TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
FINALS COVERAGE
Topics:
1. Real Property Tax (RPT)
2. Customs Modernization and Tariff Act (CMTA)
3. Jurisdiction of the Court of Tax Appeals
PART I. REAL PROPERTY TAX
March 31, 2017 (1st Hour)
(By: J Al Reyes)
This is still part of the local government taxation.Let’s start with the real property
taxation under the local government code. Let’s start with the constitutional basis. It’s
pretty much the same with the local government taxation, general principle. It starts
with, Article X section 5 of the constitution.
The following are the basis for our Real Property Taxation:
1. Constitutional – same basis nagidiscussnatin last time pertaining to local
government taxation, Section 5 Article X.
2. Local Government Code – Book II, Title II The LGUs have the power of
administration, appraisal, assessment, levy and collection of real property taxes.
That is under Section 197 of the Local Government Code. That is the essential
provision which provides LGUs the power to impose real property taxes upon real
properties which are located in their territorial jurisdiction.
What are the fundamental principles of real property taxation under the local
government code? Section 198. Real property shall be assessed… you are probably
familiar with many of these. The assessment of real properties must be based on a
uniform classification within each local government unit; and there’s also the
prohibition that legislation, assessment and levy of real property taxes cannot be left to
a private person. Which is why you have the City Treasurer, the local assessors, those
people who administer the authority of the local government to assess real property for
real property tax purposes.
There is also the principle that the appraisal and assessment of real property must
also be equitable. In one case, this involves Pasig City, what happened was that there
is this city ordinance increasing the appraisal value of the real property and the
increase was around 400-500%. So sobranglaki. In this case the Supreme Court
struck down the ordinance saying that this is actually unjust, oppressive and this is no
longer equitable, it violates the fundamentalprinciples of real property taxation under
the Local Government Code.
But in these fundamental principles, they are all important, but what is something new
here is the appraisal and assessment.
1. The appraisal must be at the real property’s current fair market value in the local
government unit where the property is located
2. The real property must be assessed on the basis of actual use So appraisal, and
then you have actual use.
What does appraisal mean? Appraisal of real property. What happens when you
appraise something? You determine the value, right? What is the basis for the
appraisal as provided in the Local Government Code? Fair market value.
What is the significance of this appraisal? What happens after there is an appraisal?
Before payment of taxes, what happens first? Appraisal is important because it has
something to do with the assessment. You value the real property, and that is the
basis for the assessment of the real property. From that assessment you will get the
percentage of real property tax, and then you will get the tax. Then you have the
concept of actual use. Under Section 217, the real property shall be classified, valued
and assessed on the basis of its actual value regardless of where located, whoever
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owns it, and whoever uses it. Apart from ownership, sometimes the ownership is
important. But what is more important in real property taxation is the actual use. Just
remember actual use of the real property because this has also a bearing on the
assessment of real property for real property taxation purposes, and also later on
when we will be discussing about the exceptions from real property purposes.
TSN from last year: basis for appraisal for the assessment is actual use.
Let us go now to the case of Allied Banking vs. Quezon City.
There is a city ordinance. Sabing city ordinance if there will be a conveyance of real
property, there will be a real property tax which is based on the BIR zonal value or the
total consideration whichever is higher. Then CAP bought a property from a person
worth 38million. What did Quezon city do? There was an assessment for real property
taxes. And what did CAP do? Diba CAP entered its protest and paid under protest.
One of the contentions of CAP here is that the ordinance is null and void because the
ordinance violates Section 130 of the Local Government Code. What is the ruling of
the Supreme Court on that issue? According to the Supreme Court, the real properties
shall be appraised at the current and fair market value prevailing in the locality where
the property is located and classified for assessment purposes on the basis of actual
use. Why did the Supreme Court say that there was a violation? Anopalang basis ng
appraisal dito? Sabing Supreme Court, the real properties shall be appraised at the
current and fair market value prevailing in the locality where the property is located
and classified for assessment purposes on the basis of actual use. In this case, it
violates Section 130 of the Local Government Code mainly because the fundamental
principles would say that real property should be appraised at its current and fair
market value, and classified for assessment purposes on the basis of actual use. Ano
bang sinasabing ordinance dito? It’s based on what? It’s based on the zonal value. On
top of that, aside from violating Section 130 of the Local Government Code, it
undermines the authority of the local assessors, because ultimately the local
assessors should be the one to determine the appraised value of the property and
make assessment levels on the basis of these two principles: fair market value and on
the basis of its actual use.
In the case of Estate of Concordia vs. city of manila
Here, it is still connected as to the assessment of real property tax. So what happened
here is that Concordia here owned real property and that real property was eventually
mortgaged and was eventually foreclosed (mahiligsa eventually) and the heirs of
Concordia failed to redeem the property and of course the title of the property was
consolidated to the highest bidder, which happens to be GSIS . now GSIS had it
rented to third persons. Of course there was an assessment of real property tax. But
what happened was that the city government of manila actually assessed the heirs of
Concordia. So the question is: was it proper to begin with? Were the heirs of
Concordia liable for the real property taxes? Take not that the assessment of real
property tax must be based on its actual use. N this case of coure, if you have read
the fact, if have read the case, the court said that Concordia was no longer the owner
of the property… because I was foreclosed nga. Okay? In fact GSIS was already the
owner of the real property and the GSIS in fact rents this out to some other person.
But is GSIS liable for real property tax? Later on we will discuss the real property tax
liability of GSIS.
So what is the nature of this real property tax? I it an excise tax? No it is not an excise
tax. It is not a tax on a privilege of owning a property. It is rather a tax based on using
it.
How do you define a real property tax? Real property tax is said to be a direct tax on
the ownership of the land and buildings and other improvements thereon not
specifically exempted and is payable regardless of whether the property is used or not.
So this definition given by other authors is not actually accurate, because you must
consider not just the ownership but also actual use of the property.
What are the characteristics of real property tax?
1. It is a direct tax. The impact and incidence of the tax falls upon the same person.
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Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
2. It is imposed on use and not necessarily on the ownership of the property. We will
see this later on when we deal with real property tax exemption.
3. It is an ad valorem tax. Ad valorem, based on value. It is based on the assessed
value of the property.
4. Proportionate in character.
5. Progressive in character.
6. It creates a single and indivisible obligation.
7. It is a local tax.
Of course, real property taxation nga, subject of real property taxation are real
properties. But take note that the Local Government Code itself does not define what
real property is. It gives you the definition of improvements, it gives you the definition
of machineries, but it does not give you a definition of real property.
That is why the first thing you will have to determine is whether or not the property is
real property and therefore subject to RPT. You look at the provisions of the Civil
Code. You look at Article 415. Basically the discussions and principles of real property
in the Civil Code applies also in the Local Government Code or in real property
taxation. However, you will notice that there are some concepts which are seemingly
personal properties in the Civil Code, but for real property taxation purposes, they are
considered as real properties. For instance, the definition of improvements and
machineries, look at the Local Government Code.
Section 199. xxx (m) "Improvement" is a valuable addition made to a property or an
amelioration in its condition, amounting to more than a mere repair or replacement of
parts involving capital expenditures and labor, which is intended to enhance its value,
beauty or utility or to adapt it for new or further purposes; (o) "Machinery" embraces
machines, equipment, mechanical contrivances, instruments, appliances or apparatus
which may or may not be attached, permanently or temporarily, to the real property. It
includes the physical facilities for production, the installations and appurtenant service
facilities, those which are mobile, self-powered or selfpropelled, and those not
permanently attached to the real property which are actually, directly, and exclusively
used to meet the needs of the particular industry, business or activity and which by
their very nature and purpose are designed for, or necessary to its manufacturing,
mining, logging, commercial, industrial or agricultural purposes; xxx
Take note however, that in Article 415 particularly Section 5, let’s relate this with the
definition of machinery. If you look at the definition of machinery here, to be
considered as real property under 415, it is necessary that the machinery is placed by
the owner of the property; but under real property taxation, it is not specified. So
sometimes it’s easy to determine whether it’s real property or not because you look at
415. But what about those seemingly personal properties? For this we must look at
several cases for us to understand this.
Take note that if there is a conflict between the civil law provision and the provision on
the local government code on the definition for the purposes of taxation, it is the
special law which shall prevail.
(The following cases gi copy paste nalangnako from last year..parehaslang man
pudnamga cases)
Mindanao Bus Company.
What is the business of the petitioner here? Engaged in transportation of passengers
and cargo by motor vehicles. Describe their business premises of Mindanao Bus. It
maintains a garage, repair shop, blacksmith or carpentry shops. The machineries are
placed thereon on wooden platforms and cement. So what did the City Assessors do?
What is their contention, why did they assess a property tax on these equipment and
machineries? What is the legal basis of the City Assessors here? The City Assessors
contend that the equipment although movable are immobilized by destination. Now the
issue here is whether or not Mindanao Bus Line is liable for the taxes assessed? To
determine the taxability of the properties assessed, you must first determine whether
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
these equipment and machineries are considered as real properties. Supreme Court
said that the machineries could not be considered as immobilized. These equipment
are clearly incidental. Let’s simplify: the machineries placed on those wooden and
cemented platforms are not considered as real properties. Number one, they can be
removed easily; and number two, they are merely incidentals.
Article 415 of the New Civil Code, for it to be immobilized, these platforms on which
the machinery were placed, they must be essential and principal elements of the
business. What happens here, these equipment, these machineries are merely
incidentals because the bus company can go on even if the machineries and
equipment are not existing.
Compare it to the case of Board of Assessment Appeals vs. Manila Electric Company.
MERALCO is engaged in the business of providing electricity, generated by its
hydroelectric plant. This is transmitted by means of electric transmission wires, which
are fastened to insulators attached on steel towers constructed by MERALCO.
Quezon City assessed MERALCO with real property taxes. The issue in this case if
whether or not MERALCO should be subject to real property tax. In determining the
classification of these steel towers, the Supreme Court held that these towers do not
count as real properties under Article 415(1) because they do not adhere to the soil.
Second, they cannot be included under (3) because they are movable.
Now what about Meralco Securities Industrial Corporation vs. CTA? What is that case
all about? The property involved here are oil pipelines. These pipelines are buried
underground. If something happens to the pipeline, MERALCO will have to dig it up
and they will use a certain special equipment to cut the pipeline because it’s made of
steel. There’s a difficulty in moving and repairing those pipelines.
These oil pipelines are treated real property because they are considered as
construction adhering to the soil and attached to the land in such a way that it cannot
be separated without dismantling the steel pipes.
Let’s compare this with the case of Manila Electric Company vs. Central Board of
Assessment Appeals.
The properties involved her are storage tanks. These tanks are connected to Manila
Enterprise Industrial Corporation. The local government required MERALCO to pay tax
and penalties on said storage tanks. The Supreme Court held that the two storage
tanks may be considered as improvements on the land, hence it was deemed to be
real property for the purposes of taxation. It’s considered as improvements on the land
and is being used in its business. The case of Board of Assessment Appeals vs.
Manila Electric Company, 119 Phil. 328, wherein Meralco's steel towers were held not
to be subject to realty tax, is not in point because in that case the steel towers were
regarded as poles and under its franchise Meralco's poles are exempt from taxation.
Moreover, the steel towers were not attached to any land or building. They were
removable from their metal frames. Nor is there any parallelism between this case and
Mindanao Bus Co. vs. City Assessor, 116 Phil. 501, where the tools and equipment in
the repair, carpentry and blacksmith shops of a transportation company were held not
subject to realty tax because they were personal property. As to the storage tanks, the
Supreme Court described the two tanks to have been installed with some degree of
permanence as receptacles for the considerable quantities of oil needed by Meralco
for its operations.
Now, Caltex vs. CBAA G.R. No. L-50466 May 31, 1982.
This is still about machineries and equipment, pretty much the same with the
Mindanao Bus case, but this time what is involved is a gasoline station.
Dibameronsilang pumps, underground tanks. These properties were then assessed for
real property taxes. The equipment were considered as real properties because if you
remove them, the gas station will be useless. If you dig up the tanks, where will you
store the gasoline? If you dig up the pumps, what will you use in order to make tubil
the sasakyan?
Compare it with the Mindanao Bus case. Yes there are equipment and machineries
necessary for the repair of the bus, but if you remove it, can Mindanao Bus continue
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Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
their business? Yes of course. Transportation man sila. The last case is about power
barges. (Gidescribelang man niyaang power barge, wala may discussion.) If it so
happens that you forget these cases, there is some sort of trick which I found in a
book. There are two questions that you have to ask yourself: 1. Is the real property
among the properties listed in 415? If the answer is yes, then it is a real property
subject to real property tax. But what if it’s not among the 415? 2. Is the property
essential and principal to the conduct of business? If yes, most likely it is a real
property subject to real property taxation. Why? If you look at the definition of
improvement and machineries, that is the legal basis for that. Ginagamitmosa
business mo, it is some sort of utility, if you take it out your business will not function
anymore, then it is considered as real property. If your answer to the second question
is no, that is considered as a personal property which is already outside the ambit of
real property taxation.
And then you have the case of neilsen vs. cabanlas (I’m not sure
gibalikbaliknanakoogpaminaw)
this is a case involving power barges. Galutawlngsyasadagat… it is considered as a
real property? So remember propery case ni? Katongga remain langsya one place?
They are considered as immovable property. Now, its really a good thing if you
remember the facts of the cases which distinguished properties being involved here
which are either considered by jurisprudence as real or personal property because in
the ba exam if you remember how the court ruled on it you can cite the title of the
case. But just in case you will forget in order to determine whether it is a real property
you only have to ask these two questions:
1.) Is the property a real property as defined in article 145? If it falls under
145 automatic ya..it will be subjected to real property tax.
2.) Is the property essential and principal in the conduct of the business of
the taxpayer.? If the answer is yes, then it is going to be subject to real
property tax. The legal basis of this is the definition of improvement and
machinery under the law. So to be safe better be ver familiar with these
definitions under the LGC.
Meralco vs. City assessors of lucena. Kuryetenanaman! (sukokaaukadha)
what are properties involved here?
1. Transformers and electric posts
2. Transmission lines;
3. Insulators
These are all located in lucena city and of course as per tax declaration, these facilities
have fair market value at 81 million and an assess value of 65 million. An assessment
was sent to them. So they appealed the assessment before the local court on
assessment appeals of lucena city.
LCA f lucenacty said that :Meralco is tax exempt. But is still liable for the franchise tax
under te local governnt code.
Second point of th LCA: the assessment made by the assessor is valid. Years after,
lucena city sent meralco a notice to meralco to pay the real property tax deficiency.
Syempreumalmaulitangmeralco. Okay,
One of the issues here was whether or not the Transformers and electric posts;
Transmission lines/wires; Insulators should be considered as real properties for the
purpose of assessment, collection and payment of real property tax?
The supreme court said: (this is quite peculiar)the SC said that the posts, wires, ad
insulators are may qualify as immovable property for purposes of real property
taxation.
Now, the contention of meralco here is like this; if we trace the history of how do we
determine a property to be either a personal or real property it get quite confusing
already because there are personal property which for purposes of real property
taxation becomes a real property. (and then there is one line na dli gyudnako ma gets.
Kapilanagyunakogibalik sorry mga around 5 words)
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Angsagotnamanng SC if there is a seeming disagreement or contradiction between
the definition given by given by the local government code and the civil code regarding
the classification of a certain property, for purposes of real property taxation, you
should follow the definition found in the local government code. But the question relly
is whether or not the enumerated properties hould be considered as real properties.
This time the SC is being an Ass***** angsabing SC: this is a question of fact and the
supreme court is not a trier of facts. In the end the supreme court did not settle the
matter. Sabing SC the person who should determine whether these properties are
realties or not should be the local assessor it is not us who should determine. O.. F**k
Y*o Supreme court (hehe) hindimosinagot. But you have to read this case because
you know, the SC made some story telling about the history of the definition of the real
property in the civil code an the loa government code. I think it would really help you
understand which properties are included or should considered as rel properties for
purposes of real property taxation.
Let’s go now to the different kinds of impositions. You have here 4 types of impositions
under the real property taxation in the LGC.
1. You have the ACRPT which is in section 232 and 233 og the LGC
2. You have the special (something )fund
3. Then you have the Ad valorem tax
4. And then lastly you have the special levy.
1 the ACRPT which is found section 232 and 233 of the LGC who may impost real
property taxation. What type of LGUs? You have provinces, cities and municipalities
situated within metro manila area. Note that generally seakingmnicipalites may not
impose real property tax the exception is if the municipality is in metro manila area.
(somedyo bias tayo) now what is the tax rate? Normally it is 1% of the assessed value
of the real property, when it comes to the provinces. But when it comes to the
municipalties and cities within metro manila, the rate is not exceeding (dli koka gets
kaysaba) who may impse this? Of course it is the municipalities or cities within metro
manila.
Then you have an additional 1% of the assessed vlue of the real property.
( kindlyvrifytht part kaywalayklaro. Sorry) and this shall be set aside for purposes of
special education (not sure sabanapud) fund.
Then you have the ad valorem tax. This is actually a sanction against property owners.
Who does not make their lands productive and to encourage utilization of land
resources for development. What are the idle lands covered? It is found under section
(dli gyud ma klaro sorry) 1.) you have agricultural lands of more than 1 hectare suited
for cultivation but which remains uncultivated or unimproved. There are exceptions
okay. 2.) Agricultural lands which (have trees shall not be considered idle lands and
you have lands actually used for (raising …not sure with what I heard paki verify)
purposes pakaon sab aka ogcabao.And then you have 3.) lands other than
agricultural, these are lands located In a municipality which is more than 1000 sq.m in
area. Which remains unutilized or unimproved. You also have idle lands exempt from
tax. You have section 238.
Ad of course you have the special levy. This is not a tax. This is just an imposition.
Specially a province, cty or municipality may impose a special levy on land within its
territorial jurisdiction. Specially (limited or dedicated) dli gyudklaro :( to a public works,
projects, or improvements funded by the loca government unit. The special levy shall
not exceed (60%) of the amount of the projects or improvements. Okay bfore we
discuss the property subject to real property tax kase residual man ang (inclusion) not
sure. If it is not exempted then that property is subject to real property taxation.
Let’s discuss first the exception. You have section 234. The following are exempted In
the imposition of real property tax. Number 1. Real property owned by the republic or
any of its political subdivision. So the government cannot tax itself.
Let’ go back to the case of GSIS vs. the city of manila.
I think this is a different case already. Okay so GSIS owns two parcels of land.
These prcels of land were leased out to a hotel corp. it is a prive corporation. A
portio of said property is occupied by GSIS and the municipal trial court. The city of
manila demanded payment of real property taxes on the subject property.
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Magkanobabayaranna taxes? More or less (48 million) of course reklamoang GSIS.
Now, there are main issues here.
1. Is GSIS exempt I real property taxes?
2. Is the entire property which was leased out GSIS exempt? From real
property tax?
The contention of the other party is this: GSIS is a GOCC if you remember there is a
provision in the local government code in exemption ?first to answer this question,
you must look into the characterization of GSIs if it is a GOCC or not. If it is not a
GOCC what is it? Angsabing Supreme Court dito is this: GSIS is a tax exempt
entity.Gsis is not a gocc but is actually an instrumentality of the national govt. so
basically it used the MIAA vs. CA ruling. The capital of the GSIS is not divided to the
members each year. It has no member to speak of.
Second, the properties owned by the GSIS , the nature of the property held by the
GSIS is that GSIS is considered a mere trustee of these properties. Since it is
established that GSIS is a tax exempt entity kase government instrumentality sya, is
it exempt from real property tax?
The supreme court said that if you read the codal, GSIS is exempt from real property
tax because it is owned by the republic, except when it is used by another entity for
a fee. Now, if we go back to the facts of this case, here, GSIS leased the big chunk
of it to a hotel corporation, one part of it is used the GSIS itself and then another part
is used by the judiciary. Now, since GSIS is a government instrumentality, it is
exempt from tax. But the beneficial use of that property is given to some other
persons who are subject to tax. GSIS is tax exempt but who should be held liable for
the real property tax? The real property tax according to the supreme court is
chargeable against the tax exempt person who had actual or beneficial use of the
real propertyregardless of whether he or she is an owner.
Next is you have the MIAA case, the facts is almost the same with GSIS.
The property here includes airport lands and building. Portions of the airport buildings
are leased out to concessionaires. Is the real property held by the MIAA (the airport
and the airport building) exempt from real property taxation.? The ruling here is that
the property held by the MIAA are properties of public dominion, intended for public
use and as such they are exempt from real property taxation under section 238 of the
local government code. MIAA is a government instrumentality and it is not a GOCC.
But is the entire property exempt from the real property tax? No. only those which are
used by the MIAA are tax Exempt. However, those part of the real property being
leased out to the concessionaires, are not exempt. They shall be paid by those who
exercise the actual and beneficial use of the said real property regardless whether
they are not the owners. Of the real property. You read the case of light rail transit gr.
127316 and gr. 143214 philippine ports authorityvs. The city of ilo-ilo. I think it is in
your handout.
Then you also have charitable institutions, churches, mosques, cemeteries not for
profit, actually and directly used religious charitable and educational purpose..these
are actually constitutional tax exemptions this is just reproduced in the local
government code. So everything about requirements for tax exemption applies in this
case. You read the case of lux center vs. QC. Take note of the definition what is that
actually directly and exclusively used is it equated to principal use? What if the lands
are leased out to private entities? Who are not exempt from taxes? Then you also the
city assessors of cebu vs. assoc. of benebolarestitute (walakokasabot) 2007 (probably
naasahandouts. Pls. check out nalangpasensyasabaw.) this is also about the
characterization or the effect if, the entity is tax exempt has property or portions of it is
being leased out to non exempt persons. Or the effect if the property is actually,
exclusively and directly used by the gOCCs in the transmission of electric power and
the distribution of water. Case in point : ( A vs. Batanggas)
Let’s go to appraisal and assessment of real property tax . Who may levy a real
property taxes? The LGUs PROVINCE, cities, and municipalities with metro manila.
What is the procedure here? Bagomagbayadng real property tax, there must first be
an appraisal. Again the appraisal is the determination of the value of the property
which will be subjected to taxation. After the appraisal of course, there will be an
assessment. Is the process of determining the value of the property or portion thereof
subject to tax. Including discovery, representation (paki verify ni representation
gyudakongpagka hear not sure though kaysaba) and appraisal of the property. Who
has the duty to appraise and assess a real property? The duty is with the local
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
assessor. Including the determination as to whether or not this real property is subject
to real property tax?
Dbasabinatin, (maamguerzo?) the assessor has the duty to appraise and assess
together with that is the duty to determine whether a property is subject to real
property tax and of course it involves the listing listahan..list of real property, Sino
bamga brokers dito? Dba if you have real properties that you seek to sell dba you call
it listing so there will be listing of real properties. Who are the persons involved in
determining the listing, there personalities involved. No. 1 you have the ROD, the ROD
has the power and duty to determine whether the real property should be taxed for real
property tax. 2. Building official. He shall be responsible for everything that the building
ought to comply building permits etc2x, they will have to furnish a copy of it with the
assessor Assessors, 4. The Geodetic engr. They will do they survey and will give a
copy of that to the assessor. 5. Then you’ll have notice to the public that is why every
time there is a reconveyance they will have to submit it to the local assessor (walakoka
gets notice to the public gyud). Then you have 6. The insurance company because
many of these properties buildings ang houses are insured these individuals will help
the local assessors to determine which of these real properties are or can be
subjected to real property tax.
Let’s go now to appraisal. How is real property assessed for purposes of real property
tax? It should appraised according to its current and fair market value prevailing upon
the locality where the property is situated. Take note that all real property must be
appraised. Whether or not taxable or exempt.
