New Section Numbers of the National Internal Revenue Code of 1977

August 16, 1977 REVENUE MEMORANDUM CIRCULAR NO. 27-77 SUBJECT : New Section Numbers of the National Internal Revenue Code of 1977 TO : All Internal Revenue Officers and others concerned Pending the release by the Government Printing Office of the printed official copies of the National Internal Revenue Code of 1977 and in order to guide the officials and employees of the Bureau of Internal Revenue, as well as the public, there is promulgated hereunder the titles of the sections of the National Internal Revenue Code of 1977, showing the section number in the old Code and the corresponding section number in the new Code. In preparing correspondence to taxpayers and others concerned where the National Internal Revenue Code is to be cited, the new section number contained in the attached issuance should be cited as well as the corresponding section number in the old code. All those concerned are hereby enjoined to be guided accordingly. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8 ANNEX INTERNAL REVENUE CODE OF 1977 NEW RESECTIONING TITLE SECTION NO. OLD NEW 1 1 Title of Code TITLE I. ORGANIZATION OF BUREAU 2 2 Chief Officials of Bureau of Internal Revenue 3 3 Powers and Duties of Bureau 4 4 Specific Provisions to be Contained in Regulations 5 5 Forms, Certificates, and Appliances Supplied by the Commissioner of Internal Revenue 6 6 Agents and Deputies for Collection of National Internal Revenue 7 Repealed 7-A 7 Power of Commissioner of Internal Revenue to Obtain Information on Potential Taxpayers 8 8 Internal Revenue Districts 8-A 9 Revenue Regional Director 9 10 Duties of Revenue District Officers and other Internal Revenue Officers 10 11 Authority of Revenue Examiners 11 12 Assignment of Internal Revenue Officers 12 13 Assignment of Internal Revenue Officers and other Employees to other Duties 13 14 Reports of Violations of Law 14 15 Authority of Internal Revenue Officers to Make Arrests and Seizures 15 16 Power of Commissioner of Internal Revenue to Make Assessments 16 17 Authority of Officers to Administer Oaths and Take Testimony 17 18 Contents of Commissioner's Annual Report 18 19 Sources of Revenue 19 Repealed 20 Repealed TITLE II INCOME TAX CHAPTER I Definitions 84 20 Definitions CHAPTER II Tax on Individuals 21 21 Rates of tax on citizens or residents 22 22 Tax on nonresident alien individuals 23 23 Amount of personal exemptions allowable to individuals CHAPTER III Tax on Corporations 24 24 Rates of tax on corporations 25 25 Additional tax on corporations improperly accumulating profits or surplus 26 26 Tax liability of members of general professional partnerships 27 27 Exemptions from tax on corporations CHAPTER IV Computation of Net Income 28 28 Meaning of net income 29 29 Gross income 30 30 Deductions from gross income 31 31 Items not deductible 32 32 Special provisions regarding income and deductions of insurance companies, whether domestic or foreign 33 33 Losses from wash sales of stock or securities 34 34 Capital gains and losses 35 35 Determination of gain or loss from the sale or other disposition of property 36 36 Inventories 37 37 Income from sources within the Philippines CHAPTER V Accounting Periods and Methods of Accounting 38 38 General rule 39 39 Period in which items of gross income included 40 40 Period for which deductions and credits taken 41 41 Change of accounting period 42 42 Final or adjustment returns for a period of less than twelve months 43 43 Installment basis 44 44 Allocation of income and deductions CHAPTER VI Returns and Payment of Tax 45 45 Individual returns 46 46 Corporation returns 47 47 Extension of time to file returns 48 48 Returns of receivers, trustees in bankruptcy, or assignees 49 49 Returns of general professional partnerships 50 50 Verification of returns 51 51 Payment and assessment of income tax 52 52 Receipts for payments made 53 53 Withholding of tax at source 54 54 Returns and payment of taxes withheld at source 55 55 Tax on profits collectible from owner or other persons CHAPTER VII Estates and Trusts 56 56 