1904 Internal Revenue Law of the Philippines

Rules, stamps, cedulas, and accounting

Section 5 authorizes the Collector of Internal Revenue to prepare and distribute regulations, directions, and instructions for assessment and collection that do not conflict with the Act, and to provide necessary forms and implements.
Section 5 authorizes the Collector to distribute adhesive stamps and dies to express and denote stamp taxes (and for ad valorem taxes, the amount), subject to approval by the Secretary of Finance and Justice.
Section 5 provides that approved regulations, directions, and instructions have the force and effect of law until revoked or amended.
Section 6 requires necessary adhesive stamps and blank cedulas to be printed under the Treasurer of the Philippine Islands’ direction in designated designs and denominations determined by the Collector.
Section 6 makes the Treasurer of the Philippine Islands responsible for stamps and cedulas until disposed of under this Act.
Section 6 requires monthly reports by both the Insular Treasurer and the Collector to the Auditor on stamps and cedulas received and issued during the preceding month and those on hand at month-end.
Section 10 requires the provincial treasurer to make a monthly return to the Collector of Internal Revenue of all stamps sold and to account for tax amounts collected, with stamps issued charged at full face value.

Bonds, reporting, and custody of collections

Section 7 requires the Collector of Internal Revenue, before entering office, to execute a bond to the Insular Government in the sum of sixty thousand pesos with sufficient sureties approved by and filed with the Insular Treasurer.
Section 7 conditions the Collector’s bond on faithful performance of duties and due accounting for stamps, cedulas, moneys, and other property coming into possession by virtue of office.
Section 7 authorizes the Insular Treasurer to require the bond to be increased or decreased based on exigencies of service.
Section 8 requires each provincial treasurer to transmit to the Insular Treasurer on or before the fifth day of each calendar month all money collected during the preceding month on account of internal revenues.
Section 8 prohibits any provincial treasurer from retaining money properly belonging to the Insular Treasury for paying salaries and expenses of the provincial treasurer’s office or for any other purpose.
Section 9 requires each provincial treasurer’s existing bond under the Provincial Government Act to stand as security for faithful internal-revenue collection and faithful accounting and turnover of public moneys.

Personnel: inspectors, revenue agents, storekeepers, gaugers

Section 11 authorizes the Collector of Internal Revenue, with consent of the Secretary of Finance and Justice, to employ inspectors and revenue agents at annual salaries not exceeding four thousand pesos each.
Section 11 authorizes assignment under the direction of internal-revenue officers or for special duties determined by the Collector, including reassignment of employees to perform inspector/revenue agent duties.
Section 12 requires inspectors and revenue agents to ensure faithful execution and compliance with internal-revenue laws and regulations and to aid in prevention, detection, and punishment of frauds.
Section 12 requires written reporting to the Collector of Internal Revenue of any neglect of duty, incompetency, delinquency, or malfeasance, with facts and supporting evidence.
Section 12 authorizes inspectors and revenue agents to suspend from duty any gauger or storekeeper by written notice, and to notify the proper provincial treasurer and the Collector with a written report stating action and reasons within three days thereafter.
Section 12 requires immediate reporting to the Collector of Internal Revenue and the Insular Treasurer of suspected neglect of duty, incompetency, delinquency, or malfeasance by a provincial treasurer, and requires the Collector to take necessary steps to protect revenue and transmit the report to the Secretary of Finance and Justice.
Section 12 provides that necessary traveling expenses of revenue agents and inspectors in public service are paid monthly from Insular funds.
Section 13 authorizes appointment of internal-revenue storekeepers, with compensation not to exceed ten pesos per day, subject to approval of the Secretary of Finance and Justice.
Section 14 requires storekeepers to take an oath and give a bond to the Insular Government with sufficient sureties approved by the Insular Treasurer.
Section 14 requires storekeepers to be assigned by the Collector to bonded or manufacturer warehouses established by law, and allows transfer from one warehouse to another by the Collector.
Section 15 authorizes appointment of internal-revenue gaugers by the Collector with consent of the Secretary of Finance and Justice, with oath and bond approved by and filed with the Insular Treasurer.
Section 15 provides that gauger duties are performed under supervision of the provincial treasurer or, where assigned, of a customs collector in charge of a port of entry.
Section 16 authorizes gauger fees determined by quantity gauged, with fees and actual necessary traveling expenses paid monthly from Insular funds.
Section 18 allows the Collector, with consent of the Secretary of Finance and Justice, to combine storekeeper and gauger duties in one officer where production or manufacture volume is insufficient for two officers, and provides that compensation is that of storekeeper only.

