Eneral Rinciples Imitation Axing Ower: Taxation Ii Finals Atty. Kim Aranas Eh 402

1.
Internal Source of Local FUnd:

LOCAL TAXATION a. Local taxes- Local taxes levied or imposed by the LGU
GENERAL PRINCIPLES , L IMITATION , T AXING POWER b. Real Property Taxes- which is being collected by the
Government
c. Non tax revenues- These are the regulatory fees.
Revenues from regulatory fees collected by the LGU or
the exercise of its police power or in rendering service to
the public. (Garbage collection fee, Toll fee)
2. External Source of Local Fund
a. Internal Revenue Allotment (IRA) received from the
National Government
b. National Aid- given in times of calamities, disaster
3. Borrowings of the Local Government Unit
Fundamental Principles- Local Taxation (PIE-CUP-UP) –Must

memorize
1. Levied for PUBLIC Purpose
2. The revenues collected under the code shall inure solely
to the benefit of, and subject to disposition by, the LGU
Levying the tax or other imposition unless otherwise
specifically provided therein (The one who impose should
Definition: be the one to dispose)
 Basically it is a revenue raising power exercise by the local 3. Equitable and based as much as possible on the
government unit in order to raise revenue enough to defray taxpayers ability to pay
necessary expenses and the manner of levying and 4. Not contrary to law, public policy, national economic
imposition of the local taxes is done through the enactment or policy, or in restraint of trade
passage of what we call as an ordinance. The law is binding 5. Uniform in each local sub-unit
as far as the local government unit is concerned. The revenue 6. Collecting local taxes and other impositions shall not be
that it is being raised thru the ordinance is basically the local let to any private person (BIR can delegate the collection
taxes. to AABs but for local taxes, it cannot be delegated)
7. Not unjust, excessive, oppressive, or confiscatory
 The power of the LGUs to collect tax is merely delegated. 8. Each LGU shall, as far as practicable, evolve a
Delegated by this foundation of local taxing power directly progressive system of taxation.(not mandatory but
granted under Section 5, Article X of the 1987 Constitution directory as far as the LGUs are concerned.)
which states that “Each local government unit shall have the  Limits the power of the LGU in collecting local taxes. If it
power to create its own sources of revenues and to levy violates any of the fundamental principles then this would
taxes, fees and charges subject to such guidelines and be a ground for the illegality of the imposition tax by the
limitations as the Congress may provide, consistent with the LGU
basic policy of local autonomy. Such taxes, fees, and charges Constitutional
shall accrue exclusively to the local governments.” That Limitations
provision is not self executory that’s why Sec. 129 of RA 7160 Fundamental Principles
(sec. 130, LGC)
executed the particular provision and under Sec 129 it
Public hearing
provides the fiscal power of the local government units. Nature of Local Taxing Power requirements
Who can exercise the power of taxation? 1. Not inherent but direct Principle of pre-emption
1. Provinces grant of exclusionary rule
2. Cities 2. Limited- Common limitations on
3. Municipalities LGUs taxing Power (Sec.
3. Legislative
133, LGC)
4. Barangays 4. Territorial
 Take note a region is not a local territory jurisdiction. 5. Accrual of Tax
 You have to remember that each of this local territorial LGC, Sec. 132
jurisdiction has its own executive and legislative branch. 1. Sangguniang
It may be the governor, mayor or the barangay captain. Panlalawigan
2. SAngguniang
Panglungsod
Scope: 3. Sangguniang
1) Local Taxation-pertains to local taxes, levies, charges Pambayan
as enumerated under RA 7160. For provinces (Sec 135), 4. Barangay
Municipalities (147) and so on as enumerated in the Council
LGC
2) Real Property Taxation- It’s a local tax because  Local Taxation power is not inherent but granted under
collected by LGU but imposed in a nationwide scale. The the Constitution.
rates are the same. In local taxation there is only a  Principle of pre-emption rule simply tells us that the LGU
ceiling, in RPT it’s the same nationwide. can only subject tax only when the national gov’t did not
subject it.
Sources of Local Fund
TAXATION II FINALS ATTY. KIM ARANAS EH 402 1
Amores, Aveztrus, Cabading, Calzado, Dela Peña, Dungog, Flores,Maceda, Nazario, Roloma, Sios-e, Tan
 Territorial meaning to say it may only be exercised within ON THE GRANT TAX EXEMPTIONS OR TAX RELIEFS:
its territorial jurisdiction. A. TAX EXEMPTIONS OR TAX RELIEFS MAY BE
 Accrual of tax- the local gov’t unit does not remit a share GRANTED IN CASES OF:
to the national gov’t.
 NATURAL CALAMITIES
 CIVIL DISTURBANCE
POWERS OF THE SANGGUNIAN  GENERAL FAILURE OF CROPS, OR
 ADVERSE ECONOMIC CONDITIONS SUCH
AS SUBSTANTIAL DECREASE IN PRICES OF
AGRICULTURAL OR AGRI-BASED
PRODUCTS
B. THE GRANT OF EXEMPTIONS OR RELIEF SHALL BE
THROUGH AN ORDINANCE.
C. ANY EXEMPTION OR RELIEF GRANTED TO A TYPE
OR KIND OF BUSINESS SHALL APPLY TO ALL
BUSINESSES SIMILARLY SITUATED.
D. ANY EXEMPTION OR RELIEF GRANTED SHALL TAKE
EFFECT ONLY DURING THE NEXT CALENDAR YEAR
FOR A PERIOD NOT EXCEEDING TWELVE (12)
MONTHS AS MAY BE PROVIDED IN THE
ORDINANCE.
Power to Prescribe Penalties for Tax violations and ABOLITION OF TAX EXEMPTION BEFORE THE LGC
Limitations Thereon *Sec. 516, LGC) UNLESS OTHERWISE PROVIDED IN THOS CODE, TAX
1) The sanggunian of a local government unit is authorized to EXEMPTIONS OR INCENTIVES GRANTED TO, OR
prescribe fines or other penalties for violation of tax ordinances PRESENTLY ENJOYED BY ALL PERSONS, WHETHER
o a. In no case shall fines be less than NATURAL OR JURIDICAL, INCLUDING GOVERNMENT
P1,000 nor more than P5,000 OWNED OR CONTROLLED CORPORATIONS EXCEPT:
o b. Nor shall imprisonment be less than 1. LOCAL WATER DISTRICTS
one (1) month nor more than six (6) months. 2. COOPERATIVES DULY REGISTERED UNDER R.A. 6938
2) Such fine or other penalty or both shall be imposed at the 3. NON STOCK AND NON PROFIT HOSIPITALS
discretion of the court. 4. EDUCATIONAL INSTITUTIONS, ARE HEREBY
3) The sanggunian barangay may prescribe a fine not less than WITHDRAWN UPON THE EFFECTIVITY OF THIS CODE.
P100 nor more tha P1,000.  The power to grant tax exemption- The one who can
impose the tax, is also the one that can grant the tax
 Take note, the imposition of fines only pertain to local exemption.
taxes imposed thru an ordinance. For RPT, there is a  The exemption should apply to all entities similarly
separate set of provisions for RPT. situated. Not to a specific entity.
 May a Barangay imprison an entity for non-payment of
tax? No. It can only impose a fine. IN THE CASE OF SHARED REVENUES, THE EXEMPTION OR
To Adjust Local Tax Rates (Sec. 191, LGC) RELIEF SHALL ONLY EXTEND TO THE LOCAL GOVERNMENT
UNIT GRANTING SUCH EXEMPTION OR RELIEF.
ADJUSTMENT SHOULD BE MADE NOT OFTENER THAN
ONCE EVERY FIVE (5) BUT IN NO CASE SHALLE THE
ON THE GRANT OF TAX INCENTIVES:
ADJUSTMENT EXCEED TEN PERCENT (10%) OF THE RATES
FIXED UNDER THE LOCAL GOVERNMENT CODE  THE TAX INCENTIVES SHALL BE GRANTED ONLY TO
NEW INVESTMENTS IN THE LOCALITY AND THE
 Can the LGU go higher than the ceiling or the maximum ORDINANCE SHALL PRESCRIBE THE TERMS AND
rate? Yes, because of the provision under Sec. 191 of CONDITIONS THEREFOR.
the LGC but it is not unlimited.  THE GRANT OF TAX INCENTIVE SHALL BE FOR A
o SEC. 191. Authority of Local Government Units DEFINITE PERIOD NOT EXCEEDING ONE (1)
to Adjust Rates of Tax ordinances. - Local CALENDAR YEAR.
government units shall have the authority to  THE GRANT OF TAX INCENTIVES SHALL BE BY
adjust the tax rates as prescribed herein not ORDINANCE PASSED PERIOD TO THE FIRST (1ST)
oftener than once every five (5) years, but in no
DAY OF JANUARY OF ANY YEAR.
case shall such adjustment exceed ten percent
(10%) of the rates fixed under this Code.  ANY TAX INCENTIVE GRANTED TO A TYPE OR KIND
OF BUSINESS SHALL APLY TO ALL BUSINES
GUIDE OF SANGGUNIANS IN GRANTING OF TAX SIMILARLY SITUATED.
EXEMPTIONS, TAX RELIEFS AND TAX INCENTIVES (ART.
282[B], RULES AND REGULATIONS IMPLEMENTING THE
 These shared revenues pertain to local taxes wherein the
LOCAL GOVERNMENT CODE OF 1991] proceeds are being shared by several divisions of local

territorial jurisdiction. Example: Local tax on extraction of As to publication on posting it will be done 10 days after the final
sands, stones and other quarrying resources in public proposal for 3 consecutive weeks. If there’s no newspaper of
lands. The province generally imposes 10% on the FMV. general circulation in the locality, then it has to be posted in 2
The proceeds thereof is being shared by the province, conspicuous places.
municipality and barangays where the extraction is
located. 30%-province, 30%-municipality, 40%-Barangay Doctrine of preemption or exclusion: the national government
 On the grant of Tax incentive is different from tax elects to tax a particular period; it impliedly holds from the local
exemption. This is given for the primary purpose of government the delegated power to tax the same field.
encouraging new investments. So the tax incentive is
granted only to new investments. The local taxing power is limited, unlike the power of taxation
 Again this is only for local taxes, not for RPT. that may be exercised by the congress or national legislature
 Educational institutions should also be non-stock, not which is plenary and supreme, the local taxation power is limited
profit. in the sense that it’s subject not only to the constitutional
 PEZA registered entities still pay local taxes although it is limitations but it’s also subject to fundamental principles of local
only one. 5%of gross income-2% goes to the BIR;3% to taxation.
the LGU.
IMPOSITION OF LOCAL TAXES COMMON LIMITATIONS
- List of taxes that may not anymore be imposed by local
taxing authority primarily because 1) it’s a tax already
imposed by the national internal revenue code; 2) it’s a
tax or duties and charges which are already imposed by
the tariff and customs code or 3) prohibited by public
policy.
SEC. 133. Common Limitations on the Taxing Powers of

Local Government Units. - Unless otherwise provided herein,
the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of
the following:
 They can’t impose income tax because it’s already being
imposed by the national government through the NIRC.
(a) Income tax, except when levied on banks and other

-impose thru passage of local tax ordinance financial institutions;
 These banks and other financial institutions, if we based
Kinds: on it benefits-received theory, it also requires a high
1) Tax ordinance specifically enumerated in RA 7160 degree of security as far as the local government is
2) Not specifically enumerated in RA 7160 taking into concerned.
consideration the pre-emption rule.
Requisites: (b) Documentary stamp tax;  
1)Filing of a proposal who is a member of the Sanggunian  Already covered by the NIRC  
2) After 10 days there must be a publication or posting shall be for
3 consecutive weeks. If it’s posting then it must be posted to 2 (c) Taxes on estates, inheritance, gifts, legacies and other
conspicuous places. acquisitions mortis causa, except as otherwise provided
3) There has to be notification to Treasurer, the entities to be herein;  
subjected to the tax  Already provided by the NIRC.
4) Public Hearing.  “except as otherwise provided herein;” means “Except
5) There has to be a forum in the Sanggunian those subject to taxes on transfer or real property by
6) It has to be approved by the local chief executive. As a rule for provinces and cities”
the province the local chief executive is given 15 day, for cities the o For provinces, the province can collect a local
local chief executive is given 10 days to enact the ordinance. If it is tax called tax on transfers of ownership of real
not enacted, then it is deemed passed. The local chief executive property. Estate tax, inheritance, gifts and
may veto it but the sanggunian may override the veto by the vote legacies are all transferred but because it’s
of 2/3 of all the members of the sanggunian. primarily covered by NIRC, the local
government unit cannot anymore levy except
Doctrine of Pre-emption or Exclusion these tax mentioned that transfers of ownership
of real property.
- If the national government elects to tax a particular area it
impliedly withholds from the Local government the local delegated
(d) Customs duties, registration fees of vessel and wharfage
power to tax the same field. Stated otherwise, If it is not taxed by
on wharves, tonnage dues, and all other kinds of customs
the national government then the local government can tax. But
fees, charges and dues except wharfage on wharves
not all the local government can do that. Only a specific division;
constructed and maintained by the local government unit
Province and Barangay cannot do it.
concerned;
 The exception if the wharfs are being constructed and
RECAP: maintained

