Atty. Cleo D. Sabado-Andrada, Cpa, Mba, LLM

y. cleo d.
sabado-andrada, cpa, mba, llm

GOVERNMENT REMEDIES
REMEDIES OF THE TAXPAYERS
JUDICIAL REMEDIES and the CTA
y. cleo d. sabado-andrada, cpa, mba, llm

ASPECTS, STAGES OR PROCESSESS
OF TAXATION
LEV involves the passage of tax
TAX
Y laws or ordinances through
POLICY
the legislature.
involves the act of

ASSESSMEN administration and
T implementation of the tax
TAX
laws by the executive
ADMINI
branch of the government
S-
TAX TRATIO
involves the act of
PAYMENT/ N
collecting the tax.
COLLECTION “tax collections”
TAX ASSESSMENT
refers to the process of determining the correct amount

of tax due in accordance with the prevailing tax laws.
The taxpayer reports his own

assessment of his tax liability in his tax
return to the Internal Revenue Officer.

POWER TO MAKE ASSESSMENT and
PRESCRIBE REQUIREMENTS FOR
TAX ADMINISTRATION AND ENFORCEMENT
A. To examine books, records, and obtain
information
This power to receive information CAN cover other

persons apart from the one whose tax liability is in
question. It can include other persons with books or
records, or even government offices, the BSP, and
GOCCs.
The CIR can summon a person to answer for

liabilities.
information
The CIR can require production of records
The CIR can take testimony under oath.
The CIR can issue both subpoenas duces tecum and

ad testificandum
The CIR can also have revenue officers/employees

conduct a canvass.
information
This power does NOT include the ability to

inquire into bank deposits, because it would
be a violation of the secrecy of bank deposit
UNLESS, exceptions exist.

B. To inquire in bank deposits of
taxpayers.
ALLOWED:
1. For a decedent to determine gross estate.
2. Taxpayers who filed application for

compromise of tax liability based on financial
incapacity (THE TAXPAYER MUST EXECUTE A
WAIVER TO THIS EFFECT.)
‘EXCHANGE OF INFORMATION ON TAX
MATTERS ACTOF 2009”
pursuant to request by proper authority from a treaty
country
EFFECT:
such information obtained from the banks and other
financial institutions may be used by the BIR for tax
assessment, verification and enforcement purposes.
Only the courts may authorize the release of ITRs under

this law (but upon order of the President)
CIR gives notice in writing to the taxpayer that a foreign tax

authority is requesting for his information
DUTY OF A BANK THAT DISCOVERS DEATH OF
A PERSON HOLDING AN ACCOUNT
(JOINT or SINGLE)
The bank will disallow withdrawals without

the certification by the CIR that transfer
taxes have been paid.
The maximum amount of P20,000 only

will be allowed as withdrawal.
C. To ASSESS and COLLECT tax.
The non-filing of a return does not bar the CIR from

authorizing assessment of a taxpayer.
The CIR can resort to “BEST EVIDENCE” available

when there is failure to file a required return or
when a false or fraudulent return is filed.
D. NOT TO ALLOW THE WITHDRAWAL OF
RETURN, STATEMENT, OR DECLARATION.
General Rule:
Return, Statement, Declaration filed with the BIR
cannot be withdrawn.
Exception:
It may be amended within 3 years, as long as there is
no notice for audit or investigation of the return served
upon the taxpayer.
E. POWER TO DELEGATE HIS POWERS TO

SUBORDINATE OFFICIAL.
LIMIT: NOT LOWER THAN DIVISION CHIEF.

POWERS THAT CANNOT BE DELEGATED
 Power to recommend RULES and REGULATIONS by the
Secretary of Finance
 Power to issue rulings of first impression or reverse,

revoke, modify any existing ruling.
 Power to compromise or abate any tax liability;

except:
Regional assessments involving basic tax of
P500,000 or less, and minor criminal violations
 Power to assign or reassign revenue officers to

establishments where articles subject to excise tax are
produced or kept
F. POWER TO PRESCRIBE REAL PROPERTY

VALUES.
to divide the Philippines into different zones or

areas and shall, upon consultation with
competent appraisers both from the private and
public sectors, determine the fair market value
of real properties located in each zone or area
G. POWER TO ACCREDIT TAX REGISTER
AGENTS
based on their professional competence,

integrity and moral fitness, individuals and
general professional partnerships and their
representatives who prepare and file tax returns,
statements, reports, protests, and other papers with
or who appear before, the Bureau for taxpayers.
H. POWER TO PRESCRIBE ADDITIONAL
PROCEDURAL OR DOCUMENTARY REQUIREMENTS
prescribe the manner of compliance with

any documentary or procedural requirement in
connection with the submission or preparation of
financial statements accompanying the tax returns.
A written notice and demand made by
the BIR on the taxpayer for the settlement
of a due tax liability that is set and fixed.
Presumed to be correct and made in

good faith
an assessment is presumed correct and
made in good faith in the performance of
official duties and failure to present proof
of error will prosper such assessment.
(Atlas Consolidated Mining and Development

Corp. vs. CA, Comm. of Internal Revenue and
CTA, 59 SCAD 870, G.R. No. 105563, 10 March
1995)
REQUISITES OF A VALID ASSESSMENT
(Final Assessment Notice)
1. Computation of tax liabilities
2. Statement of factual and legal basis for
assessment
3. Demand for payment on the taxpayer
4. Made within prescriptive period
5. Signed by the CIR or his authorized
representative
6. Served by personal delivery or through
registered mail
7. Issued on account of a valid letter of
authority
assessment
3.The
Demand for shall
taxpayer payment on the taxpayer
be informed in writing of
the law and the facts on which the assessment is
made; otherwise, the assessment shall
representative
6. Served by personalbe void.
delivery or through
registered mail
authority
assessment
5. MADE
SignedWITHIN
by thePRESCRIPTIVE
CIR or his authorized
PERIOD
representative
6. Served by personal delivery
TAX ASSESSMENT MADEorOR
through
registered mail
DEEMED MADE
When it is released or sent to the taxpayer
authority
1. Computation
LETTER of tax liabilities
DEEMED DULY MADE
assessment
When it is properly addressed with
3. Demand forpostage
payment on the taxpayer
prepaid.
representative When it is mailed
registered mail
authority
(Final Assessment
LETTER DEEMED DULY Notice)
MADE
2. When
Statementit isofproperly
factual and legal basiswith
addressed for
assessment
postage prepaid.
Personal Sending
4. Made within OR Registered
prescriptive period mailed.
5. SignedOrdinary
by themailCIR not
or allowed.
his authorized
Inrepresentative
cases where the taxpayer refuses to acknowledge
receipt of assessment
6. Served noticedelivery
by personal from theorBIR, it is the
through
burden of the
registered mailBIR to prove that such notice was
indeed received by the taxpayer concerned.
authority
(Republic vs. Court of Appeals, 149 SCRA 351)
assessment
representative
registered mail
authority
By THE use of net-worth method
(capital maintenance approach) of
determining income.
Rule of thumb, increase in

taxpayer’s net worth other than
return of capital is income.
METHODS OF INCOME DETERMINATION
Inventory method:
oThe CIR anytime during the taxable year
may order inventory-taking of goods of a
taxpayer to determine his internal revenue
tax.
oHe may also place any business under
surveillance.
oThe findings are deemed prima facie
correct.
METHODS OF INCOME DETERMINATION
Constructive method:
oIf a taxpayer failed to issue receipts and
invoices or there is ground to believe the
records and books do not reflect the return –
CIR may look into sales, receipts, income,

or other taxable base of similarly-situated
business/persons to prescribe a minimum
amount of gross receipts/sales that will serve
as tax base.
ISSUANCE OF JEOPARDY ASSESSMENT
When the TAXPAYER IS:
Retiring from business subject to tax
Intending to leave Philippines or remove
his property
Seeking to hide/conceal property
Performing acts tending to obstruct
proceeding for collection of tax for the
past/current year/quarter OR render it
partially or totally ineffective unless
proceedings begin immediately
EFFECT OF JEOPARDY ASSESSMENT
The tax period is terminated.
The CIR sends the taxpayer notice of the

decision (termination) AND demand for
immediate payment of taxes yet unpaid
These taxes are due and payable

immediately and subject to penalties if
not paid within the prescribed period.
DELINQUENT TAXPAYER
Self-assessed based on return not paid at
all or not completely

THE NATIONAL INTERNAL REVENUE TAXES
Sec. 21 of NIRC
PercentageTaxes Documentary
Stamp Taxes Donor’s Tax
E- Excise Income
VAT Tax Tax
Estat Such other taxes as may be

e imposed
Taxe and collected by the BIR
s
Income tax
Business tax;
Excise tax on production/importation
VAT
Other Percentage Tax
Transfer taxes
Donor’s tax
Estate tax

Documentary Stamp Tax
Custom Duties
Energy Tax
Travel Tax
Motor Vehicle Tax

– Community tax
– Privilege/occupational tax
– Real property tax
– Local business taxes

By nature,
NATIONAL INTERNAL REVENUE TAXES
SELF-ASSESSING
WHEN TAXPAYER EARNS INCOME,

HE HAS THE RESPONSIBILITY TO
COMPUTE, FILE AND PAY HIS TAX
TO THE BIR.
By nature,
NATIONAL INTERNAL REVENUE TAXES
SELF-ASSESSING
No further need for the

government to make
assessment to create the tax
liability of the taxpayer.

By nature,
NATIONAL INTERNAL SELF-
REVENUE TAXES ASSESSING
No further need for the government to make

assessment to create the tax liability of the
taxpayer.
BUT, CAN THE GOVERNMENT MAKE

TAX ASSESSMENT?
RELEVANCE OF ASSESSMENT
relevant in the proper pursuit of judicial and extra-

judicial remedies to enforce taxpayer’s liabilities
relevant in the application of statutes of limitations
relevant in the imposition of surcharges and interest
relevant in the establishment of tax liens.

TAX ASSESSMENT
Taxpayer’s Government’s
Assessment Assessment
(Thru Tax Returns) (Before and After
payments of tax)

Government’s Assessment
(Before and After payments of tax)
1. BEFORE a tax return is filed.

a. after prescription period expired
b. If the taxpayer intends to leave the country
or close business
2. After a fraudulent tax return is uncovered.

WHEN IS GOVERNMENT
TAX ASSESSMENT MADE
TAX ASSESSMENT PERIOD

Within the 3-year prescription period, when the
taxpayer filed an accurate tax return. (Sec. 203,
NIRC)
3 years to assess from the last day allowed

by law to file the return
or
if filed after the last day, count 3 years from
date of actual filing
NIRC)
The CIR may still issue a REVISED

ASSESSMENT within the original
prescriptive period, and even if there is
already pending appeal of the original
assessment
NIRC)
If deadline falls on a Saturday, Sunday or a

holiday, deadline is on the next business day.

Within the 3-year prescription period, when the taxpayer filed
an accurate tax return. (Sec. 203, NIRC)
If under the Electronic Filing and Payment

System (EFPS) (different deadline of filing and
payment)
OR
under the Online eBlR Form System (same
deadline of filing and payment)
transmission of electronic returns and electronic
payment must be completed/made on and actually
received by the BIR on or before 12 midnight.


Within the 10-year prescription period, when the BIR

discovers that the tax return filed was fraudulent. (Sec.
222 (a), NIRC)
10 years to assess from discovery of a false

or fraudulent return, or non-filing thereof.
If erroneous return was filed, it is deemed

not file. So the 10 year period applies.

 Fraudulent Return
Failure to report an income in an amount
exceeding 30% of that declared per Tax
Return
Over statement of deduction in an amount
exceeding 30% of the actual deductions.
Before the expiration of the 3-year period, the BIR

and the taxpayer may agree on the period of
assessment. (Sec. 222 (b), NIRC)
REQUISITES OF A VALID WAIVER

1.Acceptance date, the fact of receipt must be
indicated in the copies, copy furnished taxpayer
2. Date of expiry, specify the new extended period.

The taxes must not have prescribed.
Before the expiration of the 3-year period, the BIR and the
taxpayer may agree on the period of assessment. (Sec. 222
(b), NIRC)
REQUISITES OF A VALID WAIVER
3. It must be made within the prescriptive period.
4. It must be signed by the CIR if it is a tax case involving

more than P1 million. Must be signed by the taxpayer too.
RDO can sign only in cases of tax pending
investigation and period is about to prescribe, regardless
of amount.

