TAX REMEDIES

Prof. Vic C. Mamalateo

U.P. COLLEGE OF LAW
September 6, 2005
 TAX REMEDIES
PURPOSE OF REMEDIES
NATURE OF REMEDIES
SUMMARY
COERCIVE
TYPES OF REMEDIES
SUBSTANTIVE REMEDIES
PROCEDURAL REMEDIES
ADMINISTRATIVE REMEDIES
JUDICIAL REMEDIES
 SCOPE
REMEDIES OF GOVERNMENT
TAX ADMINISTRATION AND
ENFORCEMENT

REMEDIES OF TAXPAYERS
 PERSONS AUTHORIZED TO
COLLECT TAXES
BUREAU OF INTERNAL REVENUE (Sec.3, 9 & 10, NIRC)
1 CIR + 4 DCIR + 13 ACIR
19 REGIONS + 115 DISTRICT OFFICES
AGENTS OF BIR COMMISSIONER (Sec. 12, NIRC)
BUREAU OF CUSTOMS
VALUE ADDED TAX AND EXCISE TAX ON
IMPORTED GOODS
APPROPRIATE GOVERNMENT OFFICE
ENERGY TAX
AUTHORIZED AGENT BANKS
NATIONAL INTERNAL REVENUE TAXES
WITHHOLDING AGENTS
 POWERS OF BIR
ASSESS AND COLLECT NATIONAL INTERNAL
REVENUE TAXES, FEES AND CHARGES
ENFORCE ALL FORFEITURES, PENALTIES AND
FINES
EXECUTE JUDGMENT IN ALL CASES DECIDED IN
ITS FAVOR BY CTA AND ORDINARY COURTS
EFFECT SUPERVISORY AND POLICE POWERS
CONFERRED BY TAX CODE OR SPECIAL LAWS
(Sec. 2, NIRC)
POWERS OF COMMISSIONER
INTERPRET TAX LAWS AND DECIDE TAX
CASES
EXAMINE BOOKS OF ACCOUNTS AND
ACCOUNTING RECORDS
OBTAIN INFORMATION
SUMMON PERSON LIABLE FOR TAX
TAKE TESTIMONY
CANVASS REGION OR DISTRICT FROM TIME
TO TIME REGARDING PERSONS LIABLE TO
TAX (Sec. 4, NIRC)
POWERS OF COMMISSIONER
EXAMINE RETURNS AND DETERMINE TAX
ASSESS PROPER TAX BASED ON BEST EVIDENCE
OBTAINABLE
CONDUCT INVENTORY TAKING, SURVEILLANCE
AND PRESCRIBE PRESUMPTIVE GROSS SALES OR
RECEIPTS
TERMINATE TAXABLE PERIOD
PRESCRIBE REAL PROPERTY VALUES
ACCREDIT AND REGISTER TAX AGENTS (Sec. 4, NIRC)
INQUIRE INTO BANK DEPOSITS (Sec. 5 & 6(F), NIRC)
 ESTOPPEL
ESTOPPEL DOES NOT APPLY TO GOVT
STATE CANNOT BE ESTOPPED BY THE MISTAKE
OR NEGLECT OF ITS AGENTS AND OFFICERS (Central
Azucarera de Tarlac v. CIR; CIR v. Abad)
ERRONEOUS APPLICATION OF LAW BY PUBLIC
OFFICERS DO NOT BLOCK SUBSEQUENT CORRECT
APPLICATION OF STATUTES (Visayan Cebu Terminal v. CIR)
ESTOPPEL DOES NOT APPLY TO PRECLUDE
SUBSEQUENT FINDING OF TAXABILITY NOR TO
DEPRIVE GOVT OF ITS RIGHT TO RAISE
DEFENSES EVEN IF RAISED ONLY FOR THE FIRST
TIME ON APPEAL (Phil-American Drug v. CIR; Rodriguez v. CIR)
 ESTOPPEL
ESTOPPEL ADMITS OF EXCEPTIONS
IN THE INTEREST OF JUSTICE AND
FAIR PLAY (Hospicio de San Jose v. CIR)
ESTOPPEL APPLIES AGAINST THE
TAXPAYER
PREVIOUS REQUESTS FOR REINVESTI-
GATION HAVE THE EFFECT OF PLACING
TAXPAYER IN ESTOPPEL (CIR v. Suyoc Consolidated
Mining Corp.)
 INJUNCTION
NO COURT HAS AUTHORITY TO
GRANT INJUNCTION TO RESTRAIN
COLLECTION OF TAXES, EXCEPT
WHEN COLLECTION WILL
JEOPARDIZE INTEREST OF
GOVERNMENT OR TAXPAYER (Sec. 218, NIRC;
R.A. 1125)

APPEAL TO CTA DOES NOT SUSPEND

COLLECTION OF TAX
 ADMINISTRATIVE
REMEDIES
TAX LIEN
COMPROMISE AND ABATEMENT
DISTRAINT AND/OR LEVY
FORFEITURE
PENALTIES AND FINES
SURCHARGE, INTEREST, AND COMPROMISE PENALTY
TAX CLEARANCE
NO DISTRIBUTION OF ASSETS BEFORE PAYMENT OF TAX
LIABILITIES
UNPAID SUBSCRIPTION RECEIVABLE OF STOCKHOLDERS
 TAX LIEN
LIEN ATTACHES FROM TIME OF ASSESSMENT
(NOT ONLY FROM SERVICE OF WDL) UNTIL
PAID
LIEN ON REAL PROPERTY IS NOT VALID
AGAINST MORTGAGEE, PURCHASER, OR
JUDGMENT CREDITOR UNTIL IT IS FILED
WITH REGISTER OF DEEDS (Sec. 219, NIRC)
TAX DUE ON GOODS IMPORTED TAX FREE IS
LIEN ON GOODS SUPERIOR TO ALL
CHARGES, REGARDLESS OF POSSESSOR (Sec.
