P a r t XII

Local Taxation

1222. Distinguish local taxation f r o m internal r e v e n u e tax a n d
real p r o p e r t y tax:

Answer.
Internal Revenue Tax Local T a x Real Property Tax
All types of imposts
which local g o v e r n m e n t
units are e m p o w e r e d to Taxes levied by
All types of national enact on businesses, provinces, cities and
taxes levied by the occupations, regulated municipalities on real
national government privileges and activities, properties and their
utility charges carried improvements
and within their
respective territorial
jurisdiction
Collected by the Collected by provinces, Collected by provinces
Bureau of Internal cities, municipalities or cities w h e r e the
Revenue through and barangays property is located
accredited banks
Self-assessing Not self assessing
Exercise by the national
government under its Exercise by the local g o v e r n m e n t units under its
inherent power of delegated power of taxation
taxation

1223. W h a t are the fundamental principles governing local
taxation?

Answer.
a) T h e imposition should be within the taxing authority of t h e local
government.

b) Collection of local taxes shall not be let to a n y private person or
entity;

c) Should not be in restraint of trade

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d) S h o u l d not be oppressive, excessive, discriminatory, unjust,
confiscatory a n d contrary to the declared national economic
policy of the g o v e r n m e n t ;

"oppressive" - u n r e a s o n a b l y b u r d e n s o m e , unjustly severe or
harsh.

"excessive" - characterized by w h a t e v e r is notably greater than
w h a t is m o d e r a t e , reasonable, proper, usual, necessary
and just.

"confiscatory" - a m o u n t s to u n d u e seizure or forfeiture of
private property in favor of the public treasury.

"unjust" - deficient in justice a n d fairness.

e) S h o u l d be based on t h e ability-to-pay principle;

f) S h o u l d evolve a progressive s c h e m e of taxation in the exercise
of their power of taxation as m a n d a t e d by the Constitution.

g) Should be uniform in all local political sub-units;

h) Levied for a public purpose

i) Collections shall inure and redound to local welfare, interest
and benefits.

1224. W h a t are t h e objectives local taxation?

Answer.
a) To enjoin the e n a c t m e n t of a Local Government Code which
shall allocate a m o n g the different local government units their
power and resources.

b) To ensure the viability and self-sufficiency of local government
unit by directly granting t h e m general taxing powers consistent
with the basic policy of local autonomy.

c) To allocate and define the taxing and other revenue raising
powers of local governments;

d) To develop local governments thru the exercise of their taxing
and other revenue-raising powers into viable, financially stable
and self-sufficient communities without over-burdening the
taxpayer with multiple and unreasonable impositions;

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e) To insure that each local government will have its fair share of
available resources and that the resources of the national
government will not be unduly disturbed; and

f) To insure that local taxation shall be fair, uniform and just.

1225. W h a t are the s o u r c e s of the taxing p o w e r s of the local
governments?

Answer.
a) The 1935 Constitution did not itself provide for any such
delegation of tax powers to the local g o v e r n m e n t s , the source
of their taxing powers w e r e derived from a limited statutory
authority. The power of the local g o v e r n m e n t to tax w a s not
inherent (then and now) b e c a u s e it could be exercised only
w h e n authorized to do so by legislation of the C o n g r e s s .

b) Under the 1973 Constitution, the power of taxation of the local
government is not plenary and absolute b e c a u s e the National
A s s e m b l y m a y still provide for s u c h limitations, as it may desire
on the exercise of said power.

c) W h e r e a s , under Art. X, Sec. 3; Sec. 5; a n d Sec. 6. of the 1987
Philippine Constitution, the local g o v e r n m e n t s w e r e broadly
conferred with such powers subject only to specific exceptions
that the law m a y prescribe. T h u s , w h e r e there is neither grant
nor prohibition by statute the tax power must n o w be d e e m e d
to exist.

Previous to t h e effectivity of the Local G o v e r n m e n t
C o d e of 1 9 9 1 , P. D. 231 (The Local T a x C o d e ) w a s the law
governing the exercise by provinces, cities, municipalities and
barangays of their taxing and other revenue-raising powers.

3 C o n g r e s s cannot enact laws depriving local g o v e r n m e n t
units ( L G U ) from exercising s u c h p o w e r to tax but it may by
law merely subject the exercise of that p o w e r to limitations
and guidelines.

O Such local taxes, fees and c h a r g e s i m p o s e d by the L G U
shall accrue exclusively to t h e m .

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1226. W h o exercises the p o w e r of taxation in the local level?

A n s w e r . T h e local legislative body or the S a n g g u n i a n of the local
g o v e r n m e n t units through the e n a c t m e n t of tax ordinance. (Sec
132, L G C )

1227. Do the local g o v e r n m e n t units have the inherent power
to tax?

A n s w e r . Local g o v e r n m e n t units (province, city, municipality and
barangay) do not have t h e inherent p o w e r to tax, because they are
mere creatures of law, except s u c h p o w e r as m a y be delegated to
t h e m by the national legislature or conferred by the Constitution
itself. By virtue thereof, local g o v e r n m e n t units have the power,
independently of legislation, to create their o w n sources of revenue
and to levy taxes to finance g o v e r n m e n t a l activities in their
respective localities.

Thus, unlike a sovereign state, municipal corporations
(province/city/municipality/barangay) have no inherent power to
tax. T h e y m a y exercise the power only if delegated to them by the
national legislature or conferred by the Constitution itself.

1228. W h a t is the nature of the taxing power of local
governments?

Answer.
a) It is not inherent

b) C a n be exercised only if delegated to t h e m by law or by the
Constitution; and

c) Not absolute; subject to limitations provided by law.

1229. H o w is the local p o w e r of taxation exercised?

Answer. It is exercised by the legislative body of each local
government units via the enactment of a tax ordinance.

1230. W h a t are the requisites of local tax ordinance:

Answer.
a) It should satisfy the procedural and substantive due process;

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1 2 3 1 . and charges under the Local G o v e r n m e n t C o d e of 1 9 9 1 .A. 5 4 4 7 a p p r o v e d on Sept. 231 (June 2 8 . city. including C o m m u n i t y Development Tax (Cedula). W h a t are the aspects of local taxation? Answer. municipal and barangay ordinances imposing taxes are subject to the limitations provided in the Local G o v e r n m e n t C o d e . 7 1 6 0 . Local Tax C o d e a n d the Real Property Tax C o d e . 720 . w h i c h is g o v e r n e d by - 1. c) Publication of ordinance within 10 days from approval for three (3) consecutive days in a newspaper of general circulation and/or posting in at least two (2) conspicuous and publicly accessible places. Provincial.A. 1232. 25.D. No. The two aspects of local taxation are - a) Local taxation that levies t a x e s . No. T h e Special Education Fund Law (R.D. 1973). voting and approval and/or veto requirements complied with. [R. fees and other impositions. T h e Real Property T a x C o d e enacted under P. 4 6 4 as a m e n d e d . (May 2 0 . b) Public hearing prior to enactment is required with quorum. a) The Local G o v e r n m e n t taxation covering the imposition of license taxes. b) Real property taxation. fees. 1968). 1974) 2. W h a t is the s c o p e of local taxation? Answer. (RA 7160) w h i c h repealed the Local Tax C o d e enacted under P. the Local G o v e r n m e n t Code of 1991] b) Real Property Taxation that is a system of levy on real property imposed on a countrywide basis.

respectively. Panlungsod. 55. and the latter. Bayan or Barangay. fees. persons or entities. b) Principle of Ability-to-pay . would be prohibited from levying taxes that municipalities may impose under certain instances. like national taxation. is legislative in nature and shall be exercised through an appropriate tax ordinance and requires public hearing prior to its enactment. T w o (2) a c c e p t e d p r i n c i p l e o f a p p o r t i o n i n g t h e b u r d e n o f taxation: Answer. L G C ) b) Local taxation.Persons w h o benefit from a g o v e r n m e n t service must pay tax.1 2 3 3 . through the Sangguniang Panlalawigan. a) Each local g o v e r n m e n t unit m a y create its o w n sources of r e v e n u e a n d levy taxes. rentals and service charges. W h a t are the general rules/provisions on the authority of the local g o v e r n m e n t units to tax? Answer. 92 Phil. license. d) Local governments cannot e x e m p t persons or entities from real property taxes but they may condone liabilities on real property taxes. 721 . Cornista. T h e exercise of the power to tax by the local legislative a s s e m b l y is subject to the veto power of the local chief executive. f e e s and charges. a) Principle of Benefits Received . ( N O T E : properties exempt from property taxes are specifically identified and enumerated) e) Municipalities may levy taxes not otherwise levied by provinces. consistent with t h e basic policy of local a u t o n o m y . and other forms of r e v e n u e m e a s u r e s s u c h as tolls. (Sec. 838) but they may grant tax incentives to n e w industries. (Reyes vs.P e r s o n s w h o possess more wealth or income should pay more tax t h a n those w h o have less. (Approval by the Secretary of Finance on the said enactment is not necessary) c) Local g o v e r n m e n t s are not authorized to condone or remit regulatory taxes. 1234. which shall exclusively accrue to it.

h) The interpretations of laws on the grant of tax powers to local governments is to be liberally construed but doubts on the liability of a taxpayer under a valid tax ordinance is construed strictly against the local g o v e r n m e n t unit except. Can congress by legislation deprive local g o v e r n m e n t s of their taxing p o w e r ? A n s w e r . being a constitutional provision it c a n be abolished only by constitutional a m e n d m e n t s a n d not be a m e r e legislative act. 1235. as regards tax exemptions. and (3) impose service charges. C a n c o n g r e s s limit t h e p o w e r o f t h e local g o v e r n m e n t t o tax? A n s w e r . (2) fees and charges o n . 1 2 3 8 . No. billboards and signboards. T h u s . because of Art. 5 of the 1987 Constitution. incentives and reliefs. Y e s . embracing both such specific and general tax powers as provinces and municipalities may impose. T h e Congress can only impose reasonable limitations on s u c h power to tax. C a n c o n g r e s s still e n a c t local t a x l a w s n o t w i t h s t a n d i n g an expressed grant of such power to the local governments? . However. and cockpits. g) Barangays may under certain conditions (1) levy taxes on store and retailers. X. C a n the local g o v e r n m e n t units exercise t h e p o w e r of taxation without a legislative grant? Answer. Sec. Y e s . gamecocks and cockfights. f) Cities have the broadest tax powers. 1237. the C o n g r e s s m a y issue guidelines and limitations consistent with the policy of local a u t o n o m y . 1236. b e c a u s e the C o n g r e s s is e m p o w e r e d to impose guidelines and limitations in t h e taxing power of the local governments units. T h e power of the local g o v e r n m e n t s to tax is constitutionally granted and it exists independently of legislation.

T h e taxing powers of the local government are not as extensive as that of the national government. There are some identified businesses that cannot be subject to local taxation. it did not divest itself of its inherent power to enact local tax laws. May 14. Yes. Y e s . (b) non-impairment of obligations of 723 . W h e n C o n g r e s s delegated the power to tax to the local g o v e r n m e n t s . C a n t h e national g o v e r n m e n t tax the local g o v e r n m e n t ? H o w about the local g o v e r n m e n t units taxing the national government? A n s w e r . a) Constitutional limitations . 1239. The constitutional. but the local g o v e r n m e n t units c a n n o t tax the national government b e c a u s e t h e spring c a n n o t rise higher than its source. (Basco vs. inherent. the exercise of the power to tax by the local legislative (Sanggunians) is subject to the veto power of the local chief executive. PAGCOR. Y e s . (Mayor) 1243. it c a n grant the local g o v e r n m e n t the power to tax certain matters. (Basco vs. Pagcor. Is the p o w e r of the local g o v e r n m e n t to tax absolute? A n s w e r . T h e taxing power of the local government is not absolute as it is subject to s u c h limitations as m a y be provided by law. -197 SCRA 52) Likewise. C a n c o n g r e s s e x e m p t t h o s e that are t a x e d b y the local government? A n s w e r . the national can tax the local government units. 1991) 1240. W h a t are the limitations and restrictions on the power of the local g o v e r n m e n t to tax? Answer. particularly those imposed under the Local Government Code. Y e s . C a n t h e l o c a l g o v e r n m e n t t a x all k i n d s o f b u s i n e s s e n t i t i e s o p e r a t i n g w i t h i n its t e r r i t o r i a l j u r i s d i c t i o n ? A n s w e r .(a) due process and equal protection clauses. 1242. statutory and contractual limitations on national taxation are also applied to local taxation. GR 91649. C o n g r e s s has the power to control over local g o v e r n m e n t s . it c a n provide for e x e m p t i o n s or even take back such power. A n s w e r . 1 2 4 1 .

provinces or municipalities. municipality or barangay. and (e) tax exemptions of religious and charitable institutions. b) That the resources of the national g o v e r n m e n t will not be unduly disturbed. c) Statutory limitations . if it is a city tax it m u s t be uniform throughout the city. contracts. it being ultra vires. and d) That local taxation will be fair. (c) non-imprisonment for non-payment of poll tax. Uniformity of taxation within the territorial limits of the taxing jurisdiction.those expressly provided by law and applicable to all levels of local government . It is not required that the s a m e rate of tax be applied to all cities. Territorial uniformity defined: A n s w e r . 1244. (c) direct double taxation. W h a t are the limitations on the taxing p o w e r s of the local government units? (In relation to the welfare of the constituents of the local bodies) Answer. a) That the taxpayers will not be o v e r .denominated as "common limitations on the taxing powers of local government units" d) Tax privilege granted by the g o v e r n m e n t under a valid contract limits the exercise of the power of taxation within the terms and conditions of the said contract. b) Inherent restrictions . province or municipality. c) That e a c h local g o v e r n m e n t unit will h a v e its fair share of available resource.(a) public purpose. A tax ordinance that imposes a tax b e y o n d any of the limitations is VOID. province. (b) territoriality. H e n c e . 1245.b u r d e n e d or saddled with multiple and unreasonable impositions. 724 . (d) exemption of government or instrumentalities from taxation. (d) rule on uniformity in taxation. but only that such rate be uniformly applied to all of the s a m e class of taxable subjects within e a c h city. uniform and just.

Is a t a x o r d i n a n c e o p p r e s s i v e b e c a u s e it carries a penal clause of fine or imprisonment? A n s w e r .2 5 % and Equal sharing . 2 3 % thereof t o the provinces 2.5 0 % . City of lloilo. T h e most equitable tax system is that which is most closely in conformity with the standards of equity in the distribution of real i n c o m e . the high court ruled that a tax ordinance does not become oppressive simply b e c a u s e it carries a penal clause of fine or imprisonment.1246.2 5 % O 2 0 % of the 2 3 % of cities' share in its internal revenue allotment shall be allotted for development projects and appropriated in 725 . neither d o e s it b e c o m e unconstitutional because it subjects the t a x p a y e r to criminal prosecution for non-payment of the tax validly i m p o s e d . W h e n is a tax m e a s u r e equitable? A n s w e r . H o w m u c h is t h e s h a r e of t h e local g o v e r n m e n t units in the internal revenue allotment? A n s w e r . c) 4 0 % on t h e third year and thereafter. In the c a s e of Villanueva vs. 2 3 % thereof to the cities 3. 1. 28. 1 2 4 7 . Dec. T h e w o r d "equitable" in taxation refers to the distribution of the tax b u r d e n itself. 1968. and 4. city and municipality shall be determined on the basis of the following formula: Population . No. Land area . 3 4 % thereof to municipalities. The share of each province. Local g o v e r n m e n t units shall receive: a) 3 0 % on the first y e a r of the effectivity of the Local Government Code b) 3 5 % o n the s e c o n d year. 1248. 2 0 % thereof to barangays.

royalties. interests. 1249. Local government units shall have the share of 4 0 % of the gross collection derived by the national g o v e r n m e n t from excise taxes on mineral products.6 5 % and Barangay - 35%. bridges or ferry within its territory or for repaying borrowings for their construction. taxes. share from any co-production. canal. L G C ) A n s w e r . as a m e n d e d or other applicable laws. under their residual taxing powers. joint venture or production a g r e e m e n t (referred to as the proceeds on the development of national wealth). local g o v e r n m e n t s may. For natural resources located in highly urbanized cities or independent cities. slaughterhouse fees or charges for holding benefit s h o w s . fines.c o m p o n e n t s cities get 4 5 % from that share. charges. accordance with the approved local development plans of the city. and service charges. and c h a r g e s w h i c h do not fall within the scope of taxes e n u m e r a t e d under the Local G o v e r n m e n t C o d e as well as those which are levied on subjects or bases w h i c h a r e not taxed under the N I R C . 1250. What do you understand by the residual taxing powers of the local g o v e r n m e n t s ? (Sec. 726 . O The share of the city in the internal revenue allotment shall be released directly to the City treasurer on a quarterly basis within 5 days after the end of each quarter and shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose. T h u s . 4 0 % of its share shall be automatically apportioned in the following manner: City . surcharges. fees. H o w m u c h is the share of local g o v e r n m e n t s in the proceeds from the development and utilization of national wealth? Answer. s u c h as the imposition and collection of market stall f e e s . operated and maintained by t h e m . raise revenue t h r o u g h other sources. . 186. Like the National g o v e r n m e n t the local g o v e r n m e n t units do have this residual power of taxation w h i c h is t h e power to impose taxes. public utility charges rendered in the operation of public utilities o w n e d . f e e s . tolls for m a i n t e n a n c e of any road.

confiscatory. or c h a r g e s are not unjust. fees or charges. b) C o m m o n limitations on the taxing powers of local government units as prescribed. effectivity and publication of tax ordinance have b e e n complied with. d) T h e requirement prescribed which directs that the ordinance levying such residual taxes shall not be enacted without any prior public hearing conducted for the purpose. 1252. Principle of Preemption refers to an instance where the National Government elects to tax a particular area. fees. oppressive. excessive. 1253.1251. or contrary to declared national policy". b) T h e t a x e s . Define the Principle of Preemption or the Exclusionary Rule: Answer. and e) The Principle of Preemption or Exclusionary Rule is applicable under the premises. Elements of residual power of taxation: Answer. W h a t are the restrictions or limitations on the exercise of residual taxing p o w e r of the local g o v e r n m e n t units: Answer. c) A public hearing have b e e n c o n d u c t e d prior to the enactment of the ordinance levying t h e t a x e s . impliedly withholding from the local government the delegated power to tax 727 . a) Constitutional limitations as provided. o p p r e s s i v e or contrary to the declared national e c o n o m i c policy of the g o v e r n m e n t . a) T h e tax b a s e or subject are not t a x e d under the National Internal R e v e n u e C o d e or other applicable laws. confiscatory. excessive. c) F u n d a m e n t a l principles governing local taxation particularly that requirement that they must not be "unjust. and d) T h e procedures for the a p p r o v a l .

etc. However.500. f) It does not apply b e y o n d a certain level of sales or receipts for the preceding year.500 in any 12-month period shall be liable to 1 2 % V A T 728 .g. e) W h e n C o n g r e s s allows municipal corporations to cover fields of taxation it already occupies.919. w h i c h are i m p o s e d under the Tariff and Customs Code. persons w h o are e x e m p t from the 1 2 % VAT are subject to the 3% percentage tax which is in lieu of the 1 2 % VAT.919. fees. a graduated fixed tax which is not a sales tax but a tax on the privilege of engaging in a particular business. This doctrine principally rests upon the intention of the Congress.00 (RR 16- 2 0 1 1 . the same field. it impliedly withholds from the local government the delegated power to tax the same field. Where the National Government elects to tax a particular area.. fees. c) Taxes.) When this Doctrine does not apply? (Excluded impositions pursuant to this Doctrine): a) T a x e s w h i c h are levied under t h e N I R C . they may proceed with the levy. ( E x a m p l e : P e r s o n s selling more than Php 1. so long as the business tax being levied by the L G U s is not a sales tax. d) T a x e s . unless otherwise provided by the L G U . which took effect January 1. (e. 2012) during any 12-month period. b) Taxes. This arises w h e n the aggregate gross taxable sales/receipts derived by the taxpayer from all lines of businesses and every separate and distinct establishment or place w h e r e the business is conducted d o e s not exceed Php 1. Illustration: Under the V A T law. etc. fees and other c h a r g e s i m p o s e d under special laws. Preemption here would m e a n that the imposition of the 3% percentage tax on sales would impliedly preclude the imposition of that same kind of tax by local g o v e r n m e n t units. the imposition of w h i c h contravenes existing governmental policies or w h i c h violates the f u n d a m e n t a l principles of taxation.

Inc.) g) If the subjects of the taxes levied by the national and local g o v e r n m e n t s are different from e a c h other. Is there d o u b l e or multiple taxation in the local level? A n s w e r . such as the uniformity clause on taxation. 1254. a n d cities m a y not impose taxes w h i c h the b a r a n g a y s are specifically e m p o w e r e d to impose being to the exclusion of all other local g o v e r n m e n t units.. is limited to the fixing of imposable fines and length of time of imprisonment. (Pepsi-Cola Bottling Co. and also to any sales tax i m p o s e d by the local government unit. 729 . of Tanauan. This power. municipalities. Leyte.000. 69 SCRA 460) 1255. T h e r e is no double taxation in case one tax is imposed by the State a n d the other by the City or Municipality because there are t w o (2) different taxing authorizes. Mun. of the Phils. LGC) A n s w e r . P o w e r of the local g o v e r n m e n t s to prescribe penalties for tax violations a n d limitation t h e r e o n : (Sec.in no case shall fines be less than Php 1. It is something not favored but permissible. D o u b l e taxation has not b e e n prohibited except implicitly against: a) provinces a n d municipalities that either of said governments m a y not impose a tax w h i c h the other may impose under the municipalities' specific tax p o w e r s b) provinces. neither shall the imprisonment be less than one (1) month nor more than six (6) months. particularly: a) The Sangguniang is authorized to prescribe fines and other penalties for violation of local tax ordinances . b) Such fines or other penalty shall be imposed at the discretion of the court. N O T E : T h e r e is no constitutional prohibition against double taxation in the Philippines. provided s o m e other constitutional requirement is not thereby violated. 516. vs.000 or more than Php 5.

b) T h e grant of tax e x e m p t i o n shall be through a valid tax ordinance. incentives or reliefs under s u c h terms and conditions. The power to e x e m p t is not as broad as the power to tax. as they may d e e m necessary subject to limitations provided by law. 730 . LGC) Answer. LGC) Answer. d) T h e e x e m p t i o n shall take effect only during the next calendar year for a period of not more t h a n one (1) year as m a y be provided in the tax o r d i n a n c e . c) A n y e x e m p t i o n or relief g r a n t e d to a type or kind of business shall apply to all business similarly situated. general failure of crops or adverse e c o n o m i c conditions such as substantial d e c r e a s e in prices of agricultural or agri-based products. 1258. c) The Sanggunian Barangay may prescribe a fine of not less than Php 100 or more than Php 1. Local government units may. 1256. a) The s a m e shall be granted in c a s e s of natural calamities. Local governments are authorized to adjust tax rates as prescribed under the LGC but should not do so oftener than once every five (5) years and in no case shall such adjustment exceed ten percent (10%) of the fixed rates under the C o d e . civil disturbance. e) In case of shared r e v e n u e s .000. through ordinances duly approved grant tax exemptions. 191. 1257. P o w e r of the local g o v e r n m e n t to adjust tax rates: (Sec. 192. Power of the local g o v e r n m e n t to grant local tax exemptions: (Sec. Guidelines on the grant of tax e x e m p t i o n s or tax reliefs: Answer. t h e e x e m p t i o n or relief shall only extend to the L G U granting such e x e m p t i o n or relief.

W h o s e exemptions were not withdrawn upon the effectivity of the L G C ? Answer. a n d d) Non-stock. What are the common revenue-raising powers of the local government units (province. s t c) T h e grant shall be by tax ordinance passed prior to the 1 day of January of any year. 731 . All local government units are authorized to impose and collect the following fees and charges: a) Service fees a n d charges . a) Local water districts b) C o o p e r a t i v e s duly registered under RA 6 9 3 8 (The Cooperative C o d e of the Philippines) c) Non-stock a n d non-profit hospitals.1259. non-profit educational institutions O T h e p o w e r of the local g o v e r n m e n t to grant tax exemption. b) T h e grant shall be for a period not exceeding one (1) year. municipal. a) It shall be granted only to n e w investments in the locality and the tax ordinance shall prescribe the terms and conditions therefore. and d) A n y grant to a type or kind of business shall apply to all businesses similarly situated. city a n d barangay)? Answer. tax incentives and tax reliefs shall not apply to regulatory fees w h i c h are levied under the police power of the L G U . 1260. Guidelines on the grant of tax incentives: Answer. O T h e tax e x e m p t i o n shall be conferred through the issuance of a non-transferrable tax e x e m p t i o n certificate.for any service rendered by local governments in an amount reasonably commensurate to such service. 1261.

or a tax upon goods and merchandise carried into the municipalities. the said facility shall be free and o p e n for public use. the local g o v e r n m e n t unit c o n c e r n e d m a y discontinue the collection of the tolls. post office personnel delivering mail. d) Market fees . b) Public utility charges . except in the elementary g r a d e s . But. fees and charges and thereafter. terms and conditions relative thereto shall be determined and fix by the local s a n g g u n i a n c o n c e r n e d . waterway. 732 . (Tan vs. f) Corral fees .for the animals to be slaughtered w h i c h are deposited and kept in a corral o w n e d by the local g o v e r n m e n t . the collection may be declared null and void. operated. bridges. The amount. Local government may impose the s a m e provided that such wharves are constructed and maintained by t h e m . 7 SCRA 887) c) Toll fees or c h a r g e s for roads. The officers and enlisted m e n of the A F P a n d m e m b e r s of the P N P on mission.for the slaughter of any animal for public consumption. and maintained by local governments within their territorial jurisdiction. pier or wharf. of Pagbilao. ferries and telecommunication system f u n d e d and constructed by the local g o v e r n m e n t c o n c e r n e d .for services rendered in connection with the operation of public utilities o w n e d .for instruction in schools w h i c h the local g o v e r n m e n t operates. Mun. g) Tuition fees . W h e n public safety a n d welfare dictates. "Wharfage" is the compensation or fee or charge for tying vessels to a wharf and for loading goods or shipping them therefrom. rates.for the o c c u p a n c y or use of public markets and premises of the s a m e . physically handicapped and disabled citizens and senior citizens are e x e m p t f r o m these toll fees and c h a r g e s . e) Slaughter fees . canals. if the imposition partakes of a specific tax.

including non-bank intermediaries. h) C h a r g e s for h o l d i n g benefits . gifts. 133(a) and the second the business tax under Sec. finance and investment companies. 1262. d) T a x e s on income of any kind w h a t s o e v e r except w h e n levied on b a n k s and other financial institutions. .those collected from benefits held by local g o v e r n m e n t s to raise funds for s o m e specific purpose. inheritance. 143(f) of the same Code. legacies and other acquisitions mortis c a u s a . So that. p a w n s h o p s and dealers in securities and foreign e x c h a n g e . 5% on the amount of royalties of their real or personal properties. Currently. 3 0 % corporate income tax and 2 0 % withholding tax on their Philippine currency deposit interest income and yields from deposit substitutes. a) D o c u m e n t a r y S t a m p tax. b) T a x e s on forest c o n c e s s i o n s . 733 . these entities are already subject to gross receipts tax by the National Government up to 3 0 % of their lending activities. a n d i) L i c e n s e or P e r m i t f e e s . lending investors. T h e Local G o v e r n m e n t C o d e categorically authorizes the L G U s to impose two (2) types of taxes on banks and financial institutions. inspection.a m o u n t sufficient to cover the cost of regulation. m o n e y shops. c) T a x e s on estates. and surveillance relative to the issuance of a permit to e n g a g e in any business or occupation. the . stock brokers. the local government units in formulating the revenue ordinance must consider the s a m e in imposing additional tax burden on them. and forest products (not its sale) w h e n sold domestically by the concessionaire himself. stock markets. except the 1/2 of 1% tax on transfers of real property o w n e r s h i p that m a y be imposed by provinces and cities. W h a t are t h e t a x e s that c a n n o t be i m p o s e d by the local g o v e r n m e n t units? ( C o m m o n limitations on the taxing powers of the LGU) Answer. insurance companies.first being the income tax under Sec.

registration fees of vessels except as otherwise provided in the L T C . export t a x e s . tonnage dues. h) Taxes or fees for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof except tricycles. I) T a x e s and other impositions u p o n g o o d s carried into or out of. fees or other levies on Philippine finished. land or water except as otherwise provided by the LTC. the territorial jurisdictions of local 734 . g) Local governments may tax tricycle operation. manufactured or p r o c e s s e d products is T A X A B L E by municipalities or cities. charges and dues except w h a r f a g e on w h a r v e s constructed a n d maintained by the local g o v e r n m e n t c o n c e r n e d at rates not e x c e e d i n g those fixed by the T C C . f) Taxes on the business of transportation contractors and persons engaged in the transportation of passengers or freight by hire and c o m m o n carriers by air. manufactured or processed products. e) Taxes on businesses inside the export processing zones because the power of taxation is coterminous with the territorial boundaries and therefore local government units cannot lawfully impose taxes beyond such boundaries. fees and other levies m a y be i m p o s e d by local g o v e r n m e n t units on raw materials E X P O R T E D T O F O R E I G N C O U N T R I E S . or passing t h r o u g h . and w h a r f a g e on w h a r v e s . i) Customs duties. and all other kinds of c u s t o m s fees. Likewise. T h e prohibition is on t a x i n g the p r o d u c t s e x p o r t e d a b r o a d . k) Export taxes. a n d products of Philippine cottage industries. they may impose a business tax on transportation contractors. The zone is "outside" the territorial jurisdiction of the locality. (including berthing fees) j) T a x e s on p r e m i u m s paid by o w n e r s of property w h o obtain insurance directly with foreign insurance c o m p a n i e s . except taxes that w o u l d use gross receipts as a tax base. T h e business of exporting Philippine finished. Under the L G C of 1 9 9 1 . or for reinsurance or retrocession ( p r e m i u m s refunded on account of rejection of risk).

O An o r d i n a n c e imposing a tax regulating the exit of food supply and labor animals by prescribing a license permit and requiring t h e p a y m e n t of certain fee therefor w a s held to be invalid. poultry or animal-raiser himself or his immediate family. O An ordinance charging outgoing fee in the transport of rice and corn f r o m o n e municipality to another is violative to Sec. 7 SCRA 132) O T h e s e products b e c o m e taxable w h e n sold by agri- business enterprises in c o m m e r c i a l quantities or when these are transformed into manufactured articles such as salted duck eggs. or otherwise. 3 T h e s e are likewise taxable w h e n sold by persons other t h a n t h e farmer or producer. mineral products. or other taxes in any f o r m w h a t e v e r u p o n such g o o d s or merchandise. being in restraint of trade. 735 . g o v e r n m e n t s in the guise of unreasonable charges for w h a r f a g e . and their by-products when sold domestically by the operators. f i s h e r m a n . even without being processed. (Oriental Kapok Industries vs. 87 Phil. O A business tax on copra dealers on every hundred kilos of copra exported a b r o a d w a s declared v o i d . o) Taxes on mines. O An ordinance imposing a tax on the inspection of meat c o m i n g f r o m outside city limits by a veterinarian and charging fees therefore w a s declared invalid. charcoal or sugar. 5(j) PD 2 3 1 . and minerals. CIR. mining operations. 96) n) Percentage tax or value-added tax on sales or exchanges of goods and services or similar transactions thereon. 3 An export tax i m p o s e d on the inspection fee on every head of h o g . m ) T a x e s or fees on agricultural or aquatic products w h e n sold by the marginal farmer. (Bermejo vs. use of bridges. cattle and c a r a b a o transported to other places w a s forbidden. Collector.

the Cooperative Code of the Philippines. T h e L R T w a s created to serve the needs of the riding public w h o pays the required rates for the use of the L R T system from w h i c h the Authority derived material gains. toll fees a m o n g others. its agencies and instrumentalities and other local government units. p) Taxes on countryside and barangay business enterprises and on registered cooperatives duly organized and registered with the proper government office under RA 6938. review or bulletin appearing at regular intervals primarily for t h e purpose of public advertisement except books and materials prescribed by the D E C S as school texts. V A T . T h u s . & City Assessor of Manila (CBAA case No. It is not e n g a g e d in purely g o v e r n m e n t a l service entitled to the tax e x e m p t i o n . fees or charges of any kind on the national government. fees. s) Excise taxes on articles or g o o d s e n u m e r a t e d under the NIRC and taxes. Light Rail Transit Authority vs. a n d c h a r g e s on petroleum products. L-06. municipalities a n d cities are 736 . r) T a x e s on the business of persons e n g a g e d in t h e printing and publication of any n e w s p a p e r . or percentage tax. L G U s may not tax local water districts. such as on consumption of water. non- stock and non-profit hospitals and educational institutions because the Local G o v e r n m e n t C o d e expressly provided for their e x e m p t i o n . electricity. N O T E : LGUs are authorized to tax G O C C s . m a g a z i n e . but not a business tax on the businesses of importing. resolved July 6. manufacturing or producing said products subject to excise tax. q) Taxes. Board of Assessment Appeals of Mia. duly registered cooperatives. O The exemption does not include payment of service charges or rentals for the use of property and equipment or public utilities o w n e d by the local government. 1995) Carriageways and terminals o w n e d by the L R T A are subject to realty taxes of the L G U s . But. e v e n t h o u g h built or attached to the national road w h i c h is the property of the national government.

Art. f r o m s u c h date of registration and countryside and barangay business enterprises registered pursuant to RA 6 8 1 0 . 1263. Local taxes. Even if the sugar central itself produces the sugar cane because under the definition of "agricultural product" the yield of the soil is considered only as such for purposes of taxation w h e n it is in its original f o r m . marine and fresh water products are taxable b e c a u s e w h a t is prohibited is for the local g o v e r n m e n t s to i m p o s e taxes or fees on agricultural products.2 ) o f P D 231 ( O m n i b u s Investment Code) T h e e x e m p t i o n is on t h e The exemption is on the business of exporting products being exported. drying. 1 9 ( A . but N O T those levied on the business of producing t h e m . respectively. their e x e m p t i o n being applicable to national taxes only. or w h e n preserved in a more convenient and marketable form through the simple processes of freezing. salting and stripping. Accrual means when liability for the tax has attached or begun. authorized to i m p o s e business taxes of not more than 2% of the gross receipts for the preceding year on said entities. The conversion of sugar cane into sugar is NOT included in the simple processes contemplated under the definition. 3 BOI-registered c o m p a n i e s are N O T e x e m p t from Major's permits.6 years have expired the local government m a y t h e n after exercise its power of taxation on these businesses. 48 of PD 1789 S e c . fees and charges shall accrue on the 1st day 737 . 3 Producers of agricultural. O O n c e the 4 . 3 Local g o v e r n m e n t s m a y levy taxes on sugar centrals on the basis of gross sales for the preceding calendar year. t) T a x e s on business enterprises certified by the Board of Investments as pioneer or non-pioneer for a period of 6 and 4 y e a r s . regulatory fees and service charges that local g o v e r n m e n t m a y have i m p o s e d under a duly-enacted tax o r d i n a n c e . Distinguish between "accrual of tax" and "time for payment": Answer.

W h e n p a y a b l e ? . Fees vs. interest and other penalties are imposable. new taxes. fees and charges shall be paid within the first 20 days of January or of each subsequent quarter. of January of each year. furnished. For late payment due and collectible thereof surcharge.Within 60 d a y s f r o m the date of the execution of the d e e d . Scope of the taxing power of the P r o v i n c e : A n s w e r . Local taxes. A province m a y levy the following - A) T a x on Transfer of Real P r o p e r t y O w n e r s h i p (Sec. 135) Rate of tax . This time of payment may be extended by the Sanggunian concerned for a justifiable reason or cause. Imposed under the Imposed under t h e police Imposed under the taxing power of the power of the g o v e r n m e n t principle of equity government 1265. or changes in the rates shall accrue on the 1st day of the quarter next following the effectivity of the ordinance imposing such new levies or rates. fees and charges. 738 . Distinctions: Tax vs. C h a r g e s : Answer. or for to t h e cost of regulating the convenience the activity or privilege. w h i c h e v e r is higher. "Accrual of tax" " T i m e of p a y m e n t " It refers to the date the tax is payable It refers to the time the tax b e c o m e s without penalty. 1264. Tax Fee Service Charge Imposed for purposes of Imposed in payment of Imposed for purposes regulations. or f r o m the date of t h e decedent's death in the case of transfer by s u c c e s s i o n . However. for a period not exceeding 6 months without surcharge or penalties. as the case may be. T h e a m o u n t services rendered by the to raising revenues is more or less equivalent local g o v e r n m e n t .Not more than 5 0 % of 1% of the total consideration involved in the acquisition of the property or of the fair market value.

3 S a l e of land for socialized housing projects is exempt from the transfer tax. C) Franchise tax notwithstanding any exemption granted by any law or other special law (Sec. not exceeding 1/20 of 1% of the capital investment. or realized. (In case the " R E C " d o n a t e s properties. within its territorial jurisdiction. if t h e transfer is f r o m landlords to tenant- f a r m e r under the C o m p r e h e n s i v e Agrarian Reform Law is taxable. the tax shall not exceed 1/20 of 1 % of the capital investment. 3 Real properties o w n e d by t h e traditional exemptees to private parties are subject to transfer taxes.For old business. For newly started business. they shall likewise be subject to d o n o r ' s tax) B) T a x on b u s i n e s s of printing or publication (Sec. 3 Agricultural land. 739 . transferor. 136) - Tax on business of printing and publication except books and materials prescribed by the D E C S as school texts. 9 Transfer of o w n e r s h i p o v e r a land pending issuance of a Free Patent under t h e Public Land Act (CA 141) by the B u r e a u of Lands. In case of newly started business.At the place w h e r e the property is located 3 Foreclosed properties (by banks) are subject to the transfer tax a n d c o m p u t e d b a s e d on the registration of the certificate of sale with the Register of Deeds. not exceeding 5 0 % of 1 % of the gross annual receipts for the preceding calendar year. 137). Rate of tax .T h e seller. donor. T a x S i t u s ? . Rate of tax . executor or administrator of the property.For old business not exceeding 5 0 % of 1 % of the gross annual receipts for the preceding calendar year based on the incoming receipts. W h o p a y s ? . is subject to transfer tax.

franchises. 8) 3 L G U are without power to tax electric p o w e r c o m p a n i e s already subject to franchise tax unless their franchise allows the imposition of additional tax. earnings. P L D T ) with franchises containing the "in lieu of all taxes" proviso are N O T subject to the said local franchise tax. necessary and irreconcilable conflict. M e r a l c o . but w h e r e there is a clear. R e a s o n : While admittedly the established jurisprudence is that if a general law is enacted after the special law. 46 Phil. the N P C Charter is a special law. such as the provisions contained in franchise grants. 740 . right of way. 3 N P C . Collector of Customs.s u c h privilege is not subject to the local franchise tax. but this admits exceptions. 3 W h e r e the franchise provides that "such annual payments shall be in lieu of all taxes of every name and nature - municipal. earnings and all other property owned or operated by the grantee" .s u c h privilege m a y not be subject to the additional provincial franchise tax. 3 Municipalities may grant franchises but has no authority to impose franchise tax. 3 The province shall not impose the franchise tax on business enjoying franchise operating within the territorial jurisdiction of any city located within the province. 3 W h e r e the franchise t e r m provides that it "shall be in lieu of all other taxes and assessments of whatever nature and by whatever authority upon the privilege. income. (Compania General vs.3 The power of the local government units to levy taxes is expressly made subject to the limitations provided by law. 3 Transportation c o m p a n i e s are not holders of franchises being only grantees of certificates of public c o n v e n i e n c e . a government corporation is liable for franchise tax despite exemption granted under its Charter. the special law remains. and franchise" . Such as in the case of NPC w h e r e the D O J opines that the Local G o v e r n m e n t Code is a general law. the general law prevails. 3 Business establishments ( R C P I . province or city upon the capital stock. w h e r e a s .

138V Rate of tax . earth.Not more than 1 0 % of fair market value in the locality per cubic meter of ordinary stones. (b) C o m p o n e n t city or municipality w h e r e the products are extracted . rivers. 3 T h e proceeds of the tax on s a n d .00 ( N O T E : cities may impose professional taxes higher than Php 300. and other quarry resources extracted f r o m public lands or from the beds of s e a s . s a n d . 3 T h e power Jo impose sand and gravel fee belongs to the province and N O T to the municipality. lakes. gravel a n d other quarry r e s o u r c e s (Sec. s t r e a m s . 3 O w n e r s or lessees of private lands shall have the preferential right to extract and remove sand and gravel materials that m a y be found in their land. 3 T h e s a n d and gravel tax imposed under local tax ordinance from contractors extracting materials within private c o n c e s s i o n s or lands. gravel and other quarry resources shall be distributed as follows: a) Province - 3 0 % . W h e r e payable? at the province where the professional exercises his profession or where he maintains his principal 741 . and other public w a t e r s within the territorial jurisdiction. 139) (sometimes referred to as occupation tax) Rate of tax .on or before the 31st of January of each year. E) Professional T a x (Sec. 3 Contractors of g o v e r n m e n t infrastructure projects are subject to sand a n d gravel tax.00) W h e n payable? . w h i c h are neither franchises nor contracts but simply privilege licenses. regardless of whether the said contractors are engaged in the construction of infrastructure projects or not. gravel.not exceeding Php 300. Lands with imperfect titles (Tax Declarations) shall be recognized if supported by up-to-date payment of realty taxes. D) T a x on s a n d .4 0 % . creeks. and (c) Barangay w h e r e the s a m e is extracted .3 0 % .