RCBC v. CIR
RCBC was assessed. Before period to assess has already
prescribed, RCBC and CIR executed a waiver of
prescriptive period. There were discussions and RCBC
agreed to pay 2 out of 10 items it was assessed for. RCBC
claimed that for the other 8 items, there was already
prescription. RCBC claimed the waiver was defective
because the CIR did not sign the waiver and the amount was
1M or more. Is RCBC correct?
RCBC v. CIR
HELD: NO. RCBC is considered estopped through its partial

payment of the revised assessments within the extended
period provided in the said waivers. Thus, it had impliedly
admitted the validity of the said waivers. Had it believed that
the waiver was invalid and that the period to assess had
effectively prescribed, RCBC could have refused to make any
payment based on any assessment against it.
Jeopardy Assessment, if the taxpayer:
Retiring from business subject to tax

Intending to leave Philippines or remove
his property
Seeking to hide/conceal property
Performing acts tending to obstruct
proceeding for collection of tax for the
past/current year/quarter OR render it
partially or totally ineffective unless
proceedings begin immediately
BAR QUESTION/S
The Commissioner of Internal Revenue issued an

assessment for deficiency income tax for taxable
year 2000 last July 31, 2006 in the amount of
P10 million inclusive of surcharge and interests.
If the deliquent taxpayer is your client, what
steps will you take? What is your defense?
2006 BAR EXAMS

BAR QUESTION/S
Mia, a compensation income earner, filed her income tax
return for the taxable year 2007 on March 30, 2008. On May
20, 2011, Mia received an assessment notice and letter of
demand covering the taxable year 2007 but the postmark on
the envelope shows April 10, 2011. Her return is not a false
and fraudulent return. Can Mia raise the defense of
prescription?
A. No. The 3 year prescriptive period started to run
A.on
No. The15,
April 3 year prescriptive
2008, hence, period
it hasstarted
not yettoexpired
run on April
on 15,
2008,
Aprilhence, it has not yet expired on April 10, 2011.
10, 2011.
B. Yes. The 3 year prescriptive period started to run on April
15, 2008, hence, it had already expired by May 20, 2011.
C. No. The prescriptive period started to run on March 30,
2008, hence, the 3 year period expired on April 10, 2011.
D. Yes. Since the 3-year prescriptive period started to run on
March 30, 2008, it already expired by May 20, 2011.
2011 BAR EXAMS
EXCEPTIONS AS TO PERIOD OF LIMITATION OF
ASSESSMENT and COLLECTION OF TAXES in
Section 222 (b) of the NIRC
BUT, If BEFORE the expiration of the 3 year

period for the assessment of tax, both the
Commissioner and taxpayer have agreed in
WRITING ,
TAX may be ASSESSED WITHIN THE PERIOD

AGREED UPON
The period so agreed upon may be extended by
subsequent WRITTEN AGREEMENT made BEFORE
the expiration of the period previously agreed upon.
EXCEPTIONS AS TO PERIOD OF LIMITATION OF
ASSESSMENT and COLLECTION OF TAXES in
If taxpayer retires from business
BUT, If taxpayer leaves the country
JEOPARDY ASSESSMENT

JEOPARDY ASSESSMENT
is a tax assessment made by an authorized Revenue Officer

without the benefit of complete or partial audit, in light of
the RO’s belief that the assessment and collection of a
deficiency tax will be jeopardized by delay caused by the
Taxpayer’s failure to:
Comply with audit and investigation requirements to

present his books of accounts and/or pertinent records,
or
Substantiate all or any of the deductions, exemptions or
credits claimed in his return.

BAR QUESTION/S
What should the BIR do when the prescriptive period for the
assessment of a tax deficiency is about to prescribe but the
taxpayer has not yet complied with the BIR requirements for
the production of books of accounts and other records to
substantiate the claimed deductions, exemptions or credits?
A. Call the taxpayer to a conference to explain the delay.

B. Immediately conduct an investigation of the taxpayer's
activities.
C. Issue
C. Issuea ajeopardy
jeopardy assessment
assessment coupled
coupled with aof
with a letter
letter of demand.
demand.
D. Issue a notice of constructive distraint to protect
government interest.
2011 BAR EXAMS

GOVERNMENT REMEDIES
ASSESSMENT PROCEDURE
(ENTIRE PROCESS OF ASSESSMENT)
Section 228, NIRC
I. TAX AUDIT
Validity is 120 days. With allowable 120 days

extension.
Examination of books of account and other records

of the taxpayer to determine correct tax liability.
“Best Evidence Available” rule applies.

GOVERNMENT REMEDIES
Section 228, NIRC
II. Findings and INFORMAL CONFERENCE

IT shortensGOVERNMENT
the BIR’s deficiency taxREMEDIES
assessment process by
introducing two changes. First, the BIR will no longer
ASSESSMENT
conduct informal PROCEDURE
conferences before issuing a Preliminary
(ENTIRE
Assessment NoticePROCESS OF ASSESSMENT)
(PAN). Second, the BIR will now issue a
Section
Final Assessment Notice 228,
(FAN) NIRC
within 15 days from receiving
the taxpayer’s replyand
II. Findings to the PAN
INFORMAL CONFERENCE
Now, the taxpayer’s first opportunity to be heard will be

when he replies to the PAN. It states that the PAN must
require the taxpayer to reply. It is only when the
taxpayer does not reply that a FAN is issued as a matter
of due course.
GOVERNMENT REMEDIES
Section 228, NIRC
PRE-ASSESSMENT NOTICE
communication issued by the Regional
Assessment Division, or any other
concerned BIR Office, informing a
Taxpayer who has been audited of the
findings of the Revenue Officer,
following the review of these findings.
GOVERNMENT REMEDIES
Section 228, NIRC
III. ISSUANCE OF PRELIMINARY
ASSESSMENT NOTICE (PAN)

GOVERNMENT REMEDIES
Section 228, NIRC

BAR QUESTION/S
29. On July 31, 2011, Esperanza received a

preliminary assessment notice from the BIR
demanding that she pays P180,000.00
deficiency income taxes on her 2009 income.
How many days from July 31, 2011 should
Esperanza respond to the notice?
A. 180 days.
B. 30 days.
C. 60 days.
D. 15 days.
15 days
2011 BAR EXAMS
DELINQUENCY Delinquency tax can
TAX immediately be collected
administratively (levy or distraint)
or judicially. Subject to 25%
surcharge, interest, compromise
penalty.
–versus-
Deficiency tax has to be assessed
first and go through the whole
process since the amount is not
yet settled. can immediately be
DEFICIENCY collected administratively (levy or
distraint) or judicially. Subject to
TAX interest, compromise penalty.
GOVERNMENT REMEDIES
Section 228, NIRC

GOVERNMENT REMEDIES
Section 228, NIRC

GOVERNMENT REMEDIES
Section 228, NIRC

GOVERNMENT REMEDIES
Section 228, NIRC

GOVERNMENT REMEDIES
Section 228, NIRC

GOVERNMENT REMEDIES
Section 228, NIRC
IV. REPLY
Within 15 days from receipt of the Taxpayer of the

PAN.
Failure of the Taxpayer to file a REPLY,

FINAL ASSESSMENT NOTICE (FAN) will be issued.

GOVERNMENT REMEDIES
REPLY REPLY is against the
Preliminary Assessment Notice
(PAN) and to be filed within 15
days from receipt of PAN.
FAILURE to file REPLY:
FAN will be issued.
–versus-
PROTEST is against the Final
Assessment Notice (FAN) and to
be filed within 30 days from
receipt of FAN.
FAILURE to file PROTEST:
FAN becomes final and
PROTEST
executory.
PRE-ASSESSMENT NOTICE
communication issued by the Regional

Assessment Division, or any other
concerned BIR Office, informing a
Taxpayer who has been audited of the
findings of the Revenue Officer,
following the review of these findings.
y. cleo d. sabado-andrada, cpa, mba

BAR QUESTION/S
29. On July 31, 2011, Esperanza received a

preliminary assessment notice from the BIR
demanding that she pays P180,000.00
deficiency income taxes on her 2009 income.
How many days from July 31, 2011 should
Esperanza respond to the notice?
A. 180 days.
B. 30 days.
C. 60 days.
D. 15 days.
15 days
2011 BAR EXAMS
BIR Sends Preliminary

Assessment Notice TAXPAYER
PRE-ASSESSMENT
NOTICE NOT REQUIRED
When the finding of any deficiency tax is

the result of mathematical error appearing
on the face of the return;


PRE-ASSESSMENT
NOTICE NOT REQUIRED
When a discrepancy has been determined

between the tax withheld and the amount
actually remitted by the withholding
agent;
BAR QUESTION/S
In the investigation of the withholding tax returns of AZ Medina
Security Agency (AZ Medina) for the taxable years 1997 and
1998, a discrepancy between the taxes withheld from its
employees and the amounts actually remitted to the
government was found. Accordingly, before the period of
prescription commenced to run, the BIR issued an assessment
and a demand letter calling for the immediate payment of the
deficiency withholding taxes in the total amount of
P250,000.00. Counsel for AZ Medina protested the
assessment for being null and void on the ground that no pre-
assessment notice had been issued. However, the protest was
denied. Counsel then filed a petition for prohibition with the
Court of Tax Appeals to restrain the collection of the tax.
2002 BAR EXAMS

BAR QUESTION/S
Questions:
1.Is the contention of the counsel tenable?
2.Will the special civil action for prohibitin brought before the
CTA under Section 11 of R.A. No. 1125 prosper? Discuss your
answer.
2002 BAR EXAMS


PRE-ASSESSMENT
NOTICE NOT REQUIRED
When a taxpayer who opted to claim a refund or

tax credit of excess creditable withholding tax
for a taxable period automatically applied the
same against the estimated tax liabilities for the
quarters of the succeeding taxable year;

PRE-ASSESSMENT
NOTICE NOT REQUIRED
When the excise tax due (on excisable

articles) has not been paid;


PRE-ASSESSMENT
NOTICE NOT REQUIRED
When an article locally purchased or

imported by an exempt person, such as
vehicles, capital equipment, machinery
and spare parts, has been sold, traded or
transferred to non-exempt persons.
If the review conducted by the Assessment
Division has established sufficient basis to
assess the taxpayer for any deficiency tax,
Sends Preliminary
BIR Assessment Notice TAXPAYER
RESPONDS
WITHIN 15 DAYS
WILL NOW WARRANT FROM RECEIPT
THE ISSUANCE OF Failure to
ASSESSMENT BASED ON RESPOND WITHIN
THE FINDINGS 15 DAYS
BIR Issues
ASSESSMENT TAXPAYER
FILES PROTEST WITHIN 30

DAYS FROM RECEIPT OF
ASSESSMENT
Submits proofs within 60 days
from filing of Protest
No supporting documents,
ASSESSMENT BECOMES FINAL
BIR Denies Protest TAXPAYER
APPEALS TO THE COURT OF TAX

APPEALS (CTA) IN DIVISION (PETITION
FOR REVIEW) WITHIN 30 DAYS
FROM RECEIPT OF DENIAL
NO APPEAL WAS MADE, BIR

decision on Tax Assessment
becomes FINAL, EXECUTORY
and DEMANDABLE.
Ignores supporting
TAXPAYER
documents within
BIR 180 days upon
submission
THIS IS NOT
NO APPEAL WAS
APPEALS TO THE
COURT OF TAX
FAVORABLE
MADE, BIR decision
on Tax Assessment
APPEALS (CTA) in
Division (PETITION FOR
TO THE
becomes FINAL,
EXECUTORY and
REVIEW) WITHIN 30
DAYS FROM THE
TAXPAYER
DEMANDABLE. LAPSE OF THE 180
y. cleo d. sabado-andrada, cpa, mba DAY PERIOD
Ignores supporting
TAXPAYER
documents within
BIR 180 days upon
submission
EVEN IF THE 180TO

APPEALS DAYS
THEHAS
NO APPEAL WAS LAPSED….YOU
COURT OFHAVE
TAX TO
MADE, BIR decision WAITAPPEALS
FOR THE(CTA)
DECISION
in
on Tax Assessment OF Division
THE BIR(PETITION
AND WITHINFOR30
becomes FINAL, DAYS FROM
REVIEW) WITHIN
RECEIPT 30
EXECUTORY and DAYSAPPEAL
THEREOF, FROM TOTHE THE
DEMANDABLE. LAPSE OF THE 180
CTA in DIVISION.
y. cleo d. sabado-andrada, cpa, mba DAY PERIOD
Lascona Land Co., Inc. vs. Commisner
of Internal Revenue
G.R. No. 171251 promulgated March 5, 2012
A taxpayer has two options in case the CIR fails

to act on a disputed assessment within 180 days
from submission by the taxpayer of relevant
documents in support of its protest, namely: (1)
file a petition for review with the CTA within
30 days from the expiration of the 180-day
period, or (2) wait for the final decision of the
CIR on the disputed assessment and appeal
such final decision to the CTA within 30 days
from receipt.
BAR QUESTION/S
Spanflex Int’l Inc. received a notice of assessment from the
BIR. It seasonably filed a protest with all the necessary
supporting documents but the BIR failed to act on the
protest. Thirty days from the lapse of 180 days from the filing
of its protest, Spanflex still has not elevated the matter to the
CTA. What remedy, if any, can Spanflex take?
A. It may file a motion to admit appeal if it could prove that
its failure to appeal was due to the negligence of counsel.
B. It may no longer appeal since there is no BIR decision
from
C. Itwhich
may itwait
could
forappeal.
the final decision of the BIR on
C. It may wait for the final decision of the BIR on his protest
his protest and appeal it to the CTA within 30 days
and appeal it to the CTA within 30 days from receipt of such
from receipt of such decision.
decision.
D. None. Its right to appeal to the CTA has prescribed.
2011 BAR EXAMS

BAR QUESTION/S
The taxpayer seasonably filed his protest together
with all the supporting documents. It is already July
31, 2011, or 180 days from submission of the
protest but the BIR Commissioner has not yet
decided his protest. Desirous of an early resolution
of his protested assessment, the taxpayer should
file his appeal to the Court of Tax Appeals not later
than
A. August 31, 2011.
August
B. August30, 2011
30, 2011.
C. August 15, 2011.
D. August 1, 2011.
2011 BAR EXAMS

CTA DENIES
the TAXPAYER
in
PETITION
Division
NO MOTION FOR FILES MOTION FOR

RECONSIDERATION WAS RECONSIDERATION
MADE, CTA decision on Tax TO THE SAME
Assessment becomes DIVISION WITHIN
FINAL, EXECUTORY and 15 DAYS FROM
DEMANDABLE. RECEIPT OF
y. cleo d. sabado-andrada, cpa, mba DENIAL.
CTA DENIES the

