BP

April 5, 1984
BATAS PAMBANSA BLG. 700*
AN ACT AMENDING SECTIONS 318 AND 319 OF THE NATIONAL INTERNAL

REVENUE CODE, AS AMENDED, SO AS TO REDUCE THE PERIOD OF
LIMITATION FOR ASSESSMENT OF INTERNAL REVENUE TAXES FROM FIVE
(5) TO THREE (3) YEARS
SECTION 1. Section 318 of the National Internal Revenue Code, as amended, is hereby
amended to read as follows:
"Sec. 318. Period of limitation upon assessment and collection. - Except as provided
in the succeeding section, internal revenue taxes shall be assessed within three years after
the last day prescribed by law for the filing of the return, and no proceeding in court
without assessment for the collection of such taxes shall be begun after the expiration of
such period: Provided, That in a case where a return is filed beyond the period prescribed
by law, the three-year period shall be counted from the day the return was filed. For the
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."
SECTION 2. Section 319 of the same Code is hereby amended to read as follows:
"Sec. 319. Exceptions as to period of limitation of assessment and collection of taxes.

- (a) In the case of a false or fraudulent return with intent to evade tax or a failure to file a
return, the tax may be assessed, or a proceeding in court for the collection of such tax
may be begun without assessment, at any time within ten years after the discovery of the
falsity, fraud, or omission: Provided, That in a fraud assessment which has become final
and executory, the fact of fraud shall be judicially taken cognizance of in the civil or
criminal action for the collection thereof.
"(b) If before the expiration of the time prescribed in the preceding section for the
assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to
its assessment after such time, the tax may be assessed within the period agreed upon.
The period so agreed upon may be extended by subsequent written agreements made
before the expiration of the period previously agreed upon.
"(c) Any internal revenue tax which has been assessed within the period of limitation
above-prescribed may be collected within three years following the assessment of the tax.
"(d) Any internal revenue tax which has been assessed within the period agreed upon
as provided in paragraph (b) hereinabove may be collected by distraint or levy or by a
proceeding in court within the period agreed upon in writing before the expiration of the
three-year period. The period so agreed upon may be extended by subsequent written
agreements made before the expiration of the period previously agreed upon.
"(e) Provided, however, That nothing in the immediately proceeding section and
paragraph (a) hereof shall be construed to authorize the examination and investigation or
inquiry into any tax returns filed in accordance with the provisions of any tax amnesty
law or decree."
SECTION 3. The period of limitation herein prescribed shall apply to assessments of

internal revenue taxes beginning taxable year 1984.
Approved, April 5, 1984.
Copyright 2003 ACCESSLAW, Inc.
03-25-1982 BATAS PAMBANSA BLG. 221

03-25-1982 BATAS PAMBANSA BLG. 221 AN ACT REVISING THE RATES OF
CAPITAL GAINS TAX ON CERTAIN SALES OF SHARES OF STOCK AND THE
MANNER OF ASSESSING AND COLLECTING THE SAME, FURTHER
AMENDING FOR THE PURPOSE OF THE NATIONAL INTERNAL REVENUE
CODE OF 1977, AS AMENDED
March 25, 1982
AN ACT REVISING THE RATES OF CAPITAL GAINS TAX ON CERTAIN SALES

OF SHARES OF STOCK AND THE MANNER OF ASSESSING AND COLLECTING
THE SAME, FURTHER AMENDING FOR THE PURPOSE OF THE NATIONAL
INTERNAL REVENUE CODE OF 1977, AS AMENDED
SECTION 1. Paragraph (g), Section 34 of the National Internal Revenue Code of 1977,
as amended, is further amended to read as follows:
"(g) The provisions of paragraph (b) of this Section to the contrary notwithstanding,
net capital gains realized during each taxable year by individuals or corporations from
sale or exchange of shares of stock shall be taxed as follows:
Not over P100,000 10%
Over P100,000 20%
Provided, however, That sale of shares of stock listed and traded through a local stock
exchange shall be taxed at one-fourth of one percent of the gross selling price of the share
or shares of stock sold.
"The taxes herein imposed shall be collected, paid and remitted in a manner provided for
by regulations to be promulgated by the Minister of Finance, within thirty days from the
approval of this Act, upon the recommendation of the Commissioner of Internal Revenue
and/or the Chairman of the Securities and Exchange Commission. Such rules and
regulations shall take effect fifteen days following its publication in a newspaper of
general circulation in the Philippines."
SECTION 2. This Act shall take effect upon its approval.
Approved, March 25, 1982.

12-18-1981 BATAS PAMBANSA BLG. 135 AN ACT AMENDING CERTAIN
PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS
AMENDED, AND FOR OTHER PURPOSES
December 18, 1981

January 1, 1982
AN ACT AMENDING CERTAIN PROVISIONS OF THE NATIONAL INTERNAL

REVENUE CODE OF 1977, AS AMENDED, AND FOR OTHER PURPOSES
SECTION 1. Section 21 of the National Internal Revenue Code of 1977, as amended, is

hereby further amended to read as follows:
"Sec. 21. Rates of tax on citizens or residents. - (a) On taxable compensation

income. - A tax is hereby imposed upon the taxable compensation income as determined
in Section 28(a) received during each taxable year from all sources by every individual,
whether a citizen of the Philippines, determined in accordance with the following
schedule:
Not over P2,500 0%

Over P 2,500 but not over P 5,000 1%
Over P 5,000 but not over P 10,000 P 25 + 3% of excess over P 5,000
Over P 40,000 but not over P 60,000 P 3,075 + 15% of excess over P 40,000
Over P 60,000 but not over P100,000 P 6,075 + 19% of excess over P 60,000
Over P100,000 but not over P250,000 P 13,657 + 24% of excess over P100,000
Over P500,000 P122,175 + 35% of excess over P500,000
"(b) On taxable net income. - A tax is hereby imposed upon the taxable net income as
determined in Section 29(a) received during each taxable year from all sources by every
individual, whether a citizen of the Philippines, or an alien residing in the Philippines
determined in accordance with the following schedule:
Not over P10,000 5%

Over P10,000 but not over P30,000 P 500 + 15% of excess over P 10,000
Over P30,000 but not over P150,000 P 3,500 + 30% of excess over P 30,000
Over P500,000 P197,000 + 60% of excess over P500,000
"(c) On royalties, prizes and other winnings. - Royalties, prizes (except prizes
amounting to Three thousand pesos or less which shall be subject to tax under paragraph
[b] and other winnings (except Philippine Charity Sweepstakes winnings) received by
citizens and resident alien individuals shall be subject to a final tax at the rate of fifteen
per centum (15%) on the total amount thereof, which shall be collected and paid as
provided in Sections 53 and 54 of this Code.
"(d) On interest from bank deposits and yield or any other monetary benefit from
deposit substitutes and from trust fund and similar arrangements. - Interest from
Philippine Currency Bank deposits and yield or any other monetary benefit from deposit
substitutes and from trust fund and similar arrangements whether received by citizens of
the Philippines or by resident alien individuals, shall be subject to the final tax as follows:
(a) fifteen per centum (15%) of the interest on savings deposits, and (b) twenty per
centum (20%) of interest on time deposits and yield or any other monetary benefit from
deposit substitutes and from trust fund and similar arrangements, which shall be collected
and paid as provided in Sections 53 and 54 of this Code: Provided, That no tax shall be
imposed if the aggregate amount of the interest on all Philippine Currency deposit
accounts maintained by a depositor alone or together with another in any one bank at any
time during the taxable period does not exceed One thousand pesos (P1,000,000) a year
or Two hundred fifty pesos (P250.00) per quarter: Provided, further, That if the recipient
of such interest is exempt from income taxation, no tax shall be imposed and that, if the
recipient is enjoying preferential income tax treatment, then the preferential tax rates so
provided shall be imposed.
"(e) On dividends and share of individual partner in the net profits or taxable
partnership. - Dividends received by an individual who is a citizen of the Philippines or
resident alien from a domestic corporation and the share of an individual partner in a
partnership subject to tax under Section 24(a) shall be subject to a final tax at the rate of
fifteen per centum (15%) on the total amount thereof, which shall be collected and paid
as provided in Sections 53 and 54 of this Code.
"(f) On adjusted gross income. - A tax is hereby imposed upon the adjusted gross
income derived by a non-resident citizen from all sources without the Philippines during
each taxable year computed in accordance with the following schedule:
If the amount subject to tax is:

Not over U.S. $6,000.00 1%
Over U.S. $6,000.00 but
not over U.S. $20,000.00 U.S. $60 plus 2% of excess over U.S.
$6,000
Over U.S. $20,000 U.S. $340 plus 3% of excess over U.S. $20,000
For purposes of this paragraph, "adjusted gross income" means the gross income from all
sources without the Philippines less the following:
"(1) An allowance for personal exemption in the amount of Two thousand dollars
(U.S. $2,000), if the person making the return is a single or a married person legally
separated from his or her spouse; or Four Thousand dollars (U.S. $4,000), if the person
making the return is married or head of the family, as defined in Section 23 of this Code
and
"(2) The total amount of the national income tax actually paid to the government of the
foreign country of his residence.
"Every non-resident citizen availing of the special rates provided herein is

required to support his declaration of gross income, exemption and deductions claimed
by attaching to his Philippine income tax return a copy of the income tax return he has
filed with the government of the foreign country of his residence."
SECTION 2. Section 22 of the said Code is hereby amended to read as follows:
"Sec. 22. Tax on non-resident alien individuals. - (a) Non-resident aliens engaged in
trade or business within the Philippines. (1) In general. - Non-resident aliens engaged in
trade or business in the Philippines shall be subject to tax in the same manner as resident
citizens and aliens on taxable compensation income and/or other taxable net income
received from all sources within the Philippines, except capital gains realized from
buying and/or selling shares of stock of Philippine corporations listed in the dollar or any
foreign currency board of stock exchange: Provided, That for purposes of this Title, a
non-resident alien individual who shall come to the Philippines and stay therein for an
aggregate period of more than one hundred eighty days during any calendar year shall be
deemed a non-resident alien, doing business in the Philippines, the provision of Section
20(g) of this Code to the contrary notwithstanding.
"(2) Dividend, share in the net profits of a taxable partnership, interest, royalties,
prizes and other winnings, etc. - Dividends from a domestic corporation, share in the net
profits of a partnership taxable under Section 24(a), interest, royalties, (in any form) and
prizes (except prizes amounting to P3,000 or less which shall be subject to tax under
paragraph (b) of Section 21) and other winnings (except Philippine Charity Sweepstakes
winnings), shall be subject to a final tax of thirty per centum (30%) on the total amount
thereof, which shall be collected and paid as provided in Sections 53 and 54 of this Code.
"(b) Non-resident alien not engaged in trade or business within the Philippines. - There
shall be levied, collected and paid for each taxable year upon the entire income received
from all sources within the Philippines by every non-resident alien individual not
engaged in trade of business within the Philippines as interest, dividends, rents, salaries,
wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed
or determinable annual or periodical or casual gains, profits, and income, and capital
gains (except capital gains realized from buying and/or selling shares of stock of
Philippine corporations listed in the dollar or any acceptable foreign currency board of
any stock exchange), a tax equal to thirty per centum (30%) of such income.
"(c) Aliens employed by regional or area headquarters of multinational corporations. -

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 established
in the Philippines by multinational corporations as salaries, wages, annuities,
compensations, remunerations and other emoluments, such as honoraria and allowances,
from such regional or area headquarters a tax equal to fifteen per centum (15%) of such
gross income: Provided, That the activities of the said regional headquarters or area
headquarters shall be limited to acting as supervisory, communications and coordinating
center for their affiliates, subsidiaries or branches of such multinational corporations. For
purposes of this chapter, the term 'multinational corporation' means a foreign firm or
entity engaged in international trade with affiliates or subsidiaries or branch offices in
the Asia Pacific Region.
"(d) Aliens employed by offshore banking units. - There shall be levied, collected and
paid for each taxable year upon the gross income received by every alien individual
employed by offshore banking units established in the Philippines as salaries, wages,
annuities, compensations, remunerations and other emoluments, such as honoraria and
allowances, from such offshore banking units a tax equal to fifteen per centum (15%) of
such gross income.
"(e) Aliens employed by petroleum service contractors and subcontractors. - Aliens

who are permanent residents of a foreign country but who are employed and assigned in
the Philippines by service contractors or by subcontractors engaged in petroleum
operations in the Philippines shall be liable to a final income tax equal to fifteen per
centum (15%) of the salaries, wages, annuities, compensations, remunerations and other
emoluments, such as honoraria and allowances, received from such contractors or
subcontractors. Any income, earned from all other sources within the Philippines by the
said alien employees shall be subject to the income tax imposed under the National
Internal Revenue Code."
SECTION 3. Section 23 of the said Code is hereby amended to read as follows:

"Sec. 23. Amount of personal exemptions allowable to individuals. - For the
purpose of the tax provided in this Title, there shall be allowed in the nature of a
deduction from the amount of gross compensation income and/or net income, as the case
may be, the following personal exemptions:
"(a) Personal exemption of a single individuals. - The sum of Three thousand pesos
(P3,000,00), if the person making the return is a single person or a married person
judicially decreed as legally separated from his or her spouse.
"(b) Personal exemption of married persons or heads of family. - The sum of Six
thousand pesos (P6,000,00), if the person making the return is a married man or a married
woman, or Four thousand five hundred pesos (P4,500,00), if the person making the
return is the head of the family: Provided, That only one exemption of six thousand
pesos (P6,000,00) shall be made from the aggregate income of both husband and wife
when not legally separated. For the purposes of this section, the term "head of the
family" means an unmarried man or woman with one or both parents, or with one or
more brothers or sisters, or with one or more legitimate, recognized natural, or adopted
children living with and dependent upon him or her for their chief support where such
brothers, sisters, or children are not more than twenty-one years of age, unmarried, and
not gainfully employed, of where such children are incapable of self-support because of
mental or physical defect.
"(c) Additional exemption for dependents, - The sum of Two thousand pesos
(P2,000,00) for each legitimate, recognized natural or adopted child wholly dependent
upon and living with the taxpayer if such dependents are not more than twenty-one years
of age, unmarried, and not gainfully employed or if they are incapable of self-support
because of mental or physical defect. The additional exemption under this subsection
shall be allowed only if the person making the return is either married or head of the
family: Provided, however, That the total number of dependents for which additional
exemptions may be claimed shall not exceed four dependents: Provided, further, That an
additional exemption of One thousand pesos (P1,000,00) shall be allowed for each child
who otherwise qualified as dependent prior to January 1, 1980.
"In the case of individual who derives compensation and other incomes,
the amount of personal and additional exemptions granted under this section shall be
deducted first from the gross compensation income. Any excess thereof shall be
deducted from other income.
"(d) Change of Status. - If the taxpayer is married or should have additional

dependents as defined in subsection (c) above during the taxable year, the taxpayer may
claim the corresponding personal and additional exemption, as the case may be, in full for
such year.
"If the taxpayer should die during the taxable year, his estate may still
claim the personal and additional exemptions for himself and his dependents as if he died
at the close of such year.
"If the spouse or any of the dependents should die or if any of such
dependents becomes twenty-one years old during the taxable year, the taxpayer may still
claim the same exemptions as if they died, or if such dependents become twenty-one
years old at the close of such year.
"(e) Allowances for adjustment. - Upon the recommendation of the Minister of

Finance, the President may not more often than once every three years, adjust the
personal and additional exemptions taking into account, among others, the movements in
consumer price indices, levels of minimum wages, and bare subsistence levels.
"(f) Personal exemptions allowable to non-resident alien individuals. - A non-resident

alien individual engaged in trade or business in the Philippines shall be entitled to
personal exemption in an amount equal to the exemptions allowed by the income tax law
of the country of which he is a subject or citizen to citizens of the Philippines not
residing in such country, but not to exceed the amount fixed in this section as exemption
for citizens or residents of the Philippines: Provided, That said non-resident alien should
file a true and accurate return of the total income received by him from all sources in the
Philippines, as required by this Title."
SECTION 4. The title of Chapter IV is hereby amended to read as follows:
"Chapter IV. - Computation of taxable compensations income and taxable net income."
SECTION 5. Section 28 of said Code is hereby amended to read as follows:
"Sec. 28. Taxable compensation income. - (a) Computation. - For purposes of

determining the tax prescribed in Section 21(a), "taxable compensation income" is gross
compensation income as defined in paragraph (b) hereof, less the personal and additional
exemptions allowed under Section 23.
"(b) "Gross compensation income" defined. - "Gross compensation income includes

all income payments received as a result of an employer-employee relationship such as,
salaries, wages, honoraria, bonuses, pensions, allowances for transportation,
representation, entertainment, fees, (including director's fees) and other income of similar
nature, including compensation paid in kind: Provided, however, That payments made
by a general professional partnership to a partner for services rendered shall not be
considered as gross compensation income but as a partner's distributive share of ordinary
business income.
"(c) Exclusion from gross compensation income. - The following are excluded from
the computation of gross compensation income:
"(1) Actual, moral, exemplary and nominal damages received by the employees or his
heirs pursuant to a final judgment or compromise agreement arising out of or related to
an employer-employee relationship.
"(2) All items excluded under paragraphs (c) (1) to (c) (8), inclusive of Section 29."
"Sec. 29. Taxable net income. - (a) For purposes of determining the tax prescribed
in Section 21(b) and Section 24, "taxable net income" is gross income as defined in
paragraph (b) hereof, less the deductions allowed by Section 30 and, in the case of
individuals, the personal and additional exemptions allowed under Section 23.
"(b) "Gross income" defined. - "Gross income" includes gains, profits, and income
derived from professions, vocations, trades, business, commerce, sales, or from dealings
in property, whether real or personal, or growing out of the ownership or use of property
or any interest therein; and from interest, rents, dividends, securities, or the transactions
of any business carried on for gain or profit, or gains, profits and income of whatever
kind and in whatever form derived from any source: Provided, however, That gross
compensation income tax under this Title shall not be included in "gross income".
"(c) Exclusions from gross income. - The following items shall not be included in
gross income and shall be exempt from taxation under this Title:
"(1) Life Insurance. - The proceeds of life insurance policies paid to the heirs or
beneficiaries upon the death of the insured, whether in a single sum or otherwise, but if
such amounts are held by the insurer under an agreement to pay interest thereon, the
interest payments shall be included in gross income.
"(2) Amount received by insured as return of premium. - The amount received by the
insured, as a return of premium or premiums paid by him under life insurance,
endowment, or annuity contracts, either during the term or at the maturity of the term
mentioned in the contract or upon surrender of the contract.
"(3) Gifts, bequests, and devises. - The value of property acquired by gift, bequest,
devise, or descent; but the income from such property shall be included in gross income.
"(4) Interest on Government securities. - Interest upon the obligations of the

