Republic of the Philippines

CARLOS HILADO MEMORIAL STATE COLLEGE

Talisay City, Negros Occidental

Readings in Philippine History

Second Semester, SY 2020-2021

History of Taxation in the Philippines

Prepared by: Ms. Charity Mae M. Dosayla

Assistant Professor

History of Taxation in the Philippines

Pre-Spanish Period

Filipinos in the pre-colonial period paid taxes to the head of the barangay either called Datu, Rajah, Sultan, or
Lakan. Tributes were paid in kind such as the people’s agricultural produce.

In pre-Spanish Philippines, people were categorized as belonging to one of three social classes: maharlikas or
the nobles class, the timawa or the freemen, and the aliping namamahay and aliping saguigilid. Members of
the family of the head of the barangay as well as members of the Maginoo or Council of Elders belonged to
the maharlika class. The Maginoos or Council of Elders was a council of old men who served as adviser to the
Datu. This class was exempted from paying taxes, but they have to accompany the Datu to war at their own
expense. However, there were some villages where the nobles or maharlikas also had to pay annual tribute to
the datu in the form of 100 hundred gantas of rice. This was required when the lands were purchased with
gold by the new datu to whom these nobles are now going to pay tributes. Among these three classes, the
timawa were the ones required to pay tributes. They paid the datu with the produce of their land. As they are
free people, they can enter into marriage agreement, engage in business and trade, and even purchase
slaves.

Spanish Period

The Spaniards were ardent collectors of taxes from Filipinos. Tax collection among the natives of the
Philippines islands was based on the royal decree of King Carlos I issued June 26, 1523 and reads.

Because it is just and reasonable that the Indians who were pacified and reduced to our rule
and vassalage, should serve us and pay tribute in recognition of our lordship and service, as
our subjects and vassals do. They, however, have the custom to pay tribute to their native
rulers and chiefs. We command that these Indians be persuaded for this reason to pay us
tribute in moderate quantity of the fruits of the land, as in other times our laws provided.
And it is our voluntary will that the Spaniards, wherever they are, collect these tributes in
compliance with their duties and obligations, except in the capital towns and ports of war
and in the encomiendas and towns which belong to the Royal Crown (Zaide, 1990).

Filipino natives were required to pay the following types of taxes.

1. Buwis or tribute
2. Sanctorum Tax for church support
3. Donativo de Zamboanga to crush Moro raids
4. Vinta to equip vintas to shield coastal areas
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 5. Town community chest
6. Bandala
7. diezmos prediales (tithes)

Spanish friar Domingo de Salazar documented the hardships, misfortunes, and oppressions Filipino natives
experienced in the hands of Spanish conquistadores regarding tribute collection. De Salazar contended that
Filipinos were not familiar of the real intent of the Spaniards in coming to their islands which is not to subjugate
them and force them to pay tributes. He attested that the native inhabitants were also resistant of paying
tributes, and whenever they can resist, they did to the point even of going to war. However, when they can do
no more, they had no other recourse but to face the grueling task of paying tributes. Mostly, natives were
assigned to a particular encomienda where the collection of tribute was conducted. Otherwise, the governor
sent someone to collect tributes from them. Tributes may be paid in gold to a maximum of 8 reales or in
agricultural produce the natives collect from their lands. Spaniards however compelled Indians to pay in gold
and demanded the finest and the heaviest among their properties. The Indian chief was assigned to collect
gold from the native inhabitants, and if these natives are unable to pay, the chief was crucified or his head
placed in stocks where then he is lashed and tormented until he gives the total amount of tribute demanded
from them. Many chiefs had died from this manner of collecting tributes. In case the chief does not present
himself the Spaniards, his wife or daughter is seized. Spaniards collected tribute from children, old men, and
slaves, and many among these people decided not to marry while others killed their children (de Salazar,
1583, p.222-224).

In the 17th and 18th centuries, the Contador de’ Resultas served as the Chief Royal Accountant who functioned
similarly with the present-day Commissioner of the Bureau of Internal Revenue. Also as Chief Arbitrator, he
decided upon financial matters which can be revoked only by the Council of Indies. The Philippines received
and annual subsidy of Php250,000 from the Spanish treasury due to the poor financial condition of the country
owing primarily to the ineffective revenue collection system (BIR, 2021).