TAXPAYER
SAME MR
Division
NO PETITION FOR REVIEW FILES PETITION

WAS MADE, CTA decision FOR REVIEW TO
on Tax Assessment THE CTA EN BANC
becomes FINAL, WITHIN 15 DAYS
EXECUTORY and FROM RECEIPT
DEMANDABLE. OF DENIAL.
CTA DENIES the TAXPAYER

EN BANC PETITION
NO PETITION FOR
REVIEW on FILES PETITION FOR
CERTIORARI WAS REVIEW on
MADE, CTA EN BANC CERTIORARI TO THE
decision on Tax SUPREME COURT
Assessment becomes WITHIN 15 DAYS
FINAL, EXECUTORY and FROM RECEIPT OF
DEMANDABLE. DENIAL.
BAR QUESTION/S
What is the effect on the tax liability of a taxpayer who
does not protest an assessment for deficiency taxes?
A. The taxpayer may appeal his liability to the CTA since

the assessment is a final decision of the Commissioner
on the matter.
B. The BIR could already enforce the collection of the
taxpayer's liability if it could secure authority from the
CTA.
C. The
C. Thetaxpayer's
taxpayer's liability
liability becomes
becomes fixed
fixed and andto
subject
subject as
collection to the
collection
assessmentas becomes
the assessment
final and
collectible.
becomes final and collectible.
D. The taxpayer's liability remains suspended for 180
days from the expiration of the period to protest.
2011 BAR EXAMS
ASPECTS, STAGES OR PROCESSESS
OF TAXATION
LEV involves the passage of tax
TAX
Y laws or ordinances through
POLICY
the legislature.
involves the act of

ASSESSMEN administration and
T implementation of the tax
TAX
laws by the executive
ADMINI
branch of the government
S-
TAX TRATIO
involves the act of
PAYMENT/ N
collecting the tax.
COLLECTION “tax collections”
TAX COLLECTION
the government is clothed with authority to devise

ways and means to accomplish tax collection in
the most effective manner. BUT, the LAW protects
the taxpayer against the ABUSES of Tax Collection
Hence, even if taxes are obligatory by reason of command,

the taxpayer is still protected by the
principle of due process
TAX COLLECTION
IMPOSITION OF INJUNCTION
Tax Law provides that injunctions are not

available to restrain collection of National
Internal Revenue Tax, fee or charge imposed by the Tax
Code. (Sec. 218, NIRC)
The imposition of injunction is only applicable

within the discretion of the Tax Court,
THE COURT OF TAX APPEALS.
Prohibition on the issuances of
temporary restraining orders on the
collection of taxes against the Bureau
of Internal Revenue by Courts other
than the Courts other than the Court of
Tax Appeals, the issuance of warrants
of distraint and garnishment,
assessments, cases filed before the
Court of Tax Appeals, and the sale of
property distrained and granished.
It is only the Court of Tax Appeals that has judicial
jurisdiction to suspend the collection of taxes but
only under certain conditions that is when its
opinion the collection by the Bureau of Internal
Revenue may jeopardize the interest of the
government and/or the taxpayer and which case the
Court of Tax Appeals may suspend the collection of
taxes and require the taxpayer either to deposit the
amount claimed or to file a surety bond for not
more than double the amount being assessed.
TAX COLLECTION
IMPOSITION OF INJUNCTION
“LOCAL GOVERNMENT IN THE CASE OF

COLLECTION OF LOCAL TAXES THERE IS NO
EXPRESS PROVISION IN THE LGC PROHIBITING
COURTS FROM ISSUING AN INJUNCTION TO
RESTRAIN LOCAL GOVERNMENTS FROM
COLLECTING TAXES”
Angeles City v. Angeles City Electric Corporation
and RTC 57, Angeles City
G.R. No. 166134 Promulgated June 29, 2010
COLLECTION REMEDIES
AVAILABLE TO GOVERNMENT
the law provides the government various

remedies to enforce effective collection of
internal revenue taxes, fees, and charges and
increments thereto where the taxpayer is
delinquent

IF the internal revenue tax has been assessed:
taxpayer filed an accurate tax return. (Sec. 203, NIRC)
It may be collected by distraint or levy, or

by a proceeding in court within 5
years following the assessment of
tax. (Section 203, NIRC
Within the 10-year prescription period, when the BIR
discovers that the tax return filed was fraudulent.
(Sec. 222 (a), NIRC)

by a proceeding in court within 5
years following the assessment of
tax. Section 222 (c), NIRC.

by a proceeding in court within the
period agreed upon in writing before
the expiration of the 5 year period.
Section 222 (d), NIRC.
BAR QUESTION/S
34. On March 30, 2005 Miguel Foods, Inc. received a notice of
assessment and a letter of demand on its April 15, 2002 final
adjustment return from the BIR. Miguel Foods then filed a request for
reinvestigation together with the requisite supporting documents on
April 25, 2005. On June 2, 2005, the BIR issued a final assessment
reducing the amount of the tax demanded. Since Miguel Foods was
satisfied with the reduction, it did not do anything anymore. On April 15,
2010 the BIR garnished the corporation's bank deposits to answer for
the tax liability. Was the BIR action proper?
A. Yes. The BIR has 5 years from the filing of the protest within which to
collect.
B.
B. Yes. TheBIR
Yes. The BIRhashas 5 years
5 years fromfrom the issuance
the issuance of the
of the final final
assessment
assessment
withinwhich to within
collect. which to collect.
C. No. The taxpayer did not apply for a compromise.
D. No. Without the taxpayer’s prior authority, the BIR action violated the
Bank Deposit Secrecy Law.
2011 BAR EXAMS

COLLECTION REMEDIES
DISTRAINT OF PERSONAL PROPERTY
LEVY OF REAL PROPERTY
CIVIL OR CRIMINAL ACTION
Either or both of these remedies may be pursued
simultaneously in the collection of taxes once the
assessment becomes final and demandable.
When the amount of the tax liability is not more than
one hundred pesos (P100), the remedies of distraint
and levy SHALL NOT BE AVAILED OF.
BAR QUESTION/S
The BIR could not avail itself of the remedy of levy

and distraint to implement, through collection, an
assessment that has become final, executory, and
demandable where
A. the subject of the assessment is an income tax.

B.
B. the amount of
of the
thetax
taxinvolved
involveddoes
doesnot
notexceed
exceed
P100.00.
P100.00.
C. the corporate taxpayer has no other uncollected
tax liability.
D. the taxpayer is an individual compensation
income earner.
2011 BAR EXAMS
COLLECTION REMEDIES
DISTRAINT OF PERSONAL PROPERTY
Section 207(A), NIRC
is the seizure by the government of personal

property – tangible or intangible – to enforce the
payment of taxes, to be followed by its public
sale if taxes accruing thereto are not
voluntarily paid.
Any excess over the tax liability and
expenses incidental thereto shall be
returned to the taxpayer.
DISTRAINT OF PERSONAL PROPERTY Sec. 207(A), NIRC
PROCEDURES OF DISTRAINT
1. Summary Remedies
Section 207, NIRC
Failure to pay delinquent tax to within the time
required, the following BIR Officers shall effect the
distraint:
1. The BIR Commissioner or his duly authorized
representative, if the amount involved is in excess of
P1,000,000; or
2. The Revenue District Officer, if the amount
involved is P1,000,000 or less.
2. Procedure for Distraint and

Garnishment Section 208, NIRC
account the goods, chattels, effects, or other personal

property distrained within 10 days from receipt of the
warrant.
leave a statement of the sum demanded and a note

stating the time and place of sale.

2. Procedure for Distraint and

Garnishment Section 208, NIRC
leave a copy of the warrant, which he signed with the

owner or person from whom the personal properties
were taken, at the dwelling or place of business of such
person and with someone of suitable age and
discretion.

3. Sale of Property Distrained &

Disposition of Proceeds Section
209, NIRC
cause a notation to be exhibited in not less than two

public places in the municipality or city where the distraint
is made, specifying the time and place of sale and the
articles distrained.


209, NIRC
At the time and place fixed in such notice the said

officer shall sell the goods, chattels or effects,
or other personal property, at public auction to
the highest bidder.

209, NIRC
Any excess on what is required to pay the entire claim,

including expenses, shall be returned to the owner of
the property sold.
No charge shall be imposed for the
services of the local internal revenue
officer or his deputy.
4.
Release of Distrained
Property upon Payment Prior to
Sale Section 210, NIRC
all proper charges are paid to the officer conducting

the sale, the goods or effects distrained shall be
restored to the owner.

5. Report of Sale to the BIR

Section 211, NIRC
Within 2 days after the sale, the officer making the same
shall make a report of his proceedings in writing to the
Commissioner and shall himself preserve a copy of such
report as an official record.

6. Purchase by Government at
Sale upon Distraint
Section 212, NIRC
When the amount bid for the BIR Commissioner may
property under distraint is not purchase the same in
equal to the amount of the behalf of the National
tax or when the amount of bid Government for the
is substantially lesser than amount of taxes,
the actual market value of the penalties, and costs due
articles offered for sale thereon.
7. Further Distraint
Section 217, NIRC
the remedy of distraint of personal property may be

repeated if necessary until the full amount due
and all expenses are collected.

CONSTRUCTIVE DISTRAINT
Section 206, NIRC
To safeguard the interest of the government, the

Commissioner may place under constructive distraint the
property of the delinquent taxpayer or any taxpayer who, in his
opinion,
1.is retiring from any business subject to tax;
2.is intending to leave the Philippines or to remove his
property therefrom;
3.to hide or conceal his property;
4.to perform any act tending to obstruct the proceedings
for collecting the tax due or which may be due from him.
Section 206, NIRC
HOW?
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.

Section 206, NIRC
HOW?
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, the Revenue
Officer effecting the constructive distraint shall proceed to
preapare a list of such property in the presence of Two (2)
witnesses, leave a copy of the same in the premises
where the property distrained is located, after which the
property shall be deemed to have been placed under
constructive distraint.
COLLECTION REMEDIES
LEVY OF REAL PROPERTY
Section 207(B), NIRC
is the seizure by the government of real property

in order to enforce the payment of taxes. the
property may be sold at a public sale if, after
seizure, the taxes are not voluntarily paid.
When the amount of the tax liability is not more than

one hundred pesos (P100), the remedies of distraint
and levy SHALL NOT BE AVAILED OF.
LEVY OF REAL PROPERTY Section 207(B), NIRC
PROCEDURES OF LEVY
1. Summary Remedies
Section 207, NIRC
After the expiration of the time required to pay the

delinquent tax or delinquent revenue as prescribed by law,
real property may be levied upon, before,
simultaneously or after the distraint of personal property
belonging to the delinquent taxpayer.

PROCEDURES OF LEVY
1. Summary Remedies
Section 207, NIRC
Levy shall be effected in writing upon the

certificate detailing a description of the property
upon which levy is made.
A failure of notice is a fatal defect. (Sec. 207 [B], NIRC;

PROCEDURES OF LEVY
2. Advertisement and Sale

Section 213, NIRC
Within 20 days after levy, the officer

conducting the proceedings shall proceed to
advertise the property or a usable portion
thereof as may be necessary to satisfy the
claim and cost of sale and such advertisement
shall cover a period of at least 30 days.
PROCEDURES OF LEVY
3. Redemption of Property Sold

Section 214, NIRC
Within one year from the date of sale, the
delinquent taxpayer, or anyone for him, shall have
the right of paying to the RDO the amount of the
public taxes, penalties thereon from the date of
delinquency to the date of sale, together with
interest on said purchase price at the rate of
15% per annum from the date of purchase to the
date of redemption.
PROCEDURES OF LEVY

Section 214, NIRC
The owner shall not, however, be deprived of

the possession of the said property and shall
be entitled to the rent and other income
thereof until the expiration of the time allowed
for its redemption.
PROCEDURES OF LEVY

Section 214, NIRC
In case the taxpayer does not redeem the

property as above provided, the RDO shall,
as grantor, execute a deed conveying to the
purchaser how much the property has been
sold, free from all liens of any kind
whatsoever. (Sec. 202, NIRC)
PROCEDURES OF LEVY
4. Further Levy Section 217, NIRC
The levy, as a remedy on realty, may be

repeated if necessary until the full amount due,
including all expenses, is collected.

CIVIL and CRIMINAL ACTIONS Section 220, NIRC
CIVIL and CRIMINAL actions and proceedings

instituted in behalf of the Government under the
authority of the NIRC or other law enforced by the
BIR ….
shall be brought in the name of the Government

of the Philippines and shall be conducted by legal
officers of the BIR.

CIVIL and CRIMINAL ACTIONS Section 220, NIRC
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 BIR
Commissioner. (Sec. 220, NIRC)

GOVERNMENT REMEDIES
OPTIONS OF THE GOVERNMENT
CIVIL and CRIMINAL ACTIONS
Tax liability can be collected through

CRIMINAL ACTION
PRINCIPLES ON CRIMINAL TAX ACTIONS:
1. No criminal action can be filed in court

without approval of the CIR. The power can be
delegated to subordinates through administrative
issuances. DOJ Prosecutors can provide
assistance.
GOVERNMENT REMEDIES
2. The Solicitor General is required to appear

or sign pleadings during the appellate
proceedings.
Action by the CIR without Solicitor

General concurrence will lead to dismissal of
the case.
GOVERNMENT REMEDIES
3. Filing of criminal case brings the civil

collection case with it.
But acquittal in criminal action does not

bar further civil collection action.
GOVERNMENT REMEDIES
4.Period of prescription is 5 years counted from

the commission of the violation.
If time of violation is not known, from

discovery thereof and institution of judicial
proceedings for its investigation and
punishment.
GOVERNMENT REMEDIES
5. Prescription of 5 years is interrupted when:
- the proceedings are instituted.

