Tax 2 Finals

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Taxation 2 Finals reviewer

Prof. O. Carag
2 Semester A.Y. 2011-2012
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Janz Hanna Ria N. Serrano

Part Three: Tax Remedies Under the NIRC
I. Taxpayers Remedies
A. Administrative Protest Taxpayers Remedy Before Payment
1. Assessment of Internal Revenue Taxes
NIRC, 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper taxes should be
assessed, he shall first notify the taxpayer of his findings: provided, however, That a preassessment notice shall not be required in the
following cases:
(a) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax as appearing on the face of the
return; or
(b) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was determined to
have carried over and automatically applied the same amount claimed against the estimated tax liabilities for the taxable qua rter or
quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable articles has not been paid; or
(e) When the article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment, machineries
and spare parts, has been sold, traded or transferred to non-exempt persons.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be
void.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the
taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings.
Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days
from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days
from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the
taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said
decision, or from the lapse of one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable.
RR 12-99. Implementing the Provisions of the National Internal Revenue Code of 1997 Governing the Rules on Assessment of National
Internal Revenue Taxes, Civil Penalties and Interest and the Extra-judicial Settlement of a Taxpayer's Criminal Violation of the Code Through
Payment of a Suggested Compromise Penalty
Sec. 1. Scope. Pursuant to the provisions of Section 244 , in relation to Section 245 of the National Internal Revenue Code of 1997, these
Regulations are hereby promulgated to implement the provisions of Sections 6 , 7 , 204 , 228 , 247 , 248 and 249 on assessment of national
internal revenue taxes, fees and charges and to provide the rules governing the extra-judicial settlement of a taxpayer's criminal violation of
the said Code or any of its implementing Regulations through payment of a suggested compromise penalty.
Sec. 2. General Principles.
2.1. The surcharge and/or interest herein prescribed shall apply to all taxes, fees and charges imposed under the Code which shall be
collected at the same time, in the same manner, and as part of the tax.
2.2. In case the tax due from the taxpayer is paid on a partial or installment basis, the interest on the deficiency tax or on the delinquency
tax liability of the taxpayer shall be imposed from due date of the tax until full payment thereof. The interest shall be computed based on
the diminishing balance of the tax, inclusive of interests.
Sec. 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment.
3.1. Mode of procedures in the issuance of a deficiency tax assessment:
3.1.1. Notice for informal conference. The Revenue Officer who audited the taxpayer's records shall, among others, state in his
report whether or not the taxpayer agrees with his findings that the taxpayer is liable for deficiency tax or taxes. If the taxpayer is not
amenable, based on the said Officer's submitted report of investigation, the taxpayer shall be informed, in writing, by the Revenue
District Office or by the Special Investigation Division, as the case may be (in the case Revenue Regional Offices) or by the Chief of
Division concerned (in the case of the BIR National Office) of the discrepancy or discrepancies in the taxpayer's payment of his internal
revenue taxes, for the purpose of "Informal Conference," in order to afford the taxpayer with an opportunity to present his side of the
case. If the taxpayer fails to respond within fifteen (15) days from date of receipt of the notice for informal conference, he shall be
considered in default, in which case, the Revenue District Officer or the Chief of the Special Investigation Division of the Revenue
Regional Office, or the Chief of Division in the National Office, as the case may be, shall endorse the case with the least possible delay to
the Assessment Division of the Revenue Regional Office or to the Commissioner or his duly authorized representative, as the case may
be, for appropriate review and issuance of a deficiency tax assessment, if warranted.
3.1.2. Preliminary Assessment Notice (PAN). If after review and evaluation by the Assessment Division or by the Commissioner
or his duly authorized representative, as the case may be, it is determined that there exists sufficient basis to assess the taxpayer for
any deficiency tax or taxes, the said Office shall issue to the taxpayer, at least by registered mail, a Preliminary Assessment Notice
(PAN) for the proposed assessment, showing in detail, the facts and the law, rules and regulations, or jurisprudence on which the
proposed assessment is based (see illustration in ANNEX A hereof). If the taxpayer fails to respond within fifteen (15) days from date
of receipt of the PAN, he shall be considered in default, in which case, a formal letter of demand and assessment notice shall be caused
to be issued by the said Office, calling for payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties.
3.1.3. Exceptions to Prior Notice of the Assessment. The notice for informal conference and the preliminary assessment notice
shall not be required in any of the following cases, in which case, issuance of the formal assessment notice for the payment of the
taxpayer's deficiency tax liability shall be sufficient:
(i) When the finding for any deficiency tax is the result of mathematical error in the computation of the tax appearing on the face
of the tax return filed by the taxpayer; or
(ii) When a discrepancy has been determined between the tax withheld and the amount actually remitted by the withholding
agent; or
(iii) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the same amount claimed against the estimated tax liabilities for
the taxable quarter or quarters of the succeeding taxable year; or
(iv) When the excise tax due on excisable articles has not been paid; or
(v) When an article locally purchased or imported by an exempt person, such as, but not limited to, vehicles, capital equipment,
machineries and spare parts, has been sold, traded or transferred to non-exempt persons.
3.1.4. Formal Letter of Demand and Assessment Notice. The formal letter of demand and assessment notice shall be issued by the
Commissioner or his duly authorized representative. The letter of demand calling for payment of the taxpayer's deficiency tax or taxes
shall state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the formal letter of
demand and assessment notice shall be void (see illustration in ANNEX B hereof). The same shall be sent to the taxpayer only by
registered mail or by personal delivery. If sent by personal delivery, the taxpayer or his duly authorized representative shall
acknowledge receipt thereof in the duplicate copy of the letter of demand, showing the following: (a) His name; (b) signature; (c)
designation and authority to act for and in behalf of the taxpayer, if acknowledged received by a person other than the taxpayer
himself; and (d) date of receipt thereof.
3.1.5. Disputed Assessment. The taxpayer or his duly authorized representative may protest administratively against the aforesaid
formal letter of demand and assessment notice within thirty (30) days from date of receipt thereof. If there are several issues involved
in the formal letter of demand and assessment notice but the taxpayer only disputes or protests against the validity of some of the
issues raised, the taxpayer shall be required to pay the deficiency tax or taxes attributable to the undisputed issues, in which case, a
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collection letter shall be issued to the taxpayer calling for payment of the said deficiency tax, inclusive of the applicable surcharge
and/or interest. No action shall be taken on the taxpayer's disputed issues until the taxpayer has paid the deficiency tax or taxes
attributable to the said undisputed issues. The prescriptive period for assessment or collection of the tax or taxes attributable to the
disputed issues shall be suspended.
The taxpayer shall state the facts, the applicable law, rules and regulations, or jurisprudence on which his protest is based,
otherwise, his protest shall be considered void and without force and effect. If there are several issues involved in the disputed
assessment and the taxpayer fails to state the facts, the applicable law, rules and regulations, or jurisprudence in support of his protest
against some of the several issues on which the assessment is based, the same shall be considered undisputed issue or issues, in which
case, the taxpayer shall be required to pay the corresponding deficiency tax or taxes attributable thereto.
The taxpayer shall submit the required documents in support of his protest within sixty (60) days from date of filing of his
letter of protest, otherwise, the assessment shall become final, executory and demandable. The phrase "submit the required
documents" includes submission or presentation of the pertinent documents for scrutiny and evaluation by the Revenue Officer
conducting the audit. The said Revenue Officer shall state this fact in his report of investigation.
If the taxpayer fails to file a valid protest against the formal letter of demand and assessment notice within thirty (30) days
from date of receipt thereof, the assessment shall become final, executory and demandable.
If the protest is denied, in whole or in part, by the Commissioner, the taxpayer may appeal to the Court of Tax Appeals within
thirty (30) days from date of receipt of the said decision, otherwise, the assessment shall become final, executory and demandable.
In general, if the protest is denied, in whole or in part, by the Commissioner or his duly authorized representative, the taxpayer
may appeal to the Court of Tax Appeals within thirty (30) days from date of receipt of the said decision, otherwise, the assessment
shall become final, executory and demandable: Provided, however, that if the taxpayer elevates his protest to the Commissioner within
thirty (30) days from date of receipt of the final decision of the Commissioner's duly authorized representative, the latter's decision
shall not be considered final, executory and demandable, in which case, the protest shall be decided by the Commissioner. Cdtai
If the Commissioner or his duly authorized representative fails to act on the taxpayer's protest within one hundred eighty
(180) days from date of submission, by the taxpayer, of the required documents in support of his protest, the taxpayer may appeal to
the Court of Tax Appeals within thirty (30) days from the lapse of the said 180-day period, otherwise, the assessment shall become
final, executory and demandable.
3.1.6. Administrative Decision on a Disputed Assessment. The decision of the Commissioner or his duly authorized
representative shall (a) state the facts, the applicable law, rules and regulations, or jurisprudence on which such decision is based,
otherwise, the decision shall be void (see illustration in ANNEX C hereof), in which case, the same shall not be considered a decision on
a disputed assessment; and (b) that the same is his final decision.
3.1.7. Constructive Service. If the notice to the taxpayer herein required is served by registered mail, and no response is received
from the taxpayer within the prescribed period from date of the posting thereof in the mail, the same shall be considered actually or
constructively received by the taxpayer. If the same is personally served on the taxpayer or his duly authorized representative who,
however, refused to acknowledge receipt thereof, the same shall be constructively served on the taxpayer. Constructive service
thereof shall be considered effected by leaving the same in the premises of the taxpayer and this fact of constructive service is attested
to, witnessed and signed by at least two (2) revenue officers other than the revenue officer who constructively served the same. The
revenue officer who constructively served the same shall make a written report of this matter which shall form part of the docket of
this case (see illustration in ANNEX D hereof).
Sec. 4. Civil Penalties.
4.1. Twenty-Five Percent (25%) Surcharge. There shall be imposed, in addition to the basic tax required to be paid, a penalty
equivalent to twenty-five percent (25%) thereof, in any the following cases:
4.1.1. Failure to file any return and pay the tax due thereon as required under the provisions of this Code or rules and regulations on
the date prescribed; or
4.1.2. Unless otherwise authorized by the Commissioner, filing a return with an internal revenue officer other than those with whom
the return is required to be filed; or
4.1.3. Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment; or
4.1.4. Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of this Code
or rules and regulations, or the full amount of tax due for which no return is required to be filed, on or before the date pr escribed for
its payment.
4.2. Fifty Percent (50%) Surcharge:
4.2.1. In case of willful neglect to file the return within the period prescribed by the Code, or in case a false or fraudulent return is
willfully made, the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax, in case any payment has been
made on the basis of such return before the discovery of the falsity or fraud: Provided, That a substantial underdeclaration of taxable
sales, receipts or income, or a substantial overstatement of deductions, as determined by the Commissioner or his duly authorized
representative, shall constitute prima facie evidence of a false or fraudulent return: Provided, further, That failure to report sales,
receipts or income in an amount exceeding thirty percent (30%) of that declared per return, and a claim of deductions in an amount
exceeding thirty percent (30%) of actual deductions, shall render the taxpayer liable for substantial underdeclaration of sales, receipts
or income or for overstatement of deductions, as mentioned herein: Provided, further, that the term "willful neglect to file the return
within the period prescribed by the Code" shall not apply in case the taxpayer, without notice from the Commissioner or his
authorized representative, voluntarily files the said return, in which case, only 25% surcharge shall be imposed for late filing and late
payment of the tax in lieu of the above 50% surcharge. Conversely, the 50% surcharge shall be imposed in case the taxpayer files the
return only after prior notice in writing from the Commissioner or his duly authorized representative.
4.2.2. Section 6 (A) of the Code provides that any tax return filed by a taxpayer "may be modified, changed or amended" by the
taxpayer "within three (3) years from date of such filing" provided, however, that "no notice for audit or investigation of such return,
statement or declaration has, in the meantime, been actually served upon the taxpayer." Thus, if upon investigation, it is determined
that the taxpayer's originally filed tax return is false or fraudulent, such taxpayer shall remain liable to the 50% civil penalty
regardless that the taxpayer has filed his amended tax return, if the said amended tax return, however, has been filed only after
issuance of the Letter of Authority for the investigation of the taxpayer's tax return or such amendment has been made in the course of
the said investigation.
Sec. 5. Mode of Procedures in Computing for the Tax and/or Applicable Surcharge. Shown hereunder are illustrative cases for the
computation and assessment of the tax, inclusive of surcharge (if applicable) and interest:
5.1. Late filing and late payment of the tax. Illustration: Income tax return for the calendar year 1998 was due for filing on April 15,
1999 but the taxpayer voluntarily filed his tax return, without notice from the BIR, only on June 30, 1999. The tax due per return
amounts to P100,000. In this case, the taxpayer shall be liable for delinquency penalties consisting of 25% surcharge, plus 20% interest
per annum, computed from due date of the tax until date of payment, computed as follows [illustration deleted]
Only one 25% surcharge shall be imposed for late filing of the return and late payment of the tax.
5.2. The tax return is filed on time but filed through an internal revenue officer other than with whom the return is required to be filed.
Illustration: The taxpayer's 1998 income tax return is required to be filed through the authorized agent bank under the jurisdiction of
RDO East Makati. But, without prior authorization from the BIR, the taxpayer filed his tax return and paid the tax through the authorized
agent bank under the jurisdiction of RDO Davao City. Tax due and paid per return is P100,000.00. [illustration deleted]
5.3. Late filing and late payment due to taxpayer's willful neglect. Illustration: The taxpayer did not file his income tax return for the
calendar year 1997 which was due for filing on April 15, 1998. He was notified by the BIR of his failure to file the tax return, for which
reason, he filed his tax return and paid the tax, only after the said notice, on June 30, 1999. The tax due per return is P100,000.00.
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5.4. Penalty or penalties for deficiency tax. As a rule, no surcharge is imposed on deficiency tax and on the basic tax. However, if the
amount due inclusive of penalties is not paid on or before the due date stated on the demand letter, the corresponding surcharge shall be
imposed. [illustrations deleted]
5.5. Late payment of a deficiency tax assessed. In general, the deficiency tax assessed shall be paid by the taxpayer within the time
prescribed in the notice and demand, otherwise, such taxpayer shall be liable for the civil penalties incident to late payment. [illustration
deleted]
5.6. Computation of 20% interest per annum in case of partial or installment payment of a tax liability. Illustration No. 1: In case
extended payment of the tax is duly authorized. DEF CORPORATION, due to financial incapacity, requested that it be allowed to pay its
income tax liability per return for calendar year 1998, in the amount of P1,000,000.00, in four (4) monthly installments, starting April 15,
1999. Its request has been duly approved pursuant to Sec. 53 of the Tax Code.
In this case, no 25% surcharge shall be imposed for late payment of the tax since its deadline for payment has been duly
extended. However, 20% interest per annum for the extended payment shall be imposed, computed based on the diminishing balance of
the "unpaid amount", pursuant to the provisions of Section 249 (D) of the Code.
No 25% surcharge on extended payment shall be imposed provided, however, that the taxpayer's request for extension of the period
within which to pay is made on or before the deadline prescribed for payment of the tax due. Conversely, if such request is made after the
deadline prescribed for payment, the taxpayer shall already be treated late in payment, in which case, the 25% surcharge shall be
imposed, even if payment of the delinquency be allowed in partial amortization. [illustrations deleted]
Sec. 6. Suggested Compromise Penalty in Extra-judicial Settlement of a Taxpayer's Criminal Violation. Section 204 of the Tax Code of
1997 provides that "All criminal violations may be compromised except: (a) those already filed in court, or (b) those involving fraud." This
means that, in general, the taxpayer's criminal liability arising from his violation of the pertinent provision of the Code may be settled extra-
judicially instead of the BIR instituting against the taxpayer a criminal action in Court. A compromise in extra-judicial settlement of the
taxpayer's criminal liability for his violation is consensual in character, hence, may not be imposed on the taxpayer without his consent.
Hence, the BIR may only suggest settlement of the taxpayer's liability through a compromise.
The extra-judicial settlement of the taxpayer's criminal liability and the amount of the suggested compromise penalty shall conform with
the schedule of compromise penalties provided under Revenue Memorandum Order No. 1-90 or as hereafter revised.
(a) Assessment Process (RR 12-99), General
i. Tax Audit: examination of books of accounts and other accounting records
- Issuance of letter of authority/letter notice/tax verification notice (TVN)
ii. Notice of Informal Conference
iii. Issuance of Preliminary Assessment Notice (PAN)
iv. Exceptions to Issuance of PAN
v. Reply to PAN 15 days from receipt. In meritorious cases and upon written request, extension not exceeding 10 days may be given
the TP to respond
RR 12-85, Sec. 3(a). Regional Office cases The taxpayer shall reply within a period of fifteen (15) days from receipt of the pre-
assessment notice. In meritorious cases and upon written request of the taxpayer an extension may be granted within which to
respond, but in no case shall the extension exceed a total of ten (10) days.
The reply of the taxpayer shall be filed with the Assessment Branch of the Regional Office which has jurisdiction over the case.
vi. Issuance of formal letter of demand and assessment notice/Final Assessment notice
vii. Disputed Assessment reply of Taxpayer
viii. Administrative Decision on a Disputed Assessment
(b) Requisites of a Valid Assessment
CIR v. Pascor Realty.
CIR v. Hantex.
CIR v. BPI.
- TP informed in writing of the law and facts on which assessment is made.
CIR v. BPI, as liquidator of Paramount Acceptance Corp.
- Notice of assessment sent to taxpayers old office is not a valid assessment
RP v. Leonor de la Rama.
- When tax assessment is deemed made
CIR v. CA.
- All presumptions are in favor of tax assessments
(c) Jeopardy assessment (Best Evidence Obtainable Rule)
NIRC, 6(B). Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration
and Enforcement. - (B) Failure to Submit Required Returns, Statements, Reports and other Documents. - When a report required by law
as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the time fixed by laws or rules and
regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the
proper tax on the best evidence obtainable.
In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a
false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such
information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes.
(d) Tax Delinquency and Tax Deficiency
(e) Period of Assessment
i. Prescription
(1) General rule 3 years
NIRC, 203. Period of Limitation Upon Assessment and Collection. - Except as provided in Section 222, internal revenue
taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return, and no proceeding
in court without assessment for the collection of such taxes shall be begun after the expiration of such period: Provided, That
in a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day
the return was filed. For purposes of this Section, a return filed before the last day prescribed by law for the filing thereof shall
be considered as filed on such last day.
RMC 48-90 (Re: Counting of the 3-year prescriptive period).
Period in the Issuance of Notice of Assessment, or Warrants of Distraint, Levy & Garnishment. Every now and then, an
assessment is issued on what appears to be the "last day" of the prescriptive period prescribed by law, e.g., a 1989 Income
Tax Return filed on April 15, 1986 was assessed for deficiency income tax on April 15, 1989. Pursuant to Sections 203 and
223 (c) of the Tax Code as amended by B.P. Blg. 700 which took effect on April 5, 1984, except in the case of a false or
fraudulent return or failure to file a return, the period with which to make an assessment is three (3) years after the
return is filed. Such tax may be collected by distraint or levy or garnishment or by a proceeding in court within (3) years
after assessment of the tax.
When a period covers a leap year, the question is raised as to when the last day of the prescriptive period shall have
expired. Accordingly, in order to have a correct understanding of the procedure in determining the period of limitation
upon assessment and collection when the period covers a leap year, it shall be understood that years are of 365 days
each as provided in Article 13 of the New Civil Code. Consequently, a 3-year prescriptive period for assessment or
collection purposes prescribed under Sections 203 and 223(c) of the Tax Code shall have an aggregate number of
1,095 days (365 days x 3 years = 1,095 days), reckoned from the date of filing of the return, or from the issuance of
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the assessment, as the case may be. In other words, the 3-year prescriptive period expires on the 1,095th day,
notwithstanding the fact that within the period, there is a leap year which is of 366 days.
(2) Exceptions
a. 10 years in case of false or fraudulent return
NIRC, 222(a). Exceptions as to Period of Limitation of Assessment and Collection of Taxes. (a) In the case of a false
or fraudulent return with intent to evade tax or of failure to file a return, the tax may be assessed, or a proceeding in
court for the collection of such tax may be filed without assessment, at any time within ten (10) years after the discovery
of the falsity, fraud or omission: Provided, That in a fraud assessment which has become final and executory, the fact of
fraud shall be judicially taken cognizance of in the civil or criminal action for the collection thereof.
CIR v. Estate of Benigno Toda.
b. Waiver agreed upon by BIR and TP
NIRC, 222(b). Exceptions as to Period of Limitation of Assessment and Collection of Taxes. (b) If before the
expiration of the time prescribed in Section 203 for the assessment of the tax, both the Commissioner and the taxpayer
have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon. The
period so agreed upon may be extended by subsequent written agreement made before the expiration of the period
previously agreed upon.
(i) RMO 20-90 (Re: Proper Execution of the Waiver of the Statute of Limitations under the NIRC)
(ii) RMC 06-05 (Re: Salient Features of Supreme Court Decision on Waiver of the Statute of Limitations under the Tax
Code)
(iii) Revenue Delegation Authority No. 05-01 (Re: Delegation of Authority to Sign and Accept the Waiver of the Defense
of Prescription under the Statute of Limitations)
**for (i)-(iii), see separate document
Phil. Journalists, Inc v. CIR. [RMC 06-05]
- Waiver of statute of limitations does not mean that taxpayer relinquishes his/its right to invoke prescription
- Waiver of statute of limitations is a bilateral agreement between taxpayer and BIR
- Requirement to furnish taxpayer with copy of the waiver is to give notice of acceptance by the BIR and perfection of
the agreement
1. A waiver of the statute of limitations under the Tax Code must conform strictly with the provisions of Revenue
Memorandum Order No. 20-90 in order to be valid and binding.
1.1. The waiver must specify a definite agreed date between the BIR and the taxpayer within which the former may
assess and collect revenue taxes.
1.2. The waiver must be accepted by the Commissioner of Internal Revenue or his duly authorized representative,
and the date of acceptance must be indicated.
1.3. The taxpayer must be furnished a copy of the waiver accepted by the BIR.
2. A waiver of the statute of limitations under the Tax Code, to a certain extent, is a derogation of the taxpayer's right
to security against prolonged and unscrupulous investigations and must therefore be carefully and strictly
construed.
3. A waiver of the statute of limitations is not a waiver of the right to invoke the defense of prescription. It is an
agreement between the taxpayer and the BIR that the period to issue an assessment and collect the taxes due is
extended to a date certain.
4. A waiver of the statute of limitations is not a unilateral act by the taxpayer or the BIR, but is a bilateral agreement
between two parties.
CIR v. CA.
- To be binding, waivers require the concurrence of the CIR
ii. Suspension of Running of the Statute of Limitations
NIRC, 223. Suspension of Running of Statute of Limitations. - The running of the Statute of Limitations provided in Sections 203
and 222 on the making of assessment and the beginning of distraint or levy a proceeding in court for collection, in respect of any
deficiency, shall be suspended for the period during which the Commissioner is prohibited from making the assessment or
beginning distraint or levy or a proceeding in court and for sixty (60) days thereafter; when the taxpayer requests for a
reinvestigation which is granted by the Commissioner; when the taxpayer cannot be located in the address given by him in the
return filed upon which a tax is being assessed or collected: Provided, that, if the taxpayer informs the Commissioner of any change
in address, the running of the Statute of Limitations will not be suspended; when the warrant of distraint or levy is duly served
upon the taxpayer, his authorized representative, or a member of his household with sufficient discretion, and no property could be
located; and when the taxpayer is out of the Philippines.
RP v. Ablaza.
- Rationale for prescribing a limitation of actions for income tax collection
(f) Period of Collection
i. General Rule: BIR must collect the tax judicially or administratively within 5 years from assessment
PNB v. CA, CTA, Savellano, CIR.
ii. Exception: in case of false or fraudulent return without prior assessment, BIR must collect tax judicially within 10 years from
discovery of the falsity or omission
NIRC, 222(c). Exceptions as to Period of Limitation of Assessment and Collection of Taxes (c) Any internal revenue tax
which has been assessed within the period of limitation as prescribed in paragraph (a) hereof may be collected by distraint or levy
or by a proceeding in court within five (5) years following the assessment of the tax.
2. Protesting an Assessment
(a) Protest of Assessment by Taxpayer
NIRC, 228, supra.
RR 12-85. Pursuant to Section 326 of the National Internal Revenue Code of 1977, as amended, in relation to Section 4 of the same
Code, the following rules and regulations implementing the provisions of Section 319-A (now 229) of the same Code introduced by P.D.
1773 are hereby promulgated to govern the issuance of assessment notices as well as the adjudication of administrative protests against
said assessments.
POST REPORTING NOTICE
Sec. 1. Post-reporting notice. Upon receipt of the report of findings, the Division Chief, Revenue District Officer or Chief, Office Audit
Section, as the case may be, shall send to the taxpayer a notice for an informal conference before forwarding the report to higher
authorities for approval. The notice which is Annex "A" hereof shall be accompanied by a summary of findings as basis for the informal
conference.
In cases where the taxpayer has agreed in writing to the proposed assessment, or where such proposed assessment has been paid,
the required notice may be dispensed with.
PRE-ASSESSMENT NOTICE
Sec. 2. Notice of proposed assessment. When the Commissioner or his duly authorized representative finds that taxes should be
assessed, he shall first notify the taxpayer of his findings in the attached prescribed form as Annex "B" hereof. The notice shall be made in
writing and sent to the taxpayer at the address indicated in his return or at his last known address as stated in his notice of change of
address.
In cases where the taxpayer has agreed in writing to the proposed assessment, or where such proposed assessment has been paid,
the required notice may be dispensed with.
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Sec. 3. Time to reply. Venue for filing reply.
(a) Regional Office cases The taxpayer shall reply within a period of fifteen (15) days from receipt of the pre-assessment notice. In
meritorious cases and upon written request of the taxpayer an extension may be granted within which to respond, but in no case
shall the extension exceed a total of ten (10) days.
The reply of the taxpayer shall be filed with the Assessment Branch of the Regional Office which has jurisdiction over the case.
(b) National Office cases The taxpayer shall reply within a period of fifteen (15) days from receipt of pre-assessment notice. In
meritorious cases and upon written request the taxpayer may be given an extension within which to respond but in no case shall
the extension exceed a total of ten (10) days.
The reply of the taxpayer shall be filed with the Sector Audit Review Division or the National Audit Review Division, as the case may
be, having jurisdiction over the case.
With regard to pre-assessment notices sent by the Withholding Tax Division in compliance with withholding tax provisions, the
same shall be filed with the Withholding Tax Division.
Sec. 4. Examination of records. In case the taxpayer responds to the notice within the above-prescribed period, he or his duly
authorized representative shall be allowed to examine the records of the case and to present his arguments in writing protesting the
proposed assessment. Thereafter, the Commissioner or his authorized representative shall, of the basis of the evidence on record, decide
whether or not to approve the report as a prelude to the issuance of the corresponding assessment notice.
ISSUANCE OF ASSESSMENT
Sec. 5. Failure to reply to pre-assessment notices; issuance of assessment. In the event the taxpayer fails to respond to the pre-
assessment notice within the above prescribed period, or when the Commissioner or his duly authorized representative finds the
response to be without merit, he should be informed of such fact and the report of investigation shall be given due course.
PROTEST TO ASSESSMENT
Sec. 6. Protest. The taxpayer may protest administratively an assessment by filing a written request for reconsideration or
reinvestigation specifying the following particulars:
(a) Name of the taxpayer and address for the immediate past three (3) taxable year.
(b) Nature of request whether reinvestigation or reconsideration specifying newly discovered evidence he intends to present if it is a
request for investigation.
(c) The taxable periods covered.
(d) Assessment number.
(e) Date of receipt of assessment notice or letter of demand.
(f) Itemized statement of the findings to which the taxpayer agrees as a basis for computing the tax due, which amount should be paid
immediately upon the filing of the protest. For this purpose, the protest shall not be deemed validly filed unless payment of the
agreed portion of the tax is paid first.
(g) The itemized schedule of the adjustments with which the taxpayer does not agree.
(h) A statement of facts and/or law in support of the protest.
A request for reconsideration or reinvestigation of an assessment shall be accompanied by a waiver of the Statute of Limitations in
favor of the government.
For the purpose of the protest herein
(a) Request for reconsideration refers to a plea of re-evaluation of the assessment on the basis of existing records without need
of additional evidence. It may involve both a question of fact or of law or both.
(b) Request for reinvestigation refers to a plea of re-evaluation of an assessment on the basis of newly discovered or additional
evidence that a taxpayer intends to present in the reinvestigation. It may also involve a question of fact or law or both.
Sec. 7. When to file protest A protest must be filed within thirty (30) days from receipt of the assessment.
Sec. 8. Where to file protest In Regional Office cases, the request for reconsideration or reinvestigation of assessment shall be filed
with the Collection Branch of the region which has jurisdiction over the case.
For cases handled by the National Office, such request shall be filed with the Collection Office.
Sec. 9. Finality of assessments. If a taxpayer who receives an assessment from the Bureau of Internal Revenue fails to file a protest
within the period prescribed in Section 7 of these regulations, the said assessment shall be final and unappealable and the taxpayer is
thereby precluded from disputing the assessment.
Sec. 10. Appeals of decision of Commissioner or Regional Director of the Court of Tax Appeals. Final decision issued by the
Commissioner or Regional Director may be appealed to the Court of Tax Appeals within thirty (30) days from receipt thereof, otherwise
the same shall be final and executory.
Sec. 11. Change of address. In case of change of address, the taxpayer must give written notice thereof to the Revenue District Officer
or the district having jurisdiction over his former legal residence and/or place of business, copy furnished the Revenue District Officer
having jurisdiction over his new legal residence or place of business, the Revenue Computer Center and the Receivable Accounts
Division, BIR, National Office, Quezon City, and in case of failure to do so, any communication referred to in these regulations previously
sent to his former legal residence or business address as appearing in his tax return for the period involved shall be considered valid and
binding for purposes of the period within which to reply.
RR 12-99, supra.
(b) Submission of documents within 60 days from filing of protest
CIR v. First Express Pawnshop Co.
- Determination of relevant supporting documents rests on the taxpayer
(c) Effect of Failure to Protest render the assessment final, executor and demandable
3. Rendition of Decision by Commissioner
(a) Denial of Protest
i. CIRs actions equivalent to denial of protest
(1) Filing of criminal action against taxpayer
(2) Issuing a warrant of distraint and levy
CIR v. Isabela Cultural Corp.
- Final Notice before Seizure is deemed as commissioners final decision
(b) Inaction by commissioner no decision from the CIR within 180 days following the submission by TP of the documents in support of
his/its protest
4. Remedies of Taxpayer to Action by Commissioner
(a) In case of denial of protest within 30 days from receipt of decision, taxpayer may appeal before the CTA
i. What constitutes a decision appealable to CTA?
Case(s)
Allied Banking Corp. v. CIR.
CIR v. Ayala Securities Corp.
- A final demand letter for payment of delinquent taxes may be considered a decision on a disputed or protested assessment
CIR v. Union Shipping.
Oceaninc Wireless Network v. CIR.
ii. Effect of Failure to Appeal assessment becomes final, demandable and executor
Republic v. CA, Nielson.
(b) In case of inaction by Commission within 180 days from submission of documents
i. Within 30 days after the end of the 180-day period, taxpayer may appeal case to the CTA; or
ii. Taxpayer may await decision of the CIR, thereafter appeal within 30 days from receipt of denial
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Case(s):
RCBC v. CIR.
Lascona Land v. CIR. CTA Case No. 5777 reversed by CA: CIR v. Lascona Land CA-GR SP 58061)
(c) Effect of Failure to Appeal assessment becomes ginal, demandable and executory
B. Administrative Claim for refund or recovery of erroneously or illegally collected taxes remedy after payment
1. Legal Basis of Tax Refunds
NCC, 2142. Lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly
enriched or benefited at the expense of another.
NCC, 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return
it arises.
2. Statutory Basis for Tax Refund under the Tax Code
NIRC, 204(C). Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may - (C) Credit
or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when
they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit
for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in
writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however,
That a return filed showing an overpayment shall be considered as a written claim for credit or refund.
A Tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal revenue tax, excluding
withholding taxes, for which the taxpayer is directly liable. Any request for conversion into refund of unutilized tax credits may be allowed,
subject to the provisions of Section 230 of this Code: Provided, That the original copy of the Tax Credit Certificate showing a creditable balance
is surrendered to the appropriate revenue officer for verification and cancellation: Provided, further, That in no case shall a tax refund be
given resulting from availment of incentives granted pursuant to special laws for which no actual payment was made.
The Commissioner shall submit to the Chairmen of the Committee on Ways and Means of both the Senate and House of Representatives,
every six (6) months, a report on the exercise of his powers under this Section, stating therein the following facts and information, among
others: names and addresses of taxpayers whose cases have been the subject of abatement or compromise; amount involved; amount
compromised or abated; and reasons for the exercise of power: Provided, That the said report shall be presented to the Oversight Committee
in Congress that shall be constituted to determine that said powers are reasonably exercised and that the government is not unduly deprived
of revenues.
NIRC, 229. Recovery of Tax Erroneously or Illegally Collected. - no suit or proceeding shall be maintained in any court for the recovery of
any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any pe nalty claimed to
have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority,
or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with
the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or
duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty
regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written
claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have
been erroneously paid.
(a) Scope of claims for refund
(b) Necessity of proof for claim of refund
(c) Burden of proof on the taxpayer/claimant
(d) Nature of erroneously paid tax/illegally assessed collected tax
(e) Tax refund v. tax credit
(f) Essential requisites for claim of refund
i. Actual collection and receipt by government of tax sought to be recovered (requiring factual proof)
ii. Legal basis for grant of refund
3. Who may claim/apply for tax refund/tax credit
(a) Taxpayer/withholding agents of non-resident foreign corporations
4. Requirements for refund as laid down by cases
(a) Necessity of written claim for refund
CIR v. Rosemarie Acosta.
- Rationale for requiring a written claim for refund
(b) Claim containing a categorical demand for reimbursement
(c) Filing of administrative claim for refund and the suit/proceeding before the CTA within 2 years from date of payment regardless of any
supervening cause
CIR v. Primetown Property Group.
- The two-year prescriptive period is computed based on Sec. 31 of Admin Code of 1987, not Art. 13 of the Civil Code
CIR v. Phil. American Life Insurance Co.
- Requirements for recovery of any national internal revenue tax assessed or collected
ACCRA Investment Corp v. CA.
- When 2-year prescriptive period commences to run
- Rationale in computing the 2-year prescriptive period
CIR v. Victorias Milling.
- When period of prescription starts
College of Oral and Dental Surgery v. CTA.
- Failure to institute action within 2 years after payment of tax bars taxpayer from recovery of the same
BPI Leasing Corp v. CA.
- Tax refunds are strictly construed against the person claiming the exemption
(i) Meaning of supervening causes
5. Other considerations affecting tax refunds
(a) VAT refund/application for tax credit for excess input taxes 2 year period reckoned from the close o taxable quarter when sales
transactions made, not 2 years from date of payment
NIRC, 112(A). Refunds or Tax Credits of Input Tax. - (A) Zero-rated or Effectively Zero-rated Sales. - any VAT-registered person,
whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were
made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of
zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange
proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP):
Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of
goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one
of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, that for a person making
sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated
sales.
(b) No requirement to pay under protest prior to claim for refund/application for tax credit
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(c) Commissioner may grant tax refund even without written claim where on the face of the return filed upon which payment was made, it is
clear that there was erroneous payment
(d) Partial payment of tax cannot be made the basis of claim for tax refund
CIR v. Prieto.
(e) In case refund of taxes paid in installment, 2-year period counted from payment of last installment
CIR v. TMX Sales, CTA.
CIR v. CA.
C. Judicial Remedies
1. Appeal to the CTA
(a) In protest cases
NIRC, 228, supra.
i. 30 days from receipt of denial of protest
ii. In case of inaction by CIR, within 30 days following the lapse of the 180-day period for submission of documents
(b) In claim for tax refund
NIRC, 229, supra.
i. If no decision from the CIR is forthcoming, before the lapse of the 2-year period from the date of payment of the tax
2. Mode of appeal
RA 1125, as amended by RA 9282, Sec. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision,
ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and
Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the
CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred
to in Section 7(a)(2) herein.
Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of
Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided,
from the expiration of the period fixed by law to act thereon. A Division of the CTA shall hear the appeal: Provided, however, That with respect
to decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial Court in the exercise of its appellate jurisdiction
appeal shall be made by filing a petition for review under a procedure analogous to that provided for under rule 43 of the 1997 Rules of Civil
Procedure with the CTA, which shall hear the case en banc.
All other cases involving rulings, orders or decisions filed with the CTA as provided for in Section 7 shall be raffled to its Divisions. A
party adversely affected by a ruling, order or decision of a Division of the CTA may file a motion for reconsideration of new trial before the
same Division of the CTA within fifteens (15) days from notice thereof: Provide, however, That in criminal cases, the general rule applicable in
regular Courts on matters of prosecution and appeal shall likewise apply.
No appeal taken to the CTA from the decision of the Commissioner of Internal Revenue or the Commissioner of Customs or the Regional
Trial Court, provincial, city or municipal treasurer or the Secretary of Finance, the Secretary of Trade and Industry and Secretary of
Agriculture, as the case may be shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction of his
tax liability as provided by existing law: Provided, however, That when in the opinion of the Court the collection by the aforementioned
government agencies may jeopardize the interest of the Government and/or the taxpayer the Court any stage of the proceeding may suspend
the said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the amount
with the Court.
In criminal and collection cases covered respectively by Section 7(b) and (c) of this Act, the Government may directly file the said cases
with the CTA covering amounts within its exclusive and original jurisdiction.
3. Who may appeal
RA 1125, as amended by RA 9282, Sec. 11, supra.
4. Jurisdiction of the CTA
RA 1125, as amended by RA 9282, Sec. 7. Jurisdiction. - The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes,
fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws
administered by the Bureau of Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes,
fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific
period of action, in which case the inaction shall be deemed a denial;
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the
exercise of their original or appellate jurisdiction;
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges, seizure,
detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under
the Customs Law or other laws administered by the Bureau of Customs;
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over cases involving the
assessment and taxation of real property originally decided by the provincial or city board of assessment appeals;
6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from decisions of the
Commissioner of Customs which are adverse to the Government under Section 2315 of the Tariff and Customs Code;
7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or article, and the
Secretary of Agriculture in the case of agricultural product, commodity or article, involving dumping and countervailing duties
under Section 301 and 302, respectively, of the Tariff and Customs Code, and safeguard measures under Republic Act No.
8800, where either party may appeal the decision to impose or not to impose said duties.
b. Jurisdiction over cases involving criminal offenses as herein provided:
1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal Revenue Code or Tariff
and Customs Code and other laws administered by the Bureau of Internal Revenue or the Bureau of Customs: Provided,
however, That offenses or felonies mentioned in this paragraph where the principal amount o taxes and fees, exclusive of
charges and penalties, claimed is less than One million pesos (P1,000,000.00) or where there is no specified amount claimed
shall be tried by the regular Courts and the jurisdiction of the CTA shall be appellate. Any provision of law or the Rules of Court
to the contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil liability for
taxes and penalties shall at all times be simultaneously instituted with, and jointly determined in the same proceeding by the
CTA, the filing of the criminal action being deemed to necessarily carry with it the filing of the civil action, and no right to
reserve the filling of such civil action separately from the criminal action will be recognized.
2. Exclusive appellate jurisdiction in criminal offenses:
a) Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases originally decided by
them, in their respected territorial jurisdiction.
b) Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the exercise of their
appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in their respective jurisdiction.
c) Jurisdiction over tax collection cases as herein provided:
1) Exclusive original jurisdiction in tax collection cases involving final and executory assessments for taxes, fees,
charges and penalties: Provided, however, That collection cases where the principal amount of taxes and fees,
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exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) shall be tried by the
proper Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court.
2) Exclusive appellate jurisdiction in tax collection cases:
(a) Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection cases
originally decided by them, in their respective territorial jurisdiction.
(b) Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the Exercise of
their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction.
5. Procedure in the CTA A.M. No. 05-11-07-CTA, see separate document
6. Appeal from the CTA (division) to CTA en banc and from CTA en banc to SC
RA 1125, as amended by RA 9282, Sec. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matter arising under
the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be maintained, except as herein
provided, until and unless an appeal has been previously filed with the CTA and disposed of in accordance with the provisions of this Act.
A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new trial, may file a petition for
review with the CTA en banc.
RA 1125, as amended by RA 9282, Sec. 19. Review by Certiorari. - A party adversely affected by a decision or ruling of the CTA en banc may
file with the Supreme Court a verified petition for review on certiorari pursuant to Rule 45 of the 1997 Rules of Civil Procedure
II. Governments Remedies
A. Administrative Remedies
NIRC, 205. Remedies for the Collection of Delinquent Taxes. - The civil remedies for the collection of internal revenue taxes, fees or charges, and
any increment thereto resulting from delinquency shall be:
(a) By distraint of goods, chattels, or effects, and other personal property of whatever character, including stocks and other securities, debts,
credits, bank accounts and interest in and rights to personal property, and by levy upon real property and interest in rights to real
property; and
(b) By civil or criminal action.
Either of these remedies or both simultaneously may be pursued in the discretion of the authorities charged with the collection of such taxes:
Provided, however, That the remedies of distraint and levy shall not be availed of where the amount of tax involve is not more than One hundred
pesos (P100).
The judgment in the criminal case shall not only impose the penalty but shall also order payment of the taxes subject of the criminal case as
finally decided by the Commissioner.
The Bureau of Internal Revenue shall advance the amounts needed to defray costs of collection by means of civil or criminal action, including
the preservation or transportation of personal property distrained and the advertisement and sale thereof, as well as of real property and
improvements thereon.
1. Tax Lien
NIRC, 219. Nature and Extent of Tax Lien. - If any person, corporation, partnership, joint-account (cuentas en participacion), association or
insurance company liable to pay an internal revenue tax, neglects or refuses to pay the same after demand, the amount shall be a lien in favor
of the Government of the Philippines from the time when the assessment was made by the Commissioner until paid, with interests, penalties,
and costs that may accrue in addition thereto upon all property and rights to property belonging to the taxpayer: Provided, That this lien shall
not be valid against any mortgagee purchaser or judgment creditor until notice of such lien shall be filed by the Commissione r in the office of
the Register of Deeds of the province or city where the property of the taxpayer is situated or located.
RMC 2-94.
HSBC v. Commissioner.
Republic v. Enriquez.
- Tax lien is more superior than a private litigants claim predicated on a judgment
(a) Actual distraint
NIRC, 207(A). Summary Remedies. - (A) Distraint of Personal Property. - Upon the failure of the person owing any delinquent tax or
delinquent revenue to pay the same at the time required, the Commissioner or his duly authorized representative, if the amount involved
is in excess of One million pesos (P1,000,000), or the Revenue District Officer, if the amount involved is One million pesos (P1,000,000)
or less, shall seize and distraint any goods, chattels or effects, and the personal property, including stocks and other securities, debts,
credits, bank accounts, and interests in and rights to personal property of such persons ;in sufficient quantity to satisfy the tax, or charge,
together with any increment thereto incident to delinquency, and the expenses of the distraint and the cost of the subsequent sale.
A report on the distraint shall, within ten (10) days from receipt of the warrant, be submitted by the distraining officer to the
Revenue District Officer, and to the Revenue Regional Director: Provided, That the Commissioner or his duly authorized representative
shall, subject to rules and regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner, have the
power to lift such order of distraint: Provided, further, That a consolidated report by the Revenue Regional Director may be required by
the Commissioner as often as necessary.
(b) Constructive Distraint
NIRC, 206. Constructive Distraint of the Property of A Taxpayer. - To safeguard the interest of the Government, the Commissioner
may place under constructive distraint the property of a delinquent taxpayer or any taxpayer who, in his opinion, is retiring from any
business subject to tax, or is intending to leave the Philippines or to remove his property therefrom or to hide or conceal his property or
to perform any act tending to obstruct the proceedings for collecting the tax due or which may be due from him.
The constructive distraint of personal property shall be affected by requiring the taxpayer or any person having possession or
control of such property to sign a receipt covering the property distrained and obligate himself to preserve the same intact and unaltered
and not to dispose of the same ;in any manner whatever, without the express authority of the Commissioner.
In case the taxpayer or the person having the possession and control of the property sought to be placed under constructive
distraint refuses or fails to sign the receipt herein referred to, the revenue officer effecting the constructive distraint shall proceed to
prepare a list of such property and, in the presence of two (2) witnessed, leave a copy thereof in the premises where the property
distrained is located, after which the said property shall be deemed to have been placed under constructive distraint.
(c) Procedure for Distraint and Garnishment
NIRC, 208. Procedure for Distraint and Garnishment. - The officer serving the warrant of distraint shall make or cause to be made an
account of the goods, chattels, effects or other personal property distrained, a copy of which, signed by himself, shall be left either with
the owner or person from whose possession such goods, chattels, or effects or other personal property were taken, or at the dwelling or
place of business of such person and with someone of suitable age and discretion, to which list shall be added a statement of the sum
demanded and note of the time and place of sale.
Stocks and other securities shall be distrained by serving a copy of the warrant of distraint upon the taxpayer and upon the
president, manager, treasurer or other responsible officer of the corporation, company or association, which issued the said stocks or
securities.
Debts and credits shall be distrained by leaving with the person owing the debts or having in his possession or under his control
such credits, or with his agent, a copy of the warrant of distraint. The warrant of distraint shall be sufficient authority to the person
owning the debts or having in his possession or under his control any credits belonging to the taxpayer to pay to the Commissioner the
amount of such debts or credits.
Bank accounts shall be garnished by serving a warrant of garnishment upon the taxpayer and upon the president, manager,
treasurer or other responsible officer of the bank. Upon receipt of the warrant of garnishment, the bank shall tun over to the
Commissioner so much of the bank accounts as may be sufficient to satisfy the claim of the Government.
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NIRC, 209. Sale of Property Distrained and Disposition of Proceeds. - The Revenue District Officer or his duly authorized
representative, other than the officer referred to in Section 208 of this Code shall, according to rules and regulations prescribed by the
Secretary of Finance, upon recommendation of the Commissioner, forthwith cause a notification to be exhibited in not less than two (2)
public places in the municipality or city where the distraint is made, specifying; the time and place of sale and the articles distrained. The
time of sale shall not be less than twenty (20) days after notice. One place for the posting of such notice shall be at the Office of the Mayor
of the city or municipality in which the property is distrained.
At the time and place fixed in such notice, the said revenue officer shall sell the goods, chattels, or effects, or other personal
property, including stocks and other securities so distrained, at public auction, to the highest bidder for cash, or with the approval of the
Commissioner, through duly licensed commodity or stock exchanges.
In the case of Stocks and other securities, the officer making the sale shall execute a bill of sale which he shall deliver to the buyer,
and a copy thereof furnished the corporation, company or association which issued the stocks or other securities. Upon receipt of the
copy of the bill of sale, the corporation, company or association shall make the corresponding entry in its books, transfer the stocks or
other securities sold in the name of the buyer, and issue, if required to do so, the corresponding certificates of stock or other securities.
Any residue over and above what is required to pay the entire claim, including expenses, shall be returned to the owner of the
property sold. The expenses chargeable upon each seizure and sale shall embrace only the actual expenses of seizure and preservation of
the property pending ;the sale, and no charge shall be imposed for the services of the local internal revenue officer or his deputy.
NIRC, 210. Release of Distrained Property Upon Payment Prior to Sale. - If at any time prior to the consummation of the sale all
proper charges are paid to the officer conducting the sale, the goods or effects distrained shall be restored to the owner.
NIRC, 211. Report of Sale to Bureau of Internal Revenue. - Within two (2) days after the sale, the officer making the same shall make a
report of his proceedings in writing to the Commissioner and shall himself preserve a copy of such report as an official record.
NIRC, 212. Purchase by Government at Sale Upon Distraint. - When the amount bid for the property under distraint is not equal to
the amount of the tax or is very much less than the actual market value of the articles offered for sale, the Commissioner or his deputy
may purchase the same in behalf of the national Government for the amount of taxes, penalties and costs due thereon.
Property so purchased may be resold by the Commissioner or his deputy, subject to the rules and regulations prescribed by
the Secretary of Finance, the net proceeds therefrom shall be remitted to the National Treasury and accounted for as internal revenue.
Sale of Forfeited/seized chattels and removable fixtures
NIRC, 227. Satisfaction of Judgment Recovered Against any Internal Revenue Officer. - When an action is brought against any
Internal Revenue officer to recover damages by reason of any act done in the performance of official duty, and the Commissioner is
notified of such action in time to make defense against the same, through the Solicitor General, any judgment, damages or costs
recovered in such action shall be satisfied by the Commissioner, upon approval of the Secretary of Finance, or if the same be paid by the
person used shall be repaid or reimbursed to him.
No such judgment, damages, or costs shall be paid or reimbursed in behalf of a person who has acted negligently or in bad
faith, or with willful oppression.
NIRC, 228, supra.
2. Levy and Sale of Real Property
NIRC, 207(B). Summary Remedies (B) Levy on Real Property. - After the expiration of the time required to pay the delinquent tax or
delinquent revenue as prescribed in this Section, real property may be levied upon, before simultaneously or after the distraint of personal
property belonging to the delinquent. To this end, any internal revenue officer designated by the Commissioner or his duly authorized
representative shall prepare a duly authenticated certificate showing the name of the taxpayer and the amounts of the tax and penalty due
from him. Said certificate shall operate with the force of a legal execution throughout the Philippines.
Levy shall be affected by writing upon said certificate a description of the property upon which levy is made. At the same time, written
notice of the levy shall be mailed to or served upon the Register of Deeds for the province or city where the property is located and upon the
delinquent taxpayer, or if he be absent from the Philippines, to his agent or the manager of the business in respect to which the liability arose,
or if there be none, to the occupant of the property in question.
In case the warrant of levy on real property is not issued before or simultaneously with the warrant of distraint on personal property,
and the personal property of the taxpayer is not sufficient to satisfy his tax delinquency, the Commissioner or his duly authorized
representative shall, within thirty (30) days after execution of the distraint, proceed with the levy on the taxpayer's real property.
Within ten (10) days after receipt of the warrant, a report on any levy shall be submitted by the levying officer to the Commissioner or
his duly authorized representative: Provided, however, That a consolidated report by the Revenue Regional Director may be required by the
Commissioner as often as necessary: Provided, further, That the Commissioner or his duly authorized representative, subject to rules and
regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner, shall have the authority to lift warrants of
levy issued in accordance with the provisions hereof.
NIRC, 213. Advertisement and Sale. - Within twenty (20) days after levy, the officer conducting the proceedings shall proceed to advertise
the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale; and such advertisement shall cover a period
of a least thirty (30) days. It shall be effectuated by posting a notice at the main entrance of the municipal building or city hall and in public and
conspicuous place in the barrio or district in which the real estate lies and ;by publication once a week for three (3) weeks in a newspaper of
general circulation in the municipality or city where the property is located. The advertisement shall contain a statement of the amount of
taxes and penalties so due and the time and place of sale, the name of the taxpayer against whom taxes are levied, and a short description of
the property to be sold. At any time before the day fixed for the sale, the taxpayer may discontinue all proceedings by paying the taxes,
penalties and interest. If he does not do so, the sale shall proceed and shall be held either at the main entrance of the municipal building or city
hall, or on the premises to be sold, as the officer conducting the proceedings shall determine and as the notice of sale shall specify.
Within five (5) days after the sale, a return by the distraining or levying officer of the proceedings shall be entered upon the records of
the Revenue Collection Officer, the Revenue District officer and the Revenue Regional Director. The Revenue Collection Officer, in consultation
with the Revenue district Officer, shall then make out and deliver to the purchaser a certificate from his records, showing the proceedings of
the sale, describing the property sold stating the name of the purchaser and setting out the exact amount of all taxes, penalties and interest:
Provided, however, That in case the proceeds of the sale exceeds the claim and cost of sale, the excess shall be turned over to the owner of the
property.
The Revenue Collection Officer, upon approval by the Revenue District Officer may, out of his collection, advance an amount sufficient to
defray the costs of collection by means of the summary remedies provided for in this Code, including ;the preservation or transportation in
case of personal property, and the advertisement and subsequent sale, both in cases of personal and real property including improvements
found on the latter. In his monthly collection reports, such advances shall be reflected and supported by receipts.
NIRC, 214. Redemption of Property Sold. - Within one (1) year from the date of sale, the delinquent taxpayer, or any one for him, shall have
the right of paying to the Revenue District Officer the amount of the public taxes, penalties, and interest thereon from the date of delinquency
to the date of sale, together with interest on said purchase price at the rate of fifteen percent (15%) per annum from the date of purchase to
the date of redemption, and such payment shall entitle the person paying to the delivery of the certificate issued to the purchaser and a
certificate from the said Revenue District Officer that he has thus redeemed the property, and the Revenue District Officer shall forthwith pay
over to the purchaser the amount by which such property has thus been redeemed, and said property thereafter shall be free form the lien of
such taxes and penalties.
The owner shall not, however, be deprived of the possession of the said property and shall be entitled to the rents and other income
thereof until the expiration of the time allowed for its redemption.
3. Forfeiture of real property to the Government for want of bidder
NIRC, 215. Forfeiture to Government for Want of Bidder. - In case there is no bidder for real property exposed for sale as herein above
provided or if the highest bid is for an amount insufficient to pay the taxes, penalties and costs, the Internal Revenue Officer conducting the
sale shall declare the property forfeited to the Government in satisfaction of the claim in question and within two (2) days thereafter, shall
make a return of his proceedings and the forfeiture which shall be spread upon the records of his office. It shall be the duty of the Register of
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Deeds concerned, upon registration with his office of any such declaration of forfeiture, to transfer the title of the property forfeited to the
Government without the necessity of an order from a competent court.
Within one (1) year from the date of such forfeiture, the taxpayer, or any one for him may redeem said property by paying to the
Commissioner or the latter's Revenue Collection Officer the full amount of the taxes and penalties, together with interest thereon and the costs
of sale, but if the property be not thus redeemed, the forfeiture shall become absolute.
(a) Resale of forfeited property transferred in the name of government
RR 22-02.
4. Further distraint and levy
NIRC, 217. Further Distraint or Levy. - The remedy by distraint of personal property and levy on realty may be repeated if necessary until
the full amount due, including all expenses, is collected.
5. Suspension of business operations
6. Non-availability of injunction to restrain collection of tax
NIRC, 218. Injunction not Available to Restrain Collection of Tax. - No court shall have the authority to grant an injunction to restrain the
collection of any national internal revenue tax, fee or charge imposed by this Code.
Southern Cross Cement Corp v. Phil. Cement Manufacturers Corp.
- Imposition of safeguard measures should not be enjoined despite availability of judicial review
CIR v. Cebu Portland Cement.
- Rationale for prohibiting injunctions from restraining tax collection
Churchill v. Rafferty.
- By taking away injunction, the State leaves the taxpayer to the same ordinary remedial actions prevailing between citizen and citizen
- Illegality or unconstitutionality of a tax does not authorize the courts to restrain its collection by injunction
- Tax collectors are authorized to seize and sell property of delinquent taxpayers without court assistance
- No government could exist if every litigious man were permitted to delay the collection of its taxes
B. Judicial Remedies
NIRC, 220. Form and Mode of Proceeding in Actions Arising under this Code. - Civil and criminal actions and proceedings instituted in behalf of
the Government under the authority of this Code or other law enforced by the Bureau of Internal Revenue shall be brought in the name of the
Government of the Philippines and shall be conducted by legal officers of the Bureau of Internal Revenue but no civil or criminal action for the
recovery of taxes or the enforcement of any fine, penalty or forfeiture under this Code shall be filed in court without the approval of the
Commissioner.
NIRC, 221. Remedy for Enforcement of Statutory Penal Provisions. - The remedy for enforcement of statutory penalties of all sorts shall be by
criminal or civil action, as the particular situation may require, subject to the approval of the Commissioner.
NIRC, 281. Prescription for Violations of any Provision of this Code. - All violations of any provision of this Code shall prescribe after Five (5)
years.
Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not known at the time, from
the discovery thereof and the institution of judicial proceedings for its investigation and punishment.
The prescription shall be interrupted when proceedings are instituted against the guilty persons and 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.
Quirico Ungab v. Vicente Cusi.
- Assessment of a deficiency is not necessary to a criminal prosecution for tax evasion
III. Statutory Offenses and Penalties
A. Civil Penalties
1. Surcharge
(a) General 25%
NIRC, 248(A). Civil Penalties. (A) There shall be imposed, in addition to the tax required to be paid, a penalty equivalent to twenty-
five percent (25%) of the amount due, in the following cases:
(1) Failure to file any return and pay the tax due thereon as required under the provisions of this Code or rules and regulations on
the date prescribed; or
(2) Unless otherwise authorized by the Commissioner, filing a return with an internal revenue officer other than those with whom
the return is required to be filed; or
(3) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment; or
(4) Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of this Code
or rules and regulations, or the full amount of tax due for which no return is required to be filed, on or before the date
prescribed for its payment.
(b) In case of willful neglect to file return, filing of false/fraudulent return 50%
NIRC, 248(B). In case of willful neglect to file the return within the period prescribed by this Code or by rules and regulations, or in case
a false or fraudulent return is willfully made, the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax, in
case, any payment has been made on the basis of such return before the discovery of the falsity or fraud: Provided, That a substantial
underdeclaration of taxable sales, receipts or income, or a substantial overstatement of deductions, as determined by the Commissioner
pursuant to the rules and regulations to be promulgated by the Secretary of Finance, shall constitute prima facie evidence of a false or
fraudulent return: Provided, further, That failure to report sales, receipts or income in an amount exceeding thirty percent (30%) of that
declared per return, and a claim of deductions in an amount exceeding (30%) of actual deductions, shall render the taxpayer liable for
substantial underdeclaration of sales, receipts or income or for overstatement of deductions, as mentioned herein.
2. Interest
NIRC, 249. Interest.
(a) In general (20%)
NIRC, 249(A). In General. - There shall be assessed and collected on any unpaid amount of tax, interest at the rate of twenty percent
(20%) per annum, or such higher rate as may be prescribed by rules and regulations, from the date prescribed for payment until the
amount is fully paid.
(b) Deficiency Interest
NIRC, 249(B). Deficiency Interest. - Any deficiency in the tax due, as the term is defined in this Code, shall be subject to the interest
prescribed in Subsection (A) hereof, which interest shall be assessed and collected from the date prescribed for its payment until the full
payment thereof
(c) Delinquency Interest
NIRC, 249(C). Delinquency Interest. - In case of failure to pay:
(1) The amount of the tax due on any return to be filed, or
(2) The amount of the tax due for which no return is required, or
(3) A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner,
there shall be assessed and collected on the unpaid amount, interest at the rate prescribed in Subsection (A) hereof until the
amount is fully paid, which interest shall form part of the tax.
(d) Interest on Extended Payment
NIRC, 249(D). Interest on Extended Payment. - If any person required to pay the tax is qualified and elects to pay the tax on
installment under the provisions of this Code, but fails to pay the tax or any installment hereof, or any part of such amount or installment
on or before the date prescribed for its payment, or where the Commissioner has authorized an extension of time within which to pay a
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tax or a deficiency tax or any part thereof, there shall be assessed and collected interest at the rate hereinabove prescribed on the tax or
deficiency tax or any part thereof unpaid from the date of notice and demand until it is paid.
3. Other Fines and Penalties
(a) Failure to file certain returns
NIRC, 250. Failure to File Certain Information Returns. - In the case of each failure to file an information return, statement or list, or
keep any record, or supply any information required by this Code or by the Commissioner on the date prescribed therefor, unless it is
shown that such failure is due to reasonable cause and not to willful neglect, there shall, upon notice and demand by the Commisssioner,
be paid by the person failing to file, keep or supply the same, One thousand pesos (1,000) for each failure: Provided, however, That the
aggregate amount to be imposed for all such failures during a calendar year shall not exceed Twenty-five thousand pesos (P25,000).
(b) Failure of withholding agent to collect and remit tax
NIRC, 251. Failure of a Withholding Agent to Collect and Remit Tax. - Any person required to withhold, account for, and remit any tax
imposed by this Code or who willfully fails to withhold such tax, or account for and remit such tax, or aids or abets in any manner to
evade any such tax or the payment thereof, shall, in addition to other penalties provided for under this Chapter, be liable upon conviction
to a penalty equal to the total amount of the tax not withheld, or not accounted for and remitted.
(c) Failure of withholding Agent to refund excess withholding tax
NIRC, 252. Failure of a Withholding Agent to refund Excess Withholding Tax. - Any employer/withholding agent who fails or refuses
to refund excess withholding tax shall, in addition to the penalties provided in this Title, be liable to a penalty to the total amount of
refunds which was not refunded to the employee resulting from any excess of the amount withheld over the tax actually due on their
return.
B. Crimes, Other Offenses and Forfeitures
1. General Provisions
NIRC, 253. General Provisions. -
(a) Any person convicted of a crime penalized by this Code shall, in addition to being liable for the payment of the tax, be subject to the
penalties imposed herein: Provided, That payment of the tax due after apprehension shall not constitute a valid defense in any
prosecution for violation of any provision of this Code or in any action for the forfeiture of untaxed articles.
(b) Any person who willfully aids or abets in the commission of a crime penalized herein or who causes the commission of any such
offense by another shall be liable in the same manner as the principal.
(c) If the offender is not a citizen of the Philippines, he shall be deported immediately after serving the sentence without further
proceedings for deportation. If he is a public officer or employee, the maximum penalty prescribed for the offense shall be imposed
and, in addition, he shall be dismissed from the public service and perpetually disqualified from holding any public office, to vote
and to participate in any election. If the offender is a Certified Public Accountant, his certificate as a Certified Public Accountant
shall, upon conviction, be automatically revoked or cancelled.
(d) 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 the employees responsible for the violation.
(e) The fines to be imposed for any violation of the provisions of this Code shall not be lower than the fines imposed herein or twice the
amount of taxes, interest and surcharges due from the taxpayer, whichever is higher.
2. Specific Offenses and Crimes
NIRC, 254. Attempt to Evade or Defeat Tax. - Any person who willfully attempts in any manner to evade or defeat any tax imposed under
this Code or the payment thereof shall, in addition to other penalties provided by law, upon conviction thereof, be punished by a fine not less
than Thirty thousand (P30,000) but not more than One hunderd thousand pesos (P100,000) and suffer imprisonment of not less than two (2)
years but not more than four (4) years: Provided, That the conviction or acquittal obtained under this Section shall not be a bar to the filing of
a civil suit for the collection of taxes.
NIRC, 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess
Taxes Withheld on Compensation. - Any person required under this Code or by rules and regulations promulgated thereunder to pay any
tax make a return, keep any record, or supply correct the accurate information, who willfully fails to pay such tax, make such return, keep such
record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess taxes withheld on compensation, at
the time or times required by law or rules and regulations shall, in addition to other penalties provided by law, upon conviction thereof, be
punished by a fine of not less than Ten thousand pesos (P10,000) and suffer imprisonment of not less than one (1) year but not more than ten
(10) years.
Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or 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
internal revenue office wherein the same was actually filed shall, upon conviction therefor, be punished by a fine of not less than Ten thousand
pesos (P10,000) but not more than Twenty thousand pesos (P20,000) and suffer imprisonment of not less than one (1) year but not more than
three (3) years.
NIRC, 256. Penal Liability of Corporations. - Any corporation, association or general co-partnership liable for any of the acts or omissions
penalized under this Code, in addition to the penalties imposed herein upon the responsible corporate officers, partners, or employees shall,
upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos (P50,000) but not more than One
hundred thousand pesos (P100,000).
NIRC, 257. Penal Liability for Making False Entries, Records or Reports, or Using Falsified or Fake Accountable Forms.
(A) Any financial officer or independent Certified Public Accountant engaged to examine and audit books of accounts of taxpayers under
Section 232 (A) and any person under his direction who:
(1) Willfully falsifies any report or statement bearing on any examination or audit, or renders a report, including exhibits, statements,
schedules or other forms of accountancy work which has not been verified by him personally or under his supervision or by a
member of his firm or by a member of his staff in accordance with sound auditing practices; or
(2) Certifies financial statements of a business enterprise containing an essential misstatement of facts or omission in respect of the
transactions, taxable income, deduction and exemption of his client; or
(B) Any person who:
(1) Not being an independent Certified Public Accountant according to Section 232(B) or a financial officer, examines and audits books
of accounts of taxpayers; or
(2) Offers to sign and certify financial statements without audit; or
(3) Offers any taxpayer the use of accounting bookkeeping records for internal revenue purposes not in conformity with the
requirements prescribed in this Code or rules and regulations promulgated thereunder; or
(4) Knowingly makes any false entry or enters any false or fictitious name in the books of accounts or record mentioned in the
preceding paragraphs; or
(5) Keeps two (2) or more sets of such records or books of accounts; or
(6) In any way commits an act or omission, in violation of the provisions of this Section; or
(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 translation as required in Section 234 of this Code, or whose books of accounts or records kept in a native language,
English or Spanish, and found to be at material variance 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 this Code, or knowingly uses fake or falsified revenue
official receipts, Letters of Authority, certificates authorizing registration, Tax Credit Certificates, Tax Debit Memoranda and other
accountable forms shall, upon conviction for each act or omission, be punished by a fine not less than Fifty thousand pesos
(P50,000) but not more than One hundred pesos (P100,000) and suffer imprisonment of not less than two (2) years but not more
than six (6) years.
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If the offender is a Certified Public Accountant, his certificate as a Certified Public Accountant shall be automatically revoked or
cancelled upon conviction.
In the case of foreigners, conviction under this Code shall result in his immediate deportation after serving sentence, without
further proceedings for deportation.
NIRC, 258. Unlawful Pursuit of Business. - Any person who carries on any business for which an annual registration fee is imposed without
paying the tax as required by law shall, upon conviction for each act or omission, be punished by a fine of not less than Five thousand pesos
(P5,000) but not more than Twenty thousand pesos (P20,000) and suffer imprisonment of not less than six (6) months but not more than two
(2) years: Provided, That in the case of a person engaged in the business of distilling, rectifying, repacking, compounding or manufacturing any
article subject to excise tax, he shall, upon conviction for each act or omission, be punished by a fine of not less than Thirty thousand pesos
(P30,000) but not more than Fifty thousand pesos (P50,000) and suffer imprisonment of not less than two (2) years but not more than four
(4) years.
NIRC, 259. Illegal Collection of Foreign Payments. - Any person who knowingly undertakes the collection of foreign payments as provided
under Section 67 of this Code without having obtained a license therefor, or without complying with its implementing rules and regulations,
shall, upon conviction for each act or omission, be punished by a fine of not less than Twenty thousand pesos (P20,000) but not more than
Fifty thousand pesos (P50,000) and suffer imprisonment of not less than one (1) year but not more than two (2) years.
NIRC, 260. Unlawful Possession of Cigarette Paper in Bobbins or Rolls, Etc. - It shall be unlawful for any person to have in his possession
cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips, without the corresponding authority therefor issued by the
Commissioner. Any person, importer, manufacturer of cigar and cigarettes, who has been found guilty under this Section, shall, upon
conviction for each act or omission, be punished by a fine of not less than Twenty thousand pesos (P20,000) but not more than One hundred
thousand pesos (P1000,000) and suffer imprisonment for a term of not less than six (6) years and one (1) day but not more than twelve (12)
years.
NIRC, 261. Unlawful Use of Denatured Alcohol. - Any person who for the purpose of manufacturing any beverage, uses denatured alcohol or
alcohol specially denatured to be used for motive power or withdrawn under bond for industrial uses or alcohol knowingly misrepresented to
be denatured to be unfit for oral intake or who knowingly sells or offers for sale any beverage made in whole or in part from such alcohol or
who uses such alcohol for the manufacture of liquid medicinal preparations taken internally, or knowingly sells or offers for sale such
preparations containing as an ingredient such alcohol, shall upon conviction for each act or omission be punished by a fine of not less than
Twenty thousand pesos (P20,000) but not more than One hundred thousand pesos (P100,000) and suffer imprisonment for a term of not less
than six (6) years and one (1) day but not more than twelve (12) years.
Any person who shall unlawfully recover or attempt to recover by distillation or other process any denatured alcohol or who knowingly
sells or offers for sale, conceals or otherwise disposes of alcohol so recovered or redistilled shall be subject to the same penalties imposed
under this Section.
NIRC, 262. Shipment or Removal of Liquor or Tobacco Products under False Name or Brand or as an Imitation of any Existing or
Otherwise Known Product Name or Brand. - Any person who ships, transports or removes spirituous, compounded or fermented liquors,
wines or any manufactured products of tobacco under any other than the proper name or brand known to the trade as designating the kind
and quality of the contents of the cask, bottle or package containing the same or as an imitation of any existing or otherwise known product
name or brand or causes such act to be done, shall, upon conviction for each act or omission, be punished by a fine of not less than Twenty
thousand pesos (P20,000) but not more than One hundred thousand pesos (P1000,000) and suffer imprisonment of not less than six (6) years
and one (1) day but not more than twelve (12) years.
NIRC, 263. Unlawful Possession or Removal of Articles Subject to Excise Tax without Payment of the Tax. - Any person who owns
and/or is found in possession of imported articles subject to excise tax, the tax on which has not been paid in accordance with law, or any
person who owns and/or is found in possession of imported tax-exempt articles other than those to whom they are legally issued shall be
punished by:
(a) A fine of not less than One thousand pesos (P1,000) nor more than Two thousand pesos (P2,000) and suffer imprisonment of not less
than sixty (60) days but not more than one hundred (100) days, if the appraised value, to be determined in the manner prescribed in the
Tariff and Customs Code, including duties and taxes, of the articles does not exceed One thousand pesos (P1,000).
(b) A fine of not less than Ten thousand pesos (P10,000) but not more than Twenty thousand pesos (P20,000) and suffer imprisonment of
not less than two (2) years but not more than four (4) years, if the appraised value, to be determined in the manner prescribed in the
Tariff and Customs Code, including duties and taxes, of the articles exceeds One thousand pesos (P1,000) but does not exceed Fifty
thousand pesos (P50,000);
(c) A fine of not less than Thirty thousand pesos (P30,000) but not more than Sixty thousand pesos (P60,000) and suffer imprisonment of
not less than four (4) years but not more than six (6) years, if the appraised value, to be determined in the manner prescribed in the
Tariff and Customs Code, including duties and taxes of the articles is more than Fifty thousand pesos (P50,000) but does not exceed One
hundred fifty thousand pesos (P150,000); or
(d) A fine of not less than Fifty thousand pesos (P50,000) but not more than One hundred thousand pesos (P100,000) and suffer
imprisonment of not less than ten (10) years but not more than twelve (12) years, if the appraised value, to be determined in the manner
prescribed in the Tariff and Customs Code, including duties and taxes, of the articles exceeds One hundred fifty thousand pesos
(P150,000).
Any person who is found in possession of locally manufactured articles subject to excise tax, the tax on which has not been paid in
accordance with law, or any person who is found in possession of such articles which are exempt from excise tax other than those to whom the
same is lawfully issued shall be punished with a fine of not less than (10) times the amount of excise tax due on the articles found but not less
than Five hundred pesos (P500) and suffer imprisonment of not less than two (2) years but not more than four (4) years.
Any manufacturer, owner or person in charge of any article subject to excise tax who removes or allows or causes the unlawful removal
of any such articles from the place of production or bonded warehouse, upon which the excise tax has not been paid at the time and in the
manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid, or conceals the same after illegal
removal shall, for the first offense, be punished with a fine of not less than ten (10) times the amount of excise tax due on the articles but not
less than One thousand pesos (P1,000) and suffer imprisonment of not less than one (1) year but not more than two (2) years.
The mere unexplained possession of articles subject to excise tax, the tax on which has not been paid in accordance with law, shall be
punishable under this Section.
NIRC, 264. Failure or refusal to Issue Receipts or Sales or Commercial Invoices, Violations related to the Printing of such Receipts or
Invoices and Other Violations.
(a) Any person who, being required under Section 237 to issue receipts or sales or commercial invoices, fails or refuses to issue such receipts
of invoices, issues receipts or invoices that do not truly reflect and/or contain all the information required to be shown therein, or uses
multiple or double receipts or invoices, shall, upon conviction for each act or omission, be punished by a fine of not less than One
thousand pesos (P1,000) but not more than Fifty thousand pesos (P50,000) and suffer imprisonment of not less than two (2) years but
not more than four (4) years.
(b) Any person who commits any of the acts enumerated hereunder shall be penalized in the same manner and to the same extent as
provided for in this Section:
(1) Printing of receipts or sales or commercial invoices without authority from the Bureau of Internal Revenue; or
(2) Printing of double or multiple sets of invoices or receipts; or
(3) Printing of unnumbered receipts or sales or commercial invoices, not bearing the name, business style, Taxpayer Identification
Number, and business address of the person or entity.
NIRC, 265. Offenses Relating to Stamps. - Any person who commits any of the acts enumerated hereunder shall, upon conviction thereof, be
punished by a fine of not less than Twenty thousand pesos (P20,000) but not more than Fifty thousand pesos (P50,000) and suffer
imprisonment of not less than four (4) years but not more than eight (8) years:
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(a) making, importing, selling, using or possessing without express authority from the Commissioner, any die for printing or making stamps,
labels, tags or playing cards;
(b) Erasing the cancellation marks of any stamp previously used, or altering the written figures or letters or cancellation marks on internal
revenue stamps;
(c) Possessing false, counterfeit, restored or altered stamps, labels or tags or causing the commission of any such offense by another;
(d) Selling or offering for sale any box or package containing articles subject to excise tax with false, spurious or counterfeit stamps or labels
or selling from any such fraudulent box, package or container as aforementioned; or
(e) Giving away or accepting from another, or selling, buying or using containers on which the stamps are not completely destroyed.
NIRC, 266. Failure to Obey Summons. - Any person who, being duly summoned to appear to testify, or to appear and produce books of
accounts, records, memoranda or other papers, or to furnish information as required under the pertinent provisions of this Code, neglects to
appear or to produce such books of accounts, records, memoranda or other papers, or to furnish such information, shall, upon conviction, be
punished by a fine of not less than Five thousand pesos (P5,000) but not more than ten thousand pesos (P10,000) and suffer imprisonment of
not less than one (1) year but not more than two (2) years.
NIRC, 267. Declaration under Penalties of Perjury. - Any declaration, return and other statement required under this Code, shall, in lieu of
an oath, contain a written statement that they are made under the penalties of perjury. Any person who willfully files a declaration, return or
statement containing information which is not true and correct as to every material matter shall, upon conviction, be subject to the penalties
prescribed for perjury under the Revised Penal Code.
NIRC, 268. Other Crimes and Offenses.
(A) Misdeclaration or Misrepresentation of Manufacturers Subject to Excise Tax. - Any manufacturer who, in violation of the provisions
of Title VI of this Code, misdeclares in the sworn statement required therein or in the sales invoice, any pertinent data or information
shall be punished by a summary cancellation or withdrawal of the permit to engage in business as a manufacturer of articles subject to
excise tax.
(B) Forfeiture of Property Used in Unlicensed Business or Dies Used for Printing False Stamps, Etc. - All chattels, machinery, and
removable fixtures of any sort used in the unlicensed production of articles subject to excise tax shall be forfeited. Dies and other
equipment used for the printing or making of any internal revenue stamp, label or tag which is in imitation of or purports to be a lawful
stamp, label or tag shall also be forfeited.
(C) Forfeiture of Goods Illegally Stored or Removed. - Unless otherwise specifically authorized by the Commissioner, all articles subject
to excise tax should not be stored or allowed to remain in the distillery warehouse, bonded warehouse or other place where made, after
the tax thereon has been paid; otherwise, all such articles shall be forfeited. Articles withdrawn from any such place or from customs
custody or imported into the country without the payment of the required tax shall likewise be forfeited.
NIRC, 269. Violations Committed by Government Enforcement Officers. - Every official, agent, or employee of the Bureau of Internal
Revenue or any other agency of the Government charged with the enforcement of the provisions of this Code, who is guilty of any of the
offenses herein below specified shall, upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos
(P50,000) but not more than One hundred thousand pesos (P100,000) and suffer imprisonment of not less than ten (10) years but not more
than fifteen (15) years and shall likewise suffer an additional penalty of perpetual disqualification to hold public office, to vote, and to
participate in any public election:
(a) Extortion or willful oppression through the use of his office or willful oppression and harassment of a taxpayer who refused, declined,
turned down or rejected any of his offers specified in paragraph (d) hereof;
(b) Knowingly demanding or receiving any fee, other or greater sums that are authorized by law or receiving any fee, compensation or
reward, except as by law prescribed, for the performance of any duty;
(c) Willfully neglecting to give receipts, as by law required, for any sum collected in the performance of duty or willfully neglecting to
perform any other duties enjoined by law;
(d) Offering or undertaking to accomplish, file or submit a report or assessment on a taxpayer without the appropriate examination of the
books of accounts or tax liability, or offering or undertaking to submit a report or assessment less than the amount due the Government
for any consideration or compensation, or conspiring or colluding with another or others to defraud the revenues or otherwise violate
the provisions of this Code;
(e) Neglecting or by design permitting the violation of the law by any other person;
(f) Making or signing any false entry or entries in any book, or making or signing any false certificate or return;
(g) Allowing or conspiring or colluding with another to allow the unauthorized retrieval, withdrawal or recall of any return, state ment or
declaration after the same has been officially received by the Bureau of Internal Revenue;
(h) Having knowledge or information of any violation of this Code or of any fraud committed on the revenues collectible by the Bureau of
Internal Revenue, failure to report such knowledge or information to their superior officer, or failure to report as otherwise required by
law; and
(i) Without the authority of law, demanding or accepting or attempting to collect, directly or indirectly, as payment or otherwise any sum of
money or other thing of value for the compromise, adjustment or settlement of any charge or complaint for any violation or alleged
violation of this Code.
Provided, That the provisions of the foregoing paragraph notwithstanding, any internal revenue officer for which a prima facie case of
grave misconduct has been established shall, after due notice and hearing of the administrative case and subject to Civil Service Laws, be
dismissed from the revenue service: Provided, further, That the term 'grave misconduct', as defined in Civil Service Law, shall include the
issuance of fake letters of authority and receipts, forgery of signature, unsurpation of authority and habitual issuance of unreasonable
assessments.
NIRC, 270. Unlawful Divulgence of Trade Secrets. - Except as provided in Section 71 of this Code and Section 26 of Republic Act No. 6388,
any officer or employee of the Bureau of Internal Revenue who divulges to any person or makes known in any other manner than may be
provided by law information regarding the business, income or estate of any taxpayer, the secrets, operation, style or work, or apparatus of
any manufacturer or producer, or confidential information regarding the business of any taxpayer, knowledge of which was acquired by him
in the discharge of his official duties, shall upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos
(P50,000) but not more than One hundred thousand pesos (P100,000), or suffer imprisonment of not less than two (2) years but not more
than five (5) years, or both.
NIRC, 271. Unlawful Interest of Revenue Law Enforcers in Business. - Any internal revenue officer who is or shall become interested,
directly or indirectly, in the manufacture, sale or importation of any article subject to excise tax under Title VI of this Code or in the
manufacture or repair or sale, of any die for printing, or making of stamps, or labels shall upon conviction for each act or omission, be
punished by a fine of not less than Five thousand pesos (P5,000) but not more than Ten thousand pesos (P10,000), or suffer imprisonment of
not less than two (2) years and one (1) day but not more than four (4) years, or both.
NIRC, 272. Violation of Withholding Tax Provision. - Every officer or employee of the Government of the Republic of the Philippines or any
of its agencies and instrumentalities, its political subdivisions, as well as government-owned or controlled corporations, including the Bangko
Sentral ng Pilipinas (BSP), who, under the provisions of this Code or rules and regulations promulgated thereunder, is charged with the duty
to deduct and withhold any internal revenue tax and to remit the same in accordance with the provisions of this Code and other laws is guilty
of any offense herein below specified shall, upon conviction for each act or omission be punished by a fine of not less than Five thousand pesos
(P5,000) but not more than Fifty thousand pesos (P50,000) or suffer imprisonment of not less than six (6) months and one (1) day but not
more than two (2) years, or both:
(a) Failing or causing the failure to deduct and withhold any internal revenue tax under any of the withholding tax laws and implementing
rules and regulations;
(b) Failing or causing the failure to remit taxes deducted and withheld within the time prescribed by law, and implementing rules and
regulations; and
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(c) Failing or causing the failure to file return or statement within the time prescribed, or rendering or furnishing a false or fraudulent return
or statement required under the withholding tax laws and rules and regulations.
NIRC, 273. Penalty for Failure to Issue and Execute Warrant. - Any official who fails to issue or execute the warrant of distraint or levy
within thirty (30) days after the expiration of the time prescribed in Section 207 or who is found guilty of abusing the exercise thereof by
competent authority shall be automatically dismissed from the service after due notice and hearing.
NIRC, 274. Penalty for Second and Subsequent Offenses. - In the case of reincidence, the maximum of the penalty prescribed for the offense
shall be imposed.
NIRC, 275. Violation of Other Provisions of this Code or Rules and Regulations in General. - Any person who violates any provision of
this Code or any rule or regulation promulgated by the Department of Finance, for which no specific penalty is provided by law, shall, upon
conviction for each act or omission, be punished by a fine of not more than One thousand pesos (P1,000) or suffer imprisonment of not more
than six (6) months, or both.
NIRC, 276. Penalty for Selling, Transferring, Encumbering or in any way Disposing of Property Placed under Constructive Distraint. -
Any taxpayer, whose property has been placed under constructive distraint, who sells, transfers, encumbers or in any way disposes of said
property, or any part thereof, without the knowledge and consent of the Commissioner, shall, upon conviction for each act or omission, be
punished by a fine of not less than twice the value of the property so sold, encumbered or disposed of but not less than Five Thousand pesos
(P5,000), or suffer imprisonment of not less than two (2) years and one (1) day but not more than four (4) years, of both.
NIRC, 277. Failure to Surrender Property Placed under Distraint and Levy. - Any person having in his possession or under his control any
property or rights to property, upon which a warrant of constructive distraint, or actual distraint and levy has been issued shall, upon demand
by the Commissioner or any of his deputies executing such warrant, surrender such property or right to property to the Commissioner or any
of his deputies, unless such property or right is, at the time of such demand, subject to an attachment or execution under any judicial process.
Any person who fails or refuses to surrender any of such property or right shall be liable in his own person and estate to the Government in a
sum equal to the value of the property or rights not so surrendered but not exceeding the amount of the taxes (including penalties and
interest) for the collection of which such warrant had been issued, together with cost and interest if any, from the date of such warrant. In
addition, such person shall, upon conviction for each act or omission, be punished by a fine of not less than Five thousand pesos (P5,000), or
suffer imprisonment of not less than six (6) months and one (1) day but not more than two (2) years, or both.
NIRC, 278. Procuring Unlawful Divulgence of Trade Secrets. - Any person who causes or procures an officer or employee of the Bureau of
Internal 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 his official duties, and which it is unlawful for him to reveal, and 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, shall be punished by a
fine of not more than Two thousand pesos (P2,000), or suffer imprisonment of not less than six (6) months nor more than five (5) years, or
both.
NIRC, 279. Confiscation and Forfeiture of the Proceeds or Instruments of Crime. - In addition to the penalty Imposed for the violation of
the provisions of Title X of this Code, the same shall carry with it the confiscation and forfeiture in favor of the government of the proceeds of
the crime or value of the goods, and the instruments or tools with which the crime was committed: Provided, however, That if in the course of
the proceedings, it is established that the instruments or tools used in the illicit act belong to a third person, the same shall be confiscated and
forfeited after due notice and hearing in a separate proceeding in favor of the Government if such third person leased, let, chartered or
otherwise entrusted the same to the offender: Provided, further, That in case the lessee subleased, or the borrower, charterer, or trustee
allowed the use of the instruments or tools to the offender, such instruments or tools shall, likewise, be confiscated and forfeited: Provided,
finally, That property of common carriers shall not be subject to forfeiture when used in the transaction of their business as such common
carrier, unless the owner or operator of said common carrier was, at the time of the illegal act, a consenting party or privy thereto, without
prejudice to the owner's right of recovery against the offender in a civil or criminal action. Articles which are not subject of lawful commerce
shall be destroyed.
NIRC, 280. Subsidiary Penalty. - If the person convicted for violation of any of the provisions of this Code has no property with which to meet
the fine imposed upon him by the court, or is unable to pay such fine, he shall be subject to a subsidiary personal liability at the rate of one (1)
day for each Eight pesos and fifty centavos (P8.50) subject to the rules established in Article 39 of the Revised Penal Code.
NIRC, 281, supra.
C. Informers Reward
NIRC, 282. Informer's Reward to Persons Instrumental in the Discovery of Violations of the National Internal Revenue Code and in the
Discovery and Seizure of Smuggled Goods.
(A) For Violations of the National Internal Revenue Code. Any person, except an internal revenue official or employee, or other public official
or employee, or his relative within the sixth degree of consanguinity, who voluntarily gives definite and sworn information, not yet in the
possession of the Bureau of Internal Revenue, leading to the discovery of frauds upon the internal revenue laws or violations of any of the
provisions thereof, thereby resulting in the recovery of revenues, surcharges and fees and/or the conviction of the guilty party and/or the
imposition of any of the fine or penalty, shall be rewarded in a sum equivalent to ten percent (10%) of the revenues, surcharges or fees
recovered and/or fine or penalty imposed and collected or One Million Pesos (P1,000,000) per case, whichever is lower. The same amount of
reward shall also be given to an informer where the offender has offered to compromise the violation of law committed by him and his offer
has been accepted by the Commissioner and collected from the offender: Provided, That should no revenue, surcharges or fees be actually
recovered or collected, such person shall not be entitled to a reward: Provided, further, That the information mentioned herein shall not refer
to a case already pending or previously investigated or examined by the Commissioner or any of his deputies, agents or examiners, or the
Secretary of Finance or any of his deputies or agents: Provided, finally, That the reward provided herein shall be paid under rules and
regulations issued by the Secretary of Finance, upon recommendation of the Commissioner.
(B) For Discovery and Seizure of Smuggled Goods. To encourage the public to extend full cooperation in eradicating smuggling, a cash reward
equivalent to ten percent (10%) of the fair market value of the smuggled and confiscated goods or One Million Pesos (P1,000,000) per case,
whichever is lower, shall be given to persons instrumental in the discovery and seizure of such smuggled goods.
The cash rewards of informers shall be subject to income tax, collected as a final withholding tax, at a rate of ten percent (10%).
The Provisions of the foregoing Subsections notwithstanding, all public officials, whether incumbent or retired, who acquired the information
in the course of the performance of their duties during their incumbency, are prohibited from claiming informer's reward.
IV. Compromise and Abatement of Taxes
A. Compromise
NIRC, 204(A). Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may - (A) Compromise
the payment of any internal revenue tax, when:
(1) A reasonable doubt as to the validity of the claim against the taxpayer exists; or
(2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.
The compromise settlement of any tax liability shall be subject to the following minimum amounts:
For cases of financial incapacity, a minimum compromise rate equivalent to ten percent (10%) of the basic assessed tax; and
For other cases, a minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax.
Where the basic tax involved exceeds One million pesos (P1,000.000) or where the settlement offered is less than the prescribed minimum
rates, the compromise shall be subject to the approval of the Evaluation Board which shall be composed of the Commissioner and the four (4)
Deputy Commissioners.
RR 08-04.
RR 03-07.
B. Abatement
NIRC, 204(B). Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - Abate or cancel a tax liability, when:
(1) The tax or any portion thereof appears to be unjustly or excessively assessed; or
(2) The administration and collection costs involved do not justify the collection of the amount due.
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All criminal violations may be compromised except: (a) those already filed in court, or (b) those involving fraud.
RR 13-01.
Chavez v. PCGG.
- Requisites for the exercise of commissioners power to abate or cancel tax liability
Part Four: Local Government Taxation and Real Property Taxation
I. Local Government Taxation

