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TAXATION

TITLE II
REAL PROPERTY TAXATION

CHAPTER I
General Provisions

Section 197. Scope. - This Title shall govern the administration, appraisal, assessment, levy and collection
of real property tax.

Section 198. Fundamental Principles. - The appraisal, assessment, levy and collection of real property tax
shall be guided by the following fundamental principles:

(a) Real property shall be appraised at its current and fair market value;

(b) Real property shall be classified for assessment purposes on the basis of its actual use;

(c) Real property shall be assessed on the basis of a uniform classification within each local government
unit;

(d) The appraisal, assessment, levy and collection of real property tax shall not be let to any private person;
and

(e) The appraisal and assessment of real property shall be equitable.

Section 199. Definitions. - When used in this Title:

(a) "Acquisition Cost" for newly-acquired machinery not yet depreciated and appraised within the year of
its purchase, refers to the actual cost of the machinery to its present owner, plus the cost of
transportation, handling, and installation at the present site;

(b) "Actual Use" refers to the purpose for which the property is principally or predominantly utilized by
the person in possession thereof;

(c) "Ad Valorem Tax" is a levy on real property determined on the basis of a fixed proportion of the value
of the property;

(d) "Agricultural Land" is land devoted principally to the planting of trees, raising of crops, livestock and
poultry, dairying, salt making, inland fishing and similar aquacultural activities, and other agricultural
activities, and is not classified as mineral, timber, residential, commercial or industrial land;

(e) "Appraisal" is the act or process of determining the value of property as of a specified date for a specific
purpose;

(f) "Assessment" is the act or process of determining the value of a property, or proportion thereof subject
to tax, including the discovery, listing, classification, and appraisal of properties;

(g) "Assessment Level" is the percentage applied to the fair market value to determine the taxable value
of the property;
(h) "Assessed Value" is the fair market value of the real property multiplied by the assessment level. It is
synonymous to taxable value;

(i) "Commercial Land" is land devoted principally for the object of profit and is not classified as agricultural,
industrial, mineral, timber, or residential land;

(j) "Depreciated Value" is the value remaining after deducting depreciation from the acquisition cost;

(k) "Economic Life" is the estimated period over which it is anticipated that a machinery or equipment
may be profitably utilized;

(l) "Fair Market Value" is the price at which a property may be sold by a seller who is not compelled to sell
and bought by a buyer who is not compelled to buy;

(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;

(n) "Industrial Land" is land devoted principally to industrial activity as capital investment and is not
classified as agricultural, commercial, timber, mineral or residential land;

(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 self-propelled, 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;

(p) "Mineral Lands" are lands in which minerals, metallic or non-metallic, exist in sufficient quantity or
grade to justify the necessary expenditures to extract and utilize such materials;

(q) "Reassessment" is the assigning of new assessed values to property, particularly real estate, as the
result of a general, partial, or individual reappraisal of the property;

(r) "Remaining Economic Life" is the period of time expressed in years from the date of appraisal to the
date when the machinery becomes valueless;

(s) "Remaining Value" is the value corresponding to the remaining useful life of the machinery;

(t) "Replacement or Reproduction Cost" is the cost that would be incurred on the basis of current prices,
in acquiring an equally desirable substitute property, or the cost of reproducing a new replica of the
property on the basis of current prices with the same or closely similar material; and

(u) "Residential Land" is land principally devoted to habitation.

Section 200. Administration of the Real Property Tax. - The provinces and cities, including the
municipalities within the Metropolitan Manila Area, shall be primarily responsible for the proper, efficient
and effective administration of the real property tax.
CHAPTER II
Appraisal and Assessment of Real Property

Section 201. Appraisal of Real Property. - All real property, whether taxable or exempt, shall be appraised
at the current and fair market value prevailing in the locality where the property is situated. The
Department of Finance shall promulgate the necessary rules and regulations for the classification,
appraisal, and assessment of real property pursuant to the provisions of this Code.

Section 202. Declaration of real Property by the Owner or Administrator. - It shall be the duty of all
persons, natural or juridical, owning or administering real property, including the improvements therein,
within a city or municipality, or their duly authorized representative, to prepare, or cause to be prepared,
and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of their
property, whether previously declared or undeclared, taxable or exempt, which shall be the current and
fair market value of the property, as determined by the declarant. Such declaration shall contain a
description of the property sufficient in detail to enable the assessor or his deputy to identify the same
for assessment purposes. The sworn declaration of real property herein referred to shall be filed with the
assessor concerned once every three (3) years during the period from January first (1st) to June thirtieth
(30th) commencing with the calendar year 1992.

Section 203. Duty of Person Acquiring Real Property or Making Improvement Thereon. - It shall also be the
duty of any person, or his authorized representative, acquiring at any time real property in any
municipality or city or making any improvement on real property, to prepare, or cause to be prepared,
and file with the provincial, city or municipal assessor, a sworn statement declaring the true value of
subject property, within sixty (60) days after the acquisition of such property or upon completion or
occupancy of the improvement, whichever comes earlier.

Section 204. Declaration of Real Property by the Assessor. - When any person, natural or juridical, by
whom real property is required to be declared under Section 202 hereof, refuses or fails for any reason to
make such declaration within the time prescribed, the provincial, city or municipal assessor shall himself
declare the property in the name of the defaulting owner, if known, or against an unknown owner, as the
case may be, and shall assess the property for taxation in accordance with the provision of this Title. No
oath shall be required of a declaration thus made by the provincial, city or municipal assessor.

Section 205. Listing of Real Property in the Assessment Rolls. -

(a) In every province and city, including the municipalities within the Metropolitan Manila Area, there
shall be prepared and maintained by the provincial, city or municipal assessor an assessment roll wherein
shall be listed all real property, whether taxable or exempt, located within the territorial jurisdiction of
the local government unit concerned. Real property shall be listed, valued and assessed in the name of
the owner or administrator, or anyone having legal interest in the property.

(b) The undivided real property of a deceased person may be listed, valued and assessed in the name of
the estate or of the heirs and devisees without designating them individually; and undivided real property
other than that owned by a deceased may be listed, valued and assessed in the name of one or more co-
owners: Provided, however, That such heir, devisee, or co-owner shall be liable severally and
proportionately for all obligations imposed by this Title and the payment of the real property tax with
respect to the undivided property.
(c) The real property of a corporation, partnership, or association shall be listed, valued and assessed in
the same manner as that of an individual.

(d) Real property owned by the Republic of the Philippines, its instrumentalities and political subdivisions,
the beneficial use of which has been granted, for consideration or otherwise, to a taxable person, shall be
listed, valued and assessed in the name of the possessor, grantee or of the public entity if such property
has been acquired or held for resale or lease.

Section 206. Proof of Exemption of Real Property from Taxation. - Every person by or for whom real
property is declared, who shall claim tax exemption for such property under this Title shall file with the
provincial, city or municipal assessor within thirty (30) days from the date of the declaration of real
property sufficient documentary evidence in support of such claim including corporate charters, title of
ownership, articles of incorporation, by-laws, contracts, affidavits, certifications and mortgage deeds, and
similar documents.

If the required evidence is not submitted within the period herein prescribed, the property shall be listed
as taxable in the assessment roll. However, if the property shall be proven to be tax exempt, the same
shall be dropped from the assessment roll.

Section 207. Real Property Identification System. - All declarations of real property made under the
provisions of this Title shall be kept and filed under a uniform classification system to be established by
the provincial, city or municipal assessor.

Section 208. Notification of Transfer of Real Property Ownership. - Any person who shall transfer real
property ownership to another shall notify the provincial, city or municipal assessor concerned within
sixty (60) days from the date of such transfer. The notification shall include the mode of transfer, the
description of the property alienated, the name and address of the transferee.

Section 209. Duty of Registrar of Deeds to Appraise Assessor of Real Property Listed in Registry. -

(a) To ascertain whether or not any real property entered in the Registry of Property has escaped discovery
and listing for the purpose of taxation, the Registrar of Deeds shall prepare and submit to the provincial,
city or municipal assessor, within six (6) months from the date of effectivity of this Code and every year
thereafter, an abstract of his registry, which shall include brief but sufficient description of the real
properties entered therein, their present owners, and the dates of their most recent transfer or alienation
accompanied by copies of corresponding deeds of sale, donation, or partition or other forms of alienation.

(b) It shall also be the duty of the Registrar of Deeds to require every person who shall present for
registration a document of transfer, alienation, or encumbrance of real property to accompany the same
with a certificate to the effect that the real property subject of the transfer, alienation, or encumbrance,
as the case may be, has been fully paid of all real property taxes due thereon. Failure to provide such
certificate shall be a valid cause for the Registrar of Deeds to refuse the registration of the document.

Section 210. Duty of Official Issuing Building Permit or Certificate of Registration of Machinery to Transmit
Copy to Assessor. - Any public official or employee who may now or hereafter be required by law or
regulation to issue to any person a permit for the construction, addition, repair, or renovation of a
building, or permanent improvement on land, or a certificate of registration for any machinery, including
machines, mechanical contrivances, and apparatus attached or affixed on land or to another real property,
shall transmit a copy of such permit or certificate within thirty (30) days of its issuance, to the assessor of
the province, city or municipality where the property is situated.

Section 211. Duty of Geodetic Engineers to Furnish Copy of Plans to Assessor. - It shall be the duty of all
geodetic engineers, public or private, to furnish free of charge to the assessor of the province, city or
municipality where the land is located with a white or blue print copy of each of all approved original or
subdivision plans or maps of surveys executed by them within thirty (30) days from receipt of such plans
from the Lands Management Bureau, the Land Registration Authority, or the Housing and Land Use
Regulatory Board, as the case may be.

Section 212. Preparation of Schedule of Fair Market Values. - Before any general revision of property
assessment is made pursuant to the provisions of this Title, there shall be prepared a schedule of fair
market values by the provincial, city and municipal assessor of the municipalities within the Metropolitan
Manila Area for the different classes of real property situated in their respective local government units
for enactment by ordinance of the sanggunian concerned. The schedule of fair market values shall be
published in a newspaper of general circulation in the province, city or municipality concerned or in the
absence thereof, shall be posted in the provincial capitol, city or municipal hall and in two other
conspicuous public places therein.

Section 213. Authority of Assessor to Take Evidence. - For the purpose of obtaining information on which
to base the market value of any real property, the assessor of the province, city or municipality or his
deputy may summon the owners of the properties to be affected or persons having legal interest therein
and witnesses, administer oaths, and take deposition concerning the property, its ownership, amount,
nature, and value.

Section 214. Amendment of Schedule of Fair Market Values. - The provincial, city or municipal assessor
may recommend to the sanggunian concerned amendments to correct errors in valuation in the schedule
of fair market values. The sanggunian concerned shall, by ordinance, act upon the recommendation within
ninety (90) days from receipt thereof.

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.

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.

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.
Section 218. Assessment Levels. - The assessment levels to be applied to the fair market value of real
property to determine its assessed value shall be fixed by ordinances of the sangguniang panlalawigan,
sangguniang panlungsod or sangguniang bayan of a municipality within the Metropolitan Manila Area, at
the rates not exceeding the following:

(a) On Lands:

CLASS ASSESSMENT LEVELS

Residential 20%

Agricultural 40%

Commercial 50%

Industrial 50%

Mineral 50%

Timberland 20%

(b) On Buildings and Other Structures:

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(1) Residential
Fair market Value

Over Not Over Assessment


Levels

P175,000.00 0%

P175,000.00 300,000.00 10%

300,000.00 500,000.00 20%

500,000.00 750,000.00 25%

750,000.00 1,000,000.00 30%

1,000,000.00 2,000,000.00 35%


2,000,000.00 5,000,000.00 40%

5,000,000.00 10,000,000.00 50%

10,000,000.00 60%

(2) Agricultural
Fair Market Value

Over Not Over Assessment


Levels

P300,000.00 25%

P300,000.00 500,000.00 30%

500,000.00 750,000.00 35%

750,000.00 1,000,000.00 40%

1,000,000.00 2,000,000.00 45%

2,000,000.00 50%

(3) Commercial / Industrial


Fair Market Value

Over Not Over Assessment


Levels

P300,000.00 30%

P300,000.00 500,000.00 35%

500,000.00 750,000.00 40%

750,000.00 1,000,000.00 50%

1,000,000.00 2,000,000.00 60%

2,000,000.00 5,000,000.00 70%


5,000,000.00 10,000,000.00 75%

10,000,000.00 80%

(4) Timberland
Fair Market Value

Over Not Over Assessment


Levels

P300,000.00 45%

P300,000.00 500,000.00 50%

500,000.00 750,000.00 55%

750,000.00 1,000,000.00 60%

5,000,000.00 2,000,000.00 65%

2,000,000.00 70%

(c) On Machineries

Class Assessment Levels

Agricultural 40%

Residential 50%

Commercial 80%

Industrial 80%

(d) On Special Classes: The assessment levels for all lands buildings, machineries and other improvements;

Actual Use Assessment


Level

Cultural 15%

Scientific 15%
Hospital 15%

Local water districts 10%

Government-owned or 10%
controlled corporations
engaged in the supply and
distribution of water and/or
generation and transmission of
electric power

Section 219. General Revision of Assessment and Property Classification. - The provincial, city or municipal
assessor shall undertake a general revision of real property assessments within two (2) years after the
effectivity of this Code and every three (3) years thereafter.

