Professional Documents
Culture Documents
I.
DIGEST Nov
7, 2014
PRELIMINARY
MATTERS
A.
2.
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power was deemed withheld), the present constitutional rule
MANILA ELECTRIC COMPANY, petitioner vs. PROVINCE
OF LAGUNA and BENITO R. BALAZO, inhis capacity as
Provincial Treasurer of Laguna, respondents. [GR No.
131359 | May 5, 1999 | 3D]
FACTS:
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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limitations
as 7,
the2014
Congress may provide, consistent
o
The power to tax is primarily vested
with the basic policy of local autonomy. Such taxes,
fees and charges shall accrue exclusively to the Local
Governments.
in the Congress;
however, in our jurisdiction, it may be exercised by
local legislative bodies, no longer merely be virtue of a
valid delegation as before, but pursuant to direct
authority conferred by Section 5, Article X of the
Constitution. Under the latter, the exercise of the
power may be subject to such guidelines and
limitations as the Congress may provide which,
however, must be consistent with the basic policy of
local autonomy.
This new perspective is best articulated by Fr. Joaquin G.
Bernas, S.J., himself a Commissioner of the 1986
Constitutional Commission which crafted the 1987
Constitution, thus:
o
What is the effect of Section 5 on the fiscal position of
municipal corporations? Section 5 does not change
the doctrine that municipal corporations do not
possess inherent powers of taxation. What it does is to
confer municipal corporations a general power to levy
taxes and otherwise create sources of revenue. They
no longer have to wait for a statutory grant of these
powers. The power of the legislative authority relative
to the fiscal powers of local governments has been
reduced to the authority to impose limitations on
municipal powers. Moreover, these limitations must be
"consistent with the basic policy of local autonomy."
The important legal effect of Section 5 is thus to
reverse the principle that doubts are resolved against
municipal corporations. Henceforth, in interpreting
statutory provisions on municipal fiscal powers,
doubts will be resolved in favor of municipal
corporations. It is understood, however, that taxes
imposed by local government must be for a public
purpose, uniform within a locality, must not be
confiscatory, and must be within the jurisdiction of the
local unit to pass.
In net effect, the controversy presently before the Court
involves, at bottom, a clash between the inherent taxing
power of the legislature, which necessarily includes the
power to exempt, and the local governments delegated
power to tax under the aegis of the 1987 Constitution.
For sure, in Philippine Long Distance Telephone Company,
Inc. (PLDT) vs. City of Davao, this Court has upheld the
power of Congress to grant exemptions over the power of
local government units to impose taxes. There, the Court
wrote:
o
Indeed, the grant of taxing powers to local
government units under the Constitution and the LGC
does not affect the power of Congress to grant
exemptions to certain persons, pursuant to a declared
national policy. The legal effect of the constitutional
grant to local governments simply means that in
interpreting statutory provisions on municipal taxing
powers, doubts must be resolved in favor of municipal
corporations.
Admittedly, Rep. Act No. 7633 was enacted subsequent to
the LGC. Perfectly aware that the LGC has already withdrawn
Bayantels former exemption from realty taxes, Congress
opted to pass Rep. Act No. 7633 using, under Section 11
thereof, exactly the same defining phrase "exclusive of this
franchise" which was the basis for Bayantels exemption
from realty taxes prior to the LGC. In plain language, Section
11 of Rep. Act No. 7633 states that "the grantee, its
successors or assigns shall be liable to pay the same taxes
on their real estate, buildings and personal property,
exclusive of this franchise, as other persons or corporations
are now or hereafter may be required by law to pay." The
Court views this subsequent piece of legislation as an
express and real intention on the part of Congress to once
again remove from the LGCs delegated taxing power, all of
the franchisees (Bayantels) properties that are actually,
directly and exclusively used in the pursuit of its franchise.
3.
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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the provision is the explicit statutory impediment to
a.
the
enjoyment of absolute taxing power by local government
units, not to mention the reality that such power is a
delegated power.
4.
Secretary of Justice
o
dismissed the appeal on the ground that it was filed
out of time i.e., beyond thirty (30) days from the
effectivity of the Ordinance on October 1, 1996, as
prescribed under Section 187 of the 1991 LGC
o
Citing the case of Taada vs. Tuvera, the date of
effectivity of the subject ordinance retroacted to the
date of its approval in October 1996, after the
required publication or posting has been complied
with, pursuant to Section 3 of said ordinance.
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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raised
on appeal
within thirty (30) days from
in three (3) public places, viz: in front
the effectivity thereof to the Secretary of
Justice who shall render a decision within sixty (60)
days from the receipt of the appeal: Provided,
however, That such appeal shall not have the
effect of suspending the effectivity of the
ordinance and accrual and payment of the tax,
fee or charge levied therein: Provided, finally,
That within thirty (30) days after receipt of the
decision or the lapse of the sixty-day period
without the Secretary of Justice acting upon
the appeal, the aggrieved party may file
appropriate proceedings.
In a last ditch effort to justify its failure to file a timely appeal
with the Secretary of Justice, the petitioner contends that its
period to appeal should be counted not from the time the
ordinance took effect in 1996 but from the time its members
were personally given copies of the approved ordinance in
November 1997. It insists that it was unaware of the
approval and effectivity of the subject ordinance in 1996 on
two (2) grounds: first, no public hearing was conducted prior
to the passage of the ordinance and, second, the approved
ordinance was not posted.
Petitioners bold assertion that there was no public
hearing conducted prior to the passage of Kautusan Blg.
28 is belied by its own evidence. In petitioners two (2)
communications with the Secretary of Justice, it enumerated
the various objections raised by its members before the
passage of the ordinance in several meetings called by the
Sanggunian for the purpose. These show beyond doubt that
petitioner was aware of the proposed increase and in fact
participated in the public hearings therefor. The respondent
municipality likewise submitted the Minutes and Report of
the public hearings conducted by the Sangguniang Bayans
Committee on Appropriations and Market on February 6, July
15 and August 19, all in 1996, for the proposed increase in
the stall rentals.
Petitioner cannot gripe that there was practically no public
hearing conducted as its objections to the proposed measure
were not considered by the Sangguniang Bayan. To be sure,
public hearings are conducted by legislative bodies to allow
interested parties to ventilate their views on a proposed law
or ordinance. These views, however, are not binding on the
legislative body and it is not compelled by law to adopt the
same. Sanggunian members are elected by the people to
make laws that will promote the general interest of their
constituents. They are mandated to use their discretion and
best judgment in serving the people. Parties who participate
in public hearings to give their opinions on a proposed
ordinance should not expect that their views would be
patronized by their lawmakers.
On the issue of publication or posting, Section 188 of the
Local Government Code provides:
Section 188. Publication of Tax Ordinance and Revenue
Measures.
Within ten (10) days after their approval,
certified true copies of all provincial, city, and municipal
tax ordinances or revenue measures shall be published in
full for three (3) consecutive days in a newspaper of local
circulation; Provided, however, That in provinces, cities
and municipalities where there are no newspapers of
local circulation, the same may be posted in at least
two (2) conspicuous and publicly accessible places.
(emphasis supplied)
The records is bereft of any evidence to prove petitioners
negative allegation that the subject ordinance was not
posted as required by law. In contrast, the respondent
Sangguniang Bayan of the Municipality of Hagonoy,
Bulacan, presented evidence which clearly shows that
the procedure for the enactment of the assailed
ordinance was complied with. Municipal Ordinance No.
28 was enacted by the Sangguniang Bayan of Hagonoy on
October 1, 1996. Then Acting Municipal Mayor Maria Garcia
Santos approved the Ordinance on October 7, 1996. After its
approval, copies of the Ordinance were given to the
Municipal Treasurer on the same day.
On November 9,
1996,
the
Ordinance
was
approved
by
the
Sangguniang Panlalawigan.
The Ordinance was
posted during the period from November 4 - 25, 1996
of the municipal
building, at the bulletin board of the Sta. Ana Parish Church
and on the front door of the Office of the Market Master in
the public market. Posting was validly made in lieu of
publication as there was no newspaper of local
circulation in the municipality of Hagonoy. This fact
was known to and admitted by petitioner. Thus, petitioners
ambiguous and unsupported claim that it was only
sometime in November 1997 that the Provincial Board
approved Municipal Ordinance No. 28 and so the posting
could not have been made in November 1996was
sufficiently disproved by the positive evidence of respondent
municipality. Given the foregoing circumstances, petitioner
cannot validly claim lack of knowledge of the approved
ordinance. The filing of its appeal a year after the effectivity
of the subject ordinance is fatal to its cause.
5.
B.
Sec. 186. Power To Levy Other Taxes, Fees or Charges. Local government units may exercise the power to levy
taxes, fees or charges on any base or subject not otherwise
specifically enumerated herein or taxed under the provisions
of the National Internal Revenue Code, as amended, or other
applicable laws: Provided, That the taxes, fees, or charges
shall not be unjust, excessive, oppressive, confiscatory or
contrary to declared national policy: Provided, further, That
the ordinance levying such taxes, fees or charges shall not
be enacted without any prior public hearing conducted for
the purpose.
2.
DOCTRINE
OF
PRE-EMPTION
EXCLUSIONARY RULE
OR
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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Novpreempted
7, 2014it from entering the field of
government
taxation of sugar centrals and sugar refineries." Plaintiff
seeks refuge in Section 189 of the National Internal Revenue
Code which subjects proprietors or operators of sugar
centrals or sugar refineries to percentage tax.
The implausibility of this position is at once apparent. We are
not dealing here with percentage tax. Rather, we are
concerned with a tax specifically for operators of sugar
centrals and sugar refineries. The rates imposed are based
on the maximum annual output capacity. Which is not a
percentage. Because it is not a share. Nor is it a tax based on
the amount of the proceeds realized out of the sale of sugar,
centrifugal or refined.
What can be said at most is that the national government
has preempted the field of percentage taxation. Section 1 of
Commonwealth Act 472, while granting municipalities power
to levy taxes, expressly removes from them the power to
exact "percentage taxes".
It is correct to say that preemption in the matter of taxation
simply refers to an instance where the national
government elects to tax a particular area, impliedly
withholding from the local government the delegated
power to tax the same field. This doctrine primarily rests
upon the intention of Congress. Conversely, should Congress
allow municipal corporations to cover fields of taxation it
already occupies, then the doctrine of preemption will not
apply.
In the case at bar, Section 4(1) of Commonwealth Act 472
clearly and specifically allows municipal councils to tax
persons engaged in "the same businesses or occupation" on
which "fixed internal revenue privilege taxes" are "regularly
imposed by the National Government." With certain
exceptions specified in Section 3 of the same statute. Our
case does not fall within the exceptions. It would therefore
be futile to argue that Congress exclusively reserved to the
national government the right to impose the disputed taxes.
GENERAL PROVISIONS
A.
B.
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cleaning
or dyeing establishments, steam
supplied with the services
laundries, and laundries using washing
machines; proprietors or owners of shops for
the repair of any kind of mechanical and
electrical devices, instruments, apparatus, or
furniture and shoe repairing by machine or any
mechanical
contrivance;
proprietors
or
operators of establishments or lots for parking
purposes; proprietors or operators of tailor
shops, dress shops, milliners and hatters,
beauty parlors, barbershops, massage clinics,
sauna, Turkish and Swedish baths, slenderizing
and building salons and similar establishments;
photographic
studios;
funeral
parlors;
proprietors or operators of hotels, motels, and
lodging houses; proprietors or operators of
arrastre and stevedoring, warehousing, or
forwarding establishments; master plumbers,
smiths, and house or sign painters; printers,
bookbinders, lithographers; publishers except
those engaged in the publication or printing of
any newspaper, magazine, review or bulletin
which appears at regular intervals with fixed
prices for subscription and sale and which is not
devoted principally to the publication and
advertisements; business agents, private
detective or watchman agencies, commercial
and immigration brokers, and cinematographic
film owners, lessors and distributors.
(i)
"Countryside
and
Barangay
Business
Enterprise" refers to any business entity,
association, or cooperative registered under the
provisions of Republic Act Numbered Sixty-eight
hundred ten (R.A. No. 6810), otherwise known
as "Magna Carta For Countryside And Barangay
Business Enterprises (Kalakalan 20)";
(k) "Dealer" means one whose business is to buy
and sell merchandise, goods, and chattels as a
merchant. He stands immediately between the
producer or manufacturer and the consumer
and depends for his profit not upon the labor he
bestows upon his commodities but upon the
skill and foresight with which he watches the
market;
(l) "Fee" means a charge fixed by law or ordinance
for the regulation or inspection of a business or
activity;
(m) "Franchise" is a right or privilege, affected with
public interest which is conferred upon private
persons or corporations, under such terms and
conditions as the government and its political
subdivisions may impose in the interest of
public welfare, security, and safety;
(n) "Gross Sales or Receipts" include the total
amount of money or its equivalent representing
the contract price, compensation or service fee,
including the amount charged or materials
(o)
(p)
(q)
(r)
(j)
(s)
(t)
(u)
(v)
and deposits or
advance payments actually or constructively
received during the taxable quarter for the
services performed or to be performed for
another
person
excluding
discounts
if
determinable at the time of sales, sales return,
excise tax, and value-added tax (VAT);
"Manufacturer" includes every person who, by
physical or chemical process, alters the exterior
texture or form or inner substance of any raw
material
or
manufactured
or
partially
manufactured product in such manner as to
have been put in its original condition, or who
by any such process alters the quality of any
such raw material or manufactured or partially
manufactured products so as to reduce it to
marketable shape or prepare it for any of the
use of industry, or who by any such process
combines
any
such
raw
material
or
manufactured
or
partially
manufactured
products with other materials or products of the
same or of different kinds and in such manner
that the finished products of such process or
manufacture can be put to a special use or uses
to which such raw material or manufactured or
partially manufactured products in their original
condition could not have been put, and who in
addition
alters
such
raw
material
or
manufactured
or
partially
manufactured
products, or combines the same to produce
such finished products for the purpose of their
sale or distribution to others and not for his
own use or consumption;
"Marginal Farmer or Fisherman" refers to an
individual engaged in subsistence farming or
fishing which shall be limited to the sale, barter
or exchange of agricultural or marine products
produced by himself and his immediate family;
"Motor Vehicle" means any vehicle propelled by
any power other than muscular power using the
public roads, but excluding road rollers, trolley
cars, street-sweepers, sprinklers, lawn mowers,
bulldozers, graders, fork-lifts, amphibian trucks,
and cranes if not used on public roads, vehicles
which run only on rails or tracks, and tractors,
trailers, and traction engines of all kinds used
exclusively for agricultural purposes;
"Municipal Waters" includes not only streams,
lakes, and tidal waters within the municipality,
not being the subject of private ownership and
not comprised within the national parks, public
forest, timber lands, forest reserves or fishery
reserves,but also marine waters included
between two lines drawn perpendicularly to the
general coastline from points where the
boundary lines of the municipality or city touch
the sea at low tide and a third line parallel with
the general coastline and fifteen (15)
kilometers from it. Where two (2) municipalities
are so situated on the opposite shores that
there is less than fifteen (15) kilometers of
marine waters between them, the third line
shall be equally distant from opposite shores of
their respective municipalities;
"Operator" includes the owner, manager,
administrator, or any other person who
operates or is responsible for the operation of a
business establishment or undertaking;
"Peddler" means any person who, either for
himself or on commission, travels from place to
place and sells his goods or offers to sell and
deliver the same. Whether a peddler is a
wholesale peddler or a retail peddler of a
particular commodity shall be determined from
the definition of wholesale dealer or retail
dealer as provided in this Title;
"Persons" means every natural or juridical
being, susceptible of rights and obligations or
of being the subject of legal relations;
"Residents" refer to natural persons who have
their habitual residence in the province, city, or
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where they exercise their civil
(a) xxx
(w)
(x)
(y)
(z)
D.
COMMON LIMITATIONS
1.
INCOME TAX
TRANSFER TAXES
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:
CUSTOMS DUTIES
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Nov
7, 2014
the
imposition
toll fees
or charges for the use of any public
road, pier, or wharf, waterway, bridge, ferry or
telecommunication system funded and constructed by the
local government unit concerned: Provided, That no such toll
fees or charges shall be collected from officers and enlisted
men of the Armed Forces of the Philippines and members of
the Philippine National Police on mission, post office
personnel delivering mail, physically-handicapped, and
disabled citizens who are sixty-five (65) years or older.
DEFINITION OF MARGINALIZED
FISHERMEN (Sec. 131[p])
Marginal
Farmer
or
Fishermanindividual
engaged in subsistence farming or fishing which shall
be limited to the sale, barter or exchange of
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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Novor7,
2014products produced by himself
agricultural
marine
and his immediate family (Sec. 131[p], 1991 LGC)
CITY OF CEBU and/or CITY COUNCIL OF THE CITY OF
CEBU, composed of Hon. FLORENCIO S. UROT,
RAYMUNDO A. CRYSTAL, BIENVENIDO B. TUDTUD, JOSE
V. CUENCO, PABLO U. ABELLA, GEORGE M. BALADJAY,
ARTURO L. ABELLANA, JESUS S. GABUYA and MARIO R.
VELOSO,
petitioners,
vs.
HON.
INTERMEDIATE
APPELLATE COURT, HON. CESAR VIRATA and HON.
PEDRO M. ALMANZOR, in their capacities as Secretary
and Acting Secretary, respectively, Department of
Finance, respondents.[G.R. No. 70684 | October 10, 1986 |
2D]
FACTS:
8.
10
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2014
NIRC
are those
levied
petroleum products, per Section
148 of the NIRC.
Admittedly, the proffered definition of an excise tax as "a tax
upon the performance, carrying on, or exercise of some right,
privilege, activity, calling or occupation" derives from the
compendium American Jurisprudence, popularly referred to
as Am Jur, and has been cited in previous decisions of this
Court, including those cited by Petron itself. Such a definition
would not have been inconsistent with previous incarnations
of our Tax Code, such as the NIRC of 1939, as amended, or
the NIRC of 1977 because in those laws the term "excise tax"
was not used at all. In contrast, the nomenclature used in
those prior laws in referring to taxes imposed on specific
articles was "specific tax." Yet beginning with the National
Internal Revenue Code of 1986, as amended, the term
"excise taxes" was used and defined as applicable "to goods
manufactured or produced in the Philippines and to things
imported." This definition was carried over into the present
NIRC of 1997. Further, these two latest codes categorize two
different kinds of excise taxes: "specific tax" which is
imposed and based on weight or volume capacity or any
other physical unit of measurement; and "ad valorem tax"
which is imposed and based on the selling price or other
specified value of the goods. In other words, the meaning of
"excise tax" has undergone a transformation, morphing from
the Am Jur definition to its current signification which is a tax
on certain specified goods or articles.
The change in perspective brought forth by the use of the
term "excise tax" in a different connotation was not lost on
the departed author Jose Nolledo as he accorded divergent
treatments in his 1973 and 1994 commentaries on our tax
laws. Writing in 1973, and essentially alluding to the Am Jur
definition of "excise tax," Nolledo observed:
o
Are specific taxes, taxes on property or excise taxes
11
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Nov
7,sought
2014to be collected in Pililla were
AtDIGEST
the time the
taxes
imposed, there was no national law in place similar to
Section 133(h) of the Code that barred local taxes, fees or
charges on petroleum products. There were circulars to that
effect issued by the Finance Department, yet the Court could
not validate such issuances since under the tax laws then
in place no exemptions were given to manufacturers,
wholesalers, retailers, or dealers in petroleum products. In
fact, the Court tellingly observed that if the imposition of
tax on business of manufacturers, etc. in petroleum products
contravenes a declared national policy, it should have been
expressly stated in P.D. No. 436. Such expression
conspiciously missing in P.D. No. 436 is now found in Section
133(h).
In view of the difference in statutory paradigm between this
case and Pililla, the latter case is severely diminished as
applicable precedent at bar. The Court then was correct in
observing that a mere administrative circular could not
prohibit a local tax that is not otherwise barred under a
national statute, yet in this case that conflict is not present
since the Code explicitly prohibits the imposition of several
classes of local taxes, including those on petroleum products.
We can concede that a tax on a business is distinct from a
tax on the article itself, or for that matter, that a business tax
is distinct from an excise tax. However, such distinction is
immaterial insofar as the latter part of Section 133(h) is
concerned, for the phrase taxes, fees or charges on
petroleum products does not qualify the kind of taxes, fees
or charges that could withstand the absolute prohibition
imposed by the provision. It would have been a different
matter had Congress, in crafting Section 133(h), barred
excise taxes or direct taxes, or any category of taxes
only, for then it would be understood that only such specified
taxes on petroleum products could not be imposed under the
prohibition. The absence of such a qualification leads to the
conclusion that all sorts of taxes on petroleum products,
including business taxes, are prohibited by Section 133(h).
Where the law does not distinguish, we should not
distinguish.