131(A), NIRC)
 COMPROMISE
GROUNDS FOR COMPROMISE
REASONABLE DOUBT OF ASSESSMENT
40% OF BASIC TAX ASSESSED
FINANCIAL POSITION OF TAXPAYER
DEMONSTRATES CLEAR INABILITY TO PAY
ASSESSED TAX
10% OF BASIC TAX ASSESSED
TAXPAYER WAIVES IN WRITING HIS PRIVILEGE UNDER
RA 1405
ALL CRIMINAL VIOLATIONS MAY BE COMPROMISED,
EXCEPT THOSE ALREADY FILED IN COURT OR
INVOLVING FRAUD (Sec. 204(A), NIRC)
 COMPROMISE
POWER TO COMPROMISE IS NOT
ABSOLUTE. BOC COMMISSIONER IS
NOT AUTHORIZED TO ACCEPT
ANYTHING LESS THAN WHAT IS
ADJUDICATED BY THE COURT IN
FAVOR OF GOVT THAT HAS BECOME
FINAL AND EXECUTORY (Rovero v. Amparo)
 ABATEMENT
ABATEMENT MEANS ENTIRE TAX
LIABILITY IS CANCELLED
TAX IS UNJUSTLY OR EXCESSIVELY ASSESSED
ADM AND COLLECTION COSTS DO NOT
JUSTIFY COLLECTION OF AMOUNT DUE
POWER TO COMPROMISE OR ABATE SHALL
NOT BE DELEGATED BY CIR, EXCEPT:
REGIONAL ASSESSMENTS P500T OR LESS
MINOR CRIMINAL VIOLATIONS (Sec. 204(B)& Sec. 7,
NIRC)
 DISTRAINT, LEVY OR
GARNISHMENT
DISTRAINT PERSONAL PROPERTY
ACTUAL DISTRAINT: DELINQUENCY SETS IN
CONSTRUCTIVE DISTRAINT
PREVENTIVE REMEDY TO FORESTALL POSSIBLE
DISSIPATION OF ASSETS WHEN DELINQUENCY TAKES
PLACE
TAX LIABILITY HAS PREFERENTIAL LIEN OVER
CONSTRUCTIVE DISTRAINT TO ANSWER FOR JUDGMENT
LIEN IN FAVOR OF EMPLOYEES OF COMPANY FOR
UNPAID WAGES
LEVY REAL PROPERTY
GARNISHMENT BANK DEPOSITS
 DISTRAINT, LEVY OR
GARNISHMENT
WDL MUST BE EFFECTED WITHIN FIVE
YEARS FROM DATE OF ASSESSMENT (CIR v.
Avelino)
WDL MAY BE ISSUED AS STEP
PRELIMINARY TO COLLECTION BY
JUDICIAL ACTION (Alhambra Cigar v. CIR)
WDL MAY BE REPEATED UNTIL FULL
AMOUNT DUE IS COLLECTED (Sec. 217, NIRC)
SATISFACTION OF TAX DUE MEANS
DISCHARGE PRO TANTO (Castro v. CIR)
 FORFEITURE
NO BIDDER IN PUBLIC SALE
AMOUNT OF HIGHEST BID IS INSUFFI-CIENT
TO PAY THE TAXES, PENALTIES AND COSTS
(Sec. 215, NIRC)
FORFEITURE BECOMES ABSOLUTE AFTER
LAPSE OF ONE YEAR FROM DATE OF
FORFEITURE AND NO REDEMPTION OF
PROPERTY WAS MADE (Gen. Banking Act 3 months; Civil Code
1 year)

DISCHARGE OF TAX LIABILITY IS PRO TANTO

 CLOSURE OF BUSINESS
VAT-REGISTERED TAXPAYER
FAILURE TO ISSUE RECEIPTS OR INVOICES
FAILURE TO FILE VAT RETURNS
UNDERSTATEMENT OF SALES BY 30% OR MORE
NON-VAT PERSON
FAILURE TO REGISTER
TEMPORARY CLOSURE: NOT LESS THAN
FIVE DAYS; LIFTED ONLY UPON
COMPLIANCE WITH REQUIREMENTS (Sec. 115,
NIRC)
 PENALTIES AND FINES
COMPROMISE PENALTY
AMOUNT WHICH TAXPAYER PAYS TO
COMPROMISE TAX VIOLATION THAT MAY BE
SUBJECT OF CRIMINAL PROSECUTION
MUTUAL AGREEMENT; MAY NOT BE IMPOSED
BY BIR, IF TAXPAYER DOES NOT AGREE
THERETO (CIR v. Firemans Fund Insurance Co.)
IF TAXPAYER HAS EXPRESSED WILLINGNESS
TO PAY COMPROMISE PENALTY IN AN APPEAL
TO CTA, AMOUNT MAY BE COLLECTED AS PART
OF JUDGMENT (CIR v. Guerrero)
 REMEDIES OF THE
GOVERNMENT
JUDICIAL ACTIONS
CIVIL ACTION
CRIMINAL ACTION
CASE TO BE FILED IN THE NAME OF THE
GOVERNMENT OF THE PHILIPPINES (Sec. 220, NIRC)
NO CIVIL OR CRIMINAL CASE MAY BE FILED
WITHOUT APPROVAL OF THE
COMMISSIONER
CIVIL ACTION IS RESORTED TO WHEN TAX
LIABILITY BECOMES COLLECTIBLE
 CIVIL ACTION
COLLECTIBILITY OF DELINQUENT TAX
FINAL ASSESSMENT IS NOT PROTESTED WITHIN 30
DAYS FROM DATE OF RECEIPT (Marcos II v. CIR), OR
PROTESTED BUT BIR CONDITIONS ARE NOT COMPLIED
WITH BY TAXPAYER (Dayrit v. Cruz; Republic v. Ledesma)
SELF-ASSESSED TAX SHOWN IN RETURN IS NOT PAID
WITHIN DATE PRESCRIBED BY LAW (2nd installment)
PROTEST AGAINST ASSESSMENT IS DENIED BY BIR (Basa v.
