Professional Documents
Culture Documents
Tax 2 LGU
Tax 2 LGU
1
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
2
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 to more than a mere repair or replacement of parts
value of the property increase, the tax will also involving capital expenditures and labor, which is
increase intended to enhance its value, beauty or utility or to
It creates a single and indivisible obligation. adapt it for new or further purposes;
Local tax
(o) "Machinery" embraces machines, equipment,
Q: What is real property? mechanical contrivances, instruments, appliances or
Normally we apply Article 415 of the Civil Code apparatus which may or may not be attached,
permanently or temporarily, to the real property. It
Article 415. The following are immovable property: includes the physical facilities for production, the
installations and appurtenant service facilities, those
(1) Land, buildings, roads and constructions of all kinds which are mobile, self-powered or self-propelled, and
adhered to the soil; those not permanently attached to the real property
(2) Trees, plants, and growing fruits, while they are which are actually, directly, and exclusively used to
attached to the land or form an integral part of an meet the needs of the particular industry, business or
immovable; activity and which by their very nature and purpose
(3) Everything attached to an immovable in a fixed are designed for, or necessary to its manufacturing,
manner, in such a way that it cannot be separated mining, logging, commercial, industrial or agricultural
therefrom without breaking the material or deterioration purposes;
of the object;
(4) Statues, reliefs, paintings or other objects for use or **Compare this with the CC provision Art 415 (5)
ornamentation, placed in buildings or on lands by the
owner of the immovable in such a manner that it reveals xxx actually, directly, and exclusively used to meet the
the intention to attach them permanently to the needs of the particular industry, business or activity and
tenements; which by their very nature and purpose are designed for,
(5) Machinery, receptacles, instruments or implements or necessary xxx
intended by the owner of the tenement for an industry or
works which may be carried on in a building or on a piece Mindanao Bus Company vs City Assessor GR L-17870,
of land, and which tend directly to meet the needs of the Sept 29 1962
said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or The City Assessor assessed MBC with deficiency taxes
breeding places of similar nature, in case their owner has over machines. According to the City Assessor, these
placed them or preserves them with the intention to have equipment are immobilized by Art 415 of the Civil
them permanently attached to the land, and forming a Code:
permanent part of it; the animals in these places are “(5) Machinery, receptacles, instruments or implements
included; intended by the owner of the tenement for an industry
(7) Fertilizer actually used on a piece of land; or works which may be carried on in a building or on a
(8) Mines, quarries, and slag dumps, while the matter piece of land, and which tend directly to meet the needs
thereof forms part of the bed, and waters either running of the said industry or works;”
or stagnant;
(9) Docks and structures which, though floating, are ISSUE: WON MBC is liable for the deficiency RPT for
intended by their nature and object to remain at a fixed these machineries are sitting on cement or wooden
place on a river, lake, or coast; platforms.
(10) Contracts for public works, and servitudes and other
real rights over immovable property. (334a) RULING: The stipulation expressly states that the
equipment are placed on wooden or cement platforms.
When it comes to real property taxation, some parts They can be moved around and about in petitioner's
doesn’t make sense but for the purpose of assessing RPT repair shop.
even if generally movable property, they are considered as
immovable. Movable equipments to be immobilized in
contemplation of the law must first be "essential and
LGC; Section 199. Definitions. principal elements" of an industry or works without
(m) "Improvement" is a valuable addition made to a which such industry or works would be "unable to
property or an amelioration in its condition, amounting function or carry on the industrial purpose for which it
was established." We may here distinguish, therefore,
3
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 transportation business could be carried on without the
destination because they are essential and principal repair or service shop if its rolling equipment is repaired or
elements in the industry for those which may not be so serviced in another shop belonging to another.
considered immobilized because they are merely
incidental, not essential and principal. BOARD OF ASSESSMENT APPEALS vs MANILA
ELECTRIC
On the other hand, machineries of breweries used in
the manufacture of liquor and soft drinks, though May hydroelectric powerplant, then merong steel
movable in nature, are immobilized because they are towers. What is the nature of that steel tower? Is it
essential to said industries; but the delivery trucks and realty or not?
adding machines which they usually own and use and
are found within their industrial compounds are merely SC went back to Art. 415(1) Land, buildings, roads and
incidental and retain their movable nature. constructions of all kinds adhered to the soil; Sabin ang
Similarly, the tools and equipments in question in this SC, the towers do not fall under this definition because
instant case are, by their nature, not essential and the towers do not constitute buildings or constructions
principle municipal elements of petitioner's business of adhered to the soil. What is the nature of these
transporting passengers and cargoes by motor trucks. towers? They are easily removable and merely attached
They are merely incidentals — acquired as movables or bolted to a square metal frame. So hindi sya realty.
and used only for expediency to facilitate and/or Kung sabihin mong “adhered to the soil”, it is
improve its service. Even without such tools and characterized by more or less permanency.
equipments, its business may be carried on, as
petitioner has carried on, without such equipments, Art. 415 (3) Everything attached to an immovable in a
before the war. The transportation business could be fixed manner, in such a way that it cannot be
carried on without the repair or service shop if its separated therefrom without breaking the material or
rolling equipment is repaired or serviced in another deterioration of the object; Sabi nang SC, medyo weird,
shop belonging to another. the towers do not fall under this definition because the
towers are not attached to an immovable in a fixed
(Campaner) manner.
Are they considered as real properties? NO. Hindi sya real
property for RPT purposes. The machineries placed on Art. 415 (5) Machinery, receptacles, instruments or
those wooden and cemented platforms can be moved implements intended by the owner of the tenement
around in the petitioner’s shop. for an industry or works which may be carried on in a
building or on a piece of land, and which tend directly
It cannot be considered as immobilized in contemplation to meet the needs of the said industry or works; SC
of law because it must first be considered as essential and said that again, the towers does not fall in this
principal elements of the industry or works without which definition. The towers are not machineries. Even if they
the industry would be unable to function. were, they were not intended for the industry or works
on the land itself. The business is not found on the land
So these are actually not necessary for the bus company to on which the towers are built.
continue its main business; ang kailangan yung bus mismo,
but the equipment, not necessary. In fact they can have it MERALCO SECURITIES vs CBAA
repaired/maintained in a shop. In other words, the
equipments are considered merely incidentals. Only for Pipelines, underground; transporting petroleum and oil.
the expediency and to facilitate the improved service.
The SC said that Meralco is liable for the RPT because
From the FT: the pipelines are considered real properties under Art.
Similarly, the tools and equipments in question in this 415 (1) and (3). “Constructions of all kind adhered to
instant case are, by their nature, not essential and the soil”, klaro na sya, adhered to the soil, the pipelines
principle municipal elements of petitioner's business of are attached to the land in such a way that it cannot be
transporting passengers and cargoes by motor trucks. separated therefrom without dismantling the pipes.
They are merely incidentals — acquired as movables and
used only for expediency to facilitate and/or improve its MANILA ELECTRIC vs CBAA
service. Even without such tools and equipments, its
business may be carried on, as petitioner has carried on, In this case, storage tanks. Nakapatong ang storage
without such equipments, before the war. The tanks sa semento, and the storage tanks has pipelines.
4
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 Manila Electric Company vs. City Assessor and City
may storage tanks placed below ground, adhered to the Treasurer of Lucena City
soil na, so automatic real property. But in this case,
nakapatong eh. GR 166102 August 5, 2015
SC said that the tanks are realties. “We hold that while The properties included here are transformers and
the two storage tanks are not embedded in the land, electric posts, transmission lines.
they may, nevertheless, be considered as improvements
on the land, enhancing its utility and rendering it useful The Supreme Court said here that the wires, poles,
to the oil industry. It is undeniable that the two tanks electric meters, transformers MAY qualify as a real
have been installed with some degree of permanence property for purposes of real property taxation.
as receptacles for the considerable quantities of oil Sabi ng Supreme Court here is MAY. It is an open-
needed by Meralco for its operations. ended decision.
For purposes of taxation, the term "real property" may What is essential here is this, the laws and rules
include things which should generally be regarded as defining real property for real property tax (RPT)
personal property(84 C.J.S. 171, Note 8). It is a familiar purposes are already confusing we should harmonize
phenomenon to see things classed as real property for this. The poles etc. are real property for RPT purposes,
purposes of taxation which on general principle might we just have look at the Civil Code. But the SC said as
be considered personal property (Standard Oil Co. of between the Civil Code, the general law describing
New York vs. Jaramillo, 44 Phil. 630, 633).” what a real property or an immovable is all about we
have the local government code. This is essentially a
What is the difference between this case sa Mindanao Bus special law planting the LGU the power to impose RPT.
case? They are essentially the same, nakapatong din. This As between a general law and a specific/special law,
differs because in this case, the storage tanks cannot be the special law will prevail.
removed without paralyzing the business. In the Mindanao
case, the equipment were merely incidental to the Ang sabi ng Supreme Court dito “MAY qualify as real
business, you remove them, mag operate pa rin ang bus property”, why is it this way? Bakit “MAY”? Because the
company. SC said here is that the determination of whether or
not this electric transmissions, poles, transformers, etc.,
CALTEX vs CBAA whether or not they are real property, are factual
issues. And the SC is not a trier of facts. I think the SC
The property subject of this case are - underground remanded this case back to the lower court. (grabe
tanks, elevated tank, elevated water tanks, water tanks, gyud ang SC, wala nalang man gyud nila gi decide kung
gasoline pumps, computing pumps, water pumps, car unsa ang nature).
washer, car hoists, truck hoists, air compressors and
tireflators. From the full text: MERALCO maintains that
its electric posts are not machinery subject to
SC said that the machineries are realties because they real property tax because said posts are not
are necessary for the operation of the gas station; being exclusively used by MERALCO; these are
without them, the gas station would be useless. Parang also being utilized by cable and telephone
weird kasi gisali ang mga car hoist, air compressors, etc. companies. This, however, is a factual issue
which the Court cannot take cognizance of in
FELS ENERGY vs BATANGAS the Petition at bar as it is not a trier of facts.
Whether or not the electric posts of MERALCO
Power barges. are actually being used by other companies or
industries is best left to the determination of
The law in point here is Art 415 (9) Docks and the City Assessor or his deputy, who has been
structures which, though floating, are intended by granted the authority to take evidence under
their nature and object to remain at a fixed place on a Article 304 of the Rules and Regulations
river, lake, or coast; Implementing the Local Government Code of
1991.
So power barge, although palutang-lutang, but they are
intended to remain at a fixed place. Capitol Wireless, Inc. vs. The Provincial Treasurer Of
(Castro) Batangas
5
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
In the event that you forget all these cases, makalimutan SECTION 232. Power to Levy Real Property Tax. - A
niyo siya, you just have to answer these 2-fold questions province or city or a municipality within the
to know if that particular property is a real property for Metropolitan Manila Area may levy an annual ad
purposes of RPT: valorem tax on real property such as land, building,
machinery, and other improvement not hereinafter
1. Is this classified under Article 145 of the Civil specifically exempted.
Code? Pag pasok siya sa Article 415 of the Civil
Code it is a real property. No questions about it. Rates
SECTION 233. Rates of Levy. - A province or city or a
But what if it does not fall under Article 415 of municipality within the Metropolitan Manila Area shall
the Civil Code. The next question that you have fix a uniform rate of basic real property tax applicable
to ask is: to their respective localities as follows:
2. Is the property essential and principal in the (a) In the case of a province, at the rate not
exceeding one percent (1%) of the assessed
conduct of the business? Pag sinabi na essential,
value of real property; and
meaning if you take this out it would paralyze
the business. And if YES, it would paralyze the (b) In the case of a city or a municipality
business then it becomes a real property subject within the Metropolitan Manila Area, at the
to RPT. The legal basis for that is the definition of rate not exceeding two percent (2%) of the
machinery under the Local Government Code. assessed value of real property.
Sec. 199 Definitions
So mas malaki ang sa City compared to that sa Province.
(o) "Machinery" embraces machines,
equipment, mechanical contrivances,
instruments, or apparatus which may or may WHO MAY IMPOSE REAL PROPERTY TAXES ON REALTY?
not be attached, permanently or temporarily, 1. Provinces
to the real property. It includes the physical
6
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 planted to permanent or perennial crops with at least fifty
independent city siya. Basta siyudad pwede siya (50) trees to a hectare shall not be considered idle lands.
mag RPT. Lands actually used for grazing purposes shall likewise not
3. Municipalities within the Metro Manila only. be considered idle lands.
Outside Metro Manila, wala na kayong magawa
jan, they don’t have the authority to impose RPT. (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
SPECIAL EDUCATION FUND unimproved by the owner of the property or person
having legal interest therein.
SECTION 235. Additional Levy on Real Property for the
Special Education Fund. - A province or city, or a
Regardless of land area, this Section shall likewise apply to
municipality within the Metropolitan Manila Area, may
residential lots in subdivisions duly approved by proper
levy and collect an annual tax of one percent (1%) on
authorities, the ownership of which has been transferred
the assessed value of real property which shall be in
to individual owners, who shall be liable for the additional
addition to the basic real property tax. The proceeds
tax: Provided, however, That individual lots of such
thereof shall exclusively accrue to the Special Education
subdivisions, the ownership of which has not been
Fund (SEF).
transferred to the buyer shall be considered as part of the
subdivision, and shall be subject to the additional tax
Bawat province or city ata meron nito. This is for a specific payable by subdivision owner or operator.
purpose- special education fund within the territorial
jurisdiction of the locality where property is located.
Based on Section 237 there are two (2) types of idle lands:
1. AGRICULTURAL LANDS
AD VALOREM TAX ON IDLE LANDS
2. Other Lands
SECTION 236. Additional Ad Valorem Tax on Idle
Lands. - A province or city, or a municipality the Requirements to consider Agricultural Lands as Idle
Metropolitan Manila Area, may levy an annual tax on Lands:
idle lands at the rate not exceeding five percent (5%) of 1. The property must be (classified as) an
the assessed value of the property which shall be in agricultural land;
addition to the basic real property tax.
2. The land must be more than one (1) hectare;
Ito medjo masakit ito kasi 5% unlike sa Basic and Special
Education Fund na 1% lang.
What is the purpose of this? 3. The land must be suitable for agricultural uses;
1. To penalize- this is to penalize property owner
who will not use their properties productively. 4. One half (½) must remain uncultivated or
Naa koy yuta, unsay gamit nimo ana- WALA! unimproved;
2. To encourage utilization of the land resources in
order to contribute to the national 5. Must not be planted with at least fifty (50) trees;
development.
6. The land must not be actually used for grazing
(Gido)
purposes.
IDLE LANDS COVERED
7
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Section 234. Exemptions from Real Property Tax. - The *The same ruling in Manila Int. Airport vs. CA (2006)
following are exempted from payment of the real property
tax:
LIGHT RAIL TRANSIT AUTHORITY versus CBBA
(a) Real property owned by the Republic of the Philippines (GR 127316, Oct. 12, 2000)
or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration Contention: Involved here is the LRT; the contention of the
or otherwise, to a taxable person; LRT here is that they are exempt from Real Property Taxes
because the carriage ways and stations are real property
8
TAXATION 2- 4th exam
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 properties, not for public use, and that the operation of
poles. the port and its facilities and the administration of its
buildings are in the nature of ordinary business. The
Ruling: The Supreme Court said that that is actually petitioner is clothed, under P.D. No. 857, with corporate
misleading. It does not mean that they are attach on status and corporate powers in the furtherance of its
government lines that they are already exempt. LRT is a proprietary interests:
service-oriented entity for profit even if it is for public
service. We reject the petitioner's claim that it is exempt
from the payment of real property taxes, considering that
Contention: LRTA is not the main user of the property but it does not use the port facilities and buildings. This Court
it is actually the public. (from full text: Petitioner argues overruled a similar submission as follows:
that it merely operates and maintains the LRT system, and Under the Real Property Tax Code, real property
that the actual users of the carriageways and terminal is classified for assessment purposes on the basis of actual
stations are the commuting public. It adds that the public- use, which is defined as "the purpose for which the
use character of the LRT is not negated by the fact that property is principally or predominantly utilized by the
revenue is obtained from the latter's operations.) person in possession of the property.