- the offender is absent from the country.
6. Payment of civil liability will not extinguish

criminal liability.
GOVERNMENT REMEDIES
7. If a person is convinced that the taxpayer is

guilty, the CIR cannot impose an arbitrary
penalty. CIR must file criminal proceedings.
EXCEPTION:
ENTERING INTO A COMPROMISE
PENALTY
If
a person is convicted for violation of Tax Code and he has no property to meet the fine, he can be subject to subsidiary
personal liability
GOVERNMENT REMEDIES
COMPROMISE PENALTY COMPROMISE
money paid to compromise a tax the amount of money paid by the
violation that a taxpayer has taxpayer to settle his civil liability.
committed which may be subject
of criminal prosecution.
basis for amount paid is gross basis is the basic tax assessed.
sales and receipts during the year
or the tax due.
Minimum amount: Minimum amount:
depends on the tax violation, and 40% , 20 or 10%
in general is not less than P1K
GOVERNMENT REMEDIES
8. Criminal action can proceed before or during

pendency of assessment and there must be a
prima facie showing of willful attempt to evade
taxes.
GOVERNMENT REMEDIES
9.Assessment is not applicable before criminal

prosecution. There is no need for precise
computation and assessment of tax before criminal
prosecution.
CIRCUMSTANCES NEEDED:
- Prima facie showing of willful attempt to
evade.
- There must be a final finding that a tax due.
BUT, for civil case for collection,
ASSESSMENT is required.
GOVERNMENT REMEDIES
For self-assessed taxes by taxpayers, the assessment
takes the place of the FAN in the process. So, there is
no need for assessment prior to collection in a civil
case. The collection can ensue within 5 years of the
date of filing of the return.
Taxes that do not require assessment to establish
tax liability or delinquency:
1.Self-assessing tax
2.Tax paid is lower than the tax due on the return filed
GOVERNMENT REMEDIES
Taxes that require prior assessment before
being established
1.Tax, when period of taxpayer is terminated
Example: those that require JEOPARDY
ASSESSMENT.
2. Deficiency tax liability arising from BIR tax audit
3. Tax lien on property
4. Dissolving corporation
GOVERNMENT REMEDIES
10. Prior deficiency assessment is not needed

before a criminal tax case can be filed. (only in
civil cases)
11. For corporations, the President, Managing

Partner, Treasurer or Officer responsible for the
violation will be held criminally liable.
GOVERNMENT REMEDIES
WARRANT OF GARNISHMENT
• The taking over of personal property

of delinquent taxpayer which are in
the possession of third party, (bank
deposit), for purposes of collecting
delinquent taxes.
OTHER COLLECTION REMEDIES
Enforcement of tax lien;
Enforcement of forfeiture;
Entering into compromise of tax case;
Requiring the filing of bonds;
Requiring proof of filing of income tax
returns;
Giving of rewards to informers;
Making arrest, search and seizure;
Deportation of aliens;
Inspection of books of accounts;
Use of national tax register;
Enforcement of tax lien;
Enforcement of forfeiture;
Entering into compromise of tax case;
Requiring proof of filing of income tax
returns;
Giving of rewards to informers;
Enforcement of TAX LIEN Section 219, NIRC
A tax lien is directed to the property subject to tax

regardless of the owner of the property, irrespective of
who is the possessor thereof.
It is enforced:
(a)by a seizure of the property, and
(b)by a sale of the property.

By seizure, the proceeds of the property sold are

applied to satisfy the tax liability and the excess
thereof shall be returned to the taxpayer.
By forfeiture, no part of proceeds goes to

the taxpayer because the property is
confiscated in favor of the government.
This lien is not valid against any mortgage, 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 of city where the property of
the taxpayer is situated or located. (Sec. 219, NIRC)

Enforcement of forfeiture Section 224;225, NIRC
The forfeiture of chattels and removable fixtures of

any sort shall be enforced by the seizure and
sale, or destruction, of the specific forfeited
property.
The forfeiture of real property shall be enforced

by a judgment of condemnation and sale in a
legal action or proceeding, civil or criminal, as
the case require.
Enforcement of forfeiture Section 224;225, NIRC
As a form of evidence, forfeited property

shall not immediately be destroyed for at least 20
days after seizure. (Sec. 225, NIRC)

Entering into compromise of tax case

Section 204, NIRC
A compromise of the tax liability is possible at any

stage of the litigation, even during appeal, although
legal propriety demands that prior leave of court should
be obtained.
(Pampanga Sugar Development Corporation vs. Court of

Industrial Relations, 114 SCRA 725)
Section 204, NIRC
A criminal compromise is proper only if done

before the filing of the information with the court
(Sec. 204, NIRC).
The Civil Code shall govern the effects of

compromise.
(Arts. 2037 – 2041, Civil Code)

Section 204, NIRC
Commissioner may compromise the
payment of any internal revenue tax when:
•A reasonable doubt as to the validity of the

claim against the taxpayer exists; or
•The financial position of the taxpayer

demonstrates a clear inability to pay the
assessed tax.
BAR QUESTION/S
State and discuss briefly whether the following cases

may be compromised or may not be compromised:
a.Delinquent accounts
b.Cases under administrative protest, after issuance of the
final assessment notice to the taxpayer, which are still
pending.
c.Criminal tax fraud cases
d.Criminal violations already in filed in court
e.Cases where final reports of reinvestigation or
reconsideration have been issued resulting in the reduction of
the original assessment agreed to by the tax payer when he
signed the required agreement form.
2005 BAR EXAMS

Section 204, NIRC
Cases which may be Compromised
The taxpayers and the BIR may agree to

compromise the following cases:
1. Delinquent accounts;
2. Civil tax cases disputed before the courts;
3. Collection cases filed in courts;

Section 204, NIRC

4.Cases under administrative protest after
issuance of the Final Assessment Notice to the
taxpayer which are still pending in the Regional
Offices, Revenue District Office, Legal Service,
Large Taxpayer Service, Collection Service,
Enforcement Service and other offices in the
National Office;

Section 204, NIRC

5. Criminal violations, other than those already

filed in court, or those involving criminal tax
fraud.
Section 204, NIRC
Cases that are NOT Subject to Compromise
1.Withholding tax cases, unless the applicant

taxpayer invokes provisions of law that cast doubt
on the taxpayer’s obligation to withhold;
2. Criminal tax fraud cases confirmed as such by

the Commissioner of Internal Revenue or his duly
authorized representative;

Section 204, NIRC
3. Criminal violations already filed in court;

4. Delinquent accounts with duly approved
schedule of installment payments;
5. Cases where final reports of reinvestigation or
reconsideration have been issued where the
taxpayer is agreeable.
Section 204, NIRC
6. Cases which become final and executory after

final judgment of a court, where compromise is
requested on the ground of doubtful validity of the
assessment; and
7. Estate tax cases where compromise is
requested on the ground of financial incapacity
of the taxpayer
BAR QUESTION/S
State and discuss briefly whether the following cases

may be compromised or may not be compromised:
a.Delinquent accounts
b.Cases under administrative protest, after issuance of the
final assessment notice to the taxpayer, which are still
pending.
c.Criminal tax fraud cases
d.Criminal violations already in filed in court
e.Cases where final reports of reinvestigation or
reconsideration have been issued resulting in the reduction of
the original assessment agreed to by the tax payer when he
signed the required agreement form.
2005 BAR EXAMS

Section 204, NIRC
minimum compromise rate on tax

compromise settlement
(Rev. Reg. No. 7-2001)
A.10% of basic tax assessed due to
financial incapability
1.an individual taxpayer whose only source of income is
from employment and whose monthly salary, if single, is
P10,500 or less, or if married, whose salary together
with his spouse is P21,000/month, or less; the
taxpayer, however, must possess no other
leviable/distrainable assets, other than his family home;
Section 204, NIRC

(Rev. Reg. No. 7-2001)
A.10% of basic tax assessed due to

2. An individual without any income;

3. Zero networth, negative networth taxpayer;
4. Non-operating companies for a period of 3 years
or more as of the date of application for compromise.
Section 204, NIRC

(Rev. Reg. No. 7-2001)
B. 20% of basic tax assessed due to
1.Dissolved corporation;
2.Non-operating companies for a period of less
than 3 years; and
3.Corporations declared insolvent or bankrupt .
Section 204, NIRC

(Rev. Reg. No. 7-2001)
C. 40% of assessed tax due to financial

incapability for surplus or earnings deficit
resulting to impairment in the original capital
by at least 50%

Section 204, NIRC

(Rev. Reg. No. 7-2001)
D. 40% for doubtful validity of assessment
Where the basic tax involved exceeds one million pesos

(P1,000,000) or where the settlement offered is less than the
prescribed minimum rates, the compromise shall be subject to
the approval of the Evaluation Board which shall be composed
of the BIR Commissioner and the four (4) Deputy
Commissioners.
Section 159 and 160, NIRC
applicable to customs duties and excise

taxes.
In cases where the computation of required

actual tax payment is not readily done and
will cause delays, an agreement shall be made
that a bond is secured instead of assuring payment of
tax that may still be due.
Giving of rewards to informers
Section 282, NIRC
Reward is 10% of the amount recovered
subject to income tax, collected as a

final withholding tax, at the rate of
10%.
Section 282, NIRC
For Violation of NIRC

Any person, except an internal revenue official or
employee, or other public official or employee, or his
relative within the 6th degree of consanguinity shall be
rewarded in a sum equivalent to 10% of the
revenue, surcharges or fees recovered and
or fine or penalty imposed and collected or
P1,000,000 per case, whichever is lower
Section 282, NIRC
1.He voluntarily gives definite and sworn information not yet

in the possession of the BIR;
2.The said information leads to the discovery of frauds upon
internal revenue laws or violations of any of the provisions
thereof;
3.The discovery of the frauds resulted in the recovery of
revenues, surcharges and fees and/or the conviction of the
guilty party and/or the imposition of any fine or penalty.

Section 282, NIRC
For discovery and seizure

of smuggled goods
A cash reward equivalent to 10% of the fair market

value of the smuggled and confiscated goods or
P1,000,000 per case, whichever is lower

Requiring proof of filing of income tax returns;

The government may impose surcharges

and interest in addition to basic taxes to
ensure tax collection once a taxpayer
neglects to pay his taxes.

Surcharges
SIMPLE NEGLECT WILLFUL NEGLECT

Section 248 (A), NIRC Section 248 (B), NIRC
25% 50%
SURCHARGE SURCHARGE
FOR EACH FOR EACH
VIOLATION VIOLATION
SIMPLE NEGLECT
25% SURCHARGE FOR EACH VIOLATION
1.Fails to file any return and pay the tax due thereon;
2.Filesincome tax returns with an internal revenue officer

other than with whom the return is required to be filed;

SIMPLE NEGLECT
3. Fails to pay the deficiency tax within the time prescribed

for its payment in the notice of assessment,
4. Fails to pay the full or part of the amount of tax shown on

any return required to be filed, or the full amount of tax due
for which no return is required to be filed, on or before the
prescribed date for its payment.

WILLFUL NEGLECT
1.Intentional neglects to file the return with the period

prescribed by the Tax Code or by rules and regulations,
2.Presents false or fraudulent return to the BIR.

Interest
DEFICIENCY DELINQUENCY
INTEREST INTEREST
Section 249 (B), NIRC Section 248 (B), NIRC
20% INTEREST 20% INTEREST

PER ANNUM (or PER ANNUM (or
higher rate) higher rate)
DEFICIENCY INTEREST Section 249 (B), NIRC
20% INTEREST PER ANNUM (or higher
rate)
It is the amount still due and

collectible from the taxpayer upon
audit or investigation. It shall be
assessed and collected from the
date prescribed for its payment
until the full payment thereof.
DELINQUENCY INTEREST Section 248 (B), NIRC
20% INTEREST PER ANNUM (or higher
rate)
It is the additional amount imposed for the failure
to pay:
1. the amount of the tax due on any return
required to be filed;
2. The amount of the tax due for which no return is
required;
3. A deficiency tax, or any surcharge or interest
thereon on the due date appearing in the notice and
demand of the Commissioner.
NIRC Provision NIRC TRAIN
General 20% interest on any unpaid General interest on unpaid

interest amount of tax from the amount of tax is changed to
date prescribed for 12% (at double the rate of
payment until the amount legal interest rate for loans or
fully paid forbearance of any money in
the absence of an express
stipulation as set by the BSP;
prevailing BSP-set legal
interest is 6%)
Additional proviso:
Deficiency and delinquency
interest shall in no case be
imposed simultaneously.
Deficienc Deficiency interest The period when

y interest is assessed and deficiency interest
collected from the shall stop to run is
date prescribed for until full payment OR
its payment until upon issuance of a
full payment notice and demand
thereof. by the BIR
Commissioner;
whichever comes
earlier.
BAR QUESTION/S
What is a “deficiency interest” for purposes of the

income tax? Illustrate.
What is a “delinquency interest” for purposes of

the income tax? Illustrate.
1995 BAR EXAMS

REMEDIES
AVAILABLE TO TAXPAYER
A person adversely affected by the
action taken by the BIR can avail of…
ADMINISTRATIVE
JUDICIAL REMEDIES
REMEDIES
to question the enforcement of tax

collection.

