property is located (the tax lien shall be
annotated on the title)
Tax Remedies: Remedies of the Government
IMPORTANCE OF TAX REMEDIES
o to enhance the governments tax collection
efforts
o to safeguard against arbitrary action
NON-INJUNCTION OF TAX STATUTES
Sec. 218, NIRC: No court shall have the
authority to grant injunction to restrain the
collection of any national internal revenue tax,
fee or charge imposed by this Code.
EXCEPTION: a decision of the CIR appealed to
the CTA does not suspend payment, levy or
distraint of taxpayers property; but if the CTA
finds that collection may jeopardize the interest
of the taxpayer or the government, then CTA
may suspend or restrain the collection of tax and
require the taxpayer to either deposit the
amount claimed or to file a surety bond for more
than double the amount with the court
Q: During pendency of the appeal in the
CTA, the BIR files a civil action for
collection of tax in the RTC, what is the
remedy of the taxpayer?
A: The taxpayer may file a motion to dismiss in
the RTC on the ground that the collection of tax
has no basis where the assessment thereof is
still under dispute with CTA.
REMEDIES OF THE GOVERNMENT
- these remedies may be pursued singly or
simultaneously
1. Tax Lien
- from the moment the tax is due, not from the
service of the warrant of distraint
- not valid against a mortgage purchaser or
judgment creditor until NOTICE has been filed
by CIR with the RD of the province or city where
2. Compromise
- allowed when:
1. a reasonable doubt as to validity of the claim
against the taxpayer exists
2. financial position of the taxpayer demonstrates a
clear inability to pay the assessed tax (minimum
compromise rate equivalent to 10% of the basic
assessed tax and the taxpayer must waive in
writing his privilege under the Banking Secrecy
Law, such waiver constituting authority of the
CIR to inquire into his bank deposits)
Compromise v. ABATEMENT:
o As Effect C: reduce tax liability; A: cancel the
entire tax liability
o As to when proper C: when there is
reasonable doubt as to validity of tax
assessment or the taxpayer is financially
incapacitated to pay; A: when there is unjust
assessment (excessive) or when administration
and collection cost do not justify the amount of
tax due
GR: compromise of criminal violations is allowed,
EXCEPT:
1. those already filed in court
2. those involving fraud
GR: power to compromise is a non-delegable
power of CIR, EXCEPT that regional evaluation
board may compromise:
1. basic taxes less than P500,000
2. minor criminal violations
NOTA BENE: A compromise penalty is in lieu of
a criminal prosecution. If the taxpayer fails to
abide by the compromise arrangement, the
government has two options:
1. collect the compromised sum; or
2. disregard the compromise and collect the
original tax due.
 ADDENDUM: But if the taxpayer does not agree
to the compromise, a collection action by the
government for the compromise penalty does
not lie. This is because, by its nature, a
compromise is entered into by mutual
agreement between parties and the proposed
compromise penalty is neither tax nor an
administrative penalty for tax delinquency.
Q: May a case still be compromised after
final judgment?
A: No, because by virtue of the final judgment,
the government had already acquired a vested
right.
Q: Can withholding tax be compromised?
A: No. Taxpayer constituted as withholding
agent who deducted and withheld at source the
tax on income payment made by him holds the
taxes as trust funds for the government. He is
obligated to remit them to the BIR. His
subsequent inability to pay or remit the tax
withheld is not a ground for compromise