The language of Section 133(h) makes plain that the
prohibition with respect to petroleum products extends not
only to excise taxes thereon, but all taxes, fees and
charges. The earlier reference in paragraph (h) to excise
taxes comprehends a wider range of subjects of taxation: all
articles already covered by excise taxation under the NIRC,
such as alcohol products, tobacco products, mineral
products, automobiles, and such non-essential goods as
jewelry, goods made of precious metals, perfumes, and
yachts and other vessels intended for pleasure or sports. In
contrast, the later reference to taxes, fees and charges
pertains only to one class of articles of the many subjects of
excise taxes, specifically, petroleum products. While local
government units are authorized to burden all such other
class of goods with taxes, fees and charges, excepting
excise taxes, a specific prohibition is imposed barring the
levying of any other type of taxes with respect to petroleum
products.
THE
PROVINCE
OF
BULACAN,
ROBERTO
M.
PAGDANGANAN, FLORENCE CHAVEZ, and MANUEL DJ
SIAYNGCO
in
their
capacity
as
PROVINCIAL
GOVERNOR, PROVINCIAL TREASURER, PROVINCIAL
LEGAL ADVISE, respectively, petitioners, vs. THE
HONORABLE COURT OF APPEALS (FORMER SPECIAL
12TH DIVISION), PUBLIC CEMENT CORPORATION,
respondents.[G.R. No. 126232 | November 27, 1998 | 3D]
FACTS:
12
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value ofNov
the 7,
gross
output thereof at the time of
o
o
13
HELD: NO
The plaintiff-appellant submits that Ordinance No. 23 and
constitute double taxation, because these two ordinances
cover the same subject matter and impose practically the
same tax rate. The thesis proceeds from its assumption that
both ordinances are valid and legally enforceable. This is not
so. As earlier quoted, Ordinance No. 23, which was approved
on September 25, 1962, levies or collects from soft drinks
producers or manufacturers a tax of one-sixteen (1/16) of a
centavo for every bottle corked, irrespective of the volume
contents of the bottle used. When it was discovered that the
producer or manufacturer could increase the volume
contents of the bottle and still pay the same tax rate, the
Municipality of Tanauan enacted Ordinance No. 27, approved
on October 28, 1962, imposing a tax of one centavo (P0.01)
on each gallon (128 fluid ounces, U.S.) of volume capacity.
The difference between the two ordinances clearly lies in the
tax rate of the soft drinks produced: in Ordinance No. 23, it
was 1/16 of a centavo for every bottle corked; in Ordinance
No. 27, it is one centavo (P0.01) on each gallon (128 fluid
ounces, U.S.) of volume capacity. The intention of the
Municipal Council of Tanauan in enacting Ordinance No. 27 is
thus clear: it was intended as a plain substitute for the prior
Ordinance No. 23, and operates as a repeal of the latter,
even without words to that effect.
That brings Us to the question of whether the remaining
Ordinance No. 27 imposes a percentage or a specific tax.
Undoubtedly, the taxing authority conferred on local
governments under Section 2, Republic Act No. 2264, is
broad enough as to extend to almost "everything, accepting
those which are mentioned therein." As long as the tax
levied under the authority of a city or municipal ordinance is
not within the exceptions and limitations in the law, the
same comes within the ambit of the general rule, pursuant to
the rules of exclucion attehus and exception firmat regulum
in cabisus non excepti. The limitation applies, particularly, to
the prohibition against municipalities and municipal districts
to impose "any percentage tax on sales or other taxes in any
form based thereon nor impose taxes on articles subject to
specific tax except gasoline, under the provisions of the
National Internal Revenue Code." For purposes of this
particular limitation, a municipal ordinance which prescribes
a set ratio between the amount of the tax and the volume of
sale of the taxpayer imposes a sales tax and is null and void
for being outside the power of the municipality to enact. But,
the imposition of "a tax of one centavo (P0.01) on each
gallon (128 fluid ounces, U.S.) of volume capacity" on all soft
drinks produced or manufactured under Ordinance No. 27
does not partake of the nature of a percentage tax on sales,
or other taxes in any form based thereon. The tax is levied
on the produce (whether sold or not) and not on the sales.
The volume capacity of the taxpayer's production of soft
drinks is considered solely for purposes of determining the
tax rate on the products, but there is no set ratio between
the volume of sales and the amount of the tax.
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The municipal
of Malabang, Lanao del Sur,
14
of Justice
claiming that the tax ordinances imposition of
amusement tax is an ultra vires act on the part of
respondent province
the
subject
tax
ordinance
levies
HELD: YES
Section 133 provides for the common limitations on the
taxing powers of LGUs. Specifically, Section 133 (i) prohibits
the levy by LGUs of percentage or value-added tax (VAT) on
sales, barters or exchanges or similar transactions on goods
or services except as otherwise provided by the LGC.
In Commissioner of Internal Revenue v. Citytrust Investment
Phils. Inc., the Supreme Court defined percentage tax as a
"tax measured by a certain percentage of the gross selling
price or gross value in money of goods sold, bartered or
imported; or of the gross receipts or earnings derived by any
person engaged in the sale of services." Also, Republic Act
No. 8424, otherwise known as the National Internal Revenue
Code (NIRC), in Section 125, Title V, lists amusement taxes
as among the (other) percentage taxes which are levied
regardless of whether or not a taxpayer is already liable to
pay value-added tax (VAT).
Amusement taxes are fixed at a certain percentage of the
gross receipts incurred by certain specified establishments.
Thus, applying the definition in CIR v. Citytrust and drawing
from the treatment of amusement taxes by the NIRC,
amusement taxes are percentage taxes as correctly argued
by Pelizloy.
However, provinces are not barred from levying amusement
taxes even if amusement taxes are a form of percentage
taxes. Section 133 (i) of the LGC prohibits the levy of
percentage taxes "except as otherwise provided" by the LGC.
10. TAXES ON TRANSPORTATION
CONTRACTORS AND COMMON CARRIERS
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:
(a) xxx
xxxxxx
(j) Taxes on the gross receipts of transportation
contractors and persons engaged in the transportation
of passengers or freight by hire and common carriers by
air, land or water, except as provided in this Code;
xxxxxx
(o) xxx
FIRST
PHILIPPINE
INDUSTRIAL
CORPORATION,
petitioner, vs. COURT OF APPEALS, HONORABLE
PATERNO V. TAC-AN, BATANGAS CITY and ADORACION
C. ARELLANO, in her official capacity as City Treasurer
of Batangas, respondents. [G.R. No. 125948 December 29,
1998 | 2D]
FACTS:
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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2014
(Commonwealth Act No. 1416, as amended)
When FPIC
applied
a Mayors permit, the respondent
city treasurer assessed FPIC a business tax based on
gross receipts
FPIC paid the assessed taxes under protest
FPIC then filed a letter-protest addressed to the
respondent city treasurer who denied the same
City Treasurer FPIC considered engaged in
transportation business, thus cannot claim exemption
under Sec. 133(j) of the LGC
FPIC filed with the RTC a complaint for tax refund against
the respondents
FPIC imposition and collection of business tax on its
gross receipts violates Sec. 133 of the LGC
Respondents FPIC not exempt under Sec. 133 (j) of
the LGC since it is not a transportation contractor and
pipelines are not included in the term common carrier
RTC dismissed the complaint
FPIC filed a petition for review before the SC which
referred the case to the CA
CA affirmed RTCs decision
15
which at least
partially supplements the law on common carriers set forth
in the Civil Code. Under Section 13, paragraph (b) of the
Public Service Act, "public service" includes:
o
every person that now or hereafter may own, operate.
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele,
whether permanent, occasional or accidental, and
done for general business purposes, any common
carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger,
or both, with or without fixed route and whatever may
be its classification, freight or carrier service of any
class, express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system gas,
electric light heat and power, water supply and power
petroleum, sewerage system, wire or wireless
communications
systems,
wire
or
wireless
broadcasting stations and other similar public
services.
Republic Act 387 also regards petroleum operation as a
public utility. Pertinent portion of Article 7 thereof provides:
o
that
everything
relating
to
the
exploration for and exploitation of
petroleum . . . and everything relating to
the manufacture, refining, storage, or
transportation by special methods
of petroleum, is hereby declared to be
a public utility. (Emphasis Supplied)
The Bureau of Internal Revenue likewise considers the
petitioner a "common carrier." In BIR Ruling No. 069-83, it
declared:
o
. . . since [petitioner] is a pipeline concessionaire that
is engaged only in transporting petroleum products, it
is considered a common carrier under Republic Act No.
387 . . . . Such being the case, it is not subject to
withholding tax prescribed by Revenue Regulations
No. 13-78, as amended.
From the foregoing disquisition, there is no doubt that
petitioner is a "common carrier" and, therefore, exempt from
the business tax as provided for in Section 133 (j), of the
Local Government Code, to wit:
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:
xxxxxxxxx
(j) Taxes on the gross receipts of transportation
contractors and persons engaged in the transportation
of passengers or freight by hire and common carriers by
air, land or water, except as provided in this Code.
[Revised Ruling] The deliberations conducted in the House of
Representatives on the Local Government Code of 1991 are
illuminating: Why the transportation business is being
excluded from the taxing powers of the LGUs? To guard
against the imposition of taxes by the LGUs on the carrier
business to prevent duplication of this tax.
It is clear that the legislative intent in excluding from the
taxing power of the local government unit the imposition of
business tax against common carriers is to prevent a
duplication of the so-called "common carrier's tax."
Petitioner is already paying three (3%) percent common
carrier's tax on its gross sales/earnings under the National
Internal Revenue Code. To tax petitioner again on its gross
receipts in its transportation of petroleum business would
defeat the purpose of the Local Government Code.
11. TAXES ON PREMIUMS
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,
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
DIGEST Nov
7, 2014shall not extend to the levy of
municipalities,
and barangays
the following:
(a) xxx
xxxxxx
(k) Taxes on premiums paid by way or reinsurance or
retrocession;
xxxxxx
(o) xxx
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them
to address
serious concern better than the
national government.
It may not be amiss to state, nevertheless, that under Article
458 (a)[3-VI] of the Local Government Code, the power of
LGUs to regulate the operation of tricycles and to grant
franchises for the operation thereof is still subject to the
guidelines prescribed by the DOTC. In compliance therewith,
the Department of Transportation and Communications
("DOTC") issued "Guidelines to Implement the Devolution of
LTFRBs Franchising Authority over Tricycles-For-Hire to Local
Government units pursuant to the Local Government Code."
As can be gleaned from the explicit language of the statute,
as well as the corresponding guidelines issued by DOTC, the
newly delegated powers pertain to the franchising
and regulatory powers theretofore exercised by the
LTFRB and not to the functions of the LTO relative to
the registration of motor vehicles and issuance of
licenses for the driving thereof. Clearly unaffected by the
Local Government Code are the powers of LTO under R.A.
No.4136 requiring the registration of all kinds of motor
vehicles "used or operated on or upon any public highway" in
the country.
The Court shares the apprehension of the Solicitor General if
the above functions were to likewise devolve to local
government units; he states:
o
If the tricycle registration function of respondent LTO
is decentralized, the incidence of theft of tricycles
will most certainly go up, and stolen tricycles
registered in one local government could be
registered in another with ease. The determination of
ownership thereof will also become very difficult.
o
Fake driver's licenses will likewise proliferate. This
likely scenario unfolds where a tricycle driver, not
qualified by petitioner LTO's testing, could secure a
license from one municipality, and when the same is
confiscated, could just go another municipality to
secure another license.
o
Devolution will entail the hiring of additional
personnel charged with inspecting tricycles for road
worthiness, testing drivers, and documentation.
Revenues raised from tricycle registration may not
be enough to meet salaries of additional personnel
and incidental costs for tools and equipment.
The power over tricycles granted under Section 458(a)(3)(VI)
of the Local Government Code to LGUs is the power to
regulate their operation and to grant franchises for the
operation thereof. The exclusionary clause contained in the
tax provisions of Section 133(1) of the Local Government
Code must not be held to have had the effect of withdrawing
the express power of LTO to cause the registration of all
motor vehicles and the issuance of licenses for the driving
thereof. These functions of the LTO are essentially regulatory
in nature, exercised pursuant to the police power of the
State, whose basic objectives are to achieve road safety by
insuring the road worthiness of these motor vehicles and the
competence of drivers prescribed by R. A. 4136. Not
insignificant is the rule that a statute must not be construed
in isolation but must be taken in harmony with the extant
body of laws.
The Court cannot end this decision without expressing
its own serious concern over the seeming laxity in the
grant of franchises for the operation of tricycles-forhire and in allowing the indiscriminate use by such
vehicles
on
public
highways
and
principal
thoroughfares. Senator Aquilino C. Pimentel, Jr., the
principal author, and sponsor of the bill that eventually has
become to be known as the Local Government Code, has
aptly remarked:
o
Tricycles
are
a
popular
means
of
transportation, specially in the countryside.
They are, unfortunately, being allowed to
drive
along
highways
and
principal
thoroughfares where they pose hazards to
their passengers arising from potential
collisions with buses, cars and jeepneys.
o
The operation of tricycles within a
municipality may be regulated by
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G.R. No. 120082 September 11, 1996
FACTS:
18
THIRD DIVISION
FACTS:
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19
(MIAA) operates
and administers the Ninoy Aquino International Airport
(NAIA) Complex under Executive Order No. 903 (EO
903), otherwise known as the Revised Charter of the
Manila International Airport Authority. EO 903 was issued
on 21 July 1983 by then President Ferdinand E. Marcos.
Under Sections 34 and 225 of EO 903, approximately
600 hectares of land, including the runways, the airport
tower, and other airport buildings, were transferred to
MIAA. The NAIA Complex is located along the border
between Pasay City and Paraaque City. On 28 August
2001, MIAA received Final Notices of Real Property Tax
Delinquency from the City of Pasay for the taxable years
1992 to 2001. On 24 August 2001, the City of Pasay,
through its City Treasurer, issued notices of levy and
warrants of levy for the NAIA Pasay properties. MIAA
received the notices and warrants of levy on 28 August
2001. Thereafter, the City Mayor of Pasay threatened to
sell at public auction the NAIA Pasay properties if the
delinquent real property taxes remain unpaid.
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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Nov and/or
7, 2014
distribution
generation and transmission of
electric power;
(d) All real property owned by duly registered cooperatives
as provided for under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of
real property tax previously granted to, or presently enjoyed
by, all persons, whether natural or juridical, including all
government-owned or controlled corporations are hereby
withdrawn upon the effectivity of this Code.
THE CITY OF DAVAO, CITY TREASURER AND THE CITY
ASSESSOR OF DAVAO CITY, Petitioners, vs. THE REGIONAL
TRIAL COURT, BRANCH XII, DAVAO CITY AND THE
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS),
Respondent.
G.R. No. 127383 August 18, 2005
SECOND DIVISION
FACTS:
20
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Nov
2014and/or publishing of books or
The
receipts
from
the7,
printing
other reading materials prescribed by the Department of
Education, Culture and Sports as school texts or references
shall be exempt from the tax herein imposed.
iii. Franchise Tax (Sec. 137)
Section
137. Franchise
Tax. Notwithstanding
any
exemption granted by any law or other special law, the
province may impose a tax on businesses enjoying a
franchise, at the rate not exceeding fifty percent (50%) of
one percent (1%) of the gross annual receipts for the
preceding calendar year based on the incoming receipt, or
realized, within its territorial jurisdiction.
In the case of a newly started business, the tax shall not
exceed one-twentieth (1/20) of one percent (1%) of the
capital investment. In the succeeding calendar year,
regardless of when the business started to operate, the tax
shall be based on the gross receipts for the preceding
calendar year, or any fraction thereon, as provided herein.
NATIONAL POWER CORPORATION, petitioner, vs. CITY
OF CABANATUAN, respondent.
G.R. No. 149110
April 9, 2003
THIRD DIVISION
FACTS:
National Power Corporation (NPC) is a governmentowned and controlled corporation created under
Commonwealth Act No. 120, as amended. It is tasked to
undertake
the
"development
of
hydroelectric
generations of power and the production of electricity
from nuclear, geothermal and other sources, as well as,
the transmission of electric power on a nationwide
basis." Concomitant to its mandated duty, NPC has,
among others, the power to construct, operate and
maintain power plants, auxiliary plants, power stations
and substations for the purpose of developing hydraulic
power and supplying such power to the inhabitants. For
many years, NPC sells electric power to the residents of
Cabanatuan City, posting a gross income of
P107,814,187.96 in 1992. Pursuant to section 37 of
Ordinance No. 165-92, the City of Cabanatuan assessed
NPC a franchise tax amounting to P808,606.41,
representing 75% of 1% of the latter's gross receipts for
the preceding year.
ISSUE # 1: Whether the City of Cabanatuan is authorized by
the LGC to impose the franchise tax against NPC.
HELD # 1: YES.
Section 151 in relation to section 137 of the LGC clearly
authorizes the city government to impose on NPC the
franchise tax in question. In section 131 (m) of the LGC,
Congress unmistakably defined a franchise in the sense of a
secondary or special franchise. This is to avoid any confusion
when the word franchise is used in the context of taxation.
As commonly used, a franchise tax is "a tax on the privilege
of transacting business in the state and exercising corporate
franchises granted by the state." It is not levied on the
corporation simply for existing as a corporation, upon its
property or its income, but on its exercise of the rights or
privileges granted to it by the government. Hence, a
corporation need not pay franchise tax from the time it
ceased to do business and exercise its franchise. It is within
this context that the phrase "tax on businesses enjoying a
franchise" in section 137 of the LGC should be interpreted
and understood. Verily, to determine whether the petitioner
is covered by the franchise tax in question, the following
requisites should concur: (1) that petitioner has a "franchise"
in the sense of a secondary or special franchise; and (2) that
it is exercising its rights or privileges under this franchise
within the territory of the respondent city government. NPC
fulfills both requisites.
ISSUE # 2: Whether the fact the the NPC is wholly owned by
the National Government exempts it from the imposition of a
franchise tax.
21
HELD # 2: NO.
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Nov
7, 2014
business,
barters,
exchanges, leases, goods or
properties, renders services. It is also levied on every
importation of goods whether or not in the course of trade or
business. The tax base of the VAT is limited only to the value
added to such goods, properties, or services by the seller,
transferor or lessor. Further, the VAT is an indirect tax and
can be passed on to the buyer. The franchise tax, on the
other hand, is a percentage tax imposed only on franchise
holders. It is imposed under Section 119 of the Tax Code and
is a direct liability of the franchise grantee.
On January 1, 1998, R.A. No. 8424 was passed confirming the
10% VAT liability of radio and/or television companies with
yearly gross receipts exceeding P10,000,000.00. R.A. No.
9337 was subsequently enacted and became effective on
July 1, 2005. The said law further amended the NIRC by
increasing the rate of VAT to 12%. The effectivity of the
imposition of the 12% VAT was later moved from January 1,
2006 to February 1, 2006. In consonance with the above
survey of pertinent laws on the matter, ABS-CBN is subject to
the payment of VAT. It does not have the option to choose
between the payment of franchise tax or VAT since it is a
broadcasting company with yearly gross receipts exceeding
Ten Million Pesos (P10,000,000.00). The clause "in lieu of all
taxes" does not pertain to VAT or any other tax. It cannot
apply when what is paid is a tax other than a franchise tax.
Since the franchise tax on the broadcasting companies with
yearly gross receipts exceeding ten million pesos has been
abolished, the "in lieu of all taxes" clause has now become
functus officio, rendered inoperative.
In sum, ABS-CBN's claims for exemption must fail on twin
grounds. First, the "in lieu of all taxes" clause in its franchise
failed to specify the taxes the company is sought to be
exempted from. Neither did it particularize the jurisdiction
from which the taxing power is withheld. Second, the clause
has become functus officio because as the law now stands,
ABS-CBN is no longer subject to a franchise tax. It is now
liable for VAT.
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Nov 7, 2014
imposed
3% franchise
tax, Congress intended it to be
exempt from all kinds of franchise taxes whether local or
national. However, Smart failed in this regard.
SMART COMMUNICATIONS, INC., Petitioner, vs. THE CITY
OF DAVAO, represented herein by its Mayor Hon. RODRIGO
DUTERTE, and the SANGGUNIANG PANLUNSOD OF DAVAO
CITY, Respondents.
G.R. No. 155491
July 21, 2009
THIRD DIVISION
Resolution on the MR
ISSUE: Whether the Expanded VAT Law, by replacing the
national franchise tax, abolished the payment of local
franchise tax.
HELD: NO.
The previous decisions in PLDT v. City of Davao and PLDT v.
City of Bacolod, in denying the claim for exemption from the
payment of local franchise tax, suggests that Aside from the
national franchise tax, the franchisee is still liable to pay the
local franchise tax, unless it is expressly and unequivocally
exempted from the payment thereof under its legislative
franchise. The "in lieu of all taxes" clause in a legislative
franchise should categorically state that the exemption
applies to both local and national taxes; otherwise, the
exemption claimed should be strictly construed against the
taxpayer and liberally in favor of the taxing authority.
