TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
FINALS COVERAGE
Topics:
1. Real Property Tax (RPT)
2. Customs Modernization and Tariff Act (CMTA)
3. Jurisdiction of the Court of Tax Appeals
PARTI. REAL PROPERTY TAX
March 31, 2017 (1st Hour)
(By: J Al Reyes)
This is still part of the local government taxation.Let’s start
with the real property taxation under the local government
code. Let’s start with the constitutional basis. It’s pretty
much the same with the local government taxation, general
principle. It starts with, Article X section 5 of the
constitution.
The following are the basis for our Real Property Taxation:
1. Constitutional – same basis nagidiscussnatin last time
pertaining to local government taxation, Section 5 Article X.
2. Local Government Code – Book II, Title II The LGUs
have the power of administration, appraisal, assessment,
levy and collection of real property taxes.
That is under Section 197 of the Local Government Code.
That is the essential provision which provides LGUs the
power to impose real property taxes upon real properties
which are located in their territorial jurisdiction.
What are the fundamental principles of real property
taxation under the local government code? Section 198.
Real property shall be assessed… you are probably
familiar with many of these. The assessment of real
properties must be based on a uniform classification within
each local government unit; and there’s also the prohibition
that legislation, assessment and levy of real property taxes
cannot be left to a private person. Which is why you have
the City Treasurer, the local assessors, those people who
administer the authority of the local government to assess
real property for real property tax purposes.
There is also the principle that the appraisal and
assessment of real property must also be equitable. In one
case, this involves Pasig City, what happened was that
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
there is this city ordinance increasing the appraisal value of
the real property and the increase was around 400-500%.
So sobranglaki. In this case the Supreme Court struck
down the ordinance saying that this is actually unjust,
oppressive and this is no longer equitable, it violates the
fundamentalprinciples of real property taxation under the
Local Government Code.
But in these fundamental principles, they are all important,
but what is something new here is the appraisal and
assessment.
1. The appraisal must be at the real property’s current fair
market value in the local government unit where the
property is located
2. The real property must be assessed on the basis of
actual use So appraisal, and then you have actual use.
What does appraisal mean? Appraisal of real property.
What happens when you appraise something? You
determine the value, right? What is the basis for the
appraisal as provided in the Local Government Code? Fair
market value.
What is the significance of this appraisal? What happens
after there is an appraisal? Before payment of taxes, what
happens first? Appraisal is important because it has
something to do with the assessment. You value the real
property, and that is the basis for the assessment of the
real property. From that assessment you will get the
percentage of real property tax, and then you will get the
tax. Then you have the concept of actual use. Under
Section 217, the real property shall be classified, valued
and assessed on the basis of its actual value regardless of
where located, whoever owns it, and whoever uses it.
Apart from ownership, sometimes the ownership is
important. But what is more important in real property
taxation is the actual use. Just remember actual use of the
real property because this has also a bearing on the
assessment of real property for real property taxation
purposes, and also later on when we will be discussing
about the exceptions from real property purposes.
TSN from last year: basis for appraisal for the assessment
is actual use.
Let us go now to the case of Allied Banking vs. Quezon
City.
1|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)

There is a city ordinance. Sabing city ordinance if there will
be a conveyance of real property, there will be a real
property tax which is based on the BIR zonal value or the
total consideration whichever is higher. Then CAP bought a
property from a person worth 38million. What did Quezon
city do? There was an assessment for real property taxes.
And what did CAP do? Diba CAP entered its protest and
paid under protest. One of the contentions of CAP here is
that the ordinance is null and void because the ordinance
violates Section 130 of the Local Government Code. What
is the ruling of the Supreme Court on that issue? According
to the Supreme Court, the real properties shall be
appraised at the current and fair market value prevailing in
the locality where the property is located and classified for
assessment purposes on the basis of actual use. Why did
the Supreme Court say that there was a violation?
Anopalang basis ng appraisal dito? Sabing Supreme Court,
the real properties shall be appraised at the current and fair
market value prevailing in the locality where the property is
located and classified for assessment purposes on the
basis of actual use. In this case, it violates Section 130 of
the Local Government Code mainly because the
fundamental principles would say that real property should
be appraised at its current and fair market value, and
classified for assessment purposes on the basis of actual
use. Ano bang sinasabing ordinance dito? It’s based on
what? It’s based on the zonal value. On top of that, aside
from violating Section 130 of the Local Government Code,
it undermines the authority of the local assessors, because
ultimately the local assessors should be the one to
determine the appraised value of the property and make
assessment levels on the basis of these two principles: fair
market value and on the basis of its actual use.
In the case of Estate of Concordia vs. city of manila
Here, it is still connected as to the assessment of real
property tax. So what happened here is that Concordia
here owned real property and that real property was
eventually mortgaged and was eventually foreclosed
(mahiligsa eventually) and the heirs of Concordia failed to
redeem the property and of course the title of the property
was consolidated to the highest bidder, which happens to
be GSIS . now GSIS had it rented to third persons. Of
course there was an assessment of real property tax. But
what happened was that the city government of manila
actually assessed the heirs of Concordia. So the question
is: was it proper to begin with? Were the heirs of Concordia
liable for the real property taxes? Take not that the
assessment of real property tax must be based on its
actual use. N this case of coure, if you have read the fact,
if have read the case, the court said that Concordia was
no longer the owner of the property… because I was
foreclosed nga. Okay? In fact GSIS was already the owner
of the real property and the GSIS in fact rents this out to
some other person. But is GSIS liable for real property tax?
Later on we will discuss the real property tax liability of
GSIS.
So what is the nature of this real property tax? I it an excise
tax? No it is not an excise tax. It is not a tax on a privilege
of owning a property. It is rather a tax based on using it.
How do you define a real property tax? Real property tax is
said to be a direct tax on the ownership of the land and
buildings and other improvements thereon not specifically
exempted and is payable regardless of whether the
property is used or not. So this definition given by other
authors is not actually accurate, because you must
consider not just the ownership but also actual use of the
property.
What are the characteristics of real property tax?
1. It is a direct tax. The impact and incidence of the tax
falls upon the same person.
2. It is imposed on use and not necessarily on the
ownership of the property. We will see this later on when
we deal with real property tax exemption.
3. It is an ad valorem tax. Ad valorem, based on value. It is
based on the assessed value of the property.
4. Proportionate in character.
5. Progressive in character.
6. It creates a single and indivisible obligation.
7. It is a local tax.
Of course, real property taxation nga, subject of real
property taxation are real properties. But take note that the
Local Government Code itself does not define what real
property is. It gives you the definition of improvements, it
gives you the definition of machineries, but it does not give
you a definition of real property.
That is why the first thing you will have to determine is
whether or not the property is real property and therefore

Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
2|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
subject to RPT. You look at the provisions of the Civil
Code. You look at Article 415. Basically the discussions
and principles of real property in the Civil Code applies also
in the Local Government Code or in real property taxation.
However, you will notice that there are some concepts
which are seemingly personal properties in the Civil Code,
but for real property taxation purposes, they are considered
as real properties. For instance, the definition of
improvements and machineries, look at the Local
Government Code.
Section 199. xxx (m) "Improvement" is a valuable addition
made to a property or an amelioration in its condition,
amounting to more than a mere repair or replacement of
parts involving capital expenditures and labor, which is
intended to enhance its value, beauty or utility or to adapt it
for new or further purposes; (o) "Machinery" embraces
machines, equipment, mechanical contrivances,
instruments, appliances or apparatus which may or may
not be attached, permanently or temporarily, to the real
property. It includes the physical facilities for production,
the installations and appurtenant service facilities, those
which are mobile, self-powered or selfpropelled, and those
not permanently attached to the real property which are
actually, directly, and exclusively used to meet the needs of
the particular industry, business or activity and which by
their very nature and purpose are designed for, or
necessary to its manufacturing, mining, logging,
commercial, industrial or agricultural purposes; xxx
Take note however, that in Article 415 particularly Section
5, let’s relate this with the definition of machinery. If you
look at the definition of machinery here, to be considered
as real property under 415, it is necessary that the
machinery is placed by the owner of the property; but
under real property taxation, it is not specified. So
sometimes it’s easy to determine whether it’s real property
or not because you look at 415. But what about those
seemingly personal properties? For this we must look at
several cases for us to understand this.
Take note that if there is a conflict between the civil law
provision and the provision on the local government code
on the definition for the purposes of taxation, it is the
special law which shall prevail.
(The following cases gi copy paste nalangnako from last
year..parehaslang man pudnamga cases)
Mindanao Bus Company.
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
What is the business of the petitioner here? Engaged in
transportation of passengers and cargo by motor vehicles.
Describe their business premises of Mindanao Bus. It
maintains a garage, repair shop, blacksmith or carpentry
shops. The machineries are placed thereon on wooden
platforms and cement. So what did the City Assessors do?
What is their contention, why did they assess a property
tax on these equipment and machineries? What is the legal
basis of the City Assessors here? The City Assessors
contend that the equipment although movable are
immobilized by destination. Now the issue here is whether
or not Mindanao Bus Line is liable for the taxes assessed?
To determine the taxability of the properties assessed, you
must first determine whether these equipment and
machineries are considered as real properties. Supreme
Court said that the machineries could not be considered as
immobilized. These equipment are clearly incidental. Let’s
simplify: the machineries placed on those wooden and
cemented platforms are not considered as real properties.
Number one, they can be removed easily; and number two,
they are merely incidentals.
Article 415 of the New Civil Code, for it to be immobilized,
these platforms on which the machinery were placed, they
must be essential and principal elements of the business.
What happens here, these equipment, these machineries
are merely incidentals because the bus company can go
on even if the machineries and equipment are not existing.
Compare it to the case of Board of Assessment Appeals
vs. Manila Electric Company.
MERALCO is engaged in the business of providing
electricity, generated by its hydroelectric plant. This is
transmitted by means of electric transmission wires, which
are fastened to insulators attached on steel towers
constructed by MERALCO. Quezon City assessed
MERALCO with real property taxes. The issue in this case
if whether or not MERALCO should be subject to real
property tax. In determining the classification of these steel
towers, the Supreme Court held that these towers do not
count as real properties under Article 415(1) because they
do not adhere to the soil. Second, they cannot be included
under (3) because they are movable.
Now what about Meralco Securities Industrial Corporation
vs. CTA? What is that case all about? The property
involved here are oil pipelines. These pipelines are buried
underground. If something happens to the pipeline,
3|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
MERALCO will have to dig it up and they will use a certain
special equipment to cut the pipeline because it’s made of
steel. There’s a difficulty in moving and repairing those
pipelines.
These oil pipelines are treated real property because they
are considered as construction adhering to the soil and
attached to the land in such a way that it cannot be
separated without dismantling the steel pipes.
Let’s compare this with the case of Manila Electric
Company vs. Central Board of Assessment Appeals.
The properties involved her are storage tanks. These tanks
are connected to Manila Enterprise Industrial Corporation.
The local government required MERALCO to pay tax and
penalties on said storage tanks. The Supreme Court held
that the two storage tanks may be considered as
improvements on the land, hence it was deemed to be real
property for the purposes of taxation. It’s considered as
improvements on the land and is being used in its
business. The case of Board of Assessment Appeals vs.
Manila Electric Company, 119 Phil. 328, wherein Meralco's
steel towers were held not to be subject to realty tax, is not
in point because in that case the steel towers were
regarded as poles and under its franchise Meralco's poles
are exempt from taxation. Moreover, the steel towers were
not attached to any land or building. They were removable
from their metal frames. Nor is there any parallelism
between this case and Mindanao Bus Co. vs. City
Assessor, 116 Phil. 501, where the tools and equipment in
the repair, carpentry and blacksmith shops of a
transportation company were held not subject to realty tax
because they were personal property. As to the storage
tanks, the Supreme Court described the two tanks to have
been installed with some degree of permanence as
receptacles for the considerable quantities of oil needed by
Meralco for its operations.
Now, Caltex vs. CBAA G.R. No. L-50466 May 31, 1982.
This is still about machineries and equipment, pretty much
the same with the Mindanao Bus case, but this time what is
involved is a gasoline station. Dibameronsilang pumps,
underground tanks. These properties were then assessed
for real property taxes. The equipment were considered as
real properties because if you remove them, the gas station
will be useless. If you dig up the tanks, where will you store
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
the gasoline? If you dig up the pumps, what will you use in
order to make tubil the sasakyan?
Compare it with the Mindanao Bus case. Yes there are
equipment and machineries necessary for the repair of the
bus, but if you remove it, can Mindanao Bus continue their
business? Yes of course. Transportation man sila. The last
case is about power barges. (Gidescribelang man niyaang
power barge, wala may discussion.) If it so happens that
you forget these cases, there is some sort of trick which I
found in a book. There are two questions that you have to
ask yourself: 1. Is the real property among the properties
listed in 415? If the answer is yes, then it is a real property
subject to real property tax. But what if it’s not among the
415? 2. Is the property essential and principal to the
conduct of business? If yes, most likely it is a real property
subject to real property taxation. Why? If you look at the
definition of improvement and machineries, that is the legal
basis for that. Ginagamitmosa business mo, it is some sort
of utility, if you take it out your business will not function
anymore, then it is considered as real property. If your
answer to the second question is no, that is considered as
a personal property which is already outside the ambit of
real property taxation.
And then you have the case of neilsen vs. cabanlas (I’m
not sure gibalikbaliknanakoogpaminaw)
this is a case involving power barges.
Galutawlngsyasadagat… it is considered as a real
property? So remember propery case ni? Katongga remain
langsya one place? They are considered as immovable
property. Now, its really a good thing if you remember the
facts of the cases which distinguished properties being
involved here which are either considered by jurisprudence
as real or personal property because in the ba exam if you
remember how the court ruled on it you can cite the title of
the case. But just in case you will forget in order to
determine whether it is a real property you only have to ask
these two questions:
1.) Is the property a real property as defined in
article 145? If it falls under 145 automatic ya..it
will be subjected to real property tax.
2.) Is the property essential and principal in the
conduct of the business of the taxpayer.? If the
answer is yes, then it is going to be subject to
real property tax. The legal basis of this is the
definition of improvement and machinery under
4|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
the law. So to be safe better be ver familiar with
these definitions under the LGC.
Meralco vs. City assessors of lucena. Kuryetenanaman!
(sukokaaukadha)
what are properties involved here?
1. Transformers and electric posts
2. Transmission lines;
3. Insulators
These are all located in lucena city and of course as per
tax declaration, these facilities have fair market value at 81
million and an assess value of 65 million. An assessment
was sent to them. So they appealed the assessment
before the local court on assessment appeals of lucena
city.
LCA f lucenacty said that :Meralco is tax exempt. But is still
liable for the franchise tax under te local governnt code.
Second point of th LCA: the assessment made by the
assessor is valid. Years after, lucena city sent meralco a
notice to meralco to pay the real property tax deficiency.
Syempreumalmaulitangmeralco. Okay,
One of the issues here was whether or not the
Transformers and electric posts; Transmission lines/wires;
Insulators should be considered as real properties for the
purpose of assessment, collection and payment of real
property tax?
The supreme court said: (this is quite peculiar)the SC said
that the posts, wires, ad insulators are may qualify as
immovable property for purposes of real property taxation.
Now, the contention of meralco here is like this; if we trace
the history of how do we determine a property to be either
a personal or real property it get quite confusing already
because there are personal property which for purposes of
real property taxation becomes a real property. (and then
there is one line na dli gyudnako ma gets.
Kapilanagyunakogibalik sorry mga around 5 words)
Angsagotnamanng SC if there is a seeming disagreement
or contradiction between the definition given by given by
the local government code and the civil code regarding the
classification of a certain property, for purposes of real
property taxation, you should follow the definition found in
the local government code. But the question relly is
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
whether or not the enumerated properties hould be
considered as real properties. This time the SC is being an
Ass***** angsabing SC: this is a question of fact and the
supreme court is not a trier of facts. In the end the supreme
court did not settle the matter. Sabing SC the person who
should determine whether these properties are realties or
not should be the local assessor it is not us who should
determine. O.. F**k Y*o Supreme court (hehe)
hindimosinagot. But you have to read this case because
you know, the SC made some story telling about the
history of the definition of the real property in the civil code
an the loa government code. I think it would really help you
understand which properties are included or should
considered as rel properties for purposes of real property
taxation.
Let’s go now to the different kinds of impositions. You have
here 4 types of impositions under the real property taxation
in the LGC.
1. You have the ACRPT which is in section 232 and
233 og the LGC
2. You have the special (something )fund
3. Then you have the Ad valorem tax
4. And then lastly you have the special levy.
1 the ACRPT which is found section 232 and 233 of the
LGC who may impost real property taxation. What type of
LGUs? You have provinces, cities and municipalities
situated within metro manila area. Note that generally
seakingmnicipalites may not impose real property tax the
exception is if the municipality is in metro manila area.
(somedyo bias tayo) now what is the tax rate? Normally it
is 1% of the assessed value of the real property, when it
comes to the provinces. But when it comes to the
municipalties and cities within metro manila, the rate is not
exceeding (dli koka gets kaysaba) who may impse this? Of
course it is the municipalities or cities within metro manila.
Then you have an additional 1% of the assessed vlue of
the real property. ( kindlyvrifytht part kaywalayklaro. Sorry)
and this shall be set aside for purposes of special
education (not sure sabanapud) fund.
Then you have the ad valorem tax. This is actually a
sanction against property owners. Who does not make
their lands productive and to encourage utilization of land
resources for development. What are the idle lands
covered? It is found under section (dli gyud ma klaro sorry)
1.) you have agricultural lands of more than 1 hectare
5|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
suited for cultivation but which remains uncultivated or
unimproved. There are exceptions okay. 2.) Agricultural
lands which (have trees shall not be considered idle lands
and you have lands actually used for (raising …not sure
with what I heard paki verify) purposes pakaon sab aka
ogcabao.And then you have 3.) lands other than
agricultural, these are lands located In a municipality
which is more than 1000 sq.m in area. Which remains
unutilized or unimproved. You also have idle lands exempt
from tax. You have section 238.
Ad of course you have the special levy. This is not a tax.
This is just an imposition. Specially a province, cty or
municipality may impose a special levy on land within its
territorial jurisdiction. Specially (limited or dedicated) dli
gyudklaro :( to a public works, projects, or improvements
funded by the loca government unit. The special levy shall
not exceed (60%) of the amount of the projects or
improvements. Okay bfore we discuss the property subject
to real property tax kase residual man ang (inclusion) not
sure. If it is not exempted then that property is subject to
real property taxation.
Let’s discuss first the exception. You have section 234. The
following are exempted In the imposition of real property
tax. Number 1. Real property owned by the republic or any
of its political subdivision. So the government cannot tax
itself.
Let’ go back to the case of GSIS vs. the city of manila.
I think this is a different case already. Okay so GSIS owns
two parcels of land. These prcels of land were leased out
to a hotel corp. it is a prive corporation. A portio of said
property is occupied by GSIS and the municipal trial court.
The city of manila demanded payment of real property
taxes on the subject property. Magkanobabayaranna
taxes? More or less (48 million) of course reklamoang
GSIS.
Now, there are main issues here.
1. Is GSIS exempt I real property taxes?
2. Is the entire property which was leased out GSIS
exempt? From real property tax?
The contention of the other party is this: GSIS is a GOCC if
you remember there is a provision in the local government
code in exemption ?first to answer this question, you must
look into the characterization of GSIs if it is a GOCC or not.
If it is not a GOCC what is it? Angsabing Supreme Court
dito is this: GSIS is a tax exempt entity.Gsis is not a gocc
but is actually an instrumentality of the national govt. so
basically it used the MIAA vs. CA ruling. The capital of the
GSIS is not divided to the members each year. It has no
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
member to speak of.
Second, the properties owned by the GSIS , the nature of
the property held by the GSIS is that GSIS is considered a
mere trustee of these properties. Since it is established that
GSIS is a tax exempt entity kase government
instrumentality sya, is it exempt from real property tax?
The supreme court said that if you read the codal, GSIS is
exempt from real property tax because it is owned by the
republic, except when it is used by another entity for a fee.
Now, if we go back to the facts of this case, here, GSIS
leased the big chunk of it to a hotel corporation, one part of
it is used the GSIS itself and then another part is used by
the judiciary. Now, since GSIS is a government
instrumentality, it is exempt from tax. But the beneficial use
of that property is given to some other persons who are
subject to tax. GSIS is tax exempt but who should be held
liable for the real property tax? The real property tax
according to the supreme court is chargeable against the
tax exempt person who had actual or beneficial use of the
real propertyregardless of whether he or she is an owner.
Next is you have the MIAA case, the facts is almost the
same with GSIS.
The property here includes airport lands and building.
Portions of the airport buildings are leased out to
concessionaires. Is the real property held by the MIAA (the
airport and the airport building) exempt from real property
taxation.? The ruling here is that the property held by the
MIAA are properties of public dominion, intended for public
use and as such they are exempt from real property
taxation under section 238 of the local government code.
MIAA is a government instrumentality and it is not a
GOCC.
But is the entire property exempt from the real property
tax? No. only those which are used by the MIAA are tax
Exempt. However, those part of the real property being
leased out to the concessionaires, are not exempt. They
shall be paid by those who exercise the actual and
beneficial use of the said real property regardless whether
they are not the owners. Of the real property. You read the
case of light rail transit gr. 127316 and gr. 143214
philippine ports authorityvs. The city of ilo-ilo. I think it
is in your handout.
Then you also have charitable institutions, churches,
mosques, cemeteries not for profit, actually and directly
used religious charitable and educational purpose..these
are actually constitutional tax exemptions this is just
6|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
reproduced in the local government code. So everything
about requirements for tax exemption applies in this case.
You read the case of lux center vs. QC. Take note of the
definition what is that actually directly and exclusively used
is it equated to principal use? What if the lands are leased
out to private entities? Who are not exempt from taxes?
Then you also the city assessors of cebu vs. assoc. of
benebolarestitute (walakokasabot) 2007 (probably
naasahandouts. Pls. check out nalangpasensyasabaw.)
this is also about the characterization or the effect if, the
entity is tax exempt has property or portions of it is being
leased out to non exempt persons. Or the effect if the
property is actually, exclusively and directly used by the
gOCCs in the transmission of electric power and the
distribution of water. Case in point : ( A vs. Batanggas)
Let’s go to appraisal and assessment of real property tax .
Who may levy a real property taxes? The LGUs
PROVINCE, cities, and municipalities with metro manila.
What is the procedure here? Bagomagbayadng real
property tax, there must first be an appraisal. Again the
appraisal is the determination of the value of the property
which will be subjected to taxation. After the appraisal of
course, there will be an assessment. Is the process of
determining the value of the property or portion thereof
subject to tax. Including discovery, representation (paki
verify ni representation gyudakongpagka hear not sure
though kaysaba) and appraisal of the property. Who has
the duty to appraise and assess a real property? The duty
is with the local assessor. Including the determination as to
whether or not this real property is subject to real property
tax?
Dbasabinatin, (maamguerzo?) the assessor has the duty to
appraise and assess together with that is the duty to
determine whether a property is subject to real property tax
and of course it involves the listing listahan..list of real
property, Sino bamga brokers dito? Dba if you have real
properties that you seek to sell dba you call it listing so
there will be listing of real properties. Who are the persons
involved in determining the listing, there personalities
involved. No. 1 you have the ROD, the ROD has the power
and duty to determine whether the real property should be
taxed for real property tax. 2. Building official. He shall be
responsible for everything that the building ought to comply
building permits etc2x, they will have to furnish a copy of it
with the assessor Assessors, 4. The Geodetic engr. They
will do they survey and will give a copy of that to the
assessor. 5. Then you’ll have notice to the public that is
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
why every time there is a reconveyance they will have to
submit it to the local assessor (walakoka gets notice to the
public gyud). Then you have 6. The insurance company
because many of these properties buildings ang houses
are insured these individuals will help the local assessors
to determine which of these real properties are or can be
subjected to real property tax.
Let’s go now to appraisal. How is real property assessed
for purposes of real property tax? It should appraised
according to its current and fair market value prevailing
upon the locality where the property is situated. Take note
that all real property must be appraised. Whether or not
taxable or exempt.
Now, distinguish:
Fair market value from assessed value. First is the
determination, the MV is usually declared by the owner but
if you ask how much the fair market value is, it should be
declared by the local assessor. On the other hand,
assessed value you are talking about the assessment level
as stated in the revenue code of that particular country to a
fair market value. Let’s say for example,
sabihinnatinnagpagawaako ng building and its worth 20
million. I, as the owner of the building is required by the
local assessors to declare na cost ng building ko 20 M.
normally that’s the fair market value. To determine the
assessed value you look at the local revenue ordinance.
How much is the assessed value of this real property? And
the assessed value is just a percentage of the fair market
value. Sabihinnalangnatinang assessed value is just 10 %
of the fair market value. Magkanonalangang assessed
value? 2m? And assessed value is your basis for the
computation of the real property tax later on. We have
been mentioning about declaration of real property kanina
pa..who makes the declaration of the real property? It is
found in sections 202, 203 and 204. First, of course, the
declaration must be made by the owner of the property. He
must make that declaration under oath. Second, if a
person acquires a real property he must declare such fact
to the local assessor. He must declare it under oath.
Supposing these persons will fail or will refuse to make
such declarations, the local assessor is not precluded from
making his own personal assessment of that real property.
And such declaration may not be under oath. Just like the
meralco case earlier. Ayawnyang mag declare okay. I will
declare it for you sabing local assessor, it is up to you to
contest. What is the purpose of the tax declaration? The
7|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
purpose of this is number 1. For the determination of the
fair market value.
March 31, 2017 (2nd Hour)
(By: Algene Cutamora)
What is the purpose of a tax declaration?
1. For determination of the fair market value
2. For determination the assessment level of the
property.
What is the purpose of tax declaration, by the way? So
magdeclare ka ng value of property. What is being issued
is a “Tax Declaration.” You are saying “I declare that these
are the real properties I own.”
What is the purpose or nature of that declaration? The
primary purpose of that is it’s list of properties and of the
real property taxes.
Is it an evidence of ownership? By itself, the tax declaration
can be used as an evidence of ownership. Of course, it is a
good indication of ownership when coupled with some
other factors. Like you couple it with titles. Also, it is an
indication of possession. Nganong magbayad man ka ug
real property tax if you do not possess the property?
If you volunteer with the legal aid, you will encounter such
cases. Yung mga squatter, mag-away2 sila. They will just
present real property tax declaration. Usually, the person
with the oldest tax declaration wins.
You don’t really look at ownership if you talk about
unlawful detainer or forcible entry, diba? Okay? Now, let’s
move on.
Let’s go to the preparation of the schedule of the fair
market value. A schedule is prepared and then there will be
a classification of real property.
Section 215. Classes of Real Property for Assessment
Purposes. - For purposes of assessment, real property
shall be classified as residential, agricultural, commercial,
industrial, mineral, timberland or special.
The city or municipality within the Metropolitan
Manila Area, through their respective sanggunian, shall
have the power to classify lands as residential, agricultural,
commercial, industrial, mineral, timberland, or special in
accordance with their zoning ordinances.
We also have Section 216 of the Local Government Code.
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
Section 216. Special Classes of Real Property. - All
lands, buildings, and other improvements thereon actually,
directly and exclusively used for hospitals, cultural, or
scientific purposes, and those owned and used by local
water districts, and government-owned or controlled
corporations rendering essential public services in the
supply and distribution of water and/or generation and
transmission of electric power shall be classified as special.
Ano man itong special real properties?
These are lands, buildings, and other improvements
thereon:
1. actually, directly and exclusively used for
hospitals, cultural, or scientific purposes, and
2. those owned and used by local water districts,
and government-owned or controlled
corporations rendering essential public services
in the supply and distribution of water and/or
generation and transmission of electric power
Who is in-charged for the classification of lands? Paano mo
malaman if a real property is residential or commercial?
Who determines that? It’s not the local assessor ha. It is
the Sanggunian, meaning the city or the province within the
City of Manila or your own Sanggunian.
Section 217. Actual Use of Real Property as Basis for
Assessment. - Real property shall be classified, valued
and assessed on the basis of its actual use regardless of
where located, whoever owns it, and whoever uses it.
What is the basis for the basis for the classification of the
land? It is based on actual use, wherever located, whoever
owns it and whoever uses it.
When you declare the real property in your tax declaration,
you also declare the use of that property. If the local
assessor does not agree with the declaration, what is
controlling? What is controlling is not one that the
assessors says and not even what the owner says. What is
the determining factor is the ACTUAL USE of property.
Again, you go back to the actual use principle – pretty
much like the case of PATALINGHUG vs. CA.
[Talks about funeral parlor in Cabaguio]
Anyway, there was an ordinance enacted by the City of
Davao. Under the ordinance, there’s a specific place
declared as commercial compatible. Now, commercial and
compatible for industrial use. Included in this ordinance is
that funeral homes may be built provided that these will be
established not less than 50 meters from any residential
structures, churches and other institutional buildings.
8|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
Now, here comes Patalinghug Funeral Homes. Several
residents in Agdao complained. Nganong naa may funeral
home diri sa atoa? Lain kaayo, diri ta nagpuyo tapos
daghan patay?
The essential ruling here is that: The purpose of the tax
declaration here. Kasi dito, ang katabi ng Patalinghug
Funeral Home is a boarding house pero sabi naman ni
Patalinghug na hindi nay un boarding house but already a
laundry shop. The Supreme Court said:
“x x x that a tax declaration is not conclusive of
the nature of the property for zoning purposes. A
property may have been declared by its owner as
residential for real estate taxation purposes but it
may well be within a commercial zone. A
discrepancy may thus exist in the determination
of the nature of property for real estate taxation
purposes vis-a-vis the determination of a
property for zoning purposes.”
A tax declaration is only for the determination of the
assessment level. The appraisal is based on the actual
use of property irrespective of previous assessments or
taxpayer’s valuation or declaration thereof.
Then you have assessment levels. Sabi natin na the
assessment level does not talk about the value of the
property. A percentage applied to the fair market value of
the property to determine the taxable value of the property.
Who says the assessment level? It’s the Sanggunian. Ang
assessor – ang main purpose is to assess for the purpose
of real property taxation so make an assessment, appraisal
and including the classification of that property.
When does an assessment or a re-assessment become
effective? We have Section 221.
Section 221. Date of Effectivity of Assessment or
Reassessment. - All assessments or reassessments
made after the first (1st) day of January of any year shall
take effect on the first (1st) day of January of the
succeeding year: Provided, however, That the
reassessment of real property due to its partial or total
destruction, or to a major change in its actual use, or to any
great and sudden inflation or deflation of real property
values, or to the gross illegality of the assessment when
made or to any other abnormal cause, shall be made within
ninety (90) days from the date any such cause or causes
occurred, and shall take effect at the beginning of the
quarter next following the reassessment.
General rule: Assessment or re-assessment made after the
1st day of January shall take effect on January 1 of
succeeding year. If there is a new assessment of real
property, let us say sometime in June, then the real
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
property assessment (including the RPT) will apply only on
the following years.
The exception is if there is a re-assessment made within 90
days for the occurrence of a ground.
What are the grounds?
1. Partial or total destruction of the goods
Masunog imong property. Syempre,
the property will lose its value. You
need to declare again.
2. Major change to its actual use
3. Inflation or Deflation of real property values
4. Gross illegality of the assessment
5. Any abnormal costs
Let’s now go to the collection of real property taxes. First,
let us talk about accrual. The taxes accrue, then the
taxpayer pays the tax as accrued.
Section 246. Date of Accrual of Tax. - The real property
tax for any year shall accrue on the first day of January and
from that date it shall constitute a lien on the property
which shall be superior to any other lien, mortgage, or
encumbrance of any kind whatsoever, and shall be
extinguished only upon the payment of the delinquent tax.
Who collects the real property tax? The local treasurer or
authorized deputies.
When is a real property tax paid? There is no time frame
given by the Local Government Code but Section 249 tells
us that the city or sanggunian treasurer shall…
Section 248. Assessor to Furnish Local Treasurer with
Assessment Roll. - The provincial, city or municipal
assessor shall prepare and submit to the treasurer of the
local government unit, on or before the thirty-first (31st) day
of December each year, an assessment roll containing a
list of all persons whose real properties have been newly
assessed or reassessed and the values of such properties.
Section 247. Collection of Tax. - The collection of the real
property tax with interest thereon and related expenses,
and the enforcement of the remedies provided for in this
Title or any applicable laws, shall be the responsibility of
the city or municipal treasurer concerned.
The city or municipal treasurer may deputize the
barangay treasurer to collect all taxes on real property
located in the barangay: Provided, That the barangay
treasurer is properly bonded for the purpose: Provided,
further, That the premium on the bond shall be paid by the
city or municipal government concerned.
In the end, the payment of real property tax will entirely
depend on the notice of file posted and published by the
9|P age
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
local treasurer. The time frame for the payment shall be
provided for by the local city governance,
Section 250. Payment of Real Property Taxes in
Installments. - The owner of the real property or the
person having legal interest therein may pay the basic real
property tax and the additional tax for Special Education
Fund (SEF) due thereon without interest in four (4) equal
installments; the first installment to be due and payable on
or before March Thirty-first (31st); the second installment,
on or before June Thirty (30); the third installment, on or
before September Thirty (30); and the last installment on or
before December Thirty-first (31st), except the special levy
the payment of which shall be governed by ordinance of
the sanggunian concerned.
The date for the payment of any other tax
imposed under this Title without interest shall be prescribed
by the sanggunian concerned.
Payments of real property taxes shall first be
applied to prior years delinquencies, interests, and
penalties, if any, and only after said delinquencies are
settled may tax payments be credited for the current
period.
So real property tax may be paid on equal installments.
The payment works of course like “first in, first out” basis.
Kung merong tax na wala pa nabayaran, yun muna ang
unang babayaran.
Section 251. Tax Discount for Advanced Prompt
Payment. - If the basic real property tax and the additional
tax accruing to the Special Education Fund (SEF) are paid
in advance in accordance with the prescribed schedule of
payment as provided under Section 250, the sanggunian
concerned may grant a discount not exceeding twenty
percent (20%) of the annual tax due.
One peculiar thing about real property taxes is that if you
pay early, you can get a discount. It is provided for under
Section 251. What is important is that this is provided in the
ordinance by the Sanggunian concerned.
Section 270. Periods Within Which To Collect Real
Property Taxes. - The basic real property tax and any
other tax levied under this Title shall be collected within five
(5) years from the date they become due. No action for the
collection of the tax, whether administrative or judicial, shall
be instituted after the expiration of such period. In case of
fraud or intent to evade payment of the tax, such action
may be instituted for the collection of the same within ten
(10) years from the discovery of such fraud or intent to
evade payment.
The period of prescription within which to collect shall be
suspended for the time during which:
(1) The local treasurer is legally prevented from
collecting the tax;
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
(2) The owner of the property or the person
having legal interest therein requests for reinvestigation
and executes a waiver in writing before the expiration of
the period within which to collect; and
(3) The owner of the property or the person
having legal interest therein is out of the country or
otherwise cannot be located.
Then you have prescriptive periods for collection. It is
pretty much the same with your local taxes. When there is
fraud or intention to evade, the period now is 10 years.
Of course, there are grounds which would suspend the
prescriptive period for real property tax collection:
(1) The local treasurer is legally prevented from
collecting the tax;
(2) The owner of the property or the person
having legal interest therein requests for reinvestigation
and executes a waiver in writing before the expiration of
the period within which to collect; and
(3) The owner of the property or the person
having legal interest therein is out of the country or
otherwise cannot be located.
This is basically the same with your local taxation.
Section 254. Notice of Delinquency in the Payment of
the Real Property Tax. –
(a) When the real property tax or any other tax
imposed under this Title becomes delinquent, the
provincial, city or municipal treasurer shall immediately
cause a notice of the delinquency to be posted at the main
hall and in a publicly accessible and conspicuous place in
each barangay of the local government unit concerned.
The notice of delinquency shall also be published once a
week for two (2) consecutive weeks, in a newspaper of
general circulation in the province, city, or municipality.
(b) Such notice shall specify the date upon which the tax
became delinquent and shall state that personal property
may be distrained to effect payment. It shall likewise state
that any time before the distraint of personal property,
payment of the tax with surcharges, interests and penalties
may be made in accordance with the next following
Section, and unless the tax, surcharges and penalties are
paid before the expiration of the year for which the tax is
due except when the notice of assessment or special levy
is contested administratively or judicially pursuant to the
provisions of Chapter 3, Title II, Book II of this Code, the
delinquent real property will be sold at public auction, and
the title to the property will be vested in the purchaser,
subject, however, to the right of the delinquent owner of the
property or any person having legal interest therein to
redeem the property within one (1) year from the date of
sale.
10 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
When it comes to tax collection, the first thing that taxpayer
is going to receive is a Notice of Deliquency. If you are
already delinquent in your real property taxes, it means that
you have not paid your RPT. Then, you will receive your
Notice of Deliquency.
What will happen to this notice of delinquency? It will be
posted at the main hall, in a public and conspicuous place.
A notice of delinquency shall also be published once a
week for two consecutive weeks.
Now, from January 1, the tax for the real property accrue.
Kapag nag-accrue na, huwag ka matakot, because you just
need to wait for the Notice of Collection. Kapag lumabas na
ang Notice of Collection, that will prescribe the time that
you will pay your real property taxes. Kapag hindi ka
nakabayad, that is the time that you will wait again for
another period and that is for the Notice of Deliquency to
be posted and published.
Can the real property taxes be condoned? Yes, under
Article 276.
Section 276. Condonation or Reduction of Real
Property Tax and Interest. - In case of a general failure of
crops or substantial decrease in the price of agricultural or
agribased products, or calamity in any province, city or
municipality, the sanggunian concerned, by ordinance
passed prior to the first (1st) day of January of any year
and upon recommendation of the Local Disaster
Coordinating Council, may condone or reduce, wholly or
partially, the taxes and interest thereon for the succeeding
year or years in the city or municipality affected by the
calamity.
Section 277. Condonation or Reduction of Tax by the
President of the Philippines. - The President of the
Philippines may, when public interest so requires, condone
or reduce the real property tax and interest for any year in
any province or city or a municipality within the
Metropolitan Manila Area.
The authorities who may condone real property taxes are
the following:
1. Sanggunian
2. President of the President
What are the grounds for condonation, in full or in part?
1. In case of a general failure of crops
2. Substantial decrease in the price of agricultural
or agribased products
3. Calamity in any province, city or municipality
These grounds are for the Sanggunian.
For the President, the ground is “When public interests so
requires” under Section 277 of the LGC.”
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
Section 256. Remedies For The Collection Of Real
Property Tax. - For the collection of the basic real property
tax and any other tax levied under this Title, the local
government unit concerned may avail of the remedies by
administrative action thru levy on real property or by judicial
action.
What if the taxpayer will still pay the taxes even after the
posting and publication of the notice of delinquency. If the
taxpayer will not pay within the period, then the
government now will have judicial and administrative
remedy to collect the taxes.
1. Tax lien – same in local taxation but you may
make refence to Section 257
Section 257. Local Governments Lien. - The basic real
property tax and any other tax levied under this Title
constitutes a lien on the property subject to tax, superior to
all liens, charges or encumbrances in favor of any person,
irrespective of the owner or possessor thereof, enforceable
by administrative or judicial action, and may only be
extinguished upon payment of the tax and the related
interests and expenses.
2. Distraint of property – if you look at the
provisions, you won’t find any procedure relating
to distraint of properties. But if you read Section
254, there is a mention of distraint.
“Such notice shall specify the date
upon which the tax became delinquent
and shall state that personal property
may be distrained to effect payment”
Even if it is a real property that is involved, of
course, distraint of property is still possible. It will
entirely effect on the local treasurer to choose
what remedy to avail in order to enforce tax
collection.
3. Levy on real property – under Section 258 and
Section 260 of the LGC
Section 258. Levy on Real Property. - After the
expiration of the time required to pay the basic real
property tax or any other tax levied under this Title,
real property subject to such tax may be levied upon
through the issuance of a warrant on or before, or
simultaneously with, the institution of the civil action
for the collection of the delinquent tax. The provincial
or city treasurer, or a treasurer of a municipality within
the Metropolitan Manila Area, as the case may be,
when issuing a warrant of levy shall prepare a duly
authenticated certificate showing the name of the
11 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
delinquent owner of the property or person having
legal interest therein, the description of the property,
the amount of the tax due and the interest thereon.
The warrant shall operate with the force of a legal
execution throughout the province, city or a
municipality, within the Metropolitan Manila Area. The
warrant shall be mailed to or served upon the
delinquent owner of the real property or person having
legal interest therein, or in case he is out of the
country or cannot be located, the administrator or
occupant of the property. At the same time, written
notice of the levy with the attached warrant shall be
mailed to or served upon the assessor and the
Registrar of Deeds of the province, city or municipality
within the Metropolitan Manila Area where the
property is located, who shall annotate the levy on the
tax declaration and certificate of title of the property,
respectively.
The levying officer shall submit a report on
the levy to the sanggunian concerned within ten (10)
days after receipt of the warrant by the owner of the
property or person having legal interest therein.
Section 260. Advertisement and Sale. - Within thirty
(30) days after service of the warrant of levy, the local
treasurer shall proceed to publicly advertise for sale or
auction the property or a usable portion thereof as
may be necessary to satisfy the tax delinquency and
expenses of sale. The advertisement shall be effected
by posting a notice at the main entrance of the
provincial, city or municipal building, and in a publicly
accessible and conspicuous place in the barangay
where the real property is located, and by publication
once a week for two (2) weeks in a newspaper of
general circulation in the province, city or municipality
where the property is located. The advertisement shall
specify the amount of the delinquent tax, the interest
due thereon and expenses of sale, the date and place
of sale, the name of the owner of the real property or
person having legal interest therein, and a description
of the property to be sold. At any time before the date
fixed for the sale, the owner of the real property or
person having legal interest therein may stay the
proceedings by paying the delinquent tax, the interest
due thereon and the expenses of sale. The sale shall
be held either at the main entrance of the provincial,
city or municipal building, or on the property to be
sold, or at any other place as specified in the notice of
the sale.
Within thirty (30) days after the sale, the local
treasurer or his deputy shall make a report of the sale
to the sanggunian concerned, and which shall form
part of his records. The local treasurer shall likewise
prepare and deliver to the purchaser a certificate of
sale which shall contain the name of the purchaser, a
description of the property sold, the amount of the
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
delinquent tax, the interest due thereon, the expenses
of sale and a brief description of the proceedings:
Provided, however, That proceeds of the sale in
excess of the delinquent tax, the interest due thereon,
and the expenses of sale shall be remitted to the
owner of the real property or person having legal
interest therein.
The local treasurer may, by ordinance duly
approved, advance an amount sufficient to defray the
costs of collection thru the remedies provided for in
this Title, including the expenses of advertisement and
sale.
The procedure is the same with local
government taxes so I don’t think I need to
discuss everything already.
Now, what is peculiar though is that if
you contest the validity of the sale, you follow
Section 267.
Section 267. Action Assailing Validity of Tax Sale. - No
court shall entertain any action assailing the validity or any
sale at public auction of real property or rights therein
under this Title until the taxpayer shall have deposited with
the court the amount for which the real property was sold,
together with interest of two percent (2%) per month from
the date of sale to the time of the institution of the action.
The amount so deposited shall be paid to the purchaser at
the auction sale if the deed is declared invalid but it shall
be returned to the depositor if the action fails.
Neither shall any court declare a sale at public auction
invalid by reason or irregularities or informalities in the
proceedings unless the substantive rights of the delinquent
owner of the real property or the person having legal
interest therein have been impaired.
Under this Section, no court shall entertain any action
assailing the validity or any sale at public auction of real
property or rights therein under this Title until the taxpayer
shall have deposited with the court the amount for which
the real property was sold, together with interest of two
percent (2%).
Take note also that simple irregularities will not invalidate
the sale of the property.
Section 262. Final Deed to Purchaser. - In case the
owner or person having legal interest fails to redeem the
delinquent property as provided herein, the local treasurer
shall execute a deed conveying to the purchaser said
property, free from lien of the delinquent tax, interest due
thereon and expenses of sale. The deed shall briefly state
the proceedings upon which the validity of the sale rests.
12 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
Now, collection of real property taxes in court. Civil
remedies may be resorted to collect the taxes due, you
look at now the jurisdictional amounts. You file with the
RTC or MTC based on the jurisdictional amounts.
Section 266. Collection of Real Property Tax Through
the Courts. - The local government unit concerned may
enforce the collection of the basic real property tax or any
other tax levied under this Title by civil action in any court
of competent jurisdiction. The civil action shall be filed by
the local treasurer within the period prescribed in Section
270 of this Code.
Let’s now go to refunds and credits. Let’s talk first about
protests.
Section 252. Payment Under Protest. –
(a) No protest shall be entertained unless the
taxpayer first pays the tax. There shall be annotated on the
tax receipts the words "paid under protest". The protest in
writing must be filed within thirty (30) days from payment of
the tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within Metropolitan
Manila Area, who shall decide the protest within sixty (60)
days from receipt.
(b) The tax or a portion thereof paid under
protest, shall be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided
in favor of the taxpayer, the amount or portion of the tax
protested shall be refunded to the protestant, or applied as
tax credit against his existing or future tax liability.
(d) In the event that the protest is denied or upon
the lapse of the sixty day period prescribed in
subparagraph (a), the taxpayer may avail of the remedies
as provided for in Chapter 3, Title II, Book II of this Code.
Supposing, a real property tax assessment was made
against you. Nagsend sila ng Notice of Deliquency. Tapos
wrong ang taxes. This was what happened to Meralco…
Now, what is the remedy of the taxpayer? Of course, the
tax payer can file a protest.
But this time, if the taxpayer will file a protest, he
is required to “pay under protest”. Section 5 (a) provides
that:
“No protest shall be entertained unless the
taxpayer first pays the tax. There shall be
annotated on the tax receipts the words "paid
under protest". The protest in writing must be
filed within thirty (30) days from payment of the
tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within
Metropolitan Manila Area, who shall decide the
protest within sixty (60) days from receipt.“
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
The requirement of payment under protest is specific under
real property taxation. NIRC does not require payment
under protest but in RPT, payment under protest is
required. Why? I think because it is easier for a person to
escape tax liability in case that person sells the property.
Ibenta niya nalang para iba ang magbayad, diba?
The protest must be filed within 30 days from the payment
of tax. Pwede ka muna magbayad bago protest or bayad
then protest (isabay mo). Basta, the protest must be made
within thirty days from the payment of tax.
After protest has been filed, the local treasurer involved
must decide the protest within 60 days from receipt. There
are three possibilities that will happen:
1. The local treasurer will agree – so daug ang
taxpayer or lot owner
2. The local treasurer may disagree – of course the
taxpayer will receive a decision