Section 220. Valuation of Real Property. - In cases where (a) real property is declared and listed for
taxation purposes for the first time; (b) there is an ongoing general revision of property classification and
assessment; or (c) a request is made by the person in whose name the property is declared, the provincial,
city or municipal assessor or his duly authorized deputy shall, in accordance with the provisions of this
Chapter, make a classification, appraisal and assessment or taxpayer's valuation thereon: Provided,
however, That the assessment of real property shall not be increased oftener than once every three (3)
years except in case of new improvements substantially increasing the value of said property or of any
change in its actual use.

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.

Section 222. Assessment of Property Subject to Back Taxes. - Real property declared for the first time shall
be assessed for taxes for the period during which it would have been liable but in no case of more than
ten (10) years prior to the date of initial assessment: Provided, however, That such taxes shall be
computed on the basis of the applicable schedule of values in force during the corresponding period.

If such taxes are paid on or before the end of the quarter following the date the notice of assessment was
received by the owner or his representative, no interest for delinquency shall be imposed thereon;
otherwise, such taxes shall be subject to an interest at the rate of two percent (2%) per month or a fraction
thereof from the date of the receipt of the assessment until such taxes are fully paid.

Section 223. Notification of New or Revised Assessment. - When real property is assessed for the first time
or when an existing assessment is increased or decreased, the provincial, city or municipal assessor shall
within thirty (30) days give written notice of such new or revised assessment to the person in whose name
the property is declared. The notice may be delivered personally or by registered mail or through the
assistance of the punong barangay to the last known address of the person to be served.

Section 224. Appraisal and Assessment of Machinery. -

(a) The fair market value of a brand-new machinery shall be the acquisition cost. In all other cases, the fair
market value shall be determined by dividing the remaining economic life of the machinery by its
estimated economic life and multiplied by the replacement or reproduction cost.

(b) If the machinery is imported, the acquisition cost includes freight, insurance, bank and other charges,
brokerage, arrastre and handling, duties and taxes, plus charges at the present site. The cost in foreign
currency of imported machinery shall be converted to peso cost on the basis of foreign currency exchange
rates as fixed by the Central Bank.

Section 225. Depreciation Allowance for Machinery. - For purposes of assessment, a depreciation
allowance shall be made for machinery at a rate not exceeding five percent (5%) of its original cost or its
replacement or reproduction cost, as the case may be, for each year of use: Provided, however, That the
remaining value for all kinds of machinery shall be fixed at not less than twenty percent (20%) of such
original, replacement, or reproduction cost for so long as the machinery is useful and in operation.

CHAPTER III
Assessment Appeals

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.

Section 227. Organization, Powers, Duties, and Functions of the Local Board of Assessment Appeals. -

(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 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.

Section 228. Meetings and Expenses of the Local Board of Assessment Appeals. -
(a) The Board of Assessment Appeals of the province or city shall meet once a month and as often as may
be necessary for the prompt disposition of appealed cases. No member of the Board shall be entitled to
per diems or traveling expenses for his attendance in Board meetings, except when conducting an ocular
inspection in connection with a case under appeal.

(b) All expenses of the Board shall be charged against the general fund of the province or city, as the case
may be. The sanggunian concerned shall appropriate the necessary funds to enable the Board in their
respective localities to operate effectively.

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 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.

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 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.

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.

CHAPTER IV
Imposition of Real Property Tax

Section 232. Power to Levy Real Property Tax. - A province or city or a municipality within the
Metropolitan Manila Area my levy an annual ad valorem tax on real property such as land, building,
machinery, and other improvement not hereinafter specifically exempted.

Section 233. Rates of Levy. - A province or city or a municipality within the Metropolitan Manila Area shall
fix a uniform rate of basic real property tax applicable to their respective localities as follows:

(a) In the case of a province, at the rate not exceeding one percent (1%) of the assessed value of real
property; and

(b) In the case of a city or a municipality within the Metropolitan Manila Area, at the rate not exceeding
two percent (2%) of the assessed value of real property.

Section 234. Exemptions from Real Property Tax. - The following are exempted from payment of the real
property tax:

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions except when
the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;

(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit
or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used
for religious, charitable or educational purposes;

(c) All machineries and equipment that are actually, directly and exclusively used by local water districts
and government owned or controlled corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;

(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and

(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously granted to, or
presently enjoyed by, all persons, whether natural or juridical, including all government-owned or
controlled corporations are hereby withdrawn upon the effectivity of this Code.

CHAPTER V
Special Levies on Real Property

Section 235. Additional Levy on Real Property for the Special Education Fund. - A province or city, or a
municipality within the Metropolitan Manila Area, may levy and collect an annual tax of one percent (1%)
on the assessed value of real property which shall be in addition to the basic real property tax. The
proceeds thereof shall exclusively accrue to the Special Education Fund (SEF).

Section 236. Additional Ad Valorem Tax on Idle Lands. - A province or city, or a municipality within the
Metropolitan Manila Area, may levy an annual tax on idle lands at the rate not exceeding five percent
(5%) of the assessed value of the property which shall be in addition to the basic real property tax.

Section 237. Idle Lands, Coverage. - For purposes of real property taxation, idle lands shall include the
following:

(a) Agricultural lands, more than one (1) hectare in area, suitable for cultivation, dairying, inland fishery,
and other agricultural uses, one-half (1/2) of which remain uncultivated or unimproved by the owner of
the property or person having legal interest therein. Agricultural lands planted to permanent or perennial
crops with at least fifty (50) trees to a hectare shall not be considered idle lands. Lands actually used for
grazing purposes shall likewise not be considered idle lands.

(b) Lands, other than agricultural, located in a city or municipality, more than one thousand (1,000) square
meters in area one-half (1/2) of which remain unutilized or unimproved by the owner of the property or
person having legal interest therein.

Regardless of land area, this Section shall likewise apply to residential lots in subdivisions duly approved
by proper authorities, the ownership of which has been transferred to individual owners, who shall be
liable for the additional tax: Provided, however, That individual lots of such subdivisions, the ownership
of which has not been transferred to the buyer shall be considered as part of the subdivision, and shall be
subject to the additional tax payable by subdivision owner or operator.

Section 238. Idle Lands Exempt from Tax. - A province or city or a municipality within the Metropolitan
Manila Area may exempt idle lands from the additional levy by reason of force majeure, civil disturbance,
natural calamity or any cause or circumstance which physically or legally prevents the owner of the
property or person having legal interest therein from improving, utilizing or cultivating the same.

Section 239. Listing of Idle Lands by the Assessor. - The provincial, city or municipal assessor shall make
and keep an updated record of all idle lands located within his area of jurisdiction. For purposes of
collection, the provincial, city or municipal assessor shall furnish a copy thereof to the provincial or city
treasurer who shall notify, on the basis of such record, the owner of the property or person having legal
interest therein of the imposition of the additional tax.

Section 240. Special Levy by Local Government Units. - A province, city or municipality may impose a
special levy on the lands comprised within its territorial jurisdiction specially benefited by public works
projects or improvements funded by the local government unit concerned: Provided, however, That the
special levy shall not exceed sixty percent (60%) of the actual cost of such projects and improvements,
including the costs of acquiring land and such other real property in connection therewith: Provided,
further, That the special levy shall not apply to lands exempt from basic real property tax and the
remainder of the land portions of which have been donated to the local government unit concerned for
the construction of such projects or improvements.

Section 241. Ordinance Imposing a Special Levy. - A tax ordinance imposing a special levy shall describe
with reasonable accuracy the nature, extent, and location of the public works projects or improvements
to be undertaken, state the estimated cost thereof, specify the metes and bounds by monuments and
lines and the number of annual installments for the payment of the special levy which in no case shall be
less than five (5) nor more than ten (10) years. The sanggunian concerned shall not be obliged, in the
apportionment and computation of the special levy, to establish a uniform percentage of all lands subject
to the payment of the tax for the entire district, but it may fix different rates for different parts or sections
thereof, depending on whether such land is more or less benefited by proposed work.

Section 242. Publication of Proposed Ordinance Imposing a Special Levy. - Before the enactment of an
ordinance imposing a special levy, the sanggunian concerned shall conduct a public hearing thereon;
notify in writing the owners of the real property to be affected or the persons having legal interest therein
as to the date and place thereof and afford the latter the opportunity to express their positions or
objections relative to the proposed ordinance.

Section 243. Fixing the Amount of Special Levy. - The special levy authorized herein shall be apportioned,
computed, and assessed according to the assessed valuation of the lands affected as shown by the books
of the assessor concerned, or its current assessed value as fixed by said assessor if the property does not
appear of record in his books. Upon the effectivity of the ordinance imposing special levy, the assessor
concerned shall forthwith proceed to determine the annual amount of special levy assessed against each
parcel of land comprised within the area especially benefited and shall send to each landowner a written
notice thereof by mail, personal service or publication in appropriate cases.

Section 244. Taxpayer's Remedies Against Special Levy. - Any owner of real property affected by a special
levy or any person having a legal interest therein may, upon receipt of the written notice of assessment
of the special levy, avail of the remedies provided for in Chapter 3, Title Two, Book II of this Code.

Section 245. Accrual of Special Levy. - The special levy shall accrue on the first day of the quarter next
following the effectivity of the ordinance imposing such levy.lawphil.net

CHAPTER VI
Collection of Real Property Tax

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.

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.

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 249. Notice of Time for Collection of Tax. - The city or municipal treasurer shall, on or before the
thirty-first (31st) day of January each year, in the case of the basic real property tax and the additional tax
for the Special Education Fund (SEF) or any other date to be prescribed by the sanggunian concerned in
the case of any other tax levied under this title, post the notice of the dates when the tax may be paid
without interest at a conspicuous and publicly accessible place at the city or municipal hall. Said notice
shall likewise be published in a newspaper of general circulation in the locality once a week for two (2)
consecutive weeks.

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.

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.

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.

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.

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.

Section 255. Interests on Unpaid Real Property Tax. - In case of failure to pay the basic real property tax
or any other tax levied under this Title upon the expiration of the periods as provided in Section 250, or
when due, as the case may be, shall subject the taxpayer to the payment of interest at the rate of two
percent (2%) per month on the unpaid amount or a fraction thereof, until the delinquent tax shall have
been fully paid: Provided, however, That in no case shall the total interest on the unpaid tax or portion
thereof exceed thirty-six (36) months.

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.
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.

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 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 259. Penalty for Failure to Issue and Execute Warrant. - Without prejudice to criminal prosecution
under the Revised Penal Code and other applicable laws, any local treasurer or his deputy who fails to
issue or execute the warrant of levy within one (1) year from the time the tax becomes delinquent or
within thirty (30) days from the date of the issuance thereof, or who is found guilty of abusing the exercise
thereof in an administrative or judicial proceeding shall be dismissed from the service.

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 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.

Section 261. Redemption of Property Sold. - Within one (1) year from the date of sale, the owner of the
delinquent real property or person having legal interest therein, or his representative, shall have the right
to redeem the property upon payment to the local treasurer of the amount of the delinquent tax,
including the interest due thereon, and the expenses of sale from the date of delinquency to the date of
sale, plus interest of not more than two percent (2%) per month on the purchase price from the date of
sale to the date of redemption. Such payment shall invalidate the certificate of sale issued to the
purchaser and the owner of the delinquent real property or person having legal interest therein shall be
entitled to a certificate of redemption which shall be issued by the local treasurer or his deputy.

From the date of sale until the expiration of the period of redemption, the delinquent real property shall
remain in possession of the owner or person having legal interest therein who shall be entitled to the
income and other fruits thereof.