Republic Act No. 7716, otherwise known as the "Expanded
VAT Law," did not remove or abolish the payment of local
franchise tax. It merely replaced the national franchise tax
that was previously paid by telecommunications franchise
holders and in its stead imposed a ten percent (10%) VAT in
accordance with Section 108 of the Tax Code. VAT replaced
the national franchise tax, but it did not prohibit nor abolish
the imposition of local franchise tax by cities or
municipalities.
iv. Tax on Sand, Gravel and Quarry Resources (Sec. 138)
Section 138. Tax on Sand, Gravel and Other Quarry
Resources. - The province may levy and collect not more
than ten percent (10%) of fair market value in the locality
per cubic meter of ordinary stones, sand, gravel, earth, and
other quarry resources, as defined under the National
Internal Revenue Code, as amended, extracted from public
lands or from the beds of seas, lakes, rivers, streams, creeks,
and other public waters within its territorial jurisdiction.
The permit to extract sand, gravel and other quarry
resources shall be issued exclusively by the provincial
governor, pursuant to the ordinance of the sangguniang
panlalawigan.
The proceeds of the tax on sand, gravel and other quarry
resources shall be distributed as follows:
(1) Province - Thirty percent (30%);
(2) Component City or Municipality where the sand, gravel,
and other quarry resources are extracted - Thirty percent
(30%); and
(3) Barangay where the sand, gravel, and other quarry
resources are extracted - Forty percent (40%).
Municipality of San Fernando vs. Sta. Romana
L-GR No. 30159, Mar. 31, 1987
SECON DIVISION
FACTS:
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DIGEST
Nov
7, 2014
or local tax,
license,
or fee for the practice of such
Tax Appeals questioning the denial by the Commissioner
profession.
(c) Any individual or corporation employing a person
subject to professional tax shall require payment by that
person of the tax on his profession before employment
and annually thereafter.
(d) The professional tax shall be payable annually, on or
before the thirty-first (31st) day of January. Any person
first beginning to practice a profession after the month
of January must, however, pay the full tax before
engaging therein. A line of profession does not become
exempt even if conducted with some other profession
for which the tax has been paid. Professionals
exclusively employed in the government shall be
exempt from the payment of this tax.
(e) Any person subject to the professional tax shall write
in deeds, receipts, prescriptions, reports, books of
account, plans and designs, surveys and maps, as the
case may be, the number of the official receipt issued to
him.
1. Definition of Professionals (Sec. 238 (f) IRR of the LGC)
2. Professional practices his profession in several places
(Sec. 228 (b) IRR
of LGC)
(b) Every person legally authorized to practice his profession
shall pay the professional tax to the province where he
practice his profession or where he maintains his principal
office in case he practices his profession in several places,
provided, however, that such person who has paid the
corresponding professional tax shall be entitled to practice
his profession in any part the Philippines without being
subjected to any other national or local tax, license, or fee
for the practice of such profession.
vi. Amusement Tax (Sec. 140) as amended by RA No. 9640
dated May 21, 2009
Section 140. Amusement Tax. (a) The province may levy an amusement tax to be collected
from the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other
places of amusement at a rate of not more than thirty
percent (30%) of the gross receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be
deducted and withheld by their proprietors, lessees, or
operators and paid to the provincial treasurer before the
gross receipts are divided between said proprietors, lessees,
or operators and the distributors of the cinematographic
films.
(c) The holding of operas, concerts, dramas, recitals, painting
and art exhibitions, flower shows, musical programs, literary
and oratorical presentations, except pop, rock, or similar
concerts shall be exempt from the payment of the tax
hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time,
manner, terms and conditions for the payment of tax. In case
of fraud or failure to pay the tax, the sangguniang
panlalawigan may impose such surcharges, interest and
penalties as it may deem appropriate.
(e) The proceeds from the amusement tax shall be shared
equally by the province and the municipality where such
amusement places are located.
PBA vs. CA
GR No. 119122, August 8, 2000
THIRD DIVISION
FACTS:
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Annual
Nov 7,
2014
Section
141.
Fixed
Tax For Every Delivery Truck or
Van of Manufacturers or Producers, Wholesalers of, Dealers,
or Retailers in, Certain Products. (a) The province may levy an annual fixed tax for every
truck, van or any vehicle used by manufacturers, producers,
wholesalers, dealers or retailers in the delivery or distribution
of distilled spirits, fermented liquors, soft drinks, cigars and
cigarettes, and other products as may be determined by the
sangguniang panlalawigan, to sales outlets, or consumers,
whether directly or indirectly, within the province in an
amount not exceeding Five hundred pesos (P500.00).
(b) The manufacturers, producers, wholesalers, dealers and
retailers referred to in the immediately foregoing paragraph
shall be exempt from the tax on peddlers prescribed
elsewhere in this Code.
b. Municipalities
i. Business Taxes (Sec. 143)
ERICSSON TELECOMMUNICATION VS. CITY OF PASIG
GR No. 176667, November 22. 2007
THIRD DIVISION
FACTS:
25
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DIGEST
Nov
2014 under Article V of its
Corporation
is 7,
authorized,
City of Manila assessed Coca-Cola
Amended By-Laws, to collect regular assessments from
its
members
for
operating
expenses,
capital
expenditures on the common areas, and other special
assessments as provided for in the Master Deed with
Declaration of Restrictions of the Condominium. On 15
December 1998, the Corporation received a Notice of
Assessment dated 14 December 1998 signed by the City
Treasurer. The Notice of Assessment stated that the
Corporation is "liable to pay the correct city business
taxes, fees and charges," computed as totaling
P1,601,013.77 for the years 1995 to 1997. The Notice of
Assessment was silent as to the statutory basis of the
business taxes assessed. Through counsel, the
Corporation responded with a written tax protest dated
12 February 1999, addressed to the City Treasurer.
ISSUE: Whether the City of Makati may collect business taxes
on condominium corporations.
HELD: NO.
26
on the basis of
Section 21 of Tax Ordinance No. 7794, as amended by
the aforementioned tax ordinances, for deficiency local
business taxes, penalties, and interest, in the total
amount of P18,583,932.04, for the third and fourth
quarters of the year 2000. Coca-Cola filed a protest with
the city treasurer on the ground that the said
assessment amounted to double taxation, as respondent
was taxed twice, i.e., under Sections 14 and 21 of Tax
Ordinance No. 7794, as amended by Tax Ordinances No.
7988 and No. 8011.
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public
in character
not oppressive, excessive nor
prohibitive.
From his decision, ASC filed a PFR before CTA.
Issue:
Whether Sec. 2 of the Ordinance is valid
Whether the ASC is entitled to be refunded the
amount it paid.
Decision:
As regards the 1st issue, ASC argues that Sec. 2 of
the Ordinance is contrary to the Constitution and LGC for
LGUs do not have the inherent power to tax except such
power as may be delegated to them by law. ASC posits that
the Ordinance is confiscatory and excessive. Moreover, Secs.
130, 133, 143 (b) and 191 of the LGC expressly imposed
limitations that govern the exercise of the LGUs taxing
powers. Considering that Ordinance No. 98-015 imposes a
3% business tax on the gross sales, it is necessarily an
exaction based on sales, thus, null and void.
Further, petitioner argues that Section 191 of the
LGC specifically provides that local government units have
the authority to adjust the tax rates as prescribed in the LGC
of 1991 not oftener than once every five (5) years but in no
case shall the adjustments exceed ten percent (10%) of the
rates fixed under the said Code. Thus, by amending Section
5 (b) of the RCM, respondents should have increased the
graduated rates by ten percent (10%) and not imposed a
fixed rate of 3%.
Muntinlupa City avers that it is erroneous for the
petitioner to claim that as it is covered under Sec. 143(b) of
the LGC, it may no longer be taxed under Sec. 2 of the
Ordinance. ASC is clearly both a distributor/dealer and
retailer, such that neither Sec. 143(b) nor any other
subparagraphs of Sec. 143 find application. Not being
covered under Subparagraphs A to G, then Art. 237 of the
IRR of the LGC, which allows cities to levy and collect a
percentage tax not ecedding 3% based on gross sales or
receipts on any business not specified in Sec. 143 A to G of
the LGC, in releation to Sec. 151 of the LGC come into play.
Even assuming that Art. 237 of IRR in relation to Sec. 151 do
not apply, the imposition finds basis in Sec. 143(h) of the
LGC. The 3% business tax imposed is still within the 50%
maximum increase from the 2% percentage tax allowed by
law. City government, therefore, did not exceed its limits in
imposing the 3% business tax on the gross sales of liquor,
beer, etc.
On the main issue, with the enactment of Ordinance
No. 98-015, City Govt. now collect from ASC the 3% fixed
business tax rate based on its gross sales or receipts of
liquor and other distilled products and tobacco products as a
wholesaler and retailer, on the premise that no other
provision of law imposes a business tax on wholesalers and
retailers of liquor, beer, wine, distilled products, and other
tobacco products.
It is emphasized that the very phrase under Sec.
143(b) of the LGC ay article of commerce of whatever kind
is broad enough as o include liquor, beer , wine, and tobacco
products.
ASC have already been taxed as distributor and
dealer of liquor, beer, wine, and tobacco products by the City
based on the graduated rates provided for under Sec. 5(b) of
the Revenue Code of Muntinlupa. Hence, it was erroneous for
the City to argue that no other provision of law imposes a
business tax on wholesalers ad retailers of liquor, beer, etc.
When Ordninance No. 98-015 was enacted
amending the rates of business taxes to a fixed rate of 3%
which is more than 10% of the allowable increase, such
imposition was excessive and contrary to law. Pursuant to
Sec. 191 9(9) of the LGC, it is provided that the LGUs may
adjust the rates of taxes prescribed in the same Code, not
oftener than once every 5 years but in no case shall it
exceed 10% of the rates already prescribed. In this regard,
the adjustments on the rate of tax imposed upon ASC should
have been based on the existing graduated business tax
rates under Revenue Code of Mutinlupa.
City cannot based the adjustments on the business
tax rates on the 2% tax rate provided under Sec. 143(h) of
the LGC because the Revenue Code of Muntinlupa adopted a
graduated rate of Tax, pursuant to Sec. 143(b) taking for
consideration the last paragraph of Sec. 143 of the LGC.
27
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periods provided by law would be rendered
Decision:
- SC held that the arguments raised in this case were mere
restatements of previous arguments raised in the DIVISION
that had already been thoroughly discussed and passed
upon in the decision.
- We find that the Court in Division appropriately denied
petitioner's claim for refund pertaining to the period
from December 16, 2000 to December 2002, due to
petitioner's failure to file an administrative claim for
refund before the City Government of Muntinlupa as
required under Section 196 of the LGC prior to judicial
recourse. Said provision reads thus:
"Section 196. Claim for Refund of Tax Credit. No case or
proceeding shall be maintained in any court for the recovery
of any tax, fee, or charge erroneously or illegally collected
until a written claim for refund or credit has been filed with
the local treasurer. No case or proceeding shall be
entertained in any court after the expiration of two (2) years
from the date of the payment of such tax, fee, or charge, or
from the date the taxpayer is entitled to a refund or credit."
Clearly from the above quoted provision, no case or
proceeding may be entertained by any courts absent
showing that petitioner has a written claim for refund of
erroneous or excessive payment of any tax, fee or charge
filed with the local treasurer prior to its filing before any
court.
Moreover, it should be noted that two reckoning periods are
provided by law for the filing of a case or proceeding, which
is from the date of payment of the tax, and from the date the
taxpayer becomes entitled to the refund. However,
petitioner's interpretation of the phrase "from the date the
taxpayer becomes entitled to the refund" is not in
consonance with the intent of the law since Section 196
should not be read in isolation, but in relation with other
provisions of the LGC. As exhaustively discussed by the
Court in Division in its Resolution dated April 4, 2008, it held
that:
"Section 187 of the Local Government Code dictates the
procedure for questioning the constitutionality or legality of
tax ordinances. It provides in part that: 'any question on the
constitutionality or legality of tax ordinances or 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
the receipt of the appeal'. It further provides that 'such
appeal shall not have the effect of suspending the effectivity
of the ordinance and the accrual and payment of the tax, fee
or charge levied therein.
A reading of Section 187 of the Local Government Code
would show that the law intends that questions on the
legality or constitutionality of an ordinance or tax measure
be threshed out the soonest possible time. It should be
raised within thirty (30) days from approval and such appeal
should be resolved within sixty (60) days from receipt
thereof. Section 187 states that any appeal on the legality or
constitutionality of the ordinance does not suspend its
effectivity.
Thus, before any final declaration of its nullity, taxes accrue
and should be paid accordingly. In the same vein, the
reckoning periods for the filing of a claim for refund in
Section 196 of the Local Government Code should be
interpreted so as to accomplish the evident purpose, viz., the
settlement of the rights of the taxpayer vis--vis the
government, at the earliest opportunity. The phrase "from
the date the taxpayer becomes entitled to a refund or credit"
in Section 196 should not be interpreted to mean the finality
of the decision of a court declaring the tax measure void,
even without a timely claim for refund. Otherwise, claims for
refund will be filed even after several years from payment of
the tax due, merely because the tax ordinance was declared
void. And the filing of administrative and judicial claims for
refund shall be endless. This interpretation would give the
taxpayer, who was not able to question the legality or
constitutionality of the tax measure within the period
provided in Section 187, the right to instead file a claim for
refund with the court under Section 196, absent the filing of
a timely administrative claim. In effect, the prescriptive
28
naught and
meaningless.
- Petitioner's failure to file the appropriate administrative
claim for refund for the period December 16, 2000 to
September 2002, cannot be countenanced. More so, since it
has been able to file a timely administrative claim for the 3%
business tax it paid covering January 2, 1999 to December
15, 2000. It is clearly aware of the requirements for the filing
of an administrative claim set forth by law. Its manifest error
cannot be cured at this point.
- On the issue of the validity of the Ordinance, As thoroughly
discussed by the Court in Division, We emphasize that
respondent cannot base the adjustments on the business tax
rates on the 2% tax rate provided for under Section 143 (h)
of the LGC.
It should be noted that petitioner has already been taxed as
a distributor and dealer of liquor, beer, wine, distilled spirits,
cigarettes and tobacco products by the respondents, based
on the graduated rates provided for under Section 5 (b) of
the
- Revenue Code of Muntinlupa City based on Section 143 (b)
of the LGC that taxes "any article of commerce of whatever
kind and nature", which is broad enough as to include
products of petitioner. When the law evidently does not
distinguish the articles of commerce subject to the business
tax, thus, respondents should not have done so.
In addition, a general provision that provides for the scope
and extent of the city's taxing power like the above quoted
Section 151 of the LGC cannot be made to apply. On the
contrary,
the
proper
provision
in
cases
of
amendment/increase of tax rates is:
SEC. 191. Authority of Local Government Units to Adjust
Rates of Tax Ordinances. Local government units shall
have the authority to adjust the tax rates as prescribed
herein not oftener than once every five (5) years, but in no
case shall such adjustment exceed ten percent (10%) of the
rates this Code.
Based
on
the
foregoing,
the
imposition
of
an
amended/increased rate of business taxes to a fixed rate of
3%, which is more than 10% of the allowable increase as
indicated in Section 191 of the LGC, provided under Section
2 of Ordinance No. 98-015, is excessive and contrary to law.
WHEREFORE, in view of the foregoing, the instant Petition for
Review is hereby DENIED for lack of merit. The assailed
Decision and Resolution of the Court
in Division dated December 12, 2007 and April 4, 2008,
respectively, are hereby AFFIRMED.
CAGAYAN ELECTRIC POWER AND LIGHT Co. (CEPALCO)
vs. CITY OF CAGAYAN DE ORO
G.R. No. 191761 November 14, 2012
J: Carpio
Facts:
Sagguniang Panglungsod of CDO passed Ordinance
9503-2005 imposing a ax on the lease or rental of electric
and telecommunication posts, poles or towers by pole
owners to other pole users a 10% of annual retal income
derived from such lease or rental.
CEPALCO questioned the validity of the Ordinance
before RTC CDO on the ground that the tax is a tax on
income which CDO City may not impose, the same being
expressly prohibited by Sec. 133(a) of LGC.
CEPALCO further argues that assuming the CDO
may impose such tax, it is nevertheless exempted from such
by virtue of its franchise providing for such exemption.
RTC ruled in favor of CDO City, holding that the
ordinance is an imposition prohibited by the LGC because
what is directly taxed is not the income but the privilege of
CEPALCO to engage in business. It also made mention of the
catch all provision: Moreover, Section 143(h), in relation to
Section 151, of the Local Government Code authorizes a city
to impose taxes, fees and charges on any business which is
not specified as prohibited under Section 143(a) to (g) and
which the city council may deem proper to tax.
CA affirmed the decision of RTC and held that
CEPALCO failed to file a timely appeal to the Secretary of
Justice. Hence, this appeal.
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Issue:
Whether
CEPALCO
is liable to pay business tax under
the Ordiance
Decision:
On failure to appeal on time: Clearly, the law
requires that the dissatisfied taxpayer who questions the
validity or legality of a tax ordinance must file his appeal to
the Secretary of Justice, within 30 days from effectivity
thereof. In case the Secretary decides the appeal, a period
also of 30 days is allowed for an aggrieved party to go to
court. But if the Secretary does not act thereon, after the
lapse of 60 days, a party could already proceed to seek relief
in court. These three separate periods are clearly given for
compliance as a prerequisite before seeking redress in a
competent court. Such statutory periods are set to prevent
delays as well as enhance the orderly and speedy discharge
of judicial functions. For this reason the courts construe
these provisions of statutes as mandatory. Consequently, any
delay in implementing tax measures would be to the
detriment of the public. It is for this reason that protests over
tax ordinances are required to be done within certain time
frames. In the instant case, it is our view that the failure of
petitioners to appeal to the Secretary of Justice within 30
days as required by Sec. 187 of R.A. 7160 is fatal to their
cause. As in Reyes, CEPALCOs failure to appeal to the
Secretary of Justice within the statutory period of 30 days
from the effectivity of the ordinance should have been fatal
to its cause. However, we relax the application of the rules in
view of the more substantive matters.
On the merits of the case: Although CEPALCO does
not question the authority of the Sangguniang Panlungsod of
Cagayan de Oro to impose a tax or to enact a revenue
measure, CEPALCO insists that Ordinance No. 9503-2005 is
an imposition of an income tax which is prohibited by Section
133(a) of the Local Government Code. Unfortunately for
CEPALCO, we agree with the ruling of the trial and appellate
courts that Ordinance No. 9503-2005 is a tax on business.
CEPALCOs act of leasing for a consideration the use of its
posts, poles or towers to other pole users falls under the
Local Government Codes definition of business. Business is
defined by Section 131(d) of the Local Government Code as
"trade or commercial activity regularly engaged in as a
means of livelihood or with a view to profit." In relation to
Section 131(d), Section 143(h) of the Local Government
Code provides that the city may impose taxes, fees, and
charges on any business which is not specified in Section
143(a) to (g) and which the sanggunian concerned may
deem proper to tax. In contrast to the express statutory
provisions on the City of Cagayan de Oros power to tax,
CEPALCOs claim of tax exemption of the income from its
poles relies on a strained interpretation. Section 1 of R.A. No.
9284 added Section 9 to R.A. No. 3247, CEPALCOs franchise:
SEC. 9. Tax Provisions. The grantee, its successors
or assigns, shall be subject to the payment of all taxes,
duties, fees or charges and other impositions applicable to
private electric utilities under the National Internal Revenue
Code (NIRC) of 1997, as amended, the Local Government
Code and other applicable laws: Provided, That nothing
herein shall be construed as repealing any specific tax
exemptions, incentives, or privileges granted under any
relevant law: Provided, further, That all rights, privileges,
benefits and exemptions accorded to existing and future
private electric utilities by their respective franchises shall
likewise be extended to the grantee.
The grantee shall file the return with the city or
province where its facility is located and pay the taxes due
thereon to the Commissioner of Internal Revenue or his duly
authorized representative in accordance with the NIRC and
the return shall be subject to audit by the Bureau of Internal
Revenue.
The Local Government Code withdrew tax
exemption privileges previously given to natural or juridical
persons, and granted local government units the power to
impose franchise tax, thus:
SEC. 137. Franchise Tax. Notwithstanding any
exemption granted by any law or other special law, the
province may impose a tax on businesses enjoying a
franchise, at a rate not exceeding fifty percent (50%) of one
percent (1%) of the gross annual receipts for the preceding
calendar year based on the incoming receipt, or realized,
within its territorial jurisdiction.
29
xxxx
SEC. 193. Withdrawal of Tax Exemption Privileges.
Unless otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all persons,
whether natural or juridical, including government-owned or
controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock
and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code.
SEC. 534. Repealing Clause. x x x.
(f) All general and special laws, acts, city charters,
decrees, executive orders, proclamations and administrative
regulations, or part or parts thereof which are inconsistent
with any of the provisions of this Code are hereby repealed
or modified accordingly. CEPALCOs claim of exemption under
the "in lieu of all taxes" clause must fail in light of Section
193 of the Local Government Code as well as Section 9 of its
own franchise.
