National Internal Revenue Code

CHAPTER VI EXCISE TAX ON MISCELLANEOUS
NATIONAL INTERNAL ARTICLES

CHAPTER VII EXCISE TAX ON MINERAL
61
REVENUE CODE PRODUCTS

CHAPTER VIII ADMINISTRATIVE PROVISIONS
63
REGULATING BUSINESS OF PERSONS DEALING

As last amended by R.A. No. 10963 IN ARTICLES SUBJECT TO EXCISE TAX 64
TITLE VII DOCUMENTARY STAMP TAX 66
TITLE VIII REMEDIES 70
Taxation, Tari and Customs Laws CHAPTER I REMEDIES IN GENERAL 70
CHAPTER II CIVIL REMEDIES FOR COLLECTION
OF TAXES 70
TABLE OF CONTENTS CHAPTER III PROTESTING AN ASSESSMENT,

REFUND, ETC. 73
RA No 8424 | National Internal Revenue Code of 1997 4
TITLE IX COMPLIANCE REQUIREMENTS 74
TITLE I ORGANIZATION AND FUNCTION OF THE
CHAPTER I KEEPING OF BOOKS OF ACCOUNTS
BUREAU OF INTERNAL REVENUE 4
AND RECORDS 74
TITLE II TAX ON INCOME 8
CHAPTER II ADMINISTRATIVE PROVISIONS 75
Revenue Regulation Implementing the Income Tax
CHAPTER III RULES AND REGULATIONS 77
Provisions of TRAIN Act 8
TITLE X STATUTORY OFFENSES AND PENALTIES 78
CHAPTER I - DEFINITIONS 8
CHAPTER I ADDITIONS TO THE TAX 78
CHAPTER II GENERAL PRINCIPLES 9
CHAPTER II CRIMES, OTHER OFFENSES AND
CHAPTER III TAX ON INDIVIDUALS 9
FORFEITURES 79
CHAPTER IV TAX ON CORPORATIONS 12
CHAPTER III PENALTIES IMPOSED ON PUBLIC
CHAPTER V COMPUTATION OF TAXABLE INCOME OFFICERS 82
16
CHAPTER IV OTHER PENAL PROVISIONS 83
CHAPTER VI COMPUTATION OF GROSS INCOME
TITLE XI ALLOTMENT OF INTERNAL REVENUE 85
16
CHAPTER I DISPOSITION AND ALLOTMENT OF
CHAPTER VII ALLOWABLE DEDUCTIONS 18
NATIONAL INTERNAL REVENUE IN GENERAL 85
CHAPTER VIII ACCOUNTING PERIODS AND
CHAPTER II SPECIAL DISPOSITION OF CERTAIN
METHODS OF ACCOUNTING 28
NATIONAL INTERNAL REVENUE TAXES 85
CHAPTER IX RETURNS AND PAYMENT OF TAX 29
TITLE XII OVERSIGHT COMMITTEE 88
CHAPTER X ESTATES AND TRUSTS 32
TITLE XIII REPEALING PROVISIONS 88
CHAPTER XI OTHER INCOME TAX
TITLE XIV FINAL PROVISIONS 90
REQUIREMENTS 33
CHAPTER XII QUARTERLY CORPORATE INCOME RA No 10708 | The Tax Incentives Management and
TAX ANNUAL DECLARATION AND QUARTERLY Transparency Act (TIMTA) 91
PAYMENTS OF INCOME TAXES 35
Rules and Regulations Implementing the TIMTA 91
CHAPTER XIII WITHHOLDING ON WAGES 35
Revenue Regulation Implementing the Withholding RA No 10863 | Customs Modernization and Tariff Act 93
of Income Tax Provisions of TRAIN Act 35 TITLE I Preliminary Provisions 93
Revenue Regulation Implementing the Withholding CHAPTER 1 Short Title 93
of Income Tax Provisions of the Tax Reform Act of
CHAPTER 2 General and Common Provisions 93
1997 35
CHAPTER 3 Types of Importation 96
TITLE III ESTATE AND DONOR'S TAXES 37
CHAPTER 4 Relief Consignment 97
Revenue Regulation Implementing the Estate and
Donor’s Tax Provisions of TRAIN Act 37 TITLE II Bureau of Customs 97
CHAPTER I ESTATE TAX 37 CHAPTER 1 General Administration 97
CHAPTER II DONOR'S TAX 41 CHAPTER 2 Customs Districts and Ports of Entry
98
TITLE IV VALUE ADDED TAX 43
CHAPTER 3 Exercise of Police Authority 98
Revenue Regulation Implementing the VAT
Provisions of TRAIN Act 43 TITLE III Customs Jurisdiction and Customs Control 99
CHAPTER I IMPOSITION OF TAX 43 CHAPTER 1 Customs Jurisdiction 99
CHAPTER II COMPLIANCE REQUIREMENTS 48 CHAPTER 2 Customs Control 99
TITLE V OTHER PERCENTAGE TAXES 49 TITLE IV Import Clearance and Formalities 100
TITLE VI EXCISE TAXES ON CERTAIN GOODS AND CHAPTER 1 Goods Declaration 100
SERVICES 52 CHAPTER 2 Examination of Goods 102
CHAPTER I GENERAL PROVISIONS 52 CHAPTER 3 Assessment and Release 102
CHAPTER II EXEMPTION OR CONDITIONAL CHAPTER 4 Special Procedures 103
TAX-FREE REMOVAL OF CERTAIN ARTICLES 53 TITLE V Export Clearance and Formalities 103
CHAPTER III EXCISE TAX ON ALCOHOL CHAPTER 1 Export Clearance and Declaration 104
PRODUCTS 54
TITLE VI Customs Transit and Transshipment 104
CHAPTER IV EXCISE TAX ON TOBACCO
PRODUCTS 57 CHAPTER 1 Customs Transit 104
CHAPTER V EXCISE TAX ON PETROLEUM CHAPTER 2 Customs Transshipment 104
PRODUCTS 58 TITLE VII Import Duty and Tax 104
CHAPTER 1 Basis of Valuation 104
© Compiled by Rehne Gibb Larena | JD-2 | University of San Carlos

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

CHAPTER 2 Special Duties and Trade Remedy

Measures 106 RA No 1125 | Court of Tax Appeals Act 1
TITLE VIII Tax and Duty Deferment, Preference and A.M. No. 05-11-07-CTA | Revised Rules of the Court of
Exemption 108 Tax Appeals 154
CHAPTER 1 Conditionally Tax and/or Duty-Exempt RULE 1 TITLE AND CONSTRUCTION 154
Importation 108
RULE 2 THE COURT, ITS ORGANIZATION AND
CHAPTER 2 Customs Warehouses 111 FUNCTIONS 154
CHAPTER 3 Free Zones 113 RULE 3 PLACE OF OFFICE, SEAL AND OFFICE HOURS
CHAPTER 4 Stores 113 155
TITLE IX Duty Drawback and Refund 114 RULE 4 JURISDICTION OF THE COURT 155
CHAPTER 1 Duty Drawback 114 RULE 5 FORM AND STYLE OF PAPERS 156
CHAPTER 2 Refund and Abatement 114 RULE 6 PLEADINGS FILED WITH THE COURT 156
TITLE X Post Clearance Audit 115 RULE 7 PROCEDURE IN THE COURT OF TAX APPEALS
TITLE XI Administrative and Judicial Procedures 117 157
CHAPTER 1 Advance Ruling and Dispute RULE 8 PROCEDURE IN CIVIL CASES 157
Settlement 117 RULE 9 PROCEDURE IN CRIMINAL CASES 157
CHAPTER 2 Protest 117 RULE 10 SUSPENSION OF COLLECTION OF TAX 158
CHAPTER 3 Alert Orders 118 RULE 11 PRE-TRIAL 159
CHAPTER 4 Seizure and Forfeiture 118 RULE 12 TRIAL 159
CHAPTER 5 Appeal in Protest and Forfeiture RULE 13 TRIAL BY COMMISSIONER 160
Cases 120 RULE 14 JUDGMENT, ITS ENTRY AND EXECUTION 160
CHAPTER 6 Abandonment 120 RULE 15 MOTION FOR RECONSIDERATION OR NEW
CHAPTER 7 Other Administrative Proceedings 121 TRIAL 161
CHAPTER 8 Civil Remedies for the Collection of RULE 16 APPEAL 162
Duties and Taxes 121 RULE 17 LEGAL FEES AND COSTS 162
CHAPTER 9 Judicial Proceedings 122 RULE 18 EFFECTIVITY 162
CHAPTER 10 Disposition of Property in Customs
Custody 122 PD No 1464 | Tariff and Customs Code of 1978 162
TITLE XII Third Parties 123 BOOK I Tariff Law 162
CHAPTER 1 Customs Service Providers 123 TITLE I Import Tariff 162
CHAPTER 2 Carriers, Vessels, and Aircrafts 123 ANNEX Headings and Subheadings Covered by
CHAPTER 3 Other Third Parties 126 Special Provisions 163
CHAPTER 4 Authorized Economic Operators TITLE II Administrative Provisions 168
(AEOs) 126 PART 1 Bases of Assessment of Duty 168
TITLE XIII Customs Fees and Charges 127 PART 2 Special Duties 170
TITLE XIV Offenses and Penalties 127 PART 3 Flexible Tariff 172
CHAPTER 1 Crimes and Other Offenses 127 PART 4 Tariff Commission 173
CHAPTER 2 Penalties Imposed Upon Bureau TITLE III Export Tariff and Premium Duty 174
Employees 131 BOOK II Customs Law 175
TITLE XV Miscellaneous Provisions 131 TITLE I The Bureau of Customs 175
TITLE XVI Tariff Administration and Policy 132 PART 1 Organization, Function and
CHAPTER I Tariff Commission 132 Jurisdiction of the Bureau 175
CHAPTER II Flexible Tariff 133 PART 2 Collection Districts and Port of Entry
CHAPTER III Tariff Nomenclature and Rate of 176
Duty 134 TITLE II Coastwise Trade 177
TITLE XVII Congressional Oversight Committee 135 TITLE III Vessels and Aircraft in Foreign Trade 177
TITLE XVIII Final Provisions 135 PART 2 Entrance and Clearance of Aircraft in
Foreign Trade 179
PD No 464 | Real Property Tax Code 135
TITLE IV Ascertainment, Collection and Recovery
CHAPTER I GENERAL PROVISIONS 135 of Import Duty 181
CHAPTER II APPRAISAL AND ASSESSMENT OF REAL PART 1 Importation in General 181
PROPERTY 137 PART 2 Entry at Customhouse 181
Special Classes of Real Property. 138 PART 3 Examination, Classification and
CHAPTER III ASSESSMENT APPEALS 140 Appraisal of Imported Articles 183
CHAPTER IV IMPOSITION OF REAL PROPERTY TAX 141 PART 4 Delivery of Articles 184
CHAPTER V SPECIAL LEVIES ON REAL PROPERTY 142 PART 5 Liquidation of Duties 185
CHAPTER VI COLLECTION OF REAL PROPERTY TAX PART 6 Abatements and Refunds 185
144 PART 7 Abandonment of Imported Articles
CHAPTER VII DISPOSITION OF PROCEEDS 147 186
CHAPTER VIII ORGANIZATION, FUNCTIONS AND TITLE V Warehousing of Imported Articles 186
SUPERVISION 147 PART 1 Warehousing in General 186
CHAPTER IX SPECIAL PROVISIONS 149 PART 2 Bonded Manufacturing and Smelting
CHAPTER X MISCELLANEOUS PROVISIONS 149 Warehouse 187
CHAPTER XI PENAL PROVISIONS 150 PART 3 Transportation in Bond 187
CHAPTER XII TRANSITORY PROVISIONS 150
© Compiled by RGL 2 of 201


TITLE VI Administrative and Judicial Proceedings

188
PART 1 Search, Seizure and Arrest 188
PART 2 Administrative Proceedings 189
PART 3 Judicial Proceedings 191
PART 4 Surcharges, Fines and Forfeitures 191
PART 5 Disposition of Property in Customs
Custody 194
PART 6 Fees and Charges 195
TITLE VII General Provisions 196
PART 1 Customs Brokers 196
PART 2 Miscellaneous Provisions 197
PART 3 Provisions on Penalties 199
FINAL PROVISIONS 201



Finance and shall be included in the database created

under Republic Act No. 10708, otherwise known as 'The
RA No 8424 | National Internal Revenue Tax Incentives Management and Transparency Act
Code of 1997 (TIMTA).'(as amended by RA No 10963)
As amended (C) To summon the person liable for tax or required to file
a return, or any officer or employee of such person, or any
person having possession, custody, or care of the books of
accounts and other accounting records containing
TITLE I ORGANIZATION AND FUNCTION OF THE entries relating to the business of the person liable for tax,
BUREAU OF INTERNAL REVENUE or any other person, to appear before the Commissioner
or his duly authorized representative at a time and place
(As Last Amended by RA No. 10963) [1] specified in the summons and to produce such books,
SEC. 1. Title of the Code. - This Code shall be known as papers, records, or other data, and to give testimony;
the Tax Reform for Acceleration and Inclusion (TRAIN). [2] (D) To take such testimony of the person concerned,
SEC. 2. Powers and Duties of the Bureau of Internal under oath, as may be relevant or material to such
Revenue. - The Bureau of Internal Revenue shall be under inquiry; and
the supervision and control of the Department of Finance (E) To cause revenue officers and employees to make a
and its powers and duties shall comprehend the canvass from time to time of any revenue district or
assessment and collection of all national internal revenue region and inquire after and concerning all persons
taxes, fees, and charges, and the enforcement of all therein who may be liable to pay any internal revenue tax,
forfeitures, penalties, and fines connected therewith, and all persons owning or having the care, management
including the execution of judgments in all cases decided or possession of any object with respect to which a tax is
in its favor by the Court of Tax Appeals and the ordinary imposed.
courts. The Bureau shall give effect to and administer the The provisions of the foregoing paragraphs
supervisory and police powers conferred to it by this Code notwithstanding, nothing in this Section shall be
or other laws. construed as granting the Commissioner the authority to
SEC. 3. Chief Officials of the Bureau of Internal inquire into bank deposits other than as provided for in
Revenue. - The Bureau of Internal Revenue shall have a Section 6(F) of this Code.
chief to be known as Commissioner of Internal Revenue, SEC. 6. Power of the Commissioner to Make
hereinafter referred to as the Commissioner, and four (4) Assessments and Prescribe Additional Requirements
assistant chiefs to be known as Deputy Commissioners. for Tax Administration and Enforcement. -
SEC. 4. Power of the Commissioner to Interpret Tax (A) Examination of Return and Determination of Tax
Laws and to Decide Tax Cases. - The power to interpret Due. After a return has been filed as required under the
the provisions of this Code and other tax laws shall be provisions of this Code, the Commissioner or his duly
under the exclusive and original jurisdiction of the authorized representative may authorize the examination
Commissioner, subject to review by the Secretary of of any taxpayer and the assessment of the correct
Finance. amount of tax, notwithstanding any law requiring the
The power to decide disputed assessments, refunds of prior authorization of any government agency or
internal revenue taxes, fees or other charges, penalties instrumentality: Provided, however, That failure to file a
imposed in relation thereto, or other matters arising return shall not prevent the Commissioner from
under this Code or other laws or portions thereof authorizing the examination of any taxpayer.(as
administered by the Bureau of Internal Revenue is vested amended by RA No 10963)
in the Commissioner, subject to the exclusive appellate The tax or any deficiency tax so assessed shall be paid
jurisdiction of the Court of Tax Appeals. [3] upon notice and demand from the Commissioner or
SEC. 5. Power of the Commissioner to Obtain from his duly authorized representative.
Information, and to Summon, Examine, and Take Any return, statement of declaration filed in any office
Testimony of Persons. - In ascertaining the correctness authorized to receive the same shall not be withdrawn:
of any return, or in making a return when none has been Provided, That within three (3) years from the date of
made, or in determining the liability of any person for any such filing, the same may be modified, changed, or
internal revenue tax, or in collecting any such liability, or amended: Provided, further, That no notice for audit or
in evaluating tax compliance, the Commissioner is investigation of such return, statement or declaration has
authorized: in the meantime been actually served upon the taxpayer.
(A) To examine any book, paper, record, or other data (B) Failure to Submit Required Returns, Statements,
which may be relevant or material to such inquiry; Reports and other Documents. - When a report required
(B) To obtain on a regular basis from any person other by law as a basis for the assessment of any national
than the person whose internal revenue tax liability is internal revenue tax shall not be forthcoming within the
subject to audit or investigation, or from any office or time fixed by laws or rules and regulations or when there
officer of the national and local governments, is reason to believe that any such report is false,
government agencies and instrumentalities, including incomplete or erroneous, the Commissioner shall assess
the Bangko Sentral ng Pilipinas and government-owned the proper tax on the best evidence obtainable.
or -controlled corporations, any information such as, but In case a person fails to file a required return or other
not limited to, costs and volume of production, receipts or document at the time prescribed by law, or willfully or
sales and gross incomes of taxpayers, and the names, otherwise files a false or fraudulent return or other
addresses, and financial statements of corporations, document, the Commissioner shall make or amend the
mutual fund companies, insurance companies, regional return from his own knowledge and from such
operating headquarters of multinational companies, joint information as he can obtain through testimony or
accounts, associations, joint ventures or consortia and otherwise, which shall be prima facie correct and
registered partnerships, and their members: Provided, sufficient for all legal purposes.
That the Cooperative Development Authority shall submit
to the Bureau a tax incentive report, which shall include (C) Authority to Conduct Inventory-taking, Surveillance
information on the income tax, value-added tax, and and to Prescribe Presumptive Gross Sales and
other tax incentives availed of by cooperatives registered Receipts. - The Commissioner may, at any time during
and enjoying incentives under Republic Act No. 6938, as the taxable year, order inventory-taking of goods of any
amended: Provided, further, That the information taxpayer as a basis for determining his internal revenue
submitted by the Cooperative Development Authority to tax liabilities, or may place the business operations of any
the Bureau shall be submitted to the Department of person, natural or juridical, under observation or



surveillance if there is reason to believe that such person (1) A decedent to determine his gross estate; and
is not declaring his correct income, sales or receipts for (2) Any taxpayer who has filed an application for
internal revenue tax purposes. The findings may be used compromise of his tax liability under Section
as the basis for assessing the taxes for the other months 204(A)(2) of this Code by reason of financial
or quarters of the same or different taxable years and incapacity to pay his tax liability.
such assessment shall be deemed prima facie correct.
In case a taxpayer files an application to
When it is found that a person has failed to issue receipts compromise the payment of his tax liabilities on his
and invoices in violation of the requirements of Sections claim that his financial position demonstrates a
113 and 237 of this Code, or when there is reason to believe clear inability to pay the tax assessed, his application
that the books of accounts or other records do not shall not be considered unless and until he waives in
correctly reflect the declarations made or to be made in a writing his privilege under Republic Act No. 1405,
return required to be filed under the provisions of this Republic Act No. 6426, otherwise known as the
Code, the Commissioner, after taking into account the Foreign Currency Deposit Act of the Philippines, or
sales, receipts, income or other taxable base of other under other general or special laws, and such waiver
persons engaged in similar businesses under similar shall constitute the authority of the Commissioner to
situations or circumstances or after considering other inquire into the bank deposits of the taxpayer.
relevant information may prescribe a minimum amount
of such gross receipts, sales and taxable base, and such (3) A specific taxpayer or taxpayers subject of a
amount so prescribed shall be prima facie correct for request for the supply of tax information from a
purposes of determining the internal revenue tax foreign tax authority pursuant to an international
liabilities of such person. convention or agreement on tax matters to which
the Philippines is a signatory or a party of: Provided,
(D) Authority to Terminate Taxable Period. - When it That the information obtained from the banks and
shall come to the knowledge of the Commissioner that a other financial institutions may be used by the
taxpayer is retiring from business subject to tax, or is Bureau of Internal Revenue for tax assessment,
intending to leave the Philippines or to remove his verification, audit and enforcement purposes.
property therefrom or to hide or conceal his property, or
is performing any act tending to obstruct the In case of a request from a foreign tax authority for
proceedings for the collection of the tax for the past or tax information held by banks and financial
current quarter or year or to render the same totally or institutions, the exchange of information shall be
partly ineffective unless such proceedings are begun done in a secure manner to ensure confidentiality
immediately, the Commissioner shall declare the tax thereof under such rules and regulations as may be
period of such taxpayer terminated at any time and shall promulgated by the Secretary of Finance, upon
send the taxpayer a notice of such decision, together with recommendation of the Commissioner.
a request for the immediate payment of the tax for the The Commissioner shall provide the tax information
period so declared terminated and the tax for the obtained from banks and financial institutions
preceding year or quarter, or such portion thereof as may pursuant to a convention or agreement upon
be unpaid, and said taxes shall be due and payable request of the foreign tax authority when such
immediately and shall be subject to all the penalties requesting foreign tax authority has provided the
hereafter prescribed, unless paid within the time fixed in following information to demonstrate the
the demand made by the Commissioner. foreseeable relevance of the information to the
(E) Authority of the Commissioner to Prescribe Real request:
Property Values. - The Commissioner is hereby (a) The identity of the person under examination or
authorized to divide the Philippines into different zones investigation;
or areas and shall, upon mandatory consultation with
competent appraisers both from the private and public (b) A statement of the information being sought,
sectors, and with prior notice to affected taxpayers, including its nature and the form in which the said
determine the fair market value of real properties located foreign tax authority prefers to receive the
in each zone or area, subject to automatic adjustment information from the Commissioner;
once every three (3) years through rules and regulations (c) The tax purpose for which the information is
issued by the Secretary of Finance based on the current being sought;
Philippine valuation standards: Provided, That no
adjustment in zonal valuation shall be valid unless (d) Grounds for believing that the information
published in a newspaper of general circulation in the requested is held in the Philippines or is in the
province, city or municipality concerned, or in the possession or control of a person within the
absence thereof, shall be posted in the provincial capitol, jurisdiction of the Philippines;
city or municipal hall and in two (2) other conspicuous (e) To the extent known, the name and address of
public places therein: Provided, further, That the basis of any person believed to be in possession of the
any valuation, including the records of consultations requested information;
done, shall be public records open to the inquiry of any (f) A statement that the request is in conformity with
taxpayer. For purposes of computing any internal revenue the law and administrative practices of the said
tax, the value of the property shall be, whichever is the foreign tax authority, such that if the requested
higher of: information was within the jurisdiction of the said
(1) the fair market value as determined by the foreign tax authority then it would be able to obtain
Commissioner; or the information under its laws or in the normal
(2) the fair market value as shown in the schedule of course of administrative practice and that it is in
values of the Provincial and City Assessors. conformity with a convention or international
agreement; and
(as amended by RA No 10963)
(g) A statement that the requesting foreign tax
(F) Authority of the Commissioner to Inquire into Bank authority has exhausted all means available in its
Deposit Accounts and Other Related information held own territory to obtain the information, except those
by Financial Institutions. [4] - Notwithstanding any that would give rise to disproportionate difficulties.
contrary provision of Republic Act No. 1405, Republic Act
No. 6426, otherwise known as the Foreign Currency The Commissioner shall forward the information as
Deposit Act of the Philippines, and other general or promptly as possible to the requesting foreign tax
special laws, the Commissioner is hereby authorized to authority. To ensure a prompt response, the
inquire into the bank deposits and other related Commissioner shall confirm receipt of a request in
information held by financial institutions of: writing to the requesting tax authority and shall notify


the latter of deficiencies in the request, if any, within sixty Revenue District Officer having jurisdiction over the
(60) days from receipt of the request. taxpayer, as members; and
If the Commissioner is unable to obtain and provide the (d) The power to assign or reassign internal revenue
information within ninety (90) days from receipt of the officers to establishments where articles subject to
request, due to obstacles encountered in furnishing the excise tax are produced or kept.
information or when the bank or financial institution Section 8. Duty of the Commissioner to Ensure the
refuses to furnish the information, he shall immediately Provision and Distribution of Forms, Receipts,
inform the requesting tax authority of the same, Certificates, and Appliances, and the
explaining the nature of the obstacles encountered or the Acknowledgment of Payment of Taxes. -
reasons for refusal.
(A) Provision and Distribution to Proper-Officials. - Any
The term "foreign tax authority," as used herein, shall law to the contrary notwithstanding, it shall be the duty
refer to the tax authority or tax administration of the of the Commissioner, among other things, to prescribe,
requesting State under the tax treaty or convention to provide, and distribute to the proper officials the requisite
which the Philippines is a signatory or a party of. licenses; internal revenue stamps; unique, secure and
(G) Authority to Accredit and Register Tax Agents. - The non-removable identification markings (hereafter called
Commissioner shall accredit and register, based on their unique identification markings), such as codes or stamps,
professional competence, integrity and moral fitness, be affixed to or form part of all unit packets and packages
individuals and general professional partnerships and and any outside packaging of cigarettes and bottles of
their representatives who prepare and file tax returns, distilled spirits; labels and other forms; certificates; bonds;
statements, reports, protests, and other papers with or records; invoices; books; receipts; instruments; appliances
who appear before, the Bureau for taxpayers. Within one and apparatus used in administering the laws falling
hundred twenty (120) days from January 1, 1998, the within the jurisdiction of the Bureau. For this purpose,
Commissioner shall create national and regional internal revenue stamps, or other markings and labels
accreditation boards, the members of which shall serve shall be caused by the Commissioner to be printed with
for three (3) years, and shall designate from among the adequate security features.
senior officials of the Bureau, one (1) chairman and two (2) Internal revenue stamps, whether of a bar code or fuson
members for each board, subject to such rules and design, or other markings shall be firmly and
regulations as the Secretary of Finance shall promulgate conspicuously affixed or printed on each pack of cigars
upon the recommendation of the Commissioner. and cigarettes and bottles of distilled spirits subject to
Individuals and general professional partnerships and excise tax in the manner and form as prescribed by the
their representatives who are denied accreditation by the Commissioner, upon approval of the Secretary of Finance.
Commissioner and/or the national and regional To further improve tax administration, cigarette and
accreditation boards may appeal such denial to the alcohol manufacturers shall be required to install
Secretary of Finance, who shall rule on the appeal within automated volume-counters of packs and bottles to deter
sixty (60) days from receipt of such appeal. Failure of the over-removals and misdeclaration of removals.
Secretary of Finance to rule on the Appeal within the
prescribed period shall be deemed as approval of the (B) Receipts for Payment Mode. - It shall be the duty of
application for accreditation of the appellant. the Commissioner or his duly authorized representative
or an authorized agent bank to whom any payment of
(H) Authority of the Commissioner to Prescribe any tax is made under the provisions of this Code to
Additional Procedural or Documentary Requirements. - acknowledge the payment of such tax, expressing the
The Commissioner may prescribe the manner of amount paid and the particular account for which such
compliance with any documentary or procedural payment was made in a form and manner prescribed
requirement in connection with the submission or therefor by the Commissioner.
preparation of financial statements accompanying the
tax returns. SEC. 9. Internal Revenue Districts. - With the approval of
the Secretary of Finance, the Commissioner shall divide
SEC. 7.Authority of the Commissioner to Delegate the Philippines into such number of revenue districts as
Power. - The Commissioner may delegate the powers may from time to time be required for administrative
vested in him under the pertinent provisions of this Code purposes. Each of these districts shall be under the
to any or such subordinate officials with the rank supervision of a Revenue District Officer.
equivalent to a division chief or higher, subject to such
limitations and restrictions as may be imposed under SEC. 10. Revenue Regional Director. - Under rules and
rules and regulations to be promulgated by the Secretary regulations, policies and standards formulated by the
of Finance, upon recommendation of the Commissioner: Commissioner, with the approval of the Secretary of
Provided, however, That the following powers of the Finance, the Revenue Regional director shall, within the
Commissioner shall not be delegated: region and district offices under his jurisdiction, among
others:
(a) The power to recommend the promulgation of
rules and regulations by the Secretary of Finance; (a) Implement laws, policies, plans, programs, rules
and regulations of the department or agencies in
(b) The power to issue rulings of first impression or the regional area;
to reverse, revoke or modify any existing ruling of the
Bureau; (b) Administer and enforce internal revenue laws,
and rules and regulations, including the assessment
(c) The power to compromise or abate, under Sec. and collection of all internal revenue taxes, charges
204 (A) and (B) of this Code, any tax liability: and fees;
Provided, however, That assessments issued by the
regional offices involving basic deficiency taxes of (c) Issue Letters of authority for the examination of
Five hundred thousand pesos (P500,000) or less, and taxpayers within the region;
minor criminal violations, as may be determined by (d) Provide economical, efficient and effective
rules and regulations to be promulgated by the service to the people in the area;
Secretary of finance, upon recommendation of the
Commissioner, discovered by regional and district (e) Coordinate with regional offices or other
officials, may be compromised by a regional departments, bureaus and agencies in the area;
evaluation board which shall be composed of the (f) Coordinate with local government units in the
Regional Director as Chairman, the Assistant area;
Regional Director, the heads of the Legal,
Assessment and Collection Divisions and the (g) Exercise control and supervision over the officers
and employees within the region; and


(h) Perform such other functions as may be functions, as often as the exigencies of the revenue
provided by law and as may be delegated by the service may require, to establishments or places where
Commissioner. articles subject to excise tax are produced or kept:
SEC. 11. Duties of Revenue District Officers and Other Provided, That an internal revenue officer assigned to any
Internal Revenue Officers. - It shall be the duty of every such establishment shall in no case stay in his
Revenue District Officer or other internal revenue officers assignment for more than two (2) years, subject to rules
and employees to ensure that all laws, and rules and and regulations to be prescribed by the Secretary of
regulations affecting national internal revenue are Finance, upon recommendation of the Commissioner.
faithfully executed and complied with, and to aid in the SEC. 17. Assignment of Internal Revenue Officers and
prevention, detection and punishment of frauds of Other Employees to Other Duties. - The Commissioner
delinquencies in connection therewith. may, subject to the provisions of Section 16 and the laws
It shall be the duty of every Revenue District Officer to on civil service, as well as the rules and regulations to be
examine the efficiency of all officers and employees of prescribed by the Secretary of Finance upon the
the Bureau of Internal Revenue under his supervision, recommendation of the Commissioner, assign or reassign
and to report in writing to the Commissioner, through the internal revenue officers and employees of the Bureau of
Regional Director, any neglect of duty, incompetency, Internal Revenue, without change in their official rank
delinquency, or malfeasance in office of any internal and salary, to other or special duties connected with the
revenue officer of which he may obtain knowledge, with enforcement or administration of the revenue laws as the
a statement of all the facts and any evidence sustaining exigencies of the service may require: Provided, That
each case. internal revenue officers assigned to perform assessment
or collection function shall not remain in the same
SEC. 12. Agents and Deputies for Collection of National assignment for more than three (3) years; Provided,
Internal Revenue Taxes. - The following are hereby further, That assignment of internal revenue officers and
constituted agents of the Commissioner: employees of the Bureau to special duties shall not
a) The Commissioner of Customs and his exceed one (1) year.
subordinates with respect to the collection of SEC. 18. Reports of Violation of Laws. - When an
national internal revenue taxes on imported goods; internal revenue officer discovers evidence of a violation
b) The head of the appropriate government office of this Code or of any law, rule or regulations
and his subordinates with respect to the collection administered by the Bureau of Internal Revenue of such
of energy tax; and character as to warrant the institution of criminal
proceedings, he shall immediately report the facts to the
c) Banks duly accredited by the Commissioner with Commissioner through his immediate superior, giving
respect to receipt of payments internal revenue the name and address of the offender and the names of
taxes authorized to be made thru banks. the witnesses if possible: Provided, That in urgent cases,
Any officer or employee of an authorized agent bank the Revenue Regional director or Revenue District Officer,
assigned to receive internal revenue tax payments and as the case may be, may send the report to the
transmit tax returns or documents to the Bureau of corresponding prosecuting officer in the latter case, a
Internal Revenue shall be subject to the same sanctions copy of his report shall be sent to the Commissioner.
and penalties prescribed in Sections 269 and 270 of this SEC. 19. Contents of Commissioner's Annual Report. -
Code. The Annual Report of the Commissioner shall contain
SEC. 13. Authority of a Revenue Officer. - Subject to the detailed statements of the collections of the Bureau with
rules and regulations to be prescribed by the Secretary of specifications of the sources of revenue by type of tax, by
Finance, upon recommendation of the Commissioner, a manner of payment, by revenue region and by industry
Revenue Officer assigned to perform assessment group and its disbursements by classes of expenditures.
functions in any district may, pursuant to a Letter of In case the actual collection exceeds or falls short of
Authority issued by the Revenue Regional Director, target as set in the annual national budget by fifteen
examine taxpayers within the jurisdiction of the district in percent (15%) or more, the Commissioner shall explain the
order to collect the correct amount of tax, or to reason for such excess or shortfall.
recommend the assessment of any deficiency tax due in
the same manner that the said acts could have been SEC. 20. Submission of Report and Pertinent
performed by the Revenue Regional Director himself. Information by the Commissioner. -
SEC. 14. Authority of Officers to Administer Oaths and (A) Submission of Pertinent Information to Congress. -
Take Testimony. - The Commissioner, Deputy The provision of Section 270 of this Code to the contrary
Commissioners, Service Chiefs, Assistant Service Chiefs, notwithstanding, the Commissioner shall, upon request
Revenue Regional Directors, Assistant Revenue Regional of Congress and in aid of legislation, furnish its
Directors, Chiefs and Assistant Chiefs of Divisions, appropriate Committee pertinent information including
Revenue District Officers, special deputies of the but not limited to: industry audits, collection performance
Commissioner, internal revenue officers and any other data, status reports in criminal actions initiated against
employee of the Bureau thereunto especially deputized persons and taxpayer's returns: Provided, however, That
by the Commissioner shall have the power to administer any return or return information which can be associated
oaths and to take testimony in any official matter or with, or otherwise identify, directly or indirectly, a
investigation conducted by them regarding matters particular taxpayer shall be furnished the appropriate
within the jurisdiction of the Bureau. Committee of Congress only when sitting in Executive
Session Unless such taxpayer otherwise consents in
SEC. 15. Authority of Internal Revenue Officers to Make writing to such disclosure.
Arrests and Seizures. - The Commissioner, the Deputy
Commissioners, the Revenue Regional Directors, the (B) Report to Oversight Committee. - The Commissioner
Revenue District Officers and other internal revenue shall, with reference to Section 204 of this Code, submit to
officers shall have authority to make arrests and seizures the Oversight Committee referred to in Section 290
for the violation of any penal law, rule or regulation hereof, through the Chairmen of the Committee on Ways
administered by the Bureau of Internal Revenue. Any and Means of the Senate and House of Representatives, a
person so arrested shall be forthwith brought before a report on the exercise of his powers pursuant to the said
court, there to be dealt with according to law. section, every six (6) months of each calendar year.
SEC. 16. Assignment of Internal Revenue Officers SEC. 21. Sources of Revenue. - The following taxes, fees
Involved in Excise Tax Functions to Establishments and charges are deemed to be national internal revenue
Where Articles subject to Excise Tax are Produced or taxes:
Kept. - The Commissioner shall employ, assign, or (a) Income tax;
reassign internal revenue officers involved in excise tax



(b) Estate and donor's taxes; (G) The term 'nonresident alien' means an individual
(c) Value-added tax; whose residence is not within the Philippines and who is
not a citizen thereof.
(d) Other percentage taxes;
(H) The term 'resident foreign corporation' applies to a
(e) Excise taxes; foreign corporation engaged in trade or business within
(f) Documentary stamp taxes; and the Philippines.
(g) Such other taxes as are or hereafter may be (I) The term 'nonresident foreign corporation' applies to
imposed and collected by the Bureau of Internal a foreign corporation not engaged in trade or business
Revenue. within the Philippines.
(J) The term 'fiduciary' means a guardian, trustee,
executor, administrator, receiver, conservator or any
TITLE II TAX ON INCOME person acting in any fiduciary capacity for any person.
(As Last Amended by RA No. 10653, 10963) [5] (K) The term 'withholding agent' means any person
required to deduct and withhold any tax under the
Revenue Regulation Implementing the Income Tax provisions of Section 57.
Provisions of TRAIN Act (L) The term 'shares of stock' shall include shares of stock

of a corporation, warrants and/or options to purchase
shares of stock, as well as units of participation in a
partnership (except general professional partnerships),
CHAPTER I - DEFINITIONS joint stock companies, joint accounts, joint ventures
taxable as corporations, associations and recreation or
SEC. 22. Definitions. - When used in this Title: amusement clubs (such as golf, polo or similar clubs), and
(A) The term 'person' means an individual, a trust, estate mutual fund certificates.
or corporation. (M) The term 'shareholder' shall include holders of a
(B) The term 'corporation' shall include partnerships, no share/s of stock, warrant/s and/or option/s to purchase
matter how created or organized, joint-stock companies, shares of stock of a corporation, as well as a holder of a
joint accounts (cuentas en participacion), association, or unit of participation in a partnership (except general
insurance companies, but does not include general professional partnerships) in a joint stock company, a
professional partnerships and a joint venture or joint account, a taxable joint venture, a member of an
consortium formed for the purpose of undertaking association, recreation or amusement club (such as golf,
construction projects or engaging in petroleum, coal, polo or similar clubs) and a holder of a mutual fund
geothermal and other energy operations pursuant to an certificate, a member in an association, joint-stock
operating consortium agreement under a service company, or insurance company.
contract with the Government. 'General professional (N) The term 'taxpayer' means any person subject to tax
partnerships' are partnerships formed by persons for the imposed by this Title.
sole purpose of exercising their common profession, no
part of the income of which is derived from engaging in (O) The terms 'including' and 'includes', when used in a
any trade or business. definition contained in this Title, shall not be deemed to
exclude other things otherwise within the meaning of the
(C) The term 'domestic', when applied to a corporation, term defined.
means created or organized in the Philippines or under
its laws. (P) The term 'taxable year' means the calendar year, or
the fiscal year ending during such calendar year, upon
(D) The term 'foreign', when applied to a corporation, the basis of which the net income is computed under this
means a corporation which is not domestic Title. 'Taxable year' includes, in the case of a return made
(E) The term 'nonresident citizen' means; for a fractional part of a year under the provisions of this
Title or under rules and regulations prescribed by the
(1) A citizen of the Philippines who establishes to the Secretary of Finance, upon recommendation of the
satisfaction of the Commissioner the fact of his commissioner, the period for which such return is made.
physical presence abroad with a definite intention to
reside therein. (Q) The term 'fiscal year' means an accounting period of
twelve (12) months ending on the last day of any month
(2) A citizen of the Philippines who leaves the other than December.
Philippines during the taxable year to reside abroad,
either as an immigrant or for employment on a (R) The terms 'paid or incurred' and 'paid or accrued'
permanent basis. shall be construed according to the method of
accounting upon the basis of which the net income is
(3) A citizen of the Philippines who works and computed under this Title.
derives income from abroad and whose
employment thereat requires him to be physically (S) The term 'trade or business' includes the
present abroad most of the time during the taxable performance of the functions of a public office.
year. (T) The term 'securities' means shares of stock in a
(4) A citizen who has been previously considered as corporation and rights to subscribe for or to receive such
nonresident citizen and who arrives in the shares. The term includes bonds, debentures, notes or
Philippines at any time during the taxable year to certificates, or other evidence or indebtedness, issued by
reside permanently in the Philippines shall likewise any corporation, including those issued by a government
be treated as a nonresident citizen for the taxable or political subdivision thereof, with interest coupons or in
year in which he arrives in the Philippines with registered form.
respect to his income derived from sources abroad (U) The term 'dealer in securities' means a merchant of
until the date of his arrival in the Philippines. stocks or securities, whether an individual, partnership or
(5) The taxpayer shall submit proof to the corporation, with an established place of business,
Commissioner to show his intention of leaving the regularly engaged in the purchase of securities and the
Philippines to reside permanently abroad or to resale thereof to customers; that is, one who, as a
return to and reside in the Philippines as the case merchant, buys securities and re-sells them to customers
may be for purpose of this Section. with a view to the gains and profits that may be derived
therefrom.
(F) The term 'resident alien' means an individual whose
residence is within the Philippines and who is not a (V) The term 'bank' means every banking institution, as
citizen thereof. defined in Section 2 of Republic Act No. 337, [6] as


amended, otherwise known as the "General banking for their affiliates, subsidiaries, or branches in the
Act." A bank may either be a commercial bank, a thrift Asia-Pacific Region and other foreign markets.
bank, a development bank, a rural bank or specialized (EE) The term 'regional operating headquarters' shall
government bank. mean a branch established in the Philippines by
(W) The term 'non-bank financial intermediary' means multinational companies which are engaged in any of the
a financial intermediary, as defined in Section 2(D)(C) of following services: general administration and planning;
Republic Act No. 337, [7] as amended, otherwise known as business planning and coordination; sourcing and
the "General Banking Act," authorized by the Bangko procurement of raw materials and components;
Sentral ng Pilipinas (BSP) to perform quasi-banking corporate finance advisory services; marketing control
activities. and sales promotion; training and personnel
(X) The term 'quasi-banking activities' means borrowing management; logistic services; research and
funds from twenty (20) or more personal or corporate development services and product development;
lenders at any one time, through the issuance, technical support and maintenance; data processing and
endorsement, or acceptance of debt instruments of any communications; and business development.
kind other than deposits for the borrower's own account, (FF) The term 'long-term deposit or investment
or through the issuance of certificates of assignment or certificate' shall refer to certificate of time deposit or
similar instruments, with recourse, or of repurchase investment in the form of savings, common or individual
agreements for purposes of relending or purchasing trust funds, deposit substitutes, investment management
receivables and other similar obligations: Provided, accounts and other investments with a maturity period of
however, That commercial, industrial and other not less than five (5) years, the form of which shall be
non-financial companies, which borrow funds through prescribed by the Bangko Sentral ng Pilipinas (BSP) and
any of these means for the limited purpose of financing issued by banks only (not by non-bank financial
their own needs or the needs of their agents or dealers, intermediaries and finance companies) to individuals in
shall not be considered as performing quasi-banking denominations of Ten thousand pesos (P10,000) and
functions. other denominations as may be prescribed by the BSP.
(Y) The term 'deposit substitutes' shall mean an (GG) The term 'statutory minimum wage' shall refer to
alternative from of obtaining funds from the public (the the rate fixed by the Regional Tripartite Wage and
term 'public' means borrowing from twenty (20) or more Productivity Board, as defined by the Bureau of Labor
individual or corporate lenders at any one time) other and Employment Statistics (BLES) of the Department of
than deposits, through the issuance, endorsement, or Labor and Employment (DOLE). [9]
acceptance of debt instruments for the borrowers own (HH) The term 'minimum wage earner' shall refer to a
account, for the purpose of relending or purchasing of worker in the private sector paid the statutory minimum
receivables and other obligations, or financing their own wage or to an employee in the public sector with
needs or the needs of their agent or dealer. These compensation income of not more than the statutory
instruments may include, but need not be limited to minimum wage in the non-agricultural sector where
bankers' acceptances, promissory notes, repurchase he/she is assigned. [10]
agreements, including reverse repurchase agreements
entered into by and between the Bangko Sentral ng
Pilipinas (BSP) and any authorized agent bank,
certificates of assignment or participation and similar
CHAPTER II GENERAL PRINCIPLES
instruments with recourse: Provided, however, That debt
instruments issued for interbank call loans with maturity SEC. 23. General Principles of Income Taxation in the
of not more than five (5) days to cover deficiency in Philippines. - Except when otherwise provided in this
reserves against deposit liabilities, including those Code:
between or among banks and quasi-banks, shall not be (A) A citizen of the Philippines residing therein is taxable
considered as deposit substitute debt instruments. on all income derived from sources within and without
(Z) The term 'ordinary income' includes any gain from the Philippines;
the sale or exchange of property which is not a capital (B) A nonresident citizen is taxable only on income
asset or property described in Section 39(A)(1). Any gain derived from sources within the Philippines;
from the sale or exchange of property which is treated or
considered, under other provisions of this Title, as (C) An individual citizen of the Philippines who is working
'ordinary income' shall be treated as gain from the sale and deriving income from abroad as an overseas contract
or exchange of property which is not a capital asset as worker is taxable only on income derived from sources
defined in Section 39(A)(1). The term 'ordinary loss' within the Philippines: Provided, That a seaman who is a
includes any loss from the sale or exchange of property citizen of the Philippines and who receives compensation
which is not a capital asset. Any loss from the sale or for services rendered abroad as a member of the
exchange of property which is treated or considered, complement of a vessel engaged exclusively in
under other provisions of this Title, as 'ordinary loss' shall international trade shall be treated as an overseas
be treated as loss from the sale or exchange of property contract worker;
which is not a capital asset. (D) An alien individual, whether a resident or not of the
(AA) The term 'rank and file employees' shall mean all Philippines, is taxable only on income derived from
employees who are holding neither managerial nor sources within the Philippines;
supervisory position as defined under existing provisions (E) A domestic corporation is taxable on all income
of the Labor Code of the Philippines, as amended. derived from sources within and without the Philippines;
(BB) The term 'mutual fund company' shall mean an and
open-end and close-end investment company as defined (F) A foreign corporation, whether engaged or not in
under the Investment Company Act. [8] trade or business in the Philippines, is taxable only on
(CC) The term 'trade, business or profession' shall not income derived from sources within the Philippines.
include performance of services by the taxpayer as an
employee.
(DD) The term 'regional or area headquarters' shall CHAPTER III TAX ON INDIVIDUALS
mean a branch established in the Philippines by
multinational companies and which headquarters do not SEC. 24. Income Tax Rates. -
earn or derive income from the Philippines and which act (A) Rates of Income Tax on Individual Citizen and
as supervisory, communications and coordinating center Individual Resident Alien of the Philippines. —


(1) An income tax is hereby imposed: (b) Rate of Tax on Income of Purely Self-employed
(a) On the taxable income defined in Section 31 of this Individuals and/or Professionals Whose Gross Sales or
Code, other than income subject to tax under Gross Receipts and Other Non-operating Income Does
Subsections (B), (C), and (D) of this Section, derived for Not Exceed the Value-added Tax (VAT) Threshold as
each taxable year from all sources within and without the Provided in Section 109(BB). — Self-employed
Philippines by every individual citizen of the Philippines individuals and/or professionals shall have the option to
residing therein; avail of an eight percent (8%) tax on gross sales or gross
receipts and other non-operating income in excess of
(b) On the taxable income defined in Section 31 of this Two hundred fifty thousand pesos (P250,000) in lieu of
Code, other than income subject to tax under the graduated income tax rates under Subsection
Subsections (B), (C), and (D) of this Section, derived for (A)(2)(a) of this Section and the percentage tax under
each taxable year from all sources within the Philippines Section 116 of this Code.
by an individual citizen of the Philippines who is residing
outside of the Philippines including overseas contract (c) Rate of Tax for Mixed Income Earners. —
workers referred to in Subsection (C) of Section 23 hereof; Taxpayers earning both compensation income and
and income from business or practice of profession shall be
subject to the following taxes:
(c) On the taxable income defined in Section 31 of this
Code, other than income subject to tax under (1) All Income from Compensation — The rates
Subsections (B), (C), and (D) of this Section, derived for prescribed under Subsection (A)(2)(a) of this Section.
each taxable year from all sources within the Philippines (2) All Income from Business or Practice of Profession
by an individual alien who is a resident of the Philippines. —
(2) Rates of Tax on Taxable Income of Individuals. (a) If Total Gross Sales and/or Gross Receipts and
— The tax shall be computed in accordance with and at Other Non-operating Income Do Not Exceed the VAT
the rates established in the following schedule: Threshold as Provided in Section 109(BB) of this Code. —
(a) Tax Schedule Effective January 1, 2018 until The rates prescribed under Subsection (A)(2)(a) of this
December 31, 2022: Section on taxable income, or eight percent (8%) income
tax based on gross sales or gross receipts and other
Not over P250,000 0% non-operating income in lieu of the graduated income
Over P250,000 but not over 20% of the excess tax rates under Subsection (A)(2)(a) of this Section and
P400,000 over P250,000 the percentage tax under Section 116 of this Code.
(b) If Total Gross Sales and/or Gross Receipts and
Over P400,000 but not over P30,000 + 25% of the Other Non-operating Income Exceeds the VAT Threshold
P800,000 excess over P400,000 as Provided in Section 109(BB) of this Code. — The rates
Over P800,000 but not over P130,000 + 30% of the prescribed under Subsection (A)(2)(a) of this Section.
P2,000,000 excess over P800,000 (B) Rate of Tax on Certain Passive Income: —
Over P2,000,000 but not P490,000 + 32% of (1) Interests, Royalties, Prizes, and Other Winnings.
over P8,000,000 the excess over — A final tax at the rate of twenty percent (20%) is hereby
P2,000,000 imposed upon the amount of interest from any currency
Over P8,000,000 P2,410,000 + 35% of bank deposit and yield or any other monetary benefit
the excess over from deposit substitutes and from trust funds and similar
P8,000,000 arrangements; royalties, except on books, as well as other
literary works and musical compositions, which shall be
imposed a final tax of ten percent (10%); prizes (except
Tax Schedule Effective January 1, 2023 and onwards: prizes amounting to Ten thousand pesos (P10,000) or less
which shall be subject to tax under Subsection (A) of
Not over P250,000 0% Section 24; and other winnings (except winnings
Over P250,000 but not over 15% of the excess over amounting to Ten thousand pesos (P10,000) or less from
P400,000 P250,000 Philippine Charity Sweepstakes and Lotto which shall be
exempt), derived from sources within the Philippines:
Over P400,000 but not over P22,500 + 20% of the Provided, however, That interest income received by an
P800,000 excess over P400,000 individual taxpayer (except a nonresident individual) from
a depository bank under the expanded foreign currency
Over P800,000 but not over P102,500 + 25% of the
deposit system shall be subject to a final income tax at
P2,000,000 excess over P800,000
the rate of fifteen percent (15%) of such interest income:
Over P2,000,000 but not P402,500 + 30% of Provided, further, That interest income from long-term
over P8,000,000 the excess over deposit or investment in the form of savings, common or
P2,000,000 individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced
Over P8,000,000 P2,202,500 + 35% of by certificates in such form prescribed by the Bangko
the excess over Sentral ng Pilipinas (BSP) shall be exempt from the tax
P8,000,000 imposed under this Subsection: Provided, finally, That
For married individuals, the husband and wife, should the holder of the certificate pre-terminate the
subject to the provision of Section 51(D) hereof, shall deposit or investment before the fifth (5th) year, a final
compute separately their individual income tax based on tax shall be imposed on the entire income and shall be
their respective total taxable income: Provided, That if any deducted and withheld by the depository bank from the
income cannot be definitely attributed to or identified as proceeds of the long-term deposit or investment
income exclusively earned or realized by either of the certificate based on the remaining maturity thereof:
spouses, the same shall be divided equally between the Four (4) years to less than five (5) years - 5%;
spouses for the purpose of determining their respective
taxable income. Three (3) years to less than (4) years - 12%; and
Provided, That minimum wage earners as defined in Less than three (3) years - 20%
Section 22(HH) of this Code shall be exempt from the (2) Cash and/or Property Dividends. — A final tax at
payment of income tax on their taxable income:Provided, the rate of ten percent (10%) shall be imposed upon the
further, That the holiday pay, overtime pay, night shift cash and/or property dividends actually or constructively
differential pay and hazard pay received by such received by an individual from a domestic corporation or
minimum wage earners shall likewise be exempt from from a joint stock company, insurance or mutual fund
income tax. companies and regional operating headquarters of



multinational companies, or on the share of an individual on taxable income received from all sources within
in the distributable net income after tax of a partnership the Philippines. A nonresident alien individual who
(except a general professional partnership) of which he is shall come to the Philippines and stay therein for an
a partner, or on the share of an individual in the net aggregate period of more than one hundred eighty
income after tax of an association, a joint account, or a (180) days during any calendar year shall be deemed
joint venture or consortium taxable as a corporation of a 'nonresident alien doing business in the
which he is a member or co-venturer. Philippines'. Section 22 (G) of this Code
(C) Capital Gains from Sale of Shares of Stock not notwithstanding.
Traded in the Stock Exchange. — The provisions of (2) Cash and/or Property Dividends from a
Section 39(B) notwithstanding, a final tax at the rate of Domestic Corporation or Joint Stock Company, or
fifteen percent (15%) is hereby imposed upon the net Insurance or Mutual Fund Company or Regional
capital gains realized during the taxable year from the Operating Headquarter or Multinational
sale, barter, exchange or other disposition of shares of Company, or Share in the Distributable Net
stock in a domestic corporation, except shares sold, or Income of a Partnership (Except a General
disposed of through the stock exchange. Professional Partnership), Joint Account, Joint
Venture Taxable as a Corporation or Association.,
Interests, Royalties, Prizes, and Other Winnings. -
Not over P 100,000 5% Cash and/or property dividends from a domestic
corporation, or from a joint stock company, or from
On any amount in excess of P 100,000 10% an insurance or mutual fund company or from a
regional operating headquarter of multinational
(as amended by RA No 10963) company, or the share of a nonresident alien
(D) Capital Gains from Sale of Real Property. - individual in the distributable net income after tax of
a partnership (except a general professional
(1) In General. - The provisions of Section 39(B) partnership) of which he is a partner, or the share of
notwithstanding, a final tax of six percent (6%) based a nonresident alien individual in the net income
on the gross selling price or current fair market value after tax of an association, a joint account, or a joint
as determined in accordance with Section 6(E) of venture taxable as a corporation of which he is a
this Code, whichever is higher, is hereby imposed member or a co-venturer; interests; royalties (in any
upon capital gains presumed to have been realized form); and prizes (except prizes amounting to Ten
from the sale, exchange, or other disposition of real thousand pesos (P10,000) or less which shall be
property located in the Philippines, classified as subject to tax under Subsection (B)(1) of Section 24)
capital assets, including pacto de retro sales and and other winnings (except Philippine Charity
other forms of conditional sales, by individuals, Sweepstakes and Lotto winnings); shall be subject to
including estates and trusts: Provided, That the tax an income tax of twenty percent (20%) on the total
liability, if any, on gains from sales or other amount thereof: Provided, however, that royalties on
dispositions of real property to the government or books as well as other literary works, and royalties on
any of its political subdivisions or agencies or to musical compositions shall be subject to a final tax
government-owned or controlled corporations shall of ten percent (10%) on the total amount thereof:
be determined either under Section 24 (A) or under Provided, further, That cinematographic films and
this Subsection, at the option of the taxpayer; similar works shall be subject to the tax provided
(2) Exception. - The provisions of paragraph (1) of under Section 28 of this Code: Provided,
this Subsection to the contrary notwithstanding, furthermore, That interest income from long-term
capital gains presumed to have been realized from deposit or investment in the form of savings,
the sale or disposition of their principal residence by common or individual trust funds, deposit
natural persons, the proceeds of which is fully substitutes, investment management accounts and
utilized in acquiring or constructing a new principal other investments evidenced by certificates in such
residence within eighteen (18) calendar months form prescribed by the Bangko Sentral ng Pilipinas
from the date of sale or disposition, shall be exempt (BSP) shall be exempt from the tax imposed under
from the capital gains tax imposed under this this Subsection: Provided, finally, that should the
Subsection: Provided, That the historical cost or holder of the certificate pre-terminate the deposit or
adjusted basis of the real property sold or disposed investment before the fifth (5th) year, a final tax shall
shall be carried over to the new principal residence be imposed on the entire income and shall be
built or acquired: Provided, further, That the deducted and withheld by the depository bank from
Commissioner shall have been duly notified by the the proceeds of the long-term deposit or investment
taxpayer within thirty (30) days from the date of sale certificate based on the remaining maturity thereof:
or disposition through a prescribed return of his Four (4) years to less than five (5) years - 5%;
intention to avail of the tax exemption herein
mentioned: Provided, still further, That the said tax Three (3) years to less than four (4) years - 12%;
exemption can only be availed of once every ten (10) and
years: Provided, finally, That if there is no full Less than three (3) years - 20%.
utilization of the proceeds of sale or disposition, the
portion of the gain presumed to have been realized (3) Capital Gains. - Capital gains realized from sale,
from the sale or disposition shall be subject to barter or exchange of shares of stock in domestic
capital gains tax. For this purpose, the gross selling corporations not traded through the local stock
price or fair market value at the time of sale, exchange, and real properties shall be subject to the
whichever is higher, shall be multiplied by a fraction tax prescribed under Subsections (C) and (D) of
which the unutilized amount bears to the gross Section 24.
selling price in order to determine the taxable (B) Nonresident Alien Individual Not Engaged in Trade
portion and the tax prescribed under paragraph (1) or Business Within the Philippines. - There shall be
of this Subsection shall be imposed thereon. levied, collected and paid for each taxable year upon the
SEC. 25. Tax on Nonresident Alien Individual. - entire income received from all sources within the
Philippines by every nonresident alien individual not
(A) Nonresident Alien Engaged in trade or Business engaged in trade or business within the Philippines as
Within the Philippines. - interest, cash and/or property dividends, rents, salaries,
(1) In General. - A nonresident alien individual wages, premiums, annuities, compensation,
engaged in trade or business in the Philippines shall remuneration, emoluments, or other fixed or
be subject to an income tax in the same manner as determinable annual or periodic or casual gains, profits,
an individual citizen and a resident alien individual, and income, and capital gains, a tax equal to twenty-five


percent (25%) of such income. Capital gains realized by a shall be liable for income tax only in their separate and
nonresident alien individual not engaged in trade or individual capacities.
business in the Philippines from the sale of shares of For purposes of computing the distributive share of the
stock in any domestic corporation and real property shall partners, the net income of the partnership shall be
be subject to the income tax prescribed under computed in the same manner as a corporation.
Subsections (C) and (D) of Section 24.
Each partner shall report as gross income his distributive
(C) Alien Individual Employed by Regional or Area share, actually or constructively received, in the net
Headquarters and Regional Operating Headquarters of income of the partnership.
Multinational Companies. - There shall be levied,
collected and paid for each taxable year upon the gross
income received by every alien individual employed by
regional or area headquarters and regional operating
CHAPTER IV TAX ON CORPORATIONS
headquarters established in the Philippines by
multinational companies as salaries, wages, annuities, SEC. 27. Rates of Income tax on Domestic Corporations.
compensation, remuneration and other emoluments, -
such as honoraria and allowances, from such regional or (A) In General. - Except as otherwise provided in this
area headquarters and regional operating headquarters, Code, an income tax of thirty-five percent (35%) is hereby
a tax equal to fifteen percent (15%) of such gross income: imposed upon the taxable income derived during each
Provided, however, That the same tax treatment shall taxable year from all sources within and without the
apply to Filipinos employed and occupying the same Philippines by every corporation, as defined in Section
position as those of aliens employed by these 22(B) of this Code and taxable under this Title as a
multinational companies. For purposes of this Chapter, corporation, organized in, or existing under the laws of
the term 'multinational company' means a foreign firm the Philippines: Provided, That effective January 1, 2009,
or entity engaged in international trade with affiliates or the rate of income tax shall be thirty percent (30%). [15]
subsidiaries or branch offices in the Asia-Pacific Region
and other foreign markets.(as amended by RA No 10963) In the case of corporations adopting the fiscal-year
accounting period, the taxable income shall be computed
(D) Alien Individual Employed by Offshore Banking without regard to the specific date when specific sales,
Units. - There shall be levied, collected and paid for each purchases and other transactions occur. Their income
taxable year upon the gross income received by every and expenses for the fiscal year shall be deemed to have
alien individual employed by offshore banking units been earned and spent equally for each month of the
established in the Philippines as salaries, wages, period.
annuities, compensation, remuneration and other
emoluments, such as honoraria and allowances, from The corporate income tax rate shall be applied on the
such offshore banking units, a tax equal to fifteen percent amount computed by multiplying the number of months
(15%) of such gross income: Provided, however, That the covered by the new rate within the fiscal year by the
same tax treatment shall apply to Filipinos employed and taxable income of the corporation for the period, divided
occupying the same position as those of aliens employed by twelve. [16]
by these offshore banking units.(as amended by RA No Provided, further, That the President, upon the
10963) recommendation of the Secretary of Finance, may
(E) Alien Individual Employed by Petroleum Service effective January 1, 2000, allow corporations the option to
Contractor and Subcontractor. [14] - An alien individual be taxed at fifteen percent (15%) of gross income as
who is a permanent resident of a foreign country but who defined herein, after the following conditions have been
is employed and assigned in the Philippines by a foreign satisfied:
service contractor or by a foreign service subcontractor (1) A tax effort ratio of twenty percent (20%) of Gross
engaged in petroleum operations in the Philippines shall National Product (GNP);
be liable to a tax of fifteen percent (15%) of the salaries,
wages, annuities, compensation, remuneration and other (2) A ratio of forty percent (40%) of income tax
emoluments, such as honoraria and allowances, received collection to total tax revenues;
from such contractor or subcontractor: Provided, (3) A VAT tax effort of four percent (4%) of GNP; and
however, That the same tax treatment shall apply to a
(4) A 0.9 percent (0.9%) ratio of the Consolidated
Filipino employed and occupying the same position as an
Public Sector Financial Position (CPSFP) to GNP.
alien employed by petroleum service contractor and
subcontractor. The option to be taxed based on gross income shall be
available only to firms whose ratio of cost of sales to gross
Any income earned from all other sources within the
sales or receipts from all sources does not exceed
Philippines by the alien employees referred to under
fifty-five percent (55%).
Subsections (C), (D), and (E) hereof shall be subject to the
pertinent income tax, as the case may be, imposed under The election of the gross income tax option by the
this Code. corporation shall be irrevocable for three (3) consecutive
taxable years during which the corporation is qualified
under the scheme.
(F) The preferential tax treatment provided in
For purposes of this Section, the term 'gross income'
Subsections (C), (D), and (E) of this Section shall not be
derived from business shall be equivalent to gross sales
applicable to regional headquarters (RHQs), regional
less sales returns, discounts and allowances and cost of
operating headquarters (ROHQs), offshore banking units
goods sold. 'Cost of goods sold' shall include all business
(OBUs) or petroleum service contractors and
expenses directly incurred to produce the merchandise to
subcontractors registering with the Securities and
bring them to their present location and use.
Exchange Commission (SEC) after January 1, 2018:
Provided, however, That existing RHQs/ROHQs, OBUs or For a trading or merchandising concern, 'cost of goods
petroleum service contractors and subcontractors sold' shall include the invoice cost of the goods sold, plus
presently availing of preferential tax rates for qualified import duties, freight in transporting the goods to the
employees shall continue to be entitled to avail of the place where the goods are actually sold, including
preferential tax rate for present and future qualified insurance while the goods are in transit.
employees.(as amended by RA No 10963) For a manufacturing concern, 'cost of goods
SEC. 26. Tax Liability of Members of General manufactured and sold' shall include all costs of
Professional Partnerships. - A general professional production of finished goods, such as raw materials used,
partnership as such shall not be subject to the income tax direct labor and manufacturing overhead, freight cost,
imposed under this Chapter. Persons engaging in
business as partners in a general professional partnership



insurance premiums and other costs incurred to bring banks including branches of foreign banks that may
the raw materials to the factory or warehouse. be authorized by the Bangko Sentral ng Pilipinas
In the case of taxpayers engaged in the sale of service, (BSP) to transact business with foreign currency
'gross income' means gross receipts less sales returns, deposit system shall be exempt from all taxes,
allowances and discounts. except net income from such transactions as may
be specified by the Secretary of Finance, upon
(B) Proprietary Educational Institutions and Hospitals. - recommendation by the Monetary Board to be
Proprietary educational institutions and hospitals which subject to the regular income tax payable by banks:
are nonprofit shall pay a tax of ten percent (10%) on their Provided, however, That interest income from
taxable income except those covered by Subsection (D) foreign currency loans granted by such depository
hereof: Provided, that if the gross income from 'unrelated banks under said expanded system to residents
trade, business or other activity' exceeds fifty percent other than offshore banking units in the Philippines
(50%) of the total gross income derived by such or other depository banks under the expanded
educational institutions or hospitals from all sources, the system, shall be subject to a final tax at the rate of
tax prescribed in Subsection (A) hereof shall be imposed ten percent (10%). [20]
on the entire taxable income. For purposes of this Any income of nonresidents, whether individuals or
Subsection, the term 'unrelated trade, business or other corporations, from transactions with depository
activity' means any trade, business or other activity, the banks under the expanded system shall be exempt
conduct of which is not substantially related to the from income tax.
exercise or performance by such educational institution
or hospital of its primary purpose or function. A (4) Intercorporate Dividends. - Dividends received
'proprietary educational institution' is any private by a domestic corporation from another domestic
school maintained and administered by private corporation shall not be subject to tax.
individuals or groups with an issued permit to operate (5) Capital Gains Realized from the Sale, Exchange
from the Department of Education, Culture and Sports or Disposition of Lands and/or Buildings. - Afinal
(DECS) [17], or the Commission on Higher Education tax of six percent (6%) is hereby imposed on the gain
(CHED), or the Technical Education and Skills presumed to have been realized on the sale,
Development Authority (TESDA), as the case may be, in exchange or disposition of lands and/or buildings
accordance with existing laws and regulations. which are not actually used in the business of a
(C) Government-owned or -Controlled Corporations, corporation and are treated as capital assets, based
Agencies or Instrumentalities. [18] - The provisions of on the gross selling price of fair market value as
existing special or general laws to the contrary determined in accordance with Section 6(E) of this
notwithstanding, all corporations, agencies, or Code, whichever is higher, of such lands and/or
instrumentalities owned or controlled by the buildings.
Government, except the Government Service Insurance (E) Minimum Corporate Income Tax on Domestic
System (GSIS), the Social Security System (SSS), the Corporations. -
Philippine Health Insurance Corporation (PHIC), and the (1) Imposition of Tax. - A minimum corporate
local water districts shall pay such rate of tax upon their income tax of two percent (2%) of the gross income
taxable income as are imposed by this Section upon as of the end of the taxable year, as defined herein, is
corporations or associations engaged in a similar hereby imposed on a corporation taxable under this
business, industry, or activity.(as amended by RA No Title, beginning on the fourth taxable year
10963) immediately following the year in which such
(D) Rates of Tax on Certain Passive Incomes. - corporation commenced its business operations,
(1) Interest from Deposits and Yield or any other when the minimum income tax is greater than the
Monetary Benefit from Deposit Substitutes and tax computed under Subsection (A) of this Section
from Trust Funds and Similar Arrangements, and for the taxable year.
Royalties. — A final tax at the rate of twenty percent (2) Carry Forward of Excess Minimum Tax. - Any
(20%) is hereby imposed upon the amount of excess of the minimum corporate income tax over
interest on currency bank deposit and yield or any the normal income tax as computed under
other monetary benefit from deposit substitutes Subsection (A) of this Section shall be carried
and from trust funds and similar arrangements forward and credited against the normal income tax
received by domestic corporations, and royalties, for the three (3) immediately succeeding taxable
derived from sources within the Philippines: years.
Provided, however, That interest income derived by a (3) Relief from the Minimum Corporate Income
domestic corporation from a depository bank under Tax Under Certain Conditions. - The Secretary of
the expanded foreign currency deposit system shall Finance is hereby authorized to suspend the
be subject to a final income tax at the rate of fifteen imposition of the minimum corporate income tax on
percent (15%) of such interest income. any corporation which suffers losses on account of
(2) Capital Gains from the Sale of Shares of Stock prolonged labor dispute, or because of force
Not Traded in the Stock Exchange. — A final tax at majeure, or because of legitimate business reverses.
the rate of fifteen percent (15%) shall be imposed on The Secretary of Finance is hereby authorized to
net capital gains realized during the taxable year promulgate, upon recommendation of the
from the sale, exchange or other disposition of Commissioner, the necessary rules and regulation
shares of stock in a domestic corporation except that shall define the terms and conditions under
shares sold or disposed of through the stock which he may suspend the imposition of the
exchange. minimum corporate income tax in a meritorious
(as amended by RA No 10963) case.
(4) Gross Income Defined. - For purposes of
Not over P 100,000 5% applying the minimum corporate income tax
Amount in excess of P 100,000 10% provided under Subsection (E) hereof, the term
'gross income' shall mean gross sales less sales
(3) Tax on Income Derived under the Expanded returns, discounts and allowances and cost of goods
Foreign Currency Deposit System. - Income sold. 'Cost of goods sold' shall include all business
derived by a depository bank under the expanded expenses directly incurred to produce the
foreign currency deposit system from foreign merchandise to bring them to their present location
currency transactions with non-residents, offshore and use.
banking units in the Philippines, local commercial



For a trading or merchandising concern, 'cost of goods Philippines: Provided, further, That for a flight
sold' shall include the invoice cost of the goods sold, plus which originates from the Philippines, but
import duties, freight in transporting the goods to the transshipment of passenger takes place at any
place where the goods are actually sold including part outside the Philippines on another airline,
insurance while the goods are in transit. only the aliquot portion of the cost of the ticket
For a manufacturing concern, 'cost of goods corresponding to the leg flown from the
manufactured and sold' shall include all costs of Philippines to the point of transshipment shall
production of finished goods, such as raw materials used, form part of Gross Philippine Billings.
direct labor and manufacturing overhead, freight cost, (b) International Shipping. - 'Gross Philippine
insurance premiums and other costs incurred to bring Billings' means gross revenue whether for
the raw materials to the factory or warehouse. passenger, cargo or mail originating from the
In the case of taxpayers engaged in the sale of service, Philippines up to final destination, regardless of
'gross income' means gross receipts less sales returns, the place of sale or payments of the passage or
allowances, discounts and cost of services. 'Cost of freight documents.
services' shall mean all direct costs and expenses Provided, That international carriers doing business
necessarily incurred to provide the services required by in the Philippines may avail of a preferential rate or
the customers and clients including (A) salaries and exemption from the tax herein imposed on their
employee benefits of personnel, consultants and gross revenue derived from the carriage of persons
specialists directly rendering the service and (B) cost of and their excess baggage on the basis of an
facilities directly utilized in providing the service such as applicable tax treaty or international agreement to
depreciation or rental of equipment used and cost of which the Philippines is a signatory or on the basis
supplies: Provided, however, That in the case of banks, of reciprocity such that an international carrier,
'cost of services' shall include interest expense. whose home country grants income tax exemption
SEC. 28. Rates of Income Tax on Foreign Corporations. - to Philippine carriers, shall likewise be exempt from
[21] the tax imposed under this provision.
(A) Tax on Resident Foreign Corporations. - (4) Offshore Banking Units. - The provisions of any
law to the contrary notwithstanding, income derived
(1) In General. - Except as otherwise provided in this by offshore banking units authorized by the Bangko
Code, a corporation organized, authorized, or Sentral ng Pilipinas (BSP), from foreign currency
existing under the laws of any foreign country, transactions with non-residents, other offshore
engaged in trade or business within the Philippines, banking units, local commercial banks, including
shall be subject to an income tax equivalent to branches of foreign banks that may be authorized
thirty-five percent (35%) of the taxable income by the Bangko Sentral ng Pilipinas (BSP) to transact
derived in the preceding taxable year from all business with offshore banking units shall be
sources within the Philippines: Provided, That exempt from all taxes except net income from such
effective January 1, 2009, the rate of income tax shall transactions as may be specified by the Secretary of
be thirty percent (30%). [22] Finance, upon recommendation of the Monetary
In the case of corporations adopting the fiscal-year Board which shall be subject to the regular income
accounting period, the taxable income shall be tax payable by banks: Provided, however, That any
computed without regard to the specific date when interest income derived from foreign currency loans
sales, purchases and other transactions occur. Their granted to residents other than offshore banking
income and expenses for the fiscal year shall be units or local commercial banks, including local,
deemed to have been earned and spent equally for branches of foreign banks that may be authorized
each month of the period. by the BSP to transact business with offshore
banking units, shall be subject only to a final tax at
The corporate income tax rate shall be applied on the rate of ten percent (10%). [24]
the amount computed by multiplying the number
of months covered by the new rate within the fiscal Any income of nonresidents, whether individuals or
year by the taxable income of the corporation for the corporations, from transactions with said offshore
period, divided by twelve. [23] banking units shall be exempt from income tax.
Provided, however, That a resident foreign (5) Tax on Branch Profits Remittances. - Any profit
corporation shall be granted the option to be taxed remitted by a branch to its head office shall be
at fifteen percent (15%) on gross income under the subject to a tax of fifteen (15%) which shall be based
same conditions, as provided in Section 27 (A). on the total profits applied or earmarked for
remittance without any deduction for the tax
(2) Minimum Corporate Income Tax on Resident component thereof (except those activities which
Foreign Corporations. - A minimum corporate are registered with the Philippine Economic Zone
income tax of two percent (2%) of gross income, as Authority). The tax shall be collected and paid in the
prescribed under Section 27 (E) of this Code, shall be same manner as provided in Sections 57 and 58 of
imposed, under the same conditions, on a resident this Code: Provided, that interests, dividends, rents,
foreign corporation taxable under paragraph (1) of royalties, including remuneration for technical
this Subsection. services, salaries, wages premiums, annuities,
(3) International Carrier. - An international carrier emoluments or other fixed or determinable annual,
doing business in the Philippines shall pay a tax of periodic or casual gains, profits, income and capital
two and one-half percent (2 1/2 %) on its 'Gross gains received by a foreign corporation during each
Philippine Billings' as defined hereunder: taxable year from all sources within the Philippines
shall not be treated as branch profits unless the
(a) International Air Carrier. - 'Gross Philippine same are effectively connected with the conduct of
Billings' refers to the amount of gross revenue its trade or business in the Philippines.
derived from carriage of persons, excess
baggage, cargo, and mail originating from the (6) Regional or Area Headquarters and Regional
Philippines in a continuous and uninterrupted Operating Headquarters of Multinational
flight, irrespective of the place of sale or issue Companies. -
and the place of payment of the ticket or (a) Regional or area headquarters as defined in
passage document: Provided, That tickets Section 22(DD) shall not be subject to income
revalidated, exchanged and/or indorsed to tax.
another international airline form part of the
Gross Philippine Billings if the passenger
boards a plane in a port or point in the



(b) Regional operating headquarters as defined received during each taxable year from all sources
in Section 22(EE) shall pay a tax of ten percent within the Philippines, such as interests, dividends,
(10%) of their taxable income. rents, royalties, salaries, premiums (except
(7) Tax on Certain Incomes Received by a Resident reinsurance premiums), annuities, emoluments or
Foreign Corporation. - other fixed or determinable annual, periodic or
casual gains, profits and income, and capital gains,
(a) Interest from Deposits and Yield or any except capital gains subject to tax under
other Monetary Benefit from Deposit subparagraph 5 ( c ): Provided, That effective January
Substitutes, Trust Funds and Similar 1, 2009, the rate of income tax shall be thirty percent
Arrangements and Royalties. - Interest from (30%). [26]
any currency bank deposit and yield or any
other monetary benefit from deposit (2) Nonresident Cinematographic Film Owner,
substitutes and from trust funds and similar Lessor or Distributor. - A cinematographic film
arrangements and royalties derived from owner, lessor, or distributor shall pay a tax of
sources within the Philippines shall be subject twenty-five percent (25%) of its gross income from
to a final income tax at the rate of twenty all sources within the Philippines.
percent (20%) of such interest: Provided, (3) Nonresident Owner or Lessor of Vessels
however, That interest income derived by a Chartered by Philippine Nationals. - A nonresident
resident foreign corporation from a depository owner or lessor of vessels shall be subject to a tax of
bank under the expanded foreign currency four and one-half percent (4 1/2%) of gross rentals,
deposit system shall be subject to a final lease or charter fees from leases or charters to
income tax at the rate of seven and one-half Filipino citizens or corporations, as approved by the
percent (7 1/2%) of such interest income. Maritime Industry Authority.
(b) Income Derived under the Expanded (4) Nonresident Owner or Lessor of Aircraft,
Foreign Currency Deposit System. - Income Machineries and Other Equipment. - Rentals,
derived by a depository bank under the charters and other fees derived by a nonresident
expanded foreign currency deposit system lessor of aircraft, machineries and other equipment
from foreign currency transactions with shall be subject to a tax of seven and one-half
nonresidents, offshore banking units in the percent (7 1/2%) of gross rentals or fees.
Philippines, local commercial banks including (5) Tax on Certain Incomes Received by a
branches of foreign banks that may be Nonresident Foreign Corporation. -
authorized by the Bangko Sentral ng Pilipinas
(BSP) to transact business with foreign (a) Interest on Foreign Loans. - A final
currency deposit system units, and other withholding tax at the rate of twenty percent
depository banks under the expanded foreign (20%) is hereby imposed on the amount of
currency deposit system shall be exempt from interest on foreign loans contracted on or after
all taxes, except net income from such August 1, 1986;
transactions as may be specified by the (b) Intercorporate Dividends. - A final
Secretary of Finance, upon recommendation by withholding tax at the rate of fifteen percent
the Monetary Board to be subject to the regular (15%) is hereby imposed on the amount of cash
income tax payable by banks: Provided, and/or property dividends received from a
however, That interest income from foreign domestic corporation, which shall be collected
currency loans granted by such depository and paid as provided in Section 57 (A) of this
banks under said expanded system to residents Code, subject to the condition that the country
other than offshore banking units in the in which the nonresident foreign corporation is
Philippines or other depository banks under the domiciled, shall allow a credit against the tax
expanded system shall be subject to a final tax due from the nonresident foreign corporation
at the rate of ten percent (10%). [25] taxes deemed to have been paid in the
Any income of nonresidents, whether Philippines equivalent to twenty percent (20%),
individuals or corporations, from transactions which represents the difference between the
with depository banks under the expanded regular income tax of thirty-five percent (35%)
system shall be exempt from income tax. and the fifteen percent (15%) tax on dividends
as provided in this subparagraph: Provided, that
(c) Capital Gains from Sale of Shares of Stock effective January 1, 2009, the credit against the
Not Traded in the Stock Exchange. - A final tax due shall be equivalent to fifteen percent
tax at the rates prescribed below is hereby (15%), which represents the difference between
imposed upon the net capital gains realized the regular income tax of thirty percent (30%)
during the taxable year from the sale, barter, and the fifteen percent (15%) tax on dividends;
exchange or other disposition of shares of stock [27]
in a domestic corporation except shares sold or
disposed of through the stock exchange: (c) Capital Gains from Sale of Shares of Stock
not Traded in the Stock Exchange. - A final tax
Not over P 100,000 at the rates prescribed below is hereby
imposed upon the net capital gains realized
On any amount in excess
during the taxable year from the sale, barter,
of P 100,000
exchange or other disposition of shares of stock
in a domestic corporation, except shares sold, or
disposed of through the stock exchange:
Not over P 100,000

(d) Intercorporate Dividends. - Dividends
received by a resident foreign corporation from On any amount in excess
a domestic corporation liable to tax under this of P 100,000
Code shall not be subject to tax under this Title.
(B) Tax on Nonresident Foreign Corporation. -
(1) In General. - Except as otherwise provided in this
Code, a foreign corporation not engaged in trade or SEC. 29. Imposition of Improperly Accumulated
business in the Philippines shall pay a tax equal to Earnings Tax. -
thirty-five percent (35%) of the gross income


(A) In General. - In addition to other taxes imposed by (C) A beneficiary society, order or association, operating
this Title, there is hereby imposed for each taxable year on for the exclusive benefit of the members such as a
the improperly accumulated taxable income of each fraternal organization operating under the lodge system,
corporation described in Subsection B hereof, an or mutual aid association or a nonstock corporation
improperly accumulated earnings tax equal to ten organized by employees providing for the payment of life,
percent (10%) of the improperly accumulated taxable sickness, accident, or other benefits exclusively to the
income. members of such society, order, or association, or
(B) Tax on Corporations Subject to Improperly nonstock corporation or their dependents;
Accumulated Earnings Tax. - (D) Cemetery company owned and operated exclusively
(1) In General. - The improperly accumulated for the benefit of its members;
earnings tax imposed in the preceding Section shall (E) Nonstock corporation or association organized and
apply to every corporation formed or availed for the operated exclusively for religious, charitable, scientific,
purpose of avoiding the income tax with respect to athletic, or cultural purposes, or for the rehabilitation of
its shareholders or the shareholders of any other veterans, no part of its net income or asset shall belong to
corporation, by permitting earnings and profits to or inure to the benefit of any member, organizer, officer
accumulate instead of being divided or distributed. or any specific person;
(2) Exceptions. - The improperly accumulated (F) Business league chamber of commerce, or board of
earnings tax as provided for under this Section shall trade, not organized for profit and no part of the net
not apply to: income of which inures to the benefit of any private
(a) Publicly-held corporations; stock-holder, or individual;
(b) Banks and other nonbank financial (G) Civic league or organization not organized for profit
intermediaries; and but operated exclusively for the promotion of social
welfare;
(c) Insurance companies.
(H) A nonstock and nonprofit educational institution;
(C) Evidence of Purpose to Avoid Income Tax. -
(I) Government educational institution;
(1) Prima Facie Evidence. - the fact that any
corporation is a mere holding company or (J) Farmers' or other mutual typhoon or fire insurance
investment company shall be prima facie evidence company, mutual ditch or irrigation company, mutual or
of a purpose to avoid the tax upon its shareholders cooperative telephone company, or like organization of a
or members. purely local character, the income of which consists solely
of assessments, dues, and fees collected from members
(2) Evidence Determinative of Purpose. - The fact for the sole purpose of meeting its expenses; and
that the earnings or profits of a corporation are
permitted to accumulate beyond the reasonable (K) Farmers', fruit growers', or like association organized
needs of the business shall be determinative of the and operated as a sales agent for the purpose of
purpose to avoid the tax upon its shareholders or marketing the products of its members and turning back
members unless the corporation, by the clear to them the proceeds of sales, less the necessary selling
preponderance of evidence, shall prove to the expenses on the basis of the quantity of produce finished
contrary. by them;
(D) Improperly Accumulated Taxable Income. - For Notwithstanding the provisions in the preceding
purposes of this Section, the term 'improperly paragraphs, the income of whatever kind and character
accumulated taxable income' means taxable income of the foregoing organizations from any of their
adjusted by: properties, real or personal, or from any of their activities
conducted for profit regardless of the disposition made of
(a) Income exempt from tax; such income, shall be subject to tax imposed under this
(b) Income excluded from gross income; Code.
(c) Income subject to final tax; and
(d) The amount of net operating loss carry-over
deducted; CHAPTER V COMPUTATION OF TAXABLE
And reduced by the sum of: INCOME
(a) Dividends actually or constructively paid; and SEC. 31. Taxable Income Defined. - The term 'taxable
income' means the pertinent items of gross income
(b) Income tax paid for the taxable year. specified in this Code, less deductions, if any, authorized
Provided, however, That for corporations using the for such types of income by this Code or other special
calendar year basis, the accumulated earnings tax shall laws.(as amended by RA No 10963)
not apply on improperly accumulated income as of
December 31, 1997. In the case of corporations adopting
the fiscal year accounting period, the improperly
accumulated income not subject to this tax, shall be CHAPTER VI COMPUTATION OF GROSS
reckoned, as of the end of the month comprising the INCOME
twelve (12)-month period of fiscal year 1997-1998. SEC. 32. Gross Income. -
(E) Reasonable Needs of the Business. - For purposes of (A) General Definition. - Except when otherwise
this Section, the term 'reasonable needs of the provided in this Title, gross income means all income
business' includes the reasonably anticipated needs of derived from whatever source, including (but not limited
the business. to) the following items:
SEC. 30. Exemptions from Tax on Corporations. - The (1) Compensation for services in whatever form paid,
following organizations shall not be taxed under this Title including, but not limited to fees, salaries, wages,
in respect to income received by them as such: commissions, and similar items;
(A) Labor, agricultural or horticultural organization not (2) Gross income derived from the conduct of trade
organized principally for profit; or business or the exercise of a profession;
(B) Mutual savings bank not having a capital stock (3) Gains derived from dealings in property;
represented by shares, and cooperative bank without
capital stock organized and operated for mutual (4) Interests;
purposes and without profit; (5) Rents;



(6) Royalties; disability or for any cause beyond the control of

(7) Dividends; the said official or employee.
(8) Annuities; (c) The provisions of any existing law to the
contrary notwithstanding, social security
(9) Prizes and winnings; benefits, retirement gratuities, pensions and
(10) Pensions; and other similar benefits received by resident or
nonresident citizens of the Philippines or aliens
(11) Partner's distributive share from the net income who come to reside permanently in the
of the general professional partnership. Philippines from foreign government agencies
(B) Exclusions from Gross Income. - The following items and other institutions, private or public.
shall not be included in gross income and shall be (d) Payments of benefits due or to become due
exempt from taxation under this Title: to any person residing in the Philippines under
(1) Life Insurance. - The proceeds of life insurance the laws of the United States administered by
policies paid to the heirs or beneficiaries upon the the United States Veterans Administration.
death of the insured, whether in a single sum or (e) Benefits received from or enjoyed under the
otherwise, but if such amounts are held by the Social Security System in accordance with the
insurer under an agreement to pay interest thereon, provisions of Republic Act No. 8282.
the interest payments shall be included in gross
income. (f) Benefits received from the GSIS under
Republic Act No. 8291, including retirement
(2) Amount Received by Insured as Return of gratuity received by government officials and
Premium. - The amount received by the insured, as employees.
a return of premiums paid by him under life
insurance, endowment, or annuity contracts, either (7) Miscellaneous Items. -
during the term or at the maturity of the term (a) Income Derived by Foreign Government. -
mentioned in the contract or upon surrender of the Income derived from investments in the
contract. Philippines in loans, stocks, bonds or other
(3) Gifts, Bequests, and Devises. - The value of domestic securities, or from interest on
property acquired by gift, bequest, devise, or deposits in banks in the Philippines by (i)
descent: Provided, however, That income from such foreign governments, (ii) financing institutions
property, as well as gift, bequest, devise or descent owned, controlled, or enjoying refinancing from
of income from any property, in cases of transfers of foreign governments, and (iii) international or
divided interest, shall be included in gross income. regional financial institutions established by
foreign governments.
(4) Compensation for Injuries or Sickness. -
amounts received, through Accident or Health (b) Income Derived by the Government or its
Insurance or under Workmen's Compensation Acts, Political Subdivisions. - Income derived from
as compensation for personal injuries or sickness, any public utility or from the exercise of any
plus the amounts of any damages received, whether essential governmental function accruing to
by suit or agreement, on account of such injuries or the Government of the Philippines or to any
sickness. political subdivision thereof.
(5) Income Exempt under Treaty. - Income of any (c) Prizes and Awards. - Prizes and awards
kind, to the extent required by any treaty obligation made primarily in recognition of religious,
binding upon the Government of the Philippines. charitable, scientific, educational, artistic,
literary, or civic achievement but only if:
(6) Retirement Benefits, Pensions, Gratuities, etc.-
(i) The recipient was selected without any
(a) Retirement benefits received under action on his part to enter the contest or
Republic Act No. 7641 and those received by proceeding; and
officials and employees of private firms,
whether individual or corporate, in accordance (ii) The recipient is not required to render
with a reasonable private benefit plan substantial future services as a condition
maintained by the employer: Provided, That the to receiving the prize or award.
retiring official or employee has been in the (d) Prizes and Awards in sports Competition. -
service of the same employer for at least ten All prizes and awards granted to athletes in
(10) years and is not less than fifty (50) years of local and international sports competitions and
age at the time of his retirement: Provided, tournaments whether held in the Philippines or
further, That the benefits granted under this abroad and sanctioned by their national sports
subparagraph shall be availed of by an official associations.
or employee only once. For purposes of this
Subsection, the term 'reasonable private (e) 13th Month Pay and Other Benefits. - Gross
benefit plan' means a pension, gratuity, stock benefits received by officials and employees of
bonus or profit-sharing plan maintained by an public and private entities: Provided, however,
employer for the benefit of some or all of his That the total exclusion under this
officials or employees, wherein contributions subparagraph shall not exceed Ninety
are made by such employer for the officials or thousand pesos (P90,000) which shall cover:
employees, or both, for the purpose of (i) Benefits received by officials and
distributing to such officials and employees the employees of the national and local
earnings and principal of the fund thus government pursuant to Republic Act No.
accumulated, and wherein its is provided in 6686;
said plan that at no time shall any part of the (ii) Benefits received by employees
corpus or income of the fund be used for, or be pursuant to Presidential Decree No. 851, as
diverted to, any purpose other than for the amended by Memorandum Order No. 28,
exclusive benefit of the said officials and dated August 13, 1986;
employees.
(iii) Benefits received by officials and
(b) Any amount received by an official or employees not covered by Presidential
employee or by his heirs from the employer as Decree No. 851, as amended by
a consequence of separation of such official or Memorandum Order No. 28, dated August
employee from the service of the employer 13, 1986; and
because of death sickness or other physical



(iv) Other benefits such as productivity (1) Fringe benefits which are authorized and
incentives and Christmas bonus. exempted from tax under special laws;
(as amended by RA No 10963) (2) Contributions of the employer for the benefit of
(f) GSIS, SSS, Medicare and Other the employee to retirement, insurance and
Contributions. - GSIS, SSS, Medicare and hospitalization benefit plans;
Pag-Ibig contributions, and union dues of (3) Benefits given to the rank and file employees,
individuals. whether granted under a collective bargaining
(g) Gains from the Sale of Bonds, Debentures agreement or not; and
or other Certificate of Indebtedness. - Gains (4) De minimis benefits as defined in the rules and
realized from the same or exchange or regulations to be promulgated by the Secretary of
retirement of bonds, debentures or other Finance, upon recommendation of the
certificate of indebtedness with a maturity of Commissioner.
more than five (5) years. The Secretary of Finance is hereby authorized to
(h) Gains from Redemption of Shares in promulgate, upon recommendation of the
Mutual Fund. - Gains realized by the investor Commissioner, such rules and regulations as are
upon redemption of shares of stock in a mutual necessary to carry out efficiently and fairly the provisions
fund company as defined in Section 22 (BB) of of this Section, taking into account the peculiar nature
this Code. and special need of the trade, business or profession of
SEC. 33. Special Treatment of Fringe Benefit. - the employer.
(A) Imposition of Tax. - Effective January 1, 2018 and

onwards, a final tax of thirty-five percent (35%) is hereby
imposed on the grossed-up monetary value of fringe CHAPTER VII ALLOWABLE DEDUCTIONS
benefit furnished or granted to the employee (except
rank and file employees as defined herein) by the SEC. 34. Deductions from Gross Income. - Except for
employer, whether an individual or a corporation (unless taxpayers earning compensation income arising from
the fringe benefit is required by the nature of, or personal services rendered under an employer-employee
necessary to the trade, business or profession of the relationship where no deductions shall be allowed under
employer, or when the fringe benefit is for the this Section other than under subsection (M) hereof, in
convenience or advantage of the employer). The tax computing taxable income subject to income tax under
herein imposed is payable by the employer which tax Sections 24(A); 25(A); 26; 27(A), (B) and (C); and 28(A)(1),
shall be paid in the same manner as provided for under there shall be allowed the following deductions from
Section 57(A) of this Code. The grossed-up monetary gross income;
value of the fringe benefit shall be determined by (A) Expenses. -
dividing the actual monetary value of the fringe benefit
(1) Ordinary and Necessary Trade, Business or
by sixty-five percent (65%) effective January 1, 2018 and
Professional Expenses. -
onwards: Provided, however, That fringe benefit furnished
to employees and taxable under Subsections (B), (C), (D), (a) In General. - There shall be allowed as
and (E) of Section 25 shall be taxed at the applicable rates deduction from gross income all the ordinary
imposed thereat: Provided, further, That the grossed-up and necessary expenses paid or incurred
value of the fringe benefit shall be determined by during the taxable year in carrying on or which
dividing the actual monetary value of the fringe benefit are directly attributable to, the development,
by the difference between one hundred percent (100%) management, operation and/or conduct of the
and the applicable rates of income tax under Subsections trade, business or exercise of a profession,
(B), (C), (D), and (E) of Section 25.(as amended by RA No including:
10963) (i) A reasonable allowance for salaries,
(B) Fringe Benefit Defined. - For purposes of this wages, and other forms of compensation
Section, the term 'fringe benefit' means any good, for personal services actually rendered,
service or other benefit furnished or granted in cash or in including the grossed-up monetary value
kind by an employer to an individual employee (except of fringe benefit furnished or granted by
rank and file employees as defined herein) such as, but the employer to the employee: Provided,
not limited to, the following: That the final tax imposed under Section
33 hereof has been paid;
(1) Housing;
(ii) A reasonable allowance for travel
(2) Expense account;
expenses, here and abroad, while away
(3) Vehicle of any kind; from home in the pursuit of trade,
(4) Household personnel, such as maid, driver and business or profession;
others; (iii) A reasonable allowance for rentals
(5) Interest on loan at less than market rate to the and/or other payments which are required
extent of the difference between the market rate as a condition for the continued use or
and actual rate granted; possession, for purposes of the trade,
business or profession, of property to
(6) Membership fees, dues and other expenses which the taxpayer has not taken or is not
borne by the employer for the employee in social taking title or in which he has no equity
and athletic clubs or other similar organizations; other than that of a lessee, user or
(7) Expenses for foreign travel; possessor;
(8) Holiday and vacation expenses; (iv) A reasonable allowance for
entertainment, amusement and
(9) Educational assistance to the employee or his recreation expenses during the taxable
dependents; and year, that are directly connected to the
(10) Life or health insurance and other non-life development, management and
insurance premiums or similar amounts in excess of operation of the trade, business or
what the law allows. profession of the taxpayer, or that are
directly related to or in furtherance of the
(C) Fringe Benefits Not Taxable. - The following fringe
conduct of his or its trade, business or
benefits are not taxable under this Section:
exercise of a profession not to exceed such


ceilings as the Secretary of Finance may, (c) If the indebtedness is incurred to finance
by rules and regulations prescribe, upon petroleum exploration.
recommendation of the Commissioner, (3) Optional Treatment of Interest Expense. - At
taking into account the needs as well as the option of the taxpayer, interest incurred to
the special circumstances, nature and acquire property used in trade business or exercise
character of the industry, trade, business, of a profession may be allowed as a deduction or
or profession of the taxpayer: Provided, treated as a capital expenditure.
That any expense incurred for
entertainment, amusement or recreation (C) Taxes. -
that is contrary to law, morals public policy (1) In General. - Taxes paid or incurred within the
or public order shall in no case be allowed taxable year in connection with the taxpayer's
as a deduction. profession, trade or business, shall be allowed as
(b) Substantiation Requirements. - No deduction, except:
deduction from gross income shall be allowed (a) The income tax provided for under this Title;
under Subsection (A) hereof unless the
taxpayer shall substantiate with sufficient (b) Income taxes imposed by authority of any
evidence, such as official receipts or other foreign country; but this deduction shall be
adequate records: (i) the amount of the allowed in the case of a taxpayer who does not
expense being deducted, and (ii) the direct signify in his return his desire to have to any
connection or relation of the expense being extent the benefits of paragraph (3) of this
deducted to the development, management, subsection (relating to credits for taxes of
operation and/or conduct of the trade, business foreign countries);
or profession of the taxpayer. (c) Estate and donor's taxes; and
(c) Bribes, Kickbacks and Other Similar (d) Taxes assessed against local benefits of a
Payments. - No deduction from gross income kind tending to increase the value of the
shall be allowed under Subsection (A) hereof for property assessed.
any payment made, directly or indirectly, to an
official or employee of the national Provided, That taxes allowed under this Subsection,
government, or to an official or employee of any when refunded or credited, shall be included as part
local government unit, or to an official or of gross income in the year of receipt to the extent of
employee of a government-owned or the income tax benefit of said deduction.
-controlled corporation, or to an official or (2) Limitations on Deductions. - In the case of a
employee or representative of a foreign nonresident alien individual engaged in trade or
government, or to a private corporation, general business in the Philippines and a resident foreign
professional partnership, or a similar entity, if corporation, the deductions for taxes provided in
the payment constitutes a bribe or kickback. paragraph (1) of this Subsection (C) shall be allowed
(2) Expenses Allowable to Private Educational only if and to the extent that they are connected
Institutions. - In addition to the expenses allowable with income from sources within the Philippines.
as deductions under this Chapter, a private (3) Credit Against Tax for Taxes of Foreign
educational institution, referred to under Section 27 Countries. - If the taxpayer signifies in his return his
(B) of this Code, may at its option elect either: (a) to desire to have the benefits of this paragraph, the tax
deduct expenditures otherwise considered as imposed by this Title shall be credited with:
capital outlays of depreciable assets incurred during (a) Citizen and Domestic Corporation. - In the
the taxable year for the expansion of school facilities case of a citizen of the Philippines and of a
or (b) to deduct allowance for depreciation thereof domestic corporation, the amount of income
under Subsection (F) hereof. taxes paid or incurred during the taxable year
(B) Interest. - to any foreign country; and
(1) In General. - The amount of interest paid or (b) Partnerships and Estates. - In the case of
incurred within a taxable year on indebtedness in any such individual who is a member of a
connection with the taxpayer's profession, trade or general professional partnership or a
business shall be allowed as deduction from gross beneficiary of an estate or trust, his
income: Provided, however, That the taxpayer's proportionate share of such taxes of the general
otherwise allowable deduction for interest expense professional partnership or the estate or trust
shall be reduced by forty-two percent (42%) of the paid or incurred during the taxable year to a
interest income subjected to final tax: Provided, That foreign country, if his distributive share of the
effective January 1, 2009, the percentage shall be income of such partnership or trust is reported
thirty-three percent (33%). [29] for taxation under this Title.
(2) Exceptions. - No deduction shall be allowed in An alien individual and a foreign corporation shall
respect of interest under the succeeding not be allowed the credits against the tax for the
subparagraphs: taxes of foreign countries allowed under this
(a) If within the taxable year an individual paragraph.
taxpayer reporting income on the cash basis (4) Limitations on Credit. - The amount of the credit
incurs an indebtedness on which an interest is taken under this Section shall be subject to each of
paid in advance through discount or otherwise: the following limitations:
Provided, That such interest shall be allowed as (a) The amount of the credit in respect to the
a deduction in the year the indebtedness is tax paid or incurred to any country shall not
paid: Provided, further, That if the indebtedness exceed the same proportion of the tax against
is payable in periodic amortizations, the which such credit is taken, which the taxpayer's
amount of interest which corresponds to the taxable income from sources within such
amount of the principal amortized or paid country under this Title bears to his entire
during the year shall be allowed as deduction in taxable income for the same taxable year; and
such taxable year;
(b) The total amount of the credit shall not
(b) If both the taxpayer and the person to exceed the same proportion of the tax against
whom the payment has been made or is to be which such credit is taken, which the taxpayer's
made are persons specified under Section 36 taxable income from sources without the
(B); or


Philippines taxable under this Title bears to his (c) No loss shall be allowed as a deduction
entire taxable income for the same taxable year. under this Subsection if at the time of the filing
(5) Adjustments on Payment of Incurred Taxes. - If of the return, such loss has been claimed as a
accrued taxes when paid differ from the amounts deduction for estate tax purposes in the estate
claimed as credits by the taxpayer, or if any tax paid tax return.
is refunded in whole or in part, the taxpayer shall (2) Proof of Loss. - In the case of a nonresident alien
notify the Commissioner; who shall re-determine individual or foreign corporation, the losses
the amount of the tax for the year or years affected, deductible shall be those actually sustained during
and the amount of tax due upon such the year incurred in business, trade or exercise of a
re-determination, if any, shall be paid by the profession conducted within the Philippines, when
taxpayer upon notice and demand by the such losses are not compensated for by insurance or
Commissioner, or the amount of tax overpaid, if any, other forms of indemnity. The secretary of Finance,
shall be credited or refunded to the taxpayer. In the upon recommendation of the Commissioner, is
case of such a tax incurred but not paid, the hereby authorized to promulgate rules and
Commissioner as a condition precedent to the regulations prescribing, among other things, the
allowance of this credit may require the taxpayer to time and manner by which the taxpayer shall
give a bond with sureties satisfactory to and to be submit a declaration of loss sustained from casualty
approved by the Commissioner in such sum as he or from robbery, theft or embezzlement during the
may require, conditioned upon the payment by the taxable year: Provided, That the time to be so
taxpayer of any amount of tax found due upon any prescribed in the rules and regulations shall not be
such redetermination. The bond herein prescribed less than thirty (30) days nor more than ninety (90)
shall contain such further conditions as the days from the date of discovery of the casualty or
Commissioner may require. robbery, theft or embezzlement giving rise to the
(6) Year in Which Credit Taken. - The credits loss; and
provided for in Subsection (C)(3) of this Section may, (3) Net Operating Loss Carry-Over. - The net
at the option of the taxpayer and irrespective of the operating loss of the business or enterprise for any
method of accounting employed in keeping his taxable year immediately preceding the current
books, be taken in the year which the taxes of the taxable year, which had not been previously offset as
foreign country were incurred, subject, however, to deduction from gross income shall be carried over
the conditions prescribed in Subsection (C)(5) of this as a deduction from gross income for the next three
Section. If the taxpayer elects to take such credits in (3) consecutive taxable years immediately following
the year in which the taxes of the foreign country the year of such loss: Provided, however, That any
accrued, the credits for all subsequent years shall be net loss incurred in a taxable year during which the
taken upon the same basis and no portion of any taxpayer was exempt from income tax shall not be
such taxes shall be allowed as a deduction in the allowed as a deduction under this Subsection:
same or any succeeding year. Provided, further, That a net operating loss
(7) Proof of Credits. - The credits provided in carry-over shall be allowed only if there has been no
Subsection (C)(3) hereof shall be allowed only if the substantial change in the ownership of the business
taxpayer establishes to the satisfaction of the or enterprise in that -
Commissioner the following: (i) Not less than seventy-five percent (75%) in
(a) The total amount of income derived from nominal value of outstanding issued shares., if
sources without the Philippines; the business is in the name of a corporation, is
held by or on behalf of the same persons; or
(b) The amount of income derived from each
country, the tax paid or incurred to which is (ii) Not less than seventy-five percent (75%) of
claimed as a credit under said paragraph, such the paid up capital of the corporation, if the
amount to be determined under rules and business is in the name of a corporation, is held
regulations prescribed by the Secretary of by or on behalf of the same persons.
Finance; and For purposes of this subsection, the term 'net
(c) All other information necessary for the operating loss' shall mean the excess of allowable
verification and computation of such credits. deduction over gross income of the business in a
taxable year.
(D) Losses. -
Provided, That for mines other than oil and gas wells,
(1) In General. - Losses actually sustained during the a net operating loss without the benefit of
taxable year and not compensated for by insurance incentives provided for under Executive Order No.
or other forms of indemnity shall be allowed as 226, as amended, otherwise known as the Omnibus
deductions: Investments Code of 1987, incurred in any of the first
(a) If incurred in trade, profession or business; ten (10) years of operation may be carried over as a
deduction from taxable income for the next five (5)
(b) Of property connected with the trade, years immediately following the year of such loss.
business or profession, if the loss arises from The entire amount of the loss shall be carried over to
fires, storms, shipwreck, or other casualties, or the first of the five (5) taxable years following the
from robbery, theft or embezzlement. loss, and any portion of such loss which exceeds the
The Secretary of Finance, upon taxable income of such first year shall be deducted
recommendation of the Commissioner, is in like manner form the taxable income of the next
hereby authorized to promulgate rules and remaining four (4) years.
regulations prescribing, among other things, (4) Capital Losses. -
the time and manner by which the taxpayer
shall submit a declaration of loss sustained (a) Limitations. - Loss from sales or Exchanges
from casualty or from robbery, theft or of capital assets shall be allowed only to the
embezzlement during the taxable year: extent provided in Section 39.
Provided, however, That the time limit to be so (b) Securities Becoming Worthless. - If
prescribed in the rules and regulations shall not securities as defined in Section 22 (T) become
be less than thirty (30) days nor more than worthless during the taxable year and are
ninety (90) days from the date of discovery of capital assets, the loss resulting therefrom shall,
the casualty or robbery, theft or embezzlement for purposes of this Title, be considered as a loss
giving rise to the loss.


from the sale or exchange, on the last day of allowance computed in accordance with rules and
such taxable year, of capital assets. regulations prescribed by the Secretary of Finance,
(5) Losses From Wash Sales of Stock or Securities. upon recommendation of the Commissioner, under
- Losses from 'wash sales' of stock or securities as any of the following methods:
provided in Section 38. (a) The straight-line method;
(6) Wagering Losses. - Losses from wagering (b) Declining-balance method, using a rate not
transactions shall be allowed only to the extent of exceeding twice the rate which would have
the gains from such transactions. been used had the annual allowance been
(7) Abandonment Losses. - computed under the method described in
Subsection (F) (1);
(a) In the event a contract area where
petroleum operations are undertaken is (c) The sum-of-the-years-digit method; and
partially or wholly abandoned, all accumulated (d) Any other method which may be prescribed
exploration and development expenditures by the Secretary of Finance upon
pertaining thereto shall be allowed as a recommendation of the Commissioner.
deduction: Provided, That accumulated (3) Agreement as to Useful Life on Which
expenditures incurred in that area prior to Depreciation Rate is Based. - Where under rules
January 1, 1979 shall be allowed as a deduction and regulations prescribed by the Secretary of
only from any income derived from the same Finance upon recommendation of the
contract area. In all cases, notices of Commissioner, the taxpayer and the Commissioner
abandonment shall be filed with the have entered into an agreement in writing
Commissioner. specifically dealing with the useful life and rate of
(b) In case a producing well is subsequently depreciation of any property, the rate so agreed
abandoned, the un-amortized costs thereof, as upon shall be binding on both the taxpayer and the
well as the un-depreciated costs of equipment national Government in the absence of facts and
directly used therein , shall be allowed as a circumstances not taken into consideration during
deduction in the year such well, equipment or the adoption of such agreement. The responsibility
facility is abandoned by the contractor: of establishing the existence of such facts and
Provided, That if such abandoned well is circumstances shall rest with the party initiating the
re-entered and production is resumed, or if modification. Any change in the agreed rate and
such equipment or facility is restored into useful life of the depreciable property as specified in
service, the said costs shall be included as part the agreement shall not be effective for taxable
of gross income in the year of resumption or years prior to the taxable year in which notice in
restoration and shall be amortized or writing by certified mail or registered mail is served
depreciated, as the case may be. by the party initiating such change to the other
(E) Bad Debts. - party to the agreement:
(1) In General. - Debts due to the taxpayer actually Provided, however, that where the taxpayer has
ascertained to be worthless and charged off within adopted such useful life and depreciation rate for
the taxable year except those not connected with any depreciable and claimed the depreciation
profession, trade or business and those sustained in expenses as deduction from his gross income,
a transaction entered into between parties without any written objection on the part of the
mentioned under Section 36 (B) of this Code: Commissioner or his duly authorized
Provided, That recovery of bad debts previously representatives, the aforesaid useful life and
allowed as deduction in the preceding years shall be depreciation rate so adopted by the taxpayer for the
included as part of the gross income in the year of aforesaid depreciable asset shall be considered
recovery to the extent of the income tax benefit of binding for purposes of this Subsection.
said deduction. (4) Depreciation of Properties Used in Petroleum
(2) Securities Becoming Worthless. - If securities, Operations. - An allowance for depreciation in
as defined in Section 22 (T), are ascertained to be respect of all properties directly related to
worthless and charged off within the taxable year production of petroleum initially placed in service in
and are capital assets, the loss resulting therefrom a taxable year shall be allowed under the
shall, in the case of a taxpayer other than a bank or straight-line or declining-balance method of
trust company incorporated under the laws of the depreciation at the option of the service contractor.
Philippines a substantial part of whose business is However, if the service contractor initially elects the
the receipt of deposits, for the purpose of this Title, declining-balance method, it may at any
be considered as a loss from the sale or exchange, subsequent date, shift to the straight-line method.
on the last day of such taxable year, of capital assets. The useful life of properties used in or related to
(F) Depreciation. - production of petroleum shall be ten (10) years of
(1) General Rule. - There shall be allowed as a such shorter life as may be permitted by the
depreciation deduction a reasonable allowance for Commissioner.
the exhaustion, wear and tear (including reasonable Properties not used directly in the production of
allowance for obsolescence) of property used in the petroleum shall be depreciated under the
trade or business. In the case of property held by straight-line method on the basis of an estimated
one person for life with remainder to another useful life of five (5) years.
person, the deduction shall be computed as if the (5) Depreciation of Properties Used in Mining
life tenant were the absolute owner of the property Operations. - an allowance for depreciation in
and shall be allowed to the life tenant. In the case of respect of all properties used in mining operations
property held in trust, the allowable deduction shall other than petroleum operations, shall be computed
be apportioned between the income beneficiaries as follows:
and the trustees in accordance with the pertinent
provisions of the instrument creating the trust, or in (a) At the normal rate of depreciation if the
the absence of such provisions, on the basis of the expected life is ten (10) years or less; or
trust income allowable to each. (b) Depreciated over any number of years
(2) Use of Certain Methods and Rates. - The term between five (5) years and the expected life if
'reasonable allowance' as used in the preceding the latter is more than ten (10) years, and the
paragraph shall include, but not limited to, an depreciation thereon allowed as deduction


from taxable income: Provided, That the and marketing expenses, and depreciation of
contractor notifies the Commissioner at the properties directly used in the mining operations.
beginning of the depreciation period which This paragraph shall not apply to expenditures for
depreciation rate allowed by this Section will be the acquisition or improvement of property of a
used. character which is subject to the allowance for
(6) Depreciation Deductible by Nonresident Aliens depreciation.
Engaged in Trade or Business or Resident Foreign In no case shall this paragraph apply with respect to
Corporations. - In the case of a nonresident alien amounts paid or incurred for the exploration and
individual engaged in trade or business or resident development of oil and gas.
foreign corporation, a reasonable allowance for the The term 'exploration expenditures' means
deterioration of Property arising out of its use or expenditures paid or incurred for the purpose of
employment or its non-use in the business trade or ascertaining the existence, location, extent or quality
profession shall be permitted only when such of any deposit of ore or other mineral, and paid or
property is located in the Philippines. incurred before the beginning of the development
(G) Depletion of Oil and Gas Wells and Mines. - stage of the mine or deposit.
(1) In General. - In the case of oil and gas wells or The term 'development expenditures' means
mines, a reasonable allowance for depletion or expenditures paid or incurred during the
amortization computed in accordance with the development stage of the mine or other natural
cost-depletion method shall be granted under rules deposits. The development stage of a mine or other
and regulations to be prescribed by the Secretary of natural deposit shall begin at the time when
finance, upon recommendation of the deposits of ore or other minerals are shown to exist
Commissioner. Provided, That when the allowance in sufficient commercial quantity and quality and
for depletion shall equal the capital invested no shall end upon commencement of actual
further allowance shall be granted: Provided, further, commercial extraction.
That after production in commercial quantities has (3) Depletion of Oil and Gas Wells and Mines
commenced, certain intangible exploration and Deductible by a Nonresident Alien individual or
development drilling costs: (a) shall be deductible in Foreign Corporation. - In the case of a nonresident
the year incurred if such expenditures are incurred alien individual engaged in trade or business in the
for non-producing wells and/or mines, or (b) shall be Philippines or a resident foreign corporation,
deductible in full in the year paid or incurred or at allowance for depletion of oil and gas wells or mines
the election of the taxpayer, may be capitalized and under paragraph (1) of this Subsection shall be
amortized if such expenditures incurred are for authorized only in respect to oil and gas wells or
producing wells and/or mines in the same contract mines located within the Philippines.
area.
(H) Charitable and Other Contributions. -
'Intangible costs in petroleum operations' refers to
any cost incurred in petroleum operations which in (1) In General. - Contributions or gifts actually paid
itself has no salvage value and which is incidental to or made within the taxable year to, or for the use of
and necessary for the drilling of wells and the Government of the Philippines or any of its
preparation of wells for the production of petroleum: agencies or any political subdivision thereof
Provided, That said costs shall not pertain to the exclusively for public purposes, or to accredited
acquisition or improvement of property of a domestic corporation or associations organized and
character subject to the allowance for depreciation operated exclusively for religious, charitable,
except that the allowances for depreciation on such scientific, youth and sports development, cultural or
property shall be deductible under this Subsection. educational purposes or for the rehabilitation of
veterans, or to social welfare institutions, or to
Any intangible exploration, drilling and development non-government organizations, in accordance with
expenses allowed as a deduction in computing rules and regulations promulgated by the Secretary
taxable income during the year shall not be taken of finance, upon recommendation of the
into consideration in computing the adjusted cost Commissioner, no part of the net [30] income of which
basis for the purpose of computing allowable cost inures to the benefit of any private stockholder or
depletion. individual in an amount not in excess of ten percent
(2) Election to Deduct Exploration and (10%) in the case of an individual, and five percent
Development Expenditures. - In computing taxable (%) in the case of a corporation, of the taxpayer's
income from mining operations, the taxpayer may taxable income derived from trade, business or
at his option, deduct exploration and development profession as computed without the benefit of this
expenditures accumulated as cost or adjusted basis and the following subparagraphs.
for cost depletion as of date of prospecting, as well (2) Contributions Deductible in Full. -
as exploration and development expenditures paid Notwithstanding the provisions of the preceding
or incurred during the taxable year: Provided, That subparagraph, donations to the following
the amount deductible for exploration and institutions or entities shall be deductible in full:
development expenditures shall not exceed
twenty-five percent (25%) of the net income from (a) Donations to the Government. - Donations
mining operations computed without the benefit of to the Government of the Philippines or to any
any tax incentives under existing laws. The actual of its agencies or political subdivisions,
exploration and development expenditures minus including fully-owned government
twenty-five percent (25%) of the net income from corporations, exclusively to finance, to provide
mining shall be carried forward to the succeeding for, or to be used in undertaking priority
years until fully deducted. activities in education, health, youth and sports
development, human settlements, science and
The election by the taxpayer to deduct the culture, and in economic development
exploration and development expenditures is according to a National Priority Plan
irrevocable and shall be binding in succeeding determined by the National Economic and
taxable years. Development Authority (NEDA), In consultation
'Net income from mining operations', as used in with appropriate government agencies,
this Subsection, shall mean gross income from including its regional development councils
operations less 'allowable deductions' which are and private philanthropic persons and
necessary or related to mining operations. institutions: Provided, That any donation which
'Allowable deductions' shall include mining, milling is made to the Government or to any of its


agencies or political subdivisions not in organization may be treated as a
accordance with the said annual priority plan utilization, but only if at the time such
shall be subject to the limitations prescribed in amount is set aside, the accredited
paragraph (1) of this Subsection; nongovernment organization has
(b) Donations to Certain Foreign Institutions established to the satisfaction of the
or International Organizations. - donations to Commissioner that the amount will be
foreign institutions or international paid for the specific project within a
organizations which are fully deductible in period to be prescribed in rules and
pursuance of or in compliance with regulations to be promulgated by the
agreements, treaties, or commitments entered Secretary of Finance, upon
into by the Government of the Philippines and recommendation of the Commissioner,
the foreign institutions or international but not to exceed five (5) years, and the
organizations or in pursuance of special laws; project is one which can be better
accomplished by setting aside such
(c) Donations to Accredited Nongovernment amount than by immediate payment of
Organizations. -The term 'nongovernment funds.
organization' means a non-profit domestic
corporation: (3) Valuation. - The amount of any charitable
contribution of property other than money shall be
(1) Organized and operated exclusively for based on the acquisition cost of said property.
scientific, research, educational,
character-building and youth and sports (4) Proof of Deductions. - Contributions or gifts
development, health, social welfare, shall be allowable as deductions only if verified
cultural or charitable purposes, or a under the rules and regulations prescribed by the
combination thereof, no part of the net [31] Secretary of Finance, upon recommendation of the
income of which inures to the benefit of Commissioner.
any private individual; (I) Research and Development. -
th
(2) Which, not later than the 15 day of the (1) In General. - A taxpayer may treat research or
third month after the close of the development expenditures which are paid or
accredited nongovernment organizations incurred by him during the taxable year in
taxable year in which contributions are connection with his trade, business or profession as
received, makes utilization directly for the ordinary and necessary expenses which are not
active conduct of the activities chargeable to capital account. The expenditures so
constituting the purpose or function for treated shall be allowed as deduction during the
which it is organized and operated, unless taxable year when paid or incurred.
an extended period is granted by the (2) Amortization of Certain Research and
Secretary of Finance in accordance with Development Expenditures. - At the election of the
the rules and regulations to be taxpayer and in accordance with the rules and
promulgated, upon recommendation of regulations to be prescribed by the Secretary of
the Commissioner; Finance, upon recommendation of the
(3) The level of administrative expense of Commissioner, the following research and
which shall, on an annual basis, conform development expenditures may be treated as
with the rules and regulations to be deferred expenses:
prescribed by the Secretary of Finance, (a) Paid or incurred by the taxpayer in
upon recommendation of the connection with his trade, business or
Commissioner, but in no case to exceed profession;
thirty percent (30%) of the total expenses;
and (b) Not treated as expenses under paragraph (1)
hereof; and
(4) The assets of which, in the event of
dissolution, would be distributed to (c) Chargeable to capital account but not
another non-profit domestic corporation chargeable to property of a character which is
organized for similar purpose or purposes, subject to depreciation or depletion.
or to the state for public purpose, or would In computing taxable income, such deferred
be distributed by a court to another expenses shall be allowed as deduction ratably
organization to be used in such manner as distributed over a period of not less than sixty (60)
in the judgment of said court shall best months as may be elected by the taxpayer
accomplish the general purpose for which (beginning with the month in which the taxpayer
the dissolved organization was organized. first realizes benefits from such expenditures).
Subject to such terms and conditions as The election provided by paragraph (2) hereof may
may be prescribed by the Secretary of be made for any taxable year beginning after the
Finance, the term 'utilization' means: effectivity of this Code, but only if made not later
(i) Any amount in cash or in kind than the time prescribed by law for filing the return
(including administrative expenses) for such taxable year. The method so elected, and
paid or utilized to accomplish one or the period selected by the taxpayer, shall be
more purposes for which the adhered to in computing taxable income for the
accredited nongovernment taxable year for which the election is made and for
organization was created or all subsequent taxable years unless with the
organized. approval of the Commissioner, a change to a
different method is authorized with respect to a part
(ii) Any amount paid to acquire an or all of such expenditures. The election shall not
asset used (or held for use) directly in apply to any expenditure paid or incurred during
carrying out one or more purposes any taxable year for which the taxpayer makes the
for which the accredited election.
nongovernment organization was
created or organized. (3) Limitations on Deduction. - This Subsection
shall not apply to:
An amount set aside for a specific project
which comes within one or more purposes (a) Any expenditure for the acquisition or
of the accredited nongovernment improvement of land, or for the improvement
of property to be used in connection with



research and development of a character which Notwithstanding the provision of the preceding

is subject to depreciation and depletion; and Subsections, The Secretary of Finance, upon
(b) Any expenditure paid or incurred for the recommendation of the Commissioner, after a public
purpose of ascertaining the existence, location, hearing shall have been held for this purpose, may
extent, or quality of any deposit of ore or other prescribe by rules and regulations, limitations or ceilings
mineral, including oil or gas. for any of the itemized deductions under Subsections (A)
to (J) of this Section: Provided, That for purposes of
(J) Pension Trusts. - An employer establishing or determining such ceilings or limitations, the Secretary of
maintaining a pension trust to provide for the payment of Finance shall consider the following factors: (1) adequacy
reasonable pensions to his employees shall be allowed as of the prescribed limits on the actual expenditure
a deduction (in addition to the contributions to such trust requirements of each particular industry; and (2)effects of
during the taxable year to cover the pension liability inflation on expenditure levels: Provided, further, That no
accruing during the year, allowed as a deduction under ceilings shall further be imposed on items of expense
Subsection (A)(1) of this Section) a reasonable amount already subject to ceilings under present law.
transferred or paid into such trust during the taxable year
in excess of such contributions, but only if such amount SEC. 35. Allowance of Personal Exemption for
(1)has not theretofore been allowed as a deduction, and Individual Taxpayer. - (as amended by RA No 10963)
(2) is apportioned in equal parts over a period of ten (10) SEC. 36. Items not Deductible. -
consecutive years beginning with the year in which the (A) General Rule. - In computing net income, no
transfer or payment is made. deduction shall in any case be allowed in respect to -
(K) Additional Requirements for Deductibility of (1) Personal, living or family expenses;
Certain Payments. - Any amount paid or payable which
is otherwise deductible from, or taken into account in (2) Any amount paid out for new buildings or
computing gross income or for which depreciation or for permanent improvements, or betterments
amortization may be allowed under this Section, shall be made to increase the value of any property or
allowed as a deduction only if it is shown that the tax estate;
required to be deducted and withheld therefrom has This Subsection shall not apply to intangible
been paid to the Bureau of Internal Revenue in drilling and development costs incurred in
accordance with this Section 58 and 81 of this Code. petroleum operations which are deductible
(L) Optional Standard Deduction (OSD). - In lieu of the under Subsection (G) (1) of Section 34 of this
deductions allowed under the preceding Subsections, an Code.
individual subject to tax under Section 24, other than a (3) Any amount expended in restoring property
nonresident alien, may elect a standard deduction in an or in making good the exhaustion thereof for
amount not exceeding forty percent (40%) of his gross which an allowance is or has been made; or
sales or gross receipts, as the case may be. In the case of a
corporation subject to tax under Sections 27(A) and (4) Premiums paid on any life insurance policy
28(A)(1), it may elect a standard deduction in an amount covering the life of any officer or employee, or
not exceeding forty percent (40%) of its gross income as of any person financially interested in any trade
defined in Section 32 of this Code. Unless the taxpayer or business carried on by the taxpayer,
signifies in his return his intention to elect the optional individual or corporate, when the taxpayer is
standard deduction, he shall be considered as having directly or indirectly a beneficiary under such
availed himself of the deductions allowed in the policy.
preceding Subsections. Such election when made in the (B) Losses from Sales or Exchanges of Property. -
return shall be irrevocable for the taxable year for which In computing net income, no deductions shall in any
the return is made: Provided, That an individual who is case be allowed in respect of losses from sales or
entitled to and claimed for the optional standard exchanges of property directly or indirectly -
deduction shall not be required to submit with his tax
return such financial statements otherwise required (1) Between members of a family. For purposes
under this Code: Provided, further, That a general of this paragraph, the family of an individual
professional partnership and the partners comprising shall include only his brothers and sisters
such partnership may avail of the optional standard (whether by the whole or half-blood), spouse,
deduction only once, either by the general professional ancestors, and lineal descendants; or
partnership or the partners comprising the partnership: (2) Except in the case of distributions in
Provided, finally, That except when the Commissioner liquidation, between an individual and
otherwise permits, the said individual shall keep such corporation more than fifty percent (50%) in
records pertaining to his gross sales or gross receipts, or value of the outstanding stock of which is
the said corporation shall keep such records pertaining to owned, directly or indirectly, by or for such
his gross income as defined in Section 32 of this Code individual; or
during the taxable year, as may be required by the rules (3) Except in the case of distributions in
and regulations promulgated by the Secretary of Finance, liquidation, between two corporations more
upon recommendation of the Commissioner. than fifty percent (50%) in value of the
Notwithstanding the provisions of the preceding outstanding stock of which is owned, directly or
Subsections indirectly, by or for the same individual if either
(as amended by RA No 10963) one of such corporations, with respect to the
taxable year of the corporation preceding the
(M) Premium Payments on Health and/or date of the sale of exchange was under the law
Hospitalization Insurance of an Individual Taxpayer. - applicable to such taxable year, a personal
the amount of premiums not to exceed Two thousand holding company or a foreign personal holding
four hundred pesos (P2,400) per family or Two hundred company;
pesos (P200) a month paid during the taxable year for
health and/or hospitalization insurance taken by the (4) Between the grantor and a fiduciary of any
taxpayer for himself, including his family, shall be allowed trust; or
as a deduction from his gross income: Provided, That said (5) Between the fiduciary of and the fiduciary of
family has a gross income of not more than Two hundred a trust and the fiduciary of another trust if the
fifty thousand pesos (P250,000) for the taxable year: same person is a grantor with respect to each
Provided, finally, That in the case of married taxpayers, trust; or
only the spouse claiming the additional exemption for (6) Between a fiduciary of a trust and
dependents shall be entitled to this deduction. beneficiary of such trust.


