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TAXATION LAW
2018 BAR
BY: ATTY. CLARE MARIE F. ORTEGA
I. TARIFF AND CUSTOMS CODE (PD 1464) AS AMENDED BY THE CUSTOMS

MODERNIZATION AND TARIFF ACT (RA 10863), WHICH TOOK EFFECT ON JUNE 16, 2016
A. Tariff and duties

1. Definitions:
Tariff-list or schedule of articles on which a duty is imposed upon the importation

into the country, with the rates at which they are severally taxed. Simply put, this
refers to the system of imposing taxes on the importation of foreign merchandise.
Kinds: Import and Export Tariff
Customs Duties-name of taxes on the importation and exportation of

commodities.
2. Purpose for imposition: Revenue-raising and regulation (Garcia v. The Executive

Secretary, G.R. No. 101273, 03 July 1992)
3. Kinds/Classification of Duties:
a) Ordinary/Regular Duties
(1) Ad valorem-computed based on the value of the imported article.
Criteria for the determination of the dutiable value:
-price of imported article in the exporting country
-price of imported article in the manufacturing country (if it is not
the exporting country), or in a third country with the same stage of
economic development
-reports of Revenue or Commercial Attaches
-if it is still not ascertainable, the domestic wholesale market price
(2) Specific-computed based on the dutiable weight of goods

Weights may either be:
-Gross: weight of the articles together with the weight of all the
containers, holders and packing (at the time of importation)
-Legal: weight of the articles together with its immediate container,
holder or packing (at the time of importation, and/or when packed in
retail, at the time of their sale to the public in their usual retail
quantities, unless the articles are packed in a single container.
-Net: actual weight of the articles excluding their containers,
holders and packing.
b) Special duties
4. Flexible Tariff Clause (TIETWO)

The Congress may, by law, authorize the President to fix within specified limits,
and subject to such limitations and restriction as it may impose, tariff rates, import
and export quotas, tonnage and wharfage dues, and other duties or imposts
within the framework of the national development program of the Government
1|P a g e - U N A U T H O R I Z E D R E P R O D U C T I O N O F T H I S R E V I E W M A T E R I A L I S I L L E G A L
AND TANTAMOUNT TO INTELLECTUAL PROPERTY RIGHTS INFRINGEMENT
ATTY. CLARE MARIE ORTEGA
. .
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(Article VI, Section 28, paragraph 2, Section 28, Article 6, 1987 Constitution subject
to limitations under the law.
Anti- Countervailing Marking Discriminatory Safeguar Duties

Dum Duty Duty Duty d
ping Meas
Duty ures
Imposition Imported Goods enjoying a Imported Goods from General- All
goods subsidy in good foreign goods imp
sold the exporting s not countries or orts
below country prop that produ mad
its erly discriminate cts e by
norma mark against impor the
l value ed Philippine ted in Pres
products increa iden
sed t
quanti upo
ties n
inve
Special- stig
volum atio
e of n of
impor the
ts Tarif
excee f
ds a Co
base mmi
trigge ssio
r level n
or and
price reco
falls mm
below end
a atio
trigge n of
r price NED
level A
Purpose Protect local industries from Prevent Protect national Protect Protect
undue competition possi interest dome nati
ble stic onal
dece indust eco
ption ries nom
and y,
produ gen
cers eral
from welf
increa are
sed and
impor nati
ts onal
secu
rity
Imposing Secretary of Trade and Comm. of President General- Preside
Authori Industry, Secretary of Custo Secret nt
ty ms ary of
. .
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Agriculture, Tariff Trade

Commission and
Indust
ry;
Secret
ary of
Agricu
lture
Special-
Secret
ary of
Agricu
lture
Judicial Any interested party adversely None Any None
review affected, Petition for intere
Review: CTA, within 30 sted
days. party
advers
ely
affect
ed,
Petitio
n for
Revie
w:
CTA,
within
30
days.
Howe
ver,
the
filing
of the
Petitio
n for
Revie
w
shall
not
suspe
nd the
impos
ition
and
collect
ion of
the
tariff
duties
.
B. Accrual and Payment of Tax Duties
. .
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1. As a general rule, all goods imported into the Philippines shall be subject to duty
upon importation, including goods previously exported from the Philippines.
What to remember?
-De Minimis Value: Php 10,000.00
-Adult Passengers: 2 reams of cigarettes or 2 tins of tobacco, 2 bottles of liquor or

wine not exceeding one (1) liter per bottle.
-OFW’s and Balikbayans/Returning Residents: Php 150,000.00 duty exemption on