subject to OPT or 12% VAT as the case may be.
(e) Taxes, fees and charges and other impositions upon  “except as provided in this Code;” - tricycle operators.
goods carried into or out of, or passing through, the territorial Because the LGU can regulate the operators of the
jurisdictions of local government units in the guise of tricycle, then the LGU can collect taxes on gross receipts.
charges for wharfage, tolls for bridges or otherwise, or other
taxes, fees or charges in any form whatsoever upon such (k) Taxes on premiums paid by way of reinsurance or
goods or merchandise; retrocession;
 These is within the ambit or jurisdiction of the bureau of  Reinsurance - insures the insurer
customs. Otherwise, if the local government will also  Retrocession -
collect, it will amount to double taxation.  The premiums can no longer be collected because it’s
already the second level of your insurance and it’s
(f) Taxes, fees or charges on agricultural and aquatic covered under the insurance code.
products when sold by marginal farmers or fishermen;
 Small operation is primarily described as for subsistence (l) Taxes, fees or charges for the registration of motor
purposes only. It’s not primarily for commercial or sale. vehicles and for the issuance of all kinds of licenses or
permits for the driving thereof, except tricycles;
(g) Taxes on business enterprises certified to by the Board of  In letter (j) the exception is to the tricycle
Investments as pioneer or non-pioneer for a period of six (6)  In letter (l) - these are already under the mandate of the
and four (4) years, respectively from the date of registration; LTO
 They are duly registered under EO 226 or the
Investments Code. It’s primarily exempt because they (m) Taxes, fees, or other charges on Philippine products
enjoy the fiscal executive of income tax holiday. actually exported, except as otherwise provided herein;
o Income tax holiday is where in the enterprise  It’s not consumed here in Philippines this is with
registered is not subject to any taxes, including consonance to the cross-border destination principle.
local taxes  “except as otherwise provided herein;” - still the business
 If pioneer enterprise – 6 years tax that is being imposed on those engaged in export
 If non-pioneer enterprise – 4 years business. What is being subject to local is the business
 Same provision under Special Economic Zone Act (SEZ) itself and not the goods or products being exported.
wherein there is also the fiscal executive of income tax
holiday (n) Taxes, fees, or charges, on Countryside and Barangay
 Pioneer enterprise - first to establish such kind of Business Enterprises and cooperatives duly registered under
business in the Philippines R.A. No. 6810 and Republic Act Numbered Sixty-nine hundred
thirty-eight (R.A. No. 6938) otherwise known as the
(h) Excise taxes on articles enumerated under the National "Cooperatives Code of the Philippines" respectively; and
Internal Revenue Code, as amended, and taxes, fees or  Provided in Special laws
charges on petroleum products;
 Articles enumerated in NIRC - tobacco, alcohol, (o) Taxes, fees or charges of any kind on the National
automobiles and non-essential goods and jewelries. Government, its agencies and instrumentalities, and local
These are expressly listed under NIRC. government units.
o If a particular item is not enumerated in NIRC,  You can’t transfer money from your own pockets
the local government can still collect excess tax.
 Petroleum products - generic exception with no REVENUE RAISING POWERS
qualification from local taxation. 1. General or common revenue raising powers - all LGU can
exercise this power
Petron Corporation vs. Mayor Tobias M. Tiangco, et.al. i. Reasonable Fees and charges for services
- Petron questioned the imposition of excise tax by the rendered - consideration for the services rendered
LGU and the CPA said that the local government is by local government units (Sec. 153)
prohibited from imposing such excise tax because the  Parking fees, garbage collection, going
product is classified as petroleum products. to city hall and ask for business permit
(i) Percentage or value-added tax (VAT) on sales, barters or ii. Public utilities charges must be owned, operated
exchanges or similar transactions on goods or services and maintained by the LGUs within their jurisdiction
except as otherwise provided herein; (Sec. 154)
 Already collected by the national government.  Water facilities
 “except as otherwise provided herein;” - you have the iii. Toll fees or charges must be funded and
business taxes which may be collected by cities and constructed by the LGUs (Sec. 155)
municipalities.  Municipal roads or barangay roads
 Except:
(j) Taxes on the gross receipts of transportation contractors i. Officers and enlisted men of
and persons engaged in the transportation of passengers or the Armed Forces of the
freight by hire and common carriers by air, land or water, Philippines (AFP) and
except as provided in this Code; members of the Philippine
 For transportation contractors and transporting National Police (PNP) on
passengers, specifically common carriers it’s already mission,
subject to carriers under Other Percentage Tax.
 Others, like contractors which carries goods, they may be
ii. Post office personnel in the  Not violation of constitution of freedom of the press
act of delivering mail because this is a tax on business of printing and
iii. Physically-handicapped, and publication. It would be a different story if you didn’t
iv. Disabled citizens who are collect a business tax in other types of businesses and
sixty-five (65) years or older. you just imposed it to somebody who is into printing and
publication because in that sense you’re singling out that
 May be suspended by the Sanggunian for general business who’s into press or publication.
welfare purposes. No further conditions, so long as the
welfare requires it. 3. Franchise Tax (Sec. 137)
 The barangay may collect toll fees and charges provided  Tax rate:
it was funded and constructed by the barangay. o On going business - not exceeding 50%of 1%
of the gross annual receipts for the preceding
2. Specific revenue raising powers - applicable only to particular calendar year
division or unit of LGU o Newly started business - not exceed 1/20 of
1% of the capital investment
A. PROVINCES_  You are subjected to franchise tax when you’re enjoying
a franchise
1. Tax on Transfer of Real Property Ownership or Local o Primary franchise - being granted to you by the
transfer tax (LTT) (Sec. 135) state for you to exist
 On transfer of real property, and not ownership.  Juridical entity
o In Real Property tax, you pay it if you own real o Secondary franchise - If the corporation and the
property business exercises its rights and privileges
o In Transfer of Real Property, you pay the tax if within the territory of the LGU
there is sale, donation, barter or any other mode  Electricity or water
of transferring ownership or title of real property  The franchise tax is based on gross annual receipts.
 Even if it’s because of death you still o CTA case: It was questioned that WON the
have to pay this type of local tax franchise tax doesn’t amount to double taxation
 Tax rate: not more than 50% of 1% or 0.5%. because the businesses is already paying
o May be higher, provided that not oftener than 5 business tax for engaging business in the
years to adjust and not to exceed 10% of the tax locality and the business tax is being paid to the
to be collected cities and municipalities and based on gross
 Tax base: total consideration involved or FMV, in case annual receipt. Thus paid based on the same
the monetary consideration involved in the transfer is not taxing period, same taxing authority. Ruling is
substantial, whichever is higher. that it’s not double taxation in the strict sense
 Exceptions: because the nature of the franchise tax is
o Transfers pursuant to CARL different from the nature of business tax. The
o Sale of socialized housing franchise tax is collected if the tax payer enjoys
o Transferred to transferee not subject to tax its privilege of exercising the franchise. Whereas
 Buyer is consulate or embassy of the business tax, it’s automatically collected
foreign country when the entity or taxpayer engages in the
 Primarily liable to settle this type of local tax is the business. They are of different nature and
transferor kind.
o Transfer through sale, it’s the seller
o Donation, it’s the donor 4. Shared revenues among the LGUs - Tax on Sand, Gravel
o Death, administrator of property and other Quarry Resources or Sand and Gravel Tax (Sec.
 Must be paid within 60 days from the date of execution or 138)
from the date of decedents date
 The sand the gravel and other quarry resources must be
2. Tax on Printing and Publication (Sec. 136) extracted from the public lands or beds of seas, lakes,
rivers, creeks or streams.
 This is a business tax.  Tax rate: not more than 10% of FMV
 GR: Only cities and municipalities may collect business  If the quarry happened in a private land or property, the
tax province can’t impose the 10% of tax. It’s already
o Ex: Sec. 136 - so long as the business in covered by the NIRC and subject to excise tax.
printing and publications of books, cards,  Shared with cities, municipalities and provinces.
posters, etc. o Province - Thirty percent (30%);
 Tax rate: o Component city or municipality - Thirty
o Existing business - not exceed 50% of 1% of percent (30%); and
the gross annual receipts for the preceding year o Barangay - Forty percent (40%).
o New business - not exceed 1/20 of 1% of the  Province imposes the 10% and the city, municipality and
initial capital investments since there’s no gross barangay have to wait that they be given a share by the
annual receipts of previous year province. The city, municipality and barangay cannot
 Except: Printing and/or publishing of books or other impose this tax on quarrying.
reading materials prescribed by the Department of  "Quarry resources" shall mean any common stone or
Education, CHED and TESDA as school texts or other common mineral substances as the Director of the
references. Bureau of Mines and Geo- Sciences may declare to be
quarry resources such as, but not restricted to, marl,
houses, hot springs and tourist spots." It was
marble, granite, volcanic cinders, basalt, tuff and rock
phosphate: Provided, That they contain no metal or other Pelizloy's position that the Tax Ordinance's
valuable minerals in economically workable quantities.   imposition of a 10% amusement tax on gross
5. Professional Tax (Sec. 139) receipts from admission fees for resorts,
 The professional must have undergone licensure swimming pools, bath houses, hot springs, and
examination by the government. It’s either you take
the bar exam or board exam (PRC) tourist spots is an ultra vires act on the part of
 Professionals who doesn’t have licensure exams the Province of Benguet. Thus, it filed an
(industrial engineering) - they are professionals but
are not covered under this tax. appeal/petition before the Secretary of Justice
 Ceiling: P300 on January 27, 2006.
 Situs: In the practice where you practice your
profession or in the place where the principal office
is located. Held: No. Section 131 (c) of the LGC already
o Once you pay it you can practice your provides a clear definition of amusement
profession anywhere in the Philippines.
places‘. Thus, resorts, swimming pools, bath
 Highly urbanized cities can collect professional tax.
 When: must be paid annually on or before January houses, hot springs and tourist spots do not
31 or before engaging the practice of your
belong to the same category or class as
profession.
o Lawyers: we’re mandated by SC to indicate theaters, cinemas, concert halls, circuses, and
in the pleading the professional tax boxing stadia. It follows that they cannot be
6. Amusement tax (Sec. 140) considered as among the o
̳ ther places of
 Tax rate: not more than 10% of the gross receipts from amusement‘ contemplated by Section 140 of the
admission fees
 It’s taxed on the operator or proprietor of the heaters, LGC and which may properly be subject to
cinemas, concert halls, circuses, boxing stadia, and other amusement taxes.
places of amusement.
o Only those who were not subjected as
amusement tax under NIRC. Like cockpits,  Professional basketball games are also not subject to
cabarets, night or day clubs, jai-alai, amusement tax because it is already subject to OPT
professional basketball games.
 Concert may be tax provided it is a pop, rock or similar under the NIRC.
concerts.
o EXEMPT: 7. Annual Fixed Tax For Every Delivery Truck or Van of
 Operas Manufacturers or Producers, Wholesalers of, Dealers, or
 Concerts Retailers in, Certain Products. (Sec. 141)
 Dramas    It is the truck, the van, or the vehicle itself that is being
 Recitals subjected to tax here. We don’t look at the weight or the
 Paintings and art exhibitions content of the said vehicle.
 Flower shows    Rate: P500.00
 Musical programs  Example: distributors of Coke, Pepsi, SanMig
 Literary and oratorical presentations
 The proceeds are shared equally by the province and B. MUNICIPALITIES_
municipality
 May the province impose amusement tax? (Pelizloy Section 143. Tax on Business. - The municipality may impose
Realty Corporation vs. Province of Benguet) taxes on the following businesses:
(a) On manufacturers, assemblers, repackers, processors,
Facts: Pelizloy owns Palm Grove Resort, which brewers, distillers, rectifiers, and compounders of liquors,
is designed for recreation and which has distilled spirits, and wines or manufacturers of any article of
commerce of whatever kind or nature
facilities like swimming pools, a spa and function
 Rate: Graduated scale of P165 – P24,375 per annum or
halls. The Prov. Board of the Prov. of Benguet a rate not exceeding thirty-seven and half percent (37½
approved Prov. Tax Ordinance No. 05-107, %) of one percent (1%) of the gross sales or gross
receipts
otherwise known as the Benguet Revenue Code
of 2005 ("Tax Ordinance"). Section 59, Article X (b) On wholesalers, distributors, or dealers in any article of
commerce of whatever kind or nature
of the Tax Ordinance levied a ten percent (10%)  Rate: Graduated scale of P18 – P10,000 per annum or at
amusement tax on gross receipts from a rate not exceeding fifty percent (50%) of one percent
(1%) of the gross sales or gross receipts
admissions to "resorts, swimming pools, bath

 When considered a wholesaler? What makes you a
wholesaler is when your customer is not the end user or (f) On banks and other financial institutions, at a rate not
the retainer. exceeding fifty percent (50%) of one percent (1%) on the
 When we say dealer, you are engaged in buying and gross receipts of the preceding calendar year derived from
selling such that when you buy you don’t consume. interest, commissions and discounts from lending activities,
income from financial leasing, dividends, rentals on property
(c) On exporters, and on manufacturers, millers, producers, and profit from exchange or sale of property, insurance
wholesalers, distributors, dealers or retailers of essential premium.
commodities
 Essential commodities include: (g) On peddlers engaged in the sale of any merchandise or
 Rice and corn; article of commerce, at a rate not exceeding Fifty pesos
 Wheat or cassava flour, meat, dairy products, (P50.00) per peddler annually.
locally manufactured, processed or preserved  Peddler - means any person who, either for himself or on
food, sugar, salt and other agricultural, marine,
and fresh water products, whether in their original commission, travels from place to place and sells his
state or not; goods or offers to sell and deliver the same.
 Cooking oil and cooking gas;  It is a fixed tax.
 Laundry soap, detergents, and medicine;
 Agricultural implements. equipment and post- (h) On any business, not otherwise specified in the preceding
harvest facilities, fertilizers, pesticides, paragraphs, which the Sanggunian concerned may deem
insecticides, herbicides and other farm inputs; proper to tax: Provided, That on any business subject to the
 Poultry feeds and other animal feeds; excise, value-added or percentage tax under the National
 School supplies; and Internal Revenue Code, as amended, the rate of tax shall not
 Cement. exceed two percent (2%) of gross sales or receipts of the
 Rate: at a rate not exceeding one-half (½) of the rates preceding calendar year.
prescribed under subsection (a), (b) and (d) of this
 Special requirement for this catch-all provision to apply:
Section.
1. Having a special ordinance for that purpose
(d) Retailers 2. With a prior public hearing
 You are considered as a retailer when you are the seller
3. It must not be excessive, unjust, confiscatory or
to the end user.
 Rate: following the fundamental principles of taxation
and
4. It must not violate the common limitations found
under Sec. 133, which are:
 The business is not subject to VAT or
Take note: Under Section 152 of the LGC, if the gross sales of other national taxes as imposed in the
receipts of the calendar year is Fifty thousand pesos (P50,000.00) NIRC
or less, in the case of cities and Thirty thousand pesos
 If subject to VAT or OPT under the
(P30,000.00) or less, in the case of municipalities, it is the
Barangay, exclusively, that collects the local tax on retailers. NIRC, the tax rate shall not exceed
Which means that if it is more than P50,000 or P30,000, it is the 2% of the gross sales or receipts of
city or municipality that collects, respectively.
the preceding calendar year
(e) On contractors and other independent contractors  Exception: Any business engaged in production,
 Rate: Graduated Scale of P27.50 – PP11, 500 per manufacture, refining, distribution, or sale of oil, gasoline
annum or at a rate not exceeding fifty percent (50%) of
one percent (1%) of the gross sales or gross receipts. or any other petroleum products shall not be subject to
 Contractors - includes persons, natural or juridical, not any local tax.