Now, distinguish:
Fair market value from assessed value. First is the determination, the MV is usually
declared by the owner but if you ask how much the fair market value is, it should be
declared by the local assessor. On the other hand, assessed value you are talking
about the assessment level as stated in the revenue code of that particular country to
a fair market value. Let’s say for example, sabihinnatinnagpagawaako ng building and
its worth 20 million. I, as the owner of the building is required by the local assessors to
declare na cost ng building ko 20 M. normally that’s the fair market value. To
determine the assessed value you look at the local revenue ordinance. How much is
the assessed value of this real property? And the assessed value is just a percentage
of the fair market value. Sabihinnalangnatinang assessed value is just 10 % of the fair
market value. Magkanonalangang assessed value? 2m? And assessed value is your
basis for the computation of the real property tax later on. We have been mentioning
about declaration of real property kanina pa..who makes the declaration of the real
property? It is found in sections 202, 203 and 204. First, of course, the declaration
must be made by the owner of the property. He must make that declaration under
oath. Second, if a person acquires a real property he must declare such fact to the
local assessor. He must declare it under oath. Supposing these persons will fail or will
refuse to make such declarations, the local assessor is not precluded from making his
own personal assessment of that real property. And such declaration may not be
under oath. Just like the meralco case earlier. Ayawnyang mag declare okay. I will
declare it for you sabing local assessor, it is up to you to contest. What is the purpose
of the tax declaration? The purpose of this is number 1. For the determination of the
fair market value.
March 31, 2017 (2nd Hour)
(By: Algene Cutamora)
What is the purpose of a tax declaration?
1. For determination of the fair market value
2. For determination the assessment level of the property.
What is the purpose of tax declaration, by the way? So magdeclare ka ng value of
property. What is being issued is a “Tax Declaration.” You are saying “I declare that
these are the real properties I own.”
What is the purpose or nature of that declaration? The primary purpose of that is it’s
list of properties and of the real property taxes.
Is it an evidence of ownership? By itself, the tax declaration can be used as an
evidence of ownership. Of course, it is a good indication of ownership when coupled
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with some other factors. Like you couple it with titles. Also, it is an indication of
possession. Nganong magbayad man ka ug real property tax if you do not possess the
property?
If you volunteer with the legal aid, you will encounter such cases. Yung mga squatter,
mag-away2 sila. They will just present real property tax declaration. Usually, the
person with the oldest tax declaration wins.
You don’t really look at ownership if you talk about unlawful detainer or forcible entry,
diba? Okay? Now, let’s move on.
Let’s go to the preparation of the schedule of the fair market value. A schedule is
prepared and then there will be a classification of real property.
Section 215. Classes of Real Property for Assessment Purposes. - For purposes of
assessment, real property shall be classified as residential, agricultural, commercial,
industrial, mineral, timberland or special.
The city or municipality within the Metropolitan Manila Area, through their
respective sanggunian, shall have the power to classify lands as residential,
agricultural, commercial, industrial, mineral, timberland, or special in accordance with
their zoning ordinances.
We also have Section 216 of the Local Government Code.
Section 216. Special Classes of Real Property. - All lands, buildings, and other
improvements thereon actually, directly and exclusively used for hospitals, cultural, or
scientific purposes, and those owned and used by local water districts, and
government-owned or controlled corporations rendering essential public services in
the supply and distribution of water and/or generation and transmission of electric
power shall be classified as special.
Ano man itong special real properties?
These are lands, buildings, and other improvements thereon:
1. actually, directly and exclusively used for hospitals, cultural, or scientific
purposes, and
2. those owned and used by local water districts, and government-owned or
controlled corporations rendering essential public services in the supply
and distribution of water and/or generation and transmission of electric
power
Who is in-charged for the classification of lands? Paano mo malaman if a real property
is residential or commercial? Who determines that? It’s not the local assessor ha. It is
the Sanggunian, meaning the city or the province within the City of Manila or your own
Sanggunian.
Section 217. Actual Use of Real Property as Basis for Assessment. - Real property
shall be classified, valued and assessed on the basis of its actual use regardless of
where located, whoever owns it, and whoever uses it.
What is the basis for the basis for the classification of the land? It is based on actual
use, wherever located, whoever owns it and whoever uses it.
When you declare the real property in your tax declaration, you also declare the use of
that property. If the local assessor does not agree with the declaration, what is
controlling? What is controlling is not one that the assessors says and not even what
the owner says. What is the determining factor is the ACTUAL USE of property.
Again, you go back to the actual use principle – pretty much like the case of
PATALINGHUG vs. CA.
[Talks about funeral parlor in Cabaguio]
Anyway, there was an ordinance enacted by the City of Davao. Under the ordinance,
there’s a specific place declared as commercial compatible. Now, commercial and
compatible for industrial use. Included in this ordinance is that funeral homes may be
built provided that these will be established not less than 50 meters from any
residential structures, churches and other institutional buildings.
Now, here comes Patalinghug Funeral Homes. Several residents in Agdao
complained. Nganong naa may funeral home diri sa atoa? Lain kaayo, diri ta nagpuyo
tapos daghan patay?
The essential ruling here is that: The purpose of the tax declaration here. Kasi dito,
ang katabi ng Patalinghug Funeral Home is a boarding house pero sabi naman ni
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Patalinghug na hindi nay un boarding house but already a laundry shop. The Supreme
Court said:
“x x x that a tax declaration is not conclusive of the nature of the property
for zoning purposes. A property may have been declared by its owner as
residential for real estate taxation purposes but it may well be within a
commercial zone. A discrepancy may thus exist in the determination of the
nature of property for real estate taxation purposes vis-a-vis the
determination of a property for zoning purposes.”
A tax declaration is only for the determination of the assessment level. The appraisal
is based on the actual use of property irrespective of previous assessments or
taxpayer’s valuation or declaration thereof.
Then you have assessment levels. Sabi natin na the assessment level does not talk
about the value of the property. A percentage applied to the fair market value of the
property to determine the taxable value of the property.
Who says the assessment level? It’s the Sanggunian. Ang assessor – ang main
purpose is to assess for the purpose of real property taxation so make an assessment,
appraisal and including the classification of that property.
When does an assessment or a re-assessment become effective? We have Section
221.
Section 221. Date of Effectivity of Assessment or Reassessment. - All assessments or
reassessments made after the first (1st) day of January of any year shall take effect on
the first (1st) day of January of the succeeding year: Provided, however, That the
reassessment of real property due to its partial or total destruction, or to a major
change in its actual use, or to any great and sudden inflation or deflation of real
property values, or to the gross illegality of the assessment when made or to any other
abnormal cause, shall be made within ninety (90) days from the date any such cause
or causes occurred, and shall take effect at the beginning of the quarter next following
the reassessment.
General rule: Assessment or re-assessment made after the 1 st day of January shall
take effect on January 1 of succeeding year. If there is a new assessment of real
property, let us say sometime in June, then the real property assessment (including
the RPT) will apply only on the following years.
The exception is if there is a re-assessment made within 90 days for the occurrence of
a ground.
What are the grounds?
1. Partial or total destruction of the goods
Masunog imong property. Syempre, the property will lose its
value. You need to declare again.
2. Major change to its actual use
3. Inflation or Deflation of real property values
4. Gross illegality of the assessment
5. Any abnormal costs
Let’s now go to the collection of real property taxes. First, let us talk about accrual. The
taxes accrue, then the taxpayer pays the tax as accrued.
Section 246. Date of Accrual of Tax. - The real property tax for any year shall accrue
on the first day of January and from that date it shall constitute a lien on the property
which shall be superior to any other lien, mortgage, or encumbrance of any kind
whatsoever, and shall be extinguished only upon the payment of the delinquent tax.
Who collects the real property tax? The local treasurer or authorized deputies.
When is a real property tax paid? There is no time frame given by the Local
Government Code but Section 249 tells us that the city or sanggunian treasurer
shall…
Section 248. Assessor to Furnish Local Treasurer with Assessment Roll. - The
provincial, city or municipal assessor shall prepare and submit to the treasurer of the
local government unit, on or before the thirty-first (31st) day of December each year,
an assessment roll containing a list of all persons whose real properties have been
newly assessed or reassessed and the values of such properties.
Section 247. Collection of Tax. - The collection of the real property tax with interest
thereon and related expenses, and the enforcement of the remedies provided for in
this Title or any applicable laws, shall be the responsibility of the city or municipal
treasurer concerned.
The city or municipal treasurer may deputize the barangay treasurer to
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collect all taxes on real property located in the barangay: Provided, That the barangay
treasurer is properly bonded for the purpose: Provided, further, That the premium on
the bond shall be paid by the city or municipal government concerned.
In the end, the payment of real property tax will entirely depend on the notice of file
posted and published by the local treasurer. The time frame for the payment shall be
provided for by the local city governance,
Section 250. Payment of Real Property Taxes in Installments. - The owner of the real
property or the person having legal interest therein may pay the basic real property tax
and the additional tax for Special Education Fund (SEF) due thereon without interest in
four (4) equal installments; the first installment to be due and payable on or before
March Thirty-first (31st); the second installment, on or before June Thirty (30); the third
installment, on or before September Thirty (30); and the last installment on or before
December Thirty-first (31st), except the special levy the payment of which shall be
governed by ordinance of the sanggunian concerned.
The date for the payment of any other tax imposed under this Title without
interest shall be prescribed by the sanggunian concerned.
Payments of real property taxes shall first be applied to prior years
delinquencies, interests, and penalties, if any, and only after said delinquencies are
settled may tax payments be credited for the current period.
So real property tax may be paid on equal installments. The payment works of course
like “first in, first out” basis. Kung merong tax na wala pa nabayaran, yun muna ang
unang babayaran.
Section 251. Tax Discount for Advanced Prompt Payment. - If the basic real property
tax and the additional tax accruing to the Special Education Fund (SEF) are paid in
advance in accordance with the prescribed schedule of payment as provided under
Section 250, the sanggunian concerned may grant a discount not exceeding twenty
percent (20%) of the annual tax due.
One peculiar thing about real property taxes is that if you pay early, you can get a
discount. It is provided for under Section 251. What is important is that this is provided
in the ordinance by the Sanggunian concerned.
Section 270. Periods Within Which To Collect Real Property Taxes. - The basic real
property tax and any other tax levied under this Title shall be collected within five (5)
years from the date they become due. No action for the collection of the tax, whether
administrative or judicial, shall be instituted after the expiration of such period. In case
of fraud or intent to evade payment of the tax, such action may be instituted for the
collection of the same within ten (10) years from the discovery of such fraud or intent
to evade payment.
The period of prescription within which to collect shall be suspended for the time
during which:
(1) The local treasurer is legally prevented from collecting the tax;
(2) The owner of the property or the person having legal interest therein
requests for reinvestigation and executes a waiver in writing before the expiration of
the period within which to collect; and
(3) The owner of the property or the person having legal interest therein is
out of the country or otherwise cannot be located.
Then you have prescriptive periods for collection. It is pretty much the same with your
local taxes. When there is fraud or intention to evade, the period now is 10 years.
Of course, there are grounds which would suspend the prescriptive period for real
property tax collection:
(1) The local treasurer is legally prevented from collecting the tax;
(2) The owner of the property or the person having legal interest therein
requests for reinvestigation and executes a waiver in writing before the expiration of
the period within which to collect; and
(3) The owner of the property or the person having legal interest therein is
out of the country or otherwise cannot be located.
This is basically the same with your local taxation.
Section 254. Notice of Delinquency in the Payment of the Real Property Tax. –
(a) When the real property tax or any other tax imposed under this Title
becomes delinquent, the provincial, city or municipal treasurer shall immediately cause
a notice of the delinquency to be posted at the main hall and in a publicly accessible
and conspicuous place in each barangay of the local government unit concerned. The
notice of delinquency shall also be published once a week for two (2) consecutive
weeks, in a newspaper of general circulation in the province, city, or municipality.
(b) Such notice shall specify the date upon which the tax became delinquent and shall
state that personal property may be distrained to effect payment. It shall likewise state
that any time before the distraint of personal property, payment of the tax with
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
surcharges, interests and penalties may be made in accordance with the next
following Section, and unless the tax, surcharges and penalties are paid before the
expiration of the year for which the tax is due except when the notice of assessment or
special levy is contested administratively or judicially pursuant to the provisions of
Chapter 3, Title II, Book II of this Code, the delinquent real property will be sold at
public auction, and the title to the property will be vested in the purchaser, subject,
however, to the right of the delinquent owner of the property or any person having
legal interest therein to redeem the property within one (1) year from the date of sale.
When it comes to tax collection, the first thing that taxpayer is going to receive is a
Notice of Deliquency. If you are already delinquent in your real property taxes, it
means that you have not paid your RPT. Then, you will receive your Notice of
Deliquency.
What will happen to this notice of delinquency? It will be posted at the main hall, in a
public and conspicuous place. A notice of delinquency shall also be published once a
week for two consecutive weeks.
Now, from January 1, the tax for the real property accrue. Kapag nag-accrue na,
huwag ka matakot, because you just need to wait for the Notice of Collection. Kapag
lumabas na ang Notice of Collection, that will prescribe the time that you will pay your
real property taxes. Kapag hindi ka nakabayad, that is the time that you will wait again
for another period and that is for the Notice of Deliquency to be posted and published.
Can the real property taxes be condoned? Yes, under Article 276.
Section 276. Condonation or Reduction of Real Property Tax and Interest. - In case of
a general failure of crops or substantial decrease in the price of agricultural or
agribased products, or calamity in any province, city or municipality, the sanggunian
concerned, by ordinance passed prior to the first (1st) day of January of any year and
upon recommendation of the Local Disaster Coordinating Council, may condone or
reduce, wholly or partially, the taxes and interest thereon for the succeeding year or
years in the city or municipality affected by the calamity.
Section 277. Condonation or Reduction of Tax by the President of the Philippines. -
The President of the Philippines may, when public interest so requires, condone or
reduce the real property tax and interest for any year in any province or city or a
municipality within the Metropolitan Manila Area.
The authorities who may condone real property taxes are the following:
1. Sanggunian
2. President of the President
What are the grounds for condonation, in full or in part?
1. In case of a general failure of crops
2. Substantial decrease in the price of agricultural or agribased products
3. Calamity in any province, city or municipality
These grounds are for the Sanggunian.
For the President, the ground is “When public interests so requires” under Section 277
of the LGC.”
Section 256. Remedies For The Collection Of Real Property Tax. - For the collection of
the basic real property tax and any other tax levied under this Title, the local
government unit concerned may avail of the remedies by administrative action thru
levy on real property or by judicial action.
What if the taxpayer will still pay the taxes even after the posting and publication of the
notice of delinquency. If the taxpayer will not pay within the period, then the
government now will have judicial and administrative remedy to collect the taxes.
1. Tax lien – same in local taxation but you may make refence to Section
257
Section 257. Local Governments Lien. - The basic real property tax and any other tax
levied under this Title constitutes a lien on the property subject to tax, superior to all
liens, charges or encumbrances in favor of any person, irrespective of the owner or
possessor thereof, enforceable by administrative or judicial action, and may only be
extinguished upon payment of the tax and the related interests and expenses.
2. Distraint of property – if you look at the provisions, you won’t find any
procedure relating to distraint of properties. But if you read Section 254,
there is a mention of distraint.
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“Such notice shall specify the date upon which the tax
became delinquent and shall state that personal property may
be distrained to effect payment”
Even if it is a real property that is involved, of course, distraint of property
is still possible. It will entirely effect on the local treasurer to choose what
remedy to avail in order to enforce tax collection.
3. Levy on real property – under Section 258 and Section 260 of the LGC
Section 258. Levy on Real Property. - After the expiration of the time required to
pay the basic real property tax or any other tax levied under this Title, real
property subject to such tax may be levied upon through the issuance of a
warrant on or before, or simultaneously with, the institution of the civil action for
the collection of the delinquent tax. The provincial or city treasurer, or a
treasurer of a municipality within the Metropolitan Manila Area, as the case may
be, when issuing a warrant of levy shall prepare a duly authenticated certificate
showing the name of the delinquent owner of the property or person having legal
interest therein, the description of the property, the amount of the tax due and
the interest thereon. The warrant shall operate with the force of a legal execution
throughout the province, city or a municipality, within the Metropolitan Manila
Area. The warrant shall be mailed to or served upon the delinquent owner of the
real property or person having legal interest therein, or in case he is out of the
country or cannot be located, the administrator or occupant of the property. At
the same time, written notice of the levy with the attached warrant shall be
mailed to or served upon the assessor and the Registrar of Deeds of the
province, city or municipality within the Metropolitan Manila Area where the
property is located, who shall annotate the levy on the tax declaration and
certificate of title of the property, respectively.
The levying officer shall submit a report on the levy to the sanggunian
concerned within ten (10) days after receipt of the warrant by the owner of the
property or person having legal interest therein.
Section 260. Advertisement and Sale. - Within thirty (30) days after service of
the warrant of levy, the local treasurer shall proceed to publicly advertise for sale
or auction the property or a usable portion thereof as may be necessary to
satisfy the tax delinquency and expenses of sale. The advertisement shall be
effected by posting a notice at the main entrance of the provincial, city or
municipal building, and in a publicly accessible and conspicuous place in the
barangay where the real property is located, and by publication once a week for
two (2) weeks in a newspaper of general circulation in the province, city or
municipality where the property is located. The advertisement shall specify the
amount of the delinquent tax, the interest due thereon and expenses of sale, the
date and place of sale, the name of the owner of the real property or person
having legal interest therein, and a description of the property to be sold. At any
time before the date fixed for the sale, the owner of the real property or person
having legal interest therein may stay the proceedings by paying the delinquent
tax, the interest due thereon and the expenses of sale. The sale shall be held
either at the main entrance of the provincial, city or municipal building, or on the
property to be sold, or at any other place as specified in the notice of the sale.
Within thirty (30) days after the sale, the local treasurer or his deputy
shall make a report of the sale to the sanggunian concerned, and which shall
form part of his records. The local treasurer shall likewise prepare and deliver to
the purchaser a certificate of sale which shall contain the name of the purchaser,
a description of the property sold, the amount of the delinquent tax, the interest
due thereon, the expenses of sale and a brief description of the proceedings:
Provided, however, That proceeds of the sale in excess of the delinquent tax,
the interest due thereon, and the expenses of sale shall be remitted to the owner
of the real property or person having legal interest therein.
The local treasurer may, by ordinance duly approved, advance an
amount sufficient to defray the costs of collection thru the remedies provided for
in this Title, including the expenses of advertisement and sale.
The procedure is the same with local government taxes so I
don’t think I need to discuss everything already.
Now, what is peculiar though is that if you contest the validity
of the sale, you follow Section 267.
Section 267. Action Assailing Validity of Tax Sale. - No court shall entertain any action
assailing the validity or any sale at public auction of real property or rights therein
under this Title until the taxpayer shall have deposited with the court the amount for
which the real property was sold, together with interest of two percent (2%) per month
from the date of sale to the time of the institution of the action. The amount so
deposited shall be paid to the purchaser at the auction sale if the deed is declared
invalid but it shall be returned to the depositor if the action fails.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Neither shall any court declare a sale at public auction invalid by reason or
irregularities or informalities in the proceedings unless the substantive rights of the
delinquent owner of the real property or the person having legal interest therein have
been impaired.
Under this Section, no court shall entertain any action assailing the validity or any sale
at public auction of real property or rights therein under this Title until the taxpayer
shall have deposited with the court the amount for which the real property was sold,
together with interest of two percent (2%).
Take note also that simple irregularities will not invalidate the sale of the property.
Section 262. Final Deed to Purchaser. - In case the owner or person having legal
interest fails to redeem the delinquent property as provided herein, the local treasurer
shall execute a deed conveying to the purchaser said property, free from lien of the
delinquent tax, interest due thereon and expenses of sale. The deed shall briefly state
the proceedings upon which the validity of the sale rests.
Now, collection of real property taxes in court. Civil remedies may be resorted to
collect the taxes due, you look at now the jurisdictional amounts. You file with the RTC
or MTC based on the jurisdictional amounts.
Section 266. Collection of Real Property Tax Through the Courts. - The local
government unit concerned may enforce the collection of the basic real property tax or
any other tax levied under this Title by civil action in any court of competent
jurisdiction. The civil action shall be filed by the local treasurer within the period
prescribed in Section 270 of this Code.
Let’s now go to refunds and credits. Let’s talk first about protests.
Section 252. Payment Under Protest. –
(a) No protest shall be entertained unless the taxpayer first pays the tax.
There shall be annotated on the tax receipts the words "paid under protest". The
protest in writing must be filed within thirty (30) days from payment of the tax to the
provincial, city treasurer or municipal treasurer, in the case of a municipality within
Metropolitan Manila Area, who shall decide the protest within sixty (60) days from
receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by
the treasurer concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer,
the amount or portion of the tax protested shall be refunded to the protestant, or
applied as tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty
day period prescribed in subparagraph (a), the taxpayer may avail of the remedies as
provided for in Chapter 3, Title II, Book II of this Code.
Supposing, a real property tax assessment was made against you. Nagsend sila ng
Notice of Deliquency. Tapos wrong ang taxes. This was what happened to Meralco…
Now, what is the remedy of the taxpayer? Of course, the tax payer can file a protest.
But this time, if the taxpayer will file a protest, he is required to “pay under
protest”. Section 5 (a) provides that:
“No protest shall be entertained unless the taxpayer first pays the tax.
There shall be annotated on the tax receipts the words "paid under
protest". The protest in writing must be filed within thirty (30) days from
payment of the tax to the provincial, city treasurer or municipal treasurer,
in the case of a municipality within Metropolitan Manila Area, who shall
decide the protest within sixty (60) days from receipt.“
The requirement of payment under protest is specific under real property taxation.
NIRC does not require payment under protest but in RPT, payment under protest is
required. Why? I think because it is easier for a person to escape tax liability in case
that person sells the property. Ibenta niya nalang para iba ang magbayad, diba?
The protest must be filed within 30 days from the payment of tax. Pwede ka muna
magbayad bago protest or bayad then protest (isabay mo). Basta, the protest must be
made within thirty days from the payment of tax.
After protest has been filed, the local treasurer involved must decide the protest within
60 days from receipt. There are three possibilities that will happen:
1. The local treasurer will agree – so daug ang taxpayer or lot owner
2. The local treasurer may disagree – of course the taxpayer will receive a
decision
3. The local treasurer will not do anything.
How many days is given for the local assessor to decide? 60 days.
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What will the taxpayer do if the taxpayer receives a decision within the 60-day period?
“In the event that the protest is denied or upon the lapse of the sixty day period
prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for
in Chapter 3, Title II, Book II of this Code.”
If I’m not mistaken, this refers to the filing of an action against the local government
before the appropriate courts, MTC or RTC, depending on the jurisdictional amounts.
What if there is no action on the part of the local treasurer? The taxpayer has 30 days
within which to appeal before the RTC or MTC depending on the jurisdictional amount.
Then you have the repayment of excessive collections:
Section 253. Repayment of Excessive Collections. - When an assessment of basic
real property tax, or any other tax levied under this Title, is found to be illegal or
erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a
written claim for refund or credit for taxes and interests with the provincial or city
treasurer within two (2) years from the date the taxpayer is entitled to such reduction
or adjustment.
The provincial or city treasurer shall decide the claim for tax refund or
credit within sixty (60) days from receipt thereof. In case the claim for tax refund or
credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title
II, Book II of this Code.
Tax refunds are also available when you talk about real property taxation. For refund
of real property taxes, you must have a written request for refund and file it before the
treasurer within two years.
