BA 127 Administrative Remedies

Remedies of the State
Administrative Remedies
Alalim, Hamir Venn

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Isabel
Lisud, Samantha Danielle
Manucom, Klarissa Anne
Power to Assess
A tax assessment is the
DEFINITION
determination of the taxes due
from a taxpayer under the
National Internal Revenue Code
of 1997.
As explained by the lifeblood
doctrine, the government is
PURPOSE
given the right to compel its
taxpayers to pay taxes
necessary to preserve the
state’s sovereignty.
● Taxes are generally
self-assessing. They are
initially computed and
WHO MAKES THE

voluntarily paid by the
taxpayer.
ASSESSMENT ● BIR Commissioner or his

duly authorized
representative
1. No agreement between tax
official and taxpayer during
pre-assessment stage
REQUISITES 2. Should be in writing
OF A VALID
3. Must state in detail the facts
and the law, the rules and
ASSESSMENT
regulations, or the
jurisprudence on which
assessment was made,
otherwise, it renders the
assessment NULL AND
VOID.
PRESCRIPTIVE
● DEFINITION:
Period of time granted by
PERIODS
law to the BIR to assess a
taxpayer
If the tax deficiency is due to: Period to assess
Simple neglect Within 3 yrs from:

- ITR without fraud 1. Last day prescribed by law for filing
of return;
2. Wherein the return was filed beyond

the period prescribed by law, the
day the return was filed;
3. Wherein the return was substantially

amended, the day of amendment.
Willful neglect 1. Within 10 yrs from discovery of

- ITR with fraud fraud or omission
- Substantial omission
- Failure to file return 2. No assessment; Court proceeding
for tax collection within 10 yrs from
discovery of fraud or omission
NOTES
Any return, statement, or declaration filed cannot be withdrawn.
But the same can be changed, modified, or amended within 3
yrs from filing provided no notice for audit or investigation has
been served to the taxpayer.
Return filed before the last day prescribed by law shall be
considered filed on such last day.
The BIR and the taxpayer may agree in writing the assessment
period, and such may be extended through a subsequent
agreement in writing before the expiration of the period
previously agreed upon.
Failure of the BIR to act within the prescriptive period waives its
right to do such, and deems that the taxpayer has paid the
correct amount of tax.
In cases of Jeopardy assessment,
The Commissioner can terminate the tax period of the taxpayer when such
taxpayer:
● Retires from business subject to tax
● Intends to leave PH
● Removes his/her property from the PH
● Hides/conceals his/her property
● Performs any act tending to obstruct the proceedings of the collection of tax
for the past/current quarter or renders the same an inefficient.
Because of this, the taxpayer is not afforded the benefit of a tax audit, thus
assessment may be done anytime.
SUMMARY:
1. Letter of Authority (LOA)

2. BIR Fieldwork/Walkthrough
3. Issuance of Notice of
Informal Conference
STAGES OF A TAX
4. Issuance of Preliminary
Assessment Notice
ASSESSMENT
5. Issuance of Formal Letter of
Demand (FLD) and Final
Assessment Notice (FAN)
6. Issuance of Final Decision
on Disputed Assessment
(FDDA)
7. Court of Tax Appeals
Letter of Authority (LOA)
○ Commences the audit process
○ Authorizes a Revenue officer (RO) to conduct a tax examination
○ Specifies which tax types, and the taxable period, which shall not
exceed one taxable year unless specifically and expressly
identified, to be examined
○ Valid only for a period of 30 days upon issuance

Letter of Authority (LOA)
○ Signatories required:
Investigating office Approving official

Revenue District Office (RDO) Regional director
Large Taxpayers Service (LTS) Assistant Commissioner - LTS
and its division
Enforcement Service (ES) and its Deputy Commissioner - Legal
division and Inspection group
Task Forces and Special team BIR Commissioner or any
authorized official
BIR Fieldwork/Walkthrough
○ Grants the RO a period of 120 days from receipt of taxpayer of the

LOA to conduct the investigation
○ The RO will proceed with the enumerated documents in the LOA,

such as accounting records and reports, which shall serve as the
basis for the examination
BIR Fieldwork/Walkthrough
○ The taxpayer is given until a second request to present such

documents, otherwise, a Final Notice will be served. Should the
taxpayer still fail to do so, the BIR may issue a Sub Poena Duces
Tecum, which mandatorily requires the taxpayer to submit such
documents within a specified time and place. Failure to comply with
such is a ground for criminal prosecution. During such process, the
assessment shall proceed.
Issuance of Notice of Informal Conference
○ The RO will submit its preliminary findings with the RDO for
approval, and thereafter to the taxpayer.
○ The RO shall state in the report whether or not the taxpayer is

amenable with such findings.
Issuance of Notice of Informal Conference
○ If the taxpayer is not amenable, the RDO, SID, or the Chief of