SEC. 37. Special Provisions Regarding Income and property of a kind which would properly be included
Deductions of Insurance Companies, Whether in the inventory of the taxpayer if on hand at the
Domestic or Foreign. - close of the taxable year or property held by the
(A) Special Deduction Allowed to Insurance taxpayer primarily for sale to customers in the
Companies. - In the case of insurance companies, ordinary course of his trade or business, or property
whether domestic or foreign doing business in the used in the trade or business, of a character which is
Philippines, the net additions, if any, required by law to be subject to the allowance for depreciation provided in
made within the year to reserve funds and the sums Subsection (F) of Section 34; or real property used in
other than dividends paid within the year on policy and trade or business of the taxpayer.
annuity contracts may be deducted from their gross (2) Net Capital Gain. - The term 'net capital gain'
income: Provided, however, That the released reserve be means the excess of the gains from sales or
treated as income for the year of release. exchanges of capital assets over the losses from
(B) Mutual Insurance Companies. - In the case of mutual such sales or exchanges.
fire and mutual employers' liability and mutual (3) Net Capital Loss. - The term 'net capital loss'
workmen's compensation and mutual casualty insurance means the excess of the losses from sales or
companies requiring their members to make premium exchanges of capital assets over the gains from such
deposits to provide for losses and expenses, said sales or exchanges.
companies shall not return as income any portion of the (B) Percentage Taken into Account - In the case of a
premium deposits returned to their policyholders, but taxpayer, other than a corporation, only the following
shall return as taxable income all income received by percentages of the gain or loss recognized upon the sale
them from all other sources plus such portion of the or exchange of a capital asset shall be taken into account
premium deposits as are retained by the companies for in computing net capital gain, net capital loss, and net
purposes other than the payment of losses and expenses income.
and reinsurance reserves.
(1) One hundred percent (100%) if the capital asset
(C) Mutual Marine Insurance Companies. - Mutual has been held for not more than twelve (12) months;
marine insurance companies shall include in their return and
of gross income, gross premiums collected and received
by them less amounts paid to policyholders on account of (2) Fifty percent (50%) if the capital asset has been
premiums previously paid by them and interest paid held for more than twelve (12) months;
upon those amounts between the ascertainment and (C) Limitation on Capital losses. - Losses from sales or
payment thereof. exchange capital assets shall be allowed only to the
(D) Assessment Insurance Companies. - Assessment extent of the gains from such sales or exchanges. If a
insurance companies, whether domestic or foreign, may bank or trust company incorporated under the laws of
deduct from their gross income the actual deposit of the Philippines, a substantial part of whose business is
sums with the officers of the Government of the the receipt of deposits, sells any bond, debenture, note, or
Philippines pursuant to law, as additions to guarantee or certificate or other evidence of indebtedness issued by
reserve funds. any corporation (including one issued by a government or
political subdivision thereof), with interest coupons or in
SEC. 38. Losses from Wash Sales of Stock or Securities. registered form, any loss resulting from such sale shall
- not be subject to the foregoing limitation and shall not be
(A) In the case of any loss claimed to have been sustained included in determining the applicability of such
from any sale or other disposition of shares of stock or limitation to other losses.
securities where it appears that within a period (D) Net Capital Loss Carry-Over. - If any taxpayer, other
beginning thirty (30) days before the date of such sale or than a corporation, sustains in any taxable year a net
disposition and ending thirty (30) days after such date, capital loss, such loss (in an amount not in excess of the
the taxpayer has acquired (by purchase or by exchange net income for such year) shall be treated in the
upon which the entire amount of gain or loss was succeeding taxable year as a loss from the sale or
recognized by law), or has entered into a contact or exchange of a capital asset held for not more than twelve
option so to acquire, substantially identical stock or (12) months.
securities, then no deduction for the loss shall be allowed
under Section 34 unless the claim is made by a dealer in (E) Retirement of Bonds, Etc. - For purposes of this Title,
stock or securities and with respect to a transaction made amounts received by the holder upon the retirement of
in the ordinary course of the business of such dealer. bonds, debentures, notes or certificates or other
evidences of indebtedness issued by any corporation
(B) If the amount of stock or securities acquired (or (including those issued by a government or political
covered by the contract or option to acquire) is less than subdivision thereof) with interest coupons or in registered
the amount of stock or securities sold or otherwise form, shall be considered as amounts received in
disposed of, then the particular shares of stock or exchange therefor.
securities, the loss from the sale or other disposition of
which is not deductible, shall be determined under rules (F) Gains or losses from Short Sales, Etc. - For purposes
and regulations prescribed by the Secretary of Finance, of this Title -
upon recommendation of the Commissioner. (1) Gains or losses from short sales of property shall
(C) If the amount of stock or securities acquired (or be considered as gains or losses from sales or
covered by the contract or option to acquire which) is not exchanges of capital assets; and
less than the amount of stock or securities sold or (2) Gains or losses attributable to the failure to
otherwise disposed of, then the particular shares of stock exercise privileges or options to buy or sell property
or securities, the acquisition of which (or the contract or shall be considered as capital gains or losses.
option to acquire which) resulted in the non-deductibility
of the loss shall be determined under rules and SEC. 40. Determination of Amount and Recognition of
regulations prescribed by the Secretary of Finance, upon Gain or Loss. -
recommendation of the Commissioner. (A) Computation of Gain or Loss. - The gain from the
SEC. 39. Capital Gains and Losses. - sale or other disposition of property shall be the excess of
the amount realized therefrom over the basis or adjusted
(A) Definitions. - As used in this Title - basis for determining gain, and the loss shall be the
(1) Capital Assets. - The term 'capital assets' excess of the basis or adjusted basis for determining loss
means property held by the taxpayer (whether or over the amount realized. The amount realized from the
not connected with his trade or business), but does sale or other disposition of property shall be the sum of
not include stock in trade of the taxpayer or other



money received plus the fair market value of the property earnings and profits of the corporation; the
(other than money) received; remainder, if any, of the gain recognized shall
(B) Basis for Determining Gain or Loss from Sale or be treated as a capital gain.
Disposition of Property. - The basis of property shall be - (b) If, in connection with the exchange
(1) The cost thereof in the case of property acquired described in the above exceptions, the
on or after March 1, 1913, if such property was transferor corporation receives not only stock
acquired by purchase; or permitted to be received without the
recognition of gain or loss but also money
(2) The fair market price or value as of the date of and/or other property, then (i) if the corporation
acquisition, if the same was acquired by inheritance; receiving such money and/or other property
or distributes it in pursuance of the plan of merger
(3) If the property was acquired by gift, the basis or consolidation, no gain to the corporation
shall be the same as if it would be in the hands of shall be recognized from the exchange, but (ii)
the donor or the last preceding owner by whom it if the corporation receiving such other property
was not acquired by gift, except that if such basis is and/or money does not distribute it in
greater than the fair market value of the property at pursuance of the plan of merger or
the time of the gift then, for the purpose of consolidation, the gain, if any, but not the loss
determining loss, the basis shall be such fair market to the corporation shall be recognized but in an
value; or amount not in excess of the sum of such
money and the fair market value of such other
(4) If the property was acquired for less than an property so received, which is not distributed.
adequate consideration in money or money's worth,
the basis of such property is the amount paid by the (4) Assumption of Liability. -
transferee for the property; or (a) If the taxpayer, in connection with the
(5) The basis as defined in paragraph (C)(5) of this exchanges described in the foregoing
Section, if the property was acquired in a transaction exceptions, receives stock or securities which
where gain or loss is not recognized under would be permitted to be received without the
paragraph (C)(2) of this Section. recognition of the gain if it were the sole
consideration, and as part of the consideration,
(C) Exchange of Property. - another party to the exchange assumes a
(1) General Rule. - Except as herein provided, upon liability of the taxpayer, or acquires from the
the sale or exchange or property, the entire amount taxpayer property, subject to a liability, then
of the gain or loss, as the case may be, shall be such assumption or acquisition shall not be
recognized. treated as money and/or other property, and
shall not prevent the exchange from being
(2) Exception. - No gain or loss shall be recognized if within the exceptions.
in pursuance of a plan of merger or consolidation -
(b) If the amount of the liabilities assumed plus
(a) A corporation, which is a party to a merger the amount of the liabilities to which the
or consolidation, exchanges property solely for property is subject exceed the total of the
stock in a corporation, which is a party to the adjusted basis of the property transferred
merger or consolidation; or pursuant to such exchange, then such excess
(b) A shareholder exchanges stock in a shall be considered as a gain from the sale or
corporation, which is a party to the merger or exchange of a capital asset or of property which
consolidation, solely for the stock of another is not a capital asset, as the case may be.
corporation also a party to the merger or (5) Basis -
consolidation; or
(a) The basis of the stock or securities received
(c) A security holder of a corporation, which is a by the transferor upon the exchange specified
party to the merger or consolidation, in the above exception shall be the same as the
exchanges his securities in such corporation, basis of the property, stock or securities
solely for stock or securities in such corporation, exchanged, decreased by (1) the money
a party to the merger or consolidation. received, and (2) the fair market value of the
No gain or loss shall also be recognized if property is other property received, and increased by (a)
transferred to a corporation by a person in exchange the amount treated as dividend of the
for stock or unit of participation in such a shareholder and (b) the amount of any gain
corporation of which as a result of such exchange that was recognized on the exchange: Provided,
said person, alone or together with others, not That the property received as 'boot' shall have
exceeding four (4) persons, gains control of said as basis its fair market value: Provided, further,
corporation: Provided, That stocks issued for services That if as part of the consideration to the
shall not be considered as issued in return for transferor, the transferee of property assumes a
property. liability of the transferor or acquires form the
(3) Exchange Not Solely in Kind. - latter property subject to a liability, such
assumption or acquisition (in the amount of the
(a) If, in connection with an exchange described liability) shall, for purposes of this paragraph, be
in the above exceptions, an individual, a treated as money received by the transferor on
shareholder, a security holder or a corporation the exchange: Provided, finally, That if the
receives not only stock or securities permitted transferor receives several kinds of stock or
to be received without the recognition of gain securities, the Commissioner is hereby
or loss, but also money and/or property, the authorized to allocate the basis among the
gain, if any, but not the loss, shall be recognized several classes of stocks or securities.
but in an amount not in excess of the sum of
the money and fair market value of such other (b) The basis of the property transferred in the
property received: Provided, That as to the hands of the transferee shall be the same as it
shareholder, if the money and/or other property would be in the hands of the transferor
received has the effect of a distribution of a increased by the amount of the gain
taxable dividend, there shall be taxed as recognized to the transferor on the transfer.
dividend to the shareholder an amount of the (6) Definitions. -
gain recognized not in excess of his
proportionate share of the undistributed


(a) The term "securities" means bonds and (b) From a foreign corporation, unless less than
debentures but not 'notes' of whatever class or fifty percent (50%) of the gross income of such
duration. foreign corporation for the three-year period
(b) The term "merger" or "consolidation", when ending with the close of its taxable year
used in this Section, shall be understood to preceding the declaration of such dividends or
mean: (i) the ordinary merger or consolidation, for such part of such period as the corporation
or (ii) the acquisition by one corporation of all or has been in existence) was derived from
substantially all the properties of another sources within the Philippines as determined
corporation solely for stock: Provided, That for a under the provisions of this Section; but only in
transaction to be regarded as a merger or an amount which bears the same ratio to such
consolidation within the purview of this dividends as the gross income of the
Section, it must be undertaken for a bona fide corporation for such period derived from
business purpose and not solely for the purpose sources within the Philippines bears to its gross
of escaping the burden of taxation: Provided, income from all sources;
further, That in determining whether a bona (3) Services.- Compensation for labor or
fide business purpose exists, each and every personal services performed in the Philippines;
step of the transaction shall be considered and (4) Rentals and Royalties. - Rentals and royalties
the whole transaction or series of transaction from property located in the Philippines or
shall be treated as a single unit: Provided, finally from any interest in such property, including
, That in determining whether the property rentals or royalties for -
transferred constitutes a substantial portion of
the property of the transferor, the term (a) The use of or the right or privilege to
"property" shall be taken to include the cash use in the Philippines any copyright,
assets of the transferor. patent, design or model, plan, secret
formula or process, goodwill, trademark,
(c) The term "control", when used in this trade brand or other like property or right;
Section, shall mean ownership of stocks in a
corporation possessing at least fifty-one (b) The use of, or the right to use in the
percent (51%) of the total voting power of all Philippines any industrial, commercial or
classes of stocks entitled to vote. scientific equipment;
(d) The Secretary of Finance, upon (c) The supply of scientific, technical,
recommendation of the Commissioner, is industrial or commercial knowledge or
hereby authorized to issue rules and information;
regulations for the purpose "substantially all" (d) The supply of any assistance that is
and for the proper implementation of this ancillary and subsidiary to, and is
Section. furnished as a means of enabling the
SEC. 41. Inventories. - whenever in the judgment of the application or enjoyment of, any such
Commissioner, the use of inventories is necessary in order property or right as is mentioned in
to determine clearly the income of any taxpayer, paragraph (a), any such equipment as is
inventories shall be taken by such taxpayer upon such mentioned in paragraph (b) or any such
basis as the Secretary of Finance, upon recommendation knowledge or information as is mentioned
of the Commissioner, may, by rules and regulations, in paragraph (c);
prescribe as conforming as nearly as may be to the best (e) The supply of services by a nonresident
accounting practice in the trade or business and as most person or his employee in connection with
clearly reflecting the income. the use of property or rights belonging to,
If a taxpayer, after having complied with the terms and a or the installation or operation of any
conditions prescribed by the Commissioner, uses a brand, machinery or other apparatus
particular method of valuing its inventory for any taxable purchased from such nonresident person;
year, then such method shall be used in all subsequent (f) Technical advice, assistance or services
taxable years unless: rendered in connection with technical
(i) With the approval of the Commissioner, a change management or administration of any
to a different method is authorized; or scientific, industrial or commercial
undertaking, venture, project or scheme;
(ii) The Commissioner finds that the nature of the and
stock on hand (e.g., its scarcity, liquidity,
marketability and price movements) is such that (g) The use of or the right to use:
inventory gains should be considered realized for tax (i) Motion picture films;
purposes and, therefore, it is necessary to modify the
valuation method for purposes of ascertaining the (ii) Films or video tapes for use in
income, profits, or loss in a more realistic manner: connection with television; and
Provided, however, That the Commissioner shall not (iii) Tapes for use in connection with
exercise his authority to require a change in radio broadcasting.
inventory method more often than once every three
(3) years: Provided, further, That any change in an (5) Sale of Real Property. -Gains, profits and
inventory valuation method must be subject to income from the sale of real property located in
approval by the Secretary of Finance. the Philippines; and
SEC. 42. Income from Sources Within the Philippines. - (6) Sale of Personal Property. - Gains; profits
and income from the sale of personal property,
(A)Gross Income from Sources Within the Philippines. - as determined in Subsection (E) of this Section.
The following items of gross income shall be treated as
gross income from sources within the Philippines: (B) Taxable Income From Sources Within the
Philippines. -
(1) Interests. - Interests derived from sources within
the Philippines, and interests on bonds, notes or (1) General Rule. - From the items of gross income
other interest-bearing obligation of residents, specified in Subsection (A) of this Section, there shall
corporate or otherwise; be deducted the expenses, losses and other
deductions properly allocated thereto and a ratable
(2) Dividends. - The amount received as dividends: part of expenses, interests, losses and other
(a) From a domestic corporation; and deductions effectively connected with the business
or trade conducted exclusively within the



Philippines which cannot definitely be allocated to derived partly from sources within and partly from
some items or class of gross income: Provided, That sources without the Philippines.
such items of deductions shall be allowed only if Gains, profits and income derived from the purchase of
fully substantiated by all the information necessary personal property within and its sale without the
for its calculation. The remainder, if any, shall be Philippines, or from the purchase of personal property
treated in full as taxable income from sources within without and its sale within the Philippines shall be
the Philippines. treated as derived entirely form sources within the
(2) Exception. - No deductions for interest paid or country in which sold: Provided, however, That gain from
incurred abroad shall be allowed from the item of the sale of shares of stock in a domestic corporation shall
gross income specified in subsection (A) unless be treated as derived entirely form sources within the
indebtedness was actually incurred to provide funds Philippines regardless of where the said shares are sold.
for use in connection with the conduct or operation The transfer by a nonresident alien or a foreign
of trade or business in the Philippines. corporation to anyone of any share of stock issued by a
(C) Gross Income From Sources Without the domestic corporation shall not be effected or made in its
Philippines. - The following items of gross income shall book unless: (1) the transferor has filed with the
be treated as income from sources without the Commissioner a bond conditioned upon the future
Philippines: payment by him of any income tax that may be due on
the gains derived from such transfer, or (2) the
(1) Interests other than those derived from sources Commissioner has certified that the taxes, if any, imposed
within the Philippines as provided in paragraph (1) of in this Title and due on the gain realized from such sale or
Subsection (A) of this Section; transfer have been paid. It shall be the duty of the
(2) Dividends other than those derived from sources transferor and the corporation the shares of which are
within the Philippines as provided in paragraph (2) sold or transferred, to advise the transferee of this
of Subsection (A) of this Section; requirement.
(3) Compensation for labor or personal services (F) Definitions. - As used in this Section the words 'sale'
performed without the Philippines; or 'sold' include 'exchange' or 'exchanged'; and the word
'produced' includes 'created', 'fabricated',
(4) Rentals or royalties from property located 'manufactured', 'extracted', 'processed', 'cured' or 'aged'.
without the Philippines or from any interest in such
property including rentals or royalties for the use of
or for the privilege of using without the Philippines,
patents, copyrights, secret processes and formulas, CHAPTER VIII ACCOUNTING PERIODS AND
goodwill, trademarks, trade brands, franchises and
METHODS OF ACCOUNTING
other like properties; and
SEC. 43. General Rule. - The taxable income shall be
(5) Gains, profits and income from the sale of real
computed upon the basis of the taxpayer's annual
property located without the Philippines.
accounting period (fiscal year or calendar year, as the
(D) Taxable Income From Sources Without the case may be) in accordance with the method of
Philippines. - From the items of gross income specified accounting regularly employed in keeping the books of
in Subsection (C) of this Section, there shall be deducted such taxpayer, but if no such method of accounting has
the expenses, losses, and other deductions properly been so employed, or if the method employed does not
apportioned or allocated thereto and a ratable part of any clearly reflect the income, the computation shall be made
expense, loss or other deduction which cannot definitely in accordance with such method as in the opinion of the
be allocated to some items or classes of gross income. Commissioner clearly reflects the income. If the
The remainder, if any, shall be treated in full as taxable taxpayer's annual accounting period is other than a fiscal
income from sources without the Philippines. year, as defined in Section 22(Q), or if the taxpayer has no
(E) Income From Sources Partly Within and Partly annual accounting period, or does not keep books, or if
Without the Philippines.- Items of gross income, the taxpayer is an individual, the taxable income shall be
expenses, losses and deductions, other than those computed on the basis of the calendar year.
specified in Subsections (A) and (C) of this Section, shall SEC. 44. Period in which Items of Gross Income
be allocated or apportioned to sources within or without Included.- The amount of all items of gross income shall
the Philippines, under the rules and regulations be included in the gross income for the taxable year in
prescribed by the Secretary of Finance, upon which received by the taxpayer, unless, under methods of
recommendation of the Commissioner. Where items of accounting permitted under Section 43, any such
gross income are separately allocated to sources within amounts are to be properly accounted for as of a different
the Philippines, there shall be deducted (for the purpose period. In the case of the death of a taxpayer, there shall
of computing the taxable income therefrom) the be included in computing taxable income for the taxable
expenses, losses and other deductions properly period in which falls the date of his death, amounts
apportioned or allocated thereto and a ratable part of accrued up to the date of his death if not otherwise
other expenses, losses or other deductions which cannot properly includible in respect of such period or a prior
definitely be allocated to some items or classes of gross period.
income. The remainder, if any, shall be included in full as
SEC. 45. Period for which Deductions and Credits
taxable income from sources within the Philippines. In
Taken. - The deductions provided for in this Title shall be
the case of gross income derived from sources partly
taken for the taxable year in which 'paid or accrued' or
within and partly without the Philippines, the taxable
'paid or incurred', dependent upon the method of
income may first be computed by deducting the
accounting upon the basis of which the net income is
expenses, losses or other deductions apportioned or
computed, unless in order to clearly reflect the income,
allocated thereto and a ratable part of any expense, loss
the deductions should be taken as of a different period. In
or other deduction which cannot definitely be allocated
the case of the death of a taxpayer, there shall be allowed
to some items or classes of gross income; and the portion
as deductions for the taxable period in which falls the
of such taxable income attributable to sources within the
date of his death, amounts accrued up to the date of his
Philippines may be determined by processes or formulas
death if not otherwise properly allowable in respect of
of general apportionment prescribed by the Secretary of
such period or a prior period.
Finance. Gains, profits and income from the sale of
personal property produced (in whole or in part) by the SEC. 46. Change of Accounting Period. - If a taxpayer,
taxpayer within and sold without the Philippines, or other than an individual, changes his accounting period
produced (in whole or in part) by the taxpayer without from fiscal year to calendar year, from calendar year to
and sold within the Philippines, shall be treated as fiscal year, or from one fiscal year to another, the net
income shall, with the approval of the Commissioner, be



computed on the basis of such new accounting period, purchaser during the taxable period in which the sale or
subject to the provisions of Section 47. other disposition is made.
SEC. 47. Final or Adjustment Returns for a Period of (C) Sales of Real Property Considered as Capital Asset
Less than Twelve (12) Months. - by Individuals. - An individual who sells or disposes of
(A) Returns for Short Period Resulting from Change of real property, considered as capital asset, and is otherwise
Accounting Period. - If a taxpayer, other than an qualified to report the gain therefrom under Subsection
individual, with the approval of the Commissioner, (B) may pay the capital gains tax in installments under
changes the basis of computing net income from fiscal rules and regulations to be promulgated by the Secretary
year to calendar year, a separate final or adjustment of Finance, upon recommendation of the Commissioner.
return shall be made for the period between the close of (D) Change from Accrual to Installment Basis. - If a
the last fiscal year for which return was made and the taxpayer entitled to the benefits of Subsection (A) elects
following December 31. If the change is from calendar for any taxable year to report his taxable income on the
year to fiscal year, a separate final or adjustment return installment basis, then in computing his income for the
shall be made for the period between the close of the last year of change or any subsequent year, amounts actually
calendar year for which return was made and the date received during any such year on account of sales or
designated as the close of the fiscal year. If the change is other dispositions of property made in any prior year shall
from one fiscal year to another fiscal year, a separate final not be excluded.
or adjustment return shall be made for the period SEC. 50. Allocation of Income and Deductions. - In the
between the close of the former fiscal year and the date case of two or more organizations, trades or businesses
designated as the close of the new fiscal year. (whether or not incorporated and whether or not
(B) Income Computed on Basis of Short Period. - Where organized in the Philippines) owned or controlled directly
a separate final or adjustment return is made under or indirectly by the same interests, the Commissioner is
Subsection (A) on account of a change in the accounting authorized to distribute, apportion or allocate gross
period, and in all other cases where a separate final or income or deductions between or among such
adjustment return is required or permitted by rules and organization, trade or business, if he determined that
regulations prescribed by the Secretary of Finance, upon such distribution, apportionment or allocation is
recommendation of the Commissioner, to be made for a necessary in order to prevent evasion of taxes or clearly to
fractional part of a year, then the income shall be reflect the income of any such organization, trade or
computed on the basis of the period for which separate business.
final or adjustment return is made.
SEC. 48. Accounting for Long-term Contracts. - Income
from long-term contracts shall be reported for tax
purposes in the manner as provided in this Section. As CHAPTER IX RETURNS AND PAYMENT OF TAX
used herein, the term 'long-term contracts' means SEC. 51. Individual Return. -
building, installation or construction contracts covering a
(A) Requirements. -
period in excess of one (1) year. Persons whose gross
income is derived in whole or in part from such contracts (1) Except as provided in paragraph (2) of this
shall report such income upon the basis of percentage of Subsection, the following individuals are required to
completion. The return should be accompanied by a file an income tax return:
return certificate of architects or engineers showing the (a) Every Filipino citizen residing in the
percentage of completion during the taxable year of the Philippines;
entire work performed under contract. There should be
deducted from such gross income all expenditures made (b) Every Filipino citizen residing outside the
during the taxable year on account of the contract, Philippines, on his income from sources within
account being taken of the material and supplies on the Philippines;
hand at the beginning and end of the taxable period for (c) Every alien residing in the Philippines, on
use in connection with the work under the contract but income derived from sources within the
not yet so applied. If upon completion of a contract, it is Philippines; and
found that the taxable [net] income arising thereunder
has not been clearly reflected for any year or years, the (d) Every nonresident alien engaged in trade or
Commissioner may permit or require an amended return. business or in the exercise of profession in the
Philippines.
SEC. 49. Installment Basis. -
(2) The following individuals shall not be required to
(A) Sales of Dealers in Personal Property. - Under rules file an income tax return:
and regulations prescribed by the Secretary of Finance,
upon recommendation of the Commissioner, a person (a) An individual whose taxable income does
who regularly sells or otherwise disposes of personal not exceed two hundred fifty thousand pesos
property on the installment plan may return as income (P250,000) under Section 24(A)(2)(a): Provided,
therefrom in any taxable year that proportion of the That a citizen of the Philippines and any alien
installment payments actually received in that year, individual engaged in business or practice of
which the gross profit realized or to be realized when profession within the Philippines shall file an
payment is completed, bears to the total contract price. income tax return, regardless of the amount of
gross income;(as amended by RA No 10963)
(B) Sales of Realty and Casual Sales of Personality. - In
the case (1) of a casual sale or other casual disposition of (b) An individual with respect to pure
personal property (other than property of a kind which compensation income, [35] as defined in Section
would properly be included in the inventory of the 32 (A)(1), derived from sources within the
taxpayer if on hand at the close of the taxable year), for a Philippines, the income tax on which has been
price exceeding One thousand pesos (P1,000), or (2) of a correctly withheld under the provisions of
sale or other disposition of real property, if in either case Section 79 of this Code: Provided, That an
the initial payments do not exceed twenty-five percent individual deriving compensation concurrently
(25%) of the selling price, the income may, under the rules from two or more employers at any time during
and regulations prescribed by the Secretary of Finance, the taxable year shall file an income tax return.
[36]
upon recommendation of the Commissioner, be returned
on the basis and in the manner above prescribed in this (c) An individual whose sole income has been
Section. As used in this Section, the term 'initial subjected to final withholding tax pursuant to
payments' means the payments received in cash or Section 57(A) of this Code; and
property other than evidences of indebtedness of the


(d) A minimum wage earner as defined in (E) Return of Parent to Include Income of Children. -
section 22 (HH) of this Code or an individual The income of unmarried minors derived from properly
who is exempt from income tax pursuant to the received from a living parent shall be included in the
provisions of this Code and other laws, general return of the parent, except (1) when the donor's tax has
or special. [37] been paid on such property, or (2) when the transfer of
(3) The foregoing notwithstanding, any individual such property is exempt from donor's tax.
not required to file an income tax return may (F) Persons Under Disability. - If the taxpayer is unable to
nevertheless be required to file an information make his own return, the return may be made by his duly
return pursuant to rules and regulations prescribed authorized agent or representative or by the guardian or
by the Secretary of Finance, upon recommendation other person charged with the care of his person or
of the Commissioner. property, the principal and his representative or guardian
(4) The income tax return shall be filed in duplicate assuming the responsibility of making the return and
by the following persons: incurring penalties provided for erroneous, false or
fraudulent returns.
(a) A resident citizen - on his income from all
sources; (G) Signature Presumed Correct. - The fact that an
individual's name is signed to a filed return shall be prima
(b) A nonresident citizen - on his income facie evidence for all purposes that the return was
derived from sources within the Philippines; actually signed by him.
(c) A resident alien - on his income derived from SEC. 51-A. Substituted Filing of Income Tax Returns by
sources within the Philippines; and Employees Receiving Purely Compensation Income. —
(d) A nonresident alien engaged in trade or Individual taxpayers receiving purely compensation
business in the Philippines - on his income income, regardless of amount, from only one employer in
derived from sources within the Philippines. the Philippines for the calendar year, the income tax of
which has been withheld correctly by the said employer
(5) The income tax return (ITR) shall consist of a (tax due equals tax withheld) shall not be required to file
maximum of four (4) pages in paper form or an annual income tax return. The certificate of
electronic form, and shall only contain the following withholding filed by the respective employers, duly
information: stamped 'received' by the BIR, shall be tantamount to the
(A) Personal profile and information; substituted filing of income tax returns by said
employees.(as amended by RA No 10963)
(B) Total gross sales, receipts or income from
compensation for services rendered, conduct of SEC. 52. Corporation Returns. -
trade or business or the exercise of a profession, (A) Requirements. - Every corporation subject to the tax
except income subject to final tax as provided herein imposed, except foreign corporations not engaged
under this Code; in trade or business in the Philippines, shall render, in
(C) Allowable deductions under this Code; duplicate, a true and accurate quarterly income tax
return and final or adjustment return in accordance with
(D) Taxable income as defined in Section 31 of the provisions of Chapter XII of this Title. The income tax
this Code; and return shall consist of a maximum of four (4) pages in
(E) Income tax due and payable paper form or electronic form, be filed by the president,
(as amended by RA No 10963) vice-president or other principal officer, shall be sworn to
by such officer and by the treasurer or assistant treasurer,
(B) Where to File. - Except in cases where the and shall only contain the following information:
Commissioner otherwise permits, the return shall be filed
with an authorized agent bank, Revenue District Officer, (1) Corporate profile and information;
Collection Agent or duly authorized Treasurer of the city (2) Gross sales, receipts or income from services
or municipality in which such person has his legal rendered, or conduct of trade or business, except
residence or principal place of business in the Philippines, income subject to final tax as provided under this
or if there be no legal residence or place of business in Code;
the Philippines, with the Office of the Commissioner. (3) Allowable deductions under this Code;
(C) When to File. - (4) Taxable income as defined in Section 31 of this
(1) The return of any individual specified above shall Code; and
be filed on or before the fifteenth (15th) day of April (5) Income tax due and payable.
of each year covering income for the preceding
taxable year. Provided, That the foregoing provisions shall not
affect the implementation of Republic Act No. 10708
(2) Individuals subject to tax on capital gains; or TIMTA.
(a) From the sale or exchange of shares of stock (as amended by RA No 10963)
not traded thru a local stock exchange as
prescribed under Section 24(C)shall file a return (B) Taxable Year of Corporation. - A corporation may
within thirty (30) days after each transaction employ either calendar year or fiscal year as a basis for
and a final consolidated return on or before filing its annual income tax return: Provided, That the
April 15 of each year covering all stock corporation shall not change the accounting period
transactions of the preceding taxable year; and employed without prior approval from the Commissioner
in accordance with the provisions of Section 47 of this
(b) From the sale or disposition of real property Code.
under Section 24(D) shall file a return within
thirty (30) days following each sale or other (C) Return of Corporation Contemplating Dissolution or
disposition. Reorganization. - Every corporation shall, within thirty
(30) days after the adoption by the corporation of a
(D) Husband and Wife. - Married individuals, whether resolution or plan for its dissolution, or for the liquidation
citizens, resident or nonresident aliens, who do not derive of the whole or any part of its capital stock, including a
income purely from compensation, shall file a return for corporation which has been notified of possible
the taxable year to include the income of both spouses, involuntary dissolution by the Securities and Exchange
but where it is impracticable for the spouses to file one Commission, or for its reorganization, render a correct
return, each spouse may file a separate return of income return to the Commissioner, verified under oath, setting
but the returns so filed shall be consolidated by the forth the terms of such resolution or plan and such other
Bureau for purposes of verification for the taxable year. information as the Secretary of Finance, upon


recommendation of the commissioner, shall, by rules and Section 24 (c), 24(D), 27(E)(2), 28(A)(8)(c) and
regulations, prescribe. 28(B)(5)(c) shall be paid on the date the return
The dissolving or reorganizing corporation shall, prior to prescribed therefor is filed by the person liable
the issuance by the Securities and Exchange Commission thereto: Provided, That if the seller submits proof of
of the Certificate of Dissolution or Reorganization, as may his intention to avail himself of the benefit of
be defined by rules and regulations prescribed by the exemption of capital gains under existing special
Secretary of Finance, upon recommendation of the laws, no such payments shall be required: Provided,
Commissioner, secure a certificate of tax clearance from further, That in case of failure to qualify for
the Bureau of Internal Revenue which certificate shall be exemption under such special laws and
submitted to the Securities and Exchange Commission. implementing rules and regulations, the tax due on
the gains realized from the original transaction shall
(D) Return on Capital Gains Realized from Sale of immediately become due and payable, subject to
Shares of Stock not Traded in the Local Stock the penalties prescribed under applicable provisions
Exchange. - Every corporation deriving capital gains from of this Code: Provided, finally, That if the seller,
the sale or exchange of shares of stock not traded thru a having paid the tax, submits such proof of intent
local stock exchange as prescribed under Sections 24(C), within six (6) months from the registration of the
25(A)(3), 27(E)(2), 28(A)(8)(c) and 28 (B)(5)(c) shall file a document transferring the real property, he shall be
return within thirty (30) days after each transactions and a entitled to a refund of such tax upon verification of
final consolidated return of all transactions during the his compliance with the requirements for such
taxable year on or before the fifteenth (15th) day of the exemption.
fourth (4th) month following the close of the taxable year.
In case the taxpayer elects and is qualified to report the
SEC. 53. Extension of Time to File Returns. - The gain by installments under Section 49 of this Code, the
Commissioner may, in meritorious cases, grant a tax due from each installment payment shall be paid
reasonable extension of time for filing returns of income within (30) days from the receipt of such payments.
(or final and adjustment returns in case of corporations),
subject to the provisions of Section 56 of this Code. No registration of any document transferring real
property shall be effected by the Register of Deeds unless
SEC. 54. Returns of Receivers, Trustees in Bankruptcy the Commissioner or his duly authorized representative
or Assignees. - In cases wherein receivers, trustees in has certified that such transfer has been reported, and
bankruptcy or assignees are operating the property or the tax herein imposed, if any, has been paid.
business of a corporation, subject to the tax imposed by
this Title, such receivers, trustees or assignees shall make (B) Assessment and Payment of Deficiency Tax. - After
returns of net income [38] as and for such corporation, in the return is filed, the Commissioner shall examine it and
the same manner and form as such organization is assess the correct amount of the tax. The tax or
hereinbefore required to make returns, and any tax due deficiency income tax so discovered shall be paid upon
on the income as returned by receivers, trustees or notice and demand from the Commissioner.
assignees shall be assessed and collected in the same As used in this Chapter, in respect of a tax imposed by
manner as if assessed directly against the organizations this Title, the term 'deficiency' means:
of whose businesses or properties they have custody or (1) The amount by which the tax imposed by this
control. Title exceeds the amount shown as the tax by the
SEC. 55. Returns of General Professional Partnerships. - taxpayer upon his return; but the amount so shown
Every general professional partnership shall file, in on the return shall be increased by the amounts
duplicate, a return of its income, except income exempt previously assessed (or collected without
under Section 32(B) of this Title, setting forth the items of assessment) as a deficiency, and decreased by the
gross income and of deductions allowed by this Title, and amount previously abated, credited, returned or
the names, Taxpayer Identification Numbers (TIN), otherwise repaid in respect of such tax; or
addresses and shares of each of the partners. (2) If no amount is shown as the tax by the taxpayer
SEC. 56. Payment and Assessment of Income Tax for upon this return, or if no return is made by the
Individuals and Corporations. - taxpayer, then the amount by which the tax exceeds
(A) Payment of Tax. - the amounts previously assessed (or collected
without assessment) as a deficiency; but such
(1) In General. - The total amount of tax imposed by amounts previously assessed or collected without
this Title shall be paid by the person subject thereto assessment shall first be decreased by the amounts
at the time the return is filed. In the case of tramp previously abated, credited returned or otherwise
vessels, the shipping agents and/or the husbanding repaid in respect of such tax.
agents, and in their absence, the captains thereof
are required to file the return herein provided and SEC. 57. Withholding of Tax at Source. -
pay the tax due thereon before their departure. (A) Withholding of Final Tax on Certain Incomes. -
Upon failure of the said agents or captains to file the Subject to rules and regulations the Secretary of Finance
return and pay the tax, the Bureau of Customs is may promulgate, upon the recommendation of the
hereby authorized to hold the vessel and prevent its Commissioner, requiring the filing of income tax return
departure until proof of payment of the tax is by certain income payees, the tax imposed or prescribed
presented or a sufficient bond is filed to answer for by Sections 24(B)(1), 24(B)(2), 24(C), 24(D)(1); 25(A)(2),
the tax due. 25(A)(3), 25(B), 25(C), 25(D), 25(E), 27(D)(1), 27(D)(2), 27(D)(3),
(2) Installment of Payment. - When a tax due is in 27(D)(5), 28 (A)(4), 28(A)(5), 28(A)(7)(a), 28(A)(7)(b),
excess of Two thousand pesos (P2,000), the taxpayer 28(A)(7)(c), 28(B)(1), 28(B)(2), 28(B)(3), 28(B)(4), 28(B)(5)(a),
other than a corporation, may elect to pay the tax in 28(B)(5)(b), 28(B)(5)(c); 33; and 282 of this Code on
two (2) equal installments, in which case, the first specified items of income shall be withheld by
installment shall be paid at the time the return is payor-corporation and/or person and paid in the same
filed and the second installment on or before manner and subject to the same conditions as provided
October 15 following the close of the calendar year, if in Section 58 of this Code.
any installment is not paid on or before the date (B) Withholding of Creditable Tax at Source. - The
fixed for its payment, the whole amount of the tax Secretary of Finance may, upon the recommendation of
unpaid becomes due and payable together with the the Commissioner, require the withholding of a tax on
delinquency penalties.(as amended by RA No the items of income payable to natural or juridical
10963) persons, residing in the Philippines, by
(3) Payment of Capital Gains Tax. - The total payor-corporation/persons as provided for by law, at the
amount of tax imposed and prescribed under rate of not less than one percent (1%) but not more than
thirty-two percent (32%) thereof, which shall be credited



against the income tax liability of the taxpayer for the The Commissioner may, by rules and regulations, grant to
taxable year: Provided, That, beginning January 1, 2019, any withholding agent a reasonable extension of time to
the rate of withholding shall not be less than one percent furnish and submit the return required in this Subsection.
(1%) but not more than fifteen percent (15%) of the (D) Income of Recipient. - Income upon which any
income payment.(as amended by RA No 10963) creditable tax is required to be withheld at source under
(C) Tax-free Covenant Bonds. - In any case where bonds, Section 57 shall be included in the return of its recipient
mortgages, deeds of trust or other similar obligations of but the excess of the amount of tax so withheld over the
domestic or resident foreign corporations, contain a tax due on his return shall be refunded to him subject to
contract or provisions by which the obligor agrees to pay the provisions of Section 204; if the income tax collected
any portion of the tax imposed in this Title upon the at source is less than the tax due on his return, the
obligee or to reimburse the obligee for any portion of the difference shall be paid in accordance with the provisions
tax or to pay the interest without deduction for any tax of Section 56.
which the obligor may be required or permitted to pay All taxes withheld pursuant to the provisions of this Code
thereon or to retain therefrom under any law of the and its implementing rules and regulations are hereby
Philippines, or any state or country, the obligor shall considered trust funds and shall be maintained in a
deduct bonds, mortgages, deeds of trust or other separate account and not commingled with any other
obligations, whether the interest or other payments are funds of the withholding agent.
payable annually or at shorter or longer periods, and
whether the bonds, securities or obligations had been or (E) Registration with Register of Deeds. - No
will be issued or marketed, and the interest or other registration of any document transferring real property
payment thereon paid, within or without the Philippines, shall be effected by the Register of Deeds unless the
if the interest or other payment is payable to a Commissioner or his duly authorized representative has
nonresident alien or to a citizen or resident of the certified that such transfer has been reported, and the
Philippines. capital gains or creditable withholding tax, if any, has
been paid: Provided, however, That the information as
SEC. 58. Returns and Payment of Taxes Withheld at may be required by rules and regulations to be
Source. - prescribed by the Secretary of Finance, upon
(A) Quarterly Returns and Payments of Taxes Withheld. recommendation of the Commissioner, shall be
- Taxes deducted and withheld under Section 57 by annotated by the Register of Deeds in the Transfer
withholding agents shall be covered by a return and paid Certificate of Title or Condominium Certificate of Title:
to, except in cases where the Commissioner otherwise Provided, further, That in cases of transfer of property to a
permits, an authorized agent bank, Revenue District corporation, pursuant to a merger, consolidation or
Officer, Collection Agent, or duly authorized Treasurer of reorganization, and where the law allows deferred
the city or municipality where the withholding agent has recognition of income in accordance with Section 40, the
his legal residence or principal place of business, or where information as may be required by rules and regulations
the withholding agent is a corporation, where the to be prescribed by the Secretary of Finance, upon
principal office is located. recommendation of the Commissioner, shall be
The taxes deducted and withheld by the withholding annotated by the Register of Deeds at the back of the
agent shall be held as a special fund in trust for the Transfer Certificate of Title or Condominium Certificate of
government until paid to the collecting officers. Title of the real property involved: Provided, finally, That
any violation of this provision by the Register of Deeds
The return for final and creditable withholding taxes shall shall be subject to the penalties imposed under Section
be filed and the payment made not later than the last 269 of this Code.
day of the month following the close of the quarter
during which the withholding was made.(as amended SEC. 59. Tax on Profits Collectible from Owner or Other
by RA No 10963) Persons. - The tax imposed under this Title upon gains,
profits, and income not falling under the foregoing and
(B) Statement of Income Payments Made and Taxes not returned and paid by virtue of the foregoing or as
Withheld. - Every withholding agent required to deduct otherwise provided by law shall be assessed by personal
and withhold taxes under Section 57 shall furnish each return under rules and regulations to be prescribed by
recipient, in respect to his or its receipts during the the Secretary of Finance, upon recommendation of the
calendar quarter or year, a written statement showing the Commissioner. The intent and purpose of the Title is that
income or other payments made by the withholding all gains, profits and income of a taxable class, as defined
agent during such quarter or year, and the amount of the in this Title, shall be charged and assessed with the
tax deducted and withheld therefrom, simultaneously corresponding tax prescribed by this Title, and said tax
upon payment at the request of the payee, but not later shall be paid by the owners of such gains, profits and
than the twentieth (20th) day following the close of the income, or the proper person having the receipt, custody,
quarter in the case of corporate payee, or not later than control or disposal of the same. For purposes of this Title,
March 1 of the following year in the case of individual ownership of such gains, profits and income or liability to
payee for creditable withholding taxes. For final pay the tax shall be determined as of the year for which a
withholding taxes, the statement should be given to the return is required to be rendered.
payee on or before January 31 of the succeeding year.

(C) Annual Information Return. - Every withholding
agent required to deduct and withhold taxes under
Section 57 shall submit to the Commissioner an annual CHAPTER X ESTATES AND TRUSTS
information return containing the list of payees and SEC. 60. Imposition of Tax. -
income payments, amount of taxes withheld from each
payee and such other pertinent information as may be (A) Application of Tax. - The tax imposed by this Title
required by the Commissioner. In the case of final upon individuals shall apply to the income of estates or of
withholding taxes, the return shall be filed on or before any kind of property held in trust, including:
January 31 of the succeeding year, and for creditable (1) Income accumulated in trust for the benefit of
withholding taxes, not later than March 1 of the year unborn or unascertained person or persons with
following the year for which the annual report is being contingent interests, and income accumulated or
submitted. This return, if made and filed in accordance held for future distribution under the terms of the
with the rules and regulations approved by the Secretary will or trust;
of Finance, upon recommendation of the Commissioner,
(2) Income which is to be distributed currently by
shall be sufficient compliance with the requirements of
the fiduciary to the beneficiaries, and income
Section 68 of this Title in respect to the income payments.
collected by a guardian of an infant which is to be
held or distributed as the court may direct;


(3) Income received by estates of deceased persons shall not be included in computing the income of the
during the period of administration or settlement of beneficiaries.
the estate; and SEC. 62. Exemption Allowed to Estates and Trusts. - (as
(4) Income which, in the discretion of the fiduciary, amended by RA No 10963)
may be either distributed to the beneficiaries or SEC. 63. Revocable trusts. - Where at any time the
accumulated. power to revest in the grantor title to any part of the
(B) Exception. - The tax imposed by this Title shall not corpus of the trust is vested (1) in the grantor either alone
apply to employee's trust which forms part of a pension, or in conjunction with any person not having a
stock bonus or profit-sharing plan of an employer for the substantial adverse interest in the disposition of such part
benefit of some or all of his employees (1) if contributions of the corpus or the income therefrom, or (2) in any
are made to the trust by such employer, or employees, or person not having a substantial adverse interest in the
both for the purpose of distributing to such employees disposition of such part of the corpus or the income
the earnings and principal of the fund accumulated by therefrom, the income of such part of the trust shall be
the trust in accordance with such plan, and (2) if under included in computing the taxable income of the grantor.
the trust instrument it is impossible, at any time prior to SEC. 64. Income for Benefit of Grantor. -
the satisfaction of all liabilities with respect to employees
under the trust, for any part of the corpus or income to be (A) Where any part of the income of a trust (1) is, or in the
(within the taxable year or thereafter) used for, or diverted discretion of the grantor or of any person not having a
to, purposes other than for the exclusive benefit of his substantial adverse interest in the disposition of such part
employees: Provided, That any amount actually of the income may be held or accumulated for future
distributed to any employee or distributee shall be distribution to the grantor, or (2) may, or in the discretion
taxable to him in the year in which so distributed to the of the grantor or of any person not having a substantial
extent that it exceeds the amount contributed by such adverse interest in the disposition of such part of the
employee or distributee. income, be distributed to the grantor, or (3) is, or in the
discretion of the grantor or of any person not having a
(C) Computation and Payment. - substantial adverse interest in the disposition of such part
(1) In General. - The tax shall be computed upon the of the income may be applied to the payment of
taxable income of the estate or trust and shall be premiums upon policies of insurance on the life of the
paid by the fiduciary, except as provided in Section grantor, such part of the income of the trust shall be
63 (relating to revocable trusts) and Section 64 included in computing the taxable income of the grantor.
(relating to income for the benefit of the grantor). `
(2) Consolidation of Income of Two or More Trusts. (B) As used in this Section, the term 'in the discretion of
- Where, in the case of two or more trusts, the the grantor' means in the discretion of the grantor, either
creator of the trust in each instance is the same alone or in conjunction with any person not having a
person, and the beneficiary in each instance is the substantial adverse interest in the disposition of the part
same, the taxable income of all the trusts shall be of the income in question.
consolidated and the tax provided in this Section SEC. 65. Fiduciary Returns. - Guardians, trustees,
computed on such consolidated income, and such executors, administrators, receivers, conservators and all
proportion of said tax shall be assessed and persons or corporations, acting in any fiduciary capacity,
collected from each trustee which the taxable shall render, in duplicate, a return of the income of the
income of the trust administered by him bears to person, trust or estate for whom or which they act, and be
the consolidated income of the several trusts. subject to all the provisions of this Title, which apply to
SEC. 61. Taxable Income. - The taxable income of the individuals in case such person, estate or trust has a gross
estate or trust shall be computed in the same manner income of Twenty thousand pesos (P20,000) [40] or over
and on the same basis as in the case of an individual, during the taxable year. Such fiduciary or person filing
except that: the return for him or it, shall take oath that he has
(A) There shall be allowed as a deduction in computing sufficient knowledge of the affairs of such person, trust or
the taxable income of the estate or trust the amount of estate to enable him to make such return and that the
the income of the estate or trust for the taxable year same is, to the best of his knowledge and belief, true and
which is to be distributed currently by the fiduciary to the correct, and be subject to all the provisions of this Title
beneficiaries, and the amount of the income collected by which apply to individuals: Provided, That a return made
a guardian of an infant which is to be held or distributed by or for one or two or more joint fiduciaries filed in the
as the court may direct, but the amount so allowed as a province where such fiduciaries reside; under such rules
deduction shall be included in computing the taxable and regulations as the Secretary of Finance, upon
income of the beneficiaries, whether distributed to them recommendation of the Commissioner, shall prescribe,
or not. Any amount allowed as a deduction under this shall be a sufficient compliance with the requirements of
Subsection shall not be allowed as a deduction under this Section.
Subsection (B) of this Section in the same or any SEC. 66. Fiduciaries Indemnified Against Claims for
succeeding taxable year. Taxes Paid. - Trustees, executors, administrators and
(B) In the case of income received by estates of deceased other fiduciaries are indemnified against the claims or
persons during the period of administration or demands of every beneficiary for all payments of taxes
settlement of the estate, and in the case of income which, which they shall be required to make under the
in the discretion of the fiduciary, may be either provisions of this Title, and they shall have credit for the
distributed to the beneficiary or accumulated, there shall amount of such payments against the beneficiary or
be allowed as an additional deduction in computing the principal in any accounting which they make as such
taxable income of the estate or trust the amount of the trustees or other fiduciaries.
income of the estate or trust for its taxable year, which is
properly paid or credited during such year to any legatee,
heir or beneficiary but the amount so allowed as a
deduction shall be included in computing the taxable CHAPTER XI OTHER INCOME TAX
income of the legatee, heir or beneficiary. REQUIREMENTS
(C) In the case of a trust administered in a foreign country, SEC. 67. Collection of Foreign Payments. - All persons,
the deductions mentioned in Subsections (A) and (B) of corporations, duly registered general co-partnerships
this Section shall not be allowed: Provided, That the (companies colectivas) undertaking for profit or
amount of any income included in the return of said trust otherwise the collection of foreign payments of interests
or dividends by means of coupons, checks or bills of
exchange shall obtain a license from the Commissioner,



and shall be subject to such rules and regulations SEC. 71. Disposition of Income Tax Returns, Publication
enabling the government to obtain the information of Lists of Taxpayers and Filers. - After the assessment
required under this Title, as the Secretary of Finance, shall have been made, as provided in this Title, the
upon recommendation of the Commissioner, shall returns, together with any corrections thereof which may
prescribe. have been made by the Commissioner, shall be filed in
SEC. 68. Information at Source as to Income Payments. the Office of the Commissioner and shall constitute
- all persons, corporations or duly registered co- public records and be open to inspection as such upon
partnerships (companies colectivas), in whatever capacity the order of the President of the Philippines, under rules
acting, including lessees or mortgagors of real or personal and regulations to be prescribed by the Secretary of
property, trustees, acting in any trust capacity, executors, Finance, upon recommendation of the Commissioner.
administrators, receivers, conservators and employees The Commissioner may, in each year, cause to be
making payment to another person, corporation or duly prepared and published in any newspaper the lists
registered general co-partnership (compania colectiva), of containing the names and addresses of persons who
interests, rents, salaries, wages, premiums, annuities, have filed income tax returns.
compensations, remunerations, emoluments or other Income tax returns of specific taxpayers subject of a
fixed or determinable gains, profits and income, other request for exchange of information by a foreign tax
than payment described in Section 69, in any taxable authority pursuant to an international convention or
year, or in the case of such payments made by the agreement on tax matters to which the Philippines is a
Government of the Philippines, the officers or employees signatory or a party of, shall be open to inspection upon
of the Government having information as to such the order of the President of the Philippines, under rules
payments and required to make returns in regard and regulations as may be prescribed by the Secretary of
thereto, are authorized and required to render a true and Finance, upon recommendation of the Commissioner. [41]
accurate return to the Commissioner, under such rules
and regulations, and in such form and manner as may be SEC. 72. Suit to Recover Tax Based on False or
prescribed by the Secretary of Finance, upon Fraudulent Returns. - When an assessment is made in
recommendation of the Commissioner, setting forth the case of any list, statement or return, which in the opinion
amount of such gains, profits and income and the name of the Commissioner was false or fraudulent or contained
and address of the recipient of such payments: Provided, any understatement or undervaluation, no tax collected
That such returns shall be required, in the case of under such assessment shall be recovered by any suit,
payments of interest upon bonds and mortgages or unless it is proved that the said list, statement or return
deeds of trust or other similar obligations of corporations, was not false nor fraudulent and did not contain any
and in the case of collections of items, not payable in the understatement or undervaluation; but this provision
Philippines, of interest upon the bonds of foreign shall not apply to statements or returns made or to be
countries and interest from the bonds and dividends made in good faith regarding annual depreciation of oil
from the stock of foreign corporations by persons, or gas wells and mines.
corporations or duly registered general co-partnerships SEC. 73. Distribution of Dividends or Assets by
(companies colectivas), undertaking as a matter of Corporations. -
business or for profit or otherwise the collection of foreign
payments of such interests or dividends by means of (A) Definition of Dividends. - The term 'dividends' when
coupons or bills of exchange. used in this Title means any distribution made by a
corporation to its shareholders out of its earnings or
SEC. 69. Return of Information of Brokers. - Every profits and payable to its shareholders, whether in money
person, corporation or duly registered general or in other property.
co-partnership (compania colectiva), doing business as a
broker in any exchange or board or other similar place of Where a corporation distributes all of its assets in
business, shall, when required by the Commissioner, complete liquidation or dissolution, the gain realized or
render a correct return duly verified under oath under loss sustained by the stockholder, whether individual or
such rules and regulations as the Secretary of Finance, corporate, is a taxable income or a deductible loss, as the
upon recommendation of the Commissioner, may case may be.
prescribe, showing the names of customers for whom (B) Stock Dividend. - A stock dividend representing the
such person, corporation or duly registered general transfer of surplus to capital account shall not be subject
co-partnership (compania colectiva) has transacted any to tax. However, if a corporation cancels or redeems stock
business, with such details as to the profits, losses or issued as a dividend at such time and in such manner as
other information which the Commissioner, may require to make the distribution and cancellation or redemption,
as to each of such customers as will enable the in whole or in part, essentially equivalent to the
Commissioner to determine whether all income tax due distribution of a taxable dividend, the amount so
on profits or gains of such customers has been paid. distributed in redemption or cancellation of the stock
SEC. 70. Returns of Foreign Corporations. - shall be considered as taxable income to the extent that it
represents a distribution of earnings or profits.
(A) Requirements. - Under rules and regulations
prescribed by the Secretary of finance, upon the (C) Dividends Distributed are Deemed Made from Most
recommendation of the Commissioner, any attorney, Recently Accumulated Profits. - Any distribution made
accountant, fiduciary, bank, trust company, financial to the shareholders or members of a corporation shall be
institution or other person, who aids, assists, counsels or deemed to have been made from the most recently
advises in, or with respect to; the formation, organization accumulated profits or surplus, and shall constitute a part
or reorganization of any foreign corporation, shall, within of the annual income of the distributee for the year in
thirty (30) days thereafter, file with the Commissioner a which received.
return. (D) Net Income of a Partnership Deemed
(B) Form and Contents of Return. - Such return shall be Constructively Received by Partners. - The taxable
in such form and shall set forth; under oath, in respect of income declared by a partnership for a taxable year which
each such corporation, to the full extent of the is subject to tax under Section 27 (A) of this Code, after
information within the possession or knowledge or under deducting the corporate income tax imposed therein,
the control of the person required to file the return, such shall be deemed to have been actually or constructively
information as the Secretary of Finance, upon received by the partners in the same taxable year and
recommendation of the Commissioner, shall prescribe by shall be taxed to them in their individual capacity,
rules and regulations as necessary for carrying out the whether actually distributed or not.
provisions of this Title. Nothing in this Section shall be
construed to require the divulging of privileged
communications between attorney and client.


be carried over and credited against the estimated

CHAPTER XII QUARTERLY CORPORATE quarterly income tax liabilities for the taxable quarters of
INCOME TAX ANNUAL DECLARATION AND the suceeding taxable years. Once the option to
carry-over and apply the excess quarterly income tax
QUARTERLY PAYMENTS OF INCOME TAXES
against income tax due for the taxable quarters of the
SEC. 74. Declaration of Income Tax for Individuals. - succeeding taxable years has been made, such option
(A) In General. - Except as otherwise provided in this shall be considered irrevocable for that taxable period
Section, every individual subject to income tax under and no application for cash refund or issuance of a tax
Sections 24 and 25(A) of this Title, who is receiving credit certificate shall be allowed therefor.
self-employment income, whether it constitutes the sole SEC. 77. Place and Time of Filing and Payment of
source of his income or in combination with salaries, Quarterly Corporate Income Tax. -
wages, and other fixed or determinable income, shall
(A) Place of Filing. - Except as the Commissioner
make and file a declaration of his estimated income for
otherwise permits, the quarterly income tax declaration
the current taxable year on or before May 15 of the same
required in Section 75 and the final adjustment return
taxable year. (as amended by RA No 10963) In general,
required I Section 76 shall be filed with the authorized
'self-employment income' consists of the earnings
agent banks or Revenue District Officer or Collection
derived by the individual from the practice of profession
Agent or duly authorized Treasurer of the city or
or conduct of trade or business carried on by him as a
municipality having jurisdiction over the location of the
sole proprietor or by a partnership of which he is a
principal office of the corporation filing the return or
member. Nonresident Filipino citizens, with respect to
place where its main books of accounts and other data
income from without the Philippines, and nonresident
from which the return is prepared are kept.
aliens not engaged in trade or business in the Philippines,
are not required to render a declaration of estimated (B) Time of Filing the Income Tax Return. - The
income tax. The declaration shall contain such pertinent corporate quarterly declaration shall be filed within sixty
information as the Secretary of Finance, upon (60) days following the close of each of the first three (3)
recommendation of the Commissioner, may, by rules and quarters of the taxable year. The final adjustment return
regulations prescribe. An individual may make shall be filed on or before the fifteenth (15th) day of April,
amendments of a declaration filed during the taxable or on or before the fifteenth (15th) day of the fourth (4th)
year under the rules and regulations prescribed by the month following the close of the fiscal year, as the case
Secretary of Finance, upon recommendation of the may be.
Commissioner. (C) Time of Payment of the Income Tax. - The income
(B) Return and Payment of Estimated Income Tax by tax due on the corporate quarterly returns and the final
Individuals. - The amount of estimated income as adjustment income tax returns computed in accordance
defined in Subsection (C) with respect to which a with Sections 75 and 76 shall be paid at the time the
declaration is required under Subsection (A) shall be paid declaration or return is filed in a manner prescribed by
in four (4) installments. The first installment shall be paid the Commissioner.
at the time of declaration and the second and third shall
be paid on August 15 and November 15 of the current
year, respectively. The fourth installment shall be paid on
or before May 15 of the following calendar year when the CHAPTER XIII WITHHOLDING ON WAGES
final adjusted income tax return is due to be filed.(as
amended by RA No 10963)
(C) Definition of Estimated Tax. - In the case of an Revenue Regulation Implementing the Withholding
individual, the term 'estimated tax' means the amount of Income Tax Provisions of TRAIN Act
which the individual declared as income tax in his final
adjusted and annual income tax return for the preceding
taxable year minus the sum of the credits allowed under Revenue Regulation Implementing the Withholding
this Title against the said tax. If, during the current taxable of Income Tax Provisions of the Tax Reform Act of
year, the taxpayer reasonable expects to pay a bigger 1997
income tax, he shall file an amended declaration during
any interval of installment payment dates.
SEC. 75. - Declaration of Quarterly Corporate Income SEC. 78. Definitions. - As used in this Chapter:
Tax. - Every corporation shall file in duplicate a quarterly
(A) Wages. - The term 'wages' means all remuneration
summary declaration of its gross income and deductions
(other than fees paid to a public official) for services
on a cumulative basis for the preceding quarter or
performed by an employee for his employer, including
quarters upon which the income tax, as provided in Title II
the cash value of all remuneration paid in any medium
of this Code, shall be levied, collected and paid. The tax so
other than cash, except that such term shall not include
computed shall be decreased by the amount of tax
remuneration paid:
previously paid or assessed during the preceding
quarters and shall be paid not later than sixty (60) days (1) For agricultural labor paid entirely in products of
from the close of each of the first three (3) quarters of the the farm where the labor is performed, or
taxable year, whether calendar or fiscal year. (2) For domestic service in a private home, or
SEC. 76. - Final Adjustment Return. - Every corporation (3) For casual labor not in the course of the
liable to tax under Section 27 shall file a final adjustment employer's trade or business, or
return covering the total taxable income for the
preceding calendar or fiscal year. If the sum of the (4) For services by a citizen or resident of the
quarterly tax payments made during the said taxable Philippines for a foreign government or an
year is not equal to the total tax due on the entire taxable international organization.
income of that year, the corporation shall either: If the remuneration paid by an employer to an employee
(A) Pay the balance of tax still due; or for services performed during one-half (1/2) or more of any
payroll period of not more than thirty-one (31) consecutive
(B) Carry-over the excess credit; or days constitutes wages, all the remuneration paid by such
(C) Be credited or refunded with the excess amount employer to such employee for such period shall be
paid, as the case may be. deemed to be wages; but if the remuneration paid by an
employer to an employee for services performed during
In case the corporation is entitled to a tax credit or refund
more than one -half (1/2) of any such payroll period does
of the excess estimated quarterly income taxes paid, the
not constitute wages, then none of the remuneration
excess amount shown on its final adjustment return may



paid by such employer to such employee for such period counter-signature by the Chairman, Commission on
shall be deemed to be wages. Audit or the latter's duly authorized representative
(B) Payroll Period. - The term 'payroll period' means a as an exception to the requirement prescribed by
period for which payment of wages is ordinarily made to Section 49, Chapter 8, Subtitle B, Title 1 of Book V of
the employee by his employer, and the term Executive Order No. 292, otherwise known as the
'miscellaneous payroll period' means a payroll period Administrative Code of 1987. [43]
other than, a daily, weekly, biweekly, semi-monthly, (D) Personal Exemptions.-
monthly, quarterly, semi-annual, or annual period. (1) In General. - Unless otherwise provided by this
(C) Employee. - The term 'employee' refers to any Chapter, the personal and additional exemptions
individual who is the recipient of wages and includes an applicable under this Chapter shall be determined
officer, employee or elected official of the Government of in accordance with the main provisions of this Title.
the Philippines or any political subdivision, agency or (2) Exemption Certificate. -
instrumentality thereof. The term 'employee' also
includes an officer of a corporation. (a) When to File. - On or before the date of
commencement of employment with an
(D) Employer. - The term 'employer' means the person employer, the employee shall furnish the
for whom an individual performs or performed any employer with a signed withholding exemption
service, of whatever nature, as the employee of such certificate relating to the personal and
person, except that: additional exemptions to which he is entitled.
(1) If the person for whom the individual performs or (b) Change of Status. - In case of change of
performed any service does not have control of the status of an employee as a result of which he
payment of the wages for such services, the term would be entitled to a lesser or greater amount
'employer' (except for the purpose of Subsection(A) of exemption, the employee shall, within ten
means the person having control of the payment of (10) days from such change, file with the
such wages; and employer a new withholding exemption
(2) In the case of a person paying wages on behalf of certificate reflecting the change.
a nonresident alien individual, foreign partnership or (c) Use of Certificates. - The certificates filed
foreign corporation not engaged in trade or hereunder shall be used by the employer in the
business within the Philippines, the term 'employer' determination of the amount of taxes to be
(except for the purpose of Subsection(A) means withheld.
such person.
(d) Failure to Furnish Certificate. - Where an
SEC. 79. Income Tax Collected at Source. - employee, in violation of this Chapter, either
(A) Requirement of Withholding. - Except in the case of fails or refuses to file a withholding exemption
a minimum wage earner as defined in Section 22(HH) of certificate, the employer shall withhold the
this Code, every employer making payment of wages taxes prescribed under the schedule for zero
shall deduct and withhold upon such wages a tax exemption of the withholding tax table
determined in accordance with the rules and regulations determined pursuant to Subsection (A) hereof.
to be prescribed by the Secretary of Finance, upon (D) Withholding on Basis of Average Wages. - The
recommendation of the Commissioner. [42] Commissioner may, under rules and regulations
(B) Tax Paid by Recipient. - If the employer, in violation promulgated by the Secretary of Finance, authorize
of the provisions of this Chapter, fails to deduct and employers to:
withhold the tax as required under this Chapter, and (1) Estimate the wages which will be paid to an
thereafter the tax against which such tax may be credited employee in any quarter of the calendar year;
is paid, the tax so required to be deducted and withheld
shall not be collected from the employer; but this (2) Determine the amount to be deducted and
Subsection shall in no case relieve the employer from withheld upon each payment of wages to such
liability for any penalty or addition to the tax otherwise employee during such quarter as if the appropriate
applicable in respect of such failure to deduct and average of the wages so estimated constituted the
withhold. actual wages paid; and
(C) Refunds or Credits. - (3) Deduct and withhold upon any payment of
wages to such employee during such quarter such
(1) Employer. - When there has been an amount as may be required to be deducted and
overpayment of tax under this Section, refund or withheld during such quarter without regard to this
credit shall be made to the employer only to the Subsection.
extent that the amount of such overpayment was
not deducted and withheld hereunder by the (F) Husband and Wife. - When a husband and wife each
employer. are recipients of wages, whether from the same or from
different employers, taxes to be withheld shall be
(2) Employees. -The amount deducted and determined on the following bases:
withheld under this Chapter during any calendar
year shall be allowed as a credit to the recipient of (1) The husband shall be deemed the head of the
such income against the tax imposed under Section family and proper claimant of the additional
24(A) of this Title. Refunds and credits in cases of exemption in respect to any dependent children,
excessive withholding shall be granted under rules unless he explicitly waives his right in favor of his
and regulations promulgated by the Secretary of wife in the withholding exemption certificate.
Finance, upon recommendation of the (2) Taxes shall be withheld from the wages of the
Commissioner. wife in accordance with the schedule for zero
Any excess of the taxes withheld over the tax due exemption of the withholding tax table prescribed in
from the taxpayer shall be returned or credited Subsection (D)(2)(d) hereof.
within three (3) months from the fifteenth (15th) day (E) Nonresident Aliens. - Wages paid to nonresident
of April. Refunds or credits made after such time alien individuals engaged in trade or business in the
shall earn interest at the rate of six percent (6%) per Philippines shall be subject to the provisions of this
annum, starting after the lapse of the three-month Chapter.
period to the date the refund of credit is made.
(F) Year-end Adjustment. - On or before the end of the
Refunds shall be made upon warrants drawn by the calendar year but prior to the payment of the
Commissioner or by his duly authorized compensation for the last payroll period, the employer
representative without the necessity of shall determine the tax due from each employee on



taxable compensation income for the entire taxable year other information, and shall be furnished at such other
in accordance with Section 24(A). The difference between time and in such form as the Secretary
the tax due from the employee for the entire year and the of Finance, upon the recommendation of the
sum of taxes withheld from January to November shall Commissioner, may, by rules and regulation, prescribe.
either be withheld from his salary in December of the
current calendar year or refunded to the employee not (B) Annual Information Returns. - Every employer
later than January 25 of the succeeding year. required to deduct and withhold the taxes in respect of
the wages of his employees shall, on or before January
(as amended by RA No 10963) thirty-first (31st) of the succeeding year, submit to the
SEC. 80. Liability for Tax. - Commissioner an annual information return containing a
(A) Employer. - The employer shall be liable for the list of employees, the total amount of compensation
withholding and remittance of the correct amount of tax income of each employee, the total amount of taxes
required to be deducted and withheld under this withheld therefrom during the year, accompanied by
Chapter. If the employer fails to withhold and remit the copies of the statement referred to in the preceding
correct amount of tax as required to be withheld under paragraph, and such other information as may be
the provision of this Chapter, such tax shall be collected deemed necessary. This return, if made and filed in
from the employer together with the penalties or accordance with rules and regulations promulgated by
additions to the tax otherwise applicable in respect to the Secretary of Finance, upon recommendation of the
such Commissioner, shall be sufficient compliance with the
requirements of Section 68 of this Title in respect of such
failure to withhold and remit. wages.
(B) Employee. - Where an employee fails or refuses to file (C) Extension of Time. - The Commissioner, under such
the withholding exemption certificate or wilfully supplies rules and regulations as may be promulgated by the
false or inaccurate information thereunder, the tax Secretary of Finance, may grant to any employer a
otherwise required to be withheld by the employer shall reasonable extension of time to furnish and submit the
be collected from him including penalties or additions to statements and returns required under this Section.
the tax from the due date of remittance until the date of
payment. On the other hand, excess taxes withheld made
by the employer due to:
(1) Failure or refusal to file the withholding TITLE III ESTATE AND DONOR'S TAXES
exemption certificate; or
(2) False and inaccurate information shall not be

refunded to the employee but shall be forfeited in Revenue Regulation Implementing the Estate and
favor of the Government.
Donor’s Tax Provisions of TRAIN Act
SEC. 81. Filing of Return and Payment of Taxes
Withheld. - Except as the Commissioner otherwise
permits, taxes deducted and withheld by the employer CHAPTER I ESTATE TAX
on wages of employees shall be covered by a return and
paid to an authorized agent bank; Collection Agent, or SEC. 84. Rates of Estate Tax. - There shall be levied,
the duly authorized Treasurer of the city or municipality assessed, collected and paid upon the transfer of the net
where the employer has his legal residence or principal estate as determined in accordance with Sections 85 and
place of business, or in case the employer is a corporation, 86 of every decedent, whether resident or nonresident of
where the principal office is located. the Philippines, a tax at the rate of six percent (6%) based
on the value of such net estate.(as amended by RA No
The return shall be filed and the payment made within 10963)
twenty-five (25) days from the close of each calendar
quarter: Provided, however, That the Commissioner may, SEC. 85. Gross Estate. - the value of the gross estate of
with the approval of the Secretary of Finance, require the the decedent shall be determined by including the value
employers to pay or deposit the taxes deducted and at the time of his death of all property, real or personal,
withheld at more frequent intervals, in cases where such tangible or intangible, wherever situated: Provided,
requirement is deemed necessary to protect the interest however, that in the case of a nonresident decedent who
of the Government. at the time of his death was not a citizen of the
Philippines, only that part of the entire gross estate which
The taxes deducted and withheld by employers shall be is situated in the Philippines shall be included in his
held in a special fund in trust for the Government until taxable estate.
the same are paid to the said collecting officers.
(A) Decedent's Interest. - To the extent of the interest
SEC. 82. Return and Payment in Case of Government therein of the decedent at the time of his death;
Employees. - If the employer is the Government of the
Philippines or any political subdivision, agency or (B) Transfer in Contemplation of Death. - To the extent
instrumentality thereof, the return of the amount of any interest therein of which the decedent has at any
deducted and withheld upon any wage shall be made by time made a transfer, by trust or otherwise, in
the officer or employee having control of the payment of contemplation of or intended to take effect in possession
such wage, or by any officer or employee duly designated or enjoyment at or after death, or of which he has at any
for the purpose. time made a transfer, by trust or otherwise, under which
he has retained for his life or for any period which does
SEC. 83. Statements and Returns. - not in fact end before his death (1) the possession or
(A) Requirements. - Every employer required to deduct enjoyment of, or the right to the income from the
and withhold a tax shall furnish to each such employee in property, or (2) the right, either alone or in conjunction
respect of his employment during the calendar year, on with any person, to designate the person who shall
or before January thirty-first (31st) of the succeeding year, possess or enjoy the property or the income therefrom;
or if his employment is terminated before the close of except in case of a bona fide sale for an adequate and full
such calendar year, on the same day of which the last consideration in money or money's worth.
payment of wages is made, a written statement (C) Revocable Transfer. -
confirming the wages paid by the employer to such
employee during the calendar year, and the amount of (1) To the extent of any interest therein, of which the
tax deducted and withheld under this Chapter in respect decedent has at any time made a transfer (except in
of such wages. The statement required to be furnished by case of a bona fide sale for an adequate and full
this Section in respect of any wage shall contain such consideration in money or money's worth) by trust
or otherwise, where the enjoyment thereof was
subject at the date of his death to any change



through the exercise of a power (in whatever (A) Deductions Allowed to the Estate of a Citizen or a
capacity exercisable) by the decedent alone or by Resident. — In the case of a citizen or resident of the
the decedent in conjunction with any other person Philippines, by deducting from the value of the gross
(without regard to when or from what source the estate —
decedent acquired such power), to alter, amend, (1) Standard Deduction. — An amount equivalent to
revoke, or terminate, or where any such power is Five million pesos (P5,000,000).
relinquished in contemplation of the decedent's
death. (2) For claims against the estate: Provided, That at
the time the indebtedness was incurred the debt
(2) For the purpose of this Subsection, the power to instrument was duly notarized and, if the loan was
alter, amend or revoke shall be considered to exist contracted within three (3) years before the death of
on the date of the decedent's death even though the decedent, the administrator or executor shall
the exercise of the power is subject to a precedent submit a statement showing the disposition of the
giving of notice or even though the alteration, proceeds of the loan.
amendment or revocation takes effect only on the
expiration of a stated period after the exercise of the (3) For claims of the deceased against insolvent
power, whether or not on or before the date of the persons where the value of decedent's interest
decedent's death notice has been given or the therein is included in the value of the gross estate.
power has been exercised. In such cases, proper (4) For unpaid mortgages upon, or any
adjustment shall be made representing the interests indebtedness in respect to, property where the value
which would have been excluded from the power if of decedent's interest therein, undiminished by such
the decedent had lived, and for such purpose if the mortgage or indebtedness, is included in the value
notice has not been given or the power has not of the gross estate, but not including any income tax
been exercised on or before the date of his death, upon income received after the death of the
such notice shall be considered to have been given, decedent, or property taxes not accrued before his
or the power exercised, on the date of death. death, or any estate tax. The deduction herein
(D) Property Passing Under General Power of allowed in the case of claims against the estate,
Appointment. - To the extent of any property passing unpaid mortgages or any indebtedness shall, when
under a general power of appointment exercised by the founded upon a promise or agreement, be limited to
decedent: (1) by will, or (2) by deed executed in the extent that they were contracted bona fide and
contemplation of, or intended to take effect in possession for an adequate and full consideration in money or
or enjoyment at, or after his death, or (3) by deed under money's worth. There shall also be deducted losses
which he has retained for his life or any period not incurred during the settlement of the estate arising
ascertainable without reference to his death or for any from fires, storms, shipwreck, or other casualties, or
period which does not in fact end before his death (a) the from robbery, theft or embezzlement, when such
possession or enjoyment of, or the right to the income losses are not compensated for by insurance or
from, the property, or (b) the right, either alone or in otherwise, and if at the time of the filing of the
conjunction with any person, to designate the persons return such losses have not been claimed as a
who shall possess or enjoy the property or the income deduction for the income tax purposes in an income
therefrom; except in case of a bona fide sale for an tax return, and provided that such losses were
adequate and full consideration in money or money's incurred not later than the last day for the payment
worth. of the estate tax as prescribed in Subsection (A) of
Section 91.
(E) Proceeds of Life Insurance. - To the extent of the
amount receivable by the estate of the deceased, his (5) Property Previously Taxed. — An amount equal
executor, or administrator, as insurance under policies to the value specified below of any property forming
taken out by the decedent upon his own life, irrespective part of the gross estate situated in the Philippines of
of whether or not the insured retained the power of any person who died within five (5) years prior to the
revocation, or to the extent of the amount receivable by death of the decedent, or transferred to the
any beneficiary designated in the policy of insurance, decedent by gift within five (5) years prior to his
except when it is expressly stipulated that the death, where such property can be identified as
designation of the beneficiary is irrevocable. having been received by the decedent from the
donor by gift, or from such prior decedent by gift,
(F) Prior Interests. - Except as otherwise specifically bequest, devise or inheritance, or which can be
provided therein, Subsections (B), (C) and (E) of this identified as having been acquired in exchange for
Section shall apply to the transfers, trusts, estates, property so received:
interests, rights, powers and relinquishment of powers, as
severally enumerated and described therein, whether One hundred percent (100%) of the value, if the prior
made, created, arising, existing, exercised or relinquished decedent died within one (1) year prior to the death
before or after the effectivity of this Code. of the decedent, or if the property was transferred to
him by gift, within the same period prior to his
(G) Transfers for Insufficient Consideration. - If any one death;
of the transfers, trusts, interests, rights or powers
enumerated and described in Subsections (B), (C) and (D) Eighty percent (80%) of the value, if the prior
of this Section is made, created, exercised or relinquished decedent died more than one (1) year but not more
for a consideration in money or money's worth, but is not than two (2) years prior to the death of the decedent,
a bona fide sale for an adequate and full consideration in or if the property was transferred to him by gift
money or money's worth, there shall be included in the within the same period prior to his death;
gross estate only the excess of the fair market value, at Sixty percent (60%) of the value, if the prior decedent
the time of death, of the property otherwise to be died more than two (2) years but not more than
included on account of such transaction, over the value of three (3) years prior to the death of the decedent, or
the consideration received therefor by the decedent. if the property was transferred to him by gift within
(H) Capital of the Surviving Spouse. - The capital of the the same period prior to his death;
surviving spouse of a decedent shall not, for the purpose Forty percent (40%) of the value, if the prior
of this Chapter, be deemed a part of his or her gross decedent died more than three (3) years but not
estate. more than four (4) years prior to the death of the
SEC. 86. Computation of Net Estate. - For the purpose of decedent, or if the property was transferred to him
the tax imposed in this Chapter, the value of the net by gift within the same period prior to his death; and
estate shall be determined: Twenty percent (20%) of the value, if the prior
decedent died more than four (4) years but not more


than five (5) years prior to the death of the decedent, One hundred percent (100%) of the value if the prior
or if the property was transferred to him by gift decedent died within one (1) year prior to the death
within the same period prior to his death. of the decedent, or if the property was transferred to
These deductions shall be allowed only where a him by gift, within the same period prior to his
donor's tax, or estate tax imposed under this Title death;
was finally determined and paid by or on behalf of Eighty percent (80%) of the value, if the prior
such donor, or the estate of such prior decedent, as decedent died more than one (1) year but not more
the case may be, and only in the amount finally than two (2) years prior to the death of the decedent,
determined as the value of such property in or if the property was transferred to him by gift
determining the value of the gift, or the gross estate within the same period prior to his death;
of such prior decedent, and only to the extent that Sixty percent (60%) of the value, if the prior decedent
the value of such property is included in the died more than two (2) years but not more than
decedent's gross estate, and only if in determining three (3) years prior to the death of the decedent, or
the value of the estate of the prior decedent, no if the property was transferred to him by gift within
deduction was allowable under paragraph (5) in the same period prior to his death;
respect of the property or properties given in
exchange therefor. Where a deduction was allowed Forty percent (40%) of the value, if the prior
of any mortgage or other lien in determining the decedent died more than three (3) years but not
donor's tax, or the estate tax of the prior decedent, more than four (4) years prior to the death of the
which was paid in whole or in part prior to the decedent, or if the property was transferred to him
decedent's death, then the deduction allowable by gift within the same period prior to his death; and
under said Subsection shall be reduced by the Twenty percent (20%) of the value, if the prior
amount so paid. Such deduction allowable shall be decedent died more than four (4) years but not
reduced by an amount which bears the same ratio more than five (5) years prior to the death of the
to the amounts allowed as deductions under decedent, or if the property was transferred to him
paragraphs (2), (3), (4), and (6) of this Subsection as by gift within the same period prior to his death.
the amount otherwise deductible under said
paragraph (5) bears to the value of the decedent's These deductions shall be allowed only where a
estate. Where the property referred to consists of donor's tax, or estate tax imposed under this Title is
two or more items, the aggregate value of such finally determined and paid by or on behalf of such
items shall be used for the purpose of computing donor, or the estate of such prior decedent, as the
the deduction. case may be, and only in the amount finally
determined as the value of such property in
(6) Transfers for Public Use. — The amount of all determining the value of the gift, or the gross estate
bequests, legacies, devises or transfers to or for the of such prior decedent, and only to the extent that
use of the Government of the Republic of the the value of such property is included in that part of
Philippines or any political subdivision thereof, for the decedent's gross estate which at the time of his
exclusively public purposes. death is situated in the Philippines; and only if, in
(7) The Family Home. — An amount equivalent to determining the value of the net estate of the prior
the current fair market value of the decedent's decedent, no deduction is allowable under
family home: Provided, however, That if the said paragraph (2) of Subsection (B) of this Section, in
current fair market value exceeds Ten million pesos respect of the property or properties given in
(P10,000,000), the excess shall be subject to estate exchange therefore. Where a deduction was allowed
tax. of any mortgage or other lien in determining the
donor's tax, or the estate tax of the prior decedent,
(8) Amount Received by Heirs under Republic Act which was paid in whole or in part prior to the
No. 4917. — Any amount received by the heirs from decedent's death, then the deduction allowable
the decedent's employee as a consequence of the under said paragraph shall be reduced by the
death of the decedent-employee in accordance with amount so paid. Such deduction allowable shall be
Republic Act No. 4917: Provided, That such amount is reduced by an amount which bears the same ratio
included in the gross estate of the decedent. to the amounts allowed as deductions under
(as amended by RA No 10963) paragraphs (1) and (3) of this Subsection as the
(B) Deductions Allowed to Nonresident Estates. - In the amount otherwise deductible under paragraph (2)
case of a nonresident not a citizen of the Philippines, by bears to the value of that part of the decedent's
deducting from the value of that part of his gross estate gross estate which at the time of his death is
which at the time of his death is situated in the situated in the Philippines. Where the property
Philippines: referred to consists of two (2) or more items, the
aggregate value of such items shall be used for the
(1) Standard Deduction. - An amount equivalent to purpose of computing the deduction.
Five hundred thousand pesos (P500,000);(as
amended by RA No 10963) (4) Transfers for Public Use. - The amount of all
bequests, legacies, devises or transfers to or for the
(2) That proportion of the deductions specified in use of the Government of the Republic of the
paragraphs (2), (3), and (4) of Subsection (A) of this Philippines or any political subdivision thereof, for
Section which the value of such part bears to the exclusively public purposes.
value of his entire gross estate wherever situated;(as
amended by RA No 10963) (C) Share in the Conjugal Property. - The net share of the
surviving spouse in the conjugal partnership property as
(3) Property Previously Taxed. - An amount equal diminished by the obligations properly chargeable to
to the value specified below of any property forming such property shall, for the purpose of this Section, be
part of the gross estate situated in the Philippines of deducted from the net estate of the decedent.(as
any person who died within five (5) years prior to the amended by RA No 10963)
death of the decedent, or transferred to the
decedent by gift within five (5) years prior to his (D) Miscellaneous Provisions. - No deduction shall be
death, where such property can be identified as allowed in the case of a nonresident not a citizen of the
having been received by the decedent from the Philippines, unless the executor, administrator, or anyone
donor by gift, or from such prior decedent by gift, of the heirs, as the case may be, includes in the return
bequest, devise or inheritance, or which can be required to be filed under Section 90 the value at the
identified as having been acquired in exchange for time of his death of that part of the gross estate of the
property so received: nonresident not situated in the Philippines.


(D) Tax Credit for Estate Taxes paid to a Foreign (2) The deductions allowed from gross estate in
Country. - determining the estate as defined in Section 86; and
(1) In General. — The tax imposed by this Title shall (3) Such part of such information as may at the time
be credited with the amounts of any estate tax be ascertainable and such supplemental data as
imposed by the authority of a foreign country. may be necessary to establish the correct taxes.
(2) Limitations on Credit. — The amount of the Provided, however, That estate tax returns showing a
credit taken under this Section shall be subject to gross value exceeding Five million pesos
each of the following limitations: (P5,000,000) shall be supported with a statement
(a) The amount of the credit in respect to the tax duly certified to by a Certified Public Accountant
paid to any country shall not exceed the same containing the following:
proportion of the tax against which such credit is (as amended by RA No 10963)
taken, which the decedent's net estate situated (a) Itemized assets of the decedent with their
within such country taxable under this Title bears corresponding gross value at the time of his
to his entire net estate; and death, or in the case of a nonresident, not a
(b) The total amount of the credit shall not exceed citizen of the Philippines, of that part of his
the same proportion of the tax against which gross estate situated in the Philippines;
such credit is taken, which the decedent's net (b) Itemized deductions from gross estate
estate situated outside the Philippines taxable allowed in Section 86; and
under this Title bears to his entire net estate.
(c) The amount of tax due whether paid or still
(as amended by RA No 10963) due and outstanding.
SEC. 87 Exemption of Certain Acquisitions and (B) Time for Filing. - For the purpose of determining the
Transmissions. - The following shall not be taxed: estate tax provided for in Section 84 of this Code, the
(A) The merger of usufruct in the owner of the naked title; estate tax return required under the preceding
(B) The transmission or delivery of the inheritance or Subsection (A) shall be filed within one (1) year from the
legacy by the fiduciary heir or legatee to the decedent's death.(as amended by RA No 10963)
fideicommissary; A certified copy of the schedule of partition and the order
(C) The transmission from the first heir, legatee or donee of the court approving the same shall be furnished the
in favor of another beneficiary, in accordance with the Commissioner within thirty (30) days after the
desire of the predecessor; and promulgation of such order.
(D) All bequests, devises, legacies or transfers to social (C) Extension of Time. - The Commissioner shall have
welfare, cultural and charitable institutions, no part of the authority to grant, in meritorious cases, a reasonable
net income of which inures to the benefit of any extension not exceeding thirty (30) days for filing the
individual: Provided, however, That not more than thirty return.
percent (30%) of the said bequests, devises, legacies or (D) Place of Filing. - Except in cases where the
transfers shall be used by such institutions for Commissioner otherwise permits, the return required
administration purposes. under Subsection (A) shall be filed with an authorized
SEC. 88. Determination of the Value of the Estate. - agent bank, or Revenue District Officer, Collection Officer,
or duly authorized Treasurer of the city or municipality in
(A) Usufruct. - To determine the value of the right of which the decedent was domiciled at the time of his
usufruct, use or habitation, as well as that of annuity, death or if there be no legal residence in the Philippines,
there shall be taken into account the probable life of the with the Office of the Commissioner.
beneficiary in accordance with the latest Basic Standard
Mortality Table, to be approved by the Secretary of SEC. 91. Payment of Tax. -
Finance, upon recommendation of the Insurance (A) Time of Payment. - The estate tax imposed by
Commissioner. Section 84 shall be paid at the time the return is filed by
(B) Properties. - The estate shall be appraised at its fair the executor, administrator or the heirs.
market value as of the time of death. However, the (B) Extension of Time. - When the Commissioner finds
appraised value of real property as of the time of death that the payment on the due date of the estate tax or of
shall be, whichever is higher of - any part thereof would impose undue hardship upon the
(1) The fair market value as determined by the estate or any of the heirs, he may extend the time for
Commissioner; or payment of such tax or any part thereof not to exceed five
(5) years, in case the estate is settled through the courts,
(2) The fair market value as shown in the schedule of or two (2) years in case the estate is settled extrajudicially.
values fixed by the Provincial and City Assessors.
In such case, the amount in respect of which the
SEC. 89. Notice of Death to be Filed. - (as amended by extension is granted shall be paid on or before the date of
RA No 10963) the expiration of the period of the extension, and the
SEC. 90. Estate Tax Returns. - running of the Statute of Limitations for assessment as
provided in Section 203 of this Code shall be suspended
(A) Requirements. - In all cases of transfers subject to the for the period of any such extension.
tax imposed herein, or regardless of the gross value of the
estate, where the said estate consists of registered or Where the taxes are assessed by reason of negligence,
registrable property such as real property, motor vehicle, intentional disregard of rules and regulations, or fraud on
shares of stock or other similar property for which a the part of the taxpayer, no extension will be granted by
clearance from the Bureau of Internal Revenue is the Commissioner.
required as a condition precedent for the transfer of If an extension is granted, the Commissioner may require
ownership thereof in the name of the transferee, the the executor, or administrator, or beneficiary, as the case
executor, or the administrator, or any of the legal heirs, as may be, to furnish a bond in such amount, not exceeding
the case may be, shall file a return under oath in double the amount of the tax and with such sureties as
duplicate, setting forth:(as amended by RA No 10963) the Commissioner deems necessary, conditioned upon
(1) The value of the gross estate of the decedent at the payment of the said tax in accordance with the terms
the time of his death, or in case of a nonresident, not of the extension.
a citizen of the Philippines, of that part of his gross (C) Payment by Installment. — In case the available cash
estate situated in the Philippines; of the estate is insufficient to pay the total estate tax due,
payment by installment shall be allowed within two (2)


years from the statutory date for its payment without civil have the duty of furnishing the Commissioner, Regional
penalty and interest.(as amended by RA No 10963) Director, Revenue District Officer or Revenue Collection
(D) Liability for Payment. - The estate tax imposed by Officer of the place where he may have his principal
Section 84 shall be paid by the executor or administrator office, with copies of such documents and any
before delivery to any beneficiary of his distributive share information whatsoever which may facilitate the
of the estate. Such beneficiary shall to the extent of his collection of the aforementioned tax. Neither shall a
distributive share of the estate, be subsidiarily liable for debtor of the deceased pay his debts to the heirs, legatee,
the payment of such portion of the estate tax as his executor or administrator of his creditor, unless the
distributive share bears to the value of the total net certification of the Commissioner that the tax fixed in this
estate. Chapter had been paid is shown; but he may pay the
executor or judicial administrator without said
For the purpose of this Chapter, the term 'executor' or certification if the credit is included in the inventory of
'administrator' means the executor or administrator of the estate of the deceased.
the decedent, or if there is no executor or administrator
appointed, qualified, and acting within the Philippines, SEC. 96. Restitution of Tax Upon Satisfaction of
then any person in actual or constructive possession of Outstanding Obligations. - If after the payment of the
any property of the decedent. estate tax, new obligations of the decedent shall appear,
and the persons interested shall have satisfied them by
SEC. 92. Discharge of Executor or Administrator from order of the court, they shall have a right to the restitution
Personal Liability. - If the executor or administrator of the proportional part of the tax paid.
makes a written application to the Commissioner for
determination of the amount of the estate tax and SEC. 97. Payment of Tax Antecedent to the Transfer of
discharge from personal liability therefore, the Shares, Bonds or Rights. - There shall not be transferred
Commissioner (as soon as possible, and in any event to any new owner in the books of any corporation,
within one (1) year after the making of such application, or sociedad anonima, partnership, business, or industry
if the application is made before the return is filed, then organized or established in the Philippines any share,
within one (1) year after the return is filed, but not after obligation, bond or right by way of gift inter vivos or
the expiration of the period prescribed for the mortis causa, legacy or inheritance, unless a certification
assessment of the tax in Section 203 shall not notify the from the Commissioner that the taxes fixed in this Title
executor or administrator of the amount of the tax. The and due thereon have been paid is shown.
executor or administrator, upon payment of the amount If a bank has knowledge of the death of a person, who
of which he is notified, shall be discharged from personal maintained a bank deposit account alone, or jointly with
liability for any deficiency in the tax thereafter found to be another, it shall allow any withdrawal from the said
due and shall be entitled to a receipt or writing showing deposit account, subject to a final withholding tax of six
such discharge. percent (6%). For this purpose, all withdrawal slips shall
SEC. 93. Definition of Deficiency. - As used in this contain a statement to the effect that all of the joint
Chapter, the term 'deficiency' means: depositors are still living at the time of withdrawal by any
one of the joint depositors and such statement shall be
(a) The amount by which the tax imposed by this under oath by the said depositors.(as amended by RA
Chapter exceeds the amount shown as the tax by No 10963)
the executor, administrator or any of the heirs upon
his return; but the amounts so shown on the return
shall first be increased by the amounts previously
assessed (or collected without assessment) as a CHAPTER II DONOR'S TAX
deficiency and decreased by the amount previously
abated, refunded or otherwise repaid in respect of SEC. 98. Imposition of Tax. -
such tax; or (A) There shall be levied, assessed, collected and paid
(b) If no amount is shown as the tax by the executor, upon the transfer by any person, resident or nonresident,
administrator or any of the heirs upon his return, or of the property by gift, a tax, computed as provided in
if no return is made by the executor, administrator, Section 99.
or any heir, then the amount by which the tax (B) The tax shall apply whether the transfer is in trust or
exceeds the amounts previously assessed (or otherwise, whether the gift is direct or indirect, and
collected without assessment) as a deficiency; but whether the property is real or personal, tangible or
such amounts previously assessed or collected intangible.
without assessment shall first be decreased by the
SEC. 99. Rates of Tax Payable by Donor. -
amounts previously abated, refunded or otherwise
repaid in respect of such tax. (A) In General. — The tax for each calendar year shall be
six percent (6%) computed on the basis of the total gifts in
SEC. 94. Payment before Delivery by Executor or
excess of Two hundred fifty thousand pesos (P250,000)
Administrator. - No judge shall authorize the executor or
exempt gift made during the calendar year.
judicial administrator to deliver a distributive share to any
party interested in the estate unless a certification from (B) Any contribution in cash or in kind to any candidate,
the Commissioner that the estate tax has been paid is political party or coalition of parties for campaign
shown. purposes shall be governed by the Election Code, as
amended.
SEC. 95. Duties of Certain Officers and Debtors. -
Registers of Deeds shall not register in the Registry of (as amended by RA No 10963)
Property any document transferring real property or real SEC. 100. Transfer for Less Than Adequate and Full
rights therein or any chattel mortgage, by way of gifts Consideration. - Where property, other than real property
inter vivos or mortis causa, legacy or inheritance, unless a referred to in Section 24(D), is transferred for less than an
certification from the Commissioner that the tax fixed in adequate and full consideration in money or money's
this Title and actually due thereon had been paid is show, worth, then the amount by which the fair market value of
and they shall immediately notify the Commissioner, the property exceeded the value of the consideration
Regional Director, Revenue District Officer, or Revenue shall, for the purpose of the tax imposed by this Chapter,
Collection Officer or Treasurer of the city or municipality be deemed a gift, and shall be included in computing the
where their offices are located, of the nonpayment of the amount of gifts made during the calendar year: Provided,
tax discovered by them. Any lawyer, notary public, or any however, That a sale, exchange, or other transfer of
government officer who, by reason of his official duties, property made in the ordinary course of business (a
intervenes in the preparation or acknowledgment of transaction which is a bona fide, at arm's length, and free
documents regarding partition or disposal of donation from any donative intent), will be considered as made for
inter vivos or mortis causa, legacy or inheritance, shall


an adequate and full consideration in money or money's gift. In case of real property, the provisions of Section
worth.(as amended by RA No 10963) 88(B) shall apply to the valuation thereof.
SEC. 101. Exemption of Certain Gifts. - The following gifts SEC. 103. Filing of Return and Payment of Tax. -
or donations shall be exempt from the tax provided for in (A) Requirements. - any individual who makes any
this Chapter: transfer by gift (except those which, under Section 101, are
(A) In the Case of Gifts Made by a Resident. - exempt from the tax provided for in this Chapter) shall,
(1) Gifts made to or for the use of the National for the purpose of the said tax, make a return under oath
Government or any entity created by any of its in duplicate. The return shall set forth:
agencies which is not conducted for profit, or to any (1) Each gift made during the calendar year which is
political subdivision of the said Government; and to be included in computing net gifts;
(2) Gifts in favor of an educational and/or charitable, (2) The deductions claimed and allowable;
religious, cultural or social welfare corporation, (3) Any previous net gifts made during the same
institution, accredited non-government calendar year;
organization, trust or philanthropic organization or
research institution or organization: Provided, (4) The name of the donee; and
however, That not more than thirty percent (30%) of (5) Such further information as may be required by
said gifts shall be used by such donee for rules and regulations made pursuant to law.
administration purposes. For the purpose of this
exemption, a 'non-profit educational and/or (B) Time and Place of Filing and Payment - The return
charitable corporation, institution, accredited of the donor required in this Section shall be filed within
nongovernment organization, trust or thirty (30) days after the date the gift is made and the tax
philanthropic organization and/or research due thereon shall be paid at the time of filing. Except in
institution or organization' is a school, college or cases where the Commissioner otherwise permits, the
university and/or charitable corporation, accredited return shall be filed and the tax paid to an authorized
nongovernment organization, trust or philanthropic agent bank, the Revenue District Officer, Revenue
organization and/or research institution or Collection Officer or duly authorized Treasurer of the city
organization, incorporated as a nonstock entity, or municipality where the donor was domiciled at the
paying no dividends, governed by trustees who time of the transfer, or if there be no legal residence in
receive no compensation, and devoting all its the Philippines, with the Office of the Commissioner. In
income, whether students' fees or gifts, donation, the case of gifts made by a nonresident, the return may
subsidies or other forms of philanthropy, to the be filed with the Philippine Embassy or Consulate in the
accomplishment and promotion of the purposes country where he is domiciled at the time of the transfer,
enumerated in its Articles of Incorporation. or directly with the Office of the Commissioner.
(as amended by RA No 10963) SEC. 104. Definitions. - For purposes of this Title, the
terms 'gross estate' and 'gifts' include real and personal
(B) In the Case of Gifts Made by a Nonresident not a property, whether tangible or intangible, or mixed,
Citizen of the Philippines. - wherever situated: Provided, however, That where the
(1) Gifts made to or for the use of the National decedent or donor was a nonresident alien at the time of
Government or any entity created by any of its his death or donation, as the case may be, his real and
agencies which is not conducted for profit, or to any personal property so transferred but which are situated
political subdivision of the said Government. outside the Philippines shall not be included as part of his
'gross estate' or 'gross gift': Provided, further, That
(2) Gifts in favor of an educational and/or charitable, franchise which must be exercised in the Philippines;
religious, cultural or social welfare corporation, shares, obligations or bonds issued by any corporation or
institution, foundation, trust or philanthropic sociedad anonima organized or constituted in the
organization or research institution or Philippines in accordance with its laws; shares,
organization:Provided, however, That not more than obligations or bonds by any foreign corporation
thirty percent (30%) of said gifts shall be used by eighty-five percent (85%) of the business of which is
such donee for administration purposes. located in the Philippines; shares, obligations or bonds
(C) Tax Credit for Donor's Taxes Paid to a Foreign issued by any foreign corporation if such shares,
Country. - obligations or bonds have acquired a business situs in the
(1) In General. - The tax imposed by this Title upon Philippines; shares or rights in any partnership, business
a donor who was a citizen or a resident at the time or industry established in the Philippines, shall be
of donation shall be credited with the amount of any considered as situated in the Philippines: Provided, still
donor's tax of any character and description further, that no tax shall be collected under this Title in
imposed by the authority of a foreign country. respect of intangible personal property:
(2) Limitations on Credit. - The amount of the (a) if the decedent at the time of his death or the
credit taken under this Section shall be subject to donor at the time of the donation was a citizen and
each of the following limitations: resident of a foreign country which at the time of his
death or donation did not impose a transfer tax of
(a) The amount of the credit in respect to the any character, in respect of intangible personal
tax paid to any country shall not exceed the property of citizens of the Philippines not residing in
same proportion of the tax against which such that foreign country, or
credit is taken, which the net gifts situated
within such country taxable under this Title (b) if the laws of the foreign country of which the
bears to his entire net gifts; and decedent or donor was a citizen and resident at the
time of his death or donation allows a similar
(b) The total amount of the credit shall not exemption from transfer or death taxes of every
exceed the same proportion of the tax against character or description in respect of intangible
which such credit is taken, which the donor's personal property owned by citizens of the
net gifts situated outside the Philippines Philippines not residing in that foreign country.
taxable under this title bears to his entire net
gifts. The term 'deficiency' means:
SEC. 102. Valuation of Gifts Made in Property. - If the gift (a) the amount by which tax imposed by this
is made in property, the fair market value thereof at the Chapter exceeds the amount shown as the tax by
time of the gift shall be considered the amount of the the donor upon his return; but the amount so
shown on the return shall first be increased by the
amount previously assessed (or Collected without


assessment) as a deficiency, and decreased by the (d) The right or the privilege to use motion
amounts previously abated, refunded or otherwise picture films, tapes and discs; and
repaid in respect of such tax, or (e) Radio, television, satellite transmission
(b) if no amount is shown as the tax by the donor, and cable television time.
then the amount by which the tax exceeds the The term "gross selling price" means the
amounts previously assessed, (or collected without total amount of money or its equivalent
assessment) as a deficiency, but such amounts which the purchaser pays or is obligated
previously assessed, or collected without to pay to the seller in consideration of the
assessment, shall first be decreased by the amount sale, barter or exchange of the goods or
previously abated, refunded or otherwise repaid in properties, excluding the value-added tax.
respect of such tax. The excise tax, if any, on such goods or
properties shall form part of the gross
selling price.
(2) The following sales by VAT-registered
TITLE IV VALUE ADDED TAX persons shall be subject to zero percent (0%)
(As Last Amended by RA Nos. 8761,9010,9238,9337 & rate:
9361, 10963) (a) Export Sales. — The term 'export sales'

means:
(1) The sale and actual shipment of goods
Revenue Regulation Implementing the VAT from the Philippines to a foreign country,
Provisions of TRAIN Act irrespective of any shipping arrangement
that may be agreed upon which may
influence or determine the transfer of
CHAPTER I IMPOSITION OF TAX ownership of the goods so exported and
SEC. 105. Persons Liable. - Any person who, in the course paid for in acceptable foreign currency or its
of trade or business, sells barters, exchanges, leases goods equivalent in goods or services, and
or properties, renders services, and any person who accounted for in accordance with the rules
imports goods shall be subject to the value-added tax and regulations of the Bangko Sentral ng
(VAT) imposed in Sections 106 to 108 of this Code. Pilipinas (BSP);
The value-added tax is an indirect tax and the amount of (2) Sale and delivery of goods to:
tax may be shifted or passed on to the buyer, transferee (i) Registered enterprises within a
or lessee of the goods, properties or services. This rule separate customs territory as provided
shall likewise apply to existing contracts of sale or lease of under special laws; and
goods, properties or services at the time of the effectivity (ii) Registered enterprises within tourism
of Republic Act No. 7716. enterprise zones as declared by the
The phrase "in the course of trade or business" means Tourism Infrastructure and Enterprise
the regular conduct or pursuit of a commercial or an Zone Authority (TIEZA) subject to the
economic activity, including transactions incidental provisions under Republic Act No. 9593 or
thereto, by any person regardless of whether or not the The Tourism Act of 2009.
person engaged therein is a non-stock, nonprofit private (3) Sale of raw materials or packaging
organization (irrespective of the disposition of its net materials to a nonresident buyer for delivery
income and whether or not it sells exclusively to to a resident local export-oriented enterprise
members or their guests), or government entity. to be used in manufacturing, processing,
The rule of regularity, to the contrary notwithstanding, packing or repacking in the Philippines of
services as defined in this Code rendered in the the said buyer's goods and paid for in
Philippines by nonresident foreign persons shall be acceptable foreign currency and accounted
considered as being rendered in the course of trade or for in accordance with the rules and
business. regulations of the Bangko Sentral ng
SEC. 106. Value-Added Tax on Sale of Goods or Pilipinas (BSP);
Properties. - (4) Sale of raw materials or packaging
(A) Rate and Base of Tax. - There shall be levied, assessed materials to export-oriented enterprise
and collected on every sale, barter or exchange of goods whose export sales exceed seventy percent
or properties, a value-added tax equivalent to twelve (70%) of total annual production;
percent (12%) of the gross selling price or gross value in (5) Those considered export sales under
money of the goods or properties sold, bartered or Executive Order No. 226, otherwise known as
exchanged, such tax to be paid by the seller or the Omnibus Investment Code of 1987, and
transferor.(as amended by RA No 10963) other special laws; and
(1) "Goods or Properties." The term "goods" or (6) The sale of goods, supplies, equipment
"properties" shall mean all tangible and and fuel to persons engaged in international
intangible objects which are capable of shipping or international air transport
pecuniary estimation and shall include: operations: Provided, That the goods,
(a) Real properties held primarily for sale supplies, equipment and fuel shall be used
to customers or held for lease in the for international shipping or air transport
ordinary course of trade or business; operations.
(b) The right or the privilege to use patent, Provided, That subparagraphs (3), (4), and (5)
copyright, design or model, plan, secret hereof shall be subject to the twelve percent
formula or process, goodwill, trademark, (12%) value-added tax and no longer be
trade brand or other like property or right; considered export sales subject to zero percent
(0%) VAT rate upon satisfaction of the following
(c) The right or the privilege to use in the conditions:
Philippines of any industrial, commercial
or scientific equipment; (1) The successful establishment and
implementation of an enhanced VAT refund
system that grants refunds of creditable
input tax within ninety (90) days from the



filing of the VAT refund application with the determine the appropriate tax base in cases where a
Bureau: Provided, That, to determine the transaction is deemed a sale, barter or exchange of goods
effectivity of item no. 1, all applications filed or properties under Subsection (B) hereof, or where the
from January 1, 2018 shall be processed and gross selling price is unreasonably lower than the actual
must be decided within ninety (90) days market value.
from the filing of the VAT refund application; SEC. 107. Value-Added Tax on Importation of Goods. -
and
(A) In General. - There shall be levied, assessed and
(2) All pending VAT refund claims as of collected on every importation of goods a value-added
December 31, 2017 shall be fully paid in cash tax equivalent to twelve percent (12%) based on the total
by December 31, 2019. value used by the Bureau of Customs in determining tariff
Provided, That the Department of Finance shall and customs duties, plus customs duties, excise taxes, if
establish a VAT refund center in the Bureau of any, and other charges, such tax to be paid by the
Internal Revenue (BIR) and in the Bureau of importer prior to the release of such goods from customs
Customs (BOC) that will handle the processing custody: Provided, That where the customs duties are
and granting of cash refunds of creditable determined on the basis of the quantity or volume of the
input tax. goods, the value-added tax shall be based on the landed
An amount equivalent to five percent (5%) of cost plus excise taxes, if any.(as amended by RA No
the total VAT collection of the BIR and the BOC 10963)
from the immediately preceding year shall be (B) Transfer of Goods by Tax-exempt Persons. - In the
automatically appropriated annually and shall case of tax-free importation of goods into the Philippines
be treated as a special account in the General by persons, entities or agencies exempt from tax where
Fund or as trust receipts for the purpose of such goods are subsequently sold, transferred or
funding claims for VAT refund: Provided, That exchanged in the Philippines to non-exempt persons or
any unused fund, at the end of the year shall entities, the purchasers, transferees or recipients shall be
revert to the General Fund. considered the importers thereof, who shall be liable for
Provided, further, That the BIR and BOC shall any internal revenue tax on such importation. The tax due
be required to submit to the Congressional on such importation shall constitute a lien on the goods
Oversight Committee on the Comprehensive superior to all charges or liens on the goods, irrespective
Tax Reform Program (COCCTRP) a quarterly of the possessor thereof
report of all pending claims for refund and any
unused fund. SEC. 108. Value-added Tax on Sale of Services and Use
(b) Sales to persons or entities whose or Lease of Properties. -
exemption under special laws or international (A) Rate and Base of Tax. - There shall be levied, assessed
agreements to which the Philippines is a and collected, a value-added tax equivalent to twelve
signatory effectively subjects such sales to zero percent (12%) of gross receipts derived from the sale or
rate. exchange of services, including the use or lease of
(as amended by RA No 10963) properties.
(B) Transactions Deemed Sale. - The following The phrase 'sale or exchange of services' means the
transactions shall be deemed sale: performance of all kinds of services in the Philippines for
(1) Transfer, use or consumption not in the course of others for a fee, remuneration or consideration, including
business of goods or properties originally intended those performed or rendered by construction and service
for sale or for use in the course of business; contractors; stock, real estate, commercial, customs and
immigration brokers; lessors of property, whether
(2) Distribution or transfer to: personal or real; warehousing services; lessors or
(a) Shareholders or investors as share in the distributors of cinematographic films; persons engaged
profits of the VAT-registered persons; or in milling, processing, manufacturing or repacking goods
for others; proprietors, operators or keepers of hotels,
(b) Creditors in payment of debt; motels, resthouses, pension houses, inns, resorts;
(3) Consignment of goods if actual sale is not made proprietors or operators of restaurants, refreshment
within sixty (60) days following the date such goods parlors, cafes and other eating places, including clubs and
were consigned; and caterers; dealers in securities; lending investors;
transportation contractors on their transport of goods or
(4) Retirement from or cessation of business, with cargoes, including persons who transport goods or
respect to inventories of taxable goods existing as of cargoes for hire and other domestic common carriers by
such retirement or cessation. land relative to their transport of goods or cargoes;
(C) Changes in or Cessation of Status of a common carriers by air and sea relative to their transport
VAT-registered Person. - The tax imposed in Subsection of passengers, goods or cargoes from one place in the
(A) of this Section shall also apply to goods disposed of or Philippines to another place in the Philippines; sales of
existing as of a certain date if under circumstances to be electricity by generation companies, transmission by any
prescribed in rules and regulations to be promulgated by entity, and distribution companies, including electric
the Secretary of Finance, upon recommendation of the cooperatives; services of franchise grantees of electric
Commissioner, the status of a person as a VAT-registered utilities, telephone and telegraph, radio and television
person changes or is terminated. broadcasting and all other franchise grantees except
(D) Sales Returns, Allowances and Sales Discounts. - those under Section 119 of this Code and non-life
The value of goods or properties sold and subsequently insurance companies (except their crop insurances),
returned or for which allowances were granted by a including surety, fidelity, indemnity and bonding
VAT-registered person may be deducted from the gross companies; and similar services regardless of whether or
sales or receipts for the quarter in which a refund is made not the performance thereof calls for the exercise or use
or a credit memorandum or refund is issued. Sales of the physical or mental faculties. The phrase 'sale or
discount granted and indicated in the invoice at the time exchange of services' shall likewise include:
of sale and the grant of which does not depend upon the (1) The lease or the use of or the right or privilege to use
happening of a future event may be excluded from the any copyright, patent, design or model, plan, secret
gross sales within the same quarter it was given. formula or process, goodwill, trademark, trade brand or
(E) Authority of the Commissioner to Determine the other like property or right;
Appropriate Tax Base. - The Commissioner shall, by rules
and regulations prescribed by the Secretary of Finance,



(2) The lease or the use of, or the right to use of any other emerging energy sources using technologies such
industrial, commercial or scientific equipment; as fuel cells and hydrogen fuels.
(3) The supply of scientific, technical, industrial or (8) Services rendered to:
commercial knowledge or information; (i) Registered enterprises within a separate customs
(4) The supply of any assistance that is ancillary and territory as provided under special law; and
subsidiary to and is furnished as a means of enabling the (ii) Registered enterprises within tourism enterprise zones
application or enjoyment of any such property, or right as as declared by the TIEZA subject to the provisions under
is mentioned in subparagraph (2) or any such knowledge Republic Act No. 9593 or The Tourism Act of 2009.
or information as is mentioned in subparagraph (3);
Provided, That subparagraphs (B)(1) and (B)(5) hereof shall
(5) The supply of services by a nonresident person or his be subject to the twelve percent (12%) value-added tax
employee in connection with the use of property or rights and no longer be subject to zero percent (0%) VAT rate
belonging to, or the installation or operation of any brand, upon satisfaction of the following conditions:
machinery or other apparatus purchased from such
nonresident person; (1) The successful establishment and implementation of
an enhanced VAT refund system that grants refunds of
(6) The supply of technical advice, assistance or services creditable input tax within ninety (90) days from the filing
rendered in connection with technical management or of the VAT refund application with the Bureau: Provided,
administration of any scientific, industrial or commercial That, to determine the effectivity of item no. 1, all
undertaking, venture, project or scheme; applications filed from January 1, 2018 shall be processed
(7) The lease of motion picture films, films, tapes and and must be decided within ninety (90) days from the
discs; and filing of the VAT refund application; and
(8) The lease or the use of or the right to use radio, (2) All Pending VAT refund claims as of December 31, 2017
television, satellite transmission and cable television time. shall be fully paid in cash by December 31, 2019.
Lease of properties shall be subject to the tax herein Provided, That the Department of Finance shall establish
imposed irrespective of the place where the contract of a VAT refund center in the Bureau of Internal Revenue
lease or licensing agreement was executed if the property (BIR) and in the Bureau of Customs (BOC) that will handle
is leased or used in the Philippines. the processing and granting of cash refunds of creditable
The term 'gross receipts' means the total amount of input tax.
money or its equivalent representing the contract price, An amount equivalent to five percent (5%) of the total
compensation, service fee, rental or royalty, including the value-added tax collection of the BIR and the BOC from
amount charged for materials supplied with the services the immediately preceding year shall be automatically
and deposits and advanced payments actually or appropriated annually and shall be treated as a special
constructively received during the taxable quarter for the account in the General Fund or as trust receipts for the
services performed or to be performed for another purpose of funding claims for VAT Refund: Provided, That
person, excluding value-added tax. any unused fund, at the end of the year shall revert to the
(B) Transactions Subject to Zero Percent (0%) Rate. — General Fund.
The following services performed in the Philippines by Provided, further, That the BIR and the BOC shall be
VAT-registered persons shall be subject to zero percent required to submit to the COCCTRP a quarterly report of
(0%) rate: all pending claims for refund and any unused fund.
(1) Processing, manufacturing or repacking goods for (as amended by RA No 10963)
other persons doing business outside the Philippines SEC. 109. Exempt Transactions. - [54]
which goods are subsequently exported, where the
services are paid for in acceptable foreign currency and (1) Subject to the provisions of Subsection (2) hereof, the
accounted for in accordance with the rules and following transactions shall be exempt from the
regulations of the Bangko Sentral ng Pilipinas (BSP); value-added tax.
(2) Services other than those mentioned in the preceding (A) Sale or importation of agricultural and marine
paragraph, rendered to a person engaged in business food products in their original state, livestock and
conducted outside the Philippines or to a nonresident poultry of a kind generally used as, or yielding or
person not engaged in business who is outside the producing foods for human consumption; and
Philippines when the services are performed, the breeding stock and genetic materials therefor.
consideration for which is paid for in acceptable foreign Products classified under this paragraph shall be
currency and accounted for in accordance with the rules considered in their original state even if they have
and regulations of the Bangko Sentral ng Pilipinas (BSP); undergone the simple processes of preparation or
(3) Services rendered to persons or entities whose preservation for the market, such as freezing, drying,
exemption under special laws or international salting, broiling, roasting, smoking or stripping.
agreements to which the Philippines is a signatory Polished and/or husked rice, corn grits, raw sugar or
effectively subjects the supply of such services to zero raw cane sugar and molasses, ordinary salt and
percent (0%) rate; copra shall be considered in their original state;
(4) Services rendered to persons engaged in international For this purpose, notwithstanding the process/es
shipping or international air transport operations, involved in its production, 'raw sugar or raw cane
including leases of property for use thereof: Provided, sugar' means sugar whose content of sucrose by
That these services shall be exclusively for international weight, in the dry state, corresponds to a
shipping or air transport operations; polarimeter reading of less than 99.5 degrees. (as
amended by Republic Act No. 10864, [June 10, 2016])
(5) Services performed by subcontractors and/or 55]
contractors in processing, converting, or manufacturing
goods for an enterprise whose export sales exceed (B) Sale or importation of fertilizers; seeds, seedlings
seventy percent (70%) of total annual production; and fingerlings; fish, prawn, livestock and poultry
feeds, including ingredients, whether locally
(6) Transport of passengers and cargo by domestic air or produced or imported, used in the manufacture of
sea vessels from the Philippines to a foreign country; and finished feeds (except specialty feeds for race horses,
(7) Sale of power or fuel generated through renewable fighting cocks, aquarium fish, zoo animals and other
sources of energy such as, but not limited to, biomass, animals generally considered as pets);
solar, wind, hydropower, geothermal, ocean energy, and (C) Importation of professional instruments and
implements, tools of trade, occupation or


employment, wearing apparel, domestic animals, and below, house and lot, and other residential
and personal and household effects belonging to dwellings valued at Two million five hundred
persons coming to settle in the Philippines or thousand pesos (P2,500,000) and below: Provided,
Filipinos or their families and descendants who are That beginning January 1, 2021, the VAT exemption
now residents or citizens of other countries, such shall only apply to sale of real properties not
parties hereinafter referred to as overseas Filipinos, primarily held for sale to customers or held for lease
in quantities and of the class suitable to the in the ordinary course of trade or business, sale of
profession, rank or position of the persons importing real property utilized for socialized housing as
said items, for their own use and not for barter or defined by Republic Act No. 7279, sale of house and
sale, accompanying such persons, or arriving within lot, and other residential dwellings with selling price
a reasonable time: Provided, That the Bureau of of not more than Two million pesos (P2,000,000):
Customs may, upon the production of satisfactory Provided, further, That every three (3) years
evidence that such persons are actually coming to thereafter, the amount herein stated shall be
settle in the Philippines and that the goods are adjusted to its present value using the Consumer
brought from their former place of abode, exempt Price Index, as published by the Philippine Statistics
such goods from payment of duties and taxes: Authority (PSA);
Provided, further, That vehicles, vessels, aircrafts, (Q) Lease of a residential unit with a monthly rental
machineries and other similar goods for use in not exceeding Fifteen thousand pesos (P15,000);
manufacture, shall not fall within this classification
and shall therefore be subject to duties, taxes and (R) Sale, importation, printing or publication of
other charges; books and any newspaper, magazine, review or
bulletin which appears at regular intervals with fixed
(E) Services subject to percentage tax under Title V; prices or subscription and sale and which is not
(F) Services by agricultural contract growers and devoted principally to the publication of paid
milling for others of palay into rice, corn into grits advertisements;
and sugar cane into raw sugar; (S) Transport of passengers by international carriers;
(G) Medical, dental, hospital and veterinary services (T) Sale, importation or lease of passenger or cargo
except those rendered by professionals; vessels and aircraft, including engine, equipment
(H) Educational services rendered by private and spare parts thereof for domestic or international
educational institutions, duly accredited by the transport operations;
Department of Education (DepEd), the Commission (U) Importation of fuel, goods and supplies by
on Higher Education (CHED), the Technical persons engaged in international shipping or air
Education and Skills Development Authority transport operations: Provided, That the fuel, goods,
(TESDA) and those rendered by government and supplies shall be used for international shipping
educational institutions; or air transport operations;
(I) Services rendered by individuals pursuant to an (V) Services of bank, non-bank financial
employer-employee relationship; intermediaries performing quasi-banking functions,
(J) Services rendered by regional or area and other non-bank financial intermediaries;
headquarters established in the Philippines by (W) Sale or lease of goods and services to senior
multinational corporations which act as supervisory, citizens and persons with disability, as provided
communications and coordinating centers for their under Republic Act Nos. 9994 (Expanded Senior
affiliates, subsidiaries or branches in the Asia-Pacific Citizens Act of 2010) and 10754 (An Act Expanding
Region and do not earn or derive income from the the Benefits and Privileges of Persons with
Philippines; Disability), respectively;
(K) Transactions which are exempt under (X) Transfer of property pursuant to Section 40(C)(2)
international agreements to which the Philippines is of the NIRC, as amended;
a signatory or under special laws, except those
under Presidential Decree No. 529; (Y) Association dues, membership fees, and other
assessments and charges collected by homeowners
(L) Sales by agricultural cooperatives duly registered associations and condominium corporations;
with the Cooperative Development Authority to
their members as well as sale of their produce, (Z) Sale of gold to the Bangko Sentral ng Pilipinas
whether in its original state or processed form, to (BSP);
non-members; their importation of direct farm (AA) Sale of drugs and medicines prescribed for
inputs, machineries and equipment, including spare diabetes, high cholesterol, and hypertension
parts thereof, to be used directly and exclusively in beginning January 1, 2019; and
the production and/or processing of their produce;
(BB) Sale or lease of goods or properties or the
(M) Gross receipts from lending activities by credit or performance of services other than the transactions
multi-purpose cooperatives duly registered with the mentioned in the preceding paragraphs, the gross
Cooperative Development Authority; annual sales and/or receipts do not exceed the
(N) Sales by non-agricultural, non-electric and amount of Three million pesos (P3,000,000).
non-credit cooperatives duly registered with the (as amended by RA No 10963)
Cooperative Development Authority: Provided, That
the share capital contribution of each member does (2) A VAT-registered person may elect that Subsection (1)
not exceed Fifteen thousand pesos (P15,000) and not apply to its sale of goods or properties or services:
regardless of the aggregate capital and net surplus Provided, that an election made under this subsection
ratably distributed among the members; shall be irrevocable for a period of three (3) years from the
quarter the election was made. [64]
(O) Export sales by persons who are not
VAT-registered; SEC. 110. Tax Credits. -
(P) Sale of real properties not primarily held for sale A. Creditable Input Tax. -
to customers or held for lease in the ordinary course (1) Any input tax evidenced by a VAT invoice or
of trade or business or real property utilized for official receipt issued in accordance with Section 113
low-cost and socialized housing as defined by hereof on the following transactions shall be
Republic Act No. 7279, otherwise known as the creditable against the output tax:
Urban Development and Housing Act of 1992, and
other related laws, residential lot valued at One (a) Purchase or importation of goods:
million five hundred thousand pesos (P1,500,000)



(i) For sale; or option be refunded or credited against other internal
(ii) For conversion into or intended to form revenue taxes, subject to the provisions of Section 112.
part of a finished product for sale (C) Determination of Creditable Input Tax. - The sum of
including packaging materials; or the excess input tax carried over from the preceding
(iii) For use as supplies in the course of month or quarter and the input tax creditable to a
business; or VAT-registered person during the taxable month or
quarter shall be reduced by the amount of claim for
(iv) For use as materials supplied in the refund or tax credit for value-added tax and other
sale of service; or adjustments, such as purchase returns or allowances and
(v) For use in trade or business for which input tax attributable to exempt sale.
deduction for depreciation or amortization The claim for tax credit referred to in the foregoing
is allowed under this Code. [65] paragraph shall include not only those filed with the
(b) Purchase of services on which a Bureau of Internal Revenue but also those filed with
value-added tax has been actually paid. other government agencies, such as the Board of
Investments and the Bureau of Customs.
(2) The input tax on domestic purchase or
importation of goods or properties by a SEC. 111. Transitional/Presumptive Input Tax Credits. -
VAT-registered person [66] shall be creditable: (A) Transitional Input Tax Credits. - A person who
(a) To the purchaser upon consummation of becomes liable to value-added tax or any person who
sale and on importation of goods or properties; elects to be a VAT-registered person shall, subject to the
and filing of an inventory according to rules and regulations
prescribed by the Secretary of finance, upon
(b) To the importer upon payment of the recommendation of the Commissioner, be allowed input
value-added tax prior to the release of the tax on his beginning inventory of goods, materials and
goods from the custody of the Bureau of supplies equivalent to two percent (2%) [70] of the value of
Customs. such inventory or the actual value-added tax paid on such
Provided, That the input tax on goods purchased or goods, materials and supplies, whichever is higher, which
imported in a calendar month for use in trade or shall be creditable against the output tax.
business for which deduction for depreciation is (B) Presumptive Input Tax Credits. - Persons or firms
allowed under this Code shall be spread evenly over engaged in the processing of sardines, mackerel and
the month of acquisition and the fifty-nine (59) milk, and in manufacturing refined sugar and cooking oil,
succeeding months if the aggregate acquisition cost shall be allowed a presumptive input tax, creditable
for such goods, excluding the VAT component against the output tax, equivalent to four percent (4%) [71]
thereof, exceeds One million pesos (P1,000,000): of the gross value in money of their purchases of primary
Provided, however, That if the estimated useful life of agricultural products which are used as inputs to their
the capital good is less than five (5) years, as used for production.
depreciation purposes, then the input VAT shall be
spread over such a shorter period: Provided, further, As used in this Subsection, the term 'processing' shall
That the amortization of the input VAT shall only be mean pasteurization, canning and activities which
allowed until December 31, 2021 after which through physical or chemical process alter the exterior
taxpayers with unutilized input VAT on capital goods texture or form or inner substance of a product in such
purchased or imported shall be allowed to apply the manner as to prepare it for special use to which it could
same as scheduled until fully utilized: Provided, not have been put in its original form or condition.
finally, That in the case of purchase of services, lease SEC. 112. Refunds or Tax Credits of Input Tax. -
or use of properties, the input tax shall be creditable
to the purchaser, lessee or licensee upon payment of (A) Zero-rated or Effectively Zero-rated Sales. - Any
the compensation, rental, royalty or fee.(as VAT-registered person, whose sales are zero-rated or
amended by RA No 10963) effectively zero-rated may, within two (2) years after the
close of the taxable quarter when the sales were made,
(3) A VAT-registered person who is also engaged in apply for the issuance of a tax credit certificate or refund
transactions not subject to the value-added tax shall of creditable input tax due or paid attributable to such
be allowed tax credit as follows: sales, except transitional input tax, to the extent that such
(a) Total input tax which can be directly input tax has not been applied against output tax:
attributed to transactions subject to Provided, however, That in the case of zero-rated sales
value-added tax; and [68] under Section 106(A)(2)(a)(1), (2) and (b) and Section 108
(B)(1) and (2), the acceptable foreign currency exchange
(b) A ratable portion of any input tax which proceeds thereof had been duly accounted for in
cannot be directly attributed to either activity. accordance with the rules and regulations of the Bangko
The term "input tax" means the value-added tax Sentral ng Pilipinas (BSP): Provided, further, That where
due from or paid by a VAT-registered person in the the taxpayer is engaged in zero-rated or effectively
course of his trade or business on importation of zero-rated sale and also in taxable or exempt sale of
goods or local purchase of goods or services, goods of properties or services, and the amount of
including lease or use of property, from a creditable input tax due or paid cannot be directly and
VAT-registered person. It shall also include the entirely attributed to any one of the transactions, it shall
transitional input tax determined in accordance with be allocated proportionately on the basis of the volume of
Section 111 of this Code. sales. Provided, finally, That for a person making sales that
are zero-rated under Section 108(B) (6), the input taxes
The term "output tax" means the value-added tax shall be allocated ratably between his zero-rated and
due on the sale or lease of taxable goods or non-zero-rated sales. [72]
properties or services by any person registered or
required to register under Section 236 of this Code. (B) Cancellation of VAT Registration. - A person whose
[69] registration has been cancelled due to retirement from or
(B) Excess Output or Input Tax. - If at the end of any cessation of business, or due to changes in or cessation of
taxable quarter the output tax exceeds the input tax, the status under Section 106(C) of this Code may, within two
excess shall be paid by the Vat-registered person. If the (2) years from the date of cancellation, apply for the
input tax exceeds the output tax, the excess shall be issuance of a tax credit certificate for any unused input
carried over to the succeeding quarter or quarters. tax which may be used in payment of his other internal
Provided, however, That any input tax attributable to revenue taxes.
zero-rated sales by a VAT-registered person may at his


(C) Period within which Refund or Tax Credit of Input (3) The date of transaction, quantity, unit cost and
Taxes shall be Made. - In proper cases, the Commissioner description of the goods or properties or nature of
shall grant a refund for creditable input taxes within the service; and
ninety (90) days from the date of submission of the (4) In the case of sales in the amount of One
official receipts or invoices and other documents in thousand pesos (P1,000) or more where the sale or
support of the application filed in accordance with transfer is made to a VAT-registered person, the
Subsections (A) and (B) hereof: Provided, That should the name, business style, if any, address and Taxpayer
Commissioner find that the grant of refund is not proper, Identification Number (TIN) of the purchaser,
the Commissioner must state in writing the legal and customer or client. [75]
factual basis for the denial.
(C) Accounting Requirements. - Notwithstanding the
In case of full or partial denial of the claim for tax refund, provisions of Section 233, all persons subject to the
the taxpayer affected may, within thirty (30) days from value-added tax under Sections 106 and 108 shall, in
the receipt of the decision denying the claim, appeal the addition to the regular accounting records required,
decision with the Court of Tax Appeals: Provided, maintain a subsidiary sales journal and subsidiary
however, That failure on the part of any official, agent, or purchase journal on which the daily sales and purchases
employee of the BIR to act on the application within the are recorded. The subsidiary journals shall contain such
ninety (90)-day period shall be punishable under Section information as may be required by the Secretary of
269 of this Code. Finance.
(as amended by RA No 10963) (D) Consequence of Issuing Erroneous VAT Invoice or
(D) Manner of Giving Refund. - Refunds shall be made VAT Official Receipt. -
upon warrants drawn by the Commissioner or by his duly (1) If a person who is not a VAT-registered persons
authorized representative without the necessity of being issues an invoice or receipt showing his Taxpayer
countersigned by the Chairman, Commission on audit, Identification Number (TIN), followed by the word
the provisions of the Administrative Code of 1987 to the "VAT";
contrary notwithstanding: Provided, That refunds under
this paragraph shall be subject to post audit by the (a) The issuer shall, in addition to any liability to
Commission on Audit. other percentage taxes, be liable to:
(i) The tax imposed in Section 106 or 108
without the benefit of any input tax credit;
and
CHAPTER II COMPLIANCE REQUIREMENTS
(ii) A 50% surcharge under Section 248(B)
SEC. 113. Invoicing and Accounting Requirements for of this Code; [76]
VAT-Registered Persons. -
(b) The VAT shall, if the other requisite
(A) Invoicing Requirements. - A VAT-registered person information required under Subsection (B)
shall issue: hereof is shown on the invoice or receipt, be
(1) A VAT invoice for every sale, barter or exchange of recognized as an input tax credit to the
goods or properties; and purchaser under Section 110 of this Code.
(2) A VAT official receipt for every lease of goods or (2) If a VAT-registered person issues a VAT invoice or
properties, and for every sale, barter or exchange of VAT official receipt for a VAT-exempt transaction, but
services. [74] fails to display prominently on the invoice or receipt
the term 'VAT exempt sale', the issuer shall be liable
(B) Information Contained in the VAT Invoice or VAT to account for the tax imposed in section 106 or 108
Official Receipt. - The following information shall be as if Section 109 did not apply. [77]
indicated in the VAT invoice or VAT official receipt:
(E) Transitional Period. - Notwithstanding Subsection (B)
(1) A statement that the seller is a VAT-registered hereof, taxpayers may continue to issue VAT invoices and
person, followed by his Taxpayer's Identification VAT official receipt for the period July 1, 2005 to
Number (TIN); and December 31, 2005 in accordance with Bureau of Internal
(2) The total amount which the purchaser pays or is Revenue administrative practices that existed as of
obligated to pay to the seller with the indication that December 31, 2004.
such amount includes the value-added tax. SEC. 114. Return and Payment of Value-Added Tax. -
Provided, That:
(A) In General. - Every person liable to pay the
(a) The amount of the tax shall be known as a value-added tax imposed under this Title shall file a
separate item in the invoice or receipt; quarterly return of the amount of his gross sales or
(b) If the sale is exempt from value-added tax, receipts within twenty-five (25) days following the close of
the term "VAT-exempt sale: shall be written or each taxable quarter prescribed for each taxpayer:
printed prominently on the invoice or receipt; Provided, however, That VAT-registered persons shall pay
the value-added tax on a monthly basis: Provided, finally,
(c) If the sale is subject to zero percent (0%)
That beginning January 1, 2023, the filing and payment
value-added tax, the term "zero-rated sale" shall
required under this Subsection shall be done within
be written or printed prominently on the
twenty-five (25) days following the close of each taxable
invoice or receipt.
quarter.(as amended by RA No 10963)
(d) If the sale involved goods, properties or
Any person, whose registration has been cancelled in
services some of which are subject to and some
accordance with Section 236, shall file a return and pay
of which are VAT zero-rated or Vat exempt, the
the tax due thereon within twenty-five (25) days from the
invoice or receipt shall clearly indicate the
date of cancellation of registration: Provided, That only
break-down of the sale price between its
one consolidated return shall be filed by the taxpayer for
taxable, exempt and zero-rated components,
his principal place of business or head office and all
and the calculation of the value-added tax on
branches.
each portion of the sale shall be known on the
invoice or receipt: Provided, That the seller may (B) Where to File the Return and Pay the Tax. - Except
issue separate invoices or receipts for the as the Commissioner otherwise permits, the return shall
taxable, exempt, and zero-rated components of be filed with and the tax paid to an authorized agent
the sale. bank, Revenue Collection Officer or duly authorized city
or municipal Treasurer in the Philippines located within


the revenue district where the taxpayer is registered or the local taxes imposed under Republic Act No. 7160,
required to register. otherwise known as the Local Government Code of 1991.
(C) Withholding of Value-added Tax. - The Government In computing the percentage tax provided in this Section,
or any of its political subdivisions, instrumentalities or the following shall be considered the minimum quarterly
agencies, including government-owned or -controlled gross receipts in each particular case:
corporations (GOCCs) shall, before making payment on
account of each purchase of goods and services which Jeepney for hire -
are subject to the value-added tax imposed in Sections 1. Manila and other Cities P 2,400
106 and 108 of this Code, deduct and withhold a final 2. Provincial 1,200
value-added tax at the rate of five percent (5%) of the Public utility bus -
gross payment thereof: Provided, That beginning January Not exceeding 30 passengers P 3,600
1, 2021, the VAT withholding system under this Subsection Exceeding 30 but not exceeding 50
shall shift from final to a creditable system: Provided, passengers 6,000
further, That the payment for lease or use of properties or Exceeding 50 passengers 7,200
property rights to nonresident owners shall be subject to Taxis -
twelve percent (12%) withholding tax at the time of 1. Manila and other Cities P 3,600
payment: Provided, finally, That payments for purchases 2. Provincial 2,400
of goods and services arising from projects funded by Car for hire (with chauffer) P 3,000
Official Development Assistance (ODA) as defined under Car for hire (without chauffer) 1,800
Republic Act No. 8182, otherwise known as the 'Official
Development Assistance Act of 1996,' as amended, shall SEC. 118 Percentage Tax on International Carriers. - [82]
not be subject to the final withholding tax system as (A) International air carriers doing; business in the
imposed in this Subsection. For purposes of this Section, Philippines on their gross receipts derived from transport
the payor or person in control of the payment shall be of cargo from the Philippines to another country shall pay
considered as the withholding agent.(as amended by RA a tax of three percent (3%) of their quarterly gross
No 10963) receipts.
SEC. 115. Power of the Commissioner to Suspend the (B) International shipping carriers doing business in the
Business Operations of a Taxpayer. - The Commissioner Philippines on their gross receipts derived from transport
or his authorized representative is hereby empowered to of cargo from the Philippines to another country shall pay
suspend the business operations and temporarily close a tax equivalent to three percent (3%) of their quarterly
the business establishment of any person for any of the gross receipts.
following violations: SEC. 119. Tax on Franchises. - Any provision of general or
(a) In the case of a VAT-registered Person. - special law to the contrary notwithstanding, there shall
(1) Failure to issue receipts or invoices; be levied, assessed and collected in respect to all
franchises on radio and/or television broadcasting
(2) Failure to file a value-added tax return as companies whose annual gross receipts of the preceding
required under Section 114; or year do not exceed Ten million pesos (P10,000.00), subject
(3) Understatement of taxable sales or receipts to Section 236 of this Code, a tax of three percent (3%) and
by thirty percent (30%) or more of his correct on gas and water utilities, a tax of two percent (2%) on the
taxable sales or receipts for the taxable quarter. gross receipts derived from the business covered by the
law granting the franchise: Provided, however, That radio
(b) Failure of any Person to Register as Required and television broadcasting companies referred to in this
under Section 236. Section shall have an option to be registered as a
The temporary closure of the establishment shall be value-added taxpayer and pay the tax due thereon:
for the duration of not less than five (5) days and Provided, further, That once the option is exercised, said
shall be lifted only upon compliance with whatever option shall not be irrevocable. [83]
requirements prescribed by the Commissioner in The grantee shall file the return with, and pay the tax due
the closure order. thereon to the Commissioner or his duly authorized
representative, in accordance with the provisions of
Section 128 of this Code, and the return shall be subject to
audit by the Bureau of Internal Revenue, any provision of
TITLE V OTHER PERCENTAGE TAXES any existing law to the contrary notwithstanding.
(As Last Amended by RA Nos. 8761, 9010, 9238, 9337 & SEC. 120. Tax on Overseas Dispatch, Message or
10001, 10963) [80] Conversation Originating from the Philippines. -
SEC. 116. Tax on Persons Exempt from Value-Added Tax (A) Persons Liable. - There shall be collected upon every
(VAT). - Any person whose sales or receipts are exempt overseas dispatch, message or conversation transmitted
under Section 109 (BB) of this Code from the payment of from the Philippines by telephone, telegraph, telewriter
value-added tax and who is not a VAT-registered person exchange, wireless and other communication equipment
shall pay a tax equivalent to three percent (3%) of his service, a tax of ten percent (10%) on the amount paid for
gross quarterly sales or receipts: Provided, That such services. The tax imposed in this Section shall be
cooperatives, and beginning January 1, 2019, payable by the person paying for the services rendered
self-employed and professionals with total annual gross and shall be paid to the person rendering the services
sales and/or gross receipts not exceeding Five hundred who is required to collect and pay the tax within twenty
thousand pesos (P500,000) shall be exempt from the (20) days after the end of each quarter.
three percent (3%) gross receipts tax herein imposed(as (B) Exemptions. - The tax imposed by this Section shall
amended by RA No 10963) not apply to:
SEC. 117. Percentage Tax on Domestic Carriers and (1) Government. - Amounts paid for messages
Keepers of Garages. - Cars for rent or hire driven by the transmitted by the Government of the Republic of
lessee, transportation contractors, including persons who the Philippines or any of its political subdivisions or
transport passengers for hire, and other domestic carriers instrumentalities;
by land, [81] for the transport of passengers [except owners
of bancas] and owners of animal-drawn two wheeled (2) Diplomatic Services. - Amounts paid for
vehicle), and keepers of garages shall pay a tax equivalent messages transmitted by any embassy and consular
to three percent (3%) of their quarterly gross receipts. offices of a foreign government;
The gross receipts of common carriers derived from their (3) International Organizations. - Amounts paid for
incoming and outgoing freight shall not be subjected to messages transmitted by a public international


organization or any of its agencies based in the for purposes of classifying the transaction and the correct
Philippines enjoying privileges, exemptions and rate of tax shall be applied accordingly.
immunities which the Government of the Provided, finally, That the generally accepted accounting
Philippines is committed to recognize pursuant to principles as may be prescribed by the Securities and
an international agreement; and Exchange Commission for other non-bank financial
(4) News Services. - Amounts paid for messages intermediaries shall likewise be the basis for the
from any newspaper, press association, radio or calculation of gross receipts. [86]
television newspaper, broadcasting agency, or Nothing in this Code shall preclude the Commissioner
newstickers services, to any other newspaper, press from imposing the same tax herein provided on persons
association, radio or television newspaper performing similar financing activities.
broadcasting agency, or newsticker service or to a
bona fide correspondent, which messages deal SEC. 123. Tax on Life Insurance Premiums. - There shall
exclusively with the collection of news items for, or be collected from every person, company or corporation
the dissemination of news item through, public (except purely cooperative companies or associations)
press, radio or television broadcasting or a doing life insurance business of any sort in the Philippines
newsticker service furnishing a general news service a tax of two percent (2%) [87] of the total premium
similar to that of the public press. collected, whether such premiums are paid in money,
notes, credits or any substitute for money; but premiums
SEC. 121. Tax on Banks and Non-Bank Financial refunded within six (6) months after payment on account
Intermediaries Performing Quasi- Banking Functions.- of rejection of risk or returned for other reason to a person
There shall be collected a tax on a gross receipt derived insured shall not be included in the taxable receipts; nor
from sources within the Philippines by all banks and shall any tax be paid upon reinsurance by a company that
non-bank financial intermediaries in accordance with the has already paid the tax; nor upon doing business outside
following schedule: the Philippines on account of any life insurance of the
insured who is a nonresident, if any tax on such premium
(a) On interest, commissions and discounts from is imposed by the foreign country where the branch is
lending activities as well as income from financial established nor upon premiums collected or received on
leasing, on the basis of remaining maturities of account of any reinsurance , if the insured, in case of
instruments from which such receipts are personal insurance, resides outside the Philippines, if any
derived: tax on such premiums is imposed by the foreign country
Maturity period is five years or less 5% where the original insurance has been issued or
perfected; nor upon that portion of the premiums
Maturity period is more than five years 1% collected or received by the insurance companies on
variable contracts (as defined in Section 232(2) of
(b) On dividends and equity shares and net 0% Presidential Decree No. 612), in excess of the amounts
income of subsidiaries necessary to insure the lives of the variable contract
workers.
(c) On royalties, rentals of property, real or 7%
personal, profits, from exchange and all other 'Cooperative companies or associations' are such as are
items treated as gross income under Section 32 of conducted by the members thereof with the money
this Code collected from among themselves and solely for their
own protection and not for profit.
(d) On net trading gains within the taxable year 7% SEC. 124. Tax on Agents of Foreign Insurance
on foreign currency, debt securities, derivatives, Companies. - Every fire, marine or miscellaneous
and other similar financial instruments. insurance agent authorized under the Insurance Code to
Provided, however, That in case the maturity period procure policies of insurance as he may have previously
referred to in paragraph (a) is shortened thru been legally authorized to transact on risks located in the
pre-termination, then the maturity period shall be Philippines for companies not authorized to transact
reckoned to end as of the date of pre-termination for business in the Philippines shall pay a tax equal to twice
purposes of classifying the transaction and the correct the tax imposed in Section 123: Provided, That the
rate of tax shall be applied accordingly. provision of this Section shall not apply to reinsurance:
Provided, however, That the provisions of this Section
Provided, finally, That the generally accepted accounting shall not affect the right of an owner of property to apply
principles as may be prescribed by the Bangko Sentral ng for and obtain for himself policies in foreign companies in
Pilipinas for the bank or non-bank financial intermediary cases where said owner does not make use of the
performing quasi-banking functions shall likewise be the services of any agent, company or corporation residing or
basis for the calculation of gross receipts. [84] doing business in the Philippines. In all cases where
Nothing in this Code shall preclude the Commissioner owners of property obtain insurance directly with foreign
from imposing the same tax herein provided on persons companies, it shall be the duty of said owners to report to
performing similar banking activities. the Insurance Commissioner and to the Commissioner
each case where insurance has been so effected, and
SEC. 122. Tax on Other Non-Bank Financial shall pay the tax of five percent (5%)on premiums paid, in
Intermediaries. [85] - There shall be collected a tax of five the manner required by Section 123.
percent (5%) on the gross receipts derived by other
non-bank financial intermediaries doing business in the SEC. 125. Amusement Taxes. - There shall be collected
Philippines, from interests, commissions, discounts and from the proprietor, lessee or operator of cockpits,
all other items treated as gross income under this code.: cabarets, night or day clubs, boxing exhibitions,
Provided, That interests, commissions and discounts from professional basketball games, Jai-Alai and racetracks, a
lending activities, as well as income from financial tax equivalent to:
leasing, shall be taxed on the basis of the remaining (a) Eighteen percent (18%) in the case of cockpits;
maturities of the instruments from which such receipts
are derived, in accordance with the following schedule: (b) Eighteen percent (18%) in the case of cabarets,
night or day clubs;
Maturity period is five years or less 5% (c) Ten percent (10%) in the case of boxing
Maturity period is more than five years 1% exhibitions: Provided, however, That boxing
exhibitions wherein World or Oriental
Provided, however, That in case the maturity period is Championships in any division is at stake shall be
shortened thru pre-termination, then the maturity period exempt from amusement tax: Provided, further,
shall be reckoned to end as of the date of pre-termination That at least one of the contenders for World or
Oriental Championship is a citizen[s] of the



Philippines and said exhibitions are promoted by a outstanding shares of stock after the listing in the local
citizen/s of the Philippines or by a corporation or stock exchange:
association at least sixty percent (60%) of the capital
of which is owned by such citizens; Up to twenty-five percent (25%) 4%
(d) Fifteen percent (15%) in the case of professional Over twenty-five percent (25%) but not over 2%
basketball games as envisioned in Presidential thirty-three and one third percent (33 1/3%)
Decree No. 871: Provided, however, That the tax Over thirty-three and one third percent (33 1/3%) 1%
herein shall be in lieu of all other percentage taxes of The tax herein imposed shall be paid by the issuing
whatever nature and description; and corporation in primary offering or by the seller in
(e) Thirty percent (30%) in the case of Jai-Alai and secondary offering.
racetracks - of their gross receipts, irrespective, of For purposes of this Section, the term 'closely held
whether or not any amount is charged for corporation' means any corporation at least fifty percent
admission. (50%) in value of outstanding capital stock or at least fifty
For the purpose of the amusement tax, the term 'gross percent (50%) of the total combined voting power of all
receipts' embraces all the receipts of the proprietor, classes of stock entitled to vote is owned directly or
lessee or operator of the amusement place. Said gross indirectly by or for not more than twenty (20) individuals.
receipts also include income from television, radio and For purposes of determining whether the corporation is a
motion picture rights, if any. A person or entity or closely held corporation, insofar as such determination is
association conducting any activity subject to the tax based on stock ownership, the following rules shall be
herein imposed shall be similarly liable for said tax with applied:
respect to such portion of the receipts derived by him or
it. (1) Stock Not Owned by Individuals. - Stock owned
directly or indirectly by or for a corporation,
The taxes imposed herein shall be payable at the end of partnership, estate or trust shall be considered as
each quarter and it shall be the duty of the proprietor, being owned proportionately by its shareholders,
lessee or operator concerned, as well as any party liable, partners or beneficiaries.
within twenty (20) days after the end of each quarter, to
make a true and complete return of the amount of the (2) Family and Partnership Ownerships. - An
gross receipts derived during the preceding quarter and individual shall be considered as owning the stock
pay the tax due thereon. owned, directly or indirectly, by or for his family, or by
or for his partner. For purposes of the paragraph, the
SEC. 126. Tax on Winnings. - Every person who wins in 'family of an individual' includes only his brothers
horse races shall pay a tax equivalent to ten percent (10%) and sisters (whether by whole or half-blood), spouse,
of his winnings or 'dividends', the tax to be based on the ancestors and lineal descendants.
actual amount paid to him for every winning ticket after
deducting the cost of the ticket: Provided, That in the (3) Option. - If any person has an option acquire
case of winnings from double, forecast/quinella and stock, such stock shall be considered as owned by
trifecta bets, the tax shall be four percent (4%). In the case such person. For purposes of this paragraph, an
of owners of winning race horses, the tax shall be ten option to acquire such an option and each one of a
percent (10%) of the prizes. series of options shall be considered as an option to
acquire such stock.
The tax herein prescribed shall be deducted from the
'dividends' corresponding to each winning ticket or the (4) Constructive Ownership as Actual Ownership.
'prize' of each winning race horse owner and withheld by - Stock constructively owned by reason of the
the operator, manager or person in charge of the horse application of paragraph (1) or (3) hereof shall, for
races before paying the dividends or prizes to the persons purposes of applying paragraph (1) or (2), be treated
entitled thereto. as actually owned by such person; but stock
constructively owned by the individual by reason of
The operator, manager or person in charge of horse races the application of paragraph (2) hereof shall not be
shall, within twenty (20) days from the date the tax was treated as owned by him for purposes of again
deducted and withheld in accordance with the second applying such paragraph in order to make another
paragraph hereof, file a true and correct return with the the constructive owner of such stock.
Commissioner in the manner or form to be prescribed by
the Secretary of Finance, and pay within the same period (C) Return on Capital Gains Realized from Sale of
the total amount of tax so deducted and withheld. Shares of Stocks. -
SEC. 127. Tax on Sale, Barter or Exchange of Shares of (1) Return on Capital Gains Realized from Sale of
Stock Listed and Traded through the Local Stock Shares of Stock Listed and Traded in the Local
Exchange or through Initial Public Offering. - Stock Exchange. - It shall be the duty of every stock
broker who effected the sale subject to the tax
(A) Tax on Sale, Barter or Exchange of Shares of Stock imposed herein to collect the tax and remit the
Listed and Traded through the Local Stock Exchange.- same to the Bureau of Internal Revenue within five
There shall be levied, assessed and collected on every (5) banking days from the date of collection thereof
sale, barter, exchange, or other disposition of shares of and to submit on Mondays of each week to the
stock listed and traded through the local stock exchange secretary of the stock exchange, of which he is a
other than the sale by a dealer in securities, a tax at the member, a true and complete return which shall
rate of six-tenths of one percent (6/10 of 1%) of the gross contain a declaration of all the transactions effected
selling price or gross value in money of the shares of stock through him during the preceding week and of
sold, bartered, exchanged or otherwise disposed which taxes collected by him and turned over to the
shall be paid by the seller or transferor.(as amended by Bureau Of Internal Revenue.
RA No 10963)
(2) Return on Public Offerings of Shares of Stock.
(B) Tax on Shares of Stock Sold or Exchanged Through - In case of primary offering, the corporate issuer
Initial Public Offering. - There shall be levied, assessed shall file the return and pay the corresponding tax
and collected on every sale, barter, exchange or other within thirty (30) days from the date of listing of the
disposition through initial public offering of shares of shares of stock in the local stock exchange. In the
stock in closely held corporations, as defined herein, a tax case of secondary offering, the provision of
at the rates provided hereunder based on the gross Subsection (C) (1) of this Section shall apply as to the
selling price or gross value in money of the shares of stock time and manner of the payment of the tax.
sold, bartered, exchanged or otherwise disposed in
accordance with the proportion of shares of stock sold, (D) Common Provisions. - any gain derived from the sale,
bartered, exchanged or otherwise disposed to the total barter, exchange or other disposition of shares of stock
under this Section shall be exempt from the tax imposed



in Sections 24(C), 27(D)(2), 28(A)(8)(c), and 28(B)(5)(c) of (as amended by RA No 10963)
this Code and from the regular individual or corporate SEC. 130. Filing of Return and Payment of Excise Tax on
income tax. Tax paid under this Section shall not be Domestic Products. -
deductible for income tax purposes.
(A) Persons Liable to File a Return, Filing of Return on
SEC. 128. Returns and Payment of Percentage Taxes. - Removal and Payment of Tax. -
(A) Returns of Gross Sales, Receipts or Earnings and (1) Persons Liable to File a Return. - Every person
Payment of Tax. - liable to pay excise tax imposed under this Title shall
(1) Persons Liable to Pay Percentage Taxes. - Every file a separate return for each place of production
person subject to the percentage taxes imposed setting forth, among others the description and
under this Title shall file a quarterly return of the quantity or volume of products to be removed, the
amount of his gross sales, receipts or earnings and applicable tax base and the amount of tax due
pay the tax due thereon within twenty-five (25) days thereon: Provided, however, That in the case of
after the end of each taxable quarter: Provided, That indigenous petroleum, natural gas or liquefied
in the case of a person whose VAT registration is natural gas, the excise tax shall be paid by the first
cancelled and who becomes liable to the tax buyer, purchaser or transferee for local sale, barter or
imposed in Section 116 of this Code, the tax shall transfer, while the excise tax on exported products
accrue from the date of cancellation and shall be shall be paid by the owner, lessee, concessionaire or
paid in accordance with the provisions of this operator of the mining claim.
Section. Should domestic products be removed from the
(2) Person Retiring from Business. - Any person place of production without the payment of the tax,
retiring from a business subject to percentage tax the owner or person having possession thereof shall
shall notify the nearest internal revenue officer, file be liable for the tax due thereon.
his return and pay the tax due thereon within (2) Time for Filing of Return and Payment of the
twenty (20) days after closing his business. Tax. - Unless otherwise specifically allowed, the
(3) Determination of Correct Sales or Receipts. - return shall be filed and the excise tax paid by the
When it is found that a person has failed to issue manufacturer or producer before removal of
receipts or invoices, or when no return is filed, or domestic products from place of production:
when there is reason to believe that the books of Provided, That the excise tax on locally
accounts or other records do not correctly reflect the manufactured petroleum products and indigenous
declarations made or to be made in a return petroleum levied under Sections 148 and 151(A)(4),
required to be filed under the provisions of this respectively, of this Title shall be paid within ten (10)
Code, the Commissioner, after taking into account days from the date of removal of such products for
the sales, receipts or other taxable base of other the period from January 1, 1998 to June 30, 1998;
persons engaged in similar businesses under similar within five (5) days from the date of removal of such
situations or circumstances, or after considering products for the period from July 1, 1998 to
other relevant information may prescribe a December 31, 1998; and, before removal from the
minimum amount of such gross receipts, sales and place of production of such products from January 1,
taxable base and such amount so prescribed shall 1999 and thereafter: Provided, further, That the
be prima facie correct for purposes of determining excise tax on nonmetallic mineral or mineral
the internal revenue tax liabilities of such person. products, or quarry resources shall be due and
(as amended by RA No 10963) payable upon removal of such products from the
locality where mined or extracted, but with respect
(B) Where to File. - Except as the Commissioner to the excise tax on locally produced or extracted
otherwise permits, every person liable to the percentage metallic mineral or mineral products, the person
tax under this Title may, at his option, file a separate liable shall file a return and pay the tax within fifteen
return for each branch or place of business, or a (15) days after the end of the calendar quarter when
consolidated return for all branches or places of business such products were removed subject to such
with the authorized agent bank, Revenue District Officer, conditions as may be prescribed by rules and
Collection Agent or duly authorized Treasurer of the city regulations to be promulgated by the Secretary of
or municipality where said business or principal place of Finance, upon recommendation of the
business is located, as the case may be. Commissioner. For this purpose, the taxpayer shall
file a bond in an amount which approximates the
amount of excise tax due on the removals for the
said quarter. The foregoing rules notwithstanding,
TITLE VI EXCISE TAXES ON CERTAIN GOODS for imported mineral or mineral products, whether
metallic or nonmetallic, the excise tax due thereon
AND SERVICES shall be paid before their removal from customs
(As Last Amended by RA Nos. 9224, 9334 & 9337, 10963) custody.
[88]
(3) Place of Filing of Return and Payment of the
Tax. - Except as the Commissioner otherwise
CHAPTER I GENERAL PROVISIONS permits, the return shall be filed with and the tax
paid to any authorized agent bank or Revenue
Collection Officer, or duly authorized City or
SEC.129. Goods subject to Excise Taxes. - Excise taxes Municipal Treasurer in the Philippines.
apply to goods manufactured or produced in the (4) Exceptions. - The Secretary of Finance, upon
Philippines for domestic sales or consumption or for any recommendation of the Commissioner may, by rules
other disposition and to things imported as well as and regulations, prescribe:
services performed in the Philippines. The excise tax
imposed herein shall be in addition to the value-added (a) The time for filing the return at intervals
tax imposed under Title IV. other than the time prescribed in the
preceding paragraphs for a particular class or
For purposes of this Title, excise taxes herein imposed and classes of taxpayers after considering factors
based on weight or volume capacity or any other physical such as volume of removals, adequate
unit of measurement shall be referred to as 'specific tax' measures of security and such other relevant
and an excise tax herein imposed and based on selling information required to be submitted under
price or other specified value of the good or service the pertinent provisions of this Code; and
performed shall be referred to as 'ad valorem tax.'


