TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
LOCAL GOVERNMENT TAXATION
REAL PROPERTY TAX
March 28, 2019
(Tan)
Real Property Taxation
Constitutional Basis is still SEC. 5 ARTICLE X of the 1987
Constitution.
Section 5. Each local government unit shall have the
power to create its own sources of revenues and to levy
taxes, fees and charges subject to such guidelines and
limitations as the Congress may provide, consistent with
the basic policy of local autonomy. Such taxes, fees, and
charges shall accrue exclusively to the local governments.
Under the Local Government Code it is found in Book II
Title II Section 197
Section 197. Scope. - This Title shall govern the
administration, appraisal, assessment, levy and collection
of real property tax.
The FUNDAMENTAL PRINCIPLES OF REAL PROPERTY
TAXATION is found in Section 198 of the Local
Government Code.
Section 198. Fundamental Principles. - The appraisal,
assessment, levy and collection of real property tax shall
be guided by the following fundamental principles:
(a) Real property shall be appraised at its current and fair
market value;
(b) Real property shall be classified for assessment
purposes on the basis of its actual use;
(c) Real property shall be assessed on the basis of a
uniform classification within each local government unit;
(d) The appraisal, assessment, levy and collection of real
property tax shall not be let to any private person; and
(e) The appraisal and assessment of real property shall be
equitable.
Most of these terms are already familiar to us. For
example “uniformity” within the territorial jurisdiction,
and when you talk about collection of local business taxes;
but when it comes to Real Property Taxes this involves not
only the COLLECTION but also the APPRAISAL,
ASSESSMENT and LEVY of Real Property Taxes.
What is important here are these two (2)
1. The APPRAISAL must be at the CURRENT AND
FAIR MARKET VALUE of the local government
unit where the property is located;
1
2. The real property must be ASSESSED of on the
basis of its ACTUAL USE.
APPRAISAL
What do you mean by appraisal?
This is the act or process of determining the
value of the real property as of a specific date
for a specific purpose.
When it comes to appraisal there is the element of time
and usage (is this property used for residential purposes or
commercial or if this building has a factory inside) the
appraisal of the property is depending on how the real
property is being used.
What is the significance of appraisal?
Appraisal here is important because the local
government would base its assessment on the
appraisal of the value of the real property.
It establishes the basis for the real property
assessment for purposes of real property
taxation.
Appraisal is the starting point of the Local
Government in making the assessment for
purposes Real Property Taxes (take note that
appraisal is different from assessment).
In the process of making an assessment the real property
must be classified on the basis of its ACTUAL USE.
Section 217. Actual Use of Real Property as Basis for
Assessment. - Real property shall be classified, valued
and assessed on the basis of its actual use regardless of
where located, whoever owns it, and whoever uses it.
You must look into the usage of that specific property
(Example is the Allied Banking versus Quezon City case)
What if there is a city ordinance saying the basis of the
assessment will be the actual market value as stated in the
deed of sale?
(Viola)
What they’re saying right now, is that the basis of the RPT
is the actual value of the property as stated in the Deed of
Sale.
This ordinance is against the LGC because what is in the
LGC is that when the Local assessor will assess a real
property for RPT purposes, the basis will always be the
actual use, we don’t care about what’s stated in the DOS
or the consideration in the Deed of Transfer.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Q: So how are we supposed to value the RPT according to
such use?
TESTATE ESTATE OF CONCORDIA T. LIM
vs.
CITY OF MANILA and GOVERNMENT SERVICE
INSURANCE SYSTEM
The late Concordia Lim obtained a real estate loan from
GSIS, secured by a mortgage constituted or 2 parcels of
land. For failure to pay the loan, the GSIS being the
highest bidder in a foreclosure sale obtained  the
properties. This led to the consolidation of Titles in
favor of GSIS in 1977.However, the Board of Trustees
issued Resolution No. 188, wherein the estate of Lim
was allowed to repurchase the properties. The City
Treasurer of Manila required the petitioner to pay the
real estate taxes due on 1977, 1978 and on the first
quarter of 1979, before the titles could be transferred.
The petitioner paid but under protest. A demand for
reimbursement was sent against the GSIS. GSIS refused.
A demand for refund was also sent to the City
Treasurer, likewise refused also.
The lower court cited by way of obiter dictum, the case
of City of Baguio v. Busuego, 100 SCRA 116 (1980)
wherein the Court ruled that while the GSIS may be
exempt from the payment of real estate tax, the
exemption does not cover properties the beneficial use
of which was granted to other taxable persons.
RULING: The real estate taxes later assessed on the said
properties for the years 1977, 1978 and the first
quarter of 1979 were charged against the plaintiff-
appellant even if the latter was not the beneficial user
of the parcels of land.
In real estate taxation, the unpaid tax attaches to the
property and is chargeable against the taxable person
who had actual or beneficial use and possession of it
regardless of whether or not he is the owner. (Sections
3(a) and 19 of P.D. No. 464; Province of Nueva Ecija v.
Imperial Mining Co., Inc., 118 SCRA 632 [1982]). Raising
doubts on the validity of the imposition and collection
of the real property tax for the designated periods
before the title to the properties may be transferred,
the plaintiff-appellant paid under protest.
The court here ruled that the estate is not liable to pay
the real property tax due for the years 1977, 1978 and
first quarter of 1979. The clause in the Deed of Sale
cannot be interpreted to include taxes for the periods
prior to April 11, 1979, the date of repurchase.
2
To impose the real property tax on the estate which
was neither the owner nor the beneficial user of the
property during the designated periods would not only
be contrary to law but also unjust. If plaintiff-appellant
intended to assume the liability for realty taxes for the
prior periods, the contract should have specifically
stated "real estate taxes" due for the years 1977,1978
and first quarter of 1979. The payments made by the
plaintiff-appellant cannot be construed to be an
admission of a tax liability since they were paid under
protest and were done only in compliance with one of
the requirements for the consummation of the sale as
directed by the City Treasurer of Manila.
However, that the estate is not entitled to a
reimbursement from the respondent GSIS because: (1)
the GSIS is exempt from payment of the real property
tax under Sec. 33 of the Revised Charter of the GSIS;
and (2) the tax should be based on "actual use" of the
property.
Q: What are considered as Real Property?
General basis is the Civil Code Article 415. RPT is a tax on
the ownership of land but sometimes the owner of the
property is not liable to pay the RPT for it can be passed on
to the persons who have the beneficial use of the
property.
Q: How do you define a real property tax?
Real property tax is said to be a direct tax on the
ownership of the land and buildings and other
improvements thereon not specifically exempted and is
payable regardless of whether the property is used or not.
So this definition given by other authors is not actually
accurate, because you must consider not just the
ownership but also actual use of the property.
The tax is usually single or indivisible-- the land, including
buildings and improvements thereof, except where the
owner of the improvements are different persons.
The determination of proper RPT requires the intervention
of assessors.
SUMMARY:
 RPT is a direct tax
 It is imposed on the use and not necessarily the
ownership
 It is ad valorem—the value of the property is
part of the tax base
 Its proportionate in character because it is
calculated in certain percentage
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
 It is progressive in character because as the
value of the property increase, the tax will also
increase
 It creates a single and indivisible obligation.
 Local tax
Q: What is real property?
Normally we apply Article 415 of the Civil Code
Article 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds
adhered to the soil;
(2) Trees, plants, and growing fruits, while they are
attached to the land or form an integral part of an
immovable;
(3) Everything attached to an immovable in a fixed
manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration
of the object;
(4) Statues, reliefs, paintings or other objects for use or
ornamentation, placed in buildings or on lands by the
owner of the immovable in such a manner that it reveals
the intention to attach them permanently to the
tenements;
(5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece
of land, and which tend directly to meet the needs of the
said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or
breeding places of similar nature, in case their owner has
placed them or preserves them with the intention to have
them permanently attached to the land, and forming a
permanent part of it; the animals in these places are
included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter
thereof forms part of the bed, and waters either running
or stagnant;
(9) Docks and structures which, though floating, are
intended by their nature and object to remain at a fixed
place on a river, lake, or coast;
(10) Contracts for public works, and servitudes and other
real rights over immovable property. (334a)
When it comes to real property taxation, some parts
doesn’t make sense but for the purpose of assessing RPT
even if generally movable property, they are considered as
immovable.
LGC; Section 199. Definitions.
(m) "Improvement" is a valuable addition made to a
property or an amelioration in its condition, amounting
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to more than a mere repair or replacement of parts
involving capital expenditures and labor, which is
intended to enhance its value, beauty or utility or to
adapt it for new or further purposes;
(o) "Machinery" embraces machines, equipment,
mechanical contrivances, instruments, appliances or
apparatus which may or may not be attached,
permanently or temporarily, to the real property. It
includes the physical facilities for production, the
installations and appurtenant service facilities, those
which are mobile, self-powered or self-propelled, and
those not permanently attached to the real property
which are actually, directly, and exclusively used to
meet the needs of the particular industry, business or
activity and which by their very nature and purpose
are designed for, or necessary to its manufacturing,
mining, logging, commercial, industrial or agricultural
purposes;
**Compare this with the CC provision Art 415 (5)
xxx actually, directly, and exclusively used to meet the
needs of the particular industry, business or activity and
which by their very nature and purpose are designed for,
or necessary xxx
Mindanao Bus Company vs City Assessor GR L-17870,
Sept 29 1962
The City Assessor assessed MBC with deficiency taxes
over machines. According to the City Assessor, these
equipment are immobilized by Art 415 of the Civil
Code:
“(5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry
or works which may be carried on in a building or on a
piece of land, and which tend directly to meet the needs
of the said industry or works;”
ISSUE: WON MBC is liable for the deficiency RPT for
these machineries are sitting on cement or wooden
platforms.
RULING: The stipulation expressly states that the
equipment are placed on wooden or cement platforms.
They can be moved around and about in petitioner's
repair shop.
Movable equipments to be immobilized in
contemplation of the law must first be "essential and
principal elements" of an industry or works without
which such industry or works would be "unable to
function or carry on the industrial purpose for which it
was established." We may here distinguish, therefore,
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
those movable which become immobilized by
destination because they are essential and principal
elements in the industry for those which may not be so
considered immobilized because they are merely
incidental, not essential and principal.
On the other hand, machineries of breweries used in
the manufacture of liquor and soft drinks, though
movable in nature, are immobilized because they are
essential to said industries; but the delivery trucks and
adding machines which they usually own and use and
are found within their industrial compounds are merely
incidental and retain their movable nature.
Similarly, the tools and equipments in question in this
instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of
transporting passengers and cargoes by motor trucks.
They are merely incidentals — acquired as movables
and used only for expediency to facilitate and/or
improve its service. Even without such tools and
equipments, its business may be carried on, as
petitioner has carried on, without such equipments,
before the war. The transportation business could be
carried on without the repair or service shop if its
rolling equipment is repaired or serviced in another
shop belonging to another.
(Campaner)
Are they considered as real properties? NO. Hindi sya real
property for RPT purposes. The machineries placed on
those wooden and cemented platforms can be moved
around in the petitioner’s shop.
It cannot be considered as immobilized in contemplation
of law because it must first be considered as essential and
principal elements of the industry or works without which
the industry would be unable to function.
So these are actually not necessary for the bus company to
continue its main business; ang kailangan yung bus mismo,
but the equipment, not necessary. In fact they can have it
repaired/maintained in a shop. In other words, the
equipments are considered merely incidentals. Only for
the expediency and to facilitate the improved service.
From the FT:
Similarly, the tools and equipments in question in this
instant case are, by their nature, not essential and
principle municipal elements of petitioner's business of
transporting passengers and cargoes by motor trucks.
They are merely incidentals — acquired as movables and
used only for expediency to facilitate and/or improve its
service. Even without such tools and equipments, its
business may be carried on, as petitioner has carried on,
without such equipments, before the war. The
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transportation business could be carried on without the
repair or service shop if its rolling equipment is repaired or
serviced in another shop belonging to another.
BOARD OF ASSESSMENT APPEALS vs MANILA
ELECTRIC
May hydroelectric powerplant, then merong steel
towers. What is the nature of that steel tower? Is it
realty or not?
SC went back to Art. 415(1) Land, buildings, roads and
constructions of all kinds adhered to the soil; Sabin ang
SC, the towers do not fall under this definition because
the towers do not constitute buildings or constructions
adhered to the soil. What is the nature of these
towers? They are easily removable and merely attached
or bolted to a square metal frame. So hindi sya realty.
Kung sabihin mong “adhered to the soil”, it is
characterized by more or less permanency.
Art. 415 (3) Everything attached to an immovable in a
fixed manner, in such a way that it cannot be
separated therefrom without breaking the material or
deterioration of the object; Sabi nang SC, medyo weird,
the towers do not fall under this definition because the
towers are not attached to an immovable in a fixed
manner.
Art. 415 (5) Machinery, receptacles, instruments or
implements intended by the owner of the tenement
for an industry or works which may be carried on in a
building or on a piece of land, and which tend directly
to meet the needs of the said industry or works; SC
said that again, the towers does not fall in this
definition. The towers are not machineries. Even if they
were, they were not intended for the industry or works
on the land itself. The business is not found on the land
on which the towers are built.
MERALCO SECURITIES vs CBAA
Pipelines, underground; transporting petroleum and oil.
The SC said that Meralco is liable for the RPT because
the pipelines are considered real properties under Art.
415 (1) and (3). “Constructions of all kind adhered to
the soil”, klaro na sya, adhered to the soil, the pipelines
are attached to the land in such a way that it cannot be
separated therefrom without dismantling the pipes.
MANILA ELECTRIC vs CBAA
In this case, storage tanks. Nakapatong ang storage
tanks sa semento, and the storage tanks has pipelines.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Wala mang question if gasoline stations diba, kasi if
may storage tanks placed below ground, adhered to the
soil na, so automatic real property. But in this case,
nakapatong eh.
SC said that the tanks are realties. “We hold that while
the two storage tanks are not embedded in the land,
they may, nevertheless, be considered as improvements
on the land, enhancing its utility and rendering it useful
to the oil industry. It is undeniable that the two tanks
have been installed with some degree of permanence
as receptacles for the considerable quantities of oil
needed by Meralco for its operations.
For purposes of taxation, the term "real property" may
include things which should generally be regarded as
personal property(84 C.J.S. 171, Note 8). It is a familiar
phenomenon to see things classed as real property for
purposes of taxation which on general principle might
be considered personal property (Standard Oil Co. of
New York vs. Jaramillo, 44 Phil. 630, 633).”
What is the difference between this case sa Mindanao Bus
case? They are essentially the same, nakapatong din. This
differs because in this case, the storage tanks cannot be
removed without paralyzing the business. In the Mindanao
case, the equipment were merely incidental to the
business, you remove them, mag operate pa rin ang bus
company.
CALTEX vs CBAA
The property subject of this case are - underground
tanks, elevated tank, elevated water tanks, water tanks,
gasoline pumps, computing pumps, water pumps, car
washer, car hoists, truck hoists, air compressors and
tireflators.
SC said that the machineries are realties because they
are necessary for the operation of the gas station;
without them, the gas station would be useless. Parang
weird kasi gisali ang mga car hoist, air compressors, etc.
FELS ENERGY vs BATANGAS
Power barges.
The law in point here is Art 415 (9) Docks and
structures which, though floating, are intended by
their nature and object to remain at a fixed place on a
river, lake, or coast;
So power barge, although palutang-lutang, but they are
intended to remain at a fixed place.
(Castro)
5
Manila Electric Company vs. City Assessor and City
Treasurer of Lucena City
GR 166102 August 5, 2015
The properties included here are transformers and
electric posts, transmission lines.
The Supreme Court said here that the wires, poles,
electric meters, transformers MAY qualify as a real
property for purposes of real property taxation.
Sabi ng Supreme Court here is MAY. It is an open-
ended decision.
What is essential here is this, the laws and rules
defining real property for real property tax (RPT)
purposes are already confusing we should harmonize
this. The poles etc. are real property for RPT purposes,
we just have look at the Civil Code. But the SC said as
between the Civil Code, the general law describing
what a real property or an immovable is all about we
have the local government code. This is essentially a
special law planting the LGU the power to impose RPT.
As between a general law and a specific/special law,
the special law will prevail.
Ang sabi ng Supreme Court dito “MAY qualify as real
property”, why is it this way? Bakit “MAY”? Because the
SC said here is that the determination of whether or
not this electric transmissions, poles, transformers, etc.,
whether or not they are real property, are factual
issues. And the SC is not a trier of facts. I think the SC
remanded this case back to the lower court. (grabe
gyud ang SC, wala nalang man gyud nila gi decide kung
unsa ang nature).
From the full text: MERALCO maintains that
its electric posts are not machinery subject to
real property tax because said posts are not
being exclusively used by MERALCO; these are
also being utilized by cable and telephone
companies. This, however, is a factual issue
which the Court cannot take cognizance of in
the Petition at bar as it is not a trier of facts.
Whether or not the electric posts of MERALCO
are actually being used by other companies or
industries is best left to the determination of
the City Assessor or his deputy, who has been
granted the authority to take evidence under
Article 304 of the Rules and Regulations
Implementing the Local Government Code of
1991.
Capitol Wireless, Inc. vs. The Provincial Treasurer Of
Batangas
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
G.R. No. 180110, May 30, 2016
The property here is an underground water cable. The
corporation, Capitol Wireless Inc. is a Philippine
corporation in the business of providing international
telecommunications services.
Parang Southeast Asian ang coverage niya ditto and
there are underwater cables. And these underwater
cables passed through Batangas. Ang sabi ng Province
of Batangas underwater cables are real properties and
so they tried to collect RPT.
May submarine communications cables be classified as
taxable real property by the local governments?
The Supreme Court said YES. Submarine or undersea
communications cables are akin to electric transmission
lines which this Court has recently declared in Manila
Electric Company vs. City Assessor and City Treasurer of
Lucena City, as "no longer exempted from real property
tax" and may qualify as "machinery" subject to real
property tax under the Local Government Code.
You just read this case. This is so easy to understand.
In the event that you forget all these cases, makalimutan
niyo siya, you just have to answer these 2-fold questions
to know if that particular property is a real property for
purposes of RPT:
1. Is this classified under Article 145 of the Civil
Code? Pag pasok siya sa Article 415 of the Civil
Code it is a real property. No questions about it.
But what if it does not fall under Article 415 of
the Civil Code. The next question that you have
to ask is:
2. Is the property essential and principal in the
conduct of the business? Pag sinabi na essential,
meaning if you take this out it would paralyze
the business. And if YES, it would paralyze the
business then it becomes a real property subject
to RPT. The legal basis for that is the definition of
machinery under the Local Government Code.
Sec. 199 Definitions
(o) "Machinery" embraces machines,
equipment, mechanical contrivances,
instruments, or apparatus which may or may
not be attached, permanently or temporarily,
to the real property. It includes the physical
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facilities for production, installations and
appurtenant service facilities, those which are
mobile, self-powered or self-propelled, and
those not permanently attached to the real
property which are actually, directly, and
exclusively used to meet the needs of the
particular industry, business or activity and
which by their very nature and purpose are
designed for, or necessary to its
manufacturing, mining, logging, commercial,
industrial or agricultural purposes;
However, if the answer to the question is NO
then it is not a real property for RPT purposes.
IMPOSITION OF RPT
WHAT ARE THE KINDS OF REAL PROPERTY TAXES or
IMPOSITIONS OF REAL PROPERTY TAX?
1. Basic Real Property Taxes
2. Special Education Fund
3. Ad Valorem Tax
4. Special Levy
BASIC REAL PROPERTY TAXES
SECTION 232. Power to Levy Real Property Tax. - A
province or city or a municipality within the
Metropolitan Manila Area may levy an annual ad
valorem tax on real property such as land, building,
machinery, and other improvement not hereinafter
specifically exempted.
Rates
SECTION 233. Rates of Levy. - A province or city or a
municipality within the Metropolitan Manila Area shall
fix a uniform rate of basic real property tax applicable
to their respective localities as follows:
(a) In the case of a province, at the rate not
exceeding one percent (1%) of the assessed
value of real property; and
(b) In the case of a city or a municipality
within the Metropolitan Manila Area, at the
rate not exceeding two percent (2%) of the
assessed value of real property.
So mas malaki ang sa City compared to that sa Province.
WHO MAY IMPOSE REAL PROPERTY TAXES ON REALTY?
1. Provinces
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola

2. Cities, it doesn’t matter kung component or
independent city siya. Basta siyudad pwede siya
mag RPT.
3. Municipalities within the Metro Manila only.
Outside Metro Manila, wala na kayong magawa
jan, they don’t have the authority to impose RPT.
SPECIAL EDUCATION FUND
SECTION 235. Additional Levy on Real Property for the
Special Education Fund. - A province or city, or a
municipality within the Metropolitan Manila Area, may
levy and collect an annual tax of one percent (1%) on
the assessed value of real property which shall be in
addition to the basic real property tax. The proceeds
thereof shall exclusively accrue to the Special Education
Fund (SEF).
Bawat province or city ata meron nito. This is for a specific
purpose- special education fund within the territorial
jurisdiction of the locality where property is located.
AD VALOREM TAX ON IDLE LANDS
SECTION 236. Additional Ad Valorem Tax on Idle
Lands. - A province or city, or a municipality the
Metropolitan Manila Area, may levy an annual tax on
idle lands at the rate not exceeding five percent (5%) of
the assessed value of the property which shall be in
addition to the basic real property tax.
Ito medjo masakit ito kasi 5% unlike sa Basic and Special
Education Fund na 1% lang.
What is the purpose of this?
1. To penalize- this is to penalize property owner
who will not use their properties productively.
Naa koy yuta, unsay gamit nimo ana- WALA!
2. To encourage utilization of the land resources in
order to contribute to the national
development.
(Gido)
IDLE LANDS COVERED
planted to permanent or perennial crops with at least fifty
(50) trees to a hectare shall not be considered idle lands.
Lands actually used for grazing purposes shall likewise not
be considered idle lands.
(b) Lands, other than agricultural, located in a city or
municipality, more than one thousand (1,000) square
meters in area one-half (1/2) of which remain unutilized or
unimproved by the owner of the property or person
having legal interest therein.
Regardless of land area, this Section shall likewise apply to
residential lots in subdivisions duly approved by proper
authorities, the ownership of which has been transferred
to individual owners, who shall be liable for the additional
tax: Provided, however, That individual lots of such
subdivisions, the ownership of which has not been
transferred to the buyer shall be considered as part of the
subdivision, and shall be subject to the additional tax
payable by subdivision owner or operator.
Based on Section 237 there are two (2) types of idle lands:
1. AGRICULTURAL LANDS
2. Other Lands
Requirements to consider Agricultural Lands as Idle
Lands:
1. The property must be (classified as) an
agricultural land;
2. The land must be more than one (1) hectare;
3. The land must be suitable for agricultural uses;
4. One half (½) must remain uncultivated or
unimproved;
5. Must not be planted with at least fifty (50) trees;
6. The land must not be actually used for grazing
purposes.