 In our previous meetings we’ve discussed on the
subject to professional tax under Section 139 of this common revenue raising powers of the local government
Code, whose activity consists essentially of the sale of all units. We said that the LGU may collect public utility
charges, special fees as consideration for the services it
kinds of services for a fee, regardless of whether or not
rendered, it nay also collect toll fees as charges on
the performance of the service calls for the exercise or bridge, waterways which is being owned, operated and
use of the physical or mental faculties of such contractor maintained by the LGU. We’ve discussed already on the
specific powers, taxing or revenue raising powers that
or his employees.
may be exercised by the province and we already said
 So if you are a lawyer you are not considered a
that as a rule there are seven revenue raising measure
contractor and you don’t pay this tax because you are
that the province may collect.
already subject to Professional Tax.
1. Tax on transfer of ownership of real property.
 A transportation contractor (carrier passengers or goods)
2. Tax on printing and publication of books, cards, posters
are not subject to local tax because they are already
3. Franchise tax
subject to national tax under the NIRC.
4. Tax on sand, gravel, and extraction on quarrying resources in  So meaning to say, if you do not pay your business tax
public land. this year, then theoritically speaking, you should not be
5. Professional tax operating there.
6. Amusement tax
 In short the local government has grounds to call your
7. Annual fixed tax not exceeding P500.00 for every delivery
trucks, vans, or vehicles when used by manufacturers of distilled attention, not close automatically but the least is to make
spirits, fermented liquors, etc. you pay. So, graduated annual fixed tax however it
 We move on to the local tax collected by municipalities. becomes a percentage tax if the gross reipt/sales
As a rule, it is the cities and municipalities that which may amounts to 2 million or more so it becomes a percentage
collect business tax the exception is, in so far as the tax wherein the rate must not exceed 50% of 1%.
provinces are concerned is the tax on the business of
publication and printing. so, what are these tax on 3. On exporters, and on manufacturers , millers,
business? Again this is not a tax on the goods, this is not
producers, wholesalers, distributors, dealers or
a tax on the income of the entity, but this is the tax on the
privilege to engage on a particular activity. retailers of essential commodities enumerated
1. Tax on manufacturers, assemblers, repackers, hereunder at a rate not exceeding one-half (½) of the
processors, brewers, distillers, rectifiers, and rates prescribed under subsection (a), (b) and (d) of
compounders of liquors, distilled spirits, and wines this Section:
or manufacturers of any article of commerce of
whatever kind or nature (1) Rice and corn;
 manufacturer we refer to producer or the very source of
the product being marketed. There is an annual (2) Wheat or cassava flour, meat, dairy products, locally
manufactured, processed or preserved food, sugar, salt
graduated fixed tax whichis based on the taxpayers
and other agricultural, marine, and fresh water products,
gross sales or receipts. Its a range whoever, when the whether in their original state or not;
gross sales or receipts amounts to 6.5million or more for
the preceeeding calendar year the tax ceases to be a
(3) Cooking oil and cooking gas;
fixed tax and it becomes a percentage tax which is 37.5%
of 1%.
(4) Laundry soap, detergents, and medicine;
2. On wholesalers, distributors, or dealers in any article
of commerce of whatever kind or nature
(5) Agricultural implements. equipment and post-harvest
 different ang 1 and 2 because in no. 1 its the facilities, fertilizers, pesticides, insecticides, herbicides
manufacturer or the prodsucer in no. 2 it is the and other farm inputs;
wholesaler, retailer or distributor.
 We basically distinguish a wholesaler and a retailer in (6) Poultry feeds and other animal feeds;
that if the purchaser of the products being sold by that
entity is not the end user, meaning retailer, then the seller (7) School supplies; and
is a wholesaler. On the other hand if the purchaser is the
end user or the final consumer of the very item which is (8) Cement.
being purchased then the seller is described as the
retailer.
 SO BASICALLY, THESE ITEMS 1-8, these are
 And there is a different business tax for the wholesaler considered as essential commodities as far as local
and a different business tax for the retailer. So no.2 is on taxation is concerned.
the wholesaler. Similar to the manufacturers, this is also  What is being subjected to tax are not the goods or the
subjected to graduated annual fixed tax, based on the commodities rather, its the business. Exporting,
gross sales or receipts for the preceeding calendar year. manufacturing, milling, producing, wholesaling,
 You might ask, sir the basis is the gross sales or receipts distributing, dealing or retailing these types of
commodities.
of the preceeding calendar year, does this mean that the  Why do we need to emphasize that? Because again,
business tax pertain to the business conducted the specifically for export, goods or commodities actually
previous year? N exported we follow the destination principle or the cross
 No, because the business tax is collected at the border doctrine.
beginning of the year, so basically its not strictly power of  When it is actually exported it should not be subjected to
taxation, its more on police power, because the power of tax here in the philippines. Then again what is subjected
to tax here is the business. So how much?
taxation may be exercised together with the police power.
 at a rate not exceeding one-half (½) of the rates
The business tax is more on police power together with prescribed under subsection (a)pertaining to
power of taxation because the business tax is a requisite manufacturers, (b)pertaining to wholesalers and (d)
for you to operate during the current year. retailers of this Section.
 So 50% kung pila ang gi-impose to producedrs, retailers
and wholesalers of commodities which are non-essential,
½ of that will be imposed to these types of businesses.
 The reason is to encourage more businesses to engage  The CTA said that the tax on business should
in the sale, the retail, the production, the export of only be paid once and it should on the total
essential commodities. They are given a preferred rate gross receipts of the preceeding calendar year
which is 50%.
taking into consideration everything otherwise, it
4. On retailers.
 if the buyer is the end user or final consumer then will amount to double taxation because it only
the seller is a retailer. If your buyer is not the final collects one type of tax which is business tax.
consumer, its the retailer, then the seller is a
wholesaler. When you apply for the business permit, 7. On peddlers engaged in the sale of any merchandise or
you specify there the activity or activities you are article of commerce, at a rate not exceeding Fifty pesos
going to conduct manufacturing, retailing. Etc. (P50.00) per peddler annually. Peddler - means any person
 Retailers are those who are engaged in a sale where who, either for himself or on commission, travels from place
the purchaser buys the commodity for his own
to place and sells his goods or offers to sell and deliver the
consumption, irrespective of the quantity of the
commodity sold. They are those who sell products to same.
end-users.
 RATE: 2% or 1%  How about vans or vehicles used to deliver softdrinks or
 If gross sales or receipts for the preceding calendar beverages, are they not considered peddlers? Well in so
year is: far as local taxation, they can be considered as peddlers
 400k or less – 2% because they are basically bringing goods from one
 More than 400k – 1% place to another. But for local taxation they are out of
 However, barangays shall have the exclusive power this annual fixed tax of 50 pesos because they are
to levy taxes on gross sales or receipts of the already coverd by the local taxing power under the
preceding calendar year if: (example sari-sari store) province.
A.) 50k or less, in case the barangay is located in cities  Any business not otherwise specified above, this is what
B.) 30k or less, if located in municipalities. I’ve told you. This is the fall back provision. So meaning
 This is one area wherein the barangays can pre-empt to say, if your business is not yet taxed by the national
both the municipalities and the cities in imposing LBT to government, following the pre-emption rule, and your
retailers. type of business is not among those enumerated from 1
 When you are both a wholesaler and a retailer, you are to 7, the municipality as well as the city may still collect
subject to BOTH – as wholesaler and retailer. You have business tax from you. Provided that on any business
different sales as wholesaler and retailer. subject to excise, value added or percentage tax under
5. On contractors and other independent contractors, the NIRC the rate of the tax may not exceed 2% of gross
subjected to the graduated annual fixed tax with gross sales sales or receipts of the preceding calendar year and the
or receipts for the preceding calendar year but when it Sanggunian concerned may impose schedular
reaches 2,000,000.00 or more it becomes a percentage tax graduated tax rates but in no to case exceed tax rates
and the is rate not exceeding fifty percent (50%) of one prescribed in Section 143(h) of the LGC.
percent (1%)  In short, it now depends now to the Sanggunian whether
Contractors - includes persons, natural or juridical, not or not the Sanggunian subjects that to type of business
subject to professional tax under Section 139 of this to local tax.
Code, whose activity consists essentially of the sale of all  Generally 8, but the 8th: On any business, not otherwise
kinds of services for a fee, regardless of whether or not specified above na local tax and not subject to tax by the
the performance of the service calls for the exercise or national government.
use of the physical or mental faculties of such contractor  The next thing you need to know insofar as local taxing
or his employees. power of the municipality is the SITUS or the place
 Remember contractor for the transportation of where you’re going to pay the tax being collected by the
goods and passengers are not subject to these municipality. This is because what if there are several
type of business tax becasue for goods they are branches ang business nimo, you have a factory, or
alreasy subject to OPT and for passengers plantation.
common carrier’s tax. Theis provision pertains
to contractors whether or not exercising their Section 150. Situs of the Tax. -
profession.
6. Banks and other financial institutions at a rate not
exceeding fifty percent (50%) of one percent (1%) on the (a) For purposes of collection of the taxes under Section
gross receipts of the preceding calendar year derived from 143 of this Code, manufacturers, assemblers, repackers,
interest, commissions and discounts from lending activities, brewers, distillers, rectifiers and compounders of liquor,
income from financial leasing, dividends, rentals on property distilled spirits and wines, millers, producers, exporters,
and profit from exchange or sale of property, insurance wholesalers, distributors, dealers, contractors, banks and
premium. other financial institutions, and other businesses,
 take note there was one case involving a bank maintaining or operating branch or sales outlet
elsewhere shall record the sale in the branch or sales
wheerein the locasl government divided the
outlet making the sale or transaction, and the tax thereon
50% of 1%. It collected 50% of 1% on the shall accrue and shall be paid to the municipality where
commissions and discounts from lending such branch or sales outlet is located. In cases where
activities then another 50% of 1% from income there is no such branch or sales outlet in the city or
from financial leasing. municipality where the sale or transaction is made, the
sale shall be duly recorded in the principal office and the  Now the distribution of this 70%: pwede man naay factory
taxes due shall accrue and shall be paid to such city or lahi pud sad plantation. (Plantation of banana, Factory
municipality. making the banana chips, ang pagbaligya sa Branch)
 It is very common that your factory is located in Lilo-an, (c) In case of a plantation located at a place other than
your branch selling – generating sales is in Cebu City. If the place where the factory is located, said seventy
there is no rule on that, alkansi si Lilo-an kay the factory percent (70%) mentioned in subparagraph (b) of
located there does not generate sales. subsection (2) above shall be divided as follows:
 So remember that the tax on business is based on gross
receipts or sales of the preceding period. Does it mean to (1) Sixty percent (60%) to the city or municipality
say that the municipality of Lilo-an cannot collect any where the factory is located; and
business tax on the factory because in the first place
wala man ni gi-record nga sales kay the sales happen in
Cebu City, naa nganhi ang Sales office. (2) Forty percent (40%) to the city or
 Now of course it is ensured under LGC that there is a municipality where the plantation is located.
sharing of revenue even if the plantation or factory do not
generate any income. As a general rule the payment of  No problem if the location of the factory and the
the local business tax should be made in the locality plantation in the same locality but if they belong to
where the branch, sales office or warehouse is located. different localities:
 Presumption, warehouse, it stores/available ang goods
for sale or accepts orders for sales, so the sale is Total Sales: PhP 1M recorded in the principal office
recorded in the locality where the warehouse is located.
 What if the principal office of our business is also
generating sales. Well of course, you have to also have
to pay where your principal office is located. What I’m
trying to say here is that, kung asa na gi-generate ang
sales nimo, you pay it in the locality where you generated
the gross sales receipts, after all, it is based on gross
receipts. Lahi ang permit na kuahon nimo for the principal
place lahi pud ang permit and ang local tax na bayaran
for the branch, sales office or warehouse.  Pay kung asa located.
 So what if there is not branch, no sales office, no  What if nay principal office, branch, factory and plantation
warehouse. It might also happen that ang naa ra nimo all located in the different localities? The branch is
diha is a display center or area wherein you can receive located in Santander. You go back to the first rule: if
order but you have no goods stored ready to be delivered there is a branch then the sale pertaining to that branch
to the customer taken care of by the principal place of will just be recorded where that branch is located.
business. If there is no branch, no sales office, no  What if there are two factories? No problem if in the
warehouse, then the sales or receipts will be recorded at same locality but if one is in Lilo-an and another in
the principal office. It follows that the locality where the Compostela?
principal office is located, payment will be made there.
 If there is a factory, project office, plant or plantation: (d) In cases where a manufacturer, assembler, producer,
obviously dili man ni mu-generate because this is the exporter or contractor has two (2) or more factories, project
place where you producing or manufacture the product. offices, plants, or plantations located in different localities,
As to not be unfair the specifically to the locality where the seventy percent (70%) sales allocation mentioned in
the factory, project office, plant or plantation is located, subparagraph (b) of subsection (2) above shall be prorated
the LGC provides: among the localities where the factories, project offices,
plants, and plantations are located in proportion to their
(b) The following sales allocation shall apply to respective volumes of production during the period for which
manufacturers, assemblers, contractors, producers, and the tax is due.
exporters with factories, project offices, plants, and
plantations in the pursuit of their business:  Volume of production, ang factory nay mu-provide ana.
Pila ka units or kilos ang mo-produce
(1) Thirty percent (30%) of all sales recorded in
the principal office shall be taxable by the city or (continuing from above illustration)
municipality where the principal office is located; Total of 90,000 units produced in one year, Prorate the 70%
and (allocated = P 420,000)
(2) Seventy percent (70%) of all sales recorded  in one year because we are talking of annual production
in the principal office shall be taxable by the city  We don’t take into consideration the branch here
or municipality where the factory, project office, because whatever sales/receipt of the branch everything
plant, or plantation is located. goes to that branch.
 If the sales is through routes, trucks, vans or vehicles, we
have to ascertain if there is a branch, sales office or
warehouse where the goods being sold came from. If
there is a branch, sales office or warehouse, then the (1) Grant fishery privileges to erect fish corrals,
sales of these trucks, vans or vehicles will be reported in oysters, mussels or other aquatic beds or
the locality where branch, sales office or warehouse bangus fry areas, within a definite zone of the
these are located. municipal waters, as determined by it: Provided,
(Warehouse – there are available stock for sale and accepts however, That duly registered organizations and
orders and delivers) cooperatives of marginal fishermen shall have
the preferential right to such fishery privileges:
 In warehouse we have to qualify, the warehouse must Provided, further, That the sangguniang bayan
have available stocks for sale and the warehouse may require a public bidding in conformity with
accepts orders and delivers it. It’s a different story if it’s and pursuant to an ordinance for the grant of
just a warehouse which doesn’t accept orders or delivers. such privileges: Provided, finally, That in the
 If there is no branch, sales office or warehouse then it will absence of such organizations and cooperatives
be the gross sales or receipt will be recorded in the place or their failure to exercise their preferential right,
where the goods were withdrawn. other parties may participate in the public
 Is it possible that the place where the goods were bidding in conformity with the above cited
withdrawn is also a branch? Yes. procedure.
 So basically, that is the situs of local business taxation.
 Again, the rule of allocation applies only if there is no (2) Grant the privilege to gather, take or catch
branch being mentioned. bangus fry, prawn fry or kawag-kawag or fry of
other species and fish from the municipal waters
by nets, traps or other fishing gears to marginal
Provided, however, That barangays shall have the exclusive fishermen free of any rental, fee, charge or any
power to levy taxes, as provided under Section 152 hereof, on other imposition whatsoever.
gross sales or receipts of the preceding calendar year of Fifty
thousand pesos (P50,000.00) or less, in the case of cities, and (3) Issue licenses for the operation of fishing
Thirty thousand pesos (P30,000.00) or less, in the case of vessels of three (3) tons or less for which
municipalities. purpose the sangguniang bayan shall
promulgate rules and regulations regarding the
issuances of such licenses to qualified
 For municipalities, under section 143, located within applicants under existing laws.
Metro Manila (Pateros) may impose higher local or
business tax rate but shall not exceed 50% of the tax rate Provided, however, That the sanggunian
mentioned in sec 143 (a to letter h). concerned shall, by appropriate ordinance,
penalize the use of explosives, noxious or
poisonous substances, electricity, muro-ami,
Section 147. Fees and Charges. - The municipality may impose and other deleterious methods of fishing and
and collect such reasonable fees and charges on business and prescribe a criminal penalty therefor in
occupation and, except as reserved to the province in Section 139 accordance with the provisions of this Code:
of this Code, on the practice of any profession or calling, Provided, finally, That the sanggunian
commensurate with the cost of regulation, inspection and licensing concerned shall have the authority to prosecute
before any person may engage in such business or occupation, or any violation of the provisions of applicable
practice such profession or calling. fishery laws.
 Under Sec. 147, municipalities may collect and impose  How about cities? What are their taxing powers? Sec
such reasonable fees and charges on business and 151.
occupation except those reserved for provinces. Although
we said before that a computer or industrial engineer are
not subject to taxes because they don’t have licensure Section 151. Scope of Taxing Powers. - Except as otherwise
examinations, they are not covered under the provided in this Code, the city, may levy the taxes, fees, and
professional tax diba, so the municipality can collect charges which the province or municipality may impose: Provided,
some sort of tax from them. however, That the taxes, fees and charges levied and collected by
highly urbanized and independent component cities shall accrue
to them and distributed in accordance with the provisions of this
Code.
Section 149. Fishery Rentals, Fees and Charges. -
 The rates of taxes that the city may levy may exceed the
(a) Municipalities shall have the exclusive authority maximum rates allowed for the province or municipality
to grant fishery privileges in the municipal waters by not more than fifty percent (50%) except the rates of
and impose rentals, fees or charges therefor in professional and amusement taxes.
accordance with the provisions of this Section.  The most powerful then when it comes to revenue raising
activity is the city because they can collect taxes that are
(b) The sangguniang bayan may: also collected by the province.
 You have to remember that for component cities, there
are certain taxes that have to be shared with the

