date of delinquency to date of sale)
d. 15% interest per annum of purchase price (date of purchase to date of
redemption)
2. The owner shall not be deprived of the possession of the property sold and shall
be entitled to the rents and other income thereof until the expiration of the time
allowed for redemption.
b)Disposition for
want of bidders or
bids inadequate to
satisfy tax
defieciency
c)Advertisement for
sale
Distraint
Seizure of personal
property owned by
and in possession of
the taxpayer
Levy
Seizure of real
property owned by
and in possession of
the taxpayer
Forfeited to the
government then sold
to meet the
deficiency
Garnishment*
Seizure of personal
property owned by
the taxpayer but in
the possession of a
third party (e.g. bank)
Purchased by
government then
resold to meet
deficiency
Advertised once a
week for three weeks
No advertisement is
required
15
Judicial Proceedings
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. However, no civil or criminal action for 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.
a. Civil action it is a case filed before the regular courts requiring the taxpayer to pay
taxes.
b. Criminal action it is a case filed before the regular court requiring the taxpayer to pay
the taxes and enforcing penalty against him for violation of the tax code.
I.
Civil Penalties
The additions to the tax or deficiency tax shall apply to all taxes, fees and charges
imposed under the Code. The amount so added to the tax shall be collected at the same time,
in the same manner and as part of the subject tax.
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:
(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.
A penalty of 50% of the tax or of the deficiency tax is imposed under the following cases:
(1) Willful neglect to file the return on the date prescribed.
- Taxpayer is presumed to unable to file his return after a considerable length of
time. (Unable to pay the amount tax due after receiving notice from the
Commissioner)
(2) Willful filing of a false or fraudulent return.
- Substantial under-declaration of sales, receipts, or income; and
- Substantial overstatement of deductions of deductions constitute prima facie
evidence of a false or fraudulent return
- Failure to report sales, receipts, or income in an amount exceeding 30% of return
declared
16
II.
Criminal Penalties
The fines to be imposed for any violation of the Code shall be:
Not lower than Php30, 000.00 or twice the amount of TIS (taxes, interest, and surcharges)
due, whichever is higher.
Any person convicted of a crime penalized by the Code shall be liable not only for the
payment of the tax but for the penalties imposed as well. Any person who willfully aids or
abets in the commission of such crime or ho causes the commission of any offense by
another, shall be equally liable as the principal.
The table below shows what would be the criminal actions against different offenders:
Offender
Non-citizen of the Philippines
CPA
Criminal Penalty
Shall be deported immediately after serving
the sentence w/o further proceedings for
deportation.
Maximum penalty prescribed;
Dismissed from public service; and
Perpetually disqualified from holding
any public office
Disqualified to vote and participate in
any collection
CPA certificate shall be revoked or cancelled,
upon conviction
Penalty imposed on person/s responsible for
violation (partner, president, general manager,
branch manager, treasurer, etc.)
In addition to other penalties;
o Shall be fined:
Php30,000.00 to Php100,000.00
o Shall suffer imprisonment:
2 to 4 years
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 Tax Code.
However, the Court of Tax Appeals (CTA) can issue injunctions while in the exercise of
its appellate jurisdiction in cases pending before it. This is an exception to no injunction rule.
The CTA may enjoin collection of taxes if in its opinion the same may jeopardize the
interest of the government and/or the taxpayer.
Tax lien and Remedy for Enforcement of Statutory Penal Revision
Tax lien: A legal claim or charge on property, either real or personal, as security from the
payment of a tax obligation.
Remedy: The remedy for enforcement of statutory penalties of all sort shall be by criminal or
civil action, as particular situation may require, subject to the approval of the Commissioner.
Period for Assessment and Collection
Assessment is the written notice and demand by the BIR on the taxpayer for the
settlement of a due tax liability that is there definitely set and fixed.