Government of the Republic of the Philippines or any political subdivisions thereof, but
in the case of such obligations issued after the approval of this Code, only to the extent
provided in the act authorizing the issue thereof.
"(5) Compensation for injuries or sickness. - Amounts received, through Accident or

Health Insurance or under Workmen's Compensation Acts, as compensation for personal
injuries or sickness, plus the amount of any damages received whether by suit or
agreement on account of such injuries or sickness.
"(6) Income exempt under treaty. - Income of any kind, to the extent required by any
treaty obligation binding upon the Government of the Philippines.
"(7) Retirement benefits, pensions, gratuities, etc. -
"(A) Retirement benefits received by officials and employees or private firms, whether
individual or corporate, in accordance with a reasonable private benefit plan maintained
by the employer: Provided, That the retiring official or employee has been in the service
of the same employer for at least ten (10) years is not less than fifty years of age at the
time of his retirement: Provided, further, That the benefits granted under this
subparagraph shall be availed of by an official or employee only once. For purposes of
this sub-section, the term "reasonable private benefit plan" means a pension, gratuity,
stock bonus or profit-sharing plan maintained by an employer for the benefit of some or
all of his officials or employees, wherein contributions are made by such employer for
officials and employees, or both, for the purpose of distributing to such officials and
employees the earnings and principal of the fund thus accumulated, and wherein it is
provided in said plan that at no time shall any part of the corpus or income of the fund be
used for, or be diverted to, any purpose other than for the exclusive benefit of the said
officials and employees.
"(B) Any amount received by an official or employee or by his heirs from the
employer as a consequence of separation of such official or employee from the service of
the employer due to death, sickness or other physical disability or for any cause beyond
the control of the said official or employee.
"(C) The provisions of any existing law to the contrary notwithstanding, social security
benefits, retirement gratuities, pensions and other similar benefits received by resident or
non-resident citizens of the Philippines or aliens who come to reside permanently in the
Philippines from foreign government agencies and other institutions, private or public.
"(D) Payments of benefits due or to become due to any person residing in the
Philippines under the laws of the United States administered by the United States
Veterans Administration.
"(E) Payments of benefits made under the Social Security Act of 1954, as amended.
"(F) Benefits received from the GSIS and the retirement gratuity received by
government officials and employees.
"(8) Miscellaneous items. - (A) Income received from their investments in the
Philippines in loans, stocks, bonds or other domestic securities or from interest on their
deposits in banks in the Philippines by (1) foreign governments, (2) financing institutions
owned, controlled, or enjoying refinancing from them, and (3) international or regional
financing institutions established by governments.
"(B) Income derived from any public utility or from the exercise of any essential
governmental function accruing to the Government of the Philippines or to any political
subdivision thereof.
"(C) Income derived as rewards under Republic Act Numbered Twenty-three hundreds
and thirty-eight, as amended by Presidential Decree No. 707.
"(D) Interest earned from deposits maintained with a bank under the expanded foreign
currency deposit system."
"Sec. 30. Deductions from gross income. - In computing net income there shall be
allowed as deductions. -
"(a) Expenses. - (1) Business expenses. - (A) In general. - All ordinary and necessary
expenses pair or incurred during the taxable year in carrying on any trade or business,
including a reasonable allowance for salaries or other compensation for personal services
actually rendered; travelling expenses while away from home in the pursuit of a trade,
profession or business, rentals or other payments required to be made as a condition to
the continued use or possession, for the purpose of the trade, profession or business, of
property to which the taxpayer has not taken or is not taking title or in which he has no
equity.
"(B) General requirements for entertainment amusement or recreation. - No deductions

otherwise allowable under this paragraph shall be allowed for any item -
"(i) Activity. - With respect to an activity which is of a type generally considered to

constitute entertainment, amusement, or recreation, unless the taxpayer establishes that
the item was directly related to, or, in the case of an item was directly preceding or
following a substantial and bona fide business discussion (including business meetings at
a convention or otherwise), that such item was associated with, the active conduct of the
taxpayer's trade, profession or business, or
"(ii) Facility. - With respect to a facility used in connection with an activity referred to
in subparagraph (A), unless the taxpayer establishes that the facility was used primarily
for the furtherance of the taxpayer's trade or business and that the item was directly
related to the active conduct of such trade, profession or business.
"For purposes of applying this subparagraph, dues or fees paid to any

social, athletic or sporting club or organization shall be treated as items with respect to
facilities.
"In no case shall an entertainment, amusement or recreational expense

which is contrary to law, public policy or for immoral purposes be allowed as a
deduction.
"(C) Substantiation required. - No deduction shall be allowed under the preceding

subparagraph (B) unless the taxpayer substantiates with official receipts or by adequate
records or by sufficient evidence corroborating his own statement (i) the amount of such
expense or other item, (ii) the date and place of entertainment, amusement, or recreation,
(iii) the professional or business purpose of the expense or other items and (iv) the
professional or business relationships, to the taxpayer of the persons entertained or using
the facility. The Minister of Finance may by regulations provide that some or all of the
requirements in the preceding sentence shall not apply in the case of an expense which
does not exceed an amount prescribed pursuant to such regulations.
"(2) Expenses allowable to non-resident alien individuals and foreign corporations. -

In the case of a non-resident alien individual or a foreign corporation, the expenses
deductible are the necessary expenses paid or incurred in carrying on any business or
trade conducted within the Philippines exclusively.
"(3) Expenses allowable to private educational institutions. - In addition to the

expenses allowable as deductions under paragraph (1) of this subsection, a private
educational institutions, whether stock or non-stock, shall also be allowed to deduct
during the taxable year when they incurred expenses for the expansion of school facilities
to be determined by rules and regulations issued jointly by the Ministries of Education
and Culture and of Finance.
"(b) Interest:
"(1) In General. - The amount of interest paid or accrued within a taxable year on
indebtedness incurred in connection with the taxpayer's profession, trade, or business,
except on indebtedness incurred or continued to purchase or carry obligations the interest
upon which is exempt from taxation as income under this Title: Provided, however, That
interest on deposits paid by authorized agent banks of the Central Bank of the Philippines
to depositors shall be allowed as a deduction only if it is shown that the tax on such
interest was withheld and paid in accordance with the provisions of Sections 53 and 54
of this Code.
"(2) Interest allowable to non-resident aliens. - In the case of a non-resident alien

individual or a foreign corporation, the amount of interest allowable in the proportion of
the amount of interest paid within the year on indebtedness, except on indebtedness
incurred or continued to purchase or carry obligations, the interest upon which is wholly
exempt from taxation as income under this Title, which the gross amount of income for
the year derived from sources within the Philippines bears to gross amount of income
derived from all sources within and without the Philippines; but this deduction shall be
allowed only if such non-resident alien individual or foreign corporation includes in the
return required by this Title all the information necessary for its calculation.
"(3) No deduction shall be allowed in respect of interest otherwise deductible under

the preceding subparagraphs -
"(A) If within the taxable year an individual taxpayer reporting income on the cash
basis incurs an indebtedness on which an interest is paid in advance through discount or
otherwise: Provided, however, That such interest shall be allowed as a deduction in the
year the indebtedness is paid: and Provided, further, That if the indebtedness is payable
in periodic amortization, the amount of interest which corresponds to the amount of the
principal amortized or paid during the year shall be allowed as deduction in such taxable
year.
"(B) If both the taxpayer and the person to whom the payment has been made or is to
be made are persons specified within any one of the paragraphs of subsection (b) of
Section 31.
"(C) If the indebtedness is incurred to finance petroleum exploration.
"(c) Taxes:
"(1) In general. - Taxes paid or accrued within the taxable year in connection with the
taxpayer's profession, trade or business, except -
"(A) The income tax provided for under this Title;
"(B) Income, war-profits, and excess-profits taxes imposed by authority of any foreign
country; but this deduction shall be allowed in the case of a taxpayer who does not
signify in his return his desire to have to any extent the benefits of paragraph (3) of this
subsection (relating to credits for taxes of foreign countries);
"(C) Estate and gift taxes;
"(D) Taxes assessed against local benefits of a kind tending to increase the value of the
property assessed; and
"(E) Electric energy consumption tax imposed by Batas Pambansa Blg. 36.
"(2) Limitations on deductions. -
"(A) In the case of a non-resident alien individual and a foreign corporation, the
deductions for taxes provided in paragraph (1) of this subsection (c) shall be allowed only
if and to the extent that they are connected with income from sources within the
Philippines; and
"(B) In the case of a citizen of a foreign country residing in the Philippines whose
income from sources within such foreign country is not taxable under this Title, only that
portion of the taxes paid to such foreign country which corresponds to his net income
taxable under this Title shall be allowed as deduction.
"(3) Credit against tax for taxes of foreign countries. - If the taxpayer signifies in his
return his desire to have the benefits of this paragraph, the tax imposed by this Title shall
be credited with -
"(A) Citizen and domestic corporation. - In the case of a citizen of the Philippines and
of a domestic corporation, the amount of any income, war-profits, and excess-profits
taxes paid or accrued during the taxable year to any foreign country;
"(B) Alien resident of the Philippines. - In the case of an alien resident of the
Philippines, the amount of any such taxes paid or accrued during the taxable year to any
foreign country; if the foreign country of which such alien resident is a citizen or subject,
in imposing such taxes allows a similar credit to citizens of the Philippines residing in
such country; and
"(C) Partnerships and estates. - In the case of any such individual who is a member of a
general professional partnership or a beneficiary of an estate or trust, his proportionate
share of such taxes of the general professional partnership or the state or trust paid or
accrued during the taxable year to a foreign country, if his distributive share of the
income of such partnership or trust is reported for taxation under this Title.
"(D) Non-resident aliens and foreign corporations. - Non-resident alien individuals and
foreign corporations shall not be allowed the credits against the tax for the taxes of
foreign countries allowed under this paragraph.
"(4) Limitations on credit. - The amount of the credit taken under this section shall be
subject to each of the following limitations:
"(A) The amount of the credit in respect to the tax paid or accrued to any country shall
not exceed the same proportion of the tax against which such credit is taken, which the
taxpayer's net income from sources within such country under this Title bears to his
entire net income for the same taxable year; and
"(B) The total amount of the credit shall not exceed the same proportion of the tax
against which such credit is taken, which the taxpayer's net income from sources without
the Philippines taxable under this Title bears to his entire net income for the same
taxable year.
"(5) Adjustments on payments of accrued taxes. - If accrued taxes when paid differ
from the amounts claimed as credits by the taxpayer, or if any tax paid is refunded in
whole or in part, the taxpayer shall notify the Commissioner of Internal Revenue, who
shall redetermine the amount of the tax for the year or years affected, and the amount of
tax due upon such determination, if any, shall be paid by the taxpayer upon notice and
demand by the Commissioner, or the amount of tax overpaid, if any, shall be credited or
refunded to the taxpayer. In the case of such a tax accrued but not paid, the
Commissioner as a condition precedent to the allowance of this credit may require the
taxpayer to give a bond with sureties satisfactory to and to be approved by the
Commissioner in such sum as he may require, conditioned upon the payment by the
taxpayer of any amount of tax found due upon any such redetermination. The bond
herein prescribed shall contain such further conditions as the Commissioner may require.
"(6) Year in which credit taken. - The credits provided for in paragraph (3) of this
subsection may, at the option of the taxpayer and irrespective of the method of
accounting employed in keeping his books, be taken in the year in which the taxes of the
foreign country accrued, subject, however, to the conditions prescribed in paragraph (5)
of this subsection. If the taxpayer elects to take such credits in the year in which the
taxes of the foreign country accrued, the credits for all subsequent years shall be taken
upon the same basis, and no portion of any such taxes shall be allowed as a deduction in
the same or any succeeding year.
"(7) Proof of credits. - The credits provided in paragraph (3) of this subsection shall
be allowed only if the taxpayer establishes to the satisfaction of the Commissioner (1) the
total amount of income derived from sources without the Philippines, (2) the amount of
income derived from each country, the tax paid or accrued to which is claimed as a credit
under said paragraph, such amount to be determined under rules and regulations
prescribed by the Minister of Finance, and (3) all other information necessary for the
verification and computation of such credits.
"(8) Taxes of foreign subsidiary. - For the purposes of this subsection a domestic
corporation which owns a majority of the voting stock of a foreign corporation from
which it receives dividends in any taxable year shall be deemed to have paid the same
proportion of any income, war-profits, or excess-profits taxes paid by such foreign
corporation to any foreign country, upon or with respect to the accumulated profits of
such foreign corporation from such dividends were paid which the amount of such
dividend bears to the amount of such accumulated profits; Provided, That the amount of
tax deemed to have been paid under this subsection shall in no case exceed the same
proportion of the tax against which credit is taken which the amount of such dividends
bears to the amount of the entire net income of the domestic corporation in which such
dividends are included. The term "accumulated profits" when used in this subsection in
reference to a foreign corporation, means the amount of its gains, profits, or income in
excess of the income, war-profits, and excess-profits taxes imposed upon or with respect
to such profits or income; and the Commissioner of Internal Revenue shall have full
power to determine from the accumulated profits of what year or years such dividends
were paid, treating dividends paid in the first 60 days of any year as having been paid
from the accumulated profits of the preceding year or years (unless to his satisfaction
shown otherwise), and in other respects treating dividends as having been paid from the
most recently accumulated gains, profits, or earnings. In the case of a foreign
corporation, the income, war-profits, and excess-profits taxes of which are determined on
the basis of an accounting period of less than one year, the word "year" as used in this
subsection shall be construed to mean such accounting period.
"(9) Taxes of shareholder paid by corporation. - The deduction for taxes allowed by
subsection (c) shall be allowed to a corporation in the case of taxes imposed upon a
shareholder of the corporation upon his interest as shareholder which are paid by the
corporation without reimbursement from the shareholder, but in such cases no deduction
shall be allowed the shareholder for the amount of such taxes.
"(d) Losses:
"(1) By individuals. - In the case of an individual, losses actually sustained during the
taxable year and not compensated for by insurance or otherwise.
"(A) If incurred in trade, profession, or business: Provided, however, That a loss

representing the excess over the income, of allowable expenses and other deductions
directly or approximately attributable or related to the production or earning of such
income from a particular line of business or activity, shall not be allowed as a deduction
from or offset against income derived from other sources: Provided, further, That a net
operating loss sustained in a particular line of profession, business or activity within three
years after the commencement of such business or activity may, in a manner prescribed
by regulations promulgated by the Minister of Finance, be carried over as a deduction
from the income derived from the same particular line of business or activity for two (2)
consecutive years immediately following the year such loss was sustained, or
"(B) If incurred in any transaction entered into for profit, though not connected with
the trade or business. The Minister of Finance, upon recommendation of the
Commissioner of Internal Revenue, is hereby authorized to promulgate rules and
regulations prescribing, among other things, the time and manner by which the taxpayer
shall submit a declaration of loss sustained from casualty of from robbery, theft, or
embezzlement during the taxable year: Provided, however, That the time limit to be so
prescribed in the regulations shall not be less than 30 days nor more than 90 days from
the date of the occurrence of the casualty or robbery, theft, or embezzlement giving rise
to the loss.
"(2) By corporation. - In the case of a corporation, all losses actually sustained and
charged off within the taxable year and not compensated for by insurance or otherwise.
"(3) By non-resident aliens of foreign corporations. - In the case of a non-resident

alien individual or foreign corporation, the losses deductible are those actually sustained
during the year incurred in business or trade conducted within the Philippines, and losses
actually sustained during the year in transactions entered into for profit in the Philippines
although not connected with their business or trade, when such losses are not
compensated for by insurance or otherwise. The Minister of Finance, upon
recommendation of the Commissioner of Internal Revenue, is hereby authorized to
promulgate rules and regulations prescribing, among other things, the time and manner
by which the taxpayer shall submit a declaration of loss sustained from casualty or from
robbery, theft, or embezzlement during the taxable year: Provided, however, That the
time to be so prescribed in the regulations shall not less than 30 days nor more than 90
days from the date of the occurrence of the casualty or robbery, theft, or embezzlement
giving rise to the loss.
"(4) Capital losses. -