The local treasurer has 60 days within which to decide. If the decision is adverse, you
follow the rules on the local taxation.
These remedies and protests – you do it when there is some sort of discrepancy on
the tax liability of the taxpayer. Discrepancy on the amount ha.
What if the problem is the assessment itself? For example, the assessor will make an
assessment of a property when in fact that property was used by corporation. Ano ang
remedy ng taxpayer dito? File an appeal. If the taxpayer receives an assessment, the
taxpayer shall file an appeal of Local Board Assessment Appeals (LBAA).
Section 226. Local Board of Assessment Appeals. - Any owner or person having legal
interest in the property who is not satisfied with the action of the provincial, city or
municipal assessor in the assessment of his property may, within sixty (60) days from
the date of receipt of the written notice of assessment, appeal to the Board of
Assessment Appeals of the provincial or city by filing a petition under oath in the form
prescribed for the purpose, together with copies of the tax declarations and such
affidavits or documents submitted in support of the appeal.
The composition is found under Section 227.
Section 227. Organization, Powers, Duties, and Functions of the Local Board of
Assessment Appeals. –
(a) The Board of Assessment Appeals of the province or city shall be
composed of the Registrar of Deeds, as Chairman, the provincial or city prosecutor
and the provincial, or city engineer as members, who shall serve as such in an ex
officio capacity without additional compensation.
(b) The chairman of the Board shall have the power to designate any
employee of the province or city to serve as secretary to the Board also without
additional compensation.
(c) The chairman and members of the Board of Assessment Appeals of
the province or city shall assume their respective positions without need of further
appointment or special designations immediately upon effectivity of this Code. They
shall take oath or affirmation of office in the prescribed form.
(d) In provinces and cities without a provincial or city engineer, the district
engineer shall serve as member of the Board. In the absence of the Registrar of
Deeds, or the provincial or city prosecutor, or the provincial or city engineer, or the
district engineer, the persons performing their duties, whether in an acting capacity or
as a duly designated officer-in-charge, shall automatically become the chairman or
member, respectively, of the said Board, as the case may be.
The property owner has 60 days, from the receipt of the assessment, to file an appeal
with the LBAA.
What is the form of the appeal? It is through a verified petition: “filing a petition under
oath in the form prescribed for the purpose, together with copies of the tax
declarations and such affidavits or documents submitted in support of the appeal”.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Who are the persons entitled to appeal?
1. Property owner
2. Persons with legal interests over the property
General rule: Owner of the property
Exceptions:
1. Owner is except
2. Actual or beneficial use is transferred to some other person (that person
who uses the property, for taxable purposes, shall pay the RPT)
How many days are given to file the appeal? You have 60 days from the receipt of the
written notice of assessment.
Sabihin natin meron kang bagong bahay. Then the local assessor made an
assessment of your house which is really outrageous. Masyadong mataas. Do you still
need to file a Motion for Reconsideration before the local assessor? No need to file na.
You immediately appeal. What is just required is that there is an assessment made by
the assessor. If you do not agree with the assessment, file na agad sa LBAA.
What will happen if you file a Motion for Reconsideration and you wait for the decision
of the local assessor? The reglementary period within which to appeal will not toll.
Eventually, if you cannot file an appeal before the LBAA on time, then the assessment
will become final. Hence, you cannot appeal na.
Section 229. Action by the Local Board of Assessment Appeals. –
(a) The Board shall decide the appeal within one hundred twenty (120)
days from the date of receipt of such appeal. The Board, after hearing, shall render its
decision based on substantial evidence or such relevant evidence on record as a
reasonable mind might accept as adequate to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the
power to summon witnesses, administer oaths, conduct ocular inspection, take
depositions, and issue subpoena and subpoena duces tecum. The proceedings of the
Board shall be conducted solely for the purpose of ascertaining the facts without
necessarily adhering to technical rules applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or
the person having legal interest therein and the provincial or city assessor with a copy
of the decision of the Board. In case the provincial or city assessor concurs in the
revision or the assessment, it shall be his duty to notify the owner of the property or
the person having legal interest therein of such fact using the form prescribed for the
purpose. The owner of the property or the person having legal interest therein or the
assessor who is not satisfied with the decision of the Board, may, within thirty (30)
days after receipt of the decision of said Board, appeal to the Central Board of
Assessment Appeals, as herein provided. The decision of the Central Board shall be
final and executory.
After receiving the verified petition with supporting documents and affidavits, the LBAA
now has 120 days to decide. Of course, there will be a meeting conducted.
What is the quantum of evidence required? Only substantial evidence.
The LBAA has the power to issue subpoena, summon witness, etc.
What if the owner of the property or taxpayer receives and adverse decision? The
owner of the property or the person having legal interest therein or the assessor who is
not satisfied with the decision of the Board, may, within thirty (30) days after receipt of
the decision of said Board, appeal to the Central Board of Assessment Appeals, as
herein provided. The decision of the Central Board shall be final and executory.
So no Motion for Reconsideration pa rin. You go to the Central Board of Assessment
Appeals or CBAA.
Section 230. Central Board of Assessment Appeals. - The Central Board of
Assessment Appeals shall be composed of a chairman, and two (2) members to be
appointed by the President, who shall serve for a term of seven (7) years, without
reappointment. Of those first appointed, the chairman shall hold office for seven (7)
years, one member for five (5) years, and the other member for three (3) years.
Appointment to any vacancy shall be only for the unexpired portion of the term of the
predecessor. In no case shall any member be appointed or designated in a temporary
or acting capacity. The chairman and the members of the Board shall be Filipino
citizens, at least forty (40) years old at the time of their appointment, and members of
the Bar or Certified Public Accountants for at least ten (10) years immediately
preceding their appointment. The chairman of the Board of Assessment Appeals shall
have the salary grade equivalent to the rank of Director III under the Salary
Standardization Law exclusive of allowances and other emoluments. The members of
the Board shall have the salary grade equivalent to the rank of Director II under the
Salary Standardization Law exclusive of allowances and other emoluments. The Board
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Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
shall have appellate jurisdiction over all assessment cases decided by the Local Board
of Assessment Appeals.
There shall be Hearing Officers to be appointed by the Central Board of
Assessment Appeals pursuant to civil service laws, rules and regulations, one each for
Luzon, Visayas and Mindanao, who shall hold office in Manila, Cebu City and
Cagayan de Oro City, respectively, and who shall serve for a term of six (6) years,
without reappointment until their successors have been appointed and qualified. The
Hearing Officers shall have the same qualifications as that of the Judges of the
Municipal Trial Courts.
The Central Board Assessment Appeals, in the performance of its powers
and duties, may establish and organize staffs, offices, units, prescribe the titles,
functions and duties of their members and adopt its own rules and regulations.
Unless otherwise provided by law, the annual appropriations for the
Central Board of Assessment Appeals shall be included in the budget of the
Department of Finance in the corresponding General Appropriations Act.
What’s the composition? Just look at the provision. There is one chairman and two
members.
Who may appeal before the CBAA?
1. The owner or the person having legal interest over the property.
2. The local assessor. In behalf of the city, municipality or province.
What if the decision of the CBAA is still adverse sa taxpayer? The next remedy is to
appeal the decision of the CBAA is to appeal with the Court of Tax Appeals. This time,
it should be the CTA en banc. Local taxation, after natin sa RTC, you go to CTA
division then CTA en banc then SC.
When you go to real property taxation, when you go to figures, if you have protest, you
just need to pay under protest. Then file ka ng protest sa RTC or MTC depending on
the jurisdictional amount then CTA division then CTA en banc then SC.
But when you talk about challenging the assessment, you start from the LBAA to
CBAA to CTA en banc to SC. The CTA en banc has exclusive appellate jurisdiction to
review by appeal the decisions of the CBAA.
Take note also of the affect of appeal on the payment of real property tax.
Section 231. Effect of Appeal on the Payment of Real Property Tax. - Appeal on
assessments of real property made under the provisions of this Code shall, in no case,
suspend the collection of the corresponding realty taxes on the property involved as
assessed by the provincial or city assessor, without prejudice to subsequent
adjustment depending upon the final outcome of the appeal.
PART II. CUSTOMS MODERNIZATION AND
TARIFF ACT
April 7, 2017 (1st Hour)
(By: Alona Suzell B. Ruyeras)
TARIFF AND CUSTOMS CODE
*Latest Law: An Act Modernizing the Customs and Tariff Administration (Republic Act
No. 10863) 10 June 2016
Let’s talk about Customs Modernization and Tariff Act (CMTA) or Republic
Act 10863.
I have been looking for the Internal Rules and Regulations (IRR) for this
but I haven’t yet found one. So we will be dealing more with the codal provisions of the
law because that will always be the bread and butter when you take the bar
examinations.
Now, this is called Customs Modernization and Tariff Act (CMTA) or
Republic Act 10863. Before, it is called the Tariff and Customs Code of the Philippines
(TCCP) or Presidential Decree 1464 which already has undergone a lot of
amendments. Since a lot of the provisions in that law has already become obsolete
because of progress, etc., the Congress finally decided to enact this new law which
makes our custom law at par with other international laws on customs and tariffs.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
If you want a textbook, isa lang yung nakita ko, the author is Domondon.
But it’s a pretty much useless book (Lol). It’s just more on codal and indicates whether
certain provisions of the TCCP has been amended or revoked by the new law.
Do we need to compare TCCP and CMTA in the first place?
Yes. There should somehow be a comparison between TCCP and CMTA
because, as the book would say, about 80% of the provisions of the TCCP are re-
enacted in the CMTA. And, based on the repealing clause of the CMTA, all laws which
are not inconsistent therewith are considered to be still in force and in effect. So from
time to time, we have to refer to the provisions of the TCCP including its IRR.
Let’s start with the Bureau of Customs (BOC). Since we are talking about
tariffs and customs, the main agency we will be dealing with is the Bureau of Customs.
Before, there were only four (4) Deputy Commissioners, right now, there are four (4) to
six (6) Deputy Commissioners. They are all Presidential appointees and majority of
them should be from the ranks of the BOC.
Section 200. Chief Officials of the Bureau.— The Bureau shall be headed by a
Commissioner and shall be assisted by at least four (4) but not more than six (6)
Deputy Commissioners.
The Commissioner shall be appointed by the President of the Philippines.
The Deputy Commissioners shall also be appointed by the President and at least
majority of whom shall come from the ranks of the Bureau.
What are the Functions and Powers of the BOC?
This is found in Section 202 of the CMTA:
Section 202. Functions of the Bureau.— The Bureau shall exercise the following
duties and functions:
(a) Assessment and collection of customs revenues from imported goods and other
dues, fees, charges, fines and penalties accruing under this Act;
(b) Simplification and harmonization of customs procedures to facilitate movement of
goods in international trade;
(c) Border control to prevent entry of smuggled goods;
(d) Prevention and suppression of smuggling and other customs fraud;
(e) Facilitation and security of international trade and commerce through an informed
compliance program;
(f) Supervision and control over the entrance and clearance of vessels and aircraft
engaged in foreign commerce;
(g) Supervision and control over the handling of foreign mails arriving in the
Philippines for the purpose of collecting revenues and preventing the entry of
contraband;
(h) Supervision and control on all import and export cargoes, landed or stored in piers,
airports, terminal facilities, including container yards and freight stations for the
protection of government revenue and prevention of entry of contraband;
(i) Conduct a compensation study with the end view of developing and recommending
to the President a competitive compensation and remuneration system to attract and
retain highly qualified personnel, while ensuring that the Bureau remains financially
sound and sustainable;
(j) Exercise of exclusive original jurisdiction over forfeiture cases under this Act; and
(k) Enforcement of this Act and all other laws, rules and regulations related to customs
administration.
If you read it, it is basically the enforcement of the CMTA and other related
laws, those relating to customs and tariffs. Customs administration is lodged with the
BOC. Just to summarize, the powers start from the assessment of the taxes and fees,
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Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
including the fine and surcharges, there is also the simplification and harmonization of
international trade, imports and exports of goods, the ports and porters and the
exclusive jurisdiction over forfeiture cases under the CMTA.
There are two (2) important officers in the BOC.
1. Commissioner of Customs (COC)
2. District Collectors (DCs)
Let’s start with the Commissioner or the Commissioner of Customs
(COC). He is practically the highest official of the BOC. Ang counterpart nya sa BIR is
the Commissioner of Internal Revenue (CIR). His (COC) functions are found in
Sections 201 and 204 of the CMTA:
Section 201. Powers and Functions of the Commissioner.— The Commissioner shall
have the following powers and functions:
(a) Exclusive and original jurisdiction to interpret the provisions of this Act, in
collaboration with other relevant government agencies, subject to review by the
Secretary of Finance;
(b) Exercise any customs power, duties and functions, directly or indirectly;
(c) Review any action or decision of any customs officer performed pursuant to the
provisions of this Act;
(d) Review and decide disputed assessments and other matters related thereto,
subject to review by the Secretary of Finance and exclusive appellate jurisdiction of
the Court of Tax Appeals (CTA);
(e) Delegate the powers vested under this Act to any customs officer with the rank
equivalent to division chief or higher, except for the following powers and functions:
(1) Promulgation of rules and regulations;
(2) Issuance, revocation or modification of rulings; and
(3) Compromise or abate of customs obligations.
(f) Assignment or reassignment of any customs officer subject to the approval of the
Secretary of Finance; Provided, That District Collectors and other customs officers
that perform assessment functions shall not remain in the same area of assignment
for more than three (8) years; and
(g) Perform all other duties and functions as may be necessary for the effective
implementation of this Act and other customs related laws.
Section 204. Promulgation of Rules and Regulations.— The Commissioner, subject to
the approval of the Secretary of Finance, shall promulgate rules and regulations for
the enforcement of this Act. The Commissioner shall regularly prepare and publish an
updated customs manual, and the rules, regulations and decisions of the Bureau. The
Commissioner shall furnish the Congress of the Philippines, the NEDA and the Tariff
Commission with electronic copies of department orders, administrative orders,
circulars, and rules and regulations promulgated pursuant to this Act.
To summarize, the COC has the power to interpret the provisions of the
CMTA, the power to enforce the CMTA and other related laws, the power to repeal the
actions of customs officers, the power to delegate, the power to assign or reassign
customs officials and promulgate rules and regulations. Take note that the
Commissioner, subject to the approval of the Secretary of Finance, shall promulgate
rules and regulations for the enforcement of this Act.
Now, what is peculiar about the CMTA is the emphasis on transparency.
There is a provision there which says that any implementing rules and regulations
must be published from time to time which includes the uploading in the internet or in
websites. The BOC, now, will publish not only the rules and regulations but also all the
rulings that they have made except those information which are considered as
confidential.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Next, for the implementation of the customs law, the entire Philippines is
divided into customs districts. This is pretty much the same with the revenue districts
when it comes to the Internal Revenue Code. In every customs district, there will be a
customs district collector. This is equivalent to the revenue district collector of the
NIRC. The district collector will be assisted by the deputy district collector. The
customs districts shall supervise the ports of entry under each jurisdiction.
Section 206. Customs Districts.— For administrative purposes, the Philippines shall
be divided into as many Customs Districts as necessary, the respective limits of which
may be changed from time to time by the Commissioner, with the approval of the
Secretary of Finance.
Each Customs District shall be supervised by one (1) District Collector, assisted by as
many Deputy District Collectors as may be necessary. The choice of the location of a
District Office, its business hours and the staffing pattern thereof, shall be based on
the particular requirements of each district.
What do you understand by a Port of Entry?
Under Section 102 (HH), holding hands (Lol), of the CMTA:
Section 102. Definition of Terms.— As used in this Act:
xxx
(hh) Port of Entry refers to a domestic port open to both domestic and international
trade, including principal ports of entry and subports of entry. A principal port of entry
is the chief port of entry of the Customs District wherein it is situated and is the
permanent station of the District Collector of such port. Subports of entry are under
the administrative jurisdiction of the District Collector of the principal port of entry of
the Customs District. Port of entry as used in this Act shall include airport of entry; xxx
So there are two (2) types of Ports of Entry:
1. Principal Port of Entry – chief port of entry of the Customs District wherein
it is situated and is the permanent station of the District Collector of such
port
Under the CMTA, there’s an enumeration of what are the Principal Ports of
Entries.
Section 207. Ports of Entry.— All ports of entry shall be under the supervision and
control of a Customs District. A District Collector shall be assigned in the principal
ports of entry while a Deputy District Collector may be assigned to other types of ports
of entry.
The principal ports of entry shall be located in Aparri, San Fernando, Manila, Manila
International Container Port, Ninoy Aquino International Airport, Subic, Clark,
Batangas, Legaspi, Iloilo, Cebu, Tacloban, Surigao, Cagayan de Oro, Zamboanga,
Davao, Limay and such other ports that may be created pursuant to this Act.
For the effective enforcement of the Bureau's functions and without hampering
business and commercial operations of the ports, sea ports and airport authorities and
private ports and airport operators shall provide suitable areas for examination, and
for other customs equipment free of charge within a definite period of time, as agreed
with private port and airport operations, if any.
All other ports are subports. Dito siguro sa Davao City, our Principal Port of
Entry siguro nandyan sa Sasa Wharf . But we know we also have ports in Tagum or
Mati. So yan mga subports na yan.
2. Subports - under the administrative jurisdiction of the District Collector of
the principal port of entry of the Customs District.
The district collectors are assigned at the principal ports. This is under Section
207 (see previous reference).
What are the Duties of a District Collector?
This is found in Section 210:
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Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
Section 210. Duties of the District Collector.— The District Collector shall have the
following duties in their assigned Customs District:
(1) Ensure entry of all imported goods at the customs office;
(2) Prevent importation and exportation of prohibited goods;
(3) Ensure legal compliance of regulated goods and facilitate the flow of legitimate
trade;
(4) Examine, classify and value imported goods;
(5) Assess and collect duties, taxes and other charges on imported goods;
(6) Hold and dispose imported goods in accordance with this Act;
(7) Prevent smuggling and other customs fraud; and
(8) Perform other necessary duties that may be assigned by the Commissioner for
the effective implementation of this Act. Subject to the supervision and control of the
District Collector, the duties and functions of the District Collector may be delegated
to the Deputy District Collector. The Deputy District Collector assigned to a sub-port
shall be under the supervision and control of the District Collector of the
corresponding principal port.
So if you read that, basically, the district collector has power over all Ports
of Entry within its jurisdiction, it also has the power to enforce customs law, rules and
regulations within the scope of his territorial jurisdiction.
When we talk of “Territorial Jurisdiction” here, we do not only talk about
the Ports of Entry or Subports but all territory under his jurisdiction. For example, may
vessel dyan somewhere na naka float , we will never know.
Basically, the District Collector is like a mini Commissioner of Customs,
only that the territorial coverage is just limited. Of course, he (DC) has to report to the
COC with regard to all transactions within his district.
When does the CMTA and Other Customs Law apply?
If you remember in Consti 1, one of the exceptions to warrants of arrest
(which means there may be warrantless search and seizure) is when it involves
Customs Law. So if particular goods or places are searched by the Customs (BOC),
there can be no warrant.
Going back to the question, when will we know that CMTA and Other
Customs Law apply? When there’s importation or exportation of goods. It is not limited
to the goods imported or exported but also the means by which these goods are
transported (e.g. vessels, land transportation, air transportation).
What is Importation?
The technical definition is found in Section 102 (Z):
Section 102. Definition of Terms.— As used in this Act:
xxx
(z) Importation refers to the act of bringing in of goods from a foreign territory into
Philippine territory, whether for consumption, warehousing, or admission as defined
in this Act; xxx
What about Exportation?
Section 102. Definition of Terms.— As used in this Act:
xxx
(s) Exportation refers to the act, documentation, and process of bringing goods out
of Philippine territory; xxx
Going back to importation, we said that it is the act of bringing in of goods
from a foreign territory into Philippine territory as defined in this Act. Therefore, we
need to know the meaning of technical definition of importation. Know this by heart
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
because this always comes out of the bar exams: When does importation begin and
when does it End?
When does Importation begin?
Section 103:
Section 103. When Importation Begins and Deemed Terminated.— Importation
begins when the carrying vessel or aircraft enters the Philippine territory with the
intention to unload therein. Importation is deemed terminated when:
(a) The duties, taxes and other charges due upon the goods have been paid or
secured to be paid at the port of entry unless the goods are free from duties, taxes
and other charges and legal permit for withdrawal has been granted; or
(b) In case the goods are deemed free of duties, taxes and other charges, the goods
have legally left the jurisdiction of the Bureau.
Importation begins when the carrying vessel or aircraft enters the
Philippine territory with the intention to unload therein.
You have to read the case of:
FEEDER INTERNATIONAL LINE, PTE., LTD vs CA
G.R. No. 94262, May 31, 1991
Facts:
There is a foreign vessel owned by Feeder International Shipping Lines carrying gas
and fuel oil. The vessel anchored somewhere in Ilo-ilo without informing the
customs. An informant thereafter gave details as to such vessel. The customs, then,
inspected the vessels and found out that it had no required documents. Forfeiture
procedures then ensued not only of the cargoes but including the vessel. From the
Collector of Customs all the way to the CTA, talo ang petitioner.
Issue: W/N there is legal importation (Is there importation to begin-with?)
International Feeder’s Argument: It claimed not to be guilty because the importation
did not begin in the first place. In fact, we did not unload anything.
Ruling:
The SC held that International Feeder is guilty of illegal importation because even if
there is no actual unloading of the articles, still what matters is the intention to
unload. The actual unloading of the cargo is not necessary. The mere intention to
unload is enough. Under the evidence presented, Feeder has the intention to unload
plus there are lacking documents for importation. How did the Customs determine
that there was an intention to unload? The SC said that the numerous violations of
the customs law and the lack of any documentation are considered indicative of the
intent to unload without informing the Customs.
When does Importation End?
Still, Section 103:
Section 103. When Importation Begins and Deemed Terminated.— Importation
begins when the carrying vessel or aircraft enters the Philippine territory with the
intention to unload therein. Importation is deemed terminated when:
(a) The duties, taxes and other charges due upon the goods have been paid or
secured to be paid at the port of entry unless the goods are free from duties, taxes
and other charges and legal permit for withdrawal has been granted; or
(b) In case the goods are deemed free of duties, taxes and other charges, the goods
have legally left the jurisdiction of the Bureau.
So there are two (2) scenarios here:
1. If the goods are imposed upon with taxes and other charges and duties;
2. Goods which are free from duties and taxes.
First scenario: When goods are subject to duties, taxes and other charges
*When is importation terminated?
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Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
Two (2) requisites must concur:
1. Duties and taxes have been paid or secured to be paid at the Port of
Entry. Take note, this does not only involve the payment of customs
duties but also of taxes (e.g. VAT);
2. There must be a Legal Permit for Withdrawal granted by the customs.
Second scenario: When goods are not subject to duties, taxes and other charges
*When is importation terminated?
It is when the goods have legally left the jurisdiction of the Bureau. Maybe
the goods were already taken out of the warehouse, the territorial jurisditction or from
the Port of Entry.
SECRETARY OF FINANCE VS. ORO MAURA SHIPPING LINES
G.R. No. 156946 July 15, 2009
This case will illustrate to you when the importation has ended.
Facts:
What is imported here is a ship. M/V Haruna from Japan. They claim that it is a tax-
free importation. Now, if it is a tax-free importation, there must be the filing of a bond.
Of course, there must also be a letter of credit. Later on, Cebu demanded the
payment of taxes from Glory Shipping Lines (the importer) because the bond expired.
