so , pt tones ~Teeir A q TAXATION 2 III-D Hed wa - 10% 2" Semester AY 2017 - 2018 ‘ of UP College of Law & 1 Prof. Othello C. Carag Witten 30% eras Fog) - 36° Part 1: ESTATE AND DONOR’S TAX = Na ~ 28" ESTATE TAX References: 1. National Internal Revenue Code of 1997. Mandaluyong City: National Book Store, July 2009 Edition. 2. De Leon, Hector S. and De Leon, Hector M., Jr. The Law on Transfer and Business Taxation. ‘Manila: Rex Book Store, Inc., 2009. 3. Revenue Regulations No. 02-03 dated 16 December 2002. I. BASIC PRINCIPLES OF ESTATE TAX A. Estate Tax Defined B. Nature and Purpose of Estate Tax C. Time of Transfer of Properties Case(s): p Lorenzo v. Posadas (64 Phil. 353) D. Governing Law - statute in force at the time of death of the decedent I. DETERMINATION OF GROSS ESTATE [Sec. 85, NIRC; Rev. Regulations No. 02-03 (RR 02-03)] A. Classification of Decedents (Sec. 85) 1. Citizen and Resident - Resident Citizen (RC), Non-resident Citizen (NRC) and Resident Alien (RA) 2. Non-resident Alien (NRA) B. Composition of Gross Estate, in General (Sec. 4, RR 02-03) 1. RC, NRC, RA - all properties, real or personal, tangible or intangible, wherever situated 2. NRA- only properties situated in the Phil., except for intangible property which is subject to the rule on reciprocity 1. Rule on Reciprocity (Sec. 104, NIRC) C. Concept of “Residence” for Estate Tax Purposes D. Items to be Included in determining Gross Estate (Sec. 85 (A) to 85(G), NIRC)—— 1. Decedent's interest Prior interests Transfers in contemplation of death »ewe Revocable transfers Transfers with retained interest Property passing under a general power of appointment Transfers for insufficient consideration 2S Ne Proceeds of life insurance E. Specific Items to be included in Gross Estate (Sec. 104, NIRC) F. Valuation of the Gross Estate (Sec. 88, NIRC; Sec. 4 RRO2-03) — ~ how fe corp bet wel Mm. DETERMINATION OF NET ESTATE/ALLOWABLE DEDUCTIONS FROM GROSS ESTATE (Sec. 86, NIRC) A. Net Estate of Decedent who is either Citizen or Resident of the Philippines (RC, NRC, RA) (Sec. 86(A), NIRC) - Value of estate shall be determined by deducting from the value of gross estate: 1. Expenses, losses, indebtedness, and taxes (ELIT) (Sec. 6(A)(1), RR 02-03) ye Seon, Woe i. Funeral expenses - LOWER between actual and 5% of gross estate Ceiling: 200,000.00 *% Gow Bh ii, Judicial expenses of the testamentary and intestate proceedings Rules 81 and 86, Revised Rules of Court iil, Claims of deceased against insolvent persons iv. Casualty losses v. Claims against the estate 1. Requisites for deductibility (Sec. 6(A)(3)(i), RR 02-03) 2. Substantiation requirements (Sec. 6(A)(3)(ii), RR 02-03) = vi. Unpaid mortgages vii. Taxes 2. Property Previously taxed (Vanishing Deduction) i, Requisites for Vanishing Deduction 3. Transfers for Public Use 4, Family Home (Sec. 6(D), RR 02-03)1. Ceiling on Value of Family Home (21 Million) ii, Definition of family home/When deemed constituted iti, Beneficiaries of a Family Home iv. Conditions for deductibility 5. Standard Deduction (Sec. 6(E), RR 02-03) 6. Medical Expenses (Sec. 6(F), RR 02-03) Ceiling: (R500,000.00) 7. Amounts received by heirs under Republic Act No. 4917 8. Net Share of Surviving Spouse in the Conjugal Partnership or Community Property + 4. Rehrenwd Pay / Copanhon Prete B. Net Estate of Decedént who is a Non-resident Alien of the Philippines (NRA) (Sec. 86(B), NIRC; Sec. 7, RR 02-03) 1. ‘Value of estate shall be determined by deducting from the value of gross estate: Expenses, loses, indebtedness, and taxes (ELIT) fi, Property Previously Taxed ili, Transfers for Public Use iv. Net Share of Surviving Spouse in the Conjugal Partnership or Community Property i as 2. Condition for deductibility (Sec. 86(D), NIRC) IV. EXCLUSIONS FROM GROSS ESTATE/EXEMPTIONS OF CERTAIN ACQUISITIONS AND TRANSMISSIONS ‘A. Capital of Surviving Spouse Sec. 85(H) of NIRC Arts. 148, 150, 201, Civil Code Arts. 91, 92, 109, Family Code Proceeds of life insurance where designation of beneficiary is irrevocable (Sec. 85(E), NIRC) C. Proceeds of life insurance where decedent was the insured but not the policy owner. D. Exemptions of Certain Acquisitions/Transmissions (Sec. 87, NIRC) . GE < 2200,000.00; Merger of the usufruct in the owner of the naked title; Transmission of inherited property from the fiduciary heir/ legatee to fideicommissary; iv, Transmission of inherited property from the first heir/ legatee in favor of another beneficiary; and v. Bequests, devises, legacies or transfers to social welfare, cultural and charitable institutions.E. Exemptions under Special Laws Vs COMPUTATION OF ESTATE TAX A. Tax Rate (Sec, 84, NIRC) 1. Tax Credit for Estate Taxes paid to a Foreign Country (Sec. 86(E), NIRC) VI. Filing of Notice of Death/Filing of Returns/Payment of Estate Tax A. Requirement of Filing for Notice of Death (Sec. 89, NIRC) > within 2 months after death of decedent B. Estate Tax Returns 1, Requirements 2. Time for Filing 3. Extension of Time to File 4. Place of Filing Return Sec. 90, NIRC Secs. 9(A), 9(B), 9(C), RR 02-03 C. Payment of Estate Tax 1, Time for Payment 2. Extension of time to pay estate tax 3. Payment of estate tax by installment 4, Liability for payment Sec. 91, NIRC Secs. 9(D), 9(E), 9(F), 9(G), RR 02-03 - 7 ten DONOR’S TAX A BASIC PRINCIPLES OF DONOR’S TAX A. Concept of Donor’s Tax isdge ys. CIR (145 SCRA 292) B. Nature of Donor’s Tax C. Purpose of Donor's Tax D. Requisites of a Valid Donation 1, Capacity of donor (Art. 735, New Civil Code) 2. Donative intent 3. Delivery 4. Acceptance (Art. 736, New Civil Code)LL ——— E, Transfers