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Taxation Law II

Dean Manuel Quibod III-Manresa (2013)

REMEDIES Q: After the filing of the return, does that mean that you
(Dean decided to have recitations, so Miss Universe and have no obligation anymore to the Government in so far
peg nito. Q&A portion) as your income tax, since you have already complied
with the filing of the return and the payment of the
annual tax?
Q: If you earned P 1,000,000.00 in a year, and you want to
file the tax on that income, what do file?
A: The tax will still be assessed by the BIR to know if you
paid the correct tax or if you have a deficiency.
A: An income tax return.
Q: What will the BIR do after you have filed you return?
Q: How often do you file an income tax return?
A: Upon the submission of the return, the BIR will examine
A: Quarterly and Annually.
the return.
Q: When you are subject to a donors tax, prior to the
Read Section 203.
payment of the donors tax, what do you usually do for
purposes of paying the donors tax?
SEC. 203. Period of Limitation Upon Assessment and
A: You file a Donors Tax Return. Collection. - Except as provided in Section 222, internal
revenue taxes shall be assessed within three (3) years
Q: When do you file the donors tax return. after the last day prescribed by law for the filing of the
return, and no proceeding in court without assessment for
A: You file 30 days after making the donation, the collection of such taxes shall be begun after the
expiration of such period: Provided, That in a case where
Q: If you are an administrator of the estate, and there is a a return is filed beyond the period prescribed by law, the
tax due on the estate of the decedent, what will you do three (3)-year period shall be counted from the day the
for purposes of paying the estate tax due? return was filed.

A: You will first inform the BIR of the death of the For purposes of this Section, a return filed before the last
decedent, then file the Estate Tax Return. day prescribed by law for the filing thereof shall be
considered as filed on such last day.
Q: For VAT, if you are also subject to an output VAT, how
do you pay the tax? Q: So what is the period within which the BIR is mandated
to make the assessment?
A: There is a separate tax return for VAT. You file the VAT
return, and pay the VAT on the basis of the return. A: Three years after the last day prescribed by law for the
filing of the return.
Q: What about percentage tax, like if you are a common
carrier, and you have to pay the percentage tax on that Q: In income tax return, the deadline is April 15. If you file
business? your return on April 1, how will you count the three year
period?
A: You file a percentage tax return.
A: The period will begin to run on April 16.
Q: If you are a manufacturer, and you have to pay an
excise tax, what do you have to do? Q: If you file the return on May 1, when will you start
counting?
A: You file an excise tax return.
A: It will start on May 2, since in counting periods, we do
Q: When you are subject to the DST, and the amount is not include the first day.
very large, what do you do to pay the DST?
The general prescriptive period within which the
A: You file a DST return. government is given time to make assessments is three
years. No proceeding in court without assessment for the
You have noticed that all internal revenue taxes require collection of said taxes shall be begun after the
the filing of tax returns, prior to its payment. This brings us expiration of the period.
to the principle that taxes in the NIRC are self-assessing
taxes. The BIR will not accept payment for taxes without Q: Can the BIR collect the deficiency tax without an
proper filing of the return. Together with the filing of the assessment? When the BIR is given three years to assess,
return, you pay the tax due based on the return filed. can it collect the deficiency tax collect without an
assessment?

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Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

A: In case of deficiency, the BIR has 3 years to assess the


A: The BIR cannot collect. return. However, in case of false or fraudulent return with
intent to evade tax or of failure to file a return, the BIR
Q: Can the BIR collect after the expiration of the three may assess, or a proceeding in court be filed without an
year period? assessment, within 10 years after the discovery of the
fraud.
A: The BIR can no longer collect. That is precisely the
reason of the law. You cannot go to court to collect the Q: What do you understand of the provision that allows
taxes if there is no prior assessment. In other words, you the BIR to file an action in court without an assessment?
can only collect the deficiency tax against the tax payer
if there is an assessment. A: This means that if there is fraud, falsity or an omission to
pay tax, the BIR can file a criminal case against the
After the return has been filed and the three year period taxpayer even without prior assessment. So even if you
lapses, the government can no longer run after the have not received an assessment notice yet, the BIR can
taxpayers. If the taxed year is 2012, the income tax proceed to file a case against you.
deadline is April 15, 2013. The BIR is given from April 16,
2013 to April 15, 2016 to collect any deficiency tax. If the In this provision, remember that the general prescriptive
BIR informs you of a deficiency finding on April 16, 2016, period within which to make an assessment is three years.
that is already barred because it has already prescribed, But in case of false or fraudulent return or failure to file a
So if the BIR would like to assess you of the deficiency, it return, the assessment will be longer. The BIR is given 10
should be made within the three year period. Within the years. However, in case the BIR omits to make an
three year period, the BIR cannot start running after you assessment during the 3 year period, and still continue on
without any assessment. The taxpayer must first be assessing a taxpayer by merely saying that there is fraud
notified of the deficiency. or falsity in the return filed, that is improper. The BIR
cannot just do that because they have to show that the
The word assessment does not contemplate only the false and fraudulent return was done with intent to evade
period but also the finding of the BIR of the deficiency paying the tax. Again, the BIR could not just say that
after examining the return. The examination, audit and there is fraud in order for them not to be affected of the
inspection, will require the taxpayer to surrender not only prescriptive period. The burden now is with the BIR that
the financial statements, but also the books of accounts there is falsity and fraud and that there is intent to evade
and business records. They will also ask the suppliers to the tax.
cross-match the purchases that the taxpayer made is the
same figure that you indicated in the return. If there will It is not at all times that the government will have the
be variance, a deficiency will result. period of 10 years. Only in the cases stated in Section 222.

This is what happens to gasoline dealers. The BIR will ask Read Section 222 (b).
the dealers how much gasoline they supply to a certain
entity. If the figures will not match, that would be a (b) If before the expiration of the time prescribed in
source of a deficiency. You will now be assessed of a Section 203 for the assessment of the tax, both the
deficiency income tax. Commissioner and the taxpayer have agreed in writing to
its assessment after such time, the tax may be assessed
Lets read Section 222. within the period agreed upon.

SEC. 222. Exceptions as to Period of Limitation of The period so agreed upon may be extended by
Assessment and Collection of Taxes. subsequent written agreement made before the
expiration of the period previously agreed upon.
(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 So the three year period can be extended so long as the
assessed, or a proceeding in court for the collection of taxpayer and the commissioner agreed in writing for such
such tax may be filed without assessment, at any time extension. The period so agreed upon can further be
within ten (10) years after the discovery of the falsity, extended by subsequent written agreements, so long as
fraud or omission: Provided, That in a fraud assessment such agreement was made before the expiration of the
which has become final and executory, the fact of fraud period previously agreed upon.
shall be judicially taken cognizance of in the civil or
criminal action for the collection thereof. Q: If the BIR sends an extension notice to the taxpayer
and the taxpayer agrees to and signs the agreement
Q: Relate this provision with Section 203. approving the extension, is that extension valid?

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Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

A: Yes. The extension notice signed by both the taxpayer Q: What is the period within which to assess any
and the commissioner complies with the requirement of deficiency tax?
the law for a valid extension.
A: Within 3 years, as a general rule, or within 10 years if
Q: Would the extension be valid even if the extension there is fraud and falsity.
notice has no signature of the commissioner, as long as
the taxpayer agreed to it? Q: What is the period to collect?

A: In an extension, you have the statutory provision that A: 5 years.


both the commissioner and the taxpayer have agreed in
writing. The operative act is their signatures. If the So you have to remember these periods: 3,10,5. 3 years to
extension agreement was signed only by the taxpayer, it make an assessment, 10 years if there is falsity or fraud,
is not valid (Johnson case). and 5 years to collect the deficiency tax.

Johnson case Q: Can the government and the taxpayer agree to


extend the period of collection?
When the BIR noticed that the period is not enough to
finish the assessment, they sent an extension notice to the A: Yes, as provided in paragraph (d).
taxpayer. The taxpayer agreed by signing the notice. BIR
again sent another notice of extension, to which the (d) Any internal revenue tax, which has been assessed
taxpayer agreed again. A third extension was again sent. within the period agreed upon as provided in paragraph
Taxpayer again agreed. After the assessment, BIR sent (b) hereinabove, may be collected by distraint or levy or
the taxpayer a deficiency notice. The taxpayers now by a proceeding in court within the period agreed upon
protested saying that the assessment is already barred by in writing before the expiration of the five (5) -year period.
prescription. The BIR contended that there is no need for
the commissioner to sign because the notice is already in The period so agreed upon may be extended by
writing. subsequent written agreements made before the
expiration of the period previously agreed upon.
Supreme Court said no. The provision is not a unilateral
agreement. It is a bilateral agreement. This is a Lets read the last paragraph.
mandatory provision. So the agreement to extend must
be in writing and signed both by the commissioner and
(e) Provided, however, That nothing in the immediately
the taxpayer.
preceding section and paragraph (a) hereof shall be
construed to authorize the examination and investigation
Therefore, the assessment is already barred by
or inquiry into any tax return filed in accordance with the
prescription.
provisions of any tax amnesty law or decree.

Q: How many extensions are allowed?


Remember the principle of tax amnesty. It operates as an
absolute forgiveness on the part of the taxpayer. Tax
A: As many as you can. But it is not wise to agree to the
amnesty are usually legislated.
extension, if you are the taxpayer.
Q: If the taxpayer is under investigation, and during the
Another matter is that if you agree for an extension, the
pendency of the three year period, congress came up
period must be definite. In one case, the extension was
with a tax amnesty, can the taxpayer avail of the
worded as waiver of the prescriptive period. That is not
amnesty despite the fact that he is under investigation?
allowed. The waiver of the statutory period is not allowed
because for the purposes of the extension, the period
A: Even if you are under investigation, if the government
must be definite. It must be clear when the extension
legislates a tax amnesty, you are given the opportunity to
period starts and ends.
avail of such amnesty. If there is an amnesty, the
investigations are suspended, to give way to taxpayers
Read letter c.
who likes to relent and avail of the tax amnesty and pay
the deficiency taxes.
(c) Any internal revenue tax which has been assessed
within the period of limitation as prescribed in paragraph If you avail of a tax amnesty, the government cannot run
(a) hereof may be collected by distraint or levy or by a after you anymore.
proceeding in court within five (5) years following the
assessment of the tax. Q: Are taxes imprescriptible?

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Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

A: Yes, as an exception. The general rule is that it can be NB: Read Revenue Regulation 12-99 and 18-2013.
assessed up to three years. Therefore, as a general rule,
taxes prescribe. The assessment contemplates Section 228.

Q: What are the instances that taxes are imprescriptible. SEC. 228. Protesting of Assessment. - When the
Commissioner or his duly authorized representative finds
A: that proper taxes should be assessed, he shall first notify
SEC. 223. Suspension of Running of Statute of Limitations. - the taxpayer of his findings: Provided, however, That a
The running of the Statute of Limitations provided in preassessment notice shall not be required in the
Sections 203 and 222 on the making of assessment and following cases:
the beginning of distraint or levy a proceeding in court for
collection, in respect of any deficiency, shall be (a) When the finding for any deficiency tax is the result of
suspended for the period during which the Commissioner mathematical error in the computation of the tax as
is prohibited from making the assessment or beginning appearing on the face of the return; or(b) When a
distraint or levy or a proceeding in court and for sixty (60) discrepancy has been determined between the tax
days thereafter; when the taxpayer requests for a withheld and the amount actually remitted by the
reinvestigation which is granted by the Commissioner; withholding agent; or(c) When a taxpayer who opted to
when the taxpayer cannot be located in the address claim a refund or tax credit of excess creditable
given by him in the return filed upon which a tax is being withholding tax for a taxable period was determined to
assessed or collected: Provided, that, if the taxpayer have carried over and automatically applied the same
informs the Commissioner of any change in address, the amount claimed against the estimated tax liabilities for
running of the Statute of Limitations will not be suspended; the taxable quarter or quarters of the succeeding taxable
when the warrant of distraint or levy is duly served upon year; or(d) When the excise tax due on exciseable
the taxpayer, his authorized representative, or a member articles has not been paid; or(e) When the article locally
of his household with sufficient discretion, and no property purchased or imported by an exempt person, such as,
could be located; and when the taxpayer is out of the but not limited to, vehicles, capital equipment,
Philippines. machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.
Q: How many instances are there?
The taxpayers shall be informed in writing of the law and
A: *Dean is really confusing in this part, but according to the facts on which the assessment is made; otherwise, the
him, the following are the instances when the statute of assessment shall be void.
limitations is suspended:
Within a period to be prescribed by implementing rules
1. Shall be suspended for the period during and regulations, the taxpayer shall be required to
which the Commissioner is prohibited from respond to said notice.
making the assessment or beginning distraint
or levy or a proceeding in court and for sixty If the taxpayer fails to respond, the Commissioner or his
(60) days; duly authorized representative shall issue an assessment
2. When the taxpayer requests for a based on his findings.
reinvestigation which is granted by the
commissioner; Such assessment may be protested administratively by
3. When the taxpayer cannot be located in the filing a request for reconsideration or reinvestigation
address given by him in the return filed. within thirty (30) days from receipt of the assessment in
However, if you notify the BIR of your change such form and manner as may be prescribed by
of address, but despite the notice, the BIR still implementing rules and regulations.
sent the assessments to your previous
address, it will not toll the running of the Within sixty (60) days from filing of the protest, all relevant
prescriptive period; supporting documents shall have been submitted;
4. When the warrant of distraint or levy is duly otherwise, the assessment shall become final.
served upon the taxpayer and property can
be located; If the protest is denied in whole or in part, or is not acted
5. When the taxpayer is out of the Philippines. upon within one hundred eighty (180) days from
submission of documents, the taxpayer adversely
The suspension covers both assessment and collection. affected by the decision or inaction may appeal to the
This list is exclusive. Only in these grounds and instances Court of Tax Appeals within thirty (30) days from receipt of
that the assessment and collection of deficiency taxes the said decision, or from the lapse of one hundred eighty
are imprescriptible. (180)-day period; otherwise, the decision shall become
final, executory and demandable.

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Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

If the assessment pertains to a notice informing the Q: Does this violate due process?
taxpayer of the finding of the deficiency and determining
that facts and the law to which the assessment is based, A: No. the taxpayer is still given the opportunity to
you have Section 228. question the assessment.

Q: In Revenue Regulation 12-99, what is this preliminary Q: In Section 228, is there a mention of the informal
assessment notice? conference?

A: A: None. It only mentions of a pre-assessment notice and


a subsequent notice of assessment.
Q: Which comes first, the notice of informal conference
or the pre-assessment notice? In RR 18-2013, the BIR removed the notice of informal
conference, but they reiterated that there is no violation
A: The notice of the informal conference of due process because in the revised rules, the taxpayer
is still given the opportunity to question the validity of the
Q: In Revenue Regulation 12-99, what happens when the assessment. Now, once there is a finding of a deficiency,
taxpayer is under investigation, and theres now an initial the BIR will initially send a pre-assessment notice.
finding of deficiency?
Q: What does that assessment notice contain?
A: There will be a notice of informal conference. This is
what is initially sent. A: It should contain in detail the facts and law, rules and
regulations, to which the assessment is based.
Q: What is the option given to the taxpayers upon receipt
of the notice for informal conference? Q: When that pre-assessment notice is sent to the
taxpayer, containing the facts and the law, in the hands
A: The taxpayer may attend the informal conference or of the taxpayers, what will the taxpayers do?
he may not attend.
A: The taxpayer has 15 days within which to respond. He
Q: When he attends the informal conference, what will will be considered in default if he does not respond, and
happen? therefore a formal letter of demand shall be issued,
calling for the payment of the tax.
A: They may enter into a compromise agreement. He will
admit liability in this case, but they will enter into a Q: When the taxpayer receives the final letter of
compromise agreement for the payment of the demand, what will he do?
deficiency. He may also refute the findings of the
examiner. A: The taxpayer can file a protest.

Q: If they wont arrive into an agreement, what will Q: In the hands of the Commissioner, what will he do with
happen? the protest?

A: *Dean did not allow the student to continue A: The Commissioner would act on the protest. He may
answering* Just read Revenue Regulation 12-99 for the either deny or grant the protest.
process.
Q: If the protest is denied, where will the taxpayer go?
We go now to RR 18-2013.
A: The taxpayer may either appeal to the CTA within 30
Q: What do you understand of this revenue regulation? days from the day of receipt of the decision, or elevate
his protest through request for reconsideration to the
A: This is an amendment of the prior revenue regulation. Commissioner within 30 days.

