TAXATION IN THE PHILIPPINES

The Beginning
Cedula Personal
Ancient Filipinos have already started paying of taxes. The purpose of paying taxes
was protection from their datus. The collection of taxes were called buwis Exept for
the chieftain households, everyone in the community was required to pay their taxes.

Non-payment of which was already punishable y those periods. The arrival of the
Spaniards introduced a modern concept of taxiation. The native Filipino aged 16-60
were compelled to pay tribute or tributa to the king of Spain through the colonial
government amounting to eight (8) reals or one (1) peso per year.
Other forms of payment came in like gold, copper, textile, rice, livestock and forced
labor called servicio y polo, but in 1884 the tributre was abolished and replaced by
the cedula, a certificate identifying the tax payer.
The tribute was a personal tax of the nature of a uniform poll tax and was the only
direct tax universally enforced. it was levied on the natives, including mestizos
Spaniard resident in the island were exempt. The rate, known as "one tribute," was
originally 8 silver reals for each family, but this was early raised to 10 reales fuertes
or their equivalent, 25 reales de vellon, equal to 1/4 pesos. and subsequently to 12
reales fuertes, or 11/2 peso.
According to plehn in 1901 under the tribute, as expalines above, the firs-born sons of
the cabezas de barangay (former Datus) or “ person adopted as such “ were exempt
in paying the said tribute.
 Pre – Colonial Period(900 – 1521)

 Government were called “Barangays”

 No national government
 There was no “datu” strong enough to unite the archipelago into one nation. Some barangays however united to form a confederation. It was
headed by a ruler called “datu” or raja”.
 Ancient Filipinos practice paying taxes for the protection from their “datu”.
 The collected tax or tribute was called “buwis” or “handug”.
 Pre – Colonial Period(900 – 1521)
 The chieftain’s family members were enjoying exemption from paying taxes.
 Non-payment of taxes was already punishable during this period.
 Judicial process was influenced by religion and by waiting the intervention of the deities. Wherein Datu served as the chief judge who was assisted
by group of elders in the barangay that acted as members of the jury.
 Pre – Colonial Period(900 – 1521)
 Three classes.
  ”tumao” class (includes  datu) were the nobility of pure royal descent. 
  ”timawa” class,
 warrior class or the “the third rank of nobility" and "free men, neither chiefs nor slaves". required to render military service to
the datu in hunts, land wars or sea raids .
 They could acquire property, acquire any job they want, pick their own wives, and acquire an Alipin. They were however expected to
pay taxes, and support the Maginoo class. They are the only class to pay taxes, and hence their importance in the community.
  ”oripun” class (commoners and slaves),
 renders services to the tumao and timawa for debts or favors.
 The Alipin did not likely make any money for their services, and hence did not pay taxes. 
 The priestly class were scribes that are tasked to record
history, and keep track of tributes and taxes that were
expected from the governed.

 Spanish Period (1521 to 1898)

 The government introduced a
 “New Income – Generating means”
 Examples:
 Manila – Acapulco Galleon Trade (1565 – 1815)

 A ship trade going back and forth yearly between Manila and Acapulco.
 Fundamental income – generating business for the Spanish
 The Galleon trade brought silver from Nueva Castilla and silk from China by way of
Manila.
 Spanish Period (1521 to 1898)
 Polo Y Servicio (Forced Labor)

 Evolved within the framework of the Encomienda System

 40 days, of men ranging from 16 to 60 years of age who were obligated to give
personal services to community projects. One could be exempted from the polo by
paying a fee called falla (which was worth one and a half real). 
 Spanish Period (1521 to 1898)

 Bandala
 System implemented by Spanish authorities in the Philippines that required native
Filipino farmers to sell their goods to the government.
 Also collected were the “mandalâ” , a round stack of rice stalks to be threshed), an
annual enforced sale and requisitioning of goods such as rice.
 Spanish Period (1521 to 1898)
 Encomienda System (1570)
  A Compliance with the decree issued by King Philip II in 1558,
distributed lands in Cebu to loyal Spanish subjects. The
encomienda was not actually a land grant but was a favor from
the kind under which the Spaniard receiving his favor was given
the right to collect tributes–or taxes–from the inhabitants of the
area assigned to him. The man who received this favor was called
an encomendero. The encomienda was, therefore, a public office
The encomenderos were required by law to perform the
following duties

 #1. to give protection to the natives

 #2. to help the missionaries convert the natives to Christianity

 #3. to promote education

 Spanish Period (1521 to 1898)

 Tribute “Buwis”
 which could be paid in cash or kind, was initially fixed at 8 reales

(one real= 12.5 centavos) and later increased to 15reals, apportioned

as follows:
 10 reals buwis, one real diezmos prediales(tithes)
 1 real to the town community chest
 1 real sanctorum tax
 3 reales for church support
 Custom duties and income tax were also collected.


 By 1884, the tribute was replaced by the Cedula personal, wherein colonists were
required to pay for personal identification. Everyone over the age of 18 was obliged
to pay.
 During the 17th and 18th centuries, the Contador de' Resultas served as the Chief
Royal Accountant whose functions were similar to the Commissioner of Internal
Revenue. He was the Chief Arbitrator whose decisions on financial matters were
final except when revoked by the Council of Indies. During these times, taxes that
were collected from the inhabitants varied from tribute or head tax of one gold maiz
annually; tax on value of jewelries and gold trinkets; indirect taxes on tobacco,
wine, cockpits, burlas and powder. From 1521 to 1821, the Spanish treasury had to
subsidize the Philippines in the amount of P 250,000.00 per annum due to the poor
financial condition of the country, which can be primarily attributed to the poor
revenue collection system.
American Period (1898 – 1946
 January 1, 1940,The cédula was imposed by the Americans,
when Commonwealth Act No. 465 went into effect,
mandating the imposition of a base residence tax of fifty
centavos and an additional tax of one peso based on factors
such as income and real estate holdings.
 American Period (1898 – 1946)
 The payment of this tax would merit the issue of a residence
certificate. Corporations were also subject to the residence
tax.
 However, persons who are ineligible to pay the residence tax
may be issued a certificate for twenty centavos.
The use of Cedula

 “Residence Certificate”, is a legal identity document in the Philippines.

 Issued by cities and municipalities to all persons that have reached the age of majority and upon
payment of a community tax,
 It is one of the closest single documents the Philippines has to a national system of identification.
 A person is required to present a cedula when he or she acknowledges a document before a notary
public
 Takes an oath of office upon election or appointment to a government position; receives a
license, certificate or permit from a public authority; pays a tax or fee; receives money from a
public fund; transacts official business; or receives salary from a person or corporation.
 American Period (1898 – 1946)
 During  1973, significant amendments were put into effect following the enactment of the Local
Tax Code, with amendments on the allocation of the residence tax and on who are covered under
it, as well as payment provisions.
 During 1991,Local Tax Code were later subsumed into the Local Government Code. The
residence tax and residence certificate were renamed into the current community tax and
community tax certificate
American Period (1898 – 1901)

 In line with the Filipinization policy of then US President McKinley,

Filipino Collectors were appointed. The first three (3) BIR Collectors
were: Wenceslao Trinidad (1918-1922); Juan Posadas, Jr. (1922-1934) and
Alfredo Yatao (1934-1938).
 May 1921, by virtue of Act No. 299, the Real Estate, License and Cash
Divisions were abolished and their functions were transferred to the City
of Manila. As a result of this transfer, the Bureau was left with five (5)
divisions, namely:
 1) Administrative
 2) Law
 3) Accounting
 4) Income Tax
 5) Inspection.