The local treasurer or his deputy, upon receipt from the purchaser of the certificate of sale, shall forthwith
return to the latter the entire amount paid by him plus interest of not more than two percent (2%) per
month. Thereafter, the property shall be free from lien of such delinquent tax, interest due thereon and
expenses of sale.

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.

Section 263. Purchase of Property By the Local Government Units for Want of Bidder. - In case there is no
bidder for the real property advertised for sale as provided herein, the real property tax and the related
interest and costs of sale the local treasurer conducting the sale shall purchase the property in behalf of
the local government unit concerned to satisfy the claim and within two (2) days thereafter shall make a
report of his proceedings which shall be reflected upon the records of his office. It shall be the duty of the
Registrar of Deeds concerned upon registration with his office of any such declaration of forfeiture to
transfer the title of the forfeited property to the local government unit concerned without the necessity
of an order from a competent court.

Within one (1) year from the date of such forfeiture, the taxpayer or any of his representative, may
redeem the property by paying to the local treasurer the full amount of the real property tax and the
related interest and the costs of sale. If the property is not redeemed as provided herein, the ownership
thereof shall be vested on the local government unit concerned.

Section 264. Resale of Real Estate Taken for Taxes, Fees, or Charges. - The sanggunian concerned may, by
ordinance duly approved, and upon notice of not less than twenty (20) days, sell and dispose of the real
property acquired under the preceding section at public auction. The proceeds of the sale shall accrue to
the general fund of the local government unit concerned.

Section 265. Further Distraint or Levy. - Levy may be repeated if necessary until the full amount due,
including all expenses, is collected.

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.

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.

Section 268. Payment of Delinquent Taxes on Property Subject of Controversy. - In any action involving the
ownership or possession of, or succession to, real property, the court may, motu propio or upon
representation of the provincial, city, or municipal treasurer or his deputy, award such ownership,
possession, or succession to any party to the action upon payment to the court of the taxes with interest
due on the property and all other costs that may have accrued, subject to the final outcome of the action.

Section 269. Treasurer to Certify Delinquencies Remaining Uncollected. - The provincial, city or municipal
treasurer or their deputies shall prepare a certified list of all real property tax delinquencies which
remained uncollected or unpaid for at least one (1) year in his jurisdiction, and a statement of the reason
or reasons for such non-collection or non-payment, and shall submit the same to the sanggunian
concerned on or before December thirty-first (31st) of the year immediately succeeding the year in which
the delinquencies were incurred, with a request for assistance in the enforcement of the remedies for
collection provided herein.

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;

(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.

CHAPTER VII
Disposition of Proceeds

Section 271. Distribution of Proceeds. - The proceeds of the basic real property tax, including interest
thereon, and proceeds from the use, lease or disposition, sale or redemption of property acquired at a
public auction in accordance with the provisions of this Title by the province or city or a municipality within
the Metropolitan Manila Area shall be distributed as follows:

(a) In the case of provinces:

(1) Province - Thirty-five percent (35%) shall accrue to the general fund;

(2) Municipality - Forty percent (40%) to the general fund of the municipality where the property is
located; and

(3) Barangay - Twenty-five percent (25%) shall accrue to the barangay where the property is located.

(b) In the case of cities:

(1) City - Seventy percent (70%) shall accrue to the general fund of the city; and

(2) Thirty percent (30%) shall be distributed among the component barangays of the cities where the
property is located in the following manner:

(i) Fifty percent (50%) shall accrue to the barangay where the property is located;

(ii) Fifty percent (50%) shall accrue equally to all component barangays of the city; and

(c) In the case of a municipality within the Metropolitan Manila Area:

(1) Metropolitan Manila Authority - Thirty-five percent (35%) shall accrue to the general fund of the
authority;

(2) Municipality - Thirty-five percent (35% shall accrue to the general fund of the municipality where the
property is located;

(3) Barangays - Thirty percent (30%) shall be distributed among the component barangays of the
municipality where the property is located in the following manner:

(i) Fifty percent (50%) shall accrue to the barangay where the property is located;

(ii) Fifty percent (50%) shall accrue equally to all component barangays of the municipality.

(d) The share of each barangay shall be released, without need of any further action, directly to the
barangay treasurer on a quarterly basis within five (5) days after the end of each quarter and shall not be
subject to any lien or holdback for whatever purpose.

Section 272. Application of Proceeds of the Additional One Percent SEF Tax. - The proceeds from the
additional one percent (1%) tax on real property accruing to the Special Education Fund (SEF) shall be
automatically released to the local school boards: Provided, That, in case of provinces, the proceeds shall
be divided equally between the provincial and municipal school boards: Provided, however, That the
proceeds shall be allocated for the operation and maintenance of public schools, construction and repair
of school buildings, facilities and equipment, educational research, purchase of books and periodicals, and
sports development as determined and approved by the Local School Board.

Section 273. Proceeds of the Tax on Idle Lands. - The proceeds of the additional real property tax on idle
lands shall accrue to the respective general fund of the province or city where the land is located. In the
case of a municipality within the Metropolitan Manila Area, the proceeds shall accrue equally to the
Metropolitan Manila Authority and the municipality where the land is located.

Section 274. Proceeds of the Special Levy. - The proceeds of the special levy on lands benefited by public
works, projects and other improvements shall accrue to the general fund of the local government unit
which financed such public works, projects or other improvements.

CHAPTER VIII
Special Provisions

Section 275. General Assessment Revision; Expenses Incident Thereto. - The sanggunian of provinces,
cities and municipalities within the Metropolitan Manila Area shall provide the necessary appropriations
to defray the expenses incident to the general revision of real property assessment.

All expenses incident to a general revision of real property assessment shall, by ordinance of the
sangguniang panlalawigan, be apportioned between the province and the municipality on the basis of the
taxable area of the municipality concerned.

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.

Section 278. Duty of Registrar of Deeds and Notaries Public to Assist the Provincial, City or Municipal
Assessor. - It shall be the duty of the Registrar of Deeds and notaries public to furnish the provincial, city
or municipal assessor with copies of all contracts selling, transferring, or otherwise conveying, leasing, or
mortgaging real property received by, or acknowledged before them.

Section 279. Insurance Companies to Furnish Information. - Insurance companies are hereby required to
furnish the provincial, city or municipal assessor copies of any contract or policy insurance on buildings,
structures, and improvements insured by them or such other documents which may be necessary for the
proper assessment thereof.

Section 280. Fees in Court Actions. - All court actions, criminal or civil, instituted at the instance of the
provincial, city or municipal treasurer or assessor under the provisions of this Code, shall be exempt from
the payment of court and sheriff's fees.
Section 281. Fees in Registration of Papers or Documents on Sale of Delinquent Real Property to Province,
City or Municipality. - All certificates, documents, and papers covering the sale of delinquent property to
the province, city or municipality, if registered in the Registry of Property, shall be exempt from the
documentary stamp tax and registration fees.

Section 282. Real Property Assessment Notices or Owner's Copies of Tax Declarations to be Exempt from
Postal Charges or Fees. - All real property assessment notices or owner's copies of tax declaration sent
through the mails by the assessor shall be exempt from the payment of postal charges or fees.

Section 283. Sale and Forfeiture Before Effectivity of Code. - Tax delinquencies incurred, and sales and
forfeitures of delinquent real property effected, before the effectivity of this Code shall be governed by
the provisions of applicable laws then in force.

IV. TARIFF AND CUSTOMS CODE OF 1978

A. TARIFF AND DUTIES, DEFINED

B. GENERAL RULE: ALL IMPORTED ARTICLES ARE SUBJECT TO DUTY

Section 100. Imported Articles Subject to Duty

All articles, when imported from any foreign country into the Philippines, shall be subject to duty upon
each importation, even though previously exported from the Philippines, except as otherwise
specifically provided for in this Code in other laws.

1. Importation by the Government Taxable

Section 1205. Importations by the Government. Except as otherwise specifically provided, all
importations by the government for its own use or that of its subordinate branches on instrumentalities,
or corporations, agencies or instrumentalities owned or controlled by the government, shall be subject
to the duties, taxes, fees and other charges provided for in this Code: Provided, however, That upon
certification of the head of the department or political subdivision concerned, with the approval of the
Auditor General, that the imported article is actually being used by the government or any of its political
subdivision concerned, the amount of duty, tax, fee or charge shall be refunded to the government or
the political subdivision which paid it.

C. PURPOSE FOR IMPOSITION

D. FLEXIBLE TARIFF CLAUSE

Section 401. Flexible Clause.

a. The President, upon investigation by the Commission and recommendation of the National Economic
Council, is hereby empowered to reduce by not more than fifty per cent or to increase by not more than
five times the rates of import duty expressly fixed by statute (including any necessary change in
classification) when in his judgment such modification in the rates of import duty is necessary in the
interest of national economy, general welfare and/or national defense.

b. Before any recommendation is submitted to the President by the Council pursuant to the provisions
of this section, the Commission shall conduct an investigation in the course of which it shall hold public
hearings wherein interested parties shall be afforded reasonable opportunity to be present, to produce
evidence and to be heard. The Commission may also request the views and recommendations of any
government office, agency or instrumentality, and such office, agency or instrumentality shall cooperate
fully with the Commission.

c. The President shall have no authority to transfer articles from the duty-free list to the dutiable list nor
from the dutiable list to the duty-free list of the tariff.

d. The power of the President to increase or decrease rates of import duty within the limits fixed in
subsection "a" shall include the authority to modify the form of duty. In modifying the form of duty the
corresponding ad valorem or specific equivalents of the duty with respect to imports from the principal
concerning foreign country for the most recent representation period shall be used as basis.

e. The Commissioner of Customs shall regularly furnish to the Commission a copy each of all customs
import entries containing every pertinent information appearing in the collectors' liquidated duplicates,
including the consular invoice and/or the commercial invoice. The Commission or its duly authorized
agents shall have access to and the right to copy all the customs import entries and other documents
appended thereto as finally in the General Auditing Office.

f. The Commission is authorized to adopt such reasonable procedure, rules and regulations as it may
deem necessary to carry out the provisions of this section.

g. Any order issued by the President pursuant to the provisions of this section shall take effect thirty
days after its issuance.

h. The provisions of this section shall not apply to any article the importation of which into the
Philippines is or may be governed by Section 402 of this Code.

i. The authority herein granted to the President shall be exercised only when Congress is not in session.

E. REQUIREMENTS OF IMPORTATION

1. Beginning and Ending of Importation

Section 1202. When Importation Begins and Deemed Terminated. Importation begins when the carrying
vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein. Importation
is deemed terminated upon payment of the duties, taxes and other charges due upon the articles, or
secured to be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in
case said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction
of the customs.
2. Obligations of Importer

a. Cargo Manifest

b. Import Entry

Section 1301. Persons Authorized to Make Import Entry. Imported articles must be entered in the
customhouse at the port of entry within fifteen days from date of discharge of the last package from the
vessel either (a) by the importer, being holder of the bill of lading, (b) by any other holder of the bill of
lading in due course, (c) by a customs broker acting under authority from a holder of the bill, or (d) by a
person duly empowered to act as agent or attorney-in-fact for such holder: Provided, That the Collector
may grant an extension of not more than fifteen days.

Section 1305. By Whom to be Signed. The declaration shall be signed by the importer, consignee or
holder of the bill, by or for whom the entry is effected, if such person is an individual, or in case of a
corporation, firm or association, by its manager, or by a licensed customs broker duly authorized to act
for either of them. When it is impracticable to obtain a declaration thus signed, the Collector may allow
it to be signed by some person in interest having first and best knowledge of the facts. A Collector may
also, in his discretion, require that the declaration shall be sworn to by the person signing the same.

c. Declaration of Correct Weight or Value

d. Liability for Payment of Duties

Section 1204. Liability of Importer for Duties. Unless relieved by laws or regulations, the liability for
duties, taxes, fees and other charges attaching on importation constitutes a personal debt due from the
importer to the government which can be discharged only by payment in full of all duties, taxes, fees
and other charges legally accruing. It also constitutes a lien upon the articles imported which may be
enforced while such articles are in custody or subject to the control of the government.

e. Liquidation of Duties

Section 1601. Liquidation and Record of Entries. If the Collector shall approve the returns of the
appraiser and the report of the weights, gauge or quantity, the liquidation shall be made on the face of
the entry showing the particulars thereof, initiated by the liquidating clerk, approved by the chief
liquidator, and recorded in the record of liquidations.

A daily record of all entries liquidated shall be posted in the public corridor of the customhouse, stating
the name of the vessel or aircraft, the port from which she arrived, the date of her arrival, the name of
the importer, and the serial number and date of the entry. A daily record must also be kept by the
Collector of all additional duties, taxes and other charges found upon liquidation, and notice shall
promptly be sent to the interested parties.