Imposition of tax 57 57 Net income 58 58 Exemption allowed to estates and trusts 59 59 Revocable trusts 60 60 Income for benefit of grantor 61 61 Fiduciary returns 62 62 Fiduciaries indemnified against claims for taxes paid CHAPTER VIII Personal Holding Companies 63 63 Tax on personal holding companies 64 64 Definition of personal holding company 65 65 Personal holding company income 66 66 Stock ownership 67 67 Definition of foreign personal holding company 68 68 Gross income and stock ownership requirements of foreign personal holding companies 69 69 Corporation income taxed to Philippine shareholders 70 70 Information returns by officers and directors 71 71 Information returns by shareholders CHAPTER IX Administrative Provisions 72 72 Surcharge for failure to render returns and for rendering false and fraudulent returns 73 73 Penalty for failure to file returns or to pay tax 74 74 Penalty imposed on corporation which refuse or neglect to make a return 75 75 Return of information by corporation; penalty for failure to keep records of stockholders or dividends paid 76 76 Collection of foreign items 77 77 Information at source as to payments of one thousand eight hundred pesos or more 78 78 Return of corporation contemplating dissolution 79 79 Return of information of brokers 80 80 Returns as to formation, etc., of foreign corporations 81 81 Disposition of income tax returns; publication of lists of persons filing returns and paying taxes 82 82 Suit to recover tax based on false or fraudulent returns 83 83 Distribution of dividends or assets by corporation CHAPTER X Corporate Income Tax Withholding Art. 1 84 Requirements of declaration Art. 2 85 Time for filing declaration and paying estimated income tax Art. 3 86 Place of filing declaration and paying estimated income tax Art. 4 87 Filing of adjustment returns and final payment of income tax Art. 5 88 Civil penalties Art. 6 89 Declaration under penalties of perjury CHAPTER XI Withholding on Wages Art. 1 90 Definitions Art. 2 91 Income tax collected at source Art. 3 92 Liability for tax Art. 4 93 Return and payment to the Government of taxes withheld Art. 5 94 Return and payment in case of Government employees Art. 6 95 Statements and returns Art. 7 96 Surcharges for failure to render returns and for rendering false or fraudulent returns; delinquency in payment of taxes Art. 8 97 Penalties Art. 9 98 Verification of returns, etc. **Supplement B. A System of Corporate Income Tax Withholding (P.D. No. 30) **Supplement A. Withholding on Wages TITLE III ESTATE AND DONOR'S TAXES CHAPTER I Estate Tax 85 99 Rates of estate tax 86 Repealed by P.D. 69 87 Repealed by P.D. 69 88 100 Gross estate 89 101 Net estate 90 102 Exemption of certain acquisitions and transmissions 91 103 Determination of value of the estate 92 104 Notice of death to be filed 93 105 Returns 94 106 Where no return, or a false or fraudulent returns filed 95 107 Payment of tax 96 108 Examination of return and determination of tax 97 109 Discharge of executor or administrator from personal liability 98 110 Definition of deficiency 99 111 Interest on extended payment 100 112 Interest on deficiency 101 113 Additions to the tax in case of nonpayment 102 114 Ad valorem penalties 103 115 Payment before delivery by executor or administrator 104 116 Duties of certain officers and debtors 105 117 Restitution of tax upon satisfaction of outstanding obligations 106 118 Payment of tax antecedent to the transfer of shares, bonds, or rights 107 119 Specific penalties CHAPTER II (Gift) Donor's Tax 108 120 Imposition of tax 109 121 Rates of tax payable by donor 110 Repealed by P.D. 69 111 122 Transfer for less than adequate and full consideration 112 123 Exemption of certain gifts 113 124 Valuation of gifts made in property 114 Repealed by P.D. 69 115 125 Returns 116 126 Payment of tax 117 127 Examination of return and determination of tax 118 128 Interest on extended payments 118-A 129 Interest on deficiency 119 130 Additions to the tax in case of nonpayment 120 131 Ad valorem penalties 121 132 Specific penalties 122 133 Definitions TITLE IV