DISCUSSION ON THE MERITS:
CEPALCO argues that the Ordinance is invalid
because of 2 limitations: (1) The taxes imposable under Sec.
137 or 143(h) are restricted as to the amount which may be
imposed; and (2) If it is a city which imposes the same, it can
impose only up to one half of what the province or
municipality may impose.
Ordinance 9503-2005 imposes a tax on the lease or
rental of electric or telecommunication posts, poles, or
towers by pole owners to other pole users at the rate of 10%
of the annual rental income derived therefrom.
Sec. 137 considering that the tax allowed
provinces SHALL NOT EXCEED 50% OF 1% OF THE GROSS
ANNUAL RECEIPTS FOR THE PRECEDING CALENDAR YEAR
based on the incoming receipt,xxx xxx.. the tax imposed by
Ordinance a the rate of 10% is too much. There is a whale of
a difference between the allowable 50% of 1% and the 10%
tax imposed by CDO city.
To illustrate: assuming that the gross annual receipt
is Php100, the maximum tax that a province may impose
under Section 137 (50% of 1%) shall be Php0.5 or only fifty
centavos. Therefore, the maximum tax that the City may
impose shall only be one-half of this, which is Php0.25 or
only twenty-five centavos. But the questioned Ordinance
imposes a tax amounting to 10% of the gross annual receipt
of Php100, which is Php10, or Ten Pesos. This a whooping
[sic] 40 times more than that allowed for the province! The
violation made by respondent city of its delegated taxing
authority is all too patent.
With respect to Section 143(h), the rate of tax which
the municipality may impose "shall not exceed two percent
(2%) of gross sales or receipts of the preceding calendar
year." On the other hand, the tax imposed by Ordinance No.
9503-2005 is "at the rate of ten (10) percent of the annual
rental income derived therefrom." Again, it is obvious that
the respondent Citys questioned tax ordinance is way too
much.
CDO City argues that Section 186 of the LGC allow
[sic] local government units to exercise their taxing power to
levy taxes, fees or charges on any base or subject not
otherwise specifically enumerated in the preceding sections,
more particularly Section 143 thereof, or under the
provisions of the National Internal Revenue Code, as long as
they are not unjust, excessive, oppressive, confiscatory or
contrary to declared national policy. Moreover, a public
hearing is required before the Ordinance levying such taxes,
fees or charges can be enacted; CEPALCO is mistaken when
it states that a city can impose a tax up to only one-half of
what the province or city may impose. A more circumspect
reading of the Local Government Code could have prevented
this error. Section 151 of the Local Government Code states
that, subject to certain exceptions, a city may exceed by "not
more than 50%" the tax rates allowed to provinces and
municipalities.29 A province may impose a franchise tax at a
rate "not exceeding 50% of 1% of the gross annual
receipts."30 Following Section 151, a city may impose a
franchise tax of up to 0.0075 (or 0.75%) of a business gross
annual receipts for the preceding calendar year based on the
incoming receipt, or realized, within its territorial jurisdiction.
A municipality may impose a business tax at a rate not
exceeding "two percent of gross sales or receipts."31
Following Section 151, a city may impose a business tax of
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upDIGEST
to 0.03 (or
3%) of7,a 2014
business gross sales or receipts of
the preceding calendar year.
CEPALCO also erred when it equates Section 137s
"gross annual receipts" with Ordinance No. 9503-2005s
"annual rental income." Section 2 of Ordinance No. 95032005 imposes "a tax on the lease or rental of electric and/or
telecommunication posts, poles or towers by pole owners to
other pole users at the rate of ten (10) percent of the annual
rental income derived therefrom," and not on CEPALCOs
gross annual receipts. Thus, although the tax rate of 10% is
definitely higher than that imposable by cities as franchise or
business tax, the tax base of annual rental income of
"electric and/or telecommunication posts, poles or towers by
pole owners to other pole users" is definitely smaller than
that used by cities in the computation of franchise or
business tax. In effect, Ordinance No. 9503-2005 wants a
slice of a smaller pie.
However, we disagree with the City of Cagayan de
Oros submission that Ordinance No. 9503-2005 is not
subject to the limits imposed by Sections 143 and 151 of the
Local Government Code. On the contrary, Ordinance No.
9503-2005 is subject to the limitation set by Section 143(h).
Section 143 recognizes separate lines of business and
imposes different tax rates for different lines of business. Let
us suppose that one is a brewer of liquor and, at the same
time, a distributor of articles of commerce. The brewery
business is subject to the rates established in Section 143(a)
while the distribution business is subject to the rates
established in Section 143(b). The City of Cagayan de Oros
imposition of a tax on the lease of poles falls under Section
143(h), as the lease of poles is CEPALCOs separate line of
business which is not covered by paragraphs (a) to (g) of
Section 143. The treatment of the lease of poles as a
separate line of business is evident in Section 4(a) of
Ordinance No. 9503-2005. The City of Cagayan de Oro
required CEPALCO to apply for a separate business permit.
More importantly, because "any person, who in the
course of trade or business x x x leases goods or properties x
x x shall be subject to the value-added tax,"3 the imposable
tax rate should not exceed two percent of gross receipts of
the lease of poles of the preceding calendar year. Section
143(h) states that "on any business subject to x x x valueadded x x x tax under the National Internal Revenue Code,
as amended, the rate of tax shall not exceed two percent
(2%) of gross sales or receipts of the preceding calendar
year" from the lease of goods or properties. Hence, the 10%
tax rate imposed by Ordinance No. 9503-2005 clearly
violates Section 143(h) of the Local Government Code.
Finally, in view of the lack of a separability clause,
we declare void the entirety of Ordinance No. 9503-2005.
Any payment made by reason of the tax imposed by
Ordinance No. 9503-2005 should, therefore, be refunded to
CEPALCO. Our ruling, however, is made without prejudice to
the enactment by the City of Cagayan de Oro of a tax
ordinance that complies with the limits set by the Local
Government Code.
WHEREFORE, we GRANT the petition.
LOCAL AND REAL PROPERTY TAX
30
not
the
tax
be
Business Taxes
- imposed in the exercise of the Police Power for
regulatory purposes.
- paid for the privilege of carrying on a business in the
year the tax was paid.
- paid at the beginning of the year as a fee to allow the
business to operate for the rest of the year.
- prerequisite to the conduct of business.
Income Tax
- tax on all yearly profits arising from property,
professions, trades or offices, or as a tax on a
persons income, emoluments, profits and the like.
- tax on income, whether net or gross realized in
one taxable year.
- It is due on or before the 15 th day of the 4th month
following the close of the TPs taxable year and is
generally regarded as an excise tax, levied upon
the right of a person or entity to receive income or
profits.
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person, natural or juridical, shall require the
RATES OF TAX WITHIN METRO MANILA (Sec. 144)
Sec. 144. Rates of Tax within the Metropolitan Manila Area.
The municipalities within the Metropolitan Manila Area may
levy taxes at rates which shall not exceed by 50% the
maximum rates prescribed in the preceding section.
RETIREMENT OF BUSINESS (Sec. 145)
Sec. 145. Retirement of Business. A business subject to tax
pursuant to the preceding sections shall, upon termination
thereof, submit a sworn statement of its gross sales or
receipts for the current year. If the tax paid during the year
be less than the tax due on said gross sales or receipts of the
current year, the difference shall be paid before the business
is considered officially retired.
IRR of LGC
PART SIX
Special Provisions
ARTICLE 241. Retirement of Business.
(a) Any person natural or juridical, subject to the tax on
businesses under Article 232 of this Rule shall, upon
termination of the business, submit a sworn statement of the
gross sales or receipts for the calendar year.
For purposes hereof, termination shall mean that business
operations are stopped completely. Any change in ownership,
management and/or name of the business shall not
constitute termination as contemplated in this Article. Unless
stated otherwise, assumption of the business by any new
owner or manager or re-registration of the same business
under a new name will only be considered by the LGU
concerned for record purposes in the course of the renewal
of the permit or license to operate the business.
The local treasurer concerned shall see to it that the
payment of taxes of a business is not avoided by simulating
the termination or retirement thereof. For this purpose, the
following procedural guidelines shall be strictly observed:
(1) The local treasurer shall assign every application for the
termination or retirement of business to an inspector in his
office who shall go to the address of the business on record
to verify if it is really no longer operating. If the inspector
finds that the business is simply placed under a new name,
manager and/or new owner, the local treasurer shall
recommend to the mayor the disapproval of the application
for the termination or retirement of said business.
Accordingly, the business continues to become liable for the
payment of all the taxes, fees and charges imposed thereon
under existing local tax ordinances; and
(2) In the case of a new owner to whom the business was
transferred by sale or other form of conveyance, said new
owner shall be liable to pay the tax or fee for the transfer of
the business to him if there is an existing ordinance
prescribing such transfer tax.
(b) If it is found that the retirement or termination of the
business is legitimate, and the tax due therefrom be less
than the tax due for the current year based on the gross
sales or receipts, the difference in the amount of the tax
shall be paid before the business is considered officially
retired or terminated.
(c) The permit issued to a business retiring or terminating its
operations shall be surrendered to the local treasurer who
shall forthwith cancel the same and record such cancellation
in his books.
ARTICLE 242. Related or Combined Businesses.
(a) The conduct or operation of two or more related
businesses provided in Article 232 of this Rule by any one
31
issuance of a
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(c)DIGEST
In cases where
person
conducts or operates two (2) or
more businesses mentioned in Section 143 of this Code
which are subject to different rates of tax, the gross sales or
receipts of each business shall be separately reported for the
purpose of computing the tax due from each business.
SITUS OF TAX (Section 150) Where to pay business
tax?
Section 150. Situs of the Tax. (a) For purposes of collection of the taxes under Section 143
of this Code, manufacturers, assemblers, repackers, brewers,
distillers, rectifiers and compounders of liquor, distilled
spirits and wines, millers, producers, exporters, wholesalers,
distributors, dealers, contractors, banks and other financial
institutions, and other businesses, maintaining or operating
branch or sales outlet elsewhere shall record the sale in the
branch or sales outlet making the sale or transaction, and
the tax thereon shall accrue and shall be paid to the
municipality where such branch or sales outlet is located. In
cases where there is no such branch or sales outlet in the
city or municipality where the sale or transaction is made,
the sale shall be duly recorded in the principal office and the
taxes due shall accrue and shall be paid to such city or
municipality.
(b) The following sales allocation shall apply to
manufacturers, assemblers, contractors, producers, and
exporters with factories, project offices, plants, and
plantations in the pursuit of their business:
(1) Thirty percent (30%) of all sales recorded in the principal
office shall be taxable by the city or municipality where the
principal office is located; and
(2) Seventy percent (70%) of all sales recorded in the
principal office shall be taxable by the city or municipality
where the factory, project office, plant, or plantation is
located.
(c) In case of a plantation located at a place other than the
place where the factory is located, said seventy percent
(70%) mentioned in subparagraph (b) of subsection (2)
above shall be divided as follows:
(1) Sixty percent (60%) to the city or municipality where the
factory is located; and
(2) Forty percent (40%) to the city or municipality where the
plantation is located.
(d) In cases where a manufacturer, assembler, producer,
exporter or contractor has two (2) or more factories, project
offices, plants, or plantations located in different localities,
the seventy percent (70%) sales allocation mentioned in
subparagraph (b) of subsection (2) above shall be prorated
among the localities where the factories, project offices,
plants, and plantations are located in proportion to their
respective volumes of production during the period for which
the tax is due.
(e) The foregoing sales allocation shall be applied
irrespective of whether or not sales are made in the locality
where the factory, project office, plant, or plantation is
located.
IRR of LGC on SITUS OF TAX (Compare with Iloilo
Bottlers)
ARTICLE 243. Situs of the Tax.
(a) Definition of Terms
(1) Principal Office the head or main office of the business
appearing in the pertinent documents submitted to the
Securities and Exchange Commission, or the Department of
Trade and Industry, or other appropriate agencies, as the
case may be.
The city or municipality specifically mentioned in the articles
of incorporation or official registration papers as being the
official address of said principal office shall be considered as
the situs thereof.
In case there is a transfer or relocation of the principal office
to another city or municipality, it shall be the duty of the
owner, operator or manager of the business to give due
notice of such transfer or relocation to the local chief
executives of the cities or municipalities concerned within
fifteen (15) days after such transfer or relocation is effected.
(2) Branch or Sales Office a fixed place in a locality which
conducts operations of the business as an extension of the
32
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(c)DIGEST
Port of Loading
The
city or municipality where the port
of loading is located shall not levy and collect the tax
imposable in Article 232 of this Rule unless the exporter
maintains in said city or municipality its principal office, a
branch, sales office or warehouse, factory, plant, or
plantation in which case, the rule on the matter shall apply
accordingly.
(d) Sales made by route trucks, vans, or vehicles
(1) For route sales made in a locality where a manufacturer,
producer, wholesaler, retailer or dealer has a branch or sales
office or warehouse, the sales are recorded in the branch,
sales office or warehouse and the tax due thereon is paid to
the LGU where such branch, sales office or warehouse is
located.
(2) For route sales made in a locality where a manufacturer,
producer, wholesaler, retailer or dealer has no branch, sales
office or warehouse, the sales are recorded in the branch,
sales office or warehouse from where the route trucks
withdraw their products for sale, and the tax due on such
sales is paid to the LGU where such branch, sales office or
warehouse is located.
(3) Based on subparagraphs (1) and (2) above, LGUs where
route trucks deliver merchandise cannot impose any tax on
said trucks except the annual fixed tax authorized to be
imposed by the province in Article 230 of this Rule on every
delivery truck or van or any motor vehicle used by
manufacturers, producers, wholesalers, dealers, or retailers
in the delivery or distribution of distilled spirits, fermented
liquors, soft drinks, cigars and cigarettes, and other products
as may be determined by the sangguniang panlalawigan,
and by the city, pursuant to Article 223 of this Rule.
(4) In addition to this annual fixed tax, cities may also collect
from same manufacturers, producers, wholesalers, retailers,
and dealers using route trucks a mayor's permit fee which
shall be imposed in a local tax ordinance pursuant to Article
233 in relation to Article 222 of this Rule.
It is not the place where the contract was perfected, but
the place of delivery which determines the taxable situs of
the property sought to be taxed. (JOSE PANGANIBAN vs.
SHELL COMPANY)
Thus, it is all inconsequential where the subject
transactions were perfected and consummated or paid. It
was held in Shell vs. Sipocot
From the explanatory note and the general discussions
in Congress over the House Bill No. 5288, it can be readily
gathered that one of the main purposes for the enactment of
the law was to provide for the construction and the
improvement of principal road systems in municipalities. The
logical conclusion would accordingly follow that the taxable
situs of the property to be taxed should be where the same
is used. This place is ordinarily the place of delivery. As
correctly pointed out by the appellants (SHELL COMPANY),
the term SOLD under the statute and the ordinance in
question does not mean a mere perfected contract but a
consummated sale, where delivery becomes of the essence
in determining the situs of the sale.
In the cases of Soriano y Cia vs. CIR, etc., it has been
ruled that for a sale to be taxed in the Philippines, it must be
consummated there; thus, indicating that the place of
consummation (associated with the delivery of the things
subject matter of the contract) is the accepted criterion in
determining the situs of the contract for purposes of
taxation, and not merely the place of the perfection of the
contract.
The taxing power of cities, municipalities, and municipal
districts may be used:
1. Upon any person engaged in an y occupation or business,
or exercising any privilege therein;
2. For services rendered by those political subdivisions or
rendered in connection with any business, profession or
occupation being conducted therein; and
3. To levy, for public purposes, just and uniform taxes,
licenses or fees.
This is referred to as the jurisdictional test to determine
the situs of taxation for municipalities. (Phil. Match vs.
City of Cebu)
33
Facts:
- This case is about the legality of the tax collected by Cebu
City on sales of matches stored by the Phil. Match Co. In
Cebu City BUT delivered to customers outside of the City.
Issue: Whether the imposition of municipal tax was valid.
Decision: YES.
- The sales in the instant case were in the city and the
matches sold were stored in the city. The facts that the
matches were delivered to customers, whose places of
business were outside of the city, would not place those
sales beyond the taxing power of the city.
- We hold that the appeal is devoid of merit bemuse the city
can validly tax the sales of matches to customers outside of
the city as long as the orders were booked and paid for in the
company's branch office in the city. Those matches can be
regarded as sold in the city, as contemplated in the
ordinance, because the matches were delivered to the
carrier in Cebu City. Generally, delivery to the carrier is
delivery to the buyer (Art. 1523, Civil Code; Behn, Meyer &
Co. vs. Yangco, 38 Phil. 602).
- A different interpretation would defeat the tax ordinance in
question or encourage tax evasion through the simple
expedient of arranging for the delivery of the matches at the
out. skirts of the city through the purchase were effected and
paid for in the company's branch office in the city.
- Those sales formed part of the merchandising business
being assigned on by the company in the city. In essence,
they are the same as sales of matches fully consummated in
the city.
- Furthermore, because the sellers place of business is in
Cebu City, it cannot be sensibly argued that such sales
should be considered as transactions subject to the taxing
power of the political subdivisions where the customers
resided and accepted delivery of the matches sold.
VS. PANGANIBAN DOCTRINE
Note that the prohibition against the imposition of
percentage taxes (formerly provided for in section 1 of
Commonwealth Act No. 472) refers to municipalities and
municipal districts but not to chartered cities. (See Local Tax
Code, P.D. No. 231. Marinduque Iron Mines Agents, Inc. vs.
Municipal Council of Hinabangan Samar, 120 Phil. 413;
Ormoc Sugar Co., Inc. vs. Treasurer of Ormoc City, L-23794,
February 17, 1968, 22 SCRA 603). Note further that the
taxing power of cities, municipalities and municipal districts
may be used (1) "upon any person engaged in any
occupation or business, or exercising any privilege" therein;
(2) for services rendered by those political subdivisions or
rendered in connection with any business, profession or
occupation being conducted therein, and (3) to levy, for
public purposes, just and uniform taxes, licenses or fees (C.
N. Hodges vs. Municipal Board of the City of Iloilo, 117 Phil.
164, 167. See sec. 31[251, Revised Charter of Cebu City).
Applying that jurisdictional test to the instant case, it is at
once obvious that sales of matches to customers outside oil
Cebu City, which sales were booked and paid for in the
company's branch office in the city, are subject to the city's
taxing power. The instant case is easily distinguishable from
the Shell Company case where the price of the oil sold was
paid outside of the municipality of Sipocot, the entity
imposing the tax.
On the other hand, the ruling in Municipality of Jose
Panganiban, Province of Camarines Norte vs. Shell Company
of the Philippines, Ltd., L-18349, July 30, 1966, 17 SCRA 778
that the place of delivery determines the taxable situs of the
property to be taxed cannot properly be invoked in this case.
Republic Act No. 1435, the law which enabled the
Municipality of Jose Panganiban to levy the sales tax involved
in that case, specifies that the tax may be levied upon oils
"distributed within the limits of the city or municipality",
meaning the place where the oils were delivered. That
feature of the Jose Panganiban case distinguished it from this
case.
ILOILO BOTTLERS vs. CITY OF ILOILO
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the taxing authority only when the acts,
G.R. No. 52019, August 18, 1998
Facts:
- Iloilo bottlers had its bottling plant in Pavia, Iloilo, outside of
Iloilo city. It distributed its soft drinks by means of a fleet of
delivery trucks which went directly to customers in different
places in the Iloilo province.
- Sales transactions with customers were entered into and
sales were perfected and consummated by route salesmen.
Truck sales were made independently of transactions in the
main office. The delivery trucks were not used solely for the
purpose of delivering soft drinks previously sold at Pavia.
They served as selling units.
- Ordinance No.5 was enacted byt the Iloilo City, imposing
tax on persons, firms, and corporations engaged in business
of: 1. Distribution of soft drinks
2. Manufacture of soft drinks
3. Bottling of soft drinks within the territorial jurisdiction
of the Iloilo City
- Iloilo bottlers disclaims liability on the ground that since it is
not engaged in the independent business of distributing soft
drinks, but that its activity of selling is merely an incident to,
or is a necessary consequence of its main or principal
business of bottling, then it is not liable under the city tax
ordinance.
34
privileges or
businesses are done or performed within the jurisdiction of
said authority [Commissioner of Internal Revenue v. British
Overseas Airways Corp. and Court of Appeals, G.R. Nos.
65773-74, April 30, 1987, 149 SCRA 395, 410.] Specifically,
the situs of the act of distributing, bottling or manufacturing
softdrinks must be within city limits, before an entity
engaged in any of the activities may be taxed in Iloilo City.
- As stated above, sales were made by Iloilo Bottlers, Inc. in
Iloilo City. Thus, we have no option but to declare the
company liable under the tax ordinance.