(b) The manner and time of payment of excise cigars and cigarettes, distilled spirits, fermented liquors
taxes other than as herein prescribed, under a and wines brought directly into the duly chartered or
tax prepayment, advance deposit or similar legislated freeports of the Subic Special Economic and
schemes. In the case of locally produced of Freeport Zone, created under Republic Act No. 7227; the
extracted minerals and mineral products or Cagayan Special Economic Zone and Freeport, created
quarry resources where the mine site or place under Republic Act No. 7922; and the Zamboanga City
of extraction is not the same as the place of Special Economic Zone, created under Republic Act No.
processing or production, the return shall be 7903,and such other freeports as may hereafter be
filed with and the tax paid to the Revenue established or created by law: Provided, further, That
District Office having jurisdiction over the notwithstanding the provisions of Republic Act Nos. 9400
locality where the same are mined, extracted or and 9593, importations of cigars and cigarettes, distilled
quarried: Provided, however, That for metallic spirits, fermented liquors and wines made directly by a
minerals processed abroad, the return shall be government-owned and operated duty-free shop, like the
filed and the tax due thereon paid to the Duty-Free Philippines (DFP), shall be exempted from all
Revenue District Office having jurisdiction over applicable duties only: Provided, still further, That such
the locality where the same are mined, articles directly imported by a government-owned and
extracted or quarried. operated duty-free shop like the Duty-Free Philippines,
(B) Determination of Gross Selling Price of Goods shall be labeled 'duty-free' and 'not for resale': Provided,
Subject to Ad Valorem Tax. - Unless otherwise provided, finally, That the removal and transfer of tax and duty-free
the price, excluding the value-added tax, at which the goods, products, machinery, equipment and other similar
goods are sold at wholesale in the place of production or articles other than cigars and cigarettes, distilled spirits,
through their sales agents to the public shall constitute fermented liquors and wines, from one freeport to
the gross selling price. If the manufacturer also sells or another freeport, shall not be deemed an introduction
allows such goods to be sold at wholesale in another into the Philippine customs territory. [89]
establishment of which he is the owner or in the profits of Cigars and cigarettes, distilled spirits and wines within
which he has an interest, the wholesale price in such the premises of all duty-free shops which are not labeled
establishment shall constitute the gross selling price. as herein above required, as well as tax and duty-free
Should such price be less than the cost of manufacture articles obtained from a duty free shop and subsequently
plus expenses incurred until the goods are finally sold, found in a non duty-free shop to be offered for resale shall
then a proportionate margin of profit, not less than ten be confiscated, and the perpetrator of such non-labeling
percent (10%) of such manufacturing cost and expenses, or re-selling shall be punishable under the applicable
shall be added to constitute the gross selling price. provisions of this Code.
(C) Manufacturer's or Producer's Sworn Statement. - Articles confiscated shall be destroyed using the most
Every manufacturer or producer of goods or products environmentally friendly method available in accordance
subject to excise taxes shall file with the Commissioner with the rules and regulations to be promulgated by the
on the date or dates designated by the latter, and as often Secretary of Finance, upon recommendation of the
as may be required, a sworn statement showing, among Commissioners of Customs and Internal Revenue.
other information, the different goods or products The tax due on any such goods, products, machinery,
manufactured or produced and their corresponding equipment or other similar articles shall constitute a lien
gross selling price or market value, together with the cost on the article itself, and such lien shall be superior to all
of manufacture or production plus expenses incurred or other charges or liens, irrespective of the possessor
to be incurred until the goods or products are finally sold. thereof.
(D) Credit for Excise tax on Goods Actually Exported. - (B) Rate and Basis of the Excise Tax on Imported
When goods locally produced or manufactured are Articles. - Unless otherwise specified imported articles
removed and actually exported without returning to the shall be subject to the same rates and basis of excise
Philippines, whether so exported in their original state or taxes applicable to locally manufactured articles.
as ingredients or parts of any manufactured goods or
products, any excise tax paid thereon shall be credited or SEC. 132. Mode of Computing Contents of Cask or
refunded upon submission of the proof of actual Package. - Every fractional part of a proof liter equal to or
exportation and upon receipt of the corresponding greater than a half liter in a cask or package containing
foreign exchange payment: Provided, That the excise tax more than one liter shall be taxed as a liter, and any
on mineral products, except coal and coke, imposed smaller fractional part shall be exempt; but any package
under Section 151 shall not be creditable or refundable of spirits, the total content of which are less than a proof
even if the mineral products are actually exported. liter, shall be taxed as one liter.
SEC. 131. Payment of Excise Taxes on Imported Articles.
-
(A) Persons Liable. - Excise taxes on imported articles CHAPTER II EXEMPTION OR CONDITIONAL
shall be paid by the owner or importer to the Custom TAX-FREE REMOVAL OF CERTAIN ARTICLES
Officers, conformably with the regulations of the
Department of Finance and before the release of such SEC. 133. Removal of Wines and distilled Spirits for
articles from the customs house, or by the person who is Treatment of Tobacco Leaf. - Upon issuance of a permit
found in possession of articles which are exempt from from the Commissioner and subject to the rules and
excise taxes other than those legally entitled to regulations prescribed by the Secretary of Finance,
exemption. manufacturers of cigars and cigarettes may withdraw
from bond, free of excise local and imported wines and
In the case of tax-free articles brought or imported into distilled spirits in specific quantities and grades for use in
the Philippines by persons, entities, or agencies exempt the treatment of tobacco leaf to be used in the
from tax which are subsequently sold, transferred or manufacture of cigars and cigarettes; but such wines and
exchanged in the Philippines to non-exempt persons or distilled spirits must first be suitably denatured.
entitles, the purchasers or recipients shall be considered
the importers thereof, and shall be liable for the duty and SEC. 134. Domestic Denatured Alcohol. - Domestic
internal revenue tax due on such importation. alcohol of not less than one hundred eighty degrees
(180O) proof (ninety percent (90%) absolute alcohol) shall,
The provision of any special or general law to the contrary when suitably denatured and rendered unfit for oral
notwithstanding, the importation of cigars and cigarettes, intake, be exempt from the excise tax prescribed in
distilled spirits, fermented liquors and wines into the Section 141: Provided, however, That such denatured
Philippines, even if destined for tax and duty free shops, alcohol shall be subject to tax under Section 106(A) of this
shall be subject to all applicable taxes, duties, charges, Code: Provided, further, That if such alcohol is to be used
including excise taxes due thereon. This shall apply to



for motive power, it shall be taxed under Section 148(d) of distinct from those ordinarily used for fermented liquors,
this Code: Provided, finally, That any alcohol, previously each containing not less than one hundred seventy-five
rendered unfit for oral intake after denaturing but (175) liters with a note of their contents permanently
subsequently rendered fit or oral intake after undergoing affixed thereon.
fermentation, dilution, purification, mixture or any other SEC. 140. Removal of Tobacco Products without
similar process shall be taxed under Section 141 of this Prepayment of Tax. - Products of tobacco entirely unfit
Code and such tax shall be paid by the person in for chewing or smoking may be removed free of tax for
possession of such reprocessed spirits. agricultural or industrial use, under such conditions as
SEC. 135. Petroleum Products Sold to International may be prescribed in the rules and regulations prescribed
Carriers and Exempt Entities or Agencies. -Petroleum by the Secretary of Finance. Stemmed leaf tobacco,
products sold to the following are exempt from excise tax: fine-cut shorts, the refuse of fine-cut chewing tobacco,
(a) International carriers of Philippine or foreign scraps, cuttings, clippings, stems, or midribs, and
registry on their use or consumption outside the sweepings of tobacco may be sold in bulk as raw material
Philippines: Provided, That the petroleum products by one manufacturer directly to another without
sold to these international carriers shall be stored in payment of the tax, under such conditions as may be
a bonded storage tank and may be disposed of only prescribed in the rules and regulations prescribed by the
in accordance with the rules and regulations to be Secretary of Finance.
prescribed by the Secretary of Finance, upon 'Stemmed leaf tobacco,' as herein used, means leaf
recommendation of the Commissioner; tobacco which has had the stem or midrib removed. The
(b) Exempt entities or agencies covered by tax term does not include broken leaf tobacco.
treaties, conventions and other international
agreements for their use of consumption: Provided,
however, That the country of said foreign
international carrier or exempt entities or agencies CHAPTER III EXCISE TAX ON ALCOHOL PRODUCTS
exempts from similar taxes petroleum products sold SEC. 141. Distilled Spirits. - [90] On distilled spirits, subject
to Philippine carriers, entities or agencies; and to the provisions of Section 133 of this Code, an excise tax
(c) Entities which are by law exempt from direct and shall be levied, assessed and collected based on the
indirect taxes. following schedules:
SEC. 136. Denaturation, Withdrawal and Use of (a) Effective on January 1, 2013
Denatured Alcohol. - Any person who produces, 1. An ad valorem tax equivalent to fifteen
withdraws, sells, transports or knowingly uses, or is in percent (15%) of the net retail price (excluding
possession of denatured alcohol, or articles containing the excise tax and the value-added tax) per
denatured alcohol in violation of laws or regulations now proof; and
or hereafter in force pertaining thereto shall be required
2. In addition to the ad valorem tax herein
to pay the corresponding tax, in addition to the penalties
imposed, a specific tax of Twenty pesos
provided for under Title X of this Code.
(P20.00) per proof liter.
SEC. 137. Removal of Spirits Under Bond for
(b) Effective on January 1, 2015
Rectification. - Spirits requiring rectification may be
removed from the place of production to another 1. An ad valorem equivalent to twenty percent
establishment for the purpose of rectification without (20%) of the net retail price (excluding the
prepayment of the excise tax: Provided, That the distiller excise tax and the value-added tax) per proof;
removing such spirits and the rectifier receiving them and
shall file with the Commissioner their joint bond 2. In addition to the ad valorem tax herein
conditioned upon the payment by the rectifier of the imposed, the specific tax rate of Twenty pesos
excise tax due on the rectified alcohol: Provided, further, (P20.00) per proof liter.
That in cases where alcohol has already been rectified
either by original and continuous distillation or by (c) In addition to the ad valorem tax herein imposed,
re-distillation, no loss for rectification and handling shall the specific tax rate of Twenty pesos (P20.00) per
be allowed and the rectifier thereof shall pay the excise proof liter.
tax due on such losses: Provided, finally, That where a Medicinal preparations, flavoring extracts, and all other
rectifier makes use of spirits upon which the excise tax preparations, except toilet preparations, of which,
has not been paid, he shall be liable for the payment of excluding water, distilled spirits for the chief ingredient,
the tax otherwise due thereon. shall be subject to the same tax as such chief ingredient.
SEC. 138. Removal of Fermented Liquors to Bonded This tax shall be proportionally increased for any strength
Warehouse. - Any brewer may remove or transport from of the spirits taxed over proof spirits, and the tax shall
his brewery or other place of manufacture to a bonded attach to this substance as soon as it is in existence as
warehouse used by him exclusively for the storage or sale such, whether it be subsequently separated as pure or
in bulk of fermented liquors of his own manufacture, any impure spirits, or transformed into any other substance
quantity of such fermented liquors, not less than one either in the process of original production or by any
thousand (1,000) liters at one removal, without subsequent process.
prepayment of the tax thereon under a permit which
shall be granted by the Commissioner. Such permit shall 'Spirits or distilled spirits' is the substance known as
be affixed to every package so removed and shall be ethyl alcohol, ethanol or spirits of wine, including all
cancelled or destroyed in such manner as the dilutions, purifications and mixtures thereof, from
Commissioner may prescribe. Thereafter, the whatever source, by whatever process produced, and
manufacturer of such fermented liquors shall pay the tax shall include whisky, brandy, rum, gin and vodka, and
in the same manner and under the same penalty and other similar products or mixtures.
liability as when paid at the brewery. 'Proof spirits' is liquor containing one-half (1/2) of its
SEC. 139. Removal of Damaged Liquors Free of Tax. - volume of alcohol of a specific gravity of seven thousand
When any fermented liquor has become sour or nine hundred and thirty-nine thousandths (0.7939) at
otherwise damaged so as to be unfit for use as such, fifteen degrees centigrade (15˚C). A 'proof liter' means a
brewers may sell and after securing a special permit from liter of proof spirits.
the Commissioner, under such conditions as may be 'Net retail price' shall mean the price at which the
prescribed in the rules and regulations prescribed by the distilled spirit is sold on retail in at least five (5) major
Secretary of Finance, remove the same without the supermarkets in Metro Manila, excluding the amount
payment of tax thereon in cask or other packages, intended to cover the applicable excise tax and the


value-added tax. For distilled spirits which are marketed or its permit to engage in business as manufacturer or
outside Metro Manila, the 'net retail price' shall mean the importer of distilled spirits.
price at which the distilled spirits is sold in at least five (5) Any corporation, association or partnership liable for any
major supermarkets in the region excluding the amount of the acts or omissions in violation of this Section shall be
intended to cover the applicable excise tax and the fined treble the amount of deficiency taxes, surcharges
value-added tax. and interest which may be assessed pursuant to this
Major supermarkets , as contemplated under this Act, Section.
shall be those with the highest annual gross sales in Any person liable for any of the acts or omissions
Metro Manila or the region, as the case may be, as prohibited under this Section shall be criminally liable
determined by the National Statistics Office, and shall and penalized under Section 254 of this Code. Any person
exclude retail outlets or kiosks, convenience or sari-sari who wilfully aids or abets in the commission of any such
stores, and others of a similar nature: Provided, That no act or omission shall be criminally liable in the same
two (2) supermarkets in the list to be surveyed are manner as the principal.
affiliated and/or branches of each other: Provided, finally,
That in case a particular distilled spirit is not sold in major If the offender is not a citizen of the Philippines, he shall
supermarkets, the price survey can be conducted in retail be deported immediately after serving the sentence,
outlets where said distilled spirit is sold in Metro Manila or without further proceedings for deportation.
the region, as the case maybe, upon determination of the SEC. 142. Wines. - [91] On wines, there shall be collected
Commissioner of the Internal Revenue. per liter of volume capacity effective on January 1, 2013,
The net retail price shall be determined by the Bureau of the following excise taxes:
Internal Revenue (BIR) through a price survey under oath. (a) Sparkling wines/champagnes regardless of proof,
The methodology and all pertinent documents used in if the net retail price per bottle of seven hundred
the conduct of the latest price survey shall be submitted fifty milliliter (750 ml.) volume capacity (excluding
to the Congressional Oversight Committee on the the excise tax and value-added tax) is:
Comprehensive Tax Reform Program created under (1) Five hundred pesos (P500) or less - Two
Republic Act No. 8240. hundred fifty pesos (P250.00); and
Understatement of the suggested net retail price by as (2) More than Five hundred pesos (P500) -Seven
much as fifteen percent (15%) of the actual net retail price hundred pesos (P700.00)
shall render the manufacturer or importer liable for
additional excise tax equivalent to the tax due and (b) Still wines containing and carbonated wines
difference between the understated suggested net retail containing fourteen percent (14%) of alcohol by
price and the actual net retail price. volume or less, Thirty pesos (P30.00); and
Distilled spirits introduced in the domestic market after (c) Still wines and carbonated wines containing
the effectivity of this Act shall be initially taxed according more than fourteen percent (14%) but not more than
to their suggested net retail prices. twenty-five percent (25%) of alcohol by volume, Sixty
pesos (P60.00).
'Suggested net retail price' shall mean the net retail
price at locally manufactured or imported distilled spirits The rates of tax imposed under this Section shall be
are intended by the manufacturer or importer to be sold increased by four percent (4%) every year thereafter
on retail in major supermarkets or retail outlets in Metro effective on January 1, 2014, through revenue regulations
Manila for those marketed nationwide, and in other issued by the Secretary of Finance.
regions, for those with regional markets. At the end of Fortified wines containing more than twenty-five percent
three (3) months from the product launch, the Bureau of of alcohol by volume shall be taxed as distilled spirits.
Internal Revenue shall validate the suggested net retail 'Fortified wines' shall mean natural wines to which
price of the new brand against the net retail price as distilled spirits are added to increase their alcoholic
defined herein and initially determine the correct tax on a strength.
newly introduced distilled spirits. After the end of nine (9)
months from such validation, the Bureau of Internal 'Net retail price', shall mean the price at which sparkling
Revenue shall revalidate the initially validated net retail wine/champagne is sold on retail in at least (5) major
price against the net retail price as of the time of supermarkets in Metro Manila, excluding the amount
revalidation in order to finally determine the correct tax intended to cover the applicable excise tax and the
on a newly introduced distilled spirits. value-added-tax. For sparkling wines/champagnes which
are marketed outside Metro Manila, the 'net retail price'
All distilled spirits existing in the market at the time of the shall mean the price at which the wine is sold in at least
effectivity of this Act shall be taxed according to the tax five (5) major supermarkets in the region excluding the
rates provided above based on the latest price survey of amount intended to cover the applicable excise tax and
the distilled spirits conducted by the Bureau of Internal the value-added tax.
Revenue.
Major supermarkets, as contemplated under this Act,
The methodology and all pertinent documents used in shall be those with the highest annual gross sales in
the conduct of the latest price survey shall be submitted Metro Manila or the region, as the case may be, as
to the Congressional Oversight Committee on the determined by the National Statistics Office, and shall
Comprehensive Tax Reform Program created under exclude retail outlets or kiosks, convenience or sari-sari
Republic Act No. 8240. stores, and others of a similar nature: Provided, That no
Manufacturers and importers of distilled spirits shall, two (2) supermarkets in the list to be surveyed are
within thirty (30) days from the effectivity of this Act, and affiliated and/or branches of each other: Provided, finally,
within the first five (5) days of every third month that in case a particular sparkling wine/champagne is not
thereafter, submit to the Commissioner a sworn sold in major supermarkets, the price survey can be
statement of the volume of sales for each particular conducted in retail outlets where said sparkling
brand of distilled spirits sold at his establishment for the wine/champagne is sold in Metro Manila or the region, as
three-month period immediately preceding. the case maybe upon the determination of the
Commissioner of Internal Revenue.
Any manufacturer or importer who, in violation of this
Section, misdeclares or misrepresents in his or its sworn The net retail price shall be determined by the Bureau of
statement herein required any pertinent data or Internal Revenue (BIR) through a price survey under oath.
information shall, upon final findings by the The methodology and all pertinent documents used in
Commissioner that the violation was committed, be the conduct of the latest price survey shall be submitted
penalized by a summary cancellation or withdrawal of his to the Congressional Oversight Committee on the


Comprehensive Tax Reform Program created under ale, porter and other fermented liquors except tuba, basi,
Republic Act No. 8240. tapuy and similar domestic fermented liquors in
Understatement of the suggested net retail price by as accordance with the following schedule:
much as fifteen percent (15%) of the actual net retail price Effective on January 1, 2013
shall render the manufacturer or importer liable for (a) If the net retail price (excluding the excise
additional excise tax equivalent to the tax due and tax and the value-added tax) per liter of volume
difference between the understated suggested net retail capacity is Fifty pesos and sixty centavos
price and the actual net retail price. (P50.60) or less, the tax shall be Fifteen pesos
Sparkling wines/champagnes introduced in the domestic (P15.00) per liter; and
market after the effectivity of this Act shall be initially tax (b) If the net retail price (excluding the excise
classified according to their suggested net retail prices. tax and the value-added tax) per liter of volume
'Suggested net retail price' shall mean the net retail capacity is more than Fifty pesos and sixty
price at which locally manufactured or imported centavos (P50.60), the tax shall be Twenty pesos
sparkling wines/champagnes are intended by the (P20.00) per liter.
manufacturer or importer to be sold on retail in major Effective on January 1, 2014
supermarkets or retail outlets in Metro Manila for those
marketed nationwide, and in other regions, for those with (a) If the net retail price (excluding the excise
regional markets. At the end of three (3) months from the tax and the value-added tax) per liter of volume
product launch, the Bureau of Internal Revenue shall capacity is Fifty pesos and sixty centavos
validate the suggested net retail price of the sparkling (P50.60) or less, the tax shall be Seventeen
wine /champagne against the net retail price as defined pesos (P17.00) per liter; and
herein and initially determine the correct tax bracket to (b) If the net retail price (excluding the excise
which a newly introduced sparkling wine/champagne tax and the value-added tax) per liter of volume
shall be classified. After the end of nine (9) months from capacity is more than Fifty pesos and sixty
such validation, the Bureau of Internal Revenue shall centavos (P50.60), the tax shall be Twenty-one
revalidate the initially validated net retail price against as pesos (P21.00) per liter.
of the time of revalidation in order to finally determine
the correct tax bracket to which a newly introduced Effective on January 1, 2015
sparkling wine/champagne shall be classified. (a) If the net retail price (excluding the excise
The proper tax classification of sparkling tax and the value-added tax) per liter of volume
wines/champagnes, whether registered before or after capacity is Fifty pesos and sixty centavos
the effectivity of this Act, shall be determined every two (P50.60) or less, the tax shall be Nineteen pesos
(2) years from the date of effectivity of this Act. (P19.00) per liter; and
All sparkling wines/champagnes existing in the market at (b) If the net retail price (excluding the excise
the time of the effectivity of this Act shall be classified tax and the value-added tax) per liter of volume
according to the net retail prices and the tax rates capacity is more than Fifty pesos and sixty
provided above based on the latest price survey of the centavos (P50.60), the tax shall be Twenty-two
sparkling wines/champagnes conducted by the Bureau of pesos (P22.00) per liter.
Internal Revenue. Effective on January 1, 2016
The methodology and all pertinent documents used in (a) If the net retail price (excluding the excise
the conduct of the latest price survey shall be submitted tax and the value-added tax) per liter of volume
to the Congressional Oversight Committee on the capacity is Fifty pesos and sixty centavos
Comprehensive Tax Reform Program created under (P50.60) or less, the tax shall be Twenty-one
Republic Act No. 8240. pesos (P21.00) per liter; and
Manufacturers and importers of wines shall, within thirty (b) If the net retail price (excluding the excise
(30) days from the effectivity of this Act, and within the tax and the value-added tax) per liter of volume
first five (5) days of every month thereafter, submit to the capacity is more than Fifty pesos and sixty
Commissioner a sworn statement of the volume of sales centavos (P50.60), the tax shall be Twenty-three
for each particular brand of wines sold at his pesos (P23.00) per liter.
establishment for the three-month period immediately
preceding. Effective on January 1, 2017, the tax on all fermented
liquors shall be Twenty-three pesos and fifty centavos
Any manufacturer or importer who, in violation of this (P23.50) per liter.
Section, misdeclares or misrepresents in his or its sworn
statement herein required any pertinent data or The rates of tax imposed under this Section shall be
information shall, upon final findings by the increased by four percent (4%) every year thereafter
Commissioner that the violation was committed be effective on January 1, 2018, through revenue regulations
penalized by a summary cancellation or withdrawal of his issued by the Secretary of Finance. However, in case of
or its permit to engage in business as manufacturer or fermented liquors affected by the 'no downward
importer of wines. reclassification' provision prescribed under this Section,
the four percent (4%) increase shall apply to their
Any corporation, association or partnership liable for any respective applicable tax rates.
of the acts or omissions in violation of this Section shall be
fined treble the amount of deficiency taxes, surcharges Fermented liquors which are brewed and sold at
and interest which may be assessed pursuant to this micro-breweries or small establishments such as pubs
Section. and restaurants shall be subject to the rate of
Twenty-eight pesos (P28.00) per liter effective on January
Any person liable for any of the acts or omissions 1, 2013: Provided, That this rate shall be increased by four
prohibited under this Section shall be criminally liable percent (4%) every year thereafter effective on January 1,
and penalized under Section 254 of this Code. Any person 2014, through revenue regulations issued by the
who willfully aids or abets in the commission of any such Secretary of Finance.
act or omission shall be criminally liable in the same
manner as the principal. Fermented liquors introduced in the domestic market
after the effectivity of this Act shall be initially tax
If the offender is not a citizen of the Philippines, he shall classified according to their suggested net retail prices.
be deported immediately after serving the sentence,
without further proceedings for deportation. 'Suggested net retail price' shall mean the net retail
price at which locally manufactured or imported
Sec. 143. Fermented Liquor. - [92] There shall be levied, fermented liquor are intended by the manufacturer or
assessed and collected an excise tax on beer, lager beer,



importer to be sold on retail in major supermarkets or sales for each particular brand of fermented liquor sold at
retail outlets in Metro Manila for those marketed his establishment for the three-month period
nationwide, and in other regions, for those with regional immediately preceding.
markets. At the end of three (3) months from the product Any brewer or importer who, in violation of this Section,
launch, the Bureau of Internal Revenue shall validate the misdeclares or misrepresents in his or its sworn
suggested net retail price of the newly introduced statement herein required any pertinent data or
fermented liquor against the net retail price as defined information shall, upon final findings by the
herein and initially determine the correct tax bracket to Commissioner that the violation was committed, be
which a newly introduced fermented liquor, as defined penalized by a summary cancellation or withdrawal of his
above, shall be classified. After the end of nine (9) months or its permit to engage in business as brewer or importer
from such validation, the Bureau of Internal Revenue of fermented liquor.
shall revalidate the initially validated net retail price
against the net retail price as of the time of revalidation in Any corporation, association or partnership liable for any
order to finally determine the correct tax bracket which a of the acts or omissions in violation of this Section shall be
newly introduced fermented liquor shall be classified. fined treble the amount of deficiency taxes, surcharges
and interest which may be assessed pursuant to this
'Net retail price' shall mean the price at which the Section.
fermented liquor is sold on retail in at least five (5) major
supermarkets in Metro Manila (for brands of fermented Any person liable for any of the acts or omissions
liquor marketed nationally), excluding the amount prohibited under this Section shall be criminally liable
intended to cover the applicable excise tax and the and penalized under Section 254 of this Code. Any person
value-added tax. For brands which are marketed outside who willfully aids or abets in the commission of any such
Metro Manila, the 'net retail price' shall mean the price at act or omission shall be criminally liable in the same
which the fermented liquor is sold in at least five (5) major manner as the principal.
supermarkets in the region excluding the amount If the offender is not a citizen of the Philippines, he shall
intended to cover the applicable excise tax and the be deported immediately after serving the sentence,
value-added tax. without further proceedings for deportation.
Major supermarkets, as contemplated under this Act,
shall be those with the highest annual gross sales in
Metro Manila or the region, as the case may be, as
determined by the National Statistics Office, and shall CHAPTER IV EXCISE TAX ON TOBACCO PRODUCTS
exclude retail outlets or kiosks, convenience or sari-sari SEC. 144. Tobacco Products. - [93]There shall be collected
stores, and others of a similar nature: Provided, That no an excise tax of One peso and seventy-five centavos
two (2) supermarkets in the list to be surveyed are (P1.75) effective on January 1, 2013 on each kilogram of the
affiliated and/or branches of each other: Provided, finally, following products of tobacco:
That in case a particular fermented liquor is not sold in
major supermarkets, the price survey can be conducted (a) Tobacco twisted by hand or reduced into a
in retail outlets where said fermented liquor is sold in condition to be consumed in any manner other than
Metro Manila or the region, as the case may be, upon the the ordinary mode of drying and curing;
determination of the Commissioner of Internal Revenue. (b) Tobacco prepared or partially prepared with or
The net retail price shall be determined by the Bureau of without the use of any machine or instruments or
Internal Revenue (BIR) through a price survey under oath. without being pressed or sweetened except as
otherwise provided hereunder; and
The methodology and all pertinent documents used in
the conduct of the latest price survey shall be submitted (c) Fine-cut shorts and refuse, scraps, clippings,
to the Congressional Oversight Committee on the cuttings, stems and sweepings of tobacco except as
Comprehensive Tax Reform Program created under otherwise provided hereunder.
Republic Act No. 8240. Stemmed leaf tobacco, tobacco prepared or partially
Understatement of the suggested net retail price by as prepared with or without the use of any machine or
much as fifteen percent (15%) of the actual net retail price instrument or without being pressed or sweetened,
shall render the manufacturer or importer liable for fine-cut shorts and refuse, scraps, clippings, cuttings,
additional excise tax equivalent to the tax due and stems, midribs, and sweepings of tobacco resulting from
difference between the understated suggested net retail the handling or stripping of whole leaf tobacco shall be
price and the actual net retail price. transferred, disposed of, or otherwise sold, without any
prepayment of the excise tax herein provided for, if the
Any downward reclassification of present categories, for same are to be exported or to be used in the manufacture
tax purposes, of fermented liquors duly registered at the of cigars, cigarettes, or other tobacco products on which
time of the effectivity of this Act which will reduce the tax the excise tax will eventually be paid on the finished
imposed herein, or the payment thereof, shall be product, under such conditions as may be prescribed in
prohibited. the rules and regulations promulgated by the Secretary
The proper tax classification of fermented liquors, of Finance, upon recommendation of the Commissioner.
whether registered before or after the effectivity of this On tobacco specially prepared for chewing so as to be
Act, shall be determined every two (2) years from the date unsuitable for use in any other manner, on each kilogram,
of effectivity of this Act. One peso and fifty centavos (P1.50) effective on January 1,
All fermented liquors existing in the market at the time of 2013.
the effectivity of this Act shall be classified according to The rates of tax imposed under this Section shall be
the net retail prices and the tax rates provided above increased by four percent. (4%) every year thereafter
based on the latest price survey of the fermented liquors effective on January 1, 2014, through revenue regulations
conducted by the Bureau of Internal Revenue. issued by the Secretary of Finance.
The methodology and all pertinent documents used in No tobacco products manufactured in the Philippines
the conduct of the latest price survey shall be submitted and produced for export shall be removed from their
to the Congressional Oversight Committee on the place of manufacture or exported without posting of an
Comprehensive Tax Reform Program created under export bond equivalent to the amount of the excise tax
Republic Act No. 8240. due thereon if sold domestically: Provided, however, That
Every brewer or importer of fermented liquor shall, within tobacco products for export may be transferred from the
thirty (30) days from the effectivity of this Act, and within place of manufacture to a bonded facility, upon posting of
the first five (5) days of every month thereafter, submit to a transfer bond, prior to export.
the Commissioner a sworn statement of the volume of


Tobacco products imported into the Philippines and 'Cigarettes packed by hand' shall refer to the manner of
destined for foreign countries shall not be allowed entry packaging of cigarette sticks using an individual person's
without posting a bond equivalent to the amount of hands and not through any other means such as a
customs duty, excise and value-added taxes due thereon mechanical device, machine or equipment.
if sold domestically. (C) Cigarettes Packed by Machine. — There shall be
Manufacturers and importers of tobacco products shall, levied, assessed and collected on cigarettes packed by
within thirty (30) days from the effectivity of this Act, and machine a tax at the rates prescribed below:
within the first five (5) days of every month thereafter, Effective on January 1, 2018 until June 30, 2018, the
submit to the Commissioner a sworn statement of the tax on all cigarettes packed by machine shall be
volume of sales for each particular brand of tobacco Thirty-two pesos and fifty centavos (P32.50) per pack;
products sold for the three-month period immediately
preceding. Effective on July 1, 2018 until December 31, 2019, the
tax on all cigarettes packed by machine shall be
Any manufacturer or importer who, in violation of this Thirty-five pesos (P35.00) per pack;
Section, misdeclares or misrepresents hi his or its sworn
statement herein required any pertinent data or Effective on January 1, 2020 until December 31, 2021,
information shall, upon final findings by the the tax on all cigarettes packed by machine shall be
Commissioner that the violation was committed, be Thirty-seven pesos and fifty centavos (P37.50) per
penalized by a summary cancellation or withdrawal of his pack; and
or its permit to engage in business as manufacturer or Effective on January 1, 2022 until December 31, 2023,
importer of cigars or cigarettes. the tax on all cigarettes packed by machine shall be
Any corporation, association or partnership liable for any Forty pesos (P40.00) per pack.
of the acts or omissions in violation of this Section shall be The rates of tax imposed under this Subsection shall be
fined treble the amount of deficiency taxes, surcharges increased by four percent (4%) every year thereafter
and interest which may be assessed pursuant to this effective on January 1, 2024, through revenue regulations
Section. issued by the Secretary of Finance.
Any person liable for any of the acts or omissions (as amended by RA No 10963)
prohibited under this Section shall be criminally liable
and penalized under Section 254 of this Code. Any person SEC. 146. Inspection Fee. - For inspection made in
who willfully aids or abets in the commission of any such accordance with this Chapter, there shall be collected a
act or omission shall be criminally liable in the same fee of Fifty centavos (P0.50) for each thousand cigars or
manner as the principal. fraction thereof; Ten centavos (P0.10) for each thousand
cigarettes of fraction thereof; Two centavos (P0.02) for
If the offender is not a citizen of the Philippines, he shall each kilogram of leaf tobacco or fraction thereof; and
be deported immediately after serving the sentence, Three centavos (P0.03) for each kilogram or fraction
without further proceedings for deportation. thereof, of scrap and other manufactured tobacco.
Sec. 145. Cigars and Cigarettes. - [94] The inspection fee on leaf tobacco, scrap, cigars,
(A) Cigars. - There shall be levied, assessed and collected cigarettes and other tobacco products as defined in
on cigars an excise tax in accordance with the following Section 147 of this Code shall be paid by the wholesaler,
schedule: manufacturer, producer, owner or operator of redrying
plant, as the case may be, immediately before removal
(1) Effective on January 1, 2013 thereof from the establishment of the wholesaler,
(a) An ad valorem tax equivalent to twenty manufacturer, owner or operator of the re-drying plant. In
percent (20%) of the net retail price (excluding case of imported leaf tobacco and products thereof, the
the excise tax and the value-added tax) per inspection fee shall be paid by the importer before
cigar; and removal from customs' custody.
(b) In addition to the ad valorem tax herein Fifty percent (50%) of the tobacco inspection fee shall
imposed, a specific tax of Five pesos (P5.00) per accrue to the Tobacco Inspection Fund created by
cigar. Section 12 of Act No. 2613, as amended by Act No. 3179,
(2) In addition to the ad valorem tax herein and fifty percent (50%) shall accrue to the Cultural Center
imposed, the specific tax rate of Five pesos (P5.00) of the Philippines.
imposed under this subsection shall be increased by SEC. 147. Definition of Terms. - When used herein and in
four percent (4%) effective on January 1, 2014 statements or official forms prescribed hereunder, the
through revenue regulations issued by the Secretary following terms shall have the meaning indicated:
of Finance. (a) 'Cigars' mean all rolls of tobacco or any substitute
(B) Cigarettes Packed by Hand. - There shall be levied, thereof, wrapped in leaf tobacco.
assessed and collected on cigarettes packed by hand an (b) 'Cigarettes' mean all rolls of finely-cut leaf
excise tax based on the following schedules: tobacco, or any substitute therefor, wrapped in
Effective on January 1, 2018 until June 30, 2018, paper or in any other material.
Thirty-two pesos and fifty centavos (P32.50) per pack; (c) 'Wholesale price' shall mean the amount of
Effective on July 1, 2018 until December 31, 2019, money or price paid for cigars or cigarettes
Thirty-five pesos (P35.00) per pack; purchased for the purpose of resale, regardless of
Effective on January 1, 2020 until December 31, 2021, quantity.
Thirty-seven pesos and fifty centavos (P37.50) per (d) 'Retail price' shall mean the amount of money or
pack; and price which an ultimate consumer or end-user pays
Effective on January 1, 2022 until December 31, 2023, for cigars or cigarettes purchased.
Forty pesos (P40.00) per pack.
The rates of tax imposed under this subsection shall be
increased by four percent (4%) every year effective on CHAPTER V EXCISE TAX ON PETROLEUM
January 1, 2024, through revenue regulations issued by PRODUCTS
the Secretary of Finance.
SEC. 148. Manufactured Oils and Other Fuels. — There
Duly registered cigarettes packed by hand shall only be shall be collected on refined and manufactured mineral
packed in twenties and other packaging combinations of oils and motor fuels, the following excise taxes which shall
not more than twenty.


attach to the goods hereunder enumerated as soon as (j) Liquefied petroleum gas, per kilogram, One peso
they are in existence as such: (P1.00): Provided, That liquefied petroleum gas when
Effective January 1, 2018 used as raw material in the production of
petrochemical products, subject to the rules and
(a) Lubricating oils and greases, including but not regulations to be promulgated by the Secretary of
limited to, basestock for lube oils and greases, high Finance, shall be taxed zero (P0.00) per kilogram:
vacuum distillates, aromatic extracts and other
similar preparations, and additives for lubricating oils Provided, finally, That liquefied petroleum gas used for
and greases, whether such additives are petroleum motive power shall be taxed at the equivalent rate as the
based or not, per liter and kilogram, respectively, of excise tax on diesel fuel oil;
volume capacity or weight, Eight pesos (P8.00): (k) Asphalts, per kilogram, Eight Pesos (P8.00);
Provided, That lubricating oils and greases produced (l) Bunker fuel oil, and on similar fuel oils having more
from basestocks and additives on which the excise or less the same generating power, per liter of volume
tax has already been paid shall no longer be subject capacity, Two pesos and fifty centavos (P2.50):
to excise tax: Provided, further, That locally produced Provided, however, That the excise taxes paid on the
or imported oils previously taxed as such but are purchased basestock (bunker) used in the
subsequently reprocessed, refined or recycled shall manufacture of excisable articles and forming part
likewise be subject to the tax imposed under this thereof shall be credited against the excise tax due
Subsection; therefrom; and
(b) Processed gas, per liter of volume capacity, Eight (m) Petroleum coke, per metric ton, Two pesos and
pesos (P8.00); fifty centavos (P2.50): Provided, however, That,
(c) Waxes and petrolatum, per kilogram, Eight pesos petroleum coke, when used as feedstock to any
(P8.00); power generating facility, per metric ton, zero (P0.00).
(d) On denatured alcohol to be used for motive Effective January 1, 2019
power, per liter of volume capacity, Eight pesos (a) Lubricating oils and greases, including but not
(P8.00): Provided, That unless otherwise provided by limited to, basestock for lube oils and greases, high
special laws, if the denatured alcohol is mixed with vacuum distillates, aromatic extracts and other
gasoline, the excise tax on which has already been similar preparations, and additives for lubricating oils
paid, only the alcohol content shall be subject to the and greases, whether such additives are petroleum
tax herein prescribed. For purposes of this based or not, per liter and kilogram, respectively, of
Subsection, the removal of denatured alcohol of not volume capacity or weight, Nine pesos (P9.00):
less than one hundred eighty degrees (180º) proof Provided, That lubricating oils and greases produced
(ninety percent (90%) absolute alcohol) shall be from basestocks and additives on which the excise
deemed to have been removed for motive power, tax has already been paid shall no longer be subject
unless shown otherwise; to excise tax: Provided, further, That locally produced
(e) Naphtha, regular gasoline, pyrolysis gasoline and or imported oils previously taxed as such but are
other similar products of distillation, per liter of subsequently reprocessed, rerefined or recycled shall
volume capacity, Seven pesos (P7.00):Provided, likewise be subject to the tax imposed under this
however, That naphtha and pyrolysis gasoline, when Subsection.
used as a raw material in the production of (b) Processed gas, per liter of volume capacity, Nine
petrochemical products, or in the refining of pesos (P9.00);
petroleum products, or as replacement fuel for
natural-gas-fired-combined cycle power plant in lieu (c) Waxes and petrolatum, per kilogram, Nine pesos
of locally-extracted natural gas during the (P9.00);
non-availability thereof, subject to the rules and (d) On denatured alcohol to be used for motive
regulations to be promulgated by the Secretary of power, per liter of volume capacity, Nine pesos
Finance, per liter of volume capacity, zero (P9.00): Provided, That unless otherwise provided by
(P0.00):Provided, further, That the production of special laws, if the denatured alcohol is mixed with
petroleum products, whether or not they are gasoline, the excise tax on which has already been
classified as products of distillation and for use solely paid, only the alcohol content shall be subject to the
for the production of gasoline shall be exempt from tax herein prescribed. For purposes of this
excise tax: Provided, finally, That the by-product Subsection, the removal of denatured alcohol of not
including fuel oil, diesel fuel, kerosene, pyrolysis less than one hundred eighty degrees (180º) proof
gasoline, liquefied petroleum gases, and similar oils (ninety percent (90%) absolute alcohol) shall be
having more or less the same generating power, deemed to have been removed for motive power,
which are produced in the processing of naphtha into unless shown otherwise;
petrochemical products shall be subject to the
applicable excise tax specified in this Section, except (e) Naphtha, regular gasoline, pyrolysis gasoline, and
when such by-products are transferred to any of the other similar products of distillation, per liter of
local oil refineries through sale, barter or exchange, volume capacity, Nine pesos (P9.00):Provided,
for the purpose of further processing or blending into however, That naphtha and pyrolysis gasoline, when
finished products which are subject to excise tax used as a raw material in the production of
under this Section; petrochemical products, or in the refining of
petroleum products, or as replacement fuel for
(f) Unleaded premium gasoline, per liter of volume natural-gas-fired-combined cycle power plant in lieu
capacity, Seven pesos (P7.00); of locally-extracted natural gas during the
(g) Aviation turbo jet fuel, aviation gas, per liter of non-availability thereof, subject to the rules and
volume capacity, Four Pesos (P4.00); regulations to be promulgated by the Secretary of
Finance, per liter of volume capacity, zero
(h) Kerosene, per liter of volume capacity, Three pesos (P0.00):Provided, further, That the production of
(P3.00): Provided, That kerosene, when used as petroleum products, whether or not they are
aviation fuel, shall be subject to the same tax on classified as products of distillation and for use solely
aviation turbo jet fuel under the preceding paragraph for the production of gasoline shall be exempt from
(g), such tax to be assessed on the user thereof; excise tax: Provided, finally, That the by-product
(i) Diesel fuel oil, and on similar fuel oils having more including fuel oil, diesel fuel, kerosene, pyrolysis
or less the same generating power, per liter of volume gasoline, liquefied petroleum gases and similar oils
capacity, Two pesos and fifty centavos (P2.50); having more or less the same generating power,
which are produced in the processing of naphtha into


petrochemical products shall be subject to the volume capacity, Ten pesos (P10.00):Provided,
applicable excise tax specified in this Section, except however, That naphtha and pyrolysis gasoline, when
when such by-products are transferred to any of the used as a raw material in the production of
local oil refineries through sale, barter or exchange, petrochemical products, or in the refining of
for the purpose of further processing or blending into petroleum products or as replacement fuel for
finished products which are subject to excise tax natural-gas-fired-combined cycle power plant in lieu
under this Section; of locally-extracted natural gas during the
(f) Unleaded premium gasoline, per liter of volume non-availability thereof, subject to the rules and
capacity, Nine pesos (P9.00); regulations to be promulgated by the Secretary of
Finance, per liter of volume capacity, zero
(g) Aviation turbo jet fuel, aviation gas, per liter of (P0.00):Provided, further, That the production of
volume capacity, Four pesos (P4.00); petroleum products, whether or not they are
(h) Kerosene, per liter of volume capacity, Four pesos classified as products of distillation and for use solely
(P4.00): Provided, That kerosene, when used as for the production of gasoline shall be exempt from
aviation fuel, shall be subject to the same tax on excise tax: Provided, finally, That the by-product
aviation turbo jet fuel under the preceding paragraph including fuel oil, diesel fuel, kerosene, pyrolysis
(g), such tax to be assessed on the user thereof; gasoline, liquefied petroleum gases and similar oils
having more or less the same generating power,
(i) Diesel fuel oil, and on similar fuel oils having more which are produced in the processing of naphtha into
or less the same generating power, per liter of volume petrochemical products shall be subject to the
capacity, Four pesos and fifty centavos (P4.50); applicable excise tax specified in this Section, except
(j) Liquefied petroleum gas, per kilogram, Two pesos when such by-products are transferred to any of the
(P2.00): Provided, That liquefied petroleum gas when local oil refineries through sale, barter or exchange,
used as raw material in the production of for the purpose of further processing or blending into
petrochemical products, subject to the rules and finished products which are subject to excise tax
regulations to be promulgated by the Secretary of under this Section;
Finance, per kilogram, zero (P0.00):Provided, finally, (f) Unleaded premium gasoline, per liter of volume
That liquefied petroleum gas used for motive power capacity, Ten pesos (P10.00);
shall be taxed at the equivalent rate as the excise tax
on diesel fuel oil; (g) Aviation turbo jet fuel, aviation gas, per liter of
volume capacity, Four pesos (P4.00);
(k) Asphalts, per kilogram, Nine pesos (P9.00);
(h) Kerosene, per liter of volume capacity, Five pesos
(l) Bunker fuel oil, and on similar fuel oils having more (P5.00): Provided, That kerosene, when used as
or less the same generating power, per liter of volume aviation fuel, shall be subject to the same tax on
capacity, Four pesos and fifty centavos (P4.50): aviation turbo jet fuel under the preceding paragraph
Provided, however, That the excise taxes paid on the (g), such tax to be assessed on the user thereof;
purchased basestock (bunker) used in the
manufacture of excisable articles and forming part (i) Diesel fuel oil, and on similar fuel oils having more
thereof shall be credited against the excise tax due or less the same generating power, per liter of volume
therefrom; and capacity, Six pesos (P6.00);
(m) Petroleum coke, per metric ton, Four pesos and (j) Liquefied petroleum gas, per kilogram, Three
fifty centavos (P4.50): Provided, however, That, pesos (P3.00): Provided, That liquefied petroleum gas
petroleum coke, when used as feedstock to any when used as raw material in the production of
power generating facility, per metric ton, zero (P0.00). petrochemical products, subject to the rules and
regulations to be promulgated by the Secretary of
Effective January 1, 2020 Finance, per kilogram, zero (P0.00):Provided, finally,
(a) Lubricating oils and greases, including but not That liquefied petroleum gas used for motive power
limited to, basestock for lube oils and greases, high shall be taxed at the equivalent rate as the excise tax
vacuum distillates, aromatic extracts and other on diesel fuel oil;
similar preparations, and additives for lubricating oils (k) Asphalts, per kilogram, Ten pesos (P10.00);
and greases, whether such additives are petroleum
based or not, per liter and kilogram, respectively, of (l) Bunker fuel oil, and on similar fuel oils having more
volume capacity or weight, Ten pesos (P10.00): or less the same generating power, per liter of volume
Provided, That lubricating oils and greases produced capacity, Six pesos (P6.00):Provided, however, That
from basestocks and additives on which the excise the excise taxes paid on the purchased basestock
tax has already been paid shall no longer be subject (bunker) used in the manufacture of excisable articles
to excise tax: Provided, further, That locally produced and forming part thereof shall be credited against the
or imported oils previously taxed as such but are excise tax due therefrom; and
subsequently reprocessed, rerefined or recycled shall (m) Petroleum coke, per metric ton, Six pesos (P6.00):
likewise be subject to the tax imposed under this Provided, however, That, petroleum coke, when used
subsection. as feedstock to any power generating facility, per
(b) Processed gas, per liter of volume capacity, Ten metric ton, zero (P0.00).
pesos (P10.00); Petroleum products, including naphtha, LPG, petroleum
(c) Waxes and petrolatum, per kilogram, Ten pesos coke, refinery fuel and other products of distillation, when
(P10.00); used as input, feedstock or as raw material in the
manufacturing of petrochemical products, or in the
(d) On denatured alcohol to be used for motive refining of petroleum products, or as replacement fuel for
power, per liter of volume capacity, Ten pesos (P10.00): natural-gas-fired-combined cycle power plant in lieu of
Provided, That unless otherwise provided by special locally-extracted natural gas during the non-availability
laws, if the denatured alcohol is mixed with gasoline, thereof, subject to the rules and regulations to be
the excise tax on which has already been paid, only promulgated by the Secretary of Finance, per liter of
the alcohol content shall be subject to the tax herein volume capacity, zero (P0.00); Provided, That the
prescribed. For purposes of this Subsection, the by-product including fuel oil, diesel fuel, kerosene,
removal of denatured alcohol of not less than one pyrolysis gasoline, liquefied petroleum gases, and similar
hundred eighty degrees (180º) proof (ninety percent oils having more or less the same generating power,
(90%) absolute alcohol) shall be deemed to have been which are produced in the processing of naphtha into
removed for motive power, unless shown otherwise; petrochemical products shall be subject to the applicable
(e) Naphtha, regular gasoline, pyrolysis gasoline and excise tax specified in this Section, except when such
other similar products of distillation, per liter of by-products are transferred to any of the local oil



refineries through sale, barter or exchange, for the (f) Engagement of Fuel Marking Provider. — The
purpose of further processing or blending into finished government shall engage only one fuel marking
products which are subject to excise tax under this provider who shall, under the supervision and
Section. direction of the Commissioners of Internal Revenue
For the period covering 2018 to 2020, the scheduled and Customs, be responsible for providing,
increase in the excise tax on fuel as imposed in this monitoring, and administering the fuel markers,
Section shall be suspended when the average Dubai provide equipment and devices, conduct field and
crude oil price based on Mean of Platts Singapore (MOPS) confirmatory tests, and perform such other acts
for three (3) months prior to the scheduled increase of the incidental or necessary to the proper implementation
month reaches or exceeds Eighty dollars (USD80) per of the provisions of this Act: Provided, That the fuel
barrel. marking provider shall provide an end-to-end
solution to the Government, including the
Provided, That the Department of Finance shall perform establishment and operation of testing facilities that
an annual review of the implementation of the excise tax are certified to ISO 17025;
on fuel and shall, based on projections provided and
recommendations of the Development Budget (g) All costs pertaining to the procurement of the
Coordination Committee, as reconciled from the official fuel markers shall be borne by the refiner,
conditions as provided above, recommend the manufacturer or importer, of petroleum products, as
implementation or suspension of the excise tax on fuel: the case may be: Provided, That the government may
Provided, further, That the recommendation shall be subsidize the cost of official fuel markers in the first
given on a yearly basis: Provided, finally, That any year of implementation;
suspension of the increase in excise tax shall not result in (h) Fuel Marking Program Funds. — In addition to
any reduction of the excise tax being imposed at the time any appropriation to implement this Section and the
of the suspension. last paragraph of Section 171 of this Act, fees or
(as amended by RA No 10963) charges collected in relation to the fuel marking
program may be recorded as trust receipts of the
SEC. 148-A. Mandatory Marking of All Petroleum implementing agencies, and shall be exclusively
Products. — In accordance with rules and regulations to disbursed to defray the cost of services or equipment
be issued by the Secretary of Finance, in consultation required to fully implement the said program, subject
with the Commissioner of Internal Revenue and to rules and regulations to be issued by the
Commissioner of Customs and in coordination with the DOF-DBM-COA permanent committee;
Secretary of Energy, the Secretary of Finance shall require
the use of an official fuel marking or similar technology (i) The marking of petroleum products shall be
on petroleum products that are refined, manufactured, or mandatory within five (5) years from the effectivity of
imported into the Philippines, and that are subject to the this Act; and
payment of taxes and duties, such as but not limited to, ( j) The term 'random field test' shall refer to periodic
unleaded premium gasoline, kerosene, and diesel fuel oil random inspections and tests performed to establish
after the taxes and duties thereon have been paid. The qualitative and quantitative positive result of fuel
mandatory marking of all petroleum products shall be in trafficking, which are conducted on fuels found in the
accordance with the following: warehouses, storage tanks, gas stations and other
(a) Official Markers. — There shall be a list of retail outlets, and in such other properties or
chemical additives and corresponding quantitative equipment, including mechanisms of transportation,
ratio as identified by the Secretary of Finance as of persons engaged in the sale, delivery, trading,
official fuel markers. The official fuel markers shall be transportation, distribution, or importation of fuel
distinct and, to the greatest degree possible, intended for domestic market.
impossible to imitate or replicate: Provided, That the The term 'confirmatory tests' shall refer to the accurate
official fuel marker must be unique to the Philippines and precise analytical test of the tested unmarked,
and that its chemical composition and quantitative adulterated, or diluted fuel using a device, tool or
ratio must persist for at least three (3) years from their equipment which will validate and confirm the result of
application or administration to the unmarked fuel; the field test, that is immediately conducted in an
(b) The person, entity, or taxpayer who owns or enters accredited testing facility that is certified to ISO 17025.
the petroleum products into the country, or the (as amended by RA No 10963)
person to whom the petroleum products are
consigned shall cause and accommodate the
marking of the petroleum products with the official
marking agent; CHAPTER VI EXCISE TAX ON MISCELLANEOUS
(c) Internal revenue or customs officers shall be on ARTICLES
site to administer the declaration of the tax and
duties imposed on the petroleum products and to
oversee the application of the fuel marking; SEC. 149. Automobiles. - There shall be levied, assessed
and collected an ad valorem tax on automobiles based on
(d) Absence of Official or Dilution of the Official the manufacturer's or importer's selling price, net of
Marker; Presumptions. — In the event that the excise and value-added tax, in accordance with the
petroleum products which do not contain the official following schedule:
marker or which contain the official marker but are
diluted beyond the acceptable percentage approved Net manufacturer's price/ importer's Rate
by the Secretary of Finance are found in the domestic selling price
market or in the possession of anyone, or under any
situation where said petroleum products are subject Up to P 600,000 4%
to duties and taxes, it shall be presumed that the
same were withdrawn with the intention to evade the Over P 600,000 to P 1 Million 10%
payment of the taxes and duties due thereon;
(e) The use of fraudulent marker on the petroleum Over P1. Million to P 4 Million 20%
products shall be considered prima facie evidence
that the same have been withdrawn or imported Over P 4 Million 50%
without the payment of taxes and duties due Provided, That, hybrid vehicles shall be subject to fifty
thereon; percent (50%) of the applicable excise tax rates on
automobiles under this Section: Provided, further,That


purely electric vehicles and pick-ups shall be exempt (b) Perfumes and toilet waters;
from excise tax on automobiles. (c) Yachts and other vessels intended for pleasure or
As used in this Section — sports.
(a) Automobile shall mean any four (4) or more SEC. 150-A. Non-essential Services. — There shall be
wheeled motor vehicle regardless of seating capacity, levied, assessed, and collected a tax equivalent to five
which is propelled by gasoline, diesel, electricity or percent (5%) based on the gross receipts derived from the
any other motive power: Provided, That for purposes performance of services, net of excise tax and
of this Act, buses, trucks, cargo vans, value-added tax, on invasive cosmetic procedures,
jeepneys/jeepney substitutes, single cab chassis, and surgeries, and body enhancements directed solely
special-purpose vehicles shall not be considered as towards improving, altering, or enhancing the patient's
automobiles. appearance and do not meaningfully promote the proper
(b) Truck/cargo van shall mean a motor vehicle of function of the body or prevent or treat illness or disease:
any configuration that is exclusively designed for the Provided, That this tax shall not apply to procedures
carriage of goods and with any number of wheels necessary to ameliorate a deformity arising from, or
and axles: Provided, That pick-ups shall be considered directly related to, a congenital or developmental defect
as trucks. or abnormality, a personal injury resulting from an
accident or trauma, or disfiguring disease, tumor, virus or
(c) Jeepney/jeepney substitutes shall mean as infection: Provided, finally, That cases or treatments
'Philippine jeep or jeepney' which are of the jitney covered by the National Health Insurance Program shall
type locally designed and manufactured generally not be subject to this tax.(as amended by RA No 10963)
from surplus parts and components. It shall also
include jeepney substitutes that are manufactured SEC. 150-B. Sweetened Beverages. —
from brand-new single cab chassis or cowl chassis (A) Rate and Base of Tax. — Effective January 1, 2018:
and locally customized rear body that has continuous (1) A tax of Six pesos (P6.00) per liter of volume
sideway row seats with open rear door and without capacity shall be levied, assessed, and collected on
retractable glass windows. sweetened beverages using purely caloric
(d) Bus shall mean a motor vehicle of any sweeteners, and purely non-caloric sweeteners, or a
configuration with gross vehicle weight of 4.0 tons or mix of caloric and non-caloric sweeteners: Provided,
more with any number of wheels and axles, which is That this tax rate shall not apply to sweetened
generally accepted and specially designed for mass beverages using high fructose corn syrup: Provided,
or public transportation. further, That sweetened beverages using purely
(e) Single cab chassis shall mean a motor vehicle coconut sap sugar and purely steviol glycosides shall
with complete engine power train and chassis be exempt from this tax; and
equipped with a cab that has a maximum of two (2) (2) A tax of Twelve pesos (P12.00) per liter of volume
doors and only one (1) row of seats. capacity shall be levied, assessed, and collected on
(f) Special purpose vehicle shall mean a motor sweetened beverages using purely high fructose corn
vehicle designed for specific applications such as syrup or in combination with any caloric or
cement mixer, fire truck, boom truck, ambulance non-caloric sweetener.
and/or medical unit, and off-road vehicles for heavy (B) Definition of Terms. — As used in this Act:
industries and not for recreational activities. (1) Sweetened beverages (SBs) refer to non-alcoholic
(g) Hybrid electric vehicle shall mean a motor beverages of any constitution (liquid, powder, or
vehicle powered by electric energy, with or without concentrates) that are pre-packaged and sealed in
provision for off-vehicle charging, in combination with accordance with the Food and Drug Administration
gasoline, diesel or any other motive power: Provided, (FDA) standards, that contain caloric and/or
That, for purposes of this Act, a hybrid electric vehicle non-caloric sweeteners added by the manufacturers,
must be able to propel itself from a stationary and shall include, but not be limited to the following,
condition using solely electric motor. as described in the Food Category System from
Provided, That in the case of imported automobiles not Codex Alimentarius Food Category Descriptors
for sale, the tax imposed herein shall be based on the (Codex Stan 192-1995, Rev. 2017 or the latest) as
total landed value, including transaction value, customs adopted by the FDA:
duty and all other charges. (a) Sweetened juice drinks;
Automobiles used exclusively within the freeport zone (b) Sweetened tea;
shall be exempt from excise tax. (c) All carbonated beverages;
(as amended by RA No 10963) (d) Flavored water;
SEC. 150. Non-essential Goods. - There shall be levied, (e) Energy and sports drinks;
assessed and collected a tax equivalent to twenty-percent
(20%) based on the wholesale price or the value of (f) Other powdered drinks not classified as milk,
importation used by the Bureau of Customs in juice, tea, and coffee;
determining tariff and customs duties, net of excise tax (g) Cereal and grain beverages; and
and value-added tax, of the following goods:
(h) Other non-alcoholic beverages that contain
(a) All goods commonly or commercially known as added sugar.
jewelry, whether real or imitation, pearls, precious
and semi-precious stones and imitations thereof; (2) Caloric sweetener refers to a substance that is
goods made of, or ornamented, mounted or fitted sweet and includes sucrose, fructose, and glucose
with, precious metals or imitations thereof or ivory that produces a certain sweetness;
(not including surgical and dental instruments, (3) High fructose corn syrup refers to a sweet
silver-plated wares, frames or mountings for saccharide mixture containing fructose and glucose
spectacles or eyeglasses, and dental gold or gold which is derived from corn and added to provide
alloys and other precious metals used in filling, sweetness to beverages, and which includes other
mounting or fitting the teeth); opera glasses and similar fructose syrup preparations; and
lorgnettes. The term 'precious metals' shall include
platinum, gold, silver and other metals of similar or (4) Non-caloric sweetener refers to a substance that
greater value. The term 'imitations thereof' shall are artificially or chemically processed that produces
include platings and alloys of such metals; a certain sweetness. These are substances which can
be directly added to beverages, such as aspartame,
sucralose, saccharin, acesulfame potassium,



neotame, cyclamates and other non-nutritive The FDA shall also conduct post-marketing surveillance
sweeteners approved by the Codex Alimentarius and of the sweetened beverages on display in supermarkets,
adopted by the FDA. groceries or retail stores and/or inspection of
(C) Exclusions. — The following products, as described in manufacturing sites to determine compliance with the
the food category system from Codex Alimentarius Food requirements of this Section. Violations of the provisions
Category Descriptors (Codex Stan 192-1995, Rev. 2017 or of this Act, including but not limited to, mislabeling or
the latest) as adopted by the FDA, are excluded from the misbranding, shall, to the extent applicable, be
scope of this Act: punishable under existing laws.
(1) All milk products, including plain milk, infant (F) Duty of the Commissioner to Ensure Payment of
formula milk, follow-on milk, growing up milk, Taxes. — It shall be the duty of the Commissioner, among
powdered milk, ready-to-drink milk and flavored milk, other things, to prescribe a materially unique, secure and
fermented milk, soymilk, and flavored soymilk; nonremovable identification, such as codes, stamps or
other markings, to be firmly and conspicuously affixed on
(2) One Hundred Percent (100%) Natural Fruit Juices and form part of the label of all excisable sweetened
— Original liquid resulting from the pressing of fruit, beverages.
the liquid resulting from the reconstitution of natural
fruit juice concentrate, or the liquid resulting from For this purpose, the abovementioned control measure
the restoration of water to dehydrated natural fruit shall be caused by the Commissioner to be printed with
juice that do not have added sugar or caloric adequate security features to ensure the payment of
sweetener; excise tax on sweetened beverages.
(3) One Hundred Percent (100%) Natural Vegetable (G) Review of Implementation of the Sweetened
Juices — Original liquid resulting from the pressing of Beverage Tax. — At the start of the implementation of
vegetables, the liquid resulting from the the sugar sweetened beverage tax and every year
reconstitution of natural vegetable juice concentrate, thereafter, the Department of Health, Department of
or the liquid resulting from the restoration of water to Science and Technology, and Department of Finance
dehydrated natural vegetable juice that do not have shall review the impact of these provisions on its health
added sugar or caloric sweetener; objectives with the view to making recommendations on
the tax rate on these beverages.
(4) Meal Replacement and Medically Indicated
Beverages — Any liquid or powder drink/product for (as amended by RA No 10963)
oral nutritional therapy for persons who cannot
absorb or metabolize dietary nutrients from food or
beverages, or as a source of necessary nutrition used
due to a medical condition and an oral electrolyte CHAPTER VII EXCISE TAX ON MINERAL PRODUCTS
solution for infants and children formulated to SEC. 151. Mineral Products. -
prevent dehydration due to illness; and
(A) Rates of Tax. - There shall be levied, assessed and
(5) Ground coffee, instant soluble coffee, and collected on minerals, mineral products and quarry
pre-packaged powdered coffee products. resources, excise tax as follows:
(D) Filing of Return and Payment of Excise Tax and (1) On domestic or imported coal and coke,
Penalty. — notwithstanding any incentives granted in any law
(1) Filing of Return and Payment of Excise Tax on or special law:
Domestic and Imported Sweetened Beverages. — Effective January 1, 2018, Fifty pesos (P50.00) per
The provision of Sections 130 and 131 of the NIRC, as metric ton;
appropriate, shall apply to sweetened beverages.
Effective January 1, 2019, One hundred pesos
(2) Penalty. — Upon final findings by the (P100.00) per metric ton; and
Commissioner of Internal Revenue and/or Customs
Effective January 1, 2020, One hundred fifty pesos
that any manufacturer or importer, in violation of this
(P150.00) per metric ton.
Section, misdeclares or misrepresents in the sworn
statement provided in Section 130(c) of the NIRC, as (2) On all nonmetallic minerals and quarry resources,
amended, any pertinent data or information, the a tax of four percent (4%) based on the actual market
penalty of summary cancellation or withdrawal of the value of the gross output thereof at the time of
permit to engage in business as manufacturer or removal, in the case of those locally extracted or
importer of sweetened beverages as provided under produced; or the value used by the Bureau of
Section 268 of the NIRC, as amended, shall be Customs in determining tariff and customs duties,
imposed. net of excise tax and value-added tax in the case of
importation.
Any corporation, association or partnership liable for any
of the acts or omissions in violation of this Section shall be (as amended by RA No 10963)
fined treble the amount of deficiency taxes, surcharges, Notwithstanding the provision of paragraph (4) of
and interest which may be assessed pursuant to this Subsection (A) of this Section, locally extracted
Section. natural gas and liquefied natural gas shall not be
Any person liable for any of the acts or omissions subject to the excise tax imposed herein.
prohibited under this Section shall be criminally liable (3) On all metallic minerals, a tax based on the actual
and penalized under Section 254 of the NIRC, as market value of the gross output thereof at the time
amended. Any person who willfully aids or abets in the of removal, in the case of those locally extracted or
commission of any such act or omission shall be produced; or the value used by the Bureau of
criminally liable in the same manner as the principal. Customs in determining tariff and customs duties,
If not a citizen of the Philippines, the offender shall be net of excise tax and value-added tax, in the case of
deported immediately after serving the sentence without importation, in accordance with the following
further proceedings for deportation. schedule;
(E) Specific Responsibility of the Food and Drug (a) Copper and other metallic minerals, four
Administration (FDA). — Starting June 1, 2018, the FDA percent (4%); and
shall require all manufacturers and importers of (b) Gold and chromite, four percent (4%).
sweetened beverages covered by this Act to indicate on
the label the type of sweetener used, and on sweetened (4) On indigenous petroleum, a tax of six percent
beverages in powder form to indicate on the label the (6%) of the fair international market price thereof, on
equivalent of each serving per liter of volume capacity. the first taxable sale, barter, exchange or such


similar transaction, such tax to be paid by the buyer by rules and regulations recommended by the
or purchaser before removal from the place of Commissioner and approved by the Secretary of Finance,
production. and such records, whether of raw materials received into
(as amended by RA No 10963) the factory or of articles produced therein, shall be
deemed public and official documents for all purposes.
The phrase 'first taxable sale, barter, exchange or
similar transaction' means the transfer of The records of raw materials kept by such manufacturers
indigenous petroleum in its original state to a first may be used as evidence by which to determine the
taxable transferee. The fair international market amount of excise taxes due from them, and whenever the
price shall be determined in consultation with an amounts of raw material received into any factory
appropriate government agency; exceeds the amount of manufactured or partially
manufactured products on hand and lawfully removed
For the purpose of this Subsection, 'indigenous from the factory, plus waste removed or destroyed, and a
petroleum' shall include locally-extracted mineral reasonable allowance for unavoidable loss in
oil, hydrocarbon gas, bitumen, crude asphalt, manufacture, the Commissioner may assess and collect
mineral gas and all other similar or naturally the tax due on the products which should have been
associated substances with the exception of coal, produced from the excess.
peat, bituminous shale and/or stratified mineral
deposits. The excise tax due on the products as determined and
assessed in accordance with this Section shall be payable
(B) For purposes of this Section, the term - upon demand or within the period specified therein.
(1) 'Gross output' shall be interpreted as the actual SEC. 154. Premises Subject to Approval by
market value of minerals or mineral products or of Commissioner. - No person shall engage in business as a
bullion from each mine or mineral land operated as manufacturer of or dealer in articles subject to excise tax
a separate entity, without any deduction from unless the premises upon which the business is to
mining, milling, refining (including all expenses conducted shall have been approved by the
incurred to prepare the said minerals or mineral Commissioner.
products in a marketable state), as well as
transporting, handling, marketing or any other SEC. 155. Manufacturers and/or Importers to Provide
expenses: Provided, That if the minerals or mineral Themselves with Counting or Metering Devices to
products are sold or consigned abroad by the lessee Determine Volume of Production and Importation. —
or owner of the mine under C.I.F. terms, the actual Manufacturers of cigarettes, alcoholic products, oil
cost of ocean freight and insurance shall be products, and other articles subject to excise tax that can
deducted: provided, however, That in the case of be similarly measured shall provide themselves with such
mineral concentrate, not traded in commodity necessary number of suitable counting or metering
exchanges in the Philippines or abroad, such as devices to determine as accurately as possible the
copper concentrate, the actual market value shall be volume, quantity or number of the articles produced by
the world price quotations of the refined mineral them under rules and regulations promulgated by the
products content thereof prevailing in the said Secretary of Finance, upon recommendation of the
commodity exchanges, after deducting the Commissioner: Provided, That the Department of Finance
smelting, refining and other charges incurred in the shall maintain a registry of all petroleum manufacturers
process of converting the mineral concentrates into and/or importers and the articles being manufactured
refined metal traded in those commodity and/or imported by them: Provided, further, That the
exchanges. Department of Finance shall mandate the creation of a
real-time inventory of petroleum articles being
(2) 'Minerals' shall mean all naturally occurring manufactured, imported or found in storage depots of
inorganic substances (found in nature) whether in such petroleum manufacturers and/or importers:
solid, liquid, gaseous or any intermediate state. Provided, finally, That importers of finished petroleum
(3) 'Mineral products' shall mean things produced products shall also provide themselves with
and prepared in a marketable state by simple Bureau-accredited metering devices to determine as
treatment processes such as washing or drying, but accurately as possible the volume of petroleum products
without undergoing any chemical change or imported by them.
process or manufacturing by the lessee, This requirement shall be complied with before
concessionaire or owner of mineral lands. commencement of operations.
(4) 'Quarry resources' shall mean any common (as amended by RA No 10963)
stone or other common mineral substances as the
Director of the Bureau of Mines and Geo-Sciences SEC. 156. Labels and Form of Packages. - All articles of
may declare to be quarry resources such as, but not domestic manufacture subject to excise tax and all leaf
restricted to, marl, marble, granite, volcanic cinders, tobacco shall be put up and prepared by the
basalt, tuff and rock phosphate: Provided, That they manufacturer or producer, when removed for sale or
contain no metal or other valuable minerals in consumption, in such packages only and bearing such
economically workable quantities. marks or brand as shall be prescribed in the rules and
regulations promulgated by the Secretary of Finance; and
goods of similar character imported into the Philippines
shall likewise be packed and marked in such a manner as
may be required.
CHAPTER VIII ADMINISTRATIVE PROVISIONS
REGULATING BUSINESS OF PERSONS DEALING IN SEC. 157. Removal of Articles After the Payment of Tax.
ARTICLES SUBJECT TO EXCISE TAX - When the tax has been paid on articles or products
subject to excise tax, the same shall not thereafter be
SEC. 152. Extent of Supervision Over Establishments stored or permitted to remain in the distillery, distillery
Producing Taxable Output. - The Bureau of Internal warehouse, bonded warehouse, or other factory or place
Revenue has authority to supervise establishments where where produced. However, upon prior permit from the
articles subject to excise tax are made or kept. The Commissioner, oil refineries and/or companies may store
Secretary of Finance shall prescribe rules and regulations or deposit tax-paid petroleum products and commingle
as to the mode in which the process of production shall the same with its own manufactured products not yet
be conducted insofar as may be necessary to secure a subjected to excise tax. Imported petroleum products
sanitary output and to safeguard the revenue. may be allowed to be withdrawn from customs custody
SEC. 153. Records to be Kept by Manufacturers; without the prepayment of excise tax, which products
Assessment Based Thereon. - Manufacturers of articles may be commingled with the tax-paid or bonded
subject to excise tax shall keep such records as required products of the importer himself after securing a prior


permit from the Commissioner: Provided, That capacity of the same, the time when it is to be removed,
withdrawals shall be taxed and accounted for on a and the place for which it is destined, as well as the name
'first-in, first-out' basis. of the person by whom it is to be used; and such
SEC. 158. Storage of Goods in Internal-revenue Bonded apparatus or mechanical contrivance shall not be set up
Warehouses. - An internal-revenue bonded warehouse nor dismantled or transferred without a permit in writing
may be maintained in any port of entry for the storing of from the Commissioner.
imported or manufactured goods which are subject to A written permit from the Commissioner for importing,
excise tax. The taxes on such goods shall be payable only manufacturing or selling of cigarette paper in bobbins or
upon removal from such warehouse and a reasonable rolls, cigarette tipping paper or cigarette filter tips is
charge shall be made for their storage therein. The required before any person shall engage in the
Commissioner, may, in his discretion, exact a bond to importation, manufacture or sale of the said articles. No
secure the payment of the tax on any goods so stored. permit to sell said articles shall be granted unless the
SEC. 159. Proof of Exportation; Exporter's Bond. - name and address of the prospective buyer is first
Exporters of goods that would be subject to excise tax, if submitted to the Commissioner and approved by him.
sold or removed for consumption in the Philippines, shall Records, showing the stock of the said articles and the
submit proof of exportation satisfactory to the disposal thereof by sale of persons with their respective
Commissioner, and , when the same is deemed addresses as approved by the Commissioner, shall be
necessary, shall be required to give a bond prior to the kept by the seller, and records, showing stock of said
removal of the goods for shipment, conditioned upon the articles and consumption thereof, shall be kept by the
exportation of the same in good faith. buyer, subject to inspection by internal revenue officers.
SEC. 160. Manufacturers' and Importers' Bond. - SEC. 165. Establishment of Distillery Warehouse. - Every

Manufacturers and importers of articles subject to excise distiller, when so required by the Commissioner, shall
tax shall post a bond subject to the following conditions: provide at his own expense a warehouse, and shall be
situated in and constitute a part of his distillery premises
(A) Initial Bond. - In case of initial bond, the amount and to be used only for the storage of distilled spirits of
shall be equal to One Hundred thousand pesos his own manufacture until the tax thereon shall have
(P100,000): Provided, That if after six (6) months of been paid; but no dwelling house shall be used for such
operation, the amount of initial bond is less than the purpose. Such warehouse, when approved by the
amount of the total excise tax paid during the Commissioner, is declared to be a bonded warehouse,
period, the amount of the bond shall be adjusted to and shall be known as a 'distillery warehouse'.
twice the tax actually paid for the period.
SEC. 166. Custody of Distillery or Distillery Warehouse. -
(B) Bond for the Succeeding Years of Operation. - Every distillery or distillery warehouse shall be in the joint
The bonds for the succeeding years of operation custody of the revenue inspector, if one is assigned
shall be based on the actual total excise tax paid thereto, and of the proprietor thereof. It shall be kept
during the period the year immediately preceding securely locked, and shall at no time be unlocked or
the year of operation. opened or remain unlocked or opened unless in the
Such bond shall be conditioned upon faithful compliance, presence of such revenue inspector or other person who
during the time such business is followed, with laws and may be designated to act for him as provided by law.
rules and regulations relating to such business and for SEC. 167. Limitation on Quantity of Spirits Removed
the satisfaction of all fines and penalties imposed by this from Warehouse. - No distilled spirits shall be removed
Code. from any distillery, distillery warehouse, or bonded
SEC. 161. Records to be Kept by Wholesale Dealers. - warehouse in quantities of less than fifteen (15) gauge
Wholesale dealers shall keep records of their purchases liters at any one time, except bottled goods, which may
and sales or deliveries of articles subject to excise tax, in be removed by the case of not less than twelve (12)
such form as shall be prescribed in the rules and bottles.
regulations by the Secretary of Finance. These records SEC. 168. Denaturing Within Premises. - For purposes of
and the entire stock of goods subject to tax shall be this Title, the process of denaturing alcohol shall be
subject at all times to inspection of internal revenue effected only within the distillery premises where the
officers. alcohol to be denatured is produced in accordance with
SEC. 162. Records to be Kept by Dealers in Leaf formulas duly approved by the Bureau of Internal
Tobacco. - Dealers in leaf tobacco shall keep records of Revenue and only in the presence of duly designated
the products sold or delivered by them to other persons representatives of said Bureau.
in such manner as may be prescribed in the rules and SEC. 169. Recovery of Alcohol for Use in Arts and
regulations by the Secretary of Finance, such records to Industries. - Manufacturers employing processes in
be at all times subject to inspection of internal revenue which denatured alcohol used in arts and industries is
officers. expressed or evaporated from the articles manufactured
SEC. 163. Preservation of Invoices and Stamps. - All may, under rules and regulations to be prescribed by the
dealers whosoever shall preserve, for the period Secretary of Finance, upon recommendation of the
prescribed in Section 235, all official invoices received by Commissioner, be permitted to recover the alcohol so
them from other dealers or from manufacturers, together used and restore it again to a condition suitable solely for
with the fractional parts of stamps affixed thereto, if any, use in manufacturing processes.
and upon demand, shall deliver or transmit the same to SEC. 170. Requirements Governing Rectification and
any interval revenue officer. Compounding of Liquors. - Persons engaged in the
SEC. 164. Information to be Given by Manufacturers, rectification or compounding of liquors shall, as to the
Importers, Indentors, and Wholesalers of any mode of conducting their business and supervision over
Apparatus or Mechanical Contrivance Specially for the the same, be subject to all the requirements of law
Manufacture of Articles Subject to Excise Tax and applicable to distilleries: Provided, That where a rectifier
Importers, Indentors, Manufacturers or Sellers of makes use of spirits upon which the excise tax has been
Cigarette Paper in Bobbins, Cigarette Tipping Paper or paid, no further tax shall be collected on any rectified
Cigarette Filter Tips. - Manufacturers, indentors, spirits produced exclusively therefrom: Provided, further,
wholesalers and importers of any apparatus or That compounders in the manufacture of any
mechanical contrivance specially for the manufacture of intoxicating beverage whatever, shall not be allowed to
articles subject to tax shall, before any such apparatus or make use of spirits upon which the excise tax has not
mechanical contrivance is removed from the place of been previously paid.
manufacture or from the customs house, give written SEC. 171. Authority of Internal Revenue Officer in
information to the Commissioner as to the nature and Searching for and Testing Taxable Articles. - Any


internal revenue officer may, in the discharge of his SEC. 174. Stamp Tax on Original Issue of Shares of
official duties, enter any house, building or place where Stock. - On every original issue, whether on organization,
articles subject to tax under this Title are produced or reorganization or for any lawful purpose, of shares of
kept, or are believed by him upon reasonable grounds to stock by any association, company, or corporation, there
be produced or kept, so far as may be necessary to shall be collected a documentary stamp tax of Two pesos
examine, test, discover or seize the same. (P2.00) on each Two hundred pesos (P200), or fractional
He may also stop and search any vehicle or other means part thereof, of the par value, of such shares of stock:
of transportation when upon reasonable grounds he Provided, That in the case of the original issue of shares of
believes that the same carries any article on which the stock without par value, the amount of the documentary
excise tax has not been paid. stamp tax herein prescribed shall be based upon the
actual consideration for the issuance of such shares of
Subject to rules and regulations to be issued by the stock: Provided, further, That in the case of stock
Secretary of Finance, the Commissioner of Internal dividends, on the actual value represented by each
Revenue or his authorized representatives may conduct share.(as amended by RA No 10963)
periodic random field tests and confirmatory tests on fuel
required to be marked under Section 148-A found in SEC. 175. Stamp Tax on Sales, Agreements to Sell,
warehouses, storage tanks, gas stations and other retail Memoranda of Sales, Deliveries or Transfer of Shares or
outlets, and in such other properties of persons engaged Certificates of Stock. — On all sales, or agreements to
in the sale, delivery, trading, transportation, distribution, sell, or memoranda of sales, or deliveries, or transfer of
or importation of fuel intended for the domestic market: shares or certificates of stock in any association, company,
Provided, the following shall be complied with: or corporation, or transfer of such securities by
assignment in blank, or by delivery, or by any paper or
(a) Random field testing shall be conducted in the agreement, or memorandum or other evidences of
presence of revenue or customs officers, fuel marking transfer or sale whether entitling the holder in any
provider, and the authorized representative of the manner to the benefit of such stock, or to secure the
owner of the fuel to be tested: Provided, That an future payment of money, or for the future transfer of any
employee assigned or working at the place where the stock, there shall be collected a documentary stamp tax
random field test is conducted shall be deemed an of One peso and fifty centavos (P1.50) on each Two
authorized representative of the owner; hundred pesos (P200), or fractional part thereof, of the
(b) All field tests shall be properly filmed or par value of such stock: Provided, That only one tax shall
video-taped, and documented; and be collected on each sale or transfer of stock from one
person to another, regardless of whether or not a
(c) A sample of the randomly tested fuel shall be certificate of stock is issued, indorsed, or delivered in
immediately obtained by the revenue or customs pursuance of such sale or transfer: and Provided, further,
officer upon discovering that the same is unmarked, That in the case of stock without par value the amount of
adulterated, or diluted: the documentary stamp tax herein prescribed shall be
Provided, further, That confirmatory fuel test certificates equivalent to fifty percent (50%) of the documentary
issued by fuel testing facilities shall be valid for any legal stamp tax paid upon the original issue of said stock.(as
purpose from the date of issue, and shall constitute amended by RA No 10963)
admissible and conclusive evidence before any court. SEC. 176. Stamp Tax on Bonds, Debentures, Certificate
(as amended by RA No 10963) of Stock or Indebtedness Issued in Foreign Countries. -
On all bonds, debentures, certificates of stock, or
SEC. 172. Detention of Package Containing Taxable certificates of indebtedness issued in any foreign country,
Articles. - Any revenue officer may detain any package there shall be collected from the person selling or
containing or supposed to contain articles subject to transferring the same in the Philippines, such as tax as is
excise tax when he has good reason to believe that the required by law on similar instruments when issued, sold
lawful tax has not been paid or that the package has or transferred in the Philippines.
been or is being removed in violation of law, and every
such package shall be held by such officer in a safe place SEC. 177. Stamp Tax on Certificates of Profits or
until it shall be determined whether the property so Interest in Property or Accumulations. — On all
detained is liable by law to be proceeded against for certificates of profits, or any certificate or memorandum
forfeiture; but such summary detention shall not showing interest in the property or accumulations of any
continue in any case longer than seven (7) days without association, company or corporation, and on all transfers
due process of law or intervention of the officer to whom of such certificates or memoranda, there shall be
such detention is to be reported. collected a documentary stamp tax of One peso (P1.00)
on each Two hundred pesos (P200), or fractional part
thereof, of the face value of such certificates or
memorandum.(as amended by RA No 10963)
TITLE VII DOCUMENTARY STAMP TAX SEC. 178. Stamp Tax on Bank Checks, Drafts,
Certificates of Deposit not Bearing Interest, and Other
(As Amended by RA Nos. 9243, 9648, & 10001, 10963) Instruments. — On each bank check, draft, or certificate
SEC. 173. Stamp Taxes Upon Documents, Loan of deposit not drawing interest, or order for the payment
Agreements, Instruments and Papers. - Upon of any sum of money drawn upon or issued by any bank,
documents, instruments, loan agreements and papers, trust company, or any person or persons, companies or
and upon acceptances, assignments, sales and transfers corporations, at sight or on demand, there shall be
of the obligation, right or property incident thereto, there collected a documentary stamp tax of Three pesos
shall be levied, collected and paid for, and in respect of (P3.00).(as amended by RA No 10963)
the transaction so had or accomplished, the SEC. 179. Stamp tax on All Debt Instruments. - On every
corresponding documentary stamp taxes prescribed in original issue of debt instruments, there shall be collected
the following Sections of this Title, by the person making, a documentary stamp tax of One peso and fifty centavos
signing, issuing, accepting, or transferring the same (P1.50) on each Two hundred pesos (P200), or fractional
wherever the document is made, signed, issued, part thereof, of the issue price of any such debt
accepted or transferred when the obligation or right instruments: Provided, That for such debt instruments
arises from Philippine sources or the property is situated with terms of less than one (1) year, the documentary
in the Philippines, and the same time such act is done or stamp tax to be collected shall be of a proportional
transaction had: Provided, That whenever one party to amount in accordance with the ratio of its term in
the taxable document enjoys exemption from the tax number of days to three hundred sixty-five (365) days:
herein imposed, the other party who is not exempt shall Provided, further, That only one documentary stamp tax
be the one directly liable for the tax. shall be imposed on either loan agreement, or promissory


notes issued to secure such loan.(as amended by RA No SEC. 184. Stamp Tax on Policies of Insurance Upon
10963) Property. - On all policies of insurance or other
For purposes of this section, the term 'debt instrument' instruments by whatever name the same may be called,
shall mean debt instrument representing borrowing and by which insurance shall be made or renewed upon
lending transactions including but not limited to property of any description, including rents or profits,
debentures, certificates of indebtedness, due bills, bonds, against peril by sea or on inland waters, or by fire or
loan agreements, including those signed abroad wherein lightning, there shall be collected a documentary stamp
the object of contract is located or used in the tax of Fifty centavos (P0.50) on each Four pesos (P4.00), or
Philippines, instruments and securities issued by the fractional part thereof, of the amount of premium
government or any of its instrumentalities, deposit charged: Provided, however, That no documentary stamp
substitute debt instruments, certificates or other tax shall be collected on reinsurance contracts or on any
evidences of deposits that are either drawing interest instrument by which cession or acceptance of insurance
significantly higher than the regular savings deposit risks under any reinsurance agreement is effected or
taking into consideration the size of the deposit and the recorded.
risks involved or drawing interest and having a specific SEC. 185. Stamp Tax on Fidelity Bonds and Other
maturity date, orders for payment of any sum of money Insurance Policies. - On all policies of insurance or bonds
otherwise than at sight or on demand, promissory notes, or obligations of the nature of indemnity for loss, damage
whether negotiable or non-negotiable, except bank notes or liability made or renewed by any person, association,
issued for circulation. company or corporation transacting the business of
SEC. 180 Stamp Tax on All Bills of Exchange or Drafts. - accident, fidelity, employer's liability, plate, glass, steam,
On all bills of exchange (between points within the boiler, burglar, elevator, automatic sprinkler, or other
Philippines) or drafts, there shall be collected a branch of insurance (except life, marine, inland, and fire
documentary stamp tax of Sixty centavos (P0.60) on each insurance), and all bonds, undertakings, or recognizances,
Two hundred pesos (P200) or fractional part thereof, of conditioned for the performance of the duties of any
the face value of any such bill of exchange or draft.(as office or position, for the doing or not doing of anything
amended by RA No 10963) therein specified, and on all obligations guaranteeing the
validity or legality of any bond or other obligations issued
SEC. 181. Stamp Tax Upon Acceptance of Bills of by any province, city, municipality, or other public body or
Exchange and Others. - Upon any acceptance or organization, and on all obligations guaranteeing the title
payment of any bill of exchange or order for the payment to any real estate, or guaranteeing any mercantile credits,
of money purporting to be drawn in a foreign country but which may be made or renewed by any such person,
payable in the Philippines, there shall be collected a company or corporation, there shall be collected a
documentary stamp tax of Sixty centavos (P0.60) on each documentary stamp tax of Fifty centavos (P0.50) on each
Two hundred pesos (P200), or fractional part thereof, of Four pesos (P4.00), or fractional part thereof, of the
the face value of any such bill of exchange, or order, or the premium charged.
Philippine equivalent of such value, if expressed in foreign
currency.(as amended by RA No 10963) SEC. 186. Stamp Tax on Policies of Annuities and
Pre-Need Plans. - On all policies of annuities, or other
SEC. 182. Stamp Tax on Foreign Bills of Exchange and instruments by whatever name the same may be called,
Letters of Credit. - On all foreign bills of exchange and whereby an annuity may be made, transferred or
letter of credit (including orders, by telegraph or redeemed, there shall be collected a documentary stamp
otherwise, for the payment of money issued by express or tax of One peso (P1.00) on each Two hundred pesos
steamship companies or by any person or persons) drawn (P200), or fractional part thereof, of the premium or
in but payable out of the Philippines in a set of three (3) or installment payment on contract price collected. On
more according to the custom of merchants and bankers, pre-need plans, the documentary stamp tax shall be
there shall be collected a documentary stamp tax of Sixty Forty centavos (P0.40) on each Two hundred pesos
centavos (P0.60) on each Two hundred pesos (P200), or (P200), or fractional part thereof, of the premium or
fractional part thereof, of the face value of any such bill of contribution collected.(as amended by RA No 10963)
exchange or letter of credit, or the Philippine equivalent
of such face value, if expressed in foreign currency.(as SEC. 187. Stamp Tax on Indemnity Bonds. - On all bonds
amended by RA No 10963) for indemnifying any person, firm or corporation who
shall become bound or engaged as surety for the
SEC. 183. Stamp Tax on Life Insurance Policies. - On all payment of any sum of money or for the due execution or
policies of insurance or other instruments by whatever performance of the duties of any office or position or to
name the same may be called, whereby any insurance account for money received by virtue thereof, and on all
shall be made or renewed upon any life or lives, there other bonds of any description, except such as may be
shall be collected a one-time documentary stamp tax at required in legal proceedings, or are otherwise provided
the following rates: for herein, there shall be collected a documentary stamp
tax of Thirty centavos (P0.30) on each Four pesos (P4.00),
If the amount of insurance does not Exempt or fractional part thereof, of the premium charged.
exceed P 100,000
SEC. 188. Stamp Tax on Certificates. - On each
If the amount of insurance exceeds Php 20.00 certificate of damage or otherwise, and on every other
P100,000 but does not exceed certificate or document issued by any customs officer,
P300,000 marine surveyor, or other person acting as such, and on
each certificate issued by a notary public, and on each
If the amount of insurance exceeds Php 50.00 certificate of any description required by law or by rules
P300,000 but does not exceed or regulations of a public office, or which is issued for the
P500,000 purpose of giving information, or establishing proof of a
fact, and not otherwise specified herein, there shall be
If the amount of insurance exceeds Php 100.00 collected a documentary stamp tax of Thirty pesos
P500,000 but does not exceed (P30.00).(as amended by RA No 10963)
P750,000 SEC. 189. Stamp Tax on Warehouse Receipts. - On each
warehouse receipt for property held in storage in a public
If the amount of insurance exceeds Php 150.00 or private warehouse or yard for any person other than
P750,000 but does not exceed the proprietor of such warehouse or yard, there shall be
P1,000,000 collected a documentary stamp tax of Thirty pesos
(P30.00): Provided, That no tax shall be collected on each
If the amount of insurance exceeds Php warehouse receipt issued to any one person in any one
P1,000,000 200.00 calendar month covering property the value of which


does not exceed Two hundred pesos (P200).(as amended actually loaned or given at the time of the execution of
by RA No 10963) the mortgage, pledge or deed of trust, additional
SEC. 190. Stamp Tax on Jai-Alai, Horse Racing Tickets, documentary stamp tax shall be paid which shall be
lotto or Other Authorized Numbers Games. - n each computed on the basis of the amount advanced or
jai-alai, horse race ticket, lotto, or other authorized loaned at the rates specified above: Provided, however,
numbers games, there shall be collected a documentary That if the full amount of the loan or credit, granted
stamp tax of Twenty centavos (P0.20): Provided, That if under the mortgage, pledge or deed of trust shall be
the cost of the ticket exceed One peso (P1.00), an computed on the amount actually loaned or given at the
additional tax of Twenty centavos (P0.20) on every One time of the execution of the mortgage, pledge or deed of
peso (P1.00), or fractional part thereof, shall be trust. However, if subsequent advances are made on such
collected.(as amended by RA No 10963) mortgage, pledge or deed of trust, additional
documentary stamp tax shall be paid which shall be
SEC. 191. Stamp Tax on Bills of Lading or Receipts. - On computed on the basis of the amount advanced or
each set of bills of lading or receipts (except charter party) loaned at the rates specified above: Provided, however,
for any goods, merchandise or effects shipped from one That if the full amount of the loan or credit, granted
port or place in the Philippines (except on ferries across under the mortgage, pledge or deed of trust is specified
rivers), or to any foreign port, there shall be collected a in such mortgage, pledge or deed of trust, the
documentary stamp tax of Two pesos (P2.00), if the value documentary stamp tax prescribed in this Section shall
of such goods exceeds One hundred pesos (P100) and be paid and computed on the full amount of the loan or
does not exceed One thousand pesos (P1,000); Twenty credit granted.
pesos (P20.00), if the value exceeds One thousand pesos
(P1,000); Provided, however, That freight tickets covering SEC. 196. Stamp tax on Deeds of Sale, Conveyances and
goods, merchandise or effects carried as accompanied Donation of Real Property. - On all conveyances,
baggage of passengers on land and water carriers donations, deeds, instruments, or writings, other than
primarily engaged in the transportation of passengers are grants, patents or original certificates of adjudication
hereby exempt.(as amended by RA No 10963) issued by the Government, whereby any land, tenement,
or other realty sold shall be granted, assigned, transferred,
SEC. 192. Stamp Tax on Proxies. - On each proxy for donated or otherwise conveyed to the purchaser, or
voting at any election of officers of any company or purchasers, or to any other person or persons designated
association, or for any other purpose, except proxies by such purchaser or purchasers, or donee, there shall be
issued affecting the affairs of associations or corporations collected a documentary stamp tax, at the rates herein
organized for religious, charitable or literary purposes, below prescribed, based on the consideration contracted
there shall be collected a documentary stamp tax of to be paid for such realty or on its fair market value
Thirty Pesos (P30.00).(as amended by RA No 10963) determined in accordance with Section 6(E) of this Code,
SEC. 193. Stamp Tax on Powers of Attorney. - On each whichever is higher: Provided, That when one of the
power of attorney to perform any act whatsoever, except contracting parties is the Government, the tax herein
acts connected with the collection of claims due from or imposed shall be based on the actual consideration:
accruing to the Government of the Republic of the (a) When the consideration, or value received or
Philippines, or the government of any province, city or contracted to be paid for such realty, after making
municipality, there shall be collected a documentary proper allowance of any encumbrance, does not
stamp tax of Ten pesos (P10.00).(as amended by RA No exceed One thousand pesos (P1,000), Fifteen pesos
10963) (P15.00).
SEC. 194. Stamp tax on Lease and Other Hiring (b) For each additional One thousand pesos (P1,000)
Agreements. - On each lease, agreement, memorandum, or fractional part thereof in excess of One thousand
or contract for hire, use or rent of any lands or tenements, pesos (P1,000) of such consideration or value, Fifteen
or portions thereof, there shall be collected a pesos (P15.00).
documentary stamp tax of Six pesos (P6.00) for the first
Two thousand pesos (P2,000), or fractional part thereof, Transfers exempt from donor's tax under Section 101(a)
and an additional Two pesos (P2.00) for every One and (b) of this Code shall be exempt from the tax
thousand pesos (P1,000) or fractional part thereof, in imposed under this Section.
excess of the first Two thousand pesos (P2,000) for each When it appears that the amount of the documentary
year of the term of said contract or agreement.(as stamp tax payable hereunder has been reduced by an
amended by RA No 10963) incorrect statement of the consideration in any
SEC. 195. Stamp Tax on Mortgages, Pledges and Deeds conveyance, deed, instrument or writing subject to such
of Trust. - On every mortgage or pledge of lands, estate, tax the Commissioner, provincial or city Treasurer, or
or property, real or personal, heritable or movable, other revenue officer shall, from the assessment rolls or
whatsoever, where the same shall be made as a security other reliable source of information, assess the property
for the payment of any definite and certain sum of of its true market value and collect the proper tax
money lent at the time or previously due and owing or thereon.
forborne to be paid, being payable, and on any (as amended by RA No 10963)
conveyance of land, estate, or property whatsoever, in SEC. 197. Stamp Tax on Charter Parties and Similar
trust or to be sold, or otherwise converted into money Instruments. - On every charter party, contract or
which shall be and intended only as security, either by agreement for the charter of any ship, vessel or streamer,
express stipulation or otherwise, there shall be collected a or any letter or memorandum or other writing between
documentary stamp tax at the following rates: the captain, master or owner, or other person acting as
(a) When the amount secured does not exceed Five agent of any ship, vessel or steamer, and any other person
thousand pesos (P5,000), Forty pesos (P40.00). or persons for or relating to the charter of any such ship,
(b) On each Five thousand pesos (P5,000), or vessel or streamer, and on any renewal or transfer of such
fractional part thereof in excess of Five thousand charter, contract, agreement, letter or memorandum,
pesos (P5,000), an additional tax of Twenty pesos there shall be collected a documentary stamp tax at the
(P20.00). following rates:
(as amended by RA No 10963) (a) If the registered gross tonnage of the ship, vessel
or steamer does not exceed one thousand (1,000)
On any mortgage, pledge, or deed of trust, where the tons, and the duration of the charter or contract
same shall be made as a security for the payment of a does not exceed six (6) months, One thousand pesos
fluctuating account or future advances without fixed (P1,000); and for each month or fraction of a month
limit, the documentary stamp tax on such mortgage, in excess of six (6) months, an additional tax of One
pledge or deed of trust shall be computed on the amount hundred pesos (P100) shall be paid.


(b) If the registered gross tonnage exceeds one and which agreement is duly registered and
thousand (1,000) tons and does not exceed ten approved by the Bureau of Internal Revenue. (BIR).
thousand (10,000) tons, and the duration of the (d) Loan agreements or promissory notes, the
charter or contract does not exceed six (6) months, aggregate of which does not exceed Two hundred
Two thousand pesos (P2,000); and for each month or fifty thousand pesos ( P250,000) or any such amount
fraction of a month in excess of six (6) months, an as may be determined by the Secretary of Finance,
additional tax of Two hundred pesos (P200) shall be executed by an individual for his purchase on
paid. installment for his personal use or that for his family
(c) If the registered gross tonnage exceeds ten and not for business or resale, barter or hire of a
thousand (10,000) tons and the duration of the house, lot, motor vehicle, appliance or furniture:
charter or contract does not exceed six (6) months, Provided, however, That the amount to be set by the
Three thousand pesos (P3,000); and for each month Secretary of Finance shall be in accordance with a
or fraction of a month in excess of six (6) months, an relevant price index but not to exceed ten percent
additional tax of Three hundred pesos (P300) shall (10%) of the current amount and shall remain in
be paid. force at least for three (3) years.
(as amended by RA No 10963) (e) Sale, barter or exchange of shares of stock listed
SEC. 198. Stamp Tax on Assignments and Renewals of and traded through the local stock exchange.
Certain Instruments. - Upon each and every assignment (f) Assignment or transfer of any mortgage, lease or
or transfer of any mortgage, lease or policy of insurance, policy of insurance, or the renewal or continuance of
or the renewal or continuance of any agreement, any agreement, contract, charter, or any evidence of
contract, charter, or any evidence of obligation or obligation or indebtedness, if there is no change in
indebtedness by altering or otherwise, there shall be the maturity date or remaining period of coverage
levied, collected and paid a documentary stamp tax, at from that of the original instrument.
the same rate as that imposed on the original instrument. (g) Fixed income and other securities traded in the
SEC. 199. Documents and Papers Not Subject to Stamp secondary market or through an exchange.
Tax. - The provisions of Section 173 to the contrary (h) Derivatives: Provided, That for purposes of this
notwithstanding, the following instruments, documents exemption, repurchase agreements and reverse
and papers shall be exempt from the documentary repurchase agreements shall be treated similarly as
stamp tax: derivatives.
(a) Policies of insurance or annuities made or (i) Interbank or interdepartmental advances within
granted by a fraternal or beneficiary society, order, the same legal entity.
association or cooperative company, operated on
the lodge system or local cooperation plan and (j) All forbearances arising from sales or service
organized and conducted solely by the members contracts including credit card and trade
thereof for the exclusive benefit of each member receivables: Provided, That the exemption be limited
and not for profit. to those executed by the seller or service provided.
(b) Certificates of oaths administered to any (k) Bank deposit accounts without a fixed term or
government official in his official capacity or of maturity.
acknowledgment by any government official in the (l) All contracts, deeds, documents, documents and
performance of his official duties, written transactions related to the conduct of business of
appearance in any court by any government official, the Bangko Sentral ng Pilipinas.
in his official capacity; certificates of the
administration of oaths to any person as to the (m) Transfer of property pursuant to Section 40 (C)
authenticity of any paper required to be filed in (2) of the National Internal Revenue Code of 1997, as
court by any person or party thereto, whether the amended.
proceedings be civil or criminal; papers and (n) Interbank call loans with maturity of not more
documents filed in courts by or for the national, than seven (7) days to cover deficiency in reverses
provincial, city or municipal governments; affidavits against deposit liabilities including those between
of poor persons for the purpose of proving poverty; or among banks and quasi-banks.
statements and other compulsory information
required of persons or corporations by the rules and SEC. 200. Payment of Documentary Stamp Tax. -
regulations of the national, provincial, city or (A) In General. - The provisions of Presidential Decree No.
municipal governments exclusively for statistical 1045 notwithstanding, any person liable to pay
purposes and which are wholly for the use of the documentary stamp tax upon any document subject to
bureau or office in which they are filed, and not at tax under Title VII of this Code shall file a tax return and
the instance or for the use or benefit of the person pay the tax in accordance with the rules and regulations
filing them; certified copies and other certificates to be prescribed by the Secretary of Finance, upon
placed upon documents, instruments and papers recommendation of the Commissioner.
for the national, provincial, city, or municipal (B) Time for Filing and Payment of the Tax. - Except as
governments, made at the instance and for the sole provided by rules and regulations promulgated by the
use of some other branch of the national, provincial, Secretary of Finance, upon recommendation of the
city or municipal governments; and certificates of Commissioner, the tax return prescribed in this Section
the assessed value of lands, not exceeding Two shall be filed within ten (10) days after the close of the
hundred pesos (P200) in value assessed, furnished month when the taxable document was made, signed,
by the provincial, city or municipal Treasurer to issued, accepted, or transferred, and the tax thereon shall
applicants for registration of title to land. be paid at the same time the aforesaid return is filed.
(c) Borrowing and lending of securities executed (C) Where to File. - Except in cases where the
under the Securities Borrowing and Lending Commissioner otherwise permits, the aforesaid tax return
Program of a registered exchange, or in accordance shall be filed with and the tax due shall be paid through
with regulations prescribed by the appropriate the authorized agent bank within the territorial
regulatory authority: Provided, however, That any jurisdiction of the Revenue District Office which has
borrowing or lending of securities agreement as jurisdiction over the residence or principal place of
contemplated hereof shall be duly covered by a business of the taxpayer. In places where there is no
master securities borrowing and lending agreement authorized agent bank, the return shall be filed with the
acceptable to the appropriate regulatory authority Revenue District Officer, collection agent, or duly
authorized Treasurer of the city or municipality in which


the taxpayer has his legal residence or principal place of (1) The tax or any portion thereof appears to be
business. unjustly or excessively assessed; or
(D) Exception. - In lieu of the foregoing provisions of this (2) The administration and collection costs involved
Section, the tax may be paid either through purchase and do not justify the collection of the amount due.
actual affixture; or by imprinting the stamps through a All criminal violations may be compromised except:
documentary stamp metering machine, on the taxable (a) those already filed in court, or (b) those involving
document, in the manner as may be prescribed by rules fraud.
and regulations to be promulgated by the Secretary of
Finance, upon recommendation of the Commissioner. (C) Credit or refund taxes erroneously or illegally received
or penalties imposed without authority, refund the value
SEC. 201. Effect of Failure to Stamp Taxable Document. of internal revenue stamps when they are returned in
- An instrument, document or paper which is required by good condition by the purchaser, and, in his discretion,
law to be stamped and which has been signed, issued, redeem or change unused stamps that have been
accepted or transferred without being duly stamped, rendered unfit for use and refund their value upon proof
shall not be recorded, nor shall it or any copy thereof or of destruction. No credit or refund of taxes or penalties
any record of transfer of the same be admitted or used in shall be allowed unless the taxpayer files in writing with
evidence in any court until the requisite stamp or stamps the Commissioner a claim for credit or refund within two
are affixed thereto and cancelled. (2) years after the payment of the tax or penalty: Provided,
No notary public or other office authorized to administer however, That a return filed showing an overpayment
oaths shall add this jurat or acknowledgment to any shall be considered as a written claim for credit or refund.
document subject to documentary stamp tax unless the A Tax Credit Certificate validly issued under the provisions
proper documentary stamps are affixed thereto and of this Code may be applied against any internal revenue
cancelled. tax, excluding withholding taxes, for which the taxpayer is
directly liable. Any request for conversion into refund of
unutilized tax credits may be allowed, subject to the
provisions of Section 230 of this Code: Provided, That the
TITLE VIII REMEDIES original copy of the Tax Credit Certificate showing a
creditable balance is surrendered to the appropriate
revenue officer for verification and cancellation: Provided,
CHAPTER I REMEDIES IN GENERAL further, That in no case shall a tax refund be given
SEC. 202. Final Deed to Purchaser. - In case the taxpayer resulting from availment of incentives granted pursuant
shall not redeem the property as herein provided, the to special laws for which no actual payment was made.
Revenue District Officer shall, as grantor, execute a deed The Commissioner shall submit to the Chairmen of the
conveying to the purchaser so much of the property as Committee on Ways and Means of both the Senate and
has been sold, free from all liens of any kind whatsoever, House of Representatives, every six (6) months, a report
and the deed shall succinctly recite all the proceedings on the exercise of his powers under this Section, stating
upon which the validity of the sale depends. therein the following facts and information, among
SEC. 203. Period of Limitation Upon Assessment and others: names and addresses of taxpayers whose cases
Collection. - Except as provided in Section 222, internal have been the subject of abatement or compromise;
revenue taxes shall be assessed within three (3) years amount involved; amount compromised or abated; and
after the last day prescribed by law for the filing of the reasons for the exercise of power: Provided, That the said
return, and no proceeding in court without assessment report shall be presented to the Oversight Committee in
for the collection of such taxes shall be begun after the Congress that shall be constituted to determine that said
expiration of such period: Provided, That in a case where a powers are reasonably exercised and that the
return is filed beyond the period prescribed by law, the Government is not unduly deprived of revenues.
three (3)-year period shall be counted from the day the
return was filed. For purposes of this Section, a return
filed before the last day prescribed by law for the filing
thereof shall be considered as filed on such last day. CHAPTER II CIVIL REMEDIES FOR COLLECTION
SEC. 204. Authority of the Commissioner to OF TAXES
Compromise, Abate and Refund or Credit Taxes. - SEC. 205. Remedies for the Collection of Delinquent
The Commissioner may - Taxes. - The civil remedies for the collection of internal
revenue taxes, fees or charges, and any increment thereto
(A) Compromise the payment of any internal revenue tax, resulting from delinquency shall be:
when:
(a) By distraint of goods, chattels, or effects, and
(1) A reasonable doubt as to the validity of the claim other personal property of whatever character,
against the taxpayer exists; or including stocks and other securities, debts, credits,
(2) The financial position of the taxpayer bank accounts and interest in and rights to personal
demonstrates a clear inability to pay the assessed property, and by levy upon real property and interest
tax. in rights to real property; and
The compromise settlement of any tax liability shall be (b) By civil or criminal action.
subject to the following minimum amounts: Either of these remedies or both simultaneously may be
For cases of financial incapacity, a minimum pursued in the discretion of the authorities charged with
compromise rate equivalent to ten percent (10%) of the collection of such taxes: Provided, however, That the
the basic assessed tax; and remedies of distraint and levy shall not be availed of
where the amount of tax involve is not more than One
For other cases, a minimum compromise rate hundred pesos (P100).
equivalent to forty percent (40%) of the basic
assessed tax. The judgment in the criminal case shall not only impose
the penalty but shall also order payment of the taxes
Where the basic tax involved exceeds One million pesos subject of the criminal case as finally decided by the
(P1,000.000) or where the settlement offered is less than Commissioner.
the prescribed minimum rates, the compromise shall be
subject to the approval of the Evaluation Board which The Bureau of Internal Revenue shall advance the
shall be composed of the Commissioner and the four (4) amounts needed to defray costs of collection by means of
Deputy Commissioners. civil or criminal action, including the preservation or
transportation of personal property distrained and the
(B) Abate or cancel a tax liability, when:


advertisement and sale thereof, as well as of real property in respect to which the liability arose, or if there be none,
and improvements thereon. to the occupant of the property in question.
SEC. 206. Constructive Distraint of the Property of A In case the warrant of levy on real property is not issued
Taxpayer. - To safeguard the interest of the Government, before or simultaneously with the warrant of distraint on
the Commissioner may place under constructive distraint personal property, and the personal property of the
the property of a delinquent taxpayer or any taxpayer taxpayer is not sufficient to satisfy his tax delinquency,
who, in his opinion, is retiring from any business subject the Commissioner or his duly authorized representative
to tax, or is intending to leave the Philippines or to shall, within thirty (30) days after execution of the
remove his property therefrom or to hide or conceal his distraint, proceed with the levy on the taxpayer's real
property or to perform any act tending to obstruct the property.
proceedings for collecting the tax due or which may be Within ten (10) days after receipt of the warrant, a report
due from him. on any levy shall be submitted by the levying officer to
The constructive distraint of personal property shall be the Commissioner or his duly authorized representative:
affected by requiring the taxpayer or any person having Provided, however, That a consolidated report by the
possession or control of such property to sign a receipt Revenue Regional Director may be required by the
covering the property distrained and obligate himself to Commissioner as often as necessary: Provided, further,
preserve the same intact and unaltered and not to That the Commissioner or his duly authorized
dispose of the same ;in any manner whatever, without representative, subject to rules and regulations
the express authority of the Commissioner. promulgated by the Secretary of Finance, upon
In case the taxpayer or the person having the possession recommendation of the Commissioner, shall have the
and control of the property sought to be placed under authority to lift warrants of levy issued in accordance with
constructive distraint refuses or fails to sign the receipt the provisions hereof.
herein referred to, the revenue officer effecting the SEC. 208. Procedure for Distraint and Garnishment. -
constructive distraint shall proceed to prepare a list of The officer serving the warrant of distraint shall make or
such property and, in the presence of two (2) witnesses, cause to be made an account of the goods, chattels,
leave a copy thereof in the premises where the property effects or other personal property distrained, a copy of
distrained is located, after which the said property shall which, signed by himself, shall be left either with the
be deemed to have been placed under constructive owner or person from whose possession such goods,
distraint. chattels, or effects or other personal property were taken,
SEC. 207. Summary Remedies. - or at the dwelling or place of business of such person and
with someone of suitable age and discretion, to which list
(A) Distraint of Personal Property. - Upon the failure of shall be added a statement of the sum demanded and
the person owing any delinquent tax or delinquent note of the time and place of sale.
revenue to pay the same at the time required, the
Commissioner or his duly authorized representative, if the Stocks and other securities shall be distrained by serving
amount involved is in excess of One million pesos a copy of the warrant of distraint upon the taxpayer and
(P1,000,000), or the Revenue District Officer, if the upon the president, manager, treasurer or other
amount involved is One million pesos (P1,000,000) or less, responsible officer of the corporation, company or
shall seize and distraint any goods, chattels or effects, and association, which issued the said stocks or securities.
the personal property, including stocks and other Debts and credits shall be distrained by leaving with the
securities, debts, credits, bank accounts, and interests in person owing the debts or having in his possession or
and rights to personal property of such persons in under his control such credits, or with his agent, a copy of
sufficient quantity to satisfy the tax, or charge, together the warrant of distraint. The warrant of distraint shall be
with any increment thereto incident to delinquency, and sufficient authority to the person owning the debts or
the expenses of the distraint and the cost of the having in his possession or under his control any credits
subsequent sale. belonging to the taxpayer to pay to the Commissioner
A report on the distraint shall, within ten (10) days from the amount of such debts or credits.
receipt of the warrant, be submitted by the distraining Bank accounts shall be garnished by serving a warrant of
officer to the Revenue District Officer, and to the Revenue garnishment upon the taxpayer and upon the president,
Regional Director: Provided, That the Commissioner or his manager, treasurer or other responsible officer of the
duly authorized representative shall, subject to rules and bank. Upon receipt of the warrant of garnishment, the
regulations promulgated by the Secretary of Finance, bank shall turn over to the Commissioner so much of the
upon recommendation of the Commissioner, have the bank accounts as may be sufficient to satisfy the claim of
power to lift such order of distraint: Provided, further, That the Government.
a consolidated report by the Revenue Regional Director SEC. 209. Sale of Property Distrained and Disposition of
may be required by the Commissioner as often as Proceeds. - The Revenue District Officer or his duly
necessary. authorized representative, other than the officer referred
(B) Levy on Real Property. - After the expiration of the to in Section 208 of this Code shall, according to rules and
time required to pay the delinquent tax or delinquent regulations prescribed by the Secretary of Finance, upon
revenue as prescribed in this Section, real property may recommendation of the Commissioner, forthwith cause a
be levied upon, before simultaneously or after the notification to be exhibited in not less than two (2) public
distraint of personal property belonging to the places in the municipality or city where the distraint is
delinquent. To this end, any internal revenue officer made, specifying; the time and place of sale and the
designated by the Commissioner or his duly authorized articles distrained. The time of sale shall not be less than
representative shall prepare a duly authenticated twenty (20) days after notice to the owner or possessor of
certificate showing the name of the taxpayer and the the property as above specified and the publication or
amounts of the tax and penalty due from him. Said posting of such notice. One place for the posting of such
certificate shall operate with the force of a legal execution notice shall be at the Office of the Mayor of the city or
throughout the Philippines. municipality in which the property is distrained.
Levy shall be affected by writing upon said certificate a At the time and place fixed in such notice, the said
description of the property upon which levy is made. At revenue officer shall sell the goods, chattels, or effects, or
the same time, written notice of the levy shall be mailed other personal property, including stocks and other
to or served upon the Register of Deeds for the province securities so distrained, at public auction, to the highest
or city where the property is located and upon the bidder for cash, or with the approval of the Commissioner,
delinquent taxpayer, or if he be absent from the through duly licensed commodity or stock exchanges.
Philippines, to his agent or the manager of the business In the case of Stocks and other securities, the officer
making the sale shall execute a bill of sale which he shall



deliver to the buyer, and a copy thereof furnished the advance an amount sufficient to defray the costs of
corporation, company or association which issued the collection by means of the summary remedies provided
stocks or other securities. Upon receipt of the copy of the for in this Code, including the preservation or
bill of sale, the corporation, company or association shall transportation in case of personal property, and the
make the corresponding entry in its books, transfer the advertisement and subsequent sale, both in cases of
stocks or other securities sold in the name of the buyer, personal and real property including improvements
and issue, if required to do so, the corresponding found on the latter. In his monthly collection reports, such
certificates of stock or other securities. advances shall be reflected and supported by receipts.
Any residue over and above what is required to pay the SEC. 214. Redemption of Property Sold. - Within one (1)
entire claim, including expenses, shall be returned to the year from the date of sale, the delinquent taxpayer, or any
owner of the property sold. The expenses chargeable one for him, shall have the right of paying to the Revenue
upon each seizure and sale shall embrace only the actual District Officer the amount of the public taxes, penalties,
expenses of seizure and preservation of the property and interest thereon from the date of delinquency to the
pending the sale, and no charge shall be imposed for the date of sale, together with interest on said purchase price
services of the local internal revenue officer or his deputy. at the rate of fifteen percent (15%) per annum from the
SEC. 210. Release of Distrained Property Upon Payment date of purchase to the date of redemption, and such
Prior to Sale. - If at any time prior to the consummation payment shall entitle the person paying to the delivery of
of the sale all proper charges are paid to the officer the certificate issued to the purchaser and a certificate
conducting the sale, the goods or effects distrained shall from the said Revenue District Officer that he has thus
be restored to the owner. redeemed the property, and the Revenue District Officer
shall forthwith pay over to the purchaser the amount by
SEC. 211. Report of Sale to Bureau of Internal Revenue. - which such property has thus been redeemed, and said
Within two (2) days after the sale, the officer making the property thereafter shall be free from the lien of such
same shall make a report of his proceedings in writing to taxes and penalties.
the Commissioner and shall himself preserve a copy of
such report as an official record. The owner shall not, however, be deprived of the
possession of the said property and shall be entitled to
SEC. 212. Purchase by Government at Sale Upon the rents and other income thereof until the expiration of
Distraint. - When the amount bid for the property under the time allowed for its redemption.
distraint is not equal to the amount of the tax or is very
much less than the actual market value of the articles SEC. 215. Forfeiture to Government for Want of Bidder.
offered for sale, the Commissioner or his deputy may - In case there is no bidder for real property exposed for
purchase the same in behalf of the national Government sale as herein above provided or if the highest bid is for an
for the amount of taxes, penalties and costs due thereon. amount insufficient to pay the taxes, penalties and costs,
the Internal Revenue Officer conducting the sale shall
Property so purchased may be resold by the declare the property forfeited to the Government in
Commissioner or his deputy, subject to the rules and satisfaction of the claim in question and within two (2)
regulations prescribed by the Secretary of Finance, the days thereafter, shall make a return of his proceedings
net proceeds therefrom shall be remitted to the National and the forfeiture which shall be spread upon the records
Treasury and accounted for as internal revenue. of his office. It shall be the duty of the Register of Deeds
SEC. 213. Advertisement and Sale. - Within twenty (20) concerned, upon registration with his office of any such
days after levy, the officer conducting the proceedings declaration of forfeiture, to transfer the title of the
shall proceed to advertise the property or a usable property forfeited to the Government without the
portion thereof as may be necessary to satisfy the claim necessity of an order from a competent court.
and cost of sale; and such advertisement shall cover a Within one (1) year from the date of such forfeiture, the
period of a least thirty (30) days. It shall be effectuated by taxpayer, or any one for him, may redeem said property
posting a notice at the main entrance of the municipal by paying to the Commissioner or the latter's Revenue
building or city hall and in public and conspicuous place Collection Officer the full amount of the taxes and
in the barrio or district in which the real estate lies and by penalties, together with interest thereon and the costs of
publication once a week for three (3) weeks in a sale, but if the property be not thus redeemed, the
newspaper of general circulation in the municipality or forfeiture shall become absolute.
city where the property is located. The advertisement
shall contain a statement of the amount of taxes and SEC. 216. Resale of Real Estate Taken for Taxes. - The
penalties so due and the time and place of sale, the name Commissioner shall have charge of any real estate
of the taxpayer against whom taxes are levied, and a obtained by the Government of the Philippines in
short description of the property to be sold. At any time payment or satisfaction of taxes, penalties or costs arising
before the day fixed for the sale, the taxpayer may under this Code or in compromise or adjustment of any
discontinue all proceedings by paying the taxes, penalties claim therefore; and said Commissioner may, upon the
and interest. If he does not do so, the sale shall proceed giving of not less than twenty (20) days notice, sell and
and shall be held either at the main entrance of the dispose of the same of public auction or with prior
municipal building or city hall, or on the premises to be approval of the Secretary of Finance, dispose of the same
sold, as the officer conducting the proceedings shall at private sale. In either case, the proceeds of the sale
determine and as the notice of sale shall specify. shall be deposited with the National Treasury, and an
accounting of the same shall rendered to the Chairman
Within five (5) days after the sale, a return by the of the Commission on Audit.
distraining or levying officer of the proceedings shall be
entered upon the records of the Revenue Collection SEC. 217. Further Distraint or Levy. - The remedy by
Officer, the Revenue District officer and the Revenue distraint of personal property and levy on realty may be
Regional Director. The Revenue Collection Officer, in repeated if necessary until the full amount due, including
consultation with the Revenue district Officer, shall then all expenses, is collected.
make out and deliver to the purchaser a certificate from SEC. 218. Injunction not Available to Restrain Collection
his records, showing the proceedings of the sale, of Tax. - No court shall have the authority to grant an
describing the property sold stating the name of the injunction to restrain the collection of any national
purchaser and setting out the exact amount of all taxes, internal revenue tax, fee or charge imposed by this Code.
penalties and interest: Provided, however, That in case the SEC. 219. Nature and Extent of Tax Lien. - If any person,
proceeds of the sale exceeds the claim and cost of sale, corporation, partnership, joint-account (cuentas en
the excess shall be turned over to the owner of the participacion), association or insurance company liable to
property. pay an internal revenue tax, neglects or refuses to pay the
The Revenue Collection Officer, upon approval by the same after demand, the amount shall be a lien in favor of
Revenue District Officer may, out of his collection, the Government of the Philippines from the time when


the assessment was made by the Commissioner until located in the address given by him in the return filed
paid, with interests, penalties, and costs that may accrue upon which a tax is being assessed or collected: Provided,
in addition thereto upon all property and rights to that, if the taxpayer informs the Commissioner of any
property belonging to the taxpayer: Provided, That this change in address, the running of the Statute of
lien shall not be valid against any mortgagee, purchaser Limitations will not be suspended; when the warrant of
or judgment creditor until notice of such lien shall be distraint or levy is duly served upon the taxpayer, his
filed by the Commissioner in the office of the Register of authorized representative, or a member of his household
Deeds of the province or city where the property of the with sufficient discretion, and no property could be
taxpayer is situated or located. located; and when the taxpayer is out of the Philippines.
SEC. 220. Form and Mode of Proceeding in Actions SEC. 224. Remedy for Enforcement of Forfeitures. - The
Arising under this Code. - Civil and criminal actions and forfeiture of chattels and removable fixtures of any sort
proceedings instituted in behalf of the Government shall be enforced by the seizure and sale, or destruction,
under the authority of this Code or other law enforced by of the specific forfeited property. The forfeiture of real
the Bureau of Internal Revenue shall be brought in the property shall be enforced by a judgment of
name of the Government of the Philippines and shall be condemnation and sale in a legal action or proceeding,
conducted by legal officers of the Bureau of Internal civil or criminal, as the case may require.
Revenue but no civil or criminal action for the recovery of SEC. 225. When Property to be Sold or Destroyed. -
taxes or the enforcement of any fine, penalty or forfeiture Sales of forfeited chattels and removable fixtures shall be
under this Code shall be filed in court without the effected, so far as practicable, in the same manner and
approval of the Commissioner. under the same conditions as the public notice and the
SEC. 221. Remedy for Enforcement of Statutory Penal time and manner of sale as are prescribed for sales of
Provisions. - The remedy for enforcement of statutory personal property distrained for the non-payment of
penalties of all sorts shall be by criminal or civil action, as taxes.
the particular situation may require, subject to the Distilled spirits, liquors, cigars, cigarettes, other
approval of the Commissioner. manufactured products of tobacco, and all apparatus
SEC. 222. Exceptions as to Period of Limitation of used I or about the illicit production of such articles may,
Assessment and Collection of Taxes. - upon forfeiture, be destroyed by order of the
(a) In the case of a false or fraudulent return with Commissioner, when the sale of the same for
intent to evade tax or of failure to file a return, the consumption or use would be injurious to public health
tax may be assessed, or a proceeding in court for the or prejudicial to the enforcement of the law.
collection of such tax may be filed without All other articles subject to excise tax, which have been
assessment, at any time within ten (10) years after manufactured or removed in violation of this Code, as
the discovery of the falsity, fraud or omission: well as dies for the printing or making of internal revenue
Provided, That in a fraud assessment which has stamps and labels which are in imitation of or purport to
become final and executory, the fact of fraud shall be lawful stamps, or labels may, upon forfeiture, be sold or
be judicially taken cognizance of in the civil or destroyed in the discretion of the Commissioner.
criminal action for the collection thereof. Forfeited property shall not be destroyed until at least
(b) If before the expiration of the time prescribed in twenty (20) days after seizure.
Section 203 for the assessment of the tax, both the SEC. 226. Disposition of funds Recovered in Legal
Commissioner and the taxpayer have agreed in Proceedings or Obtained from Forfeitures. - all
writing to its assessment after such time, the tax judgments and monies recovered and received for taxes,
may be assessed within the period agreed upon. The costs, forfeitures, fines and penalties shall be paid to the
period so agreed upon may be extended by Commissioner or his authorized deputies as the taxes
subsequent written agreement made before the themselves are required to be paid, and except as
expiration of the period previously agreed upon. specially provided, shall be accounted for and dealt with
(c) Any internal revenue tax which has been the same way.
assessed within the period of limitation as SEC. 227. Satisfaction of Judgment Recovered Against
prescribed in paragraph (a) hereof may be collected any Internal Revenue Officer. - When an action is
by distraint or levy or by a proceeding in court within brought against any Internal Revenue officer to recover
five (5) years following the assessment of the tax. damages by reason of any act done in the performance of
(d) Any internal revenue tax, which has been official duty, and the Commissioner is notified of such
assessed within the period agreed upon as provided action in time to make defense against the same,
in paragraph (b) hereinabove, may be collected by through the Solicitor General, any judgment, damages or
distraint or levy or by a proceeding in court within costs recovered in such action shall be satisfied by the
the period agreed upon in writing before the Commissioner, upon approval of the Secretary of Finance,
expiration of the five (5) -year period. The period so or if the same be paid by the person used shall be repaid
agreed upon may be extended by subsequent or reimbursed to him.
written agreements made before the expiration of No such judgment, damages, or costs shall be paid or
the period previously agreed upon. reimbursed in behalf of a person who has acted
(e) Provided, however, That nothing in the negligently or in bad faith, or with willful oppression.
immediately preceding and paragraph (a) hereof
shall be construed to authorize the examination and
investigation or inquiry into any tax return filed in
accordance with the provisions of any tax amnesty CHAPTER III PROTESTING AN ASSESSMENT,
law or decree. REFUND, ETC.
SEC. 223. Suspension of Running of Statute of SEC. 228. Protesting of Assessment. - When the
Limitations. - The running of the Statute of Limitations Commissioner or his duly authorized representative finds
provided in Sections 203 and 222 on the making of that proper taxes should be assessed, he shall first notify
assessment and the beginning of distraint or levy a the taxpayer of his findings: Provided, however, That a
proceeding in court for collection, in respect of any pre-assessment notice shall not be required in the
deficiency, shall be suspended for the period during following cases:
which the Commissioner is prohibited from making the
assessment or beginning distraint or levy or a proceeding (a) When the finding for any deficiency tax is the
in court and for sixty (60) days thereafter; when the result of mathematical error in the computation of
taxpayer requests for a reinvestigation which is granted the tax as appearing on the face of the return; or
by the Commissioner; when the taxpayer cannot be



(b) When a discrepancy has been determined for internal revenue tax liabilities of the taxpayer, and the
between the tax withheld and the amount actually amount covered by the certificate shall revert to the
remitted by the withholding agent; or general fund.
(c) When a taxpayer who opted to claim a refund or (C)Transitory Provision. - For purposes of the preceding
tax credit of excess creditable withholding tax for a Subsection, a tax credit certificate issued by the
taxable period was determined to have carried over Commissioner or his duly authorized representative prior
and automatically applied the same amount to January 1, 1998, which remains unutilized or has a
claimed against the estimated tax liabilities for the creditable balance as of said date, shall be presented for
taxable quarter or quarters of the succeeding revalidation with the Commissioner or his duly authorized
taxable year; or representative or on before June 30, 1998.
(d) When the excise tax due on excisable articles has SEC. 231. Action to Contest Forfeiture of Chattel. - In
not been paid; or case of the seizure of personal property under claim of
(e) When the article locally purchased or imported forfeiture, the owner desiring to contest the validity of the
by an exempt person, such as, but not limited to, forfeiture may, at any time before sale or destruction of
vehicles, capital equipment, machineries and spare the property, bring an action against the person seizing
parts, has been sold, traded or transferred to the property or having possession thereof to recover the
non-exempt persons. same, and upon giving proper bond, may enjoin the sale;
or after the sale and within six (6) months, he may bring
The taxpayers shall be informed in writing of the law and an action to recover the net proceeds realized at the sale.
the facts on which the assessment is made; otherwise,
the assessment shall be void.
Within a period to be prescribed by implementing rules

and regulations, the taxpayer shall be required to respond TITLE IX COMPLIANCE REQUIREMENTS
to said notice. If the taxpayer fails to respond, the
Commissioner or his duly authorized representative shall (As amended by RA Nos. 9337 & 10021, 10963)
issue an assessment based on his findings.
Such assessment may be protested administratively by CHAPTER I KEEPING OF BOOKS OF ACCOUNTS
filing a request for reconsideration or reinvestigation AND RECORDS
within thirty (30) days from receipt of the assessment in SEC. 232. Keeping of Books of Accounts. -
such form and manner as may be prescribed by
implementing rules and regulations. Within sixty (60) (A) Corporations, Companies, Partnerships or Persons
days from filing of the protest, all relevant supporting Required to Keep Books of Accounts. - All corporations,
documents shall have been submitted; otherwise, the companies, partnerships or persons required by law to
assessment shall become final. pay internal revenue taxes shall keep and use relevant
and appropriate set of bookkeeping records duly
If the protest is denied in whole or in part, or is not acted authorized by the Secretary of Finance wherein all
upon within one hundred eighty (180) days from transactions and results of operations are shown and
submission of documents, the taxpayer adversely from which all taxes due the Government may readily
affected by the decision or inaction may appeal to the and accurately be ascertained and determined any time
Court of Tax Appeals within thirty (30) days from receipt of the year: Provided, That corporations, companies,
of the said decision, or from the lapse of one hundred partnerships or persons whose gross annual sales,
eighty (180)-day period; otherwise, the decision shall earnings, receipts or output exceed Three million pesos
become final, executory and demandable. (P3,000,000), shall have their books of accounts audited
SEC. 229. Recovery of Tax Erroneously or Illegally and examined yearly by independent Certified Public
Collected. - no suit or proceeding shall be maintained in Accountants and their income tax returns accompanied
any court for the recovery of any national internal revenue with a duly accomplished Account Information Form
tax hereafter alleged to have been erroneously or illegally (AIF) which shall contain, among others, information
assessed or collected, or of any penalty claimed to have lifted from certified balance sheets, profit and loss
been collected without authority, of any sum alleged to statements, schedules listing income-producing
have been excessively or in any manner wrongfully properties and the corresponding income therefrom and
collected without authority, or of any sum alleged to have other relevant statements.(as amended by RA No 10963)
been excessively or in any manner wrongfully collected, (B) Independent Certified Public Accountant Defined. -
until a claim for refund or credit has been duly filed with The term 'Independent Certified Public Accountant', as
the Commissioner; but such suit or proceeding may be used in the preceding paragraph, means an accountant
maintained, whether or not such tax, penalty, or sum has who possesses the independence as defined in the rules
been paid under protest or duress. and regulations of the Board of Accountancy
In any case, no such suit or proceeding shall be filed after promulgated pursuant to Presidential Decree No. 692,
the expiration of two (2) years from the date of payment otherwise known as the Revised Accountancy Law.
of the tax or penalty regardless of any supervening cause SEC. 233. Subsidiary Books. - All corporations,
that may arise after payment: Provided, however, That the companies, partnerships or persons keeping the books of
Commissioner may, even without a written claim therefor, accounts mentioned in the preceding Section may, at
refund or credit any tax, where on the face of the return their option, keep subsidiary books as the needs of their
upon which payment was made, such payment appears business may require: Provided, That were such
clearly to have been erroneously paid. subsidiaries are kept, they shall form part of the
SEC. 230. Forfeiture of Cash Refund and of Tax Credit. - accounting system of the taxpayer and shall be subject to
(A) Forfeiture of Refund. - A refund check or warrant the same rules and regulations as to their keeping,
issued in accordance with the pertinent provisions of this translation, production and inspection as are applicable
Code, which shall remain unclaimed or uncashed within to the journal and the ledger.
five (5) years from the date the said warrant or check was SEC. 234. Language in which Books are to be Kept;
mailed or delivered, shall be forfeited in favor of the Translation. - All such corporations, companies,
Government and the amount thereof shall revert to the partnerships or persons shall keep the books or records
general fund. mentioned in Section 232 hereof in native language,
(B) Forfeiture of Tax Credit. - A tax credit certificate English or Spanish: Provided, however, That if in addition
issued in accordance with the pertinent provisions of this to said books or records the taxpayer keeps other books
Code, which shall remain unutilized after five (5) years or records in a language other than a native language,
from the date of issue, shall, unless revalidated, be English or Spanish, he shall make a true and complete
considered invalid, and shall not be allowed as payment translation of all the entries in suck other books or records



into a native language; English or Spanish, and the said A person maintaining a head office, branch or facility shall
translation must be made by the bookkeeper, or such register with the Revenue District Officer having
taxpayer, or in his absence, by his manager and must be jurisdiction over the head office, brand or facility. For
certified under oath as to its correctness by the said purposes of this Section, the term 'facility' may include
bookkeeper or manager, and shall form an integral part but not be limited to sales outlets, places of production,
of the aforesaid books of accounts. The keeping of such warehouses or storage places.
books or records in any language other than a native (B) Annual Registration Fee - An annual registration fee
language, English or Spanish, is hereby prohibited. in the amount of Five hundred pesos (P500) for every
SEC. 235. Preservation of Books and Accounts and separate or distinct establishment or place of business,
Other Accounting Records. - All the books of accounts, including facility types where sales transactions occur,
including the subsidiary books and other accounting shall be paid upon registration and every year thereafter
records of corporations, partnerships, or persons, shall be on or before the last day of January: Provided, however,
preserved by them for a period beginning from the last That cooperatives, individuals earning purely
entry in each book until the last day prescribed by compensation income, whether locally or abroad, and
Section 203 within which the Commissioner is authorized overseas workers are not liable to the registration fee
to make an assessment. The said books and records shall herein imposed.
be subject to examination and inspection by internal The registration fee shall be paid to an authorized agent
revenue officers: Provided, That for income tax purposes, bank located within the revenue district, or to the
such examination and inspection shall be made only Revenue Collection Officer, or duly authorized Treasurer
once in a taxable year, except in the following cases: of the city of municipality where each place of business or
(a) Fraud, irregularity or mistakes, as determined by branch is registered.
the Commissioner; (C) Registration of Each Type of Internal Revenue Tax.-
(b) The taxpayer requests reinvestigation; Every person who is required to register with the Bureau
(c) Verification of compliance with withholding tax of Internal Revenue under Subsection (A) hereof, shall
laws and regulations; register each type of internal revenue tax for which he is
obligated, shall file a return and shall pay such taxes, and
(d) Verification of capital gains tax liabilities; and shall updates such registration of any changes in
(e) In the exercise of the Commissioner's power accordance with Subsection (E) hereof.
under Section 5(B) to obtain information from other (D) Transfer of Registration. - In case a registered person
persons in which case, another or separate decides to transfer his place of business or his head office
examination and inspection may be made. or branches, it shall be his duty to update his registration
Examination and inspection of books of accounts status by filing an application for registration information
and other accounting records shall be done in the update in the form prescribed therefor.
taxpayer's office or place of business or in the office
of the Bureau of Internal Revenue. All corporations, (E) Other Updates. - Any person registered in accordance
partnerships or persons that retire from business with this Section shall, whenever applicable, update his
shall, within ten (10) days from the date of registration information with the Revenue District Office
retirement or within such period of time as may be where he is registered, specifying therein any change in
allowed by the Commissioner in special cases, type and other taxpayer details.
submit their books of accounts, including the (F) Cancellation of Registration. -
subsidiary books and other accounting records to (1) General Rule. - The registration of any person
the Commissioner or any of his deputies for who ceases to be liable to a tax type shall be
examination, after which they shall be returned. cancelled upon filing with the Revenue District
Corporations and partnerships contemplating Office where he is registered an application for
dissolution must notify the Commissioner and shall registration information update in a form prescribed
not be dissolved until cleared of any tax liability. therefor.
Any provision of existing general or special law to the (2) Cancellation of Value-Added Tax Registration. -
contrary notwithstanding, the books of accounts and A VAT- registered person may cancel his registration
other pertinent records of tax-exempt organizations or fo VAT if:
grantees of tax incentives shall be subject to examination
by the Bureau of Internal Revenue for purposes of (a) He makes written application and can
ascertaining compliance with the conditions under which demonstrate to the Commissioner's satisfaction
they have been granted tax exemptions or tax incentives, the his gross sales or receipts for the following
and their tax liability, if any. twelve(12) months, other than those that are
exempt under Section 109 (A) to (U) (sic), will
not exceed One million five hundred thousand
pesos (P1,500,000) or
CHAPTER II ADMINISTRATIVE PROVISIONS (b) He has ceased to carry on his trade of
SEC. 236. Registration Requirements. - business, and does not expect to recommence
any trade or business within the next (12)
(A) Requirements. - Every person subject to any internal months.
revenue tax shall register once with the appropriate
Revenue District Officer: The cancellation of registration will be effective from
the first day of the following month.
(1) Within ten (10) days from date of employment, or
(G) Persons Required to Register for Value-Added Tax. -
(2) On or before the commencement of business,or [95]
(3) Before payment of any tax due, or (1) Any person who, in the course of trade or
(4) Upon filing of a return, statement or declaration business, sells, barters or exchanges goods or
as required in this Code. properties, or engages in the sale or exchange of
services, shall be liable to register for value-added
The registration shall contain the taxpayer's name, style,
tax if:
place of residence, business and such other information
as may be required by the Commissioner in the form (a) His gross sales or receipts for the past
prescribed therefor: Provided, That the Commissioner twelve (12) months, other than those that are
shall simplify the business registration and tax exempt under Section 109(A) to (BB), have
compliance requirements of self-employed individuals exceeded Three million pesos (P3,000,000); or
and/or professionals.(as amended by RA No 10963)


(b) There are reasonable grounds to believe that new Taxpayer Identification Number (TIN) shall be

his gross sales or receipts for the next twelve supplied in accordance with the provisions of this Section.
(12) months, other than those that are exempt In the case of a nonresident decedent, the executor or
under Section 109(A) to (BB), will exceed Three administrator of the estate shall register the estate with
million pesos (P3,000,000). the Revenue District Office where he is registered:
(as amended by RA No 10963) or Provided, however, That in case such executor or
(2) Every person who becomes liable to be registered administrator is not registered, registration of the estate
under paragraph (1) of this Subsection shall register shall be made with the Taxpayer Identification Number
with the Revenue District Office which has (TIN) supplied by the Revenue District Office having
jurisdiction over the head office or branch of that jurisdiction over his legal residence.
person, and shall pay the annual registration fee Only one Taxpayer identification Number (TIN) shall be
prescribed in Subsection (B) hereof. If he fails to assigned to a taxpayer. Any person who shall secure more
register, he shall be liable to pay the tax under Title than one Taxpayer Identification Number shall be
IV as if he were a VAT-registered person, but without criminally liable under the provision of Section 275 on
the benefit of input tax credits for the period in 'Violation of Other Provisions of this Code or Regulations
which he was not properly registered. in General'.
(H) Optional Registration for Value-Added Tax of SEC. 237. Issuance of Receipts or Sales or Commercial
Exempt Person. - Invoices. - (A) Issuance. — All persons subject to an
(1) Any person who is not required to register for internal revenue tax shall, at the point of each sale and
value-added tax under Subsection (G) hereof may transfer of merchandise or for services rendered valued at
elect to register for value-added tax by registering One hundred pesos (P100) or more, issue duly registered
with the Revenue District Office that has jurisdiction receipts or sale or commercial invoices, showing the date
over the head office of that person, and paying the of transaction, quantity, unit cost and description of
annual registration fee in Subsection (B) hereof. merchandise or nature of service: Provided, however, That
where the receipt is issued to cover payment made as
(2) Any person who elects to register under this rentals, commissions, compensation or fees, receipts or
Subsection shall not be entitled to cancel his invoices shall be issued which shall show the name,
registration under Subsection (F)(2) for the next business style, if any, and address of the purchaser,
three (3) years. customer or client: Provided, further, That where the
Provided, That any person taxed under Section purchaser is a VAT-registered person, in addition to the
24(A)(2)(b) and 24(A)(2)(c)(2)(a) of the NIRC who information herein required, the invoice or receipt shall
elected to pay the eight percent (8%) tax on gross further show the Taxpayer Identification Number (TIN) of
sales or receipts shall not be allowed to avail of this the purchaser.
option. Within five (5) years from the effectivity of this Act and
For purposes of Title IV of this Code, any person who upon the establishment of a system capable of storing
has registered value-added tax as a tax type in and processing the required data, the Bureau shall
accordance with the provisions of Subsection (C) require taxpayers engaged in the export of goods and
hereof shall be referred to as a 'VAT-registered services, taxpayers engaged in e-commerce, and
person' who shall be assigned only one Taxpayer taxpayers under the jurisdiction of the Large Taxpayers
Identification Number (TIN). Service to issue electronic receipts or sales or commercial
invoices in lieu of manual receipts or sales or commercial
(as amended by RA No 10963) invoices, subject to rules and regulations to be issued by
(I) Supplying of Taxpayer Identification Number (TIN). - the Secretary of Finance upon recommendation of the
Commissioner and after a public hearing shall have been
Any person required under the authority of this Code to held for this purpose: Provided, That taxpayers not
make, render or file a return, statement or other covered by the mandate of this provision may issue
document shall be supplied with or assigned a Taxpayer electronic receipts or, sales or commercial invoices, in lieu
Identification Number (TIN) which he shall indicate in of manual receipts, and sales and commercial invoices.
such return, statement or document filed with the
Bureau of Internal Revenue for his proper identification The original of each receipt or invoice shall be issued to
for tax purposes, and which he shall indicate in certain the purchaser, customer or client at the time the
documents, such as, but not limited to the following: transaction is effected, who, if engaged in business or in
the exercise of profession, shall keep and preserve the
(1) Sugar quedans, refined sugar release order or same in his place of business for a period of three (3) years
similar instruments; from the close of the taxable year in which such invoice or
(2) Domestic bills of lading; receipt was issued, while the duplicate shall be kept and
(3) Documents to be registered with the Register of preserved by the issuer, also in his place of business, for a
Deeds of Assessor's Office; like period: Provided, That in case of electronic receipts or
sales or commercial invoices, the digital records of the
(4) Registration certificate of transportation same shall be kept by the purchaser, customer or client
equipment by land, sea or air; and the issuer for the same period above stated.
(5) Documents to be registered with the Securities The Commissioner may, in meritorious cases, exempt any
and Exchange Commission; person subject to internal revenue tax from compliance
(6) Building construction permits; with the provisions of this Section
(7) Application for loan with banks, financial (as amended by RA No 10963)
institutions, or other financial intermediaries; SEC. 237-A. Electronic Sales Reporting System. —
(8) Application for mayor's permit; Within five (5) years from the effectivity of this Act and
upon the establishment of a system capable of storing
(9) Application for business license with the and processing the required data, the Bureau shall
Department of Trade & Industry; and require taxpayers engaged in the export of goods and
(10) Such other documents which may hereafter be services, and taxpayers under the jurisdiction of the Large
required under rules and regulations to be Taxpayers Service to electronically report their sales data
promulgated by the Secretary of Finance, upon to the Bureau through the use of electronic point of sales
recommendation of the Commissioner. systems, subject to rules and regulations to be issued by
the Secretary of Finance as recommended by the
In cases where a registered taxpayer dies, the Commissioner of Internal Revenue: Provided, That the
administrator or executor shall register the estate of the
decedent in accordance with Subsection (A) hereof and a



machines, fiscal devices, and fiscal memory devices shall the person or persons interested in the estate should,
be at the expense of the taxpayers. within thirty (30) days from the death of the decedent,
The data processing of sales and purchase data shall submit to the Bureau of Internal Revenue or the regional
comply with the provisions of Republic Act No. 10173, or revenue District Office inventories of goods or stocks
otherwise known as the "Data Privacy Act" and Section had at the time of such death.
270 of the NIRC, as amended, on unlawful divulgence of The requirement under this Section shall also be
taxpayer information and such other laws relating to the applicable in the case of transfer of ownership or change
confidentiality of information. of name of the business establishment.
The Bureau shall also establish policies, risk management SEC. 243. Removal of Business to Other Location. - Any
approaches, actions, trainings, and technologies to business for which the annual registration fee has been
protect the cyber environment, organization, and data in paid may, subject to the rules and regulations prescribed
compliance with Republic Act No. 10175 or the by the Secretary of Finance, upon recommendation of
"Cybercrime Prevention Act of 2012." the Commissioner, be removed and continued in any
(as amended by RA No 10963) other place without the payment of additional tax during
the term for which the payment was made.
SEC. 238. Printing of Receipts or Sales or Commercial
Invoices. - All persons who are engaged in business shall
secure from the Bureau of Internal Revenue an authority
to print receipts or sales or commercial invoices before a CHAPTER III RULES AND REGULATIONS
printer can print the same.
SEC. 244. Authority of Secretary of Finance to
No authority to print receipts or sales or commercial Promulgate Rules and Regulations. - The Secretary of
invoices shall be granted unless the receipts or invoices to Finance, upon recommendation of the Commissioner,
be printed are serially numbered and shall show, among shall promulgate all needful rules and regulations for the
other things, the name, business style, Taxpayer effective enforcement of the provisions of this Code.
Identification Number (TIN) and business address of the
person or entity to use the same, and such other SEC. 245. Specific Provisions to be Contained in Rules
information that may be required by rules and and Regulations. - The rules and regulations of the
regulations to be promulgated by the Secretary of Bureau of Internal Revenue shall, among other things,
Finance, upon recommendation of the Commissioner. contain provisions specifying, prescribing or defining:
All persons who print receipt or sales or commercial (a) The time and manner in which Revenue Regional
invoices shall maintain a logbook/register of taxpayers Directors shall canvass their respective Revenue
who availed of their printing services. The Regions for the purpose of discovering persons and
logbook/register shall contain the following information: property liable to national internal revenue taxes,
and the manner in which their lists and records of
(1) Names, Taxpayer Identification Numbers of the taxable persons and taxable objects shall be made
persons or entities for whom the receipts or sales or and kept;
commercial invoices were printed; and
(b) The forms of labels, brands or marks to be
(2) Number of booklets, number of sets per booklet, required on goods subject to an excise tax, and the
number of copies per set and the serial numbers of manner in which the labelling, branding or marking
the receipts or invoices in each booklet. shall be effected;
SEC. 239. Sign to be Exhibited by Distiller, Rectifier, (c) The conditions under which and the manner in
Compounder, Repacker and Wholesale Liquor Dealer. - which goods intended for export, which if not
Every person engaged in distilling or rectifying spirits, exported would be subject to an excise tax, shall be
compounding liquors, repacking wines or distilled spirits, labelled, branded or marked;
and every wholesale liquor dealer shall keep
conspicuously on the outside of his place of business a (d) The conditions to be observed by revenue
sign exhibiting, in letters not less than six centimeters (6 officers respecting the institutions and conduct of
cms.) high, his name or firm style, with the words legal actions and proceedings;
'Registered Distiller,' 'Rectifier of Spirits,' 'Compounder of (e) The conditions under which goods intended for
Liquors,' 'Repacker of Wines or Distilled Spirits,' or storage in bonded warehouses shall be conveyed
'Wholesale Liquor Dealer,' as the case may be, and his thither, their manner of storage and the method of
assessment number. keeping the entries and records in connection
SEC. 240. Sign to be exhibited by manufacturer of therewith, also the books to be kept by Revenue
Products of Tobacco. - Every manufacturer of cigars, Inspectors and the reports to be made by them in
cigarettes or tobacco, and every wholesale dealer in leaf connection with their supervision of such houses;
tobacco or manufactured products of tobacco shall place (f) The conditions under which denatured alcohol
and keep on outside of the building wherein his business may be removed and dealt in, the character and
is carried on, so that it can be distinctly seen, a sign quantity of the denaturing material to be used, the
stating his full name and business in letters not less than manner in which the process of denaturing shall be
six centimeters (6 cms.) high and also giving his effected, so as to render the alcohol suitably
assessment number. denatured and unfit for oral intake, the bonds to be
SEC. 241. Exhibition of Certificate of Payment at Place given, the books and records to be kept, the entries
of Business. - The certificate or receipts showing to be made therein, the reports to be made to the
payment of taxes issued to a person engaged in a Commissioner, and the signs to be displayed in the
business subject to an annual registration fee shall be business ort by the person for whom such
kept conspicuously exhibited in plain view in or at the denaturing is done or by whom, such alcohol is dealt
place where the business is conducted; and in case of a in;
peddler or other persons not having a fixed place of (g) The manner in which revenue shall be collected
business, shall be kept in the possession of the holder and paid, the instrument, document or object to
thereof, subject to production upon demand of any which revenue stamps shall be affixed, the mode of
internal revenue officer. cancellation of the same, the manner in which the
SEC. 242. Continuation of Business of Deceased proper books, records, invoices and other papers
Person. - When any individual who has paid the annual shall be kept and entries therein made by the
registration fee dies, and the same business is continued person subject to the tax, as well as the manner in
by the person or persons interested in his estate, no which licenses and stamps shall be gathered up and
additional payment shall be required for the residue of returned after serving their purposes;
the term which the tax was paid: Provided, however, That



