Is distraint available under the CMTA?
Yes. (Section 1134a, CMTA)
Section 1134.Summary Remedies. —
(A) Distraint of Personal Property. — Upon failure of the person owing any delinquent duty, tax and other charges to pay at the time required, the Commissioner shall seize and distraint the goods, chattels or effects, and the personal property, including stocks and other securities, debts, credits, hank accounts, and interests in and rights to personal property of such persons, in sufficient quantity to satisfy the duty, tax or other charge and the expenses of the distraint and the cost of the subsequent sale.
The officer serving the warrant of distraint shall make or cause to be made an account of the goods, chattels, effects, or other personal property distrained, a copy of which, signed by the said officer, shall he left either with the owner or person from whose possession such goods, chattels, or effects or other personal property were taken, or at the dwelling or other place of business of such person and with
someone of suitable age and discretion, to which list shall be added a statement of the sum demanded and note of the time and place of sale.
Stocks and other securities shall be distrained by serving a copy of the warrant of distraint upon the importer and upon the president, manager, treasurer, or other responsible officer of the corporation, company or association, which issued the said stocks or securities.
Debts and credits shall be distrained by leaving with the person owing the debts or having in his/her possession or under his/her control such credits, or with his/her agent, a copy of the warrant of distraint.
The warrant of distraint shall be sufficient authority to the person owing the debts or having in his possession or under his control any credits belonging to the importer to pay to the Commissioner the
amount of such debts of credits.
Bank accounts shall be garnished by serving a warrant of garnishment upon the importer and upon the president, manager, treasurer, or other responsible officer of the bank Upon the receipt of the warrant of
garnishment, the bank shall turn over to the Commissioner so much of the bank accounts as may be sufficient to satisfy the claim of the government.
A report on the distraint shall, within ten (10) days from receipt of the warrant, be submitted by the Commissioner to the Secretary of Finance: Provided , That the Commissioner shall have the power to lift such order of distraint subject to the rules and regulations promulgated pursuant to this Act.
48. It is clear under Section 207(b) that the BIR is allowed to resort to levy. Is levy available under the LGC?
Yes. (Section 176, LGC)
Section 176. Levy on Real Property. - After the expiration of the time required to pay the delinquent tax, fee, or charge, real property may be levied on before, simultaneously, or after the distraint of personal property belonging to the delinquent taxpayer.
Is levy available under real property taxation?
Yes. (Section 258, LG C)
Section 258. Levy on Real Property. - After the expiration of the time required to pay the basic real property tax or any other tax levied under this Title, real property subject to such tax may be levied upon
through the issuance of a warrant on or before, or simultaneously with, the institution of the civil action for the collection of the delinquent tax.
Is levy available under the Old Customs Code?
No.
Is levy available under the CMTA?
Yes. (Section 1134b, CMTA)
Section 1134.Summary Remedies. — x x x
(B) Levy on Real Property. — After the expiration of the period within which to pay the duty, tax and other charges as prescribed in this section, real property may be levied upon, before, simultaneously, or after the distraint of personal property belonging to the importer. To this end, the Commissioner or the duly authorized representative shall prepare a duly authenticated certificate showing the name of the importer and the amounts of the duty and tax and penalty due. The certificate shall operate with the force of a legal execution throughout the Philippines.
The levy shall be effected by writing upon the certificate a description of the property on which levy is made. At the same time, written notice of the levy shall be mailed to or served upon the register of deeds of the province or city where the property is located and upon the importer, or if the latter is not in the Philippines, upon the agent or the manager of the business from which the liability arose, or if there be none, to the occupant of the property in question.
In case the warrant of levy on real property is not issued before or simultaneously with the warrant of distraint on personal property, and the personal property of the importer is not sufficient to satisfy the duty and tax due, the Commissioner or a duly authorized representative shall, within thirty (30) days after execution of the distraint, proceed with the levy on the real property of the importer.