REMEDIES
AVAILABLE TO TAXPAYER
ADMINISTRATIVE
EXHAUSTION OF REMEDIES
JUDICIAL
BEFORE SEEKING REMEDIES

ADMINISTRATIVE REMEDIES
(available to the TAXPAYER)
1. entering into
compromise
Before payment, the taxpayer
may offer an amount which is
lesser than the amount of tax
liability assessed to him

2. Filing of Claim for Tax

Credit
After payment, a tax credit certificate
could be issued to the taxpayer, which
may be applied against any internal
revenue tax for which the taxpayer is
liable.
This is not applicable to withholding taxes.

3. Filing of Claim for Refund
After payment, a request for actual return in

cash of erroneously or illegally collected taxes
should be made through filing a claim for tax
refund.
categorical demand
for reimbursement
Filing of Claim for Tax Credit

Filing of Claim for Refund
shall be filed in BUT Even without a
writing with the written claim
Commissioner
within 2 years the BIR Commissioner may refund
after the payment or credit any tax if, on the face of
of tax or penalty. the return upon which payment
(Sec. 229 and 230, was made, it appears clearly to
NIRC) have been erroneously paid.
shall be filed in
The two (2) -year period is
writing with
not only a limitation for filing a
the
Commissioner claim for refund at the
within 2 years administrative level but also
after the a limitation for
payment of tax appealing the case to
or penalty. the Court of Tax Appeals
(Sec. 229 and 230,
NIRC)
BAR QUESTION/S
State the conditions required by the Tax Code

before the Commissioner of Internal Revenue
could authorize the refund or credit of taxes
erroneously or illegally received.
2005 BAR EXAMS

The two (2) -year period is not only a limitation for filing a
claim for refund at the administrative level but also a
limitation for appealing the case to the Court of
Tax Appeals
DATE Petition for
CLAIM Review CTA in
OF FOR TAX DIVISIO
PAYME REFUND/ 30 days N
NT CREDIT
2 YEARS
JUDICIAL REMEDIES OF THE
TAXPAYER IN CLAIMING TAX
REFUND/CREDIT available to the
TAXPAYER)
Petition for
CTA in MR Review
CTA CTA EN
DIVISIO SAME BANC
N 15 days DIVISION 15 days

JUDICIAL REMEDIES OF THE
TAXPAYER IN CLAIMING TAX
REFUND/CREDIT available to the
TAXPAYER)
Petition for on Certiorari

CTA EN SUPREME
BANC COURT
15 days

BAR QUESTION/S
On March 12, 2001, REN paid his taxes. Ten

months later, he realized that he had overpaid
and so he immediately filed a claim for refund
with the Commissioner of Internal Revenue.
On February 27, 2003, he received the decision

of the Commissioner denying REN’s claim for
refund. On March 24, 2003, REN filed an appeal
with the Court of Tax Appeals. Was his appeal
filed on time or not? Reason.
2004 BAR EXAMS
FORFEITURE of 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, shall be forfeited in
favor of the Government and the amount thereof
shall revert to the general fund.
(Sec. 230 [A], NIRC)

FORFEITURE of Tax Credit
A Tax Credit Certificate which shall remain

unutilized after 5 years from the date of
issuance, shall, unless revalidated, be
considered invalid, and shall not be allowed
as payment for internal revenue tax liabilities
of the taxpayer and the amount covered by
the certificate shall revert to the general fund.
(Sec. 230 [B], NIRC)

OTHER ADMINISTRATIVE REMEDIES
and
OTHER JUDICIAL REMEDIES


Demand for the Letter of Authority (LA)

Authorizes a particular Revenue
Officer to go over, verify and
scrutinize a taxpayer’s books and
records
must be served to the taxpayer within 30

days from its date of issue; otherwise, it
becomes null and void and the taxpayer
has all the right to refuse its service if
presented beyond the 30–day period.
APPLYING FOR NO AUDIT PROGRAM (NAP)
REQUISITES
1.Incometax payment for the current taxable year
must exceed the income tax payment for the
base (PREVIOUS) year by at least 20%.
2.Ratio of income tax payment to gross

sales/receipts for the current taxable year must
be at least equal to that of the base
(previous)year.
Action for Damages

against Revenue Officers
Section 227, NIRC
Action to recover damages by reason of any act done

in the performance of official duty.

Action to Contest Forfeiture of Chattel
Section 231, NIRC
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, and upon
giving proper bond, may enjoin the sale; or after
the sale and within 6 months, he may bring an
action to recover the net proceeds realized
at the sale.
BAR QUESTION/S
Describe separately the procedures on the legal

remedies under the Tax Code available to an
aggrieved taxpayer both at the administrative and
judicial levels.
2000 BAR EXAMS

CTA Profile
The passage of R.A. 9282 on March 30,

2004, which took effect on April 23, 2004,
recently expanded the jurisdiction of the
Court of Tax Appeals (CTA), by amending
certain sections of R.A. 1125, the “Law
Creating the Court of Tax Appeals”.

CTA Profile
Under R.A. 9282, CTA’s rank is now

elevated to the level of the Court of
Appeals with special jurisdiction and its
memberships enlarged from one (1)
division of three Judges to two (2)
divisions of three Justices each.

CTA Profile
It acquired both the original and appellate

jurisdictions over civil and criminal tax
cases involving the National Internal
Revenue Code, Tariff and Customs Code
and the Local Government Assessment
Code.

Legal Basis
The Court of Tax Appeals was originally

created by virtue of Republic Act. No. 1125
which was enacted on June 16, 1954 and
was recently amended by Republic Act. No.
9282 on March 30, 2004, which took effect
on April 23, 2004.

Legal Basis
Under Section 1 of the new law, the Court is

headed by a Presiding Justice and
assisted by five (5) Associate Justices.
They shall have the same qualifications, rank,

category, salary, emoluments and other privileges,
be subject to the same inhibitions and
disqualifications and enjoy the same retirement and
other benefits as those provided for under existing
laws for the Presiding Justice and Associate
Justices of the Court of Appeals.
Legal Basis
Previously, only decision, judgment, ruling

or inaction of the
Commissioner of Internal Revenue ,
Commissioner of Customs,
Secretary of Finance,
Secretary of Trade and Industry,
Secretary of Agriculture,
involving the National Internal Revenue Code and
the Tariff and Customs Code on civil matters are
appeallable to the Court of Tax Appeals.
Legal Basis
The expanded jurisdiction transferred to

the CTA the jurisdiction of:
1. the Regional Trial Courts

2. Court of Appeals
over matters involving criminal violation and

collection of revenues under the National Internal
Revenue Code and Tariff and Customs Code.

Legal Basis
In addition, it also acquired jurisdiction

over cases involving local and real
property taxes which used to be with the
Regional Trial Court and the Court of
Appeals.

OUTLINE OF JURISDICTION
Section 7, R.A. 9282
I. Exclusive Appellate Jurisdiction to Review by Appeal

1. DECISIONS of the Commissioner of Internal Revenue
in cases involving
a. disputed assessments,
b. refunds of internal revenue taxes,
c. fees or other charges,
d. penalties in relation thereto, or
e. other matters arising under the NIRC or other
laws administered by the BIR.
Petition for Review under Rule 42
POWERS of the Internal Revenue Commissioner
2. DECIDE TAX CASES (Sec. 4 par. 2 of NIRC
-Disputed assessments
-Refunds of internal revenue taxes, fees or other
charges
-Penalties imposed arising under the Tax Code or
other tax laws;
-Other matters arising under the NIRC.
Is the Decision of the Commissioner subject to APPEAL?

It is subject to the EXCLUSIVE APPELLATE
JURISDICTION of the COURT OF TAX APPEALS.

2. INACTION by the Commissioner of Internal Revenue in
cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in realtion
thereto, or other matters arising under the NIRC or other
laws administered by the BIR, where the NIRC
provides a specific period of action , in which
case the inaction shall be deemed a denial.

3. DECISIONS, ORDERS or RESOLUTIONS of the

RTC 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 of custom 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 custom
cases elevated to them 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 Trade and Industry, in cases of
nonagricultural product, commodity or article, and the
Secretary of Agriculture in cases of agricultural product,
commodity or article involving dumping and countervailing
duties under Sections 301 and 302, respectively, of the Tariff
and Customs Code, and safeguard measures under R.A. No.
8808, where either party may appeal the decision to impose or
not to impose said duties

II. CIVIL and CRIMINAL CASES

Criminal action and the corresponding civil action
for the recovery of civil liability for taxes and
penalties
1.
shall at all time be simultaneously
instituted with and jointly determined in the
proceeding before the CTA.
There is no need to reserve the filing of
such civil action separately from the
criminal action.

A. Exclusive ORIGINAL jurisdiction
1. VIOLATIONS of NIRC, Tariff and Customs Code

and other laws administered by the BIR or the
Bureau of Customs, where the principal amount of
taxes and fees, exclusive of charges and penalties
claimed is P1 million and above.


B. Exclusive APPELLATE jurisdiction
1. VIOLATIONS of NIRC, Tariff and Customs Code
and other laws administered by the BIR or the
Bureau of Customs, ORIGINALLY DECIDED BY
THE REGULAR COURT where the principal
amount of taxes and fees, is less than P1 million or
no specified amount claimed.


2. JUDGMENTS,
J RESOLUTIONS or ORDERS of the
RTC in tax cases ORIGINALLY DECIDED BY
THEM.


3. JUDGMENTS, RESOLUTIONS or ORDERS of the

RTC in the exercise of their APPELLATE
JURISDICTION over tax cases ORIGINALLY
DECIDED BY THE MeTC, MTC and MCTC
via petition for review.


4. TAX COLLECTION CASES
a. FROM JUDGMENTS, RESOLUTIONS

or ORDERS of the RTC ORIGINALLY
DECIDED BY THEM via an
appeal.

4. TAX COLLECTION CASES
b. FROM JUDGMENTS, RESOLUTIONS or

ORDERS of the RTC in the exercise
of their APPELLATE JURISDICTION
over tax cases ORIGINALLY
DECIDED BY THE MeTC, MTC
and MCTC via petition for
WHO MAY APPEAL?
Any party adversely affected by a
decision, ruling or inaction of the
Commissioner of Internal Revenue,
Commissioner of Customs,
Secretary of Finance,
Secretary of Trade and Industry
Secretary of Agriculture
Regional Court,
may file an appeal with the Court of Tax
Appeals.
WHEN TO APPEAL
APPEALS TO THE COURT OF TAX APPEALS

(CTA) WITHIN 30 DAYS FROM RECEIPT OF
SUCH DECISION OR RULING
APPEALS TO THE COURT OF TAX APPEALS (CTA)

after the expiration of the period fixed by law for
action referred to in Section 7(a)[2] of R.A. 9282,
in which case the inaction shall be deemed a
denial

"Sec. 7. Jurisdiction. - The CTA shall exercise:
"a. Exclusive appellate jurisdiction to review by appeal, as

herein provided:
"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;

WHEN TO APPEAL
The decision of the DIVISION of CTA is

appealable WITHIN 15 DAYS to the
CTA EN BANC
THE DECISION OF THE DIVISION OF CTA EN

BANC IS DIRECTLY APPEALABLE TO THE
SUPREME COURT ON QUESTIONS OF LAW ON
CERTIORARI.

CTA shall not be governed by the Technical
Rules of Evidence
The findings of fact of the Court of Tax Appeals are

entitled to the highest respect.

Appeal to the CTA shall not suspend the
payment, levy, distraint and sale of
taxpayer’s property
But when in the opinion of the Court, the collection by the

aforemetioned government agencies may jeopardize the
interest of the Government and or/taxpayer, the Court at 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.

BAR QUESTION/S
RR disputed a deficiency tax assessment and

upon receipt of an adverse decision by the
Commissioner of Internal Revenue, filed an
appeal with the Court of Tax Appeals. While the
appeal is pending, the BIR served a warrant of
levy on the real poperties of RR to enforce
collection of the disputed tax. Granting arguendo
that the BIR can legally levy on the properties,
what could RR do to stop the process? Explain
briefly.
2004 BAR EXAMS
Final Notice before seizure constitutes as a decision
on a disputed assessment, hence, appealable to he
CTA.
A demand letter for tax deficiency assessments issued

and signed by the Chief of the BIR Accounts
Receivable and Billing Division is deemed final and
executory and subject to an appeal to the Court of
Tax Appeals.

LOCAL GOVERNMENT TAXATION
taxing power and other revenue-raising powers.

shall be exercised by:
provinces,
cities,
municipalities,
and barangays

Power to Create Sources of Revenue
Each local government unit shall exercise its power

to create its own sources of revenue and to levy
taxes, fees, and charges subject to the provisions
herein, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue
exclusively to the local government units.

Fundamental Principles
(a) Taxation shall be uniform in each

local government unit;

(b) Taxes, fees, charges and other
impositions shall:
(1) be equitable and based as far as practicable

on the taxpayer's ability to pay;
(2) be levied and collected only for public

purposes;
(b) Taxes, fees, charges and other
impositions shall:
(3) not be unjust, excessive, oppressive, or

confiscatory;
(4) not be contrary to law, public policy, national

economic policy, or in restraint of trade;
(c) The collection of local taxes, fees,

charges and other impositions shall in
no case be let to any private person;

(d) The revenue collected pursuant to the
provisions of this Code shall inure solely
to the benefit of, and be subject to
disposition by, the local government
unit levying the tax, fee, charge or
other imposition unless otherwise
specifically provided herein;
(e) Each local government unit shall, as far

as practicable, evolve a progressive system of
taxation.