Section 147. Fees and Charges. - The municipality may
impose and collect such reasonable fees and charges on
business and occupation and, except as reserved to the
province in Section 139 of this Code, on the practice of any
profession or calling, commensurate with the cost of
regulation, inspection and licensing before any person may
engage in such business or occupation, or practice such
profession or calling.
(l) "Fee" means a charge fixed by law or ordinance for the
regulation or inspection of a business or activity; (Sec. 131,
LGC)
(g) "Charges" refers to pecuniary liability, as rents or fees
against persons or property; (Sec. 131, LGC)
OTHER MATTERS
Decision: YES.
- This Court has always recognized that the right to
manufacture implies the right to sell/distribute the
manufactured products. Hence, for tax purposes, a
manufacturer does not necessarily become engaged in the
separate business of selling simply because it sells the
products it manufactures. In certain cases, however, a
manufacturer may also be considered as engaged in the
separate business of selling its products.
- To determine whether an entity engaged in the principal
business of manufacturing, is likewise engaged in the
separate business of selling, its marketing system or sales
operations must be looked into.
- Under the first system, the manufacturer enters into sales
transactions and invoices the sales at its main office where
purchase orders are received and approved before delivery
orders are sent to the company's warehouses, where in turn
actual deliveries are made. No warehouse sales are made;
nor are separate stores maintained where products may be
sold independently from the main office. The warehouses
only serve as storage sites and delivery points of the
products earlier sold at the main office. Under the second
system, sales transactions are entered into and perfected at
stores or warehouses maintained by the company. Any one
who desires to purchase the product may go to the store or
warehouse and there purchase the merchandise. The stores
and warehouses serve as selling centers.
- Entities operating under the first system are NOT
considered engaged in the separate business of selling or
dealing in their products, independent of their manufacturing
business. Entities operating under the second system are
considered engaged in the separate business of selling.
- In the case at bar, the company distributed its softdrinks by
means of a fleet of delivery trucks which went directly to
customers in the different places in lloilo province. Sales
transactions with customers were entered into and sales
were perfected and consummated by route salesmen. Truck
sales were made independently of transactions in the main
office. The delivery trucks were not used solely for the
purpose of delivering softdrinks previously sold at Pavia.
They served as selling units. They were what were called,
until recently, "rolling stores". The delivery trucks were
therefore much the same as the stores and warehouses
under the second marketing system. Iloilo Bottlers, Inc. thus
falls under the second category above. That is, the
corporation was engaged in the separate business of selling
or distributing soft-drinks, independently of its business of
bottling them.
- The tax imposed under Ordinance No. 5 is an excise tax. It
is a tax on the privilege of distributing, manufacturing or
bottling softdrinks. Being an excise tax, it can be levied by
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7, 2014
issuances
to qualified applicants under
existing laws.
Provided, however, That the sanggunian concerned shall, by
appropriate ordinance, penalize the use of explosives,
noxious or poisonous substances, electricity, muro-ami, and
other deleterious methods of fishing and prescribe a criminal
penalty therefor in accordance with the provisions of this
Code: Provided, finally, That the sanggunian concerned shall
have the authority to prosecute any violation of the
provisions of applicable fishery laws.
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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 the appeal provided furthermore that such
appeal shall not have the effect of suspending the effectivity
of the ordinance and the accrual and payment of the tax,
fee, or charge levied therein and provided finally that within
thirty (30) days after receipt of the decision or the lapse of
the sixty-day period without the Secretary of Justice acting
upon the appeal, the aggrieved party may file appropriate
proceedings with a court of competent jurisdiction.
All tax ordinances or revenue measures shall be numbered
consecutively throughout the calendar year and continuously
from year to year, using the last two (2) digits of the
calendar year in which it is enacted, followed by its
denominated number.
For example, an ordinance is passed in January, 1992, and it
is the first ordinance for that year. The ordinance shall be
denominated and numbered as Tax Ordinance No. 92-001.
The next shall be Tax Ordinance No. 92-002, Tax Ordinance
No. 92-003, and so forth.
BELEN C. FIGUERRES vs. CA, CITY ASSESSORS OF
MANDALUYONG CITY, et. Al
G.R. No. 11972 March 25, 1999
J: MENDOZA
Facts:
- Belen C. Figuerres owns a parcel of land in Mandaluyong
City.
- In 1993, she received a notice of assessment from the City
Assessor of Mandaluyong City based on Ordinance Nos. 119,
125, and 135 which contain a schedule of fair market values
of different classes of real property in the municipality
(subsequently became City).
- Figuerres brought a prohibition suit in the CA against the
treasurer, assessor and the then Sangguniang Bayan of
Mandaluyong to stop them from enforcing the ordinances in
question on the ground that the ordinances were invalid for
having been adopted without public hearings and prior
publication or posting and without complying with the
implementing rules yet to be issued by the Dept. Of Finance.
- CA dismissed the petition on the grounds that the approval
and determination of Dept. Of Finance is not needed under
the LGC since it is now the City council of Mandaluyong that
is empowered to determine and approved the aforecited
Ordinances and that the publication of the Ordinances is not
necessary for their effectivity.
- Figuerres brought the matter to the SC.
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years from payment of the tax due, erely
On December
1, 2014
1998, the City Government of
Muntinlupa, through the approval of its City Mayor,
enacted City Ordinance No. 98-015, which imposes a
three percent (3%) business tax on the sale and
distribution of alcoholic beverages and tobacco
products. In this regard, for the periods covering January
2, 1999 to September 15, 2002, Alabang Supermarket
allegedly paid the total amount of P3,696,557.06 in
compliance with the aforementioned ordinance.
Aggrieved by the alleged erroneous collections made by
the City, Alabang Supermarket, through its external
auditor, wrote a letter to the Bureau of Local
Government Finance (BLGF) of the Department of
Finance seeking clarification on whether or not the City
of Muntinlupa can legally impose the 3% business tax on
gross receipts of wholesalers and retailers from their
sale of liquor, beer, wine, distilled spirits, cigarette and
tobacco products under City Ordinance No. 98-015 to
which the BLGF issued its ruling in favor of Alabang
Supermarket. Alabang Supermarket sought a refund
from the City.
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and
provide
the
structures
to implement it to keep up with
the technological advances in the industry and the needs of
the public. The thrust of the law is to promote gradually the
deregulation of the entry, pricing, and operations of all public
telecommunications entities and thus promote a level
playing field in the telecommunications industry. There is
nothing in the language of 23 nor in the proceedings of both
the House of Representatives and the Senate in enacting R.A.
No. 7925 which shows that it contemplates the grant of tax
exemptions to all telecommunications entities, including
those whose exemptions had been withdrawn by the LGC. In
sum, it does not appear that, in approving 23 of R.A. No.
7925, Congress intended it to operate as a blanket tax
exemption to all telecommunications entities. Applying the
rule of strict construction of laws granting tax exemptions
and the rule that doubts should be resolved in favor of
municipal corporations in interpreting statutory provisions on
municipal taxing powers, we hold that 23 of R.A. No. 7925
cannot be considered as having amended PLDT's franchise
so as to entitle it to exemption from the imposition of local
franchise taxes.
NPC VS. CITY OF CABANATUAN
GR No. 149110, April 9, 2003
THIRD DIVISION
FACTS:
National Power Corporation (NPC) is a governmentowned and controlled corporation created under
Commonwealth Act No. 120, as amended. It is tasked to
undertake
the
"development
of
hydroelectric
generations of power and the production of electricity
from nuclear, geothermal and other sources, as well as,
the transmission of electric power on a nationwide
basis." Concomitant to its mandated duty, NPC has,
among others, the power to construct, operate and
maintain power plants, auxiliary plants, power stations
and substations for the purpose of developing hydraulic
power and supplying such power to the inhabitants. For
many years, NPC sells electric power to the residents of
Cabanatuan City, posting a gross income of
P107,814,187.96 in 1992. Pursuant to section 37 of
Ordinance No. 165-92, the City of Cabanatuan assessed
NPC a franchise tax amounting to P808,606.41,
representing 75% of 1% of the latter's gross receipts for
the preceding year.
ISSUE: Whether the fact the the NPC is wholly owned by the
National Government exempts it from the imposition of a
franchise tax.
HELD: NO.
A franchise tax is imposed based not on the ownership but
on the exercise by the corporation of a privilege to do
business. The taxable entity is the corporation which
exercises the franchise, and not the individual stockholders.
By virtue of its charter, NPC was created as a separate and
distinct entity from the National Government. It can sue and
be sued under its own name, and can exercise all the powers
of a corporation under the Corporation Code. To be sure, the
ownership by the National Government of its entire capital
stock does not necessarily imply that the NPC is not engaged
in business. Section 2 of Pres. Decree No. 2029 classifies
government-owned or controlled corporations (GOCCs) into
those performing governmental functions and those
performing proprietary functions. Included in the class of
GOCCs performing proprietary functions are "business-like"
entities such as the National Steel Corporation (NSC), the
National Development Corporation (NDC), the Social Security
System (SSS), the Government Service Insurance System
(GSIS), and the National Water Sewerage Authority
(NAWASA), among others.
v. Community Tax
1. Who may impose (Sec. 156)
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Nov
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2014
exemption
before
last day of March, he shall have
twenty (20) days to pay the community tax without
becoming delinquent.
Persons who come to reside in the Philippines or reach the
age of eighteen (18) years on or after the first (1st) day of
July of any year, or who cease to belong to an exempt class
or after the same date, shall not be subject to the
community tax for that year.
(b) Corporations established and organized on or before the
last day of June shall be liable for the community tax for that
year. But corporations established and organized on or
before the last day of March shall have twenty (20) days
within which to pay the community tax without becoming
delinquent. Corporations established and organized on or
after the first day of July shall not be subject to the
community tax for that year.
If the tax is not paid within the time prescribed above, there
shall be added to the unpaid amount an interest of twentyfour percent (24%) per annum from the due date until it is
paid.
7. Community Tax Certificate (Sec. 162)
Section 162. Community Tax Certificate. - A community tax
certificate shall be issued to every person or corporation
upon payment of the community tax. A community tax
certificate may also be issued to any person or corporation
not subject to the community tax upon payment of One peso
(P1.00).
8. Presentation of CTC on certain occasions (Sec. 163)
Section 163. Presentation of Community Tax Certificate On
Certain Occasions. (a) When an individual subject to the community tax
acknowledges any document before a notary public, takes
the oath of office upon election or appointment to any
position in the government service; receives any license,
certificate. or permit from any public authority; pays any tax
or free; receives any money from any public fund; transacts
other official business; or receives any salary or wage from
any person or corporation with whom such transaction is
made or business done or from whom any salary or wage is
received to require such individual to exhibit the community
tax certificate.
The presentation of community tax certificate shall not be
required in connection with the registration of a voter.
(b) When, through its authorized officers, any corporation
subject to the community tax receives any license,
certificate, or permit from any public authority, pays any tax
or fee, receives money from public funds, or transacts other
official business, it shall be the duty of the public official with
whom such transaction is made or business done, to require
such corporation to exhibit the community tax certificate.
(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.
IV. COLLECTION OF TAXES AND REMEDIES
a. Collection of Taxes
i. Tax Period and Manner of Payment (Sec. 165)
Section 165. Tax Period and Manner of Payment. - Unless
otherwise provided in this Code, the tax period of all local
taxes, fees and charges shall be the calendar year. Such
taxes, fees and charges may be paid in quarterly
installments.
ii. Accrual of Tax (Sec. 166)
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2014 shall specifically state the
authority
of the
deputy
name, address, and business of the taxpayer whose books,
accounts, and pertinent records are to be examined, the date
and place of such examination and the procedure to be
followed in conducting the same.
For this purpose, the records of the revenue district office of
the Bureau of Internal Revenue shall be made available to
the local treasurer, his deputy or duly authorized
representative.
b. Remedies of the Government
i. Local Governments Lien (Sec. 173)
Section 173. Local Government's Lien. - Local taxes, fees,
charges and other revenues constitute a lien, superior to all
liens, charges or encumbrances in favor of any person,
enforceable by appropriate administrative or judicial action,
not only upon any property or rights therein which may be
subject to the lien but also upon property used in business,
occupation, practice of profession or calling, or exercise of
privilege with respect to which the lien is imposed. The lien
may only be extinguished upon full payment of the
delinquent local taxes fees and charges including related
surcharges and interest.
ii. Civil Remedies (Sec. 174)
Section 174. Civil Remedies. - The civil remedies for the
collection of local taxes, fees, or charges, and related
surcharges and interest resulting from delinquency shall be:
(a) By administrative action thru distraint of goods, chattels,
or effects, and other personal property of whatever
character, including stocks and other securities, debts,
credits, bank accounts, and interest in and rights to personal
property, and by levy upon real property and interest in or
rights to real property;
(b) By judicial action.
Either of these remedies or all may be pursued concurrently
or simultaneously at the discretion of the local government
unit concerned.
iii. Distraint (Sec. 175)
Section 175. Distraint of Personal Property. - The remedy by
distraint shall proceed as follows:
(a) Seizure - Upon failure of the person owing any local tax,
fee, or charge to pay the same at the time required, the local
treasurer or his deputy may, upon written notice, seize or
confiscate any personal property belonging to that person or
any personal property subject to the lien in sufficient
quantity to satisfy the tax, fee, or charge in question,
together with any increment thereto incident to delinquency
and the expenses of seizure. In such case, the local treasurer
or his deputy shall issue a duly authenticated certificate
based upon the records of his office showing the fact of
delinquency and the amounts of the tax, fee, or charge and
penalty due. Such certificate shall serve as sufficient warrant
for the distraint of personal property aforementioned, subject
to the taxpayer's right to claim exemption under the
provisions of existing laws. Distrained personal property shall
be sold at public auction in the manner hereon provided for.
(b) Accounting of distrained goods. - The officer executing
the distraint shall make or cause to be made an account of
the goods, chattels or effects distrained, a copy of which
signed by himself shall be left either with the owner or
person from whose possession the goods, chattels or effects
are taken, or at the dwelling or place or business of that
person and with someone of suitable age and discretion, to
which list shall be added a statement of the sum demanded
and a note of the time and place of sale.
40
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Nov 7,
2014
municipal
as the
case may be, shall within thirty
(30) days after execution of the distraint, proceed with the
levy on the taxpayer's real property.
41
A report on any levy shall, within ten (10) days after receipt
of the warrant, be submitted by the levying officer to the
sanggunian concerned.
Within thirty (30) days after the sale, the local treasurer or
his deputy shall make a report of the sale to the sanggunian
concerned, and which shall form part of his records. After
consultation with the sanggunian, the local treasurer shall
make and deliver to the purchaser a certificate of sale,
showing the proceeding of the sale, describing the property
sold, stating the name of the purchaser and setting out the
exact amount of all taxes, fees, charges, and related
surcharges, interests, or penalties: Provided, however, That
any excess in the proceeds of the sale over the claim and
cost of sales shall be turned over to the owner of the
property.
Within one (1) year from the date of such forfeiture, the
taxpayer or any of his representative, may redeem the
property by paying to the local treasurer the full amount of
the taxes, fees, charges, and related surcharges, interests, or
penalties, and the costs of sale. If the property is not
redeemed as provided herein, the ownership thereof shall be
fully vested on the local government unit concerned.
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(h)
Any material
improvement of any real property.
c. Taxpayers Remedies
d. Question Constitutionality of Ordinance
Section 187. Procedure for Approval and Effectivity of Tax,
Ordinances and Revenue Measures; Mandatory Public
Hearings. - The procedure for approval of local tax
ordinances and revenue measures shall be in accordance
with the provisions of this Code: Provided, That public
hearings shall be conducted for the purpose prior to the
enactment thereof: Provided, further, That any question on
the constitutionality or legality of tax ordinances or 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 the appeal: Provided, however, That such appeal
shall not have the effect of suspending the effectivity of the
ordinance and the accrual and payment of the tax, fee, or
charge levied therein: Provided, finally, That within thirty (30)
days after receipt of the decision or the lapse of the sixty-day
period without the Secretary of Justice acting upon the
appeal, the aggrieved party may file appropriate proceedings
with a court of competent jurisdiction.
[ G.R. No. 112497, August 04, 1994 ]
HON. FRANKLIN M. DRILON, IN HIS CAPACITY AS
SECRETARY OF JUSTICE, PETITIONER, VS. MAYOR
ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY
TREASURER
ANTHONY
ACEVEDO,
SANGGUNIANG
PANGLUNSOD
AND
THE
CITY
OF
MANILA,
RESPONDENTS.
FACTS:
42
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7, the
2014
imposing aNov
tax on
lease or rental of electric and/or
declaratory relief before the Regional
HELD: YES
Ordinance No. 9503-2005 is a local revenue measure. As
such, the Local Government Code applies.
SEC. 187. Procedure for Approval and
Effectivity of Tax Ordinances and Revenue
Measures; Mandatory Public Hearings.
The procedure for approval of local tax
ordinances and revenue measures shall be
in accordance with the provisions of this
Code: Provided, That public hearings shall
be conducted for the purpose prior to the
enactment thereof: Provided, further, That
any question on the constitutionality or
legality of tax ordinances or 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 the appeal: Provided,
however, That such appeal shall not have
the effect of suspending the effectivity of
the ordinance and the accrual and payment
of the tax, fee, or charge levied
therein: Provided, finally, That within thirty
(30) days after receipt of the decision or the
lapse of the sixty-day period without the
Secretary of Justice acting upon the appeal,
the aggrieved party may file appropriate
proceedings with a court of competent
jurisdiction.
SEC. 188. Publication of Tax Ordinances and
Revenue Measures. - Within ten (10) days
after their approval, certified true copies of
all provincial, city, and municipal tax
ordinances or revenue measures shall be
published in full for three (3) consecutive
days
in
a
newspaper
of
local
circulation: Provided,
however, That
in
provinces, cities and municipalities where
there are no newspapers of local circulation,
the same may be posted in at least two (2)
conspicuous and publicly accessible places.
The Sangguniang Panlungsod of Cagayan de Oro approved
Ordinance No. 9503-2005 on 10 January 2005. Section 5 of
said ordinance provided that the Ordinance shall take effect
after 15 days following its publication in a local newspaper of
general circulation for at least three (3) consecutive issues.
Gold Star Daily published Ordinance No. 9503-2005 on 1 to 3
February 2005. Ordinance No. 9503-2005 thus took effect on
19 February 2005. CEPALCO filed its petition for
43
Trial Court on
30 September 2005, clearly beyond the 30-day period
provided in Section 187. CEPALCO did not file
anything before the Secretary of Justice. CEPALCO
ignored our ruling in Reyes v. Court of Appeals [18] on the
mandatory nature of the statutory periods:
Publication
FACTS:
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44
DIGEST
Nov
2014
became due. No action for the collection of such
August 17,
2000 7,
the
DOJ Secretary issued a Resolution
declaring the ordinance null and void and without legal
effect. In its decision it was held that respondents
failure to file their comments and present documentary
evidence to show that the mandatory requirement of law
on publication, among other things, has been met, may
be deemed to have waived its right to controvert or
dispute the documentary evidence submitted by
petitioner which indubitably show that subject tax
ordinance was published only once, i.e., on the May 22,
2000 issue of the Philippine Post. Clearly, therefore,
herein respondents failed to satisfy the requirement that
said ordinance shall be published for three (3)
consecutive days as required by law.
Despite the resolution of the DOJ, respondents continued
to assess petitioner business tax for the year 2001
based on the tax rates prescribe under Tax Ordinance
No. 7988. Thus, petitioner filed a complaint with the RTC
praying
that
respondents
be
enjoined
from
implementing the aforementioned tax ordinance.
RTC rendered a decision in favour of petitioner since the
defendants did not follow the procedure in the
enactment of Tax Ordinance No. 7988.
During the pendency of the said case, the City Mayor of
Manila approved on February 22, 2001 Tax Ordinance
no. 8011 entitled An Ordinance Amending Certain
Sections of Ordinance No. 7988. Said ordinance was
once again challenged by petitioner before the DOJ
questioning the legality of the aforementioned tax
ordinance. The ordinance was likewise declared null and
void since it was an amendatory ordinance that was
previously declared null and void. The MR was
subsequently denied in a Resolution dated March 12,
2002.
The City of Manila appealed said resolution but the same
was dismissed by the RTC for lack of merit. Thereafter,
they filed an MR and the same was granted by the RTC.
Hence, this instant petition.
iii.
Protest of an Assessment
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Nov 7, it2014
consideration,
is certain that the FMV or zonal
Mandamus lies only to compel an officer
45
to perform a
ministerial duty (one which is so clear and specific as to
leave no room for the exercise of discretion in its
performance) but not a discretionary function (one which by
its nature requires the exercise of judgment). Respondent's
argument that "[m]andamus cannot lie to compel the City
Treasurer to accept as full compliance a tax payment which
in his reasoning and assessment is deficient and incorrect" is
thus persuasive.
CTA EB CASE NO. 413 June 3, 2009
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,
INC., petitioner, vs. CITY OF BALANGA and AMADO P.