A. Introduction
1. Nature and Source of Local Taxing Power
1987 Consti, Art X, Sec. 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and
charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes,
fees, and charges shall accrue exclusively to the local governments.
(a) Grant of local taxing power under the Local Government Code
LGC, 129. Power to Create Sources of Revenue. - Each local government unit shall exercise its power to create its own sources of revenue
and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees,
and charges shall accrue exclusively to the local government units.
IRR, 217. Scope. The following rules and regulations shall govern the exercise by provinces, cities, municipalities, and barangays of
their taxing and other revenue-raising powers.
(b) Authority to prescribe penalties for tax violations
LGC, 168. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. - The sanggunian may impose a surcharge not exceeding twenty-
five (25%) of the amount of taxes, fees or charges not paid on time and an interest at the rate not exceeding two percent (2%) per month
of the unpaid taxes, fees or charges including surcharges, until such amount is fully paid but in no case shall the total thirty-six (36%)
months.
LGC, 169. Interests on Other Unpaid Revenues. - Where the amount of any other revenue due a local government unit, except voluntary
contributions or donations, is not paid on the date fixed in the ordinance, or in the contract, expressed or implied, or upon the occurrence
of the event which has given rise to its collection, there shall be collected as part of that amount an interest thereon at the rate not
exceeding two percent (2%) per month from the date it is due until it is paid, but in no case shall the total interest on the unpaid amount
or a portion thereof exceed thirty-six (36) months.
IRR, 256. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. The sanggunian may impose a surcharge not exceeding twenty-
five percent (25%) of the amount of taxes, fees, or charges not paid on time and an interest at the rate not exceeding two percent (2%)
per month of the unpaid taxes, fees, or charges including surcharges, until such amount is fully paid but in no case shall the total interest
on the unpaid amount or portion thereof exceed thirty-six (36) months.
IRR, 257. Interests on Other Unpaid Revenues. Where the amount of any other revenue due an LGU, except voluntary contributions or
donations, is not paid on the date fixed in the ordinance, or in the contract, expressed or implied, or upon the occurrence of the event
which has given rise to its collection, there shall be collected as part of that amount an interest thereon at the rate not exceeding two
percent (2%) per month from the date it is due until it is paid, but in no case shall the total interest on the unpaid amount or a portion
thereof exceed thirty-six (36) months.
(c) Authority to grant local tax exemptions
LGC, 192. Authority to Grant Tax Exemption Privileges. - Local government units may, through ordinances duly approved, grant tax
exemptions, incentives or reliefs under such terms and conditions as they may deem necessary.
IRR, 282. Authority to Grant Tax Exemption Privileges or Incentives.
(a) While sanggunians may grant tax exemption, tax incentive, or tax relief, such grant shall not apply to regulatory fees which are
levied under the police power of LGUs. Tax exemptions shall be conferred through the issuance of a tax exemption certificate, which
shall be non-transferable.
(b) The sanggunians granting tax exemptions, tax incentives and tax reliefs may be guided by the following:
(1) On the grant of tax exemptions or tax reliefs:
i. Tax exemption or tax relief may be granted in cases of natural calamities, civil disturbance, general failure of crops, or
adverse economic conditions such as substantial decrease in the prices of agricultural or agri-based products;
ii. The grant of exemption or relief shall be through an ordinance.
iii. Any exemption or relief granted to a type or kind of business shall apply to all business similarly situated; and
iv. Any exemption or relief granted shall take effect only during the next calendar year for a period not exceeding twelve
(12) months as may be provided in the ordinance. In the case of shared revenues, the exemption or relief shall only
extend to the LGU granting such exemption or relief.
(2) On the grant of tax incentives:
i. The tax incentive shall be granted only to new investments in the locality and the ordinance shall prescribe the terms and
conditions therefor;
ii. The grant of the tax incentive shall be for a definite period not exceeding one (1) calendar year;
iii. The grant of tax incentives shall be by ordinance passed prior to the first (1st) day of January of any year; and
iv. Any tax incentive granted to a type or kind of business shall apply to all businesses similarly situated.
(d) Withdrawal of Exemptions
LGC, 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemptions or incentives granted to, or
presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local
water districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code.
IRR, 283. Withdrawal of Tax Exemption Privileges or Incentives. Unless otherwise provided in this Rule, beginning January 1, 1992,
all local tax exemption privileges or incentives granted to and presently enjoyed by any person, whether natural or juridical, including
GOCCs, are considered withdrawn, except the following:
(a) Local water districts;
(b) Cooperatives duly registered under RA 6938, otherwise known as the Cooperative Code of the Philippines;
(c) Non-stock and non-profit hospitals and educational institutions;
(d) Business enterprises certified by the Board of Investments (BOI) as pioneer or non-pioneer for a period of six (6) and four (4)
years, respectively, from the date of registration;
(e) Business entity, association, or cooperatives registered under RA 6810; and
(f) Printer and/or publisher of books or other reading materials prescribed by DECS as school texts or references, insofar as
receipts from the printing and/or publishing thereof are concerned.
Unless otherwise repealed by law, business and economic enterprises operating within export processing zones administered by
the Export Processing Zone Authority shall continue to enjoy the tax exemption privileges and tax incentives granted in PD 66, as
amended.
(e) Authority to Adjust Local Tax Rates
LGC, 191. Authority of Local Government Units to Adjust Rates of Tax Ordinances. - Local government units shall have the authority to
adjust the tax rates as prescribed herein not oftener than once every five (5) years, but in no case shall such adjustment exceed ten
percent (10%) of the rates fixed under this Code.
IRR, 281. Authority to Adjust Rates of Taxes. LGUs shall be authorized to adjust the tax rates prescribed in this Rule not oftener than
once every five (5) years, but in no case shall such adjustments exceed ten percent (10%) of the rates fixed in this Rules.
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(f) Residual Taxing Power of Local Governments
LGC, 186. Power To Levy Other Taxes, Fees or Charges. - Local government units may exercise the power to levy taxes, fees or charges on
any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as
amended, or other applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or
contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted
without any prior public hearing conducted for the purpose.
IRR, 274. Power to Levy Other Taxes, Fees, or Charges. LGUs may exercise the power to levy taxes, fees, or charges on any base or
subject not otherwise specifically enumerated in this Rule or taxed under the provisions of the NIRC, as amended, or other applicable
laws provided that the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory, or contrary to declared national
policy provided further that the ordinance levying such taxes, fees, or charges shall not be enacted without prior public hearing
conducted for the purpose.
(g) Authority to issue Local Tax Ordinances
LGC 132. Local Taxing Authority. - The power to impose a tax, fee, or charge or to generate revenue under this Code shall be exercised by
the sanggunian of the local government unit concerned through an appropriate ordinance.
In relation with LGC, 187. Procedure for Approval and Effectivity of Tax, Ordinances and Revenue Measures; Mandatory Public Hearings. -
The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code:
Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question
on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the
effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal:
Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment
of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-
day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of
competent jurisdiction.
2. Scope of Taxing Power
LGC, 128. Scope. - The provisions herein shall govern the exercise by provinces, cities, municipalities, and barangays of their taxing and other
revenue-raising powers.
IRR, 217. Scope The following rules and regulations shall govern the exercise by provinces, cities, municipalities, and barangays of their
taxing and other revenue-raising powers
3. Fundamental Principles
LGC, 130. Fundamental Principles. - The following fundamental principles shall govern the exercise of the taxing and other revenue-raising
powers of local government units:
(a) Taxation shall be uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall:
(1) be equitable and based as far as practicable on the taxpayer's ability to pay;
(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 pursuant to the provisions of this Code shall inure solely to the benefit of, and be subject to the disposition by, the
local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein; and,
(e) Each local government unit shall, as far as practicable, evolve a progressive system of taxation.
IRR, 219. Fundamental Principles. The following fundamental principles shall govern the exercise of the taxing and other revenue-raising
powers of LGUs:
(a) Taxation shall be uniform in each LGU. The uniformity required is only within the territorial jurisdiction of a province, a city, a
municipality, or a barangay;
(b) Taxes, fees, charges, or other impositions shall:
(1) Be equitable and based, as far as practicable, on the taxpayer's ability to pay;
(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 restraint of trade;
(c) Collection of local taxes, fees, charges, or other impositions shall in no case be let to any private person;
(d) The revenue collected pursuant to the provisions of this Rule shall insure solely to the benefit of, and be subject to disposition by, the
LGU levying the tax, fee, charge, or other imposition unless otherwise specifically provided in this Rules; and
(e) Each LGU shall, as far as practicable, evolve a progressive system of taxation.
Tan v. del Rosario.
- Uniformity of Taxation, defined
Tolentino v. Sec. of Finance.
- Equality and Uniformity of Taxation, defined
Pepsi v. Tanauan.
- An increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory
Ormoc Sugar v. Mun. Board of Ormoc.
- A general objection that a local tax imposition is in restraint of trade will not nullify a taxing ordinance which is otherwise valid
4. Local Taxing Authority
(a) Power to create revenues exercised thru local government units
LGC, 132. Local Taxing Authority. - The power to impose a tax, fee, or charge or to generate revenue under this Code shall be exercised by
the sanggunian of the local government unit concerned through an appropriate ordinance.
IRR, 222. Local Taxing Authority. The power to impose a tax, fee, or charge or to generate revenue under the Code shall be exercised
by the sanggunian of the LGU concerned through an appropriate tax ordinance or revenue measure
(b) Procedure for Approval and Effectivity of Tax Ordinance
LGC, 187, supra.
LGC, 188. Publication of Tax Ordinances and Revenue Measures. - Within ten (10) days after their approval, certified true copies of all
provincial, city, and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a
newspaper of local circulation: Provided, however, That in provinces, cities and municipalities where there are no newspapers of local
circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places.
LGC, 189. Furnishing of Copies of Tax Ordinances and Revenue Measures. - Copies of all provincial, city, and municipal and barangay tax
ordinances and revenue measures shall be furnished the respective local treasurers for public dissemination.
Magtajas v. Pryce Properties Corp.
- Test of a Valid Ordinance
Tatel v. Mun of Virac.
- For an ordinance to be valid, it should also be passed according to the procedure prescribed by law.
5. Common Limitations on the Taxing Powers of LGUs
LGC, 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise of the taxing
powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:
(a) Income tax, except when levied on banks and other financial institutions;
(b) Documentary stamp tax;
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(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided herein;
(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 wharves constructed and maintained by the local government unit concerned;
(e) Taxes, fees, and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of local
government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees, or charges in any form
whatsoever upon such goods or merchandise;
(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4)
years, respectively from the date of registration;
(h) Excise taxes on articles enumerated under the national Internal Revenue Code, as amended, and taxes, fees or charges on petroleum
products;
(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise
provided herein;
(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and
common carriers by air, land or water, except as provided in this 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 herein;
(n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly registered under R.A. No. 6810 and
Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known as the "Cooperative Code of the Philippines"
respectively; and
(o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units.
Basco v PAGCOR.
- The power of local governments to impose taxes and fees is always subject to limitations which Congress may provide by law. || (a) The City
of Manila, being a mere Municipal corporation has no inherent right to impose taxes Thus, "the Charter or statute must plainly show an
intent to confer that power or the municipality cannot assume it". Its "power to tax" therefore must always yield to a legislative act which is
superior having been passed upon by the state itself which has the "inherent power to tax" (Bernas, the Revised [1973] Philippine
Constitution, Vol. 1, 1983 ed. p. 445). || (b) The Charter of the City of Manila is subject to control by Congress. It should be stressed that
"municipal corporations are mere creatures of Congress" which has the power to "create and abolish municipal corporations" due to its
"general legislative powers". Congress, therefore, has the power of control over Local governments And if Congress can grant the City of
Manila the power to tax certain matters, it can also provide for exemptions or even take back the power.
Phil. Petroleum Corp v. Pililia.
- The tax on business different from a tax on the article itself
FPIC v. CA.
- A pipeline concessionaire transporting via pipeline its petroleum products from its refineries deemed to fall under the term common
carrier || FPIC is a common carrier, hence exempt under 133(j) FPIC falss under the definition of a common carrier under CC. || FPIC
already paying 3% common carrier tax under NIRC; to be taxed by the LGU would amount to double taxation || Also, petroleum act
pipeline concessioner = common carrier = public utility
NDC v. Cebu City.
- To come within the exemption from the imposition of local taxes, it is important to establish that property is owned by the Government or
by its unincorporated agency
B. Specific Taxing Powers of LGUs
1. Taxing Powers of Provinces
LGC, 134. Scope of Taxing Powers. - Except as otherwise provided in this Code, the province may levy only the taxes, fees, and charges as
provided in this Article.
IRR, 223. Taxing and Other Revenue-Raising Powers of Provinces. Except as otherwise provided in this Rule, the province may levy only the
taxes, fees and charges as herein provided for.
(a) Tax on Transfer of Real Property Ownership
LGC, 135. Tax on Transfer of Real Property Ownership.
(a) The province may impose a tax on the sale , donation, barter, or on any other mode of transferring ownership or title of real
property at the rate of not more than fifty percent (50%) of the one percent (1%) of the total consideration involved in the
acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial,
whichever is higher. The sale, transfer or other disposition of real property pursuant to R.A. No. 6657 shall be exempt from this tax.
(b) For this purpose, the Register of Deeds of the province concerned shall, before registering any deed, require the presentation of the
evidence of payment of this tax. The provincial assessor shall likewise make the same requirement before cancelling an old tax
declaration and issuing a new one in place thereof, Notaries public shall furnish the provincial treasurer with a copy of any deed
transferring ownership or title to any real property within thirty (30) days from the date of notarization.
It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein imposed within sixty (60) days
from the date of the execution of the deed or from the date of the decedent's death.
IRR, 224. Tax on Transfer or Real Property Ownership. (a) The province may impose a tax on the sale, donation, barter, or on any
other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of one percent (1%) of the
total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in
the transfer is not substantial, whichever is higher. The sale, transfer, or other disposition of real property pursuant to RA 6657 shall be
exempt from this tax.
The fair market value as used herein shall be that reflected in the prevailing schedule of fair market values enacted by the
sanggunian concerned.
(b) For this purpose, the registrar of deeds of the province concerned shall, before registering any deed, require the presentation of
the evidence of payment of this tax. The provincial assessor shall likewise make the same requirement before cancelling an old tax
declaration and issuing a new one in place thereof. Notaries public shall furnish the provincial treasurer with a copy of any deed
transferring ownership or title to any real property within thirty (30) days from the date of notarization.
It shall be the duty of the seller, donor, transferor, executor, or administrator to pay the tax herein imposed within sixty (60) days
from the date of the execution of the deed or from the date of the property owner's death.
(b) Tax on Business of Printing and Publication
LGC, 136. Tax on Business of Printing and Publication. - The province may impose a tax on the business of persons engaged in the printing
and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature, at a rate not
exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year.
In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital
investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross
receipts for the preceding calendar year, or any fraction thereof, as provided herein.
The receipts from the printing and/or publishing of books or other reading materials prescribed by the Department of
Education, Culture and Sports as school texts or references shall be exempt from the tax herein imposed.
IRR, 225. Tax on Business of Printing and Publication. The province may impose a tax on the business of persons engaged in the
printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and other printed materials of
similar nature, at rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year.
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investment. In the succeeding calendar year, regardless of when business started to operate, the tax shall be based on the gross receipts
for the preceding calendar year, or any fraction thereof as provided in this Rule.
The receipts from the printing and/or publishing of books or other reading materials prescribed by DECS as school texts or
references shall be exempt from the tax herein imposed.
(c) Franchise Tax
LGC, 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on
businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the
preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.
investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross
receipts for the preceding calendar year, or any fraction thereon, as provided herein
IRR, 226. Franchise Tax.
(a) Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a
franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts, which shall include both cash
sales and sales on account realized during the preceding calendar year within its territorial jurisdiction, excluding the territorial
limits of any city located in the province.
(b) The province shall not impose the tax on business enjoying franchise operating within the territorial jurisdiction of any city located
within the province.
(c) The term businesses enjoying franchise shall not include holders of certificates of public convenience for the operation of public
utility vehicles for reason that such certificates are not considered as franchises.
(d) In the case of a newly started business, the tax shall not exceed one twentieth (1/20) of one percent (1%) of the capital investment.
In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for
the preceding calendar year, or any fraction thereof, as provided in this Article.
The capital investment to be used as basis of the tax of a newly started business as herein provided shall be determined in the following
manner:
(1) In the locality where the principal office of the business is located, the paid-up-capital stated in the articles of incorporation, in
case of corporations, or in any similar document in case of other types of business organizations or enterprises shall be
considered as the capital investment.
(2) Where there is a branch or sales office which commences business operations during the same year as the principal office but
which is located in another province or in a city outside the province, the paid-up capital referred to above shall be reduced by
the amount of the capital investment made for the said branch or sales office which shall be taxable instead by the province or
city where it is located.
(3) Where the newly started business is a branch or sales office commencing business operations at a year later than that of the
principal office, capital investment shall mean the total funds invested in the branch or sales office.
QC v. ABS-CBN.
PLDT v. Laguna.
(d) Tax on Sand, Gravel and Other Quarry Services
LGC, 138. Tax on Sand, Gravel and Other Quarry Resources. - The province may levy and collect not more than ten percent (10%) of fair
market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the
National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and
other public waters within its territorial jurisdiction.
The permit to extract sand, gravel and other quarry resources shall be issued exclusively by the provincial governor, pursuant
to the ordinance of the sangguniang panlalawigan.
The proceeds of the tax on sand, gravel and other quarry resources shall be distributed as follows:
(1) Province - Thirty percent (30%);
(2) Component City or Municipality where the sand, gravel, and other quarry resources are extracted - Thirty percent (30%);
and
(3) Barangay where the sand, gravel, and other quarry resources are extracted - Forty percent (40%).
IRR, 227. Tax on Sand, Gravel, and Other Quarry Resources. (a) The province may levy and collect not more than ten percent (10%) of
fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources, such as but not
limited to marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate, extracted from public lands or from the beds of seas,
lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction.
(b) The permit to extract sand, gravel, and other quarry resources shall be issued exclusively by the governor, pursuant to the
ordinance of the sangguniang panlalawigan.
(c) The proceeds of the tax on sand, gravel, and other quarry resources shall be distributed as follows:
(1) Province Thirty percent (30%)
(2) Component city or municipality where the sand, gravel and other quarry resources are extracted Thirty percent (30%)
(3) Barangay where the sand, gravel, and other quarry resources are extracted Forty percent (40%)
Bulacan v. CA.
- A province may levy and collect tax on sand, gravel, etc. extracted only from public lands.
(e) Professional Tax
LGC, 139. Professional Tax.
(a) The province may levy an annual professional tax on each person engaged in the exercise or practice of his profession requiring
government examination at such amount and reasonable classification as the sangguniang panlalawigan may determine but shall in
no case exceed Three hundred pesos (P300.00).
(b) Every person legally authorized to practice his profession shall pay the professional tax to the province where he practices his
profession or where he maintains his principal office in case he practices his profession in several places: Provided, however, That
such person who has paid the corresponding professional tax shall be entitled to practice his profession in any part of the
Philippines without being subjected to any other national or local tax, license, or fee for the practice of such profession.
(c) Any individual or corporation employing a person subject to professional tax shall require payment by that person of the tax on his
profession before employment and annually thereafter.
(d) The professional tax shall be payable annually, on or before the thirty-first (31st) day of January. Any person first beginning to
practice a profession after the month of January must, however, pay the full tax before engaging therein. A line of profession does
not become exempt even if conducted with some other profession for which the tax has been paid. Professionals exclusively
employed in the government shall be exempt from the payment of this tax.
(e) Any person subject to the professional tax shall write in deeds, receipts, prescriptions, reports, books of account, plans and designs,
surveys and maps, as the case may be, the number of the official receipt issued to him.
IRR, 228. Professional Tax. (a) The province may levy an annual professional tax on each person engaged in the exercise or practice of
his profession requiring government examination at such amount and reasonable classification as the sangguniang panlalawigan may
determine but shall in no case exceed Three Hundred Pesos (P300.00).
(b) Every person legally authorized to practice his profession shall pay the professional tax to the province where he practice his
profession or where he maintains his principal office in case he practices his profession in several places, provided, however, that
such person who has paid the corresponding professional tax shall be entitled to practice his profession in any part the Philippines
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without being subjected to any other national or local tax, license, or fee for the practice of such profession.
(c) Any individual or corporation employing a person subject to professional tax shall require payment by that person of the tax on his
profession before employment and annually thereafter.
(d) The professional tax shall be payable annually, on or before the thirty-first (31st) day of January. Any person first beginning to
practice a profession after the month of January must, however, pay the full tax before engaging therein. A line of profession does
not become exempt even if conducted with some other profession for which the tax has been paid. Professionals exclusively
employed in the government shall be exempt from the payment of this tax.
(e) Any person subject to the professional tax shall write in deeds, receipts, prescriptions, reports, books of account, plans and designs,
surveys and maps, as the case may be, the number of the official receipt issued to him.
(f) The professionals subject to tax herein imposed are only those who have passed the bar examinations, or any board or other
examinations conducted by the Professional Regulation Commission (PRC). For example, a lawyer who is also a Certified Public
Accountant (CPA) must pay the professional tax imposed on lawyers and that fixed for CPAs, if he is to practice both professions.
For the purpose of collecting the tax, the provincial treasurer or his duly authorized representative shall require from such
professionals their current annual registration cards issued by competent authority before accepting payment of their professional tax
for the current year. The PRC shall likewise require the professionals presentation of proof of payment before registration of proof of
payment before registration of professionals or renewal of their licenses.
(f) Amusement Tax
LGC, 140. Amusement Tax.
(a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert
halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts
from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to
the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of
the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and
oratorical presentations, except pop, rock, or similar concerts shall be exempt from the payment of the tax hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In case of fraud or
failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interest and penalties as it may deem
appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places
are located.
IRR, 229. Amusement Tax. (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of
the gross receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to
the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of
the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, paintings and art exhibitions, flower shows, musical programs, literary and
oratorical presentations except pop, rock or similar concerts shall be exempted from the payment of the amusement tax, subject to
the guidelines issued by DOF.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions, including the issuance by proprietor, lessee,
or operator of the theater or amusement place of admission tickets for the payment of tax. In case of fraud or failure to pay the tax
the sangguniang panlalawigan may impose such surcharges, interests, and penalties as it may deem appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places
are located.
(g) Tax on delivery truck/van
LGC, 141. Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain
Products.
(a) The province may levy an annual fixed tax for every truck, van or any vehicle used by manufacturers, producers, wholesalers,
dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other
products as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers, whether directly or indirectly,
within the province in an amount not exceeding Five hundred pesos (P500.00).
(b) The manufacturers, producers, wholesalers, dealers and retailers referred to in the immediately foregoing paragraph shall be
exempt from the tax on peddlers prescribed elsewhere in this Code.
IRR, 230. Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers or Retailers in,
Certain Products. (a) The province may levy an annual fixed tax for every truck, van, or any motor vehicle used by manufacturers,
producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigars and
cigarettes, and other products as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers, whether directly
or indirectly, within the province in an amount not exceeding Five Hundred Pesos (P500.00).
(b)The manufacturers, producers, wholesalers, dealers, and retailers referred to in the immediately preceding paragraph (a) hereof shall
be exempt from the tax on peddlers prescribed in Article 233 (g) of this Rule.
2. Taxing powers of municipalities
LGC, 142. Scope of Taxing Powers. - Except as otherwise provided in this Code, municipalities may levy taxes, fees, and charges not otherwise
levied by provinces.
IRR, 231. Scope of Taxing and Other Revenue-Raising Powers of Municipalities. Unless provided in this Rule, municipalities may levy taxes,
fees, and charges not otherwise levied by the province.
(a) Tax on various types of businesses
LGC, 143.
IRR, 232.
(b) Ceiling on business tax imposable on municipalities within Metro Manila
LGC, 144. Rates of Tax within the Metropolitan Manila Area. - The municipalities within the Metropolitan Manila Area may levy taxes at
rates which shall not exceed by fifty percent (50%) the maximum rates prescribed in the preceding Section.
IRR, 236. Rates of Tax in Municipalities Within the Metropolitan Manila Area. (a) The municipalities within MMA may levy the taxes
on businesses enumerated in Article 233 of this Rule at rates which shall not exceed by fifty percent (50%) the maximum rates
prescribed for said businesses.
(b) The said municipalities within MMA, pursuant to Article 275 of this Rule, may levy and collect the taxes which may be imposed by the
province under Article 225, 226, 227, 228, 229, 230 and 231 of this Rule at rates not exceeding those prescribed therein
(c) Tax on Retirement of Business
LGC, 145. Retirement of Business. - A business subject to tax pursuant to the preceding sections shall, upon termination thereof, submit a
sworn statement of its gross sales or receipts for the current year. If the tax paid during the year be less than the tax due on said gross
sales or receipts of the current year, the difference shall be paid before the business is considered officially retired.
IRR, 241. Retirement of Business. (a) Any person natural or juridical, subject to the tax on businesses under Article 233 of this Rule
shall, upon termination of the business, submit a sworn statement of the gross sales or receipts for the calendar year.
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For purposes hereof, termination shall mean that business operations are stopped completely. Any change in ownership,
management and/or name of the business shall not constitute termination as contemplated in this Article. Unless stated otherwise,
assumption of the business by any new owner or manager or registration of the same business under a new name will only be
considered by the LGU concerned for record purposes in the course of the renewal of the permit or license to operate the business.
The local treasurer concerned shall see to it that the payment of taxes of a business is not avoided by simulating the termination or
retirement thereof. For this purpose, the following procedural guidelines shall be strictly observed:
(1) The local treasurer shall assign every application for the termination or retirement of business to an inspector in his office
who shall go to the address of the business on record to verify if it is really no longer operating. If the inspector finds that the
business is simply placed under a new name, manager and/or new owner, the local treasurer shall recommend to the mayor
the disapproval of the application for the termination or retirement of said business. Accordingly, the business continues to
become liable for the payment of all taxes, fees, and charges imposed thereon under existing local tax ordinances; and
(2) In the case of a new owner to whom the business was transferred by sale or other form of conveyance, said new owner shall
be liable to pay the tax or fee for the transfer of the business to him if there is an existing ordinance prescribing such transfer
tax.
(b) If it is found that the retirement or termination of the business is legitimate, and the tax due therefrom be less than the tax due for
the current year based on the gross sales or receipts, the difference in the amount of the tax shall be paid before the business is
considered officially retired or terminated.
(c) The permit issued to a business retiring or terminating its operations shall be surrendered to the local treasurer who shall
forthwith cancel the same and record such cancellation in his books.
(d) Rules on Payment of Business Tax
LGC, 146. Payment of Business Taxes.
(a) The taxes imposed under Section 143 shall be payable for every separate or distinct establishment or place where business subject
to the tax is conducted and one line of business does not become exempt by being conducted with some other business for which
such tax has been paid. The tax on a business must be paid by the person conducting the same.
(b) In cases where a person conducts or operates two (2) or more of the businesses mentioned in Section 143 of this Code which are
subject to the same rate of tax, the tax shall be computed on the combined total gross sales or receipts of the said two (2) or more
related businesses.
(c) In cases where a person conducts or operates two (2) or more businesses mentioned in Section 143 of this Code which are subject
to different rates of tax, the gross sales or receipts of each business shall be separately reported for the purpose of computing the
tax due from each business.
IRR, 242. Related or Combined Businesses. (a) The conduct or operation of two or more related businesses provided in Article 233 of
this Rule by any one person, natural or juridical, shall require the issuance of a separate permit or license to each business.
(b) If a person conducts or operates two (2) or more related businesses which are subject to the same rate of imposition, the tax shall be
computed on the basis of the combined total gross sales or receipts of the said two (2) or more related businesses.
(c) If, however, the businesses operated by one person are governed by separate tax schedules or the rates of the taxes are different, the
taxable gross sales or receipts of each business shall be reported independently and the tax thereon shall be computed on the basis of the
appropriate schedule.
(e) Fees and Charges for Regulation and Licensing
LGC, 147. Fees and Charges. - The municipality may impose and collect such reasonable fees and charges on business and occupation and,
except as reserved to the province in Section 139 of this Code, on the practice of any profession or calling, commensurate with the cost of
regulation, inspection and licensing before any person may engage in such business or occupation, or practice such profession or calling.
LGC, 148. Fees for Sealing and Licensing of Weights and Measures.
(a) The municipality may levy fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed
by the sangguniang bayan.
(b) The sangguniang bayan shall prescribe the necessary regulations for the use of such weights and measures, subject to such
guidelines as shall be prescribed by the Department of Science and Technology. The sanggunian concerned shall, by appropriate
ordinance, penalize fraudulent practices and unlawful possession or use of instruments of weights and measures and prescribe the
criminal penalty therefor in accordance with the provisions of this Code. Provided, however, That the sanggunian concerned may
authorize the municipal treasurer to settle an offense not involving the commission of fraud before a case therefor is filed in court,
upon payment of a compromise penalty of not less than Two hundred pesos (P200.00).
LGC, 149. Fishery Rentals, Fees and Charges.
(a) Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rentals, fees or
charges therefor in accordance with the provisions of this Section.
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oysters, mussels or other aquatic beds or bangus fry areas, within a definite zone
of the municipal waters, as determined by it: Provided, however, That duly registered organizations and cooperatives of
marginal fishermen shall have the preferential right to such fishery privileges: Provided, further, That the sangguniang bayan
may require a public bidding in conformity with and pursuant to an ordinance for the grant of such privileges: Provided,
finally, That in the absence of such organizations and cooperatives or their failure to exercise their preferential right, other
parties may participate in the public bidding in conformity with the above cited procedure.
(2) Grant the privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag or fry of other species and fish from the
municipal waters by nets, traps or other fishing gears to marginal fishermen free of any rental, fee, charge or any other
imposition whatsoever.
(3) Issue licenses for the operation of fishing vessels of three (3) tons or less for which purpose the sangguniang bayan shall
promulgate rules and regulations regarding the issuances of such licenses to qualified applicants under existing laws.
Provided, however, That the sanggunian concerned shall, by appropriate ordinance, penalize the use of explosives, noxious or
poisonous substances, electricity, muro-ami, and other deleterious methods of fishing and prescribe a criminal penalty therefor in
accordance with the provisions of this Code: Provided, finally, That the sanggunian concerned shall have the authority to prosecute
any violation of the provisions of applicable fishery laws.
IRR, 233. Fees and Charges. The municipality may impose and collect such reasonable fees and charges on businesses and
occupations and, except as reserved to the province in Article 229 of this Rule, on the practice of any profession or calling before any
person may engage in such business or occupation, or practice such profession or calling provided that such fees or charges shall only be
commensurate to the cost of issuing the license or permit and the expenses incurred in the conduct of the necessary inspection or
surveillance.
No such fee or charge shall be based on capital investment or gross sales or receipts of the person or business liable therefor.
IRR, 234. Fees for Sealing and Licensing of Weights and Measures. (a) The municipality may levy fees for the sealing and licensing of
weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan.
(b) The sangguniang bayan shall enact an appropriate ordinance prescribing the necessary regulations for the use of weights and
measures which shall be in accordance with such guidelines as may be prescribed by the Department of Science and Technology.
The ordinance enacted for the purpose shall also prescribe the penalties for violations, fraudulent practices, and unlawful
possession or use of instruments of weights and measures including the criminal penalty therefor in accordance with Article 280 of
this Rule provided, however, that the sangguniang bayan concerned may authorize the municipal treasurer to settle an offense not
involving the commission of fraud before a case therefor is filed in court, upon payment of a compromise penalty of not less than
Two Hundred Pesos (P200.00).
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(c) The ordinance of the sangguniang bayan may also embody such sanctions as may be deemed appropriate relative to the use of any
weight or measure not properly sealed or licensed in accordance with paragraph (b) of this Article, such as the confiscation of said
illegal weight or measure, or the revocation of the permit or license of the business, and/or the filing of appropriate charges against
the owner or operator of the business.
IRR, 235. Fishery Rentals, Fees, and Charges. (a) Municipalities shall have the exclusive authority to grant fishery privileges in the
municipal waters and impose rentals, fees, or charges therefor in accordance with the provisions of this Article.
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussel, or other aquatic beds or bangus fry areas, within a definite zone of
the municipal waters, as determined by the sangguniang bayan. The sangguniang bayan may require the conduct of a public
bidding provided that duly registered organizations and cooperatives of marginal fishermen shall have the preferential right
to such fishery privileges without being required to undergo the bidding and provided further that in the absence of such
organizations and cooperatives or failure to exercise their preferential right, other parties may participate in the said public
bidding in conformity with this provision.
(2) Grant the privilege to gather, take or catch bangus fry, prawn fry, or kawag-kawag or fry of other species and fish from the
municipal waters by nets, traps or other fishing gears to marginal fishermen free of any rental, fee, charge, or any other
imposition whatsoever.
(3) Issue licenses for the operation of fishing vessels of three (3) tons or less for which purpose the sangguniang bayan shall
promulgate rules and regulations regarding the issuances of such licenses to qualified applicants under existing laws provided,
however, that the sangguniang bayan concerned shall, by appropriate ordinance, penalize the use of explosives, noxious or
poisonous substances, electricity, muro-ami, and other deleterious methods of fishing and prescribe a criminal penalty
therefor in accordance with the provisions of this Rule and provided further that the sangguniang bayan concerned shall have
the authority to prosecute any violation of the provisions of applicable fishery laws.
(f) Situs of Tax collected under Sec. 143
LGC, 150. Situs of the Tax.
(a) For purposes of collection of the taxes under Section 143 of this Code, manufacturers, assemblers, repackers, brewers, distillers,
rectifiers and compounders of liquor, distilled spirits and wines, millers, producers, exporters, wholesalers, distributors, dealers,
contractors, banks and other financial institutions, and other businesses, maintaining or operating branch or sales outlet elsewhere
shall record the sale in the branch or sales outlet making the sale or transaction, and the tax thereon shall accrue and shall be paid
to the municipality where such branch or sales outlet is located. In cases where there is no such branch or sales outlet in the city or
municipality where the sale or transaction is made, the sale shall be duly recorded in the principal office and the taxes due shall
accrue and shall be paid to such city or municipality.
(b) The following sales allocation shall apply to manufacturers, assemblers, contractors, producers, and exporters with factories,
project offices, plants, and plantations in the pursuit of their business:
(1) Thirty percent (30%) of all sales recorded in the principal office shall be taxable by the city or municipality where the principal
office is located; and
(2) Seventy percent (70%) of all sales recorded in the principal office shall be taxable by the city or municipality where the
factory, project office, plant, or plantation is located.
(c) In case of a plantation located at a place other than the place where the factory is located, said seventy percent (70%) mentioned in
subparagraph (b) of subsection (2) above shall be divided as follows:
(1) Sixty percent (60%) to the city or municipality where the factory is located; and
(2) Forty percent (40%) to the city or municipality where the plantation is located.
(d) In cases where a manufacturer, assembler, producer, exporter or contractor has two (2) or more factories, project offices, plants, or
plantations located in different localities, the seventy percent (70%) sales allocation mentioned in subparagraph (b) of subsection
(2) above shall be prorated among the localities where the factories, project offices, plants, and plantations are located in
proportion to their respective volumes of production during the period for which the tax is due.
(e) The foregoing sales allocation shall be applied irrespective of whether or not sales are made in the locality where the factory,
project office, plant, or plantation is located.
IRR, 243. Situs of the Tax.
(a) Definition of Terms
(1) Principal Office the head or main office of the business appearing in the pertinent documents submitted to the Securities
and Exchange Commission, or the Department of Trade and Industry, or other appropriate agencies, as the case may be.
The city or municipality specifically mentioned in the articles of incorporation of official registration papers as being the
official address of said principal office shall be considered as the situs thereof.
In case there is a transfer or relocation of the principal office to another city or municipality, it shall be the duty of the
owner, operator or manager of the business to give due notice of such transfer or relocation to the local chief executives of the
cities or municipalities concerned within fifteen (15) days after such transfer or relocation is effected.
(2) Branch or Sales Office a fixed place in a locality which conducts operations of the business as an extension of the principal
office. Offices used only as display areas of the products where no stocks or items are stored for sale, although orders for the
products may be received thereat, are not branch or sales offices as herein contemplated. A warehouse which accepts orders
and/or issues sales invoices independent of a branch with sales office shall be considered as a sales office.
(3) Warehouse a building utilized for the storage of products for sale and from which goods or merchandise are withdrawn for
delivery to customers or dealers, or by persons acting in behalf of the business. A warehouse that does not accept orders
and/or issue sales invoices as aforementioned shall not be considered a branch or sales office.
(4) Plantation a tract of agricultural land planted to trees or seedlings whether fruit bearing or not, uniformly spaced or seeded
by broadcast methods or normally arranged to allow highest production. For purposes of this Article, inland fishing ground
shall be considered as plantation.
(5) Experimental Farms agricultural land utilized by a business or corporation to conduct studies, tests, researches or
experiments involving agricultural, agribusiness, marine, or aquatic, livestock, poultry, dairy and other similar products for the
purpose of improving the quality and quantity of goods or products.
On-site sales of commercial quantity made in experimental farms shall be similarly imposed the corresponding tax under
Article 233 and allocated in paragraph (b) of this Article.
(b) Sales Allocation
(1) All sales made in a locality where there is a branch or sales office or warehouse shall be recorded in said branch or sales office
or warehouse and the tax shall be payable to the city or municipality where the same is located.
(2) In cases where there is no such branch, sales office, or warehouse in the locality where the sale is made, the sale shall be
recorded in the principal office along with the sales made by said principal office and the tax shall accrue to the city or
municipality where said principal office is located.
(3) In cases where there is a factory, project office, plant or plantation in pursuit of business, thirty percent (30%) of all sales
recorded in the principal office shall be taxable by the city or municipality where the principal office is located and seventy
percent (70%) of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project
office, plant or plantation is located. LGUs where only experimental farms are located shall not entitled to the sales allocation
provided in this subparagraph.
(4) In case of a plantation located in a locality other than that where the factory is located, the seventy percent (70%) sales
allocation shall be divided as follows:
i. Sixty percent (60%) to the city or municipality where the factory is located; and
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ii. Forty percent (40%) to the city or municipality where the plantation is located.
(5) In cases where there are two (2) or more factories, project offices, plants or plantations located in different localities, the
seventy percent (70%) sales allocation shall be prorated among the localities where such factories, project offices, plants, and
plantations are located in proportion to their respective volumes of production during the period for which the tax is due. In
the case of project offices of service and other independent contractors, the term production shall refer to the cost of projects
actually undertaken during the tax period.
(6) The sales allocation in paragraph (b) hereof shall be applied irrespective of whether or not sales are made in the locality
where the factory, project office, plant or plantation is located. In case of sales made by the factory, project office, plant or
plantation, the sale shall be covered by subparagraphs (1) or (2) above.
(7) In case of manufacturers or producers which engage the services of an independent contractor to produce or manufacture
some of their products, these rules on situs of taxation shall apply except that the factory or plant and warehouse of the
contractor utilized for the production and storage of the manufacturers' products shall be considered as the factory or plant
and warehouse of the manufacturer.
(c) Port of Loading The city or municipality where the port of loading is located shall not levy and collect the tax imposable in Article
233 of this Rule unless the exporter maintains in said city or municipality its principal office, a branch, sales office or warehouse,
factory, plant, or plantation in which case, the rule on the matter shall apply accordingly.
(d) Sales made by route trucks, vans, or vehicles
(1) For route sales made in a locality where a manufacturer, producer, wholesaler, retailer or dealer has a branch or sales office or
warehouse, the sale are recorded in the branch, sales office or warehouse and the tax due thereon is paid to the LGU where
such branch, sales office or warehouse is located.
(2) For route sales made in a locality where a manufacturer, producer, wholesaler, retailer or dealer has no branch, sales office or
warehouse the sales are recorded in the branch, sales office or warehouse from where the route trucks withdraw their
products for sale, and the tax due on such sales is paid to the LGU where such branch, sales office or warehouse is located.
(3) Based on subparagraphs (1) and (2) above, LGUs where route trucks deliver merchandise cannot impose any tax on said
trucks except the annual fixed tax authorized to be imposed by the province in Article 231 of this Rule on every delivery truck
or van or any motor vehicle used by manufacturers, producers, wholesalers, dealers, or retailers, in the delivery or distribution
of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products as may be determined by the
sangguniang panlalawigan, and by the city, pursuant to Article 223 of this Rule.
(4) In addition to this annual fixed tax, cities may also collect from same manufacturers, producers, wholesalers, retailers, and
dealers using route trucks a mayor's permit fee which shall be imposed in a local tax ordinance pursuant to Article 234 in
relation to Article 223 of this Rule.
3. Taxing Power of Cities
LGC, 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the
province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and
independent component cities shall accrue to them and distributed in accordance with the provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty
percent (50%) except the rates of professional and amusement taxes.
IRR, 237. Scope of Taxing and Other Revenue-Raising Powers of Cities. The city may:
(a) Levy and collect any of the taxes, fees, charges and other impositions that the province and the municipality may impose. The rates
of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty
percent (50%) except the rates of professional and amusement taxes; and
(b) Levy and collect a percentage tax on any business not otherwise specified under paragraphs (a) to (g), Article 233 of this Rule, at
rates not exceeding three percent (3%) of the gross sales or receipts of the preceding calendar year.
4. Taxing Powers of Barangays
LGC, 152. Scope of Taxing Powers. - The barangays may levy taxes, fees, and charges, as provided in this Article, which shall exclusively accrue
to them:
(a) Taxes - On stores or retailers with fixed business establishments with gross sales of receipts of the preceding calendar year of Fifty
thousand pesos (P50,000.00) or less, in the case of cities and Thirty thousand pesos (P30,000.00) or less, in the case of municipalities, at
a rate not exceeding one percent (1%) on such gross sales or receipts.
(b) Service Fees or Charges. - Barangays may collect reasonable fees or charges for services rendered in connection with the regulations or
the use of barangay-owned properties or service facilities such as palay, copra, or tobacco dryers.
(c) Barangay Clearance. - No city or municipality may issue any license or permit for any business or activity unless a clearance is first
obtained from the barangay where such business or activity is located or conducted. For such clearance, the sangguniang barangay may
impose a reasonable fee. The application for clearance shall be acted upon within seven (7) working days from the filing thereof. In the
event that the clearance is not issued within the said period, the city or municipality may issue the said license or permit.
(d) Other fees and Charges. - The barangay may levy reasonable fees and charges:
(1) On commercial breeding of fighting cocks, cockfights and cockpits;
(2) On places of recreation which charge admission fees; and
(3) On billboards, signboards, neon signs, and outdoor advertisements.
IRR, 240. Scope of Taxing and Other Revenue-Raising Powers of Barangays. The barangays may levy the following taxes, fees, and charges,
which shall exclusively accrue to them.
(a) Taxes on stores or retailers with fixed business establishments with gross sales or receipts of the preceding calendar year of Fifty
Thousand Pesos (P50,000.00) or less, in the case of a barangay within a city, and Thirty Thousand Pesos (P30,000.00) or less, in the case
of a barangay within a municipality, at rates not exceeding one percent (1%) on such gross sales or receipts.
(b) Service fees or charges for services rendered in connection with the regulation or the use of barangay-owned properties or service
facilities such as palay, copra, or tobacco dryers.
(c) Fee for the issuance of a barangay clearance for any business or activity located or conducted within the territorial jurisdiction of the
barangay before the city or municipality may issue a license or permit to said business or activity. Cassia
The application for barangay clearance shall be acted upon within seven (7) working days from the filing thereof. In the event that a
clearance is not issued or the application is denied within the said period, the city or municipality may issue the license or permit to the
applicant.
The issuance of a barangay clearance shall not be required during CY 1992 in the case of existing businesses or activities applying
only for renewal of their respective permits or licenses with the city or municipality concerned.
(d) Other fees and charges on:
(1) Commercial breeding of fighting cocks.
For purposes of imposing barangay fees and charges on the commercial breeding of fighting cocks, commercial breeding shall
mean an annual sale of more than five (5) fighting cocks of a duly registered breeder.
(2) Cockfights and cockpits
(3) Places of recreation which charge admission fees.
Places of recreation shall include places of amusement where one seeks admission to entertain himself by seeing or viewing
the show or performance or those where one amuses himself by direct participation.
(4) Billboards, signboards, neon signs, and outdoor advertisements at rates not less than the following:
i. Billboards or signboards for advertisement of business, per square meter or fraction thereof:
Single-Faced Ten Pesos (P10.00)
Double-Faced Twenty Pesos (P20.00)
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ii. Billboards or signs for professionals, per square meter or fraction thereof: Eight Pesos (P8.00)
iii. Billboards, signs, or advertisements for business and professions painted on any building or structures or otherwise
separated or detached therefrom, per square meter thereof: Nine Pesos (P9.00)
iv. Advertisement for business or professions by means of slides in movies payable by the advertisers: One Hundred Pesos
(P100.00)
v. Advertisements by means of vehicles, balloons, kites, etc. per day or fraction thereof: Forty Pesos (P40.00); per week or
fraction thereof: Sixty Pesos (P60.00); and per month or fraction thereof: Eighty Pesos (P80.00).
For the use of electric or neon lights in billboards under items (i) to (iv) above, the amount of Ten Pesos (P10.00)
per square meter or fraction thereof shall be imposed in addition to the above prescribed rates.
vi. Signs, signboards, billboards, advertisements, including stickouts, streamers, lighted signs, and other electronic media,
posters, privilege panels, stone signs, placards, price strips, buntings, and the like, belonging to manufacturers or
producers or professionals, but displayed at the place where a business or profession is conducted, or displayed on
delivery or other service and public utility vehicles, shall be exempt from such fees or charges provided in paragraphs (i)
and (ii) above and other impositions that may be imposed by the barangay.
vii. Privilege panels shall be subject to one half (1/2) of the rates herein prescribed.
viii. For purposes of this Article, the new rates to be adopted by the barangay shall apply only to billboards, privilege panels,
signs, and outdoor advertisements which shall be constructed or installed after the effectivity of the Code.
5. Common Revenue Raising Powers
(a) Service Fees and Charges
LGC, 153. Service Fees and Charges. - Local government units may impose and collect such reasonable fees and charges for services
rendered.
IRR, 244(a). Common Revenue-Raising Powers. Provinces, cities, municipalities, and barangays: (a) May impose and collect fees and
service or user charges for any service rendered by LGUs in an amount reasonably commensurate to such service provided that no
service charge shall be based on capital investments or gross sales or receipts of the persons or business liable therefor.
(b) Public Utility Charges
LGC, 154. Public Utility Charges. - Local government units may fix the rates for the operation of public utilities owned, operated and
maintained by them within their jurisdiction.
IRR, 244(b). Common Revenue-Raising Powers. Provinces, cities, municipalities, and barangays: (b) Shall exercise the power to
collect charges for services rendered by LGUs in connection with the operation of public utilities owned, operated, and maintained by
them at rates to be fixed by the sanggunian concerned.
LGUs may prescribe the terms and conditions, through an appropriate ordinance enacted by their sanggunians, for the use of any
public road, pier or wharf, waterway, bridge, or ferry or telecommunication system, funded and constructed by them, and fix reasonable
toll fees and service charges for the use thereof provided that the following persons shall be exempted from the payment of said toll fees
and charges:
(1) Officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission;
(2) Post Office personnel delivering mail;
(3) Persons who are physically handicapped; and
(4) Disabled citizens who are sixty-five (65) years or older.
(c) Toll Fees or Charges
LGC, 155. Toll Fees or Charges. - The sanggunian concerned may prescribe the terms and conditions and fix the rates for the imposition of
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 local government unit concerned: Provided, That no such toll fees or charges shall be collected from officers and
enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel
delivering mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older.
When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and
thereafter the said facility shall be free and open for public use.
IRR, 244(c). Common Revenue-Raising Powers. Provinces, cities, municipalities, and barangays: (c) The collection of toll fees and
charges may be discontinued by the sanggunian concerned when public safety and welfare so requires
6. Community Tax
(a) Who may impose? cities and municipalities
LGC, 156. Community Tax. - Cities or municipalities may levy a community tax in accordance with the provisions of this Article.
IRR, 245. Community Tax. Cities or municipalities may levy an annual community tax in lieu of the residence tax formerly levied and
collected in Section 38 of PD 231, as amended. Accordingly, all cities and municipalities shall enact for the purpose, a tax ordinance to
take effect as of January 1, 1992.
For purposes of enactment of a local tax ordinance levying a community tax, the conduct of a public hearing provided in Article
259 of this Rule shall no longer be required.
(b) Persons liable
i. Individuals
LGC, 157. Individuals Liable to Community Tax. - Every inhabitant of the Philippines eighteen (18) years of age or over who has been
regularly employed on a wage or salary basis for at least thirty (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 One thousand pesos (P1,000.00)
or more, or who is required by law to file an income tax return shall pay an annual additional tax of Five pesos (P5.00) and an
annual additional tax of One peso (P1.00) for every One thousand pesos (P1,000.00) of income regardless of whether from business,
exercise of profession or from property which in no case shall exceed Five thousand pesos (P5,000.00).
In the case of husband and wife, the additional tax herein imposed shall be based upon the total property owned by them and
the total gross receipts or earnings derived by them.
IRR, 246(a). Levy or Imposition. The levy or imposition of community tax by a city or municipality shall be governed by the
following rules and guidelines: (a) Individuals liable to the payment of community tax
(1) Every inhabitant of the Philippines eighteen (18) years of age or over who has been regularly employed on a wage or
salary basis for at least thirty (30) consecutive working days during any calendar years;
(2) An individual who is engaged in business or occupation;
(3) An individual who owns real property with an aggregate assessed value of One Thousand Pesos (P1,000.00) or more;
(4) An individual who is required by law to file an income tax return.
IRR, 246(b). Levy or Imposition. The levy or imposition of community tax by a city or municipality shall be governed by the
following rules and guidelines: (b) Rate of community tax payable by individuals
(1) The rate of community tax that may be levied and collected from said individuals shall be Five Pesos (P5.00) plus an
additional tax of One Peso (P1.00) for every One Thousand Pesos (P1,000.00) of income regardless of whether from
business, exercise of profession, or from property but which in no case shall exceed Five Thousand Pesos (P5,000.00).
(2) In case of husband and wife, each of them shall be liable to pay the basic tax of Five Pesos (P5.00), but the additional tax
imposable on the husband and wife shall be One Peso (P1.00) for every One Thousand Pesos (P1,000.00) of income from
the total property owned by them and/or the total gross receipts or earnings derived by them.
ii. Juridical persons
LGC, 158. Juridical Persons Liable to Community Tax. - Every corporation no matter how created or organized, whether domestic or
resident foreign, engaged in or doing business in the Philippines shall pay an annual community tax of Five hundred pesos
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(P500.00) and an annual additional tax, which, in no case, shall exceed Ten thousand pesos (P10,000.00) in accordance with the
following schedule:
(1) For every Five thousand pesos (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 under existing laws, found in the assessment rolls of the city
or municipality where the real property is situated - Two pesos (P2.00); and
(2) For every Five thousand pesos (P5,000.00) of gross receipts or earnings derived by it from its business in the Philippines
during the preceding year - Two pesos (P2.00).
The dividends received by a corporation from another corporation however shall, for the purpose of the additional tax, be
considered as part of the gross receipts or earnings of said corporation.
IRR, 246(c). Levy or Imposition. The levy or imposition of community tax by a city or municipality shall be governed by the
following rules and guidelines: (c) Juridical persons liable to the payment of community tax Every corporation, no matter how
created or organized, whether domestic or resident foreign, engaged in or doing business in the Philippines shall pay community
tax of Five Hundred Pesos (P500.00) and an additional tax, which, in no case, shall exceed Ten Thousand Pesos (P10,000.00) in
accordance with the following schedule:
(1) For every Five Thousand Pesos (P5,000.00) worth of real property in the Philippines owned by the juridical entity during the
preceding year, based on the assessed value used for the payment of the real property tax under existing laws Two pesos
(P2.00); and
(2) For every Five Thousand Pesos (P5,000.00) of gross receipts or earnings derived from the business in the Philippines during
the preceding year Two pesos (P2.00).
The dividends received by a corporation from another corporation shall, for the purpose of the additional tax, be considered as
part of the gross receipts or earnings of said corporation.
(c) Exemptions
LGC, 159. Exemptions. - The following are exempt from the community tax:
(1) Diplomatic and consular representatives; and
(2) Transient visitors when their stay in the Philippines does not exceed three (3) months
(d) Place of Payment
LGC, 160. Place of Payment. - The community tax shall be paid in the place of residence of the individual, or in the place where the
principal office of the juridical entity is located.
IRR, 246(e). Place of Payment
(1) Community tax shall be paid in the city or municipality where the residence of the individual is located, or in the city or municipality
where the principal office of the juridical entity is located.
(2) It shall be unlawful for any city or municipal treasurer to collect community tax outside the territorial jurisdiction of the city or the
municipality.
(3) In case of branch, sales office or warehouse where sales are made and recorded, corresponding community tax shall be paid to the
LGU where such branch, sales office or warehouse is located.
(4) Any person, natural or juridical, who pays community tax to a city or municipality other than the city or municipality where his
residence, or principal office in the case of juridical persons, is located shall remain liable to pay such tax to the city or municipality
concerned.
(e) Time for Payment
LGC, 161. Time for Payment; Penalties for Delinquency.
(a) The community tax shall accrue on the first (1st) day of January of each year which shall be paid not later than the last day of
February of each year. If a person reaches the age of eighteen (18) years or otherwise loses the benefit of exemption on or before
the last day of June, he shall be liable for the community tax on the day he reaches such age or upon the day the exemption ends.
However, if a person reaches the age of eighteen (18) years or loses the benefit of exemption on or before the last day of March, he
shall have twenty (20) days to pay the community tax without becoming delinquent.
Persons who come to reside in the Philippines or reach the age of eighteen (18) years on or after the first (1st) day of July of
any year, or who cease to belong to an exempt class or after the same date, shall not be subject to the community tax for that year.
(b) Corporations established and organized on or before the last day of June shall be liable for the community tax for that year. But
corporations established and organized on or before the last day of March shall have twenty (20) days within which to pay the
community tax without becoming delinquent. Corporations established and organized on or after the first day of July shall not be