Division concerned, shall issue a Notice for Informal Conference,
which gives the taxpayer the opportunity to present his/her side.
○ The Informal Conference shall be held within 30 days from receipt

of such notice.
○ If after the Informal Conference the taxpayer is still liable and not
amenable, the RDO, SID, or the Chief of Division concerned shall
endorse the case within 7 days from the conclusion of the
Informal conference to the Assessment Division of the RRO, or to
the BIR commissioner or his duly authorized representative.
Issuance of PAN
○ Issued to taxpayer or his duly authorized representative after

review and evaluation by the Commissioner or his duly authorized
representative that there exists a sufficient basis to assess the
taxpayer.
○ Shows in detail the facts and the law, the rules and regulations, or
the jurisprudence on which the proposed assessment is based.
○ Who are authorized to sign and issue a PAN

■ Commissioner
■ Revenue Regional Director
■ Assistant Commissioner - LTS/EAS
Issuance of PAN
○ Taxpayer is given a period for 15 days from receipt of PAN to

respond.
○ When PAN is not required:

■ Deficiency tax is the result of a mathematical error
■ Discrepancy has been determined between tax withheld and the
amount actually remitted
■ Taxpayer opts to claim a refund or credit of excess CWT
■ Excise tax due has not been paid
■ An article locally purchased or imported by an exempt person has
been sold, traded, or transferred to a non-exempt person
Thus, a FLD and FAN shall be issued outright.

Issuance of FLD and FAN
○ Issued:
i. Upon failure of taxpayer to respond, or
ii. Within 15 days from submission of taxpayer of his response to
PAN indicating his disagreement with the findings*
○ Calls for payment of the taxpayer’s deficiency taxes
○ Shall state in detail the facts and the law, the rules and regulations,
or the jurisprudence on which the proposed assessment is based
*RMC No. 11-14 allows a FLD/FAN to be issues beyond the 15-day period from the filing of
taxpayer’s response to PAN provided it is issued within the period of limitation to assess
Motion for Motion for

Reconsideration Reinvestigation
As to evidence
Limited to evidence Includes newly
already at hand discovered or additional
evidence, which shall be
Taxpayer is given a period of submitted within 60
days from filing of
30 days from receipt of FLD protest
and FAN to file his Protest As to suspension of prescriptive period
Letter, in the form of: Shall not suspend Shall suspend
prescriptive period prescriptive period to
collect
As to approval of Commissioner
Can be availed so long Commissioner must first
as request is indicated in grant the request
protest letter
○ Such protest shall indicate the nature of the protest, the date of
assessment notice, and the applicable law, rules and regulations, or
jurisprudence on which such protest is based.
○ These shall be filed with the following persons who signed the PAN,
FLD, and FANs
Noncompliance with the aforementioned shall render the protest VOID.

Issuance of FDDA
All decisions regarding the protest to the FAN, whether such was
denied in whole or in part, shall be communicated to the taxpayer
through the issuance of a FDDA.
CTA
● If the taxpayer’s protest was denied, ● If the taxpayer’s protest was not
in whole or in part, the taxpayer may: acted upon by the Commissioner
within 180 days from filing of
○ Appeal to the CTA within 30 protest, the taxpayer may:
days from receipt of decision, or
○ Appeal to CTA within 30 days
○ File a motion for reconsideration from after the expiration of the
to Commissioner. 180-day period, or
■ Upon receipt of aFDDA,
the taxpayer may appeal ○ Await the final decision of the
to the CTA within 30 Commissioner and then
days from receipt of appeal such to the CTA within
such 30 days after the receipt of
such decision
Summary
Power to Collect
Authority of BIR (Sec 2, NIRC)
● The powers and duties of the BIR include:

○ Assessment and collection of all national internal revenue taxes,
fees, and charges
○ Enforcement of all forfeitures, penalties, and fines connected
therewith
■ Including the execution of judgments in all cases decided in its
favor by the Court of Tax Appeals and the ordinary courts.
Prescriptive period to collect
● The BIR has 5 years following assessment to enforce collection.

○ Once a FAN has been issued, the five-year period to collect starts
to run.
■ Nidea, I.C. (2016). Only five years to collect. Retrieved from
https://businessmirror.com.ph/2016/04/13/only-five-years-to-coll
ect/.
I. Civil Penalties (Sec. 248, NIRC)
● A penalty equivalent to 25% of the amount due shall be imposed in

any of the following cases:
1. Failure to file any return and pay the tax due thereon on the
date prescribed
2. Unless otherwise authorized by the Commissioner, filing a
return with an internal revenue officer other than those with
whom the return is required to be filed
3. Failure to pay the deficiency tax within the time prescribed for
its payment in the notice of assessment
4. Failure to pay the full or part of the amount of tax shown on any
return required to be filed or the full amount of tax due for
which no return is required to be filed, on or before the date
prescribed for its payment.
● A penalty equivalent to 50% of the tax or of the deficiency tax shall be

imposed in the following cases:
1. In case of willful neglect to file the return within the period
prescribed; or
2. In case a false or fraudulent return is willfully made.
● There is prima facie evidence of a false or fraudulent return when:

1. There is substantial understatement of taxable sales, receipts
or income; or
2. There is substantial overstatement of deductions.
● To be considered substantial:
1. The understatement of sales, receipts or income must be more
than 30% of that declared per return;
2. The overstatement of deductions must be more than 30% of
actual deductions.
a. NOTE: This is how it was phrased in the NIRC, but “actual” may refer to
deductions claimed in the return.
II. Interest (Sec. 249, NIRC)
● In general:
○ Base: Any unpaid amount of tax
○ Rate: Double the legal interest rate for loans as set by the BSP, in
the absence of an express stipulation
■ 6% - current legal interest rate per BSP Memorandum No. 799
series of 2013
■ 12% - legal interest rate on unpaid tax (RR 21-2018)
○ Term: From the date prescribed for payment until amount is fully
paid
● Deficiency ● In no case shall deficiency

○ The amount still due and and delinquency interests be
collectible from the imposed simultaneously.
taxpayer
● Delinquency
○ Failure of the taxpayer to
pay the tax due on the
date fixed by law or
indicated in the
assessment notice or
letter of demand
● Deficiency interest
● Any deficiency in the tax due shall be subject to interest, which shall be
assessed and collected from the date prescribed for its payment until:
1. Full payment of the amount due; or
2. Upon issuance of a notice and demand by the Commissioner or
his authorized representative, whichever comes first.
● Delinquency interest
● In case of failure to pay:
1. The amount of the tax due on any return to be filed; or
2. The amount of the tax due for which no return is required; or
3. A deficiency tax, or any surcharge or interest thereon, on the
due date appearing in the notice and demand of the
Commissioner
● There shall be assessed and collected on the unpaid amount, interest
until the amount is fully paid, which interest shall form part of the tax.
Illustration (RR 21-2018)
● Mr. A has been assessed deficiency income tax of P1,000,000.00,

exclusive of interest and surcharge, for taxable year 2018. The tax
liability has remained unpaid despite the lapse of June 30, 2020, the
deadline for payment stated in the notice and demand issued by the
Commissioner. Payment was made by the taxpayer on February 10,
2021.
○ NOTES:
■ April 15, 2019- prescribed date of filing for 2018 returns
■ June 30, 2020- deadline indicated in the notice and demand
■ February 10, 2021- actual date of payment
Basic tax due- income tax P 1,000,000.00
Add: 25% Surcharge for late payment P 250,000.00
12% Deficiency interest from 145,315.07 395,315.07

04.16.2019 to 06.30.2020 (442
days)
(145315.07= 1000000*0.12*(442/365))
Total amount due, June 30, 2020 P 1,395,315.07
Add: 12% Delinquency interest from 103,215.09

07.01.2020 to 02.10.2021 (225 days;
based on total amount due of
1,395,315.07 as of 06.30.2020)
(103215.09= 1395315.07*0.12*(225/365))
Total amount due, February 10, 2021 P 1,498,530.16

Transitory provision (RR 21-2018)
Period Applicable interest type and

rate
For the period up to Dec. 31, Deficiency and/or delinquency
2017 interest at 20%
For the period Jan. 1, 2018 until Deficiency and/or delinquency
full payment of the tax liability interest at 12%
Illustration (RR 21-2018)
● A Company has been assessed deficiency income tax of

P1,000,000.00, exclusive of interest and surcharge, for taxable year
2015. The tax liability has remained unpaid despite the lapse of June
30, 2017, the deadline for payment stated in the notice and demand
issued by the Commissioner. Payment was made by the taxpayer only
on February 10, 2018.
○ NOTES:
■ April 15, 2016- prescribed date of filing for 2015 returns
■ June 30, 2017- deadline indicated in the notice and demand
■ February 10, 2018- actual date of payment
Basic tax due- income tax P 1,000,000.00
Add: 25% Surcharge for late payment (based P 250,000.00

on basic tax due)
20% Deficiency interest from 04.16.2016 241,643.84 491,643.84

to 06.30.2017 (441 days; based on basic
tax due)
Total Amount Due, June 30, 2017 P 1,491,643.84
Add: 20% Deficiency interest from 07.01.2017 P 100,821.92

to 12.31.2017 (184 days; based on basic
tax due)
20% Delinquency interest from 150,390.39

07.01.2017 to 12.31.2017 (184 days; based
on total amount due on June 30, 2017)
12% Delinquency interest from 01.01.2018 20,106.54 271,318.85

to 02.10.2018 (41 days; based on total
amount due on June 30, 2017)
Total Amount Due, February 10, 2018 P 1,762,962.69

RMC 54-2018
● Amended tax returns

● In an amendment of a return where an additional tax is due, 25%
penalty and 12% interest shall be imposed per amended return based
on the additional tax to be paid.
III. Compromise Penalty
● Amounts collected by the BIR in lieu of criminal prosecution for

violations committed by taxpayers, the payment of which is based on
a compromise agreement validly entered into between the taxpayer
and the Commissioner of Internal Revenue
III. Compromise Penalty
● RMO No. 7-2015 Annex A

