TITLE V - OTHER PERCENTAGE TAXESdocshare01.docshare.tips/files/23786/237867989.pdf · TITLE V OTHER...

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TAX ATI O N L AWREVIEWER

ATENEO CENTRAL BAR OPERATIONS 2001Eric, Joy, Judd, Roland

TITLE VOTHER PERCENTAGE TAXES

1. On Persons Exempt from Value-added Tax (VAT)-- 3% of gross quarterly sales orreceipts, except cooperatives (Sec. 116)

2. On Domestic Carriers and Keepers of Garages -- 3% of quarterly gross receiptsexcept: owners of animal drawn 2 wheeled vehicles and bancas (Sec. 117)In computing the percentage tax, the following shall be considered the minimumquarterly gross receipts in each particular case:Jeepney for hire

Manila and other cities P2,400Provincial 1,200

Public utility bus Not exceeding 30 passengers P3,600>30 but < 50 passengers 6,000Exceeding 50 passengers 7,200

Taxis Manila and other cities P3,600Provincial 2,400

Car for hire (with chauffeur) P3,000Car for hire (without chauffeur) P1,800

3. On International Carriersa) International air carriers doing business in the Phils. -- 3% of quarterly gross

receipts.b) International shipping carriers doing business in the Phils. -- 3%) of quarterly

gross receipts. (Sec. 118)4. Franchises

a) on radio and/or television broadcasting companies whose annual grossreceipts of the preceding year does not exceed P10M --3%

b) on electric, gas and water utilities -- 2% (Sec. 119)5. Overseas Dispatch, Message or Conversation Originating from the Phils.

a) by telephone, telegraph, telewriter, exchange-- 10%b) wireless and other communication equipment services-10% payable by the person paying for the services rendered paid to the person rendering the services who is required to collect and pay the taxwithin twenty (20) days after the end of each quarterExemptions: a) Messages transmitted by the government b) Diplomatic services c) Public International Organizations

c) News Services (Sec. 120)

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6. Banks and Non-bank Financial Intermediaries on gross receipts derived from sourceswithin the Phils.: (Sec. 121)

on interest, commissions and discounts from lending activities as well as incomefrom financial leasing, on the basis of remaining maturities

Short-term maturity (not in excess of 2 years) 5%Medium-term maturity (over 2 years but not more than 4) 3% Long-term maturity Over 4 years but not exceeding 7 1%

Over 7 years 0%On dividends 0%On royalties, rentals of property, real or personal,profits from exchange and all other items treatedas gross income 5%

7. Finance Companies (Sec. 122)a) gross receipts derived by all finance companies, as well as by other financial

intermediaries not performing quasi-banking functions doing business in thePhilippines, from interest, discounts and all other items treated as gross income --5%

b) interests, commissions and discounts from lending activities, as well as incomefrom financial leasing, shall be taxed on the basis of the remaining maturities

Short-term maturity (not in excess of 2 years) 5%Medium-term maturity (over 2 years but not exceeding 4) 3%Long-term maturity -- Over 4 years but not exceeding 7 1%

Over 7 years 0%8. Life Insurance Premiums -- 5% of total premium collected (Sec. 123)

except purely cooperative associations/ premiums refunded within 6 months9. Agents of Foreign Insurance Companies -- 10% of total premiums (Sec. 124)10. Amusement Taxes (% of gross receipts) (Sec.125) a) Cockpits --18% b) cabarets, night or day clubs -- 18 % c) boxing exhibitions -- 10%

except boxing exhibitions wherein World or Oriental Championships in any divisionis at stake provided at least one of the contenders for World or Oriental Championship is acitizen of the Philippinesand the exhibitions are promoted by a citizen/s of the Philippines or by acorporation or association at least sixty percent (60%) of the capital of which isowned by such citizens;

d) professional basketball --15%e) Jai-Alai and racetracks irrespective of whether or not any amount is charged for

admission -- 30%“gross receipts”-embraces all the receipts of the proprietor/operator/lessee of theamusement place

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11. Tax on Winnings (Sec. 126)a) horse races -- 10% of winnings based on the actual amount paid to him for every

winning ticket after deducting the cost of the ticketb) winnings from double, forecast/quinella and trifecta bets-- 4%b owners of winning race horses -- 10%

12. Tax on Sale, Barter or Exchange of Shares of Stock A. Listed and Traded through the Local Stock Exchange -- 1/2 of 1% of the gross

selling price B. Initial Public Offering of closely held corp. of the shares of stock sold, bartered,

exchanged or otherwise disposed in accordance with the proportion of shares ofstock sold, bartered, exchanged or otherwise disposed to the total outstandingshares of stock after the listing in the local stock exchange: (% of gross selling price/gross value in money) Up to 25% ……………………………….4%

Over 25% but not over 33 1/3% ………2%Over 33 1/3% ……………………………1%

--- tax imposed shall be paid by the issuing corporation in primary offering or by theseller in secondary offering

'CLOSELY HELD CORPORATION' -- any corporation at least 50% in value of theoutstanding capital stock or at least 50% of the total combined voting power of allclasses of stock entitled to vote is owned directly or indirectly by or for not more than 20individuals

Rules in determining whether a corporation is closely held:1. Stock owned directly or indirectly by or for a corporation, partnership, estate or trust

-- considered as being owned proportionately by its shareholders, partners orbeneficiaries

2. Family and Partnership Ownerships -- An individual shall be considered as owningthe stock owned, directly or indirectly, by or for his family, or by or for his partner(''family of an individual' only his brothers and sisters (whole or half-blood), spouse,ancestors and lineal descendants)

3. An option to acquire stock shall be considered as ownership of such stock4. Constructive Ownership as Actual Ownership

C. Return on Capital Gains Realized from Sale of Shares of Stocks. -1. Return on Capital Gains Realized from Sale of Shares of Stock Listed and Traded in

the Local Stock Exchangea) duty of every stock broker who effected the sale subject to the tax imposed

herein to collect the tax and remit the same to the Bureau of Internal Revenuewithin five (5) banking days from the date of collection and to submit to thesecretary of the stock exchange, of which he is a member, a true and completereturn

2. Return on Public Offerings of Shares of Stock

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a) primary offering -- the corporate issuer shall file the return and pay thecorresponding tax within 30 days from the date of listing of the shares of stock inthe local stock exchange

b) secondary offering - 5 banking days from the date of collection (Sec. 127)

PROCEDURE: (Sec. 128)I. Filing of returns and payment of percentage taxes

A Persons Liable to Pay Percentage Taxes shall:1) file a quarterly return of the amount of his gross sales, receipts or earnings 2) pay the tax due within 25 days after the end of each taxable quarter

B. Person Retiring from Business subject to percentage tax shall:1) notify the nearest internal revenue officer2) file his return and 3) pay the tax due within 20 days after closing his business

C.Exceptions -- Commissioner may prescribe:1) time for filing the return at intervals other than the time prescribed considering:

a) volume of salesb) financial conditionc) adequate measures of securityd) such other relevant information required

2) manner and time of payment of percentage taxes including a scheme of taxprepayment.

II. Where to File -- Except as the Commissioner otherwise permits, a) with the authorized agent bankb) Revenue District Officerc) Collection Agent or d) duly authorized Treasurer of the city or municipality where said business or principal

place of business is located

TITLE VI EXCISE TAXES ON CERTAIN GOODS

Goods subject to excise tax: (Sec. 129)1. goods manufactured or produced in the Philippines for domestic sale or consumption

or for any other disposition and to things imported2. imposed in addition to the value-added tax

2 Kinds of excise tax1. SPECIFIC TAX ( taxes imposed based on weight or volume capacity or any other

physical unit of measurement 2. AD VALOREM TAX ( tax imposed based on selling price or other specified value of

the good

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Filing of Return and Payment of Excise Tax on DOMESTIC Products (Sec. 130)Persons Liable

--file a separate return for each place of production setting forth:1. the description of products2. quantity or volume of products to be removed3. tax base 4. tax due

TAXABLE ARTICLE PERSONS LIABLEindigenous petroleum, naturalgas or liquefied natural gas

first buyer, purchaser or transfereefor local sale/transfer/barter

exported products owner/lessee/concessionaire/operator of the mining claim

domestic products removedfrom place of production w/opayment of tax

owner or person having possessionthereof

Time for Filing of Return and Payment of the TaxTAXABLE ARTICLE WHEN PAYMENT MADElocally manuf. petroleumproducts and indigenouspetroleum

W/in 10 days from date of removal ofsuch prods. from 1/1/98 to June 30’98w/in 5 days from date of removal ofsuch products for the period of July 1,’98 to Dec. 31 ’98before removal from place ofproduction from Jan 1 ’99 andthereafter

Nonmetallic mineral, mineralproducts, quarry resources

upon removal of such products fromlocality where mined or extracted

locally produced or extractedmetallic mineral or mineralproducts

file a return and pay the tax within 15days after the end of the calendarquarter when such products wereremoved

for imported mineral or mineralproducts, whether metallic ornonmetallic

paid before their removal fromcustoms custody

Place for Filing of the Return and Payment of the Taxa) any authorized agent bank b) Revenue Collection Officerc) duly authorized City or Municipal Treasurer in the Philippines.

Determination of gross selling price for goods subject to Ad Valorem tax: the price,excluding VAT, at which goods are sold at wholesale in the place of production orthrough sales agents to the public

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Payment of Excise Taxes on IMPORTED ArticlesPersons Liable:1) owner or importer to the Customs Officers before the release of such articles from

the customs house, or 2) by the person who is found in possession of articles which are exempt from excise

taxes other than those legally entitled to exemption-- tax-free articles brought or imported into the Philippines by persons, entities, oragencies exempt from tax which are subsequently sold, transferred or exchanged in thePhilippines to non-exempt persons or entities -- the purchasers or recipients shall beconsidered the importers, and shall be liable for the duty and internal revenue tax due onsuch importation (Sec. 131)

IMPORTATION OF CIGARS, CIGARETTES, DISTILLED SPIRITSGen. Rule: even if destined for tax and duty free shops ( shall be subject to allapplicable taxes, duties, charges, including excise taxes due Except: cigars and cigarettes, distilled spirits and wines brought directly into the dulychartered or legislated freeports of the

a) Subic Special Economic and Freeport Zone, created under RA No. 7227; b) Cagayan Special Economic Zone and Freeport, created under RA No. 7922;

c) Zamboanga City Special Economic Zone, created under RA No. 7903, and are nottransshipped to any other port in the Philippines

EXEMPTION OR CONDITIONAL TAX-FREE REMOVAL OF CERTAIN ARTICLES1) Domestic Denatured Alcohol a) not less than 180º proof b) suitably denatured and rendered unfit for oral intake

exempt from excise tax on alcohol products but taxable under Section 106(A)/ VATExcept: 1. if it is to be used for motive power-taxable (excise tax on petroleum products)2. any alcohol, previously rendered unfit for oral intake after denaturing but

subsequently rendered fit for oral intake after undergoing fermentation, dilution,purification, or mixture-taxable (excise tax on alcohol products)(Sec. 134)

2) Petroleum Products sold to the following are exempt from excise tax:a) International carriers of Philippine or foreign registry on their use or consumption

outside the Philippinesb) Exempt entities or agencies covered by tax treaties, conventions and other

international agreements for their use or consumptionb Entities which are by law exempt from direct and indirect taxes (Sec. 135)

EXCISE TAX ON ALCOHOL PRODUCTS(*rates to be increased by 12% on Jan.1, 2000) (Sec. 141-143)

TAXABLE ARTICLE TAX RATEI. (a) Distilled Spirits P8.00 per proof literDistilled Spirits produced in a pot still or P4.00 per proof liter

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other similar primary distilling apparatusby a distiller producing not more than100 liters/day, containing not more than50% of alcohol by volumedistilled spirits produced from rawmaterials other than those in (a)

taxed in accordance with thenet retail price per bottle 750ml. volume capacity (excludingexcise tax and VAT) as follows:less than P250 -- P75/proofliter P250 - P675 --P150/proofliter More than P675 --P300/proof liter

medicinal preparations, flavoringextracts, and all other preparations,except toilet preparations, of which,excluding water, distilled spirits form thechief ingredient

same tax as such chiefingredient

II. WinesSparkling wines/champagnesregardless of proof, if the net retail priceper bottle (excluding the excise tax andthe value-added tax)

P500 or less --P100 More thanP500-- P300

Still wines containing 14% of alcohol byvolume or less

P12.00

Still wines containing more than 14%but not more than 25% of alcohol byvolume

P24.00

Fortified wines containing more than25% of alcohol by volume

same as distilled spirits

III. Fermented Liquoron beer, lager beer, ale, porter andother fermented liquors except tuba,basi, tapuy and similar domesticfermented liquors

1. net retail price per liter ofvolume capacity is less thanP14.50 -- P6.15/ liter 2. netretail price P14.50 - P22.00 ---P9.15/liter 3. net retail price ismore than P22.00 --P12.15/liter

TAXABLE ARTICLE TAX RATEI. Tobacco Products: a) twistedby hand or reduced into acondition to be consumed in anymanner other than the ordinarymode of drying and curing b)prepared or partially preparedwith or without the use of any

P0.75/kilogram

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machine or instruments orwithout being pressed orsweetened c) fine-cut shorts andrefuse, scraps, clippings,cuttings, stems and sweepingsof tobaccotobacco specially prepared forchewing so as to be unsuitablefor use in any other manner