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 , That the Commissioner may lift such warrants of levy issued, subject to the rules and regulations promulgated pursuant to this Act.
49. What are the distinction between distraint and levy? There are four or five. Mention two significant distinctions.
1) Distraint involves personal property. Levy involves real property. (Already a given!) 2) Distraint may be actual or constructive. There is no such thing as constructive levy.
3) Distraint merely requires posting. Levy requires publication.
50. How is constructive distraint effected?
The constructive distraint of personal property shall be effected by requiring the taxpayer or any person having possession or control of such property to sign a receipt covering the property distrained and obligate himself to preserve the same intact and unaltered and not to dispose of the same, in any manner whatever, without the express authority of the Commissioner. (Section 206, NIRC)
51. When can the BIR resort to constructive distraint?
To safeguard the interest of the Government, the Commissioner may place under constructive distraint the property of any taxpayer:
1) when he is retiring from any business subject to tax, 2) when he is intending to leave the Philippines,
3) when he is intending to remove his property therefrom or to hide or conceal his property, or 4) when he is intending to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him. (Section 206, NIRC)
52. Is notice of sale still required to be served on the delinquent taxpayer? Did you not learn that publication is a notice to the whole world? Read Section 213, para. 4 of the NIRC.
Yes, because the taxpayer cannot exercise his right under Section 213 to prevent the sale if he is not informed of such sale. What you learned that publication is a notice to the whole world does not apply here because of that provision.
SEC. 213.
Advertisement and Sale.
– x x xAt any time before the day fixed for the sale, the taxpayer may discontinue all proceedings by paying the taxes, penalties and interest.
Assignment:
We will review what you have learned in protest and refund. I have lengthily discussed refund in the book because it always comes out in the bar. Read:
Protest – pp. 218-225 (mentioned seven cases, five of which came out in the bar)
Refund – pp. 225-242 (mentioned 35 cases, all of which came out in the bar)
CTA – pp. 243-263 (mentioned 18 cases in CTA, 2/3 of which came out)
Appendix B – New Revenue Regulations
Cases which will answer this bar question: what may constitute decisions of the BIR appealable to the CTA?
1. Republic v. Lim Tian Teng Sons, 16 SCRA 584 2. Surigao Electric v. CA, 57 SCRA 523
3. Commissioner v. Ayala Securities Corporation, 70 SCRA 204
5. Commissioner v. Advertising Associates, 133 SCRA 765 6. Commissioner v. Algue, 158 SCRA 9
7. Commissioner v. Union Shipping Lines, 185 SCRA 547 8. Commissioner v. Isabela Cultural Corporation, 361 SCRA 71 9. Oceanic Wireless Network, Inc. v. Commissioner, 477 SCRA 205 10. Allied Banking Corporation v. Commissioner, 611 SCRA 692 I will ask you one or two liner on the jurisprudential ruling of the court.
February 17, 2018 TAX REMEDIES
I declared a ceasefire last week. Today is a war.
I am just here to guide you. I hope you read your assignment.
Comparative Review of the Taxpayer’s Remedies
Local treasurer Local treasurer Commissioner of Customs
REFUND Section 196 Section 253 Section 193
Prescriptive
Local treasurer Local treasurer Commissioner of Customs
Protest under NIRC Where do you file? BIR
What do you file? Request for reinvestigation or reconsideration
When do you file? Within 30 days from receipt of the final assessment notice or final letter of demand
Protest under LGC, Section 195 Where do you file? Local treasurer
When do you file? Within 60 days from receipt of the local tax assessment
Protest under RPT, Section 252 Where do you file? Local treasurer
When do you file? Within 30 days from the date of payment of taxes Payment under protest is required.
Check the recent case on the SC website regarding the definition of payment under protest.