subject to the community tax for that year.
If the tax is not paid within the time prescribed above, there shall be added to the unpaid amount an interest of twenty-four percent
(24%) per annum from the due date until it is paid.
IRR, 246(f). Time for Payment
(1) Community tax shall accrue on the first (1st) day of January of each year and shall be paid not later than the last day of February of
each year.
(2) If a person reaches the age of eighteen (18) years or otherwise loses the benefit of exemption on or before the last day of June, he
shall be liable for the payment of community tax on the day he reaches such age or upon the day the exemption on or before the last
day of March, he shall have twenty (20) days within which to pay the community tax without becoming delinquent.
(3) Persons who come to reside in the Philippines or reach the age of eighteen (18) years on or after the first (1st) day of July of any
year, or who cease to belong to an exempt class on or after the same date, shall not be subject to community tax for that year.
(4) Corporations established and organized on or before the last day of June shall be liable for the payment of community tax for that
year. Corporations established and organized on or before the last day of March shall have twenty (20) days within which to pay the
community tax without becoming delinquent. Corporations established and organized on or after the first day of July shall not be
subject to community tax for that year.
(f) Printing of Community Tax Certificate and Distribution of Proceeds
LGC, 164. Printing of Community Tax Certificates and Distribution of Proceeds.
(a) The Bureau of Internal Revenue shall cause the printing of community tax certificates and distribute the same to the cities and
municipalities through the city and municipal treasurers in accordance with prescribed regulations.
The proceeds of the tax shall accrue to the general funds of the cities, municipalities and barangays except a portion thereof
which shall accrue to the general fund of the national government to cover the actual cost of printing and distribution of the forms
and other related expenses. The city or municipal treasurer concerned shall remit to the national treasurer the said share of the
national government in the proceeds of the tax within ten (10) days after the end of each quarter.
(b) The city or municipal treasurer shall deputize the barangay treasurer to collect the community tax in their respective jurisdictions:
Provided, however, That said barangay treasurer shall be bonded in accordance with existing laws.
(c) The proceeds of the community tax actually and directly collected by the city or municipal treasurer shall accrue entirely to the
general fund of the city or municipality concerned. However, proceeds of the community tax collected through the barangay
treasurers shall be apportioned as follows:
(1) Fifty percent (50%) shall accrue to the general fund of the city or municipality concerned; and
(2) Fifty percent (50%) shall accrue to the barangay where the tax is collected.
IRR, 249. Printing of Community Tax Certificates and Distribution of Proceeds. The Bureau of Internal Revenue (BIR) shall cause the
printing of community tax certificates and distribute the same to the cities and municipalities through the city and municipal treasurers
in accordance with prescribed regulations. To facilitate distribution, the BIR may send on consignment to the provincial treasurers blank
forms of the community tax certificates and the municipal treasurers of the province shall secure through the provincial treasurer, their
respective requirements. The city or municipal treasurer concerned shall remit to the National Treasurer, for the account of the BIR, the
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share of the National Government in the proceeds of the tax, representing the cost of printing and distribution, within ten (10) days after
the end of each quarter. In cases where the certificates were secured or requisitioned from the provincial treasurer, the municipal
treasurers shall remit payments to the provincial treasurer who shall, in turn, effect the remittance to the National Treasurer as required.
IRR, 251. Allocation of Proceeds of Community Tax. The proceeds of community tax actually and directly collected by the city or
municipal treasurer shall accrue entirely to the general fund of the city or municipality concerned. The proceeds of community tax
collected through the barangay treasurers shall be apportioned as follows:
(a) Fifty percent (50%) shall accrue to the general fund of the city or municipality concerned; and
(b) Fifty percent (50%) shall accrue to the barangay where the tax is collected.
C. Collection of Business Taxes
1. Tax Period and Manner of Payment
LGC, 165. Tax Period and Manner of Payment. - Unless otherwise provided in this Code, the tax period of all local taxes, fees and charges shall
be the calendar year. Such taxes, fees and charges may be paid in quarterly installments.
IRR, 253. Tax Period and Manner of Payment. Unless otherwise provided in this Rule, the tax period of all local taxes, fees, and charges shall
be the calendar year. Such taxes, fees, and charges may be paid in quarterly installments as may be provided in the tax ordinance
2. Accrual of Tax
LGC, 166. Accrual of Tax. - Unless otherwise provided in this Code, all local taxes, fees, and charges shall accrue on the first (1st) day of January
of each year. However, new taxes, fees or charges, or changes in the rates thereof, shall accrue on the first (1st) day of the quarter next
following the effectivity of the ordinance imposing such new levies or rates.
IRR, 254. Accrual of Tax. Unless otherwise provided herein, local taxes, fees, and charges shall accrue on the first (1st) day of January of
each year as regards tax subjects then liable therefor, but an entirely new tax, fee or charge, or charges in the rates of existing taxes, fees, or
charges, shall accrue on the first day of the quarter next following the effectivity of the ordinance imposing such new levies or rates.
3. Time of Payment
LGC, 167. Time of Payment. - Unless otherwise provided in this Code, all local taxes, fees, and charges shall be paid within the first twenty (20)
days of January or of each subsequent quarter, as the case may be. The sanggunian concerned may, for a justifiable reason or cause, extend the
time for payment of such taxes, fees, or charges without surcharges or penalties, but only for a period not exceeding six (6) months.
IRR, 255. Time of Payment. Unless otherwise specifically provided in this Rule, all local taxes, fees, and charges due and accruing to the
LGUs shall be paid within the first twenty (20) days of January or of each subsequent quarter, as the case may be. The sanggunian concerned
may, for a justifiable reason or cause, extend the time for payment of such taxes, fees, or charges without surcharges or penalties, but only for
a period not exceeding six (6) months.
4. Penalties on unpaid Taxes, Fees or Charges
(a) Surcharges and penalties
LGC, 168. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. - The sanggunian may impose a surcharge not exceeding twenty-
five (25%) of the amount of taxes, fees or charges not paid on time and an interest at the rate not exceeding two percent (2%) per month
of the unpaid taxes, fees or charges including surcharges, until such amount is fully paid but in no case shall the total thirty-six (36%)
months.
IRR, 256. Surcharges and Penalties on Unpaid Taxes, Fees, or Charges. The sanggunian may impose a surcharge not exceeding twenty-
five percent (25%) of the amount of taxes, fees, or charges not paid on time and an interest at the rate not exceeding two percent (2%)
per month of the unpaid taxes, fees, or charges including surcharges, until such amount is fully paid but in no case shall the total interest
on the unpaid amount or portion thereof exceed thirty-six (36) months.
(b) Interests on Other Unpaid Revenues
LGC, 169. Interests on Other Unpaid Revenues. - Where the amount of any other revenue due a local government unit, except voluntary
contributions or donations, is not paid on the date fixed in the ordinance, or in the contract, expressed or implied, or upon the occurrence
of the event which has given rise to its collection, there shall be collected as part of that amount an interest thereon at t he rate not
exceeding two percent (2%) per month from the date it is due until it is paid, but in no case shall the total interest on the unpaid amount
or a portion thereof exceed thirty-six (36) months.
IRR, 257. Interests on Other Unpaid Revenues. Where the amount of any other revenue due an LGU, except voluntary contributions or
donations, is not paid on the date fixed in the ordinance, or in the contract, expressed or implied, or upon the occurrence of the event
which has given rise to its collection, there shall be collected as part of that amount an interest thereon at the rate not exceeding two
percent (2%) per month from the date it is due until it is paid, but in no case shall the total interest on the unpaid amount or a portion
thereof exceed thirty-six (36) months.
5. Authority of Treasurer in Collection and Inspection of Books
(a) Collection of local revenues
LGC, 170. Collection of Local Revenue by Treasurer. - All local taxes, fees, and charges shall be collected by the provincial, city, municipal,
or barangay treasurer, or their duly authorized deputies.
The provincial, city or municipal treasurer may designate the barangay treasurer as his deputy to collect local taxes, fees, or
charges. In case a bond is required for the purpose, the provincial, city or municipal government shall pay the premiums thereon in
addition to the premiums of bond that may be required under this Code.
IRR, 258. Collection of Local Revenues. All local taxes, fees, and charges shall be collected by the provincial, city, municipal, or
barangay treasurer, or their duly authorized deputies.
The provincial, city, or municipal treasurer may designate the barangay treasurer as his deputy to collect local taxes, fees, or
charges. In case a bond is required for the purpose, the provincial, city, or municipal government shall pay the premium thereon in
addition to the premiums of bond that may be required under these Rules.
(b) Examination of Books of Accounts and Records
LGC, 171. Examination of Books of Accounts and Pertinent Records of Businessmen by Local Treasurer. - The provincial, city, municipal or
barangay treasurer may, by himself or through any of his deputies duly authorized in writing, examine the books, accounts, and other
pertinent records of any person, partnership, corporation, or association subject to local taxes, fees and charges in order to ascertain.
assess, and collect the correct amount of the tax, fee, or charge. Such examination shall be made during regular business hours, only once
for every tax period, and shall be certified to by the examining official. Such certificate shall be made of record in the books of accounts of
the taxpayer examined.
In case the examination herein authorized is made by a duly authorized deputy of the local treasurer, the written authority of
the deputy concerned shall specifically state the name, address, and business of the taxpayer whose books, accounts, and pertinent
records are to be examined, the date and place of such examination and the procedure to be followed in conducting the same.
For this purpose, the records of the revenue district office of the Bureau of Internal Revenue shall be made available to the
local treasurer, his deputy or duly authorized representative.
IRR, 259. Examination of Books of Accounts and Pertinent Records of Businessmen. (a) For purposes of implementing this Article,
only the treasurer of the LGU imposing the tax, fee, or charge, may examine the books of accounts and pertinent records of businessmen
in order to ascertain, assess, and collect the correct amount of taxes, fees, and charges.
(b) The provincial, city, municipal, or barangay treasurer may, by himself or through any of his deputies duly authorized in writing, examine
the books, accounts, and other pertinent records of any person, partnership, corporation, or association subject to local taxes, fees, and
charges.
(c) The examination shall be made during regular business hours not oftener than once a year for every tax period, which shall be the year
immediately preceding the examination, and shall be certified by the examining official. Such certification shall be made of record in the
books of accounts of the taxpayer examined.
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(d) In case the examination is made by a duly authorized deputy of the local treasurer, the written authority of the deputy concerned shall
specifically state the name, address, and business of the taxpayer whose books, accounts, and pertinent records are to be examined, the
date and place of such examination, and the procedure to be followed in conducting the same.
(e) For this purpose, the records of the revenue district office of the BIR shall be made available to the local treasurer, his deputy or duly
authorized representative.
(f) The Secretary of Finance shall prescribe the necessary forms to be used and such guidelines which may be deemed necessary for the
proper and effective implementation of this Article.
D. Taxpayers Remedies
1. Periods of Assessment and Collection of Local Taxes, Fees or Charges
LGC, 194. Periods of Assessment and Collection.
(a) Local taxes, fees, or charges shall be assessed within five (5) years from the date they became due. No action for the collection of such
taxes, fees, or charges, whether administrative or judicial, shall be instituted after the expiration of such period: Provided, That. taxes,
fees or charges which have accrued before the effectivity of this Code may be assessed within a period of three (3) years from the date
they became due.
(b) In case of fraud or intent to evade the payment of taxes, fees, or charges, the same may be assessed within ten (10) years from discovery
of the fraud or intent to evade payment.
(c) Local taxes, fees, or charges may be collected within five (5) years from the date of assessment by administrative or judicial action. No
such action shall be instituted after the expiration of said period: Provided, however, That, taxes, fees or charges assessed before the
effectivity of this Code may be collected within a period of three (3) years from the date of assessment.
(d) The running of the periods of prescription provided in the preceding paragraphs shall be suspended for the time during which:
(1) The treasurer is legally prevented from making the assessment of collection;
(2) The taxpayer requests for a reinvestigation and executes a waiver in writing before expiration of the period within which to assess
or collect; and
(3) The taxpayer is out of the country or otherwise cannot be located.
IRR, 284. Period of Assessment and Collection. (a) Local taxes, fees, or charges shall be assessed within five (5) years from the date they
become due. No action for the collection of such taxes, fees, or charges, whether administrative or judicial, shall be instituted after the
expiration of such period provided that taxes, fees or charges which have accrued before the effectivity of the Code may be assessed within a
period of three (3) years from the date they became due.
(b) In case of fraud or intent to evade the payment of taxes, fees, or charges, the same may be assessed within ten (10) years from discovery
of the fraud or intent to evade payment.
(c) Local taxes, fees, or charges may be collected within five (5) years from the date of assessment by administrative or judicial action. No
such action shall be instituted after the expiration of said period provided that taxes, fees, or charges assessed before the effectivity of the
Code may be collected within a period of three (3) years from the date of assessment.
(d) The running of the periods of prescription provided in the preceding paragraphs shall be suspended for the time during which:
(1) The treasurer is legally prevented from making the assessment of collection;
(2) The taxpayer requests re-investigation and executes a waiver in writing before expiration of the period within which to assess or
collect; and
(3) The taxpayer is out of the country or otherwise cannot be located.
2. Protest of Assessment
LGC, 195. Protest of Assessment. - When the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges have
not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the surcharges,
interests and penalties. Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the
local treasurer contesting the assessment; otherwise, the assessment shall become final and executory. The local treasurer shall decide the
protest within sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue
a notice cancelling wholly or partially the assessment. However, if the local treasurer finds the assessment to be wholly or partly correct, he
shall deny the protest wholly or partly with notice to the taxpayer. The taxpayer shall have thirty (30) days from the receipt of the denial of
the protest or from the lapse of the sixty (60) day period prescribed herein within which to appeal with the court of competent jurisdiction
otherwise the assessment becomes conclusive and unappealable.
IRR, 285. Protest on Assessment. When the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges
have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge the amount of deficiency, the surcharges,
interests, and penalties. Within sixty (60) days from receipt of the notice of assessment, the taxpayer may file a written protest with the local
treasurer contesting the assessment; otherwise, the assessment shall become final and executory. The local treasurer shall de cide the protest
within sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a
notice cancelling wholly or partially the assessment. If the local treasurer finds the assessment to be wholly or partly correct, he shall deny the
protest wholly or partly with notice to the taxpayer.
The taxpayer shall have thirty (30) days from receipt of the denial of the protest or from the lapse of the sixty-day period prescribed in
this Article within which to appeal with the court of competent jurisdiction; otherwise, the assessment becomes conclusive and unappealable.
3. Claim for Refund or Tax Credit for erroneously or illegally collected tax, fee or charge
LGC, 196. Claim for Refund of Tax Credit. - No case or proceeding shall be maintained in any court for the recovery of any tax, fee, or charge
erroneously or illegally collected until a written claim for refund or credit has been filed with the local treasurer. No case or proceeding shall
be entertained in any court after the expiration of two (2) years from the date of the payment of such tax, fee, or charge, or from the date the
taxpayer is entitled to a refund or credit.
IRR, 286. Claim for Refund or Tax Credit. All taxpayers entitled to a refund or tax credit provided in this Rule shall file with the local
treasurer a claim in writing duly supported by evidence of payment (e.g., official receipts, tax clearance, and such other proof evidencing
overpayment within two (2) years from payment of the tax, fee, or charge. No case or proceeding shall be entertained in any court without this
claim in writing, and after the expiration of two (2) years from the date of payment of such tax, fee, or charge, or from the date the taxpayer is
entitled to a refund or tax credit.
The tax credit granted a taxpayer shall not be refundable in cash but shall only be applied to future tax obligations of the same taxpayer
for the same business. If a taxpayer has paid in full the tax due for the entire year and he shall have no other tax obligation payable to the LGU
concerned during the year, his tax credits, if any, shall be applied in full during the first quarter of the next calendar year on the tax due from
him for the same business of said calendar year.
Any unapplied balance of the tax credit shall be refunded in cash in the event that he terminates operation of the business involved
within the locality.
E. Civil Remedies (by the LGU) for Collection of Revenues
1. Local governments lien for delinquent taxes, fees or charges
LGC, 173. Local Government's Lien. - Local taxes, fees, charges and other revenues constitute a lien, superior to all liens, charges or
encumbrances in favor of any person, enforceable by appropriate administrative or judicial action, not only upon any property or rights
therein which may be subject to the lien but also upon property used in business, occupation, practice of profession or calling, or exercise of
privilege with respect to which the lien is imposed. The lien may only be extinguished upon full payment of the delinquent local taxes fees and
charges including related surcharges and interest.
IRR, 264. Levy on Real Property. After the expiration of the time required to pay the delinquent tax, fee, or charge, real property may be
levied on, before, simultaneously, after the distraint of personal property belonging to the delinquent taxpayer. The provincial, city or
municipal treasurer, as the case may be, shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount of the
tax, fee, or charge, and penalty due from him. Such certificate shall operate with the force of a legal execution throughout the Philippines. Levy
shall be effected by writing upon said certificate the description of the property upon which levy is made. At the same time, written notice of
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the levy shall be mailed to or served upon the local assessor and registrar of deeds of the province or city where the property is located who
shall annotate the levy on the tax declaration and certificate of title of the property, respectively, and the delinquent taxpayer or, if he be
absent from the Philippines, to his agent or the manager of the business in respect to which the liability arose, or if there be none, to the
occupant of the property in question.
In case the levy on real property is not issued before or simultaneously with the warrant of distraint on personal property, and the
personal property of the taxpayer is not sufficient to satisfy his delinquency, the provincial, city or municipal treasurer, as the case may be,
shall within thirty (30) days after execution of the distraint, proceed with the levy on the taxpayer's real property.
A report on any levy shall, within ten (10) days after receipt of the warrant, be submitted by the levying officer to the sanggunian
concerned.
2. Civil Remedies, in General
LGC, 174. Civil Remedies. - The civil remedies for the collection of local taxes, fees, or charges, and related surcharges and interest resulting
from delinquency shall be:
(a) By administrative action thru distraint of goods, chattels, or effects, and other personal property of whatever character, including
stocks and other securities, debts, credits, bank accounts, and interest in and rights to personal property, and by levy upon real
property and interest in or rights to real property;
(b) By judicial action.
Either of these remedies or all may be pursued concurrently or simultaneously at the discretion of the local government unit concerned.
IRR, 262. Civil Remedies. The civil remedies for the collection of local taxes, fees, or charges, and related surcharges and interests resulting
from delinquencies shall be:
(a) By administrative action through distraint of goods, chattels, or effects, and other personal property of whatever character,
including stocks and other securities, debts, credits, bank accounts, and interest in and rights to personal property, and by levy
upon real property and interest in or rights to real property; and
(b) By judicial action.
Either of these two (2) remedies or both may be pursued concurrently or simultaneously at the discretion of the LGU concerned.
(a) Administrative Action
(b) Judicial Action
3. Procedure for Administrative Action
(a) Distraint of Personal Property, Procedure
LGC, 175. Distraint of Personal Property. - The remedy by distraint shall proceed as follows:
(a) Seizure - Upon failure of the person owing any local tax, fee, or charge to pay the same at the time required, the local treasurer or his
deputy may, upon written notice, seize or confiscate any personal property belonging to that person or any personal property
subject to the lien in sufficient quantity to satisfy the tax, fee, or charge in question, together with any increment thereto incident to
delinquency and the expenses of seizure. In such case, the local treasurer or his deputy shall issue a duly authenticated certificate
based upon the records of his office showing the fact of delinquency and the amounts of the tax, fee, or charge and penalty due. Such
certificate shall serve as sufficient warrant for the distraint of personal property aforementioned, subject to the taxpayer's right to
claim exemption under the provisions of existing laws. Distrained personal property shall be sold at public auction in the manner
hereon provided for.
(b) Accounting of distrained goods. - The officer executing the distraint shall make or cause to be made an account of the goods, chattels
or effects distrained, a copy of which signed by himself shall be left either with the owner or person from whose possession the
goods, chattels or effects are taken, or at the dwelling or place or business of that person and with someone of suitable age and
discretion, to which list shall be added a statement of the sum demanded and a note of the time and place of sale.
(c) Publication - The officer shall forthwith cause a notification to be exhibited in not less than three (3) public and conspicuous places
in the territory of the local government unit where the distraint is made, specifying the time and place of sale, and the articles
distrained. The time of sale shall not be less than twenty (20) days after the notice to the owner or possessor of the property as
above specified and the publication or posting of the notice. One place for the posting of the notice shall be at the office of the chief
executive of the local government unit in which the property is distrained.
(d) Release of distrained property upon payment prior to sale - If at any time prior to the consummation of the sale, all the proper
charges are paid to the officer conducting the sale, the goods or effects distrained shall be restored to the owner.
(e) Procedure of sale - At the time and place fixed in the notice, the officer conducting the sale shall sell the goods or effects so
distrained at public auction to the highest bidder for cash. Within five (5) days after the sale, the local treasurer shall make a report
of the proceedings in writing to the local chief executive concerned.
Should the property distrained be not disposed of within one hundred and twenty (120) days from the date of distraint, the
same shall be considered as sold to the local government unit concerned for the amount of the assessment made thereon by the
Committee on Appraisal and to the extent of the same amount, the tax delinquencies shall be cancelled.
Said Committee on Appraisal shall be composed of the city or municipal treasurer as chairman, with a representative of the
Commission on Audit and the city or municipal assessor as members.
(f) Disposition of proceeds - The proceeds of the sale shall be applied to satisfy the tax, including the surcharges, interest, and other
penalties incident to delinquency, and the expenses of the distraint and sale. The balance over and above what is required to pay the
entire claim shall be returned to the owner of the property sold. The expenses chargeable upon the seizure and sale shall embrace
only the actual expenses of seizure and preservation of the property pending the sale, and no charge shall be imposed for the
services of the local officer or his deputy. Where the proceeds of the sale are insufficient to satisfy the claim, other property may, in
like manner, be distrained until the full amount due, including all expenses, is collected.
IRR, 263. Distraint of Personal Property. The remedy by distraint shall proceed as follows:
(a) Seizure Upon failure of the person owing any local tax, fee, or charge to pay the same at the time required, the local treasurer or
his deputy may, upon written notice, seize or confiscate any personal property belonging to that person or any personal property
subject to the lien in sufficient quantity to satisfy the tax, fee, or charge in question, together with any increment thereto incident to
delinquency and the expenses of seizure. In such case, the local treasurer or his deputy shall issue a duly authenticated certificate
based upon the records of his office showing the fact of delinquency and the amounts of the tax, fee, or charge and penalty due. Such
certificate shall serve as sufficient warrant for the distraint of personal property aforementioned, subject to the taxpayer's right to
claim exemption under the provisions of applicable laws. Distrained personal property shall be sold at public auction in the manner
provided in this Rule.
(b) Accounting of distrained goods The officer executing the distraint shall make or cause to be made an account of the goods,
chattels, or effects distrained, a copy of which signed by himself shall be left either with the owner or person from whose possession
the goods, chattels, or effects are taken, or at the dwelling or place of business of that person and with someone of suitable age and
discretion, to which list shall be added a statement of the sum demanded and a note of the time and place of sale.
(c) Publication The officer shall forthwith cause a notification to be exhibited in not less than three (3) public and conspicuous
places in the territory of the LGU where the distraint is made, specifying the time and place of sale, and the articles distrained. The
time of sale shall not be less than twenty (20) days after notice to the owner or possessor of the property as above specified and the
publication or posting of the notice. One place for the posting of the notice shall be at the office of the chief executive of the LGU in
which the property is distrained.
(d) Release of distrained property upon payment prior to sale If at any time prior to the consummation of the sale, all the proper
charges are paid to the officer conducting the sale, the goods or effects distrained shall be restored to the owner.
(e) Procedure of sale At time and place fixed in the notice, the officer conducting the sale shall sell the goods or effects so distrained
at public auction to the highest bidder for cash. Within five (5) days after the sale, the local treasurer shall make a report of the
proceedings in writing to the local chief executive concerned.
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Should the property distrained be not disposed of within one hundred and twenty (120) days from the date of distraint, the
same shall be considered as sold to the LGU concerned for the amount of the assessment made thereon by the committee on
appraisal and to the extent of the same amount, the tax delinquencies shall be cancelled.
The committee on appraisal shall be composed of the city or municipal treasurer as chairman, with a representative of COA
and the city or municipal assessor, as members.
(f) Disposition of proceeds The proceeds of the sale shall be applied to satisfy the tax, including the surcharges, interests, and other
penalties incident to delinquency, and the expenses of the distraint and sale. The balance over and above what is required to pay the
entire claim shall be returned to the owner of the property sold. The expenses chargeable upon the seizure and sale shall embrace
only the actual expenses of seizure and preservation of the property pending the sale, and no charge shall be imposed for the
services of the local officer or his deputy. Where the proceeds of the sale are insufficient to satisfy the claim, other property may, in
like manner, be distrained until the full amount due, including all expenses, is collected.
(b) Levy of Real Property, Procedure
LGC, 176. Levy on Real Property. - After the expiration of the time required to pay the delinquent tax, fee, or charge, real property may be
levied on before, simultaneously, or after the distraint of personal property belonging to the delinquent taxpayer. To this end, the
provincial, city or municipal treasurer, as the case may be, shall prepare a duly authenticated certificate showing the name of the
taxpayer and the amount of the tax, fee, or charge, and penalty due from him. Said certificate shall operate with the force of a legal
execution throughout the Philippines. Levy shall be effected by writing upon said certificate the description of the property upon which
levy is made. At the same time, written notice of the levy shall be mailed to or served upon the assessor and the Register of Deeds of the
province or city where the property is located who shall annotate the levy on the tax declaration and certificate of title of the property,
respectively, and the delinquent taxpayer or, if he be absent from the Philippines, to his agent or the manager of the business in respect
to which the liability arose, or if there be none, to the occupant of the property in question.
In case the levy on real property is not issued before or simultaneously with the warrant of distraint on personal property, and
the personal property of the taxpayer is not sufficient to satisfy his delinquency, the provincial, city or municipal treasurer, as the case
may be, shall within thirty (30) days after execution of the distraint, proceed with the levy on the taxpayer's real property.
A report on any levy shall, within ten (10) days after receipt of the warrant, be submitted by the levying officer to the
LGC, 178. Advertisement and Sale. - Within thirty (30) days after the levy, the local treasurer shall proceed to publicly advertise for sale
or auction the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale; and such advertisement shall
cover a period of at least thirty (30) days. It shall be effected by posting a notice at the main entrance of the municipal building or city
hall, and in a public and conspicuous place in the barangay where the real property is located, and by publication once a week for three
(3) weeks in a newspaper of general circulation in the province, city or municipality where the property is located. The advertisement
shall contain the amount of taxes, fees or charges, and penalties due thereon, and the time and place of sale, the name of the taxpayer
against whom the taxes, fees, or charges are levied, and a short description of the property to be sold. At any time before the date fixed
for the sale, the taxpayer may stay they proceedings by paying the taxes, fees, charges, penalties and interests. If he fails to do so, the sale
shall proceed and shall be held either at the main entrance of the provincial, city or municipal building, or on the property to be sold, or
at any other place as determined by the local treasurer conducting the sale and specified in the notice of sale.
Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of the sale to the sanggunian
concerned, and which shall form part of his records. After consultation with the sanggunian, the local treasurer shall make and deliver to
the purchaser a certificate of sale, showing the proceeding of the sale, describing the property sold, stating the name of the purchaser and
setting out the exact amount of all taxes, fees, charges, and related surcharges, interests, or penalties: Provided, however, That any excess
in the proceeds of the sale over the claim and cost of sales shall be turned over to the owner of the property.
The local treasurer may, by ordinance duly approved, advance an amount sufficient to defray the costs of collection by means
of the remedies provided for in this Title, including the preservation or transportation in case of personal property, and the
advertisement and subsequent sale, in cases of personal and real property including improvements thereon.
LGC, 179. Redemption of Property Sold. - Within one (1) year from the date of sale, the delinquent taxpayer or his representative shall
have the right to redeem the property upon payment to the local treasurer of the total amount of taxes, fees, or charges, and related
surcharges, interests or penalties from the date of delinquency to the date of sale, plus interest of not more than two perce nt (2%) per
month on the purchase price from the date of purchase to the date of redemption. Such payment shall invalidate the certificate of sale
issued to the purchaser and the owner shall be entitled to a certificate of redemption from the provincial, city or municipal treasurer or
his deputy.
The provincial, city or municipal treasurer or his deputy, upon surrender by the purchaser of the certificate of sale previously
issued to him, shall forthwith return to the latter the entire purchase price paid by him plus the interest of not more than two percent
(2%) per month herein provided for, the portion of the cost of sale and other legitimate expenses incurred by him, and said property
thereafter shall be free from the lien of such taxes, fees, or charges, related surcharges, interests, and penalties.
The owner shall not, however, be deprived of the possession of said property and shall be entitled to the rentals and other
income thereof until the expiration of the time allowed for its redemption.
LGC, 180. Final Deed to Purchaser. - In case the taxpayer fails to redeem the property as provided herein, the local treasurer shall execute
a deed conveying to the purchaser so much of the property as has been sold, free from liens of any taxes, fees, charges, related
surcharges, interests, and penalties. The deed shall succinctly recite all the proceedings upon which the validity of the sale depends.
LGC, 181. Purchase of Property By the Local Government Units for Want of Bidder. - In case there is no bidder for the real property
advertised for sale as provided herein, or if the highest bid is for an amount insufficient to pay the taxes, fees, or charges, related
surcharges, interests, penalties and costs, the local treasurer conducting the sale shall purchase the property in behalf of the local
government unit concerned to satisfy the claim and within two (2) days thereafter shall make a report of his proceedings which shall be
reflected upon the records of his office. It shall be the duty of the Registrar of Deeds concerned upon registration with his office of any
such declaration of forfeiture to transfer the title of the forfeited property to the local government unit concerned without the necessity
of an order from a competent court.
Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may redeem the property by
paying to the local treasurer the full amount of the taxes, fees, charges, and related surcharges, interests, or penalties, and the costs of
sale. If the property is not redeemed as provided herein, the ownership thereof shall be fully vested on the local government unit
concerned.
LGC, 182. Resale of Real Estate Taken for Taxes, Fees, or Charges. - The sanggunian concerned may, by ordinance duly approved, and upon
notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding section at public auction. The
proceeds of the sale shall accrue to the general fund of the local government unit concerned.
IRR, 264. Levy on Real Property. After the expiration of the time required to pay the delinquent tax, fee, or charge, real property may
be levied on, before, simultaneously, after the distraint of personal property belonging to the delinquent taxpayer. The provincial, city or
municipal treasurer, as the case may be, shall prepare a duly authenticated certificate showing the name of the taxpayer and the amount
of the tax, fee, or charge, and penalty due from him. Such certificate shall operate with the force of a legal execution throughout the
Philippines. Levy shall be effected by writing upon said certificate the description of the property upon which levy is made. At the same
time, written notice of the levy shall be mailed to or served upon the local assessor and registrar of deeds of the province or city where
the property is located who shall annotate the levy on the tax declaration and certificate of title of the property, respectively, and the
delinquent taxpayer or, if he be absent from the Philippines, to his agent or the manager of the business in respect to which the liability
arose, or if there be none, to the occupant of the property in question.
In case the levy on real property is not issued before or simultaneously with the warrant of distraint on personal property, and
the personal property of the taxpayer is not sufficient to satisfy his delinquency, the provincial, city or municipal treasurer, as the case
may be, shall within thirty (30) days after execution of the distraint, proceed with the levy on the taxpayer's real property.
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A report on any levy shall, within ten (10) days after receipt of the warrant, be submitted by the levying officer to the
IRR, 266. Advertisement and Sale. Within thirty (30) days after levy, the local treasurer shall proceed to publicly advertise for sale or
auction the property or a usable portion thereof as may be necessary to satisfy the claim and cost of sale; and such advertisement shall
cover a period of at least thirty (30) days. It shall be effected by posting a notice at the main entrance of the city or municipal hall, and in
public and conspicuous places in the barangay where the real property is located, and by publication once a week for three (3) weeks in a
newspaper of general circulation in the province, city or municipality where the property is located. The advertisement shall contain the
amount of taxes, fees or charges, and penalties due thereon, and the time and place of sale, the name of the taxpayer against whom the
taxes, fees, or charges are levied, and a short description of the property to be sold. At any time before the date fixed for the sale, the
taxpayer may stay the proceedings by paying the taxes, fees, charges, penalties, and interests. If he fails to do so, the sale shall proceed
and shall be held either at the main entrance of the provincial capitol, city or municipal hall, or on the property to be sold, or at any other
place as determined by the local treasurer conducting the sale and specified in the notice of sale.
Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of the sale to the sanggunian
concerned, and which shall form part of his records. After consultation with the sanggunian, the local treasurer shall make and deliver to
the purchaser a certificate of sale, showing the proceedings of the sale, describing the property sold, stating the name of the purchaser
and setting out the exact amount of all taxes, fees, charges, and related surcharges, interests, or penalties provided that any excess in the
proceeds of the sale over the claim and cost of sales shall be turned over to the owner of the property. The local treasurer may, by a duly
approved ordinance, advance an amount sufficient to defray the costs of collection by means of the remedies provided, in this Rule,
including the preservation or transportation, in case of personal property, and the advertisement and subsequent sale, in cases of
personal and real property including improvements thereon.
IRR, 267. Redemption of Property Sold. Within one (1) year from the date of sale, the delinquent taxpayer or his representative shall
have the right to redeem the property upon payment to the local treasurer of the total amount of taxes, fees, or charges, and related
surcharges, interest, or penalties from the date of delinquency to the date of sale, plus interest of not more than two percent (2%) per
month on the purchase price from the date of purchase to the date of redemption. Such payment shall invalidate the certificate of sale
issued to the purchaser and the owner shall be entitled to a certificate of redemption from the provincial, city, or municipal treasurer or
his deputy.
The provincial, city, or municipal treasurer or his deputy, upon surrender by the purchaser of the certificate of sale previously
issued to him, shall forthwith return to the latter the entire purchase price paid by him plus the interest of not more than two percent
(2%) per month herein provided for, the portion of the cost of sale and other legitimate expenses incurred by him, and said property
thereafter shall be free from the lien of such taxes, fees, or charges, related surcharges, interests, and penalties.
The owner shall not be deprived of the possession of said property and shall be entitled to the rentals and other income
thereof until the expiration of the time allowed for its redemption .
IRR, 268. Final Deed of Conveyance to Purchaser. In case the taxpayer fails to redeem the property as provided herein, the local
treasurer shall execute a deed conveying to the purchaser so much of the property as has been sold, free from liens of any taxes, fees,
charges, related surcharges, interests, and penalties. The deed shall succinctly recite all the proceedings upon which the validity of the
sale depends.
IRR, 269. Purchase of Property by the Local Government Units for Want of Bidder. In case there is no bidder for the real property
advertised for sale as provided herein, or if the highest bid is for an amount insufficient to pay the taxes, fees, or charges, related
surcharges, interests, penalties, and costs, the local treasurer conducting the sale shall purchase the property in behalf of the LGU
concerned to satisfy the claim and within two (2) days thereafter shall make a report of his proceedings which shall be reflected upon the
records of his office. It shall be the duty of the registrar of deeds concerned upon registration with his office of any such declaration of
forfeiture to transfer the title of the forfeited property to the LGU concerned without the necessity of an order from a competent court.
Within one (1) year from the date of such forfeiture the taxpayer or any of his representative, may redeem the property by
paying to the local treasurer the full amount of the taxes, fees, charges, and related surcharges, interests, or penalties, and the costs of
sale. If the property is not redeemed as provided herein, the ownership thereof shall be fully vested on the LGU concerned.
IRR, 270. Resale of Real Estate Acquired for Payment of Taxes, Fees, or Charges. The sanggunian concerned may, by a duly approved
ordinance, and upon notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding Article
at public auction. The proceeds of the sale shall accrue to the general fund of the LGU concerned.
(c) Further Distraint or Levy
LGC, 184. Further Distraint or Levy. - The remedies by distraint and levy may be repeated if necessary until the full amount due, including
all expenses, is collected.
IRR, 272. Further Distraint or Levy. The remedies by distraint and levy may be repeated if necessary until the full amount due,
including all expenses, is collected
(d) Exemption of Personal Property from Distraint or Levy
LGC, 185. Personal Property Exempt from Distraint or Levy. - The following property shall be exempt from distraint and the levy,
attachment or execution thereof for delinquency in the payment of any local tax, fee or charge, including the related surcharge and
interest:
(a) Tools and implements necessarily used by the delinquent taxpayer in his trade or employment;
(b) One (1) horse, cow, carabao, or other beast of burden, such as the delinquent taxpayer may select, and necessarily used by him
in his ordinary occupation;
(c) His necessary clothing, and that of all his family;
(d) Household furniture and utensils necessary for housekeeping and used for that purpose by the delinquent taxpayer, such as he
may select, of a value not exceeding Ten thousand pesos (P10,000.00);
(e) Provisions, including crops, actually provided for individual or family use sufficient for four (4) months;
(f) The professional libraries of doctors, engineers, lawyers and judges;
(g) One fishing boat and net, not exceeding the total value of Ten thousand pesos (P10,000.00), by the lawful use of which a
fisherman earns his livelihood; and
(h) Any material or article forming part of a house or improvement of any real property
IRR, 273. Personal Property Exempt from Distraint or Levy. The following property shall be exempt from distraint and the levy,
attachment or execution thereof for delinquency in the payment of any local tax, fee, or charge, including related surcharges and
interests:
(a) Tools and implements necessarily used by the delinquent taxpayer in his trade or employment:
(b) One (1) horse, cow, carabao, or other beast of burden, such as the delinquent taxpayer may select, and necessarily used by him
in his ordinary occupation;
(c) His necessary clothing, and that of all his family;
(d) Household furniture and utensils necessary for housekeeping and used for that purpose by the delinquent taxpayer, such as he
may select, of a value not exceeding Ten Thousand Pesos (P10,000.00);
(e) Provisions, including crops, actually provided for individual or family use sufficient for four (4) months;
(f) The professional libraries of doctors, engineers, lawyers and judges;
(g) One (1) fishing boat and net, not exceeding the total value of Ten Thousand Pesos (P10,000.00), by the lawful use of which a
fisherman earns his livelihood; and
(h) Any material or article forming part of a house or improvement of any real property.
(e) Penalty on Local Treasurer for Failure to Issue and Execute Warrant of Distraint or Levy
LGC, 177. Penalty for Failure to Issue and Execute Warrant. - Without prejudice to criminal prosecution under the Revised Penal Code and
other applicable laws, any local treasurer who fails to issue or execute the warrant of distraint or levy after the expiration of the time
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prescribed, or who is found guilty of abusing the exercise thereof by competent authority shall be automatically dismissed from the
service after due notice and hearing.
IRR, 265. Penalty for failure to Issue and Execute Warrant. Without prejudice to criminal prosecution under the Revised Penal Code
and other applicable laws, any local treasurer who fails to issue or execute the warrant of distraint or levy after the expiration of the time
prescribed, or who is found guilty of abusing the exercise thereof by competent authority, shall be automatically dismissed from the
service after due notice and hearing.
4. Procedure for Judicial Action
LGC, 183. Collection of Delinquent Taxes, Fees, Charges or other Revenues through Judicial Action. - The local government unit concerned may
enforce the collection of delinquent taxes, fees, charges or other revenues by civil action in any court of competent jurisdiction. The civil action
shall be filed by the local treasurer within the period prescribed in Section 194 of this Code.
IRR, 274. Power to Levy Other Taxes, Fees, or Charges. LGUs may exercise the power to levy taxes, fees, or charges on any base or subject
not otherwise specifically enumerated in this Rule or taxed under the provisions of the NIRC, as amended, or other applicable laws provided
that the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory, or contrary to declared national policy provided further
that the ordinance levying such taxes, fees, or charges shall not be enacted without prior public hearing conducted for the purpose.
LGC, 194, supra.
IRR, 284, supra.
II. Real Property Taxation
A. Introduction
1. Nature of real property tax ad valorem
2. Fundamental principles
LGC, 198. Fundamental Principles. - The appraisal, assessment, levy and collection of real property tax shall be guided by the following
fundamental principles:
(a) Real property shall be appraised at its current and fair market value;
(b) Real property shall be classified for assessment purposes on the basis of its actual use;
(c) Real property shall be assessed on the basis of a uniform classification within each local government unit;
(d) The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and
(e) The appraisal and assessment of real property shall be equitable.
IRR, 289. Fundamental Principles. The appraisal, assessment, levy, and collection of real property tax shall be governed by the following
fundamental principles:
(a) Real property shall be appraised at its current and fair market value;
(b) Real property shall be classified for assessment purposes on the basis of its actual use;
(c) Real property shall be assessed on the basis of a uniform classification within each LGU;
(d) The appraisal, assessment, levy, and collection of real property tax shall not be let to any private person; and
(e) The appraisal and assessment of real property shall be equitable.
B. Imposition of Real Property Tax
1. Power to Levy Real Property Tax
LGC, 232. Power to Levy Real Property Tax. - A province or city or a municipality within the Metropolitan Manila Area my levy an annual ad
valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted.
IRR, 323. Power to Levy Real Property Tax. Provinces and cities, and municipalities within MMA, through their respective sanggunians,
may levy the annual ad valorem tax on real property such as land, buildings, machinery, and other improvements not specifically exempted
under this Rule.
2. Rates of Levy
LGC, 233. Rates of Levy. - A province or city or a municipality within the Metropolitan Manila Area shall fix a uniform rate of basic real
property tax applicable to their respective localities as follows:
(a) In the case of a province, at the rate not exceeding one percent (1%) of the assessed value of real property; and
(b) In the case of a city or a municipality within the Metropolitan Manila Area, at the rate not exceeding two percent (2%) of the
assessed value of real property.
IRR, 324. Rates of Levy. A province or a city, or a municipality within MMA shall fix a uniform rate of basic real property tax applicable in
their respective jurisdictions as follows:
(a) For provinces: not exceeding one per cent (1%) of the assessed value;
(b) For cities or for municipalities within MMA: not exceeding two percent (2%) of the assessed value.
No public hearing shall be required before the enactment of a local tax ordinance levying the basic real property tax.
3. Exemption from Real Property Tax
LGC, 234. Exemptions from Real Property Tax. - The following are exempted from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof
has been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all
lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and government owned or
controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons,
whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this
Code.
IRR, 325. Exemption from Payment of Real Property Tax. The following are exempted from payment of the real property tax:
(a) All real property owned by the Republic of the Philippines or any of its political subdivisions, except when the beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages, or convents appurtenant thereto, mosques, nonprofit or religious cemeteries and all lands,
buildings, and improvements actually, directly, and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local water districts and GOCCs engaged in the supply
and distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided in RA 6938; and
(e) Machinery and equipment exclusively used for pollution control and environmental protection.
Except as provided in this Rule, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all
persons, whether natural or juridical, including all GOCCs are withdrawn upon the effectivity of the Code.
MCIAA v. Marcos. [petitioner asserts that although it is a government-owned or controlled corporation it is mandated to perform functions in
the same category as an instrumentality of Government. An instrumentality of Government is one created to perform governmental functions
primarily to promote certain aspects of the economic life of the people. Considering its task "not merely to efficiently operate and manage the
Mactan-Cebu International Airport, but more importantly, to carry out the Government policies of promoting and developing the Central
Visayas and Mindanao regions as centers of international trade and tourism, and accelerating the development of the means of transportation
and communication in the country," and that it is an attached agency of the Department of Transportation and Communication (DOTC), 8 the
petitioner "may stand in [sic] the same footing as an agency or instrumentality of the national government." Hence, its tax exemption privilege
under Section 14 of its Charter "cannot be considered withdrawn with the passage of the Local Government Code of 1991 (hereinafter LGC)
because Section 133 thereof specifically states that the taxing powers of local government units shall not extend to the levy of taxes of fees or
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charges of any kind on the national government its agencies and instrumentalities.] Thus, reading together Section 133, 232 and 234 of the
LGC, we conclude that as a general rule, as laid down in Section 133 the taxing powers of local government units cannot extend to the levy of
inter alia, "taxes, fees, and charges of any kind of the National Government, its agencies and instrumentalties, and local government units";
however, pursuant to Section 232, provinces, cities, municipalities in the Metropolitan Manila Area may impose the real property tax except
on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial used
thereof has been granted, for consideration or otherwise, to a taxable person", as provided in item (a) of the first paragraph of Section 234. ||
As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons, including government-owned and
controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the LGC,
except those granted to local water districts, cooperatives duly registered under R.A. No. 6938, non stock and non-profit hospitals and
educational institutions, and unless otherwise provided in the LGC. The latter proviso could refer to Section 234, which enumerates the
properties exempt from real property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption in so far as the
real property taxes are concerned by limiting the retention only to those enumerated there-in; all others not included in the enumeration lost
the privilege upon the effectivity of the LGC. Moreover, even as the real property is owned by the Republic of the Philippines, or any of its
political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is withdrawn if the beneficial use of such
property has been granted to taxable person for consideration or otherwise.
MIA v. CA. Section 243(a) of the Local Government Code (LGC) exempts from real estate tax any real property owned by the Republic of the
Philippines. This exemption should be read in relation with Sec. 133(o) of the LGC, which provides that the exercise of the taxing powers of
local governments shall not extend to the levy of taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities. The rule is that a tax is never presumed and there must be clear language in the law imposing the tax. This rule applies with
greater force when local governments seek to tax national government instrumentalities. Moreover, a tax exemption is construed liberally in
favor of national government instrumentalities. When the law vests in a government instrumentality corporate powers, the instrumentality
does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock corporation, it remains a
government instrumentality exercising not only governmental but also corporate powers. Also, when the law makes a government
instrumentality operationally autonomous, the instrumentality remains part of the National Government machinery. || MIAA is not organized
as a stock or non-stock corporation. It is not a stock corporation because it has no capital stock divided into shares. It has capital but it is not
divided into shares of stock. It has no stockholders or voting shares. MIAA is also not a non-stock corporation because it has no members. Even
assuming that the Government is considered as the sole member of MIAA, this will not make MIAA a non-stock corporation. Being a public
utility, MIAA is not organized for any of the purposes provided for under the Corporation Code for which a non-stock corporation may be
organized. Also, it is mandated by its charter to remit 20% of its annual gross operating income to the National Treasury. Non-stock
corporations cannot distribute any part of their income to their members. MIAA is a government instrumentality vested with corporate
powers to perform efficiently its governmental functions. When the law vests in a government instrumentality corporate powers, the
instrumentality does not become a corporation. Unless the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only governmental but also corporate powers. Also, when the law
makes a government instrumentality operationally autonomous, the instrumentality remains part of the National Government
machinery. Being a government instrumentality, MIAA falls under Sec. 133(o) of the LGC. As such, it is not a taxable person.
QC v. Bayantel.
Digital Telecomm v. Batangas.
C. Appraisal and Assessment of Real Property [LGC, 201-225; IRR, 292-310]
1. Rule on Appraisal of Real Property at Fair Market Value
LGC, 201. Appraisal of Real Property. - All real property, whether taxable or exempt, shall be appraised at the current and fair market value
prevailing in the locality where the property is situated. The Department of Finance shall promulgate the necessary rules and regulations for
the classification, appraisal, and assessment of real property pursuant to the provisions of this Code.
IRR, 292. Appraisal of Real Property. Within sixty (60) days from the effectivity of these Rules, DOF shall promulgate rules and regulations
and such procedural guidelines as may be necessary for the proper classification, appraisal, and assessment of real property in accordance
with the provisions of this Rule.
2. Declaration of Real Property
LGC, 202. Declaration of real Property by the Owner or Administrator. - It shall be the duty of all persons, natural or juridical, owning or
administering real property, including the improvements therein, within a city or municipality, or their duly authorized representative, to
prepare, or cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of their
property, whether previously declared or undeclared, taxable or exempt, which shall be the current and fair market value of the property, as
determined by the declarant. Such declaration shall contain a description of the property sufficient in detail to enable the assessor or his
deputy to identify the same for assessment purposes. The sworn declaration of real property herein referred to shall be filed with the assessor
concerned once every three (3) years during the period from January first (1st) to June thirtieth (30th) commencing with the calendar year
1992.
LGC, 203. Duty of Person Acquiring Real Property or Making Improvement Thereon. - It shall also be the duty of any person, or his authorized
representative, acquiring at any time real property in any municipality or city or making any improvement on real property, to prepare, or
cause to be prepared, and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of subject property,
within sixty (60) days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.
LGC, 204. Declaration of Real Property by the Assessor. - When any person, natural or juridical, by whom real property is required to be
declared under Section 202 hereof, refuses or fails for any reason to make such declaration within the time prescribed, the provincial, city or
municipal assessor shall himself declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the case
may be, and shall assess the property for taxation in accordance with the provision of this Title. No oath shall be required of a declaration thus
made by the provincial, city or municipal assessor.
IRR, 293. Declaration of Real Property by the Owner or Administrator.
(a) All persons, natural or judicial, or their duly authorized representatives, owning or administering real property, including improvements
thereon, within a city or a municipality, shall prepare or cause to be prepared, and file with the provincial, city, or municipal assessor, a
sworn statement declaring the true value of their property or properties, whether previously declared or undeclared, taxable or exempt,
which shall be the current and fair market value of the property as determined by the declarant.
(b) Such declaration shall contain a description of the property sufficient in detail to enable the local assessor or his deputy to identify the
same for assessment purposes.
(c) All property owners or administrators or their duly authorized representatives shall file the sworn declaration of real property values
once every three (3) years during the period from January 1 to June 30 of the year commencing with Calendar Year 1992.
(d) The DOF shall prescribe a standard form to be known as Sworn Declaration of Property Values for the use of all local assessors' offices, as
well as the procedures to be observed in the filing and safekeeping thereof.
The sangguniang panlungsod and sangguniang bayan may enact their respective ordinances providing for the imposition of penalties or
pecuniary fines on property owners or administrators who fail to comply with this Article.
IRR, 294. Duty of Persons Acquiring Real Property or Making Improvement Thereon.
(a) All persons, natural or juridical, or their duly authorized representatives, who acquire at any time a parcel or parcels of land in any city or
municipality, shall file with the provincial, city, or municipal assessor of the locality where the property is located, a sworn statement
declaring the true value of subject property within sixty (60) days after the acquisition of such property as evidenced by a duly notarized
or final deed of conveyance executed between the contracting parties bearing proof of registration from the registrar of deeds concerned.
The sixty-day period shall commence on the date of execution of the deed of conveyance.
(b) In the case of houses, buildings, or other improvements acquired or newly constructed which will require building permits, property
owners or their authorized representatives shall likewise file a sworn declaration of the true value of the subject house, building, or other
improvement within sixty (60) days after:
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(1) The date of a duly notarized final deed of sale, contract, or other deed of conveyance covering the subject property executed
between the contracting parties;
(2) The date of completion or occupancy of the newly constructed building, house, or improvement whichever comes earlier; and
(3) The date of completion or occupancy of any expansion, renovation, or additional structures or improvements made upon any
existing building, house, or other real property, whichever comes earlier.
(c) In the case of machinery, the sixty-day period for filing the required sworn declaration of property values shall commence on the date of
installation thereof as determined by the city or municipal assessor and, for this purpose, said local assessor may secure certification of
the building official or engineer or other appropriate official stationed in the province, city, or municipality concerned.
(d) The sangguniang panlalawigan, sangguniang panlungsod, and sangguniang bayan shall enact their respective local ordinances providing
for the imposition of penalties or pecuniary fines on property owners or administrators who fail to comply with this Article.
IRR, 295. Declaration of Real Property by the Local Assessor.
(a) The local assessor shall declare only real property previously undeclared from taxation purposes.
(b) In the case of real property discovered whose owner or owners are unknown, the provincial, city, or municipal assessor shall likewise
declare the same in the name of the Unknown Owner, copy furnished the provincial assessor in the case of declarations made by a
component city or municipal assessor, until such time that a person, natural or juridical, comes forth and files the sworn declaration of
property values required under either Article 294 or 295 of this Rule, as the case may be.
(c) No oath shall be required of any declaration made by the provincial, city, or municipal assessor.
3. Listing of Real Property in Assessment Rolls
LGC, 205. Listing of Real Property in the Assessment Rolls.
(a) In every province and city, including the municipalities within the Metropolitan Manila Area, there shall be prepared and maintained by
the provincial, city or municipal assessor an assessment roll wherein shall be listed all real property, whether taxable or exempt, located
within the territorial jurisdiction of the local government unit concerned. Real property shall be listed, valued and assessed in the name
of the owner or administrator, or anyone having legal interest in the property.
(b) The undivided real property of a deceased person may be listed, valued and assessed in the name of the estate or of the heirs and
devisees without designating them individually; and undivided real property other than that owned by a deceased may be listed, valued
and assessed in the name of one or more co-owners: Provided, however, That such heir, devisee, or co-owner shall be liable severally and
proportionately for all obligations imposed by this Title and the payment of the real property tax with respect to the undivided property.
(c) The real property of a corporation, partnership, or association shall be listed, valued and assessed in the same manner as that of an
individual.
(d) Real property owned by the Republic of the Philippines, its instrumentalities and political subdivisions, the beneficial use of which has
been granted, for consideration or otherwise, to a taxable person, shall be listed, valued and assessed in the name of the possessor,
grantee or of the public entity if such property has been acquired or held for resale or lease.
IRR, 296. Listing of Real Property in the Assessment Rolls.
(a) In every province and city, including the municipalities within MMA, there shall be prepared and maintained by the provincial, city,
or municipal assessor an assessment roll wherein all real property, whether taxable or exempt, located within the territorial
jurisdiction of the LGU concerned shall be listed. Real property shall be listed, valued, and assessed in the name of the owner or
administrator, or anyone having legal interest in the property.
(b) The undivided real property of a deceased person may be listed, valued, and assessed in the name of the estate or of the heirs and
devisees without designating them individually; and undivided real property other than that owned by a deceased may be listed,
valued, and assessed in the name of one or more co-owners provided, however, that such heir, devisee, or co-owner shall be liable
severally and proportionately for all obligations imposed by this Rule and the payment of the real property tax with respect to the
undivided property.
(c) The real property of a corporation, partnership, or association shall be listed, valued, and assessed in the same manner as that of an
individual.
(d) Real property owned by the Republic of the Philippines, its instrumentalities and political subdivisions, the beneficial use of which
has been granted, for consideration or otherwise, to a taxable person, shall be listed, valued, and assessed in the name of the
possessor, grantee, or of the public entity if such property has been acquired or held for resale or lease.
(a) Proof of exemption of real property to be excluded from assessment rolls