Republic), OR 180 DAY PERIOD LAPSES AND TAXPAYER
FAILED TO APPEAL TO CTA WITHIN 30 DAYS FROM DATE
OF RECEIPT OR FROM LAPSE OF 180 DAY PERIOD (Lascona
Realty Corp. v. CIR)
 CIVIL ACTION
WHO APPROVES?
CIR, REGIONAL DIRECTOR (Arches v. Bellosillo), OR LEGAL
DIVISION (Republic v. Hizon)
SOLGEN, OR BIR SPECIAL ATTORNEYS OUTSIDE METRO
MANILA, AFFIRMED BY SOLGEN (Republic v. Domecillo)
WHERE FILED? RTC OR CTA
HOW CIVIL ACTION BEGUN?
FILE COMPLAINT WITH RTC
FILE ANSWER IN CTA TO TAXPAYERS PETITION FOR
REVIEW AND PRAY FOR PAYMENT OF TAX; HENCE, EVEN
IF NO RTC CASE WAS FILED, RIGHT TO COLLECT HAS NOT
PRESCRIBED (Mambulao Lumber v. Republic)
 CIVIL ACTION
WHEN TO GO TO RTC?
PRO FORMA PROTEST FILED
BIR IS NOT REQUIRED TO RULE FIRST ON
TAXPAYERS REQUEST FOR REINVESTIGATION
BEFORE INITIATION JUDICIAL ACTION TO COLLECT;
DECISION OF CIR MAY BE INFERRED FROM HIS
REFERRAL OF CASE TO SOL GEN (Republic v. Lim Tian Teng
Sons & Co)
VALID PROTEST FILED
BIR HAS TO RULE FIRST ON TAXPAYERS PROTEST SO
AS NOT TO DEPRIVE HIM OF RIGHT TO APPEAL TO
CTA (San Juan v. Velasquez)
 CRIMINAL ACTION
JUDGMENT IN CRIMINAL ACTION SHALL
NOT ONLY IMPOSE THE PENALTY BUT
SHALL ORDER PAYMENT OF TAXES
SUBJECT OF CRIMINAL CASE AS FINALLY
DECIDED BY CIR (Sec. 205, NIRC)
CRIMINAL ACTION MAY INVOLVE NON-
PAYMENT OF TAXES
NON-FILING OF TAX RETURN
NON-ISSUANCE OF INVOICES
 CRIMINAL ACTION
NO CRIMINAL ACTION SHALL BE BEGUN
WITHOUT THE APPROVAL OF THE
COMMISSIONER
CRIMINAL ACTIONS FOR VIOLATIONS OF
TAX CODE OR OTHER LAWS ENFORCED BY
BIR MUST BE BROUGHT IN THE NAME OF
THE GOVERNMENT AND CONDUCTED BY
ITS LEGAL OFFICERS (Sec. 220, NIRC)
 CRIMINAL ACTION
PENAL CODE
EVERY PERSON CRIMINALLY LIABLE FOR A FELONY IS
ALSO CIVILLY LIABLE (Art. 100, RPC)
TAX CODE
CIVIL LIABILITY TO PAY TAX ARISES NOT BECAUSE OF ANY
FELONY BUT UPON TAXPAYERS FAILURE TO PAY ASSESSED
TAX. CRIMINAL LIABILITY ARISES AS A RESULT OF ONES
LIABILITY TO PAY HIS TAX (Castro v. CIR; Republic v. Patanao)
SEC. 254, 1997 NIRC PROVIDES THAT CONVICTION OR
ACQUITTAL SHALL NOT BE A BAR TO FILING OF CIVIL SUIT
FOR COLLECTION OF TAXES; OLD SEC. 73, NIRC PROVIDES
IMPOSITION OF IMPRISONMENT OR FINE, OR BOTH, BUT FAILED TO
PROVIDE COLLECTION OF TAX IN CRIMINAL PROCEEDINGS
 CRIMINAL ACTION
ACQUITTAL OF TAXPAYER IN CRIMINAL ACTION DOES
NOT NECESSARILY RESULT IN EXONERATION FROM CIVIL
LIABILITY
CIVIL LIABILITY IS NOT DEEMED INCLUDED IN CRIMINAL
ACTION
DUTY TO PAY TAX IS IMPOSED BY STATUTE PRIOR TO AND
INDEPENDENTLY OF ANY ATTEMPT BY TAXPAYER TO
EVADE PAYMENT
TAX LIABILITY IS NOT CONSEQUENCE OF FELONIOUS
ACTS CHARGED IN CRIMINAL PROCEEDING NOR IS IT
MERE CIVIL LIABILITY ARISING FROM CRIME THAT
COULD BE WIPED OUT BY JUDICIAL DECLARATION OF
NON-EXISTENCE OF CRIMINAL ACTS CHARGED (Republic v.
