THE

NATIONAL INTERNAL
REVENUE CODE
OF THE PHILIPPINES
(Pres. Decree No. 1158 as amended
up to Rep. Act No. 9504)

Third Edition
with:
An Act Creating the Court of Tax Appeals, as
amended
Revised Rules of the Court of Tax Appeals, as
amended
Attrition Act of 2005
Republic Act No. 9480
Revenue Regulations No. 10-2008

By
RBSI Editorial Staff
Ernesto C. Salao, LL.B.

ecsalao@rexpublishing.com.ph

2009

Book Store
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Manila, Philippines
i
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Philippine Copyright, 2009

by

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ISBN 978-971-23-5278-2

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No. ________________
ISBN 978-971-23-5278-2

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TABLE OF CONTENTS
TITLE I ORGANIZATION AND FUNCTION
OF THE BUREAU OF INTERNAL REVENUE
Section 1. Title of the Code............................................. 1
Section 2. Powers and Duties of the Bureau of

Internal Revenue ................................ 1
Section 3. Chief officials of the Bureau of Internal
Revenue................................................ 2
Section 4. Power of the Commissioner to interpret

tax laws and to decide tax cases ......... 2
Section 5. Power of the Commissioner to obtain

information, and to summon/

examine, and take testimony

of persons.............................................. 3
Section 6. Power of the Commissioner to make

assessments and prescribe additional

requirements for tax administration

and enforcement................................... 4
Section 7. Authority of the Commissioner to delegate
power.................................................... 9
Section 8. Duty of the commissioner to ensure the

provision and distribution of forms,

receipts, certificates, and appliances,

and the acknowledgment of payment

of taxes.................................................. 10
Section 9. Internal Revenue Districts............................ 11
Section 10. Revenue Regional Director.......................... 11
Section 11. Duties of Revenue District Officers and

Other Internal Revenue Officers......... 12
Section 12. Agents and deputies for collection

of National Internal Revenue
Taxes..................................................... 13

iii

Section 13. Authority of a Revenue Officer ................... 14

Section 14. Authority of officers to administer

Oaths and take testimony................... 14
Section 15. Authority of internal revenue officers

to make arrests and seizures............... 14
Section 16. Assignment of Internal Revenue Officers

involved in excise tax functions to

establishments where articles

subject to excise tax are produced

or kept................................................... 15
Section 17. Assignment of Internal Revenue

Officers and other employees

to other duties...................................... 15
Section 18. Reports of violation of laws......................... 16
Section 19. Contents of commissioners annual
report.................................................... 16
Section 20. Submission of report and pertinent

information by the commissioner........ 16
Section 21. Sources of revenue....................................... 17
TITLE II TAX ON INCOME
Chapter I DEFINITIONS
Section 22. Definitions.................................................... 19
Chapter II GENERAL PRINCIPLES
Section 23. General principles of income taxation

in the Philippines ................................ 28
Chapter III TAX ON INDIVIDUALS
Section 24. Income tax rates ......................................... 30
Section 25. Tax on nonresident alien individual .......... 35
Section 26. Tax liability of members of General

Professional Partnerships .................. 40
iv

Chapter IV TAX ON CORPORATIONS

Section 27. Rates of income tax on domestic

corporations ......................................... 41
Section 28. Rates of income tax on foreign
corporations.......................................... 48
Section 29. Imposition of improperly accumulated

earnings tax.......................................... 56
Section 30. Exemptions from tax on corporations......... 58

Chapter V COMPUTATION OF TAXABLE

INCOME
Section 31. Taxable Income defined .............................. 61
Chapter VI COMPUTATION OF GROSS

INCOME
Section 32. Gross income................................................ 62
Section 33. Special treatment of fringe benefit ............ 67
Chapter VII ALLOWABLE DEDUCTIONS
Section 34. Deductions from gross income ................... 71
Section 35. Allowance of personal exemption for

individual taxpayer ............................. 97
Section 36. Items not deductible ................................... 99
Section 37. Special provisions regarding income and

deductions of insurance companies,

whether domestic or foreign ............... 101
Section 38. Losses from wash sales of stock or
securities .............................................. 102
Section 39. Capital gains and losses ............................. 103
Section 40. Determination of amount and

recognition of gain or loss.................... 106
Section 41. Inventories .................................................. 112
Section 42. Income from sources within the
Philippines ........................................... 113
v

Chapter VIII ACCOUNTING PERIODS AND

METHODS OF ACCOUNTING
Section 43. General rule ................................................ 119
Section 44. Period in which items of gross income
included................................................ 119
Section 45. Period for which deductions and credits
taken .................................................... 120
Section 46. Change of accounting period....................... 120
Section 47. Final or adjustment returns for a period

of less than twelve (12) months........... 120
Section 48. Accounting for long-term contracts............. 121
Section 49. Installment basis......................................... 122
Section 50. Allocation of income and deductions .......... 123
Chapter IX RETURNS AND PAYMENT

