NOTES IN TAXATION (by: Atty. J.

Lim)

Rescue Doctrine (Life-blood Doctrine)

- without taxes govt cannot survive

Power of Taxation
- most important because of the money
- if there is a conflict between Police Power & Power of Taxation, the former prevails
- Delegable but must always be with a standard that will limit it (eg. Delegated to the President & LGU)

Limitations
- President cannot condone taxes; he can condone only criminal cases
- LGU cannot impose any tax already contained in the NIRC
- LGU has no power to grant tax exemption to real property, (see: regulatory taxes, licenses)

For Congress (ie. the National Govt), their power to tax is as broad as the extent that xxx [E: those that they are not
allowed to tax]

Doctrine of Prescription, Non-claims, & Laches does not lie against the Govt

- the Constitution only limited the inherent police power; it did not give the Legislative Department the power of taxation

Constitutional Limitation
Inherent Limitation
Contractual Limitation

Power to Tax is Supreme, Plenary, Comprehensive, & Unlimited

SCOPE: BI-TRAP3
Business
Interest
Transaction
Right of a citizen
Acts
Privileges
Properties
Persons

Re: Rights of a Citizen

GR: Power of Taxation can be exercised only within the Philippines
E: the rights of a citizen can be taxed even if exercised outside the territorial jurisdiction of the govt

But income tax from the business & property can be taxed because that is a right

EE: Income of OCW if covered with EE Cx

 NB: Prior to 1998, income of OCW is taxable

GR: No one can withhold the payment of taxes

E: if exempted

 Power of Taxation is exercised in the making of tax laws

Doctrine of Necessity
- it necessary that there is a power of taxation, otherwise, the govt will die

BENEFITS RECEIVED THEORY

Under the General Principles Under Income Taxation
Citizen & the Govt have a mutual responsibility The money paid (w/c is a bad debt then) is a
to support & protect one another fresh income, so TAXABLE

[NB: give the money because it is our

obligation; not to receive basic services; Creditor-debtor relationship [eg. When there is
otherwise – what about those who cannot a condonation of a debt; so bad debts are
pay?] deductible]

- All receivables are part of income

- If you did not include bad debts to the
amount receivable  it cannot be deducted.

 Return of Capital is NOT subject of income tax

Public Purpose if:
1. In support of the govt
2. It addresses public needs
3. For some recognized objectives of the govt

Pascual Doctrine: Public Purpose must NOT BE AN AFTERTHOUGHT

 PT is subject to International Treaty (PT is subordinate to the treaty)

 Govt cannot tzx another govt; only the latter’s subordinate

 If the govt exercise a governmental function  it cannot be taxed

 If govt is exercising a private function  it can be taxed.

BUT, GSIS/SSS/PAGCOR/PHILHEALTH/PSCO are exempt from tax (income tax in particular) even if they exercise a
governmental function or not

Interest Income is a passive income (eg. Income realized without active participation – eg. That income from a deposit); it
is subject to a final tax (of 20%) in income taxation

Final tax:
10,000
- 8,000 – Withholding Tax
2,000 – post tax – no longer returnable (ie. not included in the ITR)

 if there is a final tax  no more income tax

Taxes are paid in money

SC: Taxes can be paid by negotiable instrument

Legal Basis of Tax Collection: Presumed Benefit Given by the Govt [P2RIC]
Protection
Peace & Order
Resources
Incentives
Conducive climate
[this are considered contribution of the govt in the acquisition of wealth]

SOCIAL TAXES – imposed not only so that the govt can collect but for the protection of local industries & citizens (eg.
Marking duty, dumping duty, discrimination duty.

Countervailing duty – has to do with the SUBSIDY given (eg. If subsidized  cheaper [this “cheaper good” comes from
foreign country  if sold here  there is a countervailing duty])

FUNDAMENTAL PRINCIPLES OF INCOME TAXATION

1. Ability to pay principle (ATTP)
- the more money/privileges  pay more taxes

- Relate Progressive System (PST)of Taxation with ATTP

Kapatiran ng Manggagawa case: imposition of flat rate is not violative of PST/ATTP because the Constitution use
“EVOLVE”, that is “to come up with a design”

2. Sum collected must not be arbitrary

 No tax law that is not understandable
 Tax law must be simple

 NB: Power of Taxation

1. If there is a doubt as to whether or not PT can be exercised  resolve it in favor of the govt
2. If there is a doubt as to the VALIDITY of a tax law  resolve it in favor of the govt
3. If there is a doubt as to the grant of TAX EXEMPTION  resolve it in favor of the govt
4. Resolve doubts regarding Burden of Taxation in favor of the taxpayer

Principles used by the Govt to equalize burden of taxation

1. BENEFIT – more benefit, more tax; AND
2. ATTP

 “AND” = ATTP cannot be used only because even if one has a lot of money, he might have a lot of debt; consider the
benefit received.
STAGES OF TAX LAW
1. LEVY – making of tax law; non-delegable (legislative)
2. ASSESSMENT & COLLECTION OF TAXES – delegable (executive)
3. PAYMENT

 Assessment a.k.a. “audit” or “investigation”

Hizon Doctrine:
F: Pleading for Court Collection is signed by the Regional Director and not by the Commissioner.

SC: The signing is not included in the provisions which are NON-DELEGABLE, therefore, the signing is delegable
[reason: lifeblood]

- Assessment must be made within 3 yrs from the time when tax is due or (?) whichever is later.

 NB: if assessment is VALID  collection does not prescribe (even if natulugan na!)

 Collection of IR Taxes can be delegated, BUT  Collection of LOCAL TAXES is NON-DELEGABLE, only the
Treasurer can collect

CIR and Ccustoms decides; Sec of Finance reviews the decisions of CIR & CC; CTA-CA-SC reviews the decision of Sec
of Finance

Role of Judiciary in the PT: ONLY application & interpretation of law according to the intention of the Congress

Doctrine of Judicial Non-interference:

- Judiciary cannot inquire into the wisdom of tax law

 PT can be used to enhance Social Justice

Under RA 8424, Only the Revenue Regional Director CAN ISSUE AN ASSESSMENT ORDER.

Purpose of Assessment:
1. Fixing Liability
2. Demand

 PRE-ASSESSMENT IS MANDATORY, without it assessment is NOT VALID.

 PT exercised by Congress is ABSOLUTE as far as these are concern: CONES

1. Coverage of Taxation
2. Object or Purpose of Taxation
3. Nature of tax
4. Extent of Tax
5. Situs

TAX – enforced proportionate contributions

DIFFERENT CLASSIFICATIONS OF TAXES

1. As to Purpose
a. General or Fiscal – to bring money (eg. Income tax)
b. Regulatory – regulating conduct of business

2. As to Subject Matter
a. Poll
 b. Property
c. Excise/Privilege/Occupation tax

3. As to Incidents or as to who bears the burden

a. Direct – burden of tax CANNOT be shifted
b. Indirect – burden of tax CAN be shifted

VAT – indirect [All business taxes are indirect taxes

Eg: Seller pays tax to the Govt  the seller passes on to the end-consumer

TRADITIONAL EXEMPTEES: [REC] Religious, Educational, & Charitable institution

- REC are exempt ONLY as to REAL PROPERTIES on the condition that:
1. it OWNS the property, and
2. Property is Actually, Directly, & Exclusively use for the purpose.

 Property tax is a direct tax [Rule property owners are the ones who pay property tax

NPC Doctrine
- If Govt use a property for govt purpose  NO TAX
- If Govt use a property for private purpose  NO TAX
- If beneficial use of the government propertyis transferred to an individual  the property is taxable regardless whether
or not it is used for governmental or private purpose. [ So, the individual here will pay for the property that he does
NOT own.

GR: NO ONE is exempt from indirect taxes (if you are enjoying tax exemption  you are only enjoying an exempt from
direct taxes)
E: BLANKET TAX EXEMPTION – exemption from direct & indirect taxes (eg. WHO, ADB)
HERE, the remedy of the seller is to file a TAX REFUND OR TAX CREDIT from the govt because the indirect tax
(eg. VAT) cannot be passed on to the institution (eg. WHO, ADB) [See: Go Teng Co Case]

Real Property: BASIC: REC are exempt

SPECIAL LEVIES ON PROPERTIES (additional computatio)

1. Special Education Fund Tax – REC are also exempt from this
2. Special Assessment – here, REC is NOT EXEMPT under the Constitution, but it CAN BE EXEMPT under the Tax
Code.

PP – for the General Welfare

Taxes group according to amount

Specific – based on measurement

AD VALOREM – based on the cost of the product (ie. higher value, higher tax)

As to authority (eg. National or Local) – here, remedies & prescriptive periods differ.

FLAT –

PROGRESSIVE – tax base xxx xxx xxx

REGRESSIVE – more money you have, less taxes you pay to the govt (eg. Exercised in the European Countries)

Eg. Estate/Donor’s Tax

Taxable Estate
- 200k  this the last discount

MIXED –

Taxable income = gross income – allowable deduction

Tax License
-As to purpose: revenue -As to purpose: regulation

-by the National Govt -introduced by LGU

-Post-imposition -Pre-imposition

- Power behind collection: PT -Power behind collection: PP

“Free worship clause” – worship is not taxable

American Bible Society Case

- License is paid before exercising the business. So, free worship clause can be violated because the imposition is
before.
- BUT tax does not violate the “free worship clause”

YMCA Case
- if religious organization doing religious activities (ie. direct) & realized money  the money is exempt.

Eg: if Religious institution made money in performing religious activity  the money is exempt; if it made money from
performing educational activity  the money is not exempt [no longer DIRECT]

 Tax is more expensive than license because it has no limit

 Non-payment of license is ILLEGAL.