P0.60/kilogram

II. Cigars P1.00/cigarCigarettes Packed by Hand P0.40/packCigarettes Packed by Machine(excluding the excise tax and thevalue-added tax)

1. net retail price is over P10.00/pack-- P12.00/pack 2. net retail priceexceeds P6.50 but does not exceedP10.00/pack -- P8.00/pack 3. net retailprice P5.00 but does not exceedP6.50/pack -P5.00/pack 4. net retailprice is below P5.00/pack --P1.00/pack

Inspection Fee 1 paid by the wholesaler, manufacturer, producer, owner or operator of redrying plant

immediately before removal from the establishment2 in case of imported leaf tobacco and its products, to be paid by the importer before

removal from customs' custodyP0.50/thousand cigars or fraction thereofP0.10/thousand cigarettes or fraction thereofP0.02/kilogram of leaf tobacco or fraction thereofP0.03/kilogram or fraction thereof, of scrap and other manufactured tobacco

EXCISE TAX ON PETROLEUM PRODUCTS

TAXABLE ARTICLE TAX RATELubricating oils and greases P4.50/liter and kg of vol capacity or

wtProcessed gas P0.05/ liter of volume capacityWaxes and petrolatum P3.50/kilogramDenatured alcohol to be used formotive power

P0.05/liter of volume capacity

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Naphtha, regular gasoline andother similar products of distillation

P4.80/ per liter of volume capacity

Leaded premium gasoline P5.35/liter of volume capacityUnleaded premium gasoline P4.35/liter of volume capacityAviation turbo jet fuel P3.67/liter of volume capacityKerosene P0.60/liter of volume capacityKerosene, when used as aviationfuel,

same tax on aviation turbo jet fuel

Diesel fuel oil, and on similar fueloils having more or less the samegenerating power


Liquefied petroleum gas P0.00/literLiquefied petroleum gas used formotive power

equivalent rate as the excise tax ondiesel fuel oil

Asphalts P0.56/kilogramBunker fuel oil, and on similar fueloils having more or less the samegenerating power


EXCISE TAX ON MISCELLANEOUS ARTICLES1. Automobiles

Engine Displacement (in cc.)Gasoline Diesel Tax RateUp to 1600 Up to 1800 15%1601 - 2000 1801 – 2300 35%2001 - 2700 2301 – 3000 50%2701 or over 3001 or over 100%

a) Automobiles acquired for use by persons or entities operating within the freeport zone-- exempt 1) Provided, that utility vehicles of registered zone enterprises, which are

indispensable in the conduct and operations of their business, such as deliverytrucks and cargo vans with gross vehicle weight above three (3) metric tons may beallowed unrestricted use outside the freeport zone

2) Provided, further, vehicles owned by tourist-oriented enterprises utilized exclusivelyfor the purpose of transporting tourists in tourism-related activities, and servicevehicles of freeport registered enterprises and executives, such as company servicecars and expatriates' and investors' automobiles brought in the name of suchenterprises, may be used outside the freeport zone for such periods as may beprescribed by the Departments of Finance, and Trade and Industry, the Bureau ofCustoms and the Freeport authorities concerned, which in no case shall exceed 14days/ month

3) tourist buses and cars, service vehicles of registered freeport enterprises and

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company service cars used for more than an aggregate period of 14 days/monthoutside of the freeport zone ( the owner or importer shall pay the correspondingcustoms duties, taxes and charges

4) personally-owned vehicles of residents, including leaseholders of residences insidethe freeport zone,---use of such vehicles outside of the freeport zone

--shall be deemed an introduction into the Philippine customs territory--such introduction shall be deemed an importation into the Philippines--shall subject such vehicles to customs duties, taxes and charges, includingexcise tax due on such vehicle

b) Non-essential Goods -- 20% based on the wholesale price or the value of importationused by the Bureau of Customs

1) All goods commonly or commercially known as--jewelry (real or imitation)--pearls--precious and semi-precious stones and imitations --goods made of, or ornamented, mounted or fitted with, precious metals orimitations thereof --ivory (not including surgical and dental instruments, silver-plated wares, framesor mountings for spectacles or eyeglasses, and dental gold or gold alloys andother precious metals used in filling, mounting or fitting of the teeth)

--opera glasses and lorgnettes2) Perfumes and toilet waters3) Yachts and other vessels intended for pleasure or sports

EXCISE TAX ON MINERAL PRODUCTS1. Mineral Products

a) On coal and coke -- P10.00/metric tonb) On all nonmetallic minerals and quarry resources -- 2% based on the actual market

value of the gross output thereof at the time of removal (if locally extracted orproduced) or the value used by the Bureau of Customs in determining tariff andcustoms duties, net of excise tax and value-added tax ( in the case of importation)

c) c) locally extracted natural gas and liquefied natural gas 2%

d) On all metallic minerals --Copper and other metallic minerals

On the 1st 3 years upon the effectivity of RA 7729 1%On the 4th and 5th years 1½%On the 6th year and thereafter 2%

--Gold and chromite 2%e) On indigenous petroleum -- 3% of the fair international market price

TITLE VIIDOCUMENTARY STAMP TAX

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A. WHAT is a DST? It is a tax on documents, instruments & paper evidencing the acceptance,

assignment, sale or transfer of an obligation, right, or property incident thereto.

I. NATURE of DST It is an excise tax because it is really imposed on the transaction than on the

document. It is paid only once. The liability to the tax and the amount thereof aredetermined from the face of the document itself.

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II. WHO are the persons liable: (M I S A T)• The ones1) M aking2) I ssuing3) S igning4) A ccepting5) T ransfering

the document, instrument or paper

III. DOCUMENTS SUBJECT TO TAX• Corporate documents • Commercial documents• Insurance policies • Deeds of sale• Special contracts • Maritime documents• Certificates • Luxuries• Other assignments and renewals

A. CORPORATE DOCUMENTS1) Original issue of shares of stock (s175)

(a) Cost of imposition is borne by the corporation originally issuing the stockcertificate

(b) Revenue Memorandum Circular #47-97 The documentary stamp tax on original issues of certificates of stock

as provided under Section 175 of the Tax Code attaches uponacceptance of the stockholder’s subscription in the capital stock of acorporation regardless of the physical issuance and delivery to thestockholder of the certificate of stock evidencing his stockholding.Therefor, taxes accrue at the time the shares are issued.

Meaning of the term “original issue” is - point at which the stockholderacquires and may exercise attributes of ownership over the stocks.

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(c) Phil. Consolidated Coconut Industries v CIR, 70 SCRA 22 Certificates of stock temporarily subject to suspensive conditions shall

only be liable for DST only when released from said conditions. Forthen and only then shall they truly acquire any practical value for theirowners.

(d) CIR v Heald Lumber Company, 10 SCRA 37 A mere transfer of surplus to capital and an increase in stated value of

the outstanding no par value shares does not constitute and issuanceof share and consequently, no additional stamp tax is due in suchincrease.

2) On proxies (s192) • Basis: each proxy document• Exemption: proxies issued at affecting the affairs of association, or

corporation organized for religious, charitable or literary purposes.

B. COMMERCIAL DOCUMENTS1) Debentures and Certificates of indebtedness (S174)

Basis: face value of document2) Bonds, debentures, certificates of stock or indebtedness issued in foreign

countries (S177) Basis: fixed tax as required by law on similar instruments when issued, sold

or transferred in the Philippines. Issued in any foreign country but sold or transferred in the Philippines

3) Certificates of profits or interest in property or accumulations (S178) Basis: face value

4) Bank Checks, drafts, certificates of deposit not bearing interest, and otherinstruments (S179) Basis: fixed on each instrument the tax applies only to inland bank checks, drafts, or certificates of deposit not

drawing interest5) All bonds, loan agreements, promissory notes, bills of exchange, drafts,

instruments and securities issued by the government or any of itsinstrumentalities, deposit substitute debt instruments, certificates of depositsbearing interest and others not payable on sight or demand (s180) Basis: Face value Exemptions:

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a.) bank notes issued for circulationb.) loan agreements and promissory notes that aggregate of which does not

exceed P250.00 executed by an individual for his purchase, oninstallment, of a house, lot, motor, vehicle, appliance or furniture, for hispersonal use or that of his family

Renewal is also subject to dst “renewal” postponement of the maturity of the obligation dealth with; an

extension of the time in which that obligation may be discharged. Tax on renewal shall be at the same rate as the tax on the original document.

6) Upon acceptance of bills of exchange and others (s181) Document taxable: any bill or exchange or order for the payment of money

purporting to be drawn in the foreign country but payable in the Philippines. Basis: Face value

7) Foreign bills of exchange and letters of credit (s182) Document taxable: all foreign bills of exchange and letters of credit drawn in

but made payable outside the Philippines. Basis: face value

8) Warehouse Receipts (s189) Basis: each warehouse receipt Exemption: warehouse receipt issued to any one person in any one calendar

month covering property the value of which does not exceed P200.9) Bills of lading or receipts (s191)

Basis: Value of the goods Exemptions: charter party, freight tickets covering goods, merchandise or

effects carried as accompanied baggage of passengers on land and watercarriers primarily engaged in the transportation of passengers.

C. INSURANCE POLICIES1) Life insurance policies (s183)

Basis: Amount insured by an such policy The tax is collectible not only on the original policy but also upon renewals No DST is due on insurance policies issued by a Phil. company to persons in

other countries. (S43,RR26) The tax is imposed upon issuance of the policy even if at that time premium

had not yet been paid. If the policy is cancelled, no refund of the tax shall be made.

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2) Property insurance policies (s184) Basis: Premium charged

3) Fidelity bonds and other insurance policies (s185) Basis: Premium charged

4) Policies of annuities and pre-need plans (s186) Annuity - Basis: Capital of the annuity Pre-need plans - Basis: Value or amount of the plan

5) Indemnity Bonds (s 187) Basis: Premium charged Exemption: such as may be required in legal proceedings (eg. Injunction,

attachment)6) Certificates (s188)

certificate of damage or otherwise issued by any public official in publiccapacity for the purpose of giving info or establishing proof of fact.

Basis: each document

D. DEEDS OF SALES1) Sales, agreements to sell, memoranda of sales, deliveries or transfer of due-bills,

certificates of obligation, or shares or certificates of stock (s176). Basis: Par value of due-bill, certificate of obligation or stock

2) Deeds of sale and conveyances of real property (s196) Basis: Tax rate based on amount Property must be located in the Philippines Deeds of partition & deeds of redemption, taxable

E. SPECIAL CONTRACTS1) Powers of attorney (s193)

Basis: Fixed tax rate Exemption: Collection of claims due from or accruing to the government of

the Philippines or the government of any province, city or municipality.2) Leases and other hiring agreement (s194)

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Basis: Fixed tax rate3) Mortgages, pledges and deeds of trust (s195)

Basis: Tax rate based on amount transactions must be effected and consummated within the Philippines tax is based on the amount secured and not on the value of property

mortgaged there must be an existing debt

4) Jai-alai, horse race tickets, lotto or other authorized numbers games (s190) Basis: each ticket

F. MARITIME DOCUMENTS Charter parties and similar instrument (s197)

V. EXEMPTIONS: (SICFAGOW)1. SOLE USE - Certified copies and other certificates placed upon documents,

instruments, and papers by the national, provincial, city or municipalgovernments made in the instance and for the sole use of some other branch ofthe national, provincial, city or municipal governments

2. GOVERNMENT & INDIGENT DOCUMENTS FILED IN COURT - Papers anddocuments filed in courts by or for the national, provincial, city or municipalgovernments, affidavits of poor persons for the purpose of proving poverty

3. COMPULSORY INFORMATION FOR STATISTICAL PURPOSES - Statementsand other compulsory information required of persons or corporations by therules and regulations of the national, provincial city or municipality governmentexclusively for statistical purposes and which are wholly for the use of the bureauin which they are filed, and not at the instance or for the use or benefit of theperson filing them

4. FRATERNAL/BENEFICIARY ORGANIZATION INSURANCE POLICIES OFANNUITIES - Policies of insurance of annuities made by a fraternal or beneficiarysociety, order, association or cooperative company, operated on the lodgesystem or local cooperation plan and organized and conducted solely by themembers thereof for the exclusive benefit of each member and not for profit

5. CERTIFICATES OF THE ASSESSED VALUE OF LANDS NOT EXCEEDINGP200 - Certificates of the assessed value of lands not exceeding P200 in valueassessed, furnished by the provincial, city or municipal treasure to applicants forregistration of the title to land.

6. CERTIFICATES OF OATHS ADMINISTERED TO ANY GOVERNMENTOFFICIAL IN HIS OFFICIAL CAPACITY - Certificates of oaths administered toany government official in his official capacity or of acknowledgment by anygovernment official in the performance of his official duties, written appearance inany court by any government official in his official capacity.

7. CERTIFICATES OF THE ADMINISTRATION OF OATHS FOR PAPERAUTHENTICITY - Certificates of the administration of oaths to a person as to theauthenticity of a paper required to be filed in court by any person, whether theproceedings be civil or criminal

8. WRITTEN APPEARANCES - Written appearances in any court by anygovernment official in his official capacity

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VI. PAYMENT OF DOCUMENTARY STAMP TAXA. WHO are required to accomplish and file a dst DECLARATION under BIR Form2000

1) Any person liable to pay dst on a taxable document/transaction when tax dueis >P200.

