San Beda College of Law

2012 CENTRALIZED BAR OPERATIONS

250
TAXATION LAW | NIRC Remedies





Table 1 Distraint of Personal Property

Distraint of Personal
Property
Internal Revenue Local Taxes
Is there
CONSTRUCTIVE
DISTRAINT?
YES NO
Issuing authority of the
warrant of distraint
Commissioner of Internal
Revenue - If amount of tax due is
more than P 1M
Revenue District Officer: If P1M
or less.
Local Treasurer
Posting of Notices
Notification to be exhibited in not less than
2 PUBLIC PLACES in the municipality
where distraint is made. One place for
posting is the Office of the Mayor.
Notification to be exhibited in not less
than 3 PUBLIC AND
CONSPICUOUS PLACES in the
territory of the local government unit
where distraint is made. One place
for the posting of the notice shall be
at the office of the chief executive of
the local government unit.
Report of Sale
Within 2 days after the sale, the officer
making the same shall make a report of
the proceedings in writing to the
Commissioner and shall himself preserve
a copy of such report as an official record.
Within 5 days after the sale, the local
treasurer shall make a report of the
proceedings in writing to the local
chief executive concerned.
Time of Sale
Not less than 20 days after notice to the
owner or possessor of the property AND
the publication or posting of such notice.
Not less than 20 days after notice to
the owner and possessor AND the
publication or posting of such notice.
Purchase of Distrained
Property by the
Government
The amount of bid is not equal to the
amount of the tax.
The amount of bid is very much less
than the actual market value of the
articles offered for sale.
The Commissioner may purchase the
same in behalf of the National
Government
Should the property distrained be not
disposed of within 120 days from the
date of distraint, the same shall be
considered as sold to the local
government unit concerned for the
amount of the assessment made
thereon by the Committee.


Table 2 Levy upon Real Property

Levy Upon Real Property Internal Revenue Local Taxes / Real Property Tax
Advertisement
Within 20 DAYS AFTER THE LEVY,
the officer conducting the proceedings
shall advertise the property or a
usable portion thereof as may be
necessary to satisfy the claim and the
cost of sale.
Within 30 DAYS AFTER THE LEVY,
the local treasurer shall proceed to
publicly advertise for sale or auction
the property or a usable portion
thereof as may be necessary to
satisfy the claim and the cost of sale.
How levy is effected
Levy shall be effected by writing upon
the duly authenticated certificate a
description of the property upon which
levy is made; At the same time,
written notice of levy shall be mailed
or served upon the:
1. REGISTER OF DEEDS
2. DELINQUENT TAX
PAYER
Levy shall be effected by writing upon
the Duly Authenticated Certificate the
description of the property upon which
the levy is made; At the same time, a
written notice of levy shall be mailed
to or served upon the:
1. ASSESSOR and REGISTER OF
DEEDS to annotate the levy on
the TAX DECLARATION and the
CERTIFICATE OF TITLE and
2. DELINQUENT TAXPAYER.
Posting and Publication
Posting a notice at the main
entrance of the municipal
building; AND
In a public and conspicuous
place in the barrio or district
SAME
TABLE OF COMPARISON OF REMEDIES




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NIRC Remedies | TAXATION LAW

Levy Upon Real Property Internal Revenue Local Taxes / Real Property Tax
in which the real estate lies;
AND
By publication once a week
for three weeks in a
newspaper of general
circulation in the municipality
or city where the property is
located.
Advance of the cost
The Revenue Collection Officer, upon
approval of the Revenue District
Officer, advance an amount sufficient
to defray the costs of collection by
means of summary remedies.
The local treasurer may, by ordinance
duly approved, advance an amount
sufficient to defray the costs of
collection by means of the remedies
provided in the law.
Forfeiture in favor of the
government
If there is no bidder for real
property exposed for sale
The highest bid is for an
amount insufficient to pay the
taxes, penalties and costs
The Internal Revenue Officer
shall declare the property
forfeited to the Government
in satisfaction of the claim in
question.
It shall be the duty of the
Register of Deeds
concerned, upon registration
with his office of the
DECLARATION OF
FORFEITURE to transfer the
title of the property to the
Government without the
necessity of court order.
No bidder for the real property
advertised for sale
If the highest bid is for an
amount insufficient to pay the
taxes, fees, or charges
The local treasurer conducting
the sale shall purchase the
property in behalf of the local
government unit.
It shall be the duty of the
Register of Deeds concerned,
upon registration with his office
of the DECLARATION OF
FORFEITURE to transfer the
title of the property to the
Government without the
necessity of court order.
Resale of Real Estate
Taken for Taxes
Upon giving of not less than
20 days notice, the
Commissioner may sell and
dispose of the real property.
Sale may be at public
auction or in a private sale
(upon approval of the Sec.
Of Finance)
Proceeds of the sale shall be
deposited with the National
treasurer and an accounting
of the same shall be
rendered to the Chairman of
the Commission on Audit.
The Sanggunian concerned, by
an ordinance duly approved
and upon notice of not less than
20 days may sell and dispose of
the real property.
Sale is only by public auction.
The proceeds of the sale shall
accrue to the general fund of
the local government unit
concerned.
Interest rate on the
redemption price
The redemption price shall be:
Amount of public taxes,
penalties, and interest
thereon from the date of
delinquency to the date of
sale.
Interest on the purchase
price at the rate of 15% per
annum from the date of
purchase to the date of
redemption.
The redemption price shall be:
Amount of public taxes,
penalties, and interest thereon
from the date of delinquency to
the date of sale.
Interest on the purchase price
at the rate of 2% per month
from the date of purchase to the
date of redemption.