140) Rate of tax .) 3 A person beginning a profession after t h e month of January is required to pay the professional tax for the whole year. painting and art exhibitions. Professionals exclusively employed in the government shall be e x e m p t from the payment of the tax. 742 .Not more than 3 0 % of the gross receipts from admission fees. or proprietor or lessees. concerts ( E X C E P T pop. and payment thereof entitles him to practice his profession anywhere in the Philippines without being further made subject to any other national or local tax. F) A m u s e m e n t tax on a d m i s s i o n (Sec. it is subject to the business tax as contractors [Sec. 3 Local g o v e r n m e n t may not impose mayor's permits in the exercise of a profession but m a y properly impose regulatory fee by ordinance on those e n g a g e in business. H e n c e . flower s h o w s . he is required to pay as many professional taxes as the case may be. w h e r e a s . office. d r a m a . musical p r o g r a m s . recitals. 143 (e) L G C ] and major's permit fees and other regulatory fees of the local g o v e r n m e n t s . W h o pays? T h e proprietor or operators or lessees of places of a m u s e m e n t . If the person exercises several professions at the same time. the professional partners shall also pay their professional taxes respectively. and literary and oratorical presentations. W h o i m p o s e s this t a x ? T h e city or province m a y impose the a m u s e m e n t taxes on a d m i s s i o n . for that it is considered a contractor within the m e a n i n g of Sec. 13 (h) L G C . license or fee for the practice of such profession. rock or similar concerts w h i c h shall be subject to a m u s e m e n t tax). w h e r e a s the municipal government may impose business tax on a m u s e m e n t places which is a tax on the privilege of operating an a m u s e m e n t place paid by its operator. O General professional partnership is e n g a g e d in rendering services for a fee. ( N O T E : A Judge or a prosecutor w h o teaches after his/her official time with the government is required to pay the professional tax. Except t h o s e that operate operas.

classical or semi-classical music to arouse organ music c o n s c i o u s n e s s and promote Filipino culture a m o n g the public is e x e m p t from a m u s e m e n t tax. 3 "Other a m u s e m e n t places" m a y include bath houses. s t e a m and s a u n a baths. s w i m m i n g pools. no a m u s e m e n t tax should be a s s e s s e d and collected. income tax is due) Distinctions between A m u s e m e n t taxes collected by the Local Governments and BIR: Answer. 3 Philippine National Red Cross is exempted from a m u s e m e n t tax. operator. 3 W h e n no admission fee is collected or paid for admission to an a m u s e m e n t place. 743 . 3 A m u s e m e n t tax is levied as a percentage of the admission fee and actually paid by the customers of the a m u s e m e n t place. skating rinks. operator or lessee. ( N O T E : if income is realized therefrom. 3 T h e a m u s e m e n t tax is shared equally between the province a n d the municipality w h e r e t h e a m u s e m e n t places are located. A m u s e m e n t tax of the L G U A m u s e m e n t tax of the BIR Collected by the city or provincial Collected by the national government government The basis of the tax is the price The basis of the tax is the gross indicated on the ticket receipts of the proprietor. school p r o g r a m s and exhibitions and other educational activities of public schools to which admission fees are c h a r g e d is e x e m p t f r o m the a m u s e m e n t tax provided t h e net proceeds realized therefrom accrue to the athletic funds or library fund of t h e s c h o o l . resorts. lessee of places the amusement place. 3 Athletic meets. 3 P e r f o r m a n c e s of non-professional musicians to promote Filipino folk music. g y m s if any a m o u n t is c h a r g e d as entrance fee to the patrons. The tax is paid by those seeking This percentage tax the direct liability admission to the amusement of the proprietor.

circuses and other places of a m u s e m e n t but it does not include the authority to tax professional basketball g a m e s . concert halls. Can an L G U impose an a m u s e m e n t tax on admission tickets to P B A g a m e s ? Answer. cinematographers. whether directly or indirectly. the term gross receipts e m b r a c e s all t h e receipts of the proprietors. lessees or operators of t h e a m u s e m e n t place G) Fixed annual tax on delivery t r u c k s a n d v a n s of manufacturers. concert halls. wholesalers of. lessees. Basketball Association vs. 337 SCRA 358: The amusement tax on gross receipts or from the sale of admission tickets are considered national tax and not a local tax. lessees. dealers. The gross receipt shall include all income from the cession. or retailers in certain products of peddler's tax. cinematographs. Phil. CA. Rate of tax . Sec.not e x c e e d i n g P 5 0 0 . thus e x e m p t i n g the manufacturers or producers. 13 of the LTC) indicates that the province can only impose a tax on admission f r o m the proprietors. 1 of PD 1456 (for the purpose of a m u s e m e n t tax. producers. or operators of the a m u s e m e n t place) is broad e n o u g h to e m b r a c e t h e cession of advertising and streamer spaces as the s a m e e m b r a c e s all the receipts of the proprietors. dealers or retailers in certain p r o d u c t s . The a m u s e m e n t tax collectible by the province is a tax on admission fees paid by the viewers and collected by the proprietors. circuses and other places of amusement. lessees or operators of theaters. Is the cession of advertising a n d s t r e a m e r s p a c e s to vintage enterprises subject to the p a y m e n t of a m u s e m e n t tax under the N I R C ? A n s w e r . or operators of theaters. The tax provision (Sec. (Sec. streamers and advertising spaces of the entity sponsoring the activity. 141) A n n u a l Fixed Tax is on every truck. 0 0 for every delivery van or other vehicle used in t h e delivery or distribution of the 744 . wholesalers. v a n or any vehicle used in delivering products to sales outlets or customers.

ferry or telecommunication system funded and constructed by the provincial g o v e r n m e n t . (Sec. corral fees. 153) L) C h a r g e s for the operation of public utilities o w n e d . except in the public elementary grades. special levy on lands benefited by public works projects f u n d e d by the provincial government. freight services and cargo forwarding businesses a r e not subject to this imposition. additional ad v a l o r e m tax on idle lands at the rate not e x c e e d i n g 5% of the a s s e s s e d value of real property. (Sec. pier or wharf. w a t e r w a y . products to sales outlets or c o n s u m e r s . and N) Tuition fees from the operation of the provincial high school. machinery and other improvement not specifically e x e m p t e d a t the rate not e x c e e d i n g 1 % o f the a s s e s s e d v a l u e of the real property. bridge. 240) J) Toll f e e s or c h a r g e s for the use of any public road. M) Slaughter fees. and 745 . charges for holding benefits. 154) The taxes authorized to be levied by a province are in addition to the taxes imposed by the NIRC. (Sec. 235) 2. operated a n d maintained by the provincial government. market fees. 155) K) R e a s o n a b l e fees a n d c h a r g e s for services rendered. additional levy on real property for the special education f u n d at a rate of not more than 1 % of its a s s e s s e d value. building. 3 T r u c k i n g . (Sec. (Sec. H) A n n u a l ad v a l o r e m tax on real property s u c h as land. (Sec. (Sec. 232) I) Special levies on real property such as t h o s e on the following: 1. either directly or indirectly within the province. 2 3 6 ) 3.

T w o (2) types of taxes on banks and financial institutions that local g o v e r n m e n t s (municipal and/or city ) are a u t h o r i z e d to i m p o s e : Answer. Can the m u n i c i p a l g o v e r n m e n t exercise the power to c r e a t e its o w n s o u r c e s o f r e v e n u e i n d e p e n d e n t o f t h e province or city? Answer. O) Those are that are allowed under the c o m m o n taxing powers of the local government in addition to the above enumeration. (not necessarily 3 0 % as imposed under the NIRC) b) Business taxes [Sec. Consistent with local autonomy. interest e a r n e d a n d actually collected in a d v a n c e on bills discounted. 3. interest e a r n e d and actually collected on t i m e loans. a) Income tax on t h e m [Sec. levy taxes. 1267. 1268. income from financial leasing. 2. What is the composition of the gross receipts of banks? A n s w e r .w h i c h is a tax on their income realized during the year.w h i c h is a tax for the business of operating a bank or other financial institution. 1266. Yes. It shall include: a) Interest from loans and discounts: 1. municipal government can exercise the power to create revenue sources. 143(f)] . rentals on property and profits from e x c h a n g e or sale of property a n d insurance premiums. at t h e rate of 1/2 of 1 % base on their preceding year's gross receipt derived from interest. 746 . 133(a)] . dividends. discounts e a r n e d a n d actually collected in a d v a n c e on bills d i s c o u n t e d . c o m m i s s i o n s and discounts f r o m lending activities. including those collected in a d v a n c e or partially collected. fees and charges which shall exclusively accrue to the municipality.

a) All transactions filed with or negotiated in the branch shall be taxable in the said branch. 1270. e) Income f r o m sale or e x c h a n g e of assets and property. "X". financial intermediaries and 747 . W h a t bank i n c o m e are not subject to local taxation: Answer. f) C a s h dividends e a r n e d and received on equity investments. a) Interest e a r n e d under the e x p a n d e d foreign currency deposit system. or if there is non-separability of the businesses of the banking. d) Income e a r n e d and actually collected f r o m acquired assets. h) I n c o m e c o m p o n e n t of rentals f r o m financing leasing. as a m e n d e d ( H o m e Financing Act) c) Receipts from filing fees. b) Interest e a r n e d and actually collected on inter-bank loans. W h a t is the situs of business tax on banks? Answer. a d o m e s t i c banking institution is also e n g a g e d in f i n a n c i n g activities. service and other administrative charges. b) Interest a c c u m u l a t e d by lending institutions on mortgages insured under RA 4 8 0 . interest e a r n e d a n d actually collected on mortgage contracts receivables.(1) f r o m lessees of safe deposit b o x e s (2) f r o m lessees of bank premises and equipment. c) Rental income on properties . 1269. 4. 1 2 7 1 . b) Transactions filed and negotiated with branch but being beyond the approving authority of the branch manager and forwarded to the Head Office for final approval are subject to local taxation in the branch office. g) Bank c o m m i s s i o n s f r o m lending activities.

plant. and (c) Construction contractors. (b) Enterprises registered with the B O I . and plantation or 3 branch offices? (FP B) A n s w e r . 1272. producer or exporter (MACPE) with factory. Tax situs of excise taxes. The Principle of "Non-Separability of B u s i n e s s " also applies to (a) exporting. a m u s e m e n t . the business shall be treated as O N E business activity subject to one business tax under Sec. project office. whenever it conducts an integrated operation consisting of manufacturing. insurance c o m p a n i e s . May the municipal or city government collect both wholesaler a n d retailer's tax on b u s i n e s s m e n e n g a g e d in both activities of wholesaling and retailing within the s a m e tax period? Answer. If the activities are inherent. wholesaling and retailing. 143 (f) of the L G C . t h e tax is u p o n the p e r f o r m a n c e of an act. necessary or incidental to either the business of banking. enjoyment of a privilege or the e n g a g i n g of an occupation. T h e tax situs of the business tax is the place w h e r e the sale is effected if a branch or sales office is there located. service shops. h o w s h o u l d the local g o v e r n m e n t tax the entities? Answer. plant or plantation are located. such as on restaurants. financing or insurance. T a x "situs" refers to the place w h e r e p a y m e n t of tax is m a d e according to law. 143) 1273. assembler. If no such branch or sales office is located w h e r e the sale is effected the sale shall be duly recorded in the principal office a n d taxable by the local g o v e r n m e n t s w h e r e the principal business office and the factory. contractor. (Sec. hotel. project office. W h a t is the situs of business tax on manufacturers. billboards. not d e p e n d e n t on the domicile of the taxpayer but on the place in which the act is performed or occupation is e n g a g e d in and N O T upon the location of the office but the place w h e r e the sale is perfected. Wholesalers w h o are at the s a m e time retailers shall be taxed on both activities but m a y avail of the concession or the reduced tax. etc. In the case of a sales tax. is the place w h e r e the 748 .

g) In case there are 2 or more factories or plants located in different areas . b) T h e gross sales or receipts of the principal office from export transactions a r e taxable excluding the sales or receipts recorded in the b r a n c h e s . tax situs follows t h e Principle of Territoriality of taxation. a) On export sales m a d e by its branch office .t h e sale shall be recorded in the principal office. c) A w a r e h o u s e that a c c e p t s orders and or issues invoices independent of the branch with sales office is taxable. e) In c a s e there is no branch or sales office in the locality where the sale is m a d e . f) In case t h e factory also sells the g o o d s it produces . 749 . N O T E : Do not forget that income (subject to internal revenue tax) earned by different branches is consolidated at the principal office and filed at the place where the principal office is located.the gross sales/receipts derived by said branch shall be taxable by the city or municipality w h e r e it is operating.privilege is being exercised. d) Offices that are used for display area of the products m a n u f a c t u r e d w h e r e no stock or items are stored for sale.3 0 % of all sales recorded in the principal office shall be taxable by the city or municipality w h e r e the principal office is located and the 7 0 % of the gross sales/receipts shall be taxed where the factory is located.the 7 0 % sales allocation for factories that are also selling shall be pro rated in proportion to their respective volumes of production during the period for which the tax is due.s a m e rule applies based on sales. W h e r e the law is silent on the matter. h) In case the manufacturer engages the services of an independent contractor to produce or manufacture some of their products . although orders for displayed products may be received are not branch or sales offices a n d therefore not subject to tax.

the PDIC is liable to pay the business tax imposed by the local governments. 1274. 1275. 4 0 % to the city or municipality where the plantation is located. 2. corporations or G O C C s e n g a g e d as principals in the insurance business. EXCEPT MUTUAL BENEFIT ASSOCIATIONS A N D PURELY C O O P E R A T I V E S insurance associations organized under the laws on cooperatives. T h e exemption privileges granted to it under its Charter [RA 1467(1978)] w e r e withdrawn by the L G C (1991). including their branches. Thus. a) Insurance contracts or policies issued by the h e a d office or branch office shall be recorded in said offices as the c a s e m a y be and the p r e m i u m s and/or gross receipts due thereon shall be subject to local business taxes. b) All insurance p r e m i u m s and/or gross receipts f r o m transactions not recorded in the branch office of the insurance c o m p a n y shall be recorded in t h e head office and taxable there. associations. a g o v e r n m e n t o w n e d and controlled corporation subject to business taxes? Answer. j) If plantation is located is some place other than where the factory is located. the foregoing 7 0 % shall be subdivided as follows - 1. Y e s . 6 0 % to the city or municipality where the factory is located. Yes. 750 . Is the PDIC. Are insurance companies included in the term "other financial institutions" and therefore subject to local business taxes? A n s w e r . Insurance c o m p a n i e s shall include all individuals. The 5% tax on the total p r e m i u m s paid under the NIRC is independent of the taxes due to the local government. What is the situs of business tax on insurance companies? Answer. 1276. partnerships.

The tax shall be based on the gross receipts of the producers. refining. Is "X" subject to the tax imposed by the Local G o v e r n m e n t (City)? A n s w e r . W h i l e "X" is dealing in an article of c o m m e r c e (copra). "X" is not required to pay the tax because the business taxes that m a y be i m p o s e d by the municipal g o v e r n m e n t are those businesses e n g a g e d in manufacturing. marine and fresh-water products on the commercial scale. Can the municipal government impose a b u s i n e s s tax based on "output" or "Production"? A n s w e r . brokers and sale representatives are not subject to business taxes but they are liable to the occupation tax under Sec. producing. May municipalities impose business taxes on gasoline stations? Answer. brokers and sales representatives subject to local business taxes? A n s w e r . it neither sells. Municipalities may not impose "business taxes" on any business engaged in the production. manufacture. To be considered a dealer. importing. 147 of the C o d e . No. backyard fishermen. exporting. Municipalities ineluding cities may impose a tax on persons e n g a g e d in the business of producing agricultural. C o m m i s s i o n s and other m e a n s of earnings of insurance agents. However. the act of selling the copra purchased which is an indispensable e l e m e n t of dealing is w a n t i n g .1277. 1278. It is only authorized to impose business tax based on gross sales and/or receipts for the preceding calendar year. Are insurance agents. w h o l e s a l i n g or retailing of any article of c o m m e r c e and t h o s e dealing in s u c h article. e x p o r t s c o p r a f r o m said city a n d it d o e s not earn gross receipts. "X" merely b u y s copra in the City. both activities of buying and selling must have taken place in the city. Surigao City passed on ordinance imposing an annual tax on all business operating therein based on gross receipts. 1280. aside from the V A T of t h e N I R C . poultry and animal raisers w h o do not engage in business on a commercial scale are exempt. 1279. 751 .

gasoline and other petroleum products in line with the existing national policy of the government. a domestic construction firm with principal office in La Trinidad. Are contractors of government infrastructure projects subject to local b u s i n e s s t a x e s ? Answer. Benguet imposed a business tax thereon? A n s w e r . As a rule. Granting that "X" pre-fabricated the works locally and installed t h e m overseas. Yes. m a y the local g o v e r n m e n t of La Trinidad. Benguet may impose a business tax on the gross receipt of "X" realized therefrom which shall be subject to not m o r e than 14 of t h e rate prescribed under Sec. except w h e n otherwise expressly indicated or prohibited in t h e law itself. 3 A business tax is due and payable on every separate and distinct establishment or place w h e r e business is c o n d u c t e d . 1284. M a y the local legislative b o d y lower tax rates in g e n e r a l ? A n s w e r . X. Benguet. 1281. No. Yes. Both are subject to local and national business taxes. w a s engaged to do an overseas construction project. 1283. A line of business d o e s not 752 . May the municipal government impose a business tax on said project outside of the Philippines? Answer. w h i c h shall not be subject to the local business tax. distribution or sale of oil. T h e construction contractors shall declare separately the gross receipts realized t h e r e f r o m . and on e a c h line of business. T h e municipal g o v e r n m e n t of La Trinidad. 1282. 143(e) of t h e C o d e . There is no distinction between contractors of government and non-government projects. the power of taxation is unavailing. in the case of overseas construction project outside the territorial boundaries of the Philippines. local legislative bodies m a y impose tax rates lower than the ceiling fixed in t h e C o d e . H o w is local b u s i n e s s taxes paid? Answer.

The execution of a promissory note by a taxpayer from its liability to pay and its acceptance by the City Treasurer will not 753 . May the local government impose surcharge and penalties on unpaid local t a x e s . in an activity merely incidental which serves no other p e r s o n or business. In c a s e he operates two (2) or more businesses that are subject to the s a m e rate of tax. as a feature thereof.. Generally. the tax shall be computed on t h e c o m b i n e d total gross sales or receipts of said two (2) or more related businesses otherwise the tax liabilities accrue and shall be reported separately. T h e local t a x e s . 2 W h e r e a p e r s o n is e n g a g e d in a distinct business. 1286. unless otherwise provided by the Tax C o d e (e.g. fees or charges are payable in quarterly installments. tax on transfer of real property o w n e r s h i p w h i c h is payable within 60 days f r o m date of execution of the d e e d or from date of decedent's death). fees and charges not paid on time and an interest of 2% per month from time of delinquency until fully paid may be imposed but in no case shall the total interest on the unpaid amount or portion thereof exceed 36 months or 7 2 % . T h u s . T h e basis thereof shall be the "gross sales/receipts for the preceding calendar year" w h i c h need not be the gross sale for one complete year of 12 m o n t h s . fees and charges are on the calendar year basis. O T h e b u s i n e s s tax is paid by the person conducting the business. Tax period and manner of payment of taxes imposed by the local g o v e r n m e n t units: A n s w e r . b e c o m e e x e m p t by being conducted with another business for w h i c h the tax is paid. Surcharge of not more than 2 5 % of the amount of taxes. w h e r e a business operated on a date other than J a n u a r y of the year. the incidental and restricted activity is not to be c o n s i d e r e d as intended to be separate or additionally taxed. local taxes. its "gross sales" is on what w a s realized from date of operation to the end of the calendar year. fees a n d c h a r g e s ? Answer. 1285.

and b) W h a r f a g e on w h a r v e s constructed a n d maintained by t h e city. Therefore. W h a t are the non-business taxes. fees and charges which the province or municipality may impose. 754 . b) Fees for the sealing and licensing of w e i g h t s and m e a s u r e s . a city shall not levy the taxes and other impositions e n u m e r a t e d under the " C o m m o n limitations on the taxing powers of local g o v e r n m e n t s " which exceptions refer to - a) Tax that m a y be levied by cities on the transfer of real property ownership. and on the practice of profession. embracing both such specific and general tax powers as provinces and municipalities may impose. c) It cannot also impose additional taxes on articles subject to specific taxes under the provisions of t h e N I R C . a) Fees and charges on business and o c c u p a t i o n . 1288. A city can validly tax the sales to customers outside the city as long as the orders w e r e b o o k e d and paid for in the company's branch office in the city. 1289. relieve the taxpayer from the imposition of surcharges and interests. The rate of taxes that the city may levy may exceed the m a x i m u m rates allowed for the province or municipality by not more than 5 0 % except the rates of professional and a m u s e m e n t taxes. it may levy the taxes. Except as otherwise provided. 1287. Cities have the broadest tax powers. What is the scope of the taxing powers of CITIES: Answer. c) Fees and charges for services r e n d e r e d . W h a t are the specific limitations on the taxing power of the City? Answer. fees a n d charges that may be imposed by Cities? Answer.

1290. bridge. 133(h) prohibits the taxing of products already tax under the N I R C . w h e r e a s . ferry or t e l e c o m m u n i c a t i o n system that are f u n d e d and constructed by t h e city. May the city government impose business taxes on gasoline stations? A n s w e r . municipality. T h e city through the S a n g g u n i a n Panlunsod shall have the exclusive authority to grant t h e m fishery privileges: a) To erect fish corrals. b) To gather. 133 (I) LGC. A r e c o m m o n carriers required to pay local taxes based on gross receipts under the Local Government Code? Answer. take or catch b a n g u s fry. pier or wharf. 1292. No. Under Sec. L G C ) N O T E : Sec. 143(h) allows the imposition on the privilege of engaging in the "business" of manufacturing or dealing in said products. w a t e r w a y . oyster. 143 (h). e) Toll f e e s and c h a r g e s for t h e use of any public road. fee or c h a r g e or any other imposition. Cities may collect business taxes on manufacturers. W h a t are fishery privileges and to whom are they granted? A n s w e r . Sec. (Sec. d) C h a r g e s for t h e operation of public utilities owned and maintained by the city.k a w a g or fry of other species f r o m city waters to marginal fishermen free of any rental. f e e s and c h a r g e s including licensing for the operation of fishing vessels of three (3) tons or less. the taxing powers of province. f) Fishery rentals. wholesalers. 1291. city or barangay shall not extend to the levy of taxes on the gross receipts of transportation contractors engaged in the transportation of passengers or freight by hire and 755 . retailers or dealers in petroleum products. mussels or other aquatic beds or b a n g u s fry areas within a definite area that will determine giving preferential rights to duly registered cooperatives or organizations of marginal f i s h e r m e n . or k a w a g . but the rate of tax thereon shall not exceed 2% of the gross sales or receipts of the preceding year.

He can also redeem his real property e v e n after it has b e e n sold. 756 . Distraint of personal property 2. the distraint property shall be returned to h i m . w h o s e gross sales or receipts for the preceding calendar year does not e x c e e d P h p 50K in cities and Php 30K in municipalities. is fully paid. 1294. a) Administrative action - 1. S c o p e of the taxing p o w e r s of Barangays: Answer. at a rate not e x c e e d i n g 1 % on such gross sales or receipt. {First Philippine Industrial Corp. CA. vs. This is enforceable by appropriate administrative and judicial actions and can only be extinguished if all delinquent revenue. as well as property used in business or occupation. common carriers by air. W h a t c a n the city g o v e r n m e n t do in c a s e of d e l i n q u e n t taxes? Answer. Levy upon real property b) Judicial action If the taxpayer pays the delinquent taxes before the date of sale. He or his authorized representative can exercise this right of redemption within one year from the date of sale. The city government can make legal claim to personal property of delinquent taxpayers. If the taxpayer fails to redeem the real property within t h e prescribed period after the levy. on stores of retailers with fixed b u s i n e s s establishment. fees and charges to the e x c l u s i o n of the other local g o v e r n m e n t units that shall exclusively a c c r u e to t h e m - (a) Taxes. including surcharges and interests. the City Treasurer shall publicly advertise that the property is now for sale or auction. B a r a n g a y s m a y levy the following t a x e s . W h a t civil r e m e d i e s c a n the city g o v e r n m e n t t a k e for collecting delinquent taxes? Answer. 300 SCRA 661) 1293. land or water. 1295. A d v e r t i s e m e n t shall run for at least 30 days.

In the event that the clearance is not issued within the said period. s i g n b o a r d s a n d outdoor advertisements. the city or municipality m a y issue t h e said license or permit. 1297. A reasonable fee may be i m p o s e d by the b a r a n g a y unit for the issuance of the s a m e . (c) R e a s o n a b l e fees and c h a r g e s (a) on c o m m e r c i a l breeding of fighting c o c k s . T h e application for clearance shall be acted upon within s e v e n (7) d a y s f r o m the filing thereof. 1298. H o w often c a n the local g o v e r n m e n t units adjust and/or change tax rates? A n s w e r . It is a law passed or enacted by the legislative body of the local g o v e r n m e n t in the exercise of its law-making authority. Distinctions between an ordinance and a resolution: Answer. (b) on places of recreation w h i c h charge a d m i s s i o n fees. cockfights a n d cockpits. Ordinance defined: A n s w e r . (d) B a r a n g a y C l e a r a n c e . (b) Service c h a r g e s for services rendered in connection with the regulation of the use of b a r a n g a y . It is a legislative act passed by the local board or council in the exercise of its lawmaking authority. Ordinance Resolution It is intended to permanently direct It is used whenever the legislature and control matters applying to wishes to express an opinion that is persons or things in general. copra or t o b a c c o dryer and the like.No city or municipality m a y issue any license or permit for any business or activity unless a clearance is first obtained f r o m the b a r a n g a y w h e r e s u c h business or activity is located or c o n d u c t e d . 1 2 9 9 .o w n e d properties or service facilities s u c h as palay. to have temporary effect only. 757 . 1296. Local g o v e r n m e n t units except cities are authorized to adjust tax rate not oftener than o n c e every five (5) years but such adjustment shall not e x c e e d 1 0 % of the rates fixed in the LTC. and (3) on billboards. W h a t is t h e nature'of a local tax o r d i n a n c e ? A n s w e r .

to interested or affected parties operating or doing business within the territorial jurisdiction of t h e local g o v e r n m e n t unit c o n c e r n e d . 758 . a) Prior to the e n a c t m e n t of any tax ordinance or revenue measure. law anytime. W h a t are the pre-requisites before local tax ordinance and revenue measures are enacted by the local government? Answer. Ordinance Resolution It prescribes a permanent rule of It is temporary in nature. The S a n g g u n i a n c o n c e r n e d shall c a u s e the sending of a written notice of the p r o p o s e d ordinance. either expressly or ministerial duties. or the last day of publication. whichever is later. or date of posting thereof. 3. resolution but only by another w i t h d r a w n . 1300. they may be by necessary implication. conduct of government. The notice shall specify the date a n d v e n u e of t h e public hearing. Within t e n (10) d a y s f r o m filing of any p r o p o s e d tax ordinance or r e v e n u e m e a s u r e . The initial public hearing shall be held not earlier than ten (10) d a y s f r o m the sending out of t h e notice. public hearing shall be conducted for the purpose. t h e s a m e must first be published for three (3) consecutive d a y s in a n e w s p a p e r of local circulation or shall be posted simultaneously in at least two (2) c o n s p i c u o u s public places within t h e territorial jurisdiction of t h e local g o v e r n m e n t unit c o n c e r n e d . cancelled and ordinance enacted with the s a m e revised without the formalities of formalities as the original ordinance. enclosing a copy thereof. It is binding not only on the inhabitants of the municipality but Not necessarily so also on strangers or non-residents coming into its territorial jurisdiction It cannot be a m e n d e d by mere Can be recalled. revoked. modified. Once duly enacted remains in force As it pertains temporarily to until repealed. implemented until cancelled or replaced. 2. which shall be in the following manner: b) 1.

w h e t h e r for or against the e n a c t m e n t of the proposed tax ordinance or revenue measure. 1301. a) It must not contravene the Constitution or statute. c) No tax ordinance or revenue m e a s u r e shall be enacted or a p p r o v e d in the a b s e n c e of a public hearing duly conducted in the m a n n e r herein provided. 5. confiscatory. and s u c h public hearing shall continue until all issues shall have b e e n presented and fully deliberated u p o n and a c o n s e n s u s shall have b e e n o b t a i n e d . c o m m e n t s and r e c o m m e n d a t i o n s . s u b m i t t e d by t h o s e w h o participated. the gist of such tax ordinance or revenue m e a s u r e shall be published in a n e w s p a p e r of general circulation within the province where the S a n g g u n i a n c o n c e r n e d belongs. c) It must not be discriminatory. posting of the tax ordinance or revenue measure shall be m a d e in all municipalities and cities of the province w h e r e the S a n g g u n i a n of origin is situated. and the like. 759 . In the a b s e n c e of such newspaper. W h a t is the test applied in determining the validity of an ordinance? ' Answer. unjust. unfair. m e m o r a n d a . T h e Secretary of the S a n g g u n i a n c o n c e r n e d shall prepare t h e minutes of s u c h public hearing and shall attach to the minutes t h e position papers. d) It must be general and consistent with the national or public policy of the government. all affected or interested parties shall be a c c o r d e d an opportunity to a p p e a r a n d present or e x p r e s s their v i e w s . During t h e public hearing. b) It must not prohibit but may regulate trade. unreasonable and oppressive. e) If the tax ordinance or revenue m e a s u r e contains penal provisions as authorized under the Local Tax C o d e . d) E x e m p t e d f r o m the m a n d a t o r y public hearing requirement is the city or municipal ordinance levying a c o m m u n i t y tax in view of the urgency of issuing s u c h ordinance for official purposes. 4.

it shall likewise be d e e m e d a p p r o v e d . in w h i c h case it shall be d e e m e d a p p r o v e d without t h e chief executive's approval or signature. An o r d i n a n c e . upon approval by the majority of all its m e m b e r s . a) A tax ordinance passed by the local board or council shall be approved and signed by the local chief executive concerned. be signed by the punong barangay. certified copies of all provincial. The power to impose a local tax. by a 2/3 vote of all its m e m b e r s . publication and effectivity shall also apply to tax ordinances. 1. The procedure applicable to local government ordinances in general such as q u o r u m . Panlungsod. city and municipal tax o r d i n a n c e s or revenue m e a s u r e s shall be published in full for three (3) consecutive d a y s in a n e w s p a p e r of local circulation. What are the procedural requirements in the e n a c t m e n t of local tax o r d i n a n c e s ? Answer. c) T h e lawmaking body may. Bayan or Barangay concerned through an appropriate ordinance. d) If said chief executive fails to approve or veto a tax ordinance within 10 d a y s after its p a s s a g e . 760 . unless o t h e r w i s e p r o v i d e d by it shall go into effect after ten (10) d a v s f r o m t h e date of its posting.1302. Within ten (10) days after approval by the S a n g g u n i a n . Ordinances p a s s e d by the s a n g g u n i a n barangay shall. submission for approval of the ordinance to the local chief executive. 2. pass the ordinance over the veto. fee or charge or to generate revenue may be exercised only by the Sanggunian Panlalawigan. he m a y veto it by signifying to the proper l a w m a k i n g body his disapproval thereon in writing. W h e r e there are no n e w s p a p e r s of local circulations the s a m e m a y be posted in at least two (2) c o n s p i c u o u s and publicly accessible places. b) If he considers any such tax ordinance prejudicial to the public welfare or ultra vires. the matter of veto and overriding the s a m e .

and. or the City Sanggunian as the case may be. city. within 10 days from enactment copies shall be forwarded to the municipal Sanggunian. 1 3 0 4 . A tax ordinance shall go into effect on the 10th day after its approval by the local chief executive. 4. shall review the tax ordinance within 30 days after receipt of a copy thereof. b) by the municipal board or barrio council . for the review of the ordinance. The provincial or the city or municipal sanggunian. as the case may be. t h e s a m e shall be considered as falling at the beginning of the next ensuing quarter a n d t h e t a x e s . fees or charges d u e shall begin to accrue t h e r e f r o m . 761 . municipal a n d barangay tax o r d i n a n c e s and revenue m e a s u r e s shall be furnished to the respective local treasurers for public dissemination. or city council . In c a s e the effectivity of any tax ordinance or revenue m e a s u r e falls on any date other t h a n the beginning of the quarter.for municipal or barrio tax ordinances. Within 15 d a y s after its a p p r o v a l . or Within three (3) days after its approval. a certified true copy of a tax ordinance shall be furnished the Secretary of Finance for review: a) by t h e provincial b o a r d . T h e r e q u i r e m e n t o f r e v i e w o f t h e t a x o r d i n a n c e a f t e r its approval: A n s w e r . N O T E : Fixing of a m o u n t and rate of local tax cannot be delegated to administrative officials. 1303. copies of the approved tax ordinance of the municipality or a component city shall be furnished to the provincial Sanggunian. 3. in the case of barangay ordinances.for provincial or city tax ordinances. Copies of all provincial. W h e n does a tax ordinance take effect? A n s w e r .

oppressive and confiscatory. as the case may be. excessive. and d) discriminatory in the conduct of business or calling or e) in restraint of trade. in t h e c a s e of provincial. as the case may be. N o t e : The authority of the Secretary of Finance is no m o r e than to suspend the effectivity of a tax ordinance in w h o l e or in part and is limited to the grounds e n u m e r a t e d . 1306. if in his opinion. A n y question or issue raised against the legality of any tax ordinance. 1305. 1270 (a) to ( e l l . A n y question on the constitutionality or legality of tax ordinances or revenue m e a s u r e s m a y be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice w h o shall render a decision within sixty (60) d a y s f r o m date of receipt of the a p p e a l . c) contrary to the national e c o n o m i c policy. on g r o u n d s other t h a n those m e n t i o n e d a b o v e TNo. takes no action as authorized. in the c a s e of tax ordinance of the city a n d b a r a n g a y s within t h e city. b) unreasonable. the provincial treasurer. If. 762 . or to the City Fiscal. the tax or fee therein levied or imposed is: a) prohibited of a local g o v e r n m e n t to impose and collect. w h o s e opinion shall be rendered within a period of thirty (30) days after receipt by him of the query or protest. or the city treasurer. the tax ordinance shall remain in force. G r o u n d s for review or s u s p e n s i o n of tax ordinance by the Secretary of Finance: Answer. unjust. H o w to question the legality of a tax ordinance or revenue measures? Answer. the Secretary of Finance or the provincial or city treasurer. shall review and have the authority to suspend the effectivity of any tax ordinance within 120 days after receipt of a copy thereof. The Secretary of Finance. municipal or barangay tax ordinances. within 120 days after receipt of a copy thereof. shall be referred for opinion to the Provincial Fiscal. or portion thereof.

speedy and adequate remedy. as the case may be. 1982) T h e Principle on Primacy of Administrative Remedies and Doctrine on Tax Refund are also applicable to local taxation. 74 SCRA 306. Central Board of Assessment Appeals May 31. T h e opinion of the Provincial or City Fiscal. 50 O. It does not affect the jurisdiction of the court over the case. (Meralco Securities Corp. (Bagatsing vs. Ramirez. m a y be raised on appeal within thirty (30) d a y s from the effectivity thereof to the Secretary of Justice w h o shall render an opinion on the matter within sixty (60) d a y s after receipt of the appeal. 5266) 2. (Pineda vs. (Callanta vs. June 28. within thirty (30) days u p o n receipt of the decision or the lapse of t h e sixty (60) days period without the Secretary of Justice acting u p o n the a p p e a l . 763 . as it merely implies absence of a cause of action. 1983) C o n s e q u e n c e of failure to e x h a u s t administrative remedies: 1. or 2. the aggrieved party m a y contests the s a m e in a court of c o m p e t e n t jurisdiction. of Trinidad vs. W h e n the application of the "Primacy" does not provide a plain. W h e n its application may cause great and irreparable d a m a g e . vs. Courts can scrutinize the acts of a g e n c i e s on question of law and jurisdiction e v e n w h e r e no review is given by statute. Central Board of Assessment Appeals May 31. T h e decision of the Secretary of Justice shall be final and executory unless. CFI. CFI ofDavao. 1982. The failure to raise in the trial court the issue of non- exhaustion of administrative remedies prevents a party from invoking it on appeal. However. W h e n o b t a i n i n g ? ( w h e n e x h a u s t i o n o f administrative remedies need not be c o m p l i e d with?) 1. e x h a u s t i o n of administrative remedies before resort to judicial bodies is not an absolute rule.G. Office of the Ombudsman) T h e special civil action of certiorari is proper in questioning the decision of a g e n c i e s exercising quasi-judicial powers. Caltex vs. Mun.

if it finds such ordinance to be b e y o n d the power conferred u p o n the city or municipal S a n g g u n i a n to i m p o s e . Failure on the part of the provincial. or charge levied nor does it authorize the local legislative body to re-impose the s a m e tax or fee levied under a suspended ordinance until such time as the ground for the suspension thereof shall have ceased to exist or the appeal has been resolve in its favor. 1308. t h e city or municipal S a n g g u n i a n . shall review the tax ordinance within 30 days after receipt of a copy thereof. may e x a m i n e the ordinance by itself or require the provincial attorney or prosecutor to provide it with his written c o m m e n t s or r e c o m m e n d a t i o n that may be considered by the S a n g g u n i a n in making its decision. W h e r e a s . W h a t is the effect of an appeal questioning the constitutionality or legality of a tax o r d i n a n c e or r e v e n u e measure upon the accrual and payment of the s a m e ? Answer. Effect of declaration of invalidity or s u s p e n s i o n of tax ordinance: Answer. The provincial S a n g g u n i a n . shall return the s a m e for adjustment. m a y either (a) modify t h e tax ordinance to meet the objections thereto or (b) file an a p p e a l with t h e proper court. a m e n d m e n t or notification that w o u l d thereby render the ordinance s u s p e n d e d until s u c h time or after the revision thereof called for is effected. otherwise. as the c a s e m a y be. 3 A n y tax or fee paid pursuant to a s u s p e n d e d tax ordinance or pursuant to a protested ordinance or any part thereof shall be 764 . Such appeal shall N O T HAVE the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax. in w h o l e or in part. municipal or city treasurer as the case m a y be. in t h e case of barangay ordinances. to take action within 30 d a y s . within 30 d a y s after receipt of the notice of suspension. if it finds the tax ordinance inconsistent with law.1307. the provincial or the city or municipal treasurer. The Secretary of Finance. in its c a s e . the tax ordinance or the part(s) thereof declared suspended shall be considered as r e v o k e d . the tax ordinance shall be d e e m e d consistent with law and therefore valid. T h e local legislative body. fee. It may declare the ordinance invalid.

/. considered as having b e e n paid under protest until final resolution of the issues raised. a. t o all liens. T h e lien may only be extinguished upon full payment of the delinquent local taxes. such as those arising from contracts or from laws of general application. or c. charges. This lien is s u p e r i o r . The tax lien does not extend to other revenues. 765 . fees and charges inclusive of all increments thereto. City treasurer. W h a t are the r e m e d i e s of t h e local g o v e r n m e n t in the collection of local taxes Answer. or b. 1309. Secretary of Finance 1310. Provincial treasurer. W h o has the p o w e r to s u s p e n d a tax ordinance under the LGC? Answer. Persuasive devices and safeguards - a) A T a x Lien is a legal claim or charge on property (whether real or personal) established by law as a sort of security for the p a y m e n t of tax obligations Lien for taxes and other revenues due to the local g o v e r n m e n t on all property or rights of the business. the issue can be raised before a competent court in as much as decision of administrative bodies exercising quasi-judicial functions are subject to review by the courts. (2) criminal penalties imposed under the Local Tax Code or by ordinances. b) Imposition or threat of (1) surcharges and interest. or encumbrances in favor of any person enforceable by appropriate administrative or judicial action. 3 If the decision of the treasurer or the Secretary of Finance is adverse to the taxpayer.

(a) by distraint of personal properties of w h a t e v e r character to enforce collection of delinquent taxes. or their deputies who should be authorized in writing. Under RA 9 2 8 2 . (4) requiring community tax certificate to be exhibited in s o m e instances.T h e C T A has jurisdiction o v e r local t a x e s a n d real property t a x e s . and c h a r g e s or other revenue by civil action in any court of c o m p e t e n t jurisdiction. 766 . Administrative remedies . (1) the Register of Deeds requiring evidences of payment of transfer taxes to provinces and cities for registration or other dealings on real properties. (3) to require professional to show proof of payment of occupation tax. 2. Z> Judicial action to enforce collection is filed in the regular courts. Legal action in ordinary courts to enforce p a y m e n t of delinquent taxes and other revenues d u e to the local g o v e r n m e n t units. and (b) by judicial action. but a lien m a y include real properties enforceable by legal action. such as. T h e s e remedies may either be pursued concurrently or simultaneously at t h e discretion of t h e local g o v e r n m e n t unit c o n c e r n e d . T h e civil action shall be filed by the local treasurer within the period prescribed. including the e n f o r c e m e n t of lien. the C T A has no jurisdiction to take cognizance of collection of local taxes and cases of protest of a s s e s s m e n t of local taxes. Coercive Means to Collect Delinquent Taxes: 1. (2) employers to require employees to show payment of occupation taxes. E x p a n d e d Jurisdiction of t h e C T A (April 2 0 0 4 ) . c) Examination of books by Provincial or City treasurer. T h e local g o v e r n m e n t unit c o n c e r n e d m a y enforce the collection of delinquent t a x e s . O Under RA 1125. f e e s . d) Cooperative functions of other offices. II. N O T E : T h e r e is no provision in the Local Tax C o d e on "levy" or sale of real property.

or charges without surcharges or penalties but only for a period not exceeding 6 months. O Unless otherwise provided under the LTC. Can the local sanggunian of the local government condone taxes? Answer. it w a s held that a municipal license (regulatory) tax already in existence shall be subject to change only by ordinance 767 . 1312. all local taxes. T h e civil action w o u l d preclude a criminal case as a proper r e m e d y for collection of delinquent local taxes. all local taxes. Collector of Internal Revenue. f e e s . O Unless otherwise prqvided in the LTC. and charges shall accrue on the first day of January of each year. and charges shall be paid within the first 20 days of January or of e a c h subsequent quarter as the case may be. 92 Phil. The Sanggunian concerned may for a justifiable reason or cause extend the time for payment of such taxes. 342. In the case of De Mesa vs. fees. f e e s . fees. Patanao. 20 SCRA 712 * People vs. fees. c h a r g e s and other r e v e n u e s collected by the local g o v e r n m e n t s ? Answer. and charges shall be the calendar year. 252) T h e a b o v e remedies may be pursued alternatively or simultaneously. NOTES: 3 Unless otherwise provided under the L T C . fees. the tax period of all local taxes. or c) By judicial action . 53 Phil. ( Republic vs.1311.T h e local g o v e r n m e n t m a y institute an ordinary civil action with the regular courts of proper jurisdiction for the collection of delinquent taxes. fees. N e w taxes or fees or charges shall accrue on the first day of the quarter next following the effectivity of the ordinance imposing such new taxes or rates. and charges m a y be paid in quarterly installments. H o w are delinquent local taxes. or b) By levy u p o n real property or any interest therein. Arnault. charges or r e v e n u e s . a) By distraint of personal property. Such taxes.

T h e s e areas are under the jurisdiction and control of the Export Processing Zone Authority. Jr. although it need not be the property in respect to w h i c h the tax is a s s e s s e d .) However. Dep't. as a business enterprise operating within the export processing z o n e administered by EPZA. Salvador. to S. A r e the local g o v e r n m e n t s a l l o w e d to tax businesses operating within the 'EPZA or the ecozone? Answer. U. It maintains an office in M a k a t i . local governments cannot impose taxes upon persons. 768 . Thus. 1974. and for services actually rendered by it based on duly a p p r o v e d local ordinance. property residing or situated beyond such boundaries. letter dated June 8. A tax lien is distinguished f r o m distraint in that in distraint the property must be that of the taxpayer. w h e r e it pays business taxes corresponding to 3 0 % of its gross annual sales. of Justice Opinion No. In the case of PHILPHOS. an EPZA-registered entity: P H I L P R O S has a plant inside the Leyte Industrial D e v e l o p m e n t estate a special export processing z o n e administered by EPZA. any operation or production of a zone-registered business d o n e or conducted "outside" the subject z o n e shall be taxable by the concerned local units w h e r e such operation or production is carried out. s. Businesses within the "export processing zone" are beyond the taxing powers of the local governments because it is a fundamental principle of law that the taxing power of the state is coterminous with its territorial boundaries. w h e r e a s . The ordinance imposing license (regulatory) tax is prospective in character and application. T h e Municipality of Isabel of Leyte claims that P H I L P R O S should likewise pay business taxes therein based on the remaining 7 0 % of its yearly gross sales. 1987. 104. PD 66. of Finance. 1314. and no authority is anywhere given to the municipal legislative body to condone taxes previously accrued. 18. 1313. Distinction b e t w e e n tax lien a n d distraint of p r o p e r t y : A n s w e r . H E L D : T h e tax e x e m p t i o n privileges of P H I L P R O S under Sec. tax lien is generally directed to the property subject to the tax regardless of the owner. S u c h e x e m p t i o n does not extend to t h e p a y m e n t of fees a n d service charges for rental or use of public utilities o w n e d and operated by the Municipality of Isabel. (Dep'f. Manila. still applies in so far as its activities u n d e r t a k e n within the z o n e .

rank in relation to charges in favor of mortgages. 175) Answer. or other claims against private parties encumbrances the t a x p a y e r ? By appropriate Law silent. 56) What amounts due Local taxes and other the local g o v e r n m e n t revenues Only the real property tax are e n f o r c e d ? Property subject of the tax. 73-83. (It may be by H o w m a y the lien be administrative or judicial seizure and sale under enforced? action Sees. redemption of property within one year from date of 769 . 61) R P T C (Sec. publication of the sale of distraint properties for 30 days.1315. (rules on Only by payment of the H o w m a y the lien be liens in general. Mechanics and procedure on distraint of personal property to e n f o r c e collection of delinquent local taxes: (Sec. BASIS L T C (Sec. delivery to the purchaser of the certificate of sale. business Only the real property subject to the lien? in respect of w h i c h t h e c h a r g e is i m p o s e d . due will apply 1316. or by legal action) L a w is silent. and subject to the tax property rights therein. including delinquent taxes and removed? payment of the a m o u n t penalties. report of the sale to the Sanggunian. H o w d o e s the lien Superior to all liens or Superior to all other liens. C O M P A R I S O N OF TAX LIENS UNDER THE LTC AND THE RPTC: Answer. accounting of distraint goods. and all those used in W h a t properties are the o c c u p a t i o n . T h e procedure is s u m m a r y in nature which includes requirements on the seizure or confiscation of the taxpayer's assets in sufficient quantity to satisfy the tax liability. procedure of sale and disposition of the proceeds of the sale by application thereof to the delinquent tax and expenses of sale and the return of the balance to the owner of the property. RPTC.