province. But if it is an HUC or ICC, everything that that previously known as the Cedula. Once you pay your
city collects solely accrues to it. cedula or your community tax, you are being issued a
 Professional tax that is 300 pesos, amusement tax is 10 community tax ticket.
of gross receipts. But for the rest it is 0.05%. So the Only the following can collect or impose the community tax:
maximum increase would 0.75% because one half of 50 * Who may collect the community tax?
is 25. As to the tax on quarrying resources, it’s 10, so the  Cities
maximum will be 15%. But then again if HUC or ICC, it  Municipalities
can be exclusive for them.
 May a Barangay levy a tax? Yes. > Barangays can collect but they cannot impose CT.
 Barangays may levy taxes on retailers with fixed Barangay treasurer can be deputized to collect taxes. If
business establishments with the gross sales or receipts the barangay is deputized to collect the CT, there will be
for the preceding calendar year not exceeding 50k for 50-50 sharing of the proceeds.
barangays in cities and not more than 30k for barangays * Who are liable in paying the community tax?
in municipalities.  Individuals
 The maximum rate is not more than 1% of the gross  Corporations
sales or receipts. Though most of the times these are not
 The community tax is a requisite for you to be able to get
collected anymore.
 Barangays may also collect service fees or charges for your business permit from the mayor’s office.
services it renders in connection with the regulation or Taxpayers covered:
the use of barangay properties or service facilities.
Another is the proceeds from barangay clearances, A. Individual Person liable to pay the community tax (Sec.
because it is a requisite before you can apply for a 157)
business permit that you secure a barangay clearance.
 The moment you apply for a barangay clearance, it must 1. An inhabitant of the Phils.
be acted on within 7 days. Failure to act within that > Whether or not a citizen of the Philippines. So even if
period, it is deemed as if the applicant is issued the you are an alien, so long as you are residing here in the
clearance. Philippines, then you may be made liable to pay for the
 Other fees and charges may reasonably levy on community tax.
commercial breeding of fighting cocks or cockpits. 2. 18 years of age or over
Reasonable fees or charges, but not taxes, such as when 3. Falling under any of the following 4 categories:
they detail barangay tanod in cockpits. i. Who has been regularly employed on a wage
Other Fees and Charges - The barangay may levy reasonable or salary basis for at least 30 consecutive
fees and charges: working days during any calendar year, or
(1) On commercial breeding of fighting cocks, ii. Who is engaged in business or occupation, or
cockfights and cockpits; iii. Who owns real property with an aggregate
 You have the barangay clearance. Of course you assessed value of 1k or more, or
also have the other fees and charges the brgy. may iv. Who is required by law to file an income tax
reasonably levy. return
 All commercial breeding of fighting cocks, cockfights,  All 3 requisites must concur.
and cockpits, reasonable fees and charges, kung Hence, if you are a resident and earning
mag- detail ug brgy. tanod nganha ang brgy., then income, however you are below 18, you are still
they may collect fees also. not required to pay CT.
 Familiar mo anang tukis (?)? The brgy. may also Computation:
collect reasonable fees and charges. When we talk An annual CT of P5.00 and an annual additional tax of P1.00 for
of cockfights, that happens in cockpits. Kanang tukis, every 1k of income regardless of whether from business, exercise
bawal man na, but usually allowed na during fiesta of profession or from property which in no case shall exceed 5k.
or fiesta celebration. It’s an informal sabong. Kanang  Take note, renewal of business permits of employers.
kaka (?), if ganahan ang brgy. nga i-subject na to Yearly man ng renewal, so it is part of the requirement
reasonable fees and charges, pwede siguro because that before the business permit of the employer is
it is not being subjected to any tax. renewed, the employer must see to it that the community
(2) On places of recreation which charge admission tax of the employees have been paid and settled
fees (i.e. discoral); and according to their gross income of the previous year, ang
(3) On billboards, signboards, neon signs, and basehan ana is ang 2316. So if sa 2316, naka-report
outdoor advertisements. ngadto nga ang annual income nimo is P500k, then ang
 I don’t require you to memorize the rates, but at least you bayaran nimo nga community tax would be P505. That’s
should be able to ascertain if this particular revenue P5 plus P1 for every 1k.
raising power belongs to the province, the municipality,  Okay ra ang employment and in business, it has to be
the city or the barangay. Remember, the most powerful renewed so ma-monitor ra; medyo lisod ang
among the four are the cities. implementation of the collection of community tax [with
COMMUNITY TAX (Secs. 156-164) regard to] ownership of real property with an aggregate
 Sa katong common revenue raising powers diay, other assessed value of 1k or more. It might be quite difficult.
that the service fees, etc., there is also common revenue  You have to remember, in case of husband and wife, the
raising power for municipalities and cities and that’s to additional tax imposed shall be based upon the total
the proceeds of community tax collection. This is

property owned by the husband and wife and the total eighteen (18) years on or after the first (1st) day of July of
gross receipts or earnings derived by them. any year, or who cease to belong to an exempt class on
B. Juridical Persons or after the same date, shall not be subject to the
Corporations no matter how created or organized whether community tax for that year.
domestic or resident foreign engaged in or doing business in the  Corporations established and organized on or before the
Philippines are also liable to pay an annual community tax. Hence, last day of June shall be liable for the community tax for
Non Resident Foreign Corporation are not required to pay that year. But corporations established and organized on
community tax. or before the last day of March shall have twenty (20)
Computation: days within which to pay the community tax without
An annual CT of P500 and an annual additional tax, which, in no becoming delinquent. Corporations established and
case, shall exceed 10k in accordance with the following schedule: organized on or after the first day of July shall not be
(1) For every 5k worth of real property in the Philippines subject to the community tax for that year. If the tax is not
owned by it during the preceding year based on the paid within the time prescribed above, there shall be
valuation used for the payment of the real property tax added to the unpaid amount an interest of twenty-four
under existing laws, found in the assessment rolls of the percent (24%) per annum from the due date until it is
city or municipality where the real property is situated – paid.
P2.00; and  Accrual – 1st day of January every year
(2) For every 5k of gross receipts or earnings derived by  Payment – not later than the last day of February of each
it from its business in the Philippines during the year
preceding year - P2.00.  Corporation established after March – it is not expressly
The dividends received by a corporation from another corporation stated under the law but the standard is immediately after
however shall, for the purpose of the additional tax, be considered the incorporation.
as part of the gross receipts or earnings of said corporation.  Who may collect?
 Diba because the CT certificate, from the word 1. The city, municipal treasurer, basically is responsible
‘community tax,’ it’s a proof also that you are residing in in the collection
the locality, although later on, it’s not strictly the place of 2. But the city or municipal treasurer may deputize the
residence lang gyud kung asa aka pwede mubayad sa barangay treasurer to collect the CT in their
CT. You are required to get a CT certificate and wala ka respective jurisdiction
income and wala ka real property ownership, then you
> proceeds of the collection of the CT will have
may still get a CT certificate upon payment of at least P5.
to be shared equally between the
Exemptions granted:
municipality/city and the barangay responsible
1. Absolute exemption- Diplomatic and consular
in the collection
representatives
> the city or municipality may require a bond for
2. Relative exemption- Transient visitors when their stay in the
it
Philippines does not exceed 3 months
* If the transient visitor exceeds the 3 months maximum period Why do we need to pay?
provided by law, then, the exemption is lost.  Because under several transactions, it is require that an
Where to get the CT certificate/ Where to pay individual or corporation must present CT certificate.
1. in the place of residence of the individual, or  Ngano need or bayad og community tax because under
2. in the place where the principal office of the juridical several transactions it is require that an individual or
corporation must present community tax certificate.
entity is located, or
 Individual section 163 of the LGC - when individual
3. in the place where you are employed or the principal subjected to community tax acknowlefges any document
office of your employment before the notary public - strictly imposed before, but now
under the notarial law, it is not considered anymore as
* Piece of advice, kung mukuha mo ug CT proof of identification. Nana mo legal writing? Ethics?
certificate, adto nalang sa place of residence ninyo  Before CTC considered as proof of identity, but not
especially kung dili ing-ana kadato alg lugar ninyo, at anymore today considered as sufficent
least, you make a contribution.
Penalty for delinquency or late payment: Section 163. Presentation of Community Tax Certificate On
 The CT due plus an additional interest of 24% per annum Certain Occasions. -
from the due date until it is paid
Time of Payment of CT
(a) When an individual subject to the community tax
 The community tax shall accrue on the first (1st) day of
acknowledges any document before a notary public,
January of each year which shall be paid not later than
the last day of February of each year. If a person reaches takes the oath of office upon election or appointment
the age of eighteen (18) years or otherwise loses the to any position in the government service; receives
benefit of exemption on or before the last day of June, he any license, certificate. or permit from any public
shall be liable for the community tax on the day he authority; pays any tax or free; receives any money
reaches such age or upon the day the exemption ends. from any public fund; transacts other official
 However, if a person reaches the age of eighteen (18)
business; or receives any salary or wage from any
years or loses the benefit of exemption on or before the
last day of March, he shall have twenty (20) days to pay person or corporation with whom such transaction is
the community tax without becoming delinquent. Persons made or business done or from whom any salary or
who come to reside in the Philippines or reach the age of
wage is received to require such individual to exhibit  In short - nr? Years, bisag 10 years paka wa naka bayad
the community tax certificate. na local tax, the surcharges it is only good for 36 months,
that is 3 years.
 Interest 24% per annum or or an interest 2% per month
 The presentation of community tax certificate shall not be from the date due until it is paid, but similar in
required in connection with the registration of a voter. surcharges, the computation of the interest on a monthly
bais must not exceed 36 months or 3 years.
(b) When, through its authorized officers, any corporation  This is also the distinction between the LGC and NIRC as
subject to the community tax receives any license, certificate, far as surhces. NIRC wlay limit kung pila ang years ang
or permit from any public authority, pays any tax or fee, ma collect nga surcharges but the LGC is limited to 36
receives money from public funds, or transacts other official months or 3 years.
business, it shall be the duty of the public official with whom
such transaction is made or business done, to require such Section 168. kinsa ang mo collect sa local tax? It should be
corporation to exhibit the community tax certificate. the provincial, city , municpal, barangay, treasurer or the Duly
authorized deputy of the treasure.
(c) The community tax certificate required in the two
preceding paragraphs shall be the one issued for the current
year, except for the period from January until the fifteenth
(15th) of April each year, in which case, the certificate issued
for the preceding year shall suffice.  So mao to - not later than 28th day of each month .
 When you file income tax return ba to? - ITR noh? You --
need to specify latest, naglibog ko kung 2305, but yeah I
think so, as confirmed by markley, when you file your Remedies of the Government and Tax payer
income, specifiy your updated CTC number, ah oh sakto.
So, mao ra na.
 Employer can validily requires employees to get an Remedies of the LGU
updated Community tax certificate.
 For Extra judicial remedies - may resort lien, na discuss
naman ni nto ang lien, this attaches to the property so
long as ou have unpaid taxes, since this attaches, e
annotate ni sa tax declaration even if you transfer the
Administrative Matters in so far as collection of local taxes in
ownership, even if the owner changes, so long as you did
concern
not pay it, then that lien continues to exist,
 Distraint - personal property, LEVY - real property and as
 Under Section 165. Tax period and manner of discuss in NIRC remedies, made before on simultaneous
payment, when it comes to tax period there are two, with distraint you can continue this so long liability
calendar or fiscal year but for local taxes, we only remains unpaid.
CALENDAR YEAR. So meaning to say January 1 to  Compromise ang difference diri, under NIRC naay MRC
December 31, there is no such thing as fiscal year in 10% or 40% depending on the reason, for LOCAL
local taxation even if it involves local taxes to government taxation there is no such thng as minimum
corporation. compromise rate, so it will depend on the discretion of
 Taxes,fees and charges maybe paid in quarterly the LGU
installments to the local treasures office,
 Section 166. That is accrual of tax as a rule - when
will this local taxes accrue? It accrues on the 1 st day Judicial Remedy
of January of every year, however new taxes fees
and charges in the rates thereof shall first day of the  Court Action for collection of taxes and if the LGU resorts
quarter, following the effectivity of the ordinance court action you have to take in consideration, kinsa ang
imposing such new levy or rates. juridication ang MTCC? RTC? Pila ang amount? Does it
 When should you pay the local tax,? ofcourse different ni 400,000 does it exceed 300k we will discuss this later on
sa community tax, because the community tax on or the  Declaratory relief or injunction as the case maybe -
last day of February for other taxes, it must be paid for ofcourse, the DR and injunction ,the LGU will not raise it
the first 20 days of January or for the subsequent quarter against the tax payer but probably against the national
as the case maybe government or against the provincial government kung
 But it can be extended with justifiable cause without naay tax gi collect ang province and naa pd si city or
penalty or surcharges, but not exceeding 6 month as municipality, and not clear who has authority, then they
provided for section 167. may resort to this.
 For the surcharges, the same under NIRC , those not
exceeding 25% of the amount tax, fees or charges
inclding surcharges, until such amount is fully paid but in
no case total interest on the unpaid amount of portion
thereof, exceed 36 months TAX PAYER REMEDIES

