TAX 2 Outline

7/31/2019 TAX 2 Outline

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ATENEO DE MANILA UNIVERSITYSCHOOL OF LAW

Rockwell Center, Makati City__________________________________________________________________

Syllabus on

RIGHTS AND REMEDIES OF THE GOVERNMENT UNDERTHE NATIONAL INTERNAL REVENUE CODE

By: Atty. Carlos G. Baniqued

I. Examination and Audit of ReturnsA. Statutory Basis

Secs. 5 and 6, NIRCB. Selection of Returns for Audit

Read MAMALATEO, TAX RIGHTS AND REMEDIES 356-380(2005)

II. BIRs Investigative/Enforcement AuthorityRev. Mem. Order No. 36-99, Feb. 9, 1999A. Statutory Basis1. Administrative Summons to Taxpayer

Sec. 5(C), (D), NIRCSec. 6(C), NIRC

2. Third-Party SummonsSec. 5(B), (C), NIRC

3. Conduct Inventory-Taking, SurveillanceSec. 6(C), NIRC

4. Prescribe Zonal Value for Real PropertiesSec. 6(E), NIRCRepublic v. Aquafresh Seafoods, Inc., G.R. No. 170389, Oct. 20,2010, 634 SCRA 82 (2010)

5. Inquire into Bank Deposits of Decedent or Person Applying forCompromise due to Financial IncapacitySec. 6(F), NIRC

6. Accreditation of Tax Agents/PractitionersSec. 6(G), NIRCRev. Regs. No. 4-2010, Feb. 24, 2010Rev. Regs No. 14-2010, Nov. 25, 2010

7. Rule-Making AuthoritySee VII, below.

B. Informers RewardSec. 282, NIRCBIR Rul. No. 071-00, Dec. 18, 2000CIR v. COA, G.R. No. 101976, Jan. 29, 1993Savellano v. COA, G.R. No. 102258, Jan. 29, 1993


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Fitness By Design, Inc. v. CIR, 569 SCRA 788, 798 (2008)Rev. Mem. Circular No. 86-2010, Nov. 15, 2010

III. BIRs Power to Make AssessmentsA. Upon Examination of Returns Filed

Sec. 6(A), NIRCB. In Case of Failure to Submit Required Reports

Sec. 6(B), NIRCSy Po v. CTA, 164 SCRA 524, 527-528 (1988)

C. After Inventory Taking or SurveillanceSec. 6(C), NIRC

D. Where CIR Terminates Taxpayers Taxable PeriodSec. 6(D), NIRC

E. Issuance of Pre-Assessment NoticeSec. 228, NIRCSec. 3, Rev. Regs. No. 12-99, Sept. 6, 1999Pilipinas Shell Petroleum Corp. v. CIR, 541 SCRA 316 (2007)CIR v. Menguito, G.R. No. 16750, Sept. 17, 2008, 565 SCRA 461(2008)CIR v. Metro Star Superama, Inc., G.R. No. 185371, Dec. 8, 2010

F. Issuance of Final Assessment NoticeSec. 228, NIRCCIR v. Reyes, 480 SCRA 382, 396 (2006)CIR v. Enron Subic Power Corp., 576 SCRA 212, 218 (2009)Sec. 3, Rev. Regs. No. 12-99, Sept. 6, 19991. What Constitutes an Assessment?

CIR v. Pascor Realty and Dev. Corp., 309 SCRA 402 (1999)Republic v. Court of Appeals, 149 SCRA 351 (1987)Basilan Estates, Inc. v. CIR, 21 SCRA 17 (1967)Nava v. CIR, 13 SCRA 104 (1965)Barcelon, Roxas Securities, Inc. v. CIR, 498 SCRA 126, 136(2006)Collector v. Bautista, 105 Phil. 1326, 1327 (1959)Adamson v. Court of Appeals, G.R. Nos. 120935 and 124557,May 21, 2009, 588 SCRA 27 (2009)CIR v. Menguito, supra

2. Presumption of Correctness of AssessmentSy Po v. CTA, supra

3. Assessment Must be Based on Actual FactsCollector v. Benipayo, 4 SCRA 182 (1962)CIR v. Hantex Trading Co., Inc., 454 SCRA 301, 329 (2005)

G. Issuance of Tax Verification Notices and Letter NoticesRev. Mem. Order No. 46-2004, Sept. 2, 2004Rev. Mem. Order No. 7-2010, Jan. 25, 2010


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1. Capital Gains Tax Returns2. Expanded Withholding Tax Returns3. Estate and Donors Tax Returns

IV. Collection of Unpaid TaxesA. Distraint, Garnishment, Levy and SeizureSecs. 205-217, 224-225 NIRC

Sec. 202, NIRCSec. 11, Rep. Act No. 1125, as amended by Rep. Act No. 9282Rev. Memorandum Order No. 39-2007, Dec. 12, 2007People v. Sandiganbayan, 467 SCRA 137, 153 (2005)