OF TAX
Section 51. Individual returns ....................................... 125
Section 52. Corporation returns .................................... 129
Section 53. Extension of time to file returns ................ 130
Section 54. Returns of receivers, trustees in

bankruptcy or assignees...................... 130
Section 55. Returns of General Professional
Partnerships......................................... 131
Section 56. Payment and assessment of income tax

for individuals and corporations......... 131
Section 57. Withholding of tax at source ...................... 134
Section 58. Returns and payment of taxes withheld

at source............................................... 135
Section 59. Tax on profits collectible from owner

or other persons.................................... 138
Chapter X ESTATES AND TRUSTS
Section 60. Imposition of tax.......................................... 140
vi

Section 61. Taxable income ........................................... 142

Section 62. Exemption allowed to estates and trusts... 143
Section 63. Revocable trusts........................................... 143
Section 64. Income for benefit of grantor....................... 143
Section 65. Fiduciary returns ........................................ 144
Section 66. Fiduciaries indemnified against claims

for taxes paid........................................ 145
Chapter XI OTHER INCOME TAX

REQUIREMENTS
Section 67. Collection of foreign payments ................... 146
Section 68. Information at source as to income
payments ............................................. 146
Section 69. Return of information of brokers ............... 147
Section 70. Returns of foreign corporations .................. 148
Section 71. Disposition of income tax returns,

publication of lists of taxpayers

and filers .............................................. 149
Section 72. Suit to recover tax based on false or

fraudulent returns .............................. 149
Section 73. Distribution of dividends or assets by
corporations ......................................... 149
Chapter XII QUARTERLY CORPORATE

INCOME TAX
ANNUAL DECLARATION AND QUARTERLY PAYMENTS OF INCOME TAXES
Section 74. Declaration of income tax for individuals ... 152
Section 75. Declaration of quarterly corporate

income tax ........................................... 153
Section 76. Fiscal adjustment return ............................ 154
Section 77. Place and time of filing and payment

of quarterly corporate income tax ...... 155
vii

Chapter XIII WITHHOLDING ON WAGES

Section 78. Definitions ................................................... 156
Section 79. Income tax collected at source .................... 158
Section 80. Liability for tax............................................ 162
Section 81. Filing of return and payment of taxes
withheld ............................................... 162
Section 82. Return and payment in cases of

government employees ....................... 163
Section 83. Statements and returns ............................. 163
TITLE III ESTATE AND DONORS TAXES
Chapter I ESTATE TAX
Section 84. Rates of Estate Tax ..................................... 166
Section 85. Gross estate.................................................. 166
Section 86. Computation of net estate........................... 170
Section 87. Exemption of certain acquisitions

and transmissions ............................... 178
Section 88. Determination of the value of the estate ... 178
Section 89. Notice of death to be filed ........................... 179
Section 90. Estate tax returns ....................................... 179
Section 91. Payment of tax ............................................ 181
Section 92. Discharge of executor or administrator

from personal liability......................... 183
Section 93. Definition of deficiency ............................... 183
Section 94. Payment before delivery by executor or
administrator....................................... 184
Section 95. Duties of certain officers and debtors ........ 184
Section 96. Restitution of tax upon satisfaction of

outstanding obligations ...................... 185
Section 97. Payment of tax antecedent to the transfer

of shares, bonds or rights .................... 185
Chapter II DONORS TAX
Section 98. Imposition of tax ......................................... 187
viii

Section 99. Rates of tax payable by donor..................... 187

Section 100. Transfer for less than adequate

and full consideration ......................... 188
Section 101. Exemption of certain gifts ........................ 188
Section 102. Valuation of gifts made in property ......... 190
Section 103. Filing of return and payment of tax......... 191
Section 104. Definitions ................................................. 192
TITLE IV VALUE-ADDED TAX
Chapter I IMPOSITION OF TAX
Section 105. Persons liable ............................................ 194
Section 106. Value-added tax on sale of goods or

properties ............................................ 195
Section 107. Value-added tax on importation of
goods .................................................... 199
Section 108. Value-added tax on sale of services and

use or lease of properties .................... 200
Section 109. Exempt transactions ................................. 205
Section 110. Tax credits ................................................. 209
Section 111. Transitional/Presumptive input tax
credits................................................... 212
Section 112. Refunds or tax credits of input tax .......... 213
Chapter II COMPLIANCE REQUIREMENTS
Section 113. Invoicing and accounting requirements

for VAT-Registered Persons ............... 216
Section 114. Return and payment of value-added
tax.......................................................... 219
Section 115. Power of the commissioner to

suspend the business operations

of a taxpayer......................................... 220

ix

TITLE V OTHER PERCENTAGE TAXES

Section 116. Tax on persons exempt from value
added tax.............................................. 222
Section 117. Percentage tax on domestic carriers

and keepers of garages ....................... 222
Section 118. Percentage tax on international
carriers ................................................. 223
Section 119. Tax on franchises ...................................... 223
Section 120. Tax on overseas dispatch, message or