Tax Toll
-demand of proprietorship

-can be imposed by govt or private individual

-amount is determined by the cost of property

or amount of improvement

Example of: Tax Avoidance – Senior Citizens are exempt from toll fees. So, if you are near a toll fee and you have with
you your grandmother  let her drive.

Tax Debt
-based on law -based on contract

-paid in money -paid in money or in kind

-there can be imprisonment in non-payement -no imprisonment in non-payment

-GR: it cannot be offset

-it can be offset
-E: Domingo vs Garlitos Case: if both are due &
demandable & fully liquidated  legal
compensation can be made.

-there is interest if taxpayer is delinquent

-prescription: in Tax Code -interest is stipulated

-prescription: in the Civil Code

Tax becomes a debt (so, don’t apply the Tax Code, but the Rules on Actionable Document)

Eg: liability is secured by a BOND

B
Xxx
Interest on a debt (see: Prieto Case)
Collection
Compromise

Assessment under the NIRC

Special Assessment is a property tax

- it is shouldered by those DIRECTLY BENEFITED
- NOT PERMANENT in nature

TAX LIEN (ie. the annotation mismo!) – remedy of govt (eg. The govt will annotate the lien)

SPECIAL TAX LIEN is a tax

- tax for ALL TAX NOT PAID because of special privilege applied for
Tax exemption is not automatic & non-transferable

MARGIN FEE – imposition that you have to pay whenever there is a currency conversion transaction

Eg: $P (“” is the margin fee)

- If importation is exempt  margin fee need not be collected

 Salary of OCWs are not taxable from 1998

3 Kinds of License
1. for regulation
2. for revenue
3. for regulation & revenue

 Useful & Non-useful business can be regulated

SOURCES:
Revenue Regulation (ie. the implementing BIR Rulings (Administrative issuances)
rules)
-issued by the Secretary of Finance -issued by the CIR/CCm

-must be published to have the effect & force of -NO effect & force of law; needs no publication
law
-given weight in the interpretation of law

 NB: BIR Ruling is PERSONAL to the inquirer. (eg. When one ask if he is exempt & the BIR answers YES  that ruling
cannot be invoked by another because it is personal.

 TAX LAWS are CIVIL in character, so, even in times of war it is not suspended.

GR: Tax laws are prospective in character

E: Income tax [reason: it is computed from the start of to the end of the year.

POWERS OF BIR

BIR – agency for collection of tax

1. Assessment
2. Collection

- if the BIR, in the person of the CIR or his deputy, sends an assessment notice to a taxpayer  the notice is
PRESUMED to be VALID & CORRECT (Presumption of Validity)

- Presumption of Validity is a NOT a violation of due process because you have 30 days to dispute the assessment (ie.
your opportunity to be heard)

3. Enforcement of all procedure, penalties, & fines, & execution of judgment

4. To supervise & police power

BIR – IR taxes (broader power)

- can enter dwelling, business establishment, warehouses, & business offices without search warrant & can arrest
person, intercept motor vehicle even without a warrant [reason: collection of taxes in NOT UNREASONABLE; Consti
prohibits unreasonable searches & seizures only]

BOC – Import tax

- CANNOT enter a dwelling without a warrant (but can go to warehouses or business establishment)

Eg. BOC comes to your office to inspect imported goods in your store but you have a document to support them  they
seized them without a warrant [reason: LBD]

Case:
F: A businessman let some of his employees to stay in his bodega in order to make it dwelling so that Customs Officials
cannot enter his bodega without warrant. But inside the bodega are highly desirable(?) goods.

SC: This is a business establishment, NOT A DWELLING. Dwelling must be that of the taxpayer not anyone else.
5. Assignment of IR officials & employees
6. Issues forms, xxx xxx xxx, stamps, appliances xxx xxx xxx

Appliances
Eg. Those used in DST if it is impracticable to paste all the stamps in the public instrument.

DST – in reality the most expensive tax; it is P10 for every P1000.

- transfer of right/obligation/properties/interest, AND if transfer is valid only if there is a public instrument used  the
public instrument must be covered by a DST.

7. report annually to Congress of their collection

4 Officials in the BIR

1. CIR
2. Deputy Commissioner
3. Deputy Commissioner
4. Deputy Commissioner
5. *Deputy Commissioner of the Legal Department – *added; for judicial collection of taxes; he files the necessary
documents for collection & file it with the court. (before this was the least priority because prosecution does not know
tax laws)

POWERS OF CIR
1. Power to decide tax problem (interpret tax laws subject to the review of the Sec of Finance) interpret = in the
administrative level

Cases that CIR is empowered to decide

Interpretation of laws
D
R
O
P
[all of these are appealable to the CTA]

 Refund of IR taxes; Tax court recognizes ONLY refund of IR TAXES; refund of custom duties in recognizable by the
regular courts

- Inquiring into bank deposits (ie. does one have an account?) is NOT a violation of the Bank Secrecy, unless the
inquirer asks HOW MUCH is the deposit.

 Doctrine of the Fruit of the Poison Tree does not apply in taxation (eg. BIR can go to LTO to ask how many registered
vehicles does a person have for purposes of taxation)

Reportorial Requirement of Business Establishment

Lucio Tan case: factory price [re: tax avoidance]; excise tax is based on 20 sticks per pack; Lucio Tan manufactured
cigarettes of 10 sticks per pack, so no excise tax.

Power of CIR to CANVASS

- Now, excise tax is computed based on a canvass (eg. Ask the 20 biggest buyers for prices of their purchases), no
longer factory price

Utivo case: using arm-length transaction is illegal (eg. When marketing arm is not a separate corporation but only a
branch)

Power to COMPROMISE
- see: who are authorized to compromise?

 taxpayer can make an offer to compromise; the govt can make an offer to compromise; so, compromise is available to
both govt & taxpayer.

- if deputy commissioner is empowered to reject or accept a compromise proposal  xxx xxx xxx

 In compromise, liability can be reduced, interest can be compromised, what is NOT SUBJECT TO COMPROMISE is
the SURCHARGE (aka ad valorem tax). (Phil Banking Doctrine)

- surcharge is the civil sanction. [reason: no one has the privilege to withhold the payment of taxes because it affects
the interest of the govt

 if a subordinate officer rejects a proposal to compromise (eg. That the proposal is preposterous)  the decision
rejecting the proposal is FINAL & NON-APPEALABLE.
 if the Deputy Commissioner accepts the proposal to compromise  that cannot be implemented yet because the
accepted proposal is subject to the review of the CIR.

Power of CIR to make ASSESSMENT

- CIR can disregard a false return submitted & make another one
- CIR can prepare a return for & in behalf of a person who did not submit a return.

 Assessment is based on the return submitted

Q: if no return is submitted will there be no assessment?

A:. NO. In the absence of a return, the govt can prepare a return for you

BEST EVIDENCE OBTAINABLE RULE

- used by the CIR as basis in making a return for & in behalf of a taxpayer
- ie. “Entry on the return must always be based on hard facts, it cannot be based on hearsay.”

 If you submit a return to the govt  that return is CANNOT BE WITHDRAWN because it is the basis of the
assessment. If you committed an error in making the entry  you are allowed to AMEND the return within 3 yrs from the
time you submitted it; PROVIDED there is NO ASSESSMENT YET.

Power of CIR to authorize to make PRESUMPTIVE GROSS SALE OR PRESUMPTIVE GROSS RECEIPT

Presumptive Gross Sale – tangible goods; total sale from day 1 to December 31, without any deduction

Presumptive Gross Receipt – in selling services, the sum total of payment for the services rendered.

Computation: business tax is based on the gross receipt or gross sale.

BUT, for example taxi or PUJ, there is no receipt issued. So how are the businessmen in this case pay their taxes? So,
the CIR is authorized to give a presumptive gross receipt (eg. Ask for the PUJ’s seating capacity, etc.)

Power to TERMINATE OR CHANGE TAX PERIOD

 IR taxes are due on April 15

 Govt employees pay their IR taxes on March 15 but April 15 is the reckoning point of the prescriptive period for IR
taxes

When can the CIR terminate or change tax period?

1. if you are going to CONCEAL property for purposes of tax evasion. (eg. Transferring property to your relative)
2. LEAVING the country
3. OBSTRUCTION of tax collection (eg. By indiscriminately enjoining the BIR to enforce tax collection)

 only the tax court can issue or order the BIR from enforcing a tax collection

Petition for Injunction is available on when:

i. taxpayer has perfected an appeal, &
ii. petition to enjoin BIR to enforce tax collection

4. When taxpayer is RETIRING from business (eg. Dissolution; NO DISSOLUTION without BIR clearance)
5. When taxpayer is REMOVING PROPERTIES from where they are located.

Actual distraint = seize property  sell the property at public auction

Constructive distraint (eg. Govt goes to the house of the taxpayer  then it will leave an inventory sheet; whether or not
the taxpayer accepts it there are witnesses to prove that the properties in the inventory are seen;  the taxpayer is not
suppose to sell anything listed in the inventory.

 in actual distraint, the govt must assess the taxpayer; the tax due the taxpayer must be determined. In constructive
distraint, NO NEED OF ASSESSMENT because nothing is taken. The govt officer will go back to their office to compute
the tax due  go back & seize.

 Constructive distraint can be exercise if there is CLOR2

Power to PRESCRIBE REAL ESTATE VALUE

- If you are going to sell a capital assess – ie. properties NOT used in business –  pay CGT
- Selling an ordinary asset is subject to the normal IT.
[these are based on the zonal value]
Power to ACCREDIT & REGISTER TAX AGENT
- eg. Accredited banks

 using a wrong return is equivalent to NON-PAYMENT at all.

