TAX2

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T AX AT I O N L A W
REVIEWER
ATENEO CENTRAL BAR OPERATIONS 2001
Eric, Joy, Judd, Roland
TITLE V
OTHER PERCENTAGE TAXES
1. On Persons Exempt from Value-added Tax (VAT)-- 3% of gross quarterly sales or
receipts, except cooperatives (Sec. 116)
2. On Domestic Carriers and Keepers of Garages -- 3% of quarterly gross receipts
except: owners of animal drawn 2 wheeled vehicles and bancas (Sec. 117)
In computing the percentage tax, the following shall be considered the minimum
quarterly gross receipts in each particular case:
Jeepney for hire
Manila and other cities
P2,400
Provincial
1,200
Public utility bus
Not exceeding 30 passengers
P3,600
>30 but < 50 passengers
6,000
Exceeding 50 passengers
7,200
Taxis
Manila and other cities
P3,600
Provincial
2,400
Car for hire (with chauffeur)
P3,000
Car for hire (without chauffeur)
P1,800
3. On International Carriers
a) International air carriers doing business in the Phils. -- 3% of quarterly gross
receipts.
b) International shipping carriers doing business in the Phils. -- 3%) of quarterly
gross receipts. (Sec. 118)
4. Franchises
a) on radio and/or television broadcasting companies whose annual gross
receipts of the preceding year does not exceed P10M --3%
b) on electric, gas and water utilities -- 2% (Sec. 119)
5. Overseas Dispatch, Message or Conversation Originating from the Phils.
a) by telephone, telegraph, telewriter, exchange-- 10%
b) wireless and other communication equipment services-10%
payable by the person paying for the services rendered
paid to the person rendering the services who is required to collect and pay the tax
within twenty (20) days after the end of each quarter
Exemptions:
a) Messages transmitted by the government
b) Diplomatic services
c) Public International Organizations
c) News Services (Sec. 120)
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REVIEWER
6. Banks and Non-bank Financial Intermediaries on gross receipts derived from sources
within the Phils.: (Sec. 121)
on interest, commissions and discounts from lending activities as well as income
from financial leasing, on the basis of remaining maturities
Short-term maturity (not in excess of 2 years)
5%
Medium-term maturity (over 2 years but not more than 4)
3%
Long-term maturity Over 4 years but not exceeding 7
1%
Over 7 years
0%
On dividends
0%
On royalties, rentals of property, real or personal,
profits from exchange and all other items treated
as gross income
5%
7. Finance Companies (Sec. 122)
a) gross receipts derived by all finance companies, as well as by other financial
intermediaries not performing quasi-banking functions doing business in the
Philippines, from interest, discounts and all other items treated as gross income -5%
b) interests, commissions and discounts from lending activities, as well as income
from financial leasing, shall be taxed on the basis of the remaining maturities
Short-term maturity (not in excess of 2 years)
5%
Medium-term maturity (over 2 years but not exceeding 4) 3%
Long-term maturity -- Over 4 years but not exceeding 7
1%
Over 7 years
0%
8. Life Insurance Premiums -- 5% of total premium collected (Sec. 123)
except purely cooperative associations/ premiums refunded within 6 months
9. Agents of Foreign Insurance Companies -- 10% of total premiums (Sec. 124)
10. Amusement Taxes (% of gross receipts) (Sec.125)
a) Cockpits --18%
b) cabarets, night or day clubs -- 18 %
c) boxing exhibitions -- 10%
except boxing exhibitions wherein World or Oriental Championships in any division
is at stake
provided at least one of the contenders for World or Oriental Championship is a
citizen of the Philippines
and the exhibitions are promoted by a citizen/s of the Philippines or by a
corporation or association at least sixty percent (60%) of the capital of which is
owned by such citizens;
d) professional basketball --15%
e) Jai-Alai and racetracks irrespective of whether or not any amount is charged for
admission -- 30%
gross receipts-embraces all the receipts of the proprietor/operator/lessee of the
amusement place
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REVIEWER
11. Tax on Winnings (Sec. 126)
a) horse races -- 10% of winnings based on the actual amount paid to him for every
winning ticket after deducting the cost of the ticket
b) winnings from double, forecast/quinella and trifecta bets-- 4%
b owners of winning race horses -- 10%
12. Tax on Sale, Barter or Exchange of Shares of Stock

A. Listed and Traded through the Local Stock Exchange -- 1/2 of 1% of the gross
selling price
B. Initial Public Offering of closely held corp. of the shares of stock sold, bartered,
exchanged or otherwise disposed in accordance with the proportion of shares of
stock sold, bartered, exchanged or otherwise disposed to the total outstanding
shares of stock after the listing in the local stock exchange: (% of gross selling price/
gross value in money)
Up to 25% .4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%
--- tax imposed shall be paid by the issuing corporation in primary offering or by the
seller in secondary offering
'CLOSELY HELD CORPORATION' -- any corporation at least 50% in value of the
outstanding capital stock or at least 50% of the total combined voting power of all
classes of stock entitled to vote is owned directly or indirectly by or for not more than 20
individuals
Rules in determining whether a corporation is closely held:
1. Stock owned directly or indirectly by or for a corporation, partnership, estate or trust
-- considered as being owned proportionately by its shareholders, partners or
beneficiaries
2. Family and Partnership Ownerships -- An individual shall be considered as owning
the stock owned, directly or indirectly, by or for his family, or by or for his partner
(''family of an individual' only his brothers and sisters (whole or half-blood), spouse,
ancestors and lineal descendants)
3. An option to acquire stock shall be considered as ownership of such stock
4. Constructive Ownership as Actual Ownership
C. Return on Capital Gains Realized from Sale of Shares of Stocks. 1. Return on Capital Gains Realized from Sale of Shares of Stock Listed and Traded in
the Local Stock Exchange
a) duty of every stock broker who effected the sale subject to the tax imposed
herein to collect the tax and remit the same to the Bureau of Internal Revenue
within five (5) banking days from the date of collection and to submit to the
secretary of the stock exchange, of which he is a member, a true and complete
return
2. Return on Public Offerings of Shares of Stock
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a) primary offering -- the corporate issuer shall file the return and pay the
corresponding tax within 30 days from the date of listing of the shares of stock in
the local stock exchange
b) secondary offering - 5 banking days from the date of collection (Sec. 127)
PROCEDURE: (Sec. 128)
I. Filing of returns and payment of percentage taxes
A Persons Liable to Pay Percentage Taxes shall:
1) file a quarterly return of the amount of his gross sales, receipts or earnings
2) pay the tax due within 25 days after the end of each taxable quarter
B. Person Retiring from Business subject to percentage tax shall:

1) notify the nearest internal revenue officer
2) file his return and
3) pay the tax due within 20 days after closing his business
C.Exceptions -- Commissioner may prescribe:
1) time for filing the return at intervals other than the time prescribed considering:
a) volume of sales
b) financial condition
c) adequate measures of security
d) such other relevant information required
2) manner and time of payment of percentage taxes including a scheme of tax
prepayment.
II. Where to File -- Except as the Commissioner otherwise permits,
a) with the authorized agent bank
b) Revenue District Officer
c) Collection Agent or
d) duly authorized Treasurer of the city or municipality where said business or principal
place of business is located
TITLE VI
EXCISE TAXES ON CERTAIN GOODS
Goods subject to excise tax: (Sec. 129)
1. goods manufactured or produced in the Philippines for domestic sale or consumption
or for any other disposition and to things imported
2. imposed in addition to the value-added tax
2 Kinds of excise tax
1. SPECIFIC TAX ( taxes imposed based on weight or volume capacity or any other
physical unit of measurement
2. AD VALOREM TAX ( tax imposed based on selling price or other specified value of
the good
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REVIEWER
Filing of Return and Payment of Excise Tax on DOMESTIC Products (Sec. 130)
Persons Liable
--file a separate return for each place of production setting forth:
1. the description of products
2. quantity or volume of products to be removed
3. tax base
4. tax due
TAXABLE ARTICLE
indigenous petroleum, natural
gas or liquefied natural gas
exported products
PERSONS LIABLE
first buyer, purchaser or transferee
for local sale/transfer/barter
owner/lessee/concessionaire/
operator of the mining claim
domestic products removed owner or person having possession
from place of production w/o thereof
payment of tax
Time for Filing of Return and Payment of the Tax
TAXABLE ARTICLE
WHEN PAYMENT MADE
locally
manuf.
petroleum W/in 10 days from date of removal of
products
and
indigenous such prods. from 1/1/98 to June 30
petroleum
98
w/in 5 days from date of removal of
such products for the period of July 1,
98 to Dec. 31 98
before removal from place of
production from Jan 1 99 and
thereafter
Nonmetallic mineral, mineral upon removal of such products from
products, quarry resources
locality where mined or extracted
locally produced or extracted file a return and pay the tax within 15
metallic mineral or mineral days after the end of the calendar
products
quarter when such products were
removed
for imported mineral or mineral paid before their removal from
products, whether metallic or customs custody
nonmetallic
Place for Filing of the Return and Payment of the Tax
a) any authorized agent bank
b) Revenue Collection Officer
c) duly authorized City or Municipal Treasurer in the Philippines.
Determination of gross selling price for goods subject to Ad Valorem tax: the price,
excluding VAT, at which goods are sold at wholesale in the place of production or
through sales agents to the public
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REVIEWER
Payment of Excise Taxes on IMPORTED Articles
Persons Liable:
1) owner or importer to the Customs Officers before the release of such articles from
the customs house, or
2) by the person who is found in possession of articles which are exempt from excise
taxes other than those legally entitled to exemption
-- tax-free articles brought or imported into the Philippines by persons, entities, or
agencies exempt from tax which are subsequently sold, transferred or exchanged in the
Philippines to non-exempt persons or entities -- the purchasers or recipients shall be
considered the importers, and shall be liable for the duty and internal revenue tax due on
such importation (Sec. 131)
IMPORTATION OF CIGARS, CIGARETTES, DISTILLED SPIRITS
Gen. Rule: even if destined for tax and duty free shops ( shall be subject to all
applicable taxes, duties, charges, including excise taxes due
Except: cigars and cigarettes, distilled spirits and wines brought directly into the duly
chartered or legislated freeports of the
a) Subic Special Economic and Freeport Zone, created under RA No. 7227;
b) Cagayan Special Economic Zone and Freeport, created under RA No. 7922;
c) Zamboanga City Special Economic Zone, created under RA No. 7903, and are not
transshipped to any other port in the Philippines
EXEMPTION OR CONDITIONAL TAX-FREE REMOVAL
OF CERTAIN ARTICLES
1) Domestic Denatured Alcohol
a) not less than 180 proof
b) suitably denatured and rendered unfit for oral intake
exempt from excise tax on alcohol products but taxable under Section 106(A)/ VAT
Except:
1. if it is to be used for motive power-taxable (excise tax on petroleum products)
2. any alcohol, previously rendered unfit for oral intake after denaturing but
subsequently rendered fit for oral intake after undergoing fermentation, dilution,
purification, or mixture-taxable (excise tax on alcohol products)(Sec. 134)
2) Petroleum Products sold to the following are exempt from excise tax:
a) International carriers of Philippine or foreign registry on their use or consumption
outside the Philippines
b) Exempt entities or agencies covered by tax treaties, conventions and other
international agreements for their use or consumption
b Entities which are by law exempt from direct and indirect taxes (Sec. 135)
EXCISE TAX ON ALCOHOL PRODUCTS
(*rates to be increased by 12% on Jan.1, 2000) (Sec. 141-143)
TAXABLE ARTICLE
TAX RATE
I. (a) Distilled Spirits
P8.00 per proof liter
Distilled Spirits produced in a pot still or P4.00 per proof liter
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other similar primary distilling apparatus
by a distiller producing not more than
100 liters/day, containing not more than
50% of alcohol by volume
distilled spirits produced from raw taxed in accordance with the
materials other than those in (a)
net retail price per bottle 750
ml. volume capacity (excluding
excise tax and VAT) as follows:
less than P250 -- P75/proof
liter P250 - P675 --P150/proof
liter More than P675 -P300/proof liter
medicinal
preparations,
flavoring same tax as such chief
extracts, and all other preparations, ingredient
except toilet preparations, of which,
excluding water, distilled spirits form the
chief ingredient
II. Wines
Sparkling
wines/champagnes P500 or less --P100 More than
regardless of proof, if the net retail price P500-- P300
per bottle (excluding the excise tax and
the value-added tax)
Still wines containing 14% of alcohol by P12.00
volume or less
Still wines containing more than 14% P24.00
but not more than 25% of alcohol by
volume
Fortified wines containing more than same as distilled spirits
25% of alcohol by volume
III. Fermented Liquor
on beer, lager beer, ale, porter and 1. net retail price per liter of
other fermented liquors except tuba, volume capacity is less than
basi, tapuy and similar domestic P14.50 -- P6.15/ liter 2. net
fermented liquors
retail price P14.50 - P22.00 --P9.15/liter 3. net retail price is
more
than
P22.00
-P12.15/liter
TAXABLE ARTICLE
TAX RATE
I. Tobacco Products: a) twisted P0.75/kilogram
by hand or reduced into a
condition to be consumed in any
manner other than the ordinary
mode of drying and curing b)
prepared or partially prepared
with or without the use of any
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machine or instruments or
without
being
pressed
or
sweetened c) fine-cut shorts and
refuse,
scraps,
clippings,
cuttings, stems and sweepings
of tobacco
tobacco specially prepared for
chewing so as to be unsuitable
for use in any other manner
II. Cigars
Cigarettes Packed by Hand
Cigarettes Packed by Machine
(excluding the excise tax and the
value-added tax)
P0.60/kilogram
P1.00/cigar
P0.40/pack
1. net retail price is over P10.00/pack
-- P12.00/pack 2. net retail price
exceeds P6.50 but does not exceed
P10.00/pack -- P8.00/pack 3. net retail
price P5.00 but does not exceed
P6.50/pack -P5.00/pack 4. net retail
price is below P5.00/pack -P1.00/pack
Inspection Fee
1 paid by the wholesaler, manufacturer, producer, owner or operator of redrying plant
immediately before removal from the establishment
2 in case of imported leaf tobacco and its products, to be paid by the importer before
removal from customs' custody
P0.50/thousand cigars or fraction thereof
P0.10/thousand cigarettes or fraction thereof
P0.02/kilogram of leaf tobacco or fraction thereof
P0.03/kilogram or fraction thereof, of scrap and other manufactured tobacco
EXCISE TAX ON PETROLEUM PRODUCTS
TAXABLE ARTICLE
Lubricating oils and greases
Processed gas
Waxes and petrolatum
Denatured alcohol to be used for
motive power
TAX RATE
P4.50/liter and kg of vol capacity or
wt
P0.05/ liter of volume capacity
P3.50/kilogram
P0.05/liter of volume capacity
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Naphtha, regular gasoline and
other similar products of distillation
Leaded premium gasoline
Unleaded premium gasoline
Aviation turbo jet fuel
Kerosene
Kerosene, when used as aviation
fuel,
Diesel fuel oil, and on similar fuel
oils having more or less the same
generating power
Liquefied petroleum gas
Liquefied petroleum gas used for
motive power
Asphalts
Bunker fuel oil, and on similar fuel
oils having more or less the same
generating power
P4.80/ per liter of volume capacity

same tax on aviation turbo jet fuel
P0.00/liter
equivalent rate as the excise tax on
diesel fuel oil
P0.56/kilogram
EXCISE TAX ON MISCELLANEOUS ARTICLES

