Tax II Finals

TAXATION LAW II l Atty. Kim Aranas l For the exclusive use of EH 404 A.Y.
2016-2017
Sources of local funds

LOCAL GOVERNMENT TAXATION
A. Internal sources
Basic principles 1. Real property taxes
2. Local taxes
Things to master in local government taxation as per Atty: 3. Non-tax revenue sources, i.e. licensing, garbage collection.
A. General principles. (pursuant to the LGU’s police power)
B. Different types of taxes that each LGU can collect.
B. External sources
Atty: The territorial jurisdiction of the Phils is divided into PCMB 1. Allotment from the national government (IRA – internal
(Provinces, cities, municipalities and barangays). These divisions cannot revenue allotment)
collect the very same tax – meaning, if such tax has already been 2. National aid or share in the national wealth given by the
collected by the province, the same can no longer be collected by the national government, i.e. when the LGU is in a state of
city or municipality, unless the city is classified as a HUC. calamity
3. Borrowings
Local taxation defined
The process wherein the LGU, through the mandate of RA 7160, levies
and imposes tax to raise its own revenue. This is a delegated power by Fundamental principles of Local Government Taxation
the Constitution. The money collected used to finance the LGU is called
local taxes. Section 30, LGC
(PIE-CUP-UP)
Legal foundations of the taxing power
1. Levied for a public purpose.
1. Sec 5, Art 10, 1987 Constitution
Atty: There is no hard and fast rule with respect to the definition
Gives LGUs the power to raise its own revenues. of public purpose. Be guided by jurisprudence.
“Each LGU shall have the power to create its own sources of 2. The revenue collected shall inure solely to the benefit of,
revenue and to levy taxes, fees and charges subject to such and subject to the disposition by the LGU levying the tax
guidelines and limitation as the Congress may provide, consistent other imposition unless otherwise specifically provided.
with the basic policy of local autonomy. Such taxes, fees, and
charges shall accrue exclusively to the LGUs.” Atty: The taxes levied shall accrue exclusively to the LGU
concerned. It follows that whoever imposes the tax shall benefit
Atty: However, the same is not self-executing. Thus, Section 129 therefrom. It is the Sanggunian who is the taxing authority, thus,
of RA 7160 was passed, which provides for the specific fiscal the taxes collected shall likewise be subject to their disposition.
revenue measures of LGUs.
2. Section 129 RA 7160 If the Mayor should want to dispose of the proceeds of local
taxation, there should be proper authority coming from the
Each LGU shall exercise its power to: Sanggunian in the form of an ordinance.
(a) Create its own sources of revenue 3. Equitable and based as far as practicable on the taxpayer's
(b) Levy taxes, fees, and charges. ability to pay.
Both are subject to the provisions in the LGC and consistent with Atty: Take note of the difference between equitable and equal.
local autonomy. Such taxes, fees and charges levied accrue
exclusively to the local government units. 4. Not contrary to law, public policy, national economic
policy, or in the restraint of trade.
Important: The following are granted with the local power to tax. They
are likewise referred to as the local government units: 5. Uniform in each local government unit.
1. Provinces
2. Cities Atty: If this is the rate of the local tax imposed by the municipality,
3. Municipalities it must be the same rate for the entire municipality. Ex.
4. Barangays Professional tax is P500. It shall be uniform for all professionals.
Scope of local taxation 6. The collection of local taxes, fees, charges and other
impositions shall not be let to any private person.
1. Local taxation
Atty: This distinguishes national taxes from local taxes. Unlike
Imposition of taxes pursuant to its power under RA 7160. Local
national taxes, the collection of local taxes cannot be delegated to
taxes are imposed through ordinances. The amount of taxes is on
private firms, including banks. In other words, you cannot pay local
a case to case basis as RA 7160 only provides a limit or the
taxes to banks.
maximum amount that a LGU may levy.
7. Not unjust, excessive, oppressive, or confiscatory.
Atty: Local taxes would also depend on the classification: whether
province, city, municipality or barangay.
8. Each local government unit shall, as far as practicable,
evolve a progressive system of taxation.
2. Real property taxation
This is a nationwide imposition. All LGUs collect real property
taxes. The rate of taxes is uniform.
1|U N I V E R S I T Y O F S A N C A R L O S
TAXATION LAW II l Atty. Kim Aranas l For the exclusive use of EH 404 A.Y. 2016-2017
Nature of the taxing power of LGUs Powers of the local taxing authority - Sanggunian
A. Not inherent but a direct grant. Power

Must be through to issue local tax ordinances
an ordinance
“The power of taxation is an inherent power of the State as long Sec. 132, LGC
as the State exists.” However, the same is only true with respect The power to impose a tax, fee, or charge, or to generate revenue under
to the national government. this Code shall be exercised by the Sanggunian of the local government
unit concerned through an appropriate ordinance.
But, while it is not inherent, it is a direct grant from the
Constitution. LGUs are created by the Constitution and their power Atty: The imposition of these taxes must be through a local ordinance.
to tax springs therefrom. RA 7610 was passed merely pursuant to This presupposes a proper proposal, notification and hearing. However,
the Constitutional provision granting LGUs revenue-raising powers. the same may be vetoed by the local chief executive. The process for
passage will be discussed later on.
Thus, the legislature cannot pass a law abolishing the power to
collect tax by the LGUs, unless the Constitution itself is amended
to that effect. Power to prescribe penalties for tax violations
B. Limited Section 516, LGC
Unlike internal revenue taxes, local taxes are not plenary in nature. 1. The Sanggunian of a LGU is authorized to prescribe fines or other
There is a specific list of taxes that each LGU can collect: penalties for violation of tax ordinances
It is
limited by the: (a) In no case shall such fines be less than P1,000 nor more
1. Constitutional limitations (due process, etc.) than P5,000
2. Fundamental principles (b) Nor shall imprisonment be less than 1 month nor more than
3. Public hearing requirement 6 months.
4. Principle of pre-emption or exclusionary rule – What the LGU
can collect are only those taxes not collected by the national 2. Such fine or other penalty, or both, shall be imposed at the
government. discretion of the court.
5. Common limitations on the taxing power of LGUs
3. The Sangguniang barangay may prescribe a fine of not less than
C. Legislative P100 nor more than P1,000.
The levying authority is the Sanggunian (the legislative branch of
each LGU) Power to adjust local tax rates
1. Provinces – Sangguniang Panlalawigan
2. City – Sangguniang Panlungsod Section 191, LGC
3. Municipalities – Sangguniang Bayan LGUs shall have the authority to adjust the tax rates as prescribed not
4. Barangay – Sangguniang Pambarangay oftener than once every 5 years, but in no case shall the adjustment
exceed 10% of the rates fixed by the Code.
D. Territorial
Local taxing power can only be imposed within the territorial Atty: The Sanggunian can increase or decrease the local tax rates.
jurisdiction of the LGU concerned. Thus, if you go to another LGU, However, adjustment shall:
you will be subject to another local tax. 1. Only be once every 5 years
2. Not exceed 10% of the rates fixed by the LGC.
E. Accrual of tax
Local taxes are exclusive for the local government units levying the Power to grant local tax exemptions
same. LGUs are not required to remit the same to the national
government. Thus, the national government does not share in said Section 192, LGC
local taxes. However, the converse is not true as LGUs share in the LGUs may, through ordinances duly approved, grant tax exemptions,
national taxes in the form of the IRA. incentives or reliefs under such terms and conditions as they may deem
necessary.
Atty: This distinguishes our central form of government from a
federal system. In a federal system, each state can collect taxes. Atty: The power to impose tax carries with it the power to grant local
Their taxing power is more extensive. However, they are mandated tax exemptions. However, the power to grant tax exemption does not
to provide a share to the national government. In our case, if you cover levies pursuant to the police power of the government. (i.e. license
are a 5th class municipality, there is a chance that the local taxes or business permits, CENRO fees, etc. as these are regulatory on the
collected will be minimal. Consequently, the IRA will also be part of the LGU)
relatively small.
Art. 282 (b) IRR of LGC
Guide of Sanggunians in granting of tax exemption, tax reliefs and tax

incentives
On the grant of tax exemptions or tax reliefs

1. Tax exemptions or tax reliefs may be granted in cases of:
(a) Natural calamities
(b) Civil disturbance
(c) General failure of corps
(d) Adverse economic conditions such as substantial decrease in