Q: How is the process done in this revenue regulation? So from the denial of the protest, the protest will be
brought to the CTA. In the CTA, the case will be
A: *Not clear if Dean agreed with the student, so lets processed on twio levels. It will be heard by CTA by
read nalang the regulation* division and when there is an adverse decision, the case
will be appealed to the CTA en banc. From the CTA en
Q: What was eliminated in this amendment? banc, you now go to the Supreme Court. That is where
the assessment will become final.
A: The notice of informal conference.

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Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

Q: If the taxpayer fails to respond to the pre-assessment Q: If there is no decision within 180 days, what will the
notice, what is the consequence? taxpayer do?

A: When the taxpayer fails to respond, he will be A: The taxpayer may appeal to the CTA within 30 days
considered in default. from the lapse of the 180 days.

Q: Will that make the assessment final? Q: Is he given the option to wait for the decision even if
the 180 day period has already expired?
A: No.
A: The taxpayer is given the option to go to the CTA or
Q: What will happen since the assessment will not be final wait for the decision.
on the ground of the taxpayers failure to respond?
That is the reason why there is a defect in the law when it
A: A formal letter of demand and final assessment notice states otherwise, the decision will become final and
will be issued. So when a pre-assessment notice is executor, because since there is an inaction in this case,
ignored, it does not make the assessment final. What the there is no such decision to become final to begin with.
BIR will do is send a final assessment notice.
In 2004, the CTA came out with the internal rules of
Q: What will the taxpayer do with that final assessment procedure in the CTA saying that the taxpayers could
notice? wait for the decision because there is no decision that will
become final, under Section 228. That is a defect in the
A: The taxpayer may file a protest. law.

Q: If he fails to protest, what will happen? So the taxpayer is allowed to wait pursuant to the rules of
procedure issued by the CTA.
A: If the taxpayer fails to protest, the assessment shall
become final and demandable. Once you go to the CTA because of the inaction, you
cannot anymore withdraw the petition. Once the
Q: When the assessment becomes final, what will the taxpayer avail of the remedy of going to the CTA by
government do? reason of the inaction, he cannot withdraw that
anymore. The remedies are exclusive.
A: The BIR will now collect the taxes.
From the CTA division, you appeal to the CTA en banc,
Q: In what cases is the pre-assessment no longer and then to the Supreme Court. No appeals to the CA
required? anymore because under the new law, RA 9282, the CTA is
now equivalent of the CA. So no tax cases are now
A: 1) When the filing for a deficiency tax is the result of a appealed to the CA. But in the CTA, the case shall go
mathematical error in the computation of the tax. two processed, by division and en banc, before it can
proceed to the Supreme Court.
*Dean asked for examples rather than have the student
enumerate each item. Lets just read the revenue Once the Supreme Court decides on the protest, the
regulation* assessment will become final and collection proceeding
will follow.
The taxpayer will be sent, in these cases, a final
assessment notice. For the collection proceedings, you have Section 205.

Only in these five cases that no pre-assessment will be SEC. 205. Remedies for the Collection of Delinquent Taxes.
issued. In all other cases of a finding of a deficiency, it is - The civil remedies for the collection of internal revenue
required that there is a pre-assessment notice that will be taxes, fees or charges, and any increment thereto
sent to the taxpayer. resulting from delinquency shall be:

Q: When a final assessment notice is received by the (a) By distraint of goods, chattels, or effects, and other
taxpayer and he contested the assessment, what is the personal property of whatever character, including
period within which the commissioner must decide on the stocks and other securities, debts, credits, bank accounts
protest? and interest in and rights to personal property, and by
levy upon real property and interest in rights to real
A: The commissioner is given 180 days to decide on the property; and
protest.
(b) By civil or criminal action.

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Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

In levy or real properties, this is similar to extra-judicial


Either of these remedies or both simultaneously may be foreclosure of real estate mortgage. They have the same
pursued in the discretion of the authorities charged with process. The sheriff will annotate the claim before the
the collection of such taxes:Provided, however, That the ROD. The ROD will annotate the claim. There will be the
remedies of distraint and levy shall not be availed of issuance of notice of sale and publication of that notice
where the amount of tax involve is not more than One of sale setting the auction day. During the auction, the
hundred pesos (P100). property will be sold to the highest bidder. The certificate
of sale will be issued to the highest bidder and will be
The judgment in the criminal case shall not only impose annotated with the ROD for purposes of counting the one
the penalty but shall also order payment of the taxes year redemption period. If there will be no redemption
subject of the criminal case as finally decided by the you will issue a final deed to the purchaser. If there is
Commissioner. redemption, the property will be returned to the
taxpayer. The proceeds of the auction will be applied to
The Bureau of Internal Revenue shall advance the the delinquency. If there be an excess, the excess will be
amounts needed to defray costs of collection by means given back to the taxpayer. If there will still be a balance,
of civil or criminal action, including the preservation or further levy or distraint will be done.
transportation of personal property distrained and the
advertisement and sale thereof, as well as of real The other remedies include forfeiture under Section 224-
property and improvements thereon. 225; the enforcement of a tax lien in Section 119; entering
into compromise in Section 204 these are the remedies
So you have these remedies for the collection of under the NIRC to collect the taxes. You also have the
delinquent taxes. The civil remedies for the collection informers reward under Section 282. You also have the
resulting from delinquencies consist of administrative and remedy under Section 5 and 6 of NIRC. The remedies are
judicial remedies. not only found in Title VIII, but also in other parts of the tax
code.
Administrative remedies for collection include destraint
on personal property in Section 206 212; and levy of real NB: You may read the book of de Leon. The aspect of tax
property covered by Section 207 (b), 213, 214, 202 and administration is discussed in the book of de Leon. You
215. Section 202 is misplaced in your codal. It must follow have a list there of the administrative remedies.
Section 214 because that is the procedure on levy.
The other group of collection remedies is judicial actions,
Do not be confused of these proceeding, the distraint by way of a civil or criminal action.
and levy, because these are the same proceedings that
you will encounter in the rules of execution (Rule 39). Q: How do you proceed with a civil action to collect
When the judgment creditor will now collect the award, taxes?
the sheriff will run after the debtor, either after the
personal or real properties of the debtor. That is also the A: File a case of collection of sum of money.
process in collecting taxes when there is deficiency.
Q: In what court will you file?
In the distraint of personal property, the proceeding may
either be constructive or actual distraint. Section 206 tells A: In depends on the value of the tax to be collected. So
us about constructive distraint. Constructive distraint is you have to remember the jurisdictional amount.
similar to your rules on preliminary attachment. In
constructive distaint, during the assessment proceedings, Q: Can you file a collection case in the CTA?
to protect the interest of the government, the taxpayer
will be served a warrant of distraint, ordering him to A: No.
preserve his properties during the pendency of the
assessment. Q: How do you proceed with the filing of a criminal
action to collect the tax?
In the event that assessment becomes final and
collection proceedings are now pursued against the A: It will start through filing an affidavit-complaint filed by
taxpayers, actual distraint will follow. In actual distraint, the BIR in the fiscals office, not in the Department of
the personal properties are ceased and sold at public Justice. The fiscal will now determine if there is probable
auction. The proceeds will be applied to the deficient cause through a Preliminary Investigation, to which the
taxes plus penalties interests and surcharges. Any excess taxpayer will be notified. A copy of the complaint will be
will be returned to the taxpayer. But if there will still be a given to the taxpayer for the purpose of filing a counter-
balance, further distraint or levy will be done. affidavit.

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Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

Q: When you file a criminal action to collect the tax, does One of the principles applicable in collection remedies is
this require a prior assessment? that Taxes are the lifeblood of the government. The
government is allowed to resort to all of these remedies
A: Yes. The BIR cannot collect the tax if there was no to collect the taxes. Aside from that, you also have
assessment against the taxpayer. another principle involving Injunction.

Read Section 220. SEC. 218. Injunction not Available to Restrain Collection of
Tax. - No court shall have the authority to grant an
SEC. 220. Form and Mode of Proceeding in Actions Arising injunction to restrain the collection of any national
under this Code. - Civil and criminal actions and internal revenue tax, fee or charge imposed by this Code.
proceedings instituted in behalf of the Government under
the authority of this Code or other law enforced by the As a rule, the collection of the taxes cannot be subject to
Bureau of Internal Revenue shall be brought in the name any injunction because of the same principle that taxes
of the Government of the Philippines and shall be are the lifeblood of the government.
conducted by legal officers of the Bureau of Internal
Revenue but no civil or criminal action for the recovery of Another remedy aside from distraint and levy, is the
taxes or the enforcement of any fine, penalty or forfeiture enforcement of a tax lien in Section 219.
under this Code shall be filed in court without the
approval of the Commissioner. SEC. 219. Nature and Extent of Tax Lien. - If any person,
corporation, partnership, joint-account (cuentas en
Q: In pursuit of the collection remedies on the part of the participacion), association or insurance company liable
government, when the BIR proceeds with administrative to pay an internal revenue tax, neglects or refuses to pay
of collecting the tax, is the BIR precluded from the same after demand, the amount shall be a lien in
proceeding civilly or criminally against the tax payer? favor of the Government of the Philippines from the time
when the assessment was made by the Commissioner
A: No. Either of the remedies and both simultaneously until paid, with interests, penalties, and costs that may
can be availed of by the government to collect the accrue in addition thereto upon all property and rights to
taxes. This means that the government has in its discretion property belonging to the taxpayer: Provided, That this
to pursue either or both of the remedies. lien shall not be valid against any mortgagee purchaser
or judgment creditor until notice of such lien shall be filed
Q: What does this tell us? by the Commissioner in the office of the Register of Deeds
of the province or city where the property of the taxpayer
A: This tells us that the BIR can proceed on those actions is situated or located.
so that there will be more efficient collection of taxes,
pursuant to the principle that taxes are the lifeblood of Q: What is a Tax Lien?
the country.
A: A claim against the property of the taxpayer.
So, all these remedies, administrative, civil or criminal,
may be pursued at the same time. The government is not Q: How is the tax lien enforced?
precluded to resort to only one of these remedies.
A: *Student reads Section 219*
In the case of a criminal action to collect the tax, there is
no need of a prior assessment. In Section 205, the Q: When does the claim arises?
judgment in the criminal case shall not only impose the
penalty but shall also order the payment of taxes, subject A: When the taxpayer refuses to pay the tax or neglects
of the criminal case. In filing the criminal action, you still to pay the tax, after demand, the government will now
follow the ordinary rules of procedure. enforce the tax lien.

The BIR will file a complaint before the fiscals office, or Q: When the government enforce the tax lien against his
they may file it to the Department of Justice. The properties, what will the government do?
taxpayer will be notified so he may file his counter-
affidavit. The preliminary investigation will be conducted A: The ROD will annotate the lien.
to determine if there is probable cause. If there is a
finding of probable cause, the formal complaint Q: The ROD told the BIR that they cannot annotate
information will be filed. The proceedings that will later on because this property is already mortgaged with a bank.
take place, will be the same in your criminal procedure. What will happen?
Even if there is a finding of acquittal, the court shall still
make a determination of the civil liability, since the filing A: *Student reads last part of the provision*. So if the title is
of the criminal action carried with it the civil aspect. clean, the lien can be annotated. But if there Is an

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existing mortgage or encumbrance, the lien will be A:


annotated but will not be valid against the first mortgage
of judgment-debtor. The lien will be secondary to the first Q: So in case of chattels and immovable properties, what
mortgagees claim. So your claim has the possibility of not will you do?
being enforced.
A: You either seize, sale or destroy the property.
Later, when we go to local tax, take note of what is the
consequence of a tax lien in local taxation. In Real Q: What will be done first?
Property Taxation, the tax lien is superior to all other liens.
So even if there is an existing mortgage on the title,. But if A: You first seize the property. The BIR will then classify the
the lien involves the claim of the LGU for unpaid Real condition of the properties seized. If it is still fit for sale,
Property Taxes, such lien will be superior. This is not so in then the properties will be sold. If it cannot anymore be
internal revenue taxes. sold of are already unfit for consumption, the properties
will be destroyed.
Another remedy is the remedy of forfeiture under Section
224 and 225. Q: In case of real properties, what will you do?

SEC. 224. Remedy for Enforcement of Forfeitures. - The A: First, you should obtain a judgment of condemnation.
forfeiture of chattels and removable fixtures of any sort
shall be enforced by the seizure and sale, or destruction, Q: What is a judgment of condemnation?
of the specific forfeited property.
A:
The forfeiture of real property shall be enforced by a
judgment of condemnation and sale in a legal action or Another remedy is compromise under Section 204.
proceeding, civil or criminal, as the case may require.
SEC. 204. Authority of the Commissioner to Compromise,
SEC. 225. When Property to be Sold or Destroyed. - Sales Abate and Refund or Credit Taxes. - The Commissioner
of forfeited chattels and removable fixtures shall be may -
effected, so far as practicable, in the same manner and (A) Compromise the Payment of any Internal Revenue
under the same conditions as the public notice and the Tax, when:
time and manner of sale as are prescribed for sales of (1) A reasonable doubt as to the validity of the claim
personal property distrained for the non-payment of against the taxpayer exists; or(2) The financial position of
taxes. the taxpayer demonstrates a clear inability to pay the
assessed tax.
Distilled spirits, liquors, cigars, cigarettes, other The compromise settlement of any tax liability shall be
manufactured products of tobacco, and all apparatus subject to the following minimum amounts:
used I or about the illicit production of such articles may, For cases of financial incapacity, a minimum
upon forfeiture, be destroyed by order of the compromise rate equivalent to ten percent (10%) of the
Commissioner, when the sale of the same for basic assessed tax; and
consumption or use would be injurious to public health or For other cases, a minimum compromise rate equivalent
prejudicial to the enforcement of the law. to forty percent (40%) of the basic assessed tax.
All other articles subject to excise tax, which have been Where the basic tax involved exceeds One million pesos
manufactured or removed in violation of this Code, as (P1,000.000) or where the settlement offered is less than
well as dies for the printing or making of internal revenue the prescribed minimum rates, the compromise shall be
stamps and labels which are in imitation of or purport to subject to the approval of the Evaluation Board which
be lawful stamps, or labels may, upon forfeiture, be sold shall be composed of the Commissioner and the four (4)
or destroyed in the discretion of the Commissioner. Deputy Commissioners.
Forfeited property shall not be destroyed until at least (B) Abate or Cancel a Tax Liability, when:
twenty (20) days after seizure. (1) The tax or any portion thereof appears to be unjustly
or excessively assessed; or(2) The administration and
Q: How is this remedy of forfeiture enforced? collection costs involved do not justify the collection of
the amount due.
A: The remedy of forfeiture shall be enforced by seizure of All criminal violations may be compromised except: (a)
the immovable things that are forfeited and the sale those already filed in court, or (b) those involving fraud.
thereof. In case of real property, there must be a (C) Credit or refund taxes erroneously or illegally
judgment of condemnation and its subsequent sale. received or penalties imposed without authority, refund
the value of internal revenue stamps when they are
Q: What is forfeiture? returned in good condition by the purchaser, and, in his
discretion, redeem or change unused stamps that have

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been rendered unfit for use and refund their value upon compromise rate equivalent to ten percent (10%) of the
proof of destruction. basic assessed tax. For other cases, a minimum
No credit or refund of taxes or penalties shall be allowed compromise rate equivalent to forty percent (40%) of the
unless the taxpayer files in writing with the Commissioner basic assessed tax. Where the basic tax involved exceeds
a claim for credit or refund within two (2) years after the One million pesos (P1,000.000) or where the settlement
payment of the tax or penalty: Provided, however, That a offered is less than the prescribed minimum rates, the
return filed showing an overpayment shall be considered compromise shall be subject to the approval of the
as a written claim for credit or refund. Evaluation Board which shall be composed of the
A Tax Credit Certificate validly issued under the provisions Commissioner and the four (4) Deputy Commissioners.
of this Code may be applied against any internal revenue
tax, excluding withholding taxes, for which the taxpayer Q: When do you abate and cancel tax liability?
is directly liable.
Any request for conversion into refund of unutilized tax A: When the tax or any portion thereof appears to be
credits may be allowed, subject to the provisions of unjustly or excessively assessed or when the
Section 230 of this Code: Provided, That the original copy administration and collection costs involved do not justify
of the Tax Credit Certificate showing a creditable the collection of the amount due.
balance is surrendered to the appropriate revenue officer
for verification and cancellation: Provided, further, That in Take note that even criminal violations may be
no case shall a tax refund be given resulting from compromised except those already filed in court and
availment of incentives granted pursuant to special laws those involving fraud.
for which no actual payment was made.
The Commissioner shall submit to the Chairmen of the The other remedies are found in Section 5 and 6. You also
Committee on Ways and Means of both the Senate and have Section 15.
House of Representatives, every six (6) months, a report
on the exercise of his powers under this Section, stating In the case of the criminal action, there is no need of a
therein the following facts and information, among others: prior assessment for purposes of pursuing the remedy of
names and addresses of taxpayers whose cases have filing the criminal action. But if you proceed with the
been the subject of abatement or compromise; amount remedy of the civil action, it requires prior assessment. To
involved; amount compromised or abated; and reasons collect taxes by way of civil action in court, this would
for the exercise of power: Provided, That the said report require a prior assessment.
shall be presented to the Oversight Committee in
Congress that shall be constituted to determine that said Lets go to Section 281.
powers are reasonably exercised and that the
government is not unduly deprived of revenues. SEC. 281. Prescription for Violations of any Provision of this
Code. - All violations of any provision of this Code shall
Q: In what instances can the Commissioner enter into a prescribe after Five (5) years.
compromise?
Prescription shall begin to run from the day of the
A: When there is (1) A reasonable doubt as to the validity commission of the violation of the law, and if the same be
of the claim against the taxpayer exists; or (2) The not known at the time, from the discovery thereof and the
financial position of the taxpayer demonstrates a clear institution of judicial proceedings for its investigation and
inability to pay the assessed tax. punishment.