Patanao; Castro v. CIR)
 CRIMINAL ACTION
SUBSEQUENT PAYMENT OF TAX LIABILITY OR
EXTINGUISHMENT OF TAX LIABILITY THRU
PRESCRIPTION WILL NOT OPERATE TO ABSOLVE
TAXPAYERS CRIMINAL LIABILITY (People v. Tierra)
SUBSIDIARY IMPRISONMENT CAN BE IMPOSED IN
CASE OF INSOLVENCY OF TAXPAYER AS REGARDS
TAX HE IS SENTENCED TO PAY (People v. Balagtas ruling
modified by Congress)
PENALTY SHALL BE IMPOSED ON PARTNER,
PRESIDENT, GEN. MGR., TREASURER, OR OFFICER
RESPONSIBLE FOR VIOLATION
 CRIMINAL ACTION
FILING OF CRIMINAL ACTION DURING PENDENCY OF
PROTEST
ASSESSMENT IS NOT NECESSARY TO CRIMINAL PROSECUTION
FOR WILLFUL ATTEMPT TO EVADE TAX
CRIME IS COMPLETE WHEN VIOLATOR HAS KNOWINGLY AND
WILLFULLY FILED FRAUDULENT RETURN WITH INTENT TO
EVADE TAX
WHAT IS INVOLVED HERE IS NOT COLLECTION OF TAXES
WHERE ASSESSMENT MAY BE REVIEWED BY RTC BUT
CRIMINAL PROSECUTION FOR VIOLATION OF TAX CODE
THERE IS NO PRECISE COMPUTATION AND ASSESSMENT OF TAX
BEFORE THERE CAN BE CRIMINAL PROSECUTION
THERE CAN BE NO CIVIL ACTION TO ENFORCE COLLECTION
BEFORE ASSESSMENT PROCEDURES HAVE BEEN FOLLOWED
[Ungab v. Cusi (1980)]
 CRIMINAL ACTION
CRIMINAL CHARGE WITHOUT ASSESSMENT
ASSESSMENT IS NOT NECESSARY BEFORE
CRIMINAL CHARGE (FOR NON-FILING OF
RETURN) IS FILED
CRIMINAL CHARGE NEED ONLY BE PROVED BY
PRIMA FACIE SHOWING OF FAILURE TO FILE
REQUIRED RETURN AND SUCH FACT NEED NOT
BE PROVED BY AN ASSESSMENT
ISSUANCE OF ASSESSMENT IS DIFFERENT FROM
FILING OF COMPLAINT FOR CRIMINAL
PROSECUTION [CIR v. Pascor Realty & Dev Corp (1999)]
 CRIMINAL ACTION
FOR CRIMINAL PROSECUTION TO PROCEED BEFORE
ASSESSMENT, PRIMA FACIE SHOWING OF WILLFUL
ATTEMPT TO EVADE TAX MUST EXIST [CIR v. Fortune Tobacco
(1997)]
FORTUNES SITUATION IS FACTUALLY APART FROM
UNGAB
REG. WHOLESALE PRICE APPROVED BY BIR
PRESUMED ACTUAL PRICE
NOT FRAUDULENT UNLESS BIR HAS FINAL
DETERMINATION OF WHAT IS CORRECT TAX
PREL. INV. MAY BE ENJOINED UNDER
EXCEPTIONAL CIRCUMSTANCES
 REMEDIES OF TAXPAYERS
ADMINISTRATIVE REMEDY
BEFORE PAYMENT OF TAX
PROTEST OF ASSESSMENT
AFTER PAYMENT OF TAX
TAX CREDIT, OR
REFUND
JUDICIAL REMEDY
APPEAL TO COURT OF TAX APPEALS
 TAX ASSESSMENT STAGES
LETTER OF AUTHORITY
INFORMAL CONFERENCE
POST- REPORTING NOTICE
PREL. ASSESSMENT NOTICE (PAN)
FORMAL ASSESSMENT NOTICE (FAN)
PROTEST LETTER
REINVESTIGATION OR RECONSIDERATION
DENIAL (REGIONAL DIRECTOR OR CIR)
APPEAL TO COURT OF TAX APPEALS
 APPEALS
ADMINISTRATIVE APPEAL
DECISION OF REGIONAL DIRECTOR MAY BE APPEALED
TO COMMISSIONER
PRIOR EXHAUSTION OF ADM REMEDIES GIVES ADM
AUTHORITIES PRIOR OPPORTUNITY TO DECIDE
CONTROVERSIES WITHIN THEIR COMPETENCE (Aguinaldo
Industries Corp. v. CIR)
JUDICIAL APPEAL
FINAL DECISION OF COMMISSIONER MAY BE APPEALED
TO COURT OF TAX APPEALS
CTA DECISION APPEALED TO COURT OF APPEALS
COURT OF APPEALS DECISION APPEALED TO SUPREME
COURT
 KINDS OF TAXES
TAXES WHICH DO NOT REQUIRE
ASSESSMENT TO ESTABLISH LIABILITY
SELF-ASSESSING TAX
TAX PAID IS LOWER THAN TAX DUE PER
RETURN FILED
TAXES WHICH REQUIRE ASSESSMENT
DEFICIENCY TAX LIABILITY
TAX PERIOD IS TERMINATED
TAX LIEN
DISSOLVING CORPORATION (Sec. 52( c), NIRC)
 NO PRE-ASSESSMENT
NOTICE REQUIRED
DEFICIENCY TAX IS THE RESULT OF
MATHEMATICAL ERROR
DISCREPANCY IS BETWEEN AMOUNT WITHHELD
AND AMOUNT REMITTED
TAXPAYER WHO OPTED TO CLAIM REFUND/TAX
CREDIT ALSO CARRIED OVER AND APPLIED SAME
AGAINST TAX OF NEXT TAXABLE QUARTER
EXCISE TAX DUE HAS NOT BEEN PAID
CONSTRUCTIVE IMPORTATION (Sec. 228, NIRC)
 ASSESSMENT

WHAT IS AN ASSESSMENT?
NOTICE THAT TAXPAYERS OWES
GOVERNMENT A SUM OF MONEY
CONTAINS COMPUTATION OF TAX LIABILITY
AND A DEMAND FOR PAYMENT OF TAX WITHIN
CERTAIN PERIOD (CIR v. Pascor Realty & Dev Corp)
PURPOSE OF ASSESSMENT
TO ESTABLISH TAX LIABILITY WHERE AN
ASSESSMENT IS REQUIRED
 ASSESSMENT
FORMS OF ASSESSMENT
FORMAL ASSESSMENT NOTICE
LETTER DEMANDING PAYMENT OF ERRONEOUSLY
REFUNDED AMOUNT (Guagua Electric Co v. CIR), or AMOUNT
PAID BY BOUNCING CHECK (Republic v. Limaco & de Guzman)
LETTER FROM REVENUE OFFICER GRANTING
OPPORTUNITY TO DISPROVE FINDINGS (SHOW-CAUSE
LETTER)
FOLLOW-UP LETTER DULY RECEIVED BY
TAXPAYER WITHIN PRESCRIPTIVE PERIOD.
(TAXPAYER DENIED RECEIPT OF ORIGINAL DEMAND LETTER AND ASS.