which may be constituted as donation 1, Sale / exchange / transfer of Property for less than adequate and full consideration (Sec. 100, NIRC) ~ emp Gee Hd) il. Condonation / remission of debt ill, Renunciation of Inheritance * Exception F. Law Governing imposition of Donor’s Tax (Sec. 11, RR 02-03) Ml, DETERMINATION OF GROSS GIFT ‘A. Classification of Donor 1 a Residents - Resident Citizen (RC), Non-resident Citizen (NRC) and Resident Alien 2. Non-resident Alien (NRA) B. Composition of Gross Gift 1. RC, NRC, RA ~ Real Property located within and without the Philippines ~ Tangible personal property located within & without the Philippines ~ Intangible personal property located within & without the Philippines (See 104, NIRC) 2. NRA ~ Real Property located within Phitippines + Tangible personal property located within Philippines ~ Intangible personal property located within Philippines unless there's reciprocity (See 104, NIRC) = Rule on Reciprocity C. Exemptions of Gifts from Donation Tax 1. Gifts made by Residents (RC, RA) (Sec. 101(A), NIRC) i. Services / gifts made on account of marriage by parents to children + first 210,000 (reve in TRAIN Lu) ii. Gifts made to or for the use of national government fii, Gifts in favor of educational / charitable institution Condition: not more than 30% of the gift will be used by donee for admin purposes 2. Gifts Made by a Non-resident Alien (NRA) (Sec. 101(B), NIRC)i. same as (ii) above i, same as (iii) above 3. Exemptions from donor's tax under Special Laws D. Valuation of Gifts made in Property (Sec. 102 and 88(B), 1. FMV at time of gift a NIRC) Real Property = Higher of FMV determined by CIR or FMV fixed by provincial and city ‘assessors, whichever is higher, 3. Valuation of Particular Gifts i, Personal Property if. Real Property iii. Cash F. Computation of Donor’s Tax 1. Person tiable = Donors 2. Tax Basis (Sec. 99, NIRC; Sec, 11, RR 02-03) 3. Tax Rates (Sec. 99(A) and (B), NIRC) i. graduated if donee is not a stranger as defined in Sec, 998) GL fares gy aioe fi, 30% of net gifts if donee is stranger (rene 4) eAw) a. who is a stranger 4, Computation of Tax (Sec. 12, RR 02-03) 4. cumulative basis over a period of one (1) calendar year 5. Tax Credit for Donor's Taxes Paid to a Foreign Country (Sec. 101(C) G. Returns / Payment (Sec. 103, NIRC / Sec. 13, RR 02-03) 1. Requirements 2, Time / Place of Filing & Payment 4, Time of Filing - 30 days after date of gift is made / completed Payment coincides with the filing of return, Place of Filing /Payment a. RC, NRC, RA - Residence / Domicile of donor b. NRA - Philippine Embassy / Consulate where he is domiciled at the time of transfer foe 0 — 6Part 2: fe, ‘art 2: BUSINESS TAXES National | Edition eternal Revenue Code of 1997, ‘Mandaluyong City: National Book Store, Mamalateo, Victorino ¢., Value Added Tax. Quezon City: Kalayaan Press, 2007, 3. De Leon, Hector s, and De Manila: Rex Book Store, ne ect ‘M. Jr. The Law on Transfer and Business Taxati n. 2005, as amended by RR No. 4-07 (“1 1 July 2009 Revenue Regulations No, 16. RR 16-05, as amended”) ALUE-ADDED TAX gar ppuke |. NATURE AND CHARACTERISTICS OF VAT ey en Popp] Potty ¢ Heong A. Tax on Value added teput 4 goede inp q gods B. Sales Tax C. Tax On Consumption (Sec. 4.105-2, RR 16-05, as amended) D. Indirect Tax 1. Impact of Tax ~ Sllin 2. Incidence of Tax ~ bya Contex Corp. vs. Commissioner of Internal Revenue (433 SCRA 376) E. Tax Credit Method (pt ~ oulpst = amar) F. Destination Principle CIR v. Toshiba Information Equipment (Phils.) (466 SCRA 211) ll. PERSONS LIABLE TO VAT (Sec. 105, NIRC; Sec. 4.105-1, RR 16-05, as amended) A. Person (Sec. 4.105.1, RR 16-05, as amended by RR 04-07) B. Taxable Person (Sec. 4.105.1, RR 16-05, as amended) Magers £0 any Person liable to VAT whether registered or registrable according to Sec. 236 of the NIRC. 2. where the amount of gross receipts exceed the threshold fixed by law [Sec. 109 (V), NIRC] . In the course of trade or business (Sec. 4.105-3, RR 16-05, as amended) - Notwithstanding the rule on regularity - the Philippines are subject to VAT. Services performed by non-resident foreign persons in Commissioner of internal Revenue vs. COMASERCO (329 SCRA 237) A CIR v. Magsaysay Lines (497 SCRA 63) IIL, VAT ON SALE OF GOODS OR PROPERTIES (Sec. 106, NIRC)TTT - —_ rw A. Rate and Tax Base Rates - 12% oF 0% 2. Tax Base - Gross selling price (2) Meaning of Gross Selling Price (Sec. 4.106-4, RR 16-05, as amended) China Banking Corp. vs. Court of Appeals (403 SCRA 634) (©) Allowable deductions from Gross Selling Price (Sec. 106(D), NIRC; Sec. 4 106-9, RR 16-05, as amended) Requisites for Taxability of sale of goods and/or properties: 1 In general Sale, barter or exchange of goods or properties (c) Meaning of term “goods or properties” (Sec. 4.106-2, RR 16-05, as amended) 2. In the course of trade or business (Sec. 4.106-3, RR 16-05, as amended) 3. Goods and properties are located within the Philippines and consumed therein 4. Sale of goods or properties not exempt from VAT under Sec. 109 of NIRC C. Sale of Real Properties (Sec. 4.106-3 , RR 16-05, as amended) * D. Zero-rated Sales of goods or properties (Sec. 106 (A), NIRC) 1, Zero-rated Sales, defined (Sec. 4.106-5 1® par., RR 16-05, as amended) 2. Sales subject to 0% VAT (a) Export Sales (Sec. 4.106-5 (a), RR 16-05, as amended) (b) Foreign Currency Denominated Sales (Sec. 4.106-5 (b), RR 16-05, as amended) (c) Sales to tax-exempt entities (Sec. 4.106-5 (c), RR 16-05, as amended) 3. Differentiated from Effectively Zero-rated Sales of goods and properties (Sec. 4.106-6, RR 16-05, as