Power to withdraw tax exemptions
prices of agricultural or agricultural-based products
Section 193, LGC
Atty: But of course, prior to the grant of exemption or relief, there
should be proper declaration from the legislature of the LGU as to Unless otherwise provided, tax exemptions or incentives granted to, or
the calamity, disturbance, etc. presently enjoyed by all persons, whether natural or judicial, including
government-owned or controlled corporations, except local water
2. The grant of exemptions shall also be through an ordinance. districts, cooperatives duly registered under R.A. No. 6938, non-stock
and non-profit hospitals and education institutions, are withdrawn upon
Atty: Since the imposition of tax is through an ordinance, the grant the effectivity of the Code.
of exemption therefrom shall likewise be through an ordinance. It
should not be through a mere resolution because the same only Tax exemptions existing before the effectivity of LGC have
expresses the sentiment of the legislature. It does not in any way been abolished
bind them. Moreso, a resolution is not considered a law.
Atty: Prior to the passage of RA 7160, there were some GOCCs which
Also, in the same way that BIR issues TCCs (tax credit certificates) are exempted from local taxation. However, upon the passage of said
or other certificate granting exemptions, LGUs should likewise issue law, Sec. 193 thereof specifically provides that tax exemptions existing
a certificate of tax exemption to the local taxpayer concerned which before the effectivity of the LGC are abolished, except:
as a rule, is non-transferable. 1. Local water districts
2. Cooperatives duly registered under RA 6938
3. Any exemption or relief granted to a type or kind of business shall 3. Non-stock and non-profit hospitals
apply to all businesses similarly situated. 4. Educational instiitutions
4. Any exemption or relief granted shall take effect only during the TN: The four exceptions above-stated still enjoy local tax exemption.
next calendar year for a period not exceeding 12 months as may
be provided in the ordinance.
Imposition of local taxes
Atty: However, it is unusual for an LGU to pass an ordinance to
this effect because it would entail a reduction of its revenues. Must be through an ordinance
Important: In the case of shared revenues, the exemption or relief Section 132, LGC
shall only extend to the LGU granting such exemption or relief.
The power to impose a tax, fee, or charge, or to generate revenue under
Shared revenues – revenues usually shared by the province and the this Code shall be exercised by the Sanggunian of the local government
city or municipality located in said province. Ex. Mining – proceeds unit concerned through an appropriate ordinance.
of mining are usually shared by the province and city where the
mining is being done. If it is only the municipality which grants the Atty: The imposition of a local tax must be through an ordinance. The
exemption, it does not follow that the share of the province is also same is true with respect to the grant of tax exemptions or incentives.
exempted from local taxes.
Kinds of tax ordinances
On the grant of tax incentives
1. Ordinances imposing local taxes enumerated under the LGC.
1. Shall be granted only to new investments in the locality and the
ordinance shall prescribe the terms and conditions therefor. Ex: Provinces imposing amusement tax.
2. The grant of tax incentive shall be for a definite period not 2. Ordinances imposing taxes not yet imposed by the national
exceeding 1 calendar year. government nor specified in the Local Government Code.
3. Shall be by ordinance passed prior to the first day of January of Requisites of a valid tax ordinance
any year.
4. Any tax incentive granted to a type or kind of business shall apply 1. Filing of proposal.
to all businesses similarly situated.
2. Publication or posting (10/3/2).
Atty: Take note that the tax incentive is not granted to a specific
taxpayer. It is granted to a kind or type of business. 10 days after the filing of the proposal, there must be publication
or posting.
Exemption – no taxes are collected at all
Incentive – only lesser taxes are collected (a) Publication – if there is a newspaper of local circulation
(published in full for 3 consecutive days)
However, an exemption can be considered as an incentive, but it (b) Posting – if there is no newspaper of local circulation. In
does not follow that no tax may be collected from those granted which case, it has to be posted in at least 2 conspicuous and
with tax incentives – there may be, but at a lower rate. The purpose publicly accessible places. (Sec. 188, LGC)
is to encourage investors to come into the locality.
3. Notification – to all stakeholders or those who may be affected by
the revenue raising measure.
4. Public hearing – prior to the enactment of the tax ordinance.
5. Approval by the Local Chief Executive (LCE).
(a) LCE has 15/10 days to act This is not subject to local tax because the same is already taxed
15 days – provinces by the national taxing authority.
10 days – cities or municipalities
6. Taxes, fees or charges on agricultural and aquatic
(b) If not acted upon within said period – ordinance is deemed products when sold by marginal farmers or fishermen.
approved.
Atty: This covers only marginal farmers or fishermen – or those
(c) If LCE vetoed within said period – the Sangguniang Council who farm and fish for their own subsistence. Commercial farming
can override the veto by a 2/3 vote of all the members. or fishing are not covered by this provision. Thus, local tax may
be imposed on them.
Doctrine of Pre-emption or Exclusionary rule
Where the national government elects to tax a particular area or activity, 7. Taxes on business enterprises certified to by the Board of
it impliedly withholds from the LGU the delegated power to tax the same Investments as pioneer or non-pioneer for a period of 6
area or activity. As a rule, the national government pre-empts the taxing and 4 years, respectively from the date of registration.
role of the LGUs, unless otherwise provided.
Atty: This refers to the tax holiday benefit or incentive granted
Atty: Conversely, if an activity has not been imposed of tax by the to pioneer or non-pioneer business enterprises. Since they do not
national government, the LGU can tax the same. Provided however, that pay national taxes by reason of the holiday incentive, local taxes
such right to tax is not granted to other LGUs. cannot also be imposed.
Common limitations on the taxing powers of LGUs (15) For PEZA-registered enterprises:
They pay 5% in lieu of other local taxes. However, of the 5%,
Section 133, LGC only 3% goes to the BIR. The other 2% goes to the LGUs.
The exercise of taxing powers of provinces, cities, municipalities and
barangays (PCMB) shall not extend to the levy of the following: 8. Excise taxes on articles enumerated under the national
Internal Revenue Code, as amended, and taxes, fees or
1. Income tax, except when levied on banks and other charges on petroleum products.
financial institutions.
Atty: There are two things excepted from local taxation here:
Atty: This tax is already imposed by the NIRC. However, banks
and other financial institutions are excepted (meaning, local taxes (a) Articles enumerated under the NIRC (same article – i.e.
can still be imposed on them) because they are given more tobacco, non-essential goods, jewelry, automobile, etc.
protection by the government, being businesses involved in riskier These are already subjected to excise taxes under the NIRC.
ventures. This is in line with the benefits received theory. Thus, the LGU cannot anymore collect local taxes on these
very same items)
2. Documentary stamp tax.
(b) Taxes, fees and charges on petroleum products – this is a
3. Taxes on estates, inheritance, gifts, legacies and other generic limitation. In one case, it was declared that those
acquisitions mortis causa, except local transfer tax. engaged in the sale of petroleum products, are not subject
to any type of local taxes.
Atty: Taxes on items 1 and 2 are already imposed by the NIRC.
9. Percentage or value-added tax (VAT) on sales, barters or
4. Customs duties, registration fees of vessel and wharfage exchanges or similar transactions on goods or services
on wharves, tonnage dues, and all other kinds of customs except as otherwise provided herein.
fees, charges and dues, except wharfage on wharves
constructed and maintained by the LGU concerned. Atty: This is basic since this is already collected under the NIRC.
Atty: Wharfage is the payment if a vessel would load or unload 10. Taxes on the gross receipts of transportation contractors
cargoes in the wharf. This is not a tax on the goods but a tax on and persons engaged in the transportation of passengers
the right of the vessel to load or unload goods. or freight by hire and common carriers by air, land or
water, except as provided in this Code.
GR: Not subject to local tax because they are already subjected
to tax under the Tariff and Customs Code. Atty: This is not anymore subject to local tax because the gross
receipts of transportation contractors of goods may already be
XPN: If the wharves are being constructed and maintained by the subject to the 12% VAT or OPT common carrier’s tax in case of
LGU concerned. transport of passengers.
5. Taxes, fees, and charges and other impositions upon The exception as provided in the Code pertains to the gross
goods carried into or out of, or passing through the receipts or operations of tricycles. Thus, the LGU may collect taxes
territorial jurisdictions of LGUs in the guise of charges for on operators of tricycles.
wharfage, tolls for bridges or otherwise, or other taxes,
fees or charges in any form whatsoever upon such goods 11. Taxes on premiums paid by way or reinsurance or
or merchandise. retrocession.
Atty: Take note that the taxes, fees, charges and other Atty: Reinsurance and retrocession are tackled in Insurance Law.
imposition which are being excepted here or not being subject to Reinsurance – insurer seeks another insurer
local tax pertains only to goods. Distinguish this from the taxes Retrocession – reinsurer seeks another insurer
imposed on the transport of passengers.
12. Taxes, fees or charges for the registration of motor Provided, That no such toll fees or charges shall be collected from
vehicles and for the issuance of all kinds of licenses or officers and enlisted men of the Armed Forces of the Philippines
permits for the driving thereof, except tricycles. and members of the Philippine National Police on mission, post
office personnel delivering mail, physically-handicapped, and
Atty: Not subject to local tax because taxes are already being disabled citizens who are 65 years or older.
collected by the national government through the LTO/LTFRB. When public safety and welfare so requires, the Sanggunian
concerned may discontinue the collection of the tolls, and
XPN: Tricycles – may be subject to local tax. thereafter the said facility shall be free and open for public use.
13. Taxes, fees, or other charges on Philippine products Atty: These must be funded and constructed by the LGU for it to
actually exported, except as otherwise provided herein. collect fees for the use of these facilities.
Atty: Not subject to local tax because they are not consumed If funded only but it was not the LGU who constructed rather
here in the Philippines. However, business taxes on those maybe DPWH, it does not fall under this provision.
engaged in export business in the locality may be collected, but
not taxes on the product exported. Exempted from imposition:
1. Officers and enlisted men of the AFP
14. Taxes, fees, or charges, on Countryside and Barangay 2. Members of the Philippine National Police on mission
Business Enterprises and cooperatives duly registered 3. Post office personnel delivering mail
under R.A. No. 6810 and R.A. No. 6938 otherwise known 4. Physically-handicapped, and disabled citizens who are 65
as the "Cooperative Code of the Philippines" respectively. years or older.
Atty: Cooperatives registered under the CDA are exempted from Important: These 3 are just discretionary on the part of the LGU.
taxation, it thus follows that local taxes cannot be imposed. These are non-tax revenue generating activities.
15. Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities, and local Specific powers to tax
government units.
PROVINCE
Important: If you look at the enumeration, they are the taxes which Specific taxing powers of the Province
are either:
1. Already imposed by the Internal Revenue Code or by the Tariff and Sections 135-141, LGC
Customs Code 1. Tax on transfer of real property ownership
2. Contravenes existing governmental policies 2. Tax on business of printing and publication
3. Violates fundamental principles of taxation 3. Franchise tax
4. Imposed already under special laws. 4. Tax on sand, gravel and other quarry resources
5. Profession tax
Common revenue-raising powers of LGUs 6. Amusement tax
7. Annual fixed tax for every delivery truck or van of manufacturers
Service, Public Utility, Toll fees and charges or producers, wholesalers of, dealers, or retailers in, certain
products.
1. Service fees and charges