TAXPAYER’S REMEDIES-LOCAL
TAXES
HOW TO CHALLENGE THE
CONSTITUTIONALITY OR LEGALITY OF
LOCAL TAX ORDINANCE?
Appeal Secretary Appropriate
Date of Proceedings Regula
of
Effectivity
Justice r
Within 30
Court
days from Within 30 days after
effectivity receipt of the Decision
OR the lapse of the 60
SHALL RENDER A days period without the
DECISION WITHIN 60 Secretary of Justice
DAYS FROM DATE OF acting upon the appeal.
RECEIPT OF THE APPEAL
TAXING POWER OF THE PROVINCES
Tax on Transfer of Real Property Ownership
rate not more than fifty percent (50%) of one percent (1%) of
the total consideration involved in the acquisition of the
property
or
the fair market value in case the monetary consideration
involved in the transfer is not substantial,
whichever is higher.
The sale, transfer or other disposition of real property
pursuant to R.A. No. 6657 shall be exempt from this tax.
Tax on Business of Printing and Publication.
rate not exceeding fifty percent (50%) of one percent

(1%) of the gross annual receipts for the preceding
calendar year.
In the case of a newly started business, the tax shall not

exceed one-twentieth (1/20) of one percent (1%) of the
capital investment.

Franchise Tax
rate not exceeding fifty percent (50%) of one percent

(1%) of the gross annual receipts for the preceding
calendar year based on the incoming receipt, or
realized, within its territorial jurisdiction.
In the case of a newly started business, the tax shall

not exceed one-twentieth (1/20) of one percent (1%)
of the capital investment.

BAR QUESTION/S
The Local Government Code took effect on January 1, 1992.
PLDT’s legislative franchise was granted sometime before 1992. Its

franchise provides that PLDT will only pay 3% franchise tax in lieu of all
taxes.
The legislative franchise of Smart and Globe Telecoms were granted in
1998. Their legislative franchises state that they will pay only 5% franchise
tax in lieu of all taxes.
The Province of Zamboange del Norte passed an Ordinace in 1997 that
imposes a local franchise tax on all telecommunication companies
operating within the province. The tax is 50% of 1% of the gross annual
receipts of the preceding calendar year based on the incoming receipts, or
receipts realized, within territorial jurisdiction.
Is the ordinance valid? Are PLDT, Smart and Globe liable to pay
franchise taxes. Reason briefly.
2007 BAR EXAMS

SEC. 137. Franchise Tax. - Notwithstanding any exemption
granted by any law or other special law, the province may
impose a tax on businesses enjoying a franchise, at a
rate not exceeding fifty percent (50%) of one percent (1%) of
the gross annual receipts for the preceding calendar year
based on the incoming receipt, or realized, within its
territorial jurisdiction. In the case of a newly started
business, the tax shall not exceed one-twentieth (1/20) of one
percent (1%) of the capital investment. In the succeeding
calendar year, regardless of when the business started to
operate, the tax shall be based on the gross receipts for the
preceding calendar year, or any fraction thereof, as provided
herein.
Tax on Sand, Gravel and Other Quarry Resources
levy and collect not more than ten percent

(10%) of fair market value in the locality
per cubic meter of ordinary stones, sand, gravel,
earth, and other quarry resources, as defined
under the National Internal Revenue Code, as
amended, extracted from public lands or from the
beds of seas, lakes, rivers, streams, creeks, and
other public waters within its territorial
jurisdiction.
Tax on Sand, Gravel and Other Quarry Resources
The permit to extract sand, gravel and other quarry resources
shall be issued exclusively by the provincial governor,
pursuant to the ordinance of the sangguniang panlalawigan.
The proceeds of the tax on sand, gravel and other

quarry resources shall be distributed as follows:
(1) Province - 30%;
(2) Component city or municipality where the sand, gravel,
and other quarry resources are extracted - 30%; and
(3) barangay where the sand, gravel, and other quarry
resources are extracted - 40%.
Professional Tax
The province may levy an annual professional tax

on each person engaged in the exercise or practice
of his profession requiring government examination
at such amount and reasonable classification as
the sangguniang panlalawigan may determine
but shall in no case exceed Three hundred
pesos (P=300.00).

Amusement Tax
The province may levy an amusement tax to be

collected from the proprietors, lessees, or
operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of
amusement at a rate of not more than thirty
percent (30%) of the gross receipts from
admission fees.

Annual Fixed Tax For Every Delivery Truck or Van

of Manufacturers or Producers, Wholesalers pf,
Dealers, or Retailers in Certain Products
in an amount not
exceeding Five hundred
pesos (P500.00).

TAXING POWER OF THE MUNICIPALITIES
Tax on Business
Fees and Charges On BUSINESS and OCCUPATION
Fees for Sealing and Licensing of Weights and Measures
Fishery Rentals, Fees and Charges

TAXING POWER OF THE CITIES

the city, may levy the taxes, fees, and charges
which the province or municipality may impose
That the taxes, fees and charges levied and

collected by highly urbanized and independent
component cities shall accrue to them.
The rates of taxes that the city may levy may exceed
the maximum rates allowed for the province or
municipality by not more than fifty percent
(50%) except the rates of professional and amusement
taxes.
BAR QUESTION/S
Aside from the basic real estate tax, give three

(3) other taxes which may be imposed by
povincial and city governments as well as
municipalities in the Metro Manila area.
2002 BAR EXAMS

TAXING POWER OF THE BARANGAYS
On stores or retailers with fixed business establishments

with gross sales or receipts of the preceding calendar
year of Fifty thousand pesos (P=50,000.00) or less, in
the case of cities and Thirty thousand pesos
(P=30,000.00) or less, in the case of municipalities,
at a rate not exceeding one percent (1%)
on such gross sales or receipts.

TAXING POWER OF THE BARANGAYS

Other Fees and Charges - The barangay may
levy reasonable fees and charges:
(1) On commercial breeding of fighting cocks,

cockfights and cockpits;
(2) On places of recreation which charge admission

fees; and
(3) On billboards, signboards, neon signs, and

outdoor advertisements.
COMMON REVENUE-RAISING POWERS
Service Fees and Charges.
Public Utility Charges. –

-public utilities owned, operated and
maintained by them within their
jurisdiction.

Toll Fees or Charges.
- toll fees or charges for the use of any

public road, pier or wharf, waterway,
bridge, ferry or telecommunication system
funded and constructed by the local
government unit concerned

Provided, That no such toll fees or charges

shall be collected from officers and enlisted
men of the Armed Forces of the
Philippines and members of the
Philippine National Police on mission,
post office personnel delivering mail,
physically-handicapped, and disabled
citizens who are sixty-five (65) years or
older.
When public safety and welfare so

requires, the sanggunian concerned
may discontinue the collection of the
tolls, and thereafter the said facility
shall be free and open for public use.

TAXES
PROTEST ON ASSESSMENT OF LOCAL TAX
Who will issue Notice of Assessment

and within what period?
The local Treasurer (province, city or municipality)
assesses the local tax within 5 years from the date
it becomes due OR within 10 years in cases of
fraud and intent to evade payment of the tax.
The local Treasurer issues a
NOTICE OF ASSESSMENT
to the Taxpayer
TAXES
Assessment PROTEST APPEAL

Notice LOCAL Regular
(tax paid TREASUR Court
under ER
60 days 30 days from receipt
protest) of adverse decision
If appeal is acted upon
OR
30 days from the
60 days to decide from the lapse of the 60 day
date of filing of the Protest period if the protest is
not acted upon.
TAXES
Petition for Review
Petition for CTA in on Certiorari
Review
Regular DIVISION SUPREM
Court or E COURT
30 days EN BANC 15 days
If RTC exercised its original jurisdiction, file Petition for

Review before the CTA in Division
If RTC exercised its appellate jurisdiction, file Petition
for Review before the CTA en banc.
COMMUNITY TAX
Taxpayers Individuals
subject to the
community Corporations.
taxes are:

COMMUNITY TAX
Kinds of community taxes
•Basic Community Tax
•Additional Community Tax
•Optional Community Tax

COMMUNITY TAX FOR INDIVIDUAL
Every inhabitant of the Philippines, eighteen years of age or
over , shall pay a basic community tax of five pesos (P5.00),
provided:
1.Regularly employed on a wage or salary basis for at least

thirty (30) consecutive working days during any calendar year;
2. Engaged in business or occupation;
3.Owns real property with an aggregate assessed value of one

thousand pesos (P1,000) or more; or;
4.Required by law to file an income tax return.

COMMUNITY TAX FOR INDIVIDUAL
In addition to Basic Community Tax, an individuals
shall pay an additional community tax, as follows:
One peso (P 1.00) for every one thousand pesos

P1,000.00 which shall not exceed five thousand
pesos (P5,000.00) if from within the Philippines, in the
preceding year of Gross Receipts from business or gross
receipts from the practice of profession or pursuit of an
occupation or Income from real property.
Note: There should be a full P1,000 in order to have

an additional community tax of P 1.00 (an amount
that is not full P1,000 is not taxable.)
COMMUNITY TAX FOR CORPORATION
Every corporation, no matter how created or organized,

domestic or resident foreign, engaged in or doing
business in the Philippines, including general
professional partnership, shall pay a Basic
Community Tax of five hundred pesos (P500.00)

COMMUNITY TAX FOR CORPORATION
In addition to Basic Community Tax, a
corporation shall pay an additional community
tax, as follows:
Two pesos (P 2.00) for every one thousand pesos
(P 5,000.00) which shall not exceed ten thousand
pesos (P10,000.00) if from within the Philippines, in the
preceding year for Gross Receipts from business
or assesses value of property
Note: There should be a full P5,000 in order to have

an additional community tax of P 2.00 (an amount
that is not full P5,000 is not taxable.)
When to pay the tax?
If the individual or corporation is liable as of

January 1 of the year, the tax shall be paid not
later than the last day of February.
If the individual or corporation becomes
liable after January 1 of the year until March 31,
within 20 days from the date he/it became liable;
If the individual or corporation becomes
liable after March 31 of the year until June 30, the
tax shall be paid on the date he/it becomes liable.
If the individual becomes liable after June 30,
he/it is exempted for the year.
EXEMPTION FOR COMMUNITY TAX
•Diplomatic and consular representatives
•Transient visitors when their stay in the

Philippines does not exceed three (3)
months.

EXEMPTION FOR COMMUNITY TAX

Persons who come to reside in the
Philippines on or after July 1;
Persons who become 18 years of age on or

after July 1;
Corporations established and organized on

or after July 1 (Sections 159 & 161, LGC).

OPTIONAL COMMUNITY TAX
Any person or corporation that is EXEMPT

from the Community Tax but who desires to
pay, shall pay one peso (P1.00).

REAL PROPERTY TAXES

Fundamental Principles-Real Property Taxation
1. Real Property shall be appraised at its current

and fair market value;
2. Real Property shall be classified for assessment

purposes on the basis of its actual use;
3. Real Property shall be assessed on the basis of

a uniform classification within each local
government unit;
REAL PROPERTY TAXES

Fundamental Principles-Real Property Taxation
4. The appraisal, assessment, levy and collection of

real property tax shall not be let to any private
person; and
5. The appraisal and assessment of real property

shall be equitable.
Section 198, LGC

REAL PROPERTY TAXES
PROVINCES
LGUs EMPOWERED
by LGC to IMPOSE CITIES
REAL PROPERTY MUNICIPALITIES
TAX within the Metropolitan
Manila Area.
Municipalities outside the Metropolitan

Manila Area and BARANGAYS do not
enjoy the power of real property
taxation.
REAL PROPERTY TAXES
COMPONENTS OF THE REAL PROERTY TAX
Annual SPECIAL LEVIES

ad valorem tax
1. Special education fund-1%

2. Tax on idle lands-5%
3. Special Assessment.

REAL PROPERTY TAXES
VARIOUS CLASSES OF REAL PROPERTY
FOR ASSESSMENT PURPOSES
1. Residential;
2. Agricultural
3. Commercial
4. Industrial
5. Mineral
6. Timberland
7. Special- actually and directly used for
hospitals, cultural, or scientific purposes,
owned by local water district, GOCCs rendering
essential public services in the supply and
distribution of water and or generation and
transmission of electric power.
REAL PROPERTY TAXES
GENERAL REVISION OF REAL

PROERTY ASSESSMENTS SHALL BE
UNDERTAKEN ONLY ONCE IN EVERY
THREE (3) YEARS
Section 219, LGC

REAL PROPERTY TAXES
Real Properties EXEMPT from the Real Property Tax
Section 234, LGC
1. Real Property owned by the Republic of the

Philippines or any of its political
subdivisions, EXCEPT when the beneficial
use thereof has been granted, for
consideration or otherwise, to a taxable
person;

REAL PROPERTY TAXES
Section 234, LGC
2. Charitable institutions, churches, parsonages

or convents appurtenant thereto, mosques,
non-profit or religious cemeteries and all
lands, buildings, and improvements actually,
directly and exclusively used for religious,
charitable or educational purposes;

REAL PROPERTY TAXES
Section 234, LGC
3. All machinery and equipment that are

actually, directly and exclusively used by
local water districts and GOCCs engaged in
the supply and distribution of water and/or
generation and transmission of electric
power;