1. Automobiles
Engine Displacement (in cc.)
Gasoline
Diesel
Up to 1600
Up to 1800
1601 - 2000
1801 2300
2001 - 2700
2301 3000
2701 or over
3001 or over
Tax Rate
15%
35%
50%
100%
a) Automobiles acquired for use by persons or entities operating within the freeport zone
-- exempt
1) Provided, that utility vehicles of registered zone enterprises, which are
indispensable in the conduct and operations of their business, such as delivery
trucks and cargo vans with gross vehicle weight above three (3) metric tons may be
allowed unrestricted use outside the freeport zone
2) Provided, further, vehicles owned by tourist-oriented enterprises utilized exclusively
for the purpose of transporting tourists in tourism-related activities, and service
vehicles of freeport registered enterprises and executives, such as company service
cars and expatriates' and investors' automobiles brought in the name of such
enterprises, may be used outside the freeport zone for such periods as may be
prescribed by the Departments of Finance, and Trade and Industry, the Bureau of
Customs and the Freeport authorities concerned, which in no case shall exceed 14
days/ month
3) tourist buses and cars, service vehicles of registered freeport enterprises and
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company service cars used for more than an aggregate period of 14 days/month
outside of the freeport zone ( the owner or importer shall pay the corresponding
customs duties, taxes and charges
4) personally-owned vehicles of residents, including leaseholders of residences inside
the freeport zone,
---use of such vehicles outside of the freeport zone
--shall be deemed an introduction into the Philippine customs territory
--such introduction shall be deemed an importation into the Philippines
--shall subject such vehicles to customs duties, taxes and charges, including
excise tax due on such vehicle
b) Non-essential Goods -- 20% based on the wholesale price or the value of importation
used by the Bureau of Customs
1) All goods commonly or commercially known as
--jewelry (real or imitation)
--pearls
--precious and semi-precious stones and imitations
--goods made of, or ornamented, mounted or fitted with, precious metals or
imitations thereof
--ivory (not including surgical and dental instruments, silver-plated wares, frames
or mountings for spectacles or eyeglasses, and dental gold or gold alloys and
other precious metals used in filling, mounting or fitting of the teeth)
--opera glasses and lorgnettes
2) Perfumes and toilet waters
3) Yachts and other vessels intended for pleasure or sports
EXCISE TAX ON MINERAL PRODUCTS
1. Mineral Products
a) On coal and coke -- P10.00/metric ton
b) On all nonmetallic minerals and quarry resources -- 2% based on the actual market
value of the gross output thereof at the time of removal (if locally extracted or
produced) or the value used by the Bureau of Customs in determining tariff and
customs duties, net of excise tax and value-added tax ( in the case of importation)
c) c) locally extracted natural gas and liquefied natural gas
2%
d) On all metallic minerals

--Copper and other metallic minerals
On the 1st 3 years upon the effectivity of RA 7729 1%
On the 4th and 5th years
1%
On the 6th year and thereafter
2%
--Gold and chromite
2%
e) On indigenous petroleum -- 3% of the fair international market price
TITLE VII
DOCUMENTARY STAMP TAX
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A. WHAT is a DST?
It is a tax on documents, instruments & paper evidencing the acceptance,
assignment, sale or transfer of an obligation, right, or property incident thereto.
I.
NATURE of DST
It is an excise tax because it is really imposed on the transaction than on the
document. It is paid only once. The liability to the tax and the amount thereof are
determined from the face of the document itself.
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II. WHO are the persons liable: (M I S A T)
The ones
1) M aking
2) I ssuing
3) S igning
4) A ccepting
5) T ransfering
the document, instrument or paper
III.
DOCUMENTS SUBJECT TO TAX

Corporate documents
Insurance policies
Special contracts
Certificates
Other assignments and renewals
Commercial documents
Deeds of sale
Maritime documents
Luxuries
A. CORPORATE DOCUMENTS
1) Original issue of shares of stock (s175)
(a) Cost of imposition is borne by the corporation originally issuing the stock
certificate
(b) Revenue Memorandum Circular #47-97
The documentary stamp tax on original issues of certificates of stock
as provided under Section 175 of the Tax Code attaches upon
acceptance of the stockholders subscription in the capital stock of a
corporation regardless of the physical issuance and delivery to the
stockholder of the certificate of stock evidencing his stockholding.
Therefor, taxes accrue at the time the shares are issued.
Meaning of the term original issue is - point at which the stockholder
acquires and may exercise attributes of ownership over the stocks.
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(c) Phil. Consolidated Coconut Industries v CIR, 70 SCRA 22
Certificates of stock temporarily subject to suspensive conditions shall
only be liable for DST only when released from said conditions. For
then and only then shall they truly acquire any practical value for their
owners.
(d) CIR v Heald Lumber Company, 10 SCRA 37
A mere transfer of surplus to capital and an increase in stated value of
the outstanding no par value shares does not constitute and issuance
of share and consequently, no additional stamp tax is due in such
increase.
2) On proxies (s192)
Basis: each proxy document
Exemption: proxies issued at affecting the affairs of association, or
corporation organized for religious, charitable or literary purposes.
B. COMMERCIAL DOCUMENTS
1) Debentures and Certificates of indebtedness (S174)
Basis: face value of document
2) Bonds, debentures, certificates of stock or indebtedness issued in foreign
countries (S177)
Basis: fixed tax as required by law on similar instruments when issued, sold
or transferred in the Philippines.
Issued in any foreign country but sold or transferred in the Philippines
3) Certificates of profits or interest in property or accumulations (S178)
Basis: face value
4) Bank Checks, drafts, certificates of deposit not bearing interest, and other
instruments (S179)
Basis: fixed on each instrument
the tax applies only to inland bank checks, drafts, or certificates of deposit not
drawing interest
5) All bonds, loan agreements, promissory notes, bills of exchange, drafts,
instruments and securities issued by the government or any of its
instrumentalities, deposit substitute debt instruments, certificates of deposits
bearing interest and others not payable on sight or demand (s180)
Basis: Face value
Exemptions:
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6)
7)
8)
9)
a.) bank notes issued for circulation

b.) loan agreements and promissory notes that aggregate of which does not
exceed P250.00 executed by an individual for his purchase, on
installment, of a house, lot, motor, vehicle, appliance or furniture, for his
personal use or that of his family
Renewal is also subject to dst
renewal postponement of the maturity of the obligation dealth with; an
extension of the time in which that obligation may be discharged.
Tax on renewal shall be at the same rate as the tax on the original document.
Upon acceptance of bills of exchange and others (s181)
Document taxable: any bill or exchange or order for the payment of money
purporting to be drawn in the foreign country but payable in the Philippines.
Basis: Face value
Foreign bills of exchange and letters of credit (s182)
Document taxable: all foreign bills of exchange and letters of credit drawn in
but made payable outside the Philippines.
Basis: face value
Warehouse Receipts (s189)
Basis: each warehouse receipt
Exemption: warehouse receipt issued to any one person in any one calendar
month covering property the value of which does not exceed P200.
Bills of lading or receipts (s191)
Basis: Value of the goods
Exemptions: charter party, freight tickets covering goods, merchandise or
effects carried as accompanied baggage of passengers on land and water
carriers primarily engaged in the transportation of passengers.
C. INSURANCE POLICIES
1) Life insurance policies (s183)
Basis: Amount insured by an such policy
The tax is collectible not only on the original policy but also upon renewals
No DST is due on insurance policies issued by a Phil. company to persons in
other countries. (S43,RR26)
The tax is imposed upon issuance of the policy even if at that time premium
had not yet been paid.
If the policy is cancelled, no refund of the tax shall be made.
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2) Property insurance policies (s184)
Basis: Premium charged
3) Fidelity bonds and other insurance policies (s185)
4) Policies of annuities and pre-need plans (s186)
Annuity - Basis: Capital of the annuity
Pre-need plans - Basis: Value or amount of the plan
5) Indemnity Bonds (s 187)
Exemption: such as may be required in legal proceedings (eg. Injunction,
attachment)
6) Certificates (s188)
certificate of damage or otherwise issued by any public official in public
capacity for the purpose of giving info or establishing proof of fact.
Basis: each document
D. DEEDS OF SALES
1) Sales, agreements to sell, memoranda of sales, deliveries or transfer of due-bills,
certificates of obligation, or shares or certificates of stock (s176).
Basis: Par value of due-bill, certificate of obligation or stock
2) Deeds of sale and conveyances of real property (s196)
Basis: Tax rate based on amount
Property must be located in the Philippines
Deeds of partition & deeds of redemption, taxable
E. SPECIAL CONTRACTS
1) Powers of attorney (s193)
Basis: Fixed tax rate
Exemption: Collection of claims due from or accruing to the government of
the Philippines or the government of any province, city or municipality.
2) Leases and other hiring agreement (s194)
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Basis: Fixed tax rate
3) Mortgages, pledges and deeds of trust (s195)
Basis: Tax rate based on amount
transactions must be effected and consummated within the Philippines
tax is based on the amount secured and not on the value of property
mortgaged
there must be an existing debt
4) Jai-alai, horse race tickets, lotto or other authorized numbers games (s190)
Basis: each ticket
F. MARITIME DOCUMENTS
Charter parties and similar instrument (s197)
V. EXEMPTIONS: (SICFAGOW)
1. SOLE USE - Certified copies and other certificates placed upon documents,
instruments, and papers by the national, provincial, city or municipal
governments made in the instance and for the sole use of some other branch of
the national, provincial, city or municipal governments
2. GOVERNMENT & INDIGENT DOCUMENTS FILED IN COURT - Papers and
documents filed in courts by or for the national, provincial, city or municipal
governments, affidavits of poor persons for the purpose of proving poverty
3. COMPULSORY INFORMATION FOR STATISTICAL PURPOSES - Statements
and other compulsory information required of persons or corporations by the
rules and regulations of the national, provincial city or municipality government
exclusively for statistical purposes and which are wholly for the use of the bureau
in which they are filed, and not at the instance or for the use or benefit of the
person filing them
4. FRATERNAL/BENEFICIARY ORGANIZATION INSURANCE POLICIES OF
ANNUITIES - Policies of insurance of annuities made by a fraternal or beneficiary
society, order, association or cooperative company, operated on the lodge
system or local cooperation plan and organized and conducted solely by the
members thereof for the exclusive benefit of each member and not for profit
5. CERTIFICATES OF THE ASSESSED VALUE OF LANDS NOT EXCEEDING
P200 - Certificates of the assessed value of lands not exceeding P200 in value
assessed, furnished by the provincial, city or municipal treasure to applicants for
registration of the title to land.
6. CERTIFICATES OF OATHS ADMINISTERED TO ANY GOVERNMENT
OFFICIAL IN HIS OFFICIAL CAPACITY - Certificates of oaths administered to
any government official in his official capacity or of acknowledgment by any
government official in the performance of his official duties, written appearance in
any court by any government official in his official capacity.
7. CERTIFICATES OF THE ADMINISTRATION OF OATHS FOR PAPER
AUTHENTICITY - Certificates of the administration of oaths to a person as to the
authenticity of a paper required to be filed in court by any person, whether the
proceedings be civil or criminal
8. WRITTEN APPEARANCES - Written appearances in any court by any
government official in his official capacity
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VI. PAYMENT OF DOCUMENTARY STAMP TAX
A. WHO are required to accomplish and file a dst DECLARATION under BIR Form
2000
1) Any person liable to pay dst on a taxable document/transaction when tax due
is >P200.
2) Any Revenue Collection Officer, duly authorized to sell loose dsts
3) Any person authorized to use DST Metering Machine
B. WHEN to file RETURN
1) within 10 days after close of month when taxable document was (misat. see
III)
2) within 5 days after close of each week for Revenue Collection Officers
3) each time ds are purchased for reloading, for dst metering machine
authorized persons
C. WHEN to PAY
1) general rule: simultaneous with filing of return
2) exception: purchase and actual affixture
Actual Stamping System: loose documentary stamps
Constructive Stamping System: constructive affixture
printing through a DS metering machine
D. WHERE to FILE/PAY
1) authorized agent bank within the jurisdiction of the revenue district office
having jurisdiction over the residence or principal place of business of the
taxpayer
2) revenue district officer, collection agent or his duly authorized treasurer of the
city or municipality in which the taxpayer has his legal residence or principal
place of business
E. AFFIXTURE
1) In general: DS is affixed on the original copy of the document
2) Exception: duplicate copy when the same has been substituted and used in
place of the original
F. FAILURE TO STAMP TAXABLE DOCUMENT
1) will not render the document void
2) but document cannot be:
3) recorded in government offices
4) cannot be accepted in evidence in court
G. PENALTY
25% surcharge plus 20% interest per annum
H. DUTY OF NOTARY PUBLIC
Not to add his jurat or acknowledgment to any document subject to
documentary stamp tax unless the proper documentary stamps are affixed
thereto and cancelled.
LINCOLN PHILIPPINE LIFE vs CA (GR 118043, July 23, 1998)
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Facts: Lincoln is a domestic corp. engaged in life insurance business. In 1984, it issued
50,000 shares as dividends, with par value of P100 or a total of P5M. Lincoln paid DST
on each certificate based on its par value.
Issue: What is the proper basis of DST, par value or book value of the shares?
Held: There is no basis to treat stock dividends as a distinct class from ordinary shares
of stock since 224 of the NIRC merely distinguishes certificates of stock & not the
shares themselves as one with par value and one without. There is therefore no
reason for determining the actual value of such dividends for purposes of DST if the
certificates indicate a par value. The tax is levied upon the specific transactions which
gives rise to the original issuance but on the privilege of issuing certificates of stock.
PHIL. HOME ASSURANCE vs CA (GR 119446, Jan 21, 1999)