their personal and household effects (less than 5 years and have not availed of
this privilege within 6 months prior to return); Php 250,000.00 duty exemption on
their personal and household effects (at least 5 years but not more than 10 years
and have not availed of this privilege within 5 years prior to return); Php
350,000.00 duty exemption on their personal and household effects (at least 10
years and have not availed of this privilege within 10 years prior to return.)
-Requirements: not in commercial quantities, not intended for barter, sale

or for hire, and limited to the foregoing values.
-Balikbayan Boxes: Php 150,000.00
Excess: Ad Valorem.
2. When does importation begin and when is it 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.
(Section 1202 of the TCCP)
The Bureau of Customs has jurisdiction so long as importation has not ended.
In order for an importation to be deemed terminated, the payment of the duties,

taxes, fees and other charges of the item brought into the country must be in
full. For as long as the importation has not been completed, the imported item
remains under the jurisdiction of the BOC.
3. What is smuggling?
This is committed by a person who –
(1) fraudulently imports or brings into the Philippines, or assist in doing so, any
article contrary to law, or
(2) receives, buys, sells, 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. (Sec. 3601, TCC)
4. Import Entry must be filed in the Customhouse within 30 days from the date of
discharge of the last package from the vessel, which shall not be extendible.
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Failure to file the entry constitutes implied abandonment and will result in
the ̳ipso facto‘ forfeiture of the goods/shipment.
5. Kinds of Import Entry: Informal and Formal
Informal Entry:
a. Articles of a commercial nature intended for sale, barter or hire, the dutiable
value of which does not exceed P2,000.00;
b. Personal and household effects or articles, not in commercial quantity,
imported in passenger‘s baggage, mail, or otherwise for personal use.
Formal Entry:
a. Articles of a commercial nature intended for sale, barter, or hire, the dutiable
value of which is more than P2,000.00;
b. Articles for, which the Collector may, upon the recommendation of the Tariff
Commission for the protection of a local industry, or the revenue, require
formal entry regardless of value and whatever purpose and nature of the
importation.
*All imported articles are subject to Formal and Informal entry except importation
admitted free of duty for the official use of embassies, legation and other agencies
of foreign governments who accord like privileges to corresponding agencies of
the Philippines.
C. Remedies:
1. Government:
Right of Police Officer to Enter or search any land or enclosure or any warehouse,
store or other building, which is not a dwelling house: WITHOUT SEARCH
WARRANT.
-A warehouse, store or other building or enclosure used for the keeping of storage
of articles does not become a dwelling house 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;
If search is of Dwelling House, SHOULD BE WITH SEARCH WARRANT issued by a

competent court;
Right to Search, inspect, examine Vessels or Aircrafts and Persons or Articles

Conveyed Therein: should be within the limits of any collection district, 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.
No proceeding shall give rise to any claim for the damage caused to article or
vessel or aircraft.
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Seizure and Forfeiture proceedings (exclusive jurisdiction of BOC) are available to

the BOC in the case of smuggling which may refer to the following: Prohibited
articles; Wrong entry of port; Export of goods contrary to law; Contraband;
Doctrine of Hot Pursuit

-If the act committed in violation of the TCC is done within Philippine waters,
seizure and forfeiture may be pursued or continued beyond the territorial
jurisdiction or the maritime zone and on the high seas.
Automatic review over the decision of the Commissioner of Customs (COC) if the
Government was aggrieved in a Decision of the Collector in seizure cases-to
protect the Government against corrupt and conniving customs collectors.
2. Taxpayer
Protest Cases procedure:
Examiner issues an Assessment (import/export)
File a protest before a collector within 15 days from payment

Commissioner of Customs
Who has 15 days to set the case
For hearing, and 30 days to decide
1. Rule against taxpayer 2. Rule for taxpayer
. .
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Appeal to COC within Automatic review by COC

15 days
Appeal to CTA Division Automatic review by DOF

within 30 days from receipt
of decision
Appeal to CTA Division
within 30 days from receipt
MR to CTA Division of decision (R42 ROC)
Within 15 days
Appeal to CTA en banc within

15 days
Appeal to the SC (Petition for Review)

within 15 days under R45
II. LOCAL GOVERNMENT TAXATION
What is the nature of the taxing power of the provinces, municipalities and cities? How will the
local government units be able to exercise their taxing powers? (2007 Bar)
-The power of a province, municipality and city to tax is limited to the extent that such power is
delegated to it either by the Constitution or by statute. Such power, however, is not inherent for
provinces, cities and municipalities as they are not the sovereign; rather, they are mere
“territorial and political subdivisions of the Republic of the Philippines”.
-The taxing powers may be exercised by the sanggunian of the local government unit through an
appropriate ordinance. (Sec. 132, LGC)
Important points:
a. All local taxes accrue on January 1 and are due on or before 20 January;
b. Fundamental principles shall govern the exercise of the taxing and other revenue-
raising powers of local government units:
i. Taxation shall be uniform in each local government unit;
ii. Taxes, fees, charges and other impositions shall:
(1) be equitable and based as far as practicable on the taxpayer's ability
to pay;
(2) be levied and collected only for public purposes;
. .
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(3) not be unjust, excessive, oppressive, or confiscatory;