There are only two instances where the BIR can inquire The prescription shall be interrupted when proceedings
into your bank accounts: are instituted against the guilty persons and shall begin to
run again if the proceedings are dismissed for reasons not
1) In the case of estate taxation constituting jeopardy.
2) When the taxpayer will enter into a compromise
on the ground of financial incapacity. The term of prescription shall not run when the offender is
absent from the Philippines.
In these cases, the taxpayer must first execute a waiver.
This provides for the period within which the criminal
CF: Section 6 of NIRC. action should be pursued.

The compromise is still a negotiation, and not an In Section 222, the assessment is 3 years, and 10 years as
obligation on the part of the government. However, to an exception. To collect the tax, you have 5 years,
speed up collection the government may enter into a whether you proceed with administrative remedies or
compromise. In the event of a compromise, there are judicial remedies. Do not be confused of the periods.
limitations. For cases of financial incapacity, a minimum

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The running of the prescriptive period is tolled when the liability for internal revenue taxes like VAT or other excise
offender is out of the country. taxes on account of importation.

Lets now go to informers reward. An informer who gives a sworn information not yet known
to the BIR will be given a reward. He shall be rewarded to
SEC. 282. Informer's Reward to Persons Instrumental in the a sum equivalent to 10% of the revenue recovered or
Discovery of Violations of the National Internal Revenue 1,000,000 whichever is lower. So the information must lead
Code and in the Discovery and Seizure of Smuggled to collection of the tax in order for the informer to be
Goods. - rewarded. The reward will still be given even if the
(A) For Violations of the National Internal Revenue Code. offender will offer to compromise. The reward in this case
- Any person, except an internal revenue official or will be based in the compromised amount.
employee, or other public official or employee, or his
relative within the sixth degree of consanguinity, who For discovery and seizure of smuggled goods, there is no
voluntarily gives definite and sworn information, not yet in more exclusion as to who can be an informer. You will
the possession of the Bureau of Internal Revenue, leading receive 10% of the fair value of the goods, or 1,000,000,
to the discovery of frauds upon the internal revenue laws whichever is lower. The cash reward will be subjected to
or violations of any of the provisions thereof, thereby a withholding tax. Before 1998, this reward is tax free. But
resulting in the recovery of revenues, surcharges and fees not it is already subject to tax.
and/or the conviction of the guilty party and/or the
imposition of any of the fine or penalty, shall be rewarded Title IX talks about compliance requirements.
in a sum equivalent to ten percent (10%) of the revenues,
surcharges or fees recovered and/or fine or penalty SEC. 232. Keeping of Books of Accounts. -
imposed and collected or One Million Pesos (P1,000,000) (A) Corporations, Companies, Partnerships or Persons
per case, whichever is lower. Required to Keep Books of Accounts. - All corporations,
The same amount of reward shall also be given to an companies, partnerships or persons required by law to
informer where the offender has offered to compromise pay internal revenue taxes shall keep a journal and a
the violation of law committed by him and his offer has ledger or their equivalents: Provided, however, That those
been accepted by the Commissioner and collected from whose quarterly sales, earnings, receipts, or output do not
the offender: Provided, That should no revenue, exceed Fifty thousand pesos (P50,000) shall keep and use
surcharges or fees be actually recovered or collected, simplified set of bookkeeping records duly authorized by
such person shall not be entitled to a reward:Provided, the Secretary of Finance where in all transactions and
further, That the information mentioned herein shall not results of operations are shown and from which all taxes
refer to a case already pending or previously due the Government may readily and accurately be
investigated or examined by the Commissioner or any of ascertained and determined any time of the
his deputies, agents or examiners, or the Secretary of year:Provided, further, That corporations, companies,
Finance or any of his deputies or agents: Provided, partnerships or persons whose gross quarterly sales,
finally, That the reward provided herein shall be paid earnings, receipts or output exceed One hundred fifty
under rules and regulations issued by the Secretary of thousand pesos (P150,000) shall have their books of
Finance, upon recommendation of the Commissioner. accounts audited and examined yearly by independent
(B) For Discovery and Seizure of Smuggled Goods. - To Certified Public Accountants and their income tax returns
encourage the public to extend full cooperation in accompanied with a duly accomplished Account
eradicating smuggling, a cash reward equivalent to ten Information Form (AIF) which shall contain, among others,
percent (10%) of the fair market value of the smuggled information lifted from certified balance sheets, profit and
and confiscated goods or One Million Pesos (P1,000,000) loss statements, schedules listing income-producing
per case, whichever is lower, shall be given to persons properties and the corresponding income therefrom and
instrumental in the discovery and seizure of such other relevant statements.
smuggled goods. (B) Independent Certified Public Accountant Defined. -
The cash rewards of informers shall be subject to income The term"Independent Certified Public Accountant", as
tax, collected as a final withholding tax, at a rate of ten used in the preceding paragraph, means an accountant
percent (10%). who possesses the independence as defined in the rules
The provisions of the foregoing Subsections and regulations of the Board of Accountancy
notwithstanding, all public officials, whether incumbent or promulgated pursuant to Presidential Decree No. 692,
retired, who acquired the information in the course of the otherwise known as the Revised Accountancy Law.
performance of their duties during their incumbency, are
prohibited from claiming informer's reward. This talks about the keeping of books of accounts. The
books required are the journals and ledgers or their
The informers reward is of two kinds; one for violation of equivalent.
the NIRC and one for discovery of smuggled goods. The
discovery adnd seizure of smuggled goods is not involved

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SEC. 233. Subsidiary Books. - All corporations, companies, Examination and inspection of books of accounts and
partnerships or persons keeping the books of accounts other accounting records shall be done in the taxpayer's
mentioned in the preceding Section may, at their option, office or place of business or in the office of the Bureau of
keep subsidiary books as the needs of their business may Internal Revenue.
require: Provided, That were such subsidiaries are kept, All corporations, partnerships or persons that retire from
they shall form part of the accounting system of the business shall, within ten (10) days from the date of
taxpayer and shall be subject to the same rules and retirement or within such period of time as may be
regulations as to their keeping, translation, production allowed by the Commissioner in special cases, submit
and inspection as are applicable to the journal and the their books of accounts, including the subsidiary books
ledger. and other accounting records to the Commissioner or
any of his deputies for examination, after which they shall
SEC. 234. Language in which Books are to be Kept; be returned.
Translation. - All suchcorporations, companies, Corporations and partnerships contemplating dissolution
partnerships or persons shall keep the books or records must notify the Commissioner and shall not be dissolved
mentioned in Section 232 hereof in native language, until cleared of any tax liability.
English or Spanish: Provided, however, That if in addition Any provision of existing general or special law to the
to said books or records the taxpayer keeps other books contrary notwithstanding, the books of accounts and
or records in a language other than a native language, other pertinent records of tax-exempt organizations or
English or Spanish, he shall make a true and complete grantees of tax incentives shall be subject to examination
translation of all the entries in suck other books or records by the Bureau of Internal Revenue for purposes of
into a native language; English or Spanish, and the said ascertaining compliance with the conditions under which
translation must be made by the bookkeeper, or such they have been granted tax exemptions or tax
taxpayer, or in his absence, by his manager and must be incentives, and their tax liability, if any.
certified under oath as to its correctness by the said
bookkeeper or manager, and shall form an integral part The keeping of the books must be in the same period
of the aforesaid books of accounts. within which the action for assessment can be pursued.
The keeping of such books or records in any language So after three years, you are free to throw away the
other than a native language, English or Spanish, is books.
hereby prohibited.
Ordinarily, you can only be investigated and be
If you will be asked in what language shall the books are subjected to assessment only once in a taxable year.
to be kept, Section 234 will give you an answer. They can When you are under assessment, what generates that
be in English, Spanish or in the native language. notice informing you that you are under assessment is the
letter of authority (LOA). The LOA is the document of the
If it will be in a language other than this three, you must examiner served to the taxpayer informing him of the
keep a separate book that will provide translations. assessment. The LOA will define the tax period involved.
You cannot be examined for an indefinite tax period. The
SEC. 235. Preservation of Books and Accounts and Other period must be definite and must be stated in the LOA.
Accounting Records. - All the books of accounts,
including the subsidiary books and other accounting You can be made to keep the books for more than three
records of corporations, partnerships, or persons, shall be years in the cases enumerated in Section 235. These are
preserved by them for a period beginning from the last the exception to the general rule.
entry in each book until the last day prescribed by
Section 203 within which the Commissioner is authorized SEC. 236. Registration Requirements. -
to make an assessment. (A) Requirements. - Every person subject to any internal
The said books and records shall be subject to revenue tax shall register once with the appropriate
examination and inspection by internal revenue Revenue District Officer:
officers: Provided, That for income tax purposes, such (1) Within ten (10) days from date of employment, or
examination and inspection shall be made only once in a (2) On or before the commencement of business,or
taxable year, except in the following cases: (3) Before payment of any tax due, or
(a) Fraud, irregularity or mistakes, as determined by the (4) Upon filing of a return, statement or declaration as
Commissioner;(b) The taxpayer requests required in this Code.
reinvestigation;(c) Verification of compliance with The registration shall contain the taxpayer's name, style,
withholding tax laws and regulations;(d) Verification of place of residence, business and such other information
capital gains tax liabilities; and(e) In the exercise of the as may be required by the Commissioner in the form
Commissioner's power under Section 5(B) to obtain prescribed therefor.
information from other persons in which case, another or A person maintaining a head office, branch or facility
separate examination and inspection may be made. shall register with the Revenue District Officer having
jurisdiction over the head office, brand or facility.

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For purposes of this Section, the term "facility" may (I) Optional Registration of Exempt Person. - Any person
include but not be limited to sales outlets, places of whose transactions are exempt from value-added tax
production, warehouses or storage places. under Section 109(z) of this Code; or any person whose
(B) Annual Registration Fee. - An annual registration fee in transactions are exempt from the value-added tax under
the amount of Five hundred pesos (P500) for every Section 109(a), (b), (c), and (d) of this Code, who opts to
separate or distinct establishment or place of business, register as a VAT taxpayer with respect to his export sales
including facility types where sales transactions occur, only, may update his registration information in
shall be paid upon registration and every year thereafter accordance with Subsection (E) hereof, not later than ten
on or before the last day of January: Provided, (10) days before the beginning of the taxable quarter and
however, That cooperatives, individuals earning purely shall pay the annual registration fee prescribed in
compensation income, whether locally or abroad, and Subsection (B) hereof.
overseas workers are not liable to the registration fee In any case, the Commissioner may, for administrative
herein imposed. reasons, deny any application for registration including
The registration fee shall be paid to an authorized agent updates prescribed under Subsection (E) hereof.
bank located within the revenue district, or to the For purposes of Title IV of this Code, any person who has
Revenue Collection Officer, or duly authorized Treasurer registered value-added tax as a tax type in accordance
of the city of municipality where each place of business with the provisions of Subsection (C) hereof shall be
or branch is registered. referred to as VAT-registered person who shall be
(C) Registration of Each Type of Internal Revenue Tax. - assigned only one Taxpayer Identification Number.
Every person who is required to register with the Bureau (J) Supplying of Taxpayer Identification Number (TIN). -
of Internal Revenue under Subsection (A) hereof, shall Any person required under the authority of this Code to
register each type of internal revenue tax for which he is make, render or file a return, statement or other
obligated, shall file a return and shall pay such taxes, and document shall be supplied with or assigned a Taxpayer
shall updates such registration of any changes in Identification Number (TIN) which he shall indicate in
accordance with Subsection (E) hereof. such return, statement or document filed with the Bureau
(D) Transfer of Registration. - In case a registered person of Internal Revenue for his proper identification for tax
decides to transfer his place of business or his head office purposes, and which he shall indicate in certain
or branches, it shall be his duty to update his registration documents, such as, but not limited to the following:
status by filing an application for registration information (1) Sugar quedans, refined sugar release order or similar
update in the form prescribed therefor. instruments;(2) Domestic bills of lading;(3) Documents to
(E) Other Updates. - Any person registered in accordance be registered with the Register of Deeds of Assessor's
with this Section shall, whenever applicable, update his Office;(4) Registration certificate of transportation
registration information with the Revenue District Office equipment by land, sea or air;(5) Documents to be
where he is registered, specifying therein any change in registered with the Securities and Exchange
type and other taxpayer details. Commission;(6) Building construction permits;(7)
(F) Cancellation of Registration. - The registration of any Application for loan with banks, financial institutions, or
person who ceases to be liable to a tax type shall be other financial intermediaries;(8) Application for mayor's
cancelled upon filing with the Revenue District Office permit;(9) Application for business license with the
where he is registered an application for registration Department of Trade & Industry; and(10) Such other
information update in a form prescribed therefor. documents which may hereafter be required under rules
(G) Persons Commencing Business. - Any person, who and regulations to be promulgated by the Secretary of
expects to realize gross sales or receipts subject to value- Finance, upon recommendation of the Commissioner.
added tax in excess of the amount prescribed under In cases where a registered taxpayer dies, the
Section 109(z) of this Code for the next 12-month period administrator or executor shall register the estate of the
from the commencement of the business, shall register decedent in accordance with Subsection (A) hereof and
with the Revenue District Office which has jurisdiction over a new Taxpayer Identification Number (TIN) shall be
the head office or branch and shall pay the annual supplied in accordance with the provisions of this Section.
registration fee prescribed in Subsection (B) hereof. In the case of a nonresident decedent, the executor or
(H) Persons Becoming Liable to the Value-added Tax. - administrator of the estate shall register the estate with
Any person, whose gross sales or receipts in any 12- the Revenue District Office where he is
month period exceeds the amount prescribed under registered: Provided, however, That in case such executor
Subsection 109(z) of this Code for exemption from the or administrator is not registered, registration of the estate
value-added tax shall register in accordance with shall be made with the Taxpayer Identification Number
Subsection (A) hereof, and shall pay the annual (TIN) supplied by the Revenue District Office having
registration fee prescribed within ten (10) days after the jurisdiction over his legal residence.
end of the last month of that period, and shall be liable to Only one Taxpayer identification Number (TIN) shall be
the value-added tax commencing from the first day of assigned to a taxpayer.
the month following his registration. Any person who shall secure more than one Taxpayer
Identification Number shall be criminally liable under the