Facts: Petitioners are domestic corps. engaged in the insurance business. They claim
a refund on the DST they paid for insurance policies they issued. They maintain that
since the premiums on the policies were not paid, they are considered as never to
have taken effect pursuant to the Insurance Code & therefore, no DST were due
thereon.
Issue: Was DST properly levied?
Held: YES. DST is levied on the exercise of the privilege executing specific
instruments, and must be paid upon the issuance of the instruments, without regard to
whether the contracts which gave rise to them are rescissible, void, voidable or
unenforceable.
TITLE VIII
REMEDIES
I. Civil Remedies for Collection by the Government: (Sec. 205)
1. Distraint of goods, chattels or effects
2. Levy upon real property and interest therein
3. Civil or criminal action
One or all of the remedies may be pursued simultaneously in the discretion of
revenue authorities
Distraint or levy NOT availed of where the amount of tax involved is NOT MORE
than P100
Prescriptive Periods:
1) Assessment of Tax Liability
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(a) 3 years from the last day prescribed by law for filing when return is filed:
1. before the last day prescribed by law or
2. on the last day prescribed by law
(b) 3 years from filing of return when the return is filed beyond the period prescribed
by law (Sec. 203)
(c) 10 years after the discovery of the falsity, fraud or omission in case of:
1. false or fraudulent return with intent to evade tax, or
2. failure to file a return (Sec. 222 a)
The following are covered by the general rule (Sec. 203):
false return-filed with no intent to evade tax
fraudulent return-filed with intent to evade tax
(d) within the period agreed upon, when before the expiration of the period in Sec.
203 for the assessment of tax, both the Commissioner and the taxpayer have
agreed in writing to its assessment after such time. Such period agreed upon
may be extended by written agreement before the expiration of the previous
period. (Sec.222 b)
2) Collection of Tax Liability

(a) 3 years from assessment (according to Atty. Baez)
5 years from assessment (according to Abella/Abiog/Sarmiento book)
(b) 5 yrs from assessment in case of a false or fraudulent return or failure to file a
return
(c) in case of an agreed pd. for assessment, collection shall be within the pd. agreed
upon in writing before the expiration of the 5 yr. Pd. (Sec. 222 c,d)
Suspension of Prescriptive Periods: (Sec. 223)
1) Periods suspended:
(a) periods for assessment in Sec. 203 and 222
(b) beginning of distraint or levy
(c) proceeding in court for collection
2) Grounds for suspension of prescriptive periods [ R LOP2 ]
a) Commissioner is Prohibited from making the assessment or beginning distraint or
levy or a proceeding in court and for 60 days thereafter
b) Taxpayer requests for Reinvestigation which is granted
c) Taxpayer cannot be Located in the address given in the return filed, but if the
taxpayer informs the Commissioner of a change in address the prescriptive
period will not be suspended
d) When the warrant is served upon the taxpayer and no Property could be located
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e) When the taxpayer is Out of the Phils.
When may taxes be compromised? [ VIC ]
1. A reasonable doubt as to the Validity of the claim against the taxpayer exists; or
2. The financial position of the taxpayer demonstrates a clear Inability to pay the
assessed tax. (Sec. 204 A)
3. Criminal violations EXCEPT:
a) those already filed in court
b) those involving fraud (Sec 204 B)
Limitations for compromise of tax liability: (Sec. 204 A)
1. Minimum compromise rate:
a) In case of financial incapacity, 10% of basic assessed tax
b) In other cases, 40% of basic assessed tax
2. Subject to approval of Evaluation Board (composed of Commissioner and 4 Deputy
Commissioners):
a) when basic tax involved exceeds P1,000,000 or
b) where the settlement offered is less than the prescribed minimum rates
When may taxes be abated or cancelled? [ UJ ]
1. The tax or any portion thereof appears to be Unjustly or excessively assessed; or
2. The administration and collection costs involved do not Justify the collection of the
amount due (Sec. 204 B)
Constructive Distraint (only for personal property):

1) When may this occur? (RIRHO)
a) taxpayer is Retiring from any business subject to tax
b) taxpayer is Intending to leave the Phil. or to Remove his property therefrom
c) taxpayer Hides or conceals his property
d) taxpayer performs any act tending to Obstruct the proceedings for collection of
any tax due
2) Procedure
(a) Require the taxpayer or any person having control of the property to
1. sign a receipt covering property distrained
2. obligate himself to preserve the same intact and unaltered
3. not to dispose of the property in any manner, without the authority of the
Commissioner
(b) Where taxpayer or person in possession refuses to sign:
1. distraining officer shall prepare a list of the property distrained
2. in the presence of 2 witnesses, leave a copy in the premises where the
property is located (Sec. 206)
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Distraint of Personal Property
WHO MAY EFFECT DISTRAINT
AMOUNT INVOLVED
Commissioner
or
his
duly
authorized In
excess
of
representative
P1,000,000
Revenue District Officer
P1,000,000 or less
1) Property Siezed or Distrained
a) goods, chattels, effects and other personal property
b) including stocks and other securities, debts, credits, bank accounts, interests in
and rights to personal property
2) Report on the Distraint
a) by the distraining officer
1. submitted within 10 days from receipt of the warrant
2. submitted to the Revenue District Officer and to the Revenue Regional
Director
b) by the Revenue Regional Director-consolidated report, as may be required by the
Commissioner
3) The order of Distraint may be lifted by the Commissioner or his representative (Sec.
207 A)
4) Procedure
(a) Goods, effects, chattels and other personal property
1. a copy of an account of the property distrained, signed by the officer, shall be
left either from the owner or the person from whom the property was taken or
at the dwelling or place of business of such person and with someone of
suitable age and discretion
2. statement of the sum demanded
3. time and place of sale
(b) Stocks and other Securities

1. serving a copy of the warrant upon the taxpayer AND upon the president,
manager, treasurer or other responsible officer of the issuing corporation,
company, association
(c) Debts and Credits
1. leaving a copy of the warrant with the person owing the debts or having in his
possession such credits or his agent
2. warrant shall be sufficient authority to pay the Commissioner the amount of
such debts or credits
(d) Bank accounts (garnishment)
1. serve a warrant of garnishment upon the taxpayer AND upon the president,
manger, treasurer or other responsible officer of the bank
2. bank shall turn over to the Commissioner so much of the bank accounts as
may be sufficient (Sec. 208)
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Levy on Real Property
1. When exercised: before, simultaneously or after the distraint of personal property
belonging to the taxpayer
2. Procedure:
(a) internal revenue officer shall prepare a duly authenticated certificate showing the
name of taxpayer, amounts of tax and penalty due. Enforceable throughout the
Philippines
(b) officer shall write upon the certificate a description of the property upon which
levy is made
(c) written notice of levy shall be mailed or served upon
1. the Register of Deeds where the property is located and
2. the taxpayer or agent/manager of the business in respect to the tax liability or
to the occupant of the property
(d) If personal property of taxpayer is not sufficient to satisfy the tax due, levy on real
property shall proceed within 30 days after distraint
(e) Report on levy
1. by levying officer
i. submitted within 10 days from receipt of warrant
ii. submitted to the Commissioner or his representative
2. by the Revenue Regional Director-- consolidated report, as may be required
by the Commissioner
(f) The warrant may be lifted by the Commissioner or his representative
Tax Lien:
superior to judgment claim of private property
attaches not only from the time the warrabt was served BUT from the time tax was
due and demandable
1. Nature-- a lien in favor of the Government of the Philippines when a person liable to
pay a tax neglects or fails to do so upon demand
2. Duration-lien exists from the time assessment is made by the Commissioner until
paid, with interests, penalties and costs that may accrue in addition thereto
3. Extent-upon all property and rights to property belonging to the taxpayer
4. Effectivity against third persons-only when notice of such lien is filed by the
Commissioner in the Register of Deeds in the province/city where the property is
situated (Sec. 219)
Civil and Criminal Actions:
1. Brought in the name of the Government of the Philippines
2. Conducted by legal officers of the BIR
3. In case of actions for recovery of taxes or enforcement of a fine, penalty or forfeiture,
must be filed with the approval of the Commissioner (Sec. 220)
Forfeiture: (Sec. 224-225)
How enforced
Chattels
and Seizure,
sale
or
Removable fixtures
destruction of specific
forfeited property
Sale
Judgment
of
condemnation and sale
in a legal action, civil or
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criminal
Real Property
Distilled
Spirits,
liquors,
cigars,
cigarettes
manuf.
Products of tobacco
and apparatus used
for their production
Other
articles
subject to excise tax
which have been
manuf. Or removed
in violation of this
Code;
dies
for
printing or making
fake
revenue
stamps and labels
In the same manner and

under
the
same
conditions as sales of
personal
property
distrained
Upon forfeiture, may
order of the the sale
may be health or
prejudicial
be
destroyed
by
Commissioner
where
injurious to public to law
enforcement
Upon forfeiture may be

sold or destroyed at the
discretion
of
the
Commissioner *forfeited
property shall not be
destroyed until at least
20 days from seizure
II. Remedies of a Taxpayer

1. Administrative
a) protest of assessment
b) claim for refund
2. Judicial Relief
Requisites of a valid assessment:
1. in writing
2. must state the facts and law upon which it is based (Sec. 228)
Kinds of Assessment:
1. Post Reporting notice-Initial findings are presented and discussed with the taxpayer;
informal conference can be held
2. Pre-assessment Notice
Instances where a pre-assessment notice NEED NOT be given: (MET DC)

a) when the finding for deficiency tax is a result of Mathematical error in the
computation of tax appearing on the face of the return; or
b) Discrepancy is determined between the tax withheld and the amount actually
remitted by the withholding agent
c) a taxpayer who opted to claim a refund or tax credit was determined to have Carried
over and applied the amount against succeeding tax liabilities
d) Excise tax has not been paid
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e) an article locally purchased or imported by an exempt person has been sold, traded
or Transferred to non-exempt persons
1. Final Assessment
(Revenue Regulation No. 12-85 and Sec. 228)
*pls. read Revenue Regulation No. 12-85 for the procedure of assessment
Protest of Assessment:
1. File a request for reinvestigation or reconsideration within 30 days from receipt of the
assessment
request for reinvestigation-a plea for re-evaluation of an assessment on the basis
of newly discovered or additional evidence that a taxpayer intends to present in
the reinvestigation. Involves a question of fact or law or both.
request for reconsideration-a plea for re-evaluation of the assessment on the
basis of existing records without need of additional evidence. Involves a question
of fact or law or both. (Revenue Regulation No. 12-85)
2. Within 60 days from filing of protest, all relevant supporting documents should have
been submitted, otherwise, the assessment shall become FINAL (cannot be
appealed). (Sec. 228)
Appeal of Protest to the CTA (Judicial Relief): (Sec. 228)
1. Grounds:
a) if the protest is denied in whole or in part or
b) is not acted upon within 180 days from submission of documents
2. Appellate Court: Court of Tax Appeals
3. Period to appeal:
a) within 30 days from receipt of decision denying the protest or
b) 30 days from the lapse of 180 day period
4. Effect of failure to appeal: the decision shall be final, executory and demandable
Parties Entitled to Refund
General Rule: The person entitled to ask
same.
Exceptions:
Case
Who is entitled to ask
for refund
Where tax has The taxpayer (even if
been shifted
tax has been actually
shifted by the taxpayer
to his customers as in
sales tax an even if the
tax has been billed as
a separate item in the
invoice
(CIR
vs
American Rubber)
for a refund is the taxpayer who paid the