2) Any Revenue Collection Officer, duly authorized to sell loose dst’s3) Any person authorized to use DST Metering Machine

B. WHEN to file RETURN1) within 10 days after close of month when taxable document was (misat. see

III)2) within 5 days after close of each week for Revenue Collection Officers3) each time ds are purchased for reloading, for dst metering machine

authorized personsC. WHEN to PAY

1) general rule: simultaneous with filing of return2) exception: purchase and actual affixture

Actual Stamping System: loose documentary stampsConstructive Stamping System: constructive affixtureprinting through a DS metering machine

D. WHERE to FILE/PAY1) authorized agent bank within the jurisdiction of the revenue district office

having jurisdiction over the residence or principal place of business of thetaxpayer

2) revenue district officer, collection agent or his duly authorized treasurer of thecity or municipality in which the taxpayer has his legal residence or principalplace of business

E. AFFIXTURE1) In general: DS is affixed on the original copy of the document2) Exception: duplicate copy when the same has been substituted and used in

place of the originalF. FAILURE TO STAMP TAXABLE DOCUMENT

1) will not render the document void2) but document cannot be:3) recorded in government offices4) cannot be accepted in evidence in court

G. PENALTY 25% surcharge plus 20% interest per annum

H. DUTY OF NOTARY PUBLIC Not to add his jurat or acknowledgment to any document subject to

documentary stamp tax unless the proper documentary stamps are affixedthereto and cancelled.

LINCOLN PHILIPPINE LIFE vs CA (GR 118043, July 23, 1998)

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Facts: Lincoln is a domestic corp. engaged in life insurance business. In 1984, it issued50,000 shares as dividends, with par value of P100 or a total of P5M. Lincoln paid DSTon each certificate based on its par value.

Issue: What is the proper basis of DST, par value or book value of the shares?Held: There is no basis to treat stock dividends as a distinct class from ordinary shares

of stock since §224 of the NIRC merely distinguishes certificates of stock & not theshares themselves as one with par value and one without. There is therefore noreason for determining the actual value of such dividends for purposes of DST if thecertificates indicate a par value. The tax is levied upon the specific transactions whichgives rise to the original issuance but on the privilege of issuing certificates of stock.

PHIL. HOME ASSURANCE vs CA (GR 119446, Jan 21, 1999)

Facts: Petitioners are domestic corps. engaged in the insurance business. They claima refund on the DST they paid for insurance policies they issued. They maintain thatsince the premiums on the policies were not paid, they are considered as never tohave taken effect pursuant to the Insurance Code & therefore, no DST were duethereon.

Issue: Was DST properly levied?Held: YES. DST is levied on the exercise of the privilege executing specific

instruments, and must be paid upon the issuance of the instruments, without regard towhether the contracts which gave rise to them are rescissible, void, voidable orunenforceable.

TITLE VIII REMEDIES

I. Civil Remedies for Collection by the Government: (Sec. 205)1. Distraint of goods, chattels or effects2. Levy upon real property and interest therein3. Civil or criminal action

One or all of the remedies may be pursued simultaneously in the discretion ofrevenue authorities

Distraint or levy NOT availed of where the amount of tax involved is NOT MOREthan P100

Prescriptive Periods:1) Assessment of Tax Liability

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(a) 3 years from the last day prescribed by law for filing when return is filed:1. before the last day prescribed by law or2. on the last day prescribed by law

(b) 3 years from filing of return when the return is filed beyond the period prescribedby law (Sec. 203)

(c) 10 years after the discovery of the falsity, fraud or omission in case of:1. false or fraudulent return with intent to evade tax, or 2. failure to file a return (Sec. 222 a)

The following are covered by the general rule (Sec. 203): false return-filed with no intent to evade tax fraudulent return-filed with intent to evade tax

(d) within the period agreed upon, when before the expiration of the period in Sec.203 for the assessment of tax, both the Commissioner and the taxpayer haveagreed in writing to its assessment after such time. Such period agreed uponmay be extended by written agreement before the expiration of the previousperiod. (Sec.222 b)

2) Collection of Tax Liability(a) 3 years from assessment (according to Atty. Bañez)

5 years from assessment (according to Abella/Abiog/Sarmiento book)

(b) 5 yrs from assessment in case of a false or fraudulent return or failure to file areturn

(c) in case of an agreed pd. for assessment, collection shall be within the pd. agreedupon in writing before the expiration of the 5 yr. Pd. (Sec. 222 c,d)

Suspension of Prescriptive Periods: (Sec. 223)1) Periods suspended:

(a) periods for assessment in Sec. 203 and 222(b) beginning of distraint or levy (c) proceeding in court for collection

2) Grounds for suspension of prescriptive periods [ R LOP2 ]a) Commissioner is Prohibited from making the assessment or beginning distraint or

levy or a proceeding in court and for 60 days thereafterb) Taxpayer requests for Reinvestigation which is grantedc) Taxpayer cannot be Located in the address given in the return filed, but if the

taxpayer informs the Commissioner of a change in address the prescriptiveperiod will not be suspended

d) When the warrant is served upon the taxpayer and no Property could be located

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e) When the taxpayer is Out of the Phils.

When may taxes be compromised? [ VIC ]1. A reasonable doubt as to the Validity of the claim against the taxpayer exists; or2. The financial position of the taxpayer demonstrates a clear Inability to pay the

assessed tax. (Sec. 204 A)3. Criminal violations EXCEPT:

a) those already filed in courtb) those involving fraud (Sec 204 B)

Limitations for compromise of tax liability: (Sec. 204 A)1. Minimum compromise rate:

a) In case of financial incapacity, 10% of basic assessed taxb) In other cases, 40% of basic assessed tax

2. Subject to approval of Evaluation Board (composed of Commissioner and 4 DeputyCommissioners):a) when basic tax involved exceeds P1,000,000 orb) where the settlement offered is less than the prescribed minimum rates

When may taxes be abated or cancelled? [ UJ ]1. The tax or any portion thereof appears to be Unjustly or excessively assessed; or2. The administration and collection costs involved do not Justify the collection of the

amount due (Sec. 204 B)

Constructive Distraint (only for personal property):1) When may this occur? (RIRHO)

a) taxpayer is Retiring from any business subject to taxb) taxpayer is Intending to leave the Phil. or to Remove his property therefromc) taxpayer Hides or conceals his propertyd) taxpayer performs any act tending to Obstruct the proceedings for collection of

any tax due

2) Procedure(a) Require the taxpayer or any person having control of the property to

1. sign a receipt covering property distrained2. obligate himself to preserve the same intact and unaltered3. not to dispose of the property in any manner, without the authority of the

Commissioner (b) Where taxpayer or person in possession refuses to sign:

1. distraining officer shall prepare a list of the property distrained2. in the presence of 2 witnesses, leave a copy in the premises where the

property is located (Sec. 206)

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Distraint of Personal Property

WHO MAY EFFECT DISTRAINT AMOUNT INVOLVEDCommissioner or his duly authorizedrepresentative

In excess ofP1,000,000

Revenue District Officer P1,000,000 or less1) Property Siezed or Distrained

a) goods, chattels, effects and other personal property b) including stocks and other securities, debts, credits, bank accounts, interests in

and rights to personal property2) Report on the Distraint

a) by the distraining officer1. submitted within 10 days from receipt of the warrant2. submitted to the Revenue District Officer and to the Revenue Regional

Directorb) by the Revenue Regional Director-consolidated report, as may be required by the

Commissioner3) The order of Distraint may be lifted by the Commissioner or his representative (Sec.

207 A)

4) Procedure(a) Goods, effects, chattels and other personal property

1. a copy of an account of the property distrained, signed by the officer, shall beleft either from the owner or the person from whom the property was taken orat the dwelling or place of business of such person and with someone ofsuitable age and discretion

2. statement of the sum demanded3. time and place of sale

(b) Stocks and other Securities1. serving a copy of the warrant upon the taxpayer AND upon the president,

manager, treasurer or other responsible officer of the issuing corporation,company, association

(c) Debts and Credits1. leaving a copy of the warrant with the person owing the debts or having in his

possession such credits or his agent2. warrant shall be sufficient authority to pay the Commissioner the amount of

such debts or credits(d) Bank accounts (garnishment)

1. serve a warrant of garnishment upon the taxpayer AND upon the president,manger, treasurer or other responsible officer of the bank

2. bank shall turn over to the Commissioner so much of the bank accounts asmay be sufficient (Sec. 208)

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Levy on Real Property1. When exercised: before, simultaneously or after the distraint of personal property

belonging to the taxpayer

2. Procedure:(a) internal revenue officer shall prepare a duly authenticated certificate showing the

name of taxpayer, amounts of tax and penalty due. Enforceable throughout thePhilippines

(b) officer shall write upon the certificate a description of the property upon whichlevy is made

(c) written notice of levy shall be mailed or served upon1. the Register of Deeds where the property is located and 2. the taxpayer or agent/manager of the business in respect to the tax liability or

to the occupant of the property(d) If personal property of taxpayer is not sufficient to satisfy the tax due, levy on real

property shall proceed within 30 days after distraint(e) Report on levy

1. by levying officeri. submitted within 10 days from receipt of warrantii. submitted to the Commissioner or his representative

2. by the Revenue Regional Director-- consolidated report, as may be requiredby the Commissioner

(f) The warrant may be lifted by the Commissioner or his representative

Tax Lien: superior to judgment claim of private property attaches not only from the time the warrabt was served BUT from the time tax was

due and demandable1. Nature-- a lien in favor of the Government of the Philippines when a person liable to

pay a tax neglects or fails to do so upon demand2. Duration-lien exists from the time assessment is made by the Commissioner until

paid, with interests, penalties and costs that may accrue in addition thereto3. Extent-upon all property and rights to property belonging to the taxpayer4. Effectivity against third persons-only when notice of such lien is filed by the

Commissioner in the Register of Deeds in the province/city where the property issituated (Sec. 219)

Civil and Criminal Actions:1. Brought in the name of the Government of the Philippines2. Conducted by legal officers of the BIR3. In case of actions for recovery of taxes or enforcement of a fine, penalty or forfeiture,

must be filed with the approval of the Commissioner (Sec. 220)

Forfeiture: (Sec. 224-225)How enforced Sale

Chattels andRemovable fixtures

Seizure, sale ordestruction of specificforfeited property

Judgment ofcondemnation and salein a legal action, civil or

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criminalReal Property In the same manner and

under the sameconditions as sales ofpersonal propertydistrained

Distilled Spirits,liquors, cigars,cigarettes manuf.Products of tobaccoand apparatus usedfor their production

Upon forfeiture, mayorder of the the salemay be health orprejudicial

be destroyed byCommissioner whereinjurious to public to lawenforcement

Other articlessubject to excise taxwhich have beenmanuf. Or removedin violation of thisCode; dies forprinting or makingfake revenuestamps and labels

Upon forfeiture may besold or destroyed at thediscretion of theCommissioner *forfeitedproperty shall not bedestroyed until at least20 days from seizure

II. Remedies of a Taxpayer1. Administrative

a) protest of assessmentb) claim for refund

2. Judicial Relief

Requisites of a valid assessment:1. in writing2. must state the facts and law upon which it is based (Sec. 228)

Kinds of Assessment:1. Post Reporting notice-Initial findings are presented and discussed with the taxpayer;informal conference can be held2. Pre-assessment Notice

Instances where a pre-assessment notice NEED NOT be given: (MET DC)a) when the finding for deficiency tax is a result of Mathematical error in the

computation of tax appearing on the face of the return; orb) Discrepancy is determined between the tax withheld and the amount actually

remitted by the withholding agentc) a taxpayer who opted to claim a refund or tax credit was determined to have Carried

over and applied the amount against succeeding tax liabilitiesd) Excise tax has not been paid

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e) an article locally purchased or imported by an exempt person has been sold, tradedor Transferred to non-exempt persons

1. Final Assessment(Revenue Regulation No. 12-85 and Sec. 228)*pls. read Revenue Regulation No. 12-85 for the procedure of assessment

Protest of Assessment:1. File a request for reinvestigation or reconsideration within 30 days from receipt of the

assessment request for reinvestigation-a plea for re-evaluation of an assessment on the basis

of newly discovered or additional evidence that a taxpayer intends to present inthe reinvestigation. Involves a question of fact or law or both.

request for reconsideration-a plea for re-evaluation of the assessment on thebasis of existing records without need of additional evidence. Involves a questionof fact or law or both. (Revenue Regulation No. 12-85)

2. Within 60 days from filing of protest, all relevant supporting documents should havebeen submitted, otherwise, the assessment shall become FINAL (cannot beappealed). (Sec. 228)

Appeal of Protest to the CTA (Judicial Relief): (Sec. 228)1. Grounds:

a) if the protest is denied in whole or in part orb) is not acted upon within 180 days from submission of documents

2. Appellate Court: Court of Tax Appeals3. Period to appeal:

a) within 30 days from receipt of decision denying the protest orb) 30 days from the lapse of 180 day period

4. Effect of failure to appeal: the decision shall be final, executory and demandable

Parties Entitled to RefundGeneral Rule: The person entitled to ask for a refund is the taxpayer who paid the

same.Exceptions:Case Who is entitled to ask

for refundNotes

Where tax hasbeen shifted

The taxpayer (even iftax has been actuallyshifted by the taxpayerto his customers as insales tax an even if thetax has been billed asa separate item in theinvoice (CIR vsAmerican Rubber)

Because the sales tax isimposed directly on the selleras an occupation tax for sellingOnce recovered, the sellermust hold the refunded taxesin trust for the individualpurchasers who advancedpayment thereof and whosename must appear on hisrecords

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Where payer isnot the taxpayer(e.g. theaterowners who paidillegal municipaltaxes billed toand collectedfrom theatergoers)