because the withholding tax is not a tax upon
the withholding agent but is only a procedure
for collection of tax.
3. Distraint and Levy
- summary, extra-judicial or administrative
enforcement remedies
DISTRAINT v. LEVY: distraint is to personal
property while levy is to real property
KINDS OF DISTRAINT:
1. Actual when delinquency of the payment sets
in; there is actual seizure and distraint
2. Constructive no actual delinquency ; the
owner is prohibited from disposing of his
property; preventive remedy to forestall a
possible dissipation of the taxpayers assets
when delinquency takes place
CONSTRUCTIVE DISTRAINT PROPER IF:
1. taxpayer is retiring from any business subject to
tax
2. he intends to leave the Philippines
3. he removes his property therefrom
4. he performs any act tending to obstruct the
proceedings for collecting the tax due or which
may be due from him
PROCEDURE:
o Actual Distraint Procedure
1. commencement of distraint proceedings by CIR
(P1M+) or RDO (P1M or less)
2. service of warrant of distraint
3. notice of sale of distrained property to the
owner or possessor not less than 20 days from
date of sale, and osting in not less than 2 public
places in municipality or city where distraint is
made
4. sale of property distrained by public auction,
highest bidder for cash, or with approval of CIR
through duly licensed commodity or stock
exchange
EQUITY OF REDEMPTION: payment of all proper
charges any time prior to sale
NOTA BENE: A person in possession or having
control of property under actual distraint (or
levy) may be penalized if upon demand he fails
or refuses to surrender the goods, EXCEPT in
case of judicial attachment or execution.
o Constructive Distraint Procedure
1. commencement of distraint proceedings
2. service of warrant of constructive distraint
3. taxpayer is required to sign a receipt covering
the property distrained and obligate himself to
preserve the same; if taxpayer refuses to sign
the receipt, the revenue officer shall prepare a
list of property distrained and in the presence of
two witnesses leave a copy thereof in the
premises
o Procedure on Levy of Real Property
1. service of warrant of levy after the expiration of
time required to pay the delinquent tax
2. duly authenticated certificate showing the name
of the taxpayer and the amounts of the tax and
penalty due from him (operate with the force of
a legal execution)
3. written notice of levy to the Register of Deeds
and the delinquent taxpayer, his agent or
manager (if TP is absent), occupant of the
 property (if no agent/manager); in case legal officer of the BIR
government first effected distraint and it is not
enough to cover the tax, then CIR shall, within GROUND: prima facie showing of failure to file a
30d after execution of the distraint, proceed required tax return or a willful attempt to evade
with levy taxes; no need for assessment
4. advertisement of the sale within 20d after levy
for a period of at least 30d at the main entrance 6. Other Remedies Available
of the municipal building and other public,
conspicuous places and publication once a week o Forfeiture
for 3wks in a newspaper of general circulation o Suspension of Business Operations
5. public sale of the property under levy at main o Enforcement of Administrative Sanctions
entrance of the municipal building or on the
premises to be sold
6. return of sale within 5d after sale
7. issue certificate of sale; taxpayer is entitled to
any residue
8. in case of no bidder, the property shall be
declared forfeited to the government
EQUITY OF REDEMPTION: any time prior to sale
RIGHT OF REDEMPTION: within 1yr from date
of sale or forfeiture