SPECIFIC TAXES CHAPTER I Articles subject to Specific Tax 123 134 Articles subject to specific tax 124 135 Payment of specific tax on domestic products 125 136 Payment of specific tax on imported articles 126 137 Mode of computing contents of cask or package 127 138 Tax on preparations containing distilled spirits as chief ingredient 128 139 Exemption in favor of domestic denatured alcohol 128-A 140 Denaturation, withdrawal and use of denatured alcohol 129 141 Removal of spirits or cigars under bond 130 142 Removal of fermented liquors to bonded warehouse 131 143 Removal of damaged liquor free of tax 132 144 Removal of tobacco products without prepayment of tax 133 145 Specific tax on distilled spirits 134 146 Specific tax on wines 135 147 Specific tax on fermented liquors 136 148 Specific tax on tobacco products 137 149 Specific tax on cigars and cigarettes 137-A 150 Definitions of terms 138 151 Specific tax on matches 139 Repealed Specific tax on mechanical lighters 140 152 Specific tax on fireworks 141 Repealed Specific tax on skimmed milk 142 153 Specific tax on manufactured oil and other fuels 143 154 Specific tax on coal 144 155 Specific tax on bunker fuel oil 145 156 Specific tax on diesel fuel oil 146 157 Specific tax on cinematographic films 147 Repealed Specific tax on playing cards 148 158 Specific tax on saccharine CHAPTER II Administrative provisions regulating business of persons dealing in articles subject to specific tax 149 159 Extent of supervision over establishments producing taxable output 150 160 Records to be kept by manufacturers-Assessment based thereon 151 161 Premises subject to approval by Commissioner 151-A 162 Manufacturers to provide themselves with counting or metering devices to determine production 152 163 Labels and form of packages 153 164 Removal of articles after payment of tax 154 165 Storage of goods in internal-revenue bonded warehouse 155 166 Proof of exportation 156 167 Manufacturers' and importers' bond 157 168 Records to be kept by wholesale dealers 158 169 Records to be kept by dealers in leaf tobacco 159 170 Preservation of invoices and stamps 160 171 Information to be given by manufacturers, importers, indentors, and wholesalers of any apparatus or mechanical contrivance specially for the manufacture of articles subject to specific tax . . . sellers of cigarettes paper in bobbins, cigarette tipping paper or cigarette filter tips 161 172 Establishment of distillery warehouse 162 173 Custody of distillery or distillery warehouse 163 174 Limitation on quantity of spirits removed from warehouse 164 175 Denaturing within premises 165 176 Recovery of alcohol for use in arts and industries 166 177 Requirements governing rectification and compounding of liquors 167 178 Authority of internal-revenue officer in searching for taxable articles 168 179 Detention of package containing taxable articles 169 Deleted Inscription to be placed on skimmed milk CHAPTER III Penal Provisions 170 180 Unlawful practices relative of payment of specific taxes 171 181 Unlawful use of denatured alcohol 172 182 Forfeiture of goods illegally stored or removed 173 183 Forfeiture of property used in unlicensed business, or dies used for printing false stamps, etc. 174 184 Unlawful possession or removal of articles subject to specific tax without payment of tax 175 185 Punishment for subsequent offenses 176 186 Shipment of liquor or tobacco under false name or brand 177 Repealed Illegal sale of skimmed milk TITLE V TAXES ON BUSINESS CHAPTER I Definitions 194 187 Words and Phrases defined CHAPTER II Tax on Business 178 188 Payment of privilege taxes 179 189 Legality of business as affected by payment of tax 180 190 Time for payment of fixed taxes 180-A 191 Interest on delinquency 181 Repealed Reckoning of tax for business first begun or abandoned year 182 192 Fixed taxes 183 193 Payment of percentage taxes 184 194 Percentage tax on sales of jewelry, toilet preparation and others 184-A 195 Percentage tax on sales of automobiles 185 196 Percentage tax on sales of sporting goods, and others 185-A 197 Percentage tax on sales of