Section 1602. Tentative Liquidation. If to determine the exact amount due under the law in whole or in
part some future action is required, the liquidation shall be deemed to be tentative as to the item or
items affected and shall to that extent be subject to future and final readjustment and settlement. The
entry in such case shall be stamped "Tentative liquidation".

Section 1603. Finality of Liquidation. When articles have been entered and passed free of duty or final
adjustment of duties made, with subsequent delivery, such entry and passage free of duty or settlement
of duties will, after the expiration of one year, from the date of the final payment of duties, in the
absence of fraud or protest, be final and conclusive upon all parties, unless the liquidation of the import
entry was merely tentative.

Section 1604. Treatment of Fractions in the Liquidation. In determining the total amount of duties,
taxes, surcharges, wharfage and/or other charges to be paid on entries, a fraction of a peso less than
fifty centavos shall be disregarded, and a fraction of a peso amounting to fifty centavos or more shall be
considered as one peso. In case of overpayment or underpayment of duties, taxes, surcharges, wharfage
and/or other charges paid on entries, where the amount involved is less than five pesos, no refund or
collection shall be made.

f. Keeping of Records

F. IMPORTATION IN VIOLATION OF TAX CREDIT CERTIFICATE

1. SMUGGLING

Section 3601. Unlawful Importation. Any person who shall fraudulently import or bring into the
Philippines, or assist in so doing, any article, contrary to law, or shall receive, conceal, buy, sell, or in any
manner facilitate the transportation, concealment, or sale of such article after importation, knowing the
same to have been imported contrary to law, shall be punished by a fine of not less than six hundred
pesos nor more than five thousand pesos and imprisonment for not less than six months nor more than
two years and, if the offender is an alien, he shall be deported after serving the sentence.

When, upon trial for a violation of this section, the defendant is shown to have or to have had
possession of the article in question, such possession shall be deemed sufficient evidence to authorize
conviction, unless the defendant shall explain the possession to the satisfaction of the court.

2. OTHER FRAUDULENT PRACTICES

Section 3602. Various Fraudulent Practices Against Customs Revenue. Any person who makes or
attempts to make any entry of imported or exported article by means of any false or fraudulent invoice,
declaration, affidavit, letter, paper, or by means of any false statement, written or verbal, or by means
of any false or fraudulent practice whatsoever, or shall be guilty of any willful act or omission by means
of whereof the Government might be deprived of the lawful duties, taxes and other charges, or any
portion thereof, accruing from the article or any portion thereof, embraced or referred to in such
invoice, declaration, affidavit, letter, paper, or statement, or affected by such act or omission, shall, for
each offense, be punished by a fine of not less than six hundred pesos nor more than five thousand
pesos and by imprisonment for not less than six months nor more than two years and if the offender is
an alien, he shall be deported after serving the sentence.
G. CLASSIFICATION OF GOODS

1. TAXABLE IMPORTATION

2. PROHIBITED IMPORTATION

Section 102. Prohibited Importations. The importation into the Philippines of the following articles is
prohibited:

a. Dynamite, gunpowder, ammunitions and other explosives, firearm and weapons of war, and detached
parts thereof, except when authorized by law.1awphil

b. Written or printed article in any form containing any matter advocating or inciting treason, rebellion,
insurrection or sedition against the Government of the Philippines, of forcible resistance to any law of
the Philippines, or containing any threat to take the life of or inflict bodily harm upon any person in the
Philippines.

c. Written or printed articles, photographs, engravings, lithographs, objects, paintings, drawings or other
representation of an obscene or immoral character.

d. Articles, instruments, drugs and substances designed, intended or adapted for preventing human
conception or producing unlawful abortion, or any printed matter which advertises or describes or gives
directly or indirectly information where, how or by whom human conception is prevented or unlawful
abortion produced.

e. Roulette wheels, gambling outfits, loaded dice, marked cards, machines, apparatus or mechanical
devices used in gambling, or in the distribution of money, cigars, cigarettes or other articles when such
distribution is dependent upon chance, including jackpot and pinball machines or similar contrivances.

f. Lottery and sweepstakes tickets except those authorized by the Philippine Government,
advertisements thereof and lists of drawings therein.

g. Any article manufactured in whole or in part of gold silver or other precious metal, or alloys thereof,
the stamps brands or marks of which do not indicate the actual fineness or quality of said metals or
alloys.

h. Any adulterated or misbranded article of food or any adulterated or misbranded drug in violation of
the provisions of the "Food and Drugs Act."

i. Marihuana, opium poppies, coca leaves, or any other narcotics or synthetic drugs which are or may
hereafter be declared habit forming by the President of the Philippines, any compound, manufactured
salt, derivative, or preparation thereof, except when imported by the Government of the Philippines or
any person duly authorized by the Collector of Internal Revenue, for medicinal purposes only.

j. Opium pipes and parts thereof, of whatever material.

k. All other articles the importation of which is prohibited by law.

3. CONDITIONALLY-FREE IMPORTATION
Section 105. Conditionally Free Importations. The following articles shall be exempt from the payment of
import duties upon compliance with the formalities prescribed in, or with the regulations which shall be
promulgated by the Commissioner of Customs with the approval of the department head:

a. Animals and plants for scientific, experimental, propagation, botanical, breeding, zoological and
national defense purposes: Provided, That no live trees, shoots, plants and moss, and bulbs, tubers and
seeds for propagation purposes may be imported under this section, except by order of the Government
of the Philippines or other duly authorized institutions: Provided, further, That the free entry of animals
for breeding purposes shall be restricted to animals of a recognized breed, duly registered in the book of
record established for that breed: And provided, finally, That certificate of such record, and pedigree of
such animal duly authenticated by the proper custodian of such book of record, shall be produced and
submitted to the Collector of Customs, together with affidavit of the owner or importer, that such
animal is the identical animal described in said certificate of record and pedigree.

b. Aquatic products (e.g., fish, crustaceans, mollusks, marine animals, seaweed, fish oil, roe), including
preparations or manufactures thereof, caught or gathered by vessels of Philippine registry: Provided,
That they are imported in such vessels or in crafts attached thereto: And provided, further, That they
have not been landed in any foreign territory or, if so landed, they have been landed solely for
transhipment without having been advanced in condition.

c. Samples of the kind, in such quantity and of such dimensions or construction as to render them
unsalable or of no appreciable commercial value, models not adapted for practical use and samples of
medicine properly marked "physicians' samples not for sale".

Commercial samples, except those that are not readily and easily identifiable (e.g., 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 ten thousand pesos, upon the giving of a bond in an
amount equal to one and one-half times the ascertained duties, taxes and other charges thereon,
conditioned for the exportation of said samples within six months from the date of the acceptance of
the import entry, or in default thereof, the payment of the corresponding duties, taxes and other
charges. If the value of any single consignment of such commercial samples exceeds ten thousand
pesos, the importer thereof may select any portion of same not exceeding in value ten thousand pesos
for entry under the provisions of this subsection, and the excess of the consignment may be entered in
bond, or for consumption, as the importer may elect.

d. Articles, including binnacles, propellers, and the like, the character of which, as imported, prevents
their use for other purposes than the construction, equipment, or repair of vessels and aircraft, and life-
preservers and life buoys, related equipment and parts and accessories thereof, which are necessary for
the take-off and landing and for the safe navigation of vessels and aircraft.

e. Equipment for use in the salvage of vessels or aircraft, upon identification and the giving of a bond in
an amount equal to one and one-half times the ascertained duties, taxes and other charges thereon,
conditioned for the exportation thereof or payment of the corresponding duties, taxes and other
charges within six months from the date of acceptance of the import entry: Provided, That the Collector
of Customs may extend the time for exportation or payment of duties, taxes and other charges for a
term not exceeding six months from the expiration of the original period.
f. Cost of repairs made in foreign countries upon vessels or aircraft documented, registered or licensed
in the Philippines, upon proof satisfactory to the Collector of Customs (1) that adequate facilities for
such repairs are not afforded in the Philippines, or (2) that such vessels or aircraft, while in the regular
course of her voyage or flight was 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 vessel or
aircraft to enable her to reach her port of destination.

g. Articles brought into the Philippines for repair, processing or reconditioning to be re-exported upon
completion of the repair, processing or reconditioning: Provided, That the Collector of Customs may, in
his discretion, require the giving of a bond in an amount equal to one and one-half times the ascertained
duties, taxes and other charges thereon, conditioned for the exportation thereof or payment of the
corresponding duties, taxes and other charges within six months from the date of acceptance of the
import entry.

h. Medals, badges, cups and other small articles bestowed as trophies or prizes, or those received or
accepted as honorary distinctions.

i. Wearing apparel and household effects, including those articles provided for under subsections "j" and
"k", and belonging to residents of the Philippines returning from abroad, which were exported from the
Philippines by such returning residents upon their departure therefrom or during their absence abroad,
upon the identity of such articles being established to the satisfaction of the Collector of Customs;
personal and household effects brought into the Philippines by returning residents, the export value of
which does not exceed five hundred pesos, solely for personal or household use but not imported for
the account of any other person nor intended for barter, sale or hire: Provided, That such returning
residents have not received the benefit of any exemption hereunder within one hundred and eighty
days from and after the date of the last exemption granted: And provided, further, That in the event the
total export value of the imported article or articles exceeds the amount of five hundred pesos, such
article or articles shall be subject to duty only on the amount in excess of five hundred pesos; articles of
the same kind and class purchased in foreign countries by residents of the Philippines during their
absence abroad and accompanying them upon their return to the Philippines, or arriving within a
reasonable time which in no case shall exceed ninety (90) days before or after the owner's return, upon
proof satisfactory to the Collector of Customs that same have been in their use abroad for more than
one year; articles in any single shipment consigned to any single person when the total export value of
such shipment does not exceed one hundred pesos: Provided, That when the export value exceeds the
amount of one hundred pesos, only the amount in excess of one hundred pesos shall be subject to duty.

j. Wearing apparel, articles of personal adornment, toilet articles, portable tolls and instruments,
theatrical costumes, and similar personal effects, accompanying travelers or tourists in their baggage or
arriving within a reasonable time, in the discretion of the Collector of Customs, before or after the
owners, in use of and necessary and appropriate for the wear or use of such persons according to their
profession or position for the immediate purposes of their journey and their present comfort and
convenience: Provided, That this exemption shall not be held to apply to articles intended for other
persons or for barter, sale or hire: Provided, further, That the Collector of Customs may, in his
discretion, require a bond in an amount equal to one and one-half times the ascertained duties, taxes
and other charges upon articles classified under this subsection, conditioned for the exportation thereof
or payment of the corresponding duties, taxes and other charges, within six months from the date of
acceptance of the import entry: And provided, finally, That the Collector of Customs may extend the
time for exportation or payment of duties, taxes and other charges for a term not exceeding six months
from the expiration of the original period.

k. Vehicles, horses, harness, bed and table linen, table service, furniture, musical instruments and
personal effects of like character, owned and imported by travelers or tourists for their convenience and
comfort, upon identification and the giving of a bond in an amount equal to one and one-half times the
ascertained duties, taxes and other charges thereon, conditioned for the exportation thereof or
payment of the corresponding duties, taxes and other charges within six months from the date of
acceptance of the import entry: Provided, That the Collector of Customs may extend the time for
exportation or payment of duties, taxes and other charges for a term not exceeding six months from the
expiration of the original period.

l. Professional instruments and implements, tools of trade, occupation or employment, wearing apparel,
domestic animals, and personal and household effects, including those of the kind and class provided for
under subsections "j" and "k" and belonging to persons coming to settle in the Philippines, in quantities
and of the class suitable to the profession, rank or position of the person importing them, for their own
use and not for barter or sale, accompanying such persons, or arriving within a reasonable time, in the
discretion of the Collector of Customs, before or after the arrival of their owners, upon the production
of evidence satisfactory to the Collector of Customs that such persons are actually coming to settle in
the Philippines, that the articles are brought from their former place of abode, that change of residence
is bona fide, and that the privilege of free entry under this subsection has never been previously granted
to them: Provided, That neither merchandise of any kind, nor machinery or other articles for use in
manufacture, shall be classified under this subsection.

m. Animals, vehicles, portable theaters, circus and theatrical equipment, including musical instruments,
sceneries, panoramas, properties, saddlery, wax figures and similar objects for public entertainment,
and other articles for display in public expositions, or for exhibition or competition for prizes, and
devices for projecting pictures and parts and appurtenances therefor, upon identification and the giving
of a bond in an amount equal to one and one-half times the ascertained duties, taxes and other charges
thereon, conditioned for exportation thereof or payment of the corresponding duties, taxes and other
charges within six months from the date of acceptance of the import entry: Provided, That the Collector
of Customs may extend the time for exportation or payment of duties, taxes and other charges for a
term not exceeding six 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, That if any of the said films is exhibited for profit, the proceeds therefrom shall be subject to
confiscation, in addition to the penalty provided under section three thousand six hundred and ten of
this Code.

n. Articles (e.g., photographic, sound recording, electrical and other equipment, vehicles, animals,
costumes, apparel, properties, supplies, unexposed motion picture films) brought by foreign producers
for making or recording motion pictures on location in the Philippines, upon identification and the giving
of a bond in an amount equal to one and one-half times the ascertained duties, taxes and other charges
thereon, conditioned for exportation thereof or payment of the corresponding duties, taxes and charges
within six months from the date of acceptance of the import entry. Unexposed motion picture films
allowed free entry under bond for exportation falling within this subsection and subsequently exposed,
whether or not developed, may be reexported free of import duties, taxes and other charges.