3. The local treasurer will not do anything.
How many days is given for the local assessor to decide?
60 days.
What will the taxpayer do if the taxpayer receives a
decision within the 60-day period? “In the event that the
protest is denied or upon the lapse of the sixty day period
prescribed in subparagraph (a), the taxpayer may avail of
the remedies as provided for in Chapter 3, Title II, Book II
of this Code.”
If I’m not mistaken, this refers to the filing of an action
against the local government before the appropriate courts,
MTC or RTC, depending on the jurisdictional amounts.
What if there is no action on the part of the local treasurer?
The taxpayer has 30 days within which to appeal before
the RTC or MTC depending on the jurisdictional amount.
Then you have the repayment of excessive collections:
Section 253. Repayment of Excessive Collections. -
When an assessment of basic real property tax, or any
other tax levied under this Title, is found to be illegal or
erroneous and the tax is accordingly reduced or adjusted,
the taxpayer may file a written claim for refund or credit for
taxes and interests with the provincial or city treasurer
within two (2) years from the date the taxpayer is entitled to
such reduction or adjustment.
The provincial or city treasurer shall decide the
claim for tax refund or credit within sixty (60) days from
receipt thereof. In case the claim for tax refund or credit is
denied, the taxpayer may avail of the remedies as provided
in Chapter 3, Title II, Book II of this Code.
13 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
Tax refunds are also available when you talk about real
property taxation. For refund of real property taxes, you
must have a written request for refund and file it before the
treasurer within two years.
The local treasurer has 60 days within which to decide. If
the decision is adverse, you follow the rules on the local
taxation.
These remedies and protests – you do it when there is
some sort of discrepancy on the tax liability of the taxpayer.
Discrepancy on the amount ha.
What if the problem is the assessment itself? For example,
the assessor will make an assessment of a property when
in fact that property was used by corporation. Ano ang
remedy ng taxpayer dito? File an appeal. If the taxpayer
receives an assessment, the taxpayer shall file an appeal
of Local Board Assessment Appeals (LBAA).
Section 226. Local Board of Assessment Appeals. -
Any owner or person having legal interest in the property
who is not satisfied with the action of the provincial, city or
municipal assessor in the assessment of his property may,
within sixty (60) days from the date of receipt of the written
notice of assessment, appeal to the Board of Assessment
Appeals of the provincial or city by filing a petition under
oath in the form prescribed for the purpose, together with
copies of the tax declarations and such affidavits or
documents submitted in support of the appeal.
The composition is found under Section 227.
Section 227. Organization, Powers, Duties, and
Functions of the Local Board of Assessment Appeals.
– assessor. If you do not agree with the assessment, file na
(a) The Board of Assessment Appeals of the
province or city shall be composed of the Registrar of
Deeds, as Chairman, the provincial or city prosecutor and
the provincial, or city engineer as members, who shall
serve as such in an ex officio capacity without additional
compensation.
(b) The chairman of the Board shall have the
power to designate any employee of the province or city to
serve as secretary to the Board also without additional
compensation.
(c) The chairman and members of the Board of
Assessment Appeals of the province or city shall assume
their respective positions without need of further
appointment or special designations immediately upon
effectivity of this Code. They shall take oath or affirmation
of office in the prescribed form.
(d) In provinces and cities without a provincial or
city engineer, the district engineer shall serve as member
of the Board. In the absence of the Registrar of Deeds, or
the provincial or city prosecutor, or the provincial or city
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
engineer, or the district engineer, the persons performing
their duties, whether in an acting capacity or as a duly
designated officer-in-charge, shall automatically become
the chairman or member, respectively, of the said Board,
as the case may be.
The property owner has 60 days, from the receipt of the
assessment, to file an appeal with the LBAA.
What is the form of the appeal? It is through a verified
petition: “filing a petition under oath in the form prescribed
for the purpose, together with copies of the tax declarations
and such affidavits or documents submitted in support of
the appeal”.
Who are the persons entitled to appeal?
1. Property owner
2. Persons with legal interests over the property
General rule: Owner of the property
Exceptions:
1. Owner is except
2. Actual or beneficial use is transferred to some
other person (that person who uses the property,
for taxable purposes, shall pay the RPT)
How many days are given to file the appeal? You have 60
days from the receipt of the written notice of assessment.
Sabihin natin meron kang bagong bahay. Then the local
assessor made an assessment of your house which is
really outrageous. Masyadong mataas. Do you still need to
file a Motion for Reconsideration before the local assessor?
No need to file na. You immediately appeal. What is just
required is that there is an assessment made by the
agad sa LBAA.
What will happen if you file a Motion for Reconsideration
and you wait for the decision of the local assessor? The
reglementary period within which to appeal will not toll.
Eventually, if you cannot file an appeal before the LBAA on
time, then the assessment will become final. Hence, you
cannot appeal na.
Section 229. Action by the Local Board of Assessment
Appeals. –
(a) The Board shall decide the appeal within one
hundred twenty (120) days from the date of receipt of such
appeal. The Board, after hearing, shall render its decision
based on substantial evidence or such relevant evidence
on record as a reasonable mind might accept as adequate
to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the
Board shall have the power to summon witnesses,
administer oaths, conduct ocular inspection, take
14 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
depositions, and issue subpoena and subpoena duces
tecum. The proceedings of the Board shall be conducted
solely for the purpose of ascertaining the facts without
necessarily adhering to technical rules applicable in judicial
proceedings.
(c) The secretary of the Board shall furnish the
owner of the property or the person having legal interest
therein and the provincial or city assessor with a copy of
the decision of the Board. In case the provincial or city
assessor concurs in the revision or the assessment, it shall
be his duty to notify the owner of the property or the person
having legal interest therein of such fact using the form
prescribed for the purpose. The owner of the property or
the person having legal interest therein or the assessor
who is not satisfied with the decision of the Board, may,
within thirty (30) days after receipt of the decision of said
Board, appeal to the Central Board of Assessment
Appeals, as herein provided. The decision of the Central
Board shall be final and executory.
After receiving the verified petition with supporting
documents and affidavits, the LBAA now has 120 days to
decide. Of course, there will be a meeting conducted.
What is the quantum of evidence required? Only
substantial evidence.
The LBAA has the power to issue subpoena, summon
witness, etc.
What if the owner of the property or taxpayer receives and
adverse decision? The owner of the property or the person
having legal interest therein or the assessor who is not
satisfied with the decision of the Board, may, within thirty
(30) days after receipt of the decision of said Board, appeal
to the Central Board of Assessment Appeals, as herein
provided. The decision of the Central Board shall be final
and executory.
So no Motion for Reconsideration pa rin. You go to the
Central Board of Assessment Appeals or CBAA.
Section 230. Central Board of Assessment Appeals. -
The Central Board of Assessment Appeals shall be
composed of a chairman, and two (2) members to be
appointed by the President, who shall serve for a term of
seven (7) years, without reappointment. Of those first
appointed, the chairman shall hold office for seven (7)
years, one member for five (5) years, and the other
member for three (3) years. Appointment to any vacancy
shall be only for the unexpired portion of the term of the
predecessor. In no case shall any member be appointed or
designated in a temporary or acting capacity. The chairman
and the members of the Board shall be Filipino citizens, at
least forty (40) years old at the time of their appointment,
and members of the Bar or Certified Public Accountants for
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
at least ten (10) years immediately preceding their
appointment. The chairman of the Board of Assessment
Appeals shall have the salary grade equivalent to the rank
of Director III under the Salary Standardization Law
exclusive of allowances and other emoluments. The
members of the Board shall have the salary grade
equivalent to the rank of Director II under the Salary
Standardization Law exclusive of allowances and other
emoluments. The Board shall have appellate jurisdiction
over all assessment cases decided by the Local Board of
Assessment Appeals.
There shall be Hearing Officers to be appointed
by the Central Board of Assessment Appeals pursuant to
civil service laws, rules and regulations, one each for
Luzon, Visayas and Mindanao, who shall hold office in
Manila, Cebu City and Cagayan de Oro City, respectively,
and who shall serve for a term of six (6) years, without
reappointment until their successors have been appointed
and qualified. The Hearing Officers shall have the same
qualifications as that of the Judges of the Municipal Trial
Courts.
The Central Board Assessment Appeals, in the
performance of its powers and duties, may establish and
organize staffs, offices, units, prescribe the titles, functions
and duties of their members and adopt its own rules and
regulations.
Unless otherwise provided by law, the annual
appropriations for the Central Board of Assessment
Appeals shall be included in the budget of the Department
of Finance in the corresponding General Appropriations
Act.
What’s the composition? Just look at the provision. There
is one chairman and two members.
Who may appeal before the CBAA?
1. The owner or the person having legal interest
over the property.
2. The local assessor. In behalf of the city,
municipality or province.
What if the decision of the CBAA is still adverse sa
taxpayer? The next remedy is to appeal the decision of the
CBAA is to appeal with the Court of Tax Appeals. This
time, it should be the CTA en banc. Local taxation, after
natin sa RTC, you go to CTA division then CTA en banc
then SC.
When you go to real property taxation, when you go to
figures, if you have protest, you just need to pay under
protest. Then file ka ng protest sa RTC or MTC depending
on the jurisdictional amount then CTA division then CTA en
banc then SC.
But when you talk about challenging the assessment, you
start from the LBAA to CBAA to CTA en banc to SC. The
15 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
CTA en banc has exclusive appellate jurisdiction to review
by appeal the decisions of the CBAA.
Take note also of the affect of appeal on the payment of
real property tax.
Section 231. Effect of Appeal on the Payment of Real
Property Tax. - Appeal on assessments of real property
made under the provisions of this Code shall, in no case,
suspend the collection of the corresponding realty taxes on
the property involved as assessed by the provincial or city
assessor, without prejudice to subsequent adjustment
depending upon the final outcome of the appeal.
PART II. CUSTOMS MODERNIZATION AND
TARIFF ACT
April 7, 2017 (1st Hour)
(By: Alona Suzell B. Ruyeras)
TARIFF AND CUSTOMS CODE
*Latest Law: An Act Modernizing the Customs and
Tariff Administration (Republic Act No. 10863) 10 June
2016
Let’s talk about Customs Modernization and
Tariff Act (CMTA) or Republic Act 10863.
I have been looking for the Internal Rules and
Regulations (IRR) for this but I haven’t yet found one. So
we will be dealing more with the codal provisions of the law
because that will always be the bread and butter when you
take the bar examinations.
Now, this is called Customs Modernization and
Tariff Act (CMTA) or Republic Act 10863. Before, it is
called the Tariff and Customs Code of the Philippines
(TCCP) or Presidential Decree 1464 which already has
undergone a lot of amendments. Since a lot of the
provisions in that law has already become obsolete
because of progress, etc., the Congress finally decided to
enact this new law which makes our custom law at par with
other international laws on customs and tariffs.
If you want a textbook, isa lang yung nakita ko,
the author is Domondon. But it’s a pretty much useless
book (Lol). It’s just more on codal and indicates whether
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
certain provisions of the TCCP has been amended or
revoked by the new law.
Do we need to compare TCCP and CMTA in the first
place?
Yes. There should somehow be a comparison
between TCCP and CMTA because, as the book would
say, about 80% of the provisions of the TCCP are re-
enacted in the CMTA. And, based on the repealing clause
of the CMTA, all laws which are not inconsistent therewith
are considered to be still in force and in effect. So from
time to time, we have to refer to the provisions of the TCCP
including its IRR.
Let’s start with the Bureau of Customs (BOC).
Since we are talking about tariffs and customs, the main
agency we will be dealing with is the Bureau of Customs.
Before, there were only four (4) Deputy Commissioners,
right now, there are four (4) to six (6) Deputy
Commissioners. They are all Presidential appointees and
majority of them should be from the ranks of the BOC.
Section 200. Chief Officials of the Bureau.— The
Bureau shall be headed by a Commissioner and shall be
assisted by at least four (4) but not more than six (6)
Deputy Commissioners.
The Commissioner shall be appointed by the President of
the Philippines.
The Deputy Commissioners shall also be appointed by the
President and at least majority of whom shall come from
the ranks of the Bureau.
What are the Functions and Powers of the BOC?
This is found in Section 202 of the CMTA:
Section 202. Functions of the Bureau.— The Bureau
shall exercise the following duties and functions:
(a) Assessment and collection of customs revenues from
imported goods and other dues, fees, charges, fines and
penalties accruing under this Act;
(b) Simplification and harmonization of customs procedures
to facilitate movement of goods in international trade;
(c) Border control to prevent entry of smuggled goods;
(d) Prevention and suppression of smuggling and other
16 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
customs fraud;
(e) Facilitation and security of international trade and
commerce through an informed compliance program;
(f) Supervision and control over the entrance and clearance
of vessels and aircraft engaged in foreign commerce;
(g) Supervision and control over the handling of foreign
mails arriving in the Philippines for the purpose of collecting
revenues and preventing the entry of contraband;
(h) Supervision and control on all import and export
cargoes, landed or stored in piers, airports, terminal
facilities, including container yards and freight stations for
the protection of government revenue and prevention of
entry of contraband;
(i) Conduct a compensation study with the end view of
developing and recommending to the President a
competitive compensation and remuneration system to
attract and retain highly qualified personnel, while ensuring
that the Bureau remains financially sound and sustainable;
(j) Exercise of exclusive original jurisdiction over forfeiture
cases under this Act; and
(k) Enforcement of this Act and all other laws, rules and
regulations related to customs administration.
If you read it, it is basically the enforcement of
the CMTA and other related laws, those relating to customs
and tariffs. Customs administration is lodged with the BOC.
Just to summarize, the powers start from the assessment
of the taxes and fees, including the fine and surcharges,
there is also the simplification and harmonization of
international trade, imports and exports of goods, the ports
and porters and the exclusive jurisdiction over forfeiture
cases under the CMTA.
There are two (2) important officers in the BOC.
1. Commissioner of Customs (COC)
2. District Collectors (DCs)
Let’s start with the Commissioner or the
Commissioner of Customs (COC). He is practically the
highest official of the BOC. Ang counterpart nya sa BIR is
the Commissioner of Internal Revenue (CIR). His (COC)
functions are found in Sections 201 and 204 of the CMTA:
Section 201. Powers and Functions of the
Commissioner.— The Commissioner shall have the
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
following powers and functions:
(a) Exclusive and original jurisdiction to interpret the
provisions of this Act, in collaboration with other relevant
government agencies, subject to review by the Secretary of
Finance;
(b) Exercise any customs power, duties and functions,
directly or indirectly;
(c) Review any action or decision of any customs officer
performed pursuant to the provisions of this Act;
(d) Review and decide disputed assessments and other
matters related thereto, subject to review by the Secretary
of Finance and exclusive appellate jurisdiction of the Court
of Tax Appeals (CTA);
(e) Delegate the powers vested under this Act to any
customs officer with the rank equivalent to division chief or
higher, except for the following powers and functions:
(1) Promulgation of rules and regulations;
(2) Issuance, revocation or modification of rulings; and
(3) Compromise or abate of customs obligations.
(f) Assignment or reassignment of any customs officer
subject to the approval of the Secretary of Finance;
Provided, That District Collectors and other customs
officers that perform assessment functions shall not remain
in the same area of assignment for more than three (8)
years; and
(g) Perform all other duties and functions as may be
necessary for the effective implementation of this Act and
other customs related laws.
Section 204. Promulgation of Rules and Regulations.—
The Commissioner, subject to the approval of the
Secretary of Finance, shall promulgate rules and
regulations for the enforcement of this Act. The
Commissioner shall regularly prepare and publish an
updated customs manual, and the rules, regulations and
decisions of the Bureau. The Commissioner shall furnish
the Congress of the Philippines, the NEDA and the Tariff
Commission with electronic copies of department orders,
administrative orders, circulars, and rules and regulations
promulgated pursuant to this Act.
To summarize, the COC has the power to
interpret the provisions of the CMTA, the power to enforce
17 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
the CMTA and other related laws, the power to repeal the
actions of customs officers, the power to delegate, the
power to assign or reassign customs officials and
promulgate rules and regulations. Take note that the
Commissioner, subject to the approval of the Secretary of
Finance, shall promulgate rules and regulations for the
enforcement of this Act.
Now, what is peculiar about the CMTA is the
emphasis on transparency. There is a provision there
which says that any implementing rules and regulations
must be published from time to time which includes the
uploading in the internet or in websites. The BOC, now, will
publish not only the rules and regulations but also all the
rulings that they have made except those information which
are considered as confidential.
Next, for the implementation of the customs law,
the entire Philippines is divided into customs districts. This
is pretty much the same with the revenue districts when it
comes to the Internal Revenue Code. In every customs
district, there will be a customs district collector. This is
equivalent to the revenue district collector of the NIRC. The
district collector will be assisted by the deputy district
collector. The customs districts shall supervise the ports of
entry under each jurisdiction.
Section 206. Customs Districts.— For administrative
purposes, the Philippines shall be divided into as many
Customs Districts as necessary, the respective limits of
which may be changed from time to time by the
Commissioner, with the approval of the Secretary of
Finance.
Each Customs District shall be supervised by one (1)
District Collector, assisted by as many Deputy District
Collectors as may be necessary. The choice of the location
of a District Office, its business hours and the staffing
pattern thereof, shall be based on the particular
requirements of each district.
What do you understand by a Port of Entry?
Under Section 102 (HH), holding hands (Lol), of
the CMTA:
Section 102. Definition of Terms.— As used in this Act:
xxx
(hh) Port of Entry refers to a domestic port open to both
domestic and international trade, including principal ports
of entry and subports of entry. A principal port of entry is
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
the chief port of entry of the Customs District wherein it is
situated and is the permanent station of the District
Collector of such port. Subports of entry are under the
administrative jurisdiction of the District Collector of the
principal port of entry of the Customs District. Port of entry
as used in this Act shall include airport of entry; xxx
So there are two (2) types of Ports of Entry:
1. Principal Port of Entry – chief port of entry of
the Customs District wherein it is situated and is
the permanent station of the District Collector of
such port
Under the CMTA, there’s an enumeration of what are
the Principal Ports of Entries.
Section 207. Ports of Entry.— All ports of entry shall be
under the supervision and control of a Customs District. A
District Collector shall be assigned in the principal ports
of entry while a Deputy District Collector may be assigned
to other types of ports of entry.
The principal ports of entry shall be located in Aparri, San
Fernando, Manila, Manila International Container Port,
Ninoy Aquino International Airport, Subic, Clark,
Batangas, Legaspi, Iloilo, Cebu, Tacloban, Surigao,
Cagayan de Oro, Zamboanga, Davao, Limay and such
other ports that may be created pursuant to this Act.
For the effective enforcement of the Bureau's functions and
without hampering business and commercial operations of
the ports, sea ports and airport authorities and private ports
and airport operators shall provide suitable areas for
examination, and for other customs equipment free of
charge within a definite period of time, as agreed with
private port and airport operations, if any.
All other ports are subports. Dito siguro sa Davao City,
our Principal Port of Entry siguro nandyan sa Sasa Wharf.
But we know we also have ports in Tagum or Mati. So yan
mga subports na yan.
2. Subports -under the administrative jurisdiction of
the District Collector of the principal port of entry
of the Customs District.
The district collectors are assigned at the principal
ports. This is under Section 207 (see previous reference).
What are the Duties of a District Collector?
18 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
This is found in Section 210:
Section 210. Duties of the District Collector.— The
District Collector shall have the following duties in their
assigned Customs District:
(1) Ensure entry of all imported goods at the customs
office;
(2) Prevent importation and exportation of prohibited
goods;
(3) Ensure legal compliance of regulated goods and
facilitate the flow of legitimate trade;
(4) Examine, classify and value imported goods;
(5) Assess and collect duties, taxes and other charges on
imported goods;
(6) Hold and dispose imported goods in accordance with
this Act;
(7) Prevent smuggling and other customs fraud; and
(8) Perform other necessary duties that may be assigned
by the Commissioner for the effective implementation of
this Act. Subject to the supervision and control of the
District Collector, the duties and functions of the District
Collector may be delegated to the Deputy District Collector.
The Deputy District Collector assigned to a sub-port shall
be under the supervision and control of the District
Collector of the corresponding principal port.
So if you read that, basically, the district collector
has power over all Ports of Entry within its jurisdiction, it
also has the power to enforce customs law, rules and
regulations within the scope of his territorial jurisdiction.
When we talk of “Territorial Jurisdiction” here, we
do not only talk about the Ports of Entry or Subports but all
territory under his jurisdiction. For example, may vessel
dyan somewhere na naka float, we will never know.
Basically, the District Collector is like a mini
Commissioner of Customs, only that the territorial coverage
is just limited. Of course, he (DC) has to report to the COC
with regard to all transactions within his district.
When does the CMTA and Other Customs Law apply?
If you remember in Consti 1, one of the
exceptions to warrants of arrest (which means there may
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
be warrantless search and seizure) is when it involves
Customs Law. So if particular goods or places are
searched by the Customs (BOC), there can be no warrant.
Going back to the question, when will we know
that CMTA and Other Customs Law apply? When there’s
importation or exportation of goods. It is not limited to
the goods imported or exported but also the means by
which these goods are transported (e.g. vessels, land
transportation, air transportation).
What is Importation?
The technical definition is found in Section 102
(Z):
Section 102. Definition of Terms.— As used in this Act:
xxx
(z) Importation refers to the act of bringing in of goods from
a foreign territory into Philippine territory, whether for
consumption, warehousing, or admission as defined in this
Act; xxx
What about Exportation?
Section 102. Definition of Terms.— As used in this Act:
xxx
(s) Exportation refers to the act, documentation, and
process of bringing goods out of Philippine territory; xxx
Going back to importation, we said that it is the
act of bringing in of goods from a foreign territory into
Philippine territoryas defined in this Act. Therefore, we
need to know the meaning of technical definition of
importation. Know this by heart because this always comes
out of the bar exams: When does importation begin and
when does it End?
When does Importation begin?
Section 103:
Section 103. When Importation Begins and Deemed
Terminated.—Importation begins when the carrying
vessel or aircraft enters the Philippine territory with the
intention to unload therein. Importation is deemed
terminated when:
(a) The duties, taxes and other charges due upon the
goods have been paid or secured to be paid at the port of
entry unless the goods are free from duties, taxes and
19 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
other charges and legal permit for withdrawal has been
granted; or
(b) In case the goods are deemed free of duties, taxes and
other charges, the goods have legally left the jurisdiction of
the Bureau.
Importation begins when the carrying vessel or
aircraft enters the Philippine territory with the intention
to unload therein.
You have to read the case of:
FEEDER INTERNATIONAL LINE, PTE., LTD vs CA
G.R. No. 94262, May 31, 1991
Facts:
There is a foreign vessel owned by Feeder International
Shipping Lines carrying gas and fuel oil. The vessel
anchored somewhere in Ilo-ilo without informing the
customs. An informant thereafter gave details as to such
vessel. The customs, then, inspected the vessels and
found out that it had no required documents. Forfeiture
procedures then ensued not only of the cargoes but
including the vessel. From the Collector of Customs all the
way to the CTA, talo ang petitioner.
Issue: W/N there is legal importation (Is there importation
to begin-with?)
International Feeder’s Argument:It claimed not to be
guilty because the importation did not begin in the first
place. In fact, we did not unload anything.
Ruling:
The SC held that International Feeder is guilty of illegal
importation because even if there is no actual unloading of
the articles, still what matters is the intention to unload.
The actual unloading of the cargo is not necessary. The
mere intention to unload is enough. Under the evidence
presented, Feeder has the intention to unload plus there
are lacking documents for importation. How did the
Customs determine that there was an intention to
unload?The SC said that the numerous violations of the
customs law and the lack of any documentation are
considered indicative of the intent to unload without
informing the Customs.
When does Importation End?
Still, Section 103:
Section 103. When Importation Begins and Deemed
Terminated.— Importation begins when the carrying
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
vessel or aircraft enters the Philippine territory with the
intention to unload therein. Importation is deemed
terminated when:
(a) The duties, taxes and other charges due upon the
goods have been paid or secured to be paid at the port
of entry unless the goods are free from duties, taxes
and other charges and legal permit for withdrawal has
been granted; or
(b) In case the goods are deemed free of duties, taxes
and other charges, the goods have legally left the
jurisdiction of the Bureau.
So there are two (2) scenarios here:
1. If the goods are imposed upon with taxes and
other charges and duties;
2. Goods which are free from duties and taxes.
First scenario: When goods are subject to duties, taxes
and other charges
*When is importation terminated?
Two (2) requisites must concur:
1. Duties and taxes have been paid or secured to
be paid at the Port of Entry. Take note, this does
not only involve the payment of customs duties
but also of taxes (e.g. VAT);
2. There must be a Legal Permit for Withdrawal
granted by the customs.
Second scenario: When goods are not subject to
duties, taxes and other charges
*When is importation terminated?
It is when the goods have legally left the
jurisdiction of the Bureau. Maybe the goods were already
taken out of the warehouse, the territorial jurisditction or
from the Port of Entry.
SECRETARY OF FINANCE VS. ORO MAURA SHIPPING
LINES
G.R. No. 156946 July 15, 2009
This case will illustrate to you when the importation has
ended.
Facts:
What is imported here is a ship. M/V Haruna from Japan.
They claim that it is a tax-free importation. Now, if it is a
tax-free importation, there must be the filing of a bond. Of
20 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
course, there must also be a letter of credit. Later on, Cebu
demanded the payment of taxes from Glory Shipping Lines
(the importer) because the bond expired. In the meantime,
Glory sold the ship to Oro Maura Shipping Lines. Oro
reported the same transaction as an importation but this
time, in the Port of Manila. When the Government of Cebu
learned of the same, it assessed Oro for deficiency taxes.
Oro argued that taxes have already been paid in the Port of
Mactan.
Issue:Was the importation terminated?
Ruling:
No. In this case, importation has not yet been terminated. It
is immaterial that taxes have already been paid in the Port
of Mactan because the entire process is only a continuation
of the original importation.
For importation to terminate, two (2) requisites must be
complied with:
1. Duties and taxes have been paid or secured to
be paid at the Port of Entry;
2. There must be a Legal Permit for Withdrawal
granted by the customs.
Were the two (2) requisites complied with? No.
1. There was no payment of tax by Oro in the Port
of Cebu;
2. There was no Legal Permit of Withdrawal issued
yet.
Who are the persons who may exercise Police
Authority according to the CMTA?
This is found under Section 214:
Section 214. Persons Exercising Police Authority.—
For the effective implementation of this Act, the following
persons are authorized to effect search, seizure, and
arrest:
(a) Officials of the Bureau, District Collectors, Deputy
District Collectors, police officers, agents, inspectors
and guards of the Bureau;
(b) Upon authorization of the Commissioner, officers
and members of the Armed Forces of the Philippines
(AFP) and national law enforcement agencies; and
(c) Officials of the BIR on all cases falling within the
regular performance of their duties, when payment of
internal revenue taxes is involved.
All officers authorized by the Commissioner to exercise
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
police authority shall at all times coordinate with the
Commissioner.
Goods seized by deputized officers pursuant to this section
shall be physically turned-over immediately to the Bureau,
unless provided under existing laws, rules and regulations.
For this purpose, mission orders shall clearly indicate the
specific name carrying out the mission and the tasks to be
carried out.
Subject to the approval of the Secretary of Finance, the
Commissioner shall define the scope, areas covered,
procedures and conditions governing the exercise of such
police authority including custody and responsibility for the
seized goods. The rules and regulations to this effect shall
be furnished to the concerned government agencies and
personnel for guidance and compliance.
All seizures pursuant to this section must be effected in
accordance with the provisions on the conduct of seizure
proceedings provided for in Chapters 3 and 4 of Title XI of
this Act.
Where can the Police Authority be exercised?
It is found under Section 215 in relation to
Section 303:
Section 215. Place Where Authority May be
Exercised.— All persons exercising police authority as
described in the preceding section shall, only exercise
powers within customs premises as provided for in Section
303 of this Act, and within the limits of the authority granted
by the Commissioner, Port and airport authorities in allports
of entry shall provide authorized customs officers with
unhampered access to all premises within their
administrative jurisdiction.
Section 303. Control Over Premises Used for Customs
Purposes.— The Bureau shall, for customs purposes,
have exclusive control, direction and management of
customs offices, facilities, warehouses, ports, airports,
wharves, infrastructure and other premises in the Customs
Districts, in all cases without prejudice to the general police
powers of the local government units (LGUs), the
Philippine Coast Guard and of law enforcement agencies in
the exercise of their respective functions.
What are the Powers of those Persons with Authority
to Exercise Police Authority?
• Power of Seizure under Section 216:
Section 216, Exercise of Power of Seizure.— Any
21 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
person exercising police authority under this Act has the
power and duty to seize any vessel, aircraft, cargo, goods,
animal or any other movable property when the same is
subject to forfeiture or when they are subject of a fine
imposed under this Act.
• Power to Enter Premises under Section 219:
Section 219. Authority to Enter Properties.— Any
person exercising police authority may, at any time, enter,
pass through, and search any land, enclosure, warehouse,
store, building or structure not principally used as a
dwelling house.
When a security personnel or any other employee lives
in the warehouse, store, or any building, structure or
enclosure that is used for storage of goods, it shall not be
considered as a dwelling house for purposes of this Act.
Again, one of the exceptions of the general rule
wherein we can have a warrantless search and seizure is
when it involves Customs Law. This is found under Section
219 of the CMTA.
The rule is that, if it is a land, warehouse or
structure NOT used as a dwelling place, the Customs
Officials authorized to do the search may enter and
conduct a search WITHOUT any search warrant. The
qualification is that, it must NOT be used as a dwelling
house.
What if there is a security personnel inside? It’s
okay. It will still NOT be considered as a dwelling house.
What is it is the security guard and his family?
There was no problem before during the regime of the
TCCP because the law was clear, it will not be considered
a dwelling house even though the employee or his family
dwells in the premises. Specific, family is included. But this
was removed in the CMTA.
This begs the question: What is the treatment if
the family of the employee also lives there? Can a
warrantless search be conducted in the premises? There is
no answer yet. But if you ask me, no. You have to go back
to the intention of the law. If the place is merely for storage,
then it is not a place for dwelling which can be searched by
the Bureau of Customs.
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
The rule is different when it comes to dwelling
houses.
Section 220. Authority to Search Dwelling House.— A
dwelling house may be entered and searched only upon
warrant issued by a Judge of a competent court, the
sworn application thereon showing probable cause and
particularly describing the place to be searched and the
goods to be seized.
So basically, it is alright to search a dwelling
place in the enforcement of Customs Laws, provided, there
is a search warrant. The regular search warrant must be
issued by the Judge.
• Power to Inspect and Visit under Section 224
Section 224. Power to Inspect and Visit.— The
Commissioner or any customs officer who is authorized in
writing by the Commissioner, may demand evidence of
payment of duties and taxes on imported goods openly for
sale or kept in storage. In the event that the interested
party fails to produce such evidence within fifteen (15)
days, the goods may be seized and subjected to forfeiture
proceedings: Provided, That during the proceedings, the
interested party shaUbe given the opportunity to prove or
show the source of the goods and the payment of duties
and taxes thereon: Provided, Further, That when the
warrant of seizure has been issued but subsequent
documents presented evidencing proper payment are
found to be authentic and in order, the District Collector
shall, within fifteen (15) days from the receipt of the motion
to quash or recall the warrant, cause the immediate release
of the goods seized, subject to clearance by the
Commissioner: Provided, Finally, That the release thereof
shall not be contrary to law.
Let’s go to Customs Jurisdiction. This has
something to do with the Customs Territorial Jurisdiction.
Section 300. Customs Jurisdiction.— For the effective
implementation of this Act, the Bureau shall exercise
jurisdiction over all seas within Philippine territory and
all coasts, ports, airports, harbors, bays, rivers and
inland waters whether navigable or not from the sea
and any means of conveyance.
The Bureau shall pursue imported goods subject to seizure
during its transport by land, water and air and shall
exercise jurisdiction as may be necessary for the effective
enforcement of this Act. When a vessel or aircraft becomes
subject to seizure for violation of this Act, a pursuit of such
vessel or aircraft which began within the territorial waters or
22 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
air space may continue beyond the same, and the vessel
or aircraft may be seized in the high seas or international
air space.
Also in Section 300, the Doctrine of Hot Pursuit
is incorporated. Second paragraph, “The Bureau shall
pursue imported goods subject to seizure during its
transport by land, water and air and shall exercise
jurisdiction as may be necessary for the effective
enforcement of this Act. When a vessel or aircraft becomes
subject to seizure for violation of this Act, a pursuit of such
vessel or aircraft which began within the territorial waters or
air space may continue beyond the same, and the vessel
or aircraft may be seized in the high seas or international
air space.”
We also have Section 301:
Section 301. Customs Control Over Goods.— All goods,
including means of transport, entering or leaving the
customs territory, regardless of whether they are liable to
duties and taxes, shall be subject to customs control to
ensure compliance with this Act.
In the application of customs control, the Bureau shall
employ audit-based controls and risk management
systems, use automation to the fullest extent possible, and
adopt a compliance measurement strategy to support risk
management.
The Bureau shall seek to cooperate and conclude mutual
administrative assistance agreements with other customs
administrations to enhance customs control. The Bureau
shall consult, coordinate, and cooperate with other
government regulatory agencies, free zones authorities,
and the customs stakeholders, in general, to enhance
customs control.
The jurisdiction of the BOC also extends to the
goods.
April 7, 2017 (2nd
Hour)
(By: Peter Quiel Vega)
The jurisdiction of BOC is not limited to vessels
and aircrafts. It also includes the goods.
Section 301. Customs Control Over Goods.— All
goods, including means of transport, entering or
leaving the customs territory, regardless of whether
they are liable to duties and taxes, shall be subject to
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
customs control to ensure compliance with this Act.
In the application of customs control, the Bureau shall
employ audit-based controls and risk management
systems, use automation to the fullest extent possible,
and adopt a compliance measurement strategy to
support risk management.
The Bureau shall seek to cooperate and conclude
mutual administrative assistance agreements with
other customs administrations to enhance customs
control. The Bureau shall consult, coordinate, and
cooperate with other government regulatory agencies,
free zones authorities, and the customs stakeholders,
in general, to enhance customs control.
The first thing that will happen is there is unloading of the
goods and there is this thing called “entry.”
What is this “entry”?
Upon unloading, the goods must be declared and entered
at the customs office of the port of entry. As provided in
section 400.
Section 400. Goods to be Imported through
Customs Office.— All goods imported into the
Philippines shall be entered through a customs
office at a port of entry, or may be admitted to or
removed from a free zone as defined in this Act, as
the case may be.
Which comes first? Declaration or entry? How do you
define “entry” in ordinary definition?
Entry is an act of documentation and bringing in goods in
the customs territory including the goods coming from the
free zone. Part of the entry is the declaration.
What are the types of importation?
1. Free importation
2. Regulated importation
3. Prohibited importation
Section 116. Free Importation and Exportation.—
Unless otherwise provided by law or regulation, all
goods may be freely imported into and exported
from the Philippines without need for import and
export permits, clearances or licenses.
Section 117. Regulated Importation and
Exportation.— Goods which are subject to
regulation shall be imported or exported only after
securing the necessary goods declaration or export
declaration, clearances, licenses, and any other
requirements, prior to importation or exportation. In
23 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
case of importation, submission of requirements
after arrival of the goods but prior to release from
customs custody shall be allowed but only in cases
provided for by governing laws or regulations.
Section 118. Prohibited Importation and
Exportation.— The importation and exportation of
the following goods are prohibited:
(a) Written or printed goods in any form containing
any matter advocating or inciting treason, rebellion,
insurrection, sedition against the government of the
Philippines, or forcible resistance to any law of the
Philippines, or written or printed goods containing
any threat to take the life of, or inflict bodily harm
upon any person in the Philippines;
(b) Goods, instruments, drugs and substances
designed, intended or adapted for producing
unlawful abortion, or any printed matter which
advertises, describes or gives direct or indirect
information where, how or by whom unlawful
abortion is committed;
(c) Written or printed goods, negatives or
cinematographic films, photographs, engravings,
lithographs, objects, paintings, drawings or other
representation of an obscene or immoral character;
(d) Any goods manufactured in whole or in part of
gold, silver or other precious metals or alloys and
the stamp, brand or mark does not Indicate the
actual fineness of quality of the metals or alloys;
(e) Any adulterated or misbranded food or goods for
human consumption or any adulterated or
misbranded drug in violation of relevant laws and
regulations;
(f) Infringing goods as defined under the Intellectual
Property Code and related laws; and
(g) All other goods or parts thereof which
importation and exportation are explicitly prohibited
by law or rules and regulations issued by the
competent authority.
Who makes the declaration?
Section 106. Declarant.— A declarant may be a
consignee or a person who has the right to dispose
of the goods. The declarant shall lodge a goods
declaration with the Bureau and may be:
(a) The importer, being the holder of the bill of
lading; or
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
(b) The exporter, being the owner of the goods to be
shipped out; or
(c) A customs broker acting under the authority of
the importer or from a holder of the bill; or
(d) A person duly empowered to act as agent or
attorney-in-fact for each holder.
In case the consignee or the person who has the
right to dispose of the goods is a juridical person, it
may authorize a responsible officer of the company
to sign the goods declaration as declarant on its
behalf.
The goods declaration submitted to the Bureau
shall be processed by the declarant or by a licensed
customs broker; Provided, That for importations, a
transition period of two (2) years from the effectivity
of this Act is hereby provided during which
subparagraph (d) of this section shall not be
implemented by the Bureau: Provided, Further, That
after two (2) years from the effectivity of this Act,
subparagraph (d) of this section shall take into
effect consistent with international standards and
customs best practices.
The declarant has to declare the goods and the value of
the goods and also the payment of taxes necessary or
connected to importation or exportation.
Section 102. (dd) Lodgement refers to the
registration of a goods declaration with the Bureau;
What are the kinds of entry?
1. Formal entry
- Filed by the customs broker.
2. Informal entry
- Filed by examiner or appraiser
Section 402. Goods Declaration for Consumption.—
All goods declaration for consumption shall be
cleared through a formal entry process except for
the following goods which shall be cleared through
an informal entry process;
(a) Goods of a commercial nature with Free on
Board (FOB) or Free Carrier At (FCA) value of less
than fifty thousand pesos (₱50,000.00). Every three
(3) years after the effectivity of this Act, the
Secretary of Finance shall adjust this amount as
provided herein to its present value, using the
Consumer Price Index (CPI) as published by the
24 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
PSA; and
(b) Personal and household effects or goods, not in
commercial quantity, imported in a passenger’s
baggage or mail.
The Commissioner may adjust the value of goods of
commercial nature that shall be cleared through an
informal entry process without prejudice to the
periodic adjustment period in subparagraph (a) of
this section.
All importations entered through, a formal entry
process shall be covered by a letter of credit or any
verifiable commercial document evidencing
payment or in cases where there is no sale for
export, by any commercial document indicating the
commercial value of the goods.
Conditional declaration of the goods.
Section 403. Provisional Goods Declaration.—
Where the declarant does not have all the
information or supporting documents required to
complete the goods declaration, the lodging of a
provisional goods declaration may be allowed:
Provided, That it substantially contains the
necessary information required by the Bureau and
the declarant undertakes to complete the
information or submit the supporting documents
within forty-five (45) days from the filing of the
provisional goods declaration, which period may be
extended by the Bureau for another forty-five (45)
days for valid reasons.
If the Bureau accepts a provisional goods
declaration, the duty treatment of the goods shall
not be different from that of goods with complete
declaration.
Goods under a provisional goods declaration may
be released upon posting of any required security
equivalent to the amount ascertained to be the
applicable duties and taxes.
Who is deemed the owner of imported goods?
Section 404. Owner of Imported Goods.— All goods
imported into the Philippines shall be deemed to be
the property of the consignee or the holder of the
bill of lading, airway bill or other equivalent
transport document if duly endorsed by the
consignee therein, or, if consigned to order, duly
endorsed by the consignor. The underwriters of
abandoned goods and the salvors of goods saved
from wreck at sea, coast, or in any area of the
Philippines, may be regarded as the consignees.
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
The owner is the one liable for the taxes, fees, and
charges.
Section 405. Liability of Importer for Duties and
Taxes.— Unless relieved by laws or regulations, the
liability for duties, taxes, fees, and other charges
attached to importation constitutes a personal debt
due and demandable against the importer in favor of
the government and shall be discharged only upon
payment of duties, taxes, fees and other charges. It
also constitutes alien on the imported goods which
may be enforced while such goods are under
customs' custody.
When shall the goods declaration be lodge?
Section 407. xxx Goods declaration must be lodged
within fifteen (15) days from the date of discharge of
the last package from the vessel or aircraft. The
period to file the goods declaration may, upon
request, be extended on valid grounds for another
fifteen (15) days: Provided, That the request is made
before the expiration of the original period within
which to file the goods declaration: Provided,
However, That the period of the lodgement of the
goods declaration may be adjusted by the
Commissioner.
Section 411. Contents of Goods Declaration.—
Goods declaration shall contain the names of the
consignee, importing vessel or aircraft, port of
departure, port of destination and date of arrival, the
number and marks of packages, or the quantity, if in
bulk, the nature and correct commodity description
of the goods contained therein, its value as set forth
in a proper invoice, and such other information as
may be required by rules and regulations. Where the
declarant does not have all the information required
to make the goods declaration, a provisional or
incomplete goods declaration shall, for certain
cases and for reasons deemed valid by the Bureau,
be allowed to be lodged: Provided, That it contains
the particulars deemed necessary by the Bureau for
the acceptance of the entry filed and that the
declarant undertakes to complete it within forty-five
(45) days from the filing of the provisional goods
declaration in accordance with Section 403 of this
Act.
Section 412. Statements to be Provided in the
Goods Declaration.— No entry of imported goods
shall be allowed unless the goods declaration has
been lodged with the Bureau. The goods declaration
shall, under penalties of falsification or perjury,
contain the following statements:
25 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)