Official disclosures and officer misconduct penalties

Section 17 requires any internal-revenue officer whose compensation is wholly or partly from fees, allowances, or rewards to render to the Collector a statement under oath of all such fees, emoluments, or rewards received during the period covered by the statement, under regulations approved by the Secretary of Finance and Justice.
Section 17 deems any knowingly and willfully false statement to be willful perjury punishable as perjury.
Section 17 punishes neglect or omission to render the statement with a fine not exceeding one thousand pesos.
Section 19 requires provincial treasurers to report within ten days to the fiscal of the province facts supporting criminal prosecution or forfeiture, including offender and witnesses, and requires revenue agents and inspectors to make the same report to the provincial fiscal, with a duplicate forwarded to the Collector.
Section 19 requires the fiscal to institute and conduct prosecution when facts warrant it.
Section 20 authorizes provincial treasurers and authorized deputies and inspectors and revenue agents to summon witnesses, administer oaths, and take evidence under the law.
Section 20 authorizes issuance of a subpoena and enforcement of witness attendance in the manner provided in Chapter XVI of Act Numbered One hundred and ninety.
Section 21 authorizes any officer of internal revenue specially authorized by the Collector to seize property subject to seizure, limited by time, place, kind, and class specified in the authority.
Section 22 prohibits divulging trade secrets or other confidential information and penalizes violations with a fine not more than two thousand pesos and imprisonment of not less than one nor more than five years.
Section 23 prohibits internal-revenue officers from having an interest in specified industries and activities involving tobacco, cigars/snuff, fermented liquors, and distilled spirits; violations are punishable by a fine of not less than one thousand pesos nor more than ten thousand pesos, at the court’s discretion.
Section 24 imposes criminal penalties for extortion or willful oppression, unauthorized demands, receipt of unauthorized compensation, failure to give receipts, collusion to defraud revenues, willful creation of opportunities to defraud, intent to enable another to defraud, negligent or designed permission of law violations, false entries/certificates/returns, failure to report known violations or frauds, and demanding or accepting money or value to compromise or settle charges—unless expressly authorized by law.
Section 24 provides that these acts are punishable by a fine of not less than four hundred pesos and not more than ten thousand pesos, or imprisonment of not less than six months and not more than five years, or both, at the court’s discretion.
Section 24 requires splitting any fine imposed: one-half for the Insular Government and one-half for the informer, as ascertained and stated in the judgment.
Section 24 provides that provincial treasurers and their deputies and employees are deemed officers or agents acting under the authority of this Act.

Coverage of internal revenue sources and taxes

Section 25 provides that the listed revenue sources are included in internal revenue for the Philippine Islands, and taxes are collected by the Collector through provincial treasurers or authorized deputies, or as otherwise provided by law.
Section 25 requires internal revenue proceeds to support the several provinces and the Insular and municipal governments in the manner in this Act.
Section 25 enumerates the sources as: Certain license tax; Tax on distilled spirits; Tax on fermented liquors; Tax on manufactured tobacco and snuff; Tax on cigars and cigarettes; Tax on matches; Tax on banks and bankers; Stamp taxes on specified objects; Poll or cedula personal tax; Tax on insurance companies; Tax on forestry products; Tax on valid perfected mining concessions granted prior to April eleventh, eighteen hundred and ninety-nine; Tax on business, manufacture, and occupation.