Theater goers are notentitled to claim refundof such taxes (Medinavs City of Baguio)

Where payer iswithholding agent

Withholding agent(CIR vs Procter &Gamble)

"Taxpayer" is any personsubject to tax imposed by thistitle (income tax). Thewithholding agent is directlyand independently liable forthe correct amount of tax thatshould be withheld, and ofdeficiency assessments,surcharges and penalties

Where donor'stax was assumedby donee

Donee is the properparty to claim refund ofthe donor's tax (even ifthe tax was advancedby the donor)

When may taxes be refunded or credited?1. Taxes refunded or credited: (EPWroSUn)

a) Taxes erroneously or illegally receivedb) Penalties imposed without authorityc) Any sum alleged to have been excessively or in any manner wrongfully collectedd) Refund the value of internal revenue stamps when returned in good condition by

the purchasere) Redeem or change unused stamps rendered unfit for use and refund their value

upon proof of destruction, in the discretion of the Commissioner2. Procedure for credit/refund

a) taxpayer files in writing with the Commissioner a claim for credit or refundb) filed within 2 yrs after the payment of the tax or penaltyc) a return filed showing an overpayment shall be considered a written claim for

credit or refund3. Suit or proceeding for refund

a) a claim for refund or credit has been filed with the Commissionerb) the suit may be maintained whether or not such tax/penalty/sum has been paid

under protestc) in any case, suit must be filed within 2 yrs. from date of payment of the

tax/penalty regardless of any supervening cause that may arise after payment

d) the Commissioner may, even without a written claim, refund or credit a tax, whereon the face of the return upon which payment was made, payment appears to be

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erroneous. (Sec. 204 C , 229)4. Tax Credit Certificate

a) may be applied against any internal revenue tax, except withholding taxesb) original copy is surrendered to the revenue officerc) no tax refund will be given resulting from availment of incentives granted by law

where no actual payment was made (Sec. 204 C)5. Forfeiture of cash refund/tax credit

a) Forfeiture of refund in favor of the government when a refund check or warrantremains unclaimed or uncashed within 5 yrs. from date of mailing or delivery

b) Forfeiture of Tax Credit-a tax credit certificate which remains unutilized after 5yrs. from date of issue, shall be invalid, UNLESS revalidated. (Sec. 230)

Commencement of 2-year period under Sec . 204(3) and 229Case 2-year period starts from NotesIf the tax soughtto be refunded isillegally orerroneouslycollected

From date tax was paid(CIR v Victorias Milling)

If the tax is paidin installment oronly in part

From date of the last or finalinstallment or payment (CIRvs Prieto; CIR v Palanca)

There is no paymentuntil the whole/entiretax liability is fully paid

If the taxpayermerely made adeposit

From conversion of thedeposit to payment (UnionGarment v Coll)

Merely making adeposit is notequivalent to paymentuntil the amount isactually applied to thespecific purpose forwhich it was deposited

If tax has beenwithheld fromsource (throughthe withholdingtax system)

From date it falls de at theend of the taxable year(Gibbs vs CIR) He isdeemed to have paid his taxliability when the same fallsdue at the end of thetaxable year (Aguilar vsCA)

A taxpayer whocontributes to thewithholding tax systemperforms andextinguishes his taxobligation for the yearconcerned. In otherwords, he is paying histax liabilities for thatyear.

Corporatetaxpayer

At the earliest, on the dateof the filing of the adjustedfinal return (ACCPAInvestment vs CA) The 2-yrperiod provided in Sec 229should be computed fromthe time of filing of theAdjusted Return or Annual

It is only then that thecorporation canascertain whether itmade profits orincurred losses in itsbusiness operations

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ITR and final payment ofincome tax (CIR vs TMXSales)

If tax was noterroneously orillegally paid butthe taxpayerbecame entitledto refund becauseof superveningcircumstances

From the date the taxpayerbecomes entitled to refundand not from the date ofpayment (CIR vs DonPedro Central Azucarera)

Before the right torefund or credit arises,there is absolutely nobasis to file a claim withthe CIR or commencea suit in court

Action to Contest Forfeiture of Chattel: (Sec.231)BEFORE THE SALE AFTER THE SALE

Period to file anytime before sale ordestruction of property

Within 6 months from thesale

Party againstwhom theaction is filed

the person seizing theproperty or havingpossession thereof

the person seizing theproperty or havingpossession thereof

Cause ofAction

Enjoin the sale Recover net proceedsrealized at the sale

Add’l. Reqt. File a bond

Jurisdiction of the Court of Tax Appeals:1. Decisions of the Commissioner of Internal Revenue in cases involving disputed

assessments, refunds of internal revenue taxes, fees or other charges/penaltiesimposed, or other matters arising under the NIRC or any law administered by theBIR

2. Decisions of the Commissioner of Customs in cases involving liability for customsduties, fees or other money charges; seizure, detention of release of propertyaffected; fines, forfeitures or other penalties imposed in relation thereto; or othermatters arising under the Customs Law or other law administered by the Bureau ofCustoms (RA 1125 as amended by RA 3457)

Sale of Personal Property Distrained and of Real Property Levied upon(Sections 209--216)

DISTRAINT OFPERSONAL PROPERTY

LEVY OF REALPROPERTY

I. Advertisement/NoticeWhen made Advertisement period: 20

dayswithin 20 days after the levyadvertisement period shallbe at least 30 days

How made A notice shall be exhibitedin not less than 2 public

posting a notice at the mainentrance of the

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places in themunicipality/city wheredistraint is made; one placeshall be at the office of theMayor

municipal/city building ANDin a public/conspicuousplace in the district wherethe property is located b)publication, once a week for3 weeks in a newspaper ofgeneral circulation in themunicipality/city where theproperty is located

Contents time and place of salearticles distrained

a)amount of tax andpenalties due b) name oftaxpayer against whomtaxes are levied c) shortdescription of the propertyto be sold

II. SaleTime of Sale shall not be less than 20

days after notice to theowner or possessor of theproperty AND publication orposting of notice

After the periods for postingand publication have beencomplied with

Where made At the place fixed in thenotice

at the main entrance of themunicipal building or cityhall or on the premises tobe sold as the notice of saleshall specify

How made a) officer shall sell theproperty at a public auctionto the highest bidder forcash or, with the approval ofthe Commissioner, throughduly licensed commodity orstock exchanges b) In caseof stocks and othersecurities, the officer shallexecute a bill of sale whichhe shall deliver to the buyerand a copy furnished to theissuing corporation. Theissuing corporation shallmake a corresponding entryin its books and if requiredto do so, issue newcertificates of stock

Excess/Residue of propertysold

a)Residue over and abovewhat is required to be paid(tax due and expenses)

In case the proceeds of thesale exceeds the claim andcost of sale, the excess

29



shall be turned over to theowner of the property sold.b)Expenses chargeableshall include actualexpanses of seizure andpreservation of propertypending sale.

shall be turned over to theowner of the property

Report of Sale made in writing within 2days, by the officer makingthe sale, submitted to theCommissioner.

a) within 5 days after thesale, a return made by theofficer making the sale shallbe entered in the records ofthe Revenue CollectionOfficer, Revenue DistrictOfficer and Rev. Reg.Director b) RevenueCollection Officer shalldeliver to the purchaser acertificate from his recordsshowing: i. proceedings ofsale ii. description ofproperty sold iii. name ofpurchaser iv. amount oftaxes, penalties and interest

III. Release ofProperty to besold

If prior to the sale, all propercharges are paid to theofficer conducting the sale,the property shall berestored to the owner.

At any time before the dayfixed for the sale, thetaxpayer may discontinuethe sale by paying taxes,penalties and interest due

IV. Forfeiture/Purchase by governmentWhen made a)when the bid for the

property during the sale isnot equal to the amount oftax or b)the bid is less thanthe actual market value ofthe goods offered for sale

no bidder or highest bid isinsufficient to pay theamount due

How made Commissioner or hisrepresentative maypurchase the property inbehalf of he NationalGovernment for the amountdue thereon

a) revenue officerconducting sale shalldeclare the propertyforfeited to the governmentin satisfaction of the claimb) within 2 days fromforfeiture, officer shall makea return of the proceedingsc) Register of Deeds, uponregistration of declaration offorfeiture shall transfer titleof the property to the

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governmentRedemption within 1 year from date of

forfeiture redeemed by thetaxpayer or anyone in hisbehalf effected by paying tothe Commissioner orRevenue Collection Officerthe full amount of taxes,penalties plus interest andcosts of sale if noredemption made, forfeitureis absolute

Resale a)May be resold by theCommissioner or his deputyand b) proceeds remitted tothe National Treasury andaccounted for as internalrevenue

a)Public Auction--noticegiven of sale for not lessthan 20 days b)Private salecan be made with priorapproval from the Sec. OfFinance c)In either case,proceeds of sale shall bedeposited with the NationalTreasury

V. Redemption of Property SoldPeriod ofredemption

One year from date of sale *owner shall not be deprivedof possession of propertysold and shall be entitled toincome thereof until theexpiration of the period forredemption

Who mayredeem

Delinquent taxpayer oranyone for him

Procedure a) pay to the RevenueDistrict Officer the amountof taxes, penalties andinterest thereon from date ofdelinquency to date of saleb) pay also interest onpurchase price at the rate of15% p.a. form date ofpurchase to date ofredemption

Rights ofPersonredeeming theproperty

a) delivery of the certificateissued to the purchaser b)certificate of redemptionfrom the Revenue DistrictOfficer c) property

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redeemed shall be free fromlien of such taxes andpenalties

CIR vs CA, CTA & BIR (GR 117254, Jan 21, 1999)

Facts: On April 2, 1986, Paramount filed its Annual ITR. It previously paid an amountrepresenting its quarterly income tax. The amount paid was greater than the incometax due on the return. Thus Paramount's return showed a refundable amount. OnApril 14, 1988, BPI, as Paramount's Liquidator, filed a letter claiming refund.

Issue: When will be the 2-yr prescriptive period refund claims commence, from April 2,1986 when the Annual ITR was filed or April 15, 1986, when the Adjustment Returncould still be filed without incurring delay in under §70 (b) of the NIRC?

Held: §230 of the NIRC provides for a 2-yr prescriptive period to be counted " from thedate of payment of tax" for actions for refund of corporate income tax. Thus, the 2-yrperiod should be reckoned from the actual filing of the Adjustment Return or AnnualITR, because at this point, it can be determined whether there has been anoverpayment of tax. Thus, the claim for refund has already prescribed.

PBCom vs CIR (GR 112024, Jan 28, 1999)

Facts: PBCom filed its quarterly ITR for the 1st & 2nd qtrs. of 1985. Later, it sufferedlosses and reported a net loss for 1985 & 1986. However, it earned rent for whichtaxes were previously withheld by their lessees. On Aug 1987, it requested for a taxcredit representing tax overpayments in the 1st & 2nd qtrs of 1985. On July 1988, it alsoclaimed refund of the creditable taxes withheld from the 1985 & 1986 rentals.

Issue: WoN PBCom, relying on RMC #7-85 changing the prescriptive period for taxrefunds from 2 to 10 yrs. is barred by prescription.

Held: YES. Taxes are the lifeblood of the nation, thus the modes to enforce collectionshould be summary & rarely interfered with. From the same perspective, claims forrefund should be exercised within the time fixed by law in order not to unduly delay theBIR in its collection functions. §229 of the NIRC provides for a 2-yr prescriptive pd.The revenue regulation on the other hand, was beyond the provisions of the law. Anerroneous interpretation of the law does not vest a taxpayer with a shield againstjudicial action. Thus PBCom was already barred from filing its claim.

CIR vs BF GOODRICH (GR 104171, Feb. 24, 1999)

Facts: The BIR assessed a deficiency donor's tax against BF Goodrich for a sale ofland it concluded more than 6 yrs. earlier. Goodrich claims that the BIR's right tocollect has prescribed, having gone beyond the 5-yr period prescribed by §331 of theNIRC.

Issue: WoN CIR's right to collect has prescribed?Held: It is clear that the assessments were issued beyond the 5-year prescriptive

period. For the purpose of safeguarding taxpayers from any unreasonableexamination, investigation or assessment, our tax laws provides a statute of limitation

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in the collection of taxes. Being a remedial measure, the law on prescription should beliberally construed in order to afford such protection.

TITLE XSTATUTORY OFFENSES AND PENALTIES

Chapter I - ADDITIONS TO THE TAX

Additions to the tax are:1. Civil Penalties

a) 25% of the amount due for RIDT;b) 50% of the tax or the deficiency tax for willful neglect to file or false or fraudulent

return willfully made.c) Interest - 20% per annum on any unpaid amount of tax or such higher rate as

may be prescribed by the rules and regulations.2. From the date prescribed for payment until the amount is fully paid.

a) Deficiency Interestb) Delinquency Interestc) Interest on Extended Payment

3. Date of notice and demand until it is paid.a) Failure to file certain Information Returns

P 1,000 for each failure but not exceeding P 25,000 during a calendar yr.b) Failure of withholding agent to Collect and Remit tax.

Penalty: Amt. of tax not withheld, or not accounted for and remitted plus otherpenalties.

c) Failure of withholding agent to Refund excess withholding tax. Penalty: Amount of refund which was not refunded to the employee resulting

from the any excess of the amount withheld over the tax actually due on theirreturn.