○ Contains the updated Schedule of Compromise Penalties
■ Nature of violation
■ Corresponding sections in the NIRC for each violation
■ Criminal penalty imposed
■ Amount of compromise
○ All criminal violations can be compromised except: (Sec. 204, NIRC)

■ Those already filed in court; or
■ Those involving fraud
III. Commonly Used Penalties
Criminal Penalty Amount of Compromise
Section Nature of Violation
Imposed
Sec. 250, Failure to make, file, or none ₱1,000 for each failure to
NIRC submit the complete make, file, or submit the said
quarterly information returns
● Summary Lists of ● Provided that, the
Sales and aggregate amount
Purchases-Local & imposed for such
Imported (SLSP) failures shall not
● Annual Alpha List of exceed ₱25,000 per
Payees and/or calendar year
Employees subjected
to withholding taxes
● Supply correct and For this purpose, failure to
accurate information supply the required
therein at the time or information for each buyer
times required by the or seller of goods and
Tax Code or other services shall constitute a
existing rules and single punishable act or
regulations omission.
Imposed
Sec. 250, Failure to make, file, none ₱1,000 for each information
NIRC submit, or supply correct return, schedule, report,
and accurate information certification, and other
in the: document not made, filed or
● Information returns, submitted or for each record
schedules, reports, not maintained
sworn statements, and ● Provided that, the
other documents aggregate amount
(aside from previously imposed for such
listed) failures shall not
exceed ₱25,000 per
calendar year
● RMC No. 51-2009

○ Who are required to submit SLSs/SLPs?
■ SLSs: All VAT-registered persons with total quarterly sales/receipts
(net of VAT) exceeding ₱2,500,000
■ SLPs: All VAT-registered persons with total quarterly purchases (net
of VAT) exceeding ₱1,000,000
○ When and where are the concerned taxpayers required to submit

SLSs/SLPs?
■ Revenue District Office (RDO) / Large Taxpayers District Office (LTDO)
/ Large Taxpayers Audit and Investigation Division (LTAID)
■ On or before the twenty‐fifth (25th) day of the month following the
close of the taxable quarter
● RMC No. 51-2009

○ If the taxpayer still failed to submit required SLS/SLP after issuance
of official notice despite payment of administrative penalty:
■ Issuance of Subpoena Duces Tecum (SDT): mandates the immediate
submission of aforesaid SLS/SLP
■ If taxpayer complied with the SDT, he must pay an additional ₱10,000
compromise penalty for each non-submission of SLS/SLP
■ If taxpayer still failed to submit after issuance of SDT, the BIR will file a
criminal case against him
● RMC No. 51-2009

○ Acts in connection of Sec. 250 that are instead criminally
punishable:
■ Act of non-submission of SLS/SLP
● Submission of erroneous/incomplete/falsified information in a
particular SLS/SLP
● Failure to make, file, or submit required SLS/SLP in the prescribed
format at the time or times required by tax code or other
regulations (Sec. 255, NIRC)
■ Failure to submit complete schedules for at least:
● For SLS/P/I: two times in a taxable year
● For Annual Alpha Lists of Payees from whom Taxes were
Withheld: two consecutive years
Imposed
Sec. 254, Willful attempt to evade or Fine of not less than Cannot be compromised
NIRC defeat any tax imposed by ₱500,000 but not because it involves fraud
the NIRC or the payment more than
thereof ₱10,000,000 AND
imprisonment of not
less than 6 years but
not more than 10
years
Criminal Penalty
Section Nature of Violation Amount of Compromise
Imposed
Sec. 255, Failure to make, file or Fine of not less If gross sales, earnings,
NIRC submit any return or than ₱10,000 AND receipts; or gross estate or
supply correct imprisonment of not gift:
information at the time less than 1 year but
or times required by law not more than 10 Exceeds But does Amount
or regulations not exceed
years
xxx 50,000 1,000
50,000 100,000 3,000
100,000 500,000 5,000
500,000 5,000,000 10,000
5,000,000 10,000,000 15,000
10,000,000 25,000,000 20,000
25,000,000 xxx 25,000

Criminal Penalty
Imposed
Sec. 255, Failure to withhold or Fine of not less If amount of tax not withheld
NIRC remit withheld taxes at than ₱10,000 AND or remitted:
the time or times imprisonment of not
required by law or less than 1 year but Exceeds But does Amount
regulations not more than 10 not exceed
years xxx 5,000 1,000
5,000 15,000 3,000
15,000 20,000 5,000
20,000 50,000 10,000
50,000 500,000 15,000
500,000 1,000,000 20,000
1,000,000 xxx 25,000