Requirements to consider Other Lands as Idle Lands:

Section 237. Idle Lands, Coverage. - For purposes of real 1. The land is more than one thousand (1,000)
property taxation, idle lands shall include the following: square meters;
2. ½ of the area remains unutilized.
(a) Agricultural lands, more than one (1) hectare in area,
suitable for cultivation, dairying, inland fishery, and other IDLE LANDS EXEMPT FROM TAX
agricultural uses, one-half (1/2) of which remain
uncultivated or unimproved by the owner of the property
or person having legal interest therein. Agricultural lands

7
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Section 238. Idle Lands Exempt from Tax. - A province or
city or a municipality within the Metropolitan Manila Area
may exempt idle lands from the additional levy by reason
of force majeure, civil disturbance, natural calamity or any
cause or circumstance which physically or legally prevents
the owner of the property or person having legal interest
therein from improving, utilizing or cultivating the same.
Examples:
1. You have a vast land, once you set foot on that
land – “ignan ka na kidnapon ka” – if that is the
case, you cannot cultivate the land;
2. (from 2018 TSN) An idle land declared by the
LGU as a flood buffer zone “wala ka talagang
magagawa sa land na yan kasi pag nag baha
diyan dadaan lahat ng tubig.” That is a flood
control mechanism.
SPECIAL LEVY
This is NOT a tax but an example of a SPECIAL
ASSESSMENT. This is an imposition by the LGU.
Section 240. Special Levy by Local Government Units. -
A province, city or municipality may impose a special
levy on the lands comprised within its territorial
jurisdiction specially benefited by public works projects
or improvements funded by the local government unit
concerned: Provided, however, That the special levy
shall not exceed sixty percent (60%) of the actual cost
of such projects and improvements, including the costs
of acquiring land and such other real property in
connection therewith: Provided, further, That the
special levy shall not apply to lands exempt from basic
real property tax and the remainder of the land
portions of which have been donated to the local
government unit concerned for the construction of
such projects or improvements.
EXEMPTION FROM REAL PROPERTY TAX
Section 234. Exemptions from Real Property Tax. - The
following are exempted from payment of the real property
tax:
(a) Real property owned by the Republic of the Philippines
or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration
or otherwise, to a taxable person;
8
XXX...
Case(s) on point:
GSIS versus CITY TREASURER and ASSESSOR of MANILA
(GR 168242, Dec. 23, 2009)
Facts: GSIS owned real property lands rented to a hotel.
GSIS is specifically exempt from tax by its charter. When
the LGC came, that tax exemption was withdrawn. The City
Treasurer and the City Assessor demanded payment of
RPT for the properties rented out to the hotel.
Issues:
1. Is GSIS exempt from RPT?
2.Are the properties in this case (those leased to the hotel)
exempt from RPT?
Ruling: (1) GSIS IS TAX EXEMPT. RA 8291 reenacted the
full tax exemption of GSIS from taxes imposed by LGUs.
GSIS being classified as an instrumentality of the
government. RA 8291 reenacted the full tax exemption of
GSIS, this includes RPT.
(2) it does not mean that because GSIS is tax exempt entity
there is not more RPT liabilities in this case. SINCE THE
NEMEFICIAL USE OF THE PROPERTY WAS GRANTED TO A
TAXABLE PERSON, THE PROPERTY IS SUBJECT TO RPT.
PAYMENT OF THE RPT IS CHARGABLE TO THE PERSON
EXECISING BENEFICIAL USE OF THE PROPERTY. (Hotel in
this case – The LGU shall collect upon them)
MACTAN CEBU INTERNATIONAL AIRPORT versus CITY OF
LAPU-PAU
(GR 181756, June 15, 2015)
The airport itself is a Government Instrumentality. As such,
its property actually used, solely and exclusively for
public purposes, including the airport terminal, runway
and etc. are exempt from RPT.
Extent of The Exemption:
The exemption from paying RPT does not extend to its
(airport) real properties leased to taxable people. specific
real property leased to taxable people is subject to RPT.
*The same ruling in Manila Int. Airport vs. CA (2006)
LIGHT RAIL TRANSIT AUTHORITY versus CBBA
(GR 127316, Oct. 12, 2000)
Contention: Involved here is the LRT; the contention of the
LRT here is that they are exempt from Real Property Taxes
because the carriage ways and stations are real property
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FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
under and because they are attached on government
poles.
Ruling: The Supreme Court said that that is actually
misleading. It does not mean that they are attach on
government lines that they are already exempt. LRT is a
service-oriented entity for profit even if it is for public
service.
Contention: LRTA is not the main user of the property but
it is actually the public. (from full text: Petitioner argues
that  it merely operates and maintains the LRT system, and
that the actual users of the carriageways and terminal
stations are the commuting public. It adds that the public-
use character of the LRT is not negated by the fact that
revenue is obtained from the latter's operations.)
Ruling: (from Full Text: Unlike public roads which are open
for use by everyone, the LRT is accessible only to those
who pay the required fare. It is, thus, apparent that
petitioner does not exist solely for public service, and that
the LRT carriageways and terminal stations are not
exclusively for public use. Although petitioner is a public
utility, it is nonetheless profit-earning.  It actually uses
those carriageways and terminal stations in its public
utility business and earns money therefrom.
PHILIPPINE PORTS AUTHORITY versus CITY OF ILOILO
(GR 143214, Nov. 11, 2004)
(inaudible discussion)
Transcriber’s Entry:
When P.D. No. 857 took effect on December 23,
1975, the petitioner became the owner of the subject
facilities and appurtenances in this case which were levied
for nonpayment of RPT.
Note that after the LGC took effect, petitioner herein was
never classified/reclassified as a tax-exempt entity.
Petitioner is empowered to invest its funds in such
government securities approved by the Board of Directors,
and derives its income from rates, charges or fees for the
use by vessels of the port premises, appliances or
equipment. Clearly then, the petitioner is a profit-earning
corporation; hence, its patrimonial properties are subject
to tax.
The bare fact that the port and its facilities and
appurtenances are accessible to the general public does
not exempt it from the payment of real property taxes. It
must be stressed that the said port facilities and
appurtenances are the petitioner's corporate patrimonial
9
properties, not for public use, and that the operation of
the port and its facilities and the administration of its
buildings are in the nature of ordinary business.  The
petitioner is clothed, under P.D. No. 857, with corporate
status and corporate powers in the furtherance of its
proprietary interests:
We reject the petitioner's claim that it is exempt
from the payment of real property taxes, considering that
it does not use the port facilities and buildings.  This Court
overruled a similar submission as follows:
Under the Real Property Tax Code, real property
is classified for assessment purposes on the basis of actual
use, which is defined as "the purpose for which the
property is principally or predominantly utilized by the
person in possession of the property.
(Isidor)
This is a reiteration of a constitutional provision on
exemption on real property taxes.
(b) Charitable institutions, churches, parsonages or
convents appurtenant thereto, mosques, non-profit or
religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used
for religious, charitable or educational purposes;
Please take note of the case of Lung Center of the
Philippines vs Quezon City
- Not discussed by Sir.
Lung Center of the Philippines vs. Quezon City (From
2017 TSN)
G.R. No. 144104 June 29, 2004
This case talks about the exemption under Section
234(b). This provision is actually copy paste from the
constitution. The basic point here is even if it is
receiving some profits, it does not take away the fact
that it is organized for charity. In fact, the fact that it is
a charitable institution does not make it automatically
exempt from RPT. The properties to be exempt must be
actually, directly and exclusively for its purpose. So the
properties or portion thereof rented out is not exempt
from RPT.
Let’s proceed:
c. All machineries and equipment that are actually,
directly and exclusively used by local water districts and
government owned or controlled corporations engaged
in the supply and distribution of water and/or
generation and transmission of electric power;
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
The case in point here is Fels Energy Inc. Vs Province of
Batangas
- Not discussed by sir
FELS Energy, Inc. vs. The Province of Batangas, et al.,
(From 2017 TSN)
G.R. No. 168557 February 16, 2007
The argument of FELS energy there is somewhat a
direct taxexemption. We are providing electricity and
we are working with GOCCs so we should be given the
same tax exemption.
The SC said NO.
You cannot escape payment of RPT by invoking the
provision of the LGC.
It is necessary that:
(1) the entity is a GOCC and
(2) the machinery and equipment are actually, directly
and
exclusively used for supply and distribution of
electricity or water.
And then you have:
d. All real property owned by duly registered
cooperatives as provided for under R.A. No. 6938;
Then lastly you have:
e. Machinery and equipment used for pollution control
and environmental protection.
Except as provided herein, any exemption from
payment of real property tax previously granted to, or
presently enjoyed by, all persons, whether natural or
juridical, including all government owned or controlled
corporations are hereby withdrawn upon the effectivity
of this Code.
Now, there is this one peculiar situation with respect to
real property tax exemption. This involves yung sa may
Sta. Cruz. Yung Coal Plant.
Here is the issue here:
Diba in Coal Plant meron yan siyang machinery and
equipment to be used for pollution control, to reduce the
environmental impact of this coal plant. So anong ginawa
nila?
So, basically there is a big machinery there and this
machinery was placed inside the building and then the
Province of Davao del Sur tried to collect taxes. So, sabi ng
Prov. Of Davao del Sur, sige yung equipment nyo exempt
siya from real property tax but the building you should pay
for the real property tax.
10
Argument of Coal Plant:
Sabi naman ng Coal plant, we are not supposed to be liable
for the real property taxes because without the building,
there could be no machinery, we need that building so
that, we could house that machinery. It is an integral part
of the machinery.
So, which is which?
If you were the lawyer of the Province, how do you argue?
What does the law say?
“e. Machinery and equipment used for pollution control
and environmental protection.”
Is the building a machinery or an equipment?
Take note that in claiming tax exemptions, it is strictly
construed against the taxpayer and in favor of the state.
Right?
What if ikaw ang lawyer ng Coal Plant?
You would say na okay, yes there is a building but it is part
and parcel of the machinery or the equipment. You cannot
take it out (machinery or equipment) from the property,
otherwise it will be destroyed and it will lose its essence.
Therefore, this is exempted from real property tax.
*This case is still undecided.
ASSESSMENT AND APPRAISAL OF
REAL PROPERTY TAXES
Section 232. Power to Levy Real Property Tax.- A
province or city or a municipality within the
Metropolitan Manila Area may levy an annual ad
valorem tax on real property such as land, building,
machinery, and other improvement not hereinafter
specifically exempted.
Who collects:
 Province, City or Municipality within the
Metropolitan Manila area
Definition of APPRAISAL:
- It is the act or process of determining the value of the
property at
a specified date for a specific purpose.
Definition of ASSESSMENT:
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
- It is the act or process of determining the value of
property or a portion thereof subject to tax including the
discovery, listing, classification and appraisal of the
property.
Duty to Appraise and Assess
Who has the duty to appraise and assess the real property
for RPT purposes?
The duty is lodged with the Local Assessor.
Kung sa Davao City pa, Davao City Assessor’s Office.
When we talk about assessment here, this is an entirely
different concept pagdating sa RPT.
Because this involves the determination of assessment of
the property appraised for purposes of real property
taxation.
In APPRAISAL, you talk about the body of the property,
pagdating sa ASSESSMENT, it is just a portion of the
appraised value of the property.
WHO ARE THE PERSONS INVOLVE IN THE LISTING,
APPRAISAL, AND ASSESSMENT OF THE PROPERTY?
1. ROD (Registrar of Deeds);
 Duties:
A. To ascertain whether or not any real property
escaped discovery and listing for RPT purposes;
B. To require every person who shall present for
registration a document for transfer to
accompany the same with a certificate that the
RPT has been duly paid;
C. If the RPT has not been paid then the ROD
may refuse the registration of that document.
2. Building Officials;
Duty: Transmit a copy of the building permit or
certificate to the City Assessor.
When: Within 30 days from its issuance.
3. Geodetic Engineers;
Duty: Required to furnish a copy free of charge
to the assessor of the province, city or
municipality where the land is located with a
white or blue print copy of each of all approved
original or subdivision plans or maps of surveys
executed by them.
11
When: Within 30 days from receipt of such plans
from the Lands Management Bureau, the Land
Registration Authority, or the Housing and Land
Use Regulatory Board as the case may be.
4. Notaries Public;
Duty: Required to submit to the City Assessor all
contracts involving real property acknowledged
by them.
*These submissions are important because the
first thing that the Local Assessor will do is to
prepare a listing. When you say listing, this is a
just a list of all existing real property in the Local
Government Unit where the properties are
found.
(Lagat)
The listing, that would be the first thing that would
happen.
Next is the APPRAISAL.
How would be the real property be appraised?
It is appraised at the current and fair market value
prevailing in the locality where the property is situated.
It really depends on cases to case. For province that are
far, it is cheaper. But when you’re in the city, like Metro
Manila, that is very expensive.
Fair market value — use the definition given in Sales Law.
Fair market value is the price in which the
property is sold by person not compelled to sell and by a
buyer who is not compelled to buy.
(Case: Allied bank v Quezon City)
FAIR MARKET VALUE VS. ASSESSED VALUE
The fair market value is different from the assessed value.
As to its determination, the FMV is usually declared by the
owner, but subject to the final determination of the
assessor, while the AV is determined by the application of
the assessment level as determined by the local ordinance
to the FMV of the property
AV is the portion of that value of the FMV.
AV is the TAX BASE FOR PURPOSES OF real property
taxation
It is a percentage of the FMV
APPROACHES IN ESTIMATING FMV
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Q: How do we determine the FMV?
Maraming ways to determine it; some are the ff:
1) The Sales Analysis approach
- the data accumulated by the ROD
How much is the property now here?
How much does it cost?
We have to look at those as indicated
in the consideration in the deed of
sale, which are situated relatively close
to that property.
2) Income Capitalization Approach
- This considers income of the property
determined from the fair market value
This time, you don’t just look at the value of the
property, you also look at how much income will
this property earn given the circumstances
3) Reproduction Cost Approach
- This is exclusively in the raising man-made
improvements such as buildings and other
structures. In this case, the labor materials are
considered to reproduce a replica of such
improvement.
LISTING OF REAL PROPERTIES
How does it go?
First, is declaring real property, Sec.202
General Rule:
It shall b e the duty of all persons, natural or
juridical, owning or administering a property including the
improvements therein, within a city or municipality, or
duly authorised representative to prepare or cause to be
prepared and file with the province, city or municipal
assessor a sworn statement declaring the true value of the
property.
First touch pa rin nyan, is the property owner or his
authorised representative; he is required to make a
declaration as to the value of that real property.
The purpose of this declaration is to determine the
assessed level.
Mag-declare ka, then, the local assessor will make a tax
declaration. What is the nature of this tax declaration?
12
As a rule, tax declarations or receipts of real property tax
payments are evidence of declarations and payments only.
It only proves the value as declared; yan lang. It is not
conclusive evidence of ownership. But the Supreme Court
would always say that voluntary declaration of piece of
property for RPT purposes manifests not only one’s
sincere, and honest desire to obtain title to the property,
and announce adverse claim the state and all other
interested parties, but also, to contribute the needed
revenues for the government. Such acts strengthen his
bona fide claim of acquisition of ownership.
It is only corroborative proof of ownership. With the Tax-
dec, you are more or less the owner of the property. No
one in his right mind would declare it as part of his
properties, if it is not his own. This is also the rule on
possession. Alright
What if the owner of the property will refuse to make
declaration?
Then the local assessor, himself, may declare the property
in the name of the possessor. He will declare it for you.
When should the declaration be done?
Owners/Administrators —
It must be made once every three years.
For persons acquiring real property —
within 60 days after acquisition
For persons holding a proof in real property — within 60
days from the date of completion, or, occupancy
Then, the next thing that would happen is the preparation
of the schedule of their market value.
After the declaration, the assessor will now be ready to
prepare the schedule for the market value to add in
listings. And this would be submitted to the local
sanggunian in preparation for the enactment of the
ordinance.
That is the only function of the assessor; prepare the
listing of all the properties, determine their value, and
hanggan dyan lang. The next thing the local assessor
would do is to submit it to the local sanggunian.
Why? Because in levying it, it is still an administrative
function.
Paano sila magstart ng local tax if they don’t know the fair
market value and the properties within their territorial
jurisdiction?
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
That’s it.
CLASSIFICATION OF PROPERTIES
(for purpose of real property tax)
1) Residential land
- principally devoted for habitation
2) Agricultural
- devoted principally to the planting of trees, crops,
livestock, poultry, mainland fishing and similar
agricultural activities and other agri-activities not
classified as mineral, timber or commercial or industrial
3) Commercial
- it is for profit; It is not classified as agri, etc
4) Industrial
- principally to industrial activities and capital
investments (usually factories)
5) Timber lands
6) SPECIAL LANDS (Sec.216, LGC)
Sec. 216. All lands and buildings and other
improvements therein, exclusively used for hospitals,
cultural, or executive purposes and those owned and
used by local GOCCs rendering essential public
purposes and supply own generation of electric power
shall be classified as special.
Who has the power to classify lands?
The City or municipality (metro manila)
— respective Sanggunian
That’s why if you want to change the classification of that
land, they must have to undergo proceedings the
respective local sanggunian.
If you want to reclassify from agricultural to residential
lands, (ie. Camella housing), you have to go to the
Sanggunian. And the sanggunian must reclassify that from
agri- to residential
What is the BASIS of the classification of the land?
- ACTUAL use wherever located, whoever owns it,
whoever uses it.
April 4, 2019
(Lim)
CLASSIFICATION OF LANDS
13
Section 216. Special Classes of Real Property. - All
lands, buildings, and other improvements thereon
actually, directly and exclusively used for hospitals,
cultural, or scientific purposes, and those owned and
used by local water districts, and government-owned or
controlled corporations rendering essential public
services in the supply and distribution of water and/or
generation and transmission of electric power shall be
classified as special.
Q: Who has the power to classify lands
A: Land Classification of the Sanggunian. This is why if
there are subdivisions classified as agricultural then they
will go to the Sanggunian to reclassify the said land.
Q: What is the basis of the classification of the land?
A: The basis of the classification is always the actual use.
Q: Will the declaration of the owners of the property, as
to its use, affect the land?
A: No. Generally, there is a declaration as it is the
“classification of the property”. But take note that it is just
a declaration. It may be possible that the classification in
the declaration and the actual use is different. Case in
point is Patalinghug vs. Court of Appeals. The declaration
that the building is for residential purposes is not
conclusive as to the nature of the property. A property
may have been declared by its owner as residential for
real estate taxation purposes but it may well be within a
commercial zone. In this property, aside from the funeral
parlor, may apartment sa tabi and laundry shop. It’s really
used for commercial purposes, they cannot say na
residential lang yun.
Patalinghug v CA
GR No 104786, January 27, 1994 
FACTS:
A funeral home was constructed in Davao City. Per
ordinance, the same should not be less than 50 meters
away from residential lots. A building owned by Tepoot
is both used as a dwelling and as a business is located
within 50 meters of the funeral home. Under its tax
declaration, the commercial property is labeled as
residential tax purposes. 
RULING:
In the case at bar, the testimony of City Councilor
Vergara shows that Mr. Tepoot's building was used for
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola

a dual purpose both as a dwelling and as a place where by ordinances of the sangguniang panlalawigan,
a laundry business was conducted. [8] But while its sangguniang panlungsod or sangguniang bayan of a
commercial aspect has been established by the municipality within the Metropolitan Manila Area, at
presence of machineries and laundry paraphernalia, its the rates not exceeding the following:
use as a residence, other than being declared for
taxation purposes as such, was not fully substantiated. (a) On Lands:
CLASS ASSESSMENT LEVELS
The reversal by the Court of Appeals of the trial court's Residential 20%
decision was based on Tepoot's building being declared Agricultural 40%
for taxation purposes as residential. It is our considered Commercial 50%
view, however, that a tax declaration is not conclusive Industrial 50%
of the nature of the property for zoning purposes. A Mineral 50%
property may have been declared by its owner as Timberland 20%
residential for real estate taxation purposes but it may
well be within a commercial zone. A discrepancy may (b) On Buildings and Other Structures:
thus exist in the determination of the nature of (1) Residential
property for real estate taxation purposes vis-a-vis the Fair market Value
determination of a property for zoning purposes. Over Not Over Assessment Levels
Needless to say, even if we are to examine the
evidentiary value of a tax declaration under the Real P175,000.00 0%
Property Tax Code, a tax declaration only enables the P175,000.00 300,000.00 10%
assessor to identify the same for assessment levels. In 300,000.00 500,000.00 20%
fact, a tax declaration does not bind a provincial/city 500,000.00 750,000.00 25%
assessor, for under Sec. 22 of the Real Estate Tax Code, 750,000.00 1,000,000.00 30%
[9]
 appraisal and assessment are based on the actual use 1,000,000.00 2,000,000.00 35%
irrespective of "any previous assessment or taxpayer's 2,000,000.00 5,000,000.00 40%
valuation thereon," which is based on a taxpayer's 5,000,000.00 10,000,000.00 50%
declaration. In fact, a piece of land declared by a 10,000,000.00 60%
taxpayer as residential may be assessed by the
provincial or city assessor as commercial because its (2) Agricultural
actual use is commercial. Fair Market Value
Over Not Over Assessment Levels
ASSESSMENT LEVELS P300,000.00 25%
P300,000.00 500,000.00 30%
The next step is kapag meron na tayong appraisal, may 500,000.00 750,000.00 35%
classification, for determination of real property tax, then 750,000.00 1,000,000.00 40%
determination of assessment levels and how is it assessed. 1,000,000.00 2,000,000.00 45%
2,000,000.00 50%
Q: How is it determined?
A: By the respective ordinances of each province or city. (3) Commercial / Industrial
Assessed value is not the value of the property. Iba yung Fair Market Value
face value, assessed value and iba yung assessment level. Over Not Over Assessment Levels
P300,000.00 30%
Q: What is assessment levels? P300,000.00 500,000.00 35%
A: It is a percentage applied to determine to the fair 500,000.00 750,000.00 40%
market value of real property. For example: In Davao City 750,000.00 1,000,000.00 50%
the percentage for residential is 20% lang. After 1,000,000.00 2,000,000.00 60%
determining the assessment, dun na madetermine ang fair 2,000,000.00 5,000,000.00 70%
market value. The rates of the assessment should not 5,000,000.00 10,000,000.00 75%
exceed the rates provided under Section 218 of the LCG. 10,000,000.00 80%

(4) Timberland
Section 218. Assessment Levels. - The assessment Fair Market Value
levels to be applied to the fair market value of real Over Not Over Assessment Levels
property to determine its assessed value shall be fixed P300,000.00 45%

14
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola

P300,000.00 500,000.00 50% (Olamit)

500,000.00 750,000.00 55% So after January 1, may bagong re-assessment value, it will
750,000.00 1,000,000.00 60% take effect only on the following year.
5,000,000.00 2,000,000.00 65%
2,000,000.00 70% Xxx Provided, however, That the reassessment of real
property due to its partial or total destruction, or to a
(c) On Machineries major change in its actual use, or to any great and sudden
Class Assessment Levels inflation or deflation of real property values, or to the
Agricultural 40% gross illegality of the assessment when made or to any
Residential 50% other abnormal cause, shall be made within ninety (90)
Commercial 80% days from the date any such cause or causes occurred…
Industrial 80% xxx

(d) On Special Classes: The assessment levels for all
lands buildings, machineries and other improvements;
Actual Use Assessment Level
Cultural 15%
Scientific 15%
Hospital 15%
Local water districts 10%
Government-owned or controlled corporations
engaged in the supply and distribution of water and/or
generation and transmission of electric power 10%
Pag sinabi nating tax base of the real property tax, it is not
the assessed value, not the face value, BUT it is the value
of the property on the assessment level. From time to
time, this classification of property must be reclassified
and reassessed in order to reflect the true value of the
property.
If the grounds are these:
“reassessment due to partial or total destruction, etc. or to
a major change in its actual use”, it will take effect 90 days
from the date any such cause or causes occurred.
Just take note of this provision.
So, you already know the assessment, the appraisal value,
the tax basis, we are now in the COLLECTION stage.
COLLECTION OF REAL PROPERTY TAXES
Let’s go first to the ACCRUAL.
Q: When will real property taxes accrue?
Pag’ sabi natin ng real property taxes, it would include
special liabilities ha. Like the SEF (Special Education Fund).

Q: How often should the reclassification and
reassessment be made?
A: It should be every three years and thereafter.
EFFECTIVITY OF THE ASSESSMENT
Section 221. Date of Effectivity of Assessment or
Reassessment. - All assessments or reassessments
made after the first (1st) day of January of any year
shall take effect on the first (1st) day of January of the
succeeding year: Provided, however, That the
reassessment of real property due to its partial or total
destruction, or to a major change in its actual use, or to
any great and sudden inflation or deflation of real
property values, or to the gross illegality of the
assessment when made or to any other abnormal
cause, shall be made within ninety (90) days from the
date any such cause or causes occurred, and shall take
effect at the beginning of the quarter next following the
reassessment.
Q: When does the RPT and special liabilities accrue?
We have Sec. 246 of your LGC.
SEC. 246. Date of Accrual of Tax.- The real property tax
for any year shall accrue on the first day of January and
from that date it shall constitute a lien on the property
which shall be superior to any other lien, mortgage, or
encumbrance of any kind whatsoever, and shall be
extinguished only upon the payment of the delinquent
tax.
The RPT and the special liability accrues every January 1.
But it doesn’t mean you have to pay every January 1, it is
just that for the previous year, meron ka ng babayaran na
RPT by January 1. That is the time that the obligation to
pay real property tax arise or accrue.
And of course we have to take note, by January 1,
automatic meron na yang lien sa property.
Q: How do you remove that lien over the real property?
It is by payment of the real property tax.

15
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Q: Who collects the real property tax?
When it comes to collection, it is the local treasurer.
Sec. 247 of the LGC:
SEC. 247. Collection of Tax. - The collection of the real
property tax with interest thereon and related
expenses, and the enforcement of the remedies
provided for in this Title or any applicable laws, shall be
the responsibility of the city or municipal treasurer
concerned. The city or municipal treasurer may
deputize the barangay treasurer to collect all taxes on
real property located in the barangay: Provided, That
the barangay treasurer is properly bonded for the
purpose: Provided, further, That the premium on the
bond shall be paid by the city or municipal government
concerned.
If you notice, it cannot be delegated to any private person.
But when it comes to real property taxes, local treasurer,
he or she, can deputize the barangay treasurer with
respect to the real properties located in that particular
barangay.
Then you have Sec. 249. This is the notice of time for the
collection of tax.
SEC. 249. Notice of Time for Collection of Tax. - The city
or municipal treasurer shall, on or before the thirty-first
(31st) day of January each year, in the case of the basic
real property tax and the additional tax for the Special
Education Fund (SEF) or on any other date to be
prescribed by the sanggunian concerned in the case of
any other tax levied under this Title, post the notice of
the dates when the tax may be paid without interest at
a conspicuous and publicly accessible place at the city
or municipal hall. Said notice shall likewise be published
in a newspaper of general circulation in the locality
once a week for two (2) consecutive weeks.
So the first thing that we will receive is the notice for the
collection of the real property tax. Ito yung sinasabi natin.
Ang equivalent nito when it comes to your NIRC or local
business taxes, ito yung “PAN” (Preliminary Assessment
Notice) assessment kumbaga. It is somewhat a demand for
all real property tax owners to pay their real property tax.
Medyo mahirap naman kasi kung isa isang ibibigay, diba?
A lot of people owns real property. So, ang gawin nyan,
posting of notices. That’s the first thing that will happen.
Q: When is the posting made?
It is made on or before January 31 or any other date as
prescribed from the ordinance by the Sanggunian.
16
Q: When should the RPT be made?
Sec. 250 of the LGC:
SEC. 250. Payment of Real Property Taxes in
Installments. - The owner of the real property or the
person having legal interest therein may pay the basic
real property tax and the additional tax for Special
Education Fund (SEF) due thereon without interest in
four (4) equal installments; the first installment to be
due and payable on or before March Thirty-first (31st);
the second installment, on or before June Thirty (30);
the third installment, on or before September Thirty
(30); and the last installment on or before December
Thirty-first (31st), except the special levy the payment
of which shall be governed by ordinance of the
sanggunian concerned. The date for the payment of
any other tax imposed under this Title without interest
shall be prescribed by the sanggunian concerned.
Payments of real property taxes shall first be applied to
prior years delinquencies, interests, and penalties, if
any, and only after said delinquencies are settled may
tax payments be credited for the current period.
So supposedly, under the LGC, and most city ordinances
would provide that RPT may be paid for four installments.
This is especially true if the real property value is very big.
Like for example Abreeza. As one portion of that property
in Abreeza, if you remember merong road na nag-collapse
diyan. That portion alone, yung buong title niyan, I think
ang assessed value niya is around Php 21 million. Dako
kayo siya.
So, in order to ease the burden on the part of the
taxpayers or owners of that property, they are allowed to
pay on four equal installments. So four installments siya.
On or before March, June, September, and then you have
December.
Also, there is one thing to remember in RPT, you can
actually pay it in advance. And of course, if you pay it in
advance, pwede pa maka-avail ug discounts, depending on
the ordinance concerned.
Sec. 251 of the LGC:
SEC. 251. Tax Discount for Advanced Prompt Payment. -
If the basic real property tax and the additional tax
accruing to the Special Education Fund (SEF) are paid in
advance in accordance with the prescribed schedule of
payment as provided under Section 250, the
sanggunian concerned may grant a discount not
exceeding twenty percent (20%) of the annual tax due.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Authority is still from the Sanggunian.
Then you have the prescriptive period.
Q: How about if it is given to the LGU to collect the RPT
before the period (to collect) to prescribe?
So the prescriptive period is provided under Sec. 270:
SEC. 270. Periods Within Which To Collect Real Property
Taxes. - The basic real property tax and any other tax
levied under this Title shall be collected within five (5)
years from the date they become due. No action for the
collection of the tax, whether administrative or judicial,
shall be instituted after the expiration of such period. In
case of fraud or intent to evade payment of the tax,
such action may be instituted for the collection of the
same within ten (10) years from the discovery of such
fraud or intent to evade payment. The period of
prescription within which to collect shall be suspended
for the time during which:
(1) The local treasurer is legally prevented from
collecting the tax;
(2) The owner of the property or the person having
legal interest therein requests for reinvestigation and
executes a waiver in writing before the expiration of
the period within which to collect; and  have to receive a notice of delinquency. This is under Sec.
(3) The owner of the property or the person having
legal interest therein is out of the country or otherwise
cannot be located.  SEC. 254. Notice of Delinquency in the Payment of the
So let’s just summarize. This is pretty much the same on
your law on business taxes.
General Rule: 5 years.
Iba dito sa LGC at sa NIRC.
The LG has a period of 5 years within which to collect. 5
years from the date the taxes became due, thereafter, no
action for the collection of the tax, whether administrative
or judicial, shall be instituted after the expiration of that 5
year period. That is the general rule under normal
circumstances.
Under extraordinary circumstances, the prescriptive
period to collect is 10 years. 10 years from the discovery of
the ground.
What are the grounds?
1. Fraud
2. Intent to evade payment
Take note also of the instances wherein the prescriptive
period to collect is suspended:
17
1. The local treasurer is legally prevented from
collecting the tax
- An example is when there is an
injunction issued by the court.
2. The owner of the property or the person
having legal interest therein requests for
reinvestigation and executes a waiver in writing
before the expiration of the period within which
to collect
3. The owner of the property or the person
having legal interest therein is out of the country
or otherwise cannot be located. 
If the taxpayer will still not pay, then this is the time that
the government now will avail of its remedies to collect
the taxes.
So kung wala siyang gagawin, delinquent parin siya and
does not avail of its own remedies, then that is the time
for the government to collect the tax.
But what happens?
The first thing that will happen is that the taxpayer would
254 of the LGC:
Real Property Tax. - (a) When the real property tax or
any other tax imposed under this Title becomes
delinquent, the provincial, city or municipal treasurer
shall immediately cause a notice of the delinquency to
be posted at the main entrance of the provincial
capitol, or city or municipal hall and in a publicly
accessible and conspicuous place in each barangay of
the local government unit concerned. The notice of
delinquency shall also be published once a week for
two (2) consecutive weeks, in a newspaper of general
circulation in the province, city, or municipality.
(b) Such notice shall specify the date upon which the
tax became delinquent and shall state that personal
property may be distrained to effect payment. It shall
likewise state that at any time before the distraint of
personal property, payment of the tax with surcharges,
interests and penalties may be made in accordance
with the next following Section, and unless the tax,
surcharges and penalties are paid before the expiration
of the year for which the tax is due except when the
notice of assessment or special levy is contested
administratively or judicially pursuant to the provisions
of Chapter 3, Title II, Book II of this Code, the
delinquent real property will be sold at public auction,
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola

and the title to the property will be vested in the

purchaser, subject, however, to the right of the 1. Judicial Remedies
delinquent owner of the property or any person having 2. Administrative Remedies
legal interest therein to redeem the property within a. Tax lien (Sec. 257);
one (1) year from the date of sale. b. Distraint of Personal Properties (Sec.
254[b]);
c. Levy on Real Property (Sec. 258 in
If sa January 1 mag-accrue ang tax, and then there is a
relation to Sec. 260, when the
notice to be posted by the local government, bayad ka
Government will start to initiate the
quarterly. But if the taxpayer will not pay, then you will be
levy proceedings)
considered as a tax delinquent.
Distraint of Personal Property
Pag hindi ka nakabayad ng local taxes mo, you don’t have
to worry as of the moment so long as there is still no
Under the RPT portion of the LGC, it would seem that
notice of delinquency be posted by the local government
distraint is not allowed because there’s no specific
unit concerned. ‘Pag lumabas na ang notice of
provision in the LGC pertaining to distraint of personal
delinquency, it will just be posted. You will not receive any
property with respect to nonpayment of RPT. But
notice. It will just be posted first in the Municipal hall and
nevertheless, some books would include this as part of the
second is in the barangay where the property is located.
government’s remedy.
Apart from that there will be a publication (once a week)
Levy on Real Property
for two consecutive weeks in a newspaper of general
circulation.
The rules for levy is practically the same with the local
business taxes. But please make no mistake about it
(Singanon)
because this is a very important matter when it comes to
Q: Can the RPT be condoned?
levy on real property.
Yes. There are 2 persons who may be allowed to condone
The case in point here is: Salva vs Magpile G.R. No.
real property taxes:
220440, November 8, 2017.
1. The Sanggunian
2. The President of the Philippines
Now I have some reservations about this law. Why is it Section 258. Levy on Real Property. - After the
that despite the condonation, the President is allowed to expiration of the time required to pay the basic real
do so? Is this an exercise of the power to tax? Or is this a property tax or any other tax levied under this Title,
matter of enforcement? real property subject to such tax may be levied upon
Q: What are the grounds for the condonation of RPT? through the issuance of a warrant on or before, or
simultaneously with, the institution of the civil action
1. General failure of crops; for the collection of the delinquent tax. The provincial
2. Substantial decrease in the price of agricultural or city treasurer, or a treasurer of a municipality within
or agri-based products the Metropolitan Manila Area, as the case may be,
3. Calamity when issuing a warrant of levy shall prepare a duly
authenticated certificate showing the name of the
Notice of Delinquency delinquent owner of the property or person having
legal interest therein, the description of the property,
Now you already know about Posting and Publication and the amount of the tax due and the interest thereon.
you should be able to know when and where it should be The warrant shall operate with the force of a legal
posted and published. execution throughout the province, city or a
municipality, within the Metropolitan Manila Area. The
The taxpayer is given time to pay the real property tax warrant shall be mailed to or served upon the
including interest, surcharges and penalties so as to delinquent owner of the real property or person having
prevent the government from initiating the process of legal interest therein, or in case he is out of the country
collecting the taxes. or cannot be located, the administrator or occupant of
the property. At the same time, written notice of the
Q: What are the remedies of the Government to collect levy with the attached warrant shall be mailed to or
the taxes? served upon the assessor and the Registrar of Deeds of
the province, city or municipality within the

18
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Metropolitan Manila Area where the property is
located, who shall annotate the levy on the tax
declaration and certificate of title of the property,
respectively.
So let us just outline.
First, the levy proper.
After the expiration of the time period to pay, the
treasurer will prepare a certificate of delinquency which
has the force and effect of legal execution.
The certificate will contain the name of the delinquent
taxpayer, the description of the property, the amount of
the tax due and the interest thereon.
This certificate will be mailed to or served upon:
1. The owner or administrator of the real property;
2. The local assessor;
3. The ROD who will annotate it at the back of the
property’s title.
After the levy proper, you have the advertisement and
sale.
Section 260. Advertisement and Sale. - Within thirty
(30) days after service of the warrant of levy, the local
treasurer shall proceed to publicly advertise for sale or
auction the property or a usable portion thereof as may
be necessary to satisfy the tax delinquency and
expenses of sale. The advertisement shall be effected
by posting a notice at the main entrance of the
provincial, city or municipal building, and in a publicly
accessible and conspicuous place in the barangay
where the real property is located, and by publication
once a week for two (2) weeks in a newspaper of
general circulation in the province, city or municipality
where the property is located. The advertisement shall
specify the amount of the delinquent tax, the interest
due thereon and expenses of sale, the date and place of
sale, the name of the owner of the real property or
person having legal interest therein, and a description
of the property to be sold. At any time before the date
fixed for the sale, the owner of the real property or
person having legal interest therein may stay the
proceedings by paying the delinquent tax, the interest
due thereon and the expenses of sale. The sale shall be
held either at the main entrance of the provincial, city
or municipal building, or on the property to be sold, or
at any other place as specified in the notice of the sale.
Within thirty (30) days after the sale, the local treasurer
or his deputy shall make a report of the sale to the
19
sanggunian concerned, and which shall form part of his
records. The local treasurer shall likewise prepare and
deliver to the purchaser a certificate of sale which shall
contain the name of the purchaser, a description of the
property sold, the amount of the delinquent tax, the
interest due thereon, the expenses of sale and a brief
description of the proceedings: Provided, however,
That proceeds of the sale in excess of the delinquent
tax, the interest due thereon, and the expenses of sale
shall be remitted to the owner of the real property or
person having legal interest therein.
The local treasurer may, by ordinance duly approved,
advance an amount sufficient to defray the costs of
collection thru the remedies provided for in this Title,
including the expenses of advertisement and sale.
Within 30 days after levy, there will be advertisements for
sale posted and published. This is different from the
posting and publication of the notice of delinquency.
The posting will be done in pretty much the same place:
city hall, municipal or provincial capitol, and also in the
barangay where the property is located.
The publication is pretty much the same: once a week for
two (2) consecutive weeks.
And even if after such notices the taxpayer will not pay the
taxes including the interest and surcharges, then the sale
will proceed after the completion of the advertisement.
The sale shall be held either at the main entrance of the
provincial, city or municipal building, or on the property to
be sold, or at any other place as specified in the notice of
the sale.
If there is no sufficient bidder, then the LGU will purchase
the property.
Section 263. Purchase of Property By the Local
Government Units for Want of Bidder. - In case there is
no bidder for the real property advertised for sale as
provided herein, the real property tax and the related
interest and costs of sale the local treasurer conducting
the sale shall purchase the property in behalf of the
local government unit concerned to satisfy the claim
and within two (2) days thereafter shall make a report
of his proceedings which shall be reflected upon the
records of his office. It shall be the duty of the Registrar
of Deeds concerned upon registration with his office of
any such declaration of forfeiture to transfer the title of
the forfeited property to the local government unit
concerned without the necessity of an order from a
competent court. Within one (1) year from the date of
such forfeiture, the taxpayer or any of his
representative, may redeem the property by paying to
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
the local treasurer the full amount of the real property
tax and the related interest and the costs of sale. If the
property is not redeemed as provided herein, the
ownership thereof shall be vested on the local
government unit concerned.
In both occasions, public sale or purchase by the LGU, the
taxpayer is entitled to redeem the property within one
year from the date of sale.
And there is this certain SC decision which states that the
date of sale is the date of annotation on the certificate of
sale with the ROD.
The case here is: City Mayor of Quezon City vs RCBC G.R.
No. 171033, August 8, 2010.
But this decision is quite peculiar because it seems to run
counter with the specific provisions of the LGC, which
provides that the 1-year redemption period is counted
from the date of sale and not from the date of registration.
The ordinance enacted by the Quezon City however
provides that the period should be counted from the date
of registration. This is the reason why the SC in this case
ruled that the 1-year period should start from the date of
registration.
But I have seen another case, this is a 2017 case: City of
Davao vs Dalisay, represented by the Special Administrator
Atty. Nicasio Paderna.
(Tan)
CITY OF DAVAO versus DALISAY
GR 207791, July 15, 2015
Ruling: It is now apparent that the previous rule
enunciating the reckoning period of redemption for tax
delinquent properties from the date of the registration of
sale of the property is no longer controlling. Section 261
now mandates that the owner of the delinquent real
property or person having legal interest therein, or his
representative, has the right to redeem the
property within one (1) year from the date of sale upon
payment of the delinquent tax and other fees.
The Supreme Court said that the one year period of
redemption is reckoned on the date of sale, this is the date
of the public auction.
This case also has something to do of the forfeiture – in
case there is no bidder it will be ipso facto forfeited in
favour of the local government concern.
20
After the action sale is not left without any remedy
because the taxpayer can still challenge the validity of the
sale.
Q: What is the requirement before the taxpayer can
challenge?
Section 267. Action Assailing Validity of Tax Sale. - No
court shall entertain any action assailing the validity or
any sale at public auction of real property or rights
therein under this Title until the taxpayer shall have
deposited with the court the amount for which the real
property was sold, together with interest of two percent
(2%) per month from the date of sale to the time of the
institution of the action. The amount so deposited shall be
paid to the purchaser at the auction sale if the deed is
declared invalid but it shall be returned to the depositor if
the action fails.
Neither shall any court declare a sale at public auction
invalid by reason or irregularities or informalities in the
proceedings unless the substantive rights of the
delinquent owner of the real property or the person
having legal interest therein have been impaired.
OFELIA GAMILLA versus BURGUNDY REALTY
CORPORATION
GR 212246, June 22, 2015
A very simple case relative to the requirement of
deposit; no deposit then the court cannot assume
jurisdiction over the challenge of the taxpayer.
If the property is not relieved then a final deed to the
purchaser would be issued as provided in Section 262 LGC.
Section 262.  Final Deed to Purchaser. - In case the owner
or person having legal interest fails to redeem the
delinquent property as provided herein, the local treasurer
shall execute a deed conveying to the purchaser said
property, free from lien of the delinquent tax, interest due
thereon and expenses of sale. The deed shall briefly state
the proceedings upon which the validity of the sale rests.
Next. . .
Section 266. Collection of Real Property Tax Through the
Courts. - The local government unit concerned may
enforce the collection of the basic real property tax or any
other tax levied under this Title by civil action in any court
of competent jurisdiction. The civil action shall be filed by
the local treasurer within the period prescribed in Section
270 of this Code.
This is still ordinary civil case filed by the city against the
tax delinquent.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
When it comes to jurisdiction, let us follow the general
rule in jurisdiction; when the amount to be collected (basic
tax excluding interest and penalties) is:
 not more than 300,000 or 400,000 if within
the Metro Manila area – MTC
 exceeding 300,000 or 400,000 but not more
than 1,000,000 - RTC
 exceeding 1,000,000 – CTA
SALVA versus MAGPILE
GR 220440, Nov. 28, 2017
Facts:
Sometime in the 1960s Magpile owned a parcel of land
located in Makati. Under the Certification of Title the
address provided is 2118 Apolinario Makati Rizal. On 1980s
Maypile filed a sworn declaration of real properties with a
new address. In other words he was able to notify the
Local Government of Makati of a change of address. He
failed to pay his Real Property
Taxes, what happened was that when the notices was sent
it was sent to the old address. The auction sale proceeded
and after 2 years Magpile filed a case with the RTC.
RTC rendered a decision against Maypile. Maypile then
filed an appeal with the Court of Appeals (CA). CA took
cognizance of the case
Issues: 1. WON CA has appellate jurisdiction over the case.
2. WON the auction sale may be allowed in view of the
failure of the City Treasurer to send the notice.
Ruling: 1. As to jurisdiction. The CA has jurisdiction of the
case. The case arose from the alleged non compliance of
the Local Government Unit of the provisions of the Local
Government Code. It has nothing to do with tax but of the
violation of due process. This is not a tax matter already.
The issue on the validity and legality of the tax sale is not
necessarily related to the issue of the legality of the Real
Property Tax.
2. With respect to the auction sale. The Supreme Court
annulled the auction sale because it did not follow Section
254 and other pertinent provisions of the LGC on levy and
auction sale.
From Full text: Section 254 mandates that the notice of
delinquency in the payment of the real property be: (1)
posted at the main entrance of the provincial capitol, or
city or municipal hall and in a publicly accessible and
conspicuous place in each barangay of the local
21
government unit concerned, and (2) published once a
week for two (2) consecutive weeks, in a newspaper of
general circulation in the province, city, or municipality.
In Talusan y. Tayag,38 the Court added that the notice of
delinquency should be sent to the registered owner of the
property subject of a possible tax sale. We ratiocinated:
In this regard, we note that unlike land registration
proceedings which are in rem, cases involving an auction
sale of land for the collection of delinquent taxes are in
personam. Thus, notice by publication, though sufficient in
proceedings in rem, does not as a rule satisfy the
requirement of proceedings in personam. As such, mere
publication of the notice of delinquency would not suffice,
considering that the procedure in tax sales is in
personam. It was, therefore, still incumbent upon the city
treasurer to send the notice of tax delinquency directly to
the taxpayer in order to protect the interests of the
latter.39
Under Section 258, the warrant of levy must be mailed to
or served upon the delinquent owner of the real property
or person having legal interest therein, or in case he is out
of the country or cannot be located, to the administrator
or occupant of the property. At the same time, written
notice of the levy with the attached warrant shall be
mailed to or served upon the assessor and the Register of
Deeds of the province, city or a municipality where the
property is located, who shall annotate the levy on the tax
declaration and certificate of title of the property,
respectively. The levying officer shall submit a report on
the levy to the sanggunian concerned within ten (10) days
after receipt of the warrant by the owner of the property
or person having legal interest therein.
Lastly, Section 260 requires that within thirty (30) days
after service of the warrant of levy, the local treasurer
shall proceed to publicly advertise for sale or auction the
property or a usable portion thereof as may be necessary
to satisfy the tax delinquency and expenses of sale. The
advertisement shall be effected by: (1) posting a notice at
the main entrance of the provincial, city or municipal
building, and in a publicly accessible and conspicuous place
in the barangay where the real property is located, and (2)
publication once a week for two (2) weeks in a newspaper
of general circulation in the province, city or municipality
where the property is located.
In this case, the notice of tax delinquency was not proven
to have been posted and published in accordance with the
requirements of the LGC.1âwphi1 Specifically, Salva failed
to support her claim that the City Treasurer, her deputy or
any authorized officer actually caused the posting of a
notice of delinquency in the Makati City Hall and in a
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola

publicly accessible and conspicuous place

in Barangay Bangkal where the property is purported to (Viola)
be located. Likewise, she failed to substantiate the fact This is required if the taxpayer would like to protest the
that the notice was published. The Affidavit of Publication real property taxes sought to be collected against him. This
of the newspaper's publisher as well as the issues of the is important.
newspaper where the notice was published were not
presented as proof. Local business taxes, we don’t need to pay under protest,
but with real property tax there must be a payment under
protest.
The notice of delinquency, which was allegedly
sent via registered mail, was improperly addressed. We
Q: When should the protest be made?
agree with Magpile's contention that the billing
Within 30 days from the payment of the tax.
statements, notice of realty tax delinquency, and warrants
of levy were all sent by the City Treasurer to "2118
Q: Where to file?
Apolinario St., Bangkal, Makati City," which is an address
other than the one indicated in his tax records. Notably, Before the provincial, city, or the municipal Treasurer
concerned.
TCT No. 215195 showed Magpile's address as "2118
Apolinario, Makati, Rizal," while the Sworn Statement
The local treasurer is has 60 days from the filing or receipt
stated his address as "1772 Evangelista, Bangkal, Makati,
of the protest within which to decide the tax case.
M.M." In the absence of a registry return card or an
affidavit of service, it cannot be definitely ascertained that
the documents were in fact received by Magpile or any of
his authorized representative. Adding to the doubt is the
Q: When is a protest required?
undisputed allegation of Magpile that, per Certification
When there is a question on the reasonableness of the
issued by the Barangay Captain of Pio del Pilar, Makati,
amount assessed. This refers only to the figures.
"2118 Apolinario Street" has been replaced by "1510 A & B
Apolinario Street" since 1996. If indeed true, there is really
If the question raised goes into the authority or the power
no way that the mail matters would reach the addressee.
of the assessor to impose the assessment, and of the
treasurer to collect the tax, then payment under protest is
not required.
REMEDIES OF THE TAXPAYER

In deciding, two things might happen:

PAYMENT UNDER PROTEST
Section 252. Payment Under Protest. -
(a) No protest shall be entertained unless the taxpayer first
pays the tax. There shall be annotated on the tax receipts
the words "paid under protest". The protest in writing
must be filed within thirty (30) days from payment of the
tax to the provincial, city treasurer or municipal treasurer,
in the case of a municipality within Metropolitan Manila
Area, who shall decide the protest within sixty (60) days
from receipt.
(b) The tax or a portion thereof paid under protest, shall
be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor
of the taxpayer, the amount or portion of the tax
protested shall be refunded to the protestant, or applied
as tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon the
lapse of the sixty day period prescribed in subparagraph
(a), the taxpayer may avail of the remedies as provided for
in Chapter 3, Title II, Book II of this Code.
1. The local treasurer will render a decision
within the 60 days period; or
2. The local treasurer will not act upon the
protest within the 60 days period.
If there is a denial or inaction, proceed with the remedy of
the taxpayer—appeal.
With respect to appeal, there are 4 things to think of (in
order):
1. Appeal through a petition to the local board of
assessment appeals (LBAA)
2. Appeal through the central board of
assessment appeals (CBAA)
3. Petition for review before the CTA En Banc
4. Petition for review under Rule 45 with the
Supreme Court
LBAA
Section 226. Local Board of Assessment Appeals. - Any
owner or person having legal interest in the property who
is not satisfied with the action of the provincial, city or

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municipal assessor in the assessment of his property may,
within sixty (60) days from the date of receipt of the
written notice of assessment, appeal to the Board of
Assessment Appeals of the provincial or city by filing a
petition under oath in the form prescribed for the
purpose, together with copies of the tax declarations and
such affidavits or documents submitted in support of the
appeal.
Section 227. Organization, Powers, Duties, and Functions
of the Local Board of Assessment Appeals. -
(a) The Board of Assessment Appeals of the province or
city shall be composed of the Registrar of Deeds, as
Chairman, the provincial or city prosecutor and the
provincial, or city engineer as members, who shall serve as
such in an ex officio capacity without additional
compensation.
(b) The chairman of the Board shall have the power to
designate any employee of the province or city to serve as
secretary to the Board also without additional
compensation.
(c) The chairman and members of the Board of
Assessment Appeals of the province or city shall assume
their respective positions without need of further
appointment or special designations immediately upon
effectivity of this Code. They shall take oath or affirmation
of office in the prescribed form.
(d) In provinces and cities without a provincial or city
engineer, the district engineer shall serve as member of
the Board. In the absence of the Registrar of Deeds, or the
provincial or city prosecutor, or the provincial or city
engineer, or the district engineer, the persons performing
their duties, whether in an acting capacity or as a duly
designated officer-in-charge, shall automatically become
the chairman or member, respectively, of the said Board,
as the case may be.
This is done by verified petition and you attach the tax
declaration, supporting affidavits and other documents.
The persons who can appeal are:
1. The owner;
2. The person with legal interest to the property.
As a general rule, the owner is liable for the payment of
the RPT because this ia necessary consequence which
proceeds from the ownership. But the personal liability for
real property taxes may also be expressly let on the entity
with the beneficial use of that property.
Period to appeal
23
The tax payer is given 60 days from receipt of the notice of
assessment.
Suppose that Davao City made an assessment of all the
real property within its jurisdiction, then the local assessor
sent a local assessment showing the new values of the real
property that you own, can you file a motion for
reconsideration? NO. This is not allowed under the rules.
In case there is an assessment on the RP, go directly to the
LBAA.
Effect of Failure to Appeal
A taxpayer’s failure to question the assessment before the
LBAA renders the assessment of the local assessor final
and executory and demandable. The taxpayer is now
precluded from questioning the correctness of the
assessment or invoking any defense that would reopen the
question of the liability based on merits. (NPC v Province
of Quezon GR 171586, July 15 2009)
From the LPAA, let’s go to:
Section 229. Action by the Local Board of Assessment
Appeals. –
(a) The Board shall decide the appeal within one hundred
twenty (120) days from the date of receipt of such appeal.
The Board, after hearing, shall render its decision based on
substantial evidence or such relevant evidence on record
as a reasonable mind might accept as adequate to support
the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board
shall have the power to summon witnesses, administer
oaths, conduct ocular inspection, take depositions, and
issue subpoena and subpoena duces tecum. The
proceedings of the Board shall be conducted solely for the
purpose of ascertaining the facts without necessarily
adhering to technical rules applicable in judicial
proceedings.
When the decision is already made:
(c) The secretary of the Board shall furnish the owner of
the property or the person having legal interest therein
and the provincial or city assessor with a copy of the
decision of the Board. In case the provincial or city
assessor concurs in the revision or the assessment, it shall
be his duty to notify the owner of the property or the
person having legal interest therein of such fact using the
form prescribed for the purpose. The owner of the
property or the person having legal interest therein or the
assessor who is not satisfied with the decision of the
Board, may, within thirty (30) days after receipt of the
decision of said Board, appeal to the Central Board of
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Assessment Appeals, as herein provided. The decision of
the Central Board shall be final and executory.
Upon receipt, the LBAA has 120 days to decide on the
appeal.
Degree of proof
Only substantial evidence
When the decision is already made:
The secretary of the Board shall furnish the owner of the
property or the person having legal interest therein and
the provincial or city assessor with a copy of the decision
of the Board.
If the decision is adverse to the TP or the property owner,
the TP has 30 days from the receipt of the decision to
appeal the same with the CBAA. The CBAA’s decision is
generally final and executory.
Q: Do we need to file an MR before appeal to the CBAA?
It’s not actually stated in the law.
Sir: I would suggest that if the decision is received, appeal
directly to the CBAA.
CBAA
Section 230. Central Board of Assessment Appeals. –
The Central Board of Assessment Appeals shall be
composed of a chairman, and two (2) members to be
appointed by the President, who shall serve for a term of
seven (7) years, without reappointment. Of those first
appointed, the chairman shall hold office for seven (7)
years, one member for five (5) years, and the other
member for three (3) years. Appointment to any vacancy
shall be only for the unexpired portion of the term of the
predecessor. In no case shall any member be appointed or
designated in a temporary or acting capacity. The
chairman and the members of the Board shall be Filipino
citizens, at least forty (40) years old at the time of their
appointment, and members of the Bar or Certified Public
Accountants for at least ten (10) years immediately
preceding their appointment. The chairman of the Board
of Assessment Appeals shall have the salary grade
equivalent to the rank of Director III under the Salary
Standardization Law exclusive of allowances and other
emoluments. The members of the Board shall have the
salary grade equivalent to the rank of Director II under the
Salary Standardization Law exclusive of allowances and
other emoluments. The Board shall have appellate
jurisdiction over all assessment cases decided by the Local
Board of Assessment Appeals.
24
There shall be Hearing Officers to be appointed by the
Central Board of Assessment Appeals pursuant to civil
service laws, rules and regulations, one each for Luzon,
Visayas and Mindanao, who shall hold office in Manila,
Cebu City and Cagayan de Oro City, respectively, and who
shall serve for a term of six (6) years, without
reappointment until their successors have been appointed
and qualified. The Hearing Officers shall have the same
qualifications as that of the Judges of the Municipal Trial
Courts.
The Central Board Assessment Appeals, in the
performance of its powers and duties, may establish and
organize staffs, offices, units, prescribe the titles, functions
and duties of their members and adopt its own rules and
regulations.
Unless otherwise provided by law, the annual
appropriations for the Central Board of Assessment
Appeals shall be included in the budget of the Department
of Finance in the corresponding General Appropriations
Act.
Section 231. Effect of Appeal on the Payment of Real
Property Tax. - Appeal on assessments of real property
made under the provisions of this Code shall, in no case,
suspend the collection of the corresponding realty taxes
on the property involved as assessed by the provincial or
city assessor, without prejudice to subsequent adjustment
depending upon the final outcome of the appeal.
The CBAA has jurisdiction to hear appeals from the
decision of the LBAA.
Q: Who may appeal before the CBAA?
1. The owner;
2. Persons having interest in the property;
3. The local assessor
- he is not precluded from appealing
any adverse decision of the LBAA.
If the decision is adverse to the Taxpayer, the next remedy
is filing of a petition before the CTA En Banc. We do not
need to go through the CTA in Division at this point, the
law says that any decision of the CBAA will be appealed to
the CTA En Banc.
The CTA En Banc has exclusive appellate jurisdiction to
review in appeal the decision of the CBAA.
RA 9282; Section 7. Section 7 of the same Act is hereby
amended to read as follows:
"Sec. 7. Jurisdiction. - The CTA shall exercise:
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"a. Exclusive appellate jurisdiction to review by appeal, as of the Philippines.

herein provided:
xxx
"5. Decisions of the Central Board of Assessment Appeals
in the exercise of its appellate jurisdiction over cases
involving the assessment and taxation of real property
originally decided by the provincial or city board of
assessment appeals;
If the decision of the CTA En Banc is still adverse to the TP,
he shall file an MR and if it is still denied, the case may be
appealed before the SC within 15 days under Rule 45 of
ROC, extendible for another 15 days for reasonable
grounds.
Thereafter, the decision of the SC if still adverse MR may
be filed and if still adverse, there’s no other choice for the
TP than to pay the RPT.
The Deputy Commissioners shall also be appointed by
the President and at least majority of whom shall come
from the ranks of the Bureau.
POWERS AND FUNCTIONS OF THE BOC
Section 202. Functions of the Bureau.— The Bureau
shall exercise the following duties and functions:
(a) Assessment and collection of customs revenues
from imported goods and other dues, fees, charges,
fines and penalties accruing under this Act;
(b) Simplification and harmonization of customs
procedures to facilitate movement of goods in
international trade;

(c) Border control to prevent entry of smuggled goods;

(d) Prevention and suppression of smuggling and other
customs fraud;

(e) Facilitation and security of international trade and

commerce through an informed compliance program;

(f) Supervision and control over the entrance and

CUSTOMS MODERNIZATION AND clearance of vessels and aircraft engaged in foreign
TARIFF ACT (CMTA) commerce;
April 10, 2019
(g) Supervision and control over the handling of foreign
(Campaner)
mails arriving in the Philippines for the purpose of
collecting revenues and preventing the entry of
CUSTOMS MODERNIZATION AND TARIFF ACT is RA 10863
contraband;
– this is enacted because the TCCP (Tariff and Customs
Code of the Philippines) provisions are actually outdated.
(h) Supervision and control on all import and export
Before the CMTA, we were using the old law and that old
cargoes, landed or stored in piers, airports, terminal
law does not incorporate anything which involves the
facilities, including container yards and freight stations
modernized way of importing/exporting.
for the protection of government revenue and
prevention of entry of contraband;
**story about how ports in Singapore are waaay better
than those in Philippines.
(i) Conduct a compensation study with the end view of
developing and recommending to the President a
Let us focus now on the Bureau of Customs. It is headed
competitive compensation and remuneration system to
by a Commissioner who shall be assisted by at least 4 but
attract and retain highly qualified personnel, while
not more than 6 deputy commissioners. Unlike before,
ensuring that the Bureau remains financially sound and
there is only 4 of them. There is also a requirement that
sustainable;
majority of the deputy commissioners should come from
the ranks of the BOC.
(j) Exercise of exclusive original jurisdiction over
forfeiture cases under this Act; and
Section 200. Chief Officials of the Bureau.— The Bureau
shall be headed by a Commissioner and shall be
(k) Enforcement of this Act and all other laws, rules and
assisted by at least four (4) but not more than six (6)
regulations related to customs administration.
Deputy Commissioners.