NOTICE) (Republic v. Nielson & Co)
 ASSESSMENT
WHEN MUST ASSESSMENT BE MADE? (Sec. 203 & 222, NIRC)
RETURN WAS FILED
NOT FALSE OR FRAUDULENT 3 YRS FROM FILING
FALSE OR FRAUDULENT 10 YRS FROM DATE OF
DISCOVERY OF FILING OF FALSE OR FRAUDULENT
RETURN
NO RETURN WAS FILED
10 YEARS FROM DATE OF DISCOVERY OF OMISSION
IF ASSESSMENT DUE DATE FALLS ON SATURDAY,
GOVERNMENT HAS NEXT BUSINESS DAY WITHIN WHICH TO
ASSESS (CIR v. Western Pacific Corp)
NORMAL YEAR HAS 365 DAYS; LEAP YEAR, 366 DAYS (CIR v.
NAMARCO)
 ASSESSMENT
WHEN IS ASSESSMENT DEEMED MADE?
ISSUE DATE OF ASSESSMENT NOTICE IS NOT
RECKONING POINT FOR PRESCRIPTION
DATE ASSESSMENT NOTICE AND DEMAND
LETTER IS RELEASED, MAILED OR SENT TO
TAXPAYER CONSTITUTES ACTUAL ASSESSMENT
(Republic v. Limaco & de Guzman)
PRESUMPTION OF RECEIPT IN REGULAR
COURSE OF MAIL APPLIES, IF IT WAS PROPERLY
ADDRESSED, POSTAGE WAS PREPAID, AND WAS
MAILED. IF ONE ELEMENT IS ABSENT,
PRESUMPTION DOES NOT LIE (Enriquez v. Sunlife of Canada)
 ASSESSMENT
ASSESSMENT IS MADE WHEN SENT WITHIN THE
PRESCRIBED PERIOD, EVEN IF RECEIVED BY
TAXPAYER AFTER EXPIRATION OF PRESCRIPTIVE
PERIOD (CIR v. Bautista; Republic v. Tan Kim En)
RELEASE AND MAILING SHOULD BE
SATISFACTORILY PROVED BY GOVT
POST MARK STAMPED ON ENVELOPE RETURN CARD
MERE NOTATIONS ON RECORDS OF BIR OF MAILING, MADE
WITHOUT TAXPAYERS INTERVENTION OR CONTROL, AND
WITHOUT SUPPORTING EVIDENCE CANNOT SUFFICE
RECEIPT OF 2ND FINAL NOTICE PERSONALLY IS NO PROOF
THAT TAXPAYER RECEIVED 1ST NOTICE BY MAIL (Nava v. CIR)
 ASSESSMENT
WHERE TAXPAYER DENIES RECEIPT OF
MAILED DEMAND LETTER, BIR MUST
PROVE RECEIPT BY TAXPAYER (Republic v. Nielson &
Co)
WHERE THERE IS NO BASIS FOR
ASSESSMENT OF TAX, SENDING OF
ASSESSMENT NOTICE AND DEMAND
LETTER DID NOT PRODUCE LEGAL EFFECT
THAT WOULD WARRANT COLLECTION OF
THE TAX (Republic v. Leonor dela Rama)
DIVIDENDS APPLIED ON CONTESTED PERSONAL LOANS
 ASSESSMENT
WHO MAY ASSESS?
COMMISSIONER OR REGIONAL DIRECTOR
PRESUMPTION OF CORRECTNESS OF
ASSESSMENT, BEING A MERE
PRESUMPTION, CANNOT BE MADE TO
REST ON ANOTHER PRESUMPTION, NO
MATTER HOW REASONABLE OR LOGICAL
SAID PRESUMPTION MAY BE.
ASSESSMENT MUST BE BASED ON ACTUAL
FACTS (CIR v. Benipayo)
 FORMS OF PROTEST
REQUEST FOR RECONSIDERATION
REQUEST FOR ITEMIZED INFO ON DISALLOWED ITEMS
(CIR v. Capital Subdivision)
REQUEST FOR REINVESTIGATION
DATE OF RECEIPT OF ASSESSMENT NOTICE
ITEMS ADMITTED OR PROTESTED BY TAXPAYER
STATEMENT OF FACTS AND APPLICABLE LAW, RULES
AND JURISPRUDENCE
SUPPORTING DOCUMENTARY EVIDENCE
PRO-FORMA PROTEST LETTER
REQUEST FOR COPY OF COMPUTATION IS NOT A
PROTEST THAT SUSPENDS PRESCRIPTIVE PERIOD (CIR v.
Atlas Consolidated Mining)
 WHEN TO FILE PROTEST?
30 DAYS FROM DATE OF RECEIPT
PERSONAL DELIVERY
MAIL
IF ASSESSMENT NOTICE AND DEMAND
LETTER ARE NOT RECEIVED OR
IMPROPERLY ADDRESSED TO ANOTHER,
30-DAY PERIOD STARTS FROM DATE OF
RECEIPT OF WDL OR NOTICE FROM RTC
OR SOL GEN
 WHERE TO FILE PROTEST?
REGIONAL/DISTRICT ASSESSMENTS
REGIONAL DIRECTORS OFFICE, OR
CHIEF, ASSESSMENT DIVISION
NATIONAL OFFICE ASSESSMENTS
LARGE TAXPAYER CASES
TAX FRAUD CASES
WITHHOLDING TAX CASES
 EFFECTS OF
ADMINISTRATIVE PROTEST
TAXPAYER CANNOT DELAY COLLECTION OF
TAXES BY MERELY ASKING FOR RECONSIDE-
RATION OR CLARIFICATION (Republic v. Marsman Dev. Corp.)
FILING OF REQUEST FOR REINVESTIGATION OF
ASSESSMENT DOES NOT SUSPEND OR INTERRUPT
RUNNING OF PRESCRIPTIVE PERIOD TO COLLECT.