(4) not be contrary to law, public policy, national economic policy, or
in the restraint of trade;
iii. The collection of local taxes, fees, charges and other impositions shall in no
case be let to any private person;
iv. The revenue collected pursuant to the provisions of this Code shall inure solely
to the benefit of, and be subject to the disposition by, the local government unit
levying the tax, fee, charge or other imposition unless otherwise specifically
provided herein; and,
v. Each local government unit shall, as far as practicable, evolve a progressive
system of taxation.
Principles to remember in local taxation

(a). Residual Taxing Power: Power to levy taxes, fees, or charges on any base or subject not
specifically enumerated under the LGC and not taxed under the NIRC or any other tax laws.
(b). Rule of pre-emption: If the national government elects a particular area as subject to tax, it
impliedly withholds from the local government unit the delegated power to tax the same fields
or area.
For purposes of local taxation (including real property taxes), what is the significance of the
distinction between an agency or instrumentality of the government AND a government owned
or controlled corporation (GOCC)?
An agency or instrumentality of the national government is exempt from local taxes, fees and
charges while a GOCC is not so exempt.
Prescriptive Period for Assessment and Collection of ordinary local taxes:
ASSESSMENT COLLECTION
5 yrs from due date ( Jan 1 every year) 5 yrs from receipt of Assessment
10 yrs from discovery of fraud or intent to
5 yrs from receipt of Assessment
evade payment
Procedure in Protest Cases of Local Taxes
1. When the local treasurer or his duly authorized representative finds that correct taxes, fees,
or charges have not been paid, he shall issue a notice of assessment stating the nature of the
tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties.
2. Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a
written protest (payment under protest) with the local treasurer contesting the assessment;
otherwise, the assessment shall become final and executory.
3. The local treasurer shall decide the protest within sixty (60) days from the time of its filing. If
the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a notice
cancelling wholly or partially the assessment. However, if the local treasurer finds the assessment
to be wholly or partly correct, he shall deny the protest wholly or partly with notice to the
. .
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taxpayer.
4. The taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from
the lapse of the sixty (60) day period prescribed herein within which to appeal with the court of
competent jurisdiction (MTC: does not exceed 300k/400k; RTC: exceeds 300/400k, provided
the amount is less than 1M; CTA Division: 1M or above) otherwise the assessment becomes
conclusive and unappealable.
Refund of Local Tax:
No case or proceeding shall be maintained in any court for the recovery of any tax, fee, or charge
erroneously or illegally collected until a written claim for refund or credit has been filed with
the local treasurer. No case or proceeding shall be entertained in any court after the expiration
of two (2) years from the date of the payment of such tax, fee, or charge, or from the date the
taxpayer is entitled to a refund or credit.
III. REAL PROPERTY TAX
Fundamental Principles
a. Appraisal and Assessment by the Assessor’s Office;
"Appraisal" is the act or process of determining the value of property as of a specified date for a
specific purpose;
"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;
b. what constitutes real properties?

- properties covered by Article 415 of the Civil Code;
- Airfield, runway and taxiway and the lots on which the runway and taxiway
are located;
- Underground tanks;
- Gasoline tanks permanently attached to the soil;
- Machineries and equipment;
- Underground cables;
- Submarine or undersea communication cables;
- Oil pipes;
- Boathouse if tied to the shore and used as residence
c. Idle lands maybe exempt from RET due to valid causes such as force majeure, civil disturbance,
natural calamity, or any other reason which prevents the owner from utilizing the property
d. Exemption from RET shall be based on the actual use not the ownership:
e. Unpaid RET attaches to the land and not the owner, thus, the remedy of lien is available to the
government.
f. Exemption from real estate tax:
. .
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(a). real properties owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted for consideration
to a taxable person:
-Beneficial use principle