JIMENEZ, in his capacity as OIC-City Treasurer of the
City of Balanga, respondents.
FACTS:
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DIGEST
Nov 7, in2014
exercise authority
accordance with Section 18 of
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A reading
of Section
187 of the Local Government
above-specified newly adjusted tax
Code would show that the law intends that
questions on the legality or constitutionality of an
ordinance or tax measure be threshed out the
soonest possible time. It should be raised within
thirty (30) days from approval and such appeal
should be resolved within sixty (60) days from
receipt thereof. Section 187 states that any appeal
on the legality or constitutionality of the ordinance
does not suspend its effectivity. Thus, before any
final declaration of its nullity, taxes accrue and
should be paid accordingly.
In the same vein, the reckoning periods for the filing
of a claim for refund in Section 196 of the Local
Government Code should be interpreted so as to
accomplish the evident purpose, viz., the
settlement of the rights of the taxpayer vis--vis the
government, at the earliest opportunity. The phrase
"from the date the taxpayer becomes entitled to a
refund or credit" in Section 196 should not be
interpreted to mean the finality of the decision of a
court declaring the tax measure void, even without
a timely claim for refund. Otherwise, claims for
refund will be filed even after several years from
payment of the tax due, merely because the tax
ordinance was declared void. And the filing of
administrative and judicial claims for refund shall be
endless. This interpretation would give the
taxpayer, who was not able to question the legality
or constitutionality of the tax measure within the
period provided in Section 187, the right to instead
file a claim for refund with the court under Section
196, absent the filing of a timely administrative
claim. In effect, the prescriptive periods provided by
law would be rendered naught and meaningless.
This could not have been the intention of
lawmakers. A taxpayer who believes that he has
paid a tax imposed under a void ordinance should
timely exhaust administrative remedies before
resorting to the filing of a judicial claim or timely
question
its
constitutionality
and
legality.
Petitioner's
failure
to
file
the
appropriate
administrative claim for refund for the period
December 16, 2000 to September 2002, cannot be
countenanced. More so, since it has been able to file
a timely administrative claim for the 3% business
tax it paid covering January 2, 1999 to December
15, 2000. It is clearly aware of the requirements for
the filing of an administrative claim set forth by law.
Its manifest error cannot be cured at this point."
Tax Ordinance
Rate
Amendatory Ordinances
47
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Novis 7,
2014
date
the taxpayer
entitled
to a refund or credit" provided
under Section 196 should not be interpreted to mean the
finality of the decision declaring the tax measure void.
However, in view of the clear provision of the LGC and after a
conscientious study of the circumstances in this case, this
forum deems it prudent to veer off the stern interpretation of
the phrase "from the date the taxpayer is entitled to a
refund or credit" under Section 196.
A cardinal rule in statutory construction is that when the law
is clear and free from any doubt or ambiguity, there is no
room for construction or interpretation. There is only room
for application.
Inasmuch as the law states in unequivocal terms that a case
or proceeding shall be entertained in any court if filed within
two (2) years from the date of the payment of such tax, fee,
or charge, or from the date the taxpayer is entitled to a
refund or credit. We venture to say now that petitioners'
judicial claim for refund or credit may still be pursued within
two (2) years from the time the assailed ordinance is nullified
or from the time the decision nullifying the ordinance
becomes fin al and executory, because it is only at such time
when the petitioners become entitled to a refund or credit or
their claim for refund is ripened for administrative and
judicial determination.
(2) NO
Is injunction available?
FACTS:
48
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REAL PROPERTY TAX
I.
PRELIMINARY MATTERS
a. Definition of Real Property Tax
49
FACTS:
Both the City Court and the CFI adjudged the defendant
liable to pay realty taxes thereon from the time
possession of such property was transferred to him,
although pending full payment of the purchase price the
seller GSIS as a government exempt from the payment
of taxes retains ownership and title over the property.
Hence, this petition.
ISSUE: Who is liable to pay the tax Busuego or GSIS?
HELD: Defendant Busuego
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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7, officially
2014 charged with the duty of
administrative
agency
administering and enforcing Commonwealth Act 186 which
contains the tax-exempting provision at issue carries great
weight in determining the operation of said provision.
50
FACTS:
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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Novimprovements
7, 2014 thereon and the [power
the
buildings and
plant]." At first blush, this contractual provision would appear
to make the NPC liable and give it standing to protest the
assessment. The tax liability we refer to above, however, is
the liability arising from law that the local government unit
can rightfully and successfully enforce, not the contractual
liability that is enforceable between the parties to a contract
as discussed below. By law, the tax liability rests on Mirant
based on its ownership, use, and possession of the plant and
its machineries.
In Testate of Concordia Lim v. City of Manila, we had occasion
to rule that:
In [Baguio v. Busuego], the assumption by the
vendee of the liability for real estate taxes
prospectively due was in harmony with the tax
policy that the user of the property bears the
tax. In [the present case], the interpretation that
the [vendee] assumed a liability for overdue real
estate taxes for the periods prior to the contract of
sale is incongruent with the said policy because
there was no immediate transfer of possession of
the properties previous to full payment of the
repurchase price. Xxxx
To impose the real property tax on the estate which was
neither the owner nor the beneficial user of the property
during the designated periods would not only be contrary to
law but also unjust.
For a fuller appreciation of this ruling, the Baguio case
referred to a contract of sale wherein the vendee not only
assumed liability for the taxes on the property, but also
acquired its use and possession, even though title remained
with the vendor pending full payment of the purchase price.
Under this situation, we found the vendee who had assumed
liability for the realty taxes and who had been given use and
possession to be liable. Compared with Baguio, the Lim case
supposedly involved the same contractual assumption of tax
liabilities, but possession and enjoyment of the property
remained with other persons. Effectively, Lim held that the
contractual assumption of the obligation to pay real property
tax, by itself, is not sufficient to make one legally
compellable by the government to pay for the taxes due; the
person liable must also have use and possession of the
property.
Using the Baguio and Lim situations as guides, and after
considering the comparable legal situations of the parties
assuming liability in these cases, we conclude that the NPCs
contractual liability alone cannot be the basis for the
enforcement of tax liabilities against it by the local
government unit. In Baguio and Lim, the vendors still
retained ownership, and the effectiveness of the tax
liabilities assumed by the vendees turned on the possession
and use of the property subject to tax. In other words, the
contractual assumption of liability was supplemented by an
interest that the party assuming liability had on the property
taxed; on this basis, the vendee in Baguio was found liable,
while the vendee in Lim was not. In the present case, the
NPC is neither the owner, nor the possessor or user of the
property taxed. No interest on its part thus justifies any tax
liability on its part other than its voluntary contractual
undertaking. Under this legal situation, only Mirant as the
contractual obligor, not the local government unit, can
enforce the tax liability that the NPC contractually assumed;
the NPC does not have the "legal interest" that the law and
jurisprudence require to give it personality to protest the tax
imposed by law on Mirant.
51
FACTS:
FACTS:
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Section 198. Fundamental Principles. The City Treasurer
Manila informed GSIS President and
GM of the unpaid RPT due on the aforementioned
property. Respondent then issued a Notices of Realty Tax
Delinquency for the subject properties.
GSIS wrote back emphasizing its exemption from all
kinds of taxes, including realty taxes under RA 8291.
GSIS filed a petition for certiorari and prohibition with
prayer for a restraining and injunctive relief before the
Manial RTC. GSIS later amended its petition the fact that
the Katigbak property has been leased to and occupied
by the Manila Hotel Corporation (MHC) which has
contractually bound itself to pay any realty taxes that
may be imposed on the subject property.
RTC dismissed the GSIS petition. Hence, this instant
petition for review.
SC granted the petition.
52
The appraisal,
assessment, levy and collection of real property tax shall be
guided by the following fundamental principles:
(a) Real property shall be appraised at its current
and fair market value;
(b) Real property shall be classified for assessment
purposes on the basis of its actual use;
(c) Real property shall be assessed on the basis of a
uniform classification within each local government
unit;
(d) The appraisal, assessment, levy and collection of
real property tax shall not be let to any private
person; and
(e) The appraisal and assessment of real property
shall be equitable.
d.
Important Definitions
i.
c.
Fundamental Principles
Machineries
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Nov
2014 by the Public Service
collecting
rates7,approved
xxx
xxx
xxx
Commission.
Petitioner is the owner of the land where it maintains
and operates a garage for its TPU motor trucks; a repair
shop; blacksmith and carpentry shops, and with these
machineries which are placed therein, its TPU trucks are
made; body constructed; and same are repaired in a
condition to be serviceable in the TPU land
transportation business it operates. These machineries
have never been or were never used as industrial
equipments to produce finished products for sale, nor to
repair machineries, parts and the like offered to the
general public indiscriminately for business or
commercial purposes for which petitioner has never
engaged in, to date.1awphl.nt
The City Assessor of Cagayan de Oro assessed petitioner
realty tax on its maintenance and repair equipment.
These machines includes: Hobart electric welder
machine, storm boring machine, lathe machine with
motor, black and decker grinder, PEMCO hydraulic press,
battery charger and D-engine Waukesha-M-Fuel.
Petitioner appealed the assessment to the Board of Tax
Appeals on the ground that the same are not realty.
The Board sustained the city assessor, so petitioner filed
with the Court of Tax Appeals a petition for review of the
assessment. CTA sustained the respondent city
assessors ruling. Hence, this appeal.
Respondents contend that said equipments, tho
movable, are immobilized by destination.
SC the subject petition is hereby set aside and the
equipment in question is declared not subject to
assessment as real estate for the purposes of real estate
tax.
53
(5)
Machinery,
receptacles,
instruments
or
implements intended by the owner of the tenement
for an industry or works which may be carried on in
a building or on a piece of land, and which tend
directly to meet the needs of the said industry or
works; (Civil Code of the Phil.)
Aside from the element of essentiality the above-quoted
provision also requires that the industry or works be carried
on in a building or on a piece of land. Thus in the case
of Berkenkotter vs. Cu Unjieng, supra, the "machinery, liquid
containers, and instruments or implements" are found in a
building constructed on the land. A sawmill would also be
installed in a building on land more or less permanently, and
the sawing is conducted in the land or building.
But in the case at bar the equipments in question are
destined only to repair or service the transportation
business, which is not carried on in a building or
permanently on a piece of land, as demanded by the law.
Said equipments may not, therefore, be deemed real
property.
Resuming what we have set forth above, we hold that
the equipments in question are not absolutely
essential to the petitioner's transportation business,
and petitioner's business is not carried on in a
building, tenement or on a specified land, so said
equipment may not be considered real estate within
the meaning of Article 415 (c) of the Civil Code.
FACTS:
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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treated the machinery as personal property.
DIGEST
HELD:
YES
54
This Court
Two oil storage tanks, used for storing fuel oil for
Meralco's power plants, were installed by Manila
Electric Company on a lot in San Pascual, Batangas
which it leased in 1968 from Caltex (Phil.), Inc.
In 1970, the municipal treasurer of Bauan, Batangas, on
the basis of an assessment made by the provincial
assessor, required Meralco to pay realty taxes on the
two tanks.
CBAA: The tanks together with the foundation, walls,
dikes, steps, pipelines and other appurtenances
constitute taxable improvements.
MR denied. Hence Meralco files this petition, contending
that the Board acted without jurisdiction and committed
a grave error of law in holding that its storage tanks are
taxable real property.
o
The said oil storage tanks do not fall within
any of the kinds of real property
enumerated in Article 415 of the Civil Code
and, therefore, they cannot be categorized
as realty by nature, by incorporation, by
destination nor by analogy.
o
Stress is laid on the fact that the tanks are
not attached to the land and that they
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
DIGEST Nov
7, placed
2014 on leased land, not on the
were
in the City of Manila and its suburbs,
land owned by Meralco.
Issue: W/N the oil storage tanks do not fall within any of the
kinds of real property subject to tax
Held: No
The issue raised by Meralco has to be resolved in the light of
the provisions of the Assessment Law, Commonwealth Act
No. 470, and the Real Property Tax Code, Presidential Decree
No. 464 which took effect on June 1, 1974.
Section 2 of the Assessment Law provides that the realty tax
is due "on real property, including land, buildings, machinery,
and other improvements" not specifically exempted in
section 3 thereof. This provision is reproduced with some
modification in the Real Property Tax Code which provides:
Sec. 38. Incidence of Real Property Tax. They
shall be levied, assessed and collected in all
provinces, cities and municipalities an annual ad
valorem tax on real property, such as land,
buildings, machinery and other improvements
affixed or attached to real property not hereinafter
specifically exempted.
The Code contains the following definition in its section 3:
55
as authorized by
While the two storage tanks are not embedded in the land,
they may, nevertheless, be considered as improvements
on the land, enhancing its utility and rendering it
useful to the oil industry. It is undeniable that the two
tanks have been installed with some degree of permanence
as receptacles for the considerable quantities of oil needed
by Meralco for its operations.
Held: No
Par. 9, Part
Franchise:
Two,
Act
No.
484
Respondent's
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Nov 7,therefore,
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It isevident,
industry or works in the land
56
in which the
steel supports or towers are constructed.
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DIGEST
Nov 7, 2014
Sangguniang
Panlungsod
has
declared
the
(4) or to the gross illegality of the assessment when
iv. Appraisal
v. Assessment
vi. Assessed Value
e. Appraisal of Real Property
Section 201. Appraisal of Real Property. - All real
property, whether taxable or exempt, shall be appraised at
the current and fair market value prevailing in the locality
where the property is situated. The Department of Finance
shall promulgate the necessary rules and regulations for the
classification, appraisal, and assessment of real property
pursuant to the provisions of this Code.
RAUL H. SESBREO, petitioner, vs. CENTRAL BOARD OF
ASSESSMENT APPEALS and THE CITY ASSESSOR OF
CEBU CITY, respondents
G.R. No. 106588 | March 24, 1997 (3D)
Facts:
On April 3, 1980, petitioner purchased from Estrella
Benedicto Tan 2 parcels of land in Cebu City.
Thereafter, petitioner declared the real property
constructed on the said lots for purposes of tax
assessment as a residential house of strong materials
with a floor area of 60 square meters.
The field inspectors of the Cebu City Assessor then
discovered that the real property declared and assessed
was actually a residential building consisting of 4 storeys
with a 5th storey used as a roof deck.
Based on these findings, petitioners was assessed real
property tax.
Petitioner protested the new assessment for being
"excessive and unconscionable," contending that it was
increased by more than 1,000% as compared to its
previous market value of P60,000.00 or assessed value
of P36,900.00
Petitioner insists that CBAA should have computed the
assessed value of the property based on its market
value as defined in paragraph n, Section 3 of PD 464, to
wit:
n) Market Value is defined as "the highest price estimated
in terms of money which the property will buy if
exposed for sale in the open market allowing a
reasonable time to find a purchaser who buys with
knowledge of all uses to which it is adapted and for
which it is capable of being used." It is also referred to
as "the price at which a willing seller would sell and a
willing buyer would buy, neither being under abnormal
pressure.
Arguing that he should not be liable for back taxes,
petitioner states that Respondent CBAA should have
applied Section 24, instead of Section 25, of PD 464.
These statutory provisions read:
"Section 24.
Date of effectivity of Assessment or
Reassessment. All assessments or reassessments
made after the first day of January of any year shall take
effect on the first day of January of the succeeding year:
Provided, however, That the reassessment of real
property due to its (1) partial or total destruction, or to
(2) a major change in its actual use, or to any (3) great
and sudden inflation or deflation of real property values,
shall be made
such cause or
effect at the
following the
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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Nov 7,This
2014
first place.
will certainly subvert the raison
local government units for enactment by
58
ordinance of the
sanggunian concerned. The schedule of fair market values
shall be published in a newspaper of general circulation in
the province, city or municipality concerned or in the
absence thereof, shall be posted in the provincial capitol, city
or municipal hall and in two other conspicuous public places
therein.
Issue: W/N the trail court erred to correctly apply Sec. 212 of
the LGC
Held: No
The petitioner claims that the effectivity date of
Manila Ordinance No. 7894 and the schedule of the
fair market values is January 1, 1996. He contends
that Sec. 212 of the R.A. 7160 prohibits the general
revision of real property assessment before the
approval of the schedule of the fair market values.
Thus, the alleged revision of real property
assessment in 1995 is illegal.
Based on the evidence presented by the parties, the
steps to be followed for the mandatory conduct of
General Revision of Real Property assessments,
pursuant to the provision of Sec. 219, of R.A. No.
7160 are as follows:
1. The preparation of Schedule of Fair
Market Values
2. The enactment of Ordinances:
a. levying
an
annual
"ad
valorem" tax on real property
and
an
additional
tax
accruing to the SEF.
b. fixing the assessment levels
to be applied to the market
values of real properties;
c. providing
necessary
appropriation
to
defray
expenses incident to general
revision of real property
assessments; and
d. adopting the Schedule of Fair
Market Values prepared by
the assessors
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The preparation
of fair market values as a
distribution of water and/or generation and
59
transmission of
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In this
regard,
Court pointed with approbation
plaintiff-appellant even if the latter
the appellate courts application of Sec. 216 in
relation with Sec. 215 of the Local Government
Code on the proper classification of the subject
CHHMAC
building
as
"special"
and
not
"commercial." Secs. 215 and 216 pertinently
provide:
xxxx
60
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Nov
7,petitioners
2014 appeal and declared that
LBAA:
Denied
Petitioner, as trustee for College Assurance
61
Plan of the
Philippines, Inc., purchased from Liwanag C. Natividad et
al. a 1,000 square meter parcel of land located along
Aurora Boulevard, Quezon City.
After its acquisition of the property, petitioner was, in
accordance with Section 3 of the ordinance, required to
pay a higher real estate tax compared to that paid prior
to the sale by Natividad.
Petitioner paid the quarterly real estate tax for the
property from the 1st quarter of 1999 up to the 3rd
quarter of 2000. Its tax payments for the 2nd, 3rd, and
4th quarter of 1999, and 1st and 2nd quarter of 2000
were, however, made under protest.
In its written protest with the City Treasurer, petitioner
assailed Section 3 of the ordinance as null and void, it
contending that it is violative of the equal protection and
uniformity of taxation clauses of the Constitution.
Petitioner additionally contended that the proviso of
Section 3 of the ordinance which allows re-assessment
every time the property is transferred, ceded or
conveyed violates Sections 219 and 220 of the Local
Government Code which provide that the assessment of
real property shall not be increased oftener than once
every 3 except in case of new improvements
substantially increasing the value of said property or of
any change in its actual use.
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various
sources stated in Sections 202,
Section 218. Assessment Levels.
62
- The assessment
levels to be applied to the fair market value of real property
to determine its assessed value shall be fixed by ordinances
of the sangguniang panlalawigan, sangguniang panlungsod
or sangguniang bayan of a municipality within the
Metropolitan Manila Area, at the rates not exceeding the
following:
(a) On Lands:
CLASS
ASSESSMENTLEVELS
Residential
20%
Agricultural
40%
Commercial
50%
Industrial
50%
Mineral
50%
Timberland
20%
Not Over
Assessment
Levels
P175,000.00
P175,000.00
300,000.00
300,000.00
500,000.00
500,000.00
750,000.00
750,000.00 1,000,000.00
1,000,000.00 2,000,000.00
2,000,000.00 5,000,000.00
5,000,000.00 10,000,000.00
10,000,000.00
0%
10%
20%
25%
30%
35%
40%
50%
60%
(2) Agricultural
Fair Market Value
Over
P300,000.00
P300,000.00
500,000.00
750,000.00
1,000,000.00
2,000,000.00
Not Over
500,000.00
750,000.00
1,000,000.00
2,000,000.00
Assessment
Levels
25%
30%
35%
40%
45%
50%
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(3) Commercial / Industrial
63
Over
P300,000.00
P300,000.00
500,000.00
750,000.00
1,000,000.00
2,000,000.00
5,000,000.00
10,000,000.00
Assessment
Levels
Not Over
30%
35%
40%
50%
60%
70%
75%
80%
500,000.00
750,000.00
1,000,000.00
2,000,000.00
5,000,000.00
10,000,000.00
(4) Timberland
Fair Market Value
Over
Not Over
P300,000.00
500,000.00
750,000.00
1,000,000.00
2,000,000.00
P300,000.00
500,000.00
750,000.00
5,000,000.00
2,000,000.00
Assessment
Levels
45%
50%
55%
60%
65%
70%
(c) On Machineries
Class
Assessment
Levels
Agricultural
Residential
Commercial
Industrial
40%
50%
80%
80%
Assessment Level
15%
15%
15%
10%
Government-owned or
controlled corporations
engaged in the supply and
distribution of water and/or
generation and transmission
of electric power
10%
of
Assessments
and
Property
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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7, 2014
province,
cityor
municipality,
the sanggunian concerned, by
ordinance passed prior to the first (1st) day of January of any
year and upon recommendation of the Local Disaster
Coordinating Council, may condone or reduce, wholly or
partially, the taxes and interest thereon for the succeeding
year or years in the city or municipality affected by the
calamity.