Negative films, undeveloped, 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 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 working the photographic camera or other photographic and sound recording
apparatus by means of which the film is made.

o. Costumes, regalia and other articles, including office supplies and equipment, imported for the official
use of members and attaches of foreign embassies, legations, consular officers and other
representatives of foreign government: Provided, That the country which any such person represents
accords like privileges to corresponding officials of the Philippines.

Articles imported for the personal or family use of the members and attaches of foreign embassies,
legations, consular officers and other representatives of foreign governments: Provided, That such
privilege shall be accorded under special agreements between the Philippines and the countries which
they represent: And provided, further, That the privilege may be granted only upon specific instructions
of the Department of Finance in each instance which will be issued only upon request of the
Department of Foreign Affairs.

p. Regalia, gems, statuary, specimens or casts of sculptures imported for the bona fide use and by the
order of any society incorporated or established solely for religious, philosophical, educational, scientific
or literary purposes, or for the encouragement of the fine arts, or for the use and by the order of any
institution of learning, public library, museum, orphan asylum or hospital, and not for barter, sale or
hire: Provided, That the term "regalia" shall be held to embrace only such insignia of rank or office or
emblems as may be worn upon the person or borne in the hand during public exercises or ceremonies of
the society or institution, and shall not include articles of furniture or fixtures, or ordinary wearing
apparel, nor personal property of individuals.

q. Musical organs imported for the bona fide use and by the owner of any society incorporated or
established for religious or educational purposes, or, expressly for presentation thereto.

r. Scientific apparatus, instruments and utensils specially imported for the bona fide use and by the
order of any society or institution incorporated or established solely for educational, scientific, or
charitable purposes, or for the encouragement of the fine arts, or for the bona fide use and by the order
of any institution of learning in the Philippines, and not for barter, sale or hire.

s. Philosophical, historical, economic, scientific, technical and vocational books specially imported for
the bona fide use and by the order of any society or institution, incorporated or established solely for
philosophical, educational, scientific, charitable or literary purposes, or for the encouragement of the
fine arts, or for the bona fide use of and by the order of any institution of learning in the Philippines:
Provided, That the provisions of this subsection shall apply to books not exceeding two copies of any
one work when imported by any individual for his own use, and not for barter, sale or hire.

Bibles, missals, prayerbooks, koran, ahadith and other religious books of similar nature and extracts
therefrom, hymnal and hymns for religious uses, specially prepared books, music and other instrumental
aids for the deaf, mute or blind, and textbooks prescribed for use in any school in the Philippines:
Provided, That complete books published in parts in periodical form shall not be classified herein.

t. Newsprint, whenever imported by or for publishers for the exclusive use in the publication of
newspapers.

u. Articles donated to public or private institutions established solely for educational, scientific, cultural,
charitable, health, relief, philanthropic or religious purposes, for free distribution among, or exclusive
use of, the needy.

v. Food, clothing, house-building and sanitary-construction materials, and medical, surgical and other
supplies for use in emergency relief work, when imported by or directly for the account of any victim,
sufferer, refugee, survivor or any other person affected thereby, or by or for the account of any relief
organization, not operated for profit, for distribution among the distressed individuals, whenever the
President shall, by proclamation, declare an emergency to exist by reason of a state of war, pestilence,
cholera, plague, famine, drought, typhoon, earthquake, fire, flood and similar conditions: Provided, That
the importation free of duty of articles described in this herein subsection shall continue only during the
existence of such emergency, or within such limits and subject to such conditions as the President may,
by his proclamation, deem necessary to meet the emergency.

w. Philippine articles previously exported from the Philippines and returned without having been
advanced in value or improved in condition by any process of manufacture or other means, and upon
which no drawback or bounty has been allowed, and foreign articles when returned after having been
loaned and exported for use temporarily abroad solely for exhibition, examination or experimentation,
for scientific or educational purposes, and foreign containers packed with exported Philippine articles
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, subject to identification: Provided, That any Philippine article
falling under this subsection upon which drawback or bounty has been allowed shall, upon re-
importation thereof, be subject to a duty under this subsection equal to the amount of such drawback
or bounty.

x. Large containers (e.g., demijohns, cylinders, drums, casks and other similar receptacles of metal, glass
or other material) which are, in the opinion of the Collector of Customs, of such a character as to be
readily identifiable may be delivered to the importer thereof upon identification and the giving of a
bond in an amount equal to one and one-half times the ascertained duties, taxes and other charges
thereon, conditioned for the exportation thereof on payment of the corresponding duties, taxes and
other charges within one year from the date of acceptance of the import entry.

y. Supplies or ship stores listed as such for the use of the vessel; supplies which are intended for the
reasonable requirements of the vessel in her voyage outside the Philippines, including such articles
transferred from a bonded warehouse in any collection district to any vessel engaged in foreign trade,
for use or consumption of the passengers or its crew on board such vessel as sea stores; or articles
purchased abroad for sale on board a vessel as saloon stores or supplies: Provided, That any surplus or
excess of such ship, sea or saloon stores arriving from foreign ports shall be dutiable according to the
corresponding heading or subheading.
z. Articles and salvage from vessels recovered after the period of two years from the date of filing the
marine protest or the time when the vessel was wrecked or abandoned as determined by the Collector
of Customs, or such part of Philippine vessel or her equipment, wrecked or abandoned in Philippine
waters or elsewhere: Provided, That articles and salvage recovered within the said period of two years
shall be dutiable according to the corresponding heading or subheading.

aa. Articles of easy identification exported from the Philippines for repairs abroad and subsequently
reimported: Provided, That the cost of the repairs made to any such article shall pay a rate of duty of
twenty-five per cent ad valorem.

bb. Coffins or urns containing human remains, bones or ashes, and all articles for ornamenting said
coffins or urns and accompanying same; used personal and household effects, not merchandise, of
deceased persons, upon identification as such, satisfactory to the Collector of Customs.

H. CLASSIFICATION OF DUTIES

1. ORDINARY/REGULAR DUTIES

a. Ad Valorem, Methods of Valuation

i. Transaction Value

ii. Transaction Value of Identical Goods

iii. Transaction Value of Similar Goods

iv. Deductive Value

v. Computed Value

vi. Fallback Value

b. Specific

2. SPECIAL DUTIES

a. Dumping Duties

Section 301. Dumping Duty.

a. Whenever the Secretary of Finance (hereinafter called the Secretary") has reason to believe, from
invoices or other papers or from information made available to him by any government agency or
interested party, that a specific kind or class of foreign article, whether dutiable or duty-free, is being
sold or is likely to be sold for exportation to, or in, the Philippines, at a price less than its fair value, as
hereinafter defined, the importation or sale of which might injure, or prevent the establishment of, or is
likely to injure an industry in the Philippines, he shall so advise the Tariff Commission (hereinafter called
the "Commission").

b. The Commission, upon receipt of such advice from the Secretary, shall conduct an investigation to
1. Verify if the kind or class of articles in question is being sold or is likely to be sold for exportation to, or
in, the Philippines at a price less than its fair value;

2. Determine if, as a result thereof, an industry in the Philippines is being injured or is likely to be injured
or is prevented from being established by reason of the importation or sale of such kind or class of
article into the Philippines; and

3. Ascertain the difference, if any, between the purchase price or, in the absence thereof, the exporter's
sales price, and the fair value of the article. The Commission shall submit its findings to the Secretary
within one month after receipt of the aforesaid advice.

c. The Secretary shall, within fifteen days from the report of the Commission, decide whether the article
in question is being imported in violation of this section and shall give due notice of such finding and
shall direct the Commissioner of Customs to cause the dumping duty, to be levied, collected and paid, as
prescribed in this section, in addition to any other duties, taxes and charges imposed by law on such
article.

d. The "dumping duty" as provided for in subsection "e" hereof shall be equal to the difference between
the purchase price or, in the absence thereof, the exporter's sales price, and the fair value of the article.

e. For the purpose of this section

1. The "fair value" of an article shall be its foreign market value, or, in the absence of such value, its cost
of production.

2. The "purchase price" of an imported article shall be the price at which such article has been
purchased or agreed to be purchased, prior to the time of exportation, by the person by whom or for
whose account the article is imported, plus, when not included in such price

(a) The cost of all containers and coverings and all other costs, charges and expenses incident to placing
the article in condition, packed ready for shipment to the Philippines;

(b) The amount of any export tax paid in the country of exportation on the exportation of the article to
the Philippines;

(c) The amount of any import duties imposed by the country of exportation which have been rebated, or
which have not been collected, by reason of the exportation of the article to the Philippines; and

(d) The amount of any taxes imposed in the country of exportation upon the manufacturer, producer or
seller, in respect to the manufacture, production or sale of the article, which have been rebated, or
which have not been collected, be reason of the exportation of the article of the Philippines.

Any additional costs, charges and expenses incident to bringing the article from the place of shipment in
the country of exportation to the place of delivery in the Philippines and Philippine customs duties
imposed thereon shall not be included.

3. The "exporter's sale price" of an imported article shall be the price at which such article is sold or
agreed to be sold in the Philippines, before or after the time of exportation, by or for the account of the
exporter, including
(a) The cost of all containers and coverings and all other costs, charges and expenses incident to placing
the article in condition, packed ready for shipment to the Philippines;

(b) The amount of any import duties imposed by the country of exportation which have been rebated,
or which have not been collected, by reason of the exportation of the article to the Philippines; and

(c) The amount of any taxes imposed in the country of exportation upon the manufacturer, producer or
seller in respect to the manufacture, production or sale of the article, which have been rebated, or
which have not been collected, by reason of its exportation to the Philippines. The following amount, if
included, shall be deducted

(1) The amount of costs, charges and expenses, and Philippine customs duties, incident to bringing the
article from the place of shipment in the country of exportation to the place of delivery in the
Philippines;

(2) The amount of commissions, if any, for selling in the Philippines the particular article under
consideration;

(3) An amount equal to the expenses, if any, generally incurred by or for the account of the exporter in
the Philippines in selling identical or substantially identical article; and

(4) The amount of any export tax paid in the country of exportation on the exportation of the article to
the Philippines.

4. The "foreign market value" of an imported article shall be the price, at the time of exportation of such
article to the Philippines, at which such or similar article is sold or freely offered for sale to all purchasers
in the principal markets of the country from which exported, in the usual wholesale quantities and in the
ordinary course of trade for home consumption (or, if not sold or offered for sale for home
consumption, then for exportation to countries other than the Philippines), including the cost of all
containers and coverings and all other costs, charges and expenses incident to placing the article in
condition packed ready for shipment to the Philippines, except that in the case of articles purchased or
agreed to be purchased by the person by whom or for whose account the article is imported, prior to
the time of exportation, the foreign market value shall be ascertained as of the date of such purchase or
agreement to purchase. In the ascertainment of foreign market value for the purpose of this section, no
pretended sale or offer for sale, and no sale or offer for sale intended to establish a fictitious market,
shall be taken into account.