B. Civil ActionSec. 205, NIRCSec. 220, NIRCSec. 7(b)(2)(c), Rep. Act No. 1125, as amended by Rep. Act No. 9282Republic v. Lim Tian Teng Sons & Co., 16 SCRA 584 (1966)San Juan v. Vasquez, 3 SCRA 92 (1961)Yabes v. Flojo, L-46954, July 20, 1982, 115 SCRA 278 (1982)Lim, Sr. v. CA, 190 SCRA 616Republic v. Patanao, 20 SCRA 712 (1967)

C. Criminal ActionSec. 220, NIRCSec. 7(b)(1), Rep. Act No. 1125, as amended by Rep. Act No. 9282CIR v. Pascor Realty and Dev. Corp, supraUngab v. Cusi, Jr., G.R. No. L-41919-24, May 30, 1980, 97 SCRA 877(1980)

Adamson v. Court of Appeals, supraD. Anti-Injunction Rule

1. General RuleSec. 218, NIRCCIR v. Cebu Portland Cement Co., 156 SCRA 535, 541 (1987)Churchill and Tait v. Rafferty, 32 Phil. 580 (1915)Collector v. Reyes and CTA, 100 Phil. 822 (1957)Collector v. Avelino, 100 Phil. 327 (1956)

2. ExceptionSec. 11, Rep. Act No. 1125, as amended by Rep. Act No. 9282Rule 10, Revised Rules of the CTA (S.C. A.M. No. 05-11-07-

CTA, Nov. 22, 2005E. Nature and Extent of Tax Lien

Sec. 219, NIRCF. Compromise and Abatement

Sec. 204 (A) and (B), NIRCRev. Regs. No. 30-2002, Dec. 16, 2002Security Bank Corporation v. CIR, 499 SCRA 453 (2006)


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People v. Sandiganbayan, supraPNOC v. Court of Appeals, 457 SCRA 32, 90 (2005)BIR Rul. No. 111-99, July 22, 1999

G. Liability of Corporate Officers and StockholdersProton Pilipinas Corporation v. Republic, 504 SCRA 528, 546 (2006)

V. Imposition of Surcharge, Interest, and Compromise PenaltyA. Civil Penalties

Sec. 248, NIRCSecs. 250-252, NIRCSecs. 4 & 5, Rev. Regs. No. 12-99, Sept. 6, 1999Philippine Refining Company v. CA, 256 SCRA 667, 678 (1996)BPI v. CIR, 496 SCRA 601, 619-620 (2006)Tambunting Pawnshop, Inc. v. CIR, 610 SCRA 514 (2010)Michel J. Lhuillier Pawnshop, Inc. v. CIR, 501 SCRA 450, 453-454(2006)Connel Bros. Co. (Phil.) v. CIR, 9 SCRA 735, 740 (1963)Tuason, Jr. v. Lingad, 58 SCRA 170, 178-179 (1974)CIR v. Republic Cement Corporation, 124 SCRA 46, 62-63 (1983)Antam Pawnshop Corp. v. CIR, 566 SCRA 57, 74-75 (2008)CIR v. Javier, Jr., 199 SCRA 824, 831 (1991)CIR v. Japan Air Lines, 202 SCRA 450, 458 (1991)Insular Lumber Co. v. CIR, L-7190, April 28, 1956BIR Rul. No. 002-95, Jan. 6, 1995BIR Rul. No. 48-99, April 13, 1999BIR Rul. No. 205-99, Dec. 28, 1999

BIR Rul. No. 059-01, Dec. 20, 2001B. Interest

Sec. 249, NIRCSec. 5. Rev. Regs. No. 12-99, Sept. 6, 1999Cagayan Electric v. CIR, 138 SCRA 629 (1985)Cf: Republic v. Heras, 32 SCRA 507, 513-514 (1970)

B. Compromise PenaltySec. 6, Rev. Regs. No. 12-99, Sept. 6, 1999Rev. Mem. Order No. 1-90, Nov. 28, 1989CIR v. Lianga Bay Logging Co., Inc., 193 SCRA 86, 92-93 (1991)CIR v. Japan Air Lines, Inc., 202 SCRA 450, 459 (1991)

Philippine Intl Fair, Inc. v. Collector, 4 SCRA 774 (1962)

VI. Statute of LimitationsA. Period to Assess

Sections 203, 222, 223, NIRCi. When is an Assessment Deemed Made?