refrigerators, air-conditioners, beverage coolers, ice cream cabinets and others 185-B 198 Percentage tax on sales of phonographs, combination radio and phonograph sets of all types, television sets, combination radio and television sets, combination radio-phonograph-television sets, gramophones and similar articles 186 199 Percentage tax on sales of other articles 186-A 200 Whenever a tax-free product is utilized in the manufacture or production of any article, in the determination of the value of such finished article, the value of such tax-free product shall be deducted 186-B 201 Percentage tax on sales of processed meat, milk and vegetables, fish and other sea foods, wheat flour and feeds 187 Repealed Percentage tax on consignments abroad 188 202 Transactions and persons not subject to percentage tax 189 203 Percentage tax upon proprietors or operators of rope factories, sugar central and mills, coconut oil mills, cassava mills, and desiccated coconut factories 190 204 Compensating tax 191 205 Contractors, proprietors or operators of dockyards, and others 191-A 206 Caterers 192 207 Percentage tax on carriers and keepers of garages 193 Repealed Amount of tax on business 194 (187) (Words and phrases defined) 195 208 Percentage tax on stock, real estate, commercial, customs and immigration brokers and cinematographic film owners, lessors, or distributors 195-A 209 Percentage tax on dealers in securities; lending investors 195-B 210 Percentage tax on stock transactions 196 Repealed Reduction of tax on race tracks 197 211 Privilege secured by payment of tax 198 212 Continuation of business of deceased person 199 213 Removal of business to other location 200 214 Revocation of privilege 201 Repealed 202 Repealed CHAPTER III Administrative Provisions 203 215 Registration of name or style with the revenue district officer or collection agent 204 216 Persons subject to tax, to issue sales invoices or receipts 205 217 Sign to be exhibited by distiller, rectifier, compounder, repacker, and wholesale liquor dealer 206 218 Sign to be exhibited by manufacturer of products of tobacco 207 219 Exhibition of certificate of payment at place of business CHAPTER IV Penal Provisions especially applicable to Business 208 220 Unlawful pursuit of business 209 221 Failure to make return of receipts, sales receipts; or gross value of output removed, or pay the tax due thereon TITLE VI DOCUMENTARY STAMP TAXES 210 222 Stamp taxes upon documents, instruments, and papers 211 223 Stamp tax on bonds, debentures, and certificates of indebtedness 212 224 Stamp tax on original issue of certificates of stock 213 225 Stamp tax on sales, agreements to sell, memoranda of sales, deliveries or transfer of bonds, due-bills, certificates of obligation, or shares or certificates of stock 214 226 Stamp tax on bonds, debentures, certificates of stock or indebtedness issued in foreign countries 215 227 Stamp tax on certificates of profits or interest in property or accumulations 216 228 Stamp tax on bank checks, drafts, certificates of deposit not bearing interest, and other instruments 217 229 Stamp tax on negotiable promissory notes, bills of exchange, drafts, certificates of deposit bearing interest and others not payable on sight or demand 218 230 Stamp tax upon acceptance of bill of exchange and others 219 231 Stamp tax on foreign bills of exchange and letters of credit aisa dc 220 232 Stamp tax on life insurance policies 221 233 Stamp tax on policies of insurance upon property 222 234 Stamp tax on fidelity bonds and other insurance policies 223 235 Stamp tax on policies of annuities 224 236 Stamp tax on indemnity bonds 225 237 Stamp tax on certificates 226 238 Stamp tax on warehouse, motel and hotel receipts; and others 226-A 239 Stamp tax on Jai-Alai or horse race tickets 227 240 Stamp tax on bills of lading or receipts 228 Repealed 229 241 Stamp tax on proxies 231 242 Stamp tax on powers of attorney 231 243 Stamp tax on losses and other hiring 232 244 Stamp tax on mortgages, pledges, and deeds of trust 233 245 Stamp tax on deeds of sale and conveyances of real property 234 