(Isidor)
Ruling: (from Full Text: Unlike public roads which are open
This is a reiteration of a constitutional provision on
for use by everyone, the LRT is accessible only to those
exemption on real property taxes.
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 (b) Charitable institutions, churches, parsonages or
exclusively for public use. Although petitioner is a public convents appurtenant thereto, mosques, non-profit or
utility, it is nonetheless profit-earning. It actually uses religious cemeteries and all lands, buildings, and
those carriageways and terminal stations in its public improvements actually, directly, and exclusively used
utility business and earns money therefrom. for religious, charitable or educational purposes;
9
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
e. Machinery and equipment used for pollution control *This case is still undecided.
and environmental protection.
Except as provided herein, any exemption from
payment of real property tax previously granted to, or ASSESSMENT AND APPRAISAL OF
presently enjoyed by, all persons, whether natural or REAL PROPERTY TAXES
juridical, including all government owned or controlled
corporations are hereby withdrawn upon the effectivity
of this Code. Section 232. Power to Levy Real Property Tax.- A
province or city or a municipality within the
Now, there is this one peculiar situation with respect to Metropolitan Manila Area may levy an annual ad
real property tax exemption. This involves yung sa may valorem tax on real property such as land, building,
Sta. Cruz. Yung Coal Plant. machinery, and other improvement not hereinafter
Here is the issue here: specifically exempted.
Diba in Coal Plant meron yan siyang machinery and Who collects:
equipment to be used for pollution control, to reduce the
environmental impact of this coal plant. So anong ginawa Province, City or Municipality within the
nila? Metropolitan Manila area
So, basically there is a big machinery there and this Definition of APPRAISAL:
machinery was placed inside the building and then the - It is the act or process of determining the value of the
Province of Davao del Sur tried to collect taxes. So, sabi ng property at
Prov. Of Davao del Sur, sige yung equipment nyo exempt a specified date for a specific purpose.
siya from real property tax but the building you should pay
for the real property tax. Definition of ASSESSMENT:
10
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 When: Within 30 days from receipt of such plans
property or a portion thereof subject to tax including the from the Lands Management Bureau, the Land
discovery, listing, classification and appraisal of the Registration Authority, or the Housing and Land
property. Use Regulatory Board as the case may be.
Who has the duty to appraise and assess the real property Duty: Required to submit to the City Assessor all
for RPT purposes? contracts involving real property acknowledged
by them.
The duty is lodged with the Local Assessor.
Kung sa Davao City pa, Davao City Assessor’s Office. *These submissions are important because the
first thing that the Local Assessor will do is to
When we talk about assessment here, this is an entirely prepare a listing. When you say listing, this is a
different concept pagdating sa RPT. just a list of all existing real property in the Local
Government Unit where the properties are
Because this involves the determination of assessment of found.
the property appraised for purposes of real property
taxation. (Lagat)
The listing, that would be the first thing that would
In APPRAISAL, you talk about the body of the property, happen.
pagdating sa ASSESSMENT, it is just a portion of the
appraised value of the property. Next is the APPRAISAL.
WHO ARE THE PERSONS INVOLVE IN THE LISTING,
APPRAISAL, AND ASSESSMENT OF THE PROPERTY? How would be the real property be appraised?
It is appraised at the current and fair market value
1. ROD (Registrar of Deeds); prevailing in the locality where the property is situated.
Duty: Transmit a copy of the building permit or The fair market value is different from the assessed value.
certificate to the City Assessor.
As to its determination, the FMV is usually declared by the
When: Within 30 days from its issuance. owner, but subject to the final determination of the
assessor, while the AV is determined by the application of
3. Geodetic Engineers; the assessment level as determined by the local ordinance
to the FMV of the property
Duty: Required to furnish a copy free of charge
to the assessor of the province, city or AV is the portion of that value of the FMV.
municipality where the land is located with a AV is the TAX BASE FOR PURPOSES OF real property
white or blue print copy of each of all approved taxation
original or subdivision plans or maps of surveys It is a percentage of the FMV
executed by them.
APPROACHES IN ESTIMATING FMV
11
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? As a rule, tax declarations or receipts of real property tax
Maraming ways to determine it; some are the ff: payments are evidence of declarations and payments only.
1) The Sales Analysis approach It only proves the value as declared; yan lang. It is not
conclusive evidence of ownership. But the Supreme Court
- the data accumulated by the ROD would always say that voluntary declaration of piece of
How much is the property now here? property for RPT purposes manifests not only one’s
How much does it cost? sincere, and honest desire to obtain title to the property,
We have to look at those as indicated and announce adverse claim the state and all other
in the consideration in the deed of interested parties, but also, to contribute the needed
sale, which are situated relatively close revenues for the government. Such acts strengthen his
to that property. bona fide claim of acquisition of ownership.
2) Income Capitalization Approach
It is only corroborative proof of ownership. With the Tax-
- This considers income of the property dec, you are more or less the owner of the property. No
determined from the fair market value 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
This time, you don’t just look at the value of the possession. Alright
property, you also look at how much income will
this property earn given the circumstances What if the owner of the property will refuse to make
declaration?
3) Reproduction Cost Approach Then the local assessor, himself, may declare the property
in the name of the possessor. He will declare it for you.
- This is exclusively in the raising man-made
improvements such as buildings and other When should the declaration be done?
structures. In this case, the labor materials are
considered to reproduce a replica of such Owners/Administrators —
improvement. It must be made once every three years.
For persons acquiring real property —
LISTING OF REAL PROPERTIES within 60 days after acquisition
For persons holding a proof in real property — within 60
How does it go? days from the date of completion, or, occupancy
First, is declaring real property, Sec.202 Then, the next thing that would happen is the preparation
of the schedule of their market value.
General Rule:
After the declaration, the assessor will now be ready to
It shall b e the duty of all persons, natural or
prepare the schedule for the market value to add in
juridical, owning or administering a property including the
listings. And this would be submitted to the local
improvements therein, within a city or municipality, or
sanggunian in preparation for the enactment of the
duly authorised representative to prepare or cause to be
ordinance.
prepared and file with the province, city or municipal
assessor a sworn statement declaring the true value of the
That is the only function of the assessor; prepare the
property.
listing of all the properties, determine their value, and
First touch pa rin nyan, is the property owner or his
hanggan dyan lang. The next thing the local assessor
authorised representative; he is required to make a
would do is to submit it to the local sanggunian.
declaration as to the value of that real property.
Why? Because in levying it, it is still an administrative
The purpose of this declaration is to determine the
function.
assessed level.
Paano sila magstart ng local tax if they don’t know the fair
Mag-declare ka, then, the local assessor will make a tax
market value and the properties within their territorial
declaration. What is the nature of this tax declaration?
jurisdiction?
12
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Sec. 216. All lands and buildings and other A: No. Generally, there is a declaration as it is the
improvements therein, exclusively used for hospitals, “classification of the property”. But take note that it is just
cultural, or executive purposes and those owned and a declaration. It may be possible that the classification in
used by local GOCCs rendering essential public the declaration and the actual use is different. Case in
purposes and supply own generation of electric power point is Patalinghug vs. Court of Appeals. The declaration
shall be classified as special. that the building is for residential purposes is not
conclusive as to the nature of the property. A property
Who has the power to classify lands? may have been declared by its owner as residential for
The City or municipality (metro manila) real estate taxation purposes but it may well be within a
— respective Sanggunian commercial zone. In this property, aside from the funeral
parlor, may apartment sa tabi and laundry shop. It’s really
That’s why if you want to change the classification of that used for commercial purposes, they cannot say na
land, they must have to undergo proceedings the residential lang yun.
respective local sanggunian.
Patalinghug v CA
If you want to reclassify from agricultural to residential GR No 104786, January 27, 1994
lands, (ie. Camella housing), you have to go to the
Sanggunian. And the sanggunian must reclassify that from FACTS:
agri- to residential A funeral home was constructed in Davao City. Per
ordinance, the same should not be less than 50 meters
What is the BASIS of the classification of the land? away from residential lots. A building owned by Tepoot
- ACTUAL use wherever located, whoever owns it, is both used as a dwelling and as a business is located
whoever uses it. within 50 meters of the funeral home. Under its tax
declaration, the commercial property is labeled as
residential tax purposes.
April 4, 2019
(Lim) RULING:
CLASSIFICATION OF LANDS In the case at bar, the testimony of City Councilor
Vergara shows that Mr. Tepoot's building was used for
13
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
(d) On Special Classes: The assessment levels for all If the grounds are these:
lands buildings, machineries and other improvements; “reassessment due to partial or total destruction, etc. or to
a major change in its actual use”, it will take effect 90 days
Actual Use Assessment Level from the date any such cause or causes occurred.
Cultural 15%
Scientific 15% Just take note of this provision.
Hospital 15%
Local water districts 10% So, you already know the assessment, the appraisal value,
Government-owned or controlled corporations the tax basis, we are now in the COLLECTION stage.
engaged in the supply and distribution of water and/or
generation and transmission of electric power 10%
COLLECTION OF REAL PROPERTY TAXES
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 Let’s go first to the ACCRUAL.
of the property on the assessment level. From time to Q: When will real property taxes accrue?
time, this classification of property must be reclassified
and reassessed in order to reflect the true value of the Pag’ sabi natin ng real property taxes, it would include
property. special liabilities ha. Like the SEF (Special Education Fund).
Q: How often should the reclassification and Q: When does the RPT and special liabilities accrue?
reassessment be made?
A: It should be every three years and thereafter. 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
EFFECTIVITY OF THE ASSESSMENT from that date it shall constitute a lien on the property
which shall be superior to any other lien, mortgage, or
Section 221. Date of Effectivity of Assessment or encumbrance of any kind whatsoever, and shall be
Reassessment. - All assessments or reassessments extinguished only upon the payment of the delinquent
made after the first (1st) day of January of any year tax.
shall take effect on the first (1st) day of January of the
succeeding year: Provided, however, That the The RPT and the special liability accrues every January 1.
reassessment of real property due to its partial or total But it doesn’t mean you have to pay every January 1, it is
destruction, or to a major change in its actual use, or to just that for the previous year, meron ka ng babayaran na
any great and sudden inflation or deflation of real RPT by January 1. That is the time that the obligation to
property values, or to the gross illegality of the pay real property tax arise or accrue.
assessment when made or to any other abnormal And of course we have to take note, by January 1,
cause, shall be made within ninety (90) days from the automatic meron na yang lien sa property.
date any such cause or causes occurred, and shall take
effect at the beginning of the quarter next following the Q: How do you remove that lien over the real property?
reassessment.
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
So the first thing that we will receive is the notice for the Also, there is one thing to remember in RPT, you can
collection of the real property tax. Ito yung sinasabi natin. actually pay it in advance. And of course, if you pay it in
Ang equivalent nito when it comes to your NIRC or local advance, pwede pa maka-avail ug discounts, depending on
business taxes, ito yung “PAN” (Preliminary Assessment the ordinance concerned.
Notice) assessment kumbaga. It is somewhat a demand for
all real property tax owners to pay their real property tax. Sec. 251 of the LGC:
Medyo mahirap naman kasi kung isa isang ibibigay, diba? SEC. 251. Tax Discount for Advanced Prompt Payment. -
A lot of people owns real property. So, ang gawin nyan, If the basic real property tax and the additional tax
posting of notices. That’s the first thing that will happen. accruing to the Special Education Fund (SEF) are paid in
advance in accordance with the prescribed schedule of
Q: When is the posting made? payment as provided under Section 250, the
sanggunian concerned may grant a discount not
It is made on or before January 31 or any other date as exceeding twenty percent (20%) of the annual tax due.
prescribed from the ordinance by the Sanggunian.
16
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. 1. The local treasurer is legally prevented from
collecting the tax
Then you have the prescriptive period.
- An example is when there is an
Q: How about if it is given to the LGU to collect the RPT injunction issued by the court.
before the period (to collect) to prescribe?
2. The owner of the property or the person
So the prescriptive period is provided under Sec. 270: having legal interest therein requests for
reinvestigation and executes a waiver in writing
SEC. 270. Periods Within Which To Collect Real Property before the expiration of the period within which
Taxes. - The basic real property tax and any other tax to collect
levied under this Title shall be collected within five (5)
years from the date they become due. No action for the 3. The owner of the property or the person
collection of the tax, whether administrative or judicial, having legal interest therein is out of the country
shall be instituted after the expiration of such period. In or otherwise cannot be located.
case of fraud or intent to evade payment of the tax, If the taxpayer will still not pay, then this is the time that
such action may be instituted for the collection of the the government now will avail of its remedies to collect
same within ten (10) years from the discovery of such the taxes.
fraud or intent to evade payment. The period of
prescription within which to collect shall be suspended So kung wala siyang gagawin, delinquent parin siya and
for the time during which: does not avail of its own remedies, then that is the time
(1) The local treasurer is legally prevented from for the government to collect the tax.
collecting the tax;
(2) The owner of the property or the person having But what happens?
legal interest therein requests for reinvestigation and
executes a waiver in writing before the expiration of The first thing that will happen is that the taxpayer would
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 254 of the LGC:
legal interest therein is out of the country or otherwise
cannot be located. SEC. 254. Notice of Delinquency in the Payment of the
Real Property Tax. - (a) When the real property tax or
So let’s just summarize. This is pretty much the same on any other tax imposed under this Title becomes
your law on business taxes. delinquent, the provincial, city or municipal treasurer
shall immediately cause a notice of the delinquency to
General Rule: 5 years. be posted at the main entrance of the provincial
capitol, or city or municipal hall and in a publicly
Iba dito sa LGC at sa NIRC. accessible and conspicuous place in each barangay of
the local government unit concerned. The notice of
The LG has a period of 5 years within which to collect. 5 delinquency shall also be published once a week for
years from the date the taxes became due, thereafter, no two (2) consecutive weeks, in a newspaper of general
action for the collection of the tax, whether administrative circulation in the province, city, or municipality.
or judicial, shall be instituted after the expiration of that 5
year period. That is the general rule under normal (b) Such notice shall specify the date upon which the
circumstances. tax became delinquent and shall state that personal
Under extraordinary circumstances, the prescriptive property may be distrained to effect payment. It shall
period to collect is 10 years. 10 years from the discovery of likewise state that at any time before the distraint of
the ground. personal property, payment of the tax with surcharges,
What are the grounds? interests and penalties may be made in accordance
with the next following Section, and unless the tax,
1. Fraud surcharges and penalties are paid before the expiration
2. Intent to evade payment of the year for which the tax is due except when the
notice of assessment or special levy is contested
Take note also of the instances wherein the prescriptive administratively or judicially pursuant to the provisions
period to collect is suspended: of Chapter 3, Title II, Book II of this Code, the
delinquent real property will be sold at public auction,
17
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
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 sanggunian concerned, and which shall form part of his
located, who shall annotate the levy on the tax records. The local treasurer shall likewise prepare and
declaration and certificate of title of the property, deliver to the purchaser a certificate of sale which shall
respectively. contain the name of the purchaser, a description of the
property sold, the amount of the delinquent tax, the
So let us just outline. interest due thereon, the expenses of sale and a brief
description of the proceedings: Provided, however,
First, the levy proper. That proceeds of the sale in excess of the delinquent
tax, the interest due thereon, and the expenses of sale
After the expiration of the time period to pay, the shall be remitted to the owner of the real property or
treasurer will prepare a certificate of delinquency which person having legal interest therein.
has the force and effect of legal execution.
The local treasurer may, by ordinance duly approved,
The certificate will contain the name of the delinquent advance an amount sufficient to defray the costs of
taxpayer, the description of the property, the amount of collection thru the remedies provided for in this Title,
the tax due and the interest thereon. including the expenses of advertisement and sale.
