REMEDIES OF THE GOVERNMENT

- these remedies may be pursued singly or simultaneously

1. Tax Lien
- from the moment the tax is due, not from the service of the warrant of distraint
- not valid against a mortgage purchaser or judgment creditor until NOTICE has
been filed by CIR with the RD of the province or city where property is located (the
tax lien shall be annotated on the title)
2. Compromise
- allowed when:
a reasonable doubt as to validity of the claim against the taxpayer exists
financial position of the taxpayer demonstrates a clear inability to pay the assessed
tax (minimum compromise rate equivalent to 10% of the basic assessed tax and the
taxpayer must waive in writing his privilege under theBanking Secrecy Law, such
waiver constituting authority of the CIR to inquire into his bank deposits)
Compromise v. ABATEMENT:
As Effect C: reduce tax liability; A: cancel the entire tax liability
As to when proper C: when there is reasonable doubt as to validity of tax
assessment or the taxpayer is financially incapacitated to pay; A: when there is
unjust assessment (excessive) or when administration andcollection cost do not
justify the amount of tax due
GR: compromise of criminal violations is allowed, EXCEPT:
those already filed in court
those involving fraud
GR: power to compromise is a non-delegable power of CIR, EXCEPT that regional
evaluation board may compromise:
basic taxes less than P500,000
minor criminal violations
NOTA BENE: A compromise penalty is in lieu of a criminal prosecution. If the
taxpayer fails to abide by the compromise arrangement, the government has two
options:
collect the compromised sum; or disregard the compromise and collect the original
tax due.

ADDENDUM: But if the taxpayer does not agree to the compromise,

a collection action by the government for the compromise penalty does not lie. This
is because, by its nature, a compromise is entered into by mutual agreement
between parties and the proposed compromise penalty is neither tax nor an
administrative penalty for tax delinquency.
Q: May a case still be compromised after final judgment?
A: No, because by virtue of the final judgment, the government had already
acquired a vested right.
Q: Can withholding tax be compromised?
A: No. Taxpayer constituted as withholding agent who deducted and withheld
at source the tax on income payment made by him holds the taxes as trust funds
for the government. He is obligated to remit them to the BIR. His subsequent
inability to pay or remit the tax withheld is not a ground for compromise because
the withholding tax is not a tax upon the withholding agent but is only a procedure
for collection of tax.
3. Distraint and Levy
- summary, extra-judicial or administrative enforcement remedies
DISTRAINT v. LEVY: distraint is to personal property while levy is to real property

KINDS OF DISTRAINT:
Actual when delinquency of the payment sets in; there is actual seizure and
distraint
Constructive no actual delinquency ; the owner is prohibited from disposing of his
property; preventive remedy to forestall a possible dissipation of the taxpayers
assets when delinquency takes place
CONSTRUCTIVE DISTRAINT PROPER IF:
taxpayer is retiring from any business subject to tax he intends to leave
the Philippines he removes his property therefrom he performs any act tending to
obstruct the proceedings for collecting the tax due or which may be due from him

PROCEDURE:
Actual Distraint Procedure
commencement of distraint proceedings by CIR (P1M+) or RDO (P1M or less)
service of warrant of distraint
notice of sale of distrained property to the owner or possessor not less than 20 days
from date of sale, and osting in not less than 2 public places in municipality or city
where distraint is made
sale of property distrained by public auction, highest bidder for cash, or with
approval of CIR through duly licensed commodity or stock exchange
EQUITY OF REDEMPTION: payment of all proper charges any time prior to sale

NOTA BENE: A person in possession or having control of property under actual

distraint (or levy) may be penalized if upon demand he fails or refuses to surrender
the goods, EXCEPT in case of judicial attachment or execution.

Constructive Distraint Procedure

commencement of distraint proceedings
service of warrant of constructive distraint
taxpayer is required to sign a receipt covering the property distrained and obligate
himself to preserve the same; if taxpayer refuses to sign the receipt, the revenue
officer shall prepare a list of property distrained and in the presence of two
witnesses leave a copy thereof in the premises

Procedure on Levy of Real Property

service of warrant of levy after the expiration of time required to pay the delinquent
tax
duly authenticated certificate showing the name of the taxpayer and the amounts
of the tax and penalty due from him (operate with the force of a legal execution)

written notice of levy to the Register of Deeds and the delinquent taxpayer, his
agent or manager (if TP is absent), occupant of the property (if no agent/manager);
in case government first effected distraint and it is not enough to cover the tax,
then CIR shall, within 30d after execution of the distraint, proceed with levy
advertisement of the sale within 20d after levy for a period of at least 30d at the
main entrance of the municipal building and other public, conspicuous places and
publication once a week for 3wks in a newspaper of general circulation
public sale of the property under levy at main entrance of the municipal building or
on the premises to be sold
return of sale within 5d after sale
issue certificate of sale; taxpayer is entitled to any residue
in case of no bidder, the property shall be declared forfeited to the government
EQUITY OF REDEMPTION: any time prior to sale
RIGHT OF REDEMPTION: within 1yr from date of sale or forfeiture

4. Civil Action
WHEN:
when a tax is assessed and the assessment becomes final and unappealable
(because TP failed to fileadministrative protest with BIR within 30d from receipt of
assessment)
when an administrative protest is denied or is not acted upon within 180d from
submission of documents and TP fails to appeal to the CTA
WHERE: regular courts, with approval of CIR except if express delegation to Regional
Director; motion to dismiss the complaint should also be filed in the regular courts
HOW: the complaint must be brought in the name of the Government and
conducted by a legal officer of the BIR
5. Criminal Action
WHEN: before lapse of 5 years (prescription period)
WHERE: DOJ

HOW: complaint approved by CIR brought in the name of the Government and
conducted by a legal officer of the BIR
GROUND: prima facie showing of failure to file a required tax return or a willful
attempt to evade taxes; no need for assessment
6. Other Remedies Available
Forfeiture
Suspension of Business Operations
Enforcement of Administrative Sanctions