"(A) Limitation. - Losses from sales or exchange of capital assets shall be allowed only
to the extent provided in Section 34.
"(B) Securities becoming worthless. - If any securities as defined in Section 20

becomes worthless during the taxable year and are capital assets, the loss resulting
therefrom shall, for the purposes of this Title, be considered as a loss from the sale or
exchange, on the last day of such taxable year, or capital assets.
"(5) Losses on wash sales of stock or securities. - Losses on "wash sales" of stock or
securities as provided in Section 33.
"(6) Wagering losses. - Losses from wagering transactions shall be allowed only to the
extent of the gains from such transactions.
"(7) Abandonment Losses. - (A) In the event a contract area where petroleum
operations are undertaken is partially or wholly abandoned, all accumulated exploration
and development expenditures pertaining thereto shall be allowed as a deduction:
Provided, however, That accumulated expenditures incurred in that area prior to January
1, 1979, shall be allowed as a deduction only from any income derived from the same
contract area. In all cases, notices of abandonment shall be filed with the Commissioner
of Internal Revenue.
"(B) In case a producing well is subsequently abandoned, the unamortized costs

thereof, as well as the undepreciated costs of equipment directly used therein shall be
allowed as a deduction in the year such well, equipment or facility is abandoned by the
contractor; Provided, however, That if such abandoned well is reentered and production
is resumed, or if such equipment or facility is restored into service, the said costs shall be
included as part of gross income in the year of resumption or restoration and shall be
amortized or depreciated, as the case may be.
"(e) Bad Debts:
"(1) In general. - Debts due to the taxpayer actually ascertained to be worthless and
charged off within the taxable year except those not connected with profession, trade or
business and those sustained in a transaction entered into between parties mentioned
under subsection (b) of Section 31 of this Code.
"(2) Bad debts deductible by non-resident aliens or foreign corporations. - In the case
of a non-resident alien individual or a foreign corporation, bad debts are deductible if
they have arisen in the course of business or trade conducted within the Philippines and
actually ascertained to be worthless and charged off within the year.
"(3) Securities becoming worthless. - If any securities as defined in Section 20 are

ascertained to be worthless and charged off within the taxable year and are capital assets,
the loss resulting therefrom shall, in the case of a taxpayer other than a bank of trust
company incorporated under the laws of the Philippines a substantial part of whose
business is the receipt of deposits, for the purpose of this Title, be considered as a loss
from the sale or exchange, on the last day of such taxable year of capital assets.
"(f) Depreciation:
"(1) In general. - A reasonable allowance for deterioration of property arising out of its
use or employment in the profession, business or trade, or out of its not being used:
Provided, That when the allowance authorized under this subsection shall equal the
capital invested by the taxpayer or, in case of purchase made prior to March first,
nineteen hundred and thirteen, the fair market value as of that date, no further allowance
shall be made. In the case of property held by one person for life with remainder to
another person, the deduction shall be computed as if the life tenant where the absolute
owner of the property and shall be allowed to the life tenant. In the case of property held
in trust, the allowable deduction shall be apportioned between the income beneficiaries
and the trustees in accordance with the pertinent provisions of the instrument creating the
trust, or, in the absence of such provisions, on the basis of the trust income allowable to
each.
"(2) Depreciation of properties used in petroleum operations. - An allowance for

depreciation in respect to all properties directly related to production of petroleum
initially placed in service in a taxable year under the straight-line or double-declining
balance method of depreciation at the option of the service contractor. However, of the
service contractor initially elects the double-declining method, it may, at any subsequent
date, shift to the straight-line method. The useful life of properties used in or related to
production of petroleum shall be ten (10) days or such shorter life as may be permitted by
the Commissioner of Internal Revenue.
"Properties not used directly in the production of petroleum shall be

depreciated under the straight-line method on the basis of an estimated useful life of five
(5) years.
"(3) Depreciation deductible by non-resident aliens of foreign corporations. - In the

case of a non-resident alien individual or foreign corporation, a reasonable allowance for
the deterioration of property arising out of its use or employment or its non-use in the
business or trade shall be permitted only when such property is located within the
Philippines.
"(g) Depletion of oil and gas wells and mines:
"(1) In general. - In the case of oil and gas wells and mines, a reasonable allowance for
depletion or amortization computed in accordance with the cost depletion method shall be
granted under rules and regulations to be prescribed by the Minister of Finance: Provided,
That when the allowance shall equal the capital invested no further allowance shall be
granted: Provided, further, That after production in commercial quantities has
commenced, certain intangible exploration and development drilling costs (i) shall be
deductible in the year incurred if such expenditures are incurred for on-producing wells
or (ii) shall be deductible in full in the year paid or incurred or, at the election of the
election of the taxpayer, may be capitalized and amortized, if such expenditures incurred
are for producing wells in the same contract area.
"Intangible costs in petroleum operations refer to any costs incurred in

petroleum operations which in itself has no salvage value and which is incidental to and
necessary for the drilling of wells and preparation of wells for the production of
petroleum: Provided, That said cost shall not pertain to the acquisition or improvement of
property of a character subject to the allowance for depreciation except that the
allowances for the depreciation on such property, shall be deductible under this
subsection.
"Any intangible exploration, drilling and development expenses allowed

as a deduction in computing taxable income during the year shall not be taken into
consideration in computing the adjusted cost basis for the purpose of computing
allowable cost depletion.
"(2) Election to deduct exploration and development expenditures. - In computing

taxable income, the taxpayer may, at his option, deduct exploration and development
expenditures accumulated as cost or adjusted basis for cost depletion as of January 1,
1978, as well as exploration and development expenditures paid or incurred during the
taxable year: Provided, That the total amount deductible for exploration and development
expenditures shall not exceed twenty-five per centum (25%) of the net income from
mining operations computed without the benefit of any tax incentives under existing
laws. This subparagraph shall not apply to expenditures for the acquisition or
improvement of property of a character which is subject to the allowance for depreciation
under Section 30 (f) (1) of this Code but the allowance for depreciation thereon shall be
treated as expenditure.
"The election by the taxpayers to deduct the exploration and development

expenditures is irrevocable and shall be binding in succeeding taxable years.
"In no case shall this paragraph apply with respect to amounts paid or
incurred for the exploration and development of oil and gas. The term "exploration
expenditures" means expenditures paid or incurred for the purpose of ascertaining the
existence, location, extent, or quality of any deposit of ore or other mineral, and paid or
incurred before the beginning of the development state of the mine or deposit. The term
"development expenditures" means expenditures paid or incurred during the development
stage of the mine or other natural deposits. The development stage of a mine or other
natural deposit shall begin at the time when deposits or ore or other minerals are shown
to exist in sufficient commercial quantity and quality and shall end upon commencement
of actual commercial extraction.
"(3) Depletion of oil and gas wells and mines deductible by a non-resident alien
individual or foreign corporation. - In the case of a non-resident alien individual or a
foreign corporation, allowance for depletion of oil and gas wells or mines under
paragraph (1) shall be authorized only in respect to oil and gas wells or mines located
within the Philippines.
"(h) Charitable and other contributions. -
"(1) In general. - Contributions or gifts actually paid or made within the taxable year
to or for the use of the Government of the Philippines or any of its agencies or any
political subdivision thereof for exclusively public purposes, or to domestic corporations
or associations organized and operated exclusively for religious, charitable, scientific
youth and sports development, cultural or educational purposes or for the rehabilitation
of veterans, or to social welfare institutions, no part of the net income of which inures to
the benefit of any private stockholder or individual to an amount not in excess of six per
centum (6%) in the case of an individual, and three per centum (3%) in the case of a
corporation, of the taxpayer's taxable net income as computed without the benefit of this
and the following subparagraphs.
"(2) Contributions deductible in full. - Notwithstanding the provisions of the preceding

subparagraph, donations to the following institutions or entities shall be deductible in
full:
"(A) Donations to the Government. - Donation to the Government of the Philippines or

to any of its agencies or political subdivisions including fully-owned government
corporations exclusively to finance, to provide for, or to be used in undertaking priority
activities in education, health, youth and sports development, human settlements, science
and culture, and in economic development according to a national priority plan to be
determined by the NEDA, in consultation with appropriate government agencies,
including its regional development councils, and private philanthropic persons and
institutions: Provided, however, That any donation which is made to the Government or
to any of its agencies or political subdivisions not in accordance with the said annual
priority plan shall be subject to the limitations prescribed in subparagraph (1) of this
Section.
"(B) Donations to certain foreign institutions or international organizations. -

Donations to foreign institutions or international organizations which are fully deductible
in pursuance of or in compliance with agreements, treaties, or commitments entered into
by the Government of the Philippines and the foreign institutions or international
organizations or in pursuance of special laws.
"(C) Donations to certain private foundations. - The term "private foundation" means a
non-profit domestic corporation;
"(i) Organized and operated exclusively for scientific, research, education, character-
building and youth and sports development, health, social welfare, cultural or charitable
purposes, or a combination thereof, no part of the net income of which inures to the
benefit of any private individual;
"(ii) Which, not later than the 15th day of the third month after the close of the
foundation's taxable year in which contributions are received, makes utilization directly
for the active conduct of the activities constituting the purpose or function for which it is
organized and operated, unless an extended period is granted by the Minister of Finance
in accordance with the rules and regulations to be promulgated.
"(iii) The level of administrative expense of which shall on an annual basis conform
with the rules and regulations to be prescribed by the Minister of Finance but in no case
to exceed thirty per centum (30%) of total expenses;
"(iv) The assets of which in the event of dissolution would be distributed to another
non-profit domestic corporation organized for similar purpose or purposes, or to the State
for a public purpose, or would be distributed by a court to another organization to be used
in such manner as in the judgment of said court will best accomplish the general purpose
for which the dissolved organization was organized.
"Subject to such terms and conditions as may be prescribed by the Minister of Finance,
the term "utilization" means:
"(i) Any amount in cash or in kind (including administrative expenses) pair or utilized
to accomplish one or more purposes for which the private foundation was created or
organized.
"(ii) Any amount paid to acquire an asset used (or held for use) directly in carrying out
one or more purposes for which the foundation was created or organized.
"An amount set aside for a specific project which comes within one or
more purposes of the foundation may be treated as a utilization, but only if, at the time
such amount is set aside, the private foundation establishes to the satisfaction of the
Commissioner of Internal Revenue that the amount will be paid for the specific project
within a period to be prescribed in regulations to be promulgated by the Minister of
Finance, but not to exceed 5 years, and the project is one which can be better
accomplished by setting aside such amount than by immediate payment of funds. The
Minister of Finance shall promulgate rules and regulations to implement this
subparagraph.
"(3) Valuation. - Properties other than cash donated shall be valued in accordance with
the rules and regulations prescribed by the Minister of Finance, in consultation with the
appropriate government agencies.
"(4) Proof of deductions. - Contributions or gifts shall be allowable as deductions only

if verified under the regulations prescribed by the Minister of Finance.
"(i) Conditions under which a non-resident alien individual may receive benefit of
deductions. - A non-resident alien individual engaged in trade or business in the
Philippines shall reserve the benefit of the deductions provided for in this section only by
filing or causing to be filed with the Commissions of Internal Revenue a true and
accurate return of his total income, received from all sources, corporate or otherwise in
the Philippines, in the manner prescribed by this Code; and in case of his failure to file
such return the Commissioner of Internal Revenue shall collect the tax on such income.
"(j) Pension trusts. - General rule. - An employer establishing or maintaining a

pension trust to provide for the payment of reasonable pensions to his employees shall be
allowed as a deduction (in addition to the contributions to such trusts during the taxable
year to cover the pension liability accruing during the year, allowed as a deduction under
subsection (a) of this section) a reasonable amount transferred or paid into such trust
during the taxable year in excess of such contributions, but only if such amount (1) has
not theretofore been allowable as a deduction, and (2) is apportioned in equal parts over a
period of ten consecutive years beginning with the year in which the transfer or payment
is made.
"(k) Optional Standard Deduction. - In lieu of the deductions allowed under this
section an individual subject to tax under Section 21 (b), other than a non-resident alien,
may elect a standard deduction in an amount not exceeding ten per centum (10%) of his
gross income. Unless the taxpayer signifies in his return his intention to elect the
optional standard deduction, he shall be considered as having availed himself of the
deductions allowed in the preceding subsection. The Minister of Finance shall prescribe
the manner of the election. Such election when made in the return shall be irrevocable
for the taxable year for which the return is made."
"(l) Additional requirement for deductibility of certain payments. - Any amount paid
or payable which otherwise deductible from, or taken into account in computing gross
income for which depreciation or amortization may be allowed under this section and
Section 29, shall be allowed as a deduction only if it is shown that the tax required to be
deducted and withheld therefrom has been paid to the Bureau of Internal Revenue in
accordance with this section, Sections 54 and 93 of this Code. (As amended by PD 1351,
PD 1353, PD 1475)
"Notwithstanding the provisions of the preceding paragraphs, the Minister

of Finance, upon recommendation of the Commissioner, after a public hearing shall have
been held for this purpose may prescribe by regulations, limitations or ceilings for any of
the itemized deduction under this section; Provided, That for purposes of determining
such ceilings or limitations, the Minister of Finance shall consider the following factors:
(1) adequacy of the prescribed limits on the actual expenditure requirements of each
particular industry; and (2) effects of inflation on expenditure levels; Provided, further,
That no ceilings shall further be imposed on items of expense already subject to ceilings
under present law."

"Sec. 45. Individual returns. - (a) Requirements. - (1) The following individuals are
required to file an income tax return, if they have a gross income of at least P3,000 for the
taxable year.
"(A) Every Filipino citizen, whether residing in the Philippines or abroad, and
"(B) Every alien residing in the Philippines, regardless of whether the gross income
was derived from sources within or outside the Philippines.
"(2) Regardless of amount, every non-resident alien engaged in trade or business in the
Philippines shall fine an income tax return.
"The income tax return shall be filed in duplicate, and shall set forth specifically the gross
amount of income from all sources, except that of non-resident aliens engaged in trade or
business in the Philippines which shall contain only such income derived from sources
within the Philippines: Provided, however, That in the case of an individual with
compensation income taxable under Section 21 (a) and where the tax withheld thereon in
final, a simplified return shall be filed with the Bureau of Internal Revenue after directly
or through the employer.
"(3) Notwithstanding the provisions of the preceding paragraphs, an individual (except

a non resident alien engaged in trade or business in the Philippines) whose gross
compensation income as defined under Section 28(b) does not exceed his personal
exemption of P3,000 if he/she is single or P6,000 if he/she is married or P4,500 if he/she
is head of family, is not required to filed an income tax return.
"(b) Where to file. - Except in cases where the Commissioner otherwise permits, the
return shall be filed with the Revenue District Officer, Collection Agent, or duly
authorized Treasurer of the Municipality in which such person has his legal residence or
principal place of business in the Philippines, or if there be no legal residence or place of
business in the Philippines, then with the Office of the Commissioner of Internal
Revenue.
"(c) When to file. - The return of:
"(1) Residents of the Philippines, whether citizens or aliens, whose income had been
derived solely from salaries, wages, interest, dividends, allowances, commissions,
bonuses, fees, pensions, or any combination thereof shall be filed on or before the
eighteenth day of March of each year, covering income for the proceeding taxable year.
"(2) All other individuals not mentioned above, including non-resident citizens shall
be filed on or before the fifteenth day of April of each year covering income of the
preceding taxable year.
"Individuals subject to the final schedule tax on net capital gains from the
sale or other disposition of real property under Section 34 (h) of this Code, shall file or
cause to be filed a separate return prescribed therefor by the Commissioner within thirty
(30) days following each sale or other disposition of capital assets.
"(d) Husband and Wife. - In the case of married persons, whether citizens, resident or
non-resident aliens, only one consolidated return for the taxable year shall be filed by
either spouse to cover the income of both spouses, but where it is impracticable for the
spouses, to file one consolidated return, each spouse may file his separate return of
income, but the returns so filed shall be consolidated for the purpose of the tax prescribed
under this Title.
"(e) Return of parent to include income of children. - The income of unmarried minors
derived from property received from a living parent shall be included in the return of the
parent, except (1) when the gift tax has been paid on such property, or (2) when the
transfer of such property is exempt from gift tax.
"(f) Persons under disability. - If the taxpayer is unable to make his own return, the
return may be made by his duly authorized agent or representative or by the guardian or
other person charged with the care of his person or property, the principal and his
representative or guardian assuming the responsibility of making the return and incurring
penalties provided for erroneous, false or fraudulent returns.
"(g) Signature presumed correct. - The fact that an individual's name is signed to a
filed return shall be prima facie evidence for all purposes that the return was actually
signed by him."
"Sec. 53. Withholding of tax at source. - (a) Tax-free covenant bonds. -
"(1) Requirements of withholding. - In any case where bonds, mortgages, deeds of

trust, or other similar obligations of domestic or resident foreign corporations, contain a
contract or provision by which the obligor agrees to pay any portion of the tax imposed in
this Title upon the obligee or to reimburse the obligee for any portion of the tax or to pay
the interest without deduction for any tax which the obligor may be required or permitted
to pay thereon or to retain therefrom under any law of the Philippines, or any state or
country, the obligor shall deduct and withhold a tax equal to thirty per centum (30%) of
the interest or other payments upon those bonds, mortgages, deeds of trust, or other
obligations, whether the interest or other payments are payable annually or at shorter or
longer periods, and whether the bonds, securities or obligations had been or will be
issued or marketed, and the interest or other payment thereon paid, within or outside the
Philippines, if the interest or other payment is payable to a non-resident alien or to a
citizen or resident of the Philippines.
"(b) Withholding tax on royalties, prizes and other winnings. - The tax imposed by
Sections 21 (c) and 24 of this Code on royalties, prizes (except prizes amounting to Three
thousand pesos or less which shall be subject to tax under paragraph (b) of Section 21)
and winnings shall be withheld by the payor-corporation and/or person and paid in the
same manner and subject to the same conditions as provided in Section 54 of the
National Internal Revenue Code.
"(c) Withholding tax on dividends. - The tax imposed by Sections 21 and 24 (c) of this
Code on dividends shall be withheld by the payor-corporation and paid in the same
manner and subject to the same conditions as provided in Section 54 of this Code.
"(d) Withholding of final tax on interest on bank deposits, yield or any other monetary
benefit from deposit substitutes and from trust and similar arrangements.
"(1) Withholding of final tax. - Every bank or non-bank financial intermediary shall
deduct and withhold from the interest on bank deposits or yield or any other monetary
benefit from deposit substitutes a final tax equal to fifteen per centum (15%) of the
interest on savings deposits and twenty per centum (20%) of the interest on time deposits
or yield or any other monetary benefit from deposit substitutes and from trust fund and
similar arrangements: Provided, however, That no withholding tax shall be made if the
aggregate amount of the interest on all deposits accounts maintained by a depositor alone
or together with another in any one bank at any time during the taxable period does not
exceed One thousand pesos (P1,000.00) a year or Two hundred fifty pesos (P250.00)
per quarter. For this purpose, interest on a deposit account maintained by two persons
shall be deemed to be equally owned by them.
"(2) Depositors or placers/investors enjoying tax exemption privileges or preferential