This certificate will be mailed to or served upon: Within 30 days after levy, there will be advertisements for
sale posted and published. This is different from the
1. The owner or administrator of the real property; posting and publication of the notice of delinquency.
2. The local assessor;
3. The ROD who will annotate it at the back of the The posting will be done in pretty much the same place:
property’s title. city hall, municipal or provincial capitol, and also in the
barangay where the property is located.
After the levy proper, you have the advertisement and
sale. The publication is pretty much the same: once a week for
two (2) consecutive weeks.
Section 260. Advertisement and Sale. - Within thirty And even if after such notices the taxpayer will not pay the
(30) days after service of the warrant of levy, the local taxes including the interest and surcharges, then the sale
treasurer shall proceed to publicly advertise for sale or will proceed after the completion of the advertisement.
auction the property or a usable portion thereof as may
be necessary to satisfy the tax delinquency and The sale shall be held either at the main entrance of the
expenses of sale. The advertisement shall be effected provincial, city or municipal building, or on the property to
by posting a notice at the main entrance of the be sold, or at any other place as specified in the notice of
provincial, city or municipal building, and in a publicly the sale.
accessible and conspicuous place in the barangay If there is no sufficient bidder, then the LGU will purchase
where the real property is located, and by publication the property.
once a week for two (2) weeks in a newspaper of
general circulation in the province, city or municipality Section 263. Purchase of Property By the Local
where the property is located. The advertisement shall Government Units for Want of Bidder. - In case there is
specify the amount of the delinquent tax, the interest no bidder for the real property advertised for sale as
due thereon and expenses of sale, the date and place of provided herein, the real property tax and the related
sale, the name of the owner of the real property or interest and costs of sale the local treasurer conducting
person having legal interest therein, and a description the sale shall purchase the property in behalf of the
of the property to be sold. At any time before the date local government unit concerned to satisfy the claim
fixed for the sale, the owner of the real property or and within two (2) days thereafter shall make a report
person having legal interest therein may stay the of his proceedings which shall be reflected upon the
proceedings by paying the delinquent tax, the interest records of his office. It shall be the duty of the Registrar
due thereon and the expenses of sale. The sale shall be of Deeds concerned upon registration with his office of
held either at the main entrance of the provincial, city any such declaration of forfeiture to transfer the title of
or municipal building, or on the property to be sold, or the forfeited property to the local government unit
at any other place as specified in the notice of the sale. concerned without the necessity of an order from a
competent court. Within one (1) year from the date of
Within thirty (30) days after the sale, the local treasurer such forfeiture, the taxpayer or any of his
or his deputy shall make a report of the sale to the representative, may redeem the property by paying to
19
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 After the action sale is not left without any remedy
tax and the related interest and the costs of sale. If the because the taxpayer can still challenge the validity of the
property is not redeemed as provided herein, the sale.
ownership thereof shall be vested on the local
government unit concerned. Q: What is the requirement before the taxpayer can
challenge?
In both occasions, public sale or purchase by the LGU, the Section 267. Action Assailing Validity of Tax Sale. - No
taxpayer is entitled to redeem the property within one court shall entertain any action assailing the validity or
year from the date of sale. any sale at public auction of real property or rights
therein under this Title until the taxpayer shall have
And there is this certain SC decision which states that the deposited with the court the amount for which the real
date of sale is the date of annotation on the certificate of property was sold, together with interest of two percent
sale with the ROD. (2%) per month from the date of sale to the time of the
institution of the action. The amount so deposited shall be
The case here is: City Mayor of Quezon City vs RCBC G.R. paid to the purchaser at the auction sale if the deed is
No. 171033, August 8, 2010. declared invalid but it shall be returned to the depositor if
the action fails.
But this decision is quite peculiar because it seems to run Neither shall any court declare a sale at public auction
counter with the specific provisions of the LGC, which invalid by reason or irregularities or informalities in the
provides that the 1-year redemption period is counted proceedings unless the substantive rights of the
from the date of sale and not from the date of registration. delinquent owner of the real property or the person
having legal interest therein have been impaired.
The ordinance enacted by the Quezon City however
provides that the period should be counted from the date OFELIA GAMILLA versus BURGUNDY REALTY
of registration. This is the reason why the SC in this case CORPORATION
ruled that the 1-year period should start from the date of GR 212246, June 22, 2015
registration.
But I have seen another case, this is a 2017 case: City of A very simple case relative to the requirement of
Davao vs Dalisay, represented by the Special Administrator deposit; no deposit then the court cannot assume
Atty. Nicasio Paderna. jurisdiction over the challenge of the taxpayer.
20
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 government unit concerned, and (2) published once a
rule in jurisdiction; when the amount to be collected (basic week for two (2) consecutive weeks, in a newspaper of
tax excluding interest and penalties) is: general circulation in the province, city, or municipality.
not more than 300,000 or 400,000 if within In Talusan y. Tayag,38 the Court added that the notice of
the Metro Manila area – MTC delinquency should be sent to the registered owner of the
property subject of a possible tax sale. We ratiocinated:
exceeding 300,000 or 400,000 but not more
than 1,000,000 - RTC
In this regard, we note that unlike land registration
exceeding 1,000,000 – CTA proceedings which are in rem, cases involving an auction
sale of land for the collection of delinquent taxes are in
SALVA versus MAGPILE personam. Thus, notice by publication, though sufficient in
GR 220440, Nov. 28, 2017 proceedings in rem, does not as a rule satisfy the
requirement of proceedings in personam. As such, mere
Facts: publication of the notice of delinquency would not suffice,
Sometime in the 1960s Magpile owned a parcel of land considering that the procedure in tax sales is in
located in Makati. Under the Certification of Title the personam. It was, therefore, still incumbent upon the city
address provided is 2118 Apolinario Makati Rizal. On 1980s treasurer to send the notice of tax delinquency directly to
Maypile filed a sworn declaration of real properties with a the taxpayer in order to protect the interests of the
new address. In other words he was able to notify the latter.39
Local Government of Makati of a change of address. He
failed to pay his Real Property Under Section 258, the warrant of levy must be mailed to
or served upon the delinquent owner of the real property
Taxes, what happened was that when the notices was sent or person having legal interest therein, or in case he is out
it was sent to the old address. The auction sale proceeded of the country or cannot be located, to the administrator
and after 2 years Magpile filed a case with the RTC. or occupant of the property. At the same time, written
notice of the levy with the attached warrant shall be
RTC rendered a decision against Maypile. Maypile then mailed to or served upon the assessor and the Register of
filed an appeal with the Court of Appeals (CA). CA took Deeds of the province, city or a municipality where the
cognizance of the case property is located, who shall annotate the levy on the tax
declaration and certificate of title of the property,
Issues: 1. WON CA has appellate jurisdiction over the case. respectively. The levying officer shall submit a report on
the levy to the sanggunian concerned within ten (10) days
2. WON the auction sale may be allowed in view of the after receipt of the warrant by the owner of the property
failure of the City Treasurer to send the notice. or person having legal interest therein.
Ruling: 1. As to jurisdiction. The CA has jurisdiction of the Lastly, Section 260 requires that within thirty (30) days
case. The case arose from the alleged non compliance of after service of the warrant of levy, the local treasurer
the Local Government Unit of the provisions of the Local shall proceed to publicly advertise for sale or auction the
Government Code. It has nothing to do with tax but of the property or a usable portion thereof as may be necessary
violation of due process. This is not a tax matter already. to satisfy the tax delinquency and expenses of sale. The
The issue on the validity and legality of the tax sale is not advertisement shall be effected by: (1) posting a notice at
necessarily related to the issue of the legality of the Real the main entrance of the provincial, city or municipal
Property Tax. building, and in a publicly accessible and conspicuous place
in the barangay where the real property is located, and (2)
2. With respect to the auction sale. The Supreme Court publication once a week for two (2) weeks in a newspaper
annulled the auction sale because it did not follow Section of general circulation in the province, city or municipality
254 and other pertinent provisions of the LGC on levy and where the property is located.
auction sale.
In this case, the notice of tax delinquency was not proven
From Full text: Section 254 mandates that the notice of
to have been posted and published in accordance with the
delinquency in the payment of the real property be: (1)
requirements of the LGC.1âwphi1 Specifically, Salva failed
posted at the main entrance of the provincial capitol, or
to support her claim that the City Treasurer, her deputy or
city or municipal hall and in a publicly accessible and
any authorized officer actually caused the posting of a
conspicuous place in each barangay of the local
notice of delinquency in the Makati City Hall and in a
21
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
22
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
municipal assessor in the assessment of his property may, The tax payer is given 60 days from receipt of the notice of
within sixty (60) days from the date of receipt of the assessment.
written notice of assessment, appeal to the Board of
Assessment Appeals of the provincial or city by filing a Suppose that Davao City made an assessment of all the
petition under oath in the form prescribed for the real property within its jurisdiction, then the local assessor
purpose, together with copies of the tax declarations and sent a local assessment showing the new values of the real
such affidavits or documents submitted in support of the property that you own, can you file a motion for
appeal. reconsideration? NO. This is not allowed under the rules.
Section 227. Organization, Powers, Duties, and Functions In case there is an assessment on the RP, go directly to the
of the Local Board of Assessment Appeals. - LBAA.
(a) The Board of Assessment Appeals of the province or
city shall be composed of the Registrar of Deeds, as Effect of Failure to Appeal
Chairman, the provincial or city prosecutor and the
provincial, or city engineer as members, who shall serve as A taxpayer’s failure to question the assessment before the
such in an ex officio capacity without additional LBAA renders the assessment of the local assessor final
compensation. and executory and demandable. The taxpayer is now
precluded from questioning the correctness of the
(b) The chairman of the Board shall have the power to assessment or invoking any defense that would reopen the
designate any employee of the province or city to serve as question of the liability based on merits. (NPC v Province
secretary to the Board also without additional of Quezon GR 171586, July 15 2009)
compensation.
From the LPAA, let’s go to:
(c) The chairman and members of the Board of Section 229. Action by the Local Board of Assessment
Assessment Appeals of the province or city shall assume Appeals. –
their respective positions without need of further (a) The Board shall decide the appeal within one hundred
appointment or special designations immediately upon twenty (120) days from the date of receipt of such appeal.
effectivity of this Code. They shall take oath or affirmation The Board, after hearing, shall render its decision based on
of office in the prescribed form. substantial evidence or such relevant evidence on record
as a reasonable mind might accept as adequate to support
(d) In provinces and cities without a provincial or city the conclusion.
engineer, the district engineer shall serve as member of
the Board. In the absence of the Registrar of Deeds, or the (b) In the exercise of its appellate jurisdiction, the Board
provincial or city prosecutor, or the provincial or city shall have the power to summon witnesses, administer
engineer, or the district engineer, the persons performing oaths, conduct ocular inspection, take depositions, and
their duties, whether in an acting capacity or as a duly issue subpoena and subpoena duces tecum. The
designated officer-in-charge, shall automatically become proceedings of the Board shall be conducted solely for the
the chairman or member, respectively, of the said Board, purpose of ascertaining the facts without necessarily
as the case may be. adhering to technical rules applicable in judicial
proceedings.
This is done by verified petition and you attach the tax
declaration, supporting affidavits and other documents. When the decision is already made:
The persons who can appeal are: (c) The secretary of the Board shall furnish the owner of
1. The owner; the property or the person having legal interest therein
2. The person with legal interest to the property. and the provincial or city assessor with a copy of the
decision of the Board. In case the provincial or city
As a general rule, the owner is liable for the payment of assessor concurs in the revision or the assessment, it shall
the RPT because this ia necessary consequence which be his duty to notify the owner of the property or the
proceeds from the ownership. But the personal liability for person having legal interest therein of such fact using the
real property taxes may also be expressly let on the entity form prescribed for the purpose. The owner of the
with the beneficial use of that property. property or the person having legal interest therein or the
assessor who is not satisfied with the decision of the
Period to appeal Board, may, within thirty (30) days after receipt of the
decision of said Board, appeal to the Central Board of
23
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Assessment Appeals, as herein provided. The decision of There shall be Hearing Officers to be appointed by the
the Central Board shall be final and executory. Central Board of Assessment Appeals pursuant to civil
service laws, rules and regulations, one each for Luzon,
Upon receipt, the LBAA has 120 days to decide on the Visayas and Mindanao, who shall hold office in Manila,
appeal. Cebu City and Cagayan de Oro City, respectively, and who
shall serve for a term of six (6) years, without
Degree of proof reappointment until their successors have been appointed
Only substantial evidence and qualified. The Hearing Officers shall have the same
qualifications as that of the Judges of the Municipal Trial
When the decision is already made: Courts.
The secretary of the Board shall furnish the owner of the
property or the person having legal interest therein and The Central Board Assessment Appeals, in the
the provincial or city assessor with a copy of the decision performance of its powers and duties, may establish and
of the Board. organize staffs, offices, units, prescribe the titles, functions
and duties of their members and adopt its own rules and
If the decision is adverse to the TP or the property owner, regulations.
the TP has 30 days from the receipt of the decision to
appeal the same with the CBAA. The CBAA’s decision is Unless otherwise provided by law, the annual
generally final and executory. appropriations for the Central Board of Assessment
Appeals shall be included in the budget of the Department
Q: Do we need to file an MR before appeal to the CBAA? of Finance in the corresponding General Appropriations
It’s not actually stated in the law. Act.
Sir: I would suggest that if the decision is received, appeal
directly to the CBAA. Section 231. Effect of Appeal on the Payment of Real
Property Tax. - Appeal on assessments of real property
CBAA made under the provisions of this Code shall, in no case,
suspend the collection of the corresponding realty taxes
Section 230. Central Board of Assessment Appeals. – on the property involved as assessed by the provincial or
city assessor, without prejudice to subsequent adjustment
The Central Board of Assessment Appeals shall be depending upon the final outcome of the appeal.
composed of a chairman, and two (2) members to be
appointed by the President, who shall serve for a term of The CBAA has jurisdiction to hear appeals from the
seven (7) years, without reappointment. Of those first decision of the LBAA.
appointed, the chairman shall hold office for seven (7)
years, one member for five (5) years, and the other Q: Who may appeal before the CBAA?
member for three (3) years. Appointment to any vacancy 1. The owner;
shall be only for the unexpired portion of the term of the 2. Persons having interest in the property;
predecessor. In no case shall any member be appointed or 3. The local assessor
designated in a temporary or acting capacity. The - he is not precluded from appealing
chairman and the members of the Board shall be Filipino any adverse decision of the LBAA.
citizens, at least forty (40) years old at the time of their
appointment, and members of the Bar or Certified Public If the decision is adverse to the Taxpayer, the next remedy
Accountants for at least ten (10) years immediately is filing of a petition before the CTA En Banc. We do not
preceding their appointment. The chairman of the Board need to go through the CTA in Division at this point, the
of Assessment Appeals shall have the salary grade law says that any decision of the CBAA will be appealed to
equivalent to the rank of Director III under the Salary the CTA En Banc.
Standardization Law exclusive of allowances and other
emoluments. The members of the Board shall have the The CTA En Banc has exclusive appellate jurisdiction to
salary grade equivalent to the rank of Director II under the review in appeal the decision of the CBAA.
Salary Standardization Law exclusive of allowances and
other emoluments. The Board shall have appellate RA 9282; Section 7. Section 7 of the same Act is hereby
jurisdiction over all assessment cases decided by the Local amended to read as follows:
Board of Assessment Appeals. "Sec. 7. Jurisdiction. - The CTA shall exercise:
24
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
25
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
You will notice that this provision is all about the and decisions of the Bureau. The Commissioner shall
enforcement powers of the CMTA. Kung sa NIRC meron furnish the Congress of the Philippines, the NEDA and
tayong Commissioner of Internal Revenue, when it comes the Tariff Commission with electronic copies of
to the BOC, we have the COC (Commissioner of Customs), department orders, administrative orders, circulars,
he is the person who weilds and enforces the powers and rules and regulations promulgated pursuant to this
granted under the CMTA, he is the most important official Act.
in the BOC.