amended) -» #%%E. Transactions deemed Sale (Sec. 106(B), NIRC; Sec. 4.106-7, RR 16-05, as amended) 1. Transfer, use or consumption not in the course of business of goods/properties originally intended for sale or use in the course of business 2. Distribution or transfer to shareholders, investors or creditors 3. Consignment of goods if actual sale is not made within 60 days from date of consignment 4, Retirement from or cessation of business with respect to inventories on hand F. Change or Cessation of Status as VAT-registered person (Sec. 106(C), NIRC; Sec. 4.106-8, RR 16-05, as amended)a 1+ subject to VAT ° goods or properties originally intended for sale or use in business and capital goods existing ay the tf: (a) Chany tus to VAT-exempt status. (0) Approval of request for cancellation of a registration due to reversion to exempt status (c) Approval of request for cancellation of registration due to desire to revert to exempt status after lapse of 3 consecutive years, (4) Approval of request for cancellation of registration for failure to meet threshold amount (ermraos oeguet registration for failure to meet youn 2. not subject to VAT (a) Change of controt of a corporation (b) Change in the trade or corporate name (c) Merger or consolidation of corporations «1 lV: VAT ON IMPORTATION (Sec, 107, NIRC; Sec. 4,107-1, RR 16-05, as amended) V._ VAT ON SALE OF SERVICES AND USE OR LEASE OF PROPERTIES (Sec. 108, NIRC; Sec. 4,108-1, RR 16-05, as amended) A. Tax Rate - 12% or 0% B, Tax Base - Gross Receipts 1, Gross Recetpts, Defined (Sec, 108, NIRC; Sec. 4.108:4, RR 16-05, as amended) 2. Constructive Receipt C, Requisttes for Taxability of Sale of Services 1, Sale or Exchange of services (a) Meaning of “Sale or exchange of services” (Sec. 4.108-2, RR 16-05, as amended) Commissioner of internal Revenue vs. COMASERCO (329 SCRA 237) 2, Persons selling services liable to VAT (Sec, 4.108-2, RR 16-05, as amended; Sec. 4.108-3, RR 16- 05, as amended) 3. Service performed in the Philippines 4, Service performed in the course of trade or business 5. Seller of service who actually or constructively receives the fee or remuneration 6. Service 1s not exempt from VAT D, Zero-Rated Sale of Services (Sec. 108(B), NIRC) 1, Tero-rated Sales, defined (Sec, 4.108-5 1" par., RR 16-05, as amended)2. Services subject to 0% VAT (Sec, 4,108-5 (b)(1) - (7), RR 16-05, as amended) 3. Differentiated from Effectivel ly Zero-rated Sales of goods and properties (Sec. 4.108-6, RR 16-05, as amended) VI. VAT EXEMPT TRANSACTIONS (Sec. 109, NIRC) A. Vat Exempt Transactions, in general (Sec. 4.109-1 (A), RR 16-05, as amended) B. Exempt Transactions, Enumerated (Sec. 4.109-1 (B), RR 16-05, as amended) VII. COMPUTATION OF VAT A. Input Tax & Output Tax, defined (Sec. 110, NIRC; Sec. 4.110-1, RR 16-05, as amended) B. Sources of Input Tax - creditable against output tax (Sec. 110, NIRC; Sec. 4.110-1 (a) - (g), RR 16-05, as amended) 1, Purchase or importation of goods (a) For sale; or (b) For conversion into or intended to form part of a finished product for sale, including Packaging materials; or (c) For use as supplies in the course of business; or (d) For use as raw materials supplied in the sale of services; or (€) For use in trade or business for which deduction for depreciation or amortization is allowed under the NIRC. i, Claim for input tax on depreciable goods (Sec. 4.110-3, RR 16-05, as amended) 2. Purchase of real properties for which VAT has actually been paid 3. Purchase of services in which VAT has actually been paid 4, Transactions “deemed sale” under Sec. 106 (B) of the NIRC 5. Transitional input tax under Sec. 111(a) of the NIRC (Sec. 111 (A), NIRC; Sec. 111-1(a), RR 16-05, as amended) 6. Presumptive input tax under Sec. 111(b) of the NIRC (Sec. 111 (B), NIRC; Sec. 111-1 (b), RR 16: 05, as amended) 7. Transitional input tax credits allowed under the transitory and other provisions of the Regulations. C. Persons who can avail of the input tax credit (Sec. 4110-2, RR 16-05, as amended) D. Determination of Output/Input Tax; Vat Payable; Excess Input Tax Credits 1, Determination of Output Tax 2. Determination of Input Tax Creditable (Sec. 4.110-5, RR 16-05, as amended)3. Allocation of Input Tax on Mixed Transactions (Sec. 4.110-4, RR 16-05, as amended) 4. Determination of the Output Tax and VAT Pay 'yable and Computation of VAT Payable or Excess Tax Credits (Secs. 4.110-6 and 4.1 10-7, RR 16-05, as amended) E. Substantiation of input tax credits (Sec, 4.110-8, RR 16-05, as amended) F. Refund or Tax Credit of Excess Input Tax (Sec, i 2 112, NIRC, Sec. 4.112-1, RR 16-05, as amended) Who may claim for refund/apply for issuance of Tax Credit Certificate (TCC) Period to file claim for Fefund/apply for issuance of TCC 3. Manner of giving refund Intel Technology Phil., nc. vs. Commissioner Of internal Revenue (522 SCRA 657) 4R.A. Philippines, inc. vs. Commissioner OF Internal Revenue. C.T.A. Case No. 128. January 15, 2007 Vill. ‘Transactions subject to Special Rules A. Transactions of Foreign Governments B. Transactions with PEZA/SBMA/CEZA-registered entities 'X. Compliance Requirements A. Registration (Sec. 236 (G)- (H), NIRC; Sec. 9.236-1 -9,236-6, RR 16-05, as amended) 1. Mandatory (Sec. 236 (6), NIRC) 2. Optional (Sec. 236 (H), NIRC) B. Invoicing and Accounting Requirements (Sec. 113, NIRC; Sec. 4.113-1 1. Invoicing Requirements, In General (Sec. 4.113-1, RR 16-05, as amended) 2. Invoicing and Recording Deemed Sale Transactions (Sec. 4.113-2, RR 16-05, as amended) 3. Consequences of Issuing Erroneous VAT Invoice or VAT Official Receipt (Sec. 4.113-4, RR 16-05, as amended) C. Filing of Return and Payment of VAT (Sec. 114(A) -(B) , RR 16-05, as amended) D. Withholding of Creditable VAT (Sec. 114(C), NIRC; Sec. 4.114-2, RR 16:05, as amended) E. Administrative and Penal Sanctions (Sec. 115, NIRC; Sec. 4.115-1, RR 16-05, as amended) uPart 3: TAX REMEDIES UNDER THE NIRC References: 1. National Internal Revenue Code of 1997. Mandaluyong City: National Book Store, July 2009 Edition. 