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provision of Section 275 on 'Violation of Other Provisions of All persons who print receipt or sales or commercial
this Code or Regulations in General'. invoices shall maintain a logbook/register of taxpayers
who availed of their printing services.
All taxpayers are required to register and pay the annual The logbook/register shall contain the following
registration fee of P500.00. You also have to get a Tax information:
Identification Number (TIN). (1) Names, Taxpayer Identification Numbers of the
persons or entities for whom the receipts or sales or
SEC. 237. Issuance of Receipts or Sales or Commercial commercial invoices were printed; and
Invoices. -All persons subject to an internal revenue tax (2) Number of booklets, number of sets per booklet,
shall, for each sale or transfer of merchandise or for number of copies per set and the serial numbers of the
services rendered valued at Twenty-five pesos (P25.00) or receipts or invoices in each booklet.
more, issue duly registered receipts or sales or
commercial invoices, prepared at least in duplicate, This tells you about the requirement on printing receipts.
showing the date of transaction, quantity, unit cost and
description of merchandise or nature of service: Provided, Lets now go to Section 245.
however, That in the case of sales, receipts or transfers in
the amount of One hundred pesos (P100.00) or more, or SEC. 245. Specific Provisions to be Contained in Rules and
regardless of the amount, where the sale or transfer is Regulations. -The rules and regulations of the Bureau of
made by a person liable to value-added tax to another Internal Revenue shall, among other thins, contain
person also liable to value-added tax; or where the provisions specifying, prescribing or defining:
receipt is issued to cover payment made as rentals, (a) The time and manner in which Revenue Regional
commissions, compensations or fees, receipts or invoices Director shall canvass their respective Revenue Regions
shall be issued which shall show the name, business style, for the purpose of discovering persons and property liable
if any, and address of the purchaser, customer or to national internal revenue taxes, and the manner in
client: Provided, further, That where the purchaser is a which their lists and records of taxable persons and
VAT-registered person, in addition to the information taxable objects shall be made and kept;(b) The forms of
herein required, the invoice or receipt shall further show labels, brands or marks to be required on goods subject
the Taxpayer Identification Number (TIN) of the to an excise tax, and the manner in which the labelling,
purchaser. branding or marking shall be effected;(c) The conditions
The original of each receipt or invoice shall be issued to under which and the manner in which goods intended for
the purchaser, customer or client at the time the export, which if not exported would be subject to an
transaction is effected, who, if engaged in business or in excise tax, shall be labelled, branded or marked;(d) The
the exercise of profession, shall keep and preserve the conditions to be observed by revenue officers respecting
same in his place of business for a period of three (3) the institutions and conduct of legal actions and
years from the close of the taxable year in which such proceedings;(e) The conditions under which goods
invoice or receipt was issued, while the duplicate shall be intended for storage in bonded warehouses shall be
kept and preserved by the issuer, also in his place of conveyed thither, their manner of storage and the
business, for a like period. method of keeping the entries and records in connection
The Commissioner may, in meritorious cases, exempt any therewith, also the books to be kept by Revenue
person subject to internal revenue tax from compliance Inspectors and the reports to be made by them in
with the provisions of this Section. connection with their supervision of such houses;(f) The
conditions under which denatured alcohol may be
This will guide you in determining the minimum value to removed and dealt in, the character and quantity of the
which you have to issue a receipt. denaturing material to be used, the manner in which the
process of denaturing shall be effected, so as to render
SEC. 238. Printing of Receipts or Sales or Commercial the alcohol suitably denatured and unfit for oral intake,
Invoices. - All persons who are engaged in business shall the bonds to be given, the books and records to be kept,
secure from the Bureau of Internal Revenue an authority the entries to be made therein, the reports to be made to
to print receipts or sales or commercial invoices before a the Commissioner, and the signs to be displayed in the
printer can print the same. business or by the person for whom such denaturing is
No authority to print receipts or sales or commercial done or by whom, such alcohol is dealt in;(g) The manner
invoices shall be granted unless the receipts or invoices in which revenue shall be collected and paid, the
to be printed are serially numbered and shall show, instrument, document or object to which revenue stamps
among other things, the name, business style, Taxpayer shall be affixed, the mode of cancellation of the same,
Identification Number (TIN) and business address of the the manner in which the proper books, records, invoices
person or entity to use the same, and such other and other papers shall be kept and entries therein made
information that may be required by rules and regulations by the person subject to the tax, as well as the manner in
to be promulgated by the Secretary of Finance, upon which licenses and stamps shall be gathered up and
recommendation of the Commissioner. returned after serving their purposes;(h) The conditions to

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be observed by revenue officers respecting the volume of business, wage and employment levels, and
enforcement of Title III imposing a tax on estate of a similar economic factors.
decedent, and other transfers mortis causa, as well as on The penalties prescribed under Section 248 of this Code
gifts and such other rules and regulations which the shall be imposed on any violation of the rules and
Commissioner may consider suitable for the enforcement regulations issued by the Secretary of Finance, upon
of the said Title III;(i) The manner in which tax returns, recommendation of the Commissioner, prescribing the
information and reports shall be prepared and reported place of filing of returns and payments of taxes by large
and the tax collected and paid, as well as the conditions taxpayers.
under which evidence of payment shall be furnished the
taxpayer, and the preparation and publication of tax What you have to remember here is the definition of a
statistics;(j) The manner in which internal revenue taxes, large taxpayer.
such as income tax, including withholding tax, estate and
donor's taxes, value-added tax, other percentage taxes, SEC. 244. Authority of Secretary of Finance to Promulgate
excise taxes and documentary stamp taxes shall be paid Rules and Regulations. - The Secretary of Finance, upon
through the collection officers of the Bureau of Internal recommendation of the Commissioner, shall promulgate
Revenue or through duly authorized agent banks which all needful rules and regulations for the effective
are hereby deputized to receive payments of such taxes enforcement of the provisions of this Code.
and the returns, papers and statements that may be filed
by the taxpayers in connection with the payment of the
The authority to make rules and regulations is upon the
tax: Provided, however, That notwithstanding the other
Secretary of Finance, not on the Commissioner. The
provisions of this Code prescribing the place of filing of
commissioner only recommends.
returns and payment of taxes, the Commissioner may, by
rules and regulations, require that the tax returns, papers
SEC. 246. Non-Retroactivity of Rulings. - Any revocation,
and statements that may be filed by the taxpayers in
modification or reversal of any of the rules and
connection with the payment of the tax. Provided,
regulations promulgated in accordance with the
however, That notwithstanding the other provisions of this
preceding Sections or any of the rulings or circulars
Code prescribing the place of filing of returns and
promulgated by the Commissioner shall not be given
payment of taxes, the Commissioner may, by rules and
retroactive application if the revocation, modification or
regulations require that the tax returns, papers and
reversal will be prejudicial to the taxpayers, except in the
statements and taxes of large taxpayers be filed and
following cases:
paid, respectively, through collection officers or through
(a) Where the taxpayer deliberately misstates or omits
duly authorized agent banks: Provided, further, That the
material facts from his return or any document required of
Commissioner can exercise this power within six (6) years
him by the Bureau of Internal Revenue;(b) Where the facts
from the approval of Republic Act No. 7646 or the
subsequently gathered by the Bureau of Internal Revenue
completion of its comprehensive computerization
are materially different from the facts on which the ruling
program, whichever comes earlier: Provided, finally, That
is based; or(c) Where the taxpayer acted in bad faith.
separate venues for the Luzon, Visayas and Mindanao
areas may be designated for the filing of tax returns and
payment of taxes by said large taxpayers. Tax laws and other regulations are prospective in
For the purpose of this Section, "large taxpayer" means a application. Retroactive application only happens in the
taxpayer who satisfies any of the following criteria; instances enumerated in Section 246.
(1) Value-Added Tax (VAT). - Business establishment with
VAT paid or payable of at least One hundred thousand
pesos (P100,000) for any quarter of the preceding taxable LOCAL GOVERNMENT TAXATION
year;
(2) Excise Tax. - Business establishment with excise tax Q: What is the basis of the local governments power of
paid or payable of at least One million pesos (P1,000,000) taxation.
for the preceding taxable year;
(3) Corporate Income Tax. - Business establishment with A: Section 129
annual income tax paid or payable of at least One
million pesos (P1,000,000) for the preceding taxable year;
Section 129. Power to Create Sources of Revenue. - Each
and
local government unit shall exercise its power to create
(4) Withholding Tax. - Business establishment with
its own sources of revenue and to levy taxes, fees, and
withholding tax payment or remittance of at least One
charges subject to the provisions herein, consistent with
million pesos (P1,000,000) for the preceding taxable year.
the basic policy of local autonomy. Such taxes, fees, and
Provided, however, That the Secretary of Finance, upon
charges shall accrue exclusively to the local government
recommendation of the Commissioner, may modify or
units.
add to the above criteria for determining a large
taxpayer after considering such factors as inflation,

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Q: Is the power of taxation of LGUs inherent? (e) Each local government unit shall, as far as
practicable, evolve a progressive system of taxation.
A: No.
Q: Are these principles of taxation on the LGUs the same
Q: How is the power granted? principles in the states inherent power of taxation?
A: A: Yes because in our constitution the policy of the state
is that which is mirrored in the provisions herein provided.
Q: What is the role of the LGC in LGUs power of taxation?
Q: What provisions?
A: The LGC provides the scope of the power. But the
power is granted by the constitution. The LGC A: The principle that the state will promote progressive
system of taxation is also provided in the Constitution.
Q: What are these Local Government Units?
Q: How about the principle of due process?
A: Section 128.
A: The levying of taxes must only be for public purposes
Section 128. Scope. - The provisions herein shall govern and must not be excessive and confiscatory.
the exercise by provinces, cities, municipalities, and
barangays of their taxing and other revenue-raising Q: What about equal protection?
powers.
A: Taxation shall be uniform in each local government
Read Section 130. unit and that it shall be equitable and based on the
taxpayers ability to pay.

Section 130. Fundamental Principles. - The following The principles that you have learned in the states
fundamental principles shall govern the exercise of the inherent power of taxation is the same principles as
taxing and other revenue-raising powers of local provided in Section 130. They also apply in local taxation.
government units: These principles are the same but are more defined.

(a) Taxation shall be uniform in each local government Q: Who is given the authority to exercise local taxation so
unit; far as taxes are concerned?

(b) Taxes, fees, charges and other impositions shall: A: Section 132.

(1) be equitable and based as far as practicable Section 132. Local Taxing Authority. - The power to
on the taxpayer's ability to pay; 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
(2) be levied and collected only for public
appropriate ordinance.
purposes;

(3) not be unjust, excessive, oppressive, or Q: What do you mean by Sanggunian?


confiscatory;
A: Sangguniang panlalawigan, Sangguniang panlungsod
and Sangguniang bayan.
(4) not be contrary to law, public policy, national
economic policy, or in the restraint of trade; Q: What do they enact?

(c) The collection of local taxes, fees, charges and other A: They pass an ordinance for the imposition of the tax,
impositions shall in no case be let to any private person; fee or charge.

(d) The revenue collected pursuant to the provisions of Q: What does Section 133 tell us?
this Code shall inure solely to the benefit of, and be
subject to the disposition by, the local government unit A:
levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and, Section 133. Common Limitations on the Taxing Powers of
Local Government Units. - Unless otherwise provided

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herein, the exercise of the taxing powers of provinces, (n) Taxes, fees, or charges, on Countryside and Barangay
cities, municipalities, and barangays shall not extend to Business Enterprises and cooperatives duly registered
the levy of the following: under R.A. No. 6810 and Republic Act Numbered Sixty-
nine hundred thirty-eight (R.A. No. 6938) otherwise known
(a) Income tax, except when levied on banks and other as the "Cooperative Code of the Philippines" respectively;
financial institutions; and

(b) Documentary stamp tax; (o) Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities, and local
government units.
(c) Taxes on estates, inheritance, gifts, legacies and other
acquisitions mortis causa, except as otherwise provided
herein; Q: Why are these limitations provided?

(d) Customs duties, registration fees of vessel and A: So that the LGU may not exercise the power arbitrarily.
wharfage on wharves, tonnage dues, and all other kinds
of customs fees, charges and dues except wharfage on Q: What does this provision tell us?
wharves constructed and maintained by the local
government unit concerned; A: This enumeration includes all taxes that cannot be
imposed by LGUs.

(e) Taxes, fees, and charges and other impositions upon Q: Why are LGUs prohibited from imposing these taxes?
goods carried into or out of, or passing through, the
territorial jurisdictions of local government units in the A: Because these are national taxes and thus are already
guise of charges for wharfage, tolls for bridges or collected by the national government. They cannot
otherwise, or other taxes, fees, or charges in any form impose taxes already provided or given to the national
whatsoever upon such goods or merchandise; government. These taxes are already provided for in the
NIRC.
(f) Taxes, fees or charges on agricultural and aquatic
products when sold by marginal farmers or fishermen; Read Section 133 (e).

(g) Taxes on business enterprises certified to by the Board (e) Taxes, fees, and charges and other impositions upon
of Investments as pioneer or non-pioneer for a period of goods carried into or out of, or passing through, the
six (6) and four (4) years, respectively from the date of territorial jurisdictions of local government units in the
registration; guise of charges for wharfage, tolls for bridges or
otherwise, or other taxes, fees, or charges in any form
(h) Excise taxes on articles enumerated under the whatsoever upon such goods or merchandise;
national Internal Revenue Code, as amended, and taxes,
fees or charges on petroleum products; Q: What is the reason behind this provision?

(i) Percentage or value-added tax (VAT) on sales, barters A: Because if the imposition will be allowed, that will
or exchanges or similar transactions on goods or services constitute restraint of trade which is expressly prohibited
except as otherwise provided herein; in Section 130 (b)(4).

(j) Taxes on the gross receipts of transportation Just imagine if LGUs will have this ordinance, no business
contractors and persons engaged in the transportation of or trade will flourish because the cost of trade is so high
passengers or freight by hire and common carriers by air, that there will be no expected profit anymore.
land or water, except as provided in this Code;
So in Section 133, most of these taxes are already
imposed by the national government, either under the
(k) Taxes on premiums paid by way or reinsurance or
NIRC or the Tariffs and Customs Code.
retrocession;
Q: In the case of provinces, what are the taxes allowed
(l) Taxes, fees or charges for the registration of motor to be imposed?
vehicles and for the issuance of all kinds of licenses or
permits for the driving thereof, except tricycles; A: Sections 135-141.

(m) Taxes, fees, or other charges on Philippine products Q: What are the taxes allowed to be imposed by
actually exported, except as otherwise provided herein; Municipalities?

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(c) Any individual or corporation employing a person


A: Sections 143, 147, 148 and 149. subject to professional tax shall require payment by that
person of the tax on his profession before employment
Q: What are taxes fees and charges allowed to be and annually thereafter.
imposed by Cities?
(d) The professional tax shall be payable annually, on or
A: Section 151. before the thirty-first (31st) day of January. Any person first
beginning to practice a profession after the month of
Section 151. Scope of Taxing Powers. - Except as January must, however, pay the full tax before engaging
otherwise provided in this Code, the city, may levy the therein. A line of profession does not become exempt
taxes, fees, and charges which the province or even if conducted with some other profession for which
municipality may impose: Provided, however, That the the tax has been paid. Professionals exclusively
taxes, fees and charges levied and collected by highly employed in the government shall be exempt from the
urbanized and independent component cities shall payment of this tax.
accrue to them and distributed in accordance with the
provisions of this Code. (e) Any person subject to the professional tax shall write
in deeds, receipts, prescriptions, reports, books of
The rates of taxes that the city may levy may exceed the account, plans and designs, surveys and maps, as the
maximum rates allowed for the province or municipality case may be, the number of the official receipt issued to
by not more than fifty percent (50%) except the rates of him.
professional and amusement taxes.
Q: So in view of Section 139, how much professional tax
Q: What does this provision mean? can the city impose?

A: The taxing powers of provinces and municipalities A: The City shall impose the same rate as in the province,
combined constitute the taxing power of cities. which is P300.00.

Q: Is there a limit to such exercise of taxing powers? Q: How about amusement tax?

A: Section 151, second paragraph. A:

Q: provinces are authorized to imposed professional tax. Section 140. Amusement Tax.
How much is the rate?
(a) The province may levy an amusement tax to be
A:
collected from the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia,
Section 139. Professional Tax. and other places of amusement at a rate of not more
than thirty percent (30%) of the gross receipts from
(a) The province may levy an annual professional tax on admission fees.
each person engaged in the exercise or practice of his
profession requiring government examination at such (b) In the case of theaters or cinemas, the tax shall first be
amount and reasonable classification as the deducted and withheld by their proprietors, lessees, or
sangguniang panlalawigan may determine but shall in no operators and paid to the provincial treasurer before the
case exceed Three hundred pesos (P300.00). gross receipts are divided between said proprietors,
lessees, or operators and the distributors of the
(b) Every person legally authorized to practice his cinematographic films.
profession shall pay the professional tax to the province
where he practices his profession or where he maintains (c) The holding of operas, concerts, dramas, recitals,
his principal office in case he practices his profession in painting and art exhibitions, flower shows, musical
several places: Provided, however, That such person who programs, literary and oratorical presentations, except
has paid the corresponding professional tax shall be pop, rock, or similar concerts shall be exempt from the
entitled to practice his profession in any part of the payment of the tax hereon imposed.
Philippines without being subjected to any other national
or local tax, license, or fee for the practice of such (d) The sangguniang panlalawigan may prescribe the
profession. 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

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surcharges, interest and penalties as it may deem Q: If you are the provincial councilor, and you are going
appropriate. to impose an ordinance under Section 135, what rate will
you impose?
(e) The proceeds from the amusement tax shall be
shared equally by the province and the municipality A: .5% of the total amount of the consideration of the
where such amusement places are located. sale.

Q: Can the province impose a rate lesser than that rate?


