CITY UNIVERSITY OF PASAY

Pasadena St. F.B. Harrison, Pasay City COURSE OUTLINE

TAX LAW REVIEW

2ND Semester, AY 2011-2012 Atty. Froilan G. Agatep Mondays 7-10 p.m. Criteria for Grading 10% - class attendance 20 % - graded recitations 30 % - midterm examination 40% - final examination Suggested References Mamalateo, Reviewer on Taxation, 2008 ed. Chavez, Income Taxation, 2011 ed. Chavez, Tax 2 Revealed, 2011 ed. I. GENERAL PRINCIPLES OF TAXATION A. Definition and Concept of Taxation Sison v. Ancheta, 130 SCRA 654 Philippine Health Care Providers, Inc. v. CIR, 18 September 2009 B. Nature of Taxation C. Characteristics of Taxation D. Power of Taxation Compared With Other Powers 1. Police Power 2. Power of Eminent Domain E. Purpose of Taxation 1. Revenue-raising 2. Non-revenue/special or regulatory PAL v. Edu, 15 August 1988 Tio v. Videogram, 151 SCRA 208 F. Principles of Sound Tax System 1. Fiscal Adequacy 2. Administrative Feasibility 3. Theoretical Justice G. Theory and Basis of Taxation 1. Lifeblood Theory Commissioner v. Algue, 17 February 1988 2. Necessity Theory 3. Benefits-Protection Theory (Symbiotic Relationship) 4. Jurisdiction over subject and objects

Doctrines in Taxation

1. Prospectivity of tax laws CIR v. Acosta, GR154068, 3 August 2007 2. Double taxation a. Strict sense b. Broad sense c. Constitutionality of double taxation d. Modes of eliminating double taxation 3. Escape from taxation a. Shifting of tax burden 1) Ways of shifting the tax burden 2) Taxes that can be shifted 3) Meaning of impact and incidence of taxation b. Tax avoidance c. Tax evasion 4. Exemption from taxation a. Meaning of exemption from taxation b. Nature of tax exemption c. Kinds of tax exemption 1) Express 2) Implied 3) Contractual d. Rationale/grounds for exemption e. Revocation of tax exemption 5. Compensation and Set-off 6. Compromise 7. Tax amnesty a. Definition b. Distinguished from tax exemption 8. Construction and Interpretation of: a. Tax laws b. Tax exemption and exclusion c. Tax rules and regulations d. Penal provisions of tax laws e. Non-retroactive application to taxpayers H. Sources of tax laws I. Scope and Limitation of Taxation 1. Inherent Limitations a. Public Purpose Pascual v. Secretary of Public Works, 110 Phil 331** Lutz v. Araneta, 98 Phil 148

b. Inherently Legislative Exceptions: a) Delegation to local governments b) Delegation to the President c) Delegation to administrative agencies Pepsi v. Municipality of Tanauan, 69 SCRA 460 Pepsi v. City of Butuan, 24 SCRA 789 c. Territorial d. International Comity e. Exemption of Government Entities, Agencies, and Instrumentalities LRTA v. CBAA, 12 October 2000 MCIAA v. Marcos, 11 September 1996 MIAA v. Paranaque, GR No. 155650, 20 July 2006 MIAA v. Pasay City, G.R. No. 163072, 02 April 2009 2. Constitutional Limitations a. Due process of law; CREBA v. Exec. Sec. Romulo, March 9, 2010 Villegas v. Hiu Chiong Tsai Pao Ho, 10 November 1978 City of Baguio v. De Leon, 25 SCRA 938 b. Equal protection of laws; Association of Customs Brokers v. Manila, 93 Phil 107 Shell v. Vano, 94 Phil 387 Kapatiran v. Tan, 30 June 1988 Ormoc Sugar Central v. Ormoc Treasurer, 17 February 1968 Judy Anne Santos v. People, GR No. 173176, 26 August 2008 c. Uniformity and equity in taxation; Tolentino v. Secretary of Finance, 25 August 1994 d. Prohibition against imprisonment for non-payment of poll tax; e. Prohibition against impairment of obligations and contracts; Cagayan Power and Light Co. v. CIR, GR No. 60126, September 25, 1985 MERALCO v. Province of Laguna, G.R. No. 131359, May 5, 1999 RCPI v. Provincial Assessor of South Cotabato, GR No.144486, 13 April 2005 f. Prohibition against infringement of religious freedom; American Bible Society v. City of Manila, 101 Phil 386 g. Prohibition against appropriation of proceeds of taxation for the use, benefit, or support of any church h. Prohibition against taxation of religious, charitable, and educational entities Lladoc v. CIR, 14 Phil 292 Abra Valley College v. Aquino, 15 June 1988 Herrera v. QC Board of Assessment Appeals, 30 September 1961

Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51 Phil 352 Lung Center of the Philippines v. QC, 29 June 2004 i. Prohibition against taxation of non-stock, non-profit educational institutions; Department of Finance Order No. 137-87, dated Dec. 16, 1987 CIR v. CA, 14 October 1998 (YMCA) j. Others a) b) the President c) d) the House of Rep. Grant of tax exemption Veto of appropriation, revenue, tariff bills by Non-impairment of the SC jurisdiction Revenue bills shall originate exclusively from

ABAKADA Guro Party List, et al., v. The Honorable Executive Secretary Eduardo Ermita, et al., G.R. No. 168056, 1 September 2005 e) Infringement of press freedom f) Grant of franchise J. Stages of Taxation 1. 2. 3. 4. Levy Assessment and Collection Payment Refund

K. Essential Characteristics of Taxes L. Requisites of a valid tax M. Tax as distinguished from other forms of exactions 1. 2. 3. 4. 5. Tariff Toll License fee Special assessment Debt

N. Kinds of Taxes 1. As to object a. Personal, capitation, or poll tax b. Property tax c. Privilege tax 2. As to burden or incidence a. Direct b. Indirect 3. As to tax rates a. Specific b. Ad valorem c. Mixed 4. As to purposes a. General or fiscal

b. Special, regulatory, or sumptuary 5. As to scope or authority to impose a. National internal revenue taxes b. Local real property tax, municipal tax 6. As to graduation a. Progressive b. Regressive c. Proportionate II. INCOME TAXATION A. The Concept of Income Conwi v. CIR, 213 SCRA 83 Madrigal v. Rafferty, 38 Phil 414 B. Tests Applied in Determining the Existence of Income 1. 2. 3. 4. Severance Test/Realization Test Tax Benefit Rule and the Economic Benefit Test Claim of Right Doctrine Income from Whatever Source

C. Requisites for the Taxability of an Income 1. Existence of a Gain 2. Realization of a Gain a. Actual b. Constructive (e.g. Sec 26) c. Presumptive (e.g. Sec 24 d) 3. Gain must not be excluded (Section 32B) D. The Philippine Income Tax System 1. Types of Income Tax Systems a. Schedular System v. Global System Sison v. Ancheta, GR No. L-59431, 25 July 1984 b. Schedular Rates of Taxes v. Schedular System 2. The Philippine Income Tax System as a Semi-Global/Mixed System E. Criteria in Imposing Philippine Income Taxes 1. Source 2. Residency 3. Citizenship F. Tax Situs for Income Tax Section 23 Individual Taxpayers (Sections 24-26) Corporations (Sections 27 to 30) Estates and Trusts (Sections 60-66) Definition of Terms Under Section 22 Source of Income (Section 42)

1. Services CIR v. Marubeni Corp., GR No. 137377, 18 December 2001 2. Interest Income NDC v. CIR, 151 SCRA 472 3. Dividends 4. Rent and Royalties

5. Sale of Property a. Real Property b. Personal PropertyXpassage of title test Tax treatment of properties produced within but sold without or produced without but sold within d. Special Rules Re Software: RMC 44-2005 G. Gross income 1. Definition Gross Income v. Gross Sales/Receipts The General Rules on Inclusion and Exclusion of Income Items (Sections 31, 32A and 32B) 2. Compensation Income and Other Benefits a. Taxability of Compensation Income and the Application of the Employers Convenience Rule Henderson v. Collector, 1 SCRA 649 b. Retirement Payments, Pensions and Gratuities (a) (b) (c) (d) (e) (f) RA 7641, RA 4917, Section 60B Separation Payments Leave Benefits 13th Month Pay and other bonuses SSS/GSIS Benefits/PhilHealth/Pag-ibig/Union Dues Fringe Benefits (Section 33)