REAL PROPERTY TAXES
Section 234, LGC
4. All real property owned by duly registered

cooperatives as provided for under Republic
Act No. 6938;
5. Machinery and Equipment used for pollution

control, and environmental protection
(Section 234, LGC);
REAL PROPERTY TAXES
Section 218, LGC
6. ZERO-ASSESSMENT
LEVEL
Residential lots whose fair market value does

not exceed P175,000.00
Reason: excluding the poor landowner from the

burden of real property taxation.
REAL PROPERTY TAXES
Can the President of the Philippines interfere in the

imposition of real property tax?
YES. When public interest so requires, the

President may CONDONE or REDUCE the
real property tax and interest for any year in
any province, city, or municipality within
Metropolitan Manila Area.
Section 277, LGC

TAXPAYER’S REMEDIES
Real Property Taxes
PROTEST ON ASSESSMENT OF LAND VALUE
Local Assessor makes an appraisal on the real

property based on the current market value and
classifies the property according to actual use;
Local Assessor applies the assessment level and

fixes the assessed value of the real property;

Real Property Taxes
Local Assessor gives NOTICE OF ASSESSMENT to

the person in whose name the real property is
declared.
PROTEST
LOCAL APPEAL CENTRAL
Assessment BOARD BOARD
Notice ASSESSMEN ASSESSMEN
60 days T APPEALS 30 days T APPEALS
LBAA CBAA
120 DAYS
TO DECIDE
Real Property Taxes
Petition for
CENTRAL Petition for Review on
BOARD Review Certiorari
ASSESSMEN CTA SUPREM
T APPEALS EN BANC E COURT
CBAA 30 days 15 days

Real Property Taxes
PROTEST ON ASSESSMENT/
COLLECTION OF REAL PROPERTY TAX
Local Assessor submits an assessment roll to the local

Treasurer
Local Treasurer informs the public when the tax shall

be paid
- posting of notice at conspicuous places, and
- publication in a newspaper of general
circulation in the locality once a week for 2
consecutive weeks.
Real Property Taxes
Local Treasurer assesses and collects the real
property tax starting January 1;
DATE
OF PROTEST APPEAL LOCAL
PAYME BOARD
LOCAL ASSESSMEN
NT TREASURER
(under 30 days 60 days T APPEALS
protest) LBAA
60 DAYS
TO DECIDE 120 DAYS
TO DECIDE
Real Property Taxes
PETITION
LOCAL CENTRAL FOR
APPEAL
REVIEW
BOARD BOARD CTA
ASSESSMEN ASSESSMEN EN
T APPEALS T APPEALS BANC
30 days 30 days
LBAA CBAA
120 DAYS
TO DECIDE
Real Property Taxes
PETITION FOR REVIEW

ON CERTIORARI
CTA SUPREM
EN BANC E COURT
15 days

TARIFF
Book of Rates which Duties payable

lists down the on articles or
different kinds of merchandise
articles/merchandise imported or
along with the duties exported
imposed on the
same.
TARIFF = CUSTOMS DUTIES

PURPOSES OF TARIFF
m a y b e
Ta r i ffs
t e d f o r For the protection of
c r ea
v e n u e s domestic producers
re
Tariff may be created as a retaliation

against the tariffs levied by a foreign
country

TARIFF
IMPORT EXPORT
DUTIES DUTIES
Imposed on products
Regular import duties that are exported out
are ad valorem duties of the Philippines to a
imposed on imported foreign country of
articles that enter the destination.
country in
accordance with TCC At present, export duty
is no longer imposed
on products exported
out of the Philippines.
SPECIAL IMPORT DUTIES
In addition to Regular Import Duties
this special duty is

Discriminatory designed to offset any
Duty foreign discrimination
against our local
commerce.

imposed to offset any

Countervailing foreign subsidy granted
Duty to imported goods to the
prejudice of our local
industries.

MARKING DUTY

DUMPING DUTIES

CUSTOMS FEES AND CHARGES IMPOSABLE
UNDER THE TARIFF & CUSTOMS CODE
HARBOR FEE
amount which the owner, agent, operator or
master of a vessel has to pay for each ENTRANCE
INTO or DEPARTURE FROM a port of entry in the
Philippines
WHARFAGE DUE
amount assessed against the cargo of a
vessel engaged in foreign or coastwise trade, based
on the quantity, weight or measure received nad/or
discharge by such vessel.

BERTHING CHARGE
amount assessed against a vessel for
mooring or berthing at a pier, wharf, bulkhead
wharf, river or channel marginal wharf at any
national port in the Philippines.
STORAGE CHARGE
amount assessed on articles for storage in
customs premises, cargo sheds and warehouses of
the government.

ARRASTRE CHARGE
amount which the owner, consignee, or agent
of either, of articles or baggage has to pay for the
handling, receiving and custody of the imported or
exported article or the baggage of the passengers;
TONNAGE DUES
amount paid by the owner, agent, operator or
master of a vessel engaged in foreign trade coming
to the Philippines from a foreign port or going to a
foreign port from the Philippines based on the
tonnage of the vessel.
ANCHORAGE FEE
amount assessed against vessels engaged in
foreign trade that do not berth but drop anchor at
any port of the Philippines;
USAGE FEE
DOMESTIC TRADE that berth or drop anchor at any
port of the Philippines;

LAY UP FEE
DOMESTIC TRADE that are authorized to
temporarily lay up and anchor at any port in the
Philippines; and
OTHER FEES and CHARGES

these are imposed for the services rendered
and for the documents issued by the Bureau of
Customs, such as certificates of Philippine Registry
or ownership and other permits and license issued.

ARTICLES THAT ARE PROHIBITED FROM
BEING IMPORTED INTO THE PHILIPPINES
Dynamite, gunpowder, ammunitions and other

explosives, firearms and weapons war, and
parts thereof, EXCEPT when authorized by law.
Treasonous and rebellious articles
Obscene and immoral articles
PROHIBITED and ILLEGAL DRUGS

ARTICLES THAT ARE PROHIBITED FROM
BEING IMPORTED INTO THE PHILIPPINES
Gambling devices and tickets,

EXCEPT those authorized by law.
OTHER ARTICLES WHICH MAY BE

PROHIBITED BY LAW TO BE IMPORTED
INTO THE PHILIPPINES

Section 1202, Tariff and Customs Code.
IMPORTATIONs
when the carrying vessel or aircraft ENTERS

THE JURISDICTION OF THE PHILIPPINES
with intention to unlade therein.
IMPORTATIONs END
UPON PAYMENT of the duties, taxes and other

charges due upon the articles and the granting of
the legal permit for withdrawal of the same.
The customs official or person authorized to assist
him in the enforcement of tariff and customs laws
may AT ANYTIME enter, pass through, or search
any land or enclosure, or any warehouse, store or
other building NOT BEING a DWELLING HOUSE.
The fact that a person employed as watchman, or

his family, stays and lives in the warehouse, store
or other building or enclosure used for keeping or
storage of articles, DOES NOT ITSELF MAKE
THE SAID PLACE A DWELLING HOUSE.

A DWELLING HOUSE may be entered and
searched ONLY BY VIRTUE OF A WARRANT
issued by a judge showing probable cause and
particularly describing the place to be searched and
person or thing to be seized.
Section 2208 and 2209, Tariff and Customs Code.

The customs official or person authorized to assist
him may open and examine any box, trunk, envelope
or other container, wherever found. . . when he has
reasonable cause to suspect the presence therein of
dutiable or prohibited articles introduced into the
Philippines contrary to law.
The custom official can likewise STOP, SEARCH

and EXAMINE any vehicle, beast or person
reasonably suspected of holding or conveying
dutiable or prohibited articles introduced into the
Philippines contrary to law.
Section 2211, Tariff and Customs Code.

STEPS INVOLVED IN PROTEST CASES
UNDER THE TARIFF AND CUSTOMS CODE
Collector Determines the
of
Importer/
duties, taxes, fees owner
Customs
& other charges
Makes payment
after final
liquidation
Issues an ORDER for Hearing
At the time of
within 15 days from receipt of payment OR within
the Protest and renders 15 days thereafter,
decision within 30 days from FILE A WRITTEN
the termination of the hearing. PROTEST with the
CC
Collector Adverse or NO Importer/

of decision within owner
Customs 30 DAYS
MAY APPEAL TO THE COMMISSIONER

OF CUSTOMS WITHIN 15 DAYS AFTER
NOTIFICATION OF THE DECISION OR
LAPSE OF THE 30 DAY PERIOD TO
DECIDE THE SAME.
Adverse Decision Importer/

CC AGAINST the owner
importer/owner
MAY FILE A PETITION FOR REVIEW TO

THE COURT OF TAX APPEALS IN
DIVISION WITHIN 30 DAYS FROM
RECEIPT THEREOF.

CTA Adverse
in Decision Importer/
DIVISION AGAINST the owner
importer/owner
MAY FILE A MOTION FOR

RECONSIDERATION OR NEW TRIAL
BEFORE THE SAME DIVISION WITHIN
15 DAYS FROM RECEIPT THEREOF.
CTA Adverse Importer/

in Resolution of the
DIVISION MR
owner
MAY FILE A PETITION FOR REVIEW

BEFORE THE CTA EN BANC
WITHIN 15 DAYS FROM RECEIPT
THEREOF.
CTA Importer/
Adverse Decision
En Banc owner
MAY FILE A PETITION FOR REVIEW ON

CERTIORARI BEFORE THE
SUPREME COURT
THEREOF.
THE RULING OF THE COLLECTOR OF
CUSTOMS IN DETERMINING THE DUTIES,
TAXES, FEES AND CHARGES (EXCEPT
THE FIXING OF FINES IN SEIZURE
CASES) BECOME FINAL AND
CONCLUSIVE IF:
No PROTEST is filed at the time of payment or within 15

days thereafter;
No appeal is filed with the CC within 15 days after

notification of the decision of the Collector of Customs which
is adverse to the owner/importer; and
No appeal is filed with the Court of tax Appeals of the

decision of the CC within 30 days receipt thereof.
Collector Adverse or NO
Importer/
WHAT IF THE COLLECTOR
of
Customs
decision within
30 DAYS owner
OF CUSTOMS RENDERS A
DECISION
MAY APPEAL TO THE THAT IS
COMMISSIONER
OF CUSTOMS WITHIN 15 DAYS AFTER
ADVERSE TODECISION
NOTIFICATION OF THE THEOR
LAPSE OF THE 30 DAY PERIOD TO
GOVERNMENT IN THE
DECIDE THE SAME.
PROTEST CASE?
WHAT IF THE
COLLECTOR OF
SHALL RESULT
CUSTOMS INTO AN
RENDERS A AUTOMATIC
DECISION THAT REVIEW
IS ADVERSE TO BY THE
THE COMMISSIONER
GOVERNMENT IN
OF CUSTOMS.
THE PROTEST
CASE?
SHALL RESULT INTO
AN AUTOMATIC AFFIRMS
REVIEW DECISION OF
BY THE COLLECTOR OF
COMMISSIONER OF CUSTOMS
CUSTOMS.
SHALL AGAIN
RESULT INTO AN
AUTOMATIC REVIEW
BY THE SECRETARY
OF FINANCE.
SHALL RESULT
INTO AN SHALL AGAIN
AFFIRM
AUTOMATIC S
RESULT INTO AN
REVIEW Collector AUTOMATIC REVIEW
BY THE of BY THE SECRETARY
COMMISSIONER OF Customs OF FINANCE.
CUSTOMS.
Provided, that if within 30 days from receipt of the
records of the case, the CC or the Secretary of
Finance, as the case may be, fails to render a
decision on the case, the decision of the Collector
of Customs under review shall become final and
executory.
NATURE OF THE
FORFEITURE PROCEEDINGS
Proceedings in rem and are directed against

the res.
Lack of knowledge by the owner does not

generally render the vessel immune from
forfeiture.

NATURE OF THE
Forfeiture of PRIVATE CARRIER used in the

conveyance of illegally imported or exported
articles requires knowledge on the part of the
carrier-owner or his agent of the unlawful act.

NATURE OF THE
A PRIMA FACIE presumption shall exist against the

vessel, vehicle, or aircraft under any of the following
circumstances:
1.The conveyance has been used for smuggling at least twice

before;
2.The owner is not in the business for which the conveyance
is generally used;
3.The owner is not financially in a position to own such
conveyance
NATURE OF THE
The importer/owner may secure the release of the

seized and detained articles UPON THE FILING OF
A BOND OF NOT LESS THAN THE APPRAISED
VALUE of the articles and/or any fines, expenses,
and costs that may be adjudged in the case.

NATURE OF THE
IMPORTED ARTICLES WHICH ARE

PROHIBITED BY LAW SHALL NOT BE
RELEASED UNDER BOND.

NATURE OF THE
THE REDEMPTION OF THE FOLLOWING SEIZED

ARTICLES SHALL NOT BE ALLOWED DESPITE
OFFER TO PAY THE DOMESTIC MARKET VALUE
THEREOF:
a.When there is ACTUAL FRAUD;

b.When the importation is absolutely prohibited;
c.When the release would be contrary to law.