(h) The conditions to be observed by revenue SEC. 246. Non- Retroactivity of Rulings. - Any
officers respecting the enforcement of Title III revocation, modification or reversal of any of the rules and
imposing a tax on estate of a decedent, and other regulations promulgated in accordance with the
transfers mortis causa, as well as on gifts and such preceding Sections or any of the rulings or circulars
other rules and regulations which the Commissioner promulgated by the Commissioner shall not be given
may consider suitable for the enforcement of the retroactive application if the revocation, modification or
said Title III; reversal will be prejudicial to the taxpayers, except in the
(i) The manner in which tax returns, information and following cases:
reports shall be prepared and reported and the tax (a) Where the taxpayer deliberately misstates or
collected and paid, as well as the conditions under omits material facts from his return or any
which evidence of payment shall be furnished the document required of him by the Bureau of Internal
taxpayer, and the preparation and publication of tax Revenue;
statistics; (b) Where the facts subsequently gathered by the
(j) The manner in which internal revenue taxes, such Bureau of Internal Revenue are materially different
as income tax, including withholding tax, estate and from the facts on which the ruling is based; or
donor's taxes, value-added tax, other percentage (c) Where the taxpayer acted in bad faith.
taxes, excise taxes and documentary stamp taxes
shall be paid through the collection officers of the
Bureau of Internal Revenue or through duly
authorized agent banks which are hereby deputized
to receive payments of such taxes and the returns, TITLE X STATUTORY OFFENSES AND
papers and statements that may be filed by the PENALTIES
taxpayers in connection with the payment of the tax:
Provided, however, That notwithstanding the other (As amended by RA No. 10021, 10963)
provisions of this Code prescribing the place of filing
of returns and payment of taxes, the Commissioner CHAPTER I ADDITIONS TO THE TAX
may, by rules and regulations, require that the tax
returns, papers and statements that may be filed by SEC. 247. General Provisions. -
the taxpayers in connection with the payment of the (a) The additions to the tax or deficiency tax prescribed in
tax. Provided, however, That notwithstanding the this Chapter shall apply to all taxes, fees and charges
other provisions of this Code prescribing the place of imposed in this Code. The Amount so added to the tax
filing of returns and payment of taxes, the shall be collected at the same time, in the same manner
Commissioner may, by rules and regulations require and as part of the tax.
that the tax returns, papers and statements and
taxes of large taxpayers be filed and paid, (b) If the withholding agent is the Government or any of
respectively, through collection officers or through its agencies, political subdivisions or instrumentalities, or
duly authorized agent banks: Provided, further, That a government-owned or controlled corporation, the
the Commissioner can exercise this power within six employee thereof responsible for the withholding and
(6) years from the approval of Republic Act No. 7646 remittance of the tax shall be personally liable for the
or the completion of its comprehensive additions to the tax prescribed herein.
computerization program, whichever comes earlier: (c) The term 'person', as used in this Chapter, includes an
Provided, finally, That separate venues for the Luzon, officer or employee of a corporation who as such officer,
Visayas and Mindanao areas may be designated for employee or member is under a duty to perform the act
the filing of tax returns and payment of taxes by said in respect of which the violation occurs.
large taxpayers.
SEC. 248. Civil Penalties. -
For the purpose of this Section, 'large taxpayer' means a
taxpayer who satisfies any of the following criteria; (A) There shall be imposed, in addition to the tax required
to be paid, a penalty equivalent to twenty-five percent
(1) Value-Added Tax (VAT) - Business (25%) of the amount due, in the following cases:
establishment with VAT paid or payable of at least
One hundred thousand pesos (P100, 000) for any (1) Failure to file any return and pay the tax due
quarter of the preceding taxable year; thereon as required under the provisions of this
Code or rules and regulations on the date
(2) Excise tax - Business establishment with excise prescribed; or
tax paid or payable of at least One million pesos (P1,
000,000) for the preceding taxable year; (2) Unless otherwise authorized by the
Commissioner, filing a return with an internal
(3) Corporate Income Tax - Business establishment revenue officer other than those with whom the
with annual income tax paid or payable of at least return is required to be filed; or
One million pesos (P1,000,000) for the preceding
taxable year; and (3) Failure to pay the deficiency tax within the time
prescribed for its payment in the notice of
(4) Withholding tax - Business establishment with assessment; or
withholding tax payment or remittance of at least
One million pesos (P1,000,000) for the preceding (4) Failure to pay the full or part of the amount of
taxable year. tax shown on any return required to be filed under
the provisions of this Code or rules and regulations,
Provided, however, That the Secretary of Finance, upon or the full amount of tax due for which no return is
recommendation of the Commissioner, may modify or required to be filed, on or before the date prescribed
add to the above criteria for determining a large taxpayer for its payment.
after considering such factors as inflation, volume of
business, wage and employment levels, and similar (B) In case of willful neglect to file the return within the
economic factors. period prescribed by this Code or by rules and
regulations, or in case a false or fraudulent return is
The penalties prescribed under Section 248 of this Code willfully made, the penalty to be imposed shall be fifty
shall be imposed on any violation of the rules and percent (50%) of the tax or of the deficiency tax, in case,
regulations issued by the Secretary of Finance, upon any payment has been made on the basis of such return
recommendation of the Commissioner, prescribing the before the discovery of the falsity or fraud: Provided, That
place of filing of returns and payments of taxes by large a substantial under-declaration of taxable sales, receipts
taxpayers. or income, or a substantial overstatement of deductions,
as determined by the Commissioner pursuant to the
rules and regulations to be promulgated by the Secretary



of Finance, shall constitute prima facie evidence of a false agent who fails or refuses to refund excess withholding
or fraudulent return: Provided, further, That failure to tax shall, in addition to the penalties provided in this Title,
report sales, receipts or income in an amount exceeding be liable to a penalty to the total amount of refunds
thirty percent (30%) of that declared per return, and a which was not refunded to the employee resulting from
claim of deductions in an amount exceeding (30%) of any excess of the amount withheld over the tax actually
actual deductions, shall render the taxpayer liable for due on their return.
substantial under-declaration of sales, receipts or income
or for overstatement of deductions, as mentioned herein.
SEC. 249. Interest. -
CHAPTER II CRIMES, OTHER OFFENSES AND
(A) In General. - There shall be assessed and collected on FORFEITURES
any unpaid amount of tax, interest at the rate of double
the legal interest rate for loans or forbearance of any SEC. 253. General Provisions. -
money in the absence of an express stipulation as set by (a) Any person convicted of a crime penalized by this
the Bangko Sentral ng Pilipinas from the date prescribed Code shall, in addition to being liable for the payment of
for payment until the amount is fully paid: Provided, That the tax, be subject to the penalties imposed herein:
in no case shall the deficiency and the delinquency Provided, That payment of the tax due after apprehension
interest prescribed under Subsections (B) and (C) hereof, shall not constitute a valid defense in any prosecution for
be imposed simultaneously.(as amended by RA No violation of any provision of this Code or in any action for
10963) the forfeiture of untaxed articles.
(B) Deficiency Interest. - Any deficiency in the tax due, (b) Any person who willfully aids or abets in the
as the term is defined in this Code, shall be subject to the commission of a crime penalized herein or who causes
interest prescribed in Subsection (A) hereof, which the commission of any such offense by another shall be
interest shall be assessed and collected from the date liable in the same manner as the principal.
prescribed for its payment until the full payment thereof,
or upon issuance of a notice and demand by the (c) If the offender is not a citizen of the Philippines, he
Commissioner of Internal Revenue, whichever comes shall be deported immediately after serving the sentence
earlier.(as amended by RA No 10963) without further proceedings for deportation. If he is a
public officer or employee, the maximum penalty
(C) Delinquency Interest. - In case of failure to pay: prescribed for the offense shall be imposed and, in
(1) The amount of the tax due on any return to be addition, he shall be dismissed from the public service
filed, or and perpetually disqualified from holding any public
office, to vote and to participate in any election. If the
(2) The amount of the tax due for which no return is offender is a Certified Public Accountant, his certificate as
required, or a Certified Public Accountant shall, upon conviction, be
(3) A deficiency tax, or any surcharge or interest automatically revoked or cancelled.
thereon on the due date appearing in the notice and (d) In the case of associations, partnerships or
demand of the Commissioner, there shall be corporations, the penalty shall be imposed on the
assessed and collected on the unpaid amount, partner, president, general manager, branch manager,
interest at the rate prescribed in Subsection (A) treasurer, officer-in-charge, and the employees
hereof until the amount is fully paid, which interest responsible for the violation.
shall form part of the tax.2
(e) The fines to be imposed for any violation of the
(D) Interest on Extended Payment. - If any person provisions of this Code shall not be lower than the fines
required to pay the tax is qualified and elects to pay the imposed herein or twice the amount of taxes, interest and
tax on installment under the provisions of this Code, but surcharges due from the taxpayer, whichever is higher.
fails to pay the tax or any installment hereof, or any part of
such amount or installment on or before the date SEC. 254. Attempt to Evade or Defeat Tax. - Any person
prescribed for its payment, or where the Commissioner who willfully attempts in any manner to evade or defeat
has authorized an extension of time within which to pay a any tax imposed under this Code or the payment thereof
tax or a deficiency tax or any part thereof, there shall be shall, in addition to other penalties provided by law, upon
assessed and collected interest at the rate hereinabove conviction thereof, be punished with a fine of not less
prescribed on the tax or deficiency tax or any part thereof than Five hundred thousand pesos (P500,000) but not
unpaid from the date of notice and demand until it is more than Ten million pesos (P10,000,000), and
paid. imprisonment of not less than six (6) years but not more
than ten (10) years: Provided, That the conviction or
SEC. 250. Failure to File Certain Information Returns. - acquittal obtained under this Section shall not be a bar to
In the case of each failure to file an information return, the filing of a civil suit for the collection of taxes.(as
statement or list, or keep any record, or supply any amended by RA No 10963)
information required by this Code or by the
Commissioner on the date prescribed therefor, unless it is SEC. 255. Failure to File Return, Supply Correct and
shown that such failure is due to reasonable cause and Accurate Information, Pay Tax Withhold and Remit Tax
not to willful neglect, there shall, upon notice and and Refund Excess Taxes Withheld on Compensation. -
demand by the Commissioner, be paid by the person Any person required under this Code or by rules and
failing to file, keep or supply the same, One thousand regulations promulgated thereunder to pay any tax make
pesos (1,000) for each failure: Provided, however, That the a return, keep any record, or supply correct the accurate
aggregate amount to be imposed for all such failures information, who willfully fails to pay such tax, make such
during a calendar year shall not exceed Twenty-five return, keep such record, or supply correct and accurate
thousand pesos (P25,000). information, or withhold or remit taxes withheld, or
refund excess taxes withheld on compensation, at the
SEC. 251. Failure of a Withholding Agent to Collect and time or times required by law or rules and regulations
Remit Tax. - Any person required to withhold, account for, shall, in addition to other penalties provided by law, upon
and remit any tax imposed by this Code or who willfully conviction thereof, be punished by a fine of not less than
fails to withhold such tax, or account for and remit such Ten thousand pesos (P10,000) and suffer imprisonment of
tax, or aids or abets in any manner to evade any such tax not less than one (1) year but not more than ten (10) years.
or the payment thereof, shall, in addition to other
penalties provided for under this Chapter, be liable upon Any person who attempts to make it appear for any
conviction to a penalty equal to the total amount of the reason that he or another has in fact filed a return or
tax not withheld, or not accounted for and remitted. statement, or actually files a return or statement and
subsequently withdraws the same return or statement
SEC. 252. Failure of a Withholding Agent to refund after securing the official receiving seal or stamp of
Excess Withholding Tax. - Any employer/withholding receipt of internal revenue office wherein the same was



actually filed shall, upon conviction therefore, be If the offender is a Certified Public Accountant, his
punished by a fine of not less than Ten thousand pesos certificate as a Certified Public Accountant shall be
(P10,000) but not more than Twenty thousand pesos automatically revoked or cancelled upon conviction.
(P20,000) and suffer imprisonment of not less than one (1) In the case of foreigners, conviction under this Code shall
year but not more than three (3) years. result in his immediate deportation after serving
SEC. 256. Penal Liability of Corporations. - Any sentence, without further proceedings for deportation.
corporation, association or general co-partnership liable SEC. 258. Unlawful Pursuit of Business. - Any person
for any of the acts or omissions penalized under this who carries on any business for which an annual
Code, in addition to the penalties imposed herein upon registration fee is imposed without paying the tax as
the responsible corporate officers, partners, or employees required by law shall, upon conviction for each act or
shall, upon conviction for each act or omission, be omission, be punished by a fine of not less than Five
punished by a fine of not less than Fifty thousand pesos thousand pesos (P5,000) but not more than Twenty
(P50,000) but not more than One hundred thousand thousand pesos (P20,000) and suffer imprisonment of not
pesos (P100,000). less than six (6) months but not more than two (2) years:
SEC. 257. Penal Liability for Making False Entries, Provided, That in the case of a person engaged in the
Records or Reports, or Using Falsified or Fake business of distilling, rectifying, repacking, compounding
Accountable Forms. - or manufacturing any article subject to excise tax, he
(A) Any financial officer or independent Certified Public shall, upon conviction for each act or omission, be
Accountant engaged to examine and audit books of punished by a fine of not less than Thirty thousand pesos
accounts of taxpayers under Section 232 (A) and any (P30,000) but not more than Fifty thousand pesos
person under his direction who: (P50,000) and suffer imprisonment of not less than two
(2) years but not more than four (4) years.
(1) Willfully falsifies any report or statement bearing
on any examination or audit, or renders a report, SEC. 259. Illegal Collection of Foreign Payments. - Any
including exhibits, statements, schedules or other person who knowingly undertakes the collection of
forms of accountancy work which has not been foreign payments as provided under Section 67 of this
verified by him personally or under his supervision Code without having obtained a license therefor, or
or by a member of his firm or by a member of his without complying with its implementing rules and
staff in accordance with sound auditing practices; or regulations, shall, upon conviction for each act or
omission, be punished by a fine of not less than Twenty
(2) Certifies financial statements of a business thousand pesos (P20, 000) but not more than Fifty
enterprise containing an essential misstatement of thousand pesos (P50, 000) and suffer imprisonment of
facts or omission in respect of the transactions, not less than one (1) year but not more than two (2) years.
taxable income, deduction and exemption of his
client; or SEC. 260. Unlawful Possession of Cigarette Paper in
Bobbins or Rolls, Etc. - It shall be unlawful for any person
(B) Any person who: to have in his possession cigarette paper in bobbins or
(1) Not being an independent Certified Public rolls, cigarette tipping paper or cigarette filter tips,
Accountant according to Section 232(B) or a without the corresponding authority therefor issued by
financial officer, examines and audits books of the Commissioner. Any person, importer, manufacturer of
accounts of taxpayers; or cigar and cigarettes, who has been found guilty under
this Section, shall, upon conviction for each act or
(2) Offers to sign and certify financial statements omission, be punished by a fine of not less than Twenty
without audit; or thousand pesos (P20,000) but not more than One
(3) Offers any taxpayer the use of accounting hundred thousand pesos (P100,000) and suffer
bookkeeping records for internal revenue purposes imprisonment for a term of not less than six (6) years and
not in conformity with the requirements prescribed one (1) day but not more than twelve (12) years.
in this Code or rules and regulations promulgated SEC. 261. Unlawful Use of Denatured Alcohol. - Any
thereunder; or person who for the purpose of manufacturing any
(4) Knowingly makes any false entry or enters any beverage, uses denatured alcohol or alcohol specially
false or fictitious name in the books of accounts or denatured to be used for motive power or withdrawn
record mentioned in the preceding paragraphs; or under bond for industrial uses or alcohol knowingly
misrepresented to be denatured to be unfit for oral intake
(5) Keeps two (2) or more sets of such records or or who knowingly sells or offers for sale any beverage
books of accounts; or made in whole or in part from such alcohol or who uses
(6) In any way commits an act or omission, in such alcohol for the manufacture of liquid medicinal
violation of the provisions of this Section; or preparations taken internally, or knowingly sells or offers
(7) Fails to keep the books of accounts or records for sale such preparations containing as an ingredient
mentioned in Section 232 in a native language, such alcohol, shall upon conviction for each act or
English or Spanish, or to make a true and complete omission be punished by a fine of not less than Twenty
translation as required in Section 234 of this Code, or thousand pesos (P20,000) but not more than One
whose books of accounts or records kept in a native hundred thousand pesos (P100,000) and suffer
language, English or Spanish, and found to be at imprisonment for a term of not less than six (6) years and
material variance with books or records kept by him one (1) day but not more than twelve (12) years.
in another language; or Any person who shall unlawfully recover or attempt to
(8) Willfully attempts in any manner to evade or recover by distillation or other process any denatured
defeat any tax imposed under this Code, or alcohol or who knowingly sells or offers for sale, conceals
knowingly uses fake or falsified revenue official or otherwise disposes of alcohol so recovered or
receipts, Letters of Authority, certificates authorizing redistilled shall be subject to the same penalties imposed
registration, Tax Credit Certificates, Tax Debit under this Section.
Memoranda and other accountable forms shall, SEC. 262. Shipment or Removal of Liquor or Tobacco
upon conviction for each act or omission, be Products under False Name or Brand or as an Imitation
punished by a fine not less than Fifty thousand of any Existing or Otherwise Known Product Name or
pesos (P50,000) but not more than One hundred Brand. - Any person who ships, transports or removes
pesos (P100,000) and suffer imprisonment of not spirituous, compounded or fermented liquors, wines or
less than two (2) years but not more than six (6) any manufactured products of tobacco under any(sic)
years. other than the proper name or brand known to the trade
as designating the kind and quality of the contents of the
cask, bottle or package containing the same or as an



imitation of any existing or otherwise known product Sec. 264. Failure or refusal to Issue Receipts or Sales or
name or brand or causes such act to be done, shall, upon Commercial Invoices, Violations related to the Printing
conviction for each act or omission, be punished by a fine of such Receipts or Invoices and Other Violations. -
of not less than Twenty thousand pesos (P20,000) but not (a) Any person who, being required under Section 237 to
more than One hundred thousand pesos (P100,000) and issue receipts or sales or commercial invoices, fails or
suffer imprisonment of not less than six (6) years and one refuses to issue such receipts of invoices, issues receipts
(1) day but not more than twelve (12) years. or invoices that do not truly reflect and/or contain all the
SEC. 263. Unlawful Possession or Removal of Articles information required to be shown therein, or uses
Subject to Excise Tax without Payment of the Tax. - Any multiple or double receipts or invoices, shall, upon
person who owns and/or is found in possession of conviction for each act or omission, be punished by a fine
imported articles subject to excise tax, the tax on which of not less than One thousand pesos (P1,000) but not
has not been paid in accordance with law, or any person more than Fifty thousand pesos (P50,000) and suffer
who owns and/or is found in possession of imported imprisonment of not less than two (2) years but not more
tax-exempt articles other than those to whom they are than four (4) years.
legally issued shall be punished by: (b) Any person who commits any of the acts enumerated
(a) A fine of not less than One thousand pesos hereunder shall be penalized with a fine of not less than
(P1,000) nor more than Two thousand pesos (P2,000) Five hundred thousand pesos (P500,000) but not more
and suffer imprisonment of not less than sixty (60) than Ten million pesos (P10,000,000), and imprisonment
days but not more than one hundred (100) days, if of not less than six (6) years but not more than ten (10)
the appraised value, to be determined in the years:(as amended by RA No 10963)
manner prescribed in the Tariff and Customs Code, (1) Printing of receipts or sales or commercial
including duties and taxes, of the articles does not invoices without authority from the Bureau of
exceed One thousand pesos (P1,000). Internal Revenue; or
(b) A fine of not less than Ten thousand pesos (2) Printing of double or multiple sets of invoices or
(P10,000) but not more than Twenty thousand pesos receipts;
(P20,000) and suffer imprisonment of not less than
two (2) years but not more than four (4) years, if the (3) Printing of unnumbered receipts or sales or
appraised value, to be determined in the manner commercial invoices, not bearing the name,
prescribed in the Tariff and Customs Code, including business style, Taxpayer Identification Number, and
duties and taxes, of the articles exceeds One business address of the person or entity; or
thousand pesos (P1,000) but does not exceed Fifty (4) Printing of other fraudulent receipts or sales or
thousand pesos (P50,000); commercial invoices(as amended by RA No 10963)
(c) A fine of not less than Thirty thousand pesos SEC. 264-A. Failure to Transmit Sales Data Entered on
(P30,000) but not more than Sixty thousand pesos Cash Register Machine (CRM)/Point of Sales System
(P60,000) and suffer imprisonment of not less than (POS) Machines to the BIR's Electronic Sales Reporting
four (4) years but not more than six (6) years, if the System. — Any taxpayer required to transmit sales data
appraised value, to be determined in the manner to the Bureau's electronic sales reporting system but fails
prescribed in the Tariff and Customs Code, including to do so, shall pay, for each day of violation, a penalty
duties and taxes of the articles is more than Fifty amounting to one-tenth of one percent (1/10 of 1%) of the
thousand pesos (P50,000) but does not exceed One annual net income as reflected in the taxpayer's audited
hundred fifty thousand pesos (P150,000); or financial statement for the second year preceding the
(d) A fine of not less than Fifty thousand pesos current taxable year for each day of violation or Ten
(P50,000) but not more than One hundred thousand thousand pesos (P10,000), whichever is higher; Provided,
pesos (P100, 000) and suffer imprisonment of not That should the aggregate number of days of violation
less than ten (10) years but not more than twelve (12) exceed one hundred eighty (180) days within a taxable
years, if the appraised value, to be determined in the year, an additional penalty of permanent closure of the
manner prescribed in the Tariff and Customs Code, taxpayer shall be imposed: Provided, further, That if the
including duties and taxes, of the articles exceeds failure to transmit is due to force majeure or any causes
One hundred fifty thousand pesos (P150,000). beyond the control of the taxpayer the penalty shall not
apply.(as amended by RA No 10963)
Any person who is found in possession of locally
manufactured articles subject to excise tax, the tax on SEC. 264-B. Purchase, Use, Possession, Sale or Offer to
which has not been paid in accordance with law, or any Sell, Installment, Transfer, Update, Upgrade, Keeping
person who is found in possession of such articles which or Maintaining of Sales Suppression Devices. — Any
are exempt from excise tax other than those to whom the person who shall purchase, use, possess, sell or offer to
same is lawfully issued shall be punished with a fine of sell, install, transfer, update, upgrade, keep, or maintain
not less than (10) times the amount of excise tax due on any software or device designed for, or is capable of: (a)
the articles found but not less than Five hundred pesos suppressing the creation of electronic records of sale
(P500) and suffer imprisonment of not less than two (2) transactions that a taxpayer is required to keep under
years but not more than four (4) years. existing tax laws and/or regulations; or (b) modifying,
hiding, or deleting electronic records of sales transactions
Any manufacturer, owner or person in charge of any and providing a ready means of access to them, shall be
article subject to excise tax who removes or allows or punished by a fine of not less than Five hundred
causes the unlawful removal of any such articles from the thousand pesos (P500,000) but not more than Ten million
place of production or bonded warehouse, upon which pesos (P10,000,000), and suffer imprisonment of not less
the excise tax has not been paid at the time and in the than two (2) years but not more than four (4) years:
manner required, and any person who knowingly aids or Provided, That a cumulative suppression of electronic
abets in the removal of such articles as aforesaid, or sales record in excess of the amount of Fifty million pesos
conceals the same after illegal removal shall, for the first (P50,000,000) shall be considered as economic sabotage
offense, be punished with a fine of not less than ten (10) and shall be punished in the maximum penalty provided
times the amount of excise tax due on the articles but not for under this provision.(as amended by RA No 10963)
less than One thousand pesos (P1,000) and suffer
imprisonment of not less than one (1) year but not more SEC. 265-A. Offenses Relating to Fuel Marking. — All
than two (2) years. offenses relating to fuel marking shall, in addition to the
penalties imposed under Title X of the NIRC, as amended,
The mere unexplained possession of articles subject to Section 1401 of Republic Act No. 10863, otherwise known
excise tax, the tax on which has not been paid in as the 'Customs Modernization and Tariff Act (CMTA),' and
accordance with law, shall be punishable under this other relevant laws, be punishable as follows:
Section.


(a) Any person who is found to be engaged in the sale, (a) Making, importing, selling, using or possessing
trade, delivery, distribution or transportation of unmarked without express authority from the Commissioner,
fuel in commercial quantity held for domestic use or any die for printing or making stamps, labels, tags or
merchandise shall, upon conviction, suffer the penalties playing cards;
of: (b) Erasing the cancellation marks of any stamp
(1) For the first offense, a fine of Two million five previously used, or altering the written figures or
hundred thousand pesos (P2,500,000); letters or cancellation marks on internal revenue
(2) For the second offense, a fine of Five million pesos stamps;
(P5,000,000); and (c) Possessing false, counterfeit, restored or altered
(3) For the third offense, a fine of Ten million pesos stamps, labels or tags or causing the commission of
(P10,000,000) and revocation of license to engage in any such offense by another;
any trade or business. (d) Selling or offering for sale any box or package
(b) Any person who causes the removal of the official fuel containing articles subject to excise tax with false,
marking agent from marked fuel, and the adulteration or spurious or counterfeit stamps or labels or selling
dilution of fuel intended for sale to the domestic market, from any such fraudulent box, package or container
or the knowing possession, storage, transfer or offer for as aforementioned; or
sale of fuel obtained as a result of such removal, (e) Giving away or accepting from another, or
adulteration or dilution shall be penalized in the same selling, buying or using containers on which the
manner and extent as provided for in the preceding stamps are not completely destroyed.
Subsection. Sec. 266. Failure to Obey Summons. - Any person who,
(c) Any person who commits any of the acts enumerated being duly summoned to appear to testify, or to appear
hereunder shall, upon conviction, be punished by a fine of and produce books of accounts, records, memoranda or
not less than One million pesos (P1,000,000) but not more other papers, or to furnish information as required under
than Five million pesos (P5,000,000), and suffer the pertinent provisions of this Code, neglects to appear
imprisonment of not less than four (4) years but not more or to produce such books of accounts, records,
than eight (8) years: memoranda or other papers, or to furnish such
(1) Making, importing, selling, using or possessing fuel information, shall, upon conviction, be punished by a fine
markers without express authority; of not less than Five thousand pesos (P5,000) but not
more than ten thousand pesos (P10,000) and suffer
(2) Making, importing, selling, using or possessing imprisonment of not less than one (1) year but not more
counterfeit fuel markers; than two (2) years.
(3) Causing another person or entity to commit any of SEC. 267. Declaration under Penalties of Perjury. - Any
the two (2) preceding acts; or declaration, return and other statement required under
(4) Causing the sale, distribution, supply or transport this Code, shall, in lieu of an oath, contain a written
of legitimately imported, in-transit, manufactured or statement that they are made under the penalties of
procured controlled precursors and essential perjury. Any person who willfully files a declaration, return
chemicals, in diluted, mixtures or in concentrated or statement containing information which is not true
form, to any person or entity penalized in Subsections and correct as to every material matter shall, upon
(a), (b), or (c) hereof, including but not limited to, conviction, be subject to the penalties prescribed for
packaging, repackaging, labeling, relabeling or perjury under the Revised Penal Code.
concealment of such transaction through fraud, SEC. 268. Other Crimes and Offenses. -
destruction of documents, fraudulent use of permits,
misdeclaration, use of front companies or mail fraud. (A) Misdeclaration or Misrepresentation of
Manufacturers Subject to Excise Tax. - Any
(d) Any person who willfully inserts, places, adds or manufacturer who, in violation of the provisions of Title VI
attaches directly or indirectly, through any overt or covert of this Code, misdeclares in the sworn statement required
act, whatever quantity of any unmarked fuel, counterfeit therein or in the sales invoice, any pertinent data or
additive or chemical in the person, house, effects, information shall be punished by a summary cancellation
inventory, or in the immediate vicinity of an innocent or withdrawal of the permit to engage in business as a
individual for the purpose of implicating, incriminating or manufacturer of articles subject to excise tax.
imputing the commission of any violation of this Act shall,
upon conviction, be punished by a fine of not less than (B) Forfeiture of Property Used in Unlicensed Business
Five million pesos (P5,000,000) but not more than Ten or Dies Used for Printing False Stamps, Etc. - All
million pesos (P10,000,000), and suffer imprisonment of chattels, machinery, and removable fixtures of any sort
not less than four (4) years but not more than eight (8) used in the unlicensed production of articles subject to
years. excise tax shall be forfeited. Dies and other equipment
used for the printing or making of any internal revenue
(e) Any person who is authorized, licensed or accredited stamp, label or tag which is in imitation of or purports to
under this Act and its implementing rules to conduct fuel be a lawful stamp, label or tag shall also be forfeited.
tests, who issues false or fraudulent fuel test results
knowingly, willfully or through gross negligence, shall (C) Forfeiture of Goods Illegally Stored or Removed. -
suffer the additional penalty of imprisonment ranging Unless otherwise specifically authorized by the
from one (1) year and one (1) day to two (2) years and six Commissioner, all articles subject to excise tax should not
(6) months. be stored or allowed to remain in a distillery, distillery
warehouse, bonded warehouse or other place where
The additional penalties of revocation of the license to made, after the tax thereon has been paid; otherwise, all
practice his profession in case of a practitioner, and the such articles shall be forfeited. Articles withdrawn from
closure of the fuel testing facility, may also be imposed at any such place or from customs custody or imported into
the instance of the court. the country without the payment of the required tax shall
(as amended by RA No 10963) likewise be forfeited.
SEC. 265. Offenses Relating to Stamps. - Any person
who commits any of the acts enumerated hereunder
shall, upon conviction thereof, be punished by a fine of CHAPTER III PENALTIES IMPOSED ON PUBLIC
not less than Twenty thousand pesos (P20,000) but not
OFFICERS
more than Fifty thousand pesos (P50,000) and suffer
imprisonment of not less than four (4) years but not more SEC. 269. Violations Committed by Government
than eight (8) years: Enforcement Officers. - Every official, agent, or
employee of the Bureau of Internal Revenue or any other



agency of the Government charged with the Section 26 of Republic Act No. 6388, any officer or
enforcement of the provisions of this Code, who is guilty employee of the Bureau of Internal Revenue who
of any of the offenses herein below specified shall, upon divulges to any person or makes known in any other
conviction for each act or omission, be punished by a fine manner than may be provided by law information
of not less than Fifty thousand pesos (P50,000) but not regarding the business, income or estate of any taxpayer,
more than One hundred thousand pesos (P100,000) and the secrets, operation, style or work, or apparatus of any
suffer imprisonment of not less than ten (10) years but not manufacturer or producer, or confidential information
more than fifteen (15) years and shall likewise suffer an regarding the business of any taxpayer, knowledge of
additional penalty of perpetual disqualification to hold which was acquired by him in the discharge of his official
public office, to vote, and to participate in any public duties, shall upon conviction for each act or omission, be
election: punished by a fine of not less than Fifty thousand pesos
(a) Extortion or willful oppression through the use of (P50,000) but not more than One hundred thousand
his office or willful oppression and harassment of a pesos (P100,000), or suffer imprisonment of not less than
taxpayer who refused, declined, turned down or two (2) years but not more than five (5) years, or both.
rejected any of his offers specified in paragraph (d) Any officer or employee of the Bureau of Internal
hereof; Revenue who divulges or makes known in any other
(b) Knowingly demanding or receiving any fee, manner to any person other than the requesting foreign
other or greater sums that are authorized by law or tax authority information obtained from banks and
receiving any fee, compensation or reward, except as financial institutions pursuant to Section 6(F), knowledge
by law prescribed, for the performance of any duty; or information acquired by him in the discharge of his
official duties, shall upon conviction, be punished by a
(c) Willfully neglecting to give receipts, as by law fine of not less than Fifty thousand pesos (P50,000) but
required, for any sum collected in the performance not more than One hundred thousand pesos (P100,000),
of duty or willfully neglecting to perform any other or suffer imprisonment of not less than two (2) years but
duties enjoined by law; not more than five (5) years, or both.4
(d) Offering or undertaking to accomplish, file or SEC. 271. Unlawful Interest of Revenue Law Enforcers in
submit a report or assessment on a taxpayer Business. - Any internal revenue officer who is or shall
without the appropriate examination of the books of become interested, directly or indirectly, in the
accounts or tax liability, or offering or undertaking to manufacture, sale or importation of any article subject to
submit a report or assessment less than the amount excise tax under Title VI of this Code or in the
due the Government for any consideration or manufacture or repair or sale, of any die for printing, or
compensation, or conspiring or colluding with making of stamps, or labels shall upon conviction for each
another or others to defraud the revenues or act or omission, be punished by a fine of not less than
otherwise violate the provisions of this Code; Five thousand pesos (P5,000) but not more than Ten
(e) Neglecting or by design permitting the violation thousand pesos (P10,000), or suffer imprisonment of not
of the law by any other person; less than two (2) years and one (1) day but not more than
four (4) years, or both.
(f) Making or signing any false entry or entries in any
book, or making or signing any false certificate or SEC. 272. Violation of Withholding Tax Provision. -
return; Every officer or employee of the Government of the
Republic of the Philippines or any of its agencies and
(g) Allowing or conspiring or colluding with another instrumentalities, its political subdivisions, as well as
to allow the unauthorized retrieval, withdrawal or government-owned or controlled corporations, including
recall of any return, statement or declaration after the Bangko Sentral ng Pilipinas (BSP), who, under the
the same has been officially received by the Bureau provisions of this Code or rules and regulations
of Internal Revenue; promulgated thereunder, is charged with the duty to
(h) Having knowledge or information of any deduct and withhold any internal revenue tax and to
violation of this Code or of any fraud committed on remit the same in accordance with the provisions of this
the revenues collectible by the Bureau of Internal Code and other laws is guilty of any offense herein below
Revenue, failure to report such knowledge or specified shall, upon conviction for each act or omission
information to their superior officer, or failure to be punished by a fine of not less than Five thousand
report as otherwise required by law;(as amended by pesos (P5,000) but not more than Fifty thousand pesos
RA No 10963) (P50,000) or suffer imprisonment of not less than six (6)
months and one (1) day but not more than two (2) years,
(i) Without the authority of law, demanding or or both:
accepting or attempting to collect, directly or
indirectly, as payment or otherwise any sum of (a) Failing or causing the failure to deduct and
money or other thing of value for the compromise, withhold any internal revenue tax under any of the
adjustment or settlement of any charge or withholding tax laws and implementing rules and
complaint for any violation or alleged violation of regulations;
this Code; and (b) Failing or causing the failure to remit taxes
(j) Deliberate failure to act on the application for deducted and withheld within the time prescribed
refunds within the prescribed period provided under by law, and implementing rules and regulations; and
Section 112 of this Act. (c) Failing or causing the failure to file return or
Provided, That the provisions of the foregoing paragraph statement within the time prescribed, or rendering
notwithstanding, any internal revenue officer for which a or furnishing a false or fraudulent return or
prima facie case of grave misconduct has been statement required under the withholding tax laws
established shall, after due notice and hearing of the and rules and regulations.
administrative case and subject to Civil Service Laws, be SEC. 273. Penalty for Failure to Issue and Execute
dismissed from the revenue service: Provided, further, Warrant. - Any official who fails to issue or execute the
That the term 'grave misconduct,' as defined in the Civil warrant of distraint or levy within thirty (30) days after the
Service Law, shall include the issuance of fake letters of expiration of the time prescribed in Section 207 or who is
authority and receipts, forgery of signature, usurpation of found guilty of abusing the exercise thereof by
authority and habitual issuance of unreasonable competent authority shall be automatically dismissed
assessments. from the service after due notice and hearing.
SEC. 270. Unlawful Divulgence of Trade Secrets. -
Except as provided in Section 6(F) and 71 of this Code and


trustee allowed the use of the instruments or tools to the

CHAPTER IV OTHER PENAL PROVISIONS offender, such instruments or tools shall, likewise, be
confiscated and forfeited: Provided, finally, That property
SEC. 274. Penalty for Second and Subsequent Offenses. of common carriers shall not be subject to forfeiture
- In the case of reincidence, the maximum of the penalty when used in the transaction of their business as such
prescribed for the offense shall be imposed. common carrier, unless the owner or operator of said
SEC. 275. Violation of Other Provisions of this Code or common carrier was, at the time of the illegal act, a
Rules and Regulations in General. - Any person who consenting party or privy thereto, without prejudice to
violates any provision of this Code or any rule or the owner's right of recovery against the offender in a civil
regulation promulgated by the Department of Finance, or criminal action. Articles which are not subject of lawful
for which no specific penalty is provided by law, shall, commerce shall be destroyed.
upon conviction for each act or omission, be punished by SEC. 280. Subsidiary Penalty. - If the person convicted
a fine of not more than One thousand pesos (P1,000) or for violation of any of the provisions of this Code has no
suffer imprisonment of not more than six (6) months, or property with which to meet the fine imposed upon him
both. by the court, or is unable to pay such fine, he shall be
SEC. 276. Penalty for Selling, Transferring, subject to a subsidiary personal liability at the rate of one
Encumbering or in any way Disposing of Property (1) day for each Eight pesos and fifty centavos (P8.50)
Placed under Constructive Distraint. - Any taxpayer, subject to the rules established in Article 39 of the
whose property has been placed under constructive Revised Penal Code.
distraint, who sells, transfers, encumbers or in any way SEC. 281. Prescription for Violations of any Provision of
disposes of said property, or any part thereof, without the this Code. - All violations of any provision of this Code
knowledge and consent of the Commissioner, shall, upon shall prescribe after Five (5) years.
conviction for each act or omission, be punished by a fine
of not less than twice the value of the property so sold, Prescription shall begin to run from the day of the
encumbered or disposed of but not less than Five commission of the violation of the law, and if the same be
Thousand pesos (P5,000), or suffer imprisonment of not not known at the time, from the discovery thereof and
less than two (2) years and one (1) day but not more than the institution of judicial proceedings for its investigation
four (4) years, of both. and punishment.
SEC. 277. Failure to Surrender Property Placed under The prescription shall be interrupted when proceedings
Distraint and Levy. - Any person having in his possession are instituted against the guilty persons and shall begin
or under his control any property or rights to property, to run again if the proceedings are dismissed for reasons
upon which a warrant of constructive distraint, or actual not constituting jeopardy.
distraint and levy has been issued shall, upon demand by The term of prescription shall not run when the offender
the Commissioner or any of his deputies executing such is absent from the Philippines.
warrant, surrender such property or right to property to
the Commissioner or any of his deputies, unless such SEC. 282. Informer's Reward to Persons Instrumental in
property or right is, at the time of such demand, subject the Discovery of Violations of the National Internal
to an attachment or execution under any judicial process. Revenue Code and in the Discovery and Seizure of
Any person who fails or refuses to surrender any of such Smuggled Goods. -
property or right shall be liable in his own person and (A) For Violations of the National Internal Revenue Code.-
estate to the Government in a sum equal to the value of Any person, except an internal revenue official or
the property or rights not so surrendered but not employee, or other public official or employee, or his
exceeding the amount of the taxes (including penalties relative within the sixth degree of consanguinity, who
and interest) for the collection of which such warrant had voluntarily gives definite and sworn information, not yet
been issued, together with cost and interest if any, from in the possession of the Bureau of Internal Revenue,
the date of such warrant. In addition, such person shall, leading to the discovery of frauds upon the internal
upon conviction for each act or omission, be punished by revenue laws or violations of any of the provisions thereof,
a fine of not less than Five thousand pesos (P5,000), or thereby resulting in the recovery of revenues, surcharges
suffer imprisonment of not less than six (6) months and and fees and/or the conviction of the guilty party and/or
one (1) day but not more than two (2) years, or both. the imposition of any of the fine or penalty, shall be
SEC. 278. Procuring Unlawful Divulgence of Trade rewarded in a sum equivalent to ten percent (10%) of the
Secrets. - Any person who causes or procures an officer revenues, surcharges or fees recovered and/or fine or
or employee of the Bureau of Internal Revenue to divulge penalty imposed and collected or One Million Pesos
any confidential information regarding the business, (P1,000,000) per case, whichever is lower. The same
income or inheritance of any taxpayer, knowledge of amount of reward shall also be given to an informer
which was acquired by him in the discharge of his official where the offender has offered to compromise the
duties, and which it is unlawful for him to reveal, and any violation of law committed by him and his offer has been
person who publishes or prints in any manner whatever, accepted by the Commissioner and collected from the
not provided by law, any income, profit, loss or offender: Provided, That should no revenue, surcharges or
expenditure appearing in any income tax return, shall be fees be actually recovered or collected, such person shall
punished by a fine of not more than Two thousand pesos not be entitled to a reward: Provided, further, That the
(P2,000), or suffer imprisonment of not less than six (6) information mentioned herein shall not refer to a case
months nor more than five (5) years, or both. already pending or previously investigated or examined
by the Commissioner or any of his deputies, agents or
SEC. 279. Confiscation and Forfeiture of the Proceeds examiners, or the Secretary of Finance or any of his
or Instruments of Crime. - In addition to the penalty deputies or agents: Provided, finally, That the reward
Imposed for the violation of the provisions of Title X of this provided herein shall be paid under rules and regulations
Code, the same shall carry with it the confiscation and issued by the Secretary of Finance, upon
forfeiture in favor of the government of the proceeds of recommendation of the Commissioner.
the crime or value of the goods, and the instruments or
tools with which the crime was committed: Provided, (B) For Discovery and Seizure of Smuggled Goods.To
however, That if in the course of the proceedings, it is encourage the public to extend full cooperation in
established that the instruments or tools used in the illicit eradicating smuggling, a cash reward equivalent to ten
act belong to a third person, the same shall be percent (10%) of the fair market value of the smuggled
confiscated and forfeited after due notice and hearing in and confiscated goods or One Million Pesos (P1,000,000)
a separate proceeding in favor of the Government if such per case, whichever is lower, shall be given to persons
third person leased, let, chartered or otherwise entrusted instrumental in the discovery and seizure of such
the same to the offender: Provided, further, That in case smuggled goods.
the lessee subleased, or the borrower, charterer, or



The cash rewards of informers shall be subject to income

tax, collected as a final withholding tax, at a rate of ten
percent (10%).
CHAPTER II SPECIAL DISPOSITION OF CERTAIN
The Provisions of the foregoing Subsections NATIONAL INTERNAL REVENUE TAXES
notwithstanding, all public officials, whether incumbent
or retired, who acquired the information in the course of SEC. 286. Disposition of Proceeds of insurance
the performance of their duties during their incumbency, Premium Tax. - Twenty-five percent (25%) of the
are prohibited from claiming informer's reward. premium tax collected under Section 123 of this Code
shall accrue to the Insurance Fund as contemplated in
Section 418 of Presidential Decree No. 612 which shall be
used for the purpose of defraying the expenses of the
Insurance Commission. The Commissioner shall turn over
TITLE XI ALLOTMENT OF INTERNAL REVENUE and deliver the said Insurance Fund to the Insurance
(As Last Amended by RA Nos. 9334, 9337 & 10026, Commissioner as soon as the collection is made.
10963) [96] SEC. 287. Shares of Local Government Units in the
Proceeds from the Development and Utilization of the
CHAPTER I DISPOSITION AND ALLOTMENT OF National Wealth. - Local Government units shall have an
equitable share in the proceeds derived from the
NATIONAL INTERNAL REVENUE IN GENERAL
utilization and development of the national wealth,
SEC. 283. Disposition of National Internal Revenue. - within their respective areas, including sharing the same
National Internal revenue collected and not applied as with the inhabitants by way of direct benefits.
herein above provided or otherwise specially disposed of
(A) Amount of Share of Local Government Units. -
by law shall accrue to the National Treasury and shall be
Local government units shall, in addition to the
available for the general purposes of the Government,
internal revenue allotment, have a share of forty
with the exception of the amounts set apart by way of
percent (40%) of the gross collection derived by the
allotment as provided for under Republic Act No. 7160,
national government from the preceding fiscal year
otherwise known as the Local Government Code of 1991.
from excise taxes on mineral products, royalties, and
In addition to the internal revenue allotment as provided such other taxes, fees or charges, including related
for in the preceding paragraph, fifty percent (50%) of the surcharges, interests or fines, and from its share in
national taxes collected under Sections 106, 108 and 116 of any co-production, joint venture or production
this Code in excess of the increase in collections for the sharing agreement in the utilization and
immediately preceding year shall be distributed as development of the national wealth within their
follows: territorial jurisdiction.
(a) Twenty percent (20%) shall accrue to the city or (B) Share of the Local Governments from Any
municipality where such taxes are collected and Government Agency or Government-owned or -
shall be allocated in accordance with Section 150 of Controlled Corporation. - Local Government Units
Republic Act No. 7160, otherwise known as the Local shall have a share, based on the preceding fiscal
Government Code of 1991; and year, from the proceeds derived by any government
(b) Eighty percent (80%) shall accrue to the National agency or government-owned or controlled
Government. corporation engaged in the utilization and
development of the national wealth based on the
SEC. 284. Allotment for the Commission on Audit. - following formula, whichever will produce a higher
One-half of one percent (1/2 of 1%) of the collections from share for the local government unit:
the national internal revenue taxes not otherwise
accruing to special accounts in the general fund of the (1) One percent (1%) of the gross sales or
national government shall accrue to the Commission on receipts of the preceding calendar year, or
Audit as a fee for auditing services rendered to local (2) Forty percent (40%) of the excise taxes on
government units, excluding maintenance, equipment, mineral products, royalties, and such other
and other operating expenses as provided for in Section taxes, fees or charges, including related
21 of Presidential Decree No. 898. surcharges, interests or fines the government
The Secretary of Finance is hereby authorized to deduct agency or government-owned or -controlled
from the monthly internal revenue tax collections an corporations would have paid if it were not
amount equivalent to the percentage as herein fixed, and otherwise exempt.
to remit the same directly to the Commission on Audit (C) Allocation of Shares. - The share in the preceding
under such rules and regulations as may be promulgated Section shall be distributed in the following manner:
by the Secretary of Finance and the Chairman of the
(1) Where the natural resources are located in
Commission on Audit.
the province:
SEC. 285. Allotment for the Bureau of Internal Revenue.
(a) Province - twenty percent (20%)
- An amount equivalent to five percent (5%) of the excess
of actual collections of national internal revenue taxes (b) Component city/municipality -
over the collection goal shall accrue to the special fund of forty-five percent (45%); and
the Bureau of Internal Revenue and shall be treated as (c) Barangay - thirty-five percent (35%)
receipts automatically appropriated. Said amount shall be
utilized as incentive bonus for revenue personnel, Provided, however, That where the natural resources
purchase of necessary equipment and facilities for the are located in two (2) or more provinces, or in two (2)
improvement of tax administration, as approved by the or more component cities or municipalities or in two
Commissioner: Provided, That the President may, upon (2) or more barangays, their respective shares shall
recommendation of the Commissioner, direct that the be computed on the basis of: (1) Population - seventy
excess be credited to a Special Account in the National percent (70%); and (2) Land area - thirty percent
Treasury to be held in the reserve available for distribution (30%).
as incentive bonus in the subsequent years. (2) Where the natural resources are located in a
The Secretary of Finance is hereby authorized to transfer highly urbanized or independent component
from the Treasury an amount equivalent to the city:
percentage as herein fixed and to remit the same directly (a) City - sixty - five percent (65%); and
to the Bureau of Internal Revenue under such rules and
regulations as may be promulgated by the Secretary of (b) Barangay - thirty - five percent (35%)
Finance.


Provided, however, That where the natural resources (5) Infrastructure projects such as farm to market
are located in two (2) or more cities, the allocation of roads, schools, hospitals, and rural health facilities;
shares shall be based on the formula on population and
and land area as specified in subsection (C)(1) hereof. (6) Agro-industrial projects that will enable tobacco
SEC. 288. Disposition of Incremental Revenues. - farmers to be involved in the management and
(A) Incremental Revenues from Republic Act No. 7660. subsequent ownership of projects, such as
- The incremental revenues from the increase in the post-harvest and secondary processing like cigarette
documentary stamp taxes under R.A. No. 7660 shall be manufacturing and by-product utilization.
set aside for the following purposes: The Department of Budget and Management, in
(1) In 1994 and 1995, twenty five percent (25%) consultation with the Department of Agriculture, shall
thereof respectively, shall accrue to the Unified issue rules and regulations governing the allocation and
Home-Lending Program under Executive Order No. disbursement of this fund, not later than one hundred
90 particularly for mass-socialized housing program eighty (180) days from the effectivity of this Act.
to be allocated as follows: fifty percent (50%) for (C) Incremental Revenues from the Excise Tax on
mass-socialized housing; thirty percent (30%) for the Alcohol and Tobacco Products. -
community mortgage program; and twenty percent After deducting the allocations under Republic Act Nos.
(20%) for land banking and development to be 7171 and 8240, eighty percent (80%) of the remaining
administered by the National Housing Authority: balance of the incremental revenue derived from this Act
Provided, That not more than one percent (1%) of the shall be allocated for the universal health care under the
respective allocations hereof shall be used for National Health Insurance Program, the attainment of
administrative expenses; the millennium development goals and health awareness
(2) In 1996, twenty five percent (25%) thereof to be programs; and twenty percent (20%) shall be allocated
utilized for the National Health Insurance Program nationwide, based on political and district subdivisions,
that hereafter may be mandated by law; for medical assistance and health enhancement facilities
(3) In 1994 and every year thereafter, twenty five program, the annual requirements of which shall be
percent (25%) thereof shall accrue to a Special determined by the Department of Health (DOH).
Education Fund to be administered by the (D) Incremental Revenue from the Value-Added Tax -
Department of Education, Culture and Sports for the Fifty percent (50%) of the Local Government unit's share
construction and repair of school facilities, training from the incremental revenue from the Value-Added Tax
of teachers, and procurement or production of shall be allocated and used exclusively for the following
instructional materials and teaching aids; and purposes:
(4) In 1994 and every year thereafter, fifty percent (1) Fifteen percent (15%) for public elementary and
(50%) thereof shall accrue to a Special Infrastructure secondary education to finance the construction of
Fund for the Construction and repair of roads, buildings, purchases of school furniture and
bridges, dams and irrigation, seaports and in-service teacher trainings;
hydroelectric and other indigenous power projects: (2) Ten percent (10%) for health insurance premiums
Provided, however, That for the years 1994 and 1995, of enrolled indigents as a counterpart contribution
thirty percent (30%), and for the years 1996, 1997 and of the local government to sustain the universal
1998, twenty percent (20%), of this fund shall be coverage of the National Health Insurance Program;
allocated for depressed provinces as declared by the
President as of the time of the effectivity of R.A. No. (3) Fifteen percent (15%) for environmental
7660: Provided, further, That availments under this conservation to fully implement a comprehensive
fund shall be determined by the President on the national reforestation program; and
basis of equity. (4) Ten percent (10%) for agricultural modernization
Provided, finally, That in paragraphs (2), (3), and (4) of this to finance the construction of farm-to-market roads
Section, not more one percent (1%) of the allocated funds and irrigation facilities.
thereof shall be used for administrative expenses by the Such allocations shall be segregated as separate trust
implementing agencies. funds by the national treasury and shall be over and
(B) Incremental Revenues from Republic Act No. 8240. above the annual appropriation for similar purposes.
- Fifteen percent (15%) of the incremental revenue (E) The amount of Fifteen million pesos (P15, 000,000)
collected from the excise tax on tobacco products under shall be allocated for a Public Information and Education
R. A. No. 8240 shall be allocated and divided among the Program to be administered by the Bureau of Internal
provinces producing burley and native tobacco in Revenue, explaining clearly to businesses their
accordance with the volume of tobacco leaf production. registration, invoicing and reporting requirements under
The fund shall be exclusively utilized for programs to the value-added tax rules. Such program should include
promote economically viable alternatives for tobacco seminars and visits to taxpayers to familiarize them with
farmers and workers such as: the tax and the development and publication of
(1) Programs that will provide inputs, training, and easy-to-read guides on the value-added tax.
other support for tobacco farmers who shift to (F) Incremental Revenues from the Tax Reform for
production of agricultural products other than Acceleration and Inclusion (TRAIN). — For five (5) years
tobacco including, but not limited to, high-value from the effectivity of this Act, the yearly incremental
crops, spices, rice, corn, sugarcane, coconut, revenues generated shall be automatically appropriated
livestock and fisheries; as follows:
(2) Programs that will provide financial support for (1) Not more than seventy percent (70%) to fund
tobacco farmers who are displaced or who cease to infrastructure projects such as, but not limited to, the
produce tobacco; Build, Build, Build Program and provide infrastructure
(3) Cooperative programs to assist tobacco farmers programs to address congestion through mass transport
in planting alternative crops or implementing other and new road networks, military infrastructure, sports
livelihood projects; facilities for public schools, and potable drinking water
supply in all public places; and
(4) Livelihood programs and projects that will
promote, enhance, and develop the tourism (2) Not more than thirty percent (30%) to fund:
potential of tobacco-growing provinces; (a) Programs under Republic Act No. 10659, otherwise
known as 'Sugarcane Industry Development Act of
2015,' to advance the self-reliance of sugar farmers


that will increase productivity, provide livelihood assessments to the COCCTRP. The National Expenditure
opportunities, develop alternative farming systems Program from 2019 onwards shall provide line items that
and ultimately enhance farmers' income; correspond to the allocations mandated in the provisions
(b) Social mitigating measures and investments in: (i) above.
education, (ii) health, targeted nutrition, and At the end of five (5) years from the effectivity of this Act,
anti-hunger programs for mothers, infants, and all earmarking provisions under Subsection (F), shall
young children, (iii) social protection, (iv) cease to exist and all incremental revenues derived under
employment, and (v) housing that prioritize and this Act shall accrue to the General Fund of the
directly benefit both the poor and near-poor government.
households; (as amended by RA No 10963)
(c) A social welfare and benefits program where SEC. 289. Special Financial Support to Beneficiary
qualified beneficiaries shall be provided with a social Provinces Producing Virginia Tobacco. - The financial
benefits card to avail of the following social benefits: support given by the National Government for the
(i) Unconditional cash transfer to households in beneficiary provinces shall be constituted and collected
the first to seventh income deciles of the National from the proceeds of fifteen percent (15%) of the excise
Household Targeting System for Poverty taxes on locally manufactured Virginia-type of cigarettes.
Reduction (NHTS-PR), Pantawid Pamilyang The funds allotted shall be divided among the beneficiary
Pilipino Program, and the social pension program provinces pro-rata according to the volume of Virginia
for a period of three (3) years from the effectivity of tobacco production.
this Act: Provided, That the unconditional cash
transfer shall be Two hundred pesos (P200.00) per Provinces producing Virginia tobacco shall be the
month for the first year and Three hundred pesos beneficiary provinces under Republic Act No. 7171.
(P300.00) per month for the second year and third Provided, however, that to qualify as beneficiary under
year, to be implemented by the Department of R.A. No. 7171, a province must have an average annual
Social Welfare and Development (DSWD); production of Virginia leaf tobacco in an amount not less
than one million kilos: Provided, further, that the
(ii) Fuel vouchers to qualified franchise holders of Department of Budget and Management (DBM) shall
Public Utility Jeepneys (PUJs); each year determine the beneficiary provinces and their
(iii) For minimum wage earners, unemployed, and computed share of the funds under R.A. No. 7171, referring
the poorest fifty percent (50%) of the population: to the National Tobacco Administration (NTA) records of
(1) Fare discount from all public utility vehicles tobacco acceptances, at the tobacco trading centers for
(except trucks for hire and school transport the immediate past year.
service) in the amount equivalent to ten The Secretary of Budget and Management is hereby
percent (10%) of the authorized fare; directed to retain annually the said funds equivalent to
(2) Discounted purchase of National Food fifteen percent (15%) of excise taxes on locally
Authority (NFA) rice from accredited retail manufactured Virginia-type cigarettes to be remitted to
stores in the amount equivalent to ten percent the beneficiary provinces qualified under R.A. No. 7171.
(10%) of the net retail prices, up to a maximum The provisions of existing laws to the contrary
of twenty (20) kilos per month; and notwithstanding, the fifteen percent (15%) share from
(3) Free skills training under a program government revenues mentioned in R.A. No. 7171 and due
implemented by the Technical Skills and to the Virginia tobacco-producing provinces shall be
Development Authority (TESDA). directly remitted to the provinces concerned.
Provided, That benefits or grants contained in Provided, That this Section shall be implemented in
this Subsection shall not be availed in addition accordance with the guidelines of Memorandum Circular
to any other discounts. No. 61-A dated November 28, 1993, which amended
Memorandum Circular No. 61, entitled 'Prescribing
(iv) Other social benefits programs to be Guidelines for Implementing Republic Act No. 7171', dated
developed and implemented by the government. January 1, 1992.
Notwithstanding any provisions herein to the contrary, Provided, further, That in addition to the local
the incremental revenues from the tobacco taxes under government units mentioned in the above circular, the
this Act shall be subject to Section 3 of Republic Act No. concerned officials in the province shall be consulted as
7171, otherwise known as 'An Act to Promote the regards the identification of projects to be financed.
Development of the Farmers in the Virginia Tobacco
Producing Provinces,' and Section 8 of Republic Act No. SEC. 289-A. Support for Local Water Districts. -the
8240, otherwise known as 'An Act Amending Sections 138, amount that would have been paid as income tax and
139, 140 and 142 of the National Internal Revenue Code, as saved by the local water district by virtue of its exemption
Amended, and for Other Purposes.' to the income taxes shall be used by the local water
district concerned for capital equipment expenditure in
An interagency committee, chaired by the Department of order to expand water services coverage and improve
Budget and Management (DBM) and co-chaired by DOF water quality in order to provide safe and clean water in
and DSWD, and comprised of National Economic and provinces, cities and municipalities: Provided, further, that
Development Authority (NEDA), Department of the water district shall not increase by more than twenty
Transportation (DOTr), Department of Education (DepEd), percent (20%) a year its appropriation or representation
Department of Health (DOH), Department of Labor and expenses and purchase of motor vehicles.
Employment (DOLE), National Housing Authority (NHA),
Sugar Regulatory Administration (SRA), Department of All unpaid taxes or any portion thereof due from a local
the Interior and Local Government (DILG), Department of water district for the period starting August 13, 1995 until
Energy (DOE), NFA, and TESDA, is hereby created to the effectivity date of this Act [97] are hereby condoned by
oversee the identification of qualified beneficiaries and the Government subject to the following conditions: (1)
the implementation of these projects and programs: that the Bureau of Internal Revenue, after careful review
Provided, That qualified beneficiaries under Subsection of the financial statements of a water district applying for
(c) hereof shall be identified using the National ID System condonation of taxes due, establishes its financial
which may be enacted by Congress. incapacity, after providing for its maintenance and
operating expenses, debt servicing and reserved fund, to
Within sixty (60) days from the end of the three (3)-year meet such obligations for the period stated herein, and
period from the effectivity of this Act, the interagency (2) that the water district availing of such condonation
committee and respective implementing agencies for shall submit to Congress of the Philippines a program of
the above programs shall submit corresponding program internal reforms, duly certified by the local water utilities



administration, that would bring about its economic and (d) Section 8(d), last paragraph, insofar as VAT
financial viability. exemption is concerned, of R.A. 7278 or An Act Amending
All water districts, through the Local Water Utilities Commonwealth Act No. 111, as Amended by P.D. 460
Administration, shall furnish the Committee on Ways and entitled An Act to Create a Public Corporation to be
Means for the Senate and House of Representatives, Known as the Boy Scouts of the Philippines, and to
respectively, on an annual basis, with statistical data and Define its Powers and Purposes, by Strengthening the
financial statements regarding their operations and other Volunteer and Democratic Character of the Boy Scouts of
information as may be required, for purposes of the Philippines and for Other Purposes;
monitoring compliance with the provisions of this Act [98] (e) Section 1, insofar as VAT exemption is concerned,
and reviewing the rationalization for tax exemption of R.A. 7291 or An Act Restoring the Tax and Duty
privileges. [99] Incentives Previously Enjoyed by the Veterans Federation
of the Philippines under Republic Act Numbered
Twenty-Six Hundred and Forty;
(f) Section 21, insofar as VAT exemption is concerned,
of R.A. 7306 or the Charter of the People's Television
TITLE XII OVERSIGHT COMMITTEE Network, Inc.;
SEC. 290. Congressional Oversight Committee. -A (g) Section 14, insofar as VAT exemption is concerned,
Congressional Oversight Committee, hereinafter referred of R.A. 7354 or the Postal Service Act of 1992;
to as the Committee, is hereby constituted in accordance (h) Section 9(c), insofar as VAT exemption is
with the provisions of this Code. The Committee shall be concerned, of R.A. 7355 or the Manlilikha ng Bayan Act;
composed of the Chairmen of the Committee on Ways (i) Section 21, insofar as VAT exemption is concerned,
and Means of the Senate and House of Representatives of R.A. 7356 or the Law Creating the National Commission
and four (4) additional members from each house, to be for Culture and the Arts;
designated by the Speaker of the House of (j) Section 7(f), insofar as VAT exemption is concerned,
Representatives and the Senate President, respectively. of R.A. 7371 or An Act Converting the Aklan Agricultural
College into Aklan State College of Agriculture, and
The Committee shall, among others, in aid of legislation: Appropriating Funds Therefor;
(1) Monitor and ensure the proper implementation (k) Section 12, second sentence, insofar as VAT
of Republic Act No. 8240; exemption is concerned, of R.A. 7373 or An Act
Establishing the Eastern Visayas Science High School;
(2) Determine that the power of the Commissioner (l) Section 11(j), insofar as VAT exemption is concerned,
to compromise and abate is reasonably exercised; of R.A. 7605 or the Charter of the Philippine State College
(3) Review the collection performance of the Bureau of Aeronautics;
of Internal Revenue; and (m) Section 126, insofar as VAT exemption is
concerned, of R.A. 7653 or The New Central Bank Act;
(4) Review the implementation of the programs of
(n) Section 14, insofar as VAT exemption is concerned,
the Bureau of Internal Revenue.
of R.A. 7875 or the National Health Insurance Act of 1995;
In furtherance of the hereinabove cited objectives, the (o) Section 18, insofar as VAT exemption is concerned,
Committee is empowered to require of the Bureau of and Section 18, last paragraph of R.A. 7884 or the National
Internal Revenue, submission of all pertinent information, Dairy Development Act of 1995;
including but not limited to: industry audits; collection (p) Section 8, insofar as VAT exemption is concerned,
performance data; status report on criminal actions of R.A. 8160 or An Act Granting the University of the
initiated against persons; and submission of taxpayer Philippines a Franchise to Construct, Install, Operate and
returns: Provided, however, That any return or return Maintain for Educational and Other Related Purposes,
information which can be associated with, or otherwise Radio and Television Broadcasting Stations within the
identify, directly or indirectly, a particular taxpayer shall be University of the Philippines and in Such Other Areas
furnished the Committee only when sitting in Executive within the Scope of its Operation;
Session unless such taxpayer otherwise consents in (q) Sections 2 and 16, insofar as VAT exemption is
writing to such disclosure. concerned, of R.A. 8282 or The Social Security Act of 1997;
(r) Section 39, insofar as VAT exemption is concerned,
of R.A. 8291 or The Government Service Insurance System
Act of 1997;
TITLE XIII REPEALING PROVISIONS (s) Section 4(c) and (f), insofar as VAT exemption is
concerned, of R.A. 8292 or the Higher Education
SEC. 291. In General. - All laws, decrees, executive orders, Modernization Act of 1997;
rules and regulations or parts thereof which are contrary (t) Section 25, insofar as VAT exemption is concerned,
to or inconsistent with this Code are hereby repealed, of R.A. 8492 or the National Museum Act of 1998;
amended or modified accordingly. (u) Section 3(h), insofar as VAT exemption is
Repealing Clause of RA 10963: concerned, of R.A. 8502 or the Jewelry Industry
Development Act of 1998;
SECTION 86. Repealing Clause. — The following (v) Article 65, insofar as VAT exemption and zero
laws or provisions of laws are hereby repealed and the rating is concerned, of regional or area headquarters and
persons and/or transactions affected herein are made zero-rating of the sale or lease of goods and property and
subject to the VAT provision of Title IV of the NIRC, as the rendition of services to regional or area headquarters,
amended: and Article 67, insofar as VAT exemption is concerned, of
(a) Section 3 of Presidential Decree (P.D.) 1972, s. 1985, R.A. 8756; Provided, That existing RHQs and ROHQs
as amended, Sections 4 and 5 of Executive Order No. enjoying VAT exemption and zero-rating at the time of
(E.O.) 1057, s. 1985, and Section 4 of E.O. 1064, s. 1985, the effectivity of TRAIN shall not be affected;
insofar as the VAT tax exemption and tax credit is (w) Section 7(c), insofar as VAT exemption is
concerned; concerned, of R.A. 9045 or An Act Creating the Batangas
(b) Section 10, insofar as VAT exemption is concerned, State University;
of Republic Act No. (R.A.) 6807 or An Act Converting the (x) Section 7(c), insofar as VAT exemption is
Mati Community College into a State College to be known concerned, of R.A. 9055 or An Act Converting the Aklan
as the Davao Oriental State College of Science and State College of Agriculture into the Aklan State
Technology, Providing for a Charter for this Purpose, University;
Expanding its Curricular Offerings, Redirecting its (y) Section 13, insofar as VAT exemption is concerned,
Objectives, and Appropriating Funds Therefor; of R.A. 9083 or An Act Establishing the Sta. Rosa Science
(c) Sections 18 and 19, insofar as VAT exemption is and Technology High School in Sta. Rosa, Laguna;
concerned, of R.A. 6847 or The Philippine Sports
Commission Act;



(z) Section 7(c) and (f), insofar as VAT exemption is (ww) Section 22(b) of R.A. 10747 or the Rare Diseases
concerned, of R.A. 9138 or An Act Establishing the Act n of the Philippines;
Guimaras State College; (xx) Section 45(a), (b), and (c), with respect to VAT, of
(aa) Section 7(c), insofar as VAT exemption is R.A. 9003 or the Ecological Solid Waste Management Act
concerned, of R.A. 9141 or An Act Converting the Negros of 2000;
Occidental Agricultural College into State College to be (yy) Section 5(b), with respect to VAT, of R.A. 10771 or
known as the Negros State College of Agricultural; n the Philippine Green Jobs Act of 2016;
(bb) Section 16, insofar as VAT exemption is (zz) Section 6, with respect to VAT, of R.A. 7459 or the
concerned, of R.A. 9497 or The Civil Aviation Authority Act Inventors and Invention n Incentives Act of the
of 2008; Philippines;
(cc) Section 25(b) and (c), insofar as VAT exemption is (aaa) Section 24, insofar as VAT exemption of
concerned, and (d), insofar as VAT zero-rating is foundations for scientific advancements is concerned, of
concerned, of R.A. 9500 or the University of the R.A. 2067, as amended, or the Science Act of 1958; and
Philippines Charter of 2008; (bbb) Section 9, with respect to VAT, of R.A. 9511 or the
(dd) Section 20(b)n and (c), insofar as VAT exemption National Grid Corporation of the Philippines Act.
concerned, and (d) insofar as VAT zero-rating is Provided, That the VAT obligations of
concerned, of R.A. 9519 or An Act Converting Mindanao government-owned and -controlled corporations, state
Polytechnic State College into a State University to be universities and colleges, and other government
Known as the Mindanao University of Science and instrumentalities whose VAT exemption has been
Technology; repealed under this Act shall be chargeable to the Tax
(ee) Section 17(c), insofar as VAT exemption is Expenditure Fund (TEF) provided for in the annual
concerned, of R.A. 3591, otherwise known as the PDIC General Appropriations Act:Provided, further, That VAT
Charter, as amended by Section 8 of R.A. 9576, otherwise exemption, VAT zero-rating, and VAT credit granted to
known as An Act Increasing the Maximum Deposit state universities and colleges on their purchases and
Insurance Coverage, and in Connection Therewith, to importations are hereby repealed and the transactions
Strengthen the Regulatory and Administrative Authority, affected herein are made subject to the VAT provisions of
and Financial Capability of the Philippine Deposit Title IV of the NIRC, as amended.
Insurance Corporation (PDIC), Amending for this Purpose Provided, That, with respect to income tax, the
Republic Act Numbered Three Thousand Five Hundred following laws or provisions of laws are hereby repealed or
Ninety-One, as Amended, Otherwise Known as the PDIC amended:
Charter, and for Other Purposes; (a) Section 33(A) of R.A. 7277, as amended by R.A.
(ff) Sections 2 and 19, insofar as VAT exemption is 10754 or the Magna Carta for Persons with Disability;
concerned, of R.A. 9679 or An Act Further Strengthening (b) Section 22(B) of R.A. 10165 or the Foster Care Act of
the Home Development Mutual Fund, and for Other 2012;
Purposes; (c) Section 4 of R.A. 1169 or An Act Providing for
(gg) Section 23, insofar as VAT exemption is Charity Sweepstakes, Horse Races and Lotteries:
concerned of the National Historical Commission of the "SEC. 4. Holding of sweepstakes. — The Office shall
Philippines, of R.A. 10086, or the Strengthening Peoples' hold charity horse race sweepstakes under such
Nationalism Through Philippine History Act; regulations as shall be promulgated by the Board in
(hh) Section 7(b) and (c), insofar as VAT exemption is accordance with Republic Act Numbered Three hundred
concerned, and (d), insofar as VAT zero-rating is and nine: Provided, however, That when the holding of a
concerned, of R.A. 9647 or the Philippine Normal sweepstakes race to determine prizes is impossible due
University Modernization Act of 2009; to war, public calamity, or other unforeseen or fortuitous
(ii) Section 17, insofar as VAT exemption is concerned, event or when there is no sufficient number of horses to
of R.A. 7898, as amended by R.A. 10349, Establishing the determine the major prizes, the Board of Directors may
Revised AFP Modernization Program and for Other determine the procedure to be followed in the
Purposes; distribution of prizes in the most just, equitable and
(jj) Section 56, insofar as VAT exemption is concerned, expeditious manner. The horse races and the sale of
of R.A. 10801 or the Overseas Workers Welfare tickets in the said sweepstakes shall be exempt from all
Administration Act; taxes, except that each ticket shall bear a twelve-centavo
(kk) Section 9(e)(2) and (j), with respect to VAT, of R.A. internal revenue stamp. The tickets shall be printed by
7900 or the High-Value Crops Development Act of 1995; the Government and shall be considered government
(ll) Section 24(e) of R.A. 10068 or the Organic securities for the purposes of penalizing forgery or
Agriculture Act of 2010; alteration."
(mm) Section 14(b), with respect to VAT, R.A. 7308 or (d) Section 5 of R.A. 8756 or An Act Providing for the
the Seed Industry Development Act of 1992; Terms, Conditions and Licensing Requirements of
(nn) Section 35 (b) and (c),n with respect to VAT, of Regional or Area Headquarters, Regional Operating
R.A. 8550 or The Philippine Fisheries Code of 1998; Headquarters, and Regional Warehouses of Multinational
(oo) Section 13, second paragraph, with respect to Companies, Amending for the Purpose Certain Provisions
VAT, of R.A. 10817 or the Philippine Halal Export of Executive Order No. 226 or The Omnibus Investments
Development and Promotion Act of 2016; Code of 1987: Provided, That existing Regional or Area
(pp) Section 9(3), (4), and (8), with respect to VAT, of Headquarters, Regional Operating Headquarters, and
R.A. 8479 or the Downstream Oil Industry Deregulation Regional Warehouses of Multinational Companies
Act of 1998; enjoying the preferential income tax rate at the time of
(qq) Section 6(c) and (d), with respect to VAT, of R.A. the effectivity of the TRAIN shall not be affected;
7103 or the Iron and Steel Industry Act; (e) Section 2 of P.D. 1354, s. 1978 or Imposing Final
(rr) Section 10, with respect to VAT, of R.A. 7718 or An Income Tax on Subcontractors and Alien Employees of
Act Amending R.A. No. 6957; Service Contractors and Subcontractors Engaged in
(ss) Section 26(A)(3),n with respect to VAT, of R.A. 9275 Petroleum Operations in the Philippines under
or the Philippine Clean Water Act of 2004; Presidential Decree No. 87: Provided, That service
(tt) Section 20(d)(3) of R.A. 7279 or the Urban contractors and subcontractors enjoying the preferential
Development and Housing Act of 1992; income tax rate at the time of the effectivity of the TRAIN
(uu) Section 20(d)(3) of R.A. 10884 or An Act shall not be affected; and
Strengthening the Balanced Housing Development (f) Section 7 of P.D. 1034, s. 1976, or Authorizing the
Program, Amending for the Purpose R.A. 7279, as Establishment of an Offshore Banking System in the
Amended, Otherwise Known as the Urban Development Philippines: Provided, That service contractors and
and Housing Act of 1992; subcontractors enjoying the preferential income tax rate
(vv) Section 14, with respect to VAT, of R.A. 8423 or the at the time of the effectivity of the TRAIN shall not be
Traditional and Alternative Medicine Act (TAMA) of 1997; affected.



[27]
As amended by RA 9337, supra.
[28]
On July 31, 1986, Section 24 of E.0. 37 changed all "net
income" phrases appearing in Title II of the Tax Code of
TITLE XIV FINAL PROVISIONS 1977 to "taxable income."
SEC. 292. Separability Clause. - If any clause, sentence, [29]
paragraph or part of this Code shall be adjudged by any [31]
Court of competent jurisdiction to be invalid, such Should read as "taxable" income, not "net" income".
judgment shall not affect, impair or invalidate the Refer to Footnote of Section 31 of the NIRC of 1997, supra.
remainder of said Code, but shall be confined in its [32]
operation to the clause, sentence, paragraph or part [33]
thereof directly involved in the controversy. Ibid
[34]
Ibid
[35]
Under RA 9994, otherwise known as the "Senior
[1]
Citizens Act of 2010," which took effect on February 15,
Republic Act No. 10653 entitled: “An Act Adjusting the 2010, senior citizens who are considered to be minimum
13th Month Pay and Other Benefits Ceiling Excluded wage earners in accordance with RA 9504 shall also be
from the Computation of Gross Income for Purposes of treated as exempt from the payment of individual
Income Taxation, Amending for the Purpose Section income tax.
32(B), Chapter VI of the National Internal Revenue Code [36]
of 1997, as amended.” As amended by RA 9504, supra.
[37]
[2]
The National Internal Revenue Code of 1997 is embodied Ibid.
under Section 3 of RA 8424, entitled "An Act Amending [39]
N.B.: Under RA 9504, individual taxpayers, regardless of
the National Internal Revenue Code, as Amended, and their status are now entitled to just one amount of basic
for Other Purposes," which is otherwise known as the "Tax personal exemption, i.e., P50,000.
Reform Act of 1997 and which took effect on January 1, [40]
N.B.: See footnote under Section 62, supra.
1998."
[41]
[3] As inserted by RA 10021, supra.
Republic Act 1125, entitled "An Act Creating the Court of
[42]
Tax Appeals," had been amended by RA 3457, RA 9282 As amended by RA 9504, supra.
and RA 9503. [43]
Ibid.
[4]
As amended by RA 10021, supra. [44]
Now 12%
[5]
Republic Act No. 10653 entitled, “An Act Adjusting the [45]
13th Month Pay and Other Benefits Ceiling Excluded [46]
from the Computation of Gross Income for Purposes of As inserted by RA 9337, supra.
Income Taxation, Amending for the Purpose Section [47]
Now 12%
32(B), Chapter VI of the National Internal Revenue Code [48]
of 1997, as amended.” As amended by RA 9337, supra.
[49]
[6]
RA 337, otherwise known as the "General Banking Act," Ibid.
had been amended by RA 8791, otherwise known as the [50]
As amended by RA 9337.
"General Banking Law of 2000." [51]
As Amended by RA 9337, supra.
[7]
Ibid. [52]
Ibid.
[8]
RA 2969 is otherwise known as the "Investment [53]
Ibid.
Company Act."
[54]
[9] RA 10378, supra.
As added by RA 9504, supra.
[55]
[10] As amended by RA 9337
Ibid.
[56]
[11] As amended by RA 9337, supra.
Subtitle inserted by RA 9504, supra.
[57]
[12] Ibid.
[58]
[13] Ibid.
As originally added by RA 9504, Ibid.
[59]
[14] P 1,919, 500.00 effective January 1, 2012 (RR 16-2001).
Source is Section 2 of PD 1354.
[60]
[15] P 3,199,200.00 effective January 1, 2012(RR 16-2001).
[61]
Ibid.
[62]
[17] 12,800 (effective January 1, 2012 (RR 16-2011)
Now Department of Education (DepEd).
[63]
As amended by RA Nos. 9337 and 10026, supra.
[64]
[19] Ibid.
As interested by RA 10026, Ibid.
[65]
[66]
[21] Ibid
As amended by RA 10378 entitled "AN ACT
[67]
RECOGNIZING THE PRINCIPLE OF RECIPROCITY AS Ibid
BASIS FOR THE GRANT OF INCOME TAX EXEMPTIONS TO [68]
Ibid
INTERNATIONAL CARRIERS AND RATIONALIZING OTHER [69]
TAXES IMPOSED THEREON BY AMENDING SECTIONS Ibid
28(A)(3)(a), 109, 118 AND 236 OF THE NATIONAL INTERNAL [70]
REVENUE CODE (NIRC), AS AMENDED, AND FOR OTHER [71]
PURPOSE". Ibid.
[72]
[22]
As amended by RA 9337, supra. Ibid.
[73]
[23]
Ibid A amended by RA 9337, supra.
[74]
[24]
[75]
[25]
As amended by RA 9294, supra. As newly introduced under RA 9337, supra.
[76]
[26]
[77]
Ibid.


[78] [92]
Now 12% As amended by RA 9334, supra and RA 10351, supra.
[79] [93]
As amended by RA 9337. As amended by RA 9334, supra and RA 10351, supra.
[80] [94]
Republic Act No. 8761, entitled "An Act Imposing the As amended by RA 9334, supra and RA 10351, supra.
VAT on Certain Services Beginning January 1, 2001, [95]
Amending for the Purpose Section 5 of RA 8424 and for
[96]
other Purposes," was approved on February 1, 2001. Republic Act no. 9334, entitled "An Act Increasing the
Excise Tax Rates imposed on Alcohol and tobacco
Republic Act No. 9010, entitled "An Act to Further Defer Products, Amending for the Purpose Sections 131, 141,142,
the Imposition of the VAT on Certain Services, Amending 144, and 288 of the NIRC of 1997, as amended," was
for the purpose of Section 5 of RA 8424, as Amended by approved on December 21, 2004 and took effect on
RA 8761," was approved on February 27, 2001. January 1, 2005.
Republic Act No. 9238, entitled "An Act Amending Republic Act No. 9334, entitled "An Act Amending
Certain Sections of the NIRC of 1997, as Amended by Section 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116,
Excluding Several Services from the Coverage of the VAT 117, 119, 121, 148, 151, 236, 237, and 288 of the NIRC of 1997, as
and Re-imposing the Gross Receipts Tax on Bank and Amended, and for other Purposes" was approved on May
Non-bank Financial Intermediaries Beginning January 1, 24, 2005. Its affectivity clause provides that it shall take
2004," lapsed into law on February 5, 2004 without the effect July 1, 2005 but due to TRO issued by the Supreme
signature of the President, in accordance with Article VI, Court, the law took effect November 1, 2005 when the
Section 27 (1) of the 1987 Constitution. TRO was finally lifted. But the increase of the VAT rate
Republic Act No. 9337, entitled "An Act Amending from 10% to 12% took effect only beginning February 1,
Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 114, 116, 117, 2006.
119, 121, 148, 151, 236, 237, and 288 of the NIRC of 1997, as Republic Act No. 10026, entitled "An Act Granting
Amended, and for Other Purposes," was approved on May Income Tax Exemption to Local Water Districts by
24, 2005. Its effectivity clause provides that it shall take Amending Section 27(C) of the NIRC of 1997, As Amended,
effect July 1, 2005 but due to a TRO issued by the and Adding Section 289-A to the Code for the Purpose,"
Supreme Court, the law took effect only on Nov. 1, 2005 was approved on March 21, 2010 without the signature of
when the TRO was finally lifted. But the increase of the the President in accordance with Article VI, Section 27(1)
VAT rate from 10% to 12% took effect only beginning of the Constitution.
February 1, 2006.
[97]
The Act referred to is RA 10026, supra.
Republic Act No. 10001, entitled "An Act Reducing the
[98]
Taxes on Life Insurance Policies, Amending for this Ibid.
Purpose Sections 123 and 183 of the NIRC of 1997, As [99]
Ibid.
Amended," was approved on February 23, 2010.
[81]
[82]
As Amended by RA 10378, supra.
RA No 10708 | The Tax Incentives
[83]
As amended by RA 9337, supra. Management and Transparency Act
[84]
As originally amended by RA 9238, supra, and as last (TIMTA)
amended by RA 9337, supra.
[85]
RA 9238, supra, re-imposed the gross receipts tax on
other non-bank financial intermediaries which includes Rules and Regulations Implementing the TIMTA
pawnshops beginning January 1, 2004.
[86]
As amended by RA 9238 and RA 9337, supra.
[87] December 9, 2015
[88] AN ACT ENHANCING TRANSPARENCY IN THE
Republic Act No. 9224, entitled "An Act Rationalizing MANAGEMENT AND ACCOUNTING OF TAX INCENTIVES
the Excise Tax on Automobiles, Amending for the ADMINISTERED BY INVESTMENT PROMOTION
Purpose the NIRC of 1997, and for Other Purposes" was AGENCIES
approved on August 29, 2003.
Be it enacted by the Senate and House of
Republic Act No. 9334, entitled "An Act Increasing the Representatives of the Philippines in Congress
Excise tax Rates Imposed on Alcohol and Tobacco assembled:
Products, Amending for the Purpose Sec. 131, 141, 142, 143,
144, 145 and 288 of the NIRC of 1997, as Amended," was SECTION 1. This Act shall be known as “The Tax Incentives
approved on December 21, 2004 and took effect on Management and Transparency Act (TIMTA)”.
January 1, 2005. SECTION 2. Declaration of Policy. — It is hereby declared
Republic Act No. 9337, entitled "An Act Amending Secs. the policy of the State to promote fiscal accountability
27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, and transparency in the grant and management of tax
121, 148, 151, 236, 148, 151, 236, 237 and 288 of the NIRC of incentives by developing means to promptly measure the
1997, as Amended, and for Other Purposes," was government’s fiscal exposure on these grants and to
approved on May 24, 2005. Its effectivity clause provides enable the government to monitor, review, and analyze
that it shall take effect July 1, 2005 but due to a TRO the economic impact thereof and thereby optimize the
issued by the Supreme Court, the law took effect only on social benefit of such incentives.
November 1, 2005 when the TRO was finally lifted. But the SECTION 3. Definition of Terms. — As used in this Act:
increase of the VAT rate form 10% to 12% took effect only
beginning February 1, 2006. a. Investment Promotion Agencies (IPAs) shall refer to
[89]
government entities created by law, executive order,
As amended by RA 9334, supra and RA 10351 entitled, decree or other issuance, in charge of promoting
An Act Restructuring the Excise Tax on Alcohol and investments, administering tax and non-tax incentives,
Tobacco Products by Amending Sections 141, 142, 143, 144, and/or overseeing the operations of the different
145, 8, 131 and 288 of Republic Act No. 8424. Otherwise economic zones and freeports in accordance with their
Known as the National Internal Revenue Code of 1997, as respective charters. These include the Board of
amended by Republic Act No. 9334, and for Other Investments (BOI), Philippine Economic Zone Authority
Purposes approved on December 19, 2012. (PEZA), Bases Conversion and Development Authority
[90]
As amended by RA 9334, supra and RA 10351, supra. (BCDA), Subic Bay Metropolitan Authority (SBMA), Clark
[91] Development Corporation (CDC), John Hay Management
As amended by RA 9334, supra and RA 10351, supra. Corporation (JHMC), Poro Point Management


Corporation (PPMC), Bataan Technology Park, Inc. (BTPI), Nothing in this Act shall be construed to diminish or limit,

Cagayan Economic Zone Authority (CEZA), Zamboanga in whatever manner, the amount of incentives that EPAs
City Special Economic Zone Authority (ZCSEZA), Phividec may grant pursuant to their charters and existing laws; or
Industrial Authority (PIA), Aurora Pacific Economic Zone to prevent, deter, or delay the promotion and regulation
and Freeport Authority (APECO), Authority of the of investments, processing of applications for
Freeport Area of Bataan (AFAB), Tourism Infrastructure registrations, and evaluation of entitlement of incentives
and Enterprise Zone Authority (TIEZA), and ail other by IPAs.
similar authorities that may be created by law in the SECTION 6. Conduct of Cost-Benefit Analysis on
future; Investment Incentives. — The National Economic and
b. Tax incentives shall refer to fiscal incentives such as Development Authority (NEDA) is mandated to conduct
those which come in the form of income tax holidays cost-benefit analysis on the investment incentives to
(ITH), exemptions, deductions, credits or exclusions from determine the impact of tax incentives on the Philippine
the tax base, as provided by law, to registered business economy.
entities; and For this purpose, all heads of the IPAs shall submit to the
c. Registered business entity shall refer to any individual, NEDA the aggregate tax incentives, based on the
partnership, corporation, Philippine branch of a foreign submissions of registered business entities as provided in
corporation, or other entity incorporated and/or organized Section 4 of this Act, and aggregate investment-related
and existing under Philippine laws and registered with an data, both on a sectoral or per industry basis, which may
IPA. include, but not limited to, investment projects,
SECTION 4. Filing of Tax Returns and Submission of Tax investment cost, actual employment and export earnings.
Incentives Reports. — All registered business entities are SECTION 7. Penalties for Noncompliance with Filing and
required to file their tax returns and pay their tax Reportorial Requirements. — Any registered business
liabilities, on or before the deadline as provided under the entity which fails to comply with filing and reportorial
National Internal Revenue Code (NIRC), as amended, requirements with the appropriate IPAs and/or which fails
using the electronic system for filing and payment of to show proof of filing of tax returns using the electronic
taxes of the Bureau of Internal Revenue (BIR). system for filing and payment of taxes of the BIB shall be
For registered business entities availing of incentives imposed the following penalties:
administered by the IPAs, they shall file with their a. First (1st) violation — payment of a fine amounting to
respective IPAs a complete annual tax incentives report of one hundred thousand pesos (P100,000.00);
their income-based tax incentives, value-added tax and b. Second (2nd) violation — payment of a fine amounting
duty exemptions, deductions, credits or exclusions from to five hundred thousand pesos (P500,000.00); and
the tax base as provided in the charter of the IPA
concerned, within thirty (30) days from the statutory c. Third (3rd) violation — cancellation of the registration of
deadline for filing of tax returns and payment of taxes. the registered business entity.
The IPAs shall, within sixty (60) days from the end of the Provided, That if the failure to show such proof is not due
statutory deadline for filing of the relevant tax returns, to the fault of the registered business entity, the same
submit to the BIR, their respective annual tax incentives shall not be a ground for the suspension of the ITH and/or
reports based on the list of the registered business other income-based tax incentives availment.
entities who have filed said tax incentives report. Any government official or employee who fails without
The details of the tax incentives reports, as provided in justifiable reason to provide or furnish the required tax
the preceding paragraphs, shall be provided in the incentives report or other data or information as required
implementing rules and regulations (IRR) of this Act. under this Act shall be penalized, after due process, by a
fine equivalent to the official’s or employee’s basic salary
The foregoing provisions shall be without prejudice to the for a period of one (1) month to six (6) months or by
right of the BIR and the Bureau of Customs (BOC) to suspension from government service for not more than
conduct assessment within the prescribed period one (1) year, or both, in addition to any criminal and
provided in the NIRC, as amended, and the Tariff and administrative penalties imposable under existing laws.
Customs Code of the Philippines (TCCP), as amended,
respectively. SECTION 8. Funding. — Such amount necessary to carry
out the implementation of this Act shall be sourced from
SECTION 5. Monitoring of Tax Incentives. — The BIR and the current General Appropriations Act (GAA).
the BOC shall submit to the Department of Finance
(DOF), notwithstanding any law to the contrary: (a) the SECTION 9. Joint Congressional Oversight Committee. —
tax and duty incentives of registered business entities as A Joint Congressional Oversight Committee, herein
reflected in their filed tax returns and import entries; and referred to as the Oversight Committee, shall be
(b) actual tax and duty incentives as evaluated and constituted in accordance with the provisions of this Act.
determined by the BIR and the BOC. The Oversight Committee shall be composed of the
respective Chairpersons of the Committees on Ways and
The DOF shall maintain a single database for monitoring Means of the Senate and of the House of Representatives
and analysis of tax incentives granted. and four (4) additional members from each House, one of
For purposes of monitoring and transparency, the DOF whom shall be the Chairperson of the Senate Committee
shall submit to the Department of Budget and on Trade, Commerce and Entrepreneurship and the
Management (DBM) the aggregate data on a sectoral Chairperson of the House Committee on Trade and
and per industry basis of: (1) the amount of tax incentives Industry to be designated by the Senate President and
availed by registered business entities; (2) the estimate the Speaker of the House of Representatives, respectively.
claims of tax incentives immediately preceding the The Oversight Committee shall monitor and ensure the
current year; (3) the programmed tax incentives for the proper implementation of this Act.
current year; and (4) the projected tax incentives for the SECTION 10. Implementing Rules and Regulations. —
following year. Such information shall be given to the The Secretaries of the DOF and the Department of Trade
Oversight Committee created under Section 9 of this Act. and Industry (DTI), in coordination with the NEDA
The aforesaid data shall be reflected by the DBM in the Director-General, Commissioners of the BIR and BOC,
annual Budget of Expenditures and Sources of Financing and heads of concerned IPAs, shall, within sixty (60) days
(BESF), which shall be known as the Tax Incentives from the effectivity of this Act, promulgate rules and
Information (TII) section: Provided, That the TII shall be regulations to faithfully implement the intent and
limited to the aggregate data related to incentives availed provisions of this Act: Provided, That the failure of the
of by registered business entities based on the Secretaries of the DOF and DTI to promulgate the rules
submissions of the DOF and the concerned IPAs, and regulations shall not prevent the implementation of
categorized by sector, by IPA and type of incentive. this Act upon its effectivity.



SECTION 11. Separability Clause. – If any provision of this (b) Actual or Outright Exportation refers to the
Act is subsequently declared invalid or unconstitutional, customs procedure applicable to goods which, being in
other provisions hereof which are not affected thereby free circulation, leave the Philippine territory and are
shall remain in full force and effect. intended to remain permanently outside it;
SECTION 12. Repealing Clause. – All other laws, acts, (c) Admission refers to the act of bringing imported
presidential decrees, executive orders, issuances, goods directly or through transit into a free zone;
presidential proclamations, rules and regulations or parts (d) Airway Bill (AWB) refers to a transport document
thereof which are contrary to and inconsistent with any for airfreight used by airlines and international freight
provision of this Act are hereby repealed, amended or forwarders which specify the holder or consignee of the
modified accordingly. bill who has the right to claim delivery of the goods when
SECTION 13. Effectivity. – This Act shall take effect fifteen they arrive at the port of destination. It is a contract of
(15) days after its complete publication either in the carriage that includes carrier conditions, such as limits of
Official Gazette or in at least one (1) newspaper of general liability and claims procedures. In addition, it contains
circulation. transport instructions to airlines and carriers, a
description of the goods, and applicable transportation
RA No 10863 | Customs Modernization charges;
and Tariff Act (e) Appeal refers to the remedy by which a person
who is aggrieved or adversely affected by any action,
decision, order, or omission of the Bureau, seeks redress
before the Bureau, the Secretary of Finance, or
May 30, 2016 competent court, as the case may be;
REPUBLIC ACT NO. 10863 (f) Assessment refers to the process of determining
AN ACT MODERNIZING THE CUSTOMS AND TARIFF the amount of duties and taxes and other charges due on
ADMINISTRATION imported and exported goods;
(g) Authorized Economic Operator (AEO) refers to the
importer, exporter, customs broker, forwarder, freight
TITLE I Preliminary Provisions forwarder, transport provider, and any other entity duly
accredited by the Bureau based on the World Customs
CHAPTER 1 Short Title Organization (WCO) Framework of Standards to Secure
and Facilitate Global Trade, the Revised Kyoto Convention
SECTION 100. Short Title. — This Act shall be known (RKC), the WCO Supply Chain Management Guidelines
as the "Customs Modernization and Tariff Act (CMTA)". and the various national best practices to promote trade
facilitation and to provide a seamless movement of goods
CHAPTER 2 General and Common Provisions across borders through secure international trade supply
chains with the use of risk management and modern
SECTION 101. Declaration of Policy. — It is hereby technology;
declared the policy of the State to protect and enhance
government revenue, institute fair and transparent (h) Bill of Lading (B/L) refers to a transport document
customs and tariff management that will efficiently issued by shipping lines, carriers and international freight
facilitate international trade, prevent and curtail any form forwarders or non-vessel operating common carrier for
of customs fraud and illegal acts, and modernize customs water-borne freight. The holder or consignee of the bill
and tariff administration. Towards this end, the State shall: has the right to claim delivery of the goods at the port of
destination. It is a contract of carriage that includes
(a) Develop and implement programs for the carrier conditions, such as limits of liability and claims
continuous enhancement of customs systems and procedures. In addition, it contains transport instructions
processes that will harmonize customs procedures; to shipping lines and carriers, a description of the goods,
(b) Adopt clear and transparent customs rules, and applicable transportation charges;
regulations, policies and procedures, consistent with (i) Bureau refers to the Bureau of Customs;
international standards and customs best practices;
(j) Carrier refers to the person actually transporting
(c) Establish a regime of transparency of and goods or in charge of or responsible for the operation of
accessibility to customs information, customs laws, rules, the means of transport such as airlines, shipping lines,
regulations, administrative policies, procedures and freight forwarders, cargo consolidators, non-vessel
practices, in order to ensure informed and diligent operating common carriers and other international
compliance with customs practices and procedures by transport operators;
stakeholders;
(k) Clearance refers to the completion of customs
(d) Consult, coordinate and cooperate with other and other government formalities necessary to allow
government agencies and the private sector in goods to enter for consumption, warehousing, transit or
implementing and developing customs policy; transshipment, or to be exported or placed under another
(e) Provide a fair and expeditious administrative and customs procedure;
judicial appellate remedy for customs related grievances (l) Commission refers to the Tariff Commission;
and matters;
(m) Conditional Importation refers to the customs
(f) Employ modern practices in customs procedure known under the RKC as temporary admission
administration and utilize information and in which certain goods can be brought into a customs
communications technology in the implementation of territory conditionally relieved, totally or partially, from
customs functions; and payment of import duties and taxes; such goods must be
(g) Institute professionalism and meritocracy in imported for a specific purpose and must be intended for
customs tax administration by attracting and retaining reexportation within a specified period and without
competent and capable customs officers and personnel having undergone any substantial change except due to
to enforce the provisions of this Act. normal depreciation;
SECTION 102. Definition of Terms. — As used in this (n) Customs Broker refers to any person who is a
Act: bona fide holder of a valid Certificate of
Registration/Professional Identification Card issued by
(a) Abatement refers to the reduction or diminution, the Professional Regulatory Board and Professional
in whole or in part, of duties and taxes where payment Regulation Commission pursuant to Republic Act No.
has not been made;


9280, as amended, otherwise known as the "Customs providing packing/crating, trucking and warehousing,
Brokers Act of 2004"; engaging as an agent/representative of a foreign
(o) Customs Office refers to any customs non-vessel operating as a common carrier/cargo
administrative unit that is competent and authorized to consolidator named in a master bill of lading as
perform all or any of the functions enumerated under consignee of a consolidated shipment, and other related
customs and tariff laws; undertakings;
(p) Customs Officer, as distinguished from a clerk or (bb) International Freight Forwarder refers to persons

employee, refers to a person whose duty, not being responsible for the assembly and consolidation of
clerical or manual in nature, involves the exercise of shipments into single lot, and assuming, in most cases,
discretion in performing the function of the Bureau. It the full responsibility for the international transport of
may also refer to an employee authorized to perform a such shipment from point of receipt to the point of
specific function of the Bureau as provided in this Act; destination;
(q) Customs Territory refers to areas in the Philippines (cc) Jurisdictional Control refers to the power and
where customs and tariff laws may be enforced; rights of the Bureau in exercising supervision and police
authority over all seas within the jurisdiction of the
(r) Entry refers to the act, documentation and process Philippine territory and over all coasts, ports, airports,
of bringing imported goods into the customs territory, harbors, bays, rivers and inland waters whether navigable
including goods coming from free zones; or not from the sea;
(s) Exportation refers to the act, documentation, and (dd) Lodgement refers to the registration of a goods
process of bringing goods out of Philippine territory; declaration with the Bureau;
(t) Export Declaration refers to a statement made in (ee) Non-Vessel Operating Common Carrier (NVOCC)
the manner prescribed by the Bureau and other refers to an entity, which may or may not own or operate
appropriate agencies, by which the persons concerned a vessel that provides a point-to-point service which may
indicate the procedure to be observed for taking out or include several modes of transport and/or undertakes
causing to be taken out any exported goods and the group age of less container load (LCL) shipments and
particulars of which the customs administration shall issues the corresponding transport document;
require;
(ff) Outright Smuggling refers to an act of importing
(u) Flexible Clause refer to the power of the President goods into the country without complete customs
upon recommendation of the National Economic and prescribed importation documents, or without being
Development Authority (NEDA): (1) to increase, reduce or cleared by customs or other regulatory government
remove existing protective tariff rates of import duty, but agencies, for the purpose of evading payment of
in no case shall be higher than one hundred percent prescribed taxes, duties and other government charges;
(100%) ad valorem; (2) to establish import quota or to ban
importation of any commodity as may be necessary; and (gg) Perishable Good refers to goods liable to perish
(3) to impose additional duty on all import not exceeding or goods that depreciate greatly in value while stored or
ten percent (10%) ad valorem, whenever necessary; which cannot be kept without great disproportionate
expense, which may be proceeded to, advertised and sold
(v) Foreign Exporter refers to one whose name at auction upon notice if deemed reasonable;
appears on documentation attesting to the export of the
product to the Philippines regardless of the (hh) Port of Entry refers to a domestic port open to
manufacturer's name in the invoice; both domestic and international trade, including
principal ports of entry and subports of entry. A principal
(w) Free Zone refers to special economic zones port of entry is the chief port of entry of the Customs
registered with the Philippine Economic Zone Authority District wherein it is situated and is the permanent
(PEZA) under Republic Act No. 7916, as amended, duly station of the District Collector of such port. Subports of
chartered or legislated special economic zones and entry are under the administrative jurisdiction of the
freeports such as Clark Freeport Zone; Poro Point District Collector of the principal port of entry of the
Freeport Zone; John Hay Special Economic Zone and Customs District. Port of entry as used in this Act shall
Subic Bay Freeport Zone under Republic Act No. 7227, as include airport of entry;
amended by Republic Act No. 9400; the Aurora Special
Economic Zone under Republic Act No. 9490, as (ii) Port of Discharge, also called Port of Unloading,
amended; the Cagayan Special Economic Zone and refers to a place where a vessel, ship, aircraft or train
Freeport under Republic Act No. 7922; the Zamboanga unloads its shipments, from where they will be
City Special Economic Zone under Republic Act No. 7903; dispatched to their respective consignees;
the Freeport Area of Bataan under Republic Act No. 9728; (jj) Reexportation means exportation of goods which
and such other freeports as established or may be have been imported;
created by law; (kk) Release of Goods refers to the action by the
(x) Goods refer to articles, wares, merchandise and Bureau to permit goods undergoing clearance to be
any other items which are subject of importation or placed at the disposal of the party concerned;
exportation; (ll) Refund refers to the return, in whole or in part, of
(y) Goods Declaration refers to a statement made in duties and taxes paid on goods;
the manner prescribed by the Bureau and other (mm) Security refers to any form of guaranty, such as
appropriate agencies, by which the persons concerned a surety bond, cash bond, standby letter of credit or
indicate the procedure to be observed in the application irrevocable letter of credit, which ensures the satisfaction
for the entry or admission of imported goods and the of an obligation to the Bureau;
particulars of which the customs administration shall
require; (nn) Smuggling refers to the fraudulent act of
importing any goods into the Philippines, or the act of
(z) Importation refers to the act of bringing in of assisting in receiving, concealing, buying, selling,
goods from a foreign territory into Philippine territory, disposing or transporting such goods, with full
whether for consumption, warehousing, or admission as knowledge that the same has been fraudulently
defined in this Act; imported, or the fraudulent exportation of goods. Goods
(aa) Freight Forwarder refers to a local entity that acts referred to under this definition shall be known as
as a cargo intermediary and facilitates transport of goods smuggled goods;
on behalf of its client without assuming the role of a (oo) Taxes refer to all taxes, fees and charges imposed
carrier, which can also perform other forwarding services, under this Act and the National Internal Revenue Code
such as booking cargo space, negotiating freight rates, (NIRC) of 1997, as amended, and collected by the Bureau;
preparing documents, advancing freight payments,


(pp) Technical Smuggling refers to the act of goods. The declarant shall lodge a goods declaration with
importing goods into the country by means of the Bureau and may be:
fraudulent, falsified or erroneous declaration of the goods (a) The importer, being the holder of the bill of lading;
to its nature, kind, quality, quantity or weight, for the or
purpose of reducing or avoiding payment of prescribed
taxes, duties and other charges; (b) The exporter, being the owner of the goods to be
shipped out; or
(qq) Tentative Release refers to a case where the
assessment is disputed and pending review, an importer (c) A customs broker acting under the authority of the
may put up a cash bond equivalent to the duties and importer or from a holder of the bill; or
taxes due on goods before the importer can obtain the (d) A person duly empowered to act as agent or
release of said goods; attorney-in-fact for each holder.
(rr) Transit refers to the customs procedure under In case the consignee or the person who has the right
which goods, in its original form, are transported under to dispose of the goods is a juridical person, it may
customs control from one customs office to another, or to authorize a responsible officer of the company to sign the
a free zone; goods declaration as declarant on its behalf.
(ss) Transshipment refers to the customs procedure The goods declaration submitted to the Bureau shall
under which goods are transferred under customs be processed by the declarant or by a licensed customs
control from the importing means of transport to the broker: Provided, That for importations, a transition period
exporting means of transport within the area of one of two (2) years from the effectivity of this Act is hereby
customs office, which is the office of both importation provided during which subparagraph (d) of this section
and exportation; shall not be implemented by the Bureau: Provided,
(tt) Traveler refers to any person who temporarily further, That after two (2) years from the effectivity of this
enters the territory of a country in which he or she does Act, subparagraph (d) of this section shall take into effect
not normally resides (non-resident), or who leaves that consistent with international standards and customs best
territory, and any person who leaves the territory of a practices.
country in which he or she normally resides (departing SECTION 107. Rights and Responsibilities of the
resident) or who returns to that territory (returning Declarant. — The declarant shall be responsible for the
resident); and accuracy of the goods declaration and for the payment of
(uu) Third Party refers to any person who deals all duties, taxes and other charges due on the imported
directly with the Bureau, for and on behalf of another goods. The licensed customs broker shall likewise be
person, relating to the importation, exportation, responsible for the accuracy of the goods declaration but
movement or storage of goods. shall not be responsible for the payment of duties, taxes
and other charges due on the imported goods.
SECTION 103. When Importation Begins and
Deemed Terminated. — Importation begins when the The declarant shall sign the goods declaration, even
carrying vessel or aircraft enters the Philippine territory when assisted by a licensed customs broker, who shall
with the intention to unload therein. Importation is likewise sign the goods declaration.
deemed terminated when: SECTION 108. Penalties for Errors in Goods
(a) The duties, taxes and other charges due upon the Declaration. — The Bureau shall not impose substantial
goods have been paid or secured to be paid at the port of penalties for errors when such errors are inadvertent and
entry unless the goods are free from duties, taxes and there was no fraudulent intent or gross negligence in the
other charges and legal permit for withdrawal has been commission thereof: Provided, That in order to discourage
granted; or repetition of such errors, a penalty may be imposed but
shall not be excessive.
(b) In case the goods are deemed free of duties, taxes
and other charges, the goods have legally left the SECTION 109. Application of Information and
jurisdiction of the Bureau. Communications Technology. — In accordance with
international standards, the Bureau shall utilize
SECTION 104. When Duty and Tax are Due on information and communications technology to enhance
Imported Goods. — Except as otherwise provided for in customs control and to support a cost-effective and
this Act or in other laws, all goods, when imported into efficient customs operations geared towards a paperless
the Philippines, shall be subject to duty upon customs environment.
importation, including goods previously exported from
the Philippines. The Bureau shall communicate, exchange and
process trade- and logistics-related information in the
Unpaid duties, taxes and other charges, shall incur national and regional level for the efficient and prompt
legal interest of twenty percent (20%) per annum clearance of goods and commodities in a
computed from the date of final assessment under technology-neutral and secured infrastructure for
Section 429 of this Act, when payment becomes due and business, industries, and government.
demandable. The legal interest shall likewise accrue on
any fine or penalty imposed. The security of data and communication shall be in a
manner that is consistent with applicable local and
Upon payment of the duties, taxes and other charges, internationally accepted standards on information
the Bureau shall issue the necessary receipt or document security.
as proof of such payment.
The Bureau shall likewise include as part of its
SECTION 105. Effective Date of Rate of Import Duty. systems and processes, a disaster preparedness and
— Imported goods shall be subject to the import duty recovery plan to ensure business continuity by
rates under the applicable tariff heading that are effective maintaining its uptime goal for its electronic and online
at the date of importation or upon withdrawal from the services.
warehouse for consumption. In case of withdrawal from
free zones for introduction to the customs territory, the For purposes of customs procedures, electronic
duty rate at the time of withdrawal shall be applicable on documents, permits, licenses or certificates shall be
the goods originally admitted, whether withdrawn in its acceptable and shall have the legal effect, validity or
original or advanced form. enforceability as any other document or legal writing:
Provided, That when the prescribed requirements are
In case of goods sold at customs public auction, the duly complied with, the Bureau shall:
duty rates at the date of the auction shall apply for
purposes of implementing Section 1143 (a) of this Act. (a) Recognize the authenticity and reliability of
electronic documents;
SECTION 106. Declarant. — A declarant may be a
consignee or a person who has the right to dispose of the



(b) Transmit approval in the form of electronic data An appeal in writing shall be filed within the period
messages or electronic documents; and prescribed in this Act or by regulation and shall specify
(c) Require and/or accept payments and issue the grounds thereof.
receipts acknowledging such payments through systems The Bureau may allow a reasonable time for the
using electronic data messages or electronic documents. submission of supporting evidence to the appeal.
The introduction and implementation of information
and communications technology shall be undertaken CHAPTER 3 Types of Importation
with due consultation with directly affected parties and
stakeholders. SECTION 115. Treatment of Importation. — Imported
goods shall be deemed "entered" in the Philippines for
SECTION 110. Relationship between the Bureau and consumption when the goods declaration is
Third Parties. — Parties may transact business with the electronically lodged, together with any required
Bureau either directly or through a designated third party supporting documents, with the pertinent customs
to act on their behalf. office.
The customs transactions directly transacted by a SECTION 116. Free Importation and Exportation. —
party shall not be treated less favorably or be subject to Unless otherwise provided by law or regulation, all goods
more stringent requirements than those transacted may be freely imported into and exported from the
through a designated third party. Philippines without need for import and export permits,
A designated third party shall have the same rights clearances or licenses.
and obligations as the designating party when SECTION 117. Regulated Importation and
transacting business with the Bureau. Exportation. — Goods which are subject to regulation
Subject to the provisions of existing laws, treaties, shall be imported or exported only after securing the
convention and international agreements, the Secretary necessary goods declaration or export declaration,
of Finance shall make the necessary guidelines for the clearances, licenses, and any other requirements, prior to
defined relationship of the Bureau and third parties. importation or exportation. In case of importation,
submission of requirements after arrival of the goods but
SECTION 111. Information of General Application. — prior to release from customs custody shall be allowed
All laws, decisions, rulings, circulars, memoranda and but only in cases provided for by governing laws or
orders of the Bureau shall be published in accordance regulations.
with law.
SECTION 118. Prohibited Importation and
To foster an informed compliance regime, the Bureau Exportation. — The importation and exportation of the
shall ensure that all relevant and available information of following goods are prohibited:
general application pertaining to customs operations and
procedures which are not confidential or intended for the (a) Written or printed goods in any form containing
Bureau's internal use only, shall be readily accessible to any matter advocating or inciting treason, rebellion,
any interested person. insurrection, sedition against the government of the
Philippines, or forcible resistance to any law of the
Any new information, amendment or changes in Philippines, or written or printed goods containing any
customs law, administrative procedures or requirements, threat to take the life of, or inflict bodily harm upon any
shall, as far as practicable, be made readily available prior person in the Philippines;
to its effective date of implementation unless advance
notice is precluded. (b) Goods, instruments, drugs and substances
designed, intended or adapted for producing unlawful
SECTION 112. Information of a Specific Nature. — abortion, or any printed matter which advertises,
The Bureau shall provide information, not otherwise describes or gives direct or indirect information where,
confidential or for the Bureau's internal use only, relating how or by whom unlawful abortion is committed;
to a specific matter as may be requested by an interested
party for legitimate use. (c) Written or printed goods, negatives or
cinematographic films, photographs, engravings,
The Bureau may require the payment of a reasonable lithographs, objects, paintings, drawings or other
fee in providing such information. The requested representation of an obscene or immoral character;
information shall be released within reasonable time
from the filing of the request and payment of the (d) Any goods manufactured in whole or in part of
required fee. gold, silver or other precious metals or alloys and the
stamp, brand or mark does not indicate the actual
SECTION 113. Decision and Ruling. — The Bureau fineness of quality of the metals or alloys;
shall, consistent with Section 1502 of this Act, issue
binding and advance decision and ruling at the request (e) Any adulterated or misbranded food or goods for
of an interested party on matters pertaining to human consumption or any adulterated or misbranded
importation or exportation of goods. drug in violation of relevant laws and regulations;
Upon written request of the interested party, the (f) Infringing goods as defined under the Intellectual
Bureau shall notify the party of its decision in writing Property Code and related laws; and
within the period specified in this Act or by regulation. (g) All other goods or parts thereof, which
Should the decision be adverse to the requesting importation and exportation are explicitly prohibited by
interested party, the reasons thereof shall be indicated law or rules and regulations issued by the competent
and the party shall be advised of the party's right of authority.
appeal.
SECTION 119. Restricted Importation and
The ruling and decision shall be issued by the Bureau Exportation. — Except when authorized by law or
within thirty (30) days from the submission of the regulation, the importation and exportation of the
necessary documents and information. following restricted goods are prohibited:
SECTION 114. Right of Appeal, Forms and Ground. — (a) Dynamite, gunpowder, ammunitions and other
Any party adversely affected by a decision or omission of explosives, firearms and weapons of war, or parts thereof;
the Bureau pertaining to an importation, exportation, or
any other legal claim shall have the right to appeal within (b) Roulette wheels, gambling outfits, loaded dice,
fifteen (15) days from receipt of the questioned decision marked cards, machines, apparatus or mechanical
or order. devices used in gambling or the distribution of money,
cigars, cigarettes or other goods when such distribution is
dependent on chance, including jackpot and pinball
machines or similar contrivances, or parts thereof;


(c) Lottery and sweepstakes tickets, except (b) Exercise any customs power, duties and functions,
advertisements thereof and lists of drawings therein; directly or indirectly;
(d) Marijuana, opium, poppies, coca leaves, heroin or (c) Review any action or decision of any customs
other narcotics or synthetic drugs which are or may officer performed pursuant to the provisions of this Act;
hereafter be declared habit forming by the President of (d) Review and decide disputed assessments and
the Philippines, or any compound, manufactured salt, other matters related thereto, subject to review by the
derivative, or preparation thereof, except when imported Secretary of Finance and exclusive appellate jurisdiction
by the government of the Philippines or any person duly of the Court of Tax Appeals (CTA);
authorized by the Dangerous Drugs Board, for medicinal
purposes; (e) Delegate the powers vested under this Act to any
customs officer with the rank equivalent to division chief
(e) Opium pipes or parts thereof, of whatever or higher, except for the following powers and functions:
material; and
(1) Promulgation of rules and regulations;
(f) Any other goods whose importation and
exportation are restricted. (2) Issuance, revocation or modification of rulings; and
The restriction to import or export the above stated (3) Compromise or abate of customs obligations.
goods shall include the restriction on their transit. (f) Assignment or reassignment of any customs
officer subject to the approval of the Secretary of Finance:
CHAPTER 4 Relief Consignment Provided, That District Collectors and other customs
officers that perform assessment functions shall not
SECTION 120. Relief Consignment. — Goods such as remain in the same area of assignment for more than
food, medicine, equipment and materials for shelter, three (3) years; and
donated or leased to government institutions and
accredited private entities for free distribution to or use of (g) Perform all other duties and functions as may be
victims of calamities shall be treated and entered as relief necessary for the effective implementation of this Act and
consignment. other customs related laws.
Upon declaration of a state of calamity, clearance of SECTION 202. Functions of the Bureau. — The
relief consignment shall be a matter of priority and Bureau shall exercise the following duties and functions:
subject to a simplified customs procedure. The Bureau (a) Assessment and collection of customs revenues
shall provide for: from imported goods and other dues, fees, charges, fines
(a) Lodging of a simplified goods declaration or of a and penalties accruing under this Act;
provisional or incomplete goods declaration subject to (b) Simplification and harmonization of customs
completion of the declaration within a specified period; procedures to facilitate movement of goods in
(b) Lodging, registering and checking of the goods international trade;
declaration and supporting documents prior to the arrival (c) Border control to prevent entry of smuggled
of the goods, and their release upon arrival; goods;
(c) Clearance beyond the designated hours of (d) Prevention and suppression of smuggling and
business or away from customs offices and waiver of any other customs fraud;
corresponding charges; and
(e) Facilitation and security of international trade and
(d) Examination and/or sampling of goods only in commerce through an informed compliance program;
exceptional circumstances.
(f) Supervision and control over the entrance and
The Department of Finance (DOF) and the clearance of vessels and aircraft engaged in foreign
Department of Social Welfare and Development (DSWD) commerce;
shall jointly issue the rules and regulations for the
(g) Supervision and control over the handling of
implementation of this provision.
foreign mails arriving in the Philippines for the purpose of
SECTION 121. Duty and Tax Treatment. — Relief collecting revenues and preventing the entry of
consignment, as defined in Section 120, imported during contraband;
a state of calamity and intended for a specific calamity
(h) Supervision and control on all import and export
area for the use of the calamity victims therein, shall be
cargoes, landed or stored in piers, airports, terminal
exempt from duties and taxes.
facilities, including container yards and freight stations
for the protection of government revenue and prevention
of entry of contraband;
TITLE II Bureau of Customs
(i) Conduct a compensation study with the end view
of developing and recommending to the President a
CHAPTER 1 General Administration competitive compensation and remuneration system to
SECTION 200. Chief Officials of the Bureau. — The attract and retain highly qualified personnel, while
Bureau shall be headed by a Commissioner and shall be ensuring that the Bureau remains financially sound and
assisted by at least four (4) but not more than six (6) sustainable;
Deputy Commissioners. (j) Exercise of exclusive original jurisdiction over
The Commissioner shall be appointed by the forfeiture cases under this Act; and
President of the Philippines. (k) Enforcement of this Act and all other laws, rules
The Deputy Commissioners shall also be appointed and regulations related to customs administration.
by the President and at least majority of whom shall SECTION 203. Annual Report of the Commissioner.
come from the ranks of the Bureau. — The Commissioner shall submit to the President, the
SECTION 201. Powers and Functions of the Congress of the Philippines and the NEDA an annual
Commissioner. — The Commissioner shall have the report on the performance of the Bureau, on or before
following powers and functions: March 31 of the following year.
(a) Exclusive and original jurisdiction to interpret the SECTION 204. Promulgation of Rules and
provisions of this Act, in collaboration with other relevant Regulations. — The Commissioner, subject to the
government agencies, subject to review by the Secretary approval of the Secretary of Finance, shall promulgate
of Finance; 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 (1) Ensure entry of all imported goods at the customs
the Congress of the Philippines, the NEDA and the Tariff office;
Commission with electronic copies of department orders, (2) Prevent importation and exportation of prohibited
administrative orders, circulars, and rules and regulations goods;
promulgated pursuant to this Act.
(3) Ensure legal compliance of regulated goods and
SECTION 205. Copies of Goods Declaration. — The facilitate the flow of legitimate trade;
Commissioner shall regularly furnish the NEDA, the
Philippine Statistics Authority (PSA), the Bureau of (4) Examine, classify and value imported goods;
Internal Revenue (BIR) and the Tariff Commission (5) Assess and collect duties, taxes and other charges
electronic copies of all customs goods declaration on imported goods;
processed and cleared by the Bureau.
(6) Hold and dispose imported goods in accordance
Upon request, the Tariff Commission shall have with this Act;
access to, and the right to be furnished with copies of
liquidated goods declaration and other documents (7) Prevent smuggling and other customs fraud; and
supporting the goods declaration as finally filed in the (8) Perform other necessary duties that may be
Commission on Audit (COA). assigned by the Commissioner for the effective
For this purpose, the Bureau shall maintain electronic implementation of this Act.
records of goods declaration and other documents Subject to the supervision and control of the District
supporting the declaration. 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
CHAPTER 2 Customs Districts and Ports of
under the supervision and control of the District Collector
Entry of the corresponding principal port.
SECTION 206. Customs Districts. — For SECTION 211. Temporary Succession of Deputy
administrative purposes, the Philippines shall be divided District Collector to Position of Acting District Collector.
into as many Customs Districts as necessary, the — In the absence or disability of a District Collector or, in
respective limits of which may be changed from time to case of vacancy, the Deputy District Collector shall
time by the Commissioner, with the approval of the temporarily discharge the duties of the District Collector.
Secretary of Finance. Should there be no Deputy District Collector, the District
Each Customs District shall be supervised by one (1) Collector shall designate, in writing, a senior ranking
District Collector, assisted by as many Deputy District customs officer to temporarily perform the duties of the
Collectors as may be necessary. The choice of the location District Collector. In case there are two (2) or more senior
of a District Office, its business hours and the staffing ranking customs officers with equal length of service, a
pattern thereof, shall be based on the particular drawing of lots shall be undertaken. The District Collector
requirements of each district. shall report the designation to the Commissioner within
twenty-four (24) hours after the designation.
SECTION 207. Ports of Entry. — All ports of entry shall
be under the supervision and control of a Customs SECTION 212. Records to be Kept by Customs
District. A District Collector shall be assigned in the Officers. — District Collectors, Deputy District Collectors,
principal ports of entry while a Deputy District Collector and customs officers acting in such capacities must
may be assigned to other types of ports of entry. maintain permanent records of official transactions and
turn-over all records and official papers to their respective
The principal ports of entry shall be located in Aparri,
successors or other authorized officials. The records shall
San Fernando, Manila, Manila International Container
be made available for inspection by other authorized
Port, Ninoy Aquino International Airport, Subic, Clark,
officials of the Bureau.
Batangas, Legaspi, Iloilo, Cebu, Tacloban, Surigao,
Cagayan de Oro, Zamboanga, Davao, Limay and such If required, the District Collector shall affix the official
other ports that may be created pursuant to this Act. dry seal of the Bureau on all documents and records
requiring authentication.
For the effective enforcement of the Bureau's
functions and without hampering business and SECTION 213. Reports of the District Collector to the
commercial operations of the ports, seaports and airport Commissioner. — The District Collector shall report to the
authorities and private ports and airport operators shall Commissioner any probable or initiated litigation within
provide suitable areas for examination and for other the Customs District and shall submit regular monthly
customs equipment free of charge within a definite reports on all district transactions.
period of time, as agreed with private port and airport
operations, if any.
CHAPTER 3 Exercise of Police Authority
SECTION 208. Power of the President to Open and
Close Any Port. — Upon the recommendation of the SECTION 214. Persons Exercising Police Authority. —
Secretary of Finance, the President may open or close any For the effective implementation of this Act, the following
port of entry. Upon closure of a port of entry, the existing persons are authorized to effect search, seizure, and
personnel shall be reassigned by the Commissioner, arrest:
subject to the approval of the Secretary of Finance. (a) Officials of the Bureau, District Collectors, Deputy
SECTION 209. Assignment of Customs Officers and District Collectors, police officers, agents, inspectors and
Employees to Other Duties. — The Commissioner, with guards of the Bureau;
the approval of the Secretary of Finance, may assign any (b) Upon authorization of the Commissioner, officers
employee of the Bureau to any port, service, division or and members of the Armed Forces of the Philippines
office of the Bureau within the Bureau's staffing pattern (AFP) and national law enforcement agencies; and
or organizational structure, or may assign any employee (c) Officials of the BIR on all cases falling within the
other duties: Provided, That such assignment shall not regular performance of their duties, when payment of
affect the employee's tenure of office nor result in a internal revenue taxes is involved.
change of status, demotion in rank and/or salary
deduction. All officers authorized by the Commissioner to
exercise police authority shall at all times coordinate with
SECTION 210. Duties of the District Collector. — The the Commissioner.
District Collector shall have the following duties in their
assigned Customs District: 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 The proceeding herein authorized shall not give rise
regulations. to any claim for damage caused to the goods, vessel or
For this purpose, mission orders shall clearly indicate aircraft, unless there is gross negligence or abuse of
the specific name carrying out the mission and the tasks authority in the exercise thereof.
to be carried out. SECTION 222. Authority to Search Vehicles, Other
Subject to the approval of the Secretary of Finance, Carriers, Persons and Animals. — Upon reasonable
the Commissioner shall define the scope, areas covered, cause, any person exercising police authority may open
procedures and conditions governing the exercise of such and examine any box, trunk, envelope, or other container
police authority including custody and responsibility for for purposes of determining the presence of dutiable or
the seized goods. The rules and regulations to this effect prohibited goods. This authority includes the search of
shall be furnished to the concerned government receptacles used for the transport of human remains and
agencies and personnel for guidance and compliance. dead animals. Such authority likewise includes the power
to stop, search, and examine any vehicle or carrier, person
All seizures pursuant to this section must be effected or animal suspected of holding or conveying dutiable or
in accordance with the provisions on the conduct of prohibited goods.
seizure proceedings provided for in Chapters 3 and 4 of
Title XI of this Act. SECTION 223. Authority to Search Persons Arriving
from Foreign Countries. — Upon reasonable cause,
SECTION 215. Place Where Authority May be travelers arriving from foreign countries may be
Exercised. — All persons exercising police authority as subjected to search and detention by the customs
described in the preceding section shall only exercise officers. The dignity of the person under search and
powers within customs premises as provided for in detention shall be respected at all times. Female
Section 303 of this Act, and within the limits of the inspectors may be employed for the examination and
authority granted by the Commissioner. search of persons of their own sex.
Port and airport authorities in all ports of entry shall SECTION 224. Power to Inspect and Visit. — The
provide authorized customs officers with unhampered Commissioner or any customs officer who is authorized in
access to all premises within their administrative writing by the Commissioner, may demand evidence of
jurisdiction. payment of duties and taxes on imported goods openly
SECTION 216. Exercise of Power of Seizure. — Any for sale or kept in storage. In the event that the interested
person exercising police authority under this Act has the party fails to produce such evidence within fifteen (15)
power and duty to seize any vessel, aircraft, cargo, goods, days, the goods may be seized and subjected to forfeiture
animal or any other movable property when the same is proceedings: Provided, That during the proceedings, the
subject to forfeiture or when they are subject of a fine interested party shall be given the opportunity to prove or
imposed under this Act. show the source of the goods and the payment of duties
and taxes thereon: Provided, further, That when the
SECTION 217. Duty of Officer to Disclose Official warrant of seizure has been issued but subsequent
Character. — For the proper exercise of police authority, documents presented evidencing proper payment are
any authorized person shall disclose the nature of the found to be authentic and in order, the District Collector
authority upon being questioned at the time of exercise shall, within fifteen (15) days from the receipt of the
thereof and shall exhibit the corresponding written motion to quash or recall the warrant, cause the
authority issued by the Commissioner. immediate release of the goods seized, subject to
SECTION 218. Authority to Require Assistance and clearance by the Commissioner:Provided, finally, That the
Information. — Any person exercising police authority release thereof shall not be contrary to law.
may demand the assistance of and request information
from the Philippine National Police (PNP), the AFP and
other national law enforcement agencies, when TITLE III Customs Jurisdiction and Customs
necessary, to effect any search, seizure or arrest. It shall be Control
the duty of any police officer and other national law
enforcers to give such lawful assistance.
SECTION 219. Authority to Enter Properties. — Any CHAPTER 1 Customs Jurisdiction
person exercising police authority may, at any time, enter, SECTION 300. Customs Jurisdiction. — For the
pass through, and search any land, enclosure, warehouse, effective implementation of this Act, the Bureau shall
store, building or structure not principally used as a exercise jurisdiction over all seas within Philippine
dwelling house. territory and all coasts, ports, airports, harbors, bays, rivers
When a security personnel or any other employee and inland waters whether navigable or not from the sea
lives in the warehouse, store, or any building, structure or and any means of conveyance.
enclosure that is used for storage of goods, it shall not be The Bureau shall pursue imported goods subject to
considered as a dwelling house for purposes of this Act. seizure during its transport by land, water and air and
SECTION 220. Authority to Search Dwelling House. shall exercise jurisdiction as may be necessary for the
— A dwelling house may be entered and searched only effective enforcement of this Act. When a vessel or
upon warrant issued by a Judge of a competent court, aircraft becomes subject to seizure for violation of this
the sworn application thereon showing probable cause Act, a pursuit of such vessel or aircraft which began
and particularly describing the place to be searched and within the territorial waters or air space may continue
the goods to be seized. beyond the same, and the vessel or aircraft may be seized
in the high seas or international air space.
SECTION 221. Authority to Search Vessels or
Aircrafts and Persons or Goods Conveyed Therein. —
Any person exercising police authority under this Act may CHAPTER 2 Customs Control
board, inspect, search and examine a vessel or aircraft SECTION 301. Customs Control over Goods. — All
and any container, trunk, package, box or envelope found goods, including means of transport, entering or leaving
on board, and physically search and examine any person the customs territory, regardless of whether they are
thereon. In case of any probable violation of this Act, the liable to duties and taxes, shall be subject to customs
person exercising police authority may seize the goods, control to ensure compliance with this Act.
vessel, aircraft, or any part thereof.
In the application of customs control, the Bureau
Such power to search includes removal of any false shall employ audit-based controls and risk management
bottom, partition, bulkhead, or any other obstruction for systems, use automation to the fullest extent possible,
the purpose of uncovering any concealed dutiable or
forfeitable goods.


and adopt a compliance measurement strategy to SECTION 402. Goods Declaration for Consumption.
support risk management. — All goods declaration for consumption shall be cleared
The Bureau shall seek to cooperate and conclude through a formal entry process except for the following
mutual administrative assistance agreements with other goods which shall be cleared through an informal entry
customs administrations to enhance customs control. process:
The Bureau shall consult, coordinate, and cooperate with (a) Goods of a commercial nature with Free on Board
other government regulatory agencies, free zones (FOB) or Free Carrier At (FCA) value of less than fifty
authorities, and the customs stakeholders, in general, to thousand pesos (P50,000.00). Every three (3) years after
enhance customs control. the effectivity of this Act, the Secretary of Finance shall
SECTION 302. Enforcement of Port Regulation of adjust this amount as provided herein to its present value,
the Bureau of Quarantine. — Customs officials and using the Consumer Price Index (CPI) as published by the
employees shall cooperate with the quarantine PSA; and
authorities in the enforcement of the port quarantine (b) Personal and household effects or goods, not in
regulations promulgated by the Bureau of Quarantine commercial quantity, imported in a passenger's baggage
and shall give effect to the same insofar as connected or mail.
with matters of shipping and navigation. The Commissioner may adjust the value of goods of
SECTION 303. Control over Premises Used for commercial nature that shall be cleared through an
Customs Purposes. — The Bureau shall, for customs informal entry process without prejudice to the periodic
purposes, have exclusive control, direction and adjustment period in subparagraph (a) of this section.
management of customs offices, facilities, warehouses, All importations entered through a formal entry
ports, airports, wharves, infrastructure and other process shall be covered by a letter of credit or any
premises in the Customs Districts, in all cases without verifiable commercial document evidencing payment or
prejudice to the general police powers of the local in cases where there is no sale for export, by any
government units (LGUs), the Philippine Coast Guard and commercial document indicating the commercial value
of law enforcement agencies in the exercise of their of the goods.
respective functions.
SECTION 403. Provisional Goods Declaration. —
SECTION 304. Power of the President to Subject Where the declarant does not have all the information or
Premises to Customs Jurisdiction. — When public supporting documents required to complete the goods
interest requires, the President may, by executive order, declaration, the lodging of a provisional goods
declare any public wharf, landing place, infrastructure, declaration may be allowed: Provided, That it substantially
street or land, in any port of entry under the jurisdiction of contains the necessary information required by the
the Bureau as may be necessary, for customs purposes Bureau and the declarant undertakes to complete the
and/or to authorize a port or terminal operator to transfer information or submit the supporting documents within
overstaying cargoes in an inland depot or terminal. forty-five (45) days from the filing of the provisional goods
SECTION 305. Trespass or Obstruction of Customs declaration, which period may be extended by the
Premises. — No person shall enter or obstruct a customs Bureau for another forty-five (45) days for valid reasons.
office, warehouse, port, airport, wharf, or other premises If the Bureau accepts a provisional goods declaration,
under the control of the Bureau without prior authority, the duty treatment of the goods shall not be different
including the streets or alleys where these facilities are from that of goods with complete declaration.
located.
Goods under a provisional goods declaration may be
SECTION 306. Special Surveillance for the released upon posting of any required security equivalent
Protection of Customs Revenue and Prevention of to the amount ascertained to be the applicable duties
Smuggling. — The Bureau shall conduct surveillance on and taxes.
vessels or aircrafts entering Philippine territory and on
imported goods entering the customs office: Provided, SECTION 404. Owner of Imported Goods. — All
That the function of the Philippine Coast Guard to goods imported into the Philippines shall be deemed to
prevent and suppress the illegal entry of these goods, be the property of the consignee or the holder of the bill
smuggling and other forms of customs fraud and of lading, airway bill or other equivalent transport
violations of maritime law and its proper surveillance of document if duly endorsed by the consignee therein, or, if
vessels entering and/or leaving Philippine territory as consigned to order, duly endorsed by the consignor. The
provided in Republic Act No. 9993, otherwise known as underwriters of abandoned goods and the salvors of
the "Philippine Coast Guard Law of 2009", shall continue goods saved from wreck at sea, coast, or in any area of the
to be in force. Philippines, may be regarded as the consignees.
SECTION 307. Temporary Storage of Goods. — SECTION 405. Liability of Importer for Duties and
Subject to the rules and regulations to be issued by the Taxes. — Unless relieved by laws or regulations, the
Secretary of Finance, the Commissioner shall establish a liability for duties, taxes, fees, and other charges attached
system for temporary storage of imports prior to goods to importation constitutes a personal debt due and
declaration in case of abandoned or overstaying goods. 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
TITLE IV Import Clearance and Formalities a lien on the imported goods which may be enforced
while such goods are under customs' custody.
CHAPTER 1 Goods Declaration SECTION 406. Importations by the Government. —

Except those provided for in Section 800 of this Act, all
SECTION 400. Goods to be Imported through importations by the government for its own use or that of
Customs Office. — All goods imported into the its subordinate branches or instrumentalities, or
Philippines shall be entered through a customs office at a corporations, agencies or instrumentalities owned or
port of entry, or may be admitted to or removed from a controlled by the government, shall be subject to the
free zone as defined in this Act, as the case may be. duties, taxes, fees and other charges under this Act.
SECTION 401. Importations Subject to Goods SECTION 407. Goods Declaration and Period of
Declaration. — Unless otherwise provided for in this Act, Filing. — As far as practicable, the format of the goods
all imported goods shall be subject to the lodgement of a declaration shall conform with international standards.
goods declaration. A goods declaration may be for The data required in the goods declaration shall be
consumption, for customs bonded warehousing, for limited to such particulars that are deemed necessary for
admission, for conditional importation, or for customs the assessment and collection of duties and taxes, the
transit. compilation of statistics and compliance with this Act.



The Bureau shall require the electronic lodgement of the received by the declarant, and the declaration thereon
goods declaration. are in all respects genuine and true.
The Bureau shall only require supporting documents Goods declaration shall be submitted electronically
necessary for customs control to ensure that all pursuant to Republic Act No. 8792, otherwise known as
requirements of the law have been complied with. the "Electronic Commerce Act of 2000". Such declarations
Translation of supporting documents shall not be when printed and certified by a competent customs
required except when necessary. officer as a faithful reproduction of the electronic
Goods declaration must be lodged within fifteen (15) submission shall be considered as actionable documents
days from the date of discharge of the last package from for purposes of prosecuting a declarant if the declarations
the vessel or aircraft. The period to file the goods are found to be fraudulent.
declaration may, upon request, be extended on valid SECTION 413. Description of Goods. — Under such
grounds for another fifteen (15) days: Provided, That the terms and conditions prescribed under the rules and
request is made before the expiration of the original regulations, the description of the goods in the goods
period within which to file the goods declaration: declaration must be sufficient and specific in detail to
Provided, however, That the period of the lodgement of enable the goods to be identified for customs valuation,
the goods declaration may be adjusted by the statistical purposes, and classification to the appropriate
Commissioner. tariff heading and subheading in the currency of the
SECTION 408. Lodgement and Amendment of invoice, and in such other particulars necessary for the
Goods Declaration. — The Bureau shall permit the proper assessment and collection of duties and taxes. The
electronic lodgement of the goods declaration at any quantity and value of each of the several classes of goods
designated customs office. The Bureau shall, for valid shall be separately declared according to their respective
reason and under terms and conditions provided by headings or subheadings and the totals of each heading
regulation, permit the declarant to amend the goods or subheading shall be duly shown.
declaration that has already been lodged: Provided, That SECTION 414. Commercial and Noncommercial
the request to amend the goods declaration, together Invoice. — Commercial invoice of imported goods shall
with the intended amendments, must be received prior contain the following:
to final assessment or examination of the goods. (a) The agreed price paid or to be paid for the goods;
SECTION 409. Advance Lodgement and Clearance. (b) The adjustments to the price paid or to be paid as
— The Bureau may provide for the lodgement and defined in Section 701 (1) of this Act, if not yet included in
clearance of goods declaration and supporting the invoice, as may be applicable;
documents prior to the arrival of the goods under such
terms and conditions as may be provided by rules and (c) The names of the buyer, seller, and the time and
regulations to be promulgated under this Act. place of sale;
SECTION 410. Entry of Goods in Part for (d) The port of entry;
Consumption and in Part for Warehousing. — Goods (e) A sufficient description to enable the accurate
declaration covered by one bill of lading or airway bill over identification of goods for tariff classification, customs
goods which are meant in part for consumption and in valuation, and statistical purposes, indicating the correct
part for warehousing may be both entered commodity description, in customary term or
simultaneously for release at the port of entry. commercial designation, the grade or quality, numbers,
SECTION 411. Contents of Goods Declaration. — marks or symbols under which they are sold by the seller
Goods declaration shall contain the names of the or manufacturer, together with the marks and number of
consignee, importing vessel or aircraft, port of departure, packages in which the goods are packed;
port of destination and date of arrival, the number and (f) The quantities in the weights or measures of the
marks of packages, or the quantity, if in bulk, the nature goods shipped; and
and correct commodity description of the goods
contained therein, its value as set forth in a proper (g) Any other fact deemed necessary for the proper
invoice, and such other information as may be required examination, customs valuation, and tariff classification of
by rules and regulations. Where the declarant does not the goods as may be prescribed by rules and regulations.
have all the information required to make the goods To the extent possible, the above requirements shall
declaration, a provisional or incomplete goods declaration also apply to goods imported but not covered by sale,
shall, for certain cases and for reasons deemed valid by such as goods on consignment or lease, samples, or
the Bureau, be allowed to be lodged: Provided, That it donations, covered by a consignment, pro forma invoice,
contains the particulars deemed necessary by the Bureau or other noncommercial invoice.
for the acceptance of the entry filed and that the
declarant undertakes to complete it within forty-five (45) SECTION 415. Mode of Payment and Terms of Trade.
days from the filing of the provisional goods declaration — Subject to existing laws and rules on foreign currency
in accordance with Section 403 of this Act. exchange, the internationally accepted standards and
practices on the mode of payment or remittance
SECTION 412. Statements to be Provided in the covering import and export transactions, including
Goods Declaration. — No entry of imported goods shall standards developed by international trading bodies such
be allowed unless the goods declaration has been lodged as the International Chamber of Commerce (ICC) on
with the Bureau. The goods declaration shall, under trading terms (incoterms) and on international letters of
penalties of falsification or perjury, contain the following credit such as the Uniform Customs and Practice for
statements: Documentary Credits (UCPDC), shall be recognized.
(a) The invoice and goods declaration contain an SECTION 416. Examination of Samples. — Customs
accurate and faithful account of the prices paid or officers shall see to it that representative samples taken
payable for the goods, and other adjustments to the price during examination shall be properly receipted for and
actually paid or payable, and that nothing has been retained within a reasonable period of time. The quantity
omitted therefrom or concealed whereby the and value of the samples taken shall be noted in the
government of the Republic of the Philippines might be specified box of goods declaration or electronic form.
defrauded of any part of the duties and taxes lawfully due Such samples shall be duly labeled as will definitely
on the goods; and identify them with the importation for which they are
(b) To the best of the declarant's information and taken.
belief, all the invoices and bills of lading or airway bills SECTION 417. Forwarding of Cargo and Remains of
relating to the goods are the only ones in existence Wrecked Vessel or Aircraft. — When vessels or aircrafts
relating to the importation in question, and that these are wrecked within the Philippines, the original owners or
documents are in the same state as when they were consignees of the cargo, or by its underwriters, in case of



abandonment, may seek approval from the Bureau to SECTION 420. Conditions for Examination. —
forward the goods saved from the wreck to the ports of Pursuant to internationally accepted standards, the
destination without going through the customs office in Bureau may adopt nonintrusive examination of goods,
the district in which the goods were cast ashore or such as the use of x-ray machines.
unloaded. Upon approval, the goods may be forwarded Physical examination of the goods shall be conducted
with particular manifests and duly certified by a customs when:
officer in charge of the goods.
(a) It is directed by the Commissioner on account of a
The owner of the vessel or aircraft may be permitted derogatory information;
to export the remains of the wreck upon proper
examination and inspection. The remains of a wrecked (b) The goods are subject to an Alert Order issued by
vessel shall include not only its hull and rigging, but also competent authority;
all sea stores, goods and equipment, such as sails, ropes (c) The goods are electronically selected for physical
and chain anchors. examination;
SECTION 418. Derelicts and Goods from Abandoned (d) There are issues and controversies surrounding
Wrecks. — Derelicts and all goods recovered from sea or the goods declaration and the import clearance process;
from abandoned wrecks shall be under the jurisdiction of or
the port where the goods arrive, and shall be retained in
the custody of the Bureau. If not claimed by the owner, (e) The importer or declarant requests for the
underwriter or salvor, the same shall be deemed as examination of the goods.
property of the government. The Commissioner may exempt from physical
When such goods are brought into port by lighters or examination the goods of authorized economic operators
other craft, each vessel shall submit a manifest of their or of those provided for under any existing trade
respective cargo. facilitation program of the Bureau.
The customs officer nearest the scene of the wreck Physical examination, when required, shall be
shall take charge of the goods saved and shall give conducted in an expeditious manner.
immediate notice to the District Collector or the nearest SECTION 421. Duties of Customs Officer Tasked to
customs office. Examine the Imported Goods. — In the examination,
In order to prevent any attempt to commit fraud, the classification, and valuation of the goods, the customs
District Collector shall be represented at the salvage of officer shall:
the cargo by customs officers who shall examine and (a) Determine whether the packages for examination
receive the inventory made on the cargo. and their contents are in accordance with the goods
Derelicts and goods salvaged from foreign vessels or declaration, invoice and other pertinent documents;
aircrafts recovered from sea or wreck are prima facie (b) Take samples of the imported goods for
dutiable and may be entered for consumption or examination or laboratory analysis when necessary;
warehousing. If claimed to be of Philippine production,
and consequently conditionally duty-free, proof must be (c) Issue a receipt for a sample taken and retained
submitted as in ordinary cases of reimportation of goods. during examination; and
Foreign goods landed from a vessel or aircraft in distress (d) Report whether the goods have been correctly
is dutiable if sold or disposed of in the Philippines. declared as to value, quantity, measurement, weight,
Before any goods taken from a recent wreck are tariff classification and not imported contrary to law.
admitted to the customs territory, the same shall be Failure on the part of the customs officer to perform
appraised, and the owner or importer shall have the same the above duties shall be penalized according to Section
right to appeal as in ordinary importation. 1431 of Title XIV of this Act.
No part of a Philippine vessel or aircraft or its SECTION 422. Customs Expenses Constituting
equipment, wrecked either in Philippine or foreign Charges on Goods. — The cost of examination shall be for
waters, shall be subject to duty. the account of the importer or exporter, subject to proper
accounting and documentation. All expenses incurred by
the Bureau for the handling or storage of goods and
CHAPTER 2 Examination of Goods other necessary operations shall be chargeable against
SECTION 419. Examination of Goods. — Examination the goods, and shall constitute a lien thereon.
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 CHAPTER 3 Assessment and Release
live animals, perishable goods and other goods requiring SECTION 423. Determination of the De Minimis
immediate examination. Value. — No duties and taxes shall be collected on goods
Whenever necessary, a system of coordination and with an FOB or FCA value of ten thousand pesos
joint examination of goods shall be established by the (P10,000.00) or below. The Secretary of Finance shall
Bureau and other regulatory agencies under existing laws adjust the de minimis value as provided herein, every
and regulations. three (3) years after the effectivity of this Act. The value
herein stated shall be adjusted to its present value using
As a general rule, the Bureau may examine the goods the CPI, as published by the PSA.
in the presence of the declarant or an authorized
representative. Examination of the goods in the absence SECTION 424. Duty of Customs Officer Tasked to
of the declarant or authorized representative may be Assess Imported Goods. — For purposes of assessing
allowed in exceptional circumstance and for valid and duties and taxes on imported goods, the customs officer
justifiable grounds, as may be defined by regulations shall classify, value, and determine the duties and taxes to
promulgated by the Secretary of Finance, upon be paid. The customs officer shall prepare and submit an
recommendation of the Commissioner. The Bureau may assessment report as established under this Act.
require the declarant to be present or to be represented SECTION 425. Tentative Assessment of Goods
at the examination of the goods or to render any Subject to Dispute Settlement. — Assessment shall be
assistance necessary to facilitate the examination. deemed tentative if the duties and taxes initially assessed
The Bureau shall take samples of the goods only are disputed by the importer. The assessment shall be
when needed to establish the tariff description and value completed upon final readjustment based on the tariff
of goods declared, or to ensure compliance with this Act. ruling in case of classification dispute, or the final
Samples drawn shall be as minimal as possible. resolution of the protest case involving valuation, rules of
origin, and other customs issues.