Q: So how much can the Cities impose as amusement
tax? A: Yes, since the only limitation is that it must not exceed
the rate provided in the LGC.
A: The cities must impose the same rate for amusement
tax as well. So they can only impose 30% of the gross Q: What about taxes on the business of printing and
receipts as amusement tax. publication?

Q: How about in the other taxes? A: Section 136.

A: For other taxes, Cities can impose higher than those


imposed by provinces, but such increase shall be limited Section 136. Tax on Business of Printing and Publication. -
to 50% of the amount imposed by provinces. The province may impose a tax on the business of
persons engaged in the printing and/or publication of
So except in professional and amusement taxes, cities books, cards, posters, leaflets, handbills, certificates,
can impose higher taxes. receipts, pamphlets, and others of similar nature, at a rate
not exceeding fifty percent (50%) of one percent (1%) of
Q: in the case of provinces, what is the rate for the the gross annual receipts for the preceding calendar
transfer of real property ownership? year.

A: Section 135. In the case of a newly started business, the tax shall not
exceed one-twentieth (1/20) of one percent (1%) of the
Section 135. Tax on Transfer of Real Property Ownership. 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
(a) The province may impose a tax on the sale , calendar year, or any fraction thereof, as provided
donation, barter, or on any other mode of transferring herein.
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 The receipts from the printing and/or publishing of books
property or of the fair market value in case the monetary or other reading materials prescribed by the Department
consideration involved in the transfer is not substantial, of Education, Culture and Sports as school texts or
whichever is higher. The sale, transfer or other disposition references shall be exempt from the tax herein imposed.
of real property pursuant to R.A. No. 6657 shall be exempt
from this tax. Q: How about franchise tax?

(b) For this purpose, the Register of Deeds of the province A: Section 137.
concerned shall, before registering any deed, require the
presentation of the evidence of payment of this tax. The Section 137. Franchise Tax. - Notwithstanding any
provincial assessor shall likewise make the same exemption granted by any law or other special law, the
requirement before cancelling an old tax declaration province may impose a tax on businesses enjoying a
and issuing a new one in place thereof, Notaries public franchise, at the rate not exceeding fifty percent (50%) of
shall furnish the provincial treasurer with a copy of any one percent (1%) of the gross annual receipts for the
deed transferring ownership or title to any real property preceding calendar year based on the incoming receipt,
within thirty (30) days from the date of notarization. or realized, within its territorial jurisdiction.

It shall be the duty of the seller, donor, transferor, In the case of a newly started business, the tax shall not
executor or administrator to pay the tax herein imposed exceed one-twentieth (1/20) of one percent (1%) of the
within sixty (60) days from the date of the execution of the capital investment. In the succeeding calendar year,
deed or from the date of the decedent's death. regardless of when the business started to operate, the
tax shall be based on the gross receipts for the preceding

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calendar year, or any fraction thereon, as provided The RPT are what we call non-self assessing taxes, unlike
herein. internal revenue taxes and some local taxes. The tariff
and customs duties are also non-self assessing. The
Q: Does the province have the authority to immediately collector of customs is the one who will compute the
enforce the provisions of the LGC? dutiable value and the corresponding duties.

A: They first have to enact an ordinance. These powers RPT are non-self assessing because the property owner
given by the LGC are just limitations to the taxing power himself cannot determine the fair market value of his
of the LGUs. Therefore, the Sanggunian, through an property. The real property is still subject to appraisal and
ordinance will fix the rate. Not all LGUs have inhabitants assessment to determine the fair market value. It is the
who can afford the rates in the LGC. So some LGUs local assessor, whose function is to make the appraisal
impose lesser taxes. The rates that they will impose will and assessment of real properties. The end product is
depend in the capability of their taxpayers. what we call as the Tax Declaration. This is the document
that will contain the the fair market value of the property,
and the assessed value of the property. These are the
January 29 (parehong sira ang recordings namin ni ate
two figures that will be found in your Tax declaration.
jen sa day na ito, so to follow nalang to ha?
What is collected by the LGU through the Local Treasurer,
Maghahanap pa ako ng recording na maayos)
is the RPT, which is based on the assessed value multiplied
by the rate.
REAL PROPERTY TAXATION
RPT = Assessed Value x rate
Section 197. Scope. - This Title shall govern the
administration, appraisal, assessment, levy and collection The property owner may know the fair market value but
of real property tax. he would not know the assessed value, because there is
a formula for that.
In the case of Real Property Taxation (RPT), the subjects of
the tax are real properties. When you talk about real Assessed Value = Fair Market Value x Assessment Level
properties, these are the real properties as defined under
you Civil Code. They are movables, which include lands, The law in your RPT provides the percentages, which is
buildings, and all other improvement, including those called the assessment level for each kind of real property.
attached to the land. Your tax is based on the assessed value, not the fair
market value.
For RPT you have appraisal and assessment, levy and
collection. In sum, your RPT simply involves assessment in determining
the assessed value, and the collection of the tax, except
What is appraised and assessed are the real properties. those properties which are exempted. In the principles,
What is levied and collected is the tax. you have tax exemptions on RPT on the basis of actual
use (religious, charitable, educational).
Similar to local taxation, wherein you have the LGUs
having its own taxing powers, wherein the LGC provides
Section 198. Fundamental Principles. - The appraisal,
the extent of the power to the kind of taxes they are
assessment, levy and collection of real property tax shall
allowed to impose, and the imposition of these charges
be guided by the following fundamental principles:
cannot be done without the passage of a tax ordinance.
In RPT, LGUs also have to enact an ordinance to impose
the taxes authorized to them, principally the provinces (a) Real property shall be appraised at its current and fair
and the cities, under the LGC. market value;

In the case of Metro Manila, the way they enact tax (b) Real property shall be classified for assessment
ordinance, including RPT, since it is composed of different purposes on the basis of its actual use;
cities, the different cities are clustered into several
groupings. There are about four clusters. One LGU in a (c) Real property shall be assessed on the basis of a
cluster cannot impose or amend or introduce new taxes uniform classification within each local government unit;
unless with the approval of the other LGUs in the cluster.
So when an LGU gets an approval from the other LGUs
(d) The appraisal, assessment, levy and collection of real
within the cluster, they can now go to the Sanggunian to
property tax shall not be let to any private person; and
propose the ordinance. Without that conformity,
whatever ordinance they enact will be null and void.
(e) The appraisal and assessment of real property shall be
equitable.

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The principles here are the same as the states and local new replica of the property on the basis of
governments power of taxation. The subjects here current prices with the same or closely similar
however are real properties. Lets go over them one by material
one.
The property, under this approach, will be valued on the
a) Real property shall be appraised at its current and fair basis of replacement/reproduction cost.
market value;
The most common approach is the Sales approach.
The word appraisal is defined in Section 199(e).
(b) Real property shall be classified for assessment
purposes on the basis of its actual use;
(e) "Appraisal" is the act or process of
determining the value of property as of a
specified date for a specific purpose; In the NIRC the taxpayer himself determines the tax
liability. The Commissioner may also come up with an
assessment of a tax deficiency. In local taxation,
There is an appraisal for purposes of coming up with a fair assessment is made by the local treasurer. In RPT, you
market value of the property. The property owner may have Section 199 (f).
himself provide the fair market value. The LGUs may
come up with its own fair market value on the basis of its
zoning. The LGU will be zonified whether they are within (f) "Assessment" is the act or process of
commercial, residential and industrial zones, through an determining the value of a property, or proportion
ordinance. The real properties found in a specific zone thereof subject to tax, including the discovery,
will have their corresponding fair market values. listing, classification, and appraisal of properties;

Q: What is fair market value? Basically, this is the determination of the value of the
property subject to tax, or what we call the assessed
(l) "Fair Market Value" is the price at which a value
property may be sold by a seller who is not
compelled to sell and bought by a buyer who is Assessed Value = Fair Market Value x Assessment Level
not compelled to buy;
The Assessment level is the percentage applied to the fair
The fair market value may be arrived through three types market value to determine the taxable value of the
of valuation: property. That taxable value is the assessed value.

1) Sales approach (Section 199 (l)) this is the Under Section 199 (h), assessed value is defined as:
common valuation. This is usually determined
depending on the location.
2) Income Approach (Reyes vs. Omanson (?)) the (h) "Assessed Value" is the fair market value of
property of JBL Reyes was appraised by the City the real property multiplied by the assessment
of Manila, which consist of apartment dwellings. level. It is synonymous to taxable value;
When it was assessed for RPT purposes, the
assessors made a valuation on the basis of the The taxable value of the property is not the fair market
sales approach. Reyes questioned that appraisal value but the assessed value of the property. The person
claiming that sales approach is not applicable doing the assessment and appraisal is the local assessor.
because the value of the property is being The person who determines the tax to be paid is the local
restricted by the rent control law. It can only earn treasurer, who makes the levy and the collection.
so much because of the restrictions imposed by
the law. So you have this income approach.
Now let us define actual use.
Under this approach, your property may be
valued on the basis of the income that could be
generated or earned by such property. (b) "Actual Use" refers to the purpose for which
3) Replacement/Reproduction Cost (Section 199 the property is principally or predominantly
(t)) utilized by the person in possession thereof;

(t) "Replacement or Reproduction Cost" is the Whether the real property is exempted from taxation
cost that would be incurred on the basis of purposes, the exemption will always be guided by its
current prices, in acquiring an equally desirable actual use. If it is commercial and residential, it will be
substitute property, or the cost of reproducing a taxable. But if it is used for religious, charitable and

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educational purposes, it will be exempted. It is not the or juridical, owning or administering real property,
ownership that will determine exemption but its actual including the improvements therein, within a city or
use. municipality, or their duly authorized representative, to
prepare, or cause to be prepared, and file with the
(c) Real property shall be assessed on the basis of a provincial, city or municipal assessor, a sworn statement
uniform classification within each local government unit; 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
In assessing the tax, the LGU shall provide a uniform
property, as determined by the declarant. Such
classification. They have to enact an ordinance for
declaration shall contain a description of the property
purposes of not violating the equal protection clause.
sufficient in detail to enable the assessor or his deputy to
identify the same for assessment purposes. The sworn
Even if it is zoned as residential, it does not mean that you declaration of real property herein referred to shall be
cannot put there a commercial building, or have in a filed with the assessor concerned once every three (3)
commercial area the residence of the owners. In these years during the period from January first (1st) to June
cases, be guided by the actual use of the property. So thirtieth (30th) commencing with the calendar year 1992.
you apportion your assessment vis--vis the portion of the
property used as residential and that which is used as
commercial. It is the owner who will make the declaration. He will go
to the assessor to declare the value of the property,
whether previously declared or undeclared, whether
(d) The appraisal, assessment, levy and collection of real taxable or exempt. The declaration must have a
property tax shall not be let to any private person; and description of the property.

Assessment and appraisal must be done by the local


Section 203. Duty of Person Acquiring Real Property or
assessor, and the levy and collection must be done by
Making Improvement Thereon. - It shall also be the duty
the local treasurer.
of any person, or his authorized representative, acquiring
at any time real property in any municipality or city or
(e) The appraisal and assessment of real property shall be making any improvement on real property, to prepare, or
equitable. cause to be prepared, and file with the provincial, city or
municipal assessor, a sworn statement declaring the true
Remember here the principle of ability to pay. value of subject property, within sixty (60) days after the
acquisition of such property or upon completion or
occupancy of the improvement, whichever comes
Section 200. Administration of the Real Property Tax. - The
earlier.
provinces and cities, including the municipalities within
the Metropolitan Manila Area, shall be primarily
responsible for the proper, efficient and effective A real property was sold. When the ROD will issue a new
administration of the real property tax. title, the buyer must declare said title to the Assessor so
that the name of the seller in the tax declaration will be
cancelled, and the new owner will be substituted therein.
Municipalities outside Metro Manila do not enact
If the new owner is not aware of the taxes payable for
ordinance for RPT. It will be the provinces or the cities.
the property, he will not know that the property has
already been subject of an auction as a result of the
Section 201. Appraisal of Real Property. - All real property, unpaid taxes.
whether taxable or exempt, shall be appraised at the
current and fair market value prevailing in the locality This also covers making an improvement to the property.
where the property is situated. The Department of Finance Before constructing the house, you need to get a
shall promulgate the necessary rules and regulations for building permit. After the construction, you have to get
the classification, appraisal, and assessment of real an occupancy permit. This permit you will present to the
property pursuant to the provisions of this Code. local assessor to declare the newly constructed building.
So if you have a house and lot, you have to make a
This is the basic rule in the appraisal and assessment of separate declaration for the lot and the house.
property. This means that all real properties, whether
taxable or exempt, shall be declared for RPT purposes. All In agricultural lots, if it is vacant, then you have to declare
properties must have a real property tax declaration. that it is vacant. But if you start planting corn on the lot,
you have to declare such an improvement as well.
Section 202. Declaration of real Property by the Owner or
Administrator. - It shall be the duty of all persons, natural

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Section 204. Declaration of Real Property by the by the republic, all these must be declared. The
Assessor. - When any person, natural or juridical, by government is also required to make a tax declaration.
whom real property is required to be declared under
Section 202 hereof, refuses or fails for any reason to make Section 206. Proof of Exemption of Real Property from
such declaration within the time prescribed, the Taxation. - Every person by or for whom real property is
provincial, city or municipal assessor shall himself declare declared, who shall claim tax exemption for such
the property in the name of the defaulting owner, if property under this Title shall file with the provincial, city
known, or against an unknown owner, as the case may or municipal assessor within thirty (30) days from the date
be, and shall assess the property for taxation in of the declaration of real property sufficient documentary
accordance with the provision of this Title. No oath shall evidence in support of such claim including corporate
be required of a declaration thus made by the provincial, charters, title of ownership, articles of incorporation, by-
city or municipal assessor. laws, contracts, affidavits, certifications and mortgage
deeds, and similar documents.
If the owner fails to make the declaration, the assessor will
do the declaration for the owner. If the required evidence is not submitted within the period
herein prescribed, the property shall be listed as taxable
Section 205. Listing of Real Property in the Assessment in the assessment roll. However, if the property shall be
Rolls. proven to be tax exempt, the same shall be dropped
from the assessment roll.
(a) In every province and city, including the
municipalities within the Metropolitan Manila Area, there In the case of property tax exemption for religious,
shall be prepared and maintained by the provincial, city charitable and educational use, the grant is in the
or municipal assessor an assessment roll wherein shall be constitution, but it is not automatic. You have to present
listed all real property, whether taxable or exempt, proof that you are covered by that exemption.
located within the territorial jurisdiction of the local
government unit concerned. Real property shall be listed, Read with Section 234.
valued and assessed in the name of the owner or
administrator, or anyone having legal interest in the
Section 234. Exemptions from Real Property Tax. - The
property.
following are exempted from payment of the real
property tax:
(b) The undivided real property of a deceased person
may be listed, valued and assessed in the name of the
(a) Real property owned by the Republic of the
estate or of the heirs and devisees without designating
Philippines or any of its political subdivisions except when
them individually; and undivided real property other than
the beneficial use thereof has been granted, for
that owned by a deceased may be listed, valued and
consideration or otherwise, to a taxable person;
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 (b) Charitable institutions, churches, parsonages or
obligations imposed by this Title and the payment of the convents appurtenant thereto, mosques, non-profit or
real property tax with respect to the undivided property. religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;
(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. (c) All machineries and equipment that are actually,
directly and exclusively used by local water districts and
government owned or controlled corporations engaged
(d) Real property owned by the Republic of the
in the supply and distribution of water and/or generation
Philippines, its instrumentalities and political subdivisions,
and transmission of electric power;
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, (d) All real property owned by duly registered
grantee or of the public entity if such property has been cooperatives as provided for under R.A. No. 6938; and
acquired or held for resale or lease.
(e) Machinery and equipment used for pollution control
The assessment roll is the list of the real properties in the and environmental protection.
territory of the assessor, and their classifications and their
assessed values. Whether it is owned by a corporation or Except as provided herein, any exemption from payment
of real property tax previously granted to, or presently

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enjoyed by, all persons, whether natural or juridical, effect that the real property subject of the transfer,
including all government-owned or controlled alienation, or encumbrance, as the case may be, has
corporations are hereby withdrawn upon the effectivity of been fully paid of all real property taxes due thereon.
this Code. Failure to provide such certificate shall be a valid cause
for the Registrar of Deeds to refuse the registration of the
CASE: Philippine Association of Rural Electric document.
Cooperatives is a cooperative registered with the
National Electric Administration (NEA). They questioned This is for the purpose of updating both the records of the
the constitutionality of Section 234 (d), as a violation of ROD and the local assessor. In reality, the records of the
the equal protection clause as the exemption only covers ROD are more updated than the records of the local
cooperatives registered with Cooperative Development assessor.
Authority (CDA). The Supreme Court ruled that there is no
violation of equal protection because there is a Paragraph b talks about the Real Property Tax clearance.
distinction between those cooperative registered with The ROD will not issue a new title to the new owner
the NEA and those registered with the CDA. What they without this clearance, which would show that you have
could have done is to lobby in the Congress to include paid all taxes on the property.
them in the exemption.