3. Rules applied to Trade/Business or Professional Income 4. Rules Applied to Passive Income a. Royalties, prizes and winnings b. Interest Income from bank deposits and deposit substitutes i. On Philippine Currency ii. On Foreign Currency iii. Long-term investments c. Dividends CIR v. CA and ANSCOR, G.R. No. 108576, January 20, 1999 Section 73B d. Sale of Real Property classified as capital asset i. Sale of principal residence ii. Alternative taxation in case of sale to government

e. Sale of shares of stocks not listed or traded in the stock exchange F. Rules as Applied to Other Sources of Income a. Cancellation of Indebtedness b. Income from Lease and Leasehold Improvements c. Income from Installment Transactions Banas v. CA, G.R. No. 102967. February 10, 2000 d. Income from Long-Term Construction Projects H. Exclusions from Gross Income Definition Exempt Corporations a. GOCCs b. Non-stock non-profit educational institutions I. Deductions from Gross Income 1. The Concept of Allowable Deductions CIR v. Central Luzon Drug Corp., GR No. 159647, 15 April 2005 CIR v. Central Luzon Drug Corp., GR No. 148512, 26 June 2006 and Bicolandia Drug Corp. v. CIR, GR No. 142299, 22 June 2006 (See also: CIR v. Central Luzon Drug Corp., GR No. 159610, June 2008, in relation to RA9257) 2. Kinds of Allowable Deductions 3. The Optional Standard Deduction (RA9504) 4. Itemized Deductions: Concepts, Kinds, Rules and Requisites a. General Business Expenses CIR v. Isabela Cultural Corporation, 2007 CIR v. General Foods, Inc., G.R. No. 143672. April 24, 2003 CM Hoskins v. CIR, GR No. L-24059, 28 November 1969 Gancayco v. Collector, 1 SCRA 980 Representation Expenses, Rev. Regs. 10-2002 b. Bad Debts i. Tax Benefit Rule c. Interests i. Requisites for Deductibility ii. Tax Arbitrage Scheme Rev. Regs. 13-2000 iii. On Capital Expenditure iv. Interest on tax delinquencies CIR v. Itogon Suyoc Mines, GR No. L-25399, 29 July 1969 d. Taxes i. Requisites for Deductibility ii. Deductible Taxes iii. Non-deductible taxes e. Depreciation i. Properties subject to depreciation

ii. Allowable modes of depreciation f. Depletion g. Losses i. Ordinary Losses ii. Capital Losses iii. Other Kinds of Losses iv. NOLCO Rev. Regs. 14-2001 PICOP v. CIR, GR No. L-106949, 1 December 1995 v. Casualty Losses h. Charitable Contributions i. With Limitation ii. Deductible in Full i. Pension Trusts j. Research and Development Costs J. Special Treatment of Gains and Losses from dealings in property Ordinary Assets v. Capital Assets China Banking Corporation v. Court of Appeals, G.R. No. 125508. July 19, 2000 Rules on Ordinary Gains and Losses Special Rules on Capital Transactions (Capital Gains and Losses) a. Rules on Real Property classified as capital asset b. Rules on gains/losses from sale of shares of stocks not listed or traded in the stock exchange by non-dealers in securities c. Rules regarding other capital assets i. Loss Limitation Rule ii. Holding Period Rule iii. Net Capital Loss Carry-Over (NCLCO) Rule Wash Sales, Wagering Losses and Abandonment Losses K. Taxation of Income of Individual taxpayers 1. Citizens a) Resident citizens b) Non-resident citizens 2) Aliens a) Resident aliens b) Non-resident aliens i. Engaged in trade or business ii. Not engaged in trade or business Personal Exemptions (Please see RA 9504) Additional Exemptions Change of Status Taxation of Married Individuals Minimum Wage Earner L. Taxation of Income of Corporate Taxpayers