San Beda College of Law
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TAXATION LAW | NIRC Remedies
Table 3 Period of Collection and Assessment and Suspension Thereof

NIRC Local Taxes Real Property Taxes
Meaning of
Assessment
An assessment is a finding
by the taxing authority that
the taxpayer has not paid
his correct taxes. The
ultimate purpose of
assessment is to ascertain
the amount that a taxpayer
should pay. This is the
context in which
assessment is issued for
internal revenue taxation.
Same as that of the NIRC.
Assessment in Real
Property Taxation means
the act or process of
determining the value of
the property subject to tax.
(Sec. 219, LGC)





Prescriptive
Period for
Assessment

Internal revenue taxes shall
be assessed within 3 years
after the last day prescribed
by law for filing a return.
Within 5 years from the
date they become due.
No express provision on
prescriptive period for
assessment.

Exceptions to
period of
assessment
1. In case of false or
fraudulent return or
failure to file a return
within 10 years after
discovery of falsity,
fraud or omission.
2. Waiver of Statute of
Limitation before the
expiration of the time
prescribed, the
Commissioner and the
taxpayer have agreed
in writing to its
assessment after such
time, the tax may be
assessed within the
period agreed upon.
Local taxes, fees, and
charges which accrued
before the effectivity of the
LGC 3 years from the
date they became due.

Prescriptive
Period for
Collection
1. In case of Normal
Assessment, the
prescriptive period for
collection would be 3
years from the date of
assessment.
(Note: This is not
expressly provided for
in the NIRC; subject to
the opposing view that
the 5-year period
applies, whether the
assessment is Normal
or otherwise)
2. Any internal revenue
tax which has been
assessed within the
period of limitation as
prescribed in Section
222(a), within 5 years
following the
assessment of the tax.
3. In case of false or
fraudulent return or
NON-FILING OF
RETURN, the BIR may
file an ordinary action
to collect even without
an assessment. The
period to collect is 10
years, reckoned from
the date of discovery of
Local taxes, fees, or
charges may be collected
within 5 years from the date
of assessment by
administrative or judicial
action.

In case of fraud or
intent to evade
payment within 10
years from discovery of
fraud
Basic real property tax
shall be collected
within 5 years from the
date they become due.
In case of fraud or
intent to evade
payment, such action
may be instituted for
the collection of the
same within 10 years
from the discovery of
such fraud or intent to
evade payment.



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NIRC Remedies | TAXATION LAW

NIRC Local Taxes Real Property Taxes
falsity or fraud or non-
filing.
4. In case the taxpayer
has waived the Statute
of Limitations, within
the period agreed upon
between the
Commissioner and the
taxpayer.

Suspension of
Prescriptive
Periods
Suspension of Running of
Statute of Limitation:
1. the Commissioner is
prohibited from making
the assessment or
beginning distraint or
levy or a proceeding in
court and for 60 days
thereafter;
2. When the taxpayer
requests for
reinvestigation which is
granted by the
Commissioner;
3. When the taxpayer
cannot be located in
the address given by
him in the return filed
upon which the tax is
being assessed or
collected;
4. When the warrant of
distraint or levy is duly
served upon the
taxpayer, his
authorized
representative, or a
member of his
household with
sufficient discretion and
no property could be
located;
5. When the taxpayer is
out of the Philippines.
The prescriptive periods
shall be suspended during
which (Prescriptive period
for ASSESSMENT and
COLLECTION):
1. The treasurer is legally
prevented from making
the assessment of
collection;
2. The taxpayer requests
for reinvestigation and
executes a waiver in
writing before the
expiration of the period
within which to assess
or collect;
3. The taxpayer is out of
the country or
otherwise cannot be
located. (Sec. 194,
LGC)
The period of prescription
within which to collect shall
be suspended for the time
during which:
1. The treasurer is legally
prevented from
collecting the tax;
2. The owner of the
property or the person
having legal interest
therein requests for
reinvestigation and
executes a waiver in
writing before the
expiration of the period
within which to collect;
3. The owner of the
property or the person
having legal interest
therein is out of the
country or otherwise
cannot be located.
(Sec. 270, LGC)