What are the powers of the COC? It’s provided for under
Section 201. Powers and Functions of the Sec. 201 and 204. But to summarize, the COC has the
Commissioner.— The Commissioner shall have the following powers:
following powers and functions: 1. The power to interpret provisions of the CMTA
2. The power to enforce the CMTA and related
(a) Exclusive and original jurisdiction to interpret the laws, rules and regulations
provisions of this Act, in collaboration with other 3. The power to review the actions and decisions of
relevant government agencies, subject to review by the any customs officer including disputed
Secretary of Finance; assessments subject to review by the Secretary
of Finance and exclusive appellate jurisdiction of
(b) Exercise any customs power, duties and functions, the CTA
directly or indirectly; 4. The power to delegate his powers
5. The power to assign or reassign customs officers
(c) Review any action or decision of any customs officer 6. The power to promulgate rules and regulations
performed pursuant to the provisions of this Act; subject to the approval of the Sec. of Finance.
(d) Review and decide disputed assessments and other If you notice, this is actually similar powers granted to the
matters related thereto, subject to review by the Commissioner of the Internal Revenue. Also, the BOC is
Secretary of Finance and exclusive appellate jurisdiction under the direct control and supervision of the
of the Court of Tax Appeals (CTA); Department of Finance.
(e) Delegate the powers vested under this Act to any Section 206. Customs Districts.— For administrative
customs officer with the rank equivalent to division purposes, the Philippines shall be divided into as many
chief or higher, except for the following powers and Customs Districts as necessary, the respective limits of
functions: which may be changed from time to time by the
Commissioner, with the approval of the Secretary of
(1) Promulgation of rules and regulations; Finance.
(2) Issuance, revocation or modification of Each Customs District shall be supervised by one (1)
rulings; and District Collector, assisted by as many Deputy District
(3) Compromise or abate of customs Collectors as may be necessary. The choice of the
obligations. location of a District Office, its business hours and the
staffing pattern thereof, shall be based on the particular
(f) Assignment or reassignment of any customs officer requirements of each district.
subject to the approval of the Secretary of If in BIR, we have the “districts”, in customs parlance, we
Finance; Provided, That District Collectors and other also have “Customs Districts”. Aside from the customs
customs officers that perform assessment functions districts, since we will be talking about
shall not remain in the same area of assignment for importation/exportation, we will also be talking about
more than three (8) years; and ports of entry.
(g) Perform all other duties and functions as may be
necessary for the effective implementation of this Act Q: What is a port of entry?
and other customs related laws.
Section 102 (hh) Port of Entry refers to a domestic port
Section 204. Promulgation of Rules and Regulations.
open to both domestic and international trade,
— The Commissioner, subject to the approval of the
including principal ports of entry and subports of entry.
Secretary of Finance, shall promulgate rules and
A principal port of entry is the chief port of entry of the
regulations for the enforcement of this Act. The
Customs District wherein it is situated and is the
Commissioner shall regularly prepare and publish an
permanent station of the District Collector of such port.
updated customs manual, and the rules, regulations
26
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
xxx When do we apply the CMTA Law and Other customs law?
The general answer is, they apply only when there is an
The principal ports of entry shall he located in Aparri, importation/exportation. So the customs laws and its
San Fernando, Manila, Manila International Container taxation aspect is very limited.
Port, Ninoy Aquino International Airport, Subic, Clark,
Batangas, Legaspi, Iloilo, Cebu, Tacloban, Surigao, Importation - Sec. 102 (z) Importation refers to the act of
Cagayan de Oro, Zamboanga, Davao, Limay and such bringing in of goods from a foreign territory into Philippine
other ports that may be created pursuant to this Act. territory, whether for consumption, warehousing, or
admission as defined in this Act;
xxx
Exportation – Sec. 102 (s) Exportation refers to the act,
If you want a concrete example, you have the Davao port documentation, and process of bringing goods out of
in Sasa. When you say “principal port”, it is the major port Philippine territory;
of a certain city or a certain customs district.
Note that the above are technical terms.
DUTIES OF DISTRICT COLLECTORS
It’s not enough for us to define importation as based on
Section 210. Duties of the District Collector.— The Sec. 102 (z), because there is a time-limitation as to when
District Collector shall have the following duties in their it will begin and when it will end. So long as the goods are
assigned Customs District: still within that time frame, then importation is not yet
done. If it is not yet done, the BOC will not lose jurisdiction
(1) Ensure entry of all imported goods at the customs over the goods, such that, the BOC can still collect the
office; customs duties due for the importation of that particular
(2) Prevent importation and exportation of prohibited goods.
goods;
(3) Ensure legal compliance of regulated goods and Q: When does importation begin?
facilitate the flow of legitimate trade;
(4) Examine, classify and value imported goods; Section 103. When Importation Begins and Deemed
(5) Assess and collect duties, taxes and other charges Terminated.— Importation begins when the carrying
on imported goods; vessel or aircraft enters the Philippine territory with the
(6) Hold and dispose imported goods in accordance intention to unload therein. xxxx
with this Act; What is peculiar in this definition is the term “intention to
(7) Prevent smuggling and other customs fraud; and unload”. This means that the time the importation begins
(8) Perform other necessary duties that may be does not involve only in the actual unloading of the
assigned by the Commissioner for the effective cargoes being imported, it is enough that there is this
implementation of this Act. Subject to the supervision intention.
and control of the District Collector, the duties and
functions of the District Collector may be delegated to FEEDER INTERNATIONAL vs CA
the Deputy District Collector. The Deputy District
Collector assigned to a sub-port shall be under the There is this foreign vessel, carrying gas and oil.
supervision and control of the District Collector of the Pumunta sila Pilipinas pero hindi sila dumaong. They
27
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
went to somewhere in Iloilo and placed anchors there. a. There is payment of the duties and
Because of that, there was investigation by the charges, or at least they are secured to
Customs. The investigation led to the discovery that the be paid; and
vessel does not have on board the required shipping b. The legal permit for withdrawal must
documents. be granted
2. If the goods imported are free from duties and
BOC held the cargoes as well as the vessel, they taxes – the importation is deemed terminated if
detained and seized. the goods have legally left the jurisdiction of the
The COC found the Feeder International guilty of illegal Bureau.
importation and the forfeiture of the vessel and the
cargoes were ordered. (Castro)
SECRETARY OF FINANCE VS. ORO MAURA SHIPPING
Issues: WON there was illegal importation LINES
To determine that, we must first ask, was there
importation to begin with? G.R. No. 156946 July 15, 2009
According to Feeder, there was no importation at all Facts: Glory Shipping Lines here imported a vessel from
because it did not even unload anything. They just Japan. The vessel arrived at the Port of Mactan. The
anchored. vessel was released tax and duty-free to the company.
The company posted a bond conditioned on the re-
SC: there is importation right from the very start. Actual export of the vessel within a period of one (1) year
unloading is not a requirement because mere intention from March 22, 1993, or, in case of default, to pay
is enough. customs duty, tax and other charges on the importation
of the vessel. The bond expired and was not renewed
Where did the SC get this “intention” by the Feeder to by the company. It did not also pay the duties, taxes
unload? The intent is established because violation of and other charges due on the vessel despite demands
customs laws are considered as indicative of the intent by the Collector of the Port of Mactan.
which constitutes the commencement of importation.
The fact that there is a violation of customs laws, The company sold to the respondent the vessel without
establishes a prima facie presumption that there is an informing the Collector of the Port of Mactan. The
intention to unload. vessel entered the Port of Manila and the duties and
taxes were paid by the respondent. After discovering
In this case, what is the violation? The lack of the that the vessel M/V HARUNA had been sold to the
necessary shipping documents. respondent, the Collector of the Port of Mactan sent
the respondent a demand letter for the unpaid customs
Q: When does importation end? duties and charges of Glory Shipping Lines. The
respondent argued that the importation is already
Section 103. xxx Importation is deemed terminated terminated and the duties and taxes were already paid.
when:
Issue: Whether the importation has already been
(a) The duties, taxes and other charges due upon the terminated.
goods have been paid or secured to be paid at the port
of entry unless the goods are free from duties, taxes Held: No.
and other charges and legal permit for withdrawal has There was an original but incomplete importation by
been granted; or Glory Shipping Lines that the respondent could not
have simply disregarded proceeds from knowledge of
(b) In case the goods are deemed free of duties, taxes the vessels history and the application of the relevant
and other charges, the goods have legally left the law.
jurisdiction of the Bureau.
In order for an importation to be deemed terminated,
There are two scenarios here: the payment of the duties, taxes, fees and other
1. If the goods imported are subject to duties and charges of the item brought into the country must be in
taxes – the importation is deemed terminated full. For as long as the importation has not been
when: completed, the imported item remains under the
jurisdiction of the BOC. From the perspective of
28
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
29
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
enter, pass through, and search any land, enclosure, Section 221. Authority to Search Vessels or Aircrafts
warehouse, store, building or structure not principally and Persons or Goods Conveyed Therein.— Any
used as a dwelling house. person exercising police authority under this Act may
board, inspect, search and examine a vessel or aircraft
When a security personnel or any other employee lives and any container, trunk, package, box or envelope
in the warehouse, store, or any building, structure or found on board, and physically search and examine any
enclosure that is used for storage of goods, it shall not person thereon. In case of any probable violation of this
be considered as a dwelling house for purposes of this Act, the person exercising police authority may seize
Act. the goods, vessel, aircraft, or any part thereof.
In Section 219, if you remember this is actually one of the Such power to search includes removal of any false
exceptions in your Constitutional Law. What is the main bottom, partition, bulkhead, or any other obstruction
requirement before a police officer or any government for the purpose of uncovering any concealed dutiable
official can search a certain place? You need to have a or forfeitable goods.
search warrant. And this is ONE OF THE EXCEPTIONS.
When it comes to enforcement of Customs Laws, as a The proceeding herein authorized shall not give rise to
general rule you do not need a warrant, so long as the any claim for damage caused to the goods, vessel or
place to be searched is not principally use as a dwelling aircraft, unless there is gross negligence or abuse of
house. authority in the exercise thereof.
What if there is a security personnel living in the said AUTHORITY TO SEARCH VEHICLES, OTHER
building, nag puyo ko didto kauban akong pamilya and CARRIERS, PERSONS AND ANIMALS
naa pud private guard? If you read further Section 219,
“when a security personnel or any other employee lives in Section 222. Authority to Search Vehicles, Other
the warehouse, store, or any building, structure or Carriers, Persons and Animals.— Upon reasonable
enclosure that is used for storage of goods, it shall not be cause, any person exercising police authority may open
considered as a dwelling house for purposes of this Act.” and examine any box, trunk, envelope, or other
Hindi ito katulad sa Local Government Code, na ang idle container for purposes of determining the presence of
land lagyan ko lang ng kalabaw, it does not work here. dutiable or prohibited goods. This authority includes
What matters is the principal use of that place, if it used as the search of receptacles used for the transport of
a storage house, warehouse or anything, the customs human remains and dead animals. Such authority
officer may go and search that place. likewise includes the power to stop, search, and
examine any vehicle or carrier, person or animal
This is quiet peculiar because under PCCP (I cannot find suspected of holding or conveying dutiable or
the meaning of the acronym ) there is this certain term prohibited goods.
“and his family”, but sa CMTA wala na ito. Right now
under sa CMTA wala na yung “and his family”. AUTHORITY TO SEARCH PERSONS ARRIVING
FROM FOREIGN COUNTRIES
What if ang gipapuyo didto kay ang entire family sa
security guard? I think the interpretation under the PCCP is Section 223. Authority to Search Persons Arriving
still applicable in this scenario. From Foreign Countries.— Upon reasonable cause,
travelers arriving from foreign countries may be
For dwelling houses, the rule is different: subjected to search and detention by the customs
Section 220. Authority to Search Dwelling House.— A officers. The dignity of the person under search and
dwelling house may be entered and searched only upon detention shall be respected at all times. Female
warrant issued by a Judge of a competent court, the inspectors may be employed for the examination and
sworn application thereon showing probable cause and search of persons of their own sex.
particularly describing the place to be searched and the
goods to be seized. 3. POWER TO INSPECT AND VISIT
30
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
interested party fails to produce such evidence within ENTRY. The goods will be imported. And then there will be
fifteen (15) days, the goods may be seized and DECLARATION. And after the Declaration it will be entered
subjected to forfeiture proceedings: Provided, That through the Customs Office at the port of entry, this is
during the proceedings, the interested party shall be according to Section 400.
given the opportunity to prove or show the source of
the goods and the payment of duties and taxes Section 400. Goods to be Imported through Customs
thereon: Provided, Further, That when the warrant of Office.— All goods imported into the Philippines shall
seizure has been issued but subsequent documents be entered through a customs office at a port of entry
presented evidencing proper payment are found to be or may be admitted to or removed from a free zone as
authentic and in order, the District Collector shall, defined in this Act as the case may be.
within fifteen (15) days from the receipt of the motion
to quash or recall the warrant, cause the immediate If you have tried to travel abroad, diba tanungin kayo ano
release of the goods seized, subject to clearance by the dala niyo and may ipa-fill up na form that is what we call as
Commissioner: Provided, Finally, That the release DECLARATION. When you declare and you submit it to the
thereof shall not be contrary to law. Customs Office that is what we call as ENTRY- Section 115.
For example: yang mga intsik-intsik na tindahan jan sa SEC. 115. Treatment of Importation. - Imported goods
DCLA, the Customs Officer may just go there and demand shall be deemed "entered" in the Philippines for
whether or not these goods were imported and there are consumption when the goods declaration is
proper release documents. electronically lodged, together with any required
supporting documents, with the pertinent customs
CUSTOMS JURISDICTION office.
The primary provision here in Customs Jurisdiction is So you have a DECLARATION and have it ENTERED in the
Section 300. Bureau of Customs.
This provision includes the DOCTRINE OF HOT PURSUIT, 2. REGULATED IMPORTATION – Section 117
ito yung 2nd paragraph. The pursuit of vehicles, vessels, or
aircrafts which originated here in the Philippines that can Section 117. Regulated Importation and Exportation.
be pursued by a Philippin officers and the transport may — Goods which are subject to regulation shall be
be seized in the high seas. imported or exported only after securing the necessary
goods declaration or export declaration clearances
licenses and any other requirements prior to
THE DETAILS IN IMPORTATION importation or exportation. In case of importation
submission of requirements after arrival of the goods
Alam na natin where does it begin where it will end. So but prior to release from customs custody shall be
how does it go? What if someone will import something? allowed but only in cases provided for by governing
Upon arrival at the port, the first thing that will be done is laws or regulations.
31
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
There is a listing of those which are prohibited. When we In letter F, bakit marami tayong products na fake, mga
say prohibited, these are totally disallowed by the Chinese products jan sa DCLA? (CrocZ with letter ‘Z’)
Government to be imported or exported.
RESTRICTED IMPORTATION AND EXPORTATION
Section 118. Prohibited Importation and Exportation.