The Commissioner shall be appointed by the President

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You will notice that this provision is all about the
enforcement powers of the CMTA. Kung sa NIRC meron
tayong Commissioner of Internal Revenue, when it comes
to the BOC, we have the COC (Commissioner of Customs),
he is the person who weilds and enforces the powers
granted under the CMTA, he is the most important official
in the BOC.
Section 201. Powers and Functions of the
Commissioner.— The Commissioner shall have the
following powers and functions:
(a) Exclusive and original jurisdiction to interpret the
provisions of this Act, in collaboration with other
relevant government agencies, subject to review by the
Secretary of Finance;
(b) Exercise any customs power, duties and functions,
directly or indirectly;
(c) Review any action or decision of any customs officer
performed pursuant to the provisions of this Act;
(d) Review and decide disputed assessments and other
matters related thereto, subject to review by the
Secretary of Finance and exclusive appellate jurisdiction
of the Court of Tax Appeals (CTA);
(e) Delegate the powers vested under this Act to any
customs officer with the rank equivalent to division
chief or higher, except for the following powers and
functions:
(1) Promulgation of rules and regulations;
(2) Issuance, revocation or modification of
rulings; and
(3) Compromise or abate of customs
obligations.
(f) Assignment or reassignment of any customs officer
subject to the approval of the Secretary of
Finance; Provided, That District Collectors and other
customs officers that perform assessment functions
shall not remain in the same area of assignment for
more than three (8) years; and
(g) Perform all other duties and functions as may be
necessary for the effective implementation of this Act
and other customs related laws.
Section 204. Promulgation of Rules and Regulations.
— The Commissioner, subject to the approval of the
Secretary of Finance, shall promulgate rules and
regulations for the enforcement of this Act. The
Commissioner shall regularly prepare and publish an
updated customs manual, and the rules, regulations
26
and decisions of the Bureau. The Commissioner shall
furnish the Congress of the Philippines, the NEDA and
the Tariff Commission with electronic copies of
department orders, administrative orders, circulars,
and rules and regulations promulgated pursuant to this
Act.
What are the powers of the COC? It’s provided for under
Sec. 201 and 204. But to summarize, the COC has the
following powers:
1. The power to interpret provisions of the CMTA
2. The power to enforce the CMTA and related
laws, rules and regulations
3. The power to review the actions and decisions of
any customs officer including disputed
assessments subject to review by the Secretary
of Finance and exclusive appellate jurisdiction of
the CTA
4. The power to delegate his powers
5. The power to assign or reassign customs officers
6. The power to promulgate rules and regulations
subject to the approval of the Sec. of Finance.
If you notice, this is actually similar powers granted to the
Commissioner of the Internal Revenue. Also, the BOC is
under the direct control and supervision of the
Department of Finance.
Section 206. Customs Districts.— For administrative
purposes, the Philippines shall be divided into as many
Customs Districts as necessary, the respective limits of
which may be changed from time to time by the
Commissioner, with the approval of the Secretary of
Finance.
Each Customs District shall be supervised by one (1)
District Collector, assisted by as many Deputy District
Collectors as may be necessary. The choice of the
location of a District Office, its business hours and the
staffing pattern thereof, shall be based on the particular
requirements of each district.
If in BIR, we have the “districts”, in customs parlance, we
also have “Customs Districts”. Aside from the customs
districts, since we will be talking about
importation/exportation, we will also be talking about
ports of entry.
Q: What is a port of entry?
Section 102 (hh) Port of Entry refers to a domestic port
open to both domestic and international trade,
including principal ports of entry and subports of entry.
A principal port of entry is the chief port of entry of the
Customs District wherein it is situated and is the
permanent station of the District Collector of such port.
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Subports of entry are under the administrative
jurisdiction of the District Collector of the principal port
of entry of the Customs District. Port of entry as used in
this Act shall include airport of entry;
So when we say ports of entry, it is not limited to those
involving vessels, airports are also included.
Two types of Ports of Entry:
1. Principal port of entry
2. Subports of entry
Principal ports of entry are listed in Sec. 207 of the CMTA.
xxx
The principal ports of entry shall he located in Aparri,
San Fernando, Manila, Manila International Container
Port, Ninoy Aquino International Airport, Subic, Clark,
Batangas, Legaspi, Iloilo, Cebu, Tacloban, Surigao,
Cagayan de Oro, Zamboanga, Davao, Limay and such
other ports that may be created pursuant to this Act.
xxx
If you want a concrete example, you have the Davao port
in Sasa. When you say “principal port”, it is the major port
of a certain city or a certain customs district.
DUTIES OF DISTRICT COLLECTORS
Section 210. Duties of the District Collector.— The
District Collector shall have the following duties in their
assigned Customs District:
(1) Ensure entry of all imported goods at the customs
office;
(2) Prevent importation and exportation of prohibited
goods;
(3) Ensure legal compliance of regulated goods and
facilitate the flow of legitimate trade;
(4) Examine, classify and value imported goods;
(5) Assess and collect duties, taxes and other charges
on imported goods;
(6) Hold and dispose imported goods in accordance
with this Act;
(7) Prevent smuggling and other customs fraud; and
(8) Perform other necessary duties that may be
assigned by the Commissioner for the effective
implementation of this Act. Subject to the supervision
and control of the District Collector, the duties and
functions of the District Collector may be delegated to
the Deputy District Collector. The Deputy District
Collector assigned to a sub-port shall be under the
supervision and control of the District Collector of the
27
corresponding principal port.
The District Collector is stationed in the port of entry. He is
actually a mini-COC. He has the enforcement powers of
the COC.
In essence, the district collector has the supervision and
control over the ports of entry within his jurisdiction. He
also has the power to enforce all customs laws, rules and
regulations within the scope of his territorial jurisdiction.
He has the duty to ensure the entry of all imported goods,
examine, classify value of imported goods, and assess and
collect taxes due on importation/exportation.
When do we apply the CMTA Law and Other customs law?
The general answer is, they apply only when there is an
importation/exportation. So the customs laws and its
taxation aspect is very limited.
Importation - Sec. 102 (z) Importation refers to the act of
bringing in of goods from a foreign territory into Philippine
territory, whether for consumption, warehousing, or
admission as defined in this Act;
Exportation – Sec. 102 (s) Exportation refers to the act,
documentation, and process of bringing goods out of
Philippine territory;
Note that the above are technical terms.
It’s not enough for us to define importation as based on
Sec. 102 (z), because there is a time-limitation as to when
it will begin and when it will end. So long as the goods are
still within that time frame, then importation is not yet
done. If it is not yet done, the BOC will not lose jurisdiction
over the goods, such that, the BOC can still collect the
customs duties due for the importation of that particular
goods.
Q: When does importation begin?
Section 103. When Importation Begins and Deemed
Terminated.— Importation begins when the carrying
vessel or aircraft enters the Philippine territory with the
intention to unload therein. xxxx
What is peculiar in this definition is the term “intention to
unload”. This means that the time the importation begins
does not involve only in the actual unloading of the
cargoes being imported, it is enough that there is this
intention.
FEEDER INTERNATIONAL vs CA
There is this foreign vessel, carrying gas and oil.
Pumunta sila Pilipinas pero hindi sila dumaong. They
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went to somewhere in Iloilo and placed anchors there.
Because of that, there was investigation by the
Customs. The investigation led to the discovery that the
vessel does not have on board the required shipping
documents.
BOC held the cargoes as well as the vessel, they
detained and seized.
The COC found the Feeder International guilty of illegal
importation and the forfeiture of the vessel and the
cargoes were ordered.
Issues: WON there was illegal importation
To determine that, we must first ask, was there
importation to begin with?
According to Feeder, there was no importation at all
because it did not even unload anything. They just
anchored.
SC: there is importation right from the very start. Actual
unloading is not a requirement because mere intention
is enough.
Where did the SC get this “intention” by the Feeder to
unload? The intent is established because violation of
customs laws are considered as indicative of the intent
which constitutes the commencement of importation.
The fact that there is a violation of customs laws,
establishes a prima facie presumption that there is an
intention to unload.
In this case, what is the violation? The lack of the
necessary shipping documents.
Q: When does importation end?
Section 103. xxx Importation is deemed terminated
when:
(a) The duties, taxes and other charges due upon the
goods have been paid or secured to be paid at the port
of entry unless the goods are free from duties, taxes
and other charges and legal permit for withdrawal has
been granted; or
(b) In case the goods are deemed free of duties, taxes
and other charges, the goods have legally left the
jurisdiction of the Bureau.
There are two scenarios here:
1. If the goods imported are subject to duties and
taxes – the importation is deemed terminated
when:
28
a. There is payment of the duties and
charges, or at least they are secured to
be paid; and
b. The legal permit for withdrawal must
be granted
2. If the goods imported are free from duties and
taxes – the importation is deemed terminated if
the goods have legally left the jurisdiction of the
Bureau.
(Castro)
SECRETARY OF FINANCE VS. ORO MAURA SHIPPING
LINES
G.R. No. 156946 July 15, 2009
Facts: Glory Shipping Lines here imported a vessel from
Japan. The vessel arrived at the Port of Mactan. The
vessel was released tax and duty-free to the company.
The company posted a bond conditioned on the re-
export of the vessel within a period of one (1) year
from March 22, 1993, or, in case of default, to pay
customs duty, tax and other charges on the importation
of the vessel. The bond expired and was not renewed
by the company. It did not also pay the duties, taxes
and other charges due on the vessel despite demands
by the Collector of the Port of Mactan.
The company sold to the respondent the vessel without
informing the Collector of the Port of Mactan. The
vessel entered the Port of Manila and the duties and
taxes were paid by the respondent. After discovering
that the vessel M/V HARUNA had been sold to the
respondent, the Collector of the Port of Mactan sent
the respondent a demand letter for the unpaid customs
duties and charges of Glory Shipping Lines. The
respondent argued that the importation is already
terminated and the duties and taxes were already paid.
Issue: Whether the importation has already been
terminated.
Held: No.
There was an original but incomplete importation by
Glory Shipping Lines that the respondent could not
have simply disregarded proceeds from knowledge of
the vessels history and the application of the relevant
law.
In order for an importation to be deemed terminated,
the payment of the duties, taxes, fees and other
charges of the item brought into the country must be in
full. For as long as the importation has not been
completed, the imported item remains under the
jurisdiction of the BOC. From the perspective of
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process, the importation that originally started with
Glory Shipping Lines was therefore never completed
and terminated, so that the respondents present
importation is merely a continuation of that original
process.
From 2017 TSN
EXERCISE OF POLICE AUTHORITY
Q: Who are the persons/officers who may exercise police
authority for the enforcement of CMTA?
Section 214. Persons Exercising Police Authority.—
For the effective implementation of this Act, the
following persons are authorized to effect search,
seizure, and arrest:
(a) Officials of the Bureau, District Collectors,
Deputy District Collectors, police officers,
agents, inspectors and guards of the Bureau;
(b) Upon authorization of the Commissioner,
officers and members of the Armed Forces of
the Philippines (AFP) and national law
enforcement agencies; and
(c) Officials of the BIR on all cases falling
within the regular performance of their
duties, when payment of internal revenue
taxes is involved.
All officers authorized by the Commissioner to exercise
police authority shall at all times coordinate with the
Commissioner.
Goods seized by deputized officers pursuant to this
section shall be physically turned-over immediately to
the Bureau, unless provided under existing laws, rules
and regulations.
For this purpose, mission orders shall clearly indicate
the specific name carrying out the mission and the
tasks to be carried out.
Subject to the approval of the Secretary of Finance, the
Commissioner shall define the scope, areas covered,
procedures and conditions governing the exercise of
such police authority including custody and
responsibility for the seized goods. The rules and
regulations to this effect shall be furnished to the
concerned government agencies and personnel for
guidance and compliance.
All seizures pursuant to this section must be effected in
accordance with the provisions on the conduct of
seizure proceedings provided for in Chapters 3 and 4 of
Title XI of this Act.
29
It is not merely limited to the officers of the Bureau of
Customs but it is listed in Section 214.
In letter C, why kasama ang officials ng BIR? “When
payment of internal revenue taxes is involved”, like what?
Example where the BIR can have enforcement powers?
What is the tax implication when the taxpayer will import
something under the NIRC? When the taxpayer will import
something whether or not related to business, such
importation is subject to what tax? VAT!
Q: Where can such authority be exercised?
Section 215. Place Where Authority May be Exercised.
— All persons exercising police authority as described
in the preceding section shall, only exercise powers
within customs premises as provided for in Section 303
of this Act, and within the limits of the authority
granted by the Commissioner, Port and airport
authorities in all ports of entry shall provide authorized
customs officers with unhampered access to all
premises within their administrative jurisdiction.
Read this in conjunction with Section 303
Section 303. Control Over Premises Used for Customs
Purposes.— The Bureau shall, for customs purposes,
have exclusive control, direction and management of
customs offices, facilities, warehouses, ports, airports,
wharves, infrastructure and other premises in the
Customs Districts, in all cases without prejudice to the
general police powers of the local government units
(LGUs), the Philippine Coast Guard and of law
enforcement agencies in the exercise of their
respective functions.
POWERS
1. POWERS OF SEIZURE EXERCISING POLICE
AUTHORITY
Section 216. Exercise of Power of Seizure.— Any
person exercising police authority under this Act has
the power and duty to seize any vessel, aircraft, cargo,
goods, animal or any other movable property when the
same is subject to forfeiture or when they are subject
of a fine imposed under this Act.
This is actually what happened to the vessel we were
talking about earlier. The vessel and its cargoes were
subject to seizure and forfeiture.
2. POWER OR AUTHORITY TO ENTER PROPERTIES
Section 219. Authority to Enter Properties.— Any
person exercising police authority may, at any time,
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enter, pass through, and search any land, enclosure,
warehouse, store, building or structure not principally
used as a dwelling house.
When a security personnel or any other employee lives
in the warehouse, store, or any building, structure or
enclosure that is used for storage of goods, it shall not
be considered as a dwelling house for purposes of this
Act.
In Section 219, if you remember this is actually one of the
exceptions in your Constitutional Law. What is the main
requirement before a police officer or any government
official can search a certain place? You need to have a
search warrant. And this is ONE OF THE EXCEPTIONS.
When it comes to enforcement of Customs Laws, as a
general rule you do not need a warrant, so long as the
place to be searched is not principally use as a dwelling
house.
What if there is a security personnel living in the said
building, nag puyo ko didto kauban akong pamilya and
naa pud private guard? If you read further Section 219,
“when a security personnel or any other employee lives in
the warehouse, store, or any building, structure or
enclosure that is used for storage of goods, it shall not be
considered as a dwelling house for purposes of this Act.”
Hindi ito katulad sa Local Government Code, na ang idle
land lagyan ko lang ng kalabaw, it does not work here.
What matters is the principal use of that place, if it used as
a storage house, warehouse or anything, the customs
officer may go and search that place.
This is quiet peculiar because under PCCP (I cannot find
the meaning of the acronym ) there is this certain term
“and his family”, but sa CMTA wala na ito. Right now
under sa CMTA wala na yung “and his family”.
What if ang gipapuyo didto kay ang entire family sa
security guard? I think the interpretation under the PCCP is
still applicable in this scenario.
For dwelling houses, the rule is different:
Section 220. Authority to Search Dwelling House.— A
dwelling house may be entered and searched only upon
warrant issued by a Judge of a competent court, the
sworn application thereon showing probable cause and
particularly describing the place to be searched and the
goods to be seized.
Also read the following provisions:
 SEARCH OF VESSELS OR AIRCRAFTS AND GOODS
CONVEYED THEREIN
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Section 221. Authority to Search Vessels or Aircrafts
and Persons or Goods Conveyed Therein.— Any
person exercising police authority under this Act may
board, inspect, search and examine a vessel or aircraft
and any container, trunk, package, box or envelope
found on board, and physically search and examine any
person thereon. In case of any probable violation of this
Act, the person exercising police authority may seize
the goods, vessel, aircraft, or any part thereof.
Such power to search includes removal of any false
bottom, partition, bulkhead, or any other obstruction
for the purpose of uncovering any concealed dutiable
or forfeitable goods.
The proceeding herein authorized shall not give rise to
any claim for damage caused to the goods, vessel or
aircraft, unless there is gross negligence or abuse of
authority in the exercise thereof.
 AUTHORITY TO SEARCH VEHICLES, OTHER
CARRIERS, PERSONS AND ANIMALS
Section 222. Authority to Search Vehicles, Other
Carriers, Persons and Animals.— Upon reasonable
cause, any person exercising police authority may open
and examine any box, trunk, envelope, or other
container for purposes of determining the presence of
dutiable or prohibited goods. This authority includes
the search of receptacles used for the transport of
human remains and dead animals. Such authority
likewise includes the power to stop, search, and
examine any vehicle or carrier, person or animal
suspected of holding or conveying dutiable or
prohibited goods.
 AUTHORITY TO SEARCH PERSONS ARRIVING
FROM FOREIGN COUNTRIES
Section 223. Authority to Search Persons Arriving
From Foreign Countries.— Upon reasonable cause,
travelers arriving from foreign countries may be
subjected to search and detention by the customs
officers. The dignity of the person under search and
detention shall be respected at all times. Female
inspectors may be employed for the examination and
search of persons of their own sex.
3. POWER TO INSPECT AND VISIT
Section 224. Power to Inspect and Visit.— The
Commissioner or any customs officer who is authorized
in writing by the Commissioner, may demand evidence
of payment of duties and taxes on imported goods
openly for sale or kept in storage. In the event that the
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interested party fails to produce such evidence within
fifteen (15) days, the goods may be seized and
subjected to forfeiture proceedings: Provided, That
during the proceedings, the interested party shall be
given the opportunity to prove or show the source of
the goods and the payment of duties and taxes
thereon: Provided, Further, That when the warrant of
seizure has been issued but subsequent documents
presented evidencing proper payment are found to be
authentic and in order, the District Collector shall,
within fifteen (15) days from the receipt of the motion
to quash or recall the warrant, cause the immediate
release of the goods seized, subject to clearance by the
Commissioner: Provided, Finally, That the release
thereof shall not be contrary to law.
For example: yang mga intsik-intsik na tindahan jan sa
DCLA, the Customs Officer may just go there and demand
whether or not these goods were imported and there are
proper release documents.
CUSTOMS JURISDICTION
The primary provision here in Customs Jurisdiction is
Section 300.
Section 300. Customs Jurisdiction.— For the effective
implementation of this Act, the Bureau shall exercise
jurisdiction over all seas within Philippine territory and
all coasts, ports, airports, harbors, bays, rivers and
inland waters whether navigable or not from the sea
and any means of conveyance.
The Bureau shall pursue imported goods subject to
seizure during its transport by land, water and air and
shall exercise jurisdiction as may be necessary for the
effective enforcement of this Act. When a vessel or
aircraft becomes subject to seizure for violation of this
Act, a pursuit of such vessel or aircraft which began
within the territorial waters or air space may continue
beyond the same, and the vessel or aircraft may be
seized in the high seas or international air space.
This provision includes the DOCTRINE OF HOT PURSUIT,
ito yung 2nd paragraph. The pursuit of vehicles, vessels, or
aircrafts which originated here in the Philippines that can
be pursued by a Philippin officers and the transport may
be seized in the high seas.
THE DETAILS IN IMPORTATION
Alam na natin where does it begin where it will end. So
how does it go? What if someone will import something?
Upon arrival at the port, the first thing that will be done is
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ENTRY. The goods will be imported. And then there will be
DECLARATION. And after the Declaration it will be entered
through the Customs Office at the port of entry, this is
according to Section 400.
Section 400. Goods to be Imported through Customs
Office.— All goods imported into the Philippines shall
be entered through a customs office at a port of entry
or may be admitted to or removed from a free zone as
defined in this Act as the case may be.
If you have tried to travel abroad, diba tanungin kayo ano
dala niyo and may ipa-fill up na form that is what we call as
DECLARATION. When you declare and you submit it to the
Customs Office that is what we call as ENTRY- Section 115.
SEC. 115. Treatment of Importation. - Imported goods
shall be deemed "entered" in the Philippines for
consumption when the goods declaration is
electronically lodged, together with any required
supporting documents, with the pertinent customs
office.
So you have a DECLARATION and have it ENTERED in the
Bureau of Customs.
TYPES OF IMPORTATION/EXPORTATION
1. Free Importation- Section 116
Section 116. Free Importation and Exportation.—
Unless otherwise provided by law or regulation all
goods may be freely imported into and exported from
the Philippines without need for import and export
permits clearances or licenses.
This does not mean that this is already free of taxes ha.
This means that the movements of the goods to and from
the Philippines, these are FREE, there will be no legal
impediment in importing or exporting these goods.
Example is magdala ka ug isang katutak na shampoo
(chismis about shampoo from abroad).
2. REGULATED IMPORTATION – Section 117
Section 117. Regulated Importation and Exportation.
— Goods which are subject to regulation shall be
imported or exported only after securing the necessary
goods declaration or export declaration clearances
licenses and any other requirements prior to
importation or exportation. In case of importation
submission of requirements after arrival of the goods
but prior to release from customs custody shall be
allowed but only in cases provided for by governing
laws or regulations.
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When you say its regulated importation, what is imported
is not an illegal product or good. It is not illegal per se. For
example: rice. Hindi ka man basta-basta maka import ng
rice because one of our main agricultural products here in
the Philippines is rice. It is a regulated importation.
Another example is cement. Diba nag i-import man tayo ng
cement.
3. PROHIBITED IMPORTATION- Section 118
There is a listing of those which are prohibited. When we
say prohibited, these are totally disallowed by the
Government to be imported or exported.
Section 118. Prohibited Importation and Exportation.
— The importation and exportation of the following
goods are prohibited:
(a) Written or printed goods in any form containing any
matter advocating or inciting treason, rebellion,
insurrection, sedition against the government of the
Philippines, or forcible resistance to any law of the
Philippines, or written or printed goods containing any
threat to take the life of, or inflict bodily harm upon any
person in the Philippines;
(b) Goods, instruments, drugs and substances designed,
intended or adapted for producing unlawful abortion,
or any printed matter which advertises, describes or
gives direct or indirect information where, how or by
whom unlawful abortion is committed;
(c) Written or printed goods, negatives or
cinematographic films, photographs, engravings,
lithographs, objects, paintings, drawings or other
representation of an obscene or immoral character;
(d) Any goods manufactured in whole or in part of gold,
silver or other precious metals or alloys and the stamp,
brand or mark does not Indicate the actual fineness of
quality of the metals or alloys;
(e) Any adulterated or misbranded food or goods for
human consumption or any adulterated or misbranded
drug in violation of relevant laws and regulations;
(f) Infringing goods as defined under the Intellectual
Property Code and related laws; and
(g) All other goods or parts thereof which importation
and exportation are explicitly prohibited by law or rules
and regulations issued by the competent authority.
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Question what about the documents or reports brought
here in the Philippines from international agencies saying
that the government is advocating extrajudicial killings? Is
it inciting sedition? (Sir did not answer)
In letter C, what if mag import ka ng mga magazines like
PlayBoy, is that obscene? Is it immoral? But why do we
have it here? (Sir talked about Bill of Rights: what is the
definition of that something that is immoral or obscene
materials- those which has no object other than to satisfy
the prurient interest of man?) So what’s that, what about
FHM?
In letter F, bakit marami tayong products na fake, mga
Chinese products jan sa DCLA? (CrocZ with letter ‘Z’)
RESTRICTED IMPORTATION AND EXPORTATION
Sec. 119. Restricted Importation and Exportation. –
Except when authorized by law or regulation, the
importation and exportation of the following restricted
goods are prohibited:
(a) Dynamite, gunpowder, ammunitions and other
explosives, firearms and weapons of war, or parts
thereof;
(b) Roulette wheels, gambling outfits, loaded dice,
marked cards, machines, apparatus or mechanical
devices used in gambling or the distribution of money,
cigars, cigarettes or other goods when such distribution
is dependent on chance, including jackpot and pinball
machines or similar contrivances, or parts thereof;
(c) Lottery and sweepstakes tickets, except
advertisements thereof and lists of drawings therein;
(d) Marijuana, opium, poppies, coca leaves, heroin or
other narcotics or synthetic drugs which are or may
hereafter be declared habit forming by the President of
the Philippines, or any compound, manufactured salt,
derivative, or preparation thereof, except when
imported by the government of the Philippines or any
person duly authorized by the Dangerous Drugs Board,
for medicinal purposes;
(e) Opium pipes or parts thereof, of whatever material;
and
(f) Any other goods whose importation and exportation
are restricted.
The restriction to import or export the above stated
goods shall include the restriction on their transit.
At first glance, it may be considered as prohibited. But this
is more of regulated entry. So except when authorized by
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law or regulation, the importation and exportation of the
following restricted goods are prohibited.
So you have to know what is the difference between a
regulated importation, prohibited importation, and
restricted importation
DECLARATION
Sabi natin kanina, when you go to the Customs Office you
have to declare and have it entered.
Who makes the declaration?
The DECLARANT found in Section 106.
Section 106. Declarant.— A declarant may be a
consignee or a person who has the right to dispose of
the goods. The declarant shall lodge a goods
declaration with the Bureau and may be:
(a) The importer, being the holder of the bill
of lading; or
(b) The exporter, being the owner of the
goods to be shipped out; or
(c) A customs broker acting under the
authority of the importer or from a holder of
the bill; or
(d) A person duly empowered to act as agent
or attorney-in-fact for each holder.
In case the consignee or the person who has the right
to dispose of the goods is a juridical person, it may
authorize a responsible officer of the company to sign
the goods declaration as declarant on its behalf. The
goods declaration submitted to the Bureau shall be
processed by the declarant or by a licensed customs
broker; Provided, That for importations, a transition
period of two (2) years from the effectivity of this Act is
hereby provided during which subparagraph (d) of this
section shall not be implemented by the Bureau:
Provided, Further, That after two (2) years from the
effectivity of this Act, subparagraph (d) of this section
shall take into effect consistent with international
standards and customs best practices.
(Gido)
SECTION 107. Rights and Responsibilities of the Declarant.
— The declarant shall be responsible for the accuracy of
the goods declaration and for the payment of all duties,
taxes and other charges due on the imported goods. The
licensed customs broker shall likewise be responsible for
the accuracy of the goods declaration but shall not be
33
responsible for the payment of duties, taxes and other
charges due on the imported goods.
The declarant shall sign the goods declaration, even
when assisted by a licensed customs broker, who shall
likewise sign the goods declaration.
The technical definition of “Entry” and Lodgement  is
found in Section 102 (r) and (dd) respectively.
(r) Entry refers to the act, documentation and process of
bringing imported goods into the customs territory,
including goods coming from free zones;
Xxxxx
(dd) Lodgement refers to the registration of a goods
declaration with the Bureau;
Types of Entry:
1. FORMAL ENTRY – “pag sinabi nating” formal
Entry this are the ones filed by the broker.
2. INFORMAL ENTRY – if the entry is filed by the
customs examiner or appraiser.
SECTION 402. Goods Declaration for Consumption.— All
goods declaration for consumption shall be cleared
through a formal entry process except for the following
goods which shall be cleared through an informal entry
process;
(a) Goods of a commercial nature with Free on Board
(FOB) or Free Carrier At (FCA) value of less than fifty
thousand pesos (₱50,000.00). Every three (3) years after
the effectivity of this Act, the Secretary of Finance shall
adjust this amount as provided herein to its present value,
using the Consumer Price Index (CPI) as published by the
PSA; and
(b) Personal and household effects or goods, not in
commercial quantity, imported in a passenger’s baggage
or mail.
The Commissioner may adjust the value of goods of
commercial nature that shall be cleared through an
informal entry process without prejudice to the periodic
adjustment period in subparagraph (a) of this section.
All importations entered through, a formal entry
process shall be covered by a letter of credit or any
verifiable commercial document evidencing payment or in
cases where there is no sale for export, by any commercial
document indicating the commercial value of the goods.
Provisional Goods Declaration
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Sometimes “pag dating sa Pilipinas” the consignee are not
sure what the contents are inside the crate or containers.
SECTION 403. Provisional Goods Declaration.— Where the
declarant does not have all the information or supporting
documents required to complete the goods declaration,
the lodging of a provisional goods declaration may be
allowed: Provided, That it substantially contains the
necessary information required by the Bureau and the
declarant undertakes to complete the information or
submit the supporting documents within forty-five (45)
days from the filing of the provisional goods declaration,
which period may be extended by the Bureau for another
forty-five (45) days for valid reasons.
If the Bureau accepts a provisional goods declaration,
the duty treatment of the goods shall not be different
from that of goods with complete declaration.
Goods under a provisional goods declaration may be
released upon posting of any required security equivalent
to the amount ascertained to be the applicable duties and
taxes.
Q: Who are deemed owner of imported goods?
SECTION 404. Owner of Imported Goods.— All goods
imported into the Philippines shall be deemed to be the
property of the consignee or the holder of the bill of
lading, airway bill or other equivalent transport document
if duly endorsed by the consignee therein, or, if consigned
to order, duly endorsed by the consignor. The
underwriters of abandoned goods and the salvors of goods
saved from wreck at sea, coast, or in any area of the
Philippines, may be regarded as the consignees.
Q: What is the liability of the importer?
SECTION 405. Liability of Importer for Duties and Taxes.
— Unless relieved by laws or regulations, the liability for
duties, taxes, fees, and other charges attached to
importation constitutes a personal debt due and
demandable against the importer in favor of the
government and shall be discharged only upon payment of
duties, taxes, fees and other charges. It also constitutes
alien on the imported goods which may be enforced while
such goods are under customs' custody.
Q: How is it discharged?
From the provision of 405 only upon the
payment of duties, taxes, fees and other charges.
Q: When should the goods declaration be filed?
SECTION 407. Goods Declaration and Period of Filing.
— As far as practicable, the format of the goods
34
declaration shall conform with international standards.
The data required in the goods declaration shall be limited
to such particulars that are deemed necessary for the
assessment and collection of duties and taxes, the
compilation of statistics and compliance with this Act. The
Bureau shall require the electronic lodgement of the goods
declaration.
The Bureau shall only require supporting documents
necessary for customs control to ensure that all
requirements of the law have been complied with.
Translation of supporting documents shall not be required
except when necessary.
Goods declaration must be lodged within fifteen (15)
days from the date of discharge of the last package from
the vessel or aircraft. The period to file the goods
declaration may, upon request, be extended on valid
grounds for another fifteen (15) days: Provided, That the
request is made before the expiration of the original
period within which to file the goods
declaration: Provided, However, That the period of the
lodgement of the goods declaration may be adjusted by
the Commissioner.
Also Remember Sections 411 and 412:
SECTION 411. Contents of Goods Declaration.— Goods
declaration shall contain the names of the consignee,
importing vessel or aircraft, port of departure, port of
destination and date of arrival, the number and marks of
packages, or the quantity, if in bulk, the nature and correct
commodity description of the goods contained therein, its
value as set forth in a proper invoice, and such other
information as may be required by rules and regulations.
Where the declarant does not have all the information
required to make the goods declaration, a provisional or
incomplete goods declaration shall, for certain cases and
for reasons deemed valid by the Bureau, be allowed to be
lodged: Provided, That it contains the particulars deemed
necessary by the Bureau for the acceptance of the entry
filed and that the declarant undertakes to complete it
within forty-five (45) days from the filing of the provisional
goods declaration in accordance with Section 403 of this
Act.
SECTION 412. Statements to be Provided in the Goods
Declaration.— No entry of imported goods shall be
allowed unless the goods declaration has been lodged with
the Bureau. The goods declaration shall, under penalties of
falsification or perjury, contain the following statements:
(a) The invoice and goods declaration contain an accurate
and faithful account of the prices paid or payable for the
goods, and other adjustments to the price actually paid or
payable, and that nothing has been omitted therefrom or
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concealed whereby the government of the Republic of the
Philippines might be defrauded of any part of the duties
and taxes lawfully due on the goods; and
(b) To the best of the declarant's information and belief, all
the invoices and bills of lading or airway bills relating to
the goods are the only ones in existence relating to the
importation in question, and that these documents are in
the same state as when they were received by the
declarant, and the declaration thereon are in all respects
genuine and true.
Goods declaration shall be submitted electronically
pursuant to Republic Act No. 8792, otherwise known as
the “Electronic Commerce Act of 2000”. Such declarations
when printed and certified by a competent customs officer
as a faithful reproduction of the electronic submission
shall be considered as actionable documents for purposes
of prosecuting a declarant if the declarations are found to
be fraudulent.
These provisions provides for the contents of goods,
declarations and the statements to be provided in the
goods for declaration.
Then after unloading, after it had been entered and lodge
with Bureau of Customs, what will happen is the
examination of goods. It will not stop there – for the
examination of goods – priority for the examination of
goods is given to perishable goods like animals and other
goods requiring immediate examination. It is for the office
of the Bureau of Customs to determine whether or not the
declaration made is actually the same with the goods
imported. There has to be a comparison or examination
need to be done because there will be different tariff rate
or customs fees for each and every item or goods.
As a general rule the BOC may examine the goods in the
presence of the declarant or his authorized representative.
But the examination of goods without the presence of the
declarant or his representative may be allowed in
exceptional circumstances which are provided for in
Section 419
SECTION 419. Examination of Goods.— Examination of
goods, when required by the Bureau, shall be conducted
immediately after the goods declaration has been lodged.
Priority in the examination shall be given to live animals,
perishable goods and other goods requiring immediate
examination.
Whenever necessary, a system of coordination and joint
examination of goods shall be established by the Bureau
and other regulatory agencies under existing laws and
regulations.
35
As a general rule, the Bureau may examine the goods in
the presence of the declarant or an authorized
representative. Examination of the goods in the absence of
the declarant or authorized representative may be allowed
in exceptional circumstance and for valid and justifiable
grounds, as may be defined by regulations promulgated by
the Secretary of Finance, upon recommendation of the
Commissioner. The Bureau may require the declarant to
be present or to be represented at the examination o£ the
goods or to render any assistance necessary to facilitate
the examination.
The Bureau shall take samples of the goods only when
needed to establish the tariff description and value of
goods declared, or to ensure compliance with this Act.
Samples drawn shall be as minimal as possible.
By virtue of the amendment provided in the CMTA, Non
evasive examination of goods are now provided like x-ray
machines, but this thus not prevent the BOC from
physically examining the goods.
Transcriber’s Entry: Physical examination of the goods shall
be conducted when:
(a) It is directed by the Commissioner on account
of a derogatory information;
(b) The goods are subject to an Alert Order
issued by competent authority;
(c) The goods are electronically selected for
physical examination;
(d) There are issues and controversies
surrounding the goods declaration and the
import clearance process; or
(e) The importer or declarant requests for the
examination of the goods.
The Commissioner may exempt from physical examination
the goods of authorized economic operators or of those
provided for under any existing trade facilitation program
of the Bureau.
Physical examination, when required, shall be conducted
in an expeditious manner. (See Section 420, CMTA)
ASSESSMENT
After the examination comes assessment. ASSESSMENT is
the process of determining the amount of duties and taxes
and other charges due on imported and exported goods
(SEC. 102(f), CTMA)
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Q: Who has the duty to assess imported goods?
Section 424. Duty of Customs Officer Tasked to Assess
Imported Goods.— For purposes of assessing duties and
taxes on imported goods, the customs officer shall classify,
value, and determine the duties and taxes to be paid. The
customs officer shall prepare and submit an assessment
report as established under this Act.
Q: Can the importer dispute the assessment?
Yes. This is called Tentative Assessment; but this
does not prevent the customs officer from proceeding
with the assessment.
Section 425. Tentative Assessment of Goods Subject to
Dispute Settlement.— Assessment shall be deemed
tentative if the duties and taxes initially assessed are
disputed by the importer. The assessment shall be
completed upon final readjustment based on the tariff
ruling in case of classification dispute, or the final
resolution of the protest case involving valuation, rules of
origin, and other customs issues.
The District Collector may allow the release of the
imported goods under tentative assessment upon the
posting of sufficient security to cover the applicable duties
and taxes equivalent to the amount that is disputed.
CLASSIFICATION DISPUTE means the importer challenged
the classification given by the customs officer given to the
goods being imported.
Can the district collector modify or alter the appraisal,
classification or the return?
General Rule: He can no longer alter or modify.
Exceptions:
(1) Within one (1) year after payment of the
duties, upon statement of error in conformity
with Section 912 of this Act, as approved by the
District Collector;
(2) Within fifteen (15) days after such payment,
upon request for reappraisal or reclassification
addressed to the Commissioner by the District