STEPS INVOLVED IN SEIZURE AND
FORFEITURE CASES UNDER THE TARIFF
AND CUSTOMS CODE
The imported articles are seized and a warrant for
detention of the property is issued by the
Collector of Customs.
The Collector of Customs makes a report of the

seizure to the Commissioner of Customs.
The Collector of Customs gives notification to

the importer/owner;

AND CUSTOMS CODE
The Collector of Customs schedules the hearing
and renders his decision after the hearing is
conducted;
Collector Adverse decision
Importer/
of against
Customs importer/owner owner
MAY APPEAL TO THE COMMISSIONER OF

CUSTOMS WITHIN 15 DAYS AFTER
NOTIFICATION OF THE DECISION OR LAPSE
OF THE 30 DAY PERIOD TO DECIDE THE
AND CUSTOMS CODE
Adverse Decision
Importer/
CC AGAINST the
importer/owner owner

RECEIPT THEREOF.
AND CUSTOMS CODE
Adverse Importer/
CTA
Decision owner
in
AGAINST the
DIVISION
importer/owner

AND CUSTOMS CODE
CTA Adverse Importer/

in Resolution of the owner
DIVISION MR

THEREOF.
AND CUSTOMS CODE
CTA Importer/
Adverse Decision
En Banc owner

SUPREME COURT
THEREOF.
AND CUSTOMS CODE
The Collector of Customs schedules the hearing
and renders his decision after the hearing is
conducted;
Collector
WHAT IF THE
AdverseCOLLECTOR OF
Importer/
of decision against
CUSTOMS
Customs
owner
RENDERS A DECISION
owner/importerr
THAT
MAY APPEALISTOADVERSE TO THE
THE COMMISSIONER OF
GOVERNMENT
CUSTOMS WITHIN IN THEAFTER
15 DAYS SEIZURE
NOTIFICATION OF THE DECISION OR LAPSE
CASE?
OF THE 30 DAY PERIOD TO DECIDE THE
AND CUSTOMS CODE
WHAT IF THE If the amount is
COLLECTOR OF less than
CUSTOMS P500,000.00, the
RENDERS A DECISION WILL
DECISION THAT RESULT INTO AN
IS ADVERSE TO
THE
AUTOMATIC
GOVERNMENT REVIEW
IN THE SEIZURE BY THE
CASE? COMMISSIONER OF
CUSTOMS.
AND CUSTOMS CODE
If the amount is less than
AFFIRMS DECISION OF
P500,000.00, the result SHALL
COLLECTOR OF
RESULT INTO AN AUTOMATIC
CUSTOMS OR IF NO
REVIEW
DECISION IS MADE
BY THE COMMISSIONER OF
WITHIN 30 DAYS FROM
CUSTOMS.
RECEIPT OF RECORDS
SHALL AGAIN
RESULT INTO AN
AUTOMATIC REVIEW
BY THE SECRETARY
OF FINANCE.
AND CUSTOMS CODE
If the amount
WHAT IF THE P500,000.00 or more,
COLLECTOR OF the DECISION WILL
CUSTOMS RESULT INTO AN
RENDERS A AUTOMATIC REVIEW
DECISION THAT BY THE SECRETARY OF
IS ADVERSE TO FINANCE.
THE
GOVERNMENT The inaction of the Secretary of
IN THE SEIZURE Finance within 30 days from
CASE? receipts of the records shall render
the decision final and executory
AND CUSTOMS CODE
If the amount
WHAT IF THE P500,000.00 or more,
COLLECTOR OF the DECISION WILL
CUSTOMS
WHAT IF THE SECRETARY OF
RENDERS A
RESULT INTO AN
AUTOMATIC REVIEW
FINANCE RENDERS A
DECISION THAT
IS ADVERSE TO
BY THE SECRETARY OF
FINANCE.
DECISION ADVERSE
THE
GOVERNMENT
TO THE
The inaction of the Secretary of
OWNER OR
IN THE SEIZURE
CASE?
IMPORTER?
Finance within 30 days from
receipts of the records shall render
the decision final and executory
WHAT IF THE SECRETARY OF FINANCE
RENDERS A DECISION ADVERSE TO THE
OWNER OR IMPORTER?
Adverse Decision
Secretary
AGAINST the
Importer/
of
Finance importer/owner owner

RECEIPT THEREOF.
OWNER OR IMPORTER?
CTA
in
AFFIRMS the Importer/
Decision owner
DIVISION

OWNER OR IMPORTER?
CTA AFFIRMS the Importer/

in DECISION and M R owner
DIVISION FAILS

THEREOF.
OWNER OR IMPORTER?
CTA AFFIRMS the Importer/

En Banc Decision owner

SUPREME COURT
THEREOF.
LIQUIDATION OF IMPORT ENTRY
BECOMES FINAL AND CONCLUSIVE UPON
ALL PARTIES AFTER THE EXPIRATION OF
ONE (1) YEAR FROM THE FINAL
SETTLEMENT OF DUTIES AND DELIVERY
OF THE IMPORTED ARTICLES IN THE
ABSENCE OF FRAUD OR PROTEST.
LIQUIDATIONS THAT ARE TENTATIVE IN

CHARACTER ARE NOT COVERED BY THE
LIMITATION.

DOCUMENTARY STAMPS TAX
A documentary stamp tax is a tax on

certain documents, for which the return
and/or the payment is made.
The return shall be filed and the payment

must be made within ten (10) days after the
close of the month when the taxable document
was made, signed, issued, accepted or
transferred.
Who is the taxpayer?
The tax is paid by the person making,

signing, issuing, accepting or transferring
the document.
Whenever one party to the taxable

document enjoys an exemption from the
tax, the other party who is not exempt
shall be the one directly liable for the tax.
EFFECT OF FAILURE TO STAMP TAXABLE

DOCUMENT
An instrument, document or paper which is required

by law to be stamped, and which has been signed,
issued, accepted or transferred without being duly
stamped, shall not be recorded, nor shall it or
any copy of it, or any record of transfer of the
same be admitted or use in evidence in any court
until the requisite stamps shall have been paid.

EFFECT OF FAILURE TO STAMP
TAXABLE DOCUMENT
No notary public or other officer

authorized to administer oaths shall add
his jurat or acknowledgment to any
document subject to documentary stamp
tax unless the proper documentary stamps
are paid.
Section 174 ₱ 1.00/₱ 200.00 ₱2.00/₱ 200.00

Original Issue of Shares
of Stock
Section 175 ₱ 0.75/₱ 200.00 ₱ 1.50/₱ 200.00

Sales, Agreements to
Sell, Memoranda of
Sales, Deliveries or
Transfer of Shares or
Certificates of Stock
with par value
Section 175 25% of DST paid on 50% of DST paid on

Sales, Agreements to original issue original issue
Sell, Memoranda of
Sales, Deliveries or
Transfer of Shares or
Certificates of Stock
without par value
Section 177 ₱ 0.50/₱ 200.00 ₱ 1.00/₱ 200.00

Certificates of Profits or
Interest in Property or
Accumulations
Section 178 ₱ 1.50/piece of check ₱ 3.00/piece of check

Bank Checks, Drafts,
Certificates of Deposit
not Bearing Interest,
and Other Instruments
Section 179 ₱ 1.00/₱ 200.00 of FV ₱ 1.50/₱ 200.00 of FV

All Debt Instruments or a fraction of 365 or a fraction of 365
days for instruments days for instruments
with term of less than 1 with term of less than 1
year year
Section 180 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00

All Bills of Exchange
(between points within
the Philippines) or
Drafts
Section 181 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00

Acceptance of Bills of
Exchange or Order
Drawn in a Foreign
Country but Payable in
the Philippines
Section 182 ₱ 0.30/₱200.00 ₱ 0.60/₱200.00

Foreign Bills of
Exchange and Letters of
Credit
Section 183 Not Over ₱ 100K = Not Over ₱ 100K =

Life Insurance Policies Exempt Exempt
Over ₱ 100K but not Over ₱ 100K but not

over ₱ 300K = ₱ 10.00 over ₱ 300K = ₱ 20.00
Section 183 Over ₱ 300K but not Over ₱ 300K but not
Life Insurance Policies over ₱ 500K – ₱ 25.00 over ₱ 500K – ₱ 50.00

over ₱ 750K – ₱ 50.00 over ₱ 750K – ₱ 100.00

over ₱ 1M – ₱ 75.00 over ₱ 1M – ₱ 150.00
Section 183 Over ₱ 1M - ₱ 100.00 Over ₱ 1M - ₱ 200.00

Life Insurance Policies
Section 186 ₱ 0.50/₱200.00 ₱ 1.00/₱200.00

Policies of Annuities
Section 186 ₱ 0.20/₱200.00 ₱ 0.40/₱200.00

Pre-Need Plans
Section 188 ₱ 15.00/Certificate ₱ 30.00/Certificate

Certificates Issued
Section 189 Above ₱ 200.00 = Above ₱ 200.00 =
Warehouse Receipts ₱15.00 ₱30.00
Section 190 ₱ 1.00 and below = ₱ 1.00 and below =

Jai-Alai, Horse Race, ₱ 0.10 ₱ 0.20
Tickets, Lotto or Other
Authorized Number
Games Above ₱ 1.00 = Above ₱ 1.00 =
₱ 0.10/₱ 1.00 ₱ 0.20/₱ 1.00
Section 191 Over ₱ 100.00 but not Over ₱ 100.00 but not
Bills of Lading or over ₱ 1K = ₱1.00 over ₱ 1K = ₱2.00
Receipts
Over ₱ 1K = ₱10.00 Over ₱ 1K = ₱ 20.00
Section 192 ₱ 15.00/proxy vote ₱ 30.00/proxy vote

Proxies for Voting at
any Election
Section 193 ₱ 5.00/issued power of ₱ 10.00/issued power
Powers of Attorney attorney of attorney
Section 194 First ₱ 2K = ₱ 3.00 First ₱ 2K = ₱ 6.00

Leases and Other Hiring
Agreements
Over ₱ 2K = Over ₱ 2K =
₱ 1.00/₱ 1K ₱ 2.00/₱ 1K
Section 195 First ₱ 5K = ₱ 20.00 First ₱ 5K = ₱ 40.00
Mortgages, Pledges and
Deeds of Trust
Over ₱ 5K = Over ₱ 5K =
₱ 10.00/₱ 5K ₱ 20.00/₱ 5K
Section 197 First 6 months = First 6 months =
Charter Parties and ₱ 500.00 + ₱ 50.00 for ₱ 1K + ₱ 100.00 for
Similar Instruments if each month or fractions each month or fractions
gross tonnage of ship, of a month in excess of of a month in excess of
vessel or steamer is 6 months 6 months
1,000 tons and below
Charter Parties and ₱ 1K + ₱ 100.00 for ₱ 2K + ₱ 200.00 for
Similar Instruments if each month or each month or
gross tonnage of ship, fractions of a month in fractions of a month in
vessel or steamer is 1,001 excess of 6 months excess of 6 months
tons to 10,000 tons
Charter Parties and ₱ 1.5K + ₱ 150.00 for ₱ 3K + ₱ 300.00 for
Similar Instruments if each month or each month or
gross tonnage of ship, fractions of a month in fractions of a month in
vessel or steamer is more excess of 6 months excess of 6 months
than 10,000 tons
Section 196 No DST On first ₱ 1K = ₱15.00

Deeds of Sale,
Conveyances and In excess of ₱ 1K or
Donations of Real fractional part thereof =
Property ₱ 15.00/₱ 1K
Transfers exempt from

donor’s tax under
Section 101 (a) and (b)
of the Tax Code shall be
exempt from DST
Maraming salamat po!!

Atty. Cleo D. Sabado-Andrada, Cpa, Mba, LLM

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y. cleo d.

sabado-andrada, cpa, mba, llm

REMEDIES OF THE TAXPAYERS

JUDICIAL REMEDIES and the CTA

y. cleo d. sabado-andrada, cpa, mba, llm

involves the act of

refers to the process of determining the correct amount

The taxpayer reports his own

y. cleo d. sabado-andrada, cpa, mba, llm

This power to receive information CAN cover other

The CIR can summon a person to answer for

The CIR can require production of records

The CIR can take testimony under oath.

The CIR can issue both subpoenas duces tecum and

The CIR can also have revenue officers/employees

This power does NOT include the ability to

UNLESS, exceptions exist.

2. Taxpayers who filed application for

Only the courts may authorize the release of ITRs under

CIR gives notice in writing to the taxpayer that a foreign tax

The bank will disallow withdrawals without

The maximum amount of P20,000 only

C. To ASSESS and COLLECT tax.

The non-filing of a return does not bar the CIR from

The CIR can resort to “BEST EVIDENCE” available

E. POWER TO DELEGATE HIS POWERS TO

LIMIT: NOT LOWER THAN DIVISION CHIEF.

 Power to issue rulings of first impression or reverse,

 Power to compromise or abate any tax liability;

 Power to assign or reassign revenue officers to

F. POWER TO PRESCRIBE REAL PROPERTY

to divide the Philippines into different zones or

based on their professional competence,

prescribe the manner of compliance with

Presumed to be correct and made in

(Atlas Consolidated Mining and Development

Rule of thumb, increase in

CIR may look into sales, receipts, income,

The CIR sends the taxpayer notice of the

These taxes are due and payable

y. cleo d. sabado-andrada, cpa, mba, llm

Estat Such other taxes as may be

y. cleo d. sabado-andrada, cpa, mba, llm

y. cleo d. sabado-andrada, cpa, mba, llm

y. cleo d. sabado-andrada, cpa, mba, llm

WHEN TAXPAYER EARNS INCOME,

NATIONAL INTERNAL REVENUE TAXES

No further need for the

y. cleo d. sabado-andrada, cpa, mba, llm

No further need for the government to make

BUT, CAN THE GOVERNMENT MAKE

relevant in the proper pursuit of judicial and extra-

relevant in the application of statutes of limitations

relevant in the imposition of surcharges and interest

relevant in the establishment of tax liens.

y. cleo d. sabado-andrada, cpa, mba, llm

y. cleo d. sabado-andrada, cpa, mba, llm

1. BEFORE a tax return is filed.

2. After a fraudulent tax return is uncovered.