O n e place for the posting of the notice shall be at the office of the chief executive of the local g o v e r n m e n t in which the property is distraint. upon written notice. to w h i c h list shall be a d d e d a statement of the a m o u n t d e m a n d e d and a note of the time and place of sale. To this e n d .Thereafter. together with any or all increments thereto incident to delinquency and e x p e n s e s of seizure. 770 . the distraint personal property shall be sold at public auction. fee or charge. to pay the s a m e at the time required. non-deprivation of the possession of said property by the owner with the right to receive the rentals/income during the period of redemption. and final deed to purchaser in case there is failure to redeem. Where the proceeds of the sale are insufficient to satisfy the claim. the treasurer or his deputy may. the treasurer or his deputy shall issue a duly authenticated certificate based upon the records of his office showing the fact of delinquency and the a m o u n t of the tax and penalty due. fee or charge in question. b) Accounting of distraint goods • T h e officer executing the distraint shall m a k e or c a u s e to be m a d e an accounting of the g o o d s or effects distraint. interests and expenses are collected. a copy of w h i c h is signed by himself shall be left either with the o w n e r or person from w h o s e possession the g o o d s or effects w e r e taken or at the dwelling or place of business of that person and with s o m e o n e of suitable a g e and discretion. t h e officer shall c a u s e a notification to be exhibited in not less than three (3) public places in the territory of the local g o v e r n m e n t w h e r e the distraint is m a d e . T h e time of sale shall not be less t h a n 20 d a y s after notice to t h e o w n e r or possessor of the property as specified a n d t h e publication or posting of the notice. Specifically - a) Seizure . seize or confiscate any personal property subject to the tax lien in sufficient quantity to satisfy the tax. This shall serve as sufficient warrant for the distraint of personal property. specifying t h e time and place of sale and the articles distraint. c) Publication .Upon failure of the person owing any local tax. Thereafter.sale. other property belonging to the taxpayer may again be distraint until the full amount due inclusive of surcharges.

(Referred to as forfeiture) Said C o m m i t t e e on Appraisal is c o m p o s e d of the city or municipal treasurer as chairperson with a representative of the C o m m i s s i o n on Audit and the city or municipal assessor as members. A n y residue over and above what is required to pay the claim shall be returned to the owner of the property sold. other property may. and the e x p e n s e of the distraint and sale. T h e e x p e n s e s chargeable upon the seizure and sale shall be equivalent to the actual expense of seizure and preservation of the property pending the sale. 1317. together with the increments thereto incident to delinquency. is collected. W h e n the proceeds of t h e sale are insufficient to satisfy the claim. t h e treasurer shall m a k e a report of the proceedings in writing to t h e chief executive of the local government concerned. Tools and the implements necessarily used by the delinquent taxpayer in his trade or employment. a. the s a m e shall be consider as sold to the local g o v e r n m e n t for the amount of the a s s e s s m e n t m a d e t h e r e o n by the C o m m i t t e e on Appraisal and to the extent of the s a m e amount. including all expenses and costs. S h o u l d the property distraint be not disposed of within 120 d a y s f r o m the date of distraint. e) Procedure of sale • At the time and place fixed in the notice t h e officer shall sell the g o o d s or effects so distraint at public auction to the highest bidder for c a s h . in like manner be distraint until the full a m o u n t due. No charge for the services shall be imposed. Within five (5) d a y s after the sale. d) Release of the distraint property upon payment prior to sale (Right of Pre-emption) . . f) Disposition of proceeds • T h e proceeds of the sale shall be applied to satisfy the tax. the tax delinquency shall be cancelled. the g o o d s or effects distraint shall be restored to the owner. P e r s o n a l property e x e m p t f r o m distraint a n d levy: Answer.If at any time prior to the c o n s u m m a t i o n of the sale all proper charges are paid to the officer conducting the sale.

Prescriptive period to a s s e s s local t a x e s : A n s w e r . Local taxes. by the lawful use of which a fisherman earns his livelihood. actually provided for individual or family use sufficient for 4 months. such as he may select. 1318.000. of a value not exceeding Php 10. fees. No action for the collection of s u c h taxes. Local taxes. the s a m e m a y be assessed within ten (10) years f r o m discovery of the fraud or intent to evade payment. such as the delinquent taxpayer may select. or other beast of burden. One horse. fees. g. A n y material or article forming part of a house or improvement of any real property. 1319. and that of all his family.00. b. and h.000. . carabao. fees or charges shall be a s s e s s e d within five (5) years from the date they b e c o m e d u e . Household furniture and utensils necessary for housekeeping and used for that purpose by the delinquent taxpayer. e. In c a s e of fraud or intent to evade the p a y m e n t of t a x e s . not e x c e e d i n g the total value of Php 10. cow. O n e fishing boat and net. f. Prescriptive period on collection of local taxes: A n s w e r . lawyers and judges. c. and necessarily used by him in his ordinary occupation. His necessary clothing. engineers. Provisions.00. fees or c h a r g e s . or c h a r g e s m a y be collected within five (5) years from the date of a s s e s s m e n t by administrative or judicial action. or charges whether administrative or judicial shall be instituted after the expiration of such period without said a s s e s s m e n t having been made. The professional libraries of doctors. including crops. d.

The procedural rules m a y thus apply. 773 . the t a x p a y e r m a y file a written protest with the local treasurer contesting the a s s e s s m e n t . Is a petition for injunction against collection of local t a x e s a r e m e d y a v a i l a b l e to a t a x p a y e r ? A n s w e r . the a s s e s s m e n t shall b e c o m e final and executory. 1989). T h e running of the periods of prescription to assess and/or collect local taxes shall be s u s p e n d e d for the time during which - a) the treasurer is legally prevented from the a s s e s s m e n t or collection of the tax. b) the t a x p a y e r requests for a reinvestigation and executes a w a i v e r in writing before the expiration of the period within which to a s s e s s or collect. May the prescriptive period to assess and/or collect local taxes be s u s p e n d e d ? A n s w e r . This ancillary remedy may be resorted to if irreparable d a m a g e would be caused to the taxpayer by the collection of the tax and no other adequate remedy is available to him. c) the taxpayer is out of t h e country. vs. (Valley Trading vs. N O T E : T h e appeal (a) from the decision of the Secretary of Justice or (b) involving disputing a s s e s s m e n t s of local treasurer is filed w i t h the regular court a n d now appealable to the Court of Tax Appeals. the Local Tax Code does not specifically prohibit injunction agamst the collection of local taxes. 1322. CFI. 1142. 1 3 2 1 . Manila. Alfonso.For taxpayer to pay the tax and thereafter claim a refund within the prescribed period. and d) the t a x p a y e r c a n n o t be located in his given address.Within 6 0 days from receipt of notice of a s s e s s m e n t . 46 Phil. the presumption is that it is valid and constitutional. R e m e d y . 159) Injunction cannot be issued pending a case on the tax ordinance simply because it is alleged to be unconstitutional or invalid. Until so declared. (Physical Therapy Asso.1320. Unlike the N I R C . 101 Phil. P r o t e s t a g a i n s t a n a s s e s s m e n t . otherwise. March 4. Zaragoza vs.

R e m e d i e s available to a t a x p a y e r under the Local Tax Code: Answer. X may file a complaint assailing the validity of the ordinance and praying for tax refund of its perceived overpayments without first filing a protest to the payment of taxes due under the ordinance. Prior to Assessment - a) Administrative appeal to the Secretary of Justice. Administrative r e m e d i e s : 1. This remedy is available before the b r e a c h or violation of such tax law. C l a i m f o r t a x r e f u n d or t a x c r e d i t . the taxpayer may within 30 d a y s f r o m receipt thereof or from . (2003 case) N O T E : The local tax has to be contra-distinguished f r o m a real property tax which cannot he protested without payment. fee or charge or from the date the taxpayer is entitled to a refund or credit. 2. w h o shall d e c i d e the s a m e within 60 days f r o m date of filing of the dispute.1 3 2 3 . X files a c o m p l a i n t a s s a i l i n g t h e validity of t h e tax o r d i n a n c e a n d p r a y i n g f o r a t a x r e f u n d o f its p e r c e i v e d o v e r p a y m e n t s without protest. Yes. 1324.The taxpayer may file a written claim for refund or credit with the local treasurer within 2 years from the date of payment of the tax. A. If the decision is adverse to the interest of t h e taxpayer. Will his claim prosper? Answer. However. After Assessment- Within 60 d a y s f r o m receipt of the a s s e s s m e n t . the taxpayer m a y contest the a s s e s s m e n t by a written protest before the local treasurer. failure of X to interpose the requisite appeal to the Secretary of Justice is F A T A L to his complaint for a tax refund. 1325. and b) Action for declaratory relief w h e n applicable Declaratory relief is a r e m e d y o p e n to determine any question of construction or validity of a tax law a n d for the declaration of the taxpayer's liability thereunder.

must be made before the lapse of the 60-day period from receipt thereof otherwise the assessment becomes final and executory and it may no longer thus be disputed. If the local treasurer does not act on the written claim for refund and the 2-year statute of limitation is about to expire. d) Judicial action in ordinary courts for (1) declaratory relief before breach or violation of the law or regulation. fee or charge and then seek a refund thereof within the 2-year statute of limitation. t h e lapse of the 60-day period prescribed within which to a p p e a l with t h e court of c o m p e t e n t jurisdiction. if an assessment is issued. should be held in a b e y a n c e pending final determination thereof. otherwise t h e a s s e s s m e n t b e c o m e s conclusive and unappealable. b) Formal protest a d d r e s s e d to the Secretary of Finance on four g r o u n d s (Sec. opt to pay the tax. instead of filing a written protest. Before payment of the tax: a) S u s p e n s i o n of the tax by Provincial or City Treasurer and by t h e Secretary of Finance. LTC) c) Formal query a d d r e s s e d to the Provincial or City Fiscal - on g r o u n d s other t h a n the four. 4 5 . 4.p a y m e n t need not be under protest (application of t h e principle of "Exhaustion of Administrative remedies" prior to court action) T h e taxpayer may. the taxpayer should forthwith initiate the court action for refund 775 . fee or charge. The written claim for refund itself may be filed with the court of competent jurisdiction within 2 years from payment of the amount due or from the time the taxpayer is entitled to a refund or credit. the collection of the tax. 3. W h e n an a s s e s s m e n t is seasonably disputed. subject matter of the a s s e s s m e n t . The filing of a written claim for refund with the local treasurer is a condition precedent for maintaining a court action. T h e payment. or (2) ask for injunction as an ancillary remedy. After payment of the tax Written claim for refund or credit addressed to the collecting officer .

1979. ofOpon vs. the Court may entertain the appeal so long as the case of refund is filed within the 2-year period and a written claim for refund or credit had earlier been submitted to the local treasurer. (Santos vs. vs. Declaratory relief . 94 Phil. the only remedy is to pay the tax and after exhausting administrative remedies. 28. injunction will not lie to restrain the collection of taxes. not having been specifically provided for by that law. B. 519) 5. Mun. COULD BE FILED WITHIN SIX (6) YEARS FROM THE PAYMENT THEREOF AS A CASE OF SOLUTIO IN DEBIT I. Mun. similar to that obtaining in the case of a denial on a written protest of an assessment. Judicial r e m e d i e s : 1. Note that the Tax Code failed to specifically provide for a period of appeal in the event a decision is made by local treasurer concerned on the claim for refund. a j u d g m e n t against w h o m w o u l d not be enforceable against the local g o v e r n m e n t .As a general rule. 7 SCRA 970. City of Manila. Shell Co. Under the Local Tax Code. Dela Fuente. 65. (Tan vs. An action against erring local officials w h o acted with malice or i n e x c u s a b l e n e g l i g e n c e . Dec. (Puyat & Sons vs. Caltex Phil. After liability has attached under t h e tax ordinance. Injunction . of Sipocot. 105 Phil. Proctor & Gamble vs. Aquino. the applicable statute of limitations for claims for refund. sue for recovery in the ordinary court. 22 SCRA 755) The judicial action must be directed against the municipal corporation (local g o v e r n m e n t ) and not against the municipal officials. of Jagna. and consider the treasurer's inaction as a denial of his claim for refund. This relief shall not lie if the provisions of the ordinance are not doubtful or a m b i g u o u s and that payment of the tax during the p e n d e n c y of the c a s e has no effect on said case. E X C E P T in cases of 776 . 1263) 2.M a y be filed by the t a x p a y e r with the ordinary court before liability under the ordinance has attached. Thus. Mun. 90 Phil.

1326. 344. Board of Manila. 1989) 3. 90 Phil. after the lapse of 60 days. Prov'l. Action for tax refund (If action is based on solutio indebiti. Pacific Com'l. a period of 30 days is allowed for the aggrieved party to go to court. and 5. (Rafael vs. Mun. irreparable injury. 46 Phil. (Valley Trading Co. Alfonso. 777 . protest is not needed). In a judicial action before the ordinary court the action should be directed against the local government unit c o n c e r n e d and N O T t h e collection officer. However. unless it is a case for d a m a g e s or a criminal action for the illegal acts of such officers w h e n they are the o n e s intended to be held personally a n s w e r a b l e for such acts. Dela Fuente. CFI of Isabela. or (b) for a n n u l m e n t of a tax ordinance. Kaminer. March 31. the L T C d o e s not contain any specific provision prohibiting courts f r o m enjoining the collection of local t a x e s . Special r e m e d i e s such as personal appeal to a n d p e r s u a d i n g the authorities c o n c e r n e d or thru mass action or "people's people" m a y be resorted to. vs. if the Secretary does not act thereon. a party could already proceed to seek relief in court. (Tan vs. 4. Co. vs.) Unlike the N I R C . 1143. Zamora vs. 101 Phil. 187. 25 Phil. L G C : (Appeal to the Secretary of Justice) Answer. Treasurer 52 Phil. 190. In case the Secretary decides the appeal. Action for annulment of tax ordinance. vs. (Physical Therapy Org. provided it be s h o w n that the collection of the tax pending the final resolution of the c a s e w o u l d c a u s e irreparable injury to the t a x p a y e r w h o has no other a d e q u a t e remedy in the ordinary c o u r s e of law. R e m e d i e s of a taxpayer under Sec. 159) This m a y be resorted to AS AN A N C I L L A R Y R E M E D Y in an action for (a) declaratory relief. 519) C. Mandamus. Said provision requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice within 30 days from the effectivity thereof.

1328. 1330. (Jardine Davies Insurance Brokers. m a y e x a m i n e the books of accounts and pertinent records of b u s i n e s s m e n in order to ascertain. It is the time span within which a current tax obligation is in effect and collectible. W h o may examine books of accounts and records of b u s i n e s s m e n for p u r p o s e s of local t a x e s ? A n s w e r . S u c h as the o c c u r r e n c e of flood. vs. 171 of t h e L G C . 1329. earthquake. Permit fees and utility charges are in the nature of payments to defray the e x p e n s e s incurred by the local unit for services rendered in the inspection or regulation of a particular business or activity. after the rendition of t h e service. volcano eruption or other calamity w h i c h may have recently ravaged t h e locality. fee or c h a r g e without penalty for a period not exceeding six (6) m o n t h s . generally they have no time s p a n s but are payable immediately. Define a tax period as u s e d in local t a x a t i o n : Answer. Consequently. NOTE: These three (3) separate periods ("30-30-60") are given for compliance as a pre-requisite before seeking redress in a competent court. t y p h o o n . C a n the local legislative b o d y validly grant e x t e n s i o n of time of p a y m e n t of local taxes without penalty? A n s w e r . 778 . Under Sec. assess and collect the correct a m o u n t thereof. fee or c h a r g e . no personnel in t h e Offices of the Provincial Governor or City or Municipal M a y o r m a y inspect records of businessmen unless duly deputized in writing by the local treasurer concerned. extend the time for the payment of a tax. usually coinciding with the calendar year and payable in quarterly installments. NOTE: Tax period does not apply to permit fees and public utility charges. It may. Inc. W h e n are p e r m i t f e e s a n d utility c h a r g e s p a y a b l e ? Answer. only the treasurer of the local government unit imposing the tax. Aliposa) 1327. for justifiable reason or c a u s e .

Are public market vendors required to issue invoices or sales receipts? A n s w e r . Ramirez. v e g e t a b l e s . the power of taxation shall be exercised by the Sanggunian of the local government unit concerned through appropriate ordinance.. g a m e . or other forms of revenue m e a s u r e s such as tolls. 142 SCRA 500) 1332. rentals and service charges consistent with the basic policy of local a u t o n o m y . It is more of an administrative sanction which should be collection only by a civil action. in proper c a s e s . T h e n o n .p a y m e n t thereof is not a penalty under criminal law but an additional a m o u n t a d d e d to the usual c h a r g e . fish and other domestic food products are e x e m p t f r o m t h e requirement of issuing sales invoices or receipts. except those provided in the Local C o d e itself. the m o m e n t they sell products in addition to those mentioned they lose the benefit of t h e e x e m p t i o n . (Bagatsing vs. 3 Local g o v e r n m e n t units have a share in the proceeds of national internal revenue taxes.p a y m e n t of lease of public m a r k e t stall a criminal offense? A n s w e r . 86 SCRA 270) 779 . poultry. which shall exclusively accrue to it. Is n o n .1 3 3 1 . Hiu Chiong Tsai. T h e y are required to k e e p books of accounts because they are. licenses fees. fees and charges. T h e s u r c h a r g e i m p o s e d for late or n o n . subject to income tax and c o m m u n i t y development tax (cedula). Mamenta. 3 Local taxation is legislative in nature. have been withdrawn. Public market v e n d o r s selling exclusively domestic meat. TICKERS: 3 Each local g o v e r n m e n t unit m a y create its o w n sources of revenue and levy taxes. H o w e v e r . Villegas vs. fruits. 74 SCRA 306.p a y m e n t of monthly rentals by a lessee of a public market stall of a city or municipality is not a criminal offense. 3 Tax exemption privileges existing prior to 1 9 9 1 . (Conde vs. Jr.

3 The tax powers of local government units are to be liberally
construed but a DOUBT on the application of a tax ordinance
shall be construed strictly against the Local government unit.

o Exception: - Tax exemptions, incentive or relief that shall
be construed strictly against the grantee or taxpayer.

O Doubts on the liability of a taxpayer under a valid tax ordinance
are construed strictly against the local government unit.

O Local government units and their officials are not exempt from
liability for death or injury to person or persons or d a m a g e to
property.

C Unlike ordinary local ordinances or resolutions, the enactment of
tax ordinances and revenue m e a s u r e s requires public hearings to
be first conducted. T h e power to review and declare inconsistent
with law, in w h o l e or in part, barangay ordinances by the
Sanggunian B a y a n or Panlungsod and municipal ordinances by
the Sanggunian Panlalawigan (whose decisions are final) is also
applicable to tax ordinances. However, the law has withdrawn the
review and suspension powers of local treasurers and the
Secretary of Finance under the Local T a x C o d e .

O All tax ordinances or revenue m e a s u r e s of local g o v e r n m e n t units
existing upon the effectivity of t h e Local G o v e r n m e n t C o d e shall
continue to be in force and effect unless a m e n d e d by the
S a n g g u n i a n c o n c e r n e d , or inconsistent w i t h , or in violation of, the
provisions of the Local G o v e r n m e n t C o d e .

3 It appears that it is the legislative intention to limit provinces and
municipalities, respectively, to t h e imposition of taxes that the
other may levy under its specific authority. Municipalities m a y levy
taxes not otherwise levied by provinces, w h e r e a s , provinces are
prohibited from levying taxes that municipalities m a y impose
under the e n u m e r a t i o n of its specific authority.

3 L G U s are prohibited f r o m imposing taxes on the sale, barter or
e x c h a n g e of agricultural and aquatic/marine products produced
by farmer or f i s h e r m a n himself and his immediate family.

However, the L G U s m a y impose a tax on persons e n g a g e d in the
business or producing agricultural, marine and fresh-water
products on a c o m m e r c i a l scale.

780

3 L G U is prohibited f r o m imposing taxes on the gross receipts of
transportation contractors and persons engaged in the
transportation of p a s s e n g e r s or freight by c o m m o n carriers but
not on the operation or franchising of tricycles, the issuance of
licenses or permits for the driving thereof.

3 Transfer of rights over mining claims is not subject to transfer
taxes by the province or city.

3 T h e L G U s are without p o w e r to tax electric power c o m p a n i e s
already subject to franchise tax unless their franchise allows the
imposition of additional tax.

781

P A R T XIII

COMMUNITY
DEVELOPMENT TAX

This is a tax for being a resident and m e m b e r of a community. It
used to be known as Residence tax or "Cedula". This tax is collectible
by the city or municipal treasurer w h o can deputize the barangay
treasurers in the collection thereof in their respective territorial
jurisdiction.

The cedula tax was the first individual tax imposed in the
Philippines during the Spanish regime. It w a s abolished in 1937 but
restored under C.A. No. 4 6 5 in the form of residence tax, now k n o w n
as community development tax.

1333. Governing law on C o m m u n i t y Tax:

Answer. Sec. 38 of the Local T a x C o d e g o v e r n s the levy,
collection, and administration of the residence tax by the national
government through the BIR as well as the rates and accrual of the
proceeds thereof.

1334. Nature of C o m m u n i t y Tax:

Answer. T h e c o m m u n i t y tax is essentially a poll or capitation tax. It
is of a fixed a m o u n t i m p o s e d u p o n certain inhabitants of the
Philippines "without regard to their property or on the occupation in
which they may be e n g a g e d . "

1335. W h o are authorized to levy c o m m u n i t y tax?

A n s w e r . Cities and Municipalities.

1336. C o m p o s i t i o n of a c o m m u n i t y tax:

A n s w e r . Tax proper or the basic tax (Class A) a n d additional tax
(Class B).

782

1337. W h o are the persons liable?

Answer.
(a) Every inhabitant of the Philippines 18 years of age or over w h o :
(Class A and/or Class B)

1. has b e e n regularly e m p l o y e d on a w a g e or salary basis for
at least 30 consecutive w o r k i n g days during any calendar
year; or

2. is e n g a g e d in b u s i n e s s or o c c u p a t i o n ; or

T h e business or o c c u p a t i o n need not be taxable under
the N I R C .

3. o w n s real property with an a g g r e g a t e a s s e s s e d value of
Php 1,000.00 or m o r e ; or

T h e o w n e r is the one liable although the property is
held in usufruct by another.

4. is required by law to file an income tax return.

A non-resident alien is not an inhabitant. He is
therefore, not subject to t h e tax w h e t h e r or not required by
law to file an income tax return.

Inhabitant - m e a n s any p e r s o n , irrespective of his or her
citizenship or nationality, w h o dwells or resides in the
Philippines for a period exceeding three (3) months.

In the case of h u s b a n d a n d wife, the additional tax imposed
shall be based upon the total property owned by them
and the total gross receipts or earnings derived by
t h e m . (Sec. 157, LGC)

(b) Corporations no matter how created or organized, whether
domestic or resident foreign, engaged in or doing business
in the Philippines, including joint stock company, partnership,
joint account, association, or insurance companies, but
excluding general professional partnerships and joint ventures
for undertaking construction projects or engaging in energy
operations under service contract with the government. (Class
C of basic and C-1 for additional)

783

3 Persons w h o c o m e to reside in t h e Philippine or reach 18 years of age on or after July 1st of any year or w h o c e a s e to be e x e m p t e d on or after the s a m e date shall not be subject to the c o m m u n i t y tax for that year. W h e r e a s . W h e n payable? Answer. NOTE: Estates of deceased persons. but the heirs must declare their proportionate shares of the income. 1338. 784 . A R E NOT subject to the tax. 3 If a person reaches 18 years of a g e or loses the benefit of exemption on or before the last day of M a r c h . the Community tax is imposed on its principal office. 3 If a person reaches the age of 18 years or otherwise loses the benefit of exemption on or before the last day of J u n e . It accrues on the first day of January of e a c h year that shall be paid on or before the last day of February of e a c h year. 3 If the tax is not paid within the time prescribed a b o v e . (c) Optional (Class D) . being neither corporations nor individuals. 3 Corporations established a n d organized on or before t h e last day of J u n e shall be liable for the c o m m u n i t y tax for that year. he shall have 20 days to pay the c o m m u n i t y tax without b e c o m i n g delinquent. 3 If the corporation has sales offices. he shall be liable for the c o m m u n i t y tax on the day he reaches 18 years of age or upon the day the e x e m p t i o n ends. branches or warehouses of establishments. there shall be a d d e d to the unpaid a m o u n t an interest of 2 4 % per a n n u m from the d u e date until it is paid. corporations established a n d organized on or before the last day of M a r c h shall h a v e 20 d a y s within w h i c h to pay the community tax without becoming delinquent and corporations established a n d organized on or after July 1 shall not be subject to the c o m m u n i t y tax for that year.is issued to any person or corporation not liable to the payment of the community tax but desiring to have a residence certificate upon payment of the basic tax.

00 for every Php 1. 3 Dividends received by a corporation f r o m another corporation shall be considered as part of the gross receipts or earnings of said corporation.W h e t h e r d o m e s t i c or foreign.1339. or in the place w h e r e the principal office of the juridical entity is located. Basic tax of P h p 500.00. there shall be added to the unpaid a m o u n t an interest of 2 4 % per a n n u m from the d u e date until it is paid. 3 Corporation . It is a local tax for the following reasons - 3 The participation by the BIR is only for the printing of the certificates and distribution thereof to municipal and city treasurers.000. Situs of community tax: A n s w e r . in a c c o r d a n c e with - Php 2. exercise of profession or from property that in no c a s e shall e x c e e d Php 5. 1341.00 for every Php 5.A basic tax of P h p 5. 3 Individual .000.000.00.00 worth of real property in the Philippines o w n e d by it during t h e preceding year based on the a s s e s s e d v a l u e of the real property and Php 2. 785 .000. A m o u n t or rate of c o m m u n i t y tax: Answer.00 and an annual additional tax of Php 1.00 and an a n n u a l additional tax which in no case shall exceed Php 10. 3 If the tax is not paid within the time prescribed. T h e community tax shall be paid in the place of residence of the individual.00 of gross receipts or earnings derived by it from its business in the Philippines during the preceding year.00 for every Php 5. T h e additional tax shall be based u p o n the total property o w n e d by both h u s b a n d and wife and the total gross receipts or earnings derived by t h e m . e n g a g e d in or doing business in t h e Philippines.00 of income regardless of w h e t h e r f r o m business. Nature of c o m m u n i t y tax: Answer. 1340.000.

e) Transient visitors w h e n their stay in t h e Philippines does not exceed three (3) m o n t h s . 3 Proceeds are allocated to the cities. 1342. c) Non-profit corporations e) Diplomatic and consular representatives.5 0 % proportion. and 3 The provisions on community tax are located in Sees. b) Individuals less than 18 years of age although e m p l o y e d . a) W h e n an individual subject to t h e c o m m u n i t y tax a c k n o w l e d g e s any d o c u m e n t before a notary public. 786 . A community tax certificate m a y also be issued to any person or corporation not subject to the c o m m u n i t y tax u p o n p a y m e n t of the basic tax. Instances w h e n c o m m u n i t y tax certificate is required: Answer. municipalities and barangays in the 5 0 % . 1344. b) W h e n he takes the oath of office upon election or appointment to any position in t h e g o v e r n m e n t service. Community tax Certificate defined: A n s w e r . 1343. O Only a small portion is remitted to the National Government merely to cover cost of printing and distribution of the community tax certificates 3 Collection is done by the city or municipal treasurer w h o can deputize barangay treasurers in collecting the tax. W h o is e x e m p t from c o m m u n i t y tax? Answer. a) Individuals below 18 years of age w h o do not have real property or are not e n g a g e d in business. 156 - 164 of the Local Government C o d e of 1 9 9 1 . A c o m m u n i t y tax certificate shall be issued to every person or corporation u p o n p a y m e n t of the c o m m u n i t y tax.

e) W h e n he transacts other official business. or permit from any public authority. 787 . in w h i c h c a s e . T h e c o m m u n i t y tax certificate required shall be the one issued for t h e current year. the certificate issued for the preceding years shall suffice. d) W h e n h e receives any m o n e y f r o m the public f u n d . certificate. f) W h e n he pays any tax or fee. g) W h e n he receives any salary or w a g e f r o m any person or corporation.c) W h e n he receives any license. e x c e p t for t h e period from January to April 15 e a c h year.

State the f u n d a m e n t a l principles g o v e r n i n g real property taxation: Answer.Refers to the purpose for w h i c h the property is principally or predominantly utilized by the person in possession of the property. PART XIV REAL PROPERTY TAXATION 1345. b) Real property shall be classified for a s s e s s m e n t purposes on the basis of its actual use. a) Real property. He uses it as mineral land. c) The appraisal. levy and collection of real property tax shall not be let to any private p e r s o n . whether taxable or exempt. Real property shall be a s s e s s e d on the basis of its actual use regardless of w h e r e located and w h o e v e r uses it. A private property o w n e r w h o leases his real property to a traditional e x e m p t e e is not e x e m p t f r o m real property tax even if said property is actually. he can be a s s e s s e d real property tax e v e n if he is not the owner of said land or even if he does not have mining rights thereon b e c a u s e the rule for a s s e s s m e n t under the R P T C is "actual use". Actual use . b e c a u s e the owner uses the property for c o m m e r c i a l purposes. e) The goal of real property a s s e s s m e n t shall be the equitable distribution of the tax b u r d e n . Illustration: "A" is a lessee of a real property belonging to the government. a s s e s s m e n t . a n d d) The appraisal and assessment of real property shall be equitable. 788 . shall be appraised at its current and fair market value. directly or exclusively used by the " R E C " for its m a i n p u r p o s e .

Doctrine of Usage defined: Answer. Real properties are taxed according to how they are used and not on ownership. 3 A building actually u s e d for residential purposes by persons other t h a n the o w n e r on rented basis shall be classified and a s s e s s e d as residential based on its current level of assessment. H o w are real properties t a x e d ? A n s w e r . 3 In c a s e the residential or purely c o m m e r c i a l building stands in a mixed residential-commercial area. IS IN P O S E S S I O N . 3 V a c a n t or idle land located in a purely residential or mixed residential-commercial area shall be classified as residential. if located in a purely commercial area. 1347. valued and assessed o n t h e basis o f its A C T U A L U S E R E G A R D L E S S O F W H E R E THEY ARE LOCATED. WHOEVER OWNS IT AND WHOEVER U S E S IT.the land shall be a s s e s s e d on its c o m m e r c i a l value and the i m p r o v e m e n t on its a s s e s s e d value fixed on the basis of the a s s e s s m e n t level for residential land and vice-versa. City ofBaauio vs. the more predominant use of such land shall govern its classification and assessment level. However. Doctrine of Usage is the gauge used in determining taxability of real properties. Busueao (1980) The taxpayer resisted the assessment on the real property which he acquired from the GSIS under a contract to sell on the theory that the property is still not fully paid and is still registered in the name of the GSIS (an entity with a statutory 789 . 1346. a n d O C C U P A T I O N OF IT. g) Real property shall be a s s e s s e d on the basis of a uniform standard of value within e a c h local political subdivision. Real properties shall be classified. f) T h e appraisal of real property shall be uniform in each local political subdivision. 3 A purely residential building erected in a c o m m e r c i a l area . the same shall be classified as c o m m e r c i a l .

Market value . real property tax exemption in its charter). " "The price at w h i c h a willing seller w o u l d sell a n d a willing buyer would buy. 12000) LRT resisted the assessment on the carriageways and terminal stations for real taxes upon the theory that such real properties are for public use similar in nature to public roads. while the "assessed value" is determined by the application of the a s s e s s m e n t level to t h e "fair market value". hence. To establish the fair market value of real property. its carriageways and terminal stations are not exclusively for public use and in addition. 12. 1348. the City A s s e s s o r may s u m m o n the o w n e r s of real properties affected. The Supreme Court applied the Doctrine of Usage and held that since the property was already being used by a non-exempt taxpayer. 1349. 790 . as well as other w i t n e s s e s ."Is the highest price estimated in terms of money which the property will buy if e x p o s e d for sale in the o p e n market allowing a r e a s o n a b l e time to find a purchaser w h o buys with knowledge of all the uses to w h i c h it is a d o p t e d a n d for which it is capable of being u s e d . Central Board of Assessment Appeals. LRT Authority vs. The beneficial user of said property is liable. it cannot be exempted from real property tax. (Oct. neither being under a b n o r m a l pressure. H o w are real properties a p p r a i s e d ? Answer. there is no grant of real property tax exemption in the Charter of the LRT. The Supreme Court held that it w a s not for public use because only those w h o are riding the L R T use t h e m ." "Fair market v a l u e " is d e t e r m i n e d by the declarant of the real property or by the Assessor. All real properties. w h e t h e r taxable or exempt. Distinctions between "FAIR MARKET VALUE" and " A S S E S S E D V A L U E " for p u r p o s e s of the real property tax: Answer. for t h e purpose of getting information to base u p o n the real property's market value. shall be appraised at the current fair market v a l u e prevailing in the city w h e r e they are located.

An additional 1% tax for the Special Educational Fund. c) To bring about an equitable distribution of the tax burden. m.A. and other agricultural uses. located in the City or Municipality. No. likewise imposed on an ad valorem basis. (R. 1352. 5447) [Referred to as the "SEF" Tax] . inland fishery. Coverage of the Real Property Tax Code: Answer. (RA 5447) 2. more than 2. 1/2 of which remain uncultivated or unimproved by the owner(s) thereof.000 sq. Assessment level . What are the objectives of the Real Property Code? Answer. effective J u n e 1. dairying. 4 6 4 . 1350. 791 .the levy is made on an ad valorem basis as in the case of the basic tax. D . What is the scope of the Real Property Tax Code? A n s w e r . collection and administration the real property tax. Idle land shall include (a) agricultural lands suitable for cultivation. (b) lands other than agricultural. N o .Is t h e percentage applied to t h e market value to determine t h e taxable or a s s e s s e d value of the property. cities and municipalities. T h e C o d e ( P . a) To increase local g o v e r n m e n t revenues f r o m the realty tax. while the "assessed v a l u e " is merely a certain percentage of the "fair market value" d e p e n d i n g on the a s s e s s m e n t level of the real property in question. 1974) governs the appraisal and a s s e s s m e n t of real property for purposes of taxation by provinces. inclusive of the levy. An additional 5% tax on idle lands (Referred to the "IL" Tax]. 1351. T h e "fair market value" is s u p p o s e d to be the actual value of the real property in the o p e n market. b) To u p g r a d e a s s e s s m e n t procedures and processes. b) Special levies on said property such as: 1. a) A n n u a l ad v a l o r e m tax on real property.

B a r a n g a y s c a n n o t i m p o s e real property taxes or special a s s e s s m e n t . (1) a n d (2) a b o v e . In Nos. but (b) E x e m p t i o n from real property tax does not include e x e m p t i o n f r o m special assessment. (3) a b o v e . 4 6 4 that took effect on J u n e 1. W h a t law g o v e r n s the real property t a x ? A n s w e r . cities a n d municipalities within Metro Manila. the special levy shall not exceed 6 0 % of the actual cost of such projects and improvements. Special levy or special a s s e s s m e n t which is not actually a tax. Metro Manila municipalities including municipalities outside the Metro Manila area. and (c) residential lots in subdivisions duly approved by proper authorities. 1974. including the costs of acquiring the land and such other real property f r o m basic real property tax and the remainder of the land portions of which have b e e n donated to the local g o v e r n m e n t unit c o n c e r n e d for the construction of such projects or i m p r o v e m e n t s . t h e s a m e may be i m p o s e d by provinces. it can only be levied by provinces. T h e Real Property Tax is g o v e r n e d by the Real Property Tax C o d e enacted under P. 792 . in area 1/2 of which remain unutilized or unimproved by the owner(s) thereof. the ownership of which has been transferred to individual owners. 1353. N O T E : (a) Real property granted e x e m p t i o n f r o m real property tax shall also be e x e m p t e d f r o m the imposition of the Special Education Fund T a x of 1 % . In No. (3).D. for No. Special levy or assessment imposed by local or national governments on property especially benefited by certain infrastructure development to help defray a part. including the cost of acquiring land and other real property in connection therewith. not exceeding 6 0 % of the cost thereof. cities. Municipalities outside Metro Manila cannot impose the aforementioned taxes and levies. 3.

(Eusebio Villanueva. 1355. al. Real property tax defined: A n s w e r . 1968) 3 This is a local tax. et. City of lloilo..1354. 1356. although the value may vary in a c c o r d a n c e with such factor. W h a t is real property t a x a t i o n ? A n s w e r . "Real Property" may include things that should generally be regarded as personal property. 3 It is a tax on property of a certain class located within a certain territory on a specified date in proportion to its value or in accordance with some other reasonable method of apportionment. Is t h e i m p o s i t i o n of real p r o p e r t y tax a national tax or a local tax? A n s w e r . 793 . Central Board of A s s e s s m e n t Appeals. 3 It is collected or payable at appointed times and constitutes a superior lien on and is enforceable against the property subject to such taxation and not by imprisonment of the owner. b) the imposition is m a d e t h r o u g h o u t t h e Philippines and not only in a particular political subdivision. vs. In the c a s e of Meralco Securities Industrial Corporation vs. December 28. it w a s held by the S u p r e m e Court that the imposition of real property tax is national based on t w o (2) g r o u n d s : a) the imposition has b e e n m a d e by the law-making body and later by t h e President of the Philippines. It is a direct tax on the o w n e r s h i p of lands and buildings or other i m p r o v e m e n t s thereon not specially exempted and is payable regardless of w h e t h e r the property is used or not. It is taxation of real property. T h e tax is usually single or indivisible although the land and building or i m p r o v e m e n t s erected thereon are assessed separately except w h e n the land and building or improvement belongs to separate o w n e r s . 3 It is a fixed proportion of the assessed value of the property being taxed and requires the intervention of assessors.

1982 3 It is a tax in rem against the real property without personal liability therefore on the part of the owner thereof. V a l u e is the tax b a s e .. Give the characteristics of real p r o p e r t y tax: Answer. 1963) 1357. d) It creates a single indivisible obligation. T h e law makes no distinction b e t w e e n property held in g o v e r n m e n t capacity and those possessed in a proprietary character. 794 . e) It is a local tax. T h e impact and incidence of taxation d e v o l v e s on t h e s a m e person. T h e function of real property tax is to raise revenue. Imperial Mining Co. said government o w n e d properties b e c o m e s taxable if the beneficial or actual use thereof is transferred for a consideration or otherwise to a taxable person. (Board of A s s e s s m e n t A p p e a l s of Laguna vs. 3 The policy of taxing real property is on the basis of actual use even if the user is not the owner. W h a t is the p u r p o s e of the real property t a x ? A n s w e r . a) It is a direct tax on the o w n e r s h i p of real property. May 2 1 . * Province of Nueva Ecija vs. CTA. such as those acquired by the g o v e r n m e n t in execution sales. Exceptions to this are the special levies on real property. Nov. 1358. c) It is proportionate b e c a u s e the tax is calculated on the basis of a certain percentage of the value a s s e s s e d .is a levy on real property d e t e r m i n e d on the basis of a fixed proportion of the value of t h e property. It is levied by the province or city. 19. 3 While properties o w n e d by the Republic of the Philippines or any of its political subdivision are exempt from real property taxes. b) It is an ad valorem tax. tax sales and escheats. Ad valorem tax .

• Commercial land . listing. • Depreciated value . • Ad Valorem tax . mineral.Land devoted primarily for the object of profit and is not classified as agricultural. including the discovery. dairying. or residential land.Is the estimated period over which it is anticipated that a machinery or equipment may be profitably utilized.It is the fair market value of the real property multiplied by the a s s e s s m e n t level.It is t h e act or process of determining the value of property.This refers to t h e purpose for w h i c h the real property is principally or predominantly utilized by the person in possession thereof. or proportion thereof subject to tax. • Economic life . salt m a k i n g .It is the percentage applied to the fair market value to determine the taxation value of the property.1359. • Assessed value . classification and appraisal of properties. • Appraisal .A land d e v o t e d principally to the planting of trees. timber. • Agricultural land . DEFINITION OF TERMS: • Acquisition cost . industrial.It is the act or process of determining the value of property as of a specific date for a specific purpose.For newly-acquired machinery not yet depreciated a n d appraised within the year of its purchase. • Assessment . inland fishing and similar aqua-cultural activities and other agricultural activities. refers to t h e actual cost of the machinery to its present owner plus the cost of transportation.Is a levy on real property determined on the basis of a fixed proportion of the value of the property. It is synonymous to taxable value. • Assessment level . 795 .Is t h e value remaining after deducting depreciations from the acquisition cost. • Actual use . livestock and poultry. handling and installation at the present site. raising of crops.

T h e taxing power of local g o v e r n m e n t s in real property taxation is a delegated power.E m b r a c e s m a c h i n e s . • Mineral land . • Tax assessed .T h e a n n u a l real estate tax imposable on the taxable real property without the penalties accruing thereto. 796 .Is a valuable addition made to a property or an amelioration in its condition. • Improvement . 1360. instruments. amounting to more than a mere repair or replacement of parts involving capital expenditures and labor and normally requiring a building permit from the local government c o n c e r n e d .Is a land in w h i c h minerals. or (b) the seizure of property to satisfy a tax obligation. particularly real estate. • Residential land .It refers to land devoted to industry as capital investment.It refers to land with trees g r o w i n g on it. • Industrial land .Is the assigning of new a s s e s s e d value to property. •> Levy . partial.Is the period of time expressed in years f r o m the date of appraisal to t h e d a t e w h e n the machinery b e c o m e s valueless. beauty or utility or to adapt it for new or further purposes.It is the price at which a property may be sold by a seller w h o is not compelled to sell and bought by a buyer who is not compelled to buy. • Fair Market Value .It means (a) an imposition of a tax. permanently or temporarily to the real property. Give the nature a n d s c o p e of the local taxing p o w e r in real property t a x a t i o n : A n s w e r . appliances or apparatus. metallic or non- metallic exist in sufficient quantity or g r a d e to justify the necessary expenditures to extract and utilize s u c h materials. • Machinery . • Reassessment . or individual reappraisal of t h e property. as the result of a general. •> Timber land .L a n d principally d e v o t e d to habitation. mechanical contrivances. fee or charge. equipment. w h i c h may or may not be attached. which is intended to enhance its value. • Remaining economic life .

and municipalities in the Metro Manila area do not only have the power to levy real estate taxes but they also fix real estate tax rates. 797 .00 if a fine and not less than 1 month or more t h a n 6 months if it is imprisonment. 3 Municipalities a n d b a r a n g a y s are devoid of the power to levy real property taxes.000.00 or more t h a n Php 5. cities. 3 No public hearing shall be required before the enactment of a local tax ordinance levying the basic real property tax.00 or more than Php 1.000. P o w e r of the local g o v e r n m e n t to prescribe penalties for tax violation under the Real Property Tax Code: A n s w e r .00 T h e power to fix penalties applies only to province. 1 3 6 1 . Municipal and barangay Sanggunians are not e m p o w e r e d to levy said taxes and these units do not have anything to do with the imposition of penalties for realty tax violations. and in the case of a city or a municipality within t h e M e t r o Manila area at t h e rate not e x c e e d i n g 2% of the a s s e s s e d value of real property. and municipalities in Metro Manila because it is only the Sanggunians of these local g o v e r n m e n t units that can levy real property taxes. Is a real p r o p e r t y tax i m p o s a b l e u p o n e a c h of the co- heirs on their undivided share of the property inherited from their parents? A n s w e r . Unless partition is effected. 3 Provinces shall fix a uniform rate of basic real property tax applicable to their respective localities at the rate not exceeding 1 % of t h e a s s e s s e d value of real property. 3 T a x e s on property are taxes a s s e s s e d on all property or on all property of a certain class located within a certain territory on a specified date in proportion to its value or in accordance with s o m e other r e a s o n a b l e m e t h o d of apportionment.000. hence. cities. 1362. each co-heir cannot yet claim ownership over a definite portion of the inherited property. Local g o v e r n m e n t s have the power to impose penalties for tax violations and that t h e penalty should not be less than Php 1. 3 Provinces. Barangays may prescribe as fine not less t h a n Php 100.