Paying to wrong official is NO-PAYMENT at all. So, you will pay again, & if paid outside the period  there is a surcharge.

Authority to inquire into bank deposits

This is available when:
1. tax involved is Estate Tax ( the last tax to be paid by a taxpayer)
2. in offer to compromise based on the taxpayer’s financial incapacity

Power to MAKE ADDITIONAL PROCEDURAL & DOCUMENTARY REQUIREMENT

NON-DELEGABLE POWER (Hizon Doctrine)

1. Recommend the promulgation of rules & regulation to the SOF
2. Issue ruling of first impression or reverse or modify any existing ruling of the CIR
3. Power to compromise or abate tax liability

When can CIR cancel a tax liability?

1. when assessment is unjust
2. when the cost of collection is more than the tax to be collected.

Power to ASSIGN OR REASSIGN IR OFFICERS

Power to COMPROMISE

- offer to compromise

- if reason for compromise with the BIR/BOC is financial inability of the taxpayer  CIR must collect at least 10% of the
assessed tax. [here, there is a need to waive the Bank Secrecy]

- if the reason to compromise is OTHER THAN FINANCIAL INABILITY  at least 40% of the assessed tax must be
collected. (eg. The accountant did not inform the taxpayer of some material matters)

 NEW RULE:
- if the amount involved is more than P1M  this cannot be decided by the CIR/CC himself, it must be decided by the
EVALUATION BOARD

Power to REFUND OR CREDIT

Refund – if taxpayer wants cash

Credit – if taxpayer likes to apply the money to the next liability

When is refund or credit available?

1. Overpayment
2. Illegal Payment (eg. Taxpayer was harassed & because of that he paid)
3. Erroneous payment
4. Penalties imposed without authority

Different meaning of tax credit

1. OIEP
2. Withholding tax
3. Foreign tax (eg. Estate tax as universal tax)

 Requirement: claim the refund or credit within 2yrs from payment; this is jurisdictional & absolute.

 Partial Payments are not subject to tax refund (eg. Corporate taxpayer pays on installment, ie. every quarter; in the 2 nd
quarter there was an overpayment  this cannot be refunded. Full payment must be made first on the last return (ie.
FINAL ADJUSTMENT RETURN – this is the reckoning point of the 2yrs; do the refund here)

BPI case: 2yrs is not for the govt to approve; Certificate of Tax Credit can be used in 2yrs

 Tax credit or refund is NOT available in DST

IR Officers (ie. of DOF/BIR/BOC) can make arrest or seizure in the violation of tax laws even without a warrant

Interpretation of tax laws: according to the intention of the Congress & in harmony with the Constution.
GR: Taxes are imprescriptible (LBD)
E:

If a tax requires a return  it has a prescriptive period; if it does not  none.

Eg. In DST, the property sold in 1950 which was evidenced by a public instrument can be charged of DST now if it did not
undergo DST in 1950. DST are imprescriptible.

Prescriptive period in IR Taxes

- IR assessment: 3/10 (GR)
- For tariff/customs taxes: no prescriptive period

 Real Property Taxes are imprescriptible

Doctrine of Strictissimi Juri: the rule is taxation, the exception is exemption

Tax laws are MANDATORY OR DIRECTORY

Case:
Taxpayer was assessed before. Thereafter there was a law passed making some amendments. The liability for which the
taxpayer was assessed for tax was made non-taxable by the amendatory law.
Here, there can still be collection. [LBD]

 Good faith has NO PLACE in taxation. (eg. You do not know that…) [reason: payment is mandatory]

Due Process Clause

Equal Protection of Laws

Equality in taxation refers to privileges enjoyed (eg. Tax exemption)

Uniformity in taxation refers to the rate or amount (the burden of taxation) (eg. Similarly situated are taxed a 5%)

 Class legislation is NOT allowed; class legislation statute is allowed.

Community Development Tax (Cedula) is evidence by the CTC.

- if you do not pay this, you cannot be imprisoned. But if do not pay other taxes  you can be imprisoned.

Non-impairment of obligation & contract

Govt doing govtal function  no tax

Govt doing proprietary function  xxx xxx

FRANCHISE (in reality a tax exemption privilege)

Extension of a franchise by the govt is a govt function, if the govt withdraws it  you cannot invoke NIOC

If govt exercise proprietary function  it steps down to the level of a citizen  NIOC applies

You cannot alter the stipulation without the consent of the other. (eg. Municipality wants to extend the area of the plaza.
So, it buys, by contract, some properties of different individuals  later it exercised the power of eminent domain instead.
[this is an impairment]

- if tax exemption privilege is embodied in a contract  covered by the NIOC

 Govt cannot contribute property to build churches

BIR Ruling: El Shadai in Luneta is not violating the Constitution or is it discriminatory because others who also want to use
the Luneta can apply for it

SCHOOL TAX
Govt School
-exempt from tax even if there is a money
coming in
-but if it leases property  burden of tax is
shifted to the individual (but supposedly govt
property is exempt from real property tax)
Non-stock non-profit
-exempt
Allied Services
-if income from tuition fee is 50% more than the
income from allied services (eg. Bookstore,
canteen, etc.)  it is exempt from tax (?)

- if allied services is operated by the school itself  all the income from such services is exempt
- if the operation of the allied services is transferred to a private concessionaire  it becomes taxable
- if the school owns a canteen or bookstore outside the school campus even if operated by the school  it is taxable
(normal tax: 32%)
- if income from allied services is bigger than the income from tuition fee  the school is taxed at 32% (it is considered
as private corporation)

 FOR NON-PROFIT ONLY (NOT NON-STOCK): if tuition fee is greater than income from allied services  10% tax

See: schools that are always subject to tax as normal corporation

 DONATION to a non-stock, non-profit institution: the donation is exempt from taxes provided not more than 30% of the
donation is used for ADMINISTRATIVE PURPOSES (eg. For the Salary of the employees)

Concurrence of the Majority of Congress to grant tax exemption

What is tax holiday?

 Grant of tax exemption is NEVER DISCRIMINATORY because (eg. If the foreign entity is exempt from tax but
employed 50 Filipinos  the govt can collect from the 50 individuals)

Tax Amnesty Tax Exempted

-liable in the beginning but liability is condoned -from the beginning taxpayer is not liable

Tax amnesty
Eg. You are not paying for a long time  suddenly the govt says that you come out & declare your income & pay 20% only
of whatever you declare (eg. Declare you untaxed income).  Here, you will not be assessed anymore.

[but see, the religious payers pays, let say, 32%. So, are these religious taxpayers entitled to a refund for the 12%?
NONE. There was NO overpayment because their payment was valid.]

 Usually, the one who voluntarily availed tax amnesty program is FREE FROM ASSESSMENT. BUT, Can the CIR still
assess him? YES. If the DECLARATION IS ERRONEOUS.

 You are only exempt from investigation if you availed tax amnesty program & your declaration of untaxed income is
CORRECT, FULL, & VALID

Tax amnesty – eg. Reduced estate tax

 Under NIRC, no limit as far as interest is concern. (so, if you do not pay your tax for the past 10yrs  interest for the
past 10 yrs can be collected).
Under the Real Property Tax Code, interest cannot be collected more than 72% (ie. maximum of 36 months only)

 Local Govt has a JUST SHARE in the IR which shall be automatically released.

“Shared Revenue”
eg. If a Municipality grants a tax exemption to a taxpayer  it only waives its share, the others (eg. The province) can
collect their share.

 Taxpayer suit – the money misappropriated must be sourced from the Power of Taxation (ie. NOT if foreign loan)

INCOME TAXATION

Situs of Taxation

*Professional Tax: in the place where it is exercised

- govt employees are exempt from professional tax

professional = PRC

Pay as many professional tax as there are number of profession you exercise (pay on or before 31 st of January)

*Personal Property – where it is located

 Civil Code provision on intangible property is subject to the law of the place it is located IS NOT APPLICABLE IN
TAXATION. But = test: does govt receive benefit?

*Income tax – residence of taxpayer or citizenship of taxpayer

*Transfer tax – last resident of the taxpayer

Case:
Estate tax: (re: transfer of residence) eg. Stay in Manila for Medical Consideration.
 1. Intention to permanently reside in another place
2. Physically present

Other case:
Old man intends to buy a property in Manila but he died while he is in transit to Manila. So, he is not physically
present in Manila.
Here SC held that: although not physically present, there is an intent to reside permanently in Manila. [So, the
return must be file in Manila]

Multiplicity of Tax Situs

International Juridical Double Taxation Double Taxation

-entity is taxed by different govt; remedy 1) -refers to individual not entity
treaty to reduce burden of taxation; 2) tax credit

See: SC Johnson Case for definition of “International Juridical Double Taxation”

SC Johnson Case: “most favored nation clause” – cannot be invoked by one not similarly situated. (eg. US vs Germany)

*Franchise tax – where the franchise is granted

 NO Prohibition against double taxation

Individual Taxpayers
1. Resident Citizen
2. Non Resident Citizen
3. Resident Alien
4. Non-resident alien engaged in business or trade
5. Special Alien
6. Estate UNDER JUDICIAL SETTLEMENT
7. Irrevocable Trust
8. Co-owernship

 OCW & Seamen

- Beginning 1998 to the present, an OCW is exempt from income tax on income realized abroad out of Employer-
Employee Relationship (ie. compensation income – with EECx)
- But OCW’s income in the Philippines is taxable

Seamen is considered as OCW only in the sense that he is an 1) EMPLOYEE inside the vessel; & 2) the VESSEL is
EXCLUSIVELY FOR INTERNATIONAL TRADE. [1) & 2) must be both present, without these the seaman is not
considered as OCW]

IRREVOCABLE TRUST
Owner of the money |
Grantor |
Grantee |
| if there is income from the money  it will go to the beneficiaries

- If at the end of the term or contract the MONEY is going to be distributed to the beneficiaries who are
IRREPLACEABLE  there is an irrevocable trust. In this case, the money is considered “SINGLE INDIVIDUAL”, so,
tax it in the name of the irrevocable trust, therefore, entitled to a personal exemption of P20K.
- if money goes back to the owner  revocable trust

 Trust is taxable to the grantor when:

1. at the end of the trust agreement the money goes back to the company of the grantor
2. when the beneficiary can be replaced

- if trust is revocable  there is no income tax of “that money”

ESTATE TAX

- If one dies & leaves several income generating properties  all the properties will be taken together & be considered
as an ESTATE.
- The income realized by the Estate is taxable to him on the day & the year he died, as if he died at the last day of the
year
- If all these properties are not yet distributed  this becomes a JURIDICAL PERSON & that is like that only (ie. juridical
person) for a period of 5yrs

- Estate is subject to income tax for a period of 5yrs

- The 5yrs expired when the properties are probated in court for distribution.