General Provisions 1) The additions to the tax or deficiency tax apply to all taxes, fees and charges

imposed in this Code. 2) The amount so added to the tax shall be collected at the same time, in the same

manner and as part of the tax.3) If the withholding agent is the Government or any of its agencies, political

subdivisions or instrumentalities, or a government-owned or -controlled corporation,the employee responsible for the withholding and remittance of the tax shall bepersonally liable for the additions to the tax.

4) The term ‘person’, includes an officer or employee of a corporation who as suchofficer, employee or member is under a duty to perform the act in respect of whichthe violation occurs.

1. Civil Penalties (Sec. 248)A) Penalty: 25% of the amount due, in addition to the tax required to be paid.

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In case of the following: (RIDT) (lets get RID of T ax)a) Failure to file any Return and pay the tax on the date prescribed; orb) Filing a return with an Internal revenue officer other than those with whom the

return is required to be filed, unless otherwise authorized by theCommissioner; or

c) Failure to pay the Deficiency tax within the time prescribed for its payment inthe notice of assessment; or

d) Failure to pay on or before the date prescribed for its payment:1. the full or part of the amount of Tax shown on any return required to be

filed;2. the full amount of tax due for which no return is required to be filed.

B) Penalty: 50% of the tax or of the deficiency tax, in case any payment has been madeon the basis of a return before the discovery of the falsity or fraud. In case of: (FiFa)

a) Willful neglect to File the return within the period prescribed; orb) False or fraudulent return is willfully made, in case any payment has been

made on the basis of such return before the discovery of the falsity or fraud. Prima facie evidence of a false or fraudulent return as determined by

the Commissioner pursuant to the rules and regulations promulgatedby the Sec. of Finance:

1. substantial underdeclaration of taxable sales, receipts orincome - failure to report sales, receipts or income in anamount exceeding 30% of that declared per return

2. substantial overstatement of deductions - claim of deductionsin an amount exceeding 30% of actual deductions

2. Interest (Sec. 249)A) There shall be assessed and collected an Interest at 20% per annum on any unpaid

amount of taxB) or higher rate prescribed by rules and regulations from the date prescribed for

payment until the amount is fully paid.C) from the date prescribed for its payment until the full payment.

(a) Deficiency Interest in the tax due (b) Delinquency Interest. - In case of failure to pay:

1. tax due on any return required to be filed, or2. tax due for which no return is required, or3. A deficiency tax, or any surcharge or interest thereon on the due date

appearing in the notice and demand of the Commissioner.D) interest shall form part of the tax.

Interest on Extended Payment.1) any person who is qualified and elects to pay the tax on installment but fails to pay

the tax, or any installment, or any part on or before the date prescribed; or2) where the Commissioner has authorized an extension of time within which to pay a

tax or a deficiency tax or any part thereof,

34



3) from the date of notice and demand until it is paid.

3. Failure to File Certain Information Returns (Sec. 250) A) Penalty: P 1,000 for each failure B) The aggregate amount for all such failure shall not exceed P 25,000 during a

calendar yearC) Upon notice and demand by the CommissionerD) Unless it is shown that such failure is due to reasonable cause and not to willful

neglect.In the case of each failure to file:

1) information return;2) statement or list;3) keep any record;4) supply any information

E) required by this Code or by the Commissioner on the date prescribed thereof.

4. Failure of a Withholding Agent to Collect and Remit Tax (Sec. 251)A) Penalty: Amount of the tax not withheld, or not accounted for and remitted plus other

penalties.B) Liable only upon conviction

In case of the following:1. Any person required to withhold, account for, and remit any tax; or 2. Who willfully fails to withhold such tax, or account for and remit such tax; or 3. Aids or abets in any manner to evade any such tax or the payment thereof,

5. Failure of a Withholding Agent to Refund Excess Withholding Tax. (Sec.252) A) Penalty: Amount of refund which was not refunded to the employee resulting from

any excess of the amount withheld over the tax actually due on their return plus otherpenalties. In case: Any employer/withholding agent fails or refuses to refund excess

withholding tax.

CHAPTER II - CRIMES, OTHER OFFENSES AND FORFEITURES

Crimes:1. Attempt to evade or defeat tax.2. Failure to file return, supply correct and accurate information, pay tax, withhold and

remit tax and refund excess taxes withheld on compensation.3. Penal liability of corporation.4. Penal liability for making false entries, records, or reports, or using falsified or fake

accountable forms.5. Unlawful pursuit of business.6. Illegal collection of foreign payments.

35



7. Unlawful possession of cigarette paper in bobbins or rolls, etc.8. Unlawful use of denatured alcohol.9. 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.10. Unlawful possession or removal of articles subject to excise tax without payment of

the tax.11. Failure or refusal to issue receipts or sales or commercial invoices, violations related

to the printing of such receipts or invoices and other violations.12. Offenses relating to stamps.13. Failure to obey summons.14. Declarations under penalties of perjury.

Other crimes and offenses:1. Misdeclaration or misrepresentation of manufacturers subject to excise tax.2. Forfeiture of property used in unlicensed business or dies used for printing false

stamps, etc.3. Forfeiture of goods illegally stored or removed.

General Provisions (Sec. 253) 1. Any person convicted of a crime under this Code is liable for the payment of the tax

and is subject to the penalties imposed herein.2. Payment of the tax due after apprehension is not a valid defense in any prosecution

for violation of any provision of this Code or in any action for the forfeiture of untaxedarticles.

3. A person is liable in the same manner as the principal when he: a) willfully aids or abets in the commission of a crime penalized herein or b) causes the commission of any such offense by another.

4. If the offender is not a citizen of the Philippines:a) he shall serve the sentence; andb) deported immediately after serving the sentence without further proceedings for

deportation.

5. If he is a public officer or employee:a) the maximum penalty prescribed for the offense shall be imposed; andb) he shall be dismissed from the public service and perpetually disqualified from

holding any public office, to vote to participate in any election. 6. If the offender is a Certified Public Accountant, his certificate as a Certified Public

Accountant shall, upon conviction, be automatically revoked or cancelled.7. In the case of associations, partnerships or corporations, the penalty shall be

imposed on the partner, president, general manager, branch manager, treasurer,officer-in-charge, and employees responsible for the violation.

8. The fines to be imposed for any violation of the provisions of this Code shall:a) not be lower than the fines imposed herein or b) twice the amount of taxes, interests and surcharges due from the taxpayer,

whichever is higher.

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Attempt to Evade or Defeat Tax. (Sec. 254)A. Penalty, upon conviction: Fine - P30,000 or 100,000; and Imprisonment - 2 to 4

years; Plus other penalties Who is liable: Any person who willfully attempts in any manner to evade or

defeat any tax or the payment thereof.A. The conviction or aquittal obtained under this Section shall not be a bar to the filing

of a civil suit for the collection of taxes.

Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold andRemit Tax and Refund Excess Taxes Withheld on Compensation. (Sec. 264)A. Penalty, upon conviction: Fine - P10,000 or more; and Imprisonment - 1 to 10 years;

Plus other penalties Person liable: Any person required:

1. to pay any tax, 2. make a return, 3. keep any record, or 4. supply correct and accurate information,

Offense: willfully fails to 1. pay tax, 2. make a return, 3. keep the record, 4. supply such correct and accurate information, 5. withhold or remit taxes withheld, 6. refund taxes withheld on compensation, at the time or times required.

B. Penalty, upon conviction: Fine - P10,000 - 20,000; and Imprisonment - 1 to 3 years;Plus other penalties

Person liable: Any person who: 1. attempts to make it appear for any reason that he or another has in fact filed a return

or statement, or 2. actually files a return or statement and subsequently withdraws the same return or

statement after securing the official receiving seal or stamp of receipt of an internalrevenue office wherein the same was actually filed.

Penal Liability of Corporations (Sec 256)A. Penalty, upon conviction: Fine - P50,000 - 100,000; In addition to the penalties

imposed upon the responsible corporate officers, partners, or employees.Who is liable: 1. Any corporation, 2. association or 3. general co-partnerships liable for any of the acts or omissions penalized under this

Code.

Penal Liability for Making False Entries. Records or Reports, or Using Falsified or FakeAccountable Forms (Sec. 257) A. Penalty, upon conviction for each act or omission: Fine - P50,000 - 100,000; and

Imprisonment - 2 to 6 years;

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1) Offender is a Certified Public Accountant, his certificate shall be automaticallyrevoked or cancelled upon conviction.

2) In the case of foreigners, conviction under this Code shall result in his immediatedeportation after serving sentence, without further proceedings for deportation.

Who is liable:1) Any financial officer or2) Independent Certified Public Accountant engaged to examine and audit books of

accounts of taxpayers under Sec.232 (A)and3) Any person under his direction.

Offense: (FVC) (combine Fidel V. Ramos with Fidel Castro equals Fidel V. Castro thusFVC)

1) Willfully Falsifies any report or statement bearing on any examination or audit2) Renders a report, including exhibits, statements, schedules or other forms of

accountancy work which has not been Verified by him personally or under hissupervision or by a member of his firm or by a member of his staff in accordancewith sound auditing practices, or

3) Certifies financial statements of a business enterprise containing an essentialmisstatement of facts or ommission in respect of the transactions, taxableincome, deduction and exemption of his client; or

B. Any person who (NOOFTANMER) rearranged to (FOOTMAN REN) 1) Not an independent Certified Public Accountant or a financial officer according to

Sec. 232 (B), examines and audits books of accounts of taxpayers; or2) Offers to sign and certify financial statements without audit; or3) Offers any taxpayer the use of accounting bookkeeping records for internal

revenue purposes not in conformity with the requirements prescribed, or4) Knowingly makes any False entry or enters any false or fictitious name in the

books of accounts or records mentioned in the preceding paragraphs; or5) Keeps Two (2) or more sets of such records or books of accounts; or6) Commits an Act or omission, in violation of the provisions of this Section;7) Fails to keep the books of accounts or records mentioned in Section 232 in a

Native language, English or Spanish, or to make a true and complete translationas required in Section 234 of this Code, or whose books of accounts or recordskept in a native language, English or Spanish, and found to be at Materialvariance with books or records kept by him in another language; or

8) Willfully attempts in any manner to Evade or defeat any tax imposed under thisCode, or knowingly uses fake or falsified Revenue official receipts, Letters ofAuthority, certificates authorizing registration, Tax Credit Certificates, Tax CreditMemoranda and other accountable form.

Unlawful Pursuit of Business. (Sec. 258)Who is liable:

1. Any person who carries on any business for which in annual registration fee isimposed without paying the tax as required by law.

Penalty, upon conviction for each act or omission: Fine - P5,000 -20,000; and Imprisonment - 6 months to 2 years;

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2. A person engaged in the business of distilling, rectifying, repacking,compounding or manufacturing any article subject to excise tax.

Penalty, upon conviction for each act or omission: Fine - P30,000 -50,000; and Imprisonment - 1 to 2 years;

Illegal Collection of Foreign Payments (Sec. 259)Penalty, upon conviction for each act or omission: Fine - P20,000 - 50,000; and

Imprisonment - 1 to 2 years;Who is liable and offense: Any person who:

1) Knowingly undertakes the collection of foreign payments under Sec. 67 without alicense or

2) Without complying with the implementing rules and regulations.

Unlawful Possession of Cigarette Paper in Bobbins or Rolls, Etc. (Sec. 260)Penalty, upon conviction for each act or omission: Fine - P20,000 - 100,000; and

Imprisonment - 6 years 1 day to 12 years;Who is liable: 1. Any person

2. Importer 3. manufacturer of cigar or cigarettes

Offense: Possession without the corresponding authority issued by the Commissioner of:1. cigarette paper in bobbins or rolls, 2. cigarette tipping paper or cigarette filter tips,

Unlawful Use of Denatured Alcohol. (Sec. 261)Penalty, upon conviction for each act or omission: Fine - P20,000 - 100,000; and

Imprisonment - 6 years 1 day to 12 years;Who is liable: Any person who:

1. For the purpose of manufacturing any beverage, use denatured alcohol oralcohol specially denatured to be used for motive power or

2. Withdrawn under bond for industrial uses or alcohol knowingly misrepresented tobe denatured to be unfit for oral intake or

3. who knowingly sells or offers for sale such preparations containing as aningredient such alcohol.

4. Unlawfully recover or attempt to recover by distillation or other process anydenatured alcohol or

5. Who knowingly sells or offers for sale, conceals or otherwise disposes of alcoholas recovered or redistilled.

Shipment or Removal of Liquor or Tobacco Products under False Name or Brand or asan Imitation of any Existing or Otherwise Known Product Name or Brand. (Sec. 262)Penalty, upon conviction for each act or omission: Fine - P20,000 - 100,000; and

Imprisonment - 6 years 1 day to 12 years;

Who is liable: Any person who: 1. ships 2. transports

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3. removesOffense: shipment, transportation or removal of:

1. spirituous, compounded or fermented liquors, 2. wines;or 3. any manufactured products of tobacco

under any other than the proper name or brand known to the trade asdesignating the kind and quality of the contents of the cask, bottle orpackage containing the same or

as an imitation of any existing or otherwise known product name orbrand or causes such act to be done.

Unlawful Possession or Removal of Articles Subject to Excise Tax Without Payment ofthe Tax. (Sec. 263)Who is liable: Any person who: owns and/or found in possession.Offense: ownership and/or possession of:

1. Articles subject to excise tax that has not been paid or 2. Tax-exempt articles other than those to whom they are legally issued.