In the meantime, Glory sold the ship to Oro Maura Shipping Lines. Oro reported the
same transaction as an importation but this time, in the Port of Manila. When the
Government of Cebu learned of the same, it assessed Oro for deficiency taxes. Oro
argued that taxes have already been paid in the Port of Mactan.
Issue: Was the importation terminated?
Ruling:
No. In this case, importation has not yet been terminated. It is immaterial that taxes
have already been paid in the Port of Mactan because the entire process is only a
continuation of the original importation.
For importation to terminate, two (2) requisites must be complied with:
1. Duties and taxes have been paid or secured to be paid at the Port of
Entry;
2. There must be a Legal Permit for Withdrawal granted by the customs.
Were the two (2) requisites complied with? No.
1. There was no payment of tax by Oro in the Port of Cebu;
2. There was no Legal Permit of Withdrawal issued yet.
Who are the persons who may exercise Police Authority according to the CMTA?
This is found under Section 214:
Section 214. Persons Exercising Police Authority.— For the effective implementation
of this Act, the following persons are authorized to effect search, seizure, and arrest:
(a) Officials of the Bureau, District Collectors, Deputy District Collectors, police
officers, agents, inspectors and guards of the Bureau;
(b) Upon authorization of the Commissioner, officers and members of the Armed
Forces of the Philippines (AFP) and national law enforcement agencies; and
(c) Officials of the BIR on all cases falling within the regular performance of their
duties, when payment of internal revenue taxes is involved.
All officers authorized by the Commissioner to exercise police authority shall at all
times coordinate with the Commissioner.
Goods seized by deputized officers pursuant to this section shall be physically
turned-over immediately to the Bureau, unless provided under existing laws, rules
and regulations.
For this purpose, mission orders shall clearly indicate the specific name carrying out
the mission and the tasks to be carried out.
Subject to the approval of the Secretary of Finance, the Commissioner shall define
the scope, areas covered, procedures and conditions governing the exercise of such
police authority including custody and responsibility for the seized goods. The rules
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
and regulations to this effect shall be furnished to the concerned government
agencies and personnel for guidance and compliance.
All seizures pursuant to this section must be effected in accordance with the
provisions on the conduct of seizure proceedings provided for in Chapters 3 and 4 of
Title XI of this Act.
Where can the Police Authority be exercised?
It is found under Section 215 in relation to Section 303:
Section 215. Place Where Authority May be Exercised.— All persons exercising
police authority as described in the preceding section shall, only exercise powers
within customs premises as provided for in Section 303 of this Act, and within the
limits of the authority granted by the Commissioner, Port and airport authorities in
allports of entry shall provide authorized customs officers with unhampered access
to all premises within their administrative jurisdiction.
Section 303. Control Over Premises Used for Customs Purposes.— The Bureau
shall, for customs purposes, have exclusive control, direction and management of
customs offices, facilities, warehouses, ports, airports, wharves, infrastructure and
other premises in the Customs Districts, in all cases without prejudice to the general
police powers of the local government units (LGUs), the Philippine Coast Guard and
of law enforcement agencies in the exercise of their respective functions.
What are the Powers of those Persons with Authority to Exercise Police Authority?
 Power of Seizure under Section 216:
Section 216, Exercise of Power of Seizure.— Any person exercising police authority
under this Act has the power and duty to seize any vessel, aircraft, cargo, goods,
animal or any other movable property when the same is subject to forfeiture or when
they are subject of a fine imposed under this Act.
 Power to Enter Premises under Section 219:
Section 219. Authority to Enter Properties.— Any person exercising police authority
may, at any time, enter, pass through, and search any land, enclosure, warehouse,
store, building or structure not principally used as a dwelling house.
When a security personnel or any other employee lives in the warehouse, store, or
any building, structure or enclosure that is used for storage of goods, it shall not be
considered as a dwelling house for purposes of this Act.
Again, one of the exceptions of the general rule wherein we can have a
warrantless search and seizure is when it involves Customs Law. This is found under
Section 219 of the CMTA.
The rule is that, if it is a land, warehouse or structure NOT used as a
dwelling place, the Customs Officials authorized to do the search may enter and
conduct a search WITHOUT any search warrant. The qualification is that, it must NOT
be used as a dwelling house.
What if there is a security personnel inside? It’s okay. It will still NOT be
considered as a dwelling house.
What is it is the security guard and his family? There was no problem
before during the regime of the TCCP because the law was clear, it will not be
considered a dwelling house even though the employee or his family dwells in the
premises. Specific, family is included. But this was removed in the CMTA.
This begs the question: What is the treatment if the family of the employee
also lives there? Can a warrantless search be conducted in the premises? There is no
answer yet. But if you ask me, no. You have to go back to the intention of the law. If
the place is merely for storage, then it is not a place for dwelling which can be
searched by the Bureau of Customs.
The rule is different when it comes to dwelling houses.
Section 220. Authority to Search Dwelling House.— A dwelling house may be entered
and searched only upon warrant issued by a Judge of a competent court, the sworn
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application thereon showing probable cause and particularly describing the place to
be searched and the goods to be seized.
So basically, it is alright to search a dwelling place in the enforcement of
Customs Laws, provided, there is a search warrant. The regular search warrant must
be issued by the Judge.
 Power to Inspect and Visit under Section 224
Section 224. Power to Inspect and Visit.— The Commissioner or any customs officer
who is authorized in writing by the Commissioner, may demand evidence of
payment of duties and taxes on imported goods openly for sale or kept in storage. In
the event that the interested party fails to produce such evidence within fifteen (15)
days, the goods may be seized and subjected to forfeiture proceedings: Provided,
That during the proceedings, the interested party shaUbe given the opportunity to
prove or show the source of the goods and the payment of duties and taxes thereon:
Provided, Further, That when the warrant of seizure has been issued but
subsequent documents presented evidencing proper payment are found to be
authentic and in order, the District Collector shall, within fifteen (15) days from the
receipt of the motion to quash or recall the warrant, cause the immediate release of
the goods seized, subject to clearance by the Commissioner: Provided, Finally, That
the release thereof shall not be contrary to law.
Let’s go to Customs Jurisdiction. This has something to do with the
Customs Territorial Jurisdiction.
Section 300. Customs Jurisdiction.— For the effective implementation of this Act, the
Bureau shall exercise jurisdiction over all seas within Philippine territory and all
coasts, ports, airports, harbors, bays, rivers and inland waters whether navigable or
not from the sea and any means of conveyance.
The Bureau shall pursue imported goods subject to seizure during its transport by
land, water and air and shall exercise jurisdiction as may be necessary for the
effective enforcement of this Act. When a vessel or aircraft becomes subject to
seizure for violation of this Act, a pursuit of such vessel or aircraft which began
within the territorial waters or air space may continue beyond the same, and the
vessel or aircraft may be seized in the high seas or international air space.
Also in Section 300, the Doctrine of Hot Pursuit is incorporated. Second
paragraph, “The Bureau shall pursue imported goods subject to seizure during its
transport by land, water and air and shall exercise jurisdiction as may be necessary for
the effective enforcement of this Act. When a vessel or aircraft becomes subject to
seizure for violation of this Act, a pursuit of such vessel or aircraft which began within
the territorial waters or air space may continue beyond the same, and the vessel or
aircraft may be seized in the high seas or international air space.”
We also have Section 301:
Section 301. Customs Control Over Goods.— All goods, including means of
transport, entering or leaving the customs territory, regardless of whether they are
liable to duties and taxes, shall be subject to customs control to ensure compliance
with this Act.
In the application of customs control, the Bureau shall employ audit-based controls
and risk management systems, use automation to the fullest extent possible, and
adopt a compliance measurement strategy to support risk management.
The Bureau shall seek to cooperate and conclude mutual administrative assistance
agreements with other customs administrations to enhance customs control. The
Bureau shall consult, coordinate, and cooperate with other government regulatory
agencies, free zones authorities, and the customs stakeholders, in general, to
enhance customs control.
The jurisdiction of the BOC also extends to the goods.
April 7, 2017 (2nd Hour)
(By: Peter Quiel Vega)
The jurisdiction of BOC is not limited to vessels and aircrafts. It also
includes the goods.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Section 301. Customs Control Over Goods.— All goods, including means of transport,
entering or leaving the customs territory, regardless of whether they are liable to duties
and taxes, shall be subject to customs control to ensure compliance with this Act.
In the application of customs control, the Bureau shall employ audit-based controls
and risk management systems, use automation to the fullest extent possible, and
adopt a compliance measurement strategy to support risk management.
The Bureau shall seek to cooperate and conclude mutual administrative assistance
agreements with other customs administrations to enhance customs control. The
Bureau shall consult, coordinate, and cooperate with other government regulatory
agencies, free zones authorities, and the customs stakeholders, in general, to
enhance customs control.
The first thing that will happen is there is unloading of the goods and there is this thing
called “entry.”
What is this “entry”?
Upon unloading, the goods must be declared and entered at the customs office of the
port of entry. As provided in section 400.
Section 400. Goods to be Imported through Customs Office.— All goods imported into
the Philippines shall be entered through a customs office at a port of entry, or may be
admitted to or removed from a free zone as defined in this Act, as the case may be.
Which comes first? Declaration or entry? How do you define “entry” in ordinary
definition?
Entry is an act of documentation and bringing in goods in the customs territory
including the goods coming from the free zone. Part of the entry is the declaration.
What are the types of importation?
1. Free importation
2. Regulated importation
3. Prohibited importation
Section 116. Free Importation and Exportation.— Unless otherwise provided by law or
regulation, all goods may be freely imported into and exported from the Philippines
without need for import and export permits, clearances or licenses.
Section 117. Regulated Importation and Exportation.— Goods which are subject to
regulation shall be imported or exported only after securing the necessary goods
declaration or export declaration, clearances, licenses, and any other requirements,
prior to importation or exportation. In case of importation, submission of requirements
after arrival of the goods but prior to release from customs custody shall be allowed
but only in cases provided for by governing laws or regulations.
Section 118. Prohibited Importation and Exportation.— The importation and
exportation of the following goods are prohibited:
(a) Written or printed goods in any form containing any matter advocating or inciting
treason, rebellion, insurrection, sedition against the government of the Philippines, or
forcible resistance to any law of the Philippines, or written or printed goods containing
any threat to take the life of, or inflict bodily harm upon any person in the Philippines;
(b) Goods, instruments, drugs and substances designed, intended or adapted for
producing unlawful abortion, or any printed matter which advertises, describes or
gives direct or indirect information where, how or by whom unlawful abortion is
committed;
(c) Written or printed goods, negatives or cinematographic films, photographs,
engravings, lithographs, objects, paintings, drawings or other representation of an
obscene or immoral character;
(d) Any goods manufactured in whole or in part of gold, silver or other precious metals
or alloys and the stamp, brand or mark does not Indicate the actual fineness of quality
of the metals or alloys;
(e) Any adulterated or misbranded food or goods for human consumption or any
adulterated or misbranded drug in violation of relevant laws and regulations;
(f) Infringing goods as defined under the Intellectual Property Code and related laws;
and
(g) All other goods or parts thereof which importation and exportation are explicitly
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prohibited by law or rules and regulations issued by the competent authority.
Who makes the declaration?
Section 106. Declarant.— A declarant may be a consignee or a person who has the
right to dispose of the goods. The declarant shall lodge a goods declaration with the
Bureau and may be:
(a) The importer, being the holder of the bill of lading; or
(b) The exporter, being the owner of the goods to be shipped out; or
(c) A customs broker acting under the authority of the importer or from a holder of the
bill; or
(d) A person duly empowered to act as agent or attorney-in-fact for each holder.
In case the consignee or the person who has the right to dispose of the goods is a
juridical person, it may authorize a responsible officer of the company to sign the
goods declaration as declarant on its behalf.
The goods declaration submitted to the Bureau shall be processed by the declarant or
by a licensed customs broker; Provided, That for importations, a transition period of
two (2) years from the effectivity of this Act is hereby provided during which
subparagraph (d) of this section shall not be implemented by the Bureau: Provided,
Further, That after two (2) years from the effectivity of this Act, subparagraph (d) of
this section shall take into effect consistent with international standards and customs
best practices.
The declarant has to declare the goods and the value of the goods and also the
payment of taxes necessary or connected to importation or exportation.
Section 102. (dd) Lodgement refers to the registration of a goods declaration with
the Bureau;
What are the kinds of entry?
1. Formal entry
- Filed by the customs broker.
2. Informal entry
- Filed by examiner or appraiser
Section 402. Goods Declaration for Consumption.— All goods declaration for
consumption shall be cleared through a formal entry process except for the following
goods which shall be cleared through an informal entry process;
(a) Goods of a commercial nature with Free on Board (FOB) or Free Carrier At (FCA)
value of less than fifty thousand pesos (₱50,000.00). Every three (3) years after the
effectivity of this Act, the Secretary of Finance shall adjust this amount as provided
herein to its present value, using the Consumer Price Index (CPI) as published by the
PSA; and
(b) Personal and household effects or goods, not in commercial quantity, imported in
a passenger’s baggage or mail.
The Commissioner may adjust the value of goods of commercial nature that shall be
cleared through an informal entry process without prejudice to the periodic adjustment
period in subparagraph (a) of this section.
All importations entered through, a formal entry process shall be covered by a letter of
credit or any verifiable commercial document evidencing payment or in cases where
there is no sale for export, by any commercial document indicating the commercial
value of the goods.
Conditional declaration of the goods.
Section 403. Provisional Goods Declaration.— Where the declarant does not have
all the information or supporting documents required to complete the goods
declaration, the lodging of a provisional goods declaration may be allowed:
Provided, That it substantially contains the necessary information required by the
Bureau and the declarant undertakes to complete the information or submit the
supporting documents within forty-five (45) days from the filing of the provisional
goods declaration, which period may be extended by the Bureau for another forty-
five (45) days for valid reasons.
If the Bureau accepts a provisional goods declaration, the duty treatment of the
goods shall not be different from that of goods with complete declaration.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Goods under a provisional goods declaration may be released upon posting of any
required security equivalent to the amount ascertained to be the applicable duties
and taxes.
Who is deemed the owner of imported goods?
Section 404. Owner of Imported Goods.— All goods imported into the Philippines
shall be deemed to be the property of the consignee or the holder of the bill of
lading, airway bill or other equivalent transport document if duly endorsed by the
consignee therein, or, if consigned to order, duly endorsed by the consignor. The
underwriters of abandoned goods and the salvors of goods saved from wreck at sea,
coast, or in any area of the Philippines, may be regarded as the consignees.
The owner is the one liable for the taxes, fees, and charges.
Section 405. Liability of Importer for Duties and Taxes.— Unless relieved by laws or
regulations, the liability for duties, taxes, fees, and other charges attached to
importation constitutes a personal debt due and demandable against the importer in
favor of the government and shall be discharged only upon payment of duties, taxes,
fees and other charges. It also constitutes alien on the imported goods which may
be enforced while such goods are under customs' custody.
When shall the goods declaration be lodge?
Section 407. xxx Goods declaration must be lodged within fifteen (15) days from the
date of discharge of the last package from the vessel or aircraft. The period to file the
goods declaration may, upon request, be extended on valid grounds for another
fifteen (15) days: Provided, That the request is made before the expiration of the
original period within which to file the goods declaration: Provided, However, That the
period of the lodgement of the goods declaration may be adjusted by the
Commissioner.
Section 411. Contents of Goods Declaration.— Goods declaration shall contain the
names of the consignee, importing vessel or aircraft, port of departure, port of
destination and date of arrival, the number and marks of packages, or the quantity, if
in bulk, the nature and correct commodity description of the goods contained therein,
its value as set forth in a proper invoice, and such other information as may be
required by rules and regulations. Where the declarant does not have all the
information required to make the goods declaration, a provisional or incomplete goods
declaration shall, for certain cases and for reasons deemed valid by the Bureau, be
allowed to be lodged: Provided, That it contains the particulars deemed necessary by
the Bureau for the acceptance of the entry filed and that the declarant undertakes to
complete it within forty-five (45) days from the filing of the provisional goods
declaration in accordance with Section 403 of this Act.
Section 412. Statements to be Provided in the Goods Declaration.— No entry of
imported goods shall be allowed unless the goods declaration has been lodged with
the Bureau. The goods declaration shall, under penalties of falsification or perjury,
contain the following statements:
(a) The invoice and goods declaration contain an accurate and faithful account of the
prices paid or payable for the goods, and other adjustments to the price actually paid
or payable, and that nothing has been omitted therefrom or concealed whereby the
government of the Republic of the Philippines might be defrauded of any part of the
duties and taxes lawfully due on the goods; and
(b) To the best of the declarant's information and belief, all the invoices and bills of
lading or airway bills relating to the goods are the only ones in existence relating to
the importation in question, and that these documents are in the same state as when
they were received by the declarant, and the declaration thereon are in all respects
genuine and true.
Goods declaration shall be submitted electronically pursuant to Republic Act No.
8792, otherwise known as the “Electronic Commerce Act of 2000”. Such declarations
when printed and certified by a competent customs officer as a faithful reproduction of
the electronic submission shall be considered as actionable documents for purposes
of prosecuting a declarant if the declarations are found to be fraudulent.
After the entry there will be examination of goods. Priority is given to perishable goods.
EXAMINATION OF GOODS
Section 419. Examination of Goods.— Examination of goods, when required by the
Bureau, shall be conducted immediately after the goods declaration has been lodged.
Priority in the examination shall be given to live animals, perishable goods and other
goods requiring immediate examination.
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Whenever necessary, a system of coordination and joint examination of goods shall
be established by the Bureau and other regulatory agencies under existing laws and
regulations.
As a general rule, the Bureau may examine the goods in the presence of the
declarant or an authorized representative. Examination of the goods in the absence of
the declarant or authorized representative may be allowed in exceptional
circumstance and for valid and justifiable grounds, as may be defined by regulations
promulgated by the Secretary of Finance, upon recommendation of the
Commissioner. The Bureau may require the declarant to be present or to be
represented at theexamination o£ the goods or to render any assistance necessary to
facilitate the examination.
The Bureau shall take samples of the goods only when needed to establish the tariff
description and value of goods declared, or to ensure compliance with this Act.
Samples drawn shall be as minimal as possible.
Right now okay naang x-ray examination. As to samples, (refer to the last paragraph
above).
Section 420. Conditions for Examination.— Pursuant to internationally accepted
standards, the Bureau may adopt nonintrusive examination of goods, such as the
use of x-ray machines.
Physical examination of the goods shall be conducted when:
(a) It is directed by the Commissioner on account of a derogatory information;
(b) The goods are subject to an Alert Order issued by competent authority;
(c) The goods are electronically selected for physical examination;
(d) There are issues and controversies surrounding the goods declaration and the
import clearance process; or
(e) The importer or declarant requests for the examination of the goods.
The Commissioner may exempt from physical examination the goods of authorized
economic operators or of those provided for under any existing trade facilitation
program of the Bureau.
Physical examination, when required, shall be conducted in an expeditious manner.
After examination there will be an assessment.
ASSESSMENT
Section 101. xxx Assessment refers to the process of determining the amount of
duties and taxes and other charges due on imported and exported goods;
Basically there will be classification of the goods imported. Then there will be
valuation. After the valuation, there will be an assessment of the total taxes of the
goods.
Who has the duty of assessment?
Section 424. Duty of Customs Officer Tasked to Assess Imported Goods.— For
purposes of assessing duties and taxes on imported goods, the customs officer
shall classify, value, and determine the duties and taxes to be paid. The customs
officer shall prepare and submit an assessment report as established under this
Act.
The importer may challenge the assessment but this is not xxx, you call this is a
tentative assessment.
Section 425. Tentative Assessment of Goods Subject to Dispute Settlement.—
Assessment shall be deemed tentative if the duties and taxes initially assessed are
disputed by the importer. The assessment shall be completed upon final readjustment
based on the tariff ruling in case of classification dispute, or the final resolution of the
protest case involving valuation, rules of origin, and other customs issues.
The District Collector may allow the release of the imported goods under tentative
assessment upon the posting of sufficient security to cover the applicable duties and
taxes equivalent to the amount that is disputed.
When assessment become final?
Section 429. Final Assessment.— Assessment shall be deemed final fifteen (15)
days after receipt of the notice of assessment by the importer or consignee.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
What is the prescriptive period?
Section 430. Period of Limitation.— In the absence of fraud and when the goods have
been finally assessed and released, the assessment shall be conclusive upon all
parties three (3) years from the date of final payment of duties and taxes, or upon
completion of the post clearance audit.
After payment of the final assessment, it doesn’t mean natapos nan a lahat. Because
under the current law, the BOC is not precluded from demanding further payment after
of the duties and taxes.
After the payment of duties and taxes, the goods declared shall be released.
Section 431. Release of Goods after Payment of Duties and Taxes.— Goods
declared shall be released when duties and taxes and other lawful charges have
been paid or secured and all the pertinent laws, rules and regulations have been
complied with.
When the Bureau requires laboratory analysis of samples, detailed technical
documents or expert advice, it may release the goods before the results of such
examination are known after posting of sufficient security by the declarant.
This does not preclude the BOC from withholding release under Section 435.
Section 435. Withholding Release Pending Satisfaction of Lien.— When the District
Collector is duly notified through a lawful order of a competent court of a lien for
freight, lighterage or general average upon any imported goods, the District Collector
shall withhold the release of the goods unless the claim has been paid or secured. In
case of disagreement, the District Collector may release the goods after payment of
the freight and lighterage due on the quantity or weight landed as actually determined.
CUSTOMS TRANSIT AND TRANSSHIPMENT
These are 2 exceptions to the rule that importation begins when the vessel begins to
enter into our territories with an intention to unload therein.
What is this customs transit?
Section 102. xx Transit refers to the customs procedure under which goods, in its
original form, are transported under customs control from one customs office to
another, or to a free zone;
It will be exempt from duties and taxes. Provided the importer will follow the rules and
regulation for such transit.
What is transshipment?
Section 102. xx Transshipment refers to the customs procedure under which
goods are transferred under customs control from the importing means of
transport to the exporting means of transport within the area of one customs
office, which is the office of both importation and exportation;
Pagabotdiri, balhinsa another barko, then lakawnapud. There is no intention to unload.
Read Section 603.
Section 603. Customs Transshipment.— Goods admitted for transshipment shall not
be subject to the payment of duties and taxes: Provided, That the goods declaration
for customs transshipment particularly indicates such nature of the goods, duly
supported by commercial or transport documents or evidence as required by the
Bureau.
Goods for transshipment must be exported from the Philippines within thirty (30)
days from arrival thereof. The Commissioner may allow an extension of such period
after the establishment of valid reasons.
IMPORT DUTY AND TAX
The goods will be valued.
How will it be valued? There are several methods stated here. The valuation methods
are sequential in application.
Section 700. Sequential Application of Valuation Methods.— Imported goods shall
be valued in accordance with the provisions of Section 701 of this Act whenever the
conditions prescribed therein are fulfilled.
Where the customs value cannot be determined under the provisions of Section 701
of this Act, it is to be determined by proceeding sequentially through the succeeding
sections hereof to the first such section under which the customs value can be
determined. Except as provided in Section 704 of this Act, it is only when the
customs value cannot be determined under the provisions of a particular section that
the provisions of the next section in the sequence can be used.
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If the importer does not request that the order of Sections 704 and 705 of this Act be
reversed, the normal order of the sequence is to be followed. If the importer so
requests but it is impossible to determine the customs value under Section 705 of
this Act, the customs value shall be determined under Section 704.
When the customs value cannot be determined under Sections 701 through 705, it
may be determined under Section 706 of this Act.