LGC, 206. Proof of Exemption of Real Property from Taxation. - Every person by or for whom real property is declared, who shall claim tax
exemption for such property under this Title shall file with the provincial, city or municipal assessor within thirty (30) days from the
date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of
ownership, articles of incorporation, by-laws, contracts, affidavits, certifications and mortgage deeds, and similar documents.
If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the
assessment roll. However, if the property shall be proven to be tax exempt, the same shall be dropped from the assessment roll.
IRR, 297. Proof of Exemption of Real Property from Taxation. Every person by or for whom real property is declared, who shall claim
tax exemption for such property under this Rule shall file with the provincial, city, or municipal assessor within thirty (30) days from the
date of the declaration of real property sufficient documentary evidence in support of such claim including corporate charters, title of
ownership, articles of incorporation, by laws, contracts, affidavits, certifications and mortgage deeds, and similar documents.
If the required evidence is not submitted within the period herein prescribed, the property shall be listed as taxable in the
assessment roll. If the property shall be proven to be tax exempt, the same shall be dropped from the assessment roll.
(b) Real property identification system
LGC, 207. Real Property Identification System. - All declarations of real property made under the provisions of this Title shall be kept and
filed under a uniform classification system to be established by the provincial, city or municipal assessor.
IRR, 298. Real Property Identification System. All declarations of real property made under the provisions of this Rule shall be kept
and filed under a uniform classification system to be established by the provincial, city, or municipal assessor pursuant to such guidelines
as may be issued by DOF for the purpose
4. Preparation of Schedule of Fair Market Values
LGC, 212. Preparation of Schedule of Fair Market Values. - Before any general revision of property assessment is made pursuant to the
provisions of this Title, there shall be prepared a schedule of fair market values by the provincial, city and municipal assessor of the
municipalities within the Metropolitan Manila Area for the different classes of real property situated in their respective local government units
for enactment by ordinance of the sanggunian concerned. The schedule of fair market values shall be published in a newspaper of general
circulation in the province, city or municipality concerned or in the absence thereof, shall be posted in the provincial capitol, city or municipal
hall and in two other conspicuous public places therein.
IRR, 303. Preparation of Schedule of Fair Market Values.
(a) Before any general revision of property assessment is made pursuant to the provisions of this Rule, there shall be prepared a
schedule of fair market values by the provincial and city assessors, and the municipal assessors of the municipalities within MMA
for the different classes of real property situated in their respective LGUs for enactment by ordinance of the sanggunian concerned.
The schedule of fair market values shall be published in a newspaper of general circulation in the province, city, or municipality
concerned, or in the absence thereof, shall be posted in the provincial capitol, city or municipal hall and in two (2) other
conspicuous public places therein.
(b) In the preparation of schedules of fair market values, the provincial and city assessors and the municipal assessors of the
municipalities within MMA shall be guided by the rules and regulations issued by DOF.
(a) Authority of assessor to take evidence
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LGC, 213. Authority of Assessor to Take Evidence. - For the purpose of obtaining information on which to base the market value of any real
property, the assessor of the province, city or municipality or his deputy may summon the owners of the properties to be affected or
persons having legal interest therein and witnesses, administer oaths, and take deposition concerning the property, its ownership,
amount, nature, and value.
IRR, 304. Authority of Local Assessors to Take Evidence. For the purpose of obtaining information on which to base the market value
of any real property, the assessor of the province, city, or municipality or his deputy may summon the owners of the properties to be
affected or persons having legal interest therein and witnesses, administer oaths, and take deposition concerning the property, its
ownership, amount, nature, and value.
(b) Amendment of Schedule of Fair Market Values
LGC, 214. Amendment of Schedule of Fair Market Values. - The provincial, city or municipal assessor may recommend to the sanggunian
concerned amendments to correct errors in valuation in the schedule of fair market values. The sanggunian concerned shall, by
ordinance, act upon the recommendation within ninety (90) days from receipt thereof.
IRR, 305. Amendment of Schedule of Fair Market Values.
(a) The provincial, city or municipal assessor may recommend to the sanggunian concerned amendments to correct errors in valuation
in the schedule of fair market values. The sanggunian concerned shall, by ordinance, act upon the recommendation within ninety
(90) days from receipt thereof.
(b) The provincial, city, or municipal assessor may recommend to the sanggunian concerned amendments to the prevailing schedule of
fair market values of the locality to correct errors arising from, or involving, omissions in the subject schedule of any kind or type of
real property, or any city, district or barangay, or any road or street and/or the classification or sub-classification of real property.
5. Classes of Real Property
LGC, 215. Classes of Real Property for Assessment Purposes. - For purposes of assessment, real property shall be classified as residential,
agricultural, commercial, industrial, mineral, timberland or special.
The city or municipality within the Metropolitan Manila Area, through their respective sanggunian, shall have the power to classify lands
as residential, agricultural, commercial, industrial, mineral, timberland, or special in accordance with their zoning ordinances.
LGC, 216. Special Classes of Real Property. - All lands, buildings, and other improvements thereon actually, directly and exclusively used for
hospitals, cultural, or scientific purposes, and those owned and used by local water districts, and government-owned or controlled
corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power
shall be classified as special.
6. Actual Use of Property as Basis of Assessment
LGC, 217. Actual Use of Real Property as Basis for Assessment. - Real property shall be classified, valued and assessed on the basis of its actual
use regardless of where located, whoever owns it, and whoever uses it.
IRR, 308. Actual Use of Real Property as Basis for Assessment. Real property shall be classified, valued, and assessed on the basis of its
actual use regardless of where located, whoever owns it, and whoever uses it
7. Assessment of Real Property
(a) Assessment Levels
LGC, 218. Assessment Levels. - The assessment levels to be applied to the fair market value of real property to determine its assessed
value shall be fixed by ordinances of the sangguniang panlalawigan, sangguniang panlungsod or sangguniang bayan of a municipality
within the Metropolitan Manila Area, at the rates not exceeding the following [tables deleted]
IRR, 309.
(b) General Revisions of Assessments and Property Classification
LGC, 219. General Revision of Assessment and Property Classification. - The provincial, city or municipal assessor shall undertake a general
revision of real property assessments within two (2) years after the effectivity of this Code and every three (3) years thereafter.
IRR, 310. General Revision of Assessments and Property Classification.
(a) The provincial, city, or municipal assessor shall undertake a general revision of real property assessment within two (2) years after
the effectivity of the Code and every three (3) years thereafter.
(b) For this purpose, the provincial assessors, the city assessors, and the municipal assessors of MMA shall prepare the schedule of fair
market values for the different kinds and classes of real property located within their respective territorial jurisdictions within one
(1) year from the effectivity of the Code in accordance with such rules and regulations issued by DOF.
(c) The general revision of assessments and property classification shall commence upon the enactment of an ordinance by the
sanggunian concerned adopting the schedule of fair market values but not later than two (2) years from the effectivity of the Code.
Thereafter, the provincial, city, or municipal assessor shall undertake the general revision of real property assessment and property
classification once every three (3) years.
(c) Date of Effectivity of Assessment or Reassessment
LGC, 221. Date of Effectivity of Assessment or Reassessment. - All assessments or reassessments made after the first (1st) day of January of
any year shall take effect on the first (1st) day of January of the succeeding year: Provided, however, That the reassessment of real
property due to its partial or total destruction, or to a major change in its actual use, or to any great and sudden inflation or deflation of
real property values, or to the gross illegality of the assessment when made or to any other abnormal cause, shall be made within ninety
(90) days from the date any such cause or causes occurred, and shall take effect at the beginning of the quarter next following the
reassessment.
IRR, 312. Date of Effectivity of Assessment or Reassessment. All assessments or reassessment made after the first (1st) day of January
of any year shall take effect on the first (1st) day of January of the succeeding year provided, however, that the reassessment of real
property due to its partial or total destruction, or to a major change in its actual use, or to any great and sudden inflation or deflation of
real property values, or to the gross illegality of the assessment when made, or to any other abnormal cause, shall be made within ninety
(90) days from the date any such cause or causes occurred, and shall take effect at the beginning of the quarter next following the
reassessment
(d) Assessment of Property Subject to Back Taxes
LGC, 222. Assessment of Property Subject to Back Taxes. - Real property declared for the first time shall be assessed for taxes for the
period during which it would have been liable but in no case of more than ten (10) years prior to the date of initial assessment: Provided,
however, That such taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding period.
If such taxes are paid on or before the end of the quarter following the date the notice of assessment was received by the
owner or his representative, no interest for delinquency shall be imposed thereon; otherwise, such taxes shall be subject to an interest at
the rate of two percent (2%) per month or a fraction thereof from the date of the receipt of the assessment until such taxes are fully paid.
IRR, 313. Assessment of Property Subject to Back Taxes. Real property declared for the first time shall be assessed for the taxes for
the period during which it would have been liable but in no case for more than ten (10) years prior to the date of initial assessment
provided, however, that such taxes shall be computed on the basis of the applicable schedule of values in force during the corresponding
period.
If such taxes are paid on or before the end of the quarter following the date the notice of assessment was received by the
owner or his representative, no interest for delinquency shall be imposed thereon; otherwise, such taxes shall be subject to an interest at
the rate of two percent (2%) per month or a fraction thereof from the date of receipt of the assessment until such taxes are fully paid.
(e) Notification of New or Revised Assessment
LGC, 223. Notification of New or Revised Assessment. - When real property is assessed for the first time or when an existing assessment is
increased or decreased, the provincial, city or municipal assessor shall within thirty (30) days give written notice of such new or revised
assessment to the person in whose name the property is declared. The notice may be delivered personally or by registered mail or
through the assistance of the punong barangay to the last known address of the person to be served.
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IRR, 314. Notification of New or Revised Assessment. When real property is assessed for the first time or when an existing assessment
is increased or decreased, the provincial, city, or municipal assessor shall, within thirty (30) days, give written notice of such new or
revised assessment to the person in whose name the property is declared. The notice may be delivered personally or by registered mail
or through the assistance of the punong barangay to the last known address of the person to be served.
8. Appraisal and Assessment of Machinery
LGC, 224. Appraisal and Assessment of Machinery.
(a) The fair market value of a brand-new machinery shall be the acquisition cost. In all other cases, the fair market value shall be determined
by dividing the remaining economic life of the machinery by its estimated economic life and multiplied by the replacement or
reproduction cost.
(b) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other charges, brokerage, arrastre and handling,
duties and taxes, plus charges at the present site. The cost in foreign currency of imported machinery shall be converted to peso cost on
the basis of foreign currency exchange rates as fixed by the Central Bank.
IRR, 315. Appraisal and Assessment of Machinery. (a) The fair market value of a brand new machinery shall be the acquisition cost. In all
other cases, the fair market value shall be determined by dividing the remaining economic life of the machinery by its estimated economic life
and multiplied by the replacement or reproduction cost.
(b) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other charges, brokerage, arrastre and handling,
duties and taxes, plus cost of inland transportation, handling, and installation charges at the present site. The cost in foreign currency of
imported machinery shall be converted to peso cost on the basis of foreign currency exchange rates as fixed by the Central Bank.
D. Collection of Real Property Tax
1. Date of Accrual of RPT
LGC, 246. Date of Accrual of Tax. - The real property tax for any year shall accrue on the first day of January and from that date it shall
constitute a lien on the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be
extinguished only upon the payment of the delinquent tax.
IRR, 337. Date of Accrual of Tax. The real property tax for any year shall accrue on the first day of January and from the date it shall
constitute a lien on the property which shall be superior to any other lien, mortgage, or encumbrance of any kind whatsoever, and shall be
extinguished only upon the payment of the delinquent tax.
2. Collection of Tax
(a) Collecting Authority
LGC, 247. Collection of Tax. - The collection of the real property tax with interest thereon and related expenses, and the enforcement of
the remedies provided for in this Title or any applicable laws, shall be the responsibility of the city or municipal treasurer concerned.
The city or municipal treasurer may deputize the barangay treasurer to collect all taxes on real property located in the
barangay: Provided, That the barangay treasurer is properly bonded for the purpose: Provided, further, That the premium on the bond
shall be paid by the city or municipal government concerned.
IRR, 338. Collection of Tax. The collection of the real property tax with interest thereon and related expenses, and the enforcement of
the remedies provided in this Rule or any applicable laws, shall be the responsibility of the city or municipal treasurer concerned.
Property owners, however, at their option or convenience, may pay their real property taxes to the provincial treasurer of the
province to which the municipality where the subject property is located, belongs.
The city or municipal treasurer may deputize the barangay treasurer to collect all taxes on real property located in the
barangay provided that the barangay treasurer is properly bonded for the purpose and provided further that the premium on the bond
shall be paid by the city or municipality concerned.
(b) Duty of Assessor to Furnish Local Treasurer with Assessment Roll
LGC, 248. Assessor to Furnish Local Treasurer with Assessment Roll. - The provincial, city or municipal assessor shall prepare and submit
to the treasurer of the local government unit, on or before the thirty-first (31st) day of December each year, an assessment roll
containing a list of all persons whose real properties have been newly assessed or reassessed and the values of such properties.
IRR, 339. Local Assessor to Furnish Local Treasurer with Assessment Roll. The provincial, city, or municipal assessor shall prepare
and submit to the local treasurer concerned, on or before the thirty-first (31st) day of December each year, an assessment roll containing
a list of all persons whose real properties have been newly assessed or reassessed and the values of such properties.
(c) Notice of Time for Collection of Tax
LGC, 249. Notice of Time for Collection of Tax. - The city or municipal treasurer shall, on or before the thirty-first (31st) day of January
each year, in the case of the basic real property tax and the additional tax for the Special Education Fund (SEF) or any othe r date to be
prescribed by the sanggunian concerned in the case of any other tax levied under this title, post the notice of the dates when the tax may
be paid without interest at a conspicuous and publicly accessible place at the city or municipal hall. Said notice shall likewise be
published in a newspaper of general circulation in the locality once a week for two (2) consecutive weeks.
IRR, 340. Notice of Time for Collection of Tax. The city or municipal treasurer shall, on or before the thirty-first (31st) day of January
each year, in the case of the basic real property tax and the additional tax for special education fund or on any other date to be prescribed
by the sanggunian concerned in the case of any other tax levied in this Rule, post the notice of the dates when the tax may be paid
without interest at a conspicuous and publicly accessible place at the city or municipal hall. Said notice shall likewise be published in a
newspaper of general circulation in the locality once a week for two (2) consecutive weeks.
3. Periods within which to collect RPT prescription
LGC, 270. Periods Within Which To Collect Real Property Taxes. - The basic real property tax and any other tax levied under this Title shall be
collected within five (5) years from the date they become due. No action for the collection of the tax, whether administrative or judicial, shall
be instituted after the expiration of such period. In case of fraud or intent to evade payment of the tax, such action may be instituted for the
collection of the same within ten (10) years from the discovery of such fraud or intent to evade payment.
The period of prescription within which to collect shall be suspended for the time during which:
(1) The local treasurer is legally prevented from collecting the tax;
(2) The owner of the property or the person having legal interest therein requests for reinvestigation and executes a waiver in writing
before the expiration of the period within which to collect; and
(3) The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be located.
IRR, 361. Periods Within Which To Collect Real Property Taxes. The basic real property tax and any other tax levied under this Rule shall
be collected within five (5) years from the date they become due. No action for collection of the tax, whether administrative or judicial, shall be
instituted after the expiration of such period. In case of fraud or intent to evade payment of the tax, such action may be instituted for the
collection thereof within ten (10) years from the discovery of such fraud or intent to evade payment.
The period of prescription within which to collect shall be suspended for the time during which:
(a) The local treasurer is legally prevented from collecting the tax;
(b) The owner of the property or the person having legal interest therein requests for reinvestigation and executes a waiver in writing
before the expiration of the period within which to collect; and
(c) The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be located.
4. Special Rules on Payment
(a) Payment of RPT in installments
LGC, 250. Payment of Real Property Taxes in Installments. - The owner of the real property or the person having legal interest therein may
pay the basic real property tax and the additional tax for Special Education Fund (SEF) due thereon without interest in four (4) equal
installments; the first installment to be due and payable on or before March Thirty-first (31st); the second installment, on or before June
Thirty (30); the third installment, on or before September Thirty (30); and the last installment on or before December Thirty-first (31st),
except the special levy the payment of which shall be governed by ordinance of the sanggunian concerned.
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The date for the payment of any other tax imposed under this Title without interest shall be prescribed by the sanggunian
concerned.
Payments of real property taxes shall first be applied to prior years delinquencies, interests, and penalties, if any, and only
after said delinquencies are settled may tax payments be credited for the current period.
IRR, 341. Payment of Real Property Taxes in Installments. The owner of the real property or the person having legal interest therein
may pay the basic real property tax and the additional tax for special education fund due thereon without interest in four (4) equal
installments; the first installment to be due and payable on or before the thirty-first (31st) of March, the second installment, on or before
the thirtieth (30th) of June; the third installment, on or before the thirtieth (30th) of September, and the last installment on or before the
thirty-first (31st) of December, except the special levy for which the payment thereof shall be governed by ordinance of the sanggunian
concerned.
The date for payment of any other tax imposed in this Rule without interest shall be prescribed by the sanggunian concerned.
Payments of real property taxes shall first be applied to prior years delinquencies, interests, and penalties, if any, and only
after said delinquencies are settled may tax payments be credited for the current period.
(b) Discount for Advanced Prompt Payment
LGC, 251. Tax Discount for Advanced Prompt Payment. - If the basic real property tax and the additional tax accruing to the Special
Education Fund (SEF) are paid in advance in accordance with the prescribed schedule of payment as provided under Section 250, the
sanggunian concerned may grant a discount not exceeding twenty percent (20%) of the annual tax due.
IRR, 342. Tax Discount for Advanced and Prompt Payment. If the basic real property tax and the additional tax accruing to special
education fund are paid on time or in advance in accordance with the prescribed schedule of payment as provided in Article 341 of this
Rule, the sanggunian concerned may grant a discount not exceeding twenty percent (20%) of the annual tax due.
For purposes of this Rule, prompt payments may be given a discount of ten percent (10%), while advanced payments may be
entitled to the maximum discount of twenty percent (20%).
(c) Interests on Unpaid Real Property Tax
LGC, 255. nterests on Unpaid Real Property Tax. - In case of failure to pay the basic real property tax or any other tax levied under this
Title upon the expiration of the periods as provided in Section 250, or when due, as the case may be, shall subject the taxpayer to the
payment of interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall
have been fully paid: Provided, however, That in no case shall the total interest on the unpaid tax or portion thereof exceed thirty-six (36)
months.
IRR, 346. Interests on Unpaid Real Property Tax. Failure to pay the basic real property tax or any other tax levied in this Rule upon the
expiration of the periods prescribed in Article 341 hereof, or when due, as the case may be, shall subject the taxpayer to the payment of
interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have been
fully paid provided that in no case shall the total interest on the unpaid tax or portion thereof exceed thirty-six (36) months.
(d) Condonation of Real Property Tax
LGC, 276. Condonation or Reduction of Real Property Tax and Interest. - In case of a general failure of crops or substantial decrease in the
price of agricultural or agribased products, or calamity in any province, city or municipality, the sanggunian concerned, by ordinance
passed prior to the first (1st) day of January of any year and upon recommendation of the Local Disaster Coordinating Council, may
condone or reduce, wholly or partially, the taxes and interest thereon for the succeeding year or years in the city or municipality affected
by the calamity.
LGC, 277. Condonation or Reduction of Tax by the President of the Philippines. - The President of the Philippines may, when public interest
so requires, condone or reduce the real property tax and interest for any year in any province or city or a municipality within the
Metropolitan Manila Area.
IRR, 367. Condonation or Reduction of Real Property Tax and Interest. In case of a general failure of crops or substantial decrease in
the price of agricultural or agribased products, or calamity in any province, city, or municipality, the sanggunian concerned, by ordinance
passed prior to the first (1st) day of January of any year and upon recommendation of the Local Disaster Coordinating Council, may
condone or reduce, wholly or partially, the taxes and interest thereon for the succeeding year or years in the city or municipality affected
by the calamity.
IRR, 368. Condonation or Reduction of Tax by the President of the Philippines. The President of the Philippines may, when public
interest so requires, condone or reduce the real property tax and interest for any year in any province or city or a municipality within
MMA
5. Remedies of Local Government Unit for Collection of Real Property Tax
(a) Issuance of Notice of Delinquency for RPT payment
(b) Local Governments Lien
LGC, 257. Local Governments Lien. - The basic real property tax and any other tax levied under this Title constitutes a lien on the property
subject to tax, superior to all liens, charges or encumbrances in favor of any person, irrespective of the owner or possessor thereof,
enforceable by administrative or judicial action, and may only be extinguished upon payment of the tax and the related interests and
expenses.
IRR, 348. Local Government Lien. The basic real property tax and any other tax levied under this Rule constitute a lien on the
property subject to tax, superior to all liens, charges or encumbrances in favor of any person, irrespective of the owner or possessor
thereof, enforceable by administrative or judicial action, and may only be extinguished upon payment of the tax and the related interests
and expenses.
(c) Remedies in General
LGC, 256. Remedies For The Collection Of Real Property Tax. - For the collection of the basic real property tax and any other tax levied
under this Title, the local government unit concerned may avail of the remedies by administrative action thru levy on real property or by
judicial action.
IRR, 347. Remedies for the Collection of Real Property Tax. For the collection of the basic real property tax and any other tax levied
under this Rule, LGU may avail of remedies by administrative or judicial action. The administrative remedies which are summary in
nature are:
(a) Levy on real property, and
(b) Sale of real property at public auction.
The judicial remedy is availed of in the court of appropriate jurisdiction. These remedies are cumulative, simultaneous and
unconditional, that is, any or all of the remedies or combination thereof may be resorted to and the use or non-use of one remedy shall
not be a bar against the institution of the others. Formal demand for the payment of the delinquent taxes and penalties due is not a pre-
requisite to such remedies. The notice of delinquency required in Article 346 of this Rule shall be sufficient for the purpose.
i. Administrative remedy through levy on real property