Section 210. Duty of Official Issuing Building Permit or


This provision operated to the effect that all RPT Certificate of Registration of Machinery to Transmit Copy
exemption granted prior to the LGC was withdrawn. to Assessor. - Any public official or employee who may
However, Congress later on passed a law reinstating the now or hereafter be required by law or regulation to issue
exemptions. This involved SSS and GSIS. to any person a permit for the construction, addition,
repair, or renovation of a building, or permanent
Section 207. Real Property Identification System. - All improvement on land, or a certificate of registration for
declarations of real property made under the provisions any machinery, including machines, mechanical
of this Title shall be kept and filed under a uniform contrivances, and apparatus attached or affixed on land
classification system to be established by the provincial, or to another real property, shall transmit a copy of such
city or municipal assessor. permit or certificate within thirty (30) days of its issuance,
to the assessor of the province, city or municipality where
Section 208. Notification of Transfer of Real Property the property is situated.
Ownership. - Any person who shall transfer real property
ownership to another shall notify the provincial, city or The building officer must send copies of the buildings
municipal assessor concerned within sixty (60) days from permits it issued to the assessor in order for the latter to
the date of such transfer. The notification shall include the determine whether the construction was completed or
mode of transfer, the description of the property not.
alienated, the name and address of the transferee.
Section 211. Duty of Geodetic Engineers to Furnish Copy
Section 209. Duty of Registrar of Deeds to Appraise of Plans to Assessor. - It shall be the duty of all geodetic
Assessor of Real Property Listed in Registry. engineers, public or private, to furnish free of charge to
the assessor of the province, city or municipality where
(a) To ascertain whether or not any real property entered the land is located with a white or blue print copy of each
in the Registry of Property has escaped discovery and of all approved original or subdivision plans or maps of
listing for the purpose of taxation, the Registrar of Deeds surveys executed by them within thirty (30) days from
shall prepare and submit to the provincial, city or receipt of such plans from the Lands Management
municipal assessor, within six (6) months from the date of Bureau, the Land Registration Authority, or the Housing
effectivity of this Code and every year thereafter, an and Land Use Regulatory Board, as the case may be.
abstract of his registry, which shall include brief but
sufficient description of the real properties entered
So the geodetic engineers shall always furnish the
therein, their present owners, and the dates of their most
assessor with blueprints of all surveys they did.
recent transfer or alienation accompanied by copies of
corresponding deeds of sale, donation, or partition or
other forms of alienation. Section 212. Preparation of Schedule of Fair Market
Values. - Before any general revision of property
assessment is made pursuant to the provisions of this Title,
(b) It shall also be the duty of the Registrar of Deeds to
there shall be prepared a schedule of fair market values
require every person who shall present for registration a
by the provincial, city and municipal assessor of the
document of transfer, alienation, or encumbrance of real
municipalities within the Metropolitan Manila Area for the
property to accompany the same with a certificate to the

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different classes of real property situated in their (d) "Agricultural Land" is land devoted principally
respective local government units for enactment by to the planting of trees, raising of crops, livestock
ordinance of the sanggunian concerned. The schedule of and poultry, dairying, salt making, inland fishing
fair market values shall be published in a newspaper of and similar aquacultural activities, and other
general circulation in the province, city or municipality agricultural activities, and is not classified as
concerned or in the absence thereof, shall be posted in mineral, timber, residential, commercial or
the provincial capitol, city or municipal hall and in two industrial land;
other conspicuous public places therein.
(i) "Commercial Land" is land devoted principally
This is the role also of the assessor, to prepare a schedule for the object of profit and is not classified as
of fair market values. If the owner fails to make a agricultural, industrial, mineral, timber, or
declaration, it will be the assessor who will make a residential land;
declaration in behalf of the owner, and make the
determination of the fair market value. There are times (n) "Industrial Land" is land devoted principally to
where the fair market value of the assessor and that of industrial activity as capital investment and is not
the owner vary. The owner will always declare a lower classified as agricultural, commercial, timber,
amount. mineral or residential land;

The schedule so made by the assessor must be approved (p) "Mineral Lands" are lands in which minerals,
by the Sanggunian through the enactment of an metallic or non-metallic, exist in sufficient
ordinance, after holding public hearings on such subject. quantity or grade to justify the necessary
expenditures to extract and utilize such materials;
Section 213. Authority of Assessor to Take Evidence. - For
the purpose of obtaining information on which to base the (u) "Residential Land" is land principally devoted
market value of any real property, the assessor of the to habitation.
province, city or municipality or his deputy may summon
the owners of the properties to be affected or persons
Special land is defined in the next Section.
having legal interest therein and witnesses, administer
oaths, and take deposition concerning the property, its
ownership, amount, nature, and value. Section 216. Special Classes of Real Property. - All lands,
buildings, and other improvements thereon actually,
directly and exclusively used for hospitals, cultural, or
This is on account of disputes on the valuation of real
scientific purposes, and those owned and used by local
properties.
water districts, and government-owned or controlled
corporations rendering essential public services in the
Section 214. Amendment of Schedule of Fair Market supply and distribution of water and/or generation and
Values. - The provincial, city or municipal assessor may transmission of electric power shall be classified as
recommend to the sanggunian concerned amendments special.
to correct errors in valuation in the schedule of fair market
values. The sanggunian concerned shall, by ordinance,
In classifying lands among these spcial classes, an
act upon the recommendation within ninety (90) days
ordinance must be enacted. This ordinance is called as
from receipt thereof.
the Zoning Ordinance.

Section 215. Classes of Real Property for Assessment


Purposes. - For purposes of assessment, real property shall Section 217. Actual Use of Real Property as Basis for
be classified as residential, agricultural, commercial, Assessment. - Real property shall be classified, valued
industrial, mineral, timberland or special. and assessed on the basis of its actual use regardless of
where located, whoever owns it, and whoever uses it.
The city or municipality within the Metropolitan Manila
Area, through their respective sanggunian, shall have the Section 218. Assessment Levels. - The assessment levels to
power to classify lands as residential, agricultural, be applied to the fair market value of real property to
commercial, industrial, mineral, timberland, or special in determine its assessed value shall be fixed by ordinances
accordance with their zoning ordinances. of the sangguniang panlalawigan, sangguniang
panlungsod or sangguniang bayan of a municipality
within the Metropolitan Manila Area, at the rates not
The definition of the classes of lands enumerated in the exceeding the following:
provision is found in Section 199.

(a) On Lands:

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CLASS ASSESSMENT LEVELS P300,000.00 500,000.00 35%

Residential 20% 500,000.00 750,000.00 40%

Agricultural 40% 750,000.00 1,000,000.00 50%

Commercial 50% 1,000,000.00 2,000,000.00 60%

Industrial 50% 2,000,000.00 5,000,000.00 70%

Mineral 50% 5,000,000.00 10,000,000.00 75%

Timberland 20% 10,000,000.00 80%

(4) Timberland
(b) On Buildings and Other Structures: Fair Market Value

Over Not Over Assessment Levels


<td P300,000.00 45%
</td
P300,000.00 500,000.00 50%
(1) Residential
Fair market Value 500,000.00 750,000.00 55%
Over Not Over Assessment Levels 750,000.00 1,000,000.00 60%
P175,000.00 0% 5,000,000.00 2,000,000.00 65%
P175,000.00 300,000.00 10% 2,000,000.00 70%
300,000.00 500,000.00 20%
(c) On Machineries
500,000.00 750,000.00 25%

750,000.00 1,000,000.00 30% Class Assessment Levels


1,000,000.00 2,000,000.00 35% Agricultural 40%
2,000,000.00 5,000,000.00 40% Residential 50%
5,000,000.00 10,000,000.00 50% Commercial 80%
10,000,000.00 60% Industrial 80%
(2) Agricultural
Fair Market Value (d) On Special Classes: The assessment levels for
Over Not Over Assessment Levels all lands buildings, machineries and other
improvements;
P300,000.00 25%

P300,000.00 500,000.00 30% Actual Use Assessment


Level
500,000.00 750,000.00 35%
Cultural 15%
750,000.00 1,000,000.00 40%
Scientific 15%
1,000,000.00 2,000,000.00 45%
Hospital 15%
2,000,000.00 50%
Local water districts 10%
(3) Commercial / Industrial
Fair Market Value Government-owned or 10%
controlled corporations
Over Not Over Assessment Levels engaged in the supply and
distribution of water and/or
P300,000.00 30%
generation and transmission of

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electric power valuation thereon: Provided, however, That the


assessment of real property shall not be increased oftener
than once every three (3) years except in case of new
You must also have these assessment levels adopted improvements substantially increasing the value of said
through an ordinance. The application of this provision is property or of any change in its actual use.
not therefore automatic.
Section 221. Date of Effectivity of Assessment or
*Dean proceeded to read the values* Reassessment. - All assessments or reassessments made
after the first (1st) day of January of any year shall take
Remember the formula for assessed value and RPT 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
Assessed Value = Fair Market Value x Assessment Level major change in its actual use, or to any great and
sudden inflation or deflation of real property values, or to
RPT = Assessed Value x rate the gross illegality of the assessment when made or to
any other abnormal cause, shall be made within ninety
The rate is fixed by law, which shall also be embodied in (90) days from the date any such cause or causes
an ordinance. What is constant here are the rate and the occurred, and shall take effect at the beginning of the
assessment level. The variable is the Assessed value and quarter next following the reassessment.
the fair market value.
New assessments/valuations/appraisals takes effect on
Example: the beginning of the next year.
Year 1
Assessment level = 20% If the ordinance on RPT adjusting the rates, the effectivity
FMV=1,000,000 will always be on January 1 of the following year, even if it
Rate=2% was approved in the middle of the year.

Assessed value = 1,000,000 x 30% In local taxation, the ordinance will take effect on the first
Assessed value = 200,000 day of the quarter following the effectivity of such
ordinance.
RPT = 200,000 x 2%
RPT = 4,000 Section 222. Assessment of Property Subject to Back
Taxes. - Real property declared for the first time shall be
Year 5 assessed for taxes for the period during which it would
FMV=1,500,000 have been liable but in no case of more than ten (10)
years prior to the date of initial assessment: Provided,
Assessed value = 1,500,000 x 30% however, That such taxes shall be computed on the basis
Assessed value = 450,000 of the applicable schedule of values in force during the
corresponding period.
RPT = 450,000 x 2%
RPT = 9,000
If such taxes are paid on or before the end of the quarter
following the date the notice of assessment was received
Section 219. General Revision of Assessment and Property by the owner or his representative, no interest for
Classification. - The provincial, city or municipal assessor delinquency shall be imposed thereon; otherwise, such
shall undertake a general revision of real property taxes shall be subject to an interest at the rate of two
assessments within two (2) years after the effectivity of this percent (2%) per month or a fraction thereof from the
Code and every three (3) years thereafter. date of the receipt of the assessment until such taxes are
fully paid.
Section 220. Valuation of Real Property. - In cases where
(a) real property is declared and listed for taxation Section 223. Notification of New or Revised Assessment. -
purposes for the first time; (b) there is an ongoing general When real property is assessed for the first time or when
revision of property classification and assessment; or (c) a an existing assessment is increased or decreased, the
request is made by the person in whose name the provincial, city or municipal assessor shall within thirty
property is declared, the provincial, city or municipal (30) days give written notice of such new or revised
assessor or his duly authorized deputy shall, in assessment to the person in whose name the property is
accordance with the provisions of this Chapter, make a declared. The notice may be delivered personally or by
classification, appraisal and assessment or taxpayer's registered mail or through the assistance of the punong

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barangay to the last known address of the person to be regarding the valuation of the property. From that notice
served. of assessment, the taxpayer is given 60 days to appeal
file before the Local board of Assessment Appeals.
Section 224. Appraisal and Assessment of Machinery.
Section 227. Organization, Powers, Duties, and Functions
(a) The fair market value of a brand-new machinery shall of the Local Board of Assessment Appeals.
be the acquisition cost. In all other cases, the fair market
value shall be determined by dividing the remaining (a) The Board of Assessment Appeals of the province or
economic life of the machinery by its estimated city shall be composed of the Registrar of Deeds, as
economic life and multiplied by the replacement or Chairman, the provincial or city prosecutor and the
reproduction cost. provincial, or city engineer as members, who shall serve
as such in an ex officio capacity without additional
(b) If the machinery is imported, the acquisition cost compensation.
includes freight, insurance, bank and other charges,
brokerage, arrastre and handling, duties and taxes, plus (b) The chairman of the Board shall have the power to
charges at the present site. The cost in foreign currency of designate any employee of the province or city to serve
imported machinery shall be converted to peso cost on as secretary to the Board also without additional
the basis of foreign currency exchange rates as fixed by compensation.
the Central Bank.
(c) The chairman and members of the Board of
Section 225. Depreciation Allowance for Machinery. - For Assessment Appeals of the province or city shall assume
purposes of assessment, a depreciation allowance shall their respective positions without need of further
be made for machinery at a rate not exceeding five appointment or special designations immediately upon
percent (5%) of its original cost or its replacement or effectivity of this Code. They shall take oath or affirmation
reproduction cost, as the case may be, for each year of of office in the prescribed form.
use: Provided, however, That the remaining value for all
kinds of machinery shall be fixed at not less than twenty (d) In provinces and cities without a provincial or city
percent (20%) of such original, replacement, or engineer, the district engineer shall serve as member of
reproduction cost for so long as the machinery is useful the Board. In the absence of the Registrar of Deeds, or the
and in operation. provincial or city prosecutor, or the provincial or city
engineer, or the district engineer, the persons performing
ASSESSMENT APPEALS their duties, whether in an acting capacity or as a duly
designated officer-in-charge, shall automatically
The usual controversy before the assessors office involves become the chairman or member, respectively, of the
the valuation of the fair market value of the property. The said Board, as the case may be.
owner and the assessor will oftentimes disagree on the
value. This composes the Local Board of Assessment Appeals.

Section 226. Local Board of Assessment Appeals. - Any Section 228. Meetings and Expenses of the Local Board of
owner or person having legal interest in the property who Assessment Appeals.
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 (a) The Board of Assessment Appeals of the province or
written notice of assessment, appeal to the Board of city shall meet once a month and as often as may be
Assessment Appeals of the provincial or city by filing a necessary for the prompt disposition of appealed cases.
petition under oath in the form prescribed for the purpose, No member of the Board shall be entitled to per diems or
together with copies of the tax declarations and such traveling expenses for his attendance in Board meetings,
affidavits or documents submitted in support of the except when conducting an ocular inspection in
appeal. connection with a case under appeal.

(b) All expenses of the Board shall be charged against


This is what will happen if there will be no agreement.
the general fund of the province or city, as the case may
be. The sanggunian concerned shall appropriate the
The assessor will issue an assessment notice. This is necessary funds to enable the Board in their respective
different from the assessment in the NIRC. In NIRC, the localities to operate effectively.
assessment pertains to deficient taxes. Here, the
assessment contains the decision of the assessor

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Section 229. Action by the Local Board of Assessment rank of Director III under the Salary Standardization Law
Appeals. exclusive of allowances and other emoluments. The
members of the Board shall have the salary grade
(a) The Board shall decide the appeal within one hundred equivalent to the rank of Director II under the Salary
twenty (120) days from the date of receipt of such Standardization Law exclusive of allowances and other
appeal. The Board, after hearing, shall render its decision emoluments. The Board shall have appellate jurisdiction
based on substantial evidence or such relevant evidence over all assessment cases decided by the Local Board of
on record as a reasonable mind might accept as Assessment Appeals.
adequate to support the conclusion.
There shall be Hearing Officers to be appointed by the
Central Board of Assessment Appeals pursuant to civil
(b) In the exercise of its appellate jurisdiction, the Board
shall have the power to summon witnesses, administer service laws, rules and regulations, one each for Luzon,
oaths, conduct ocular inspection, take depositions, and Visayas and Mindanao, who shall hold office in Manila,
issue subpoena and subpoena duces tecum. The Cebu City and Cagayan de Oro City, respectively, and
proceedings of the Board shall be conducted solely for who shall serve for a term of six (6) years, without
the purpose of ascertaining the facts without necessarily reappointment until their successors have been
adhering to technical rules applicable in judicial appointed and qualified. The Hearing Officers shall have
proceedings. the same qualifications as that of the Judges of the
Municipal Trial Courts.