Section 701. Transaction Value System—Method One.— The transaction value shall
be the price actually paid or payable for the goods when sold for export to the
Philippines adjusted in accordance with the provisions of tins section: Provided,
That:
(a) There are no restrictions as to the disposition or use of the goods by the buyer
other than restrictions which:
(i) Are imposed or required by law or by Philippine authorities;
(ii) limit the geographical area in which the goods may be resold; or
(iii) Do not substantially affect the value of the goods:
(b) The sale or price is not subject to some condition or consideration for which a
value cannot be determined with respect to the goods being valued; and
(c) The buyer and the seller are not related, or where the buyer and the seller are
related, that the transaction value is acceptable for customs purposes under the
provisions hereof.
For purposes of this Act, persons shall be deemed related only if:
(i) They are officers or directors of one another's business;
(ii) They are legally recognized partners in business;
(iii) There exists an employer-employee relationship between them;
(iv) Any person directly or indirectly owns, controls or holds five percent (5%) or
more of the outstanding voting stocks or shares of both seller and buyer;
(v) One of them directly or indirectly controls the other;
(vi) Both of them are directly or indirectly controlled by a third person;
(vii) Together they directly or indirectly control a third person; or
(viii) They are members of the same family, including those related by affinity or
consanguinity up to the fourth civil degree.
Persons who are associated in business with one another in that one is the sole
agent, sole distributor or sole concessionaire, however described, of the other shall
be deemed to be related for the purposes of this Act if they fall within any of the eight
(8) cases cited in the preceding paragraph.
In a sale between related persons, the transaction value shall be accepted as basis
for customs valuation whenever the importer demonstrates that such value closely
approximates one of the following occurring at or about the same time:
(a) The transaction value in sales to unrelated buyers of identical or similar goods for
export to the same country of importation;
(b) The customs value of identical or similar goods as determined under the
provisions of Section 704 of this Act; or
(c) The customs value of identical or similar goods are determined under the
provisions of Section 705 of this Act.
In determining the transaction value, the following shall be added to the price
actually paid or payable for the imported goods:
(1) To the extent that they are incurred by the buyer but are not included in the price
actually paid or payable for the imported goods:
(a) Commissions and brokerage fees except buying commissions;
(b) Cost of containers;
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
(c) Cost of packing, whether for labor or materials;
(d) Value, apportioned as appropriate, of the following goods and services:
materials, components, parts and similar items incorporated in the imported goods;
tools; dies; moulds and similar items used in the production of imported goods;
materials consumed in the production of the imported goods; and engineering,
development, artwork, design work and plans and sketches undertaken elsewhere
than in the Philippines and necessary for the production of imported goods, where
such goods and services are supplied directly or indirectly by the buyer free of
charge or at a reduced cost for use in connection with the production and sale for
export of the imported goods; and
(e) Amount of royalties and license fees related to the goods being valued that the
buyer must pay either directly or indirectly, as a condition of sale of the goods to the
buyer.
(2) Value of any part of the proceeds of any subsequent resale, disposal or use of
the imported goods that accrues directly or indirectly to the seller;
(3) Cost of transport of the imported goods from the port of exportation to the port of
entry in the Philippines;
(4) Loading, unloading and handling charges associated with the transport of the
imported goods from the country of exportation to the port of entry in the Philippines;
and
(5) Cost of insurance.
All additions to the price actually paid or payable shall be made only on the basis of
objective and quantifiable data.
Section 702. Transaction Value of Identical Goods—Method Two.— Where the
dutiable value cannot be determined under method one, the dutiable value shall be
the transaction value of identical goods sold for export to the Philippines and
exported at or about the same time as the goods being valued. For purposes of this
section, “Identical goods” refer to goods which are the same in all respects, including
physical characteristics, quality and reputation. Minor differences in appearances
shall not preclude goods otherwise conforming to the definition from being regarded
as identical.
If, in applying this section, more than one transaction value of identical goods are
found, the lowest value shall be used to determine the customs value.
Section 703. Transaction Value of Similar Goods—Method Three.— Where the
dutiable value cannot be determined under the preceding method, the dutiable value
shall be the transaction value of similar goods sold for export to the Philippines and
exported at or about the same time as the goods being valued. For purposes of this
section, “Similar goods” refer to goods which, although not alike in all respects, have
like characteristics and similar component materials which enable them to perform
the same functions and to be commercially interchangeable. The quality of the
goods, its reputation and the existence of a trademark shall be among the factors to
be considered in determining whether goods are similar.
If, in applying this section, more than one transaction value of identical goods are
found, the lowest such value shall be used to determine the customs value.
Section 704. Deductive Value—Method Four.— Where the dutiable value cannot be
determined under the preceding method, the dutiable value shall be the deductive
value unless otherwise requested by the importer as provided in Section 700 hereof.
The deductive value which shall be based on the unit price at which the imported
goods or identical or similar imported goods are sold in the Philippines, in the same
condition as when imported, in the greatest aggregate quantity, at or about the time
of the importation of the goods being valued, to persons not related to the persons
from whom they buy such goods, subject to deductions for the following:
(1) Either the commissions usually paid or agreed to be paid or the additions usually
made for profit and general expenses in connection with sales in such country of
imported goods of the same class or kind;
(2) The usual costs of transport and insurance and associated costs incurred within
the Philippines;
(3) Where appropriate, the costs of: (i) transport of the imported, goods from the port
of exportation to the port of entry in the Philippines; (ii) loading, unloading and
handling charges associated with the transport of the imported goods from the
country of exportation to the port of entry in the Philippines; and (iii) insurance; and
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(4) The customs duties and other national taxes payable in the Philippines by reason
of the importation or sale of the goods.
If neither the imported goods nor identical nor similar imported goods are sold at or
about the time of importation of the goods being valued in the Philippines in the
conditions they were imported, the customs value shall, subject to the conditions set
forth in the preceding paragraph, be based on the unit price at which the imported
goods or identical or similar imported goods sold in the Philippines in the condition
they were imported and at the earliest date after the importation of the goods being
valued, but before the expiration of ninety (90) days after such importation.
If neither the imported goods nor identical nor similar imported goods are sold in the
Philippines in the condition as imported, then, if the importer so requests, the
dutiable value shall be based on the unit price at which the imported goods, after
further processing, are sold in the greatest aggregate quantity to persons in the
Philippines who are not related to the persons from whom they buy such goods,
subject to allowance for the value added by such processing and deductions
provided under subsections (1), (2), (3) and (4) hereof.
Section 705. Computed Value—Method Five.— Where the dutiable value cannot be
determined under the preceding method, the dutiable value shall be the computed
value of the sum of:
(1) The cost or the value of materials and fabrication or other processing employed
in producing the imported goods;
(2) The amount for profit and general expenses equal to that usually reflected in the
sale of goods of the same class or kind as the goods being valued which are made
by producers in the country of exportation for export to the Philippines;
(3) The freight, insurance fees and other transportation expenses for the importation
of the goods;
(4) Any assist, if its value is not included under paragraph (1) hereof; and
(5) The cost of containers and packing, if their values are not included under
paragraph (1) hereof.
The Bureau shall not require or compel any person not residing in the Philippines to
produce for examination, or to allow access to, any account or other record for the
purpose of determining a computed value. However, information supplied by the
producer of the goods for the purposes of determining the customs value may be
verified in another country with the agreement of the producer and provided that said
producer will give sufficient advance notice to the government of the country in
question and that the latter does not object to the investigation.
Section 706. Fallback Value—Method Six.— If the dutiable value cannot be
determined under the preceding methods described above, it shall be determined by
using other reasonable means and on the basis of data available in the Philippines.
If the importer so requests, the importer shall be informed in writing of the dutiable
value determined under method six and the method used to determine such value.
No dutiable value shall be determined under method six on the basis of:
(1) The selling price in the Philippines of goods produced in the Philippines;
(2) A system that provides for the acceptance for customs purposes of the higher of
two (2) alternative values;
(3) The price of goods in the domestic market of the country of exportation;
(4) The cost of production, other than computed values, that have been determined
for identical or similar goods in accordance with method five hereof;
(5) The price of goods for export to a country other than the Philippines;
(6) Minimum customs values; or
(7) Arbitrary or fictitious values.
SPECIAL DUTIES AND
TRADE REMEDY MEASURES
What are these remedy measures?
Section 709. Government's Right of Compulsory Acquisition.— In order to protect
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government revenues against undervaluation of goods, the Commissioner may,
motuproprio or upon the recommendation of the District Collector, acquire imported
goods under question for a price equal to their declared customs value plus any duties
already paid on the goods, payment for which shall be made within ten (10) working
days from issuance of a warrant signed by the Commissioner for the acquisition of
such goods.
An importer who is dissatisfied with a decision of the Commissioner pertaining to this
section may, within twenty (20) working days after the date on which notice of the
decision is given, appeal to the Secretary of Finance, and thereafter if still dissatisfied,
to the CTA as provided for in Section 1136 of this Act.
Where no appeal is made by the importer, or upon reaffirmation of the
Commissioner's decision during the appeals process, the Bureau or its agents shall
sell the acquired goods pursuant to existing laws and regulations.
Nothing in this section limits or affects any other powers of the Bureau with respect to
the disposition of the goods or any liability of the importer or any other person with
respect to an offense committed in the importation of the goods.
Special tasks?
1. Marking duty
2. Anti-Dumping duty
3. Safeguard duty
4. Countervailing duty
5. Discriminatory Duty
Special task siya because normally these duties are imposed to protect the industry of
the Philippines.
1. Marking Duty
- When we talk about marking duty, this is essentially an additional
duty imposed for failure or improper marking of the goods or its
containers.
- The goods must be marked accordingly and such mark must
indicate clearly the country of origin of such articles or goods
imported.
- Why is it important to indicate the country of origin? Because we
have different agreements.
Section 710. Marking of Imported Goods and Containers.—
(A) Marking of Goods.— Except as hereinafter provided, all goods of foreign origin
imported into the Philippines or their containers, as provided in subsection (B) hereof
shall be conspicuously marked in any official language of the Philippines as legibly,
indelibly and permanently as the nature of the goods or container will permit and in
such manner as to indicate to an ultimate purchaser in the Philippines the name of
the country of origin of the goods. Pursuant thereto, the Commissioner shall, with the
approval of the Secretary of Finance:
-
- (1) Determine the character of words and phrases or abbreviation
thereof which shall be acceptable as indicating the country of
origin and prescribe any reasonable method of marking, whether
by printing, stenciling, stamping, branding, labeling or by any
other reasonable method, and in a conspicuous place on the
goods or container where the marking shall appear;
-
- (2) Require the addition of other words or symbols which may be
appropriate to prevent deception or mistake as to the origin of the
goods or as to the origin of any other goods with which such
imported goods is usually combined subsequent to importation
but before delivery to an ultimate purchaser; and
-
- (3) Authorize the exception of any goods from the requirements of
marking if:
-
- (i) Such goods are incapable of being marked;
-
- (ii) Such goods cannot be marked prior to shipment to the
Philippines without injury;
-
- (iii) Such, goods cannot be marked prior to shipment to the
Philippines, except at an expense economically prohibitive of their
importation;
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- What is remedy of the aggrieved party?

- (iv) The marking of a container of such goods will reasonably
indicate the origin of such goods; Any aggrieved party will file with the CTA a petition for review within 30 days from
- receipt of notice of the final pay.
- (v) Such goods are crude substances;
- What is the meaning of interested party?
- (vi) Such goods are imported for use by the importer and not
intended for sale in their imported or any other form;
- This can be the importer, or the secretary of trade and industry, or secretary of
- (vii) Such goods are to be processed in the Philippines by the agriculture as the case maybe.
importer or for the importer's account other than for the purpose of Take note that the filing of the appeal shall not prevent collection of taxes and duty
concealing the origin of such goods and in such manner that any without prejudice to CTA in its authority to issue injunction in proper cases.
mark contemplated by this section would necessarily be
obliterated, destroyed, or permanently concealed; What is the ground to issue injunction for the CTA?
-
- (viii) An ultimate purchaser, by reason of the character of such The imposition of the tax will jeopardize the government or jeopardize the taxpayer.
goods or by reason of the circumstances of their importation,
must necessarily know the country of origin of such goods even
though they are not marked to indicate their origin; 3. Safeguard Duty
- Section 712. Safeguard Duty.— The provisions of Republic Act No. 8800, otherwise
- (ix) Such goods were produced more than twenty (20) years prior known as the “Safeguard Measures Act”, are hereby adopted.
to their importation into the Philippines; or
- - These are emergency measures to protect domestic industries from
- (x) Such goods cannot be marked after importation except at an its imports which will cause serious injury to them.
expense which is economically prohibitive, and the failure to mark
the goods before importation was not due to any purpose of the What is the remedy of the taxpayer? Same with anti-dumping duty
importer, producer, seller or shipper to avoid compliance with this
section.
4. Countervailing Duty
-
Section 713. Countervailing Duty.— The provisions of Republic Act No. 8751,
(B) Marking of Containers.— Whenever goods are exempt under paragraph (3) of
otherwise known as “An Act Strengthening the Mechanisms for the Imposition of
subsection (A) of this section from the requirements of marking, the immediate
Countervailing Duties on Imported Subsidized Products, Commodities or Articles of
container, if any, of such goods, or such other container or containers of such goods,
Commerce in Order to Protect Domestic Industries from Unfair Trade Competition,
shall be marked in such manner as to indicate to an ultimate purchaser in the
Amending for the Purpose Section 302, Part 2, Title II, Book I of Presidential Decree
Philippines the name of the country of origin of such goods in any official language
No. 1464”, otherwise known as the “Tariff and Customs Code of the Philippines, as
of the Philippines, subject to all provisions of this section, including the same
Amended”, are hereby adopted.
exceptions as are applicable to goods under paragraph (3) of subsection (A).

(C) Fine for Failure to Mark.— If, at the time of importation any good or its container,
as provided in subsection (B) hereof, is not marked in accordance with the
requirements of this section, there shall be levied, collected, and paid upon such
good a marking duty of five percent (5%) of dutiable value, which shall be deemed to
have accrued at the time of importation.
(D) Release Withheld Until Marked.— No imported goods held in customs custody
for inspection, examination, or assessment shall be released until such goods or
their containers shall have been marked in accordance with the requirements of this
section and until the amount of duty estimated to be payable under subsection (C) of
this section shall have been deposited.
(E) The failure or refusal of the owner or importer to mark the goods as herein
required within a period of thirty (30) days after due notice shall constitute as an act
of abandonment of said goods and their disposition shall be governed by the
provisions of this Act relative to abandonment of imported goods.
2. Anti-Dumping Duty
Section 711. Dumping Duty.— The provisions of Republic Act No. 8752, otherwise
known as the “Anti-Dumping Act of 1999”, are hereby adopted.
What is Anti-Dumping duty?
It is a special duty imposed on the importation of a product, commodity or article
1. At less than its normal value at less than its normal value when destined
for domestic consumption in the exporting country which importation is
causing or is threatening to cause material injury to a domestic industry, or
2. materially retarding the establishment of a domestic industry producing
like product
In simple terms, this duty is imposed on underpriced articles imported in
the Philippines that would injure our own industry.
There are 3 personalities here:
1. Trade secretary
2. Secretary of agriculture and trade
3. Tariff commission
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special duty charged whenever any product, commodity or article of commerce is
granted directly or indirectly by the government in the country of origin or exportation,
any kind or form of specific subsidy upon the production, manufacture or exportation of
such product, commodity or article, and the importation of such subsidized product,
commodity or article has caused or threatens to cause material injury to a domestic
industry or has materially retarded the growth or prevents the establishment of a
domestic industry. So, in effect the imported product is so cheap because the country
of origin subsidizes that particular product. So to counter such, the countervailing duty
is imposed;
Remedy of aggrieved party? Same
5. Discriminatory Duty
Section 714. Discrimination by Foreign Countries.— Without prejudice to the
Philippine commitment in any ratified international agreements or treaty, the following
recourse shall be applicable in case of discrimination by foreign countries:
(a) When the President finds that the public interest will be served thereby, the
President shall, by proclamation, specify and declare new or additional duties in an
amount not exceeding one hundred percent (100%) ad valorem upon goods wholly or
in part the growth or product of, or imported in a vessel of any foreign country
whenever the President shall find as a fact that such country:
(1) Imposes, directly or indirectly, up on the disposition or transportation in transit or
through reexportation from such country of any goods wholly or in part the growth or
product of the Philippines, any unreasonable charge, exaction, regulation or limitation
which is not equally enforced upon the like goods of every foreign country; or
(2) Discriminates in fact against the commerce of the Philippines, directly or indirectly,
by law or administrative regulation or practice, by or in respect to any customs,
tonnage, or port duty, fee, charge, exaction, classification, regulation, condition,
restriction or prohibition, in such manner as to place the commerce of the Philippines
at a disadvantage compared with the commerce of any foreign country.
(b) If at any time the President shall find it to be a fact that any foreign country has not
only discriminated against the commerce of the Philippines, as aforesaid, but has,
after the issuance of a proclamation as authorized in subsection (a) of this section,
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maintained or increased its said discrimination against the commerce of the
Philippines, the President is hereby authorized, if deemed consistent with the interests
of the Philippines and of public interest, to issue a further proclamation directing that
such product of said country or such goods imported in their vessels be excluded hom
importation into the Philippines.
(c) Any proclamation issued by the President under this section shall, if the President
deems it consistent with the interest of the Philippines, extend to the whole of any
foreign country or may be confined to any subdivision or subdivisions thereof;
Provided, That the President may, whenever the public interest requires, suspend,
revoke, supplement or amend any such proclamation.
(d) All goods imported contrary to the provisions of this section shall be forfeited to the
government of the Philippines and shall be liable to be seized, prosecuted and
condemned in like manner and under the same regulations, restrictions, and
provisions as may from time to time he established for the recovery, collection,
distribution, and remission or forfeiture to the government by the tariff and customs
laws. Whenever the provision of this section shall be applicable to importations into
the Philippines of goods wholly or in part the growth or product of any foreign country,
it shall be applicable thereto, whether such goods are imported directly or indirectly.
(e) It shall be the duty of the Commission to ascertain and at all times be informed
whether any of the discriminations against the commerce of the Philippines
enumerated in subsections (a) and (b) of this section are practiced by any country;
and if and when such discriminatory acts are disclosed, it shall be the duty of the
Commission to bring the matter to the attention of the President, and to recommend
measures to address such discriminatory acts.
(f) The Secretary of Finance shall make such rules and regulations as are necessary
for the execution of a proclamation that the President may issue in accordance with
the provisions of this section.
Grounds?
1. imposed on articles wholly or in part the growth or product of, or imported in a
vessel of, any foreign country which imposes, directly or indirectly, upon the
disposition in, or transportation in transit through or re-exportation from such country of
any article wholly or in part the growth or product of the Philippines any unreasonable
charge, exaction, regulation or limitation which is not equally enforced upon the like
articles of every foreign country, or
2. discriminates in fact against the commerce of the Philippines, directly or indirectly,
by law or administrative regulation or practice, by or in respect to any customs,
tonnage, or port duty, fee, charge, exaction, classification, regulation, condition,
restriction or prohibition, in such manner as to place the commerce of the Philippines
at a disadvantage compared with the commerce of any foreign country. So this is
imposed on products coming from a country which discriminates the Philippine
product.
Who imposes? The president of the PH.
What are the options available to the President?
(1) issue a proclamation that such discriminatory country, shall be excluded from
importation into the Philippines consistent with the public interests (a total ban),
(2) the proclamation may be withdrawn, suspended or amended by the President, and
(3) all articles imported during the total ban shall be forfeited to the Government of the
Philippines and shall be liable to be seized, prosecuted and condemned;
CONDITIONALLY TAX AND/OR DUTY-EXEMPT IMPORTATION
Section 800. Conditionally Tax and/or Duty-Exempt Importation.— The following
goods shall be exempt from the payment of import duties upon comphance with
the formalities prescribed in the regulations which shall be promulgated by the
Commissioner with the approval of the Secretary of Finance: Provided, That goods
sold, bartered, hired or used for purposes other than what they were intended for
and without prior payment of the duty, tax or other charges which would have been
due and payable at the time of entry if the goods had been entered without the
benefit of this section, shall be subject to forfeiture and the importation shall
constitute a fraudulent practice against customs laws: Provided, However, That a
sale pursuant to a judicial order or in liquidation of the estate of a deceased person
shall not be subject to the preceding proviso, without prejudice to the payment of
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
duties, taxes and other charges; Provided, Further, That the President may, upon
the recommendation of the Secretary of Finance, suspend, disallow or completely
withdraw, in whole or in part, any conditionally free importation under this section:
(a) Aquatic products such as fishes, crustaceans, mollusks, marine animals,
seaweeds, fish oil, roe, caught or gathered by fishing vessels of Philippine registry;
Provided, That they are imported in such vessels or in crafts attached thereto;
Provided, However, That they have not been landed in any foreign territory or, if so
landed, that they have been landed solely for transshipment without having been
advanced in condition;
(b) Equipment for use in the salvage of vessels or aircrafts, not available locally,
upon identification and the giving of a security in an amount equal to one hundred
percent (100%) of the ascertained duties, taxes and other charges thereon,
conditioned for the exportation thereof or payment of corresponding duties, taxes
and other charges within six (6) months from the date of acceptance of the goods
declaration; Provided, That the Bureau may extend the time for exportation or
payment of duties, taxes and other
charges for a term not exceeding six (6) months from the expiration of the original
period;
(c) Cost of repairs, excluding the value of the goods used, made in foreign
countries upon vessels or aircraft documented, registered or licensed in the
Philippines, upon proof satisfactory to the Bureau: (1) that adequate facilities for
such repairs are not afforded in the Philippines; or (2) that such vessels or aircrafts,
while in the regular course of their voyage or flight, were compelled by stress of
weather or other casualty to put into a foreign port to make such repairs in order to
secure the safety, seaworthiness, or airworthiness of the vessels or aircrafts to
enable them to reach their port of destination;
(d) Goods brought into the Philippines for repair, processing or reconditioning to be
reexported upon completion of the repair, processing or reconditioning: Provided,
That the Bureau shall require security equal to one hundred percent (100%) of the
duties, taxes and other charges thereon, conditioned for the exportation thereof or
payment of the corresponding duties, taxes and other charges within six (6)
months from the date of acceptance of the goods declaration;
(e) Medals, badges, cups, and other small goods bestowed as trophies or prizes,
or those received or accepted as honorary distinction;
(f) Personal and household effects belonging to returning residents including
household appliances, jewelry, precious stones, and other goods of luxury which
were formally declared and listed before departure and identified under oath before
the District Collector when exported from the Philippines by such returning
residents upon their departure therefrom or during their stay abroad; personal and
household effects including wearing apparel, goods of personal adornment, toilet
goods, instruments related to one's profession and analogous personal or
household effects, excluding luxury items, vehicles, watercrafts, aircrafts and
animals purchased in foreign countries by residents of the Philippines which were
necessary, appropriate, and normally used for their comfort and convenience
during their stay abroad, accompanying them on their return, or arriving within a
reasonable time which, barring unforeseen and fortuitous events, in no case shall
exceed sixty (60) days after the owner's return.
For purposes of this section, the phrase “returning residents” shall refer to
nationals who have stayed in a foreign country for a period of at least six (6)
months. Returning residents shall have tax and duty exemption on personal and
household effects: Provided, That:
(1) It shall not be in commercial quantities;
(2) It is not intended for barter, sale or for hire; and
(3) Limited to the FCA or FOB value of:
(i) Three hundred fifty thousand pesos (₱350,000.00) for those who have stayed in
a foreign country for at least ten (10) years and have not availed of this privilege
within ten (10) years prior to returning resident's arrival;
(ii) Two hundred fifty thousand pesos (₱250,000.00) for those who have stayed in
a foreign country for a period of at least five (5) but not more than ten (10) years
and have not availed of this privilege within five (5) years prior to returning
resident's arrival; or
(iii) One hundred fifty thousand pesos (₱150,000.00) for those who have stayed in
a foreign country for a period of less than five (5) years and have not availed of this
privilege within six (6) months prior to returning resident's arrival.