THIS RULING IS LOGICAL; OTHERWISE, THERE IS
NO POINT TO THE LEGAL REQUIREMENT THAT
THE EXTENSION BE IN WRITING (CIR v. Atlas Cons. Mining
Corp)
 FORMS OF DENIAL OF
PROTEST
DIRECT
FORMAL DECISION OF DENIAL BY BIR COMMISSIONER
CIR SHOULD STATE IN DENIAL LETTER THAT IT IS ITS
FINAL DECISION (Union Shipping Corp v. CIR)
INDIRECT
FILING OF CIVIL CASE IN RTC WITHOUT RULING FIRST ON
VALID PROTEST TIMELY FILED BY TAXPAYER [Yabes v. Flojo
(1982)]
ISSUANCE OF WDL OR FINAL NOTICE BEFORE SEIZURE
REFERRAL OF CASE TO SOL GEN (Republic v. Lim Tian Teng & Sons)
LETTER REITERATING DEMAND FOR IMMEDIATE
PAYMENT OF TAX (CIR v. Ayala Securities Corp)
 EFFECTS OF FAILURE TO FILE
TIMELY VALID PROTEST
ASSESSMENT BECOMES FINAL AND
UNAPPEALABLE
ASSESSMENT CANNOT BE DISPUTED IN THE
CIVIL ACTION
PRESCRIPTION OF RIGHT TO ASSESS
CANNOT BE RAISED IN COURT
NO INQUIRY CAN BE MADE AS TO THE
MERITS OF THE CASE OR JUSTNESS OF
JUDGMENT RELIED UPON, EXCEPT
JURISDICTION, COLLUSION & FRAUD
 PRESCRIPTION
PRESCRIPTION
SELF-ASSESSED TAXES
PURPOSE OF RULE ON PRESCRIPTION
JUST AS GOVT IS INTERESTED IN STABILITY OF ITS
COLLECTIONS, SO ARE TAXPAYERS ENTITLED TO
ASSURANCE THAT THEY WILL NOT BE SUBJECT TO
FURTHER INVESTIGATION AFTER EXPIRATION OF
REASONABLE TIME
REMEDIAL IN NATURE
LIBERALLY CONSTRUED IN FAVOR OF TAXPAYER TO
BRING ABOUT BENEFICIENT PURPOSE OF
AFFORDING PROTECTION
 PRESCRIPTION
PRESCRIPTION OF GOVERNMENTS RIGHT
TO ASSESS
3 YEARS FROM DATE OF FILING THE RETURN
IF RETURN FILED BEFORE DEADLINE, LAW PRESUMES
RETURN FILED ON LAST DAY FOR FILING RETURN
10 YEARS FROM DATE OF DISCOVERY OF NON-
FILING OR FILING OF FALSE OR FRAUDULENT
RETURN (Sec. 203 & 222, NIRC)
TO COLLECT
5 YEARS FROM DATE OF ASSESSMENT (Sec. 222(c ), NIRC)
10 YEARS (COURT ACTION TO FORFEIT BOND) FROM
TIME RIGHT OF ACTION ACCRUES (Republic v. Dorego)
 PRESCRIPTION
PRESCRIPTION TO FILE CRIMINAL ACTION
5 YEARS FROM COMMISSION OF VIOLATION OF LAW.
IF VIOLATION IS NOT KNOWN AT THE TIME, FROM
DISCOVERY THEREOF AND INSTITUTION OF
JUDICIAL PROCEEDINGS FOR INVESTIGATION AND
PUNISHMENT (Sec. 281, NIRC)
PRESCRIPTION IS INTERRUPTED WHEN
PROCEEDINGS ARE INSTITUTED AGAINST GUILTY
PERSONS AND BEGINS TO RUN AGAIN IF
PROCEEDINGS ARE DISMISSED FOR REASONS NOT
CONSTITUTING JEOPARDY
PRESCRIPTION DOES NOT RUN WHEN OFFENDER IS
ABSENT FROM THE PHILIPPINES
 EXCEPTIONS TO STATUTE
OF LIMITATION
BEFORE EXPIRATION OF TIME PRESCRIBED FOR
ASSESSMENT, CIR AND TAXPAYER AGREED IN
WRITING
PERIOD TO ASSESS AGREED UPON MAY BE
EXTENDED BY SUBSEQUENT WRITTEN AGREEMENT
MADE BEFORE EXPIRY DATE
TAX TIMELY ASSESSED MAY BE COLLECTED WITHIN
PERIOD AGREED UPON IN WRITING BEFORE
EXPIRATION OF FIVE YEAR PERIOD
COLLECTION PERIOD MAY BE EXTENDED BY
SUBSEQUENT WRITTEN AGREEMENT MADE BEFORE
EXPIRY DATE (Sec. 222, NIRC)
STATUTE OF LIMITATIONS IS
SUSPENDED
PERIOD DURING WHICH CIR IS PROHIBITED FROM
MAKING ASSESSMENT OR BEGINNING WDL OR
PROCEEDING IN COURT AND FOR 60 DAYS
THEREAFTER
TAXPAYERS REQUEST FOR REINVESTIGATION IS
GRANTED BY CIR
TAXPAYER CANNOT BE LOCATED IN ADDRESS
SHOWN IN HIS TAX RETURN
WDL SERVED AND NO PROPERTY CAN BE
LOCATED
TAXPAYER IS OUT OF THE PHILIPPINES (Sec. 223, NIRC)
 PRESCRIPTION
PRESCRIPTION IS NOT AVAILABLE
DUE TO ACTS OR DELAYS OF
TAXPAYER (CIR v. Suyoc Consolidated Mining Co.)
IF TAXPAYER MERELY CONTENDED THAT
AMOUNTS SOUGHT TO BE COLLECTED
WERE NOT FROM ESTATE OF DECEASED
AND GAVE HIS REASONS THEREFOR, THIS
DOES NOT STOP RUNNING OF
PRESCRIPTIVE PERIOD (CIR v. Solano; CIR v. Pineda)
 PRESCRIPTION
TAX CODE (SPECIAL LAW) PROVISIONS
PREVAIL OVER CIVIL CODE (GENERAL
LAW) PROVISIONS ON PRESCRIPTION (CIR v.