64
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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or the current
zonal valuation x x x is violative
65
In this regard, Local Assessment Regulations No. 192 establishes the guidelines to assist assessors in
classifying, appraising and assessing real property three
approaches in estimating the fair market value, namely: (1)
the sales analysis or market data approach; (2) the income
capitalization approach; and (3) the replacement or
reproduction cost approach.
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66
DIGEST
Nov
7, 2014
(a) Real
property
owned by the Republic of the
shall be disposed of in the manner provided by law.
Philippines or any of its political subdivisions except
when the beneficial use thereof has been granted,
for consideration or otherwise, to a taxable person;
CA affirmed CBAA
1.
2.
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P DIGEST
is a charitable
institution
within the context of the 1973
and 1987 Constitutions: To determine whether an enterprise
is a charitable institution/entity or not, the elements which
should be considered include the statute creating the
enterprise, its corporate purposes, its constitution and bylaws, the methods of administration, the nature of the actual
work performed, the character of the services rendered, the
indefiniteness of the beneficiaries, and the use and
occupation of the properties The test whether an
enterprise is charitable or not is whether it exists to carry out
a purpose reorganized in law as charitable or whether it is
maintained for gain, profit, or private advantage
As a general principle, a charitable institution does not lose
its character as such and its exemption from taxes simply
because it derives income from paying patients, whether
out-patient, or confined in the hospital, or receives subsidies
from the government, so long as the money received is
devoted or used altogether to the charitable object which it
is intended to achieve; and no money inures to the private
benefit of the persons managing or operating the institution
(Congregational Sunday School, etc. v. Board of Review)
67
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DIGEST
Nov 7, 2014
actually, directly and exclusively used by petitioner NPC,
G.R. No. 168557 February 16, 2007 (3D)
FELS ENERGY, INC. vs. THE PROVINCE OF BATANGAS
and
THE OFFICE OF THE PROVINCIAL ASSESSOR OF
BATANGAS
SC affirms the findings of the LBAA and CBAA that the owner
of the taxable properties is petitioner FELS, which in fine, is
the entity being taxed by the local government As
stipulated in the Agreement: POLAR shall own the Power
Barges and all the fixtures, fittings, machinery and
equipment on the Site used in connection with the Power
Barges which have been supplied by it at its own cost.
POLAR shall operate, manage and maintain the Power
Barges for the purpose of converting Fuel of NAPOCOR into
electricity
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The
mere undertaking
petitioner NPC under Section 10.1
of the Agreement, that it shall be responsible for the
payment of all real estate taxes and assessments, does not
justify the exemption. The privilege granted to petitioner NPC
cannot be extended to FELS. The covenant is between FELS
and NPC and does not bind a third person not privy thereto,
in this case, the Province of Batangas.
Iloilo City
exemption
Assessors
Office
denied
the
claim
for
69
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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was
Novcreated
7, 2014
Petitioner
by virtue of RA 6958; Since the
conferred by Sec 5, Art X of the Constitution
time of its creation, MCIAA enjoyed the privilege of
exemption from payment of realty taxes in accordance
with Section 14 (The authority shall be exempt from
realty taxes imposed by the Natl Govt or any of its
political subdivisions, agencies and instrumentalities
70
the exercise
of the power may be subject to such guidelines and
limitations as the Congress may provide which, however,
must be consistent with the basic policy of local autonomy.
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These exemptions are based on the ownership, character,
and use of the property. Thus;
Ownership Exemptions. Exemptions from RPT on the
basis of ownership are real properties owned by: (i) the
Republic, (ii) a province, (iii) a city, (iv) a municipality,
(v) a barangay, and (vi) registered cooperatives.
Character Exemptions. Exempted from RPT on the basis
of their character are: (i) charitable institutions, (ii)
houses and temples of prayer like churches, parsonages
or convents appurtenant thereto, mosques, and (iii) non
profit or religious cemeteries.
Usage exemptions. Exempted from RPT on the basis of
the actual, direct and exclusive use to which they are
devoted are: (i) all lands buildings and improvements
which are actually, directed and exclusively used for
religious, charitable or educational purpose; (ii) all
machineries and equipment actually, directly and
exclusively used or by local water districts or by GOCCs
engaged in the supply and distribution of water and/or
generation and transmission of electric power; and (iii)
all machinery and equipment used for pollution control
and environmental protection
71
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MIAA filed
with CA
original petition for prohibition and
MIAA is a government instrumentality
injunction CA dismissed the petition because MIAA
filed it beyond the 60-day reglementary period
A day before the public auction, MIAA filed an Urgent ExParte and Reiteratory Motion for the Issuance of TRO
SC issued a TRO however respondents received the TRO
only three hours after the conclusion of the public
auction
72
vested with
corporate powers to perform efficiently its governmental
functions. MIAA is like any other government instrumentality,
the only difference is that MIAA is vested with corporate
powers. Section 2(10) of the Introductory Provisions of the
Administrative
Code
defines
a
government
"instrumentality" as any agency of the Natl Govt, not
integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special
funds, and enjoying operational autonomy, usually through a
charter
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orDIGEST
in any manner
control
the operation of constitutional laws
enacted by Congress to carry into execution the powers
vested in the federal government.
73
The minority asserts that the MIAA is not exempt from RPT
because Sec 193 of LGC withdrew the tax exemption of "all
persons, whether natural or juridical" upon the
effectivity of the Code: Unless otherwise provided in this
Code, tax exemptions or incentives granted to, or presently
enjoyed by all persons, whether natural or juridical,
including GOCCs, except local water districts, cooperatives
duly registered under R.A. No. 6938, non-stock and non-profit
hospitals and educational institutions are hereby withdrawn
upon effectivity of this Code. The minority states that MIAA is
indisputably a juridical person It is evident from the
quoted provisions of LGC that the withdrawn
exemptions from realty tax cover not just GOCCs, but
all persons. The term "All persons" encompasses the
two classes of persons recognized under our laws,
natural and juridical persons. Obviously, MIAA is not a
natural person. Thus, the determinative test is not
just whether MIAA is a GOCC, but whether MIAA is a
juridical person at all.
The argument of the minority is fatally flawed. Sec 193
expressly withdrew the tax exemption of all juridical persons
"[u]nless otherwise provided in this Code." Now, Sec
133(o) expressly provides
otherwise, specifically
prohibiting local governments from imposing any kind of
tax on national government instrumentalities. By express
mandate, LGUs cannot impose any kind of tax on national
government
instrumentalities
like
the
MIAA.
Local
governments are devoid of power to tax the national
government, its agencies and instrumentalities. The taxing
powers of local governments do not extend to the national
government, its agencies and instrumentalities, "[u]nless
otherwise provided in this Code" as stated in the saving
clause of Section 133. The saving clause refers to Section
234(a) on the exception to the exemption from real estate
tax of real property owned by the Republic.
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74
DIGEST
Novand
7,administers
2014
MIAA operates
NAIA Complex
A close scrutiny of the definition of "government-owned
or
controlled corporation" in Section 2(13) will show that MIAA
would not fall under such definition. MIAA is a government
"instrumentality" that does not qualify as a
"government-owned or controlled corporation." As
explained in the 2006 MIAA case: A GOCC must be
"organized as a stock or non-stock corporation." MIAA is not
organized as a stock or non-stock corporation. MIAA is not a
stock corporation because it has no capital stock divided into
shares. MIAA has no stockholders or voting shares. Section 3
of the Corporation Code defines a stock corporation as one
whose "capital stock is divided into shares and authorized to
distribute to the holders of such shares dividends x x x."
MIAA has capital but it is not divided into shares of stock.
MIAA has no stockholders or voting shares. Hence, MIAA is
not a stock corporation.
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75
DIGEST
Nov
7, 2014
constructed
to comply
with the condition imposed by
Title II of R.A. No. 7160 governs the administration, appraisal,
DENR that respondent prevent run-offs and silt materials
from contaminating the Mogpog and Boac Rivers; and
describing the subject property as a specialized
combination of essential impervious earth materials with
a special provision for a spillway and a diversion canal.
o
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76
DIGEST
Nov 7, 2014
any documentary
evidence of the exempt status of
o
Among the obligations undertaken by the NPC under the
the subject property
The DENR Certification classifies the subject property as a
"structure intended primarily for pollution control of silted
materials in order to protect the environmental degredation
of Maguila-guila, Mangamu-Mogpog River system from
getting turbid." That the subject property is a structure is
further underscored by the project design which describes
the subject property as a "zoned earth siltation dam" 56
composed of a clay core consisting of clayey materials or
impervious fill, a random fill made up of heavily to intensely
fractured metarock, and filters comprised of course tailings,
river sand deposits and course filter gravels Therefore, by
design, composition and function, the subject property is a
structure adhered to the soil, and has neither a mechanical
contrivance, instrument, tool, implement, appliances,
apparatus, nor paraphernalia that produces a mechanical
effect or performs a mechanical work of any kind. It meets
none of the following features of a machinery as described in
Section 199(o) of R.A. No. 7160:
Section 226 of the LGC lists down the two entities vested
with the personality to contest an assessment: the owner
and the person with legal interest in the property
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Nov
2014
SECTION
226.
Local 7,
Board
of Assessment Appeals. - Any
owner or person having legal interest in the property
who is not satisfied with the action of the provincial, city or
municipal assessor in the assessment of his property may,
within sixty (60) days from the date of receipt of the written
notice of assessment, appeal to the Board of Assessment
Appeals of the province or city xxx.
The liability for taxes generally rests on the owner of the real
property at the time the tax accrues. This is a necessary
consequence that proceeds from the fact of ownership.
However, personal liability for realty taxes may also
expressly rest on the entity with the beneficial use of the real
property, such as the tax on property owned by the
government but leased to private persons or entities, or
when the tax assessment is made on the basis of the actual
use of the property. In either case, the unpaid realty tax
attaches to the property but is directly chargeable
against the taxable person who has actual and
beneficial use and possession of the property
regardless of whether or not that person is the owner.
77
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them.
The
machineries
must be actually, directly, and
exclusively used by GOCC for the exemption under Sec
234(c) to apply
Nor will NPC find solace in its claim that it utilizes all the
power plants generated electricity in supplying the power
needs of its customers. Based on the clear wording of the
law, it is the machineries that are exempted from the
payment of real property tax, not the water or electricity that
these machineries generate and distribute.27
78
Section 226 of the LGC limits the right to appeal the local
assessors action to the owner or the person having legal
interest in the property Napocor posits that it is the
beneficial owner of the subject machineries, with Mirant
retaining merely a naked title to secure certain obligations.
Thus, it argues that the BOT Agreement is a mere financing
agreement and is similar to the arrangement authorized
under Art 1503 of CC, (When there is a contract of sale of
specific goods, the seller may, by the terms of the contract,
reserve the right of possession or ownership in the goods
until certain conditions have been fulfilled)
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Nov
7, 2014
generated
a defined
compensation scheme. Notably,
BPPC as owner-user is responsible for any defect in the
machineries and equipment.
79
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The benefits granted under this Act shall
G.R. No. 186242 December 23, 2009 (3D)
GSIS vs. CITY TREASURER and CITY ASSESSOR of the
CITY OF MANILA,
o
80
not be subject,
among others, to attachment, garnishment, levy or other
processes. This, however, shall not apply to obligations of
the member to the System, or to the employer, or when the
benefits granted herein are assigned by the member with the
authority of the System.
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Nov or
7, protect
2014 the solvency of the fund,
factor
to maintain
notwithstanding and independently of the guaranty of the
national government to secure such solvency or liability.
81
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82
DIGEST Nov 7, 2014
of law; instead, they were voluntarily surrendered to the
G.R. No. 185023 August 24, 2011 (2D)
CITY OF PASIG and THE CITY ASSESSOR vs. REPUBLIC
OF THE PHILIPPINES
o
I: WON Pasig City has right to assess and collect RPT from
the lessees of the properties
H: Patly
Republic owns the properties Campos voluntarily
surrendered MPLDC, which owned the properties, to the
Republic of the Philippines.
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7,and
2014
ofDIGEST
the Airport
Lands
Buildings that MIAA leases to
private entities are not exempt from real estate tax.
83
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Nov
7, 2014
dividends
allotment
of surplus and profits to its
stockholders. Therefore, it may not be classified as a stock
corporation because it lacks the second requisite of a stock
corporation which is the distribution of dividends and
allotment of surplus and profits to the stockholders.
It insists that it may not be classified as a non-stock
corporation because it has no members and it is not
organized for charitable, religious, educational, professional,
cultural, recreational, fraternal, literary, scientific, social, civil
service, or similar purposes, like trade, industry, agriculture
and like chambers as provided in Section 88 of the
Corporation Code.
84
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inDIGEST
the past. IfaNov
government
corporation loses, then it makes
its claim upon the taxpayers' money through new equity
infusions from the government and what is always invoked is
the common good. Therefore, when we insert the phrase
"ECONOMIC VIABILITY" together with the "common good,"
this becomes a restraint on future enthusiasts for state
capitalism to excuse themselves from the responsibility of
meeting the market test so that they become viable.
vs.
CITY
OF
85
REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE
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Nov
2014 from the building permit fee.
Building Code
as7,
exempted
educational foundations if the privilege were
Respondents argued that R.A. No. 6055 should be
considered repealed on the basis of Sec. 2104 of the
National Building Code. Since the disputed assessments
are regulatory in nature, they are not taxes from which
petitioner is exempt. As to the real property taxes
imposed on petitioners property located in Marisol
Village, respondents pointed out that said premises will
be used as a school dormitory which cannot be
considered as a use exclusively for educational
activities.
86
only limited to
exemption from taxation, which is already provided under
the Constitution.
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Nov
2014 and non-profit hospitals and
under
R.A. No.
6938,7,
non-stock
educational institutions, are hereby withdrawn upon the
effectivity of this Code.
Considering that exemption from payment of regulatory fees
was not among those "incentives" granted to petitioner
under R.A. No. 6055, there is no such incentive that is
retained under the LGC Consequently, no reversible error
was committed by the CA in ruling that petitioner is liable to
pay the subject building permit and related fees.
87
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Novis 7,
2014
suchland
more
or less benefited by proposed
(a) Agricultural lands, more than one
work.
o
I.
II.
PRELIMINARY MATTERS
IMPOSITION OF REAL PROPERTY TAX
A. POWER TO LEVY REAL PROPERTY TAX (Sec.
232)
B. RATES OF LEVY (Sec. 233)
C. EXEMPTIONS FROM RPT (Sec. 234)
D. ADDITIONAL LEVY FOR SEF (Sec. 235)
Section 235. Additional Levy on Real Property for
the Special Education Fund. - A province or city, or a
municipality within the Metropolitan Manila Area,
may levy and collect an annual tax of one percent
(1%) on the assessed value of real property which
shall be in addition to the basic real property tax.
The proceeds thereof shall exclusively accrue to the
Special Education Fund (SEF).
E.
88
(1) hectare in
area, suitable for cultivation, dairying, inland
fishery, and other agricultural uses, one-half (1/2) of
which remain uncultivated or unimproved by the
owner of the property or person having legal
interest therein. Agricultural lands planted to
permanent or perennial crops with at least fifty (50)
trees to a hectare shall not be considered idle lands.
Lands actually used for grazing purposes shall
likewise not be considered idle lands.
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Nov
7, 2014
and
afford
the
latter
the opportunity to express their
positions or objections relative to the proposed ordinance.
3.
Section 244. Taxpayer's Remedies Against Special Levy. Any owner of real property affected by a special levy or any
person having a legal interest therein may, upon receipt of
the written notice of assessment of the special levy, avail of
the remedies provided for in Chapter 3, Title Two, Book II of
this Code.
5.
III.
89
ADVANCED
PROMPT
REMEDIES
A.
3.
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out2014
of the country or otherwise cannot
JOSE F. PUZON, petitioner-appellant,
be located.
5.
90
vs. ALEJANDRA
ABELLERA, substituted by TOMASA D. DOMONDON,
oppositor-appellee. [G.R. No. 75082 January 31, 1989]
FACTS:
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91
irregularities: no
notices of delinquency and of sale were sent to the
owner.
The owner continued to pay realty taxes on the
property, even after the date of the sale. She would not
have done so had she been aware that it had already
been auctioned off.
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Nov
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tax rolls
or property
tax record cards of the x x x city
property by paying to the local treasurer the
where the property is located, or at his residence, if
known to said treasurer or barrio captain: Provided,
however, That a return of the proof of service under
oath shall be filed by the person making the service
with the x x x city treasurer concerned.
The auction sale of real property for the collection of
delinquent taxes is in personam, not in rem. Although
sufficient in proceedings in rem like land registration, mere
notice by publication will not satisfy the requirements of
proceedings in personam. [P]ublication of the notice of
delinquency [will] not suffice, considering that the procedure
in tax sales is in personam. It is still incumbent upon the
city treasurer to send the notice directly to the taxpayer -the registered owner of the property -- in order to protect the
latters
interests.
Although
preceded
by
proper
advertisement and publication, an auction sale is void absent
an actual notice to a delinquent taxpayer.
The sale of land for tax delinquency is in derogation of
property rights and due process; the prescribed steps must
be followed strictly. In the present case, notices either of
delinquency or of sale were not given to the delinquent
taxpayer. Those notices are mandatory, and failure to issue
them invalidates a sale.
Because it was clearly in contravention of the requirements
under the law and jurisprudence, the subsequent sale of the
real property did not make its purchaser the new owner.
vi. Redemption of Property Sold (Sec. 261)
Section 261. Redemption of Property Sold. - Within one
(1) year from the date of sale, the owner of the delinquent
real property or person having legal interest therein, or his
representative, shall have the right to redeem the property
upon payment to the local treasurer of the amount of the
delinquent tax, including the interest due thereon, and the
expenses of sale from the date of delinquency to the date of
sale, plus interest of not more than two percent (2%) per
month on the purchase price from the date of sale to the
date of redemption. Such payment shall invalidate the
certificate of sale issued to the purchaser and the owner of
the delinquent real property or person having legal interest
therein shall be entitled to a certificate of redemption which
shall be issued by the local treasurer or his deputy.
From the date of sale until the expiration of the period of
redemption, the delinquent real property shall remain in
possession of the owner or person having legal interest
therein who shall be entitled to the income and other fruits
thereof.
The local treasurer or his deputy, upon receipt from the
purchaser of the certificate of sale, shall forthwith return to
the latter the entire amount paid by him plus interest of not
more than two percent (2%) per month. Thereafter, the
property shall be free from lien of such delinquent tax,
interest due thereon and expenses of sale.
vii. Purchase of Property by the Local Government Units for
Want of Bidder (Sec.
263)
Section 263. Purchase of Property By the Local
Government Units for Want of Bidder. - In case there is
no bidder for the real property advertised for sale as
provided herein, the real property tax and the related
interest and costs of sale the local treasurer conducting the
sale shall purchase the property in behalf of the local
government unit concerned to satisfy the claim and within
two (2) days thereafter shall make a report of his
proceedings which shall be reflected upon the records of his
office. It shall be the duty of the Registrar of Deeds
concerned upon registration with his office of any such
declaration of forfeiture to transfer the title of the forfeited
property to the local government unit concerned without the
necessity of an order from a competent court.
Within one (1) year from the date of such forfeiture, the
taxpayer or any of his representative, may redeem the
92
full amount of
the real property tax and the related interest and the costs of
sale. If the property is not redeemed as provided herein, the
ownership thereof shall be vested on the local government
unit concerned.
viii. Court Action for Collection (Sec. 266)
Section 266. Collection of Real Property Tax Through
the Courts. - The local government unit concerned may
enforce the collection of the basic real property tax or any
other tax levied under this Title by civil action in any court of
competent jurisdiction. The civil action shall be filed by the
local treasurer within the period prescribed in Section 270 of
this Code.
b. Taxpayers Remedies
i. Action Assailing Validity of Tax Sale (Sec. 267)
Section 267. Action Assailing Validity of Tax Sale. - No
court shall entertain any action assailing the validity or any
sale at public auction of real property or rights therein under
this Title until the taxpayer shall have deposited with the
court the amount for which the real property was sold,
together with interest of two percent (2%) per month from
the date of sale to the time of the institution of the action.
The amount so deposited shall be paid to the purchaser at
the auction sale if the deed is declared invalid but it shall be
returned to the depositor if the action fails.
Neither shall any court declare a sale at public auction
invalid by reason or irregularities or informalities in the
proceedings unless the substantive rights of the delinquent
owner of the real property or the person having legal interest
therein have been impaired.
ii. Action Involving Ownership (Sec. 268)
Section 268. Payment of Delinquent Taxes on Property
Subject of Controversy. - In any action involving the
ownership or possession of, or succession to, real property,
the court may, motu propio or upon representation of the
provincial, city, or municipal treasurer or his deputy, award
such ownership, possession, or succession to any party to
the action upon payment to the court of the taxes with
interest due on the property and all other costs that may
have accrued, subject to the final outcome of the action.
iii. Payment under Protest (Sec. 252)
Section 252. Payment Under Protest. (a) No protest shall be entertained unless the taxpayer first
pays the tax. There shall be annotated on the tax
receipts the words "paid under protest". The protest in
writing must be filed within thirty (30) days from payment of
the tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within Metropolitan
Manila Area, who shall decide the protest within sixty (60)
days from receipt.