Only real property is subject to tax within the meaning of the Code. 3 Trees. plants. and growing fruits. 3 Statutes. 3 Everything attached to an i m m o v a b l e in a fixed manner. particularly: 3 Land. and which tend directly to meet the n e e d s of the said industry or works. while the matter thereof forms part of the b e d . quarries. 3 Machinery. 3 Fertilizer actually used on a piece of land. fish ponds or breeding places of similar nature. a n d waters either running or stagnant. 3 A n i m a l h o u s e s . instrument or i m p l e m e n t s intended by the owner of the t e n e m e n t for an industry or for w o r k s which may be carried on in a building or on a piece of land. in such a w a y that it cannot be separated therefrom without breaking the material or deterioration of the object. and slag d u m p s . beehives. and forming a permanent part of it. 1363. paintings or other objects for use or ornamentation. receptacles. in c a s e their o w n e r has placed t h e m permanently attached to t h e land. 3 Machineries and industrial e q u i p m e n t a n d t h e like that are immobilized by destination. placed in buildings or on land by the owner of the i m m o v a b l e in such a m a n n e r that it reveals the intention to attach t h e m permanently to the t e n e m e n t s . the undivided real property shall be declared for taxation purposes only as one property in the name of all the heirs. relics. building. The affidavit of the heirs. W h a t kind of properties are subject to real property tax? A n s w e r . roads and constructions of all kinds adhered to the soil. the a n i m a l s in these places are included. p i g e o n . could not be used as basis for issuing to each of them separate tax declarations covering their respective shares of the undivided real property inherited. while they are attached to the land or form an integral part of an immovable. 798 .h o u s e s . 3 Mines.

and all lands. neither may the Court unless there are facts and circumstances clearly showing that the l a w m a k e r s intend the contrary. and servitudes a n d other real rights over i m m o v a b l e property. This e x e m p t i o n . 7 SCRA 407) 3 Non-profit or religious cemeteries or public burial grounds.o w n e d corporation so e x e m p t by its charter. 3 D o c k s a n d structures w h i c h . The property so exempt. 1364. directly and exclusively used for religious or charitable purposes. R E A S O N : In e x e m p t i n g property o w n e d by the Republic of the Philippines or any of its political subdivision. and improvements..n a m e d entities the beneficial use of w h i c h has b e e n granted. are intended by their nature and object to remain at fixed place on a river. 182 SCRA 482) 3 Real properties o w n e d by G O C C acquired for resale to qualified persons are N O T e x e m p t f r o m realty taxes because they are not d e v o t e d for public use. al. or coast. g o v e r n m e n t a l or political capacity and those possessed in a private. W h a t kind of real properties are exempt from real property tax? A n s w e r . It is axiomatic that when public property is involved. 3 Real property o w n e d by the S S S is e x e m p t from realty taxes albeit the s a m e being devoted to private or proprietary purpose. 3 Charitable institutions. however. ( S S S vs. mosques. lake. the Real Property T a x C o d e m a k e s no distinction between property held in sovereign. exemption is the rule and taxation the exception.T. City of Manila. churches. City ofBacolod. to a taxable p e r s o n . actually. shall 799 . shall not apply to real property of t h e a b o v e . proprietary or patrimonial character and w h e r e the law d o e s not distinguish. buildings. et. Lim vs. for consideration or otherwise. (Testate Estate ofC. Real property o w n e d by the Republic of the Philippines or any of its political subdivisions and any g o v e r n m e n t . 3 Contracts for public w o r k s . t h o u g h floating. parsonages or convents appurtenant thereto. 3 Real property in any one city or municipality belonging to a single owner the entire assessed valuation of which is not in excess of Php 1. however.000.

1383) 3 Perennial trees and plants of e c o n o m i c value except w h e r e the land u p o n w h i c h they g r o w is planted principally to such growth. agriculture. appliances and apparatuses. business.D. purchase or lease from the public domain for conversion into dairy farms for a period of 5 years from the time of such conversion. No. c o m m e r c i a l . 3-m. No. purchase. 3 Pasture and/or grazing land acquired by grant.D. the a b o v e exemption shall include exemption from the additional 1% tax for Special Education Fund.000.D. 1621) 3 Land acquired by grant. together with all those not permanently attached to the real estate but are actually. 464 as a m e n d e d ) Under P. 4 0 . 1383) Machinery shall embrace machines. as well as the installation and appurtenant service facilities. for a period of 5 years beginning with the calendar year 1977. m i n i n g . actually used for livestock production. mechanical contrivances. No. P. during the first 3 years of the operation of the machinery. (Sec. be assessed and records thereof kept as in other cases.D. w h i c h by their very nature and purpose are d e s i g n e d for or essential to manufacturing. or lease from the public d o m a i n . or w o r k s . No. instruments. (As amended by P.D. the exemption will begin with the year of such acquisition. (As a m e n d e d by P. attached to the real estate. No. equipment. and acquisitions m a d e thereafter. No. 3 Machinery of a pioneer and preferred industry as certified by the Board of Investments used or operated for industry. (Sec. the total a s s e s s e d value of w h i c h d o e s not exceed Php 3. P. manufacturing or mining purposes. 3 The real property e x e m p t under other laws. industry or agricultural purposes.D. directly a n d essentially u s e d to meet the needs of the particular industry. 4 6 4 as a m e n d e d by P. It shall include the physical facilities available for production. including those o w n e d by Educational Foundations 800 . 1913. 3 Properties o w n e d by non-stock or non-profit educational institutions.

it follows by clear implication that the law has withheld from the L G U s the power to exempt. they may e x e m p t idle lands from the additional 5% tax by reason of force majeure. the e x e m p t i o n does not extend to real property of the franchise holder that is being rented out.o w n e d . Do local governments have the p o w e r t o e x e m p t real properties from taxation? A n s w e r . such as when there is a case of general failure of crops or substantial decrease in the price of agricultural or agri-based products or calamity within its respective area. T h e s e institutions are now e x e m p t f r o m realty tax a n d " e v e n I N C O M E T A X a n d C U S T O M S D U T I E S under t h e 1987 Constitution.o r . directly and exclusively u s e d by local w a t e r districts and G O C C e n g a g e d in the supply and distribution of water and/or generation and transmission of electric power.c o n t r o l l e d corporations are hereby w i t h d r a w n upon the effectivity of the Local Government Code. There is no provision in the Local G o v e r n m e n t Code that expressly e m p o w e r s local g o v e r n m e n t s to exempt real property from taxes. all persons. 801 . Furthermore. T h u s . 1365. organized under R. civil disturbance. natural calamity or any cause or circumstances which physically or legally prevents the owner of the property or person having legal interest therein from utilizing. improving or cultivating the same. 6 0 5 5 . any exemption from p a y m e n t of real property tax previously granted to. 234 e n u m e r a t e d the particular properties that are e x e m p t e d . while L G U s do not have such power to e x e m p t properties from realty tax. w h e t h e r natural or juridical. 3 All machineries a n d e q u i p m e n t that are actually. However. or presently enjoyed by. Sec. LGUs may grant condonation that actually partake the nature of tax exemptions. including all g o v e r n m e n t . Except for the a b o v e e n u m e r a t i o n s . No. 3 M a c h i n e r y and e q u i p m e n t used for pollution control and environmental protection. 3 All real property o w n e d by duly registered cooperatives as provided under RA 6 9 3 8 . 3 Property o w n e d by a franchise holder used solely in the business c o v e r e d by the franchise.A.

remission of real property tax may be done by: (a) the Sanggunian Panlalawigan or Panlungsod in case of: 1) general failure of crops. Classifications of real properties for assessment purposes: Answer. exemption is limited only to those properties that are enumerated under the LGC. etc.) 802 . hospital. or reliefs under such terms and conditions as they may d e e m necessary". a) Residential b) Agricultural c) Commercial d) Industrial e) Mineral f) Timber and forest land. The local governments are bereft of this authority insofar as real taxes are concerned. b) the President of the Philippines if public interest so requires. Thus. Under the R P T C . in real property taxation. W h o exercises the p o w e r of r e m i s s i o n on real property taxes? W h e n is this power obtaining? A n s w e r . T h e exercise of this authority shall be u p o n direction or approval of the President. 1367. c) the Secretary of Finance is granted special authority to formulate and prescribe s c h e m e of g r a d u a t e d p a y m e n t s of realty tax. or 3) similar w i d e s p r e a d disaster in any city or municipality or municipalities of a province. and/or remedial m e a s u r e s that w o u l d e a s e the tax burden of property o w n e r s in special cases of e c o n o m i c dislocation or imbalance arising f r o m natural calamities. o r p h a n a g e . incentives. 1366. a n d g) Special (church. or 2) great decrease in the price of products. unlike in the case of local taxes where the Local Government Code (LGC) expressly authorizes them to "grant tax exemptions.

n o t over 300K 10% Buildings and 300K . educational.not over 10.1368.0M . recreational or scientific purposes. and d) Real properties o w n e d by g o v e r n m e n t o w n e d or controlled corporations rendering essential public services in the supply a n d distribution of w a t e r and/or generation a n d transmission of electric power. directly and exclusively u s e d for religious. At what rates? At rates not exceeding the following: Classification Description / Fair Market V a l u e Assessment levels Residential 20% Commercial 50% Agricultural 40% Land Industrial < 50% Mineral 50% Timberland 20% Not over 175K 0% 1 7 5 K . b) Hospitals not o w n e d and operated by the g o v e r n m e n t or by any of its instrumentalities.S a n g g u n i a n g Panlalawigan or P a n l u n g s o d of the place w h e r e the property is located.not over 500K 20% other 5 0 0 K .0M .0Million and above 60% 803 .not over 750K 25% Structures 7 5 0 K .0m 30% (FMV) 1. W h a t are the special classes of real properties under the RPTC? Answer.0M 50% 10. a) All kinds of lands.not over 1.0M 35% 2. actually. W h a t a r e t h e a s s e s s m e n t levels t o b e a p p l i e d t o t h e fair m a r k e t value of real properties for taxation p u r p o s e s ? Who fixes the assessment levels? .not over 5.0M . cultural. 1 3 6 9 . c) T h o s e o w n e d and used by local w a t e r districts. buildings and other improvements thereon.0M 40% 5.not over 2.

Not over 300K 25% ~n 300K .0M 70% 5.0M .n o t oveM.0M 45% 2.not over 500K 30% Agricultural 500K .OM 50% Industrial 1.0 million and above 80% Not over 300K 45% 300K .0 million and above 50% Not over 300K 30% ~~ 300K . 0 M 65% 2.0M-not over2.0M 60% (FMV) 2. if within 1 year u p o n restoration of the p e a c e and 804 .OM 40% 1.not o v e r 2 .0 million and a b o v e 70% Machineries Agricultural 40% Residential 50% Commercial 80% Industrial 80% Classification Description / Fair M a r k e t V a l u e Assessment levels Cultural 15% Scientific 15% Special classes Hospital 15% of property: Local W a t e r Districts 10% GOCC engaged in the supply and 10% distribution of water and/or generation a n d transmission of electric power all machineries not land.not over 100M 75% 10.not over 5 0 0 K 50% 500K .OM 60% 1.0M . W h a t kind of real p r o p e r t i e s a r e e x e m p t f r o m t h e idle tax? A n s w e r .not over 500K 35% 500K . utilize or cultivate their lands due to any of the following c a u s e s : a) A d v e r s e peace and order conditions as certified by the Provincial C o m m a n d e r of the A r m Forces of the Philippines.not over 750K 40% Commercial or 750K .0M .not over .not over 7 5 0 K 55% Timberland 7 5 0 K .1 .not over 750K 35% (FMV) 750K . However.0M-not over2. T h e additional levy on idle lands of 5% shall not apply to property o w n e r s w h o are unable to improve.not over 5.not over 1 . 1370.

or in their a b s e n c e by the Secretary of Agriculture or his duly authorized representatives. Acquired subdivision lots which remains idle due to the failure of the subdivision owner or developer to develop the said subdivision plan as determined by the assessor. City or Municipal A s s e s s o r stating the ground(s) therefore. w h i c h shall be a c c o m p a n i e d by a certification from t h e proper a g e n c y of the local g o v e r n m e n t c o n c e r n e d . Unfavorable physical factors such as rocky nature of ground. the length of time within w h i c h the land shall be considered ready for production. Existing court litigation involving t h e land subject to the case is pending unless said land is not improved within 1 year after t h e final adjudication of the c a s e . or in their absence. flood. the idle land tax shall be i m p o s e d . and uneven topography in case of agricultural land which render the land unsuitable for cultivation as certified by the Provincial. the additional tax provided shall be i m p o s e d . 805 . If the idle land is not improved within one (1) year after t h e termination of such period of time. unutilized or uncultivated. If the idle land is not improved to within 2 years f r o m the date of the o c c u r r e n c e of the loss. the said lot remains unutilized or unimproved. e a r t h q u a k e and other causes of similar nature declared by t h e o w n e r in a s w o r n statement to be submitted to the Provincial. the said land r e m a i n s u n i m p r o v e d . Financial losses of the o w n e r due to fire. by the Secretary of Agriculture or his duly authorized representatives. the idle land tax shall be imposed subject to the rules a n d regulations issued in connection therewith. the tax shall be imposed.order in the locality as certified by the said officer. typhoon. If within 1 year from the time the subdivision is developed. Necessity to leave the land in a fallow state as certified by t h e Provincial. stating a m o n g others. City or Municipal Agriculturist. City or Municipal Agriculturist.

1 3 7 1 . W h o bears the b u r d e n of paying the real property tax?

Answer. The real property tax shall be assessed in the name of
the person owning or administering the property on which the tax
is levied.

O To impose the real property tax on the subsequent owner
which was neither the owner nor the beneficial user of the
property during the designated periods would be contrary to
law and unjust. [(Manila Electric Company vs. Barlis, 357
SCRA 833 (2001)]

O A tax declaration in the name of a person w h o has no
successional or administrative rights to a decedent's estate is
null and void. [Cenido vs. Apacionado, 318 SCRA 388
(1999)]

1372. W h o bears the b u r d e n of t a x a t i o n w h e n real property is
held in usufruct?

Answer. Generally, the naked o w n e r is the o n e liable for the realty
tax on real property held in usufruct; it is the usufructuary w h o may
pay the tax which he can recover f r o m the o w n e r u p o n termination
of the usufruct.

1373. What are the duties of persons, natural or juridical,
o w n i n g or administering real property u n d e r the R P T C ?

Answer.
a) To prepare and file with provincial or city assessor, a sworn
statement declaring the true value (current fair market value) of
their property o n c e every 3 years during the period from
January 1 to J u n e 30 to start in 1980,

b) To describe the property sufficient in detail to e n a b l e the
assessor to identify the s a m e for a s s e s s m e n t purposes;

c) To file a sworn statement on the true value of subject property
within 60 days after t h e acquisition of s u c h property, or upon
completion or o c c u p a n c y of t h e i m p r o v e m e n t , w h i c h e v e r date
c o m e s earlier.

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1374. W h a t is t h e duty of a b u y e r of real property or of a
person making improvement thereon?

A n s w e r . Every buyer of real property must m a k e a new declaration
thereof. Failure to do so shall m a k e the a s s e s s m e n t in the n a m e of
the previous o w n e r binding. (Tajonera vs. CA, 102 SCRA 467)

In c a s e of i m p r o v e m e n t s introduce on real property - the owner
thereof or his authorized representative shall file a sworn statement
declaring t h e true value of subject property within 60 days after
completion of the i m p r o v e m e n t or its o c c u p a n c y , whichever c o m e s
first.

1375. W h a t is the c o n s e q u e n c e of failure or refusal of property
owners to make such declaration within the prescribed
time?

A n s w e r . T h e provincial or city a s s e s s o r shall himself declare the
property in t h e n a m e of the defaulting owner, if k n o w n , or against
an u n k n o w n owner, and shall assess the property for taxation.

1376. Is t h e p a y m e n t of t h e real p r o p e r t y tax an e v i d e n c e of
title of o w n e r s h i p ?

A n s w e r . A s s e s s m e n t alone is of little value as proof of title to a
property and mere tax declaration does not vest ownership of the
property in the declarant. Neither tax receipts nor declaration of
ownership for taxation purposes are evidence of ownership or of
the right to possess realty w h e n not supported by other effective
proofs. (Perez vs. Court of Appeals, 59 SCRA 15, Ferrer-Lopez vs.
CA, 150 SCRA 393, Prov. of Camarines Sur vs. Dir. of Lands, 64
Phil. 600)

1377. W h a t is the probative value of a property tax
declaration?

Answer. While by itself it is not an adequate proof of ownership, it
may serve as sufficient basis for inferring possession. It proves that
the holder has a claim of title over the property - aside from
manifesting a sincere desire to obtain title thereto, they announce
the holder's adverse claim against the state and other interested
parties. (Olegario vs. Man, 608 SCRA 134)

807

1378. Is the possession of property tax declaration a n d tax
receipts sufficient to p r o v e o w n e r s h i p of real p r o p e r t y ?

Answer. Property tax declarations and tax receipts are good
indicia of possession in the concept of an owner. The same must
be accompanied by possession for a period sufficient for
acquisitive prescription to set in; by themselves, tax declaration and
tax receipts do not conclusively prove ownership of real property.
(Encinares vs. Achero, 597 SCRA 34)

1379. A s s e s s m e n t defined:

Answer. It is the act or process of determining the value of a
property or proportion thereof, subject to the tax, including the
discovery, listing and appraisal of properties. This must be
distinguished from the w o r d " a s s e s s m e n t " under the N I R C .

1380. May the validity of an a s s e s s m e n t under the R P T C be
questioned in the ordinary courts?

Answer. Sec. 64 of the R P T C provides that "no courts can
entertain any suit on the validity of the tax a s s e s s m e n t before
payment of the tax under protest, thus, implying that it may so
entertain the question after the payment of the tax under protest".

1381. May the City Assessor amend fair market value
schedules of real properties within its territorial
jurisdiction?

Answer. T h e City A s s e s s o r m a y r e c o m m e n d a m e n d m e n t s to
correct errors in valuation in fair market schedules to the
Sanggunian P a n l u n s o d . T h e S a n g g u n i a n P a n l u n s o d shall, by
ordinance, act on the r e c o m m e n d a t i o n within 90 d a y s after
receiving it.

1382. W h e n is appeal to the Local Board of Assessment
Appeals (LBAA) obtaining?

A n s w e r . A n y o w n e r or person having legal interest in t h e property
w h o is not satisfied with the action of t h e provincial, city or
municipal assessor in the a s s e s s m e n t of his property may, within
60 days from the receipt of the written notice of a s s e s s m e n t ,
appeal to the L B A A of the province or city w h e r e the property is
located by filing a petition under oath in the form prescribed for the

808

purpose, together with copies of tax declarations and such
affidavits or d o c u m e n t s submitted in support of the appeal. Within
30 days from receipt of the L B A A ' s adverse decision, dissatisfied
property o w n e r can appeal to the central Board of A s s e s s m e n t
A p p e a l s w h o s e decisions is final and executory unless appealed.
Within 15 d a y s f r o m receipt of the C B A A ' s adverse decision, and
appeal m a y be n o w be m a d e before t h e Court of T a x Appeals,
under the e x p a n s i o n jurisdiction of the C T A of RA No. 9282.

1383. W h a t is the composition of the L B A A ?

A n s w e r . T h e " L B A A " shall be c o m p o s e d of three (3) m e m b e r s , as
follows -

a) T h e Register of D e e d s , as chairperson

b) T h e Provincial or City Auditor, as m e m b e r ; and

c) T h e Provincial or City Engineer, as m e m b e r .

T h e s e officials shall serve in the " L B A A " in an ex-officio
capacity without additional c o m p e n s a t i o n .

1384. W h a t are powers of the L B A A ?

A n s w e r . T h e " L B A A " shall decide a p p e a l e d cases brought before it
within 120 days f r o m the date of receipt of such appeal. In the
exercise of its appellate jurisdiction, the Board shall have the power
to s u m m o n witnesses, administer oaths, and conduct ocular
inspection, take depositions and issue s u b p o e n a and subpoena
duces tecum.
4

T h e proceedings of the Board shall be conducted solely for the
purpose of ascertaining the truth without necessarily adhering to
technical rules applicable i n j u d i c i a l proceedings.

1385. W h a t is the composition of the Central Board of
Assessment Appeals (CBAA)?

A n s w e r . The " C B A A " shall be c o m p o s e d of -

a) Secretary of Finance, as Chairman;

b) Secretary of Justice, as Member and

809

The R P T C does not provide for the review of the Board's decision by the S u p r e m e Court. and issue subpoena and subpoena duces tecum. Thereafter.) vs. administer oaths. Within 15 days. together with copies of the tax declarations and s u c h affidavit or d o c u m e n t s submitted in support of the a p p e a l . The Board shall have jurisdiction over appealed assessment cases decided by the "LBAA". T h e decision r e n d e r e d must be based on substantial evidence presented at the hearing or at least contained 810 . Under the e x p a n d e d jurisdiction of the CTA. decisions of the C B A A m a y n o w be reviewed by the CTA and subsequently to the S u p r e m e Court. (Caltex (Phils. T h e " L B A A " will decide the a p p e a l within 120 d a y s from the receipt of the a p p e a l . c) Secretary of Local Government and Community Development as member. 1386. by filing with it or with the municipal treasurer of the municipality w h e r e the property a s s e s s e d is situated w h o is duty b o u n d to transmit it to the "LBAA" a petition under oath stating the g r o u n d s of his a p p e a l and using the form prescribed for the p u r p o s e . T h u s . The decision of the Board shall b e c o m e final and executory after the lapse of 15 days from receipt of its decision by the appellant. It has the power to s u m m o n witnesses. W h a t are the powers of the C B A A ? Answer. A n y property o w n e r w h o is not satisfied with the action of the provincial or city assessor in t h e a s s e s s m e n t of his property may file an written a d m i n i s t r a t i v e protest with the local treasurer within thirty (30) d a y s from p a y m e n t of t h e tax with the provincial or city or municipal treasurer w h e r e the property is located w h o shall decide the protest within sixty (60) d a y s from receipt of the protest. the only remedy available for seeking a review by the SC of the decision of the " C B A A " is the special civil action of certiorari. 5 SCRA 247) 1387. a petition for reconsideration may be filed. all of w h o m shall serve without additional compensation. W h a t are the remedies of property o w n e r w h o d o e s not agree with the a s s e s s m e n t of his real p r o p e r t y by t h e Assessor? A n s w e r . CBAA. take depositions. within sixty (60) d a y s f r o m date of receipt of the written notice of a s s e s s m e n t appeal to t h e Local Board of A s s e s s m e n t A p p e a l s ( L B A A ) of the province or city. he may.

without prejudice to subsequent adjustment depending upon the o u t c o m e of the a p p e a l . within t h e r e g l a m e n t a r y period of thirty (30) days. A copy of t h e a p p e a l should also be furnished the "CBAA". If the decision of the " L B A A " is adverse to the claim of the taxpayer. and exclusively to religious. T h e said " C B A A " will decide the c a s e brought on appeal within twelve (12) m o n t h s f r o m date of receipt. which decision shall b e c o m e final a n d executory after the lapse of 15 days from the date of receipt of a copy of t h e decision by the appellant. through the Chairman thereof. 1 3 8 8 . April 2 3 . Illustration: If a real property is tax-exempt at the beginning of the year because its use at the time is confined actually. W h e n are property taxes due and payable? A n s w e r . within thirty (30) d a y s f r o m receipt thereof (RA 9 2 8 2 . to the " C B A A " . 2004) and thereafter file a certiorari proceedings with the S C . The real property tax for any year shall attach and b e c o m e due and payable on the first day of January and from the s a m e date said tax and all penalties subsequently accruing thereto shall constitute a lien upon the property subject to such tax. Within t e n (10) d a y s f r o m receipt of the appeal. as the case may be. t h e n he m a y file an a p p e a l to the Central Board of A s s e s s m e n t A p p e a l ( C B A A ) within thirty (30) d a y s from receipt of t h e decision of the " L B A A " by filing his appeal under oath with the Secretary of the " L B A A " stating therein the g r o u n d s and the reason for the a p p e a l . t h e secretary of t h e " L B A A " c o n c e r n e d shall forward the s a m e and all papers related thereto. and attaching thereto any e v i d e n c e pertinent to the c a s e . in the record or disclosed to the parties or s u c h relevant evidence as a r e a s o n a b l e m i n d might accept as a d e q u a t e to support the c o n c l u s i o n . If the t a x p a y e r is not still satisfied with the decision of the " C B A A " he may. 4 1389. thru the C h a i r m a n . W h a t i s t h e effect o f a n a p p e a l o n t h e p a y m e n t o f real property tax? A n s w e r . charitable or educational purposes the exemption covers the entire year even assuming that sometime 811 . R R C . file a petition for review with the C T A under Rule 4 3 . A p p e a l s on a s s e s s m e n t s of real property made shall not s u s p e n d the collection of the corresponding realty taxes on the property involved as a s s e s s e d by the provincial or city assessor. directly.

mortgages. If the transfer is m a d e of an e x e m p t property after the tax date (January 1). the tax having accrued at the time of the transfer. CTA Case No. educational and charitable ("REC"). At the discretion of the taxpayer. Likewise. or encumbrances of any kind whatsoever and shall be enforceable against the property whether in the possession of the delinquent or any subsequent owner or possessor. 3 1 . (Institucion Teresiana vs. if at the beginning of that year. there is still liability to pay the tax e v e n in the hands of e x e m p t person. and shall be extinguished only by the payment of the delinquent taxes and penalties. 3 T h e date for the p a y m e n t of any other real property tax without interest shall be prescribed by the s a n g g u n i a n c o n c e r n e d . the property is taxable because at that particular point in time. 1110. 3 Payments of real property taxes shall first be applied to prior years' delinquencies. 1963) 1390. M a y real p r o p e r t y t a x e s b e p a i d o n i n s t a l l m e n t ? A n s w e r . interests. a n d only 812 . not religious. during the year the use of that property ceases to be for said purposes. if any. the use is for a non-exempt purpose. 3 Real property taxes paid in full on or before M a r c h 31 shall be given 2 0 % discount. Illustrations: If a real property is transferred by a non-exempt person to an exempt person after January 1. Board of Assessment Appeals. 30. 2 n d on or before J u n e 30 3rd on or before Sept. April 1. 1st on or before M a r c h 3 1 .e x e m p t person. a n d penalties. the taxable status of said property continues for that entire year even if at certain time during the year it is used for " R E C " purposes. the property still remains e x e m p t for that year even in the hands of a n o n . real property taxes may be paid without penalty in four (4) equal installments. a n d 4th o n o r before Dec. Property liens shall be superior to all other liens.

W h a t is t h e penalty for failure to pay real property tax within the period provided by law? A n s w e r . a) No court shall entertain any suit assailing the validity of a tax assessed under the R P T C until the taxpayer shall have paid. the tax assessed against him. C a n p a y m e n t of real property t a x e s be effected thru the mails? A n s w e r . the sanggunian concerned may grant a discount not e x c e e d i n g 2 0 % of the annual tax due. Remittances of p a y m e n t s sent through mail is allowed either in m o n e y order. 1394. State the restrictions upon the power of the Courts to impeach tax: Answer. or failure shall have impaired the substantial rights of the taxpayer. In no case shall the total penalty e x c e e d 2 4 % of the delinquent tax. If t h e receipt thereof is after due date it shall be considered delinquent and subject to the payment of the surcharges or statutory penalty. 1391. 1393. b) No court shall declare any tax invalid by reason of irregularities or informalities in the proceedings of the officers charged with the assessment or collection of taxes or of failure to perform their duties within the specified time for their performance unless such irregularities. 813 . T h e taxpayer shall pay a penalty of 2% on the amount of the delinquent tax (installment due and not paid) for each month until the tax shall be fully paid. If t h e basic real property tax and the additional tax accruing to the S E F are paid in a d v a n c e in accordance with the prescribed s c h e d u l e of payment. Is there tax discounts for advance payment of real property tax? A n s w e r . 1392. under protest. after said delinquencies are settled m a y tax payments be credited for the current period. c a s h or check covering the tax due from property o w n e r s provided t h e s a m e shall reach the treasurer's office on or before the close of the office hours on the last day for the p a y m e n t of the tax. informalities.

NIRC a n d the T C C : Answer. or illegally setting forth his against him. in the honest belief that taxpayer is liable. until final alleged to have thereafter. collected. c) No court shall declare any portion of the tax assessed under the provisions of the RPTC invalid except upon the condition that the taxpayer shall pay the just amount of the tax. but with complete voluntariness. a suit by a ruling or entertain any suit protested m a y be maintained decision of the assailing the ordinance shall in any court for the Collector on duties validity of a tax be considered as recovery of any must first pay the assessed until having been paid internal revenue duties determined the taxpayer under protest taxes or penalty and within 15 days shall have paid. Protest is not required to claim a refund or credit w h e r e a taxpayer paid the realty tax under a mistaken belief that it is required by law b e c a u s e p a y m e n t in s u c h c a s e is m a d e through error or mistake. C o m p a r i s o n of taxpayer's right to claim tax refund/tax credit under the R P T C . 1395. "Exhaustion" has been complied with. L T C . RPTC LTC NIRC TCC The Code The Code The C o d e does not The Code requires expressly provides that any require protest for protest. P R O T E S T A T T H E T I M E O F P A Y M E N T I S R E Q U I R E D T O PRESERVE TAXPAYER'S RIGHT TO CLAIM TAX REFUND/CREDIT UNDER THE RPTC. 1397. Is " p a y m e n t u n d e r protest" required if the real property tax w a s paid under a mistaken belief? A n s w e r . resolution of the been erroneously written protest the tax assessed issues raised. Any provides that no tax or fee paid claims of tax refund taxpayer affected court shall pursuant to a or credit. 814 . and therefore could not have b e e n m a d e under protest. file a under protest. 1396. provided objections to the the doctrine of ruling in question. as determined by the court in the pending proceedings.

X is still liable for the taxes that had already a c c r u e d and b e c o m e delinquent. 1 4 0 1 . April 30. Under the R P T C . m. W h a t is the exception to this rule? A n s w e r . 1399. No. He has not paid the real property taxes due thereon for 4 years before the property w a s entirely eaten by the sea. 1400. the g o v e r n m e n t may not enrich itself of the e x p e n s e of t h e taxpayer.. T h e basis for the determination of the just compensation in case of g o v e r n m e n t expropriation shall be the value declared by the owner in his sworn declaration or the assessed value of the s a m e property whichever is lower. T h e loss of the object of taxation is not one of the ways by w h i c h realty tax is remitted. of land bordering the sea.The taxpayer may file a written claim for refund or credit for taxes and interest with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment. W h a t would be the basis of "just compensation" in c a s e s of g o v e r n m e n t expropriation of real property? A n s w e r . Ismael Mathay. Sr. P a y m e n t of a t a x p a y e r under mistaken belief or error or that he had no k n o w l e d g e of t h e fact that he is not covered by the imposition m a y ask for t h e refund of s u c h realty tax paid by mistake b e c a u s e he should not be held to suffer loss by his g o o d intention to c o m p l y with w h a t he believes is his legal obligation which such obligation d o e s not really exist. T a x r e f u n d or t a x c r e d i t . Under t h e principle of solution indebiti a tax paid through error m a y be recovered within a period of six (6) years. In addition. * R a m i e Textiles Inc. protest is required before a written c l a i m for r e f u n d of real p r o p e r t y tax m a y be filed. Illustration: "X" o w n s 500 s q . Will a loss or destruction of property subject to real p r o p e r t y t a x e s e x t i n g u i s h t h e liability t h e r e t o ? A n s w e r . 815 . H o n . vs. 1979 1398.

and f) Formulate and adopt policies a n d procedures that will improve technical skills and develop reasonable standards of performance in the local a s s e s s m e n t and treasury services. 1403. c) T h e assessment levels or a s s e s s e d values of real properties. In the interest of local a u t o n o m y and the general welfare and subject to the conditions and limitations herein prescribed. c) Ensure that the ad valorem tax on real property shall be just. He shall be primarily responsible for the proper. The Secretary of Finance shall exercise direct executive supervision over all assessment and treasury officials and personnel in the local governments. e) Provide for the o p t i m u m utilization by the local g o v e r n m e n t s of the proceeds from the real property tax. efficient and effective administration of the real property tax. b) T h e frequency of general revisions of property valuation. upon r e c o m m e n d a t i o n of t h e Secretary of Finance. and shall: a) Evolve a comprehensive system of real property appraisal that will ensure fair and realistic property valuations for taxation purposes. b) Establish uniform a s s e s s m e n t methods and procedures that will equalize property values in e a c h local political subdivision. d) Adopt the necessary m e a s u r e s that will promote m a x i m u m tax collection efficiency at the local levels. W h a t are the President's special p o w e r s in matters of real property t a x a t i o n ? A n s w e r . as regards - a) The classification of real properties for taxation purposes. uniform and equitable.1402. and 816 . What are the duties and responsibilities of the Secretary of Finance in matters of real p r o p e r t y t a x ? Answer. is e m p o w e r e d to take adjustments in the real property tax s y s t e m . the President.

W h a t are the limitations on the President's taxing power in matters involving real properties? Answer. b) For any tax year. 817 . social and other relevant c h a n g e s . it b e c o m e s necessary to modify or adjust the classification of real properties. their a s s e s s m e n t levels and/or taxable v a l u e s on t h e basis of new concepts of essentiality and m o d e m a p p r o a c h e s to real property valuations. Under w h a t conditions m a y the President exercise the above-described powers? Answer. d) Before any recommendation is submitted to the President by the Secretary of Finance pursuant to the provisions of the R P T C . b) W h e r e in v i e w of n e w social and e c o n o m i c conditions. a) T h e m a x i m u m rates of levy fixed by the Code may be increased by not more t h a n 2% of the a s s e s s e d value of real property or reduced by not more than 1 % thereof. 1404. a) W h e r e . it b e c o m e s imperative to c h a n g e real property assessment patterns for taxation purposes. 1405. c) As m a y be r e c o m m e n d e d by the Secretary of Finance on the basis of c h a n g e s in price levels. w h e r e interested parties shall be afforded a reasonable opportunity to be heard. d) T h e extent of e x e m p t i o n from real property tax and the rates of levy. in the light of e c o n o m i c . a public hearing shall first be held. the period of general revision of property valuations for taxation purposes may be extended up to five (5) years or reduced to two (2) years. whenever practicable. the existing a s s e s s m e n t level or levels may be increased or d e c r e a s e d by not more than 3 0 % .

real properties declared for the first time cannot be a s s e s s e d for back taxes for more than 10 years. city or municipal board or council not later that the 15th day of September of the year next proceeding the year the tax shall begin to accrue. W h a t are the procedures on the levy of the realty tax by the local S a n g g u n i a n or council? Answer. of the L G C . b) Within 5 days after enactment. If the local chief executive fails to approve or veto the ordinance within 10 days after receipt of a copy thereof. re-pass the s a m e over the veto. provided for the Prescriptive Periods for Collection of realty taxes - 818 . 270.1406. c) The local board or council may. in which case it shall be d e e m e d a p p r o v e d without the local chief executive's approval or signature. a) The ordinance fixing the rate of real property tax shall be enacted by the provincial. imprescriptible. he m a y veto it by signifying to the local board or council concerned his disapproval thereof in writing. E X C E P T that: a) T h e LTC does not prohibit the local g o v e r n m e n t from providing for prescription in its tax o r d i n a n c e s . T h e y are t h u s . Both the LTC and the R P T C do not have any provision on prescription of the a s s e s s m e n t and collection of g o v e r n m e n t taxes and other revenues. and b) Under Sec. Sec. it shall likewise be d e e m e d a p p r o v e d . If he considers any such ordinance prejudicial to the public welfare. d) The ordinance fixing the rate of real property tax shall remain in full force and effect unless a m e n d e d on or before S e p t e m b e r 15 of the year next preceding the o n e in w h i c h the a m e n d m e n t is to take effect. by a 2/3 of all its m e m b e r s and within 15 days from the date of receipt of a copy of the vetoed ordinance. 1407. the board or council secretary shall forward the ordinance to the local chief executive for his approval and signature. Are the government's remedies in local taxation imprescriptible? A n s w e r . 25 of the R P T C .

176) Answer. T h e local treasurer is legally prevented from collecting the tax. b) Judicial action that may be brought in any court of competent jurisdiction. E x c e p t i o n : In c a s e of fraud or intent to evade p a y m e n t of the tax. 1408. W h e n are the prescriptive period interrupted? A n s w e r . W h a t are the g o v e r n m e n t ' s remedies in the collection of real p r o p e r t y t a x e s ? Answer. 1409. s u c h action for collection m a y be instituted within 10 Y E A R S from t h e discovery of s u c h fraud or intent to evade payment. and/or 2. Distraint of personal property of the taxpayer. The provincial. After the expiration of the time required to pay the delinquent tax. real property may be levied on or before. city or municipal treasurers as the case may be shall prepare a duly 819 . a) Administrative remedies - 1. T h e period of prescription within w h i c h to collect shall be s u s p e n d e d for t h e time during w h i c h - a. or charge. No action for the collection of the tax whether administrative or judicial shall be instituted after the expiration of s u c h period. simultaneously or after the distraint of personal property belonging to the delinquent taxpayer. T h e basic real property tax a n d other tax levied under the L G C shall be collected W I T H I N FIVE (5) Y E A R S from the date they b e c o m e d u e . fee. T h e o w n e r of the property or t h e person having legal interest therein requests for reinvestigation and executes a waiver in writing before the expiration of t h e period within which to collect. b. a n d c. Sale of the delinquent real property of the taxpayer itself. T h e o w n e r of the property or the person having legal interest therein is out of the country or otherwise cannot be located. 1410. W h a t is the p r o c e d u r e on levy of real property to enforce collection of delinquent local t a x e s ? (Sec.

fees. W h e r e there is no bidder for the real property advertised for sale or if the highest bid is for an a m o u n t insufficient to pay the taxes. a n d in a public and conspicuous place in the barangay w h e r e the real property is located. T h e advertisement notice shall contain t h e a m o u n t of taxes. At the same time. It shall be the duty of the Registrar of D e e d s c o n c e r n e d 820 . surcharge. fee or charge and penalty due from him. Levy shall be effected by writing upon said certificate the description of the property upon which levy is m a d e . A report on any levy shall within ten (10) d a y s after receipt of the warrant be submitted by the levying officer to the S a n g g u n i a n concerned. Said certificate shall operate with the force of a legal execution throughout the Philippines. In case the levy on real property is not issued before or simultaneously with the warrant of distraint on personal property and the personal property of the taxpayer is not sufficient to satisfy his delinquency. n a m e of t a x p a y e r against w h o m t h e a m o u n t are levied and a short description of the property to be sold. city or municipal treasurer as the case may be shall within thirty (30) d a y s after the execution of the distraint proceed with the levy on the taxpayer's real property. Within thirty (30) days after levy. t h e time and place of sale. the provincial. or charges.authenticated certificate showing the name of the taxpayer and the amount of the tax. penalties and all increments incident thereto. t h e local treasurer shall proceed to publicly advertise for sale or auction the property or a usable portion thereof as m a y be necessary to satisfy the claim and cost of sale. such advertisement shall cover a period of at least thirty (30) days and it shall be effected by posting a notice by the main entrance of the municipal building or city hall. written notice of the levy shall be mailed to or served upon (a) the assessor and (b) the Registrar of Deeds of the province or city where the property is located w h o shall annotate the levy on the tax declaration and certificate of title of the property respectively and the (c) delinquent taxpayer or if he be absent from the Philippines to (d) his agent or the (e) manager of the business in respect to which the liability arose. interests a n d costs the local treasurer conducting the sale shall p u r c h a s e t h e property in behalf of the local g o v e r n m e n t unit c o n c e r n e d to satisfy the claim (Forfeiture) and within t w o (2) days thereafter shall m a k e a report of his proceedings which shall be reflected u p o n t h e records of his office. or if there be none to (f) the occupant of the property in question.

Within one (1) year f r o m date of forfeiture. In case the owner-taxpayer fails to redeem he property. (Right of P r e . n a m e of purchaser. T h e S a n g g u n i a n c o n c e r n e d may. by ordinance duly a p p r o v e d . city or municipal building.e m p t i o n ) If the t a x p a y e r fails to settle the delinquency on time. 821 . description of the property sold. sell and dispose of t h e real property acquired by public auction. the ownership thereof shall be fully vested on the local government unit concerned. the taxpayer or any of his representatives may r e d e e m the property by paying to the local treasurer the full a m o u n t of the taxes inclusive of all increments. related surcharge. city of municipal treasurer or his deputy. fees and charges. After consultation with the sanggunian. free from liens of any taxes. the sale shall proceed and shall be held either at the main entrance of the provincial. the local treasurer shall. s h o w i n g the proceedings of the sale. A n y excess in the proceeds of the sale over a n d a b o v e the a m o u n t due shall be turned over to the o w n e r of the property. charges. the local treasurer shall m a k e and deliver to the purchaser a certificate of sale.upon registration with his office of any declaration of forfeiture to transfer the title of the forfeited property to the local government unit c o n c e r n e d without the necessity of an order from a competent court. At any time before t h e date fixed for the sale. fees. a m o u n t involved. interests and penalties. and u p o n notice of not less t h a n twenty (20) days. or on the property to be sold. or at any other place as d e t e r m i n e d by the local treasurer conducting the sale and specified in the notice of sale. T h e owner shall not be deprived of the possession of subject property and shall be entitled to the rentals and other income thereof until the expiration of the 1 year allowed for its redemption. The proceeds of the sale shall accrue to the general fund of the local g o v e r n m e n t unit c o n c e r n e d . If the property is not redeemed. penalties a n d interests. and which shall form part of his records. Within thirty (30) d a y s after the sale the local treasurer or his deputy shall make a report of t h e sale to t h e s a n g g u n i a n c o n c e r n e d . costs and e x p e n s e s of the sale. plus 2% interest per month from the date of purchase to the date of redemption. the taxpayer m a y stay t h e proceedings by paying the taxes. (Right of R e d e m p t i o n ) Such payment shall invalidate the certificate of sale issued to the purchaser and the owner shall b entitled to a certificate of redemption from the provincial. execute a deed of conveying to the purchaser so much of the property as has been sold.

W h o m a y exercise the Right of R e d e m p t i o n after sale? The redemption period of one (1) year is counted from the date of registration of the sale of the real property by either of the following - 1. Said protest m a y be submitted to the s a n g g u n i a n b a y a n that proposed to impose t h e special levy. If no protest is filed within the prescribed time and conditions. 1412. T h e protest must be signed by a majority of the l a n d o w n e r s affected. his executor or administrator. the l a n d o w n e r s m a y A P P E A L TO T H E P R O V I N C I A L B O A R D within thirty (30) d a y s f r o m the last 822 . in case of taxpayer's death. 1 4 1 1 . His representative (an agent or. t h e ordinance shall b e c o m e final a n d effective in all points after its approval. Protest must be submitted within thirty (30) d a y s after the last publication of the o r d i n a n c e and a list of l a n d o w n e r s shall be included in the z o n e subject to the special levy. The delinquent taxpayer. 2. including all e x p e n s e s is collected. 1413. Both the LTC and the R P T C do not provide for collection of taxes and revenues by criminal action. N O T E : The remedies by distraint and levy m a y be repeated as often as necessary until the full a m o u n t d u e . May the local government avail of criminal action to enforce collection of local a n d real property t a x e s ? A n s w e r . In the absence of the taxpayer. any person holding a lien or claim over the property such as a mortgagee. Briefly d e s c r i b e t h e m a n n e r of protesting special levies imposed by the Sangguniang Bayan? A n s w e r . The deed shall concisely recite all the proceedings upon which the validity of the sale depends. Criminal prosecution and the penalties provided under the t w o (2) c o d e s are persuasive means for collection of taxes. 3. If the protest is d e n i e d . setting forth the address and the a r g u m e n t s against the i m p r o v e m e n t to bee m a d e or the special levy i m p o s e d .