Criminal Penalty
Imposed
Sec. 255, Failure to refund excess Fine of not less If amount of tax not withheld
NIRC taxes withheld on than ₱10,000 AND or remitted:
compensation imprisonment of not
less than 1 year but Exceeds But does Amount
not more than 10 not exceed
years xxx 5,000 1,000
5,000 15,000 3,000
15,000 20,000 5,000
20,000 50,000 10,000
50,000 500,000 15,000
500,000 1,000,000 20,000
1,000,000 xxx 25,000

Criminal Penalty
Imposed
Sec. 255, Misrepresentation as to Fine of not less Cannot be compromised
NIRC actual filing of return or than ₱10,000 but not because it involves fraud
statement or withdrawal more than ₱20,000
of return or statement AND imprisonment
already filed of not less than 1
year but not more
than 3 years
Criminal Penalty
Imposed
Sec. 255, Failure to file and/or pay Fine of not less If amount of tax unpaid:
NIRC any internal revenue tax than ₱10,000 AND Exceeds But does Amount
at the time or times imprisonment of not not exceed
required by law or less than 1 year but
regulation xxx 5,000 1,000
not more than 10
years 5,000 15,000 3,000
10,000 20,000 5,000
20,000 50,000 10,000
50,000 100,000 15,000
100,000 500,000 20,000
500,000 1,000,000 30,000
1,000,000 5,000,000 40,000
5,000,000 xxx 50,000

Criminal Penalty
Imposed
Sec. 264, ● Failure to issue Applicable to all: Second
receipts or sales or Fine of not less than First Offense Offense
NIRC
commercial ₱1,000 but not more
invoices than ₱50,000 AND 10,000 20,000
imprisonment of not
less than 2 years but Subsequent violations shall not be
not more than 4 years subject to compromise.
● Refusal to issue -same- 25,000 50,000

receipts or sales or
commercial Subsequent violations shall not be
invoices subject to compromise.
● If the information 20,000 50,000

-same-
missing is the
correct amount of Subsequent violations shall not be
the transaction subject to compromise.
Criminal Penalty
Imposed
Sec. 264, ● Issuance of Second
receipts that do not -same- First Offense Offense
NIRC
truly reflect and/or
contain all 5,000 10,000
information
required to be Subsequent violations shall not be
shown therein subject to compromise.
● If the duplicate 20,000 50,000

copy of the invoice -same-
Subsequent violations shall not be
is blank but the
subject to compromise.
original copy
thereof is detached
from the booklet
and cannot be
accounted for
Criminal Penalty
Imposed
Sec. 264, ● If the amount of -same- Second
NIRC transaction stated First Offense Offense
in the taxpayer’s
copy is understated - -
vs. amount per
copy of the invoice Not qualified for compromise.
issue to the
purchaser
● For use of -same- 20,000 50,000

unregistered
Subsequent violations shall not be
receipts or invoices subject to compromise.
● For use of 25,000/unit 50,000/unit

unregistered cash -same- Subsequent violations shall not be
register machines subject to compromise.
in lieu of invoices
or receipts
Criminal Penalty
Imposed
Sec. 264, ● For possession or Second
NIRC use of multiple or -same- First Offense Offense
double receipts or
invoices - -
Not qualified for compromise.
● For printing, Fine of not less than 25,000 50,000

causing, aiding or P500,000 but not
abetting : (a) more than Subsequent violations shall not be
invoices/receipts P10,000,000 AND subject to compromise.
without authority of imprisonment of not
the BIR less than 6 years but
not more than 10 - -
● (b) Double or years
multiple sets of Not qualified for compromise.
invoices/receipts
Criminal Penalty
Imposed
Sec. 264, ● Receipts or Second
NIRC invoices not Fine of not less than First Offense Offense
bearing any of the P500,000 but not
ff.: more than 20,000 50,000
○ Consecutive P10,000,000 AND
numbers imprisonment of not Subsequent violations shall not be
○ Name of taxpayer less than 6 years but subject to compromise.
○ Business style
not more than 10
○ Business address
of the person or years
entity to use the
same
○ TIN
○ Name, address,
date, authority no.
of the printer and
inclusive serial no.
of the batch or
receipts printed
Criminal Penalty
Imposed
Sec. 275, ● Violation of any Fine of not more ₱1,000 for each violation
NIRC provision of the than ₱1,000 or
National Internal imprisonment of not
Revenue Code or more than 6 months
any regulation of or both
the Department of
Finance for which
no specific penalty
is provided by law
IV. Stages of Collection
1. Preliminary Collection Letter