conversation originating from the
Philippines............................................ 224
Section 121. Tax on banks and non-bank financial

intermediaries performing

quasi-banking functions ..................... 225
Section 122. Tax on other non-bank finance
intermediaries ..................................... 227
Section 123. Tax on life insurance premiums .............. 228
Section 124. Tax on agents of foreign insurance
companies ............................................ 229
Section 125. Amusement taxes ..................................... 229
Section 126. Tax on winnings ........................................ 231
Section 127. Tax on sale, barter or exchange of

shares of stock listed and traded

through the local stock exchange

or through initial public offering ........ 232
Section 128. Returns and payments of percentage
taxes...................................................... 235
TITLE VI EXCISE TAXES ON
CERTAIN GOODS
Chapter I GENERAL PROVISIONS
Section 129. Goods subject to excise taxes .................... 238
Section 130. Filing of return and payment of excise

tax on domestic products..................... 238
x

Section 131. Payment of excise taxes on imported

articles ................................................. 242
Section 132. Mode of computing contents of cask

or package ............................................ 245
Chapter II EXEMPTION OR CONDITIONAL

TAX-FREE REMOVAL OF

CERTAIN ARTICLES
Section 133. Removal of wines and distilled spirits

for treatment of tobacco leaf................ 246
Section 134. Domestic denatured alcohol...................... 246
Section 135. Petroleum products sold to international

carriers and exempt entities

or agencies ........................................... 247
Section 136. Denaturation, withdrawal and use of

denatured alcohol................................. 247
Section 137. Removal of spirits under bond for

rectification .......................................... 248
Section 138. Removal of fermented liquors to bonded
warehouse ............................................ 248
Section 139. Removal of damaged liquors free of tax.... 249
Section 140. Removal of tobacco products without

prepayment of tax................................ 249
Chapter III EXCISE TAX ON ALCOHOL

PRODUCTS
Section 141. Distilled spirits ......................................... 251
Section 142. Wines ......................................................... 256
Section 143. Fermented liquor....................................... 260
Chapter IV EXCISE TAX ON TOBACCO

PRODUCTS
Section 144. Tobacco products ....................................... 265
Section 145. Cigars and cigarettes ................................ 267
Section 146. Inspection fees............................................ 273
Section 147. Definition of terms..................................... 274
xi

Chapter V EXCISE TAX ON PETROLEUM

PRODUCTS
Section 148. Manufactured oils and other fuels............ 275
Chapter VI EXCISE TAX ON MISCELLANEOUS

ARTICLES
Section 149. Automobiles ............................................... 279
Section 150. Non-essential goods .................................. 282
Chapter VII EXCISE TAX ON MINERAL

PRODUCTS
Section 151. Mineral products ....................................... 283
Chapter VIII ADMINISTRATIVE PROVISIONS

REGULATING BUSINESS OF

PERSONS DEALING IN ARTICLES

SUBJECT TO EXCISE TAX
Section 152. Extent of supervision over

establishments producing taxable
output................................................... 287
Section 153. Records to be kept by manufacturers;

assessment based thereon................... 287
Section 154. Premises subject to approval by
commissioner........................................ 288
Section 155. Manufacturers to provide themselves

with counting or metering devices

to determine production ..................... 288
Section 156. Labels and form of packages .................... 289
Section 157. Removal of articles after the payment

of tax..................................................... 289
Section 158. Storage of goods in internal-revenue

bonded warehouses ............................. 289
Section 159. Proof of exportation; exporters bond ....... 290
xii

Section 160. Manufacturers and importers bond ....... 290

Section 161. Records to be kept by wholesale
dealers ................................................. 291
Section 162. Records to be kept by dealers in leaf
tobacco.................................................. 291
Section 163. Preservation of invoices and stamps ....... 291
Section 164. Information to be given by

Manufacturers, importers,

indentors, and wholesalers

of any apparatus or mechanical

contrivance specially for the

manufacture of articles subject

to excise tax and importers,

indentors, manufacturers or sellers

of cigarette paper in bobbins,

cigarette tipping paper or cigarette

filter tips............................................... 291
Section 165. Establishment of distillery warehouse..... 292
Section 166. Custody of distillery or distillery
warehouse............................................. 293
Section 167. Limitation on quantity of spirits

removed from warehouse .................... 293
Section 168. Denaturing within premises .................... 293
Section 169. Recovery of alcohol for use in arts and
industries.............................................. 294
Section 170. Requirements governing rectification

and compounding of liquors ................ 294
Section 171. Authority of internal revenue officer in

searching for taxable articles ............. 294
Section 172. Detention of package containing taxable
articles.................................................. 295
TITLE VII DOCUMENTARY STAMP TAX
Section 173. Stamp taxes upon documents, loan

agreements, instruments

and papers............................................ 296
xiii

Section 174. Stamp tax on original issue of

shares of stock ..................................... 296
Section 175. Stamp tax on sales, agreements to sell,