The District Collector may allow the release of the except on written order of the carrier or agent of the
imported goods under tentative assessment upon the vessel or aircraft, in which case neither the government
posting of sufficient security to cover the applicable nor the customs officer shall be held liable for any
duties and taxes equivalent to the amount that is damage arising from wrongful release of the goods:
disputed. Provided, That when the release of goods is made against
SECTION 426. Tentative Assessment of Provisional such written order, the customs officer shall require the
Goods Declaration. — Assessment of a provisional goods submission of a copy of the bill.
declaration shall be deemed tentative and such SECTION 434. Release of Goods upon Order of
assessment shall be completed upon final readjustment Importer. — An importer may issue a written
and submission by the declarant of the additional authorization for the release of goods stored in a bonded
information or documentation required to complete the warehouse to another person. Such authorization shall
declaration within the period provided in Section 403 of not relieve the importer from liability for the duties, taxes
this Act. and other charges due on the goods unless the person to
SECTION 427. Readjustment of Appraisal, whom the release was authorized assumes such liability.
Classification or Return. — Such appraisal, classification SECTION 435. Withholding Release Pending
or return, as finally passed upon and approved or Satisfaction of Lien. — When the District Collector is duly
modified by the District Collector, shall not be altered or notified through a lawful order of a competent court of a
modified in any manner, except: lien for freight, lighterage or general average upon any
(1) Within one (1) year after payment of the duties, imported goods, the District Collector shall withhold the
upon statement of error in conformity with Section 912 of release of the goods unless the claim has been paid or
this Act, as approved by the District Collector; secured. In case of disagreement, the District Collector
may release the goods after payment of the freight and
(2) Within fifteen (15) days after such payment, upon lighterage due on the quantity or weight landed as
request for reappraisal or reclassification addressed to the actually determined.
Commissioner by the District Collector, if the appraisal or
classification is deemed to be low; SECTION 436. Fine or Surcharge on Goods. — Goods
subject to any fine or surcharge shall be released only
(3) Upon request for reappraisal and/or after the payment of the fine or surcharge.
reclassification, in the form of a timely protest addressed
to the District Collector by the interested party if the latter
should be dissatisfied with the appraisal or return; or CHAPTER 4 Special Procedures
(4) Upon demand by the Commissioner after the SECTION 437. Traveler and Passenger Baggage. —
completion of compliance audit in accordance with the The Bureau shall provide simplified customs procedure
provisions of this Act. for traveler and baggage processing based on
international agreements and customs best practices.
SECTION 428. Assessment of Duty on Less Than
Entered Value. — Duty shall not be assessed in any case Travelers shall be permitted to export goods for
upon an amount less than the entered value, unless by commercial purposes, subject to compliance with the
direction of the Commissioner in cases when the necessary export formalities and payment of export
importer certifies at the time of entry that the entered duties, taxes and charges, if any.
value is higher than the dutiable value and that the SECTION 438. Postal Item or Mail. — Postal item or
goods are so entered in order to meet increases made by mail shall include letter-post and parcels, as described in
the appraiser in similar cases then pending international practices and agreements, such as the Acts
re-appraisement; and the lower assessment shall be of the Universal Postal Union (AUPU), currently in force.
allowed only when the importer's contention is sustained
by a final decision, and shall appear that such action of A simplified procedure shall be used in the clearance
the importer was taken in good faith after due diligence of postal item or mail, including the collection of the
and inquiry. applicable duties and taxes on such items or goods.
SECTION 429. Final Assessment. — Assessment shall When all the information required by the customs are

be deemed final fifteen (15) days after receipt of the available in the special declaration form for postal items
notice of assessment by the importer or consignee. as provided in the AUPU or similar international
agreements, the special declaration form and supporting
SECTION 430. Period of Limitation. — In the absence documents shall be the goods declaration. However, a
of fraud and when the goods have been finally assessed separate goods declaration shall be required for the
and released, the assessment shall be conclusive upon all following:
parties three (3) years from the date of final payment of
duties and taxes, or upon completion of the post (a) Goods whose value fall within the level that the
clearance audit. Commissioner has determined to be taxable and thus
must be covered by a goods declaration;
SECTION 431. Release of Goods after Payment of
Duties and Taxes. — Goods declared shall be released (b) Prohibited and regulated goods;
when duties and taxes and other lawful charges have (c) Goods, the exportation of which must be certified;
been paid or secured and all the pertinent laws, rules and and
regulations have been complied with.
(d) Imported goods under a customs procedure other
When the Bureau requires laboratory analysis of than for consumption.
samples, detailed technical documents or expert advice,
SECTION 439. Express Shipment. — The Bureau shall
it may release the goods before the results of such
provide simplified customs procedures based on
examination are known after posting of sufficient security
international standards and customs best practices for air
by the declarant.
shipments considered as time-sensitive and requiring
SECTION 432. Release of Goods to the Holder of Bill pre-arrival clearance. Express shipments of accredited air
of Lading or Airway Bill. — Any customs officer who express cargo operators may be released prior to the
releases goods to the consignee or lawful holder of the payment of the duty, tax and other charges upon posting
bill of lading or airway bill shall not be liable for any defect of a sufficient security.
or irregularity in its negotiation unless the customs officer
SECTION 440. Establishment of Advance Customs
has notice of the defect or irregularity.
Clearance and Control Program. — The Bureau may
SECTION 433. Release of Goods without Production establish and implement a voluntary program on
of Bill of Lading or Airway Bill. — No customs officer advance customs clearance and control on containerized
shall release goods to any person without the submission cargoes. The details of the voluntary advance customs
of the bill of lading or airway bill covering the goods, clearance shall be subject to the rules and regulations to



be issued by the Bureau after conducting the necessary goods intended for transit covered by Republic Act No.
public hearings and consultations with the concerned 10668, otherwise known as "An Act Allowing Foreign
sectors. Vessels to Transport and Co-Load Foreign Cargoes for
Domestic Transshipment and for Other Purposes", shall
not be subject to the payment of duties and taxes at the
TITLE V Export Clearance and Formalities port of entry: Provided, That any conditions and security
required by the Bureau are complied with.
CHAPTER 1 Export Clearance and Declaration Goods for consumption and other goods intended for
customs transit not covered by the immediately
SECTION 500. Export Declaration. — All goods preceding paragraph shall be subject to the payment of
exported from the Philippines, whether subject to export duties and taxes at the port of discharge.
duty or not, shall be declared through a competent
customs office through an export declaration, duly SECTION 602. Carrier's Security. — Carriers that
signed electronically or otherwise by the party making transport imported goods that shall be placed under
the declaration. customs transit from a port of entry to other ports, shall
post a general transportation security amounting to at
The description of the goods in the export declaration least fifty thousand pesos (P50,000.00). Such security
must contain sufficient and specific information for shall ensure the complete and immediate delivery of
statistical purposes as well as for the proper valuation and goods to the customs officer at the port of destination
classification of the goods. and the payment of pertinent customs charges and
SECTION 501. Export Product to Conform to expenses and other transfer costs. The amount of the
Standard Grades. — If applicable, products shall conform security may be adjusted by the Commissioner, upon
to export standard grades established by the approval of the Secretary of Finance.
government. The packaging of the said goods shall
likewise be labeled and marked in accordance with
CHAPTER 2 Customs Transshipment
related laws and regulations. Export declaration may not
be granted for goods violating the aforementioned SECTION 603. Customs Transshipment. — Goods
requirements. admitted for transshipment shall not be subject to the
payment of duties and taxes: Provided, That the goods
SECTION 502. Lodgement and Processing of Export
declaration for customs transshipment particularly
Declaration. — The Bureau shall promulgate rules and
indicates such nature of the goods, duly supported by
regulations to allow manual and electronic lodgement
commercial or transport documents or evidence as
and processing of the export declaration.
required by the Bureau.
SECTION 503. Rules of Origin. — Pursuant to the
Goods for transshipment must be exported from the
applicable rules of origin, the Bureau or any other
Philippines within thirty (30) days from arrival thereof. The
designated government agency may determine the
Commissioner may allow an extension of such period
origin of goods for export and, if appropriate, issue the
after the establishment of valid reasons.
corresponding certificates of origin. However, the
exporter may adopt a self-certification system: Provided, SECTION 604. Goods Entered for Immediate
That it is duly accredited by the Bureau or any other Reexportation. — Where an intent of reexportation of the
authorized government agencies. goods is shown by the bill of lading, invoice, manifest, or
other satisfactory evidence, the whole or a part of a bill
comprising not less than one package may be entered for
TITLE VI Customs Transit and Transshipment immediate reexportation under security. The District
Collector shall designate the vessel or aircraft in which
the goods are loaded constructively as a warehouse to
CHAPTER 1 Customs Transit facilitate the direct transfer of the goods to the exporting
SECTION 600. Customs Transit in the Customs vessel or aircraft.
Territory. — Customs transit within the customs territory Unless it shall appear in the bill of lading, airway bill,
shall be allowed for goods except those intended for invoice, manifest, or other satisfactory evidence, that
consumption, to be transported as follows: goods arriving in the Philippines are destined for
(a) From port of entry to another port of entry as exit transshipment, no exportation thereof will be permitted
point for outright exportation; except under entry for immediate reexportation under
sufficient security in an amount equal to the ascertained
(b) From port of entry to another port of entry or duties, taxes and other charges.
inland customs office;
Upon the reexportation of the goods, and the
(c) From inland customs office to a port of entry as production of proof of landing beyond the limits of the
exit point for outright exportation; and Philippines, the security shall be released.
(d) From one port of entry or inland customs office to
another port of entry or inland customs office.
A transit permit is required for goods transported
TITLE VII Import Duty and Tax
under customs transit. However, transfer of goods in
customs transit from one means of transport to another CHAPTER 1 Basis of Valuation
shall be allowed: Provided, That any customs seal or
fastening is not broken or tampered. SECTION 700. Sequential Application of Valuation
Methods. — Imported goods shall be valued in
The party responsible for the compliance of the accordance with the provisions of Section 701 of this Act
obligations imposed on customs transit shall ensure that whenever the conditions prescribed therein are fulfilled.
the goods are presented intact and in due course at the
customs office of destination. Failure to comply with the Where the customs value cannot be determined
aforementioned obligations or likewise failure to follow a under the provisions of Section 701 of this Act, it is to be
prescribed itinerary or period for delivery of the goods determined by proceeding sequentially through the
may immediately subject the goods to the corresponding succeeding sections hereof to the first such section
duties, taxes and other applicable fines, penalties, and under which the customs value can be determined.
surcharges. Except as provided in Section 704 of this Act, it is only
when the customs value cannot be determined under
SECTION 601. Duty and Tax on Goods Intended for the provisions of a particular section that the provisions of
Transit. — Transit goods admitted for storage in a the next section in the sequence can be used.
customs bonded warehouse, or for outright exportation
at the port of destination or inland customs office, and



If the importer does not request that the order of In determining the transaction value, the following
Sections 704 and 705 of this Act be reversed, the normal shall be added to the price actually paid or payable for the
order of the sequence is to be followed. If the importer so imported goods:
requests but it is impossible to determine the customs (1) To the extent that they are incurred by the buyer
value under Section 705 of this Act, the customs value but are not included in the price actually paid or payable
shall be determined under Section 704. for the imported goods:
When the customs value cannot be determined (a) Commissions and brokerage fees except buying
under Sections 701 through 705, it may be determined commissions;
under Section 706 of this Act.
(b) Cost of containers;
SECTION 701. Transaction Value System — Method
One. — The transaction value shall be the price actually (c) Cost of packing, whether for labor or materials;
paid or payable for the goods when sold for export to the (d) Value, apportioned as appropriate, of the following
Philippines adjusted in accordance with the provisions of goods and services: materials, components, parts and
this section: Provided, That: similar items incorporated in the imported goods; tools,
(a) There are no restrictions as to the disposition or dies, moulds and similar items used in the production of
use of the goods by the buyer other than restrictions imported goods; materials consumed in the production
which: of the imported goods; and engineering, development,
artwork, design work and plans and sketches undertaken
(i) Are imposed or required by law or by Philippine elsewhere than in the Philippines and necessary for the
authorities; production of imported goods, where such goods and
(ii) Limit the geographical area in which the goods services are supplied directly or indirectly by the buyer
may be resold; or free of charge or at a reduced cost for use in connection
(iii) Do not substantially affect the value of the goods; with the production and sale for export of the imported
goods; and
(b) The sale or price is not subject to some condition
or consideration for which a value cannot be determined (e) Amount of royalties and license fees related to the
with respect to the goods being valued; and goods being valued that the buyer must pay either
directly or indirectly, as a condition of sale of the goods to
(c) The buyer and the seller are not related, or where the buyer.
the buyer and the seller are related, that the transaction
value is acceptable for customs purposes under the (2) Value of any part of the proceeds of any
provisions hereof. subsequent resale, disposal or use of the imported goods
that accrues directly or indirectly to the seller;
For purposes of this Act, persons shall be deemed
related only if: (3) Cost of transport of the imported goods from the
port of exportation to the port of entry in the Philippines;
(i) They are officers or directors of one another's
business; (4) Loading, unloading and handling charges
associated with the transport of the imported goods from
(ii) They are legally recognized partners in business; the country of exportation to the port of entry in the
(iii) There exists an employer-employee relationship Philippines; and
between them; (5) Cost of insurance.
(iv) Any person directly or indirectly owns, controls or All additions to the price actually paid or payable shall
holds five percent (5%) or more of the outstanding voting be made only on the basis of objective and quantifiable
stocks or shares of both seller and buyer; data.
(v) One of them directly or indirectly controls the SECTION 702. Transaction Value of Identical Goods
other; — Method Two. — Where the dutiable value cannot be
(vi) Both of them are directly or indirectly controlled determined under method one, the dutiable value shall
by a third person; be the transaction value of identical goods sold for export
to the Philippines and exported at or about the same
(vii) Together they directly or indirectly control a third time as the goods being valued. For purposes of this
person; or section, "Identical goods" refer to goods which are the
(viii) They are members of the same family, including same in all respects, including physical characteristics,
those related by affinity or consanguinity up to the fourth quality and reputation. Minor differences in appearances
civil degree. shall not preclude goods otherwise conforming to the
definition from being regarded as identical.
Persons who are associated in business with one
another in that one is the sole agent, sole distributor or If, in applying this section, more than one transaction
sole concessionaire, however described, of the other shall value of identical goods are found, the lowest value shall
be deemed to be related for the purposes of this Act if be used to determine the customs value.
they fall within any of the eight (8) cases cited in the SECTION 703. Transaction Value of Similar Goods —
preceding paragraph. Method Three. — Where the dutiable value cannot be
In a sale between related persons, the transaction determined under the preceding method, the dutiable
value shall be accepted as basis for customs valuation value shall be the transaction value of similar goods sold
whenever the importer demonstrates that such value for export to the Philippines and exported at or about the
closely approximates one of the following occurring at or same time as the goods being valued. For purposes of
about the same time: this section, "Similar goods" refer to goods which,
although not alike in all respects, have like characteristics
(a) The transaction value in sales to unrelated buyers and similar component materials which enable them to
of identical or similar goods for export to the same perform the same functions and to be commercially
country of importation; interchangeable. The quality of the goods, its reputation
(b) The customs value of identical or similar goods as and the existence of a trademark shall be among the
determined under the provisions of Section 704 of this factors to be considered in determining whether goods
Act; or are similar.
(c) The customs value of identical or similar goods are If, in applying this section, more than one transaction
determined under the provisions of Section 705 of this value of identical goods are found, the lowest such value
Act. 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 country in question and that the latter does not object to
deductive value unless otherwise requested by the the investigation.
importer as provided in Section 700 hereof. The deductive SECTION 706. Fallback Value — Method Six. — If the
value which shall be based on the unit price at which the dutiable value cannot be determined under the
imported goods or identical or similar imported goods preceding methods described above, it shall be
are sold in the Philippines, in the same condition as when determined by using other reasonable means and on the
imported, in the greatest aggregate quantity, at or about basis of data available in the Philippines. If the importer
the time of the importation of the goods being valued, to so requests, the importer shall be informed in writing of
persons not related to the persons from whom they buy the dutiable value determined under method six and the
such goods, subject to deductions for the following: method used to determine such value.
(1) Either the commissions usually paid or agreed to No dutiable value shall be determined under method
be paid or the additions usually made for profit and six on the basis of:
general expenses in connection with sales in such
country of imported goods of the same class or kind; (1) The selling price in the Philippines of goods
produced in the Philippines;
(2) The usual costs of transport and insurance and
associated costs incurred within the Philippines; (2) A system that provides for the acceptance for
customs purposes of the higher of two (2) alternative
(3) Where appropriate, the costs of: (i) transport of the values;
imported goods from the port of exportation to the port
of entry in the Philippines; (ii) loading, unloading and (3) The price of goods in the domestic market of the
handling charges associated with the transport of the country of exportation;
imported goods from the country of exportation to the (4) The cost of production, other than computed
port of entry in the Philippines; and (iii) insurance; and values, that have been determined for identical or similar
(4) The customs duties and other national taxes goods in accordance with method five hereof;
payable in the Philippines by reason of the importation or (5) The price of goods for export to a country other
sale of the goods. than the Philippines;
If neither the imported goods nor identical nor similar (6) Minimum customs values; or
imported goods are sold at or about the time of
importation of the goods being valued in the Philippines (7) Arbitrary or fictitious values.
in the conditions they were imported, the customs value SECTION 707. Ascertainment of the Accuracy of the
shall, subject to the conditions set forth in the preceding Declared Value. — Nothing in this section shall be
paragraph, be based on the unit price at which the construed as restricting or calling into question the right
imported goods or identical or similar imported goods of the Bureau to ascertain the truth or accuracy of any
sold in the Philippines in the condition they were statement, document or declaration presented for
imported and at the earliest date after the importation of customs valuation purposes. When a declaration has
the goods being valued, but before the expiration of been presented and when the Bureau has reason to
ninety (90) days after such importation. doubt the truth or accuracy of the particulars or of
If neither the imported goods nor identical nor similar documents produced in support of such declaration, it
imported goods are sold in the Philippines in the may ask the importer to provide further explanation,
condition as imported, then, if the importer so requests, including documents or other evidence, that the declared
the dutiable value shall be based on the unit price at value represents the total amount actually paid or
which the imported goods, after further processing, are payable for the imported goods, adjusted in accordance
sold in the greatest aggregate quantity to persons in the with the provisions of Section 701 of this Act.
Philippines who are not related to the persons from If in the course of determining the dutiable value of
whom they buy such goods, subject to allowance for the imported goods, it becomes necessary to delay the final
value added by such processing and deductions provided determination of such dutiable value, the importer shall
under subsections (1), (2), (3) and (4) hereof. nevertheless be able to secure the release of the
SECTION 705. Computed Value — Method Five. — imported goods upon posting of a sufficient security in
Where the dutiable value cannot be determined under an amount equivalent to the duties and taxes in dispute
the preceding method, the dutiable value shall be the conditioned on the payment of additional duties and
computed value of the sum of: taxes, if any, as may be determined: Provided, That
prohibited goods shall not be released under any
(1) The cost or the value of materials and fabrication or circumstance.
other processing employed in producing the imported
goods; If, after receiving further information, or in the
absence of a response, the Bureau still has reasonable
(2) The amount for profit and general expenses equal doubts on the truth or accuracy of the declared value, it
to that usually reflected in the sale of goods of the same may deem that the customs value of the imported goods
class or kind as the goods being valued which are made cannot be determined under method one, without
by producers in the country of exportation for export to prejudice to an importer's right to appeal pursuant to
the Philippines; Section 1104 of this Act. Before taking a final decision, the
(3) The freight, insurance fees and other District Collector shall communicate to the importer, in
transportation expenses for the importation of the goods; writing if requested, the grounds for doubting the truth
or accuracy of the particulars or documents produced
(4) Any assist, if its value is not included under and give the importer a reasonable opportunity to
paragraph (1) hereof; and respond. When a final decision is made, the Bureau shall
(5) The cost of containers and packing, if their values communicate its decision and the grounds therefor in
are not included under paragraph (1) hereof. writing.
The Bureau shall not require or compel any person SECTION 708. Exchange Rate. — For the assessment
not residing in the Philippines to produce for and collection of import duty upon imported goods and
examination, or to allow access to, any account or other for other purposes, the value and prices thereof quoted in
record for the purpose of determining a computed value. foreign currency shall be converted into the currency of
However, information supplied by the producer of the the Philippines at the current rate of exchange or value
goods for the purposes of determining the customs value specified or published, from time to time, by the Bangko
may be verified in another country with the agreement of Sentral ng Pilipinas (BSP).
the producer and provided that said producer will give
sufficient advance notice to the government of the


section would necessarily be obliterated, destroyed, or

CHAPTER 2 Special Duties and Trade Remedy permanently concealed;
Measures (viii) An ultimate purchaser, by reason of the character
SECTION 709. Government's Right of Compulsory of such goods or by reason of the circumstances of their
Acquisition. — In order to protect government revenues importation, must necessarily know the country of origin
against undervaluation of goods, the Commissioner may, of such goods even though they are not marked to
motu proprio or upon the recommendation of the District indicate their origin;
Collector, acquire imported goods under question for a (ix) Such goods were produced more than twenty (20)
price equal to their declared customs value plus any years prior to their importation into the Philippines; or
duties already paid on the goods, payment for which shall
(x) Such goods cannot be marked after importation
be made within ten (10) working days from issuance of a
except at an expense which is economically prohibitive,
warrant signed by the Commissioner for the acquisition
and the failure to mark the goods before importation was
of such goods.
not due to any purpose of the importer, producer, seller
An importer who is dissatisfied with a decision of the or shipper to avoid compliance with this section.
Commissioner pertaining to this section may, within
(B) Marking of Containers. — Whenever goods are
twenty (20) working days after the date on which notice
exempt under paragraph (3) of subsection (A) of this
of the decision is given, appeal to the Secretary of
section from the requirements of marking, the
Finance, and thereafter if still dissatisfied, to the CTA as
immediate container, if any, of such goods, or such other
provided for in Section 1136 of this Act.
container or containers of such goods, shall be marked in
Where no appeal is made by the importer, or upon such manner as to indicate to an ultimate purchaser in
reaffirmation of the Commissioner's decision during the the Philippines the name of the country of origin of such
appeals process, the Bureau or its agents shall sell the goods in any official language of the Philippines, subject
acquired goods pursuant to existing laws and regulations. to all provisions of this section, including the same
Nothing in this section limits or affects any other exceptions as are applicable to goods under paragraph (3)
powers of the Bureau with respect to the disposition of of subsection (A).
the goods or any liability of the importer or any other (C) Fine for Failure to Mark. — If, at the time of
person with respect to an offense committed in the importation any good or its container, as provided in
importation of the goods. subsection (B) hereof, is not marked in accordance with
SECTION 710. Marking of Imported Goods and the requirements of this section, there shall be levied,
Containers. — (A) Marking of Goods. — Except as collected, and paid upon such good a marking duty of
hereinafter provided, all goods of foreign origin imported five percent (5%) of dutiable value, which shall be deemed
into the Philippines or their containers, as provided in to have accrued at the time of importation.
subsection (B) hereof shall be conspicuously marked in (D) Release Withheld until Marked. — No imported
any official language of the Philippines as legibly, goods held in customs custody for inspection,
indelibly and permanently as the nature of the goods or examination, or assessment shall be released until such
container will permit and in such manner as to indicate to goods or their containers shall have been marked in
an ultimate purchaser in the Philippines the name of the accordance with the requirements of this section and
country of origin of the goods. Pursuant thereto, the until the amount of duty estimated to be payable under
Commissioner shall, with the approval of the Secretary of subsection (C) of this section shall have been deposited.
Finance:
(E) The failure or refusal of the owner or importer to
(1) Determine the character of words and phrases or mark the goods as herein required within a period of
abbreviation thereof which shall be acceptable as thirty (30) days after due notice shall constitute as an act
indicating the country of origin and prescribe any of abandonment of said goods and their disposition shall
reasonable method of marking, whether by printing, be governed by the provisions of this Act relative to
stenciling, stamping, branding, labeling or by any other abandonment of imported goods.
reasonable method, and in a conspicuous place on the
SECTION 711. Dumping Duty. —
goods or container where the marking shall appear;
The provisions of Republic Act No. 8752, otherwise
(2) Require the addition of other words or symbols
known as the "Anti-Dumping Act of 1999", are hereby
which may be appropriate to prevent deception or
adopted.
mistake as to the origin of the goods or as to the origin of
any other goods with which such imported goods is SECTION 712. Safeguard Duty. —
usually combined subsequent to importation but before The provisions of Republic Act No. 8800, otherwise
delivery to an ultimate purchaser; and known as the "Safeguard Measures Act", are hereby
(3) Authorize the exception of any goods from the adopted.
requirements of marking if: SECTION 713. Countervailing Duty. —
(i) Such goods are incapable of being marked; The provisions of Republic Act No. 8751, otherwise
(ii) Such goods cannot be marked prior to shipment known as "An Act Strengthening the Mechanisms for the
to the Philippines without injury; Imposition of Countervailing Duties on Imported
Subsidized Products, Commodities or Articles of
(iii) Such goods cannot be marked prior to shipment
Commerce in Order to Protect Domestic Industries from
to the Philippines, except at an expense economically
Unfair Trade Competition, Amending for the Purpose
prohibitive of their importation;
Section 302, Part 2, Title II, Book I of Presidential Decree
(iv) The marking of a container of such goods will No. 1464", otherwise known as the "Tariff and Customs
reasonably indicate the origin of such goods; Code of the Philippines, as Amended", are hereby
(v) Such goods are crude substances; adopted.
(vi) Such goods are imported for use by the importer SECTION 714. Discrimination by Foreign Countries.
and not intended for sale in their imported or any other — Without prejudice to the Philippine commitment in
form; any ratified international agreements or treaty, the
following recourse shall be applicable in case of
(vii) Such goods are to be processed in the Philippines discrimination by foreign countries:
by the importer or for the importer's account other than
for the purpose of concealing the origin of such goods (a) When the President finds that the public interest
and in such manner that any mark contemplated by this 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 Commissioner with the approval of the Secretary of
growth or product of, or imported in a vessel of any Finance:Provided, That goods sold, bartered, hired or used
foreign country whenever the President shall find as a for purposes other than what they were intended for and
fact that such country: without prior payment of the duty, tax or other charges
(1) Imposes, directly or indirectly, upon the disposition which would have been due and payable at the time of
or transportation in transit or through reexportation from entry if the goods had been entered without the benefit
such country of any goods wholly or in part the growth or of this section, shall be subject to forfeiture and the
product of the Philippines, any unreasonable charge, importation shall constitute a fraudulent practice against
exaction, regulation or limitation which is not equally customs laws: Provided, however, That a sale pursuant to
enforced upon the like goods of every foreign country; or a judicial order or in liquidation of the estate of a
deceased person shall not be subject to the preceding
(2) Discriminates in fact against the commerce of the proviso, without prejudice to the payment of duties, taxes
Philippines, directly or indirectly, by law or administrative and other charges: Provided, further, That the President
regulation or practice, by or in respect to any customs, may, upon the recommendation of the Secretary of
tonnage, or port duty, fee, charge, exaction, classification, Finance, suspend, disallow or completely withdraw, in
regulation, condition, restriction or prohibition, in such whole or in part, any conditionally free importation under
manner as to place the commerce of the Philippines at a this section:
disadvantage compared with the commerce of any
foreign country. (a) Aquatic products such as fishes, crustaceans,
mollusks, marine animals, seaweeds, fish oil, roe, caught
(b) If at any time the President shall find it to be a fact or gathered by fishing vessels of Philippine registry:
that any foreign country has not only discriminated Provided, That they are imported in such vessels or in
against the commerce of the Philippines, as aforesaid, crafts attached thereto: Provided, however, That they
but has, after the issuance of a proclamation as have not been landed in any foreign territory or, if so
authorized in subsection (a) of this section, maintained or landed, that they have been landed solely for
increased its said discrimination against the commerce of transshipment without having been advanced in
the Philippines, the President is hereby authorized, if condition;
deemed consistent with the interests of the Philippines
and of public interest, to issue a further proclamation (b) Equipment for use in the salvage of vessels or
directing that such product of said country or such goods aircrafts, not available locally, upon identification and the
imported in their vessels be excluded from importation giving of a security in an amount equal to one hundred
into the Philippines. percent (100%) of the ascertained duties, taxes and other
charges thereon, conditioned for the exportation thereof
(c) Any proclamation issued by the President under or payment of corresponding duties, taxes and other
this section shall, if the President deems it consistent with charges within six (6) months from the date of
the interest of the Philippines, extend to the whole of any acceptance of the goods declaration: Provided, That the
foreign country or may be confined to any subdivision or Bureau may extend the time for exportation or payment
subdivisions thereof: Provided, That the President may, of duties, taxes and other charges for a term not
whenever the public interest requires, suspend, revoke, exceeding six (6) months from the expiration of the
supplement or amend any such proclamation. original period;
(d) All goods imported contrary to the provisions of (c) Cost of repairs, excluding the value of the goods
this section shall be forfeited to the government of the used, made in foreign countries upon vessels or aircraft
Philippines and shall be liable to be seized, prosecuted documented, registered or licensed in the Philippines,
and condemned in like manner and under the same upon proof satisfactory to the Bureau: (1) that adequate
regulations, restrictions, and provisions as may from time facilities for such repairs are not afforded in the
to time be established for the recovery, collection, Philippines; or (2) that such vessels or aircrafts, while in
distribution, and remission or forfeiture to the the regular course of their voyage or flight, were
government by the tariff and customs laws. Whenever compelled by stress of weather or other casualty to put
the provision of this section shall be applicable to into a foreign port to make such repairs in order to secure
importations into the Philippines of goods wholly or in the safety, seaworthiness, or airworthiness of the vessels
part the growth or product of any foreign country, it shall or aircrafts to enable them to reach their port of
be applicable thereto, whether such goods are imported destination;
directly or indirectly.
(d) Goods brought into the Philippines for repair,
(e) It shall be the duty of the Commission to ascertain processing or reconditioning to be reexported upon
and at all times be informed whether any of the completion of the repair, processing or reconditioning:
discriminations against the commerce of the Philippines Provided, That the Bureau shall require security equal to
enumerated in subsections (a) and (b) of this section are one hundred percent (100%) of the duties, taxes and other
practiced by any country; and if and when such charges thereon, conditioned for the exportation thereof
discriminatory acts are disclosed, it shall be the duty of or payment of the corresponding duties, taxes and other
the Commission to bring the matter to the attention of charges within six (6) months from the date of
the President, and to recommend measures to address acceptance of the goods declaration;
such discriminatory acts.
(e) Medals, badges, cups, and other small goods
(f) The Secretary of Finance shall make such rules and bestowed as trophies or prizes, or those received or
regulations as are necessary for the execution of a accepted as honorary distinction;
proclamation that the President may issue in accordance
with the provisions of this section. (f) Personal and household effects belonging to
returning residents including household appliances,
jewelry, precious stones, and other goods of luxury which
TITLE VIII Tax and Duty Deferment, Preference were formally declared and listed before departure and
identified under oath before the District Collector when
and Exemption exported from the Philippines by such returning
residents upon their departure therefrom or during their
stay abroad; personal and household effects including
CHAPTER 1 Conditionally Tax and/or wearing apparel, goods of personal adornment, toilet
Duty-Exempt Importation goods, instruments related to one's profession and
SECTION 800. Conditionally Tax and/or analogous personal or household effects, excluding
Duty-Exempt Importation. — The following goods shall luxury items, vehicles, watercrafts, aircrafts and animals
be exempt from the payment of import duties upon purchased in foreign countries by residents of the
compliance with the formalities prescribed in the Philippines which were necessary, appropriate, and
regulations which shall be promulgated by the normally used for their comfort and convenience during


their stay abroad, accompanying them on their return, or Employment Administration (POEA) for overseas
arriving within a reasonable time which, barring employment purposes. They cover all Filipinos, working in
unforeseen and fortuitous events, in no case shall exceed a foreign country under employment contracts,
sixty (60) days after the owner's return. regardless of their professions, skills or employment
For purposes of this section, the phrase "returning status in a foreign country; and
residents" shall refer to nationals who have stayed in a (2) Calendar Year refers to the period from January 1
foreign country for a period of at least six (6) months. to December 31.
Returning residents shall have tax and duty exemption on (h) Wearing apparel, goods of personal adornment,
personal and household effects: Provided, That: toilet goods, portable tools and instruments, theatrical
(1) It shall not be in commercial quantities; costumes and similar effects accompanying travelers, or
(2) It is not intended for barter, sale or for hire; and tourists, or arriving within a reasonable time before or
after their arrival in the Philippines, which are necessary
(3) Limited to the FCA or FOB value of: and appropriate for the wear and use of such persons
(i) Three hundred fifty thousand pesos (P350,000.00) according to the nature of the journey, their comfort and
for those who have stayed in a foreign country for at least convenience: Provided, That this exemption shall not
ten (10) years and have not availed of this privilege within apply to goods intended for other persons or for barter,
ten (10) years prior to returning resident's arrival; sale or hire: Provided, however, That the Bureau may
require either a written commitment or a security in an
(ii) Two hundred fifty thousand pesos (P250,000.00) amount equal to one hundred percent (100%) of the
for those who have stayed in a foreign country for a ascertained duties, taxes and other charges thereon,
period of at least five (5) but not more than ten (10) years conditioned for the exportation thereof or payment of the
and have not availed of this privilege within five (5) years corresponding duties, taxes and other charges within
prior to returning resident's arrival; or three (3) months from the date of acceptance of the
(iii) One hundred fifty thousand pesos (P150,000.00) goods declaration: Provided, further, That the Bureau may
for those who have stayed in a foreign country for a extend the time for exportation or payment of duties,
period of less than five (5) years and have not availed of taxes and other charges for a term not exceeding three
this privilege within six (6) months prior to returning (3) months from the expiration of the original period.
resident's arrival. Personal and household effects and vehicles
Any amount in excess of the above-stated threshold belonging to foreign consultants and experts hired by, or
shall be subject to the corresponding duties and taxes rendering service to, the government, and their staff or
under this Act. personnel and families accompanying them or arriving
within a reasonable time before or after their arrival in the
Every three (3) years after the effectivity of this Act, Philippines, in quantities and of the kind necessary and
the Secretary of Finance shall adjust the amount herein suitable to the profession, rank or position of the person
stated to its present value using the CPI as published by importing said items, for their own use and not for barter,
the PSA. sale or hire:Provided, That the Bureau may require either
In addition to the privileges granted under the a written commitment or a security in an amount equal
immediately preceding paragraph, returning Overseas to one hundred percent (100%) of the ascertained duties,
Filipino Workers (OFWs) shall have the privilege to bring taxes and other charges thereon, upon the goods
in, tax and duty-free, home appliances and other classified under this subsection; conditioned for the
durables, limited to one of every kind once in a given exportation thereof or payment of the corresponding
calendar year accompanying them on their return, or duties, taxes and other charges within three (3) months
arriving within a reasonable time which, barring after the expiration of their term or contract: Provided,
unforeseen and fortuitous events, in no case shall exceed however, That the Bureau may extend the time for
sixty (60) days after every returning OFW's return upon exportation or payment of duties, taxes and other
presentation of their original passport at the port of entry: charges for a term not exceeding three (3) months from
Provided, That any amount in excess of FCA value of one the expiration of the original period;
hundred fifty thousand pesos (P150,000.00) for personal (i) Professional instruments and implements, tools of
and household effects or of the number of duty-free trade, occupation or employment, wearing apparel,
appliances as provided for under this section, shall be domestic animals, and personal and household effects
subject to the corresponding taxes and duties: Provided, belonging to persons coming to settle in the Philippines
further, That every three (3) years after the effectivity of or Filipinos or their families and descendants who are
this Act, the Secretary of Finance shall adjust the amount now residents or citizens of other countries, such parties
herein stated to its present value using the CPI as hereinafter referred to as overseas Filipinos, in quantities
published by the PSA; and of the class suitable to the profession, rank or
(g) Residents of the Philippines, OFWs or other position of the persons importing said items, for their
Filipinos while residing abroad or upon their return to the own use and not for barter or sale, accompanying such
Philippines shall be allowed to bring in or send to their persons, or arriving within a reasonable time: Provided,
families or relatives in the Philippines balikbayan boxes That the Bureau may, upon the production of satisfactory
which shall be exempt from applicable duties and taxes evidence that such persons are actually coming to settle
imposed under the NIRC of 1997, as amended: Provided, in the Philippines and that the goods are brought from
That balikbayan boxes shall contain personal and their former place of abode, exempt such goods from the
household effects only and shall neither be in commercial payment of duties and taxes: Provided, further, That
quantities nor intended for barter, sale or for hire and that vehicles, vessels, aircrafts, machineries and other similar
the FCA value of which shall not exceed one hundred fifty goods for use in manufacture, shall not fall within this
thousand pesos (P150,000.00): Provided, further, That classification and shall therefore be subject to duties,
every three (3) years after the effectivity of this Act, the taxes and other charges;
Secretary of Finance shall adjust the amount herein (j) Goods used exclusively for public entertainment,
stated to its present value using the CPI as published by and for display in public expositions, or for exhibition or
the PSA: Provided, finally, That residents of the competition for prizes, and devices for projecting pictures
Philippines, OFWs or other Filipinos can only avail of this and parts and appurtenances thereof, upon
privilege up to three (3) times in a calendar year. Any identification, examination, and appraisal and the giving
amount in excess of the allowable non-dutiable value of a security in an amount equal to one hundred percent
shall be subject to the applicable duties and taxes; (100%) of the ascertained duties, taxes and other charges
(1) For purposes of this Act, OFWs refer to holders of thereon, conditioned for exportation thereof or payment
valid passports duly issued by the Department of Foreign of the corresponding duties, taxes and other charges
Affairs (DFA) and certified by the Department of Labor within three (3) months from the date of acceptance of
and Employment (DOLE) or the Philippine Overseas the goods declaration: Provided, That the Bureau may



extend the time for exportation or payment of duties, excess of such vessel or aircraft supplies arriving from
taxes and other charges for a term not exceeding three foreign ports or airports shall be dutiable;
(3) months from the expiration of the original period; and (p) Goods and salvage from vessels recovered after a
technical and scientific films when imported by technical, period of two (2) years from the date of filing the marine
cultural and scientific institutions, and not to be exhibited protest or the time when the vessel was wrecked or
for profit:Provided, further, That if any of the films is abandoned, or parts of a foreign vessel or its equipment,
exhibited for profit, the proceeds therefrom shall be wrecked or abandoned in Philippine waters or elsewhere:
subject to confiscation, in addition to the penalty Provided, That goods and salvage recovered within the
provided under this Act; said period of two (2) years shall be dutiable;
(k) Goods brought by foreign film producers directly (q) Coffins or urns containing human remains, bones
and exclusively used for making or recording motion or ashes, used personal and household effects (not
picture films on location in the Philippines, upon their merchandise) of the deceased person, except vehicles,
identification, examination and appraisal and the giving the FCA value of which does not exceed one hundred fifty
of a security in an amount equal to one hundred percent thousand pesos (P150,000.00), upon identification as
(100%) of the ascertained duties, taxes and other charges such: Provided, That every three (3) years after the
thereon, conditioned for exportation thereof or payment effectivity of this Act, the value herein stated shall be
of the corresponding duties, taxes and other charges adjusted to its present value using the CPI as published
within three (3) months from the date of acceptance of by the PSA;
the goods declaration, unless extended by the District
Collector for another three (3) months; photographic and (r) Samples of the kind, in such quantity and of such
cinematographic films, underdeveloped, exposed outside dimension or construction as to render them unsaleable
the Philippines by resident Filipino citizens or by or of no commercial value; models not adapted for
producing companies of Philippine registry where the practical use; and samples of medicines, properly marked
principal actors and artists employed for the production "sample-sale punishable by law", for the purpose of
are Filipinos, upon affidavit by the importer and introducing new goods in the Philippine market and
identification that such exposed films are the same films imported only once in a quantity sufficient for such
previously exported from the Philippines. As used in this purpose by a person duly registered and identified to be
paragraph, the terms "actors" and "artists" include the engaged in that trade:Provided, That importations under
persons operating the photographic camera or other this subsection shall be previously authorized by the
photographic and sound recording apparatus by which Secretary of Finance: Provided, however, That importation
the film is made; of sample medicines shall have been previously
authorized by the Secretary of Health, and that such
(l) Importations for the official use of foreign samples are new medicines not available in the
embassies, legations and other agencies of foreign Philippines: Provided, further, That samples not previously
governments: Provided, That those foreign countries authorized or properly marked in accordance with this
accord like privileges to corresponding agencies of the section shall be levied the corresponding tariff duty.
Philippines. Goods imported for the personal or family
use of members and attachés of foreign embassies, Commercial samples, except those that are not
legations, consular officers and other representatives of readily and easily identifiable as in the case of precious
foreign governments: Provided, however, That such and semi-precious stones, cut or uncut, and jewelry set
privilege shall be accorded under special agreements with precious or semi-precious stones, the value of any
between the Philippines and the countries which they single importation of which does not exceed FCA value of
represent: Provided, further, That the privilege may be fifty thousand pesos (P50,000.00) upon the giving of a
granted only upon specific instructions of the Secretary security in an amount equal to the ascertained duties,
of Finance pursuant to an official request of the DFA on taxes and other charges thereon, conditioned for the
behalf of members or attachés of foreign embassies, exportation of said samples within three (3) months from
legations, consular officers and other representatives of the date of the acceptance of the goods declaration or in
foreign governments; default thereof, the payment of the corresponding duties,
taxes and other charges: Provided, That if the FCA value of
(m) Imported goods donated to or, for the account of any single consignment of such commercial samples
the Philippine government or any duly registered relief exceeds fifty thousand pesos (P50,000.00), the importer
organization, not operated for profit, for free distribution thereof may select any portion of the same not exceeding
among the needy, upon certification by the DSWD or the the FCA value of fifty thousand pesos (P50,000.00) for
Department of Education (DepED), or the Department of entry under the provision of this subsection, and the
Health (DOH), as the case may be; excess of the consignment may be entered in bond, or for
(n) Containers, holders and other similar receptacles consumption, as the importer may elect: Provided,
of any material including kraft paper bags for locally further, That every three (3) years after the effectivity of
manufactured cement for export, including corrugated this Act, the Secretary of Finance shall adjust the amount
boxes for bananas, mangoes, pineapples and other fresh herein stated to its present value using the CPI as
fruits for export, except other containers made of paper, published by the PSA.
paperboard and textile fabrics, which are of such (s) Animals, except race horses, and plants for
character as to be readily identifiable and/or reusable for scientific, experimental propagation or breeding, and for
shipment or transportation of goods shall be delivered to other botanical, zoological and national defense
the importer thereof upon identification, examination purposes: Provided, That no live trees, shoots, plants,
and appraisal and the giving of a security in an amount moss and bulbs, tubers and seeds for propagation
equal to one hundred percent (100%) of the ascertained purposes may be imported under this section, except by
duties, taxes and other charges thereon, within six (6) order of the government or other duly authorized
months from the date of acceptance of the goods institutions: Provided, however, That the free entry of
declaration; animals for breeding purposes shall be restricted to
(o) Supplies which are necessary for the reasonable animals of recognized breed, duly registered in the record
requirements of the vessel or aircraft in its voyage or flight or registry established for that breed, and certified as
outside the Philippines, including goods transferred from such by the Bureau of Animal Industry (BAI): Provided,
a bonded warehouse in any Customs District to any vessel further, That the certification of such record, and
or aircraft engaged in foreign trade, for use or pedigree of such animal duly authenticated by the proper
consumption of the passengers or its crew on board such custodian of such record or registry, shall be submitted to
vessel or aircraft as sea or air stores; or goods purchased the District Collector, together with the affidavit of the
abroad for sale on board a vessel or aircraft as saloon owner or importer that such animal is the animal
stores or air store supplies: Provided, That any surplus or described in said certificate of record and pedigree:


Provided, finally, That the animals and plants are certified Philippines exclusively as replacements or for the

by the NEDA as necessary for economic development; emergency repair thereof, upon proof satisfactory to the
(t) Economic, technical, vocational, scientific, District Collector that such spare parts shall be utilized to
philosophical, historical and cultural books or secure the safety, seaworthiness or airworthiness of the
publications, and religious books like Bibles, missals, vessel or aircraft, to enable it to continue its voyage or
prayer books, the Koran, Ahadith and other religious flight;
books of similar nature and extracts therefrom, hymnal (y) Goods exported from the Philippines for repair,
and hymns for religious uses: Provided, That those which processing or reconditioning without having been
may have already been imported but are yet to be substantially advanced in value, and subsequently
released by the Bureau at the effectivity of this Act may reimported in its original form and in the same state:
still enjoy the privilege herein provided upon certification Provided, That in case the reimported goods advanced in
by the DepED that such imported books and/or value, whether or not in their original state, the value
publications are for economic, technical, vocational, added shall be subject to the applicable duty rate of the
scientific, philosophical, historical or cultural purposes or tariff heading of the reimported goods; and
that the same are educational, scientific or cultural (z) Trailer chassis when imported by shipping
materials covered by the International Agreement on companies for their exclusive use in handling
Importation of Educational Scientific and Cultural containerized cargo, upon posting a security in an
Materials (IAESCM) signed by the President of the amount equal to one hundred percent (100%) of the
Philippines on August 2, 1952, or other agreements ascertained duties, taxes and other charges due thereon,
binding upon the Philippines. Educational, scientific and to cover a period of one (1) year from the date of
cultural materials covered by international agreements or acceptance of the entry, which period, for meritorious
commitments binding upon the Philippine government reasons, may be extended by the Commissioner from
so certified by the DepED. year to year, subject to the following conditions:
(u) Philippine goods previously exported from the (1) That they shall be properly identified and
Philippines and returned without having been advanced registered with the Land Transportation Office (LTO);
in value or improved in condition by any process of
manufacturing or other means, and upon which no (2) That they shall be subject to customs supervision
drawback or bounty has been allowed, including fee to be fixed by the District Collector and subject to the
instruments and implements, tools of trade, machinery approval of the Commissioner;
and equipment, used abroad by Filipino citizens in the (3) That they shall be deposited in the customs
pursuit of their business, occupation or profession; and territory when not in use; and
foreign goods previously imported when returned after
having been exported and loaned for use temporarily (4) That upon the expiration of the period prescribed
abroad solely for exhibition, testing and experimentation, above, duties and taxes shall be paid unless otherwise
for scientific or educational purposes; and foreign reexported.
containers previously imported which have been used in (aa) Any officer or employee of the DFA, including any
packing exported Philippine goods and returned empty if attaché, civil or military or member of the staff assigned
imported by or for the account of the person or to a Philippine diplomatic mission abroad by the
institution who exported them from the Philippines and Department or any similar officer or employee of other
not for sale, barter or hire subject to identification: departments assigned to any Philippine consular office
Provided, That Philippine goods falling under this abroad, or any AFP military personnel accorded
subsection upon which drawback or bounty have been assimilated diplomatic rank or on duty abroad who is
allowed shall, upon reimportation thereof, be subject to a returning from a regular assignment abroad, for
duty under this subsection equal to the amount of such reassignment to the home office, or who dies, resigns, or
drawback or bounty; is retired from the service, after the approval of this Act,
(v) Aircraft, equipment and machinery, spare parts, shall be exempt from the payment of all duties and taxes
commissary and catering supplies, aviation gas, fuel and on personal and household effects, including one (1)
oil, whether crude or refined except when directly or motor car which must have been ordered or purchased
indirectly used for domestic operations, and such other prior to the receipt by the mission or consulate of the
goods or supplies imported by and for the use of order of recall, and which must be registered in the name
scheduled airlines operating under congressional of the officer or employee: Provided, That this exemption
franchise: Provided, That such goods or supplies are not shall apply only to the value of the motor car and to the
locally available in reasonable quantity, quality and price aggregate assessed value of the personal and household
and are necessary or incidental to the proper operation of effects, the latter not to exceed thirty percent (30%) of the
the scheduled airline importing the same; total amount received by the officer or employee in salary
and allowances during the latest assignment abroad, but
(w) Machineries, equipment, tools for production, not to exceed four (4) years: Provided, however, That this
plans to convert mineral ores into saleable form, spare exemption shall not be availed of more than once every
parts, supplies, materials, accessories, explosives, four (4) years: Provided, further, That the officer or
chemicals, and transportation and communications employee concerned must have served abroad for not
facilities imported by and for the use of new mines and less than two (2) years.
old mines which resume operations, when certified to as
such by the Secretary of the Department of Environment The provisions of general and special laws, to the
and Natural Resources (DENR), upon the contrary notwithstanding, including those granting
recommendation of the Director of Mines and franchises, there shall be no exemption whatsoever from
Geosciences Bureau, for a period ending five (5) years the payment of duties except as provided for in this Act;
from the first date of actual commercial production of those granted to government agencies, instrumentalities
saleable mineral products:Provided, That such goods are or government-owned or -controlled corporations
not locally available in reasonable quantity, quality and (GOCCs) with existing contracts, commitments,
price and are necessary or incidental in the proper agreements, or obligations with foreign countries
operation of the mine; and aircrafts imported by requiring such exemption; those granted to international
agro-industrial companies to be used by them in their institutions, associations or organizations entitled to
agriculture and industrial operations or activities, spare exemption pursuant to agreements or special laws; and
parts and accessories thereof, when certified to as such those that may be granted by the President upon prior
by the Secretary of the Department of Agriculture (DA) or recommendation of the NEDA in the interest of national
the Secretary of the Department of Trade and Industry economic development.
(DTI), as the case may be;
(x) Spare parts of vessels or aircraft of foreign registry
engaged in foreign trade when brought into the



District Collector where the CBW or CFW is located,

CHAPTER 2 Customs Warehouses describing the premises, location, capacity and purpose
thereof.
SECTION 801. Establishment and Supervision of
Customs Bonded Warehouses. — When the business of Upon receipt of such application, the District
the port requires such facilities, the District Collector, Collector shall examine the premises of such proposed
subject to the approval of the Commissioner, shall warehouse, particularly its location, construction and
designate and establish warehouses for use as public and storage facilities. The District Collector, with the approval
private bonded warehouses, yards, or for other special of the Commissioner, may authorize the establishment of
purposes. All such warehouses and premises shall be customs warehouses, and accept the required security for
subject to the supervision of the District Collector who its operation and maintenance. The operator of such
shall impose such conditions as may be deemed CBW and CFW shall pay an annual supervision fee, as
necessary for the protection of the revenue, and of the determined by the Commissioner.
goods stored therein. In the exercise of the District SECTION 805. Responsibility of Operators. — The
Collector's supervisory functions herein and in the operator of a CBW or CFW shall comply with the customs
Bureau's implementation of this chapter, existing requirements on establishment, security, suitability and
contracts of private operators with appropriate management, including stock-keeping and accounting of
government agency or regulator, such as, but not limited the goods, of the CBW or CFW.
to, the Philippine Ports Authority (PPA), Subic Bay
Metropolitan Authority (SBMA) and Phividec Industrial Upon lawful demand, the operator of a CBW or CFW
Authority (PIA) and their respective authorities and shall allow authorized representatives of the Bureau
powers already granted by law pertinent to such access to the premises at a reasonable time, and to all
contracts, shall not be impaired or adversely affected. documents, books and records of accounts pertaining to
the operations of the CBW or CFW.
Goods manufactured in whole or in part of imported
materials, and intended for exportation, may be made In case of loss of the goods stored in a CBW or CFW
and manufactured in a bonded manufacturing due to operator's gross negligence or willful misconduct,
warehouse subject to the following conditions: the operator shall be liable for the payment of duties and
taxes due thereof. The government assumes no legal
(1) The manufacturer shall file sufficient security for responsibility over the safekeeping of goods stored in any
the faithful observance of all laws, rules and regulations customs warehouse, yard or premises.
applicable thereto;
SECTION 806. Customs Control over CBWs and
(2) The application for the establishment of bonded CFWs. — The Bureau shall, for customs purposes, exercise
warehouses must be made in writing and filed with the control over, direct and manage CBWs and CFWs
customs officer, describing the premises, the location, pursuant to Section 303 of this Act and likewise over the
and capacity of the same, and the purpose for which the goods thereat pursuant to Section 301 of this Act:
building is to be used, pursuant to Section 804 of this Act; Provided, That the Bureau shall not be liable for any loss
(3) From the receipt of the application, the customs or damage of the goods stored for safekeeping in any
officer shall examine the premises, evaluate its location, CBW, CFW, yard or premises.
construction, and means provided for the safekeeping of SECTION 807. Discontinuance of CBW and CFW. —
the goods; The use of any CBW and CFW may be discontinued by
(4) The customs officer may authorize the the District Collector when conditions so warrant, or upon
establishment of the customs bonded warehouse, and receipt of a written request from the operator thereof:
accept a bond for its operation and maintenance if the Provided, That all the requirements of the laws and
applicant was compliant with the prescribed regulations have been complied with by said operator.
requirements; and Where dutiable goods are stored in such premises, the
same must be removed at the risk and expense of the
(5) The operator of the bonded warehouse shall pay operator: Provided, however, That the premises shall not
an annual supervision fee in an amount to be fixed by the be relinquished, and its use shall not be discontinued
Commissioner. until after a careful examination of the account of the
SECTION 802. Types of Customs Bonded warehouse shall have been made. Discontinuance of the
Warehouses (CBWs). — Customs bonded warehouses use of any warehouse shall be effective upon approval
may be classified as either manufacturing or thereof by the District Collector who shall, within ten (10)
nonmanufacturing. days, inform the Commissioner of such action in writing.
Manufacturing customs bonded warehouse may be Notice of discontinuance made by the operator shall
of the following types: (a) miscellaneous customs bonded not result in the discharge from any duties, taxes, fees
warehouse; (b) customs common bonded warehouse; or and other charges imposed on dutiable goods in said
(c) industry-specific bonded warehouse. warehouse.
Nonmanufacturing customs bonded warehouse SECTION 808. Warehousing Security on Goods
include: (a) public bonded warehouse; (b) private bonded Stored in CBWs. — For goods declared in the entry for
warehouse; or (c) other customs facilities. warehousing in CBWs, the District Collector shall require
the importer to post a sufficient security equivalent to the
SECTION 803. Types of Customs Facilities and
computed duties, taxes and other charges, conditioned
Warehouses (CFWs). — Customs facilities and
upon the withdrawal of the goods within the period
warehouses shall include:
prescribed by Section 811 of this Act or the payment of
(a) Container yard; duties, taxes and other charges and compliance with all
(b) Container freight station; importation requirements.
(c) Seaport warehouses; and SECTION 809. Withdrawal of Goods from CBWs. —
Imported goods shall be withdrawn from the CBWs when
(d) Airport warehouses. the necessary withdrawal permit has been filed, together
Subject to consultation with the NEDA and the DTI, with any related document required by any provision of
and based on prevailing economic circumstances, the this Act and other regulations.
Secretary of Finance may, upon the recommendation of Goods entered under sufficient security as provided
the Commissioner, create or dissolve certain types of in Section 1507 of this Act may be withdrawn at any time
warehouses. for consumption, transit, or exportation. The withdrawal
SECTION 804. Application for Operation of a must be made by the CBW operator or its duly
Customs Warehouse. — Application for the authorized representative.
establishment of CBW and CFW shall be filed with the


SECTION 810. Release of Goods from CFWs. — The implementing rules and regulations on the
Imported goods shall be released when the goods transit of goods admitted into, exported from, withdrawn
declaration is electronically lodged, together with any into the customs territory, and moved between free zones
related document required by any provision of this Act shall be formulated and issued jointly by the Bureau and
and other regulations. All goods entered into the CFWs the free zone authorities.
shall be subject to the filing of a goods declaration within SECTION 817. Coordination with Free Zone
the period specified under Section 407 of this Act. Authority. — To ensure compliance with customs laws
SECTION 811. Period of Storage in CBWs. — Goods and regulations, the Bureau shall coordinate with the
entered for warehousing may remain in a CBW for a governing authority of the free zone.
maximum period of one (1) year from the time of its
arrival thereat. For perishable goods, the storage period
shall be three (3) months from the date of arrival, CHAPTER 4 Stores
extendible for valid reasons, and upon written request, to SECTION 818. Stores for Consumption. — Stores for
another three (3) months. Goods not withdrawn after the consumption shall include:
expiration of the prescribed period shall be deemed as
(a) Goods intended for use by the passengers and the
abandoned, as provided under Section 1129 of this Act.
crew on board vessels, aircrafts, or trains, whether or not
The Commissioner shall, in consultation with the sold; and
Secretary of Trade and Industry, establish a reasonable
(b) Goods necessary for the operation and
storage period limit beyond one (1) year for bonded goods
maintenance of vessels, aircrafts, or trains including fuel
for manufacturing and intended for export, the
and lubricants but excluding spare parts and equipment
processing into finished products of which requires a
which are either on board upon arrival or are taken on
longer period based on industry standard and practice,
board during the stay in the customs territory of vessels,
subject to the approval of the Secretary of Finance.
aircrafts, or trains used, or intended to be used, in
SECTION 812. Exemption from Duty of Goods in international traffic for the transport of persons for
CBWs. — Goods duly entered for warehousing in CBWs remuneration or for the industrial or commercial
shall be exempt from duty and tax within the allowed transport of goods, whether or not for remuneration.
period for storage unless withdrawn for consumption,
SECTION 819. Stores to be Taken Away. — For
exportation or transit to a free zone or another CBW, in
purposes of this chapter, "stores to be taken away" means
which case, such withdrawal will be subject to the
goods for sale to the passengers and the crew of vessels,
applicable rules and regulations on the liquidation of the
aircrafts, or trains with a view to being landed, which are
warehousing entry.
either on board upon arrival or are taken on board during
SECTION 813. Records to be Kept by CBW Operators. the stay in the customs territory of vessels, aircrafts, or
— An account shall be kept by the Bureau of all goods trains used, or intended to be used, in international traffic
delivered to a CBW, and a report shall be made by the for the transport of persons for remuneration or for the
CBW operator containing a detailed statement of all industrial or commercial transport of goods, whether or
imported goods entered and withdrawn from the CBW. not for remuneration.
The Bureau shall specify the format of the report and may
SECTION 820. Exemption from Duties and Taxes of
require electronic submission.
Stores. — Customs treatment of stores should apply
All documents, books, and records of accounts uniformly, regardless of the country of registration or
concerning the operation of any CBW shall, upon ownership of vessels, aircraft, or trains. Stores which are
demand, be made available to the District Collector or the carried in a vessel, aircraft, or train arriving in the customs
representative of the District Collector for examination or territory shall be exempted from import duties and taxes
audit. For record purposes, all documents shall be kept provided that they remain on board. Stores for
for three (3) years. consumption by the passengers and the crew imported
as provisions on international express vessels, aircrafts, or
trains shall be exempted from import duties and taxes:
CHAPTER 3 Free Zones Provided, That:
SECTION 814. When Goods are Admitted and (a) Such goods are purchased only in the countries
Withdrawn. — Imported goods shall be admitted into a crossed by the international vessels and aircrafts in
free zone when the goods declaration, together with question; and
required documents, as required by existing laws and
regulations, are electronically lodged with the Bureau (b) Any duties and taxes chargeable on such goods in
and other relevant government authorities at the time of the country where they were purchased are paid.
admission. Stores necessary for the operation and maintenance
Imported goods shall be withdrawn from the free of vessels, aircrafts, or trains which are on board these
zone for entry to the customs territory when the goods means of transport shall be exempted from import duties
declaration is electronically lodged, together with and taxes: Provided, further, That they remain on board
required documents at the time of the withdrawal from while these means of transport are in the customs
the free zone. territory. The Bureau shall allow the issue of stores for use
on board during the stay of a vessel in the customs
SECTION 815. Exemption from Duty and Tax of territory in such quantities as the customs authority
Goods in Free Zones. — Unless otherwise provided by law deems reasonable with due regard to the number of the
and in accordance with the respective laws, rules and passengers and the crew and to the length of the stay of
regulations of the free zone authorities, goods admitted the vessel in the customs territory. The Bureau should
into a free zone shall not be subject to duty and tax. allow the issue of stores for use on board by the crew
SECTION 816. Movement of Goods into and from while the vessel is undergoing repairs in a dock or
Free Zones. — The entry of goods into a free zone, shipyard: Provided, finally, That the duration of stay in a
whether directly or through the customs territory, shall be dock or shipyard is considered to be reasonable.
covered by the necessary goods declaration for admission When an aircraft is to land at one or more airports in
or transit. Withdrawal from the free zone into the the customs territory, the Bureau should allow the
customs territory shall be covered by the necessary goods issuance of stores for consumption on board both during
declaration for consumption or warehousing. the stay of the aircraft at such intermediate airports and
Transfer of goods from one free zone into another during its flight between such airports.
free zone shall likewise be covered by the necessary The Bureau shall require a carrier to take appropriate
transit permit. measures to prevent any unauthorized use of the stores
including sealing of the stores, when necessary. It shall


require the removal of stores from the vessel, aircraft, or regulations as may be prescribed by the Commissioner
trains for storage elsewhere during its stay in the customs with the approval of the Secretary of Finance.
territory only when the Bureau considers it necessary. (C) On Goods Made from Imported Materials. — Upon
Vessels, aircrafts, or trains which depart for an exportation of goods manufactured or produced in the
ultimate foreign destination shall be entitled to take on Philippines, including the packing, covering, putting up,
board, exempted from duties and taxes, the following: marking or labeling thereof either in whole or in part of
(1) Stores in such quantities as the Bureau deems the imported materials for which duties have been paid, a
reasonable with due regard to the number of the refund or tax credit shall be allowed for the duties paid on
passengers and the crew, to the length of the voyage or the imported materials so used including the packing,
flight, and to any quantity of such stores already on board; covering, putting up, marking or labeling thereof, subject
and to the following conditions:
(2) Stores necessary for the operation and (1) The actual use of the imported materials in the
maintenance of a vessel, aircraft, or train, in such production or manufacture of the goods exported with
quantities as are deemed reasonable for operation and their quantity, value, and amount of duties paid thereon,
maintenance during the voyage or flight, after due regard should be established satisfactorily;
of the quantity of such stores already on board. (2) The duties refunded or credited shall not exceed
Replenishment of stores that are exempted from one hundred percent (100%) of duties paid on the
duties and taxes shall be allowed for vessels, aircrafts, or imported materials used;
trains which have arrived in the customs territory, and (3) There is no determination by the NEDA of the
which need to replenish their stores for the journey to requirement for certification on nonavailability of
their final destination in the customs territory, subject to locally-produced or manufactured competitive
the same conditions provided in this Chapter. substitutes for the imported materials used at the time of
SECTION 821. Goods Declaration for Stores. — When importation;
a declaration concerning stores on board vessels arriving (4) The exportation shall be made within one (1) year
in the customs territory is required by the Bureau, the after the importation of materials used and claim of
information required shall be kept to the minimum and refund or tax credit shall be filed within six (6) months
as may be necessary for customs control. from the date of exportation; and
The quantities of stores which are supplied to vessels (5) When two or more products result from the use of
during its stay in the customs territory should be the same imported materials, an apportionment shall be
recorded on the required goods declaration concerning made on its equitable basis.
stores. SECTION 901. Payment of Drawbacks. — Eligible
The Bureau shall not require the presentation of a claims for refund or tax credit shall be paid or granted by
separate declaration of remaining stores on board a the Bureau to claimants within sixty (60) days after
vessel, an aircraft or a train. No separate declaration receipt of properly accomplished claims: Provided, That a
concerning stores should be required upon departure of registered enterprise under Republic Act No. 5186,
vessels from the customs territory. When a declaration is otherwise known as the "Investment Incentives Act", or
required concerning stores taken on board the vessels or Republic Act No. 6135, otherwise known as the "Export
aircrafts upon departure from the customs territory, the Incentives Act of 1970", which has previously enjoyed tax
information required shall be kept to the minimum as credits based on customs duties paid on imported raw
may be necessary for customs control. materials and supplies, shall not be entitled to a
When a vessel, aircraft, or train arrives in the customs drawback under this section with respect to the same
territory, stores on board shall: importation subsequently processed and reexported.
(a) Be cleared for consumption or placed under The Secretary of Finance may, upon the
another customs procedure, subject to compliance with recommendation of the Commissioner, promulgate rules
the conditions and formalities applicable in each case; or and regulations allowing partial payments of drawbacks
pursuant to this section.
(b) Subject to prior authorization by the Bureau, be
transferred respectively to another vessel, aircraft, or train SECTION 902. Prescription of Drawback Claim. — A
assigned to an international route. claim and application for a drawback shall prescribe if it is
not filed within one (1) year from the date of importation
in case of Section 900, paragraphs (A) and (B) and within
TITLE IX Duty Drawback and Refund one (1) year from the date of exportation in the case of
Section 900, paragraph (C), subject to such rules and
regulations as may be issued by the Commissioner, upon
CHAPTER 1 Duty Drawback approval of the Secretary of Finance.
SECTION 900. Basis of Duty Drawback. — (A) On
Fuel Used for Propulsion of Vessels. — On all fuel CHAPTER 2 Refund and Abatement
imported into the Philippines used for propulsion of
SECTION 903. Refund of Duties and Taxes. — Refund
vessels engaged in trade with foreign countries, or in the
shall be granted where it is established that duties and
coastwise trade, a refund or tax credit shall be allowed not
taxes have been overcharged as a result of an error in the
exceeding ninety-nine percent (99%) of the duty imposed
assessment or goods declaration.
by law upon such fuel, which shall be paid or credited
under such rules and regulations as may be prescribed by Where permission is given by the Bureau for goods
the Commissioner with the approval of the Secretary of originally declared for a customs procedure with payment
Finance. of duties and taxes to be placed under another customs
procedure, a refund shall be made of any duties and taxes
(B) On Petroleum Oils and Oils Obtained from
charged in excess of the amount due under the new
Bituminous Minerals, Crude, Eventually Used for
procedure, subject to such regulation issued for the
Generation of Electric Power and for the Manufacture of
purpose.
City Gas. — On petroleum oils and oils obtained from
bituminous materials, crude oil imported by non-electric A refund shall not be granted if the amount of duties
utilities, sold directly or indirectly, in the same form or and taxes involved is less than five thousand pesos
after processing, to electric utilities for the generation of (P5,000.00): Provided, That the Secretary of Finance, in
electric power and for the manufacture of city gas, a consultation with the Commissioner, may adjust the
refund or tax credit shall be allowed not exceeding fifty minimum amount specified in this Act, taking into
percent (50%) of the duty imposed by law upon such oils, account the CPI as published by the PSA.
which shall be paid or credited under such rules and



SECTION 904. Abatement of Duties and Taxes. — (b) The goods have not been worked, repaired, or
When goods have not yet been released for consumption used in the country to which they were exported, and are
or have been placed under another customs procedure, reimported within a reasonable time.
provided that no other offense or violation has been Use of the goods shall, however, not hinder the
committed, the declarant shall neither be required to pay refund if such use was indispensable to discover the
the duties and taxes nor be entitled to refund thereof in defects or other circumstances which caused the
any of the following cases: reexportation or reimportation of the goods.
(a) When, at the request of the declarant, the goods As an alternative to reexportation or reimportation,
are abandoned, or as determined by the Bureau, the the goods may be expressly abandoned or destroyed or
goods are destroyed or rendered commercially valueless rendered commercially valueless under customs control
while under customs control. Any cost herein incurred as the Bureau may decide. In such case, the importer
shall be borne by the declarant; shall not be entitled to an abatement or a refund if it does
(b) When goods are destroyed or irrecoverably lost by not defray the costs of such abandonment, destruction,
accident or force majeure, the remaining waste or scrap or rendition.
after destruction, if taken into consumption, shall be SECTION 910. Abatement of Duty on Dead or
subject to the duties and taxes that would be applicable Injured Animals. — Where it is certified, under pain of
on such waste or scrap if imported in same state; and penalty for falsification or perjury, and upon production of
(c) When there are shortages due to the nature of the proof satisfactory to the Bureau that an animal subject of
goods. importation dies or suffers injury before arrival, or while in
SECTION 905. Abatement for Damage Incurred customs custody, the duty due thereon shall be abated
during Voyage. — Except as otherwise provided, no provided that its carcass on board or in customs custody
abatement of duties shall be made on account of is removed in the manner required by the Bureau and at
damage incurred or deterioration suffered during the the expense of the importer.
voyage of importation; and duties will be assessed on the SECTION 911. Investigation Required in Case of
actual quantity imported as determined by the customs Abatements and Refunds. — The Customs Officer
officers concerned. concerned shall, in all cases of abatement or refund of
SECTION 906. Abatement or Refund of Duty on duties, submit an examination report as to any fact
Missing Package. — When any package appearing on discovered which indicates any discrepancy and cause
the manifest or bill of lading or airway bill is missing, an the corresponding adjustment on the goods declaration.
abatement or refund of the duty shall be made if it is SECTION 912. Refund Arising from Correction of
certified by the importer or consignee, under pain of Errors. — Manifest clerical errors made on an invoice or
penalty for falsification or perjury, and upon production of entry, errors in return of weight, measure and gauge,
proof satisfactory to the Collector concerned, that the when duly certified under penalties of falsification or
package in question has not been unlawfully imported perjury by the surveyor or examining officer when there
into the Philippines. are such officers at the port, and errors in the distribution
SECTION 907. Abatement or Refund for Deficiency of charges on invoices not involving any question of law
in Contents of Packages. — If, upon opening of any and certified under penalties of falsification or perjury by
package, a deficiency in the quantity of the goods is the examining customs officer, may be corrected in the
found to exist based upon the invoice, such deficiency computation of duties, if such errors are discovered
shall be certified, under pain of penalty for falsification or before the payments of duties, or if discovered within one
perjury, by the customs officers concerned and upon the (1) year after release from customs custody of imported
production of proof showing that the shortage occurred goods upon written request and notice of error from the
before the arrival of the goods in the Philippines. Upon importer, or upon statement of error certified by the
sufficient proof thereof, the proper abatement or refund District Collector.
of the duty shall be made. For the purpose of correcting errors specified in the
SECTION 908. Abatement or Refund of Duties on next preceding paragraph, the Bureau is authorized to
Goods Lost or Destroyed after Arrival. — The Bureau make refunds within the statutory time limit.
may abate or refund the amount of duties accruing or SECTION 913. Claims for Refund. — All claims and
paid on any goods that have been lost due to injury, theft, application for refund of duties and taxes shall be made
destruction through fire or through any other causes, in writing and filed with the Bureau within twelve (12)
upon satisfactory proof of the same, under any of the months from the date of payment of duties and taxes.
following circumstances: If, as a result of the refund of duties, a corresponding
(a) While within the territory of any port of entry, prior refund of internal revenue taxes on the same importation
to unloading under the Bureau's supervision; becomes due, the Bureau shall cause the refund of
(b) While remaining in customs custody after internal revenue taxes in favor of the importer after
unloading; issuance of a certification from the Commissioner of
Internal Revenue, when applicable.
(c) While in transit from the port of entry to any port
in the Philippines; and The importer may file an appeal of a denial of a claim
for refund or abatement, whether it is a full or partial
(d) While released under sufficient security for export denial, with the Commissioner within thirty (30) days
except in case of loss by theft. from the date of the receipt of the denial. The
SECTION 909. Abatement and Refund of Defective Commissioner shall render a decision within thirty (30)
Goods. — Under conditions to be set by the days from the receipt of all the necessary documents
Commissioner, and with the approval of the Secretary of supporting the application. Within thirty (30) days from
Finance, an abatement and refund shall be granted on receipt of the decision of the Commissioner, the case may
imported or exported goods which are found defective or also be appealed to the CTA.
otherwise not in accordance with the agreed Notwithstanding the provisions in the preceding
specifications at the time of importation or exportation paragraphs, the filing of claims for refund of national
and are returned either to the supplier or to another internal revenue taxes shall be governed by the provisions
person designated by the supplier, subject to the provided under the NIRC of 1997, as amended.
following conditions:
(a) The goods have not been worked, repaired, or
used in the country of importation, and are reexported TITLE X Post Clearance Audit
within a reasonable time; and SECTION 1000. Audit and Examination of Records.
— Within three (3) years from the date of final payment of



duties and taxes or customs clearance, as the case may (i) Imports goods into the Philippines or withdraws
be, the Bureau may conduct an audit examination, such goods into the Philippine customs territory for
inspection, verification, and investigation of records consumption or warehousing; files a claim for refund or
pertaining to any goods declaration, which shall include drawback; or transports or stores such goods carried or
statements, declarations, documents, and electronically held under security; or
generated or machine readable data, for the purpose of (ii) Knowingly causes the importation or
ascertaining the correctness of the goods declaration and transportation or storage of imported goods referred to
determining the liability of the importer for duties, taxes above, or the filing of refund or drawback claim.
and other charges, including any fine or penalty, to
ensure compliance with this Act. (2) An agent of any party described in paragraph (1);
or
SECTION 1001. Scope of the Audit. — The audit of
importers shall be conducted when firms are selected by (3) A person whose activities require the filing of a
a computer-aided risk management system, the goods declaration.
parameters of which are to be based on objective and A person ordering imported goods from a local
quantifiable data, subject to the approval of the Secretary importer or supplier in a domestic transaction shall be
of Finance upon recommendation of the Commissioner. exempted from the requirements imposed by this
The criteria for selecting firms to be audited shall include: section unless:
(a) Relative magnitude of customs revenue to be (1) The terms and conditions of the importation are
generated from the firm; controlled by the person placing the order; or
(b) The rates of duties of the firm's imports; (2) The circumstances and nature of the relationship
(c) The compliance track records of the firm; and between the person placing the order and the importer
or supplier are such that the former may be considered as
(d) An assessment of the risk to revenue of the firm's the beneficial or true owner of the imported goods; or
import activities.
(3) The person placing the order had prior knowledge
SECTION 1002. Access to Records. — Any authorized that they will be used in the manufacture or production
officer of the Bureau shall be given by the importer and of the imported goods.
customs broker full and free access to the premises
where the records are kept, to conduct audit (b) All parties engaged in customs clearance and
examination, inspection, verification, and investigation of processing are required to keep at their principal place of
those records relevant to such investigation or inquiry. business, in the manner prescribed by regulations to be
issued by the Commissioner and for a period of three (3)
A copy of any document certified by or on behalf of years from the date of filing of the goods declaration,
the importer is admissible in evidence in all courts as if it copies of the abovementioned records covering the
were the original copy. transactions handled.
A customs officer is not entitled to enter the premises (c) Locators or persons authorized to bring imported
under this section unless, before so doing, the officer goods into free zones, such as the special economic
produces to the person occupying or apparently in zones and free ports, are required to keep subject-records
charge of the premises written evidence of the fact of of all its activities, including in whole or in part, records on
being duly authorized. The person occupying or imported goods withdrawn from said zones into the
apparently in charge of the premises entered by an customs territory for a period of three (3) years from the
officer shall provide the officer with all reasonable date of filing of the goods declaration.
facilities and assistance for the effective exercise of the
officer's authority under this section. Failure to keep the records required by this Act shall
constitute a waiver of this right to contest the results of
Unless otherwise provided herein or in other the audit based on records kept by the Bureau.
provisions of law, the Bureau may, in case of
disobedience, invoke the aid of the proper regional trial SECTION 1004. Power of the Commissioner to
court within whose jurisdiction the matter falls. The court Obtain Information and Issue Summons. — For the
may punish contumacy or refusal as contempt. In effective implementation of the post clearance audit
addition, the fact that the importer or customs broker functions of the Bureau, the Commissioner is hereby
denies the authorized customs officer full and free access authorized to:
to importation records during the conduct of a post (a) Obtain on a regular basis from any person, in
clearance audit shall create a presumption of inaccuracy addition to the person who is the subject of a post
in the transaction value declared for their imported goods clearance audit or investigation, or from any office or
and constitute grounds for the Bureau to conduct a officer of the national and local governments,
reassessment of such goods. government agencies and instrumentalities, including
In addition, the imposition of the appropriate criminal the BSP and GOCCs, any information such as costs and
sanctions provided under this Act and other volume of production, receipts or sales and gross income
administrative sanctions may be concurrently invoked of taxpayers, and the names, addresses, and financial
against contumacious importers, including the statements of corporations, regional operating
suspension of the delivery or release of their imported headquarters of multinational companies, joint accounts,
goods. associations, joint ventures or consortia and registered
partnerships, and their members, whose business
SECTION 1003. Requirement to Keep Records. — (a) operations or activities are directly or indirectly involved
All importers are required to keep at their principal place in the importation or exportation of imported goods or
of business, in the manner prescribed by regulations to products manufactured from imported component
be issued by the Commissioner and for a period of three materials;
(3) years from the date of final payment of duties and
taxes or customs clearance, as the case may be, all (b) Summon the person liable for duties and taxes or
records pertaining to the ordinary course of business and required to file goods declaration, or any officer or
to any activity or information contained in the records employee of such person, or any person having
required by this title in connection with any such activity. possession, custody, or care of the books of accounts and
other accounting records containing entries relating to
For purposes of the post clearance audit and Section the business of the person liable for duties and taxes, or
1005 of this Act, the term importer shall include the any other person, to appear before the Commissioner or
following: the duly authorized representative at a time and place
(1) Importer-of-record or consignee, owner or specified in the summons and to produce such books,
declarant, or a party who: papers, records, or other data, and to give testimony;


(c) Take such testimony of the person concerned, thirty (30) days from receipt of a properly documented
under oath, as may be relevant or material to such application.
inquiry; or When a declared tariff classification of goods, not
(d) Obtain information from banks or other financial subject of a pending application for advance ruling, is in
institutions on commercial documents and records dispute, the importer, exporter, or the Bureau shall
pertaining specifically to payments relevant to import submit the matter to the Commission for a ruling,
transaction. without prejudice to the application of Section 1106 of this
The provisions of the foregoing paragraphs Act on "protest": Provided, That such rulings of the
notwithstanding, nothing in this section shall be Commission on commodity classification shall be binding
construed as granting the Commissioner the authority to upon the Bureau, unless the Secretary of Finance shall
inquire into bank deposits of persons or entities rule otherwise.
mentioned in this Title. SECTION 1101. Valuation Ruling. — An importer or
SECTION 1005. Failure to Pay Correct Duties and exporter may file a written application for an advance
Taxes on Imported Goods. — Any person who, after valuation ruling on the proper application of a specific
being subjected to post clearance audit and examination method on customs valuation of specific goods as
as provided in Section 1000 of this Act, is found to have prescribed in Title VII, Chapter 1 of this Act.
incurred deficiencies in duties and taxes paid for The application for a valuation ruling shall be filed
imported goods, shall be penalized according to two (2) with the Commissioner who shall issue a ruling within
degrees of culpability subject to any mitigating, thirty (30) days from submission of the application form
aggravating, or extraordinary factors that are clearly and supporting documents as may be required by rules
established by available evidence as described hereunder: and regulations.
(a) Negligence. — When a deficiency results from an When the valuation method of goods not subject of
offender's failure, through an act or acts of omission or an application for advance valuation ruling or the
commission, to exercise reasonable care and competence declared customs value is in dispute, the matter shall be
in ensuring that a statement made is correct, the resolved in accordance with Section 1106 of this Act on
offender shall be charged for committing negligence, "protest".
and, if found guilty shall be penalized with a fine SECTION 1102. Ruling on the Rules of Origin. — An
equivalent to one hundred twenty-five percent (125%) of importer or exporter may file a written application for a
the revenue loss: Provided, That subject to Section 108 of ruling on whether the goods qualify as originating under
this Act, no substantial penalty shall be imposed on an the rules of origin of the applicable preferential trade
inadvertent error amounting to simple negligence, as agreement. The application for an advance ruling on
defined by rules promulgated by the Secretary of origin shall be filed with the Commissioner who shall act
Finance, upon recommendation of the Commissioner; on the application within thirty (30) days from receipt of
(b) Fraud. — When the material false statement or act the application and supporting documents as may be
in connection with the transaction was committed or required by rules and regulations.
omitted knowingly, voluntarily and intentionally, as When the declared origin of the goods, not subject of
established by clear and convincing evidence, the a request for advance ruling on origin, is in dispute, the
offender who is charged for committing fraud and is matter shall be resolved in accordance with Section 1106
found guilty thereof, shall be penalized with a fine of this Act on "protest".
equivalent to six (6) times of the revenue loss and/or
imprisonment of not less than two (2) years, but not more SECTION 1103. Conditions for Application and Effect
than eight (8) years. of Advance Ruling. — An application for an advance
ruling shall cover only one (1) product or item. The
The decision of the Commissioner, upon proper application for advance ruling shall be filed at least ninety
hearing, to impose penalties as prescribed in this section (90) days before the importation or exportation of the
may be appealed in accordance with Section 1104 of this product or item, as the case may be.
Act.
SECTION 1104. Administrative and Judicial Appeals.
SECTION 1006. Records to be Kept by the Bureau. — — An aggrieved party may, within thirty (30) days from
The Bureau shall keep a database of importer and broker receipt of an adverse ruling or decision, appeal the same
profiles which shall include a record of audit results and to the CTA without prejudice to the authority of the
the following information and papers: Secretary of Finance to review decisions adverse to the
(a) Articles of Incorporation; government in accordance with Sections 1127 and 1128 of
(b) The company structure, which shall include, but this Act, as the case may be.
not limited to, incorporators and board of directors, key SECTION 1105. Implementing Rules and
officers, and organizational structure; Regulations. — The Secretary of Finance, upon the
(c) Key importations; recommendation of the Bureau and the Commission,
shall promulgate rules and regulations to implement the
(d) Privileges enjoyed; preceding provisions on advance ruling.
(e) Penalties; and
(f) Risk categories. CHAPTER 2 Protest
The Bureau shall furnish the BIR and the DOF a copy SECTION 1106. Protest. — When a ruling or decision
of the final audit results within thirty (30) days from the of the District Collector or customs officer involving goods
issuance thereof. 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
TITLE XI Administrative and Judicial Procedures 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
CHAPTER 1 Advance Ruling and Dispute fifteen (15) days thereafter, a written protest setting forth
Settlement the objection to the ruling or decision in question and the
SECTION 1100. Classification Ruling. — An importer reasons therefore.
or exporter may file a written application for an advance Subject to the approval of the Secretary of Finance,
ruling on the tariff classification of goods with the the Commissioner shall provide such rules and
Commission. The Commission shall render a ruling within regulations as to the requirement for payment or
nonpayment of the disputed amount and in case of


nonpayment, the release of the importation under from customs custody. Under no circumstances shall the
protest upon posting of sufficient security. suspension of the processing of goods declaration be
SECTION 1107. Protest Exclusive Remedy in allowed except through an alert order issued by an
Protestable Case. — In all cases subject to protest, the authorized customs officer.
interested party who desires to have the action of the The costs of the physical inspection shall be borne by
District Collector reviewed, shall file a protest as provided the Bureau: Provided, That such cost shall be reimbursed
in Section 1106 of this Act, otherwise the action of the by the owner prior to the release of the goods if the
District Collector shall be final and conclusive. physical inspection results in the assessment of
SECTION 1108. Form and Scope of Protest. — A additional duties or taxes or the issuance of a warrant of
protest shall be filed in accordance with the prescribed seizure.
rules and regulations promulgated under this section. It The Commissioner shall be notified of the
shall specify the particular decision or ruling of the recommendation by the alerting officer within
District Collector for which protest is being made, and twenty-four (24) hours from the issuance of the alert
shall indicate the particular ground or grounds upon order. Alert orders shall be dated and assigned a unique
which the protesting party bases the claim for relief. The reference number in series which shall be the basis for
scope of a protest shall be limited to the particular goods reporting to and monitoring by the Commissioner and
subject of a goods declaration, but any number of issues the Secretary of Finance.
may be raised in a protest with reference to the goods The Bureau shall create a central clearing house for
declaration constituting the subject matter of the protest. alert orders and shall submit reports quarterly on the
SECTION 1109. Samples to be Furnished by status thereof.
Protesting Parties. — If the nature of the goods permit, SECTION 1112. Alert Orders on Perishable Goods. —
importers filing protests involving questions of fact must, When the subject of the alert order are perishable goods,
upon demand, present to the Commissioner samples of the Bureau shall attach to the recommendation a
the goods which are the subject matter of the protest. certificate stating that the goods are perishable.
The samples of the goods shall be verified by the customs
officer who made the classification against which the
protests are filed. CHAPTER 4 Seizure and Forfeiture
SECTION 1110. Decision in Protest. — When a protest SECTION 1113. Property Subject to Seizure and
is filed in proper form, the Commissioner shall render a Forfeiture. — Property that shall be subject to seizure and
decision within thirty (30) days from receipt of the forfeiture include:
protest. In case the protest is sustained, in whole or in
(a) Any vehicle, vessel or aircraft, including cargo,
part, the appropriate order shall be made, and the entry
which shall be used unlawfully in the importation or
reassessed, if necessary.
exportation of goods or in conveying or transporting
smuggled goods in commercial quantities into or from
CHAPTER 3 Alert Orders any Philippine port or place. The mere carrying or holding
on board of smuggled goods in commercial quantities
SECTION 1111. Alert Orders. — Alert orders are written shall subject such vehicle, vessel, aircraft, or any other
orders issued by customs officers as authorized by the craft to forfeiture: Provided, That the vehicle, vessel,
Commissioner on the basis of derogatory information aircraft or any other craft is not used as a common carrier
regarding possible noncompliance with this Act. An alert which has been chartered or leased for purposes of
order will result in the suspension of the processing of the conveying or transporting persons or cargo;
goods declaration and the conduct of physical or
non-intrusive inspection of the goods within forty-eight (b) Any vessel engaging in the coastwise trade which
(48) hours from issuance of the order. Within forty-eight shall have on board goods of foreign growth, produce, or
(48) hours or, in the case of perishable goods, within manufacture in excess of the amount necessary for sea
twenty-four (24) hours from inspection, the alerting stores, without such goods having been properly entered
officer shall recommend the continuance of processing of or legally imported;
goods in case of a negative finding, or issuance of a (c) Any vessel or aircraft into which shall be
warrant of seizure and detention if a discrepancy transferred cargo unloaded contrary to law prior to the
between the declaration and actual goods is found. The arrival of the importing vessel or aircraft at the port of
Bureau's information system shall immediately reflect the destination;
imposition or lifting of an alert order.
(d) Any part of the cargo, stores, or supplies of a vessel
Derogatory information shall indicate the violations or aircraft arriving from a foreign port which is unloaded
and other necessary specifics thereof. For this purpose, before arrival at the vessel's or aircraft's port of
the following shall not be considered derogatory destination and without authority from the customs
information: officer; but such cargo, ship, or aircraft stores and supplies
(a) General allegations of undervaluation; shall not be forfeited if such unloading was due to
accident, stress of weather, or other necessity and is
(b) General allegations of misclassification without subsequently approved by the District Collector;
providing the appropriate tariff heading and duty of the
shipment to be alerted; (e) Goods which are fraudulently concealed in or
removed contrary to law from any public or private
(c) General allegations of over-quantity without warehouse, container yard, or container freight station
indicating the source of information supporting the under customs supervision;
allegation;
(f) Goods, the importation or exportation of which are
(d) General allegations of misdeclaration in the entry effected or attempted contrary to law, or any goods of
without indicating the suspected actual contents thereof; prohibited importation or exportation, and all other
and goods which, in the opinion of the District Collector, have
(e) General allegations of importations contrary to law been used, are or were entered to be used as instruments
without indicating the specific law or rule to be violated. in the importation or the exportation of the former;
No alert order shall be issued on account of (g) Unmanifested goods found on any vessel or
allegations of undervaluation unless said undervaluation aircraft if manifest therefor is required;
is caused by the submission to customs of forged or (h) Sea stores or aircraft stores adjudged by the
spurious invoice or other commercial documents. District Collector to be excessive, when the duties and
An alert order may be issued only after lodgement of taxes assessed by the District Collector thereon are not
the goods declaration and prior to the release of goods paid or secured forthwith upon assessment of the same;


(i) Any package of imported goods which is found SECTION 1117. Warrant of Seizure or Order of
upon examination to contain goods not specified in the Release. — The District Collector shall have the authority
invoice or goods declaration including all other packages to issue a warrant of seizure of the goods upon
purportedly containing imported goods similar to those determination of the existence of probable cause and in
declared in the invoice or goods declaration to be the case of nonexistence thereof, the issuance of order of
contents of the misdeclared package; release. In case the District Collector issued an order of
j) Boxes, cases, trunks, envelopes, and other release, the District Collector shall immediately transmit
containers of whatever character used as receptacle or as all the records to the Commissioner who shall
device to conceal goods which are subject to forfeiture automatically review within forty-eight (48) hours, or
under this Act or which are so designed as to conceal the within twenty-four (24) hours in case of perishable goods.
character of such goods; When no decision is made by the Commissioner within
the prescribed period, the imported goods shall be
(k) Any conveyance actually used for the transport of deemed released.
goods subject to forfeiture under this Act, with its
equipage or trappings, and any vehicle similarly used, The lifting of the alert order shall be issued by the
together with its equipment and appurtenances. The District Collector only upon the affirmation of the
mere conveyance of smuggled goods by such transport decision of the District Collector by the Commissioner, or
vehicle shall be sufficient cause for the outright seizure after the lapse of the period of review by the
and confiscation of such transport vehicle but the Commissioner, whichever is earlier.
forfeiture shall not be effected if it is established that the SECTION 1118. Sale of Perishable Goods during
owner of the means of conveyance used as aforesaid, is Forfeiture Proceedings. — Upon motion of the importer
engaged as common carrier and not chartered or leased, of the perishable goods, the goods may be sold at a
or that the agent in charge thereof at the time, has no public auction during the pendency of the forfeiture
knowledge of the unlawful act; and proceedings. The proceeds of the auction shall be held in
(l) Goods sought to be imported or exported: escrow until the final resolution of the proceedings.
(1) Without going through a customs office, whether SECTION 1119. Service of Warrant of Seizure. — The
the act was consummated, frustrated, or attempted; District Collector shall cause the service of warrant of
seizure to the owner or importer of the goods or the
(2) Found in the baggage of a person arriving from authorized representative thereof. The owner or importer
abroad and undeclared by such person; shall be given an opportunity to be heard during the
(3) Through a false declaration or affidavit executed forfeiture proceedings.
by the owner, importer, exporter, or consignee For the purpose of serving the warrant, the importer,
concerning the importation of such goods; consignee, or person holding the bill of lading or airway
(4) On the strength of a false invoice or other bill shall be deemed the "owner" of the goods. For the
document executed by the owner, importer, exporter, or same purpose, "authorized representative" shall include
consignee concerning the importation or exportation of any agent of the owner and if the owner or the agent is
such goods; or unknown, any person having possession of the goods at
the time of the seizure.
(5) Through any other practice or device contrary to
law by means of which such goods entered through a Service of warrant to an unknown owner shall be
customs office to the prejudice of the government. effected by posting the warrant for fifteen (15) days in a
public place at the concerned district, and by electronic
SECTION 1114. Properties not Subject to Forfeiture in or printed publication.
the Absence of Prima Facie Evidence. — The forfeiture of
the vehicle, vessel, or aircraft shall not be effected if it is SECTION 1120. Description, Classification and
established that the owner thereof or the agent in charge Valuation of Seized Goods. — The District Collector shall
of the means of conveyance used as aforesaid has no cause the preparation of a list and particular description,
knowledge of or participation in the unlawful act: classification, and valuation of the goods seized and
Provided, That a prima facie presumption shall exist valuation of identical or similar goods.
against the vehicle, vessel, or aircraft under any of the SECTION 1121. Proceedings in Case of Property
following circumstances: Belonging to Unknown Parties. — If, within fifteen (15)
(a) If the conveyance has been used for smuggling days after service of warrant, no owner or agent can be
before; found or appears before the District Collector, the seized
goods shall be forfeited ipso facto in favor of the
(b) If the owner is not in the business for which the government to be disposed of in accordance with this
conveyance is generally used; and Act.
(c) If the owner is not financially in a position to own SECTION 1122. Seizure of Vessel or Aircraft for
such conveyance. Delinquency of Owner or Officer. — When the owner,
SECTION 1115. Conditions Affecting Forfeiture of agent, master, pilot in command or other responsible
Goods. — The forfeiture shall be effected only when and officer of any vessel or aircraft becomes liable for any
while the goods are in the custody or within the violation of this Act, the vessel or aircraft may be seized
jurisdiction of customs officers, or in the possession or and be subjected to forfeiture proceedings for the
custody of or subject to the control of the importer, settlement of any fine or penalty for which such person is
exporter, original owner, consignee, agent of another liable. In determining whether or not to seize a vessel or
person effecting the importation, entry or exportation in aircraft, the Bureau shall take into account the amount of
question, or in the possession or custody of or subject to fine or penalty in relation to the commercial impact that
the control of persons who shall receive, conceal, buy, sell, may be caused to international trade by the seizure or
or transport the same, or aid in any of such acts, with detention as well as the value of the vessel or aircraft.
knowledge that the goods were imported, or were the SECTION 1123. Burden of Proof in Forfeiture
subject of an attempt at importation or exportation Proceedings. — In all proceedings for the forfeiture of any
contrary to law. vehicle, vessel, aircraft, or goods under this Act, the
SECTION 1116. Seizure or Release of Goods. — The burden of proof shall be borne by the claimant.
District Collector shall issue an order of release or a SECTION 1124. Settlement of Pending Seizure Case
warrant of seizure within five (5) days, or two (2) days in by Payment of Fine or Redemption of Forfeited Goods.
case of perishable goods, upon the recommendation of — Subject to the approval of the Commissioner, the
the alerting officer or any other customs officer. The District Collector may allow the settlement by payment of
District Collector shall immediately make a report of such fine or the redemption of forfeited goods, during the
seizure or release to the Commissioner. course of the forfeiture proceeding. However, the


Commissioner may accept the settlement by redemption SECTION 1128. Automatic Review by the Secretary of

of any forfeiture case on appeal. No settlement by Finance in Other Cases. — In cases not involving protest
payment of fine shall be allowed when there is fraud or or forfeiture, the Commissioner shall automatically review
when the discrepancy in duties and taxes to be paid any decision by the District Collector that is adverse to the
between what is determined and what is declared government. The records of the case shall be elevated to
amounts to more than thirty percent (30%). the Commissioner within five (5) days from the
In case of settlement by payment of fine, the owner, promulgation of the decision. The Commissioner shall
importer, exporter, or consignee or agent shall offer to decide on the automatic review within thirty (30) days
pay a fine equivalent to thirty percent (30%) of the landed from receipt of the records, or within ten (10) days in the
cost of the seized goods. In case of settlement by case of perishable goods. When no decision is rendered
redemption, the owner, importer, exporter, or consignee within the prescribed period or when any decision
or agent shall offer to pay the redeemed value equivalent rendered by the Commissioner is adverse to the
to one hundred percent (100%) of the landed cost. government, the records of the case under review shall
be automatically elevated within five (5) days for the
Upon payment of the fine or payment of the review of the Secretary of Finance. The decision issued by
redeemed value, the goods shall be released and all the Secretary of Finance, whether or not a decision was
liabilities which may attach to the goods shall be rendered by the Commissioner within thirty (30) days
discharged without prejudice to the filing of from receipt of the records, or within ten (10) days in the
administrative or criminal case. case of perishable goods, shall be final upon the Bureau.
Settlement of any seizure case by payment of the fine
or redemption of forfeited goods shall not be allowed CHAPTER 6 Abandonment
when there is fraud, or where the importation is
prohibited or the release of the goods is contrary to law. SECTION 1129. Abandonment, Kinds and Effects of.
— Imported goods are deemed abandoned under any of
SECTION 1125. Decision in Forfeiture Cases. — In the following circumstances:
forfeiture cases, the District Collector shall issue an order
for hearing within fifteen (15) days, or five (5) days in case (a) When the owner, importer, or consignee of the
of perishable goods, from issuance of the warrant. The imported goods expressly signifies in writing to the
District Collector shall render a decision within thirty (30) District Collector the intention to abandon the same; or
days upon termination of the hearing, or within ten (10) (b) When the owner, importer, consignee, or
days in case of perishable goods. The decision shall interested party after due notice, fails to file the goods
include a declaration of forfeiture, the imposition of a fine declaration within the prescribed period in Section 407 of
or such other action as may be proper. this Act: Provided, That the term goods declaration shall
include provisional or incomplete goods declaration
CHAPTER 5 Appeal in Protest and Forfeiture deemed valid by the Bureau as provided in Section 403 of
this Act. For this purpose, it is the duty of the District
Cases Collector to post a list of all packages discharged and
SECTION 1126. Appeal to the Commissioner. — In their consignees, whether electronically or physically in
forfeiture cases, the person aggrieved by the decision of a the District Office, or send a notice to the consignee
District Collector may, within fifteen (15) days or five (5) within five (5) days from the date of discharge; or
days in case of perishable goods, from receipt of the (c) Having filed such goods declaration, the owner,
decision, file a written notice of appeal, together with the importer, consignee or interested party after due notice,
required appeal fee to the District Collector, furnishing a fails to pay the assessed duties, taxes and other charges
copy to the Commissioner. The District Collector shall thereon, or, if the regulated goods failed to comply with
immediately transmit all the records of the proceedings Section 117 of this Act, within fifteen (15) days from the
to the Commissioner, who shall review and decide on the date of final assessment:Provided, That if such regulated
appeal within thirty (30) days from receipt of the records, goods are subject of an alert order and the assessed
or fifteen (15) days in the case of perishable goods: duties, taxes and other charges thereof are not paid
Provided, That if within thirty (30) days, no decision is within fifteen (15) days from notification by the Bureau of
rendered, the decision of the District Collector under the resolution of the alert order, the same shall also be
appeal shall be deemed affirmed. An appeal filed beyond deemed abandoned; or
the period herein prescribed shall be dismissed.
(d) Having paid the assessed duties, taxes and other
Appeals to protest cases shall be governed by Section charges, the owner, importer or consignee or interested
114 of this Act. party after due notice, fails to claim the goods within
The decision of the Commissioner may be served thirty (30) days from payment. For this purpose, the
through the recognized modes of service under existing arrastre or warehouse operator shall report the
law. unclaimed goods to the District Collector for disposition
SECTION 1127. Automatic Review in Forfeiture Cases. pursuant to the provisions of this Act; or
— The Commissioner shall automatically review any (e) When the owner or importer fails to claim goods
decision by the District Collector adverse to the in customs bonded warehouses within the prescribed
government. The entire records of the case shall be period.
elevated within five (5) days from the promulgation of the The due notice requirement under this section may
decision. The Commissioner shall decide on the be provided by the Bureau through electronic notice or
automatic review within thirty (30) days, or within ten (10) personal service: Provided, That for non-regular importers,
days in the case of perishable goods, from receipt of the notification shall be by registered mail or personal
records. When no decision is rendered within the service. For this purpose, the accreditation of importers,
prescribed period or when a decision adverse to the exporters, and other third parties shall include provision
government is rendered by the Commissioner involving for mandatory receipt of electronic notices.
goods with FOB or FCA value of ten million pesos
(P10,000,000.00) or more, the records of the decision of SECTION 1130. Treatment and Disposition of
the Commissioner, or of the District Collector under Abandoned Goods. — Expressly abandoned goods under
review, as the case may be, shall be automatically paragraph (a) of Section 1129 of this Act shall ipso facto be
elevated within five (5) days for review by the Secretary of deemed the property of the government and shall be
Finance. The decision issued by the Secretary of Finance, disposed of in accordance with the provisions of this Act.
whether or not a decision was rendered by the If the Bureau has not disposed of the abandoned
Commissioner within thirty (30) days, or within ten (10) goods, the owner or importer of goods impliedly
days in the case of perishable goods, from receipt of the abandoned may, at any time within thirty (30) days after
records, shall be final upon the Bureau. the lapse of the prescribed period to file the declaration,


reclaim the goods provided that all legal requirements herein referred to, the customs officer effecting the
have been complied with and the corresponding duties, constructive distraint shall proceed to prepare a list of
taxes and other charges, without prejudice to charges such property and, in the presence of two (2) witnesses,
and fees due to the port or terminal operator, as well as leave a copy thereof in the premises where the property
expenses incurred have been paid before the release of distrained is located, after which the said property shall
the goods from customs custody. be deemed to have been placed under constructive
When the Bureau sells goods which have been distraint.
impliedly abandoned, although no offense has been SECTION 1134. Summary Remedies. — (A) Distraint
discovered, the proceeds of the sale, after deduction of of Personal Property. — Upon failure of the person owing
any duty and tax and all other charges and expenses any delinquent duty, tax and other charges to pay at the
incurred as provided in Section 1143 of this Act, shall be time required, the Commissioner shall seize and distraint
turned over to those persons entitled to receive them or, the goods, chattels or effects, and the personal property,
when this is not possible, held at their disposal for a including stocks and other securities, debts, credits, bank
specified period. After the lapse of the specified period, accounts, and interests in and rights to personal property
the balance shall be transferred to the forfeiture fund as of such persons, in sufficient quantity to satisfy the duty,
provided in Section 1151 of this Act. tax or other charge and the expenses of the distraint and
the cost of the subsequent sale.
CHAPTER 7 Other Administrative Proceedings The officer serving the warrant of distraint shall make
or cause to be made an account of the goods, chattels,
SECTION 1131. Authority of the Commissioner to effects, or other personal property distrained, a copy of
Make Compromise. — Subject to the approval of the which, signed by the said officer, shall be left either with
Secretary of Finance, the Commissioner may compromise the owner or person from whose possession such goods,
any administrative case arising under this Act involving chattels, or effects or other personal property were taken,
the imposition of fines and surcharges, including those or at the dwelling or other place of business of such
arising from the conduct of a post clearance audit, unless person and with someone of suitable age and discretion,
otherwise specified by law. to which list shall be added a statement of the sum
Cases involving forfeiture proceedings shall however demanded and note of the time and place of sale.
not be subject to any compromise. Stocks and other securities shall be distrained by
serving a copy of the warrant of distraint upon the
CHAPTER 8 Civil Remedies for the Collection of importer and upon the president, manager, treasurer, or
Duties and Taxes other responsible officer of the corporation, company or
association, which issued the said stocks or securities.
SECTION 1132. Remedies for the Collection of Duties,
Taxes, Fines, Surcharges, Interests, and Other Charges. Debts and credits shall be distrained by leaving with
— The civil remedies for the collection of import duties, the person owing the debts or having in his/her
taxes, fees, or charges resulting from the conduct of a possession or under his/her control such credits, or with
post clearance audit shall be obtained by: his/her agent, a copy of the warrant of distraint. The
warrant of distraint shall be sufficient authority to the
(a) Distraint of goods, chattels, or effects, and other person owing the debts or having in his possession or
personal property of whatever character, including stocks under his control any credits belonging to the importer to
and other securities, debts, credits, bank accounts, and pay to the Commissioner the amount of such debts of
interest in and rights to personal property, and by levy credits.
upon real property and interest in rights to real property;
and Bank accounts shall be garnished by serving a
warrant of garnishment upon the importer and upon the
(b) Civil or criminal action. president, manager, treasurer, or other responsible officer
Either or both of these remedies may be pursued at of the bank. Upon the receipt of the warrant of
the discretion of the Bureau: Provided, That the remedies garnishment, the bank shall turn over to the
of distraint and levy shall not be allowed when the Commissioner so much of the bank accounts as may be
amount of duties and taxes involved is not more than ten sufficient to satisfy the claim of the government.
thousand pesos (P10,000.00). A report on the distraint shall, within ten (10) days
The Bureau shall advance the amounts needed to from receipt of the warrant, be submitted by the
defray costs of collection by means of civil or criminal Commissioner to the Secretary of Finance: Provided, That
action, including the preservation or transportation of the Commissioner shall have the power to lift such order
personal property distrained and the advertisement and of distraint subject to the rules and regulations
sale thereof, as well as of real property and improvements promulgated pursuant to this Act.
thereon. (B) Levy on Real Property. — After the expiration of
SECTION 1133. Constructive Distraint of the Property. the period within which to pay the duty, tax and other
— To safeguard the interest of the government, the charges as prescribed in this section, real property may
Commissioner may place under constructive distraint the be levied upon, before, simultaneously, or after the
property of a delinquent importer who, in the opinion of distraint of personal property belonging to the importer.
the Commissioner, is retiring from any business subject To this end, the Commissioner or the duly authorized
to duty and tax, or is intending to leave the Philippines, or representative shall prepare a duly authenticated
to remove the property therefrom, or to hide or conceal certificate showing the name of the importer and the
the property, or to perform any act tending to obstruct amounts of the duty and tax and penalty due. The
the proceedings for collecting the duty and tax due, or certificate shall operate with the force of a legal execution
which may be due. throughout the Philippines.
The constructive distraint of personal property shall The levy shall be effected by writing upon the
be effected by requiring the importer or any person in certificate a description of the property on which levy is
possession or control of such property to sign a receipt made. At the same time, written notice of the levy shall
covering the property, to obligate to preserve the be mailed to or served upon the register of deeds of the
distrained property on the state and condition at the time province or city where the property is located and upon
of the government's seizure of the same, and not to the importer, or if the latter is not in the Philippines, upon
dispose of the same in any manner whatsoever, without the agent or the manager of the business from which the
the express authority of the Commissioner. liability arose, or if there be none, to the occupant of the
property in question.
In case the importer or the person in possession and
control of the property sought to be placed under In case the warrant of levy on real property is not
constructive distraint refuses or fails to sign the receipt issued before or simultaneously with the warrant of



distraint on personal property, and the personal property (d) Goods subject to a valid lien for customs duties,
of the importer is not sufficient to satisfy the duty and tax taxes and other charges collectible by the Bureau, after
due, the Commissioner or a duly authorized the expiration of the period allowed for payment thereof.
representative shall, within thirty (30) days after execution SECTION 1140. Place of Disposition of Goods. —
of the distraint, proceed with the levy on the real property Upon the order of the District Collector, goods may be
of the importer. sold or otherwise disposed of at the port where the goods
Within ten (10) days after receipt of the warrant, a are located, unless the Commissioner shall direct its
report on any levy shall be submitted by the levying transfer to another port.
officer to the Commissioner: Provided, That the SECTION 1141. Mode of Disposition. — The goods
Commissioner may lift such warrants of levy issued, subject to disposition may be donated to another
subject to the rules and regulations promulgated government agency or declared for official use of the
pursuant to this Act. Bureau, after approval of the Secretary of Finance, or sold
at a public auction within thirty (30) days after a ten
CHAPTER 9 Judicial Proceedings (10)-day notice posted at a public place at the port where
the goods are located and published electronically or in a
SECTION 1135. Supervision and Control over Criminal newspaper of general circulation.
and Civil Proceedings. — Civil and criminal actions and
proceedings instituted on behalf of the Government For purposes of donating the goods as above
under the authority of this Act or other laws enforced by described, goods suitable for shelter or consisting of
the Bureau shall be brought in the name of the foodstuffs, clothing materials or medicines may be
government of the Philippines and shall be prosecuted donated to the DSWD.
and handled by the Bureau with the assistance of the SECTION 1142. Disqualification to Participate in
Department of Justice (DOJ): Provided, That the Auction Sale. — No customs officer or employee, their
determination of the existence of probable cause and the spouses and relatives within the fourth degree of
subsequent filing of any criminal or civil case with the consanguinity or affinity shall be allowed to bid directly or
proper court against violators of this Act shall exclusively indirectly, in any customs auction.
belong to the DOJ: Provided, however, That no civil or
criminal action for the recovery of duties or the SECTION 1143. Disposition of Proceeds. — The
enforcement of any fine, penalty or forfeiture under this following expenses and obligations shall be paid from the
Act shall be filed in court without the approval of the proceeds of the sale in the order provided:
Commissioner. (a) Customs duties, except in the case of forfeited
SECTION 1136. Review by the CTA. — Unless goods;
otherwise provided in this Act or by any other law, the (b) Taxes and other charges due the government;
party aggrieved by the ruling or decisions of the
(c) Government storage charges;
Commissioner may appeal to the CTA, in the manner and
within the period prescribed by law and regulations. (d) Expenses for the appraisal, advertisement, and
Decisions of the Secretary of Finance when required by sale of auctioned goods;
this Act, may likewise be appealed to the CTA. (e) Arrastre and private storage charges and
Unless an appeal is made to the CTA in the manner demurrage charges; and
and within the period prescribed by law and regulations, (f) Freight, lighterage or general average, on the
the ruling or decision of the Commissioner or the voyage of importation, of which due notice shall have
Secretary of Finance shall be final and executory. been given to the District Collector.
SECTION 1137. Exclusive Jurisdiction of the Bureau. The Commissioner is authorized to determine the
— Jurisdiction over imported goods and goods for maximum charges to be recovered by private entities
exportation shall be exclusive to the Bureau, or the concerned under subsections (e) and (f) of this section.
Secretary of Finance, when under review by the latter,
subject to the proceedings described in this title. SECTION 1144. Disposition of Perishable Goods. —
Perishable goods as defined under this Act when
Except for the CTA, no court may issue any order or certified as such by the Bureau, may be sold at a public
decision until all the remedies for administrative appeal auction within five (5) days, after a three (3)-day notice.
have been exhausted.
For this purpose, perishable goods shall include
SECTION 1138. Fraud Investigation and Prosecution. goods liable to perish or be wasted, or those that
— No criminal case for violation of this title shall be depreciate greatly in value while stored, or which cannot
instituted without the approval of the Commissioner be kept without great disproportionate expense. The
pursuant to the provisions of this Act. Bureau shall proceed to advertise and sell the same at
The Bureau shall have the power to investigate and auction upon notice as shall be deemed to be reasonable.
institute smuggling cases committed within its SECTION 1145. Disposition of Goods Injurious to
jurisdiction: Provided, That in case of inquest, the same Public Health. — Goods in the custody of the Bureau
may be instituted by the apprehending customs officer. which, in the opinion of the District Collector are injurious
to public health, shall be seized. The District Collector
CHAPTER 10 Disposition of Property in Customs shall, if the matter is not disposable under the provisions
Custody relating to food and drugs, appoint three (3) members to
constitute a Board to examine the goods. The Board shall
SECTION 1139. Goods Subject to Disposition. — be composed of one (1) representative from either the
Goods in customs custody that are in the following DOH or other appropriate government agency or the
conditions and status shall be subject to disposition: local government unit (LGU) concerned, and two (2)
(a) Abandoned goods; representatives from the Bureau. If the goods are found
to be injurious to public health, the Board shall report this
(b) Goods entered under warehousing entry but not to the District Collector, who shall order its destruction in
withdrawn, or those whose duties and taxes have not an appropriate manner or order its re-exportation in
been paid within the period prescribed under Section 811 accordance with this Act.
of this Act;
The District Collector shall immediately coordinate
(c) Forfeited goods, other than prohibited, restricted with the health and quarantine officers at the port of
and regulated goods; after liability have been established entry for the disposition of goods injurious to public
by the proper administrative or judicial proceedings in health.
conformity with the provisions of this Act; and


SECTION 1146 Disposition of Prohibited Goods. — The Fund shall be in the name of and shall be
Prohibited goods, as provided in Section 118 of this Act, managed by the Bureau which is hereby authorized,
shall be destroyed, except paragraph (d) thereof which subject to the usual government accounting rules and
shall be turned over to the BSP. All goods suitable for regulations, to utilize it for the following purposes:
shelter, foodstuffs, clothing materials or medicines may (a) To outsource, subject to the rules on government
be disposed in accordance with Section 1141 of this Act. procurement established by law, the management of the
SECTION 1147. Disposition of Restricted Goods. — inventory, safekeeping, maintenance and sale of goods
Restricted goods as described in Section 119 of this Act enumerated in Section 1139 of this Act to private service
shall be disposed as follows: providers: Provided, That the Bureau shall retain
(a) Dynamite, gunpowder, ammunitions and other jurisdictional control and supervision over these goods as
explosives, firearms and weapons of war, and parts well as the operations of the service provider so
thereof shall be turned over to the AFP; contracted;
(b) Roulette wheels, gambling outfits, loaded dice, (b) To facilitate customs seizure, abandonment and
marked cards, machines, apparatus or mechanical forfeiture proceedings and the disposition of goods under
devices used in gambling or the distribution of money, Section 1139 of this Act, particularly those to be disposed
cigars, cigarettes, or other goods when such distribution of other than through public sale;
is dependent on chance, including jackpot and pinball (c) To enhance customs intelligence and enforcement
machines or similar contrivances, or parts thereof shall be capability to prevent smuggling; and
turned over to the appropriate government body or (d) To support the modernization program and other
agency; operational efficiency and trade facilitation initiatives of
(c) Lottery and sweepstakes tickets, except the Bureau.
advertisements thereof, and lists of drawings therein shall The DOF and the Department of Budget and
be turned over to the appropriate government body or Management (DBM) shall, upon the recommendation of
agency; the Bureau, issue a joint regulation to implement the
(d) Marijuana, opium, poppies, coca leaves, heroin, or provisions of this section.
other narcotics or synthetic drugs which are or may
hereafter be declared habit forming by the President of
the Philippines, or any compound, manufactured salt, TITLE XII Third Parties
derivative, or preparation thereof, shall be turned over to
the Dangerous Drugs Board;
CHAPTER 1 Customs Service Providers
(e) Opium pipes and parts thereof, of whatever
material, shall be turned over to the Dangerous Drugs SECTION 1200. Customs Brokers and Other Service
Board; and Providers. — Upon the recommendation of the
Commissioner, the Secretary of Finance shall issue the
(f) All other restricted goods which are highly necessary rules and regulations for the registration of
dangerous to be kept or handled shall be destroyed in a customs brokers and the accreditation of other customs
manner as the District Collector deems appropriate. service providers to ensure compliance with this Act and
Otherwise, the restricted goods shall be turned over to the rules and regulations that shall be promulgated to
the proper government agency for appropriate handling. implement it.
SECTION 1148. Disposition of Regulated Goods. —
Regulated goods shall be disposed of in a manner to be
CHAPTER 2 Carriers, Vessels, and Aircrafts
determined by the appropriate regulatory agency. In the
event that the regulatory agency allows the disposition of SECTION 1201. Ports Open to Vessels and Aircrafts
the regulated goods with commercial value and capable Engaged in Foreign Trade. — Vessels and aircrafts
of legitimate use, these shall be disposed of in engaged in foreign trade shall visit designated ports of
accordance with Section 1141 of this Act. entry only except as otherwise especially allowed by law:
Provided, That no existing and valid government contract
SECTION 1149. Disposition of Unsold Goods for Want
covering the handling of import and export cargo shall be
of Bidders. — Goods subject to sale at public auction by
diminished or impaired. Every vessel or aircraft arriving
the Bureau shall be sold at a price not less than the
within a Customs District of the Philippines from a
landed cost of the goods adjusted for normal
foreign port shall dock at the designated port of entry
depreciation.
and shall be subject to the authority of the District
Goods which remain unsold after at least two (2) Collector of the port while within its jurisdiction.
public biddings either due to the lack of bidders or for the
SECTION 1202. Control of Customs Officer over
lack of an acceptable bid, may be donated to another
Boarding or Leaving of Incoming Vessel and over Other
government agency or declared for official use of the
Vessel Approaching the Former. — Upon the arrival in
Bureau. If the goods are not suitable either for official use
port of any vessel engaged in foreign trade, it shall be
or donation, these may be subject to re-export as
unlawful for any person, except the pilot, consul,
government property or sold through a negotiated sale.
quarantine officers, customs officers, or other duly
In case of negotiated sale, the same shall be subject to
authorized persons, to board or leave the vessel without
the approval of the Secretary of Finance and executed in
permission of the customs officer concerned. It shall
the presence of a representative of the COA. For purposes
likewise be unlawful for any tugboat, rowboat, or other
of donating the goods as above described, goods suitable
craft to go alongside such vessel and for any person so
for shelter or consisting of foodstuffs, clothing materials
authorized to board the vessel to take any unauthorized
or medicines may be donated to the DSWD.
person to board the same, or allow loitering near or
SECTION 1150. Disposition of Smuggled Goods. — alongside such vessel. Unauthorized tugboats and other
Smuggled goods, when forfeited, shall be disposed of as vessels shall keep away from such vessel engaged in
provided in Section 1148 of this Act. foreign trade at a distance of not less than fifty (50)
SECTION 1151. Forfeiture Fund. — All proceeds from meters.
public auction sales after deduction of the charges as SECTION 1203. Documents to be Produced by the
provided in Section 1143 of this Act and subject to the Master Upon Entry of Vessel. — Upon entry of a vessel
claim of the owner or importer of an impliedly engaged in foreign trade, the master thereof shall
abandoned goods as provided in Section 1130 of this Act, present the following certified documents to the customs
shall be deposited in an account to be known as boarding officers:
Forfeiture Fund.
(a) The vessel's general declaration;


(b) The original manifest of all cargoes destined for master shall immediately present to the District Collector
the port, to be returned with the endorsement of the the original copy of the cargo manifest properly endorsed
boarding officers; by the boarding officer, and for inspection, the ship's
(c) Three (3) copies of the original manifest, one of register, or other documents in lieu thereof, together with
which, upon certification by the boarding officer as to the the clearance and other papers granted to the vessel at
correctness of the copy, shall be returned to the master; the port of departure for the Philippines.
(d) A copy of the cargo stowage plan; SECTION 1207. Production of Philippine Crew. — The
master of a Philippine vessel returning from abroad shall
(e) Two (2) copies of the store list; produce the entire crew listed in the vessel's shipping
(f) One (1) copy of the passengers list; crew manifest. If any member is missing, the master shall
produce proof satisfactory to the District Collector that
(g) One (1) copy of the crew list; the member has died, or absconded, has been forcibly
(h) The original copy of all through cargo manifest, for impressed into another service, or has been discharged.
deposit with the customs officer who has jurisdiction over In case of discharge in a foreign country, the master shall
the vessel while in port; produce a certificate from the consul, vice consul, or
consular agent of the Philippines there residing, showing
(i) The passengers manifest containing the names of that such discharge was effected with the consent of the
all foreigners, in conformity with the requirements of the aforesaid representative of the Philippines.
immigration laws in force in the Philippines;
SECTION 1208. Record of Arrival and Entry of
(j) One (1) copy of the original duplicate of fully Vessels and Aircraft. — A record shall be made and kept
accomplished bill of lading; open to public inspection in every Customs District of the
(k) The shipping goods and register of the vessel of date of arrival and entry of all vessels and aircraft.
Philippine registry; and SECTION 1209. Arrest of Vessel or Aircraft Departing
(l) Such other related documents. Before Entry Made. — When a vessel or aircraft arriving
SECTION 1204. Manifest Required of Vessel from within the limits of a Customs District from a foreign port
Foreign Port. — Every vessel from a foreign port must departs or attempts to depart before entry shall have
have on board a complete manifest of all its cargoes. been made, not being thereunto compelled by stress of
weather, duress of enemies, or other necessity, the
All cargoes intended to be landed at a port in the District Collector of the port may cause the arrest and
Philippines must be described in separate manifests for bring back such vessel or aircraft to the most convenient
each port of call. Each manifest shall include the port of port with the assistance of other concerned agencies.
departure and the port of delivery with the marks,
numbers, quantity, and description of the packages and SECTION 1210. Discharge of Ballast. — When not
the names of the consignees. Every vessel from a foreign brought to port as goods, ballast of no commercial value
port must have on board complete manifests of may be discharged upon permit granted by the District
passengers and baggage, in the prescribed form, setting Collector for the purpose.
forth the destination and all particulars required by SECTION 1211. Time of Unloading Cargo. —
immigration laws. Every vessel shall present to the proper Unloading of cargo from a vessel or aircraft from a foreign
customs officers upon arrival in ports of the Philippines a port during official non-working hours shall be allowed
complete list of all sea stores then on board. If the vessel subject to payment of service fees by shipping lines,
does not carry cargo or passengers, the manifest must airlines, or other interested parties at rates prescribed by
show that no cargo or passenger is carried from the port the Commissioner.
of departure to the port of destination in the Philippines. SECTION 1212. Entrance of Vessel through Necessity.
A true and complete copy of the cargo manifest shall — When a vessel from a foreign port is compelled, by
be electronically sent in advance by the shipping stress of weather or other necessity to put into any other
company, NVOCC, freight forwarder, cargo consolidator, port than that of its destination, the master within
or their agents within the cut-off period as may be twenty-four (24) hours after its arrival, shall make a protest
determined by the Bureau before the arrival of the under oath setting forth the causes or circumstances of
carrying vessel at the port of entry. Upon arrival of the such necessity. This protest, if not made before the
carrying vessel, the shipping company, NVOCC, freight District Collector, must be produced and lodged with the
forwarder, cargo consolidator, or their agents shall District Collector.
provide two (2) hard copies of the cargo manifest to the Within the same time, the master shall make a report
Bureau in case the port of entry is either the Port of to the District Collector if any part of the cargo was
Manila (PoM) or the Manila International Container Port unloaded from necessity or lost by casualty before arrival,
(MICP), and one (1) copy only in the case of the other ports and produce sufficient proof to the District Collector of
of entry. such necessity or casualty before the latter who shall give
A cargo manifest shall in no case be changed or the approval thereto and the unloading shall be deemed
altered after entry of vessel, except by means of an to have been lawfully effected.
amendment, under oath, by the master, consignee or SECTION 1213. Unloading of Vessel in Port from
agent thereof, which shall be attached to the original Necessity. — If a situation arises where the unloading of
manifest: Provided, That after the invoice and/or goods the vessel is required pending sojourn in port, the District
declaration covering an importation have been received Collector shall, upon sufficient proof of the necessity,
and recorded in the office of the appraiser, no grant a permit therefore, and the goods shall be
amendment of the manifest shall be allowed, except unloaded and stored under the supervision of customs
when it is obvious that a clerical error or any other officers.
discrepancy has been committed in the preparation of
the manifest, without any fraudulent intent, the discovery At the request of the master of the vessel or the
of which would not have been made until after owner thereof, the District Collector may grant
examination of the importation has been completed. permission to enter the port and pay duties, taxes and
other charges on, and dispose of, such part of the cargo
SECTION 1205. Translation of Manifest. — The cargo as may be perishable in nature or as may be necessary to
manifest and each copy thereof shall be accompanied by defray the expenses attending the vessel.
a translation in English, if originally written in another
language. Upon departure, the cargo, or a part thereof, may be
reloaded on board the vessel, and the vessel may proceed
SECTION 1206. Manifests for the Commission on with the same to its destination, subject only to the
Audit and District Collector. — Upon arrival of a vessel charge for storing and safekeeping of the goods and the
from a foreign port, the Bureau shall provide electronic fees for entrance and clearance. No port charges shall be
copies of the manifest to the Chairperson of the COA. The



collected on vessels entering through stress of weather, any passenger of any class, or other person not entered
duress or other urgent necessities. upon the ship's declaration.
SECTION 1214. Entry and Clearance of Vessels of a SECTION 1218. Extension of Time for Clearance. — At
Foreign Government. — The entry and clearance of the time of clearance, the master of a departing vessel
transport or supply ship of a foreign government shall be shall be required to indicate the time of intended
in accordance with the agreement by and between the departure, and if the vessel should remain in port
Philippines and the foreign government. forty-eight (48) hours after the time indicated, the master
SECTION 1215. Clearance of Vessel for Foreign Port. shall report to the District Collector for an extension of
— Before a clearance shall be granted to any vessel time of departure, and without such extension the
bound to a foreign port, the master or the agent thereof original clearance shall be nullified.
shall present to the District Collector the following SECTION 1219. Advance Notice of Aircraft Arrival. —
properly authenticated documents: (A) Nonscheduled Arrivals. — Before an aircraft comes
(a) A bill of health from the quarantine officer or into any area in the Philippines from any place outside
officer of the public health service in the port; thereof, a timely notice of the intended flight shall be
furnished to the District Collector or other customs
(b) Three (3) copies of the manifest of export cargo, officer-in-charge at or nearest the intended place of first
one of which, upon certification by the customs officer as landing, and to the quarantine and immigration
to the correctness of the copy, shall be returned to the officers-in-charge at or nearest such place of landing. If
master; dependable facilities for giving notice are not available
(c) Two (2) copies of the passengers list, showing before departure, the use of any radio equipment shall be
foreigners and other passengers; appropriate as long as it will result in the giving of
adequate and timely notice of the aircraft's approach,
(d) The register and shipping goods, if the vessel is of otherwise landing shall be made at a place equipped
Philippine registry; with navigational facilities. If, upon landing in any area,
(e) Clearance issued by the last port of entry; and the government officers have not arrived, the
pilot-in-command shall hold the aircraft and any
(f) A certificate from the Philippine Postal baggage and goods thereon intact and keep the
Corporation to the effect that it received timely notice of passengers and crew members in a segregated place
the sailing of the vessel: Provided, That the District until the inspecting officers arrive.
Collector shall not permit any vessel to sail for a foreign
port if the master or agent thereof refuses to receive bags (B) Scheduled Arrivals. — Such advance notice will not
of mail delivered to the same by the Philippine Postal be required in the case of an airline arriving in accordance
Corporation for transport upon reasonable compensation. with the regular schedule filed with the District Collector
In case the Postmaster General and the master or agent for the Customs District in which the place of first landing
do not come to an agreement concerning the amount of area is situated, and also with the quarantine and
the compensation to be paid for the carriage of the mail, immigration officers-in-charge of such place.
the matter shall be submitted for decision to a Board of SECTION 1220. Landing at International Airport of
Referees to be composed of three (3) members Entry. — Except in case of emergency or forced landings,
appointed, respectively, by the Philippine Postal aircraft arriving in the Philippines from any foreign port or
Corporation, the agency of the company to which the place shall make the first landing at an international
vessel concerned belongs, and the Bureau, who shall fix a airport of entry, unless permission to land elsewhere
reasonable rate of compensation. other than at an international airport of entry is first
SECTION 1216. Detention of Warlike Vessel obtained from the Commissioner. In such cases, the
Containing Arms and Munitions. — District Collectors owner, operator, or person in charge of the aircraft shall
shall report to the proper authorities or detain any vessel pay the expenses incurred in inspecting the aircraft,
of commercial registry manifestly built for warlike goods, passengers, and baggage carried thereon, and
purposes and about to depart from the Philippines with a such aircraft shall be subject to the authority of the
cargo consisting principally of arms and munitions of war, District Collector at the airport while within its
when the number of men shipped on board or other jurisdiction.
circumstances render it probable that such vessel is Should an emergency or forced landing be made by
intended to be employed by the owner or owners to an aircraft coming into the Philippines at a place outside
cruise or commit hostilities upon the subjects, citizens, or the jurisdiction of the latter, the pilot-in-command shall
property of any foreign principality or state, or of any not allow goods, baggage, passenger, or crew member to
colony, district, or people with whom the Philippines is at be removed or to depart from the landing place without
peace, until the decision of the President of the permission of a customs officer, unless such removal or
Philippines is rendered thereon, or until the owner or departure is necessary for purposes of safety,
owners shall give a security, in double the value of the communication with customs officers, or preservation of
vessel and cargo, that it will not be so employed, if in the life, health, or property. As soon as practicable, the
discretion of the District Collector such security will pilot-in-command, or a member of the crew-in-charge, or
prevent the violation of the provisions of this section. the owner of the aircraft, shall communicate with the
SECTION 1217. Oath of Master of Departing Vessel. customs officer at the intended place of first landing or at
— The master of a departing vessel shall state under oath the nearest international airport or other customs port of
that: entry in the area and make a full report of the
circumstances of the flight and of the emergency or
(a) All cargoes conveyed on the vessel, destined for forced landing.
the Philippines, have been duly discharged or accounted
for; SECTION 1221. Report of Arrival and Entry of Aircraft.
— The pilot-in-command of any aircraft arriving from a
(b) A true copy of the outgoing cargo manifest has foreign port or place shall immediately report its arrival to
been furnished to the Bureau; the District Collector at the airport of entry or to the
(c) No letters or packets, not enclosed in properly customs officer detailed to meet the aircraft at the place
stamped envelope sufficient to cover postage, have been of first landing. Upon arrival, such aircraft shall be
received or will be conveyed, except those relating to the boarded by a quarantine officer, and after pratique or
vessel; and that all mails placed on board the vessel health clearance is granted, shall be boarded by a
before its last clearance from the Philippines have been customs officer; subsequently no person shall be
delivered at the proper foreign port; and permitted to board or leave the aircraft without the
(d) If clearing without passenger, the vessel will not permission of the customs officer. The pilot-in-command
carry upon the instant voyage, from the Philippine port, or any other authorized agent of the owner or operator of
the aircraft shall make the necessary entry. No such


aircraft shall, without previous permission from the (1) Name of owner or operator of aircraft, registration
District Collector, depart from the place of first landing or marks and nationality of aircraft, and flight number of
discharge goods, passengers, or baggage. identification;
SECTION 1222. Documents Required in Making (2) Port of clearance, data thereof and destination;
Entry for Aircraft. — (a) For the purpose of making entry, (3) Health and customs clearance;
there shall be presented to the boarding customs officer
four (4) copies of a general declaration which shall (4) Itinerary of aircraft, including information as to
contain the following data, unless any of such data is airport of destination and departure date;
otherwise presented on a separate official form: (5) Names and nationality of crew members;
(1) Name of owner or operator of aircraft, registration (6) Passengers manifest showing places of
marks and nationality of aircraft, and flight number of destination;
identification;
(7) Export cargo manifest showing information as to
(2) Points of clearance and entry, and date of arrival; airway bill number, the number of packages related to
(3) Health and customs clearance at the last airport of each airway bill number, nature of goods, destination,
departure; and gross weight, together with a copy of each airway bill
securely attached thereto; and
(4) Itinerary of aircraft, including information as to
airport of origin and departure dates; (8) Store list showing stores loaded.
(5) Names and nationality of crew members; SECTION 1225. Oath of Person-in-Charge of
Departing Aircraft. — The pilot-in-command or
(6) Passengers manifest showing places of authorized agent of such departing aircraft shall also
embarkation and destination; state under oath to the effect that:
(7) Cargo manifest showing information as to airway (a) All cargoes conveyed on the aircraft destined to
bill number, the number of packages related to each the Philippines have been duly discharged and
airway bill number, nature of goods, destination, and accounted for; and
gross weight, together with a copy of each airway bill
securely attached thereto; (b) The aircraft has not received nor will convey any
letter or packet not enclosed in properly stamped
(8) Store list; and envelope sufficient to cover postage, except those
(9) Such other documents as may be required by the relating to the cargo of the aircraft, and that there was
Bureau. delivery to the proper foreign port of all mails placed on
(b) The general declaration shall be written in English board said aircraft before clearance from the Philippines.
and duly signed by the pilot-in-command or operator of If an aircraft is cleared to depart without passengers,
the aircraft, or the authorized agent. The section on the aircraft shall not carry any passenger thereon.
health, and customs clearances, however, shall be signed A record shall be made and kept open to public
only by the pilot-in-command or when necessary, by a inspection in every customs office at an airport of entry of
crew member when the general declaration itself has the dates of arrival and entry of all aircraft.
been signed by a non-crew member. If the aircraft does
not carry cargoes or passengers, such facts must be
shown in the manifest. CHAPTER 3 Other Third Parties
(c) A cargo manifest shall in no case be changed or SECTION 1226. Supervision and Regulation of Third
altered after entry of the aircraft, except by means of an Parties. — Third parties transacting with the Bureau on
amendment by the pilot-in-command or authorized behalf of importers and consignees shall be treated
agent thereof, under oath, and attached to the original equally as true importers or consignees.
manifest: Provided, That after the invoice and/or goods
Third parties transacting with the Bureau shall be
declaration covering an importation have been received
liable for acts committed in violation of this Act and
and recorded in the office of the appraiser, no
related laws.
amendment shall be allowed except when it is obvious
that a clerical error or any other discrepancy has been Upon the recommendation of the Commissioner, the
committed without any fraudulent intent in the Secretary of Finance shall issue rules and regulations to
preparation of the manifest, the discovery of which could govern and regulate the conduct of all third parties
not have been made until after complete examination of dealing directly with the Bureau in relation to the
the importation. importation, exportation, movement, storage and
clearance of goods for and on behalf of another person.
SECTION 1223. Manifests for the Commission on
The rules and regulations shall provide for specific
Audit (COA) and District Collector. — Upon arrival of an
conditions when third parties may or may not directly
aircraft from a foreign port, the Bureau shall provide
transact with the Bureau and shall provide a written
electronic copies of the manifest to the Chairperson of
notice in case such third parties are, for valid reasons,
the COA. The master shall immediately present to the
barred from transacting with the Bureau. Third party is
District Collector the original copy of the cargo manifest
defined under Section 102 (uu) of this Act. For purposes of
properly endorsed by the boarding officer, and for
this section, third parties may also refer to logistics
inspection, the aircraft's register or other documents in
providers, importers, exporters, carriers, airlines, shipping
lieu thereof, together with the clearance and other papers
lines, shipping agents, forwarders, consolidators, port and
granted to the aircraft at the port of departure for the
terminal operators, and warehouse operators, if such
Philippines.
persons or entities transacted with the Bureau.
SECTION 1224. Clearance of Aircraft for Foreign
Port. — (a) Any aircraft bound to a foreign port shall,
before departure, be granted clearance by the CHAPTER 4 Authorized Economic Operators
Commissioner at an airport of entry where such aircraft (AEOs)
has been authorized to make its landing; and SECTION 1227. Treatment of Authorized Economic
(b) Before clearance shall be granted to an aircraft Operators (AEOs). — The Bureau shall promulgate the
bound to a foreign port, there shall be presented to the necessary procedures and requirements for the
District Collector or to the customs officer detailed at the compliance of Authorized Economic Operators (AEOs).
place of departure four (4) copies of a general declaration For AEOs who have displayed diligence in complying with
signed by the pilot-in-command or authorized agent of the rules and the submission of official customs
an aircraft which shall contain the following data: requirements, and have satisfactorily managed their


commercial records, the Bureau shall extend the Secretary of Finance may, upon the recommendation of
following incentives: the Commissioner, increase or decrease the dues, fees
(a) Release of the goods upon provision of the and charges collectible by the Bureau to protect the
minimum information necessary to identify the goods interest of the government.
and permit the subsequent completion of the final goods
declaration;
TITLE XIV Offenses and Penalties
(b) Grant of clearance of the goods at the declarant's
premises or another place authorized by the Bureau; and
CHAPTER 1 Crimes and Other Offenses
(c) Other special procedures such as:
SECTION 1400. Misdeclaration, Misclassification,
(i) Allowing a single goods declaration for all imports Undervaluation in Goods Declaration. — Misdeclaration
or exports in a given period where goods are imported or as to quantity, quality, description, weight, or
exported frequently by the same person; measurement of the goods, or misclassification through
(ii) Use of commercial records to self assess their duty insufficient or wrong description of the goods or use of
and tax liability and, where appropriate, to ensure wrong tariff heading resulting to a discrepancy in duty
compliance with other customs requirements; and and tax to be paid between what is legally determined
(iii) Allowing the lodgement of goods declaration by upon assessment and what is declared, shall be subject
means of an entry in the records by the authorized to a surcharge equivalent to two hundred fifty percent
person to be supported subsequently by a (250%) of the duty and tax due. No surcharge shall be
supplementary goods declaration. imposed when the discrepancy in duty is less than ten
percent (10%), or when the declared tariff heading is
SECTION 1228. Trade Facility for AEO. — The rejected in a formal customs dispute settlement process
Secretary of Finance shall, upon the recommendation of involving difficult or highly technical question of tariff
the Commissioner, issue the necessary rules: classification, or when the tariff classification declaration
(a) To supervise and regulate the conduct and relied on an official government ruling.
operations of the AEOs, consistent with international best There is undervaluation when: (a) the declared value
practices, the World Customs Organization (WCO) fails to disclose in full the price actually paid or payable or
framework of standards to secure and facilitate global any dutiable adjustment to the price actually paid or
trade, and other international conventions and payable; or (b) when an incorrect valuation method is
agreements; used or the valuation rules are not properly observed,
(b) To develop a trade facilitation program for AEOs resulting in a discrepancy in duty and tax to be paid
and other authorized persons consistent with between what is legally determined as the correct value
international best practices and international conventions against the declared value. When the undervaluation is
and agreements; and established without the need to go through the formal
dispute settlement process provided for in this Act, a
(c) To recognize existing facilities where the authority surcharge shall be imposed equivalent to two hundred
or right to operate AEOs has been granted by the relevant fifty percent (250%) of the duty and tax due. No surcharge
government agency or regulator through a contract, shall be imposed when the discrepancy in duty is less
where the Bureau shall: than ten percent (10%), or the declared value is rejected as
(i) Only require an endorsement by the relevant a result of an official ruling or decision under the customs
agency or regulator; dispute settlement process involving difficult or highly
technical question relating to the application of customs
(ii) Issue a certificate of authority as a matter of valuation rules.
course; and
A discrepancy in duty and tax to be paid between
(iii) Ensure that the term of the certificate of authority what is legally determined and what is declared
shall be coterminous with the applicable government amounting to more than thirty percent (30%) shall
contract or any extension thereof. constitute a prima facie evidence of fraud.
The Bureau shall implement the provisions of this When the misdeclaration, misclassification or
chapter without interfering, or impeding AEO operations undervaluation is intentional or fraudulent, such as when
as well as existing operations of wharves, container yards, a false or altered document is submitted or when false
container freight stations, warehouses, examination areas statements or information are knowingly made, a
and other facilities located in customs territory and/or in surcharge shall be imposed equivalent to five hundred
airports and seaports. The Bureau shall likewise ensure percent (500%) of the duty and tax due and that the
that any subsequent rules, regulations, orders or goods shall be subject to seizure regardless of the
memoranda issued in relation to AEOs shall be consistent amount of the discrepancy without prejudice to the
with the appropriate government agency's or regulator's application of fines or penalties provided under Section
prevailing operating procedures and international best 1401 of this Act against the importer and other person or
practices. persons who willfully participated in the fraudulent act.
Existing contracts of private operators with SECTION 1401. Unlawful Importation or Exportation.
appropriate government agency or regulator, such as, but — Any person who shall fraudulently import or export or
not limited to, the PPA, SBMA and PIA and their bring into or outside of the Philippines any goods, or
respective authorities and powers already granted by law assist in so doing, contrary to law, or shall receive, conceal,
pertinent to such contract, shall not be impaired or buy, sell, or in any manner facilitate the transportation,
adversely affected with the Bureau's implementing rules concealment, or sale of such goods after importation, or
and regulations on AEOs. shall commit technical smuggling as defined in this Act
shall be penalized by:
TITLE XIII Customs Fees and Charges (a) Imprisonment of not less than thirty (30) days and
one (1) day but not more than six (6) months, or a fine of
SECTION 1300. Customs Dues, Fees and Charges. — not less than twenty-five thousand pesos (P25,000.00)
For services rendered and documents issued by the but not more than seventy-five thousand pesos
Bureau, dues, fees and charges shall be collected as may (P75,000.00), or both, if the appraised value of the goods
be provided under existing regulations issued by the unlawfully imported, to be determined in the manner
Secretary of Finance, upon the recommendation of the prescribed under this Act, including duties and taxes, of
Commissioner. the goods unlawfully imported does not exceed two
SECTION 1301. General Provision on the Authority to hundred fifty thousand pesos (P250,000.00);
Increase or Decrease Dues, Fees and Charges. — The