2. Final Notice before Seizure Letter
3. Warrant of Distraint/Levy or Garnishment
4. Research of taxpayer properties
5. Notice of Tax Lien and/or Notice of Tax Levy
6. Seizure of properties
7. Auction sale and/or forfeiture of properties
8. Redemption (for levied properties sold in public auction)
9. Filing of civil or criminal action
TIMELINE
V. Distraint on Personal Property (Sec. 205, NIRC)
● Seizure of the government of personal property (tangible or intangible)

to enforce payment of taxes, followed by its public sale if taxes
accruing thereto are not voluntarily paid
● Can be simultaneously pursued with other civil remedies i.e. civil or

criminal action against the taxpayer
● Cannot be availed if the amount of the delinquent tax is less than P100
V. Actual vs. Constructive Distraint (Sec. 206, NIRC)
● Actual Distraint - the government takes possession of the taxpayer’s

personal property and sells the same through public auction to sell the
latter’s unpaid tax liabilities
● Constructive Distraint - the government prohibits the taxpayer from

disposing his personal property to enforce the collection of taxes
V. Constructive Distraint (Sec. 206, NIRC)
● To safeguard the interest of the government, the Commissioner or

authorized representative, may place under constructive distraint, the
personal properties of a taxpayer, who, in the opinion of the
Commissioner:
○ Is retiring from any business subject to duty and tax;
○ Is intending to leave the Philippines;
○ Is removing property or properties therefrom;
○ Is hiding or concealing property or properties; or
○ Is performing any act tending to obstruct the proceedings of the
collecting the duty and tax due, or which may be due
● Taxpayer or any person having possession or control of such property is

required to sign a receipt covering such property distrained
○ Effect: He is obligated to preserve the property, intact and unaltered, and
not to dispose the same in any manner without the express authority of
the Commissioner
● If the taxpayer or the person having possession or control of the property

refused to sign the receipt :
○ Revenue officer effecting the constructive distraint shall prepare a list of
the properties distrained
○ In the presence of 2 witnesses, the officer must leave a copy of the list in
the premises where the property is located
● If the property under constructive distraint is sold, transferred, encumbered, or

disposed in any way, without the knowledge and consent of the Commissioner
:
○ Criminal Penalty: Fine of not less than twice the value of the property sold,
encumbered or disposed of, but not less than P5,000 or imprisonment of
not less than 2 years and 1 day but not more than 4 years, or both
○ Compromise Penalty: 20% of the value of the property
V. Procedure of Distraint (Sec. 207, NIRC)
● Issuance of Warrant of Distraint or Garnishment

○ Document directing the seizure and taking of possession of goods,
chattels, effects, and the personal properties of the taxpayer
○ Upon the failure of the taxpayer to pay his taxes due:
■ The BIR Commissioner or his duly authorized representative
may issue a Warrant of Distraint if the amount involved is in
excess of P 1,000,000
■ The Revenue Officer may issue the warrant if the amount is
P 1,000,000 or less
● Issuance of Warrant of Distraint or Garnishment

○ The warrant must specifically state the following with certainty:
■ Name of delinquent taxpayer
■ Delinquent taxes, duties, and other charges sought to be
collected
■ Time and place of public sale
● Service of Warrant
○ Distraining Officer shall make an account of goods, chattels, effects,
and personal property distrained
○ A signed copy of the account made by the distraining officer should
be left with:
■ GEN: For goods, chattels, effects, or other personal
property
● Owner or person from whose possession were taken; or
● At the dwelling or place of business of such person and
with someone of suitable age and discretion
■ For stocks and other securities
● Taxpayer; and
● President, manager, treasurer, or other responsible
officer of the corporation, company or association which
issued the distrained stocks or securities
■ For debts and credits
● Person owing the debts or having possession or under
his control such credits, or
● His or her agent
○ The warrant is sufficient authority to the person
owing debts or having possession of credits to pay
the Commissioner the amount of such debts or
credits
■ For bank accounts
● Taxpayer; and
● President, manager, treasurer, or other responsible
officer of the bank
○ The bank shall turn over to the Commissioner the
bank accounts sufficient to satisfy the claim of the
government
● Report on the Distraint

○ Distraining Officer must submit a report on the distraint, within 10
days from receipt of warrant
○ Submitted to the Commissioner thru the Revenue District Officer
and Revenue Regional Director
○ Commissioner or his duly authorized representative has the power
to lift the distraint order, subject to the rules and regulations of the
Secretary of Finance
● Report on the Distraint

○ Must contain the ff.:
■ Proof of service, and
■ Detailed account of seized and distrained goods, chattels,
effects, and personal property, including stocks and other
securities, debts, credits, bank accounts, and interests in
and rights to personal property of delinquent taxpayer
● Notice of Sale
○ The Revenue District Officer or his duly authorized representative
shall, upon the recommendation of the Commissioner, cause a
notification of sale in not less than 2 public places in the
municipality or city where the distraint is made
■ Required: Office of the Mayor
○ The notice should specify:

■ Time of sale
● Shall not be less than 20 days after notice to the
owner/possessor of property
■ Place of sale
● Sale of Distrained Property

○ The Revenue District Officer shall sell the goods, chattels, effects, or
other personal property at a public auction
○ Buyer should be the highest bidder for cash or duly licensed
commodity or stock exchanges, provided that such is approved by
the Commissioner
○ For sale of stocks and other securities:

■ RDO must execute a bill of which he shall deliver to:
● Buyer; and
● Corporation, company or association which issued the
stocks