R P T C ) 1416. T h e decisions of said Sanggunians b e c o m e final 30 d a y s after the last publication. (Sec. RPTC) 1415. A. (Sec. . S a m e as a b o v e . LTC. Q u e s t i o n i n g the tax o r d i n a n c e . W h a t is the m a n n e r of protesting special levies imposed by the Secretary of Finance? A n s w e r . Formal query on legality of ordinance No time fixed in law for the filing filed with the Provincial/City Fiscal on other than the 4 grounds under Sec. 5 1 . T h e decision of the provincial board on the a p p e a l shall be FINAL.filed by taxpayer adversely affected with t h e Sec. publication of the decision giving immediately the municipal council a written notice of a p p e a l . 4 5 . 52. R P T C ) 1414. of 120 days after approval of the Finance thru the Provindial/City ordinance or its initial implementation treasurer . 55. W h a t is the m a n n e r of protesting special levies imposed by the Sangguniang Panlalawigan or Panlungsod? A n s w e r .under the LTC Remedies Prescriptive Periods Formal protest . Comparative remedies of taxpayers involving different prescriptive periods: Answer. 45. The Secretary's decision adversely affecting the property owners may be a p p e a l e d to the proper court.appealable to Secretary of Justice Within 30 days from receipt of the thereafter appeal to the Courts. T h e majority of t h e l a n d o w n e r s affected m a y file a protest against t h e order of the Secretary within 60 days from the date of publication of t h e D e p a r t m e n t Order imposing the special levy. LTC. decision Action in ordinary court for Before liability has attached. or 823 . declaratory relief to clarify. (Sec.on 4 grounds specified under Sec.

C l a i m for R E F U N D / C R E D I T u n d e r t h e L T C : Remedies Prescriptive Period Administrative . a. Questioning the A s s e s s m e n t : No provision on assessment remedies. other than to make payment and claim for refund.A p p e a l to S u p r e m e Court 15 d a y s f r o m receipt of t h e decision D. / or b. ordinance or regulation.En B a n c (RA 9282) Judicial .(a) Appeal of Assessor's assessment to Provincial or City Board of A s s e s s m e n t Appeals within 60 days from receipt of a s s e s s m e n t notice.Action for refund in the ordinary courts.Claim for refund filed with collecting office based on solutio Six (6) years from payment indebeti Judicial . determine possible liability under a law. C. 30 d a y s f r o m receipt of decision Division ( R A 9 2 8 2 ) (b) Motion for R e c o n . Under the R P T C : Administrative r e m e d y . Claim for Refund/credit under the R P T C : Remedies Prescriptive Periods Administrative . B.(a) A p p e a l to t h e C T A . (b) Appeal the decision of the L B A A to the C B A A within 30 days from receipt of the decision.P a y m e n t must first Upon payment be paid under protest (except 824 . after exhaustion of Six (6) years f r o m p a y m e n t administrative remedies Judicial . 15 d a y s f r o m division to En Banc Motion for N e w Trial (RA 9282) .

Redemption of Before sale personal property under distraint Administrative .R e d e m p t i o n of property distraint must be m a d e before sale of the s a m e .R e d e m p t i o n of real 1 year from registration of sale property sold for tax delinquency . and appeal to Sanggunian 30 days from last publication of the Panlalawigan of decision of decision Sanggunian Bayan Administrative .Claim for refund with collecting office a n d .If protest is m a d e verbally.and redemption after acquisition by Before sale the g o v e r n m e n t for lack of adequate bidder . after e x h a u s t i o n 6 years f r o m payment of administrative r e m e d i e s . F. with t h e ordinary court E. Administrative . filed with Sanggunian Bayan within . seizure and other cases under the LTC: Administrative r e m e d y .Protest by majority of 30 days from last publication of the landowners affected by special ordinance municipal levy.payment by mistake) Administrative . seizure and other cases under the RPTC: Remedies Prescriptive Periods Administrative . Redemption. Redemption.Protest by majority of landowners affected by special levy 30 days from last publication of Province or City 1 • 825 . it must be confirmed in 30 d a y s writing within Judicial .

2 5 % shall a c c r u e to the barangay w h e r e the property is located.4 0 % to the general fund of the municipality w h e r e the property is located. B a r a n g a y s .3 5 % shall accrue to the general f u n d . (b) In the case of cities: 1. and 2. b) 5 0 % shall a c c r u e equally to all component barangays of the city. (a) In the case of Provinces - 1. 2. Remedies Prescriptive Periods Administrative . 826 .3 0 % shall be distributed a m o n g the c o m p o n e n t b a r a n g a y s of the cities w h e r e t h e property is located in the following m a n n e r - a) 5 0 % shall a c c r u e to the barangay where the property is located.3 5 % shall accrue to the general fund of the Authority. Municipality .7 0 % shall a c c r u e to the general fund of the city. Province . H o w are the p r o c e e d s of real p r o p e r t y t a x e s a p p o r t i o n e d a m o n g the local g o v e r n m e n t units? Answer.Action in ordinary court to contest validity of sale due to tax Imprescriptible delinquency if claim is that it is void ab initio 1417. Barangay . (c) In the case of a municipality within the Metropolitan Manila Area: 1• Metropolitan Manila Authority . and 3. City . Protest against 60 days from publication of the special levies imposed by the Department Order Secretary of Finance Judicial .

Sept. March 27. t h e sale may be nullified except w h e n the title to the property has passed to a third person. Reyes vs. B a r a n g a y s . 1985) 1419. Court of Appeals.3 0 % shall be distributed a m o n g the c o m p o n e n t b a r a n g a y s of the municipality w h e r e the property is located in the following m a n n e r - a) 5 0 % shall accrue to the barangay w h e r e the property is located and b) 5 0 % shall accrue equally to all component b a r a n g a y s of the municipality. 1982 IMC leased from the government mineral land with the right to explore and develop the same. 395. 1980 G S I S m a y b e e x e m p t from realty tax under its charter. 1 4 1 8 . 2. (d) T h e share of e a c h b a r a n g a y shall be released without need of any further action. Heirs of Mariano V. I M P O R T A N T C A S E S INVOLVING REAL PROPERTY TAX EXEMPTIONS: City of Baguio vs.3 5 % shall accrue to the general fund of t h e municipality w h e r e the property is located. 827 . February 28. Municipality . 102 Phil. (Velayo vs. directly to the barangay treasurer on a quarterly basis within 5 d a y s after t h e e n d of e a c h quarter and shall not be subject to a n y lien or hold back for whatever purpose. VELAYO DOCTRINE defined: A n s w e r . w h o purchased the s a m e in value and in g o o d faith. IAC. the property is taxable. Tajonera vs.. The contract stipulates that IMC shall be liable for realty tax on buildings and other improvements but is silent on the tax on the mineral land itself. 3. 18. Ordoveza. W h e n the sale of property for delinquent tax is made by a person N O T A U T H O R I Z E D by law. Busuego. 1981. however if the beneficial use or actual possession thereof is granted for a consideration or otherwise to a taxable person. 19. Imperial Mining Co. November. Province of Nueva Ecija vs.

The policy of taxing real property is on the basis of actual use even if the user is not the owner. S S S vs. political or constituent functions or only ministrant or proprietary functions are tax exempt. Properties of Government whether exercising purely sovereign. NOTE: SSS. City ofBacolod. Sec. its properties and assets are exempt from realty taxes because said properties possessed by the SSS although devoted to private or proprietary (providing disability. 828 . GSIS. NDC vs. and any G O C C (so exempt by its charter) is exempt from tax. 115 SCRA 412 SSS is a government agency exercising ministrant or proprietary functions. 125 SCRA 752 N D C is neither the G o v e r n m e n t of t h e Republic nor a branch or subdivision thereof but a G O C C that c a n n o t be said to exercise a sovereign function. and old age benefits to non-government employees) are in fact o w n e d by the G o v e r n m e n t . this exemption shall not apply to real property. Province ofNueva Ecija. the beneficial use of which has been granted for consideration or otherwise to a taxable person. it cannot invoke the exemptions thereof b e c a u s e it is merely an agency for the performance of purely corporate. 234(a) of the RPTC provides that real property owned by the RP. or any of its political subdivisions. proprietary or business functions. sickness. T h u s . death. IMC. even if only a lessee is liable. It is therefore subject to real property taxes. CSC or any bureau o f the G o v e r n m e n t is N O T in the category of G O C C w h i c h is taxable unless e x p r e s s l y e x e m p t in its corporate charter.

t h e right to impose tax on the gross receipts of a c o m m o n carrier belongs to the national g o v e r n m e n t . CA. X. PROBLEM EXERCISES 1420. T h e contract w a s for 20 y e a r s . The beneficial user of said property is liable. He p r o t e s t e d c o n t e n d i n g that he is not y e t t h e o w n e r o f s a i d p r o p e r t y b e c a u s e title shall o n l y b e transferred to him upon full payment of the contract p r i c e . T h e S u p r e m e Court held that pipeline operators are in t h e truest s e n s e of the w o r d c o m m o n carriers and are therefore e x e m p t f r o m the gross receipt tax imposed by the local g o v e r n m e n t . W h e n X took possession of the property he received a notice of assessment from the provincial a s s e s s o r i n f o r m i n g h i m that he s h o u l d begin paying real property t a x e s . 1998. there are two reasons w h y the local imposition should be considered null and void. 133 of the Local Government Code. applied the Doctrine of Usage and held that since the property w a s already being used by a non-exempt taxpayer. December 29. X protested 829 . (a) Under the NIRC. U p o n p o s s e s s i o n of the real property he received an assessment notice from the City Treasurer d e m a n d i n g p a y m e n t of real property taxes. M a y the local g o v e r n m e n t i m p o s e t a x e s on the gross receipts on petroleum companies that use said pipelines to transport petroleum to other localities a n d dealers? A n s w e r . In the case of City of Baguio vs. C. and (b) The petroleum c o m p a n i e s that use pipelines are c o m m o n carriers transporting their g o o d s by land as defined under Sec. 1422. Industrial Corporation vs. Is X c o r r e c t ? A n s w e r . X was a lucky recipient of a parcel of land sold on installment for a period of 20 years by the local government. leases from the g o v e r n m e n t a parcel of land that he uses as a w a r e h o u s e a n d parking area. 1421. a b u s i n e s s m a n by profession. T h e r e f o r e . Busuego. it cannot be exempted from real property tax. the S. In t h e c a s e of First Phil. T h e local g o v e r n m e n t of X province learned that several b u s i n e s s c o m p a n i e s within the locality use pipelines to transport petroleum products to their dealers.

gravel. T h e province has no authority to impose taxes on stones. W h e n the beneficial use of a public property is transferred to a private individual said property becomes a taxable property and the person liable is the beneficial user of the said property. and e) Appraisal. 299 SCRA 442 [1998]) 1425. d) Appraisal and a s s e s s m e n t must be equitable. sand. assessment. CA. Is X c o r r e c t ? Answer. earth and other quarry resources for sale. gravel. T h e provincial g o v e r n m e n t i m p o s e s tax on the extraction of said products. 1424. or to the province if there w a s no winning bidder. contending that he is not the owner thereof and therefor n o t l i a b l e . C i t e a t l e a s t f i v e (5) f u n d a m e n t a l p r i n c i p l e s g o v e r n i n g real p r o p e r t y t a x a t i o n t h a t are limitations on t h e t a x i n g p o w e r of the local g o v e r n m e n t s to i m p o s e real property taxes. X o w n s a big track of land w h e r e his s o n extracts stones. a) appraisal of real properties must be based at the current fair marker value. T h e former is given to the delinquent taxpayer or his assign if he exercised his option to r e d e e m the property sold either to the highest bidder in the public auction. Is the province correct? A n s w e r . 1 4 2 3 . X protested. b) Classification of real property for a s s e s s m e n t must be on the basis of actual use of the real property. earth and other quarry resources extracted f r o m private lands. c) A s s e s s m e n t must be on the basis of uniform classification. w h e r e a s . Answer. levy and collection shall not be let to private persons. (Province of Bulacan vs. s a n d . Distinguish a Certificate of R e p u r c h a s e After Sale f r o m a Certificate of Sale: A n s w e r . the latter is given to the winning bidder at the public auction or to the province if it decided to 830 .

Thereafter. A n s w e r . (1998 case) 1427. Even 831 . Moreover. and that the LRT carriageways and terminal stations are not exclusively for public use. the h o u s e c o n s t r u c t e d w i t h i n t h e p r o p e r t y w h i c h h e a n d his family presently occupies is the s a m e house he inherited from this d e c e a s e d mother. (2003 case) 1426. Unlike public roads that are open for use by everyone. the LRT is accessible only to those w h o pay the required fare. X. X is still required to pay real property tax under the latest a s s e s s e d market v a l u e of his property as stated in the tax declaration he received. the property o w n e r w h o does not agree thereto must dispute s u c h a s s e s s m e n t within 60 days from receipt of notice. the charter of petitioner does not provide for any real estate tax exemption in its favor. r e c e i v e d a c o p y of t h e latest T a x D e c l a r a t i o n on his real p r o p e r t y f r o m the Office of the A s s e s s o r . T h e court held that it w a s not for public use since only those w h o are riding the LRT use them and that there is no grant of real property tax exemption in the Charter of the LRT was provided. R e a s o n . u p o n receipt of an adverse decision he may file an appeal before the Local Board of A s s e s s m e n t Appeals questioning the taxability and/or increase of the market value of real property. Is the contention valid? (LRT Case) Answer. It is thus apparent that petitioner does not exist only solely for public service. purchase the property w h e n there w a s no other bidder or no satisfactory bid. W h e n e v e r the local assessor sends a notice to the o w n e r or lawful possessor of real property of its revised a s s e s s e d value. W h a t remedies are available to X if the local g o v e r n m e n t e n f o r c e s real property tax collection b a s e d on the latest tax declaration. The taxpayer (LRT) resisted the assessment on the c a r r i a g e w a y s a n d terminal stations for realty taxes upon t h e t h e o r y that such' real properties are for public use similar in nature to public roads. Failure on his part to question such assessment within the reglamentary period provided by law. X believes that there should be no increase in the assessed market v a l u e o n his realty b e c a u s e f o r t h e last 1 0 y e a r s h e h a s not introduced any additional improvement thereon. the local g o v e r n m e n t ' s right to collect b e c o m e s absolute upon the expiration of such period with respect to that property.

Payment under protest at the 1. T h e decision of the R T C is 5. Treasurer's denial w o u l d bring treasurer's adverse decision the case within the original taxpayer may appeal before the jurisdiction of the R T C . Claim/application for refund is a d d r e s s to the treasurer 3. RRC) 6. P a y m e n t under protest is not time of payment or within 30 days required thereafter is mandatory 2.p a y m e n t by excessive a s s e s s m e n t of real mistake property taxes 1. Protest filed before the treasurer 2. C a n the local g o v e r n m e n t avail of the r e m e d y of distraint and levy of personal property s u c h as the issuance of warrants of garnishment over bank deposits of erring taxpayers? Answer. Oct.The division of the CTA-Division "T" of the adverse decision of the m a y be the subject of a review by L B A A appeal to the C B A A t h e C T A . Within 30 days from receipt by 6. within 30 days file an appeal with 25. 2005)* the L B A A 5. (Meralco vs. Treasurer has 60 d a y s f r o m 3. (Rule 42. t h e review LBAA or if the treasurer did not act being t h e initial judicial c o g n i z a n c e on the protest within 60 d a y s from of the matter. 1428.. BA receipt of said protest. a taxable entity. 2001) 1429. Barlis. Within 30 days from receipt of 4. on solution indebiti . Distinctions between p r o c e d u r e for refund of real property taxes based on unreasonableness of amounts collected and refund based on solution indebeti: Procedure for tax refund b a s e d P r o c e d u r e for tax refund b a s e d on unreasonable collection . Corp. the exemption would not apply because their beneficial use has been granted to petitioner (LTR). T h e L B A A has 120 d a y s f r o m a p p e a l e d to the C T A (division) by receipt of the appeal to decide w a y of a petition for review. granting that the national government indeed owns the carriageways and terminal stations. (Yamane vs.En Banc 832 . May 18. "T" m a y Lepanto Condominium. Yes. Treasurer decides within 60 days receipt to decide f r o m receipt of t h e written claim 4.

T h e decision of the C T A . local legislative bodies are granted direct authority by the Constitution to levy taxes. 7. Likewise. alter or repeal all franchises when the public interest so requires. 1430. labeling the said review as an exercise of appellate jurisdiction in not correct b e c a u s e the denial of t h e protest is N O T t h e j u d g m e n t or order of a lower court but a local g o v e r n m e n t official. the province/city m a y impose a franchise tax on all businesses enjoying a franchise. notwithstanding any e x e m p t i o n granted by law. franchise are subject to alterations through a reasonable 833 . But even without such reservation clause. 195 of t h e L G C states that the r e m e d y of the taxpayer w h o s e protest is denied by t h e local treasurer is "to appeal with the court of c o m p e t e n t jurisdiction". Y e s . T h e local g o v e r n m e n t may impose a local franchise pursuant to the authority granted by the L G C that provides that. There w a s thus an implied repeal by the L G C of PD551 insofar as the latter imposes a 2% tax "in lieu of all taxes and assessments of whatever nature. R R C ) within 15 days from receipt of the a d v e r s e decision. T h e decision of a division of the C T A m a y be subjected to an MR or Motion for N e w Trial with C T A En Banc a n d thereafter an a p p e a l to the SC by m e a n s of Petition for Review on Certiorari on pure questions of law within 15 d a y s from receipt of the C T A ' s En B a n c a d v e r s e decision (Appeal to SC m a y be e x t e n d e d for a period of 30 days) * Sec. 8." The L G C did not violate the non-impairment clause of the Constitution. The Constitution also reserves to Congress the right to a m e n d . (Rule 4 3 . may be appealed before the (En Banc) within 30 d a y s from SC on pure question of law by w a y receipt of said decision by w a y of of Petition for Review on Certiorari petition for review. as the former w a s enacted in pursuance of the constitutional policy to ensure autonomy to local government.En C B A A m a y be a p p e a l e d to the C T A Banc. T h e a d v e r s e decision of the 7. D o e s the local g o v e r n m e n t have the p o w e r to impose a franchise tax on a business enjoying a legislative franchise? A n s w e r .

N O T E : The local tax has to be contra-distinguished from a real property tax which cannot he protested without payment. X questions the validity of an ordinance which has appropriated money for the construction of a public market. (2003 case) O W h e n questioning the validity of a tax ordinance. In a taxpayer's suit. X's unsubstantiated allegation that t h e public w a s not notified does not suffice to o v e r c o m e the p r e s u m p t i o n of regularity in the performance of official functions. Yes. However. X's locus standi t o bring the suit w a s q u e s t i o n e d b e c a u s e he is not a party to the contract. Will his claim p r o s p e r ? Answer. both of which cannot be contracted away. X files a c o m p l a i n t assailing the validity of the tax o r d i n a n c e a n d p r a y i n g f o r a t a x r e f u n d o f its p e r c e i v e d o v e r p a y m e n t s without protest. Will the suit of X p r o s p e r ? A n s w e r . (1999 case) 1 4 3 1 . including the validity of c o n t r a c t s e n t e r e d into by the local g o v e r n m e n t for t h e o c c u p a n c y of stalls in the said public market. 1432. exercise of police power and the power to tax. he must clearly establish that such ordinance operated unfairly against t h o s e w h o w e r e not notified. X argues that there was no publication of the ordinance such that it operated unfairly against t h o s e w h o w e r e interested to lease a space but were not given the opportunity to make deposits for the market stalls. failure of X to interpose the requisite appeal to the Secretary of Justice is FATAL to his complaint for a tax refund. T h e general rule for a taxpayer's suit is that: "Any taxpayer may impugn the validity of a tax m e a s u r e or the expenditure of public funds if he has locus standi or standing in court (a personal 834 . X may file a complaint assailing the validity of the ordinance and praying for tax refund of its perceived overpayments without first filing a protest to the payment of taxes due under the ordinance. the decision of the Secretary of Justice is mandatory under the Principle of Exhaustion of Administrative R e m e d y . However. t h e petitioner need not be a party to the contract b e t w e e n the g o v e r n m e n t and a private party to challenge its validity.

T h e Local G o v e r n m e n t C o d e explicitly authorizes the province a n d cities notwithstanding "any e x e m p t i o n granted by any law or other special laws" to impose a tax on businesses enjoying a franchise. 835 . X. Y e s . irrespective of any local ordinance that seeks to declare otherwise. 1433. Is X c o r r e c t ? A n s w e r . A m o n g the limitations set by the Congress in the Local G o v e r n m e n t C o d e . a taxpayer's suit may be allowed to prosper e v e n w h e r e there is no direct injury to the party claiming the right of judicial review w h e r e serious constitutional questions are involved. X is correct. 2005. such that the party has sustained or will sustain direct injury as a result of the challenged act" N O T E : In the recent case of Coconut Oil Refiners Association. July 29. (2005 case) 1435. C a n t h e local g o v e r n m e n t ( p r o v i n c e a n d / o r city) i m p o s e a b u s i n e s s tax on entities e n j o y i n g a f r a n c h i s e ? A n s w e r . T h e President a n d the local g o v e r n m e n t units both exercise the delegated p o w e r of taxation. ' c o n s i s t e n t with the basic policy of local authority. A delegated power cannot be further delegated. Inc. While the power of the L G U s to impose taxes within their territorial jurisdiction is derived from the Constitution itself. is that proviso which generally exempts condominium corporations from local business taxation. vs. it received a n a s s e s s m e n t f r o m t h e C i t y G o v e r n m e n t o f its u n p a i d local business taxes. w h i c h recognizes the power of these unit "to create their own resources of revenue and to levy taxes. a n d substantial interest in the case. such authority is subject to t h e guidelines and limitations as the Congress m a y p r o v i d e . 1434. X contends that it is not liable b e c a u s e the b u s i n e s s of selling real property is e x e m p t f r o m local t a x a t i o n . Can they re- delegate such authority? Answer. fees and charges". Torres. a d o m e s t i c c o n d o m i n i u m corporation is e n g a g e d in selling of real p r o p e r t y w i t h i n the city proper.

Feb. 1 4 3 7 . Is the opinion of the Department of Finance that "power barges are not real properties" binding on the local government thereby exempting the same from real property taxation? Answer. 234 of the RPTC specifically states that only real properties o w n e d by the Republic of the Philippines or any of its political subdivisions (local governments) are e x e m p t e d . electric posts.. the Supreme Court held that properties owned by G O C C s are subject to real property taxes "unless otherwise provided. Further. A r e p o w e r p l a n t b a r g e s a n d its a c c e s s o r y e q u i p m e n t mounted on the barges subject to real property taxation? ( P r o v i n c e of B a t a n g a s et." The exemption from real property taxes under Sec. Airport Authority. Yes. 2007) Answer. No. subject accessories are m o u n t e d on the barges and attached to gas turbine power plants designated to generate electric power installed at a specific location with a character of permanency. transformers a n d t r a n s m i s s i o n l i n e s t h a t i t i n s t a l l e d f o r its o p e r a t i o n . A n opinion c a n n o t override the power o f taxation especially w h e n the opinion has no leg to stand o n . a local electric c o m p a n y w a s a s s e s s e d real property taxes on its s t e e l t o w e r s . Yes. 16. In the case of Mactan-Cebu Int'l. v s . "X". 1436. being in the nature of machinery and other implements intended by the o w n e r for an industry or work w h i c h may be carried on in a building or a piece of land and which tend directly to meet the needs of said industry or work. In several cases. the highest court held that m o v a b l e properties installed at a specific location with a character of p e r m a n e n c y w o u l d be considered real properties for purposes of real property tax in c o n s o n a n c e with the definition of real property under the Civil Code. 1439. T h e s e are intended by their nature and object to be immovable properties by destination. 1438. N a p o c o r . "X" contends that the said properties are personal 836 . al. Are properties o w n e d by G O C C s subject to real property taxes? Answer.

properties a n d therefore not subject to real property tax Is "X" correct? A n s w e r . CTA EB Case No. Give a brief s u m m a r y of the taxpayer's remedies in REAL PROPERTY TAXATION: Answer. within 60 days from the receipt of the written notice of assessment. city or municipal assessor in the assessment of his property may. (Cotabato Electric Cooperative vs. 199 (0) of the L G C . facilities which are permanently attached to real property that a r e actually. at best.A taxpayer may file a written protest with the local treasurer within 30 days from payment of the tax with the provincial or city or municipal treasurer where the property is located w h o shall decide the protest within 60 days from receipt of the protest. dissatisfied property owner can appeal to the Central Board of 837 . T h e C T A en banc held that the subject properties are now included in t h e t e r m machinery provided under Sec. CBAA. directly and exclusively used to meet the needs of the particular industry. b) A p p e a l to the Local Board of A s s e s s m e n t Appeals . 1 4 4 1 . together with copies of tax declarations and such affidavits or documents submitted in support of the appeal. it is. 377 October 2. appeal to the LBAA of the province or city where the property is located by filing a petition under oath in the form prescribed for the purpose. A tax declaration by itself is not sufficient to prove o w n e r s h i p of real property it m a y serve as sufficient basis for inferring possession and are considered g o o d indicia of possession in t h e concept of an o w n e r a n d p a y m e n t of taxes is not proof of ownership either. a) Administrative protest . 2009) 1440. Under the said provision.Any owner or person having legal interest in the property who is not satisfied with the action of the provincial. Within 30 days from receipt of the LBAA's adverse decision. an indicium of possession in the concept of o w n e r s h i p b e c a u s e no o n e in his right mind would be paying taxes for a property that is not in his actual or constructive possession. business or activity are c o n s i d e r e d as machineries subject to real property tax. Is tax declaration or real property tax p a y m e n t s proof of o w n e r s h i p of real p r o p e r t y ? Answer.

838 . W h e n d o e s the tax on a n e w building c o m m e n c e ? Answer. 1443. Is the p r e s e n c e of s q u a t t e r s or illegal settlers c o n s i d e r e d in determining real property v a l u a t i o n ? Answer. 1442. 9282. W h a t is the basis of just c o m p e n s a t i o n in case a private property is acquired by the government for public use? Answer. C) Tax refund or tax credit . 1444. o r partly c o m p l e t e d but already occupied by t h e owner. or s u c h market value as determined by the assessor. Assessment Appeals w h o s e decisions is final and executory unless appealed. H o w are vacant lands classified a n d a s s e s s e d for tax purposes? Answer. 1445. A building wholly c o m p l e t e d . will be subject to the real property tax beginning f r o m the year following its c o m p l e t i o n or habitation as evidenced by the Certificate of O c c u p a n c y issued by t h e building official c o n c e r n e d . T h e basis shall be the current and market value declared by the owner or administrator. which will result in violation of the fundamental principle that property in the s a m e locality should be appraised uniformly. under the expanded jurisdiction of the CTA of RA No. w h i c h e v e r is lower. 2004. v a l u e d and a s s e s s e d like similar lands in the locality. April 23. Vacant lands shall be classified.T h e taxpayer may file a written claim for refund or credit for taxes and interest with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment. Their presence is not a factor in determining real property valuation as this would result in different valuation of lands located in the s a m e area. Within 30 days from receipt of the CBAA's adverse decision and appeal may now be made before the Court of Tax Appeals. 1-A and 1-B are undeveloped vacant lots they must be classified and a s s e s s e d as "commercial lots" if the predominant use of t h e lots in the locality is c o m m e r c i a l or if they are located within a c o m m e r c i a l z o n e under the zoning ordinance. E x a m p l e .If Lot N o .

C o m p r o m i s e settlement is allowed except when there is tax fraud or that the delinquency has already been decided by the Court. business or w o r k s .1446. the s a m e should be transferred f r o m the Taxable Roll to the E x e m p t Roll and no longer subject to the payment of real property taxes during t h e period of n o n . Llanes. 839 . which may last up to 36 months. Y e s . H e n c e . d e p e n d i n g upon the a m o u n t of total delinquencies involved. Are machinery and equipment taxable during the period of their non-use? A n s w e r . Local treasurers are allowed to enter into a compromise agreement with the taxpayers to liquidate delinquent taxes and penalties in installments. (Asiatic Petroleum Co. Is amicable settlement of delinquent taxes and penalties allowed? A n s w e r . 466) 1447. vs. 49 Phil. T h e y shall be taxable only w h e n they are actually. or e v e n if the land is o w n e d by the g o v e r n m e n t if the roads are built by individuals or corporations for their o w n use or benefits. w h e n they are no longer actually used for their purpose by reason of closure or cessation of production. 1448. A r e r o a d s built o n private l a n d s s u b j e c t t o real p r o p e r t y taxes? Answer. directly and essentially used to meet t h e needs of the particular industry. Roads are considered " i m p r o v e m e n t s " and therefore taxable w h e n built on private lands..u s e .

27(2). Art V I . but veto shall not affect the item or items to w h i c h he does not object. 3 Import duty is different from Import tax. Art. 34 which took effect 30 days after its promulgation on October 27. 1957. the first on Tariffs and the s e c o n d on C u s t o m s Duties. 1937. 1987 Constitution) 1450. (Sec 2 4 . which consolidated and codified the tariff and customs laws in the Philippines. No. 1464. 1987 Constitution). (Sec. or tariff bill.D. and private bills shall originate exclusively in the H o u s e of Representatives. No. bills of local application. 1972. V I . bills authorizing increase of the public debt. b) The President shall have t h e p o w e r to veto any particular item or items in an appropriation. 1 4 4 9 . 1957 and b e c a m e effective on July 1. otherwise known as the Tariff and Customs Code of 1978. is i m p o s e d under the T C C . percentage or excise tax). 1973. The offices charged with the administration and enforcement of the law is the Tariff C o m m i s s i o n and the Bureau of C u s t o m s . t h e import duty.D. The former Code w a s substantially a m e n d e d by P. on the other h a n d . PART XV TARIFF AND CUSTOMS LAW The law governing tariff and customs duties is P. It superseded Republic Act No. 3 It is actually a book of rates. General concept: The Tariff and C u s t o m s C o d e ( T C C ) is divided into t w o books. T h e import tax is imposed under the N I R C (in t h e form of V A T . r e v e n u e . the first Tariff and Customs Code. which was approved on June 2. but t h e S e n a t e m a y propose or concur with a m e n d m e n t s . a) All appropriation revenue or tariff bills. C i t e t w o (2) c o n s t i t u t i o n a l p r o v i s i o n s a f f e c t i n g t a r i f f : Answer. although it m a y be collected by the Bureau of C u s t o m s before the release of the g o o d s . except Section 104 thereof (rates of import duty) which took effect on January 1. 840 .

26 (1986). C u s t o m s law defined: A n s w e r . but the f o r m e r w e r e s u s p e n d e d by E. w h e r e a s . may declare. Caluag. M o d e r n C u s t o m s Tariffs defined: A n s w e r . landing place. Only after importation has begun but before importation is terminated. W h e n are tariff a n d c u s t o m s laws a p p l i e d ? Answer. any public wharf. T h e t e r m includes not only the provisions of the Tariff and C u s t o m s C o d e but also regulations m a d e pursuant thereto and all other laws and regulations that are subject to enforcement by the Bureau of C u s t o m s or otherwise within its jurisdiction like Bangko Sentral ng Pilipinas' circulars. the President of the Philippines. O. If necessary or desirable for customs purposes. O C u s t o m s duties cover both export and import duties. Distinguish "tariffs" f r o m " c u s t o m s " : A n s w e r . 5/24/67) 1452. exports of g o o d s in transit. 4/30/76. CB of the Phils. 1454. Acting Collector of Customs vs. W h o has the power to subject public premises to customs jurisdiction? Answer. subject to customs jurisdiction. 1451. A systematic a r r a n g e m e n t of customs duties levied on goods w h e n they cross the border of a political unit. w h i c h also h a v e the force and effect of law. 1455. "customs" originally denotes all "customary tolls or dues paid by merchants upon commodities on their w a y to a n d f r o m the market. 841 . (Sy vs.. It is an official list or schedule setting forth the several customs duties to be imposed on imports. " T a r i f f d e n o t e s t h e lists or schedules of c o m m o d i t i e s with particular duties or c h a r g e s u p o n e a c h noted. O All articles c o m i n g from or going abroad have to pass through the c u s t o m s e v e n if e x e m p t . T h e two (2) are often used interchangeably. by executive order. street or land in any port of entry that are previously under the jurisdiction of the Bureau of Customs. 1453.

reduce or remove existing protective rates of import duty. The President. t h e President is allowed to change the tariff rates in view of public interests. he can modify t h e f o r m of duty but not reclassify an item from duty-free to dutiable. valorem. H o w e v e r . (The existing rates may be increased or decreased to any level. 402 (Flexibility Tariff Clause) (Reciprocal T r a d e a g r e e m e n t provision) T h e President is e m p o w e r e d to The President is allowed to (a) increase. Sec. as may be necessary. W h a t is the F L E X I B L E T A R I F F C L A U S E ? (Sec. reduce or r e m o v e modify duties and other import existing protective rates of import restrictions on products and other duty. there must be public hearing. The flexibility clause authorizes the President to: a) increase. including the necessary change in classification of goods or articles imported. This section is called the reciprocal ' and (c) to impose an additional duty trade a g r e e m e n t provision authorizing on all imports not exceeding 1 0 % ad the President to enter into trade valorem. Further. Under the 1987 Constitution. w h e n e v e r necessary. a n d vice-versa. the President m a y c a u s e a gradual reduction of protection levels granted under the Tariff and C u s t o m s C o d e . 401 of the TCC) Answer. only while Congress is not in s e s s i o n . (b) to establish import quota or to ban imports of any c o m m o d i t y . 401 S e c . b) to establish import quota or ban imports of any commodity. provided that upon period of investigations by the Tariff C o m m i s s i o n a n d r e c o m m e n d a t i o n of the N E D A . upon the recommendation of the Commissioner and the Secretary of Finance. one or several stages. has the power to open and close a port of entry. provided that any increase in items with w h i c h the Philippines had import duty shall not e x c e e d 1 0 0 % ad entered into a trade a g r e e m e n t . and c) to impose an additional duty on all imports not exceeding 1 0 % ad v a l o r e m . but in no case shall the increased rate of import duty be higher than m a x i m u m of 1 0 0 % ad valorem. a g r e e m e n t with foreign countries on a reciprocal basis without need of submitting the results of such trade 842 . 1456.

for purposes of enforcement of the customs laws. general welfare and/or national defense. W h y is it called the "Flexibility clause? A n s w e r . Vinuya. T h e items subject to the increase agreement to the Congress for or d e c r e a s e of import duties a n d the ratification. 1457. b) T h e r e must be prior investigation by the Tariff C o m m i s s i o n and r e c o m m e n d a t i o n by the N E D A . establishment of t h e import quota need not be subject of a trade agreement. (Ponce Enrile vs. W h e n does the Bureau of Customs acquire exclusive jurisdiction over imported goods for purposes of enforcement of customs laws? Answer. 1459. even if no warrant of seizure or detention had previously been issued by the Collector in connection with the seizure and forfeiture proceedings. a) T h e increase. W h a t are the requisites in the exercise of the president's p o w e r of t a x a t i o n u n d e r the flexibility c l a u s e of the Tariff and Customs Code? Answer. from the m o m e n t the goods are actually in its possession or control. B e c a u s e it m a k e s the c u s t o m s tariff responsive or readily adjustable to the c h a n g i n g e c o n o m i c conditions within and outside the country. d) A n y other impositions issued by the President under said section shall take effect only 30 d a y s after promulgation except in the imposition of additional duty not exceeding 1 0 % ad valorem that shall take effect at the discretion of the President. reduction or r e m o v a l of existing protective tariffs or rates of duty are necessary in the interest of national e c o n o m y . 37 SCRA 381) 843 . The Bureau of Customs acquires exclusive jurisdiction over imported goods. c) T h e President m a y reduce the existing rates of import duty by not lower than the basic rate of 1 0 % ad v a l o r e m . 1458.

until they have legally left the jurisdiction of the C u s t o m s . to cover a letter of credit (L/C) in favor of the exporter-seller. Berdiago. but does not turn over t h e p r o c e e d s . at a port of entry and (b) the legal permit for withdrawal shall have been granted. Viduya vs. it can pay taxes and duties and withdraw the goods itself. taxes and other charges due upon the articles. or in case said articles are free of duties. 18 SCRA 59. Illustration: To import g o o d s . vs. S u p p o s e T w i t h d r a w s the g o o d s c o v e r e d by t h e trust receipt.1460. (General Travel Service. T h e duties. 844 . If the goods are in a bonded w a r e h o u s e . 73 SCRA 553) In case said articles are free of duties. cannot attach the g o o d s on the w a r e h o u s e so as to prevent the importer f r o m further withdrawing the g o o d s in fraud of t h e bank. Thus. Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with the intention to unload therein. taxes and other charges. t h e c u s t o m s duties are paid as the g o o d s are w i t h d r a w n . until they have legally left the jurisdiction of the customs. taxes and other fees must be paid in full. as holder of the trust receipt. T secures a loan from Bank X. since t h e g o o d s are in the custody of the c u s t o m s . 73 SCRA 553) Importation is deemed terminated/ended (a) upon payment of the duties. T h e bank. conditioned on his obligation to apply the proceeds of the sale of the imported g o o d s to the bank loan. David. sells t h e m . W h e n does importation begin and w h e n does it end? Answer. T h e n he is liable for estafa under the R P C a n d for a civil c a s e of collection for which the bank may apply a preliminary a t t a c h m e n t d u e to the fraud of T. Berdiago. or secured to be paid. A n y a t t a c h m e n t of the g o o d s while in the custody of the c u s t o m s is void. Ltd. However. taxes and other charges. Importation begins from the time the carrying vessel or aircraft enters the Philippine territorial jurisdiction with the intention to unload therein and ends at the time the g o o d s are released or withdrawn from the c u s t o m s w a r e h o u s e u p o n payment of the customs duties or with legal permit to withdraw. He is then m a d e to e x e c u t e a trust receipt by t h e bank for goods imported. (Viduya vs.

a pursuit of such vessel began within the jurisdictional waters may continue beyond the maritime zone. and the vessel may be seized on the high seas. T h e seizure is valid. T h e c u s t o m s agents have authority over seizure and forfeiture c a s e s involving imported goods. and jurisdiction may be exerted over it at any place aforesaid as may be necessary for the due enforcement of the law. He further argues that the right of the g o v e r n m e n t to collect said taxes has already prescribed. Six years ago. 1 4 6 1 . This refers to a situation w h e r e a vessel becomes subject to seizure by reason of an act done in the Philippine waters in violation of the tariff and customs laws. In fact. the c u s t o m s agents seized the car while parked at the parking area of S M while X w a s then w a t c h i n g a movie inside the c i n e m a . 2. X w e n t to the court questioning the seizure of his car since no warrant a p p e a r e d to have b e e n issued for the said imported motor vehicle. X's s u b m i s s i o n that the right to collect c u s t o m s duties has prescribed is not correct b e c a u s e importation had not e n d e d . importation ends w h e n the regular permit for withdrawal shall have b e e n issued and the corresponding taxes thereto fully paid. For articles subject to c u s t o m s duties. X used falsified d o c u m e n t s in effecting the release of the motor vehicle thus enabling him to pay lower import t a x e s . Doctrine of " H O T P U R S U I T " in c u s t o m s law defined: A n s w e r . T h u s . N O T E : This Doctrine is applicable to imported article that may be subject to seizure for violation of the tariff and customs laws when the s a m e is being transported in the Philippines by land. t h e seizure is not unconstitutional b e c a u s e it w a s m a d e for purposes of enforcing collection of unpaid t a x e s . That he having purchased the s a m e six years a g o f r o m Y as e v i d e n c e d by a D e e d of Sale. Rule on the validity of the seizure and X's contention. water or air. Thereafter. surcharge and interest were slapped on X. T h e r e is no need of warrant under the given facts. X bought an imported van from "Y". an a s s e s s m e n t in the a m o u n t of Php 850K by w a y of unpaid c u s t o m s duties. 845 . t h e collection of taxes is never unreasonable. Acting u p o n report of its intelligence. A n s w e r . prescription period to collect has not toiled. The regular courts do not have jurisdiction to take cognizance of cases involving seizure of imported g o o d s . Considering that falsified d o c u m e n t s were used importation w a s not yet e n d e d . No. Notably.

manifest or other satisfactory evidence that the articles are destined for transshipment. rules and regulations relating to tariff a n d c u s t o m s administrations. for t h e protection of g o v e r n m e n t r e v e n u e . invoice. 1463. terminal facilities. including container yards and freight stations. M a y articles arriving into our c o u n t r y be a l l o w e d to be exported? A n s w e r . airports. The general rule is that articles arriving in our country are not permitted to be exported unless it shall appear by the bill of lading. for the purpose of the collection of the lawful duty on the dutiable articles thus imported and the prevention of s m u g g l i n g through the m e d i u m of s u c h mails.1462. 846 . (c) T h e supervision a n d control over t h e handling of foreign mails arriving in t h e Philippines. W h a t are the functions of the Bureau of C u s t o m s ? A n s w e r . and (e) Exclusive original jurisdiction on seizure a n d forfeiture cases under the tariff a n d c u s t o m s laws. fees and charges. (d) Supervision and control over all import and export cargoes. Secondary functions - (a) To supervise and control entrance a n d clearance of vessels and aircraft in foreign c o m m e r c e . b) To prevent and suppress smuggling and other frauds in violation of the Tariff and C u s t o m s C o d e . (b) To enforce tariff and c u s t o m s laws and all other laws. Powers and Jurisdiction: Primary functions - a) To assess and collect customs lawful duties. landed or stored in piers. fines and penalties related to importation accruing under the tariff and c u s t o m s law.

Act No. 857) O Under Rep. 1993. d) the number. control. a) T h e Commissioner of Customs w h o is appointed by the President of the Philippines upon the recommendation of the Secretary of Finance. outside of w h i c h the Bureau of C u s t o m s is given the discretion w h i c h s h i p m e n t s can be released without physical e x a m i n a t i o n . port operations or port works are transferred and vested with the Philippine Ports Authority. W h o are the chief officials of the B u r e a u of C u s t o m s ? Answer. e) the importers disagree with the findings as contained in the g o v e r n m e n t surveyor's report. weight. it provides six (6) instances w h e n a n d w h e r e regular physical examination may b e e n f o r c e d . No. c) the shipment is covered by alert/hold order issued pursuant to existing orders. 1464. 7 6 5 0 . NOTE: O T h e general supervision. as a m e n d e d . T o w a r d this e n d . m a n d a t o r y requirement of ten percent (10%) examination of imported g o o d s w a s abolished. (P D. T h e Act addresses the problem of the u n d u e delay in the clearance and release of imported g o o d s . and tariff classification. a p p r o v e d on April 6. and regulation of every matter that pertains to port facilities. It repeals Section 1404 and a m e n d s Section 1401 and 1403 of the Tariff and Customs C o d e of t h e Philippines. s u c h as: a) the g o v e r n m e n t surveyor's seal on the container has been t a m p e r e d with or b r o k e n or the container s h o w s signs of having b e e n o p e n e d or having its identity c h a n g e d . 847 . and nature of packages indicated in t h e c u s t o m s entry declaration and supporting documents differ from that in the manifest. b) the container is leaking or d a m a g e d . or f) the articles are imported through airfreight where the Commissioner or Collector has knowledge that there is a variance between the declared and true quantity. weight. measurement.

W h e n a vessel b e c o m e s subject to seizure by reason of an act d o n e in Philippine waters in violation of the tariff and c u s t o m s laws. c) Intelligence and Enforcement Group d) Internal Administrative G r o u p e) M a n a g e m e n t Information System and Technology G r o u p . harbors. Commissioner. and t h e vessel m a y be seized on the high sea. it is the right of a custom official to seize g o o d s that are suspected to have b e e n introduced into the country in violation of the revenue laws not only in his o w n district but also in any other district than his o w n . ports. W h a t a r e t h e f i v e (5) n e w l y c r e a t e d o f f i c e s o f t h e B u r e a u of Customs headed by the five (5) Deputy Commissioners? Answer. 2/28/69) To the end of preventing s m u g g l i n g . bays. 848 . T h e Bureau exercises special surveillance to protect customs revenue and prevent s m u g g l i n g . beginning w h e n a vessel or aircraft enters Philippine territory until the articles have passed through t h e c u s t o m h o u s e after paying the duties or being given legal permit. This is c o n d u c t e d over the coast. 1 4 6 5 . rivers and inland waters w h e t h e r navigable f r o m t h e sea or not. b) Five (5) Deputy Commissioners who are appointed by President of the Philippines upon the recommendation of the Commissioner of Customs. a) Customs Revenue Collection Monitoring Group b) Customs A s s e s s m e n t and Operation Coordinating Group. The Bureau of C u s t o m s has the right of supervision and police authority over all seas within the jurisdiction of the Philippines and over all coasts. a pursuit of such vessel b e g u n within the jurisdictional w a t e r s may continue beyond the maritime z o n e . (Right of Pursuit or Extra-territorial Jurisdiction) {llluh Asaoli vs. W h a t is the territorial jurisdiction of the Bureau of Customs? A n s w e r . airports. 1466.