- If there is no will  it is to be partitioned extrajudicially  there is CO-OWNERSHIP

Died at the last day of the year

 Court will participate in the probate (ie. properties are distributed according to the will). So, for that service the govt will
collect estate tax for that.

- If no will  no estate under judicial settlement

(EXTRAJUDICIAL SETTLEMENT)

So, what happens to the income of income generating properties subject to extrajudicial settlement? It depends:
1. If the income of the year is P50K & it is distributed to the poor children  the poor children will pay individual income
tax based on their distributive share.
2. If the income of P50K is NOT DISTRIBUTED, will the co-ownership pay income tax? It depends: (look at the purpose
why it was not distributed)

2a) If it is deposited in furtherance of profit so that it will be used to acquire property  the co-ownership becomes a
corporate taxpayer subject to corporate tax

2b) if the incidental income of co-ownership is given to the individual  individual income tax

2c) if money is used for preservation of the property upkeep or used for payment of real property taxes  no tax

  If after 10yrs the co-ownership is not yet ended  co-ownership becomes a corporation & to be taxed as such
  so, co-ownership is considered not a taxable entity within the FIRST 10YRS of its existence. The income realized
is to be taxed on the co-owners based on their distributive share.

- Co-ownership is taxable as individual taxpayer.

SPECIAL ALIEN
- management & technical people in a 1) MULTINATIONAL COMPANY, 2) OFFSHORE BANKING UNIT, OR 3)
CONSTRUCTION PROJECT, where govt is a signatory.
- Special alien because of the SPECIAL TAX RATE of 15% FOR THE GROSS INCOME. No allowable deductions or
personal exemption.
-  the money (ie. GI) should be realized in the 3 mentioned establishment only (ie. MNC, OBU, CP). If he has
income outside these  he is taxable
- Only the 3 establishments, (MNC, OBU, CP) are covered by the 15% “STATE PREFERENTIAL TREATMENT”

 Under RA 8424, Filipino abroad has the option to choose between:

1. Preferential Tax Rate, or
2. Normal Tax Rate

 Fringe Benefit given to a special alien is subject to fringe benefit tax

Computation of FBT: Amount of benefit /68% (x32%) = FBT (see: Gross Top(?) Monetary Value

NON-RESIDENT ALIEN ENGAGED IN BUSINESS OR TRADE

- “180 days” – continuous or staggered or aggregate
- If a foreigner stays in the Philippines for MORE THAN 180 days in ONE TAX PERIOD (ie. Jan 1 – Dec 31)  he is a
NRAEBT for purposes of taxation even if he has no business at all.
- If he stays LESS THAN 180 days  he is a NRANEBT
NRAEBT – tax on net (ie. with allowable deduction)
NRANEBT – tax on gross (ie. without allowable deduction; x25% immediately)

NON-RESIDENT CITIZENS
Who are Non-resident citizens?

- Resident citizens are taxed on all income whereever realized

 Expenses incurred on illegal activity is NON-DEDUCTIBLE.

CO-OWNERSHIP – tax is based on the individual share

- co-ownership is taxed as corporation CFMPI(?)

- E: Isolated transaction

Ovillos Case:
- if there is an order to divide the co-ownership & there is a failure to divide  there is a corporate taxpayer.

Estate/trust – in income tax, it is considered a SINGLE INDIVIDUAL

When:

- Estate considered single individual during the probate but within 5 yrs

- If no will, the estate is not considered single individual (it is considered CO-OWNERSHIP)

IRREVOCABLE TRUST (3 Parties)

[but if given to the beneficiaries at the end of the term  subject to Donor’s Tax]

- if beneficiary is irreplaceable  trust is irrevocable & the money goes to the beneficiary at the end of the term  the
money is considered single individual, otherwise, the grantor will be taxed.

NON-RESIDENT CITIZEN (NRC)

- no intention of coming back in the Phils
- Green Card holder
- See: 180 days

 There can be TWO STATUSES for income tax purpose

NON-RESIDENT ALIEN (NRA)

- Eg: one who comes to exercise his profession
- Eg: Foreign Engineer (considered NRA engaging in business) who stays for 180 days  considered NRA, therefore,
he can be taxed. [even if the salary is given abroad because the taxability of service is where the service is rendered,
therefore, the whole income should be taxed; the disposition (eg. Giving) is IMMATERIAL in taxation.

Foreigner who stays in the Philippines for less than 180 days & earns an income  he is a NRA/NETB ( exempt to
submit ITR; 25%)

How will the Govt tax this? The govt will tax the agent for the withholding tax held, otherwise, the agent will be liable, even
criminally.

CAPITAL ASSET
- if it does not earn income  pay CGT (Capital Gains Tax) + Document of Transfer is taxed for Document Stamp Tax

 No CGT on NRA/NETB, but subject to 25%

Special Alien
- see: definition
- alien occupying managerial or technical position

OFFSHORE BANKING UNTS (OBU) – is a foreign corporation allowed to transact in foreign currency

- OBU are allowed to transact only with these 3 entities: 1) Commercial Banks; 2) Branches of Foreign Banks; 3)
Citizen. Transaction with these 3 is covered by 10% IT, not 32%. Transaction outside these 3 entities  32%

FOREIGN CURRENCY DIVISION UNIT

- Domestic corporation allowed to transact in foreign currency
- Tax for 32%

RESIDENT CITIZEN
I. EER
II. B/P (Business/Profession)

- if there is EER  compensation income,  this compensation income will undergo WHT (withholding tax) [Still
required to file ITR if income is MORE THAN 60K & the WHT is correct]

- if you have 2 employers  even if income is less than 60K  file an ITR.

GROSS INCOME FORMULA = NO Allowable deduction

ONLY
1) Personal exemption
Married = 32K (NOT common law marriage)
Single = 20K
Head of Family (HOF) = 25K

Legally separated spouse is considered:

a) Single if without dependent
b) HOF if with dependent

HOF:
i) Parents must be fully dependent with the HOF for support & living [even if for example widow/er parent
marries again as long as the latter is fully dependent with HOF for support & living]

ii) Brothers/Sisters – fully dependent for CHIEF SUPPORT; unmarried; under 21

 - age is not considered if bro/sis is physically handicap or mentally defective

iii) Senior Citizen

- if there is a Senior Citizen that depends on you  you can be qualified as a HOF [even if the citizen is receiving
pension if his pension is 60K & below  you are still qualified as HOF]

 in i), ii) & iii) – there is no additional exemption!!!

iv) Children ( here, with additional exemption!!!)

- only 1) legitimate; 2) Adopted; 3) Recognized Natural CHILD [example of “recognized natural” – yong legitimate
sana pero di kinasal ang magulang]
-  NB: “illegitimate child” is NOT INCLUDED HERE.

2) Additional exemption
- even the “illegitimate child”; but the illegitimate child is not considered for additional exemption in HOF

3) Health & Hospital Insurance

Hospital Policy can be deducted; conditions:
i. total income of the family is 250K or less
ii. premium paid is 2,400 or below, otherwise, only the 2,400 can be deducted.

RESIDENT CITIZEN (RC)

I. EER (uses the gross income formula)
II. B/P (engaged in business or profession)
- here, ITR is MANDATORY
- uses NET INCOME FORMULA

NET INCOME FORMULA:

Gross Income
– Allowable deduction
Subtotal
– PE/AE/HH
Taxable Income
X
%
--------------------------------------
ATP (amount of tax payable?)

ALLOWABLE DEDUCTION [CRED3IT LOP

( also enjoyed by Corporate Taxpayer, except “O”
Contributions
Research & Development expenses (no limit)
Expenses, Business
Depreciation allowance
Depletion allowance
Debt (Bad Debt)
Interest expense
Taxes
Losses
Optional Standard Deduction
Pension Trust

CONTRIBUTIONS given to the Govt, Accredited Civic Organization, REC = deductible

Qualification:
If individual  10% of gross income is deductible only
If Corporation  5% only

INTEREST EXPENSE
Eg: if you borrow money from a friend & the interest is not AD (allowable deduction); only the interest from a BANK LOAN
is considered ALLOWABLE DEDUCTION

NON-DEDUCTIBLE TAX
- income tax
- estate tax
- energy tax [not AD under “E” – expenses]
- war profit
LOSSES

Ordinary (Normal IT) Capital

GI = 100k In 2001, gain = 290k (but in the same year, the
AD = 120k house is burned  there is a capital loss of 500k
(-20k)
Capital loss can be deducted from the capital
-the –20k is a NOL (net ordinary loss) gain [290k – 500 = -210]

-the –20k can be deducted from the GI in the (but the computation is: 500k – 100k = 400k
next 3 yrs {the 100k is from the 100k in the GI <see it
under the column of Ordinary>) [So, the 400k is
the NCLCO

the Net Capital Loss can be deducted from the

capital gain if there is any; it can be deducted
on the following year only

Qualification in Capital
GI = 50k CG = 150k
Capital loss = 300k
-150k
What you can deduct must not be more than the GI of 50k.