5. The "cost of production" of an imported article shall be the sum of

(a) The cost of materials of, and of fabrication, manipulation or other process employed in
manufacturing or producing, identical or substantially identical article, at a time preceding the date of
shipment of the particular article under consideration which would ordinarily permit the manufacture or
production of the particular article under consideration in the usual course of business;

(b) The usual general expenses not less than 10 per cent of such cost, in the case of identical or
substantially identical articles;

(c) The cost of all containers and coverings, and all other costs, charges and expenses incident to placing
the particular article under consideration in condition, packed ready for shipment to the Philippines; and
(d) An addition for profit not less than 8 per cent of the sum of the amounts determined under
subparagraphs (a) and (b) hereof, equal to the profit which is originally added, in the case of articles of
the same general character as the particular article under consideration, by manufacturers or producers
in the country of manufacture or production who are engaged in the same general trade as the
manufacturer or producer of the particular article under consideration.

f. For the purposes of this section the "exporter" of an imported article shall be the person by whom or
for whose account the article is imported into the Philippines

1. If such person is the agent or principal of the exporter, manufacturer or producer; or

2. If such person owns or controls, directly or indirectly, through stock ownership or control or
otherwise, any interest in the business of the exporter, manufacturer or producer; or

3. If the exporter, manufacturer or producer owns or controls, directly or indirectly, through stock
ownership or control or otherwise, any interest in any business conducted by such persons; or

4. If any person or persons, jointly or severally, directly or indirectly, through stock ownership or control
or otherwise, own or control in the aggregate 20 per cent or more of the voting power or control in the
business carried on by the person by whom or for whose account the article is imported into the
Philippines, and also 20 per cent or more of such power or control in the business of the exporter,
manufacturer or producer.

g. Pending investigation and final decision of the case, the article in question, and articles of the same
specific kind or class subsequently imported under similar circumstances, shall be released to the owner,
importer, consignee or agent upon the giving of a bond in an amount equal to the double the estimated
value thereof. Articles which may have been delivered under the provision of section fifteen hundred
and three of this Code prior to the institution of the investigation provided in this section shall, pending
final decision, be ordered returned to the custody of the collectors of customs unless released under
bond in accordance with this section.

h. Any aggrieved party may only appeal the amount of dumping duty that is levied and collected by the
Commissioner of Customs to the Court of Tax Appeals in the same manner and within the same period
provided for by law in the case of appeals from decisions of the Commissioner of Customs.

i. (1) The article, if it has not been previously released under bond as provided in subsection "g" hereof,
shall be released after payment by the party concerned of the corresponding dumping duty in addition
to any other duties, taxes and charges, if any, or re-exported by the owner, importer, consignee or
agent, at his option and expense, upon the filing of a bond in an amount equal to double the estimated
value of the article, conditioned upon the presentation of a landing certificate issued by a consular
officer of the Philippines at the country of destination; or

(2) If the article has been previously released under bond, as provided in subsection "g" hereof, the
party concerned shall be required to pay the corresponding dumping done in addition to any other
duties, taxes and charges, if any.

j. Any investigation to be conducted by the Commission under this section shall include a hearing or
hearings where the owner, importer, consignee or agent of the imported article, the local producers of a
like article, other parties directly affected, and such other parties as in the judgment of the Commission
are entitled to appear, shall be given an opportunity to be heard and to present evidence bearing on the
subject matter.

k. It shall be the duty of collectors of customs at all ports of entry to levy and collect the dumping duty in
accordance with subsection "d" hereof on the specific kind or class of article as to which the Secretary
has made a decision of dumping.

It shall also be their duty to bring to the attention of the Secretary, thru the Commissioner of Customs,
any case coming within their notice which may, in their opinion, require action as provided in this
section.

l. The Secretary shall promulgate all rules and regulations necessary to carry out the provisions of this
section.

b. Countervailing Duties

Section 302. Countervailing Duty.

a. On articles dutiable under this Code, upon the production, manufacture or export of which any
bounty, subsidy or subvention is directly or indirectly granted in the country of origin and/or
exportation, and the importation of which has been determined by the Secretary, after investigation
and report of the Commission, as likely to materially injure an established industry, or prevent or
considerably retard the establishment of an industry in the Philippines, there shall be levied a
countervailing duty equal to the ascertained or estimated amount of such bounty, subsidy or
subvention: Provided, That the exception of any exported article from a duty or tax imposed on like
articles when destined for consumption in the country of origin and/or exportation or the refunding of
such duty or tax, shall not be deemed to constitute a grant of a bounty, subsidy or subvention within the
meaning of this section; however, should an article be allowed drawback by the country of origin and/or
exportation, only the ascertained or estimated excess of the amount of the drawback over the total
amount of the duties and/or internal taxes, if any, shall constitute a bounty, subsidy or subvention.

b. The Commission, on its own motion or upon application of any interested party, when in its judgment
there is good and sufficient reason therefor, shall ascertain, determine or estimate the net amount of
such bounty, subsidy or subvention and shall transmit to the Secretary the amounts so ascertained,
determined or estimated, if any. Wherever it is ascertained that the conditions which necessitated the
imposition of the countervailing duty have ceased to exist, and the Commission shall so certify to the
Secretary, the latter shall take the necessary steps to suspend or discontinue the imposition of such
duty.

c. The Secretary shall make all rules and regulations necessary to carry out the provisions of this section.

c. Marking Duties

Section 303. Marking of Imported Articles and Containers.

a. Marking of Articles. Except as hereinafter provided, every article of foreign origin (or its container, as
provided in subsection "b" hereof) imported into the Philippines shall be marked in any official language
of the Philippines and in a conspicuous place as legibly, indelibly and permanently as the nature of the
article (or container) will permit in such manner as to indicate to an ultimate purchaser in the
Philippines the name of the country of origin of the article. The Commissioner of Customs shall, with the
approval of the department head, issue rules and regulations to

(1) Determine the character of words and phrases or abbreviations 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 a conspicuous place on
the article or container where the marking shall appear;

(2) Require the addition of any other words or symbols which may be appropriate to prevent deception
or mistake as to the origin of the article or as to the origin of any other article with which such imported
article is usually combined subsequent to importation but before delivery to an ultimate purchaser; and

(3) Authorize the exception of any article from the requirements of marking if

(a) Such article is incapable of being marked;

(b) Such article cannot be marked prior to shipment to the Philippines without injury;

(c) Such article cannot be marked prior to shipment to the Philippines, except at an expense
economically prohibitive of its importation;

(d) The marking of a container of such article will reasonably indicate the origin of such article;

(e) Such article is a crude substance;

(f) Such article is imported for use by the importer and not intended for sale in its imported or any other
form;

(g) Such article is to be processed in the Philippines by the importer or for his account otherwise than for
the purpose of concealing the origin of such article and in such manner that any mark contemplated by
this section would necessarily be obliterated, destroyed or permanently concealed;

(h) An ultimate purchaser, by reason of the character of such article or by reason of the circumstance of
its importation, must necessarily know the country of origin of such article even though it is not marked
to indicate its origin;

(i) Such article was produced more than twenty years prior to its importation into the Philippines; or

(j) Such article cannot be marked after importation except at an expense which is economically
prohibitive, and the failure to mark the article before importation was not due to any purpose of the
importer, producer, seller or shipper to avoid compliance with this section.

b. Marking of Containers. Whenever an article is excepted under subdivision (3) of subsection "a" of this
section from the requirements of marking, the immediate container, if any, of such article, or such other
container or containers of such article as may be prescribed by the Commissioner of Customs with the
approval of the department head, shall be marked in such manner as to indicate to an ultimate
purchaser in the Philippines the name of the country of origin of such article in any official language of
the Philippines, subject to all provisions of this section, including the same exceptions as are applicable
to articles under subdivision (3) of subsection "a".
c. Marking Duty for Failure to Mark. If at the time of importation any article (or its container, as provided
in subsection "b" hereof), is not marked in accordance with the requirements of this section, there shall
be levied, collected and paid upon such article a marking duty of 5 per cent ad valorem, which shall be
deemed to have accrued at the time of importation, except when such article is exported or destroyed
under customs supervision and prior to the final liquidation of the corresponding entry.

d. Delivery Withheld until Marked. No imported article held in customs custody for inspection,
examination or appraisement shall be delivered until such articles and/or their containers, whether
released or not from customs custody, shall have been marked in accordance with the requirements of
this section and until the amount of duty estimated to be payable under subsection "c" of this section
shall have been deposited. Nothing in this section shall be construed as excepting any article or its
container from the particular requirements of marking provided for in any provisions of law.

e. The failure or refusal of the owner or importer to mark the articles as herein required within a period
of thirty days after due notice shall constitute as an act of abandonment of said articles and their
disposition shall be governed by the provisions of this Code relative to abandonment of imported
articles.

d. Retaliatory/Discriminatory Duties

Section 304. Discrimination by Foreign Countries.

a. The President, when he finds that the public interest will be served thereby, shall by proclamation
specify and declare new or additional duties in an amount not exceeding 50 per cent of the existing
rates as hereinafter provided upon articles wholly or in part the growth or product of, or imported in a
vessel of, any foreign country whenever he shall find as a fact that such country

(1) 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.

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
discriminations against the commerce of the Philippines, the President is hereby authorized, if he deems
it consistent with the interests of the Philippines, to issue a further proclamation directing that such
product of said country or such articles imported in its vessels as he shall deem consistent with the
public interests, shall be excluded from importation into the Philippines.

c. Any proclamation issued by the President under the authority of this section shall, if he deems it
consistent with the interests of the Philippines, extend to the whole of any foreign country or may be
confined to any subdivision or subdivisions thereof; and the President shall, whenever he deems the
public interests require, suspend, revoke, supplement or amend any such proclamation.

d. All articles 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 be established for the recovery,
collection, distribution and remission of 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 articles
wholly or in part the growth or product of any foreign country, they shall be applicable thereto whether
such articles are imported directly or indirectly.

e. It shall be the duty of the Commission to ascertain and at all times to 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, together with
recommendation.

f. The Secretary shall make such rules and regulations as are necessary for the execution of such
proclamation as the President may issue in accordance with the provisions of this section.

g. The authority granted herein to the President shall be exercised only when Congress is not in session.

e. Safeguard

I. REMEDIES

1. GOVERNMENT

a. Administrative / Extrajudicial

i. Search, Seizure, Forfeiture, Arrest

PART 1. SEARCH, SEIZURE AND ARREST

Section 2201. Obstruction of Customs Premises. No person shall obstruct a customhouse, warehouse,
office, wharf, street or other premises under the control of the Bureau of Customs, or any of the
approaches to such house or premises.

Section 2202. Special Surveillance for Protection of Customs Revenue and Prevention of Smuggling. In
order to prevent smuggling and to secure the collection of the legal duties, taxes and other charges, the
customs service shall exercise surveillance over the coast, beginning when a vessel or aircraft enters
Philippine territory and concluding when the article imported therein has been legally passed through
the customhouse.

Section 2203. Persons Having Police Authority. For the enforcement of the customs and tariff laws, the
following persons are authorized to effect searches, seizures and arrests comformably with the
provisions of said laws:
a. Officials of the Bureau of Customs, collectors, assistant collectors, deputy collectors, surveyors,
security and secret-service agents, inspectors, port patrol officers and guards of the Bureau of Customs.

b. Officers of the Philippine Navy when authorized by the Commissioner.

c. Any person especially authorized in writing by the Commissioner.

d. Officers generally empowered by law to effect arrests and execute processes of courts, when acting
under direction of the Collector.

e. Any person especially authorized by a Collector, subject to the restrictions stated in the next
succeeding section.

Persons exercising the powers hereinabove conferred shall, in the exercise thereof, have the same
authority, be entitled to the proper protection, and shall be governed by the same law, not inconsistent
with the provisions of this section, as other officers exercising police authority in general.

Section 2204. Place Where Authority May Be Exercised. Persons acting under authority conferred
pursuant to subsection (e) of the preceding section may exercise their authority within the limits of the
collection district only and in or upon the particular vessel or aircraft, or in the particular place, or in
respect to the particular article specified in the appointment. All such appointments shall be in writing,
and the original shall be filed in the customhouse of the district where made.

All other persons exercising the powers hereinabove conferred may exercise the same at any place
within the jurisdiction of the Bureau of Customs.

Section 2205. Exercise of Power of Seizure and Arrest. It shall be within the power of a customs official
or person authorized as aforesaid, and it shall be his duty, to make seizure of any vessel, aircraft, cargo,
articles, animal or other movable property when the same is subject to forfeiture or liable for any fine
imposed under customs and tariff laws, and also to arrest any person subject to arrest for violation of
any customs and tariff laws, such power to be exercised in conformity with the law and the provisions of
this Code.

Section 2206. Duty of Officer or Official to Disclose Official Character. It shall be the duty of any person
exercising authority as aforesaid, upon being questioned at the time of the exercise thereof, to make
known his official character as an officer or official of the Government, and if his authority is derived
from special authorization in writing to exhibit the same for inspection, if demanded.

