ATENEO DE MANILA UNIVERSITY SCHOOL OF LAW Rockwell Center, Makati City __________________________________________________________________ Syllabus on RIGHTS AND REMEDIES OF THE

GOVERNMENT UNDER THE NATIONAL INTERNAL REVENUE CODE By: Atty. Carlos G. Baniqued I. Examination and Audit of Returns A. Statutory Basis Secs. 5 and 6, NIRC B. Selection of Returns for Audit Read MAMALATEO, TAX RIGHTS AND REMEDIES 356-380 (2005) BIRs Investigative/Enforcement Authority Rev. Mem. Order No. 36-99, Feb. 9, 1999 A. Statutory Basis 1. Administrative Summons to Taxpayer Sec. 5(C), (D), NIRC Sec. 6(C), NIRC 2. Third-Party Summons Sec. 5(B), (C), NIRC 3. Conduct Inventory-Taking, Surveillance Sec. 6(C), NIRC 4. Prescribe Zonal Value for Real Properties Sec. 6(E), NIRC Republic 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 for Compromise due to Financial Incapacity Sec. 6(F), NIRC 6. Accreditation of Tax Agents/Practitioners Sec. 6(G), NIRC Rev. Regs. No. 4-2010, Feb. 24, 2010 Rev. Regs No. 14-2010, Nov. 25, 2010 7. Rule-Making Authority See VII, below. B. Informers Reward Sec. 282, NIRC BIR Rul. No. 071-00, Dec. 18, 2000 CIR v. COA, G.R. No. 101976, Jan. 29, 1993 Savellano v. COA, G.R. No. 102258, Jan. 29, 1993

II.

2 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 Assessments A. Upon Examination of Returns Filed Sec. 6(A), NIRC B. In Case of Failure to Submit Required Reports Sec. 6(B), NIRC Sy Po v. CTA, 164 SCRA 524, 527-528 (1988) C. After Inventory Taking or Surveillance Sec. 6(C), NIRC D. Where CIR Terminates Taxpayers Taxable Period Sec. 6(D), NIRC E. Issuance of Pre-Assessment Notice Sec. 228, NIRC Sec. 3, Rev. Regs. No. 12-99, Sept. 6, 1999 Pilipinas 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 Notice Sec. 228, NIRC CIR 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, 1999 1. 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 Assessment Sy Po v. CTA, supra 3. Assessment Must be Based on Actual Facts Collector 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 Notices Rev. Mem. Order No. 46-2004, Sept. 2, 2004 Rev. Mem. Order No. 7-2010, Jan. 25, 2010

3 1. 2. 3. IV. Capital Gains Tax Returns Expanded Withholding Tax Returns Estate and Donors Tax Returns

Collection of Unpaid Taxes A. Distraint, Garnishment, Levy and Seizure Secs. 205-217, 224-225 NIRC Sec. 202, NIRC Sec. 11, Rep. Act No. 1125, as amended by Rep. Act No. 9282 Rev. Memorandum Order No. 39-2007, Dec. 12, 2007 People v. Sandiganbayan, 467 SCRA 137, 153 (2005) B. Civil Action Sec. 205, NIRC Sec. 220, NIRC Sec. 7(b)(2)(c), Rep. Act No. 1125, as amended by Rep. Act No. 9282 Republic 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 616 Republic v. Patanao, 20 SCRA 712 (1967) C. Criminal Action Sec. 220, NIRC Sec. 7(b)(1), Rep. Act No. 1125, as amended by Rep. Act No. 9282 CIR v. Pascor Realty and Dev. Corp, supra Ungab v. Cusi, Jr., G.R. No. L-41919-24, May 30, 1980, 97 SCRA 877 (1980) Adamson v. Court of Appeals, supra D. Anti-Injunction Rule 1. General Rule Sec. 218, NIRC CIR 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. Exception Sec. 11, Rep. Act No. 1125, as amended by Rep. Act No. 9282 Rule 10, Revised Rules of the CTA (S.C. A.M. No. 05-11-07CTA, Nov. 22, 2005 E. Nature and Extent of Tax Lien Sec. 219, NIRC F. Compromise and Abatement Sec. 204 (A) and (B), NIRC Rev. Regs. No. 30-2002, Dec. 16, 2002 Security Bank Corporation v. CIR, 499 SCRA 453 (2006)