Collector, if the appraisal or classification is
deemed to be low;
(3) Upon request for reappraisal and/or
reclassification, in the form of a timely protest
addressed to the District Collector by the
36
interested party if the latter should be
dissatisfied with the appraisal or return; or
(4) Upon demand by the Commissioner after the
completion of compliance audit in accordance
with the provisions of this Act.
(See SEC 417)
Q: When will an assessment become final?
SECTION 429. Final Assessment.— Assessment shall be
deemed final fifteen (15) days after receipt of the notice of
assessment by the importer or consignee.
Q: What is the prescriptive period of assessment?
SECTION 430. Period of Limitation.— In the absence of fraud
and when the goods have been finally assessed and
released, the assessment shall be conclusive upon all
parties three (3) years from the date of final payment of
duties and taxes, or upon completion of the post clearance
audit.
After the payment of the final assessment, the BOC is not
precluded from demanding further payment of duties and
taxes; in fact the government requires the BOC to conduct
a POST CLEARANCE AUDIT (Title X, CTMA)
Q: What happens after the duties and taxes are paid?
There will be a permit issued by the BOC and
then the goods will be ready for release.
Section 431. Release of Goods after Payment of Duties and
Taxes.— Goods declared shall be released when duties
and taxes and other lawful charges have been paid or
secured and all the pertinent laws, rules and regulations
have been complied with.
Q: After the payment of duties and taxes, can the BOC
still withhold the goods from being released?
General Rule: Once the duties and taxes are
paid, the BOC cannot do anything about it. This is
especially true if all the documents has been filed and
completed and the full amount of the duties and taxes has
already been paid.
One exemption is under Section 435
Section 435. Withholding Release Pending Satisfaction of
Lien.— When the District Collector is duly notified through
a lawful order of a competent court of a lien for freight,
lighterage or general average upon any imported goods,
the District Collector shall withhold the release of the
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goods unless the claim has been paid or secured. In case of
disagreement, the District Collector may release the goods
after payment of the freight and lighterage due on the
quantity or weight landed as actually determined.
EXPORTATION
In exportation, what is needed is an EXPORT
DECLARATION. All goods exported from the Philippines,
whether subject to export duties or not, shall be declared
to export declaration. It may be signed electronically or
otherwise by the person making the declaration.
CUSTOMS TRANSIT AND TRANSHIPMENT
This is customs transit. In instances covered by customs
transit the goods are exempt from importation taxes
mainly because there is no importation to begin with .
TRANSIT refers to the customs procedure under which
goods, in its original form, are transported under customs
control from one customs office to another, or to a free
zone. (Sec.102(rr), CMTA)
Q: When does Custom Transit happen?
Section 600. Customs Transit in the Customs Territory.—
Customs transit within the customs territory shall be
allowed for goods except those intended for consumption,
to be transported as follows:
(a) From port of entry to another port of entry as exit point
for outright exportation;
(b) From port of entry to another port of entry or inland
customs office;
(c) From inland customs office to a port of entry as exit
point for outright exportation; and
(d) From one port of entry or inland customs office to
another port of entry or inland customs office.
A transit permit is required for goods transported under
customs transit. However, transfer of goods in customs
transit from one means of transport to another shall be
allowed; Provided, That any customs seal or fastening is
not broken or tampered.
The party responsible for the compliance of the obligations
imposed on customs transit shall ensure that the goods
are presented intact and in due course at the customs
office of destination. Failure to comply with the
aforementioned obligations or likewise failure to follow a
prescribed itinerary or period for delivery of the goods
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may immediately subject the goods to the corresponding
duties, taxes and other applicable fines, penalties, and
surcharges.
If you notice in customs transit you will see that the goods
are just transferred from one office to another.
Requirement for Customs Transit:
1. Transit Permit;
2. Carrier’s Security
Section 602. Carrier's Security.— Carriers that transport
imported goods that shall be placed under customs transit
from a port of entry to other ports, shall post a general
transportation security amounting to at least fifty
thousand pesos (₱50,000.00). Such security shall ensure
the complete and immediate delivery of goods to the
customs officer at the port of destination and the payment
of pertinent customs charges and expenses and other
transfer costs. The amount of the security may be adjusted
by the Commissioner, upon approval of the Secretary of
Finance.
CUSTOMS TRANSHIPMENT
Section 603. Customs Transshipment.— Goods admitted
for transshipment shall not be subject to the payment of
duties and taxes: Provided, That the goods declaration for
customs transshipment particularly indicates such nature
of the goods, duly supported by commercial or transport
documents or evidence as required by the Bureau.
Goods for transshipment must be exported from the
Philippines within thirty (30) days from arrival thereof. The
Commissioner may allow an extension of such period after
the establishment of valid reasons.
TRANSHIPMENT refers to the customs procedure under
which goods are transferred under customs control from
the importing means of transport to the exporting means
of transport within the area of one customs office, which is
the office of both importation and exportation. (SEC. 102
(ss), CTMA)
In other words, the goods go to the Philippines, temporary
under custom’s control for the purpose of immediately
exporting the goods. The office must be the office of both
importation and exportation, meaning when we say
transhipment this involves only one customs office,
compare it to customs transit “na dalawang opisina”.
(Isidor)
IMPORT, DUTY AND TAX
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Let’s go now to import duty and tax.
Part of the assessment of duties and taxes is the valuation
of the goods imported or exported.
There must have to be a basis for that valuation.
METHODS OF VALUATION
There are several methods of valuations. You have:
1. TRANSACTION VALUE SYSTEM (METHOD)
Section 701. Transaction Value System—Method
One.— The transaction value shall be the price actually
paid or payable for the goods when sold for export to
the Philippines adjusted in accordance with the
provisions of tins section: Provided, That:
(a) There are no restrictions as to the disposition or use
of the goods by the buyer other than restrictions which:
(i) Are imposed or required by law or by Philippine
authorities;
(ii) limit the geographical area in which the goods may
be resold; or
(iii) Do not substantially affect the value of the goods:
(b) The sale or price is not subject to some condition or
consideration for which a value cannot be determined
with respect to the goods being valued; and
(c) The buyer and the seller are not related, or where
the buyer and the seller are related, that the
transaction value is acceptable for customs purposes
under the provisions hereof.
For purposes of this Act, persons shall be deemed
related only if:
(i) They are officers or directors of one another's
business;
(ii) They are legally recognized partners in business;
(iii) There exists an employer-employee relationship
between them;
(iv) Any person directly or indirectly owns, controls or
holds five percent (5%) or more of the outstanding
voting stocks or shares of both seller and buyer;
(v)One of them directly or indirectly controls the other;
(vi) Both of them are directly or indirectly controlled by
a third person;
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(vii) Together they directly or indirectly control a third
person; or
(viii) They are members of the same family, including
those related by affinity or consanguinity up to the
fourth civil degree.
Persons who are associated in business with one
another in that one is the sole agent, sole distributor or
sole concessionaire, however described, of the other
shall be deemed to be related for the purposes of this
Act if they fall within any of the eight (8) cases cited in
the preceding paragraph. In a sale between related
persons, the transaction value shall be accepted as
basis for customs valuation whenever the importer
demonstrates that such value closely approximates one
of the following occurring at or about the same time:
(a) The transaction value in sales to unrelated buyers of
identical or similar goods for export to the same
country of importation;
(b) The customs value of identical or similar goods as
determined under the
provisions of Section 704 of this Act; or
(c) The customs value of identical or similar goods are
determined under the provisions of Section 705 of this
Act.
In determining the transaction value, the following shall
be added to the price actually paid or payable for the
imported goods:
(1) To the extent that they are incurred by the buyer
but are not included in the price actually paid or
payable for the imported goods:
(a) Commissions and brokerage fees except buying
commissions;
(b) Cost of containers;
(c) Cost of packing, whether for labor or materials;
(d) Value, apportioned as appropriate, of the
following goods and services: materials,components,
parts and similar items
incorporated in the imported goods; tools; dies; moulds
and similar items used in the production of imported
goods; materials consumed in the production of the
imported goods; and engineering, development,
artwork, design work and plans and sketches
undertaken elsewhere than in the Philippines and
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necessary for the production of imported goods, where
such goods and services are supplied directly or
indirectly by the buyer free of charge or at a reduced
cost for use in connection with the production and sale
for export of the imported goods; and
(d) Amount of royalties and license fees related to the
goods being valued that the buyer must pay either
directly or indirectly, as a condition of sale of the goods
to the buyer.
(2) Value of any part of the proceeds of any subsequent
resale, disposal or use of the imported goods that
accrues directly or indirectly to the seller;
(3) Cost of transport of the imported goods from the
port of exportation to the port of entry in the
Philippines;
(4) Loading, unloading and handling charges associated
with the transport of the imported goods from the
country of exportation to the port of entry in the
Philippines; and
(5) Cost of insurance.
All additions to the price actually paid or payable shall
be made only on the basis of objective and quantifiable
data.
The transaction value shall be the price actually paid
or payable for the goods when sold for export to the
Philippines adjusted in accordance with the provisions of
the CMTA.
2. TRANSACTION VALUE OF IDENTICAL GOODS (METHOD
2)
Section 702. Transaction Value of Identical Goods—
Method Two.— Where the dutiable value cannot be
determined under method one, the dutiable value shall
be the transaction value of identical goods sold for
export to the Philippines and exported at or about the
same time as the goods being valued.
“IDENTICAL GOODS”
For purposes of this section, “Identical goods” refer to
goods which are the same in all respects, including
physical characteristics, quality and reputation. Minor
differences in appearances shall not preclude goods
otherwise conforming to the definition from being
regarded as identical.
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If, in applying this section, more than one transaction
value of identical goods are found, the lowest value shall
be used to determine the customs value.
3. TRANSACTION VALUE OF SIMILAR GOODS (METHOD 3)
Section 703. Transaction Value of Similar Goods—
Method Three.— Where the dutiable value cannot be
determined under the preceding method, the dutiable
value shall be the transaction value of similar goods
sold for export to the Philippines and exported at or
about the same time as the goods being valued.
”SIMILAR GOODS”
For purposes of this section, “Similar goods” refer to
goods which, although not alike in all respects, have like
characteristics and similar component materials which
enable them to perform the same functions and to be
commercially interchangeable.
The quality of the goods, its reputation and the
existence of a trademark shall be among the factors to
be considered in determining whether goods are
similar.
If, in applying this section, more than one transaction
value of identical goods are found, the lowest such
value shall be used to determine the customs value.
4. THE DEDUCTIVE VALUE (METHOD 4)
Section 704. Deductive Value—Method Four.—
Where the dutiable value cannot be determined under
the preceding method, the dutiable value shall be the
deductive value unless otherwise requested by the
importer as provided in Section 700 hereof. The
deductive value which shall be based on the unit price
at which the imported goods or identical or similar
imported goods are sold in the Philippines, in the same
condition as when imported, in the greatest aggregate
quantity, at or about the time of the importation of the
goods being valued, to persons not related to the
persons from whom they buy such goods, subject to
deductions for the following:
(1) Either the commissions usually paid or agreed to be
paid or the additions usually made for profit and
general expenses in connection with sales in such
country of imported goods of the same class or kind;
(2) The usual costs of transport and insurance and
associated costs incurred within the Philippines;
(3) Where appropriate, the costs of:
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(i) transport of the imported, goods from the port of
exportation to the port of entry in the Philippines;
(ii) (ii) loading, unloading and handling charges
associated with the transport of the imported goods
from the country of exportation to the port of entry in
the Philippines;and
(iii) insurance; and
(4) The customs duties and other national taxes payable
in the Philippines by reason of the importation or sale
of the goods. If neither the imported goods nor
identical nor similar imported goods are sold at or
about the time of importation of the goods being
valued in the Philippines in the conditions they were
imported, the customs value shall, subject to the
conditions set forth in the preceding paragraph, be
based on the unit price at which the imported goods or
identical or similar imported goods sold in the
Philippines in the condition they were imported and at
the earliest date after the importation of the goods
being valued, but before the expiration of ninety (90)
days after such importation.
If neither the imported goods nor identical nor similar
imported goods are sold in the Philippines in the
condition as imported, then, if the importer so
requests, the dutiable value shall be based on the unit
price at which the imported goods, after further
processing, are sold in the greatest aggregate quantity
to persons in the Philippines who are not related to the
persons from whom they buy such goods, subject to
allowance for the value added by such processing and
deductions provided under subsections (1), (2), (3) and
(4) hereof.
5. COMPUTED VALUE (METHOD 5)
Section 705. Computed Value—Method Five.—
Where the dutiable value cannot be determined under
the preceding method, the dutiable value shall be the
computed value of the sum of:
(1) The cost or the value of materials and fabrication or
other processing employed in producing the imported
goods;
(2) The amount for profit and general expenses equal
to that usually reflected in the sale of goods of the
same class or kind as the goods being valued which are
made by producers in the country of exportation for
export to the Philippines;
(3) The freight, insurance fees and other transportation
expenses for the
40
importation of the goods;
(4) Any assist, if its value is not included under
paragraph (1) hereof; and
(5) The cost of containers and packing, if their values
are not included under paragraph (1) hereof.
The Bureau shall not require or compel any person not
residing in the Philippines to produce for examination,
or to allow access to, any account or
other record for the purpose of determining a
computed value. However, information supplied by the
producer of the goods for the purposes of determining
the customs value may be verified in another country
with the agreement of the producer and provided that
said producer will give sufficient
advance notice to the government of the country in
question and that the
6. FALLBACK VALUE (METHOD 6)
Section 706. Fallback Value—Method Six.— If the
dutiable value cannot be determined under the
preceding methods described above, it shall be
determined by using other reasonable means and on
the basis of data available in the Philippines. If the
importer so requests, the importer shall be informed in
writing of the dutiable value determined under method
six and the method used to determine such value.
No dutiable value shall be determined under method
six on the basis of:
(1) The selling price in the Philippines of goods
produced in the Philippines;
(2) A system that provides for the acceptance for
customs purposes of the higher of two (2) alternative
values;
(3) The price of goods in the domestic market of the
country of exportation;
(4)The cost of production, other than computed values,
that have been determined for identical or similar
goods in accordance with method five hereof;
(5)The price of goods for export to a country other than
the Philippines;
(6) Minimum customs values; or
(7) Arbitrary or fictitious values.
These valuation methods are SEQUENTIAL IN
APPLICATION.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
So magkasunod-sunod sya. If the transaction value is not
available then you go to the method 2 and so on and so
forth.
SPECIAL DUTIES AND TRADE REMEDY MEASURES
Then, you have the special duties and trade remedy
measures. Usually ito yung lumalabas sa bar exam.
But first let us talk about the GOVERNMENT’S RIGHT TO
COMPULSORY ACQUISITION.
Section 709. Government's Right of Compulsory
Acquisition.— In order to protect government
revenues against undervaluation of goods, the
Commissioner may, motuproprio or upon the
recommendation of the District Collector, acquire
imported goods under question for a price equal to
their declared customs value plus any duties already
paid on the goods, payment for which shall be made
within ten (10) working days from issuance of a warrant
signed by the Commissioner for the acquisition of such
goods.
An importer who is dissatisfied with a decision of the
Commissioner pertaining to this section may, within
twenty (20) working days after the date on which
notice of the decision is given, appeal to the Secretary
of Finance, and thereafter if still dissatisfied, to the CTA
as provided for in Section 1136 of this Act.
Where no appeal is made by the importer, or upon
reaffirmation of the Commissioner's decision during the
appeals process, the Bureau or its agents shall sell the
acquired goods pursuant to existing laws and
regulations.
Nothing in this section limits or affects any other
powers of the Bureau with respect to the disposition of
the goods or any liability of the importer or any other
person with respect to an offense committed in the
importation of the goods.
How is this done?
This is done by the government, it may issue a warrant for
the acquisition of the goods.
WARRANT
The warrant shall be sent by the COC.
1. The warrant shall state that the government intends to
acquire the imported goods under question for a price
equal to the declared customs value plus any duties
already paid for the goods.
When will the government be the importer?
41
So this means that the government will just buy the
property from an importer.
“PAYMENT”
“Payment for which shall be made within ten (10)
working days from issuance of a warrant signed by the
Commissioner for the acquisition of such goods”.
“DISSATISFIED IMPORTER: REMEDY”
“An importer who is dissatisfied with a decision of
the Commissioner pertaining to this section may, within
twenty (20) working days after the date on which notice of
the decision is given, appeal to the Secretary of Finance,
and thereafter if still dissatisfied, to the CTA as provided
for in Section 1136 of this Act.”
So, in sum, the government can compulsory acquire
by paying the price of the goods including the tax that has
already been paid.
If the importer is not satisfied, he may challenge the
acquisition within 20 days by filing an APPEAL TO THE
SECREATRY OF FINANCE if he is still not satisfied with the
decision, then FILE A CASE TO THE CTA IN DIVISION.
SPECIAL TARIFFS
What are these special tariffs?
1. MARKING DUTY
2. ANTI-DUMPING DUTY
3. SAFEGUARD DUTY
4. COUNTERVAILING DUTY
5. DISCRIMINATORY DUTY
We call these as special tariffs because each of which has a
specific purpose. Usually, the purpose of these special
tariffs are some sort of a deterrent of any negative impact
to the Philippine economy. These serve as protection to
Philippine products.
A. MARKING DUTY
“MARKING OF IMPORTED GOODS”
Section 710. Marking of Imported Goods and
Containers.—
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(A) Marking of Goods.— Except as hereinafter provided,
all goods of foreign origin imported into the Philippines
or their containers,
as provided in subsection (B) hereof shall be
conspicuously marked in any official language of the
Philippines as legibly, indelibly and permanently as the
nature of the goods or container will permit and in such
manner as to indicate to an ultimate purchaser in the
Philippines the name of the country of origin of the
goods. Pursuant thereto, the Commissioner shall, with
the approval of the Secretary of Finance:
(1) Determine the character of words and phrases or
abbreviation thereof
which shall be acceptable as indicating the country of
origin and prescribe any reasonable method of
marking, whether by printing, stenciling, stamping,
branding, labeling or by any other reasonable method,
and in a conspicuous place on the goods or container
where the marking shall appear;
(2) Require the addition of other words or symbols
which may be appropriate to prevent deception or
mistake as to the origin of the goods or as to the origin
of any other goods with which such imported goods is
usually combined subsequent to importation but
before delivery to an ultimate purchaser; and
(3) Authorize the exception of any goods from the
requirements of
marking if:
(i) Such goods are incapable of being marked;
(ii) Such goods cannot be marked prior to shipment to
the Philippines
without injury;
(iii) Such, goods cannot be marked prior to shipment to
the Philippines,
except at an expense economically prohibitive of their
importation;
(iv) The marking of a container of such goods will
reasonably indicate
the origin of such goods;
(v) Such goods are crude substances;
(vi) Such goods are imported for use by the importer
and not intended for
sale in their imported or any other form;
(vii) Such goods are to be processed in the Philippines
by the importer or
for the importer's account other than for the purpose
42
of concealing the
origin of such goods and in such manner that any mark
contemplated
by this section would necessarily be obliterated,
destroyed, or permanently
concealed;
(viii) An ultimate purchaser, by reason of the character
of such goods or by reason of the circumstances of their
importation, must necessarily know the country of
origin of such goods even though they are not marked
to indicate their origin;
(ix) Such goods were produced more than twenty (20)
years prior to their
importation into the Philippines; or
(x) Such goods cannot be marked after importation
except at an expense
which is economically prohibitive, and the failure to
mark the goods before
importation was not due to any purpose of the
importer, producer, seller or shipper to avoid
compliance with this section.
The important aspect here is the PROPER MARKING.
There must have to be a proper marking of the goods.
Asan ba to nanggaling?
Because it will also have an impact on the value of the
tariffs involved. Kung galing sa US mas mura, kung galing
sa Japan mas mahal parang ganyan ba.
“MARKING OF CONTAINER”
(B) Marking of Containers.— Whenever goods are
exempt under paragraph (3) of subsection (A) of this
section from the requirements of marking, the
immediate container, if any, of such goods, or such
other container or containers of such goods, shall be
marked in such manner as to indicate to an ultimate
purchaser in the Philippines the name of the country of
origin of such goods in any official language of the
Philippines, subject to all provisions of this section,
including the same exceptions as are applicable to
goods under paragraph (3) of subsection (A).
“Except as hereinafter provided, all goods of foreign origin
imported into the Philippines or their containers, as
provided in subsection (B) hereof shall be conspicuously
marked in any official language of the Philippines as
legibly, indelibly and permanently as the nature of the
goods or container will permit and in such manner as to
indicate to an ultimate purchaser in the Philippines the
name of the country of origin of the goods.”
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FOR BOTH GOODS AND CONTAINERS:
There must have to be a marking.
Official Language of the Philippines: Filipino
EXCEPTIONS FOR MARKING:
1. Goods which are incapable of being marked;
2. Goods which cannot be marked prior to the shipment to
the Philippines without injury;
3. Such, goods cannot be marked prior to shipment to the
Philippines, except at an expense economically prohibitive
of their importation;
- So, meaning mahal ang marking niya.
4. The marking of a container of such goods will
reasonably indicate the origin of such goods;
5. Such goods are crude substances;
6. Such goods are imported for use by the importer and
not intended for sale in their imported or any other form;
7. Such goods are to be processed in the Philippines by
the importer or for the importer's account other than for
the purpose of concealing the origin of such goods and in
such manner that any mark contemplated by this section
would necessarily be obliterated, destroyed, or
permanently concealed;
8. An ultimate purchaser, by reason of the character of
such goods or by reason of the circumstances of their
importation, must necessarily know the country of origin
of such goods even though they are not marked to
indicate their origin;
9. Such goods were produced more than twenty (20)
years prior to their importation into the Philippines; or
10. Such goods cannot be marked after importation
except at an expense which is economically prohibitive,
and the failure to mark the goods before importation was
not due to any purpose of the importer, producer, seller
or shipper to avoid compliance with this section.
EFFECTS OF FAILURE TO MARK
What are the effects of failure to mark?
1. Imposition of a marking duty;
43
- This is an additional payment. The importer
shall be subjected to a fine for failure to mark.
This is 5% of the dutiable value of the goods
which shall be deemed to have accrued at the
time of importation.
2. The release shall be withheld;
- The BOC shall withhold the release of those
goods until the goods are properly marked.
3. Failure or Refusal after having been ordered by the
BOC to mark.
-The failure or refusal of the owner or
importer to mark the goods as herein required
within a period of thirty (30) days after due
notice shall constitute as an act of abandonment
of said goods and their disposition shall be taken
by the BOC.
B. ANTI-DUMPING DUTY
Section 711. Dumping Duty.— The provisions of
Republic Act No. 8752, otherwise known as the “Anti-
Dumping Act of 1999”, are hereby adopted.
Then, you have the Anti-Dumping Duty.
What is Anti-Dumping duty?
It is a special duty imposed on the importation of a
product, commodity or article of commerce in the
Philippines:
1. At less than its normal value when destined for
domestic consumption in the exporting country;
2. Which importation is causing or is threatening to
cause material injury to a domestic industry, or
materially retarding the establishment of a domestic
industry producing like product.
In simpler terms, anti-dumping duty is imposed on
UNDERPRICED ARTICLES. The article we are speaking here
are imported, very cheap, such as it will affect the local
industries here in the Philippines there will be an anti-
dumping duty.
HOW MUCH WILL BE THE ANTI-DUMPING DUTY?
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
- It’s the difference between the export price and the
normal value of that article.
WHO IMPOSES THE ANTI-DUMPING DUTY?
There are different agencies involved:
1. Secretary of Trade and Industry;
2. Secretary of Agriculture;
- In case of agricultural products
3. Tariff Commission.
There will be an application that will be
submitted and then after the application or
complaint, there will be a formal investigation
then there will be a determination of the Tariff
Commission whether or not the grounds for the
imposition of the anti-dumping duty exist.
 APPLICATION >>>FORMAL
INVESTIGATION>>>DETERMINATI
ON (W/N the grounds exist)
But even if there is a time that there are grounds present,
the DECISION OF WHETHER OR NOT TO IMPOSE THE
DEFINITIVE ANTI-DUMPING DUTY REMAINS UNDER THE
PREROGATIVE OF THE TARIFF COMMISSION.
-So, paginvestigate merong grounds existing, it is still up to
the Tariff Commission whether or not the anti-dumping
duty should be imposed for the importation of such article.
DURATION OF THE DEFINITIVE ANTI-DUMPING DUTY
 Shall not exceed 5 years from the date of its
imposition under the time of which the
duty is no longer necessary.
REMEDY
What is the remedy then of the aggrieved party?
Any INTERESTED PARTY may file with the CTA a PETITION
FOR REVIEW within 30 DAYS FROM RECEIPT OF THE
NOTICE OF THE FINAL RULING.
*CTA IN DIVISION
INTERESTED PARTY
The INTERESTED PARTY here may be:
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1. He can be an IMPORTER;
2. He can even be the Secretary of Trade and
Industry or the Secretary of Agriculture as the case
may be;
*Take note also that the filing of the petition for review
shall not in any way suspend the imposition or collection
of the anti-dumping duty.
C. SAFEGUARD DUTY
Section 712. Safeguard Duty.— The provisions of
Republic Act No. 8800, otherwise known as the
“Safeguard Measures Act”, are hereby adopted.
What are these safeguard duties?
These are the emergency measures to protect domestic
industries from its imports which
will will inflict or could inflict serious injury on them.
Who has the authority?
Still the same:
1. The Secretary of Agriculture; or
2. The Secretary of Trade and Industry as the case may
be;
3. The Tariff Commission.
Section 5 of RA 880
- Provides for the application of the GENERAL
SAFEGUARD MEASURES.
REMEDY: Any INTERESTED PARTY may file with the CTA a
PETITION FOR REVIEW within 30 DAYS FROM RECEIPT OF
THE NOTICE OF THE FINAL RULING.
*CTA IN DIVISION
D. ECOUNTERVAILING DUTY
Section 713. Countervailing Duty.— The provisions of
Republic Act No. 8751, otherwise known as “An Act
Strengthening the Mechanisms for the Imposition of
Countervailing Duties on Imported Subsidized Products,
Commodities or Articles of Commerce in Order to
Protect Domestic Industries from Unfair Trade
Competition, Amending for the Purpose Section 302,
Part 2, Title II, Book I of Presidential Decree No. 1464”,
otherwise known as the “Tariff and Customs Code of the
Philippines, as Amended”, are hereby adopted.
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Then we have the Countervailing Duties.
E. DISCRIMINATORY DUTY
These are additional customs duties imposed on any
product, commodity or article of commerce:
a) Which is granted directly in indirectly by the
government in the country of origin or
exportation;
b) Any kind or form of specific subsidy upon the
production, manufacture, or exportation of such
product, commodity, or article; and
c)The importation of the subsidized product has
cause or threatens to cause:
i. material injury to a domestic
industry, or
ii. has materially retarded the growth
or prevents
the establishment of a domestic
industry.
In effect what happens in this case is that the imported
articles become so cheap because of the subsidy provided
by the foreign government where these products
originated. These cheap products would adversely affect
the local industries here in the Philippines. It is quite
similar to your Anti-Dumping duty. Ang anti-dumping duty
is underpriced db? In this case it becomes so cheap
because of any government subsidy or the country of
origin of those articles.
AMOUNT OF COUNTERVAILING DUTY
It is equivalent to the bounty subsidy or subvention
provided by the foreign government.
IMPOSING AUTHORITIES
1.Secretary of Trade and Industry; or
2.Secretary of Agriculture as the case may be;
3.Tariff Commission.
-Final decision remains with the Tariff Commission.
REMEDY OF THE AGGRIEVED PARTY
- May file with the CTA a PETITION FOR REVIEW within 30
DAYS FROM RECEIPT OF THE NOTICE OF THE FINAL
RULING.
*CTA IN DIVISION
45
Section 714. Discrimination by Foreign Countries.—
Without prejudice to the Philippine commitment in any
ratified international agreements or treaty, the following
recourse shall be applicable in case of discrimination by
foreign countries:
(a) When the President finds that the public interest will
be served thereby, the President shall, by proclamation,
specify and declare new or additional duties in an
amount not exceeding one hundred percent (100%) ad
valorem upon goods wholly or in part the growth or
product of, or imported in a vessel of any foreign country
whenever the President shall find as a fact that such
country:
(1) Imposes, directly or indirectly, up on the disposition
or transportation in transit or through reexportation
from such country of any goods wholly or in part the
growth or product of the Philippines, any unreasonable
charge, exaction, regulation or limitation which is not
equally enforced upon the like goods of every foreign
country; or
(3) Discriminates in fact against the commerce of the
Philippines, directly or indirectly, by law or
administrative regulation or practice, by or in respect to
any customs, tonnage, or port duty, fee, charge,
exaction, classification, regulation, condition, restriction
or prohibition, in such manner as to place the commerce
of the Philippines at a disadvantage compared with the
commerce of any foreign country.
(b) If at any time the President shall find it to be a fact
that any foreign country has not only discriminated
against the commerce of the Philippines, as aforesaid,
but has, after the issuance of a proclamation as
authorized in subsection (a) of this section, maintained
or increased its said discrimination against the
commerce of the Philippines, the President is hereby
authorized, if deemed consistent with the interests of
the
Philippines and of public interest, to issue a further
proclamation directing that such product of said country
or such goods imported in their vessels be excluded hom
importation into the Philippines.
(c) Any proclamation issued by the President under this
section shall, if the President deems it consistent with
the interest of the Philippines, extend to the whole of
any foreign country or may be confined to any
subdivision or subdivisions thereof; Provided, That the
President may, whenever the public interest requires,
suspend, revoke, supplement or amend any such
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proclamation.
(e) All goods imported contrary to the provisions of this
section shall be forfeited to the government of the
Philippines and shall be liable to be seized, prosecuted
and condemned in like manner and under the same
regulations, restrictions, and provisions as may from
time to time he established for the recovery, collection,
distribution, and remission or forfeiture to the
government by the tariff and customs laws. Whenever
the provision of this section shall be applicable to
importations into the Philippines of goods wholly or in
part the growth or product of any foreign country, it
shall be applicable thereto, whether such goods are
imported directly or indirectly.
(f) It shall be the duty of the Commission to ascertain
and at all times be informed whether any of the
discriminations against the commerce of the Philippines
enumerated in subsections (a) and (b) of this section are
practiced by any country; and if and when such
discriminatory acts are disclosed, it shall be the duty of
the Commission to bring the matter to the attention of
the President, and to recommend measures to address
such discriminatory acts.
(f) The Secretary of Finance shall make such rules and
regulations as are necessary for the execution of a
proclamation that the President may issue in accordance
with the provisions of this section.
- In essence, it is imposed on articles wholly or in part the
growth or product of, or imported in a vessel of, any
foreign country which discriminates or places undue
advantage on Philippine products exported to such foreign
country.
IMPOSING AUTHORITY
Q: Who imposes this duty?
IT’S THE PRESIDENT OF THE PHILIPPINES.
GROUNDS: When the President finds for a fact that such
country,
1. Imposes directly or indirectly any
unreasonable charge, exaction, regulation or
limitation which is not equally enforced upon the
like goods of every foreign country; or
2. Discriminates in fact against the commerce of
the Philippines, directly or indirectly, by law or
administrative regulation or practice, by or in
46
respect to any customs, tonnage, or port duty,
fee, charge, exaction, classification, regulation,
condition, restriction or prohibition, in such
manner as to place the commerce of the
Philippines at a disadvantage compared with the
commerce of any foreign country.
Q: What are the options available to the President?
(1) Issue a proclamation that such discriminatory
country, shall be excluded from importation into
the Philippines consistent with the public
interests (a total ban),
(2) This proclamation may be withdrawn,
suspended or amended by the President, and
(3) All articles imported during the total ban shall
be forfeited to the Government of the
Philippines and shall be liable for seizure,
prosecution or condemnation.
April 17, 2019
(Lagat)
The last thing we discussed was the special duties.
This question usually comes out in the BAR, and tinatong
din ni Dean.
What kind of special duties? What are its effects?
Requirements?
Usually the president may impose these kinds of duties.
The next is a bit important because it refers to the tax
exemption and/or importation/exportation —
importation/exportation conditionally free from tax and
duties whether for importation or exportation. Dito
pumapasok yung balikbayan or personal household
effects.
You have to familiarise with these as I have seen 2 BAR
questions on this already, which asked pertaining to
Sec.800, CMTA
Conditionally Tax and/or Duty-Exempt Importation
*transcriber’s note: this is a very long provision (items a-z).
And Sir Donalvo only highlighted a few provisions, namely:
A, B, D, E, F, and G (items that Sir considers important for
us to know).
Sec. 800. Conditionally Tax and/or Duty-Exempt
Importation. – The following goods shall be exempt
from the payment of import duties upon compliance
with the formalities prescribed in the regulations which
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Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
shall be promulgated by the Commissioner with the
approval of the Secretary of Finance:
Provided, That goods sold, bartered, hired or used for
purposes other than what they were intended for and
without prior payment of the duty, tax or other charges
which would have been due and payable at the time of
entry if the goods had been entered without the
benefit of this section, shall be subject to forfeiture and
the importation shall constitute a fraudulent practice
against customs laws:
Provided, however, That a sale pursuant to a judicial
order or in liquidation of the estate of a deceased
person shall not be subject to the preceding proviso,
without prejudice to the payment of duties, taxes and
other charges: Provided, further, That the President
may, upon the recommendation of the Secretary of
Finance, suspend, disallow or completely withdraw, in
whole or in part, any conditionally free importation
under this section:
(a) Aquatic products such as fishes, crustaceans,
mollusks, marine animals, seaweeds, fish oil, roe,
caught or gathered by fishing vessels of Philippine
registry: Provided, That they are imported in such
vessels or in crafts attached thereto: Provided,
however, That they have not been landed in any foreign
territory or, if so landed, that they have been landed
solely for transshipment without having been advanced
in condition;
(b) Equipment for use in the salvage of vessels or
aircrafts, not available locally, upon identification and
the giving of a security in an amount equal to one
hundred percent (100%) of the ascertained duties,
taxes and other charges thereon, conditioned for the
exportation thereof or payment of corresponding
duties, taxes and other charges within six (6) months
from the date of acceptance of the goods
declaration: Provided, That the Bureau may extend the
time for exportation or payment of duties, taxes and
other charges for a term not exceeding sis (6) months
from the expiration of the original period;
xxx
(d) Goods brought into the Philippines for repair,
processing or reconditioning to be reexported upon
completion of the repair, processing or
reconditioning: Provided, That the Bureau shall require
security equal to one hundred percent (100%) of the
duties, taxes and other charges thereon, conditioned
for the exportation thereof or payment of the
corresponding duties, taxes and other charges within
six (6) months from the date of acceptance of the
goods declaration;
(e) Medals, badges, cups, and other small goods
47
bestowed as trophies or prizes, or those received or
accepted as honorary distinction
(f) Personal and household effects belonging to
returning residents including household appliances,
jewelry, precious stones, and other goods of luxury
which were formally declared and listed before
departure and identified under oath before the District
Collector when exported from the Philippines by such
returning residents upon their departure therefrom or
during their stay abroad; personal and household
effects including wearing apparel, goods of personal
adornment, toilet goods, instruments related to one's
profession and analogous personal or household
effects, excluding luxury items, vehicles, watercrafts,
aircrafts and animals purchased in foreign countries by
residents of the Philippines which were necessary,
appropriate, and normally used for their comfort and
convenience during their stay abroad, accompanying
them on their return, or arriving within a reasonable
time which, barring unforeseen and fortuitous events,
in no case shall exceed sixty (60) days after the owner's
return.
For purposes of this section, the phrase "returning
residents" shall refer to nationals who have stayed in a
foreign country for a period of at least sis (6) months.
Returning residents shall have tax and duty exemption
on personal and household effects: Provided, That:
(1) It shall not be in commercial quantities;
(2) It is not intended for barter, sale or for hire; and
(3) Limited to the FCA or FOB value of:
(i) Three hundred fifty thousand pesos (P350,000.00)
for those who have stayed in a foreign country for at
least ten (10) years and have not availed of this
privilege within ten (10) years prior to returning
resident's arrival;
(ii) Two hundred fifty thousand pesos (P250,000.00) for
those who have stayed in a foreign country for a period
of at least five (5) but not more than ten (10) years and
have not availed of this privilege within five (5) years
prior to returning resident's arrival; or
(iii) One hundred fifty thousand pesos (P150,000.00) for
those who have stayed in a foreign country for a period
of less than five (5) years and have not availed of this
privilege within six (6) months prior to returning
resident's arrival.
Any amount in excess of the above-stated threshold
shall be subject to the corresponding duties and taxes
TAXATION 2- 4th exam
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Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola

under this Act. Q: What are these?

Every three (3) years after the effectivity of this Act, the
1. First is the AQUATIC PRODUCTS.
Secretary of Finance shall adjust the amount herein
stated to its present value using the CPI as published by
the PSA. If you read Section 800a, the short way of understanding
this is “aquatic products”
In addition to the privileges granted under the
immediately preceding paragraph, returning Overseas
“(a) Aquatic products such as fishes, crustaceans,
Filipino Workers (OFWs) shall have the privilege to
bring in, tax and duty-free, home appliances and other mollusks, marine animals, seaweeds, fish oil, roe, caught
durables, limited to one of every kind once in a given or gathered by fishing vessels of Philippine
calendar year accompanying them on their return, or registry: Provided, That they are imported in such vessels
arriving within a reasonable time which, barring or in crafts attached thereto: Provided, however, That they
unforeseen and fortuitous events, in no case shall have not been landed in any foreign territory or, if so
exceed sixty (60) days after every returning OFW's
landed, that they have been landed solely for
return upon presentation of their original passport at
the port of entry: Provided, That any amount in excess transshipment without having been advanced in
of FCA value of one hundred fifty thousand pesos condition;”
(P150,000.0,0) for personal and household effects or of
the number of duty-free appliances as provided for Ito yung mga fishing boats. Kasi we understand that
under this section, shall be subject to the
sometimes the fishermen would go out of Philippine
corresponding taxes and duties: Provided, further, That
every three (3) years after the effectivity of this Act, the territory, and reach Indonesia or wherever and they come
Secretary of Finance shall adjust the amount herein back with the fishes, that’s technically importation, right?
stated to its present value using the CPI as published by Coming from abroad, bringing items into the Philippines,
the PSA; but because of this specific provision, the fishes that they
catch are exempt from duties.
(g) Residents of the Philippines, OFWs or other Filipinos
while residing abroad or upon their return to the
Philippines shall be allowed to bring in or send to their
families or relatives in the Philippines balikbayan boxes Q: What are the requirements?
which shall be exempt from applicable duties and taxes 1) it must be caught by a vessel under Philippine
imposed under the NIRC of 1997, as Registry
amended: Provided, That balikbayan boxes shall
2) they have not landed in any foreign territory
contain personal and household effects only and shall
neither be in commercial quantities nor intended for
barter, sale or for hire and that the FCA value of which Meaning punta sila ng seas ng Indonesia, and they go back
shall not exceed one hundred fifty thousand pesos here.
(P150,000.00): Provided, further, That every three (3) Or, if they land in foreign territory, it is solely for
years after the effectivity of this Act, the Secretary of
transshipment.
Finance shall adjust the amount herein stated to its
present value using the CPI as published by the
PSA: Provided, finally, That residents of the Philippines, That’s the conditions that these aquatic products would be
OFWs or other Filipinos can only avail of this privilege exempt taxes and duties.
up to three (3) times in a calendar year. Any amount in 2) Equipment used for salvage of vessels aircrafts
excess of the allowable non-dutiable value shall be (Sec.800-B)
subject to the applicable duties and taxes;
3. Goods brought into the Philippines for REPAIR,
processing or recondition TO BE REEXPORTED upon
We call this “conditionally free” because if the taxpayer or
completion of the repair… subject to the condition the
importer would be able to comply with the conditions, he
Bureau will require some sort of “deposit” -100% of the
would be tax exempt, or at least free from taxes and
duties, taxes that could have been due if they have been
duties.
taxed in the Philippines (Sec.800-D)