(a) The invoice and goods declaration contain an
accurate and faithful account of the prices paid or
payable for the goods, and other adjustments to the
price actually paid or payable, and that nothing has
been omitted therefrom or concealed whereby the
government of the Republic of the Philippines might
be defrauded of any part of the duties and taxes
lawfully due on the goods; and
theexamination o£ the goods or to render any
assistance necessary to facilitate the examination.
The Bureau shall take samples of the goods only
when needed to establish the tariff description and
value of goods declared, or to ensure compliance
with this Act. Samples drawn shall be as minimal as
possible.

(b) To the best of the declarant's information and Right now okay naang x-ray examination. As to samples,
belief, all the invoices and bills of lading or airway (refer to the last paragraph above).
bills relating to the goods are the only ones in
Section 420. Conditions for Examination.—
existence relating to the importation in question,
Pursuant to internationally accepted standards, the
and that these documents are in the same state as
Bureau may adopt nonintrusive examination of
when they were received by the declarant, and the
goods, such as the use of x-ray machines.
declaration thereon are in all respects genuine and
true.
Physical examination of the goods shall be
conducted when:
Goods declaration shall be submitted electronically
pursuant to Republic Act No. 8792, otherwise known
(a) It is directed by the Commissioner on account of
as the “Electronic Commerce Act of 2000”. Such
a derogatory information;
declarations when printed and certified by a
competent customs officer as a faithful
(b) The goods are subject to an Alert Order issued
reproduction of the electronic submission shall be
by competent authority;
considered as actionable documents for purposes
of prosecuting a declarant if the declarations are
(c) The goods are electronically selected for
found to be fraudulent.
physical examination;
After the entry there will be examination of goods. Priority (d) There are issues and controversies surrounding
is given to perishable goods. the goods declaration and the import clearance
process; or
EXAMINATION OF GOODS
(e) The importer or declarant requests for the
examination of the goods.
Section 419. Examination of Goods.— Examination
of goods, when required by the Bureau, shall be
The Commissioner may exempt from physical
conducted immediately after the goods declaration
examination the goods of authorized economic
has been lodged. Priority in the examination shall
operators or of those provided for under any
be given to live animals, perishable goods and other
existing trade facilitation program of the Bureau.
goods requiring immediate examination.
Physical examination, when required, shall be
Whenever necessary, a system of coordination and
conducted in an expeditious manner.
joint examination of goods shall be established by
the Bureau and other regulatory agencies under After examination there will be an assessment.
existing laws and regulations.
ASSESSMENT
As a general rule, the Bureau may examine the
goods in the presence of the declarant or an Section 101. xxx Assessment refers to the process
authorized representative. Examination of the goods of determining the amount of duties and taxes and
in the absence of the declarant or authorized other charges due on imported and exported goods;
representative may be allowed in exceptional Basically there will be classification of the goods imported.
circumstance and for valid and justifiable grounds, Then there will be valuation. After the valuation, there will
as may be defined by regulations promulgated by
the Secretary of Finance, upon recommendation of be an assessment of the total taxes of the goods.
the Commissioner. The Bureau may require the Who has the duty of assessment?
declarant to be present or to be represented at Section 424. Duty of Customs Officer Tasked to

Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
26 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
Assess Imported Goods.— For purposes of
assessing duties and taxes on imported goods, the
customs officer shall classify, value, and determine
the duties and taxes to be paid. The customs officer
shall prepare and submit an assessment report as
established under this Act.
The importer may challenge the assessment but this is not
xxx, you call this is a tentative assessment.
Section 425. Tentative Assessment of Goods
Subject to Dispute Settlement.— Assessment shall
be deemed tentative if the duties and taxes initially
assessed are disputed by the importer. The
assessment shall be completed upon final
readjustment based on the tariff ruling in case of
classification dispute, or the final resolution of the
protest case involving valuation, rules of origin, and
other customs issues.
The District Collector may allow the release of the
imported goods under tentative assessment upon
the posting of sufficient security to cover the
applicable duties and taxes equivalent to the
amount that is disputed.
When assessment become final?
Section 429. Final Assessment.— Assessment shall
be deemed final fifteen (15) days after receipt of the
notice of assessment by the importer or consignee.
What is the prescriptive period?
Section 430. Period of Limitation.— In the absence
of fraud and when the goods have been finally
assessed and released, the assessment shall be
conclusive upon all parties three (3) years from the
date of final payment of duties and taxes, or upon
completion of the post clearance audit.
After payment of the final assessment, it doesn’t mean
natapos nan a lahat. Because under the current law, the
BOC is not precluded from demanding further payment
after of the duties and taxes.
After the payment of duties and taxes, the goods declared
shall be released.
Section 431. Release of Goods after Payment of
Duties and Taxes.— Goods declared shall be
released when duties and taxes and other lawful
charges have been paid or secured and all the
pertinent laws, rules and regulations have been
complied with.
When the Bureau requires laboratory analysis of
samples, detailed technical documents or expert
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
advice, it may release the goods before the results
of such examination are known after posting of
sufficient security by the declarant.
This does not preclude the BOC from withholding release
under Section 435.
Section 435. Withholding Release Pending
Satisfaction of Lien.— When the District Collector is
duly notified through a lawful order of a competent
court of a lien for freight, lighterage or general
average upon any imported goods, the District
Collector shall withhold the release of the goods
unless the claim has been paid or secured. In case
of disagreement, the District Collector may release
the goods after payment of the freight and
lighterage due on the quantity or weight landed as
actually determined.
CUSTOMS TRANSIT AND TRANSSHIPMENT
These are 2 exceptions to the rule that importation begins
when the vessel begins to enter into our territories with an
intention to unload therein.
What is this customs transit?
Section 102. xx Transit refers to the customs
procedure under which goods, in its original form,
are transported under customs control from one
customs office to another, or to a free zone;
It will be exempt from duties and taxes. Provided the
importer will follow the rules and regulation for such transit.
What is transshipment?
Section 102. xx Transshipment refers to the
customs procedure under which goods are
transferred under customs control from the
importing means of transport to the exporting
means of transport within the area of one customs
office, which is the office of both importation and
exportation;
Pagabotdiri, balhinsa another barko, then lakawnapud.
There is no intention to unload.
Read Section 603.
Section 603. Customs Transshipment.— Goods
admitted for transshipment shall not be subject to
the payment of duties and taxes: Provided, That the
goods declaration for customs transshipment
particularly indicates such nature of the goods, duly
supported by commercial or transport documents
or evidence as required by the Bureau.
Goods for transshipment must be exported from the
Philippines within thirty (30) days from arrival
thereof. The Commissioner may allow an extension
27 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
of such period after the establishment of valid
reasons.
IMPORT DUTY AND TAX
The goods will be valued.
How will it be valued? There are several methods stated
here. The valuation methods are sequential in application.
Section 700. Sequential Application of Valuation
Methods.— Imported goods shall be valued in
accordance with the provisions of Section 701 of
this Act whenever the conditions prescribed therein
are fulfilled.
Where the customs value cannot be determined
under the provisions of Section 701 of this Act, it is
to be determined by proceeding sequentially
through the succeeding sections hereof to the first
such section under which the customs value can be
determined. Except as provided in Section 704 of
this Act, it is only when the customs value cannot
be determined under the provisions of a particular
section that the provisions of the next section in the
sequence can be used.
If the importer does not request that the order of
Sections 704 and 705 of this Act be reversed, the
normal order of the sequence is to be followed. If
the importer so requests but it is impossible to
determine the customs value under Section 705 of
this Act, the customs value shall be determined
under Section 704.
When the customs value cannot be determined
under Sections 701 through 705, it may be
determined under Section 706 of this Act.
Section 701. Transaction Value System—Method
One.— The transaction value shall be the price
actually paid or payable for the goods when sold for
export to the Philippines adjusted in accordance
with the provisions of tins section: Provided, That:
(a) There are no restrictions as to the disposition or
use of the goods by the buyer other than
restrictions which:
(i) Are imposed or required by law or by Philippine
authorities;
(ii) limit the geographical area in which the goods
may be resold; or
(iii) Do not substantially affect the value of the
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
goods:
(b) The sale or price is not subject to some
condition or consideration for which a value cannot
be determined with respect to the goods being
valued; and
(c) The buyer and the seller are not related, or where
the buyer and the seller are related, that the
transaction value is acceptable for customs
purposes under the provisions hereof.
For purposes of this Act, persons shall be deemed
related only if:
(i) They are officers or directors of one another's
business;
(ii) They are legally recognized partners in business;
(iii) There exists an employer-employee relationship
between them;
(iv) Any person directly or indirectly owns, controls
or holds five percent (5%) or more of the
outstanding voting stocks or shares of both seller
and buyer;
(v) One of them directly or indirectly controls the
other;
(vi) Both of them are directly or indirectly controlled
by a third person;
(vii) Together they directly or indirectly control a
third person; or
(viii) They are members of the same family,
including those related by affinity or consanguinity
up to the fourth civil degree.
Persons who are associated in business with one
another in that one is the sole agent, sole distributor
or sole concessionaire, however described, of the
other shall be deemed to be related for the purposes
of this Act if they fall within any of the eight (8)
cases cited in the preceding paragraph.
In a sale between related persons, the transaction
value shall be accepted as basis for customs
valuation whenever the importer demonstrates that
such value closely approximates one of the
following occurring at or about the same time:
(a) The transaction value in sales to unrelated
buyers of identical or similar goods for export to the
28 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
same country of importation;
(b) The customs value of identical or similar goods
as determined under the provisions of Section 704
of this Act; or
(c) The customs value of identical or similar goods
are determined under the provisions of Section 705
of this Act.
In determining the transaction value, the following
shall be added to the price actually paid or payable
for the imported goods:
(1) To the extent that they are incurred by the buyer
but are not included in the price actually paid or
payable for the imported goods:
(a) Commissions and brokerage fees except buying
commissions;
(b) Cost of containers;
(c) Cost of packing, whether for labor or materials;
(d) Value, apportioned as appropriate, of the
following goods and services: materials,
components, parts and similar items incorporated in
the imported goods; tools; dies; moulds and similar
items used in the production of imported goods;
materials consumed in the production of the
imported goods; and engineering, development,
artwork, design work and plans and sketches
undertaken elsewhere than in the Philippines and
necessary for the production of imported goods,
where such goods and services are supplied
directly or indirectly by the buyer free of charge or
at a reduced cost for use in connection with the
production and sale for export of the imported
goods; and
(e) Amount of royalties and license fees related to
the goods being valued that the buyer must pay
either directly or indirectly, as a condition of sale of
the goods to the buyer.
(2) Value of any part of the proceeds of any
subsequent resale, disposal or use of the imported
goods that accrues directly or indirectly to the
seller;
(3) Cost of transport of the imported goods from the
port of exportation to the port of entry in the
Philippines;
(4) Loading, unloading and handling charges
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
associated with the transport of the imported goods
from the country of exportation to the port of entry
in the Philippines; and
(5) Cost of insurance.
All additions to the price actually paid or payable
shall be made only on the basis of objective and
quantifiable data.
Section 702. Transaction Value of Identical Goods—
Method Two.— Where the dutiable value cannot be
determined under method one, the dutiable value
shall be the transaction value of identical goods
sold for export to the Philippines and exported at or
about the same time as the goods being valued. For
purposes of this section, “Identical goods” refer to
goods which are the same in all respects, including
physical characteristics, quality and reputation.
Minor differences in appearances shall not preclude
goods otherwise conforming to the definition from
being regarded as identical.
If, in applying this section, more than one
transaction value of identical goods are found, the
lowest value shall be used to determine the
customs value.
Section 703. Transaction Value of Similar Goods—
Method Three.— Where the dutiable value cannot be
determined under the preceding method, the
dutiable value shall be the transaction value of
similar goods sold for export to the Philippines and
exported at or about the same time as the goods
being valued. For purposes of this section, “Similar
goods” refer to goods which, although not alike in
all respects, have like characteristics and similar
component materials which enable them to perform
the same functions and to be commercially
interchangeable. The quality of the goods, its
reputation and the existence of a trademark shall be
among the factors to be considered in determining
whether goods are similar.
If, in applying this section, more than one
transaction value of identical goods are found, the
lowest such value shall be used to determine the
customs value.
Section 704. Deductive Value—Method Four.—
Where the dutiable value cannot be determined
under the preceding method, the dutiable value
shall be the deductive value unless otherwise
requested by the importer as provided in Section
700 hereof. The deductive value which shall be
based on the unit price at which the imported goods
29 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
or identical or similar imported goods are sold in
the Philippines, in the same condition as when
imported, in the greatest aggregate quantity, at or
about the time of the importation of the goods being
valued, to persons not related to the persons from
whom they buy such goods, subject to deductions
for the following:
(1) Either the commissions usually paid or agreed to
be paid or the additions usually made for profit and
general expenses in connection with sales in such
country of imported goods of the same class or
kind;
(2) The usual costs of transport and insurance and
associated costs incurred within the Philippines;
(3) Where appropriate, the costs of: (i) transport of
the imported, goods from the port of exportation to
the port of entry in the Philippines; (ii) loading,
unloading and handling charges associated with the
transport of the imported goods from the country of
exportation to the port of entry in the Philippines;
and (iii) insurance; and
(4) The customs duties and other national taxes
payable in the Philippines by reason of the
importation or sale of the goods.
If neither the imported goods nor identical nor
similar imported goods are sold at or about the time
of importation of the goods being valued in the
Philippines in the conditions they were imported,
the customs value shall, subject to the conditions
set forth in the preceding paragraph, be based on
the unit price at which the imported goods or
identical or similar imported goods sold in the
Philippines in the condition they were imported and
at the earliest date after the importation of the
goods being valued, but before the expiration of
ninety (90) days after such importation.
If neither the imported goods nor identical nor
similar imported goods are sold in the Philippines in
the condition as imported, then, if the importer so
requests, the dutiable value shall be based on the
unit price at which the imported goods, after further
processing, are sold in the greatest aggregate
quantity to persons in the Philippines who are not
related to the persons from whom they buy such
goods, subject to allowance for the value added by
such processing and deductions provided under
subsections (1), (2), (3) and (4) hereof.
Section 705. Computed Value—Method Five.—
Where the dutiable value cannot be determined
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
under the preceding method, the dutiable value
shall be the computed value of the sum of:
(1) The cost or the value of materials and fabrication
or other processing employed in producing the
imported goods;
(2) The amount for profit and general expenses
equal to that usually reflected in the sale of goods
of the same class or kind as the goods being valued
which are made by producers in the country of
exportation for export to the Philippines;
(3) The freight, insurance fees and other
transportation expenses for the importation of the
goods;
(4) Any assist, if its value is not included under
paragraph (1) hereof; and
(5) The cost of containers and packing, if their
values are not included under paragraph (1) hereof.
The Bureau shall not require or compel any person
not residing in the Philippines to produce for
examination, or to allow access to, any account or
other record for the purpose of determining a
computed value. However, information supplied by
the producer of the goods for the purposes of
determining the customs value may be verified in
another country with the agreement of the producer
and provided that said producer will give sufficient
advance notice to the government of the country in
question and that the latter does not object to the
investigation.
Section 706. Fallback Value—Method Six.— If the
dutiable value cannot be determined under the
preceding methods described above, it shall be
determined by using other reasonable means and
on the basis of data available in the Philippines. If
the importer so requests, the importer shall be
informed in writing of the dutiable value determined
under method six and the method used to determine
such value.
No dutiable value shall be determined under method
six on the basis of:
(1) The selling price in the Philippines of goods
produced in the Philippines;
(2) A system that provides for the acceptance for
customs purposes of the higher of two (2)
alternative values;
30 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
(3) The price of goods in the domestic market of the
country of exportation;
(4) The cost of production, other than computed
values, that have been determined for identical or
similar goods in accordance with method five
hereof;
(5) The price of goods for export to a country other
than the Philippines;
(6) Minimum customs values; or
(7) Arbitrary or fictitious values.
SPECIAL DUTIES AND
TRADE REMEDY MEASURES
What are these remedy measures?
Section 709. Government's Right of Compulsory
Acquisition.— In order to protect government
revenues against undervaluation of goods, the
Commissioner may, motuproprio or upon the
recommendation of the District Collector, acquire
imported goods under question for a price equal to
their declared customs value plus any duties
already paid on the goods, payment for which shall
be made within ten (10) working days from issuance
of a warrant signed by the Commissioner for the
acquisition of such goods.
An importer who is dissatisfied with a decision of
the Commissioner pertaining to this section may,
within twenty (20) working days after the date on
which notice of the decision is given, appeal to the
Secretary of Finance, and thereafter if still
dissatisfied, to the CTA as provided for in Section
1136 of this Act.
Where no appeal is made by the importer, or upon
reaffirmation of the Commissioner's decision during
the appeals process, the Bureau or its agents shall
sell the acquired goods pursuant to existing laws
and regulations.
Nothing in this section limits or affects any other
powers of the Bureau with respect to the disposition
of the goods or any liability of the importer or any
other person with respect to an offense committed
in the importation of the goods.
Special tasks?
1. Marking duty
2. Anti-Dumping duty
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
3. Safeguard duty
4. Countervailing duty
5. Discriminatory Duty
Special task siya because normally these duties are
imposed to protect the industry of the Philippines.
1. Marking Duty
- When we talk about marking duty, this is
essentially an additional duty imposed for
failure or improper marking of the goods or
its containers.
- The goods must be marked accordingly and
such mark must indicate clearly the country
of origin of such articles or goods imported.
- Why is it important to indicate the country of
origin? Because we have different
agreements.
Section 710. Marking of Imported Goods and
Containers.—
(A) Marking of Goods.— Except as hereinafter
provided, all goods of foreign origin imported into
the Philippines or their containers, as provided in
subsection (B) hereof shall be conspicuously
marked in any official language of the Philippines as
legibly, indelibly and permanently as the nature of
the goods or container will permit and in such
manner as to indicate to an ultimate purchaser in
the Philippines the name of the country of origin of
the goods. Pursuant thereto, the Commissioner
shall, with the approval of the Secretary of Finance:
-
- (1) Determine the character of words
and phrases or abbreviation thereof
which shall be acceptable as
indicating the country of origin and
prescribe any reasonable method of
marking, whether by printing,
stenciling, stamping, branding,
labeling or by any other reasonable
method, and in a conspicuous place
on the goods or container where the
marking shall appear;
-
- (2) Require the addition of other
words or symbols which may be
appropriate to prevent deception or
mistake as to the origin of the goods
or as to the origin of any other goods
with which such imported goods is
usually combined subsequent to
importation but before delivery to an
31 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)

ultimate purchaser; and purpose of the importer, producer,

- seller or shipper to avoid compliance
- (3) Authorize the exception of any with this section.
goods from the requirements of -
marking if: (B) Marking of Containers.— Whenever goods are
- exempt under paragraph (3) of subsection (A) of this
- (i) Such goods are incapable of being section from the requirements of marking, the
marked; immediate container, if any, of such goods, or such
- other container or containers of such goods, shall
- (ii) Such goods cannot be marked be marked in such manner as to indicate to an
prior to shipment to the Philippines ultimate purchaser in the Philippines the name of
without injury; the country of origin of such goods in any official
- language of the Philippines, subject to all
- (iii) Such, goods cannot be marked provisions of this section, including the same
prior to shipment to the Philippines, exceptions as are applicable to goods under
except at an expense economically paragraph (3) of subsection (A).
prohibitive of their importation;
- (C) Fine for Failure to Mark.— If, at the time of
- (iv) The marking of a container of importation any good or its container, as provided
such goods will reasonably indicate in subsection (B) hereof, is not marked in
the origin of such goods; accordance with the requirements of this section,
- there shall be levied, collected, and paid upon such
- (v) Such goods are crude substances; good a marking duty of five percent (5%) of dutiable
- value, which shall be deemed to have accrued at the
- (vi) Such goods are imported for use time of importation.
by the importer and not intended for
sale in their imported or any other (D) Release Withheld Until Marked.— No imported
form; goods held in customs custody for inspection,
- examination, or assessment shall be released until
- (vii) Such goods are to be processed such goods or their containers shall have been
in the Philippines by the importer or marked in accordance with the requirements of this
for the importer's account other than section and until the amount of duty estimated to be
for the purpose of concealing the payable under subsection (C) of this section shall
origin of such goods and in such have been deposited.
manner that any mark contemplated
by this section would necessarily be (E) The failure or refusal of the owner or importer to
obliterated, destroyed, or permanently mark the goods as herein required within a period of
concealed; thirty (30) days after due notice shall constitute as
- an act of abandonment of said goods and their
- (viii) An ultimate purchaser, by reason disposition shall be governed by the provisions of
of the character of such goods or by this Act relative to abandonment of imported goods.
reason of the circumstances of their
importation, must necessarily know 2. Anti-Dumping Duty
the country of origin of such goods Section 711. Dumping Duty.— The provisions of
even though they are not marked to Republic Act No. 8752, otherwise known as the
indicate their origin; “Anti-Dumping Act of 1999”, are hereby adopted.
-
- (ix) Such goods were produced more What is Anti-Dumping duty?
than twenty (20) years prior to their It is a special duty imposed on the importation of a product,
importation into the Philippines; or
commodity or article
-
- (x) Such goods cannot be marked 1. At less than its normal value at less than its
after importation except at an expense normal value when destined for domestic
which is economically prohibitive, and consumption in the exporting country which
the failure to mark the goods before importation is causing or is threatening to cause
importation was not due to any material injury to a domestic industry, or

Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
32 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
2. materially retarding the establishment of a
domestic industry producing like product
In simple terms, this duty is imposed on
underpriced articles imported in the Philippines that would
injure our own industry.
There are 3 personalities here:
1. Trade secretary
2. Secretary of agriculture and trade
3. Tariff commission
What is remedy of the aggrieved party?
Any aggrieved party will file with the CTA a petition for
review within 30 days from receipt of notice of the final pay.
What is the meaning of interested party?
This can be the importer, or the secretary of trade and
industry, or secretary of agriculture as the case maybe.
Take note that the filing of the appeal shall not prevent
collection of taxes and duty without prejudice to CTA in its
authority to issue injunction in proper cases.
What is the ground to issue injunction for the CTA?
The imposition of the tax will jeopardize the government or
jeopardize the taxpayer.
3. Safeguard Duty
Section 712. Safeguard Duty.— The provisions of
Republic Act No. 8800, otherwise known as the
“Safeguard Measures Act”, are hereby adopted.
- These are emergency measures to protect
domestic industries from its imports which
will cause serious injury to them.
What is the remedy of the taxpayer? Same with anti-
dumping duty
4. Countervailing Duty
Section 713. Countervailing Duty.— The provisions
of Republic Act No. 8751, otherwise known as “An
Act Strengthening the Mechanisms for the
Imposition of Countervailing Duties on Imported
Subsidized Products, Commodities or Articles of
Commerce in Order to Protect Domestic Industries
from Unfair Trade Competition, Amending for the
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
Purpose Section 302, Part 2, Title II, Book I of
Presidential Decree No. 1464”, otherwise known as
the “Tariff and Customs Code of the Philippines, as
Amended”, are hereby adopted.
special duty charged whenever any product, commodity or
article of commerce is granted directly or indirectly by the
government in the country of origin or exportation, any kind
or form of specific subsidy upon the production,
manufacture or exportation of such product, commodity or
article, and the importation of such subsidized product,
commodity or article has caused or threatens to cause
material injury to a domestic industry or has materially
retarded the growth or prevents the establishment of a
domestic industry. So, in effect the imported product is so
cheap because the country of origin subsidizes that
particular product. So to counter such, the countervailing
duty is imposed;
Remedy of aggrieved party? Same
5. Discriminatory Duty
Section 714. Discrimination by Foreign Countries.—
Without prejudice to the Philippine commitment in
any ratified international agreements or treaty, the
following recourse shall be applicable in case of
discrimination by foreign countries:
(a) When the President finds that the public interest
will be served thereby, the President shall, by
proclamation, specify and declare new or additional
duties in an amount not exceeding one hundred
percent (100%) ad valorem upon goods wholly or in
part the growth or product of, or imported in a
vessel of any foreign country whenever the
President shall find as a fact that such country:
(1) Imposes, directly or indirectly, up on the
disposition or transportation in transit or through
reexportation from such country of any goods
wholly or in part the growth or product of the
Philippines, any unreasonable charge, exaction,
regulation or limitation which is not equally
enforced upon the like goods of every foreign
country; or
(2) Discriminates in fact against the commerce of
the Philippines, directly or indirectly, by law or
administrative regulation or practice, by or in
respect to any customs, tonnage, or port duty, fee,
charge, exaction, classification, regulation,
condition, restriction or prohibition, in such manner
as to place the commerce of the Philippines at a
33 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
disadvantage compared with the commerce of any
foreign country.
(b) If at any time the President shall find it to be a
fact that any foreign country has not only
discriminated against the commerce of the
Philippines, as aforesaid, but has, after the issuance
of a proclamation as authorized in subsection (a) of
this section, maintained or increased its said
discrimination against the commerce of the
Philippines, the President is hereby authorized, if
deemed consistent with the interests of the
Philippines and of public interest, to issue a further
proclamation directing that such product of said
country or such goods imported in their vessels be
excluded hom importation into the Philippines.
(c) Any proclamation issued by the President under
this section shall, if the President deems it
consistent with the interest of the Philippines,
extend to the whole of any foreign country or may
be confined to any subdivision or subdivisions
thereof; Provided, That the President may,
whenever the public interest requires, suspend,
revoke, supplement or amend any such
proclamation.
(d) All goods imported contrary to the provisions of
this section shall be forfeited to the government of
the Philippines and shall be liable to be seized,
prosecuted and condemned in like manner and
under the same regulations, restrictions, and
provisions as may from time to time he established
for the recovery, collection, distribution, and
remission or forfeiture to the government by the
tariff and customs laws. Whenever the provision of
this section shall be applicable to importations into
the Philippines of goods wholly or in part the
growth or product of any foreign country, it shall be
applicable thereto, whether such goods are
imported directly or indirectly.
(e) It shall be the duty of the Commission to
ascertain and at all times be informed whether any
of the discriminations against the commerce of the
Philippines enumerated in subsections (a) and (b) of
this section are practiced by any country; and if and
when such discriminatory acts are disclosed, it
shall be the duty of the Commission to bring the
matter to the attention of the President, and to
recommend measures to address such
discriminatory acts.
(f) The Secretary of Finance shall make such rules
and regulations as are necessary for the execution
of a proclamation that the President may issue in
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
accordance with the provisions of this section.
Grounds?
1. imposed on articles wholly or in part the growth or
product of, or imported in a vessel of, any foreign country
which imposes, directly or indirectly, upon the disposition
in, or transportation in transit through or re-exportation from
such country of any article wholly or in part the growth or
product of the Philippines any unreasonable charge,
exaction, regulation or limitation which is not equally
enforced upon the like articles of every foreign country, or
2. discriminates in fact against the commerce of the
Philippines, directly or indirectly, by law or administrative
regulation or practice, by or in respect to any customs,
tonnage, or port duty, fee, charge, exaction, classification,
regulation, condition, restriction or prohibition, in such
manner as to place the commerce of the Philippines at a
disadvantage compared with the commerce of any foreign
country. So this is imposed on products coming from a
country which discriminates the Philippine product.
Who imposes? The president of the PH.
What are the options available to the President?
(1) issue a proclamation that such discriminatory country,
shall be excluded from importation into the Philippines
consistent with the public interests (a total ban),
(2) the proclamation may be withdrawn, suspended or
amended by the President, and
(3) all articles imported during the total ban shall be
forfeited to the Government of the Philippines and shall be
liable to be seized, prosecuted and condemned;
CONDITIONALLY TAX AND/OR DUTY-EXEMPT
IMPORTATION
Section 800. Conditionally Tax and/or Duty-Exempt
Importation.— The following goods shall be exempt
from the payment of import duties upon comphance
with the formalities prescribed in the regulations
which shall be promulgated by the Commissioner
with the approval of the Secretary of Finance:
Provided, That goods sold, bartered, hired or used
for purposes other than what they were intended for
and without prior payment of the duty, tax or other
charges which would have been due and payable at
the time of entry if the goods had been entered
34 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
without the benefit of this section, shall be subject
to forfeiture and the importation shall constitute a
fraudulent practice against customs laws: Provided,
However, That a sale pursuant to a judicial order or
in liquidation of the estate of a deceased person
shall not be subject to the preceding proviso,
without prejudice to the payment of duties, taxes
and other charges; Provided, Further, That the
President may, upon the recommendation of the
Secretary of Finance, suspend, disallow or
completely withdraw, in whole or in part, any
conditionally free importation under this section:
(a) Aquatic products such as fishes, crustaceans,
mollusks, marine animals, seaweeds, fish oil, roe,
caught or gathered by fishing vessels of Philippine
registry; Provided, That they are imported in such
vessels or in crafts attached thereto; Provided,
However, That they have not been landed in any
foreign territory or, if so landed, that they have been
landed solely for transshipment without having
been advanced in condition;
(b) Equipment for use in the salvage of vessels or
aircrafts, not available locally, upon identification
and the giving of a security in an amount equal to
one hundred percent (100%) of the ascertained
duties, taxes and other charges thereon,
conditioned for the exportation thereof or payment
of corresponding duties, taxes and other charges
within six (6) months from the date of acceptance of
the goods declaration; Provided, That the Bureau
may extend the time for exportation or payment of
duties, taxes and other
charges for a term not exceeding six (6) months
from the expiration of the original period;
(c) Cost of repairs, excluding the value of the goods
used, made in foreign countries upon vessels or
aircraft documented, registered or licensed in the
Philippines, upon proof satisfactory to the Bureau:
(1) that adequate facilities for such repairs are not
afforded in the Philippines; or (2) that such vessels
or aircrafts, while in the regular course of their
voyage or flight, were compelled by stress of
weather or other casualty to put into a foreign port
to make such repairs in order to secure the safety,
seaworthiness, or airworthiness of the vessels or
aircrafts to enable them to reach their port of
destination;
(d) Goods brought into the Philippines for repair,
processing or reconditioning to be reexported upon
completion of the repair, processing or
reconditioning: Provided, That the Bureau shall
require security equal to one hundred percent
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
(100%) of the duties, taxes and other charges
thereon, conditioned for the exportation thereof or
payment of the corresponding duties, taxes and
other charges within six (6) months from the date of
acceptance of the goods declaration;
(e) Medals, badges, cups, and other small goods
bestowed as trophies or prizes, or those received or
accepted as honorary distinction;
(f) Personal and household effects belonging to
returning residents including household appliances,
jewelry, precious stones, and other goods of luxury
which were formally declared and listed before
departure and identified under oath before the
District Collector when exported from the
Philippines by such returning residents upon their
departure therefrom or during their stay abroad;
personal and household effects including wearing
apparel, goods of personal adornment, toilet goods,
instruments related to one's profession and
analogous personal or household effects, excluding
luxury items, vehicles, watercrafts, aircrafts and
animals purchased in foreign countries by residents
of the Philippines which were necessary,
appropriate, and normally used for their comfort
and convenience during their stay abroad,
accompanying them on their return, or arriving
within a reasonable time which, barring unforeseen
and fortuitous events, in no case shall exceed sixty
(60) days after the owner's return.
For purposes of this section, the phrase “returning
residents” shall refer to nationals who have stayed
in a foreign country for a period of at least six (6)
months. Returning residents shall have tax and duty
exemption on personal and household effects:
Provided, That:
(1) It shall not be in commercial quantities;
(2) It is not intended for barter, sale or for hire; and
(3) Limited to the FCA or FOB value of:
(i) Three hundred fifty thousand pesos
(₱350,000.00) for those who have stayed in a
foreign country for at least ten (10) years and have
not availed of this privilege within ten (10) years
prior to returning resident's arrival;
(ii) Two hundred fifty thousand pesos (₱250,000.00)
for those who have stayed in a foreign country for a
period of at least five (5) but not more than ten (10)
years and have not availed of this privilege within
five (5) years prior to returning resident's arrival; or
35 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
(iii) One hundred fifty thousand pesos (₱150,000.00)
for those who have stayed in a foreign country for a
period of less than five (5) years and have not
availed of this privilege within six (6) months prior
to returning resident's arrival.
Any amount in excess of the above-stated threshold
shall be subject to the corresponding duties and
taxes under this Act.
Every three (3) years after the effectivity of this Act,
the Secretary of Finance shall adjust the amount
herein stated to its present value using the CPI as
published by the PSA.
In addition to the privileges granted under the
immediately preceding paragraph, returning
Overseas Filipino Workers (OPWs) shall have the
privilege to bring in, tax and duty-free, home
appliances and other durables, limited to one of
every kind once in a given calendar year
accompanying them on their return, or arriving
within a reasonable time which, barring unforeseen
and fortuitous events, in no case shall exceed sixty
(60) days after every returning OFW's return upon
presentation of their original passport at the port of
entry: Provided, That any amount in excess of FCA
value of one hundred fifty thousand pesos
(₱150,000.00) for personal and household effects or
of the number of duty-free appliances as provided
for under this section, shall be subject to the
corresponding taxes and duties; Provided, Further,
That every three (3) years after the effectivity of this
Act, the Secretary of Finance shall adjust the
amount herein stated to its present value using the
CPI as published by the PSA;
(g) Residents of the Philippines, OPWs or other
Filipinos while residing abroad or upon their return
to the Philippines shall be allowed to bring in or
send to their families or relatives in the Philippines
balikbayan boxes which shall be exempt from
applicable duties and taxes imposed under the NIRC
of 1997, as amended: Provided, That balikbayan
boxes shall contain personal and household effects
only and shall neither be in commercial quantities
nor intended for barter, sale or for hire and that the
FCA value of which shall not exceed one hundred
fifty thousand pesos (₱150,000.00); Provided,
Further, That every three (3) years after the
effectivity of this Act, the Secretary of Finance shall
adjust the amount herein stated to its present value
using the CPI as published by the PSA; Provided,
Finally, That residents of the Philippines, OFWs or
other Filipinos can only avail of this privilege up to
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
three (3) times in a calendar year. Any amount in
excess of the allowable non-dutiable value shall be
subject to the applicable duties and taxes;
(1) For purposes of this Act, OFWs referto Holders
of valid passports duly issued by the Department of
Foreign Affairs (DFA) and certified by the
Department of Labor and Employment (DOLE) or the
Philippine Overseas Employment Administration
(POEA) for overseas employment purposes. They
cover all Filipinos, working in a foreign country
under employment contracts, regardless of their
professions, skills or employment status in a
foreign country; and (2) Calendar Year refers to the
period from January 1 to December 31.
(h) Wearing apparel, goods of personal adornment,
toilet goods, portable tools and instruments,
theatrical costumes and similar effects
accompanying travelers, or tourists, or arriving
within a reasonable time before or after their arrival
in the Philippines, which are necessary and
appropriate for the wear and use of such persons
according to the nature of the journey, their comfort
and convenience; Provided, That this exemption
shall not apply to goods intended for other persons
or for barter, sale or hire: Provided, However, That
the Bureau may require either a written commitment
or a security in an amount equal to one hundred
percent (100%) of the ascertained duties, taxes and
other charges thereon, conditioned for the
exportation thereof or payment of the
corresponding duties, taxes and other charges
within three (3) months from the date of acceptance
of the goods declaration: Provided, Further, That
the Bureau may extend the time for exportation or
payment of duties, taxes and other charges for a
term not exceeding three (3) months from the
expiration of the original period.
Personal and household effects and vehicles
belonging to foreign consultants and experts hired
by, or rendering service to, the government, and
their staff or personnel and families accompanying
them or arriving within a reasonable time before or
after their arrival in the Philippines, in quantities and
of the kind necessary and suitable to the
profession, rank or position of the person importing
said items, for their own use and not for barter, sale
or hire: Provided, That the Bureau may require
either a written commitment or a security in an
amount equal to one hundred percent (100%) of the
ascertained duties, taxes and other charges
thereon, upon the goods classified under this
subsection; conditioned for the exportation thereof
or payment of the corresponding duties, taxes and
36 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
other charges within three (3) months after the
expiration of their term or contract; Provided,
However, That the Bureau may extend the time for
exportation or payment of duties, taxes and other
charges for a term not exceeding three (3) months
from the expiration of the original period;
(i) Professional instruments and implements, tools
of trade, occupation or employment, wearing
apparel, domestic animals, and personal and
household effects belonging to persons coming to
settle in the Philippines or Filipinos or their families
and descendants who are now residents or citizens
of other countries, such parties hereinafter referred
to as overseas Filipinos, in quantities and of the
class suitable to the profession, rank or position of
the persons importing said items, for their own use
and not for barter or sale, accompanying such
persons, or arriving within a reasonable time:
Provided, That the Bureau may, upon the
production of satisfactory evidence that such
persons are actually coming to settle in the
Philippines and that the goods are brought from
their former place of abode, exempt such goods
from the payment of duties and taxes; Provided,
Further, That vehicles, vessels, aircrafts,
machineries and other similar goods for use in
manufacture, shall not fall within this classification
and shall therefore be subject to duties, taxes and
other charges;
(j) Goods used exclusively for public entertainment,
and for display in public expositions, or for
exhibition or competition for prizes, and devices for
projecting pictures and parts and appurtenances
thereof, upon identification, examination, and
appraisal and the giving of a security in an amount
equal to one hundred percent (100%) of the
ascertained duties, taxes and other charges
thereon, conditione d for exportation thereof or
payment of the corresponding duties, taxes and
other charges within three (3) months from the date
of acceptance of the goods declaration: Provided,
That the Bureau may extend the time for exportation
or payment of duties, taxes and other charges for a
term not exceeding three (3) months from the
expiration of the original period; and technical and
scientific films when imported by technical, cultural
and scientific institutions, and not to be exhibited
for profit: Provided, Further, That if any of the films
is exhibited for profit, the proceeds therefrom, shall
be subject to confiscation, in addition to the penalty
providedamder this Act;
(k) Goods brought by foreign film producers directly
and exclusively used for making or recording
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
motion picture films on location in the Philippines,
upon their identification, examination and appraisal
and the giving of a security in an amount equal to
one hundred percent (100%) of the ascertained
duties, taxes and other charges thereon,
conditioned for exportation thereof or payment of
the corresponding duties, taxes and other charges
within three (3) months from the date of acceptance
of the goods declaration, unless extended by the
District Collector for another three (3) months;
photographic and cinematographic films,
underdeveloped, exposed outside the Philippines
by resident Filipino citizens or by producing
companies of Philippine registry where the principal
actors and artists employed for the production are
Filipinos, upon affidavit by the importer and
identification that such exposed films are the same
films previously exported from the Philippines. As
used in this paragraph, the terms “actors” and
“artists” include the persons operating the
photographic camera or other photographic and
sound recording apparatus by which the film is
made;
(l) Importations for the official use of foreign
embassies, legations and other agencies of foreign
governments: Provided, That those foreign
countries accord like privileges to corresponding
agencies of the Philippines. Goods imported for the
personal or family use of members and attaches of
foreign embassies, legations, consular officers and
other representatives of foreign governments;
Provided, However, That such privilege shall be
accorded under special agreements between the
Philippines and the countries which they represent:
Provided, Further, That the privilege may be granted
only upon specific instructions of the Secretary of
Finance pursuant to an official request of the DFA
on behalf of members or attaches of foreign
embassies, legations, consular officers and other
representatives of foreign governments;
(m) Imported goods donated to or, for the account
of the Philippine government or any duly registered
relief organization, not operated for profit, for free
distribution among the needy, upon certification by
theDSWD or the Department of Education (DepED),
or the Department of Health (DOH), as the case may
be;
(n) Containers, holders and other similar
receptacles of any material including kraft paper
bags for locally manufactured cement for export,
including corrugated boxes for bananas, mangoes,
pineapples and other fresh fruits for export, except
other containers made of paper, paperboard and
37 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
textile fabrics, which are of such character as to be
readily identifiable and/or reusable for shipment or
transportation of goods shall be delivered to the
importer thereof upon identification, examination
and appraisal and the giving of a security in an
amount equal to one hundred percent (100%) of the
ascertained duties, taxes and other charges
thereon, within six (6) months from the date of
acceptance of the goods declaration;
(o) Supplies which are necessary for the reasonable
requirements of the vessel or aircraft in its voyage
or flight outside the Philippines, including goods
transferred from a bonded warehouse in any
Customs District to any vessel or aircraft engagedin
foreign trade, for use or consumption of the
passengers or its crew on board such vessel or
aircraft as sea or air stores; or goods purchased
abroad for sale on board a vessel or aircraft as
saloon stores or air store supplies; Provided, That
any surplus or excess of such vessel or aircraft
supplies arriving from foreign ports or airports shall
be dutiable;
(₱) Goods and salvage from vessels recovered after
a period of two (2) years from the date of filing the
marine protest or the time when the vessel was
wrecked or abandoned, or parts of a foreign vessel
or its equipment, wrecked or abandoned in
Philippine waters or elsewhere: Provided, That
goods and salvage recovered within the said period
of two (2) years shall be dutiable;
(q) Coffins or urns containing human remains,
bones or ashes, used personal and household
effects (not merchandise) of the deceased person,
except vehicles, the FCA value of which does not
exceed one hundred fifty thousand pesos
(₱150,000.00), upon identification as such:
Provided, That every three (3) years after the
effectivity of this Act, the value herein stated shall
be adjusted to its present value using the CPI as
published by the PSA;
(r) Samples of the kind, in such quantity and of such
dimension or construction as to render them
unsaleable or of no commercial value; models not
adapted for practical use; and samples of
medicines, properly marked “sample-sale
punishable by law”, for the purpose of introducing
new goods in the Philippine market and imported
only once in a quantity sufficient for such purpose
by a person duly registered and identified to be
engaged in that trade: Provided, That importations
under this subsection shall be previously
authorized by the Secretary of Finance: Provided,
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
However, That importation of sample medicines
shall have been previously authorized by the
Secretary of Health, and that such samples are new
medicines not available in the Philippines: Provided,
Further, That samples not previously authorized or
properly marked in accordance with this section
shall be levied the corresponding tariff duty.
Commercial samples, except those that are not
readily and easily identifiable as in the case of
precious and semi-precious stones, cut or uncut,
and jewelry set with precious or semi-precious
stones, the value of any single importation of which
does not exceed FCA value of fifty thousand pesos
(₱50,000.00) upon the giving of a security in an
amount equal to the ascertained duties, taxes and
other charges thereon, conditioned for the
exportation of said samples within three (3) months
from the date of the acceptance of the goods
declaration or in default thereof, the payment of the
corresponding duties, taxes and other charges:
Provided, That if the FCA value of any single
consignment of such commercial samples exceeds
fifty thousand pesos (₱50,000.00), the importer
thereof may select any portion of the same not
exceeding the FCA value of fifty thousand pesos
(₱50,000,00) for entry under the provision of this
subsection, and the excess of the consignment may
be entered in bond, or for consumption, as the
importer may elect: Provided, Further, That every
three (3) years after the effectivity of this Act, the
Secretary of Finance shall adjust the amount herein
stated to its present value using the CPI as
published by the PSA.
(s) Animals, except race horses, and plants for
scientific, experimental propagation or breeding,
andfor other botanical, zoological and national
defense purposes: Provided, That no live trees,
shoots, plants, moss and bulbs, tubers and seeds
for propagation purposes may be imported under
this section, except by order of the government or
other duly authorized institutions; Provided,
However, That the free entry of animals for breeding
purposes shall be restricted to animals of
recognized breed, duly registered in the record or
registry established for that breed, and certified as
such by the Bureau of Animal Industry (BAI):
Provided, Further, That the certification of such
record, and pedigree of such animal duly
authenticated by the proper custodian of such
record or registry, shall be submitted to the District
Collector, together with the affidavit of the owner or
importer that such animal is the animal described in
said certificate of record and pedigree: Provided,
Finally, That the animals and plants are certified by
38 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
the NEDA as necessary for economic development;
(t) Economic, technical, vocational, scientific,
philosophical, historical and cultural books or
publications, and religious books like Bibles,
missals, prayer books, the Koran, Ahadith and other
religious books of similar nature and extracts
therefrom, hymnal and hymns for religious uses;
Provided, That those which may have already been
imported but are yet to be released by the Bureau at
the effectivity of this Act may still enjoy the privilege
herein provided upon certification by the DepED
that such imported books and/or publications are
for economic, technical, vocational, scientific,
philosophical, historical or cultural purposes or that
the same are educational, scientific or cultural
materials covere d by the International Agreement
on Importation of Educational Scientific and
Cultural Materials (XAESCM) signed by the
President of the Philippines on August 2, 1952, or
other agreements binding upon the Philippines.
Educational, scientific and cultural materials
covered by international agreements or
commitments binding upon the Philippine
government so certified by the DepED.
(u) Philippine goods previously exported from the
Philippines and returned without having been
advanced in value, or improved in condition by any
process of manufacturing or other means, and upon
which no drawback or bounty has been allowed,
including instruments and implements, tools of
trade, machinery and equipment, used abroad by
Filipino citizens in the pursuit of their business,
occupation or profession; and foreign goods
previously imported when returned after haiffif been
exported and loaned for use temporarily abroad
solely for exhibition, testing and experimentation,
for scientific or educational purposes; and foreign
containers previously imported which have been
used in packing exported Philippine goods and
returned empty if imported by or for the account of
the person or institution who exported them from
the Philippines and not for sale, barter or hire
subject to identification: Provided, That Philippine
goods falling under this subsection upon which
drawback or bounty have been allowed shall, upon
reimportation thereof, be subject to a duty under
this subsection equal to the amount of such
drawback or bounty;
(v) Aircraft, equipment and machinery, spare parts,
commissary and catering supplies, aviation gas,
fuel and oil, whether crude or refined except when
directly or indirectly used for domestic operations,
and such other goods or supplies imported by and
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
for the use of scheduled airlines operating under
congressional franchise: Provided, That such goods
or supplies are not locally available in reasonable
quantity, quality and price and are necessary or
incidental to the proper operation of the scheduled
airline importing the same;
(w) Machineries, equipment, tools for production,
plans to convert mineral ores into saleable form,
spare parts, supplies, materials, accessories,
explosives, chemicals, and transportation and
communications facilities imported by and for the
use of new mines and old mines which resume
operations, when certified to as such by the
Secretary of the Department of Environment and
Natural Eesources (DENE), upon the
recommendation of the Director of Mines and
Geosciences Bureau, for a period ending five (5)
years from the first date of actual commercial
production of saleable mineral products: Provided,
That such goods are not locally available in
reasonable quantity, quality and price and are
necessary or incidental in the proper operation of
the mine; and aircrafts imported by agro-industrial
companies to be used by them in their agriculture
and industrial operations or activities, spare parts
and accessories thereof, when certified to as such
by the Secretary of the Department of Agriculture
(DA) or the Secretary of the Department of Trade
and Industry (DTI), as the case may be;
(x) Spare parts of vessels or aircraft of foreign
registry engaged in foreign trade when brought into
the Philippines exclusively as replacements or for
the emergency repair thereof, upon proof
satisfactory to the District Collector that such spare
parts shaft he utilized to secure the safety,
seaworthiness or airworthiness of the vessel or
aircraft, to enable it to continue its voyage or flight;
(y) Goods exported from the Philippines for repair,
processing or reconditioning without having been
substantially advanced in value, and subsequently
reimported in its original form and in the same
state: Provided, That in case the reimported goods
advanced in value, whether or not in their original
state, the value added shall be subject to the
applicable duty rate of the tariff heading of the
reimported goods; and
(z) Trailer chassis when imported by shipping
companies for their exclusive use in handling
containerized cargo, upon posting a security in an
amount equal to one hundred percent (100%) of the
ascertained duties, taxes and other charges due
thereon, to cover aperiod of one (1) year from the
39 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
date of acceptance of the entry, which period, for
meritorious reasons, may be extended by the
Commissioner from year to year, subject to the
following conditions:
(1) That they shall be properly identified and
registered with the Land Transportation Office
(LTO);
(2) That they shall be subject to customs
supervision fee to be fixed by the District Collector
and subject to the approval of the Commissioner;
(3) That they shall be deposited in the customs
territory when not in use; and
(4) That upon the expiration of the period prescribed
above, duties and taxes shall be paid unless
otherwise reexported.
(aa) Any officer or employee of the DEA, including
any attache, civil or military or member of the staff
assigned to a Philippine diplomatic mission abroad
by the Department or any similar officer or
employee of other departments assigned to any
Philippine consular office abroad, or any AFP
military personnel accorded assimilated diplomatic
rank or on duty abroad who is returning from a
regular assignment abroad, for reassignment to the
home office, or who dies, resigns, or is retired from
the service, after the approval of this Act, shall be
exempt from the payment of all duties and taxes on
personal and household effects, including one (1)
motor car which must have been ordered or
purchased prior to the receipt by the mission or
consulate of the order of recall, and which must be
registered in the name of the officer or employee:
Provided, That this exemption shall apply only to
the value of the motor car and to the aggregate
assessed value of the personal and household
effects, the latter not to exceed thirty percent (30%)
of the total amount received by the officer or
employee in salary and allowances during the latest
assignment abroad, but not to exceed four (4) years:
Provided, However, That this exemption shall not be
availed of more than once every four (4) years:
Provided, Further, That the officer or employee
concerned must have served abroad for not less
than two (2) years.
The provisions of general and special laws, to the
contrary notwithstanding, including those granting
franchises, there shall be no exemption whatsoever
from the payment of duties except as provided for in
this Act; those granted to government agencies,
instrumentalities or government-owned or -
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
controlled corporations (GOCCs) with existing
contracts, commitments, agreements, or obligations
with foreign countries requiring such exemption;
those granted to international institutions,
associations or organizations entitled to exemption
pursuant to agreements or special laws; and those
that may be granted by the President upon prior
recommendation of the NEDA in the interest of
national economic development.
This is a long provision but we will just discuss the
balikbayan box.
Remember yung may nanalona athlete then daladalani
young belt nya. Gi tax siya ng BOC. The belt is in the
exception here. It was actually tax exempt but gi tax ng
BOC kasi she failed to declare it. Even it is tax exempt, the
rule is, all goods must be declared.
Let us discuss letter F and G.
Personal house and effects belonging to a returning
residents.
Returning residents are different from OFW. Returning
residents are nationals from state of a foreign country for a
period of at least 6 months.
There are 2 things that maybe brought back:
1. Luxury – household appliance, precious gold and
stones, and other forms of luxury.
These will be tax exempt if all will be declared
and listed before departure, and identified before
the district collector that these items are exported
with the Philippines.
In simple terms, You can bring them back tax
free if you bought it outside at the time na _ sa
Philippines.
2. Household effects excluding luxury items. – it
must be accompanying them on their return, or
arriving within a reasonable time which, barring
unforeseen and fortuitous events, in no case
shall exceed sixty (60) days after the owner's
return.
Returning residents shall have tax and duty exemption
on personal and household effects: Provided, That:
(1) It shall not be in commercial quantities;
40 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
(2) It is not intended for barter, sale or for hire; and
(3) Limited to the FCA or FOB value of:
(i) Three hundred fifty thousand pesos (₱350,000.00) for
those who have stayed in a foreign country for at least ten
(10) years and have not availed of this privilege within ten
(10) years prior to returning resident's arrival;
(ii) Two hundred fifty thousand pesos (₱250,000.00) for
those who have stayed in a foreign country for a period of
at least five (5) but not more than ten (10) years and have
not availed of this privilege within five (5) years prior to
returning resident's arrival; or
(iii) One hundred fifty thousand pesos (₱150,000.00) for
those who have stayed in a foreign country for a period of
less than five (5) years and have not availed of this
privilege within six (6) months prior to returning resident's
arrival.
Any amount in excess of the above-stated threshold shall
be subject to the corresponding duties and taxes under this
Act.
OFWs
OFWs are different from returning residents.
Pagsinabimong OFW they have a passport issued by DFA
and they are certified by the DOLE or POEA for overseas
employment purposes.
For OFWs, there are 2 situations contemplated:
1. Importation of home appliances other than durable
(f)
What are the requirements?
1. the goods involved are other than durables
2. must be limited to one kind
3. once in a given calendar year
4. the goods must have accompanied him upon
arrival or within 60 days except for unforeseen or
fortuitous events
5. Must not exceed the value of P150,000
6. Presentation of the passport
April 7, 2017 (3rd Hour)
(By: Earvin Jay Alparaque)
So supposing if you are a traveler, pumunta ka ng
Singapore at nanonood ka ng Coldplay doon tapos
pagbalik mo meron ka nang TV. Are you considered as an
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
Overseas Filipino Worker? Are you considered as a
returning resident?
(g) balikbayan boxes
Now, let's discuss balikbayan boxes. Ito yung grabe sa
news dati. Diba meron tayong news dati na isang lolo sige
siya padala ng balikbayan boxes tapos pag-open ng mga
balikbayan boxes puno ng mga of commercial quantity
talaga. Tapos sabi ipanghatag daw niya sa iyang mga apo.
(Pila diay kabuok imong apo lo?)
Who are the persons who may avail of the balikbayan
boxes rule?
1. Residents of the Philippines
2. OFW's
3. Other Filipinos residing abroad or upon their return to the
Philippines.
They are allowed to bring in or send their relatives
balikbayan boxes which shall be exempt from duties and
taxes imposed under the NIRC under the following
requirements:
a. The boxes contain personal and household effects only.
b. It must neither be in commercial quantities nor intended
for sale, barter or hire.
c. The value must not exceed P150,000.
d. The Philippine residents, OFW's or other Filipinos can
avail of this privilege up to three times a year. So in a
single year, you can claim P450,000. (150,000x3)
Let's now go to REFUND and ABATEMENT.
When should the tax refund be granted? It is found in
section 903 of R.A. 10863 (Customs Modernization and
Tariff Act)-
Section 903. Refund of Duties and Taxes.— Refund shall
be granted where it is established that duties and taxes
have been overcharged as a result of an error in the
assessment or goods declaration.
Where permission is given by the Bureau for goods
originally declared for a customs procedure with payment
of duties and taxes to be placed under another customs
procedure, a refund shall be made of any duties and taxes
charged in excess of the amount due under the new
procedure, subject to such regulation issued for the
41 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
purpose.
A refund shall not be granted if the amount of duties and
taxes involved is less than five thousand pesos
(₱5,000.00); Provided, That the Secretary of Finance, in
consultation with the Commissioner, may adjust the
minimum amount specified in this Act, taking into account
the CPI as published by the PSA.
What about abatement? It is found in section 904-
Section 904.Abatement of Duties and Taxes.— When
goods have not yet been released for consumption or have
been placed under another customs procedure, provided
that no other offense or violation has been committed, the
declarant shall neither be required to pay the duties and
taxes nor be entitled to refund thereof in any of the
following cases:
(a) When, at the request of the declarant, the goods are
abandoned, or as determined by the Bureau, the goods are
destroyed or rendered commercially valueless while under
customs control. Any cost herein incurred shall be borne by
the declarant;
Meaning there is an express abandonment of the goods or
the goods are destroyed or rendered commercially
valueless while under customs control. Nadaot, nasunog
ang customs warehouse and nothing is salvaged. In that
case wala ka na bayaran na duties and taxes.
(b) When goods are destroyed or irrecoverably lost by
accident or force majeure, the remaining waste or scrap
after destruction, if taken into consumption, shall be subject
to the duties and taxes that would be applicable on such
waste or scrap if imported in same state; and
Example may bagyo, etc.
(c) When there are shortages due to the nature of the
goods.
So kailangan may shortage sa product na to due to its
nature, and in reporting, to protect the Philippines, hindi ka
nalang magbayad ng taxes. That is one reason for
abatement.
Are these the only laws for abatement? Not really
because we have sections 904-912 of R.A. 10863-
SECTION 905. Abatement for Damage Incurred During
Voyage.—- Except as otherwise provided, no abatement of
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
duties shall be made on account of damage incurred or
deterioration suffered during the voyage of importation; and
duties will be assessed on the actual quantity imported as
determined by the customs officers concerned.
SECTION 906. Abatement or Refund of Duty on Missing
Package.— When any package appearing on the manifest
or bill of lading or airway bill is missing, an abatement or
refund of the duty shall he made if it is certified by the
importer or consignee, under pain of penalty for falsification
or perjury, and upon production of proof satisfactory to the
Collector concerned, that the package in question has not
been unlawfully imported into the Philippines.
SECTION 907. Abatement or Refund for Deficiency in
Contents of Packages.— If, upon opening of any package,
a deficiency in the quantity of the goods is found to exist
based upon the invoice, such deficiency shall be certified,
under pain of penalty for falsification or perjury, by the
customs officers concerned and upon the production of
proof showing that the shortage occurred before the arrival
of the goods in the Philippines. Upon sufficient proof
thereof, the proper abatement or refund of the duty shall be
made.
SECTION 908. Abatement or Refund of Duties on Goods
Lost or Destroyed After Arrival.— The Bureau may abate or
refund the amount of duties accruing or paid on any goods
that have been lost due to injury, theft, destruction through
fire or through any other causes, upon satisfactory proof of
the same, under any of the following circumstances:
(a) While within the territory of any port of entry,
prior to unloading under the Bureau’s supervision;
(b) While remaining in customs custody after
unloading;
(c) While in transit from the port of entry to any port
in the Philippines; and
(d) While released under sufficient security for
export except in case of loss by theft.
SECTION 909. Abatement and Refund of Defective
Goods.— Under conditions to be set by the Commissioner,
and with the approval of the Secretary of Finance, an
abatement and refund shall be granted on imported or
exported goods which are found defective or otherwise not
in accordance with the agreed specifications at the time of
importation or exportation and are returned either to the
supplier or to another person designated by the supplier,
subject to the following conditions:
(a) The goods have not been worked, repaired, or
42 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)