Notes
Because the sales tax is
imposed directly on the seller
as an occupation tax for selling
Once recovered, the seller
must hold the refunded taxes
in trust for the individual
purchasers who advanced
payment thereof and whose
name must appear on his
records
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Where payer is
not the taxpayer
(e.g.
theater
owners who paid
illegal municipal
taxes billed to
and
collected
from
theater
goers)
Where payer is
withholding agent
Theater goers are not

entitled to claim refund
of such taxes (Medina
vs City of Baguio)
Withholding
agent "Taxpayer" is any person
(CIR vs Procter & subject to tax imposed by this
Gamble)
title (income tax).
The
withholding agent is directly
and independently liable for
the correct amount of tax that
should be withheld, and of
deficiency
assessments,
surcharges and penalties
Where
donor's Donee is the proper
tax was assumed party to claim refund of
by donee
the donor's tax (even if
the tax was advanced
by the donor)
When may taxes be refunded or credited?
1. Taxes refunded or credited: (EPWroSUn)
a) Taxes erroneously or illegally received
b) Penalties imposed without authority
c) Any sum alleged to have been excessively or in any manner wrongfully collected
d) Refund the value of internal revenue stamps when returned in good condition by
the purchaser
e) Redeem or change unused stamps rendered unfit for use and refund their value
upon proof of destruction, in the discretion of the Commissioner
2. Procedure for credit/refund
a) taxpayer files in writing with the Commissioner a claim for credit or refund
b) filed within 2 yrs after the payment of the tax or penalty
c) a return filed showing an overpayment shall be considered a written claim for
credit or refund
3. Suit or proceeding for refund
a) a claim for refund or credit has been filed with the Commissioner
b) the suit may be maintained whether or not such tax/penalty/sum has been paid
under protest
c) in any case, suit must be filed within 2 yrs. from date of payment of the
tax/penalty regardless of any supervening cause that may arise after payment
d) the Commissioner may, even without a written claim, refund or credit a tax, where
on the face of the return upon which payment was made, payment appears to be
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T AX AT I O N L A W
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erroneous. (Sec. 204 C , 229)
4. Tax Credit Certificate
a) may be applied against any internal revenue tax, except withholding taxes
b) original copy is surrendered to the revenue officer
c) no tax refund will be given resulting from availment of incentives granted by law
where no actual payment was made (Sec. 204 C)
5. Forfeiture of cash refund/tax credit
a) Forfeiture of refund in favor of the government when a refund check or warrant
remains unclaimed or uncashed within 5 yrs. from date of mailing or delivery
b) Forfeiture of Tax Credit-a tax credit certificate which remains unutilized after 5
yrs. from date of issue, shall be invalid, UNLESS revalidated. (Sec. 230)
Commencement of 2-year period under Sec . 204(3) and 229
Case
2-year period starts from
Notes
If the tax sought From date tax was paid
to be refunded is (CIR v Victorias Milling)
illegally
or
erroneously
collected
If the tax is paid From date of the last or final There is no payment
in installment or installment or payment (CIR until the whole/entire
only in part
vs Prieto; CIR v Palanca)
tax liability is fully paid
If the taxpayer From conversion of the Merely
making
a
merely made a deposit to payment (Union deposit
is
not
deposit
Garment v Coll)
equivalent to payment
until the amount is
actually applied to the
specific purpose for
which it was deposited
If tax has been From date it falls de at the A
taxpayer
who
withheld
from end of the taxable year contributes
to
the
source (through (Gibbs vs CIR)
He is withholding tax system
the
withholding deemed to have paid his tax performs
and
tax system)
liability when the same falls extinguishes his tax
due at the end of the obligation for the year
taxable year (Aguilar vs concerned.
In other
CA)
words, he is paying his
tax liabilities for that
year.
Corporate
At the earliest, on the date It is only then that the
taxpayer
of the filing of the adjusted corporation
can
final
return
(ACCPA ascertain whether it
Investment vs CA) The 2-yr made
profits
or
period provided in Sec 229 incurred losses in its
should be computed from business operations
the time of filing of the
Adjusted Return or Annual
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If tax was not

erroneously
or
illegally paid but
the
taxpayer
became entitled
to refund because
of
supervening
circumstances
ITR and final payment of

income tax (CIR vs TMX
Sales)
From the date the taxpayer
becomes entitled to refund
and not from the date of
payment (CIR vs Don
Pedro Central Azucarera)
Before the right to

refund or credit arises,
there is absolutely no
basis to file a claim with
the CIR or commence
a suit in court
Action to Contest Forfeiture of Chattel: (Sec.231)

BEFORE THE SALE
AFTER THE SALE
Period to file
anytime before sale or Within 6 months from the
destruction of property
sale
Party against the person seizing the the person seizing the
whom
the property
or
having property
or
having
action is filed
possession thereof
possession thereof
Cause
of Enjoin the sale
Recover net proceeds
Action
realized at the sale
Addl. Reqt.
File a bond
Jurisdiction of the Court of Tax Appeals:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges/penalties
imposed, or other matters arising under the NIRC or any law administered by the
BIR
2. Decisions of the Commissioner of Customs in cases involving liability for customs
duties, fees or other money charges; seizure, detention of release of property
affected; fines, forfeitures or other penalties imposed in relation thereto; or other
matters arising under the Customs Law or other law administered by the Bureau of
Customs (RA 1125 as amended by RA 3457)
Sale of Personal Property Distrained and of Real Property Levied upon
(Sections 209--216)
DISTRAINT
OF
PERSONAL PROPERTY
I. Advertisement/Notice
When made
Advertisement period: 20
days
How made
LEVY
OF
PROPERTY
REAL
within 20 days after the levy

advertisement period shall
be at least 30 days
A notice shall be exhibited posting a notice at the main
in not less than 2 public entrance
of
the
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places
in
the
municipality/city
where
distraint is made; one place
shall be at the office of the
Mayor
Contents
II. Sale
Time of Sale
Where made
How made
time and place of sale

articles distrained
shall not be less than 20

days after notice to the
owner or possessor of the
property AND publication or
posting of notice
At the place fixed in the
notice
municipal/city building AND

in a public/conspicuous
place in the district where
the property is located b)
publication, once a week for
3 weeks in a newspaper of
general circulation in the
municipality/city where the
property is located
a)amount
of
tax
and
penalties due b) name of
taxpayer against whom
taxes are levied c) short
description of the property
to be sold
After the periods for posting
and publication have been
complied with
at the main entrance of the
municipal building or city
hall or on the premises to
be sold as the notice of sale
shall specify
a) officer shall sell the

property at a public auction
to the highest bidder for
cash or, with the approval of
the Commissioner, through
duly licensed commodity or
stock exchanges b) In case
of
stocks
and
other
securities, the officer shall
execute a bill of sale which
he shall deliver to the buyer
and a copy furnished to the
issuing corporation. The
issuing corporation shall
make a corresponding entry
in its books and if required
to do so, issue new
certificates of stock
Excess/Residu a)Residue over and above In case the proceeds of the
e of property what is required to be paid sale exceeds the claim and
sold
(tax due and expenses) cost of sale, the excess
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Report of Sale
shall be turned over to the

owner of the property sold.
b)Expenses
chargeable
shall
include
actual
expanses of seizure and
preservation of property
pending sale.
made in writing within 2
days, by the officer making
the sale, submitted to the
Commissioner.
shall be turned over to the

owner of the property
a) within 5 days after the

sale, a return made by the
officer making the sale shall
be entered in the records of
the Revenue Collection
Officer, Revenue District
Officer and Rev. Reg.
Director
b)
Revenue
Collection
Officer
shall
deliver to the purchaser a
certificate from his records
showing: i. proceedings of
sale
ii. description of
property sold
iii. name of
purchaser
iv. amount of
taxes, penalties and interest
III. Release of If prior to the sale, all proper At any time before the day
Property to be charges are paid to the fixed for the sale, the
sold
officer conducting the sale, taxpayer may discontinue
the property shall be the sale by paying taxes,
restored to the owner.
penalties and interest due
IV. Forfeiture/Purchase by government
When made
a)when the bid for the no bidder or highest bid is
property during the sale is insufficient to pay the
not equal to the amount of amount due
tax or b)the bid is less than
the actual market value of
the goods offered for sale
How made
Commissioner
or
his a)
revenue
officer
representative
may conducting
sale
shall
purchase the property in declare
the
property
behalf of he National forfeited to the government
Government for the amount in satisfaction of the claim
due thereon
b) within 2 days from
forfeiture, officer shall make
a return of the proceedings
c) Register of Deeds, upon
registration of declaration of
forfeiture shall transfer title
of the property to the
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Redemption
Resale
a)May be resold by the

Commissioner or his deputy
and b) proceeds remitted to
the National Treasury and
accounted for as internal
revenue
V. Redemption of Property Sold

Period
of
redemption
Who
may
redeem
Procedure
Rights
of
Person
redeeming the
property
government
within 1 year from date of
forfeiture redeemed by the
taxpayer or anyone in his
behalf effected by paying to
the
Commissioner
or
Revenue Collection Officer
the full amount of taxes,
penalties plus interest and
costs of sale if no
redemption made, forfeiture
is absolute
a)Public
Auction--notice
given of sale for not less
than 20 days b)Private sale
can be made with prior
approval from the Sec. Of
Finance c)In either case,
proceeds of sale shall be
deposited with the National
Treasury
One year from date of sale *
owner shall not be deprived
of possession of property
sold and shall be entitled to
income thereof until the
expiration of the period for
redemption
Delinquent
taxpayer
or
anyone for him
a) pay to the Revenue
District Officer the amount
of taxes, penalties and
interest thereon from date of
delinquency to date of sale
b) pay also interest on
purchase price at the rate of
15% p.a. form date of
purchase
to
date
of
redemption
a) delivery of the certificate
issued to the purchaser b)
certificate of redemption
from the Revenue District
Officer
c)
property
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T AX AT I O N L A W
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redeemed shall be free from
lien of such taxes and
penalties
CIR vs CA, CTA & BIR (GR 117254, Jan 21, 1999)
Facts: On April 2, 1986, Paramount filed its Annual ITR. It previously paid an amount
representing its quarterly income tax. The amount paid was greater than the income
tax due on the return. Thus Paramount's return showed a refundable amount. On
April 14, 1988, BPI, as Paramount's Liquidator, filed a letter claiming refund.
Issue: When will be the 2-yr prescriptive period refund claims commence, from April 2,
1986 when the Annual ITR was filed or April 15, 1986, when the Adjustment Return
could still be filed without incurring delay in under 70 (b) of the NIRC?
Held: 230 of the NIRC provides for a 2-yr prescriptive period to be counted " from the
date of payment of tax" for actions for refund of corporate income tax. Thus, the 2-yr
period should be reckoned from the actual filing of the Adjustment Return or Annual
ITR, because at this point, it can be determined whether there has been an
overpayment of tax. Thus, the claim for refund has already prescribed.
PBCom vs CIR (GR 112024, Jan 28, 1999)
Facts: PBCom filed its quarterly ITR for the 1st & 2nd qtrs. of 1985. Later, it suffered
losses and reported a net loss for 1985 & 1986. However, it earned rent for which
taxes were previously withheld by their lessees. On Aug 1987, it requested for a tax
credit representing tax overpayments in the 1st & 2nd qtrs of 1985. On July 1988, it also
claimed refund of the creditable taxes withheld from the 1985 & 1986 rentals.
Issue: WoN PBCom, relying on RMC #7-85 changing the prescriptive period for tax
refunds from 2 to 10 yrs. is barred by prescription.
Held: YES. Taxes are the lifeblood of the nation, thus the modes to enforce collection
should be summary & rarely interfered with. From the same perspective, claims for
refund should be exercised within the time fixed by law in order not to unduly delay the
BIR in its collection functions. 229 of the NIRC provides for a 2-yr prescriptive pd.
The revenue regulation on the other hand, was beyond the provisions of the law. An
erroneous interpretation of the law does not vest a taxpayer with a shield against
judicial action. Thus PBCom was already barred from filing its claim.
CIR vs BF GOODRICH (GR 104171, Feb. 24, 1999)
Facts: The BIR assessed a deficiency donor's tax against BF Goodrich for a sale of
land it concluded more than 6 yrs. earlier. Goodrich claims that the BIR's right to
collect has prescribed, having gone beyond the 5-yr period prescribed by 331 of the
NIRC.
Issue: WoN CIR's right to collect has prescribed?
Held: It is clear that the assessments were issued beyond the 5-year prescriptive
period.
For the purpose of safeguarding taxpayers from any unreasonable
examination, investigation or assessment, our tax laws provides a statute of limitation
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in the collection of taxes. Being a remedial measure, the law on prescription should be
liberally construed in order to afford such protection.
TITLE X
STATUTORY OFFENSES AND PENALTIES
Chapter I - ADDITIONS TO THE TAX
Additions to the tax are:
1. Civil Penalties
a) 25% of the amount due for RIDT;
b) 50% of the tax or the deficiency tax for willful neglect to file or false or fraudulent
return willfully made.
c) Interest - 20% per annum on any unpaid amount of tax or such higher rate as
may be prescribed by the rules and regulations.
2. From the date prescribed for payment until the amount is fully paid.
a) Deficiency Interest
b) Delinquency Interest
c) Interest on Extended Payment
3. Date of notice and demand until it is paid.
a) Failure to file certain Information Returns
P 1,000 for each failure but not exceeding P 25,000 during a calendar yr.
b) Failure of withholding agent to Collect and Remit tax.
Penalty: Amt. of tax not withheld, or not accounted for and remitted plus other
penalties.
c) Failure of withholding agent to Refund excess withholding tax.
Penalty: Amount of refund which was not refunded to the employee resulting
from the any excess of the amount withheld over the tax actually due on their
return.
General Provisions
1) The additions to the tax or deficiency tax apply to all taxes, fees and charges
imposed in this Code.
2) The amount so added to the tax shall be collected at the same time, in the same
manner and as part of the tax.
3) If the withholding agent is the Government or any of its agencies, political
subdivisions or instrumentalities, or a government-owned or -controlled corporation,
the employee responsible for the withholding and remittance of the tax shall be
personally liable for the additions to the tax.
4) The term person, includes an officer or employee of a corporation who as such
officer, employee or member is under a duty to perform the act in respect of which
the violation occurs.
1. Civil Penalties (Sec. 248)
A) Penalty: 25% of the amount due, in addition to the tax required to be paid.
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In case of the following: (RIDT) (lets get RID of Tax)