tax treatment. - In all cases where the depositor or placer/investors is tax-exempt or is
enjoying preferential income tax treatment under existing laws, the withholding tax
imposed in this paragraph shall be refunded or credited as the case may be upon
submission to the Commissioner of Internal Revenue of proof that the said depositor, or
placer/ investor is a tax exempt entity or enjoys a preferential income tax treatment.
"(3) Manner of withholding. - Without divulging the names of the depositors, or

placer/investors, the tax shall be withheld by the bank or non-bank financial intermediary
and paid in the same manner and subject to the said conditions provided in Section 54 of
this Code.
"(e) Non-resident aliens and foreign corporations. (1) Non-resident aliens. - Every
individual, corporation, partnership, or association, in whatever, capacity acting,
including a lease or mortgagor of real or personal property, trustee acting in any trust
capacity, executor, administrator, receiver, conservator, fiduciary, employer, and every
officer or employee of the Government of the Republic of the Philippines having the
control, receipt, custody, disposal, or payment of interest, dividends, rents, royalties,
salaries, wages, premiums, annuities, compensation, remunerations, emoluments, or other
fixed or determinable annual, periodical or casual gains, profits, and income, and capital
gains, of any non-resident alien not engaged in trade or business within the Philippines,
shall (except in the cases provided in subsection (a)(1) of this section) deduct and
withhold from the annual, periodical, or casual gains, profits, and income, and capital
gains, a tax equal to thirty per centum (30%) thereof. This deduction and withholding
shall not be required in the case of dividends paid by a foreign corporation unless (1) the
corporation is engaged in trade or business within the Philippines, and (2) more than
eighty-five per centum (85%) of the gross income of the corporation for the three-year
period ending with the close of each taxable year preceding the declaration of the
dividends (or for such part of the period as the corporation has been in existence) was
derived from sources within the Philippines as determined under the provisions of
Section 37. The Commissioner may authorize the tax to be deducted and withheld from
the interest or other income upon any security or obligation the owners of which are not
known to the withholding agent.
"(2) Non-resident foreign corporations. - In the case of foreign corporations subject to

tax under this Title, not engaged in trade or business within the Philippines, there shall
be deducted and withheld at the source in the same manner and upon the same items as
provided in subsection (b) (1) of this section, as well as on remunerations for technical
services or otherwise, a tax equal to thirty-five per centum (35%) thereof: Provided,
That interest on foreign loans shall be subject to withholding tax of fifteen per centum
(15%). This tax shall be returned and paid in the same manner and subject to the same
conditions as provided in Section 54. This deduction and withholding shall be required
in the case of reinsurance premiums ceded to foreign insurance corporations not engaged
in trade or business in the Philippines.
"(f) Other cases of withholding tax at source. - The Minister of Finance may upon
recommendation of the Commissioner of Internal Revenue, require also the withholding
of a tax on the same items of income payable to persons (natural or juridical) residing in
the Philippines by the same persons mentioned in paragraph (b) (1) of this section at the
rate of not less than two and one-half per centum (2-1/2%) but not more than thirty-five
per centum (35%) thereof which shall be credited against the income tax liability of the
taxpayer of the taxable year."
"Sec. 58. Exemption allowed to estates and trusts. - For the purpose of the tax
provided for in this Title, there shall be allowed an exemption of Three thousand pesos
from the income of the estate or trust."
"Sec. 61. Fiduciary returns. - Guardians, trustees, executors, administrators,

receivers, conservators, and all persons or corporations, acting in any fiduciary capacity,
shall render, in duplicate, a return of the income of the person, trust, or estate for whom
or which they act, and be subject to all the provisions of this Title, which apply to
individuals in case such person, estate, or trust has a gross income of Three thousand
pesos or over during the taxable year. Such fiduciary or person filing the return for him
or it, shall take oath that he has sufficient knowledge of the affairs of such person, trust,
or estate to enable him to make such return and that the same is, to the best of his
knowledge and belief, true and correct, and be subject to all the provisions of this Title
which apply to individuals: Provided, That a return made by or for one or two or more
joint fiduciaries filed in the province where such fiduciary resides, under such regulations
as the Minister of Finance prescribe, shall be a sufficient compliance with the
requirements of this section."
"Sec. 73. Penalty for failure to file return or to pay tax. - Any one liable to pay the
tax, to make a return or to supply information required under this Code, who refuses or
neglects to pay such tax, to make such return or to supply such information at the time or
times herein specified in each year, shall be punished by a fine of not more than Two
thousand pesos or by imprisonment for not more than six months, or both: Provided,
however, That an individual with compensation income taxable under Section 21 (a) of
this Code and where the tax withheld from such compensation income is final shall be
exempt from the penalty for failure to pay the tax on such compensation income and to
file a return thereon at the designated period.
"Any individual or any officer of any corporation, or general co-partnership (compania

colectiva), required by law to make, render, sign or verify any return or to supply any
information, who makes any false or fraudulent return or statement with intent to defeat
or evade the assessment required by this Code to be made, shall be punished by a fine of
not less than Five thousand pesos and imprisonment of not less than two years." 1
"Sec. 77. Information at source as to income payments. - All persons, corporations

or duly registered co-partnerships (companias colectivas), in whatever capacity acting,
including lessees or mortgagors or real or personal property, trustees, acting in any trust
capacity, executors, administrators, receivers, conservators, and employees making
payment to another person, corporation, or duly registered general co-partnership
(compania colectiva), of interest, rents, salaries, wages, premiums, annuities,
compensations, remunerations, emoluments, or other fixed or determinable gains, profits,
and income, other than payment described in Sections 75 and 79, in any taxable year, or,
in the case of such payments made by the Government of the Philippines, the officers or
employees of the Government having information as to such payments and required to
make returns in regard thereto, are authorized and required to make returns in regard
thereto, are authorized and required to render a true and accurate return of the
Commissioner of Internal Revenue, under such rules and regulations and in such form
and manner as may be prescribed by the Minister of Finance, setting forth the amount of
such gains, profits, and income, and the name and address of the recipient of such
payments: Provided, That such returns shall be required in the case of payments of
interest upon bonds and mortgages or deeds of trust or other similar obligations of
corporations, and in the case of collections of items, not payable in the Philippines, of
interest upon the bonds of foreign countries and interest from the bonds and dividends
from the stock of foreign corporations by persons, corporations, or duly registered
general co-partnership (companias colectivas), undertaking as a matter of business or for
profit or otherwise the collection of foreign payments of such interest or dividends by
means of coupons or bills of exchange."
"Sec. 91. Income tax collected at source. - (a) Requirement of withholding. - Every
employer making payment of wages shall deduct and withhold upon such wages a tax
determined in accordance with regulations to be prepared by the Minister of Finance.
The tax withheld is a final tax, except where the personal circumstances or income of the
taxpayer change within the taxable year or where the taxpayer has multiple employment.
"(b) Tax paid by recipient. - If the employer, in violation of the provisions of this
chapter, fails to deduct and withheld the tax as required under this chapter, and
thereafter the tax against which such tax may be credited is paid, the tax so required to be
deducted and withheld shall not be collected from the employer; but this subsection shall
in no case relieve the employer from liability for any penalties or additions to the tax
otherwise applicable in respect of such failure to deduct and withhold.
"(c) Refunds or credits. - (1) Employer. - Where there has been an overpayment of tax
under this section, refund or credit shall be made to the employer only to the extent that
the amount of such overpayment was not deducted and withheld hereunder by the
employer.
"(2) Employees. - The amount deducted and withheld under this chapter during any
calendar year shall be allowed as a credit to the recipient of such income against the tax
imposed under the main provisions of this Title. Refunds and credits in cases of
excessive withholding shall be granted under rules and regulations promulgated by the
Ministry of Finance.
"Any excess of the taxes withheld over the tax due from the taxpayer shall be returned or
credited within three months from the fifteenth day of April. Refunds of credits made
after such time shall earn interest at the rate of six per centum (6%) per annum starting
after the lapse of the three month period to the date the refund or credit is made.
"Refunds shall be made upon warrants drawn by the Commissioner or by his duly
authorized representative without the necessity of counter-signature by the Chairman,
Commission on Audit or the latter's duly authorized representatives as an exception to the
requirement prescribed by Section 621 of the Revised Administrative Code.
"(d) Personal exemptions. -
"(1) In general. - Unless otherwise provided by this chapter, the personal and
additional exemptions applicable under this chapter shall be determined in accordance
with the main provisions of this Title.
"(2) Exemption certificates. -
"(A) When to be filed. - On or before the date of commencement of employment with

an employer, or within ten days from the effectivity of this Code in case of persons
already employed, the employee shall furnish the employer with a signed withholding
exemption certificate relating to the personal and additional exemption to which he is
entitled.
"(B) Change of status. - In case of change of status of an employee as a result of which

he would be entitled to a lesser amount of exemption, the employee shall, within ten days
from such change, file with the employer a new withholding exemption certificate
reflecting the change. If the change would entitle the employee to a greater amount of
exemption, he may furnish the employer with a new withholding exemption certificate
reflecting such change.
"(C) Use of certificates. - The certificates filed hereunder shall be used by the
employer in the determination of the amount of taxes to be withheld.
"(D) Failure to furnish certificate. - Where an employee, in violation of this chapter,

either fails or refuses to file a withholding exemption certificate, the employer shall
withhold the taxes prescribed under the schedule for zero exemption of the withholding
tax table subsection (a).
"(e) Withholding on basis of average wages. - The Commissioner of Internal Revenue

may, under regulations promulgated by the Minister of Finance, authorize employers (1)
to estimate the wages which will be paid to an employee in any quarter of the calendar
year, (2) to determine the amount to be deducted and withheld upon each payment of
wages to such employee during such quarter as if the appropriate average of the wages so
estimated constituted the actual wages paid, and (3) to deduct and withhold upon any
payment of wages to such employee during such quarter such amount as may be required
to be deducted and withheld during such quarter without regard to this subsection.
"(f) Husband and wife. - When a husband and wife each are recipients of wages,
whether from the same or from different employers, taxes to be withheld shall be
determined on the following bases:
(1) The husband shall be deemed the head of the family and proper claimant of the
additional exemption in respect to any dependent children;
"(2) Taxes shall be withheld from the wages of the wife in accordance with the
schedule for zero exemption of the withholding tax table in subsection (a).
"(g) Non-resident aliens. - Wages paid to non-resident alien individuals engaged in

trade or business in the Philippines shall be subject to the provisions of this chapter."
SECTION 15. Rules and Regulations. - The Minister of Finance, upon recommendation
of the Commissioner of Internal Revenue, shall within 90 days after approval of this Act,
promulgate the necessary rules and regulations for the effective enforcement of this Act.
Such regulation shall take effect following the completion of its publication in two
newspapers of general circulation in the Philippines.
SECTION 16. Repealing Clause. - All other laws, decrees, orders and regulations or parts
thereof which are inconsistent with this Act are hereby repealed or modified accordingly:
Provided, That incentives granted under Presidential Decree No. 1789 otherwise known
as the Omnibus Investments Code, Presidential Decree No. 66, as amended, Presidential
Decree No. 535 and other special laws of similar nature shall not be affected.
SECTION 17. Effectivity. - This Act shall take effect on January 1, 1982, and shall be
applicable to incomes earned beginning on such date.
Approved, December 18, 1981 (C.B. No. 34.)
ANNEX A
BIR WITHHOLDING TAX TABLES
Following are the withholding tax tables approved by the Bureau of Internal Revenue
pursuant to Revenue Regulations No. 20-81 implementing the provisions of Batas
Pambansa Blg. 135, An Act amending certain provisions of the National Internal
Revenue Code of 1977, as amended, and for other purposes (introducing the Gross
Income Tax System for compensation income.)
HOW TO USE THE TABLES
A. Legend of status and amount of exemption
1. Zero (0.0) - exemption for working wife with employed husband; employee with
multiple employers which refers to second, third, etc.. employers and employee who fails
to file an exemption certificate.
2. S (3.0) - for single or married but legally separated individuals.
3. S (4.5) - single with qualified dependent parent, sister or brother, legitimate,

recognized natural, or legally adopted child.
4. H/F1 (6.5), H/F2 (8.5), H/F3 (10.5), H/F4 (12.5), H/F5 (13.5), H/F6 (14.5) H/F7
(15.5) - The numerals affixed to the status symbol HF represent the number of qualified
legitimate, recognized natural or adopted children.
5. M (6.0) - married and not legally separated.

6. M1 (6.0), M2 (10.0), M3 (12.0), M4 (14.0), M5 (15.0), M6 (16.0), and M7 (17.0)
- The numerals affixed to the status symbol M represent the number of qualified
legitimate, recognized natural adopted children.
B. Computation of Withholding Tax
1. Use of the appropriate table for the payroll period - monthly, semi-monthly,
weekly, or daily, as the case may be.
2. Ascertain the status and total exemptions of the employee to determine the line to
be used.
3. Determine the total monetary and non-monetary (Cash Value) compensation paid
to the employee.
4. Use the tax rate indicated in the column wherein the employer's total
compensation exceeds the compensation level shown in the said column but should not
be over the compensation level of the next column to the right of the table.
5. Regular wage or compensation includes basic salary, fixed allowances for

representation, transportation, housing, cost of living and all other forms of benefits
(monetary and non-monetary) paid to an employee per payroll period.
Supplementary wages are those paid to an employee in addition to the regular
wage such as commission, overtime pay, retired pay, profit-sharing, bonus, 13th month
pay, vacation and sick leave pay etc.., with or without regard to a payroll period.
6. Compute the amount of withholding tax (see examples).
Example 1.
An employee who is married with 3 qualified dependent children entitled to total

personal and additional exemptions of P12,000.00, receives a total of regular monthly
compensation of P1,500.00
Computation:
Using the monthly withholding tax table, the monthly withholding tax is computed by
referring to line 10 of column 3, which shows a tax of P2.08 on P1,416 plus three percent
of the excess (P1,500 - P1,416 = P84)
Total compensation P1,500.00

Compensation level (line 10, col. 3) 1,416.00
Excess P 84.00
========
Tax on P1,416 2.08

Tax on excess (84 x 3%) 2.52
Monthly withholding tax P 4.60
========
Example 2.
An employee who is married with two qualified dependents received a total of P5,000 as
regular salary and commission on the same date, broken down as follows:
Regular monthly salary P3,000.00

Commissioner 2,000.00
Total P5,000.00
========
Computation:
1. Using the monthly withholding tax tables, the withholding tax on the monthly
regular wage (P3,000) is computed by referring to line 8 column 5, which show a tax of
P72.92 on P2,500 plus 11% of the excess.
2. Aggregate the monthly salary (P3,000) and commissions (P2,000) and determine
the amount of compensation in excess of P2,500 (see No. 1).
Monthly salary P3,000.00

Commissions 2,000.00
Total Compensation P5,000.00
========
Less: Compensation Level
(Col. 5, Line 8) P2,500.00
Excess P2,500.00
=======
3. Tax on P2,500 P 72.92

Tax on excess (P2,500 x 11%) 275.00
_________
Withholding tax P 347.92
=======
Example 3.
An employee who is married with two qualified dependents receives P3,000 as his
monthly regular salary from which the tax of P127.92 has already been deducted. In
addition, he was paid P2,000 as bonus on a date other than the date of payment of the
regular salary.
Computation:
Multiply the amount of bonus by the rate of tax given for the amount in excess of the
regular compensation (P3,000), which is 11% as per line 8 of col. 5.
Tax on bonus (P2,000 x 11%) P 220.00
Tax on salary already deducted 127.92
________
Total withholding tax P 347.92
=======
WITHHOLDING TAX TABLE MONTHLY
1 2 3 4 5 6 7 8
9 10
P0.00 P0.00 P2.08 P14.58 P72.92 P256.25 P506.25 P1139.58

P4139.58 P10181.25
Exemptions +0% +1% +3% +7% +11% +15% +19% +24%

+29% +35%
Status ('000P) Over Over Over Over Over Over Over Over
Over Over
Zero 0 P0 P 208 P 416 P 833 P 1666 P 3333 P 5000 P 8333 P

20833 P 41666 1
S 3.0 0 458 666 1088 1916 3583 5250 8583

21083 41916 2
HF 4.5 0 583 791 1208 2041 3708 5375 8705

21208 42041 3
M 6.0 0 708 916 1333 2166 3833 5500 8833

21333 42166 4
HF/1 6.5 0 750 958 1375 2208 3875 5541 8875

21375 42208 5
M/1 8.0 0 875 1083 1500 2333 4000 5666 9000

21500 42333 6
HF/2 8.5 0 917 1125 1541 2375 4041 5708 9041

21541 42375 7
M/2 10.0 0 1042 1250 1666 2500 4166 5833 9166

21666 42500 8
HF/3 10.5 0 1083 1291 1708 2541 4208 5875 9208
21708 42541 9
M/3 12.0 0 1028 1416 1833 2666 4333 6000 9333

21833 42666 10
HF/4 12.5 0 1250 1458 1875 2708 4375 6041 9375

21875 42708 11
HF/5 13.5 0 1333 1541 1958 2791 4458 6125 9458

21958 42791 12
M/4 14.0 0 1375 1583 2000 2833 4500 6166 9500

22000 42833 13
HF/6 14.5 0 1417 1625 2041 2875 4541 6208 9541

22041 42875 14
M/5 15.0 0 1458 1666 2083 2916 4583 6250 9583

22083 42916 15
HF/7 15.5 0 1500 1708 2125 2958 4625 6291 9625

22125 42958 16
M/6 16.0 0 1542 1750 2166 3000 4666 6333 9666

22166 43000 17
M/7 17.0 0 1625 1833 2250 3083 4750 6416 9750

22250 43083 18
Legend: S - Single HF - Single but head of the family M - Marriage 1.7 -