memoranda of sales, deliveries or

transfer of due-bills, certificates of

obligation, or shares or certificates

of stock ................................................. 297
Section 176. Stamp tax on bonds, debentures,

certificates of stock or indebtedness

issued in foreign countries .................. 298
Section 177. Stamp tax on certificates of profits or

interest in property or
accumulations ..................................... 298
Section 178. Stamp tax on bank checks, drafts,

certificates of deposit not bearing

interest, and other instruments ......... 298
Section 179. Stamp tax on all debt instruments .......... 298
Section 180. Stamp tax on all bills of exchange

or drafts ............................................... 299
Section 181. Stamp tax upon acceptance of bills of

exchange and others ........................... 300
Section 182. Stamp tax on foreign bills of exchange

and letters of credit.............................. 300
Section 183. Stamp tax on life insurance policies ........ 300
Section 184. Stamp tax on policies of insurance upon
property ............................................... 301
Section 185. Stamp tax on fidelity bonds and other

insurance policies ................................ 301
Section 186. Stamp tax on policies of annuities and

pre-need plans...................................... 302
Section 187. Stamp tax on indemnity bonds ................ 302
Section 188. Stamp tax on certificates .......................... 303
Section 189. Stamp tax on warehouse receipts ............ 303
Section 190. Stamp tax on jai-alai, horse race

tickets, lotto, or other authorized

numbers games ................................... 303
xiv

Section 191. Stamp tax on bills of lading or

receipts ............................................... 304
Section 192. Stamp tax on proxies ................................ 304
Section 193. Stamp tax on powers of attorney.............. 304
Section 194. Stamp tax on leases and other hiring
agreements........................................... 304
Section 195. Stamp tax on mortgages, pledges, and

deeds of trust ....................................... 305
Section 196. Stamp tax on deeds of sale and

conveyances of real property .............. 306
Section 197. Stamp tax on charter parties and

similar instruments ............................ 307
Section 198. Stamp tax on assignments and renewals

of certain instruments ........................ 308
Section 199. Documents and papers not subject to

stamp tax ............................................. 308
Section 200. Payment of documentary stamp tax ........ 312
Section 201. Effect of failure to stamp taxable
document ............................................. 313
TITLE VIII REMEDIES
Chapter I REMEDIES IN GENERAL
Section 202. Final deed to purchaser............................. 314
Section 203. Period of limitation upon assessment

and collection ....................................... 314
Section 204. Authority of the commissioner to

compromise, abate, and refund or

credit taxes .......................................... 315
Chapter II CIVIL REMEDIES FOR

COLLECTION OF TAXES
Section 205. Remedies for the collection of

delinquent taxes .................................. 318
xv

Section 206. Constructive distraint of the property

of a taxpayer ........................................ 319
Section 207. Summary remedies ................................... 320
Section 208. Procedure for distraint and
garnishment ........................................ 322
Section 209. Sale of property distrained and

disposition of proceeds ........................ 323
Section 210. Release of distrained property upon

payment prior to sale .......................... 324
Section 211. Report of sale to Bureau of Internal
Revenue................................................ 324
Section 212. Purchase by government at sale upon
distraint ............................................... 325
Section 213. Advertisement and sale ............................ 325
Section 214. Redemption of property sold..................... 327
Section 215. Forfeiture to government for want

of bidder ............................................... 327
Section 216. Resale of real estate taken for taxes ........ 328
Section 217. Further distraint or levy........................... 328
Section 218. Injunction not available to restrain

collection of tax .................................... 329
Section 219. Nature and extent of tax lien.................... 329
Section 220. Form and mode of proceeding in

actions arising under this code............ 329
Section 221. Remedy for enforcement of statutory

penal provisions................................... 330
Section 222. Exceptions as to period of limitation

of assessment and collection

of taxes ................................................. 330
Section 223. Suspension of running of statute of
limitations ........................................... 331
Section 224. Remedy for enforcement of forfeitures .... 332
Section 225. When property to be sold or destroyed .... 332
Section 226. Disposition of funds recovered in legal

proceedings or obtained from
forfeitures ............................................ 333
xvi

Section 227. Satisfaction of judgment recovered

against any internal revenue

officer ................................................... 333
Chapter III PROTESTING AN ASSESSMENT,

REFUND, ETC.
Section 228. Protesting of assessment .......................... 334
Section 229. Recovery of tax erroneously

or illegally collected ............................ 335
Section 230. Forfeiture of cash refund and of tax
credit..................................................... 336
Section 231. Action to contest forfeitures of chattel ..... 337
TITLE IX COMPLIANCE REQUIREMENTS
Chapter I KEEPING OF BOOKS OF