— The importation and exportation of the following Sec. 119. Restricted Importation and Exportation. –
goods are prohibited: Except when authorized by law or regulation, the
importation and exportation of the following restricted
(a) Written or printed goods in any form containing any goods are prohibited:
matter advocating or inciting treason, rebellion,
insurrection, sedition against the government of the (a) Dynamite, gunpowder, ammunitions and other
Philippines, or forcible resistance to any law of the explosives, firearms and weapons of war, or parts
Philippines, or written or printed goods containing any thereof;
threat to take the life of, or inflict bodily harm upon any
person in the Philippines; (b) Roulette wheels, gambling outfits, loaded dice,
(b) Goods, instruments, drugs and substances designed, marked cards, machines, apparatus or mechanical
intended or adapted for producing unlawful abortion, devices used in gambling or the distribution of money,
or any printed matter which advertises, describes or cigars, cigarettes or other goods when such distribution
gives direct or indirect information where, how or by is dependent on chance, including jackpot and pinball
whom unlawful abortion is committed; machines or similar contrivances, or parts thereof;
(c) Written or printed goods, negatives or (c) Lottery and sweepstakes tickets, except
cinematographic films, photographs, engravings, advertisements thereof and lists of drawings therein;
lithographs, objects, paintings, drawings or other
representation of an obscene or immoral character; (d) Marijuana, opium, poppies, coca leaves, heroin or
other narcotics or synthetic drugs which are or may
(d) Any goods manufactured in whole or in part of gold, hereafter be declared habit forming by the President of
silver or other precious metals or alloys and the stamp, the Philippines, or any compound, manufactured salt,
brand or mark does not Indicate the actual fineness of derivative, or preparation thereof, except when
quality of the metals or alloys; imported by the government of the Philippines or any
person duly authorized by the Dangerous Drugs Board,
(e) Any adulterated or misbranded food or goods for for medicinal purposes;
human consumption or any adulterated or misbranded (e) Opium pipes or parts thereof, of whatever material;
drug in violation of relevant laws and regulations; and
(f) Infringing goods as defined under the Intellectual (f) Any other goods whose importation and exportation
Property Code and related laws; and are restricted.
(g) All other goods or parts thereof which importation The restriction to import or export the above stated
and exportation are explicitly prohibited by law or rules goods shall include the restriction on their transit.
and regulations issued by the competent authority.
At first glance, it may be considered as prohibited. But this
is more of regulated entry. So except when authorized by
32
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
law or regulation, the importation and exportation of the responsible for the payment of duties, taxes and other
following restricted goods are prohibited. charges due on the imported goods.
So you have to know what is the difference between a The declarant shall sign the goods declaration, even
regulated importation, prohibited importation, and when assisted by a licensed customs broker, who shall
restricted importation likewise sign the goods declaration.
(c) A customs broker acting under the SECTION 402. Goods Declaration for Consumption.— All
authority of the importer or from a holder of goods declaration for consumption shall be cleared
the bill; or through a formal entry process except for the following
goods which shall be cleared through an informal entry
(d) A person duly empowered to act as agent process;
or attorney-in-fact for each holder. (a) Goods of a commercial nature with Free on Board
(FOB) or Free Carrier At (FCA) value of less than fifty
In case the consignee or the person who has the right thousand pesos (₱50,000.00). Every three (3) years after
to dispose of the goods is a juridical person, it may the effectivity of this Act, the Secretary of Finance shall
authorize a responsible officer of the company to sign adjust this amount as provided herein to its present value,
the goods declaration as declarant on its behalf. The using the Consumer Price Index (CPI) as published by the
goods declaration submitted to the Bureau shall be PSA; and
processed by the declarant or by a licensed customs
broker; Provided, That for importations, a transition (b) Personal and household effects or goods, not in
period of two (2) years from the effectivity of this Act is commercial quantity, imported in a passenger’s baggage
hereby provided during which subparagraph (d) of this or mail.
section shall not be implemented by the Bureau:
Provided, Further, That after two (2) years from the The Commissioner may adjust the value of goods of
effectivity of this Act, subparagraph (d) of this section commercial nature that shall be cleared through an
shall take into effect consistent with international informal entry process without prejudice to the periodic
standards and customs best practices. adjustment period in subparagraph (a) of this section.
33
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Sometimes “pag dating sa Pilipinas” the consignee are not declaration shall conform with international standards.
sure what the contents are inside the crate or containers. The data required in the goods declaration shall be limited
to such particulars that are deemed necessary for the
SECTION 403. Provisional Goods Declaration.— Where the assessment and collection of duties and taxes, the
declarant does not have all the information or supporting compilation of statistics and compliance with this Act. The
documents required to complete the goods declaration, Bureau shall require the electronic lodgement of the goods
the lodging of a provisional goods declaration may be declaration.
allowed: Provided, That it substantially contains the The Bureau shall only require supporting documents
necessary information required by the Bureau and the necessary for customs control to ensure that all
declarant undertakes to complete the information or requirements of the law have been complied with.
submit the supporting documents within forty-five (45) Translation of supporting documents shall not be required
days from the filing of the provisional goods declaration, except when necessary.
which period may be extended by the Bureau for another Goods declaration must be lodged within fifteen (15)
forty-five (45) days for valid reasons. days from the date of discharge of the last package from
If the Bureau accepts a provisional goods declaration, the vessel or aircraft. The period to file the goods
the duty treatment of the goods shall not be different declaration may, upon request, be extended on valid
from that of goods with complete declaration. grounds for another fifteen (15) days: Provided, That the
Goods under a provisional goods declaration may be request is made before the expiration of the original
released upon posting of any required security equivalent period within which to file the goods
to the amount ascertained to be the applicable duties and declaration: Provided, However, That the period of the
taxes. lodgement of the goods declaration may be adjusted by
the Commissioner.
Q: Who are deemed owner of imported goods?
Also Remember Sections 411 and 412:
SECTION 404. Owner of Imported Goods.— All goods
imported into the Philippines shall be deemed to be the SECTION 411. Contents of Goods Declaration.— Goods
property of the consignee or the holder of the bill of declaration shall contain the names of the consignee,
lading, airway bill or other equivalent transport document importing vessel or aircraft, port of departure, port of
if duly endorsed by the consignee therein, or, if consigned destination and date of arrival, the number and marks of
to order, duly endorsed by the consignor. The packages, or the quantity, if in bulk, the nature and correct
underwriters of abandoned goods and the salvors of goods commodity description of the goods contained therein, its
saved from wreck at sea, coast, or in any area of the value as set forth in a proper invoice, and such other
Philippines, may be regarded as the consignees. information as may be required by rules and regulations.
Where the declarant does not have all the information
Q: What is the liability of the importer? required to make the goods declaration, a provisional or
incomplete goods declaration shall, for certain cases and
SECTION 405. Liability of Importer for Duties and Taxes. for reasons deemed valid by the Bureau, be allowed to be
— Unless relieved by laws or regulations, the liability for lodged: Provided, That it contains the particulars deemed
duties, taxes, fees, and other charges attached to necessary by the Bureau for the acceptance of the entry
importation constitutes a personal debt due and filed and that the declarant undertakes to complete it
demandable against the importer in favor of the within forty-five (45) days from the filing of the provisional
government and shall be discharged only upon payment of goods declaration in accordance with Section 403 of this
duties, taxes, fees and other charges. It also constitutes Act.
alien on the imported goods which may be enforced while
such goods are under customs' custody. SECTION 412. Statements to be Provided in the Goods
Declaration.— No entry of imported goods shall be
Q: How is it discharged? allowed unless the goods declaration has been lodged with
From the provision of 405 only upon the the Bureau. The goods declaration shall, under penalties of
payment of duties, taxes, fees and other charges. falsification or perjury, contain the following statements:
Q: When should the goods declaration be filed? (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
SECTION 407. Goods Declaration and Period of Filing.
payable, and that nothing has been omitted therefrom or
— As far as practicable, the format of the goods
34
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
concealed whereby the government of the Republic of the As a general rule, the Bureau may examine the goods in
Philippines might be defrauded of any part of the duties the presence of the declarant or an authorized
and taxes lawfully due on the goods; and representative. Examination of the goods in the absence of
the declarant or authorized representative may be allowed
(b) To the best of the declarant's information and belief, all in exceptional circumstance and for valid and justifiable
the invoices and bills of lading or airway bills relating to grounds, as may be defined by regulations promulgated by
the goods are the only ones in existence relating to the the Secretary of Finance, upon recommendation of the
importation in question, and that these documents are in Commissioner. The Bureau may require the declarant to
the same state as when they were received by the be present or to be represented at the examination o£ the
declarant, and the declaration thereon are in all respects goods or to render any assistance necessary to facilitate
genuine and true. the examination.
The Bureau shall take samples of the goods only when
Goods declaration shall be submitted electronically needed to establish the tariff description and value of
pursuant to Republic Act No. 8792, otherwise known as goods declared, or to ensure compliance with this Act.
the “Electronic Commerce Act of 2000”. Such declarations Samples drawn shall be as minimal as possible.
when printed and certified by a competent customs officer
as a faithful reproduction of the electronic submission By virtue of the amendment provided in the CMTA, Non
shall be considered as actionable documents for purposes evasive examination of goods are now provided like x-ray
of prosecuting a declarant if the declarations are found to machines, but this thus not prevent the BOC from
be fraudulent. physically examining the goods.
These provisions provides for the contents of goods, Transcriber’s Entry: Physical examination of the goods shall
declarations and the statements to be provided in the be conducted when:
goods for declaration.
(a) It is directed by the Commissioner on account
Then after unloading, after it had been entered and lodge of a derogatory information;
with Bureau of Customs, what will happen is the
examination of goods. It will not stop there – for the (b) The goods are subject to an Alert Order
examination of goods – priority for the examination of issued by competent authority;
goods is given to perishable goods like animals and other
goods requiring immediate examination. It is for the office (c) The goods are electronically selected for
of the Bureau of Customs to determine whether or not the physical examination;
declaration made is actually the same with the goods
imported. There has to be a comparison or examination (d) There are issues and controversies
need to be done because there will be different tariff rate surrounding the goods declaration and the
or customs fees for each and every item or goods. import clearance process; or
As a general rule the BOC may examine the goods in the (e) The importer or declarant requests for the
presence of the declarant or his authorized representative. examination of the goods.
But the examination of goods without the presence of the
declarant or his representative may be allowed in The Commissioner may exempt from physical examination
exceptional circumstances which are provided for in the goods of authorized economic operators or of those
Section 419 provided for under any existing trade facilitation program
of the Bureau.
SECTION 419. Examination of Goods.— Examination of
goods, when required by the Bureau, shall be conducted Physical examination, when required, shall be conducted
immediately after the goods declaration has been lodged. in an expeditious manner. (See Section 420, CMTA)
Priority in the examination shall be given to live animals,
perishable goods and other goods requiring immediate ASSESSMENT
examination.
Whenever necessary, a system of coordination and joint After the examination comes assessment. ASSESSMENT is
examination of goods shall be established by the Bureau the process of determining the amount of duties and taxes
and other regulatory agencies under existing laws and and other charges due on imported and exported goods
regulations. (SEC. 102(f), CTMA)
35
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Section 424. Duty of Customs Officer Tasked to Assess (4) Upon demand by the Commissioner after the
Imported Goods.— For purposes of assessing duties and completion of compliance audit in accordance
taxes on imported goods, the customs officer shall classify, with the provisions of this Act.
value, and determine the duties and taxes to be paid. The (See SEC 417)
customs officer shall prepare and submit an assessment
report as established under this Act. Q: When will an assessment become final?
Q: Can the importer dispute the assessment? SECTION 429. Final Assessment.— Assessment shall be
Yes. This is called Tentative Assessment; but this deemed final fifteen (15) days after receipt of the notice of
does not prevent the customs officer from proceeding assessment by the importer or consignee.
with the assessment.
Q: What is the prescriptive period of assessment?
Section 425. Tentative Assessment of Goods Subject to
Dispute Settlement.— Assessment shall be deemed SECTION 430. Period of Limitation.— In the absence of fraud
tentative if the duties and taxes initially assessed are and when the goods have been finally assessed and
disputed by the importer. The assessment shall be released, the assessment shall be conclusive upon all
completed upon final readjustment based on the tariff parties three (3) years from the date of final payment of
ruling in case of classification dispute, or the final duties and taxes, or upon completion of the post clearance
resolution of the protest case involving valuation, rules of audit.
origin, and other customs issues.
The District Collector may allow the release of the After the payment of the final assessment, the BOC is not
imported goods under tentative assessment upon the precluded from demanding further payment of duties and
posting of sufficient security to cover the applicable duties taxes; in fact the government requires the BOC to conduct
and taxes equivalent to the amount that is disputed. a POST CLEARANCE AUDIT (Title X, CTMA)
CLASSIFICATION DISPUTE means the importer challenged Q: What happens after the duties and taxes are paid?
the classification given by the customs officer given to the There will be a permit issued by the BOC and
goods being imported. then the goods will be ready for release.
Can the district collector modify or alter the appraisal, Section 431. Release of Goods after Payment of Duties and
classification or the return? Taxes.— Goods declared shall be released when duties
and taxes and other lawful charges have been paid or
General Rule: He can no longer alter or modify. secured and all the pertinent laws, rules and regulations
have been complied with.
Exceptions:
(1) Within one (1) year after payment of the Q: After the payment of duties and taxes, can the BOC
duties, upon statement of error in conformity still withhold the goods from being released?
with Section 912 of this Act, as approved by the
District Collector; General Rule: Once the duties and taxes are
paid, the BOC cannot do anything about it. This is
(2) Within fifteen (15) days after such payment, especially true if all the documents has been filed and
upon request for reappraisal or reclassification completed and the full amount of the duties and taxes has
addressed to the Commissioner by the District already been paid.
Collector, if the appraisal or classification is
deemed to be low; One exemption is under Section 435
Section 435. Withholding Release Pending Satisfaction of
(3) Upon request for reappraisal and/or Lien.— When the District Collector is duly notified through
reclassification, in the form of a timely protest a lawful order of a competent court of a lien for freight,
addressed to the District Collector by the lighterage or general average upon any imported goods,
the District Collector shall withhold the release of the
36
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
goods unless the claim has been paid or secured. In case of may immediately subject the goods to the corresponding
disagreement, the District Collector may release the goods duties, taxes and other applicable fines, penalties, and
after payment of the freight and lighterage due on the surcharges.
quantity or weight landed as actually determined.
If you notice in customs transit you will see that the goods
are just transferred from one office to another.
EXPORTATION Requirement for Customs Transit:
1. Transit Permit;
In exportation, what is needed is an EXPORT 2. Carrier’s Security
DECLARATION. All goods exported from the Philippines,
whether subject to export duties or not, shall be declared Section 602. Carrier's Security.— Carriers that transport
to export declaration. It may be signed electronically or imported goods that shall be placed under customs transit
otherwise by the person making the declaration. from a port of entry to other ports, shall post a general
transportation security amounting to at least fifty
CUSTOMS TRANSIT AND TRANSHIPMENT thousand pesos (₱50,000.00). Such security shall ensure
the complete and immediate delivery of goods to the
This is customs transit. In instances covered by customs customs officer at the port of destination and the payment
transit the goods are exempt from importation taxes of pertinent customs charges and expenses and other
mainly because there is no importation to begin with . transfer costs. The amount of the security may be adjusted
TRANSIT refers to the customs procedure under which by the Commissioner, upon approval of the Secretary of
goods, in its original form, are transported under customs Finance.
control from one customs office to another, or to a free
zone. (Sec.102(rr), CMTA)
CUSTOMS TRANSHIPMENT
Q: When does Custom Transit happen?
Section 603. Customs Transshipment.— Goods admitted
for transshipment shall not be subject to the payment of
Section 600. Customs Transit in the Customs Territory.—
duties and taxes: Provided, That the goods declaration for
Customs transit within the customs territory shall be
customs transshipment particularly indicates such nature
allowed for goods except those intended for consumption,
of the goods, duly supported by commercial or transport
to be transported as follows:
documents or evidence as required by the Bureau.