1. Definition of a Corporation 2. Tests in Determining the Existence of a Corporate Taxpayer (Applied to Partnerships, Co-ownerships and Estates) Ona v. CIR, 45 SCRA 74 Pascual and Dragon v. CIR, 166 SCRA 560 Obillos v. CIR, 139 SCRA 436 Afisco Insurance Corp. v. CIR, 1999 Evangelista v. CIR, 102 Phil 140 3. Kinds of Corporations 4. Rules Applicable to Returnable Income 5. Rules Applicable to Passive Income a. Tax Sparing Rule CIR v. Proctor and Gamble, 204 SCRA 378 6. Taxes Peculiar to Corporations a. Minimum Corporate Income Tax b. Optional Corporate Income Tax c. Improperly Accumulated Earnings Tax Cyanamid Phils. v. CA, G.R. No. 108067, January 20, 2000 7. Special Corporations 8. Exempt Organizations and Corporations 9.Corporations enjoying preferential tax rates i. Domestic ii. Foreign 10. Branch Profit Remittance Tax 11. Gross Philippine Billings British Overseas Airways Corp. v. CIR, 149 SCRA 395 vis-a-vis Section 23 A (3) (b) and Rev. Regs. 15-2002 12. Tax Returns and Other Administrative Requirements Paseo Realty and Development Corp. v. CA, G.R. No. 119286, October 13, 2004 M. N. Income Taxation of Estates and Trusts Income Taxation of Partnerships 1. Business Partnership 2. General Professional Partnership III. A. Estate Taxes 1. Nature of estate tax 2. Reasons/doctrines supporting the imposition of estate tax a. Benefits-received principle b. Ability to pay principle c. State partnership principle 3. The Gross Estate [What comprise the gross estate? (Section 85, NIRC)] TRANSFER TAXATION

4. Kinds of decedent for estate tax purposes 5. Inclusions in the gross estate i. ii. iii. iv. v. vi. vii. Decedents Interest Transfers in contemplation of death Revocable transfers Property passing under a general power of appointment Proceeds of life insurance Prior interest Transfers for insufficient consideration

6. Exclusions in the gross estate i. The merger of usufruct in the owner of the naked title ii. The transmission or delivery of the inheritance or legacy by the fiduciary heir or legatee to the fideicommissary iii. The transmission from the first heir, legatee or donee in favor of another beneficiary, in accordance with the desire of the predecessor iv. Transfers to social welfare, cultural and charitable institutions 7. The Net Estate and the Deductions from the Gross Estate (Section 86) a. Expenses, Losses, Indebtedness, Taxes i. Funeral Expenses ii. Judicial Expenses CIR v. CA and Pajonar, GR No. 123206, 22 March 2000 iii. Claims against the estate iv. Claims against insolvent persons v. Unpaid mortgage indebtedness 1. Accommodated loans b. Vanishing deductions c. Transfers for public use d. Family Home e. Standard deduction f. Medical expenses g. Amount received by heirs under Republic Act No. 4917 h. Tax treatment of share in conjugal or community property i. Tax credits 8. Valuation 9. Administrative provisions a. Filing of notice of death b. Filing of estate tax return c. Payment of tax

10.

Provisions safeguarding the interest of the government in the collection of estate tax (Sections 94-97) Marcos II v. CA, G.R. No. 120880, June 5, 1997 CIR v. Pineda, G.R. No. L-22734, September 15, 1967 Lorenzo v. Posadas, G.R. No. 43082, June 18, 1937