So the computation is: 300k – 50k (muna) = 250k. (the 250k is the NCLCO)

OPTIONAL STANDARD DEDUCTION (OSD) = 10%

- See: “Substantiation Rule”
- OSD does not require supporting document
- If you have receipt  ITEMIZED DEDUCTION (this is always used by corporate taxpayer)

Items in IT applicable to all: exclusion from GI

EXCLUSIONS (not part of the GI, therefore, not taxable although it will bring wealth to the taxpayer) [EXCLUSION applies
to all (ie. RC, NRC, NRA)

Compensation received from injuries sustained

Retirement benefits
Interest income
I (?) xxx xxx xxx
Income realized by govt in performance of govt’al function
Benefit received from other sources
Gift
Life insurance proceeds
A (?) xxx xxx xxx
Damages

Compensation received from injuries sustained

- cost of profit is NOT EXCLUDED because it is a mere return of capital
- cost of repair is NOT EXCLUDED because damages paid to property, not to the individual

Retirement benefits
- no withholding tax because it is tax exempt (all tax exempted are exempt from WHT)
- from private sector:
Qualification:
Age Number of years of Pension
service rendered
At least AND At least 10 yrs of service EXEMPT(?)
50 yrs (need not be continuous)
old
59 AND 8 X, TAXABLE
45 AND 15 X, TAXABLE

Interest income
- it is an exclusion only if there is a WHT of 20% final tax, otherwise, subject to Normal IT.
Interest Income vs Interest Expense

- if there is an interest expense & interest income in the same year  interest expense cannot be deducted in its total
full valued

- deposits  interest income; loan for business  interest expense

I (?) xxx xxx xxx

Income realized by govt in performance of govt’al function

Benefit received from other sources

Gift
- if given gratuitously, even if substantial  not subject to IT. [but on the part of the giver, if beyond 100k  he is subject
to Donor’s Tax, recipient is exempt.
- REMUNATORY DONATIONS are subject to IT by the donee (on the part of the giver it is an expense, not subject to
Donor’s Tax)

- Exchange of services (based on the amount agreed) is taxable

- Exchange of properties, if capital asset  CGT

Life insurance proceeds

EG:
Taxpayer bought himself a life insurance policy worth 300k, his beneficiaries are W, A, & B.
If T dies  W = 100K; A = 100K; & B = 100K [these are NOT TAXABLE]

 mere return of capital is not taxable, but if there is growth,  that growth is taxable.

- Capital not subject to IT.

Managerial employee

If the Corporation pays the premium of 10M for Ee;

Ee – 10M is part of GI (if for example the beneficiaries Ee are A-Coop, W & A  the beneficiaries are exempt)

A (?) xxx xxx xxx

Damages
- Nominal, Actual, Moral, & Exemplary are NOT TAXABLE
- Attorneys fee is not also taxable
SHARES OF STOCK

- 5% or 10%
- GR: applies to xxx xxx xxx
- E: xxx xxx
- Applicable to everybody

5% or 10%
- rates 1) applied to the SOS when not traded in the EXCHANGE; 2) even if listed in the exchange but you did not avail
of the facility of the exchange instead you sold it personally.

- You do not pay tax if you buy a share, only when you sell

LISTED in the EXCHANGE (here, the broker is
the withholding agent (so, the govt is assured
of the payment of tax)
Acquisition cost: 35,000.00
Sold to: 25,000.00*
Lost: 10,000.00 (ie. 35k – 25K)
*The 25,000.00 is the Gross Selling Price
(GSP)
The GSP is always subject to a final tax of ½ of
1% of the GSP whether you gain or not. (see in
the other column, “if there is lost  no tax)
NOT LISTED in the EXCHANGE
Net gain = 100K & below  5%
Net gain = above 100K  10%
Eg:
260K = 100k – 5%; 160k – 10%
Percentage Tax on SOS
-after paying this  report your gain still w/c will
be subject to normal income tax
HERE, if there is loss  no tax

NB: base always on the GSP not on the gain

or loss.

 Domestic Corporation are not allowed to subscribe but allowed to purchase stocks.
CASH DIVIDENDS – always subject to 10%

STOCK DIVIDENT – GR: exempt from tax

Stock Dividend
 issues to  Individual Domestic Non-resident Foreign
Corp/Foreign Corp Corp
Domestic Corp Exempt Exempt Exempt
Exempt Exempt Exempt

CASH DIVIDEND
 issues to  Individual Domestic Non-resident Foreign
Corp/Foreign Corp Corp
Domestic Corp 10% Exempt 15% (subject to *TAX
((Foreign Corp)) (intracorporate SPARING RULE)
dividend)

*Tax Sparing Rule

- application of reciprocity

Tax credit: (15%)

If he can prove that his govt allows him at least 17% credit (if less than 17% or no tax credit  32% not 15%

- standard that one can apply in case of cash dividend, the recipient of it should be Non-resident Foreign Corp & the
issuer is a Domestic Corp .

TRANSFER TAXES
ESTATE TAX (aka Death Tax)
Due when there is a transfer of
property by reason of death
DONOR’S TAX (aka Gift Tax) STOCK TRANSFER TAX
Due when there is a transfer of
property during the lifetime of
the giver

ESTATE TAX

The taxpayers are:

Resident Decedent:
1. Resident Citizen
2. Non-resident citizen
3. Resident Alien
Non-resident Decedent:
4. Non-resident alien with property in the Philippines

- 180 days applies only to IT, not here in Estate Tax

Documentary Requirements:
1. Notice of Death
- GR: if the value of the estate is above 20K  legal heirs will Notice of Death within 30 days from death
- E: if the property is below 20K but it is a REGISTRABLE PROPERTY  Notice of Death is required (eg. Shares of
stock)

2. re: Estate Tax Return & Payment

- within 6 months from death, heirs must file an Estate Tax Return &  Payment (the family can request Extension of
the Period of Payment but NOT the period to file a return)
- Q: How long is the extension? If with a WILL  5yrs; if there is NO WILL  2yrs

Bank (manager?) can release up to 20K for funeral expenses; but if more than 20k  with the CIR approval.

NB: the law at the time of death applies to Estate Tax

 Even if the property is subject to escheat there is still an Estate Tax to be collected.

 if the taxpayer is out of the country  collection period is SUSPENDED.

“Benefits Received Theory” under Estate Tax

- govt was there giving services to the family by dividing the property, that is the Estate Tax – the benefit received (???)

Real Property Personal Property Intangible (share of

stock, obligations,
 bonds)
Resident Decedent Where ever situated -- --
Part of the GI
Non-resident Within the Phils Only Within the Phils Only Subject to Principle of
decedent Reciprocity
1. Similar Law
2. Similar Benefit to
a Filipino Citizen

Limitation & Application of Reciprocity

Married | Personal
Single |

Restrictions:
1. get lower figure
2. if standard  xxx xxx xxx

Intangible properties – refer also to FRANCHISES

 OBLIGATION – situs of debt is the RESIDENT OF THE DEBTOR

Situs of depositing bank determined by the location of the depositary bank (???)

CR2IG – holder of General Power appointed died (so, whatever he hold will be part of his Gross Estate, even if title did not
yet pass to his name)

- DT is cheaper than ND(?)

- Partial payment of Estate Tax (eg. When on is still alive but donated his property & enjoyed it yet, but he paid the tax
for the enjoyment)

Law that is attached with the CR2IG  BIR allowed only to move back 3yrs from death to determine CR2IG. (DOCTRINE
OF THREE YEARS PRESUMPTION)

Allowable Deductions in Estate Tax (S2HO7M-VAT2)

Share of Stock (?)
Standard Deduction (P1M)
Family Home
Ordinary deduction (7 items, see infra)
Medical expenses
Vanishing Deduction
Amounts received by heirs under RA 4917 (ie. given by reason of injury(?))
Transfer for public use
Tax credit for ET paid to a foreign country

Family Home – P1M (only 1 home is allowed, with Barangay Certificate)

Medical Expense – maximum of P500K incurred within 1yr

 S2HMA – not available by a Non-resident decedent

Ordinary deductions (7)

1. Funeral Expenses
a. 5% of the Gross Estate of the Decedent
b. P200K
c. Actual expense of the Family
- whichever is lower between a, b, or c will be the funeral expense
- if funeral expense is donated  NOT DEDUCTIBLE

2. Juridical Expenses in the Testate or Intestate Proceding

3. Claims against the Estate
4. Claims of the estate against insolvent persons
5. Unpaid mortgaged indebtedness of the decedent
6. Unpaid taxes (IT & property taxes accrued at the time of death ARE NOT DEDUCTIBLE)
7. Loss
Losses on occasion of:
Theft
Robbery
E(?) see
Calamity
Unexpected Sudden Occurrence
[these are the only losses deductible]
 Partial loss are NOT deductible, only total loss, unless contained already

VANISHING DEDUCTION – applicable to Estate Tax & Donor’s Tax

1st (ie. the parties)  5yrs  T2 (died within 5 yrs)  T3 will get the VD.