(a) From port of entry to another port of entry as exit point
Goods for transshipment must be exported from the
for outright exportation;
Philippines within thirty (30) days from arrival thereof. The
Commissioner may allow an extension of such period after
(b) From port of entry to another port of entry or inland
the establishment of valid reasons.
customs office;
(c) From inland customs office to a port of entry as exit TRANSHIPMENT refers to the customs procedure under
point for outright exportation; and which goods are transferred under customs control from
(d) From one port of entry or inland customs office to the importing means of transport to the exporting means
another port of entry or inland customs office. of transport within the area of one customs office, which is
the office of both importation and exportation. (SEC. 102
A transit permit is required for goods transported under (ss), CTMA)
customs transit. However, transfer of goods in customs
transit from one means of transport to another shall be In other words, the goods go to the Philippines, temporary
allowed; Provided, That any customs seal or fastening is under custom’s control for the purpose of immediately
not broken or tampered. exporting the goods. The office must be the office of both
importation and exportation, meaning when we say
The party responsible for the compliance of the obligations transhipment this involves only one customs office,
imposed on customs transit shall ensure that the goods compare it to customs transit “na dalawang opisina”.
are presented intact and in due course at the customs
office of destination. Failure to comply with the (Isidor)
aforementioned obligations or likewise failure to follow a IMPORT, DUTY AND TAX
prescribed itinerary or period for delivery of the goods
37
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Let’s go now to import duty and tax. (vii) Together they directly or indirectly control a third
person; or
Part of the assessment of duties and taxes is the valuation
of the goods imported or exported. (viii) They are members of the same family, including
those related by affinity or consanguinity up to the
There must have to be a basis for that valuation. fourth civil degree.
METHODS OF VALUATION
Persons who are associated in business with one
There are several methods of valuations. You have: another in that one is the sole agent, sole distributor or
sole concessionaire, however described, of the other
1. TRANSACTION VALUE SYSTEM (METHOD) shall be deemed to be related for the purposes of this
Act if they fall within any of the eight (8) cases cited in
Section 701. Transaction Value System—Method the preceding paragraph. In a sale between related
One.— The transaction value shall be the price actually persons, the transaction value shall be accepted as
paid or payable for the goods when sold for export to basis for customs valuation whenever the importer
the Philippines adjusted in accordance with the demonstrates that such value closely approximates one
provisions of tins section: Provided, That: of the following occurring at or about the same time:
(a) There are no restrictions as to the disposition or use (a) The transaction value in sales to unrelated buyers of
of the goods by the buyer other than restrictions which: identical or similar goods for export to the same
country of importation;
(i) Are imposed or required by law or by Philippine
authorities; (b) The customs value of identical or similar goods as
(ii) limit the geographical area in which the goods may determined under the
be resold; or provisions of Section 704 of this Act; or
(iii) Do not substantially affect the value of the goods:
(c) The customs value of identical or similar goods are
(b) The sale or price is not subject to some condition or determined under the provisions of Section 705 of this
consideration for which a value cannot be determined Act.
with respect to the goods being valued; and
In determining the transaction value, the following shall
(c) The buyer and the seller are not related, or where be added to the price actually paid or payable for the
the buyer and the seller are related, that the imported goods:
transaction value is acceptable for customs purposes
under the provisions hereof. (1) To the extent that they are incurred by the buyer
For purposes of this Act, persons shall be deemed but are not included in the price actually paid or
related only if: payable for the imported goods:
(i) They are officers or directors of one another's (a) Commissions and brokerage fees except buying
business; commissions;
(ii) They are legally recognized partners in business;
(b) Cost of containers;
(iii) There exists an employer-employee relationship
between them; (c) Cost of packing, whether for labor or materials;
(iv) Any person directly or indirectly owns, controls or (d) Value, apportioned as appropriate, of the
holds five percent (5%) or more of the outstanding following goods and services: materials,components,
voting stocks or shares of both seller and buyer; parts and similar items
incorporated in the imported goods; tools; dies; moulds
(v)One of them directly or indirectly controls the other; and similar items used in the production of imported
goods; materials consumed in the production of the
(vi) Both of them are directly or indirectly controlled by imported goods; and engineering, development,
a third person; artwork, design work and plans and sketches
undertaken elsewhere than in the Philippines and
38
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
necessary for the production of imported goods, where If, in applying this section, more than one transaction
such goods and services are supplied directly or value of identical goods are found, the lowest value shall
indirectly by the buyer free of charge or at a reduced be used to determine the customs value.
cost for use in connection with the production and sale
for export of the imported goods; and 3. TRANSACTION VALUE OF SIMILAR GOODS (METHOD 3)
(d) Amount of royalties and license fees related to the Section 703. Transaction Value of Similar Goods—
goods being valued that the buyer must pay either Method Three.— Where the dutiable value cannot be
directly or indirectly, as a condition of sale of the goods determined under the preceding method, the dutiable
to the buyer. value shall be the transaction value of similar goods
sold for export to the Philippines and exported at or
(2) Value of any part of the proceeds of any subsequent about the same time as the goods being valued.
resale, disposal or use of the imported goods that ”SIMILAR GOODS”
accrues directly or indirectly to the seller;
For purposes of this section, “Similar goods” refer to
(3) Cost of transport of the imported goods from the goods which, although not alike in all respects, have like
port of exportation to the port of entry in the characteristics and similar component materials which
Philippines; enable them to perform the same functions and to be
commercially interchangeable.
(4) Loading, unloading and handling charges associated
with the transport of the imported goods from the The quality of the goods, its reputation and the
country of exportation to the port of entry in the existence of a trademark shall be among the factors to
Philippines; and be considered in determining whether goods are
similar.
(5) Cost of insurance.
If, in applying this section, more than one transaction
All additions to the price actually paid or payable shall value of identical goods are found, the lowest such
be made only on the basis of objective and quantifiable value shall be used to determine the customs value.
data.
4. THE DEDUCTIVE VALUE (METHOD 4)
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 Section 704. Deductive Value—Method Four.—
the CMTA. Where the dutiable value cannot be determined under
the preceding method, the dutiable value shall be the
2. TRANSACTION VALUE OF IDENTICAL GOODS (METHOD deductive value unless otherwise requested by the
2) importer as provided in Section 700 hereof. The
deductive value which shall be based on the unit price
Section 702. Transaction Value of Identical Goods— at which the imported goods or identical or similar
Method Two.— Where the dutiable value cannot be imported goods are sold in the Philippines, in the same
determined under method one, the dutiable value shall condition as when imported, in the greatest aggregate
be the transaction value of identical goods sold for quantity, at or about the time of the importation of the
export to the Philippines and exported at or about the goods being valued, to persons not related to the
same time as the goods being valued. persons from whom they buy such goods, subject to
deductions for the following:
“IDENTICAL GOODS”
(1) Either the commissions usually paid or agreed to be
For purposes of this section, “Identical goods” refer to paid or the additions usually made for profit and
goods which are the same in all respects, including general expenses in connection with sales in such
physical characteristics, quality and reputation. Minor country of imported goods of the same class or kind;
differences in appearances shall not preclude goods
otherwise conforming to the definition from being (2) The usual costs of transport and insurance and
regarded as identical. associated costs incurred within the Philippines;
39
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
40
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 So this means that the government will just buy the
available then you go to the method 2 and so on and so property from an importer.
forth. “PAYMENT”
SPECIAL DUTIES AND TRADE REMEDY MEASURES “Payment for which shall be made within ten (10)
working days from issuance of a warrant signed by the
Then, you have the special duties and trade remedy Commissioner for the acquisition of such goods”.
measures. Usually ito yung lumalabas sa bar exam.
“DISSATISFIED IMPORTER: REMEDY”
But first let us talk about the GOVERNMENT’S RIGHT TO
COMPULSORY ACQUISITION. “An importer who is dissatisfied with a decision of
Section 709. Government's Right of Compulsory the Commissioner pertaining to this section may, within
Acquisition.— In order to protect government twenty (20) working days after the date on which notice of
revenues against undervaluation of goods, the the decision is given, appeal to the Secretary of Finance,
Commissioner may, motuproprio or upon the and thereafter if still dissatisfied, to the CTA as provided
recommendation of the District Collector, acquire for in Section 1136 of this Act.”
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 So, in sum, the government can compulsory acquire
within ten (10) working days from issuance of a warrant by paying the price of the goods including the tax that has
signed by the Commissioner for the acquisition of such already been paid.
goods.
If the importer is not satisfied, he may challenge the
An importer who is dissatisfied with a decision of the acquisition within 20 days by filing an APPEAL TO THE
Commissioner pertaining to this section may, within SECREATRY OF FINANCE if he is still not satisfied with the
twenty (20) working days after the date on which decision, then FILE A CASE TO THE CTA IN DIVISION.
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. SPECIAL TARIFFS
Where no appeal is made by the importer, or upon
reaffirmation of the Commissioner's decision during the What are these special tariffs?
appeals process, the Bureau or its agents shall sell the
acquired goods pursuant to existing laws and 1. MARKING DUTY
regulations.
Nothing in this section limits or affects any other 2. ANTI-DUMPING DUTY
powers of the Bureau with respect to the disposition of
the goods or any liability of the importer or any other 3. SAFEGUARD DUTY
person with respect to an offense committed in the
importation of the goods. 4. COUNTERVAILING DUTY
This is done by the government, it may issue a warrant for We call these as special tariffs because each of which has a
the acquisition of the goods. specific purpose. Usually, the purpose of these special
tariffs are some sort of a deterrent of any negative impact
WARRANT to the Philippine economy. These serve as protection to
The warrant shall be sent by the COC. Philippine products.
When will the government be the importer? Section 710. Marking of Imported Goods and
Containers.—
41
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
(v) Such goods are crude substances; “Except as hereinafter provided, all goods of foreign origin
imported into the Philippines or their containers, as
(vi) Such goods are imported for use by the importer provided in subsection (B) hereof shall be conspicuously
and not intended for marked in any official language of the Philippines as
sale in their imported or any other form; legibly, indelibly and permanently as the nature of the
(vii) Such goods are to be processed in the Philippines goods or container will permit and in such manner as to
by the importer or indicate to an ultimate purchaser in the Philippines the
for the importer's account other than for the purpose name of the country of origin of the goods.”
42
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
FOR BOTH GOODS AND CONTAINERS: - This is an additional payment. The importer
shall be subjected to a fine for failure to mark.
There must have to be a marking. This is 5% of the dutiable value of the goods
which shall be deemed to have accrued at the
Official Language of the Philippines: Filipino time of importation.
1. Goods which are incapable of being marked; - The BOC shall withhold the release of those
goods until the goods are properly marked.
2. Goods which cannot be marked prior to the shipment to
the Philippines without injury; 3. Failure or Refusal after having been ordered by the
BOC to mark.
3. Such, goods cannot be marked prior to shipment to the
Philippines, except at an expense economically prohibitive -The failure or refusal of the owner or
of their importation; importer to mark the goods as herein required
within a period of thirty (30) days after due
- So, meaning mahal ang marking niya. notice shall constitute as an act of abandonment
of said goods and their disposition shall be taken
4. The marking of a container of such goods will by the BOC.
reasonably indicate the origin of such goods;
6. Such goods are imported for use by the importer and Section 711. Dumping Duty.— The provisions of
not intended for sale in their imported or any other form; Republic Act No. 8752, otherwise known as the “Anti-
Dumping Act of 1999”, are hereby adopted.
7. Such goods are to be processed in the Philippines by Then, you have the Anti-Dumping Duty.
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 What is Anti-Dumping duty?
permanently concealed;
It is a special duty imposed on the importation of a
8. An ultimate purchaser, by reason of the character of product, commodity or article of commerce in the
such goods or by reason of the circumstances of their Philippines:
importation, must necessarily know the country of origin
of such goods even though they are not marked to 1. At less than its normal value when destined for
indicate their origin; domestic consumption in the exporting country;
9. Such goods were produced more than twenty (20) 2. Which importation is causing or is threatening to
years prior to their importation into the Philippines; or cause material injury to a domestic industry, or
materially retarding the establishment of a domestic
10. Such goods cannot be marked after importation industry producing like product.
except at an expense which is economically prohibitive,
and the failure to mark the goods before importation was In simpler terms, anti-dumping duty is imposed on
not due to any purpose of the importer, producer, seller UNDERPRICED ARTICLES. The article we are speaking here
or shipper to avoid compliance with this section. are imported, very cheap, such as it will affect the local
industries here in the Philippines there will be an anti-
EFFECTS OF FAILURE TO MARK dumping duty.
What are the effects of failure to mark? HOW MUCH WILL BE THE ANTI-DUMPING DUTY?
43
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 1. He can be an IMPORTER;
normal value of that article. 2. He can even be the Secretary of Trade and
Industry or the Secretary of Agriculture as the case
WHO IMPOSES THE ANTI-DUMPING DUTY? may be;
REMEDY
D. ECOUNTERVAILING DUTY
What is the remedy then of the aggrieved party?
Section 713. Countervailing Duty.— The provisions of
Any INTERESTED PARTY may file with the CTA a PETITION Republic Act No. 8751, otherwise known as “An Act
FOR REVIEW within 30 DAYS FROM RECEIPT OF THE Strengthening the Mechanisms for the Imposition of
NOTICE OF THE FINAL RULING. Countervailing Duties on Imported Subsidized Products,
Commodities or Articles of Commerce in Order to
*CTA IN DIVISION Protect Domestic Industries from Unfair Trade
Competition, Amending for the Purpose Section 302,
INTERESTED PARTY Part 2, Title II, Book I of Presidential Decree No. 1464”,
otherwise known as the “Tariff and Customs Code of the
The INTERESTED PARTY here may be: Philippines, as Amended”, are hereby adopted.
44
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
REMEDY OF THE AGGRIEVED PARTY (c) Any proclamation issued by the President under this
section shall, if the President deems it consistent with
- May file with the CTA a PETITION FOR REVIEW within 30 the interest of the Philippines, extend to the whole of
DAYS FROM RECEIPT OF THE NOTICE OF THE FINAL any foreign country or may be confined to any
RULING. subdivision or subdivisions thereof; Provided, That the
President may, whenever the public interest requires,
*CTA IN DIVISION suspend, revoke, supplement or amend any such
45
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
(f) The Secretary of Finance shall make such rules and This question usually comes out in the BAR, and tinatong
regulations as are necessary for the execution of a din ni Dean.
proclamation that the President may issue in accordance What kind of special duties? What are its effects?
with the provisions of this section. Requirements?
Usually the president may impose these kinds of duties.
- In essence, it is imposed on articles wholly or in part the
growth or product of, or imported in a vessel of, any The next is a bit important because it refers to the tax
foreign country which discriminates or places undue exemption and/or importation/exportation —
advantage on Philippine products exported to such foreign importation/exportation conditionally free from tax and
country. duties whether for importation or exportation. Dito
pumapasok yung balikbayan or personal household
effects.