Pangasinan bound to S t o . llocos Sur. T h e Secretary of Finance. a) Protest cases or those w h e r e the importer questions the legality of the a s s e s s m e n t and collection of customs duties and other fees or charges (except the fixing of fine in seizure cases). and b) Seizure cases or those wherein goods or merchandise are ordered seized by customs authorities and made subject to the penalty of forfeiture or fine for violation of the customs law. should a vessel loaded with untaxed motorcycles and electronics products leave the port of L i n g a y e n . October 23. What are the tax cases arising under the Tariff and Customs Code? Answer. Commissioner of Customs. How does the customs officials exercise jurisdiction o v e r all f o r e i g n v e s s e l s c o m i n g into P h i l i p p i n e territorial sea? A n s w e r . T h u s . offices. 1468. Here. D o m i n g o . t h e Collector of C u s t o m s of llocos Sur has the power to a p p r e h e n d the culprits responsible for smuggling and seize the untaxed goods. 849 . T h e c u s t o m s officials exercise jurisdiction over foreign vessels by posting at least a c u s t o m s inspector and a customs guard on board e a c h s u c h vessel as long as it is anchored within Philippines territorial waters. 1982) 1467. direction and m a n a g e m e n t of c u s t o m h o u s e . the issue involved is the legality of the importation of goods either because the goods are in themselves prohibited importations or their importations is effected contrary to law. for c u s t o m s purposes. 1469. 7/30/68) T h e B u r e a u of C u s t o m s shall. have exclusive control. w h a r v e s and other premises in the respective ports of entry in all c a s e s without prejudice to the general police powers of t h e City or municipality w h e r e i n such premises are situated. T h e issue involved in these cases generally relates to the correctness of the appraisal and/or classification of imported goods. w a r e h o u s e s . (Rigor vs. Under the T C C w h o is the "Secretary" or "Department Head" referred to? A n s w e r . Rosales. (Vierneza vs.

c a u s e s . (Mobil Phils. pursuant to express legislative mandate and as a necessary incident of its prime government function. c o m m e r c i a l treaties. d) all questions relative to the a r r a n g e m e n t of schedules and classifications of articles under t h e tariff law. etc. I s t h e B u r e a u o f C u s t o m s s u b j e c t t o s u i t i n its o p e r a t i o n of the arrastre service? Answer. h) in general. The Bureau of Customs. Customs Arrastre Service. acting as part of t h e machinery of the National Government in the operation of the arrastre service. b) the relations between the rates of duty on raw materials and finished or partly finished products. is immune from suit. to investigate t h e operation of c u s t o m s and tariff laws and to submit report of its investigations. e) the tariff relations b e t w e e n t h e Philippines and foreign countries. composition and classification of articles for customs revenue a n d other related purposes w h i c h shall be furnished to the N E D A . The Commission shall investigate: a) the administration of and the fiscal and industrial effects of the country's tariff and customs laws. 1 4 7 0 . a n d i) the nature. vs. 18 SCRA 1120) 1471. g) conditions. c) the effects of ad valorem and specific duties and of c o m p o u n d specific and ad v a l o r e m duty. Inc. 850 . W h a t are the functions of the Tariff C o m m i s s i o n ? Answer. Exploration. No. there being no statute to the contrary. Board of Investments. a n d effects relating to competition of foreign industries with those of the Philippines. B a n g k o Sentral ng Pilipinas and the Secretary of Finance. f) the v o l u m e of importation's c o m p a r e d with domestic production and c o n s u m p t i o n .

(Pads vs. 1473. C u s t o m s officials and a g e n t s can search any building or other places e x c e p t d w e l l i n g h o u s e s (specially if the articles involved are s u b j e c t to excise tax) and seize any discovered c o n t r a b a n d w h e n there are reasonable g r o u n d s to believe that they are stored a n d f o u n d in said place. Papa vs. Lo Ho. 26 September 1989. 56 SCRA 16. W h a t is the extent of the c u s t o m s officer's power to s e a r c h . 61 SCRA 238. Mago.1472. 17 November 1980. A n y ruling. Hope. January 21. O A dwelling h o u s e is o n e used for residence. 3 Customs officials may seize vessels. cargoes. 22 SCRA 857. Pamaran. a storage place or w a r e h o u s e does not b e c o m e a dwelling just b e c a u s e a w a t c h m a n lives in the place or his family stays there. Nasiad vs.Viduya vs. Collector. 1991) 851 . even without a search warrant. (Chia vs. to enforce the T C C . CTA. However. however. W h o is authorized to m a k e ruling on commodity classification of imported article not specifically classified in the Tariff and C u s t o m s C o d e ? A n s w e r T h e Tariff C o m m i s s i o n u p o n the request by any interested party. such a search w a s excepted. seize a n d arrest u n d e r t h e tariff a n d c u s t o m s law? A n s w e r . Collector. in the U. since historically. O T h e seizure of g o o d s concealed to avoid the duties on them is not e m b r a c e d within the prohibition of this constitutional guarantee. 73 SCRA 553 O This in effect is an exception to the constitutional guarantee against searches and seizures without warrants issued by a j u d g e u p o n probable cause. People vs. and England. of the Tariff C o m m i s s i o n shall be binding u p o n t h e B u r e a u of C u s t o m s unless the Secretary of Finance rules otherwise.People vs. O Only proper parties in interest can invoke the constitutional right against unlawful search and seizure. aircrafts. goods and animals w h e n subject to forfeiture or fine.S.

matters related to: 1. 6. b) He shall also cause the preparation and publication of a Customs Manual covering up-to-date rules and regulations and decisions of the Bureau of C u s t o m s . 5. c) He has the power to designate any government official as customs inspector at coastwise port w h e r e no customs official or employee is regularly assigned.1474. Quantity and value of articles exported f r o m the Philippines as well as the taxes and other c h a r g e s a s s e s s e d and collected on t h e m for t h e preceding year. Quantity a n d value of tax-free imports. Quantity and value of the articles imported into the Philippines. In addition to the regular functions of t h e C o m m i s s i o n e r of C u s t o m s . What are the rule-making p o w e r s of the C o m m i s s i o n e r of Customs? Answer. Percentage collection of the peso v a l u e of imports. 852 . he shall submit an annual report to the President of the Philippines. 2. 3. and the corresponding c u s t o m s duties. subject to the approval of the Secretary of Finance. taxes and other charges a s s e s s e d and collected on imported articles itemized in a c c o r d a n c e with the tariff headings and s u b h e a d i n g s as appearing in the liquidated c u s t o m s entries as provided by law. C u s t o m s valuation over and a b o v e letters of credit o p e n e d . Quantity and value of conditionally free importations. a) The Commissioner shall. This designation of national. 4. promulgate all rules and regulations necessary to enforce the provisions of the Tariff and Customs Code. provincial or municipal official shall be m a d e with the consent of the proper Department Head of the official so designated.

93 Phil. 350. (Sampaguita Shoe and Slipper Factory vs. 20 SCRA 183) 1477. May the Commissioner of Customs determine the legality of an importation or ascertain whether the conditions prescribed by law for its importation has been complied with? A n s w e r . Mon vs. (Commr. as the c a s e m a y b e . May the Commissioner of C u s t o m s order the seizure of u n t a x e d g o o d s w i t h o u t being liable for usurpation of judicial functions? 853 . the Commissioner of Customs has jurisdiction to determine the legality of an importation or ascertain whether the conditions prescribed by law for an importation have been complied with. 102 Phil. b) in seizure cases . and finally reviewed by the Secretary of Finance. Commissioner of Customs. Except as provided a b o v e . the decision under review shall b e c o m e final and executory. Cloribel. if within 30 d a y s f r o m receipt of the record of the case the C o m m i s s i o n e r or by the Secretary of Finance. However. and if the Collector's decision would be affirmed by the C o m m i s s i o n e r . no decision is rendered by either of t h e m .Supervisory authority may be exercised by the C o m m i s s i o n e r while the case is pending in the Office of the Collector of C u s t o m s a n d before the decision of the Collector b e c o m e s final. Under the Tariff and C u s t o m s Code. a) In cases involving a s s e s s m e n t of duties . s u c h decision shall be automatically elevated to. Jacinto.If in any case involving the a s s e s s m e n t of duties. W h a t are the supervisory authority of the Commissioner of Customs and the Secretary of Finance? Answer. A n y party aggrieved by either the decision of the C o m m i s s i o n e r or of the Secretary of Finance may appeal to the C T A within 30 d a y s f r o m receipt of a copy of such decision. and reviewed by the C o m m i s s i o n e r . the Collector renders a decision it shall automatically be elevated to. the supervisory authority of the Secretary of Finance over t h e Bureau of C u s t o m s does not extend to the administrative review of the ruling of the C o m m i s s i o n e r in matters a p p e a l e d to the CTA. 1093) 1476. of Customs vs.1475.

deputy collectors. seizures a n d arrest u n d e r t h e c u s t o m s a n d tariff l a w s ? Answer. police officers. 1480. c) He may search vessel or aircraft and persons or articles conveyed therein. It may be exercised at any place within the jurisdiction of the Bureau of C u s t o m s . inspectors and guards. The Commissioner of Customs may order seizure of untaxed goods without being liable for usurpation of judicial function. w h e n the payment of internal revenue taxes is involved. agents. The a b o v e do not need a warrant to m a k e searches. and execute processes of courts w h e n acting under the direction of the Collector. W h a t particular powers may be exercised under such police authority in the e n f o r c e m e n t of the Tariff and Customs Laws? Answer. Pamaran. Where such authority m a y be exercised? Answer. seizures and arrests. d) Officers generally e m p o w e r e d by law to effect arrests. (Pads vs. W h o are conferred police authority to effect searches. a) He may require the assistance of any police officer. c) Officials of the BIR on all cases falling within the regular performance of their duties. district collectors. Answer. b) Officers of the Philippine navy and other m e m b e r s of the A r m e d Forces and national law enforcement agencies when authorized by the Commissioner. owing to the e x p r e s s e d m a n d a t e and authority granted to them in the performance of their functions as provided under the Tariff and C u s t o m s C o d e . 56 SCRA 16) 1478. a) Officials of the Bureau of Customs. 854 . b) He may enter and s e a r c h any enclosure. 1479.

The search of a dwelling house in Customs Law mav be effected only upon warrant issued bv a judge of the court or such other responsible officers as maybe authorized by law. W h o h a s the authority to designate airport of entry for civil aircraft arriving in t h e P h i l i p p i n e s ? A n s w e r . 855 . 1483.00 E X C E P T . taxes and other charges w h e n the aggregate a m o u n t of the duties. b) W h e n permission to land e l s e w h e r e other than international airport of entry is first obtained f r o m the Commissioner. 711 of the T C C . beasts and persons e) He m a y s e a r c h persons arriving f r o m foreign countries. On the Collector of Customs: 9 T h e Collector of C u s t o m s has discretionary authority to REMIT the a s s e s s m e n t and collection of duties. They a r e required to m a k e their first landing at International Airport of Entry except in the following cases - a) E m e r g e n c y or forced landing. taxes and other charges is less than Php 10. 1 4 8 1 . 3 The Collector of Customs has rule-making power pursuant to Sec.00. which provides that he may exercise such power of prescribing local administrative regulations provided they are not inconsistent with law or the general bureau regulations and must be subject to the approval of the Commissioner of Customs. W h a t are the rules regarding arrivals of aircrafts in the Philippines f r o m any foreign port or place? A n s w e r . O T h e Collector m a y dispense with the seizure of articles for violation of the tariff customs laws if the value of articles to be seized is less than Php 10. T h e Secretary of Finance u p o n the r e c o m m e n d a t i o n of t h e C o m m i s s i o n e r of C u s t o m s and the Director of the Civil Aeronautics Administration. d) He m a y search vehicles. if the article is prohibited or in violation of the tariff and customs laws appears to be intentional or habitual. 1482.

any official to serve in such contingency maybe designated in writing by the Collector from his own force. T h e s a m e m a y be appealed to the Commissioner of C u s t o m s . W h a t are the duties of the Collector over importation of articles? Answer. 3 Where no deputy collector is available. (Seneres vs. Frias. and shall dispose of t h e s a m e in a c c o r d a n c e with law. d) He shall hold possession of all imported articles u p o n which duties. the Collector shall furnish any importer. 3 Decision of the Collector of C u s t o m s is not appealable to the Court of Tax Appeals. Collector of Customs vs. W h a t is the duty of the Collector in so far as dutiable value of articles entering his port of responsibility is concerned? A n s w e r . correct and permanent record of their official transactions and to submit the s a m e to the inspection of authorized officials at all time. Deputy Collector and other customs officials acting in such capacities are required to keep true. and to turn over all records and official papers to their successor or other authorized official. or vacancy of his office. disabled. 39 SCRA 533. 1485. taxes and other c h a r g e s have not b e e n paid or secured to be paid. taxes and other charges d u e on t h e imported articles. the latest information in his possession as to the dutiable value of articles entered at his port. c) He shall c a u s e all a s s e s s m e n t and collection of the duties. T h e information is given only if the Collector is 856 . O The Deputy Collector shall temporarily discharge the duties of the Collector of Customs in case the latter is absent. Upon the written application of t h e o w n e r or agent of imported goods. 3 The District Collector. Torres. b) He shall cause all such articles to be appraised and classified. a) He shall cause the entry of all imported articles at the customhouse. 45 SCRA 272) 1484.

satisfied that the importer acted in g o o d faith and unable to obtain
proper information as to the dutiable value of the subject articles.
T h e information given by the Collector is in no sense an appraisal
or binding u p o n the Collector's action on appraisal.

1486. Matters that a Collector is required to immediately report
to the C o m m i s s i o n e r under the Tariff C o d e :

Answer.
a) Prospective or newly b e g u n litigations concerning his district
relating to the c u s t o m s service.

b) All transactions in the port and district that shall be contained in
a regular monthly report in such f o r m and detail as may be
required by the C o m m i s s i o n e r of C u s t o m s .

1 4 8 7 . A r e all i m p o r t e d a r t i c l e s s u b j e c t t o c u s t o m s d u t y ?

A n s w e r . All imported articles, w h e n imported from any foreign
country into the Philippines, are subject to duty upon each
importation, e v e n t h o u g h previously exported f r o m the Philippines,
e x c e p t as otherwise provided in the Tariff and C u s t o m s C o d e or in
other laws.

1488. W h a t articles are under the jurisdiction of the T C C :

Answer.
a) All articles subject to duty, or

b) Prohibited from being imported (Prohibited importation); or

c) Conditionally-free from tariff and c u s t o m s duties (conditionally-
free importation); and

d) Free from tariff and customs duties (duty-free)

Imported goods must be entered in a customhouse at their
port of entry otherwise they shall be considered as contraband
and the importer is liable for smuggling. (Sec. 1 0 1 , TCC)

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1489. Distinguish absolutely free importation from
conditionally free importation:

Answer.
Absolutely Free Importation Conditionally Free Importation ~~
Articles exempt from duty only uporT
Articles exempt from duty without compliance with the formalities
any condition. prescribed or with the regulations
promulgated in connection with the
importation.

1490. W h a t is the effect of violation of circulars in case of
importation of articles not in the prohibited importation
list?

Answer. While goods imported in violation of the circulars may not
be considered "merchandise of prohibited importation", they
nevertheless fall within the other category of merchandise imported
"contrary to law", because regulations issued pursuant to "customs
laws" form part thereof, so that violation of the said regulations can
properly be regarded as c o m i n g within the purview of law. (F. Sare
Enterprises vs. Commissioner of Customs, 29 SCRA 112.)

1491. W h a t are the articles of prohibited importations?

Answer. Contrabands - Articles o f prohibited importation or
exportation.

a) Dynamite, a m m u n i t i o n , explosive, firearms and weapons,
except w h e n authorized by law; (absolute)

b) Written or printed article advocating or inciting treason,
rebellion, subversion, insurrection or sedition against the
Government, or forcible resistance to any law of the
Philippines; (absolute)

c) O b s c e n e or immoral articles or objects; (absolute)

d) Drugs or substances preventing human conception or
producing unlawful abortion;

e) Gambling outfits or paraphernalia; (qualified)

f) Lottery and s w e e p s t a k e s tickets except if authorized by our
Government;

858

g) Articles manufactured holly or partially of g o l d , silver, etc. not
s h o w i n g their actual fineness;

h) Adulterated or misbranded foods or drugs;

i) O p i u m , marijuana a n d similar drugs or narcotics or synthetic
drugs declared habit forming or preparation thereof unless
authorized by law; (absolutely, but if for medical purposes, then
qualified)

j) O p i u m pipes and part thereof; and

k) All other articles, importation of w h i c h is prohibited by law.

N O T E : Prohibited importations are subject to forfeiture whether
the importation is direct or indirect such as w h e n the shipper and
t h e c o n s i g n e e are o n e a n d t h e s a m e p e r s o n . (Ute Paterok vs. Bu.
of Customs, 193 SCRA 132)

O U n d e r RA 1125, c a s e s involving forfeiture of articles of
prohibited importation are N O T cognizable by the CTA
b e c a u s e t h e s e c a s e s d o not i n v o l v e liability for c u s t o m s
duties or other money charges. However, under Sec.
2 4 0 2 o f t h e T C C , w h i c h w a s e n a c t e d t h r e e (3) y e a r s a f t e r
RA 1125, it expressly confers upon the C T A jurisdiction
over appeals in seizure cases. Thus, there seems to be
no doubt as to the jurisdiction of said appellate court
over such cases.

1492. W h a t is the extent of the phrase "merchandise of
prohibited importation? '

A n s w e r . T h e term "merchandise of prohibited exportation" use in
the Administrative C o d e is broad to e m b r a c e not only those already
declared prohibited at the time of its adoption but also goods,
commodities or articles that may be the subject of activities
undertaken in violation of subsequent laws. (Geotina vs. CTA, 40
SCRA 362)

1493. W h a t articles are free of import duties?

A n s w e r . The Code enumerates the articles that shall be exempt
from the payment of import duties upon compliance with the
formalities prescribed in, or with the regulations prescribed by the

859

Commissioner of Customs with the approval of the Secretary of
Finance, such as:

a) Animals and plants for experimental, scientific, breeding and
national defense purposes;

b) Aquatic products gathered by Philippine vessels;

c) Samples of commodities of small quantity; Physician's samples
not for sale;

d) Articles necessary for the take-off and landing of aircrafts as
well as for safe navigation of vessels;

e) Articles for repair;

f) Medals, badges and caps bestowed as trophies or prizes;

g) Articles used for public expositions;

h) Historical and technical books under certain conditions;

i) Personal effects of returning residents previously exported from
the Philippines, or bought abroad and brought into the country
within 90 d a y s before or after arrival;

j) Personal effects of tourist n e e d e d by their profession or
comfort; (Cars are not personal effects)

k) T h o s e granted to international institutions or agencies,
associations or organizations entitled to e x e m p t i o n pursuant to
treaties, a g r e e m e n t s or special laws; (e.g. A D B officials can
bring cars tax free, so long as not sold locally, if sold locally,
the import tax will be i m p o s e d ) .

I) Articles brought into the country for p r o c e s s i n g , but to be re-
e x p o r t e d ; (e.g. Export Processing Z o n e )

m) T h o s e granted to g o v e r n m e n t agencies, instrumentalities or
G O C C with existing contracts, a g r e e m e n t s or obligations
(requiring such e x e m p t i o n ) with foreign countries;

n) T h o s e granted by the President u p o n the r e c o m m e n d a t i o n of
N E D A in the interest of national e c o n o m i c d e v e l o p m e n t ;

o) Bibles, missals, prayer books, Koran, ahadith and other

860

e) W h e n the importer disagrees with the findings as contained in t h e g o v e r n m e n t surveyor's report. such entry and passage free of duty or settlement of duties will. T w o kind of liquidation of duties under the Tariff and Customs Code? Answer.W h e n articles have been entered and passed free of duty or final adjustments of duties made with subsequent delivery. W h e n shall imported articles be subject to the regular physical examination under the customs law? Answer. or f) W h e n t h e articles are imported through airfreight where the C o m m i s s i o n e r of C u s t o m s or the Collector of Customs has k n o w l e d g e that there is a variance between the declared and true quantity. d) W h e n the s h i p m e n t is covered by alert hold order issued pursuant to existing orders. h y m n a l a n d h y m n s for religious uses. 1495. religious b o o k s of similar nature and extracts therefrom. a) Tentative liquidation . b) W h e n t h e container is leaking or d a m a g e d . 861 . m e a s u r e m e n t . 1494. in the absence of fraud or protest be final and conclusive upon all parties.It is subject to future and final readjustment and settlement within a period of six (6) months from date of tentative liquidation. weight and tariff classification. a) W h e n the g o v e r n m e n t surveyor's seal on the container has b e e n t a m p e r e d with or broken or the container shows signs of having b e e n o p e n e d or having its identity c h a n g e d . c) W h e n t h e n u m b e r entry declaration and supporting documents differ f r o m that in t h e manifest. b) Final liquidation . after the expiration of one (1) year from the date of final payment of duties.

c) the underwriters of a b a n d o n e d articles and d) the salvors of articles saved f r o m a w r e c k at sea. approved by the Chief Customs Assessor. a) An individual. 1498. or b) A corporation or c o m p a n y . The delivery of the article to another person does not relieve the importer and his c a s h deposit. 1497. 1499. and recorded in the record of liquidation. W h o are the o w n e r s of i m p o r t e d articles? Answer. shall be d e e m e d the consignee thereof. To w h o m is "Person" referring to for purposes of the TCC? Answer. Yes. If the Collector shall approve the returns of the appraiser and the report of the weights. or d) An association or any other kind of organization. the liquidation shall be made on the face of the entry showing the particulars thereof. or if consigned to order. and b) the holder of a bill of lading duly indorsed by the consignee therein n a m e d . gauge or quantity. initialed by the customs assessor. irrevocable domestic letter of 862 . by the consignor.1496. All articles imported into the Philippines shall be held t o be the property of the: a) person to w h o m the s a m e are c o n s i g n e d . May the imported goods be allowed delivery to another person upon order of the importer? Answer. How is liquidation of duties in c u s t o m s law effected? Answer. T h e importer o n record m a y authorize delivery to another person by writing u p o n the f a c e of the w a r e h o u s e withdrawal entry his orders to that effect. along a coast or any area of the Philippines m a y be regarded as the consignees. or c) A partnership.

W h a t is t h e n a t u r e of t h e liability of i m p o r t e r for c u s t o m s duties. It is the duty i m p o s e d for bringing out goods from the territory of the Philippines. W h a t are the different kinds/classifications of customs duties? Answer. the liability for duties. by virtue of E. 1500. t a x e s . 1 5 0 2 . bank g u a r a n t e e or b o n d from liability for the payment of duties. Export tariff d e f i n e d : A n s w e r . all export taxes. fees and other charges legally accruing to the importation. U N L E S S . even though previously exported from the Philippines. Unless otherwise relieved by laws and/or regulations. No. At present. 26 (1986). 1 5 0 1 . fees and charges? A n s w e r . 863 . As to determination of amount. T h e liability of the importer for c u s t o m s duties is considered a personal debt to the g o v e r n m e n t unless relieved by laws or regulations. namely: 1. taxes a n d other charges due t h e r e o n .the duty is based on the market value or price of the imported article. unless e x e m p t e d by law. the person to w h o m delivery w a s authorized a s s u m e s such liability by c o m p l y i n g with the requirements provided under the Tariff and Customs Code. It also constitutes a lien upon the articles imported w h i c h m a y be enforced while s u c h articles are in custody or subject to the control of t h e g o v e r n m e n t . 73 SCRA 553) 1503. Berdiago. credit. It is imposed on articles imported from a foreign country. except on logs have been suspended. O. t a x e s . This liability shall be fully extinguished upon full p a y m e n t of all duties. customs duties may be: A) Ordinary or regular which are imposed and collected merely as a source of revenue. Ad valorem . f e e s and other charges attaching on importation constitutes a personal debt d u e from the importer to the g o v e r n m e n t that can be discharged only by payment in full of said duties a n d c h a r g e s . I m p o r t tariff d e f i n e d ? A n s w e r . (Viduya vs.

2. T h e Secretary of 864 . The imported articles are appraised by appraisers of the port w h o shall be responsible to the Collector of such port for the correct appraisal of the articles imported into the Philippines. Countervailing duty . Delgado Shipping. c u s t o m s duties m a y be: B) Special duties consisting of: 1. Commr. head. (Commr. 184 SCRA 579) P. 3.D. D u m p i n g duties . (now Secretary of T r a d e a n d Industry). Alternating duties . vs. number or volume or some standard of measurement of the imported article.is o n e d e s i g n e d to offset any foreign subsidy granted to g o o d s exported to t h e Philippines to the prejudice of our local industries. Procter & Gamble. T h e imposition of d u m p i n g duty is d e t e r m i n e d by the Secretary of Finance u p o n prior investigation by the Tariff Commission. CTA. 11. ad valorem.w h i c h are i m p o s e d in addition to regular duties in order to offset any d i s a d v a n t a g e to local industry brought about by exportation to the Philippines of items at a price less than its fair market v a l u e . Specific . As to dutiable articles.the duty is based on the weight. Jan. T h e duty is equal to the ascertained or estimated a m o u n t of the bounty or subsidy given. whichever is higher. 1989. C o m p o u n d c u s t o m s duties are those w h i c h are imposed based on both the weight and v o l u m e a n d the value of the imported articles. (Commr. 34 drastically a m e n d e d the Tariff and Customs Code and it now provides for percentage on imported articles. vs. T h e duty is equal to the difference b e t w e e n the actual purchase price a n d the fair v a l u e of the article as determined in the d u m p i n g decision of t h e Secretary of Finance. vs.are those imposed on the basis of either the weight or volume or the value of the imported articles (specific or ad valorem). 21 May 1988) 2. 4.

upon the r e c o m m e n d a t i o n of N E D A .is one which is imposed by t h e President under Sec. as may be necessary.i m p o s e d under the flexible tariff clause under Section 401 of t h e Tariff a n d C u s t o m s C o d e . 304 of the Tariff and Customs C o d e not in e x c e s s of 1 0 0 % of existing rates. T h e articles will be d e e m e d a b a n d o n e d u p o n failure to mark t h e m within 30 days from notice. the President. and c) to impose an additional duty on all imports not exceeding 1 0 % ad valorem. Marking duty (5%) . it is an addition to regular c u s t o m s duties. and subject to the limitations herein prescribed. is hereby e m p o w e r e d - a) to increase.w h i c h is an additional duty imposed for improper marking of imported articles and their containers. 3. 865 . Duty . ' b) to establish import guota or to ban imports of any commodity. In the interest of national e c o n o m y . 4. designed to offset a n y foreign discrimination against our local c o m m e r c e . Finance (now Secretary of Agriculture) upon prior investigation and report of the Tariff Commission d e t e r m i n e s the countervailing duty. for t h e purpose of preventing deception of consumers. Discriminatory or retaliatory duty . reduce or r e m o v e existing protective rates of import duty. T h e purpose is to prevent deception of customers and t h e rate is 5% ad v a l o r e m . general welfare and/or national security. In c a s e of c o n t i n u e d discrimination the articles coming f r o m such foreign country m a y be b a n n e d . 5.

1504. Distinctions among the different special levies on
importation:

Answer.
Dumping Duty Countervailing Marking Duty Discriminatory^
Duty Duty
Imposed upon Imposed upon Imposed upon Imposed uporT
foreign goods foreign goods those not goods coming
Nature with value enjoying subsidy properly from countries
lower than their thus allowing marked as to that discriminate
F M V to t h e t h e m to sell at place of origin against
detriment of lower prices to of the goods Philippine
local products the detriment of Products.
local products
similarly situated
Difference A n y amount noT
Amount between the Equivalent to the 5% ad exceeding 100%
or actual price bounty, subsidy valorem of as valorem of
Rate and the normal or subvention articles the subject
value of the articles
article
Special
Committee on
Anti-Dumping
( C o m p o s e d of
the Sec. of
Impo- Finance as Secretary of Commissioner President of the
sing Chairman; Finance of C u s t o m s Philippines
authori- M e m b e r s : Sec.
ty of Department
of Trade &
industry and
either the Sec.
of Agriculture if
article in
question is agri.
products or the
Sec. of Labor if
non-agri.

1505. Briefly d i s c u s s the procedures in the imposition of
taxes/duties:

Answer.
a) Declaration by the importer of the importation, m a d e in:

866

1) Import entry - if c o m m e r c i a l quantity

2) Informal Import Entry - if articles have a dutiable value of
P h p 500 or less, or if g o o d s are personal effects for
personal use.

b) Examination of g o o d s

c) A p p r a i s a l :

1) If ad v a l o r e m - valuation

2) If specific - just weight, m e a s u r e or count

d) Classification

e) A s s e s s m e n t o f taxes

f) Liquidation of import entry - p a y m e n t of tax

1) Final liquidation

2) Provisional liquidation - liability not ascertained but must
be liquidated in six (6) months.

1506. How are customs duties paid?

Answer. C u s t o m s duties are payable upon withdrawal from the
c u s t o m h o u s e and based on import entries prepared, whether
formal or informal by:

a) Tentative liquidation subject to readjustment; and

b) Final liquidation.

If proper protest is filed and found meritorious, the entry may
be ordered re-liquidated by the Collector of Customs.

1507. W h a t is the effective rate or rates of import duty:

Answer. Imported articles shall be subject t o the rate or rates of
import duty existing at the time of entry, or withdrawal from the
warehouse, in the Philippines, for consumption.

867

On articles abandoned or forfeited to or seized by the
Government, and then sold at public auction, the rates of duty and
tariff imposed on the date of the auction shall apply provided
that duty based on the weight, volume and quantity of articles shall
be levied and collected on the weight, volume and quantity at the
time of their entry into the warehouse or at the date of
abandonment, forfeiture and/or seizure.

The value and prices of imported articles in foreign currency of
the Philippines shall be converted into the currency of the
Philippines at the current rate of e x c h a n g e or value specified or
published, from time to time, by the Bangko Sentral ng Pilipinas of
the Philippines. (CIR vs. Tanjuatco, December 27, 1980)

The basis of dutiable value is the fair market value of the
goods.

1508. What other charges or fees are payable under the T C C ?

Answer.
a) Harbor fee - it is payable by the o w n e r or operator of a vessel
for entrance into or departure f r o m a port of entry in the
Philippines.

Rationale for the imposition of harbor fees:

A vessel ordinarily enters a harbor a n d lays anchor or
moors in a port to load, or unload or both a n d in doing so,
the vessel derives benefits from port facilities maintained
by the G o v e r n m e n t , hence, they are m a d e to contribute a
share in said G o v e r n m e n t undertaking by p a y m e n t of
berthing charges a n d harbor f e e s .

b) Wharfage due - w h i c h is a s s e s s e d against t h e cargo of a
vessel e n g a g e d in foreign trade b a s e d on t h e quantity, weight
or m e a s u r e received and/or d i s c h a r g e d by s u c h v e s s e l ;

1. the owner, c o n s i g n e e or agent of the article is the one
liable to pay the c h a r g e a b o v e ;

2. wharfage dues are payable w h e t h e r or not the wharf
used in unloading is privately o w n e d or o w n e d by the
G o v e r n m e n t , such d u e s being a s s e s s e d against the
cargo.

3. it partakes of the nature of a tax that is collected by the

868

G o v e r n m e n t to support its operation of the customs
service. (Associated Sugar, Inc. et. al., vs. Commissioner
of Customs, 25 November, 1982)

How are exemptions from wharfage dues construed?

A n s w e r . Considering that w h a r f a g e dues are specifically
allotted by law for the special Port W o r k s Fund and that
e x e m p t i o n s are regarded as in derogation of sovereign
authority and of c o m m o n right a n d are construed in
strictissimi juris against the person or entity claiming
e x e m p t i o n , the e x e m p t i o n of Caltex for c u s t o m s duties is
construed not to include e x e m p t i o n from w h a r f a g e dues. (Phil.
Iron Mines, Inc. vs. Commissioner of Customs, 30 SCRA 60,
Victorias Milling Co. Inc., vs. Auditor General, 116 Phil. 1139)

c) Berthing c h a r g e - a s s e s s e d against a vessel for mooring or
berthing at the pier, wharf, etc., at any part of the Philippines;
the m o m e n t a vessel has c o m e within any slip, channel, basin,
river or canal under the jurisdiction of any port in the
Philippines, it b e c o m e s subject to berthing or mooring charges.

T h e o w n e r or operator of the vessel pays the charge above.

N O T E : T h e g o v e r n m e n t ' s right to collect berthing charges is
not planted u p o n the condition that the pier be publicly o w n e d ,
likewise m e r c h a n d i s e imported or exported loaded in/from a
private wharf m a y still be covered by wharfage dues. (Luzon
Stevedoring Corporation vs. CTA, 18 SCRA 436, Procter &
Gamble, PMC vs. Commissioner of Customs, 19 SCRA 883)

d) Storage c h a r g e - a s s e s s e d on articles for storage in customs
cargo sheds and w a r e h o u s e s of the government;

Storage charge Defined:

It is the amount which the owner, consignee, or agent of
either article or baggage has to pay for the temporary
handling, storage and custody of the imported or exported
article or the baggage of the passenger.

e) Arrastre charge - which the owner of article or baggage has to
pay for the handling, receiving and custody of such imported or
exported article;

869

however. that " w h e n articles have entered and passed free of duty or final adjustment of duties m a d e with subsequent delivery. This limitation does not apply to liquidations that are tentative. it provided. or agent of either article or baggage has to pay for the handling. Others 1 5 0 9 . in the a b s e n t of fraud or protest. from the date of final payment of duties. be final and conclusive u p o n all parties. Prescription under the T C C : A n s w e r . operator or master of a vessel e n g a g e d in foreign trade coming to the Philippines based on the net t o n n a g e of the vessel or weight of the articles discharged or laden. based on the net tonnage of the vessel or weight of the article discharged or laden.paid by the owner or operator of a vessel engaged in foreign trade coming to the Philippines from a foreign port or going to foreign port from the Philippines.It is a d e v i c e w h e r e b y g o o d s affected by taxes are re-exported as if they are not taxed at all. 870 .charged and collected for services rendered and d o c u m e n t a t i o n issued by the Bureau of C u s t o m s . It refers to duties or taxes paid back or remitted by the G o v e r n m e n t on the exportation of that on w h i c h they w e r e levied. Under the T C C . T h e T C C does not e x p r e s s any general statute of limitation. Coastwise license 3. Certificate of Philippine registry 2. g) Other fees and c h a r g e s . Examples: 1. Arrastre charge defined: It is the amount which the owner. D r a w b a c k d e f i n e d . f) Tonnage due . Tonnage dues defined: It is the a m o u n t paid by the owner agent. such entry and p a s s a g e free of duty or settlement of duties will after the expiration of o n e (1) year. receiving and custody of the imported or exported article or the baggage of the passenger. consignee. d r a w b a c k s also refer to refund of duties on imported fuel used for p r o p u l s i o n of v e s s e l s . 1510.

the matter can no longer be r e o p e n e d except only in two cases: 1. T h e periods vary d e p e n d i n g on the penalty imposed by law. the Commissioner of Customs may seize and order forfeiture. Sare Enterprises vs. 871 . Pamaran. the prescriptive periods prescribed for the violation of penal statutes in general. (P. 60 SCRA 327) N O T E : T h e Tariff a n d C u s t o m s C o d e . d) Conviction of the importer does not preclude valid imposition of administrative fines. 29 SCRA 112) c) Undervalued goods can be forfeited. What are the penalties in case of violation of the provisions of the T C C ? Answer. protest is m a d e meanwhile 2. unlike the N L R C . the liquidation is deemed final for the purpose of c o m p u t i n g the prescriptive period from t h e last installment. [Ramos vs. Commissioner of Customs. o n e (1) year after final liquidation. H e n c e . Importations m a d e without the necessary import license and the release certificates issued by the Bangko Sentral Ng Pilipinas or its authorized agent bank in the prescribed form falls within the class of merchandise of prohibited importation or merchandise the importation of which is effected contrary to law. does not provide for any statute of limitations on penal offenses c o m m i t t e d under it. b) G o o d s imported without license as required by the circulars of the B a n g k o Sentral ng Pilipinas may be forfeited under the Tariff and C u s t o m s C o d e . thus. t h e importer thereof m a y still be held criminally liable. N o t e : The imposition of administrative fine is not subject to protest. taxpayer is guilty of fraud N O T E : If the tax is paid in installments. a) If g o o d s have b e e n forfeited for violation of the Tariff and C u s t o m s C o d e . in such and other cases. 1511.

A port or place outside the jurisdiction of the Philippines. 1513. or sale of such article after importation. fines and forfeitures. CA) 1514. concealment or sale of such articles after importation knowing the s a m e to have been imported contrary to law. conceals. buy.It is an act of any person w h o shall fraudulently import or bring into the Philippines.It is a port under the administrative jurisdiction of the Collector of the Principal Port of Entry of t h e District. Principal Port of Entry defined: A n s w e r . sell or in any manner facilitate the transportation. knowing the s a m e to have been imported contrary to law. W h e n is s m u g g l i n g c o m m i t t e d ? Answer. 872 . any article. It is committed w h e n a person (a) fraudulently imports or brings into the Philippines or assists in transporting or bringing into the Philippines any article contrary to law. Foreign Port defined: A n s w e r . (Rodriguez vs. or shall receive. f) The imposition of dumping duty by the Commissioner of Customs is appealable to the Court of Tax Appeals. contrary to law. or (b) receives. sells or in any m a n n e r facilitates the transportation. concealment. Sub-port of Entry . the main duty to suppress smuggling or prevent smuggling is lodged with the Philippine Coastguard. W h i c h is the chief a n d p e r m a n e n t port of entry of the collection district wherein it is situated and is the p e r m a n e n t station of the Collector of such port. S m u g g l i n g d e f i n e d . buys. conceal. 1 5 1 2 . 1515. or assist in so doing. Under Republic Act 5173. g) Administrative penalties under the Tariff and Customs Code consist of surcharges. e) Forfeiture may be waived by the Collector of Customs w h o may instead impose a fine.

However. w h i c h include all ports. Is a d o c u m e n t required by law specifying the cargoes on broad a v e s s e l . under oath and attached to the original manifest. It shall include the port of departure and t h e port of delivery. consignee or agent thereof. It is a domestic port o p e n to both foreign and coastwise trade. This cargo manifest is required in coastwise trade for cargo and passengers transported f r o m one place or port in the Philippines to another only w h e n o n e or both of such places is a port of entry. O T h e general rule is that after entry of vessel no cargo manifest thereof shall be changed or altered E X C E P T . n u m b e r s . This term shall refer to both Entry point of imported articles: All imported articles or g o o d s w h e t h e r subject to duty or otherwise. W h e n the invoice and/or entry covering an importation shall not have been received and recorded in the Office of the Appraiser. c o m i n g into the Philippines shall be entered through a c u s t o m h o u s e at the port of entry.1516. this cargo manifest is not required for cargo and passengers transported from a coastwise port to another coastwise port because neither of the aforesaid ports is a port of entry. their marks. Coastwise ports defined: A n s w e r . 2. Cargo manifest defined: A n s w e r . 1518. T h e C o m m i s s i o n e r of C u s t o m s has the authority to change t h e limits of a collection district u p o n the approval of the Secretary of Finance. Port of entry defined: A n s w e r . It shall include "airport of entry". T h e s e are d o m e s t i c ports as are o p e n to coastwise trade only. quantity and description of the packages and the n a m e s of the consignees thereof. 873 . 1517. harbors and places not ports of entry. By a m e n d m e n t by the master. in the following cases- 1.

2. no a m e n d m e n t shall be allowed E X C E P T w h e n a clerical error or any discrepancy has been committed in the preparation of the manifest without any fraudulent intent. the s a m e and each copy thereof shall be a c c o m p a n i e d by a translation into the official language of the Philippines. consignee. 874 .i n .e. C a r g o Manifest Bill of L a d i n g It is a declaration of the entire cargo It is a declaration of a specific part of the cargo The object of a manifest is to This is prepared as a matter of facilitate the labors of the customs business convenience based authorities and to prevent the exclusively on a contract and unlawful entry of goods into the d e s i g n e d to protect the importer or country. W h e n the invoice and/or entry covering an importation shall not have been received and recorded in t h e Office of the Appraiser. O n c e the cargo manifest shall h a v e b e e n received and recorded in the said office. i. discovery of which would not have been made until after examination of the importation has been completed. Z> If the cargo manifest is originally written in a language other than the official language of the Philippines. E X C E P T 1. in English. discovery of w h i c h could not have b e e n made until after e x a m i n a t i o n of the importation has b e e n c o m p l e t e d . in Filipino and until otherwise provided by law. D i s t i n c t i o n s b e t w e e n a c a r g o m a n i f e s t a n d bill o f l a d i n g : Answer. 1 5 1 9 .c o m m a n d or authorized agent thereof under oath and attached to the original manifest. 5 No amendment of a cargo manifest shall be allowed when the preceding invoice and/or entry shall have been received and recorded in the Office of the Appraiser. By a m e n d m e n t by the p i l o t . O This is likewise applicable to cargo manifest of aircraft w h i c h shall not be c h a n g e d or altered after entry of t h e aircraft into Philippine territorial jurisdiction. E X C E P T when it is obvious that a clerical error or any discrepancy has been committed in the preparation of the manifest without any fraudulent intent.

1522. Transit cargo defined: A n s w e r . the importer shall himself be required to declare under oath and under the penalties of falsification or perjury that the declarations and statements contained in the entry are true and correct. b) A duly licensed c u s t o m s broker w h e n so authorized by the holder of the bill of lading. S h o u l d the import entry be coursed thru (b) and (c) a b o v e .1520. It is an article at any port from another port or place noted in the carrier's manifest and destined for transshipment to another local port or to a foreign port. W h a t is the m e a n i n g of "entry" in the Tariff C o d e ? Answer. and c) the procedure of passing goods through the customs house. c) An attorney-in-fact as e m p o w e r e d by the holder of the bill of lading. a) T h e importer as a holder of the bill of lading. All imported articles must be described in sufficient detail to enable t h e m to be identified both for tariff classification and statistical purposes. 1521. W h o are authorized to make import entry under the customs law? Answer. It has a triple meaning - a) the documents filed at the customs house. 1523. 875 . S u c h statement under oath by the importer shall be a prima facie evidence of his knowledge and consent thereto should the importation be found unlawful. b) the submission and acceptance of the documents. What is the rule regarding description of articles in import entry? A n s w e r .