Sec. 234 (a) exempts from real estate taxes real property owned by the Republic, unless
the beneficial use of the property is, for consideration, transferred to a taxable person.
*This exemption, however, must be read in relation with Sec. 133 (o) of the LGC, which
prohibits LGUs from imposing taxes or fees of any kind on the national government, its
agencies, and instrumentalities. Thus read together, the provisions allow the Republic to
grant the beneficial use of its property to an agency or instrumentality of the national
government. Such grant does not necessarily result in the loss of the tax exemption. The
tax exemption that the property of the Republic or its instrumentality carries ceases only
if, as stated in Sec. 234 (a) of the LGC of 1991, “beneficial use thereof has been granted,
for a consideration or otherwise, to a taxable person.”
(b). charitable institutions, churches, parsonages, convents, mosques, or religious

cemeteries and all L, B, and I, ADE for religious, charitable, and educational purposes;
(c). Machineries and equipment ADE by local water utilities and GOCC’s engaged in
supply/distribution of water and/or generation of electric power;
(d). real properties owned by cooperatives;
(e). machinery and equipment used for pollution control and environment protection.
Collection of Real Property Tax Through the Court AND Prescriptive Period for Assessment and
Collection
ASSESSMENT COLLECTION
5 yrs from due date ( Jan 1 every year) 5 yrs from receipt of Assessment
10 yrs from discovery of fraud or intent to
5 yrs from receipt of Assessment
evade payment
Refund of Local Tax:
No case or proceeding shall be maintained in any court for the recovery of any tax, fee, or charge
erroneously or illegally collected until a written claim for refund or credit has been filed with
the local treasurer. No case or proceeding shall be entertained in any court after the expiration
of two (2) years from the date of the payment of such tax, fee, or charge, or from the date the
taxpayer is entitled to a refund or credit.
Payment Under Protest is required in protest of RPT: 30 days from payment of tax and filed
before provincial, city treasurer or municipal treasurer, in the case of a municipality within
Metropolitan Manila Area. Treasurer decides within 60 days. If denied or after lapse of 60 day
period TX may go to LBAA (60 days). LBAA decides within 120 days. Appeal to CBAA within 30
days, then appeal to the CTA within 15 days. Finally, file a Petition for Review before the SC within
15 days.
10 | P a g e - U N A U T H O R I Z E D R E P R O D U C T I O N O F T H I S R E V I E W M A T E R I A L I S
ILLEGAL AND TANTAMOUNT TO INTELLECTUAL PROPERTY RIGHTS
INFRINGEMENT

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Academicus Review Center Inc.

I. TARIFF AND CUSTOMS CODE (PD 1464) AS AMENDED BY THE CUSTOMS

A. Tariff and duties

Tariff-list or schedule of articles on which a duty is imposed upon the importation

Customs Duties-name of taxes on the importation and exportation of

2. Purpose for imposition: Revenue-raising and regulation (Garcia v. The Executive

(2) Specific-computed based on the dutiable weight of goods

4. Flexible Tariff Clause (TIETWO)

Anti- Countervailing Marking Discriminatory Safeguar Duties

Agriculture, Tariff Trade

B. Accrual and Payment of Tax Duties

-De Minimis Value: Php 10,000.00

-Adult Passengers: 2 reams of cigarettes or 2 tins of tobacco, 2 bottles of liquor or

-OFW’s and Balikbayans/Returning Residents: Php 150,000.00 duty exemption on

-Requirements: not in commercial quantities, not intended for barter, sale

-Balikbayan Boxes: Php 150,000.00

2. When does importation begin and when is it terminated?

In order for an importation to be deemed terminated, the payment of the duties,

5. Kinds of Import Entry: Informal and Formal

If search is of Dwelling House, SHOULD BE WITH SEARCH WARRANT issued by a

Right to Search, inspect, examine Vessels or Aircrafts and Persons or Articles

Seizure and Forfeiture proceedings (exclusive jurisdiction of BOC) are available to

Doctrine of Hot Pursuit

Protest Cases procedure:

Examiner issues an Assessment (import/export)

File a protest before a collector within 15 days from payment

1. Rule against taxpayer 2. Rule for taxpayer

Appeal to COC within Automatic review by COC

Appeal to CTA Division Automatic review by DOF

Appeal to CTA en banc within

Appeal to the SC (Petition for Review)

II. LOCAL GOVERNMENT TAXATION

(3) not be unjust, excessive, oppressive, or confiscatory;

Principles to remember in local taxation

Prescriptive Period for Assessment and Collection of ordinary local taxes:

Procedure in Protest Cases of Local Taxes

Refund of Local Tax:

III. REAL PROPERTY TAX

b. what constitutes real properties?

f. Exemption from real estate tax:

-Beneficial use principle

(b). charitable institutions, churches, parsonages, convents, mosques, or religious

(d). real properties owned by cooperatives;

Refund of Local Tax:

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