a) Failure to file any Return and pay the tax on the date prescribed; or
b) Filing a return with an Internal revenue officer other than those with whom the
return is required to be filed, unless otherwise authorized by the
Commissioner; or
c) Failure to pay the Deficiency tax within the time prescribed for its payment in
the notice of assessment; or
d) Failure to pay on or before the date prescribed for its payment:
1. the full or part of the amount of Tax shown on any return required to be
filed;
2. the full amount of tax due for which no return is required to be filed.
B) Penalty: 50% of the tax or of the deficiency tax, in case any payment has been made
on the basis of a return before the discovery of the falsity or fraud.
In case of: (FiFa)
a) Willful neglect to File the return within the period prescribed; or
b) False or fraudulent return is willfully made, in case any payment has been
made on the basis of such return before the discovery of the falsity or fraud.
Prima facie evidence of a false or fraudulent return as determined by
the Commissioner pursuant to the rules and regulations promulgated
by the Sec. of Finance:
1. substantial underdeclaration of taxable sales, receipts or
income - failure to report sales, receipts or income in an
amount exceeding 30% of that declared per return
2. substantial overstatement of deductions - claim of deductions
in an amount exceeding 30% of actual deductions
2. Interest (Sec. 249)
A) There shall be assessed and collected an Interest at 20% per annum on any unpaid
amount of tax
B) or higher rate prescribed by rules and regulations from the date prescribed for
payment until the amount is fully paid.
C) from the date prescribed for its payment until the full payment.
(a) Deficiency Interest in the tax due
(b) Delinquency Interest. - In case of failure to pay:
1. tax due on any return required to be filed, or
2. 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.
D) interest shall form part of the tax.
Interest on Extended Payment.
1) any person who is qualified and elects to pay the tax on installment but fails to pay
the tax, or any installment, or any part on or before the date prescribed; or
2) where the Commissioner has authorized an extension of time within which to pay a
tax or a deficiency tax or any part thereof,
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3) from the date of notice and demand until it is paid.
3. Failure to File Certain Information Returns (Sec. 250)
A) Penalty: P 1,000 for each failure
B) The aggregate amount for all such failure shall not exceed P 25,000 during a
calendar year
C) Upon notice and demand by the Commissioner
D) Unless it is shown that such failure is due to reasonable cause and not to willful
neglect.
In the case of each failure to file:
1) information return;
2) statement or list;
3) keep any record;
4) supply any information
E) required by this Code or by the Commissioner on the date prescribed thereof.
4. Failure of a Withholding Agent to Collect and Remit Tax (Sec. 251)
A) Penalty: Amount of the tax not withheld, or not accounted for and remitted plus other
penalties.
B) Liable only upon conviction
In case of the following:
1. Any person required to withhold, account for, and remit any tax; or
2. Who willfully fails to withhold such tax, or account for and remit such tax; or
3. Aids or abets in any manner to evade any such tax or the payment thereof,
5. Failure of a Withholding Agent to Refund Excess Withholding Tax. (Sec.252)

A) Penalty: Amount of refund which was not refunded to the employee resulting from
any excess of the amount withheld over the tax actually due on their return plus other
penalties.
In case: Any employer/withholding agent fails or refuses to refund excess
withholding tax.
CHAPTER II - CRIMES, OTHER OFFENSES AND FORFEITURES
Crimes:
1. Attempt to evade or defeat tax.
2. Failure to file return, supply correct and accurate information, pay tax, withhold and
remit tax and refund excess taxes withheld on compensation.
3. Penal liability of corporation.
4. Penal liability for making false entries, records, or reports, or using falsified or fake
accountable forms.
5. Unlawful pursuit of business.
6. Illegal collection of foreign payments.
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7. Unlawful possession of cigarette paper in bobbins or rolls, etc.
8. Unlawful use of denatured alcohol.
9. Shipment or removal of liquor or tobacco products under false name or brand or as
an imitation of any existing or otherwise known product name or brand.
10. Unlawful possession or removal of articles subject to excise tax without payment of
the tax.
11. Failure or refusal to issue receipts or sales or commercial invoices, violations related
to the printing of such receipts or invoices and other violations.
12. Offenses relating to stamps.
13. Failure to obey summons.
14. Declarations under penalties of perjury.
Other crimes and offenses:
1. Misdeclaration or misrepresentation of manufacturers subject to excise tax.
2. Forfeiture of property used in unlicensed business or dies used for printing false
stamps, etc.
3. Forfeiture of goods illegally stored or removed.
General Provisions (Sec. 253)
1. Any person convicted of a crime under this Code is liable for the payment of the tax
and is subject to the penalties imposed herein.
2. Payment of the tax due after apprehension is not a valid defense in any prosecution
for violation of any provision of this Code or in any action for the forfeiture of untaxed
articles.
3. A person is liable in the same manner as the principal when he:
a) willfully aids or abets in the commission of a crime penalized herein or
b) causes the commission of any such offense by another.
4. If the offender is not a citizen of the Philippines:
a) he shall serve the sentence; and
b) deported immediately after serving the sentence without further proceedings for
deportation.
5. If he is a public officer or employee:
a) the maximum penalty prescribed for the offense shall be imposed; and
b) he shall be dismissed from the public service and perpetually disqualified from
holding any public office, to vote to participate in any election.
6. If the offender is a Certified Public Accountant, his certificate as a Certified Public
Accountant shall, upon conviction, be automatically revoked or cancelled.
7. In the case of associations, partnerships or corporations, the penalty shall be
imposed on the partner, president, general manager, branch manager, treasurer,
officer-in-charge, and employees responsible for the violation.
8. The fines to be imposed for any violation of the provisions of this Code shall:
a) not be lower than the fines imposed herein or
b) twice the amount of taxes, interests and surcharges due from the taxpayer,
whichever is higher.
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Attempt to Evade or Defeat Tax. (Sec. 254)
A. Penalty, upon conviction: Fine - P30,000 or 100,000; and Imprisonment - 2 to 4
years; Plus other penalties
Who is liable: Any person who willfully attempts in any manner to evade or
defeat any tax or the payment thereof.
A. The conviction or aquittal obtained under this Section shall not be a bar to the filing
of a civil suit for the collection of taxes.
Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and
Remit Tax and Refund Excess Taxes Withheld on Compensation. (Sec. 264)
A. Penalty, upon conviction: Fine - P10,000 or more; and Imprisonment - 1 to 10 years;
Plus other penalties
Person liable: Any person required:
1. to pay any tax,
2. make a return,
3. keep any record, or
4. supply correct and accurate information,
Offense: willfully fails to
1. pay tax,
2. make a return,
3. keep the record,
4. supply such correct and accurate information,
5. withhold or remit taxes withheld,
6. refund taxes withheld on compensation, at the time or times required.
B. Penalty, upon conviction: Fine - P10,000 - 20,000; and Imprisonment - 1 to 3 years;
Plus other penalties
Person liable: Any person who:
1. attempts to make it appear for any reason that he or another has in fact filed a return
or statement, or
2. actually files a return or statement and subsequently withdraws the same return or
statement after securing the official receiving seal or stamp of receipt of an internal
revenue office wherein the same was actually filed.
Penal Liability of Corporations (Sec 256)
A. Penalty, upon conviction: Fine - P50,000 - 100,000; In addition to the penalties
imposed upon the responsible corporate officers, partners, or employees.
Who is liable:
1. Any corporation,
2. association or
3. general co-partnerships liable for any of the acts or omissions penalized under this
Code.
Penal Liability for Making False Entries. Records or Reports, or Using Falsified or Fake
Accountable Forms (Sec. 257)
A. Penalty, upon conviction for each act or omission: Fine - P50,000 - 100,000; and
Imprisonment - 2 to 6 years;
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1) Offender is a Certified Public Accountant, his certificate shall be automatically
revoked or cancelled upon conviction.
2) In the case of foreigners, conviction under this Code shall result in his immediate
deportation after serving sentence, without further proceedings for deportation.
Who is liable:
1) Any financial officer or
2) Independent Certified Public Accountant engaged to examine and audit books of
accounts of taxpayers under Sec.232 (A)and
3) Any person under his direction.
Offense: (FVC) (combine Fidel V. Ramos with Fidel Castro equals Fidel V. Castro thus
FVC)
1) Willfully Falsifies any report or statement bearing on any examination or audit
2) Renders a report, including exhibits, statements, schedules or other forms of
accountancy work which has not been Verified by him personally or under his
supervision or by a member of his firm or by a member of his staff in accordance
with sound auditing practices, or
3) Certifies financial statements of a business enterprise containing an essential
misstatement of facts or ommission in respect of the transactions, taxable
income, deduction and exemption of his client; or
B. Any person who (NOOFTANMER) rearranged to (FOOTMAN REN)
1) Not an independent Certified Public Accountant or a financial officer according to
Sec. 232 (B), examines and audits books of accounts of taxpayers; or
2) Offers to sign and certify financial statements without audit; or
3) Offers any taxpayer the use of accounting bookkeeping records for internal
revenue purposes not in conformity with the requirements prescribed, or
4) Knowingly makes any False entry or enters any false or fictitious name in the
books of accounts or records mentioned in the preceding paragraphs; or
5) Keeps Two (2) or more sets of such records or books of accounts; or
6) Commits an Act or omission, in violation of the provisions of this Section;
7) Fails to keep the books of accounts or records mentioned in Section 232 in a
Native language, English or Spanish, or to make a true and complete translation
as required in Section 234 of this Code, or whose books of accounts or records
kept in a native language, English or Spanish, and found to be at Material
variance with books or records kept by him in another language; or
8) Willfully attempts in any manner to Evade or defeat any tax imposed under this
Code, or knowingly uses fake or falsified Revenue official receipts, Letters of
Authority, certificates authorizing registration, Tax Credit Certificates, Tax Credit
Memoranda and other accountable form.
Unlawful Pursuit of Business. (Sec. 258)
Who is liable:
1. Any person who carries on any business for which in annual registration fee is
imposed without paying the tax as required by law.
Penalty, upon conviction for each act or omission: Fine - P5,000 20,000; and Imprisonment - 6 months to 2 years;
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2. A person engaged in the business of distilling, rectifying, repacking,
compounding or manufacturing any article subject to excise tax.
Penalty, upon conviction for each act or omission: Fine - P30,000 50,000; and Imprisonment - 1 to 2 years;
Illegal Collection of Foreign Payments (Sec. 259)
Penalty, upon conviction for each act or omission: Fine - P20,000 - 50,000; and
Who is liable and offense: Any person who:
1) Knowingly undertakes the collection of foreign payments under Sec. 67 without a
license or
2) Without complying with the implementing rules and regulations.
Unlawful Possession of Cigarette Paper in Bobbins or Rolls, Etc. (Sec. 260)
Imprisonment - 6 years 1 day to 12 years;
Who is liable: 1. Any person
2. Importer
3. manufacturer of cigar or cigarettes
Offense: Possession without the corresponding authority issued by the Commissioner of:
1. cigarette paper in bobbins or rolls,
2. cigarette tipping paper or cigarette filter tips,
Unlawful Use of Denatured Alcohol. (Sec. 261)
Who is liable: Any person who:
1. For the purpose of manufacturing any beverage, use denatured alcohol or
alcohol specially denatured to be used for motive power or
2. Withdrawn under bond for industrial uses or alcohol knowingly misrepresented to
be denatured to be unfit for oral intake or
3. who knowingly sells or offers for sale such preparations containing as an
ingredient such alcohol.
4. Unlawfully recover or attempt to recover by distillation or other process any
denatured alcohol or
5. Who knowingly sells or offers for sale, conceals or otherwise disposes of alcohol
as recovered or redistilled.
Shipment or Removal of Liquor or Tobacco Products under False Name or Brand or as
an Imitation of any Existing or Otherwise Known Product Name or Brand. (Sec. 262)
Who is liable: Any person who: 1. ships

2. transports
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3. removes
Offense: shipment, transportation or removal of:
1. spirituous, compounded or fermented liquors,
2. wines;or
3. any manufactured products of tobacco
under any other than the proper name or brand known to the trade as
designating the kind and quality of the contents of the cask, bottle or
package containing the same or
as an imitation of any existing or otherwise known product name or
brand or causes such act to be done.
Unlawful Possession or Removal of Articles Subject to Excise Tax Without Payment of
the Tax. (Sec. 263)
Who is liable: Any person who:
owns and/or found in possession.
Offense: ownership and/or possession of:
1. Articles subject to excise tax that has not been paid or
2. Tax-exempt articles other than those to whom they are legally issued.
A1. Imported Articles
Penalty:
Appraised value of the article,
including
duties
and
taxes.
(determined in accordance with the
Tariff and Custom Code)
P1,000 and less
More than 1,000 - 50,000
More than 50,000 - 150,000
More than 150,000
Fine And
Imprisonment
P 1,000 - 2,000
P 10,000 - 20,000
P 30,000 - 60,000
P 50,000 - 100,000
60 - 100 days
2 - 4 years
4 - 6 years
10 - 12 years
A2. Locally Manufactured Articles