Guagua Electric Co.)

TO AVAIL OF 3-YEAR PRESCRIPTIVE

PERIOD, TAXPAYER MUST ALLEGE AND
PROVE THAT HE FILED RETURN
FOR THE 10-YEAR PERIOD TO APPLY,
GOVT MUST ALLEGE AND ESTABLISH
FRAUD
 PRESCRIPTION
RTC AS A SETTLEMENT (OF ESTATE) COURT
IS NOT THE PROPER TRIBUNAL TO PASS
UPON DEFENSE OF PRESCRIPTION (CIR v. Gonzales)
CIRS FAILURE TO PROVE FRAUD CAN BE
FATAL TO THE ASSESSMENT AS WHEN TAX
IS ASSESSED BEYOND THE THREE-YEAR
PRESCRIPTIVE PERIOD (Butuan Sawmil v. CIR)
PRESCRIPTION MUST BE RAISED AND
EVIDENCE INTRODUCED BY TAXPAYER AT
THE ADMINISTRATIVE LEVEL
 PRESCRIPTION
PRESCRIPTIVE PERIOD MAY BE EXTENDED BY
MUTUAL AGREEMENT IN WRITING BEFORE THE
LAPSE OF THE PROPER PRESCRIPTIVE PERIOD
(Republic v. Acebedo)
TAXPAYER MAY BE PREVENTED FROM SETTING
UP PRESCRIPTION, WHEN BY HIS REQUESTS OR
POSITIVE ACTS, GOVT HAS BEEN PERSUADED TO
POSTPONE COLLECTION TO MAKE HIM FEEL
DEMAND WAS NOT UNREASONABLE OR THAT NO
HARRASSMENT IS MEANT BY GOVT (CIR v. Planters
Products; Republic v. Arcache)
 PRESCRIPTION
WAIVER MUST BE IN WRITING AND
SIGNED BY BOTH CIR AND TAXPAYER
MERE STATEMENT IN LETTER ABOUT
INTENTION OF WAIVING IS NOT WAIVER
WAIVER NOT SIGNED BY CIR IS NOT VALID [CIR v.
Carnation (1999)]
WAIVER SIGNED BY ASST. COMMISSIONER
WHERE AMOUNT INVOLVED IS P16 M IS NOT
VALID [PBCom v. CIR (1999)]
RDO WHO ATTTESTED IN WAIVER DID NOT
SIGN FOR CIR [CIR v. Solano (1958)]
 PRESCRIPTION
WAIVER IS INEFFECTIVE IF EXECUTED BEYOND THE
PRESCRIPTIVE PERIOD
LAW DOES NOT AUTHORIZE EXTENSION ONCE PRESCRIPTION
HAS SET IN
WAIVER THAT HAS NO PERIOD OR THERE IS NO PERIOD FOR
SUBSEQUENT EXTENSION IS INVALID [Central Cement Corp v. CIR,
CTA (1997)]
FIRST WAIVER, NOT SIGNED BY CIR, IS INEFFECTIVE;
SECOND WAIVER SIGNED BY BOTH PARTIES IS OF NO
CONSEQUENCE [Luzon Packaging Products v. CIR, CTA (1997)]
FIRST WAIVER THAT DID NOT INDICATE AMOUNT AND KIND
OF TAX ASSESSED, DATE OF ACCEPTANCE BY CIR AND FACT
OF RECEIPT OF COPY BY TAXPAYER IN ACCEPTED WAIVER
IS INEFFECTIVE; SECOND WAIVER HAS NO BASIS [Solid Cement
v. CIR, CTA (1999)]
 TAX RETURN
TRANSCRIPT SHEETS ARE NOT RETURNS INCOMPLETE
INFORMATION FOR BIR TO COMPUTE SPECIFIC TAX DUE)
[Alca v. CIR, CTA (1964)]
SUBSTANTIALLY DEFECTIVE RETURN FILED IS
CONSIDERED AS NO RETURN AT ALL (CIR v. Gonzales)
INCOME TAX RETURN FILED CANNOT BE CONSIDERED
RETURN FOR COMPENSATING TAX [Butuan Sawmill v. CIR (1996)]
THERE IS NO OMISSION TO FILE RETURN WHERE TAXPAYER
FAILED TO INCLUDE CERTAIN ITEMS, NOT DUE TO WILLFUL
OMISSION OR FRAUD
RETURN MUST BE SUBSTANTIALLY COMPLETE AS TO
DETAILS TO SERVE AS STARTING POINT [Republic v. Marsman Dev
Corp)
 AMENDED RETURN
AMENDED RETURN IS SUBSTANTIALLY
DIFFERENT FROM ORIGINAL RETURN,
GOVTS RIGHT TO ASSESS IS COUNTED
FROM FILING OF AMENDED RETURN
IF ORIGINAL RETURN IS SUFFICIENTLY
COMPLETE TO MAKE AN ASSESSMENT,
SUBSEQUENT FILING OF AMENDED RETURN
NEITHER STARTS ANEW RUNNING OF
STATUTE OF LIMITATIONS NOR EXTENDS
PRESCRIPTIVE PERIOD [Ammen Transport Co. v. CIR, CTA (1965)]
 FALSE OR FRAUDULENT
RETURN
THREE (3) SEPARATE SITUATIONS OF
FALSE RETURN, FRAUDULENT RETURN,
AND FAILURE TO FILE
FALSE RETURN IMPLIES DEVIATION FROM
THE TRUTH, WHETHER INTENTIONAL OR
NOT
FRAUDULENT RETURN IMPLIES
INTENTIONAL OR DECEITFUL ENTRY WITH
INTENT TO EVADE THE TAXES DUE
 FRAUD
FRAUD MUST BE THE PRODUCT OF A
DELIBERATE INTENT TO EVADE TAX
MERE UNDERSTATEMENT IN ESTATE TAX
RETURN OF SEVEN PROPERTY WILL NOT
NECESSARILY IMPLY FRAUD [Jalandoni v. CIR (1965)]