B. Gift (Donors) Taxation 1. Nature of gift tax [Concept of gifts subject to gift taxes (Section 98)] a. Direct gifts b. Indirect gifts i. Condonation of indebtedness ii. Transfers for insufficient consideration iii.Waivers iv.Renunciation of Inheritance 2. Factors that affect liability for gift taxes a. Relationship of the donor and the donee (Section 99) 3. Deductions/Exemptions from the gift tax (Section 101) 4. Tax treatment of properties transferred for less than full or adequate consideration (Section100) a. In general b. Real properties classified as capital asset 5. Tax treatment of political contributions Abello, et al. v. CIR, GR No. 120721, 23 February 2005 Rev. Regs 8-2009 (re Creditable Withholding Tax) 6. Valuation 7. Administrative provisions a. Filing of notice of donation b. Filing of donors tax return c. Payment of tax C. VALUE ADDED TAXATION 1. Nature of Value Added Tax Kapatiran v. Tan, G.R. No. L-81311, June 30, 1988 Tolentino v. Secretary of Finance, G.R. No. 115455, August 25, 1994 (Original Decision) and G.R. No. 115455, October 30, 1995 (Motion for Reconsideration) ABAKADA Guro Party List v. Ermita G.R. No. 168056, 1 September 2005 2. VAT as an indirect tax Distinctions between direct and indirect taxes Specific characteristics of an indirect tax

i. Imposed on the seller/lessor/importer/service provider CIR v. Magsaysay Lines, GR No. 146984, 28 July 2006 Philippine Acetylene v. CIR, 17 August 1967 CIR v. American Rubber, 29 November 1966 CIR v. John Gotamco and Sons, 27 February 1987 3. Specific characteristics of Value Added Tax a. Consumption based tax i. Destination Principle ii. Cross-border Doctrine b. Tax Credit Mechanism i. Input Tax ii. Output VAT 4. Transactions subject to VAT 5. Rates of VAT a. Ordinary b. Exempt Transactions c. Zero-Rated Transactions d. Effectively Zero-Rated Transactions Contex v. CIR, G.R. No. 151135, July 2, 2004 CIR v. Seagate Technology (Phils.), GR No. 153866, 11 February 2005 CIR v. Acesite Hotel Corporation, 16 February 2007 6. Transactions Deemed Sale CIR v. Magsaysay Lines, GR No. 146984, 28 July 2006 7. Transitional Input Tax Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue, GR Nos. 158885 & 170680, dated April 2, 2009 8. Presumptive Input Tax 9. Compliance Requirements IV. INTERNAL REVENUE TAX ADMINISTRATION ENFORCEMENT & REMEDIES

A. Tax Administration: In General B. Government agencies involved in tax administration C. Extent of Congress Power re Tax Administration ABAKADA Guro Party List v. Purisima, GR166715, 14 August 2008 British American Tobacco v. Camacho, GR163583, 20 August 2008

D. The Bureau of Internal Revenue a. Composition and Functions (Section 3, NIRC) b. Powers and Duties i. In General (Section 2) ii. Specific 1. Interpret tax laws and decide cases (Sec 4) a. BIR Issuances and the rules relevant thereto Section 246, NIRC CIR v. Burroughs, 19 June 1986 CIR v. CA and Fortune, 29 August 1996 PB Com v. CIR, 28 January 1999 b. Cases that may be decided by the CIR CIR v. Leal, 18 November 2002 2. Examination of books of accounts, etc. (Sec 5) a. Requirement of issuance of a letter of authority b. Third-party verification rule c. Inquiry into bank deposits (Sec 6 F) d. Summon persons, take testimony 3. Power to assess and prescribe requirements for tax administration a. Power to examine returns (Sec 6A) i. Amendment of returns ii. Rule on confidentiality of tax returns and the exceptions thereto (Sections 71 and 270) BIR v. Ombudsman, 11 April 2002 b. Power to make a return (Sec 6B) i. Best evidence obtainable rule CIR v. Hantex Trading, GR No. 136975, 31 March 2005 CIR v. Embroidery and Garment Industries, GR No. 96262, 22 March1999 c. Power to conduct inventory taking, surveillance, and to issue presumptive gross sales/receipts (Sec 6C) d. Termination of tax period (Sec 6D) e. Fixing of real property values (Sec 6E) f. Accredit tax agents (Sec 6G)