4 People v. Sandiganbayan, supra PNOC v. Court of Appeals, 457 SCRA 32, 90 (2005) BIR Rul. No. 111-99, July 22, 1999 G. Liability of Corporate Officers and Stockholders Proton Pilipinas Corporation v. Republic, 504 SCRA 528, 546 (2006) V. Imposition of Surcharge, Interest, and Compromise Penalty A. Civil Penalties Sec. 248, NIRC Secs. 250-252, NIRC Secs. 4 & 5, Rev. Regs. No. 12-99, Sept. 6, 1999 Philippine 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, 1956 BIR Rul. No. 002-95, Jan. 6, 1995 BIR Rul. No. 48-99, April 13, 1999 BIR Rul. No. 205-99, Dec. 28, 1999 BIR Rul. No. 059-01, Dec. 20, 2001 B. Interest Sec. 249, NIRC Sec. 5. Rev. Regs. No. 12-99, Sept. 6, 1999 Cagayan Electric v. CIR, 138 SCRA 629 (1985) Cf: Republic v. Heras, 32 SCRA 507, 513-514 (1970) B. Compromise Penalty Sec. 6, Rev. Regs. No. 12-99, Sept. 6, 1999 Rev. Mem. Order No. 1-90, Nov. 28, 1989 CIR 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) Statute of Limitations A. Period to Assess Sections 203, 222, 223, NIRC i. When is an Assessment Deemed Made? Basilan Estates, Inc. v. CIR, 21 SCRA 17 (1967)

VI.

5 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) Effect of Filing an Amended Return CIR v. Phoenix Assurance Co., Ltd., L-19127, May 20, 1965, 14 SCRA 52, 58-59 (1965) Effect of Filing a Wrong Return CIR v. Cebu Portland Cement Company, supra Butuan Sawmill, Inc. v. CTA, L-20601, Feb. 28, 1966, 16 SCRA 277 (1966) How Prescriptive Period Counted CIR v. Primetown Property Group, Inc., G.R. No. 162155, Aug. 28, 2007, 531 SCRA 436 (2007) Ordinary Prescription Sec. 203, NIRC Extraordinary Prescription a. False/Fraudulent Return or No Return Sec. 222(a), NIRC Butuan Sawmill, Inc. v. CTA, 16 SCRA 277 (1966) CIR v. Engineering Equipment & Supply Co., 64 SCRA 590 Taligaman 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, 2004 Siao 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 Period Sec. 222(b), NIRC Rev. Mem. Order No. 20-90 Rev. Delegation Authority Order No. 05-01 Republic 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

ii. iii.

iv. v. vi.

6 RCBC v. CIR, G.R. No. 170257, Sept. 7, 2011 Avon Products Mfg., Inc v. CIR, CTA Case No. 7038, May 13, 2010 c. Suspension of Prescriptive Period Afisco Insurance Corporation v. Court of Appeals, 302 SCRA 1, 19-20 (1999) B. Period to Collect Secs. 203, 222, 223, NIRC CIR 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 1 Palanca 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., 104 Phil. 819 (1958) CIR v. Consolidated Mining Co., (Nov. 29, 1968) Cordero v. Gonda, 18 SCRA 331 Bank 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 NIRC Sec. 281, NIRC Lim v. CA, 190 SCRA 616 (1990) VII. BIRs Rule-Making Authority Sec. 4, NIRC Sec. 7, NIRC A. Must be Consistent with Statute Fort Bonifacio Development Corporation v. CIR, 583 SCRA 168, 195-196 (2009) Republic v. CA, et. al., G.R. No. 109193, Feb. 1, 2000 M.E. Holding Corporation v. Court of Appeals, 547 SCRA 389 (2008) CIR v. Bicolandia Drug Corporation, 496 SCRA 176 CIR v. Fortune Tobacco Corp., 559 SCRA 160 (2008)

7 Atlas Consolidated Mining & Development Corp. v. CIR, 318 SCRA 386 (1999) B. Effect of Absence of IRR CIR v. Reyes, 480 SCRA 382 (2006) C. Requirement of Publication CIR v. Trustworthy Pawnshop, Inc., 488 SCRA 538, 544 (2006) CIR v. Michael J. Lhuillier Pawnshop, 406 SCRA 178 (2003)