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Any amount in excess of the above-stated threshold shall be subject to the
corresponding duties and taxes under this Act.
Every three (3) years after the effectivity of this Act, the Secretary of Finance shall
adjust the amount herein stated to its present value using the CPI as published by
the PSA.
In addition to the privileges granted under the immediately preceding paragraph,
returning Overseas Filipino Workers (OPWs) shall have the privilege to bring in, tax
and duty-free, home appliances and other durables, limited to one of every kind
once in a given calendar year accompanying them on their return, or arriving within
a reasonable time which, barring unforeseen and fortuitous events, in no case shall
exceed sixty (60) days after every returning OFW's return upon presentation of
their original passport at the port of entry: Provided, That any amount in excess of
FCA value of one hundred fifty thousand pesos (₱150,000.00) for personal and
household effects or of the number of duty-free appliances as provided for under
this section, shall be subject to the corresponding taxes and duties; Provided,
Further, That every three (3) years after the effectivity of this Act, the Secretary of
Finance shall adjust the amount herein stated to its present value using the CPI as
published by the PSA;
(g) Residents of the Philippines, OPWs or other Filipinos while residing abroad or
upon their return to the Philippines shall be allowed to bring in or send to their
families or relatives in the Philippines balikbayan boxes which shall be exempt from
applicable duties and taxes imposed under the NIRC of 1997, as amended:
Provided, That balikbayan boxes shall contain personal and household effects only
and shall neither be in commercial quantities nor intended for barter, sale or for
hire and that the FCA value of which shall not exceed one hundred fifty thousand
pesos (₱150,000.00); Provided, Further, That every three (3) years after the
effectivity of this Act, the Secretary of Finance shall adjust the amount herein
stated to its present value using the CPI as published by the PSA; Provided,
Finally, That residents of the Philippines, OFWs or other Filipinos can only avail of
this privilege up to three (3) times in a calendar year. Any amount in excess of the
allowable non-dutiable value shall be subject to the applicable duties and taxes;
(1) For purposes of this Act, OFWs referto Holders of valid passports duly issued
by the Department of Foreign Affairs (DFA) and certified by the Department of
Labor and Employment (DOLE) or the Philippine Overseas Employment
Administration (POEA) for overseas employment purposes. They cover all
Filipinos, working in a foreign country under employment contracts, regardless of
their professions, skills or employment status in a foreign country; and (2) Calendar
Year refers to the period from January 1 to December 31.
(h) Wearing apparel, goods of personal adornment, toilet goods, portable tools and
instruments, theatrical costumes and similar effects accompanying travelers, or
tourists, or arriving within a reasonable time before or after their arrival in the
Philippines, which are necessary and appropriate for the wear and use of such
persons according to the nature of the journey, their comfort and convenience;
Provided, That this exemption shall not apply to goods intended for other persons
or for barter, sale or hire: Provided, However, That the Bureau may require either a
written commitment or a security in an amount equal to one hundred percent
(100%) of the ascertained duties, taxes and other charges thereon, conditioned for
the exportation thereof or payment of the corresponding duties, taxes and other
charges within three (3) months from the date of acceptance of the goods
declaration: Provided, Further, That the Bureau may extend the time for
exportation or payment of duties, taxes and other charges for a term not exceeding
three (3) months from the expiration of the original period.
Personal and household effects and vehicles belonging to foreign consultants and
experts hired by, or rendering service to, the government, and their staff or
personnel and families accompanying them or arriving within a reasonable time
before or after their arrival in the Philippines, in quantities and of the kind
necessary and suitable to the profession, rank or position of the person importing
said items, for their own use and not for barter, sale or hire: Provided, That the
Bureau may require either a written commitment or a security in an amount equal
to one hundred percent (100%) of the ascertained duties, taxes and other charges
thereon, upon the goods classified under this subsection; conditioned for the
exportation thereof or payment of the corresponding duties, taxes and other
charges within three (3) months after the expiration of their term or contract;
Provided, However, That the Bureau may extend the time for exportation or
payment of duties, taxes and other charges for a term not exceeding three (3)
months from the expiration of the original period;
(i) Professional instruments and implements, tools of trade, occupation or
employment, wearing apparel, domestic animals, and personal and household
effects belonging to persons coming to settle in the Philippines or Filipinos or their
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families and descendants who are now residents or citizens of other countries,
such parties hereinafter referred to as overseas Filipinos, in quantities and of the
class suitable to the profession, rank or position of the persons importing said
items, for their own use and not for barter or sale, accompanying such persons, or
arriving within a reasonable time: Provided, That the Bureau may, upon the
production of satisfactory evidence that such persons are actually coming to settle
in the Philippines and that the goods are brought from their former place of abode,
exempt such goods from the payment of duties and taxes; Provided, Further, That
vehicles, vessels, aircrafts, machineries and other similar goods for use in
manufacture, shall not fall within this classification and shall therefore be subject to
duties, taxes and other charges;
(j) Goods used exclusively for public entertainment, and for display in public
expositions, or for exhibition or competition for prizes, and devices for projecting
pictures and parts and appurtenances thereof, upon identification, examination,
and appraisal and the giving of a security in an amount equal to one hundred
percent (100%) of the ascertained duties, taxes and other charges thereon,
conditione d for exportation thereof or payment of the corresponding duties, taxes
and other charges within three (3) months from the date of acceptance of the
goods declaration: Provided, That the Bureau may extend the time for exportation
or payment of duties, taxes and other charges for a term not exceeding three (3)
months from the expiration of the original period; and technical and scientific films
when imported by technical, cultural and scientific institutions, and not to be
exhibited for profit: Provided, Further, That if any of the films is exhibited for profit,
the proceeds therefrom, shall be subject to confiscation, in addition to the penalty
providedamder this Act;
(k) Goods brought by foreign film producers directly and exclusively used for
making or recording motion picture films on location in the Philippines, upon their
identification, examination and appraisal and the giving of a security in an amount
equal to one hundred percent (100%) of the ascertained duties, taxes and other
charges thereon, conditioned for exportation thereof or payment of the
corresponding duties, taxes and other charges within three (3) months from the
date of acceptance of the goods declaration, unless extended by the District
Collector for another three (3) months; photographic and cinematographic films,
underdeveloped, exposed outside the Philippines by resident Filipino citizens or by
producing companies of Philippine registry where the principal actors and artists
employed for the production are Filipinos, upon affidavit by the importer and
identification that such exposed films are the same films previously exported from
the Philippines. As used in this paragraph, the terms “actors” and “artists” include
the persons operating the photographic camera or other photographic and sound
recording apparatus by which the film is made;
(l) Importations for the official use of foreign embassies, legations and other
agencies of foreign governments: Provided, That those foreign countries accord
like privileges to corresponding agencies of the Philippines. Goods imported for the
personal or family use of members and attaches of foreign embassies, legations,
consular officers and other representatives of foreign governments; Provided,
However, That such privilege shall be accorded under special agreements
between the Philippines and the countries which they represent: Provided, Further,
That the privilege may be granted only upon specific instructions of the Secretary
of Finance pursuant to an official request of the DFA on behalf of members or
attaches of foreign embassies, legations, consular officers and other
representatives of foreign governments;
(m) Imported goods donated to or, for the account of the Philippine government or
any duly registered relief organization, not operated for profit, for free distribution
among the needy, upon certification by theDSWD or the Department of Education
(DepED), or the Department of Health (DOH), as the case may be;
(n) Containers, holders and other similar receptacles of any material including kraft
paper bags for locally manufactured cement for export, including corrugated boxes
for bananas, mangoes, pineapples and other fresh fruits for export, except other
containers made of paper, paperboard and textile fabrics, which are of such
character as to be readily identifiable and/or reusable for shipment or
transportation of goods shall be delivered to the importer thereof upon
identification, examination and appraisal and the giving of a security in an amount
equal to one hundred percent (100%) of the ascertained duties, taxes and other
charges thereon, within six (6) months from the date of acceptance of the goods
declaration;
(o) Supplies which are necessary for the reasonable requirements of the vessel or
aircraft in its voyage or flight outside the Philippines, including goods transferred
from a bonded warehouse in any Customs District to any vessel or aircraft
engagedin foreign trade, for use or consumption of the passengers or its crew on
board such vessel or aircraft as sea or air stores; or goods purchased abroad for
sale on board a vessel or aircraft as saloon stores or air store supplies; Provided,
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That any surplus or excess of such vessel or aircraft supplies arriving from foreign
ports or airports shall be dutiable;
(₱) Goods and salvage from vessels recovered after a period of two (2) years from
the date of filing the marine protest or the time when the vessel was wrecked or
abandoned, or parts of a foreign vessel or its equipment, wrecked or abandoned in
Philippine waters or elsewhere: Provided, That goods and salvage recovered
within the said period of two (2) years shall be dutiable;
(q) Coffins or urns containing human remains, bones or ashes, used personal and
household effects (not merchandise) of the deceased person, except vehicles, the
FCA value of which does not exceed one hundred fifty thousand pesos
(₱150,000.00), upon identification as such: Provided, That every three (3) years
after the effectivity of this Act, the value herein stated shall be adjusted to its
present value using the CPI as published by the PSA;
(r) Samples of the kind, in such quantity and of such dimension or construction as
to render them unsaleable or of no commercial value; models not adapted for
practical use; and samples of medicines, properly marked “sample-sale punishable
by law”, for the purpose of introducing new goods in the Philippine market and
imported only once in a quantity sufficient for such purpose by a person duly
registered and identified to be engaged in that trade: Provided, That importations
under this subsection shall be previously authorized by the Secretary of Finance:
Provided, However, That importation of sample medicines shall have been
previously authorized by the Secretary of Health, and that such samples are new
medicines not available in the Philippines: Provided, Further, That samples not
previously authorized or properly marked in accordance with this section shall be
levied the corresponding tariff duty.
Commercial samples, except those that are not readily and easily identifiable as in
the case of precious and semi-precious stones, cut or uncut, and jewelry set with
precious or semi-precious stones, the value of any single importation of which does
not exceed FCA value of fifty thousand pesos (₱50,000.00) upon the giving of a
security in an amount equal to the ascertained duties, taxes and other charges
thereon, conditioned for the exportation of said samples within three (3) months
from the date of the acceptance of the goods declaration or in default thereof, the
payment of the corresponding duties, taxes and other charges: Provided, That if
the FCA value of any single consignment of such commercial samples exceeds
fifty thousand pesos (₱50,000.00), the importer thereof may select any portion of
the same not exceeding the FCA value of fifty thousand pesos (₱50,000,00) for
entry under the provision of this subsection, and the excess of the consignment
may be entered in bond, or for consumption, as the importer may elect: Provided,
Further, That every three (3) years after the effectivity of this Act, the Secretary of
Finance shall adjust the amount herein stated to its present value using the CPI as
published by the PSA.
(s) Animals, except race horses, and plants for scientific, experimental propagation
or breeding, andfor other botanical, zoological and national defense purposes:
Provided, That no live trees, shoots, plants, moss and bulbs, tubers and seeds for
propagation purposes may be imported under this section, except by order of the
government or other duly authorized institutions; Provided, However, That the free
entry of animals for breeding purposes shall be restricted to animals of recognized
breed, duly registered in the record or registry established for that breed, and
certified as such by the Bureau of Animal Industry (BAI): Provided, Further, That
the certification of such record, and pedigree of such animal duly authenticated by
the proper custodian of such record or registry, shall be submitted to the District
Collector, together with the affidavit of the owner or importer that such animal is the
animal described in said certificate of record and pedigree: Provided, Finally, That
the animals and plants are certified by the NEDA as necessary for economic
development;
(t) Economic, technical, vocational, scientific, philosophical, historical and cultural
books or publications, and religious books like Bibles, missals, prayer books, the
Koran, Ahadith and other religious books of similar nature and extracts therefrom,
hymnal and hymns for religious uses; Provided, That those which may have
already been imported but are yet to be released by the Bureau at the effectivity of
this Act may still enjoy the privilege herein provided upon certification by the
DepED that such imported books and/or publications are for economic, technical,
vocational, scientific, philosophical, historical or cultural purposes or that the same
are educational, scientific or cultural materials covere d by the International
Agreement on Importation of Educational Scientific and Cultural Materials
(XAESCM) signed by the President of the Philippines on August 2, 1952, or other
agreements binding upon the Philippines. Educational, scientific and cultural
materials covered by international agreements or commitments binding upon the
Philippine government so certified by the DepED.
(u) Philippine goods previously exported from the Philippines and returned without
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having been advanced in value, or improved in condition by any process of
manufacturing or other means, and upon which no drawback or bounty has been
allowed, including instruments and implements, tools of trade, machinery and
equipment, used abroad by Filipino citizens in the pursuit of their business,
occupation or profession; and foreign goods previously imported when returned
after haiffif been exported and loaned for use temporarily abroad solely for
exhibition, testing and experimentation, for scientific or educational purposes; and
foreign containers previously imported which have been used in packing exported
Philippine goods and returned empty if imported by or for the account of the person
or institution who exported them from the Philippines and not for sale, barter or hire
subject to identification: Provided, That Philippine goods falling under this
subsection upon which drawback or bounty have been allowed shall, upon
reimportation thereof, be subject to a duty under this subsection equal to the
amount of such drawback or bounty;
(v) Aircraft, equipment and machinery, spare parts, commissary and catering
supplies, aviation gas, fuel and oil, whether crude or refined except when directly
or indirectly used for domestic operations, and such other goods or supplies
imported by and for the use of scheduled airlines operating under congressional
franchise: Provided, That such goods or supplies are not locally available in
reasonable quantity, quality and price and are necessary or incidental to the proper
operation of the scheduled airline importing the same;
(w) Machineries, equipment, tools for production, plans to convert mineral ores into
saleable form, spare parts, supplies, materials, accessories, explosives, chemicals,
and transportation and communications facilities imported by and for the use of
new mines and old mines which resume operations, when certified to as such by
the Secretary of the Department of Environment and Natural Eesources (DENE),
upon the recommendation of the Director of Mines and Geosciences Bureau, for a
period ending five (5) years from the first date of actual commercial production of
saleable mineral products: Provided, That such goods are not locally available in
reasonable quantity, quality and price and are necessary or incidental in the proper
operation of the mine; and aircrafts imported by agro-industrial companies to be
used by them in their agriculture and industrial operations or activities, spare parts
and accessories thereof, when certified to as such by the Secretary of the
Department of Agriculture (DA) or the Secretary of the Department of Trade and
Industry (DTI), as the case may be;
(x) Spare parts of vessels or aircraft of foreign registry engaged in foreign trade
when brought into the Philippines exclusively as replacements or for the
emergency repair thereof, upon proof satisfactory to the District Collector that such
spare parts shaft he utilized to secure the safety, seaworthiness or airworthiness of
the vessel or aircraft, to enable it to continue its voyage or flight;
(y) Goods exported from the Philippines for repair, processing or reconditioning
without having been substantially advanced in value, and subsequently reimported
in its original form and in the same state: Provided, That in case the reimported
goods advanced in value, whether or not in their original state, the value added
shall be subject to the applicable duty rate of the tariff heading of the reimported
goods; and
(z) Trailer chassis when imported by shipping companies for their exclusive use in
handling containerized cargo, upon posting a security in an amount equal to one
hundred percent (100%) of the ascertained duties, taxes and other charges due
thereon, to cover aperiod of one (1) year from the date of acceptance of the entry,
which period, for meritorious reasons, may be extended by the Commissioner from
year to year, subject to the following conditions:
(1) That they shall be properly identified and registered with the Land
Transportation Office (LTO);
(2) That they shall be subject to customs supervision fee to be fixed by the District
Collector and subject to the approval of the Commissioner;
(3) That they shall be deposited in the customs territory when not in use; and
(4) That upon the expiration of the period prescribed above, duties and taxes shall
be paid unless otherwise reexported.
(aa) Any officer or employee of the DEA, including any attache, civil or military or
member of the staff assigned to a Philippine diplomatic mission abroad by the
Department or any similar officer or employee of other departments assigned to
any Philippine consular office abroad, or any AFP military personnel accorded
assimilated diplomatic rank or on duty abroad who is returning from a regular
assignment abroad, for reassignment to the home office, or who dies, resigns, or is
retired from the service, after the approval of this Act, shall be exempt from the
payment of all duties and taxes on personal and household effects, including one
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(1) motor car which must have been ordered or purchased prior to the receipt by
the mission or consulate of the order of recall, and which must be registered in the
name of the officer or employee: Provided, That this exemption shall apply only to
the value of the motor car and to the aggregate assessed value of the personal
and household effects, the latter not to exceed thirty percent (30%) of the total
amount received by the officer or employee in salary and allowances during the
latest assignment abroad, but not to exceed four (4) years: Provided, However,
That this exemption shall not be availed of more than once every four (4) years:
Provided, Further, That the officer or employee concerned must have served
abroad for not less than two (2) years.
The provisions of general and special laws, to the contrary notwithstanding,
including those granting franchises, there shall be no exemption whatsoever from
the payment of duties except as provided for in this Act; those granted to
government agencies, instrumentalities or government-owned or -controlled
corporations (GOCCs) with existing contracts, commitments, agreements, or
obligations with foreign countries requiring such exemption; those granted to
international institutions, associations or organizations entitled to exemption
pursuant to agreements or special laws; and those that may be granted by the
President upon prior recommendation of the NEDA in the interest of national
economic development.
This is a long provision but we will just discuss the balikbayan box.
Remember yung may nanalona athlete then daladalani young belt nya. Gi tax siya ng
BOC. The belt is in the exception here. It was actually tax exempt but gi tax ng BOC
kasi she failed to declare it. Even it is tax exempt, the rule is, all goods must be
declared.
Let us discuss letter F and G.
Personal house and effects belonging to a returning residents.
Returning residents are different from OFW. Returning residents are nationals from
state of a foreign country for a period of at least 6 months.
There are 2 things that maybe brought back:
1. Luxury – household appliance, precious gold and stones, and other forms
of luxury.
These will be tax exempt if all will be declared and listed before departure,
and identified before the district collector that these items are exported
with the Philippines.
In simple terms, You can bring them back tax free if you bought it outside
at the time na _ sa Philippines.
2. Household effects excluding luxury items. – it must be accompanying
them on their return, or arriving within a reasonable time which, barring
unforeseen and fortuitous events, in no case shall exceed sixty (60) days
after the owner's return.
Returning residents shall have tax and duty exemption on personal and household
effects: Provided, That:
(1) It shall not be in commercial quantities;
(2) It is not intended for barter, sale or for hire; and
(3) Limited to the FCA or FOB value of:
(i) Three hundred fifty thousand pesos (₱350,000.00) for those who have stayed in a
foreign country for at least ten (10) years and have not availed of this privilege within
ten (10) years prior to returning resident's arrival;
(ii) Two hundred fifty thousand pesos (₱250,000.00) for those who have stayed in a
foreign country for a period of at least five (5) but not more than ten (10) years and
have not availed of this privilege within five (5) years prior to returning resident's
arrival; or
(iii) One hundred fifty thousand pesos (₱150,000.00) for those who have stayed in a
foreign country for a period of less than five (5) years and have not availed of this
privilege within six (6) months prior to returning resident's arrival.
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Any amount in excess of the above-stated threshold shall be subject to the
corresponding duties and taxes under this Act.
OFWs
OFWs are different from returning residents. Pagsinabimong OFW they have a
passport issued by DFA and they are certified by the DOLE or POEA for overseas
employment purposes.
For OFWs, there are 2 situations contemplated:
1. Importation of home appliances other than durable (f)
What are the requirements?
1. the goods involved are other than durables
2. must be limited to one kind
3. once in a given calendar year
4. the goods must have accompanied him upon arrival or within 60 days
except for unforeseen or fortuitous events
5. Must not exceed the value of P150,000
6. Presentation of the passport
April 7, 2017 (3rd Hour)
(By: Earvin Jay Alparaque)
So supposing if you are a traveler, pumunta ka ng Singapore at nanonood ka ng
Coldplay doon tapos pagbalik mo meron ka nang TV. Are you considered as an
Overseas Filipino Worker? Are you considered as a returning resident?
(g) balikbayan boxes
Now, let's discuss balikbayan boxes. Ito yung grabe sa news dati. Diba meron tayong
news dati na isang lolo sige siya padala ng balikbayan boxes tapos pag-open ng mga
balikbayan boxes puno ng mga of commercial quantity talaga. Tapos sabi ipanghatag
daw niya sa iyang mga apo. (Pila diay kabuok imong apo lo?)
Who are the persons who may avail of the balikbayan boxes rule?
1. Residents of the Philippines
2. OFW's
3. Other Filipinos residing abroad or upon their return to the Philippines.
They are allowed to bring in or send their relatives balikbayan boxes which shall be
exempt from duties and taxes imposed under the NIRC under the following
requirements:
a. The boxes contain personal and household effects only.
b. It must neither be in commercial quantities nor intended for sale, barter or hire.
c. The value must not exceed P150,000.
d. The Philippine residents, OFW's or other Filipinos can avail of this privilege up to
three times a year. So in a single year, you can claim P450,000. (150,000x3)
Let's now go to REFUND and ABATEMENT.
When should the tax refund be granted? It is found in section 903 of R.A. 10863
(Customs Modernization and Tariff Act)-
Section 903. Refund of Duties and Taxes.— Refund shall be granted where it is
established that duties and taxes have been overcharged as a result of an error in the
assessment or goods declaration.
Where permission is given by the Bureau for goods originally declared for a customs
procedure with payment of duties and taxes to be placed under another customs
procedure, a refund shall be made of any duties and taxes charged in excess of the
amount due under the new procedure, subject to such regulation issued for the
purpose.
A refund shall not be granted if the amount of duties and taxes involved is less than
five thousand pesos (₱5,000.00); Provided, That the Secretary of Finance, in
consultation with the Commissioner, may adjust the minimum amount specified in this
Act, taking into account the CPI as published by the PSA.
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What about abatement? It is found in section 904-
Section 904. Abatement of Duties and Taxes.— When goods have not yet been
released for consumption or have been placed under another customs procedure,
provided that no other offense or violation has been committed, the declarant shall
neither be required to pay the duties and taxes nor be entitled to refund thereof in any
of the following cases:
(a) When, at the request of the declarant, the goods are abandoned, or as determined
by the Bureau, the goods are destroyed or rendered commercially valueless while
under customs control. Any cost herein incurred shall be borne by the declarant;
Meaning there is an express abandonment of the goods or the goods are destroyed or
rendered commercially valueless while under customs control. Nadaot, nasunog ang
customs warehouse and nothing is salvaged. In that case wala ka na bayaran na
duties and taxes.
(b) When goods are destroyed or irrecoverably lost by accident or force majeure, the
remaining waste or scrap after destruction, if taken into consumption, shall be subject
to the duties and taxes that would be applicable on such waste or scrap if imported in
same state; and
Example may bagyo, etc.
(c) When there are shortages due to the nature of the goods.
So kailangan may shortage sa product na to due to its nature, and in reporting, to
protect the Philippines, hindi ka nalang magbayad ng taxes. That is one reason for
abatement.