g. Power to prescribe procedural/documentary requirements i. E.g. E-Filing, Substituted Filing ii. Net Worth Method h. Power to delegate (Sec 7) i. Non-delegable powers in relation to Section16 Republic v. Hizon, 13 December 1999 i. Enforcement of police powers (Sec 15) j. Authority to Abate and Compromise Tax Liabilities (Sec 6F (2), 204 in relation to Rev. Regs. 30-2002 as amended by RR No. 8-2004); PNOC v. Court of Appeals, G.R. No.109976, April 26, 2005 People v. Tan, GR No. 152532, 16 August 2005 E. The rule on estoppel in relation to tax administration a. Against the government b. Against the taxpayer F. Assessments and its governing principles a. What constitutes an assessment CIR v. Enron Subic Power Corporation, GR No. 166387, 19 January 2009 CIR v. Pascor Realty, 29 June 1999 CIR v. Reyes, G.R. No. 159694, January 27, 2006 b. Kinds of Assessment c. Statute of Limitation on Assessment of Internal Revenue Taxes (Sections 203, 222, NIRC) RMO 20-90, Philippine Journalists Inc., v. CIR, GR No. 162852, 16 December 2004 CIR v. CA and Carnation, GR No. 115712, 25 February 1999, 303 SCRA 614 c. Instances where the running of the prescriptive period is suspended (Section 223) Republic v. Hizon, 13 December 1999 BPI v. CIR, GR No. 139736, 17 October 2005 BPI v. CIR, G.R. No. 174942, 7 March 2008 d. Procedure in the process of assessment (Section 228) e. Instances when pre-assessment is not required (Section 228) f. Governing principles concerning assessment g. When do we reckon the period when assessment was made? h. Is assessment necessary before a taxpayer could be prosecuted for violation of the NIRC?

Ungab v. Cusi, May 30, 1980 CIR v. CA, GR No. 119322, 4 June 1996 CIR v. Pascor Realty, 29 June 1999 i. Are the procedures outlined in Section 228 of the NIRC retroactive? CIR v. Reyes, G.R. No. 159694, January 27, 2006 G. Applicability of the Doctrine of Exhaustion of Administrative Remedies H. Remedies available to taxpayers a. Before Payment 1. Protest (Section 228, NIRC) a. Requirements of a valid protestRev. Regs. 12-85 b. Effect of a protest on the period to collect deficiency taxes CIR v. Wyeth Suaco Laboratories, GR No. 76281, 30 September 1991 CIR v. Atlas Consolidated Mining, GR Nos. 31230-32, 14 February 2000 c. Failure of the BIR to act within the 180-day period Lascona v. CIR, CTA Case 5777, 4 January 2000 vis--vis Section 7 (2), RA 9282 and the Revised Rules of Procedure of the CTA, AM No. 05-1107-CTA d. Administrative actions taken during the 180-day period Compare: CIR v. Union Shipping, GR No. 66160, 21 May 1990, 185 SCRA 548 and CIR v. Isabela Cultural Corporation, GR No. 135210, 11 July 2001 e. Effect of a protest filed out of time Protectors Services v. CA, GR No. 118176, 12 April 2000 f. Remedies from a denial of the protest i. Motion for Reconsideration (BIR AppellateDivision) ii. Appeal to the Court of Tax Appeals (RA 1125, as amended by RA9282) 2. Compromise b. After Payment 1. Refund (Section 229, NIRC) a. Must be strictly construed against the taxpayer Citibank, NA v. Court of Appeals, GR No. 107434, 10 October 1997 FEBTC v. CIR, GR No. 138919, 02 May 2006 b. Grounds for filing a claim for refund (See Section 229) See also: Engtek Phils v. CIR, CTA Case No. 6644, 26 January 2005 c. Period within which to file a claim for refund

