When collection of taxes may be suspended
By: Atty. Keshia Daniell L. Valencia on February 19, 2026
IT is a well-established doctrine that taxes are the lifeblood of the government. The Supreme Court opined in one case that, without taxes, the government would be paralyzed for lack of motive power to activate or operate it. The application of the lifeblood doctrine may be found in different sections of the National Internal Revenue Code of the Philippines (Tax Code). Section 218 of the Tax Code provides that no court shall have authority to grant an injunction to restrain the collection of any national internal revenue tax, fee, or charge imposed by the Tax Code.
Under the Rules of Court, an injunction is a provisional remedy that a court may issue requiring a party, a court, or a person to refrain from or perform a particular act or acts. In the context of taxation, the issuance of an injunction would prevent the Commissioner of Internal Revenue (CIR) from collecting taxes. Section 11 of Republic Act (RA) 1125, which created the Court of Tax Appeals (CTA), further states that no appeal to the CTA shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction of his tax liability provided under existing law.
However, Section 11 of RA 1125 provides an exception to the “no injunction” rule. Section 11 states that, when in the opinion of the court, the collection may jeopardize the interest of the government and/or the taxpayer, the court, at any stage of the proceeding, may suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount of the assessed taxes.
Primarily, the purpose of the bond is to secure the government’s interest, that it will be guaranteed payment of the disputed tax in the event the tax assessment is upheld.
In various cases, the Supreme Court has clarified that the requirement of posting a surety bond to suspend the collection of taxes may be dispensed with in two exceptional instances, namely: (1) when the assessment or the method of collection is “patently illegal” or “not sanctioned by law”; and (2) when the amount of the bond itself would deny the taxpayer the meaningful opportunity to contest the validity of the assessment.
In one case, the Supreme Court ruled that the CTA Division did not commit grave abuse of discretion when it ordered the CIR to desist from the collection of taxes and dispensed with the posting of a bond. The CTA Division found that: (a) the CIR’s right to assess the taxpayer for deficiency taxes had already prescribed; and (b) the revenue officers who conducted the audit were unauthorized for lack of a proper Letter of Authority. These established facts rendered the assessment patently illegal.
In another case, the Supreme Court ruled that the CTA Division committed grave abuse of discretion when it required the taxpayer to file a surety bond that was nearly five times the taxpayer’s net worth, without conducting a preliminary hearing to ascertain whether there were grounds to suspend collection of taxes on the ground that such collection would jeopardize the interest of the taxpayer. Although the bond amount was itself the amount of the assessment, the Supreme Court required the CTA Division to consider whether or not the assessment would jeopardize the interest of the taxpayer, or whether the means adopted by the CIR in determining the liability of the taxpayer was legal and valid.
Simply prescribing such a high bond amount would practically deny the taxpayer the meaningful opportunity to contest the validity of the assessment, and would likely even impoverish said taxpayer as to force him out of business. Thus, the Supreme Court ordered the remand of the case to the CTA to determine whether or not the bond required under the law may be dispensed with.
Accordingly, while taxes are the lifeblood of the government and the no injunction rule is part of the law, the courts, in the interest of justice and due process of law, may still order the suspension of collection of taxes in certain exceptional instances.
Keshia Daniell L. Valencia is an Associate of Mata-Perez, Tamayo & Francisco (MTF Counsel). This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com.
The article was published at the More to Follow Column at The Manila Times on February 19, 2026. Please see this link.