American Period

The American Civil government passed Reorganization Act No. 1189 On July 02, 1904 during the terms of
Governor-General Luke Edward Wright. On August 01, 1904, the Bureau of Internal Revenue (BIR) was
established and made operational under the management of Secretary of Finance and author of the Revenue
Law of 1904 Henry Ide. John S. Hord was the first collection (Commissioner) of BIR. His tenure was followed
by three American collectors: Ellis Cromwell, William, Holting, and James Rafferty who were all appointed by
the Civil Governor-General with approval of the Philippines Commission and the US President. Filipino
Collectors were later appointed consistent with the Filipinization Policy of President William McKinley. The first
three Filipino collectors were Wenceslao Trinidad, Juan Posadas, Jr. and Alfredo Yatao.

In 1937, Regulation No. 95 was issued which reorganized the Provincial Inspection Districts that maintained in
every province an Internal Revenue Office. On January 1, 1940, the Cedula or Residence Tax was first
imposed following the passing of Commonwealth Act No.465. The Residence Certificate was a legal identity
document recognized in the Philippines. The country was further divided into 31 inspection units, each under a
provincial revenue agent with the passing of Revenue Regulation NO. V-2 dated October 23, 1947. The
position title of the head of the Bureau was changed from collector to Commissioner in 1957. Jose Aranas was
the last collector and the first Commissioner of the Bureau.

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Marcos Administration

President Ferdinand Marcos appointed Misael Vera as BIR Commissioner in 1965. Two important programs
were implemented during his administration: Blue Master Program and Voluntary Tax Compliance Program.
The Blue Master Program was implemented to arrest the abuses of both taxpayers and BIR personnel.
Voluntary Tax Compliance Program was implemented to encourage professionals in the private and
government sectors to report their true income and pay the correct amount of taxes. During Vera’s time, 20
Regional Offices and 90 Revenue District Offices were also created. Each taxpayer was provided a permanent
Tax Account Number (TAN) in 1970. Collection of taxes through banks and the implementation of the package
audit investigation improved collection performance of the Bureau. During the Martial law years, President
Ferdinand Marcos issued several tax amnesty decrees to assist negligent taxpayers to start all over again.

Aquino Administration

Following the reorganization of government under the presidency of Corazon Aquino in 1986, BIR pledged for
an effective tax administration initially through the launching of “Operation: Walang Lagay.” BIR was
reorganized during the administration of Commissioner Bienvenido Tan Jr. Pursuant to Executive Order No.
127, the Assessment and Collection Group and the Legal and Internal Administration group were created to be
supervised by a Deputy Commissioner.

The value-added tax (VAT) was implemented during the Aquino administration. The implementation of the
VAT System was one of the structural reforms under the 1986 Tax Reform Program. The Tax Reform Program
was implemented to make tax administration simple and the tax system more equitable. In 1988, the Revenue
Information Systems Services Inc. (RISSI) was abolished and returned to the BIR. In 1989, the “Tax
Administration Program” was implemented under Commissioner Jose Ong. This program included the use of
the Taxpayer Identification Number (TIN) and the adoption of the New Payment Control System and Simplified
Net Income Taxation Scheme.

Ramos Administration

The Ramos Administration appointed the first-eve woman to become BIR Commissioner – Liwayway Vinzons
Chato. The ACTS or Action-Centered Transformation Program was undertaken for the realignment and
direction of BIR towards its attainment of its vision and mission. The five-year Tax Computerization Project
(TCP) involving a computerized Integrated Tax System and Internal Administration System was also carried
out during Commissioner Chato’s term.

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References:

Bureau of Internal Revenue. 2021. BIR History. Retrieved 07 February 2021.

https://www.bir.gov.ph/index.php/transparency/bir-history.html

de Salazar, D. 1583. Affairs in the Philippine Islands. In Emma Blair & James Alexander Robertson. The
Philippine Islands. de Salazar, Volume 5. 1903. Arthur H. Clark Company. Ohio

Zaide, G. 1990. Laws of the Indies. National Bookstore, Inc.

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