2. Mamalateo, Victorino, C., Tax Rights and Remedies, Quezon City: Kalayaan Press, 2005. |, TAXPAYER’S REMEDIES ‘A. ADMINISTRATIVE PROTEST - TAXPAYER'S REMEDY BEFORE PAYMENT 1. ASSESSMENT OF INTERNAL REVENUE TAXES Sec. 228, NIRC Revenue Regulations No. 12-99 (RR 12-99) (a) Assessment Process (RR 12-99), General i, Tax Audit: examination of books of accounts and other accounting records - Issuance of Letter of Authority/Letter Notice/Tax Verification Notice (TVN) i. Notice for Informal Conference iii, Issuance of Preliminary Assessment Notice (PAN) iv. Exceptions to Issuance of PAN Reply to PAN - 15 days from receipt. In meritorious cases and upon written request, extension not exceeding 10 days may be given the TP to respond. (Sec. 3 (a), RR No. 12- 85) vi. Issuance of Formal Letter of Demand and Assessment Notice/Final Assessment Notice vii. Disputed Assessment - reply of Taxpayer viii, Administrative Decision on a Disputed Assessment (b) Requisites of a Valid Assessment Case(s): Commissioner of Internal Revenue vs. Pascor Realty and Devt. Corp., et al. (309 SCRA 402) Commissioner Of Internal Revenue vs. Hantex Trading Co., Inc. (454 SCRA 301) CIR vs. BPI (521 SCRA 373) = TP informed in writing of the law and facts on which assessment is made. Commissioner of Internal Revenue vs. BPI, as liquidator of Paramount Acceptance Corp. (411 SCRA 456) = Notice of assessment sent to taxpayer's old office is not a valid assessment$$ A A AA |. (18 SCRA 290) Republic of the Phils. vs. Leonor a la Rama, = When tax assessment is deemed made. Commissioner of Internal Revenue vs. Court of Appeals, et al. (242 SCRA 289) - All presumptions are in favor of tax assessments (c) Jeopardy Assessment (Best Evidence Obtainable Rule) Sec. 6(B), NIRC (4) Tax Deficiency vs. Tax Delinquency (e) Period of Assessment i. Prescription (1) General rule - 3 years (Sec. 203, NIRC) Revenue Memorandum Circular (RMC) No. 48-90 (Re: Counting of the Three-year Prescriptive Period) (2) Exceptions a. 10 years in case of false or fraudulent return (Sec. 222(a)) Case(s): Commissioner of Internal Revenue vs. The Estate of Benigno P. Toda, Jr., et (438 SCRA 290) b. Waiver agreed upon by BIR and TP (Sec. 222(b), NIRC) (i) Revenue Memorandum Order No. 20-90 (Re: Proper Execution of the Waiver of the Statute of Limitations under the National Internal Revenue Code) (ii) Revenue Memorandum Circular No, 06-05 (Re: _ Salient Features of Supreme Court Decision on Waiver of the Statute of Limitations under the Tax Code) (tii)Revenue Delegation Authority Order No, 05-01 (Re: Delegation of Authority to Sign and Accept the Waiver of the Defense of Prescription Under the Statute of Limitations) Case(s): Philippine Journalists, Inc. vs. Commissioner of Internal Revenue (447 SCRA 214) + Walver of statute of limitations does not mean that taxpayer relinquishes his/its right to invoke prescription, Waiver of statute of limitations is a bilateral agreement between taxpayer cond BIR. ~ Requirement to furnish taxpayer with copy of the walver is to give notice of acceptance by the BIR and perfection of the agreement. Commissioner of Internal Revenue vs. Court of Appeals, et al. (303 SCRA 614) To be binding, waivers require the concurrence of the Commissioner of Internal Revenue ii. Suspension of Running of the Statue of Limitations (Sec. 223, NIRC) Case(s): 13Republic of the Phil. vs. Luis G. Ablaza (108 Phil 1105) ~ Rationale for prescribing a limitation of actions for income tax collection (f) Period of Collection 1. General Rule: BIR must collect the tax judicially or administratively within five (5) years from assessment. Case(s): Philippine National Bank vs. The Hon. Court of appeals, Court Of Tax Appeals, Tirso B. Savellano and Commissioner Of Internal Revenue (457 SCRA 32) ii. Exception: In case of false or fraudulent return - without prior assessment, BIR must collect tax judicially within 10 years from discovery of the falsity, fraud or omission (Sec. 222(c), NIRC) PROTESTING AN ASSESSMENT (a) Protest of Assessment by Taxpayer (Sec. 228, NIRC; RR 12-85; RR 12-99) i, Protested assessment - refers to the FAN and FLD not the PAN ji, When to file a protest - within 30 days from receipt of the Final Assessment Notice (FAN) ‘or Formal Letter of Demand (FLD) iii, Forms of Protest (1) Request for reconsideration (2) Request for reinvestigation Case(s): Commissioner of Internal Revenue vs. Phil. Global Communication, Inc. (506 SCRA 427) ~ Distinction between a Request for Reconsideration and a Request for Reinvestigation. (b) Submission of Documents within 60 days from filing of Protest. Case(s): Commissioner of Internal Revenue vs. First Express Pawnshop Company, Inc. (589 SCRA 253) - Determination of relevant supporting documents rests on the taxpayer. (c) Effect of Failure to Protest - render the assessment final, executory and demandable Rendition of Decision by Commissioner (a) Cenial of protest i. CIR’s actions equivalent to denial of protest (1) Filing of criminal action against taxpayer (2) Issuing a warrant of distraint and levy Case(s): Commissioner of Internal Revenue vs. Isabela Cultural Corp. (361 SCRA 71) 148 ee, ce ~ Final Notice Before Seizure 1s deemed as commissioner's final decision. (©) Inaction by Commissioner - No decision from the CIR within 180 days following the submission by TP of the documents in support of his/its protest. 