IMPOSING AUTHORITY You have to familiarise with these as I have seen 2 BAR
questions on this already, which asked pertaining to
Q: Who imposes this duty? Sec.800, CMTA
46
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
shall be promulgated by the Commissioner with the bestowed as trophies or prizes, or those received or
approval of the Secretary of Finance: accepted as honorary distinction
Provided, That goods sold, bartered, hired or used for
purposes other than what they were intended for and (f) Personal and household effects belonging to
without prior payment of the duty, tax or other charges returning residents including household appliances,
which would have been due and payable at the time of jewelry, precious stones, and other goods of luxury
entry if the goods had been entered without the which were formally declared and listed before
benefit of this section, shall be subject to forfeiture and departure and identified under oath before the District
the importation shall constitute a fraudulent practice Collector when exported from the Philippines by such
against customs laws: returning residents upon their departure therefrom or
Provided, however, That a sale pursuant to a judicial during their stay abroad; personal and household
order or in liquidation of the estate of a deceased effects including wearing apparel, goods of personal
person shall not be subject to the preceding proviso, adornment, toilet goods, instruments related to one's
without prejudice to the payment of duties, taxes and profession and analogous personal or household
other charges: Provided, further, That the President effects, excluding luxury items, vehicles, watercrafts,
may, upon the recommendation of the Secretary of aircrafts and animals purchased in foreign countries by
Finance, suspend, disallow or completely withdraw, in residents of the Philippines which were necessary,
whole or in part, any conditionally free importation appropriate, and normally used for their comfort and
under this section: convenience during their stay abroad, accompanying
(a) Aquatic products such as fishes, crustaceans, them on their return, or arriving within a reasonable
mollusks, marine animals, seaweeds, fish oil, roe, time which, barring unforeseen and fortuitous events,
caught or gathered by fishing vessels of Philippine in no case shall exceed sixty (60) days after the owner's
registry: Provided, That they are imported in such return.
vessels or in crafts attached thereto: Provided,
however, That they have not been landed in any foreign For purposes of this section, the phrase "returning
territory or, if so landed, that they have been landed residents" shall refer to nationals who have stayed in a
solely for transshipment without having been advanced foreign country for a period of at least sis (6) months.
in condition; Returning residents shall have tax and duty exemption
on personal and household effects: Provided, That:
(b) Equipment for use in the salvage of vessels or
aircrafts, not available locally, upon identification and (1) It shall not be in commercial quantities;
the giving of a security in an amount equal to one
hundred percent (100%) of the ascertained duties, (2) It is not intended for barter, sale or for hire; and
taxes and other charges thereon, conditioned for the
exportation thereof or payment of corresponding (3) Limited to the FCA or FOB value of:
duties, taxes and other charges within six (6) months
from the date of acceptance of the goods (i) Three hundred fifty thousand pesos (P350,000.00)
declaration: Provided, That the Bureau may extend the for those who have stayed in a foreign country for at
time for exportation or payment of duties, taxes and least ten (10) years and have not availed of this
other charges for a term not exceeding sis (6) months privilege within ten (10) years prior to returning
from the expiration of the original period; resident's arrival;
47
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
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
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
In this letter F, if you read the entire provisions, On both instances, the goods should accompany
this refers to Returning Residents. the returning resident arriving in 60days, except
when the arrival was due to unforeseen and
Q: Who are RETURNING RESIDENTS? fortuitous events.
These are nationals who have stayed in a foreign
country for a period of at least 6 months. Ano ba example nito? Like sabihin nating due to
port congestion or may storm?
Basically, there are two types of items here.
a. Let’s talk about “luxury items”, for this to be Q: What are the other conditions for free
exempted, these must be formally declared and importations by the returning residents?
listed before departure and identified by the Other conditions:
district collector. 1) It shall not be in commercial quantities;
2) not intended for sale, barter or hire;
Now, what is peculiar here is the requirement 3) limited to the FCA or FOB value depending on
that “declared and identified this items before”… the length of time the returning resident has
49
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
OFWs can bring home appliance; "one of each kind”, the note: FCA value = FOB (freight on board)
amount of which does not exceed 150K, and do it once a (FCA is now the applicable term)
year. the OFW may avail this = THREE TIMES for every
calendar year
One-of-every-kind: for example, TV, i-uwi niya ang isang
TV, that would be exempt from taxes and duties. Let’s discuss BALIKBAYAN BOXES.
For Home appliances and other durables, the goods = Q: Who may avail of this exemption?
50
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
51
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 1. Classification ruling (Sec. 1100)
in writing and filed with the Bureau within twelve (12) 2. Valuation ruling (Sec. 1101)
months from the date of payment of duties and taxes. 3. Rules of origin (Sec. 1102)
Q: Where should it be filed? An application for an advance ruling shall cover only one
A: Before the Bureau of Customs. (1) product or item. It shall be filed at least 90 days before
importation or exportation of the item, as the case may be
Q: When should it be made? (Sec. 1103, CMTA).
A: within 12 months from the date of payment of duties
and taxes. Classification Ruling
In classification ruling, with respect to any dispute as to
Q: What if the BOC denies the claim for refund or the classification of the items or goods from then
abatement? Philippines.
A: The law says:
Sec. 913. xxx xxx xxx Section 1100. Classification Ruling.— An importer or
exporter may file a written application for an advance
(3rd paragraph) The importer may file an appeal of a ruling on the tariff classification of goods with the Tariff
denial of a claim for refund or abatement, whether it is Commission. The Commission shall render a ruling
a full or partial denial, with the Commissioner within within thirty (30) days from receipt of a properly
thirty (30) days from the date of the receipt of the documented application.
denial. The Commissioner shall render a decision within
thirty (30) days from the receipt of all the necessary When a declared tariff classification of goods, not
documents supporting the application. Within thirty subject of a pending application for advance ruling, is in
(30) days from receipt of the decision of the dispute, the importer, exporter, or the Bureau shall
Commissioner, the case may also be appealed to the submit the matter to the Commission for a ruling,
CTA. without prejudice to the application of Section 1106 of
this Act on “protest”: Provided, That such rulings of the
First: There must be an application for refund filed with Commission on commodity classification shall be
the BOC if based on the provision. But actually, in practice binding upon the Bureau, unless the Secretary of
it is with the Revenue District Collector. Finance shall rule oterwise.
Take note that classification rulings are filed before the
Second: After that, if there is whole or partial denial of the Tariff Commission.
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 Valuation Ruling
decision from the receipt of all necessary documents
supporting the application. Section 1101. Valuation Ruling.— An importer or
exporter may file a written application for an advance
Fourth: If the decision of the Commissioner is still adverse, valuation ruling on the proper application of a specific
the case may be appealed to the CTA via Petition for method on customs valuation of specific goods as
Review within 30 days from the receipt of the decision. prescribed in Title VII, Chapter 1 of this Act.
52
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 with valuation, rules of origin, and other customs issues
application for advance valuation ruling or the declared is made, except the fixing of fines in seizure cases, the
customs value is in dispute, the matter shall be resolved party adversely affected may appeal by way of protest
in accordance with Section 1106 of this Act on against such ruling or decision by presenting to the
“protest”. Commissioner at the time when payment of the
amount claimed to be due the government is made, or
The application for a valuation ruling shall be filed with the within fifteen (15) days thereafter, a written protest
BOC and it is focused on the amount or how much will be setting forth the objection to the ruling or decision in
collected. question and the reasons therefore.
Rules of Origin
Subject to the approval of the Secretary of Finance, the
There is a dispute in where the product will come from Commissioner shall provide such rules and regulations
because each country imposes a different rate. as to the requirement for payment or nonpayment of
the disputed amount and in case of nonpayment, the
Section 1102. Ruling on the Rules of Origin.— An release of the importation under protest upon posting
importer or exporter may file a written application for a of sufficient security.
ruling on whether the goods qualify as originating
under the rules of origin of the applicable preferential Q: When can the taxpayer protest?
trade agreement. The application for an advance ruling A: The taxpayer may protest a ruling or decision of the
on origin shall be filed with the Commissioner who shall district collector or customs officer involving goods for:
act on the application within thirty (30) days from 1. Valuation,
receipt of the application and supporting documents as 2. Rules of origin, and
may be required by rules and regulations. 3. Other customs issues
When the declared origin of the goods, not subject of a Protest is not available in fixing of fines in seizure cases. It
request for advance ruling on origin, is in dispute, the involves a different process.
matter shall be resolved in accordance with Section Note: There is an issuance by the Bureau of Customs
1106 of this Act on “protest”. available online. (Sir did not give the citation or number
but a copy of such is posted in our class page.)
Appeals by Aggrieved Party of Advanced Ruling
Q: Where do we file our protest?
For example: If the consignee is not sure yet of the A: District Collector. If the district collector will adopt the
contents of the container, you may ask for an advanced findings of the customs officer, he shall notify the taxpayer
ruling. in writing and the reasons thereof with the fees to be paid.
Section 1104. Administrative and Judicial Appeals.— An For the aggrieved taxpayer, he may file an appeal/protest
aggrieved party may, within thirty (30) days from with the Commissioner.
receipt of an adverse ruling or decision, appeal the
same to the CTA without prejudice to the authority of Q: When should the protest be filed?
the Secretary of Finance to review decisions adverse to A: The protest shall be filed with the Commissioner
the government in accordance with Sections 1127 and (District Collector) at the time when payment of the
1128 of this Act, as the case may be. amount claimed to be due to the government is made, or
within 15 days thereafter.
The advance ruling on the rules of origin shall be filed at From the provision, it is required that:
the BOC. 1. There is a payment of duties and taxes under
PROTEST protest (same with RPT Protest);
2. The protest must be filed at the time of payment
Section 1106. Protest.— When, a ruling or decision of or within 15 days after payment.
the District Collector or customs officer involving goods
53
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 Section 1127. Automatic Review in Forfeiture Cases.—
ruling or decision in questions and there reasons therefor. The Commissioner shall automatically review any
Now, when the Commissioner receives the appeal/ protest decision by the District Collector adverse to the
on the dispute, he must resolve it within 15 days from government. The entire records of the case shall be
receipt thereof. elevated within five (5) days from the promulgation of
With respect to other issues than valuation such as rules of the decision.
origin or other customs issues, it is pretty much the same,
just read the issuance available online. The Commissioner shall decide on the automatic review
within thirty (30) days, or within ten (10) days in the
Sabi natin kanina, if there is an adverse decision of the case of perishable goods, from receipt of the records.
District Collector, you may file a protest with the COC
within 15 days and payment of protest is required. ALERT ORDERS
How long? Within 15 days from the receipt of the adverse
decision or within 15 days of such payment. So there is a Q: What are alert orders?
15 day window. The Commissioner will then ask the A: Section 1111:
parties to submit position papers and other evidence. Section 1111. Alert Orders.— Alert orders are written
After, the Commissioner shall resolve the protest within 15 orders issued by customs officers as authorized by the
days from the receipt of the position papers and other Commissioner on the basis of derogatory information
evidence. regarding possible noncompliance with this Act.
If the Commissioner will uphold the decision of the District (b) General allegations of misclassification without
Collector which is adverse to the government, such providing the appropriate tariff heading and duty of the
decision shall be automatically elevated to the Secretary of shipment to be alerted;
Finance within 5 calendar days. (c) General allegations of over-quantity without
After that, the Secretary of Finance’s decision will be final indicating the source of information supporting the
and executory. allegation;
The Commissioner will decide on the automatic review (d) General allegations of misdeclaration in the entry
within 30 days from the receipt of the records or within 10 without indicating the suspected actual contents
days in case of perishable goods. thereof; and
54
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 Q: What are the properties subject to seizure and
without indicating the specific law or rule to be forfeiture?
violated. A: Sec. 1113:
Section 1113. Property Subject to Seizure and
No alert order shall be issued on account of allegations Forfeiture.— Property that shall be subject to seizure
of undervaluation unless said undervaluation is caused and forfeiture include:
by the submission to customs of forged or spurious
invoice or other commercial documents. (a) Any vehicle, vessel or aircraft, including cargo, which
From 2016 TSN: shall be used unlawfully in the importation or
Q: When is an alert order issued? exportation of goods or in conveying or transporting
A: The law says: smuggled goods in commercial quantities into or from
An alert order may be issued only after lodgement of any Philippine port or place. The mere carrying or
the goods declaration and prior to the release of holding on board of smuggled goods in commercial
goods from customs custody. Under no circumstances quantities shall subject such vehicle, vessel, aircraft, or
shall the suspension of the processing of goods any other craft to forfeiture: Provided, That the vehicle,
declaration be allowed except through an alert order vessel, aircraft or any other craft is not used as a
issued by an authorized customs officer. common carrier which has been chartered or leased for
purposes of conveying or transporting persons or
It’s after lodgement of the goods declaration and prior to cargo;
the release of such goods. An alert order may suspend the
processing the goods declaration so long as the alert order (Singanon)
is issued by an authorized customs officer. 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.
The costs of the physical inspection shall be borne by
the Bureau: Provided, That such cost shall be Then you have:
reimbursed by the owner prior to the release of the (b) Any vessel engaging in the coastwise trade which
goods if the physical inspection results in the shall have on board goods of foreign growth, produce,
assessment of additional duties or taxes or the issuance or manufacture in excess of the amount necessary for
of a warrant of seizure. sea stores, without such goods having been properly
entered or legally imported;
The Commissioner shall be notified of the
This means that the provisions for the complement that is
recommendation by the alerting officer within twenty- really in excess of what is necessary for the complement.
four (24) hours from the issuance of the alert order.
Alert orders shall be dated and assigned a unique (c) Any vessel or aircraft into which shall be transferred
reference number in series which shall be the basis for cargo unloaded contrary to law prior to the arrival of
reporting to and monitoring by the Commissioner and the importing vessel or aircraft at the port of
the Secretary of Finance. destination;
55
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 the importation of such, goods;
under customs supervision;
(f) Goods, the importation or exportation of which are (4) On the strength of a false invoice or other document
effected or attempted contrary to law, or any goods of executed by the owner, importer, exporter, or
prohibited importation or exportation, and all other consignee concerning the importation or exportation of
goods which, in the opinion of the District Collector, such goods; or
have been used, are or were entered to be used as
instruments in the importation or the exportation of (5) Through any other practice or device contrary to law
the former; by means of which such goods entered through a
customs office to the prejudice of the government.
(g) Unmanifested goods found on any vessel or aircraft
if manifest therefor is required; And etc. This will also include unmanifested goods.
Everything that goes into the vessel or the aircraft must be
(h) Sea stores or aircraft stores adjudged by the District entered into a manifest.
Collector to be excessive, when the duties and taxes
assessed by the District Collector thereon are not paid And then you also have the misdeclared package.
or secured forthwith upon assessment of the same;
Sec. 1116. Seizure or Release of Goods. – The District
(i) Any package of imported goods which is found upon Collector shall issue an order of release or a warrant of
examination to contain goods not specified in the seizure within five (5) days, or two (2) days in case of
invoice or goods declaration including all other perishable goods, upon the recommendation of the
packages purportedly containing imported goods alerting officer or any other customs officer. The
similar to those declared in the invoice or goods District Collector shall immediately make a report of
declaration to be the contents of the misdeclared such seizure or release to the Commissioner.
package;
Q: Who has the authority to issue a warrant of seizure?
(j) Boxes, cases, trunks, envelopes, and other
containers of whatever character used as receptacle or Sec. 1117. Warrant of Seizure or Order of Release. –
as device to conceal goods which are subject to The District Collector shall have the authority to issue a
forfeiture under this Act or which are so designed as to warrant of seizure of the goods upon determination of
conceal the character of such goods; the existence of probable cause and in case of
nonexistence thereof, the issuance of order of release.
(k) Any conveyance actually used for the transport of In case the District Collector issued an order of release,
goods subject to forfeiture under this Act, with its the District Collector shall immediately transmit all the
equipage or trappings, and any vehicle similarly used, records to the Commissioner who shall automatically
together with its equipment and appurtenances. The review within forty-eight (48) hours, or within twenty-
mere conveyance of smuggled goods by such transport four (24) hours in case of perishable goods. When no
vehicle shall be sufficient cause for the outright seizure decision is made by the Commissioner within the
and confiscation of such transport vehicle but the prescribed period, the imported goods shall be deemed
forfeiture shall not be effected if it is established that released.
the owner of the means of conveyance used as The lifting of the alert order shall be issued by the
aforesaid, is engaged as common carrier and not District Collector only upon the affirmation of the
chartered or leased, or that the agent in charge thereof decision of the District Collector by the Commissioner,
at the time, has no knowledge of the unlawful act; and or after the lapse of the period of review by the
Commissioner, whichever is earlier.
(1) Goods sought to be imported or exported:
Take note of the requirement of the existence of probable
(1) Without going through a customs office, whether cause.
the act was consummated, frustrated, or attempted; Sec. 1119. Service of Warrant of Seizure. – The District
Collector shall cause the service of warrant of seizure to
(2) Found in the baggage of a person arriving from the owner or importer of the goods or the authorized
abroad and undeclared by such person; representative thereof. The owner or importer shall be
given an opportunity to be heard during the forfeiture
(3) Through a false declaration or affidavit executed by proceedings.
the owner, importer, exporter, or consignee concerning
56
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
57
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 within five (5) days from the date of discharge; or
provision.