LGC, 258. Levy on Real Property. - After the expiration of the time required to pay the basic real property tax or any other tax levied
under this Title, real property subject to such tax may be levied upon through the issuance of a warrant on or before, or
simultaneously with, the institution of the civil action for the collection of the delinquent tax. The provincial or city treasurer, or a
treasurer of a municipality within the Metropolitan Manila Area, as the case may be, when issuing a warrant of levy shall prepare a
duly authenticated certificate showing the name of the delinquent owner of the property or person having legal interest therein, the
description of the property, the amount of the tax due and the interest thereon. The warrant shall operate with the force of a legal
execution throughout the province, city or a municipality, within the Metropolitan Manila Area. The warrant shall be mailed to or
served upon the delinquent owner of the real property or person having legal interest therein, or in case he is out of the country or
cannot be located, the administrator or occupant of the property. At the same time, written notice of the levy with the attached
warrant shall be mailed to or served upon the assessor and the Registrar of Deeds of the province, city or municipality within the
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Metropolitan Manila Area where the property is located, who shall annotate the levy on the tax declaration and certificate of title of
the property, respectively.
The levying officer shall submit a report on the levy to the sanggunian concerned within ten (10) days after receipt of the
warrant by the owner of the property or person having legal interest therein.
IRR, 349. Levy on Real Property. After the expiration of the time required to pay the basic real property tax or any other tax
levied under this Rule, real property subject to such tax may be levied upon through the issuance of a warrant on or before, or
simultaneously with the institution of the civic action for the collection of the delinquent tax. Levy on real property shall be made in
the manner herein set forth.
(a) The provincial or city treasurer, or municipal treasurer of a municipality within MMA when issuing a warrant of levy shall
prepare the duly authenticated certificate showing the name of the delinquent property owner or person having legal interest
therein, the description of the property, the amount of the tax due and the interest thereon.
(b) The warrant shall be mailed to or served upon the delinquent real property owner or person having legal interest therein. In
case he is out or can not be located, to the occupant or administrator of the subject property.
(c) Written notice of levy with the attached warrant shall be mailed to or served upon the assessor and the registrar of deeds of
the province, city, or municipality within MMA where the property is located.
(d) The assessor and registrar of deeds shall annotate the levy on the tax declaration and the certificate of title, respectively.
(e) The levying officer shall submit a written report on the levy to the sanggunian concerned within ten (10) days after receipt of
the warrant by the property owner or person having legal interest in the property.
(1) Issuance of warrant