TRANSFER FOR PUBLIC USE

- oral transfer are not deductible, must be in writing
- to the govt or LGU

DONOR’S TAX
 void donation are not covered by donor’s tax

 CONDONATION OF DEBT is subject to DT

(condonation on the side of the donor; on the side of the debtor it is a remunatory donation (so, a remunatory donation
is subject to income tax)

Value over 200K – subject to DT

 Creation of an irrevocable trust is subject to DT

 Sale of an ordinary asset for insufficient consideration is subject to DT

Who are to pay DT:

1. Resident Donor
2. Non-resident donor
3. Corporation – 5% of the Gross is the allowed amount to be donated

 In DT, non-resident donor can be taxed if his property is in the Philippines (if property comes from abroad  not
covered by DT)

If share from Foreign Corporation is donated  it depends

1. if the business situs of the FC is in the Phils (so, property is in the Phils)  there is DT
2. if more than 85% is in the Phils  there is DT
3. xxx franchise xxxx (check it)

REMEDIES

REMEDIES OF THE GOVT

If there is fraud or failure to file return in 1997  the OLD TAX LAW will be applied.

Different Prescriptive Periods

1. Tax Refund

2yrs from Over-/Illegal/Erroneous Payment (ie. invalid payment)

2S (2yrs from occurrence of supervening event)

6yrs - payment by mistake (solutio indebiti)

Assessment of IR Taxes
- assessment is VALID when there is notice from tax due or date of late payment (whichever is later) [3YRS]
[early payment or last day (ie. April 15) you pay  the start of 3yrs is April 16; if you pay later than April 16  the 3yrs
will start to run on that day you made the payment]

- JEOPARDY ASSESSMENT – assessed outside the period

Kinds of xxx xxx

VALID –
ERRONEOUS – eg. Wrong document
ILLEGAL – eg. Done by someone who has no authority to do so
JEOPARDY – eg. Outside the period
INCOMPLETE –

GR: Assessment is valid only when there is a pre-assessment notice

E: when it involves:
- Special Tax Lien
- Remittances of withholding agent are different
- Refund & credit (overpayment) [want to tax credit w/o withdrawing application for tax refund]
- Nature of tax is Excisable [see: SWAM3CLEP]
- Clear Mathematical error

 NB: Tax remedy is NOT AVAILABLE to a withholding agent; only to a taxpayer. [here, the withholding agent is not a
taxpayer but a representative of the govt]

 If you do not agree to the amount of assessment  you have *30 days to dispute it. Request for reconsideration
1. Request for reinvestigation
2. Request for withdrawal
3. Request for cancellation

 *if you have disputed here  CTA can be another remedy

- within 60 days, which starts after you disputed, to support you claim.

- 180 days for the govt to decide

A – valid Agreement between the govt & the taxpayer to suspend the period

10 – applies when there is a failure to file a return or the return is fraudulent

- from point of discovery

W – Waiver of defenses in the assessment

- instances where there is waiver
1. when you dispute an assessment (see: if there is a continuation)
2. when you ask for compromise agreement involving financial disability (waive 1) Bank Secrecy; & 2) Prescriptive
period)

COLLECTION PERIOD
3YRS

IR Tax is self-assessing
- it cannot be collected without assessment but must be made within 3yr period

 No assessment but there is collection  it is VALID if involves IR taxes

10yrs from point of discovery of Failure to file a return or Fraudulent return

3/5

 tax involved cannot be collected yet until there is finality of assessment (ie. after 30 days/90 days (ie. 30+60)
*** How soon shall the 2nd assessment come? Within the REMAINING DAYS (ie. deduct the used days for assessing)
[ if the govt assessed beyond the remaining days  there is a jeopardy assessment]

- If after the 180 days  appeal to CTA within 30 days, otherwise, assessment becomes final

 if assessment is final  ripe for collection

 DO NOT DISPUTE A JEOPARDY ASSESSMENT BECAUSE IF YOU DO  THE RIGHT OF THE GOVT TO ASSESS
IS REVIVED.

RA 1125 – creation of CTA

- appeal, 30 days from denial

 Del Rosario case, Island Govt case, Uy Ham case: period to appeal in CTA is not absolute it can be shortened. [In Uy
Ham case, time to appeal is minus the day consumed for disputing assessment]

eg.
11 – consumed days on disputing the assessment
-30 days
19 days – remaining time to appeal

 CTA as STANDBY REMEDY

 CTA has jurisdiction only over DISPUTED ASSESSMENT, NOT FINAL ASSESSMENT.

CIRnirc
CCtcc
Sec of Finance
[FINAL DECISIONS of these officials are appeal to the CTA]

  Real Property after EAR from Treasure are appealable to the REGULAR COURT (?), not to the CTA.

Decided by or under the These are the cases appealable to the Tax Court
jurisdiction of
Commissioner of Internal Disputed Assessment
Revenue (NIRC) Refund of IR Tax
Other matters identified in NIRC or other laws enforced by the CIR
Penalties imposed without authority
Customs Commissioner Customs duties
(TCC) Other matters identified in TCC or other laws enforced by CC
Fines/penalties/forfeiture
Search/detention/release of imported goods
Secretary of Finance Imposition of
Special Duties (marking, dumping, countervailing)
Duties
/
Automatic Review > these are the cases (ie. DROP-COFS) decided
by the CIR & CC IN FAVOR OF THE TAXPAYER.

 You cannot go to the Tax Court WITHOUT FINAL DECISION (you cannot go here with an original case or without
EAR

 If none of the DROP-COFS-SD/AR  appeal to the regular court

 all those assessment we are talking must be made on 1998

AFTER 180 DAYS

Before 1998

TAX REFUND

BPI case: within 2yrs, claim + appeal > VALID

LOCAL GOVERNMENT TAXATION

CHAPTER 1 - GENERAL PROVISIONS

Power to Create Sources of Revenue

Each local government unit has the power to:
1. create its own sources of revenue and
2. levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. (Sec.
129)

Such taxes, fees, and charges shall accrue exclusively to the local government units.

Fundamental Principles.
The fundamental principles governing the exercise of the taxing and other revenue-raising powers of LGUs are
(U(EPuJul)LIP):
(a) Taxation shall be Uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall (EPuJuL):
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;
3) not be unJust, excessive, oppressive, or confiscatory;
4) not be contrary to Law, public policy, national economic policy, or in the 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 shall Inure solely to the benefit of the local government unit levying the tax, fee, charge or other
imposition unless otherwise specifically provided herein; and,
(e) Each local government unit shall, as far as practicable, evolve a Progressive system of taxation. (Sec. 130)

Local Taxing Authority.

The power to tax is exercised by the sanggunian of the LGU concerned through an appropriate ordinance. (Sec. 132)
Common Limitations on the Taxing Powers of LGUs
LGUs cannot levy: [ IDECTA_BEV_TRELEBI ] or (CADET-VIBE-LIBERTE)
(a) Income tax, except on banks and other financial institutions;
(b) Documentary stamp tax;
(c) Estate Tax, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided;
(d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs
fees, charges and dues, except wharfage on wharves constructed and maintained by the local government unit
concerned;
(e) Taxes, fees, and charges and other impositions upon goods carried into or out of, or passing through, the territorial
jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise,
(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of 6 and
4 years, respectively from the date of registration;
(h) Excise taxes on articles enumerated under the national Internal Revenue Code, as amended, and taxes, fees or
charges on petroleum products;
(i) Percentage or VAT on sales, barters or exchanges or similar transactions on goods or services except as otherwise
provided;
(j) Taxes on the gross receipts of Transportation contractors and persons engaged in the transportation of passengers or
freight by hire and common carriers by air, land or water, except as provided in the Code;
(k) Taxes on premiums paid by way or Reinsurance or retrocession;
(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of Licenses or permits for
the driving thereof, except tricycles;
(m) Taxes, fees, or other charges on Philippine products actually Exported, except as otherwise provided;
(n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly registered under
R.A. 6810 and R.A. 6938 (Cooperative Code of the Philippines); and
(o) Taxes, fees or charges of any kind on the National Government, its agencies and Instrumentalities, and local
government units.

Provinces (see chart)