Penalty: Fine - Not less than 10 times the amount of excise tax due but less than P500.
Who is liable:
1. Any manufacturer,
2. owner or
3. person in charge of any article subject to excise tax.
4. any person who knowingly aids or abets in the removal or
5. any person who conceals the article after illegal removal
Offense:
1. removes or
2. allows or
3. causes
the unlawful removal of any article from the place of production or bonded warehouse,
and the excise tax has not been paid at the time and in the manner required, and
1. knowingly aids or abets in the removal of such articles or
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2. conceals the same after illegal removal
Penalty: for the first offense, Fine - P 1,000 or more; and Imprisonment - 1to 2 years;
The mere unexplained possession of articles subject to excise tax, the tax on which has
not been paid in accordance with law, shall be punishable under this Section.
Failure or Refusal to Issue Receipts or Sales or Commercial Invoices, Violations Related
to the Printing of Such Receipts or Invoices and Other Violations. (Sec. 264)
Penalty, upon conviction for each act or omission: Fine - P 1,000 - 50,000; and
Who is liable, Offenses:
A. Any person who, being required under Section 237 to issue receipts or sales or
commercial invoices. Receipts (RFM)
1. Fails or refuses to issue such receipts or invoices, or
2. issue receipts or invoices that do not truly Reflect and/or contain all the
information required to be shown therein, or
3. use Multiple or double receipts or invoices.
4. Any person who commits any of the acts enumerated hereunder:
Printing (WUM)
1. Printing of receipts or sales commercial invoices Without authority from the
Bureau of Internal Revenue; or
2. Printing of double or Multiple sets of invoices or receipts; or
3. Printing of Unnumbered receipts or sales or commercial invoices, not bearing:
4. the name,
5. business style,
6. Taxpayer Identification Number, and
7. business address of the person or entity.
Offenses Relating to Stamps. (Sec. 265)
Penalty, upon conviction: Fine - P 20,000 - 50,000; and Imprisonment - 4 to 8 yrs;
Who is liable/Offenses:
Any person who commits any of the acts enumerated (BCCDF)
1. Making, importing, selling, using or possessing without express authority from the
Commissioner, any Die for printing or making stamps, labels, tags or playing
cards;
2. Erasing the Cancellation marks of any stamp previously used, or altering the
written figures or letters or cancellation marks on internal revenue stamps;
3. Possessing False, counterfeit, restored or altered stamps, labels or tags or
causing the commission of any such offense by another;
4. Selling or offering for sale any Box or package containing articles subject to
excise tax with false, spurious or counterfeit stamps or labels or selling from any
such fraudulent box, package or container as aforementioned; or
5. Giving away or accepting from another, or selling, buying or using Containers on
which the stamps are not completely destroyed.
Failure to Obey Summons. (Sec. 266)
Penalty, upon conviction: Fine - P 5,000 - 10,000; and Imprisonment - 1 to 2 yrs;
Who is liable: Any person who being duly summoned
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1. to appear to testify, or
2. to appear and produce books of accounts, records, memoranda or other
papers, or
3. to furnish info. as required under the pertinent provisions of this Code.
Offense: neglects to appear or to produce such books or accounts, records, memoranda
or other papers, or to furnish such information.
Declaration under Penalties of Perjury. (Sec. 267)
Penalty, upon conviction: Perjury under the Revised Penal Code.
Any declaration, return and other statements required under this Code, shall, in lieu of
an oath, contain a written statement that they are made under the penalties of perjury.
Who is liable: Any person who willfully files a declaration, return or statement containing
information which is not true and correct as to every material matter.
Other Crimes and Offenses. (Sec. 268)
A. Misdeclaration or Misrepresentation of Manufacturers Subject to Excise Tax.
Who is liable: Any manufacturer
Offense: Misdeclares in the sworn statement or in the sales invoice, any pertinent data
or information.
Penalty: Summary cancellation or withdrawal of the permit to engage in business as a
manufacturer of articles subject to excise tax.
B. Forfeiture of Property Used in Unlicensed Business or Dies Used for Printing False
Stamps, Etc.
Penalty: Forfeiture
1. All chattels, machinery, and removable fixtures of any sort used in the unlicensed
production of articles subject to excise tax.
2. Dies and other equipment used for the printing or making of any internal revenue
stamp, label or tag which is in imitation of or purports to be a lawful stamp, label
or tag.
C. Forfeiture of Goods Illegally Stored or Removed.
Penalty: Forfeiture
Offense:
1. All articles subject to excise tax should not be stored or allowed to remain in a
distillery, distillery warehouse, bonded warehouse or other place where made,
after the tax thereon has been paid.
2. Articles withdrawn from any such place or from customs custody or imported into
the country without the payment of the required tax.
CHAPTER III - PENALTIES IMPOSED ON PUBLIC OFFICERS
1.
2.
3.
4.
5.
Violations committed by government enforcement officers.

Unlawful divulgence of trade secrets.
Unlawful interest of revenue law enforcers in business.
Violation of withholding tax provisions.
Penalty for failure to issue and execute warrant.
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1. Violations Committed by Government Enforcement Officers. (Sec. 269)
Penalty, upon conviction: Fine - P 50,000 - 100,000; and Imprisonment - 10 to 15 years;
Additional penalty: Perpetual disqualification to hold public office, to vote, and to
participate in any public election
Any internal revenue officer for which a prima facie case of grave misconduct has been
established shall, after due notice and hearing of the administrative case and subject to
Civil Service Laws, be Dismissed from the revenue service.
Grave misconduct- defined in the Civil Service Law, includes the:

1) issuance of fake letters of authority and receipts,
2) forgery of signature,
3) usurpation of authority and
4) habitual issuance of unreasonable assessments.
Who is liable:
1) Every official, agent, or employees of the Bureau of Internal Revenue or
2) Any other agency of the Government charged with the enforcement of the
provisions of this Code., who is guilty of any of the offenses enumerated.
Offense: Memory Aid: EFRERCVFRIP or [VIP C FR FERER] (vip si father ferrer)
1) Extortion or willfull oppression through the use of his office or willful oppression
and harassment of a taxpayer who refused, declined, turned down or rejected
any of his offers specified in paragraph (d) thereof;
2) Knowingly demanding or receiving any Fee, other or greater sums than are
authorized by law or receiving any fee, compensation or reward, except as by
law prescribed, for the performance of any duty;
3) Willfully neglecting to give Receipts, as by law required, for any sum collected in
the performance of duty or willfully neglecting to perform any other duties
enjoined by law;
4) Offering or undertaking to accomplish, file or submit a report or assessment on a
taxpayer without the appropriate Examination of the books of accounts or tax
liability, or
5) Offering or undertaking to submit a Report or assessment less than the amount
due the Government for any consideration or compensation, or
6) Conspiring or colluding with another or others to defraud the revenues or
otherwise violate the provisions of this Code;
7) Neglecting or by design permitting the Violation of the law by any other person;
8) Making or signing any False entry or entries in any book, or making or signing
any false certificate or return;
9) Allowing or conspiring or colluding with another to allow the unauthorized
Retrieval, withdrawal or recall of any return, statement or declaration after the
same has been officially received by the Bureau of Internal Revenue.
10) Having knowledge or Information of any violation of this Code or of any fraud
committed on the revenues collectible by the Bureau of Internal Revenue, failure
to report such knowledge or information to their superior officer, or failure to
report as otherwise required by law; and
11) Without the authority of law, demanding or accepting or attempting to collect,
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directly or indirectly, as Payment or otherwise any sum of money or other thing of
value for the compromise, adjustment or settlement of any charge or complaint
for any violation or alleged violation of this Code.
2. Unlawful Divulgence of Trade Secrets. (Sec. 270)
Penalty, upon conviction: Fine - P 50,000 - 100,000; or Imprisonment - 2 to 5 years or
both;
Who is liable: any officer or employee of the Bureau of Internal Revenue.
Offense: Divulges to any person or makes known in any other than may be provided by
law information, knowledge of which was acquired by him in the discharge of his official
duties, regarding the:
1) business, income, or estate of any taxpayer,
2) the secrets, operation, style or work, or apparatus of any manufacturer or
producer, or
3) confidential information regarding the business of any taxpayer.
Except as provided in Section 71 of this Code and Section 26 of Republic Act No.
6388.
3. Unlawful Interest of Revenue Law Enforcers in Business. (Sec. 271)
Penalty, upon conviction for each act or omission: Fine - P 5,000 - 10,000; or
Imprisonment - 2 years 1 day to 4 years or both;
Who is liable: Any internal revenue officer.
Offense: who is or shall become interested, directly or indirectly:
1. In the manufacture, sale or importation of any article subject to excise tax or
2. In the manufacture or repair or sale, of any die for printing, or making stamps, or
labels shall,
4. Violation of Withholding Tax Provision. (Sec. 272)
Penalty, upon conviction for each act or omission: Fine - P 5,000 - 50,000; or
Imprisonment - 6 months 1 day to 2 years or both;
Who is liable: Every officer or employee who is charged with the duty to deduct and
withhold with any internal revenue tax and remit the same, of:
1. the Government or
2. any of its agencies and instrumentalities,
3. its political subdivisions,
4. government-owned or -controlled corporations, including the BSP.
Offense: Failing or causing the failure to
1. deduct and withhold any internal revenue tax;
2. remit taxes deducted and withheld within the time prescribed; and
3. file return or statement within the time prescribed, or rendering or furnishing a
false fraudulent return or statement required.
5. Penalty for Failure to Issue and Execute Warrant. (Sec. 273)
Penalty: Automatic dismissal from the service after due notice of hearing.
Who is liable/Offense: Any official who
1. Fails to issue or execute the warrant of distraint or levy within thirty (30) days
after the expiration of the time prescribed in Section 207 or
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2. Is found guilty of abusing the exercise thereof by competent authority.
CHAPTER IV - OTHER PENAL PROVISIONS
1. Penalty for second and subsequent offenses
2. Violations of other provisions of this code or rules and regulations in general.
3. Penalty for selling, transferring, encumbering or in any way disposing of property
placed under constructive distraint.
4. Failure to surrender property placed under distraint and levy.
5. Procuring unlawful divulgence of trade secrets.
6. Confication and forfeiture of proceeds or instruments of crime.
7. Subsidiary penalty.
8. Prescription for violations of any provision of this code.
9. Informers reward to persons instrumental in the discovery of violations of the NIRC
and in the discovery and seizure of smuggled goods.
1. Penalty for Second and Subsequent Offenses. (Sec. 274)

Offense: Reincidence
Penalty: Maximum of the penalty prescribed for the offense.
2. Violation of Other Provisions of this Code or Rules or Regulations in General. (Sec.
275)
Penalty: upon conviction for each act or omission: Fine: not more than P 1,000 or
Imprisonment: not more than 6 months, or both
Who is liable/Offense: Any person who violates:
1. any provision of this Code or
2. any rule or regulation promulgated by the Department of Finance.
for which no specific penalty is provided by law.
3. Penalty for Selling, Transferring, Encumbering or in any way disposing of property
Placed under Constructive Distraint. (Sec. 276)
Penalty: upon conviction for each act or omission: Fine: not less than twice the value of
the property but not less than P 5,000 or Imprisonment: 2 yrs 1 day - 4 yrs or both
Who is liable: Any taxpayer, whose property has been placed under constructive
distraint.
Offense: Without the consent of the Commissioner:
1. who sells,
2. transfers,
3. encumbers or
4. in any way disposes of said property, or any part thereof.
4. Failure to Surrender Property Placed under Distraint and Levy. (Sec. 277)
Penalty: upon conviction for each act or omission: Fine: P 5,000 or more or
Imprisonment: 6 months 1 day - 2 years, or both
Also liable in his own person and estate: sum equal to the value of the property or
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rights not surrendered but not exceeding the amount of the taxes (including
penalties and interest) together with costs and interest , from the date of such
warrant.
Who is liable: Any person having in his possession or under his control any property or
rights to property, upon which a warrant of constructive distraint or actual distraint and
levy has been issued.
Offense: Failure or refusal to surrender any of such property or rights upon demand by
the Commissioner or any of his deputies executing such warrant.
Unless such property or right is, at the time of such demand, subject to an
attachment or execution under any judicial process.
5. Procuring Unlawful Divulgence of Trade Secrets. (Sec. 278)
Penalty: upon conviction for each act or omission: Fine: not more than P 2,000 or
Imprisonment: 6 months - 5 years, or both
Who is liable:
1. Any person who causes or procures an officer or employee of the Bureau of
Internal Revenue to divulge any confidential information regarding the business,
income or inheritance of any taxpayer,
knowledge of which was acquired by him in the discharge of his
official duties, and which it is unlawful for him to reveal, and
2. Any person who publishes or prints in any manner whatever, not provided by law,
any income, profit, loss or expenditure appearing in any income tax return.
6. Confiscation & Forfeiture of the Proceeds or Instruments of Crime. (Sec. 279)
In addition to the penalty imposed in Title X: the same shall carry with it the confiscation
and forfeiture in favor of the Government of:
1. the proceeds of the crime or
2. value of the goods, and
3. the instruments or tools with which the crime was committed.
Articles which are not subject of lawful commerce shall be destroyed.
The following will also be confiscated and forfeited:
1. Instruments or tools used in the illicit act belong to a third person, after due notice
and hearing in a separate proceeding if such third person leased, let, chartered
or otherwise entrusted the same to the offender.
2. In case the lessee subleased, or the borrower, charterer, or trustee allowed to
use of the instruments or tools to the offender.
3. Property of common carriers shall be subject to forfeiture when the owner or
operator of said common carrier was, at the time of the illegal act, a consenting
party or privy thereto.
Unless such property is used in the transaction of their business as such common
carrier
Without prejudice to the owner's right of recovery against the offender in a civil or
criminal action.
7. Subsidiary Penalty. (Sec. 280)
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Penalty: subsidiary personal liability: 1 day for each P 8.50 subject to the rules
established in Article 39 of the Revised Penal Code.
Who is liable:
1. Person convicted for violation of this Code
2. Has no property to meet the fine imposed upon him by the court, or
3. Is unable to pay such fine.
8. Prescription for Violations of any Provisions of this Code. (Sec. 281)
Period: 5 years.
Period begins to run:
1. On the day of the commission of the violation of the law and
2. If the same be not known at the time: from the discovery and the institution of
judicial proceedings for its investigation and punishment.
It is interrupted when proceedings are instituted against the guilty person.
It shall begin to run again if the proceedings are dismissed for reasons not
constituting jeopardy.
The term of prescription shall not run when the offender is absent from the
Philippines.
9. Informer's Reward to Persons Instrumental in the Discovery of Violations of the