(c) The secretary of the Board shall furnish the owner of


the property or the person having legal interest therein The Central Board Assessment Appeals, in the
and the provincial or city assessor with a copy of the performance of its powers and duties, may establish and
organize staffs, offices, units, prescribe the titles, functions
decision of the Board. In case the provincial or city
and duties of their members and adopt its own rules and
assessor concurs in the revision or the assessment, it shall
regulations.
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 Unless otherwise provided by law, the annual
property or the person having legal interest therein or the appropriations for the Central Board of Assessment
assessor who is not satisfied with the decision of the Appeals shall be included in the budget of the
Board, may, within thirty (30) days after receipt of the Department of Finance in the corresponding General
decision of said Board, appeal to the Central Board of Appropriations Act.
Assessment Appeals, as herein provided. The decision of
the Central Board shall be final and executory. Under RA 9504, the decision of the Central Board is
brought to the Court of Tax Appeals. This is where the
The decision of the board will either grant or deny the action is converted to a judicial action. From the CTA,
appeal made by the taxpayers. you go to the Supreme Court.

In case of a denial, the property owner, or the assessor Section 231. Effect of Appeal on the Payment of Real
will go to the Central Board of Assessment Appeals. Property Tax. - Appeal on assessments of real property
made under the provisions of this Code shall, in no case,
Section 230. Central Board of Assessment Appeals. - The suspend the collection of the corresponding realty taxes
Central Board of Assessment Appeals shall be composed on the property involved as assessed by the provincial or
of a chairman, and two (2) members to be appointed by city assessor, without prejudice to subsequent adjustment
the President, who shall serve for a term of seven (7) depending upon the final outcome of the appeal.
years, without reappointment. Of those first appointed,
the chairman shall hold office for seven (7) years, one Pending appeal before the local board or the central
member for five (5) years, and the other member for three board, the collection of the real property tax is not
(3) years. Appointment to any vacancy shall be only for suspended. But if at the end of all the proceedings the
the unexpired portion of the term of the predecessor. In court will decide in favor of the taxpayer, any excess in
no case shall any member be appointed or designated in the payments made by him during the pendency of the
a temporary or acting capacity. The chairman and the action will be considered as tax credits, to be applied to
members of the Board shall be Filipino citizens, at least future tax liabilities.
forty (40) years old at the time of their appointment, and
members of the Bar or Certified Public Accountants for at LEVY AND COLLECTION
least ten (10) years immediately preceding their
appointment. The chairman of the Board of Assessment
Appeals shall have the salary grade equivalent to the

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Section 232. Power to Levy Real Property Tax. - A province In RPT, what is collected is the basic RPT and the special
or city or a municipality within the Metropolitan Manila levies. Special levies are provided in Section 235, 236 and
Area my levy an annual ad valorem tax on real property 240.
such as land, building, machinery, and other
improvement not hereinafter specifically exempted. What is regularly collected is the basic RPT and the 1%
SEF. The special levy on idle lands is applied only if the
Section 233. Rates of Levy. - A province or city or a land is found to be idle.
municipality within the Metropolitan Manila Area shall fix
a uniform rate of basic real property tax applicable to Section 235. Additional Levy on Real Property for the
their respective localities as follows: Special Education Fund. - A province or city, or a
municipality within the Metropolitan Manila Area, may
(a) In the case of a province, at the rate not exceeding levy and collect an annual tax of one percent (1%) on
one percent (1%) of the assessed value of real property; the assessed value of real property which shall be in
and addition to the basic real property tax. The proceeds
thereof shall exclusively accrue to the Special Education
(b) In the case of a city or a municipality within the Fund (SEF).
Metropolitan Manila Area, at the rate not exceeding two
percent (2%) of the assessed value of real property. This is for the benefit of the Local School Board, for the
upkeep of the public schools.
There is no flexibility provision here. Once you have
reached the maximum value, you cannot go any further. Section 236. Additional Ad Valorem Tax on Idle Lands. - A
province or city, or a municipality within the Metropolitan
Section 234. Exemptions from Real Property Tax. - The Manila Area, may levy an annual tax on idle lands at the
following are exempted from payment of the real rate not exceeding five percent (5%) of the assessed
property tax: value of the property which shall be in addition to the
basic real property tax.
(a) Real property owned by the Republic of the
Philippines or any of its political subdivisions except when Section 237. Idle Lands, Coverage. - For purposes of real
the beneficial use thereof has been granted, for property taxation, idle lands shall include the following:
consideration or otherwise, to a taxable person;
(a) Agricultural lands, more than one (1) hectare in area,
(b) Charitable institutions, churches, parsonages or suitable for cultivation, dairying, inland fishery, and other
convents appurtenant thereto, mosques, non-profit or agricultural uses, one-half (1/2) of which remain
religious cemeteries and all lands, buildings, and uncultivated or unimproved by the owner of the property
improvements actually, directly, and exclusively used for or person having legal interest therein. Agricultural lands
religious, charitable or educational purposes; 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
(c) All machineries and equipment that are actually,
not be considered idle lands.
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 (b) Lands, other than agricultural, located in a city or
and transmission of electric power; 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
(d) All real property owned by duly registered
having legal interest therein.
cooperatives as provided for under R.A. No. 6938; and

Regardless of land area, this Section shall likewise apply


(e) Machinery and equipment used for pollution control
to residential lots in subdivisions duly approved by proper
and environmental protection.
authorities, the ownership of which has been transferred
to individual owners, who shall be liable for the additional
Except as provided herein, any exemption from payment tax: Provided, however, That individual lots of such
of real property tax previously granted to, or presently subdivisions, the ownership of which has not been
enjoyed by, all persons, whether natural or juridical, transferred to the buyer shall be considered as part of the
including all government-owned or controlled subdivision, and shall be subject to the additional tax
corporations are hereby withdrawn upon the effectivity of payable by subdivision owner or operator.
this Code.

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Section 238. Idle Lands Exempt from Tax. - A province or computation of the special levy, to establish a uniform
city or a municipality within the Metropolitan Manila Area percentage of all lands subject to the payment of the tax
may exempt idle lands from the additional levy by reason for the entire district, but it may fix different rates for
of force majeure, civil disturbance, natural calamity or different parts or sections thereof, depending on whether
any cause or circumstance which physically or legally such land is more or less benefited by proposed work.
prevents the owner of the property or person having legal
interest therein from improving, utilizing or cultivating the So again, you have to enact an ordinance for this special
same. levy.

So even if your land is idle, you can be exempted from Section 242. Publication of Proposed Ordinance Imposing
tax for valid reasons enumerated in the provision above. a Special Levy. - Before the enactment of an ordinance
imposing a special levy, the sanggunian concerned shall
Section 239. Listing of Idle Lands by the Assessor. - The conduct a public hearing thereon; notify in writing the
provincial, city or municipal assessor shall make and owners of the real property to be affected or the persons
keep an updated record of all idle lands located within having legal interest therein as to the date and place
his area of jurisdiction. For purposes of collection, the thereof and afford the latter the opportunity to express
provincial, city or municipal assessor shall furnish a copy their positions or objections relative to the proposed
thereof to the provincial or city treasurer who shall notify, ordinance.
on the basis of such record, the owner of the property or
person having legal interest therein of the imposition of Section 243. Fixing the Amount of Special Levy. - The
the additional tax. special levy authorized herein shall be apportioned,
computed, and assessed according to the assessed
Section 240. Special Levy by Local Government Units. - A valuation of the lands affected as shown by the books of
province, city or municipality may impose a special levy the assessor concerned, or its current assessed value as
on the lands comprised within its territorial jurisdiction fixed by said assessor if the property does not appear of
specially benefited by public works projects or record in his books. Upon the effectivity of the ordinance
improvements funded by the local government unit imposing special levy, the assessor concerned shall
concerned: Provided, however, That the special levy shall forthwith proceed to determine the annual amount of
not exceed sixty percent (60%) of the actual cost of such special levy assessed against each parcel of land
projects and improvements, including the costs of comprised within the area especially benefited and shall
acquiring land and such other real property in send to each landowner a written notice thereof by mail,
connection therewith: Provided, further, That the special personal service or publication in appropriate cases.
levy shall not apply to lands exempt from basic real
property tax and the remainder of the land portions of Section 244. Taxpayer's Remedies Against Special Levy. -
which have been donated to the local government unit Any owner of real property affected by a special levy or
concerned for the construction of such projects or any person having a legal interest therein may, upon
improvements. receipt of the written notice of assessment of the special
levy, avail of the remedies provided for in Chapter 3, Title
Special levies operate as a form of reimbursement to the Two, Book II of this Code.
LGU for introducing development. Because they
invested, they have the right to recover through this Section 245. Accrual of Special Levy. - The special levy
special assessment. So this special levy is not a tax. shall accrue on the first day of the quarter next following
the effectivity of the ordinance imposing such levy.
If the development was made in front of your property,
you will be assessed more than those whose property are So you just follow the procedure in Chapter 3 of Title two
father away from the development. for your remedies as a taxpayer against special levies.

Section 241. Ordinance Imposing a Special Levy. - A tax In the case of local taxes, any amendment or revisions on
ordinance imposing a special levy shall describe with local tax ordinances, the accrual of the tax under the
reasonable accuracy the nature, extent, and location of new ordinance takes effect on the first day of the quarter
the public works projects or improvements to be following the effectivity of the ordinance. In RPT, if an
undertaken, state the estimated cost thereof, specify the ordinance is enacted, the accrual of the tax will begin on
metes and bounds by monuments and lines and the the first day of January of the following year. But in the
number of annual installments for the payment of the case of a special levy, it shall accrue on the first day of
special levy which in no case shall be less than five (5) the quarter following the date of the enactment of the
nor more than ten (10) years. The sanggunian concerned ordinance.
shall not be obliged, in the apportionment and

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Section 246. Date of Accrual of Tax. - The real property conspicuous and publicly accessible place at the city or
tax for any year shall accrue on the first day of January municipal hall. Said notice shall likewise be published in
and from that date it shall constitute a lien on the property a newspaper of general circulation in the locality once a
which shall be superior to any other lien, mortgage, or week for two (2) consecutive weeks.
encumbrance of any kind whatsoever, and shall be
extinguished only upon the payment of the delinquent Section 250. Payment of Real Property Taxes in
tax. Installments. - The owner of the real property or the
person having legal interest therein may pay the basic
Section 247. Collection of Tax. - The collection of the real real property tax and the additional tax for Special
property tax with interest thereon and related expenses, Education Fund (SEF) due thereon without interest in four
and the enforcement of the remedies provided for in this (4) equal installments; the first installment to be due and
Title or any applicable laws, shall be the responsibility of payable on or before March Thirty-first (31st); the second
the city or municipal treasurer concerned. installment, on or before June Thirty (30); the third
installment, on or before September Thirty (30); and the
The city or municipal treasurer may deputize the last installment on or before December Thirty-first (31st),
barangay treasurer to collect all taxes on real property except the special levy the payment of which shall be
located in the barangay: Provided, That the barangay governed by ordinance of the sanggunian concerned.
treasurer is properly bonded for the purpose: Provided,
further, That the premium on the bond shall be paid by The date for the payment of any other tax imposed under
the city or municipal government concerned. this Title without interest shall be prescribed by the
sanggunian concerned.
RPT will be collected by the local treasurer. As a rule, the
RPT collected by the LGU is the basic RPT and the SEF. Payments of real property taxes shall first be applied to
These are the two RPT that will be collected. The other prior years delinquencies, interests, and penalties, if any,
special levies, involving idle lands, is a special imposition and only after said delinquencies are settled may tax
to lands which has been declared as idle; and the other payments be credited for the current period.
is for reimbursement for development introduced by
LGUs. Section 251. Tax Discount for Advanced Prompt
Payment. - If the basic real property tax and the
Payment of these taxes could be done annually or additional tax accruing to the Special Education Fund
quarterly installments, pursuant to Section 250. (SEF) are paid in advance in accordance with the
prescribed schedule of payment as provided under
Section 250, the sanggunian concerned may grant a
The LGC only provides the limits of the power. The LGUs
discount not exceeding twenty percent (20%) of the
have to enact an ordinance so that the provisions
annual tax due.
allowed to them under the LGC may be imposed.

Section 252. Payment Under Protest.


So the payment of installments and the granting of
discounts shall be embodied in an ordinance.
(a) No protest shall be entertained unless the taxpayer
first pays the tax. There shall be annotated on the tax
Section 248. Assessor to Furnish Local Treasurer with receipts the words "paid under protest". The protest in
Assessment Roll. - The provincial, city or municipal writing must be filed within thirty (30) days from payment
assessor shall prepare and submit to the treasurer of the of the tax to the provincial, city treasurer or municipal
local government unit, on or before the thirty-first (31st) treasurer, in the case of a municipality within Metropolitan
day of December each year, an assessment roll Manila Area, who shall decide the protest within sixty (60)
containing a list of all persons whose real properties have days from receipt.
been newly assessed or reassessed and the values of
such properties.
(b) The tax or a portion thereof paid under protest, shall
be held in trust by the treasurer concerned.
Section 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 (c) In the event that the protest is finally decided in favor
of the taxpayer, the amount or portion of the tax
real property tax and the additional tax for the Special
protested shall be refunded to the protestant, or applied
Education Fund (SEF) or any other date to be prescribed
as tax credit against his existing or future tax liability.
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 (d) In the event that the protest is denied or upon the
lapse of the sixty day period prescribed in subparagraph

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(a), the taxpayer may avail of the remedies as provided It is also required that the local treasurer decide within
for in Chapter 3, Title II, Book II of this Code. that period. After which, the taxpayer will bring the
action to the local board of assessment appeals.
When the property owner is engaged in a controversy
with the local treasurer involving RPT assessment in There are therefore four types of cases that you bring to
connection with the amount, Section 252 has to be the local board.
complied with. You are first made to pay the tax and pay
it under protest. No protest will be entertained unless the Section 254. Notice of Delinquency in the Payment of the
taxpayer pays the tax. Real Property Tax.

In the RPT involving appeals, you have encountered (a) When the real property tax or any other tax imposed
protests against the assessment of the local assessor. Your under this Title becomes delinquent, the provincial, city or
remedy is to file a petition with the local board of municipal treasurer shall immediately cause a notice of
assessment appeals. From there, you appeal to the the delinquency to be posted at the main hall and in a
central board of assessment appeals. And then you bring publicly accessible and conspicuous place in each
it to the CTA and to the Supreme Court. barangay of the local government unit concerned. The
notice of delinquency shall also be published once a
This procedure is the same as those involving special week for two (2) consecutive weeks, in a newspaper of
levies. general circulation in the province, city, or municipality.

In matters involving the payment of the RPT, the venue is (b) Such notice shall specify the date upon which the tax
the Office is the Local Treasurer. What is required is you became delinquent and shall state that personal property
have to pay under protest and indicate in the receipts may be distrained to effect payment. It shall likewise
that you are paying under protest. And then you file the state that any time before the distraint of personal
protest with the local treasurer. The local treasurer may property, payment of the tax with surcharges, interests
either grant or deny your appeal. In the event the protest and penalties may be made in accordance with the next
is decided in favor of the taxpayer, the tax paid must be following Section, and unless the tax, surcharges and
refunded or applied as tax credit. In the event the protest penalties are paid before the expiration of the year for
is denied or lapse of the 60 day period prescribed, you which the tax is due except when the notice of
now proceed to the local board of assessment appeals. assessment or special levy is contested administratively
You would notice that all matters involving RPT will all pass or judicially pursuant to the provisions of Chapter 3, Title II,
through the local board, whether the controversy Book II of this Code, the delinquent real property will be
originated in the assessor or the treasurer. sold at public auction, and the title to the property will be
vested in the purchaser, subject, however, to the right of
Section 253. Repayment of Excessive Collections. - When the delinquent owner of the property or any person
an assessment of basic real property tax, or any other tax having legal interest therein to redeem the property
levied under this Title, is found to be illegal or erroneous within one (1) year from the date of sale.
and the tax is accordingly reduced or adjusted, the
taxpayer may file a written claim for refund or credit for This involves delinquency in paying RPT. In the event the
taxes and interests with the provincial or city treasurer taxpayer fails to pay the RPT, he will be notified. The LGU
within two (2) years from the date the taxpayer is entitled will publish in a newspaper the list of delinquent
to such reduction or adjustment. taxpayers.