Administrative remedies are divided into two, Before and after (b) In case of fraud or intent to evade the payment of taxes, fees,
assessment or charges, the same may be assessed within ten (10) years from
discovery of the fraud or intent to evade payment.cralaw
Before assessment - tax payer may question the constitutionality (c) Local taxes, fees, or charges may be collected within five (5)
of the ordinance imposing the tax or may file for declaratory relief years from the date of assessment by administrative or judicial
before the regular court action.
Grounds for the suspension of the running of the prescriptive

After assessment - may file a protest or claim for refund or credit period:
or redemption.
(d) The running of the periods of prescription provided in the
preceding paragraphs shall be suspended for the time during
Redemption- after your property is sold in public bidding or which:
forfeited you are given 1 year to redeem it, ofcourse preemption (1) The treasurer is legally prevented from making the
stil exist under local taxation prior to the sale of the property, you assessment of collection;
can prevent the sale by happening everything the unpaid tax,  When in comes to prevention from assessment or
charges and fees collection of treasurer, diba ni ingon man ta na sa NIRC,
the CIR may only be prevented and enjoined from
Judicial remedies -same gihapon. making the assessment or collection if the CTA will issue
an injunction, the regular courts cannot stop the CIR from
making the assessment or collection.
Court action, Declaratory relief or injunction
 How about the treasurer, pwede ra ba Regular courts
ang mu issue sa injuction preventing the treasurer from
making an assessment or collection of the tax? Yes. It is
different for National taxes as compared to local tax. For
Late us just take a quick discussion on the procedure for Local the taxpayer, remedy niya is court action filing a
Distraint or levy declaratory relief or injunction which may be filed in the
regular courts.
(2) The taxpayer requests for a reinvestigation and executes a
For local Distraint or levy it is provided in section 173 of the
waiver in writing before expiration of the period within which to
LGC
assess or collect; and (3) The taxpayer is out of the country or
otherwise cannot be located.
For Distraint
Jurisdictional amounts
(e) Procedure of sale - At the time and place fixed in the Jurisdiction of the MTC,MTCC,MeTC
notice, the officer conducting the sale shall sell the goods or – principal amount of taxes, fee exclusive of charges (25%
effects so distrained at public auction to the highest bidder surcharges) the is less 300,000 or less (Metro Manila - 400,000)
for cash (take note). Within five (5) days after the sale, the Jurisdiction of the RTC
local treasurer shall make a report of the proceedings in – principal amount of taxes, fee exclusive of charges is more than
writing to the local chief executive concerned. 300,000 (Metro Manila - 400,000) provided that the amount is less
 of course, the excess proceeds will have to be returned than 1M
to the owner  If ang original collection is filed, lets for example, 100K
lang ang unpaid local tax, asa i-file? MTC. Appeal? RTC
 Should the property distrained be not disposed of within  In other words, the RTC may have original jurisdiction if
one hundred and twenty (120) days from the date of the principal amount of taxes, fee exclusive of charges is
distraint, the same shall be considered as sold to the more than 300,000 (Metro Manila - 400,000) provided
local government unit concerned for the amount of the that the amount is less than 1M. And has appellate
assessment made thereon by the Committee on jurisdiction for court actions which originated in MTC
Appraisal and to the extent of the same amount, the tax  How about if it exceeds 1M? You file it in the Court of Tax
delinquencies shall be cancelled. Appeals (division). And of course, the CTA exercises
 But ang selling price niya is equivalent to the tax base na appellate jurisdiction for those court actions originating
wala na bayaran. from the RTC in tax cases.
Said Committee on Appraisal shall be composed of the city or  CTA (en banc) has appellate jurisdiction for those
municipal treasurer as chairman, with a representative of the decisions or resolutions laid out by CTA in division, or
Commission on Audit and the city or municipal assessor as over petitions for reviews of the judgments, resolutions,
members. or orders of the RTC in the exercise of their appellate
Excerpt of Section 175(f) jurisdiction in tax cases originally filed in the MTC.
… Where the proceeds of the sale are insufficient to satisfy the  For distraint and levy, you have to remember, sa family
claim, other property may, in like manner, be distrained until the code, those which may not be subject to levy or distraint
full amount due, including all katong one cow, one carabao, professional library of the
 Kato, murag more on review of distraint and levy rato lawyer or doctor…
which we have discussed under NIRC.
Prescriptive Period Remedies of the Taxpayer
(a) Local taxes, fees, or charges shall be assessed within five (5)  For the remedies of the taxpayer, kung before
years from the date they became due. assessment, the taxpayer may resolve to question on the
constitutionality ordinance imposing the tax. Within how
many days should you question the constitutionality? even if you file for a motion for reconsideration. But under
Within 30 days from the effectively of the ordinance. Local taxation, there is no provision na regardless of any
Where will you file? supervening cause, so meaning to say, pwede ma
 We follow the exhaustion of administrative remedies. It suspend ang 2 year period. Say for example, ni file mo
should be raised first before the Department of Justice, ug declaratory relief before the regular court. The running
before the Secretary of Justice. And the Secretary, as a of the 2 year period to claim for the refund of tax credit
rule, is given 60 days from the date of the receipt of the will be suspended and then continue when there is a
appeal. resolution from the court.
 Kung ang ruling sa Secretary of Justice would still be Court Action
adverse to the taxpayer, the taxpayer must file an 1. Within 30 days of receipt of decision or lapse of 60 days
appropriate action in the court of competent jurisdiction
in case of Secretary of Justice’s inaction kung mu
within 30 days from the receipt of the adverse decision of
the Secretary of Justice or from the lapse of the 60 day question ka ug constitutionality
period for the Secretary of Justice to decide. 2. Within 30 days of receipt of protest assessment is
 And when we talk to court of competent jurisdiction, we denied, or the lapse of the 60 day period for the local
are talking about the RTC. We don’t go directly to the treasurer to decide on your protest, mu adto sad ka sa
Supreme Court. Basta mag una, adto ka sa DOJ. If you court
would go directly to the RTC, that can be a ground for the 3. Depends on the amount: MTC – 300K/400K, RTC-
RTC to dismiss your question on constitutionality.
>300K/400K but less than 1M, CTA division– 1M
 And of course, declaratory relief whenever applicable,
same procedure as that is discussed in the Rules of 4. If your action is taken by the treasurer in refund period
Court. and the 2 year period is about to lapse, you can also file
the appropriate before the appropriate court
Protest
 When should you file protest? Injunction: Unlike in NIRC wherein it is prohibited, but in
Section 195. Protest of Assessment. - When the local treasurer or Local Tax there is no prohibition.
his duly authorized representative finds that correct taxes, fees, or
charges have not been paid, he shall issue a notice of assessment Things you need to remember under Local Taxation:
stating the nature of the tax, fee, or charge, the amount of  Specific revenue raising powers for provinces, cities,
deficiency, the surcharges, interests and penalties. Within sixty municipalities, including the Barangay
(60) days from the receipt of the notice of assessment, the  Community Tax Discussion
taxpayer may file a written protest with the local treasurer  Prescriptive Period to collect and assess -5,10,5 as the
contesting the assessment; OTHERWISE, the assessment shall case may be
become final and executory.  Deadline Community Tax –which shall be paid not later
 It should be in writing than the last day of February of each year.
 Sa NIRC, kung mu protest ka, you should pay, tatakan ra  Other taxes it will accrue 20 day of January every year
na ug payment under protest. But under local taxation, is
it a requirement to pay under protest? No. It’s not a
requirement. Pwede man gani i-enjoin. So pwede ra ka REAL PROPERTY TAXATION
mu protest, dili ra ka mu bayad.
 The local treasurer SHALL DECIDE THE PROTEST
WITHIN SIXTY (60) DAYS from the time of its filing. If the
local treasurer finds the protest to be wholly or partly Real Property Tax – a direct tax on ownership of lands and
meritorious, he shall issue a notice cancelling wholly or buildings or other improvements thereon payable regardless of
partially the assessment. However, if the local treasurer whether the property is used or not, although the value may vary
finds the assessment to be wholly or partly correct, he in accordance with such factor.
shall deny the protest wholly or partly with notice to the
taxpayer.  Take note: Person primarily liable to pay the RPT is the
 The taxpayer shall have thirty (30) days from the owner, because if you are the owner you have to make a
receipt of the denial of the protest or from the lapse declaration that that property belongs to you. However,
of the sixty (60) day period prescribed herein within when it comes to the imposition of the RPT we don’t look
which to APPEAL with the court of competent at ownership only, rather the law looks also the usage or
jurisdiction otherwise the assessment becomes the actual use of the property, specifically on questions
conclusive and unappealable. on whether or not this property is exempt, it’s not on the
Section 196. Claim for Refund of Tax Credit. - No case or ownership but rather on the usage of the property.
proceeding shall be maintained in any court for the recovery of
any tax, fee, or charge ERRONEOUSLY OR ILLEGALLY  This also covers improvements.
COLLECTED until a written claim for refund or credit has been
filed with the local treasurer. No case or proceeding shall be Improvements – a valuable addition made to a property or
entertained in any court after the expiration of two (2) years amelioration in its condition amounting to more than a mere
from the date of the payment of such tax, fee, or charge, or replacement of parts.
from the date the taxpayer is entitled to a refund or credit.
 Take Note: Sa NIRC, ang 2 years didto regardless of any  These improvements should enhance or increase the
supervening cause, mudagan jud ang 2 year period, value of the property, and the increase should pertain to