Number of dependents
WITHHOLDING TAX TABLE

SEMI-MONTHLY
1 2 3 4 5 6 7 8 9
10
P0.00 P0.00 P1.04 P36.46 P72.92 P128.13 P253.13 P569.79 P2069.79

P5090.63
Exemptions +0% +1% +3% +7% +11% +15% +19% +24% +29%
+35%
Status ('000P) Over Over Over Over Over Over Over Over Over
Over
Zero 0 P0 P 104 P 208 P 416 P 833 P 1666 P 2500 P 4166 P 10416

P 20833 1
S 3.0 0 229 333 541 958 1791 2625 4291 10541

20958 2
HF 4.5 0 292 395 604 1020 1854 2687 4354 10604

21020 3
M 6.0 0 354 458 666 1083 1916 2750 4416 10666

21083 4
HF/1 6.5 0 375 479 687 1104 1937 2770 4437 10687
21104 5
M/1 8.0 0 438 541 750 1166 2000 2833 4500 10750
21166 6
HF/2 8.5 0 458 562 770 1187 2020 2584 4520 10770
21187 7
M/2 10.0 0 521 625 833 1250 2083 2916 4583 10833
21250 8
HF/3 10.5 0 542 645 854 1270 2104 2937 4604 10854
21270 9
M/3 12.0 0 604 708 916 1333 2166 3000 4666 10916
21333 10
HF/4 12.5 0 625 729 937 1354 2187 3020 4687 10937
21354 11
HF/5 13.5 0 667 770 979 1395 2229 3062 4729 10979
21395 12
M/4 14.0 0 688 791 1000 1416 2250 3087 4750 11000
21416 13
HF/6 14.5 0 708 812 1020 1437 2270 3104 4707 11020
21437 14
M/5 15.0 0 729 833 1041 1458 2291 3125 4791 11041
21458 15
HF/7 15.5 0 750 854 1062 1479 2312 3145 4812 11062
21479 16
M/6 16.0 0 771 875 1083 1500 2333 3166 4833 11083
21500 17
M/7 17.0 0 813 916 1125 1541 2375 3208 4875 11125
21541 18
Legend: S-Single HF-Single but head of the family M-Marriage 1..7-

WITHHOLDING TAX TABLE WEEKLY
1 2 3 4 5 6 7 8 9
10
P0.00 P0.00 P0.48 P3.37 P16.83 P59.13 P116.83 P262.98 P955.299

P2349.52
Exemptions +0% +1% +3% +7% +11% +15% +19% +24% +29%
+35%
Over
Zero 0 P0 P 48 P 96 P 192 P 384 P 769 P 1153 P 1923 P 4807 P

9615 1
S 3.0 0 106 153 250 442 826 1211 1980 4865

9673 2
HF 4.5 0 135 182 278 471 855 1240 2009 4894

9701 3
M 6.0 0 163 211 307 500 884 1269 2038 4923

9730 4
HF/1 6.5 0 173 221 317 509 894 1278 2048 4932
9740 5
M/1 8.0 0 202 250 346 538 923 1307 2076 4961
9769 6
HF/2 8.5 0 212 259 355 548 932 1317 2086 4971
9778 7
M/2 10.0 0 240 288 384 576 961 1346 2115 5000
9807 8
HF/3 10.5 0 250 298 394 586 971 1355 2125 5009
9817 9
M/3 12.0 0 279 326 423 615 1000 1384 2153 5038
9846 10
HF/4 12.5 0 288 336 432 625 1009 1394 2163 5048
9855 11
HF/5 13.5 0 308 355 451 644 1028 1413 2182 5067
9875 12
M/4 14.0 0 317 365 461 653 1038 1423 2192 5076
9884 13
HF/6 14.5 0 327 375 471 663 1048 1432 2201 5086
9894 14
M/5 15.0 0 337 384 480 673 1057 1442 2211 5096
9903 15
HF/7 15.5 0 346 394 490 682 1067 1451 2221 5105
9913 16
M/6 16.0 0 356 403 500 692 1076 1461 2230 5115
9923 17
M/7 17.0 0 375 423 519 711 1096 1480 2250 5134
9942 18
Legend: S-Single HF-Single but head of the family M-Marriage 1..7-

WITHHOLDING TAX TABLE DAILY
1 2 3 4 5 6 7 8 9 10
P0.00 P0.00 P0.08 P0.58 P2.89 P10.15 P20.05 P45.13 P163.94
P403.22
Exemptions +0% +1% +3% +7% +11% +15% +19% +24% +29%
+35%
Over
Zero 0 P0 P 8 P 16 P 33 P 66 P 132 P 198 P 330 P 825 P

1650 1
S 3.0 0 18 26 42 75 141 207 339 834

1660 2
HF 4.5 0 23 31 47 80 142 212 344 839

1665 3
M 6.0 0 28 36 52 85 151 217 349 844

1669 4
HF/1 6.5 0 30 37 54 87 153 219 351 846

1671 5
M/1 8.0 0 35 42 59 92 158 224 356 851

1676 6
HF/2 8.5 0 36 44 61 94 160 226 358 853

1678 7
M/2 10.0 0 41 49 66 99 165 231 363 858

1683 8
HF/3 10.5 0 43 51 67 100 166 232 364 859

1684 9
M/3 12.0 0 48 56 72 105 171 237 369 864

1689 10
HF/4 12.5 0 50 57 74 107 173 239 371 866

1691 11
HF/5 13.5 0 53 61 77 110 176 242 374 869

1694 12
M/4 14.0 0 54 62 79 112 178 244 376 871
1696 13
HF/6 14.5 0 56 64 80 113 179 245 377 872

1698 14
M/5 15.0 0 58 66 82 115 181 247 379 874

1699 15
HF/7 15.5 0 59 67 84 117 183 249 381 876

1701 16
M/6 16.0 0 61 69 85 118 184 250 382 877

1702 17
M/7 17.0 0 64 72 89 122 188 254 386 881

1706 18
Legend: S-Single HF-Single but head of the family M-Marriage 1..7-Number of

dependents

SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS
AMENDED, GOVERNING THE TAXATION OF MINERALS AND MINERAL
PRODUCTS AND FOR OTHER PURPOSES
September 19, 1980
AN ACT AMENDING CERTAIN SECTIONS OF THE NATIONAL INTERNAL

REVENUE CODE OF 1977, AS AMENDED, GOVERNING THE TAXATION OF
MINERALS AND MINERAL PRODUCTS AND FOR OTHER PURPOSES
SECTION 1. Section 202 of the National Internal Revenue Code of 1977, as amended,
is hereby further amended to read as follows:
"Sec. 202. Articles not subject to percentage tax on sales. - The following shall be
exempt from the percentage taxes imposed in Sections 194, 195, 196, 197, 198, 199 and
201:
"(a) Articles subject to tax under Title IV of this Code.
"(b) Articles subject to tax under Section 203 of this Code.
"(c) .22 caliber firearms and cartridges as well as other forms of ammunition sold or
delivered directly to the Armed Forces of the Philippines or any government
instrumentality or agency engaged in maintaining peace and order for their use or issue.
"(d) Articles shipped or extorted by the manufacturer or producer, irrespective of any

shipping arrangement that may be agreed upon which may influence or determine the
transfer of ownership of the articles so exported.
"(e) Articles sold by 'registered export producers' to (1) other 'registered export
producers' (2) 'registered export traders' or (3) foreign tourists or travelers, which are
considered as 'export sales'.
"Any percentage or specific tax paid under this Title or Title IV,
respectively, on domestically manufactured or in imported raw materials used in the
manufacture of finished products exported shall be allowed to be credited against other
tax liabilities of the manufacturer-exporter: Provided, however, That the amount of the
tax on the raw material, part, accessory, or other article shall be indicated as separate item
in the sales invoice.
"Sales to foreign tourists paid in acceptable foreign currency directly made

by manufacturers or producers shall be considered export sales if the articles purchased
are actually brought out of the Philippines by the buyers upon their departure."
SECTION 2. Section of the same Code is hereby amended to read as follows:
"Sec. 253. Occupation fee. - A locator, holder, or occupant of a mining claim shall
pay to the Commissioner of Internal Revenue or his duly authorized representatives on
the date of the registration of the mining claim in the Office of the Mines Regional
Recorder concerned, and on the same date every year thereafter an annual occupation fee
of ten pesos per hectare or fractional part thereof, until the lease covering the mining
claim shall have been granted. For this purpose the Office of the Mines Regional
Recorder shall submit to the revenue district officer of the place where the mining claim
is located or at its nearest office a complete list of all mining claims registered with it,
indicating therein the name/s of locator/s, area in hectares, location, and date registered,
Thirty per centum of all the fees collected under this Section shall accrue to the province,
and seventy per centum to the municipality in which the mining claims are located:
Provided, That in case the mining claims are located in a chartered city, the full amount
shall accrue to the city concerned. Failure to pay the occupation fee herein required
within thirty days after demand shall cause the mining claims to be open for relocation
and lease by other persons qualified to locate and lease the same under the provisions of
Presidential Decree No. 463, as amended, otherwise known as the Mineral Resources
Development Decree of 1974, in the same manner as if no location of the said mining
claims had ever been made, unless the locator, holder, occupant, his heirs, executors,
administrators or legal representatives, shall have paid the delinquent occupation fees
plus a surcharge of twenty-five per centum for every year of delinquency and have
resumed occupation of the claims before relocation by other persons.
"No lease shall be granted on any mining claim until the occupation fees and surcharges
required to be paid under this Section shall have been fully paid: Provided, however, That
nothing herein contained shall be construed to extend the period within which application
for lease of mining claims shall be filed from the date of recording of the mining claims
in the Office of the Mines Regional Recorder, as provided for under Presidential Decree
No. 463, as amended." 1
"Sec. 254 Rentals and royalties on mineral lands under lease. - For the privilege of
exploring, developing, exploiting and disposing of the minerals from the lands covered
by lease, there is hereby imposed upon the lessee, rentals and royalties as follows:
"(a) Rentals -
"(1) On coal-bearing public lands, an annual rental of five pesos per hectare or fraction
thereof for each and every year for the first ten years, and ten pesos per hectare or
fraction thereof for each and every year thereafter during the life of the lease.
"(2) On public lands bearing quarry resources, an annual rental of fifty pesos per
hectare or fraction thereof for each and every year during the life of the lease.
"(3) On all other mineral lands containing metallic and non-metallic minerals under
existing mining laws or decrees, ten pesos per hectare or fraction thereof for each and
every year during the life of the lease.
"The rental shall be paid in advance to the Commissioner of Internal

Revenue or his duly authorized representative on the date of the granting of the lease and
on the same date every year thereafter during the life of the lease. Thirty per centum of all
the rentals collected shall accrue to the province, and seventy per centum to, the
municipality in which the mining claims are located: Provided, That in case the mining
claims are located in a chartered city , the full amount shall accrue to that city. 2
"(b) Royalties -
"(1) On coal, such royalties as may be specified in the lease, which shall not be less
than twenty centavos per ton of one thousand and sixteen kilograms at the time of
removal.
"(2) On all non-metallic minerals and quarry resources, a royalty tax of three per
centum of the actual market value of the annual gross output thereof at the time of
removal.
"(3) On all metallic minerals, a royalty tax of five per centum of the actual market
value of the gross output thereof at the time of removal.
"A lessee, owner or operator who sells his minerals, mineral products or
quarry resources locally shall be subject to sales tax."
"Sec. 255. Royalty taxes collectible on minerals, mineral products or quarry

resources extracted or produced from all mineral lands not covered by lease. - The
royalty taxes above prescribed shall be collected on all minerals or mineral products or
quarry resources extracted or produced from all mineral lands not covered by lease."
"Sec. 256. Time, manner and place of payment of royalties. - The royalty taxes shall
be due and payable upon the removal of the minerals or mineral products or quarry
resources from the locality where mined.
"Before removing any mineral or mineral products or quarry resources subject to the
royalty tax, the person liable to the said tax shall file, in duplicate, a return setting forth
the quantity and the actual market value of the mineral or mineral products to be removed
and pay the royalty taxes due thereon to the revenue district officer, collection agent, or
the treasurer of the city or municipality of the place where the mine is located except as
hereinbelow provided.
"However, the output of the mine may be removed from such locality without the
prepayment of such royalty taxes if the lessee, owner, or operator shall file a bond in the
form and amount and with such sureties as the Commissioner may require, conditioned
upon the payment of such royalty taxes. It shall be the duty of every lessee, owner, or
operator to make a true and complete return in duplicate setting forth the quantity and the
actual market value of the minerals or mineral products or quarry resources removed
during each calendar quarter, of the balance, if any, in cases where payment are made
upon removal, and pay the royalty taxes due thereon within twenty days after the end of
each quarter to the revenue district officer, collection agent, or the treasurer of the city or
municipality of the place where the mine is located.
"In case the royalty taxes are not paid within the period prescribed above, there shall be
added thereto a surcharge of twenty-five per centum, the increment to be a part of the tax
and the entire unpaid amount shall be subject to interest at the rate of twenty per centum
per annum. Where a false or fraudulent return is made, there shall be added to the royalty
taxes a surcharge of fifty per centum of their amount, and the entire unpaid amount shall
be subject to interest at the rate of twenty per centum per annum. The amounts so added
shall be collected in the same manner and as part of the royalty taxes."
"Sec. 257. Definitions. - When used in this Title -
"(a) The term 'gross output' shall be interpreted as the actual market value of minerals
or mineral products or of bullion from each mine or mineral lands operated as a separate
entity without any deduction from mining, milling, refining, (including all expenses
incurred to prepare the said minerals or mineral products in a marketable state) as well as
transporting, handling marketing, or any other expenses: Provided, however, That if the
minerals or mineral products are sold or consigned abroad by the lessee or owner of the
mine under C.I.F. terms, the actual cost of ocean freight and insurance shall be deducted:
Provided, finally, That in the case of mineral concentrate not traded in commodities
exchanges in the Philippines or abroad such as copper concentrate, the actual market
value shall be the world price quotations of the refined mineral product content thereof
prevailing in the said commodities exchanges, after deducting the smelting, refining and
other charges incurred in the process of converting the mineral concentrates into refined
metal traded in those commodities exchanges.
"(b) The term 'minerals' shall mean all naturally occurring inorganic substances (found
in nature) whether in solid, liquid, gaseous, or any intermediate state.
"(c) The term 'mineral products' shall mean things produced and prepared in a
marketable state by simple treatment such as washing or drying, but without undergoing
any chemical change or process or manufacturing by the lessee, concessionaire or owner
of mineral lands.
"(d) The term 'quarry resources' shall mean any common stone or other common
mineral substances as the Director may declare to be quarry resources such as, but not
restricted to, markable, granite, volcanic cinders, basalt, tuff and rock phosphate:
Provided, they contain no metal or metals or other valuable minerals in economically
workable quantities."
SECTION 7. Section 258 of the same Code is hereby repealed.
"Sec. 259 Specific penalties. - Anyone liable to make a return of the actual market
value of the output of mines or to pay the royalty taxes required in Section 256, who
refuses or neglects to file such return, or to pay such royalty taxes at the time or times
specified therein; and any lessee, owner, or person in charge of any minerals, mineral
products and quarry resources upon which the royalty taxes imposed in this Title are
applicable, who removes, in violation of the first paragraph of said Section, or who
allows or procures the unlawful removal from the mines of any such products, upon
which the royalty taxes have not been paid; and any person who abets or aids in the
unlawful removal of minerals, mineral products or quarry resources shall be fined not
more than five thousand pesos and imprisoned for not more than three years.
"Anyone required by this Title to make, render, or file a return of the actual value of the
output of mines who makes, renders, or files a false or fraudulent return with intent to
defeat or evade the payment of the royalty taxes, as the case may be, shall be fined not
more than ten thousand pesos and imprisoned for not more than five years."
SECTION 9. The provisions of Sections 194, 195, 196, 197, 199, and 201 of this Code,
to the contrary notwithstanding, the mining taxes on minerals and mineral products paid
under Title VII shall not be allowed as a tax credit against any sales tax or other tax
liabilities.
SECTION 10. The takes herein imposed shall be in lieu of all charges and fees imposed
on minerals, mineral products and quarry resources under existing general or special
laws, which charges and fees are hereby abolished.
SECTION 11. The Minister of Finance upon recommendation of the Commissioner of

Internal Revenue and in consultation with the Minister of Natural Resources, shall
SECTION 12. All acts, laws, decrees, executive orders, rules and regulations, or parts
thereof, which are contrary to or inconsistent herewith, except those granting tax
incentives, are hereby repealed, amended or modified accordingly.
SECTION 13. This Act shall take effect upon its approval. However, the rates prescribed
in Section 3 of this Act shall take effect as follows:
(a) On non-metallic minerals and quarry resources, fifty per centum of the rate
prescribed therein until March 31, 1981, and thereafter the full rate shall be imposed.
(b) On all metallic minerals, fifty per centum of the rate prescribed therein until
March 31, 1981, and thereafter the full rate shall be imposed.
Approved, September 19, 1980.

SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS
AMENDED, GOVERNING THE TAXATION OF FOREST PRODUCTS AND FOR
OTHER PURPOSES
September 17, 1980
AN ACT AMENDING CERTAIN SECTIONS OF THE NATIONAL INTERNAL

REVENUE CODE OF 1977, AS AMENDED, GOVERNING THE TAXATION OF
FOREST PRODUCTS AND FOR OTHER PURPOSES
is further amended to read as follows:
"Sec. 270. Measuring of forest products and invoicing and collection of charges
thereon. - The duties incident to the measuring of forest products shall be discharged by
the Bureau of Forest Development under regulations of the Ministry of Natural
Resources. The invoicing and collection of the charges thereon shall be done by the
Bureau of Internal Revenue under regulations approved by the Minister of Finance."
"Sec. 271. Mode of measuring timber. - Except as hereinbelow provided, all timber
shall be measured and manifested in the round or squared, before being sawn or
manufactured. The volume of all round timber shall be ascertained by multiplying the
area of the small end by the length of the log, the diameter of the log to be measured
exclusive of the exclusive of the bark; but if the end of a log is irregular the average
diameter shall be used; and in order to ascertain the volume of a log more than eight
meters long, the diameter of the middle of said log, or the average of the diameters at
both ends thereof shall be used as basis. If a log in the round, cut under license, is
measured and manifested by forest officers, the Director of Forest Development shall
make due allowance for rot, cavities, or other natural defects; but from any decision of
the Director of Forest Development in this respect, an appeal shall lie to his Ministry
Head, whose decision shall be final. The manifest of timber cut by licenses operating
sawmills in or near the forest shall be attested by forest officers whenever practicable.
"The volume of squared timber shall be ascertained by multiplying the average of the
cross section measured by the length, to which forty per centum shall be added for loss in
squaring: Provided, however, That if squared timber cut under license is measured and
manifested by forest officers, the Director of Forest Development shall make due
allowance for rot, cavities, or other natural defects; but from any decision of the Director
of Forest Development in this respect, an appeal shall lie to his Ministry Head, whose
decision shall be final. The privilege of manifesting timber after squaring shall, however,
be granted only to licensees who have squared their logs in the forests with the ax and
intend to take it to the market in this form.
"If sawn or otherwise manufactured timber is found which has not been manifested in
accordance with the provisions hereof, the corresponding forest charges shall be assessed
on twice the volume of the actual contents of such sawn or manufactured timber."
"Sec. 272. Charges on timber cut in forest land. - Except as otherwise specially
provided, the following charges shall be collected on each cubic meter of timber cut in
any forest land in the Philippines, whether removed therefrom or not:
"(a) On timber in the first and second groups, thirty pesos;
"(b) On timber in the third and fourth groups, not including firewood, fifteen pesos;
"(c) On branches and other recoverable wood wastes of timber, regardless of group
classification, when used as fuelwood or raw materials for the manufacture of finished
wood products shall be taxed at the rate of two pesos per cubic meter."
"Sec. 273. Charges on firewood cut in forest land. - There shall be collected forest
charges on each cubic meter firewood cut in forest land, except all mangrove species, two
pesos.
"Only third or fourth-group wood can be taken for firewood. However, if jointly
authorized by the Ministers of both the Ministries of Natural Resources and Agriculture,
first and second-group woods may be removed for firewood purposes from land which is
more valuable for agricultural than for forest purposes."
"Sec. 275 Specific penalties for illegal cutting and removal of forest products or for
delinquency. - When forest products are unlawfully cut or gathered in any forest lands
without license or if under license, in violation of the terms thereof, the charges on such
products shall be increased by three hundred per centum. If forest products shall be
removed without invoice, or upon removal shall be discharged without permit from boat,
car, cart, or other means of transportation, the charges shall be increased by fifty per
centum."
"Sec. 276. Charges on timber cut for use on mining claim. - When a license is
granted by the Bureau of Forest Development allowing the miner or mining company to
cut timber for the development of a mining claim on land other than such as is covered by
his or its claim, the charges on timber so cut as prescribed above, shall likewise be
imposed upon the mine lessee or concessionaire."
"Sec. 277. Charges on gums, resins, and other forest products. - On gums, resins,
rattan, and other forest products of forest lands which are not hereinabove provided for,
there is herein imposed upon the person removing such forest product a charge of ten per
centum of the actual market value thereof, determined in the manner indicated below.
"The market value of the various forest products on which forest charges may thus be
collected shall be determined from time to time by a joint assessment of the
Commissioner and the Director of Forest Development, to be approved by their
respective Ministry Heads, the same to be published for the information of public in the
Official Gazette, in two daily newspapers of national circulation, and posted in a
conspicuous place in the municipal building of a municipality concerned."
"Sec. 279. Tax exemptions of forest products lawfully removed under gratuitous
license. - No charges shall be collected on forest products removed in conformity with
the terms of a gratuitous license of the Bureau of Forest Development and in compliance
with the law and the regulations of such Bureau."
SECTION 11. The provisions of Section 280 of the same Code are hereby repealed, and
the following provisions inserted in lieu thereof, as follows:
"Sec. 280. Tax exemption of trees and products removed from public lands under a
tree farm lease. - No charges shall be collected on trees and products removed from
public lands planted to ipil-ipil and/or falcata under a tree farm lease with the
Government."
"Sec. 281. Time, manner and place of payment of forest charges. - The charges on
forest products herein imposed shall be payable at the time of the removal from or
utilization of the same within the concession area.
"Before removing any forest product subject to forest charges, the person liable to the
said tax shall file, in duplicate, a return setting forth the quantity, volume and the specie
of the forest product to be removed and pay the forest charges due thereon to the revenue
district officer, collection agent, or duly authorized treasurer of the municipality of the
place where the timber concession is located or where the forest products were gathered
and removed, except as hereinbelow provided.
"With the approval of the Commissioner, lumber may be removed from a sawmill
situated on a licensed citing area upon the giving of a bond conditioned upon the monthly
payment of the charges due on the output of such mill. He may also authorize the
shipment of forest products under auxiliary invoices without the prepayment of charges
in special cases where the prepayment of the charges at the point of origin would result in
undue hardship, if the owner or concessionaire shall first file a bond with the Bureau of
Internal Revenue in the form and amount and with such sureties as the Commissioner
may require, conditioned upon the payment of the forest charges at the point of
destination or at such time and place as the Commissioner may direct. However, if any
forest products are removed, the Commissioner of Internal Revenue or his duly
authorized representatives shall first be notified of such removal on a form prescribed for
the purpose to be filed with the revenue district officer of the place where the concession
is located or where the forest products were gathered and removed. It shall be the duty of
every licensee to make a true and complete return in duplicate setting forth the quantity,
volume and the specie of the forest product removed during each calendar quarter, or the
balance, if any, in cases where payment are made upon removal, and pay the taxes due
thereon within twenty days after the end of each quarter to the revenue district officer,
collection agent, or duly authorized treasurer of the municipality of the place where the
timber concession is located or where the forest products were gathered and removed.
"In case the taxes are not paid within the period prescribed above, there shall be added
thereto a surcharge of twenty-five per centum, the increment to be a part of the tax and
the entire unpaid amount shall be subject to interest at the rate of twenty per centum per
annum. Where a false or fraudulent return is made, there shall be added to the taxes a
surcharge of fifty per centum of their amount, and the entire unpaid amount shall be
subject to interest at the rate of twenty per centum per annum. The amounts so added
shall be collected in the same manner and as part of the taxes, as the case may be."
SECTION 13. The taxes herein imposed shall be in lieu of all charges and fees imposed
on forest products under existing general or special laws, which charges and fees are
hereby abolished: Provided, however, that timber in log form, lumber, plywood and
veneer when exported shall remain to be subject to the export duties imposed under
existing laws.
SECTION 14. As used in this Act, the term forest land shall mean public forests, the
permanent forest or forest reserves and forest reservations as defined in Presidential
Decree Numbered Seven-hundred five.
SECTION 15. The Minister of Finance, upon recommendation of the Commissioner of

Internal Revenue, and in consultation with the Minister of Natural Resources, shall
SECTION 16. All act, laws, decrees, executive orders, rules and regulations, or parts
thereof, which are contrary to or inconsistent herewith, except those granting tax
incentives, are hereby repealed, amended or modified accordingly.
SECTION 17. This Act shall take effect immediately upon approval. However, the rates
prescribed in Section 3 of this Act shall take effect as follows:
(a) On timber in the first and second groups, twenty pesos per cubic meter until
March 31, 1981, and thereafter the full rate of thirty pesos per cubic meter shall be
imposed;
(b) On timber in the third and fourth groups not including fuelwood, ten pesos per
cubic meter until March 31, 1981, and thereafter the full rate of fifteen pesos per cubic
meter shall be imposed.

09-17-1980 BATAS PAMBANSA BLG. 82 AN ACT FURTHER AMENDING
SECTION 145, 146, 147, 181 AND 186 OF THE NATIONAL INTERNAL REVENUE
CODE AND FOR OTHER PURPOSES
September 17, 1980
AN ACT FURTHER AMENDING SECTION 145, 146, 147, 181 AND 186 OF THE
NATIONAL INTERNAL REVENUE COSDE AND FOR OTHER PURPOSES
"Sec. 145. Specific tax on distilled spirits. - On distilled spirits there shall be
collected, subject to the provisions of Section one hundred thirty-nine of this Code,
except as hereinafter provided, specific taxes as follows:
"(a) If produced domestically from locally produced raw materials, per proof liter, two
pesos and forty centavos: Provided, That if produced in a pot still or other similar primary
distilling apparatus, by a distiller producing not more than fifty per centum of alcohol by
volume, per proof liter, one peso and fifty-six centavos;
"(b) If imported or produced from imported raw materials, per proof liter, thirty-five
pesos.
"This tax shall be proportionally increased for any strength of the spirits
taxed over proof spirits, and the tax shall attach to this substance as soon as it is in
existence as such, whether it be immediate or at any subsequent time transformed into
any other substance either in the process of original production or by any subsequent
process.
"Spirits or "distilled spirits" is the substance known as ethyl alcohol,

ethanol or spirits of wine, including all dilutions and mixtures thereof, from whatever
source by whatever process produced, and shall include whisky, brandy, rum, gin and
vodka, and other similar products or mixtures except compounded liquors taxed under
Section 146 of this Code.
""Proof spirits" is liquor containing one-half of its volume of alcohol of a

specific gravity of seven thousand nine hundred and thirty-nine ten thousandths at fifteen
degrees centigrade. A "proof liter" means a liter of proof spirits."
SECTION 2. Section 146 of the same Tax Code, as amended, is hereby further amended
to read as follows:
"Sec. 146. Specific tax on wines and compounded liquors. - On wines and imitation
wines and compounded liquors there shall be collected, per liter of volume capacity, the
following taxes:
"(a) Sparkling wines, regardless of proof, twelve pesos; if imported, twenty-six pesos
and forty centavos;
"(b) Still wines containing fourteen per centum of alcohol or less (except those
manufactured from locally grown raw materials), two pesos; if imported, four pesos and
forty centavos;
"(c) Still wines containing more than fourteen per centum of alcohol, four pesos; if
imported, eight pesos and eighty centavos;
"Imitation wines containing more than twenty-five per centum of alcohol

shall be taxed as distilled spirits;
"(d) Compounded liquors containing seventeen and one-half per centum of alcohol or
less, ninety-six centavos;
"(e) Compounded liquors containing more than seventeen and one-half per centum of
alcohol, but not more than twenty-five per centum thereof, one peso and thirty-four
centavos;
"(f) Compounded liquors containing more than twenty-five per centum of alcohol, but
not more than thirty-two and one- half per centum thereof, one peso and seventy-two
centavos;
"(g) Compounded liquors containing more than thirty-two and one-half per centum of
alcohol, but not more than forty per centum thereof, two pesos and ten centavos; and
"(h) Compounded liquors containing more than forty per centum of alcohol, two pesos
and sixty-six centavos.
"In computing the specific tax on compounded liquors as prescribed under

subparagraphs (d), (e), (f), (g), and (h) of this Section, the amount of specific tax paid on
the distilled spirits used in the compounding of such intoxicating beverage shall be
credited against the tax due on the compounded liquors as soon as they are in existence as
such.
"For the purpose of this Section, "compounded liquor" shall include any
intoxicating beverage whatever, concocted by or resulting from the mixture of or addition
to distilled spirits, either before or after rectification of any coloring matter, flavoring
extract or essence or other kind of wine, liquor or other ingredient."
SECTION 3. Section 147 of the same Code is hereby further amended to read as
follows:
"Sec. 147. Specific tax on fermented liquors. - On beer, lager beer, ale, porter, and
other fermented liquors (except tuba, basi, tapuy and similar domestic fermented liquors),
there shall be collected, on each liter of volume capacity, one peso and twenty centavos:
Provided, That if the fermented liquor is imported the tax shall be increased by one
hundred per centum."
SECTION 4. Section 181 of the same Tax Code is hereby amended to read as follows:
"Sec. 181. Unlawful use of denatured alcohol. - Any person who, for the purpose of
manufacturing any beverage, uses denatured alcohol or alcohol specially denatured to be
used for motive power or withdrawn under bond for industrial uses or alcohol knowingly
misrepresented to be denatured to be unfit for oral intake, or who knowingly sells or
offers for sale any beverage made in whole or in part from such alcohol, or who uses such
alcohol for the manufacture of liquid medicinal preparations taken internally, or
knowingly sells or offers for sale such preparations containing as an ingredient such
alcohol, shall on conviction be fined not less than ten thousand pesos and imprisoned for
not less than six years and one day. If the violator is an alien, he shall be liable for
deportation.
"Any person who shall unlawfully recover, or attempt to recover by distillation or other
process any denatured alcohol or who knowingly sells or offers for sale, conceals, or
otherwise disposes of alcohol so recovered or redistilled shall be subject to the same
penalties imposed under this Section."
"Sec. 186. Shipment or removal of liquor or tobacco products under false name or
brand or as an imitation of any existing or otherwise known product name or brand. -
Any person who ships, transports or removes spirituous, compounded or fermented
liquors, wines, or any manufactured products of tobacco under any 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 name or brand, or causes such act to be done, shall on
conviction be subject to a fine of not less than ten thousand pesos and imprisonment of
not less than six years and one day; and in addition, the article or articles so transported
or removed shall be forfeited. If the violator is an alien, he shall be liable for
deportation."
SECTION 6. Fifty percent of the increase in the rates provided by this Act shall take
effect upon approval of this Act and the full amount shall take effect on April 1, 1981.

12-18-1979 BATAS PAMBANSA BLG. 45 AN ACT AMENDING PARAGRAPH
(h) OF SECTION 30 OF THE NATIONAL INTERNAL REVENUE CODE OF 1977,
AS AMENDED, AND FOR OTHER PURPOSES
December 18, 1979
AN ACT AMENDING PARAGRAPH (h) OF SECTION 30 OF THE NATIONAL

INTERNAL REVENUE CODE OF 1977, AS AMENDED, AND FOR OTHER
PURPOSES
SECTION 1. Paragraph (h) of Section 30 of the National Internal Revenue Code is

hereby amended to read as follows:
"(h) Charitable and other contributions. -
"(1) In General. - Contributions or gifts actually paid or made within the taxable year
to or for the use of the Government of the Philippines or any of its agencies or any
political subdivision thereof for exclusively public purposes, or to domestic corporations
or associations organized and operated exclusively for religious, charitable, scientific,
youth and sports development, cultural or educational purposes of for the rehabilitation of
veterans, or to social welfare institutions, no part of the net income of which inures to the
benefit of any private stockholder or individual to an amount not in excess of six per
centum in the case of an individual, and three per centum in the case of a corporation, of
the taxpayer's taxable net income as computed without the benefit of this and the
following subparagraph.
"(2) Contributions deductible in full. - Notwithstanding the provisions of the preceding

subparagraph, donations to the following institutions or entities shall be deductible in
full:
"(A) Donations to the Government. - Donations to the Government of the Philippines

or to any of its agencies or political subdivisions, including fully owned government
corporations exclusively to finance, to provide for, or to be used in undertaking priority
activities in education, health, youth and sports development, human settlements, science
and culture, and in economic development according to a national priority plan to be
determined by the NEDA, in consultation with appropriate government agencies,
including its regional development councils, and private philanthropic persons and
institutions: Provided, however, That any donation which is made to the Government or
to any of its agencies or political subdivisions not in accordance with the said annual
priority plan shall be subject to the limitations prescribed in subparagraph (1) of this
Section.
"(B) Donations to certain foreign institutions or international organizations. -

Donations to foreign institutions or international organizations which are fully deductible
in pursuance of or in compliance with agreements, treaties, or commitments entered into
by the Government of the Philippines and the foreign institutions or international
organizations or in pursuance of special laws.
"(C) Donations to certain private foundations. - The term "private foundation" means a
non-profit domestic corporation;
(i) Organized and operated exclusively for scientific, research, educational,

character-building and youth and sports development, health, social welfare,cultural or
charitable purposes, or a combination thereof, no part of the net income of which inures
to the benefit of any private individual;
(ii) Which, not later than the 15th day of the third month after the close of the
foundation's taxable year in which contributions are received, makes utilization directly
for the active conduct of the activities constituting the purpose or function for which it is
organized and operated, unless an extended period is granted by the Minister of Finance
in accordance with the rules and regulations to be promulgated under Section 2 hereof;
(iii) The level of administrative expense of which shall on an annual basis conform
with the rules and regulations to be prescribed by the Minister of Finance but in no case
to exceed 30 per cent of total expenses;
(iv) The assets of which is the event of dissolution would be distributed to another
non-profit domestic corporation organized for similar purpose or purposes, or to the State
for public purpose, or would be distributed by a court to another organization to be used
in such manner as in the judgment of said court will best accomplish the general purposes
for which the dissolved organization was organized.
"Subject to such terms and conditions as may be prescribed by the Minister of Finance,
the term "utilization" means:
(i) any amount in cash or in kind (including administrative expenses) paid or utilized
to accomplish one or more purposes for which the private foundation was created or
organized.
(ii) Any amount paid to acquire an asset used (or held for use) directly in carrying out
one or more purposes for which the foundation was created or organized.
"An amount set aside for a specific project which comes within one or
more purposes of the foundation may be treated as a utilization, but only if, at the time
such amount is set aside, the private foundation establishes to the satisfaction of the
Commissioner of Internal Revenue that the amount will be paid for the specific project
within a period to be prescribed in regulations to be promulgated by the Minister of
Finance, but not to exceed 5 years, and the project is one which can be better
accomplished by setting aside such amount than by immediate payment of funds. The
Minister of Finance shall promulgate rules and regulations to implement this
subparagraph.
"(3) Valuation. - Properties other than cash donated shall be valued in accordance with
the rules and regulations prescribed by the Minister of Finance in consultation with the
appropriate government agencies.
"(4) Proof of deductions. - Contributions or gifts shall be allowable as deduction only

if verified under the regulations prescribed by the Minister of Finance."
SECTION 2. Implementing regulations. - The Minister of Finance shall, within 90 days

after approval of this Act, after consultation with the appropriate government agencies,
promulgate rules and regulations to implement the provisions of this Act consistent with
national socio-economic development programs.
SECTION 3. Transitory provisions. - All organizations or institutions which are

qualified donees for purposes of the full deductibility of charitable contributions either
under the National Internal Revenue Code of 1977 or under special laws shall apply for
re-qualification with the Commissioner of Internal Revenue within the period provided
by the implementing regulations, and all donations to such organizations or institutions
during the period for re-qualification as donees for full deductibility of charitable
contributions thereto under this Act shall be allowed.
SECTION 4. Repealing clause. - The provisions of any general or special law allowing
full deductibility of donations to any institution or entity (except donations made under
Presidential Decrees Nos. 697 and 698) or allowing deduction of any investment for the
purchase of cultural properties are hereby repealed or modified accordingly.
SECTION 5. Effectivity. - This Act shall take effect upon its approval.
Approved, December 18, 1979.