LGC, 258, supra.
IRR, 349, supra.
(2) Advertisement and sale
LGC, 260. Advertisement and Sale. - Within thirty (30) days after service of the warrant of levy, the local treasurer shall
proceed to publicly advertise for sale or auction the property or a usable portion thereof as may be necessary to satisfy the tax
delinquency and expenses of sale. The advertisement shall be effected by posting a notice at the main entrance of the
provincial, city or municipal building, and in a publicly accessible and conspicuous place in the barangay where the real
property is located, and by publication once a week for two (2) weeks in a newspaper of general circulation in the province,
city or municipality where the property is located. The advertisement shall specify the amount of the delinquent tax, the
interest due thereon and expenses of sale, the date and place of sale, the name of the owner of the real property or person
having legal interest therein, and a description of the property to be sold. At any time before the date fixed for the sale, the
owner of the real property or person having legal interest therein may stay the proceedings by paying the delinquent tax, the
interest due thereon and the expenses of sale. The sale shall be held either at the main entrance of the provincial, city or
municipal building, or on the property to be sold, or at any other place as specified in the notice of the sale.
Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of the sale to the
sanggunian concerned, and which shall form part of his records. The local treasurer shall likewise prepare and deliver to the
purchaser a certificate of sale which shall contain the name of the purchaser, a description of the property sold, the amount of
the delinquent tax, the interest due thereon, the expenses of sale and a brief description of the proceedings: Provided,
however, That proceeds of the sale in excess of the delinquent tax, the interest due thereon, and the expenses of sale shall be
remitted to the owner of the real property or person having legal interest therein.
The local treasurer may, by ordinance duly approved, advance an amount sufficient to defray the costs of collection
thru the remedies provided for in this Title, including the expenses of advertisement and sale.
IRR, 351. Advertisement and Sale. Within thirty (30) days after service of the warrant of levy, the local treasurer shall
proceed to publicly advertise for sale or auction the property or a usable portion thereof as may be necessary to satisfy the tax
delinquency and expenses of sale. The advertisement shall be effected by posting a notice at the main entrance of the
provincial, city, or municipal building, and in a conspicuous and publicly accessible place in the barangay where the real
property is located, and by publication once a week for two (2) weeks in a newspaper of general circulation in the province,
city, or municipality where the property is located. The advertisement shall specify the amount of the delinquent tax, the
interest due thereon and expenses of sale, the date and place of sale, the name of the owner of the real property or person
having legal interest therein, and a description of the property to be sold. At any time before the date fixed for the sale, the
owner of the real property or person having legal interest therein may stay the proceedings by paying the delinquent tax, the
interest due thereon and the expenses of sale. The sale shall be held either at the main entrance of the provincial, city, or
municipal building, or on the property to be sold, or any other place as specified in the notice of the sale.
Within thirty (30) days after the sale, the local treasurer or his deputy shall make a report of the sale to the
sanggunian concerned, and which shall form part of his records. The local treasurer shall likewise prepare and deliver to the
purchaser a certificate of sale which shall contain the name of the purchaser, a description of the property sold, the amount of
the delinquent tax, the interest due thereon, the expenses of the sale and a brief description of the proceedings provided that,
proceeds of the sale in excess of the delinquent tax, the interest due thereon, and the expenses of sale shall be remitted to the
owner of the real property or person having legal interest therein.
The local treasurer may, by a duly approved ordinance, advance an amount sufficient to defray the costs of
collection through the remedies provided for in this Rule, including the expenses of advertisement and sale.
(3) Purchase by government for want of bidder
LGC, 263. Purchase of Property By the Local Government Units for Want of Bidder. - In case there is no bidder for the real
property advertised for sale as provided herein, the real property tax and the related interest and costs of sale the local
treasurer conducting the sale shall purchase the property in behalf of the local government unit concerned to satisfy the claim
and within two (2) days thereafter shall make a report of his proceedings which shall be reflected upon the records of his
office. It shall be the duty of the Registrar of Deeds concerned upon registration with his office of any such declaration of
forfeiture to transfer the title of the forfeited property to the local government unit concerned without the necessity of an
order from a competent court.
Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may redeem the
property by paying to the local treasurer the full amount of the real property tax and the related interest and the costs of sale.
If the property is not redeemed as provided herein, the ownership thereof shall be vested on the local government unit
concerned.
IRR, 354. Purchase of Property By the Local Government Units for Want of Bidder. In case there is no bidder for the real
property advertised for sale as provided herein, or if the highest bid is for an amount insufficient to pay the real property tax
and the related interest and costs of the sale, the local treasurer conducting the sale shall purchase the property in behalf of
the LGU concerned to satisfy the claim and within two (2) days thereafter shall make a report of his proceedings which shall be
reflected upon the records of his office. It shall be the duty of the registrar of deeds concerned, upon registration with his office
of any such declaration of forfeiture, to transfer the title of the forfeited property to the LGU concerned without the necessity
of an order from a competent court.
Within one (1) year from the date of such forfeiture, the taxpayer or his representative, may redeem the property by
paying to the local treasurer the full amount of the real property tax and the related interest and costs of sale. If the property is
not redeemed as provided herein, the ownership thereof shall be fully vested on the LGU concerned.
(4) Redemption of property sold
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LGC, 261. Redemption of Property Sold. - Within one (1) year from the date of sale, the owner of the delinquent real property or
person having legal interest therein, or his representative, shall have the right to redeem the property upon payment to the
local treasurer of the amount of the delinquent tax, including the interest due thereon, and the expenses of sale from the date
of delinquency to the date of sale, plus interest of not more than two percent (2%) per month on the purchase price from the
date of sale to the date of redemption. Such payment shall invalidate the certificate of sale issued to the purchaser and the
owner of the delinquent real property or person having legal interest therein shall be entitled to a certificate of redemption
which shall be issued by the local treasurer or his deputy.
From the date of sale until the expiration of the period of redemption, the delinquent real property shall remain in
possession of the owner or person having legal interest therein who shall be entitled to the income and other fruits thereof.
The local treasurer or his deputy, upon receipt from the purchaser of the certificate of sale, shall forthwith return to
the latter the entire amount paid by him plus interest of not more than two percent (2%) per month. Thereafter, the property
shall be free from lien of such delinquent tax, interest due thereon and expenses of sale.
IRR, 352. Redemption of Property Sold. Within one (1) year from the date of sale, the owner of the delinquent real property
or person having legal interest therein, or his representative, shall have the right to redeem the property upon payment to the
local treasurer of the amount of the delinquent tax, including the interest due thereon, and the expenses of sale from the date
of delinquency to the date of sale, plus interest of not more than two percent (2%) per month on the purchase price from the
date of sale to the date of redemption. Such payment shall invalidate the certificate of sale issued to the purchaser and the
owner of the delinquent real property or person having legal interest therein shall be entitled to a certificate of redemption
which shall be issued by the local treasurer or his deputy.
From the date of sale until the expiration of the period of redemption, the delinquent real property shall remain in
the possession of the owner or person having legal interest therein who shall be entitled to the income and other fruits
thereof.
The local treasurer or his deputy, upon receipt from the purchaser of the certificate of sale, shall forthwith return to
the latter the entire amount paid by him plus interest of not more than two percent (2%) per month. Thereafter, the property
shall be free from the lien of such delinquent tax, interest due thereon and expenses of sale.
(5) Issuance of Final Deed to Purchaser for Failure to Redeem
LGC, 262. Final Deed to Purchaser. - In case the owner or person having legal interest fails to redeem the delinquent property
as provided herein, the local treasurer shall execute a deed conveying to the purchaser said property, free from lien of the
delinquent tax, interest due thereon and expenses of sale. The deed shall briefly state the proceedings upon which the validity
of the sale rests.
IRR, 353. Final Deed to Purchaser. In case the owner or person having legal interest therein fails to redeem the delinquent
property as provided herein, the local treasurer shall execute a deed conveying to the purchaser said property, free from lien
of the delinquent tax, interest due thereon and expenses of sale. The deed shall briefly state the proceedings upon which the
validity of the sale rests.
ii. Judicial action
LGC, 266. Collection of Real Property Tax Through the Courts. - The local government unit concerned may enforce the collection of
the basic real property tax or any other tax levied under this Title by civil action in any court of competent jurisdiction. The civil
action shall be filed by the local treasurer within the period prescribed in Section 270 of this Code.
IRR, 357. Collection of Real Property Tax Through the Courts. The delinquent basic real property tax or any other tax levied
under this Rule shall constitute a lawful indebtedness of the taxpayer to the LGU. Collection of such indebtedness can be enforced
thru civil action in any court of competent jurisdiction, as follows:
(a) The provincial or city treasurer, or municipal treasurer of a municipality of MMA shall furnish the provincial attorney or city
or municipal legal officer a certified statement of delinquency who, within fifteen (15) days after receipt, shall file the civil
action in the name of the province, city, or municipality in the proper court of competent jurisdiction. The jurisdiction of the
court is determined by the amount sought to be recovered exclusive of interests and costs. Thus, where the delinquent tax due
does not exceed Ten Thousand Pesos (P10,000.00), the competent court is the municipal or city trial court, and where the
amount due is in excess of Ten Thousand Pesos (P10,000.00), the proper court is the regional trial court.
(b) Where cognizable in an inferior court, the action must be filed in the municipality or city where the delinquent property is
located. Where the regional trial court has jurisdiction, the plaintiff LGU shall file the complaint in the city or province where
the property is situated.
(c) In both cases, that is, where the claim is either cognizable by an inferior court or by the regional trial court, the provincial or
city treasurer shall furnish the provincial attorney or the city or municipal legal officer concerned the exact address of the
defendant where he may be served with summons.
(d) Resale of Real Estate Taken for Taxes, Fess or Charges
LGC, 264. Resale of Real Estate Taken for Taxes, Fees, or Charges. - The sanggunian concerned may, by ordinance duly approved, and upon
notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding section at public auction. The
proceeds of the sale shall accrue to the general fund of the local government unit concerned.
IRR, 355. Resale of Real Estate Taken for Taxes, Fees, or Charges. The sanggunian concerned may, by a duly approved ordinance, and
upon notice of not less than twenty (20) days, sell and dispose of the real property acquired under the preceding Article at public auction.
The proceeds of the sale shall accrue to the general fund of the LGU concerned.
(e) Further Levy until full payment of amount due
LGC, 265. Further Distraint or Levy. - Levy may be repeated if necessary until the full amount due, including all expenses, is collected.
IRR, 356. Further Distraint or Levy. Levy may be repeated if necessary on the same property subject to tax until the full amount due,
including all expenses, is collected.
(f) Special rules on actions involving real property
i. Deposit required for actions assailing validity of tax sale
LGC, 267. Action Assailing Validity of Tax Sale. - No court shall entertain any action assailing the validity or any sale at public auction
of real property or rights therein under this Title until the taxpayer shall have deposited with the court the amount for which the
real property was sold, together with interest of two percent (2%) per month from the date of sale to the time of the institution of
the action. The amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared invalid but it shall be
returned to the depositor if the action fails.
Neither shall any court declare a sale at public auction invalid by reason or irregularities or informalities in the proceedings
unless the substantive rights of the delinquent owner of the real property or the person having legal interest therein have been
impaired.
IRR, 358. Action Assailing Validity of Tax Sale.
(a) No court shall entertain any action assailing the validity of any sale at public auction of real property or rights therein
under this Rule until the taxpayer shall have deposited with the court the amount for which the real property was sold,
together with interest of two percent (2%) per month from the date of sale to the time of the institution of the action. The
amount so deposited shall be paid to the purchaser at the auction sale if the deed is declared invalid but it shall be
returned to the depositor if the action fails.
(b) No court shall declare a sale at public auction invalid by reason of irregularities or informalities in the proceedings unless
the substantive rights of the delinquent owner of the real property or the person having legal interest therein have been
impaired.
ii. Award of property subject of court action upon payment of delinquent taxes
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LGC, 268. Payment of Delinquent Taxes on Property Subject of Controversy. - In any action involving the ownership or possession of,
or succession to, real property, the court may, motu propio or upon representation of the provincial, city, or municipal treasurer or
his deputy, award such ownership, possession, or succession to any party to the action upon payment to the court of the taxes with
interest due on the property and all other costs that may have accrued, subject to the final outcome of the action.
IRR, 359. Payment of Delinquent Taxes on Property Subject of Controversy. In any action involving the ownership or possession
of, or succession to, real property the court may, motu proprio or upon representation of the provincial, city, or municipal treasurer
or their respective deputies, award such ownership, possession, or succession to any party to the action upon payment to the court
of the taxes with interests due to the property and all other costs that may have accrued, subject to the final outcome of the action.
E. Taxpayers Remedies
1. Contesting an Assessment of Value of Real Property
(a) Appeal to the LBAA
LGC, 226. Local Board of Assessment Appeals. - Any owner or person having legal interest in the property who is not satisfied with the
action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt
of the written notice of assessment, appeal to the Board of Assessment Appeals of the provincial or city by filing a petition under oath in
the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support
of the appeal.
IRR, 317. Local Board of Assessment Appeals.
(a) Any property owner or person having legal interest or claim in the property who is not satisfied with the assessment of his
property made by the provincial, city, or municipal assessor pursuant to the provisions of this Rule may, within sixty (60) days
from the date of receipt of the written notice of assessment, appeal to local board of assessment appeals of the province or city
where the subject property is situated by filing a petition under oath in the standard form prescribed therefor, together with
copies of the tax declaration and such affidavits or documents in support of the appeal.
(b) In the case of municipalities within MMA, the appeals may be filed with the municipal board of assessment appeals of each
municipality as provided in Article 318 of this Rule.
i. Action by LBAA
LGC, 229. Action by the Local Board of Assessment Appeals.
(a) The Board shall decide the appeal within one hundred twenty (120) days from the date of receipt of such appeal. The Board,
after hearing, shall render its decision based on substantial evidence or such relevant evidence on record as a reasonable mind
might accept as adequate to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon witnesses, administer oaths, conduct
ocular inspection, take depositions, and issue subpoena and subpoena duces tecum. The proceedings of the Board shall be
conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules applicable in judicial
proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having legal interest therein and the
provincial or city assessor with a copy of the decision of the Board. In case the provincial or city assessor concurs in the
revision or the assessment, it shall be his duty to notify the owner of the property or the person having legal interest therein of
such fact using the form prescribed for the purpose. The owner of the property or the person having legal interest therein or
the assessor who is not satisfied with the decision of the Board, may, within thirty (30) days after receipt of the decision of
said Board, appeal to the Central Board of Assessment Appeals, as herein provided. The decision of the Central Board shall be
final and executory.
IRR, 320. Action by the Local Board of Assessment Appeals.
(a) From the date of receipt of an appeal, the local board of assessment appeals shall, on the basis of substantial evidence or such
relevant evidence on record adequately acceptable to support a conclusion, decide such appeal within one hundred twenty
(120) days.
(b) In the exercise of its appellate jurisdiction, the board shall have the power to summon witnesses, administer oaths, conduct
ocular inspection, take depositions, and issue subpoena and subpoena duces tecum. The proceedings of the board shall be
conducted solely for the purpose of ascertaining the facts without necessarily adhering to technical rules applicable in judicial
proceedings.
(c) The secretary of the board shall furnish the owner of the property or the person having legal interest therein and the
provincial or city assessor or municipal assessor within MMA with a copy of the decision of the board. In case the provincial or
city assessor or municipal assessor within MMA concurs with the revision or the assessment, it shall be his duty to notify the
owner of the property or the person having legal interest therein of such fact using the form prescribed for the purpose. The
owner of the property or the person having legal interest therein or the assessor who is not satisfied with the decision of the
board may, within thirty (30) days after receipt of the decision of the board, appeal to the Central Board of Assessment
Appeals as herein provided. The decision of the Central Board shall be final and executory.
(b) Appeal to the CBAA
LGC, 230. Central Board of Assessment Appeals. - The Central Board of Assessment Appeals shall be composed of a chairman, and two (2)
members to be appointed by the President, who shall serve for a term of seven (7) years, without reappointment. Of those first
appointed, the chairman shall hold office for seven (7) years, one member for five (5) years, and the other member for three (3) years.
Appointment to any vacancy shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be
appointed or designated in a temporary or acting capacity. The chairman and the members of the Board shall be Filipino citizens, at least
forty (40) years old at the time of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10) years
immediately preceding their appointment. The chairman of the Board of Assessment Appeals shall have the salary grade equivalent to
the rank of Director III under the Salary Standardization Law exclusive of allowances and other emoluments. The members of the Board
shall have the salary grade equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances and other
emoluments. The Board shall have appellate jurisdiction over all assessment cases decided by the Local Board of Assessment Appeals.
There shall be Hearing Officers to be appointed by the Central Board of Assessment Appeals pursuant to civil service laws,
rules and regulations, one each for Luzon, Visayas and Mindanao, who shall hold office in Manila, Cebu City and Cagayan de Oro City,
respectively, and who shall serve for a term of six (6) years, without reappointment until their successors have been appointed and
qualified. The Hearing Officers shall have the same qualifications as that of the Judges of the Municipal Trial Courts.
The Central Board Assessment Appeals, in the performance of its powers and duties, may establish and organize staffs, offices,
units, prescribe the titles, functions and duties of their members and adopt its own rules and regulations.
Unless otherwise provided by law, the annual appropriations for the Central Board of Assessment Appeals shall be included in
the budget of the Department of Finance in the corresponding General Appropriations Act.
IRR, 321. Central Board of Assessment Appeals. The Central Board shall be composed of a chairman and two (2) members to be
appointed by the President, who shall serve for a term of seven (7) years, without reappointment. Of those first appointed, the chairman
shall hold office for seven (7) years, one member for five (5) years, and the other member of three (3) years. Appointment to any vacancy
shall be only for the unexpired portion of the term of the predecessor. In no case shall any member be appointed or designated in a
temporary or acting capacity. The chairman and the members of the Central Board shall be Filipino citizens, at least forty(40) years old at
the time of their appointment, and members of the Bar or Certified Public Accountants for at least ten (10) years immediately preceding
their appointment. The chairman of the Central Board shall have the salary grade equivalent to the rank of Director III under the Salary
Standardization Law exclusive of allowances and other emoluments. The members of the Central Board shall have the salary grade
equivalent to the rank of Director II under the Salary Standardization Law exclusive of allowances and other emoluments. The Central
Board shall have appellate jurisdiction over all assessment cases decided by the local board and assessment appeals.
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There shall be hearing officers to be appointed by the Central Board pursuant to civil service law, rules and regulations, one
each of Luzon, Visayas, and Mindanao, who shall hold office in the City of Manila, Cebu City, and Cagayan de Oro City, respectively, and
who shall serve for a term of six (6) years, without reappointment until their successors shall have been appointed and qualified. The
hearing officers shall have the same qualifications as those of the Judges of the Municipal Trial Courts.
The hearing officers shall each have a salary grade equivalent to the rank of Director I under the Salary Standardization Law
exclusive of allowances and other emoluments. The hearing officers shall try and receive evidences on the appealed assessment cases as
may be directed by the Central Board.
The Central Board, in the performance of its powers and duties, may establish and organize staffs, offices, or units, prescribe
the titles, functions and duties of their members, and adopt its own rules and regulations.
Unless otherwise provided by law, the annual appropriations for the Central Board shall be included in the annual budget of
DOF.
(c) Effect of Appeal on Payment of RPT
LGC, 231. Effect of Appeal on the Payment of Real Property Tax. - Appeal on assessments of real property made under the provisions of
this Code shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial
or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.
IRR, 322. Effect of Appeal on the Payment of Real Property Tax. Appeals on assessments of real property made under the provisions
of this Rule shall, in no case, suspend the collection of the corresponding real property taxes on the property involved as assessed by the
provincial or city assessor, or the municipal assessor within MMA, without prejudice to subsequent adjustment depending upon the final
outcome of the appeal.
2. Payment of RPT under Protest
LGC, 252. Payment Under Protest.
(a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid under
protest". The protest in writing must be filed within thirty (30) days from payment of the tax to the provincial, city treasurer or
municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who shall decide the protest within sixty (60) days
from receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the
protestant, or applied as tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty day period prescribed in subparagraph (a), the taxpayer may avail of
the remedies as provided for in Chapter 3, Title II, Book II of this Code.
IRR, 343. Payment Under Protest. (a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the
tax receipts the words paid under protest. The protest in writing must be filed within thirty (30) days from payment of the tax to the
provincial or city treasurer, or municipal treasurer, in the case of a municipality within MMA, who shall decide the protest within sixty (60)
days from receipt.
(b) The tax or a portion thereof paid under protest shall be held in trust by the local treasurer concerned. Fifty percent (50%) of the tax paid
under protest shall, however, be distributed in accordance with the provisions of this Rule on the distribution of proceeds.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the
protestant, or applied as tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty-day period prescribed in paragraph (a) hereof, the taxpayer may
avail of the remedies provided in Articles 317 and 320 of this Rule.
(a) File protest with local treasurer