Tax on transfer of real property ownership
Section 153, LGC
Sec. 135, LGC
Local government units may impose and collect such reasonable
fees and charges for services rendered. (a) The province may impose a tax on the sale, donation, barter, or
on any other mode of transferring ownership or title of real
2. Public utility charges property at the rate of not more than fifty percent (50%) of the
one percent (1%) of the total consideration involved in the
Section 154, LGC acquisition of the property or of the fair market value in case the
Local government units may fix the rates for the operation of public monetary consideration involved in the transfer is not substantial,
utilities owned, operated and maintained by them within their whichever is higher. The sale, transfer or other disposition of real
jurisdiction. property pursuant to R.A. No. 6657 (Comprehensive Agrarian
Reform Law) shall be exempt from this tax.
Atty: These must be owned, operated and maintained by the LGU
within their jurisdiction. (b) For this purpose, the Register of Deeds of the province concerned
shall, before registering any deed, require the presentation of the
3. Toll fees or charges evidence of payment of this tax. The provincial assessor shall
likewise make the same requirement before cancelling an old tax
Section 154, LGC declaration and issuing a new one in place thereof, Notaries public
The Sanggunian concerned may prescribe the terms and conditions shall furnish the provincial treasurer with a copy of any deed
and fix the rates for the imposition of toll fees or charges for the transferring ownership or title to any real property within thirty
use of any public road, pier or wharf, waterway, bridge, ferry or (30) days from the date of notarization.
telecommunication system funded and constructed by the local
government unit concerned: It shall be the duty of the seller, donor, transferor, executor or
administrator to pay the tax herein imposed within sixty (60) days from
the date of the execution of the deed or from the date of the decedent's
death.
Atty: Although this involves real property, this tax is collected if you are Is this a violation of the FOI?
going to transfer the ownership of the real property in whatever mode A: No, because the constitutional provision simply means that you do
(sale, donation, due to death). not single out the press and curtail its operations. In this case, you do
not only subject the press but also other businesses.
This is different from the real property tax imposed nationwide
(a) Real property tax nationwide – tax on the privilege to own a
Franchise tax
property
(b) Local real property tax – tax on the privilege to transfer ownership
Section 137, LGC
of real property.
Notwithstanding any exemption granted by any law or other special law,
Who is primarily liable? the province may impose a tax on businesses enjoying a franchise, at
The transferor (seller or donor) the rate not exceeding 50% of 1% of the gross annual receipts for the
preceding calendar year based on the incoming receipt, or realized,
When is the deadline to pay? within its territorial jurisdiction.
Within 60 days from date execution of deed or from decedent’s death.
In the case of a newly started business, the tax shall not exceed 1/20
Exceptions: of 1% of the capital investment. In the succeeding calendar year,
regardless of when the business started to operate, the tax shall be
1. RA No. 6657
based on the gross receipts for the preceding calendar year, or any
2. Transfer of real property to embassies, consulates and other
fraction thereon, as provided herein.
diplomatic offices
Reason: Because when these establishment acquire the real Franchise tax
property, it is deemed part of the territory of the country and you It is a tax on businesses enjoying a franchise. A tax on the privilege of
don’t subject other sovereign state to tax. transacting business exercising corporate franchise granted by the
State.
Tax on business of printing and publication
Secondary franchise
Section 136, LGC The ‘franchise’ we are referring here is not the primary franchise which
is granted by the legislature for the existence of a business. This is
The province may impose a tax on the business of persons engaged in secondary franchise – as when the corporation having already primary
the printing and/or publication of books, cards, posters, leaflets, franchise will utilize facilities of the LGU for them to exercise their right
handbills, certificates, receipts, pamphlets, and others of similar nature, to operate.
at a rate not exceeding 50% of 1% of the gross annual receipts for the
preceding calendar year. Ex. NGCP erection of poles on streets for installation of wires.
In the case of a newly started business, the tax shall not exceed 1/20 Tax rate:
of 1% of the capital investment. In the succeeding calendar year, A. Existing – not exceeding 50% of 1% of gross annual receipts for
regardless of when the business started to operate, the tax shall be preceding calendar year.
based on the gross receipts for the preceding calendar year, or any B. Newly started business – not exceeding 1/20th of 1% of capital
fraction thereof, as provided herein. investment
The receipts from the printing and/or publishing of books or other Exceptions
reading materials prescribed by the Department of Education, Culture There are no specific exceptions, only counter-referred, which means
and Sports as school texts or references shall be exempt from the tax that under all instances, it will be subject to franchise tax.
herein imposed.
Atty: In one 2014 case, the Supreme Court ruled on the issue of
Rules to remember: whether the imposition of local business tax amounts to double taxation.
GR: Only municipalities and cities are given the power to collect business The petitioners argued that the basis of business tax is the gross annual
tax. receipts (GAP) and the basis of franchise tax is likewise GAP (unless
newly started in business). Tax base is the same, and taxing authority
XPN: Tax on business of printing and publication. Here, even provinces is the same, hence there is double taxation.
can impose taxes.
A: There is no direct double taxation (only indirect) because the kind
XPN to XPN: Printing and publication of prescribed textbooks by CHED and nature of each tax is different. Franchise tax is collected if a
or DepEd. (Not taxable) corporation will exercise a special right encroaching or within the
territorial jurisdiction of the LGU while business tax is the tax on the
Atty: Remember that the transaction being subjected to tax is the privilege of the entity to do business in the locality.
business of printing and/or publication of books, cards, posters, etc.
Tax on sand, gravel and other quarry resources
Tax rate
A. Existing – not exceeding 50% of 1% of gross annual receipts for
Section 138, LGC
preceding calendar year.
B. Newly started business – not exceeding 1/20th of 1% of capital The province may levy and collect not more than 10% of FMV in the
investment locality per cubic meter of ordinary stones, sand, gravel, earth, and
other quarry resources, as defined under the NIRC, as amended,
TN: No need to memorize these rates. 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 (e) Any person subject to the professional tax shall write in deeds,
issued exclusively by the provincial governor, pursuant to the ordinance receipts, prescriptions, reports, books of account, plans and
of the Sangguniang Panlalawigan. designs, surveys and maps, as the case may be, the number of
the official receipt issued to him.
The proceeds of the tax on sand, gravel and other quarry resources shall
be distributed as follows: From whom collected
Those who are engaged in the exercise or practice of his profession
(1) Province – 30% requiring government examination (Bar and Board).
(2) Component City or Municipality where the sand, gravel, and other
quarry resources are extracted – 30% TN: The maximum limit is P300.00
(3) Barangay where the sand, gravel, and other quarry resources are
extracted – 40% When collected
Annually, on or before January 31 or before beginning the practice of
Transaction tax the profession
Tax is collected on extraction of stones, gravel, sand, earth and other
quarry resources from public lands or beds of seas, lakes, rivers, Where
streams, creeks, and other public waters within its territorial jurisdiction. He has the option of paying either at:
1. Place where he will practice his profession
Must be extracted from public lands 2. Principal place of business
These are subject only to this tax if they are extracted from public land.
If it be from private land, it is subject to NIRC specifically excise tax and Exception:
province cannot thus collect this tax. However, this entity still has to go Those exclusively employed in the government, not practicing.
through the government is securing its business permit.
TN: Once acquired, can already practice anywhere in the Philippines. If
Tax rate practices two professions, must pay for two professional taxes. If only
Not more than 10% of FMV in the locality per cubic meter of the subject practices one, then pay for only one professional tax.
property.
Amusement tax
Collection will be divided (shared revenue)
1. Province – 30%
2. Component City or Municipality where the sand, gravel, and other Section 140, LGC
quarry resources are extracted – 30%
3. Barangay where the sand, gravel, and other quarry resources are (a) The province may levy an amusement tax to be collected from
extracted – 40% the proprietors, lessees, or operators of theaters, cinemas,
concert halls, circuses, boxing stadia, and other places of
Atty: Only the province can impose, the city, municipality and barangay amusement at a rate of not more than 30% (now amended to
will only have to wait for their share. 10%) of the gross receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted
Professional tax
and withheld by their proprietors, lessees, or operators and paid
Section 139, LGC to the provincial treasurer before the gross receipts are divided
between said proprietors, lessees, or operators and the
(a) The province may levy an annual professional tax on each person distributors of the cinematographic films.
engaged in the exercise or practice of his profession requiring
government examination at such amount and reasonable (c) The holding of operas, concerts, dramas, recitals, painting and art
classification as the Sangguniang Panlalawigan may determine exhibitions, flower shows, musical programs, literary and
but shall in no case exceed P300. oratorical presentations, except pop, rock, or similar concerts shall
be exempt from the payment of the tax hereon imposed.
(b) Every person legally authorized to practice his profession shall pay
the professional tax to the province where he practices his (d) The Sangguniang Panlalawigan may prescribe the time, manner,
profession or where he maintains his principal office in case he terms and conditions for the payment of tax. In case of fraud or
practices his profession in several places: Provided, however, failure to pay the tax, the Sangguniang Panlalawigan may impose
That such person who has paid the corresponding professional such surcharges, interest and penalties as it may deem
tax shall be entitled to practice his profession in any part of the appropriate.
Philippines without being subjected to any other national or local
tax, license, or fee for the practice of such profession. (e) The proceeds from the amusement tax shall be shared equally by
the province and the municipality where such amusement places
(c) Any individual or corporation employing a person subject to are located.
professional tax shall require payment by that person of the tax
on his profession before employment and annually thereafter. Amusement tax
Tax collected from the proprietors, lessees, or operators of theaters,
(d) The professional tax shall be payable annually, on or before the cinemas, concert halls, circuses, boxing stadia, and other places of
thirty-first (31st) day of January. Any person first beginning to amusement.
practice a profession after the month of January must, however,
pay the full tax before engaging therein. A line of profession does Atty: This is different from Amusement Tax on OPT in the NIRC which
not become exempt even if conducted with some other profession exclusively specifies its subjects (i.e. cockpits, etc.)
for which the tax has been paid. Professionals exclusively
employed in the government shall be exempt from the payment
of this tax.
Tax rate However, when the gross sales or receipts amount to P6.5M or
Not more than 10% of gross receipts from admission fees. (as amended more for the preceding calendar year the tax ceases to be a fixed
by RA 99640). tax. A percentage tax of 37.5% of 1% is imposed instead.
Exceptions: (Not subject to tax) B. On wholesalers, distributors, or dealers in any article of