RESEARCH: Payment under protest and appeal to the Local Board of Assessment Appeals are
"successive administrative remedies to a taxpayer who questions the correctness of an
assessment."(City of Lapu-Lapu v. Phil. Economic Zone Authority, G.R. Nos. 184203 & 187583, [November 26, 2014])
Protest under the old Tax Code, Section 2308 Where do you file? Collector of Customs
When do you file? Within 15 days from the date of payment of taxes Payment under protest is required.
Protest under the CMTA, Section 1106
Where do you file? Commissioner of Customs
When do you file? Within 15 days from the date of payment of taxes Payment under protest is also required.
Section 228 of the NIRC is not complete. It is clarified by Appendix B of your book (Revenue Regulations)
What must be protested? The final assessment notice or final letter of demand Is notice of informal conference under Rev. Reg. 12-1999 required? YES
Is notice of informal conference under Rev. Reg. 18-2013 required? NO LONGER REQUIRED.
Is preliminary assessment notice required? Yes (CIR v. Metro Star Superama, 637 SCRA 633, page 223 of the book)
Why? Due process requires PAN.
What is the prescriptive period to respond? 15 days from receipt of PAN
When there is no response given within 15 days, what will happen? The BIR will issue the FAN/FLD.
What is the difference between request for reinvestigation and request for reconsideration?
Request for reinvestigation Request for reconsideration
Basis Newly discovered evidence Existing records
Suspension of prescriptive period
Allowed (Section 228) Not allowed
(Section 223)
What is the case explaining why request for reinvestigation suspends the running of prescriptive period?
CIR v. Philippine Global Communication, p.220 What is the reason?
If both suspend the running of prescriptive period, then an erroneous assessment may never prescribe.
General rule: PAN must first be sent before FAN Exceptions: (Section 228, pp.311-312)
1. finding based on mathematical error
2. deficiency tax has been withheld (such tax discrepancy brought about or resulted in tax withheld because there is a difference between tax withheld and tax actually remitted
3. creditable withholding tax for corporate taxpayers (carried over) 4. excise tax on excisable articles has not been paid
5. locally purchased or imported goods such as vehicles and capital equipment
Hypothetical question (analyze, go outside the box):
What is the purpose of PAN? To rectify the amount. The taxpayer is given chance to explain why PAN is erroneous.
Why are there 5 exceptions? The ratio decidendi is that in the 5 exceptions, the BIR can easily rectify the assessment.
Who can issue PAN? BIR and its duly authorized representative
Who are the duly authorized representatives? Regional Revenue Directors
Explain the 60-day period. p. 314
It is required in request for reinvestigation where relevant supporting documents shall be submitted. This does not apply to reconsideration.
Memorize definitions.
Explain the 180-day period. p. 315
It is the period of inaction on the part of BIR. The taxpayer will have the option to either file a petition for review under Rule 42 within 30 days after the lapse of 180-day period, or
await the final decision
of the Commissioner of Internal Revenue.If there is a decision, the taxpayer may opt to appeal to the CTA within 30 days from receipt of the decision or file a request for reinvestigation within 30 days from receipt
Two cases on the term “await final decision” are decided by the Supreme Court. With all due respect, this is a judicial legislation. The taxpayer must wait final decision. It is not in the law. Do not criticize this.
You might not pass the bar.
So let’s have tax refund. In comparative rules, where to file? Then prescriptive period? Let’s have National Internal Revenue Code.
NIRC is 2 years from the date of payment so it’s available in the NIRC under sec. 229 Let’s go to Local Government taxation. Is there a remedy available to taxpayer?
Sec. 196
Where do you file?
The Local Treasurer Prescriptive Period?
2 years from the date of payment or from the time he is entitled thereto.
You don’t find that in the NIRC. Under the NIRC sec. 229 is from the date of payment. Here (LGC) is from the date of payment or from the time he is entitled thereto. I am talking about Sec. 196 of RA 7160 of Local Government Taxation.
What do you think the difference or its legal implications “from the time he is entitled thereto”? In sec.
229, is the doctrine of supervening cause or event applicable?