876 . s h i p m e n t s of parcels shipments and the f o r m itself is through the mails and through the filled out by the importer himself international airport with a dutiable or his broker. 1526. otherwise. 1525. D i s t i n g u i s h t h e t w o (2) k i n d s o f i m p o r t e n t r y ? Answer Formal Entry Informal Entry It is used to clear from customs This is used to clear from custody b a g g a g e a c c o m p a n i e d by customs custody commercial p a s s e n g e r s . a n d it is filled out by the c u s t o m s e x a m i n e r himself for the o w n e r or a d d r e s s e e of the parcel. It is the completion of the unloading of the shipment from the international carrier in the case of direct discharge or from the domestic carrier in case of a transshipped cargo. the Bureau of Customs will d e e m the imported goods impliedly abandoned. both the Import Entry Declaration (IED) and the Import Entry and Internal Revenue Declaration (IEIRD) should be filed within 30 days from the date of discharge of the last package from the vessel or aircraft. " D i s c h a r g e of the last p a c k a g e " d e f i n e d : Answer. T h e articles shall be d e e m e d a b a n d o n e d and shall be subject to sale. The imported articles shall be entered within thirty (30) days that is non-extendible. and shall be claimed within fifteen (15) days that is also non-extendible f r o m the date of posting of the notice to claim in conspicuous places in the Bureau of Customs. C u s t o m s ' requirement as to the entry d o c u m e n t s : Answer. Under the relevant provisions if the T C C . 1 5 2 8 . 1524. value of Php 2K or less. W h a t is t h e effect of failure to file an entry of i m p o r t e d articles within 30 d a y s as prescribed by the c u s t o m s law? A n s w e r . Within what period s h o u l d imported articles be entered and claimed under customs law? Answer. from the date of discharge of the last package from the vessel or aircraft. 1527.

the dutiable value of w h i c h is P h p 10. This privilege m a y be granted only upon specific instructions of the Secretary of Finance in e a c h instance that will be issued only upon request of the D e p a r t m e n t of Foreign Affairs. 1532. 1 5 3 1 . legations. consular officers and other representatives of foreign government. barter or hire. b) T h o s e imported for personal use or family use of the members a n d attaches' of foreign e m b a s s i e s . E x a m p l e s of importations that are cleared on an informal entry: Answer. and c) Articles not in c o m m e r c i a l quantity imported in passenger's b a g g a g e . a) Articles of c o m m e r c i a l nature intended for sale. This is a certificate issued by the Bureau of Quarantine to a vessel coming from a foreign port or place outside of the Philippines before such vessel is permitted to make entry. This happens w h e n import entries of articles covered by one bill of lading are m a d e simultaneously for both consumption and w a r e h o u s i n g . 877 . 1530. legation and other a g e n c i e s of foreign g o v e r n m e n t .000. mail or otherwise for personal use. provided the Principle of Reciprocity is recognized.00. W h a t importations are not subject to formal or informal entry? Answer.1529. Split entry defined: A n s w e r . provided the Principle of Reciprocity is applicable. Pratique defined: Answer. b) Personal and household effects. a) T h o s e intended for official use of foreign embassies.

r o w b o a t or other craft is required to keep away from aforesaid vessel at a distance of not less than 50 meters. In the case of Commissioner of Customs vs. Borres. They shall also include vessels engaged in deep sea fishing which carry their catch to a port to sell. E X C E P T as otherwise specially allowed. rowboat or other craft without the permission of c u s t o m s officials to loiter near or alongside aforesaid vessel and takes any p e r s o n aboard thereon or takes any person t h e r e f r o m . 625. c o n s u l . 1535. c u s t o m s official or other duly authorized persons. Coastwise trade defined: Answer. W h a t is the duty of vessels e n g a g e d in foreign trade u p o n arrival in the Philippines? Answer. 1533. Unauthorized tugboat. 1056 Phil. It is unlawful for any tugboat. 878 . r o w b o a t or other craft to loiter near or a l o n g side a vessel e n g a g e in foreign trade u p o n the arrival at a port of entry? A n s w e r .No person is allowed to board or leave a vessel e n g a g e d in foreign trade upon arrival at a port of entry without permission of the customs official in charge E X C E P T the pilot. 1534. What is the prohibition i m p o s e d against any tugboat. Vessels e n g a g e d in foreign trade are obliged to report and enter at Ports of Entry only. quarantine official. 3 The general rule on boarding or leaving a vessel is that . it was maintained that "coastwise trade" and "inter-island trade" are not only confined to carriage for hire of passengers and/or merchandise on board vessels between ports and places in the Philippines. O W a r vessel belonging to a foreign g o v e r n m e n t is not required to report and enters upon arrival in the Philippines pursuant to international comity unless they are also e n g a g e d in the transportation of articles in the w a y of trade.

879 . make a protest under oath and state the causes or circumstances of such necessity T h e requisite protest must be filed with the proper Collector of C u s t o m s of the port w h e r e the vessel has entered. No port charges are collected on vessels entering through stress of weather or due to other necessities. within 24 hours after arrival. Are vessels entering the country due to stress of weather or other necessities subject to port charges? Answer.1536. the master shall make report to the Collector of such fact of unlading w h o upon satisfactory proof may approve the s a m e . W h a t is the duty of the m a s t e r of vessel in case any part o f t h e c a r g o w a s u n l a d e n d u e t o n e c e s s i t y o r lost b y casualty? A n s w e r . W h a t is the duty of the master of vessel in case of entrance of vessel through necessity? A n s w e r . Within 24 hours after arrival. This a b o v e rule of disposal a d m i t s certain exception. T h e master shall. T h e overstaying imported articles on board any vessel m a y be u n l a d e n by c u s t o m s authorities and stored at the expense of the vessel after the expiration of the time for unloading thereof. 1539. b) Port congestion c) Strike d) Riots e) Civil c o m m o t i o n f) Failure of vessel's g e a r g) Bad w e a t h e r h) Other similar c a u s e s . 1538. such as - a) If t h e overstaying articles are reported for transshipment to another port. W h a t is t h e rule on overstaying imported articles on board any vessel? A n s w e r . 1537. and the unlading shall be considered lawful.

Remains. that the vessel will not be so e m p l o y e d . 1543. a) W h e n the vessel is of c o m m e r c i a l registry. citizens or property of any foreign state with w h o m the Philippines is at peace. Whereas. parts or equipment of Philippine vessel wrecked either in Philippine or foreign waters are N O T S U B J E C T to duty. What are considered "remains" of a w r e c k e d vessel? Answer. Appraised value defined: A n s w e r . d) W h e n it has on board the n u m b e r of m e n that renders it probable that s u c h vessel is intended to c o m m i t hostilities upon the subjects. in d o u b l e t h e value of the vessel and c a r g o . b) W h e n it is manifestly built for warlike purpose. c) W h e n it is about to depart f r o m the Philippines with a cargo consisting principally of a r m s and munitions. articles or equipment such as sails. chains anchors and others. 880 . taxes and other c u s t o m s charges. 1541. What is the duty of the Collector of C u s t o m over warlike vessel under the T C C ? A n s w e r .1540. 1542. It shall be his duty to detain said vessel until t h e decision of the President of the Philippines is obtained or until the o w n e r of said vessel gives a b o n d or security. to commit hostile acts u p o n any foreign state or people with w h o m the Philippines is at peace. A p p r a i s e d value for the p u r p o s e of determining the proper amount of the c a s h bond necessary for release of article under seizure includes the dutiable value of the article plus duties. D E R E L I C T S and A R T I C L E S S A L V A G E D from foreign vessels or aircraft picked up at sea or taken from wreck is prima facie dutiable and may be entered for consumption or warehousing. ropes. W h e n vessels are considered warlike under the customs law? Answer. The hull and rigging of the vessel including sea stores.

c o m m e r c i a l . like or similar articles as bought and sold or offered for sale freely in t h e usual wholesale quantities in the ordinary c o u r s e of trade in the principal markets of the exporting country on the date of exportation to the Philippines (excluding internal excise taxes to be remitted or rebated) or w h e r e there is none on such date. insurance. 881 . H o m e consumption value defined: A n s w e r . c) He shall determine the unit of quantity in which they are usually bought and sold and appraise in accordance with the Tariff and Customs Code. W h a t are the duties of the customs officer in the examination.1544. a) He shall determine that the packages designated for examination and their contents are in accordance with the declaration in the entry. invoice and pertinent documents. b) He shall thereafter make a return in such a manner to indicate whether the articles have been truly and correctly declared in the entry as regard their quantity. N o w . weight and tariff classification and not imported contrary to law. It is the price of the s a m e . It includes t h e invoice value of the article plus freight. 1545. e x p e n s e s and other necessary e x p e n s e s that is used as basis for the determination of dutiable value. This is the value of the imported g o o d s is based on the value declared in the consular. costs. This replaces t h e Home Consumption Value as basis of valuation of g o o d s . trade or sales invoice. the transactional value had replaced the home consumption value in the c o m p u t a t i o n of import taxes. It is the price actually paid or payable for the goods w h e n sold for export to the Philippines. measurement. 1546. classification and appraisal of imported articles? Answer. Transactional value defined: A n s w e r . t h e n on the price nearest to the date of exportation.

b) Within fifteen (15) d a y s after p a y m e n t of t h e duties. if the appraisal and/or classification are d e e m e d to be low. 882 .000. by all reasonable w a y s and means. He shall see to it that representative and sufficient samples of all kinds of articles that m a y be readily sampled are taken under proper receipts and retained for official purposes. upon request for reappraisal and/or classification a d d r e s s e d to the C o m m i s s i o n e r by the Collector.00 and imprisonment for not less then one (1) year nor more than ten (10) years and perpetual disqualification to hold public office. affidavit or statement of cost of production and shall report the appraisal and classification of said articles.000. to vote and to participate in any public election. ascertain the value or price of imported articles as required by law notwithstanding any invoice. upon statement of error as provided under the Tariff and Customs Code.00 nor more than Php 50. c) In case of a timely protest filed by the interested party with the Collector. (RA 7650. 3. 1993) In addition: 1. A Customs officer who fails to comply with the aforesaid duties . He shall describe all articles on the face of the entry in tariff and in such terms as will enable the Collector to pass upon the appraisal and classifications of said articles. 2. EXCEPT- Answer. He shall. material and values if return is desired longer than may be required for use in contested c a s e s . 1547. a) Within O N E (1) Y E A R after p a y m e n t of the duties. April 6.shall be punished with a fine not less than Php 5. An appraisal. E X C E P T s a m p l e s of articles identical in quality. classification or return as finally passed upon by the Collector m a y not be c h a n g e d or readjusted.

Is t h e C o l l e c t o r a u t h o r i z e d to sell i m p o r t e d articles w h o s e delivery is withheld for non-payment of customs duties? Answer. 1549.1548. No. M a y the import taxes be assessed for a lesser amount than the entered values? A n s w e r . Said cigarettes Become merchandise of prohibited importation. According to the S u p r e m e Court. the importation of which is contrary to law and may justify its forfeiture. Commissioner of Customs. T h e correct duty shall be a s s e s s e d on every imported article and the said a m o u n t shall not be less than the entered value unless by direction of the C o m m i s s i o n e r under the following cases a) W h e n t h e importer certifies at the time of entry that the entered value is higher by the dutiable value. W h a t is the effect of failure to pay internal revenue taxes on imported cigarettes? A n s w e r . c) T h a t the lower a s s e s s m e n t shall be allowed only w h e n the importer's contention is sustained by final decision and shall a p p e a r that the action of the importer w a s taken in good faith after due diligence and inquiry on his part. 24 SCRA) 1 5 5 1 . Import taxes and duties shall not be assessed in any c a s e u p o n an a m o u n t less than the entered value unless by direction of the C o m m i s s i o n e r . (Vierneza vs. where internal revenue on certain cigarettes has not been paid. 1550. W h a t is the rule as to a m o u n t of duty after the a s s e s s m e n t of imported articles is m a d e by the customs official? A n s w e r . The Collector may sell imported articles or any portion thereof whose delivery is withheld due to non-payment of customs 883 . b) T h a t the articles are so entered to meet increases made by the appraiser in similar c a s e s pending re-appraisement. it is clear that said cigarettes fall within the category of "merchandise of prohibited importation".

1552. d) W h e n e v e r any importer except the g o v e r n m e n t has an outstanding and d e m a n d a b l e account with the Bureau of C u s t o m s . Under what instances m a y the Collector validly withheld the delivery of imported articles? Answer. upon the surrender of the bill of lading. lighterage or general a v e r a g e u p o n any imported articles in his custody. EXCEPTION - Upon written order of carrier or agent of the importing vessel or aircraft in w h i c h case neither the g o v e r n m e n t nor the collector shall be held liable for any d a m a g e s that may arise out of wrongful delivery. to person w h o by the terms thereof appears to be the consignee or lawful holder of the bill and the Collector shall not be liable on account of any defect in the bill or irregularity in its negotiation. 884 . O The Collector shall be liable for d a m a g e s arising from the delivery or release of articles without the surrender from such person of the bill of lading covering said articles. unless delivery is authorized by the Commissioner. The Collector shall make delivery of shipment only. unless he has notice of the s a m e . T h e Collector m a y require the production of an exact copy of the bill of lading subsequent thereto. duties upon proper notice to the importer as in seizure cases to cover the outstanding account or liability of the importer. b) W h e n the c u s t o m s e x p e n s e s incurred by the c u s t o m s service for the handling or storage of articles and other necessary operations in connection therewith or incident to seizure and constituting as c h a r g e s on t h e articles h a v e b e e n paid. a) W h e n the Collector is duly notified in writing of a lien on freight. unless he is satisfied that the claim has been paid or s e c u r e d . 1553. W h a t are the legal r e q u i r e m e n t s for delivery or release of imported articles under the c u s t o m s law? A n s w e r . c) W h e n any fine or surcharge legally i m p o s e d on the articles is not paid or secured to be paid.

abatement shall be effected. abatement shall likewise be effected. A b a t e m e n t of duties shall not be allowed on account of d a m a g e incurred or deterioration suffered during the voyage of importation. fees or other c h a r g e s sufficient to safeguard the revenue.1554. a n d duties will be a s s e s s e d on the actual quantity imported as s h o w n by the return of w e i g h e r s . fees and other charges are paid. b) While the articles aforesaid remain in customs custody after unlading. gaugers. 885 . an irrevocable domestic letter of credit. bank g u a r a n t e e or a bond in an a m o u n t equal to 1 0 0 % of the duties. 1556. upon proper certification under penalties of perjury and/or falsification by the importer and production of satisfactory proof to article in the Philippines. W h a t are the rules on delivery of u n e x a m i n e d package? A n s w e r . In case of deficiency of any article as called for by the invoice. Under w h a t instances m a y the Collector abate or refund t h e a m o u n t o f d u t i e s a c c r u i n g o r p a i d u p o n a r t i c l e s lost or d e s t r o y e d after arrival of vessel in the Philippines? Answer. taxes. a) W h e n the articles are lost or destroyed while within the limits of any port of entry prior to unlading under customs supervision. W h a t is the rule on a b a t e m e n t of duties due to d a m a g e incurred during voyage of the vessel? A n s w e r . the Collector shall - a) Require a c a s h deposit. b) In c a s e of n o n .c o m p l i a n c e therewith. all the packages shall be held until t h e return is m a d e a n d duties. In case of missing package(s) as appearing in the manifest or bill of lading. measurers or appraisers. To effect the delivery of u n e x a m i n e d package. u p o n certification under penalty or perjury and/or falsification by the importer or consignee and upon production of proper proof to the Collector that the missing goods have not been imported into the Philippines. taxes. 1555.

judicial r e m e d y is normally availed of instead of administrative r e m e d y . instead of t h e judicial r e m e d y w h e n the goods to w h i c h the tax lien attaches. W h e n does the Bureau of C u s t o m s normally exercise administrative remedy to enforce tax collection? A n s w e r . regardless of ownership. 1559. is still in the custody or control of the G o v e r n m e n t . The Bureau of C u s t o m s normally avails itself of the administrative remedy of seizure. the r e m e d y of seizure and forfeiture may still be exercised by the BC e v e n if the g o o d s are no longer in custody. However. Abatement or refund of duties. W h e n t h e g o o d s are properly released and thus beyond the reach of tax lien. A) Extrajudicial or A d m i n i s t r a t i v e - 886 . s u c h as by enforcing the tax lien on the imported articles. bank guarantee or bond with formal entry in accordance with the T C C from the port of entry to any port in the Philippines. taxes and other charges are not allowed on articles lost or destroyed in bonded public or private warehouses outside customs z o n e . However. the carcass of any dead animal remaining on board a vessel or within customs custody shall be removed in the manner required by the Collector and at the expense of the importer. 1558. c) While the articles aforesaid are in transit under irrevocable domestic letter of credit. if the importation is prohibited or u n d e c l a r e d . R E M E D I E S O F T H E G O V E R N M E N T : A n s w e r . Abatement of duty on dead or injured animal shall be allowed upon certification under penalties of falsification or perjury and upon production of satisfactory proof to the Collector that the said animal that is the subject of importation dies or suffers injury before arrival or while in customs custody. therefore. In this c a s e . the g o v e r n m e n t can seek p a y m e n t of the tax liability through judicial action since the tax liability of the importer constitutes a personal debt to t h e g o v e r n m e n t . 1557. enforceable by action. W h e n does the Bureau of Customs normally exercise judicial remedy to enforce tax collection? A n s w e r .

T a x lien is distinct f r o m " e n f o r c e m e n t of tax lien". If t h e importation is not prohibited and there was a declaration in the import. Consequently. if there is a deficiency is only o n e year. even if m e a n t i m e it gets into the hands of an innocent purchaser for value. Available only w h e n t h e g o o d s are still within the custody or control of the B u r e a u . 887 . If the property falls into the hands of an innocent purchaser for value.the lien arose only b e c a u s e there w a s a mistake in the a s s e s s m e n t . unless there is fraud or protest. not b e c a u s e the g o o d s w e r e prohibited or t h e importation w a s irregular. the Bureau of Customs can no longer retake the property. Enforcement of Tax Lien: H o w effected? Bureau issues a warrant of distraint. the tax lien attaches to the thing a n d can be enforced against it. However. t h e n there is a final liquidation of t h e import entry. the lien can be enforced administratively only if the thing is still within the custody of the B u r e a u . seizure and forfeiture applies when the importation is prohibited or improperly made. Seizure and Forfeiture: Comparison: While enforcement (equivalent to distraint) applies only w h e n the importation is neither prohibited nor improperly made. The e x c e s s a n d deficiency both go to the taxpayer. In fact. W h e n t h e tax to an article is not paid. For e x a m p l e . t h e period to enforce the lien. e v e n he innocent purchaser still has all the g o o d s intact.1. the only w a y to enforce the tax lien is by going to court in an action for collection. T h e property is sold and the proceeds applied to the taxes. although it can go to court to enforce its tax lien. T h i s r e m e d y is u s e d w h e n the importation is not prohibited nor the import entry improperly m a d e . the Bureau cannot retake t h e m . O n c e it is no longer in the Bureau's custody. 2.

T h e Court of Tax A p p e a l s must wait for the a p p e a l . The net result of this remedy is that the government appropriates the ownership of the thing. Available even w h e n the g o o d s are no longer in the custody of the Bureau. however. . Formal hearing is set. It is. M o n e y if attempted to be brought outside of the Philippines contrary to law. c a n be forfeited. if the importation is legal. Available only w h e n the importation is unlawful or irregularly made. G o o d faith is immaterial as far as the seizure is c o n c e r n e d . While pending with the collector of c u s t o m s . the courts cannot interfere with the seizure and forfeiture. The Collector renders decision. 3.How effected? Collector issues warrant for the detention of the goods. Articles of prohibited importation. A n y m o n e y or thing of v a l u e offered as a bribe or for the purpose of exerting improper influence over a c u s t o m s official or e m p l o y e e . 4. Vessels or aircraft u s e d for s m u g g l i n g . 888 . 2. Examples of properties subject to forfeiture under the T C C : 1. even if the goods are still within the custom's custody and still in the hands of the importer. . Appeals . the goods cannot be seized or forfeited. T h u s . Available e v e n w h e n the g o o d s are already in the hands of an innocent purchaser w h o knew nothing of the illegality of the importation. 5. For example . but without deficiency and without prejudice to criminal action.importation is contraband. . A n y p a c k a g e or imported article w h i c h is found by the e x a m i n i n g official to contain any article not specified in the invoice or entry. Un-manifested c a r g o e s . and the importer is notified thereof. a valid defense in a criminal prosecution.

g o o d s that are not manifested or those that do not form part of the sea store's inventory or provisions can be the subject of forfeiture. Procedure in seizure cases of imported articles: Answer. Commissioner of Customs. T h e title of the c a s e is. 8/29/66. 7/30/61) Forfeiture proceedings are civil and not criminal in nature. Commr. Capulong vs. of Customs. T h e r e is an actual trial as in judicial proceedings (Pascual vs. 4/29/66. the property itself is the defendant. c) A formal hearing is conducted. T w o H o n d a A c c o r d Motor Vehicles. Republic of the Philippines vs. 89 SCRA 43) 1 5 6 1 . Commr. 4/25/62) N O T E : Every vessel from a foreign port must have on board a c o m p l e t e manifest of all her cargo. 5/14/66) b) In a seizure c a s e . of Customs. of Customs. Aseron. vs. 889 . (Pascual vs. (Lazaro vs. W h a t is the nature and purpose of seizure proceedings under the T C C ? Answer. et al. of Customs. a) T h e Collector issues a warrant for the detention or forfeiture of the imported articles. for instance. [Kurst Nilsen. Commr. In s u c h actions. of Customs. Cigare vs. T h e forfeiture may be enforced against the g o o d s independently of the criminal prosecution against the offender. b) T h e Collector gives the importer a written notice of the seizure and fixes a hearing date to give the importer an opportunity to be heard. Vierneza vs. a) P r o c e e d i n g s in seizure c a s e s are actions in rem directed against t h e property seized. Commr. The cargo manifest and e a c h copy thereof shall be a c c o m p a n i e d by a translation into the official language of the Philippines if originally written in another language. 5/14/66. the g o v e r n m e n t seeks t h e transfer of the title to the property f r o m the o w n e r to the state as a punishment to t h e property itself. T h u s . Commr. not against the owner thereof.1560.

(Commissioner vs. However. d) The Collector renders a declaration of forfeiture e) The importer aggrieved by the action of the Collector in any case of seizure may appeal to the Commissioner for review within fifteen (15) days from written notice of the collector's decision. 1562. is a requirement of d u e process. Under w h a t g r o u n d m a y the Collector of C u s t o m s issue Warrant of Seizure and Detention of articles under the TCC? Answer. What is the duty of the Collector of Customs upon m a k i n g a seizure of imported articles? A n s w e r . CTA & Andrulis) Notice to taxpayer if there are proceedings for seizure. W h e n goods are seized and the seizure is not protested. H o w e v e r . f) The importer aggrieved by the action or ruling of the Commissioner in any case of seizure may appeal to the CTA. T h e existence of probable c a u s e is required to warrant the institution of forfeiture proceedings. Campos Rueda) 1564. Issuance of the W a r r a n t of Seizure and Detention must be based upon probable c a u s e that the articles in question were imported or attempted to be exported contrary to the Tariff and Customs Law. the burden of proof shifts to the importer to s h o w that he is excepted from the violation. Proof required in seizure and forfeiture of imported goods under the T C C : Answer. g) The imported may proceed on appeal to the SC as in case may be. (Acting Commr. The Collector of C u s t o m s shall issue a W a r r a n t for the detention of the property. vs. forfeiture etc. o n c e this is established. prima facie evidence is required to effect the seizure. 1563. there is no need for prima facie e v i d e n c e . w h e n t h e seizure is contested. probable cause is enough. 890 .

H o w is notification to k n o w n o w n e r of imported articles effected in case of seizure? Answer. b) T h e r e is no prima facie e v i d e n c e of fraud in the importation of the article. and d) T h e release under c a s h b o n d has been approved by the Commissioner of Customs. a) By posting the notice for 15 days in the public corridor of the customhouse of the district in which the seizure was made. The o w n e r or importer of the property m a y ask for the release of his property under seizure provided the property is going to be u s e d for legitimate purpose and u p o n filing of sufficient cash bond in an a m o u n t to be fixed by the Collector of C u s t o m s subject to the following conditions - a) T h e a m o u n t of the cash shall not in any case be less than the appraised value of t h e article plus fines. e x p e n s e s and costs that m a y b e a d j u d g e d in the case. It shall include not only any agent in fact of the owner of t h e seized property but also any person having responsible possession of the property at the time of seizure. 1568. consignee or their agents in reference to the delinquency that w a s the occasion of such seizure. a ) Importer b) Consignee c) A n y person holding the bill of lading 1566. W h o are the o w n e r s of articles in seizure proceedings? Answer. By giving written notice of the seizure and opportunity to be heard to the importer. 891 . W h o are d e e m e d agents in seizure proceedings? A n s w e r . if the owner or his agent in fact is u n k n o w n or cgnnot be reached. c) T h e importation of the article is not prohibited by law. H o w is service of notice to u n k n o w n owner of goods effected in seizure cases? Answer. 1567. 1565.

b) There is no fraud in the importation or exportation of the article in question. If after fifteen (15) days the unknown owner fails to appear after notification of seizure the Collector shall declare the property forfeited to the government to be sold at auction in accordance with law. T h e wrongful making by the owner. exporter or consignee of any declaration or affidavit. 1571. importer or c o n s i g n e e or his agent shall offer to pay the fine i m p o s e d u p o n the property. c) By such other means as the Commissioner of Customs shall consider desirable. c) T h e owner. 1569. b) By publication in a newspaper. 1570. importer. or b) By redemption of forfeited property. W h a t are the requisites for the settlement of seizure case through the payment of fine: Answer. Requisites of forfeiture of g o o d s u n d e r the Tariff C o d e : A n s w e r . exporter. e) T h e property under seizure is not absolutely prohibited nor the release thereof is not contrary to law. H o w is seizure case in c u s t o m s law settled? Answer. or t h e wrongful making or 892 . a) By payment of fine. a n d d) T h e fine imposable must be in an a m o u n t not less than 2 0 % or more than 8 0 % of the landed cost of the imported seized article or the F O B value of t h e seized article for export. and f) T h e settlement must be subject to the approval of the C o m m i s s i o n e r of C u s t o m s . a) T h e seizure case is still pending adjudication with the Collector of C u s t o m s .

a) In all proceedings t a k e n for the seizure and/or forfeiture of any vehicle. It must be actual. affidavit. T h e fraud must be proved to justify forfeiture. The presumption is that the assessment if correct. 59 SCRA 110) 1573. vs. a m o u n t i n g to intention of w r o n g d o i n g with the clear purpose of avoiding the tax. the burden of proof lies upon the claimant. W h o has the b u r d e n of proof in seizure and/or forfeiture cases? Answer. W h a t is the degree of burden of proof in protest cases? Answer. delivery by t h e s a m e person of any invoice.. 647) 893 . CTA. T h e C o m m i s s i o n e r of C u s t o m s w h e n sitting in forfeiture proceedings constitutes a tribunal u p o n w h i c h the law confers jurisdiction to d e t e r m i n e all questions touching the forfeiture and further disposition of t h e illegally imported merchandise. invoice. 26 Phil. b) It is required. and an intention on the part of the importer or consignee to evade the p a y m e n t of the duties d u e . (Auyong Hian vs. (Behn Meyer & Co. In protest cases. T h e falsity of s u c h declaration. letter or paper. W h a t is the extent of the jurisdiction of the C o m m i s s i o n e r of C u s t o m s in forfeiture proceedings? A n s w e r . 2001) 1572. aircraft.all touching on the importation or exportation of merchandise. October 2. {Republic vs. the protestant has the burden of proving the correctness of his contention for the issue is not whether the Collector w a s w r o n g but whether the importer is right. beast or articles under the provisions of the tariff and c u s t o m s laws. v e s s e l . Insular Collector of Customs. however. that probable cause shall be first shown for the institution of such proceedings and the seizure and/or forfeiture w a s m a d e under the circumstances and in the manner prescribed by the Tariff and Customs Code. letter or paper . CTA. Ltd. 1574.

where the taxpayer disagrees with the ruling of the Collector. Acting Commissioner . the action taken by the Collector shall be final and conclusive against the taxpayer except as to manifest error. Distinguish b e t w e e n protest a n d forfeiture of imported goods: A n s w e r . the taxpayer can file a protest within 15 days from his payment. it w a s held that: a) Commissioner vs. t h e Collector should forward the records to the C o m m i s s i o n e r . absolute or qualified. appeal the s a m e to the Commissioner by simply notifying the Collector of his desire to have the matter reviewed by the Commissioner.m e r c h a n d i s e . If not thus protested. In protest cases involving the legality or correctness of customs duties. An aggrieved taxpayer may. b) Leuterio vs. After hearing. unless there be unmistakable proof of honest mistake. if known. Cases reiterating that the importation of g o o d s deemed smuggled are subject to forfeiture by the customs officials: A n s w e r . within 15 days from notice thereof. or illegal importations including the carrying vessel or aircraft.dutiable g o o d s of commercial quantity m a d e to pass under the cover of p a s s e n g e r s ' baggage or otherwise u n m a n i f e s t e d . shall give the o w n e r a written notice thereof. 894 . if u n k n o w n . N O T E : The release of the property under seizure a n d cash bond does not release the o w n e r or the importer of any criminal liability arising out of the importation or exportation of his shipment. including foreign dollars or other foreign currency that have c e a s e d to be legal tender. c) Bastida vs. not d e c l a r e d . In seizure cases involving the forfeiture of prohibited. imported articles that are undervalued. Castro . a n d anything that m a y be the subject of importation or exportation.1575. or within 15 days from the date the importer is entitled to refund if payment is rendered erroneous or illegal by events occurring after the payment. giving him an opportunity to be heard. the Collector shall make his written decision. In the following c a s e s . Commissioner . 1576. the Collector. forthwith. or cause its posting or publication.

Rosales. and that the crew w a s forced at gunpoint to load t h e m . however. Section 2 5 3 0 of T C C . c) W h e r e the release of the property is contrary to law. C. of Customs. CTA and Pascual. the fact that the o w n e r of the vessel had no actual k n o w l e d g e that his vessel w a s being illegally used to transport dutiable items d o e s not render the vessel i m m u n e from forfeiture. (Transglobe Int'l. 895 . Since forfeiture proceedings are in r e m and are thus directed against the res.1577. citing par.. Rule on forfeiture of vessels used in unlawful importation: A n s w e r . a motorboat o w n e d by Pascual w a s a p p r e h e n d e d by the navy off Cavite loaded with blue seal cigarettes. W h e n is redemption of forfeited property N O T allowed: Answer. Forfeiture proceedings w e r e instituted. t h e SC did not hold for the forfeiture of the vessel after being found carrying unmanifested cargo on e x a m i n a t i o n . CA and Commr. 1578. (a) and (b).A. Pascual c o n t e n d e d that he had no knowledge of the cargo. In Commissioner vs. vs. January 25. Inc. or (2) the vessel w a s used illegally to import g o o d s . 1999) After settlement of a seizure or forfeiture case the property in question shall be forthwith released and all liabilities that might attach to the property by virtue of the offense including liability incurred under any cash deposit or bond shall be deemed released. a) W h e n there is fraud b) W h e r e the importation is absolutely prohibited. T h e SC nevertheless allowed the forfeiture. since t h e C o d e refers to unmanifested articles f o u n d on vessels or aircraft e n g a g e d in coastwise trade. it w a s e v e n held that the articles do not even have to be i m p o r t e d . In Sotoyama vs. Forfeiture only holds if (1) the vessel came in other than through a port of entry. In Rigor vs.

since the proceeding in the fiscal's office in one in personam while the forfeiture proceeding is one in rem directed against the thing itself. d) Undervaluation. Is there double j e o p a r d y in the civil r e m e d y of seizure and forfeiture? Answer. (Rovero vs. 229) 1580. the importer can still be prosecuted without violating the constitutional prohibition against double jeopardy.Seizure and forfeiture is a civil. Likewise. Amparo. 91 Phil. 1579. • Acting Commissioner vs. misdeclaration or misclassification. 896 . b) Unauthorized withdrawal of imported articles from bonded warehouses. Thus. W h a t a r e t h e civil p e n a l t i e s u n d e r t h e Tariff a n d C u s t o m s Code? Answer. Surcharge is imposable w h e n there is: a) Failure to pay liquidated charges. not a criminal remedy. Neither the C o m m i s s i o n e r of C u s t o m s nor the Secretary of Finance may remit fines or forfeitures. c) Failure to supply the consular invoice w h e n required. CTA and Andrulis .It was held that the acquittal from the criminal charge does not operate a s res judicata in a seizure o r forfeiture proceeding. if the importer wins and recovers what w a s forfeited. even if the property is subjected to forfeiture. Fine is imposable under the following c i r c u m s t a n c e s : a) A n y dutiable article is found in the b a g g a g e of an arriving passenger w h i c h is not included in the baggage declaration. Hope . he may still be prosecuted. As held the following cases: • People vs. e) Failure or refusal to give e v i d e n c e or submit d o c u m e n t s for examination.

cases. produce or manufactured in excess of the amount necessary for sea 897 . being of less than 30 tons capacity. e) Failure to supply t h e requisite manifest. c) A n y m o n e y or thing of value offered as a bribe or for the purpose of exerting improper influence over a Customs official or e m p l o y e e . trunks. shall be u s e d in the importation of articles into any Philippine port or place except into a port of the Sulu sea w h e r e importation in s u c h vessel m a y be authorized by the C o m m i s s i o n e r . g) Any vessel engaging in the coastwise trade which shall have on board any article of foreign growth. if s u c h is required. including c a r g o . and any vessel w h i c h . w h e n the duties assessed by the Collector thereon are not paid or secured forthwith upon assessment of the s a m e . envelopes and other containers of whatever character used as receptacles or as devices to conceal any article which is itself subject to forfeiture under the customs and tariff laws or which is designed as to conceal the character of the article. d) A n y article w h i c h is fraudulently concealed in or removed f r o m any public or private w a r e h o u s e under Customs supervision. c) Unlawful boarding or leaving of vessel or aircraft. d) Unloading of cargo before arrival at port of destination or at improper time or place after arrival. b) Unmanifested articles found on any vessel or aircraft. f) Boxes.b) B r e a c h of b o n d . Forfeiture is imposable under t h e following instances: a) A n y v e s s e l or aircraft. e) Sea stores or aircraft stores adjudged by the Collector to be excessive. which shall be used unlawfully in t h e importation or exportation of articles into or f r o m any Philippine port or place except a port of entry. with the approval of the department head.

3. together with the equipage and a p p u r t e n a n c e s . provided the Collector is of the opinion that the misdeclaration w a s c a u s e d with fraudulent intent. in the opinion of the Collector. if a manifest therefor is required. has no k n o w l e d g e of the unlawful act. i) Any article of prohibited importation or exportation the importation of exportation of which is effected or attempted contrary to law. I) A n y beast actually being used for the c o n v e y a n c e of articles subject to forfeiture under t h e c u s t o m s and tariff laws. h) Any vessel or aircraft into which shall be transferred cargo unladen contrary to law prior to the arrival of the importing vessel or aircraft at her port of destination. importer. w h e t h e r the act w a s c o n s u m m a t e d . j) Unmanifested articles found on any vessel or aircraft. but t h e forfeiture shall not be effected if it is established that t h e o w n e r of the m e a n s of c o n v e y a n c e used as aforesaid. frustrated or a t t e m p t e d . stores without such articles having been properly entered or legally imported. On the strength of a false declaration or affidavit executed by the owner. and all other articles w h i c h . including the beast. with the e q u i p a g e or trappings. Without going t h r o u g h a c u s t o m h o u s e . k) Any package of imported article w h i c h is found by the examining official to contain article not specified in the invoice or entry. including all other packages purportedly containing imported articles similar to those declared in the invoice or entry to be the contents of t h e misdeclared package. exporter or 898 . or his agent in charge thereof at the time. m) A n y article sought to be imported or e x p o r t e d : 1. t e a m or other motive power drawing or propelling the s a m e . are or were intended to be used as instrument in the importation of the former. have been u s e d . By failure to m e n t i o n to a c u s t o m s officials articles found in the b a g g a g e of a person arriving from abroad. 2. and any vehicle similarly used.

legality or correctness of the assessment of the duties.00). T h e taxpayer has both administrative and judicial remedies available. 1581. only in the N I R C is there recovery of taxes t h r o u g h criminal suit. taxes and other charges w h e r e the aggregate a m o u n t thereof is less than ten pesos (Php 10. but both are intertwined. a n d 5. On the strength of a false invoice or other d o c u m e n t executed by the owner. exporter or c o n s i g n e e concerning the importation or exportation of s u c h article. the b u r d e n of proof lies on o n e w h o would take exceptions thereto. 4. but o n c e thus t a k e n . A Collector of C u s t o m s has discretionary authority to remit t h e a s s e s s m e n t and collection of c u s t o m s duties. Is J U D I C I A L R E M E D Y for tax collection available under the T C C ? A n s w e r . Criminal action is not available. T h r o u g h any other fraudulent practice or device by m e a n s of w h i c h s u c h article w a s entered through the c u s t o m h o u s e to the prejudice of the Government. 1583. 1582. 899 . T h e law requires the existence of probable cause to warrant the institution of forfeiture proceedings. May the Collector of Customs exercise the power of remission of custom duties? A n s w e r . importer. Protest Ground . and he m a y d i s p e n s e with the seizure of articles of less then ten pesos in value except in cases of prohibited importations or habitual or intentional violation of tariff and customs laws. c o n s i g n e e concerning the importation or exportation of s u c h articles. R E M E D I E S OF T H E T A X P A Y E R : Answer. Only civil action for collection is available.

Elements of a valid protest - a. and then protest the a s s e s s m e n t within 15 days from payment. and surcharges or fines incident thereto. (Allied Brokerage Corp. and then m a k e s a decision. T h e protest must be in writing. Single adjustment . Commissioner of Customs. t h e decision of the Collector shall be final and conclusive against him except as to matters correctable for manifest error in the manner prescribed by law. vs. It must be in writing. but any number of issues may be raised in a protest with reference to the particular item(s) constituting the subject matter of the protest. decision or order of the Collector of Customs in question together with the reasons therefor. 3 If no protest is m a d e by the importer. It must set forth the objection(s) to the ruling.refers to the entire content of one liquidation. including all duties. or else the s a m e shall be deemed waived. Scope of protest in Customs Law - The protest must be limited to the subject matter of a single adjustment or other independent transaction. b. 900 . d. c. Procedure . f e e s . O No protest shall be considered unless p a y m e n t of the a m o u n t due after final liquidation has first b e e n m a d e . It must be filed at the time of payment or 15 days thereafter. The corresponding docket fee must be paid. he must nevertheless pay the tax. setting forth all the objections to the ruling or decision in question together with the reasons relied u p o n .If the t a x p a y e r disagrees with the assessment made by the collector. 40 SCRA 555) 3 T h e collector t h e n c o n d u c t s a hearing de parte.

In this case. The decision t h e n does not b e c o m e final. and the collector's own finding as to the applicable rate of duty. T h e decision of the collector cannot. N O T E : A tax protest case. but this is risky because the p e n d e n c y of s u c h motion for reconsideration does not s u s p e n d t h e running of t h e prescriptive period to appeal. 3 If the decision of the collector favors the taxpayer. W h a t is the r e m e d y of a taxpayer aggrieved by the decision or ruling if the Collector in case of seizure? A n s w e r . The records of the case are automatically elevated w h e n a p p e a l is t a k e n . based on official reports as to the quantity. 1584. the taxpayer must appeal the s a m e to the C o m m i s s i o n e r . A liquidation id the final computation and ascertainment by the collector of the duties on imported merchandise. but also b e c a u s e of the doctrine of "exhaustion of administrative r e m e d y " . within fifteen (15) d a y s f r o m receipt of notice. otherwise it b e c o m e s final. provided the motion is not pro forma (that is. 3 If the decision favors the g o v e r n m e n t . O Only the decision of the C o m m i s s i o n e r can be raised to the C T A on petition for review. the decision favors the g o v e r n m e n t . again there is an automatic review by the Secretary of Finance. and so the decision never b e c o m e s final. If. If favorable to t h e taxpayer. not only b e c a u s e it is technically not a "decision" yet. he may file a motion for reconsideration with the Secretary of Finance. the taxpayer must appeal the s a m e . there is an a u t o m a t i c review by the Commissioner. character and value thereof. O T h e C o m m i s s i o n e r on review m a k e s his decision. on the other h a n d . the motion raises n e w issues). Within 15 days after notification in writing by the Collector of his action or decision on the seizure case the aggrieved person may: 901 . otherwise it will b e c o m e final. under the T C C involves a protest of the liquidation of import entries. T h e better r e m e d y then is for the taxpayer to appeal the decision of the C o m m i s s i o n e r to the Court of Tax Appeal within 30 d a y s f r o m receipt of the decision adversely affecting the interest of the taxpayer.

b) not less than o n e p a c k a g e . packages w e r e missing. It also refers to t h e refund of duties on imported fuel used for propulsion of vessels. 902 . a b a n d o n m e n t m a y be m a d e . d e a d or injured animals. C) R e f u n d D) A b a t e m e n t . B) Seizure cases: Claim and Dispute W h e n the goods are seized. articles w e r e lost or destroyed after arrival. d a m a g e w a s incurred during the v o y a g e . In either case. 2. but w e r e re- e x p o r t e d . Or. because of any of the following: 1. 4. E) D r a w b a c k . 5. E x p r e s s . A) A p p e a l the same to the Commissioner of Customs within 15 days from receipt of said adverse decision. provided: a) portion a b a n d o n e d is at least 1 0 % of total invoice. the collector decides. the taxpayer can dispute the forfeiture. the taxpayer can claim the seized goods by paying the fine. (Sees. this can only be availed of if the thing is not prohibited.imported g o o d s w e r e correct. 1701-1708) This refers to duties or taxes paid back or remitted by the G o v e r n m e n t on the exportation of that on w h i c h they w e r e levied.Within ten (10) d a y s f r o m the filing of import entry. a hearing is set. However. The same procedure for appeal as in protest cases applies. contents of the p a c k a g e w e r e deficient. F) A b a n d o n m e n t 1.W h a t w a s declared and paid w a s not what was imported. 3.

H o w effected? a) W h e n the owner. 3503 of T C C . consignee or interested party. the collector must declare the a b a n d o n m e n t . importer. b) W h e n the owner. 903 . However. from the date of posting of notice to claim such importation. 2. consignee or interested party after due notice. Elements of express abandonment: a) It m u s t be in writing. after having filed an entry. giving notice to the taxpayer. fails to file an entry within 30 days.It occurs w h e n the owner. for the g o o d s to be sold by the government. fails to claim his importation within fifteen (15) days that is not also extendible. which shall not be extendible from the date of discharge of the last package from the vessel or aircraft. c) W h e n the owner or importer fails or refuses to mark his imported article w h e n required by law within a period of 30 days after due notice thereof. b) It must be a d d r e s s e d to the Collector of C u s t o m s concerned.If the import entry is not submitted within fifteen (15) days. ( C M O 15-94) H o w effected? . c) g o o d s are placed within the area. c) It m u s t expressly signify the intention of the owner importer or c o n s i g n e e to a b a n d o n his importation or s h i p m e n t . d) It must be subscribed and s w o r n to before a notary public or a n y C u s t o m s officer authorized to administer oath under Sec. Implied . c o n s i g n e e of the imported article expressly signifies in writing to the Collector of C u s t o m s his intention to abandon.

R e m e d y o f d e l i n q u e n t i m p o r t e d t o p r e v e n t t h e s a l e o f his unpaid and undelivered shipment: Answer. unless the tax is first paid. the C T A cannot issue an injunction. taxes and other c h a r g e s and c o m p l i a n c e with the requirements of law. but it can only do so if the c a s e is within its jurisdiction. 1588. importer. 2301 of the T C C states that seized articles may not be released under bond if there is prima facie evidence of fraud in their importation. T h u s . consignee or other interested party shall be d e e m e d to have renounced all his interest and property rights over the a b a n d o n e d imported articles. NO Injunction Rule defined: Answer. b) The abandoned articles shall ipso facto be d e e m e d the property of the government and shall be disposed of in accordance with the provisions of the Tariff and C u s t o m s C o d e . settle his obligations with t h e B u r e a u of Customs. 904 . c) It does not relieve the o w n e r or importer from any criminal liability that m a y arise from any violation of law committed in connection with the importation of the imported articles. However. in which c a s e the aforesaid articles m a y be delivered u p o n proper payment of duties. 1 5 8 7 . T h e delinquent importer m a y prior t o the sale of the imported article. a) The owner. protested and d e c i d e d . 1586. The only court that c a n grant injunctions against the Commissioner is the C T A (by special provision of law). No court can interfere in the exercise o f the exclusive jurisdiction of the B u r e a u of C u s t o m s to enforce t h e tax liabilities under the T C C . Sec. a n d t h e n a p p e a l e d to the Commissioner. W h a t is the effect of a b a n d o n m e n t of articles subject to tax? Answer. M a y an importer submit bond in support of the release of his g o o d s f r o m t h e c u s t o m s c u s t o d y ? Answer. 1585. Yes.