Are these the only laws for abatement? Not really because we have sections 904-912
of R.A. 10863-
SECTION 905. Abatement for Damage Incurred During Voyage.—-  Except as otherwise
provided, no abatement of duties shall be made on account of damage incurred or
deterioration suffered during the voyage of importation; and duties will be assessed on
the actual quantity imported as determined by the customs officers concerned.
SECTION 906. Abatement or Refund of Duty on Missing Package.—  When any
package appearing on the manifest or bill of lading or airway bill is missing, an
abatement or refund of the duty shall he made if it is certified by the importer or
consignee, under pain of penalty for falsification or perjury, and upon production of
proof satisfactory to the Collector concerned, that the package in question has not
been unlawfully imported into the Philippines.
SECTION 907. Abatement or Refund for Deficiency in Contents of Packages.—  If, upon
opening of any package, a deficiency in the quantity of the goods is found to exist
based upon the invoice, such deficiency shall be certified, under pain of penalty for
falsification or perjury, by the customs officers concerned and upon the production of
proof showing that the shortage occurred before the arrival of the goods in the
Philippines. Upon sufficient proof thereof, the proper abatement or refund of the duty
shall be made.
SECTION 908. Abatement or Refund of Duties on Goods Lost or Destroyed After
Arrival.— The Bureau may abate or refund the amount of duties accruing or paid on
any goods that have been lost due to injury, theft, destruction through fire or through
any other causes, upon satisfactory proof of the same, under any of the following
circumstances:
(a) While within the territory of any port of entry, prior to unloading under the
Bureau’s supervision;
(b) While remaining in customs custody after unloading;
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
(c) While in transit from the port of entry to any port in the Philippines; and
(d) While released under sufficient security for export except in case of loss
by theft.
SECTION 909. Abatement and Refund of Defective Goods.—  Under conditions to be
set by the Commissioner, and with the approval of the Secretary of Finance, an
abatement and refund shall be granted on imported or exported goods which are
found defective or otherwise not in accordance with the agreed specifications at the
time of importation or exportation and are returned either to the supplier or to another
person designated by the supplier, subject to the following conditions:
(a) The goods have not been worked, repaired, or used in the country of
importation, and are reexported within a reasonable time; and
(b) The goods have not been worked, repaired, or used in the country to
which they were exported, and are reimported within a reasonable time.
Use of the goods shall, however, not hinder the refund if such use was indispensable
to discover the defects or other circumstances which caused the reexportation or
reimportation of the goods.
As an alternative to reexportation or reimportation, the goods may be expressly
abandoned or destroyed or rendered commercially valueless under customs control as
the Bureau may decide. In such case, the importer shall not be entitled to an
abatement or a refund if it does not defray the costs of such abandonment,
destruction, or rendition.
SECTION 910. Abatement of Duty on Dead or Injured Animals.— Where it is certified,
under pain of penalty for falsification or perjury, and upon production of proof
satisfactory to the Bureau that an animal subject of importation dies or suffers injury
before arrival, or while in customs custody, the duty due thereon shall be abated
provided that its carcass on board or in customs custody is removed in the manner
required by the Bureau and at the expense of the importer.
SECTION 911. Investigation Required in Case of Abatements and Refunds.—  The
Customs Officer concerned shall, in all cases of abatement or refund of duties, submit
an examination report as to any fact discovered which indicates any discrepancy and
cause the corresponding adjustment on the goods declaration.
SECTION 912. Refund Arising from Correction of Errors.— Manifest clerical errors
made on an invoice or entry, errors in return of weight, measure and gauge, when duly
certified under penalties of falsification or perjury by the surveyor or examining officer
when there are such officers at the port, and errors in the distribution of charges on
invoices not involving any question of law and certified under penalties of falsification
or perjury by the examining customs officer, may be corrected in the computation of
duties, if such errors are discovered before the payments of duties, or if discovered
within one (1) year after release from customs custody of imported goods upon written
request and notice of error from the importer, or upon statement of error certified by
the District Collector, For the purpose of correcting errors specified in the next
preceding paragraph, the Bureau is authorized to make refunds within the statutory
time limit.
Let us now go to REFUNDS, section 913-
SECTION 913. Claims for Refund.— All claims and application for refund of duties and
taxes shall be made in writing and filed with the Bureau within twelve (12) months from
the date of payment of duties and taxes.
If as a result of the refund of duties, a corresponding refund of internal revenue taxes
on the same importation becomes due, the Bureau shall cause the refund of internal
revenue taxes in favor of the importer after issuance of a certification from the
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Commissioner of Internal Revenue, when applicable.
The importer may file an appeal of a denial of a claim for refund or abatement, whether
it is a full or partial denial, with the Commissioner within thirty (30) days from the date
of the receipt of the denial. The Commissioner shall render a decision within thirty (30)
days from the receipt of all the necessary documents supporting the application.
Within thirty (30) days from receipt of the decision of the Commissioner, the case may
also be appealed to the CTA.
Notwithstanding the provisions in the preceding paragraphs, the filing of claims for
refund of national internal revenue taxes shall be governed by the provisions provided
under the NTRC of 1997, as amended.
Where should we file the claim for refund?
You must file it before the Bureau of Customs.
When should it be made?
It must be made within twelve months from the date of payment of the
duties and taxes.
What if the BOC denies your claim for refund?
The importer may file an appeal of a denial of a claim for refund or
abatement, whether it is a full or partial denial, with the Commissioner within thirty (30)
days from the date of the receipt of the denial. The Commissioner shall render a
decision within thirty (30) days from the receipt of all the necessary documents
supporting the application. Within thirty (30) days from receipt of the decision of the
Commissioner, the case may also be appealed to the CTA.
Let us now go to ADMINISTRATIVE and JUDICIAL PROCEDURES.
First is the advance ruling. Even before the importation of the goods you can
ask the BOC for an advance ruling of the products or goods provided that it only refers
to one type of goods. One advance ruling is equivalent to one type of goods or
merchandise imported.
There are three types of advance ruling-
1. Classification ruling
SECTION 1100. Classification Ruling.— An importer or exporter may file a written
application for an advance ruling on the tariff classification of goods with the
Commission. The Commission shall render a ruling within thirty (30) days from receipt
of a properly documented application.
When a declared tariff classification of goods, not subject of a pending application for
advance ruling, is in dispute, the importer, exporter, or the Bureau shall submit the
matter to the Commission for a ruling, without prejudice to the application of Section
1106 of this Act on “protest”: Provided, That such rulings of the Commission on
commodity classification shall be binding upon the Bureau, unless the Secretary of
Finance shall rule otherwise.
2. Valuation ruling
SECTION 1101. Valuation Ruling.— An importer or exporter may file a written
application for an advance valuation ruling on the proper application of a specific
method on customs valuation of specific goods as prescribed in Title VII, Chapter 1 of
this Act.
The application for a valuation ruling shall be filed with the Commissioner who shall
issue a ruling within thirty (30) days from submission of the application form and
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supporting documents as may be required by rules and regulations.
When the valuation method of goods not subject of an application for advance
valuation ruling or the declared customs value is in dispute, the matter shall be
resolved in accordance with Section 1106 of this Act on “protest”.
3. Ruling on the Rules of Origin
SECTION 1102. Ruling on the Rules of Origin.—  An importer or exporter may file a
written application for a ruling on whether the goods qualify as originating under the
rules of origin of the applicable preferential trade agreement. The application for an
advance ruling on origin shall be filed with the Commissioner who shall act on the
application within thirty (30) days from receipt of the application and supporting
documents as may be required by rules and regulations.
When the declared origin of the goods, not subject of a request for advance ruling on
origin, is in dispute, the matter shall be resolved in accordance with Section 1106 of
this Act on “protest”.
Application for advance ruling-
SECTION 1103. Conditions for Application and Effect of Advance Ruling.—  An
application for an advance ruling shall cover only one (1) product or item. The
application for advance ruling shall be filed at least ninety (90) days before the
importation or exportation of the product or item, as the case may be.
Supposing there is an adverse decision for the advance ruling, what is the
remedy of the party? This is provided under section 1104-
SECTION 1104. Administrative and Judicial Appeals.—  An aggrieved party may, within
thirty (30) days from receipt of an adverse ruling or decision, appeal the same to the
CTA without prejudice to the authority of the Secretary of Finance to review decisions
adverse to the government in accordance with Sections 1127 and 1128 of this Act, as
the case may be.
Let us go to PROTEST.
SECTION 1106. Protest.—  When, a ruling or decision of the District Collector or
customs officer involving goods with valuation, rules of origin, and other customs
issues is made, except the fixing of fines in seizure cases, the party adversely affected
may appeal by way of protest against such ruling or decision by presenting to the
Commissioner at the time when payment of the amount claimed to be due the
government is made, or within fifteen (15) days thereafter, a written protest setting
forth the objection to the ruling or decision in question and the reasons therefore.
Subject to the approval of the Secretary of Finance, the Commissioner shall
provide such rules and regulations as to the requirement for payment or nonpayment
of the disputed amount and in case of nonpayment, the release of the importation
under protest upon posting of sufficient security.
When can a taxpayer file a protest?
The taxpayer may file a protest on a ruling or decision of a district
officer/customs officer involving the goods for three reasons-
1. There is an issue in the Valuation
2. There is an issue in the Rules of Origin
3. Other customs issues
N.B. The protest is not available in fixing fines or in seizure cases because
there is a different remedy.
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Where should a protest be filed?
The protest shall be filed with the Commissioner at the time of payment of the
amount claimed to be due to the government or within fifteen days thereafter as
provided under the law. It is required that there must be payment under protest. Mag-
bayad ka ng kailangan mong bayaran and at the same time it is either you file your
protest at the time of payment or you can file it fifteen days after the payment in
protest.
Take note also of section 1107-
SECTION 1107. Protest Exclusive Remedy in Protestable Case.—  In all cases subject
to protest, the interested party who desires to have the action of the District Collector
reviewed, shall file a protest as provided in Section 1106 of this Act, otherwise the
action of the District Collector shall be final and conclusive.
You must exhaust all administrative remedies before you go to the Court of
Tax Appeals.
What if the decision of the District Collector is adverse?
The procedure under section 114 in relation to 1126 should be followed.
SECTION 1126. Appeal to the Commissioner.—  In forfeiture cases, the person
aggrieved by the decision of a District Collector may, within fifteen (15) days or five (5)
days in case of perishable goods, from receipt of the decision, file a written notice of
appeal, together with the required appeal fee to the District Collector, furnishing a copy
to the Commissioner. The District Collector shall immediately transmit all the records
of the proceedings to the Commissioner, who shall review and decide on the appeal
within thirty (30) days from receipt of the records, or fifteen (15) days in the case of
perishable goods: Provided, That if within thirty (30) days, no decision is rendered, the
decision of the District Collector under appeal shall be deemed affirmed. An appeal
filed beyond the period herein prescribed shall be dismissed.
Appeals to protest cases shall be governed by Section 114 of this Act.
The decision of the Commissioner may be served through the recognized modes of
service under existing law.
SECTION 114. Right of Appeal, Forms and Ground.—  Any party adversely affected by a
decision or omission of the Bureau pertaining to an importation, exportation, or any
other legal claim shall have the right to appeal within fifteen (15) days from receipt of
the questioned decision or order.
An appeal in writing shall be filed within the period prescribed in this Act or by
regulation and shall specify the grounds thereof.
The Bureau may allow a reasonable time for the submission of supporting evidence to
tbe appeal.
So basically if there is an adverse decision on the part of the Commissioner,
the next remedy is to file an appeal within fifteen days with the CTA.
Take note also of the concept of ALERT ORDERS-
SECTION 1111. Alert Orders.— Alert orders are written orders issued by customs
officers as authorized by the Commissioner on the basis of derogatory information
regarding possible noncompliance with this Act. An alert order will result in the
suspension of the processing of the goods declaration and the conduct of physical or
nonintrusive inspection of the goods within forty-eight (48) hours from issuance of the
order. Within forty-eight (48) hours or, in the case of perishable goods, within twenty-
four (24) hours from inspection, the alerting officer shall recommend the continuance
of processing of goods in case of a negative finding, or issuance of a warrant of
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seizure and detention if a discrepancy between the declaration and actual goods is
found. The Bureau’s information system shall immediately reflect the imposition or
lifting of an alert order.
Derogatory information shall indicate the violations and other necessary specifics
thereof. For this purpose, the following shall not be considered derogatory information:
(a) General allegations of misclassification without providing the appropriate
tariff heading and duty of the shipment to be alerted;
(b) General allegations of misclassification without providing the appropriate
tariff heading and duty of the shipment to be alerted;
(c) General allegations of over-quantity without indicating the source of
information supporting the allegation;
(d) General allegations of misdeclaration in the entry without indicating the
suspected actual contents thereof; and
(e) General allegations of importations contrary to law without indicating the
specific law or rule to be violated.
No alert order shall be issued on account of allegations of undervaluation unless said
undervaluation is caused by the submission to customs of forged or spurious invoice
or other commercial documents.
An alert order may be issued only after lodgement of the goods declaration and prior
to the release of goods from customs custody. Under no circumstances shall the
suspension of the processing of goods declaration be allowed except through an alert
order issued by an authorized customs officer.
The costs of the physical inspection shall be borne by the Bureau: Provided, That such
cost shall be reimbursed by the owner prior to the release of the goods if the physical
inspection results in the assessment of additional duties or taxes or the issuance of a
warrant of seizure.
The Commissioner shall be notified of the recommendation by the alerting officer
within twenty-four (24) hours from the issuance of the alert order. Alert orders shall be
dated and assigned a unique reference number in series which shall be the basis for
reporting to and monitoring by the Commissioner and the Secretary of Finance.
The Bureau shall create a central clearing house for alert orders and shall submit
reports quarterly on the status thereof.
There is a derogatory information that is received by the BOC and thereafter
the BOC will issue an alert order. These derogatory information are violations of the
CMTA(Customs Modernization and Tariff Act) and other customs laws which are
possible committed by the exporter or importer. Take note if we talk of possibilities,
these are not baseless allegations or general allegations ha. When we talk about
derogatory information and read the listing under section 1111(2nd paragraph, a-e),
there should be some sort of basis and the basis, grounds and provisions violated
must have to be specific. Hindi lang general allegations.
When is an alert order issued?
It is only issued after lodgment of the goods declaration and prior to the
release of the goods. By the time that the entry is made and will be lodged and there
are derogatory information that is received, an alert order may be issued.
An alert order may suspend the processing of the goods so long as the order
is issued by an authorized customs officer. If there is an alert order of course there will
be an inspection. If there will be an inspection and then there will be a violation that is
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found out by the customs officers, these goods imported or exported may be subject to
forfeiture proceedings. It will be seized and be subjected to forfeiture proceedings.
What are the properties subject to seizure and forfeiture? You have section
1113-
SECTION 1113. Property Subject to Seizure and Forfeiture.—  Property that shall be
subject to seizure and forfeiture include:
(a) Any vehicle, vessel or aircraft, including cargo, which shall be used
unlawfully in the importation or exportation of goods or in conveying or
transporting smuggled goods in commercial quantities into or from any
Philippine port or place. The mere carrying or holding on board of smuggled
goods in commercial quantities shall subject such vehicle, vessel, aircraft, or
any other craft to forfeiture: Provided, That the vehicle, vessel, aircraft or
any other craft is not used as a common carrier which has been chartered or
leased for purposes of conveying or transporting persons or cargo;
(b) Any vessel engaging in the coastwise trade which shaft have on board
goods of foreign growth, produce, or manufacture in excess of the amount
necessary for sea stores, without such goods having been properly entered
or legally imported;
(c) Any vessel or aircraft into which shall be transferred cargo unloaded
contrary to law prior to the arrival of the importing vessel or aircraft at the
port of destination;
(d) Any part of the cargo, stores, or supplies of a vessel or aircraft arriving
from a foreign port which is unloaded before arrival at the vessel’s or
aircraft’s port of destination and without authority from the customs officer;
but such cargo, ship, or aircraft stores and supplies shall not be forfeited if
such unloading was due to accident, stress of weather, or other necessity
and is subsequently approved by the District Collector;
(e) Goods which are fraudulently concealed in or removed contrary to law
from any public or private warehouse, container yard, or container freight
station under customs supervision;
(f) Goods, the importation or exportation of which are effected or attempted
contrary to law, or any goods of prohibited importation or exportation, and all
other goods which, in the opinion of the District Collector, have been used,
are or were entered to be used as instruments in the importation or the
exportation of the former;
(g) Unmanifested goods found on any vessel or aircraft if manifest therefor
is required;
(h) Sea stores or aircraft stores adjudged by the District Collector to be
excessive, when the duties and taxes assessed by the District Collector
thereon are not paid or secured forthwith upon assessment of the same;
(i) Any package of imported goods which is found upon examination to
contain goods not specified in the invoice or goods declaration including all
other packages purportedly containing imported goods similar to those
declared in the invoice or goods declaration to be the contents of the
misdeclared package;
(j) Boxes, cases, trunks, envelopes, and other containers of whatever
character used as receptacle or as device to conceal goods which are
subject to forfeiture under this Act or which are so designed as to conceal
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the character of such goods;
(k) Any conveyance actually used for the transport of goods subject to
forfeiture under this Act, with its equipage or trappings, and any vehicle
similarly used, together with its equipment and appurtenances. The mere
conveyance of smuggled goods by such transport vehicle shall be sufficient
cause for the outright seizure and confiscation of such transport vehicle but
the forfeiture shall not be effected if it is established that the owner of the
means of conveyance used as aforesaid, is engaged as common carrier
and not chartered or leased, or that the agent in charge thereof at the time,
has no knowledge of the unlawful act; and
(l) Goods sought to be imported or exported:
(1) Without going through a customs office, whether the act was
consummated, frustrated, or attempted;
(2) Found in the baggage of a person arriving from abroad and
undeclared by such person;
(3) Through a false declaration or affidavit executed by the owner,
importer, exporter, or consignee concerning the importation of
such goods;
(4) On the strength of a false invoice or other document executed
by the owner, importer, exporter, or consignee concerning the
importation or exportation of such goods; or
(5) Through any other practice or device contrary to law by
means of which such goods entered through a customs office to
the prejudice of the government.
SECTION 1115. Conditions Affecting Forfeiture of Goods.—  The forfeiture shall be
effected only when and while the goods are in the custody or within the jurisdiction of
customs officers, or in the possession or custody of or subject to the control of the
importer, exporter, original owner, consignee, agent of another person effecting the
importation, entry or exportation in question, or in the possession or custody of or
subject to the control of persons who shall receive, conceal, buy, sell, or transport the
same, or aid in any of such acts, with knowledge that the goods were imported, or
were the subject of an attempt at importation or exportation contrary to law.
If you read section 1113, dalawa lang yan eh- (a)vessel, aircraft or any means
used to transport smuggled goods and (b) goods which are fraudulently concealed or
otherwise, the goods.
Take note that the seizure of vessels, vehicles and aircrafts shall not be
effected if it is established that the owners or agents-in-charge of the means of
conveyance has no knowledge of the unlawful act. So it is entirely possible that the
owner has no knowledge of the unlawful act.
Ano ba kinalaman ng person na ito who owns the vessel?
The law provides for the prima facie presumption against vehicles, vessels and
aircrafts. What are these circumstances?
1. If the conveyance has been used for smuggling before. Nadakpan na sa
una.
2. The owner is not in the business for which the conveyance is generally
used.
3. The owner is not in a position to own such conveyance.
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When should the order of release(if no violation) or warrant of seizure(if there
is a violation) be issued?
SECTION 1116. Seizure or Release of Goods.—  The District Collector shall issue an
order of release or a warrant of seizure within five (5) days, or two (2) days in case of
perishable goods, upon the recommendation of the alerting officer or any other
customs officer. The District Collector shall immediately make a report of such seizure
or release to the Commissioner.
Who has the authority to issue a warrant of seizure?
It is the District Collector upon determination of the existence of probable
cause and in case of non-existence thereof, the issuance of the order of release.
Wala tayong problema kung meron tayong seizure kasi the importer can avail
of his/her remedies but what if the District Collector will issue an order of release?
SECTION 1117. Warrant of Seizure or Order of Release.—  The District Collector shall
have the authority to issue a warrant of seizure of the goods upon determination of the
existence of probable cause and in case of nonexistence thereof, the issuance of
order of release. In case the District Collector issued an order of release, the District
Collector shall immediately transmit all the records to the Commissioner who shall
automatically review within forty-eight (48) hours, or within twenty-four (24) hours in
case of perishable goods. When no decision is made by the Commissioner within the
prescribed period, the imported goods shall be deemed released.
The lifting of the alert order shall be issued by the District Collector only upon the
affirmation of the decision of the District Collector by the Commissioner, or after the
lapse of the period of review by the Commissioner, whichever is earlier.
The laws says that there will be an AUTOMATIC REVIEW by the
Commissioner of Customs if there is a decision adverse to the government when it
comes to seizure cases. This is why the District Collector should immediately transmit
the records to the CoC normally within forty-eight hours or twenty-four hours if the
goods are perishable.
If the CoC will not issue any rulings within the prescribed period (the CoC is
required to issue a decision or ruling normally within thirty days, or ten days if the
goods are perishable), the goods are deemed as released.
Then you have the service of warrant of seizure, section 1119-
SECTION 1119. Service of Warrant of Seizure.—  The District Collector shall cause the
service of warrant of seizure to the owner or importer of the goods or the authorized
representative thereof. The owner or importer shall be given, an opportunity to be
heard during the forfeiture proceedings.
For the purpose of serving the warrant, the importer, consignee, or person holding the
bill of lading or airway bill shall be deemed the “owner” of the goods. For the same
purpose, “authorized representative” shall include any agent of the owner and if the
owner or the agent is unknown, any person having possession of the goods at the time
of the seizure.
Service of warrant to an unknown owner shall be effected by posting the warrant for
fifteen (15) days in a public place at the concerned district, and by electronic or printed
publication.
After the seizure of the goods, the next step is the forfeiture proceedings.
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What if the owner is unknown? We have section 1121-
SECTION 1121. Proceedings in Case of Property Belonging to Unknown Parties.—  If,
within fifteen (15) days after service of warrant, no owner or agent can he found or
appears before the District Collector, the seized goods shall be forfeited ipso facto in
favor of the government to be disposed of in accordance with this Act.
If no owner will appear, there is an automatic forfeiture in favor of the
government.
Who has the burden of proof in forfeiture proceedings?
It is the claimant, the person or owner or importer claiming to be the owner of
the imported goods shall have the burden of proof in forfeiture proceedings.
Can there be settlement pending the seizure case? YES, under section 1124-
SECTION 1124. Settlement of Pending Seizure Case by Payment of Fine or
Redemption of Forfeited Goods.— Subject to the approval of the Commissioner, the
District Collector may allow the settlement by payment of fine or the redemption of
forfeited goods, during the course of the forfeiture proceeding. However, the
Commissioner may accept the settlement by redemption of any forfeiture case on
appeal. No settlement by payment of fine shall be allowed when there is fraud or when
the discrepancy in duties and taxes to be paid between what is determined and what is
declared amounts to more than thirty percent (30%).
There can be settlement upon the payment of fine or redemption of goods if
forfeited.
In the following cases, settlement in any seizure case is never allowed-
1. When there is fraud or when the discrepancy in duties and taxes to be paid
between what is determined and what is declared amounts to more than thirty percent
2. When the importation is prohibited
3. The release of the goods is contrary to law
When should be a decision in a forfeiture case be rendered?
SECTION 1125. Decision in Forfeiture Cases.— In forfeiture cases, the District Collector
shall issue an order for hearing within fifteen (15) days, or five (5) days in case of
perishable goods, from issuance of the warrant. The District Collector shall render a
decision within thirty (30) days upon termination of the hearing, or within ten (10) days
in case of perishable goods. The decision shall include a declaration of forfeiture, the
imposition of a fine or such other action as may be proper.