How about the refund of Local government tax? Is that applicable?
Yes because of that provision “from the time he is entitled thereto.”
For instance, local tax was paid in 2016. In 2017, there was finding to effect that this taxpayer was exempt. What’s the reckoning date of the 2 -year period? 2016 or 2017?
2017 is from the time he is entitled thereto. But if it were a revenue tax, you should count that from the date of payment.
Let’s have Real Property Taxation. Available to refund?
Yes, Sec. 253.
The same information. Prescriptive period?
2 years from the date of payment or from the time he is entitled thereto. Therefore, the doctrine of supervening cause applies.
Please go to Customs duties. Under the Tariff and Customs Code, It is silent on the prescriptive period.
There are provisions there from Sec. 1700 to sec. 1708 on refund but no prescriptive period must provide in such refund.
Let’s find to check whether under the Customs Modernization Tariff Act provides on prescriptive period.
What is your guess?
Refund is likewise an available remedy. Prescriptive period is on Sec. 193, RA 10863
It is 12 months from the date of payment of duties and taxes. This is a new prescriptive period. So, it’s 2 -2-2 except customs duties.
So, its 12 months or 1 year. What is the difference between 12 months and 1year?
Art. 13 of New Civil Code provides that “It shall be understood that years are of three hundred sixty -five days each”
In Administrative code, A year is counted 12 months regardless of the number of the days in each month.
The law says 12 months from the payment of duties and taxes.
So Let’s us focus on Sec. 229, we can review here a lot of jurisprud ence. I hope you recall. I think I cited 38 decisions of the court from page 225 to 242. Some of them has already asked in the bar exam. With that number of cases, this serve as a notice of you that this is the most favorite bar question next to protest.
Bar Question. Here in NIRC, you need to file so-called refund, what are the requisites?
First, it must be in writing. Written claim for refund.
Second, it must contain a categorical demand. What is that? You are requesting for a refund. Therefore, demand for reimbursement of taxes illegally, erroneously, unlawfully or excessively assessed or collected.
Third, it must file 2 years from the date of payment.
SE C. 229. Recovery of Tax E rr oneously or I llegally Collected
. - no suit or proceeding shall bewithout authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
cralaw
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment:
Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. (Sec. 229, RA 8424)
It is clear that the doctrine of supervening cause does not apply and the 2 year prescriptive period lies from the date of payment.
In Sec. 229 has a question who may file such refund? That’s the deficienc y there, then who shall file such refund?
Of course, it is the taxpayer.
(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction.
No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty:
Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund… (Sec. 204(C), RA 8424)
Taxpayer was mentioned there. Was Taxpayer mentioned in Sec. 229?
Bar Question. I think it was asked 5 times already. Be a withholding agent file a written claim for refund?
In 1988, there were two conflicting decisions of the Court, The Proctor & Gamble Case and the Wander Case. In the Wander Case, Yes, but in Proctor & Gamble Case, No. But has reconciled by the Supreme Court.
What is the prevailing jurisprudence? Does the withholding agent has a legal personality to files a written claim for refund? Reasons.
Yes,
We focus as the agent of the government. The withholding agent is not only the agent of the government.
It is also an agent of the taxpayer. As an agent of the taxpayer, the withholding agent has two fold duties to pay the tax and to file the return. So with that obligation to pay the tax, the withholding agent is technically considered as taxpayer. Withholding agent has the legal obligation to file the return of the taxpayer to pay the tax of the taxpayer as such withholding agent technically considered as taxpayer. That is the jurisprudence there.
Now from the date of payment, what do you mean by payment? That case that I cited to your book on page 225 on the case of Commissioner vs. TMX Sales 25 SCRA 184 what asked not less than 5 times in
Now from the date of payment, what do you mean by payment? That case that I cited to your book on page 225 on the case of Commissioner vs. TMX Sales 25 SCRA 184 what asked not less than 5 times in