Tax payment methods and manufacturers’ invoicing system

Section 26 requires provincial treasurers to inquire through every part of the province into persons liable to pay license tax and objects liable to tax, compile a list of such persons and enumerate objects in the manner and at the time provided or prescribed by regulations.
Section 27 requires taxes (except poll taxes) on specified manufacture/sale and on taxed instruments and written documents to be paid by affixture of internal-revenue stamps, which must be purchased, attached, and canceled as provided.
Section 28 requires taxes on specified articles removed from the place of production or bonded warehouse for sale or consumption in the Philippine Islands to be paid at the time of removal by affixing stamps to manufacturers’ official invoice sheets.
Section 28 requires initial assessment rolls in duplicate by each provincial treasurer: one kept for inspection and one transmitted to the Collector for filing in the Bureau of Internal Revenue.
Section 28 requires delivery of register and invoice books to qualified manufacturers, including stamping of assessment number and article paragraph/name on each page, authentication by Collector stamp or seal, and keeping books on factory premises for inspection.
Section 28 requires invoice entries to contain full description of taxable articles removed, date and hour of removal, consignee name and residence, and a signed certification by the owner/manager as to truth and completeness.
Section 28 requires the manufacturer to brand or permanently mark each package with the assessment number and the number of the next blank invoice sheet before removal.
Section 28 requires the manufacturer to fill, sign, detach, transmit the notification stub to the provincial treasurer, affix and cancel stamps without lapping, credit the register book, and produce invoice stubs and invoice proper with correct stamp-part retention.
Section 28 obliges the manufacturer, at delivery to the carrier, to inform the carrier that it must retain the stamped invoice continuously with the goods and then deliver it with the goods to the consignee.
Section 28 provides a bonded warehouse removal exception: goods may be removed to bonded warehouses (not exceeding one in each province) authorized by the Collector, with tax paid only when removed from those bonded warehouses; the Collector may issue rules and exact bonds to secure collection.
Section 28 provides an exception for removal to a sales warehouse of the manufacturer’s own: the invoice must accompany the goods and be delivered to the warehouse custodian instead of the carrier/bill of lading delivery requirement.
Section 28 requires the manufacturer’s register book “debit” and “credit” entries, including serial numbering of packages, day/hour entries of production, stamp purchase details, day/hour of removal entries, monthly transcription to the provincial treasurer, certification of transcripts’ truth and correctness, and monthly balancing with carryover.
Section 28 requires provincial treasurers and deputies to make entry in monthly itemized statements of stamps sold including manufacturer name and assessment number and stamp denominative value and serial number with date and hour of sale.

Export handling and warehouse/inspection rules

Section 28 requires goods removed for export under exemptions to be entered on invoices, stubs, and register books like other goods, but to be marked “For export” on invoice and stubs and noted in the register book.
Section 28 requires the invoice for export to be sent with the goods attached to the export bond provided for in this article, and requires branding/marking of assessment and invoice numbers on goods for export.
Section 28 requires additional branding/marking of each package with the words “For export.”
Section 28 allows the Collector to waive strict compliance where manufactory and warehouse are outside provincial capital in his discretion upon recommendation of the provincial treasurer or other revenue officer, subject to special rules and instructions and a bond from the manufacturer conditioned for faithful compliance.

License taxes: forms, coupons, and posting

Section 29 requires license taxes on articles sold and occupations to be paid by affixing internal-revenue stamps to license forms.
Section 29 requires license forms to be prepared and furnished by the Collector through provincial treasurers to dealers or persons liable to pay license taxes.
Section 29 requires each license form divided into four equal squares/spaces and printed with the quarters’ months and four requisition coupons marked for each quarter.
Section 29 requires the provincial treasurer or internal-revenue officer at delivery to fill the taxpayer’s name, residence, and assessment number and annual tax, and to date and sign; the officer must fill the amounts/denominative values of stamps in each coupon or pre-print/stamp the assessment and quarter tax before issue.
Section 29 requires the taxpayer to separate and transmit the quarter coupon on the first day of each quarter with necessary purchase money to procure stamps and affix them to the proper division of the license.
Section 29 requires licenses to be posted conspicuously in the taxpayer’s place of business.
Section 29 prohibits detaching coupons until the quarter represented becomes due, except that coupons may be detached in advance for paying two or more quarters at the same time.
Section 29 requires provincial treasurers to retain coupons received, endorse serial numbers and stamp values, make monthly sale entries, and transmit coupons at month-end to the Collector.
Section 29 requires license forms and coupons to be substantially the same as the sample forms appearing at the end of the article.

Wholesale records and invoice requirements

Section 30 requires wholesale dealers to keep a record of purchases and sales of articles subject to license tax and, when required, to furnish statements of each sale to wholesale or retail dealers including name and residence.
Section 30 requires dealers to preserve and deliver or transmit invoices received from manufacturers when required by internal-revenue officers, including fractional parts of stamps affixed to those invoices.
Section 30 prohibits dealers from receiving articles from manufacturers unless packages are properly branded/permanently marked as required and accompanied by properly made invoices with stamps sufficient to pay the tax on the articles.

Returns, collection documents, and filing

Section 31 requires collection and permanent filing in the Bureau of Internal Revenue of: dealer licenses with year-end stamp attachments, manufacturers’ invoices with stamped fractions, and exhausted manufacturers’ invoice books with stamped stubs.
Section 31 authorizes internal-revenue officers to gather up or transmit the documents in the manner and at times provided by regulation from the Collector of Internal Revenue.