(b) Imprisonment of not less than six (6) months and evidence to authorize conviction unless the defendant
one (1) day but not more than one (1) year, or a fine of not shall explain the possession to the satisfaction of the
less than seventy-five thousand pesos (P75,000.00) but court: Provided, That each act of unlawful importation or
not more than one hundred fifty thousand pesos exportation shall be deemed as a separate offense:
(P150,000.00), or both, if the appraised value of the goods Provided, however, That payment of the tax due after
unlawfully imported, to be determined in the manner apprehension shall not constitute a valid defense in any
prescribed under this Act, including duties and taxes, prosecution under this section: Provided, further, That
exceeds two hundred fifty thousand pesos (P250,000.00) outright smuggling shall also be punishable under this
but not more than five hundred thousand pesos section: Provided, finally, That the rights and privileges
(P500,000.00); provided in this Act for the importers, consignees,
(c) Imprisonment of not less than one (1) year and one exporters, service providers, third parties and other third
(1) day but not more than three (3) years, or a fine of not parties who committed this offense shall be revoked.
less than one hundred fifty thousand pesos (P150,000.00) SECTION 1402. Failure or Refusal of Party to Give
but not more than three hundred thousand pesos Evidence or Submit Documents for Assessment. —
(P300,000.00) or both, if the appraised value of the goods When the owner, importer or consignee of any imported
unlawfully imported, to be determined in the manner goods, or the agent of either, fails or refuses, upon lawful
prescribed under this Act, including duties and taxes, demand in writing by any customs officer to appear,
exceeds five hundred thousand pesos (P500,000.00) but lawfully depose, or submit to examination or to answer
not more than one million pesos (P1,000,000.00); any material question or refuses to produce records,
(d) Imprisonment of not less than three (3) years and accounts or invoices in possession pertaining to the value,
one (1) day but not more than six (6) years, or a fine of not classification or disposition of the goods in question and
less than three hundred thousand pesos (P300,000.00) deemed material in assessing the same, the District
but not more than one million five hundred thousand Collector shall assess a surcharge of twenty percent (20%)
pesos (P1,500,000.00), or both, if the appraised value of on the durable value of the goods which is the subject of
the goods unlawfully imported, to be determined in the the importation.
manner prescribed under this Act, including duties and SECTION 1403. Other Fraudulent Practices against
taxes, exceeds one million pesos (P1,000,000.00) but not Customs Revenue. — Any person who makes or attempts
more than five million pesos (P5,000,000.00); to make any entry of imported or exported goods by
(e) Imprisonment of not less than six (6) years and means of any false or fraudulent statement, document or
one (1) day but not more than twelve (12) years, or a fine of practice or knowingly and willfully files any false or
not less than one million five hundred thousand pesos fraudulent claim for payment of drawback or refund of
(P1,500,000.00) but not more than fifteen million pesos duties shall, for each act, be punished in accordance with
(P15,000,000.00), or both, if the appraised value of the the penalties prescribed in Section 1401 of this Act.
goods unlawfully imported, to be determined in the SECTION 1404. Failure to Declare Baggage. —
manner prescribed under this Act, including duties and Whenever dutiable goods are not declared by any person
taxes, exceeds five million pesos (P5,000,000.00) but not arriving within the Philippines, such goods shall be seized
more than fifty million pesos (P50,000,000.00); and the person may obtain release of such goods, if not
(f) Imprisonment of not less than twelve (12) years and imported contrary to any law, upon payment of a
one (1) day but not more than twenty (20) years, or a fine surcharge equivalent to thirty percent (30%) of the landed
of not less than fifteen million pesos (P15,000,000.00) but cost of such goods, in addition to all duties, taxes and
not more than fifty million pesos (P50,000,000.00), or other charges due. Nothing in this section shall preclude
both, if the appraised value of the goods unlawfully the filing of criminal action against the offender.
imported, to be determined in the manner prescribed SECTION 1405. Vessel, Seacraft, or Aircraft
under this Act, including duties and taxes, exceeds fifty Departing Before Undergoing Customs Formalities. —
million pesos (P50,000,000.00) but not more than two Any vessel, seacraft, or aircraft arriving within the limits of
hundred million pesos (P200,000,000.00); a Customs District from a foreign port which departs
(g) If the appraised value of the goods unlawfully before undergoing customs formalities, without being
imported to be determined in the manner prescribed compelled to do so by stress of weather, pursuit or duress
under this Act, including duties and taxes, exceeds two of enemies, or other necessity, shall be liable for a fine of
hundred million pesos (P200,000,000.00) or if the not less than one hundred thousand pesos (P100,000.00)
aggregate amount of the appraised value of the goods but not more than three hundred thousand pesos
which are the subject of unlawful importation committed (P300,000.00).
in more than one instance, including duties and taxes, SECTION 1406. Obstruction to Boarding Officer. — If
exceeds two hundred million pesos (P200,000,000.00), the master or pilot-in-command or any member of the
the same shall be deemed as a heinous crime and shall complement of any vessel or aircraft arriving at the
be punishable with a penalty of reclusion perpetua and a Philippine port obstructs or hinders any officer from
fine of not less than fifty million pesos (P50,000,000.00); lawfully going on board such vessel or aircraft for the
and purpose of enforcing this Act, or intentionally causes any
(h) The penalty of prision mayor shall be imposed officer to be so obstructed or hindered, the vessel or
when the crime of serious physical injuries shall have aircraft shall be liable to a fine of not less than one
been committed, and the penalty of reclusion perpetua hundred thousand pesos (P100,000.00) but not more
shall be imposed when the crime of homicide shall have than three hundred thousand pesos (P300,000.00).
been committed by reason or on the occasion of the SECTION 1407. Unlawful Boarding or Leaving of
unlawful importation. Vessel or Aircraft. — If, upon arrival at the Philippine port,
In applying the above scale of penalties, an offender any master of a vessel or pilot-in-command of an aircraft
who is a foreigner shall be deported without further engaged in a foreign trade permits any person to board
proceedings after serving the sentence. If the offender is or leave the vessel or aircraft without the permission of
a public officer or employee, the penalty which is the next the customs officer-in-charge, the owner or operator of
higher in degree shall be imposed in addition to the such vessel or aircraft shall be liable for a fine of not less
penalty of perpetual disqualification from public office, than one hundred thousand pesos (P100,000.00) but not
and disqualification to vote and to participate in any more than three hundred thousand pesos (P300,000.00).
public election. If the offender fails to pay the fine, SECTION 1408. Unloading of Cargo before Arrival at
subsidiary imprisonment shall be served. Port of Entry. — If, upon the arrival within the limits of
When, upon trial for violation of this section, the any Customs District of the Philippines of any vessel or
defendant is shown to have had possession of the goods aircraft engaged in foreign trade, the master or
in question, possession shall be deemed sufficient pilot-in-command thereof permits any part of the cargo
to be unloaded before arrival at the port of entry, and



without authority from a proper customs officer, the materially in character or otherwise with the description
owner, operator, or agent of such vessel or aircraft shall be thereof in the manifest.
liable for a fine of not less five hundred thousand pesos SECTION 1414. Discrepancy between Actual and
(P500,000.00) but not more than two million pesos Declared Weight of Manifested Goods. — If the gross
(P2,000,000.00): Provided, That no fine shall accrue upon weight of goods or package described in the manifest or
satisfactory proof to the proper District Collector that the bill of lading exceeds the declared weight by more than
unloading was rendered necessary by stress of weather, ten percent (10%), and such discrepancy was due to the
accident or other necessity: Provided, however, That the negligence of the master or pilot-in-command, the
fine imposed herein shall be without prejudice to the owner, employee, operator or agent of the importing
application of fines or penalties provided under Section vessel or aircraft shall be liable for a fine of not more than
1401 of this Act. twenty percent (20%) of the value of the package or
SECTION 1409. Unloading of Cargo at Improper goods in respect to which the deficiency exists.
Time or Place After Arrival. — The owner or operator of SECTION 1415. Discrepancy with the Master's or
any vessel or aircraft from which cargo is discharged Pilot's-in-Command Report. — When a vessel or aircraft
upon arrival in the Philippines at a time or place other arriving from a foreign port is compelled by necessity to
than that designated by the District Collector, shall be unload in another port other than the port of entry and
fined not less one hundred thousand pesos (P100,000.00) permission is granted by the District Collector for the
but not more than three hundred thousand pesos unloading of the vessel or aircraft or the delivery of any
(P300,000.00): Provided, That no fine shall accrue upon part of the cargo and it shall be found that there is
satisfactory proof to the proper District Collector that the discrepancy between the cargo unloaded and the report
unloading was rendered necessary by stress of weather, of the master or the pilot-in-command and such
accident or other necessity. discrepancy is not satisfactorily explained, the owner,
SECTION 1410. Failure to Exhibit or Deposit operator or agent of the vessel or aircraft shall be liable for
Documents. — When the master of a vessel or a fine of not less than one hundred thousand pesos
pilot-in-command of an aircraft engaged in foreign trade (P100,000.00) but not more than three hundred thousand
fails to submit to the District Collector at the time of entry pesos (P300,000.00).
of the vessel or aircraft the register or other documents in SECTION 1416. Failure to Report Fraud. — A master,
lieu thereof, together with the clearance and other pilot-in-command or other officer, owner or agent of any
documents granted by the customs officers to the vessel vessel or aircraft trading with or within the Philippines
or aircraft at the last foreign port of departure, or fails to who has knowledge of the commission of fraud that shall
exhibit any certificate or other documents required to be result in the loss or diminution of customs revenue but
then exhibited, the owner or operator of such vessel or fails to report all information relative thereto to the
aircraft shall be liable for a fine of not less than one District Collector shall be penalized with imprisonment of
hundred thousand pesos (P100,000.00) but not more not less than six (6) months and one (1) day but not more
than three hundred thousand pesos (P300,000.00). than one (1) year and shall be liable for a fine of not less
SECTION 1411. Bringing of Unmanifested Arms, than one hundred thousand pesos (P100,000.00) but not
Explosives or War Equipment. — The owner, operator, or more than three hundred thousand pesos (P300,000.00).
agent of a vessel or aircraft arriving at a port in the If the offender is a foreigner, the offender shall be
Philippines bearing cargo consisting of firearms, deported after serving the sentence. If the offender is a
gunpowder, cartridges, dynamite or any other explosives, public officer or employee, the offender shall suffer
munitions or equipment of war not contained in the additional penalty of perpetual disqualification to hold
manifest of the vessel or aircraft, or which are concealed public office, to vote and to participate in any election. All
on board, shall be liable for a fine of not less than five the benefits due from service in the government,
hundred thousand pesos (P500,000.00) but not more including the separation and retirement benefits, shall be
than one million pesos (P1,000,000.00). forfeited.
SECTION 1412. Failure to Supply Advance and SECTION 1417. False Statement of Vessel's or
Requisite Manifests. — Failure to transmit the electronic Aircraft's Destination. — When the master or
manifest within the required time as may be prescribed pilot-in-command of a vessel or aircraft loaded with
by the Bureau, prior to arrival of the carrying vessel or goods shall make a false statement as to the next
aircraft at the port of entry shall make the owner, destination of such vessel or aircraft when that
operator, or agent of the vessel or aircraft liable for a fine information is required by a customs officer, the owner or
of not less than one hundred thousand pesos operator of such vessel or aircraft shall be liable for a fine
(P100,000.00) but not more than three hundred thousand of not less than one hundred thousand pesos
pesos (P300,000.00). (P100,000.00) but not more than three hundred thousand
If the transit time from port of origin to port of entry pesos (P300,000.00). The arrival of a vessel or aircraft at a
is at least seventy-two (72) hours, the shipping or different port other than the one it had been originally
forwarding agent of the carrier or the vessel who fails to authorized and cleared for without having been impelled
submit the manifest at least twenty-four (24) hours before to do so by necessity, shall be prima facie proof that the
entry shall likewise be liable for a fine of not less than one original statement of the actual destination of the vessel
hundred thousand pesos (P100,000.00) but not more or aircraft was false.
than three hundred thousand pesos (P300,000.00). SECTION 1418. Affixing Seals. — Any person who,
SECTION 1413. Disappearance of Manifested Goods. without authority, affixes or attaches a customs seal,
— When any package or goods mentioned in the fastening, or any mark, or fastening purporting to be a
manifest meant to be unloaded at the port of destination customs seal, to any vessel, aircraft, vehicle, warehouse, or
is not unloaded upon the arrival of the vessel or aircraft, package, shall be penalized with imprisonment of not
its agent shall be liable for a fine of not less than one less than six (6) months and one (1) day but not more
hundred thousand pesos (P100,000.00) but not more than one (1) year, and shall be liable for a fine of not less
than three hundred thousand pesos (P300,000.00) unless than one hundred thousand pesos (P100,000.00) but not
the disappearance of the package or the goods in more than three hundred thousand pesos (P300,000.00).
question was not due to the negligence of the master of If the offender is a foreigner, the offender shall be
the vessel or pilot-in-command of an aircraft, and is deported after serving the sentence. If the offender is a
explained to the satisfaction of the District Collector. public officer or employee, the offender shall suffer an
additional penalty of perpetual disqualification to hold
The owner, operator, or agent of a vessel or aircraft public office and disqualification from exercising the
shall be liable for the payment of the same fine when a right to vote and to participate in any election.
package or goods listed in the manifest does not tally
SECTION 1419. Breaking of Seal Placed by Customs
Officers. — If any seal placed by a customs officer upon


any vessel or aircraft or compartment thereof, or upon SECTION 1426. Breach of Security. — Upon breach of
any box, trunk or other package of goods on board is security required to be filed under this Act, the District
broken, the owner, operator, or agent of the vessel or Collector, subject to the approval of the Commissioner,
aircraft shall be liable for a fine of not less than one may accept in satisfaction thereof a smaller sum than
hundred thousand pesos (P100,000.00) but not more that mentioned in the penalty clause of the security, but
than three hundred thousand pesos (P300,000.00) for in no case less than the amount necessary to indemnify
each broken or destroyed seal. the government for the damage occasioned by such
SECTION 1420. Breaking of Lock or Fastening breach.
Placed by Customs Officers. — If any lock or other SECTION 1427. Failure to Keep Importation Records
fastening device placed by a customs officer upon any and Full Access to Customs Officers. — Any person who
hatch door, or other means of communication in the hold fails to keep all the records of importations or books of
of a vessel or aircraft, or other part thereof for the security accounts, business and computer systems and all
of the same during the night time, is unlawfully opened, customs commercial data in the manner prescribed
broken or removed, or if any of the goods contained in under this Act, shall be punished with imprisonment of
the hold or in the other compartments so secured is not less than three (3) years and one (1) day but not more
clandestinely abstracted and landed, the owner, operator, than six (6) years and/or a fine of one million pesos
or agent of the vessel or aircraft shall be liable for a fine of (P1,000,000.00). This penalty shall likewise be imposed
not less than one hundred thousand pesos (P100,000.00) against importers and brokers who deny an authorized
but not more than three hundred thousand pesos customs officer full and free access to such records, books
(P300,000.00). of accounts, business and computer systems, and all
SECTION 1421. Removal, Breakage, and Alteration of customs commercial data including payment records,
Marks. — Any person who, without authority, willfully without prejudice to the imposition of the administrative
removes, breaks, injures, defaces or alters any customs sanctions by the Bureau against contumacious importers,
seal or other fastening or mark placed upon any vessel, including the authority to hold delivery or release of their
vehicle, on land, sea or air, warehouse or package imported goods.
containing merchandise or baggage in bond or in SECTION 1428. Concealment or Destruction of
customs custody, shall be punished with the penalty Evidence of Fraud. — Any person who willfully conceals
prescribed in Section 1420 hereof. or destroys any invoice, book, or document relating to any
SECTION 1422. Unauthorized Withdrawal of goods liable to duty after an inspection thereof has been
Imported Goods from Bonded Warehouse. — Any demanded by the District Collector or at any time
person who causes the unauthorized withdrawal of conceals or destroys any such invoice, book, or document
imported goods stored from a CBW shall be liable for for the purpose of suppressing any evidence of fraud
payment of a surcharge of fifty percent (50%) of duties, therein contained, shall be penalized with imprisonment
taxes, customs fees, and charges, found to be due and of not less than three (3) years and one (1) day but not
unpaid. The amount of surcharge shall be added to the more than six (6) years and shall be liable for a fine of not
duties, taxes and charges due on the goods withdrawn. If less than three hundred thousand pesos (P300,000.00)
the delinquency lasts for more than one (1) year, the but not more than one million pesos (P1,000,000.00).
surcharge shall be increased by twenty-five percent (25%) SECTION 1429. Other Offenses. — The owner or
of the unpaid duties and taxes annually: Provided, That operator of a vessel, aircraft or train shall be liable for a
where the withdrawal is attended with fraud, such as fine for the following acts:
when a fake or altered withdrawal permit is submitted, (a) For anchoring at any dock, pier, wharf, quay, or
the warehouse operator shall be held liable under the bulkhead other than a port of entry, a fine of not less than
pertinent provisions of this Act, without prejudice to the five hundred thousand pesos (P500,000.00) but not more
suspension or revocation of the warehousing privileges than one million pesos (P1,000,000.00) for overseas
granted by the Bureau pursuant to this Act. vessels;
SECTION 1423. Removing or Repacking Goods in (b) For dumping of garbage or slops over the sides of
Warehouse. — Any person who fraudulently conceals, the vessel within three (3) miles from the nearest
removes, or repacks merchandise in any warehouse or coastline, a fine of not less than one million pesos
fraudulently alters, defaces, or obliterates any mark or (P1,000,000.00) but not more than ten million pesos
numbers placed upon packages deposited in such (P10,000,000.00);
warehouse, or shall aid or abet any such acts, shall be
punished with the penalties prescribed in Section 1418 (c) For dumping or causing to spread crude oil,
hereof. kerosene, or gasoline in the bay or at the piers within
three (3) miles from the nearest coastline, a fine of not
Merchandise so concealed, removed, or repacked, or less than one million pesos (P1,000,000.00) but not more
packages upon which marks, numbers or the values than ten million pesos (P10,000,000.00) for each offense;
thereof have been so altered, defaced, or obliterated shall
be forfeited in favor of the government. (d) For loading gasoline or any other petroleum
products at a place other than that designated by the
SECTION 1424. Removing Goods from Customs regulations, a fine of not less than five hundred thousand
Custody. — Any person who enters any warehouse, or any pesos (P500,000.00) but not more than one million pesos
vehicle loaded with or containing merchandise with (P1,000,000.00) for each offense;
intent to unlawfully remove therefrom any merchandise
or baggage in such vessel, vehicle or warehouse or (e) For causing the emission and spread of harmful
otherwise in customs custody or control, or any person gas, fumes and chemicals, a fine of not less than one
who receives or transports any merchandise or baggage million pesos (P1,000,000.00) but not more than ten
unlawfully removed from any such vessel, vehicle or million pesos (P10,000,000.00) for each offense; and
warehouse, or shall aid or abet such removal, shall suffer (f) For transporting hazardous waste, radioactive
the penalties provided in Section 1401 hereof. waste and other toxic substances as provided under the
SECTION 1425. Failure to Pay Duties, Taxes and Basel Convention and Republic Act No. 6969, otherwise
Other Charges. — For failure to pay the duties, taxes and known as the "Toxic Substances and Hazardous and
other charges of an assessment within fifteen (15) days Nuclear Wastes Control Act of 1990", the penalty shall be
from the date of final assessment, a surcharge of ten forfeiture of the vessel in favor of the government.
percent (10%) of the total assessed amount or balance The fines imposed herein shall be without prejudice
thereon shall be added and collected, which surcharge to the application of fines or penalties provided under
shall be increased to twenty-five percent (25%) if the special laws and regulations.
delinquency lasts for more than one (1) year.
SECTION 1430. Violations of This Act and Rules and
Regulations in General. — Any person who violates any



other provision of this Act or the rules and regulations (1) day but not more than twelve (12) years and a fine of
issued pursuant thereto, shall be penalized with not less than five hundred thousand pesos (P500,000.00)
imprisonment of not less than thirty (30) days and one (1) but not more than one million pesos (P1,000,000.00). The
day but not more than one (1) year, or be liable for a fine offender shall suffer the additional penalty of perpetual
of not less than one hundred thousand pesos disqualification to hold public office, to vote and to
(P100,000.00) but not more than three hundred thousand participate in any election. All the benefits of the offender
pesos (P300,000.00), or both. If the offender is a foreigner, due from service in the government, including separation
the offender shall be deported after serving the sentence. and retirement benefits, shall be forfeited.
If the offender is a public officer or employee, the SECTION 1433. Liability for Other Offenses. — The
offender shall be disqualified from holding public office, fines and penalties imposed in this chapter shall be
from exercising the right to vote and to participate in any without prejudice to the application of fines or penalties
public election for ten (10) years. provided under Chapter 1 of this title and special laws and
regulations.
CHAPTER 2 Penalties Imposed Upon Bureau
Employees
TITLE XV Miscellaneous Provisions
SECTION 1431. Statutory Offenses of Officers and
Employees. — Every officer, agent, or employee of the SECTION 1500. Information, Decisions, and Rulings.
Bureau or of any other agency of the government — The Bureau shall ensure that all information of general
charged with the enforcement of the provisions of this application pertaining to customs, including revisions or
Act, who shall be found guilty of any delinquency as amendments thereto, shall be available to the general
described below shall be penalized with imprisonment of public.
not less than six (6) years and one (1) day but not more SECTION 1501. Period to Issue Ruling. — Unless
than twelve (12) years, and perpetual disqualification to otherwise provided in this Act, the issuing authority shall
hold public office, from exercising the right to vote and to act on the application for ruling within thirty (30) days
participate in any public election and a fine of not less from receipt of the application and supporting
than five hundred thousand pesos (P500,000.00); but not documents as may be required by regulation. Within
more than one million pesos (P1,000,000.00): three (3) days from issuance of a ruling, the issuing
(a) Extortion or willful oppression under color of law; authority shall notify the requesting party of such ruling.
(b) Knowingly demanding other or greater sums that SECTION 1502. Publication and Confidentiality of
are authorized by law or receive any fee, compensation, or Certain Information in Ruling. — The Bureau and the
reward except as by law prescribed, for the performance Commission shall regularly publish its rulings in a manner
of any duty; accessible to the public. For this purpose, each
application for ruling shall be assigned a title and unique
(c) Willfully neglecting to give receipts, as required by ruling number for easy reference. The publication shall
law, for any sum collected in the performance of duty, or contain information on the goods involved, the body or
who willfully neglect to perform any of the duties summary of the ruling, particularly the grounds relied
enjoined by law; upon to support the ruling, but shall exclude the name of
(d) Conspiring or colluding with another or others to the requesting party and other information which by
defraud the customs revenue or otherwise violate the their very nature are confidential, including those which
law; the requesting party indicated in its application as
confidential in nature. Except in the context of judicial
(e) Providing an opportunity for any person to proceedings, any disclosure of confidential information
defraud the government of customs revenue or failing to under this section shall not be made except upon the
do any act with the intent to enable any person to written consent of the beneficiary of the advance ruling.
defraud the government of customs revenue;
SECTION 1503. Duty of District Collector to Report
(f) Negligently or designedly permitting the violation Rulings to the Commissioner. — When any new or
of the law by any other person; unsettled question shall be determined by a District
(g) Making or signing for any false entry or entries in Collector, and if the matter is not otherwise appealed for
any book, making or signing any false certificate or return review in the ordinary course, the District Collector shall
in any case where the law requires the making by them notify the Commissioner of the decision and submit an
of such entry certificate or return; adequate statement of the facts involved.
(h) Failing to report knowledge or information to their SECTION 1504. Application of Established Ruling or
superior officer about an act or acts of fraud committed Decision. — A ruling or decision of the Commissioner
in revenue collection as required by law; which determines the construction or application of any
(i) Demanding or accepting or attempting, without provision of law imposing customs duties and taxes, and
authority, to collect directly or indirectly as payment or which changes any existing established valuation,
otherwise, any sum of money or other thing of value for classification, rules of origin and other customs rules,
the compromise, adjustment, or settlement of any charge interpretation or practice shall not take effect until thirty
or complaint for any violation or alleged violation of law; (30) days after public notice shall have been given in the
form of a published decision. When the ruling or decision
(j) Unlawfully disclosing confidential information favors the taxpayers, it shall become effective
gained during any investigation or audit, or using such immediately.
information for personal gain or to the detriment of the
government, the Bureau, or third parties. SECTION 1505. Authority of Official to Administer
Oaths and Take Testimony. — The Commissioner,
All the benefits due from service in the government, District Collectors and their deputies, and other customs
including separation and retirement benefits, of an officers especially deputized by the District Collector shall
officer, agent, or employee of the Bureau or of any other have authority to administer oaths and take testimony in
agency of the government charged with the connection with any matter within the jurisdiction of the
enforcement of the provisions of this Act found guilty of Bureau and, in connection therewith, may require the
the foregoing violations shall be forfeited. production of relevant papers, documents, books and
SECTION 1432. Failure to Report Fraud. — Any records in accordance with law.
employee of the Bureau who has knowledge of any fraud SECTION 1506. General Security. — In cases where
committed against the government pertaining to securities are required to be given under the provisions of
customs revenue, and who fails to report all information this Act and related customs laws, the District Collector,
relative thereto to the District Collector, shall be penalized instead of requiring separate special security where
with imprisonment of not less than six (6) years and one transactions of a particular party are numerous, may


accept general security extending over such periods of SECTION 1514. International Standards and Best
time and covering such transactions of the party in Practices. — The Bureau may adopt international
question as may be satisfactory to the District Collector. standards and best practices in customs administration
SECTION 1507. Security. — The Bureau shall prescribe laid down by international agreement or convention
the forms and amount of security required to guarantee pertaining to trade facilitation, supply chain security, and
the payment of duties and taxes and other obligations related matters, whether or not the Philippines is a
provided for in this Act. signatory to such international agreement or convention.
Any party required to provide security shall have the

option to choose from any form of security prescribed by TITLE XVI Tariff Administration and Policy
the Bureau. The Bureau may not require security if
satisfied that an obligation to the Bureau will be fulfilled,
but shall require and accept a general security from CHAPTER I Tariff Commission
declarants who regularly declare goods at different SECTION 1600. Chief Officials of the Tariff
offices in customs territory under such terms and Commission and Qualifications. — The officials of the
conditions as may be determined by the Commissioner. Tariff Commission shall consist of a Chairperson and two
The required amount of security shall be the lowest (2) Commissioners to be appointed by the President of
possible and shall not exceed the amount of imposable the Philippines. The Chairperson and the Commissioners
duties, taxes and other charges. shall be natural-born citizens of the Philippines, of good
moral character and proven integrity, and who, by
When the obligation under which the security was experience and academic training possess the necessary
required has been satisfied, the security shall be qualifications requisite for developing expert knowledge
discharged immediately. of tariff and trade related matters. During their terms of
SECTION 1508. Customs Service Fees. — Customs office, the Chairperson and the Commissioners shall not
personnel may be assigned by a District Collector to engage in the practice of any profession, or intervene
render overtime work and other customs services and directly or indirectly in the management or control of any
shall be paid for such services by the Bureau according to private enterprise which may, in any way, be affected by
service fees fixed by the Commissioner and approved by the functions of their office. They shall not be, directly or
the Secretary of Finance. The Bureau may charge indirectly, financially interested in any contract with the
additional customs service fees when applicable, subject government, or any subdivision or instrumentality
to the rates prescribed under existing rules and thereof.
regulations. SECTION 1601. Appointment and Compensation of
SECTION 1509. Testimony in Writing. — When Officials and Employees. — All employees of the
testimony is taken in any proceeding or matter under the Commission shall be appointed by the Chairperson in
authority of the Bureau, either party may require that the accordance with the Civil Service Law except as the
testimony shall be made in writing, and when so taken, private secretaries to the offices of the Chairperson,
the written testimony shall be filed with the Office of the Commissioners and Executive Director.
District Collector and to be preserved for use or reference SECTION 1602. Official Seal. — The Commission is
until the final decision has been reached. authorized to adopt an official seal.
SECTION 1510. District Collector Not Liable in SECTION 1603. Functions of the Commission. — The
Respect to Ruling in Customs Cases. — Every District Commission shall have the following functions:
Collector or other officials of the Bureau shall not be in
any way personally liable on account of any official ruling (a) Adjudicate cases on the application of trade
or decision as to which the person claiming to be remedies against imports pursuant to Sections 711, 712
aggrieved has the right to obtain either an administrative and 713 of this Act;
or judicial review. Except for misdelivery of goods, a (b) Study the impact of tariff policies and programs
District Collector may not, in the absence of abuse of on national competitiveness and consumer welfare in line
authority, be liable to any person for any loss occasioned with the economic objectives of the government;
either by the official act or the acts of the subordinates.
(c) Administer the Philippine tariff schedules and
SECTION 1511. Interest Prohibited to be Held by tariff nomenclatures;
Customs Employees. — Any person employed under the
authority of the government in the assessment of duties, (d) Issue advance rulings on tariff classification of
taxes, fees and other charges in connection with imports imported goods and render rulings on disputes over tariff
or exports, shall not own, either in whole or in part, any classification of goods pursuant to Section 1100 of this
vessel or aircraft or act as attorney, agent or consignee for Act, except in cases involving goods on which the
the owner of any vessel or aircraft or of any cargo loaded Commission has provided advance ruling on tariff
on board the vessel or aircraft; and shall not import or be classification;
involved, directly or indirectly, in the importation of any (e) Provide the President and Congress with
goods for sale into the Philippines. independent analysis, information and technical support
SECTION 1512. Reward to Persons Instrumental in on matters related to tariff and nontariff measures
the Actual Collection of Additional Revenues Arising affecting Philippine industries and exports for policy
from the Discovery of Violations of This Act. — A cash guidance;
reward equivalent to twenty percent (20%) of the actual (f) Analyze the nature and composition, and the
proceeds from the sale of smuggled goods and classification of goods according to tariff commodity
confiscated goods or actual collection of additional classification and heading number for customs and other
revenues shall be given to the customs and non-customs related purposes, which information shall be furnished
informers or whistleblowers who are instrumental in the the NEDA, DTI, DA, DOF, DENR, and BSP;
collection of additional revenues arising from the
discovery of violations of this Act in accordance with the (g) Review the trade agreements for negotiation and
rules and regulations to be issued by the Secretary of trade agreements entered into by the Philippines and
Finance. make recommendations, if necessary, on the consistency
of the terms of the agreements with the national policy
SECTION 1513. Outsourcing of Non-Sovereign objectives;
Customs Functions to Private Entities. — Subject to the
approval of the Secretary of Finance, the Bureau may (h) Conduct public consultations and public hearings
outsource any of its non-sovereign and ancillary function pursuant to its functions; and
to a qualified and competent private entity in accordance (i) Deputize or delegate, to appropriate government
with government rules on service procurement. agency its function of rendering rulings on disputes over


tariff classification of goods, until the plantilla positions evidence and to be heard. The Commission shall also hear
necessary for undertaking such function have been the views and recommendations of any government
approved and filled-up: Provided, That such delegation of office, agency, or instrumentality. The Commission shall
function shall not extend beyond three (3) years from the submit its findings and recommendations to the NEDA
effectivity of this Act. within thirty (30) days after the termination of the public
SECTION 1604. Reports of the Commission. — The hearings.
Commission shall place at the disposal of the President (c) The power of the President to increase or decrease
and any Member of the Congress of the Philippines all rates of import duty within the limits fixed in subsection
information at its command. It shall conduct such (a) hereof shall include the authority to modify the form of
investigation and submit reports as may be required by duty. In modifying the form of duty, the corresponding ad
the President and the Congress of the Philippines. It shall valorem or specific equivalents of the duty with respect
likewise report to the President and Congress on the first to imports from the principal competing foreign country
Monday of December of each year and hereafter, a for the most recent representative period shall be used as
statement of methods adopted and a summary of all basis.
reports made during the year. (d) Any order issued by the President pursuant to the
SECTION 1605. Access to Documents and Assistance provisions of this section shall take effect thirty (30) days
to the Commission. — The Commission or its duly after promulgation, except in the imposition of additional
authorized representative shall have access to any duty not exceeding ten percent (10%) ad valorem which
document, paper or record pertinent to the subject shall take effect at the discretion of the President.
matter under investigation, in the possession of any (e) The power delegated to the President as provided
person, firm, copartnership, corporation, or association for in this section shall be exercised only when Congress
engaged in the production, importation, or distribution of is not in session.
goods under investigation, and shall have power to
summon witnesses, take testimony, administer oaths, (f) The power herein delegated may be withdrawn or
and to issue subpoena duces tecum requiring the terminated by Congress through a joint resolution.
production of books, papers, or documents relating to the The NEDA shall promulgate rules and regulations
matter under investigation. The Commission may also necessary to carry out the provisions of this section.
request the views, recommendations, and assistance of
any government office, agency, or instrumentality who SECTION 1609. Promotion of Foreign Trade. — (a) For
shall be expected to cooperate fully with the Commission. the purpose of expanding foreign markets for Philippine
products as a means of assisting in the economic
SECTION 1606. Sworn and Verified Statements. — development of the country, in overcoming domestic
The Commission may order the taking of sworn unemployment, in increasing the purchasing power of
statements at any stage of any proceeding or the Philippine peso, and in establishing and maintaining
investigation before it. The sworn statements must be better relations between the Philippines and other
made before a person duly authorized to administer countries, the President, shall, from time to time:
oaths.
(1) Enter into trade agreements with foreign
The Commission is authorized to require any governments or instrumentalities thereof; and
importer, grower, producer, manufacturer or seller to file
with the Commission a statement, under oath, giving the (2) Modify import duties, including any necessary
selling prices in the Philippines of goods imported, change in classification and other import restrictions as
grown, produced, fabricated or manufactured by such are required or appropriate to carry out and promote
person. foreign trade with other countries: Provided, That in
modifying import duties or fixing import quota, the
SECTION 1607. Implementing Rules and requirements prescribed in subsection (a) of Section 1608
Regulations. — The Commission shall promulgate and of this Act shall be observed: Provided, however, That any
adopt such rules and regulations as may be necessary to modification in import duties and the fixing of import
carry out the provisions of this Act. quotas pursuant to the various trade agreements the
Philippines has entered into, shall not be subject to the
CHAPTER II Flexible Tariff limitations of aforesaid subsection (a) of Section 1608.
SECTION 1608. Flexible Clause. — (a) In the interest (b) The duties and other import restrictions as
of the general welfare and national security, and subject modified in subsection (a) of this section, shall apply to
to the limitations prescribed under this Act, the President, goods which are the growth, produce, or manufacture of
upon the recommendation of the NEDA, is hereby the specific country, whether imported directly or
empowered to: indirectly, with which the Philippines has entered into a
trade agreement: Provided, That the President may
(1) Increase, reduce, or remove existing rates of import suspend the application of any concession to goods
duty including any necessary change in classification. The which are the growth, produce, or manufactured product
existing rates may be increased or decreased to any level, of the specific country because of acts or policies which
in one or several stages, but in no case shall the increased tend to defeat the purposes set in this section, including
rate of import duty be higher than a maximum of one the operations of international cartels; and the duties and
hundred percent (100%) ad valorem; other import restrictions as negotiated shall be in force
(2) Establish import quotas or ban imports of any and effect from and after such time as specified in the
commodity, as may be necessary; and order, without prejudice to the Philippine commitments
in any ratified international agreement or treaty.
(3) Impose an additional duty on all imports not
exceeding ten percent (10%) ad valorem whenever (c) Nothing in this section shall be construed to give
necessary: Provided, That upon periodic investigations by any authority to cancel or reduce in any manner the
the Commission and recommendation of the NEDA, the indebtedness of any foreign country to the Philippines or
President may cause a gradual reduction of rates of any claim of the Philippines against any foreign country.
import duty granted in Section 1611 of this Act, including (d) Before any trade agreement is concluded with any
those subsequently granted pursuant to this section. foreign government or instrumentality thereof,
(b) Before any recommendation is submitted to the reasonable public notice of the intention to negotiate an
President by the NEDA pursuant to the provisions of this agreement with such government or instrumentality
section, except in the imposition of an additional duty not shall be given in order that interested persons may have
exceeding ten percent (10%) ad valorem, the Commission an opportunity to present their views to the Commission.
shall conduct an investigation and shall hold public The Commission shall seek information and advice from
hearings wherein interested parties shall be afforded the DTI, DA, DOF, DENR, DFA and BSP, and from such
reasonable opportunity to be present, to produce other sources as it may deem appropriate.



(e) In advising the President, on a trade agreement (a) The heading which provides the most specific
entered into by the Philippines, the following shall be description shall be preferred to headings providing a
observed: more general description. However, when two (2) or more
(1) The Commission shall determine whether or not headings each refer to part only of the materials or
the domestic industry has suffered or is being threatened substances contained in mixed or composite goods or to
with injury and whether or not the wholesale prices at part only of the items in a set put up for retail sale, those
which the domestic products are sold are reasonable, headings are to be regarded as equally specific in relation
taking into account the cost of raw materials, labor, to those goods, even if one of them gives a more
overhead, a fair return on investment, and the overall complete or precise description of the goods.
efficiency of the industry. (b) Mixtures, composite goods consisting of different
(2) The NEDA shall evaluate the report of the materials or made up of different components, and goods
Commission and submit recommendations to the put up in sets for retail sale, which cannot be classified by
President. reference to 3 (a), shall be classified as if they consisted of
their essential character, insofar as this criterion is
(3) Upon receipt of the report of the findings and applicable.
recommendations of the NEDA, the President may
prescribe adjustments in the rates of import duties, (c) When goods cannot be classified by reference to 3
withdraw, modify or suspend, in whole or in part, any (a) or 3 (b), they shall be classified under the heading
concession under any trade agreement, establish import which occurs last in numerical order among those which
quota, or institute such other import restrictions, as the equally merit consideration;
NEDA recommends to be necessary in order to fully (4) Goods which cannot be classified in accordance
protect domestic industry and the consumers, subject to with the above Rules shall be classified under the
condition that the wholesale prices of the domestic heading appropriate to the goods to which they are most
products shall be reduced to, or maintained at, the level akin.
recommended by the NEDA unless, for good cause (5) In addition to the foregoing provisions, the
shown, an increase thereof, as recommended by the following Rules shall apply with respect to the goods
NEDA, is authorized by the President. Should increases be referred to therein:
made without such authority, the NEDA shall
immediately notify the President who shall allow the (a) Camera cases, musical instrument cases, gun
importation of competing products in such quantities as cases, drawing instrument cases, necklace cases and
to protect the public from the unauthorized increase in similar containers, specially shaped or fitted to contain
wholesale prices. specific goods or set of goods, suitable for long-term use
and presented with the goods for which they are
(f) This section shall not prevent the effectivity of any intended, shall be classified with such goods when of a
executive agreement or any future preferential trade kind normally sold therewith. The Rule does not, however,
agreement with any foreign country. apply to containers which give the whole its essential
(g) The NEDA and the Commission shall promulgate character; and
such reasonable procedures, rules and regulations as they (b) Subject to the provisions of Rule 5 (a), packing
may deem necessary to execute their respective materials and packing containers presented with the
functions under this section. goods therein shall be classified with the goods if they are
of a kind normally used for packing such goods. However,
CHAPTER III Tariff Nomenclature and Rate of this provision does not apply when such packing
Duty materials or packing containers are clearly suitable for
repetitive use.
SECTION 1610. General Rules for the Interpretation
(GRI). — The classification of goods and its tariff (6) For legal purposes, the classification of goods in
nomenclature as provided pursuant to this Act shall be the subheadings of a heading shall be determined
governed by the following principles: according to the terms of those subheadings and any
related subheading notes and, mutatis mutandis, to the
(1) The titles of sections, chapters and subchapters are above Rules, on the understanding that only
provided for easy reference only. For legal purposes, subheadings at the same level are comparable. For the
classification shall be determined according to the terms purposes of the Rule, the relative section and Chapter
of the headings and any relative section or chapter notes Notes also apply, unless the context otherwise requires.
and, provided such headings or notes do not otherwise
require, according to the following provisions: SECTION 1611. Tariff Nomenclature and Rates of
Import Duty. — The provisions of Section 104 on Rates of
(2)(a) Any reference in a heading to the goods shall be Import Duty of Presidential Decree No. 1464, otherwise
taken to include a reference to the same in their known as the Tariff and Customs Code of the Philippines
incomplete or unfinished form or state: Provided,That the of 1978, as amended, specifically providing for the tariff
incomplete or unfinished goods have the essential sections, chapters, headings and subheadings and the
character, as presented, of the complete or finished rates of import duty, shall still apply and shall supplement
goods. It shall also be taken to include a reference to the this Act. There shall be levied, collected and paid upon all
same, in their complete or finished form or state (or imported goods the rates of duty indicated thereon
falling to be classified as complete or finished by virtue of except as otherwise specifically provided for in this Act:
this Rule), presented unassembled or disassembled. Provided, That the maximum rate shall not exceed one
(b) Any reference in a heading to a material or hundred percent (100%) ad valorem.
substance shall be taken to include a reference to The rates of duty provided or subsequently fixed
mixtures or combinations of that material or substance pursuant to Sections 1608 and 1609 of this Act shall be
with other materials or substances. Any reference to subject to periodic investigation by the Tariff Commission
goods of a given material or substance shall be taken to and may be revised by the President, upon the
include a reference to goods consisting wholly or partly of recommendation of the NEDA.
such material or substance. The classification of goods
consisting of more than one material or substance shall It shall also apply to all products, whether imported
be according to the principles of Rule 3. directly or indirectly, of all foreign countries, which do not
discriminate against Philippine export products. An
(3) When by application of Rule 2 (b) or for any other additional one hundred percent (100%) across-the-board
reason, goods are, prima facie, classifiable under two (2) duty shall be levied on the products of any foreign
or more headings, classification shall be effected as country which discriminates against Philippine export
follows: products.


SECTION 1612. Tariff Nomenclature and Rates of unconstitutional, the remaining provisions or parts shall
Export Duty. — The provisions of Section 514 on Export remain in full force and effect.
Products Subject to Duty and Rates of Presidential SECTION 1805. Effectivity. — This Act shall take effect
Decree No. 1464, otherwise known as the Tariff and fifteen (15) days after its publication in the Official Gazette
Customs Code of 1978, as amended, specifically providing or in a newspaper of general circulation.
for the export products subject to duty and rates, shall
still apply and shall supplement this Act. Approved: May 30, 2016.
(Customs Modernization and Tariff Act, Republic Act
No. 10863, [May 30, 2016])
TITLE XVII Congressional Oversight Committee

SECTION 1700. Congressional Oversight Committee.
— The Congressional Customs and Tariff Oversight
Committee, herein referred to as the Committee, is PD No 464 | Real Property Tax Code
hereby constituted in accordance with the provisions of As amended by PD No 939, 1002, 1230, 1383, 1446, 1621,
this Act. The Committee shall be composed of the 1812, 1913
Chairpersons of the Committee on Ways and Means of
the Senate and House of Representatives and four (4)
additional members from each House, to be designated PRESIDENTIAL DECREE No. 464 June 1, 1974
by the Senate President and the Speaker of the House of ENACTING A REAL PROPERTY TAX CODE
Representatives, respectively. The Committee shall,
WHEREAS, this country cannot progress steadily if its
among others, in aid of legislation:
local governments are not potent political subdivisions
(a) Monitor and ensure the proper implementation of contributing their proportionate shares to national
this Act; progress;
(b) Review the collection performance of the Bureau; WHEREAS, the past decade saw the passage of the Local
and Autonomy Act, the Barrio Charter, the Decentralization
(c) Review the implementation of the programs of the Act and other pieces of legislation intended to make local
Bureau. governments financially self-reliant and stable;
In furtherance of the hereinabove cited objectives, WHEREAS, it is very apparent that in spite of all these
the Committee shall require the Bureau to submit all laws, local governments still find difficulty in providing
pertinent information which includes: adequate funds with which to underwrite basic and
essential public services within their respective areas of
(1) Industry audits; responsibility;
(2) Collection performance data; and WHEREAS, studies show that one of the main reasons
(3) Status report on administrative, civil and criminal behind this is the failure of local governments to fully tap
actions initiated against persons. the income potentialities of the real property tax;
WHEREAS, to remedy the situation, there is an urgent
and compelling need to upgrade assessment services by
TITLE XVIII Final Provisions updating assessment techniques, procedures and
SECTION 1800. Implementing Rules and practices and thereby bring about equitable distribution
Regulations. — The Secretary of Finance shall, upon the of the realty tax burden among real property owners
recommendation of the Commissioner, promulgate the throughout the country;
necessary rules and regulations for the effective NOW, THEREFORE, I, FERDINAND E. MARCOS, President
implementation of this Act. of the Philippines, by virtue of the powers vested in me by
SECTION 1801. Transitory Provisions. — All suits, the Constitution do hereby adopt, promulgate and
proceedings, or prosecutions whether civil or criminal, for decree, as it hereby adopted, promulgated and decreed,
causes arising or acts done or committed prior to the as part of the law of the land, this decree entitled "The
effectivity of this Act, shall be commenced and Real Property Tax Code", the context of which follows:
prosecuted within the same time in the same manner
and with the same effect as if this Act had not been
enacted and all rights acquired, offenses committed, and CHAPTER I GENERAL PROVISIONS
penalties or forfeitures or liabilities waived prior to the Section 1. Scope. This Code shall govern the appraisal and
said effectivity shall not be affected thereby. assessment of real property for purposes of taxation by
SECTION 1802. Saving Clause. — All other laws, acts, provinces, cities and municipalities, as well as the levy,
executive orders, and Customs Administrative Orders collection and administration of real property tax.
(CAOs), Customs Memorandum Orders (CMOs), orders, Section 2. Fundamental Principles. The appraisal and
memoranda, circulars, rules and regulations issued by the assessment of real property for taxation purposes shall be
Bureau, under the provisions of Presidential Decree No. guided by the following fundamental principles:
1464, otherwise known as the Tariff and Customs Code of
the Philippines of 1978, as amended, not inconsistent with 1) Real property shall be appraised at its current and fair
the provisions of this Act, shall remain valid unless the market value;
same will be repealed or amended accordingly, pursuant 2) The appraisal of real property shall be uniform in each
to the provisions of this Act. local political subdivision;
SECTION 1803. Repealing Clause. — Presidential 3) Real property shall be classified for assessment
Decree No. 1464, otherwise known as the Tariff and purposes on the basis of its actual use;
Customs Code of the Philippines of 1978, as amended,
4) Real property shall be assessed on the basis of a
and Presidential Decree No. 1853 which require any
uniform standard of value within each local political
applicant for letter of credit covering imports to deposit
subdivision;
the full amount of duties due on the importation, are
hereby expressly repealed. All other laws, acts, 5) In no case shall the appraisal and assessment of real
presidential decrees, executive orders, rules and property for taxation purposes and the collection of the
regulations or parts thereof inconsistent with the real property tax be let to any private person; and
provisions of this Act are hereby expressly repealed, 6) The goal of property assessment shall be the equitable
amended or modified accordingly. distribution of the tax burden.
SECTION 1804. Separability Clause. — If any Section 3. Definition of Terms. When used in this Code
provision of this Act is declared invalid or



a) Actual use shall refer to the purpose for which the r) Remaining economic life the period of time (years)
property is principally or predominantly utilized by the from the date of appraisal to the date when the
persons in possession of the property. machinery becomes valueless.
b) Ad Valorem tax is a levy on real property determined s) Remaining value the value corresponding to the
on the basis of a fixed proportion of the value of the remaining useful life of the machinery.
property. t) Replacement or reproduction cost (new) the cost that
c) Agricultural land devoted principally to the raising of would be incurred on the basis of current prices, in
crops such as rice, corn, sugarcane, tobacco, coconut, etc., acquiring an equally desirable substitute property, or the
or to pasturing, dairying, inland fishery, salt making, and cost of reproducing a new replica property on the basis of
other agricultural uses, including timberlands and forest current prices with the same or closely similar material.
lands. u) Residential land principally devoted to habitation.
d) Appraisal is the act or process of determining the value Section 4. Administration of the Real Property Tax. The
of a property as of a specific date for a specific purpose. Department of Finance shall be primarily responsible for
e) Assessment the act or process of determining the the proper, efficient and effective administration of the
value of a property, or proportion thereof, subject to tax, real property tax and for this purpose it shall:
including the discovery, listing and appraisal of a) Evolve a comprehensive system of real property
properties. appraisal that will ensure fair and realistic property
f) Assessment level is the percentage applied to the valuations for taxation purposes;
market value to determine the taxable or assessed value b) Establish uniform assessment methods and
of the property. procedures that will equalize property values in each local
g) Assessed Value the value placed on taxable property by political subdivision:
the assessor for ad valorem tax purposes. The assessed c) Ensure that the ad valorem tax on real property shall be
value when multiplied by the tax rate will produce the just, uniform and equitable;
amount of tax due. It is synonymous to "taxable value."
d) Adopt the necessary measures that will promote
h) Commercial land devoted principally to commercial maximum tax collection efficiency at the local levels;
purposes, and generally for the object of profit.
e) Provide for the optimum utilization by the local
i) Depreciated Value the value remaining after deducting governments of the proceeds from the real property tax;
depreciation from either the replacement cost or the and
reproduction cost.
f) Formulate and adopt policies and procedures that will
j) Economic life the estimated period over which it is improve technical skills and develop reasonable
anticipated that a machinery may profitably be utilized. standards of performance in the local assessment and
k) Improvements Is a valuable addition made to property treasury services.
or an amelioration in its condition, amounting to more In order to attain the foregoing objectives, the Secretary
than more repairs or replacement of waste, costing labor of Finance shall exercise direct executive supervision over
or capital, and intended to enhance its value, beauty or all assessment and treasury officials and personnel in the
utility or to adapt it for new or further purposes. local governments.
l) Industrial land developed principally to industry as Section 4-A. Grant of Special Powers to the President. In
capital investment. the interest of local economy and the general welfare and
m) Machinery shall embrace machines, equipment, subject to the conditions and limitations herein
mechanical contrivances, instruments, appliances and prescribed, the president, upon recommendation of the
apparatus attached to the real estate. It shall include the Minister of Finance, is hereby empowered to make
physical facilities available for production, as well as the adjustments in the Real Property Tax System, as regards:
installations and appurtenant service facilities, together (a) The classification of real properties for taxation
with all those not permanently attached to the real estate purposes;
but are actually, directly and essentially used to meet the
needs of the particular industry, business, or works, which (b) The frequency of general revisions of property
by their very nature and purpose are designed for, or valuations;
essential to manufacturing, commercial, mining, (c) The assessment levels or assessed values of real
industrial or agricultural purposes. (as amended by properties, and
Presidential Decree No. 1383, [May 25, 1978])
(d) The extent of exemption from real property tax and
n) Market value is defined as "the highest price estimated rates of levy.
in terms of money which the property will buy if exposed
for sale in the open market allowing a reasonable time to The above powers may be exercised by the President if
find a purchaser who buys with knowledge of all the uses any of the following conditions exists:
to which it is adapted and for which it is capable of being 1. Where, in the light of economic, social and other
used." It is also referred to as `the price which a willing relevant changes, it becomes necessary to modify or
seller would sell and willing buyer would buy, neither adjust the classification of real properties, their
being under abnormal pressure." assessment levels and/or taxable values on the basis of
o) Mineral lands are those lands in which minerals exist in new concepts of essentiality and modern approaches to
sufficient quantity or grade to justify the necessary real property valuation;
expenditures to be incurred in extracting and utilizing 2. Whenever, by reason of fluctuation of currency value,
such minerals. inflation or deflation, and changing development needs
p) Original cost for newly acquired machinery not yet of the country, the existing assessment levels and/or tax
depreciated and appraised within the year of its rates are no longer realistic; or
purchase, refers to the actual cost of the machinery to its 3. Where in view of new social and economic conditions,
present owner (plus the cost of transportation, handling it becomes imperative to change real property
and installation at the present site). assessment patterns for taxation purposes.
q) Reassessment the assigning of new assessed values to The special powers hereinabove provided for shall,
property, particularly real estate, as the result of a general, however be subject to the following specific limitations:
partial or individual reappraisal of the property.
1. The maximum rates of levy fixed in this code may be
increased by not more than two per cent of the assessed


value of real property or reduced by not more than one and devisee without designating them individually; and
per cent thereof; undivided real property other than owned by a deceased
2. For any tax year, the existing assessment level or levels may be listed and valued in the name of one or more
may be increased or decreased by not more than thirty co-owners; Provided; however, That such heir, devisee or
per cent; co-owner shall be liable severally for all obligations
imposed by this Code and for the payment of the real
3. As may be recommended by the Minister of Finance on property tax with respect to the undivided property.
the basis of changes in price levels, the period of general
revision of property valuations for taxation purposes may The real property of a corporation, partnership or
be extended up to five years or reduced to two years; association shall be entered and assessed in the same
manner as that of an individual.
4. Before any recommendation is submitted to the
president by the Minister of Finance pursuant to the Real property owned by the Republic of the Philippines,
provisions of this section, a public hearing shall first be its political subdivisions and any government-owned
held, whenever practicable, where interested parties shall corporation so exempt by its charter, the beneficial use of
be afforded to a reasonable opportunity to be heard. which has been granted, for consideration or otherwise,
to a taxable person, shall be listed for purposes of taxation
in the name of the grantee, or of the public entity if such
CHAPTER II APPRAISAL AND ASSESSMENT OF property has been acquired for resale or lease.
REAL PROPERTY The assessment roll shall be prepared in accordance with

rules and regulations prescribed by the Secretary of
Section 5. Appraisal of Real Property All real property, Finance.
whether taxable or exempt, shall be appraised at the
Section 9. Proof of Exemption of Real Property from
current and fair market value prevailing in the locality
Taxation. Every person by or for whom real property is
where the property is situated.
declared, who shall claim tax exemption for such property
Section 6. Declarations of Real Property by Owner or under this Code shall file with the provincial or city
Administrator. It shall be the duty of all persons, natural or assessor within thirty days from the date of the
juridical, owning or administering real property, including declaration of real property sufficient documentary
the improvements therein, within a city or municipality, evidence in support of such claim, including corporate
or their duly authorized representative, to prepare, or charters, titles or ownerships, articles of incorporation,
cause to be prepared, and file with provincial or city by-laws, contracts, affidavits and certifications and
assessor, a sworn statement declaring the true value of mortgage deeds, and similar documents.
their property, whether previously declared or
If the required evidence is not submitted within the
undeclared, taxable or exempt, which shall be the current
period herein prescribed, the property shall be listed as
and fair market value of the property, as determined by
taxable in the assessment roll. However, it shall be proven
the declarant. Such declaration shall contain a
to be tax exempt the same shall be dropped from the roll
description of the property sufficient in detail to enable
of taxable properties.
the assessor or his deputy to identify the same for
assessment purposes. The sworn declaration of real Section 10. Real property Identification System. All
property herein referred to shall be filed with the assessor declarations of real property made under the provisions
concerned once every three years during the period from of this Code shall be kept and filed under a uniform
January first to June thirtieth commencing with the identification system to be established by the provincial
calendar year 1980, unless required earlier by the Minister of city assessors in accordance with the rules and
of Finance. (Amendments to Certain Sections of P.D. No. regulations to be prescribed by the Secretary of Finance.
464 As Amended (Real Property Tax Code), Presidential Section 11. Notification of Transfer of Real Property
Decree No. 1621, [April 19, 1979]) Ownership. Any person who shall transfer real property
Section 6-A. It shall also be the duty of any person or his ownership to another shall notify the assessor of the
authorized representative acquiring at any time real province or city wherein the property is situated within
property in any municipality or city or making any sixty days from the date of such transfer. The notification
improvement on real property, to prepare, or cause to be shall include the particulars of the transfer, description of
prepared, and file with the provincial, city, or municipal the property alienated, and the name and address of the
assessor, a sworn statement declaring the true value of transferee.
subject property, within sixty (60) days after the Section 12. Duty of Register of Deeds to Apprise Assessor
acquisition of such property, or upon completion or of Real Property Listed in Registry. To ascertain whether
occupancy of the improvement, whichever date comes or not any real property entered in the Registry of
earlier. (as amended by Presidential Decree No. 1383, Property has escaped discovery and listing for the
[May 25, 1978]) purpose of taxation, the Register of Deeds shall prepare
Section 7. Declaration of Real Property by the Assessor and submit to the provincial or city assessor, within two
When any person, natural or juridical, by whom real years from the date of approval of this Code an abstract of
property is required to be declared under Section six his registry, which shall include brief but sufficient
hereof refuses or fails for any reason to make such description of the real properties entered therein, their
declaration within the time prescribed, the provincial or present owners and the dates of their most recent
city assessor shall himself declare the property in the transfer or alienation's accompanied by copies of
name of the defaulting owner, if known, or against an corresponding deeds of sale, donation or partition or
unknown owner, as the case may be, and shall assess the other form of alienation.
property for taxation in accordance with the provisions of It shall also be the duty of the Register of Deeds to require
this Code. No oath shall be required of a declaration thus every person who shall present for registration a
made by the provincial or city assessor. document of transfer, alienation or encumbrance of real
Section 8. Listing of Real Property in the Assessment property to accompany the same with a certificate to the
Rolls. In every province and city, there shall be prepared effect that the real property subject of the transfer,
and maintained by the provincial or city assessor an alienation or encumbrance, as the case may be, has been
assessment roll wherein shall be listed all real property, fully paid of all real property taxes due thereon. Failure to
whether taxable or exempt, located within the province provide such certificate shall be a valid cause for the
or city. Real property shall be listed and valued in the Register of Deeds to refuse the registration of the
name of the owner or administrator, or anyone having document.
legal interest in the property. Section 13. Duty of Official Issuing Building Permit or
The undivided real property of a deceased person may be Certificates of Registration of Machinery to Transmit Copy
listed and valued in the name of the estate, or of the heirs to Assessor. Any public official or employee who may now


or hereafter be required by law or regulation to issue to Definition of Terms. "Patented" mineral lands are those
any person a permit for the construction, addition, repair lands covered by a duly issue mineral patent signed by
or renovation of a building or permanent improvement, the President of the Philippines.
on land, or a certificate or registration for any machinery, "Unpatented" mineral lands are those lands which were
including machines, mechanical contrivances, and located as mining claims under the provisions of the
apparatus, attached or affixed on land, or to another real Philippine Bill of 1902 but are not yet covered by a mineral
property shall transmit a copy of such permit or patent.
certificate, within thirty days of its issuance, to the
assessor of the province or city wherein the property is "Producing patented mineral claims" are those claims
situated. producing minerals for commercial purposes.
Section 14. Duty of Surveyors to Furnish Copy of Plans to "Non-producing patented mineral claims" are those
Assessors. It shall be the duty of all surveyors, public or claims which are only in the stage of exploration and
private, to furnish free of charge to the assessor of the development and has not produced minerals for
province or city where the land is located with a white or commercial production.
blue print copy of each of all approved original or A "lode mineral claim" is a parcel of mineral lands
subdivision plans or maps of surveys executed by them containing a vein, lode, ledge, lens, or mass of ore in place
within thirty days from receipt of such plans from the which has been located in accordance with law.
Bureau of Land or Land Registration Commission or the
National Urban Planning Commission, as the case may A "placer claim" is that which does not come under the
be. definition of "lode mineral claim."
Section 15. Preparation of Schedule of Values. - Before "Placer deposits" are in loose, fragmentary or broken
any general revision of property assessments is made, as rocks, boulders, floats, beds or deposits.
provided in this Code, there shall be prepared for the "Metallic" deposits are those which contain any of the
province or city a Schedule of Market Values for the metallic elements or minerals, or their combination, such
different classes of real property therein situated in such as gold, silver, platinum, tin, chromium, iron, manganese,
form and detail as shall be prescribed by the Secretary of copper, nickel, lead, zinc cinnabar, tungsten and the like.
Finance.
"Non-metallic" deposits are all other deposits not covered
Said schedule, together with an abstract of the data on by the above "metallic" deposits.
which it is based, shall be submitted to the Secretary of
Finance for review not later than the thirty-first day of In case of conflict between the above definitions and
December immediately preceding the calendar year the those appearing in the Mining Act as amended, the latter
general revision of assessments shall be undertaken. The shall prevail.
Secretary of Finance shall have ninety days from the date
or receipt within which to review said schedule to Special Classes of Real Property.
determine whether it conforms with the provisions of this
Code. All lands, buildings and other improvements thereon,
actually, directly and exclusively used for educational,
Section 16. Authority of Assessor to Take Evidence. For cultural, recreational or scientific purposes, as well as
the purpose of obtaining information on which to base hospitals not owned and operated by the government or
the market value of any real property, the provincial or by any of its instrumentalities, shall be classified as
city assessor, or his deputy, may summon witnesses, special.
administer oaths and take deposition, concerning the
property, its ownership, amount, nature and value. Section 19. Actual Use of Real Property as Basis for
Assessment. Real property shall be assessed on the basis
Section 17. Amendment of Schedules of Market Values. of its actual use regardless of where located and whoever
For the correction of errors or inequalities in any schedule uses it.
of market values, the provincial or city assessor shall, on
his own initiative or upon the direction of the Secretary of The Secretary of Finance shall issue guidelines for the
Finance, prepare an amendment designed to remedy proper implementation of the provisions of this Section.
such errors or inequalities. Such amendments shall Section 20. Assessment Levels. The assessment levels to
likewise be subject to review by the Secretary of Finance be applied to the current market values of real property
within ninety days from the date of receipt thereof. for taxation purposes shall be as follows:
Section 18. Classes of Real Property for Assessment a) On Lands The assessment levels in the province or city
Purposes. For purposes of assessment, real property shall shall be maintained at the current levels of thirty per cent
be classified as residential, agricultural, commercial or for residential lands; forty per cent for agricultural lands;
industrial and also as mineral in the case of lands. and fifty per cent for commercial or industrial lands.
Mineral lands shall be further classified as follows: b) Mineral Lands For purposes of taxation, mineral lands
(a) Metallic mineral lands, which shall include: not covered by lease shall be appraised at fifty per cent of
their market value to be determined by the Secretary of
(1) Patented lode mining claims, producing or Finance upon consultation with the Director of Mines:
non-producing; Provided, however, that mineral lands covered by leases
(2) Unpatented producing lode mining claims which may shall be declared for taxation purposes either by the
be patented; owner of the land or lessee and the assessment level
thereof shall be maintained at the current level of fifty per
(3) Unpatented non-producing the lode mining claims cent.
which may be patented;
c) On Buildings, Machineries and other Improvements.
(4) Patented placer mining claims, producing or The assessment levels now prevailing in the province or
non-producing; city shall be maintained but which shall in no case be
(5) Unpatented producing placer mining claims which lower than the assessment levels for lands hereinabove
may be patented; and prescribed nor more than eighty percent of the market
value, except buildings used exclusively for residential
(6) Unpatented non-producing placer mining claims
purpose, the assessment levels for which shall be as
which may be patented.
follows:
(b) Non-metallic mineral lands, which shall include:
1. For buildings and other improvements:
(1) Patented, producing or non-producing;
Assessment Levels
(2) Unpatented, producing which may be patented; and
(3) Unpatented, non-producing, which may be patented.



Commercial/
Section 21. General Revision of Assessments Once in
MARKET VALUE Residential
Agricultural
Industrial Every Three Years. — Beginning July 1, 1981 to June 30,
1982, the provincial or city assessor shall make a general
revision of real property assessments in the province or
P30,000 or less 15% 50% 40% city to take effect on January 1, 1983, and once every three
years thereafter; Provided, however, That if property
values in a province or city, or in any municipality, have
More than P30,000 but 20% 55% 45% greatly changed since the last general revision, the
not exceeding P50,000 provincial or city assessor may, with the approval of the
Minister of Finance or upon his discretion, undertake a
general revision of assessments in the province or city, or
More than P50,000 but 25% 60% 50% in any municipality before the third year from the
not exceeding P75,000 effectivity of the last general revision. (Amendments to
Certain Sections of P.D. No. 464 As Amended (Real
Property Tax Code), Presidential Decree No. 1621, [April 19,
More than P75,000 but 35% 65% 55% 1979])
not exceeding 125,000 Section 22. Valuation of Real Property. Upon the
discovery of real property or during the general revision of
property assessments as provided in Section twenty-one
More than 125,000 but 45% 70% 60% of this Code or at any time when requested by the person
not exceeding 175,000 in whose name the property is declared, the provincial or
city assessor or his authorized deputy shall make an
appraisal and assessment in accordance with Section five
More than 175,000 but 55% 75% 65% hereof of the real property listed and described in the
not exceeding 250,000 declaration irrespective of any previous assessment or
taxpayer's valuation thereon: Provided; however, That the
More than 250,000 but 65% 80% 70% assessment of real property shall not be increased oftener
not exceeding 350,000 than once every five years in the absence of new
improvements increasing the value of said property or of
any change in its use, except as otherwise provided in this
More than P350,000 75% 80% 75% Code.
but not exceeding Section 23. Certification of Revised Values to the
P500,000 Secretary of Finance. When the provincial or city assessor
shall have finished a general revision of property
assessments for any province, municipality or city, he shall
More than P500,000 80% 80% 80% so certify to the Secretary of Finance and the
assessments shall become effective and taxes shall
accrue and be payable thereunder in accordance with
2. For Machineries: the provisions of this Code.
Section 24. Date of Effectivity of Assessment or
ACTUAL USE ASSESSMENT LEVEL Reassessment. All assessments or reassessments made
after the first day of January of any year shall take effect
Agricultural 60% on the first day of January of the succeeding year:
Provided, however, That the reassessment of real property
Residential 70% 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
Commercial 80% of the assessment when made or to any other abnormal
cause, shall be made within ninety days from the date
Industrial 80% any such cause or causes occurred, the same to take
effect at the beginning of the quarter next following the
reassessment.
d) Special Classes. The assessment level for all lands, Section 25. Assessment of Property Subject to Back
buildings and other improvements thereon, actually, Taxes. Real property declared for the first time shall have
directly and exclusively used for educational, cultural, back taxes assessed against it for the period during which
scientific or recreational purposes, as well as hospitals not it would have been liable if assessed from the first in
owned and operated by the government or by any of its proper course but in no case for more than ten years prior
instrumentalities shall be fifteen percent (15%) of the to the year of initial assessment; Provided, however, that
market value of such properties. The special class of real the back taxes shall be computed on the basis of the
properties used for recreational purposes herein referred applicable schedule of values in force during the
to shall apply only to such properties which are owned by corresponding period.
sports or athletic clubs or such other recreational
organizations not operated primarily for profit. If said taxes are paid before the expiration of the tax
(Amendments to Certain Sections of P.D. No. 464 As collection period next ensuing, no penalty for
Amended (Real Property Tax Code), Presidential Decree delinquency shall be imposed, otherwise the taxes shall
No. 1621, [April 19, 1979]) be subject to all the penalties to which they would have
been liable and had they originally become delinquent
For the first general revision of assessment to be after assessment of the property in the usual course.
undertaken after the approval of this Code and every
three years thereafter, the assessment levels hereinabove Section 26. Binding effect of Assessment or
prescribed for the different classes of real property may Reassessment. All assessments and reassessments made
be increased at rates to be fixed by the Minister of under the provisions of this Code shall be valid and
Finance, but in no case shall such increase in rates exceed binding on all persons having legal interest on the
ten percent of the assessment levels herein prescribed for property.
each class of real property. (Amendments to Certain Section 27. Notification of New or Revised Assessments.
Sections of P.D. No. 464 As Amended (Real Property Tax When real property is assessed for the first time or when
Code), Presidential Decree No. 1621, [April 19, 1979]) an exercising assessment is increased or decreased, the
province or city shall within thirty days give written notice
of such new or revised assessment to the person in



whose name the property is declared. The notice may be

delivered personally to such person or to the occupant in
possession, if any, or by mail to the last known address of
the person to be served, or through the assistance of the "I ____________, having been appointed to the position of
barrio captain. __________, hereby solemnly swear that I will well and
faithfully discharge to the best of my ability and duties of
Section 28. Appraising Machinery. The current market my present position and of all others I may hereafter hold
value of the machinery shall be determined on the basis under the Republic of the Philippines, and that I will
of the original cost in the case of newly acquired support and defend the Constitution of the Philippines;
machinery not yet depreciated and is appraised within and that I will obey the laws, legal orders, and decrees
the year of its purchase. In the case of all others, the promulgated by the duly constituted authorities of the
current market value shall be determined by dividing the Republic of the Philippines; and that I will well and truly
remaining economic life of the machinery by its hear and determine all matters and issues between
economic life and multiplied by the replacement or taxpayers and the provincial or city assessor submitted for
reproduction cost (new) of said machinery. my decision, and that I impose this obligation upon
If the machinery is imported, replacement or myself voluntarily, without mental reservation or purpose
reproduction cost (new) shall be the original acquisition of evasion.
cost which would normally include such costs as freight So help me God.
and insurance charges, brokerage, arrastre and handling,
customs duties and taxes plus cost of inland _________________ Signature
transportation and handling, and significant installation SUBSCRIBED AND SWORN to before as this ______ day of
charges at the present site. The cost in foreign currency of __________ A.D. _________ at ____________ Philippines.
imported machinery shall be converted to peso cost on
the basis of foreign currency exchange rates as fixed by ___________________Signature of Officer administering
the Central Bank of the Philippines. oath"
Section 29. Depreciation Allowance for Machinery. For
purposes of assessment, a depreciation allowance shall
be made for machinery at a rate not exceeding ten per
cent of its original cost or its replacement or reproduction Section 32. Meetings. The local Board shall hold sessions
cost (new), as the case may be, for each year of use: at least once a month, and as often as may be necessary
Provided, That the remaining value for all kinds of for the prompt disposition of the appealed cases pending
machinery shall be fixed at not less than twenty percent before it. No member of the Board shall be entitled to per
of such original or replacement cost for so long as the diems or travelling expenses for his attendance in Board
machinery is useful and in operation. sessions, except when conducting an ocular inspection in
connection with a case under appeal.
CHAPTER III ASSESSMENT APPEALS Section 33. Expenses of the Board. All expenses of the
Local Board of Assessment Appeals shall be charged
Section 30. Local Board of Assessment Appeals. Any against the general fund of the province or city, as the
owner who is not satisfied with the action of the case may be. Local Boards and councils shall appropriate
provincial or city assessor in the assessment of his the necessary funds to enable the Board of Assessment
property may, within sixty days from the date of receipt Appeals in their respective localities to operate effectively.
by him of the written notice of assessment as provided in
this Code, appeal to the Board of Assessment appeals of Section 34. Action by the Local Board of Assessment
the province or city, by filing with it a petition under oath Appeals. The Local Board of Assessment Appeals shall
using the form prescribed for the purpose, together with decide the appeal within one hundred and twenty days
copies of the tax declarations and such affidavit or from the date of receipt of such appeal. The decision
documents submitted in support of the appeal. rendered must be based on substantial evidence
presented at the hearing or at least contained in the
Section 31. Organization, Powers and Functions of the record and disclosed to the parties or such relevant
local Board of Assessment Appeals. The Local Board of evidence as a reasonable mind might accept as adequate
Assessment Appeals shall be composed of three to support the conclusion.
members: the Register of Deeds, as Chairman, the
Provincial of City Auditor and the Provincial or City In the exercise of its appellate jurisdiction, the Board shall
Engineer, as Members, who shall serve as such in an have the power to summon witnesses, administer oaths,
ex-officio capacity without additional compensation. In conduct ocular inspection, take depositions, and issue
provinces or cities without Provincial or City Engineers, subpoena and subpoena duces tecum. The proceedings
the Highway District Engineer shall serve as member of of the Board shall be conducted solely for the purpose of
the Board, likewise in an ex-officio capacity without ascertaining the truth without necessarily adhering to
additional compensation. In the absence of a regular technical rules applicable in judicial proceedings.
appointee, the officer performing the duties of the The Secretary of the Board shall furnish the property
Register of Deeds, or the Provincial or City Auditor, or the owner and the Provincial or City Assessor with a copy
Provincial, City or Highway District Engineer whether in each of the decision of the Board. In case the provincial or
an acting capacity or as a duly-designated city assessor concurs in the revision or the assessment, it
officer-in-charge shall automatically become the shall be his duty to notify the property owner of such fact
Chairman or member of the said Board, as the case may using the form prescribed for the purpose. The owner or
be. administrator of the property of the assessor who is not
The Chairman of the Board shall have the power to satisfied with the decision of the Board of Assessment
designate any government employee of the province or Appeals, may, within thirty days after receipt of the
city to serve as Secretary of the Board also without decision of the Local Board, appeal to the Central Board
additional compensation. of Assessment Appeals by filing his appeal under oath
with the Secretary of the proper provincial or city Board of
The Chairman and members of the Local Board shall Assessment Appeals using the prescribed form stating
enter into the duties of their respective positions without therein the grounds and the reasons for the appeal, and
need of further appointment or special designation attaching thereto any evidence pertinent to the case. A
immediately upon approval of this Code. The members of copy of the appeal should be also furnished the Central
the Board shall each take the following oath, copy of Board of Assessment Appeals, through its Chairman, by
which shall be furnished the Secretary of Finance: the appellant.
Within ten (10) days from receipt of the appeal, the
Secretary of the Board of Assessment Appeals concerned



shall forward the same and all papers related thereto, to Assessment Appeals. For every fiscal year thereafter, such
the Central Board of Assessment Appeals through the sums as may be necessary for the operations of the said
Chairman thereof. Board shall be included in the appropriations of the
Section 35. Central Board of Assessment Appeals, its Department of Finance in the corresponding General
Organization. The Central Board of Assessment Appeals Appropriations Decree or laws.
shall be composed of the Secretary of Finance, as The Chairman and Members of the Central Board shall
Chairman, the Secretary of Justice and the Secretary of enter into the duties of their respective positions, without
Local Government and Community Development, as need of further appointment or special designation,
Members, who shall serve without additional immediately upon approval of this Code.
compensation. Section 36. Scope of Powers and Functions. The Central
The Central Board of Assessment Appeals shall be Board of Assessment Appeals shall have jurisdiction, over
assisted by a Board of Hearing Commissioners and a staff, appealed assessment cases decided by the Local Board of
which shall be initially composed of the following Assessment Appeals. The said Board shall decide cases
positions with compensation at the minimum rates brought on appeal within twelve (12) months from the
indicated hereunder: date of receipt, which decision shall become final and
executory after the lapse of fifteen (15) days from the date
of receipt of a copy of the decision by the appellant.
In the exercise of its appellate jurisdiction, the Central
Board of Assessment Appeals, or upon express authority,
Position Annual Salary the Hearing Commissioner, shall have the power to
summon witnesses, administer oaths, take depositions,
and issue subpoenas and subpoenas duces tecum.
1. One Central Board Chief P17,400.00
Hearing Commissioner The Central Board of Assessment Appeals shall adopt and
promulgate rules of procedure relative to the conduct of
its business.
2. Four Central Board Hearing P16,200.00
Commissioners each Section 37. Effect of Appeals on the Payment of the Real
Property Tax. Appeals on assessments of real property
made under the provisions of this Code shall, in no case,
3. One Central Board Secretary P9,600.00 suspend the collection of the corresponding realty taxes
on the property involved as assessed by the provincial or
city assessor, without prejudice to subsequent
4. Four Central Board P6,600.00 each
adjustment depending upon the final outcome of the
Stenographers appeal.
5. Three Central Board Docket P4,800.00

and Filing Clerks CHAPTER IV IMPOSITION OF REAL PROPERTY
TAX

Section 38. Incidence of Real Property Tax. There shall be
The annual appropriations for the salaries of the
levied, assessed and collected in all provinces, cities and
abovementioned positions and for such other positions as
municipalities an annual ad valorem tax on real property,
the Central Board may deem necessary to create
such as land, buildings, machinery and other
hereafter, as well as sufficient appropriations for other
improvements affixed or attached to real property not
operational requirements of the Board of Hearing
hereinafter specifically exempted.
Commissioners and its staff, shall henceforth be included
in the annual budgets of the Department of Finance in Section 39. Rates of Levy. The provincial, city or municipal
the corresponding General Appropriations Decree or board or council shall fix a uniform rate of real property
laws. tax applicable to their respective localities as follows:
Any provision of law to the contrary notwithstanding, (1) In the case of a province, the tax shall be fixed by
appointment to the positions of Central Board Chief ordinance of the provincial board at the rate of not less
Hearing Commissioner, Central Board Hearing than one fourth of one percent but not more than
Commissioners and Central Board Secretary shall be one-half of one percent of the assessed value of real
exempt from the requirements and restrictions of the property.
Civil Service Law, rules and regulations as well as those (2) In the case of a city, the tax shall be fixed by ordinance
pertaining to position-item classifications and salary of the municipal board or city council at the rate of not
standardization. Any government retiree may be less than one-half of one percent but not more than two
appointed to the Board of Hearing Commissioners and percent of the assessed value of real property.
upon his appointment, he shall not be required to
reimburse or refund any gratuity received from the The ordinance fixing the rate of real property tax shall be
government nor shall any pension or annuity to which he enacted by the local board or council not later than
is entitled be suspended or reduced on account of his fifteenth day of September of the year next preceding the
employment. A member of the Board of Hearing year the tax shall begin to accrue. Within five days after
Commissioners shall serve until he reaches the age of enactment, the board or council secretary shall forward
seventy unless he chooses to retire from the service or the ordinance to the local chief executive for his approval
sooner removed for cause, as provided by law. The and signature. If he considers any such ordinance
members of the Board of Hearing Commissioners shall be prejudicial to the public welfare, he may veto it by
members of the bar, civil or mechanical engineers, or signifying to the local board or council concerned his
certified public accountants with at least five years disapproval thereof in writing. The local board or council
supervisory and-or field experience in real property may, by a two-thirds (2/3) vote of all its members and
assessment work. within fifteen days from the date of receipt of a copy of
the vetoed ordinance, repass the same over the veto, in
The Secretary of Finance, as Chairman of the Central which case it shall be deemed approved without the local
Board of Assessment Appeals, shall appoint the members chief executive's approval or signature. If the local chief
of the Board of Hearing Commissioners and its staff. executive fails to approve or veto the ordinance within ten
The initial sum of one hundred twenty five thousand days after receipt of a copy thereof, it shall likewise be
pesos is hereby appropriated from the General Fund in deemed approved.
the National Treasury, not otherwise appropriated, to
finance the operations of the Central Board of



The ordinance fixing the rate of real property tax shall determined by the Provincial or City Assessor of the
remain in full force and effect unless amended on or Province or City where the property is located, or by the
before September fifteenth of the year next preceding Municipal Assessor in the case of idle lands situated in the
the one in which the amendment is to take effect. Any municipalities of Metropolitan Manila.
ordinance reducing the existing rates of real property tax b. The additional ad valorem tax levied in the preceding
shall be subject to review by the Secretary of Finance who paragraph shall begin to accrue on July 1, 1978, any
shall act thereon within sixty days upon receipt of a copy provision of law to the contrary notwithstanding.
thereof; otherwise, the reduced rates shall be deemed (Amending P.D. No. 464 (Real Property Tax Code) Re:
effective on the first day of January of the succeeding Additional Tax on Idle Lands, Presidential Decree No.
year. 1446, [June 11, 1978])
Section 40. Exemptions from Real Property Tax. The Section 43. Idle lands, coverage. For purposes of this
exemption shall be as follows: Decree, idle lands shall include the following:
(a) Real property owned by the Republic of the
Philippines or any of its political subdivisions and any
government-owned corporation so exempt by its charter: a. Agricultural lands suitable for cultivation, dairying,
Provided; however, That this exemption shall not apply to inland fishery, and other agricultural uses, one half of
real property of the abovenamed entities the beneficial which remain uncultivated or unimproved by the owner
use of which has been granted, for consideration or or owners thereof.
otherwise, to a taxable person. b. Lands, other than agricultural, located in a City or
(b) Non-profit cemeteries or burial grounds. Municipality, more than 2,000 square meters in area one
half of which remain unutilized or unimproved by the
(c) Charitable institutions, churches, personages or owner or owners thereof. This Section shall likewise apply
convents appurtenant thereto, mosques, and all land, to residential lots in subdivisions duly approved by proper
buildings, and improvements actually, directly and authorities, the ownership of which has been transferred
exclusively used for religious or charitable purposes. to individual owners, who shall be liable for the additional
(d) Real property in any one city or municipality tax. Individual lots of such subdivisions, the ownership of
belonging to a single owner, the entire assessed valuation which has not been transferred to the buyer shall be
of which is not in excess of one thousand pesos; Provided, considered as forming part of the subdivision, and shall
however, That the property so exempt shall be assessed be subject to the additional tax payable by subdivision
and records thereof kept as in other cases. (Amendments operator. (Amending P.D. No. 464 (Real Property Tax
to Certain Sections of P.D. No. 464 As Amended (Real Code) Re: Additional Tax on Idle Lands, Presidential
Property Tax Code), Presidential Decree No. 1621, [April 19, Decree No. 1446, [June 11, 1978])
1979]) Section 44. Idle lands exempt from tax. The additional
(e) Land acquired by grant, purchase of lease from the levy on idle lands shall not apply to landowners who are
public domain for conversion into dairy farms for a period unable to improve, utilize or cultivate their lands due to
of five years from the time of such conversion; and any of the following causes:
machinery of a pioneer and preferred industry as certified a. Adverse peace and order conditions as certified by the
by the Board of Investments used or operated for Provincial Commander of the Philippine Constabulary.
industrial, agricultural, manufacturing or mining However, if within one year upon restoration of the peace
purposes, during the first three years of the operation of and order in the locality as certified by the said Provincial
the machinery. (as amended by PD 1383) Commander, the said land remains unimproved,
(f) Perennial trees and plants of economic value, except unutilized, uncultivated, the additional tax provided
where the land upon which they grow is planted under Section forty two hereof shall be imposed.
principally to such growth. b. Financial losses of the owner due to fire, flood, typhoon,
(g) Real property exempt under other laws. earthquake and other causes of similar nature declared
(h) pasture and/or grazing lands acquired by grant, by the owner in a sworn statement to be submitted to the
purchase, or lease from the public domain, actually used Provincial, City or Municipal Assessor stating the ground
for livestock production, for a period of five years or grounds therefore, which shall be accompanied by a
beginning with calendar year 1977, and for acquisitions certification from the proper agency of the local
made thereafter, the exemption shall begin with the year government concerned. If the idle land is not improved to
of such acquisition (Amending Section 40 of P.D. No. 464 the extent prescribed in the next preceding Section
(Real Property Tax Code), Presidential Decree No. 939, within two years from the date of the occurrence of the
[May 29, 1976]) loss, the tax provided under Section forty-two hereof shall
be imposed subject to rules and regulations issued in
connection herewith.
CHAPTER V SPECIAL LEVIES ON REAL c. Existing court litigations involving the land subject to
PROPERTY tax mentioned in this chapter as certified by the Court
under which the case is pending unless said land is not
Section 41. An additional one per cent tax on real improved within one year after the final adjudication of
property for the Special Education Fund. — There is the case to the extent provided in the next preceding
hereby imposed an annual tax of one per cent on real Section, in which case, the tax provided under Section
property to accrue to the Special Education Fund created forty-two hereof shall be imposed.
under Republic Act No. 5447, which shall be in addition to
d. Necessity to leave the land in a fallow state as certified
the basic real property tax which local governments are
by the Provincial, City or Municipal Agriculturist, or in their
authorized to levy, assess, and collect under this Code:
absence, by the Secretary of Agriculture or his duly
Provided, That real property granted exemption under
authorized representatives, stating among others, the
Section 40 of this Code shall also be exempt from the
length of time within which the land shall be considered
imposition accruing to the Special Education Fund.
ready for production. If the idle land is not improved
(Amendments to Certain Sections of P.D. No. 464 As
within one year after the termination of such period of
Amended (Real Property Tax Code), Presidential Decree
time, the tax provided under Section forty-two hereof
No. 1621, [April 19, 1979], Presidential Decree No. 1913,
shall be imposed.
[March 29, 1984])
e. Unfavorable physical factors such as rocky nature of
Section 42. Additional ad valorem tax on idle lands. a.
ground, and uneven topography in the case of
There is hereby imposed an additional real property tax
agricultural land, which render the land unsuitable for
on idle lands at the rate of FIVE PER CENT PER ANNUM
cultivation as certified by the Provincial, City or Municipal
based on the assessed value of the property as


Agriculturist, or in their absence, by the Secretary of be published, with the list of the owners of the land
Agriculture or his duly authorized representatives. affected thereby, once a week for four consecutive weeks
f. Acquired subdivision lots which remain idle due to the in any newspaper published in the locality, one in English,
failure of the subdivision developer or owner to develop and one in the local dialect, if there be any, and in default
the said subdivision in accordance with the approved of local papers, in any newspaper of general circulation in
subdivision plan as determined by the assessor. If within the province, city or municipality. The said ordinance in
one year, from the time the subdivision is developed, the English, and in the local dialect, shall also be posted in the
said lot still remains unutilized or unimproved, the tax city or municipality and places affected by said
provided under Section forty-two hereof shall be improvement, and shall also be published once a week
imposed. (Amending P.D. No. 464 (Real Property Tax during four consecutive weeks by crier.
Code) Re: Additional Tax on Idle Lands, Presidential The provincial, city or municipal secretary, shall, on
Decree No. 1446, [June 11, 1978]) application, furnish a copy of the proposed ordinance to
Section 45. Application for exemption. a. The owner, each landowner affected, or his agent, and shall if
administrator, or any person having legal interest on the possible, send to all a copy of said proposed ordinance by
land, desiring to avail of the exemptions enumerated mail or messenger.
under Section 44 hereof, shall file within six months from Sec 50. Protest against special levy. Not later than thirty
the date of effectivity of this Decree, the corresponding days after the last publication of the ordinance and list of
application with the Assessor of the Province, City or landowners included in the zone subject to special levy, a
Municipality, where the land is situated. The application protest may be submitted to the provincial, municipal, or
shall state the ground or grounds under which the city board or council, signed by a majority of the
exemption is being claimed. (Amending P.D. No. 464 landowners affected by the proposed work, setting forth
(Real Property Tax Code) Re: Additional Tax on Idle Lands, the addresses of the signers and arguments in support of
Presidential Decree No. 1446, [June 11, 1978]) their objection or protest against the improvement to be
Section 46. Listing of idle lands by the assessor. The made or against the special levy imposed by ordinance. If
provincial or city assessor shall make and keep an no protest is filed within the time and under the
updated record of idle lands within one year after the conditions above specified, the provincial, city or
approval of this Code and every year thereafter. For municipal ordinance shall become final and effective in
purposes of collection, the provincial or city assessor shall all points after its approval by the corresponding board or
furnish a copy thereof to the provincial, city or municipal council.
treasurer, as the case may be, who shall notify on the Section 51. Hearing a protest. The board or council, shall
basis of such record the person having legal interest on designate a date and place for the hearing of the protest
the lands of the imposition of the additional tax. filed in accordance with the next preceding Section and
Section 47. Special levy by local governments. The shall give reasonable time to all protestants who have
provincial, city, municipal boards or councils may, by given their address and to all landowners affected by any
ordinance, provide for the imposition and collection of a protest, and shall order the publication once a week,
special levy on the lands comprised within the province, during two consecutive weeks in any newspaper of the
city, or municipality or parts thereof especially benefited locality, if there be one, of general circulation in the
by the laying out, opening, constructing, straightening, province, city or municipality, or a notice in English or in
widening, grading, paying, curbing, walling, deepening, the local dialect, of the place and date of the hearing to
or otherwise establishing, repairing, enlarging, or be held. Said notice shall likewise be posted in the city or
improving public avenues, roads, streets, alleys, sidewalks, municipality and places affected by the improvement.
parks, plazas, bridges, landing places, wharves, piers, After the proper hearing, the board or city council, shall
docks, levees, reservoirs, waterworks, water courses, render its final decision confirming, modifying or
esteros, canals, drains, and sewers: Provided, however, revoking its ordinance, and shall send notice of its
That the special levy herein authorized shall correspond decision, to all interested parties who have given their
only to a part not exceeding sixty per cent of the costs of addresses, and shall order the publication of such
said improvements or infrastructures financed by the decision, together with a list of the parcels of land
province, city or municipality, as the case may be, affected by the special levy, three times weekly, for two
including the costs of acquiring land and such other real consecutive weeks, in the manner hereinabove specified.
property in connection therewith. Within the meaning of The decision of the municipal council shall become final,
this Section, all lands comprised within the district if, before, expiration of thirty days from the date of its last
benefited, except lands exempt from the real property publication, no appeal is filed with the provincial board
tax under Section forty hereof, shall be subject to the against the proposed improvement or against the special
payment of the special levy. levy, signed by at least a majority of the landowners
affected. The appellant or appellants shall immediately
Section 48. Ordinance imposing a special levy. Tax give the municipal council a written notice of the appeal.
ordinance providing for the levying and collection of a In the case of the province or city, the decision of the
special levy shall describe with reasonable accuracy the provincial board or city council is not appealable but shall
nature, extent and location of the work to be undertaken; become final after the expiration of thirty days from its
the probable cost of the proposed work so established, last publication.
the limits whereof shall be stated by monuments and
lines, and the number of annual installments, which shall Section 52. Decision of the appeal. If an appeal is taken
not be less than five nor more than ten, in which said from the decision of the municipal council in the manner
special levy shall be payable. The provincial board, provided for in the next preceding Section, the said
municipal board or city council, or municipal council shall council shall forward to the provincial board an excerpt
not be obliged, in the apportionment and computation of from the minutes of said council relative to the proposed
the special levy, to establish a uniform percentage of all improvement and all other documents in connection
lands subject to the payment of the tax for the entire therewith, within ten days after receipt of the notice of
district, but it may fix different rates for different parts or appeal. The provincial board shall designate the place and
sections thereof, depending on whether such land is set a date which shall be within thirty days following
more or less benefited by the proposed work; nor shall receipt of the board of the documents from the
the provincial board, the municipal board or city council, municipal council, for the hearing of the appeal, giving
or municipal council be required to follow the percentage both parties notice thereof. During the hearing of the
limitations imposed by Section thirty-nine of this Code. appeal, the municipal council shall be represented and
heard, and the provincial board shall examine de novo all
The provincial, city or municipal engineer shall make the points involved in the protest filed, and its decision
plans, specifications and estimates of the proposed work. thereon shall be final.
Section 49. Publication of proposed ordinance imposing Section 53. Fixing the amount of special levy. The special
a special levy. The proposed special levy or ordinance shall levy authorized under Section forty-seven hereof shall be



apportioned, computed, and assessed according to the under Presidential Decree No. 261 shall begin to accrue on

assessed valuation of such lands, as shown by the books January 1, 1975.
of the assessor, or its current assessed value as fixed by Section 57. Collection of tax to be the responsibility of
said officer in the first instance if the property does not treasurers. The collection of the real property tax and all
appear of record in his books. Upon the approval of the penalties accruing thereto, and the enforcement of the
ordinance, the provincial or city assessor shall forthwith remedies provided for in this Code or any applicable laws,
proceed to determine the annual amount of special tax shall be the responsibility of the treasurer of the province,
assessed against each parcel of land compromised within city or municipality where the property is situated.
the district especially benefited and shall send to each
landowner a written notice thereof by ordinary mail. If Section 58. Assessor to furnish treasurer with assessment
upon completion of work it should appear that the cost roll. The provincial or city assessor shall prepare and
thereof is smaller or greater than the estimated cost of submit to the treasurer of the province, city or
the work, the provincial or city assessor shall without municipality, on or before the thirty-first day of December
delay proceed to correct the assessment by increasing or of each year, an assessment roll containing a list of all
decreasing, as the case may be, the special tax on each persons to whom real properties have been newly
parcel of land affected, for the balance of the unpaid assessed or reassessed and the values of such taxable
annual installments. If all annual installments have properties.
already been paid, the provincial or city treasurer shall fix Section 59. Notice of time for collection of tax. The
the amount of credit to be allowed to, or the additional provincial or city treasurer shall, on or before the
special tax to be levied upon the land, as the case may be. thirty-first of January each year, cause notice of the
In all cases, he shall give notice of such rectifications to periods during which real property tax may be paid
the parties interested. without penalty in their respective jurisdiction to be
Section 54. Payment of special levy. all sums due from posted at the main entrance of the provincial building or
any landowner or owners as payment of special levy shall city hall and of all municipal buildings and in a public
be payable to the provincial or city treasurer or his deputy conspicuous place in each barrio, and published in a
in the same manner as the annual ordinary tax levied newspaper and announced by crier at least three times.
upon real property, in accordance with the provisions of The form and detail of the notice shall be prescribed by
the preceding sections, shall be subject to the same the Secretary of Finance: Provided, however, That in lieu
penalties for delinquency and be enforced by the same of or in addition to such notice, the Secretary of Finance
means as said annual ordinary tax; and all said sums may require notification in any province, municipality, or
together with any of said penalties shall, from the dates city to be accomplished through the mailing of individual
on which they were assessed, constitute special liens tax bills which shall estate the exact amount of the
upon the land concerned and shall have preference over annual tax due, the amount of quarterly installment, its
other liens there may be on said lands with the sole due date, the delinquency, and the applicable penalty.
exception of the lien for non-payment of the ordinary real
property tax. Section 60. Payment of real property taxes in
installments. Real property taxes may, in the discretion of
Section 55. Special levy by the National Government. The the taxpayer, be paid without penalty in four equal
Secretary of Finance may, by Department Order issued installments; the first installment to be due and payable
for the purpose, provide for the imposition and collection on or before March thirty-first; the second installment, on
of a special levy on lands especially benefited by public or before June thirty; the third installment, on or before
works projects financed by the National government September thirty; and the last installment, on or before
corresponding to a part not exceeding sixty percent of December thirty-first, except the special levies authorized
the costs thereof as certified by the Secretary of Public under Sections forty-seven and fifty-five of this Code
Works, Transportation and Communications, the which shall be governed by the local ordinance or
proceeds of which shall accrue to the general fund of the Department Order issued by the Secretary of Finance, as
National Government. The special levy shall be the case may be.
apportioned, computed, and assessed according to the
assessed valuation of such lands as shown by the books Any person who is in any provincial, city or municipal
of the assessor, or its current assessed value as fixed by treasurer's office on the last day of any period established
said officer if the property does not appear of record in for the payment of the real property tax without penalty,
this books. The tax shall be collected by the local ready and prepared to pay but is unable to do so because
treasurers who shall remit their collections to the National of the great number of taxpayers, shall be given a suitable
Treasurer in accordance with the rules and regulations card entitling him to pay the tax without penalty on the
issued by the Secretary of Finance for the purpose of next business day.
implementing this Section. Section 61. Tax discount. If the basic and additional real
The Special levy herein authorized may within sixty days property tax levied for the Special Education Fund or any
from the date of publication of the Department Order in quarterly installment thereof is paid in full within the
the Official Gazette be protested with the Secretary of prescribed period of payment, the taxpayer shall be
Finance and if not reconsidered or rescinded may granted a discount on the tax due as follows: twenty per
thereafter be appealed to the proper court for decision. cent on the tax due and payable during the year 1974;
fifteen per cent on the tax due and payable during the
year 1975; ten per cent on the tax due and payable during
CHAPTER VI COLLECTION OF REAL PROPERTY the year 1976; and five per cent on the tax due and
payable during the year 1977; Provided, further, That only
TAX lands without any delinquency shall be granted the same;
Section 56. Date of accrual of tax. The real property tax for and Provided, finally, That the discounted tax shall not be
any year shall attach and become due and payable on the lower than the tax corresponding to the next preceding
first day of January and from the same date said tax and tax year.
all penalties subsequently accruing thereto shall Beginning with the calendar year 1978 and thereafter, the
constitute a lien upon the property subject to such tax. President of the Philippines may, at his discretion or upon
Said lien shall be superior to all other liens, mortgages, or recommendation of the Secretary of Finance, authorize
encumbrances of any kind whatsoever, shall be the grant of discounts on taxes due on real property at
enforceable against the property whether in the such rates and for such periods as he may fix, if he deems
possession of the delinquent or any subsequent owner or that the public interest so requires.
possessor, and shall be removable only by the payment of
the delinquent taxes and penalties. Section 62. Payment under protest. (a) When a taxpayer
desires for any reason to pay his tax under protest, he
The real property tax on properties actually, directly, and shall indicate the amount or portion thereof he is
exclusively used for educational purposes as provided contesting and such thereon the words "paid under



protest". Verbal protests shall be confirmed in writing, the payment without penalty of the quarterly
with a statement of the ground, therefor, within thirty installments thereof shall subject the taxpayer to the
days. The tax may be paid under protest, and in such case payment of a penalty of two per centum on the amount
it shall be the duty of the Provincial, City or Municipal of the delinquent tax for each month of delinquency or
Treasurers to annotate the ground or grounds therefor on fraction thereof, until the delinquent tax shall be fully
the receipt. paid: Provided, That in no case shall the total penalty
(b) In case of payments made under protest, the amount exceed twenty-four per centum of the delinquent tax. The
or portion of the tax contested shall be held in trust by rate of penalty for tax delinquency fixed herein shall be
the treasurer and the difference shall be treated as uniformly applied in all provinces and cities.
revenue. Section 67. Remedies cumulative, simultaneous and
(c) In the event that the protest is finally decided in favor unconditional. Collection of the real property tax may be
of the government, the amount or portion of the tax held enforced through any or all of the remedies provided
in trust by the treasurer shall accrue to the revenue under this Code, and the use or non-use of one remedy
account, but if the protest shall be decided finally in favor shall not be a bar against the institution of the others.
of the protestant, the amount or portion of the tax Formal demand for the payment of the delinquent taxes
protested against may either be refunded to the and penalties due need not be made before any of such
protestant or applied as tax credit to any other existing or remedies may be resorted to; notice of delinquency as
future tax liability of the said protestant. required in Section sixty-five hereof shall be sufficient for
the purpose.
Section 63. Repayment of excessive collections. When it
appears that an assessment of real property was Section 68. Distraint of personal property for
erroneous and unjust when made and the same is delinquency. After delinquency in the payment of such
reduced because of such error or injustice, and not by tax may be enforced by distraining the personal property
reason of damage incurred or deterioration suffered by including the crops growing on land of the delinquent
such property subsequent to the date of original taxpayer. In such case, the provincial or city treasurer or
assessment, the taxpayer shall be entitled to the proper his deputy shall issue a duly authenticated certificate,
refund for taxes and penalties paid by him for not more based upon the records of his office, showing the fact of
than three years. the delinquency and the amount of tax and penalty due,
and this shall be sufficient warrant for the seizure of any
Timely notice shall be given by the Provincial or City non-exempt personal property belonging to the
Treasurer to every taxpayer whose assessment is so delinquent taxpayer in question. Such process may be
reduced and he shall be furnished a certificate showing executed by the provincial or city treasurer, his deputy, or
the amount of refund to which he is entitled for payment any officer authorized to execute legal process.
already made.
Section 69. Personal property exempt from distraint or
Section 64. Restriction upon power of court to impeach levy. The following property shall be exempt from
tax. No court shall entertain any suit assailing the validity distraint and the levy of attachment or execution for
of tax assessed under this Code until the taxpayer shall delinquency in the payment of the real property tax:
have paid, under protest, the tax assessed against him
nor shall any court declare any tax invalid by reason of (a) Tools and the implements necessarily used by the
irregularities or informalities in the proceedings of the delinquent taxpayer in his trade or employment.
officers charged with the assessment or collection of (b) One horse, cow, carabao, or other beast of burden,
taxes, or of failure to perform their duties within this time such as the delinquent taxpayer may select, and
herein specified for their performance unless such necessarily used by him in his ordinary occupation.
irregularities, informalities or failure shall have impaired (c) His necessary clothing, and that of all his family.
the substantial rights of the taxpayer; nor shall any court
declare any portion of the tax assessed under the (d) Household furniture and utensils necessary for
provisions of Code invalid except upon condition that the housekeeping, and used for that purpose by the
taxpayer shall pay the just amount of the tax, as delinquent taxpayers, such as he may select, of a value
determined by the court in the pending proceeding. not exceeding three thousand pesos.
Section 65. Notice of delinquency in the payment of the (e) Provisions, including crops, actually provided for
real property tax. Upon the real property tax or any individual or family use sufficient for four months.
installment thereof becoming delinquent, the provincial (f) The professional libraries of lawyers, judges, clergymen,
or city treasurer shall immediately cause notice of the fact doctors, school teachers, and music teachers, not
to be posted at the main entrance of the provincial exceeding five thousand pesos in value.
building and of all municipal buildings or municipal or
city hall and in a public and conspicuous place in each (g) One fishing boat and net, not exceeding the total
barrio of the municipality of the province or city as the value of five thousand pesos, the property of any
case may be. The notice of delinquency shall also be fisherman, by the lawful use of which he earn a livelihood.
published once a week for three consecutive weeks, in a (h) Any material or article forming part of a house or
newspaper of general circulation in the province or city, if improvement of any real property.
any there be, and announced by a crier at the
marketplace for at least three market days. Section 70. Sale of distrained personal property. Property
seized upon process under Section sixty-eight hereof
Such notice shall specify the date upon which tax shall, after due advertisement, be exposed for sale at
became delinquent, and shall state that personal public auction to the bidder, and so much of the property
property may be seized to effect payment. It shall also shall be thus sold as may be necessary to satisfy the tax,
state that, at any time, before the seizure of personal penalty, and cost of the seizure and sale. The purchaser at
property, payment may be made with penalty in such sale shall acquire an indefeasible title to the
accordance with the next following section, and further, property.
that unless the tax and penalties be paid before the
expiration of the year for which the tax is due, or the tax Advertisement in such cases shall be given by notice
shall have been judicially set aside, the entire delinquent stating the name of the owner of the property to be sold,
real property will be sold at public auction, and that date, time, place and cause of the sale, posted for twenty
thereafter the full title to the property will be and remain days before the date of the auction at the main entrance
with the purchaser, subject only to the right of delinquent of the city or municipal hall, or municipal building, and at
taxpayer or any other person in his behalf to redeem the a public and conspicuous place in the barrio or street
sold property within one year from the date of sale. where the property was seized, and announced by crier at
the marketplace at least three market days before the
Section 66. Penalty for delinquency. Failure to pay the auction sale.
real property tax before the expiration of the period for


The sale shall take place, in the discretion of the provincial the city for the amount of taxes, penalties due thereon,
or city treasurer or his deputy, either at the main entrance and the costs of sale.
of the municipal building or city or municipal hall or at Section 76. Certificate of sale to be issued purchaser,
the place where the property was seized. If no satisfactory province or city. The purchaser at public auction of
bid or no bid at all is received in the place mentioned, the delinquent property shall receive from the provincial or
distrained property may be sold anywhere in the province city treasurer, or his deputy, a certificate setting forth the
or city at public auction, after the advertisement and due proceedings had at the sale, a description of the property
notice to the owner of the property. sold, the name of the purchaser, the sale price, as well as
Section 71. Redemption of distrained property The owner the exact amount of the taxes and penalties due and the
of personal property seized for non-payment of taxes may costs of sale. The person in whose name the property is
redeem the same property from the collecting officer at listed and assessed shall be furnished with a copy of the
any time after seizure and before sale by tendering to him sale certificate.
the amount of tax, penalty and costs incurred up to the Section 77. Report of sale to provincial or municipal
time of tender. The costs to be charged in making such board or city council. The provincial or city treasurer on his
seizure and sale shall only embrace the actual expenses deputy shall make a report to the provincial or municipal
of seizure and preservation of the property pending the board or city council of the sale within thirty days
same, but no charges shall be imposed for the services of thereafter, and shall make the same appear in his records.
the collecting officer or his deputy.
Section 78. Redemption of real property after sale. Within
Section 72. Return of officer and disposition of proceeds. the term of one year from the date of the registration of
The officer conducting a sale under Section seventy sale of the property, the delinquent taxpayer or his
hereof shall make immediate return of his proceedings representative, or in his absence, any person holding a
and a memorandum thereof shall be entered by the lien or claim over the property, shall have the right to
provincial or city treasurer in his records. The excess, if redeem the same by paying the provincial or city
any, of the proceeds of the sale of the distrained personal treasurer or his deputy the total amount of taxes and
property over the tax, penalty and costs of sale and penalties due up to the date of redemption, the costs of
seizure and any of the property remaining unsold in the sale and the interest at the rate of twenty per centum on
hands of the officer, shall be returned to the taxpayer. the purchase price, and such payment shall invalidate the
Section 73. Advertisement of sale of real property at sale certificate issued to the purchaser and shall entitle
public auction. After the expiration of the year for which the person making the same to a certificate from the
the tax is due, the provincial or city treasurer shall provincial or city treasurer or his deputy, stating that he
advertise the sale at public auction of the entire had redeemed the property.
delinquent real property, except real property mentioned The provincial or city treasurer or his deputy shall, upon
in subsection (a) of Section forty hereof, to satisfy all the surrender by the purchaser of the certificate of sale
taxes and penalties due and the costs of sale. Such previously issued to him, forthwith return to the latter the
advertisement shall be made by posting a notice for three entire purchase price paid by him plus the interest at
consecutive weeks at the main entrance of the provincial twenty per centum per annum herein provided for, the
building and of all municipal buildings in the province, or portion of the cost of the sale and other legitimate
at the main entrance of the city or municipal hall in the expenses incurred by him, and said property shall
case of cities, and in a public and conspicuous place in thereafter be free from the lien of said taxes and
barrio or district wherein the property is situated, in penalties.
English, Spanish and the local dialect commonly used,
and by announcement at least three market days at the Section 79. Possession and usufruct of real property
market by crier, and, in the discretion of the provincial or within one year from due date of sale. After the sale and
city treasurer, by publication once a week for three before redemption, or before the expiration of the term of
consecutive weeks in a newspaper of general circulation one year fixed in Section seventy-eight hereof for such
published in the province or city. redemption, the real property shall remain in the
possession of the delinquent taxpayer, who shall have the
The notice, publication, and announcement by crier shall right to the usufruct thereof.
state the amount of the taxes, penalties and costs of sale;
the date, hour, and place of sale, the name of the taxpayer Section 80. Issuance of final bill of sale. In case the
against whom the tax was assessed; and the kind or delinquent taxpayer or his representative, or any person
nature of property and, if land, its approximate areas, lot holding a lien or claim over the property, fails to redeem
number, and location stating the street and block the same within the period of one year from the date of
number, district or barrio, municipality and the province sale as provided in Section seventy-eight hereof, the
or city where the property to be sold is situated. Copy of provincial or city treasurer shall make an instrument
the notice shall forthwith be sent either by registered sufficient in form and effect to convey to the purchaser
mail or by messenger, or through the barrio captain, to the property purchased by him, free from any
the delinquent taxpayer, at his address as shown in the encumbrance or third party claim whatsoever, and the
tax rolls or property tax record cards of the municipality or said instrument shall succinctly set forth all proceedings
city where the property is located, or at his residence, if upon which the validity of the sale depends. Any balance
known to said treasurer or barrio captain: Provided, of the proceeds of the sale left after deducting the
however, That a return of the proof of service under oath amount of the taxes and penalties due and the costs of
shall be filed by the person making the service with the sale, shall be returned to the owner or his representative.
provincial or city treasurer concerned. Section 81. Disposition of real property acquired by
Section 74. Stay of sale of real property. At any time province or city. The provincial or city treasurer shall have
during or before the sale the taxpayers may stay all charge of the delinquent real property acquired by the
proceedings by paying the taxes and penalties due on province or city under the provisions of Section
the real property up to the time of tender and costs to the seventy-five during which time the delinquent taxpayer
provincial or city treasurer or his deputy conducting the shall have possession and usufruct of such property in
sale. accordance with Section seventy-nine hereof. Said
treasurer shall take steps within one year from the date of
Section 75. Discretion of provincial or city treasure to buy issuance of final bill of sale to dispose of the delinquent
real property in behalf of province or city. In case there is real property at public auction; but at any time before the
no bidder at the public auction of the delinquent real auction sale, any person in his own right may repurchase
property, or if the highest bid is for an amount not such property by paying the total amount of the taxes
sufficient to pay the taxes, penalties or costs of sale, the and penalties due up to the time of repurchase, the costs
provincial or city treasurer may, in his discretion, buy the of sale, and other legitimate expenses incurred by the
delinquent real property in the name of the province or province or city with respect to the property, and an
additional penalty of twenty per cent on the purchase



price: Provided, however, That the right of the delinquent Known as the Real Property Tax Code, Presidential
taxpayer or his representative or any person holding lien Decree No. 1230, [November 4, 1977])
or claim over the property to further redeem said (2) In the case of the city, ten per cent of the collections of
property within one year from the date of acquisition by the tax shall likewise accrue to the barrio where the
the province or city, in the manner provided in Section property is situated.
seventy- eight hereof; and, Provided, further That if the
treasurer has entered into a contract for the lease of the Thirty per cent of the barrio shares herein referred to may
property in the meantime, any repurchase made be spent for salaries or per diems of the barrio officials
hereunder shall be subject to such contract. and other administrative expenses, while the remaining
seventy per cent shall be utilized for development
Section 82. Collection of real property tax through the projects approved by the Secretary of Local Government
courts. The delinquent real property tax shall constitute a and Community Development or by such committee
lawful indebtedness of the taxpayer to the province or city created, or representatives designated, by him.
and collection of the tax may be enforced by civil action
in any court of competent jurisdiction. The civil action Section 87. Application of proceeds. (a) The proceeds of
shall be filed by the Provincial or City fiscal within fifteen the real property tax pertaining to the city and to the
days after receipt of the statement of delinquency municipality shall accrue entirely to their respective
certified to by the provincial or city treasurer. This remedy general funds. In the case of the province, one-fourth
shall be in addition to all other remedies provided by law. thereof shall accrue to its road and bridge fund and the
remaining three-fourths, to its general fund.
Section 83. Suits assailing validity of tax sale. No court
shall entertain any suit assailing the validity of a tax sale of (b) The entire proceeds of the additional one per cent
real estate under this Chapter until the taxpayer shall real property tax levied for the Special Education Fund
have paid into court the amount for which the real created under Republic Act No. 5447 collected in the
property was sold, together with interests of twenty per province or city on real property situated in their
centum per annum upon that sum from the date of sale respective territorial jurisdictions shall be distributed as
to the time of instituting suit. The money so paid into follows:
court shall belong to the purchaser at the tax sale if the (1) Collections in the provinces: Fifty-five per cent shall
deed is declared invalid, but shall be returned to the accrue to the municipality where the property subject to
depositor if the action fails. the tax is situated; twenty-five per cent shall accrue to the
Neither shall any court declare a sale invalid by reason of province; and twenty per cent shall be remitted to the
irregularities or informalities in the proceedings Treasurer of the Philippines.
committed by the officer charged with the duty of (2) Collections in the cities and in the cities and
making sale, or by reason of failure by him to perform his municipalities of Metro Manila: Eighty percent shall be
duties within the time herein specified for their retained by cities; including cities and municipalities of
performance, unless it shall have been proven that such Metro Manila, and twenty per cent shall be remitted to
irregularities, informalities or failure have impaired the the Treasurer of the Philippines.
substantial rights of the taxpayer.
(Amending Sections 41 and 87 of P.D. No. 464 As
Section 84. Payment of delinquent taxes on property Amended (Real Property Tax Code), Presidential Decree
subject of controversy. In any suit involving the ownership No. 1913, [March 29, 1984])
or possession of, or succession to, real property, the court
shall, on its own motion or upon representation of the However, any increase in the shares of provinces, cities
provincial, city or municipal treasurer or his deputy, and municipalities from said additional tax accruing to
condition the award of such ownership, possession or their respective local school boards commencing with
succession to any party to the controversy upon the fiscal year 1973-74 over what has been actually realized
payment to the court of the taxes and penalties due on during the fiscal year 1971-72 which, for purposes of this
the property and all the costs that may have accrued to Code, shall remain as the base year, shall be divided
the treasurer by reason of his representation. equally between the general fund and the special
education fund of the local government units concerned.
Section 85. Treasurer to certify delinquencies Remaining The Secretary of Finance may, however, at his discretion,
uncollected The provincial, city or municipal treasurer increase to not more than seventy-five per cent the
shall prepare a certified list of all real property tax amount that shall accrue annually to the local general
delinquencies remaining uncollected or unsatisfied for at fund.
least one year in his jurisdiction, and a statement of the
reason or reasons for such non-collection or (c) The proceeds of all delinquent taxes and penalties, as
non-satisfaction, and shall submit the same to the well as the income realized from the use, lease or other
Secretary of Finance on or before December thirty-first of disposition of the real property acquired by the province
the year immediately succeeding that in which the or city at a public auction in accordance with the
delinquencies have occurred with a request for assistance provisions of this Code, and the proceeds of the sale of
in the enforcement of the remedies for collection the delinquent real property or of the redemption
provided hereunder. thereof, shall accrue to the province, city or municipality
in the same manner and proportions as if the tax or taxes
had been paid in regular course.
CHAPTER VII DISPOSITION OF PROCEEDS (d) The proceeds of the additional real property tax on idle
Section 86. Distribution of proceeds. (a) The proceeds of private lands shall accrue to the respective general funds
the real property tax, except as otherwise provided in this of the province, city and municipality where the land
Code, shall accrue to the province, city or municipality subject to the tax is situated.
where the property subject to the tax is situated and shall (e) The provisions of existing laws to the contrary
be applied by the respective local government unit for its notwithstanding the proceeds of the Special Education
own use and benefit. Fund accruing to the local governments may be used for
(b) Barangay shares in real property tax collections. the salary adjustment of teachers of the national
Beginning January 1, 1978 and thereafter, the annual government, in addition to the other purposes
shares of the barangays in the basic real property tax mentioned in Section 1 of Republic Act No. 5447, as
collections shall be as follows: amended. (Amending Sections 41 and 87 of P.D. No. 464
As Amended (Real Property Tax Code), Presidential
(1) Ten per cent of the total annual collections of the Decree No. 1913, [March 29, 1984])
province and the municipality shall accrue to the
barangay where the property subject to the tax is located.
(Amending Section 86, Paragraph (b) of Presidential
Decree Numbered Four Hundred Sixty Four, Otherwise



(c) Prepare, install and maintain a system of tax mapping

showing graphically all property subject to assessment in
CHAPTER VIII ORGANIZATION, FUNCTIONS his province or city and gather all necessary data
AND SUPERVISION concerning the same.
Section 88. Provincial or city assessor, his assistant and (d) Make frequent physical surveys to check and
deputies and their appointments. There shall be a distinct determine whether all real property within the locality are
and separate assessment office in every province or city properly listed in the assessment rolls.
under the charge of a provincial or city assessor, who shall (e) Appraise all items of real property at current market
be appointed by the President of the Philippines in the value in accordance with this Code and conduct regular
manner prescribed by law. The position of provincial or ocular inspection trips to determine if all properties are
city assessor shall belong to the competitive service and assessed correctly.
its salary shall be as fixed by law.
(f) Keep a record of all transfers, leases and mortgages of
There shall be an Assistant Provincial or City Assessor in real property, rentals, insurance, and cost of construction
each assessment office, who shall be appointed by the of buildings and other improvements on land, and land
provincial or city assessor in conformity with the income for assessment purposes.
provisions of the Civil Service Law, subject to the approval
of the Secretary of Finance. The salaries of the Assistant (g) Apply uniformly the assessment levels fixed in Section
Provincial or City Assessor shall likewise be as fixed by law. twenty hereof to the current market value of all property
subject to assessment.
Upon the approval of this Code, no person shall be
appointed to the position of provincial or city assessor or (h) Cancel all of the assessments, in case several
assistant provincial or city assessor, unless he possesses a assessments are made for the same property, except the
degree in law, civil, mechanical, industrial, agricultural or one property make, but if any assessee or his
geodetic engineering, architecture; forestry; agriculture; representative shall object to the cancellation of the
commerce or business administration; or a bachelor's assessment made in his name, such assessment shall not
degree in education, arts and sciences, major in be cancelled but the fact shall be noted on the tax
mathematics or statistics; or any related courses; has declaration and assessment rolls and other property
qualified in an appropriate Civil Service Examination and books of record. Preference, however, shall be given to the
has acquired at least five years experience in real property assessment of the person who has the best title to the
assessment work, or at least three years in the case of property, or in default thereof, of the person who has
assistant provincial or city assessor. For every year lacking possession of the property.
in educational attainment, a two-year experience in real (i) Eliminate from the assessment of taxable property
property assessment work in addition to the foregoing such properties which have been destroyed or which,
experience requirement may be substituted, Provided, being exempt, have been improperly included in the
However, That he shall have completed at least two years same; decrease the assessment where the property
of any of the college courses aforementioned. (as previously assessed has suffered a permanent loss of
amended by PD 1383) value by reason of storm, flood, fire, or other calamity; and
Upon the effectivity of this Code, vacant positions of increase the assessment where improvement have been
provincial and city assessors and of assistant provincial made upon the property subsequent to the last
and city assessors shall be filled in accordance with the assessment.
provisions of this Section. (j) Attend personally or thru his duly authorized
The other employees in the assessment office, whose representative all sessions of the Local Board of
number and salaries shall be fixed by the Sangguniang Assessment Appeals and present any information or
Panlalawigan or Panlungsod shall be appointed by the record in his possession as may be required by the Board
Provincial Governor or City Mayor upon recommendation in determining the correct assessment of the real
of the provincial or city assessor, in conformity with the property under appeal.
provisions of this Section and the Civil Service Law: (k) Issue certificates pertaining to or certified copies of
Provided, That there shall be in each provincial or city the assessment records of real property and all other
assessment office one Chief Deputy Assessor and at least records relative to its assessment, upon payment of a
three deputy assessors to perform full-time field service charge or fee fixed therefor by the local board or
assessment work. Any person with at least two years council.
college education in any of the courses required for
provincial or city assessor and who possesses an (l) Perform such other acts as may be required of
appropriate Civil Service eligibility shall be deemed provincial or city assessor under this Code or other related
qualified for appointment as Chief Deputy Assessor if he laws.
has at least three years' experience, both in real property Section 90. The Municipal Deputy Assessor. There is
assessment work. The Chief Deputy Assessor shall be hereby created in every municipality the position of
appointed by the Provincial Governor or City Mayor upon municipal deputy assessor, who shall be appointed by the
recommendation of the Provincial or City Assessor, as the provincial assessor with the approval of the Secretary of
case may be, in conformity with the provisions of this Finance. The salary of the municipal deputy assessor shall
Section and the Civil Service Law, subject to the approval be equal to the basic salary authorized by law for the
of the Secretary of Finance. (as amended by PD 1383) municipal treasurer of the same municipality, one-third of
The oath of office of provincial or city assessors and the annual rate to be paid from the provincial general
assistant provincial or city assessors shall contain a fund and two-thirds, from the municipal general fund.
statement to the effect that the affiant shall appraise real Within one year from the date of approval of this Code,
property subject to assessment at its current market the position of Municipal Deputy Assessor shall be
value in accordance with this Code. created and provided for in the corresponding provincial
and municipal budgets and filed in accordance with the
Section 89. Powers and duties of provincial or city provisions of this Section.
assessor. The provincial or city assessor shall:
Any person with a bachelor's degree in law, civil or
(a) Establish a systematic method of assessment in the mechanical engineering, commerce or business
manner prescribed herein and in accordance with rules administration, or any other related collegiate course and
and regulations issued by the Secretary of Finance. who possesses an appropriate civil service eligibility shall
(b) Install and maintain a real property identification and be deemed qualified for appointment as municipal
accounting system conforming to the standards deputy assessor. A two-year experience in assessment
prescribed by the Secretary of Finance. work may be substituted for every year lacking in the
educational requirement: Provided, however, That the


appointee shall have completed at least two years of any The Assistant Municipal Assessor upon recommendation
of the college courses abovementioned. of the Deputy Provincial and Municipal Assessor shall be
The Municipal Deputy Assessor shall perform all the appointed by the Provincial Assessor upon
duties and functions related to the appraisal and recommendation of the Deputy Provincial and Municipal
assessment for taxation purposes of real property Assessor, subject to the approval of the Secretary of
situated within the municipality under the direct and Finance. In the municipalities of Metropolitan Manila, the
immediate supervision of the provincial assessor. Assistant Municipal Assessor shall be appointed by the
Commissioner for Finance of the Metropolitan Manila
In the municipalities belonging to the fourth class Commission upon recommendation of the Municipal
category or lower, the municipal treasurer may be Assessor and with the approval of the Secretary of
appointed ex-officio deputy assessor by the provincial Finance. The educational requirements prescribed for the
assessor upon recommendation of the provincial position of Deputy Provincial and Municipal Assessor shall
treasurer: Provided, however, That such municipal likewise apply to the Assistant Municipal Assessor,
treasurer possesses the minimum qualification provided, however, that he possesses an appropriate civil
requirements prescribed herein; Provided, further, That service eligibility and at least one year experience in real
no ex-officio appointment shall extend beyond twelve property assessment work. For every year lacking in the
months from the date of issue unless renewed by the aforementioned educational requirements, a two-year
appointing authority; and Provided, finally, That the experience in real property assessment work may be
appointment of a regular municipal treasurer as ex-officio substituted; Provided, That the appointee shall have
deputy assessor shall cease and be considered completed at least two years of any of the college courses
terminated upon the appointment of a regular municipal aforementioned. (as created by PD 1383)
deputy assessor as herein provided.
Section 91. Supervision over local assessment offices. The
A municipal treasurer appointed as ex-officio deputy Secretary of Finance shall exercise direct executive
assessor shall receive additional compensation equivalent supervision over local assessment affairs and the
to not more than twenty percent of his basic salary assessment offices of provincial, city and municipal
payable by the municipality. In no case however shall his governments and, for this purpose, there is hereby
basic salary plus such additional compensation exceed created a division in the Department of Finance which
the basic salary authorized for a municipal treasurer of shall discharge all powers, duties and functions that may
the next higher class of municipality. be deemed necessary in, or are pertinent to, the
Municipal treasurers who at the time of approval of this administration of the real property tax and the
Code are already appointed as ex-officio deputy assessors implementation of the provisions of this Code.
shall continue in such capacity until the appointment of a The head of this division shall in no case receive
regular municipal deputy assessor in accordance with compensation and/or emoluments lower than those
this Code. authorized for the regular division chiefs of the
Section 90-A. Department. Sufficient funds for the operation and
maintenance of said division shall be included in the
(a) The position title of Municipal Deputy Assessor is annual appropriations of the Department.
hereby changed to Deputy Provincial and Municipal
Assessor.
Municipal Deputy Assessors, who, at the time of the CHAPTER IX SPECIAL PROVISIONS
approval of this Decree, are holding permanent Section 92. Basis for payment of just compensation in
appointments shall continue in such capacity without the expropriation proceedings. In determining just
necessity of issuance of new appointments: Provided, compensation when private property is acquired by the
However, That they shall henceforth be known as Deputy government for public use, the basis shall be the market
Provincial and Municipal Assessors. value declared by the owner or administrator or anyone
(b) Beginning January 1, 1979, the position of Deputy having legal interest in the property, or such market value
Provincial and Municipal Assessor shall be created in all as determined by the assessor, whichever is lower.
municipalities. Section 93. Educational institutions exempt from the real
No new appointment for Ex-Officio Deputy Assessor shall property tax. Non-stock or non-profit educational
be issued beginning January 1, 1979, Provided, However, institutions owning real property, the total assessed value
That those holding appointments as such as Ex-Office of which does not exceed thirty thousand pesos, as well
Deputy Assessor at the time of the approval of this as Education Foundations organized under Republic Act
Decree may continue in Office as such until the No. 6055, shall be exempt from the payment of realty
appointment of a regular Deputy Provincial and taxes provided for under this Code.
Municipal Assessor, or upon expiration of the Section 94. Assessment loan revolving fund. The sum of
twelve-month period covered by his present fifty million pesos is hereby appropriated out of the
appointments, whichever comes earlier. unallocated balance of internal revenue allotments to
(c) Any person with a bachelor's degree in law, civil, local governments, after distribution of their individual
mechanical, industrial, agricultural or geodetic shares pursuant to Section One of Presidential Decree No.
engineering; architecture; forestry; agriculture; commerce 144, as amended, to constitute an Assessment Loan
or business administration, or a bachelor's degree in Revolving Fund for financing tax-mapping projects,
education, arts and sciences, major in mathematics or periodic revisions of assessments, and other real property
statistics; or any other related college course; has assessment programs of provinces, cities, and
qualified in an appropriate civil service examination and municipalities. Such fund shall be administered by the
has acquired at least two years experience in real property Secretary of Finance and shall be loaned without interest
assessment work, shall be deemed qualified for to provinces, cities, and municipalities under such terms
appointment as Deputy Provincial and Municipal and conditions as he may impose. (Amending Section 94
Assessor. A two-year experience in real property of P.D. No. 464 (Real Property Tax Code), Presidential
assessment work may be substituted for every year Decree No. 1002, [September 22, 1976])
lacking in the abovementioned educational requirement; Section 95. General assessment revision, expenses
Provided, However, That the appointee shall have incident thereto. Provincial, city and municipal boards or
completed at least two years of any of the college courses councils shall provide the necessary appropriations to
abovementioned. underwrite or defray expenses incident to general
(d) A municipality may create the position of Assistant revision of real property assessments, using for the
Municipal Assessor, whose salary shall be equal to the purpose any unappropriated balances in the general,
rate authorized for the Assistant Municipal Treasurer of road and bridge and/or permanent public improvement
the same municipality, payable from the municipal funds. funds, or any underestimated revenues accruing thereto,



or reversions of authorized appropriations in their the assessor shall be exempt from the payment of postal
respective budgets which are not otherwise urgently charges or fees.
needed, any provision of existing laws to the contrary
notwithstanding.
All expenses incident to a general revision of property CHAPTER XI PENAL PROVISIONS
assessments shall be divided equally between the Section 104. Failure to file Declaration and Other
province and the municipality. Prohibited Acts. Any person required under the provisions
of this Code to declare real property whether taxable or
exempt, who fails to file such declaration under the terms
CHAPTER X MISCELLANEOUS PROVISIONS and conditions prescribed therefor, shall upon conviction
Section 96. Remission of tax by provincial or city board or be punished by a fine of not more than one thousand
council. In case of a general failure of crops or great pesos or by imprisonment of not more than one year, or
decrease in the price of products, or similar widespread both, at the discretion of the Court; Provided, However,
disaster in any city or municipality or municipalities of a That if a violator shall voluntarily agree to pay a fine
province, the provincial of city board or council of the without necessity of filing a case in court, the Provincial,
same, by resolution passed prior to the first day of City or Municipal Assessor shall recommend the
January of any year may remit, wholly or partially, the real collection of a fine by the Provincial, City, or Municipal
property tax or the penalties thereon for the succeeding Treasurer in accordance with the rates to be fixed by the
year in the city or municipality or municipalities effected Secretary of Finance on the basis of the assessed value of
by the disaster, but a resolution so disposing must clearly subject property. The funds herein collected shall be
state the reason or reasons for such remission and shall appropriated for the operation of the Office of the
not take effect until approved by the Secretary of Finance. Provincial, City or Municipal Assessor, as the case may be.
(as amended by PD 1383)
Section 97. Remission or reduction of tax by the
President of the Philippines. The President of the Section 105. Acts committed in behalf of corporations. An
Philippines, may, in his discretion, remit or reduce the real individual who shall commit any of the violations
property tax for any year in my city, municipality or penalized in the preceding section acting under the
province if he deems that public interest so requires. authority and in behalf of a corporation, partnership or
association shall be punished by the fine and/or
Section 97-A. Grant of Special Authority to the Minister imprisonment therein provided, and the other liabilities
of Finance. — Whenever public interest shall so require, or and shall attach to the corporation, partnership or
in special cases of economic dislocation or imbalance association to whom the real property is required to be
arising from natural calamities, the Minister of Finance listed for purposes of taxation or exemption. The
shall, upon direction or approval of the President of the corporation, partnership or association, shall in addition,
Philippines, formulate and prescribe a scheme of pay a fine of not less than two thousand pesos nor more
graduated realty tax payments and/or a system of than five thousand pesos at the discretion of the court.
equalizing real property valuations for taxation purposes,
or such remedial measures that would ease the tax Section 106. Omission of property from assessment or
burden, subject to such conditions and requirements as tax rolls by officers and other acts. Any officer charged
may be deemed necessary. (Amendments to Certain with the duty of assessing real property, who shall willfully
Sections of P.D. No. 464 As Amended (Real Property Tax fail to assess, or shall intentionally omit from the
Code), Presidential Decree No. 1621, [April 19, 1979]) assessment or tax roll, any real property which he knows
to be lawfully taxable or shall wilfully or through gross
Section 98. Duty of offers to assist the provincial or city negligence under assess any real property or shall
assessor. It shall be the duty of every officer and intentionally violate or fail to perform any duty imposed
employee of the provincial, city and municipal upon him by law relating to the assessment of taxable
governments to render all necessary assistance to the and real property, shall upon conviction be punished by a
provincial or city assessor. It shall likewise be the duty of fine or not more than one thousand pesos or my
registers of deeds and notaries public to furnish the imprisonment of not more than one year, or both, at the
provincial or city assessors with copies of all contracts discretion of the court.
conveying, leasing, or mortgaging real property received
by, or acknowledged before, them. The same penalty shall be imposed upon any officer
charged with the duty of collecting the tax due on real
Section 99. Insurance companies to furnish information. property who shall willfully fail to collect the tax and
Insurance companies, whenever requested, shall furnish institute the necessary proceedings for the collection of
in each particular case to the provincial or city assessor the same.
copies of any contract or policy insurance on buildings,
structures and improvements insured by them which Any other officer required by this code to perform acts
may be necessary for the proper assessment thereof. relating to the administration of the real property tax, or
to assist the assessor or treasurer in such administration,
Section 100. Fees in court actions. All court actions, who shall willfully fail to discharge such duties, shall upon
criminal or civil, instituted at the instance of the provincial conviction, be punished by a fine or not exceeding five
or city treasurer or assessor under the provisions of this hundred pesos or by imprisonment of not more than six
Code, shall be exempt from the payment of court and months, or both, at the discretion of the court.
sheriff's fees.
Section 107. Government agents delaying assessment of
Section 101. Fees in registration of papers or documents real property and assessment appeals. Any government
on sale of delinquent real property to province or city. All official who shall intentionally and deliberately delay the
certificates, documents, or papers covering the sale of assessment of real property, or the filing of any appeal
delinquent property to the province or city, if registered in against its assessment, if such is patently indicated, shall,
the Registry of Property, shall be exempt from upon conviction, be punished by a fine of not more than
registration fees. five hundred pesos or by imprisonment of not more than
Section 102. Promulgation of rules by the Secretary of one year, or both, at the discretion of the court.
Finance. The Secretary of Finance shall promulgate the Section 108. Violation of other provisions of this Code or
rules and regulations and prescribe the forms to be used of rules and regulations in general. Any person who shall
and the procedures to be followed in carrying out violate any provision of this Code or any rule or
properly and effectively the provisions of this Code. regulations of the Department of Finance made in
Section 103. Real property assessment notices or owner's conformity thereto, for which violation no specific penalty
copies of the tax declarations to be exempt from postal is provided by law, shall be punished by a fine of not more
charges or fees. All real property assessment notices or than three hundred pesos, or by imprisonment of not
owner's copies of tax declarations sent thru the mails by more than six months, or both, at the discretion of the
court. In the case of a corporation, partnership, or



association, the penalty shall be fine of not less than two The Presiding Justice and Associate Justices shall hold
thousand pesos nor more than five thousand pesos at office during good behavior, until they reach the age of
the discretion of the court. seventy (70), or become incapacitated to discharge the
duties of their office, unless sooner removed for the same
causes and in the same manner provided by law for
CHAPTER XII TRANSITORY PROVISIONS members of the judiciary of equivalent rank.
Section 109. Sale and forfeiture before effectivity of Code. (as amended by RA No 3457, 9282, 9503)
All sales and forfeitures of delinquent real properties and Section 2. Sitting En Banc or Division; Quorum;
tax delinquencies existing before the effective date of this Proceedings. — The CTA may sit en banc or in three (3)
Code shall be governed by the provisions of laws then in Divisions, each Division consisting of three (3) Justices.
force.
Five (5) Justices shall constitute a quorum for sessions en
Section 110. Turn over of pending assessment cases, banc and two (2) Justices for sessions of a Division.
records, supplies and equipment of the Board of Provided, That when the required quorum cannot be
Assessment Appeals. All assessment cases pending constituted due to any vacancy, disqualification,
before the Board of Assessment Appeals created under inhibition, disability, or any other lawful cause, the
Commonwealth Act No. 470 and the charters of all cities Presiding Justice shall designate any Justice of other
including all their records, supplies and equipment shall Divisions of the Court to sit temporarily therein.
be turned over by its outgoing Chairman to the local
Board of Assessment Appeals in their respective localities The affirmative votes of five (5) members of the Court en
created under Presidential Decree No. 76. Such cases banc shall be necessary to reverse a decision of a Division
shall be decided pursuant to and in accordance with the but a simple majority of the Justices present necessary to
provisions of this Code. promulgate a resolution or decision in all other cases or
two (2) members of a Division, as the case may be, shall
Section 111. Repealing Clause. Commonwealth Act be necessary for the rendition of a decision or resolution
Numbered Four Hundred Seventy, as amended; the in the Division Level.
pertinent provisions of the charters of all cities; Section
two thousand ninety-two of the Revised Administrative (as amended by RA No 9282, 9503)
Code; and all acts, laws or decrees or parts of acts, laws or Section 3. Clerk of Court;Division Clerks of Court;
decrees inconsistent with the provisions of this Code are Appointment;Qualification; Compensation.— The CTA
hereby repealed or modified accordingly. shall have a Clerk of Court and three (3) Division Clerks of
Section 112. Effectivity of Code. This Code shall take effect Court who shall be appointed by the Supreme Court. No
on June 1, 1974. person shall be appointed Clerk of Court or Division Clerk
of Court unless he is duly authorized to practice law in the
Done in the City of Manila, this 20th day of May, in the Philippines. The Clerk of Court and Division Clerks of
year of Our Lord Nineteen Hundred and Seventy-four. Court shall exercise the same powers and perform the
same duties in regard to all matters within the Court's
jurisdiction, as are exercised and performed by the Clerk
RA No 1125 | Court of Tax Appeals Act of Court and Division Clerks of Court of the Court of
Appeals, in so far as the same may be applicable or
As amended by RA Nos 3457, 9282, 9503 analogous; and in the exercise of those powers and the
June 16, 1954 performance of those duties they shall be under the
direction of the Court. The Clerk of Court and the Division
AN ACT CREATING THE COURT OF TAX APPEALS
Clerks of Court shall have the same rank, privileges, salary,
Section 1. Court; Judges; qualifications; salary; tenure. emoluments, retirement and other benefits as those
- There is hereby created a Court of Tax Appeals (CTA) provided for the Clerk of Court and Division Clerks of
which shall be of the same level as the Court of Appeals, Court of the Court of Appeals, respectively. (as amended
possessing all the inherent powers of a Court of Justice, by RA No 9282)
and shall consist of a Presiding Justice and eight (8)
Section 4. Other subordinate employees. - The
Associate Justices. The incumbent Presiding Judge and
Supreme Court shall appoint all officials and employees
Associate Judges shall continue in office and bear the
of the CTA, in accordance with the Civil Service Law. The
new titles of Presiding Justice and Associate Justices. The
Supreme Court shall fix their salaries and prescribe their
Presiding Justice and the two (2) most Senior Associate
duties. (as amended by RA No 9282)
Justices, all of whom are incumbent, shall serve as
chairmen of the three (3) Divisions. The other three (3) Section 5. Disqualifications. - No Justice or other officer
incumbent Associate Justices and the three (3) additional or employee of the CTA shall intervene, directly or
Associate Justices shall serve as members of the indirectly, in the management or control of any private
Divisions. The additional three (3) Justices as provided enterprise which in any way may be affected by the
herein and the succeeding members of the Court shall be functions of the Court. Justices of the Court shall be
appointed by the President upon nomination by the disqualified from sitting in any case on the same grounds
Judicial and Bar Council. The Presiding Justice shall be so provided under Rule one hundred thirty-seven of the
designated in his appointment, and the Associate Rules of Court for the disqualification of judicial officers.
Justices shall have precedence according to the date of No person who has once served in the Court in a
their respective appointments, or when the permanent capacity, either as Presiding Justice or as
appointments of two (2) or more of them shall bear the Associate Justice thereof, shall be qualified to practice as
same date, according to the order in which their counsel before the Court for a period of one (1) year from
appointments were issued by the President. They shall his retirement or resignation. (as amended by RA No
have the same qualifications, rank, category, salary, 9282)
emoluments and other privileges, be subject to the same Section 6. Place of office. - The CTA shall have its
inhibitions and disqualifications, and enjoy the same principal office in Metro Manila and shall hold hearings at
retirement and other benefits as those provided for such time and place as it may, by order in writing,
under existing laws for the Presiding Justice and designate. (as amended by RA No 9282)
Associate Justices of the Court of Appeals.
Section 7. Jurisdiction. - The CTA shall exercise:
Whenever the salaries of the Presiding Justice and the
Associate Justices of the Court of Appeals are increased, (a) Exclusive appellate jurisdiction to review by appeal, as
such increases in salaries shall be deemed herein provided:
correspondingly extended to and enjoyed by the (1) Decisions of the Commissioner of Internal Revenue
Presiding Justice and Associate Justices of the CTA. 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 Trial Courts, Municipal Trial Courts and Municipal
administered by the Bureau of Internal Revenue; Circuit Trial Courts in their respective jurisdiction.
(2) Inaction by the Commissioner of Internal Revenue (c) Jurisdiction over tax collection cases as herein
in cases involving disputed assessments, refunds of provided:
internal revenue taxes, fees or other charges, (1) Exclusive original jurisdiction in tax
penalties in relations thereto, or other matters arising collection cases involving final and executory
under the National Internal Revenue Code or other assessments for taxes, fees, charges and
laws administered by the Bureau of Internal Revenue, penalties: Provided, however,That collection
where the National Internal Revenue Code provides a cases where the principal amount of taxes
specific period of action, in which case the inaction and fees, exclusive of charges and penalties,
shall be deemed a denial; claimed is less than One million pesos
(3) Decisions, orders or resolutions of the Regional (P1,000,000.00) shall be tried by the proper
Trial Courts in local tax cases originally decided or Municipal Trial Court, Metropolitan Trial Court
resolved by them in the exercise of their original or and Regional Trial Court.
appellate jurisdiction; (2) Exclusive appellate jurisdiction in tax
(4) Decisions of the Commissioner of Customs in collection cases:
cases involving liability for customs duties, fees or (a) Over appeals from the judgments,
other money charges, seizure, detention or release of resolutions or orders of the Regional Trial
property affected, fines, forfeitures or other penalties Courts in tax collection cases originally
in relation thereto, or other matters arising under the decided by them, in their respective
Customs Law or other laws administered by the territorial jurisdiction.
Bureau of Customs;
(b) Over petitions for review of the
(5) Decisions of the Central Board of Assessment judgments, resolutions or orders of the
Appeals in the exercise of its appellate jurisdiction Regional Trial Courts in the Exercise of
over cases involving the assessment and taxation of their appellate jurisdiction over tax
real property originally decided by the provincial or collection cases originally decided by the
city board of assessment appeals; Metropolitan Trial Courts, Municipal Trial
(6) Decisions of the Secretary of Finance on customs Courts and Municipal Circuit Trial Courts,
cases elevated to him automatically for review from in their respective jurisdiction.
decisions of the Commissioner of Customs which are (as amended by RA No 9282)
adverse to the Government under Section 2315 of the
Tariff and Customs Code; Section 8. Court of record; seal; proceedings. - The
Court of Tax Appeals shall be a court of record and shall
(7) Decisions of the Secretary of Trade and Industry, in have a seal which shall be judicially noticed. It shall
the case of non-agricultural product, commodity or prescribe the form of its writs and other processes. It shall
article, and the Secretary of Agriculture in the case of have the power to promulgate rules and regulations for
agricultural product, commodity or article, involving the conduct of the business of the Court, and as may be
dumping and counter ailing duties under Section 301 needful for the uniformity of decisions within its
and 302, respectively, of the Tariff and Customs Code, jurisdiction as conferred by law, but such proceedings
and safeguard measures under Republic Act No. shall not be governed strictly by technical rules of
8800, where either party may appeal the decision to evidence.
impose or not to impose said duties.
Section 9. Fees. - The Court shall fix reasonable fees for
(b) Jurisdiction over cases involving criminal offenses as the filing of an appeal, for certified copies of any
herein provided: transcript of record, entry or other document, and for
(1) Exclusive original jurisdiction over all criminal other authorized services rendered by the Court or its
offenses arising from violations of the National personnel.
Internal Revenue Code or Tariff and Customs Code Section 10. Power to administer oaths; issue subpoena;
and other laws administered by the Bureau of punish for contempt. - The Court shall have the power to
Internal Revenue or the Bureau of Customs: Provided, administer oaths, receive evidence, summon witnesses by
however,That offenses or felonies mentioned in this subpoena duces tecum,subject in all respects to the
paragraph where the principal amount of taxes and same restrictions and qualifications as applied in judicial
fees, exclusive of charges and penalties, claimed is proceedings of a similar nature. The Court shall, in
less than One million pesos (P1,000,000.00) or where accordance with Rule seventy-one of the Rules of Court,
there is no specified amount claimed shall be tried by have the power to punish for contempt for the same
the regular Courts and the jurisdiction of the CTA causes, under the same procedure and with the same
shall be appellate. Any provision of law or the Rules of penalties provided therein. (as amended by RA No 9282)
Court to the contrary notwithstanding, the criminal
action and the corresponding civil action for the Section 11. Who may appeal; Mode of appeal; effect of
recovery of civil liability for taxes and penalties shall at appeal. - Any party adversely affected by a decision,
all times be simultaneously instituted with, and ruling or inaction of the Commissioner of Internal
jointly determined in the same proceeding by the Revenue, the Commissioner of Customs, the Secretary of
CTA, the filing of the criminal action being deemed to Finance, the Secretary of Trade and Industry or the
necessarily carry with it the filing of the civil action, Secretary of Agriculture or the Central Board of
and no right to reserve the filling of such civil action Assessment Appeals or the Regional Trial Courts may file
separately from the criminal action will be an appeal with the CTA within thirty (30) days after the
recognized. receipt of such decision or ruling or after the expiration of
the period fixed by law for action as referred to in Section
(2) Exclusive appellate jurisdiction in criminal 7(a)(2) herein.
offenses:
Appeal shall be made by filing a petition for review under
(a) Over appeals from the judgments, resolutions a procedure analogous to that provided for under Rule 42
or orders of the Regional Trial Courts in tax cases of the 1997 Rules of Civil Procedure with the CTA within
originally decided by them, in their respected thirty (30) days from the receipt of the decision or ruling
territorial jurisdiction. or in the case of inaction as herein provided, from the
(b) Over petitions for review of the judgments, expiration of the period fixed by law to act thereon. A
resolutions or orders of the Regional Trial Courts Division of the CTA shall hear the appeal: Provided,
in the exercise of their appellate jurisdiction over however,That with respect to decisions or rulings of the
tax cases originally decided by the Metropolitan Central Board of Assessment Appeals and the Regional