4. Civil Action

WHEN:

1. when a tax is assessed and the assessment

becomes final and unappealable (because TP
failed to file administrative protest with BIR
within 30d from receipt of assessment)
2. when an administrative protest is denied or is
not acted upon within 180d from submission of
documents and TP fails to appeal to the CTA

WHERE: regular courts, with approval of CIR

except if express delegation to Regional
Director; motion to dismiss the complaint should
also be filed in the regular courts

HOW: the complaint must be brought in the

name of the Government and conducted by a
legal officer of the BIR

5. Criminal Action

WHEN: before lapse of 5 years (prescription

period)

WHERE: DOJ

HOW: complaint approved by CIR brought in the

name of the Government and conducted by a

Tax Remedies
PRE-ASSESSMENT NOTICE impt!!!
A pre-assessment notice is served by the
Government upon the taxpayer under any of
the following circumstances:
1. if the taxpayer fails to file a return where
return is required;
2. if he files a return but fails to pay the tax;
3. if he files a return and pays the tax, but
payment is insufficient because certain
deductions claimed are disallowed by the BIR.
After the taxpayers receipt of the pre-
assessment notice, any of the following
situations can take place:
1. taxpayer accepts liability and pays the tax as
appearing on the pre-assessment notice;
2. taxpayer disagrees with the pre-assessment
notice and responds by explaining that he is not
liable;
3. taxpayer pays the tax and later on files a
written claim for refund;
4. taxpayers enters into a compromise
agreement with the BIR;
5. taxpayer ignores the pre-assessment notice.
The tax code states that the period to respond
shall be prescribed by implementing rules and
regulations. If the taxpayer fails to respond
within such period (30 days), a final assessment
shall issue.
ORDINARY PERIOD FOR ASSESSMENT
The right of the government to asses and later
on to collect the tax is subject to prescription,
upon the lapse of which it can no longer
exercise this right.
Section 203, of the tax code provides that
internal revenue taxes shall be assessed within
3 years after the last day prescribed by law for
the filing of the return. The same provision of
law lays down the rules as to when the 3 year
prescriptive period for assessment begins:
1. if the return is filed before the last day
prescribed by law for the filing thereof, it shall
be considered as filed on the last day;
2. if the return is filed on the last day
prescribed by law, then it is considered as filed
on such day;
3. if the return is filed beyond the period
prescribed by law, the 3 year period shall be
counted from the day the return is filed.
So it is clear, that the reckoning point for the 3
year prescriptive period is flexible; if the
return is filed on or before the deadline, the
reckoning point is the deadline; if filed beyond
the deadline, the reckoning point is the date
the return is actually filed. The 3 year period
for assessment begins to run from such a date.
FINAL ASSESSMENT...IMPT!
A final assessment issues:
1. if the taxpayer, having received a pre-
assessment notice fails to respond within the
period provided for by the rules and
regulations;
2. under the 5 circumstances enumerated
under section 228 of the tax code where pre-
assessment notice is not necessary
Section 228. enumerates the exceptional
circumstances where a pre-assessment notice
is not necessary: IMPT!!!
1. when the finding for any deficiency tax is
the result of mathematical error in the
computation of the tax as appearing on the
face of the return;
2. when a discrepancy has been determined
between the tax withheld and the amount
actually remitted by the withholding agent; 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;
4. when the excise tax due on excisable articles
has not been paid, or
5. when an 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.