Provinces (refers to Local Govt. Provisions on Tax)
SPECIFIC PROVISIONS ON THE TAXING AND OTHER
REVENUE-RAISING POWERS OF LOCAL GOVERNMENT UNITS
Provinces
Type of Tax
Tax on Transfer of Real Property Ownership.
The province may impose a tax on the sale ,
donation, barter, or on any other mode of
transferring ownership or title of real property.
Tax on Business of Printing and Publication.
The province may impose a tax on the
business of persons engaged in the printing
and/or publication of books, cards, posters,
leaflets, handbills, certificates, receipts,
pamphlets, and others of similar nature.
Franchise Tax. Notwithstanding any
exemption granted by any law or other
special law, the province may impose a tax
on businesses enjoying a franchise.
Tax on Sand, Gravel and Other Quarry
Resources. The province may levy and
collect taxes on ordinary stones, sand,
gravel, earth, and other quarry resources
extracted from public lands or from the beds
of seas, lakes, rivers, streams, creeks, and
other public waters within its territorial
jurisdiction.
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. To be paid on or before the 31 st
day of January. Any person first beginning to
practice a profession after the month of
January must, however, pay the full tax
before engaging therein.
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
Rate
Not more than 50% of the 1% of the total
consideration or of the fair market value,
whichever is higher
Not exceeding 50% of 1% of the gross
annual receipts for the preceding calendar
year.
Not exceeding 50% of 1% of the gross
annual receipts for the preceding calendar
year, within its territorial jurisdiction.
Not more than 10% of fair market value in the
locality
At such amount and reasonable classification
as the sangguniang panlalawigan may
determine but shall in no case exceed
P300.00.
Not more than 30% of the gross receipts from
admission fees.
Exceptions
Sale, transfer or other disposition of real
property pursuant to R.A. No. 6657 (CARL).
Newly started business, the tax shall not
exceed 1/20 of 1% of the capital investment.
School texts or references, prescribed by the
DECS shall be exempt from the tax.
Newly started business, the tax shall not
exceed 1/20 of 1% of the capital investment.
Professionals exclusively employed in the
government shall be exempt from the
payment of this tax.
The holding of operas, concerts, dramas,
recitals, painting and art exhibitions, flower
shows, musical programs, literary and
oratorical presentations, except pop, rock, or
similar concerts shall be exempt.
Notes
It shall be the duty of the seller, donor,
transferor or administrator to pay the tax
imposed within 60 days from the date of the
execution of the deed or from the date of the
decedent's death.
The permit to extract resources shall be
issued exclusively by the provincial governor,
pursuant to the ordinance of the sangguniang
panlalawigan. Proceeds distributed as
follows: Province -30% Component City or
Municipality where the quarry resources are
extracted - 30% Barangay where the quarry
resources are extracted - 40%.
To be paid to the province where he/she
practices his/her profession or where he/she
maintains principal office in case the practice
is in several places Provided, After payment
he/she shall be entitled to practice his/her
profession in any part of the Phils. w/out
being subjected to any other national or local
tax, license, or fee for the practice of the
prof’ession.
Sangguniang panlalawigan may prescribe the
time, manner, terms and conditions for the
payment of tax. In case of fraud or failure to
pay, the sangguniang panlalawigan may
impose surcharges, interest and penalties.
The proceeds from the amusement tax shall
be shared equally by the province and the
municipality where such amusement places
are located.
Annual Fixed Tax For Every Delivery Truck or Amount not exceeding P500.00.
Van of Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers in,
Certain Products. The province may levy an
annual fixed tax for every truck or any vehicle
used by manufacturers, producers,
wholesalers, dealers or retailers in the
delivery of distilled spirits, soft drinks, cigars
and cigarettes, and other products as may be
determined by the sanggunian, to sales
outlets, or consumers, whether directly or
indirectly, within the province.

Municipalities
Tax on Business
The municipality may impose taxes on the following:
a. On manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of
whatever kind or nature.
b. On wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature.
c. On exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of the following essential commodities
(RW CLAPS C):
1.Rice and corn;
2.Wheat or cassava flour, meat, dairy products, locally manufactured, processed or preserved food, sugar, salt and other agricultural, marine, and fresh water products, whether in their
original state or not;
3. Cooking oil and cooking gas;
4. Laundry soap, detergents, and medicine;
5. Agricultural implements, equipment and post-harvest facilities, fertilizers, pesticides and other farm inputs;
6. Poultry feeds and other animal feeds;
7. School supplies; and
8. Cement.
d. On retailers
e. On contractors and other independent contractors
f. On banks and other financial institutions,
g. On peddlers engaged in the sale of any merchandise or article of commerce
h. On any business, which the sanggunian concerned may deem proper to tax. For businesses subject to the excise, value-added or percentage tax, the tax rate shall not exceed 2% of gross
sales of the preceding calendar year.
Rates of Tax within the Metropolitan Manila Area shall not exceed by 50% the maximum rates prescribed for a-h. (Sec. 144)

The tax is payable for every separate or distinct establishment or place where business is conducted. (Sec. 146)

The municipality may impose and collect such reasonable fees and charges on business and occupation except professional taxes reserved for provinces. (Sec 147)

Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters. The sanggunian may:
a. Grant fishery privileges to erect fish corrals, oysters, or other aquatic beds or bangus fry areas
1. Duly registered organizations and cooperatives of marginal fishermen shall have the preferential right;
2. The sanggunian may require a public bidding pursuant to an ordinance for the grant of such privilege;
3. Absent of such orgs. and coops or their failure to exercise their preferential right, other parties may participate
in the public bidding
b. Grant the privilege to gather, take or catch bangus fry, prawn fry or fry of other species and fish from the municipal
waters by nets or other fishing gears to marginal fishermen free of rental or fee
c. Issue licenses for the operation of fishing vessels of three (3) tons or less. (Sec. 149)

Situs of the Tax.

For purposes of collection of the taxes under Section 143 (tax on business), businesses maintaining or operating branch
or sales outlet elsewhere shall record the sale in the branch or sales outlet making the sale or transaction, and the tax
thereon shall accrue and shall be paid to the municipality where such branch or sales outlet is located.

In case there is no branch or sales outlet in the city or municipality where the sale made, the sale shall be recorded in the
principal office and the taxes due shall accrue and be paid to such city or municipality.

The following sales allocation for sales recorded in the principal office of businesses with factories, project offices, plants,
and plantations:

30% of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is
located; and
70% of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office,
plant, or plantation is located.
 Where the plantation located at a place other than the place where the factory is located, the above mentioned 70%
shall be divided as follows:
60% to the city or municipality where the factory is located; and
40% to the city or municipality where the plantation is located.
 Where there are 2 or more factories, project offices, plants, or plantations located in different localities, the above
mentioned 70% shall bSe shall be prorated among the localities where the factories, project offices, plants, and
plantations are located in proportion to their respective volumes of production during the period for which the tax is
due. (Sec. 150)

Cities
The city may levy the taxes, fees, and charges which the province or municipality may impose.
The tax rates that the city may levy may exceed the maximum rates allowed for the province or municipality by not more
than 50% except the rates of professional and amusement taxes. (Sec. 151)

Barangays
Scope of Taxing Powers. - The barangays may levy the following taxes and charges, which shall exclusively accrue to
them: (TOBS)
(a) Taxes - On stores or retailers with fixed business establishments with gross sales of receipts of the preceding
calendar year of P50,000.00 or less for cities and P30,000.00 or less, in the case of municipalities, rate = not
exceeding 1% on gross sales or receipts.
(b) Service Fees or Charges for services rendered in connection with the regulations or the use of barangay-owned
properties or service facilities such as palay, copra, or tobacco dryers.
(c) Barangay Clearance. - No city or municipality may issue any license or permit for any business or activity unless a
clearance is first obtained from the barangay where such business or activity is located or conducted.
(d) Other fees and Charges. - The barangay may levy reasonable fees and charges: (CRB)
1. On commercial breeding of fighting Cocks and cockpits;
2. On places of Recreation which charge admission fees; and
3. On Billboards, signboards, neon signs, and outdoor ads. (Sec. 152)

Common Revenue-Raising Powers of LGUs (Secs. 153-155) (SPT)

a. Service Fees and Charges for services rendered
b. Pubic Utility Charges for the operation of public utilities owned, operated and maintained by LGUs within their
jurisdiction.
c. 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 LGU concerned.
Exceptions:
1. officers and enlisted men of the AFP and PNP on mission,
2. post office personnel delivering mail,
3. physically-handicapped, and disabled citizens who are sixty-five (65) years or older.

Community Tax
Cities or municipalities may levy a community tax (Sec. 156)

Individuals Liable to Community Tax. - [ IER ]

a. Inhabitant of the Philippines
b. Eighteen years of age or over
c. Regularly employed on a wage or salary basis for at least 30 consecutive working days during any calendar year,
or who is engaged in business or occupation,
or who owns real property with an aggregate assessed value of P1,000.00 or more,
or who is required by law to file an income tax return
Rate = P5.00 and an annual additional tax of P1.00 for every P1,000.00 of income regardless of whether from business,
exercise of profession or from property which in no case shall exceed P5,000.00.

In the case of husband and wife, the tax imposed shall be based upon the total property owned by them and the total
gross receipts or earnings derived by them. (Sec. 157)

Juridical Personalities (Sec. 158)

Corporations, no matter how created or organized, whether domestic or resident foreign, engaged in or doing business in
the Philippines are also liable to pay an annual community tax.

Rate = P500.00 and an annual additional tax, which shall exceed P10,000.00 in accordance with the following schedule:
a. For every P5,000.00 worth of real property in the Philippines owned by it during the preceding year based on the
valuation used for the payment of real property tax - P2.00; and
b. For every P5,000.00 of gross receipts derived by it from its business in the Philippines during the preceding year -
P2.00.

Those exempt from the community tax are:

1. Diplomatic and consular representatives; and
2. Transient visitors when their stay does not exceed 3 months.

Place of Payment - place of residence of the individual, or in the place where the principal office of the juridical entity is
located. (Sec. 160)

Time for Payment - accrues on the 1 st day of Jan. of each year which shall be paid not later than the last day of Feb. of
each year

Penalties for Delinquency. - An interest of 24% per annum from the due date until it is paid shall be added on the amount
due.

A community tax certificate may also be issued to any person or corporation not subject to the community tax upon
payment of P1.00. (Sec. 162)

Sec. 163. Presentation of Community Tax Certificate On Certain Occasions. -

Individual
a. When an individual subject to the community tax acknowledges any document before a notary public,
b. takes the oath of office upon election or appointment to any position in the government service;
c. receives any license, certificate or permit from any public authority; pays any tax or fee;
d. receives any money from any public fund;
e. transacts other official business; or
f. receives any salary or wage from any person or corporation.

The community tax certificate shall not be required in the registration of a voter.

Corporation
a. receives any license, certificate, or permit from any public authority,
b. pays any tax or fee,
c. receives money from public funds, or
d. transacts other official business.