increasing the economic life and the improvement must
also be permanently assessable and can be treated
independently from the main property. In short, the
improvement itself has its own valuation.
Ex: installation of machineries, equipments and even buildings.
 For RPT under the LGC, (as compared from Art. 415 of
the Civil Code), forreal property by destination, it will only
be treated as real property if it is actually, directly and
exclusively used to keep the needs of a particular
industry or service. In short, machineries which are even
“permanently”, “non-permanently” or “temporarily” Special Levy
attached to the land, they are considered improvements 1. Special Education Fund (SEF)
subject to RPT.  Province, city, municipality within Metro Manila
 In addition to basic real property tax
Characteristics of RPT:  Ex: if sanggunian passes ordinance collecting 1% SEF,
1. It is a direct tax. this will be added to basic RPT of:
o 1% for province = 2%
2. It is an ad valorem tax. o 2% for city/municipality = 3%
3. It is proportionate. – because the tax is calculated on the 2. Ad valorem tax on idle lands
basis of a certain percentage of the value assessed.  Province, city, municipality within Metro Manila
 In addition to basic real property tax
4. It is an indivisible single obligation.  5%
RPT is a tax on the property, that is why it Section 237. Idle Lands, Coverage. – Foer purposes of
attaches to the property regardless if whether there is a real property taxation, idle lands shall include the
change in the ownership of the property or even if the following:
property is already subdivided.
(a) Agricultural lands, more than 1 hectare in area,
5. It is a local tax. – because the imposing authority is the suitable for cultivation, dairying inland fishery, and
local government unit. other agricultural uses, ½ of which remain
uncultivated or unimproved by the owner of the
May only be levied by: property or person having legal interest therein.
a. Provinces Agricultural lands planted to permanent or perennial
b. Cities crops with at least 50 trees to a hectare shall not be
c. Municipalities within Metro Manila (isa na lang considered idle lands. Lands actually used for
ang municipality sa Manila: Municipality of grazing purposes shall likewise not be considered
Pateros) idle lands.
Q: May all the LGU’s collect RPT? (b) Lands, other than agricultural, located in a city or
A: No. Only provinces, cities and municipalities within Metro municipality, more than 1000 square meters in area
Manila. ½ of which remain unutilized or unimproved by the
owner of the property or person having legal interest
Extent of Power to Levy: Rate of Basic Real Property Tax therein. Regardless of land area, this Section shall
likewise apply to residential lots in subdivisions duly
1. Province – not more than 1% of assessed value approved by proper authorities, the ownership of
2. City – not more than 2% which has been transferred to individual owners,
3. Municipality w/n MM – not more than 2% who shall be liable for the additional tax; Provided
however, that individual lots of such subdivisions, the
 Aside from the basic RPT, there shall be added a 1% ownership of which has not been transferred to the
additional real estate tax to finance the special education buyer shall be considered as part of the subdivision,
fund (SEF). So if it is the province that imposed, it shall and shall be subject to the additional tax payable by
collect 1% for the basic plus another 1% for the SEF. subdivision owner or operator.
 What is the purpose of the Special Education Fund 3. Special levy/special assessments
(SEF)?
Section 240. Special Levy by Local Government Units. – A
 To provide a common fund for public schools located province, city or municipality may impose a special levy on the
within the province and its component municipalities. lands comprised within its territorial jurisdiction specially benefitted
by public works projects or improvements funded by the local
Other than the SEF, there is another additional 5% ad valorem tax government unit concerned: Provided, further, that the special levy
on idle lands. shall not exceed 60% of the actual cost of such projects and
improvements, including the costs of acquiring land and such

other real property in connection therewith: Provided, further, that  The government leases a land to SM. Is that land
the special levy shall not apply to lands exempt from basic real subject to RPT?
property tax and the remainder of the land portions of which have YES, because it falls under the exception. SM is a taxable
been donated to the local government unit concerned for the person.
construction of such projects or improvements.
 What if it is leased out to USC, subject to RPT?
 Collected by LGU from owners whose lands are NO, because USC is not a taxable person.
benefitted by local projects causing increase in land
value  Lung Center ADE (actually-directly-exclusively)
 Province, city, municipality (not limited to within Metro principle
Manila)  “Exclusively used” means to the exclusion of other
 Requirements: people.
- Ordinance  Not synonymous with dominant or principal use.
- Prior public hearing: constituents affected
- Limit: 60% of actual cost of projects/improvements (b) Charitable institutions, churches, parsonages or
taken from general fund of LGU not DPWH or convents appurtenant thereto, mosques, nonprofit or
national government religious cemeteries and all lands, buildings and
 Example: Pinamungahan made highway connecting it to improvements ACTUALLY, DIRECTLY AND
Toledo and other municipalities, using its local funds, it EXCLUSIVELY USED for religious, charitable or
may impose special levy educational purposes;
 But if church, non-stock, non-profit educational institution,
charitable institution, may it be subject to special  TN: We are not after the ownership. We are
levy/assessment? NO. if exempted form RPT, also after the usage.
exempted from special levy/assessment
 So if cost is 100M, 60% is 60M to be divided by number Q: What if it is a machinery owned by Cebu leased to a
of landowners benefited – consultation if amount is okay cathedral?
– if not, compromise between sanggunian and affected A: Not exempted. The exemption applies only to lands,
owners; again, those exempted form RPT are not buildings and improvements.
subjected to special levy/assessment.
(c) All machineries and equipments that are ACTUALLY,
Fundamental Principles governing RPT (FEU-UP) DIRECTLY AND EXCLUSIVELY USED by (1) local
water districts and government-owned or controlled
corporations engaged in the (2) supply and distribution
Section 198. Fundamental Principles. – The appraisal, of water and/or (3) generation and transmission of
assessment, levy and collection of real property tax shall be electric power;
guided by the following fundamental principles:
 TN: Stated otherwise, the lands, buildings and
A) Real property shall be appraised at its current and Fair improvements of these entities are not exempt.
market value;
B) Real property shall be classified for assessment (d) All real property owned by duly registered
purposes on the basis of its actual Use; cooperatives as provided for under RA 6938; and
C) Real property shall be assessed on the basis of a
Uniform classification within each local government unit; (e) Machinery and equipment used for pollution control
D) The appraisal, assessment, levy and collection of real and environmental protection.
property tax shall not be let to any Private person;
E) The appraisal and assessment of real property shall be  Except as provided herein, any exemption from
Equitable. payment of real property of real property tax
previously granted to, or presently enjoyed by,
all persons, whether natural or juridical,
including all government-owned or controlled
Exemptions from Real Property Tax corporations are hereby withdrawn upon he
effectivity of this Code.
Section 234. The following are exempted from payment of the real
Q: May a GOCC be subject to RPT?
property tax:
A: Yes.
(a) Real property owned by the Republic of the  An entity is a GOCC if it has capital stocks
Philippines or any of its political subdivisions except divided into shares. It may be a stock or non-
when the beneficial use thereof has been granted, for stock corporation.
consideration or otherwise, to a taxable person;
 TN: this includes instrumentalities of the Republic. Philippine Fisheries Development Authority (PFDA) v. CBAA
Beneficial use pertains to the actual use of that tax able
person.  PFDA operating the Lucena Fishing Port
Complex is an instrumentality of the
Illustration: government. PFDA is not a GOCC for even if it
has capital stocks, it is not divided into shares of (30th) commencing with the calendar year 1992. Section
stocks. It has no stockholders or voting shares. 203. Duty of Person Acquiring Real Property or Making
It also has no members so t cannot be a non- Improvement Thereon. - It shall also be the duty of any
stock corporation. person, or his authorized representative, acquiring at any
time real property in any municipality or city or making any
 Therefore, PFDA’s building is not subject to improvement on real property, to prepare, or cause to be
RPT because it is exempted under paragraph 1 prepared, and file with the provincial, city or municipal
as an instrumentality of the Republic. assessor, a sworn statement declaring the true value of
subject property, within sixty (60) days after the acquisition of
Manila International Airport Authority (MIAA) v. CA such property or upon completion or occupancy of the
improvement, whichever comes earlier.
 A GOCC must be organized as a stock or non-stock
corporation, MIAA is not organized as a stock or non-  For newly acquired property
stock corporation. Its charter mandates that MIAA must a) Must file with the assessor within 60 days
remit 20% of its annual gross operating income to the from date of transfer a
national treasury. It is a government instrumentality b) Sworn statement containing market value
vested with corporate powers by its charter. Hence, its and description of property
airport lands and buildings are of public dominion (and  For improvement on property
cannot be subjected to RPT). a) Must file within 60 days upon completion or
occupation (whichever comes earlier)
 Other entities declared by the SC as government b) Sworn statement containing the fair market
instrumentalities are: Bangko Sentral ng Pilipinas (BSP), value and description of property
Philippine Ports Authority (PPA), University of the
Philipines (UP), GSIS. 2. Declaration by Provincial/City/Municipal Assessor (Sec.
204)
Mactan Cebu International Airport v. City of Lapu-lapu(June
15, 2015) Section 204. Declaration of Real Property by the Assessor.
- When any person, natural or juridical, by whom real
 The petitioner is an instrumentality of the government; property is required to be declared under Section 202 hereof,
thus, its properties actually, solely and exclusively used refuses or fails for any reason to make such declaration
for purposes consisting of the airport terminal building, within the time prescribed, the provincial, city or municipal
airfield, runway, taxiway, and the lots on which they are assessor shall himself declare the property in the name of
situated, are not subject to RPT and respondent city is the defaulting owner, if known, or against an unknown owner,
not justified in collecting taxes from petitioner over said as the case may be, and shall assess the property for
properties. taxation in accordance with the provision of this Title. No oath
shall be required of a declaration thus made by the
 Petitionerbn’s properties that are actually, solely, and provincial, city or municipal assessor.
exclusively used for public purpose, consisting of the
airport terminal, airfield, runway, taxiway and the lots on When: Only when person under Sec. 202 refuses or fails
which they are situated are exempt for RPT imposed by to make a declaration within prescribed time.
the city of Lapu2x.  No oath by assessor required (considered to be within
their official function)
Procedure in the administration of RPT Notes: Proof of Exemption of Real Property from Taxation (Sec.
206)
Step 1: Declaration of Real Property Section 206. Proof of Exemption of Real Property from Taxation. -
Every person by or for whom real property is declared, who shall
1. Declaration by Owner or Administrator (Sec. 202-203) claim tax exemption for such property under this Title shall file with
the provincial, city or municipal assessor within thirty (30) days
Section 202. Declaration of real Property by the Owner or from the date of the declaration of real property sufficient
Administrator. - It shall be the duty of all persons, natural or documentary evidence in support of such claim including
juridical, owning or administering real property, including the corporate charters, title of ownership, articles of incorporation,
improvements therein, within a city or municipality, or their bylaws, contracts, affidavits, certifications and mortgage deeds,
duly authorized representative, to prepare, or cause to be and similar documents. If the required evidence is not submitted
prepared, and file with the provincial, city or municipal within the period herein prescribed, the property shall be listed as
assessor, a sworn statement declaring the true value of their taxable in the assessment roll. However, if the property shall be
property, whether previously declared or undeclared, taxable proven to be tax exempt, the same shall be dropped from the
or exempt, which shall be the current and fair market value of assessment roll.
the property, as determined by the declarant. Such
declaration shall contain a description of the property  Who: By any person of for whom real property is
sufficient in detail to enable the assessor or his deputy to declared. Claim for exemption must be filed with the
identify the same for assessment purposes. The sworn assessor together with sufficient documentary evidence
declaration of real property herein referred to shall be filed to support claim
with the assessor concerned once every three (3) years
during the period from January first (1st) to June thirtieth
 When: Within 30 days from date of declaration of Section 207. Real Property Identification System. - All
property declarations of real property made under the provisions of this
Title shall be kept and filed under a uniform classification system
 Risk if not declared for RPT purposes: owner may be to be established by the provincial, city or municipal assessor.
subjected to back taxes not exceeding 10 years
 All declarations shall be kept and filed under a uniform
If property declared for the first time (Sec. 222) classification system to be established by the provincial,
city or municipal assessor.
Section 222. Assessment of Property Subject to Back Taxes. -
Real property declared for the first time shall be assessed for Step 3: Appraisal and Valuation of Real Property (Secs. 212-
taxes for the period during which it would have been liable but in 214, 224-225)
no case of more than ten (10) years prior to the date of initial  This involves the determination of the FMV, lahi pa ni sa
assessment: Provided, however, That such taxes shall be gideclare sa owner because the declaration diba at one
computed on the basis of the applicable schedule of values in point man na but the appraisal may be done every after
force during the corresponding period. If such taxes are paid on or three years.
before the end of the quarter following the date the notice of So for land:
assessment was received by the owner or his representative, no 1) Assessor of the province/city/municipality may summon
interest for delinquency shall be imposed thereon; otherwise, such the owners of the properties to be affected and may take
taxes shall be subject to an interest at the rate of two percent (2%)
depositions concerning the property, its ownership,
per month or a fraction thereof from the date of the receipt of the
amount, nature and value (Sec. 213, LGC)
assessment until such taxes are fully paid.
*When it comes to appraisal, it does not only involve the
If declared for the first time, real property shall be assessed owner and the assessor, but the assessor may also get a
for back taxes: basis of the appraisal from 3rd parties like Register of
Deeds under the Local Government Code who is obliged
a) For not more than 10 years prior to date of initial to apprise the assessor for any changes in the value of
assessment the property. It also the duty of the official issuing building
b) Taxes shall be computed on the basis of applicable permit or certificate of registration of machinery if there
schedule of values in force during corresponding period are new machineries introduced in the real properties or
in the land. Of course we have also the duty of the
geodetic engineers to apprise and notify any
developments the assessor in the property.
Step 2: Listing of Real Property in the Assessment Rolls (Sec.
2) Assessor prepares a schedule of FMV for different
205, 207)
classes of properties
*The FMV must be approved by the Sanggunian because
Assessment rolls after listing shall be forwarded to the local
the FMV will be the one used in the computation of the
treasurers.
RPT and it has to be uniform for a particular area as
determined by the assessor
Section 205. Listing of Real Property in the Assessment Rolls. –
3) Sanggunian enacts an ordinance
18 (a) In every province and city, including the municipalities
within the Metropolitan Manila Area, there shall be prepared and 4) The schedule of FMV is published in a newspaper of
maintained by the provincial, city or municipal assessor an general circulation in the province, city or municipality
assessment roll wherein shall be listed all real property, whether concerned or in the absence thereof shall be posted in
taxable or exempt, located within the territorial jurisdiction of the the provincial capitol, city or municipal hall and in two
local government unit concerned. Real property shall be listed, other conspicuous public places therein (Sec. 212, LGC)
valued and assessed in the name of the owner or administrator, or
anyone having legal interest in the property. (b) The undivided real For machinery
property of a deceased person may be listed, valued and  If the property involves machinery, again the
assessed in the name of the estate or of the heirs and devisees presumption here is that the machinery is permanently
without designating them individually; and undivided real property attached to the land, or if temporarily attached the
other than that owned by a deceased may be listed, valued and machinery should be used actually, directly and
assessed in the name of one or more co-owners: Provided, exclusively for the operation of the business or industry.
however, That such heir, devisee, or co-owner shall be liable  The fair market value of a brand-new machinery is equal
severally and proportionately for all obligations imposed by this the acquisition cost.
Title and the payment of the real property tax with respect to the  If the machinery is imported, the acquisition cost
undivided property. (c) The real property of a corporation, includes freight, insurance, bank and other charges,
partnership, or association shall be listed, valued and assessed in brokerage, arrastre and handling, duties and taxes, plus
the same manner as that of an individual. (d) Real property owned charges at the present site in order to bring the
by the Republic of the Philippines, its instrumentalities and political machinery in the land. Also called as landing cost.
subdivisions, the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person, shall be listed, 1) For brand new machinery: FMV is the acquisition cost
valued and assessed in the name of the possessor, grantee or of 2) In all other cases: FMV = (Remaining economic life/Estimated
the public entity if such property has been acquired or held for Economic Life) x Replacement Cost
resale or lease. Economic life – life where property is deemed profitable
Different from useful life – when cost higher than benefit, not
anymore economically efficient
 The period of prescription within which to collect shall be
Step 4: Determine Assessed Value (Sec. 218) suspended for the time during which: (1) The local
The assessment level is provided in the NIRC in Sec. 218. treasurer is legally prevented from collecting the tax; (2)
Procedure: The owner of the property or the person having legal
1. Take the schedule of FMV interest therein requests for reinvestigation and executes
2. Assessed Value = FMV x Assessment level a waiver in writing before the expiration of the period
3. Tax = Assessed value x Tax rate (depends if province = 1%, within which to collect; and (3) The owner of the property
city/municipality = 2% plus SEF = 1% plus ad valorem on idle land or the person having legal interest therein is out of the
= 5%) country or otherwise cannot be located.
So after computation of the tax, collection or payment the tax 1) local treasurer is legally prevented to collect tax
follows. 2) the owner requests for reinvestigation and writes a waiver
before the expiration of the 5-year period to collect, and
3) the owner of the property is out of the country or cannot be
Step 5: Payment and Collection of Tax
located
When:
Classification of lands:
January of every year and such will constitute as a superior lien
(Sec. 246) 1. Residential land- land principally devoted for habitation
Section 246. Date of Accrual of Tax. - The real property tax for 2. Agricultural land - devoted principally to planting of trees,
any year shall accrue on the first day of January and from that raising of crops, livestock and poultry, salt making, inland
date it shall constitute a lien on the property which shall be fishing, and similar aquacultural activities and other
superior to any other lien, mortgage, or encumbrance of any kind agricultural activities, and not classified as mineral,
whatsoever, and shall be extinguished only upon the payment of timber, residential, commercial or industrial land. Take
the delinquent tax. note of “inland shipping” is included.
How: 3. Commercial Land – land devoted principally for the object
a) Basic real property tax in 4 equal installments (on or of profit and not classified as agricultural, industrial,
before March 31, June 30, September 30, December 30) mineral, timber or residential land
b) Special levy – governed by ordinance (rate, deadline)
4. Industrial land – devoted principally to industrial activity
Interest for Late Payment
a) 2% for each month on unpaid amount until the delinquent as capital investment and is not classified as agricultural,
amount is paid commercial, timber, mineral or residential land
b) Provided in no case shall the total interest exceed 36 months 5. Mineral land – lands which minerals, metallic and non-
For Advance and Prompt Payment metallic, exist in sufficient quantity or grade to justify
a) Advance payment – discount not exceeding 20% of the annual necessary expenditures to extract and utilize such
tax (Sec. 251, LGC) materials
6. Timberland – identified as forest or reserved area of the
Section 251. Tax Discount for Advanced Prompt Payment. - If the government which may or may not be granted to a
basic real property tax and the additional tax accruing to the concessionaire, licensee, leasee. Take Note: If granted to
Special Education Fund (SEF) are paid in advance in accordance the following, it is taxed, if not then no tax.
with the prescribed schedule of payment as provided under 7. Special classification – basically covers land, buildings
Section 250, the sanggunian concerned may grant a discount not
and improvements actually, directly and exclusively used
exceeding twenty percent (20%) of the annual tax due.
for hospital purposes, cultural and scientific purpose, and
b) Prompt payment - discount not exceeding 10% of the annual
tax (Art. 342, IRR) those own and use by water districts and GOCCs
Who collects: The provincial, city, municipal or barangay rendering essential public services for distribution of
treasurer supply of water and electricity.
Period to collect: (Sec. 270)
Section 270. Periods Within Which To Collect Real Property I’ve been mentioning earlier of assessment levels earlier. It is
Taxes. - The basic real property tax and any other tax levied under given at given at Sec. 218. Just read it.
this Title shall be collected within five (5) years from the date they
become due. No action for the collection of the tax, whether Special Levy.
administrative or judicial, shall be instituted after the expiration of 1. Special Education Fund (SEF) = 1% of the assessed
such period. In case of fraud or intent to evade payment of the tax, value
such action may be instituted for the collection of the same within *Proceeds of the SEF will accrue automatically and it will
ten (10) years from the discovery of such fraud or intent to evade be released automatically as well to the Local
payment. Government
 purpose of the SEF is for the operation and maintenance
a) 5 years from the date they became due (not from the date of of public schools building, facilities, research, etc.
assessment because for the assessment all you have to do here  Municipalities outside Manila cannot collect SEF
is follow the schedule and from that schedule ascertain how much 2. Additional Ad valorem on idle lands
is the tax that will be payable) *Must not exceed 5%
b) within 10 years of it involves fraud or intent to evade tax *Purpose is to discourage owners not to develop the land
 The 5 and 10 year period may be suspended in several
instances. Section 237. Idle Lands, Coverage. - For purposes of
real property taxation, idle lands shall include the
Suspension of Prescriptive Period (Sec 270) following:
(a) Agricultural lands, more than one (1) hectare in area,  Province, city, municipality (not limited to within
suitable for cultivation, dairying, inland fishery, and other Metro Manila)
agricultural uses, one-half (1/2) of which remain Requirements:
uncultivated or unimproved by the owner of the property  Ordinance
or person having legal interest therein. Agricultural lands  Prior public hearing: constituents affected
planted to permanent or perennial crops with at least fifty  Limit: 60% of actual cost of projects/improvements taken
(50) trees to a hectare shall not be considered idle lands. from general fund of LGU not DPWH or national
Lands actually used for grazing purposes shall likewise
government
not be considered idle lands.
(b) Lands, other than agricultural, located in a city or  Example: Municipality of Pinamungahan naghimog short
municipality, more than one thousand (1,000) square cut road to a highway and everything was funded by the
meters in area one-half (1/2) of which remain unutilized Municipality. So in this case, they can impose the Special
or unimproved by the owner of the property or person levy, but they have to have a public hearing kung pila i-
having legal interest therein. Regardless of land area, impose and unsa period of payment. Pero ang
this Section shall likewise apply to residential lots in maiposean lang kay ang mga dli exempt.
subdivisions duly approved by proper authorities, the  But if church, non-stock, non-profit educational institution,
ownership of which has been transferred to individual charitable institution, may it be subject to special
owners, who shall be liable for the additional tax: levy/assessment? NO. if exempted from RPT, also
Provided, however, That individual lots of such exempted from special levy/assessment
subdivisions, the ownership of which has not been
4. Socialized Housing tax
transferred to the buyer shall be considered as part of the
subdivision, and shall be subject to the additional tax - 0.5% of the assessed value of all lands in urban areas
payable by subdivision owner or operator. in excess of P50,000
A. When idle land: - pursuant to RA 7279, Urban Development and Housing
 2 types: agricultural or those non-agricultural Act of 1992
 Agricultural land
Distribution of proceeds (RPT):
o More than 1 ha in area, ½ not cultivated = idle If Basic RPT is collected by the province:
o If planted with trees (at least 50/ha) and used as 40% goes to municipality where property is located;
grazing land = not idle 25% will accrue to the general fund of the barangay
 Other than agricultural where the property is located’
35% goes to the province.
o More than 1,000 sq. m., ½ unutilized/unimproved = idle  If collected by the city:
o If located in subdivision 70% goes to the city;
- Regardless of area, if unutilized/unimproved = idle 30% goes to the barangay - (15% to the barangay where
- If you don’t want it to be declared idle land, transfer property is located, other 15% goes to all barangays or component
ownership to local government unit barangays)
B. Idle lands exempt from 5% ad valorem tax – by reason of: Sec. 271 Provides that the share of each barangays shall be
- Force majeure released without any need of any further actions directly to the
- Civil disturbance barangay treasurer on quarterly basis or 5 days after end of each
- Natural calamity quarter.
- Any cause/circumstance which
physically/legally prevents owner or person with legal  If collected by municipality within Manila: (Only Pateros)
interest therein from improving, utilizing, or cultivating 35% accrue to Metro Manila or Metropolitan Authority
land 35% goes to Pateros
* For example silingan nimo Abu Sayyaf or 30% goes to the barangay - (15% to the barangay where
NPA, alangan naman nimo taxan pa property is located, other 15% goes to all barangays or component
3. Special levy/special assessments barangays)
Section 240. Special Levy by Local Government Units. - A