Trial Court in the exercise of its appellate jurisdiction, Section 14. Effect of decision that tax is barred by
appeal shall be made by filing a petition for review under statute of limitations. - If the assessment or collection of
a procedure analogous to that provided for under rule 43 any tax is barred by any statute of limitations, the
of the 1997 Rules of Civil Procedure with the CTA, which decisions of the Court that effect shall be considered as
shall hear the case en banc. its decision that there is no deficiency in respect of such
All other cases involving rulings, orders or decisions filed tax.
with the CTA as provided for in Section 7 shall be raffled Section 15. Publicity of proceedings and publication of
to its Divisions. A party adversely affected by a ruling, decisions. - All decisions of, and all evidence received by
order or decision of a Division of the CTA may file a the Court and its divisions, including transcript of
motion for reconsideration of new trial before the same stenographic reports of the hearings, shall be public
Division of the CTA within fifteens (15) days from notice records open to the inspection of the public, except that
thereof: Provide, however,That in criminal cases, the after the decision of the Court in any proceedings has
general rule applicable in regular Courts on matters of become final the Court may, upon motion of the taxpayer
prosecution and appeal shall likewise apply. or the Government permit the withdrawal, by the part
No appeal taken to the CTA from the decision of the entitled thereto of originals of books, documents and
Commissioner of Internal Revenue or the Commissioner records, and or models, diagrams, and other exhibits,
of Customs or the Regional Trial Court, provincial, city or introduced in evidence before the Court or any division; or
municipal treasurer or the Secretary of Finance, the the Court may, on its own motion, make such other
Secretary of Trade and Industry or the Secretary of disposition thereof as it deems advisable. The Court shall
Agriculture, as the case may be, shall suspend the provide for the publication of its decisions in the Official
payment, levy, distraint, and/or sale of any property of the Gazette in such form and manner as may be best
taxpayer for the satisfaction of his tax liability as provided adopted for public information and use.
by existing law: Provided, however,That when in the Section 16. Damages. - Where an appeal is found to be
opinion of the Court the collection by the aforementioned frivolous, or that proceedings have been instituted merely
government agencies may jeopardize the interest of the for delay, the Court may assess damage against the
Government and/or the taxpayer the Court any stage of appellants in an amount not exceeding five hundred
the proceeding may suspend the said collection and pesos, which shall be collected in the same manner as
require the taxpayer either to deposit the amount fines or other penalties authorized by law.
claimed or to file a surety bond for not more than double Section 17. Violation of penal law. - When, in the
the amount with the Court. performance of its functions, it should appear to the
In criminal and collection cases covered respectively by Court that a crime or other violation of law has been
Section 7(b) and (c) of this Act, the Government may committed, or, that there are reasonable grounds to
directly file the said cases with the CTA covering amounts believe that any official, employee or private person is
within its exclusive and original jurisdiction. guilty of any crime, offense or other violation, the Court
(as amended by RA No 9282) shall refer the matter to the proper department, bureau
or office for investigation or the institution of such
Section 12. Taking of evidence. - The Court may, upon criminal or administrative action as the facts and
proper motion on or its initiative, direct that a case, or any circumstances of the case may warrant.
issue thereof, be assigned to one of its members for the
taking of evidence, when the determination of a question Section 18. Appeal to the Court of Tax Appeals En
of fact arises upon motion or otherwise in any stage of Banc. - No civil proceeding involving matters arising
the proceedings, or when the taking of an account is under the National Internal Revenue Code, the Tariff and
necessary, or when the determination of an issue of fact Customs Code or the Local Government Code shall be
requires the examination of a long account. The hearing maintained, except as herein provided, until and unless
before such member shall proceed in all respects as an appeal has been previously filed with the CTA and
though the same had been made before the Court. disposed of in accordance with the provisions of this Act.
Upon the recommendation of such hearing such A party adversely affected by a resolution of a Division of
member, he shall promptly submit to the Court his report the CTA on a motion for reconsideration or new trial, may
in writing, stating his findings and conclusions; and file a petition for review with the CTA en banc. (as
thereafter, the Court shall render its decisions on the case, amended by RA No 9282)
adopting, modifying, or rejecting the report in whole or in Section 19. Review by certiorari. - A party adversely
part, as the case may be, or the Court may, in its affected by a decision or ruling of the CTA en banc may
discretion recommit it with instructions, or receive further file with the Supreme Court a verified petition for review
evidence. on certiorari pursuant to Rule 45 of the 1997 Rules of Civil
Section 13. Decision; Maximum Period for Termination Procedure. (as amended by RA No 9282)
of Cases. - Cases brought before the Court shall be Section 20. Appropriation. - The sum of
decided in accordance with Section 15, paragraph (1), seventy-thousand pesos is hereby appropriated out of
Article VIII (Judicial Department) of the 1987 Constitution. any funds in the National Treasury not otherwise
Decisions of the Court shall be in writing, stating clearly appropriated for the salaries and the purchase of supplies
and distinctly the facts and the law on which they are and equipment necessary for the operation of the Court
based, and signed by the Justices concurring therein. The of Tax Appeals herein established during the current
Court shall provide for the publication of its decisions in fiscal year. Thereafter the funds necessary for the
the Official Gazette in such form and manner as may best operation of the Court shall be included in the regular
be adopted for public information and use. Appropriation Act.
The Justices of the Court shall each certify on their Section 21. General provisions. - Whenever the words
applications for leave, and upon salary vouchers "Board of Tax Appeals" are used in Commonwealth Act
presented by them for payment, or upon the payrolls Numbered Four hundred and seventy, otherwise known
under which their salaries are paid, that all proceedings, as the Assessment Law, or in other laws, rules and
petitions and motions which have been submitted to the regulations relative thereto, the same shall read "Board of
Court for determination or decision for a period required Assessment Appeals."
by the law or the Constitution, as the case may be, have The Central Board of Tax Appeals created under section
been determined or decided by the Court on or before two of Commonwealth Act Numbered Five hundred and
the date of making the certificate, and no leave shall be thirty is hereby abolished.
granted and no salary shall be paid without such
certificate. Executive Order Numbered Four hundred and one-A,
dated the fifth of January, nineteen hundred and fifty-
(as amended by RA No 9282) one, is repealed and the Board of Tax Appeals created


therein, abolished: Provided, however, That all cases The Court shall sit en banc in the exercise of its
heretofore decided by the said Board of Tax Appeals and administrative, ceremonial and non-adjudicative
thence appealed to the Supreme Court pursuant to functions. (n)
Executive Order Numbered Four hundred one-A shall be SEC. 3. Court en banc; quorum and voting. – The
decided by the Supreme Court on the merits to all intents presiding justice or, in his absence, the most senior justice
and purposes as if said Executive Order has been duly in attendance shall preside over the sessions of the Court
enacted by the Congress: And, Provided, further, That all en banc. The attendance of four justices of the Court shall
cases now pending in the said Board of Tax Appeals shall constitute a quorum for its sessions en banc. The
be transferred to the Court of Tax Appeals and shall be presence at the deliberation and the affirmative vote of
heard and decided by the latter to all intents and four justices of the Court en banc shall be necessary for
purposes as if they had been originally filed therein. the rendition of a decision or resolution on any case or
Any law or part of law, or any executive order, rule or matter submitted for its consideration. Where the
regulation or part thereon, inconsistent with the necessary majority vote cannot be had, the petition shall
provisions of this Act is hereby repealed. be dismissed; in appealed cases, the judgment or order
Section 22. Pending cases to be remanded to Court. - appealed from shall stand affirmed; and on all incidental
All cases involving disputed assessment of Internal matters, the petition or motion shall be denied.
Revenue taxes or customs duties pending determination No decision of a Division of the Court may be reversed or
before the Court of First Instance shall be certified and modified except by the affirmative vote of four justices of
remanded by the respective clerk of court to the Court of the Court en banc acting on the case.
Tax Appeals for final disposition thereof. Interlocutory orders or resolutions shall be acted upon by
Section 23. Separability Clause. - If any clause, sentence, majority vote of the justices present constituting a
paragraph or part of this act shall be adjudged by any quorum.
court of competent jurisdiction to be invalid, such (Rules of Court, Rule 56, sec. 7a)
judgment shall not affect, impair or invalidate the
remainder of this Act, but shall confined in its operations SEC. 4. The Court in Divisions; quorum and voting. – The
to the clause, sentence, paragraph or part thereof directly chairman of the Division or, in his absence, its senior
involved in the controversy. member shall preside over the sessions of the Court in
Divisions. The attendance of at least two justices of the
Section 24. This Act shall take effect upon its approval. Court shall be necessary to constitute a quorum for its
Approved: June 16, 1954 sessions in Divisions. The presence at the deliberation and
the affirmative vote of at least two justices shall be
required for the pronouncement of a judgment or final
resolution of the Court in Divisions. (n)
SEC. 5. Hearings. – The Court en banc or in Divisions shall
A.M. No. 05-11-07-CTA | Revised Rules of conduct hearings on such days and at such times and at
the Court of Tax Appeals such places as it may fix, with notice to the parties
concerned. However, the Friday of each week shall be
devoted to hearing motions, unless, for special reasons,
November 22, 2005 the Court en banc or in Divisions shall, motu proprio or
upon motion of a party, fix another day for the hearing of
any motion. (RCTA, Rule 3, sec. 2a)
REVISED RULES OF THE COURT OF TAX APPEALS SEC. 6. Disqualification of justices.-
Pursuant to Section 8 of Republic Act No. 1125, as further (a) Mandatory. – No justice or other officer or employee of
amended by Republic Act No. 9282, the Court of Tax the Court shall intervene, directly or indirectly, in the
Appeals (hereinafter referred to as the Court) hereby management or control of any private enterprise which in
adopts and promulgates the following Rules for the any way may be affected by the functions of the Court.
conduct of its business: Justices of the Court shall be disqualified from sitting in
any case on the same grounds provided under the first
paragraph, Section 1, Rule 137 of the Rules of Court. No
RULE 1 TITLE AND CONSTRUCTION person who has once served in the Court either as
SECTION 1. Title of the Rules – These Rules shall be known presiding justice or as associate justice shall be qualified
and cited as the Revised Rules of the Court of Tax Appeals to practice as counsel before the Court for a period of one
(RRCTA). (RCTA, Rule 1, sec. 1a) year from his retirement or resignation as such. (Rules of
Court, Rule 137, sec. 1, par. 1a)
SEC. 2. Liberal construction.- The Rules shall be liberally
construed in order to promote their objective of securing (b) Disclosure and consent of parties and lawyers. – A
a just, speedy, and inexpensive determination of every justice disqualified under the first paragraph, Section 1 of
action and proceeding before the Court. (RCTA, Rule 1, Rule 137 of the Rules of Court, may, instead of
sec. 2a) withdrawing from a case or proceeding, disclose on the
records the basis of his disqualification. If, based on such
SEC. 3. Applicability of the Rules of Court. – The Rules of disclosure, the parties and lawyers, independently of the
Court in the Philippines shall apply suppletorily to these justice’s participation, all agree in writing that the reason
Rules. (n) for the inhibition is immaterial or unsubstantial, the
justice may participate in the action or proceeding. The
agreement, signed by all parties and lawyers, shall be
RULE 2 THE COURT, ITS ORGANIZATION AND incorporated in the record of the action or proceeding.
FUNCTIONS (Rules of Court, Rule 137, sec. 1, par. 1a)
Section 1. Composition of the Court. – The Court is (c) Voluntary. – A justice of the Court may, in the exercise
composed of a presiding justice and five associate of his sound discretion, disqualify himself from sitting in a
justices appointed by the President of the Philippines. In case or proceeding, for just or valid reasons other than
appropriate cases, the Court shall sit en banc, or in two those mentioned above. (Rules of Court, Rule 137, sec. 1,
Divisions of three justices each, including the presiding par. 2a)
justice, who shall be the Chairman of its First Division. (n) A justice of the Court who inhibits himself from sitting in
SEC. 2. Exercise of powers and functions. – The Court shall a case or proceeding shall immediately notify in writing
exercise its adjudicative powers, functions and duties en the presiding justice and the members of his Division. (n)
banc or in Divisions. SEC. 7. Motion to inhibit a justice. – When a motion for
inhibition of a justice is filed, the Court, en banc or in



Division, shall act upon the motion. However, if the exercise of its exclusive original jurisdiction over cases
motion for inhibition is based on a discretionary ground, involving criminal offenses arising from violations of the
the Court shall refer the motion to the justice involved for National Internal Revenue Code or the Tariff and Customs
his appropriate action. (n) Code and other laws administered by the Bureau of
Internal Revenue or Bureau of Customs;
(g) Decisions, resolutions or orders on motions for
RULE 3 PLACE OF OFFICE, SEAL AND OFFICE reconsideration or new trial of the Court in Division in the
HOURS exercise of its exclusive appellate jurisdiction over criminal
offenses mentioned in the preceding subparagraph; and
SECTION 1. Place of office. – The Court shall have its
principal office in Metro Manila. RCTA, Rule 3, sec. 1a) (h) Decisions, resolutions or orders of the Regional trial
Courts in the exercise of their appellate jurisdiction over
SEC. 2. Court seal. – The seal of the Court shall be circular
criminal offenses mentioned in subparagraph (f).
in form and shall be of the usual size. It shall bear, in its
center, a design of the coat of arms of the Republic of the (n)
Philippines with the words “BATAS AT BAYAN” SEC. 3. Cases within the jurisdiction of the Court in
immediately underneath the design. On the upper Divisions. – The Court in Divisions shall exercise:
margin running from left to right are the words “COURT
OF TAX APPEALS,” and on its lower margin the words (a) Exclusive original or appellate jurisdiction to review by
“REPUBLIKA NG PILIPINAS.” (RCTA, Rule 2, sec. 1a) appeal the following:
SEC. 3. Seal, where affixed. – The seal of the Court shall be (1) Decisions of the Commissioner of Internal Revenue in
affixed to all summons, subpoena, notices, decisions, cases involving disputed assessments, refunds of internal
orders or resolutions, certified copies of official records revenue taxes, fees or other charges, penalties in relation
and such other papers that the Court may require to be thereto, or other matters arising under the National
sealed. (n) Internal Revenue Code or other laws administered by the
Bureau of Internal Revenue;
SEC. 4. Office hours. – The Office of the Clerk of Court
shall be open for the transaction of business and (2) Inaction by the Commissioner of Internal Revenue in
receiving petitions, complaints, pleadings, motions, and cases involving disputed assessments, refunds of internal
other papers, during the hours from eight o’clock in the revenue taxes, fees or other charges, penalties in relation
morning to four-thirty o’clock in the afternoon on thereto, or other matters arising under the National
Mondays to Fridays, except on such days as may be Internal Revenue Code or other laws administered by the
designated by law or executive proclamation as Bureau of Internal Revenue, where the National Internal
non-working official holidays. (RCTA, Rule 3, sec. 3a) Revenue Code or other applicable law provides a specific
period for action: Provided, that in case of disputed
assessments, the inaction of the Commissioner of Internal
RULE 4 JURISDICTION OF THE COURT Revenue within the one hundred eighty day-period
under Section 228 of the National Internal revenue Code
SECTION 1. Jurisdiction of the Court. – The Court shall shall be deemed a denial for purposes of allowing the
exercise exclusive original jurisdiction over or appellate taxpayer to appeal his case to the Court and does not
jurisdiction to review by appeal the cases specified in necessarily constitute a formal decision of the
Republic Act No. 1125, Section 7, as amended by Republic Commissioner of Internal Revenue on the tax case;
Act No. 9282, Section 7. (n) Provided, further, that should the taxpayer opt to await
SEC. 2. Cases within the jurisdiction of the Court en banc. the final decision of the Commissioner of Internal
– The Court en banc shall exercise exclusive appellate Revenue on the disputed assessments beyond the one
jurisdiction to review by appeal the following: hundred eighty day-period abovementioned, the
taxpayer may appeal such final decision to the Court
(a) Decisions or resolutions on motions for under Section 3(a), Rule 8 of these Rules; and Provided,
reconsideration or new trial of the Court in Divisions in still further, that in the case of claims for refund of taxes
the exercise of its exclusive appellate jurisdiction over: erroneously or illegally collected, the taxpayer must file a
(1) Cases arising from administrative agencies – Bureau of petition for review with the Court prior to the expiration of
Internal Revenue, Bureau of Customs, Department of the two-year period under Section 229 of the National
Finance, Department of Trade and Industry, Department Internal Revenue Code;
of Agriculture; (3) Decisions, resolutions or orders of the Regional Trial
(2) Local tax cases decided by the Regional Trial Courts in Courts in local tax cases decided or resolved by them in
the exercise of their original jurisdiction; and the exercise of their original jurisdiction;
(3) Tax collection cases decided by the Regional Trial (4) Decisions of the Commissioner of Customs in cases
Courts in the exercise of their original jurisdiction involving liability for customs duties, fees or other money
involving final and executory assessments for taxes, fees, charges, seizure, detention or release of property affected,
charges and penalties, where the principal amount of fines, forfeitures of other penalties in relation thereto, or
taxes and penalties claimed is less than one million pesos; other matters arising under the Customs Law or other
(b) Decisions, resolutions or orders of the Regional Trial laws administered by the Bureau of Customs;
Courts in local tax cases decided or resolved by them in (5) Decisions of the Secretary of Finance on customs
the exercise of their appellate jurisdiction; cases elevated to him automatically for review from
(c) Decisions, resolutions or orders of the Regional Trial decisions of the Commissioner of Customs adverse to the
Courts in tax collection cases decided or resolved by them Government under Section 2315 of the Tariff and Customs
in the exercise of their appellate jurisdiction; Code; and
(d) Decisions, resolutions or orders on motions for (6) Decisions of the Secretary of Trade and Industry, in the
reconsideration or new trial of the Court in Division in the case of non-agricultural product, commodity or article,
exercise of its exclusive original jurisdiction over tax and the Secretary of Agriculture, in the case of
collection cases; agricultural product, commodity or article, involving
dumping and countervailing duties under Section 301
(e) Decisions of the Central Board of Assessment Appeals and 302, respectively, of the Tariff and Customs Code, and
(CBAA) in the exercise of its appellate jurisdiction over safeguard measures under Republic Act No. 8800, where
cases involving the assessment and taxation of real either party may appeal the decision to impose or not to
property originally decided by the provincial or city board impose said duties;
of assessment appeals;
(b) Exclusive jurisdiction over cases involving criminal
(f) Decisions, resolutions or orders on motions for offenses, to wit:
reconsideration or new trial of the Court in Division in the



(1) Original jurisdiction over all criminal offenses arising provided in Section 3, Rule 46 of the Rules of Court. A
from violations of the National internal Revenue Code or clearly legible duplicate original or certified true copy of
Tariff and Customs Code and other laws administered by the decision appealed from shall be attached to the
the Bureau of Internal Revenue of the Bureau of Customs, petition. (RTCA, Rule 5, sec. 2a)
where the principal amount of taxes and fees, exclusive of SEC. 3. Payment of docket fees. – The Clerk of Court shall
charges and penalties, claimed is one million pesos or not receive a petition for review for filing unless the
more; and petitioner submits proof of payment of the docket fees.
(2) Appellate jurisdiction over appeals from the Upon receipt of the petition or the complaint, it will be
judgments, resolutions or orders of the Regional Trial docketed and assigned a number, which shall be placed
Courts in their original jurisdiction in criminal offenses by the parties on all papers thereafter filed in the
arising from violations of the National Internal Revenue proceeding. The Clerk of Court will then issue the
Code or Tariff and Customs Code and other laws necessary summons to the respondent or defendant.
administered by the Bureau of Internal Revenue or (RCTA, Rule 5, sec. 3a)
Bureau of Customs, where the principal amount of taxes SEC. 4. Bill of particulars. –
and fees, exclusive of charges and penalties, claimed is
less than one million pesos or where there is no specified (a) Requirement for bill of particulars. – The Court, on its
amount claimed; own initiative or upon motion of either party filed before
responding to a pleading or, if no responsive pleading is
(c) Exclusive jurisdiction over tax collections cases, to wit: permitted by these Rules, within ten days after service of
(1) Original jurisdiction in tax collection cases involving the pleading upon him, may order a party to submit a
final and executory assessments for taxes, fees, charges detailed statement of the nature of the claim or defense
and penalties, where the principal amount of taxes and or of any matter stated in any pleading, which is not
fees, exclusive of charges and penalties, claimed is one averred with sufficient definiteness or particularity. Such
million pesos or more; and order or motion shall point out the defects complained of
(2) Appellate jurisdiction over appeals from the and the details desired. After service of the bill of
judgments, resolutions or orders of the Regional Trial particulars or of a more definite pleading, the moving or
Courts in tax collection cases originally decided by them adverse party may file his responsive pleading within ten
within their respective territorial jurisdiction. (n) days. (RCTA, Rule 8, sec. 1a)
(b) Failure to comply. – If the order issued by the Court
pursuant to paragraph (a) above is not complied with
RULE 5 FORM AND STYLE OF PAPERS within ten days after notice of the order, or within such
other time as the Court may fix, the Court may strike out
SECTION 1. Style. – All papers filed with the Court shall be
the pleading to which the motion was directed or may
either printed or typewritten, and fastened on the upper
make such other order as it deems just. The Court may
left hand corner. All such papers shall have a caption, date
upon motion set aside the order, or modify it in the
and signature, and copies, as specified below. (RCTA, Rule
interest of justice. (RCTA, Rule 8, sec. 2a)
4, sec. 1a)
(c) Motion for bill of particulars when not allowed. – No
SEC. 2. Size and specifications. – Printed or typewritten
motion for bill of particulars shall be allowed in cases
papers shall be typed double-spaced on good quality,
falling under Sections 3(a)(3) and 3(c)(2) of Rule 4 of these
unglazed and plain white paper eight and a half inches
Rules. (n)
wide by thirteen inches long (legal-size), or eight and a
quarter inches wide by eleven and three-fourths inches SEC. 5. Answer. –
long (A4-size), at least substance twenty and printed on (a) Time for filing and contents. – Within fifteen days after
one side only without covers. There shall be a margin at service of summons, the respondent or the defendant
the left-hand side of each page of not less than one and shall file an answer to the petition or complaint which
one-half inches in width and at the top, bottom and shall include all defenses in law and the specific
right-hand side of each page of not less than one inch in provisions of law and applicable jurisprudence and
width. (RCTA, Rule 4, sec. 3a) grounds for dismissal of the petition or complaint, or
SEC. 3. Citations. – Citations shall be indented at least one which shall prevent and bar recovery.
inch from the inside margin and typed single-spaced. (Rule of Procedure for Civil Forfeiture, Asset Preservation
(RCTA, Rule 4, sec. 4a) and Freeze Order, Sec. 9, par. 2a; and RCTA, Rule 7, sec. 1a)
SEC. 4. Number of copies. – The parties shall file eleven (b) Transmittal of records. – The respondent
signed copies of every paper for cases before the Court en Commissioner of Internal Revenue, Commissioner of
banc and six signed copies for cases before a Division of Customs, the Secretary of Finance, the Secretary of
the Court in addition to the signed original copy, except Agriculture, or the Secretary of Trade and Industry, within
as otherwise directed by the Court. Papers to be filed in ten days after his answer, the chairman of the Central
more than one case shall include one additional copy for Board of Assessment Appeals and the presiding judges of
each additional case. (RCTA, Rule 4, sec. 5a) the Regional Trial Courts, within ten days from receipt of
SEC. 5. Clear and legible copies. – All copies shall be clear notice, shall certify and forward to the Court all the
and legible. (RCTA, Rule 4, sec. 6a) records of the case in their possession, with the pages
duly numbered, and, if the records are in separate folders,
then the folders will also be numbered. If there are no
RULE 6 PLEADINGS FILED WITH THE COURT records, such fact shall be manifested to the Court within
the same period of ten days. The Court may, on motion,
SECTION 1. Complaint; contents. – The complaint shall and for good cause shown, grant an extension of time
contain allegations showing jurisdiction of the Court and within which to submit the aforesaid records of the case.
a concise statement of the complete facts of the Failure to transmit the records within the time prescribed
plaintiff’s cause or causes of action. The complaint shall herein or within the time allowed by the Court may
be verified and must contain a certification against forum constitute indirect contempt of court. (RCTA, Rule 7, sec.
shopping as provided in Sections 4 and 5, Rule 7 of the 2a)
Rules of Court. (n)
SEC. 6. Entry of appearance. – An attorney may enter his
SEC. 2. Petition for review; contents. – The petition for appearance by signing the initial pleading. An attorney
review shall contain allegations showing the jurisdiction may later enter his appearance only by filing an entry of
of the Court, a concise statement of the complete facts appearance with the written conformity of his client.
and a summary statement of the issues involved in the
case, as well as the reasons relied upon for the review of The initial pleading or entry of appearance shall show:
the challenged decision. The petition shall be verified and
must contain a certification against forum shopping as



(1) The attorney’s specific address which must not be a two-year period prescribed by law from payment or
Post Office Box number; collection of the taxes. (n)
(2) His Roll of Attorney’s Number; (b) A party adversely affected by a decision or resolution
(3) The date and number of his current membership due of a Division of the Court on a motion for reconsideration
in the Integrated Bar of the Philippines (IBP) per Official or new trial may appeal to the Court by filing before it a
Receipt, or Lifetime Member Number; petition for review within fifteen days from receipt of a
copy of the questioned decision or resolution. Upon
(4) Current Professional Tax Receipt (PTR) number proper motion and the payment of the full amount of the
together with date and place of issuance; and docket and other lawful fees and deposit for costs before
(5) MCLE certificate number and date of issue, unless the expiration of the reglementary period herein fixed,
exempt. the Court may grant an additional period not exceeding
fifteen days from the expiration of the original period
The attorney or party entering his appearance shall serve within which to file the petition for review. (Rules of Court,
a copy of the entry of appearance upon the opposing Rule 42, sec. 1a)
party. An attorney who appears in open court without
previously having filed his written appearance must give (c) A party adversely affected by a decision or ruling of the
his business address to the Clerk of Court and file his Central Board of Assessment Appeals and the Regional
written appearance within forty-eight hours from such Trial Court in the exercise of their appellate jurisdiction
open court appearance. An attorney or party who has may appeal to the Court by filing before it a petition for
filed his appearance and who changes his address of review within thirty days from receipt of a copy of the
record shall notify the Clerk of Court and the adverse questioned decision or ruling. (n)
party of such change of address, and a separate notice of SEC. 4. Where to appeal; mode of appeal. – (a) An appeal
such change of address shall be filed for each additional from a decision or ruling or the inaction of the
case. (RCTA, Rule 10, sec. 1a) Commissioner of Internal Revenue on disputed
assessments or claim for refund of internal revenue taxes
erroneously or illegally collected, the decision or ruling of
RULE 7 PROCEDURE IN THE COURT OF TAX the Commissioner of Customs, the Secretary of Finance,
APPEALS the Secretary of Trade & Industry, the Secretary of
Agriculture, and the Regional Trial Court in the exercise of
SECTION 1. Applicability of the Rules of the Court of their original jurisdiction, shall be taken to the Court by
Appeals, exception. – The procedure in the Court en banc filing before it a petition for review as provided in Rule 42
or in Divisions in original and in appealed cases shall be of the Rules of Court. The Court in Division shall act on the
the same as those in petitions for review and appeals appeal. (n)
before the Court of Appeals pursuant to the applicable
provisions of Rules 42, 43, 44 and 46 of the Rules of Court, (b) An appeal from a decision or resolution of the Court in
except as otherwise provided for in these Rules. (n) Division on a motion for reconsideration or new trial shall
be taken to the Court by petition for review as provided in
Rule 43 of the Rules of Court. The Court en banc shall act
RULE 8 PROCEDURE IN CIVIL CASES on the appeal. (n)
SECTION 1. Review of cases in the Court en banc. – In (c) An appeal from a decision or ruling of the Central
cases falling under the exclusive appellate jurisdiction of Board of Assessment Appeals or the Regional Trial Court
the Court en banc, the petition for review of a decision or in the exercise of their appellate jurisdiction shall be
resolution of the Court in Division must be preceded by taken to the Court by filing before it a petition for review
the filing of a timely motion for reconsideration or new as provided in Rule 43 of the Rules of Court. The Court en
trial with the Division. (n) banc shall act on the appeal. (n)
SEC. 2. Review of cases in the Court in Division. – In
appealed cases falling under the jurisdiction of the Court RULE 9 PROCEDURE IN CRIMINAL CASES
in Division in Sections 3(a)(1) to 3(a)(6) and 3(c)(2) of Rule 4,
the party filing the case shall be called the Petitioner and SECTION 1. Review of cases in the Court. – The review of
the party against whom the case is filed shall be called criminal cases in the Court en banc or in Division shall be
the Respondent. The pleading shall be entitled Petition governed by the applicable provisions of Rule 124 of the
for Review. Rules of Court. (n)
In tax collection cases originally filed with the Court SEC. 2. Institution of criminal actions. – All criminal
under Section 3(c)(1) of Rule 4, the party filing the case actions before the Court in Division in the exercise of its
shall be called the Plaintiff and the party against whom original jurisdiction shall be instituted by the filing of an
the case is filed shall be called the Defendant. The information in the name of the People of the Philippines.
pleading shall be entitled Complaint. In appealed tax In criminal actions involving violations of the National
collection cases, the original captions shall be retained. Internal Revenue Code and other laws enforced by the
The party filing the appeal shall be called the Appellant Bureau of Internal Revenue, the Commissioner of Internal
and the party against whom the appeal is filed shall be Revenue must approve their filing. In criminal actions
called the Appellee. (RCTA, Rule 5, Sec. 1a) involving violations of the tariff and Customs Code and
other laws enforced by the Bureau of Customs, the
SEC. 3. Who may appeal; period to file petition. – (a) A Commissioner of Customs must approve their filing.
party adversely affected by a decision, ruling or the (Rules of Court, Rule 110, sec. 2a; n)
inaction of the Commissioner of Internal Revenue on
disputed assessments or claims for refund of internal The institution of the criminal action shall interrupt the
revenue taxes, or by a decision or ruling of the running of the period of prescription. (Rules of Court, Rule
Commissioner of Customs, the Secretary of Finance, the 110, sec. 1, par. 2a)
Secretary of Trade and Industry, the Secretary of SEC. 3. Prosecution of criminal actions. – All criminal
Agriculture, or a Regional Trial Court in the exercise of its actions shall be conducted and prosecuted under the
original jurisdiction may appeal to the Court by petition direction and control of the public prosecutor. In criminal
for review filed within thirty days after receipt of a copy of actions involving violation of the National Internal
such decision or ruling, or expiration of the period fixed Revenue Code or other laws enforced by the Bureau of
by law for the Commissioner of Internal Revenue to act Internal Revenue, and violations of the Tariff and Customs
on the disputed assessments. In case of inaction of the Code or other laws enforced by the Bureau of Customs,
Commissioner of Internal revenue on claims for refund of the prosecution may be conducted by their respective
internal revenue taxes erroneously or illegally collected, duly deputized legal officers. (Rules of Court, Rule 110, sec.
the taxpayer must file a petition for review within the 5, par. 6a)


SEC. 4. Warrant of arrest. – Within ten days from the other laws enforced by the Bureau of Internal Revenue, or
filing of the information, the Division of the Court to the legal officers of the Bureau of Customs in cases
which the case was raffled shall evaluate the resolution of brought under the Tariff and Customs Code of the
the public prosecutor and its supporting evidence. The Philippines or other laws enforced by the Bureau of
Division may immediately dismiss the case if it finds that Customs, to appear in behalf of the officials of said
the evidence on record clearly fails to establish probable agencies sued in their official capacity: Provided, however,
cause. If the Division finds probable cause, it shall issue a such duly deputized legal officers shall remain at all times
warrant of arrest signed by the Chairman of the Division. under the direct control and supervision of the Solicitor
In case of doubt on the existence of probable cause, the General. (n)
Division may order the prosecutor to present additional SEC. 11. Inclusion of civil action in criminal action. – In
evidence, ex parte, within five days from notice. (Rules of cases within the jurisdiction of the Court, the criminal
Court, Rule 112, sec. 6a) action and the corresponding civil action for the recovery
SEC. 5. When search warrant may issue. – The Division of civil liability for taxes and penalties shall be deemed
may issue a search warrant signed by its Chairman jointly instituted in the same proceeding. The filing of the
following the requirements of Rule 126 of the Rules of criminal action shall necessarily carry with it the filing of
Court. (n) the civil action. No right to reserve the filing of such civil
SEC. 6. Bail, how amount fixed; approval. – The amount action separately from the criminal action shall be
of bail to be posted in a case filed with the Court shall be allowed or recognized. (Rules of Court, Rule 111, sec. 1[a],
fixed and approved by the Division to which the case is par. 1a)
raffled: Provided, however, that where the accused is
arrested, detained or otherwise placed in custody outside
the Metropolitan Manila area, any judge of the Regional RULE 10 SUSPENSION OF COLLECTION OF TAX
Trial Court of the place where the arrest is made may SECTION 1. No suspension of collection of tax, except as
accept and approve the bail for his release and herein prescribed. – No appeal taken to the Court shall
appearance before the Division to which his case is suspend the payment, levy, distraint, or sale of any
assigned. The judge who accepted the bail and released property of the taxpayer for the satisfaction of his tax
the accused shall inform the Division that issued the liability as provided under existing laws, except as
order of arrest of his action and forward to it the papers hereinafter prescribed. (n)
relative to the case. (Rules of Court, Rule 114, sec. 17a)
SEC. 2. Who may file. – Where the collection of the
SEC. 7. Conditions of the bail. – The conditions of the bail amount of the taxpayer’s liability, sought by means of a
are that the accused shall appear and answer the demand for payment, by levy, distraint or sale of any
complaint or information in the Division of the Court to property of the taxpayer, or by whatever means, as
which it is raffled or transferred for trial and submit provided under existing laws, may jeopardized the
himself to its orders and processes. If convicted, and the interest of the Government or the taxpayer, an interested
case is appealed to the Court en banc or to the Supreme party may file a motion for the suspension of the
Court, he will surrender himself for the execution of such collection of the tax liability. (RCTA, Rule 12, sec. 1a)
judgment as the Court en banc or the Supreme Court
SEC. 3. When to file. – The motion for the suspension of
may render; or that, in the event the case is to be tried
the collection of the tax may be filed together with the
anew or remained for a new trial, he shall appear before
petition for review or with the answer, or in a separate
the Division to which it may be remanded and submit
motion filed by the interested party at any stage of the
himself to its orders and processes. Rules of Court, Rule
proceedings. (RCTA, Rule 12, sec. 2)
114, sec. 2a)
SEC. 4. Contents and attachments of the motion. – The
SEC. 8. Release order. – The Clerk of Court shall issue the
motion for the suspension of the collection of the tax
corresponding release order. (Rules of Court, Rule 114, sec.
shall be verified and shall state clearly and distinctly the
3a)
facts and the grounds relied upon in support of the
SEC. 9. Appeal; period to appeal. – (a) An appeal to the motion. Affidavits and other documentary evidence in
Court in criminal cases decided by a Regional Trial Court support thereof shall be attached thereto, which, if
in the exercise of its original jurisdiction shall be taken by uncontroverted, would be admissible in evidence as proof
filing a notice of appeal pursuant to Sections 3(a) and 6, of the facts alleged in the motion. (RCTA, Rule 12, sec. 3a)
Rule 122 of the Rules of Court within fifteen days from
SEC. 5. Opposition. – Unless a shorter period is fixed by
receipt of a copy of the decision or final order with the
the Court because of the urgency of the motion, the
court which rendered the final judgment or order
adverse party shall, within five days after receipt of a copy
appealed from and by serving a copy upon the adverse
of the motion, file an opposition thereto, if any, which
party. The Court in Division shall act on the appeal.
shall state clearly and distinctly the facts and the grounds
(b) An appeal to the Court en banc in criminal cases relied upon in support of the opposition. (RCTA, Rule 12,
decided by the Court in Division shall be taken by filing a sec. 4)
petition for review as provided in Rule 43 of the Rules of
SEC. 6. Hearing of the motion. – The movant shall, upon
Court within fifteen days from receipt of a copy of the
receipt of the opposition, set the motion for hearing at
decision or resolution appealed from. The Court may, for
the next available motion day, and the Court shall give
good cause, extend the time for filing of the petition for
preference to the motion over all other cases, except
review for an additional period not exceeding fifteen days.
criminal cases. At the hearing, both parties shall submit
(c) An appeal to the Court in criminal cases decided by their respective evidence. If warranted, the Court may
the Regional Trial Courts in the exercise of their appellate grant the motion if the movant shall deposit with the
jurisdiction shall be taken by filing a petition for review as Court an amount in cash equal to the value of the
provided in Rule 43 of the Rules of Court within fifteen property or goods under dispute or filing with the Court
days from receipt of a copy of the decision or final order of an acceptable surety bond in an amount not more
appealed from. The Court en banc shall act on the appeal. than double the disputed amount or value. However, for
(n) the sake of expediency, the Court, motu proprio or upon
SEC. 10. Solicitor General as counsel for the People and motion of the parties, may consolidate the hearing of the
government officials sued in their official capacity. – The motion for the suspension of the collection of the tax with
Solicitor General shall represent the People of the the hearing on the merits of the case. (RCTA, Rule 12, sec.
Philippines and government officials sued in their official 5a)
capacity in all cases brought to the Court in the exercise SEC. 7. Corporate surety bonds. – In the selection and
of its appellate jurisdiction. He may deputized the legal qualification of surety companies, the parties and the
officers of the Bureau of Internal Revenue in cases Court shall be guided by Supreme Court Circular A.M. No.
brought under the National Internal Revenue Code or 04-7-02-SC, dated July 20, 2004. (n)


(1) To mark the documents or exhibits to be presented by

the parties and copies to be attached to the records after
RULE 11 PRE-TRIAL comparison;
SECTION 1. Applicability. – The rule on pre-trial under (2) To consider other matters as may aid in its disposition;
Rules 18 and 118 of the Rules of Court, as amplified in A.M. and
No. 03-1-09-SC dated July 13, 2004 (Re: Rule on Guidelines
to be Observed by Trial Court Judges and Clerk of Court (3) To inform the parties that no evidence shall be allowed
in the Conduct of Pre-Trial and Use of to be presented and offered during the trial other than
Deposition-Discovery Measures), shall apply to all cases those identified and marked during the pre-trial unless
falling within the original jurisdiction of the Court, except allowed by the Court to prevent manifest injustice.
that the parties may not be allowed to compromise the (Rule on Guidelines to be Observed by Trial Court Judges
criminal liability or submit the case to mediation, and Clerks of Court in the Conduct of Pre-trial and Use of
arbitration or other mode of alternative dispute Deposition-Discovery Measures, Sec. 1B[2]a)
resolution. (n)
(b) During the preliminary conference. – The Division
SEC. 2. Mandatory pre-trial. – In civil cases, the Clerk of Clerk of Court shall:
Court shall set the case for pre-trial on the first available
date immediately following the tenth day after the filing (1) Mark the documents to be presented as exhibits and
of the answer. copies attached to the records after comparison;
In criminal cases, the Clerk of Court shall set the case for (2) Ascertain from the parties the undisputed facts and
pre-trial not later than ten days after arraignment, if the admission on the genuineness and due execution of
accused is detained, nor later than thirty days if the documents marked as exhibits; and
accused is on bail. (3) Consider such other matters as may aid in the prompt
(RCTA, Rule 11, sec. 1a) disposition of the case.
SEC. 3. Setting for an earlier date. – Where, due to the The proceedings during the preliminary conference shall
urgency of the case, either party desires that the pre-trial be recorded in the minutes of preliminary conference to
be set on an earlier date, such party shall so state in his be signed by both parties and counsel. The Division Clerk
pleading, in which event the clerk of Court shall set the of Court shall attach the minutes of preliminary
pre-trial on the first available date immediately after the conference and the exhibits to the case record before the
filing of the answer. (RCTA, Rule 11, sec. 2a) pre-trial.
SEC. 4. Duty of the Court. – The Court shall confer with (Rule on Guidelines to be Observed by Trial Court Judges
the parties in pre-trial conferences with a view to and Clerks of Court in the Conduct of Pre-trial and Use of
narrowing the issues, making admissions of or stipulating Deposition-Discovery Measures, Sec. IB[3]a)
on facts, simplifying the presentation of evidence, or (c) During the pre-trial conference. – The Court at the
otherwise assisting in the preparation for trial or possible pre-trial conference shall consider the following:
disposition of the case in whole or in part without trial. (n)
(1) Stipulation of facts and issues raised;
SEC. 5. Procedure in civil cases. – In civil cases, the parties
(2) Marking for identification of evidence of the parties;
shall submit, at least three days before the pre-trial, their
respective pre-trial briefs containing the following: (3) Waiver of objections to admissibility of evidence;
(a) A statement of their willingness to compromise the (4) Modification of order of trial; and
civil liability indicating its desired terms, except that the (5) Such matters as will promote a fair and expeditious
case shall not be subject to referral to mediation, trial of the criminal and civil aspects of the case.
arbitration or other mode of alternative dispute
resolution; (Rules of Court, Rule 118, sec. 1a).
(b) A summary of admitted facts and proposed All agreements or admissions made or entered during
stipulation of facts; the pre-trial conference shall be in writing and signed by
the accused and counsel; otherwise, they cannot be used
(c) The issues to be tried or resolved; in evidence against the accused. The agreements shall be
(d) The documents or exhibits to be presented, stating subject to the approval of the Court.
their purpose. No evidence shall be allowed to be (Rule on Guidelines to be Observed by Trial Court Judges
presented and offered during the trial in support of a and Clerks of Court in the Conduct of Pre-trial and Use of
party’s evidence-in-chief other than those that had been Deposition –Discovery Measures, Sec. IB[8]a; and Rules of
pre-marked and identified, unless allowed by the Court to Court, Rule 118, sec. 2a)
prevent manifest injustice;
The Court may impose appropriate sanctions or penalties
(e) A manifestation of their having availed themselves of on the accused or counsel or the prosecutor who does
discovery procedures or referral to commissioners; and not appear at the pre-trial conference and does not offer
(f) The numbers and names of the witnesses, the an acceptable excuse for his absence and lack of
substance of their testimonies and the approximate cooperation. (Rules of Court, Rule 118, sec. 3a)
number of hours that will be required by the parties for (d) Pre-trial order. – After the pre-trial conference, the
the presentation of their respective witnesses. Court shall issue a pre-trial order reciting the actions
The consequence on the party at fault shall be the same taken, the facts stipulated, the admissions made,
as the effect of failure to appear. evidence marked, and such other matters covered during
the pre-trial conference. The order shall bind the parties,
Failure to file the pre-trial brief or to comply with its
limit the trial to matters not disposed of and control the
required contents shall have the same effect as failure to
course of the action during the trial, unless modified by
appear at the pre-trial.
the Court to prevent manifest injustice. (Rules of Court,
(Rules of Court, Rule 18, sec. 6a) Rule 118, sec. 4a)
SEC. 6. Procedure in criminal cases. –
(a) Before the preliminary conference. – Before the RULE 12 TRIAL
pre-trial conference, the Court may issue an order
referring the case to the Division Clerk of Court for a SECTION 1. Procedure. – The Court shall conduct the trial
preliminary conference of the parties at least three days in accordance with Rule 30 of the Rules of Court in civil
prior to the pre-trial: cases and Rule 119 thereof in criminal cases. (n)
SEC. 2. Power of the Court to receive evidence. – The
Court may receive evidence in the following cases:


(a) In all cases falling within the original jurisdiction of the ready for verification and comparison in case doubt on its

Court in Division pursuant to Section 3, Rule 4 of these authenticity is raised during the hearing or resolution of
Rules; and the formal offer of evidence. (n)
(b) In appeals in both civil and criminal cases where the
Court grants a new trial pursuant to Section 2, Rule 53
and Section 12, Rule 124 of the Rules of Court. RULE 13 TRIAL BY COMMISSIONER
(n) SECTION 1. Appointment of independent Certified Public
Accountant (CPA). – A party desiring to present
SEC. 3. Taking of evidence by a justice. – The Court may, voluminous documents in evidence before the Court may
motu proprio or upon proper motion, direct that a case, secure the services of an independent certified Public
or any issue therein, be assigned to one of its members Accountant (CPA) at its own expense. The Court shall
for the taking of evidence, when the determination of a commission the latter as an officer of the Court solely for
question of fact arises at any stage of the proceedings, or the purpose of performing such audit functions as the
when the taking of an account is necessary, or when the Court may direct. (n)
determination of an issue of fact requires the
examination of a long account. The hearing before such SEC. 2. Duties of independent CPA. – The independent
justice shall proceed in all respects as though the same CPA shall perform audit functions in accordance with the
had been made before the Court. generally accepted accounting principles, rules and
regulations, which shall include:
Upon the completion of such hearing, the justice
concerned shall promptly submit to the Court a written (a) Examination and verification of receipts, invoices,
report thereon, stating therein his findings and vouchers and other long accounts;
conclusions. Thereafter, the Court shall render its decision (b) Reproduction of, and comparison of such
on the case, adopting, modifying, or rejecting the report reproduction with, and certification that the same are
in whole or in part, or, the Court may, in its discretion, faithful copies of original documents, and pre-marking of
recommit it to the justice with instructions, or receive documentary exhibits consisting of voluminous
further evidence. documents;
(n) (c) Preparation of schedules or summaries containing a
SEC. 4. Taking of evidence by Court official. – In default or chronological listing of the numbers, dates and amounts
ex parte hearings, or in any case where the parties agree covered by receipts or invoices or other relevant
in writing, the Court may delegate the reception of documents and the amount(s) of taxes paid;
evidence to the Clerk of Court, the Division Clerks of (d) Making findings as to compliance with substantiation
Court, their assistants who are members of the Philippine requirements under pertinent tax laws, regulations and
bar, or any Court attorney. The reception of documentary jurisprudence;
evidence by a Court official shall be for the sole purpose
(e) Submission of a formal report with certification of
of marking, comparison with the original, and
authenticity and veracity of findings and conclusions in
identification by witnesses of such documentary
the performance of the audit;
evidence. The Court official shall have no power to rule on
objections to any question or to the admission of exhibits, (f) Testifying on such formal report; and
which objections shall be resolved by the Court upon (g) Performing such other functions as the Court may
submission of his report and the transcripts within ten direct.
days from termination of the hearing. (Rules of Court,
Rule 30, sec. 9a) SEC. 3. Findings of independent CPA. – The submission
by the independent CPA of pre-marked documentary
SEC. 5. Presentation of voluminous documents or long exhibits shall be subject to verification and comparison
accounts. – In the interest of speedy administration of with the original documents, the availability of which
justice, the following rules shall govern the presentation shall be the primary responsibility of the party possessing
of voluminous documents or long accounts, such as such documents and, secondarily, by the independent
receipts, invoices and vouchers, as evidence to establish CPA. The findings and conclusions of the independent
certain facts: CPA may be challenged by the parties and shall not be
(a) Summary and CPA certification. – The party who conclusive upon the Court, which may, in whole or in part,
desires to introduce in evidence such voluminous adopt such findings and conclusions subject to
documents or long accounts must, upon motion and verification. (n)
approval by the Court, refer the voluminous documents SEC. 4. Other referral to commissioner. – Whenever
to an independent Certified Public Accountant (CPA) for practicable and convenient, the Court may apply the
the purpose of presenting: procedure prescribed in Rule 32 of the Rules of Court.
(1) a summary containing, among other matters, a When the parties stipulate that a commissioner’s
chronological listing of the numbers, dates and amounts findings of fact shall be final, only questions of law shall
covered by the invoices or receipts and the amount(s) of thereafter be considered. (n)
taxes paid and SEC. 5. Compensation of Commissioner. – The Court shall
(2) a certification of an independent CPA attesting to the allow the commissioners such reasonable compensation
correctness of the contents of the summary after making as the circumstances of the case may warrant. (Rules of
an examination, evaluation and audit of voluminous Court, Rule 32, sec. 13a)
receipts, invoices or long accounts.
The name of the Certified Public Accountant or partner of
a professional partnership of certified public accountants
RULE 14 JUDGMENT, ITS ENTRY AND
in charge must be stated in the motion. The Court shall EXECUTION
issue a commission authorizing him to conduct an audit SECTION 1. Rendition of judgment. – The Court shall
and, thereafter, testify relative to such summary and decide the cases brought before it in accordance with
certification. Section 15, paragraph (1), Article VIII of the 1987
(b) Pre-marking and availability of originals. – The receipts, Constitution. The conclusions of the Court shall be
invoices, vouchers or other documents covering the said reached in consultation by the Members on the merits of
accounts or payment to be introduced in evidence must the case before its assignment to a Member for the
be pre-marked by the party concerned and submitted to writing of the decision. The presiding justice or chairman
the Court in order to be made accessible to the adverse of the Division shall include the case in an agenda for a
party who desires to check and verify the correctness of meeting of the Court en banc or in Division, as the case
the summary and CPA certification. The original copies of may be, for its deliberation. If a majority of the justices of
the voluminous receipts, invoices or accounts must be the Court en banc or in Division agree on the draft



decision, the ponente shall finalize the decision for the the place of detention to promulgate the decision or
signature of the concurring justices and its immediate resolution at such place
promulgation. Any justice of the Court en banc or in (Rules of Court, Rule 120, sec. 6a)
Division may submit a separate written concurring or
dissenting opinion within twenty days from the date of SEC. 6. Entry of judgment and final resolution. – If no
the voting on the case. The concurring and dissenting appeal or motion for reconsideration or new trial is filed
opinions, together with the majority opinion, shall be within the time provided in these Rules, the Clerk of
jointly promulgated and attached to the rollo. Court shall forthwith enter the judgment or final
resolution in the book of judgment. The date when the
In deciding the case, the Court may not limit itself to the judgment or final resolution becomes executory shall be
issues stipulated by the parties but may also rule upon deemed the date of its entry. The entry shall contain the
related issues necessary to achieve an orderly disposition dispositive part of the judgment or final resolution and
of the case. (2002 Internal Rules of the Court of Appeals, shall be signed by the Clerk of Court, with a certification
Rule VI, secs. 9 and 10a; and Rules of Court, Rule 51, sec. that such judgment or resolution has become final and
2a) executory. (Rules of Court, Rule 51, sec. 10a)
SEC. 2. Form of decision. – Every decision or final SEC. 7. Execution of judgment. – Upon the expiration of
resolution of the Court shall be in writing, stating clearly the period to appeal from a judgment or order that
and distinctly the findings of fact and the conclusions of disposes of the action or proceeding and no appeal has
law on which it is based, and signed by the justices been duly perfected, execution shall issue as a matter of
concurring therein. Such findings and conclusions shall right, on motion.
be contained in the decision or final resolution itself.
However, in appealed cases, the Court may adopt by If an appeal has been duly perfected and finally resolved,
reference the findings and conclusions set forth in the execution may be forthwith applied for in the court of
decision, order or resolution appealed from. origin, on motion of the judgment oblige, submitting
therewith a certified true copy of the judgment or final
Every decision of the Court shall be accompanied by a order sought to be enforced and of its entry, with notice
certification signed by the presiding justice or acting to the adverse party.
presiding justice, chairman or most senior member as
acting chairman of the Court en banc or in Division in the (Rules of Court, Rule 39, sec. 1a)
following form:
“Pursuant to Article VIII, Section 13 of the Constitution, it is RULE 15 MOTION FOR RECONSIDERATION OR
hereby certified that the conclusions in the above
decision were reached in consultation before the case NEW TRIAL
was assigned to the writer of the opinion of the Court.” SECTION 1. Who may and when to file motion. – Any
(Rules of Court, Rule 51, sec 5a; and 2002 Internal Rules of aggrieved party may seek a reconsideration or new trial of
the Court of Appeals, Rule VI, sec. 11a) any decision, resolution or order of the Court. He shall file
a motion for reconsideration or new trial within fifteen
SEC. 3. Amended decision. – Any action modifying or
days from the date he received notice of the decision,
reversing a decision of the Court en banc or in Division
resolution or order of the Court in question. (RCTA, Rule
shall be denominated as Amended Decision. (2002
13, sec. 1a)
Internal Rules of the Court of Appeals, Rule VI, sec. 12a)
SEC. 2. Opposition. – The adverse party may file an
SEC. 4. Resolution. – Any disposition of the Court en banc
opposition to the motion for reconsideration or new trial
or in Divisions other than on the merits shall be
within ten days after his receipt of a copy of the motion
embodied in a Resolution.
for reconsideration or new trial of a decision, resolution or
(2002 Internal Rules of the Court of Appeals, Rule VI, sec. order of the Court. (RCTA, Rule 13, sec. 2a)
12a)
SEC. 3. Hearing of the Motion. – The motion for
SEC. 5. Promulgation and notice of decision and reconsideration or new trial, as well as the opposition
resolution. – The Clerk of Court or Deputy Clerk of Court thereto, shall embody all supporting arguments and the
shall have the direct responsibility for the promulgation of movant shall set the same for hearing on the next
the decision and resolution of the Court. He shall see to it available motion day. Upon the expiration of the period
that the decision and resolution are properly signed by set forth in the next preceding section, without any
the concurring and dissenting justices and the required opposition having been filed by the other party, the
certification is duly accomplished. motion for reconsideration or new trial shall be
Promulgation consists of the filing of the decision or considered submitted for resolution, unless the Court
resolution with the Clerk of Court or Division Clerk of deems it necessary to hear the parties on oral argument,
Court, who shall forthwith annotate the date and time of in which the case the Court shall issue the proper order.
receipt and attest to it by his signature thereon. He shall (RCTA, Rule 13, sec. 3a)
serve notice of such decision or resolution upon the SEC. 4. Effect of filing the motion. – The filing of a motion
parties or their counsel, furnishing them with certified for reconsideration or new trial shall suspend the running
true copies thereof. of the period within which an appeal may be perfected.
(2002 Internal Rules of the Court of Appeals, Rule VI, sec. (RCTA, Rule 13, sec. 4a)
13a; and Rules of Court, Rule 51, sec. 9a) SEC. 5. Grounds of motion for new trial. – A motion for
In criminal cases originally filed with and decided by the new trial may be based on one or more of the following
Court in Division, the chairman shall cause the decision or causes materially affecting the substantial rights of the
resolution to be filed with the Division Clerk of Court in a movant:
sealed envelope, who shall schedule its promulgation, (a) Fraud, accident, mistake or excusable negligence
giving notice to the prosecution, the accused personally which ordinary prudence could not have guarded against
or through his bondsman or warden, and counsel and by reason of which such aggrieved party has
requiring their presence at the promulgation. probably been impaired in his rights; or
The promulgation shall consist of the reading by the (b) Newly discovered evidence, which he could not, with
Division Clerk of Court of the dispositive portion of the reasonable diligence, have discovered and produced at
decision or resolution in the presence of the accused and the trial and, which, if presented, would probably alter the
a justice of the Division that rendered the same. If the result.
accused is detained, the warden shall produce him before
A motion for new trial shall include all grounds then
the Court. However, if he is detained outside Metro
available and those not included shall be deemed waived.
Manila, the Court may authorize the executive judge of
the Regional Trial Court having territorial jurisdiction over (Rules of Court, Rule 37, sec. 1a)


SEC. 6. Contents of motion for reconsideration or new June 11, 1978
trial and notice. – The motion shall be in writing stating PRESIDENTIAL DECREE NO. 1464
its grounds, a written notice of which shall be served by
the movant on the adverse party. A DECREE TO CONSOLIDATE AND CODIFY ALL THE
TARIFF AND CUSTOMS LAWS OF THE PHILIPPINES
A motion for new trial shall be proved in the manner
provided for proof of motions. A motion for the cause WHEREAS, the Tariff and Customs Code of the
mentioned in subparagraph (a) of the preceding section Philippines known as Republic Act No. 1937 has been
shall be supported by affidavits of merits which may be amended by several Presidential Decrees dating back to
rebutted by counter-affidavits. A motion for the cause the year 1972;
mentioned in subparagraph (b) of the preceding section WHEREAS, there exist in the said Code a substantial
shall be supported by affidavits of the witnesses by whom number of provisions rendered obsolete by subsequent
such evidence is expected to be given, or by duly issuances of amendatory laws, decrees and executive
authenticated documents which are proposed to be orders thereby making it imperative to consolidate, codify
introduced in evidence. and integrate such amendatory laws, decrees and
A motion for reconsideration or new trial that does not executive orders to harmonize their provisions for the
comply with the foregoing provisions shall be deemed proper guidance of the public and efficient
pro forma, which shall not toll the reglementary period administration thereof;
for appeal. WHEREAS, there likewise exist in the said Code certain
(Rules of Court, Rule 37, sec. 2a) provisions which are impractical in application, thus,
necessitating revision in order to infuse flexibility, keep
SEC. 7. No second motion for reconsideration or for new pace with the changing needs and demands of trade and
trial. – No party shall be allowed to file a second motion commerce as well as strengthen the punitive force of the
for reconsideration of a decision, final resolution or order; law against smuggling and other forms of customs fraud.
or for new trial. (Rules of Court, Rule 52, sec. 2a)
NOW, THEREFORE, I, FERDINAND E. MARCOS, President
SEC. 8. Ruling. – The Court shall resolve the motion for of the Republic of the Philippines, by virtue of the powers
reconsideration or new trial within three months from in me vested by the Constitution, do hereby order and
the time it is deemed submitted for resolution. (Rules of decree as follows:
Court, Rule 52, sec. 3a)
SECTION 1. Codification of All Tariff and Customs Laws. —
All tariff and customs laws embodied in the present Tariff
RULE 16 APPEAL and Customs Code and various laws, presidential decrees
and executive orders including new amendments thereto
SECTION 1. Appeal to Supreme Court by petition for made in this Decree, are hereby consolidated into a single
review on certiorari. – A party adversely affected by a Code to be known as the Tariff and Customs Code of 1978
decision or ruling of the Court en banc may appeal which shall form an integral part of this Decree.
therefrom by filing with the Supreme Court a verified
petition for review on certiorari within fifteen days from SECTION 2. Effectivity. — The provisions of the Tariff and
receipt of a copy of the decision or resolution, as provided Customs Code of 1978 shall take effect immediately
in Rule 45 of the Rules of Court. If such party has filed a without prejudice, however, to the effectivity dates of the
motion for reconsideration or for new trial, the period various laws, decrees and executive orders which have so
herein fixed shall run from the party’s receipt of a copy of far amended the provisions of the Tariff and Customs
the resolution denying the motion for reconsideration or Code of the Philippines: Provided, however, that the tariff
for new trial. (n) rates indicated in the previous executive orders are now
hereby considered statutory rates, except those which
SEC. 2. Effect of appeal. – The motion for reconsideration have been reduced to the zero level, in which case the
or for new trial filed before the Court shall be deemed rates previous to the reduction will be considered the
abandoned if, during its pendency, the movant shall statutory rates.
appeal to the supreme Court pursuant to Section 1 of this
Rule. (2002 Internal Rules of the Court of Appeals, Rule VI, DONE in the City of Manila, this 11th day of June, in the
sec. 15a) year of Our Lord, Nineteen Hundred and Seventy-Eight.
RULE 17 LEGAL FEES AND COSTS BOOK I Tariff Law

SECTION 1. Additional fees and costs. – In addition to the
fees prescribed in Rule 141 of the Rules of Court and all TITLE I Import Tariff
amendments thereto, the following legal fees and costs SECTION 101. Imported Articles Subject to Duty. — All
shall be collected: articles, when imported from any foreign country into the
(a) For reception of evidence by a Court official pursuant Philippines, shall be subject to duty upon each
to Section 4, Rule 12 of these Rules five hundred pesos for importation, even though previously exported from the
each day of actual sessions; and Philippines, except as otherwise specifically provided for
(b) For any other services of the Clerk of Court and other in this Code or in other laws.
Court officials not provided for in Rule 141 of the Rules of SECTION 102. Prohibited Importations. — The importation
Court, two hundred pesos. into the Philippines of the following articles is prohibited:
a. Dynamite, gunpowder, ammunitions and other
explosives, firearms, and weapons of war, and parts
RULE 18 EFFECTIVITY thereof, except when authorized by law.
SECTION 1. Effectivity of the Revised Rules. – These Rules b. Written or printed articles in any form containing any
shall take effect on the fifteenth day of December 2005 matter advocating or inciting treason, rebellion,
following their publication in a newspaper of general insurrection, sedition or subversion against the
circulation in the Philippines not later than 25 November Government of the Philippines, or forcible resistance to
2005. (n) any law of the Philippines, or containing any threat to
take the life of, or inflict bodily harm upon, any person in
the Philippines.
PD No 1464 | Tariff and Customs Code of c. Written or printed articles, negatives or
1978 cinematographic films, photographs, engravings,
lithographs, objects, paintings, drawings or other
representation of an obscene or immoral character.



d. Articles, instruments, drugs and substances designed, may be revised by the President upon recommendation
intended or adapted for producing unlawful abortion, or of the National Economic and Development Authority.
any printed matter which advertises or describes or gives The rates of duty herein provided shall apply to all
directly or indirectly information where, how or by whom products whether imported directly or indirectly of all
unlawful abortion is produced. foreign countries, which do not discriminate against
e. Roulette wheels, gambling outfits, loaded dice, marked Philippine export products. An additional 100%
cards, machines, apparatus or mechanical devices used in across-the-board duty shall be levied on the products of
gambling, or in the distribution of money, cigars, any foreign country which discriminates against
cigarettes or other articles when such distribution is Philippine export products.
dependent upon chance, including jackpot and pinball The tariff schedules, chapters, headings and subheadings
machines or similar contrivances, or parts thereof. and the rate of import duty under Section One Hundred
f. Lottery and sweepstakes tickets except those Four of this Code shall be as follows:
authorized by the Philippine Government,
advertisements thereof and lists of drawings therein.
[INSERT SCHEDULE HERE]
g. Any article manufactured in whole or in part of gold,
silver or other precious metals or alloys thereof, the
stamps, brands or marks of which do not indicate the
actual fineness of quality of said metals or alloys.
ANNEX Headings and Subheadings Covered by
h. Any adulterated or misbranded articles of food or any Special Provisions
adulterated or misbranded drug in violation of the
provisions of the "Food and Drugs Act". PART I
i. Marijuana, opium, poppies, coca leaves, heroin or any Modifying the Rates of Import Duty on Certain Imported
other narcotics or synthetic drugs which are or may Articles as Provided Under Republic Act No. 1937,
hereafter be declared habit forming by the President of Otherwise Known as the Tariff and Customs Code of the
the Philippines, or any compound, manufactured salt, Philippines, as Amended, in Order to Implement the
derivative, or preparation thereof, except when imported Margins of Tariff Preference in Accordance with the
by the Government of the Philippines or any person duly ASEAN Agreement on Preferential Trading
authorized by the Dangerous Drugs Board for medicinal Arrangements with Respect to Certain Articles
purposes only. Negotiated During the Fourth Meeting of the ASEAN
Committee on Trade and Tourism.
j. Opium pipes and parts thereof, of whatever material.
Pursuant to the powers vested in me by Section 402 of
k. All other articles and parts thereof, the importation of Republic Act No. 1937, as amended, I, FERDINAND E.
which is prohibited by law or rules and regulations issued MARCOS, President of the Philippines, do hereby direct
by competent authority. (As amended by Presidential and order:
Decree No. 34).
SECTION 1. The articles specifically listed in Annex "A"
SECTION 103. Abbreviations. — The following hereof as classified under Section 104 of Republic Act No.
abbreviations used in this Code shall represent the terms 1937, as amended, shall be accorded the margin of tariff
indicated: preference as specified in column 4 of said Annex "A"
hereof. In effect, such articles shall be subject to the
ad val. For ad valorem Preferential Tariff for Asean indicated in Column 5 of said
Annex A.
e.g. For exempli gratia, meaning "for example".
SECTION 2. In the event that any subsequent changes are
i.e. For id est, meaning "that is". made in the basic Philippine rate of duty on any of the
above-mentioned articles such articles shall
hd. For head. automatically be accorded the corresponding margins of
preference indicated in column 4 of Annex A.
kg. For kilogram. SECTION 3. After the effective date of this Order, all the
above-described articles entered or withdrawn from
kgs. For kilograms. warehouse in the Philippines for consumption shall be
subject to the rates of import duty herein prescribed
l. For liter. subject to qualification under the Rules of Origin as
prescribed in the Agreement on Asean Preferential
g.w. For gross weight. Trading Arrangements ratified on August 1, 1977.
SECTION 4. This Order shall take effect as of 1 January
l.w. For legal weight. 1978.
Preferential
n.w. For net weight. Present Margin
BTN Product Tariff
Rate of of for
Description
SECTION 104. All tariff schedules, chapters, headings and Duty Preference
ASEAN
sub-headings and the rates of import duty under Section
104 of Presidential Decree No. 34 and all subsequent ex 02.01 Meat or Offal 10% 30% 7%
amendments issued under Executive Orders and from
Presidential Decrees are hereby adopted and form part of
this Code. bovine cattle
A uniform rate of duty, herein known as a revenue duty of ex 07.05 Mongo beans 70% 20% 56%
ten per cent ad valorem shall be imposed on all imported B (green
articles plus any of the five rates of duty of 10, 20, 40, 60
and 90 per cent ad valorem. In effect, there are only six and yellow)
levels of tariffs: 10 per cent (basic rate), 20%, 30%, 50%, 70%
and 100%. 10.05 Maize 70% 20% 56%
The rates herein provided or subsequently fixed pursuant ex 15.07 Palm oil 20% 20% 16%
to Section Four hundred one of this Code shall be subject (crude and
to periodic investigation by the Tariff Commission and


refined) Under
Tariff
ex 15.07 Palm kernel 20% 20% 16% Article Rate of Duty
Heading
oil No.
ex 25.20 Crude 20% 20% 16% 1. X-RAY FILMS 37.01 ad valorem
gypsum 10%
8" x 10"
27.01 Anthracite 10% 20% 8% 10" x 12"
coal 11" x 14"
ex 27.13 Paraffin wax 20% 10% 18% 14" x 17"

2. DEVELOPER, FIXER, 37.08 ad valorem
ex 40.11 Tractor tires 20% 10% 18% STARTER AND HARDENER 10%
A USED IN THE PRODUCTION
OF X-RAY IMAGES
70.06 Cast, rolled, 70% 30% 49%
3. POLYETHYLENE TUBING, 39.02 ad valorem
B drawn or
FLEXIBLE, FOR 10%
blown glass HEMODIALYSIS MACHINE;
(including TETRAFLUOROETHYLENE
flashed or (TEFLON TAPE)
wired glass) 4. CATHETERS 40.12 ad valorem
in rectangles, 10%
surface 5. SURGICAL GLOVES 40.13 ad valorem
ground or 10%
polished but 6. ELECTROCARDIOGRAPH 48.21 ad valorem
not further PAPER AND DISPOSABLE 10%
worked FACE MASK FOR USE IN
HOSPITALS
70.10 Glass jars for 50% 20% 40%
B baby foods 7. WASHER FOR STERILIZER 73.32 ad valorem
10%
ex 84.51 Portable 20% 20% 16% 8. ADJUSTING SPRING, 73.35 ad valorem
electric SPRING GUIDE AND MAIN 10%
typewriters SPRING FOR STERILIZER;
SPRING VALVE CUP, TRIAC
ex 84.62 Ball bearings 10% 10% 9% RETAINING RING FOR
WATER VALVE FOR
ex 85.24 Graphite and 30% 10% 27% STERILIZER
carbon
9. DISC, DISC HOLDERS, 84.17 ad valorem
electrodes
VALVE BALL SEAT AND 10%
GASKET, POWER
DIAPHRAGM AND BLACK
PART II HOUSING AND VACUUM
Reducing Under Certain Conditions and for a Limited BREAKER FOR STERILIZER;
Period Customs Duties Due on Importations of Certain REPLACEMENT DISC FOR
Hospital/Medical Equipment, Machinery, Implements STERILIZER
and Supplies 10. SKYLUX GLASS BULBS FOR 85.20 ad valorem
WHEREAS, the promotion, protection and preservation of OPERATING LAMPS 10%
the health of the citizenry is the concern of government 11. RESUSCITATORS OR 90.18 ad valorem
as ordained in the Constitution; OXYGEN APPARATUS 10%
WHEREAS, hospitals, medical centers and other similar

entities play a vital role in maintaining a healthy citizenry
so much so that their continued operation should not be SECTION 2. The following articles shall likewise be subject
hampered by reason of the rise in costs of acquisition of to the reduced rate of duty of 10% ad valorem as soon as
necessary equipment and implements; their appropriate tariff classification are determined by
the Tariff Commission and submitted to the Ministry of
WHEREAS, there is a need to provide government
Finance:
assistance to these entities to ensure that their services to
the masses, especially to the poorer segment of the 1. Phosphate Buffer
citizenry, shall be accorded at least cost and optimum 2. Carbonate/Bicarb Buffer
efficacy.
3. Potassium Ferricyanide
NOW, THEREFORE, I, FERDINAND E. MARCOS, President
of the Philippines, by virtue of the powers vested in me by 4. Caffeine Diluent
the Constitution do hereby decree and order: 5. Sodium Potassium Tartrate
SECTION 1. The provisions of Republic Act No. 1937, as 6. Sulphanilic Acid
amended, to the contrary notwithstanding, importations
by hospitals which are now engaged or shall engage in 7. Working BUN Color
the treatment and care of the sick of hospital/medical 8. Working BUN Acid
equipment, machinery, implements and supplies as
9. 4-Aminoantipyrine
hereinafter enumerated and described shall be subject to
customs duties of ten per centum (10%) ad valorem to 10. Sodium Nitrate
wit: 11. HCL 0.25N
12. Azoene Fast Red


13. SGPT and Diluent Set approval of the Minister of Finance;Provided, That any
14. Markers for X-ray Equipment article sold, bartered, hired or used for purposes other
than that they were intended for without prior payment
15. Volt complete door, valve triac unit for hemodialysis of the duty, tax or other charges which would have been
machine due and payable at the time of entry if the article had
16. High temperate control, thermistor assembly for been entered without the benefit of this section, shall be
sterilizer subject to forfeiture and the importation shall constitute
a fraudulent practice against customs revenue
17. Indicatory control and recording control for gas punishable under Section Thirty-six hundred and two, as
sterilizer amended of this Code: Provided, further, That a sale
18. Door switch, selector switch, pressure switch pursuant to a judicial order or in liquidation of the estate
of a deceased person shall not be subject to the
19. Resuscitators or oxygen apparatus preceding proviso, without prejudice to the payment of
20. Vaporizers duties, taxes and other charges: Provided, finally, That the
21. Mistogen transducer reservoir President may, upon recommendation of the Minister of
Finance, suspend, disallow or completely withdraw, in
SECTION 3. The reduction herein allowed shall only cover whole or in part, any of the conditionally-free importation
importation of hospital/medical equipment, machinery, under this section:
implements and supplies included in the list above which
are directly and actually needed and will be used a. Aquatic products (e.g., fish, crustaceans, mollusks,
exclusively in the treatment and care of the sick by the marine animals, seaweeds, fish oil, roe), caught or
hospital-importer as certified to by the Ministry of Health. gathered by fishing vessels of Philippine registry:
Shipping documents covering the importation shall be in Provided, That they are imported in such vessels or in
the name of the hospital importer to whom the goods crafts attached thereto: And provided, further, That they
shall be directly delivered by customs authorities. have not been landed in any foreign territory or, if so
landed, they have been landed solely for transhipment
SECTION 4. In addition to the condition in the preceding without having been advanced in condition;
sections, reduction in duties shall be allowed only to the
importation of hospital/medical equipment, machinery, b. Equipment for use in the salvage of vessels or aircraft,
implements and supplies that are not available locally in not available locally, upon identification and the giving of
sufficient quantities and of comparable quality and cost a bond in an amount equal to one and one-half times the
as certified to by the Board of Investments. Further, only ascertained duties, taxes and other charges thereon,
hospitals licensed by the Ministry of Health and conditioned for the exportation thereof or payment of the
accredited by the Philippine Medical Care Commission, corresponding duties, taxes and other charges within six
having at least twenty-five beds and maintaining a ward (6) months from the date of acceptance of the import
dispensing free medical services to indigents may qualify entry: Provided, That the Collector of Customs may
for the incentives granted under this Decree. extend the time for exportation or payment of duties,
taxes and other charges for a term not exceeding six (6)
SECTION 5. Any grantee of the incentives under this months from the expiration of the original period;
Decree who shall make use of the privilege hereunder for
purposes other than those for which of this Decree shall c. Cost of repairs, excluding the value of the article used,
be penalized with imprisonment of not less than five (5) made in foreign countries upon vessels or aircraft
years but not exceeding ten (10) years and a fine of not documented, registered or licensed in the Philippines,
less than P200,000.00 and in addition, such violation shall upon proof satisfactory to the Collector of Customs (1)
ipso facto cause forfeiture of the imported articles aside that adequate facilities for such repairs are not afforded in
from the payment of all taxes and duties due in the Philippines, or (2) that such vessels or aircraft, while in
accordance with the existing laws. the regular course of her voyage or flight was compelled
by stress of weather or other casualty to put into a foreign
Any person or any officer or employee of the government port to make such repairs in order to secure the safety,
who shall connive with the grantee of the reduction in seaworthiness or airworthiness of the vessel or aircraft to
duties in the violation of the provisions of this Decree enable her to reach her port of destination;
shall suffer the same penalties prescribed in the first
paragraph of this section. In case the grantee is a juridical d. Articles brought into the Philippines for repair,
person, the official or officials who consented to the processing or reconditioning to be re-exported upon
commission of the offense or tolerated the violation of the completion of the repair, processing or reconditioning:
provisions of this Decree shall be the person or persons Provided, That the Collector of Customs shall require the
liable. giving of a bond in an amount equal to one and one-half
times the ascertained duties, taxes and other charges
SECTION 6. Any hospital, medical center, medical clinic or thereon, conditioned for the exportation thereof or
institution who or which may qualify for similar payment of the corresponding duties, taxes and other
exemption privilege under existing law or other laws charges within six (6) months from the date of
hereinafter decreed or enacted and is qualified under this acceptance of the import entry;
Decree, may choose which privilege the grantee desires
to avail of, but in no case shall such grantee be entitled to e. Medals, badges, cups and other small articles bestowed
both privilege simultaneously. as trophies or prizes, or those received or accepted as
honorary distinction;
SECTION 7. Rules and regulations to implement the
provisions of this Decree shall be prepared by the Ministry f. Personal and household effects belonging to residents
of Health within fifteen (15) days from the issuance of this of the Philippines returning from abroad including
Decree and approved by the Ministry of Finance within jewelry, precious stones and other articles of luxury which
another fifteen (15) days. were formally declared and listed before departure and
identified under oath before the Collector of Customs
SECTION 8. All laws, decrees, orders, rules and regulations when exported from the Philippines by such returning
or parts thereof inconsistent with any of the provisions of residents upon their departure therefrom or during their
this Decree are hereby repealed or modified accordingly. stay abroad; personal and household effects including
SECTION 9. This Decree shall take effect upon approval wearing apparel, articles of personal adornment (except
and shall continue to be effective until 31 December 1980. luxury items), toilet articles, portable appliances and
instruments and similar personal effects, excluding
SECTION 105. Conditionally-Free Importations. — The vehicles, watercraft, aircraft, and animals, purchased in
following articles shall be exempt from the payment of foreign countries by residents of the Philippines which
import duties upon compliance with the formalities were necessary, appropriate and normally used for the
prescribed in, or with, the regulations which shall be comfort and convenience in their journey and during
promulgated by the Commissioner of Customs with the their stay abroad upon proof satisfactory to the Collector


of Customs that same have been in their use abroad for identification, examination and appraisal and the giving
more than six (6) months and accompanying them on of a bond in an amount equal to one and one-half times
their return, or arriving within a reasonable time which, the ascertained duties, taxes and other charges thereon,
barring unforeseen circumstances, in no case shall conditioned for exportation thereof or payment of the
exceed ninety (90) days before or after the owners' corresponding duties, taxes and other charges within six
return:Provided, That the personal and household effects (6) months from the date of acceptance of the import
shall neither be in commercial quantities nor intended for entry; Provided, That the Collector of Customs may
barter, sale, or hire and that the total dutiable value of extend the time for exportation or payment of duties,
which shall not exceed two thousand pesos (P2,000): taxes and other charges for a term not exceeding six (6)
Provided, further, That the returning resident has not months from the expiration of the original period; and
previously received the benefit under this section within technical and scientific films when imported by technical,
one year from and after the last exemption granted: cultural and scientific institutions, and not to be exhibited
Provided, furthermore, That a fifty (50%) per cent ad for profit: Provided, further, That if any of the said films is
valoremduty across the board shall be levied and exhibited for profit, the proceeds therefrom shall be
collected on the personal and household effects (except subject to confiscation, in addition to the penalty
luxury items) in excess of two thousand pesos (P2,000): provided under Section Thirty-six hundred and ten as
And provided, finally, That the personal and household amended, of this Code;
effects (except luxury items) of a returning resident who j. Articles brought by foreign film producers directly and
has not stayed abroad for six (6) months shall be subject exclusively used for making or recording motion picture
to fifty (50%) per cent ad valorem duty across the board, films on location in the Philippines, upon their
the total dutiable value of which does not exceed two identification, examination and appraisal and the giving
thousand pesos (P2,000); any excess shall be subject to of a bond in an amount equal to one and one-half times
the corresponding duty provided in this Code; the ascertained duties, taxes and other charges thereon,
g. Personal and household effects and vehicles conditioned for exportation thereof or payment of the
accompanying travelers, tourists, foreign consultants and corresponding duties, taxes and other charges within six
experts hired by, and/or rendering service to, the (6) months from the date of acceptance of the import
government and their staff or personnel and families, entry, unless extended by the Collector of Customs for
accompanying or arriving within a reasonable time another six (6) months;
before or after their arrival in the Philippines, which are Photographic and cinematographic films, undeveloped,
necessary and appropriate for the wear or use of such exposed outside the Philippines by resident Filipino
persons according to the nature of the journey, their citizens or by producing companies of Philippine registry
comfort and convenience: Provided, That this exemption where the principal actors and artists employed for the
shall not apply to articles intended for other persons or for production are Filipinos, upon affidavit by the importer
barter, sale or hire: Provided, further, That the Collector of and identification that such exposed films are the same
Customs may, in his discretion, require either a written films previously exported from the Philippines. As used in
commitment or a bond in an amount equal to one and this paragraph, the terms "actors" and "artists" include
one-half times the ascertained duties, taxes and other the persons operating the photographic camera or other
charges upon articles classified under this sub-section, photographic and sound recording apparatus by which
conditioned for the exportation thereof or payment of the the film is made;
corresponding duties, taxes and other charges within six
(6) months from the date of acceptance of the import k. Importations for the official use of foreign embassies,
entry in the case of travelers and tourists; and in the case legations, and other agencies of foreign governments:
of foreign consultants and experts and their staff or Provided, That those foreign countries accord like
personnel or families, within six (6) months after the privileges to corresponding agencies of the Philippines.
expiration of their term or contract: And Provided, finally, Articles imported for the personal or family use of the
That the Collector of Customs may extend the time for members and attachés of foreign embassies, legations,
exportation or payment of duties, taxes and other consular officers and other representatives of foreign
charges for a term not exceeding six (6) months from the governments: Provided, That such privilege shall be
expiration of the original period; accorded under special agreements between the
h. Professional instruments and implements, tools of Philippines and the countries which they represent: And
trade, occupation or employment, wearing apparel, Provided, further, That the privilege may be granted only
domestic animals, and personal and household effects upon specific instructions of the Minister of Finance in
belonging to persons coming to settle in the Philippines each instance which will be issued only upon request of
or Filipinos and/or their families and descendants who are the Ministry of Foreign Affairs;
now residents or citizens of other countries, such parties l. Imported articles donated to, or for the account of, any
hereinafter referred to as Overseas Filipinos, in quantities duly registered relief organization, not operated for profit,
and of the class suitable to the profession, rank or for free distribution among the needy, upon certification
position of the persons importing them, for their own use by the Ministry of Social Services and Development or the
and not for barter or sale, accompanying such persons, or Ministry of Education and Culture, as the case may be;
arriving within a reasonable time, in the discretion of the
Collector of Customs, before or after the arrival of their m. Containers, holders and other similar receptacles of
owners, which shall not be later than February 28, 1979 any material including kraft paper bags for locally
upon the production of evidence satisfactory to the manufactured cement for export, including corrugated
Collector of Customs that such persons are actually boxes for bananas, mangoes, pineapples and other fresh
coming to settle in the Philippines, that change of fruits for export, except other containers made of paper,
residence was bona fide and that the privilege of free paperboard and textile fabrics, which are of such
entry was never granted to them before or that such character as to be readily identifiable and/or reusable for
person qualifies under the provisions of Letters of shipment or transportation of goods shall be delivered to
Instructions 105, 163 and 210, and that the articles are the importer thereof upon identification, examination
brought from their former place of abode, shall be and appraisal and the giving of a bond in an amount
exempt from the payment of customs duties and taxes: equal to one and one-half times the ascertained duties,
Provided, That vehicles, vessels, aircraft, machineries and taxes and other charges within six (6) months from the
other similar articles for use in manufacture, shall not be date of acceptance of the import entry.
classified hereunder. n. Supplies which are necessary for the reasonable
i. Articles used exclusively for public entertainment, and requirements of the vessel or aircraft in her voyage or
for display in public expositions, or for exhibition or flight outside the Philippines, including articles
competition for prizes, and devices for projecting pictures transferred from a bonded warehouse in any collection
and parts and appurtenances thereof, upon district to any vessel or aircraft engaged in foreign trade,
for use or consumption of the passengers or its crew on



board such vessel or aircraft as sea or air stores; or articles Bureau of Customs at the effectivity of this Decree may
purchased abroad for sale on board a vessel or aircraft as still enjoy the privilege herein provided upon certification
saloon stores or air store supplies: Provided, That any by the Ministry of Education and Culture that such
surplus or excess of such vessel or aircraft supplies imported books and/or publications are for economic,
arriving from foreign ports or airports shall be dutiable; technical, vocational, scientific, philosophical, historical or
o. Articles and salvage from vessels recovered after a cultural purposes or that the same are educational,
period of two (2) years from the date of filing the marine scientific or cultural materials covered by the
protest or the time when the vessel was wrecked or International Agreement on Importation of Educational,
abandoned, or parts of a foreign vessel or her equipment, Scientific and Cultural Materials signed by the President
wrecked or abandoned in Philippine waters or elsewhere: of the Philippines on August 2, 1952, or other agreements
Provided, That articles and salvage recovered within the binding upon the Philippines.
said period of two (2) years shall be dutiable; Educational, scientific and cultural materials covered by
p. Coffins or urns containing human remains, bones or international agreements or commitments binding upon
ashes, used personal and household effects (not the Philippine Government so certified by the Ministry of
merchandise) of the deceased person, except vehicles, Education and Culture.
the value of which does not exceed ten thousand pesos Bibles, missals, prayer books, Koran, Ahadith and other
(P10,000) upon identification as such; religious books of similar nature and extracts therefrom,
q. Samples of the kind, in such quantity and of such hymnal and hymns for religious uses.
dimension or construction as to render them unsalable or t. Philippine articles previously exported from the
of no appreciable commercial value; models not adapted Philippines and returned without having been advanced
for practical use; and samples of medicines, properly in value or improved in condition by any process of
marked "sample-sale punishable by law", for the purpose manufacture or other means, and upon which no
of introducing a new article in the Philippine market and drawback or bounty has been allowed, including
imported only once in a quantity sufficient for such instruments and implements, tools of trade, machinery
purpose by a person duly registered and identified to be and equipment, used abroad by Filipino citizens in the
engaged in that trade: Provided, That importations under pursuit of their business, occupation or profession; and
this subsection shall be previously authorized by the foreign articles previously imported when returned after
Minister of Finance: Provided, however, That importation having been exported and loaned for use temporarily
of sample medicine shall be previously authorized by the abroad solely for exhibition, testing or experimentation,
Minister of Health that such samples are new medicines for scientific or educational purposes; and foreign
not available in the Philippines: Provided, finally, That containers previously imported which have been used in
samples not previously authorized and or properly packing exported Philippine articles and returned empty
marked in accordance with this section shall be levied the if imported by or for the account of the person or
corresponding tariff duty. institution who exported them from the Philippines and
Commercial samples, except those that are not readily not for sale, barter or hire subject to identification:
and easily identifiable (e.g., precious and semi-precious Provided, That any Philippine article falling under this
stones, cut or uncut, and jewelry set with precious or subsection upon which drawback or bounty has been
semi-precious stones), the value of any single importation allowed shall, upon re-importation thereof, be subject to a
of which does not exceed ten thousand pesos (P10,000) duty under this subsection equal to the amount of such
upon the giving of a bond in an amount equal to twice drawback or bounty;
the ascertained duties, taxes and other charges thereon, u. Aircraft, equipment and machinery, spare parts
conditioned for the exportation of said samples within six commissary and catering supplies, aviation gas, fuel and
(6) months from the date of the acceptance of the import oil, whether crude or refined, and such other articles or
entry or in default thereof, the payment of the supplies imported by and for the use of scheduled airlines
corresponding duties, taxes and other charges. If the operating under Congressional franchise: Provided, That
value of any single consignment of such commercial such articles or supplies are not locally available in
samples exceeds ten thousand pesos (P10,000), the reasonable quantity, quality and price and are necessary
importer thereof may select any portion of same not or incidental for the proper operation of the schedule
exceeding in value ten thousand pesos (P10,000) for entry airline importing the same;
under the provisions of this subsection, and the excess of v. Machineries, equipment, tools for production, plants to
the consignment may be entered in bond, or for convert mineral ores into saleable form, spare parts,
consumption, as the importer may elect; supplies, materials, accessories, explosives, chemicals, and
r. Animals (except race horses), and plants for scientific, transportation and communication facilities imported by
experimental, propagation, botanical, breeding, and for the use of new mines and old mines which
zoological and national defense purposes:Provided, That resume operations, when certified to as such by the
no live trees, shoots, plants, moss, and bulbs, tubers and Minister of Agriculture and Natural Resources upon the
seeds for propagation purposes may be imported under recommendation of the Director of Mines, for a period
this section, except by order of the Government or other ending five (5) years from the first date of actual
duly authorized institutions: Provided, further, That the commercial production of saleable mineral products:
free entry of animals for breeding purposes shall be Provided, That such articles are not locally available in
restricted to animals of recognized breed, duly registered reasonable quantity, quality and price and are necessary
in the book of record established for that breed, certified or incidental in the proper operation of the mine; and
as such by the Bureau of Animal Industry: Provided, aircrafts imported by agro-industrial companies to be
furthermore, That certificate of such record, and pedigree used by them in their agriculture and industrial
of such animal duly authenticated by the proper operations or activities, spare parts and accessories
custodian of such book of record, shall be produced and thereof;
submitted to the Collector of Customs, together with w. Spare parts of vessels or aircraft of foreign registry
affidavit of the owner or importer, that such animal is the engaged in foreign trade when brought into the
animal described in said certificate of record and Philippines exclusively as replacements or for the
pedigree: And Provided, finally, That the animals and emergency repair thereof, upon proof satisfactory to the
plants are certified by the National Economic and Collector of Customs that such spare parts shall be
Development Authority as necessary for economic utilized to secure the safety, sea-worthiness or
development; air-worthiness of the vessel or aircraft, to enable it to
s. Economic, technical, vocational, scientific, continue its voyage or flight;
philosophical, historical, and cultural books and/or x. Articles of easy identification exported from the
publications: Provided, That those which may have Philippines for repair and subsequently re-imported upon
already been imported but pending release by the proof satisfactory to the Collector of Customs that such



article is not capable of being repaired locally: Provided, the Commissioner of Customs with the approval of the
That the cost of the repairs made to any such article shall Minister of Finance.
pay a rate of duty of thirty per cent ad valorem; (b) On Petroleum Oils and Oils Obtained from
y. Trailer chassis when imported by shipping companies Bituminous Minerals, Crude Eventually Used for
for their exclusive use in handling containerized cargo, Generation of Electric Power and for the Manufacture of
upon posting a bond in an amount equal to one and City Gas. — On petroleum oils and oils obtained from
one-half times the ascertained duties, taxes and other bituminous materials, crude oils imported by non-electric
charges due thereon to cover a period of one year from utilities, sold directly or indirectly, in the same form or
the date of acceptance of the entry, which period for after processing, to electric utilities for the generation of
meritorious reasons may be extended by the electric power and for the manufacture of city gas, a
Commissioner of Customs for another year, subject to the refund or tax credit shall be allowed not exceeding fifty
following conditions: per cent (50%) of the duty imposed by law upon such oils,
1. That they shall be properly identified and registered which shall be paid or credited under such rules and
with the Land Transportation Commission; regulations as may be prescribed by the Commissioner of
Customs with the approval of the Minister of Finance.
2. That they shall be subject to customs supervision fee to
be fixed by the Collector of Customs and subject to the (c) On Articles Made from Imported Materials. — Upon
approval of the Commissioner of Customs; exportation of articles manufactured or produced in the
Philippines, including the packing, covering, putting up,
3. That they shall be deposited in the Customs zone when marking or labeling thereof either in whole or in part of
not in use; and imported materials for which duties have been paid,
4. That upon the expiration of the period prescribed refund or tax credit shall be allowed for the duties paid on
above, duties and taxes shall be paid, unless otherwise the imported materials so used including the packing,
re-exported. covering, putting up, marking or labeling thereof, subject
to the following conditions:
The provisions of Sec. 105 of Presidential Decree No. 34,
dated October 27, 1972, to the contrary nothwithstanding, 1. The actual use of the imported materials in the
any officer or employee of the Ministry of Foreign Affairs, production or manufacture of the article exported with
including any attache, civil or military, or member of his their quantity, value, and amount of duties paid thereon,
staff assigned to a Philippine diplomatic mission abroad having been established;
by his Ministry or any similar officer or employee assigned 2. The duties refunded or credited shall not exceed
to a Philippine consular office abroad, or any personnel of ninety-nine (99) per cent of duties paid on the imported
the Reparations Mission in Tokyo, or AFP military materials used;
personnel detailed with SEATO or any AFP military
personnel accorded assimilated diplomatic rank on duty 3. There are no available locally produced or
abroad who is returning from a regular assignment manufactured competitive substitutes for the imported
abroad, for reassignment to his Home office, or who dies, materials used at the time of importation as certified by
resigns, or is retired from the service, after the approval of the National Economic and Development Authority;
this Decree, shall be exempt from the payment of all 4. The exportation shall be made within one (1) year after
duties and taxes on his personal and household effects, the importation of materials used and the claim for
including one motor car which must have been ordered refund or the credit shall be filed within one (1) year from
or purchased prior to the receipt by the mission or date of exportation;
consulate of his order of recall, and which must be 5. When two or more products result from the use of the
registered in his name: Provided, however, That this same imported materials, an apportionment shall be
exemption shall apply only to the value of the motor car made on its equitable basis.
and to the aggregate assessed value of said personal and
household effects the latter not to exceed thirty per (d) Payment of Partial Drawbacks. — The Minister of
centum (30%) of the total amount received by such Finance may, upon recommendation of the
officer or employee in salary and allowances during his Commissioner of Customs, promulgate rules and
latest assignment abroad but not to exceed four years: regulations allowing partial payments of drawbacks
Provided, further, That this exemption shall not be availed under this section.
of oftener than once every four years: And, Provided, (e) Payment of the Drawbacks. — Claims for refund or tax
finally, That the officer or employee concerned must have credit eligible for such benefits shall be paid or granted
served abroad for not less than two years. by the Bureau of Customs to claimants within sixty (60)
The provisions of general and special laws, including days after receipt of properly accomplished claims:
those granting franchises, to the contrary Provided, That a registered enterprise under Republic Act
notwithstanding, there shall be no exemptions Numbered Fifty-one hundred and eighty-six or Republic
whatsoever from the payment of customs duties except Act Numbered Sixty-one hundred and thirty-five which
those provided for in this Code; those granted to has previously enjoyed tax credit based on customs
government agencies, instrumentalities or duties paid on imported raw materials and supplies, shall
government-owned or controlled corporations with not be entitled to drawback under this section, with
existing contracts, commitments, agreements, or respect to the same importation subsequently processed
obligations (requiring such exemption) with foreign and re-exported:Provided, further, That if as a result of the
countries; international institutions, associations or refund or tax credit by way of drawback of customs
organizations entitled to exemption pursuant to duties, there would necessarily result a corresponding
agreements or special laws; and those that may be refund or credit of internal revenue taxes on the same
granted by the President upon prior recommendation of importation, the Collector of Customs shall likewise certify
the National Economic and Development Authority in the the same to the Commissioner of Customs who shall
interest of national economic development. cause the said refund or tax credit of internal revenue
taxes to be paid, refunded or credited in favor of the
SECTION 106. Drawbacks. — importer, with advice to the Commissioner of Internal
(a) On Fuel Used for Propulsion of Vessels. — On all fuel Revenue.
imported into the Philippines used for propulsion of
vessels engaged in trade with foreign countries, or in the
coastwise trade, a refund or tax credit shall be allowed not TITLE II Administrative Provisions
exceeding ninety-nine (99) per cent of the duty imposed
by law upon such fuel, which shall be paid or credited PART 1 Bases of Assessment of Duty
under such rules and regulations as may be prescribed by
SECTION 201. Basis of Dutiable Value. — The dutiable
value of an imported article subject to an ad valorem rate



of duty shall be based on the home consumption value or SECTION 203. General Rules of Classification. — The

price (excluding internal excise taxes) of same, like or interpretation and application of the provisions of this
similar articles, as bought and sold or offered for sale Code relating to the classification of articles imported
freely in the usual wholesale quantities in the ordinary into the Philippines shall be governed by the following
course of trade, in the principal markets of the country principles:
from where exported on the date of exportation to the RULE 1. The titles of schedules, chapters, and subchapters
Philippines, or where there is none on such date, then on are provided for ease of reference only; for legal purposes,
the home consumption value or price nearest to the date classification shall be determined according to the terms
of exportation including the value of all containers, of the headings or subheadings and any relative schedule
coverings and/or packings of any kind and all other costs, or chapter notes and, provided, such headings, or
charges and expenses incident to placing the article in a sub-headings or notes do not otherwise require,
condition ready for shipment to the Philippines, plus ten according to the succeeding rules.
(10) per cent of such home consumption value or price.
RULE 2. a. Any reference in a heading to an article shall be
The home consumption value or price under this section taken to include a reference to that article incomplete or
shall be the value or price declared in the consular, unfinished, provided that, as imported, the incomplete or
commercial, trade or sales invoice. Where there exists a unfinished, articles has the essential character of the
reasonable doubt as to the value or price of the imported complete or finished article. It shall also be taken to
article declared in the entry, the correct dutiable value of include a reference to that article complete or finished (or
the article shall be ascertained from the reports of the falling to be classified as complete or finished by virtue of
Revenue Attachè or Commercial Attachè (Foreign Trade this rule), imported unassembled or disassembled.
Promotion Attachè), pursuant to Republic Act Numbered
Fifty-four hundred and sixty-six or other Philippine b Any reference in a heading or subheading to a material
diplomatic officers and from such other information that or substance shall include a reference to mixtures or
may be available to the Bureau of Customs. combinations of that material or substance with other
materials or substances. Any reference to articles of a
From the data thus gathered, the Commissioner of given material or substance shall include a reference to
Customs shall ascertain and establish the home articles consisting wholly or partly of such material or
consumption values of articles exported to the substance. The classification of articles consisting of more
Philippines and shall publish such lists of values from than one material or substance shall be according to the
time to time. principles of Rule 3.
When the dutiable value provided for in the preceding RULE 3. When articles are prima facie, classifiable under
paragraphs cannot be ascertained for failure of the two or more headings or subheadings, or imported in
importer to produce the documents mentioned in the sets consisting of several articles, classification shall be
second paragraph, or where there exists a reasonable effected as follows:
doubt as to dutiable value of the imported article
declared in the entry, it shall be the domestic wholesale a. The heading or subheading which provides the most
selling price of such or similar article in Manila or other specific description shall be preferred to any other
principal markets in the Philippines on the date the duty heading or subheading providing a more general
becomes payable on the article under appraisement, on description.
the usual wholesale quantities and in the ordinary course b. Mixtures and composite articles which consist of
of trade, minus — different materials or are made up of different
(a) Twenty (20) per cent thereof for expenses and profits; components and which cannot be classified by reference
and to "3a" shall be classified as if they consisted of the
material or component which gives the articles their
(b) Duties and taxes paid thereon. essential character, insofar as this criterion is applicable.
SECTION 202. Bases of Dutiable Weight. — On articles c. When articles cannot be classified by reference to "3a"
that are subject to specific rate of duty, based on weight, or "3b" they shall be classified under the heading or
the duty shall be ascertained as follows: subheading which provides the highest rate of duty.
a. When articles are dutiable by the gross weight, the RULE 4. Articles not falling within any heading or
dutiable weight thereof shall be the weight of same, subheading of this Code shall be classified under the
together with the weight of all containers, packages, heading or subheading appropriate to articles to which
holders and packing, of any kind, in which said articles are they are most akin.
contained, held or packed at the time of importation.
SECTION 204. Rate of Exchange. — For the assessment
b. When articles are dutiable by the legal weight, the and collection of import duty upon imported articles and
dutiable weight thereof shall be the weight of same, for other purposes, the value and prices thereof quoted in
together with the weight of the immediate containers, foreign currency shall be converted into the currency of
holders and/or packing in which such articles are usually the Philippines at the current rate of exchange or value
contained, held or packed at the time of importation specified or published, from time to time, by the Central
and/or, when imported in retail packages, at the time of Bank of the Philippines.
their sale to the public in usual retail quantities: Provided,
That when articles are packed in single container, the SECTION 205. Effective Date of Rates Import Duty. —
weight of the latter shall be included in the legal weight. Imported articles shall be subject to the rate or rates of
import duty existing at the time of entry, or withdrawal
c. When articles are dutiable by the net weight, the from warehouse, in the Philippines, for consumption.
dutiable weight thereof shall be only the actual weight of
the articles at the time of importation, excluding the On and after the day when this Code shall go into effect,
weight of the immediate and all other containers, holders all articles previously imported, for which no entry has
or packing in which such articles are contained, held or been made, and all articles previously entered without
packed. payment of duty and under bond for warehousing,
transportation, or any other purpose, for which no permit
d. Articles affixed to cardboard, cards, paper, wood or of delivery to the importer or his agent has been issued,
similar common material shall be dutiable together with shall be subject to the rates of duty imposed by this Code
the weight of such holders. and to no other duty, upon the entry, or withdrawal
e. When a single package contains imported articles thereof from warehouse, for consumption.
dutiable according to different weights, or to weight and On articles abandoned or forefeited to, or seized by, the
value, the common exterior receptacles shall be prorated government, and then sold at public auction, the rates of
and the different proportions thereof treated in duty and the tariff in force on the date of the auction shall
accordance with the provisions of this Code as to the apply: Provided, That duty based on the weight, volume
dutiability or non-dutiability of such packing. and quantity of articles shall be levied and collected on



the weight, volume and quantity at the time of their entry Commissioner of Customs to cause the dumping duty, to

into the warehouse or the date of abandonment, be levied, collected and paid, as prescribed in this section,
forfeiture and/or seizure. in addition to any other duties, taxes and charges
SECTION 206. Entry, or Withdrawal from Warehouse, for imposed by law on such article, and on the articles of the
Consumption. — Imported articles shall be deemed same specific kind or class subsequently imported under
"entered" in the Philippines for consumption when the similar circumstances coming from the specific country.
specified entry form is properly filed and accepted, d. The "Dumping duty" as provided for in subsection "c"
together with any related documents required by the hereof shall be equal to the difference between the actual
provisions of this Code and/or regulations to be filed with purchase price and the fair value of the article as
such form at the time of entry, at the port or station by determined in the dumping decision. However, in cases
the customs official designated to receive such entry of subsequent importations of same kind or class of
papers and any duties, taxes, fees and/or other lawful article from the specific country named in the protest,
charges required to be paid at the time of making such the dumping duty shall be equal to the difference
entry have been paid or secured to be paid with the between the actual purchase price and the fair value
customs official designated to receive such monies, actually existing at the time of importation as determined
provided that the article has previously arrived within the by the Tariff Commission from the supporting
limits of the port of entry. documents submitted or from other reliable sources.
Imported articles shall be deemed "withdrawn" from e. Pending investigation and final decision of the case,
warehouse in the Philippines for consumption when the the article in question, and articles of the same specific
specified form is properly filed and accepted, together kind or class subsequently imported under similar
with any related documents required by any provisions of circumstances, shall be released to the owner, importer,
this Code and/or regulations to be filed with such form at consignee or agent upon the giving of a bond in an
the time of withdrawal, by the customs official amount equal to twice the estimated dutiable value
designated to receive the withdrawal entry and any thereof.
duties, taxes, fees and/or other lawful charges required to f. Any aggrieved party may appeal only the amount of the
be paid at the time of withdrawal have been deposited dumping duty to the Court of Tax Appeals in the same
with the customs official designated to receive such manner and within the same period provided for by law
payment. in the case of appeal from decision of the Commissioner
of Customs.
PART 2 Special Duties g. (1) The article, if it has not been previously released
SECTION 301. Dumping Duty. — under bond as provided for in subsection "e" hereof, shall
be released after payment by the party concerned of the
a. Whenever the Minister of Finance (hereinafter called corresponding dumping duty in addition to any ordinary
the "Minister") has reason to believe, from invoices or duties, taxes, and charges, if any, or re-exported by the
other documents or newspapers, magazines or owner, importer, consignee or agent, at his option and
information made available by any government agency expense, upon the filing of a bond in an amount equal to
or interested party, that a specific kind or class of foreign twice the estimated dutiable value of the article,
article, is being imported into, or sold or is likely to be sold conditioned upon presentation of landing certificate
in the Philippines, at a price less than its fair value, the issued by a consular officer of the Philippines at the
importation or sale of which might injure, or retard the country of destination; or
establishment of, or is likely to injure, an industry
producing like goods in the Philippines, he shall so advise (2) If the article has been previously released under bond,
the Tariff Commission (hereinafter called the as provided in subsection "e" hereof, the party concerned
"Commission"), and shall instruct the Collector of shall be required to pay the corresponding dumping duty
Customs to require an anti-dumping bond of twice the in addition to any ordinary duties, taxes and charges, if
dutiable value of the imported article coming from the any.
specific country. h. Any investigation to be conducted by the Commission
b. The Commission, upon receipt of such advice from the under this section shall include a public hearing or
Minister shall conduct an investigation to: hearings where the owner, importer, consignee or agent
of the imported article, the local producers of a like article,
1. Verify if the kind or class of article in question is being other parties directly affected, and such other parties as
imported into, or sold or is likely to be sold in, the in the judgment of the Commission are entitled to
Philippines at a price less than its fair value; appear, shall be given an opportunity to be heard and to
2. Determine if, as a result thereof, an industry producing present evidence bearing on the subject matter.
like goods in the Philippines is being injured or is likely to i. The established dumping duty shall be subject to
be injured or is retarded from being established by adjustment based on the prevailing home consumption
reason of the importation or sale of that kind or class of price or in the absence thereof, the cost of production.
article into the Philippines. Provided, That a finding that The Commission shall conduct quarterly examination
an article is being imported into the Philippines at a price and/or verification of the fair value to determine the
less than its fair value shall be deemed prima facie proof necessity of adjustment. Should the Minister, upon
of injury, or retarding the establishment of an industry receipt of the report of the Commission, find that there is
producing like goods in the Philippines: And provided, a need for an adjustment he shall direct the
further, That in determining whether the domestic Commissioner of Customs to effect the necessary
industry has suffered or is being threatened with injury, adjustment in dumping duty.
the Commission shall determine whether the wholesale
prices at which the domestic products are sold are The Philippine Finance Attachè or, in the absence thereof,
reasonable, taking into account the cost of raw materials, the Commercial Attachè or, in the absence thereof, the
labor, overhead, a fair return on investment and the diplomatic officer and/or consular officer abroad shall be
overall efficiency of the industry; and advised by the Minister of any article covered by dumping
decision. The concerned Attachè or the Officer shall
3. Ascertain the difference, if any, between the purchase submit quarterly report on home consumption prices, or
price and the fair value of the article. The Commission in the absence thereof, the cost of production, of said
shall submit its findings to the Minister within one month articles to the Minister and the Commission, thru the
after the termination of the public hearing. department head.
c. The Minister shall, after receipt of the report of j. Whenever the Commission, on its own motion or upon
Commission, decide whether the article in question is application of any interested party, finds that any of the
being imported in violation of this section and shall give conditions which necessitated the imposition of the
due notice of such decision and shall direct the dumping duty has ceased to exist, it shall submit the



necessary recommendation to the Minister for the taxes and charges, if any, or re-exported upon the filing of
discontinuance or modification of such dumping duty. a bond in an amount twice the estimated dutiable value
Any decision or order made under this section by the of the article, conditioned upon the presentation of a
Minister shall be published in the Official Gazette and/or landing certificate issued by a consular officer of the
in a newspaper of general circulation. Philippines at the country of destination. If the article has
k. Any dumping decision promulgated by the Minister been previously released under bond, the party
shall be effective for a period of five years from the time concerned shall be required to pay the corresponding
of its promulgation except upon the representation of the countervailing duty in addition to ordinary duties, taxes
interested party of the necessity to continue the and other charges, if any;
implementation of said decision, in which case the e. Whenever the Commission, on its own motion or upon
Minister shall advise the Commission to conduct an application of any interested party finds that the
investigation to determine whether the conditions in condition which necessitated the imposition of the
paragraph b-1 and b-2 still exist. The action for extension countervailing duty has ceased to exist, it shall submit the
shall be brought before the Minister at least six (6) necessary recommendations to the Minister for the
months before the expiration of the period. discontinuance of the imposition of that duty. Any order
The findings of the Commission shall be submitted to the made under this section by the Minister shall be
Minister at least three (3) months before the expiration of published in the Official Gazette and/or in a newspaper of
the period. general circulation;
All industries protected by any dumping decision for five f. Any countervailing decision rendered 5 years or more
years or more from the time of its promulgation may from the time of the promulgation of this decree shall be
apply for extension to the Minister within six (6) months deemed terminated unless it can be shown by the parties
from effectivity of this decree. The decision shall be concerned that there still exists a bounty, subsidy or
deemed terminated upon failure to file the application subvention upon the production, manufacture or
within the period so provided. exportation of like goods in the Philippines; and
l. The Minister and the Commission shall promulgate all g. The Minister and the Commission shall promulgate all
rules and regulations necessary to carry out their rules and regulations necessary to carry out their
respective functions under this section. respective functions under this section.
SECTION 302. Countervailing Duty. — SECTION 303. Marking of Imported Articles and
Containers. —
a. Whenever any article is directly or indirectly granted
any bounty, subsidy or subvention upon its production, a. Marking of Articles. — Except as hereinafter provided,
manufacture or exportation in the country of origin every article of foreign origin (or its container, as provided
and/or exportation, and, the importation of which has in subsection "b" hereof) imported into the Philippines
been determined by the Minister, after investigation and shall be marked in any official language of the Philippines
report of the Commission, there shall be levied a and in a conspicuous place as legibly, indelibly and
countervailing duty equal to the ascertained or estimated permanently as the nature of the article (or container) will
amount of such bounty, subsidy or subvention: Provided, permit in such manner as to indicate to an ultimate
That the exemption of any exported article from duty or purchaser in the Philippines the name of the country of
tax imposed on like articles when destined for origin of the article. The Commissioner of Customs shall,
consumption in the country of origin and/or exportation, with the approval of the department head, issue rules
or the refunding of such duty or tax, shall not be deemed and regulations to —
to constitute a grant of a bounty, subsidy or subvention (1) Determine the character of words and phrases or
within the meaning of this section: Provided, further, That abbreviation thereof which shall be acceptable as
should an article be allowed drawback by the country of indicating the country of origin and prescribe any
origin and/or exportation, only the ascertained or reasonable method of marking, whether by printing,
estimated excess of the amount of the drawback over the stenciling, stamping, branding, labeling or by any other
total amount of the duties and/or internal taxes, if any, reasonable method, and a conspicuous place on the
shall constitute a bounty, subsidy or subvention: Provided, article or container where the marking shall appear.
finally, That petitions for imposition of countervailing (2) Require the addition of any other words or symbols
duty shall be filed with the Minister of Finance. Upon which may be appropriate to prevent deception or
finding of a prima facie case of bounty, subsidy or mistake as to the origin of the article or as to the origin of
subvention enjoyed by the imported article, the Minister any other article with which such imported article is
shall refer the case to the Tariff Commission for usually combined subsequent to importation but before
investigation and shall instruct the Commissioner of delivery to an ultimate purchaser; and
Customs to require the filing of countervailing bonds for
importations entered during the pendency of (3) Authorize the exception of any article from the
countervailing proceedings. requirements of marking if —
b. The Minister shall, after receipt of the reports of the (a) Such article is incapable of being marked;
Commission, decide whether the article in question is (b) Such article cannot be marked prior to shipment to
granted any bounty, subsidy or subvention and if so, fix the Philippines without injury;
the countervailing duty equal to the ascertained or
estimated bounty, subsidy or subvention. He shall give (c) Such article cannot be marked prior to shipment to
due notice of his decision and shall direct the the Philippines, except at an expense economically
Commissioner of Customs to cause the countervailing prohibitive of its importation;
duty to be levied, collected and paid in addition to any (d) The marking of a container of such article will
ordinary duties, taxes and charges imposed by law on reasonably indicate the origin of such article;
such article and on articles of the same specific kind or
class subsequently imported under similar (e) Such article is a crude substance;
circumstances; (f) Such article is imported for use by the importer and
c. Pending investigation and final decision of the case, not intended for sale in its imported or any other form;
the article in question shall not be released from customs (g) Such article is to be processed in the Philippines by
custody to the owner except upon the filing of a bond the importer or for his account otherwise than for the
twice the amount of the dutiable value thereof; purpose of concealing the origin of such article and in
d. The article, if not previously released under bond as such manner that any mark contemplated by this section
provided for in this section, shall be released after would necessarily be obliterated, destroyed or
payment by the party concerned of the corresponding permanently concealed;
countervailing duty in addition to any ordinary duties,



(h) An ultimate purchaser, by reason of the character of b. If at any time the President shall find it to be a fact that
such article or by reason of the circumstances of its any foreign country has not only discriminated against
importation must necessarily know the country of origin the commerce of the Philippines, as aforesaid, but has,
of such article even though it is not marked to indicate its after the issuance of a proclamation as authorized in
origin; subsection "a" of this section, maintained or increased its
(i) Such article was produced more than twenty years said discrimination against the commerce of the
prior to its importation into the Philippines; or Philippines, the President is hereby authorized, if he
deems it consistent with the interests of the Philippines,
(j) Such article cannot be marked after importation to issue a further proclamation directing that such
except at an expense which is economically prohibitive, product of said country or such articles imported in its
and the failure to mark the article before importation was vessels as he shall deem consistent with the public
not due to any purpose of the importer, producer, seller interests, shall be excluded from importation into the
or shipper to avoid compliance with this section. Philippines.
b. Marking of Containers. — Whenever an article is c. Any proclamation issued by the President under this
excepted under subdivision (3) of subsection "a" of this section shall, if he deems it consistent with the interests
section from the requirements of marking, the of the Philippines, extend to the whole of any foreign
immediate container, if any, of such article, or such other country or may be confined to any subdivision or
container or containers of such article as may be subdivisions thereof; and the President shall, whenever
prescribed by the Commissioner of Customs with the he deems the public interests require, suspend, revoke,
approval of the department head, shall be marked in supplement or amend any such proclamation.
such manner as to indicate to an ultimate purchaser in
the Philippines the name of the country of origin of such d. All articles imported contrary to the provisions of this
article in any official language of the Philippines, subject section shall be forfeited to the Government of the
to all provisions of this section, including the same Philippines and shall be liable to be seized, prosecuted
exceptions as are applicable to articles under subdivision and condemned in like manner and under the same
(3) of subsection "a". regulations, restrictions and provisions as may from time
to time be established for the recovery, collection,
c. Marking Duty for Failure to Mark. — If at the time of distribution and remission of forfeiture to the
importation any article (or its container, as provided in government by the tariff and customs laws. Whenever
subsection "b" hereof), is not marked in accordance with the provision of this section shall be applicable to
the requirements of this section, there shall be levied, importation into the Philippines of articles wholly or in
collected and paid upon such article a marking duty of 5 part the growth or product of any foreign country, they
per cent ad valorem, which shall be deemed to have shall be applicable thereto, whether such articles are
accrued at the time of importation, except when such imported directly or indirectly.
article is exported or destroyed under customs
supervision and prior to the final liquidation of the e. It shall be the duty of the Commission to ascertain and
corresponding entry. at all times to be informed whether any of the
discriminations against the commerce of the Philippines
d. Delivery Withheld until Marked. — No imported article enumerated in subsections "a" and "b" of this section are
held in customs custody for inspection, examination or practiced by any country; and if and when such
appraisement shall be delivered until such article and/or discriminatory acts are disclosed, it shall be the duty of
its containers, whether released or not from customs the Commission to bring the matter to the attention of
custody, shall have been marked in accordance with the the President, together with recommendations.
requirements of this section and until the amount of duty
estimated to be payable under subsection "c" of this f. The Minister of Finance shall make such rules and
section shall have been deposited. Nothing in this section regulations as are necessary for the execution of such
shall be construed as excepting any article or its container proclamation as the President may issue in accordance
from the particular requirements of marking provided for with the provisions of this section.
in any provision of law.
e. The failure or refusal of the owner or importer to mark PART 3 Flexible Tariff
the articles as herein required within a period of thirty SECTION 401. Flexible Clause. —
days after due notice shall constitute as an act of
abandonment of said articles and their disposition shall a. In the interest of national economy, general welfare
be governed by the provisions of this Code relative to and/or national security, and subject to the limitations
abandonment of imported articles. herein prescribed, the President, upon recommendation
of the National Economic and Development Authority
SECTION 304. Discrimination by Foreign Countries. — (hereinafter referred to as NEDA), is hereby empowered:
a. The President, when he finds that the public interest (1) to increase, reduce or remove existing protective rates
will be served thereby, shall by proclamation specify and of import duty (including any necessary change in
declare new or additional duties in an amount not classification). The existing rates may be increased or
exceeding one hundred (100%) per cent ad valorem upon decreased but in no case shall the reduced rate of import
articles wholly or in part the growth or product of, or duty be lower than the basic rate of ten (10) per cent ad
imported in a vessel of, any foreign country whenever he valorem, nor shall the increased rate of import duty be
shall find as a fact that such country — higher than a maximum of one hundred (100) per cent
ad valorem; (2) to establish import quota or to ban
(1) Imposes, directly or indirectly, upon the disposition or imports of any commodity, as may be necessary; and (3)
transportation in transit through or re-exportation from to impose an additional duty on all imports not exceeding
such country of any article wholly or in part the growth or ten (10) per cent ad valorem whenever necessary:
product of the Philippines, any unreasonable charge, Provided, That upon periodic investigations by the Tariff
exaction regulation or limitation which is not equally Commission and recommendation of the NEDA, the
enforced upon the like articles of every foreign country; or President may cause a gradual reduction of protection
(2) Discriminates in fact against the commerce of the levels granted in Section One hundred and four of this
Philippines, directly or indirectly, by law or administrative Code, including those subsequently granted pursuant to
regulation or practice, by or in respect to any customs, this section.
tonnage, or port duty, fee, charge, exaction, classification, b. Before any recommendation is submitted to the
regulation, condition, restriction or prohibition, in such President by the NEDA pursuant to the provisions of this
manner as to place the commerce of the Philippines at a section, except in the imposition of an additional duty not
disadvantage compared with the commerce of any exceeding ten (10) per cent ad valorem, the Commission
foreign country. shall conduct an investigation in the course of which they
shall hold public hearings wherein interested parties shall



be afforded reasonable opportunity to be present, Commission which shall seek information and advice
produce evidence and to be heard. The Commission shall from the Ministry of Agriculture, Ministry of Natural
also hear the views and recommendations of any Resources, the Ministry of Trade, Ministry of Tourism, the
government office, agency or instrumentality concerned. Central Bank of the Philippines, the Ministry of Foreign
The Commission shall submit their findings and Affairs, the Board of Investments and from such other
recommendations to the NEDA within thirty (30) days sources as it may deem appropriate.
after the termination of the public hearings. e. (1) In advising the President, as a result of the trade
c. The power of the President to increase or decrease agreement entered into, the Commission shall determine
rates of import duty within the limits fixed in subsection whether the domestic industry has suffered or is being
"a" shall include the authority to modify the form of duty. threatened with injury and whether the wholesale prices
In modifying the form of duty, the corresponding ad at which the domestic products are sold are reasonable,
valorem or specific equivalents of the duty with respect taking into account the cost of raw materials, labor,
to imports from the principal competing foreign country overhead, a fair return on investment, and the overall
for the most recent representative period shall be used as efficiency of the industry.
bases. (2) The NEDA shall evaluate the report of the Commission
d. The Commissioner of Customs shall regularly furnish and submit recommendations to the President.
the Commission a copy of all customs import entries as (3) Upon receipt of the report of the findings and
filed in the Bureau of Customs. The Commission or its recommendations of the NEDA, the President may
duly authorized representatives shall have access to, and prescribe such adjustments in the rates of import duties,
the right to copy all liquidated customs import entries withdraw, modify or suspend, in whole or in part, any
and other documents appended thereto as finally filed in concession under any trade agreement, establish import
the Commission on Audit. quota, or institute such other import restrictions as the
e. The NEDA shall promulgate rules and regulations NEDA recommends to be necessary in order to fully
necessary to carry out the provisions of this section. protect domestic industry and the consumers, subject to
f. Any Order issued by the President pursuant to the the condition that the wholesale prices of the domestic
provisions of this section shall take effect thirty (30) days products concerned shall be reduced to, or maintained
after promulgation, except in the imposition of additional at, the level recommended by the NEDA unless for good
duty not exceeding ten (10) per cent ad valorem which cause shown, an increase thereof, as recommended by
shall take effect at the discretion of the President. the NEDA, is authorized by the President. Should
increases be made without such authority, the NEDA
SECTION 402. Promotion of Foreign Trade. — shall immediately notify the President, who shall allow
a. For the purpose of expanding foreign markets for the importation of competing products in such quantities
Philippine products as a means of assistance in the as to protect the public from the unauthorized increase in
economic development of the country, in overcoming wholesale prices.
domestic unemployment, in increasing the purchasing f. This section shall not prevent the effectivity of any
power of the Philippine peso, and in establishing and executive agreement or any future preferential trade
maintaining better relations between the Philippines and agreement with any foreign country.
other countries, the President, is authorized from time to
time: g. The NEDA and the Commission are authorized to
promulgate such reasonable procedure, rules and
(1) To enter into trade agreements with foreign regulations as they may deem necessary to execute their
governments or instrumentalities thereof; and respective functions under this section.
(2) To modify import duties (including any necessary
change in classification) and other import restrictions, as PART 4 Tariff Commission
are required or appropriate to carry out and promote
foreign trade with other countries: Provided, however, SECTION 501. Chief Officials of the Tariff Commission. —
That in modifying import duties or fixing import quota The Officials of the Tariff Commission shall be the
the requirements prescribed in subsection "a" of Section Chairman and two (2) Member Commissioners to be
401 shall be observed: Provided, further, That any appointed by the President of the Philippines.
modification of import duties and any fixing of import SECTION 502. Qualifications. — No person shall be
quotas made pursuant to the agreement on ASEAN eligible for appointment as Chairman and Tariff
Preferential Trading Arrangements ratified on August 1, Commissioners unless they are natural-born citizens of
1977 shall not be subject to the limitations of the aforesaid the Philippines, of good moral character and proven
subsection "a" of Section 401. integrity, and who by experience and academic training
b. The duties and other import restrictions as modified in are possessed of qualifications requisite for developing
subsection "a" above, shall apply to articles which are the expert knowledge of tariff problems. They shall not,
growth, produce or manufacture of the specific country, during their tenure in office, engage in the practice of any
whether imported directly or indirectly, with which the profession, or intervene directly or indirectly in the
Philippines has entered into a trade agreement: Provided, management or control of any private enterprise which
That the President may suspend the application of any may, in any way, be affected by the functions of their
concession to articles which are the growth, produce or office nor shall be, directly or indirectly, financially
manufacture of such country because of acts (including interested in any contract with Government, or any
the operations of international cartels) or policies which in subdivision or instrumentality thereof.
his opinion tend to defeat the purposes set in this section; SECTION 503. Appointment and Compensation of
and the duties and other import restrictions as Officials and Employees. — All employees of the
negotiated shall be in force and effect from and after Commission shall be appointed by the Chairman in
such time as specified in the Order. accordance with the Civil Service Law except the Private
c. Nothing in this section shall be construed to give any Secretaries to the Chairman, Commissioners and
authority to cancel or reduce in any manner any of the Executive Director.
indebtedness of any foreign country to the Philippines or The Tariff Commission shall be reorganized in accordance
any claim of the Philippines against any foreign country. with the requirements of its reorganized functions and
d. Before any trade agreement is concluded with any responsibilites. The Chairman of the Commission, subject
foreign government or instrumentality thereof, to the approval of the Director General of the National
reasonable public notice of the intention to negotiate an Economic and Development Authority, shall determine
agreement with such government or instrumentality the new positions-designations and salary scales of the
shall be given in order that any interested person may officials and employees of the Commission by taking into
have an opportunity to present his views to the account the degree of responsibility of each position:


Provided, That the Office of Compensation and Position (g) Ascertain conversion costs and costs of production
Classification shall be furnished a copy of the new including effects of tariff modifications or import
plantilla of positions incorporating the new designations restrictions on prices in the principal growing, producing
to be automatically included in its manual of positions: or manufacturing centers of the Philippines, whenever
Provided, further, That the reorganization shall not in any practicable; and
way affect whatever benefits the officials and employees (h) Submit annual reports of these to the President of the
of the Commission are allowed under existing law and/or Philippines, copy of which shall be furnished to the NEDA,
authority. Central Bank of the Philippines, Ministry of Finance and
SECTION 504. Official Seal. — The Commission is the Board of Investments.
authorized to adopt an official seal. SECTION 507. Reports of the Commission. — The
SECTION 505. Functions of the Commission. — The Commission shall place at the disposal of the President
Commission shall investigate — and any member of the Batasang Pambansa or each
(a) the administration of, and the fiscal and industrial member thereof all information at its command; shall
effects of, the tariff and customs laws of this country now make such investigation and report as may be required
in force or which may hereafter be enacted; by the President and the Batasang Pambansa and shall
report to the President and Batasan on the first Monday
(b) the relations between the rates of duty on raw of December of each year hereafter a statement of
materials and the finished or partly finished products; methods adopted and a summary of all reports made
(c) the effects of ad valorem and specific duties and of during the year.
compound specific and ad valorem duties; SECTION 508. Access to Documents and Assistance to
(d) all questions relative to the arrangement of schedules the Commission. — The Commission or its duly
and classification of articles in the several schedules of authorized representative shall have access to any
the tariff law; document, paper or record, pertinent to the subject
matter under investigation, in the possession of any
(e) the tariff relations between the Philippines and foreign person, firm, co-partnership, corporation or association
countries, commercial treaties, preferential provisions, engaged in the production, importation or distribution of
economic alliances, the effect of export bounties and any article under investigation, and shall have power to
preferential transportation rates; summon witnesses, take testimony, administer oaths,
(f) the volume of importation compared with domestic and to issue subpoena duces tecum requiring the
production and consumption; production of books, papers or documents relating to the
matter under investigation. The Commission may also
(g) conditions, causes, and effects relating to competition request the views, recommendations and/or assistance of
of foreign industries with those of the Philippines, any government office, agency or instrumentality, and
including dumping and cost of production; such office, agency or instrumentality shall cooperate
(h) in general, to investigate the operation of customs and fully with the Commission.
tariff laws, including their relation to the national SECTION 509. Sworn Statements. — The Commission may
revenues, their effect upon the industries and labor of the order the taking of sworn statements at any stage of any
country, and to submit reports of its investigations as proceeding or investigation before it. Such sworn
hereinafter provided; and statements may be taken before any person having
(i) the nature and composition of, and the classification of, power to administer oaths.
articles according to tariff commodity classification and SECTION 510. Verified Statements. — The Commission is
heading number for customs revenue and other related authorized to require any importer, grower, producer,
purposes which shall be furnished to NEDA, Board of manufacturer or seller to file with the Commission a
Investments, Central Bank of the Philippines, and Minister statement, under oath, giving his selling prices in the
of Finance. Philippines of any article imported, grown, produced,
SECTION 506. Assistance to the President and Batasang fabricated or manufactured by him.
Pambansa. — In order that the President and the SECTION 511. Rules and Regulations of the Commission.
Batasan may secure information and assistance, it shall — The Commission shall adopt and promulgate such
be the duty of the Commission to — rules and regulations as may be necessary to carry out
(a) Ascertain conversion costs and costs of production in the provisions of this Code.
the principal growing, producing or manufacturing SECTION 512. Appropriation. — In addition to its current
centers of the Philippines, whenever practicable; appropriation the amount of Six Hundred Thousand
(b) Ascertain conversion costs and costs of production in Pesos is hereby appropriated to carry out the purpose of
the principal growing, producing or manufacturing sections five hundred one and five hundred three of this
centers of foreign countries of articles imported into the Code.
Philippines whenever such conversion costs or costs of
production are necessary for comparison with those in
the Philippines; TITLE III Export Tariff and Premium Duty
(c) Select and describe representative articles imported SECTION 514. Export Products Subject to Duty and Rates.
into the Philippines similar to, or comparable with, those — There shall be levied, assessed and collected an export
locally produced; select and describe articles of the duty on the gross F.O.B. value at the time of shipment
Philippines similar to, or comparable with, such imported based on the prevailing rate of exchange, of the following
article; and obtain and file samples of articles so selected products in accordance with the schedule specified in
whenever advisable; the column Export Duty.
(d) Ascertain import costs of such representative articles In addition to the export duties, herein referred to as basic
so selected; rate, there shall be levied, assessed and collected a
premium duty on the difference between the current
(e) Ascertain the grower's, producer's or manufacturer's price as established by the Bureau of Customs and the
selling prices in the principal growing, producing or base price of the products in accordance with schedule
manufacturing centers of the Philippines of the articles of specified under the column Premium Duty:Provided
the Philippines so selected; That, should the current price of any export product be
(f) Ascertain all other facts which will show the differences below the established base price, then only the basic rate
in, or which affect competition between, articles of the shall be applied: Provided, further, That, initially, the base
Philippines and those imported in the principal markets price upon which the premium duty shall be levied shall
of the Philippines. be eighty per centum (80%) of the F.O.B. value of the
exports established by the Bureau of Customs for


February 1974. The National Economic and Development local raw materials, as determined by the Board of
Authority shall, from time to time, review and establish Investments.
such base prices taking into account, among others, the SECTION 515. Flexible Clause. — The President, upon
cost conditions in various industries. recommendation of the National Economic and
Export Premium Development Authority, may subject any of the above
Export Products products to higher or lower rates of duty provided in this
Duty Duty Title, include additional products, exclude or exempt any
product from this Title, or additionally subject any
Mineral Products product to an export quota. In the exercise of this
authority the President shall take into account: (1) the
(1) Metallic ores and policy of encouraging domestic processing; (2) the
concentrates prevailing prices of export products in the world market;
(3) the advantages obtained by export products from
Iron 4% 20% international agreements to which the Philippines is a
signatory; (4) the preferential treatment granted to our
Chromite 4% 20% export products by foreign governments; and (5) the
need to meet domestic consumption requirements.
(2) Mineral Fuel SECTION 516. Assessment and Collection of the Duty. —
The duty shall be assessed by the Bureau of Customs and
(a) Bunker Fuel Oil 4% collected by the Bureau thru authorized agent banks of
the Central Bank not later than 30 days from date of
(b Petroleum Pitch 4% shipment.
)
SECTION 517. Deficiency and Surcharges. — In case the
duty is not fully paid at the time specified hereof, the
Plant and Vegetable Products:
deficiency shall be increased by an amount equivalent to
twenty-five per centum thereof, the total to be collected
(1) Abaca in the same manner as the duty. Where the deficiency is
the result of false or fraudulent statements or
Stripped hemp, 4% representations attributable to the exporter, the
unmanufactured surcharge shall be fifty per centum.
(2) Bananas 4% SECTION 518. Allotment and Disposition of the Proceeds.
— The proceeds of this duty shall accrue to the General
(3) Coconut Fund and shall be allotted for development projects;
except that one per centum (1%) annually shall be set
(a) Copra 6% 30% aside for the Export Assistance Fund to be administered
by the Board of Investments and expended in accordance
with the General Appropriation Act to finance export
(b Coconut Oil 4% 20%
promotion projects; however, thirty per cent of this 1%
)
shall accrue to the Bureau of Customs which shall
constitute as its intelligence fund to be disbursed by the
(c) Copra meal or cake 4% 20% Commissioner of Customs in the implementation of this
Title, such as but not limited to the purchase of
(d Dessicated coconut 4% 20% equipment, hiring of personnel if necessary and for such
) other operational expenses in the promotion of the
export industry.
(4) Pineapple
SECTION 519. Rules and Regulations. — The
(a) Pineapple sliced or 4% Commissioner of Customs shall promulgate the rules and
crushed regulations necessary for the implementation of this Title,
subject to the approval of the Minister of Finance.
(b Pineapple juice or juice 4%
) concentrate
BOOK II Customs Law
(5) Sugar and Sugar Products
TITLE I The Bureau of Customs
(a) Centrifugal Sugar 6% 20%
(b Molasses 4% 20% PART 1 Organization, Function and Jurisdiction

) of the Bureau
(6) Tobacco SECTION 601.Chief Officials of the Bureau of Customs. —
The Bureau of Customs shall have one chief and four
assistant chiefs, to be known respectively as the
(a) Tobacco leaf 4%
Commissioner of Customs (hereinafter known as the
Commissioner) and four (4) Deputy Commissioners of
(b Scrap tobacco 4% Customs, each one to head (a) Customs Revenue
) Collection Monitoring Group; (b) Customs Assessment
and Operations Coordinating Group; (c) Intelligence and
Animal Products: Enforcement Group; (d) Internal Administration Group,
who shall each receive an annual compensation in
(1) Shrimps and prawns 4% accordance with the rates prescribed by existing law. The
Commissioner and the Deputy Commissioners of

Customs shall be appointed by the President of the
For purposes of computing the duty, the cost of Philippines. (As amended by E.O. 127 effective 30 January
packaging and crating materials shall be deductible from 1987).
the export value, provided such materials are
In case of temporary and permanent vacancy, one of the
domestically manufactured using a substantial portion of
Deputy Commissioners shall be designated by the
Secretary of Finance to act as Commissioner of Customs,



until the incumbent Commissioner reassumes his duties among other things, contain a compilation of the (a)
or the position is filled by permanent appointment. quantity and value of the articles imported into the
SECTION 602.Functions of the Bureau. — The general Philippines and the corresponding amount of custom
duties, powers and jurisdiction of the bureau shall duties, taxes and other charges assessed and collected on
include: imported articles itemized in accordance with the tariff
headings and subheadings as appearing in the liquidated
a.The assessment and collection of the lawful revenues customs entries provided for in this Code, (b) percentage
from imported articles and all other dues, fees, charges, collection of the peso value of imports, (c) quantity and
fines and penalties accruing under the tariff and customs value of conditionally-free importations, (d) customs
laws; valuation over and above letters of credit opened, (e)
b.The prevention and suppression of smuggling and quantity and value of tax-free imports, and (f) the
other frauds upon the customs; quantity and value of articles exported from the
Philippines as well as the taxes and other charges
c.The supervision and control over the entrance and assessed and collected on them for the preceding year.
clearance of vessels and aircraft engaged in foreign Copies of such annual report shall be furnished regularly
commerce; to the Department of Finance, Tariff Commission, NEDA,
d.The enforcement of the tariff and custom laws and all Central Bank of the Philippines, Board of Investments,
other laws, rules and regulations relating to the tariff and Department of Budget, and other economic agencies of
customs administration; the government, on or before December 30, of each year.
e.The supervision and control over the handling of foreign For more scientific preparation of the annual report, the
mails arriving in the Philippines, for the purpose of the Commissioner shall cause the computerization of the
collection of the lawful duty on the dutiable articles thus data contained in the liquidated entries filed with the
imported and the prevention of smuggling through the Bureau of Customs.
medium of such mails; SECTION 608.Commissioner to Make Rules and
f.Supervise and control all import and export cargoes, Regulations. — The Commissioner shall, subject to the
landed or stored in piers, airports, terminal facilities, approval of the Secretary of Finance, promulgate all rules
including container yards and freight stations, for the and regulations necessary to enforce the provisions of
protection of government revenue; this Code. He shall also cause the preparation and
publication of a customs manual covering up-to-date
g.Exercise exclusive original jurisdiction over seizure and rules and regulations and decisions of the Bureau of
forfeiture cases under the tariff and customs laws. Customs. The manual shall be published and made
SECTION 603.Territorial Jurisdiction. — For the due and available to the public at least once every quarter within
effective exercise of the powers conferred by law and to the first month after the end of every quarter. The
the extent requisite therefore, said Bureau shall have the Secretary of Finance and/or the Commissioner of
right of supervision and police authority over all seas Customs shall furnish the Central Bank of the Philippines,
within the jurisdiction of the Philippines and over all Board of Investments, the NEDA and the Tariff
coasts, ports, airports, harbors, bays, rivers, and inland Commission with at least three copies each of every
waters whether navigable or not from the sea. department order, administrative order, memorandum
When a vessel becomes subject to seizure by reason of an circulars and such rules and regulations which are
act done in Philippine waters in violation of the tariff and promulgated from time to time for the purpose of
customs laws, a pursuit of such vessel began within the implementing the provisions of the Code.
jurisdictional waters may continue beyond the maritime SECTION 609.Commissioner to Furnish Copies of
zone, and the vessel may be seized on the high seas. Collectors' Liquidated Duplicates. — The Commissioner
Imported articles which may be subject to seizure for shall regularly furnish the NEDA, the Central Bank of the
violation of the tariff and customs laws may be pursued in Philippines, the Tariff Commission a copy of each of all
their transportation in the Philippines by land, water or air customs import/export entries as filed with the Bureau of
and such jurisdiction exerted over them at any place Customs. The Tariff Commission or its duly authorized
therein as may be necessary for the due enforcement of agents shall have access to and the right to copy all the
the law. customs liquidated import entries and other documents
SECTION 604.Jurisdiction Over Premises Used for appended thereto as finally filed in the Commission on
Customs Purposes. — The Bureau of Customs shall, for Audit.
customs purposes, have exclusive control, direction and
management of customhouses, warehouses, offices, PART 2 Collection Districts and Port of Entry
wharves, and other premises in the respective ports of
entry, in all cases without prejudice to the general police SECTION 701.Collection Districts and Ports of Entry
powers of the city or municipality and the Philippine Thereof. — For administrative purposes, the Philippines
Coast Guard in the exercise of its functions wherein such shall be divided into as many collection districts as
premises are situated. necessary, the respective limits of which may be changed
from time to time by the Commissioner of Customs upon
SECTION 605.Enforcement of Port Regulation of Bureau approval of the Secretary of Finance. The principal ports
of Quarantine.— Customs officials and employees shall of entry for the respective collection districts shall be
cooperate with the quarantine authorities in the Manila, Ninoy Aquino International Airport, Cebu, Iloilo,
enforcement of the port quarantine regulations Davao, Tacloban, Zamboanga, Cagayan de Oro, Surigao,
promulgated by the Bureau of Quarantine and shall give Legaspi, Batangas, San Fernando, Subic and Manila
effect to the same in so far as they are connected with International Container Port.
matters of shipping and navigation.
SECTION 702.Power of the President to Open and Close
SECTION 606.Power of the President to Subject Premises Any Port. — The president may open or close any port of
to Jurisdiction of Bureau of Customs. — When any public entry upon recommendation of the Commissioner and
wharf, landing place, street or land, not previously under the Secretary of Finance. While a port of entry is closed,
the jurisdiction of the Bureau of Customs, in any port of its existing personnel shall be reassigned to other duties
entry, is necessary or desirable for any proper customs by the Commissioner subject to the approval of the
purpose, the President of the Philippines may, by Secretary of Finance.
executive order, declare such premises to be under the
jurisdiction of the Bureau of Customs, and thereafter the SECTION 703.Assignment of Customs Officers and
authority of such Bureau in respect thereto shall be fully Employees to Other Duties. — The Commissioner of
effective. Customs may, with the approval of the Secretary of
Finance, assign any employee of the Bureau of Customs
SECTION 607.Annual Report of Commissioner. — The to any port, service, division or office within the Bureau or
annual report of the Commissioner to the President shall,



assign him duties as the best interest of the service may SECTION 712.Reports of Collector to Commissioner. — A
require, in accordance with the staffing pattern or Collector shall immediately make report to the
organizational set-up as may be prescribed by the Commissioner concerning prospective or newly begun
Commissioner of Customs with the approval of the litigation in his district touching matters relating to the
Secretary of Finance: Provided, That such assignment customs service; and he shall, in such form and detail as
shall not affect the tenure of office of the employees nor shall be required by the Commissioner make regular
result in the change of status, demotion in rank and/or monthly reports of all transactions in his port and district.
deduction in salary.
SECTION 704.Seal of Collector of Customs. — In the office TITLE II Coastwise Trade
of the Collector of a collection district there shall be kept a
seal of such design as the Commissioner shall prescribe, SECTION 906.Requirement of Manifest in Coastwise
with the approval of the Secretary of Finance with which Trade. — Manifests shall be required for cargo and
shall be sealed all documents and records requiring passengers transported from one place or port in the
authentication in such office. Philippines to another only when ore or both of such
places is a port of entry.
SECTION 705.Authority of Deputy Collectors of Customs.
— The deputy collector at a principal port of entry may, in SECTION 907.Manifest Required Upon Departure from
the name of the District Collector and subject to his Port of Entry. — Prior to departure from a port of entry,
supervision and control, perform any particular act which the master of a vessel licensed for the coastwise trade
might be done by the District Collector himself; at shall make out and subscribe duplicate manifests of the
subports, a deputy collector may, in his own name, whole cargo and all of the passengers taken on board on
exercise the general powers of a collector, subject to the such vessels, specifying in the cargo manifests the marks
supervision and control of the Collector of the subport. and numbers of packages, the port of destination and
names of the consignees, together with such further
SECTION 706.Appointment of Special Deputies with information as may be required and in the passengers
Limited Powers. — Collectors may, with the approval of manifest the name, sex, age, residence, port of
the Commissioner, appoint from their force such number embarkation, and destination of all passengers, together
of special deputies as may be necessary for the proper with such further information as may be required. He
conduct of the public business, with authority to sign shall deliver such manifests to the Collector of Customs or
documents and perform such service as may be specified other customs officials duly authorized, before whom he
in writing. shall swear to the best of his knowledge and belief, in
respect to the cargo manifests, that the goods therein
described, if foreign, were imported legally and that
SECTION 707.Succession of Deputy Collector to Position duties, taxes and other charges thereon have been paid
of Acting Collector. — In the absence or disability of a or secured to be paid, and with respect to the passenger
Collector at any port or in the case of a vacancy in his manifests, that the information therein contained is true
office, the temporary discharge of his duties shall devolve and correct as to all passengers taken on board.
upon the deputy collector of the port. Where no deputy Thereupon, then said Collector of Customs or customs
collector is available, an official to serve in such official, shall certify the same on the manifests, the
contingency may be designated in writing by the original of which he shall return to the master with a
Collector from his own force. The Collector making such permit specifying thereon, generally, the landing on
designation shall report the same without delay to the board such vessel and authorizing him to proceed to his
Commissioner and the Chairman, Commission on Audit, port of destination retaining the duplicates.
forwarding them the signature of the person so
designated. SECTION 908.Manifests Required Prior to Unloading at
Port of Entry.— Upon arrival at a port of entry of a vessel
SECTION 708.Designation of Official as Customs engaged in the coastwise trade and prior to the
Inspector. — At a coastwise port where no customs unloading of any port of the cargo, the master shall
official or employee is regularly stationed, the deliver to the Collector or other proper customs official
Commissioner may designate any national, provincial or complete manifests of all the cargo and passengers
municipal official of the port to act as an inspector of brought into said port, together with the clearance
customs for the purpose of enforcing laws and manifests of cargo and passengers for said port granted
regulations of the Bureau of Customs in the particular at any port or ports of entry from which said vessel may
port, but all such designations shall be made with the have cleared during the voyage.
consent of the proper Department head of the official so
designated. SECTION 909. Departure of Vessel Upon Detailed
Manifest. — The owner, agents or consignees of vessels
SECTION 709.Authority of Collector to Remit Duties. — A are required to present the proper detailed manifest
Collector shall have discretionary authority to remit the before departure of the vessel: Provided, however, that
assessment and collection of custom duties, taxes and the Commissioner of Customs may by regulation permit
other charges when the aggregate amount of such a vessel to depart coastwise from a port of entry upon the
duties, taxes and other charges is less than ten pesos, and filing of a general manifest by the master thereof.
he may dispense with the seizure of articles of less than
ten pesos in value except in cases of prohibited
importations or the habitual or the intentional violation of TITLE III Vessels and Aircraft in Foreign Trade
the tariff and customs laws. SECTION 1001.Ports Open to Vessels Engaged in Foreign
SECTION 710.Records to be Kept by Customs Officials. — Trade. — Duty of Vessel to Make Entry. — Vessels
District Collectors, deputy collectors and other customs engaged in the foreign trade shall touch at ports of entry
officials acting in such capacities are required to keep only, except as otherwise specially allowed; and every
true, correct and permanent records of their official such vessel arriving within a customs collection district of
transactions, to submit the same to the inspection of the Philippines from a foreign port shall make entry at
authorized officials at all times, and turn over all records the port of entry for such district and shall be subject to
and official papers to their successors or other authorized the authority of the Collector of the port while within his
officials. jurisdiction.
SECTION 711.Port Regulations. — A Collector may The master of any war vessel employed by any foreign
prescribe local administrative regulation, not inconsistent government shall not be required to report and enter on
with law or the general bureau regulations, for the arrival in the Philippines, unless engaged in the
government of his port or district, the same to be transportation of articles in the way of trade.
effective upon the approval by the Commissioner. SECTION 1002.Control of Customs Official Over Boarding
or Leaving of Incoming Vessel and Over Other Vessel


Approaching the Former. — Upon the arrival in port of until after examination of the importation has been
any vessel engaged in foreign trade, it shall be unlawful completed.
for any person (except the pilot, consul, quarantine SECTION 1006.Translation of Manifest. — The cargo
officials, custom officials or other duly authorized manifest and each copy thereof shall be accompanied by
persons) to board or leave the vessel without permission a translation into the official language of the Philippines,
of the customs official in charge; and it shall likewise be if originally written in another language.
unlawful for any tugboat, rowboat or other craft to go
along side and take any person aboard such vessel or
take any person therefrom, except as aforesaid, or loiter SECTION 1007.Manifests for Commission on Audit and
near or along side such vessel. Unauthorized tugboats, Collector. — Papers to be Deposited with Consul. —
and other vessels shall keep away from such vessel Immediately after the arrival of a vessel from a foreign
engaged in foreign trade at a distance of not less than port, the master shall deliver or mail to the Chairman,
fifty meters. Commission on Audit, Manila a copy of the cargo
SECTION 1003.Quarantine Certificate for Incoming Vessel. manifests properly endorsed by the boarding officer, and
— Entry of a vessel from a foreign port or place outside of the master shall immediately present to the Collector the
the Philippines shall not be permitted until it has original copy of the cargo manifests properly endorsed by
obtained a quarantine certificate issued by the Bureau of the boarding officer, and, for inspection, the ship's
Quarantine. register or other documents in lieu thereof, together with
the clearance and other papers granted to the vessel at
SECTION 1004.Documents to be Produced by the Master the port of departure for the Philippines.
Upon Entry of Vessel. — For the purpose of making entry
of a vessel engaged in foreign trade, the master thereof SECTION 1008.Transit Cargo. — When transit cargo from
shall present the following documents, duly certified by a foreign port or other local ports is forwarded from the
him, to the customs boarding officials: port of importation separate manifest, in triplicate, shall
be presented by each carrier.
a.The original manifest of all cargo destined for the port,
to be returned with the endorsement of the boarding SECTION 1009.Clearance of Foreign Vessels To and From
officials; Coastwise Ports. — Passengers or articles arriving from
abroad upon a foreign vessel may be carried by the same
b.Three copies of the same manifest, one of which, upon vessel through any port of entry to the port of destination
certification by the boarding official as to the correctness in the Philippines or articles intended for export may be
of the copy, shall be returned to the master; carried in a foreign vessel through a Philippine port.
c.A copy of the cargo storage plan; Upon such reasonable condition as he may impose, the
d.Two copies of store list; Commissioner may clear foreign vessels for any port and
e.One copy of passenger list; authorize the conveyance therein of either articles or
passengers brought from abroad upon such vessels; and
f.One copy of the crew list; he may likewise, upon such conditions as he may impose,
g.The original of all through cargo manifest, for deposit, allow a foreign vessel to take cargo and passengers at any
while in port, with customs official in charge of the vessel; port and convey the same, upon such vessel to a foreign
port.
h.A passenger manifest of all aliens, in conformity with
the requirements of the immigration laws in force in the SECTION 1010.Requirement as to Delivery of Mail. — A
Philippines; vessel arriving within a collection district in the
Philippines shall not be permitted to make entry or break
i.One copy of the original duplicate of bills of lading fully bulk until it is made to appear, to the satisfaction of the
accomplished; Collector, that the master, consignee or agent of the
j.The shipping articles and register of the vessel of vessel is ready to deliver to the postmaster of the nearest
Philippine registry. post office all mail matter on board such vessel and
destined for that port. Collectors are authorized to
SECTION 1005.Manifest Required of Vessel from Foreign examine and search vessels for mail carried contrary to
Port. — Every vessel from a foreign port must have on law.
board a complete manifest of all her cargo.
SECTION 1011.Production of Philippine Crew. — The
All of the cargo intended to be landed at a port in the master of a Philippine vessel returning from abroad shall
Philippines must be described in separate manifests for produce the entire crew listed in the vessel's shipping
each port of call therein. Each manifest shall include the articles; and if any member be missing, the master shall
port of departure and the port of delivery with the marks, produce proof satisfactory to the Collector that such
numbers, quantity and description of the packages and member has died, absconded, has been forcibly
the names of the consignees thereof. Every vessel from a impressed into other service, or has been discharged; and
foreign port must have on board complete manifests of in case of discharge in a foreign country, he shall produce
passengers and their baggage, in the prescribed form, a certificate from the consul, vice consul or consular
setting forth their destination and all particulars required agent of the Philippines there residing, showing that
by immigration laws, and every such vessel shall have such discharge was effected with the consent of the
prepared for presentation to the proper customs official representative of the Philippines aforesaid.
upon arrival in ports of the Philippines a complete list of
all sea stores then on board. If the vessel does not carry SECTION 1012.Record of Arrival and Entry of Vessels. — A
cargo or passengers, the manifest must show that no record shall be made and kept open to public inspection
cargo or passenger, as the case may be, is carried from in every customhouse of the date of arrival and entry of all
the port of departure to the port of destination in the vessels.
Philippines. SECTION 1013.Arrest of Vessel Departing Before Entry
A cargo manifest shall in no case be changed or altered Made. — When a vessel arriving within the limits of a
after entry of vessel, except by means of an amendment collection district from a foreign port departs or attempts
by the master, consignee or agent thereof, under oath, to depart before entry shall have been made, not being
and attached to the original manifest: Provided, however, thereunto compelled by stress of weather, duress of
That after the invoice and/or entry covering an enemies, or other necessity, the Collector of the port or
importation have been received and recorded in the the commander of any revenue cutter may arrest and
office of the appraiser, no amendment of the manifest bring back such vessel to the most convenient port.
shall be allowed, except when it is obvious that a clerical SECTION 1014.Discharge of Ballast. — When not brought
error or any other discrepancy has been committed in the to port as article, the ballast of no commercial value may
preparation of the manifest, without any fraudulent be discharged upon permit granted by the Collector for
intent, discovery of which would not have been made such purpose.