4. Remedies of Taxpayer to Action by Commissioner (2) In case of denial of protest - within before the Court of Tax Appeals i. 30 days from receipt of decision, taxpayer may appeal What constitutes a decision appealable to CTA Case(s): Allied Banking Corp. vs. Commissioner Of internal Revenue. C.T.A. EB Case No. 157. January 2, 2007, Commissioner of internal Revenue vs. Ayala Securities Corp., et al. (70 SCRA 204) 7 Ajinal demand letter for payment of delinquent taxes may be considered a decision on @ disputed or protested assessment. CIR vs. Union Shipping (185 SCRA 547) Oceanic Wireless Network v. CIR (477 SCRA 205) ii. Effect of Failure to Appeal - Republic of the Philippines vs. The Court of Appeals, and Nielson & Company, Inc. (149 SCRA 351) assessment becomes final, demandable and executory (©) In case of inaction by Commissioner within 180 days from submission of documents i. within 30 days after the end of the 180-d lay period, taxpayer may appeal case to the CTA; OR 'i. taxpayer may await decision of the CIR, thereafter appeal within 30 days from receipt of denial. Case(s): Rizal Commercial Banking Cor poration vs. Commissioner of Internal Revenue (522 SCRA 144) tascona Land Co., Inc. vs. Commissioner Of internal Revenue (667 SCRA 455) (c) Effect of Failure to Appeal - assessment becomes final, demandable and executory B. ADMINISTRATIVE CLAIM FOR REFUND OR RECOVERY OF ERRONEOUSLY OR ILLEGALLY COLLECTED TAXES - REMEDY AFTER PAYMENT 1. Legal Basis of Tax Refunds (Art. 2142 and 2154, Civil Code) 2. Statutory basis for Tax Refund under the Tax Code (Secs. 204(C) and 229, NIRC) (2) Scope of Claims for Refund (b) Necessity of Proof for Claim of Refund {c) Burden of proof on the taxpayer/claimant. (d) Nature of Erroneously paid tax/illegally assessed collected tax (e) Tax Refund vs. Tax Credit(f) Essential Requisites for Claim of Refund j. Actual collection and receipt by government of tax sought to be recovered (requiring factual proof) i. Legal basis for grant of refund 3. Who may Claim/Apply for Tax Refund/Tax Credit (a) Taxpayer/Withholding Agents of non-resident foreign corporations 4. Requirements for Refund as laid down by cases (a) Necessity of written claim for refund Case(s): Commissioner of Internal Revenue vs. Rosemarie Acosta (529 SCRA 177) ~ Rationale for requiring a written claim for refund (b) Claim containing a categorical demand for reimbursement (c) Filing of administrative claim for refund and the suit/proceeding before the CTA within 2 years from date of payment regardless of any supervening cause Case(s): CIR vs. Primetown Property Group, Inc. (531 SCRA 436) The two-year prescriptive period is computed based on Sec. 31 of the Administrative Code of 1987, not Art. 13 of the Civil Code. Commissioner of Internal Revenue vs. Philippine American Life li SCRA 446) ~ _ Requirements for the recovery of any national internal revenue tax assessed or collected. ACCRA Investments Corp. vs. Court of Appeals (204 SCRA 957) When two-year prescriptive period commences to run, + Rationale in computing the two-year prescriptive period, Commissioner of Internal Revenue vs. Victorias Milling Co., Inc., et al., G.R. No. L-24108, January 3, 1968 ~ When period of prescription starts, College of Oral & Dental Surgery vs. Court of Tax Appeals, et al. (102 Phil 912) Failure to institute action within 2 years after payment of tax bars taxpayer from recovery of the same. BPI Leasing Corp. vs. Court of Appeals, et al. (416 SCRA 4) ~ Tax refunds are strictly construed against the person claiming the exemption. Insurance Co., et al. (244 i. Meaning of supervening causes 5. Other considerations affecting tax refunds (a) VAT refund/application for tax credit for excess input taxes - 2 year period reckoned from the close of taxable quarter when sales transactions made, not 2 years from date of payment. (Sec. 112(A), NIRC) (b) No requirement to pay under protest prior to claim for refund/application for tax credit. 16(c) Commissioner may grant tax refund even without written claim where on the face of the return filed upon which payment was made, it is clear that there was erroneous payment. (4) Partial payment of tax cannot be made the basis of claim for tax refund Collector of internal Revenue v, Prieto (2 SCRA 1007) (6) In case refund of taxes paid in installment, 2 year period counted from payment of last installment, Case(s): CIR Vs. TMX Sales & CTA (205 SCRA 184) CIR Vv. CA, et. al. (301 SCRA 435) C. JUDICIAL REMEDIES 1. Appeal to the Court of Tax Appeals (CTA) (a) In protest cases (Sec. 228, NIRC) 1. 