Remedies under the Local Government Code
province, city or municipality may impose a special levy on
the lands comprised within its territorial jurisdiction specially 1. Remedy available to the LGU
benefited by public works projects or improvements funded by
the local government unit concerned: Provided, however, Administrative:
That the special levy shall not exceed sixty percent (60%) of a. Lien
the actual cost of such projects and improvements, including - the RPT is a superior lien, it attaches to the very
the costs of acquiring land and such other real property in property
connection therewith: Provided, further, That the special levy b. Levy
shall not apply to lands exempt from basic real property tax - pertains to real property
and the remainder of the land portions of which have been c. Distraint
donated to the local government unit concerned for the -personal properties
construction of such projects or improvements.
 Collected by LGU from owners whose lands are Judicial:
benefitted by local projects causing increase in land
value a. Civil collection of the Tax
 filed by the Local Treasurer within the period to collect- 5
2. Remedy available to taxpayer years from when the tax is due or within 10 years from
the discovery of fraud.
Administrative:
Where?
a. Protest - Before the regular courts. Because the CTA has no original
b. Claim for refund or credit jurisdiction, but only appellate jurisdiction.
c. Redemption
Taxpayer’s Remedies
Judicial:
a. By appealing to the CTA when it comes to in dispute 1. Protest
of assessment. Who can make a protest?
 The owner or person having legal interest on the property
Levy who is not satisfied of the action of the assessor in the
assessment of his property, or if the owner of a real
 Then, there would be a Sale, unless the owner exercises property is affected by special levy or any person who
the right of redemption. has legal interest therein may protest an assessment by
filing an appeal to the Local Board of Assessment
 During the Sale of the Real Property, there are three Appeals within 60 days from Notice of the Assessment.
possible scenarios that may occur. There will either be
- the highest bidder, Do you have to pay before having a protest?
- no bidder or  In other local business taxes, it is not necessary.
- no highest bid.  For RPT, it is a requirement that it be paid first; the
computation made by Local Treasurer. If you don’t agree
 Because when we talk of having a highest bid, it means with that, you PAY UNDER PROTEST.
that the proceeds of the sale should be sufficient for the
delinquency on the tax, as well as the charges and  Generally, the local treasurer has 60 days to act on your
expenses of sale. If the highest bid is sufficient to pay protest. There would be three possible scenarios: the
everything, then the bidder will have to pay and the local treasurer will decide in your favor, will give an
treasurer will have to report the sale to the Sanggunian adverse decision or will not act on your protest.
within 30 days after the Sale.
 Favorable- no further action.
 The local treasure will now issue a Certificate of Sale. If
there will be an excess from the sale, it will be given to  If adverse or inaction after 60 days, within 30 days, the
the owner of the property. Also, the highest bidder has to taxpayer can go to the Local Board of Assessment
wait for 1 year before he can take possession of the Appeals. It is given 120 days to decide on your protest.
property, unless he posts a bond.
 Three possible scenarios: favorable, affirm or
 Without the bond, the delinquent owner will continue to unfavorable ruling, or inaction.
possess the property and within one year, he can redeem
the property by paying the highest bidder plus 2%  If LBAA renders an adverse decision or do not act on it,
monthly interest from date of purchase to date of the taxpayer’s remedy is to appeal to the CBAA or the
redemption. Central Board of Assessment Appeals. The CBAA, take
note, there is no period for the CBAA to render its
 If there is no bidder or if the bid is insufficient, the decision.
property will be forfeited in favor of the LGU. The local
treasurer will have to purchase the property in behalf of  The CBAA can either render a favorable or unfavorable
the LGU. The treasurer, instead of issuing a Certificate of ruling. If it is unfavorable, the taxpayer will go to the Court
Sale, a Certificate of Forfeiture will have to be issued. of Tax Appeals en banc within 30 days. If you notice,
there are already 2 appellate boards na giagian nimo- the
 After issuance of Certificate of Forfeiture, the one year LBAA and the CBAA.
redemption will still apply in favor of the owner.
 CTA en banc, no period to decide. If it decides
 Pwede ba balik-balikon ang levy? unfavorably, taxpayer’s recourse is to go the Supreme
- Yes, until the unpaid tax is totally paid. Court. But before you can go to the Supreme Court,
because you are to use Rule 45 here, you need to file
 Pwede ba mauna ang levy before sa distraint? first a Motion of Reconsideration of the unfavorable ruling
- Yes, because LGU may levy before, on or after of distraint for of the CTA en banc.
personal property.
Again, it’s Petition for Review under Rule 45 to Supreme Court.
Judicial Remedies
 Note: The requirement on Payment under Protest, you
1. Civil Action have to remember that it only applies if you are
questioning the propriety of the assessment. If your
question is grounded on different matter, like the validity