National Internal Revenue Code and the Discovery and Seizure of Smuggled Goods.
(Sec. 282)
A. For Violations of the National Internal Revenue Code.
Reward: 10% of the revenues, surcharges or fees recovered and/or fine or penalty
imposed and collected or P1,000,000 per case, whichever is lower.
Where the offender has offered to compromise and his offer has been accepted:
Same amount of reward shall be given to the informer.
No revenue, surcharges or fees actually recovered or collected - No reward.
Who may avail: Any person, except an internal revenue official or employee, or his
relative within the sixth degree of consanguinity.
Acts necessary:
1. voluntarily gives definite and sworn information,
2. not yet in the possession of the Bureau of Internal Revenue,
3. leading to the discovery of frauds upon the internal revenue laws and violations
of any of the provisions thereof,
4. thereby resulting in the recovery of revenues, surcharges and fees and/or the
conviction of the guilty party and/or the imposition of any fine or penalty.
Information shall not refer to a case already pending or previously investigated or
examined by the Commissioner or any of his deputies, agents or examiners or the
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Secretary of Finance or any of his deputies or agents.
For Discovery and Seizure of Smuggled Goods.
Reward: Cash reward 10% of the fair market value of the smuggled and
confiscated goods or P1,000,000 per case, whichever is lower.
The cash rewards of informers subject to income tax, collected as a final withholding
tax, at the rate of 10%.
Who may avail: Persons instrumental in the discovery and seizure of smuggled goods.
Prohibited from claiming informer's reward:
1. all public officials, whether incumbent or retired,
2. who acquired the information in the course of the performance of their duties
3. during the incumbency
Purpose: To encourage the public to extend full cooperation in eradicating smuggling.
REVENUE MEMORANDUM ORDER NO. 57-2000
Grounds for the suspension or temporary closure of business:
a) failure to issue receipt or invoices by a VAT-registered or registrable taxpayer;
b) failure to file a value-added tax return;
c) understatement of taxable sales or receipts by 30% or more of the correct amount in
the case of a VAT-registered or registrable taxpayer; and
d) failure to register.
The recommendation for the suspension or temporary closure of business will have
to be supported with documentary proof specified in the Order.
LOCAL GOVERNMENT TAXATION

CHAPTER 1 - GENERAL PROVISIONS
Power to Create Sources of Revenue
Each local government unit has the power to:
1. create its own sources of revenue and
2. levy taxes, fees, and charges subject to the provisions herein, consistent with the
basic policy of local autonomy. (Sec. 129)
Such taxes, fees, and charges shall accrue exclusively to the local government units.
Fundamental Principles.
The fundamental principles governing the exercise of the taxing and other revenueraising powers of LGUs are (U(EPuJul)LIP):
(a) Taxation shall be Uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall (EPuJuL):
1) be Equitable and based as far as practicable on the taxpayer's ability to pay;
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2) be levied and collected only for Public purposes;
3) not be unJust, excessive, oppressive, or confiscatory;
4) not be contrary to Law, public policy, national economic policy, or in the
restraint of trade;
(c) The collection of local taxes, fees, charges and other impositions shall in no case be
Let to any private person;
(d) The revenue collected shall Inure solely to the benefit of the local government unit
levying the tax, fee, charge or other imposition unless otherwise specifically provided
herein; and,
(e) Each local government unit shall, as far as practicable, evolve a Progressive system
of taxation. (Sec. 130)
Local Taxing Authority.
The power to tax is exercised by the sanggunian of the LGU concerned through an
appropriate ordinance. (Sec. 132)
Common Limitations on the Taxing Powers of LGUs
LGUs cannot levy: [ IDECTA_BEV_TRELEBI ] or (CADET-VIBE-LIBERTE)
(a) Income tax, except on banks and other financial institutions;
(b) Documentary stamp tax;
(c) Estate Tax, inheritance, gifts, legacies and other acquisitions mortis causa, except as
otherwise provided;
(d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues,
and all other kinds of customs fees, charges and dues, except wharfage on wharves
constructed and maintained by the local government unit concerned;
(e) Taxes, fees, and charges and other impositions upon goods carried into or out of, or
passing through, the territorial jurisdictions of local government units in the guise of
charges for wharfage, tolls for bridges or otherwise,
(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal
farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of Investments as pioneer or
non-pioneer for a period of 6 and 4 years, respectively from the date of registration;
(h) Excise taxes on articles enumerated under the national Internal Revenue Code, as
amended, and taxes, fees or charges on petroleum products;
(i) Percentage or VAT on sales, barters or exchanges or similar transactions on goods
or services except as otherwise provided;
(j) Taxes on the gross receipts of Transportation contractors and persons engaged in
the transportation of passengers or freight by hire and common carriers by air, land
or water, except as provided in the Code;
(k) Taxes on premiums paid by way or Reinsurance or retrocession;
(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of
all kinds of Licenses or permits for the driving thereof, except tricycles;
(m) Taxes, fees, or other charges on Philippine products actually Exported, except as
otherwise provided;
(n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and
cooperatives duly registered under R.A. 6810 and R.A. 6938 (Cooperative Code of
the Philippines); and
(o) Taxes, fees or charges of any kind on the National Government, its agencies and
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Instrumentalities, and local government units.
Provinces (see chart)
Provinces (refers to Local Govt. Provisions on Tax)
SPECIFIC PROVISIONS ON THE TAXING AND OTHER
REVENUE-RAISING POWERS OF LOCAL GOVERNMENT UNITS
Provinces
Type of Tax
Tax on Transfer of Real Property Ownership. The
province may impose a tax on the sale , donation,
barter, or on any other mode of transferring
ownership or title of real property.
Rate
Not more than 50% of the 1%
of the total consideration or of
the fair market value, whichever
is higher
Exceptions
Sale, transfer or oth
of real property pur
No. 6657 (CARL).
Tax on Business of Printing and Publication. The

province may impose a tax on the business of
persons engaged in the printing and/or publication
of books, cards, posters, leaflets, handbills,
certificates, receipts, pamphlets, and others of
similar nature.
Franchise Tax. Notwithstanding any exemption
granted by any law or other special law, the
province may impose a tax on businesses
enjoying a franchise.
Tax on Sand, Gravel and Other Quarry
Resources. The province may levy and collect
taxes on ordinary stones, sand, gravel, earth, and
other quarry resources extracted from public lands
or from the beds of seas, lakes, rivers, streams,
creeks, and other public waters within its territorial
jurisdiction.
Not exceeding 50% of 1% of

the gross annual receipts for
the preceding calendar year.
Professional Tax.
The province may levy an
annual professional tax on each person engaged
in the exercise or practice of his profession
requiring government examination. To be paid on
or before the 31st day of January. Any person first
beginning to practice a profession after the month
of January must, however, pay the full tax before
engaging therein.
At such amount and reasonable

classification
as
the
sangguniang panlalawigan may
determine but shall in no case
exceed P300.00.
Amusement Tax.
Not more than 30% of the gross The holding of ope
The province may levy an
Newly started busin

shall not exceed 1/2
capital investment. S
references, prescri
DECS shall be exe
tax.
Not exceeding 50% of 1% of Newly started busin
the gross annual receipts for shall not exceed 1/2
the preceding calendar year, capital investment.
within its territorial jurisdiction.
Not more than 10% of fair
market value in the locality
Professionals
employed in the gov
be exempt from th
this tax.
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amusement tax to be collected from the receipts from admission fees.
proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia,
and other places of amusement
Annual Fixed Tax For Every Delivery Truck or Van Amount

of Manufacturers or Producers, Wholesalers of, P500.00.
Dealers, or Retailers in, Certain Products. The
province may levy an annual fixed tax for every
truck or any vehicle used by manufacturers,
producers, wholesalers, dealers or retailers in the
delivery of distilled spirits, soft drinks, cigars and
cigarettes, and other products as may be
determined by the sanggunian, to sales outlets, or
consumers, whether directly or indirectly, within
the province.
not
dramas, recitals, pa
exhibitions, flower s
programs, literary a
presentations, excep
similar concerts shal
exceeding
Municipalities
Tax on Business
The municipality may impose taxes on the following:
a. On manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers,
and compounders of liquors, distilled spirits, and wines or manufacturers of any
article of commerce of whatever kind or nature.
b. On wholesalers, distributors, or dealers in any article of commerce of whatever kind
or nature.
c. On exporters, and on manufacturers, millers, producers, wholesalers, distributors,
dealers or retailers of the following essential commodities
(RW CLAPS C):
1. Rice and corn;
2. Wheat or cassava flour, meat, dairy products, locally manufactured,
processed or preserved food, sugar, salt and other agricultural, marine, and
fresh water products, whether in their original state or not;
3. Cooking oil and cooking gas;
4. Laundry soap, detergents, and medicine;
5. Agricultural implements, equipment and post-harvest facilities, fertilizers,
pesticides and other farm inputs;
6. Poultry feeds and other animal feeds;
7. School supplies; and
8. Cement.
d. On retailers
e. On contractors and other independent contractors
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f. On banks and other financial institutions,
g. On peddlers engaged in the sale of any merchandise or article of commerce
h. On any business, which the sanggunian concerned may deem proper to tax. For
businesses subject to the excise, value-added or percentage tax, the tax rate shall
not exceed 2% of gross sales of the preceding calendar year.
Rates of Tax within the Metropolitan Manila Area shall not exceed by 50% the maximum
rates prescribed for a-h. (Sec. 144)
The tax is payable for every separate or distinct establishment or place where business
is conducted. (Sec. 146)
The municipality may impose and collect such reasonable fees and charges on business
and occupation except professional taxes reserved for provinces. (Sec 147)
Municipalities shall have the exclusive authority to grant fishery privileges in the
municipal waters. The sanggunian may:
a. Grant fishery privileges to erect fish corrals, oysters, or other aquatic beds or bangus
fry areas
1. Duly registered organizations and cooperatives of marginal fishermen shall
have the preferential right;
2. The sanggunian may require a public bidding pursuant to an ordinance for
the grant of such privilege;
3. Absent of such orgs. and coops or their failure to exercise their preferential
right, other parties may participate in the public bidding
b. Grant the privilege to gather, take or catch bangus fry, prawn fry or fry of other
species and fish from the municipal waters by nets or other fishing gears to marginal
fishermen free of rental or fee
c. Issue licenses for the operation of fishing vessels of three (3) tons or less. (Sec. 149)
Situs of the Tax.
For purposes of collection of the taxes under Section 143 (tax on business), businesses
maintaining or operating branch or sales outlet elsewhere shall record the sale in the
branch or sales outlet making the sale or transaction, and the tax thereon shall accrue
and shall be paid to the municipality where such branch or sales outlet is located.
In case there is no branch or sales outlet in the city or municipality where the sale made,
the sale shall be recorded in the principal office and the taxes due shall accrue and be
paid to such city or municipality.
The following sales allocation for sales recorded in the principal office of businesses with
factories, project offices, plants, and plantations:
30% of all sales recorded in the principal office shall be taxable by the city or
municipality where the principal office is located; and
70% of all sales recorded in the principal office shall be taxable by the city or
municipality where the factory, project office, plant, or plantation is located.
Where the plantation located at a place other than the place where the factory is
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located, the above mentioned 70% shall be divided as follows:

60% to the city or municipality where the factory is located; and
40% to the city or municipality where the plantation is located.
Where there are 2 or more factories, project offices, plants, or plantations located in
different localities, the above mentioned 70% shall be shall be prorated among the
localities where the factories, project offices, plants, and plantations are located in
proportion to their respective volumes of production during the period for which the
tax is due. (Sec. 150)
Cities
The city may levy the taxes, fees, and charges which the province or municipality may
impose.
The tax rates that the city may levy may exceed the maximum rates allowed for the
province or municipality by not more than 50% except the rates of professional and
amusement taxes. (Sec. 151)
Barangays
Scope of Taxing Powers. - The barangays may levy the following taxes and charges,
which shall exclusively accrue to them: (TOBS)
(a) Taxes - On stores or retailers with fixed business establishments with gross sales of
receipts of the preceding calendar year of P50,000.00 or less for cities and
P30,000.00 or less, in the case of municipalities, rate = not exceeding 1% on gross
sales or receipts.
(b) Service Fees or Charges for services rendered in connection with the regulations or
the use of barangay-owned properties or service facilities such as palay, copra, or
tobacco dryers.
(c) Barangay Clearance. - No city or municipality may issue any license or permit for
any business or activity unless a clearance is first obtained from the barangay where
such business or activity is located or conducted.
(d) Other fees and Charges. - The barangay may levy reasonable fees and charges:
(CRB)
1. On commercial breeding of fighting Cocks and cockpits;
2. On places of Recreation which charge admission fees; and
3. On Billboards, signboards, neon signs, and outdoor ads. (Sec. 152)
Common Revenue-Raising Powers of LGUs (Secs. 153-155) (SPT)
a. Service Fees and Charges for services rendered
b. Pubic Utility Charges for the operation of public utilities owned, operated and
maintained by LGUs within their jurisdiction.
c. Toll Fees or Charges for the use of any public road, pier, or wharf, waterway, bridge,
ferry or telecommunication system funded and constructed by the LGU concerned.
Exceptions:
1. officers and enlisted men of the AFP and PNP on mission,
2. post office personnel delivering mail,
3. physically-handicapped, and disabled citizens who are sixty-five (65) years or
older.
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Community Tax
Cities or municipalities may levy a community tax (Sec. 156)
Individuals Liable to Community Tax. - [ IER ]
a. Inhabitant of the Philippines
b. Eighteen years of age or over
c. Regularly employed on a wage or salary basis for at least 30 consecutive working
days during any calendar year,
or who is engaged in business or occupation,
or who owns real property with an aggregate assessed value of P1,000.00 or more,
or who is required by law to file an income tax return
Rate = P5.00 and an annual additional tax of P1.00 for every P1,000.00 of income
regardless of whether from business, exercise of profession or from property which in no
case shall exceed P5,000.00.
In the case of husband and wife, the tax imposed shall be based upon the total property
owned by them and the total gross receipts or earnings derived by them. (Sec. 157)
Juridical Personalities (Sec. 158)
Corporations, no matter how created or organized, whether domestic or resident foreign,
engaged in or doing business in the Philippines are also liable to pay an annual
community tax.
Rate = P500.00 and an annual additional tax, which shall exceed P10,000.00 in
accordance with the following schedule:
a. For every P5,000.00 worth of real property in the Philippines owned by it during the
preceding year based on the valuation used for the payment of real property tax P2.00; and
b. For every P5,000.00 of gross receipts derived by it from its business in the
Philippines during the preceding year - P2.00.
Those exempt from the community tax are:
1. Diplomatic and consular representatives; and
2. Transient visitors when their stay does not exceed 3 months.
Place of Payment - place of residence of the individual, or in the place where the
principal office of the juridical entity is located. (Sec. 160)
Time for Payment - accrues on the 1st day of Jan. of each year which shall be paid not
later than the last day of Feb. of each year
Penalties for Delinquency. - An interest of 24% per annum from the due date until it is
paid shall be added on the amount due.
A community tax certificate may also be issued to any person or corporation not subject
to the community tax upon payment of P1.00. (Sec. 162)
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Sec. 163. Presentation of Community Tax Certificate On Certain Occasions. Individual