ACCOUNTS AND RECORDS
Section 232. Keeping of books of accounts .................... 338
Section 233. Subsidiary books ....................................... 339
Section 234. Language in which books are to be

kept; translation .................................. 339
Section 235. Preservation of books of accounts and

other accounting records ..................... 340
Chapter II ADMINISTRATIVE PROVISIONS
Section 236. Registration requirements........................ 342
Section 237. Issuance of receipts or sales or

commercial invoices ............................ 347
Section 238. Printing of receipts or sales or

commercial invoices............................. 348
Section 239. Sign to be exhibited by distiller,

rectifier, compounder, repacker,

and wholesale liquor dealer ................ 349
xvii

Section 240. Sign to be exhibited by manufacturer

of products of tobacco .......................... 350
Section 241. Exhibition of certificate of payment at

place of business .................................. 350
Section 242. Continuation of business of deceased
person .................................................. 350
Section 243. Removal of business to other location ..... 351
Chapter III RULES AND REGULATIONS
Section 244. Authority of secretary of finance to

promulgate rules and regulations ...... 352
Section 245. Specific provisions to be contained in

rules and regulations .......................... 352
Section 246. Non-retroactivity of rulings ...................... 356
TITLE X STATUTORY OFFENSES AND
PENALTIES
Chapter I ADDITIONS TO THE TAX
Section 247. General provisions..................................... 357
Section 248. Civil penalties ........................................... 357
Section 249. Interest ...................................................... 359
Section 250. Failure to file certain information
returns.................................................. 360
Section 251. Failure of a withholding agent to

collect and remit tax............................ 360
Section 252. Failure of a withholding agent to refund

excess withholding tax ........................ 361
Chapter II CRIMES, OTHER OFFENSES AND
FORFEITURES
Section 253. General provisions .................................... 362
Section 254. Attempt to evade or defeat tax.................. 363
xviii

Section 255. Failure to file return, supply correct

and accurate information, pay

tax, withhold and remit tax and

refund excess taxes withheld on
compensation ....................................... 363
Section 256. Penal liability of corporations .................. 364
Section 257. Penal liability for making false entries,

records or reports, or using falsified

or fake accountable forms ................... 364
Section 258. Unlawful pursuit of business.................... 367
Section 259. Illegal collection of foreign payments ...... 367
Section 260. Unlawful possession of cigarette

paper in bobbins or rolls, etc. ............. 367
Section 261. Unlawful use of denatured alcohol .......... 368
Section 262. Shipment or removal of liquor or

tobacco products under false name

or brand or as an imitation of any

existing or otherwise known product

name or brand ..................................... 369
Section 263. Unlawful possession or removal of

articles subject to excise tax without

payment of the tax .............................. 369
Section 264. Failure or refusal to issue receipts

or sales or commercial invoices,

violations related to the printing

of such receipts or invoices

and other violations ............................ 371
Section 265. Offenses relating to stamps ...................... 372
Section 266. Failure to obey summons ......................... 373
Section 267. Declaration under penalties of perjury .... 374
Section 268. Other crimes and offenses ........................ 374
Chapter III PENALTIES IMPOSED ON

PUBLIC OFFICERS
Section 269. Violations committed by government

enforcement officers ............................ 376
xix

Section 270. Unlawful divulgence of trade

secrets .................................................. 378
Section 271. Unlawful interest of revenue law

enforcers in business............................ 379
Section 272. Violation of withholding tax
provision .............................................. 379
Section 273. Penalty for failure to issue and execute
warrant ................................................ 380
Chapter IV OTHER PENAL PROVISIONS
Section 274. Penalty for second and subsequent
offenses ................................................ 381
Section 275. Violation of other provisions of this

code or rules and regulations

in general ............................................. 381
Section 276. Penalty for selling, transferring,

encumbering or in any way

disposing of property placed

under constructive distraint................ 381
Section 277. Failure to surrender property placed

under distraint and levy...................... 382
Section 278. Procuring unlawful divulgence of

trade secrets......................................... 382
Section 279. Confiscation and forfeiture of the

proceeds or instruments

of crime ................................................ 383
Section 280. Subsidiary penalty .................................... 384
Section 281. Prescription for violations of any

provision of this code............................ 384
Section 282. Informers reward to persons

instrumental in the discovery of

violations of the National Internal

Revenue Code and in the discovery

and seizure of smuggled goods ........... 384

xx

TITLE XI ALLOTMENT OF INTERNAL

REVENUE
Chapter I DISPOSITION AND ALLOTMENT

OF NATIONAL INTERNAL

REVENUE IN GENERAL
Section 283. Disposition of national internal
revenue................................................. 387
Section 284. Allotment for the Commission on
Audit .................................................... 388
Section 285. Allotment for the Bureau of Internal
Revenue ............................................... 388
Chapter II SPECIAL DISPOSITION OF

CERTAIN NATIONAL INTERNAL

REVENUE TAXES
Section 286. Disposition of proceeds of insurance

premium tax......................................... 390
Section 287. Shares of local government units in the

proceeds from the development and

utilization of the national wealth ....... 390
Section 288. Disposition of incremental revenues ....... 392
Section 289. Special Financial support to

beneficiary provinces producing

virginia tobacco ................................... 396
TITLE XII OVERSIGHT COMMITTEE
Section 290. Congressional oversight committee ......... 399
TITLE XIII REPEALING PROVISIONS
Section 291. In general .................................................. 401

xxi

TITLE XIV FINAL PROVISIONS

Section 292. Separability clause ................................... 402
OTHER PROVISIONS OF REPUBLIC
ACT NO. 8424
Section 2. State policy..................................................... 403
Section 4. ........................................................................ 403
Section 5. Transitory Provisions. Deferment of the