A1. Imported ArticlesPenalty:Appraised value of the article,including duties and taxes.(determined in accordance with theTariff and Custom Code)

Fine And Imprisonment

P1,000 and less P 1,000 - 2,000 60 - 100 daysMore than 1,000 - 50,000 P 10,000 - 20,000 2 - 4 yearsMore than 50,000 - 150,000 P 30,000 - 60,000 4 - 6 yearsMore than 150,000 P 50,000 - 100,000 10 - 12 years

A2. Locally Manufactured Articles Penalty: Fine - Not less than 10 times the amount of excise tax due but less than P500.

Imprisonment - 2 to 4 years; Who is liable:

1. Any manufacturer, 2. owner or 3. person in charge of any article subject to excise tax.4. any person who knowingly aids or abets in the removal or5. any person who conceals the article after illegal removal

Offense:1. removes or 2. allows or 3. causes

the unlawful removal of any article from the place of production or bonded warehouse,and the excise tax has not been paid at the time and in the manner required, and

1. knowingly aids or abets in the removal of such articles or

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2. conceals the same after illegal removal Penalty: for the first offense, Fine - P 1,000 or more; and Imprisonment - 1to 2 years;The mere unexplained possession of articles subject to excise tax, the tax on which hasnot been paid in accordance with law, shall be punishable under this Section.

Failure or Refusal to Issue Receipts or Sales or Commercial Invoices, Violations Relatedto the Printing of Such Receipts or Invoices and Other Violations. (Sec. 264)Penalty, upon conviction for each act or omission: Fine - P 1,000 - 50,000; and

Imprisonment - 2 to 4 years;Who is liable, Offenses:A. Any person who, being required under Section 237 to issue receipts or sales or

commercial invoices. Receipts (RFM)1. Fails or refuses to issue such receipts or invoices, or 2. issue receipts or invoices that do not truly Reflect and/or contain all the

information required to be shown therein, or 3. use Multiple or double receipts or invoices.4. Any person who commits any of the acts enumerated hereunder: Printing – (WUM)1. Printing of receipts or sales commercial invoices Without authority from the

Bureau of Internal Revenue; or2. Printing of double or Multiple sets of invoices or receipts; or3. Printing of Unnumbered receipts or sales or commercial invoices, not bearing:4. the name, 5. business style, 6. Taxpayer Identification Number, and 7. business address of the person or entity.

Offenses Relating to Stamps. (Sec. 265) Penalty, upon conviction: Fine - P 20,000 - 50,000; and Imprisonment - 4 to 8 yrs;Who is liable/Offenses:Any person who commits any of the acts enumerated (BCCDF)

1. Making, importing, selling, using or possessing without express authority from theCommissioner, any Die for printing or making stamps, labels, tags or playingcards;

2. Erasing the Cancellation marks of any stamp previously used, or altering thewritten figures or letters or cancellation marks on internal revenue stamps;

3. Possessing False, counterfeit, restored or altered stamps, labels or tags orcausing the commission of any such offense by another;

4. Selling or offering for sale any Box or package containing articles subject toexcise tax with false, spurious or counterfeit stamps or labels or selling from anysuch fraudulent box, package or container as aforementioned; or

5. Giving away or accepting from another, or selling, buying or using Containers onwhich the stamps are not completely destroyed.

Failure to Obey Summons. (Sec. 266)Penalty, upon conviction: Fine - P 5,000 - 10,000; and Imprisonment - 1 to 2 yrs;Who is liable: Any person who being duly summoned

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1. to appear to testify, or 2. to appear and produce books of accounts, records, memoranda or other

papers, or 3. to furnish info. as required under the pertinent provisions of this Code.

Offense: neglects to appear or to produce such books or accounts, records, memorandaor other papers, or to furnish such information.Declaration under Penalties of Perjury. (Sec. 267)Penalty, upon conviction: Perjury under the Revised Penal Code.Any declaration, return and other statements required under this Code, shall, in lieu ofan oath, contain a written statement that they are made under the penalties of perjury.Who is liable: Any person who willfully files a declaration, return or statement containinginformation which is not true and correct as to every material matter.

Other Crimes and Offenses. (Sec. 268) A. Misdeclaration or Misrepresentation of Manufacturers Subject to Excise Tax.Who is liable: Any manufacturerOffense: Misdeclares in the sworn statement or in the sales invoice, any pertinent dataor information.Penalty: Summary cancellation or withdrawal of the permit to engage in business as amanufacturer of articles subject to excise tax.

B. Forfeiture of Property Used in Unlicensed Business or Dies Used for Printing FalseStamps, Etc. Penalty: Forfeiture

1. All chattels, machinery, and removable fixtures of any sort used in the unlicensedproduction of articles subject to excise tax.

2. Dies and other equipment used for the printing or making of any internal revenuestamp, label or tag which is in imitation of or purports to be a lawful stamp, labelor tag.

C. Forfeiture of Goods Illegally Stored or Removed. Penalty: ForfeitureOffense:

1. All articles subject to excise tax should not be stored or allowed to remain in adistillery, distillery warehouse, bonded warehouse or other place where made,after the tax thereon has been paid.

2. Articles withdrawn from any such place or from customs custody or imported intothe country without the payment of the required tax.

CHAPTER III - PENALTIES IMPOSED ON PUBLIC OFFICERS

1. Violations committed by government enforcement officers.2. Unlawful divulgence of trade secrets.3. Unlawful interest of revenue law enforcers in business.4. Violation of withholding tax provisions.5. Penalty for failure to issue and execute warrant.

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1. Violations Committed by Government Enforcement Officers. (Sec. 269)Penalty, upon conviction: Fine - P 50,000 - 100,000; and Imprisonment - 10 to 15 years;

Additional penalty: Perpetual disqualification to hold public office, to vote, and toparticipate in any public election

Any internal revenue officer for which a prima facie case of grave misconduct has beenestablished shall, after due notice and hearing of the administrative case and subject toCivil Service Laws, be Dismissed from the revenue service.

Grave misconduct- defined in the Civil Service Law, includes the:1) issuance of fake letters of authority and receipts, 2) forgery of signature, 3) usurpation of authority and 4) habitual issuance of unreasonable assessments.

Who is liable:1) Every official, agent, or employees of the Bureau of Internal Revenue or 2) Any other agency of the Government charged with the enforcement of the

provisions of this Code., who is guilty of any of the offenses enumerated.Offense: Memory Aid: EFRERCVFRIP or [VIP C FR FERER] (vip si father ferrer)

1) Extortion or willfull oppression through the use of his office or willful oppressionand harassment of a taxpayer who refused, declined, turned down or rejectedany of his offers specified in paragraph (d) thereof;

2) Knowingly demanding or receiving any Fee, other or greater sums than areauthorized by law or receiving any fee, compensation or reward, except as bylaw prescribed, for the performance of any duty;

3) Willfully neglecting to give Receipts, as by law required, for any sum collected inthe performance of duty or willfully neglecting to perform any other dutiesenjoined by law;

4) Offering or undertaking to accomplish, file or submit a report or assessment on ataxpayer without the appropriate Examination of the books of accounts or taxliability, or

5) Offering or undertaking to submit a Report or assessment less than the amountdue the Government for any consideration or compensation, or

6) Conspiring or colluding with another or others to defraud the revenues orotherwise violate the provisions of this Code;

7) Neglecting or by design permitting the Violation of the law by any other person;8) Making or signing any False entry or entries in any book, or making or signing

any false certificate or return;9) Allowing or conspiring or colluding with another to allow the unauthorized

Retrieval, withdrawal or recall of any return, statement or declaration after thesame has been officially received by the Bureau of Internal Revenue.

10) Having knowledge or Information of any violation of this Code or of any fraudcommitted on the revenues collectible by the Bureau of Internal Revenue, failureto report such knowledge or information to their superior officer, or failure toreport as otherwise required by law; and

11) Without the authority of law, demanding or accepting or attempting to collect,

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directly or indirectly, as Payment or otherwise any sum of money or other thing ofvalue for the compromise, adjustment or settlement of any charge or complaintfor any violation or alleged violation of this Code.

2. Unlawful Divulgence of Trade Secrets. (Sec. 270)Penalty, upon conviction: Fine - P 50,000 - 100,000; or Imprisonment - 2 to 5 years or

both;Who is liable: any officer or employee of the Bureau of Internal Revenue.Offense: Divulges to any person or makes known in any other than may be provided bylaw information, knowledge of which was acquired by him in the discharge of his officialduties, regarding the:

1) business, income, or estate of any taxpayer, 2) the secrets, operation, style or work, or apparatus of any manufacturer or

producer, or 3) confidential information regarding the business of any taxpayer.

Except as provided in Section 71 of this Code and Section 26 of Republic Act No.6388.

3. Unlawful Interest of Revenue Law Enforcers in Business. (Sec. 271)Penalty, upon conviction for each act or omission: Fine - P 5,000 - 10,000; or

Imprisonment - 2 years 1 day to 4 years or both;Who is liable: Any internal revenue officer.Offense: who is or shall become interested, directly or indirectly:

1. In the manufacture, sale or importation of any article subject to excise tax or 2. In the manufacture or repair or sale, of any die for printing, or making stamps, or

labels shall,

4. Violation of Withholding Tax Provision. (Sec. 272)Penalty, upon conviction for each act or omission: Fine - P 5,000 - 50,000; or

Imprisonment - 6 months 1 day to 2 years or both;Who is liable: Every officer or employee who is charged with the duty to deduct andwithhold with any internal revenue tax and remit the same, of:

1. the Government or 2. any of its agencies and instrumentalities, 3. its political subdivisions, 4. government-owned or -controlled corporations, including the BSP.

Offense: Failing or causing the failure to1. deduct and withhold any internal revenue tax;2. remit taxes deducted and withheld within the time prescribed; and3. file return or statement within the time prescribed, or rendering or furnishing a

false fraudulent return or statement required.

5. Penalty for Failure to Issue and Execute Warrant. (Sec. 273)Penalty: Automatic dismissal from the service after due notice of hearing. Who is liable/Offense: Any official who

1. Fails to issue or execute the warrant of distraint or levy within thirty (30) daysafter the expiration of the time prescribed in Section 207 or

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2. Is found guilty of abusing the exercise thereof by competent authority.

CHAPTER IV - OTHER PENAL PROVISIONS

1. Penalty for second and subsequent offenses2. Violations of other provisions of this code or rules and regulations in general.3. Penalty for selling, transferring, encumbering or in any way disposing of property

placed under constructive distraint.4. Failure to surrender property placed under distraint and levy.5. Procuring unlawful divulgence of trade secrets.6. Confication and forfeiture of proceeds or instruments of crime.7. Subsidiary penalty.8. Prescription for violations of any provision of this code.9. Informer’s reward to persons instrumental in the discovery of violations of the NIRC

and in the discovery and seizure of smuggled goods.

1. Penalty for Second and Subsequent Offenses. (Sec. 274)Offense: ReincidencePenalty: Maximum of the penalty prescribed for the offense.

2. Violation of Other Provisions of this Code or Rules or Regulations in General. (Sec.275)Penalty: upon conviction for each act or omission: Fine: not more than P 1,000 or

Imprisonment: not more than 6 months, or bothWho is liable/Offense: Any person who violates:

1. any provision of this Code or 2. any rule or regulation promulgated by the Department of Finance.

for which no specific penalty is provided by law.

3. Penalty for Selling, Transferring, Encumbering or in any way disposing of propertyPlaced under Constructive Distraint. (Sec. 276)Penalty: upon conviction for each act or omission: Fine: not less than twice the value of

the property but not less than P 5,000 or Imprisonment: 2 yrs 1 day - 4 yrs or bothWho is liable: Any taxpayer, whose property has been placed under constructivedistraint.Offense: Without the consent of the Commissioner:

1. who sells, 2. transfers, 3. encumbers or 4. in any way disposes of said property, or any part thereof.

4. Failure to Surrender Property Placed under Distraint and Levy. (Sec. 277)Penalty: upon conviction for each act or omission: Fine: P 5,000 or more or

Imprisonment: 6 months 1 day - 2 years, or both Also liable in his own person and estate: sum equal to the value of the property or

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rights not surrendered but not exceeding the amount of the taxes (includingpenalties and interest) together with costs and interest , from the date of suchwarrant.

Who is liable: Any person having in his possession or under his control any property orrights to property, upon which a warrant of constructive distraint or actual distraint andlevy has been issued. Offense: Failure or refusal to surrender any of such property or rights upon demand bythe Commissioner or any of his deputies executing such warrant. Unless such property or right is, at the time of such demand, subject to an

attachment or execution under any judicial process.

5. Procuring Unlawful Divulgence of Trade Secrets. (Sec. 278)Penalty: upon conviction for each act or omission: Fine: not more than P 2,000 or

Imprisonment: 6 months - 5 years, or bothWho is liable:

1. Any person who causes or procures an officer or employee of the Bureau ofInternal Revenue to divulge any confidential information regarding the business,income or inheritance of any taxpayer,

knowledge of which was acquired by him in the discharge of hisofficial duties, and which it is unlawful for him to reveal, and

2. Any person who publishes or prints in any manner whatever, not provided by law,any income, profit, loss or expenditure appearing in any income tax return.

6. Confiscation & Forfeiture of the Proceeds or Instruments of Crime. (Sec. 279)In addition to the penalty imposed in Title X: the same shall carry with it the confiscationand forfeiture in favor of the Government of:

1. the proceeds of the crime or 2. value of the goods, and 3. the instruments or tools with which the crime was committed.

Articles which are not subject of lawful commerce shall be destroyed. The following will also be confiscated and forfeited:

1. Instruments or tools used in the illicit act belong to a third person, after due noticeand hearing in a separate proceeding if such third person leased, let, charteredor otherwise entrusted the same to the offender.