San Beda College of Law
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254
TAXATION LAW | NIRC Remedies
Table 4 Protest

Protest
Tariff And Custom
Code
NIRC Local Taxes Real Property Tax
Payment in
Protest
YES
RULE: NO
EXCEPTION:
If the taxpayer only
disputes or protests
against the validity
of some of the
issues raised, the
taxpayer shall be
required to pay the
deficiency tax or
taxes attributable to
the undisputed
issues. No action
shall be taken on the
taxpayers disputed
issues until the
taxpayer has paid
the deficiency tax or
taxes attributable to
the undisputed
issues (R.R.12-99)
NO
RULE: YES
EXCEPTION:
Where the question
raised is on the very
authority and power
of the assessor to
impose the
assessment and of
the treasurer to
collect the tax
Subject of
Protest
When a ruling or
decision of the
Collector is made
whereby liability for
duties, fees, or other
money charge is
determined, the
adverse party may
protest such ruling or
decision.
The scope of protest
shall be limited to the
subject matter of a
single adjustment or
other independent
transaction; but any
number of issues may
be raised in a protest
with reference to the
particular item or
items constituting the
subject matter of
protest. Single
adjustment refers to
the entire content of
one liquidation,
including all duties,
fees, surcharges or
fines incident thereto.
The assessment that
will be the subject of
the protest of the
taxpayer is the Final
Letter of Demand or
Assessment Notice.
(FAN)
Please note that the
procedure in RR 12-
99 must first be
followed.
Notice of
Assessment
issued by the
Local Treasurer.

Grounds available to
the taxpayer for
protesting the
payment of the basic
real property tax:
1. The property is
exempt from the
payment of real
property tax
under Sec. 234
of the Code;
2. The assessment
on the property is
excessive or
unreasonable,
and is the
subject of appeal
pursuant to Sec.
231 of the Code.
3. The tax is
subject to
discount
authorized under
Sec. 251 of the
Code;
4. The assessment
is illegal or
erroneous,
pursuant to Sec.
253 of the Code.
5. The period within
which to collect
the real property
tax has
prescribed, as
provided in Sec.
270 of the Code.
(Ursal on Local
Government
Taxation)




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NIRC Remedies | TAXATION LAW

Protest
Tariff And Custom
Code
NIRC Local Taxes Real Property Tax
Period for filing
a protest
Within 15 days from
receipt of the ruling or
decision of the
Collector.

The decision referred
to is the classification
and appraisal of the
imported goods.
The assessment
may be protested by
filing a request for
reconsideration or
reinvestigation within
30 days from receipt
of the assessment.
Within 60 days
from receipt of
the notice of
assessment.
The protest must be
filed within 30 days
from payment of tax.

(The protest may be
filed at the time of
payment of the tax
being protested)
Where to file Collector of Customs
Commissioner of
Internal Revenue
Local Treasurer
Local Treasurer
Period to
Decide Protest
30 days after
termination of hearing
180 days from
receipt of written
protest.
60 days from
receipt of written
protest
60 days from receipt
of written protest
Where to appeal
in case of denial
of protest AND
Proper Courts
wherein
taxpayer should
file appeal from
each courts
decision

1. Commissioner of
the Bureau of
Customs
Note: In case the
decision of the
COMMISSIONER is
unfavorable to the
government, there is
an AUTOMATIC
REVIEW by the
Commissioner or the
Secretary of Finance.
If adverse decision
against the taxpayer,
appeal to no. 2
2. Court of Tax
Appeal Division
3. Court of Appeals
En Banc
4. Supreme Court
1. Court of Tax
Appeal Division
2. Court of Tax
Appeals En
Banc
3. Supreme Court
1. Court of
Competent
Jurisdiction
(MTC or
RTC-
depending
on
jurisdictional
amount)
2. Appeal to:
a. RTC-
decision of
MTC; or
b. CTA
Division-
decision of
RTC
3. CTA En
Banc
4. Supreme
Court
1. LBAA
2. CBAA
3. CTA En Banc
4. Supreme Court






























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TAXATION LAW | NIRC Remedies

Assessment Process and Taxpayers Remedies from Tax Assessment NIRC



























































Issuance of
Letter of
Authority

Audit or tax
investigation by the
Revenue Officer
Revenue District Officer issues notice of
Informal Conference IF taxpayer disputes the
audit report
Review by the
Assessment
Division
If there is basis for the
assessment, a Preliminary
Assessment Notice shall be
issued
If there is no
basis for
assessment,
case shall be
dismissed

