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LOCAL GOVERNMENT CODE OF 1991, AS AMENDED

I.

LOCAL GOVERNMENT TAXATION


A. Definition: It is the power of the LGUs to impose and collect taxes on its
constituents in order to raise revenues to enable them to perform the functions
for which they have been organized.
B. Fundamental Principles:
1. Levied for public purpose;
2. Revenues collected shall inure solely to the benefit of, and subject to
disposition by the LGU levying the tax or other imposition unless otherwise
specially provided therein;
3. Shall be equitable and based as much as possible on the taxpayers ability to
pay;
4. Shall not be contrary to law, public policy, national economic policy, or in
restraint of trade;
5. Shall be uniform in each LGU;
6. Collection of local taxes and other impositions shall not be let to any private
person;
7. Shall not be unjust, excessive, oppressive, or confiscatory; and
8. Each LGU shall, as far as practicable, evolve a progressive system of
taxation.
C. Sources of taxing power:
1. Sec. 5, Art. X of the 1987 Philippine Constitution.
2. Title I, Book II of RA No. 7160 (Local Government Code).
D. Authority to adjust local tax rates: Sec. 191 LGC
E. Residual Taxing Power: Sec. 186 LGC
F. Principle of Pre-emption or Exclusionary Doctrine: Where the National
Government elects to tax a particular area, it impliedly withholds from the local
government the delegated power to tax the same field. Except when the
Congress allows municipal corporations to cover fields of taxation it already
occupies.
G. Common Limitations: Sec. 133 LGC
H. Taxing powers of Provinces: Sec. 134 LGC
1. Tax on transfer of real property ownership (Sec. 135);
2. Tax on business of printing and publication (Sec. 136);
3. Franchise Tax (Sec. 137);
4. Tax on sand, gravel and other quarry resources (Sec. 138);
5. Professional tax (Sec. 139);
6. Amusement Tax (Sec. 140); and

7. Annual fixed tax for every delivery truck or van of manufacturers or producers,
wholesalers of, dealers, or retailers in, certain products (Sec. 141).
I. Taxing powers of Municipalities and Cities (Sec. 142)
1. Tax on business (Sec. 143);
2. Fees and charges (Sec. 147).
J. Situs of tax collected:
1. With branch or sales office of warehouse;
2. Where there is no branch, sales office, or warehouse;
3. Where there is a factory, project office, plant, or plantation in pursuit of
business;
4. Where there are two or more factories, project office, plant, or plantations
located in different localities; and
5. Sales made by route trucks, vans, or vehicles.
K. Taxing powers of Barangays: (Sec. 152)
1. Taxes on small business establishments;
2. Service fees or charges;
3. Barangay clearance; and
4. Other fees and charges.
L. Common revenue raising powers: (Sec. 153-155)
1. Service fees and charges;
2. Public utility charges; and
3. Toll fees and charges.
M. Community tax (Sec. 156)
1. Who are liable: Sec. 158
2. Who are exempted: Sec. 159
3. Where is it paid: Sec. 160
4. When is it paid: Sec. 161
N. Collection of business taxes:
1. Tax period: Sec. 165
2. Accrual of tax: Sec. 166
3. Time of payment: Sec. 167
4. Who has the authority to collect taxes and inspection of books: Sec. 170-171
O. Period of assessment and collection: Sec. 194
P. Grounds for suspension of the running of the prescriptive periods: Sec. 194
Q. Taxpayers Remedies
1. Prior to assessment: Question the constitutionality or legality of tax
ordinances or revenue measures.

a. Appeal to the Secretary of Justice within 30 days from the effectivity of


such ordinance or revenue measure;
b. The Secretary of Justice shall render a decision within 60 days from the
date of the receipt of the appeal;
c. Within 30 days after the receipt of the decision or after the lapse of the 60day period without the Secretary of Justice acting upon the appeal, the
aggrieved party may file appropriate proceedings with the RTC.
2. After assessment: Sec. 195
3. Claim for refund or tax credit: Sec. 196
R. Civil remedies by the LGU for collection of revenues
1. Administrative action
a. Distraint of personal property;
b. Levy upon realty;
c. Compromise;
2. Judicial Action (Sec. 138 in relation to Sec. 194)
S. Properties exempt from distraint and levy: Sec. 185