Section 2207. Authority to Require Assistance. Any person exercising police authority under the customs
and tariff laws may demand assistance of any police officer when such assistance shall be necessary to
effect any search, seizure or arrest which may be lawfully made or attempted by him. It shall be the duty
of any police officer upon whom such requisition is made to give such lawful assistance in the matter as
may be required.

Section 2208. Right of Police Officer to Enter Inclosure. For the more effective discharge of his official
duties, any person exercising the powers herein conferred, may at anytime enter, pass through, or
search any land or inclosure or any warehouse, store or other building, not being a dwelling house.

A warehouse, store or other building or inclosure used for the keeping of storage of articles does not
become a dwelling house within the meaning hereof merely by reason of the fact that a person
employed as watchman lives in the place, nor will the fact that his family stays there with him alter the
case.

Section 2209. Search of Dwelling House. A dwelling house may be entered and searched only upon
warrant issued by a judge or justice of the peace, upon sworn application showing probable case and
particularly describing the place to be searched and person or thing to be seized.

Section 2210. Right to Search Vessels or Aircrafts and Persons or Articles Conveyed Therein. It shall be
lawful for any official or person exercising police authority under the provisions of this Code to go
abroad any vessel or aircraft within the limits of any collection to go aboard any vessel or aircraft within
the limits of any collection district, and to inspect, search and examine said vessel or aircraft and any
trunk, package, box or envelope on board, and to search any person on board the said vessel or aircraft
and to this end to hail and stop such vessel or aircraft if under way, to use all necessary force to compel
compliance; and if it shall appear that any breach or violation of the customs and tariff laws of the
Philippines has been committed, whereby or in consequence of which such vessels or aircrafts, or the
article, or any part thereof, on board of or imported by such vessel or aircraft, is liable to forfeiture, to
make seizure of the same or any part thereof.

The power of search hereinabove given shall extend to the removal of any false bottom, partition,
bulkhead or other obstruction, so far as may be necessary to enable the officer to discover whether any
dutiable or forfeitable articles may be concealed therein.

No proceeding herein shall give rise to any claim for the damage thereby caused to article or vessel or
aircraft.lawphi1

Section 2211. Right to Search Vehicles, Beasts and Persons. It shall also be lawful for a person exercising
authority as aforesaid to open and examine any box, trunk, envelope or other container, wherever
found where he has reasonable cause to suspect the presence therein of dutiable or prohibited article
or articles introduced into the Philippines contrary to law, and likewise to stop, search and examine any
vehicle, beast or person reasonably suspected of holding or conveying such article as aforesaid.

Section 2212. Search of Persons Arriving From Foreign Countries. All persons coming into the Philippines
from foreign countries shall be liable to detention and search by the customs authorities under such
regulations as may be prescribed relative thereto.

Female inspectors may be employed for the examination and search of persons of their own sex.

b. Judicial

i. Rules on Appeal including Jurisdiction

Section 2401. Supervision and Control over Judicial Proceedings. In the absence of special provision,
judicial action and proceedings instituted on behalf of the Government pursuant to the provisions of this
Code shall be subject to the supervision and control of the Commissioner.

Section 2402. Review by Court of Tax Appeals. The party aggrieved by a ruling of the Commissioner in
any matter brought before him upon protest or by his action or ruling in any case of seizure may appeal
to the Court of Tax Appeals, in the manner and within the period prescribed by law and regulations.
Unless an appeal is made to the Court of Tax Appeals in the manner and within the period prescribed by
laws and regulations, the action or ruling of the Commissioner shall be final and conclusive.

2. TAXPAYER

a. Protest

Section 2308. Protest and Payment upon Protest in Civil Matters. When a ruling or decision of the
Collector is made whereby liability for duties, fees, or other money charge is determined, except the
fixing of fines in seizure cases, the party adversely affected may protest such ruling or decision by
presenting to the Collector at the time when payment of the amount claimed to be due the Government
is made, or within thirty days thereafter, a written protest setting forth his objections to the ruling or
decision in question, together with the reasons therefor. No protest shall be considered unless payment
of the amount due after final liquidation has first been made.

Section 2309. Protest Exclusive Remedy in Protestable Case. In all cases subject to protest, the interested
party who desires to have the action of the Collector reviewed, shall make a protest, otherwise, the
action of the Collector shall be final and conclusive against him, except as to matters correctible for
manifest error in the manner prescribed in section one thousand seven hundred and seven hereof.

Section 2310. Form and Scope of Protest. Every protest shall be filed in accordance with the prescribed
rules and regulations promulgated under this section and shall point out the particular decision or ruling
of the Collector to which exception is taken or objection made, and shall indicate with reasonable
precision the particular ground or grounds upon which the protesting party bases his claim for relief.

The scope of a protest shall be limited to the subject matter of a single adjustment or other independent
transaction; but any number of issue may be raised in a protest with reference to the particular item or
items constituting the subject matter of the protest.

"Single adjustment", as hereinabove used, refers to the entire content of one liquidation, including all
duties, fees, surcharges or fines incident thereto.

Section 2311. Samples to be Furnished by Protesting Parties. If the nature of the articles permit,
importers filing protests involving questions of fact must, upon demand, supply the Collector with
samples of the articles which are the subject matter of the protests. Such samples shall be verified by
the custom official who made the classification against which the protest are filed.

Section 2312. Decision or Action by Collector in Protest and Seizure Cases. When a protest in proper
form is presented in a case where protest in required, the Collector shall reexamine the matter thus
presented, and if the protest is sustained, in whole or in part, he shall enter the appropriate order, the
entry reliquidated if necessary.

In seizure cases, the Collector, after a hearing, shall in writing make a declaration of forfeiture or fix the
amount of the fine or take such other action as may be proper.

b. Abandonment
Section 1801. Abandonment, Kinds and Effect of . Abandonment is express when it is made direct to the
Collector by the interested party in writing, and it is implied when, from the action or omission of the
interested party, an intention to abandon can be clearly inferred. The failure of any interested party to
file the import entry within fifteen days or any extension thereof from the discharge of the vessel or
aircraft, shall be implied abandonment. An implied abandonment shall not be effective until the article
is declared by the Collector to have been abandoned after notice thereof is given to the interested party
as in seizure cases.

Any person who abandons an imported article renounces all his interests and property rights therein.

Section 1802. Abandonment of Imported Articles. The owner or importer of any articles may, within ten
days after filing of the import entry, abandon to the Government all or a part of the articles included in
an invoice, and, thereupon, he shall be relieved from the payment of duties, taxes and all other charges
and expenses due thereon: Provided, That the portion so abandoned is not less than ten per cent of the
total invoice and is not less than one package, except in cases of articles imported for personal or family
use. The article so abandoned shall be delivered by the owner or importer at such place within the port
of arrival as the Collector shall designate, and upon his failure to so comply, the owner or importer shall
be liable for all expenses that may be incurred in connection with the disposition of the articles.

Nothing in this section shall be construed as relieving such owner or importer from any criminal liability
which may arise from any violation of law committed in connection with the importation of the
abandoned article.

Section 1803. Right to Reclaim Article. The owner or importer of an article impliedly abandoned may, at
any time before it is sold or otherwise disposed of, reclaim such article provided all legal requirements
regarding its importation are complied with and the corresponding duties, taxes and other charges as
well as all expenses incurred as a consequence of the abandonment, are paid.

c. Abatement and Refund

Section 1701. Abatement for Damage Incurred During Voyage. Except as herein specially provided, no
abatement of 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 shown by the
return of weighers, gaugers, measures, examiners or appraisers, as the case may be.

Section 1702. Abatement or Refund of Duty on Missing Package. When any package or packages
appearing on the manifest or bill of lading are missing, a remission or refund of the duty thereon shall be
made if it is shown by proof satisfactory to the Collector that the package or packages in question have
not been imported into the Philippines.

Section 1703. Abatement or Refund for Deficiency in Contents of Package. If, upon opening any package,
a deficiency or absence of any article, or of part of the contents thereof, as called for by the invoice shall
be found to exist, such deficiency shall be certified to the Collector by the appraiser; and upon the
production of proof satisfactory to the Collector showing that the shortage occurred before the arrival
of the article in the Philippines, the proper abatement or refund of the duty shall be made.

Section 1704. Abatement or Refund of Duties on Articles Lost or Destroyed after Arrival. A Collector may
abate or refund the amount of duties accruing or paid, and may likewise make a corresponding
allowance or credit on the entry bond, or other document, upon satisfactory proof of the injury,
destruction, or loss by theft, fire or other causes of any article as follows:

a. While within the limits of any port of entry prior to unlading under customs supervision.

b. While remaining in customs custody after unlading.

c. While in transit under bond from the port of entry to any port in the Philippines.

d. While released under bond to export, except in case of loss by theft.

Section 1705. Abatement of Duty on Dead or Injured Animals. Where it is satisfactorily shown to the
Collector that an animal which is the subject of importation dies or suffers injury before arrival, or while
in customs custody, the duty shall be correspondingly abated by him, provided the carcass of any dead
animal remaining on board or in customs custody be removed in the manner required by the Collector
and at the expense of the importer.

Section 1706. Investigation Required in case of Abatements and Refunds. The Collector shall in all cases
of allowances, abatements or refunds of duties, cause an examination and report in writing to be made
as to any fact discovered during such examination which tends to account for the discrepancy or
difference and cause the corresponding adjustment to be made on the import entry.

V. JUDICIAL REMEDIES RA 1125

Republic Act No. 1125 June 16, 1954

AN ACT CREATING THE COURT OF TAX APPEALS

"SECTION 1. Court; Justices, Qualifications; Salary; Tenure. - There is hereby created a Court of Tax
Appeals (CTA) which shall be of the same level as the Court of Appeals, possessing all the inherent powers
of a Court of Justice, and shall consist of a Presiding Justice and eight (8) Associate Justices. The incumbent
Presiding Judge and Associate Judges shall continue in office and bear the new titles of Presiding Justice
and Associate Justices. The Presiding Justices and the two (2) most Senior Associate Justices, all of whom
are incumbent, shall serve as chairmen of the three (3) Divisions. The other three (3) incumbent Associate
Justices and the three (3) additional Associate Justices shall serve as members of the Divisions. The
additional three (3) Justices as provided herein and the succeeding members of the Court shall be
appointed by the President upon nomination by the Judicial and Bar Council. The Presiding Justice shall
be so designated in his appointment, and the Associate Justices shall have precedence according to the
date of their respective appointment or when the appointments of two (2) or more of them shall bear the
same date, according to the order in which their appointments were issued by the President. They shall
have the same qualifications, rank, category, salary, emoluments and other privileges, be subject to the
same inhibitions and disqualifications, and enjoy the same retirement and other benefits as those
provided for under existing laws for the Presiding Justice and Associate Justices of the Court of Appeals.

"Whenever the salaries of the Presiding Justice and the Associate Justices of the Court of Appeals are
increased, such increases in salaries shall be deemed correspondingly extended to and enjoyed by the
Presiding Justice and Associate Justices of the CTA.
"The Presiding Justice and Associate Justices shall hold office during good behavior, until they reach the
age of seventy (70), or become incapacitated to discharge the duties of their office, unless sooner
removed for the same causes and in the same manner provided by law for members of the judiciary of
equivalent rank."

"SEC. 2. Sitting En Banc or Division; Quorum; Proceedings. - The CTA may sit en banc or in three (3)
Divisions, each Division consisting of three (3) Justices.

"Five (5) Justices shall constitute a quorum for sessions en banc and two (2) Justices for sessions of a
Division. Provided, That when the required quorum cannot be constituted due to any vacancy,
disqualification, inhibition, disability, or any other lawful cause, the Presiding Justice shall designate any
Justice of other Divisions of the Court to sit temporarily therein.

"The affirmative votes of five (5) members of the Court en banc shall be necessary to reverse a decision
of a Division but a simple majority of the Justices present necessary to promulgate a resolution or decision
in all other cases or two (2) members of a Division, as the case may be, shall be necessary for the rendition
of a decision or resolution in the Division Level."