Basilan Estates, Inc. v. CIR, 21 SCRA 17 (1967)


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Republic v. Court of Appeals, 149 SCRA 351 (1987)Barcelon, Roxas Securities, Inc. v. CIR, 498 SCRA 126, 136(2006)CIR v. Bautista, 105 Phil. 1326, 1327 (1959)

ii. Effect of Filing an Amended ReturnCIR v. Phoenix Assurance Co., Ltd., L-19127, May 20, 1965,14 SCRA 52, 58-59 (1965)

iii. Effect of Filing a Wrong ReturnCIR v. Cebu Portland Cement Company, supraButuan Sawmill, Inc. v. CTA, L-20601, Feb. 28, 1966, 16SCRA 277 (1966)

iv. How Prescriptive Period CountedCIR v. Primetown Property Group, Inc., G.R. No. 162155,Aug. 28, 2007, 531 SCRA 436 (2007)

v. Ordinary PrescriptionSec. 203, NIRC

vi. Extraordinary Prescriptiona. False/Fraudulent Return or No Return

Sec. 222(a), NIRCButuan Sawmill, Inc. v. CTA, 16 SCRA 277 (1966)CIR v. Engineering Equipment & Supply Co., 64SCRA 590Taligaman Lumber Co. Inc. v. CIR, 4 SCRA 842, 847(1962)Aznar v. CTA, 58 SCRA 519 (1974)CIR v. BF Goodrich Phil. Inc., 303 SCRA 546 (1999)

CIR v. Ayala Hotels, CA-G.R. SP No. 70025, April 19,2004Siao Tiao Hong v. CIR, 213 SCRA 164, 169 (1992)Pilipinas Shell Petroleum Corp. v. CIR, 541 SCRA 316(2007)CIR v. Tulio, 474 SCRA 147 (2005)

b. Waiver of Prescriptive PeriodSec. 222(b), NIRCRev. Mem. Order No. 20-90Rev. Delegation Authority Order No. 05-01Republic v. Acebedo, 22 SCRA 1356 (1968)

CIR v. CA, et. al., 303 SCRA 614 (1999)Philippine Journalists, Inc. v. CIR, 447 SCRA 214(2004)CIR v. FMF Development Corporation, 556 SCRA 698(2008)CIR v. Kudos Metal Corporation, G.R. No. 178087,May 5, 2010


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RCBC v. CIR, G.R. No. 170257, Sept. 7, 2011Avon Products Mfg., Inc v. CIR, CTA Case No. 7038,May 13, 2010

c. Suspension of Prescriptive PeriodAfisco Insurance Corporation v. Court of Appeals,

302 SCRA 1, 19-20 (1999)B. Period to Collect

Secs. 203, 222, 223, NIRCCIR v. Hambrecht and Quist Philippines, Inc., G.R. No. 169225,Nov. 17, 2010, 635 SCRA 162, 170-172 (2010)Republic v. Ablaza, 108 Phil. 1105 (1960)Mambulao Lumber Co. v. Republic, 132 SCRA 1Palanca v. CIR, 4 SCRA 263 (1962)Republic v. Ker & Co. Ltd., 18 SCRA 208 (1966)Republic v. Hizon, 320 SCRA 574 (1999)Collector v. Clement and Hooker, 105 Phil. 51 (1959)Collector v. De los Angeles and CTA, 101 Phil. 1066 (1959)CIR v. Wyeth Suaco Laboratories, Inc. and CTA, 202 SCRA 125,131 (1991)Collector v. Suyoc Consolidated Mining Company, et. al., 104Phil. 819 (1958)CIR v. Consolidated Mining Co., (Nov. 29, 1968)Cordero v. Gonda, 18 SCRA 331Bank of the Phil. Islands v. CIR, 473 SCRA 205 (2005)Bank of the Phil. Islands v. CIR, 548 SCRA 105, 112-116 (2008)CIR v. Philippine Global Communications, Inc., 506 SCRA 427,

438-450 (2006)PNOC v. Court of Appeals, 457 SCRA 32, 110 (2005)

C. Period to Prosecute Violations of NIRCSec. 281, NIRCLim v. CA, 190 SCRA 616 (1990)

VII. BIRs Rule-Making AuthoritySec. 4, NIRCSec. 7, NIRC

A. Must be Consistent with StatuteFort Bonifacio Development Corporation v. CIR, 583 SCRA 168,195-196 (2009)Republic v. CA, et. al., G.R. No. 109193, Feb. 1, 2000M.E. Holding Corporation v. Court of Appeals, 547 SCRA 389(2008)CIR v. Bicolandia Drug Corporation, 496 SCRA 176CIR v. Fortune Tobacco Corp., 559 SCRA 160 (2008)


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Atlas Consolidated Mining & Development Corp. v. CIR, 318 SCRA386 (1999)

B. Effect of Absence of IRRCIR v. Reyes, 480 SCRA 382 (2006)

C. Requirement of PublicationCIR v. Trustworthy Pawnshop, Inc., 488 SCRA 538, 544 (2006)CIR v. Michael J. Lhuillier Pawnshop, 406 SCRA 178 (2003)

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