If the taxpayers
response is
meritorious, the
assessment shall
be dismissed

Appeal to the Supreme Court

End of Controversy
The taxpayer may opt to file a motion for reconsideration
of an unfavorable judgment. A motion for reconsideration
of the denial of the administrative protest DOES NOT
TOLL the 30-day period to appeal to the CTA. (See
Fishwealth Canning Corp.) If the Motion is denied, appeal
to the CTA within the remaining period.
If the taxpayer was not able to refute the findings in PAN or if
he is in default, a Formal Letter of Demand and Assessment
Notice shall be issued by the Commissioner
Protest of the Assessment within 30 days
from the receipt of assessment
If the Commissioner decides in favor of the Taxpayer
within 180 days the assessment is dismissed
If the Commissioners decision in
unfavorable or no action has been
taken within 180 days, Appeal to
the CTA within 30 days.
CTA decides the Appeal
If decision is unfavorable, taxpayer may file a
motion for reconsideration with the CTA
division.
If the taxpayer does NOTHING within
30 days, the assessment becomes
final, executory and demandable. It
can no longer be appealed to the CTA.
A warrant of distraint or Levy shall be
issued.



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NIRC Remedies | TAXATION LAW


Procedure for Distraint and Levy NIRC


If there is no bidder OR the highest bid is
insufficient, officer conducting sale shall forfeit the
prop to the Govt. Within two days, he shall make a
return of the forfeiture. Registrar of Deeds, who
upon registration of forfeiture, shall transfer title to
the Govt without court order. Within one year from
forfeiture, taxpayer may redeem said prop by
paying full amount of the taxes and charges (Sec.
215).

Commissioner may, after 20 days notice, sell prop at
public auction or at a private sale with approval of
the Secretary of Finance. Proceeds shall be
deposited with the National Treasury (216).
Within ten days after receipt of the warrant, levying officer shall report to the
Commissioner who shall have the authority to lift the warrant of levy (Sec. 207[B]).

Within 20 days after levy, officer shall post notice at the main entrance of the
municipality/ city hall and in a public place in the barrio/ district where the real estate
lies for at least 30 days AND publish it once a week for three weeks. Owner may prevent
sale by paying all charge (Sec. 213).

Sale shall be held at the main entrance of the municipality/ city hall, or on the premises
of the property (213).
Internal revenue officer,
designated by the
Commissioner, shall prepare a
certificate with the force of a
nationwide legal execution
(Sec. 207[B]).

Levy shall be affected by
writing upon said certificate a
description of the property.
Notice of the levy shall be
served upon the Register of
Deeds of LGU where the
property is located and upon
the owner (207[B]).
The distraining officer accounts for the goods distrained (208).
RDO posts notice in at least two public places in the municipality/ city where the
distraint is made. One place of posting must be at the mayors office.
Time of sale shall not be less than 20 days after the notice (Sec. 209).

Goods shall be restored to owner if charges are paid (210).
Otherwise, officer conducts public auction.
If the bid is not equal to the
amount of tax or very much
less than the fair market value
of goods distrained,
Commissioner may purchase
property for the National Govt.
The prop may be resold and the
net proceeds shall be remitted
to the National Treasury as
internal revenue (Sec. 212).

If the bid is Just right, the
officer sells the goods to the
highest bidder for cash or, with
the Commissioners approval,
through commodity/ stock
exchanges (209)

If there is a bidder AND the highest bid is sufficient, excess of proceeds
of sale over claim and cost of sale shall be turned over to the owner.

Within five days after sale, levying officer shall enter return of the
proceedings upon the records of the RCO, RDO, RRD (213).

Within one year from sale, owner may redeem by paying to RDO
amount of the taxes, penalties, and interest from date of delinquency
to the date of sale, and 15% per annum interest on the purchase price
from the date of purchase to date of redemption. Owner shall not be
deprived of possession and shall be entitled to the fruits until one year
expires (214).

Levy and distraint may be repeated until the full amount due and all
expenses are collected (217).
Real property may be levied on before, simultaneously, or after the distraint of personal
property (Sec. 207[B]).
Excess proceeds over the entire claim, shall be returned to the owner. No charge shall
be imposed for the services of the officer (Sec. 209).

Within two days after sale, officer shall report to Commissioner (Sec. 211).

Within five days after sale, distraining officer shall enter return of proceedings in the
record of Revenue Collection Officer, RDO, and Revenue Regional Director (213).
If the delinquent tax is more than 1Million, Commissioner seizes sufficient personal
property to satisfy the tax, charge, and expenses of seizure (Sec. 207[A]).
If the delinquent tax is NOT more than 1Million, Revenue District Officer seizes
sufficient personal property to satisfy the tax, charges, and expenses of seizure (207[A]).
Delinquent taxpayer fails to pay
tax on time.