30 days from receipt of denial of protest fi, In case of inaction by CIR, within 30 days following the lapse of the 180-day period for submission of documents (b) In claim for tax refund (Sec. 229, NIRC) i. If no decision from the CIR is forthcoming, before the lapse of the 2 year period from the date of payment of the tax 2. Mode of Appeal (Sec. 11, Republic Act (R.A.) No. 1125, as amended by R.A. No. 9282 (R.A. No. 1125, as amended) 3. Who may Appeal (Sec. 11, R.A. No. 1125, as amended) 4. Jurisdiction of the CTA (Sec. 7, R.A. No. 1125, as amended) Procedure in CTA (Rules 7 - 9; 11 - 16, A.M. No. 05-11-07-CTA Revised Rules Of The Court Of Tax Appeals) 6. Appeal from the CTA (division) to CTA en banc and from CTA en banc to SC (Secs. 18 and 19 of R.A. No. 1125, as amended) GOVERNMENT’S REMEDIES ‘A. ADMINISTRATIVE REMEDIES (Sec. 205, NIRC) 1. Tax Lien (Sec. 219, NIRC) (RMC 2-94) Case(s): Hongkong & Shanghai Banking Corporation vs. Commissioner (93 Phil 145) Republic of the Phil. vs. Ramon G. Enriquez (166 SCRA 608) - Tax lien is more superior than a private litigant’s claim predicated on a judgment. (a) Actual Distraint (Sec. 207(A), NIRC) 7> T= rent (Sec. 208 - 212, NIRC) (©) Constructive Distraint (Sec. 206, NIRC) (c) Procedure for Distraint and Garnish (d) Sale of Forfeited/Seized hattels and removable fixtures (Sec, 227 - 228, NIRC) Levy and Sale of Reat Property (Sec, 207(8), 213, 214 NIRC) Forfeiture of real property to the Govern (a) Resale of forfeited Property transfert Further Distraint and Levy (Sec, 217, Ni Suspension of Business Operations iment for want of bidder(Sec. 215, NIRC) Ted in name of government. (RR 22-02) IRC) Southern Cross Cement Corp. vs. Phil, Cement Manufacturers Corp., et al. (434 SCRA 65) should not be enjoined despite availability of judicial review. Commissioner of Internal Revenue vs. Cebu Portland Cement Co., et al. (156 SCRA 535) ~ Rationale for prohibiting injunctions from restraining tax collection Francis A. Churchill, et al. vs. James J. Rafferty (032 Phil 580) ~ By taking away injunction, the State leaves the taxpayer to the same ordinary remedial actions prevailing between citizen and citizen. + Illegatity or unconstitutionality of a tax does not authorize courts to restrain its collection by injunction, ~ Tax collectors are authorized to seize and sell property of delinquent taxpayers without court assistance. ~ No government could exist if every litigious man were permitted to delay the collection of its taxes. B. JUDICIAL REMEDIES Sec. 220 - 221, NIRC Sec. 281, NIRC Quirico P. Ungab vs. Vicente N. Cusi, Jr. (97 SCRA 877) GIR v. CA, Fortune Tobacco Corp., et al. (257 SCRA 200) ~ Assessment of a deficiency Is not necessary to a criminal prosecution for tax evasion, |. STATUTORY OFFENSES AND PENALTIES we Gu TE TRAIN A. Civil Penalties 14. Surcharge (a) General - 25% (Sec. 248 (A), NIRC) (b) In case of wilful neglect to file return, filing of false/fraudulent return - 50% (Sec. 248(8), NIRC) 18eo 2. Interest (Sec. 249, NIRC) (a) In general (20%) (Sec. 249(A), NIRC) (b) Deficiency Interest (Sec. 249(B), NIRC) (c) Delinquency Interest (Sec. 249 (C), NIRC) (d) Interest on Extended Payment (Sec. 249 (0), NIRC) 3. Other Fines and Penalties (a) Failure to file certain returns (Sec. 250, NIRC) (b) Failure of Withholding agent to collect and remit tax (Sec. 251, NIRC) (c) Failure of Withholding Agent to refund excess withholding tax (Sec. 252, NIRC) B. Crimes, Other Offenses and Forfeitures 1. General Provisions (Sec. 253) 2. Specific Offenses and Crimes (254 - 281, NIRC) C. Informer’s Reward (Sec. 282, NIRC) 1. COMPROMISE AND ABATEMENT OF TAXES ‘A. Compromise (Sec. 204(A), NIRC; RR 08-04; RR 03-07) B. Abatement (Sec. 204 (B), RR 13-01) Case(s): Francisco I. Chavez vs. PCGG, et al. (299 SCRA 744) Requisites for the exercise of commissioner's power to abate or cancel tax liability at 19Part 4: LOCAL GOVERNMENT TAXATION AND REAL PROPERTY TAXATION References: 1. Local Government Code (as Amended). Quezon City: Central Professional Books, Inc., 1996, Second Edition, 2. Ursal, Sofronto B., Philippine Law On Local Government Taxation. Quezon City: Good Governance Books, 2000. 1, LOCAL GOVERNMENT TAXATION A. INTRODUCTION 1. Nature And Source Of Local Taxing Power Sec. 5, Art. X, 1987 Constitution (a) Grant of Local Taxing Power under the Local Government Code (LGC) Sec. 129, LGC Art, 217, IRR (b) Authority to prescribe penalties for tax violations Sec. 168 & 169, LGC; Art. 256 - 257, IRR (c) Authority to grant local tax exemptions Sec. 192, LGC; Art. 282, IRR (d) Withdrawal of Exemptions Sec. 193, LGC; Art, 283, IRR (e) Authority to Adjust local tax rates Sec. 191, LGC; Art. 281, IRR (f) Residual Taxing Power of Local Governments Sec. 186, LGC; Art. 274, IRR) (g) Authority to issue local tax Ordinances Sec, 132 in relation to Sec. 187, LGC 2. Scope Of Taxing Power Sec, 128, LGC Art, 217, IRR 3. Fundamental Principles Sec. 130, LGC Art. 219, IRR 20Case(s): Tan vs. del Rosario, Jr. (237 SCRA 324) + Uniformity of Taxation, Defined, Tolentino vs. Secretary of Finance (249 SCRA 628) ~ Equality and Uniformity of Taxation, Defined. bepst Cola Bottling Co., of the Philippines, Inc. vs. Municipality of Tanauan, et. al. (69 SCRA ~ An increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory. Ormoc Sugar Co., Inc. vs, Municipal Board of Ormoc City, et. al. (20 SCRA 739) + A general objection that a local tax imposition is in restraint of trade will not nullify a taxing ordinance which is otherwise valid, 4. Local Taxing Authority (a) Power to Create Revenues exercised thru local government units Sec. 132, LGC; Art. 222 IRR) (b) Procedure for Approval and Effectivity of Tax Ordinances Secs. 187 - 189, LGC Case(s): Magtajas v. Pryce Properties Corporation, Inc. (234 SCRA 255) Tatel v. Municipality of Virac (207 SCRA 157) 5. Common Limitations On The Taxing Powers Of Local Government Units Sec. 133, LGC Case(s): Basco vs. PAGCOR, (197 SCRA 52) The power of local governments to impose taxes and fees is always subject to limitations which Congress may provide by law. Philippine Petroleum Corporation vs. Municipality of Pililla, et. al. (198 SCRA 82) The tax on business different from a tax on the article itself. First Philippine Industrial Corporation vs. Court of Appeals, et. al. (300 SCRA 661) A pipeline concessionaire transporting via pipeline its petroleum products from