The steps for issuance of an assessment notice shall be:
1. Examination/audit of the books of accounts of the taxpayer by a revenue officer who
is armed with a Letter of Authority.
2. Issuance of a Preliminary Assessment Notice (PAN)
3. Issuance of a Final Assessment Notice (FAN) / Formal Letter of Demand (FLD)
Internal revenue taxes shall be assessed within 3 years. Commencement of such period starts:
(1) From the day after the due date, if the return is filed on or before the due date; or
(2) From the day the return was filed, if the return is filed beyond the due date
*No proceeding in court without assessment for the collection of such taxes shall be begun
after expiration of such period.
o Return filed was not false or fraudulent
(a) Collection with prior assessment
Assessment: within 3 years from date of file or from last day of filing
Collection: within 5 years from date of assessment, either by:
i.
ii.
Summary proceedings, or
Judicial proceedings
18
o Return filed was false or fraudulent (with intent to evade tax or no return was filed after
notice)
(a) Collection with prior assessment
Assessment: any time within 10 years after date of discovery of the falsity, fraud, or
omission;
Collection: within 5 years from date of assessment, either by:
19
i.
ii.
Summary proceedings, or
Judicial proceedings
1) If before the expiration of 3 year period, both the Commissioner and the
taxpayer have agreed in writing to it assessment after such time, assessment may be made
within the period agreed.
2) The period so agreed upon may be extended by the subsequent written
agreement before the expiration of the 5 year period following the assessment by:
i) Summary proceedings, or
ii) Judicial proceedings.
Illustration:
The income tax return of Jean for taxable year 2015 was filed on March 10, 2016.
The tax per return is Php 10,000.00. However, upon audit by the BIR, it was discovered
that the correct amount of tax payable by Jean is Php 18,000.00. An assessment for
deficiency tax was made on April 5, 2019.
In the case above, the assessment was made on time. The assessment for tax
deficiency is valid until April 15, 2019 or 3 years from the date following the deadline for
filling the return. Considering that the assessment was made on April 5, 2019, the
assessment is valid.
Suppose the assessment is made on April 20, 2019, there is no valid assessment
since it was made after the last day for making an assessment. The taxpayer can question
the legality of the assessment on the ground of prescription of assessment.
Suppose the taxpayer filed a fraudulent return and this is discovered by the BIR
on April 20, 2018. If the assessment is made on May 15, 2021, it is valid because it is
issued within 10 years after the discovery of filling a fraudulent return. Since the
fraudulent return is discovered April 20, 2019, the Commissioner has until April 20, 2029
to make a valid assessment.
Instances where the Running of Statute of Limitation shall be suspended
1) When the taxpayer requests for a reinvestigation, which is granted by the Commissioner;
2) 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 (except if the taxpayer informs the
Commissioner of any change in address);
3) 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;
4) When the taxpayer is out of the Philippines
21
1. Administrative Protest
When: Within 30 days from date of receipt of FLD/FAN
How:
(a) Written protest; stating facts, applicable law, rules, and regulations or jurisprudence
of which his protest is based; date of the assessment notice.
(b) If only portions of FAN are disputed, must pay the deficiency tax on undisputed
portion
(c) By filing Request for Reconsideration or Request for Reinvestigation
22
Procedure:
(1) Protest against pre-assessment notice (PAN) within 15 days from receipt
(2) Protest against final assessment notice (FAN) and formal letter of demand (FAN)
Pre-assessment notice shall be issued to taxpayer after the review of the Commissioner or
his duly authorized representative in determination that there exists sufficient basis to
assess the taxpayer.