The city or municipal treasurer deputizes the barangay treasurer to collect the community tax in their respective
jurisdictions.

The proceeds of the community tax actually and directly collected by the city or municipal treasurer shall accrue entirely to
the general fund of the city or municipality concerned.

Proceeds of the community tax collected through the barangay treasurers shall be apportioned as follows: (Sec. 164)
50% accrues to the general fund of the city or municipality concerned; and
50% accrues to the barangay where the tax is collected.

PROVINCE OF BULACAN vs CA (299 SCRA 442)

Facts: The Province passed an Ordinance imposing a 10% tax on the value of stones, sand and other quarry resources
from public lands. The Provincial Treasurer levied upon Republic Cement P2.5M for its extraction of resources from
private land.
Issue: Does the province have authority to levy the tax?
Held: NO. Although §186 of the LGC authorizes municipal corps. to levy taxes other than those specifically enumerated
therein, the subject ordinance was quite specific about the fact that the taxable articles must come from public land.
Moreover, a province may not levy excise taxes on articles already taxed by the NIRC. The current tax code already
imposes a tax on ALL quarry resources, regardless of origin, hence, the Province may no longer impose any additional
amounts from Republic Cement.
 REAL PROPERTY TAXATION

I. CHARACTERISTIC OF REAL PROPERTY TAX: [ DAPIL ]

1. Direct tax on the ownership of real property
2. Ad Valorem tax. The value is based on the tax base
3. Proportion - the tax is calculated on the basis of a certain percentage of the value assessed
4. Indivisible single obligation
5. Local Tax

II. PROPERTIES LIABLE UNDER REAL PROPERTY TAX

According to the Local Government Code, Real Property liable for Real Prop tax are:
1. Land,
2. Buildings
3. Machinery and
4. Other improvements not otherwise exempted under said code (Sec 232, LGC)

Note: Although the term real property has not been expressly defined in the LGC, early decisions of the Supreme Court in
Mindanao Bus Co. v City Assessor of Cagayan de Oro, 6 SCRA `97; Board of Assessment Appeals v Meralco, 119 PHIL
328; Manila Electric Co. v Board of Assessment Appeals, 10 SCRA 68) seem to suggest that Art 415 of the Civil Code
could also be controlling.

III. CLASSIFICATION OF LAND for purposes of assessment Sec 218 (a) [CARMITS]
1. Commercial
2. Agricultural
3. Residential
4. Mineral
5. Industrial
6. Timberland
7. Special

IV. SPECIAL CLASSES OF REAL PROPERTY (sec 216, LGC) [HCS LG]
1. HOSPITALS
2. CULTURAL and SCIENTIFIC purposes
3. owned and used by LOCAL WATER DISTRICTS
4. GOCCs rendering essential public services in the supply and distribution of water and/or generation or transmission
of electric power.

V. PROPERTIES EXEMPT from real property tax (Sec. 234) [RC WEC]
1. owned by the REPUBLIC of the PHILS or its political subdivisions
except: when beneficial use has been granted to a taxable person
2. Charitable institutions, churches, parsonages, convents thereto, mosques, non-profit or religious cemeteries,
buildings and improvements actually directly and exclusively used for religious, charitable or educational
purposes.
3. Machinery and Equipment 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
4. Real property owned by duly registered Cooperatives under RA 6938
5. Machinery & equipment for pollution control and Environment protection
Exemptions previously granted, (not falling within the above enumeration) are withdrawn.

VI. FUNDAMENTAL PRINCIPLES IN Assessment REAL PROP TAXES (Art 198)

[CUANE]
1. CURRENT and fair market value is the basis of appraisal
2. UNIFORMITY in classification in each local gov’t unit should be observed
3. ACTUAL USE of the property should be the basis of classification
4. appraisal, assessment, levy and collection should NOT BE LET to any private person.
5. EQUITABLE appraisal and assessment

STEP 1 - DECLARATION OF REAL PROPERTY

1. Declared by Owner or Administrator (Sec 202-203)
IF newly acquired property -
a. files with assessor within 60 DAYS from date of transfer a
b. SWORN statement containing FMV and description of property
IF improvement on real property
a. file w/in 60 DAYS upon completion or occupation (whichever is earlier)
b. SWORN statement containing FMV and description of property
2. Declared by Provincial / City / Municipal Assessor (Sec 204)
WHEN only when the person under Sec 202 refuses or fails to make the declaration
within the prescribed time
No oath is required

 NOTE: IF FILING FOR EXEMPTION (Sec 206)

WHAT person claiming exemptions must file with assessor sufficient documentary evidence
to support claim
WHEN within 30 days from the date of DECLARATION of property

IF required evidence is not submitted within 30 days, the property will be listed as taxable in the roll
IF proven to be tax-exempt, property will be dropped from the roll
 NOTE: IF PROPERTY DECLARED FOR THE FIRST TIME (Sec. 222)
If declared for 1st time, real property shall be assessed for back taxes
a. for not more than 10 yrs prior to the date of initial assessment
b. taxes shall be computed on the basis of applicable schedule of values in force during the
corresponding periods

STEP 2: LISTING OF REAL PROPERTY IN THE ASSESSMENTROLLS

(Sec 205, 207)

STEP 3: APPRAISAL AND VALUATION OF REAL PROPERY

(Sec 212-214, 224-225)
How to determine Fair Market Value.
FOR LAND
1. Assessor of the prov/ city /mun gives summons to owners of affected properties
2. Assessor prepares a schedule of FMV for different classes of properties
3. Sanggunian enacts an ordinance
4. the schedule of FMV is published or posted

FOR MACHINERY
1. For Brand New machinery : FMV is acquisition cost
2. In all other cases: FMV = Remaining eco. life X Replacement cost Estimated
eco. life

STEP 4: DETERMINE ASSESSED VALUE (Sec 218)

Procedure
1. take the schedule of FMV
2. Assessed value = FMV X Assessment level
3. Tax = Assessed value X Tax rate

STEP 5: PAYMENT AND COLLECTION OF TAX

WHEN January 1 of every year (Sec 246)
tax shall constitute as superior lien (Sec 246)
HOW a. basic real prop tax in 4 equal installments (Mar 31,Jun 30,Sep 30, Dec 31)
b. special levy - governed by ordinance

 NOTE: INTEREST for LATE PAYMENT

- two percent (2%) each month on unpaid amt. until the delinquent amt is paid.
- provided in no case shall the total interest exceed thirty-six (36) months

 NOTE: FOR ADVANCE and PROMPT PAYMENT

a) advance payment -discount not exceeding 20% of annual tax (Sec 251, LGC)
b) prompt payment -discount not exceeding 10% of annual tax due(Art 342 IRR)

WHO COLLECTS The provincial, city, municipal or barangay treasurer

PERIOD WITHIN WHICH TO COLLECT (Sec 270).
within five (5) yrs from the date they become due
within ten (10) yrs. from discovery of fraud, in case there is fraud or intent to evade

Period of prescription shall be SUSPENDED when : (Sec 270, LGC)

1. local treasurer is legally prevented to collect tax
2. the owner of prop requests for reinvestigation and writes a waiver before expiration of period to collect
1. the owner of the prop is out of the country or cannot be located

REMEDIES IN REAL PROPERTY TAXATION

A. REMEDIES OF TAXPAYER
1. PAYMENT UNDER PROTEST (Sec 252)
- file protest with prov, city, or mun. treasurer concerned
- indicate amount contested
- annotate on tax receipt “paid under protest”
- Within 30 days, confirm protest in writing stating grounds therefor
- treasurer shall decide protest within 60 days
DONT FORGET!: No protest shall be entertained unless THE TAX IS FIRST PAID!!!!
IF PROTEST DECIDED IN FAVOR of taxpayer, amount may either be
a. refunded or
c. applied as tax credit
 IF DENIED or NOT DECIDED WITHIN 60 DAYS BY TREASURER,
a. taxpayer may appeal to board of assessment appeal or
b. avail of remedies under Ch 3 title 2 Book II
(Local Board of Assessment Appeals and Central Board of Assessment Appeals)
2. REFUND IN CASE OF EXCESSIVE COLLECTION (Sec 253)
File a written claim for refund within two (2) years from date taxpayer is entitled thereto

B. REMEDIES OF GOVERNMENT
Remedies may be enforced either through administrative or judicial action or both, alternative or simultaneously. Use or
non-use of one remedy shall not be a bar against the other (Sec 258)
1. ADMINISTRATIVE
A. Levy on Real property (Sec 258 and 259)
B. Sale of Real Property (Sec 260)
C. Local Government’s Lien (Sec 256)
D. Further Distraint or Levy (Sec 265)
2. JUDICIAL (Sec 266)-civil action filed by the local treasurer within 5 yrs. from due date
C. CONDONATION and REMISSION
 The PRESIDENT may remit or reduce real prop tax in any prov/ city/ mun if he deems that PUBLIC INTEREST so
requires (Sec 277)
 THE SANGGUNIAN concerned may CONDONE or REDUCE the tax in cases where
a. there is a general failure of crops
b. substantial decrease in the price of products
c. calamity (Sec 276)
by an ordinance - passed before Jan 1 of any year and
- upon recommendation of the Local Disaster Coordinating Council

APPEALS IN REAL PROPERTY TAXATION

OWNER OR PERSON WITH LEGAL INTEREST

Files within 60 days
1. Written Petition under Oath
2. With Supporting Documents

Within 60 days
LOCAL BOARD OF ASSESSMENT APPEALS
(LBAA Should decide win 120 DAYS from receipt of petition)

Within 30 days
CENTRAL BOARD OF ASSESSMENT APPEALS

Within 15 days
SUPREME COURT