its refineries deemed to fall under the term “common carrier”. National Development Company vs. Cebu City (215 SCRA 382) To come within the exemption from the imposition of local taxes, it is important to establish that property is owned by the Government or by its unincorporated agency. B. SPECIFIC TAXING POWERS OF LGUS 1. Taxing Powers of Provinces 21= Sec. 134, LGC; Art, 223, IRR (a) Tax on Transfer of Real Property Ownership Sec. 135, LGC; Art, 224, IRR (b) Tax on Business of Printing and Publication Sec. 136, LGC; Art. 225, IRR (©) Franchise Tax Sec. 137, LGC; Art. 226, IRR. Case(s): Quezon City, et al. v. ABS-CBN Broadcasting Corporation (567 SCRA 496) PLOT vs. Province of Laguna (467 SCRA 93) (d) Tax on Sand, Gravel and Other Quarry Services Sec. 138, LGC; Art. 227, IRR Case(s): ‘The Province of Bulacan, et. al., vs. Court of Appeals, et. al. (299 SCRA 442) A province may levy and collect tax on sand, gravel, etc. extracted only from public lands. (e) Professional Tax Sec. 139, LGC; Art. 228, IRR (f) Amusement Tax Sec, 140, LGC; Art. 229, IRR (g) Tax on delivery truck/van Sec. 141, LGC; Art. 230, IRR . Taxing Powers of Municipalities Sec. 142, LGC; Art. 231, IRR (a) Tax on various types of businesses (Sec. 143, LGC; Art. 232, IRR) (b) Solting 7 business tax imposable on municipalities within Metro Manila (Sec. 145, LGC; Art. », IRR) (c) Tax on Retirement of Business (Sec. 145, LGC; Art. 241, IRR) (4) Rules on Payment of business tax (Sec. 146, LGC; Art. 242, IRR) (e) Fees and Charges for regulation & licensing (Sec. 147 - 149, LGC; Art. 233 - 235, IRR) (f Situs of Tax collected under Sec. 143 (Sec. 150, LGC; Art. 243, IRR) 2— 3. Taxing Powers of Cities (Sec. 151, LGC; Art. 237, IRR) 4. Taxing Powers of Barangays (Sec. 152, LGC; Art. 240, IRR) 5. Common Revenue Raising Powers (a) Service Fees & Charges (Sec. 153, LGC; Art. 244(a), IRR) (b) Public Utility Charges (Sec. 154, LGC; Art. 244(b), IRR) (c) Toll Fees or Charges (Sec. 155, LGC; Art. 244(c), IRR) 6. Community Tax (a) Who may impose? cities and municipalities (Sec. 156, LGC; Art. 245, IRR) (b) Persons liable i, Individuais (Sec. 157, LGC; Arts. 246(a)(b), IRR) ii. Juridical persons (Sec. 158, LGC; Arts. 246 (c)(1)(2), IRR) (c) Exemptions (Sec. 159, LGC) (d) Place of Payment (Sec. 160, LGC; Art. 246(e), IRR) (e) Time for Payment (Sec. 161, LGC; Art. 246(f), IRR) (f) Printing of Community Tax Certificates and Distribution of Proceeds (Sec. 164, LGC; Arts. 249 and 251, IRR) C. COLLECTION OF BUSINESS TAXES 1. Tax Period and Manner of Payment (Sec. 165, LGC; Art. 253, IRR) 2. Accrual of Tax (Sec. 166, LGC; Art. 254, IRR) 3. Time of Payment (Sec. 167, LGC; Art. 255, IRR) 4. Penalties on Unpaid Taxes, Fees or Charges (a) Surcharges and Penalties (Sec. 168, LGC; Art. 256, IRR) (b) Interests on Other Unpaid Revenues (Sec. 169, LGC; Art. 257, IRR) 5, Authority of Treasurer in Collection and Inspection of Books (a) Collection of local revenues (Sec. 170, LGC; Art. 258, IRR) (b) Examination of Books of Accounts and Records (Sec. 171, LGC; Art. 259, IRR) D. TAXPAYER'S REMEDIES, 1, Periods of Assessment and Collection of Local Taxes, Fees or Charges 23_ (Sec. 194, LGC; Art. 284, IRR) 2. Protest of Assessment (Sec. 195, LGC; Art. 285, IRR) 3. Claim for Refund or Tax charge (Sec. y $e Ea Refind o Tax Credit for erroneously or ilegaly collected tax, fee or charge E. CIVIL REMEDIES (BY THE LGU) FOR COLLECTION OF REVENUES. 1. Local Government's Lien for Delinquent taxes, fees or charges (Sec. 173, LGC; Art. 264, IRR) 2. Civil Remedies, in General (Sec. 174, LGC; Art. 262, IRR) (a) Administrative Action (b) Judicial Action 3. Procedure for Administrative Action (a) Distraint of Personal Property, Procedure Sec. 175, LGC; Art, 263, IRR (b) Levy of Real Property, Procedure Secs. 176, 178 - 182, LGC Arts. 264, 266 - 270, IRR (c) Further Distraint or Levy rt. 272, IRR Sec. 184, LGC; (4) Exemption of Personal Property from Distraint or Levy Sec. 185, LGC; Art. 273, IRR {(e) Penalty on Local Treasurer for Failure to Issue and Execute Warrant of Distraint or Levy Sec. 177, LGC; Art, 265, IRR 4. Procedure for Judicial Action Sec. 183, LGC; Art. 271, IRR Sec. 194 LGC; Art. 284, IRR acl Seoeey fa 1, REAL PROPERTY TAXATION A B. Introduction 1. Nature of real property tax - ad valorem tax 2. Fundamental Principles Sec. 198, LGC; Art. 289, IRR Imposition of Real Property Tax 1. Power to Levy Real Property Tax (Sec. 232, LGC; Art. 323, IRR) 2. Rates of Levy (Sec, 233, LGC; 324, IRR) 3. Exemption from Real Property Tax (Sec. 234, LGC; Art. 325, IRR) Case(s): ‘Manila International Airport vs. Court of Appeals (495 SCRA 591) Mactan Cebu International Airport Authority vs. City of Lapu-Lapu (757 SCRA 323) Quezon City vs. Bayantel (484 SCRA 169) Digital Telecommuntcations Philippines, Inc. vs. City Government of Batangas (573 SCRA 605) GSIS vs. City Treasurer and City Assessor of Mantla (330 SCRA 609) Fels Energy Inc. vs. Province of Batangas, G.R. no, 168557 (186 SCRA 516) C. Appraisal and Assessment of Real Property Sec. 201 - 225, LGC; Art. 292 to 310, IRR Rule on Appraisal of Real Property at Fair Market Value (Sec. 201, LGC; Art. 292, IRR) . Declaration of Real Property (Sec. 202 - 204, LGC; Art. 293 - 295, IRR) x . Listing of Real Property in Assessment Rolls (Sec. 205, LGC; Art. 296, IRR) w (a) Proof of Exemption of Real Property to be excluded from Assessment Rolls (Sec. 206, LGC; Art. 297, IRR) (b) Real Property Identification System (Sec. 207, LGC; Art. 298, IRR) 4. Preparation of Schedule of Fair Market Values (Sec. 212, LGC; Art. 303, IRR) (a) Authority of Assessor to