The provincial or city treasurer shall decide the claim for It is in this aspect that the RPT will become a lien. That lien
tax refund or credit within sixty (60) days from receipt of the LGU is superior to any other liens on that property.
thereof. In case the claim for tax refund or credit is Even if there is an existing encumbrance, in the event of
denied, the taxpayer may avail of the remedies as a delinquency in RPT, the claim of the government will be
provided in Chapter 3, Title II, Book II of this Code. superior.

This involves erroneously collected RPT. In the case of a It is also in this manner where if you are a new owner of a
refund, file the claim with the local treasurer. The treasurer real property, you must have that real property declared
may either grant the refund or deny it. In case of a so that you will have a new tax declaration. If you fail to
denial, you appeal to the local board of assessment make a new declaration in the records of the assessor, it
appeals. The taxpayers may claim a refund within two will still be the former owner that will be written there. The
years from the date the taxpayer becomes entitled to notices will still be sent to the previous owner. The new
such adjustment. owner will not be aware therefore that his property has
already been sold at public auction. And without such

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knowledge, the new owner will also not be able to the tax declaration and certificate of title of the property,
redeem the property in case the property has already respectively.
been sold.
The levying officer shall submit a report on the levy to the
Section 255. Interests on Unpaid Real Property Tax. - In sanggunian concerned within ten (10) days after receipt
case of failure to pay the basic real property tax or any of the warrant by the owner of the property or person
other tax levied under this Title upon the expiration of the having legal interest therein.
periods as provided in Section 250, or when due, as the
case may be, shall subject the taxpayer to the payment If the property is not enough, you can further levy other
of interest at the rate of two percent (2%) per month on properties.
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 Section 259. Penalty for Failure to Issue and Execute
unpaid tax or portion thereof exceed thirty-six (36) Warrant. - Without prejudice to criminal prosecution
months. under the Revised Penal Code and other applicable laws,
any local treasurer or his deputy who fails to issue or
execute the warrant of levy within one (1) year from the
Section 256. Remedies For The Collection Of Real Property
time the tax becomes delinquent or within thirty (30) days
Tax. - For the collection of the basic real property tax and
from the date of the issuance thereof, or who is found
any other tax levied under this Title, the local government guilty of abusing the exercise thereof in an administrative
unit concerned may avail of the remedies by or judicial proceeding shall be dismissed from the
administrative action thru levy on real property or by service.
judicial action.

Section 260. Advertisement and Sale. - Within thirty (30)


Section 257. Local Governments Lien. - The basic real
days after service of the warrant of levy, the local
property tax and any other tax levied under this Title treasurer shall proceed to publicly advertise for sale or
constitutes a lien on the property subject to tax, superior auction the property or a usable portion thereof as may
to all liens, charges or encumbrances in favor of any be necessary to satisfy the tax delinquency and
person, irrespective of the owner or possessor thereof,
expenses of sale. The advertisement shall be effected by
enforceable by administrative or judicial action, and may
posting a notice at the main entrance of the provincial,
only be extinguished upon payment of the tax and the
city or municipal building, and in a publicly accessible
related interests and expenses.
and conspicuous place in the barangay where the real
property is located, and by publication once a week for
Section 258. Levy on Real Property. - After the expiration two (2) weeks in a newspaper of general circulation in
of the time required to pay the basic real property tax or the province, city or municipality where the property is
any other tax levied under this Title, real property subject located. The advertisement shall specify the amount of
to such tax may be levied upon through the issuance of a the delinquent tax, the interest due thereon and expenses
warrant on or before, or simultaneously with, the institution of sale, the date and place of sale, the name of the
of the civil action for the collection of the delinquent tax. owner of the real property or person having legal interest
The provincial or city treasurer, or a treasurer of a therein, and a description of the property to be sold. At
municipality within the Metropolitan Manila Area, as the any time before the date fixed for the sale, the owner of
case may be, when issuing a warrant of levy shall the real property or person having legal interest therein
prepare a duly authenticated certificate showing the may stay the proceedings by paying the delinquent tax,
name of the delinquent owner of the property or person the interest due thereon and the expenses of sale. The
having legal interest therein, the description of the sale shall be held either at the main entrance of the
property, the amount of the tax due and the interest provincial, city or municipal building, or on the property
thereon. The warrant shall operate with the force of a to be sold, or at any other place as specified in the notice
legal execution throughout the province, city or a of the sale.
municipality, within the Metropolitan Manila Area. The
warrant shall be mailed to or served upon the delinquent Within thirty (30) days after the sale, the local treasurer or
owner of the real property or person having legal interest his deputy shall make a report of the sale to the
therein, or in case he is out of the country or cannot be sanggunian concerned, and which shall form part of his
located, the administrator or occupant of the property. At records. The local treasurer shall likewise prepare and
the same time, written notice of the levy with the deliver to the purchaser a certificate of sale which shall
attached warrant shall be mailed to or served upon the contain the name of the purchaser, a description of the
assessor and the Registrar of Deeds of the province, city property sold, the amount of the delinquent tax, the
or municipality within the Metropolitan Manila Area where interest due thereon, the expenses of sale and a brief
the property is located, who shall annotate the levy on description of the proceedings: Provided, however, That

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proceeds of the sale in excess of the delinquent tax, the his office. It shall be the duty of the Registrar of Deeds
interest due thereon, and the expenses of sale shall be concerned upon registration with his office of any such
remitted to the owner of the real property or person declaration of forfeiture to transfer the title of the forfeited
having legal interest therein. property to the local government unit concerned without
the necessity of an order from a competent court.
The local treasurer may, by ordinance duly approved,
advance an amount sufficient to defray the costs of Within one (1) year from the date of such forfeiture, the
collection thru the remedies provided for in this Title, taxpayer or any of his representative, may redeem the
including the expenses of advertisement and sale. property by paying to the local treasurer the full amount
of the real property tax and the related interest and the
Section 261. Redemption of Property Sold. - Within one (1) costs of sale. If the property is not redeemed as provided
year from the date of sale, the owner of the delinquent herein, the ownership thereof shall be vested on the local
real property or person having legal interest therein, or his government unit concerned.
representative, shall have the right to redeem the
property upon payment to the local treasurer of the Section 264. Resale of Real Estate Taken for Taxes, Fees,
amount of the delinquent tax, including the interest due or Charges. - The sanggunian concerned may, by
thereon, and the expenses of sale from the date of ordinance duly approved, and upon notice of not less
delinquency to the date of sale, plus interest of not more than twenty (20) days, sell and dispose of the real
than two percent (2%) per month on the purchase price property acquired under the preceding section at public
from the date of sale to the date of redemption. Such auction. The proceeds of the sale shall accrue to the
payment shall invalidate the certificate of sale issued to general fund of the local government unit concerned.
the purchaser and the owner of the delinquent real
property or person having legal interest therein shall be Section 265. Further Distraint or Levy. - Levy may be
entitled to a certificate of redemption which shall be repeated if necessary until the full amount due, including
issued by the local treasurer or his deputy. all expenses, is collected.

From the date of sale until the expiration of the period of Section 266. Collection of Real Property Tax Through the
redemption, the delinquent real property shall remain in Courts. - The local government unit concerned may
possession of the owner or person having legal interest enforce the collection of the basic real property tax or
therein who shall be entitled to the income and other any other tax levied under this Title by civil action in any
fruits thereof. court of competent jurisdiction. The civil action shall be
filed by the local treasurer within the period prescribed in
The local treasurer or his deputy, upon receipt from the Section 270 of this Code.
purchaser of the certificate of sale, shall forthwith return to
the latter the entire amount paid by him plus interest of Section 267. Action Assailing Validity of Tax Sale. - No
not more than two percent (2%) per month. Thereafter, court shall entertain any action assailing the validity or
the property shall be free from lien of such delinquent tax, any sale at public auction of real property or rights
interest due thereon and expenses of sale. therein under this Title until the taxpayer shall have
deposited with the court the amount for which the real
Section 262. Final Deed to Purchaser. - In case the owner property was sold, together with interest of two percent
or person having legal interest fails to redeem the (2%) per month from the date of sale to the time of the
delinquent property as provided herein, the local institution of the action. The amount so deposited shall be
treasurer shall execute a deed conveying to the paid to the purchaser at the auction sale if the deed is
purchaser said property, free from lien of the delinquent declared invalid but it shall be returned to the depositor if
tax, interest due thereon and expenses of sale. The deed the action fails.
shall briefly state the proceedings upon which the validity
of the sale rests. Neither shall any court declare a sale at public auction
invalid by reason or irregularities or informalities in the
Section 263. Purchase of Property By the Local proceedings unless the substantive rights of the
Government Units for Want of Bidder. - In case there is no delinquent owner of the real property or the person
bidder for the real property advertised for sale as having legal interest therein have been impaired.
provided herein, the real property tax and the related
interest and costs of sale the local treasurer conducting This contemplates a property already sold at public
the sale shall purchase the property in behalf of the local auction. You can question the validity of that sale,
government unit concerned to satisfy the claim and subject to some conditions. One of these conditions is for
within two (2) days thereafter shall make a report of his you to make a deposit. Such amount will be given to the
proceedings which shall be reflected upon the records of purchaser is the deed is declared invalid.

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Failure to make the deposit will result to the dismissal of Take note that in the NIRC the period to collect is also 5
the action. That is a mandatory provision. If the entity is years. In local taxation you also have 5 years. Here, the
exempted from the RPT, and it is questioning the validity period is also 5 years.
of the sale, the requisite of making a deposit is not
applicable. Section 271. Distribution of Proceeds. - The proceeds of
the basic real property tax, including interest thereon,
Section 268. Payment of Delinquent Taxes on Property and proceeds from the use, lease or disposition, sale or
Subject of Controversy. - In any action involving the redemption of property acquired at a public auction in
ownership or possession of, or succession to, real accordance with the provisions of this Title by the
property, the court may, motu propio or upon province or city or a municipality within the Metropolitan
representation of the provincial, city, or municipal Manila Area shall be distributed as follows:
treasurer or his deputy, award such ownership,
possession, or succession to any party to the action upon (a) In the case of provinces:
payment to the court of the taxes with interest due on the
property and all other costs that may have accrued,
(1) Province - Thirty-five percent (35%) shall accrue to the
subject to the final outcome of the action.
general fund;

Section 269. Treasurer to Certify Delinquencies Remaining


(2) Municipality - Forty percent (40%) to the general fund
Uncollected. - The provincial, city or municipal treasurer
of the municipality where the property is located; and
or their deputies shall prepare a certified list of all real
property tax delinquencies which remained uncollected
or unpaid for at least one (1) year in his jurisdiction, and a (3) Barangay - Twenty-five percent (25%) shall accrue to
statement of the reason or reasons for such non- the barangay where the property is located.
collection or non-payment, and shall submit the same to
the sanggunian concerned on or before December thirty- (b) In the case of cities:
first (31st) of the year immediately succeeding the year in
which the delinquencies were incurred, with a request for (1) City - Seventy percent (70%) shall accrue to the
assistance in the enforcement of the remedies for general fund of the city; and
collection provided herein.
(2) Thirty percent (30%) shall be distributed among the
Section 270. Periods Within Which To Collect Real Property component barangays of the cities where the property is
Taxes. - The basic real property tax and any other tax located in the following manner:
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, (i) Fifty percent (50%) shall accrue to the barangay where
shall be instituted after the expiration of such period. In the property is located;
case of fraud or intent to evade payment of the tax, such
action may be instituted for the collection of the same (ii) Fifty percent (50%) shall accrue equally to all
within ten (10) years from the discovery of such fraud or component barangays of the city; and
intent to evade payment.
(c) In the case of a municipality within the Metropolitan
The period of prescription within which to collect shall be Manila Area:
suspended for the time during which:
(1) Metropolitan Manila Authority - Thirty-five percent
(1) The local treasurer is legally prevented from collecting (35%) shall accrue to the general fund of the authority;
the tax;
(2) Municipality - Thirty-five percent (35% shall accrue to
(2) The owner of the property or the person having legal the general fund of the municipality where the property is
interest therein requests for reinvestigation and executes located;
a waiver in writing before the expiration of the period
within which to collect; and (3) Barangays - Thirty percent (30%) shall be distributed
among the component barangays of the municipality
(3) The owner of the property or the person having legal where the property is located in the following manner:
interest therein is out of the country or otherwise cannot
be located. (i) Fifty percent (50%) shall accrue to the barangay where
the property is located;

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(ii) Fifty percent (50%) shall accrue equally to all agribased products, or calamity in any province, city or
component barangays of the municipality. municipality, the sanggunian concerned, by ordinance
passed prior to the first (1st) day of January of any year
(d) The share of each barangay shall be released, without and upon recommendation of the Local Disaster
need of any further action, directly to the barangay Coordinating Council, may condone or reduce, wholly or
treasurer on a quarterly basis within five (5) days after the partially, the taxes and interest thereon for the
end of each quarter and shall not be subject to any lien succeeding year or years in the city or municipality
or holdback for whatever purpose. affected by the calamity.

Section 277. Condonation or Reduction of Tax by the


Section 272. Application of Proceeds of the Additional
President of the Philippines. - The President of the
One Percent SEF Tax. - The proceeds from the additional
one percent (1%) tax on real property accruing to the Philippines may, when public interest so requires,
Special Education Fund (SEF) shall be automatically condone or reduce the real property tax and interest for
released to the local school boards: Provided, That, in any year in any province or city or a municipality within
case of provinces, the proceeds shall be divided equally the Metropolitan Manila Area.
between the provincial and municipal school boards:
Provided, however, That the proceeds shall be allocated This power is shared by the LGU with the President. In case
for the operation and maintenance of public schools, if a calamity, the Sanggunian can condone RPT through
construction and repair of school buildings, facilities and an ordinance. This can also be done by the President. The
equipment, educational research, purchase of books President has broader scope than that of the
and periodicals, and sports development as determined Sanggunian.
and approved by the Local School Board.
Section 278. Duty of Registrar of Deeds and Notaries
Prior to the LGC, SEF is used to address salary adjustments Public to Assist the Provincial, City or Municipal Assessor. -
of public school teachers. It shall be the duty of the Registrar of Deeds and notaries
public to furnish the provincial, city or municipal assessor
Section 273. Proceeds of the Tax on Idle Lands. - The with copies of all contracts selling, transferring, or
proceeds of the additional real property tax on idle lands otherwise conveying, leasing, or mortgaging real
shall accrue to the respective general fund of the property received by, or acknowledged before them.
province or city where the land is located. In the case of
a municipality within the Metropolitan Manila Area, the Section 279. Insurance Companies to Furnish
proceeds shall accrue equally to the Metropolitan Manila Information. - Insurance companies are hereby required
Authority and the municipality where the land is located. to furnish the provincial, city or municipal assessor copies
of any contract or policy insurance on buildings,
Section 274. Proceeds of the Special Levy. - The proceeds structures, and improvements insured by them or such
other documents which may be necessary for the proper
of the special levy on lands benefited by public works,
assessment thereof.
projects and other improvements shall accrue to the
general fund of the local government unit which financed
such public works, projects or other improvements. Section 280. Fees in Court Actions. - All court actions,
criminal or civil, instituted at the instance of the
Section 275. General Assessment Revision; Expenses provincial, city or municipal treasurer or assessor under
Incident Thereto. - The sanggunian of provinces, cities the provisions of this Code, shall be exempt from the
and municipalities within the Metropolitan Manila Area payment of court and sheriff's fees.
shall provide the necessary appropriations to defray the
expenses incident to the general revision of real property Section 281. Fees in Registration of Papers or Documents
assessment. on Sale of Delinquent Real Property to Province, City or
Municipality. - All certificates, documents, and papers
All expenses incident to a general revision of real covering the sale of delinquent property to the province,
property assessment shall, by ordinance of the city or municipality, if registered in the Registry of
sangguniang panlalawigan, be apportioned between the Property, shall be exempt from the documentary stamp
province and the municipality on the basis of the taxable tax and registration fees.
area of the municipality concerned.
Section 282. Real Property Assessment Notices or Owner's
Section 276. Condonation or Reduction of Real Property Copies of Tax Declarations to be Exempt from Postal
Tax and Interest. - In case of a general failure of crops or Charges or Fees. - All real property assessment notices or
substantial decrease in the price of agricultural or owner's copies of tax declaration sent through the mails

Transcribed by: Althea Mae P. Casador Page 37 of 38


Taxation Law II
Dean Manuel Quibod III-Manresa (2013)

by the assessor shall be exempt from the payment of


postal charges or fees.

Section 283. Sale and Forfeiture Before Effectivity of


Code. - Tax delinquencies incurred, and sales and
forfeitures of delinquent real property effected, before the
effectivity of this Code shall be governed by the
provisions of applicable laws then in force.

Transcribed by: Althea Mae P. Casador Page 38 of 38