i. General rule is two years from the date of payment ACCRA Investments Corporation v. Court of Appeals, GR No. 96322, 20 December 1991 Exception: CIR vs. Primetown Property Group, GR No. 162155, 28 August 2007. ii. In case of amended returns iii. In case of taxpayers contemplating dissolution BPI v. CIR, 28 August 2001; See also: Sections 52(c) and 56(a) d. Who has the personality to file a claim for refund? CIR v. Procter and Gamble, GR No. 66838, 216 December 1991 CIR v. CA, 20 January 1999 Silkair v. CIR, GR Nos. 171383 & 172379, 14 November 2008 e. Is setting-off of taxes against a pending claim for refund allowed?The doctrine of equitable recoupment-Case: Philex Mining Corp. v. CIR, GR No. 125704, 28 August 1998 f. Is automatic application of excess tax credits allowed? (Sec. 76)Please see Calamba Steel v. CIR, GR No. 151857, 28 April 2005; Systra Philippines v. CIR, GR No. 176290, 21 September 2007; CIR v. BPI, GR No. 178490, 07 July 2009 (Irrevocability Rule)*** g. Effect of existing tax liability on a pending claim for refundCase: CIR v. CA and Citytrust, GR No. 106611, 21 July 1994 h. Period of validity of a tax refund/credit (Sec. 230, NIRC) i. Returns are not actionable documents for purposes of the rules on civil procedure and evidence (See: Aguilar v. CIR, CA Case dated 30 March 1990) i. Refund and Protest are mutually exclusive remedies Case: Vda. De San Agustin v. CIR, 10 September 2001 j. Is the taxpayer entitled to claim interest on the refunded tax? (Sec. 79 (c) 2, NIRC)

c. Other Remedies 1. Action to Contest Forfeiture of Chattel (Sec. 231) 2. Redemption of Property Sold (Sec. 214) C. Remedies available to the government a. No injunction to restrain collection of taxes (Sec. 218, NIRC) b. Period within which the government could collect (Sections 203, 222, NIRC) Case: Republic v. Hizon, GR No. 130430, 13 December 1999; CIR v. Javier Jr., GR No. 78953, 31 July 1991 (199 SCRA 825); PNOC v. CA, GR No. 109976, 26 April 2005; BPI v. CIR, GR No. 174942, 7 March 2008 c. Overview of Remedies (Section 205) 1. Tax Lien (Section 219, NIRC) a. CIR v. NLRC, GR No. 74965, 9 November 1994 2. Compromise 3. Distraint and/or Levy 4. Civil Action 5. Criminal Action 6. Forfeiture 7. Suspension of business operations 8. Enforcement of administrative fines d. Administrative Remedies in Detail (Sections 206-217, NIRC) 1. Distraint a. Actual b. Constructive 17 2. Levy 3. Garnishment e. Judicial Remedies in Detail (Section 220, NIRC) 1. Period within which the action may be filed a. Civil Cases (Sections 203, 222, NIRC) b. Criminal Cases (See: Title X, NIRC; Section 281, NIRC)

2. Where should these cases be filed? a. Criminal Cases (See the imposable penalty vis--vis the jurisdiction of courts) b. Civil Cases (Consider the amount of tax sought to be collected vis--vis the jurisdiction of courts, together with the provisions of RA9282) 3. Cases: a. Republic v. Hizon, GR No. 130430, 13 December 1999 (re approval of filing of civil and criminal action) b. CIR v. La Suerte Cigar, G.R. No. 144942, 4 July 2002 (Re participation of the Office of the Solicitor General) c. PNOC v. Court of Appeals, G.R. No. 109976, April 26, 2005* d. Lim v. CA, GR Nos. 48134-37, 18 October 1990, 190 SCRA 616 (re prescription of criminal actions, Section 281, NIRC) e. Marcos II v. CA, GR No. 120880, 5 June 1997 (re enforcement of tax liability during pendency of probate proceedings) f. Judy Anne Santos v. People, GR No. 173176, 26 August 2008 f. Effects of failure to pay the tax on time: Additions to the tax (Chapter I, Title X, NIRC) 1. Surcharges a. Ordinary (Section 248A, NIRC) i. Failure to pay tax on time as required by the tax code or the regulations ii. Failure to pay the deficiency tax within the time fixed in the notice iii. Filing of the return with the wrong office b. Fraud Penalty (Section 248B, NIRC)

i. CIR v. Javier Jr., GR No. 78953, 31 July 1991 (199 SCRA 825) c. Cases: i. Imposition of Surcharge is mandatory 2. Interest (Section 249, NIRC) a. In General b. Deficiency Interest c. Delinquency Interest d. On Extended Payments 3. Compromise Penalties 18 4. Effect of failure to file information returns (Section 250, NIRC)