2. In case the lessee subleased, or the borrower, charterer, or trustee allowed touse of the instruments or tools to the offender.

3. Property of common carriers shall be subject to forfeiture when the owner oroperator of said common carrier was, at the time of the illegal act, a consentingparty or privy thereto.

Unless such property is used in the transaction of their business as such commoncarrier

Without prejudice to the owner's right of recovery against the offender in a civil orcriminal action.

7. Subsidiary Penalty. (Sec. 280)

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Penalty: subsidiary personal liability: 1 day for each P 8.50 subject to the rulesestablished in Article 39 of the Revised Penal Code.

Who is liable: 1. Person convicted for violation of this Code 2. Has no property to meet the fine imposed upon him by the court, or 3. Is unable to pay such fine.

8. Prescription for Violations of any Provisions of this Code. (Sec. 281)

Period: 5 years. Period begins to run:

1. On the day of the commission of the violation of the law and 2. If the same be not known at the time: from the discovery and the institution of

judicial proceedings for its investigation and punishment. It is interrupted when proceedings are instituted against the guilty person. It shall begin to run again if the proceedings are dismissed for reasons not

constituting jeopardy. The term of prescription shall not run when the offender is absent from the

Philippines.

9. Informer's Reward to Persons Instrumental in the Discovery of Violations of theNational Internal Revenue Code and the Discovery and Seizure of Smuggled Goods.(Sec. 282) A. For Violations of the National Internal Revenue Code. Reward: 10% of the revenues, surcharges or fees recovered and/or fine or penalty

imposed and collected or P1,000,000 per case, whichever is lower. Where the offender has offered to compromise and his offer has been accepted:

Same amount of reward shall be given to the informer. No revenue, surcharges or fees actually recovered or collected - No reward. Who may avail: Any person, except an internal revenue official or employee, or his

relative within the sixth degree of consanguinity.Acts necessary:1. voluntarily gives definite and sworn information,2. not yet in the possession of the Bureau of Internal Revenue, 3. leading to the discovery of frauds upon the internal revenue laws and violations

of any of the provisions thereof, 4. thereby resulting in the recovery of revenues, surcharges and fees and/or the

conviction of the guilty party and/or the imposition of any fine or penalty.

Information shall not refer to a case already pending or previously investigated orexamined by the Commissioner or any of his deputies, agents or examiners or the

47



Secretary of Finance or any of his deputies or agents. For Discovery and Seizure of Smuggled Goods.

Reward: Cash reward 10% of the fair market value of the smuggled andconfiscated goods or P1,000,000 per case, whichever is lower.

The cash rewards of informers subject to income tax, collected as a final withholdingtax, at the rate of 10%.

Who may avail: Persons instrumental in the discovery and seizure of smuggled goods. Prohibited from claiming informer's reward:

1. all public officials, whether incumbent or retired, 2. who acquired the information in the course of the performance of their duties 3. during the incumbency

Purpose: To encourage the public to extend full cooperation in eradicating smuggling.

REVENUE MEMORANDUM ORDER NO. 57-2000 Grounds for the suspension or temporary closure of business: a) failure to issue receipt or invoices by a VAT-registered or registrable taxpayer; b) failure to file a value-added tax return; c) understatement of taxable sales or receipts by 30% or more of the correct amount in

the case of a VAT-registered or registrable taxpayer; and d) failure to register. The recommendation for the suspension or temporary closure of business will have

to be supported with documentary proof specified in the Order.

LOCAL GOVERNMENT TAXATION

CHAPTER 1 - GENERAL PROVISIONS

Power to Create Sources of RevenueEach local government unit has the power to:1. create its own sources of revenue and 2. levy taxes, fees, and charges subject to the provisions herein, consistent with the

basic policy of local autonomy. (Sec. 129)

Such taxes, fees, and charges shall accrue exclusively to the local government units.

Fundamental Principles.The fundamental principles governing the exercise of the taxing and other revenue-raising powers of LGUs are (U(EPuJul)LIP): (a) Taxation shall be Uniform in each local government unit; (b) Taxes, fees, charges and other impositions shall (EPuJuL):

1) be Equitable and based as far as practicable on the taxpayer's ability to pay;

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2) be levied and collected only for Public purposes; 3) not be unJust, excessive, oppressive, or confiscatory; 4) not be contrary to Law, public policy, national economic policy, or in the

restraint of trade; (c) The collection of local taxes, fees, charges and other impositions shall in no case be

Let to any private person; (d) The revenue collected shall Inure solely to the benefit of the local government unit

levying the tax, fee, charge or other imposition unless otherwise specifically providedherein; and,

(e) Each local government unit shall, as far as practicable, evolve a Progressive systemof taxation. (Sec. 130)

Local Taxing Authority.The power to tax is exercised by the sanggunian of the LGU concerned through anappropriate ordinance. (Sec. 132)Common Limitations on the Taxing Powers of LGUsLGUs cannot levy: [ IDECTA_BEV_TRELEBI ] or (CADET-VIBE-LIBERTE)(a) Income tax, except on banks and other financial institutions; (b) Documentary stamp tax;(c) Estate Tax, inheritance, gifts, legacies and other acquisitions mortis causa, except as

otherwise provided; (d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues,

and all other kinds of customs fees, charges and dues, except wharfage on wharvesconstructed and maintained by the local government unit concerned;

(e) Taxes, fees, and charges and other impositions upon goods carried into or out of, orpassing through, the territorial jurisdictions of local government units in the guise ofcharges for wharfage, tolls for bridges or otherwise,

(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginalfarmers or fishermen;

(g) Taxes on business enterprises certified to by the Board of Investments as pioneer ornon-pioneer for a period of 6 and 4 years, respectively from the date of registration;

(h) Excise taxes on articles enumerated under the national Internal Revenue Code, asamended, and taxes, fees or charges on petroleum products;

(i) Percentage or VAT on sales, barters or exchanges or similar transactions on goodsor services except as otherwise provided;

(j) Taxes on the gross receipts of Transportation contractors and persons engaged inthe transportation of passengers or freight by hire and common carriers by air, landor water, except as provided in the Code;

(k) Taxes on premiums paid by way or Reinsurance or retrocession;(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of

all kinds of Licenses or permits for the driving thereof, except tricycles; (m) Taxes, fees, or other charges on Philippine products actually Exported, except as

otherwise provided; (n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and

cooperatives duly registered under R.A. 6810 and R.A. 6938 (Cooperative Code ofthe Philippines); and

(o) Taxes, fees or charges of any kind on the National Government, its agencies and

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Instrumentalities, and local government units.

Provinces (see chart)Provinces (refers to Local Govt. Provisions on Tax)

SPECIFIC PROVISIONS ON THE TAXING AND OTHERREVENUE-RAISING POWERS OF LOCAL GOVERNMENT UNITS

ProvincesType of Tax Rate ExceptionsTax on Transfer of Real Property Ownership. Theprovince may impose a tax on the sale , donation,barter, or on any other mode of transferringownership or title of real property.

Not more than 50% of the 1%of the total consideration or ofthe fair market value, whicheveris higher

Sale, transfer or other dispositionof real property pursuant to R.A.No. 6657 (CARL).

Tax on Business of Printing and Publication. Theprovince may impose a tax on the business ofpersons engaged in the printing and/or publicationof books, cards, posters, leaflets, handbills,certificates, receipts, pamphlets, and others ofsimilar nature.

Not exceeding 50% of 1% ofthe gross annual receipts forthe preceding calendar year.

Newly started business, the taxshall not exceed 1/20 of 1% of thecapital investment. School texts orreferences, prescribed by theDECS shall be exempt from thetax.

Franchise Tax. Notwithstanding any exemptiongranted by any law or other special law, theprovince may impose a tax on businessesenjoying a franchise.

Not exceeding 50% of 1% ofthe gross annual receipts forthe preceding calendar year,within its territorial jurisdiction.

Newly started business, the taxshall not exceed 1/20 of 1% of thecapital investment.

Tax on Sand, Gravel and Other QuarryResources. The province may levy and collecttaxes on ordinary stones, sand, gravel, earth, andother quarry resources extracted from public landsor from the beds of seas, lakes, rivers, streams,creeks, and other public waters within its territorialjurisdiction.

Not more than 10% of fairmarket value in the locality

Professional Tax. The province may levy anannual professional tax on each person engagedin the exercise or practice of his professionrequiring government examination. To be paid onor before the 31st day of January. Any person firstbeginning to practice a profession after the monthof January must, however, pay the full tax beforeengaging therein.

At such amount and reasonableclassification as thesangguniang panlalawigan maydetermine but shall in no caseexceed P300.00.

Professionals exclusivelyemployed in the government shallbe exempt from the payment ofthis tax.

Amusement Tax. The province may levy an Not more than 30% of the gross The holding of operas, concerts,

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amusement tax to be collected from theproprietors, lessees, or operators of theaters,cinemas, concert halls, circuses, boxing stadia,and other places of amusement

receipts from admission fees. dramas, recitals, painting and artexhibitions, flower shows, musicalprograms, literary and oratoricalpresentations, except pop, rock, orsimilar concerts shall be exempt.

Annual Fixed Tax For Every Delivery Truck or Vanof Manufacturers or Producers, Wholesalers of,Dealers, or Retailers in, Certain Products. Theprovince may levy an annual fixed tax for everytruck or any vehicle used by manufacturers,producers, wholesalers, dealers or retailers in thedelivery of distilled spirits, soft drinks, cigars andcigarettes, and other products as may bedetermined by the sanggunian, to sales outlets, orconsumers, whether directly or indirectly, withinthe province.

Amount not exceedingP500.00.

MunicipalitiesTax on BusinessThe municipality may impose taxes on the following:a. On manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers,

and compounders of liquors, distilled spirits, and wines or manufacturers of anyarticle of commerce of whatever kind or nature.

b. On wholesalers, distributors, or dealers in any article of commerce of whatever kindor nature.

c. On exporters, and on manufacturers, millers, producers, wholesalers, distributors,dealers or retailers of the following essential commodities (RW CLAPS C):

1. Rice and corn; 2. Wheat or cassava flour, meat, dairy products, locally manufactured,

processed or preserved food, sugar, salt and other agricultural, marine, andfresh water products, whether in their original state or not;

3. Cooking oil and cooking gas;4. Laundry soap, detergents, and medicine; 5. Agricultural implements, equipment and post-harvest facilities, fertilizers,

pesticides and other farm inputs;6. Poultry feeds and other animal feeds; 7. School supplies; and 8. Cement.

d. On retailerse. On contractors and other independent contractors

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f. On banks and other financial institutions,g. On peddlers engaged in the sale of any merchandise or article of commerceh. On any business, which the sanggunian concerned may deem proper to tax. For

businesses subject to the excise, value-added or percentage tax, the tax rate shallnot exceed 2% of gross sales of the preceding calendar year.

Rates of Tax within the Metropolitan Manila Area shall not exceed by 50% the maximumrates prescribed for a-h. (Sec. 144)

The tax is payable for every separate or distinct establishment or place where businessis conducted. (Sec. 146)

The municipality may impose and collect such reasonable fees and charges on businessand occupation except professional taxes reserved for provinces. (Sec 147)

Municipalities shall have the exclusive authority to grant fishery privileges in themunicipal waters. The sanggunian may:a. Grant fishery privileges to erect fish corrals, oysters, or other aquatic beds or bangus

fry areas1. Duly registered organizations and cooperatives of marginal fishermen shall

have the preferential right;2. The sanggunian may require a public bidding pursuant to an ordinance for

the grant of such privilege;3. Absent of such orgs. and coops or their failure to exercise their preferential

right, other parties may participate in the public biddingb. Grant the privilege to gather, take or catch bangus fry, prawn fry or fry of other

species and fish from the municipal waters by nets or other fishing gears to marginalfishermen free of rental or fee

c. Issue licenses for the operation of fishing vessels of three (3) tons or less. (Sec. 149)

Situs of the Tax. For purposes of collection of the taxes under Section 143 (tax on business), businessesmaintaining or operating branch or sales outlet elsewhere shall record the sale in thebranch or sales outlet making the sale or transaction, and the tax thereon shall accrueand shall be paid to the municipality where such branch or sales outlet is located.

In case there is no branch or sales outlet in the city or municipality where the sale made,the sale shall be recorded in the principal office and the taxes due shall accrue and bepaid to such city or municipality.

The following sales allocation for sales recorded in the principal office of businesses withfactories, project offices, plants, and plantations: 30% of all sales recorded in the principal office shall be taxable by the city ormunicipality where the principal office is located; and 70% of all sales recorded in the principal office shall be taxable by the city ormunicipality where the factory, project office, plant, or plantation is located. Where the plantation located at a place other than the place where the factory is

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located, the above mentioned 70% shall be divided as follows: 60% to the city or municipality where the factory is located; and 40% to the city or municipality where the plantation is located.

Where there are 2 or more factories, project offices, plants, or plantations located indifferent localities, the above mentioned 70% shall be shall be prorated among thelocalities where the factories, project offices, plants, and plantations are located inproportion to their respective volumes of production during the period for which thetax is due. (Sec. 150)

Cities The city may levy the taxes, fees, and charges which the province or municipality mayimpose. The tax rates that the city may levy may exceed the maximum rates allowed for theprovince or municipality by not more than 50% except the rates of professional andamusement taxes. (Sec. 151)

Barangays Scope of Taxing Powers. - The barangays may levy the following taxes and charges,which shall exclusively accrue to them: (TOBS) (a) Taxes - On stores or retailers with fixed business establishments with gross sales of

receipts of the preceding calendar year of P50,000.00 or less for cities andP30,000.00 or less, in the case of municipalities, rate = not exceeding 1% on grosssales or receipts.