246 Stamp tax on charter parties and similar instruments 235 247 Stamp tax on assignments and renewals of certain instruments 236 248 Documents and papers not subject to stamp tax 237 249 Payment of documentary stamp tax - Cancellation of stamp 238 250 Effect of failure to stamp taxable documents 239 251 Failure to affix or cancel documentary stamps 240 252 Falsification, or counterfeiting, restoration, or alteration of documentary stamps; possession or use of false, counterfeit, restored, or altered stamps TITLE VII MINING TAXES 241 253 Occupation fee 242 254 Rentals and royalties on mineral lands under lease 243 255 Ad valorem taxes on output of mineral lands not covered by lease 244 Repealed 245 256 Time and manner of payment of royalties or ad valorem taxes 246 257 Definitions of the terms "gross output," "mineral" and mineral products 247 258 Deductions from royalties payable by persons removing minerals from private lands 248 259 Specific penalties TITLE VIII MISCELLANEOUS TAXES CHAPTER I Tax on Banks 249 260 Tax on Banks 249-A 261 Tax on Finance Companies 250 262 Times for payment of tax. Increase of tax in case of delinquency 251 Repealed 252 Repealed 253 Repealed 254 Repealed CHAPTER II Taxes on Receipts of Insurance Companies 255 263 Taxes on insurance premium 256 264 Time for payment of tax 257 265 Yearly report from insurance company 258 266 Tax due from agents of foreign insurance companies CHAPTER III Franchise Tax 259 267 Tax on franchises CHAPTER IV Amusement Taxes 260 268 Amusement taxes 260-A 269 Tax on winning 260-B Repealed 260-C Repealed 261 Repealed CHAPTER V Charges on Forest Projects 262 270 Measuring of forest products and invoicing and collection of charges thereon 263 271 Mode of measuring timber 264 272 Charges on timber cut in public forests 265 273 Charges on firewood cut in public forests 266 274 Charges collectible on forest products cut, gathered and removed from unregistered private lands 267 275 Surcharges for illegal cutting and removal of forest products or for delinquency 268 276 Charges on timber cut for use on mining claim 269 277 Charges on gums, resins, and other forest products 270 278 Charges on stone, earth, salt, and guano taken from lands under the jurisdiction of the Bureau of Forest Development 271 279 No charges on products lawfully removed under gratuitous license 272 280 Gratuitous licenses subject to regulations of Department of Finance 273 281 Time for payment of forest charges CHAPTER VI Fees for Sealing Weights and Measures Sections 274 to 289. Repealed or superseded by the Local Tax Code. CHAPTER VI Firearms Tax 290 282 Definition of terms 291 283 License fees of dealers in firearms ammunition and explosives 292 284 Firearms license fees 293 285 Hunting permits 294 286 Collection and disposition of fees 295 287 Penal Provision CHAPTER VII Radio Fees. Previously repealed 296 Previously repealed 297 Previously repealed 298 Previously repealed 299 Previously repealed 300 Previously repealed 301 Previously repealed CHAPTER VII Tobacco Inspection Fees 302 288 Inspection fee CHAPTER X Water Rentals. Sections 303 and 304 were transferred to the local governments under the Local Tax Code. (Presidential Decree No. 231, as amended . CHAPTER VIII Water Rentals 303 289 Water rentals 304 290 When rentals shall be paid TITLE IX GENERAL ADMINISTRATIVE PROVISIONS CHAPTER I Remedies in General 305 291 Injunction not available to restrain collection of tax 306 292 Recovery of tax erroneously or illegally collected 307 293 Action to contest forfeiture of chattel 308 294 Form and mode of proceeding in actions arising under this Code 309 295 Authority of the Commissioner to make compromises and to refund taxes 310 296 Satisfaction of judgment recovered against any internal revenue officer 311 297 Remedy for enforcement of statutory penal provisions 312 298 Remedy for enforcement of forfeiture 313 299 When property to be sold or destroyed 314 300 Disposition of funds recovered in legal proceedings or obtained from forfeitures CHAPTER II Civil Remedies for Collection of Taxes 315 301 Nature and extent of