○ For sale of stocks and other securities:
■ Upon receipt of the corporation of the copy of the bill, it
must take necessary actions to reflect the sale in its books:
● Make corresponding entries in books;
● Transfer the stocks and other securities sold in the
name of the buyer; and
● Issue, if required to do so, the corresponding stock
certificates
○ Excess of the proceeds over taxpayer’s dues shall be returned to

the taxpayer

○ Expenses charged to the taxpayer shall only be the actual
expenses of seizure and preservation of the property pending the
sale
■ DOES NOT include the services provided by the local
internal revenue officer
○ Release of Distrained Property before Sale (Sec. 210, NIRC)

■ If the taxpayer paid to the officer all proper charges before
the consummation of the sale
● Purchase of the Government at Sale Upon Distraint

○ If the amount of the bid is not equal to the amount of the tax or is
less than the market value of the articles for sale
○ Commissioner or his duly authorized representative may purchase
the property in behalf of the National Government
○ The Commissioner can resell the purchased property and the

proceeds shall be remitted to the National Treasury and to be
accounted for as internal revenue
● Report on the Sale

○ Report should be submitted to the Commissioner within 2 days
after the sale
○ The RDO who executed the sale must report on the proceedings
in writing and he shall keep a copy of it with him as an official
record
VI. Levy upon Real Property (Sec 207B, NIRC)
● Definition
○ “A proceeding against the real property of the taxpayer, the property to
be sold at a public auction and the proceeds of the sale to be applied to
the payment of the tax”
● Procedure
○ Failure to Pay Delinquent Tax
○ Certificate
○ Levy
○ Advertisement and Sale
○ Redemption
● Limitation of Warrant of Distraint/Levy

○ Distraint/Levy shall not be availed when tax is not more than P100
○ WDL shall not be sent earlier than 90 days from the date the
assessment has become due and demandable
● Exception to 90 day rule- Delinquent taxes may be collected
immediately by distraint or levy in case where
○ Amount shown in the return is not paid on time
○ Individual taxpayer fails to pay 2nd installment of his income tax.
● Failure to Pay Delinquent Tax

○ After the expiration of the time required to pay the delinquent tax,
real property may be levied upon, before, simultaneously, or after
the distraint of personal property belonging to the delinquent.
● Certificate
○ Who prepares?
■ The provincial, city or municipal treasurer, as the case may be
○ What’s in the certificate?
■ Name of the taxpayer
■ Amount of the tax, fee, or charge, and penalty due from him
○ NOTE: The certificate shall operate with the force of a legal
execution throughout the Philippines
● Levy
○ Levy shall be effected by writing upon said certificate the
description of the property upon which levy is made
○ Written notice of the levy shall be mailed to or served upon the (1)
Register of Deeds and upon (2) the delinquent taxpayer
● Levy
○ Within 30 days after execution of distraint, the Commissioner/his
representative shall proceed with the levy
■ Warrant of Levy isn’t issued simultaneously/before warrant of
distraint on property
■ AND personal property isn’t sufficient to satisfy tax delinquency
● Levy
○ Within ten (10) days after receipt of the warrant, a report on any levy
shall be submitted by the levying officer to the Commissioner,
PROVIDED
■ a consolidated report by the Revenue Regional Director may be
required by the Commissioner as often as necessary
■ Commissioner shall have the authority to lift warrants of levy
issued in accordance with the provisions hereof
● Advertisement and Sale

○ Within twenty (20) days after levy, the officer conducting the proceedings
shall proceed to advertise the property or a usable portion
○ Period of advertisement: at least 30 days
○ How effected?
■ Posting a notice at the entrance of the municipal building/city hall*
where property is located
■ AND Publication once a week for at least 2 weeks in a newspaper of
general circulation
● Advertisement and Sale

○ Contents of the Ad
■ The advertisement shall contain a statement of the amount of taxes
and penalties
■ the time and place of sale, the name of the taxpayer against whom
taxes are levied
■ short description of the property to be sold
VI. Levy upon Real Property
● Advertisement and Sale (Sec 213)

○ Contents of the Ad
i. The advertisement shall contain a statement of the amount of taxes and
penalties
ii. the time and place of sale, the name of the taxpayer against whom taxes
are levied
iii. short description of the property to be sold
● At any time before the day fixed for the sale, the taxpayer may discontinue all
proceedings by paying the taxes, penalties and interest.
● The property shall be awarded to the highest bidder
● Forfeiture of Taxpayer’s property

○ When the amounts offered by bidders in two consecutive auction sales fail
to raise a sufficient amount to cover taxpayer’s liability, the government
will forfeit the property, The title to forfeited properties will be
consolidated in the name of the Republic of the Philippines
● Further distraint or levy
○ Further distraint or levy may be made when the proceeds of the auction
sale fail to satisfy the unpaid tax.
● Certificate of Sale (Sec 213)