Effectivity of the Imposition of VAT

on certain services................................ 403
Section 6. Separability clause ....................................... 404
Section 7. Repealing clauses .......................................... 404
Section 8. Effectivity ...................................................... 404
ANNEXES
Annex A-1 Local Distilled Spirits Brands

Produced from Sap of Nipa, Coconut,

etc. covered by Section 141(b) ............. 405
Annex A-2 Local Distilled Spirits Brands

Produced from Sap of Nipa, Coconut,

etc. covered by Section 141(b) ............. 406
Annex A-3 Distilled Spirits Brands Produced

from Grains, Cereals, and Grains

covered by Section 141(b) ................... 407
Annex A-4 Distilled Spirits Brands Produced

from Grains, Cereals, and Grains

covered by Section 141(b) ................... 409
Annex B ............................................................... 410
Annex C-1 ............................................................... 411
Annex C-2 ............................................................... 413
Annex D Tax on Cigar and Cigarettes .............. 416
xxii

APPENDICES
APPENDIX A
AN ACT CREATING THE COURT
OF TAX APPEALS
(R.A. No. 1125, as amended by R.A. No. 3457
and further amended by R.A. No. 9282
and R.A. 9503)
Section 1. Court; justices; qualifications; salary;
tenure ................................................... 418
Section 2. Sitting en banc or Division; Quorum;
proceedings........................................... 419
Section 3. Clerk of court; Division of Clerks of Court;

appointment; qualification;
compensation ....................................... 420
Section 4. Other subordinate employees ...................... 421
Section 5. Disqualifications ........................................... 421
Section 6. Place of office ................................................. 421
Section 7. Jurisdiction ................................................... 421
Section 8. Court of record; seal; proceedings ................ 424
Section 9. Fees ................................................................ 424
Section 10. Power to administer oaths, issue

subpoena, punish for contempt........... 425
Section 11. Who may appeal; mode of appeal; effect

of appeal............................................... 425
Section 12. Taking of evidence ...................................... 427
Section 13. Decision, maximum period for termination

of cases ................................................. 427
Section 14. Effect of decision that tax is barred by

statute of limitations .......................... 428
Section 15. Publicity of proceedings and publication

of decisions........................................... 428
Section 16. Damages....................................................... 429
Section 17. Violation of penal law.................................. 429
Section 18. Appeal to the Court of Appeals en banc..... 429

xxiii

Section 19. Review by certiorari .................................... 430

Section 20. Appropriation .............................................. 430
Section 21. General provisions ...................................... 430
Section 22. Pending cases to be remanded to court ..... 431
Section 23. Separability clause...................................... 431
Section 24. Effectivity..................................................... 431
Other Provisions of
Republic Act 9282
Section 13. Distraint of personal property and/or

levy on real property............................ 432
Section 14. Retention of personnel; security of tenure;

upgrading of positions and salaries.... 432
Section 15. Transitory provisions .................................. 432
Section 16. Appropriations ............................................ 433
Section 17. Repealing Clause ........................................ 433
Section 18. Separability Clause .................................... 433
Section 19. Effectivity Clause ........................................ 433
Appendix B
Revised Rules of the Court of Tax Appeals
Rule 1 Title and Construction
Section 1. Title of the rules ............................................ 434
Section 2. Liberal construction ...................................... 434
Section 3. Applicability of the rules of court ................. 435
Rule 2 The Court, its Organization
and Functions
Section 1. Composition of the Court .............................. 435
Section 2. Exercise of powers and functions ................. 435
Section 3. Court en banc; quorum and voting .............. 435
Section 4. The court divisions; quorum and voting ...... 436
xxiv

Section 5. Hearings ........................................................ 436

Section 6. Disqualification of justices ........................... 436
Section 7. Motion to inhibit a justice............................. 437
Rule 3 Place of Office, Seal
and Office Hours
Section 1. Place of office ................................................. 438
Section 2. Court seal ...................................................... 438
Section 3. Seal, where affixed ........................................ 439
Section 4. Office hours ................................................... 439
Rule 4 Jurisdiction of the Court
Section 1. Jurisdiction of the court ............................... 439
Section 2. Cases within the jurisdiction of the Court

en banc ................................................. 439
Section 3. Cases within the jurisdiction of the Court

in Divisions .......................................... 441
Rule 5 Form and Style of Papers
Section 1. Style ......................................................... 446
Section 2. Size and specifications .................................. 446
Section 3. Citations ........................................................ 446
Section 4. Number of copies ........................................... 446
Section 5. Clear and legible copies ................................ 447
Rule 6 Pleadings Filed with the Court
Section 1. Complaint; contents ...................................... 447
Section 2. Petition for review; contents ........................ 447
Section 3. Payment of docket fees ................................. 447
Section 4. Bill of particulars .......................................... 448
Section 5. Answer ......................................................... 449
Section 6. Entry of appearance ..................................... 450
xxv

