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COMMISSION ON AUDIT CIRCULAR NO.

77-69
TO

December 20, 1977

: Heads of Departments; Chiefs of Bureaus, Agencies and Offices; Managing


Heads of Government-Owned or Controlled Corporations, Self-Governing
Boards, All Officials and Employees of the Commission on Audit; Provincial
Governors; Provincial, City and Municipal Treasurers; City and Municipal Mayors;
And All Others Concerned.

SUBJECT : Revenue Regulations No. 16-77 covering the manner of withholding taxes on
payments made by government entities to private parties as provided for in
Republic Act No. 1051.
1.
For the guidance of all concerned, Revenue Regulations No.16- 77 is hereunder
reproduced:
Republic of the Philippines
DEPARTMENT OF FINANCE
Bureau of Internal Revenue Quezon City
October 11, 1977
REVENUE REGULATIONS NO. 16-77
SUBJECT : Revised regulations governing the manner of withholding taxes
on payments made by government entities to private parties as
provided for in Republic Act No. 1051.
TO

: All Internal Revenue Officers, Withholding Agents and others


concerned.

Pursuant to the provisions of Section 3 of Republic Act No. 1051, the


following revised regulations are hereby promulgated to govern the manner of
withholding taxes from payments made by government entities to private
individuals, corporations, partnerships, and/or associations including joint
ventures contemplated in Presidential Decree No. 929 as provided for in
Republic Act No. 1051 and Executive Order No. 210 and shall be known as
Revenue Regulations No. 16-77.
SEC. 1. Purpose and Scope - These regulations propose to establish a
uniform procedure on the deduction and withholding of taxes due on payments
made by all Bureaus, offices, agencies and instrumentalities of the government,
including government-owned or controlled corporations, provinces, cities and
municipalities, where the tax on payments can be fixed, determined, computed or
ascertained.
SEC. 2.
Entities required to deduct and withhold taxes. - Only
government bureaus, offices, agencies and instrumentalities of the government,
including government- owned or controlled corporations, provinces, cities and

municipalities are required to deduct and withhold the taxes due before making
any payment to any private individual, corporation, partnership and/or
associations and joint ventures as contemplated in Presidential Decree No.929.
SEC. 3. Persons whose transactions are liable to withholding tax. Private individuals, corporations, partnerships, associations and/or joint ventures
contemplated in Presidential Decree No. 929 who have transactions with the
Philippine government, or any of its branches or agencies either as contractors of
services, producers or manufacturers who have sold originally produced or
manufactured materials, wares or goods.
SEC. 4. Internal revenue taxes that should be withheld.- The following
internal revenue taxes that can fixed, determined, computed or ascertained at the
time of payment shall be deducted and withheld from said money payments.
a.

Business Tax:

1. Sales tax due from producers or manufacturers provided for in


Sections 194, 195, 196, 197, 198, 199 and 201 of the National Internal Revenue
Code of 1977. The sales tax due from producers and manufacturers allowed to
deduct the cost of raw materials used shall be withheld only if billed separately in
the invoice/s. However, in the case of producers of ordinary articles under
Section 199 not allowed any deduction for raw materials used, the sales tax shall
be withheld on the basis of the gross sales thereof.
2. Percentage tax due from proprietors of rope factories, sugar centrals
and mills, coconut oil mill, cassava mills and desiccated coconut factories
computed at 2% of the actual selling price or market value of all rope, sugar,
coconut oil, cassava flour or starch, and desiccated coconut, including its byproducts, manufactured, processed or milled by them, as provided under Section
203 of the Tax Code.
3. Percentage tax due from contractors, proprietors or operators of
dockyards and other contractors computed at 3% of their gross receipts, as
provided under Section 205 of the Tax Code. Provided that in a joint venture
contemplated under Presidential Decree No. 929, the 3% tax shall be based on
the entire amount to be paid to the principal contractor.
4. Percentage tax due on the gross receipts of caterers as provided
under Section 206 of the Tax Code.
5. Percentage tax due on common carriers by land, air and water
computed at 2% of their monthly gross receipts as provided under Section 207 of
the Tax Code.
b.

Franchise Tax:

Percentage tax due on franchise holders computed at 5% of the gross


receipts from business covered by the law granting the franchise, or such taxes,
charges and percentages as are specified in the special charters of the grantees

upon when such franchises are conferred, whichever is higher, unless the
provisions thereof preclude the imposition of a higher tax as provided under
Section 267 of the Tax Code.
c.

Charges on Forest Products:

These charges are due on all forest products which should be paid by the
forest concessionaires. They vary according to the group or class the forest
products belong. In the case of timber cut from public forest, the charges due
thereon as prescribed in Section 272 of the Tax Code are as follows:
1.

On ebony stripped of sapwood

2.

On camagon stripped of sapwood

5.00

"

3.

On molave stripped of sapwood

4.00

"

4.

On timber of first group except


those above

3.50

"

5.

On timber in second group

2.00

"

6.

On timber in third (not including


firewood)

1.25

"

On timber in fourth group (not


including firewood)

0.60

"

7.

P6.00/cu.m.