○ Within five (5) days after the sale, a return by the distraining or levying officer of
the proceedings shall be entered upon the records of the Revenue Collection
Officer
○ RCO, in consultation with RDO, shall make and deliver to the purchaser a
certificate showing the proceedings of the sale (w/ name of purchaser, set out
penalties etc.)
○ If the proceeds exceed costs and claims, the excess shall be paid to the owner.
○ RCO may advance amounts to defray cost of collection by means of the summary
remedies .
● Certificate of Sale (Sec 213)

○ Within five (5) days after the sale, a return by the distraining or levying officer of
the proceedings shall be entered upon the records of the Revenue Collection
Officer
○ RCO, in consultation with RDO, shall make and deliver to the purchaser a
certificate showing the proceedings of the sale (w/ name of purchaser, set out
penalties etc.)
○ If the proceeds exceed costs and claims, the excess shall be paid to the owner.
○ RCO may advance amounts to defray cost of collection by means of the summary
remedies .
● Redemption (Sec 214)

○ Delinquent taxpayer shall have the right to redemption by paying the ff:
i. Public taxes, penalties and interest from the date of delinquency up to sale
ii. Interest on purchase price at the rate of 15% per annum
○ Payment shall entitle payer to the delivery of certificate issued to the purchaser
and a certificate from RDO stating that he has redeemd the property
○ RDO turns over the amount by which such property has been redeemed
○ “The owner shall not, however, be deprived of the possession of the said property
and shall be entitled to the rents and other income thereof until the expiration of
the time allowed for its redemption.”
VII. Failure to Surrender Property Placed Under
Distraint & Levy (Sec. 277, NIRC)
● Criminal Penalty
○ Pay a sum equal to the value of the property or rights not
surrendered (not exceeding the amount of taxes due including
penalties and interest together with costs and interests)
○ Fined in a sum of not less than P5,000 or imprisonment for not less
than 6 months and 1 day but not more than 2 years; or both
● Compromise Penalty (RMO No. 7-2015)

○ P50,000

BA 127 Administrative Remedies

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Remedies of the State

Alalim, Hamir Venn

WHO MAKES THE

ASSESSMENT ● BIR Commissioner or his

REQUISITES 2. Should be in writing

Period of time granted by

Simple neglect Within 3 yrs from:

2. Wherein the return was ﬁled beyond

3. Wherein the return was substantially

Willful neglect 1. Within 10 yrs from discovery of

1. Letter of Authority (LOA)

○ Commences the audit process

○ Authorizes a Revenue oﬃcer (RO) to conduct a tax examination

○ Valid only for a period of 30 days upon issuance

Investigating oﬃce Approving oﬃcial

○ Grants the RO a period of 120 days from receipt of taxpayer of the

○ The RO will proceed with the enumerated documents in the LOA,

○ The taxpayer is given until a second request to present such

○ The RO shall state in the report whether or not the taxpayer is

○ If the taxpayer is not amenable, the RDO, SID, or the Chief of

○ The Informal Conference shall be held within 30 days from receipt

○ Issued to taxpayer or his duly authorized representative after

○ Who are authorized to sign and issue a PAN

○ Taxpayer is given a period for 15 days from receipt of PAN to

○ When PAN is not required:

Thus, a FLD and FAN shall be issued outright.

○ Calls for payment of the taxpayer’s deﬁciency taxes

Motion for Motion for

Noncompliance with the aforementioned shall render the protest VOID.

● The powers and duties of the BIR include:

● The BIR has 5 years following assessment to enforce collection.

● A penalty equivalent to 25% of the amount due shall be imposed in

● A penalty equivalent to 50% of the tax or of the deﬁciency tax shall be

● There is prima facie evidence of a false or fraudulent return when:

● Deﬁciency ● In no case shall deﬁciency

● Mr. A has been assessed deﬁciency income tax of P1,000,000.00,

Add: 25% Surcharge for late payment P 250,000.00

12% Deﬁciency interest from 145,315.07 395,315.07

Total amount due, June 30, 2020 P 1,395,315.07

Add: 12% Delinquency interest from 103,215.09

Total amount due, February 10, 2021 P 1,498,530.16

Period Applicable interest type and

● A Company has been assessed deﬁciency income tax of

Add: 25% Surcharge for late payment (based P 250,000.00

20% Deﬁciency interest from 04.16.2016 241,643.84 491,643.84

Total Amount Due, June 30, 2017 P 1,491,643.84

Add: 20% Deﬁciency interest from 07.01.2017 P 100,821.92

20% Delinquency interest from 150,390.39

12% Delinquency interest from 01.01.2018 20,106.54 271,318.85

Total Amount Due, February 10, 2018 P 1,762,962.69

● Amended tax returns

● Amounts collected by the BIR in lieu of criminal prosecution for

● RMO No. 7-2015 Annex A

○ All criminal violations can be compromised except: (Sec. 204, NIRC)

● RMC No. 51-2009

○ When and where are the concerned taxpayers required to submit

● RMC No. 51-2009

● RMC No. 51-2009

50,000 100,000 3,000