09-07-1979 BATAS PAMBANSA BLG. 41 AN ACT FURTHER AMENDING
CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE
September 7, 1979
AN ACT FURTHER AMENDING CERTAIN PROVISIONS OF THE NATIONAL

INTERNAL REVENUE CODE
SECTION 1. The titles of subparagraph (B) and (C) of Section 30 (a) (1) of the National
Internal Revenue Code are hereby amended to read as follows:
"(B) Limitation of entertainment expenses for individuals."
"(C) General requirements for entertainment, amusement or recreation."
SECTION 2. Section 30(a) (1) (D) of the National Internal Revenue Code is hereby
further amended by adding thereto a new subparagraph to read as follows:
"(D) Substantiation required. - No deduction shall be allowed under the preceding

subparagraphs (B) and (C), unless the taxpayer substantiates with official receipts or by
adequate records or by sufficient evidence corroborating his own statement (i) the amount
of such expense or other item (ii) the date and place of entertainment, amusement, or
recreation, (iii) the business purpose of the expense or other items and (iv) the business
relationship to the taxpayer of the persons entertained or using the facility. The Minister
of Finance may by regulations provide that some or all of the preceding sentence shall
not apply in the case of an expense which does not exceed an amount prescribed pursuant
to such regulations."
SECTION 3. Section 30(d) (1) (A) of the National Internal Revenue Code is hereby
"(A) If incurred in trade or business: Provided, however, That a loss representing the
excess over the income, of allowable expenses and other deductions directly or
proximately attributable or related to the production or earning of such income from a
particular line of business or activity, shall not be allowed as a deduction from or offset
against income derived from other sources: Provided, further, That a net operating loss
sustained in a particular line of business or activity within three years after the
commencement of such business or activity may, in a manner prescribed by regulations
promulgated by the Minister of Finance, be carried over as a deduction from the income
derived from the same particular line of business or activity for two (2) consecutive years
immediately following the year such loss was sustained."
SECTION 4. Section 36 of the National Internal Revenue Code is hereby amended to

read as follows:
"Sec. 36. Inventories. - Whenever in the judgment of the Commissioner of Internal

Revenue, the use of inventories is necessary in order to determine clearly the income of
any taxpayer, inventories shall be taken by such taxpayer upon such basis as the Minister
of Finance may, by regulations, prescribe as conforming as nearly as may be to the best
accounting practice in the trade or business and as most clearly reflecting the income.
"If a taxpayer, after having complied with the terms and conditions prescribed by the
Commissioner, uses a particular method of valuing its inventory for any taxable year,
then such method shall be used in all subsequent taxable year unless:
"(i) with the approval of the Commissioner, a change to a different method is

authorized; or
"(ii) the Commissioner finds that the nature of the stock on hand (e.g. its scarcity,
liquidity, market-ability and price movements) is such that inventory gains should be
considered realized for tax purposes and, therefore, it is necessary to modify the valuation
method for purposes of ascertaining the income, profits, or loss in a more realistic
manner; Provided, however, That the Commissioner shall not exercise his authority to
require a change in inventory method more often than once every three years; and
Provided, further, That any change in an inventory valuation method must be subject to
approval by the minister of Finance."
SECTION 5. Paragraph (m) of Section 30 is hereby amended to read as follows:
"(m) Additional requirement for deductibility of certain payments. - Any amount paid
or payable which is otherwise deductible from, or taken into account in computing, gross
income or for which depreciation or amortization may be allowed under this section and
Section 29, shall be allowed as a deduction only if its shown that the tax required to be
deducted and withheld therefrom has been paid to the Bureau of Internal revenue in
accordance with this section. Sections 54 and 93 of this Code."
SECTION 6. Subparagraph (F) of Section 37(a) (4) of the National Internal Revenue
code is hereby amended to read as follows:
"(F) Technical advice, assistance or services rendered in connection with technical

management or administration of any scientific, industrial or commercial undertaking,
venture, project or scheme; and".
SECTION 7. Paragraph (b) of Section 45 of the National Internal Revenue Code is

"(b) Where to file. - Except in cases where the Commissioner otherwise permits, the
return shall be filed with the Revenue District Officer, Collection Agent, or duly
authorized Treasurer of the municipality in which such person has his legal residence or
principal place of business in the Philippines, or if there be no legal residence or place of
business in the Philippines, then with the Office of the Commissioner of Internal
Revenue."
SECTION 8. Paragraph (f) of section 53 of the National Internal Revenue Code is

"(f) The Minister of Finance may, upon recommendation of the Commissioner of

Internal Revenue, require also the withholding of a tax at appropriate rates not to exceed
thirty-five per centum on amounts payable or paid to persons (natural or juridical)
residing in the Philippines by the same persons mentioned in paragraph (b) (1) of this
section which shall be credited against the income tax liability of the taxpayer for the
taxable year."

read as follows:
"Sec. 54. Returns and payment of taxes withheld at source. - (a) Quarter return and
payment of taxes withheld. - Taxes deducted and withheld under Section fifty-three shall
be covered by a return and paid to the Revenue District Officer, Collection Agent, or duly
authorized Treasurer of the city, or municipality where the withholding agent has his
legal residence or principal place of business, or where the withholding agent is a
corporation, where the principal office is located. The taxes deducted and withheld by the
withholding agent shall be held as a special fund in trust for the Government until paid to
the collecting officers. The Commissioner of Internal Revenue may, with the approval of
the Minister of Finance, require these withholding agents to pay or deposit the taxes
deducted or withheld at more frequent intervals when necessary to protect the interest of
the Government. The return for final withholding tax shall be filed and the payment made
within 25 days from the close of each calendar quarter, while the return for creditable
withholding taxes shall be filed and the payment made not later than the last day of the
month following the close of the quarter during which withholding was made.
"(b) Penalties for failure to render returns; for rendering false or fraudulent return; for
nonpayment or late payment of taxes withheld. - The surcharges prescribed in Section
seventy-two and the specific penalties prescribed in Section seventy-three of this Title in
cases of failure to render returns, for filing false or fraudulent returns and for failure to
pay tax shall apply to failure to file returns or pay the tax required under this Section. In
case the taxes deducted and withheld are not paid within the time prescribed, there shall
be added a surcharge of five per centum on the amount of tax unpaid and interest at the
rate of fourteen per centum per annum from the date the same become due until paid.
"(c) Statement of income payments made and taxes withheld. - Every withholding
agent required to deduct and withhold taxes under Section fifty-three shall furnish each
recipient, in respect to his or its receipts during the calendar quarter or year, a written
statement showing the income or other payments made by the withholding agent during
such quarter or year, and the amount of the tax deducted and withheld therefrom,
simultaneously upon payment at the request of the payee, but not later than the 20th day
following the close of the quarter in the case of corporate payee, or not later than March 1
of the following year in the case of individual payee for creditable withholding taxes. For
final withholding taxes, the statement should be given to the payee on or before January
31 of the succeeding year.
"(d) Annual returns. - Every withholding agent required to deduct and withholding
taxes under section fifty-three shall submit to the Commissioner of Internal Revenue a
reconciliation statement of quarterly payments and list of payees and income payments.
In the case of final withholding taxes, the return shall be filed on or before January 31 of
the succeeding taxes, and for creditable withholding taxes, not later than March 1 of the
year following the year for which the annual report is being submitted. This return, if
made and filed in accordance with regulations approved by the minister of Finance, shall
be sufficient compliance with the requirements of Section seventy-seven of this Title in
respect to the income payments.
"The Commissioner may, by regulations, grant to any withholding agent a reasonable

extension of time to furnish and submit the return required in this subsection.
"(e) Surcharge and interest for failure to deduct and withhold. - If the withholding
agent, in violation of the provisions of the preceding section and implementing
regulations thereunder, fails to deduct and withhold the amount of tax required under said
section and regulations, he shall be liable to pay in addition to the tax required to be
deducted and withheld, a surcharge of fifty per centum if the failure is due to willful
neglect or with intent to defraud the Government, or twenty-five per centum if the failure
is not due to such causes, plus interest at the rate of fourteen per centum per annum from
the time the tax is required to be withheld until the date of assessment.
"(f) Income of recipient. - Income upon which any creditable tax is required to be
withheld at the source under Section 53 shall be included in the return of its recipient but
any excess of the amount of tax so withheld over the tax due on his return shall be
refunded to him subject to the provisions of Section 295; if the income tax collected at
source is less than the tax due on his return, the difference shall be paid in accordance
with the provisions of Section 51."
read as follows:
"Sec. 86. Place of filing declaration and paying quarterly income tax. - Except in
cases where the Commissioner otherwise permits, the declaration shall be filed with, and
the tax thereon paid to, the Revenue District Officer, or the Collection Agent, or duly
authorized Treasurer of the municipality where the individual is residing or in case of a
corporation, in which is located its principal office and where its books of accounts and
other data from which the return is prepared are kept; in case of an individual who has no
legal residence in the Philippines, or a corporation that has no office of any kind or
agency in the Philippines, then the returns shall be filed and the tax thereon paid with the
Office of the Commissioner of Internal Revenue."
SECTION 11. Paragraph (c) of Section 153 of the National Internal Revenue Code is
"(c) Naptha, per liter of volume capacity, fifty centavos; gasoline and all other similar
products of distillation, per liter of volume capacity, sixty-two centavos: Provided, That
on premium and aviation gasoline the tax shall be sixty-seven centavos and fifty-five
centavos, respectively, per liter of volume capacity;" 1
SECTION 12. Paragraph (s) of Section 187 of the National Internal Revenue Code is
"(s) "Real estate broker' includes any person, other than a real estate salesman as
hereinafter defined, who for another, and for a compensation or in the expectation or
promise of receiving compensation, (1) sells or offers for sale, buys or offers to buy, lists,
or solicits for prospective purchasers, or negotiates the purchase, sale or exchange of real
estate or interests therein; (2) or negotiates loans on real estate; (3) or leases or offers to
lease or negotiates the sale, purchase or exchange of a lease or rents or places for rent or
collects rent from real estate or improvements thereon; (4) or shall be employed by or on
behalf of the owner or owners of lots or other parcels of real estate at a stated salary, on
commission, or otherwise, to sell such real estate or any parts thereof in lots or parcels.
"Real estate salesman" means any natural person regularly employed by a real estate
broker to perform in behalf of such broker any or all of the functions of a real estate
broker. One act of a character embraced within the above definition shall constitute the
person performing or attempting to perform the same as a real estate broker. But the
foregoing definitions do not include a person who shall directly perform any of the acts
aforesaid with reference to his own property, where such acts are performed in the
regular course of or as an incident to the management of such property; nor shall they
apply to persons acting pursuant to a duly executed power of attorney from the owner
authorizing final consummation by performance of a contract conveying real estate by
sale, mortgage or lease; nor shall they apply to a receiver, trustee or assignee in
bankruptcy or insolvency, or to any person acting pursuant to the order of any court; nor
to a trustee selling under a deed of trust. "Real estate dealer" includes any person engaged
in the business of buying, selling, exchanging, leasing, or renting property as principal
and holding himself out as a full or part-time dealer in real estate or as an owner of real
property or properties rented or offered to rent: Provided, however, That an owner of
sugar lands subject to tax under Commonwealth Act Numbered Five hundred and sixty-
seven shall not be considered as a real estate dealer under this definition." 2
SECTION 13. Section 196(j) of the National Internal Revenue Code is hereby amended
to read as follows:
"(j) Air-conditioning units; Provided, however, That in the case of imported air-
conditioning units, components and parts, there shall be levied, assessed and collected a
tax equivalent to thirty-five per cent based on the landed cost thereof plus mark-up. For
purposes of this subparagraph, all air-conditioning units which have not been certified by
the Board of Investment as "locally manufactured" shall be deemed to be imported. All
imported air-conditioning components and parts other than those which are of common
and general use and those which are specifically authorized to be imported under the
local content or rationalization program of the Board of Investments for the air-
conditioning industry, shall likewise be subject to the thirty-five per cent sales tax herein
imposed."
SECTION 14. This Act shall take effect immediately upon approval hereof.

09-07-1979 BATAS PAMBANSA BLG. 38 AN ACT CONSOLIDATING THE
PROVISIONS ON TRAVEL TAX BY AMENDING CERTAIN SECTIONS OF
PRESIDENTIAL DECREE NO. 1183, AS AMENDED
September 7, 1979
AN ACT CONSOLIDATING THE PROVISIONS ON TRAVEL TAX BY AMENDING

CERTAIN SECTIONS OF PRESIDENTIAL DECREE NO. 1183, AS AMENDED
SECTION 1. Section 1 of Presidential Decree No. 1183, as amended, is hereby further
"Sec. 1. There is hereby imposed, in lieu of the travel taxes levied under Section
three of Republic Act No. 1478, as amended, and Section six of Republic Act No. 6141, a
travel tax from: (a) all citizens of the Philippines; (b) permanent resident aliens; and (c)
non-immigrant aliens who have stayed in the Philippines for more than one (1) year who
are leaving the country, irrespective of the place of issuance of ticket and the form and
place of payment. A travel tax of P1,350 shall be imposed on passengers travelling under
first class passage and P810 for those travelling under economy class passage: Provided,
however, That a reduced rate of P540 for first class passage and P405 for economy class
passage as provided for under Republic Act Nos. 1478 and 6141 shall be imposed on
those enumerated under Section 2-A of this decree."
SECTION 2. Section 2 of Presidential Decree No. 1183, as amended, is hereby further

"Sec. 2. The following are exempted from the payment of travel tax imposed
herein:
"a) Officials and employees of the Philippine Government or any of its ministries,
bureaus, and instrumentalities travelling on official business;
"b) Persons whose fares are paid out of Philippine Government funds;
"c) Foreign diplomatic and consular officials and members of their staff who are duly
accredited to the Republic of the Philippines including the immediate members of their
families and household domestics whose entry as such has been authorized by the
Philippine Government;
"d) Officials, consultants, experts and employees of the United Nations Organization
and of its agencies, and those exempted under existing laws, treaties and international
agreements;
"e) Personnel or multinational companies with regional headquarters at, but not
engaged in business in the Philippines, and their dependents if joining them during the
period of their assignment in the Philippines as certified to by the Ministry of Trade;
"f) Crew members of ships and airplanes plying international routes who are leaving
the country to join their vessels or airplanes or to assume their positions therein;
"g) Filipino citizens who are permanent residents of foreign countries who have
stayed in the Philippines for a period of not more than one (1) year;
"h) Bona fide students whose studies have been approved by the NEDA Scholarship
Committee and foreign students enrolled in the Philippines and their dependents;
"i) Infants who are two years old or less;
"j) Scientists and experts of any nationality invited by the Philippine Government in
the interest of science and technology;
"k) Destitutes certified to by the Ministry of Social Services and Development as such
needing medical treatment not available in the Philippines as certified to by the Ministry
of Health, and whose fares are paid for by private individuals, charitable institutions and
organizations;
"l) United States military personnel and other United States nationals, including their
dependents in proper cases as indicated hereinbelow, who are travelling on United States
government-owned or chartered transport facilities or with fares expended out of United
States Government funds, to wit:
"1) United States military personnel and their dependents;
"2) Filipinos in the United States Military Service and their dependents;
"3) Filipino employees of the United States Government travelling on United States
Government business;
"4) U.S. State Department visitor-grantees travelling on United States Government

business;
and
"5) Destitute American repatriates.
"m) Persons whose travel is provided or funded by foreign governments with which
the Philippine Government maintains diplomatic relations;
"n) Those authorized by the President of the Philippines for reasons of national
interest."
SECTION 3. Section 2-A of the same decree is hereby further amended to read as
follows:
"Sec. 2-A. Unless otherwise exempted under Section 2 of the same Act, a reduced
rate of P540 for first class passage and P405 for economy class passage shall be imposed
on the following:
"a) Filipino journalists duly accredited by the Minister of Public Information whose
travel is in pursuit of journalistic assignments, as certified to by their editors;
"b) Officials and employees of government-owned and controlled corporations

travelling on official business;
"c) Members of government-organized economic, scientific, educational, trade,

tourism, and cultural missions and/or exhibits as certified to by the Ministry concerned;
"d) Individuals who are twelve years old or below but over 2 years of age;
"e) Those travelling under steerage class;
"f) Officials and employees of travel agencies, airline and shipping companies
travelling on non-revenue tickets, discounted tickets and tickets with service fees as part
of their employment contracts;
"g) Recipients of awards and grants from foreign governments, institutions and
organizations as certified to by the NEDA;
"h) Those authorized by the President of the Philippines for reasons of national
interest."
SECTION 4. A new section , referred to as Section 2-B, is hereby inserted to read as

follows:
"Sec. 2-B. Contract workers, their spouses and dependents 21 years of age or below,
with approved employment contracts and duly certified by the Ministry of Labor shall be
subject to a rate of P400 for first class passage and P300 for economy class passage."
SECTION 5. Proceeds to be realized from the additional tax shall accrue entirely to the
General Fund of the National Government.
SECTION 6. All laws, decrees, orders and regulations or parts thereof, which are
inconsistent with this Act are hereby repealed or modified accordingly.
SECTION 7. This Act shall take effect immediately upon its approval.