SALE OF PROPERTY FOR PRICE LESS THAN ITS
DECLARED FAIR MARKET VALUE ALONE DID
NOT BY ITSELF JUSTIFY FINDING OF FALSE
RETURN WHICH CONTAINS WRONG INFORMA-
TION DUE TO MISTAKE, CARELESSNESS OR
IGNORANCE [CIR v. Goodrich]
 FRAUD
MERE MISTAKE CANNOT BE CONSIDERED AS
FRAUDULENT INTENT, AND IF BOTH BIR AND
TAXPAYER COMMITTED MISTAKES IN MAKING
ENTRIES IN TAX RETURN AND IN ASSESSMENT
IT IS UNFAIR TO TREAT MISTAKES OF
TAXPAYER AS TAINTED WITH FRAUD AND
THOSE OF CIR AS MADE IN GOOD FAITH [Aznar v. CIR
(1974)]

INTENTIONAL FRAUD DECEPTION;

WILFULLY DONE OR RESORTED TO IN ORDER
TO GIVE UP SOME LEGAL RIGHT
 FRAUD
THERE IS NO FRAUD IN FILING RETURN WHERE
TAXPAYER PLACED A NOTATION THAT MONEY
RECEIVED WAS PRESUMED GIFT BUT TURNED OUT AN
ERROR AND NOW SUBJECT OF LITIGATION. SUCH
NOTATION WAS PRACTICALLY AN INVITATION FOR BIR
TO INVESTIGATE. FRAUD IS NEVER IMPUTED AND
COURTS NEVER SUSTAIN FRAUD UPON CIRCUM-
STANCES WHICH CREATE ONLY SUSPICION. [CIR v. Javier
(1991)]
TAX EVASION CONNOTES FRAUD THRU THE USE OF
PRETENSES AND FORBIDDEN DEVICES TO LESSEN OR
DEFEAT TAXES. UNDERSTATEMENT OF TAX IS NOT
ITSELF PROOF OF FRAUD FOR THE PURPOSE OF TAX
EVASION [Yutivo & Sons Hardware v. CIR (1961)]
 FRAUD
FRAUD IS A QUESTION OF FACT AND THE
CIRCUMSTANCES CONSTITUTING FRAUD
MUST BE ALLEGED AND PROVED IN THE
COURT
FINDING OF TRIAL COURT AS TO ITS
EXISTENCE OR NON-EXISTENCE IS FINAL
AND CANNOT BE REVIEWED, UNLESS
CLEARLY SHOWN TO BE ERRONEOUS
 FRAUD
SIMPLE STATEMENT THAT RETURNS WERE
NOT FRAUDULENT IS NOT SUFFICIENT TO
OVERTHROW THE FINDINGS OF CIR AS TO
REASON FOR OMISSION (TO DECLARE
SUBSTANTIAL OTHER INCOME)
SUBSTANTIAL UNDERDECLARATION OF
INCOME FOR SIX CONSECUTIVE YEARS
 TAX CREDIT OR REFUND
PAYMENT OF TAX UNDER PROTEST IS NOT
NECESSARY
WRITTEN CLAIM FILED WITH BIR AND CTA
WITHIN TWO YEARS FROM DATE OF PAYMENT
SUPERVENING CAUSE
QUARTERLY CORPORATE INCOME TAX
CREDITABLE WITHHOLDING TAX
CATEGORICAL DEMAND FOR PAYMENT OR
REIMBURSEMENT
SPECIFIC RULES FOR VALUE ADDED TAX
 TAX CREDIT OR REFUND
COMMISSIONER MAY GRANT REFUND OR TAX
CREDIT EVEN WITHOUT WRITTEN CLAIM
PARTIAL PAYMENT OF TAX CANNOT BE BASIS
FOR TAX REFUND
FOR TAXES PAYABLE ON INSTALLMENT, TWO
YEAR IS COUNTED FROM PAYMENT OF LAST
INSTALLMENT
PAYING TAX AFTER PERIOD TO PROTEST HAD
LAPSED AND THEN CLAIMING REFUND IS
NOT JUSTIFIED
 TAX CREDIT OR REFUND
PRINCIPLE OF EQUITABLE
RECOUPMENT NOT ALLOWED
LEGAL CAPACITY OF WITHHOLDING
AGENTS TO CLAIM TAX REFUND
WANDER PHILIPPINES, INC.
CIR VS COURT OF APPEALS
WHEN DUTY TO WITHHOLD ARISES?
UPON ACCRUAL OR PAYMENT
 SURCHARGE
RATES:
50% - FALSE OR FRAUDULENT RETURN OR
WILLFUL NEGLECT TO FILE RETURN
25% - OTHER CASES
TAX LAWS IMPOSING PENALTIES ON
DELINQUENCIES ARE INTENDED TO
HASTEN TAX PAYMENTS OR TO PUNISH
EVASION OR NEGLECT OF DUTY
 INTEREST
JUST COMPENSATION TO THE STATE FOR
DELAY IN PAYING TAX AND FOR USE OF
FUNDS THAT BELONGS TO GOVERNMENT
20% DEFIENCY INTEREST PER ANNUM
FROM THE DATE TAX IS DUE UP TO DATE
OF PAYMENT
COLLECTED AT THE SAME TIME, SAME
MANNER, AND AS PART OF TAX
 CTA
COURT OF SPECIAL APPELLATE JURISDICTION
JURISDICTION EXPANDED UNDER RA 9282
IF OFFENSE HAPPENED BEFORE APRIL 2004,
JURISDICTION UNDER OLD LAW APPLIES
EXERCISES EXCLUSIVE APPELLATE JURISDICTION TO
REVIEW BY APPEAL DECISIONS OF THE CIR AND COC
APPEAL MUST BE FILED WITHIN 30 DAYS FROM DATE
OF RECEIPT OF DECISION ON DISPUTED
ASSESSMENT. THIS IS JURISDICTIONAL.
IF DECISION IS NOT DISPUTED, ORDINARY ACTION
MAY BE FILED WITH RTC