(b) Service Fees or Charges for services rendered in connection with the regulations orthe use of barangay-owned properties or service facilities such as palay, copra, ortobacco dryers.

(c) Barangay Clearance. - No city or municipality may issue any license or permit forany business or activity unless a clearance is first obtained from the barangay wheresuch business or activity is located or conducted.

(d) Other fees and Charges. - The barangay may levy reasonable fees and charges:(CRB)

1. On commercial breeding of fighting Cocks and cockpits;2. On places of Recreation which charge admission fees; and 3. On Billboards, signboards, neon signs, and outdoor ads. (Sec. 152)

Common Revenue-Raising Powers of LGUs (Secs. 153-155) (SPT) a. Service Fees and Charges for services renderedb. Pubic Utility Charges for the operation of public utilities owned, operated and

maintained by LGUs within their jurisdiction. c. Toll Fees or Charges for the use of any public road, pier, or wharf, waterway, bridge,

ferry or telecommunication system funded and constructed by the LGU concerned.Exceptions:1. officers and enlisted men of the AFP and PNP on mission,2. post office personnel delivering mail, 3. physically-handicapped, and disabled citizens who are sixty-five (65) years or

older.

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Community Tax Cities or municipalities may levy a community tax (Sec. 156)

Individuals Liable to Community Tax. - [ IER ]a. Inhabitant of the Philippines b. Eighteen years of age or over c. Regularly employed on a wage or salary basis for at least 30 consecutive working

days during any calendar year,or who is engaged in business or occupation, or who owns real property with an aggregate assessed value of P1,000.00 or more, or who is required by law to file an income tax return

Rate = P5.00 and an annual additional tax of P1.00 for every P1,000.00 of incomeregardless of whether from business, exercise of profession or from property which in nocase shall exceed P5,000.00. In the case of husband and wife, the tax imposed shall be based upon the total propertyowned by them and the total gross receipts or earnings derived by them. (Sec. 157)

Juridical Personalities (Sec. 158)Corporations, no matter how created or organized, whether domestic or resident foreign,engaged in or doing business in the Philippines are also liable to pay an annualcommunity tax.

Rate = P500.00 and an annual additional tax, which shall exceed P10,000.00 inaccordance with the following schedule: a. For every P5,000.00 worth of real property in the Philippines owned by it during the

preceding year based on the valuation used for the payment of real property tax -P2.00; and

b. For every P5,000.00 of gross receipts derived by it from its business in thePhilippines during the preceding year - P2.00.

Those exempt from the community tax are: 1. Diplomatic and consular representatives; and2. Transient visitors when their stay does not exceed 3 months.

Place of Payment - place of residence of the individual, or in the place where theprincipal office of the juridical entity is located. (Sec. 160)

Time for Payment - accrues on the 1st day of Jan. of each year which shall be paid notlater than the last day of Feb. of each year

Penalties for Delinquency. - An interest of 24% per annum from the due date until it ispaid shall be added on the amount due.

A community tax certificate may also be issued to any person or corporation not subjectto the community tax upon payment of P1.00. (Sec. 162)

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Sec. 163. Presentation of Community Tax Certificate On Certain Occasions. - Individuala. When an individual subject to the community tax acknowledges any document

before a notary public, b. takes the oath of office upon election or appointment to any position in the

government service; c. receives any license, certificate or permit from any public authority; pays any tax or

fee; d. receives any money from any public fund; e. transacts other official business; or f. receives any salary or wage from any person or corporation.

The community tax certificate shall not be required in the registration of a voter.

Corporationa. receives any license, certificate, or permit from any public authority, b. pays any tax or fee, c. receives money from public funds, or d. transacts other official business. The city or municipal treasurer deputizes the barangay treasurer to collect thecommunity tax in their respective jurisdictions.

The proceeds of the community tax actually and directly collected by the city ormunicipal treasurer shall accrue entirely to the general fund of the city or municipalityconcerned.

Proceeds of the community tax collected through the barangay treasurers shall beapportioned as follows: (Sec. 164)50% accrues to the general fund of the city or municipality concerned; and 50% accrues to the barangay where the tax is collected.

PROVINCE OF BULACAN vs CA (299 SCRA 442)

Facts: The Province passed an Ordinance imposing a 10% tax on the value of stones,sand and other quarry resources from public lands. The Provincial Treasurer leviedupon Republic Cement P2.5M for its extraction of resources from private land.

Issue: Does the province have authority to levy the tax?Held: NO. Although §186 of the LGC authorizes municipal corps. to levy taxes other

than those specifically enumerated therein, the subject ordinance was quite specificabout the fact that the taxable articles must come from public land. Moreover, aprovince may not levy excise taxes on articles already taxed by the NIRC. The current

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tax code already imposes a tax on ALL quarry resources, regardless of origin, hence,the Province may no longer impose any additional amounts from Republic Cement.

REAL PROPERTY TAXATION

I. CHARACTERISTIC OF REAL PROPERTY TAX: [ DAPIL ]1. Direct tax on the ownership of real property2. Ad Valorem tax. The value is based on the tax base3. Proportion - the tax is calculated on the basis of a certain percentage of the valueassessed4. Indivisible single obligation5. Local Tax

II. PROPERTIES LIABLE UNDER REAL PROPERTY TAXAccording to the Local Government Code, Real Property liable for Real Prop tax are: 1. Land,2. Buildings 3. Machinery and 4. Other improvements not otherwise exempted under said code (Sec 232, LGC)

Note: Although the term real property has not been expressly defined in the LGC, early decisionsof the Supreme Court in Mindanao Bus Co. v City Assessor of Cagayan de Oro, 6 SCRA `97;Board of Assessment Appeals v Meralco, 119 PHIL 328; Manila Electric Co. v Board ofAssessment Appeals, 10 SCRA 68) seem to suggest that Art 415 of the Civil Code could also becontrolling.

III. CLASSIFICATION OF LAND for purposes of assessment Sec 218 (a) [CARMITS]1. Commercial2. Agricultural 3. Residential 4. Mineral5. Industrial6. Timberland 7. Special

IV. SPECIAL CLASSES OF REAL PROPERTY (sec 216, LGC) [HCS LG]1. HOSPITALS2. CULTURAL and SCIENTIFIC purposes3. owned and used by LOCAL WATER DISTRICTS4. GOCCs rendering essential public services in the supply and distribution of water

and/or generation or transmission of electric power.

V. PROPERTIES EXEMPT from real property tax (Sec. 234) [RC WEC]1. owned by the REPUBLIC of the PHILS or its political subdivisions except: when beneficial use has been granted to a taxable person2. Charitable institutions, churches, parsonages, convents thereto, mosques, non-

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profit or religious cemeteries, buildings and improvements actually directly andexclusively used for religious, charitable or educational purposes.

3. Machinery and Equipment actually, directly, and exclusively used by local Waterdistricts and GOCCs engaged in the supply and distribution of water and/orgeneration and transmission of electric power

4. Real property owned by duly registered Cooperatives under RA 69385. Machinery & equipment for pollution control and Environment protection

Exemptions previously granted, (not falling within the above enumeration) arewithdrawn.

VI. FUNDAMENTAL PRINCIPLES IN Assessment REAL PROP TAXES (Art 198) [CUANE]1. CURRENT and fair market value is the basis of appraisal2. UNIFORMITY in classification in each local gov’t unit should be observed3. ACTUAL USE of the property should be the basis of classification4. appraisal, assessment, levy and collection should NOT BE LET to any private person.5. EQUITABLE appraisal and assessment

STEP 1 - DECLARATION OF REAL PROPERTY1. Declared by Owner or Administrator (Sec 202-203)

IF newly acquired property - a. files with assessor within 60 DAYS from date of transfer a b. SWORN statement containing FMV and description of property

IF improvement on real propertya. file w/in 60 DAYS upon completion or occupation (whichever is earlier)b. SWORN statement containing FMV and description of property

2. Declared by Provincial / City / Municipal Assessor (Sec 204)WHEN only when the person under Sec 202 refuses or fails to make the

declaration within the prescribed timeNo oath is required

NOTE: IF FILING FOR EXEMPTION (Sec 206)WHAT person claiming exemptions must file with assessor sufficient

documentary evidence to support claimWHEN within 30 days from the date of DECLARATION of property

IF required evidence is not submitted within 30 days, the property will be listed astaxable in the roll

IF proven to be tax-exempt, property will be dropped from the roll

NOTE: IF PROPERTY DECLARED FOR THE FIRST TIME (Sec. 222)If declared for 1st time, real property shall be assessed for back taxesa. for not more than 10 yrs prior to the date of initial assessmentb. taxes shall be computed on the basis of applicable schedule of values in force during the corresponding periods

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STEP 2: LISTING OF REAL PROPERTY IN THE ASSESSMENTROLLS(Sec 205, 207)

STEP 3: APPRAISAL AND VALUATION OF REAL PROPERY(Sec 212-214, 224-225)How to determine Fair Market Value.FOR LAND1. Assessor of the prov/ city /mun gives summons to owners of affected properties2. Assessor prepares a schedule of FMV for different classes of properties3. Sanggunian enacts an ordinance 4. the schedule of FMV is published or posted

FOR MACHINERY 1. For Brand New machinery : FMV is acquisition cost2. In all other cases: FMV = Remaining eco. life X Replacement cost

Estimated eco. life

STEP 4: DETERMINE ASSESSED VALUE (Sec 218)Procedure1. take the schedule of FMV2. Assessed value = FMV X Assessment level3. Tax = Assessed value X Tax rate

STEP 5: PAYMENT AND COLLECTION OF TAXWHEN January 1 of every year (Sec 246)

tax shall constitute as superior lien (Sec 246)HOW a. basic real prop tax in 4 equal installments (Mar 31,Jun 30,Sep 30, Dec 31)

b. special levy - governed by ordinance

NOTE: INTEREST for LATE PAYMENT - two percent (2%) each month on unpaid amt. until the delinquent amt is paid.- provided in no case shall the total interest exceed thirty-six (36) months

NOTE: FOR ADVANCE and PROMPT PAYMENTa) advance payment -discount not exceeding 20% of annual tax (Sec 251, LGC)b) prompt payment -discount not exceeding 10% of annual tax due(Art 342 IRR)

WHO COLLECTS The provincial, city, municipal or barangay treasurerPERIOD WITHIN WHICH TO COLLECT (Sec 270).

within five (5) yrs from the date they become duewithin ten (10) yrs. from discovery of fraud, in case there is fraud or intent to evade

Period of prescription shall be SUSPENDED when : (Sec 270, LGC)1. local treasurer is legally prevented to collect tax2. the owner of prop requests for reinvestigation and writes a waiver before expiration of

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period to collect1. the owner of the prop is out of the country or cannot be located

REMEDIES IN REAL PROPERTY TAXATION

A. REMEDIES OF TAXPAYER1. PAYMENT UNDER PROTEST (Sec 252)

- file protest with prov, city, or mun. treasurer concerned- indicate amount contested- annotate on tax receipt “paid under protest”- Within 30 days, confirm protest in writing stating grounds therefor- treasurer shall decide protest within 60 daysDONT FORGET!: No protest shall be entertained unless THE TAX IS FIRSTPAID!!!!IF PROTEST DECIDED IN FAVOR of taxpayer, amount may either be

a. refunded or c. applied as tax credit

IF DENIED or NOT DECIDED WITHIN 60 DAYS BY TREASURER, a. taxpayer may appeal to board of assessment appeal or b. avail of remedies under Ch 3 title 2 Book II

(Local Board of Assessment Appeals and Central Board of AssessmentAppeals)

2. REFUND IN CASE OF EXCESSIVE COLLECTION (Sec 253)File a written claim for refund within two (2) years from date taxpayer is entitledthereto

B. REMEDIES OF GOVERNMENTRemedies may be enforced either through administrative or judicial action or both,alternative or simultaneously. Use or non-use of one remedy shall not be a bar againstthe other (Sec 258)

1. ADMINISTRATIVEA. Levy on Real property (Sec 258 and 259)B. Sale of Real Property (Sec 260)C. Local Government’s Lien (Sec 256)D. Further Distraint or Levy (Sec 265)

2. JUDICIAL (Sec 266)-civil action filed by the local treasurer within 5 yrs. from duedate

C. CONDONATION and REMISSION The PRESIDENT may remit or reduce real prop tax in any prov/ city/ mun if he

deems that PUBLIC INTEREST so requires (Sec 277) THE SANGGUNIAN concerned may CONDONE or REDUCE the tax in cases where

a. there is a general failure of cropsb. substantial decrease in the price of productsc. calamity (Sec 276)by an ordinance - passed before Jan 1 of any year and

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- upon recommendation of the Local Disaster Coordinating Council

APPEALS IN REAL PROPERTY TAXATION

OWNER OR PERSON WITH LEGAL INTERESTFiles within 60 days 1. Written Petition under Oath2. With Supporting Documents

Within 60 daysLOCAL BOARD OF ASSESSMENT APPEALS(LBAA Should decide win 120 DAYS from receipt of petition)

Within 30 daysCENTRAL BOARD OF ASSESSMENT APPEALS

Within 15 daysSUPREME COURT

Date post:	08-Sep-2018
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