Rule 7 Procedure in the Court of

Tax Appeals
Section 1. Applicability of the Rules of the Court

of Appeals, exception .......................... 451
Rule 8 Procedure in Civil Cases
Section 1. Review of cases in the court en banc ........... 451
Section 2. Review of cases in the court in division ....... 451
Section 3. Who may appeal; period to file petition ....... 452
Section 4. Where to appeal; mode of appeal ................. 453
Rule 9 Procedure in Criminal Cases
Section 1. Review of cases in the court ......................... 454
Section 2. Institution of criminal actions ...................... 454
Section 3. Prosecution of criminal actions .................... 455
Section 4. Warrant of arrest .......................................... 455
Section 5. When search warrant may issue .................. 455
Section 6. Bail, how amount fixed; approval ................ 456
Section 7. Conditions of the bail .................................... 456
Section 8. Release order ................................................. 456
Section 9. Appeal; period to appeal ............................... 456
Section 10. Solicitor general as counsel for the

people and government officials

sued in their official capacity .............. 457
Section 11. Inclusion of civil action in criminal
action ................................................... 458
Rule 10 Suspension of Collection Tax
Section 1. No suspension of collection of tax, except

as herein prescribed ............................ 458
Section 2. Who may file .................................................. 458
Section 3. When to file .................................................. 459
xxvi

Section 4. Contents and attachments

of the motion ........................................ 459
Section 5. Opposition ..................................................... 459
Section 6. Hearing of the motion ................................... 459
Section 7. Corporate surety bonds ................................ 460
Rule 11 Pre-Trial
Section 1. Applicability .................................................. 460
Section 2. Mandatory pre-trial ...................................... 461
Section 3. Setting for an earlier date ............................ 461
Section 4. Duty of the court ........................................... 461
Section 5. Procedure in civil cases ................................ 461
Section 6. Procedure in Criminal Cases ....................... 462
Rule 12 Trial
Section 1. Procedure ...................................................... 465
Section 2. Power of the court to receive evidence ......... 465
Section 3. Taking of evidence by a justice .................... 466
Section 4. Taking of evidence by court official .............. 466
Section 5. Presentation of voluminous documents

or long accounts ................................... 467
Rule 13 Trial by Commissioner
Section 1. Appointment of independent Certified

Public Accountant (CPA) .................... 468
Section 2. Duties of independent CPA .......................... 469
Section 3. Findings of independent CPA ...................... 469
Section 4. Other referral to commissioner .................... 470
Section 5. Compensation of commissioner .................... 470
Rule 14 Judgment, its Entry
and Execution
Section 1. Rendition of judgment .................................. 470
xxvii

Section 2. Form of decision ............................................ 471

Section 3. Amended decision ......................................... 472
Section 4. Resolution ...................................................... 472
Section 5. Promulgation and notice of decision and
resolution ............................................. 472
Section 6. Entry of judgment and final resolution ....... 473
Section 7. Execution of judgment .................................. 474
Rule 15 Motion for Reconsideration
or New Trial
Section 1. Who may and when to file motion ................ 474
Section 2. Opposition ..................................................... 474
Section 3. Hearing of the motion ................................... 475
Section 4. Effect of filing the motion ............................. 475
Section 5. Grounds of motion for new trial ................... 475
Section 6. Contents of motion for reconsideration or

new trial and notice ............................ 476
Section 7. No second motion for reconsideration or

for new trial ......................................... 477
Section 8. Ruling ......................................................... 477
Rule 16 Appeal
Section 1. Appeal to Supreme Court by petition for

review on certiorari ............................. 477
Section 2. Effect of appeal ............................................. 477
Rule 17 Legal Fees and Costs
Section 1. Additional fees and costs .............................. 477
Rule 18 Effectivity
Section 1. Effectivity of the Revised Rules ................... 478

xxviii

Appendix C
Republic Act No. 9335
Section 1. Short Title ..................................................... 479
Section 2. Declaration of Policy ..................................... 479
Section 3. Coverage ........................................................ 479
Section 4. Rewards and Incentives Fund ..................... 480
Section 5. Incentives to District Collection Offices ...... 481
Section 6. Revenue Performance Evaluation Board .... 482
Section 7. Powers and Functions of the Board ............. 482
Section 8. Liability of Officials, Examiners and