"SEC. 3. Clerk of Court; Division Clerks of Court; Appointment; Qualification; Compensation. - The CTA
shall have a Clerk of Court and three (3) Division Clerks of Court who shall be appointed by the Supreme
Court. No person shall be appointed Clerk of Court or Division Clerk of Court unless he is duly authorized
to practice law in the Philippines. The Clerk of Court and Division Clerks of Court shall exercise the same
powers and perform the same duties in regard to all matters within the Court's jurisdiction, as are
exercised and performed by the Clerk of Court and Division Clerks of Court of the Court of Appeals, in so
far as the same may be applicable or analogous; and in the exercise of those powers and the performance
of those duties they shall be under the direction of the Court. The Clerk of Court and the Division Clerks
of Court shall have the same rank, privileges, salary, emoluments, retirement and other benefits as those
provided for the Clerk of Court and Division Clerks of Court of the Court of Appeals, respectively.'

"SEC. 4. Other Subordinate Employees. - The Supreme Court shall appoint all officials and employees of
the CTA, in accordance with the Civil Service Law. The Supreme Court shall fix their salaries and prescribe
their duties."

"SEC. 5. Disqualifications. - No Justice or other officer or employee of the CTA shall intervene, directly or
indirectly, in the management or control of any private enterprise which in any way may be affected by
the functions of the Court. Justices of the Court shall be disqualified from sitting in any case on the same
grounds provided under Rule one hundred thirty-seven of the Rules of Court for the disqualification of
judicial officers. No person who has once served in the Court in a permanent capacity, either as Presiding
Justice or as Associate Justice thereof, shall be qualified to practice as counsel before the Court for a
period of one (1) year from his retirement or resignation."

"SEC. 6. Place of Office. - The CTA shall have its principal office in Metro Manila and shall hold hearings at
such time and place as it may, by order in writing, designate."

Sec. 7. Jurisdiction. - The CTA shall exercise:

"a. Exclusive appellate jurisdiction to review by appeal, as herein provided:


"1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds
of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising
under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue;

"2. Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under
the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where
the National Internal Revenue Code provides a specific period of action, in which case the inaction shall
be deemed a denial;

"3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or
resolved by them in the exercise of their original or appellate jurisdiction;

"4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other
money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in
relation thereto, or other matters arising under the Customs Law or other laws administered by the
Bureau of Customs;

"5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate jurisdiction over
cases involving the assessment and taxation of real property originally decided by the provincial or city
board of assessment appeals;

"6. Decisions of the Secretary of Finance on customs cases elevated to him automatically for review from
decisions of the Commissioner of Customs which are adverse to the Government under Section 2315 of
the Tariff and Customs Code;

"7. Decisions of the Secretary of Trade and Industry, in the case of nonagricultural product, commodity or
article, and the Secretary of Agriculture in the case of agricultural product, commodity or article, involving
dumping and countervailing duties under Section 301 and 302, respectively, of the Tariff and Customs
Code, and safeguard measures under Republic Act No. 8800, where either party may appeal the decision
to impose or not to impose said duties.

"b. Jurisdiction over cases involving criminal offenses as herein provided:

"1. Exclusive original jurisdiction over all criminal offenses arising from violations of the National Internal
Revenue Code or Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue
or the Bureau of Customs: Provided, however, That offenses or felonies mentioned in this paragraph
where the principal amount o taxes and fees, exclusive of charges and penalties, claimed is less than One
million pesos (P1,000,000.00) or where there is no specified amount claimed shall be tried by the regular
Courts and the jurisdiction of the CTA shall be appellate. Any provision of law or the Rules of Court to the
contrary notwithstanding, the criminal action and the corresponding civil action for the recovery of civil
liability for taxes and penalties shall at all times be simultaneously instituted with, and jointly determined
in the same proceeding by the CTA, the filing of the criminal action being deemed to necessarily carry with
it the filing of the civil action, and no right to reserve the filling of such civil action separately from the
criminal action will be recognized.

"2. Exclusive appellate jurisdiction in criminal offenses:


"a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax cases
originally decided by them, in their respected territorial jurisdiction.

"b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
exercise of their appellate jurisdiction over tax cases originally decided by the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts in their respective jurisdiction.

"c. Jurisdiction over tax collection cases as herein provided:

"1. Exclusive original jurisdiction in tax collection cases involving final and executory assessments for taxes,
fees, charges and penalties: Provided, however, That collection cases where the principal amount of taxes
and fees, exclusive of charges and penalties, claimed is less than One million pesos (P1,000,000.00) shall
be tried by the proper Municipal Trial Court, Metropolitan Trial Court and Regional Trial Court.

"2. Exclusive appellate jurisdiction in tax collection cases:

"a. Over appeals from the judgments, resolutions or orders of the Regional Trial Courts in tax collection
cases originally decided by them, in their respective territorial jurisdiction.

"b. Over petitions for review of the judgments, resolutions or orders of the Regional Trial Courts in the
Exercise of their appellate jurisdiction over tax collection cases originally decided by the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts, in their respective jurisdiction."

Section 8. Court of record; seal; proceedings. - The Court of Tax Appeals shall be a court of record and
shall have a seal which shall be judicially noticed. It shall prescribe the form of its writs and other
processes. It shall have the power to promulgate rules and regulations for the conduct of the business of
the Court, and as may be needful for the uniformity of decisions within its jurisdiction as conferred by law,
but such proceedings shall not be governed strictly by technical rules of evidence.

Section 9. Fees. - The Court shall fix reasonable fees for the filing of an appeal, for certified copies of any
transcript of record, entry or other document, and for other authorized services rendered by the Court or
its personnel.

SEC. 10. Power to Administer Oaths; Issue Subpoena; Punish for Contempt. - The Court shall have the
power to administer oaths, receive evidence, summon witnesses by subpoena duces tecum, subject in all
respects to the same restrictions and qualifications as applied in judicial proceedings of a similar nature.
The Court shall, in accordance with Rule seventy-one of the Rules of Court, have the power to punish for
contempt for the same causes, under the same procedure and with the same penalties provided therein.

"SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a
decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central
Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty
(30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for
action as referred to in Section 7(a)(2) herein.

"Appeal shall be made by filing a petition for review under a procedure analogous to that provided for
under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt
of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period
fixed by law to act thereon. A Division of the CTA shall hear the appeal: Provided, however, That with
respect to decisions or rulings of the Central Board of Assessment Appeals and the Regional Trial Court in
the exercise of its appellate jurisdiction appeal shall be made by filing a petition for review under a
procedure analogous to that provided for under rule 43 of the 1997 Rules of Civil Procedure with the CTA,
which shall hear the case en banc.

"All other cases involving rulings, orders or decisions filed with the CTA as provided for in Section 7 shall
be raffled to its Divisions. A party adversely affected by a ruling, order or decision of a Division of the CTA
may file a motion for reconsideration of new trial before the same Division of the CTA within fifteens (15)
days from notice thereof: Provide, however, That in criminal cases, the general rule applicable in regular
Courts on matters of prosecution and appeal shall likewise apply.

"No appeal taken to the CTA from the decision of the Commissioner of Internal Revenue or the
Commissioner of Customs or the Regional Trial Court, provincial, city or municipal treasurer or the
Secretary of Finance, the Secretary of Trade and Industry and Secretary of Agriculture, as the case may be
shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer for the satisfaction
of his tax liability as provided by existing law: Provided, however, That when in the opinion of the Court
the collection by the aforementioned government agencies may jeopardize the interest of the
Government and/or the taxpayer the Court any stage of the proceeding may suspend the said collection
and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than
double the amount with the Court.

"In criminal and collection cases covered respectively by Section 7(b) and (c) of this Act, the Government
may directly file the said cases with the CTA covering amounts within its exclusive and original
jurisdiction."

Section 12. Taking of evidence. - The Court may, upon proper motion on or its initiative, direct that a case,
or any issue thereof, be assigned to one of its members for the taking of evidence, when the determination
of a question of fact arises upon motion or otherwise in any stage of the proceedings, or when the taking
of an account is necessary, or when the determination of an issue of fact requires the examination of a
long account. The hearing before such member shall proceed in all respects as though the same had been
made before the Court.

Upon the recommendation of such hearing such member, he shall promptly submit to the Court his report
in writing, stating his findings and conclusions; and thereafter, the Court shall render its decisions on the
case, adopting, modifying, or rejecting the report in whole or in part, as the case may be, or the Court
may, in its discretion recommit it with instructions, or receive further evidence.

"SEC. 13. Decision, Maximum Period for Termination of Cases. - Cases brought before the Court shall be
decided in accordance with Section 15, paragraph (1), Article VIII (Judicial Department) of the 1987
Constitution. Decisions of the Court shall be in writing, stating clearly and distinctly the facts and the law
on which they are based, and signed by the Justices concurring therein. The Court shall provide for the
publication of its decision in the Official Gazette in such form and manner as may best be adopted for
public information and use.

"The Justices of the Court shall each certify on their applications for leave, and upon salary vouchers
presented by them for payment, or upon the payrolls under which their salaries are paid, that all
proceedings, petitions and motions which have been submitted to the Court for determination or decision
for a period required by the law or the Constitution, as the case may be, have been determined or decided
by the Court on or before the date of making the certificate, and no leave shall be granted and no salary
shall be paid without such certificate."

Section 14. Effect of decision that tax is barred by statute of limitations. - If the assessment or collection
of any tax is barred by any statute of limitations, the decisions of the Court that effect shall be considered
as its decision that there is no deficiency in respect of such tax.

Section 15. Publicity of proceedings and publication of decisions. - All decisions of, and all evidence
received by the Court and its divisions, including transcript of stenographic reports of the hearings, shall
be public records open to the inspection of the public, except that after the decision of the Court in any
proceedings has become final the Court may, upon motion of the taxpayer or the Government permit the
withdrawal, by the part entitled thereto of originals of books, documents and records, and or models,
diagrams, and other exhibits, introduced in evidence before the Court or any division; or the Court may,
on its own motion, make such other disposition thereof as it deems advisable. The Court shall provide for
the publication of its decisions in the Official Gazette in such form and manner as may be best adopted
for public information and use.

Section 16. Damages. - Where an appeal is found to be frivolous, or that proceedings have been instituted
merely for delay, the Court may assess damage against the appellants in an amount not exceeding five
hundred pesos, which shall be collected in the same manner as fines or other penalties authorized by law.

Section 17. Violation of penal law. - When, in the performance of its functions, it should appear to the
Court that a crime or other violation of law has been committed, or, that there are reasonable grounds to
believe that any official, employee or private person is guilty of any crime, offense or other violation, the
Court shall refer the matter to the proper department, bureau or office for investigation or the institution
of such criminal or administrative action as the facts and circumstances of the case may warrant.

"SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matter arising under
the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be
maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA
and disposed of in accordance with the provisions of this Act.

"A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or
new trial, may file a petition for review with the CTA en banc."

"SEC. 19. Review by Certiorari. - A party adversely affected by a decision or ruling of the CTA en banc may
file with the Supreme Court a verified petition for review on certiorari pursuant to Rule 45 of the 1997
Rules of Civil Procedure."

Section 20. Appropriation. - The sum of seventy-thousand pesos is hereby appropriated out of any funds
in the National Treasury not otherwise appropriated for the salaries and the purchase of supplies and
equipment necessary for the operation of the Court of Tax Appeals herein established during the current
fiscal year. Thereafter the funds necessary for the operation of the Court shall be included in the regular
Appropriation Act.
Section 21. General provisions. - Whenever the words "Board of Tax Appeals" are used in Commonwealth
Act Numbered Four hundred and seventy, otherwise known as the Assessment Law, or in other laws, rules
and regulations relative thereto, the same shall read "Board of Assessment Appeals."

The Central Board of Tax Appeals created under section two of Commonwealth Act Numbered Five
hundred and thirty is hereby abolished.

Executive Order Numbered Four hundred and one-A, dated the fifth of January, nineteen hundred and
fifty- one, is repealed and the Board of Tax Appeals created therein, abolished: Provided, however, That
all cases heretofore decided by the said Board of Tax Appeals and thence appealed to the Supreme Court
pursuant to Executive Order Numbered Four hundred one-A shall be decided by the Supreme Court on
the merits to all intents and purposes as if said Executive Order has been duly enacted by the Congress:
And, Provided, further, That all cases now pending in the said Board of Tax Appeals shall be transferred
to the Court of Tax Appeals and shall be heard and decided by the latter to all intents and purposes as if
they had been originally filed therein.

Any law or part of law, or any executive order, rule or regulation or part thereon, inconsistent with the
provisions of this Act is hereby repealed.

Section 22. Pending cases to be remanded to Court. - All cases involving disputed assessment of Internal
Revenue taxes or customs duties pending determination before the Court of First Instance shall be
certified and remanded by the respective clerk of court to the Court of Tax Appeals for final disposition
thereof.

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