09-07-1979 BATAS PAMBANSA BLG. 37 AN ACT AMENDING SECTIONS 34,
45, 51 AND 72 OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS
AMENDED, BY SUBJECTING TO THE FINAL TAX CAPITAL GAINS DERIVED
FROM THE SALE OR REAL PROPERTY
September 7, 1979
AN ACT AMENDING SECTIONS 34, 45, 51 AND 72 OF THE NATIONAL

INTERNAL REVENUE CODE OF 1977, AS AMENDED, BY SUBJECTING TO THE
FINAL TAX CAPITAL GAINS DERIVED FROM THE SALE OR REAL PROPERTY
SECTION 1. Section 34 of the National Internal Revenue Code of 1977, as amended, is

hereby further amended by adding thereto paragraph (h) to read as follows:
"(h) The provisions of paragraph (b) of this Section to the contrary notwithstanding,
net capital gains from the sale or other disposition of real property by citizens of the
Philippines or resident alien individuals shall be subject to the final income tax rates
prescribed as follows:
NET CAPITAL GAINS RATES
On the first P100,000 or less 10%
On any amount over P100,000 20%
such tax shall be in lieu of the tax imposed under Section 21 of this Code: Provided,
however, That the tax liability, if any, on gains from sales or other dispositions of real
property to the government or any of its political subdivisions or agencies or to
government-owned or controlled corporations shall be determined either under Section
21 hereof or under this Section, at the option of the taxpayer, Provided, further, That if
the taxpayer elects to report such gains in accordance with the provisions of Section
43(b), the amount of the tax which shall be paid on each installment shall be the
proportion of the tax herein imposed, which the installment payment received bears to the
total selling price; Provided, finally, That failure on the part of the seller to pay the tax
imposed herein on any gains returnable under the installment method will automatically
disqualify the seller-taxpayer from paying the tax in installments and the unpaid portion
of the tax shall immediately be due and demandable. The tax herein imposed shall be
returned and paid in accordance with Section 45(c) and 51(a) (4) of this Code.
"No registration of any document transferring real property shall be effected by the
Register of Deeds unless the Commissioner or his duly authorized representative has
certified that such transfer has been reported and the tax herein imposed, if any, has been
paid; in case of deferred-payment sales of real property where the vendor retains title to
the property, the vendee shall furnish the Commissioner with a copy of the instrument of
sale within the same period prescribed for payment of the tax herein imposed." 1
SECTION 2. Subparagraphs (A) and (B) of paragraph (c) of Section 45 of the National
Internal Revenue Code of 1977, as amended, are hereby renumbered as Subparagraphs
(1) and (2), respectively.
SECTION 3. Paragraph (c) of Section 45, as amended by the preceding Section, is

hereby further amended by adding thereto a new Subparagraph (3) to read as follows:
"(3) Persons subject to the tax prescribed under Section 34(h) of this Code, shall file or
cause to be filed a separate return prescribed therefor by the Commissioner within thirty
(30) days following each sale or other disposition of capital assets."
SECTION 4. Section 5(a) of the National Internal Revenue Code of 1977, as amended
is hereby further amended by adding thereto a new Subparagraph (4), prescribing the
manner of payment of the tax imposed on capital gains to read as follows:
"(4) Payment of Capital Gains Tax. - The total amount of tax imposed under Section
34(g) and (h) shall be paid on the date the return prescribed therefor is filed by the person
liable thereto: Provided, however, That if the seller submits proof of his intention to avail
himself of the benefit of exemption of capital gains under existing special laws, no such
payment shall be required; Provided, further, That in case of failure to qualify for
exemption under such special laws and implementing rules, the tax due on the gains
realized from the original transaction shall immediately become due and payable, and
subject to the penalties prescribed under applicable provisions of this Code; and
Provided, finally, That if the seller, having paid the tax, submits such proof of intent
within six months from the registration of the document transferring real property, he
shall be entitled to a refund of such tax upon verification of his compliance with the
requirements for such exemption.
"In case the person elects and is qualified to report the gain by installments under Section
43 of this Code, the tax due from each installment payment shall be paid within thirty
(30) days from the receipt of such payments."

read as follows:
"Sec. 72. Surcharges for failure to render returns; for rendering false and fraudulent
returns; and for failure to file income tax returns in the proper revenue office. - In case of
willful neglect to file the return or list required under this Title within the time prescribed
by law, or in case a false or fraudulent return or list is wilfully made, the Commissioner
on Internal Revenue shall add to the tax or to the deficiency tax, in case any payment has
been made on the basis of such return before the discovery of the falsity or fraud, a
surcharge of fifty per centum of the amount of such tax or deficiency tax. The
Commissioner shall add to the tax twenty-five per centum of its amount:
"(a) In case of any failure to make and file a return or list within the time prescribed
by law or by the Commissioner or other internal revenue officer, not due to willful
neglect, except that, when a return is voluntarily and without notice from the
Commissioner or other officer filed after such time, and it is shown that the failure to file
it was due to a reasonable cause, no such addition shall be made to the tax;
"(b) In case the return is filed with a person other than that mentioned in Sections
45(b) and 86 of this Code; and
"(c) In case the tax imposed under Section 34(h) on capital gains realized from a
deferred-payment sale where the vendor retained title to the property, or on gains on any
installment payments, is not paid within the time prescribed in Section 51(a) (4) of this
Code.
"The amount so added to any tax shall be collected at the same time in the
same manner and as part of the tax unless the tax has been paid before the discovery of
the neglect, falsity, or fraud, in which case the amount so added shall be collected in the
same manner as the tax."
SECTION 6. Any individual who realized capital gains from a sale exchange or other
disposition of real property prior to the effectivity of this Act but has not yet reported the
same or a portion thereof for income tax purposes may elect to declare such gains and
pay the tax thereon without penalty nor civil or criminal liability, within one (1) year
from the effectivity of this Act, at the rates prescribed in Section 34(h) of the National
Internal Revenue Code, as amended by this Act, in the same manner as provided therein.
The Minister of Finance, upon the recommendation of the Commissioner of Internal
Revenue, shall promulgate rules and regulations necessary to implement the provisions of
this Section.
SECTION 7. The Minister of Finance shall, within 30 days after approval of this Act,
promulgate rules and regulations to implement the provisions of this Act.

08-26-1978 BATAS PAMBANSA BLG. 5 AN ACT RESTORING THE SPECIFIC
TAX ON COMPOUNDED LIQUORS AMENDING FURTHER, FOR THE PURPOSE,
SECTION 146 OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS
AMENDED
August 26, 1978
AN ACT RESTORING THE SPECIFIC TAX ON COMPOUNDED LIQUORS

AMENDING FURTHER, FOR THE PURPOSE, SECTION 146 OF THE NATIONAL
INTERNAL REVENUE CODE OF 1977, AS AMENDED
"Sec. 146. Specific tax on wines and compounded liquors. - On wines, imitation
wines and compounded liquors, there shall be collected, per liter of volume capacity, the
following taxes:
"(a) Sparkling wines, regardless of proof, twelve pesos; if imported, twenty-six pesos
and forty centavos;
"(b) Still wines containing fourteen per centum of alcohol or less (except those
manufactured from locally grown raw materials), one peso; if imported, two pesos and
twenty centavos;
"(c) Still wines containing more than twenty-five per centum of alcohol, two pesos; if
imported, four pesos and forty centavos;
"Imitation wines containing more than twenty-five per centum of alcohol

shall be taxed as distilled spirits;
"(d) Compounded liquors containing seventeen and one-half per centum of alcohol, or
less, forty-eight centavos;
"(e) Compounded liquors containing more than seventeen and one-half per centum of
alcohol, but not more than twenty-five per centum thereof, sixty-seven centavos;
"(f) Compounded liquors containing more than twenty-five per centum of alcohol, but
more than thirty-two and one-half per centum thereof, eighty-six centavos;
"(g) Compounded liquors containing more than thirty-two and one-half per centum of
alcohol, but not more than forty per centum thereof, one peso and five centavos; and
"(h) Compounded liquors containing more than forty per centum of alcohol, one peso
and thirty-three centavos.
"In computing the specific tax on compounded liquors as prescribed under
subparagraphs (d), (e), (f), (g) and (h) of this Section, the amount of specific tax paid on
the distilled spirits used in the compounding of such intoxicating beverage shall be
credited against the tax due on the compounded liquors herein defined and the tax shall
attach to compounded liquors as soon as they are in existence as such.
"For the purpose of this Section, "compounded liquors' shall include any
intoxicating beverage whatever, concocted by or resulting from the mixture of or addition
to distilled spirits, either before or after rectification, of any coloring matter, flavoring
extract or essence or other kind of wine, liquor or other ingredient."
Approved, August 26, 1978.

.

08-26-1978 BATAS PAMBANSA BLG. 4 AN ACT PROVIDING FOR THE
UPWARD REVISION OF THE SPECIFIC TAXES ON ALCOHOLIC BEVERAGES
AND AMENDING, FOR THE PURPOSE, SECTIONS 145 AND 147 OF THE
NATIONAL INTERNAL REVENUE CODE OF 1977, AS AMENDED
August 26, 1978
AN ACT PROVIDING FOR THE UPWARD REVISION OF THE SPECIFIC TAXES

ON ALCOHOLIC BEVERAGES AND AMENDING, FOR THE PURPOSE,
SECTIONS 145 AND 147 OF THE NATIONAL INTERNAL REVENUE CODE OF
1977, AS AMENDED
SECTION 1. Sections 145 and 147 of the National Internal Revenue Code of 1977 are
"Sec. 145. Specific tax on distilled spirits. - On distilled spirits there shall be
collected, subject to the provisions of section one hundred thirty-nine of this Code, except
as hereinafter provided, specific taxes as follows:
"(a) If produced domestically from locally produced raw materials, per proof liter, one
peso and twenty centavos: Provided, That if produced in a pot still or other similar
primary distilling apparatus, by a distiller producing not more than one hundred liters a
day, containing not more than fifty per centum of alcohol by volume, per proof liter,
seventy-eight centavos;
"(b) If imported or produced from imported raw materials, per proof liter, thirty-five
pesos.
"This tax shall be proportionally increased for any strength of the spirits taxed over proof
spirits, and the tax shall attach to this substance as soon as it is in existence as such,
whether it be subsequently separated as pure or impure spirits, or be immediately or at
any subsequent time transformed into any other substances either in the process of
original production or by any subsequent process.
"'Spirits' or 'distilled spirits' is the substance known as ethyl alcohol, ethanol or spirits of
wine, including all dilution and mixtures thereof; from whatever source by whatever
process produced, and shall include whisky, brandy, rum, gin and vodka, and other
similar products or mixtures, except compounded liquors taxed under Section 146 of this
Code.
"Proof spirits is liquor containing one-half of its volume of alcohol of a specific gravity
of seven thousand nine hundred and thirty-nine ten thousandths at fifteen degrees
centigrade. A proof liter means a liter of proof spirits."
"Sec. 147. Specific tax on fermented liquors. - On beer, lager beer, ale, porter, and
other fermented liquors (except tuba, basi, tapuy and similar domestic fermented liquors),
there shall be collected, on each liter of the volume capacity, sixty centavos: Provided,
That if the fermented liquor is imported, the tax shall be increased by one hundred per
centum."

08-18-1978 BATAS PAMBANSA BLG. 2 AN ACT CONSOLIDATING THE
TAXES ON RECEIPTS FROM ROOM OCCUPANCY OF HOTELS, MOTELS AND
OTHER ESTABLISHMENTS, REPEALING PRESIDENTIAL DECREE NUMBERED
THIRTY-ONE, AND FOR OTHER PURPOSES
August 18, 1978

April 1, 1979
AN ACT CONSOLIDATING THE TAXES ON RECEIPTS FROM ROOM

OCCUPANCY OF HOTELS, MOTELS AND OTHER ESTABLISHMENTS,
REPEALING PRESIDENTIAL DECREE NUMBERED THIRTY-ONE, AND FOR
OTHER PURPOSES
SECTION 1. The National Internal Revenue Code of 1977 is hereby amended by

inserting a new section between Sections 205 and 206 thereof to read as follows:
"Sec. 205-A. Percentage tax on hotels, motels and others. - There is hereby imposed on
proprietors, operators or keepers of hotels, motels, rest houses, pension houses, lodging
houses and resorts, a tax equivalent to ten percent of their gross receipts derived from
room occupancy: Provided, That the foregoing tax shall be in lieu of the contractor's and
the documentary stamp tax under Section 205 (12) and 238 (b) of the National Internal
Revenue Code of 1977, respectively, and the science stamp tax under Section 4 of
Republic Act Numbered Fifty-four and forty-eight."
SECTION 2. Presidential Decree Numbered Thirty-one is hereby repealed.
SECTION 3. This Act shall take effect on April 1, 1979.

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April 5, 1984

BATAS PAMBANSA BLG. 700*

AN ACT AMENDING SECTIONS 318 AND 319 OF THE NATIONAL INTERNAL

"Sec. 319. Exceptions as to period of limitation of assessment and collection of taxes.

SECTION 3. The period of limitation herein prescribed shall apply to assessments of

Approved, April 5, 1984.

Copyright 2003 ACCESSLAW, Inc.

03-25-1982 BATAS PAMBANSA BLG. 221

March 25, 1982

BATAS PAMBANSA BLG. 221*

AN ACT REVISING THE RATES OF CAPITAL GAINS TAX ON CERTAIN SALES

Not over P100,000 10%

Over P100,000 20%

SECTION 2. This Act shall take effect upon its approval.

Approved, March 25, 1982.

Copyright 2003 ACCESSLAW, Inc.

12-18-1981 BATAS PAMBANSA BLG. 135

December 18, 1981

BATAS PAMBANSA BLG. 135*

AN ACT AMENDING CERTAIN PROVISIONS OF THE NATIONAL INTERNAL

SECTION 1. Section 21 of the National Internal Revenue Code of 1977, as amended, is

"Sec. 21. Rates of tax on citizens or residents. - (a) On taxable compensation

Not over P2,500 0%

Not over P10,000 5%

If the amount subject to tax is:

"Every non-resident citizen availing of the special rates provided herein is

SECTION 2. Section 22 of the said Code is hereby amended to read as follows:

"(c) Aliens employed by regional or area headquarters of multinational corporations. -

"(e) Aliens employed by petroleum service contractors and subcontractors. - Aliens

SECTION 3. Section 23 of the said Code is hereby amended to read as follows:

"(d) Change of Status. - If the taxpayer is married or should have additional

"(e) Allowances for adjustment. - Upon the recommendation of the Minister of

"(f) Personal exemptions allowable to non-resident alien individuals. - A non-resident

SECTION 4. The title of Chapter IV is hereby amended to read as follows:

SECTION 5. Section 28 of said Code is hereby amended to read as follows:

"Sec. 28. Taxable compensation income. - (a) Computation. - For purposes of

"(b) "Gross compensation income" defined. - "Gross compensation income includes

SECTION 6. Section 29 of said Code is hereby amended to read as follows:

"(4) Interest on Government securities. - Interest upon the obligations of the

"(5) Compensation for injuries or sickness. - Amounts received, through Accident or

SECTION 7. Section 30 of said Code is hereby amended to read as follows:

"(B) General requirements for entertainment amusement or recreation. - No deductions

"(i) Activity. - With respect to an activity which is of a type generally considered to

"For purposes of applying this subparagraph, dues or fees paid to any

"In no case shall an entertainment, amusement or recreational expense

"(C) Substantiation required. - No deduction shall be allowed under the preceding

"(2) Expenses allowable to non-resident alien individuals and foreign corporations. -

"(3) Expenses allowable to private educational institutions. - In addition to the

"(2) Interest allowable to non-resident aliens. - In the case of a non-resident alien

"(3) No deduction shall be allowed in respect of interest otherwise deductible under

"(C) If the indebtedness is incurred to finance petroleum exploration.

"(A) The income tax provided for under this Title;

"(C) Estate and gift taxes;

"(2) Limitations on deductions. -

"(A) If incurred in trade, profession, or business: Provided, however, That a loss

"(3) By non-resident aliens of foreign corporations. - In the case of a non-resident

"(4) Capital losses. -

"(B) Securities becoming worthless. - If any securities as defined in Section 20

"(B) In case a producing well is subsequently abandoned, the unamortized costs

"(e) Bad Debts:

"(3) Securities becoming worthless. - If any securities as defined in Section 20 are

"(2) Depreciation of properties used in petroleum operations. - An allowance for

"Properties not used directly in the production of petroleum shall be

"(3) Depreciation deductible by non-resident aliens of foreign corporations. - In the