A pre-assessment notice shall not be required in the following cases:
A. finding for any deficiency tax is the result of mathematical error in
computation of tax as appearing on face of return
B. a discrepancy has been determined between the tax withheld and the amount
actually remitted
C. taxpayer who opted to claim a refund or credit of excess creditable
withholding tax for at taxable period was determined to have carried over and
automatically applied the same amount claimed against the estimated tax
liabilities for the taxable quarter/s for the succeeding taxable year/s
D. excise tax due on excisable articles have not been paid
E. article locally purchased or imported by an exempt person
FLD/FAN shall be issued calling for the payment of the taxpayers deficiency tax liability
in the either of following cases:
A. Failure to respond within 15 days from date of receipt of PAN. (default)
B. Taxpayer responds within 15-day period but disagrees with the findings of
deficiency taxes.
*both PAN and FAN are to be issued by the Commissioner or his duly authorized
representative.
*Failure to file a valid protest will render the assessment become final, executory and
demandable.
2. Request for Reconsideration
- refers to a plea for re-evaluation of an assessment on the basis of existing records
without need of additional evidence. (question of law or fact or both)
When: During filing of protest
Decision: The CIR or his duly authorized representative must act within 180 days from
filing of request of reconsideration for decision.
3. Request for Reinvestigation
- refers to a plea for reinvestigation of an assessment on the basis of newly-discovered
evidence that a taxpayer intends to present in the reinvestigation. (question of law or fact
or both)
23
If denied by a CTA Division, appeal to CTA en banc within 15 days from date of
decision.
5. Appeal to the Supreme Court
25
The following are procedures in the recovery taxes or penalties which have been
erroneously or illegally collected from the taxpayer:
File a written claim for refund with the CIR within 2 years after final payment of the
tax or penalty;
*submit the relevant documents within 60 days from filing of claim for refund.
File an appeal with CTA within 30 days but within the 2-year period filing from:
a) Receipt of final unfavorable decision on the claim for refund
b) Lapse of 180 days
*filing of claim of refund and appeal with CTA can be done simultaneously or one
after the other (protection of taxpayers interest)
File a petition for review with the CTA within the said 2-year period when the 2-year
period is about to prescribe and the claim for refund with the CIR has not been acted
upon.
26
If the decision of the Commissioner was made after the 2-year period, he can no
longer appeal the same to the CTA.
Where the face of the return upon which payment was made, such payment
appears clearly to have been erroneously paid.
Tax refund: a refund check or warrant which shall remain unclaimed or uncashed
within 5 years from the date the said warrant or check was mailed or delivered.
Tax credit: tax credit certificate issued which shall remain unutilized after 5 years
from the date of issue, shall be invalid and shall not be allowed as payment for
any internal revenue tax liabilities.
*in both cases, the amount thereof shall revert to the general fund of the Government
Instances when the 2-year period shall suspend:
1) The Commissioner led to believe the taxpayer that he would be credited for
the payment.
2) There is an agreement between the taxpayer and agent of Commissioner to
abide by the decision of the Supreme Court.
Illustration/Application:
On April 5, 2015, Taroma paid his income taxes. After a year, he realized that he had
overpaid and so he immediately filed a claim for refund with the Commissioner of Internal
Revenue.
Issue:
On March 20, 2017, he received the decision of the Commissioner denying his claim for
refund. On April 19, 2017, Taroma filed an appeal with the CTA. Is the appeal filed on time?
Held:
No, his appeal was filed beyond the 2-year period. He should have filed his appeal within
30 days from receipt of the decision and within 2 years from the date of final payment. Hence,
the deadline for the filing of the appeal is on April 5, 2017.
1 Presiding Judge
8 Associate Justices
28
29
Sources:
30
Ballada, Susan, CPA. Domdane Publishers. Transfer and Business Taxation 2014 Issue 14th
Edition. 2014. Pp.343-352.
Reyes, Virgilio D. Philippine Business and Transfer Taxes. 2013. Plates 18-21.
Tamayo, Asser. Tax Remedies. ReSa Handouts. 2015.
Tax Remedies: Remedies of the Taxpayer. http://scire-licet.blogspot.com/2010/03/tax-remediesremedies-of-taxpayer.html. 2010.
31