(b) Appeal to the LBAA
LGC, 226, supra.
IRR, 317, supra.
(c) Appeal to the CBAA
LGC, 230, supra.
IRR, 321, supra.
(d) Appeal to the CTA (Republic Act 9282) en banc
(e) Appeal to the Supreme Court
3. Claim for refund for illegal or erroneous tax payment
LGC, 253. Repayment of Excessive Collections. - When an assessment of basic real property tax, or any other tax levied under this Title, is found
to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes
and interests with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment.
The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the
claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in Chapter 3, Title II, Book II of this Code.
IRR, 344. Repayment of Excessive Collections. When an assessment of basic real property tax, or any other tax levied in this Rule, is found
to be illegal or erroneous and the tax is accordingly reduced or adjusted, the taxpayer may file a written claim for refund or credit for taxes
and interests with the provincial or city treasurer within two (2) years from the date the taxpayer is entitled to such reduction or adjustment.
The provincial or city treasurer shall decide the claim for tax refund or credit within sixty (60) days from receipt thereof. In case the
claim for tax refund or credit is denied, the taxpayer may avail of the remedies as provided in this Rule.
F. Special levies on real property
1. Special education fund
LGC, 235. Additional Levy on Real Property for the Special Education Fund. - A province or city, or a municipality within the Metropolitan
Manila Area, may levy and collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the
basic real property tax. The proceeds thereof shall exclusively accrue to the Special Education Fund (SEF).
IRR, 326. Additional Levy on Real Property for the Special Education Fund. A province or city, or a municipality within MMA, may levy and
collect an annual tax of one percent (1%) on the assessed value of real property which shall be in addition to the basic real property tax. The
proceeds thereof shall exclusively accrue to the special education fund.
All provinces and cities, and the municipalities within MMA shall enact their respective tax ordinances imposing the additional tax for the
special education fund.
No public hearing shall be required before the enactment of a local tax ordinance levying the additional one percent (1%) special
education fund tax.
2. Additional Ad Valorem Tax on Idle Lands
LGC, 236. Additional Ad Valorem Tax on Idle Lands. - A province or city, or a municipality within the Metropolitan Manila Area, may levy an
annual tax on idle lands at the rate not exceeding five percent (5%) of the assessed value of the property which shall be in addition to the basic
real property tax.
IRR, 327. Additional Ad Valorem Tax on Idle Lands. A province or city, or a municipality within MMA, may levy an annual tax on idle lands
at the rate not exceeding five percent (5%) of the assessed value of the property which shall be in addition to the basic real property tax.
(a) Coverage of idle lands
LGC, 237. Idle Lands, Coverage. - For purposes of real property taxation, idle lands shall include the following:
(a) Agricultural lands, more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery, and other agricultural
uses, one-half (1/2) of which remain uncultivated or unimproved by the owner of the property or person having legal interest
therein. Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a hectare shall not be
considered idle lands. Lands actually used for grazing purposes shall likewise not be considered idle lands.
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(b) Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000) square meters in area one-
half (1/2) of which remain unutilized or unimproved by the owner of the property or person having legal interest therein.
Regardless of land area, this Section shall likewise apply to residential lots in subdivisions duly approved by proper authorities, the
ownership of which has been transferred to individual owners, who shall be liable for the additional tax: Provided, however, That
individual lots of such subdivisions, the ownership of which has not been transferred to the buyer shall be considered as part of the
subdivision, and shall be subject to the additional tax payable by subdivision owner or operator.
IRR, 328. Idle Lands, Coverage. For purposes of real property taxation, idle lands shall include the following:
(a) Agricultural lands, more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery, and other agricultural
uses, one-half () of which remain uncultivated or unimproved by the owner of the property or person having legal interest
therein. Agricultural lands planted to permanent or perennial crops with at least fifty (50) trees to a hectare shall not be
considered idle lands. Lands actually used for grazing purposes shall likewise not be considered idle lands.
(b) Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000) square meters in area one-
half () of which remain unutilized or unimproved by the owner of the property or person having legal interest therein.
Regardless of land area, this Article shall likewise apply to residential lots in subdivisions duly approved by proper authorities, the
ownership of which has been transferred to individual owners, who shall be liable for the additional tax provided that individual lots of
such subdivisions, the ownership of which has not been transferred to the buyer shall be considered as part of the subdivision, and shall
be subject to the additional tax payable by the subdivision owner or operator
(b) Exempt idle lands
LGC, 238. Idle Lands Exempt from Tax. - A province or city or a municipality within the Metropolitan Manila Area may exempt idle lands
from the additional levy by reason of force majeure, civil disturbance, natural calamity or any cause or circumstance which physically or
legally prevents the owner of the property or person having legal interest therein from improving, utilizing or cultivating the same.
IRR, 329. Idle Lands Exempt from Tax. A province or a city or a municipality within MMA may exempt idle lands from the additional
levy by reason of force majeure, civil disturbance, natural calamity, or any cause or circumstance which physically or legally prevents the
owner of the property or person having legal interest therein from improving, utilizing, or cultivating the same.
(c) Listing of idle lands by the assessor
LGC, 239. Listing of Idle Lands by the Assessor. - The provincial, city or municipal assessor shall make and keep an updated record of all
idle lands located within his area of jurisdiction. For purposes of collection, the provincial, city or municipal assessor shall furnish a copy
thereof to the provincial or city treasurer who shall notify, on the basis of such record, the owner of the property or person having legal
interest therein of the imposition of the additional tax.
IRR, 330. Listing of Idle Lands by the Local Assessor. The provincial, city, or municipal assessor shall make and keep an updated
record of all idle lands located within his area of jurisdiction. For purposes of collection, the provincial, city, or municipal assessor shall
furnish a copy thereof to the provincial or city treasurer who shall notify, on the basis of such record, the owner of the property or person
having legal interest therein of the imposition of the additional tax.
3. Special levy
LGC, 240. S pecial Levy by Local Government Units. - A province, city or municipality may impose a special levy on the lands comprised within
its territorial jurisdiction specially benefited by public works projects or improvements funded by the local government unit concerned:
Provided, however, That the special levy shall not exceed sixty percent (60%) of the actual cost of such projects and improvements, including
the costs of acquiring land and such other real property in connection therewith: Provided, further, That the special levy shall not apply to
lands exempt from basic real property tax and the remainder of the land portions of which have been donated to the local government unit
concerned for the construction of such projects or improvements.
IRR, 331. Special Levy by Local Government Units. A province, city, or municipality may impose a special levy on the lands comprised
within its territorial jurisdiction specially benefited by public works projects or improvements funded by the LGU concerned provided that the
special levy shall not exceed sixty percent (60%) of the actual cost of such projects and improvements, including the costs of acquiring land
and such other real property in connection therewith and provided further that the special levy shall not apply to lands exempt from basic real
property tax and the remainder of the land portions of which have been donated to the LGU concerned for the construction of s uch projects or
improvements.
(a) Ordinance/Publication of Ordinance imposing special levy