Under the foregoing circumstances, the
taxpayer shall immediately receive a final
assessment without the benefit of pre-
assessment notice.
REMEDIES AVAILABLE TO THE GOVERNMENT
IN THE COLLECTION OF THE INCOME
TAX...VERY IMPT!!
1. ADMINISTRATIVE
a. Distraint of personal property;
b. Levy of personal property
c. Enforcement of forfeiture of property
d. Enforcement of tax lien
e. Requiring the filing of bonds
f. Requiring proof of filing income tax returns
g. Deportation of aliens
h. Inspection of books of accounts.
2. JUDICIAL
a. ordinary civil action
b. criminal action
DISTRAINT- seizure by the government of
personal property, tangible or intangible, to
enforce the payment of taxes to be followed by
its public sale if the taxes are not voluntarily
paid.
Kinds of Distraint
a. Actual- there is taking of possession of the
personal property out of the taxpayer into that
of the government;
b. Constructive- the owner is merely prohibited
from disposing of his property.
LEVY- A summary administrative remedy,
seizure of real property to enforce payment of
taxes.
A written notice of levy, containing a
description of the property upon which levy is
made, the name of the taxpayer and the
amounts of the tax and penalty due from them
is served upon the taxpayer.
FORFEITURE- a divestiture of property without
compensation, in consequence of a default or
offense. In case of chattels and removal of
fixtures of any sort, forfeiture is enforced by
seizure and sale or destruction of the specific
forfeited property. The forfeiture of real
property is enforced by a judgment of
condemnation and sale in a legal action or
proceeding, civil or criminal, as the case may
require.
TAX LIEN- a legal claim or charge on property
either real or personal established by law as a
security in default of the payment of taxes.
The tax, together with interest, penalties and
cost that may accrue in addition thereto is a
lien upon all property and rights to property
belonging to the taxpayer. The lien however,
shall not be valid against any mortgagee,
purchaser or judgment creditor until legal
notice of such liens should be filed by the
Commissioner of internal revenue in the Office
of the Register of Deeds of the province or city
where the property of the taxpayer is located.
The lien attaches when the taxpayer neglects
or refuses to pay the tax after demand, but
relates back from the time when assessment
was made by the Commissioner.
REQUIRING THE FILING OF BONDS- Filing of
performance bond to secure the payment of
taxes or compliance with certain provisions of
tax laws and regulations. This may be required
by the BIR for the issuance of a tax clearance.
REQUIRING PROOF OF FILING INCOME TAX
RETURNS. Before a license to engage in trade
or business or occupation or to practice a
profession can be issued to a person,
partnership, association or corporation, he
must submit to the officer issuing such license
or permit, proof that he has filed his income
tax return during the preceding year and that
income taxes due have been paid thereon.
DEPORTATION OF ALIENS- any alien who
1. knowingly and fraudulently evades the
payment of any internal revenue tax or
2. willfully refuses to pay such tax and its
accessory penalties after the decision on the
tax liability rendered by the Commissioner of
Internal Revenue, or the CTA or any competent
judicial tribunal shall have become final and
executor, is subject to deportation. The
penalty of deportation is not a bar to any
proceeding taken by the government to enforce
collection of tax delinquency.
INSPECTION OF BOOKS OF ACCOUNTS
JUDICIAL ACTION
1. Civil Action- After the assessment made by
the Commissioner of Internal Revenue has
become final and executory for failure of the
taxpayer to dispute the same and appeal the
disputed assessment to the Court of Tax Appeals,
the government may institute civil actions to
collect internal revenue taxes in the Regional Trial
Court and the Metropolitan Trial Court, City and
municipal courts.
2. Criminal Action- maybe pursued by the
authorities for the collection of delinquent taxes.
An assessment of a tax deficiency is not
necessary to a criminal prosecution for tax
evasion. The crime is complete when the violator
has knowingly and willfully filed a fraudulent
return or neglected to file a return with intent to
evade the tax. If the taxpayer is acquitted, the
government may still collect the tax in a civil
action, because the payment of a tax is an
obligation imposed by statute and does not arise
from a criminal act.
Where the action is brought to enforce a
compromise agreement into between the
commissioner and the taxpayer, the prescriptive
period is ten years from the time the cause of
action accrues as fixed in the civil code.
The running of the statute of limitation on
the making of an assessment, the beginning
of distraint or levy or any proceeding in
court for collection is suspended: IMPT!!!!!
1. for the period during which the Commissioner
of Internal Revenue is prohibited from making tax
assessment or beginning the distraint or levy or
any proceeding in court and for sixty days
thereafter;
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, unless
the taxpayer informs the Commissioner of any
change in address;

4. when the warrant of distraint and levy is duly

Prescriptive period for collection.
served upon the taxpayer, his authorized
representative, or with a member of his
Where an assessment was made, the period for
household with sufficient discretion and no
collection by judicial action or by distraint or levy
property could be located; and
is within 3 years after the date of assessment.
Where no assessment was made and a return was
filed, and the same is not false or fraudulent, the 5. When the taxpayer is out of the Philippines.
period for collection by a proceeding in court is
within 3 years after the return was due or filed
whichever is later, except:

Where a return required to be filed was not filed,

or even if filed the same is false or fraudulent,
and made with the intent to evade the tax, the
period is ten years after discovery of the omission
to file the return or from the discovery of the
falsity or fraud. The other exception relative to
the prescriptive periods for assessment are also
applicable.

Where the government makes another

assessment on the basis of a reinvestigation
requested by the taxpayer, or a revised
assessment because of an amended return or as
a result of a reinvestigation asked for by the
taxpayer, the period is counted from the last
assessment or the last revised assessment.