There are times na iforfeit lang, there are times magkamali lang probably there
will be a finding na there is no fault at all or a fine will just be imposed. After the
payment of the fine, the goods will be released by the customs.
Then you have appeal in forfeiture cases-
SECTION 1126. Appeal to the Commissioner.—  In forfeiture cases, the person
aggrieved by the decision of a District Collector may, within fifteen (15) days or five (5)
days in case of perishable goods, from receipt of the decision, file a written notice of
appeal, together with the required appeal fee to the District Collector, furnishing a copy
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to the Commissioner. The District Collector shall immediately transmit all the records
of the proceedings to the Commissioner, who shall review and decide on the appeal
within thirty (30) days from receipt of the records, or fifteen (15) days in the case of
perishable goods: Provided, That if within thirty (30) days, no decision is rendered, the
decision of the District Collector under appeal shall be deemed affirmed. An appeal
filed beyond the period herein prescribed shall be dismissed.
Appeals to protest cases shall be governed by Section 114 of this Act.
The decision of the Commissioner may be served through the recognized modes of
service under existing law.
Then you have automatic review, this is the automatic review of forfeiture
cases-
First is the automatic review by the Commissioner of any decision of a district
collector.
SECTION 1127. Automatic Review in Forfeiture Cases.—  The Commissioner shall
automatically review any decision by the District Collector adverse to the government.
The entire records of the case shall be elevated within five (5) days from the
promulgation of the decision. The Commissioner shall decide on the automatic review
within thirty (30) days, or within ten (10) days in the case of perishable goods, from
receipt of the records. When no decision is rendered within the prescribed period or
when a decision adverse to the government is rendered by the Commissioner
involving goods with FOB or FCA value of ten million pesos (₱10,000,000.00) or more,
the records of the decision of the Commissioner, or of the District Collector under
review, as the case may be, shall be automatically elevated within five (5) days for
review by the Secretary of Finance. The decision issued by the Secretary of Finance,
whether or not a decision was rendered by the Commissioner within thirty (30) days, or
within ten (10) days in the case of perishable goods, from receipt of the records, shall
be final upon the Bureau.
So if the decision is adverse to the government, meaning there is an
absolution of any or all penalties, the decision of the district collector will be
automatically reviewed by the Commissioner.
Now, what if the Commissioner of Customs will also issue an adverse decision
against the government or does not decide with the thirty day period or ten days in the
case of perishable goods?
Under section 1127, there will be an automatic elevation or automatic review
again by the Secretary of Finance(refer to the provision).
We also have the automatic review by the Secretary of Finance under section
1128-
SECTION 1128. Automatic Review by the Secretary of Finance in Other Cases.—  In
cases not involving protest or forfeiture, the Commissioner shall automatically review
any decision by the District Collector that is adverse to the government. The records of
the case shall be elevated to the Commissioner within five (5) days from the
promulgation of the decision. The Commissioner shall decide on the automatic review
within thirty (30) days from receipt of the records, or within ten (10) days in the case of
perishable goods. When no decision is rendered within the prescribed period or when
any decision rendered by the Commissioner is adverse to the government, the records
of the case under review shall be automatically elevated within five (5) days for the
review of the Secretary of Finance. The decision issued by the Secretary of Finance,
whether or not a decision was rendered by the Commissioner within thirty (30) days
from receipt of the records, or within ten (10) days in the case of perishable goods,
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shall be final upon the Bureau.
This refers to cases not involving protests or forfeiture.
Let us now go to ABANDONMENT. There are two kinds of abandonment as
provided under section 1129-
1. Express abandonment under section 1129(a)
2. Implied abandonment under section 1129(b-e)
SECTION 1129. Abandonment, Kinds and Effects of.— Imported goods are deemed
abandoned under any of the following circumstances;
(a) When the owner, importer, or consignee of the imported goods expressly
signifies in writing to the District Collector the intention to abandon the
same; or
(b) When the owner, importer, consignee, or interested party after due
notice, falls to file the goods declaration within the prescribed period in
Section 407 of this Act; Provided, That the term goods declaration shall
include provisional or incomplete goods declaration deemed valid by the
Bureau as provided in Section 403 of this Act. For this purpose, it is the duty
of the District Collector to post a list of all packages discharged and their
consignees, whether electronically or physically in the District Office, or
send a notice to the consignee within five (5) days from the date of
discharge; or
(c) Having filed such goods declaration, the owner, importer, consignee or
interested party after due notice, fails to pay the assessed duties, taxes and
other charges thereon, or, if the regulated goods failed to comply with
Section 117 of this Act, within fifteen (15) days from the date of final
assessment: Provided, That if such regulated goods are subject of an alert
order and the assessed duties, taxes and other charges thereof are not paid
within fifteen (15) days from notification by the Bureau of the resolution of
the alert order, the same shall also be deemed abandoned; or
(d) Having paid the assessed duties, taxes and other charges, the owner,
importer or consignee or interested party after due notice, fails to claim the
goods within thirty (30) days from payment. For this purpose, the arrastre or
warehouse operator shall report the unclaimed goods to the District
Collector for disposition pursuant to the provisions of this Act; or
(e) When the owner or importer fails to claim goods in customs bonded
warehouses within the prescribed period.
The due notice requirement under this section may be provided by the Bureau through
electronic notice or personal service; Provided, That for non-regular importers,
notification shall be by registered mail or personal service. For tins purpose, the
accreditation of importers, exporters, and other third parties shall indude provision for
mandatory receipt of electronic notices.
There is also one kind of abandonment that we have discussed earlier, diba
nadiscuss natin yung deemed abandoned siya? I think the failure to mark the goods
are deemed abandoned. That is also one instance of implied abandonment.
What is the treatment of abandoned goods? We have section 1130-
SECTION 1130. Treatment and Disposition of Abandoned Goods.—  Expressly
abandoned goods under paragraph (a) of Section 1129 of this Act shall ipso facto be
deemed the property of the government and shall be disposed of in accordance with
the provisions of this Act.
If the Bureau has not disposed of the abandoned goods, the owner or importer of
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goods impliedly abandoned may, at any time within thirty (30) days after the lapse of
the prescribed period to file the declaration, reclaim the goods provided that all legal
requirements have been complied with and the corresponding duties, taxes and other
charges, without prejudice to charges and fees due to the port or terminal operator, as
well as expenses incurred have been paid before the release of the goods from
customs custody.
When the Bureau sells goods which have been impliedly abandoned, although no
offense has been discovered, the proceeds of the sale, after deduction of any duty and
tax and all other charges and expenses incurred as provided in Section 1143 of this
Act, shall be turned over to those persons entitled to receive them or, when this is not
possible, held at their disposal for a specified period. After the lapse of the specified
period, the balance shall be transferred to the forfeiture fund as provided in Section
1151 of this Act.
So this reclaim of the goods will apply only to implied abandonment.
Let us now go the civil remedies of the government, this is pretty much the
same with NIRC.
The following are the civil remedies under section 1132-
1. Distraint of goods or levy of real property
2. Civil action or criminal action
SECTION 1132. Remedies for the Collection of Duties, Taxes, Fines, Surcharges,
Interests, and Other Charges.— The civil remedies for the collection of import duties,
taxes, fees, or charges resulting from the conduct of a post clearance audit shall be
obtained by:
(a) Distraint of goods, chattels, or effects, and other personal property of
whatever character, including stocks and other securities, debts, credits,
bank accounts, and interest in and rights to personal property, and by levy
upon real property and interest in rights to real property; and
(b) Civil or criminal action.
Either or both of these remedies may be pursued at the discretion of the
Bureau; Provided, That the remedies of distraint and levy shall not be allowed when
the amount of duties and taxes involved is not more than ten thousand pesos
(₱10,000.00).
The Bureau shall advance the amounts needed to defray costs of collection by means
of civil or criminal action, including the preservation or transportation of personal
property distrained and the advertisement and sale thereof as well as of real property
and improvements thereon.
Either or both of these remedies may be pursued by the government, so there
is no hierarchy of remedies, provided that the remedies of distraint and levy shall not
be allowed when the amount of duties and taxes involved shall not exceed P10,000.
You also have the provisions on constructive distraint and summary remedies
on the distraint of personal property and levy on real property-
SECTION 1133. Constructive Distraint of the Property.—  To safeguard the interest of
the government, the Commissioner may place under constructive distraint the property
of a delinquent importer who, in the opinion of the Commissioner, is retiring from any
business subject to duty and tax, or is intending to leave the Philippines, or to remove
the property therefrom, or to hide or conceal the property, or to perform any act
tending to obstruct the proceedings for collecting the duty and tax due, or which may
be due.
The constructive distraint of personal property shall be effected by requiring the
importer or any person in possession or control of such property to sign a receipt
covering the property, to obligate to preserve the distrained property on the state and
condition at the time of the government's seizure of the same, and not to dispose of
the same in any manner whatsoever, without the express authority of the
Commissioner.
In case the importer or the person in possession and control of the property sought to
be placed under constructive distraint refuses or fails to sign the receipt herein referred
to, the customs officer effecting the constructive distraint shall proceed to prepare a list
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of such property and, in the presence of two (2) witnesses, leave a copy thereof in the
premises where the property distrained is located, after which the said property shall
be deemed to have been placed under constructive distraint.
SECTION 1134. Summary Remedies.—
(A) Distraint of Personal Property.—  Upon failure of the person owing any
delinquent duty, tax and other charges to pay at the time required, the
Commissioner shall seize and distraint the goods, chattels or effects, and
the personal property, including stocks and other securities, debts, credits,
hank accounts, and interests in and rights to personal property of such
persons, in sufficient quantity to satisfy the duty, tax or other charge and the
expenses of the distraint and the cost of the subsequent sale.
The officer serving the warrant of distraint shall make or cause to be made
an account of the goods, chattels, effects, or other personal property
distrained, a copy of which, signed by the said officer, shall he left either
with the owner or person from whose possession such goods, chattels, or
effects or other personal property were taken, or at the dwelling or other
place of business of such person and with someone of suitable age and
discretion, to which list shall be added a statement of the sum demanded
and note of the time and place of sale.
Stocks and other securities shall be distrained by serving a copy of the
warrant of distraint upon the importer and upon the president, manager,
treasurer, or other responsible officer of the corporation, company or
association, which issued the said stocks or securities.
Debts and credits shall be distrained by leaving with the person owing the
debts or having in his/her possession or under his/her control such credits,
or with his/her agent, a copy of the warrant of distraint. The warrant of
distraint shall be sufficient authority to the person owing the debts or having
in his possession or under his control any credits belonging to the importer
to pay to the Commissioner the amount of such debts of credits.
Bank accounts shall be garnished by serving a warrant of garnishment upon
the importer and upon the president, manager, treasurer, or other
responsible officer of the bank Upon the receipt of the warrant of
garnishment, the bank shall turn over to the Commissioner so much of the
bank accounts as may be sufficient to satisfy the claim of the government.
A report on the distraint shall, within ten (10) days from receipt of the
warrant, be submitted by the Commissioner to the Secretary of
Finance: Provided, That the Commissioner shall have the power to lift such
order of distraint subject to the rules and regulations promulgated pursuant
to this Act.
(B) Levy on Real Property.— After the expiration of the period within which
to pay the duty, tax and other charges as prescribed in this section, real
property may be levied upon, before, simultaneously, or after the distraint of
personal property belonging to the importer. To this end, the Commissioner
or the duly authorized representative shall prepare a duly authenticated
certificate showing the name of the importer and the amounts of the duty
and tax and penalty due. The certificate shall operate with the force of a
legal execution throughout the Philippines.
The levy shall be effected by writing upon the certificate a description of the
property on which levy is made. At the same time, written notice of the levy
shall be mailed to or served upon the register of deeds of the province or
city where the property is located and upon the importer, or if the latter is not
in the Philippines, upon the agent or the manager of the business from
which the liability arose, or if there be none, to the occupant of the property
in question.
In case the warrant of levy on real property is not issued before or
simultaneously with the warrant of distraint on personal property, and the
personal property of the importer is not sufficient to satisfy the duty and tax
due, the Commissioner or a duly authorized representative shall, within
thirty (30) days after execution of the distraint, proceed with the levy on the
real property of the importer.
Within ten (10) days after receipt of the warrant, a report on any levy shall
be submitted by the levying officer to the Commissioner; Provided, That the
Commissioner may lift such warrants of levy issued, subject to the rules and
regulations promulgated pursuant to this Act.
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Then you have judicial proceedings under section 1135 and 1136-
SECTION 1135. Supervision and Control over Criminal and Civil Proceedings.—  Civil
and criminal actions and proceedings instituted on behalf of the Government under the
authority of this Act or other laws enforced by the Bureau shall be brought in the name
of the government of the Philippines and shall be prosecuted and handled by the
Bureau with the assistance of the Department of Justice (DOJ): Provided, That the
determination of the existence of probable cause and the subsequent filing of any
criminal or civil case with the proper court against violators of this Act shall exclusively
belong to the DOJ: Provided, However, That no civil or criminal action for the recovery
of duties or the enforcement of any fine, penalty or forfeiture under this Act shall be
filed in court without the approval of the Commissioner.
SECTION 1136. Review by the CTA.— Unless otherwise provided in this Act or by any
other law, the party aggrieved by the ruling or decisions of the Commissioner may
appeal to the CTA, in the manner and within the period prescribed by law and
regulations. Decisions of the Secretary of Finance when required by this Act, may
likewise be appealed to the CTA.
Unless an appeal is made to the CTA in the manner and within the period prescribed
by law and regulations, the ruling or decision of the Commissioner or the Secretary of
Finance shall be final and executory.
So that's practically it, the basic provisions of the CMTA. The rest is actually
codal na, codal siya masyado.
PART III. JURISDICTION OF THE COURT OF TAX APPEALS
Our last discussion will be about the jurisdiction of the Court of Tax Appeals.
The original law regarding the jurisdiction of the Court of Tax Appeals is R.A.
1125 which has been amended by R.A. 9282 and R.A. 9503. (read the following laws
because not all provisions are discussed by atty. donalvo)
The jurisdiction of the Court of Tax Appeals may be classified into two-
1. Exclusive Original jurisdiction
a. Tax collection cases on final and executory assessments where the principal
amount of taxes is P1 million or more. So this means that the government may file a
tax collection case against the taxpayer and the amount of the taxes collected
exclusive of charges and penalties amounts to P1 million.
If it is less than P1 million, where should the tax collection case be filed?
It shall be filed before the MTC or RTC depending on the jurisdictional amount
R.A. 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
xxx
Exclusive original jurisdiction in tax collection cases involving final and executory
assessments for taxes, fees, charges and penalties: Provided, however, That
collection cases where the principal amount of taxes and fees, exclusive of charges
and penalties, claimed is less than One million pesos (P1,000,000.00) shall be tried by
the proper Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court.
b. Criminal offenses or violation of the NIRC(National Internal Revenue Code)
or CMTA(Customs Modernization and Tariff Act) or other laws administered by the BIR
or BOC when the principal amount of the taxes is at least P1 million or more. Again
this involves criminal cases.
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
R.A. 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
xxx
Exclusive original jurisdiction over all criminal offenses arising from violations of the
National Internal Revenue Code or Tariff and Customs Code and other laws
administered by the Bureau of Internal Revenue or the Bureau of Customs: Provided,
however, That offenses or felonies mentioned in this paragraph where the principal
amount o taxes and fees, exclusive of charges and penalties, claimed is less than One
million pesos (P1,000,000.00) or where there is no specified amount claimed shall be
tried by the regular Courts and the jurisdiction of the CTA shall be appellate. Any
provision of law or the Rules of Court to the contrary notwithstanding, the criminal
action and the corresponding civil action for the recovery of civil liability for taxes and
penalties shall at all times be simultaneously instituted with, and jointly determined in
the same proceeding by the CTA, the filing of the criminal action being deemed to
necessarily carry with it the filing of the civil action, and no right to reserve the filling of
such civil action separately from the criminal action will be recognized.
Take note that an assessment is not necessarily for the finding of a criminal
case. You need the assessment so you can determine how much is the unpaid tax
liabilities of the taxpayer. It determines whether there is probable cause to indict that
particular taxpayer for the violation of penal laws of the NIRC, CMTA or any tax laws
for that matter.
Where should be the information be filed?
Again take note of the P1 million benchmark which is exclusive of charges and
penalties. If it is less than P1 million, you go to the regular courts, either the RTC or
MTC. If it is P1 million or more, you file in the CTA Division.
What will be the process then for the filing?
If the amount of taxes would be P1 million or more, you file it initially in the
CTA Division. Then you go up to the CTA En Banc and then you go to the SC.
If it is below P1 million, if the jurisdiction is within the MTC you start there.
Then appeal to the RTC, and then to the CTA En Banc and finally to the SC. For RTC
cases, you start with the RTC. Then you go to the CTA Division, thereafter to the CTA
En Banc and lastly the SC.
2. Exclusive Appellate jurisdiction
a.
R.A. 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
xxx
Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relation thereto, or other matters arising under the National Internal Revenue or other
laws administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed
assessments, refunds of internal revenue taxes, fees or other charges, penalties in
relations thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue, where the National
Internal Revenue Code provides a specific period of action, in which case the inaction
shall be deemed a denial;
In case of disputed assessments, the CIR has 180 days in which to decide
either from the filing of the motion for reconsideration or from the submission of the
supporting documents. If the 180 days has already lapsed, the taxpayer may appeal
within the 30-day period from the lapse of the 180 days to decide.
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Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
In case of refund, when the two-year period is about to expire and the CIR has
yet to issue a decision, the taxpayer must now immediately file an appeal to the CTA
even if the period to decide has not yet expired. When it come to refund, the
prescriptive period for the filing of the administrative and judicial appeal is just two
years.
b.
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases
originally decided or resolved by them in the exercise of their original or appellate
jurisdiction;
This refers to local tax cases. The decisions of the RTC here refers to the
RTC's original jurisdiction or appellate jurisdiction.
What are the local tax cases here?
1. Legality of a tax ordinance. This is first filed the DOJ, if the DOJ renders an
adverse decision or does not render any decision, then the taxpayer must go to the
RTC questioning the legality of the tax measure. If the RTC decides against the
taxpayer, then the latter can appeal to the CTA Division.
2. Protest of local tax assessments. The taxpayer will protest where? The local
treasurer involved. If denied, the appeal is made to the regular courts depending on
the jurisdictional amount. If filed with the MTC, the taxpayer will appeal to the RTC and
then to the CTA. If filed with the RTC, then the appeal is filed to the CTA directly.
3. Refund of local tax cases. Again, the taxpayer must pass to the MTC or
RTC as the case may be and then appeal to the CTA.
c.
4. Decisions of the Commissioner of Customs in cases involving liability for customs
duties, fees or other money charges, seizure, detention or release of property affected,
fines, forfeitures or other penalties in relation thereto, or other matters arising under
the Customs Law or other laws administered by the Bureau of Customs;
d.
5. Decisions of the Central Board of Assessment Appeals in the exercise of its
appellate jurisdiction over cases involving the assessment and taxation of real property
originally decided by the provincial or city board of assessment appeals;
This is covers real property taxation already when it comes to assessments,
levies and refunds. The taxpayer first go to the LBAA(Local Board of Assessment
Appeals) and then to the CBAA and finally to the CTA En Banc.
e.
6. Decisions of the Secretary of Finance on customs cases elevated to him
automatically for review from decisions of the Commissioner of Customs which are
adverse to the Government under Section 2315 of the Tariff and Customs Code;
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural
product, commodity or article, and the Secretary of Agriculture in the case of
agricultural product, commodity or article, involving dumping and countervailing duties
under Section 301 and 302, respectively, of the Tariff and Customs Code, and
safeguard measures under Republic Act No. 8800, where either party may appeal the
decision to impose or not to impose said duties.
f.
Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts
in tax collection cases originally decided by them, in their respective territorial
jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional
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TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Trial Courts in the Exercise of their appellate jurisdiction over tax collection cases
originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts, in their respective jurisdiction."
g.
Exclusive appellate jurisdiction in criminal offenses:
a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts
in tax cases originally decided by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or orders of the Regional
Trial Courts in the exercise of their appellate jurisdiction over tax cases originally
decided by the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts in their respective jurisdiction.
So these are the important things to remember when it comes to the
jurisdiction of CTA.
Who may appeal, Mode of appeal and Effect of appeal-
R.A. 9282 Section 9. Section 11 of the same Act is hereby amended to read as
follows:
SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal . - Any party adversely
affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the
Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and
Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or
the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after
the receipt of such decision or ruling or after the expiration of the period fixed by law
for action as referred to in Section 7(a)(2) herein.
Appeal shall be made by filing a petition for review under a procedure analogous to
that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA
within thirty (30) days from the receipt of the decision or ruling or in the case of
inaction as herein provided, from the expiration of the period fixed by law to act
thereon. A Division of the CTA shall hear the appeal: Provided, however, That with
respect to decisions or rulings of the Central Board of Assessment Appeals and the
Regional Trial Court in the exercise of its appellate jurisdiction appeal shall be made
by filing a petition for review under a procedure analogous to that provided for under
rule 43 of the 1997 Rules of Civil Procedure with the CTA, which shall hear the case
en banc.
All other cases involving rulings, orders or decisions filed with the CTA as provided for
in Section 7 shall be raffled to its Divisions. A party adversely affected by a ruling,
order or decision of a Division of the CTA may file a motion for reconsideration of new
trial before the same Division of the CTA within fifteens (15) days from notice thereof:
Provide, however, That in criminal cases, the general rule applicable in regular Courts
on matters of prosecution and appeal shall likewise apply.
No appeal taken to the CTA from the decision of the Commissioner of Internal
Revenue or the Commissioner of Customs or the Regional Trial Court, provincial, city
or municipal treasurer or the Secretary of Finance, the Secretary of Trade and Industry
and Secretary of Agriculture, as the case may be shall suspend the payment, levy,
distraint, and/or sale of any property of the taxpayer for the satisfaction of his tax
liability as provided by existing law: Provided, however, That when in the opinion of the
Court the collection by the aforementioned government agencies may jeopardize the
interest of the Government and/or the taxpayer the Court any stage of the proceeding
may suspend the said collection and require the taxpayer either to deposit the amount
claimed or to file a surety bond for not more than double the amount with the Court.
In criminal and collection cases covered respectively by Section 7(b) and (c) of this
Act, the Government may directly file the said cases with the CTA covering amounts
within its exclusive and original jurisdiction."
So you have 30 days to file an appeal. The appeal shall be made by filing a
petition for review under a procedure analogous to that provided under Rule 42 of the
1997 Rules of Civil Procedure.
This is an important provision. If you read the entire provision there are only
two cases wherein the appeal should be coursed through the CTA En Banc. The
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 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)

general rule is that when you appeal, you must appeal first to the CTA in Division. The
exceptions are the following-

1. Decisions of the CBAA(Central Board of Assessment Appeals)

2. Decisions of the RTC in its appellate jurisdiction

In these two instances, the appeal must be made to the CTA En Banc. From
the CTA En Banc, you then go to the SC under Rule 45. You have 15 days to file a
petition for review on certiorari to the SC with an allowable extension of 15 days for
valid reasons.

~END OF FINALS COVERAGE~

GOD BLESS US! 

Don't be the one in the way of your own success. Stop dwelling on what hasn't yet
happened. Focus on what has and what will happen. Believe in the power of right
now. Find hope in your future and the power within you to make all of your dreams
come true.

~Anonymous

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