LGC, 241. Ordinance Imposing a Special Levy. - A tax ordinance imposing a special levy shall describe with reasonable accuracy the
nature, extent, and location of the public works projects or improvements to be undertaken, state the estimated cost thereof, specify the
metes and bounds by monuments and lines and the number of annual installments for the payment of the special levy which in no case
shall be less than five (5) nor more than ten (10) years. The sanggunian concerned shall not be obliged, in the apportionment and
computation of the special levy, to establish a uniform percentage of all lands subject to the payment of the tax for the entire district, but
it may fix different rates for different parts or sections thereof, depending on whether such land is more or less benefited by proposed
work.
LGC, 242. Publication of Proposed Ordinance Imposing a Special Levy. - Before the enactment of an ordinance imposing a special levy, the
sanggunian concerned shall conduct a public hearing thereon; notify in writing the owners of the real property to be affected or the
persons having legal interest therein as to the date and place thereof and afford the latter the opportunity to express their positions or
objections relative to the proposed ordinance.
IRR, 332. Ordinance Imposing a Special Levy. A tax ordinance imposing a special levy shall describe with reasonable accuracy the
nature, extent, and location of the public works projects or improvements to be undertaken, state the estimated cost thereof, specify the
metes and bounds by monuments and lines and the number of annual installments for the payment of the special levy which in no case
shall be less than five (5) nor more than ten (10) years. The sanggunian concerned shall not be obliged, in the apportionment and
computation of the special levy, to establish a uniform percentage of all lands subject to the payment of the tax for the entire district, but
it may fix different rates for different parts or sections thereof, depending on whether such land is more or less benefited by the
proposed work.
IRR, 333. Publication of Proposed Ordinance Imposing a Special Levy. Before the enactment of an ordinance imposing a special levy,
the sanggunian concerned shall conduct a public hearing thereon and notify in writing the owners of the real property to be affected or
the persons having legal interest therein as to the date and place thereof and afford the latter the opportunity to express their positions
or objections relative to the proposed ordinance.
(b) Fixing the Amount of Special Levy and Sending Out Notices
LGC, 243. Fixing the Amount of Special Levy. - The special levy authorized herein shall be apportioned, computed, and assessed according
to the assessed valuation of the lands affected as shown by the books of the assessor concerned, or its current assessed value as fixed by
said assessor if the property does not appear of record in his books. Upon the effectivity of the ordinance imposing special levy, the
assessor concerned shall forthwith proceed to determine the annual amount of special levy assessed against each parcel of land
comprised within the area especially benefited and shall send to each landowner a written notice thereof by mail, personal service or
publication in appropriate cases.
IRR, 334. Fixing the Amount of Special Levy. The special levy authorized herein shall be apportioned, computed, and assessed
according to the assessed valuation of the lands affected as shown by the books of the local assessor concerned, or its current assessed
value as fixed by said assessor if the property does not appear on record in his books. Upon the effectivity of the ordinance imposing
special levy, the assessor concerned shall forthwith proceed to determine the annual amount of special levy assessed against each parcel
of land comprised within the area especially benefited and shall send to each landowner a written notice thereof by mail, personal
service, or publication in appropriate cases.
(c) Taxpayers remedies against special levy
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LGC, 244. Taxpayer's Remedies Against Special Levy. - Any owner of real property affected by a special levy or any person having a legal
interest therein may, upon receipt of the written notice of assessment of the special levy, avail of the remedies provided for in Chapter 3,
Title Two, Book II of this Code.
IRR, 335. Taxpayers' Remedies Against Special Levy. Any owner of real property affected by a special levy or any person having a
legal interest therein may, upon receipt of the written notice of assessment of the special levy, avail of the remedies provided in Article
317 of this Rule.
(d) Accrual of Special Levy
LGC, 245. Accrual of Special Levy. - The special levy shall accrue on the first day of the quarter next following the effectivity of the
ordinance imposing such levy.
IRR, 336. Accrual of Special Levy. The special levy shall accrue on the first day of the quarter next following the effectivity of the
ordinance imposing such levy.
G. Tariff and Customs Code see BarOps Reviewer
1. Tariff and duties, defined
2. General rule: all imported articles are subject to duty. Importation by the government taxable
3. Purpose of imposition
4. Flexible tariff clause
5. Requirements of importation
(a) Beginning and ending of importation
(b) Obligations of importer
i. Cargo manifest
ii. Import entry
iii. Declaration of correct weight or value
iv. Liability for payment of duties
v. Liquidation of duties
vi. Keeping of records
6. Importation in violation of TCC
(a) Smuggling
(b) Other fraudulent practices
7. Classification of goods
(a) Taxable importation
(b) Prohibited importation
(c) Conditionally-free importation
8. Classification of duties
(a) Ordinary/regular duties
i. Ad valorem; methods of valuation
1) Transaction value
2) Transaction Value of identical goods
3) Transaction value of similar goods
4) Deductive value
5) Computed value
6) Fallback value
ii. specific
(b) special duties
i. dumping duties
ii. countervailing duties
iii. marking duties
iv. retaliatory/discriminatory duties
v. safeguard
9. drawbacks
10. remedies
(a) government
i. administrative/extrajudicial
1) search, seizure, forfeiture, arrest.
ii. Judicial
1) Rules on appeal including jurisdiction
(b) Taxpayer
i. Protest
ii. Abandonment
iii. Abatement and refund

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Part Four: Local Government Taxation and Real Property Taxation

I. Local Government Taxation

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(a) Proof of exemption of real property to be excluded from assessment rolls

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i. Administrative remedy through levy on real property

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(1) Issuance of warrant

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(a) File protest with local treasurer

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(a) Ordinance/Publication of Ordinance imposing special levy

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