Rules for percentage/documentary taxes and anti-fraud conduct

Section 32 requires taxes on a percentage basis of assessment to be paid in the manner prescribed by the Collector with the approval of the Secretary of Finance and Justice.
Section 32 requires documentary taxes to be paid by affixing and canceling stamps on the taxed documents’ execution, registration, or certification.
Section 33 penalizes willful disregard of provisions by manufacturers, dealers, persons subject to occupation tax, and carriers with intent to defraud insular revenues.
Section 33 provides that if fraud is actually perpetrated, persons are punished with penalties, fines, and forfeitures provided elsewhere for fraud.
Section 33 provides that if no actual fraud is consummated, the person attempting perpetration is fined not less than one hundred pesos nor more than two hundred pesos, at the court’s discretion.
Section 33 authorizes administrative fines for willful and inexcusable carelessness leading to opportunity for fraud, conduct hampering enforcement, or petty frauds/minor delinquencies by a non-prior offender, with fines not less than twenty pesos nor more than one hundred pesos, imposed by the Collector with approval of the Secretary of Finance and Justice.
Section 33 requires that administrative fines not paid upon demand can be enforced by proper action in court.

Bonds for manufacturers; transitional rules

Section 34 requires every manufacturer of articles covered by Articles V to IX to file a bond at original assessment and upon engaging in such enterprises after the Act’s effectivity.
Section 34 requires the bond amount to be approximately twenty per centum of estimated taxes payable during an average year on the manufacturer’s output.
Section 34 sets bond caps: not exceeding one hundred thousand pesos and not less than two hundred pesos.
Section 34 requires the bond to be conditioned for faithful compliance with the Act and regulations and for complete payment of all taxes lawfully accruing plus all fines and penalties imposed under the Act.
Section 35 imposes liability for taxes on certain articles manufactured before the Act’s effectivity that remain with manufacturers at that time, requiring payment of taxes under the same manner and regulations as articles manufactured after effectivity.

Tax timing, export proof, and cancellation of export bonds

Section 36 requires that taxes on distilled spirits, fermented liquors, imitation of wines, snuff, and specified tobacco and other taxed articles manufactured in the Philippines for domestic sale or consumption are paid at the time of removal from the manufactory or other bonded warehouse.
Section 36 prohibits collection of tax on portions removed for export and actually exported aboard an ocean-going ship that are not relanded in the Philippines.
Section 36 requires the Collector to issue rules and regulations requiring marks/labels on packages, bonds by owners, and furnishing bills of lading, certificates, and other evidence establishing actual export and non-sale/delivery for domestic consumption.
Section 36 requires cancellation of the bonds upon presentation of satisfactory proof to the Collector.

Valuation, currency, and inspection power

Section 37 requires valuations in internal-revenue returns or lists to be stated in Philippine currency, and deems all sums of money named in the Act as Philippine currency.
Section 38 authorizes internal-revenue officers to enter buildings or places where taxed articles or objects are made, produced, or kept, as necessary to examine them.
Section 38 penalizes refusal to admit or refusal to suffer examination, and forcible obstruction, with a fine not more than two thousand pesos, imprisonment not exceeding two years, or both, at the court’s discretion.