tax lien 316 302 Civil remedies for the collection of delinquent taxes 317 303 Constructive distraint of the property of a taxpayer 318 304 Distraint of personal property 319 305 Mode of procedure 320 306 Sale of property distraint and disposition of proceeds 321 307 Release of distrained property upon payment prior to sale 322 308 Report of sale to Bureau of Internal Revenue 323 309 Purchase by Government at sale upon distraint 324 310 Levy on real estate 324-A 311 Penalty for failure to issue and execute warrant 325 312 Advertisement and sale 326 313 Redemption of property sold 327 314 Final deed to purchaser 328 315 Forfeiture to Government for want of bidder 329 316 Resale of real estate taken for taxes 330 317 Further distraint or levy 331 318 Period of limitation upon assessment and collection 332 319 Exceptions as to period of limitation of assessment and collection of taxes 333 320 Suspension of running of statute CHAPTER III Keeping of Books of Accounts and Records 334 321 Corporations, companies, partnerships, or persons required to keep books of accounts 335 322 Subsidiary books 336 323 Language in which books are to be kept; translations 337 324 Preservation of books of accounts, and other accounting records 337-A 325 Supplying of taxpayer account number CHAPTER IV Rules and Regulations 338 326 Authority of Secretary of Finance to promulgate rules and regulations 338-A 327 Non-retroactivity of rulings TITLE X MISCELLANEOUS ADMINISTRATIVE PROVISIONS 339 Repealed Words and phrases defined 340 Repealed Lawful possession and uses of prohibited drugs specified 341 Repealed Imposition of opium. Storage of same 342 Repealed Record to be kept by physicians, pharmacists, dentists, and veterinarians. Inspection of same 343 328 Certificates of tax clearance to be secured by persons leaving the Philippines 344 329 Passage ticket to be issued only to persons exhibiting certificates of tax clearance TITLE XI GENERAL PENAL PROVISIONS 345 330 Statutory offenses of officials and employees 346 331 Reward to persons instrumental in the discovery and seizure of smuggled goods 347 332 Unlawful divulgence of trade secrets 348 333 Unlawful interest of revenue officers in business 349 334 Procuring unlawful divulgence of trade secrets 350 335 Penalty for selling, transferring, encumbering, or in any way disposing of property placed under constructive distraint 351 336 Failure to surrender property placed under distraint and levy 352 337 Violation of other provisions of this Code or regulations in general 352-A 338 Confiscation and forfeiture of the proceeds or instruments of crime 353 339 Subsidiary penalty 354 340 Prescription for violations of any provision of this Code 355 341 Making false entries; failure to keep required books, etc. 356 Repealed Failure to keep pharmacist's record and to exercise diligence in keeping prohibited drugs TITLE XII ALLOTMENT OF INTERNAL REVENUE CHAPTER I Special Disposition of Certain National Internal Revenue Taxes 357 Repealed Disposition of fees for sealing weights and measures 358 Repealed Disposition of proceeds of certain taxes 342 Disposition of proceeds of insurance premium tax 343 Granting provinces, cities and municipalities shares 359 344 Disposition of proceeds of taxes on franchises 360 345 Disposition of proceeds of income, estate and donor's taxes 361 Repealed Disposition of proceeds on motor fuel CHAPTER II Disposition and Allotment of National Internal Revenue in General 362 346 Disposition of national internal revenue in general 363 Repealed Allotment of national internal revenue for special purposes 364 Repealed Apportionment of provincial allotment 365 Repealed Apportionment and use of municipal allotment 347 Allotment for the Commission on Audit CHAPTER III Miscellaneous Provisions 366 Repealed Status of cities, municipal districts, and other local government divisions 367 Repealed Apportionment to be based upon census population 368 Repealed Payment of allotments TITLE XIII REPEALING PROVISIONS 369 348 Laws repealed TITLE XIV FINAL PROVISIONS 370 349 Separability clause 371 350 Effectivity date