Holding of operas, concerts, dramas, recitals, painting and art commerce of whatever kind or nature.
exhibitions, flower shows, musical programs, literary and oratorical
presentations. Also a graduated annual fixed tax, the rate of which is based on
the gross sales or receipts for the preceding calendar year.
Exceptions to exceptions: (Subject to tax) However, where the gross sales or receipts amount to P2M or
Pop, rock, or similar concerts. (Ex. Concert by Cold play) more, the tax becomes a percentage tax levied at a rate not
exceeding 50% of 1%.
Shared revenue
The proceeds of the tax shall be shared equally by province and the Atty: If based on the gross sales or receipts for the preceding
municipality where such amusement places are located. calendar year, does this mean that the business tax pertains to
business conducted in the previous year?
Annual fixed tax for delivery trucks of manufacturers, etc. ANS: No. Business taxes is collected at the beginning of the year.
Strictly speaking, this is already a kind of Police power. From
Section 141, LGC Taxation 1, we learned that Taxation and Police power can be
exercised simultaneously. The Business tax is a requisite for the
(a) The province may levy an annual fixed tax for every truck, van or operation of the Business at the beginning year.
any vehicle used by manufacturers, producers, wholesalers,
dealers or retailers in the delivery or distribution of distilled spirits, C. On exporters, and on manufacturers, millers, producers,
fermented liquors, soft drinks, cigars and cigarettes, and other wholesalers, distributors, dealers or retailers of essential
products as may be determined by the Sangguniang commodities.
Panlalawigan, to sales outlets, or consumers, whether directly or
indirectly, within the province in an amount not exceeding Five (1) Rice and corn;
hundred pesos (P500.00). (2) Wheat or cassava flour, meat, dairy products, locally
manufactured, processed or preserved food, sugar, salt and
(b) The manufacturers, producers, wholesalers, dealers and retailers other agricultural, marine, and fresh water products,
referred to in the immediately foregoing paragraph shall be whether in their original state or not;
exempt from the tax on peddlers prescribed elsewhere in this (3) Cooking oil and cooking gas;
Code. (4) Laundry soap, detergents, and medicine;
(5) Agricultural implements. equipment and post-harvest
Tax rate facilities, fertilizers, pesticides, insecticides, herbicides and
Not exceeding P500,000. other farm inputs;
(6) Poultry feeds and other animal feeds;
Atty: This is not a tax on the product but on the truck or vehicle used (7) School supplies; and
for the delivery or distribution of liquors, spirits and other products to (8) Cement.
sales outlets, consumers, etc.
At a rate not exceeding one-half of the rates for sales of articles
TN: There is no fallback provision that would allow the province to collect mentioned in paragraphs (a), (b) and (d) of Sec. 143 of the LGC.
taxes on activities not enumerated. So they can only levy tax on the 7
enumerated. Atty: Take note that it is not the goods you are taxing here, rather,
it is the operation of the business.
MUNICIPALITIES
D. On Retailers
Specific taxing powers of Municipalities
Section 143, 147-149, LGC The tax on retailers is not graduated annual fixed tax but an annual
percentage tax imposed at the following rates:
1. Tax on business
2. Fees and charges on regulation or licensing of business and (a) On gross sales or receipts for the preceding calendar year
occupation not exceeding P400,000 – 2%; and
3. Fees for sealing and licensing of weights and measures (b) On sales or receipts exceeding P400,000 – 1%
4. Fishery rentals, fees and charges
Atty: The sari-sari store or convenience stores are also called
Tax on business retailers. However, if the gross receipt of such store does not
exceed P50,000 for cities and P30,000 for municipalities, the
Barangay may collect such taxes.
Section 143 (a)-(h), LGC
E. On Contractors and other independent contractors.
A. On manufacturers, assemblers, repackers, processors,
brewers, distillers, rectifiers, and compounders of liquors, Also a graduated annual fixed tax based on the gross receipts for
distilled spirits, and wines or manufacturers of any article the preceding calendar year. However, when the gross receipts
of commerce of whatever kind or nature. amount to P12M or more, the contractor’s tax becomes a
percentage tax. The tax rate is 50% of 1%.
Atty: This is a graduated annual fixed tax, the rate of which is
based on the taxpayer’s gross sales or receipts for the preceding Atty: Contractors for the transportation of goods and passengers,
calendar year. cannot be subject for this kind of tax since both are already been
subject to the NIRC.
F. Banks and other financial institutions. 30%: Principal place