Tax liens and collection by levy, distraint, and sale

Section 39 makes each tax a lien in favor of the Insular Government superior to other charges/liens from when it becomes due until paid, attaching to property and rights to property used in the business relating to the assessed tax.
Section 39 defines “person” to include firms, associations, and corporations.
Section 40 authorizes the provincial treasurer, upon neglect or refusal to pay taxes and penalties due, to levy on all property on which the lien exists for nonpayment and for further sums sufficient for costs of levy, and makes distraint and levy cumulative to the remedy by action in court.
Section 41 requires, upon distraint, an inventory/account of distrained goods/effects/credits, a copy signed by the distraint officer left with the owner or possessor, and written notice of the demanded sum and time and place of sale.
Section 41 requires exhibition of notification in not less than two public places in the municipality, including posting at the office of the municipal president, stating time and place of sale and articles distrained.
Section 41 requires sale time not be less than ten days after notice to the owner or possessor and publication/posting.
Section 41 requires public auction sale for cash to the highest bidder.
Section 41 provides that payment before sale of tax, penalties, fees, and other charges restores distrained property to the owner.
Section 42 provides that sale proceeds after deducting sale expenses are applied to payment of tax and penalties due, with excess returned to the owner.
Section 42 prohibits returning spirits, tobacco products, or other forfeitable/illegally removed articles and any part of proceeds from their sale.
Section 43 authorizes the provincial treasurer to purchase distrained property for the Insular Government when the bid is less than the amount of tax or is very much less than actual market value, for the taxes, penalties, and costs due.
Section 43 requires resale under Collector of Internal Revenue regulations, with a distinct account of sale expenses transmitted to the Collector and proceeds paid into the Insular Treasury after lawful custody and sale charges.
Section 43 requires that abandoned, condemned, or forfeited articles not bringing a price equal to the tax due and payable must not be sold for consumption in the Philippines, and authorizes Collector ordering destruction by the custodian, with Collector regulations for records of destruction.
Section 44 provides that the certificate of sale is conclusive evidence of the officer’s right to make the sale and transfers the delinquent’s rights and privileges to the purchaser as if transferred/assigned by the delinquent.
Section 45 authorizes seizure and holding of real estate when goods/effects sufficient to pay tax are not found, using the manner prescribed for real-estate seizure and sale for delinquent taxes in the Municipal Code and amendments.
Section 46 requires continued seizure and sale of additional liable property until fully paid when earlier property is insufficient.
Section 47 requires the Collector of Internal Revenue to determine by general regulations fees and charges allowed in cases of distraint and seizure and whether an expense was necessary.
Section 48 requires Collector charge of real estate assigned, set off, or conveyed to Insular Government in payment of debts/taxes/penalties/costs, and with Secretary of Finance and Justice approval, authorizes sale at public auction with not less than twenty days’ notice, with proceeds deposited in Insular Treasury and accounting to Insular Auditor.
Section 49 requires officers collecting taxes to pay the gross amount received to the Insular Treasury without abatement for salary/compensation/claims, and to transmit a monthly certificate of payment signed by the Insular Treasurer stating depositor name and specific account.
Section 49 requires transmission of funds received within one calendar month to occur within the first five days of the succeeding month, with an extension permitted to provinces where compliance is impracticable, not exceeding one month.

Enforcement suits, approvals, and taxpayer remedies

Section 50 requires suits to enforce forfeiture or recover forfeited sums to be brought in the name of the Government of the Philippine Islands and conducted by the provincial fiscal or the Attorney-General.
Section 50 prohibits commencement of suits for recovery of taxes, fines, penalties, or forfeitures unless authorized and sanctioned by the Collector of Internal Revenue, who prescribes rules for revenue officers, provincial fiscals, and officials.
Section 50 requires that judgments and moneys recovered for taxes, costs, forfeitures, and penalties be paid to the provincial treasurer or deputies as taxes are required to be paid.
Section 51 authorizes the Collector, with regulations prescribed by the Secretary of Finance and Justice, to remit/remise/pay back taxes erroneously or illegally received and penalties imposed without authority, and to repay excessive or wrongfully collected taxes, plus reimburse damages and costs recovered against revenue officers sued for acts done in good faith—subject to conditions that refund occurs only after the Collector is notified of the pending action and is satisfied recovery was not due to undue negligence or willful oppression.
Section 52 prohibits maintaining court suits for recovery of any internal-revenue tax alleged excessive or collected without authority or wrongfully collected unless a protest is made at the time of payment or within ten days thereafter, and unless appeal to the Collector is made and the Collector’s decision is adverse.
Section 52 allows suit without the Collector’s decision if the decision is delayed for six months from the date of appeal.
Section 52 requires suits to be brought within two years after the cause of action accrued.
Section 52 forbids courts from granting injunctions restraining collection of taxes imposed under this Act.
Section 52 requires the taxpayer remedy where unjust assessment/taxation is claimed to be payment under protest followed by action to recover the sum claimed to have been illegally collected.
Section 53 authorizes the Collector, with approval of the Secretary of Finance and Justice, to compromise civil or other cases arising under the Act instead of commencing/prosecuting suit, and allows compromise of cases already begun with the Secretary’s consent.
Section 54 authorizes appeals by an aggrieved person from administrative imposition of fines or forfeiture to the Court of First Instance, which after due hearing may confirm, reverse, or modify and enforce judgment.
Section 54 requires appeals to be taken within ten days after notice of fine or forfeiture imposition, and requires certification of judgments to the Collector.
Section 55 penalizes making, selling, using false/counterfeit stamps or cedulas