a. When an individual subject to the community tax acknowledges any document
before a notary public,
b. takes the oath of office upon election or appointment to any position in the
government service;
c. receives any license, certificate or permit from any public authority; pays any tax or
fee;
d. receives any money from any public fund;
e. transacts other official business; or
f. receives any salary or wage from any person or corporation.
The community tax certificate shall not be required in the registration of a voter.
Corporation
a. receives any license, certificate, or permit from any public authority,
b. pays any tax or fee,
c. receives money from public funds, or
d. transacts other official business.
The city or municipal treasurer deputizes the barangay treasurer to collect the
community tax in their respective jurisdictions.
The proceeds of the community tax actually and directly collected by the city or
municipal treasurer shall accrue entirely to the general fund of the city or municipality
concerned.
Proceeds of the community tax collected through the barangay treasurers shall be
apportioned as follows: (Sec. 164)
50% accrues to the general fund of the city or municipality concerned; and
50% accrues to the barangay where the tax is collected.
PROVINCE OF BULACAN vs CA (299 SCRA 442)
Facts: The Province passed an Ordinance imposing a 10% tax on the value of stones,
sand and other quarry resources from public lands. The Provincial Treasurer levied
upon Republic Cement P2.5M for its extraction of resources from private land.
Issue: Does the province have authority to levy the tax?
Held: NO. Although 186 of the LGC authorizes municipal corps. to levy taxes other
than those specifically enumerated therein, the subject ordinance was quite specific
about the fact that the taxable articles must come from public land. Moreover, a
province may not levy excise taxes on articles already taxed by the NIRC. The current
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tax code already imposes a tax on ALL quarry resources, regardless of origin, hence,
the Province may no longer impose any additional amounts from Republic Cement.
REAL PROPERTY TAXATION
I. CHARACTERISTIC OF REAL PROPERTY TAX: [ DAPIL ]
1. Direct tax on the ownership of real property
2. Ad Valorem tax. The value is based on the tax base
3. Proportion - the tax is calculated on the basis of a certain percentage of the
assessed
4. Indivisible single obligation
5. Local Tax
value
II. PROPERTIES LIABLE UNDER REAL PROPERTY TAX

According to the Local Government Code, Real Property liable for Real Prop tax are:
1. Land,
2. Buildings
3. Machinery and
4. Other improvements not otherwise exempted under said code (Sec 232, LGC)
Note: Although the term real property has not been expressly defined in the LGC, early decisions
of the Supreme Court in Mindanao Bus Co. v City Assessor of Cagayan de Oro, 6 SCRA `97;
Board of Assessment Appeals v Meralco, 119 PHIL 328; Manila Electric Co. v Board of
Assessment Appeals, 10 SCRA 68) seem to suggest that Art 415 of the Civil Code could also be
controlling.
III. CLASSIFICATION OF LAND for purposes of assessment Sec 218 (a) [CARMITS]
1. Commercial
2. Agricultural
3. Residential
4. Mineral
5. Industrial
6. Timberland
7. Special
IV. SPECIAL CLASSES OF REAL PROPERTY (sec 216, LGC) [HCS LG]
1. HOSPITALS
2. CULTURAL and SCIENTIFIC purposes
3. owned and used by LOCAL WATER DISTRICTS
4. GOCCs rendering essential public services in the supply and distribution of water
and/or generation or transmission of electric power.
V. PROPERTIES EXEMPT from real property tax (Sec. 234) [RC WEC]
1. owned by the REPUBLIC of the PHILS or its political subdivisions
except: when beneficial use has been granted to a taxable person
2. Charitable institutions, churches, parsonages, convents thereto, mosques, non-
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profit or religious cemeteries, buildings and improvements actually directly and
exclusively used for religious, charitable or educational purposes.
3. Machinery and Equipment actually, directly, and exclusively used by local Water
districts and GOCCs engaged in the supply and distribution of water and/or
generation and transmission of electric power
4. Real property owned by duly registered Cooperatives under RA 6938
5. Machinery & equipment for pollution control and Environment protection
Exemptions previously granted, (not falling within the above enumeration) are
withdrawn.
VI. FUNDAMENTAL PRINCIPLES IN Assessment REAL PROP TAXES (Art 198)

[CUANE]
1. CURRENT and fair market value is the basis of appraisal
2. UNIFORMITY in classification in each local govt unit should be observed
3. ACTUAL USE of the property should be the basis of classification
4. appraisal, assessment, levy and collection should NOT BE LET to any private person.
5. EQUITABLE appraisal and assessment
STEP 1 - DECLARATION OF REAL PROPERTY
1. Declared by Owner or Administrator (Sec 202-203)
IF newly acquired property a. files with assessor within 60 DAYS from date of transfer a
b. SWORN statement containing FMV and description of property
IF improvement on real property
a. file w/in 60 DAYS upon completion or occupation (whichever is earlier)
b. SWORN statement containing FMV and description of property
2. Declared by Provincial / City / Municipal Assessor (Sec 204)
WHEN only when the person under Sec 202 refuses or fails to make the
declaration within the prescribed time
No oath is required
NOTE: IF FILING FOR EXEMPTION (Sec 206)

WHAT person claiming exemptions must file with assessor sufficient
documentary evidence to support claim
WHEN within 30 days from the date of DECLARATION of property
IF required evidence is not submitted within 30 days, the property will be listed as
taxable in the roll
IF proven to be tax-exempt, property will be dropped from the roll
NOTE: IF PROPERTY DECLARED FOR THE FIRST TIME (Sec. 222)

If declared for 1st time, real property shall be assessed for back taxes
a. for not more than 10 yrs prior to the date of initial assessment
b. taxes shall be computed on the basis of applicable schedule of values
in force during the corresponding periods
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STEP 2: LISTING OF REAL PROPERTY IN THE ASSESSMENTROLLS
(Sec 205, 207)
STEP 3: APPRAISAL AND VALUATION OF REAL PROPERY
(Sec 212-214, 224-225)
How to determine Fair Market Value.
FOR LAND
1. Assessor of the prov/ city /mun gives summons to owners of affected properties
2. Assessor prepares a schedule of FMV for different classes of properties
3. Sanggunian enacts an ordinance
4. the schedule of FMV is published or posted
FOR MACHINERY
1. For Brand New machinery : FMV is acquisition cost
2. In all other cases: FMV = Remaining eco. life X Replacement cost
Estimated eco. life
STEP 4: DETERMINE ASSESSED VALUE (Sec 218)
Procedure
1. take the schedule of FMV
2. Assessed value = FMV X Assessment level
3. Tax = Assessed value X Tax rate
STEP 5: PAYMENT AND COLLECTION OF TAX
WHEN January 1 of every year (Sec 246)
tax shall constitute as superior lien (Sec 246)
HOW a. basic real prop tax in 4 equal installments (Mar 31,Jun 30,Sep 30, Dec 31)
b. special levy - governed by ordinance
NOTE: INTEREST for LATE PAYMENT

- two percent (2%) each month on unpaid amt. until the delinquent amt is paid.
- provided in no case shall the total interest exceed thirty-six (36) months
NOTE: FOR ADVANCE and PROMPT PAYMENT

a) advance payment -discount not exceeding 20% of annual tax (Sec 251, LGC)
b) prompt payment -discount not exceeding 10% of annual tax due(Art 342 IRR)
WHO COLLECTS The provincial, city, municipal or barangay treasurer

PERIOD WITHIN WHICH TO COLLECT (Sec 270).
within five (5) yrs from the date they become due
within ten (10) yrs. from discovery of fraud, in case there is fraud or intent to evade
Period of prescription shall be SUSPENDED when : (Sec 270, LGC)
1. local treasurer is legally prevented to collect tax
2. the owner of prop requests for reinvestigation and writes a waiver before expiration of
58
T AX AT I O N L A W
REVIEWER
period to collect
1. the owner of the prop is out of the country or cannot be located
REMEDIES IN REAL PROPERTY TAXATION
A. REMEDIES OF TAXPAYER
1. PAYMENT UNDER PROTEST (Sec 252)
- file protest with prov, city, or mun. treasurer concerned
- indicate amount contested
- annotate on tax receipt paid under protest
- Within 30 days, confirm protest in writing stating grounds therefor
- treasurer shall decide protest within 60 days
DONT FORGET!: No protest shall be entertained unless THE TAX IS FIRST
PAID!!!!
IF PROTEST DECIDED IN FAVOR of taxpayer, amount may either be
a. refunded or
c. applied as tax credit
IF DENIED or NOT DECIDED WITHIN 60 DAYS BY TREASURER,
a. taxpayer may appeal to board of assessment appeal or
b. avail of remedies under Ch 3 title 2 Book II
(Local Board of Assessment Appeals and Central Board of Assessment
Appeals)
2. REFUND IN CASE OF EXCESSIVE COLLECTION (Sec 253)
File a written claim for refund within two (2) years from date taxpayer is entitled
thereto
B. REMEDIES OF GOVERNMENT
Remedies may be enforced either through administrative or judicial action or both,
alternative or simultaneously. Use or non-use of one remedy shall not be a bar against
the other (Sec 258)
1. ADMINISTRATIVE
A. Levy on Real property (Sec 258 and 259)
B. Sale of Real Property (Sec 260)
C. Local Governments Lien (Sec 256)
D. Further Distraint or Levy (Sec 265)
2. JUDICIAL (Sec 266)-civil action filed by the local treasurer within 5 yrs. from due
date
C. CONDONATION and REMISSION
The PRESIDENT may remit or reduce real prop tax in any prov/ city/ mun if he
deems that PUBLIC INTEREST so requires (Sec 277)
THE SANGGUNIAN concerned may CONDONE or REDUCE the tax in cases where
a. there is a general failure of crops
b. substantial decrease in the price of products
c. calamity (Sec 276)
by an ordinance - passed before Jan 1 of any year and
59
T AX AT I O N L A W
REVIEWER
- upon recommendation of the Local Disaster Coordinating Council
APPEALS IN REAL PROPERTY TAXATION
OWNER OR PERSON WITH LEGAL INTEREST
Files within 60 days
1. Written Petition under Oath
2. With Supporting Documents
Within 60 days
LOCAL BOARD OF ASSESSMENT APPEALS
(LBAA Should decide win 120 DAYS from receipt of petition)
Within 30 days
CENTRAL BOARD OF ASSESSMENT APPEALS
Within 15 days
SUPREME COURT

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12. Tax on Sale, Barter or Exchange of Shares of Stock

B. Person Retiring from Business subject to percentage tax shall:

P4.80/ per liter of volume capacity

EXCISE TAX ON MISCELLANEOUS ARTICLES

d) On all metallic minerals

DOCUMENTS SUBJECT TO TAX

Other assignments and renewals

a.) bank notes issued for circulation

PHIL. HOME ASSURANCE vs CA (GR 119446, Jan 21, 1999)

2) Collection of Tax Liability

Constructive Distraint (only for personal property):

(b) Stocks and other Securities

In the same manner and

Upon forfeiture may be

II. Remedies of a Taxpayer

Instances where a pre-assessment notice NEED NOT be given: (MET DC)

for a refund is the taxpayer who paid the

Theater goers are not

If tax was not

ITR and final payment of

Before the right to

Action to Contest Forfeiture of Chattel: (Sec.231)

within 20 days after the levy

time and place of sale

shall not be less than 20

municipal/city building AND

a) officer shall sell the

shall be turned over to the

shall be turned over to the

a) within 5 days after the

a)May be resold by the

V. Redemption of Property Sold

In case of the following: (RIDT) (lets get RID of Tax)

5. Failure of a Withholding Agent to Refund Excess Withholding Tax. (Sec.252)

Who is liable: Any person who: 1. ships

A2. Locally Manufactured Articles

Violations committed by government enforcement officers.

Grave misconduct- defined in the Civil Service Law, includes the:

1. Penalty for Second and Subsequent Offenses. (Sec. 274)

9. Informer's Reward to Persons Instrumental in the Discovery of Violations of the

LOCAL GOVERNMENT TAXATION

Tax on Business of Printing and Publication. The

Not exceeding 50% of 1% of

At such amount and reasonable

Not more than 30% of the gross The holding of ope

The province may levy an

Newly started busin

Annual Fixed Tax For Every Delivery Truck or Van Amount

located, the above mentioned 70% shall be divided as follows:

Sec. 163. Presentation of Community Tax Certificate On Certain Occasions. Individual

II. PROPERTIES LIABLE UNDER REAL PROPERTY TAX

VI. FUNDAMENTAL PRINCIPLES IN Assessment REAL PROP TAXES (Art 198)

NOTE: IF FILING FOR EXEMPTION (Sec 206)

NOTE: IF PROPERTY DECLARED FOR THE FIRST TIME (Sec. 222)

NOTE: INTEREST for LATE PAYMENT

NOTE: FOR ADVANCE and PROMPT PAYMENT

WHO COLLECTS The provincial, city, municipal or barangay treasurer

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