48
TAXATION 2- 4th exam
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Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
4. Medals, badges, cups, and other small goods bestowed
as trophies or prizes, or those received or accepted as
honorary distinction
Remember that Filipino weightlifter na nanalo
(silver) sa Olympics? Nasa news that Customs
some sort of held her because she brought
medals from the Olympics. I was wondering why
they held her up? Because of the gold medal, the
prizes, etc? Sabi nila that these were not
declared when she went back into the
Philippines.
Well, if you look at it strictly, these goods before
they would be exempted, they should be
declared. But I don’t know what happened with
her that she forget or failed to declare. But even
if she did not place it in the declaration, Sec.800-
E is very clear.
5. Personal and Household Effects belonging to Returning
Residents including household appliances, jewelry,
precious stones, and other goods of luxury which were
formally declared and listed before departure and
identified under oath before the District Collector…
I think the District Collector was confused here
(weighlifter’s case) because 'gold’ medal diba?
(cf: Letter “e)
In this letter F, if you read the entire provisions,
this refers to Returning Residents.
Q: Who are RETURNING RESIDENTS?
These are nationals who have stayed in a foreign
country for a period of at least 6 months.
Basically, there are two types of items here.
a. Let’s talk about “luxury items”, for this to be
exempted, these must be formally declared and
listed before departure and identified by the
district collector.
Now, what is peculiar here is the requirement
that “declared and identified this items before”…
49
it seems that before these residents may avail,
they have done this before they left the country
and go back, to declare this luxuries at the time
they go out abroad. Pagbalik niya, conditionally
exempt pa rin.
Because normally, if you read the entire
provision, items of luxury, when you import in
the Philippines, they are not normally tax
exempt. Normally, it would only be the
household effects of that person who is coming
here in the Philippines would be exempt.
b. Second Item: Personal And Household Effects
belonging to the returning resident and then, …
ito na yung exclusions
Q: What are the differences here between the
luxuries mentioned earlier?
Yung una, these were luxuries that were
previously declared and brought back with them
when they arrived here in the Philippines. There
is no importation to begin with.
Whereas, when you talk luxury items here, the
personal belongings, these are items which are
brought abroad and brought here in the
Philippines. So it is no longer under the category
of personal and household effects.
On both instances, the goods should accompany
the returning resident arriving in 60days, except
when the arrival was due to unforeseen and
fortuitous events.
Ano ba example nito? Like sabihin nating due to
port congestion or may storm?
Q: What are the other conditions for free
importations by the returning residents?
Other conditions:
1) It shall not be in commercial quantities;
2) not intended for sale, barter or hire;
3) limited to the FCA or FOB value depending on
the length of time the returning resident has
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
been abroad:
- 300K = at least 10 years without having availed
of the privileged within that time of returning
- 250K = 5 to 10 years of residence
- 150K = less than 5years
Any amount in excess to the ceiling (300/250/150k) is
subject to taxes.
6. for OFWs
2 Situations:
a - those under Letter F; and
b - those under Letter G — the balikbayan
boxes
“In addition to the privileges granted in the preceding
paragraph, OFWs shall have the privilege to bring in tax
and duty-free appliances and home valuables limited to
one of its kind, once in a given calendar year,
accompanying them for their return, arriving in a
reasonable time, which for varying fortuitous events,
which in no case shall exceed 60days after the OFWs
return as shown in their passport. That any amount
exceeding 150,000 for personal, household effects shall be
subject to corresponding duties and taxes.”
The first thing is, when it comes to OFW, normally when
you bring appliances from abroad, they are considered as
importation. The exception is when the returning resident
is an OFW.
OFWs can bring home appliance; "one of each kind”, the
amount of which does not exceed 150K, and do it once a
year.
One-of-every-kind: for example, TV, i-uwi niya ang isang
TV, that would be exempt from taxes and duties.
For Home appliances and other durables, the goods =
1) limited to one of each kind
2) bring back once in a given calendar year
3) the goods accompanying arrival within a reasonable
time (not exceeding 60days; except for fortuitous events);
4) the amount: 150,000- limit
50
5) presentation of passport at the port of entry
The Second is the BALIKBAYAN BOXES.
(g) Residents of the Philippines, OFWs or other Filipinos
while residing abroad or upon their return to the
Philippines shall be allowed to bring in or send to their
families or relatives in the Philippines balikbayan boxes
which shall be exempt from applicable duties and taxes
imposed under the NIRC of 1997, as
amended: Provided, That balikbayan boxes shall
contain personal and household effects only and shall
neither be in commercial quantities nor intended for
barter, sale or for hire and that the FCA value of which
shall not exceed one hundred fifty thousand pesos
(P150,000.00): Provided, further, That every three (3)
years after the effectivity of this Act, the Secretary of
Finance shall adjust the amount herein stated to its
present value using the CPI as published by the
PSA: Provided, finally, That residents of the Philippines,
OFWs or other Filipinos can only avail of this privilege
up to three (3) times in a calendar year. Any amount in
excess of the allowable non-dutiable value shall be
subject to the applicable duties and taxes;
(l) For purposes of this Act, OFWs refer to holders of
valid passports duly issued by the Department of
Foreign Affairs (DFA) and certified by the Department
of Labor and Employment (DOLE) or the Philippine
Overseas Employment Administration (POEA) for
overseas employment purposes. They cover all
Filipinos, working in a foreign country under
employment contracts, regardless of their professions,
skills or employment status in a foreign country; and (2)
Calendar Year refers to the period from January 1 to
December 31.
note: FCA value = FOB (freight on board)
(FCA is now the applicable term)
the OFW may avail this = THREE TIMES for every
calendar year
Let’s discuss BALIKBAYAN BOXES.
Q: Who may avail of this exemption?
3 personalities:
1. residents of the Philippines
2. OFWs
3. other Filipinos residing abroad or upon
returning in the Philippines
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
They may bring in or send balikbayan boxes which are
exempt from taxes and duties.
Q: What are the REQUIREMENTS?
1) Contents of the box: personal and household
effects
- not in commercial quantities nor
intended for barter, sale or hire;
2) valuation = NOT exceed 150,000
3) Number of times this privileged may be
availed: 3 times in a calendar year
(Lim)
REFUND AND ABATEMENT
Section 903. Refund of Duties and Taxes.— Refund
shall be granted where it is established that duties and
taxes have been overcharged as a result of an error in
the assessment or goods declaration.
Where permission is given by the Bureau for goods
originally declared for a customs procedure with
payment of duties and taxes to be placed under
another customs procedure, a refund shall be made of
any duties and taxes charged in excess of the amount
due under the new procedure, subject to such
regulation issued for the purpose.
A refund shall not be granted if the amount of duties
and taxes involved is less than five thousand pesos
(₱5,000.00); Provided, That the Secretary of Finance, in
consultation with the Commissioner, may adjust the
minimum amount specified in this Act, taking into
account the CPI as published by the PSA.
Anent the second paragraph, this means that in the
enactment of these laws and if there are existing claims for
refund, then the taxpayers will be entitled to such refund
and the BOC will still give such refund to the taxpayer.
A refund shall not be granted if the amount of duties and
taxes involved is less than five thousand pesos (₱5,000.00).
Even if there is an error in the declaration or error in
valuation resulting to the refund, the amount is not
51
exceeding 5k then refund is not available. This may be
adjusted by the SOF(Secretary) in consultation with the
COC(Commissioner).
Q:What is Abatement?
A: It is defined under Section 904.
Section 904. Abatement of Duties and Taxes.— When
goods have not yet been released for consumption or
have been placed under another customs procedure,
provided that no other offense or violation has been
committed, the declarant shall neither be required to
pay the duties and taxes nor be entitled to refund
thereof in any of the following cases:
(a) When, at the request of the declarant, the goods are
abandoned, or as determined by the Bureau, the goods
are destroyed or rendered commercially valueless
while under customs control. Any cost herein incurred
shall be borne by the declarant;
(b) When goods are destroyed or irrecoverably lost by
accident or force majeure, the remaining waste or
scrap after destruction, if taken into consumption, shall
be subject to the duties and taxes that would be
applicable on such waste or scrap if imported in same
state; and
(c) When there are shortages due to the nature of the
goods.
Grounds for abatement:
1. Abandonment
2. Destruction
3. Shortages
Other Instances for Abatement or Refund:
1. Sec. 905 – Damage incurred during the voyage. As a
rule, abatement due to damage incurred during the
voyage is not allowed, unless otherwise provided in CMTA;
2. Sec. 906 – Missing Package;
3. Sec. 907 – Deficiency in Contents of Packages;
4. Sec. 908 – Goods Lost or Destroyed After Arrival;
5. Sec. 909. – Defective Goods;
6. Sec. 910. – Dead or Injured Animals;
7. Sect. 912. – Correction of Errors.
PROCEDURE FOR CLAIMING OF REFUND
UNDER THE CTMA
Section 913. Claims for Refund.— All claims and
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
application for refund of duties and taxes shall be made
in writing and filed with the Bureau within twelve (12)
months from the date of payment of duties and taxes.
Q: Where should it be filed?
A: Before the Bureau of Customs.
Q: When should it be made?
A: within 12 months from the date of payment of duties
and taxes.
Q: What if the BOC denies the claim for refund or
abatement?
A: The law says:
Sec. 913. xxx xxx xxx
(3rd paragraph) The importer may file an appeal of a
denial of a claim for refund or abatement, whether it is
a full or partial denial, with the Commissioner within
thirty (30) days from the date of the receipt of the
denial. The Commissioner shall render a decision within
thirty (30) days from the receipt of all the necessary
documents supporting the application. Within thirty
(30) days from receipt of the decision of the
Commissioner, the case may also be appealed to the
CTA.
First: There must be an application for refund filed with
the BOC if based on the provision. But actually, in practice
it is with the Revenue District Collector.
Second: After that, if there is whole or partial denial of the
application to claim for refund, appeal to the
Commissioner within 30 days from the receipt of denial.
Third: The Commissioner is given 30 days to render a
decision from the receipt of all necessary documents
supporting the application.
Fourth: If the decision of the Commissioner is still adverse,
the case may be appealed to the CTA via Petition for
Review within 30 days from the receipt of the decision.
ADMINISTRATIVE AND JUDICIAL PROCEDURE
There are three (3) types of advanced rulings that a
taxpayer may request for from the BOC.
52
1. Classification ruling (Sec. 1100)
2. Valuation ruling (Sec. 1101)
3. Rules of origin (Sec. 1102)
An application for an advance ruling shall cover only one
(1) product or item. It shall be filed at least 90 days before
importation or exportation of the item, as the case may be
(Sec. 1103, CMTA).
Classification Ruling
In classification ruling, with respect to any dispute as to
the classification of the items or goods from then
Philippines.
Section 1100. Classification Ruling.— An importer or
exporter may file a written application for an advance
ruling on the tariff classification of goods with the Tariff
Commission. The Commission shall render a ruling
within thirty (30) days from receipt of a properly
documented application.
When a declared tariff classification of goods, not
subject of a pending application for advance ruling, is in
dispute, the importer, exporter, or the Bureau shall
submit the matter to the Commission for a ruling,
without prejudice to the application of Section 1106 of
this Act on “protest”: Provided, That such rulings of the
Commission on commodity classification shall be
binding upon the Bureau, unless the Secretary of
Finance shall rule oterwise.
Take note that classification rulings are filed before the
Tariff Commission.
Valuation Ruling
Section 1101. Valuation Ruling.— An importer or
exporter may file a written application for an advance
valuation ruling on the proper application of a specific
method on customs valuation of specific goods as
prescribed in Title VII, Chapter 1 of this Act.
The application for a valuation ruling shall be filed with
the Commissioner who shall issue a ruling within thirty
(30) days from submission of the application form and
supporting documents as may be required by rules and
regulations.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
When the valuation method of goods not subject of an
application for advance valuation ruling or the declared
customs value is in dispute, the matter shall be resolved
in accordance with Section 1106 of this Act on
“protest”.
The application for a valuation ruling shall be filed with the
BOC and it is focused on the amount or how much will be
collected.
Rules of Origin
There is a dispute in where the product will come from
because each country imposes a different rate.
Section 1102. Ruling on the Rules of Origin.— An
importer or exporter may file a written application for a
ruling on whether the goods qualify as originating
under the rules of origin of the applicable preferential
trade agreement. The application for an advance ruling
on origin shall be filed with the Commissioner who shall
act on the application within thirty (30) days from
receipt of the application and supporting documents as
may be required by rules and regulations.
When the declared origin of the goods, not subject of a
request for advance ruling on origin, is in dispute, the
matter shall be resolved in accordance with Section
1106 of this Act on “protest”.
Appeals by Aggrieved Party of Advanced Ruling
For example: If the consignee is not sure yet of the
contents of the container, you may ask for an advanced
ruling.
Section 1104. Administrative and Judicial Appeals.— An
aggrieved party may, within thirty (30) days from
receipt of an adverse ruling or decision, appeal the
same to the CTA without prejudice to the authority of
the Secretary of Finance to review decisions adverse to
the government in accordance with Sections 1127 and
1128 of this Act, as the case may be.
The advance ruling on the rules of origin shall be filed at
the BOC.
PROTEST
Section 1106. Protest.— When, a ruling or decision of
the District Collector or customs officer involving goods
53
with valuation, rules of origin, and other customs issues
is made, except the fixing of fines in seizure cases, the
party adversely affected may appeal by way of protest
against such ruling or decision by presenting to the
Commissioner at the time when payment of the
amount claimed to be due the government is made, or
within fifteen (15) days thereafter, a written protest
setting forth the objection to the ruling or decision in
question and the reasons therefore.
Subject to the approval of the Secretary of Finance, the
Commissioner shall provide such rules and regulations
as to the requirement for payment or nonpayment of
the disputed amount and in case of nonpayment, the
release of the importation under protest upon posting
of sufficient security.
Q: When can the taxpayer protest?
A: The taxpayer may protest a ruling or decision of the
district collector or customs officer involving goods for:
1. Valuation,
2. Rules of origin, and
3. Other customs issues
Protest is not available in fixing of fines in seizure cases. It
involves a different process.
Note: There is an issuance by the Bureau of Customs
available online. (Sir did not give the citation or number
but a copy of such is posted in our class page.)
Q: Where do we file our protest?
A: District Collector. If the district collector will adopt the
findings of the customs officer, he shall notify the taxpayer
in writing and the reasons thereof with the fees to be paid.
For the aggrieved taxpayer, he may file an appeal/protest
with the Commissioner.
Q: When should the protest be filed?
A: The protest shall be filed with the Commissioner
(District Collector) at the time when payment of the
amount claimed to be due to the government is made, or
within 15 days thereafter.
From the provision, it is required that:
1. There is a payment of duties and taxes under
protest (same with RPT Protest);
2. The protest must be filed at the time of payment
or within 15 days after payment.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
The written protest must set forth the objection to the
ruling or decision in questions and there reasons therefor.
Now, when the Commissioner receives the appeal/ protest
on the dispute, he must resolve it within 15 days from
receipt thereof.
With respect to other issues than valuation such as rules of
origin or other customs issues, it is pretty much the same,
just read the issuance available online.
Sabi natin kanina, if there is an adverse decision of the
District Collector, you may file a protest with the COC
within 15 days and payment of protest is required.
How long? Within 15 days from the receipt of the adverse
decision or within 15 days of such payment. So there is a
15 day window. The Commissioner will then ask the
parties to submit position papers and other evidence.
After, the Commissioner shall resolve the protest within 15
days from the receipt of the position papers and other
evidence.
Q: What if the decision of the Commissioner is adverse?
A: The importer may file 15 days a motion for
reconsideration with the Commissioner of Customs. In
case of denial, the aggrieved party may appeal to the CTA
within 30 days from the receipt of the denial.
Decisions of the Secretary of Finance, when required, may
also be appealed to the CTA. When will the SOF render a
decision? Usually these are cases involving automatic
review.
AUTOMATIC REVIEW
It happens when the District Collector renders a decision
adverse to the government. The decision including the
entire records of the case shall be elevated within five (5)
days from the promulgation of the decision.
If the Commissioner will uphold the decision of the District
Collector which is adverse to the government, such
decision shall be automatically elevated to the Secretary of
Finance within 5 calendar days.
After that, the Secretary of Finance’s decision will be final
and executory.
The Commissioner will decide on the automatic review
within 30 days from the receipt of the records or within 10
days in case of perishable goods.
54
Section 1127. Automatic Review in Forfeiture Cases.—
The Commissioner shall automatically review any
decision by the District Collector adverse to the
government. The entire records of the case shall be
elevated within five (5) days from the promulgation of
the decision.
The Commissioner shall decide on the automatic review
within thirty (30) days, or within ten (10) days in the
case of perishable goods, from receipt of the records.
ALERT ORDERS
Q: What are alert orders?
A: Section 1111:
Section 1111. Alert Orders.— Alert orders are written
orders issued by customs officers as authorized by the
Commissioner on the basis of derogatory information
regarding possible noncompliance with this Act.
Q: What is a “derogatory information”?
A: These are violations of CMTA that are possibly
committed by the importer or exporter.
But take note that derogatory information, to be within
the meaning of an alert order, should have some sort of
basis and must be specific. It must not merely be based on
general allegations.
Derogatory information shall indicate the violations and
other necessary specifics thereof. For this purpose, the
following shall not be considered derogatory
information:
(a) General allegations of misclassification without
providing the appropriate tariff heading and duty of the
shipment to be alerted;
(b) General allegations of misclassification without
providing the appropriate tariff heading and duty of the
shipment to be alerted;
(c) General allegations of over-quantity without
indicating the source of information supporting the
allegation;
(d) General allegations of misdeclaration in the entry
without indicating the suspected actual contents
thereof; and
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
(e) General allegations of importations contrary to law
without indicating the specific law or rule to be
violated.
No alert order shall be issued on account of allegations
of undervaluation unless said undervaluation is caused
by the submission to customs of forged or spurious
invoice or other commercial documents.
From 2016 TSN:
Q: When is an alert order issued?
A: The law says:
An alert order may be issued only after lodgement of
the goods declaration and prior to the release of
goods from customs custody. Under no circumstances
shall the suspension of the processing of goods
declaration be allowed except through an alert order
issued by an authorized customs officer.
It’s after lodgement of the goods declaration and prior to
the release of such goods. An alert order may suspend the
processing the goods declaration so long as the alert order
is issued by an authorized customs officer.
The costs of the physical inspection shall be borne by
the Bureau: Provided, That such cost shall be
reimbursed by the owner prior to the release of the
goods if the physical inspection results in the
assessment of additional duties or taxes or the issuance
of a warrant of seizure.
The Commissioner shall be notified of the
recommendation by the alerting officer within twenty-
four (24) hours from the issuance of the alert order.
Alert orders shall be dated and assigned a unique
reference number in series which shall be the basis for
reporting to and monitoring by the Commissioner and
the Secretary of Finance.
The Bureau shall create a central clearing house for
alert orders and shall submit reports quarterly on the
status thereof.
Section 1112. Alert Orders on Perishable Goods.—
When the subject of the alert order are perishable
goods, the Bureau shall attach to the recommendation
a certificate stating that the goods are perishable.
SEIZURE AND FORFEITURE
55
Q: What are the properties subject to seizure and
forfeiture?
A: Sec. 1113:
Section 1113. Property Subject to Seizure and
Forfeiture.— Property that shall be subject to seizure
and forfeiture include:
(a) Any vehicle, vessel or aircraft, including cargo, which
shall be used unlawfully in the importation or
exportation of goods or in conveying or transporting
smuggled goods in commercial quantities into or from
any Philippine port or place. The mere carrying or
holding on board of smuggled goods in commercial
quantities shall subject such vehicle, vessel, aircraft, or
any other craft to forfeiture: Provided, That the vehicle,
vessel, aircraft or any other craft is not used as a
common carrier which has been chartered or leased for
purposes of conveying or transporting persons or
cargo;
(Singanon)
So if there is a vessel or aircraft which is found to be
containing smuggled goods, the vehicle, the vessel or the
aircraft will also be subjected to forfeiture.
Then you have:
(b) Any vessel engaging in the coastwise trade which
shall have on board goods of foreign growth, produce,
or manufacture in excess of the amount necessary for
sea stores, without such goods having been properly
entered or legally imported;
This means that the provisions for the complement that is
really in excess of what is necessary for the complement.
(c) Any vessel or aircraft into which shall be transferred
cargo unloaded contrary to law prior to the arrival of
the importing vessel or aircraft at the port of
destination;
(d) Any part of the cargo, stores, or supplies of a vessel
or aircraft arriving from a foreign port which is
unloaded before arrival at the vessel's or aircraft's port
of destination and without authority from the customs
officer; but such cargo, ship, or aircraft stores and
supplies shall not be forfeited if such unloading was
due to accident, stress of weather, or other necessity
and is subsequently approved by the District Collector;
(e) Goods which are fraudulently concealed in or
removed contrary to law from any public or private
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
warehouse, container yard, or container freight station
under customs supervision;
(f) Goods, the importation or exportation of which are
effected or attempted contrary to law, or any goods of
prohibited importation or exportation, and all other
goods which, in the opinion of the District Collector,
have been used, are or were entered to be used as
instruments in the importation or the exportation of
the former;
(g) Unmanifested goods found on any vessel or aircraft
if manifest therefor is required;
(h) Sea stores or aircraft stores adjudged by the District
Collector to be excessive, when the duties and taxes
assessed by the District Collector thereon are not paid
or secured forthwith upon assessment of the same;
(i) Any package of imported goods which is found upon
examination to contain goods not specified in the
invoice or goods declaration including all other
packages purportedly containing imported goods
similar to those declared in the invoice or goods
declaration to be the contents of the misdeclared
package;
(j) Boxes, cases, trunks, envelopes, and other
containers of whatever character used as receptacle or
as device to conceal goods which are subject to
forfeiture under this Act or which are so designed as to
conceal the character of such goods;
(k) Any conveyance actually used for the transport of
goods subject to forfeiture under this Act, with its
equipage or trappings, and any vehicle similarly used,
together with its equipment and appurtenances. The
mere conveyance of smuggled goods by such transport
vehicle shall be sufficient cause for the outright seizure
and confiscation of such transport vehicle but the
forfeiture shall not be effected if it is established that
the owner of the means of conveyance used as
aforesaid, is engaged as common carrier and not
chartered or leased, or that the agent in charge thereof
at the time, has no knowledge of the unlawful act; and
(1) Goods sought to be imported or exported:
(1) Without going through a customs office, whether
the act was consummated, frustrated, or attempted;
(2) Found in the baggage of a person arriving from
abroad and undeclared by such person;
(3) Through a false declaration or affidavit executed by
the owner, importer, exporter, or consignee concerning
56
the importation of such, goods;
(4) On the strength of a false invoice or other document
executed by the owner, importer, exporter, or
consignee concerning the importation or exportation of
such goods; or
(5) Through any other practice or device contrary to law
by means of which such goods entered through a
customs office to the prejudice of the government.
And etc. This will also include unmanifested goods.
Everything that goes into the vessel or the aircraft must be
entered into a manifest.
And then you also have the misdeclared package.
Sec. 1116. Seizure or Release of Goods. – The District
Collector shall issue an order of release or a warrant of
seizure within five (5) days, or two (2) days in case of
perishable goods, upon the recommendation of the
alerting officer or any other customs officer. The
District Collector shall immediately make a report of
such seizure or release to the Commissioner.
Q: Who has the authority to issue a warrant of seizure?
Sec. 1117. Warrant of Seizure or Order of Release. –
The District Collector shall have the authority to issue a
warrant of seizure of the goods upon determination of
the existence of probable cause and in case of
nonexistence thereof, the issuance of order of release.
In case the District Collector issued an order of release,
the District Collector shall immediately transmit all the
records to the Commissioner who shall automatically
review within forty-eight (48) hours, or within twenty-
four (24) hours in case of perishable goods. When no
decision is made by the Commissioner within the
prescribed period, the imported goods shall be deemed
released.
The lifting of the alert order shall be issued by the
District Collector only upon the affirmation of the
decision of the District Collector by the Commissioner,
or after the lapse of the period of review by the
Commissioner, whichever is earlier.
Take note of the requirement of the existence of probable
cause.
Sec. 1119. Service of Warrant of Seizure. – The District
Collector shall cause the service of warrant of seizure to
the owner or importer of the goods or the authorized
representative thereof. The owner or importer shall be
given an opportunity to be heard during the forfeiture
proceedings.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
For the purpose of serving the warrant, the importer,
consignee, or person holding the bill of lading or airway
bill shall be deemed the "owner" of the goods. For the
same purpose, "authorized representative" shall
include any agent of the owner and if the owner or the
agent is unknown, any person having possession of the
goods at the time of the seizure.
Service of warrant to an unknown owner shall be
effected by posting the warrant for fifteen (15) days in a
public place at the concerned district, and by electronic
or printed publication.
If the owner is unknown, apply Sec. 1121.
Sec. 1121. Proceedings in Case of Property Belonging
to Unknown Parties. – If, within fifteen (15) days after
service of warrant, no owner or agent can be found or
appears before the District Collector, the seized goods
shall be forfeited ipso facto in favor of the government
to be disposed of in accordance with this Act.
So meaning there is an automatic forfeiture if within 15
days after service of warrant, no owner or agent can be
found or appears before the District Collector.
Q: Who has the burden of proof in forfeiture
proceedings?
Sec. 1123. Burden of Proof in Forfeiture Proceedings. –
In all proceedings for the forfeiture of any vehicle,
vessel, aircraft, or goods under this Act, the burden of
proof shall be borne by the claimant.
Q: Can there be settlement of pending seizure cases?
Yes, just pay the fine and the redemption amount of the
forfeited goods under Sec. 1124.
Sec. 1124. Settlement of Pending Seizure Case by
Payment of Fine or Redemption of Forfeited Goods. –
Subject to the approval of the Commissioner, the
District Collector may allow the settlement by payment
of fine or the redemption of forfeited goods, during the
course of the forfeiture proceeding. However, the
Commissioner may accept the settlement by
redemption of any forfeiture case on appeal. No
settlement by payment of fine shall be allowed when
there is fraud or when the discrepancy in duties and
taxes to be paid between what is determined and what
is declared amounts to more than thirty percent (30%).
In case of settlement by payment of fine, the owner,
57