Hearing within fifteen (15) d a y s from receipt of the duties under protest before the Collector.T h e importer or o w n e r m a y secure the release of the property u p o n the filing of a sufficient bond in an a m o u n t to be fixed by the Collector conditioned for the p a y m e n t of t h e appraised v a l u e of the merchandise and/or fine. a) If Collector's decision is adverse to the taxpayer-importer he m a y appeal to the C o m m i s s i o n e r of Customs within fifteen (15) days from receipt of the former's adverse decision. b) If the Commissioner's decision is adverse to taxpayer's interest he may appeal to the C T A within thirty (30) days. c) Appeal to the Supreme Court by certiorari within fifteen (15) days from receipt of CTA's adverse decision. articles of prohibited importation cannot be released under b o n d . the domestic market v a l u e (not appraised value) of t h e property. if the property is subject to forfeiture. 1589. R e m e d y of an importer during the pendency of seizure proceedings: Answer. a) Filing of bond . c) Settlement of c a s e . T h e Collector shall decide the issue after termination of t h e hearing within thirty (30) days. no injunction at all can be issued against the Collector or C o m m i s s i o n e r for the e n f o r c e m e n t of payment or seizure. H o w e v e r . S U M M A R Y O F T A X P A Y E R ' S C U S T O M S PROTEST A party adversely affected by the imposition of customs duties m a y file a written protest on his alleged liabilities with the Collector of C u s t o m s within fifteen (15) days a f t e r p a v i n g the subject a m o u n t of duties. e x p e n s e s a n d cost that m a y be a d j u d g e d in the case. O If the decision of the Collector is adverse to the Government: 905 . 1590.He m a y w a i v e forfeiture proceedings by a settlement of the c a s e u p o n p a y m e n t of the proper fine or. In effect.

the decision shall b e c o m e final and executory. d) Then to the SC within 15 d a y s from receipt of the CTA's decision. c) If the decision of the Commissioner or the Secretary of Finance reversed the Collector's decision resulting now to an adverse decision against the taxpayer. b) Should the Commissioner sustain the Collector's decision. ^ The Collector acting within his jurisdiction shall cause the imported g o o d s to be entered at the c u s t o m s w a r e h o u s e . N O T E : if the Commissioner or the Secretary of Finance fails to resolve the case within 30 days from receipt of the record of the case. Importer pays and protests. The Collector shall assess. W h e n is there automatic review of tax cases? A n s w e r .00.000.d u m p i n g duties a n d anti-countervailing during. T h a t a d e c i s i o n is a d v e r s e to the g o v e r n m e n t is r e c k o n e d f r o m the original a s s e s s m e n t . b) w h e n the c o m m i s s i o n e r ' s decision in the a s s e s s m e n t case is adverse to the g o v e r n m e n t .000. After 906 . liquidate and collect the duties thereon or he may detain the goods if the importer does not pay the duties. A u t o m a t i c review by the Secretary of Finance arises only in the following c a s e s : a) T h o s e involving a n t i . the Secretary of Finance automatically reviews such decision. claiming the tax is only Php 10. Illustration: T h e examiner a s s e s s e s the tax at P h p 50. a) An automatic review is taken by the Commissioner of Customs.00. he m a y appeal to the C T A within 30 days from receipt thereof. 1591.

1593. January 30. So the reckoning point is the original assessment. 1971) T h e regular courts issuing a warrant to search a dwelling house have no authority to take custody of goods subsequently seized. T h e regular (RTC) courts are devoid of jurisdiction to interfere in seizure proceedings despite allegation of illegality for such exclusive authority is vested in the Bureau of Customs. d) T h o s e involving other matters arising under the Customs Law or other law or part of law administered by the Bureau of Customs. it is d e e m e d a d v e r s e to the government. but also to the g o v e r n m e n t b e c a u s e there w a s a diminution of the a m o u n t .000. May 31. a) T h o s e involving liability for c u s t o m s duties. Once it is r e d u c e d . al.00. 1592. GOVERNMENT IMPORTATIONS ARE EXEMPT ONLY WHEN STORED IN GOVERNMENT WAREHOUSES. This is adverse not only to the importer. et. forfeitures or other penalties imposed in relation thereto. c) T h o s e involving fines. fees or other money charges. the collector reconsiders and reduces the assessment to Php 20. as the s a m e would be in violation of Customs laws. 1972) 1594. W h a t decisions of the Commissioner of Customs are appealable to the Court of Tax Appeals? Answer. 907 . Torres. W h a t is the role of the regular courts in matters of cases involving imported goods? A n s w e r . T H E R E P U B L I C OF T H E PHILIPPINES IS NOT E X E M P T FROM S T O R A G E CHARGES ON IMPORTATIONS FOR ITS O W N U S E A N D P U R P O S E S IF S T O R E D IN A PRIVATE WAREHOUSE. (Ponce Enrile vs. b) T h o s e involving seizure. or release of property affected. detention. hearing. (Collector of Customs vs. Vinuya. even if the collector a c k n o w l e d g e s his mistake.

Upon receipt of the C C . 1957. C o m p r o m i s e proposal of c u s t o m s duties: A n s w e r . If as a result of the refund of customs duties there would necessarily result a corresponding refund of internal revenue taxes on the s a m e importation. 1596. limited to cases w h e r e potestative authority is specifically granted such as in the remission of duties by the Collector subject to the approval of the C o m m i s s i o n e r of Customs and the Secretary of Finance. All claims for refund of duties shall be made in writing and filed with the Collector to w h o m such duties w e r e paid. However. w h e t h e r subject to duty or not. 1597. T h e power to c o m p r o m i s e with respect to c u s t o m s duties is. 1595. with advice to the CIR.A. in R. A. shall be entered through a c u s t o m h o u s e at a port of entry. the Collector shall verify the claim and if found to be correct shall certify the same to the Commissioner of Customs with proper recommendation together with all the necessary papers and documents. 908 . Prior to the effectivity of R. 1937 on July 1. refunded or tax credited in favor of the importer. 1937 said section w a s eliminated. May the C o m m i s s i o n e r of C u s t o m s c o m p r o m i s e criminal liability o f a n o f f e n d e r i n c a s e o f u n l a w f u l i m p o r t a t i o n ? A n s w e r . How is a claim for refund of duties a n d taxes effected under the Tariff a n d C u s t o m s C o d e ? A n s w e r . Thereupon. This clearly s h o w s the intent of C o n g r e s s thereafter not to allow c o m p r o m i s e s of the offender's criminal liability in said cases. 15 SCRA 402) REINTERATIONS ON TARIFF and CUSTOMS LAW IN GENERAL: 3 All articles imported into the Philippines. (People vs. the applicable law (Section 1369 of the revised Administrative Code) contained a provision allowing the C o m m i s s i o n e r of C u s t o m s to c o m p r o m i s e the criminal liability of the offender in c a s e s of unlawful importation. the Collector shall likewise certify the same to the Commissioner w h o shall cause the excess taxes to be paid. he shall cause the claim to be paid if found correct. at best. Desiderio.

By the importer. shall be subject to a f o r m a l or informal entry. mail or otherwise.00 or less. 3 T h e prescriptive period of offenses punishable under the Tariff and C u s t o m s C o d e is t w e l v e (12) years for offenses which is penalized with i m p r i s o n m e n t for eight (8) years and one (1) day to twelve (12) years. barter or hire. fee and charge. being holder of the bill of lading. 2. and 2. 3 All imported articles except importation admitted free of duty. 3 T h e G o v e r n m e n t does not a s s u m e any legal responsibility in respect to the safekeeping of articles stored in any customs or bonded warehouse. ad v a l o r e m . T h e surreptitious entry of the vessel into Philippine waters. for personal use.000. the dutiable v a l u e of w h i c h is Php 2. so that there is no proper clearance for the vessel to entry our w a t e r s . Articles of c o m m e r c i a l nature intended for sale. not in commercial quantity imported in passenger's b a g g a g e . or 909 . shall be cleared on an informal entry whenever duty. 3 T h e Tariff a n d C u s t o m s C o d e provides for percentage on imported articles. Import entry d e f i n e d : Is the declaration by the proper person of the facts and data required by law for purposes of enabling the g o v e r n m e n t to levy and charge the import duty. Period within w h i c h to deposit imported articles in the customhouse: Imported articles must be entered in the customhouse at the port of entry within seven (7) days from the date of discharge of the last package from the vessel either - 1. tax. and personal and household effects or articles. By a customs broker acting under authority from a holder of the bill of lading. tax or other charges are collectible. The absence of cargo manifest for the subject importations.3 Factors that indicate prima facie fraudulent importation: 1.

The 7-day period may be extended by the Collector of the port for not more than seven (7) days. By a person duly empowered to act as agent or attorney-in-fact for such holder. 3 T h e V A T and excise tax i m p o s e d under t h e N I R C . if importation is not prohibited. T h e taxpayer m a y recover the goods. 3 W h e r e the importation is prohibited. 60 SCRA 327) 3 In all proceedings taken for seizure and/or forfeiture of any vehicle. if g o o d s are forfeited there is no deficiency j u d g m e n t . by paying the fine or the value of the g o o d s if forfeited. vs. w h e n due on an importation constitute a tax lien on the goods S U P E R I O R to all c h a r g e s or liens t h e r e o n irrespective of the possessor thereof. (Ramon Ramos. 3 The Principle of Primacy of Exhaustion of Administrative Remedies shall be followed in cases involving questions cognizable under the T C C . Jr. aircraft. COMPARATIVE SUMMARY OF DEVICES AND REMEDIES UNDER THE NIRC A N D THE T C C TO E N F O R C E TAX COLLECTION: (Government devices & remedies in general) /• WAYS OF STRENGTHENING THE EFFECTIVE TAX ENFORCEMENT 910 . the r e m e d y of seizure and forfeiture may be exercised by the Bureau of C u s t o m s even w h e r e the g o o d s are not or no longer in t h e C u s t o m s custody and in possession or control of t h e importer or his transferee whether in g o o d faith or in bad faith. beast or articles under the provisions of the tariff and customs laws. 3. 3 Unlike in the enforcement of the tax lien. Pamaran. the burden of proof shall lie upon the claimant. 3 Goods in Customs custody pending payment of customs duties are beyond the reach of attachment. 1598.

signs to be exhibited by business e n g a g e d in liquor or tobacco production or sale //. cargo | invoices and receipts. s o u n d tax s y s t e m . 91 1 . c) Information gathering and c) Tariff C o m m i s s i o n and Philippine preparation of tax registers. HOW IS DISCOVERY AND DETECTION METHODS UNDER THE NIRC AND TCC EFFECTED? | NIRC TCC | a) Inspection and investigation of 1 arriving and departing vessels and a) Examination of accounting books aircraft. and f) Effective B C . publicity a) Educational c a m p a i g n . and their "entry" and and records. C o n s u l a r Officer's researches and continuous data gathering d) Registration of business name d) Registration of vessels and with the DTI a n d with BIR. T C . publicity and tax counseling. accreditation and tax agents certification of Customs Brokers. g o v e r n m e n t offices. e) Required issuance of sales e) Required commercial and invoices and receipts a n d keeping of consular invoices or certification by accounting books. aircraft in coastwise and foreign trade. f) Effective BIR organization. Philippine consular officials. U n d e r the N I R C a n d the BIR: U n d e r the T C C . requiring issuance of "clearance" before leaving. h) Exhibition of certificate of p a y m e n t of taxes at places of business. proper coordination with efficient and honest personnel. other g o v e r n m e n t offices lending proper coordination with other indirect support to tax collection. BC & T C : a) Educational c a m p a i g n . PCG & PPA selection of efficient and honest organization and manning them with personnel. and tax counseling b) O b s e r v a n c e of t h e c a n n o n s of a b) O b s e r v a n c e of the canons of a sound tax s y s t e m . g) Accreditation and registration of g) Examination.

e) Exercise of police powers . Criminal liability 4. S u r c h a r g e s 3. or re-exportation of bank g u a r a n t e e to assure collection goods. penalties. statements and d) Declaration of "import entry" under returns to be m a d e under penalties penalties of falsification and perjury. Fines. arrests. issuing c) Making investigation. c) Making investigation. seizures. Phil. coast. and of arrival of vessels and aircraft. t h e Tariff C o m m i s s i o n and 912 . seizures. e) Cooperative functions of other e) Cooperative functions of the non-tax-collecting government Philippine Coast G u a r d . interest 1. e) Exercise of police powers - making searches. WHAT ARE THE DIFFERENT PERSUASIVE MEANS AND SAFEGUARDS TO INSURE TAX COLLECTION UNDER THE NIRC AND TCC? NIRC TCC a) Requiring deposits of b o n d s to a) Requiring bonds. and passenger manifests and stores* list. b) Statutory tax lien b) Statutory tax lien c) Posing the threat and liability for: c) Posing the threat and liability for: 1. Interest 2. or re-exportation. d) Declaration. Deportation 3. Ports agencies or offices under Authority. arrests. issuing summons and taking testimony s u m m o n s and taking testimony d) Rewards to tax informers d) Rewards to assistance in detection of smuggling. ///. forfeitures and other penalties. examination of "import entry" required. b) Conducting surveillance of a b) Surveillance of the Phil. Criminal liability 5. forfeitures and other 5. of perjury. Surcharges 2. Deportation 4. business. making searches. cash deposits or assure collection. Fines.

g) A p p r o v a l . surcharges and costs unpaid duties. subject to excise taxes under the vessels in foreign trade to touch only NIRC. penalty is fine and forfeiture - payment of specific taxes. fees and other of sale. h) Ordering termination of accounting period. supervision and joint g) A b s o l u t e control of BC over port control of p r e m i s e s used in the premises. failure to file an import entry although the importation is not prohibited. c) Seizure is generally applied when c) Forfeiture . taxpayer but any deficiency shall also be for his account.applied in non. W H A T A R E T H E D I F F E R E N T C O E R C I V E (Extrajudicial) M E A N S IN THE COLLECTION OF DELINQUENT TAXES: NIRC TCC a) Distraint (actual and constructive) injunction is not generally available. it m a y only be issued by a) Collector may get goods on which the C T A . 91 3 . in favor of the government). by paying the fine or the value of the goods may recover the goods under certain conditions. Tax L a w s " .. f) Storage in b o n d e d w a r e h o u s e s of f) Storage in customs bonded goods subject to specific tax. ports of entry and aircraft to land first in an international port of entry. (The remedy is availed of when the property subject to the tax is forfeited importation is prohibited or irregular. The taxpayer.proceeds are applied to the g o v e r n m e n t has any claim for the tax liability. taxes. 1 5 9 9 .g. requiring all goods to pass production or storing of g o o d s thru c u s t o m s house at port of entry. e. "Administrative Agencies enforcing Police A g e n c i e s . any excess goes to the charges. b) Levy b) No levy. warehouses.

d a y s from receipt of t h e b) If legality of assessment formal a s s e s s m e n t . f) Judicial . 914 . This remedy is availed of w h e n the importation is neither prohibited nor irregular. criminal cases). After payment of the tax: necessary. 204) * P a y m e n t under protest is 2. either a civil or criminal action to judicial action against the importer recover the tax liability. although released. d) Enforcement of tax lien while the goods are in customs custody or control. The tax lien is beyond the reach of the regular courts. or appraisal is questioned. COMPARATIVE REMEDIES AVAILABLE TO TAXPAYERS UNDER THE NIRC AND T H E TCC: NIRC TCC A) Administrative remedies A) Administrative remedies 1. (Sec. 228) t a x p a y e r may protest within b) Entering into a c o m p r o m i s e 15 d a y s from assessment. The proceeds are applied to the tax d) Enforcement of tax lien. Before payment of the tax: a). 1600.W h e n the goods are f) Judicial -The g o v e r n m e n t may file released a n d the tax lien is lost. with the BIR (Sec. m a y then be instituted. liability surcharges and cost of sale. and does not include criminal cases) and abatement. Protest 1. any importer or interested a) Protest . the g o o d s are still subject to seizure. (When the g o o d s are prohibited or imported irregularly. and settlement. e) Compromise (does not need e ) C o m p r o m i s e (needs approval of Secretary's approval. and includes Secretary.Disputing the party adversely affected with the published value of duties assessment by filing a m a y within 15 days from motion for reconsideration date of publication file a or reinvestigation within 30 written protest. any excess goes to the taxpayer but he is also subject to make good any deficiency.

(Sec.W h e n the b) Action to question the collection of the tax m a y legality of the seizure. T C C ) d) Injunction . 231) receipt thereof (notice to the collector of appeal to the c) Action for d a m a g e s (sec. (Sec. (Sec. a) Filing claim for refund or 2. or if released thereof is prohibited by 215) law. 2 3 0 7 . Refund . p a y m e n t of fine or redemption of * T a x p a y e r is given the right of foreclosed goods shall not be r e d e m p t i o n within 1 year allowed in any case where f r o m date of sale or forfeiture importation is absolutely prohibited of the property sold. 1802. T C C ) N O T E : * P a y m e n t under protest is * Settlement of any seizure by not necessary. 915 . 1. dispute. c) A b a n d o n m e n t of the goods. C o m m i s s i o n e r is required) 227) (Sec. Civil A c t i o n : 1. 2313. 1701- 229) 1708. (Sec. (Sec. Criminal Action: Acting erring and abusive tax officials and/or employees of the BIR. 2 2 8 ) * A d v e r s e decision of the Collector is appealable to b) Action to contest forfeiture t h e Commissioner not to the C T A within 15 days from of chattel. exported). T C C ) B) Judicial r e m e d i e s : B) Judicial remedies: 1. (Sec. TCC) the taxpayer to put in a b o n d . RA 1125) 2. CTA may enjoin the collection and may require (Sec. (Sees.Abatement or credit within 2 years drawback (if importation regardless of any missing or deficient or if re- supervening event. jeopardize interest of taxpayer or the government. Civil Action - a) A p p e a l to the C T A within 30 a) A p p e a l to C T A within 30 d a y s f r o m receipt of t h e d a y s from received of the a d v e r s e decision of the C I R adverse decision of the or f r o m lapse of 180 d a y s C o m m i s s i o n e r of Secretary inaction of t h e C I R on the of Finance.

N O T E : The taxpayer's judicial relief both under the NIRC and the TCC may lie either with the CTA (exclusive in all cases cognizable by it) or the ordinary courts (in all other cases). .

PROBLEM EXERCISES 1601. X shipped to S t h e still n e w 2-door refrigerator earlier imported and exported together with other various appliances so S n e e d not b u y t h e m a g a i n in starting his family. 917 . even t h o u g h previously exported. except as otherwise specifically provided in the C o d e or in other laws. Six months thereafter. What is the objective of the anti-dumping law? A n s w e r . Y e s . b e c a u s e the T C C provides that "all articles. After sometime he decided to relocate his family to Bangkok. E X C E P T heads of states and foreign diplomats pursuant to international law and comity. He imported a two-door refrigerator for their o w n use and paid the corresponding duties. when imported from any foreign country shall be subject to duty upon e a c h importation. X. 1602. Thailand instead bringing along with them all their personal effects. Is the re- importation of the same 2-door refrigerator subject to duty? A n s w e r . T h e importance of the law lies not in the n u m b e r of findings of d u m p i n g m a d e neither by the Department of Finance nor in the a m o u n t of d u m p i n g duties collected but in its deterrent effect on attempts to injure local industries by unfair prices. a dual citizen opted to permanently reside in the country after the approval of his dual citizenship. 1603. It a i m s to prohibit the sale to and in the Philippines of foreign g o o d s at unfair prices. his eldest son (S) got married a n d he decided to reside in Manila. Can the customs authorities subject persons coming into the Philippines f r o m f o r e i g n countries to search of their person and property? Answer. All persons coming into the Philippines from foreign countries are liable to detention and search by Customs authorities under such regulations as maybe prescribed relative thereto.

official or unofficial missions a b r o a d are subject to baggage inspection by the Bureau of C u s t o m s personnel. No. Is Philippine Government officials who returned from special or diplomatic missions abroad exempt from baggage examinations? Answer. including o n e motor vehicle upon the dissolution of their mission. Is the o p i u m subject to seizure and the o w n e r to prosecution for alleged importation of opium? Answer. There must be proof of intent to import. a n d their office supplies and e q u i p m e n t under the Tariff C o d e ? Answer. 1604. came h o m e to the Philippines after c o m p l e t i n g his 4-year tour of duty. "X" is not guilty of the crime of illegal importation of such drug. 1605. a p a s s e n g e r on b o a r d a ship p a s s i n g t h r o u g h the Port of Manila has s o m e tins of o p i u m (prohibited articles) in his p o s s e s s i o n . or returning f r o m . W h a t treatment is a c c o r d e d to b a g g a g e of diplomats stationed in the Philippines. They are not only exempt from duties and taxes and the requirement of an informal and formal entry but also immune from examination and search under condition of reciprocity. bringing with him a BMW motor vehicle registered in his n a m e . All Philippine G o v e r n m e n t officials leaving for. 510) 1606. (U. 37 Phil. in the absence of proof that he intended to discharge the s a m e or to actually bring it within the Philippines. us C h u a Loy. Finance attache and all other attache's are included in the e x e m p t i o n of one car. 918 . "X". 1607. T h e y enjoy the benefits of exemption from duties and taxes.S. "X". T h e mere possession of o p i u m on board vessel in Philippine waters is not in itself sufficient to a m o u n t to an importation of the s a m e . This is intended to curb s m u g g l i n g . Is the car e x e m p t f r o m p a y m e n t of duty? Answer. Yes. a finance attache a s s i g n e d in the Middle East.

(Jao vs. transporting and selling at public auction the disputed article. 1995) 919 .1608. October 6. [ N O T E : this case w a s decided prior to RA 9282] A n s w e r . T h e c u s t o m s officials seized allegedly untaxed vehicles a n d p a r t s o f b u s i n e s s m a n J a o . T h e y are also e x e m p t f r o m duties and taxes under special a g r e e m e n t b e t w e e n t h e Philippine G o v e r n m e n t and the countries w h i c h they represent. detaining. W h a t about packages imported by such diplomats by freight or through the mail? A n s w e r . Contending that the R T C h a d no jurisdiction over the subject matter. T h e Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching upon seizure and forfeiture of dutiable goods. prohibition a n d m a n d a m u s with prayer for a temporary restraining order with the RTC. T h e petition of the tax officials is impressed with merits. The RTC is precluded from assuming cognizance over said matters even through petitions of certiorari. p r o m p t i n g t h e latter t o file a petition for certiorari. CA. W h a t about those articles imported for the personal or family use of the said diplomats? A n s w e r . a c c o m p a n i e d by a certificate under such seal to the effect that they contain d o c u m e n t s may be admitted from of duty without C u s t o m s e x a m i n a t i o n . 1610. T h e RTC is devoid of any c o m p e t e n c e to pass upon the validity or regularity of the seizure and forfeiture proceedings conducted by the Bureau of C u s t o m s or to enjoin or otherwise interferes with these proceedings. S u c h p a c k a g e s w h e n bearing the official seal of a foreign g o v e r n m e n t . 1609. prohibition and mandamus. A proper notation as to the disposition of the articles should be m a d e by the Customs officer c o n c e r n e d on the manifest. The RTC granted the injunction and prohibited the respondent from seizing. the tax officials filed a petition for review with the Court of A p p e a l s . Decide. T h e privilege is granted only upon specific instruction by t h e D e p a r t m e n t of Finance which is issued only upon request by t h e D e p a r t m e n t of Foreign Affairs.

u p o n request by the Collector for re-appraisal or re-classification if the appraisal or classification is d e e m e d to be low. or reverse whatever conclusions may result therefrom. appraisal. 1612. 1407 of the T C C . Y. modify. X has no certificate of public convenience 920 .w h e e l e r truck that he u s e s in his personal b u s i n e s s . Even the illegality of the warrant of seizure and detention cannot justify the trial court's interference with the Collector's jurisdiction between the existence of the collector's power to the issue and the regularity of the proceedings taken under such power. Natividad. the RTC does not have the competence to review. 1613. Yes.appeal to the CTA) 1 6 1 1 . Assessment of customs duties is the responsibility of the Collector. In case of temporary and/or permanent vacancy. Under Sec. a b u s i n e s s m a n e n g a g e d in s m u g g l i n g hired X's truck to transport imported garlic. b) Within 15 d a y s after p a y m e n t . and c) Upon request for reappraisal or reclassification in the form of a timely protest. classification or return approved by him may not be altered or modified in a n y manner. Does the Secretary of Finance have the authority to order a re-assessment of duties? A n s w e r . one of the Deputy Commissioners shall be designated by the Secretary of Finance to act as C o m m i s s i o n e r of C u s t o m s until the incumbent Commissioner r e a s s u m e s his duties or the position is filled by permanent appointment by the President. Even if there be irregularity in the exercise of such power. Under the following instances: a) Within one year after p a y m e n t of the duties or u p o n statement of error as a p p r o v e d by t h e Collector. (Taxpayer's remedies . X has a 1 0 . H o w is the office of the C o m m i s s i o n e r of C u s t o m s filled- up in case of v a c a n c y ? A n s w e r . Mison vs. vegetables and other agricultural products from the customs warehouse.

T h e Collector of C u s t o m s of the port area can validly seize all the g o o d s and forfeit t h e truck as an instrument in the s m u g g l i n g activity. The vessel is clearly subject to forfeiture in favor of the Government. 1614. water carrying untaxed imported cigarettes and goods. there arises a prima facie presumption or k n o w l e d g e or participation if the owner is N O T in business for w h i c h the c o n v e y a n c e is generally used. Is the motorboat subject to forfeiture? A n s w e r . since it w a s not being used as a duly authorized c o m m o n carrier. X. 921 . C o n s e q u e n t l y . [Sec. C a n the Collector of C u s t o m s of the port area validly seized the g o o d s a n d forfeit X's truck as an instrument in the smuggling? A n s w e r . (Sec. T h e mere carrying of such articles on board the truck in c o m m e r c i a l quantities shall subject the truck to forfeiture. Yes. No one claimed the cigarettes and g o o d s . not having a certificate of public c o n v e n i e n c e to operate a trucking business. all w e r e f o r f e i t e d i n f a v o r o f t h e g o v e r n m e n t . Thus. a registered o w n e r of a v e s s e l licensed to e n g a g e in c o a s t w i s e s h i p p i n g w a s a p p r e h e n d e d by the Phil. T C C ) T h e truck may validly is forfeited in favor of the g o v e r n m e n t . he is legally d e e m e d not to have been e n g a g e d in the trucking business. since the s a m e w a s used unlawfully in the importation of s m u g g l e d g o o d s . but a g r e e d to lease his vehicle only b e c a u s e X a n d Y used to be c l a s s m a t e s in their high school days. T C C ] However. Navy within the Phil. The fact that X has no actual knowledge that his motorboat was used illegally does not render the vessel exempt from forfeiture. Forfeiture proceedings are in the nature of proceedings in rem and are directed against the res. X c l a i m e d his v e s s e l alleging that he did not k n o w that his vessel w a s u s e d for s m u g g l i n g . w h i c h w a s chartered or leased as such. 2 5 3 0 (1). X's defense that he has no knowledge that his vessel was used illegally was personal to him but cannot absolve the vessel from liability of forfeiture. X did not k n o w that the g o o d s w e r e illegally i m p o r t e d . 2 5 3 1 . a l t h o u g h forfeiture of the vehicle will not be effected if it is established that the o w n e r thereof has NO K N O W L E D G E of or participation in the unlawful act.

T h i s d e c i s i o n w a s later modified by the Collector finding that the sacks of sugar w e r e really of f o r e i g n origin. Commissioner of Customs. without the automatic review provided therein. 20-87 which implements Sec. enjoined all Collectors to follow strictly. 2 5 3 0 (f). GT c o n t e n d s that the N o v e m b e r 3 decision b e c a m e final a n d executory in view of the absence of an appeal therefrom by the aggrieved party himself within the 15-day period provided in Sec. 12 of the Integrated Reorganization Plan. o f t h e T C C ? Answer. s m u g g l e d into the country and declared t h e m forfeited. (Yaokasin vs.1615. neither t h e Commissioner of Customs nor the Secretary of Finance w o u l d probably ever know about. importer. Grand Trading (GT) w a s the consignee of sacks of refined s u g a r seized by the Collector of C u s t o m s on the ground that these w e r e of foreign origin. a collector in any of our country's far flung ports w o u l d have absolute and unbridled discretion to determine w h e t h e r g o o d s seized by him are locally produced. a) the wrongful making by the owner.12 of the Integrated Reorganization Plan which the C o m m i s s i o n e r of C u s t o m s in his C u s t o m s M e m o r a n d u m Order No. In a N o v e m b e r 3. a n d therefore subject to payment of c u s t o m s duties and t a x e s . Is the N o v e m b e r decision of the Collector subject to the automatic review of the Commissioner of customs? A n s w e r . 180 SCRA 591) 1616. On the other hand. 2313 of the T C C . hence. exporter or consignee of any declaration or affidavit. the Collector argued that since the N o v e m b e r 3 d e c i s i o n w a s a d v e r s e to the government. the Collector ordered the r e l e a s e o f s u b j e c t s u g a r . 20-87. Without the automatic review by the C o m m i s s i o n e r of Customs or the Secretary of Finance. Sec. 2002 decision. Yes. i n r e l a t i o n t o ( 1 ) ( 3 . is intended to protect the interest of the g o v e r n m e n t in the collection of customs duties in those seizure and protest cases w h i c h . the case should have gone to the Commissioner of Customs on automatic review pursuant to Memorandum Order No. or of foreign origin. letter or 922 . W h a t are the requisites for forfeiture of goods under S e c . not dutiable. or the wrongful making or delivery by the s a m e person of any invoice.5 ) . However.

seizure and arrest without a warrant? A n s w e r . it is the N E D A that may conduct such review following the principles of administrative law. affidavit. Hence. M a y the tax officials f r o m the B u r e a u of C u s t o m s m a k e a valid search. 1617. its decisions and recommendations cannot tie the hands of the Chief Executive with finality. modify of a m e n d the decision of the Tariff Commission. paper . actions of the Tariff 923 . May the president reverse. T h e Tariff C o m m i s s i o n is an agency in the Executive Department necessarily it is subject to the control and supervision of the President. The DTI has no authority to review or modify the findings and recommendation of the Tariff Commission. and the NEDA's decision in turn is reviewable by the Office of the President. 1618. (2004 case) N O T E : W h e r e there is illegality in seizure and forfeiture conducted by t h e tax official or collector. the r e m e d y of the taxpayer is to appeal to the C o m m i s s i o n e r (then to the C T A and to the SC) and not to the R T C . Should there be conflict between the findings and r e c o m m e n d a t i o n of the Tariff C o m m i s s i o n (TC) on the imposition of import taxes.all touching on the importation or exportation of merchandise. the tax officials from the B u r e a u of C u s t o m s m a y m a k e a valid s e a r c h . (2005 case) 1619. b) the falsity of s u c h declaration. seizure and arrest e v e n without a warrant for purposes of enforcing customs and tariff laws and tax collection. In addition. the President can reverse. May the Department of Trade a n d Industry (DTI) review or modify the findings of the Tariff C o m m i s s i o n ? Answer. letter or paper. modify or a m e n d the decision of the Tariff C o m m i s s i o n ? A n s w e r . invoice. Even if conceding that the TC's findings may be administratively reviewed. Under the Tariff and C u s t o m s C o d e . and c) an intention on the part of t h e importer or consignee to evade the p a y m e n t of the duties d u e .

The court sheriff learned that the customs agents are in possession of some imported goods belonging to X. X w a s n o t a b l e t o p a y his o b l i g a t i o n s t o Y . the seizure is not unconstitutional because it w a s m a d e for purposes of enforcing collection of unpaid taxes. T h e B u r e a u o f C u s t o m s r a i d e d a n d s e i z e d g o o d s i n the w a r e h o u s e of X Corporation on the belief that they were unlawfully released f r o m t h e c u s t o m s c u s t o d y . the collection of taxes is never unreasonable. T h e c u s t o m s a g e n t s have authority over seizure and forfeiture cases involving imported g o o d s . A writ of a t t a c h m e n t w a s issued by the Regional Trial Court. prescription period to collect has not toiled. importation ends w h e n t h e regular permit for withdrawal shall have b e e n issued and the corresponding taxes fully paid. For articles subject to c u s t o m s duties. Before any seizure 924 . The regular courts (RTC) are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of C u s t o m s and to enjoin or otherwise interfere with these proceedings. T h u s . (2005 case) The seizure is valid. 1 6 2 1 . T h e latter filed a case in court a n d w o n . Notably. X's submission that the right to collect c u s t o m s duties has prescribed is not correct b e c a u s e importation has not e n d e d . T h e Collector sitting in the seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods and the regular courts cannot interfere with nor deprive him of such jurisdiction. Considering that falsified d o c u m e n t s w e r e used importation w a s not yet e n d e d . (2005 case. Further. X believes that the right of the tax officials to collect had a l r e a d y p r e s c r i b e d c o n s i d e r i n g that the c u s t o m s officials a l l o w e d the release of the g o o d s from c u s t o m s c u s t o d y with c l e a r a n c e s o t h e r w i s e h o w could the g o o d s b e r e l e a s e d i f n o p a y m e n t w e r e m a d e relative thereto? Will the action prosper? A n s w e r . T h e regular courts do not have jurisdiction to take c o g n i z a n c e of cases involving seizure of imported g o o d s . Commission are not beyond the pale of certiorari jurisdiction of the court. RE: Safeguard Measures Act) 1 6 2 0 . In fact. X filed a c a s e b e f o r e t h e r e g u l a r c o u r t q u e s t i o n i n g t h e validity and regularity of the seizure and forfeiture proceeding. T h e r e is no need of warrant under the given facts.

Importation is d e e m e d terminated only upon full p a y m e n t of the taxes i m p o s e d on said g o o d s at the port of entry and the legal permit for its release shall have b e e n granted by the Collector of C u s t o m s . It transported the smugglers and subsequently delivered the necessary lighting equipment to enable 925 . the customs officials cannot enter a dwelling without a valid warrant. agents from the Bureau of Customs raided Y's h o u s e a n d s e i z e d all t h e c e l l p h o n e s . A n s w e r . X's brother. Y e s . While t h e general rule provides that a search warrant is not necessary to effect the search and seizure of dutiable goods concealed for purposes of tax evasion. the court sheriff w e n t to the Bureau of C u s t o m s to serve the writ of attachment. The customs officials are allowed to enter offices. w a r e h o u s e or business establishments without warrant for enforce customs laws but not dwelling. The Collector received information that the cellphones are n o w hidden in the house of Y. M a y the Collector of C u s t o m s issue a warrant of seizure a n d detention of a C e s s a plane used to transport persons and gas lamps for the sole p u r p o s e of lighting a n d g u i d i n g t h e plane's t a k e off f r o m the airstrip in aid of smuggling? Answer. A n s w e r . The Collector instituted seizure proceedings and ordered the seizure a n d detention of subject g o o d s . On the strength of the order. May the goods of X be the subject of the writ of attachment? Reason. he was able to cause the release of the cellphones without tax payments and clearances. X imported cellphones in commercial quantities from abroad and through connivance with some customs officials. W h e n importation has not e n d e d the g o o d s are beyond the reach of any court. T h e g o o d s in the possession of the c u s t o m s officials can not be the subject of t h e writ of attachment issued by the regular court. 1622. T h e search and seizure of the c u s t o m s agents without the benefit of a search warrant issued by the court is not valid and is unconstitutional. the Cessna plane w a s used to insure the successful delivery of the smuggled goods. 1623. p r o c e e d i n g s could be initiated by the c u s t o m s officials. I s t h e s e a r c h a n d seizure valid? Reason.

No. It is exclusively original. (c) deductive value. an i m p o r t e r b e l i e v e s t h a t m o r e a v e n u e s for graft a n d corruption results because more p e o p l e are 926 . Such powers apply only t o vessels o r aircraft e n g a g e d only in foreign c o m m e r c e . Is the power of supervision and control over the entrance of vessels a n d aircraft limited to t h o s e e n g a g e d in domestic commerce only? Answer. Yes. (b) of similar goods. Such complementary or collateral use of the plane for smuggling operation is sufficient for it to be deemed to have been used unlawfully in the smuggling of undeclared goods. ( N O T concurrent original. W h a t is the basis of dutiable value of an i m p o r t e d article subject to an ad valorem tax under the T C C ? Answer. Under RA 9135. the cargo plane to take off without peril and transport the goods to its final destination. 1627. 1625. The Commissioner of Customs issued rules and regulations that seek to tighten the release of imported goods. adjusted by adding certain cost elements to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the subject imported goods. 1624. the (a) transactional values of identical goods. exclusive appellate and concurrent appellate) 1628. (d) computed value and (e) fallback value may be used to ascertain the import taxes d u e . A m o n g the general duties of t h e B u r e a u of Customs is to supervise the handling of foreign and domestic mails arriving in the Philippines w h e t h e r through the vessels or aircraft to determine lawful duties d u e on imported dutiable articles but it has nothing to do with the postage d u e t h e r e o n . W h a t is the nature of the jurisdiction of the Bureau of Customs over seizure and forfeiture cases? Answer. 1626. If such value could not be d e t e r m i n e d . Are foreign mails arriving in the country within the jurisdiction of the Bureau of C u s t o m s ? Answer. the basis now is the transactional value which shall be the price actually paid or payable for the goods when sold for export to the Philippines. X.

927 . thereupon. Are vessels engaged in foreign trade allowed to touch at a port o t h e r t h e n a port of e n t r y ? A n s w e r . n o w involved in the approval of the release of imported articles. All rules and regulations issued by the C o m m i s s i o n e r of C u s t o m s shall be subject to the approval of the Secretary of Finance. What kind of properties in customs custody can be disposed of by public sale? Answer. X inquires f r o m y o u the validity of the rules and regulations issued by the Commissioner of Customs. T h e Tariff C o d e requires that all vessels e n g a g e d in foreign trade are required to t o u c h at a port of entry only. T h e only exception is w h e n said vessel is specially allowed by the Bureau of Customs. What is your position on the matter? A n s w e r . I s X e x e m p t f r o m import duties on his losses? A n s w e r . No he is not e x e m p t b e c a u s e the customs laws do not allow a b a t e m e n t of duties on account of losses. a) Abandoned articles b) Articles entered under warehousing entry not withdrawn. His remedy is to demand reimbursement from the shipper. insurer or the broker as the case may be. c) Seized articles after proceedings were made. d a m a g e and deterioration during t h e v o y a g e . 1630. It was later established that the loss and damage occurred during its v o y a g e . 1631. if t h e rules and regulations w e r e not a p p r o v e d t h e n they are v o i d . he noticed some boxes opened and the others badly damage. 1629. and d) Articles subject to a valid lien for customs charges. X c a n validly contest the same before the court. Before its release X w e n t to the Bureau of Customs to check on the cartoons. X goods arrived from Japan and were stored in the customs warehouse. Under the given facts.

If articles or g o o d s are imported free of duties. w h o m he met in L o n d o n then w o r k i n g as a nurse in one of the hospitals there. Upon legally leaving the jurisdiction of the customs its importation is d e e m e d to have terminated. 105 of the Tariff a n d Customs Code. After four m o n t h s X follows N to settle in t h e P h i l i p p i n e s . tax. Is the government liable for customs duties on importation of articles? Answer. instrumentalities. Yes. branches. W h o has jurisdiction over the r e m o v a l of a n y article or the departure of any passenger from the landing place of an aircraft c o m i n g into the Philippines in c a s e of emergency or forced landing? Answer.1632. Answer. 1633. X. N. 1634. No. or corporations shall be subject to duty. all g o v e r n m e n t importations for its o w n use or its subordinates. f e e s and other c h a r g e s except those importations provided for in Sec. N c a m e h o m e ahead to prepare for their w e d d i n g . (Sec. taxes and other charges. X s t o p p e d o v e r in H o n g Kong and bought several appliances which he caused to be shipped to the Philippines by boat. 1635. an English national decided to marry her Filipina girlfriend. 1205) 928 . The Bureau of C u s t o m s and not the NAIA o r the Civil Aeronautics Authority. Is X e x e m p t from payment of duties considering that he decides to permanently settle in the country? R e a s o n . t h e appliances shipped b y X t o t h e Philippines although intended for their personal use m a y not be e x e m p t from import duties because a m o n g the conditions for e x e m p t i o n is that the articles must have b e e n brought by him f r o m his former place of abode. when is its importation deemed terminated? Answer.

T a x p a y e r ' s remedies arise only after the payment of duties. Resort to judicial relief can be availed of by the taxpayer by appealing the decision of the C o m m i s s i o n e r within 30 days from receipt thereof to the C T A . and finally to the S C . If such decision is affirmed by the Commissioner. smuggling and other customs frauds and violations of the maritime law.1636. in favor of the taxpayer) is automatically elevated to the C o m m i s s i o n e r for review. 1637. or to the c u s t o m s broker. if adverse to the G o v e r n m e n t (that is. T h e Code recognizes the functions of the Philippine Coastguard to exercise surveillance of vessels entering or departing from the Philippine territory and its role of preventing and suppressing illegal entry. If the decision of the Collector is adverse to the taxpayer. T h e decision of t h e Collector on the taxpayer's protest. Briefly d i s c u s s t h e t a x p a y e r s ' r e m e d i e s u n d e r the Tariff and Customs Code: A n s w e r . (No p a y m e n t No protest Rule) T h e administrative remedies consist of filing for a refund w h i c h m a y take the f o r m of abatement or d r a w b a c k . or lawful holder of the bill of lading. the same shall be automatically elevated to and finally reviewed by the Secretary of Finance. he can notify the Collector within 15 d a y s f r o m receipt of the said decision of his desire to have his case reviewed by the Commissioner. To w h o m should the imported articles be delivered or released? A n s w e r . 1638. To the c o n s i g n e e . T h e t a x p a y e r c a n also file a protest within 15 days from p a y m e n t if he disagrees with the ruling or decision of the Collector of C u s t o m s regarding the legality or correctness of the assessment of c u s t o m s duties. W h a t is the role of the Philippine C o a s t g u a r d under the TCC? Answer. 929 .

r The power to search under the T C C includes the removal of any false bottom. To allow a taxpayer to first secure a ruling as regards the validity of a tax before paying it would defeat the purpose. W h a t are the other types of fees that m a y be imposed by the Bureau of customs aside from duties? Answer. It is the counterpart of license.1639. c) Berthing fees d) T o n n a g e fees. and e) Harbor fees. Oct. Is there n e e d for a s e a r c h w a r r a n t to go on board a vessel or aircraft for t h e p u r p o s e of c o n d u c t i n g a search thereof and the persons and articles therein? Answer. 1951) 1641. 1 6 4 0 . 1642. The owner of the vessel may not claim d a m a g e caused to any article. The taxpayer is not allowed. vessel or aircraft under a legal search. Meer. 930 . No search warrant is necessary for a person exercising police authority to search a vessel or aircraft or any person or articles on board therein. a) Arrastre charges b) W h a r f a g e dues . (National Dental Supply C o . Are Tax Credit Certificates allowed to be used in the payment of duties and taxes due the Bureau of Customs? Answer. Y e s . 16. partition.This is c h a r g e d not for the use of the wharf but for a special f u n d . T h e reason is t o prevent delay in the collection of taxes u p o n w h i c h the government depends for its existence. t h e "Port W o r k s F u n d " of the B u r e a u . bulkhead or other obstruction. M a y a t a x p a y e r file a petition f o r d e c l a r a t o r y relief to q u e s t i o n his tax liability b e f o r e t h e r e g u l a r c o u r t ? Answer. vs.

1645. a) Identified goods that are conditionally-free from customs duties as provided under the T C C . S e c t i o n 105. he w a s intercepted by tax o f f i c i a l s f r o m t h e B u r e a u w h o w a n t e d t o c h e c k o n all d o c u m e n t s appertaining to the contents of the vans. 931 . Are c o m m o n carriers subject to forfeiture? A n s w e r . agreements or obligations with foreign countries. 1644.X is the owner of trucks transporting container vans from the Bureau of Customs to the taxpayers' warehouse or place of business. cite exceptions thereto. b) Exemptions granted to G O C C s with existing commitments. it may be forfeited. C o m m o n carriers are generally not subject to forfeiture but if the o w n e r thereof has k n o w l e d g e of its use in smuggling and he w a s a consenting party to the illegal activity. If a motor vehicle is hired to carry s m u g g l e d goods but it has no Certificate of Public C o n v e n i e n c e (CPC). It is thus subject to forfeiture and lack of personal k n o w l e d g e of the o w n e r of the carrier is not a defense to forfeiture. The tax officials cannot be convicted under the T C C since there is no evidence that they did actually search the container v a n s . Mere flagging d o w n of the container van is not punishable under the Tariff C o d e . last p a r a g r a p h o f t h e Tariff a n d C u s t o m s C o d e provides that "there shall be no exemptions w h a t s o e v e r f r o m t h e p a y m e n t o f c u s t o m s duties". most of the items were spoiled and beyond human c o n s u m p t i o n . Answer.1643. while the driver w a s transporting a 20-footer containing van loaded with perishable g o o d s . As a consequence of the flagging down and delay in delivering the goods. it is not a c o m m o n carrier. A r e the tax officials liable under the T C C ? A n s w e r . if any. The driver w a s not in possession of s o m e of the documents. On one occasion. The truck w a s not allowed to leave.

d) Exemptions granted by the President of the Philippines upon the recommendation of N E D A in the interest of the national economic development. associations or organizations pursuant to agreements and special laws where the government is a signatory thereto. .c) Exemptions of international institutions.