used in the country of importation, and are Let us now go to REFUNDS, section 913-
reexported within a reasonable time; and
SECTION 913. Claims for Refund.— All claims and
(b) The goods have not been worked, repaired, or
application for refund of duties and taxes shall be made in
used in the country to which they were exported,
writing and filed with the Bureau within twelve (12) months
and are reimported within a reasonable time.
from the date of payment of duties and taxes.
Use of the goods shall, however, not hinder the refund if
If as a result of the refund of duties, a corresponding refund
such use was indispensable to discover the defects or
of internal revenue taxes on the same importation becomes
other circumstances which caused the reexportation or
due, the Bureau shall cause the refund of internal revenue
reimportation of the goods.
taxes in favor of the importer after issuance of a
As an alternative to reexportation or reimportation, the certification from the Commissioner of Internal Revenue,
goods may be expressly abandoned or destroyed or when applicable.
rendered commercially valueless under customs control as
The importer may file an appeal of a denial of a claim for
the Bureau may decide. In such case, the importer shall
refund or abatement, whether it is a full or partial denial,
not be entitled to an abatement or a refund if it does not
with the Commissioner within thirty (30) days from the date
defray the costs of such abandonment, destruction, or
of the receipt of the denial. The Commissioner shall render
rendition.
a decision within thirty (30) days from the receipt of all the
SECTION 910. Abatement of Duty on Dead or Injured necessary documents supporting the application. Within
Animals.— Where it is certified, under pain of penalty for thirty (30) days from receipt of the decision of the
falsification or perjury, and upon production of proof Commissioner, the case may also be appealed to the CTA.
satisfactory to the Bureau that an animal subject of
Notwithstanding the provisions in the preceding
importation dies or suffers injury before arrival, or while in
paragraphs, the filing of claims for refund of national
customs custody, the duty due thereon shall be abated internal revenue taxes shall be governed by the provisions
provided that its carcass on board or in customs custody is provided under the NTRC of 1997, as amended.
removed in the manner required by the Bureau and at the
expense of the importer.
Where should we file the claim for refund?
SECTION 911. Investigation Required in Case of
Abatements and Refunds.— The Customs Officer You must file it before the Bureau of Customs.
concerned shall, in all cases of abatement or refund of
duties, submit an examination report as to any fact When should it be made?
discovered which indicates any discrepancy and cause the
corresponding adjustment on the goods declaration. It must be made within twelve months from the
date of payment of the duties and taxes.
SECTION 912. Refund Arising from Correction of Errors.—
Manifest clerical errors made on an invoice or entry, errors
in return of weight, measure and gauge, when duly certified What if the BOC denies your claim for refund?
under penalties of falsification or perjury by the surveyor or
examining officer when there are such officers at the port, The importer may file an appeal of a denial of a
and errors in the distribution of charges on invoices not claim for refund or abatement, whether it is a full or partial
involving any question of law and certified under penalties
denial, with the Commissioner within thirty (30) days from
of falsification or perjury by the examining customs officer,
the date of the receipt of the denial. The Commissioner
may be corrected in the computation of duties, if such
shall render a decision within thirty (30) days from the
errors are discovered before the payments of duties, or if
discovered within one (1) year after release from customs receipt of all the necessary documents supporting the
custody of imported goods upon written request and notice application. Within thirty (30) days from receipt of the
of error from the importer, or upon statement of error decision of the Commissioner, the case may also be
certified by the District Collector, For the purpose of appealed to the CTA.
correcting errors specified in the next preceding paragraph,
the Bureau is authorized to make refunds within the Let us now go to ADMINISTRATIVE and JUDICIAL
statutory time limit. PROCEDURES.

Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
43 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
First is the advance ruling. Even before the
importation of the goods you can ask the BOC for an
advance ruling of the products or goods provided that it
only refers to one type of goods. One advance ruling is
equivalent to one type of goods or merchandise imported.
There are three types of advance ruling-
1. Classification ruling
SECTION 1100. Classification Ruling.— An importer or
exporter may file a written application for an advance ruling
on the tariff classification of goods with the Commission.
The Commission shall render a ruling within thirty (30) days
from receipt of a properly documented application.
When a declared tariff classification of goods, not subject
of a pending application for advance ruling, is in dispute,
the importer, exporter, or the Bureau shall submit the
matter to the Commission for a ruling, without prejudice to
the application of Section 1106 of this Act on
“protest”: Provided, That such rulings of the Commission
on commodity classification shall be binding upon the
Bureau, unless the Secretary of Finance shall rule
otherwise.
2. Valuation ruling
SECTION 1101. Valuation Ruling.— An importer or exporter
may file a written application for an advance valuation
ruling on the proper application of a specific method on
customs valuation of specific goods as prescribed in Title
VII, Chapter 1 of this Act.
The application for a valuation ruling shall be filed with the
Commissioner who shall issue a ruling within thirty (30)
days from submission of the application form and
supporting documents as may be required by rules and
regulations.
When the valuation method of goods not subject of an
application for advance valuation ruling or the declared
customs value is in dispute, the matter shall be resolved in
accordance with Section 1106 of this Act on “protest”.
3. Ruling on the Rules of Origin
SECTION 1102. Ruling on the Rules of Origin.— An importer
or exporter may file a written application for a ruling on
whether the goods qualify as originating under the rules of
origin of the applicable preferential trade agreement. The
application for an advance ruling on origin shall be filed
with the Commissioner who shall act on the application
within thirty (30) days from receipt of the application and
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
supporting documents as may be required by rules and
regulations.
When the declared origin of the goods, not subject of a
request for advance ruling on origin, is in dispute, the
matter shall be resolved in accordance with Section 1106
of this Act on “protest”.
Application for advance ruling-
SECTION 1103. Conditions for Application and Effect of
Advance Ruling.— An application for an advance ruling
shall cover only one (1) product or item. The application for
advance ruling shall be filed at least ninety (90) days
before the importation or exportation of the product or item,
as the case may be.
Supposing there is an adverse decision for the
advance ruling, what is the remedy of the party? This
is provided under section 1104-
SECTION 1104. Administrative and Judicial Appeals.— An
aggrieved party may, within thirty (30) days from receipt of
an adverse ruling or decision, appeal the same to the CTA
without prejudice to the authority of the Secretary of
Finance to review decisions adverse to the government in
accordance with Sections 1127 and 1128 of this Act, as the
case may be.
Let us go to PROTEST.
SECTION 1106. Protest.— When, a ruling or decision of the
District Collector or customs officer involving goods with
valuation, rules of origin, and other customs issues is
made, except the fixing of fines in seizure cases, the party
adversely affected may appeal by way of protest against
such ruling or decision by presenting to the Commissioner
at the time when payment of the amount claimed to be due
the government is made, or within fifteen (15) days
thereafter, a written protest setting forth the objection to the
ruling or decision in question and the reasons therefore.
Subject to the approval of the Secretary of Finance, the
Commissioner shall provide such rules and regulations as
to the requirement for payment or nonpayment of the
disputed amount and in case of nonpayment, the release of
the importation under protest upon posting of sufficient
security.
When can a taxpayer file a protest?
The taxpayer may file a protest on a ruling or
decision of a district officer/customs officer involving the
goods for three reasons-
44 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
1. There is an issue in the Valuation
2. There is an issue in the Rules of Origin
3. Other customs issues
N.B. The protest is not available in fixing fines or in
seizure cases because there is a different remedy.
Where should a protest be filed?
The protest shall be filed with the Commissioner at
the time of payment of the amount claimed to be due to the
government or within fifteen days thereafter as provided
under the law. It is required that there must be payment
under protest. Mag-bayad ka ng kailangan mong bayaran
and at the same time it is either you file your protest at the
time of payment or you can file it fifteen days after the
payment in protest.
Take note also of section 1107-
SECTION 1107. Protest Exclusive Remedy in Protestable
Case.— In all cases subject to protest, the interested party
who desires to have the action of the District Collector
reviewed, shall file a protest as provided in Section 1106 of
this Act, otherwise the action of the District Collector shall
be final and conclusive.
You must exhaust all administrative remedies before
you go to the Court of Tax Appeals.
What if the decision of the District Collector is
adverse?
The procedure under section 114 in relation to 1126
should be followed.
SECTION 1126. Appeal to the Commissioner.— In forfeiture
cases, the person aggrieved by the decision of a District
Collector may, within fifteen (15) days or five (5) days in
case of perishable goods, from receipt of the decision, file
a written notice of appeal, together with the required appeal
fee to the District Collector, furnishing a copy to the
Commissioner. The District Collector shall immediately
transmit all the records of the proceedings to the
Commissioner, who shall review and decide on the appeal
within thirty (30) days from receipt of the records, or fifteen
(15) days in the case of perishable goods: Provided, That if
within thirty (30) days, no decision is rendered, the decision
of the District Collector under appeal shall be deemed
affirmed. An appeal filed beyond the period herein
prescribed shall be dismissed.
Appeals to protest cases shall be governed by Section 114
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
of this Act.
The decision of the Commissioner may be served through
the recognized modes of service under existing law.
SECTION 114. Right of Appeal, Forms and Ground.— Any
party adversely affected by a decision or omission of the
Bureau pertaining to an importation, exportation, or any
other legal claim shall have the right to appeal within fifteen
(15) days from receipt of the questioned decision or order.
An appeal in writing shall be filed within the period
prescribed in this Act or by regulation and shall specify the
grounds thereof.
The Bureau may allow a reasonable time for the
submission of supporting evidence to tbe appeal.
So basically if there is an adverse decision on the
part of the Commissioner, the next remedy is to file an
appeal within fifteen days with the CTA.
Take note also of the concept of ALERT ORDERS-
SECTION 1111. Alert Orders.— Alert orders are written
orders issued by customs officers as authorized by the
Commissioner on the basis of derogatory information
regarding possible noncompliance with this Act. An alert
order will result in the suspension of the processing of the
goods declaration and the conduct of physical or
nonintrusive inspection of the goods within forty-eight (48)
hours from issuance of the order. Within forty-eight (48)
hours or, in the case of perishable goods, within twenty-
four (24) hours from inspection, the alerting officer shall
recommend the continuance of processing of goods in
case of a negative finding, or issuance of a warrant of
seizure and detention if a discrepancy between the
declaration and actual goods is found. The Bureau’s
information system shall immediately reflect the imposition
or lifting of an alert order.
Derogatory information shall indicate the violations and
other necessary specifics thereof. For this purpose, the
following shall not be considered derogatory information:
(a) General allegations of misclassification without
providing the appropriate tariff heading and duty of
the shipment to be alerted;
(b) General allegations of misclassification without
providing the appropriate tariff heading and duty of
the shipment to be alerted;
(c) General allegations of over-quantity without
indicating the source of information supporting the
allegation;
45 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
(d) General allegations of misdeclaration in the
entry without indicating the suspected actual
contents thereof; and
(e) General allegations of importations contrary to
law without indicating the specific law or rule to be
violated.
No alert order shall be issued on account of allegations of
undervaluation unless said undervaluation is caused by the
submission to customs of forged or spurious invoice or
other commercial documents.
An alert order may be issued only after lodgement of the
goods declaration and prior to the release of goods from
customs custody. Under no circumstances shall the
suspension of the processing of goods declaration be
allowed except through an alert order issued by an
authorized customs officer.
The costs of the physical inspection shall be borne by the
Bureau: Provided, That such cost shall be reimbursed by
the owner prior to the release of the goods if the physical
inspection results in the assessment of additional duties or
taxes or the issuance of a warrant of seizure.
The Commissioner shall be notified of the recommendation
by the alerting officer within twenty-four (24) hours from the
issuance of the alert order. Alert orders shall be dated and
assigned a unique reference number in series which shall
be the basis for reporting to and monitoring by the
Commissioner and the Secretary of Finance.
The Bureau shall create a central clearing house for alert
orders and shall submit reports quarterly on the status
thereof.
There is a derogatory information that is received by
the BOC and thereafter the BOC will issue an alert order.
These derogatory information are violations of the
CMTA(Customs Modernization and Tariff Act) and other
customs laws which are possible committed by the
exporter or importer. Take note if we talk of possibilities,
these are not baseless allegations or general allegations
ha. When we talk about derogatory information and read
the listing under section 1111(2nd paragraph, a-e), there
should be some sort of basis and the basis, grounds and
provisions violated must have to be specific. Hindi lang
general allegations.
When is an alert order issued?
It is only issued after lodgment of the goods
declaration and prior to the release of the goods. By the
time that the entry is made and will be lodged and there are
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
derogatory information that is received, an alert order may
be issued.
An alert order may suspend the processing of the
goods so long as the order is issued by an authorized
customs officer. If there is an alert order of course there will
be an inspection. If there will be an inspection and then
there will be a violation that is found out by the customs
officers, these goods imported or exported may be subject
to forfeiture proceedings. It will be seized and be subjected
to forfeiture proceedings.
What are the properties subject to seizure and
forfeiture? You have section 1113-
SECTION 1113. Property Subject to Seizure and
Forfeiture.— Property that shall be subject to seizure and
forfeiture include:
(a) Any vehicle, vessel or aircraft, including cargo,
which shall be used unlawfully in the importation or
exportation of goods or in conveying or
transporting smuggled goods in commercial
quantities into or from any Philippine port or place.
The mere carrying or holding on board of
smuggled goods in commercial quantities shall
subject such vehicle, vessel, aircraft, or any other
craft to forfeiture: Provided, That the vehicle,
vessel, aircraft or any other craft is not used as a
common carrier which has been chartered or
leased for purposes of conveying or transporting
persons or cargo;
(b) Any vessel engaging in the coastwise trade
which shaft have on board goods of foreign
growth, produce, or manufacture in excess of the
amount necessary for sea stores, without such
goods having been properly entered or legally
imported;
(c) Any vessel or aircraft into which shall be
transferred cargo unloaded contrary to law prior to
the arrival of the importing vessel or aircraft at the
port of destination;
(d) Any part of the cargo, stores, or supplies of a
vessel or aircraft arriving from a foreign port which
is unloaded before arrival at the vessel’s or
aircraft’s port of destination and without authority
from the customs officer; but such cargo, ship, or
aircraft stores and supplies shall not be forfeited if
such unloading was due to accident, stress of
weather, or other necessity and is subsequently
46 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
approved by the District Collector;
(e) Goods which are fraudulently concealed in or
removed contrary to law from any public or private
warehouse, container yard, or container freight
station under customs supervision;
(f) Goods, the importation or exportation of which
are effected or attempted contrary to law, or any
goods of prohibited importation or exportation, and
all other goods which, in the opinion of the District
Collector, have been used, are or were entered to
be used as instruments in the importation or the
exportation of the former;
(g) Unmanifested goods found on any vessel or
aircraft if manifest therefor is required;
(h) Sea stores or aircraft stores adjudged by the
District Collector to be excessive, when the duties
and taxes assessed by the District Collector
thereon are not paid or secured forthwith upon
assessment of the same;
(i) Any package of imported goods which is found
upon examination to contain goods not specified in
the invoice or goods declaration including all other
packages purportedly containing imported goods
similar to those declared in the invoice or goods
declaration to be the contents of the misdeclared
package;
(j) Boxes, cases, trunks, envelopes, and other
containers of whatever character used as
receptacle or as device to conceal goods which
are subject to forfeiture under this Act or which are
so designed as to conceal the character of such
goods;
(k) Any conveyance actually used for the transport
of goods subject to forfeiture under this Act, with its
equipage or trappings, and any vehicle similarly
used, together with its equipment and
appurtenances. The mere conveyance of
smuggled goods by such transport vehicle shall be
sufficient cause for the outright seizure and
confiscation of such transport vehicle but the
forfeiture shall not be effected if it is established
that the owner of the means of conveyance used
as aforesaid, is engaged as common carrier and
not chartered or leased, or that the agent in charge
thereof at the time, has no knowledge of the
unlawful act; and
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
(l) Goods sought to be imported or exported:
(1) Without going through a customs
office, whether the act was consummated,
frustrated, or attempted;
(2) Found in the baggage of a person
arriving from abroad and undeclared by
such person;
(3) Through a false declaration or affidavit
executed by the owner, importer, exporter,
or consignee concerning the importation of
such goods;
(4) On the strength of a false invoice or
other document executed by the owner,
importer, exporter, or consignee
concerning the importation or exportation
of such goods; or
(5) Through any other practice or device
contrary to law by means of which such
goods entered through a customs office to
the prejudice of the government.
SECTION 1115. Conditions Affecting Forfeiture of Goods.—
The forfeiture shall be effected only when and while the
goods are in the custody or within the jurisdiction of
customs officers, or in the possession or custody of or
subject to the control of the importer, exporter, original
owner, consignee, agent of another person effecting the
importation, entry or exportation in question, or in the
possession or custody of or subject to the control of
persons who shall receive, conceal, buy, sell, or transport
the same, or aid in any of such acts, with knowledge that
the goods were imported, or were the subject of an attempt
at importation or exportation contrary to law.
If you read section 1113, dalawa lang yan eh-
(a)vessel, aircraft or any means used to transport
smuggled goods and (b) goods which are fraudulently
concealed or otherwise, the goods.
Take note that the seizure of vessels, vehicles and
aircrafts shall not be effected if it is established that the
owners or agents-in-charge of the means of conveyance
has no knowledge of the unlawful act. So it is entirely
possible that the owner has no knowledge of the unlawful
act.
Ano ba kinalaman ng person na ito who owns the
vessel?
47 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
The law provides for the prima facie presumption
against vehicles, vessels and aircrafts. What are these
circumstances?
1. If the conveyance has been used for smuggling
before. Nadakpan na sa una.
2. The owner is not in the business for which the
conveyance is generally used.
3. The owner is not in a position to own such
conveyance.
When should the order of release(if no violation)
or warrant of seizure(if there is a violation) be issued?
SECTION 1116. Seizure or Release of Goods.— The District
Collector shall issue an order of release or a warrant of
seizure within five (5) days, or two (2) days in case of
perishable goods, upon the recommendation of the alerting
officer or any other customs officer. The District Collector
shall immediately make a report of such seizure or release
to the Commissioner.
Who has the authority to issue a warrant of
seizure?
It is the District Collector upon determination of the
existence of probable cause and in case of non-existence
thereof, the issuance of the order of release.
Wala tayong problema kung meron tayong
seizure kasi the importer can avail of his/her remedies
but what if the District Collector will issue an order of
release?
SECTION 1117. Warrant of Seizure or Order of Release.—
The District Collector shall have the authority to issue a
warrant of seizure of the goods upon determination of the
existence of probable cause and in case of nonexistence
thereof, the issuance of order of release. In case the
District Collector issued an order of release, the District
Collector shall immediately transmit all the records to the
Commissioner who shall automatically review within forty-
eight (48) hours, or within twenty-four (24) hours in case of
perishable goods. When no decision is made by the
Commissioner within the prescribed period, the imported
goods shall be deemed released.
The lifting of the alert order shall be issued by the District
Collector only upon the affirmation of the decision of the
District Collector by the Commissioner, or after the lapse of
the period of review by the Commissioner, whichever is
earlier.
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
The laws says that there will be an AUTOMATIC
REVIEW by the Commissioner of Customs if there is a
decision adverse to the government when it comes to
seizure cases. This is why the District Collector should
immediately transmit the records to the CoC normally
within forty-eight hours or twenty-four hours if the goods
are perishable.
If the CoC will not issue any rulings within the
prescribed period (the CoC is required to issue a decision
or ruling normally within thirty days, or ten days if the goods
are perishable), the goods are deemed as released.
Then you have the service of warrant of seizure,
section 1119-
SECTION 1119. Service of Warrant of Seizure.— The
District Collector shall cause the service of warrant of
seizure to the owner or importer of the goods or the
authorized representative thereof. The owner or importer
shall be given, an opportunity to be heard during the
forfeiture proceedings.
For the purpose of serving the warrant, the importer,
consignee, or person holding the bill of lading or airway bill
shall be deemed the “owner” of the goods. For the same
purpose, “authorized representative” shall include any
agent of the owner and if the owner or the agent is
unknown, any person having possession of the goods at
the time of the seizure.
Service of warrant to an unknown owner shall be effected
by posting the warrant for fifteen (15) days in a public place
at the concerned district, and by electronic or printed
publication.
After the seizure of the goods, the next step is the
forfeiture proceedings.
What if the owner is unknown? We have section
1121-
SECTION 1121. Proceedings in Case of Property Belonging
to Unknown Parties.— If, within fifteen (15) days after
service of warrant, no owner or agent can he found or
appears before the District Collector, the seized goods
shall be forfeited ipso facto in favor of the government to be
disposed of in accordance with this Act.
If no owner will appear, there is an automatic
forfeiture in favor of the government.
Who has the burden of proof in forfeiture
proceedings?
48 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
It is the claimant, the person or owner or importer
claiming to be the owner of the imported goods shall have
the burden of proof in forfeiture proceedings.
Can there be settlement pending the seizure
case? YES, under section 1124-
SECTION 1124. Settlement of Pending Seizure Case by
Payment of Fine or Redemption of Forfeited Goods.—
Subject to the approval of the Commissioner, the District
Collector may allow the settlement by payment of fine or
the redemption of forfeited goods, during the course of the
forfeiture proceeding. However, the Commissioner may
accept the settlement by redemption of any forfeiture case
on appeal. No settlement by payment of fine shall be
allowed when there is fraud or when the discrepancy in
duties and taxes to be paid between what is determined
and what is declared amounts to more than thirty percent
(30%).
There can be settlement upon the payment of fine or
redemption of goods if forfeited.
In the following cases, settlement in any seizure case
is never allowed-
1. When there is fraud or when the discrepancy in
duties and taxes to be paid between what is determined
and what is declared amounts to more than thirty percent
2. When the importation is prohibited
3. The release of the goods is contrary to law
When should be a decision in a forfeiture case be
rendered?
SECTION 1125. Decision in Forfeiture Cases.— In forfeiture
cases, the District Collector shall issue an order for hearing
within fifteen (15) days, or five (5) days in case of
perishable goods, from issuance of the warrant. The
District Collector shall render a decision within thirty (30)
days upon termination of the hearing, or within ten (10)
days in case of perishable goods. The decision shall
include a declaration of forfeiture, the imposition of a fine or
such other action as may be proper.
There are times na iforfeit lang, there are times
magkamali lang probably there will be a finding na there is
no fault at all or a fine will just be imposed. After the
payment of the fine, the goods will be released by the
customs.
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
Then you have appeal in forfeiture cases-
SECTION 1126. Appeal to the Commissioner.— In forfeiture
cases, the person aggrieved by the decision of a District
Collector may, within fifteen (15) days or five (5) days in
case of perishable goods, from receipt of the decision, file
a written notice of appeal, together with the required appeal
fee to the District Collector, furnishing a copy to the
Commissioner. The District Collector shall immediately
transmit all the records of the proceedings to the
Commissioner, who shall review and decide on the appeal
within thirty (30) days from receipt of the records, or fifteen
(15) days in the case of perishable goods: Provided, That if
within thirty (30) days, no decisionis rendered, the decision
of the District Collector under appeal shall be deemed
affirmed. An appeal filed beyond the period herein
prescribed shall be dismissed.
Appeals to protest cases shall be governed by Section 114
of this Act.
The decision of the Commissioner may be served through
the recognized modes of service under existing law.
Then you have automatic review, this is the
automatic review of forfeiture cases-
First is the automatic review by the Commissioner of
any decision of a district collector.
SECTION 1127. Automatic Review in Forfeiture Cases.—
The Commissioner shall automatically review any decision
by the District Collector adverse to the government. The
entire records of the case shall be elevated within five (5)
days from the promulgation of the decision. The
Commissioner shall decide on the automatic review within
thirty (30) days, or within ten (10) days in the case of
perishable goods, from receipt of the records. When no
decision is rendered within the prescribed period or when a
decision adverse to the government is rendered by the
Commissioner involving goods with FOB or FCA value of
ten million pesos (₱10,000,000.00) or more, the records of
the decision of the Commissioner, or of the District
Collector under review, as the case may be, shall be
automatically elevated within five (5) days for review by the
Secretary of Finance. The decision issued by the Secretary
of Finance, whether or not a decision was rendered by the
Commissioner within thirty (30) days, or within ten (10)
days in the case of perishable goods, from receipt of the
records, shall be final upon the Bureau.
So if the decision is adverse to the government,
meaning there is an absolution of any or all penalties, the
49 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
decision of the district collector will be automatically
reviewed by the Commissioner.
Now, what if the Commissioner of Customs will
also issue an adverse decision against the government
or does not decide with the thirty day period or ten
days in the case of perishable goods?
Under section 1127, there will be an automatic
elevation or automatic review again by the Secretary of
Finance(refer to the provision).
We also have the automatic review by the Secretary
of Finance under section 1128-
SECTION 1128. Automatic Review by the Secretary of
Finance in Other Cases.— In cases not involving protest or
forfeiture, the Commissioner shall automatically review any
decision by the District Collector that is adverse to the
government. The records of the case shall be elevated to
the Commissioner within five (5) days from the
promulgation of the decision. The Commissioner shall
decide on the automatic review within thirty (30) days from
receipt of the records, or within ten (10) days in the case of
perishable goods. When no decision is rendered within the
prescribed period or when any decision rendered by the
Commissioner is adverse to the government, the records of
the case under review shall be automatically elevated
within five (5) days for the review of the Secretary of
Finance. The decision issued by the Secretary of Finance,
whether or not a decision was rendered by the
Commissioner within thirty (30) days from receipt of the
records, or within ten (10) days in the case of perishable
goods, shall be final upon the Bureau.
This refers to cases not involving protests or
forfeiture.
Let us now go to ABANDONMENT. There are two
kinds of abandonment as provided under section 1129-
1. Express abandonment under section 1129(a)
2. Implied abandonment under section 1129(b-e)
SECTION 1129. Abandonment, Kinds and Effects of.—
Imported goods are deemed abandoned under any of the
following circumstances;
(a) When the owner, importer, or consignee of the
imported goods expressly signifies in writing to the
District Collector the intention to abandon the
same; or
(b) When the owner, importer, consignee, or
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
interested party after due notice, falls to file the
goods declaration within the prescribed period in
Section 407 of this Act; Provided, That the term
goods declaration shall include provisional or
incomplete goods declaration deemed valid by the
Bureau as provided in Section 403 of this Act. For
this purpose, it is the duty of the District Collector
to post a list of all packages discharged and their
consignees, whether electronically or physically in
the District Office, or send a notice to the
consignee within five (5) days from the date of
discharge; or
(c) Having filed such goods declaration, the owner,
importer, consignee or interested party after due
notice, fails to pay the assessed duties, taxes and
other charges thereon, or, if the regulated goods
failed to comply with Section 117 of this Act, within
fifteen (15) days from the date of final
assessment: Provided, That if such regulated
goods are subject of an alert order and the
assessed duties, taxes and other charges thereof
are not paid within fifteen (15) days from
notification by the Bureau of the resolution of the
alert order, the same shall also be deemed
abandoned; or
(d) Having paid the assessed duties, taxes and
other charges, the owner, importer or consignee or
interested party after due notice, fails to claim the
goods within thirty (30) days from payment. For
this purpose, the arrastre or warehouse operator
shall report the unclaimed goods to the District
Collector for disposition pursuant to the provisions
of this Act; or
(e) When the owner or importer fails to claim goods
in customs bonded warehouses within the
prescribed period.
The due notice requirement under this section may be
provided by the Bureau through electronic notice or
personal service; Provided, That for non-regular importers,
notification shall be by registered mail or personal service.
For tins purpose, the accreditation of importers, exporters,
and other third parties shall indude provision for mandatory
receipt of electronic notices.
There is also one kind of abandonment that we have
discussed earlier, diba nadiscuss natin yung deemed
abandoned siya? I think the failure to mark the goods are
deemed abandoned. That is also one instance of implied
abandonment.
50 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
What is the treatment of abandoned goods? We
have section 1130-
SECTION 1130. Treatment and Disposition of Abandoned
Goods.— Expressly abandoned goods under paragraph (a)
of Section 1129 of this Act shall ipso facto be deemed the
property of the government and shall be disposed of in
accordance with the provisions of this Act.
If the Bureau has not disposed of the abandoned goods,
theowner or importer of goods impliedly abandoned may,
at any time within thirty (30) days after the lapse of the
prescribed period to file the declaration, reclaim the goods
provided that all legal requirements have been complied
with and the corresponding duties, taxes and other
charges, without prejudice to charges and fees due to the
port or terminal operator, as well as expenses incurred
have been paid before the release of the goods from
customs custody.
When the Bureau sells goods which have been impliedly
abandoned, although no offense has been discovered, the
proceeds of the sale, after deduction of any duty and tax
and all other charges and expenses incurred as provided in
Section 1143 of this Act, shall be turned over to those
persons entitled to receive them or, when this is not
possible, held at their disposal for a specified period. After
the lapse of the specified period, the balance shall be
transferred to the forfeiture fund as provided in Section
1151 of this Act.
So this reclaim of the goods will apply only to implied
abandonment.
Let us now go the civil remedies of the government,
this is pretty much the same with NIRC.
The following are the civil remedies under section
1132-
1. Distraint of goods or levy of real property
2. Civil action or criminal action
SECTION 1132. Remedies for the Collection of Duties,
Taxes, Fines, Surcharges, Interests, and Other Charges.—
The civil remedies for the collection of import duties, taxes,
fees, or charges resulting from the conduct of a post
clearance audit shall be obtained by:
(a) Distraint of goods, chattels, or effects, and
other personal property of whatever character,
including stocks and other securities, debts,
credits, bank accounts, and interest in and rights to
personal property, and by levy upon real property
and interest in rights to real property; and
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
(b) Civil or criminal action.
Either or both of these remedies may be pursued at the
discretion of the Bureau; Provided, That the remedies of
distraint and levy shall not be allowed when the amount of
duties and taxes involved is not more than ten thousand
pesos (₱10,000.00).
The Bureau shall advance the amounts needed to defray
costs of collection by means of civil or criminal action,
including the preservation or transportation of personal
property distrained and the advertisement and sale thereof
as well as of real property and improvements thereon.
Either or both of these remedies may be pursued by
the government, so there is no hierarchy of remedies,
provided that the remedies of distraint and levy shall not be
allowed when the amount of duties and taxes involved shall
not exceed P10,000.
You also have the provisions on constructive distraint
and summary remedies on the distraint of personal
property and levy on real property-
SECTION 1133. Constructive Distraint of the Property.— To
safeguard the interest of the government, the
Commissioner may place under constructive distraint the
property of a delinquent importer who, in the opinion of the
Commissioner, is retiring from any business subject to duty
and tax, or is intending to leave the Philippines, or to
remove the property therefrom, or to hide or conceal the
property, or to perform any act tending to obstruct the
proceedings for collecting the duty and tax due, or which
may be due.
The constructive distraint of personal property shall be
effected by requiring the importer or any person in
possession or control of such property to sign a receipt
covering the property, to obligate to preserve the distrained
property on the state and condition at the time of the
government's seizure of the same, and not to dispose of
the same in any manner whatsoever, without the express
authority of the Commissioner.
In case the importer or the person in possession and
control of the property sought to be placed under
constructive distraint refuses or fails to sign the receipt
herein referred to, the customs officer effecting the
constructive distraint shall proceed to prepare a list of such
property and, in the presence of two (2) witnesses, leave a
copy thereof in the premises where the property distrained
is located, after which the said property shall be deemed to
have been placed under constructive distraint.
SECTION 1134. Summary Remedies.—
51 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
(A) Distraint of Personal Property.— Upon failure
of the person owing any delinquent duty, tax and
other charges to pay at the time required, the
Commissioner shall seize and distraint the goods,
chattels or effects, and the personal property,
including stocks and other securities, debts,
credits, hank accounts, and interests in and rights
to personal property of such persons, in sufficient
quantity to satisfy the duty, tax or other charge and
the expenses of the distraint and the cost of the
subsequent sale.
The officer serving the warrant of distraint shall
make or cause to be made an account of the
goods, chattels, effects, or other personal property
distrained, a copy of which, signed by the said
officer, shall he left either with the owner or person
from whose possession such goods, chattels, or
effects or other personal property were taken, or at
the dwelling or other place of business of such
person and with someone of suitable age and
discretion, to which list shall be added a statement
of the sum demanded and note of the time and
place of sale.
Stocks and other securities shall be distrained by
serving a copy of the warrant of distraint upon the
importer and upon the president, manager,
treasurer, or other responsible officer of the
corporation, company or association, which issued
the said stocks or securities.
Debts and credits shall be distrained by leaving
with the person owing the debts or having in
his/her possession or under his/her control such
credits, or with his/her agent, a copy of the warrant
of distraint. The warrant of distraint shall be
sufficient authority to the person owing the debts or
having in his possession or under his control any
credits belonging to the importer to pay to the
Commissioner the amount of such debts of credits.
Bank accounts shall be garnished by serving a
warrant of garnishment upon the importer and
upon the president, manager, treasurer, or other
responsible officer of the bank Upon the receipt of
the warrant of garnishment, the bank shall turn
over to the Commissioner so much of the bank
accounts as may be sufficient to satisfy the claim
of the government.
A report on the distraint shall, within ten (10) days
from receipt of the warrant, be submitted by the
Commissioner to the Secretary of
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
Finance: Provided, That the Commissioner shall
have the power to lift such order of distraint subject
to the rules and regulations promulgated pursuant
to this Act.
(B) Levy on Real Property.— After the expiration of
the period within which to pay the duty, tax and
other charges as prescribed in this section, real
property may be levied upon, before,
simultaneously, or after the distraint of personal
property belonging to the importer. To this end, the
Commissioner or the duly authorized
representative shall prepare a duly authenticated
certificate showing the name of the importer and
the amounts of the duty and tax and penalty due.
The certificate shall operate with the force of a
legal execution throughout the Philippines.
The levy shall be effected by writing upon the
certificate a description of the property on which
levy is made. At the same time, written notice of
the levy shall be mailed to or served upon the
register of deeds of the province or city where the
property is located and upon the importer, or if the
latter is not in the Philippines, upon the agent or
the manager of the business from which the liability
arose, or if there be none, to the occupant of the
property in question.
In case the warrant of levy on real property is not
issued before or simultaneously with the warrant of
distraint on personal property, and the personal
property of the importer is not sufficient to satisfy
the duty and tax due, the Commissioner or a duly
authorized representative shall, within thirty (30)
days after execution of the distraint, proceed with
the levy on the real property of the importer.
Within ten (10) days after receipt of the warrant, a
report on any levy shall be submitted by the
levying officer to the Commissioner; Provided, That
the Commissioner may lift such warrants of levy
issued, subject to the rules and regulations
promulgated pursuant to this Act.
Then you have judicial proceedings under section
1135 and 1136-
SECTION 1135. Supervision and Control over Criminal and
Civil Proceedings.— Civil and criminal actions and
proceedings instituted on behalf of the Government under
the authority of this Act or other laws enforced by the
Bureau shall be brought in the name of the government of
the Philippines and shall be prosecuted and handled by the
Bureau with the assistance of the Department of Justice
52 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
(DOJ): Provided, That the determination of the existence of
probable cause and the subsequent filing of any criminal or
civil case with the proper court against violators of this Act
shall exclusively belong to the DOJ: Provided, However,
That no civil or criminal action for the recovery of duties or
the enforcement of any fine, penalty or forfeiture under this
Act shall be filed in court without the approval of the
Commissioner.
SECTION 1136. Review by the CTA.— Unless otherwise
provided in this Act or by any other law, the party aggrieved
by the ruling or decisions of the Commissioner may appeal
to the CTA, in the manner and within the period prescribed
by law and regulations. Decisions of the Secretary of
Finance when required by this Act, may likewise be
appealed to the CTA.
Unless an appeal is made to the CTA in the manner and
within the period prescribed by law and regulations, the
ruling or decision of the Commissioner or the Secretary of
Finance shall be final and executory.
So that's practically it, the basic provisions of the
CMTA. The rest is actually codal na, codal siya masyado.
PART III. JURISDICTION OF THE COURT
OF TAX APPEALS
Our last discussion will be about the jurisdiction of
the Court of Tax Appeals.
The original law regarding the jurisdiction of the
Court of Tax Appeals is R.A. 1125 which has been
amended by R.A. 9282 and R.A. 9503. (read the following
laws because not all provisions are discussed by atty.
donalvo)
The jurisdiction of the Court of Tax Appeals may be
classified into two-
1. Exclusive Original jurisdiction
a. Tax collection cases on final and executory
assessments where the principal amount of taxes is P1
million or more. So this means that the government may
file a tax collection case against the taxpayer and the
amount of the taxes collected exclusive of charges and
penalties amounts to P1 million.
If it is less than P1 million, where should the tax
collection case be filed?
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
It shall be filed before the MTC or RTC depending on
the jurisdictional amount
R.A. 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
xxx
Exclusive original jurisdiction in tax collection cases
involving final and executory assessments for taxes, fees,
charges and penalties: Provided, however, That collection
cases where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is less than
One million pesos (P1,000,000.00) shall be tried by the
proper Municipal Trial Court, Metropolitan Trial Court and
Regional Trial Court.
b. Criminal offenses or violation of the NIRC(National
Internal Revenue Code) or CMTA(Customs Modernization
and Tariff Act) or other laws administered by the BIR or
BOC when the principal amount of the taxes is at least P1
million or more. Again this involves criminal cases.
R.A. 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
xxx
Exclusive original jurisdiction over all criminal offenses
arising from violations of the National Internal Revenue
Code or Tariff and Customs Code and other laws
administered by the Bureau of Internal Revenue or the
Bureau of Customs: Provided, however, That offenses or
felonies mentioned in this paragraph where the principal
amount o taxes and fees, exclusive of charges and
penalties, claimed is less than One million pesos
(P1,000,000.00) or where there is no specified amount
claimed shall be tried by the regular Courts and the
jurisdiction of the CTA shall be appellate. Any provision of
law or the Rules of Court to the contrary notwithstanding,
the criminal action and the corresponding civil action for the
recovery of civil liability for taxes and penalties shall at all
times be simultaneously instituted with, and jointly
determined in the same proceeding by the CTA, the filing
of the criminal action being deemed to necessarily carry
with it the filing of the civil action, and no right to reserve
the filling of such civil action separately from the criminal
action will be recognized.
Take note that an assessment is not necessarily for
the finding of a criminal case. You need the assessment so
you can determine how much is the unpaid tax liabilities of
the taxpayer. It determines whether there is probable
cause to indict that particular taxpayer for the violation of
penal laws of the NIRC, CMTA or any tax laws for that
matter.
Where should be the information be filed?
53 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
Again take note of the P1 million benchmark which is
exclusive of charges and penalties. If it is less than P1
million, you go to the regular courts, either the RTC or
MTC. If it is P1 million or more, you file in the CTA Division.
What will be the process then for the filing?
If the amount of taxes would be P1 million or more,
you file it initially in the CTA Division. Then you go up to the
CTA En Banc and then you go to the SC.
If it is below P1 million, if the jurisdiction is within the
MTC you start there. Then appeal to the RTC, and then to
the CTA En Banc and finally to the SC. For RTC cases,
you start with the RTC. Then you go to the CTA Division,
thereafter to the CTA En Banc and lastly the SC.
2. Exclusive Appellate jurisdiction
a.
R.A. 9282 Sec. 7. Jurisdiction. - The CTA shall exercise:
xxx
Exclusive appellate jurisdiction to review by appeal, as
herein provided:
1. Decisions of the Commissioner of Internal Revenue in
cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relation
thereto, or other matters arising under the National Internal
Revenue or other laws administered by the Bureau of
Internal Revenue;
2. Inaction by the Commissioner of Internal Revenue in
cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relations
thereto, or other matters arising under the National Internal
Revenue Code or other laws administered by the Bureau of
Internal Revenue, where the National Internal Revenue
Code provides a specific period of action, in which case the
inaction shall be deemed a denial;
In case of disputed assessments, the CIR has 180
days in which to decide either from the filing of the motion
for reconsideration or from the submission of the
supporting documents. If the 180 days has already lapsed,
the taxpayer may appeal within the 30-day period from the
lapse of the 180 days to decide.
In case of refund, when the two-year period is about
to expire and the CIR has yet to issue a decision, the
taxpayer must now immediately file an appeal to the CTA
even if the period to decide has not yet expired. When it
come to refund, the prescriptive period for the filing of the
administrative and judicial appeal is just two years.
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
b.
3. Decisions, orders or resolutions of the Regional Trial
Courts in local tax cases originally decided or resolved by
them in the exercise of their original or appellate
jurisdiction;
This refers to local tax cases. The decisions of the
RTC here refers to the RTC's original jurisdiction or
appellate jurisdiction.
What are the local tax cases here?
1. Legality of a tax ordinance. This is first filed the
DOJ, if the DOJ renders an adverse decision or does not
render any decision, then the taxpayer must go to the RTC
questioning the legality of the tax measure. If the RTC
decides against the taxpayer, then the latter can appeal to
the CTA Division.
2. Protest of local tax assessments. The taxpayer
will protest where? The local treasurer involved. If denied,
the appeal is made to the regular courts depending on the
jurisdictional amount. If filed with the MTC, the taxpayer will
appeal to the RTC and then to the CTA. If filed with the
RTC, then the appeal is filed to the CTA directly.
3. Refund of local tax cases. Again, the taxpayer
must pass to the MTC or RTC as the case may be and
then appeal to the CTA.
c.
4. Decisions of the Commissioner of Customs in cases
involving liability for customs duties, fees or other money
charges, seizure, detention or release of property affected,
fines, forfeitures or other penalties in relation thereto, or
other matters arising under the Customs Law or other laws
administered by the Bureau of Customs;
d.
5. Decisions of the Central Board of Assessment Appeals
in the exercise of its appellate jurisdiction over cases
involving the assessment and taxation of real property
originally decided by the provincial or city board of
assessment appeals;
This is covers real property taxation already when it
comes to assessments, levies and refunds. The taxpayer
first go to the LBAA(Local Board of Assessment Appeals)
and then to the CBAA and finally to the CTA En Banc.
e.
6. Decisions of the Secretary of Finance on customs cases
elevated to him automatically for review from decisions of
54 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)
the Commissioner of Customs which are adverse to the
Government under Section 2315 of the Tariff and Customs
Code;
7. Decisions of the Secretary of Trade and Industry, in the
case of nonagricultural product, commodity or article, and
the Secretary of Agriculture in the case of agricultural
product, commodity or article, involving dumping and
countervailing duties under Section 301 and 302,
respectively, of the Tariff and Customs Code, and
safeguard measures under Republic Act No. 8800, where
either party may appeal the decision to impose or not to
impose said duties.
f.
Exclusive appellate jurisdiction in tax collection cases:
a. Over appeals from the judgments, resolutions or orders
of the Regional Trial Courts in tax collection cases
originally decided by them, in their respective territorial
jurisdiction.
b. Over petitions for review of the judgments, resolutions or
orders of the Regional Trial Courts in the Exercise of their
appellate jurisdiction over tax collection cases originally
decided by the Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts, in their
respective jurisdiction."
g.
Exclusive appellate jurisdiction in criminal offenses:
a. Over appeals from the judgments, resolutions or orders
of the Regional Trial Courts in tax cases originally decided
by them, in their respected territorial jurisdiction.
b. Over petitions for review of the judgments, resolutions or
orders of the Regional Trial Courts in the exercise of their
appellate jurisdiction over tax cases originally decided by
the Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in their respective jurisdiction.
So these are the important things to remember when
it comes to the jurisdiction of CTA.
Who may appeal, Mode of appeal and Effect of
appeal-
R.A. 9282 Section 9. Section 11 of the same Act is hereby
amended to read as follows:
SEC. 11. Who May Appeal; Mode of Appeal; Effect of
Appeal. - Any party adversely affected by a decision, ruling
or inaction of the Commissioner of Internal Revenue, the
Commissioner of Customs, the Secretary of Finance, the
Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
Secretary of Trade and Industry or the Secretary of
Agriculture or the Central Board of Assessment Appeals or
the Regional Trial Courts may file an appeal with the CTA
within thirty (30) days after the receipt of such decision or
ruling or after the expiration of the period fixed by law for
action as referred to in Section 7(a)(2) herein.
Appeal shall be made by filing a petition for review under a
procedure analogous to that provided for under Rule 42 of
the 1997 Rules of Civil Procedure with the CTA within thirty
(30) days from the receipt of the decision or ruling or in the
case of inaction as herein provided, from the expiration of
the period fixed by law to act thereon. A Division of the
CTA shall hear the appeal: Provided, however, That with
respect to decisions or rulings of the Central Board of
Assessment Appeals and the Regional Trial Court in the
exercise of its appellate jurisdiction appeal shall be made
by filing a petition for review under a procedure analogous
to that provided for under rule 43 of the 1997 Rules of Civil
Procedure with the CTA, which shall hear the case en
banc.
All other cases involving rulings, orders or decisions filed
with the CTA as provided for in Section 7 shall be raffled to
its Divisions. A party adversely affected by a ruling, order
or decision of a Division of the CTA may file a motion for
reconsideration of new trial before the same Division of the
CTA within fifteens (15) days from notice thereof: Provide,
however, That in criminal cases, the general rule applicable
in regular Courts on matters of prosecution and appeal
shall likewise apply.
No appeal taken to the CTA from the decision of the
Commissioner of Internal Revenue or the Commissioner of
Customs or the Regional Trial Court, provincial, city or
municipal treasurer or the Secretary of Finance, the
Secretary of Trade and Industry and Secretary of
Agriculture, as the case may be shall suspend the
payment, levy, distraint, and/or sale of any property of the
taxpayer for the satisfaction of his tax liability as provided
by existing law: Provided, however, That when in the
opinion of the Court the collection by the aforementioned
government agencies may jeopardize the interest of the
Government and/or the taxpayer the Court any stage of the
proceeding may suspend the said collection and require
the taxpayer either to deposit the amount claimed or to file
a surety bond for not more than double the amount with the
Court.
In criminal and collection cases covered respectively by
Section 7(b) and (c) of this Act, the Government may
directly file the said cases with the CTA covering amounts
within its exclusive and original jurisdiction."
So you have 30 days to file an appeal. The appeal
shall be made by filing a petition for review under a
55 | P a g e
 TAXATION II TRANSCRIPT OF STENOGRAPHIC NOTES
Based on the Lectures of Atty.Donalvo (2nd Semester of S.Y. 2016-2017)

procedure analogous to that provided under Rule 42 of the

1997 Rules of Civil Procedure.

This is an important provision. If you read the entire

provision there are only two cases wherein the appeal
should be coursed through the CTA En Banc. The general
rule is that when you appeal, you must appeal first to the
CTA in Division. The exceptions are the following-

1. Decisions of the CBAA(Central Board of

Assessment Appeals)
2. Decisions of the RTC in its appellate jurisdiction

In these two instances, the appeal must be made to

the CTA En Banc. From the CTA En Banc, you then go to
the SC under Rule 45. You have 15 days to file a petition
for review on certiorari to the SC with an allowable
extension of 15 days for valid reasons.

~END OF FINALS COVERAGE~

GOD BLESS US! ☺

Don't be the one in the way of your own success. Stop

dwelling on what hasn't yet happened. Focus on what
has and what will happen. Believe in the power of right
now. Find hope in your future and the power within you
to make all of your dreams come true.

~Anonymous

Alparaque_Cutamora_Domingo_Jala_Laguialam_Lomondot_Lumapas_Noble_Reyes_Ruyeras_Uy_Vega
56 | P a g e