Forest charges on other forest products as well as those classified as


minor products may be found in the List of Administrative Schedules and Forest
Products Regulations issued by the Secretary of Finance.
SEC. 5. Duties of the withholding officer.
a.
Amounts withheld pursuant to these regulations by a government
office or government-owned or controlled corporations on money payments to
private individuals, corporations, partnerships, or associations and joint ventures
contemplated in Presidential Decree No. 929 referred to in Section 2 hereof, shall
be remitted to the nearest revenue collection agent within the first ten (10) days
of the month following that when such money payment was made. The revenue
collection agent shall issue a revenue official receipt (ROR) or revenue tax
receipt (RTR) as the case maybe . In all cases, the revenue official receipt or the
revenue tax receipt should be in the name of the government office or entity that
withheld the tax and the kind and nature of the tax and for what contract as well
as the period covered by the payment should be indicated thereon.
b.
Every remittance of the taxes withheld under these regulations
shall be covered by a return (BIR Form 7.50, revised, August, 1977) and must be
filed with the revenue collection agent of the City or Municipality where the
government agency withholding the tax has its Office.

SEC. 6. The withholding officer shall furnish each payee a monthly


statement of the total money payments, the corresponding taxes withheld
therefrom and the number and the date of revenue official receipt/s or revenue
tax receipt/s evidencing remittances thereof to the Revenue Collection Agent.
SEC.7. Annual Report.
a.
All government offices including government-owned or controlled
corporations as well as provincial, city and municipal governments shall submit in
duplicate an annual list of money payments to private individuals, corporations,
partnerships, associations and joint ventures contemplated in Presidential
Decree No. 929 on or before January 31 of the succeeding year covering
transactions of the preceding year.
b.

The annual list shall contain the following information:


1.

Name and address of the government office which effected


the payment;

2.

Name, address and taxpayer account number of the


individual, corporation, partnership, association or joint
ventures contemplated in Presidential Decree No. 929 with
which it had transactions and to which money payment
was made;

3.

Total amount of payment/s made during the preceding year


;

4.

Nature of the transaction or payment;

5.

Date/s when payment was made; and

6.

Internal revenue tax withheld therefrom, showing the


number, date and amount of the official receipt evidencing
the remittance thereof to the Revenue Collection Agent.

c.
This annual report shall be certified correct and signed by
the head of office concerned or by any duly authorized responsible official.
SEC. 8.
thereof. -

Processing and Control of Returns/Reports, and Verification

All monthly withholding tax returns (BIR Form No. 7.50, shall be
transmitted by the Revenue Collection Agent concerned to the Regional Director
within ten (10) days from receipt hereof. The annual report prescribed under
Section 7 hereof shall be submitted by the government agency concerned direct
to the Regional Director of the region where the former is stationed, within 30
days after the end of the calendar year. The original of the annual report,
together with the original of all monthly withholding tax returns shall be
transmitted by the Regional Director on or before the 15th day of February of the

year following the period covered by the report, to the Withholding Tax Division
for processing after which the same shall be forwarded to the Data Processing
Center for collating of the information on all money payments made to a
particular taxpayer, thereafter to be referred to the corresponding Regional
Offices or National Investigating Divisions for cross-checking of the collated data
against the return filed by the taxpayer. The duplicate copies of the herein
mentioned reports shall be kept in file in the Assessment Branch of the Regional
Office for reference purposes.
SEC. 9. Exemption.
Only the transactions/contracts enumerated in Section 4 hereof are
subject to the withholding provisions of Republic Act No. 1051. Those not
mentioned therein are deemed exempted; Provided, however, that in cases of
transactions/contracts not mentioned in the aforesaid Section 4 in which there is
doubt as to whether or not a tax should be withheld, the withholding officer shall
require the payee to secure a "Certificate of Tax Exemption" from the nearest
Revenue District Officer or Revenue Regional Director.
SEC. 10. Acts Constituting Violations.
a.
Unlawful acts may be committed by the public officer or employee,
or an official or employee of a government-owned or controlled corporation when
he:
1.

Fails to withheld the tax before making any money payment;

2.

Fails to file the withholding tax return within the time prescribed by
law; and

3.

Fails to remit the taxes withheld on time.

b.

It shall be equally unlawful for any person or persons to

1.

Induce or connive with any public officer or employee, or an official


or employee of a government-owned or controlled corporation to
commit the unlawful acts stated above, or

2.

Receive any payment in violation of the provisions of the law.

SEC. 11 Penalties for Violation


Any violation of the provisions of Republic Act No.1051, as implemented
by this Revenue Regulation, shall be punished by a fine of not less than one
thousand pesos nor more than two thousand pesos and imprisonment for not
more than one year; Provided, that, in the case of a public officer or employee,
he shall be further subject to administrative proceedings and, if found guilty, shall
be dismissed from the service; Provided, further that in case of aliens, in addition
to the penalties provided for in this Section, they shall be deported without
further deportation proceedings.

SEC. 12. Repealing Clause. - All existing rules and regulations or parts
thereof which are inconsistent with the provisions of the regulations are hereby
revoked.
SEC. 13.
approval hereof.

Effectivity.

These regulations shall become effective upon

(SGD.) CESAR VIRATA


Secretary
RECOMMENDED BY:
(SGD.) EFREN I. PLANA
Acting Commissioner of Internal Revenue
TAN-P4519-F2828-A-8"
2.
All Unit Auditors, National, Local or Corporate, shall make sure that the taxes directed to
be withheld under the above quoted Revenue Regulations are deducted from any and all
payments made to private parties.
3.

This Circular shall be effective immediately.

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman

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