(c) Having filed such goods declaration, the owner,
Sec. 1127. Automatic Review in Forfeiture Cases. – The importer, consignee or interested party after due
Commissioner shall automatically review any decision notice, fails to pay the assessed duties, taxes and other
by the District Collector adverse to the government. charges thereon, or, if the regulated goods failed to
The entire records of the case shall be elevated within comply with Section 117 of this Act, within fifteen (15)
five (5) days from the promulgation of the decision. The days from the date of final assessment: Provided, That
Commissioner shall decide on the automatic review if such regulated goods are subject of an alert order
within thirty (30) days, or within ten (10) days in the and the assessed duties, taxes and other charges
case of perishable goods, from receipt of the records. thereof are not paid within fifteen (15) days from
When no decision is rendered within the prescribed notification by the Bureau of the resolution of the alert
period or when a decision adverse to the government is order, the same shall also be deemed abandoned; or
rendered by the Commissioner involving goods with
FOB or FCA value of ten million pesos (P10,000,000.00) (d) Having paid the assessed duties, taxes and other
or more, the records of the decision of the charges, the owner, importer or consignee or
Commissioner, or of the District Collector under review, interested party after due notice, fails to claim the
as the case may be, shall be automatically elevated goods within thirty (30) days from payment. For this
within five (5) days for review by the Secretary of purpose, the arrastre or warehouse operator shall
Finance. The decision issued by the Secretary of report the unclaimed goods to the District Collector for
Finance, whether or not a decision was rendered by the disposition pursuant to the provisions of this Act; or
Commissioner within thirty (30) days, or within ten (10)
days in the case of perishable goods, from receipt of (e) When the owner or importer fails to claim goods in
the records, shall be final upon the Bureau. customs bonded warehouses within the prescribed
period.
ABANDONMENT
The due notice requirement under this section may be
Abandonment in customs practice is the renunciation of provided by the Bureau through electronic notice or
an importer of all his interest in the property or rights. personal service: Provided, That for non-regular
importers, notification shall be by registered mail or
There are two kinds of Abandonment: personal service. For this purpose, the accreditation of
importers, exporters, and other third parties shall
1. Express Abandonment (Sec. 1129 [a]) include provision for mandatory receipt of electronic
2. Implied Abandonment (Sec. 1129 [b-c]) notices.
These are all stated in Sec. 1129. Q: What is the treatment for the abandoned goods?
Sec. 1129. Abandonment, Kinds and Effects of. – Sec. 1130. Treatment and Disposition of Abandoned
Imported goods are deemed abandoned under any of Goods. – Expressly abandoned goods under paragraph
the following circumstances: (a) of Section 1129 of this Act shall ipso facto be
deemed the property of the government and shall be
(a) When the owner, importer, or consignee of the disposed of in accordance with the provisions of this
imported goods expressly signifies in writing to the Act.
District Collector the intention to abandon the same; or
If the Bureau has not disposed of the abandoned
(b) When the owner, importer, consignee, or interested goods, the owner or importer of goods impliedly
party after due notice, fails to file the goods declaration abandoned may, at any time within thirty (30) days
within the prescribed period in Section 407 of this Act: after the lapse of the prescribed period to file the
Provided, That the term goods declaration shall include declaration, reclaim the goods provided that all legal
provisional or incomplete goods declaration deemed requirements have been complied with and the
valid by the Bureau as provided in Section 403 of this corresponding duties, taxes and other charges, without
Act. For this purpose, it is the duty of the District prejudice to charges and fees due to the port or
Collector to post a list of all packages discharged and terminal operator, as well as expenses incurred have
their consignees, whether electronically or physically in been paid before the release of the goods from
the District Office, or send a notice to the consignee customs custody.
58
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
CIVIL REMEDIES FOR THE COLLECTION OF DUTIES AND The constructive distraint of personal property shall be
TAXES 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
Sec. 1132. Remedies for the Collection of Duties, distrained property on the state and condition at the
Taxes, Fines, Surcharges, Interests, and Other Charges. time of the government's seizure of the same, and not
– The civil remedies for the collection of import duties, to dispose of the same in any manner whatsoever,
taxes, fees, or charges resulting from the conduct of a without the express authority of the Commissioner.
post clearance audit shall be obtained by:
In case the importer or the person in possession and
(a) Distraint of goods, chattels, or effects, and other control of the property sought to be placed under
personal property of whatever character, including constructive distraint refuses or fails to sign the receipt
stocks and other securities, debts, credits, bank herein referred to, the customs officer effecting the
accounts, and interest in and rights to personal constructive distraint shall proceed to prepare a list of
property, and by levy upon real property and interest in such property and, in the presence of two (2)
rights to real property; and witnesses, leave a copy thereof in the premises where
(b) Civil or criminal action. the property distrained is located, after which the said
property shall be deemed to have been placed under
Either or both of these remedies may be pursued at the constructive distraint.
discretion of the Bureau: Provided, That the remedies
of distraint and levy shall not be allowed when the Sec. 1134. Summary Remedies. – (A) Distraint of
amount of duties and taxes involved is not more than Personal Property. – Upon failure of the person owing
ten thousand pesos (10,000.00). any delinquent duty, tax and other charges to pay at
the time required, the Commissioner shall seize and
The Bureau shall advance the amounts needed to distraint the goods, chattels or effects, and the personal
defray costs of collection by means of civil or criminal property, including stocks and other securities, debts,
action, including the preservation or transportation of credits, bank accounts, and interests in and rights to
personal property distrained and the advertisement personal property of such persons, in sufficient quantity
and sale thereof, as well as of real property and to satisfy the duty, tax or other charge and the
improvements thereon. expenses of the distraint and the cost of the
subsequent sale.
Still pretty much the same rules, you have distraint of
personal properties and levy of real property. You also The officer serving the warrant of distraint shall make
have criminal action. or cause to be made an account of the goods, chattels,
effects, or other personal property distrained, a copy of
There is still also no hierarchy of remedies, provided that which, signed by the said officer, shall be left either
the remedies of distraint and levy shall not be allowed with the owner or person from whose possession such
59
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
goods, chattels, or effects or other personal property upon the importer, or if the latter is not in the
were taken, or at the dwelling or other place of Philippines, upon the agent or the manager of the
business of such person and with someone of suitable business from which the liability arose, or if there be
age and discretion, to which list shall be added a none, to the occupant of the property in question.
statement of the sum demanded and note of the time
and place of sale. In case the warrant of levy on real property is not
issued before or simultaneously with the warrant of
Stocks and other securities shall be distrained by distraint on personal property, and the personal
serving a copy of the warrant of distraint upon the property of the importer is not sufficient to satisfy the
importer and upon the president, manager, treasurer, duty and tax due, the Commissioner or a duly
or other responsible officer of the corporation, authorized representative shall, within thirty (30) days
company or association, which issued the said stocks or after execution of the distraint, proceed with the levy
securities. on the real property of the importer.
Debts and credits shall be distrained by leaving with the Within ten (10) days after receipt of the warrant, a
person owing the debts or having in his/her possession report on any levy shall be submitted by the levying
or under his/her control such credits, or with his/her officer to the Commissioner: Provided, That the
agent, a copy of the warrant of distraint. The warrant of Commissioner may lift such warrants of levy issued,
distraint shall be sufficient authority to the person subject to the rules and regulations promulgated
owing the debts or having in his possession or under his pursuant to this Act.
control any credits belonging to the importer to pay to
the Commissioner the amount of such debts of credits.
JUDICIAL PROCEEDINGS
Bank accounts shall be garnished by serving a warrant
of garnishment upon the importer and upon the
president, manager, treasurer, or other responsible Sec. 1135. Supervision and Control over Criminal and
officer of the bank Upon the receipt of the warrant of Civil Proceedings. – Civil and criminal actions and
garnishment, the bank shall turn over to the proceedings instituted on behalf of the Government
Commissioner so much of the bank accounts as may be under the authority of this Act or other laws enforced
sufficient to satisfy the claim of the government. by the Bureau shall be brought in the name of the
government of the Philippines and shall be prosecuted
A report on the distraint shall, within ten (10) days from and handled by the Bureau with the assistance of the
receipt of the warrant, be submitted by the Department of Justice (DOJ): Provided, That the
Commissioner to the Secretary of Finance: Provided, determination of the existence of probable cause and
That the Commissioner shall have the power to lift such the subsequent filing of any criminal or civil case with
order of distraint subject to the rules and regulations the proper court against violators of this Act shall
promulgated pursuant to this Act. exclusively belong to the DOJ: Provided, however, That
no civil or criminal action for the recovery of duties or
(B) Levy on Real Property. – After the expiration of the the enforcement of any fine, penalty or forfeiture
period within which to pay the duty, tax and other under this Act shall be filed in court without the
charges as prescribed in this section, real property may approval of the Commissioner.
be levied upon, before, simultaneously, or after the
distraint of personal property belonging to the So if you remember back in the NIRC, when the officer will
importer. To this end, the Commissioner or the duly decide file a case for collection, they need the consent of
authorized representative shall prepare a duly the Commissioner of Internal Revenue. It is pretty much
authenticated certificate showing the name of the the same with the Bureau of Customs.
importer and the amounts of the duty and tax and
penalty due. The certificate shall operate with the force Sec. 1136. Review by the CTA. – Unless otherwise
of a legal execution throughout the Philippines. provided in this Act or by any other law, the party
aggrieved by the ruling or decisions of the
The levy shall be effected by writing upon the Commissioner may appeal to the CTA, in the manner
certificate a description of the property on which levy is and within the period prescribed by law and
made. At the same time, written notice of the levy shall regulations. Decisions of the Secretary of Finance when
be mailed to or served upon the register of deeds of required by this Act, may likewise be appealed to the
the province or city where the property is located and
60
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
CTA.
In all the tax remedies that we have discussed so far, after
Unless an appeal is made to the CTA in the manner and the administrative proceedings, the appeal would almost
within the period prescribed by law and regulations, always go with the CTA.
the ruling or decision of the Commissioner or the
Secretary of Finance shall be final and executory. As what we have discussed last time, if the issues involved
is just pure questions of law, you can go to ordinary courts,
Sec. 1137. Exclusive Jurisdiction of the Bureau. – especially when you talk about violation of due process.
Jurisdiction over imported goods and goods for Those issues which have nothing to do with the collection
exportation shall be exclusive to the Bureau, or the of taxes, not really intertwined thereto or to the authority
Secretary of Finance, when under review by the latter, of the tax agency to collect, normally you can go to
subject to the proceedings described in this title. ordinary courts.
Except for the CIA, no court may issue any order or But when it comes to tax cases, it’s just the CTA. So this is
decision until all the remedies for administrative appeal why we should know what is the jurisdiction of the CTA.
have been exhausted.
The CTA is created by RA 1125 in June 16, 1954. So far
So basically those are the things that you have to look into there have been two major amendments on the CTA
in the Tariff and Customs Code. A few pointers lang, what jurisdiction:
are the important things you have to remember when it
comes to the Tariff and Customs Code: 1. RA 9282, the act which expanded the jurisdiction
of the CTA and enlarging its membership and
1. Definitions of importation and exportation, elevating its rank to the level of collegiate courts.
when does importation begin and when does it Meaning, the CTA is in equal rank to the CA.
end, and differences between the regulated and 2. RA 9503, enlarging further the organizational
prohibited importation and exportation; structure of CTA.
2. Special duties, you should know the difference
and the requirements; What are the purposes or objectives of the creation of
3. The procedures for the remedies; the CTA?
4. Some of the definitions are also important, like
the Balikbayan Boxes that may be conditionally 1. To prevent the delay in the disposition of tax
transferred except duties, how to determine cases;
residence, the requirements, Customs 2. To have a body with specialized knowledge to
Administrative Order 01-2018. The rules are which ordinary judges of regular courts are not
quite clear and simple so you just have to read likely to possess.
that.
ORGANIZATION OF THE CTA
61
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
NO, there is no need for an assessment. Assessment is for 2. Inaction by the Commissioner of Internal Revenue in
the determination of whether the taxpayer paid the cases involving disputed assessments, refunds of internal
correct taxes, while in criminal cases it is the revenue taxes, fees or other charges, penalties in relations
determination of probable cause whether or not a crime thereto, or other matters arising under the National
has been committed. Internal Revenue Code or other laws administered by the
62
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
Bureau of Internal Revenue, where the National Internal If file before the MTC- the TP will appeal to the RTC and
Revenue Code provides a specific period of action, in from there, since that was already in the exercise of the
which case the inaction shall be deemed a denial; appellate jurisdiction, the appeal via petition for review
should be made before the CTA En Banc in 30 days from
There are two possible scenarios in this case: the receipt of the decision of the RTC.
1. Disputed assessments- the CIR has 180 days to decide; If filed before the RTC- the appeal will be filed before the
from there you have 2 options: CTA in Division within 30 days, then CTA En Banc, and then
A. Wait for the decision; or the SC.
B. appeal immediately after the lapse of the 180
day period from filing the MR or if it is a Motion 3. Refund of Local tax cases
for Reinvestigation from the date of submission You will have to pass either before the MTC or the RTC
of supporting documents--he has 60 days to depending on the jurisdictional amount. The same
submit supporting documents. procedures above shall be followed.
2. Refund cases- when the 2-year period is about to expire 4. Decisions of the Commissioner of Customs in cases
and the CIR has not acted on the application for refund, involving liability for customs duties, fees or other money
you do not wait for the decision of the CIR or else the charges, seizure, detention or release of property
claim for refund will prescribe. You must file the affected, fines, forfeitures or other penalties in relation
application of refund before the lapse of such period. thereto, or other matters arising under the Customs Law
or other laws administered by the Bureau of Customs;
Right now, its mandatory for the BIR to issue or render a
decision within the 90-day period, otherwise he or she will 5. Decisions of the Central Board of Assessment Appeals
be subject to sanctions under the NIRC. in the exercise of its appellate jurisdiction over cases
3. Decisions, orders or resolutions of the Regional Trial involving the assessment and taxation of real property
Courts in local tax cases originally decided or resolved by originally decided by the provincial or city board of
them in the exercise of their original or appellate assessment appeals;
jurisdiction
For real property taxation involving property assessments,
This refers to the local taxes. it may involve special levies, and it may involve protest of
RPT. Take note payment under protest is already required.
The decision of the RTC here may be either:
Then the taxpayer goes to LBAA and then CBAA (when it
a. In its original jurisdiction; or comes to RPT, jan lang talaga sya) or it may entail RPT
b. in its appellate jurisdiction refunds.
Q: What are the local tax cases mentioned here? The decisions of the CBAA in these cases are then
appealable to the CTA En banc.
1. Legality of the tax ordinance.
If you want to challenge the tax ordinance passed by the 6. Decisions of the Secretary of Finance on customs cases
local sanggunian, go to the Secretary of Justice. If the DOJ elevated to him automatically for review from decisions
will deny your petition or appeal, or in case of inaction of the Commissioner of Customs which are adverse to the
within the period to decide you should bring an action to Government under Section 2315 of the Tariff and
the RTC to challenge the legality of the ordinance. Customs Code
The adverse decision of the RTC is appealable to the CTA in 7. Decisions of the Secretary of Trade and Industry, in the
Division within a period of 30 days by filing an application case of nonagricultural product, commodity or article,
for review. and the Secretary of Agriculture in the case of agricultural
product, commodity or article, involving dumping and
2. Protest of local tax cases. countervailing duties under Section 301 and 302,
The TP will protest, after the protest the TP will appeal to respectively, of the Tariff and Customs Code, and
RTC or MTC depending on the amount of the taxes sought safeguard measures under Republic Act No. 8800, where
to be collected. either party may appeal the decision to impose or not to
impose said duties.
63
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
64
TAXATION 2- 4th exam
FROM THE LECTURES OF ATTY. DONALVO 2018-2019
Campaner, Castro, Gido, Isidor, Lagat, Lim, Olamit, Singanon, Tan, Viola
65