70%: Factory/project office/plant/plantation
The tax is 50% of 1% on their gross receipts of the preceding
calendar year derived from interests, commissions, and discounts If Factory and Plantation are in different locations:
from lending activities, income from financial leasing, dividends, 60% of the 70% will go to the Factory
rentals on property and profit from exchange or sale of property, 40% of the 70% will go to the Plantation
insurance premium
Example: Considering P1M sales being recorded at the Principal
Atty: There is one case, where a bank was required by a local Business (CEBU)
government unit to pay taxes of 50% of 1% imposed for lending
activities, and another 50 of 1% on income of financing leasing. Based above:
The Court of Tax Appeal said, that the base of the tax is not to be  30% of the P1M will be for the Principal Business = P300k
separated in according to an activity but must be imposed for the
total amount of the income, if not, it may result to double taxation.  60% of the 70% will be go to the factory (Liloan) = P420k.
G. Peddlers engaged in the sale of any merchandise or article  40% of the 70% will go the Plantation (Consolacion) = P280k
of commerce.
Atty: What if there is a branch? Then you go back to the 1st rule:
At a rate not exceeding fifty (50) pesos per peddler annually.
4. Two or more factories or plantations in different localities
H. Any business, not otherwise specified above.
Pro-rate the 70% based on the volume of production
Provided that on any business subject to excise, value-added or If two or more factories, the 60% of 70% will be pro-rated based
percentage tax under the NIRC, the rate of the tax shall not exceed on the volume of production.
2% of gross sales or receipts of the preceding calendar year.
Example:
The Sanggunian concerned may impose a schedule of graduated
tax rates but in no case to exceed the rates prescribe in Sec. 143 60%x70%=42% (Based on Rule #3)
of LGC. 42% of P1, 000,000 total sales = P420, 000
So how do you divide this?
Atty: A fall back provision. If the business is not taxed by the NIRC
and it is not within no. 1 to 7 above, it may imposed business taxes. F1=60,000 units
F2=30,000 units
Important: For municipalities located within Metro Manila may impose
higher business tax rates but it shall not exceed 50% of the rates as F1= (2/3) x 420,000= 280,000
mentioned in under Section 143 A-H. (Section 143, LGC) F2= (1/3) x 420,000= 140,000
SITUS OF LOCAL BUSINESS TAXES 5. Sale by routes, trucks, vans or vehicles
Section 150, LGC Sales will be reported in the place where the source
branch/sales/office/warehouse is located.
1. With branch, sales, office or warehouse
Atty: If there is no branch, sales office or warehouse that accepts orders
Sale is recorded in the location of the branch/sales/office and deliver sales, then the gross sales or receipts will be recorded where
warehouse the goods are withdrawn.
Atty: What if the principal place of business also generates sales, Sales allocation will be applied to the locality where the factory or
then of course you are going to pay on the taxes to the locality of plantation is located because obviously there are no sales there, so they
the principal business. The rule here is to pay taxes where the just share through allocation.
branch or principal business is located.
Fees and charges
2. No branch, sales, office or warehouse
Section 147, LGC
Sale is recorded in the principal place of business
The municipality may impose and collect such reasonable fees and
charges on business and occupation and, except as reserved to the
Atty: If recorded at the principal business, then, you are going to
province in Section 139 of this Code, on the practice of any profession
pay taxes on the principal place of business.
or calling, commensurate with the cost of regulation, inspection and
licensing before any person may engage in such business or occupation,
3. With factory, project, plant or plantation
or practice such profession or calling.
30%: Principal place
70%: Factory/project office/plant/plantation
If Factory and Plantation are in different locations:

60% of the 70% will go to the Factory
40% of the 70% will go to the Plantation
Example: Considering P1M sales being recorded at the Principal

Business (CEBU)
Fees for sealing and licensing of weights and measures CITIES
Section 151, LGC

Section 148, LGC
The city, may levy the taxes, fees, and charges which the province or
(a) The municipality may levy fees for the sealing and licensing of municipality may impose: Provided, however, that the taxes, fees and
weights and measures at such reasonable rates as shall be charges levied and collected by highly urbanized and independent
prescribed by the Sangguniang Bayan. component cities shall accrue to them and distributed in accordance with
the provisions of this Code.
(b) The Sangguniang Bayan shall prescribe the necessary regulations
for the use of such weights and measures, subject to such The rates of taxes that the city may levy may exceed the maximum rates
guidelines as shall be prescribed by the Department of Science allowed for the province or municipality by not more than fifty percent
and Technology. The Sanggunian concerned shall, by appropriate (50%) except the rates of professional and amusement taxes.
ordinance, penalize fraudulent practices and unlawful possession
or use of instruments of weights and measures and prescribe the Atty: Cities are the most powerful among the three in terms of taxation.
criminal penalty therefor in accordance with the provisions of this The tax rate that the city may levy may exceed the maximum rates
Code. allowed by the province or municipality by not more than 50% except
the rates of professional (P300) and amusement tax (10% of gross
Provided, however, that the Sanggunian concerned may authorize receipts)
the municipal treasurer to settle an offense not involving the
commission of fraud before a case therefor is filed in court, upon Kinds of cities
payment of a compromise penalty of not less than Two hundred 1. Component cities – some taxes are shared with the province.
pesos (P200.00).
2. Independent component cities – everything collected solely
Fishery rentals, fees, charges accrues to it. No sharing with the province.
Section 149, LGC 3. Highly urbanized cities – same with independent component cities.
(a) Municipalities shall have the exclusive authority to grant fishery BARANGAYS
privileges in the municipal waters and impose rentals, fees or
charges therefor in accordance with the provisions of this Section. Specific taxing powers of the Barangays
Section 152, LGC
(b) The Sangguniang Bayan may:
1. Taxes
(1) Grant fishery privileges to erect fish corrals, oysters, 2. Service fees or charges
mussels or other aquatic beds or bangus fry areas, within 3. Barangay clearance
a definite zone of the municipal waters, as determined by 4. Other fees and charges
it: Provided, however, That duly registered organizations
and cooperatives of marginal fishermen shall have the
preferential right to such fishery privileges: Provided, Taxes
further, That the Sangguniang Bayan may require a public
bidding in conformity with and pursuant to an ordinance for Section 152 (a) LGC
the grant of such privileges: Provided, finally, That in the On stores or retailers with fixed business establishments with gross sales
absence of such organizations and cooperatives or their of receipts of the preceding calendar year of P50k or less, in the case of
failure to exercise their preferential right, other parties may cities and P30k or less, in the case of municipalities, at a rate not
participate in the public bidding in conformity with the exceeding 1% on such gross sales or receipts.
above cited procedure.
Service fees or charges
(2) Grant the privilege to gather, take or catch bangus fry,
prawn fry or kawag-kawag or fry of other species and fish
from the municipal waters by nets, traps or other fishing Section 152 (b) LGC
gears to marginal fishermen free of any rental, fee, charge Barangays may collect reasonable fees or charges for services rendered
or any other imposition whatsoever. in connection with the regulations or the use of barangay-owned
properties or service facilities such as palay, copra, or tobacco dryers.
(3) Issue licenses for the operation of fishing vessels of three
(3) tons or less for which purpose the Sangguniang Bayan
shall promulgate rules and regulations regarding the Barangay clearance
issuances of such licenses to qualified applicants under
existing laws. Provided, however, That the Sanggunian Section 152 (b) LGC
concerned shall, by appropriate ordinance, penalize the use
of explosives, noxious or poisonous substances, electricity, No city or municipality may issue any license or permit for any business
muro-ami, and other deleterious methods of fishing and or activity unless a clearance is first obtained from the barangay where
prescribe a criminal penalty therefor in accordance with the such business or activity is located or conducted. For such clearance,
provisions of this Code: Provided, finally, That the the Sangguniang barangay may impose a reasonable fee. The
sanggunian concerned shall have the authority to application for clearance shall be acted upon within seven (7) working
prosecute any violation of the provisions of applicable days from the filing thereof. In the event that the clearance is not issued
fishery laws. within the said period, the city or municipality may issue the said license
or permit.
10 | U N I V E R S I T Y O F S A N C A R L O S
Atty: The Barangay may also use the proceeds from Barangay Atty: Additional tax is equal to P2 for every P5000 of value of property
Clearances. It is a requisite that before you secure a business permit or gross receipts or earnings derived by it in the preceding year.
you need to secure first a Barangay Clearance for a fee. Under the LGC Dividends received by corporations are part of gross receipts.
no city or municipality may issue any license or permit fee for any
business activity unless a clearance is first obtained from the barangay PERSONS EXEMPT FROM COMMUNITY TAX
where the business activity is located or conducted.
1. Diplomatic and consular representatives; and
The moment you apply for barangay clearance it must be acted 2. Transient visitors when their stay in the Philippines does not
immediately by the barangay within 7 working days. Failure to act within exceed 3 months.
that period is deemed granted.
When, where, who, why, penalties
Other fees and charges
PLACE OF PAYMENT
Section 152 (b) LGC The community tax shall be paid in the place of residence of the
individual, or in the place where the principal office of the juridical entity
The barangay may levy reasonable fees and charges: is located.
(1) On commercial breeding of fighting cocks, cockfights and
cockpits. TIME OF PAYMENT
(2) On places of recreation which charge admission fees, and
(3) On billboards, signboards, neon signs, and outdoor Rules for individuals:
advertisements.
(a) The community tax shall accrue on the 1st day of January of each
Community tax year which shall be paid not later than the last day of February of
each year.
Persons liable to pay community tax
(b) If a person reaches the age of 18 years or otherwise loses the
Article IV, LGC benefit of exemption on or before the last day of June, he shall
be liable for the community tax on the day he reaches such age
Community Tax or upon the day the exemption ends.
This tax is common to both Cities and Municipalities. This was previously
known as cedula. Once paid, a community tax certificate is issued. (c) However, if a person reaches the age of 18 years or loses the
benefit of exemption on or before the last day of March, he shall
Persons liable to pay community tax: have 20 days to pay the community tax without becoming
1. Individuals delinquent.
2. Juridical persons
Rules for corporations:
INDIVIDUALS
(a) Corporations established and organized on or before the last day
(a) Every inhabitant of the Philippines, whether citizen or not of June shall be liable for the community tax for that year.
(b) 18 years or over, and at least either:
(b) But corporations established and organized on or before the last
1. Regularly employed on a wage or salary basis for at least 30 day of March shall have 20 days within which to pay the
consecutive working days during any calendar year community tax without becoming delinquent.
2. Engaged in business or occupation
3. Owns real property with an aggregate assessed value of P1k or (c) Corporations established and organized on or after the first day
more of July shall not be subject to the community tax for that year
4. Is required by law to file an income tax return
PENALTIES
Community tax liability
Tax rate of P5 (basic) and an additional of P1 for every P1,000 of income If the tax is not paid within the time prescribed above, there shall be
regardless of whether from business or exercise of profession or from added to the unpaid amount an interest of 24% per annum from the
property which shall in no case exceed P5,000 due date until it is paid.
Atty: Employers before renewal of business permit, are required to Who may collect?
make sure that community tax of their employees are paid. City or Municipal Treasurer. However, they may deputize the Barangay
Treasurer to collect in their respective jurisdictions, provided the latter
Rule in case of husband and wife is bonded.
For husband and wife, the additional tax imposed shall be based on the
total property owned by the husband and wife and the total gross Important: If barangay treasurers are deputized, the proceeds of the
receipts or earnings derived by them. tax collected through the barangay treasurers must be shared equally
between the cities or municipalities and the barangay.
JURIDICAL PERSONS
Why is there a need to get community tax?
Every corporation no matter how created or organized, whether Because there are several transactions which requires that an individual
domestic or resident foreign, engaged in or doing business in the or corporation must present community tax certificate.
Philippines.
For individuals, this is enumerated under Sec. 163 of the LGC.
Community tax liability
Tax rate is P500 (basic) and additional tax which in no case shall exceed
P10,000.
PRESENTATION OF COMMUNITY TAX CERTIFICATE SUMMARY OF RULES