Employees of the BIR and the BOC ... 484
Section 9. Right to Appeal ............................................. 484
Section 10. Performance Report .................................... 485
Section 11. Rules and Regulations ................................ 485
Section 12. Joint Congressional Oversight Committee . 485
Section 13. Separability Clause .................................... 486
Section 14. Repealing Clause ........................................ 486
Section 15. Effectivity..................................................... 486
APPENDIX D
Republic Act No. 9480
Section 1. Coverage ........................................................ 487
Section 2. Availment of the Amnesty ............................ 487
Section 3. What to Declare in the SALN ...................... 488
Section 4. Presumption of Correctness of the SALN..... 488
Section 5. Grant of Tax Amnesty .................................. 489
Section 6. Immunities and Privileges ........................... 490
Section 7. When and Where to File and Pay................. 492
Section 8. Exceptions...................................................... 492
Section 9. Unlawful Divulgence of Tax Amnesty

Return and Statement of Assets,

Liabilities and Networth........................ 493
Section 10. Penalties....................................................... 494
xxix

Section 11. Moratorium on the Grant of Tax

Amnesty.................................................. 495
Section 12. Information Management Program ........... 495
Section 13. Disposition of Proceeds from the

Tax Amnesty .......................................... 495
Section 14. Publication of List of Taxpayers

and Filers................................................ 496
Section 15. Implementing Rules and Regulations........ 496
Section 16. Effectivity..................................................... 496
APPENDIX E
Revenue Regulations No. 10-2008
Revenue Regulations No. 10-2008................................. 497

(Implementing Pertinent Provisions

of R.A. No. 9504)

xxx

THE
NATIONAL INTERNAL
REVENUE CODE
OF THE PHILIPPINES
(Pres. Decree No. 1158 as amended
up to R.A. No. 9504*)
TITLE I

ORGANIZATION AND FUNCTION

OF THE BUREAU OF INTERNAL
REVENUE
SECTION 1. Title of the Code. This Code
shall be known as the National Internal Revenue Code
of 1997.
SEC. 2. Powers and Duties of the Bureau
of Internal Revenue. The Bureau of Internal
Revenue shall be under the supervision and control of
the Department of Finance and its powers and duties
shall comprehend the assessment and collection of all
*An Act Amending Sections 22, 24, 34, 35, 51 and 79 of
the National Internal Revenue Code of 1997. Also incorporated
in this edition are Republic Act Nos. 9224, 9238, 9243, 9294,
9337 and 9503.
1

THE NATIONAL INTERNAL REVENUE CODE

Secs. 3-4

national internal revenue taxes, fees, and charges, and

!"#$#%&'()#*#%!$'&$+,,$&'(&#-!.(#/0$1#%+,!-#/0$+%2$3%#/$
connected therewith, including the execution of judgments in all cases decided in its favor by the Court of
Tax Appeals and the ordinary courts. The Bureau shall
give effect to and administer the supervisory and police
powers conferred to it by this Code or other laws. (a)1
SEC. 3. !"#$%&'%()#*+,&-%&."$&/01$*0&-%&23ternal Revenue. The Bureau of Internal Revenue
shall have a chief to be known as Commissioner of
Internal Revenue, hereinafter referred to as the Commissioner and four (4) assistant chiefs to be known as
Deputy Commissioners. (a)
SEC. 4. Power of the Commissioner to
Interpret Tax Laws and to Decide Tax Cases.
The power to interpret the provisions of this Code
and other tax laws shall be under the exclusive and
original jurisdiction of the Commissioner, subject to
review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters
arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is
vested in the Commissioner, subject to the exclusive
appellate jurisdiction of the Court of Tax Appeals.
(n)2
As amended by R.A. No. 8424 otherwise known as The
Tax Reform Act of 1997.
2
New provision introduced by R.A. No. 8424.
1

Sec. 5

TITLE I ORGANIZATION AND FUNCTION

OF THE BUREAU OF INTERNAL REVENUE

SEC. 5. Power of the Commissioner to Obtain Information, and to Summon/Examine, and

Take Testimony of Persons. In ascertaining the
correctness of any return, or in making a return when
none has been made, or in determining the liability of
any person for any internal revenue tax, or in collecting
any such liability, or in evaluating tax compliance, the
Commissioner is authorized:
(A) To examine any book, paper, record, or
other data which may be relevant or material to such
inquiry;
(B) To obtain on a regular basis from any person
other than the person whose internal revenue tax
liability is subject to audit or investigation, or from any
'&3)#$'($'&3)#($'&$!"#$%+!-'%+,$+%2$,')+,$4'5#(%*#%!/0$
government agencies and instrumentalities, including
the Bangko Sentral ng Pilipinas and governmentowned or -controlled corporations, any information such
as, but not limited to, costs and volume of production,
receipts or sales and gross incomes of taxpayers,
+%2$ !"#$ %+*#/0$ +22(#//#/0$ +%2$ 3%+%)-+,$ /!+!#*#%!/$
of corporations, mutual fund companies, insurance
companies, regional operating headquarters of
multinational companies, joint accounts, associations,
joint ventures or consortia and registered partnerships,
and their members;
(C) To summon the person liable for tax or
(#6.-(#2$!'$3,#$+$(#!.(%0$'($+%7$'&3)#($'($#*1,'7##$'&$
such person, or any person having possession, custody,
or care of the books of accounts and other accounting
records containing entries relating to the business of