SECTION 1015.Time of Unlading Cargo. — Articles brought members appointed, respectively, by the Bureau of Posts,

in a vessel from a foreign port shall be unladen only the agency of the company to which the vessel
during regular working hours or regular work days. concerned belongs, and the Bureau of Customs, which
Unlading at any other time or day may only be done board shall fix a reasonable rate of compensation.
upon authority of the Collector conditioned on the SECTION 1020.Detention of Warlike Vessel Containing
payment of losses and overtime pay by the interested Arms and Munitions. — Collectors shall detain any vessel
parties. of commercial registry manifestly built for warlike
SECTION 1016.Entrance of Vessel Through Necessity. — purposes and about to depart from the Philippines with a
When a vessel from a foreign port is compelled by stress cargo consisting principally of arms and munitions of war,
of weather or other necessity to put into any other port when the number of men shipped on board or other
than that of her destination, the master within circumstances render it probable that such vessel is
twenty-four hours of arrival, shall make protest under intended to be employed by the owner or owners to
oath setting forth the causes or circumstances of such cruise or commit hostilities upon the subjects, citizens, or
necessity. This protest, if not made before the Collector, property of any foreign prince or state, or of any colony,
must be produced to him, and a copy thereof lodged with district, or people with whom the Philippines is at peace,
him. until the decision of the President of the Philippines be
With the same time, the master shall make a report to had thereon, or until the owner or owners shall give bond
the Collector if any part of the cargo was unladen from or security, in double the value of the vessel and cargo,
necessity or lost by casualty before arrival, and such fact that she will not be so employed, if in the discretion of the
should be made to appear by sufficient proof to the Collector such bond will prevent the violation of the
Collector who shall give his approval thereto and the provisions of this section.
unlading shall be deemed to have been lawfully effected. SECTION 1021.Manifest of Export Cargo to be Delivered to
SECTION 1017.Unlading of Vessel in Port from Necessity. Chairman, Commission on Audit. — The master shall,
— If the situation is such as to require the unlading of the prior to departure, deliver mail to the Chairman,
vessel pending sojourn in port, the Collector shall, upon Commission on Audit, Manila, the returned copy of the
sufficient proof of the necessity, grant a permit therefore, manifest of export cargo.
and the articles shall be unladen and stored under the SECTION 1022.Oath of Master of Departing Vessel. — The
supervision of the customs authorities. master of such departing vessel shall state under oath to
At the request of the master of the vessel or the owner the effect:
thereof, the Collector may grant permission to enter and a.That all cargo conveyed on said vessel, with destination
pay duties, taxes and other charges on, and dispose of, to the Philippines, has been duly discharged or
such a part of the cargo as may be of perishable nature or accounted for.
as may be necessary to defray the expenses attending b.That he has mailed or delivered to the Chairman,
the vessel. Commission on Audit a true copy of the outgoing cargo
Upon departure, the cargo, or a residue thereof, may be manifest.
reladen on board the vessel, and the vessel may proceed c.That he has not received and will not convey any letters
with the same to her destination, subject only to the or packets not enclosed in properly stamped envelope
charge for storing and safe-keeping of the articles and sufficient to cover postage, except those relating to the
the fees for entrance and clearance. vessel, and that he has delivered at the proper foreign
No port charges shall be collected on vessels entering port all mails placed on board his vessel before her last
through stress of weather or other causes above clearance from the Philippines.
described. d.That if clearing without passenger, the vessel will not
SECTION 1018.Entry and Clearance of Vessels of a Foreign carry upon the instant voyage, from the Philippine port,
Government.— The entry and clearance of transport or any passenger of any class, or other person not entered
supply ship of a foreign government shall be in upon the ship's declaration.
accordance with the agreement by and between the SECTION 1023.Extension of Time for Clearance. — At the
Philippines and the foreign government. time of clearance, the master of a departing vessel shall
SECTION 1019.Clearance of Vessel for Foreign Port. — be required to indicate the time of intended departure,
Before a clearance shall be granted to any vessel bound and if the vessel should remain in port forty-eight hours
to a foreign port, the master, or the agent thereof, shall after the time indicated the master shall report to the
present to the Collector the following properly Collector for an extension of time of departure, and
authenticated documents: without such extension the original clearance shall be of
a.A bill of health from the quarantine official or official of no effect.
the public health service in the port. SECTION 1025.Export Product to Conform to Standard
b.Three copies of the manifest of export cargo, one of Grades. — A collector shall not permit products for which
which, upon certification by the customs official as to the standard grades have been established by the
correctness of the copy, shall be returned to the master. government to be laden aboard a vessel clearing for a
foreign port, unless the shipment conforms to the
c.Two copies of the passenger list, showing alien and requirements of law relative to the shipment of such
other passengers. products.
d.The register and shipping articles, if the vessel is of
Philippine registry. PART 2 Entrance and Clearance of Aircraft in
e.The consular certificate of entry, if the vessel is of foreign Foreign Trade
registry, when required.
SECTION 1101.Designation of Airports of Entry. — The
f.A certificate of the Bureau of Posts to the effect that it Secretary of Finance, upon recommendation of the
received timely notice of the sailing of the Vessel: Commissioner and the Director of the Civil Aeronautics
Provided, That the Collector shall not permit any vessel to Administration is authorized to designate airports of
sail for a foreign port if the master or agent thereof entry for civil aircraft arriving in the Philippines from any
refuses to receive bags of mail delivered to the same by place outside thereof and for articles carried on such
the Bureau of Posts for transportation for a reasonable aircraft. Such airport of entry shall be considered as a port
compensation. In case the Director of Posts and said of entry for aliens arriving on such aircraft and as a place
master or agent do not come to an agreement of quarantine inspection.
concerning the amount of the compensation to be paid
SECTION 1102.Advance Notice of Arrival. — (a)
for the carriage of the mail, the matter shall be submitted
Non-scheduled Arrivals. — Before an aircraft comes into
for decision to a Board of Referees composed of three



any area in the Philippines from any place outside 1.Name of owner or operator of aircraft, registration marks
thereof, a timely notice of the intended flight shall be and nationality of aircraft, and flight number of
furnished to the Collector or other customs officer in identification;
charge at or nearest the intended place of first landing in 2.Points of clearance and entry, and date of arrival;
such area, and to the quarantine and immigration
officers in charge at or nearest such place of landing. If 3.Health and customs clearance at the last airport of
dependable facilities for giving notice are not available departure;
before departure, any radio equipment of the place shall 4.Itinerary of aircraft, including information as to airport
be used if this will result in the giving of adequate and of origin and departure dates;
timely notice during its approach, otherwise a landing
shall be made at a place where the necessary facilities do 5.Names and nationality of crew members;
exist before coming into any area in the Philippines. If, 6.Passenger manifest showing places of embarkation and
upon landing in any area, the government officers have destination;
not arrived, the pilot-in-command shall hold the aircraft
and any baggage and article thereon intact and keep the 7.Cargo manifest showing information as to airway bill
passengers and crew members in a segregated place number, the number of packages related to each airway
until the inspecting officers arrive. bill number, nature of goods, destination, and gross
weight, together with a copy of each airway securely
(b)Scheduled Arrivals — Such advance notice will not be attached thereto; and
required in the case of aircraft of a scheduled airline
arriving in accordance with the regular schedule filed 8.Store list
with the Collector for the Customs district in which the b.The general declaration shall be written in English and
place of first landing in the area is situated, and also with duly signed by the pilot-in-command or operator of the
the quarantine and immigration officials in charge of aircraft, or the authorized agent. The Health Section
such place. thereon, however, shall be signed only by the
SECTION 1103.Landing at International Airport of Entry. — pilot-in-command or when necessary, by a crew member
Except in the case of emergency or forced landings, when the general declaration itself has been signed by a
aircraft arriving in the Philippines from any foreign port or non-crew member. If the aircraft does not carry cargo or
place shall make the first landing at an international passengers such facts must be shown in the manifests.
airport of entry, unless permission to land elsewhere than c.Cargo manifest shall in no case be changed or altered
at an international airport of entry is first obtained from after entry of the aircraft, except by means of an
the Commissioner. In such cases, the owner, operator, or amendment by the pilot-in-command or authorized
person in charge of the aircraft shall pay the expenses agent thereof, under oath, and attached to the original
incurred in inspecting the aircraft, articles, passengers manifest: Provided, however, That after the invoice and/or
and baggage carried thereon, and such aircraft shall be entry covering an importation have been received and
subject to the authority of the Collector at the airport recorded in the office of the appraiser, no amendment
while within his jurisdiction. shall be allowed except when it is obvious that a clerical
Should an emergency or forced landing be made by an error or any other discrepancy has been committed
aircraft coming into the Philippines from any place without any fraudulent intent in the preparation of the
outside thereof, the pilot-in-command shall not allow any manifest, discovery of which could not have been made
article, baggage, passenger or crew member to be until after examination of the importation has been
removed or to depart from the landing place without completed.
permission of a customs officer, unless such removal or SECTION 1106.Manifest for Commission on Audit. — The
departure is necessary for purposes of safety, pilot-in-command or authorized agent of an aircraft,
communication with customs authorities, or the upon arrival from a foreign port, shall deliver or mail to
preservation of life, health or property. As soon as the Chairman, Commission on Audit, a copy of the
practicable, the pilot-in-command, or a member of the general declaration properly endorsed by the customs
crew in charge, or the owner of the aircraft, shall Boarding Officer.
communicate with the custom officer at the intended SECTION 1107.Delivery of Mail. — Aircraft arriving within a
place of first landing or at the nearest international customs collection district in the Philippines shall not be
airport or other customs port of entry in the area and permitted to make entry until it is shown to the
make a full report of the circumstances of the flight and satisfaction of the Collector that the pilot-in-command or
of the emergency or forced landing. authorized agent of the aircraft is ready to deliver to the
SECTION 1104.Report of Arrival and Entry. — The postmaster of the nearest post office all mail matters on
pilot-in-command of any aircraft arriving from a foreign board such aircraft and destined for that port.
port or place shall immediately report his arrival to the SECTION 1110.Manifest for Transit Cargo. — When transit
Collector at the airport of entry or to the customs officer cargo from a foreign port for other local ports is
detailed to meet the aircraft at the place of first landing. forwarded from the port of importation, separate
Such aircraft upon arrival shall be boarded by the manifest, in triplicate, shall be presented by each carrier.
quarantine officer and after pratique is granted shall be
boarded by customs officer, and no person shall be SECTION 1111.Clearance of Aircraft for Foreign Port. —
permitted to board or leave the aircraft without the a.Any aircraft bound to a foreign port shall, before
permission of the customs officer in charge. departure, clear at an airport of entry or at the same place
The pilot-in-command or any other authorized agent of where such aircraft has been authorized to make its
the owner or operator of the aircraft shall make the landing by the Commissioner.
necessary entry. No such aircraft shall, without previous b.Before clearance shall be granted to an aircraft bound
permission therefore from the collector, depart from the to a foreign port, there shall be presented to the Collector
place of first landing or discharge articles, passengers or or to the customs officer detailed at the place of
baggage. departure four copies of a general declaration signed by
SECTION 1105.Documents Required in Making Entry. — the pilot-in-command or authorized agent of an aircraft
which shall contain the following data:
a.For the purpose of making entry, there shall be
presented to the customs boarding officer four copies of 1.Name of owner or operator of aircraft, registration marks
a general declaration which shall contain the following and nationality of aircraft, and flight number of
data, unless any of such data is otherwise presented on a identification;
separate official form: 2.Point of clearance, data thereof and destination;
3.Health and customs clearance;


4.Itinerary of aircraft, including information as to airport instrumentalities owned or controlled by the
of destination and departure date; government, shall be subject to the duties, taxes, fees and
5.Names and nationality of crew members; other charges provided for in this Code.
6.Passenger manifest showing place of destination; SECTION 1206.Jurisdiction of Collector Over Importation
of Articles.— The Collector shall cause all articles entering
7.Export cargo manifest showing information as to the jurisdiction of his district and destined for importation
airwaybill number, the number of packages related to through his port to be entered at the customhouse, shall
each airwaybill number, nature of goods, destination, and cause all such articles to be appraised and classified, and
gross weight, together with a copy of each airwaybill shall assess and collect the duties, taxes, and other
securely attached thereto; and charges thereon, and shall hold possession of all
8.Store list showing stores laden. imported articles upon which duties, taxes, and other
charges have not been paid or secured to be paid,
SECTION 1112.Oath of Person in Charge of Departing disposing of the same according to law.
Aircraft. — The pilot-in-command or authorized agent of
such departing aircraft shall also state under oath to the SECTION 1207.Jurisdiction of Collector Over Articles of
effect that: Prohibited Importation. — Where articles are of
prohibited importation or subject to importation only
a.All cargo conveyed on said aircraft destined to the upon conditions prescribed by law, it shall be the duty of
Philippines has been duly discharged or accounted for. the Collector to exercise such jurisdiction in respect
b.He has mailed or delivered to the Commission on Audit thereto as will prevent importation or otherwise secure
a true copy of the outward general declaration. compliance with all legal requirements.
c.He has not received nor will convey any letter or packet SECTION 1210.Disposition of Imported Articles Remaining
not enclosed in properly stamped envelope sufficient to on Vessel After Time for Unlading. — Imported articles
cover postage, except those relating to the cargo of the remaining on board any vessel after the expiration of the
aircraft, and that he has delivered to the proper foreign said period for discharge and not reported for
port all mails placed on board said aircraft before its last transshipment to another port, may be unladen by the
clearance from the Philippines. customs authorities and stored at the vessel's expense.
d.If clearing without passengers, the aircraft will not carry Unless prevented by causes beyond the vessel's control,
upon departure any passenger. such as port congestion, strikes, riots or civil commotions,
failure of vessel's gear, bad weather, and similar causes,
A record shall be made and kept open to public articles so stored shall be entered within thirty (30) days,
inspection in every customhouse at an airport of entry of which shall not be extendible, from the date of discharge
the dates of arrival and entry of all aircrafts. of the last package from the vessel or aircraft and shall be
claimed within fifteen (15) days, which shall not likewise
TITLE IV Ascertainment, Collection and be extendible from the date of posting of the notice to
Recovery of Import Duty claim in conspicuous places in the Bureau of Customs. If
not entered or not claimed, it shall be disposed of in
accordance with the provisions of this code (R.A. 7651,
PART 1 Importation in General June 04, 1993).
SECTION 1201.Article to be Imported Only Through SECTION 1211.Handling of Articles on Which Duty Has Not
Customhouse. — All articles imported into the Philippines Been Paid. — Except when done under customs
whether subject to duty or not shall be entered through a supervision, all unlading or transshipment of the cargo of
customhouse at a port of entry. vessels from foreign ports, which do not discharge at a
wharf, must be by bonded lighters; and likewise, on land
SECTION 1202.When Importation Begins and Deemed
imported goods on which duty has not been paid shall be
Terminated. — Importation begins when the carrying
carried about and handled by bonded draymen or
vessel or aircraft enters the jurisdiction of the Philippines
cartmen only.
with intention to unlade therein. Importation is deemed
terminated upon payment of duties, taxes and other
charges due upon the articles, or secured to be paid, at a PART 2 Entry at Customhouse
port of entry and the legal permit for withdrawal shall
have been granted, or in case said articles are free of SECTION 1301.Persons Authorized to Make Import Entry.
duties, taxes and other charges, until they have legally left — Imported articles must be entered in the customhouse
the jurisdiction of the customs. at the port of entry within thirty (30) days, which shall not
be extendible, from the date of discharge of the last
SECTION 1203.Owner of Imported Articles. — All articles package from the vessel or aircraft either (a) by the
imported into the Philippines shall be held to be the importer, being holder of the bill of lading, (b) by a duly
property of the person to whom the same are consigned: licensed customs broker acting under authority from a
and the holder of a bill of lading duly endorsed by the holder of the bill or (c) by a person duly empowered to act
consignee therein named, or, if consigned to order, by the as agent or attorney-in-fact for each holder: Provided,
consignor, shall be deemed the consignee thereof. The That where the entry is filed by a party other than the
underwriters of abandoned articles and the salvors of importer, said importer shall himself be required to
articles saved from wreck at sea, along a coast or in any declare under oath and under the penalties of
area of the Philippines may be regarded as the falsification or perjury that the declarations and
consignees. statements contained in the entry are true and correct:
SECTION 1204.Liability of Importer for Duties. — Unless Provided, further, That such statements under oath shall
relieved by laws or regulations, the liability for duties, constitute prima facie evidence of knowledge and
taxes, fees and other charges attaching on importation consent of the importer of violation against applicable
constitutes a personal debt due from the importer to the provisions of this Code when the importation is found to
government which can be discharged only by payment in be unlawful (R.A. 7651, June 04, 1993).
full of all duties, taxes, fees and other charges legally SECTION 1302.Import Entries. — All imported articles,
accruing. It also constitutes a lien upon the articles except importations admitted free of duty under
imported which may be enforced while such articles are Subsection "k", Section one hundred and five of this Code,
in custody or subject to the control of the government. shall be subject to a formal or informal entry. Articles of a
SECTION 1205.Importations by the Government. — Except commercial nature intended for sale, barter or hire, the
those provided for in Section One Hundred and Five of dutiable value of which is Two thousand pesos
this Code, all importations by the Government for its own (P2,000.00) or less, and personal and household effects or
use or that of its subordinate branches or articles, not in commercial quantity, imported in
instrumentalities, or corporations, agencies or passenger's baggage, mail or otherwise, for personal use,



shall be cleared on an informal entry whenever duty, tax and mark of packages, or the quantity, if in bulk, the
or other charges are collectible. nature and correct commodity description of the articles
The Commissioner may, upon instruction of the Secretary contained therein, and its value as set forth in a proper
of Finance, for the protection of domestic industry or of invoice to be presented in duplicate with the entry.
the revenue, require a formal entry, regardless of value, SECTION 1307.Description of Articles. — The description of
whatever be the purpose and nature of the importation. the articles in the import entry must be in sufficient
A formal entry may be for immediate consumption, or detail to enable the articles to be identified both for tariff
under irrevocable domestic letter of credit, bank classification of terms of the headings or subheadings of
guarantee or bond for: this code and in the currency of the invoice and the
quantity and values of each of the several classes of
(a)Placing the article in customs bonded warehouse; articles he separately declared according to their
(b)Constructive warehousing and immediate respective headings or subheadings and the totals of
transportation to other ports of the Philippines upon each heading or subheading shall be duly shown.
proper examination and appraisal; or SECTION 1308.Commercial Invoice. — Contents of
(c)Constructive warehousing and immediate exportation. Commercial invoice of articles imported in the Philippines
shall in all cases set forth all the following:
Import entries under irrevocable domestic letter of credit,
bank guarantee or bond shall be subject to the provisions a.The place where, the date when, and the person by
of Title V, Book II of this Code. whom and the person to whom the articles sold or
agreed to be sold, or if to be imported otherwise than in
All importations entered under formal entry shall be pursuance of a purchase, the place from which shipped,
covered by a letter of credit or any other verifiable the date when the person to whom and the person by
document evidencing payment. (R.A. 9135, April 27, 2001) whom they are shipped;
SECTION 1303.Entry of Article in Part for Consumption
and in Part for Warehousing. — Import entries of articles
covered by one bill of lading may be made b.The port of entry to which the articles are destined;
simultaneously for both consumption and warehousing. c.A detailed description of the articles according to the
Where an intent to export the articles is shown by the bill terms of the heading or subheadings, if specifically
of lading and invoice, the whole or a part of a bill of lading mentioned in this code, otherwise the description must
(not less than one package) may be entered for be in sufficient detail to enable the articles to be
warehousing and immediate exportation. Articles identified both for tariff classification and statistical
received at any port from another port in the Philippines purposes, indicating their correct commodity description,
on any entry for immediate transportation may be in customary terms or commercial designation, including
entered at the port of delivery either for consumption or the grade or quality, numbers, marks or symbols under
warehousing. which they are sold by the seller or manufacturer,
SECTION 1304.Declaration of the Import Entry. — Except together with the marks and number of the packages in
in case of informal entry, no entry of imported article shall which the articles are packed;
be effected until there shall have been submitted to the d.The quantities in the weights and measures of the
collector a written declaration under penalties of country or place from which the articles are shipped, and
falsification or perjury, in such form as shall be prescribed in the weights and measures used in this Code;
by the Commissioner, containing statements in
substance as follows: e.The purchase price of each article in the currency of the
purchase and in the unit of the quantity which the
a.That the entry delivered to the Collector contains a full articles were bought and sold in the place of country of
account of the value or price of said articles, including exportation, if the articles are shipped in pursuance of a
subject of the entry; purchase or an agreement to purchase;
b.That the invoice and entry contain a just and faithful f.If the articles are shipped otherwise than in pursuance
account of the value or price of said articles, including of the purchase or an agreement to purchase, the value
and specifying the value of all containers or coverings, of each article in the unit of quantity in which the articles
and that nothing has been omitted, therefrom or are usually bought and sold, and in the currency in which
concealed whereby the government of the Republic of the transactions are usually made, or, in the absence of
the Philippines might be defrauded of any part of the such value, the price in such currency which the
duties lawfully due on the articles; manufacturer, seller, shipper or owner would have
c.That, to the best of the declarant's information and received, or was willing to receive, for such articles if sold
belief, all the invoke and bills of lading relating to the in the ordinary course of trade and the usual wholesale
articles are the only ones in existence relating to the quantities in the country of exportation;
importation in question and that they are in the state in g.All charges upon the articles itemized by name and
which they were actually received by him; amount when known to the seller or shipper; or all
d.That, to the best of the declarant's information and charges by name (e.g., commission, insurance, freight,
belief, the entries, invoices and bill of lading and the cases, containers, coverings and cost of packing) included
declaration thereon under penalties of falsification of in invoice prices when the amount for such charges are
perjury are in all respects genuine and true, and were unknown to the seller or shipper;
made by the person by whom the same purpose to have h.All discounts, rebates, drawbacks and bounties
been made. separately itemized allowed upon the exportation of the
SECTION 1305.By Whom to be Signed. — The declaration articles, all internal and excise taxes applicable to the
shall be signed, under penalties of falsification or perjury, home market;
by the importer, consignee or holder of the bill, by or for i.The current home consumption value or price of which
whom the entry is effected if such person is an individual, same, like or similar article is offered or for sale for
or in case of a corporation, firm or association, by its exportation to the Philippines, on the date the invoice is
manager, or by a licensed customs broker duly prepared or the date of exportation; and,
authorized to act for either of them.
Any other facts deemed necessary to a proper
SECTION 1306.Forms and Contents of Import Entry. — examination, appraisement and classification of the
Import entries shall be in the required number of copies articles which the Commissioner may require.
in such forms as prescribed by regulations. They shall be
signed by the person making the entry of the articles, SECTION 1309.Repealed by E.O. 736.
and shall contain the names of the importing vessel or SECTION 1310.Repealed by P.D. 1679, March 6, 1980.
aircraft, port of departure and date of arrival, the number


SECTION 1311.Repealed by P.D. 1679, March 6, 1980. In order to prevent any attempt to defraud the revenue
SECTION 1312.Repealed by P.D. 1679, March 6, 1980. the Collector shall be presented at the salvage of the
cargo by customs officials detailed for that purpose, who
SECTION 1313.Information Furnished on Classification shall examine and countersign the inventory made of
and Value. — such cargo and receive a copy of the same.
a.As to classification. — When an article imported or Derelicts and articles salvaged from foreign vessels or
intended to be imported is not specifically classified in aircrafts picked up at sea, or taken from wreck is prima
this Code, the interested party, imported or foreign facie dutiable and may be entered for consumption or
exporter may submit to the Tariff Commission a sample warehousing. If claimed to be of Philippine production,
together with a full description of its component and consequently free, proof must be adduced as in
materials and uses, and request it in writing to indicate ordinary cases of reimportation of articles. Foreign articles
the heading under which the article is or shall be landed from a vessel or aircraft in distress is dutiable if
dutiable, and the Tariff Commission shall comply with sold or disposed of in the Philippines.
such requests within thirty days from receipt thereof if it
is satisfied that the application is made in good faith, in Before any article which has been taken from a recent
which case classification of the article in question upon wreck shall be admitted to entry, the same shall be
the particular importation involved shall be made appraised, and the owner or importer shall have the same
according to the heading indicated by the Tariff right to appeal as in ordinary importation.
Commission: Provided, however, That such rulings of the No part of a Philippine vessel or aircraft or her equipment,
Tariff Commission on commodity classification, shall be wrecked either in Philippine or foreign waters, shall be
binding upon the Bureau of Customs, unless the subject to duty.
Secretary shall rule otherwise.
b.As to Value. — Upon written application of owner or his PART 3 Examination, Classification and
agent, the Collector shall furnish any importer within
thirty days from receipt thereof the latest information in Appraisal of Imported Articles
his possession as to the dutiable value of the articles to be SECTION 1401.Conditions for Examination. — For the
entered at his port, after arrival or upon satisfactory protection of government revenue and public interest
evidence that they have been exported and are enroute and to prevent the entry into the country of smuggled or
to the Philippines: Provided, That the information shall be contraband goods, the Commissioner shall, in
given only if the Collector is satisfied, after questioning consultation with the Oversight Committee and subject
the importer and examining all pertinent papers to approval of the Secretary of Finance, promulgate the
presented to him, such as invoices, contracts of sale or rules and regulations that shall prescribe the procedure
purchase, orders and other commercial documents that in accordance with which the examination shall be
the importer is acting in good faith and is unable to undertaken on the importation and the required quantity
obtain proper information as to the dutiable value of the or percentage thereof: Provided, That the imported
articles on the date of exportation due to unusual articles shall in any case be subject to the regular physical
conditions: And, Provided, further, That the information so examination when:
given is in no sense an appraisal or binding upon the
Collector's action on appraisal. (1)The government surveyor's seal on the container has
been tampered with or broken or the container shows
SECTION 1314.Forwarding of Cargo and Remains of signs of having been opened or having its identity
Wrecked Vessel or Aircraft. — When vessels or aircrafts changed;
are wrecked within the Philippines, application must be
made to the Commissioner by the original owners or (2)The container is leaking or damaged;
consignees of the cargo, or by the underwriters, in case of (3)The number, weight, and nature of packages indicated
abandonment to them, for permission to forward the in the customs entry declaration and supporting
articles saved from the wreck to the ports of destination, documents differ from that in the manifest;
in other conveyance, without entry at the customhouse in (4)The shipment is covered by alert/hold order issued
the district in which the article was cast ashore or pursuant to existing orders;
unladen. On receipt of such permission, the articles may
be so forwarded with particular manifests thereof, duly (5)The importer disagrees with the findings as contained
certified by customs officials in charge of the articles. in the government surveyor's report; or
If the owner of the vessel or aircraft wishes to export the (6)The articles are imported through air freight where the
remains of the wreck, he may be permitted to do so upon Commissioner or Collector has knowledge that there is a
proper examination and inspection. variance between the declared and true quantity,
measurement, weight and tariff classification (R.A. 7650,
The remains of a wrecked vessel shall be considered to be April 06, 1993).
not only the hull and rigging of the same but also all sea
stores and articles of equipment, such as sails, ropes, SECTION 1402.Ascertainment of Weight and Quantity. —
chains, anchors and so forth. Where articles dutiable by weight, and not otherwise
specially provided for, are customarily contained in
SECTION 1315.Derelicts and Articles from Abandoned packing, packages, or receptacles of uniform or similar
Wrecks. — Derelicts and all articles picked at sea or character, it shall be the duty of the Commissioner, from
recovered from abandoned wrecks, shall be taken time to time, to ascertain by tests the weight as quantity
possession of in the port or district where they shall first of such articles, and the weight of the packing, packages
arrive, and be retained in the custody of the Collector, and or receptacles thereof, respectively, in which the same are
if not claimed and entered, as the case may be, by the customarily imported, and upon such ascertainment, to
owner, underwriter or salvor, shall be dealt with as prescribe rules for estimating the dutiable weight or
unclaimed property. quantity thereof, and thereafter such articles, imported in
When such articles are brought into port by lighters or such customary packing, packages or receptacles shall be
other craft, each of such vessels shall make entry by entered, and the duties thereon levied and collected,
manifest of her cargo. upon the bases of such estimated dutiable weight or
If, in case of wreck, there be no customhouse at the point quantity: Provided, That if the importer, consignee or
where the vessel or aircraft is wrecked, the coastguard or agent shall be dissatisfied, with such estimated dutiable
customs official nearest the scene of the wreck shall weight or quantity, and shall file with the Collector prior
render all possible aid in saving the crew and cargo of the to the delivery of the packages designated for
vessel or aircraft, taking charge of the articles saved and examination a written specification of his objections
giving immediate notice to the Collector or the nearest thereto, or if the Collector shall have reason to doubt the
customhouse. exactness of the prescribed weight or quantity in any


instance, it shall be his duty to cause such weights or (d)Upon demand by the Commissioner of Customs after
quantities to be ascertained. the completion of compliance audit pursuant to the
provisions of this Code. (R.A. 9135, April 27, 2001)
SECTION 1403.Duties of Customs Officer Tasked to SECTION 1408.Assessment of Duty on Less Than Entered
Examine, Classify and Appraise Imported Articles. — The Value. — Duty shall not be assessed in any case upon an
customs officer tasked to examine, classify, and appraise amount less than the entered value, unless by direction of
imported articles shall determine whether the packages the Commissioner in cases which the importer certifies at
designated for examination and their contents are in the time of entry that the entered value is higher than the
accordance with the declaration in the entry, invoice and dutiable value and that the articles are so entered in
other pertinent documents and shall make a return in order to meet increases made by the appraiser in similar
such a manner to indicate whether the articles have been cases then pending reappraisement; and the lower
truly and correctly declared in the entry as regard their assessment shall be allowed only when the importer's
quantity, measurement, weight, and tariff classification contention is sustained, by the final decision, and shall
and not imported contrary to law. He shall submit sample appear that such action of the importer was taken in
to the laboratory for analysis when feasible to do so and good faith after due diligence and inquiry on his part.
when such analysis is necessary for the proper SECTION 1409.Employment and Compensation of
classification, appraisal, and/or admission into the Persons to Assist in Appraisal or Classification of Articles.
Philippines of imported articles. — When necessary, the Collector may request two
Likewise, the customs officer shall determine the unit of disinterested persons versed in the matter to assist the
quantity in which they are usually bought and sold and appraiser in appraising or ascertaining dutiable value of
appraise the imported articles in accordance with Section any article. Persons so employed shall be paid
201 of this Code. compensation in an amount to be determined by the
Commissioner, not exceeding fifty pesos (P50.00) for each
Failure on the part of the customs officer to comply with day of such service.
his duties shall subject him to the penalties prescribed
under 3604 of this Code (R.A. 7650, April 06, 1993).
PART 4 Delivery of Articles
SECTION 1404. — Repealed by R.A. 7650, April 06, 1993.
SECTION 1501.Delivery of Articles to Holder of Bill of
SECTION 1405.Proceedings and Report of Appraisers. — Lading. — A Collector who makes a delivery of a
Appraisers shall, by all reasonable ways and means, shipment, upon the surrender of the bill of lading, to
ascertain, estimate and determine the value or price of person who by the terms thereof appears to be the
the articles as required by law, any invoice or affidavit consignee or lawful holder of the bill shall not be liable on
thereto or statement of cost, or of cost of production to account of any defect in the bill or irregularity in its
the contrary notwithstanding, and after revising and negotiation, unless he has notice of the same.
correcting the report of the examiners as they may judge
proper, shall report in writing on the face of the entry the SECTION 1502.Delivery of Articles Without Production of
value so determined, irrespective of whether such value is Bill of Lading. — No Collector shall deliver imported
equal, higher or lower than the invoice and/or entered articles to any person without the surrender by such
value of the articles. person of the bill of lading covering said article, except on
written order of the carrier or agent of the importing
Appraisers shall describe all articles on the face of the vessel or aircraft, in which case neither the Government
entry in tariff and such terms as will enable the Collector nor the Collector shall be held liable for any damages
to pass upon the appraisal and classification of the same, arising from wrongful delivery of the articles: Provided,
which appraisal and classification shall be subject to his however, That where delivery of articles is made against
approval or modification, and shall note thereon the such written order of the carrier or agent of the importing
measurements and quantities, and any disagreement vessel or aircraft, the Collector may, for customs purposes,
with the declaration. require the production of an exact copy of the bill of
SECTION 1406.Appraiser's Samples. — Appraisers shall lading therefore.
see that representative and sufficient samples of all kinds SECTION 1503.Cash Deposit Upon Delivery of
of articles which may be readily sampled are taken under Unexamined Packages. — To effect immediate delivery of
proper receipt and retained for official purposes; but packages not ordered for examination, the Collector shall
samples of articles identical in quality, material and values require a cash deposit, an irrevocable domestic letter of
shall not be retained, if their return is desired, longer than credit, bank guarantee or a bond, in an amount
may be required for use in contested cases. equivalent to one hundred per cent (100 %) of the duties,
The quantity and value of the samples taken shall be taxes, fees or other charges sufficient to safeguard the
noted on the face of entry. Such samples shall be duly revenue.
labeled as will definitely identify them with the If such cash deposit, irrevocable domestic letter of credit,
importation for which they are taken. bank guarantee or bond is not supplied, all the packages
SECTION 1407.Readjustment of Appraisal, Classification shall be held until the return is made and duties, taxes
or Return. — Such appraisal, classification or return as and other charges paid.
finally passed upon and approved or modified by the SECTION 1504.Delivery Upon Order of Importer. — An
Collector shall not be altered or modified in any manner, importer of record may authorize delivery to another
except: person by writing upon the face of the warehouse
(a)Within one year after payment of the duties, upon withdrawal entry his orders to that effect. Such authority
statement of error in conformity with Section seventeen to deliver the article entered for warehousing in
hundred and seven hereof, approved by the Collector. accordance with section nineteen hundred and four shall
(b)Within fifteen days after such payment upon request not relieve the importer and his cash deposit, irrevocable
for reappraisal and/or reclassification addressed to the domestic letter of credit, bank guarantee or bond from
Commissioner by the Collector, if the appraisal and/or liability for the payment of the duties, taxes and other
classification is deemed to be low. charges due on the said article unless the person to
whom the delivery was authorized to be made assumes
(c)Upon request for reappraisal and/or reclassification, in such liability by complying with the requirements of
the form of a timely protest addressed to the Collector by above mentioned section.
the interested party if the latter should be dissatisfied
with the appraisal or return. SECTION 1505.Withholding Delivery Pending Satisfaction
of Lien. — When the Collector is duly notified in writing of
a lien for freight, lighterage or general average upon any
imported articles in his custody, he shall withhold the


delivery of the same until he is satisfied that the claim has fraction of a peso less than fifty centavos shall be
been paid or secured. disregarded, and a fraction of a peso amounting to fifty
In case of a disagreement, as to the amount due between centavos or more shall be considered as one peso. In case
the party filling the lien and the importer regarding the of overpayment or underpayment of duties, taxes,
amount of the freight and lighterage based upon the surcharges and/or other charges paid on entries, where
quantity or weights of the articles imported, the Collector the amount involved is less than ten pesos, no refund or
may deliver the articles upon payment of the freight and collection shall be made.
lighterage due on the quantity or weight actually landed
as shown by the return of the proper official or by other PART 6 Abatements and Refunds
means to his satisfaction.
SECTION 1701.Abatement for Damage Incurred During
SECTION 1506.Customs Expenses Constituting Charges Voyage. — Except as herein specially provided, no
on Articles. — All expenses incurred by the customs abatement of duties shall be made on account of
service for the handling or storage of articles and other damage incurred or deterioration suffered during the
necessary operations in connection therewith, or incident voyage of importation; and duties will be assessed on the
to its seizure, shall be charged against such articles, and actual quantity imported, as shown by the return of
shall constitute a lien upon it. weighers, gauges, measurers, examiners or appraisers, as
SECTION 1507.Fine or Surcharge on Articles. — No article the case may be.
which is liable for any fine or surcharge imposed under SECTION 1702.Abatement or Refund of Duty on Missing
the tariff and customs laws shall be delivered until the Package. — When any package or packages appearing
same shall have been paid or secured by cash deposit, on the manifest or bill of lading are missing, an
irrevocable domestic letter of credit, bank guarantee or abatement or refund of the duty thereon and shall be
bond. made if it is certified, under penalties of falsification or
SECTION 1508.Authority of the Collector of Customs to perjury, by the importer or consignee, and upon
Hold the Delivery or Release of Imported Articles. — production of proof satisfactory to the Collector that the
Whenever any importer, except the government, has an package or packages in question have not been imported
outstanding and demandable account with the Bureau in to the Philippines contrary to law.
of Customs, the Collector shall hold the delivery of any SECTION 1703.Abatement or Refund for Deficiency in
article imported or consigned to such importer unless Contents of Packages. — If, upon opening any package, a
subsequently authorized by the Commissioner of deficiency or absence of any article or of part of the
Customs, and upon notice as in seizure cases, he may sell contents thereof as called for by the invoice shall be
such importation or any portion thereof to cover the found to exist, such deficiency shall be certified, under
outstanding account of such importer; Provided, penalties of falsification or perjury, to the Collector by the
however, That at any time prior to the sale, the delinquent examiner and appraiser; and upon the production of
importer may settle his obligations with the Bureau of proof satisfactory to the Collector showing that the
Customs, in which case the aforesaid articles may be shortage occurred before the arrival of the article in the
delivered upon payment of the corresponding duties and Philippines, the proper rebatement or refund of the duty
taxes and compliance with all other legal requirements. shall be made.
SECTION 1704.Abatement or Refund of Duties on Articles
PART 5 Liquidation of Duties Lost or Destroyed After Arrival. — A Collector may abate or
SECTION 1601.Liquidation and Record of Entries. — If the refund the amount of duties accruing or paid, and may
Collector shall approve the returns of the appraiser and likewise make a corresponding allowance on the
the report of the weights, gauge or quantity, the irrevocable domestic letter of credit, bank guarantee, or
liquidation shall be made on the face of the entry the entry bond or other document, upon satisfactory
showing the particulars thereof, initiated by the customs proof of injury, destruction, or loss by theft, fire or other
assessor, approved by the chief customs assessor, and causes of any article as follows:
recorded in the record of liquidations. a.While within the limits of any port of entry prior to
A daily record of all entries liquidated shall be posted in unlading under customs supervisions;
public corridor of the customhouse, stating the name of b.While remaining in customs custody after unlading;
the vessel or aircraft, the port from which she arrived, the c.While in transit under irrevocable domestic letter of
date of her arrival, the name of the importer, and the credit, bank guarantee or bond with formal entry in
serial number and the date of the entry. The daily record accordance with section one thousand three hundred
must also be kept by the Collector of all additional duties, two from the port of entry to any port in the Philippines;
taxes and other charges found upon liquidation, and
notice shall promptly be sent to the interested parties. d.While released under irrevocable domestic letter of
credit, bank guarantee or bond for export except in case
SECTION 1602.Tentative Liquidation. — If to determine of loss by theft.
the exact amount due under the law in whole or in part
some future action is required, the liquidation shall be SECTION 1705.Abatement of Duty on Dead or Injured
deemed to be tentative as to the item or items affected Animals. — Where it is certified, under penalties of
and shall to that extent be subject to future and final falsification or perjury, and upon production of proof
readjustment and settlement within a period of six (6) satisfactory to the Collector that an animal which is the
months from date of tentative liquidation. The entry in subject of importation dies or suffers injury before arrival,
such case shall be stamped "Tentative liquidation". or while in customs custody, the duty shall be
correspondingly abated by him, provide the carcass of
SECTION 1603.Finality of Liquidation. — When articles any dead animal remaining on board or in customs
have been entered and passed free of duty or final custody be removed in the manner required by the
adjustments of duties made, with subsequent delivery, Collector and at the expense of the importer.
such entry and passage free of duty or settlements of
duties will, after the expiration of three (3) years from the SECTION 1706.Investigation Required in Case of
date of the final payment of duties, in the absence of Abatements and Refunds. — The Collector shall, in all
fraud or protest or compliance audit pursuant to the cases of allowances, abatements, or refunds of duties,
provisions of this Code, be final and conclusive upon all cause an examination or report in writing to be made as
parties, unless the liquidation of the import entry was to any fact discovered during such examination which
merely tentative. (R.A. 9135, April 27, 2001) tends to account for the discrepancy or difference and
cause the corresponding adjustment to be made on the
SECTION 1604.Treatment of Fractions in the Liquidation. import entry: Provided, That no abatement or refund of
— In determining the total amount of duties, taxes, duties, taxes and other charges shall be allowed on
surcharges, and/or other charges to be paid on entries, a


articles lost or destroyed in bonded public or private penalties prescribed in Paragraph 1, Section 3604 of this
warehouses outside customs zone. Code (R.A. 7651, June 04, 1993).
SECTION 1707.Correction of Errors. — Refund of Excess SECTION 1803. — Repealed by R.A. 7651, June 04, 1993.
Payments. — Manifest clerical errors made in an invoice
or entry, errors in return of weight, measure and gauge,
when duly certified to, under penalties of falsification or TITLE V Warehousing of Imported Articles
perjury, by the surveyor or examining official (when there
are such officials at the port), and errors in the PART 1 Warehousing in General
distribution of charges on invoices not involving any
question of law and certified to, under penalties of SECTION 1901.Establishment and Supervision of
falsification or perjury, by the examining official, may be Warehouses. — When the business of the port requires
corrected in the computation of duties, if such errors be such facilities. The Collector subject to the approval of the
discovered before the payments of duties, or if discovered Commissioner shall designate and establish warehouses
within one year after the final liquidation, upon written for use as public and private bonded warehouses, sheds
request and notice of error from the importer, or upon or yards, or for other special purposes.
statement of error certified by the Collector. All such warehouses and premises shall be subject to the
For the purpose of correcting errors specified in the next supervision of the Collector, who shall impose such
preceding paragraph the Collector is authorized to conditions as may be deemed necessary for the
reliquidate entries and collect additional charges, or to protection of the revenue and of the articles stored
make refunds on statement of errors within the statutory therein.
time limit. SECTION 1902.Responsibility of Operators. — The
SECTION 1708.Claim for Refund of Duties and Taxes and operators of bonded warehouse in case of loss of the
Mode of Payment. — All claims for refund of duties shall imported articles stored shall be liable for the payment of
be made in writing and forwarded to the Collector to duties and taxes due thereon.
whom such duties are paid, who upon receipt of such The government assumes no legal responsibility in
claim, shall verify the same by the records of his Office, respect to the safekeeping of articles stored in any
and if found to be correct and in accordance with law, customs warehouse, sheds, yards or premises.
shall certify the same to the Commissioner with his
recommendation together with all necessary papers and SECTION 1903.Bonded Warehouses. — Application for the
documents. Upon receipt by the Commissioner of such establishment of bonded warehouses must be made in
certified claim he shall cause the same to be paid if found writing and filed with the Collector, describing the
correct. premises, the location, and capacity of the same, and the
purpose for which the building is to be used.
If a result of the refund of customs duties there would
necessarily result a corresponding refund of internal Upon receipt of such application, the Collector shall cause
revenue taxes on the same importation, the Collector an examination of the premises, with reference
shall likewise certify the same to the Commissioner who particularly to its location, construction and means
shall cause the said taxes to be paid, refunded, or tax provided for the safekeeping of articles and if found
credited in favor of the importer, with advice to the satisfactory, he may authorize its establishment, and
Commissioner of Internal Revenue. accept a bond for its operation and maintenance. The
operator of such bonded warehouse shall pay an annual
supervision fee in an amount to be fixed by the
PART 7 Abandonment of Imported Articles Commissioner. The bonded warehouse officers and other
employees thereof shall be regular customs employees
SECTION 1801.Abandonment, Kinds and Effects of. — An
who shall be appointed in accordance with the Civil
imported article is deemed abandoned under any of the
Service Law, rules and regulations.
following circumstances:
SECTION 1904.Irrevocable Domestic Letter of Credit or
a.When the owner, importer, consignee of the imported
Bank Guarantee or Warehousing Bond. — After articles
article expressly signifies in writing to the Collector of
declared in the entry for warehousing shall have been
Customs his intention to abandon; or
examined and the duties, taxes and other charges shall
b.When the owner, importer, consignee or interested have been determined, the Collector shall require from
party after due notice, fails to file an entry within thirty the importer an irrevocable domestic letter of credit, bank
(30) days, which shall not be extendible, from the date of guarantee or bond equivalent to the amount of such
discharge of the last package from the vessel or aircraft, duties, taxes and other charges conditioned upon the
or having filed such entry, fails to claim his importation withdrawal of articles within the period prescribed by
within fifteen (15) days, which shall not likewise be section nineteen hundred and eight of this Code and for
extendible, from the date of posting of the notice to claim payment of any duties, taxes and other charges to which
such importation. the articles shall be then subject and upon compliance
Any person who abandons an article or who fails to claim with all legal requirements regarding their importation.
his importation as provided for in the preceding SECTION 1905.Discontinuance of Warehouses. — The use
paragraph shall be deemed to have renounced all his of any warehouse may be discontinued by the Collector
interests and property rights therein (R.A. 7651, June 04, at any time when conditions so warrant, or, in case of
1993). private warehouse, upon receipt of written request to that
SECTION 1802.Abandonment of Imported Articles. — An effect from the operator thereof of the premises, provided
abandoned article shall ipso facto be deemed the all the requirements of the law and regulations have been
property of the Government and shall be disposed of in complied with by said operator. Where the dutiable
accordance with the provisions of this Code. article is stored in such premises, the same must be
removed at the risk and expense of the operator and the
Nothing in this section shall be construed as relieving the premises shall not be relinquished, nor discontinuance of
owner or importer from any criminal liability which may its use authorized, until a careful examination of the
arise from any violation of law committed in connection account of the warehouse shall have been made.
with the importation of the abandoned article. Discontinuance of any warehouse shall be effective upon
Any official or employee of the Bureau of Customs or of official notice and approval thereof by the Collector.
other government agencies who, having knowledge of SECTION 1906.Entry of Articles for Warehousing. — The
the existence of an abandoned article or having control or entry of articles for warehousing shall be in the required
custody of such abandoned article, fails to report to the number of copies in the prescribed form, and shall be
Collector within twenty-four (24) hours from the time the verified as in the entry of the articles for consumption. No
article is deemed abandoned, shall be punished with the warehousing entry shall be accepted for any article if



from the entry, supporting documents and/or to be governed by Republic Act Numbered Thirty-one
information such article is imported contrary to any law. hundred and thirty-seven.
SECTION 1907.Withdrawal of Articles from Bonded SECTION 2003.Procedure for Withdrawal. — Articles
Warehouse. — Articles entered under irrevocable received into such bonded manufacturing warehouse or
domestic letter of credit, bank guarantee or bond may be articles manufactured therein may be withdrawn or
withdrawn at any time for consumption for removed therefrom for direct shipment and for
transportation to another port, for exportation or for immediate exportation in bond under the supervision of
delivery on board a vessel or aircraft engaged in foreign the proper customs officer, who shall certify to such
trade for use on board such vessel or aircraft as sea stores shipment and exportation, or lading for immediate
or aircraft stores after liquidation of the entry. The exportation as the case may be, describing the articles by
withdrawal must be made by a person or firm duly their mark or otherwise, the quantity, the date of
authorized by the former, whose authority must appear in exportation, in the name of the vessel or aircraft:
writing upon the face of the withdrawal entry. Provided, That the waste and by-products incident to the
SECTION 1908.Limit to Period of Storage in Bonded process of manufacture in said bonded warehouse may
Warehouse. — Articles duly entered for warehousing may be withdrawn for domestic consumption upon payment
remain in bonded warehouses for a maximum period of of duty equal to the duty which would be assessed and
one year from the time of arrival at the port of entry. collected pursuant to law as if such waste or by-products
Articles not withdrawn at the expiration of the prescribed were imported from a foreign country: Provided, further,
period shall be sold at public auction by the Collector. That all waste materials may be disposed under
government supervision. All labor performed and services
SECTION 1909.Charges of Storage in Bonded Warehouse. rendered under these provisions shall be under the
— The rates of storage in public or private bonded supervision of the proper customs officer and at the
warehouses shall be subject to arrangement between the expense of the manufacturer.
importer and the warehouse operator, but such rates
shall not be in excess of the customary charges fixed by SECTION 2004.Verification by the Commissioner. — A
the Collector of the port for such warehouses. careful account shall be kept by the Collector of all articles
delivered by him to any bonded manufacturing
warehouse, and a sworn monthly return, verified by the
PART 2 Bonded Manufacturing and Smelting customs officer in charge, shall be made by the
Warehouse manufacturer containing a detailed statement of all the
imported articles used by him in the manufacture of the
SECTION 2001.Establishment of Bonded Manufacturing exported articles.
Warehouses. — All articles manufactured in whole or in All documents, books and records of accounts
part of imported materials, and intended for exportation concerning the operation of any bonded manufacturing
without being charged with duty, shall, in order to be so warehouse shall, upon demand, be made available to the
manufactured and exported, be made and manufactured Collector or his representative for examination and/or
in bonded manufacturing warehouses under such rules audit.
and regulations as the Commissioner of Customs with
the approval of the Secretary of Finance, shall prescribe: Before commencing business the operator of any bonded
Provided, That the manufacturer of such articles shall first manufacturing warehouse shall file with the
file a satisfactory bond for the faithful observance of all Commissioner a list of all the articles intended to be
laws, rules and regulations applicable thereto. manufactured in such warehouse, and state the formula
of manufacture and the names and quantities of the
SECTION 2002.Exemption from Duty. — ingredients to be used therein.
a.Whenever articles manufactured in any bonded SECTION 2005.Bonded Smelting Warehouses. — The
manufacturing warehouse established under the plants of manufacturers engaged in smelting or refining,
provisions of the preceding section shall be exported or both, of ores and crude metals, may, upon the filing of
directly therefrom or shall be duly laden for immediate satisfactory bonds, be designated as bonded smelting
exportation under the supervision of the proper official, warehouses. Ores or crude metals may be removed from
such articles shall be exempt from duty. the vessel or aircraft in which imported, or from the
b.Any imported material used in the manufacture of such bonded warehouse, into a bonded smelting warehouse
articles, and any package, covering, brand and label used without the payment of duties thereon, and there
in putting up the same may, under the regulation smelted or refined, or both, together with ores or crude
prescribed by the Commissioner, with the approval of the metals of home or foreign production: Provided, That the
Secretary of Finance, be conveyed without the payment bonds shall be charged with a sum equal in amount to
of duty into any bonded manufacturing warehouse, and the regular duties which would have been payable on
imported articles may, under the aforesaid regulations, be such ores and crude metals if entered for consumption at
transferred without the payment of duty from any the time of their importation, and the several charges
bonded warehouse into any bonded manufacturing against such bond shall be cancelled upon the
warehouse, or to duly accredited sub-contractors of exportation or delivery to a bonded manufacturing
manufacturers who shall process the same into finished warehouse established under section twenty hundred
products for exports and deliver such finished products and one hereof of a quantity of the same kind of metal
back to the bonded manufacturing warehouse, equal to the quantity of metal producible from the
therefrom to be exported; but this privilege shall not be smelting or refining, or both, of the dutiable metal
held to apply to implements, machinery or apparatus to contained in such ores or crude metals, due allowance
be used in the construction or repair of any bonded being made of smelter wastage as ascertained from time
manufacturing warehouse: Provided, however, That the to time by the Commissioner: Provided, further, That the
materials transferred or conveyed into any bonded said metals so producible or any portion thereof, may be
manufacturing warehouse shall be used in the withdrawn for domestic consumption or transferred to a
manufacture of articles for exportation within a period of bonded warehouse and withdrawn therefrom and the
nine (9) months from date of such transfer or conveyance several charges against the bond cancelled upon the
into the bonded manufacturing warehouse, which period payment of the duties chargeable against an equivalent
may for sufficient reasons be further extended for not amount of ores or crude metals from which said metal
more than three (3) months by the Commissioner. would be producible in their condition as imported:
Materials not used in the manufacture of articles for Provided, further, That on the arrival of the ores or crude
exportation within the prescribed period shall pay the metals at such establishments they shall be sampled and
corresponding duties: Provided, further, That the assayed according to commercial methods under the
operation of embroidery and apparel firms shall continue supervision of proper government officials: Provided,
further, That all labor performed and services rendered
pursuant to this section shall be under the supervision of



the proper customs official and at the expense of the Customs shall be allowed to enter the customs premises
manufacturer: Provided, further, That all regulations for without a written permission of the Collector. No person
carrying out the provisions of this section shall be shall obstruct a customhouse, warehouse, office, wharf,
prescribed by the Commissioner with the approval of the street or other premises under the control of the Bureau
Department head: And Provided, finally, That the several of Customs, or in any approaches to that house or
charges against the bond of any smelting warehouse premises.
established under the provisions of this section may be SECTION 2202.Special Surveillance for Protection of
cancelled upon the exportation or transfer to a bonded Customs Revenue and Prevention of Smuggling. — In
manufacturing warehouse from any other bonded order to prevent smuggling and to secure the collection
smelting warehouse established under this section of a of the legal duties, taxes and other charges, the customs
quantity of the same kind of metal, in excess of that service shall exercise surveillance over the coast,
covered by open bonds, equal to the amount of metal beginning when a vessel or aircraft enters Philippine
producible from the smelting or refining, or both of the territory and concluding when the article imported
dutiable metal contained in the imported ores or crude therein has been legally passed through the
metals, due allowance being made of the smelter customhouse: Provided, That the function of the
wastage as ascertained from time to time by the Philippine Coast Guard to prevent and suppress illegal
Commissioner with the approval of the department head. entry, smuggling and other customs frauds and
violations of the maritime law and its proper surveillance
of vessels entering and/or leaving the Philippine territory
as provided in section 3 (a) of Republic Act Numbered
PART 3 Transportation in Bond Fifty-one hundred and seventy-three shall continue to be
SECTION 2101.Entry for Immediate Transportation. — in force and effect.
Articles entered for constructive warehousing and SECTION 2203.Persons Having Police Authority. — For the
immediate transportation under transit manifest to other enforcement of the tariff and customs laws, the following
ports of the Philippines without appraisement may be persons are authorized to effect searches, seizures and
transported under irrevocable domestic letter of credit, arrests conformably with the provisions of said laws.
bank guarantee or bond, upon proper examination and
consigned to the Collector at the port of destination, who a.Officials of the Bureau of Customs, district collectors,
will allow entry to be made at his port by the consignee. deputy collectors, police officers, agents, inspectors and
guards of the Bureau of Customs;
Articles received at any port from another port of the
Philippines on an entry for immediate transportation may b.Officers of the Philippine Navy and other members of
be entered at the port of delivery either for consumption the Armed Forces of the Philippines and national law
or warehousing. enforcement agencies when authorized by the
Commissioner;
SECTION 2102.Bonding of Carrier Transporting Articles
Under the Preceding Section. — A carrier engaged in c.Officials of the Bureau of Internal Revenue on all cases
conveying imported articles under the preceding section falling within the regular performance of their duties,
from a port of importation to other ports shall give when the payment of internal revenue taxes are involved;
security in the nature of a general transportation bond, in d.Officers generally empowered by law to effect arrests
a sum not less than ten thousand pesos (P10,000.00) and execute processes of courts, when acting under the
conditioned that the carrier shall transport and deliver direction of the Collector.
without delay, and in accordance with law and
regulations, to the Collector at the port of destination, all In order to avoid conflicts, and insure coordination among
articles delivered to such carrier and that all proper these persons having authority to effect searches,
charges and expenses incurred by the customs seizures and arrests for the effective enforcement of, and
authorities or at their instance by reason of such conformably with tariff and customs laws, the Secretary
transshipments shall be duly paid. of Finance, shall, subject to the approval of the President
of the Philippines, define the scope, areas covered,
SECTION 2103.Articles Entered for Immediate procedures and conditions governing the exercise of such
Exportation. — Where an intent to export the articles is police authority including custody and responsibility for
shown by the bill of lading, invoice, manifest, or other the goods seized. The rules and regulations to this effect
satisfactory evidence, the whole or a part of a bill (not less shall be furnished to all the government agencies and
than one package) may be entered for immediate personnel concerned for their guidance and compliance,
exportation under bond. The Collector shall designate the and shall be published in a newspaper of general
vessel or aircraft in which the articles are laden circulation.
constructively as a warehouse to facilitate the direct
transfer of the articles to the exporting vessel or aircraft. SECTION 2204.Place Where Authority May be Exercised.
— All persons conferred with powers in the preceding
Unless it shall appear by the bill of lading, invoice, section may exercise the same at any place within the
manifest, or other satisfactory evidence, that articles jurisdiction of the Bureau of Customs.
arriving in the Philippines are destined for transshipment,
no exportation thereof will be permitted except under SECTION 2205.Exercise of Power of Seizure and Arrest. —
entry for immediate exportation under irrevocable It shall be within the power of the customs official or
domestic letter of credit, bank guaranty or bond in an person authorized as aforesaid, and it shall be his duty, to
amount equal to the ascertained duties, taxes and other make seizure of any vessel, aircraft, cargo, article, animal
charges. or other movable property, when the same is subject to
forfeiture or liable for any fine imposed under tariff and
Upon the exportation of the articles, and the production customs laws, rules and regulations, such power to be
of proof of landing of same beyond the limits of the exercised in conformity with the law and the provisions of
Philippines, the irrevocable domestic letter of credit, bank this Code: Provided, That the powers of the Fisheries
guaranty or bond shall be released. Commission to make arrests, searches and seizures as
provided in section four paragraphs "g" and "i" of Republic
Act Numbered Thirty-five hundred and twelve, and the
TITLE VI Administrative and Judicial
Philippine Coast Guard under Republic Act Numbered
Proceedings Fifty-one hundred and seventy-three shall continue to be
in force and effect.
PART 1 Search, Seizure and Arrest SECTION 2206.Duty of Officer or Official to Disclose
SECTION 2201.Trespass or Obstruction of Customs Official Character. — It shall be the duty of any person
Premises. — No person other than those with legitimate exercising authority as aforesaid, upon being questioned
business with, or employees of, the port or the Bureau of at the time of the exercise thereof, to make known his


official character as an officer or official of the

Government, and if his authority is derived from special PART 2 Administrative Proceedings
authorization in writing to exhibit the same for
inspection, if demanded. SECTION 2301.Warrant for Detention of Property-Cash
Bond. — Upon making any seizure, the Collector shall
SECTION 2207.Authority to Require Assistance. — Any issue a warrant for the detention of the property; and if
person exercising police authority under the customs and the owner or importer desires to secure the release of the
tariff laws may demand assistance of any police officer property for legitimate use, the Collector shall, with the
when such assistance shall be necessary to effect any approval of the Commissioner of Customs, surrender it
search, seizure or arrest which may be lawfully made or upon the filing of a cash bond, in an amount to be fixed
attempted by him. It shall be the duty of any police officer by him, conditioned upon the payment of the appraised
upon whom such requisition is made to give such lawful value of the article and/or any fine, expenses and costs
assistance in the matter as may be required. which may be adjudged in the case: Provided, That such
SECTION 2208.Right of Police Officer to Enter Inclosure. — importation shall not be released under any bond when
For the more effective discharge of his official duties, any there is prima facie evidence of fraud in the importation
person exercising the powers herein conferred, may at of the article: Provided, further, That articles the
any time enter, pass through, or search any land or importation of which is prohibited by law shall not be
inclosure or any warehouse, store or other building, not released under any circumstance whomsoever, Provided,
being a dwelling house. finally, That nothing in this section shall be construed as
relieving the owner or importer from any criminal liability
A warehouse, store or other building or inclosure used for which may arise from any violation of law committed in
the keeping or storage of articles does not become a connection with the importation of the article (R.A. 7651,
dwelling house within the meaning hereof merely by June 04, 1993).
reason of the fact that the person employed as
watchman lives in the place, nor will the fact that his SECTION 2302.Report of Seizure to Commissioner and
family stays there with him alter the case. Chairman, Commission on Audit. — When a seizure is
made for any cause, the Collector of the district wherein
SECTION 2209.Search of Dwelling House. — A dwelling the seizures is effected shall immediately make report
house may be entered and searched only upon warrant thereof to the Commissioner and Chairman of the
issued by a Judge of the Court or such other responsible Commission on Audit.
officers as may be authorized by law upon sworn
application showing probable cause and particularly SECTION 2303.Notification to Owner or Importer. — The
describing the place to be searched and person or thing Collector shall give the owner or importer of the property
to be seized. or his agent a written notice of the seizure and shall give
him an opportunity to be heard in reference to the
SECTION 2210.Right to Search Vessels or Aircrafts and delinquency which was the occasion of such seizure.
Persons or Articles Conveyed Therein. — It shall be lawful
for any official or person exercising police authority under For the purpose of giving such notice and of all other
the provisions of this Code to go aboard any vessel or proceedings in the matter of such seizure, the importer,
aircraft within the limits of any collection district, and to consignee or person holding the bill of lading shall be
inspect, search and examine said vessel or aircraft and deemed to be the "owner" of the article included in the
any trunk, package, box or envelope on board, and to bill.
search any person on board the said vessel or aircraft if For the same purpose, "agent" shall be deemed to
under way, to use all necessary force to compel include not only any agent in fact of the owner of the
compliance; and if it shall appear that any breach or seized property but also any person having responsible
violation of the customs and tariff laws of the Philippines possession of the property at the time of the seizure, if
has been committed, whereby or in consequence of the owner or his agent in fact is unknown or cannot be
which such vessels or aircrafts, or the article, or any part reached.
thereof, on board of or imported by such vessel or aircraft,
is liable to forfeiture to make seizure of the same or any SECTION 2304.Notification to Unknown Owner. — Notice
part thereof. to an unknown owner shall be effected by posting for
fifteen days in the public corridor of the customhouse of
The power of search hereinabove given, shall extend to the district in which the seizure was made, and, in the
the removal of any false bottom, partition, bulkhead or discretion of the Commissioner, by publication in a
other obstruction, so far as may be necessary to enable newspaper or by such other means as he shall consider
the officer to discover whether any dutiable or, forfeitable desirable.
articles may be concealed therein.
SECTION 2305.Description, Appraisal and Classification
No proceeding herein shall give rise to any claim for the of Seized Property. — The Collector shall also cause a list
damage thereby caused to article or vessel or aircraft. and particular description and/or classification of the
SECTION 2211.Right to Search Vehicles, Beasts and property seized to be prepared and an appraisement of
Persons. — It shall also be lawful for a person exercising the same, like, or similar article at its wholesale value in
authority as aforesaid to open and examine any box, the local market in the usual wholesale quantities in the
trunk, envelope or other container, wherever found when ordinary course of trade to be made by at least two
he has reasonable cause to suspect the presence therein appraising officials, if there are such officials at or near
of dutiable or prohibited article or article introduced into the place of seizure. In the absence of those officials, then
the Philippines contrary to law, and likewise to stop, by two competent and disinterested citizens of the
search and examine any vehicle, beast or person Philippines, to be selected by him for that purpose,
reasonably suspected of holding or conveying such article residing at or near the place of seizure, which list and
as aforesaid. appraisement shall be properly attested to by the
Collector and the persons making the appraisal.
SECTION 2212.Search of Persons Arriving From Foreign
Countries. — All persons coming into the Philippines from SECTION 2306.Proceedings in Case of Property Belonging
foreign countries shall be liable to detention and search to Unknown Parties. — If, within fifteen days after the
by the customs authorities under such regulations as notification prescribed in section twenty-three hundred
may be prescribed relative thereto. and four of this Code, no owner or agent can be found or
appears before the Collector, the latter shall declare the
property forfeited to the government to be sold at
Female inspectors may be employed for the examination auction in accordance with law.
and search of persons of their own sex. SECTION 2307.Settlement of Case by Payment of Fine or
Redemption of Forfeited Property. — Subject to approval
of the Commissioner, the district collector may, while the
case is still pending, except when there is fraud, accept



the settlement of any seizure case provided that the make the appropriate order, the entry reliquidated
owner, importer, exporter, or consignee or his agent shall necessary.
offer to pay to the collector a fine imposed by him upon In seizure cases, the Collector, after a hearing shall in
the property, or in case of forfeiture, the owner, exporter, writing make a declaration of forfeiture or fix the amount
importer or consignee or his agent shall offer to pay for of the fine or take such other action as may be proper.
the domestic market value of the seized article. The
Commissioner may accept the settlement of any seizure SECTION 2313.Review of Commissioner. — The person
case on appeal in the same manner. aggrieved by the decision or action of the Collector in any
matter presented upon protest or by his action in any
Upon payment of the fine as determined by the district case of seizure may, within fifteen (15) days after
collector which shall be in amount not less than twenty notification on writing by the Collector of his actions or
percentum (20%) nor more than eighty percentum (80%) decisions, file a written notice to the Collector with a copy
of the landed cost of the seized imported article or the furnished to the Commissioner of his intention to appeal
F.O.B. value of the seized article for export, or payment of the action or decision of the Collector to the
the domestic market value, the property shall be Commissioner. Thereupon the Collector shall forthwith
forthwith released and all liabilities which may or might transmit all the records of the proceedings to the
attach to the property by virtue of the offense which was Commissioner, who shall approve, modify or reverse the
the occasion of the seizure and all liability which might action or decision of the Collector and take such steps
have been incurred under any cash deposit or bond given and make such orders as may be necessary to give effect
by the owner or agent in respect to such property shall to his decision: Provided, That when an appeal is filed
thereupon be deemed to be discharged. beyond the period herein prescribed, the same shall be
Settlement of any seizure case by payment of the fine or deemed dismissed.
redemption of forfeited property shall not be allowed in If in any seizure proceedings, the Collector renders a
any case where the importation is absolutely prohibited decision adverse to the Government, such decision shall
or where the release of the property would be contrary to be automatically reviewed by the Commissioner and the
law. records of the case elevated within five (5) days from the
SECTION 2308.Protest and Payment Upon Protest in Civil promulgation of the decision of the Collector. The
Matters. — When a ruling or decision of the Collector is Commissioner shall render a decision on the automatic
made whereby liability for duties, taxes, fees or other appeal within thirty (30) days from receipts of the records
charges are determined, except the fixing of fines in of the case. If the Collector's decision is reversed by the
seizure cases, the party adversely affected may protest Commissioner, the decision of the Commissioner shall be
such ruling or decision by presenting to the Collector at final and executory. However, if the Collector's decision is
the time when payment of the amount claimed to be due affirmed, or if within thirty (30) days from receipt of the
the government is made, or within fifteen (15) days record of the case by the Commissioner no decision is
thereafter, a written protest setting forth his objection to rendered or the decision involves imported articles whose
the ruling or decision in question, together with the published value is five million pesos (P5,000,000.00) or
reasons therefore. No protest shall be considered unless more, such decision shall be deemed automatically
payment of the amount due after final liquidation has appealed to the Secretary of Finance and the records of
first been made and the corresponding docket fee, as the proceedings shall be elevated within five (5) days
provided for in Section 3301. from the promulgation of the decision of the
SECTION 2309.Protest Exclusive Remedy in Protestable Commissioner or of the Collector under appeal, as the
Case. — In all cases subject to protest, the interested case may be, is affirmed by the Secretary of Finance, or
party who desires to have the action of the Collector within thirty (30) days from receipt of the records of the
reviewed, shall make a protest, otherwise, the action of proceedings by the Secretary of Finance, no decision is
the Collector shall be final and conclusive against him, rendered, the decision of the Secretary of Finance, or of
except as to matters collectible for manifest error in the the Commissioner, or of the Collector under appeal, as
manner prescribed in section one thousand seven the case may be, shall become final and executory.
hundred and seven hereof.
SECTION 2310.Form and Scope of Protest. — Every protest In any seizure proceeding, the release of imported articles
shall be filed in accordance with the prescribed rules and shall not be allowed unless and until a decision of the
regulations promulgated under this section and shall Collector has been confirmed in writing by the
point out the particular decision or ruling, of the Collector Commissioner of Customs (R.A. 7651, June 04, 1993).
to which exception is taken or objection made, and shall SECTION 2314.Notice of Decision of Commissioner. —
indicate with reasonable precision the particular ground Notice of the decision of the Commissioner shall be given
or grounds upon which the protesting party bases his to the party by whom the case was brought before him
claim for relief. for review, and in seizure cases such notice shall be
The scope of a protest shall be limited to the subject effected by personal service if practicable.
matter of a single adjustment or other independent SECTION 2315.Supervisory Authority of Commissioner and
transaction, but any number of issue may be raised in a Secretary of Finance in Certain Cases. — If any case
protest with reference to the particular item or items involving the assessment of duties, the Collector renders
constituting the subject matter of the protest. a decision adverse to the Government, such decision shall
SECTION 2311.Samples to be Furnished by Protesting be automatically elevated to, and reviewed by, the
Parties. — If the nature of the articles permit, importers Commissioner; and if the Collector's decision would be
filing protests involving questions of fact must, upon affirmed by the Commissioner, such decision shall be
demand, supply the Collector with samples of the articles automatically elevated to, and be finally reviewed by, the
which are the subject matter of the protest. Such samples Secretary of Finance: Provided, however, That if within
shall be verified by the customs official who made the thirty (30) days from receipt of the record of the case by
classification against which the protest are filed. the Commissioner or by the Secretary of Finance, as the
SECTION 2312.Decision or Action of Collector in Protest case may be, no decision is rendered by either of them,
and Seizure Cases. — When a protest in proper form is the decision under review shall be final and executory:
presented in a case where protest is required, the Provided, further, That any party aggrieved by either the
Collector shall issue an order for hearing within fifteen (15) decision of the Commission or of the Secretary of Finance
days from receipt of the protest and hear the matter thus may appeal to the Court of Tax Appeals within thirty (30)
presented. Upon the termination of the hearing, the days from receipt of a copy of such decision. For this
Collector shall render a decision within thirty (30) days, purpose, Republic Act numbered eleven hundred and
and if the protest is sustained, in whole or in part, he shall twenty-five is hereby amended accordingly.


Except as provided in the preceding paragraph, the SECTION 2501-A.Unauthorized Withdrawal of Imported
supervisory authority of the Secretary of Finance over the Articles From Bonded Warehouse. — Upon any
Bureau of Customs shall not extend to the administrative unauthorized withdrawal of imported articles stored in a
review of the ruling or decision of the Commissioner in customs bonded warehouse, a surcharge of fifty percent
matters appealed to the Court of Tax Appeals. (50%) of duties, taxes, custom fees and charges, found to
SECTION 2316.Authority of Commissioner to Make be due and unpaid, shall be added thereto and collected.
Compromise. — Subject to the approval of the Secretary The surcharge shall be increased by twenty-five percent
of Finance, the Commissioner of Customs may (25%) annually of the unpaid taxes if the delinquency lasts
compromise any case arising under this Code or other for more than one year.
laws or part of laws enforced by the Bureau of Customs SECTION 2502.Repealed by P.D. 1679, March 6, 1980.
involving the imposition of fines, surcharges and SECTION 2503.Undervaluation, Misclassification and
forfeitures unless otherwise specified by law. Misdeclaration in Entry. — When the dutiable value of the
SECTION 2317.Government's Right of Compulsory imported articles shall be so declared and entered that
Acquisition. — In order to protect government revenues the duties, based on the declaration of the importer on
against the undervaluation of goods subject to ad the face of the entry would be less by ten percent (10%)
valorem duty, the Commissioner of Customs may acquire than should be legally collected, or when the imported
imported goods under question for a price equal to their articles shall be so described and entered that the duties
declared customs value plus any duties already paid on based on the importer's description on the face of the
the goods, payment for which shall be made within ten entry would less by ten percent (10%) than should be
(10) working days from issuance of a warrant signed by legally collected based on the tariff classification, of when
the Commissioner of Customs for the acquisition of such the dutiable weight, measurement or quantity of
goods. imported articles is found upon examination to exceed by
An importer who is dissatisfied with a decision of the ten percent (10%) or more than the entered weight,
Commissioner of Customs pertaining to this section may, measurement or quantity, a surcharge shall be collected
within twenty (20) working days after the date on which from the importer in an amount of not less than the
notice of the decision is given, appeal to the Secretary of difference between the full duty and the estimated duty
Finance and thereafter if still dissatisfied, to the Court of based upon the declaration of the importer, nor more
Tax Appeals as provided for in Section 2402 of the Tariff than twice of such difference: Provided, That an
and Customs Code of the Philippines, as amended. undervaluation, misdeclaration in weight, measurement
or quantity of more than thirty percent (30%) between
Where no appeal is made by the importer, or upon the value, weight, measurement or quantity declared in
reaffirmation of the commissioner's decision during the the entry, and the actual value, weight, quantity, or
appeals process, the Bureau of Customs or its agent shall measurement shall constitute a prima facie evidence of
sell the acquired goods pursuant to existing laws and fraud penalized under Section 2530 of this Code:
regulations. Provided, further, That any misdeclared or undeclared
Nothing in this Section limits or affects any other powers imported article/items found upon examination shall ipso
of the Bureau of Customs with respect to the disposition facto be forfeited in favor of the Government to be
of the goods or any liability of the importer or any other disposed of pursuant to the provisions of this Code.
person with respect to an offense committed in the When the undervaluation, misdescription,
importation of the goods. (R.A. 9135, April 27, 2001) misclassification or misdeclaration in the import entry is
intentional, the importer shall be subject to penal
provision under Section 3602 of this Code (R.A. 7651, June
PART 3 Judicial Proceedings 04, 1993).
SECTION 2401.Supervision and Control Over Criminal and SECTION 2504.Failure or Refusal of Party to Give
Civil Proceedings. — Civil and criminal actions and Evidence or Submit Documents for Examination. —
proceedings instituted in behalf of the government under When the owner, importer or consignee of any imported
the authority of this Code or other law enforced by the articles, or the agent of either, fails or refuses, upon lawful
Bureau shall be brought in the name of the government demand in writing by any customs official to appear,
of the Philippines and shall be conducted by customs make oath or submit himself to examination or to answer
officers but no civil or criminal action for the recovery of any material question or refuses to produce records,
duties or the enforcement of any fine, penalty or accounts or invoices in his possession pertaining to the
forfeiture under this Code shall be filed in court without value, classification or disposition of the article in
the approval of the Commissioner. (R.A. 9135, April 27, question and deemed material in appraising the same,
2001) the Collector shall assess a surcharge of twenty
SECTION 2402.Review by Court of Tax Appeals. — The percentum ad valorem on the article which is the subject
party aggrieved by the ruling of the Commissioner in any of the importation.
matter brought before him upon protest or by his action SECTION 2505.Failure to Declare Baggage. — Whenever
or ruling in any case of seizure may appeal to the Court of any dutiable article is found in the baggage of any person
Tax Appeals, in the manner and within the period arriving in the Philippines which is not included in the
prescribed by law and regulations. baggage declaration, such article shall be seized and the
Unless an appeal is made to the Court of Tax Appeals in person in whose baggage it is found may obtain release
the manner and within the period prescribed by laws and of such article, if not imported contrary to any law upon
regulations, the action or ruling of the Commissioner payment of treble and appraised value of such article plus
shall be final and conclusive. all duties, taxes and other charges due thereon unless it
shall be established to the satisfaction of the Collector
that the failure to mention or declare such dutiable article
PART 4 Surcharges, Fines and Forfeitures was without fraud.
SECTION 2501.Failure to Pay Liquidated Charges. — For Nothing in this section shall preclude the bringing of
failure to pay the amount of liquidated duties, taxes and criminal action against the offender.
other charges of a liquidation within ten (10) working days
after the notice of liquidation shall have been publicly SECTION 2506.Breach of Bond. — Upon breach of bond
posted in the customhouse, a surcharge of ten percent required to be filed under the tariff and customs laws, the
(10%) of the total amount or balance found upon Collector subject to the approval of the Commissioner
liquidation shall be added thereto and collected may accept in satisfaction thereof a smaller sum than
therewith, which surcharge shall be increased to that mentioned in the penalty clause of the bond, but in
twenty-five percent (25%) if the delinquency lasts for no case less than the amount necessary to indemnify the
more than one year. Government for the damage occasioned by such breach.


SECTION 2513.Vessel or Aircraft Departing Before Entry Such vessel shall be liable for the payment of the
Made. — Any vessel or aircraft arriving within the limits of aforesaid fine if the master, within forty eight hours, after
a collection district from a foreign port which departs arrival, shall fail to deliver to the proper consular officer of
before the entry is made, without being compelled to do his nation such document as are required by law to be
so by stress of weather, pursuit or duress of enemies, or deposited with him, or, if after having made such deposit,
other necessity, shall be fined in the sum not exceeding the master shall fail to produce to the Collector the
five thousand pesos. required evidence that the same has been effected.
SECTION 2514.Obstruction to Boarding Official. — If the SECTION 2520.Bringing of Unmanifested Arms,
master or pilot-in-command or any member of the Explosives or War Equipment. — Any vessel or aircraft
complement of any vessel or aircraft arriving at the arriving at a port in the Philippines having firearms,
Philippine port obstructs or hinders any official from gunpowder, cartridges, dynamite or any other explosives,
lawfully going on board such vessel or aircraft for the munitions or equipment of war concealed on board the
purpose of enforcing the customs and tariff laws, or vessel or not contained in the manifest of the vessel or
international causes any such official to be so obstructed aircraft, shall be fined a sum of not less than thirty
or hindered, the vessel or aircraft shall be fined in a sum thousand pesos (P30,000.00) but not exceeding one
not exceeding five thousand pesos. hundred thousand pesos (P100,000.00).
SECTION 2521.Failure to Supply Requisite Manifests. — If
SECTION 2515.Unlawful Boarding or Leaving of Vessel or any vessel or aircraft enters or departs from a port of
Aircraft. — If upon arrival at the Philippine port, any entry without submitting the proper manifests to the
master of a vessel or pilot in command of an aircraft customs authorities, or shall enter or depart conveying
engaged in a foreign trade permits any person to board unmanifested cargo other than as stated in the next
or leave the vessel or aircraft without the permission of preceding section hereof, such vessel or aircraft shall be
the customs official in charge, such vessel or aircraft shall fined in a sum not less than ten thousand pesos
be fined in a sum not exceeding five thousand pesos. (P10,000.00) but not exceeding thirty thousand pesos
(P30,000.00).
SECTION 2516.Failure to Deliver or Receive Mail. — If the
master of a vessel or the pilot in command of an aircraft The same fine shall be imposed upon any arriving or
arriving at the Philippine port fails or refuses to deliver to departing vessel or aircraft. If the master or pilot in
the postmaster of the nearest post office, as required by command shall fail to deliver or mail to the Commission
law or contract, all mail matters on board such vessel or on Audit a true copy of the manifest of the incoming or
aircraft and destined for the particular port, the vessel or outgoing cargo, as required by law.
aircraft shall be fined in a sum not exceeding one SECTION 2522.Disappearance of Manifested Article. —
thousand pesos. When any package or article mentioned in the manifest
When any vessel or aircraft which is required by law or shall not be duly forthcoming upon the arrival of the
contract to carry mail matter departs from a port or place vessel or aircraft, the vessel or aircraft shall be fined in a
where mail should be received, without giving the sum not exceeding two thousand pesos (P2,000.00),
postmaster or other postal official a reasonable unless the disappearance of the package or article in
opportunity to deliver to the vessel or aircraft or its proper question was not due to the negligence of the master of
officer or agent, any mail matter addressed to or destined the vessel or pilot in command of an aircraft and
for the port or place to which the vessel or aircraft is explained to the satisfaction of the Collector.
bound, such vessel or aircraft shall be fined in a sum not The vessel or aircraft shall be liable for the payment of the
exceeding one thousand pesos. same fine when a package or article listed in the manifest
SECTION 2517.Unlading of Cargo Before Arrival at Port of does not tally materially in character or otherwise with
Destination. — If, upon the arrival within the limits of any the description thereof in the manifest.
collection district of the Philippines of any vessel or SECTION 2523.Discrepancy Between Actual and
aircraft engaged in foreign trade, the master or pilot in Declared Weight of Manifested Article. — If the gross
command thereof permits any part of the cargo to be weight of any article or package described in the
unladen before her arrival at her port of destination, and manifest exceeds by more than twenty (20) percentum
without authority from a proper customs official, such the gross weight as declared in the manifest or bill of
vessel or aircraft shall be fined a sum not less than thirty lading thereof, and the Collector shall be of the opinion
thousand pesos (P30,000.00) but not exceeding one that such discrepancy was due to the carelessness or
hundred thousand pesos (P100,000.00), provided that no incompetency of the master or pilot in command, owner
fine shall accrue, upon satisfactory proof to the proper or employee of the vessel or aircraft, a fine of not more
collector that the unlading was rendered necessary by than fifteen (15) percentum of the value of the package or
stress of weather, accident or other necessity. article in respect to which the deficiency exists, may be
SECTION 2518.Unlading of Cargo at Improper Time or imposed upon the importing vessel or aircraft.
Place After Arrival. — Any vessel or aircraft, which after SECTION 2524.Delivery of Cargo Not Agreeing with the
arrival at her port of destination in the Philippines, Master's or Pilot's in Command Report. — When a vessel
discharges cargo at any time or place other than that or aircraft arriving from a foreign port is compelled by
designated by the Collector shall be fined in a sum not necessity to put into another port than the port of her
less than thirty thousand pesos (P30,000.00) and not destination and permission is granted by the Collector for
exceeding one hundred thousand pesos (P100,000.00), the unlading of the vessel or aircraft or the delivery of any
provided that no fine shall accrue upon satisfactory proof part of her cargo and it shall be found that the delivery of
to the proper collector that the unlading was rendered the cargo does not agree with the master's or the pilot's
necessary by stress of weather, accident or other in command report, and the discrepancy is not
necessity. satisfactory explained, the vessel or aircraft shall be fined
SECTION 2519.Failure to Exhibit or Deposit Documents. — in a sum not exceeding five thousand pesos.
When the master of a vessel or pilot in command of an SECTION 2525.Breaking of Seal Placed by Customs
aircraft engaged in foreign trade fails to exhibit to the Officials. — If any seal place by a customs official upon
Collector at the time of entry of his vessel or aircraft the any vessel or aircraft or compartment thereof, or upon
register or other paper in lieu thereof, together with the any box, trunk or other package of article on board any
clearance and other papers granted by the customs vessel or aircraft shall be fined a sum not exceeding ten
officials to his vessel or aircraft at the last foreign port of thousand pesos (P10,000.00) for each seal so broken or
departure, or fails to exhibit any certificate or other destroyed.
documents required to be then exhibited, such vessel or SECTION 2526.Breaking of Lock or Fastening Placed by
aircraft shall be fined in a sum not exceeding five Customs Officials. — If any lock or other fastening device
thousand pesos. place by a customs official upon any hatch door, or other



means of communication with the hold of a vessel or stores, without such article having been properly entered
aircraft, or other part thereof, for the security of the same or legally imported;
during the night time, shall be unlawfully opened, broken c.Any vessel or aircraft into which shall be transferred
or removed, or if any of the articles contained in the hold cargo unladen contrary to law prior to the arrival of the
or in the other compartments so secured shall be importing vessel or aircraft at her port of destination;
clandestinely abstracted and landed, the vessel or aircraft
shall be fined in a sum not exceeding ten thousand d.Any part of the cargo, stores or supplies of a vessel or
(P10,000.00) pesos. aircraft arriving from a foreign port which is unladen
before arrival at the vessel's or aircraft's port of
SECTION 2527.Disappearance of Trunk or Package destination and without authority from the customs
Specially Noted by Customs Official. — When any box, officials; but such cargo, ship or aircraft stores and
trunk or other package of article is found by a customs supplies shall not be forfeited if such unlading was due to
official on any incoming vessel or aircraft separate from accident, stress of weather or other necessity and is
the rest of the cargo or in any unusual or improper place subsequently approved by the Collector;
on such vessel or aircraft and the same shall be noted by
him, with proper description, and the attention of the e.Any article which is fraudulently concealed in or
master or pilot in command or other responsible officer removed contrary to law from any public or private
of the vessel or aircraft is called thereto, the vessel or warehouse, container yard or container freight station
aircraft shall be fined in a sum not exceeding ten under customs supervision;
thousand pesos (P10,000.00) for every such package f.Any article the importation or exportation of which is
which may subsequently be missing and unaccounted effected or attempted contrary to law, or any article of
for upon the arrival of the vessel or aircraft at the port of prohibited importation or exportation, and all other
entry. articles which, in the opinion of the Collector, have been
SECTION 2528.False Statement of Vessel's or Aircraft's used, are or were entered to be used as instruments in
Destination. — When the master or pilot in command of the importation or the exportation of the former;
a vessel or aircraft laden with articles shall make a false g.Unmanifested article found on any vessel or aircraft if
statement as to the next destination of such vessel or manifest therefore is required;
aircraft when information concerning the same is
required of him by a customs official, such vessel or h.Sea stores or aircraft stores adjudged by the Collector to
aircraft shall be fined in a sum not exceeding ten be excessive, when the duties assessed by the Collector
thousand pesos (P10,000.00); and the circumstances that thereon are not paid or secured forthwith upon
a vessel or aircraft after clearing for a certain port of assessment of the same;
destination goes to some other port, not being impelled i.Any package of imported article which is found by the
to do so by necessity, shall be prima facie proof that the examining official to contain any article not specified in
original statement of the vessel's or aircraft's actual the invoice or entry, including all other packages
destination was false. purportedly containing imported articles similar to those
SECTION 2529.Other Offences. — A vessel shall be fined in declared in the invoice or entry to be the contents of the
an amount hereafter fixed for: misdeclared package; Provided, That the Collector is of
the opinion that the misdeclaration was contrary to law;
(1)Anchoring at any dock, pier, wharf, quay, or bulkhead
without rat guards, two hundred pesos j.Boxes, cases, trunks, envelopes and other containers of
whatever character used as receptacles or as device to
(P200.00) for coastwise vessels, and one thousand pesos conceal article which is itself subject to forfeiture under
(P1,000.00) for overseas vessels; the tariff and customs laws or which is so designed as to
(2)Dumping garbage or slops over the sides within three conceal the character of such articles;
miles from the nearest coastline, one thousand pesos k.Any conveyance actually being used for the transport of
(P1,000.00); articles subject to forfeiture under the tariff and customs
(3)Dumping or causing to spread crude oil, kerosene or laws, with its equipage or trappings, and any vehicle
gasoline in the bay or at the piers within three miles from similarly used, together with its equipage and
the nearest coastline, one thousand pesos (P1,000.00) for appurtenances including the beast, steam or other
each offence; motive power drawing or propelling the same. The mere
conveyance of contraband or smuggled articles by such
(4)Loading gasoline at a place other than that designated beast or vehicle shall be sufficient cause for the outright
by the regulations, one thousand pesos (P1,000.00) for seizure and confiscation of such beast or vehicle, but the
each offence; forfeiture shall not be effected if it is established that the
(5)Causing the emission and spread of harmful gas, owner of the means of conveyance used as aforesaid, is
fumes and chemicals, five thousand pesos (P5,000.00) for engaged as common carrier and not chartered or leased,
each offence. or his agent in charge thereof at the time, has no
SECTION 2530.Property Subject to Forfeiture Under Tariff knowledge of the unlawful act;
and Customs Laws. — Any vehicle, vessel or aircraft, 1.Any article sought to be imported or exported.
cargo, article and other objects shall, under the following (1)Without going through a customhouse, whether the
conditions be subjected to forfeiture: act was consummated, frustrated or attempted;
(2)By failure to mention to a customs official, articles
a.Any vehicle, vessel or aircraft, including cargo, which found in the baggage of a person arriving from abroad;
shall be used unlawfully in the importation or exportation (3)On the strength of a false declaration or affidavit
of articles or in conveying and/or transporting contraband executed by the owner, importer, exporter or consignee
or smuggled articles in commercial quantities into or concerning the importation of such article;
from any Philippine port or place. The mere carrying or
holding on board of contraband or smuggled articles in (4)On the strength of a false invoice or other document
commercial quantities shall subject such vessel, vehicle, executed by the owner, importer, exporter or consignee
aircraft, or any other craft to forfeiture: Provided, That the concerning the importation or exportation of such article;
vessel, or aircraft or any other craft is not used as duly and
authorized common carrier and as such a carrier it is not (5)Through any other practice or device contrary to law by
chartered or leased; means of which such articles was entered through a
b.Any vessel engaging in the coastwise which shall have customhouse to the prejudice of the government.
on board any article of foreign growth, produce, or SECTION 2531.Properties Not Subject to Forfeiture in the
manufacture in excess of the amount necessary for sea Absence of Prima Facie Evidence. — The forfeiture of the
vehicle, vessel, or aircraft shall not be effected if it is



established that the owner thereof or his agent in charge

of the means of conveyance used as aforesaid has no PART 5 Disposition of Property in Customs
knowledge of or participation in the unlawful act:
Provided, however, That a prima facie presumption shall Custody
exist against the vessel, vehicle or aircraft under any of SECTION 2601.Property Subject to Sale. — Property in
the following circumstances: customs custody shall be subject to sale under the
1.If the conveyance has been used for smuggling at least conditions hereinafter provided:
twice before; a.Abandoned articles;
2.If the owner is not in the business for which the b.Articles entered under warehousing entry not
conveyance is generally used; and withdrawn nor the duties and taxes paid thereon within
3.If the owner is not financially in a position to own such the period described under Section 1908 of this Code;
conveyance. c.Seized property, other than contraband, after liability to
SECTION 2532.Conditions Affecting Forfeiture of Article. — sale shall have been established by
As regards imported or exported article or articles proper administrative or judicial proceedings in
whereof the importation or exportation is merely conformity with the provisions of this Code; and
attempted, the forfeiture shall be effected only when and
while the article is in the custody or within the jurisdiction d.Any article subject to a valid lien for customs duties,
of the customs authorities or in the hands or subject to taxes or other charges collectible by the Bureau of
the control of the importer, exporter, original owner, Customs, after the expiration of the period allowed for the
consignee, agent of other person effecting the satisfaction of the same (R.A. 7651, June 04, 1993).
importation, entry or exportation in question, or in the SECTION 2602.Place of Sale or Other Disposition of
hands or subject to the control of some persons who shall Property. — Property within the purview of this Part of
receive, conceal, buy, sell or transport the same or aid in this Code shall be sold, or otherwise disposed of, upon the
any such acts, with knowledge that the article was order of the Collector of the port where the property in
imported, or was the subject of an attempt at question is found, unless the Commissioner shall direct its
importation or exportation, contrary to law. conveyance for such purpose to some other port.
SECTION 2533.Enforcement of Lien, Administrative Fines, SECTION 2603.Mode of Sale. — In the absence of any
and Forfeitures. — Administrative fines and forfeitures special provision, subject to the provisions of Section 2601
shall be enforced by the seizure of the vehicle, vessel or above provided, property subject to sale by the customs
aircraft or other property subject to the fine or forfeiture authorities shall be sold at public auction within thirty
and by subsequent proceedings in conformity with the (30) days after ten (10) days notice of such sale shall have
provisions of Parts 2 and 3, Title VI, Book II, of this Code. been conspicuously posted at the port and such other
For the purpose of enforcing the lien for customs duties, advertisement as may appear to the Collector to be
fees and other charges on any seized or confiscated advisable in the particular case.
article in the custody of the Bureau of Internal Revenue, SECTION 2604.Disqualification to Participate in Auction
the Bureau of Internal Revenue is hereby authorized to Sale. — No customs official or employee shall be allowed
impose and enforce the said lien. to bid directly or indirectly, in any customs action.
SECTION 2534.Seizure of Vessel or Aircraft for SECTION 2605.Disposition of Proceeds. — The following
Delinquency of Owner or Officer. — When the owner, charges shall be paid from the proceeds of the sale in the
agent, master, pilot in command or other responsible order named:
officer of any vessel or aircraft becomes liable to be fined
under the tariff and customs laws on account of a
delinquency in the discharge of a duty imposed upon a.Expenses of appraisal, advertisement of sale.
him with reference to the said vessel or aircraft, the vessel
or aircraft itself may be seized and subjected in an b.Duties except in the case of abandoned and forfeited
administrative proceeding for the satisfaction of the fine articles.
for which such person would have been liable. c.Taxes and other charges due the Government.
SECTION 2535.Burden of Proof in Seizure and/or d.Government storage charges.
Forfeiture. — In all proceedings taken for the seizure
and/or forfeiture of any vessel, vehicle, aircraft, beast or e.Arrastre and private storage charges.
articles under the provisions of the tariff and customs f.Freight, lighterage or general average, on the voyage of
laws, the burden of proof shall lie upon the claimant: importation, of which due notice shall have been given to
Provided, That probable cause shall be first shown for the the Collector.
institution of such proceedings and that seizure and/or SECTION 2606.Disposition of Surplus from the Proceeds
forfeiture was made under the circumstances and in the of Sale of Abandoned or Forfeited or Acquired Articles. —
manner described in the preceding sections of this Code. Except in the case of the sale of abandoned or forfeited
SECTION 2536.Seizure of Other Articles. — The articles, and articles which are not claimed by payment of
Commissioner of Customs and Collector of Customs duties, taxes and other charges and compliance with all
and/or any other customs officer, with the prior legal requirements within the prescribed period, any
authorization in writing by the Commissioner, may surplus remaining after the satisfaction of all unlawful
demand evidence of payment of duties and taxes on charges as aforesaid shall be retained by the Collector for
foreign articles openly offered for sale or kept in storage, ten (10) days subject to the call of the owner.
and if no such evidence can be produced, such articles Upon failure of the owner to claim such surplus within
may be seized and subjected to forfeiture proceedings: this period, the Collector shall deposit such amount in a
Provided, however, That during such proceedings the special trust fund which shall be used solely for the
person or entity for whom such articles have been seized purpose of financing the compulsory acquisition of
shall be given the opportunity to prove or show the imported goods by the government as provided in
source of such articles and the payment of duties and Section 2317 hereof.
taxes thereon.
In all such cases the Collector shall report fully his action
in the matter, together with all the particulars, to the
Commissioner and to the Chairman on Audit. After one
year, the unused amounts in such special trust funds,
except for an amount necessary to finance forced
government acquisitions before the first auction of the


succeeding year, shall be turned over to the Bureau of When any article remains unsold in at least two public
Treasury as customs receipts. (R.A. 9135, April 27, 2001) biddings for want of bidders or for the lack of an
SECTION 2607.Disposition of Articles Liable to acceptable bid, and the article is perishable and/or
Deterioration. — Perishable articles shall be deposited in suitable for official use, then the Collector shall report the
any appropriate bonded warehouse; and, if not matter immediately to the Commissioner of Customs
immediately entered for export or transportation from who may, subject to the approval of the Secretary of
the vessel or aircraft in which imported or entered for Finance, authorize the official use of that article by the
consumption and the duties and taxes paid thereon, such Bureau of Customs to promote the intensive collection of
articles may be sold at auction, after such public notice, taxes and/or to help prevent or suppress smuggling and
not exceeding three days, as the necessities of the case other frauds upon the Customs, and if the article is not
permit. suitable for such use, then it may be channeled to the
official use of other offices of the National Government. If
When seizure shall be made of property which, in the the article is suitable for shelter or consists of foodstuffs,
opinion of the Collector, is liable to perish or be wasted or clothing materials or medicines then that article shall be
to depreciate greatly in value by keeping or which cannot given to government charitable institutions through the
be kept without great disproportionate expense, whether Department of Social Services and Development.
such property consists of live animals or of any article, the
appraiser shall so certify in his appraisal, then the If the article offered for sale is not suitable either for
Collector may proceed to advertise and sell the same at official use or charity, then the same may be reexported
auction, upon notice as he shall deem to be reasonable. as government property through the Department of
Trade or any other government entity through barter or
The same disposition may be made of any warehoused sale. If the article cannot be disposed of as provided
articles when the opinion of the Collector it is likely that above, the Collector shall report the matter immediately
the cost of depreciation, damage, leakage, or other to the Commissioner who may, subject to the approval of
causes, may so reduce its value as to be insufficient to pay the Secretary of Finance, dispose of the article to the best
the duties, taxes and other charges due thereon, if it advantage of the government in a negotiated private sale
should be permitted to be so kept and be subjected to which shall be consummated in the presence of a
sale in the usual course. representative of the Commission on Audit, in the
SECTION 2608.Disposition of Articles Unfit for Use or Sale manner provided for by this Code.
or Injurious to Public Health. — When any article, which SECTION 2611.Treatment of Dangerous Explosives. —
in the opinion of the Collector, is a menace to public Gunpowder or other dangerous or explosive substances,
health, is seized or otherwise comes into the custody of including firecrackers, shall not be deposited in a bonded
the Bureau of Customs, the Collector of the port shall, if warehouse, and when not entered for immediate use,
the matter is not disposable under the provisions relating transportation or export, shall be subject to such
to food and drugs, appoint a board of three members to disposition, in the discretion of the Commissioner of
examine the article. Whenever possible, one member Customs, consistent with public safety.
shall be a representative of the Department of Health or
of local health officer, and the two others shall be Expenses incurred in such disposition shall constitute a
responsible officials of the Bureau of Customs, at least lien on the articles and a charge against the owner.
one of whom shall be an appraiser. Such board shall SECTION 2612.Disposition of Smuggled Articles. —
examine said article, and if the same is found to be unfit Smuggled articles, after liability to seizure or forfeiture
or a menace to the public health, the board shall so shall have been established by proper administrative or
report in writing to the Collector, who shall forthwith judicial proceedings in conformity with the provisions of
order its destruction in such manner as the case may this Code, shall be disposed of as provided for in section
require. twenty-six hundred and ten: Provided, That articles whose
Health authorities at port of entry shall collaborate with importation is prohibited under Section One Hundred
the collectors in such matters with reasonable dispatch. Two sub-paragraphs b, c, d, e and j shall, upon order to
the Collector in writing, be burned or destroyed, in such
SECTION 2609.Disposition of Contraband. — Article of manner as the case may require as to render them
prohibited importation or exportation, known as absolutely worthless, in the presence of a representative
contraband, shall, in the absence of special provision, be each from the Commission on Audit, Ministry of Justice,
dealt with as follows: Bureau of Customs, and if possible, any representative of
a.Dynamite, gunpowder, ammunition and other the private sector.
explosives, firearms and weapons of war and parts
thereof, shall be turned over to the Armed Forces of the PART 6 Fees and Charges
Philippines;
SECTION 3301.Customs Fees and Charges. — For services
b.If the article in question is highly dangerous to be kept rendered and documents issued by the Bureau of
or handled, it shall forthwith be destroyed; Customs, the following fees shall be charged and
c.Contraband coin or bullion, foreign currencies and collected, by affixing documentary customs stamps in
negotiable instruments shall accrue to the Stabilization the correct amount upon the document or any other
Fund of the Central Bank subject to the payment of the paper which is the subject of the charge and by the
expenses incident to seizure, including the reward to the cancellation of such stamps in the manner prescribed by
informer, if any; the Commissioner, and no such document or any other
d.Other contraband of commercial value and capable of paper shall be issued or granted by any customs official
legitimate use may be sold under such restrictions as will until the correct amount of stamps shall have been
insure its use for legitimate purposes only; but if the thing affixed and cancelled: Provided, however, That fees of
is unfit for use or the Collector is of the opinion that, if twenty pesos or over may be paid in cash.
sold, it would be used for unlawful purposes, it shall be For each amendment allowed to a foreign inward P30.00
destroyed in such manner as the Collector shall direct. manifest
SECTION 2610.Disposition of Unsold Articles for Want of
Bidders. — Articles subject to sale at public auction by For each amendment allowed to a foreign P30.00
Customs authorities shall be sold at a price not less than inward manifest
the wholesale value or price in the domestic market of
these or similar articles in the usual wholesale quantities For each permit to others than passengers to 30.00
and in the ordinary course of trade as determined in take cigars aboard ship, per thousand cigars
accordance with section twenty-three hundred and five
of this Code.


For each permit (to other than passengers) to 30.00 provided that for every deficiency of three (3) academic
take cigarettes aboard ship, per thousand units in tariff and customs and/or taxation shall be
cigarettes substituted by at least three (3) months of actual
experience in customs brokerage and/or customs and
For each original import or export entry 30.00 tariff matters: Provided, That said experience shall be duly
exceeding fifty pesos in value certified by the employer or employers of the applicant.
No corporation, association or partnership shall engage in
For each entry for immediate transportation in 30.00 the customs brokerage business unless at least two (2) of
bond the officers of such corporation or association, or at least
two (2) of the members of such partnership have such
For each original internal revenue entry 30.00 certificate.
No certificate as customs broker shall be granted to any
For each original withdrawal entry from any 30.00 person who has been convicted of a crime involving
bonded warehouse moral turpitude.
For each bond accepted or renewed 30.00 SECTION 3402.Examination by the Board of Examiners
for Customs Brokers. — Examinations for customs broker
shall be given by the Board of Examiners for customs
For each approval of application in respect to 30.00
broker under the supervision of the Civil Service
transaction covered by general bond
Commission. Application for admission to such
examination shall be filed with the Civil Service
For every formal protest filed before the 50.00 Commission.
Collector of Customs
Examination for customs brokers shall be given once
For each appeal in protest and seizure cases 50.00 every two (2) years or oftener as the need therefore arises
which fact shall be certified by the Commissioner of
For each certificate not hereinabove specified, 30.00 Customs and shall be confined to subjects with which
exclusive of such are made in the course of such brokers are required to be conversant, including
routine administration in the bureau which do knowledge of customs and tariff laws and regulations,
not subserve any special pecuniary interest of and of other laws and regulations the enforcement of
the party concerned therein which is the concern of the Bureau of Customs.
The board shall submit within one hundred twenty (120)
days after the date of examination the ratings obtained
SECTION 3302.Other Charges. — When any article is sold by each candidate to the Commissioner of Civil Service
or any service rendered by the Bureau of Customs in any who shall submit such ratings to the President of the
matter for which a charge may be collected legally, no fee Philippines for release.
therefore having been fixed by law, such charge shall be A general average of seventy-five per cent (75%) shall be
on such amount as may from time to time be fixed by the passing grade for this examination: Provided, That the
regulations or order of the Commissioner and approved examinee shall not have obtained a grade of less than
by the Department of Finance, and the payment of such sixty per cent (60%) in any of the examination subjects.
charge may be made by affixing and canceling the
documentary customs stamps. This customs brokers' examination shall be considered as
equivalent to the first grade regular examination given by
the Civil Service Commission for purposes of
SECTION 3303.Effect of Failure to Affix Stamp Upon appointment to positions in the classified service the
Document. — No document or any other paper upon duties of which involve knowledge of customs and tariff
which no documentary customs stamps have been matters. The examination and registration fees shall be
affixed and cancelled shall be received or recognized by subject to Republic Act Numbered four hundred and
any customs officials. sixty-five.
SECTION 3304.General Provision on the Authority to SECTION 3403.The Board of Examiners. — The board of
Increase or Decrease Fees and Charges. — The rates of Examiners for Customs Brokers shall be composed of the
the fees and charges in all ports in the Philippines shall Commissioner of Customs, as ex-officio chairman, the
be those now provided for under section thirty-three Tariff Commissioner and three (3) other members who
hundred and one of this Code: Provided, however, That shall be appointed by the President upon the
the Secretary of Finance may, upon recommendation of recommendation of the Commissioner of Civil Service.
the Commissioner of Customs, increase or decrease the The three (3) members of the Board shall be holders of
said fees, dues and charges collectible by the Bureau of customs brokers' certificate and shall hold office for a
Customs to protect the interest of the Government. term of two (2) years: Provided, That the term of any
incumbent shall not be affected thereby. Vacancies in the
Board shall be filled for the expired term.
TITLE VII General Provisions
SECTION 3404.Compensation of Members of the Board.
— The chairman and members of the board shall receive
PART 1 Customs Brokers a compensation of ten pesos (P10.00) for each candidate
SECTION 3401.Qualifications of Applicants for Customs examined.
Broker's Certificate. — All applicants for customs broker's SECTION 3405.Fees. — (a) Each applicant for examination
certificates shall pass a written examination for the shall pay a fee as provided for in Republic Act Numbered
purpose. four hundred and sixty-five, as amended, which shall be
Applicants for admission to the said examination shall paid to the Civil Service Commission. (b) Each successful
have the following qualifications: candidate shall be issued a certificate as customs broker
upon payment of a fee of fifty pesos (P50.00) to the Civil
(a)At least 21 years of age; Service Commission.
(b)A citizen of the Philippines; SECTION 3406.Annual License Fee. — Any person who is
(c)Of good moral character; and a holder of a customs broker's certificate, desiring to
establish a customs brokerage business at any port in the
(d)Has completed at least four-year collegiate course, Philippines shall apply for an annual license from the
where he has creditably taken at least eighteen (18) Collector of the port concerned.
academic units in tariff and customs and/or taxation, and
applicant may be allowed to take the examination No such license shall be issued unless the applicant pays
the required annual license fee of one hundred pesos



(P100) and files the required bonds for customs brokers. application of any provision of law imposing customs
Whenever it shall appear that a bond given by a customs duties and which changes any existing established
broker is inadequate, the Collector shall require additional classification, interpretation or practice shall not take
or substitute bond to be filed. The additional or substitute effect until after thirty days public notice shall be given in
bond shall be furnished by the broker within ten (10) days the form of a published customs tariff decision. When
after demand, otherwise his permit shall be suspended or such ruling or decision favors the taxpayers, it shall
revoked as circumstances may warrant. The bonds become effective immediately.
posted by the customs broker may be personal bonds SECTION 3503.Authority of Official to Administer Oaths
guaranteed by at least two (2) sureties satisfactory to the and Take Testimony. — The Commissioner, Collectors and
Collector of the port or a surety bond posted by a duly their deputies, and other customs employees especially
licensed surety company. deputized by the Collector shall have authority to
SECTION 3407.Issuance, Revocation and Suspension of administer oaths and take testimony in connection with
Certificate. — A candidate who has passed the customs any matter within the jurisdiction of the Bureau of
brokers' examination shall be entitled to the issuance of a Customs and in connection therewith may require the
certificate as a customs broker: Provided, That (1) persons production of relevant papers, documents, books and
who qualified as customs broker in accordance with records in accordance with law.
customs regulations existing before the adoption of this SECTION 3504.General Bonds. — In cases where bonds
Code; (2) Commissioner of Customs who has acted as are required to be given under the provisions of the
ex-officio Chairman of the Board of Examiners for customs and tariff laws, the Collector, instead of requiring
Customs brokers and the Tariff Commissioner who has separate special bonds where transactions of a particular
acted as member of the said board; and (3) Collectors of party are numerous, may accept general bonds
Customs who have served as such in any of the collection extending over such periods of time and covering such
districts for a period of at least five years, who desire to transactions of the party in question as shall be
have a certificate issued to them may apply for the satisfactory to said Collector.
issuance of such certificate, upon payment of the fees
required under paragraph (b) of Section Thirty-four
hundred and five of this Code. SECTION 3505.Supervision Over Attorneys-in-Fact. — No
A customs broker's certificate shall show among other person acting as agent or attorney-in-fact of other
things, the full name of the registrant, shall have a serial persons shall be allowed to deal in matters pertaining to
number and, shall be signed by all the members of the customs and/or tariff unless his duly notarized power of
Board of the Commissioner of Civil Service, and shall bear attorney has been approved by the Collector of the port.
the official seal of the Board. No more than one such continuing power may be
accepted or recognized from any one person or acting as
A complaint for the suspension or revocation of the agent in the importation of articles unless he be a
certificate of a customs broker shall be filed with the licensed customs broker: Provided, That in ports of entry
Board of Examiners for Customs Brokers which shall where there are two or more licensed customs brokers
investigate the case and shall submit its findings and doing business as such customs brokers, no person shall
recommendations to the Commissioner of Civil Service act as agent or attorney-in-fact for any regular importer
and shall immediately furnish the respondent customs unless he is a full-time employee or official of such
broker with a copy of his decision. importer or principal receiving fixed compensation or
Any person who files an entry or facilitates the processing salary as such.
or release of any shipment shall be liable for smuggling if SECTION 3506.Assignment of Customs Employees to
the ostensible owner, importer or consignee and/or the Overtime Work. — Customs employees may be assigned
ostensible given address of the owner, importer or by a Collector to do overtime work at rates fixed by the
consignee is fictitious and the shipment is found to be Commissioner of Customs when the service rendered is
unlawful. If the violator is a customs broker, his license to be paid for by importers, shippers or other persons
shall be revoked by the Commissioner of Customs (R.A. served. The rates to be fixed shall not be less than that
7651, June 04, 1993). prescribed by law to be paid to employees of private
SECTION 3408.Roster of Customs Brokers. — A roster enterprise.
showing the names and addresses of the customs SECTION 3510.Reduction of Testimony to Writing. —
brokers shall be prepared by the Commissioner of Civil When testimony is taken in any proceeding or matter
Service during the month of July of every year. Copies of under the authority of the Bureau of Customs, either
this roster shall be mailed to each person so registered party may require that the same be reduced to writing,
and placed on file with the Office of the President of the and when so taken it shall be filed in the Office of the
Philippines and copies thereof, shall be furnished to the Collector and preserved for use or reference until final
Office of the Secretary of Finance to the Commissioner decision.
and Collector of Customs and to such other bureaus,
government agencies and provincial and municipal SECTION 3511.Collector Not Liable in Respect to Ruling in
authorities as may be deemed necessary, and to the Customs Cases. — No Collector or other official of
public upon request. customs shall be in any way personally liable for or an
account of any official ruling or decision as to which the
SECTION 3409.Rules and Regulations by the person claiming to be aggrieved has the right to obtain
Commissioner of Civil Service. — The Commissioner of either an administrative or judicial review, and except for
Civil Service, upon recommendation of the Board of misdelivery of articles a Collector shall not, in the absence
Examiners for Customs Brokers, shall promulgate such of abuse of authority, be liable to any person for a loss
rules and regulations as may be necessary to carry out occasioned either by his own official act or the acts of his
the provisions of Part 1 of this title. subordinates.
SECTION 3512.Interest Prohibited to be Held by Customs
PART 2 Miscellaneous Provisions Employees. — No person employed under the authority
SECTION 3501.Duty of Collector to Report Rulings to of the government in the collection of duties, taxes, fees
Commissioner. — When any new or unsettled question and other charges in connection with imports and/or
shall be determined by a collector, he shall, if the matter is exports, shall own, either in whole or in part, any vessel or
not otherwise appealed for, review in the ordinary course, aircraft or act as attorney, agent or consignee for the
notify the Commissioner of his decision and submit owner of any vessel or aircraft or of any cargo laden on
adequate statement of the facts involved. board the same nor shall any such person import or be
concerned, directly or indirectly, in the importation of any
SECTION 3502.Application of Established Ruling or article for sale into the Philippines.
Decision. — A ruling or decision of the Commissioner of
Customs which determines the construction or



SECTION 3513.Reward to Persons Instrumental in the contumacious importers under existing laws and
Discovery and Seizure of Smuggled Goods. — The regulations including the authority to hold delivery or
provisions of general and special laws to the contrary release of their imported articles. (R.A. 9135, April 27, 2001)
notwithstanding, a cash reward equivalent to twenty per SECTION 3516.Scope of the Audit. —
centum (20%) of the fair market value of the smuggled
and confiscated goods shall be given to the officers and (a)The audit of importers shall be undertaken:
men and informers who are instrumental in the discovery (1)When firms are selected by a computer-aided risk
and seizure of such goods in accordance with the rules management system, the parameters of which are to be
and regulations to be issued by the Secretary of Finance. based on objective and quantifiable data and are to be
The provisions of this section, and not those of Republic approved by the Secretary of Finance upon
Act Numbered Twenty-three Hundred and Thirty-eight recommendation of the Commissioner of Customs. The
shall govern the giving of reward in cases covered by the criteria for selecting firms to be audited shall include, but
former. not be limited to, the following:
SECTION 3514.Requirement to Keep Records. — All (a)Relative magnitude of customs revenue from the firm;
importers are required to keep at their principal place of (b)The rates of duties of the firm's imports;
business, in the manner prescribed by regulations to be
issued by the Commissioner of Customs and for a period (c)The compliance tract record of the firm; and
of three (3) years from the date of importation, all the (d)An assessment of the risk to revenue of the firm's
records of their importations and/or books of accounts, import activities.
business and computer systems and all customs
commercial data including payment records relevant for (2)When errors in the import declaration are detected;
the verification of the accuracy of the transaction value (3)When firms voluntarily request to be audited, subject
declared by the importers/customs brokers on the import to the approval of the Commissioner of Customs.
entry. (b)Brokers shall be audited to validate audits of their
All brokers are required to keep at their principal place of importer clients and/or fill in information gaps revealed
business, in the manner prescribed by regulations to be during an audit of their importer clients. (R.A. 9135, April
issued by the Commissioner of Customs and for a period 27, 2001)
of three (3) years from the date of importation copies of SECTION 3517.Documents in Foreign Language. — Where
the above mentioned records covering transactions that a document in a foreign language is presented to a
they handle. (R.A. 9135, April 27, 2001) customs officer in relation to the carrying out of any duty
SECTION 3515.Compliance Audit or Examination of or the exercise of any power of the Bureau of Customs
Records. — The importers/customs brokers shall allow any under this Code, said document in a foreign language
customs officer authorized by the Bureau of Customs to must be accompanied with a translation in the official
enter during office hours any premises or place where language of this country. (R.A. 9135, April 27, 2001)
the records referred to in the preceding section are kept SECTION 3518.Records to be Kept by Customs. — The
to conduct audit examination, inspection, verification Bureau of Customs shall likewise keep a record of audit
and/or investigation of those records either in relation to results in a database of importer and broker profiles, to
specific transactions or to the adequacy and integrity of include but not be limited to:
the manual or electronic system or systems by which
such records are created and stored. For this purpose, a (a)Articles of Incorporation;
duly authorized customs officer shall have full and free (b)The company structure, which shall include but not be
access to all books, records, and documents necessary or limited to:
relevant for the purpose of collecting the proper duties
and taxes. (1)Incorporators and Board of Directors;
In addition, the authorized customs officer may make (2)Key officers; and
copies of, or take extracts from any such documents. The (3)Organizational structure;
records or documents must, as soon as practicable after
copies of such have been taken, be returned to the (c)Key importations;
person in charge of such documents. (d)Privileges enjoyed;
A copy of any such document certified by or on behalf of (e)Penalties; and
the importer/broker is admissible in evidence in all courts (f)Risk category(ies). (R.A. 9135, April 27, 2001)
as if it were the original.
SECTION 3519.Words and Phrases Defined. — As used in
An authorized customs officer is not entitled to enter any this Code:
premises under this Section unless, before so doing, the
officer produces to the person occupying or apparently in "Foreign Port" means a port or place outside the
charge of the premises written evidence of the fact that jurisdiction of the Philippines.
he or she is an authorized officer. The person occupying "Port of Entry" is a domestic port open to both foreign
or apparently in charge of the premises entered by an and coastwise trade. The term includes principal ports of
officer shall provide the officer with all reasonable entry and subports of entry. A "principal port of entry" is
facilities and assistance for the effective exercise of the chief port of entry of the collection district wherein it
powers under this Section. is situated and is the permanent station of the Collector
Unless otherwise provided herein or in other provisions of of such port. Subports of entry are under the
law, the Bureau of Customs may, in case of disobedience, administrative jurisdiction of the Collector of the principal
invoke the aid of the proper regional trial court within port of entry of the district. Whenever the term "Port of
whose jurisdiction the matter falls. The court may punish Entry" is used herein, it shall include "airport of entry".
contumacy or refusal as contempt. In addition, the fact "Coastwise ports" are such domestic ports as are open to
that the importer/broker denies the authorized customs coastwise trade only. These include all ports, harbors and
officer full and free access to importation records during places not ports of entry.
the conduct of a post-entry audit shall create a
presumption of inaccuracy in the transaction value "Vessels" includes every sort of boat, craft or other
declared for their imported goods and constitute grounds artificial contrivance used, or capable of being used, as a
for the Bureau of Customs to conduct a re-assessment of means of transportation on water.
such goods. "Aircraft" includes any weight-carrying devise or structure
This is without prejudice to the criminal sanctions for the navigation of the air.
imposed by this Code and administrative sanctions that "Bill of Lading" includes airway bill of lading.
the Bureau of Customs may impose against



"Articles" when used with reference to importation or the article unlawfully imported exceeds twenty-five pesos
exportation, includes goods merchandise and in general but does not exceed fifty thousand pesos;
anything that may be made the subject of importation or 3.A fine of not less than six thousand pesos nor more than
exportation. eight thousand pesos and imprisonment of not less than
"Transit cargo" is article arriving at any port from another five years and one day nor more than eight years, if the
port or place noted in the carrier's manifest and destined appraised value, to be determined in the manner
for transshipment to another local port or to a foreign prescribed under this Code, including duties and taxes, of
port. the article unlawfully imported is more than fifty
thousand pesos but does not exceed one hundred fifty
thousand pesos;
"Seized property" means any property seized or held for
the satisfaction of any administrative fine or for the 4.A fine of not less than eight thousand pesos nor more
enforcement of any forfeiture under the Tariff and than ten thousand pesos and imprisonment of not less
Customs Code. than eight years and one day nor more than twelve years,
if the appraised value to be determined in the manner
"Tariff and customs laws" includes not only the provisions prescribed under this Code, including duties and taxes, of
of this Code and regulations pursuant thereto but all the article unlawfully imported exceeds one hundred fifty
other laws and regulations which are subject to thousand pesos;
enforcement by the Bureau of Customs or otherwise
within its jurisdiction. 5.The penalty of prison may or shall be imposed when the
crime of serious physical injuries shall have been
"Taxes" includes all taxes, fees and charges imposed by committed and the penalty of reclusion perpetuato
the Bureau of Customs and the Bureau of Internal death shall be imposed when the crime of homicide shall
Revenue. have been committed by reason or on the occasion of the
"Secretary" or "Department head" refers, unless otherwise unlawful importation.
specified, to the Secretary of Finance. In applying the above scale of penalties, if the offender is
"Commission" refers to the Tariff Commission. an alien and the prescribed penalty is not death, he shall
be deported after serving the sentence without further
"Person" whether singular or plural refers to an individual, proceedings for deportation. If the offender is a
corporation, partnership, association company or any government official or employee, the penalty shall be the
other kind of organization. maximum as hereinabove prescribed and the offender
"Dutiable value" refers to the value defined in section two shall suffer and additional penalty of perpetual
hundred one. disqualification from public office, to vote and to
participate in any public election.
"Bulk cargo" refers to products in a mass of one
commodity not packaged, bundled, bottled or otherwise When, upon trial for violation of this section, the
packed. defendant is shown to have had possession of the article
in question, possession shall be deemed sufficient
"Smuggling" is an act of any person who shall evidence to authorize conviction unless the defendant
fraudulently import or bring into the Philippines, or assist shall explain the possession to the satisfaction of the
in so doing, any article, contrary to law or shall receive, court: Provided, however, That payment of the tax due
conceal, buy, sell or in any manner facilitate the after apprehension shall not constitute a valid defence in
transportation, concealment, or sale of such article after any prosecution under this section.
importation, knowing the same to have been imported
contrary to law. It includes the exportation of articles in a SECTION 3602.Various Fraudulent Practices Against
manner contrary to law. Articles subject to this paragraph Customs Revenue. — Any person who makes or attempts
shall be known as smuggled articles. to make any entry of imported or exported article by
means of any false or fraudulent invoice, declaration,
"Contrabands" are articles of prohibited importation or affidavit, letter, paper or by any means of any false
exportation. statement, written or verbal, or by any means of any false
"Duly Registered" as used in this Act, refers to a person, or fraudulent practice whatsoever, or knowingly effects
natural or juridical, which is registered with the proper any entry of goods, wares or merchandise, at less than
government agencies, such as the Bureau of Commerce, true weight or measures thereof or upon a false
Securities and Exchange Commission, NACIDA, Board of classification as to quality or value, or by the payment of
Investments, Export Incentives Board or Oil Commission less than the amount legally due, or knowingly and
as now or may hereafter be required by law. (R.A. 9135, willfully files any false or fraudulent entry or claim for the
April 27, 2001) payment of drawback or refund of duties upon the
exportation of merchandise, or makes or files any affidavit
abstract, record, certificate or other document, with a
PART 3 Provisions on Penalties view to securing the payment to himself or others of any
SECTION 3601.Unlawful Importation. — Any person who drawback, allowance, or refund of duties on the
shall fraudulently import or bring into the Philippines, or exportation of merchandise, greater than that legally due
assist in so doing, any article, contrary to law, or shall thereon, or who shall be guilty of any willful act or
receive, conceal, buy, sell, or in any manner facilitate the omission shall, for each offence, be punished in
transportation, concealment, or sale of such article after accordance with the penalties prescribed in the
importation, knowing the same to have been imported preceding section.
contrary to law, shall be guilty of smuggling and shall be SECTION 3603.Failure to Report Fraud. — Any master,
punished with: pilot in command or other officer, owner or agent of any
1.A fine of not less than fifty pesos nor more than two vessel or aircraft trading with or within the Philippines
hundred pesos and imprisonment of not less than five and any employee of the Bureau of Customs who, having
days nor more than twenty days, if the appraised value, to cognizance of any fraud on the customs revenue, shall fail
be determined in the manner prescribed under this to report all information relative thereto to the Collector
Code, including duties and taxes, of the article unlawfully as by law required, shall be punished by a fine of not
imported does not exceed twenty-five pesos; more than five thousand pesos and imprisonment for not
more than one year. If the offender is an alien, he shall be
2.A fine of not less than eight hundred pesos nor more deported after serving the sentence. If the offender is a
than five thousand pesos and imprisonment of not less public official or employee, he shall suffer additional
than six months and one day nor more than four years, if penalty of perpetual disqualification to hold public office,
the appraised value, to be determined in the manner to vote and to participate in any election.
prescribed under this Code, including duties and taxes, of


SECTION 3604.Statutory Offenses of Officials and SECTION 3607.Removal, Breakage, Alteration of Marks. —

Employees. — Every official, agent or employee of the Any person who without authority, willfully removes,
Bureau or of any other agency of the government breaks, injures, or defaces or alters any custom seal or
charged with the enforcement of the provisions of this other fastening or mark placed upon any vessel, vehicles,
Code, who is guilty of any delinquency herein below on land, sea or air, warehouse or package containing
indicated shall be punished with a fine of not less than merchandise or baggage in bond or in customs custody,
Five thousand pesos nor more than Fifty thousand pesos shall be punished with the penalty prescribed in Section
and imprisonment for not less than one year nor more 3606 hereof.
than ten years and perpetual disqualification to hold SECTION 3608.Removing or Repacking Goods in
public office, to vote and to participate in any public Warehouse. — Any person who fraudulently conceals,
election: removes, or repacks merchandise in any warehouse or
(a)Those guilty of extortion or willful oppression under fraudulently alters, defaces or obliterates any marks or
color of law; numbers placed upon packages deposited in such
(b)Those who knowingly demand other or greater sums warehouse, or shall aid or abet in any such acts or
than are authorized by law or receive any fee, omission, shall be punished with the penalties prescribed
compensation, or reward except as by law prescribed, for in Section 3606 hereof.
the performance of any duty; Merchandise so concealed, removed, or repacked, or
(c)Those who willfully neglect to give receipts, as required packages upon which marks or numbers have been so
by law for any sum collection in the performance of duty, altered, defaced or obliterated, or the value thereof, shall
or who willfully neglect to perform any of the duties be forfeited to the government.
enjoined by law; SECTION 3609.Removing Goods from Customs Custody.
(d)Those who conspire or collude with another or others — Any person who maliciously enters any warehouse, or
to defraud the customs revenue or otherwise violate the any vehicle laden with or containing merchandise with
law; intent unlawfully to remove therefrom any merchandise
or baggage in such vessels, vehicle or warehouse or
(e)Those who willfully make opportunity for any person to otherwise in customs custody or control, or any person
defraud the customs revenue or who do or fail to do any who receives or transports any merchandise or baggage
act with intent to enable any person to defraud said unlawfully removed from any such vessel, vehicle or
revenue; warehouse, or shall aid or abet such removal, shall suffer
(f)Those who negligently or designedly permit the the penalties provided in Section 3606 hereof.
violation of the law by any other person; SECTION 3610.Failure to Keep Importation Records and
(g)Those who make or sign any false entry or entries in Give Full Access to Customs Officers. — Any person who
any book, or make or sign any false certificate or return in fails to keep all the records of importations and/or books
any case where the law requires the making by them of of accounts, business and computer systems and all
such entry, certificate or return; customs commercial data in the manner prescribed in
Part 2, Section 3514 of this Title shall be punished with a
(h)Those who, having knowledge or information of a fine of not less than One hundred thousand pesos
violation of the Tariff and Customs Law or any fraud (P100,000.00) but not more than Two hundred thousand
committed on the revenue collectible by the Bureau, fail pesos (P200,000.00) and/or imprisonment of not less than
to report such knowledge or information to their superior two (2) years and one day but not more than six (6) years.
official or to report as otherwise required by law; This penalty shall likewise be imposed against
(i)Those who, without the authority of law, demand or importers/brokers who deny an authorized customs
accept or attempt to collect directly or indirectly as officer full and free access to such records, books of
payment of otherwise, any sum of money or other thing accounts, business and computer systems, and all
of value for the compromise, adjustment, or settlement of customs commercial data including payment records.
any charge or complaint for any violation or alleged This is without prejudice to the administrative sanctions
violation of law; or that the Bureau of Customs may impose against the
contumacious importers under existing laws and
(j)Those who, without authority of law, disclose regulations including the authority to hold delivery or
confidential information gained during any investigation release of their imported articles. (R.A. 9135, April 27, 2001)
or audit, or use such information for personal gain or to
the detriment of the government, the Bureau or third SECTION 3611.Failure to Pay Correct Duties and Taxes on
parties. (R.A. 9135, April 27, 2001) Imported Goods. — Any person who, after being
subjected to post-entry audit and examination as
SECTION 3605.Concealment or Destruction of Evidence provided in Section 3515 of Part 2, Title VII hereof, is found
of Fraud. — Any person who willfully conceals or destroys, to have incurred deficiencies in duties and taxes paid for
any invoice, book or paper relating to any article liable to imported goods, shall be penalized according to three (3)
duty after an inspection thereof has been demanded by degrees of culpability subject to any mitigating,
the Collector of any collection district or at any time aggravating or extraordinary factors that are clearly
conceals or destroys any such invoice, book or paper for established by the available evidence:
the purpose of suppressing any evidence of fraud therein
contained, shall be punished with a fine of not more than (a)Negligence — When a deficiency results from an
five thousand pesos and imprisonment for not more than offender's failure, through an act or acts of omission or
two years. commission, to exercise reasonable care and competence
to ensure that a statement made is correct, it shall be
SECTION 3606.Affixing Seals. — Any person who, without determined to be negligent and punishable by a fine
authority affixes or attaches a customs seal, fastening, or equivalent to not less than one-half (1/2) but not more
mark or any seal, fastening or mark purporting to be a than two (2) times the revenue loss.
customs seal, fastening or mark to any vessel, vehicle on
land, sea or air, warehouse, or package, shall be punished (b)Gross Negligence — When a deficiency results from an
with a fine of not more than twenty thousand pesos or act or acts of omission or commission done with actual
imprisonment of not more than five years, or both. If the knowledge or wanton disregard for the relevant facts and
offender is an alien, he shall be deported after serving the with indifference to or disregard for the offender's
sentence; and if he is a public official or employee, he obligation under the statute, it shall be determined to be
shall suffer an additional penalty of perpetual grossly negligent and punishable by a fine equivalent to
disqualification to hold public office, to vote and not less than two and a half (2 1/2) but not more than
participate in any election. four(4) times the revenue loss.
(c)Fraud — When the material false statement or act in
connection with the transaction was committed or


omitted knowingly, voluntarily and intentionally, as

established by clear and convincing evidence, it shall be
determined to be fraudulent and be punishable by a fine
equivalent to not less than five (5) times but not more
than eight (8) times the revenue loss and imprisonment
of not less than two (2) years but not more than eight (8)
years.
The decision of the Commissioner of Customs, upon
proper hearing, to impose penalties as prescribed in this
Section may be appealed in accordance with Section
2402 hereof. (R.A. 9135, April 27, 2001)
SECTION 3612.Violations of Tariff and Customs Laws and
Regulations in General. — Any person who violates a
provision of this Code or regulations pursuant thereto, for
which delinquency no specific penalty is provided, shall
be punished by a fine of not more than one thousand
pesos or by imprisonment for not more than one year, or
both. If the offender is an alien, he shall be deported after
serving the sentence and if the offender is a public official
or employee, he shall suffer disqualification to hold public
office, to vote and participate in any public election for
ten years. (R.A. 9135, April 27, 2001)
FINAL PROVISIONS
SECTION 3701.Repealing Clause. — Sections 207, 301
(Subsections e, f, & k), 302 (Subsection b), 513, 1024, 1108,
1109, 1208, 2530 (Subsection 1) and 3705 of Republic Act
Numbered Nineteen Hundred and Thirty Seven, as
amended by Presidential Decree Numbered Thirty Four
are hereby repealed.
All Acts, Presidential Decrees, Executive Orders, Rules and
Regulations or parts thereof, in conflict with the
provisions of this Code, are hereby likewise repealed.
SECTION 3702.Transitory Provisions. — All suits,
proceedings or prosecutions whether civil or criminal, for
causes arising or acts done or committed prior to the
effectivity of this Code, shall be commenced and/or
prosecuted within the same time in the same manner
and with the same effect as if this Code had not been
enacted and all rights acquired, offences committed and
penalties, forfeitures or liabilities waived prior to the said
effectivity shall not be affected thereby.
Sections 602 (subsections d, e, f), 801 to 831, 901 to 905, 910
to 913, 2507 to 2512, 2529 (except subsection h) and 3301
(except subsection i to s) of Republic Act Numbered
Nineteen Hundred and Thirty Seven as amended by
Presidential Decree Numbered Thirty Four are hereby
deleted and the same, are incorporated in Republic Act
Numbered Fifty One Hundred and Seventy Three, as
amended, for enforcement by the Philippine Coast Guard.
Sections 602 (subsection i), 1209, 1212, 1213, 2701 to 2703,
2801, 2802, 2901 to 2908, 3001 to 3005, 3101 to 3109, 3201 to
3203 and 3507 to 3509 of Republic Act Numbered
Nineteen Hundred and Thirty Seven as amended by
Presidential Decree Numbered Thirty Four are hereby
deleted and the same are incorporated in Presidential
Decree Numbered Eight Hundred Fifty Seven, for
enforcement by the Philippine Ports Authority.
SECTION 3703.Separability Clause. — If any part or parts
of this Code should for any reason be held to be invalid or
unconstitutional, the remaining parts thereof shall
remain in full force and effect.
SECTION 3704.Effectivity Date. — This Code shall take
effect immediately.
(Tariff and Customs Code of the Philippines - Volume II,
PRESIDENTIAL DECREE NO. 1464)


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NATIONAL INTERNAL ARTICLES

REVENUE CODE PRODUCTS

REGULATING BUSINESS OF PERSONS DEALING

© Compiled by Rehne Gibb Larena | JD-2 | University of San Carlos

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

CHAPTER 2 Special Duties and Trade Remedy

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TITLE VI Administrative and Judicial Proceedings

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Finance and shall be included in the database created

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Not over P 100,000

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(6) Royalties; disability or for any cause beyond the control of

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(A) Imposition of Tax. - Effective January 1, 2018 and

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research and development of a character which Notwithstanding the provision of the preceding

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