Section 163, LGC
Who may levy Cities or municipalities
For individuals:
Individuals who are:
1. Acknowledges any document before a notary public. (c) Inhabitants of the Phils
(d) 18 years or over
Atty: Before this is strictly imposed. However now, under the (e) Either:
notarial law a community tax certificate is not anymore considered 1. Regularly employed on a wage or
a sufficient proof of identification. salary basis for at least 3 consecutive
working days during any calendar year
2. Takes the oath of office upon election or appointment to any 2. Engaged in business or occupation
position in the government service. 3. Owns real property with an aggregate
Persons liable assessed value of P1k or more
3. Receives any license, certificate or permit from any public 4. Is required by law to file an income tax
authority. return
Juridical persons
4. Pays any tax or fee.
(a) Every corporation no matter how created or
organized
Atty: When you file your income tax return, you need to specify
(b) Whether domestic or resident foreign
your updated CTC number.
(c) Engaged in or doing business in the Phils
5. Receives any money from any public fund.
Individuals
6. Transacts other official business. (a) Annual community tax of P5 + annual
additional tax of P1 per P1,000 of income
7. Receives any salary or wage from any person or corporation with regardless of whether from business,
whom such transaction is made or business done or from whom exercise of profession or property
any salary or wage is received to require such individual to exhibit (b) Never to exceed P5,000
the community tax certificate. (c) Husband and wife shall pay a basic tax of
P5 each + additional tax based on total
Atty: That is why an employer can validly require their employees property owned by them and the total gross
to get an updated CTC. receipts or earnings derived therefrom
Important: The presentation of community tax certificate shall not be Juridical persons
required in connection with the registration of a voter.
(a) Annual community tax of P500 + annual
additional tax of not more than P10,000
For corporations: Rates
according to the following schedule:
When, through its authorized officers, any corporation subject to the
1. P2 for every P5,000 worth of real
community tax receives any license, certificate, or permit from any
property in the Phils owned during the
public authority, pays any tax or fee, receives money from public funds,
preceding year based
or transacts other official business, it shall be the duty of the public
2. P2 for every P5,000 of gross receipts
official with whom such transaction is made or business done, to require
derived from business in the Phils
such corporation to exhibit the community tax certificate.
during the preceding year.
(b) Dividends received by a corporation from
another corporation shall be deemed part
of the gross receipts or earnings for
purposes of computing additional tax
Persons 1. Diplomatic and consular representatives

exempt 2. Transient visitors who stay in the Phils for
not more than 3 years
Place of Where individual resides, or where the principal

payment office of the juridical entity is located.
Accrues on the 1st day of January each year to

Time of be paid not later than the last day of February
payment of each year.
If unpaid within the prescribed period, an

Penalty interest of 24% shall be added per annum from
the due date until payment.
Administrative matters in collection of local taxes Interests on other unpaid revenues
Tax period and manner of payment Section 169, LGC

Where the amount of any other revenue due a local government unit,
Section 165, LGC
except voluntary contributions or donations, is not paid on the date fixed
Unless otherwise provided in this Code, the tax period of all local taxes, in the ordinance, or in the contract, expressed or implied, or upon the
fees and charges shall be the calendar year. Such taxes, fees and occurrence of the event which has given rise to its collection, there shall
charges may be paid in quarterly installments. be collected as part of that amount an interest thereon at the rate not
exceeding 2% per month from the date it is due until it is paid, but in
Calendar year no case shall the total interest on the unpaid amount or a portion thereof
Atty: In local taxes, we only follow calendar year. From January 1 to exceed 36 months.
December 31. There is no such thing as fiscal year in local taxation even
if it involves corporations. Interest:
24% or an interest not exceeding 2% per month on the date that is due
Manner of payment or on the date it is paid but similar as in surcharges the computation of
Taxes, fees and charges may be paid in quarterly installments in the the interest must not exceed 36 months or 3 years.
local treasurer’s office.
Atty: This is a distinction from the NIRC. Because in NIRC, there is no
limit to the limit of years to get surcharges or interests collected. In LGC,
Accrual of tax and time of payment
it is only limited to 36 months.
Accrual of tax
Collection of local revenues by treasurer
Section 166, LGC
Unless otherwise provided in this Code, all local taxes, fees, and charges Section 165, LGC
shall accrue on the 1st day of January of each year. However, new taxes, All local taxes, fees, and charges shall be collected by the provincial,
fees or charges, or changes in the rates thereof, shall accrue on the 1st city, municipal, or Barangay treasurer, or their duly authorized deputies.
day of the quarter next following the effectivity of the ordinance The provincial, city or municipal treasurer may designate the Barangay
imposing such new levies or rates. treasurer as his deputy to collect local taxes, fees, or charges. In case a
bond is required for the purpose, the provincial, city or municipal
GR: Accrues on the first day of January of each year. government shall pay the premiums thereon in addition to the premiums
of bond that may be required under this Code.
XPN: New taxes, fees or charges, or changes in the rates thereof –
accrue on the 1st day of the quarter next following the effectivity of the Who collects the taxes?
ordinance imposing such new levies or rates. The provincial, city, municipal, or Barangay treasurer, or their duly
authorized deputies.
Time of payment
Section 167, LGC Periods of assessment and collection of local taxes
Unless otherwise provided in this Code, all local taxes, fees, and charges Section 194, LGC
shall be paid within the first 20 days of January or of each subsequent
quarter, as the case may be. The Sanggunian concerned may, for a (a) Local taxes, fees, or charges shall be assessed within 5 years from
justifiable reason or cause, extend the time of payment of such taxes, the date they became due. No action for the collection of such
fees, or charges without surcharges or penalties, but only for a period taxes, fees, or charges, whether administrative or judicial, shall
not exceeding 6 months. be instituted after the expiration of such period: Provided, That,
taxes, fees or charges which have accrued before the effectivity
When should you pay local tax? of this Code may be assessed within a period of 3 years from the
Other than community tax, for other local taxes, it must be paid within date they became due.
the first 20 days of January or each subsequent quarters as the case
may be. However, this may be extended for justifiable reason or cause (b) In case of fraud or intent to evade the payment of taxes, fees, or
without surcharges or penalties for a period not exceeding 6 months. charges, the same may be assessed within 10 years from
discovery of the fraud or intent to evade payment. 
Surcharges and penalties
(c) Local taxes, fees, or charges may be collected within 5 years from
Surcharges and Penalties on unpaid Taxes, fees, or Charges. the date of by or judicial action. No such action shall be instituted
after the expiration of said period: Provided, however, that, taxes,
Section 168, LGC fees or charges assessed before the effectivity of this Code may
The Sanggunian may impose a surcharge not exceeding 25% of the be collected within a period of 3 years from the date of
amount of taxes, fees or charges not paid on time and an interest at the assessment. 
rate not exceeding 2% per month of the unpaid taxes, fees or charges
including surcharges, until such amount is fully paid but in no case shall (d) The running of the periods of prescription provided in the
the total interest on the unpaid amount or portion thereof exceed 36 preceding paragraphs shall be for the time during which:
months.
(1) The treasurer is legally prevented from making the
Atty: If your arrears for local tax have not been paid even for 10 years, assessment of collection.
the surcharge is good only for 36 months (3 years)
(2) The taxpayer requests for a reinvestigation and executes 2. Distraint of personal property
a waiver in writing before expiration of the period within
Personal properties subject to distraint are goods, chattels or
which to assess or collect; and
effects and other personal property of whatever character,
(3) The taxpayer is out of the country or otherwise cannot be
including stocks and other securities, debts, credits, bank
located. 
accounts, and interest in and rights to personal property.
Period of assessment
Procedure: (Sec. 175, LGC)
GR: Within 5 years from the date they become due.
(a) Seizure of personal property
XPN: In case of fraud or intent to evade tax – within 10 years from (b) Accounting of distrained goods
discovery of fraud or intent to evade payment. (c) Publication of time and place of sale and the articles
distrained
Period of collection (d) Release of distrained property upon payment prior to sale
Within 5 years from the date of assessment by administrative or judicial (e) Procedure of sale
action. (f) Disposition of proceeds
Prescriptive period, when suspended 3. Levy of real property