take Evidence (Sec. 213, LGC; Art. 304, IRR) (b) Amendment of Schedule of Fair Market Values (Sec. 214, LGC; Art. 305, IRR) 5. Classes of Real Property (Sec. 215 - 216, LGC) 2sEE 6. Actual Use of Property as Basis of Assessment (Sec. 217, LGC; Art. 308, IRR) 7. Assessment of Real Property y (a) Assessment Levels (Sec. 218, LGC; Art. 309, IRR) (b) General Revisions of Assessments and Property Classification (Sec. 219, LGC; Art. 310 IRR) (c) Date of Effectivity of Assessment or Reassessment (Sec. 221. LGC; Art. 312, IRR) (d) Assessment of Property Subject to Back Taxes (Sec. 222, LGC; Art. 313, IRR) (e) Notification of New or Revised Assessment (Sec. 223, LGC; Art. 314, IRR) (f) Allied Banking Corp. vs. Quezon City (101 scra 472N) 8. Appraisal and Assessment of Machinery (Sec. 224, LGC; Art. 315, IRR) D. Collection of Real Property Tax 1, Date of Accrual of RPT (Sec. 246, LGC; Art. 337,IRR) 2. Collection of Tax (a) Collecting Authority (Sec. 247, LGC; Art. 338, IRR) (b) Duty of Assessor to Furnish Local Treasurer with Assessment Roll (Sec. 248, LGC; Art. 339, IRR) (c) Notice of Time for Collection of Tax (Sec. 249, LGC; Art. 340, IRR) 3. Periods Within Which to Collect Real Property Tax - Prescription (Sec. 270, LGC; Art. 361, IRR) 4, Special Rules on Payment {a) Payment of RPT in installments (Sec. 250, LGC; Art. 341, IRR) (b) Discount for Advanced Prompt Payment (Sec, 251, LGC; Art. 342, IRR) (c) Interests on Unpaid Real Property Tax (Sec. 255,LGC; Art. 346, IRR) (d) Condonation of Real Property Tax (Secs. 276 - 277, LGC; Arts. 367-368, IRR) 5. Remedies Of Local Government Unit For Collection Of Real Property Tax (a) Issuance of Notice of Delinquency for RPT payment (b) Local Government's Lien (Sec. 257, LGC; Art. 348, IRR) (c) Remedies in General (Sec. 256, LGC; Art. 347, IRR) Administrative remedy through levy on real property (Sec. 258, LGC; Art. 349, IRR) (1) Issuance of Warrant (Sec. 258, LGC; Art. 349, IRR) 26 MB es(2) Advertisement and sale (ec. 260, LGc; are. 351, IRR) (3) Pur ) Purchase by Government for Want of Bidder (Sec. 263, LGC; Art. 354, IRR) 4} (4) Redemption of Property Sold (Sec. 261, LGC; Art, 352, IRR) (5) Iss a “re Of Final Deed to Purchaser for Failure to Redeem (Sec. 262, LGC; Art. 353, ii. Judicial action (Sec, 266, LGC; Art. 357, IRR) (A) Resale of Real Estate Taken for ‘Taxes, Fees or Charges (Sec, 264, LGC; Art. 355, IRR) (e) Further Levy untit full payment of amount due (Sec, 265,LGC; Art. 356, IRR) (9 Special rules on actions involving real Property i. Deposit required for actions assailing validity of tax sale (Sec. 267, LGC; Art. 358, IRR) Hi. Award of Property subject of court action upon Payment of delinquent taxes (Sec, 268, LGC; Art. 359, IRR) E. Taxpayer's Remedies 1. Contesting an Assessment of Value of Real Property (@) Appeal to the Local Board of Assessment Appeals (LBAA) (Sec. 226, LGC; Art. 317, IRR) i, Action by LBAA (Sec. 229, LGC; Art. 320, IRR) Case: Callanta v. Office of the Ombudsman, 285 SCRA 648 (b) Appeal to the Central Board of Assessment Appeals (CBAA) (Sec. 230,LGC; Art, 321, IRR) (c) Effect of Appeal on Payment of RPT (Sec. 231 LGC; Art. 322, IRR) 2. Payment of Real Property Under Protest (Sec. 252, LGC; Art. 343, IRR) (a) File protest with local treasurer % () Appeal to the LBAA (Sec. 226, LGC; Art. 317, IRR). (C) Appeal to the CBAA (Sec. 230, LGC; Art. 321, IRR) (d) Appeal to the CTA (Republic Act No. 9282) (e) Appeal to the Supreme Court 3. Claim for Refund for illegal or Erroneous Tax Payment (Sec. 253, LGC; Art, 344, IRR) F. Special Levies on Real Property 1. Special Education Fund (Sec. 235, LGC; Art. 326, IRR) 2. Additional Ad Valorem Tax on idle Lands (Sec. 236, LGC; Art. 327, IRR) 27 re -(a) Coverage of Idle lands (Sec. 237, LGC; Art. 328, IRR) (b) Exempt Idle lands (Sec. 238, LGC; Art. 329, IRR) (c) Listing of idle lands by the assessor (Sec. 239, LGC, Art. 330, IRR) - Special Levy (Sec. 240, LGC; Art. 331, IRR) (a) tinance/Publeaten of Ordinance imposing special levy (Sec. 241-242, LGC; Art. 332 - 333, (b) Fixing the Amount of Special Levy and Sending out Notice (Sec. 243, LGC; Art. 334, IRR) (c) Taxpayer's Remedies Against Special Levy (Sec. 244, LGC; Art. 335, IRR) Accrual of Special Levy (Sec. 245, LGC, Art. 336, IRR) Modinnivaton ae Tuaift heb (he! sae) . Tariff and Customs Code 4 Lustens 1. Tariff and duties, defined 2. General rule: All imported articles are subject to duty. Importation by taxable. 3. Purpose for imposition 4. Flexible tariff clause 5. Requirements of importation (a) Beginning and ending of importation {b) Obligations of importer i. Cargo manifest the government ii, Import entry iii. Declaration of correct weight or value iv. Liability for payment of duties v. Liquidation of duties vi. Keeping of records 6. Importation in violation of TCC (a) Smuggling (b) Other fraudulent practices 7. Classification of goods (a) Taxable importation (b) Prohibited importation (<) Conditionally-free importation 8. Classification of duties (a) Ordinary / Regular duties i, Ad valorem; Methods of valuation 1) Transaction value 282) Transaction Value of identical goods 3) Transactio N value of similar goods 4) Deductive value 5) Computed vatue 6) Fallback value ii, Specific (b) Speciat duties 4, Dumping duties il, Countervaiting duties ili, Marking duties WV. Retaliatory / Discriminatory duties Vv. Safeguard 9. Drawbacks 10. Remedies (a) Government i, Administrative/Extrajudiciat 1) Search, seizure, forfeiture, arrest ii, Judicial 1) Rules on appeal including jurisdiction (b) Taxpayer i. Protest fi. Abandonment ifi, Abatement and refund