(b) The tax or a portion thereof paid under protest, shall be
held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in favor of
the taxpayer, the amount or portion of the tax protested
shall be refunded to the protestant, or applied as tax credit
against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse
of the sixty day period prescribed in subparagraph (a), the
taxpayer may avail of the remedies as provided for in
Chapter 3, Title II, Book II of this Code.
RAMIE TEXTILES, INC., petitioner, vs. HON. ISMAEL
MATHAY, SR., in his capacity as Auditor General respondent.
G.R. No. L-32364 April 30, 1979
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application of the principle of solutio indebiti
FIRST DIVISION
FACTS:
93
under Article
2154 of the New Civil Code, which provides that "if
something is received when there is no right to demand it,
and it was unduly delivered through mistake, the obligation
to return it arises." There is, therefore, created a tie or
juridical relation in the nature of solutio indebiti expressly
classified as quasi- contract under Section 2, Chapter I
Respondent's contention that petitioner's right to recover
real estate taxes has prescribed in accordance with Section
359 of the Revised Manual of Instructions to Treasurers which
reads:
o
Section 359. Refund of taxes paid under
ordinance subsequently declared illegal
and taxes illegally assessed and collected.
To encourage prompt and voluntary
payment of taxes and to maintain the
principle that the government should not,
at the expense of the taxpayer, retain what
is not legally due it, for refund of taxes
erroneously paid or illegally collected or
assessed may be presented within two (2)
years from date of payment. Claim for
refund presented thereafter will no longer
be entertained. All claims for recovery of
taxes illegally and erroneously as shall be
filed with the treasurer who collected the
tax. The treasurer may... decide the protest
or he may forward the same to the
corresponding authority for decision. His
comment and recommendation shall be
stated by him together with the protest.
This procedure shall be strictly followed in
order to determine as to whether or not a
formal or written claim was filed within the
two (2) years from date of payment.
is without merit. The said provision applies to taxes
paid under ordinance subsequently declared illegal
or taxes illegally assessed and collected under such
ordinance, but not to payments of real estate taxes
mistakenly made, as in the present case.
Furthermore, the Revised Manual of Instructions to
Treasurers is a mere compilation of existing
accounting instructions affecting the finance and
administration of local government. Section 359,
particularly, has no force and effect of a law, and
the same can not prevail over the provisions of the
New Civil Code.
Equally not applicable is Section 17 of Commonwealth Act
No. 470 cited by respondent in relation to the right of a
property owner to contest the validity of assessment. Said
provision provides:
o
Section 17. Appeal by owner to the Board of Tax
Appeals (Now Board of Assessment Appeals, R. A.
No. 1125). Any owner who is not satisfied with the
action of a provincial assessor in the assessment of
his property may, within sixty (60) days from the
date of receipt by him of the written notice of
assessment as provided in Section 16 hereof,
appeal to the Board of Tax Appeals, which is created
in each province, by filing with it or with the
municipal Treasurer of the municipality where the
property assessed is situated who is duty bound to
transmit it to the Board of Tax Appeals, a petitioner
to that effect stating the grounds of his appeal
As already stated the claim for refund must be made within
six (6) years from date of payment. Since petitioner
demanded the refund of real estate taxes mistakenly paid
only on May 23, 1967, it can recover only those paid during
the period from October 31, 1961 to September 9, 1965 or a
total amount of P61,007.33. Petitioner has, by reason of the
six (6) years prescriptive period, lost its right to recover the
amount of P17,033.84 paid during the period from July 24,
1959 to March 27,1961.
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o
2. It is improper for this Court to prohibit or annul a
SECRETARY OF FINANCE, THE MUNICIPAL ASSESSOR OF
PASIG AND THE MUNICIPAL TREASURER OF PASIG,
respondents.
G.R. No. 117577 December 1, 1995
EN BANC
FACTS:
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case,
Novthe
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2014 of the assessor is not being
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the present
questioned. Despite petitioners protestations, the petition
filed before the court a quo primarily involves the
correctness of the assessments, which are questions of fact,
that are not allowed in a petition for certiorari, prohibition
and mandamus. The court a quo is therefore precluded from
entertaining the petition, and it appropriately dismissed the
petition.
NATIONAL POWER CORPORATION, Petitioner, vs.
PROVINCE OF QUEZON and MUNICIPALITY OF PAGBILAO,
Respondents
G.R. No. 171586 July 15, 2009
SECOND DIVISION
FACTS:
95
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The LBAA dismissed Napocors petition for
ISSUE # 2: Whether Petitioner was entitled to exemption.
HELD # 2: NO.
s applied to the present case, the governmentowned or controlled corporation claiming exemption
must be the entity actually, directly, and exclusively
using the real properties, and the use must be
devoted to the generation and transmission of
electric power. Neither the NPC nor Mirant satisfies
both requirements. Although the plants
machineries are devoted to the generation of
electric power, by the NPCs own admission and as
previously pointed out, Mirant a private
corporation uses and operates them. That Mirant
operates the machineries solely in compliance with
the will of the NPC only underscores the fact that
NPC does not actually, directly, and exclusively use
them. The machineries must be actually, directly,
and exclusively used by the government-owned or
controlled corporation for the exemption under
Section 234(c) to apply.
Nor will NPC find solace in its claim that it utilizes all
the power plants generated electricity in supplying
the power needs of its customers. Based on the
clear wording of the law, it is the machineries that
are exempted from the payment of real property
tax, not the water or electricity that these
machineries generate and distribute.
96
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properties
been
doubly taxed/assessed; (3) some
properties being taxed are no longer existent; (4) some
properties are exempt from taxation as they are being used
exclusively for educational purposes; and (5) some errors are
made in the assessment and collection of taxes due on
petitioners properties, and that respondents committed
grave abuse of discretion in making the improper, excessive
and unlawful the collection of taxes against the petitioner."
The Olivarez petition filed before the trial court primarily
involved the correctness of the assessments, which is a
question of fact that is not allowed in a petition for certiorari,
prohibition, and mandamus. Hence, we declared that the
petition should have been brought, at the very first instance,
to the LBAA, not the trial court.
Like Olivarez, Napocor, by claiming exemption from realty
taxation, is simply raising a question of the correctness of
the assessment. A claim for tax exemption, whether full or
partial, does not question the authority of local assessor to
assess real property tax. This may be inferred from Section
206 which states that:
o
SEC. 206. Proof of Exemption of Real Property from
Taxation. - Every person by or for whom real
property is declared, who shall claim tax exemption
for such property under this Title shall file with the
provincial, city or municipal assessor within thirty
(30) days from the date of the declaration of real
property sufficient documentary evidence in support
of such claim including corporate charters, title of
ownership, articles of incorporation, bylaws,
contracts, affidavits, certifications and mortgage
deeds, and similar documents. If the required
evidence is not submitted within the period herein
prescribed, the property shall be listed as taxable in
the assessment roll. However, if the property shall
be proven to be tax exempt, the same shall be
dropped from the assessment roll. [Emphasis
provided]
By providing that real property not declared and proved as
tax-exempt shall be included in the assessment roll, the
above-quoted provision implies that the local assessor has
the authority to assess the property for realty taxes, and any
subsequent claim for exemption shall be allowed only when
sufficient proof has been adduced supporting the claim.
Since Napocor was simply questioning the correctness of the
assessment, it should have first complied with Section 252,
particularly the requirement of payment under protest.
Napocors failure to prove that this requirement has been
complied with thus renders its administrative protest under
Section 226 of the LGC without any effect. No protest shall
be entertained unless the taxpayer first pays the tax.
It was an ill-advised move for Napocor to directly file an
appeal with the LBAA under Section 226 without first paying
the tax as required under Section 252. Sections 252 and 226
provide successive administrative remedies to a taxpayer
who questions the correctness of an assessment. Section
226, in declaring that "any owner or person having legal
interest in the property who is not satisfied with the action of
the provincial, city, or municipal assessor in the assessment
of his property may x x x appeal to the Board of Assessment
Appeals x x x," should be read in conjunction with Section
252 (d), which states that "in the event that the protest is
denied x x x, the taxpayer may avail of the remedies as
provided for in Chapter 3, Title II, Book II of the LGC [Chapter
3 refers to Assessment Appeals, which includes Sections 226
to 231]. The "action" referred to in Section 226 (in relation to
a protest of real property tax assessment) thus refers to the
local assessors act of denying the protest filed pursuant to
Section 252. Without the action of the local assessor, the
appellate authority of the LBAA cannot be invoked.
Napocors action before the LBAA was thus prematurely filed.
CAMP JOHN HAY DEVELOPMENT CORPORATION,
Petitioner, vs. CENTRAL BOARD OF ASSESSMENT
APPEALS, REPRESENTED BY ITS CHAIRMAN HON. CESAR S.
GUTIERREZ, ADELINA A. TABANGIN, IN HER CAPACITY AS
CHAIRMAN OF THE BOARD OF TAX (ASSESSMENT) APPEALS
OF BAGUIO CITY, AND HON. ESTRELLA B. TANO, IN HER
CAPACITY AS THE CITY ASSESSOR OF THE CITY OF BAGUIO,
Respondents. G.R. No. 169234
October 2, 2013
SECOND DIVISION
97
FACTS:
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provincial,
committed grave abuse of discretion in making
o
o
o
Relevant thereto, the remedies referred to under Chapter 3,
Title Two, Book II of RA No. 7160 or the LGC of 1991 are
those provided for under Sections 226 to 231. Significant
provisions pertaining to the procedural and substantive
aspects of appeal before the LBAA and CBAA, including its
effect on the payment of real property taxes
To begin with, Section 252 emphatically directs that the
taxpayer/real property owner questioning the assessment
should first pay the tax due before his protest can be
entertained. As a matter of fact, the words "paid under
protest" shall be annotated on the tax receipts.
Consequently, only after such payment has been made by
the taxpayer may he file a protest in writing (within thirty
(30) days from said payment of tax) to the provincial, city, or
municipal treasurer, who shall decide the protest within sixty
(60)days from its receipt. In no case is the local treasurer
obliged to entertain the protest unless the tax due has been
paid.
Secondly, within the period prescribed by law, any owner or
person having legal interest in the property not satisfied with
the action of the provincial, city, or municipal assessor in the
assessment of his property may file an appeal with the LBAA
of the province or city concerned, as provided in Section 226
of RA No. 7160 or the LGC of 1991. Thereafter, within thirty
(30) days from receipt, he may elevate, by filing a notice of
appeal, the adverse decision of the LBAA with the CBAA,
which exercises exclusive jurisdiction to hear and decide all
appeals from the decisions, orders, and resolutions of the
Local Boards involving contested assessments of real
properties, claims for tax refund and/or tax credits, or
overpayments of taxes.
Significantly, in Dr. Olivares v. Mayor Marquez,17 this Court
had the occasion to extensively discuss the subject
provisions of RA No. 7160 or the LGC of 1991, in relation to
the impropriety of the direct recourse before the courts on
issue of the correctness of assessment of real estate taxes.
The pertinent articulations follow:
o
x x x A perusal of the petition before the RTC plainly
shows that what is actually being assailed is the
correctness of the assessments made by the local
assessor of Paraaque on petitioners properties.
The allegations in the said petition purportedly
questioning the assessors authority to assess and
collect the taxes were obviously made in order to
justify the filing of the petition with the RTC. In fact,
there is nothing in the said petition that supports
their claim regarding the assessors alleged lack of
authority. What petitioners raise are the following:
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remitted
5% ofNov
the gross
income earned by it within ninety
(90) days from the close of the calendar year through the
JPDC. Unfortunately, petitioner has neither established nor
presented any evidence to show that it has indeed paid and
remitted 5% of said gross income tax; (c) the right to appeal
is a privilege of statutory origin, meaning a right granted
only by the law, and not a constitutional right, natural or
inherent. Therefore, it follows that petitioner may avail of
such opportunity only upon strict compliance with the
procedures and rules prescribed by the law itself, i.e. RA No.
7160 or the LGC of 1991; and (d) at any rate, petitioners
position of exemption is weakened by its own admission and
recognition of this Courts previous ruling that the tax
incentives granted in RA No. 7227 are exclusive only to the
Subic Special Economic and Free Port Zone; and thus, the
extension of the same to the JHSEZ (as provided in the
second sentence of Section 3 of Presidential Proclamation
No. 420) finds no support therein and therefore declared null
and void and of no legal force and effect. Hence, petitioner
needs more than mere arguments and/or allegations
contained in its pleadings to establish and prove its
exemption, making prior proceedings before the LBAA a
necessity.
CONCURRING OPINION of Justice Carpio on CAMP JOHN
HAY CASE (Page 6 in the SYLLABUS):
Republic Act No. 7227, the Bases Conversion and
Development Act of 1992, was enacted on 13 1\larch 1992.
R.A. No. 7227 authorized the President to create through
executive proclamation Special Economic Zones in various
areas in the country, including Camp John Hay in Baguio City.
President Fidel V. Ramos issued Proclamation No. 420,
establishing the JHSEZ, on 5 July 1994. Section 3 of
Proclamation No. 420 created a regime of tax exemption
within the JHSEZ.
CJHDC entered into a Lease Agreement with Bases
Conversion Development Authority (BCDA) on 19 October
1996 for the development of JHSEZ. On 21 March 2002, the
City Assessor of Baguio City issued notices of assessment to
CJHDC on the properties that it leased from BCDA. In Case
No. 2002-003, CJHDC questioned the assessments before the
Board of Tax Assessment Appeals of Baguio City (BTAABaguio), and stated that it was exempted from paying taxes
pursuant to Section 12(c) of R.A. No. 72271 and Section 3 of
Proclamation No. 420.
Pending resolution of Petitioners Appeal before the CBAA, on
24 October 2003, this Court promulgated its decision in John
Hay Peoples Alternative Coalition v. Lim (John Hay). We ruled
against JHSEZs tax exemptions, and declared that "under
Section 12of R.A. No. 7227 it is only the Subic SEZ which was
granted by Congress with tax exemption, investment
incentives and the like. There is no express extension of the
aforesaid benefits to other SEZs still to be created at the
time via presidential proclamation."4 The grant by
Proclamation No. 420of tax exemption and other privileges to
JHSEZ is void for being violative of the Constitution: a law
granting any tax exemption must have the concurrence of a
majority of all the members of Congress, and cannot be
granted by the Chief Executive alone.
o
99
iv. Refunds
Section 253. Repayment of Excessive Collections. When an assessment of basic real property tax, or any other
tax levied under this Title, is found to be illegal or erroneous
and the tax is accordingly reduced or adjusted, the taxpayer
may file a written claim for refund or credit for taxes and
interests with the provincial or city treasurer within two (2)
years from the date the taxpayer is entitled to such
reduction or adjustment.
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The second paragraph of the above quoted
The provincial or city treasurer shall decide the claim for tax
refund or credit within sixty (60) days from receipt thereof. In
case the claim for tax refund or credit is denied, the taxpayer
may avail of the remedies as provided in Chapter 3, Title II,
Book II of this Code.
Issue: W/N Petitioner can refund the real estate tax it paid
without going through the usual procedure provided for by
the Local Government Code, as a consequence of declaring
the assailed proviso invalid
Held: No
In its Decision subject of the present motion, this Court ruled
that the assailed proviso is null and void ab initio for being
ultra vires and for contravening the provisions of the Local
Government Code and its Implementing Rules and
Regulations and Local Assessment Regulations No. 1-92 and,
as such, it acquired no legal effect and conferred no rights
from its inception.
Clearly, petitioner and all those similarly situated are entitled
to a tax refund/credit corresponding to the difference
between the assessed value based on the proviso and the
assessed value based on the then prevailing schedule of fair
market values prepared by the City Assessor.
It bears stressing, however, that entitlement to a tax
refund does not necessarily call for the automatic
payment of the sum claimed. The amount of the claim
being a factual matter, it must still be proven in the normal
course and in accordance with the administrative procedure
for obtaining a refund of real property taxes, as provided
under the Local Government Code.
Under Section 253 of the Local Government Code, the claim
for refund or credit for taxes must be filed before the city
treasurer who shall decide the claim based on the tax
declarations, affidavits, documents and other documentary
evidence to be presented by petitioner.
100
dispositive
portion of the Decision of this Court dated October 11, 2005
is amended to read:
Petitioner's claim for refund may be pursued in
accordance with Section 253 of the Local
Government Code within Two (2) Years from the
finality of this Decision.
v. Assessment Appeals
1.
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jurisdiction,
and2014
there is no appeal or any other
Issue: W/N Petition for Prohibition had no cause of action by
plain, speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may file
a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be
rendered commanding the respondent to desist
from further proceedings in the action or matter
specified therein, or otherwise, granting such
incidental reliefs as law and justice may require.
With the reality that Bayantels real properties were already
levied upon on account of its nonpayment of real estate
taxes thereon, the Court agrees with Bayantel that an appeal
to the LBAA is not a speedy and adequate remedy within the
context of the aforequoted Section 2 of Rule 65. This is not to
mention of the auction sale of said properties already
scheduled on July 30, 2002.
Moreover, one of the recognized exceptions to the
exhaustion-of-administrative remedies rule is when, as here,
only legal issues are to be resolved. In fact, the Court,
cognizant of the nature of the questions presently involved,
gave due course to the instant petition.
Lest it be overlooked, an appeal to the LBAA, to be properly
considered, required prior payment under protest of the
amount of P43,878,208.18, a figure which, in the light of the
then prevailing Asian financial crisis, may have been difficult
to raise up. Given this reality, an appeal to the LBAA may not
be considered as a plain, speedy and adequate remedy. It is
thus understandable why Bayantel opted to withdraw its
earlier appeal with the LBAA and, instead, filed its petition
for prohibition with urgent application for injunctive relief.
The remedy availed of by Bayantel under Section 2, Rule 65
of the Rules of Court must be upheld.
MANILA ELECTRIC COMPANY, petitioner, vs. NELIA A.
BARLIS, in her capacity as Officer-in-Charge/Acting Municipal
Treasurer of Muntinlupa, substituting EDUARDO A. ALON,
former Municipal Treasurer of Muntinlupa, Metro Manila,
respondent
G.R. No. 114231 | May 18, 2001 (2D)
Facts:
Systems Plus Computer College (Petitioner) is a nonstock, non-profit educational institution organized and
established in 1997 with business address in Caloocan
City.
As such, it enjoys property tax exemption from the local
government on its buildings but not on the parcels of
land which petitioner is renting for P5,000 monthly from
its sister companies, Consolidated Assembly, Inc.
(Consolidated Assembly) and Pair Management and
Development Corporation (Pair Management).
On January 8, 1998, petitioner requested respondent city
government of Caloocan to extend tax exemption to the
parcels of land claiming that the same were being used
actually, directly and exclusively for educational
purposes pursuant to Article VI, Section 28(3) of the
1987 Constitution and other applicable provisions of the
Local Government Code.
On February 5, 1998, respondent city government
denied the request on the ground that the subject
parcels of land were owned by Consolidated Assembly
and Pair Management which derived income therefrom
in the form of rentals and other local taxes assumed by
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the petitioner.
from the land owners standpoint,
J: CALLEJO SR.
102
Facts:
*** 2 Consolidated petitions of FELS and NPC.
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APPEAL
TO
THE
CBAA
(Sec. 230)
Section 230. Central Board of Assessment Appeals. - The
Central Board of Assessment Appeals shall be composed of a
chairman, and two (2) members to be appointed by the
President, who shall serve for a term of seven (7) years,
without reappointment. Of those first appointed, the
chairman shall hold office for seven (7) years, one member
for five (5) years, and the other member for three (3) years.
Appointment to any vacancy shall be only for the unexpired
portion of the term of the predecessor. In no case shall any
member be appointed or designated in a temporary or acting
capacity. The chairman and the members of the Board shall
be Filipino citizens, at least forty (40) years old at the time of
their appointment, and members of the Bar or Certified
Public Accountants for at least ten (10) years immediately
preceding their appointment. The chairman of the Board of
Assessment Appeals shall have the salary grade equivalent
to the rank of Director III under the Salary Standardization
Law exclusive of allowances and other emoluments. The
members of the Board shall have the salary grade equivalent
to the rank of Director II under the Salary Standardization
Law exclusive of allowances and other emoluments. The
Board shall have appellate jurisdiction over all assessment
cases decided by the Local Board of Assessment Appeals.
There shall be Hearing Officers to be appointed by the
Central Board of Assessment Appeals pursuant to civil
service laws, rules and regulations, one each for Luzon,
Visayas and Mindanao, who shall hold office in Manila, Cebu
City and Cagayan de Oro City, respectively, and who shall
103