on the ordinance imposing tax on real property, and there
was no mandatory requirement- like hearing or posting-  No decision of a Division of the Court may be reversed or
there is no need of paying under protest. modified except by the affirmative vote of four justices of
the Court en banc acting on the case.
2. Tax Refund or Credit
Here, you have agreed but it’s just that you discovered later on  Interlocutory orders or resolutions shall be acted upon by
that what you have paid is excessive. As a rule, when an majority vote of the justices present constituting a
assessment is found to be illegal, taxpayer may claim refund for a quorum.
period of two years. (Rules of Court, Rule 56, sec. 7a)
The treasurer is given 60 days to decide whether it will give refund SEC. 4. The Court in Divisions; quorum and voting. – The
or credit to the taxpayer. If local treasurer will have not act, same chairman of the Division or, in his absence, its senior member
process as in protest case. shall preside over the sessions of the Court in Divisions. The
attendance of at least two justices of the Court shall be necessary
to constitute a quorum for its sessions in Divisions. The presence
3. Judicial Action at the deliberation and the affirmative vote of at least two justices
- Question the validity of the tax ordinance under Sec. 187. shall be required for the pronouncement of a judgment or final
Can you file a protest before the Secretary of Justice? resolution of the Court in Divisions. (n)
Section 187. Procedure for Approval and Effectivity of Tax, SEC. 5. Hearings. – The Court en banc or in Divisions shall
Ordinances and Revenue Measures; Mandatory Public conduct hearings on such days and at such times and at such
Hearings. - The procedure for approval of local tax ordinances places as it may fix, with notice to the parties concerned.
and revenue measures shall be in accordance with the provisions However, the Friday of each week shall be devoted to hearing
of this Code: Provided, That public hearings shall be conducted for motions, unless, for special reasons, the Court en banc or in
the purpose prior to the enactment thereof: Provided, further, That Divisions shall, motu proprio or upon motion of a party, fix another
any question on the constitutionality or legality of tax ordinances or day for the hearing of any motion. (RCTA, Rule 3, sec. 2a)
revenue measures may be raised on appeal within thirty (30) days
from the effectivity thereof to the Secretary of Justice who shall
render a decision within sixty (60) days from the date of receipt of They can sit en banc or in division.
the appeal: Provided, however, That such appeal shall not have
the effect of suspending the effectivity of the ordinance and the  When will the court need to sit en banc?
accrual and payment of the tax, fee, or charge levied therein: 1. If their ruling do not involve a modification or reversal, only
Provided, finally, That within thirty (30) days after receipt of the simple majority is necessary.
decision or the lapse of the sixty-day period without the Secretary Simple majority- depending on how many justices are present.
of Justice acting upon the appeal, the aggrieved party may file
appropriate proceedings with a court of competent jurisdiction. For example, if there are only 5 justices present, there will already
be quorum. A vote of 3 over 5 can already issue the ruling or
resolution.
 But, local government can still continue to collect the
taxes pending the decision of the Secretary of Justice. It 2. If it involves revocation or modification, absolute majority vote is
will not stop its implementation. necessary.
Absolute majority- majority of the 9 justices.
 But where will you go after the Secretary of Justice?
- Go to regular courts- Regional Trial Court. Because it is the court Example, if there are only 5 justices present, all the five shall
of general jurisdiction. approve the decision before it should be issued.
If the Court sits in divisions, it is composed of three divisions with
COURT OF TAX APPEALS three members.
1. First division- headed by the presiding justice.
Composition of the CTA 2. Second and Third- headed by the most senior justices.
- 9 Justices
- One presiding, 8 Associate Justices Quorum- 2.
SEC. 3. Court en banc; quorum and voting. – The presiding If they will issue a resolution, there shall be at least two justices
justice or, in his absence, the most senior justice in attendance which approves it.
shall preside over the sessions of the Court en banc. The
attendance of four justices of the Court shall constitute a quorum Justices of CTA- up to 70 years old.
for its sessions en banc. The presence at the deliberation and the
affirmative vote of four justices of the Court en banc shall be SEC. 6. Disqualification of justices.-
necessary for the rendition of a decision or resolution on any case (a) Mandatory. – No justice or other officer or employee of the
or matter submitted for its consideration. Where the necessary Court shall intervene, directly or indirectly, in the management or
majority vote cannot be had, the petition shall be dismissed; in control of any private enterprise which in any way may be affected
appealed cases, the judgment or order appealed from shall stand by the functions of the Court. Justices of the Court shall be
affirmed; and on all incidental matters, the petition or motion shall disqualified from sitting in any case on the same grounds provided
be denied. under the first paragraph, Section 1, Rule 137 of the Rules of
Court. No person who has once served in the Court either as
presiding justice or as associate justice shall be qualified to (d) Decisions, resolutions or orders on motions for reconsideration
practice as counsel before the Court for a period of one year from or new trial of the Court in Division in the exercise of its exclusive
his retirement or resignation as such. (Rules of Court, Rule 137, original jurisdiction over tax collection cases;
sec. 1, par. 1a)  If the amount is 1 million or more, you can file it in CTA in
(b) Disclosure and consent of parties and lawyers. – A justice division.
disqualified under the first paragraph, Section 1 of Rule 137 of the
Rules of Court, may, instead of withdrawing from a case or (e) Decisions of the Central Board of Assessment Appeals (CBAA)
proceeding, disclose on the records the basis of his in the exercise of its appellate jurisdiction over cases involving the
disqualification. If, based on such disclosure, the parties and assessment and taxation of real property originally decided by the
lawyers, independently of the justice’s participation, all agree in provincial or city board of assessment appeals;
writing that the reason for the inhibition is immaterial or
unsubstantial, the justice may participate in the action or (f) Decisions, resolutions or orders on motions for reconsideration
proceeding. The agreement, signed by all parties and lawyers, or new trial of the Court in Division in the exercise of its exclusive
shall be incorporated in the record of the action or proceeding. original jurisdiction over cases involving criminal offenses arising
(Rules of Court, Rule 137, sec. 1, par. 1a) from violations of the National Internal Revenue Code or the Tariff
(c) Voluntary. – A justice of the Court may, in the exercise of his and Customs Code and other laws administered by the Bureau of
sound discretion, disqualify himself from sitting in a case or Internal Revenue or Bureau of Customs;
proceeding, for just or valid reasons other than those mentioned
above. (Rules of Court, Rule 137, sec. 1, par. 2a) (g) Decisions, resolutions or orders on motions for reconsideration
A justice of the Court who inhibits himself from sitting in a case or or new trial of the Court in Division in the exercise of its exclusive
proceeding shall immediately notify in writing the presiding justice appellate jurisdiction over criminal offenses mentioned in the
and the members of his Division. (n) preceding subparagraph; and
Presiding Justice- Hon. Roman G. Del Rosario (h) Decisions, resolutions or orders of the Regional trial Courts in
the exercise of their appellate jurisdiction over criminal offenses
Jurisdiction mentioned in subparagraph (f). (n)
RULE 4 Which cases are filed in CTA en banc?

JURISDICTION OF THE COURT 1. From CTA in Division
SEC. 2. Cases within the jurisdiction of the Court en banc. – 2. From CBAA
The Court en banc shall exercise exclusive appellate jurisdiction to 3. From RTC, exercising appellate jurisdiction.
review by appeal the following:
(a) Decisions or resolutions on motions for reconsideration or new
trial of the Court in Divisions in the exercise of its exclusive SEC. 3. Cases within the jurisdiction of the Court in
appellate jurisdiction over: Divisions. – The Court in Divisions shall exercise:
(1) Cases arising from administrative agencies – (a) Exclusive original or appellate jurisdiction to review by appeal
Bureau of Internal Revenue, Bureau of Customs, Department the following:
of Finance, Department of Trade and Industry, Department of (1) Decisions of the Commissioner of Internal Revenue
Agriculture; in cases involving disputed assessments, refunds of internal
(2) Local tax cases decided by the Regional Trial revenue taxes, fees or other charges, penalties in relation
Courts in the exercise of their original jurisdiction; and thereto, or other matters arising under the National Internal
(3) Tax collection cases decided by the Regional Trial Revenue Code or other laws administered by the Bureau of
Courts in the exercise of their original jurisdiction involving Internal Revenue;
final and executory assessments for taxes, fees, charges and
penalties, where the principal amount of taxes and penalties (2) Inaction by the Commissioner of Internal Revenue in
claimed is less than one million pesos; cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties in relation
 From CTA in Division, you will file MR then it goes to thereto, or other matters arising under the National Internal
CTA en banc. Revenue Code or other laws administered by the Bureau of
Internal Revenue, where the National Internal Revenue Code
(b) Decisions, resolutions or orders of the Regional Trial Courts in or other applicable law provides a specific period for action:
local tax cases decided or resolved by them in the exercise of their Provided, that in case of disputed assessments, the inaction
appellate jurisdiction; of the Commissioner of Internal Revenue within the one
 From there, MTCC if the amount is not exceeding P300, hundred eighty day-period under Section 228 of the National
000 or P 400, 000 if in Manila. Then you can go to the Internal revenue Code shall be deemed a denial for purposes
RTC, as appellate jurisdiction so they will go to CTA en of allowing the taxpayer to appeal his case to the Court and
banc. does not necessarily constitute a formal decision of the
Commissioner of Internal Revenue on the tax case;
(c) Decisions, resolutions or orders of the Regional Trial Courts in Provided, further, that should the taxpayer opt to await the
tax collection cases decided or resolved by them in the exercise of final decision of the Commissioner of Internal Revenue on
their appellate jurisdiction; the disputed assessments beyond the one hundred eighty
 Not limited to local taxes. day-period abovementioned, the taxpayer may appeal such
final decision to the Court under Section 3(a), Rule 8 of these
Rules; and Provided, still further, that in the case of claims
for refund of taxes erroneously or illegally collected, the
taxpayer must file a petition for review with the Court prior to
the expiration of the two-year period under Section 229 of the
National Internal Revenue Code; (2) Appellate jurisdiction over appeals from the
 Note: Under Sec. 112, the two-year period covers only judgments, resolutions or orders of the Regional Trial Courts
admin, not judicial. In section 229, this two-year period in tax collection cases originally decided by them within their
covers both admin and judicial. respective territorial jurisdiction. (n)
(3) Decisions, resolutions or orders of the Regional Trial

Courts in local tax cases decided or resolved by them in the
exercise of their original jurisdiction;  As far as CTA in Division is concerned, two will fall under
its original jurisdiction:
(4) Decisions of the Commissioner of Customs in cases 1. Criminal cases or the violation of the NIRC wherein the amount
involving liability for customs duties, fees or other money of collectible taxes, charges and fees are one million pesos or
charges, seizure, detention or release of property affected, more; and
fines, forfeitures of other penalties in relation thereto, or other 2. Tax collection cases, with amount of collectible is one million
matters arising under the Customs Law or other laws pesos or more.
administered by the Bureau of Customs;
 The decision of CTA in Division, if adverse to you, you
(5) Decisions of the Secretary of Finance on customs still have to go through CTA en banc first. Only decisions
cases elevated to him automatically for review from decisions of CTA en banc can be appealed to Supreme Court,
of the Commissioner of Customs adverse to the Government provided you filed MR first.
under Section 2315 of the Tariff and Customs Code; and
 In one case before, it has been decided that the Rules of
(6) Decisions of the Secretary of Trade and Industry, in Court will not apply before the CTA. However,
the case of non-agricultural product, commodity or article, considering this Revised Rules on the CTA, it is
and the Secretary of Agriculture, in the case of agricultural expressly provided here that the Rules of Court will
product, commodity or article, involving dumping and suppletorily apply.
countervailing duties under Section 301 and 302, RULE 7
respectively, of the Tariff and Customs Code, and safeguard PROCEDURE IN THE COURT OF TAX APPEALS
measures under Republic Act No. 8800, where either party SECTION 1. Applicability of the Rules of the Court of Appeals,
may appeal the decision to impose or not to impose said exception. – The procedure in the Court en banc or in Divisions in
duties; original and in appealed cases shall be the same as those in
SOTI- nonagricultural petitions for review and appeals before the Court of Appeals
SOA- agricultural pursuant to the applicable provisions of Rules 42, 43, 44 and 46 of
Questions on the imposition shall be appealed to CTA in the Rules of Court, except as otherwise provided for in these
Division. Rules. (n)
(b) Exclusive jurisdiction over cases involving criminal offenses, to

wit:
(1) Original jurisdiction over all criminal offenses arising
from violations of the National internal Revenue Code or
Tariff and Customs Code and other laws administered by the
Bureau of Internal Revenue of the Bureau of Customs, where
the principal amount of taxes and fees, exclusive of charges
and penalties, claimed is one million pesos or more; and
Again, CTA has exclusive original jurisdiction for
collection of other local taxes amounting to taxes more
than one million pesos. This is the other scenario
wherein CTA has exclusive jurisdiction.
(2) Appellate jurisdiction over appeals from the

judgments, resolutions or orders of the Regional Trial Courts
in their original jurisdiction in criminal offenses arising from
violations of the National Internal Revenue Code or Tariff and
Customs Code and other laws administered by the Bureau of
Internal Revenue or Bureau of Customs, where the principal
amount of taxes and fees, exclusive of charges and
penalties, claimed is less than one million pesos or where
there is no specified amount claimed;
(c) Exclusive jurisdiction over tax collections cases, to wit:

(1) Original jurisdiction in tax collection cases involving
final and executory assessments for taxes, fees, charges and
penalties, where the principal amount of taxes and fees,
exclusive of charges and penalties, claimed is one million
pesos or more; and

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Internal Source of Local FUnd:

Fundamental Principles- Local Taxation (PIE-CUP-UP) –Must

TAXATION II FINALS ATTY. KIM ARANAS EH 402 2

SEC. 133. Common Limitations on the Taxing Powers of

(a) Income tax, except when levied on banks and other

TAXATION II FINALS ATTY. KIM ARANAS EH 402 3

TAXATION II FINALS ATTY. KIM ARANAS EH 402 6

 Contractors - includes persons, natural or juridical, not any local tax.

TAXATION II FINALS ATTY. KIM ARANAS EH 402 11

TAXATION II FINALS ATTY. KIM ARANAS EH 402 12

TAXATION II FINALS ATTY. KIM ARANAS EH 402 14

Grounds for the suspension of the running of the prescriptive

TAXATION II FINALS ATTY. KIM ARANAS EH 402 16

Ex: installation of machineries, equipments and even buildings.

TAXATION II FINALS ATTY. KIM ARANAS EH 402 17

Section 240. Special Levy by Local Government Units. - A

TAXATION II FINALS ATTY. KIM ARANAS EH 402 23

RULE 4 Which cases are filed in CTA en banc?

(3) Decisions, resolutions or orders of the Regional Trial

(b) Exclusive jurisdiction over cases involving criminal offenses, to

(2) Appellate jurisdiction over appeals from the

(c) Exclusive jurisdiction over tax collections cases, to wit:

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