importer, exporter, or consignee or agent shall offer to
pay a fine equivalent to thirty percent (30%) of the
landed cost of the seized goods. In case of settlement
by redemption, the owner, importer, exporter, or
consignee or agent shall offer to pay the redeemed
value equivalent to one hundred percent (100%) of the
landed cost.
Upon payment of the fine or payment of the redeemed
value, the goods shall be released and all liabilities
which may attach to the goods shall be discharged
without prejudice to the filing of administrative or
criminal case.
Settlement of any seizure case by payment of the fine
or redemption of forfeited goods shall not be allowed
when there is fraud, or where the importation is
prohibited or the release of the goods is contrary to
law.
Please take note settlement of pending seizure cases are
not allowed in the following instances:
1. Fraud cases;
2. When the importation is prohibited;
3. When the release of goods is contrary to law.
APPEAL IN PROTEST AND FORFEITURE CASES
Sec. 1126. Appeal to the Commissioner. – In forfeiture
cases, the person aggrieved by the decision of a District
Collector may, within fifteen (15) days or five (5) days in
case of perishable goods, from receipt of the decision,
file a written notice of appeal, together with the
required appeal fee to the District Collector, furnishing
a copy to the Commissioner. The District Collector shall
immediately transmit all the records of the proceedings
to the Commissioner, who shall review and decide on
the appeal within thirty (30) days from receipt of the
records, or fifteen (15) days in the case of perishable
goods: Provided, That if within thirty (30) days, no
decision is rendered, the decision of the District
Collector under appeal shall be deemed affirmed. An
appeal filed beyond the period herein prescribed shall
be dismissed.
Appeals to protest cases shall be governed by Section
114 of this Act.
The decision of the Commissioner may be served
through the recognized modes of service under existing
law.
Then you also have cases of automatic review by the
Commissioner of the decision by the District Collector
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
adverse to the government under Sec. 1127. Just read this
provision.
Sec. 1127. Automatic Review in Forfeiture Cases. – The
Commissioner shall automatically review any decision
by the District Collector adverse to the government.
The entire records of the case shall be elevated within
five (5) days from the promulgation of the decision. The
Commissioner shall decide on the automatic review
within thirty (30) days, or within ten (10) days in the
case of perishable goods, from receipt of the records.
When no decision is rendered within the prescribed
period or when a decision adverse to the government is
rendered by the Commissioner involving goods with
FOB or FCA value of ten million pesos (P10,000,000.00)
or more, the records of the decision of the
Commissioner, or of the District Collector under review,
as the case may be, shall be automatically elevated
within five (5) days for review by the Secretary of
Finance. The decision issued by the Secretary of
Finance, whether or not a decision was rendered by the
Commissioner within thirty (30) days, or within ten (10)
days in the case of perishable goods, from receipt of
the records, shall be final upon the Bureau.
ABANDONMENT
Abandonment in customs practice is the renunciation of
an importer of all his interest in the property or rights.
There are two kinds of Abandonment:
1. Express Abandonment (Sec. 1129 [a])
2. Implied Abandonment (Sec. 1129 [b-c])
These are all stated in Sec. 1129.
Sec. 1129. Abandonment, Kinds and Effects of. –
Imported goods are deemed abandoned under any of
the following circumstances:
(a) When the owner, importer, or consignee of the
imported goods expressly signifies in writing to the
District Collector the intention to abandon the same; or
(b) When the owner, importer, consignee, or interested
party after due notice, fails to file the goods declaration
within the prescribed period in Section 407 of this Act:
Provided, That the term goods declaration shall include
provisional or incomplete goods declaration deemed
valid by the Bureau as provided in Section 403 of this
Act. For this purpose, it is the duty of the District
Collector to post a list of all packages discharged and
their consignees, whether electronically or physically in
the District Office, or send a notice to the consignee
58
within five (5) days from the date of discharge; or
(c) Having filed such goods declaration, the owner,
importer, consignee or interested party after due
notice, fails to pay the assessed duties, taxes and other
charges thereon, or, if the regulated goods failed to
comply with Section 117 of this Act, within fifteen (15)
days from the date of final assessment: Provided, That
if such regulated goods are subject of an alert order
and the assessed duties, taxes and other charges
thereof are not paid within fifteen (15) days from
notification by the Bureau of the resolution of the alert
order, the same shall also be deemed abandoned; or
(d) Having paid the assessed duties, taxes and other
charges, the owner, importer or consignee or
interested party after due notice, fails to claim the
goods within thirty (30) days from payment. For this
purpose, the arrastre or warehouse operator shall
report the unclaimed goods to the District Collector for
disposition pursuant to the provisions of this Act; or
(e) When the owner or importer fails to claim goods in
customs bonded warehouses within the prescribed
period.
The due notice requirement under this section may be
provided by the Bureau through electronic notice or
personal service: Provided, That for non-regular
importers, notification shall be by registered mail or
personal service. For this purpose, the accreditation of
importers, exporters, and other third parties shall
include provision for mandatory receipt of electronic
notices.
Q: What is the treatment for the abandoned goods?
Sec. 1130. Treatment and Disposition of Abandoned
Goods. – Expressly abandoned goods under paragraph
(a) of Section 1129 of this Act shall ipso facto be
deemed the property of the government and shall be
disposed of in accordance with the provisions of this
Act.
If the Bureau has not disposed of the abandoned
goods, the owner or importer of goods impliedly
abandoned may, at any time within thirty (30) days
after the lapse of the prescribed period to file the
declaration, reclaim the goods provided that all legal
requirements have been complied with and the
corresponding duties, taxes and other charges, without
prejudice to charges and fees due to the port or
terminal operator, as well as expenses incurred have
been paid before the release of the goods from
customs custody.
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
When the Bureau sells goods which have been
impliedly abandoned, although no offense has been
discovered, the proceeds of the sale, after deduction of
any duty and tax and all other charges and expenses
incurred as provided in Section 1143 of this Act, shall be
turned over to those persons entitled to receive them
or, when this is not possible, held at their disposal for a
specified period. After the lapse of the specified period,
the balance shall be transferred to the forfeiture fund
as provided in Section 1151 of this Act.
So once there is express abandonment, then technically it
will operate as a full transfer of ownership and control of
those goods in favor of the government. It will be disposed
accordingly.
CIVIL REMEDIES FOR THE COLLECTION OF DUTIES AND
TAXES
Sec. 1132. Remedies for the Collection of Duties,
Taxes, Fines, Surcharges, Interests, and Other Charges.
– The civil remedies for the collection of import duties,
taxes, fees, or charges resulting from the conduct of a
post clearance audit shall be obtained by:
(a) Distraint of goods, chattels, or effects, and other
personal property of whatever character, including
stocks and other securities, debts, credits, bank
accounts, and interest in and rights to personal
property, and by levy upon real property and interest in
rights to real property; and
(b) Civil or criminal action.
Either or both of these remedies may be pursued at the
discretion of the Bureau: Provided, That the remedies
of distraint and levy shall not be allowed when the
amount of duties and taxes involved is not more than
ten thousand pesos (10,000.00).
The Bureau shall advance the amounts needed to
defray costs of collection by means of civil or criminal
action, including the preservation or transportation of
personal property distrained and the advertisement
and sale thereof, as well as of real property and
improvements thereon.
Still pretty much the same rules, you have distraint of
personal properties and levy of real property. You also
have criminal action.
There is still also no hierarchy of remedies, provided that
the remedies of distraint and levy shall not be allowed
59
when the amount of duties and taxes involved is not more
than ten thousand pesos.
Then you have Sec. 1133 and 1134. I think you just have to
read them because they are more or less similar to the
remedies under the NIRC.
Sec. 1133. Constructive Distraint of the Property. – To
safeguard the interest of the government, the
Commissioner may place under constructive distraint
the property of a delinquent importer who, in the
opinion of the Commissioner, is retiring from any
business subject to duty and tax, or is intending to
leave the Philippines, or to remove the property
therefrom, or to hide or conceal the property, or to
perform any act tending to obstruct the proceedings for
collecting the duty and tax due, or which may be due.
The constructive distraint of personal property shall be
effected by requiring the importer or any person in
possession or control of such property to sign a receipt
covering the property, to obligate to preserve the
distrained property on the state and condition at the
time of the government's seizure of the same, and not
to dispose of the same in any manner whatsoever,
without the express authority of the Commissioner.
In case the importer or the person in possession and
control of the property sought to be placed under
constructive distraint refuses or fails to sign the receipt
herein referred to, the customs officer effecting the
constructive distraint shall proceed to prepare a list of
such property and, in the presence of two (2)
witnesses, leave a copy thereof in the premises where
the property distrained is located, after which the said
property shall be deemed to have been placed under
constructive distraint.
Sec. 1134. Summary Remedies. – (A) Distraint of
Personal Property. – Upon failure of the person owing
any delinquent duty, tax and other charges to pay at
the time required, the Commissioner shall seize and
distraint the goods, chattels or effects, and the personal
property, including stocks and other securities, debts,
credits, bank accounts, and interests in and rights to
personal property of such persons, in sufficient quantity
to satisfy the duty, tax or other charge and the
expenses of the distraint and the cost of the
subsequent sale.
The officer serving the warrant of distraint shall make
or cause to be made an account of the goods, chattels,
effects, or other personal property distrained, a copy of
which, signed by the said officer, shall be left either
with the owner or person from whose possession such
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goods, chattels, or effects or other personal property
were taken, or at the dwelling or other place of
business of such person and with someone of suitable
age and discretion, to which list shall be added a
statement of the sum demanded and note of the time
and place of sale.
Stocks and other securities shall be distrained by
serving a copy of the warrant of distraint upon the
importer and upon the president, manager, treasurer,
or other responsible officer of the corporation,
company or association, which issued the said stocks or
securities.
Debts and credits shall be distrained by leaving with the
person owing the debts or having in his/her possession
or under his/her control such credits, or with his/her
agent, a copy of the warrant of distraint. The warrant of
distraint shall be sufficient authority to the person
owing the debts or having in his possession or under his
control any credits belonging to the importer to pay to
the Commissioner the amount of such debts of credits.
Bank accounts shall be garnished by serving a warrant
of garnishment upon the importer and upon the
president, manager, treasurer, or other responsible
officer of the bank Upon the receipt of the warrant of
garnishment, the bank shall turn over to the
Commissioner so much of the bank accounts as may be
sufficient to satisfy the claim of the government.
A report on the distraint shall, within ten (10) days from
receipt of the warrant, be submitted by the
Commissioner to the Secretary of Finance: Provided,
That the Commissioner shall have the power to lift such
order of distraint subject to the rules and regulations
promulgated pursuant to this Act.
(B) Levy on Real Property. – After the expiration of the
period within which to pay the duty, tax and other
charges as prescribed in this section, real property may
be levied upon, before, simultaneously, or after the
distraint of personal property belonging to the
importer. To this end, the Commissioner or the duly
authorized representative shall prepare a duly
authenticated certificate showing the name of the
importer and the amounts of the duty and tax and
penalty due. The certificate shall operate with the force
of a legal execution throughout the Philippines.
The levy shall be effected by writing upon the
certificate a description of the property on which levy is
made. At the same time, written notice of the levy shall
be mailed to or served upon the register of deeds of
the province or city where the property is located and
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upon the importer, or if the latter is not in the
Philippines, upon the agent or the manager of the
business from which the liability arose, or if there be
none, to the occupant of the property in question.
In case the warrant of levy on real property is not
issued before or simultaneously with the warrant of
distraint on personal property, and the personal
property of the importer is not sufficient to satisfy the
duty and tax due, the Commissioner or a duly
authorized representative shall, within thirty (30) days
after execution of the distraint, proceed with the levy
on the real property of the importer.
Within ten (10) days after receipt of the warrant, a
report on any levy shall be submitted by the levying
officer to the Commissioner: Provided, That the
Commissioner may lift such warrants of levy issued,
subject to the rules and regulations promulgated
pursuant to this Act.
JUDICIAL PROCEEDINGS
Sec. 1135. Supervision and Control over Criminal and
Civil Proceedings. – Civil and criminal actions and
proceedings instituted on behalf of the Government
under the authority of this Act or other laws enforced
by the Bureau shall be brought in the name of the
government of the Philippines and shall be prosecuted
and handled by the Bureau with the assistance of the
Department of Justice (DOJ): Provided, That the
determination of the existence of probable cause and
the subsequent filing of any criminal or civil case with
the proper court against violators of this Act shall
exclusively belong to the DOJ: Provided, however, That
no civil or criminal action for the recovery of duties or
the enforcement of any fine, penalty or forfeiture
under this Act shall be filed in court without the
approval of the Commissioner.
So if you remember back in the NIRC, when the officer will
decide file a case for collection, they need the consent of
the Commissioner of Internal Revenue. It is pretty much
the same with the Bureau of Customs.
Sec. 1136. Review by the CTA. – Unless otherwise
provided in this Act or by any other law, the party
aggrieved by the ruling or decisions of the
Commissioner may appeal to the CTA, in the manner
and within the period prescribed by law and
regulations. Decisions of the Secretary of Finance when
required by this Act, may likewise be appealed to the
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CTA.
Unless an appeal is made to the CTA in the manner and
within the period prescribed by law and regulations,
the ruling or decision of the Commissioner or the
Secretary of Finance shall be final and executory.
Sec. 1137. Exclusive Jurisdiction of the Bureau. –
Jurisdiction over imported goods and goods for
exportation shall be exclusive to the Bureau, or the
Secretary of Finance, when under review by the latter,
subject to the proceedings described in this title.
Except for the CIA, no court may issue any order or
decision until all the remedies for administrative appeal
have been exhausted.
So basically those are the things that you have to look into
in the Tariff and Customs Code. A few pointers lang, what
are the important things you have to remember when it
comes to the Tariff and Customs Code:
1. Definitions of importation and exportation,
when does importation begin and when does it
end, and differences between the regulated and
prohibited importation and exportation;
2. Special duties, you should know the difference
and the requirements;
3. The procedures for the remedies;
4. Some of the definitions are also important, like
the Balikbayan Boxes that may be conditionally
transferred except duties, how to determine
residence, the requirements, Customs
Administrative Order 01-2018. The rules are
quite clear and simple so you just have to read
that.
Let’s go now to the last topic.
JURISDICTION OF THE CTA
(COURT OF TAX APPEALS)
Cases:
CIR vs CTA and Petron GR No. 207843 July 15,
2015
Confederation for Unity vs CIR GR No 213446
July 3, 2018
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In all the tax remedies that we have discussed so far, after
the administrative proceedings, the appeal would almost
always go with the CTA.
As what we have discussed last time, if the issues involved
is just pure questions of law, you can go to ordinary courts,
especially when you talk about violation of due process.
Those issues which have nothing to do with the collection
of taxes, not really intertwined thereto or to the authority
of the tax agency to collect, normally you can go to
ordinary courts.
But when it comes to tax cases, it’s just the CTA. So this is
why we should know what is the jurisdiction of the CTA.
The CTA is created by RA 1125 in June 16, 1954. So far
there have been two major amendments on the CTA
jurisdiction:
1. RA 9282, the act which expanded the jurisdiction
of the CTA and enlarging its membership and
elevating its rank to the level of collegiate courts.
Meaning, the CTA is in equal rank to the CA.
2. RA 9503, enlarging further the organizational
structure of CTA.
What are the purposes or objectives of the creation of
the CTA?
1. To prevent the delay in the disposition of tax
cases;
2. To have a body with specialized knowledge to
which ordinary judges of regular courts are not
likely to possess.
ORGANIZATION OF THE CTA
Right now there are 8 Associate Justices. Then you have
the Sitting En Banc or Division, as we discussed last time.
Let’s go to Sec. 7 because this is the more important
portion of our discussion.
The CTA jurisdiction may be classified into two:
1. EXCLUSIVE ORIGINAL Jurisdiction
2. EXCLUSIVE APPELLATE Jurisdiction
(Viola)
EXCLUSIVE ORIGINAL JURISDICITON
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1. Tax collection cases where the principal amount o taxes
and fees is one million (1,000,000.00) or more;
RA 9282; SEC. 7. Jurisdiction. – The CTA shall exercise:
c. Jurisdiction over tax collection cases as herein provided:
1. Exclusive original jurisdiction in tax collection cases
involving final and executory assessments for taxes, fees,
charges and penalties: Provided, however, That collection
cases where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is less than
One million pesos (P1,000,000.00) shall be tried by the
proper Municipal Trial Court, Metropolitan Trial Court and
Regional Trial Court.
So if the basic tax is less than 1 million exclusive of
charges, go to ordinary courts.
1 million or more—file with the CTA.
2. Criminal offense under NIRC, TCC and other laws
administered by the BIR, where the principal amount of
taxes excluding charges is 1 million or more.
RA 9282; SEC. 7. Jurisdiction. – The CTA shall exercise:
b. Jurisdiction over cases involving criminal offenses as
herein provided:
“1. Exclusive original jurisdiction over all criminal offenses
arising from violations of the National Internal Revenue
Code or Tariff and Customs Code and other laws
administered by the Bureau of Internal Revenue or the
Bureau of Customs: Provided, however, That offenses or
felonies mentioned in this paragraph where the principal
amount o taxes and fees, exclusive of charges and
penalties, claimed is less than One million pesos
(P1,000,000.00) or where there is no specified amount
claimed shall be tried by the regular Courts and the
jurisdiction of the CTA shall be appellate. Any provision of
law or the Rules of Court to the contrary notwithstanding,
the criminal action and the corresponding civil action for
the recovery of civil liability for taxes and penalties shall at
all times be simultaneously instituted with, and jointly
determined in the same proceeding by the CTA, the filing
of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve
the filling of such civil action separately from the criminal
action will be recognized.
Q: Is an assessment necessary before the filing of criminal
case?
NO, there is no need for an assessment. Assessment is for
the determination of whether the taxpayer paid the
correct taxes, while in criminal cases it is the
determination of probable cause whether or not a crime
has been committed.
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If there is probable cause, then the information will be
filed.
Flow of appeal:
a. Civil/ criminal cases, if the basic tax involved is 1 million
or more:
1. File it before the CTA in Division;
2. If the decision of the CTA Division is adverse to
the TP, appeal to the CTA En Banc and then to the
SC.
b. Civil/ criminal case where the basic tax is less than 1
million:
1. File before the lower courts depending on the amount.
If originally filed in:
i. RTC- if the decision is adverse, appeal is to
the CTA in Division, then CTA En Banc, then
SC;
ii. MTC- if the decision is adverse, go to RTC,
then, CTA En Banc, lastly SC.
EXCLUSIVE APPELLATE JURISDICITON
Sec. 7. Jurisdiction. - The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as
herein provided:
1. Decisions of the Commissioner of Internal Revenue in
cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National
Internal Revenue or other laws administered by the
Bureau of Internal Revenue;
1. Disputed assessments
2. Refund cases
3. Those which are regarded as “other matters” arising
under the NIRC or other laws administered by the BIR.
TAKE NOTE: This refers to the decisions of the CIR. While
we were discussing the remedies, from the Regional
Director we can go immediately to the CTA—for appellate
it cannot be. Because of this provision. The safe route to
go is to follow the administrative procedure and file it with
the CIR.
2. Inaction by the Commissioner of Internal Revenue in
cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relations
thereto, or other matters arising under the National
Internal Revenue Code or other laws administered by the
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Bureau of Internal Revenue, where the National Internal
Revenue Code provides a specific period of action, in
which case the inaction shall be deemed a denial;
There are two possible scenarios in this case:
1. Disputed assessments- the CIR has 180 days to decide;
from there you have 2 options:
A. Wait for the decision; or
B. appeal immediately after the lapse of the 180
day period from filing the MR or if it is a Motion
for Reinvestigation from the date of submission
of supporting documents--he has 60 days to
submit supporting documents.
2. Refund cases- when the 2-year period is about to expire
and the CIR has not acted on the application for refund,
you do not wait for the decision of the CIR or else the
claim for refund will prescribe. You must file the
application of refund before the lapse of such period.
Right now, its mandatory for the BIR to issue or render a
decision within the 90-day period, otherwise he or she will
be subject to sanctions under the NIRC.
3. Decisions, orders or resolutions of the Regional Trial
Courts in local tax cases originally decided or resolved by
them in the exercise of their original or appellate
jurisdiction
This refers to the local taxes.
The decision of the RTC here may be either:
a. In its original jurisdiction; or
b. in its appellate jurisdiction
Q: What are the local tax cases mentioned here?
1. Legality of the tax ordinance.
If you want to challenge the tax ordinance passed by the
local sanggunian, go to the Secretary of Justice. If the DOJ
will deny your petition or appeal, or in case of inaction
within the period to decide you should bring an action to
the RTC to challenge the legality of the ordinance.
The adverse decision of the RTC is appealable to the CTA in
Division within a period of 30 days by filing an application
for review.
2. Protest of local tax cases.
The TP will protest, after the protest the TP will appeal to
RTC or MTC depending on the amount of the taxes sought
to be collected.
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If file before the MTC- the TP will appeal to the RTC and
from there, since that was already in the exercise of the
appellate jurisdiction, the appeal via petition for review
should be made before the CTA En Banc in 30 days from
the receipt of the decision of the RTC.
If filed before the RTC- the appeal will be filed before the
CTA in Division within 30 days, then CTA En Banc, and then
the SC.
3. Refund of Local tax cases
You will have to pass either before the MTC or the RTC
depending on the jurisdictional amount. The same
procedures above shall be followed.
4. Decisions of the Commissioner of Customs in cases
involving liability for customs duties, fees or other money
charges, seizure, detention or release of property
affected, fines, forfeitures or other penalties in relation
thereto, or other matters arising under the Customs Law
or other laws administered by the Bureau of Customs;
5. Decisions of the Central Board of Assessment Appeals
in the exercise of its appellate jurisdiction over cases
involving the assessment and taxation of real property
originally decided by the provincial or city board of
assessment appeals;
For real property taxation involving property assessments,
it may involve special levies, and it may involve protest of
RPT. Take note payment under protest is already required.
Then the taxpayer goes to LBAA and then CBAA (when it
comes to RPT, jan lang talaga sya) or it may entail RPT
refunds.
The decisions of the CBAA in these cases are then
appealable to the CTA En banc.
6. Decisions of the Secretary of Finance on customs cases
elevated to him automatically for review from decisions
of the Commissioner of Customs which are adverse to the
Government under Section 2315 of the Tariff and
Customs Code
7. Decisions of the Secretary of Trade and Industry, in the
case of nonagricultural product, commodity or article,
and the Secretary of Agriculture in the case of agricultural
product, commodity or article, involving dumping and
countervailing duties under Section 301 and 302,
respectively, of the Tariff and Customs Code, and
safeguard measures under Republic Act No. 8800, where
either party may appeal the decision to impose or not to
impose said duties.
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Exclusive Appellate Jurisdiction in Tax collection cases
1. Over appeals from the judgments, resolutions or orders
of the Regional Trial Courts in tax collection cases
originally decided by them, in their respective territorial
jurisdiction.
2. Over petitions for review of the judgments, resolutions
or orders of the Regional Trial Courts in the exercise of
their appellate jurisdiction over tax cases originally
decided by the Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in their respective
jurisdiction.
Exclusive Appellate Jurisdiction over Criminal cases
a. Over appeals from the judgments, resolutions or orders
of the Regional Trial Courts in tax cases originally decided
by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions
or orders of the Regional Trial Courts in the Exercise of
their appellate jurisdiction over tax collection cases
originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts, in
their respective jurisdiction.
City of Manila v. Grecia
GR 175723
Does the CTA have jurisdiction for special civil actions for
certiorari assailing the interlocutory order issued by the
RTC in a local tax case?
In other words, can you file a petition for review on
certiorari under Rule 65 before the CTA?
RULING: While it is clearly stated that the CTA has
exclusive appellate jurisdiction over decisions, orders or
resolutions of the RTCs in local tax cases originally decided
or resolved by them in the exercise of their original or
appellate jurisdiction, there is no categorical statement
under RA 1125 as well as the amendatory RA 9282, which
provides that the CTA has jurisdiction over petitions for
certiorari assailing interlocutory orders issued by the RTC
in local tax cases filed before it.
The prevailing doctrine is that the authority to issue writs
of certiorari involves the exercise of original jurisdiction
which must be expressly conferred by the Constitution or
by law and cannot be implied from the mere existence of
appellate jurisdiction.
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In the same manner, Section 5 (1), Article VIII of the 1987
Constitution grants power to the Supreme Court, in the
exercise of its original jurisdiction, to issue writs of
certiorari, prohibition and mandamus. With respect to the
Court of Appeals, Section 9 (1) of Batas Pambansa Blg. 129
(BP 129) gives the appellate court, also in the exercise of
its original jurisdiction, the power to issue, among others,
a writ of certiorari,whether or not in aid of its appellate
jurisdiction. As to Regional Trial Courts, the power to issue
a writ of certiorari, in the exercise of their original
jurisdiction, is provided under Section 21 of BP 129.
The foregoing notwithstanding, while there is no express
grant of such power, with respect to the CTA, Section 1,
Article VIII of the 1987 Constitution provides, nonetheless,
that judicial power shall be vested in one Supreme Court
and in such lower courts as may be established by law and
that judicial power includes the duty of the courts of
justice to settle actual controversies involving rights which
are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government.
On the strength of the above constitutional provisions, it
can be fairly interpreted that the power of the CTA
includes that of determining whether or not there has
been grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the RTC in issuing an
interlocutory order in cases falling within the exclusive
appellate jurisdiction of the tax court. It, thus, follows that
the CTA, by constitutional mandate, is vested with
jurisdiction to issue writs of certiorari in these cases.
Indeed, in order for any appellate court to effectively
exercise its appellate jurisdiction, it must have the
authority to issue, among others, a writ of certiorari. In
transferring exclusive jurisdiction over appealed tax cases
to the CTA, it can reasonably be assumed that the law
intended to transfer also such power as is deemed
necessary, if not indispensable, in aid of such appellate
jurisdiction.
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