1. If the treasurer is legally prevented from the assessment or Levy upon real property and interest in or rights to real property.
collection from the tax
2. If the taxpayer requests for a reinvestigation and executes a waiver Procedure: (Sec. 176, LGC)
3. If the taxpayer is out of the country or cannot be located
(a) Preparation of a duly authenticated certificate by the LGU
Atty: If the treasurer is legally prevented from the assessment or Treasurer effecting the levy on the real property
collection from the tax – the regular courts may issue an injunction as (b) Service of written notice of levy to the assessor and
compared to the NIRC which may only be issued by the CTA. Register of Deeds
(c) Annotation of the levy on the tax declaration and the
certificate of title
Remedies (d) Advertisement and Sale (Sec. 178, LGC)
Remedies of the LGUs for collection of revenues 4. Compromise
Section 174, LGC Atty: For local government taxation, there is no minimum
The civil remedies for the collection of local taxes, fees, or, and compromise rate. This will be left to the discretion of the local
surcharges and interest resulting from delinquency shall be: government.
(a) By administrative action thru distraint of goods, chattels, or Judicial remedies

effects, and other personal 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 1. Court Action
property and interest in or rights to real property; and
  Section 183, LGC
(b) By judicial action. The local government unit concerned may enforce the collection
of delinquent taxes, fees, charges or other revenues by civil action
Either of these remedies or all may be pursued concurrently or at the in any court of competent jurisdiction. The civil action shall be
discretion of the local government unit concerned.  filed by the local treasurer within the period prescribed in Section
194 of this Code.
Administrative remedies
Atty: This would depend on the jurisdictional amount.
1. Local government’s lien (a) MTC – principal amount of the taxes and fees exclusive of
interest does not exceed 300k (P400k Metro Manila)
Section 173, LGC
Local taxes, fees, charges and other revenues constitute a lien, (b) RTC
superior to all liens, charges or encumbrances in favor of any  Original jurisdiction – principal amount of the taxes
person, enforceable by appropriate administrative or judicial and fees exclusive of interest exceeds 300k (P400k
action, not only upon any property or rights therein which may be Metro Manila), provided that the amount is less than
subject to the lien but also upon property used in business, P1M.
occupation, practice of profession or calling, or exercise of
privilege with respect to which the lien is imposed.  Appellate jurisdiction for court actions which
originated in the MTC.
The lien may only be extinguished upon full payment of the
delinquent local taxes fees and charges including related (c) CTA in division
surcharges and interest.
 Original jurisdiction – principal amount of the taxes
Atty: This attaches to the property (it must be annotated). Even and fees exclusive of interest exceeds P1M
if you transfer ownership or the tax declaration changes, so long  Appellate jurisdiction for court actions originating in
as you have not settled the unpaid liabilities, that lien continues the RTC.
to exist.
(d) CTA en banc The taxpayer shall have 30 days from the receipt of the denial of
the protest or from the lapse of the 60 day period prescribed
 Appellate jurisdiction for decisions or resolutions by herein within which to appeal with the court of competent
the CTA in division jurisdiction otherwise the assessment becomes conclusive and
unappealable.
 Petitions for review of the judgment, resolutions of the
RTC in the exercise of their appellate jurisdiction over Summary of rules:
tax cases originally filed in the MTC. A. Taxpayer has 60 days to file a protest with the local treasurer
from receipt of the notice of assessment
2. Declaratory relief
B. Local treasurer has 60 days to decide
3. Injunction (a) If meritorious – notice of assessment is cancelled
(b) If unmeritorious – deny the protest
Atty: For declaratory relief and injunction, the local government
will not raise that against the taxpayer, but against the national C. Taxpayer has 30 days to appeal with the RTC either from:
or provincial government. (a) Receipt of the denial of the protest
(b) Lapse of 60-day period
Remedies of the taxpayer
Important: Under local taxation, it is not a requirement to pay
Administrative remedies when you protest.
BEFORE ASSESSMENT Atty: If the local treasurer finds the protest meritorious, the local
treasurer will just cancel the assessment. If not, appeal to the
1. Question the constitutionality of the ordinance imposing courts. Note that the jurisdiction of the court still depends on the
the local tax. amount of the tax assessed.
Section 187, LGC 2. Claim for refund or credit for erroneously or illegally
collected tax
Any question on the constitutionality or legality of tax ordinances
or revenue measures may be raised on appeal within 30 days Section 196, LGC
from the effectivity thereof to the Secretary of Justice who shall
render a decision within 60 days from the date of receipt of the No case or proceeding shall be maintained in any court for the
appeal. recovery of any tax, fee, or charge erroneously or illegally
collected until a written claim for refund or credit has been filed
Within 30 days after receipt of the decision or the lapse of the 60- with the local treasurer. No case or proceeding shall be
period without the Secretary of Justice acting upon the appeal, entertained in any court after the expiration of 2 years from the
the aggrieved party may file appropriate proceedings with a court date of the payment of such tax, fee, or charge, or from the date
of competent jurisdiction. the taxpayer is entitled to a refund or credit.
Atty: Apply the principle of exhaustion of administrative Atty: The written claim for refund or credit must be filed with the
remedies. Go first to the SOJ, then to the RTC. If you immediately local treasurer. The case has to be filed within a period of 2 years
go to the RTC, the case would most likely be dismissed. from the payment of the tax fee or charge or from the date the
(a) Secretary of Justice (has 60 days to decide from receipt) taxpayer is entitled to a refund or credit.
(b) If decision of SOJ is adverse, file with RTC within 30 days
from receipt of the adverse decision or from the lapse of the TN: Unlike the NIRC, the running of the two year period may be
60-day period. suspended by an intervening cause.
Important: The court of competent jurisdiction here is the RTC. 3. Redemption of property sold
2. Declaratory relief Section 179, LGC

Same procedure as the Rules of Court. Within 1 year from the date of sale, the delinquent taxpayer or
his representative shall have the right to redeem the property
AFTER ASSESSMENT upon payment to the local treasurer of the total amount of taxes
xxx. Such payment shall invalidate the certificate of sale issued to
1. Protest the purchaser and the owner shall be entitled to a certificate of
Section 187, LGC redemption from the provincial, city or municipal treasurer or his
deputy.
Within 60 days from the receipt of the notice of assessment, the
taxpayer may file a written protest with the local treasurer The owner shall not, however, be deprived of the possession of
contesting the assessment; otherwise, the assessment shall said property and shall be entitled to the rentals and other income
become final and executory. thereof until the expiration of the time allowed for its redemption.
The local treasurer shall decide the protest within 60 days from Atty: The period given to the taxpayer to redeem his property is
the time of its filing. If the local treasurer finds the protest to be 1 year from the date of sale. Note that the right of pre-emption
wholly or partly meritorious, he shall issue a notice cancelling may still be applied.
wholly or partially the assessment. However, if the local treasurer
finds the assessment to be wholly or partly correct, he shall deny Important: The owner shall not be deprived of the possession
the protest wholly or partly with notice to the taxpayer. or the rentals or the income until the expiration of the redemption
period.
Judicial Remedies Permanently attached v. temporarily attached
Permanently attached Temporarily attached

1. Court action
Same as above. (Section 187) A real property by incorporation
is permanently attached to a A real property by incorporation
2. Declaratory relief real property per se (it cannot temporarily attached
be removed, or it can only be (RPT by destination).
3. Injunction removed with damage done to
the property).
Atty: Under the NIRC, injunction is prohibited except if issued by
the CTA for justifiable reasons. Under the LGC, there is no such
prohibition. You may file an injunction before the court. Ascertain if actually directly and
It is always real property exclusively used to meet the
regardless of whether or not it need of a particular industry or
Angeles City v. Angeles City Electric Co is used actually directly and service activity.
The LGC does not contain a provision prohibiting courts from exclusively to meet the need of
enjoining the collection of local taxes. Such lapse may have a particular industry or service If yes – subject to RPT
allowed preliminary injunction under Rule 58, ROC where local utility. If not, not subject to RPT.
taxes are involved.
Things to remember in Local Taxation:

1. Specific revenue raising powers for provinces, municipalities, cities Characteristics of a real property tax
as well as barangays
Characteristics of a real property tax (DAPIL)
2. Community tax
3. Prescriptive period to collect and assessment as the case may be 1. It is a direct tax on the ownership of real property.
4. Deadline of community tax
2. It is an ad valorem tax. The value is based on the tax base.
REAL PROPERTY TAXATION
3. It is proportionate because the tax is calculated on the basis of a
certain percentage of the value assessed.
Concept
Real Property tax (RPT) TN: The phrase “certain percentage” is provided for by law
A direct tax on ownership of lands and buildings or other improvements depending on the nature of the property.
thereon payable regardless of whether the property is used or not,
although the value may vary in accordance with such factors. 4. It creates a single, indivisible obligation.
Real property 5. It is a local tax and may be collected by the PCM within Metro
Subject to the definition given by Art 415 of the Civil Code. Manila (This refers to the basic RPT and basic levies)
Improvement Important: Real property tax attaches on the property (i.e. lien) and
Valuable addition made to a property or an amelioration in its condition is enforceable against it.
amounting to a more than a mere replacement of parts.
Fundamental principles
LGUs with power to levy RPT (PCM)
1. Provinces Section 165, LGC
2. Cities
3. Municipalities within Metro Manila The appraisal, assessment, levy and collection of real property tax shall
be guided by the following fundamental principles:
Atty: Real property tax is:
1. Real property shall be appraised at its current and fair
1. It is a direct tax on ownership – Like the Civil Code definition, it market value.
covers all real properties. The difference with the conventional
definition of real properties under the civil code, is that the civil Atty: The responsible officer for the ultimate determination of the
FMV is the assessor. However, the owner initially declares the value
code did not include machineries.
of such property. In the absence of the owner’s declaration, the
assessor may conduct an investigation
2. RPT under taxation law embraces machines, equipment,
mechanical, contrivances, instruments, or apparatus which may
2. Real property shall be classified for assessment purposes
or may not be attached permanently, including physical facilities
on the basis of actual use.
for production, installations and appurtenant service facilities,
those that are mobile, self-powered, or self-propelled and those
Atty: The basis for classification is the actual use, not ownership.
not permanently attached to real property but which are actually,
directly, exclusively used to meet the need of a particular industry This use may vary according to the classification given by the
Sanggunian for the said land which is based its predominant use
or service activity.
(ex. If predominantly residential, then classified as residential)
MCIAA v. Marcos
Usage means direct, immediate and actual application of the
property.
In this article, what are being exempted are only lands, buildings,
3. Real property shall be assessed on the basis of uniform and improvements actually, directly, and exclusively used for
classification within each LGU. religious, charitable or educational purposes. (Does not include
machineries)
4. The appraisal, assessment, levy and collection of RPT shall
not be let to any private person. Q: If the province of Cebu leased a lot to SM, can it be subject
to RPT?
5. The appraisal and assessment of real property shall be
equitable. ANS: Yes. SM is a taxable juridical person.
Imposition of Real Property Tax Q: If the province of Cebu leased a lot to USC, can it be subject
to RPT?
Power to levy Real Property Tax
ANS: No. USC is a non-stock non-profit educational institution.
Section 232, LGC
A province or city or a municipality within the Metropolitan Manila Area Q. If the province of Cebu leases machinery that it owns to the
may levy an annual ad valorem tax on real property such as land, Archdiocese of Cebu, is it exempt or taxable?
building, machinery, and other improvement not hereinafter specifically
exempted. ANS: It is taxable. While it is true that the beneficial use is given
to a religious institution, the subject property however is a
Coverage “machinery” which is not covered under the enumeration (lands,
buildings, or improvements)
For a Province, or a City or Municipality within Metro Manila
(a) Land Exception: If such machinery was permanently attached to the
(b) Building land.
(c) Machinery
(d) Other improvements not specifically exempted 3. All machineries and equipment actually, directly and
exclusively used by local water districts GOCCs engaged
Rates of levy in the supply and distribution of water and/or generation
and transmission of electric power.
(a) Province – note exceeding 1% of the assessed value of real
property
Requisites:
(b) City– not exceeding 2% of the assessed value of real property
(a) Actually, directly and exclusively used by local water
(c) Municipality within Metro Manila – not exceeding 2% of the
districts and GOCCs
assessed value of real property
(b) Engaged in the supply and distribution of water and/or
generation and transmission of electric power
Exemptions from Real Property Tax
Example: MERALCO.
Section 234, LGC
4. All real property owned by duly registered cooperatives
1. Real property owned by the Republic of the Philippines or as provided for under R. A. No. 6938.
any of its political subdivisions, except when the
beneficial use thereof has been granted, for consideration 5. Machinery and equipment used for pollution control and
or otherwise, to a taxable person. environmental protection.
Atty: If the one using the lot is a taxable person, whether natural Except as provided herein, any exemption from payment of real property
or juridical, then the Republic or any of its political subdivisions is tax previously granted to, or presently enjoyed by, all persons, whether
subject to RPT. natural or juridical, including all government-owned or controlled
corporations are hereby withdrawn upon the effectivity of this Code.
Beneficial use – refers to actual use by a taxable person
Phil. Fisheries Development Authority (PFDA) v. Central Boards
Political subdivisions – covers government instrumentalities (ex. of Assessment Appeals (CBAA)
MCAA). Thus, these are not taxable.
PFDA operating the Lucena Fishing Port Complex is an instrumentality
of the government. PFDA is not a GOCC for even if it has capital stocks,
Phil. Ports Authority v. Iloilo
it is not divided into shares of stocks. It has no stockholders or voting
GOCCs are not covered by the exemption since the exemption shares. It also has no members so it cannot be a non-stock corporation.
only refers to instrumentalities without personalities distinct from
the government. Atty: The SC here distinguished an instrumentality of the government
from a GOCC. The SC held that it is a GOCC if it has capital stocks, and
2. Charitable institutions, churches, parsonages or convents is divided into shares of stocks, has stockholders/ voting shares.
appurtenant thereto, mosques, non-profit or religious
cemeteries and all lands, buildings, and improvements Manila International Airport Authority (MIAA) v. CA
actually, directly, and exclusively used for religious,
A GOCC must be organized as a stock or non-stock corporation. MIAA is
charitable or educational purposes.
not organized as a stock or non-stock corporation. Its charter mandates
that MIAA must remit 20% of its annual gross operating income to the
Atty: There is a constitutional provision similar to this. However
national treasury. It is a government instrumentality vested with
they are not totally similar. In the Constitutional provision (not
corporate powers by its charter. Hence airport lands and buildings are
under this code), what was being exempted were the assets.
of public dominion.
TN: This served as the main argument in MCIA v. Lapu-Lapu. Special Levy or Assessment for Public Works
Mactan Cebu International Airport v. City of Lapu Lapu
Section 240, LGC
Petitioner MCIA is an instrumentality of the government. Consequently, A province, city or municipality may a special levy on the lands
its properties actually, solely, and, exclusively used for public purposes comprised within its territorial jurisdiction specially benefited by public
consisting of the airport terminal building, airfield, runway, taxiway and works projects or improvements funded by the local government unit
the lots on which they are situated, are not subject to real property tax concerned.
and respondent City is not justified in collecting taxes from petitioner
over said properties. Provided, however, that the special levy shall not exceed 60% of the
actual cost of such projects and improvements, including the costs of
Petitioner’s properties that are actually, solely, and exclusively used for acquiring land and such other real property in connection therewith.
public purpose, consisting of the airport terminal building, airfield,
runway, taxiway and the lots on which they are situated, exempt from Provided, further, that the special levy shall not apply to lands exempt
real property tax imposed by the City of Lapu-Lapu. from basic real property tax and the remainder of the land portions of
which have been donated to the local government unit concerned for
Special Levies by LGUs the construction of such projects or improvements.
Special Levy on Idle Lands Imposing authority

Provinces, cities, and even municipalities located outside of Metro
Section 236, LGC Manila.
Additional Ad Valorem Tax on Idle Lands. – A province or city, or a When imposed

municipality the Metropolitan Manila Area, may levy an annual tax on
Requirements:
idle lands at the rate not exceeding 5% of the assessed value of the
property which shall be in addition to the basic real property tax. 1. Lands specially benefited by public works and projects or
development (i.e. increase in the value of the property)
Lands covered
2. Funded by the LGU concerned
Section 237, LGC
Atty: Pinamungajan constructed an access road connecting it to
1. Agricultural lands another town. Because of this, the value of your land increased. The
cost is 1B. LGU can recover 600M from the owners of the lands whose
More than 1 hectare in area suitable for cultivation, dairying, inland value increased because of the development. Nag ka sinabot ta class?
fishery, and other agricultural uses, ½ of which remain
uncultivated or unimproved. Important: This is the only special levy which requires public hearing.
The rest need not have. Public hearing is necessary to ascertain how to
Not considered idle lands: impose or divide the imposable assessment.
(a) Agricultural lands planted to permanent or perennial crops
with at least 50 trees to a hectare
(b) Lands actually used for grazing purposes Special Levy for Special Education Fund (SEF)
Section 235, LGC

2. Other than agricultural lands
A province or city, or a municipality within the Metropolitan Manila Area,
More than 1,000 sqm in area, ½ of which remain unutilized or may levy and collect an annual tax of 1% on the assessed value of real
unimproved. property which shall be in addition to the basic real property tax. The
proceeds thereof shall exclusively accrue to the Special Education Fund.
Atty: The purpose here is to encourage cultivation and
improvement. Atty: Proceeds of the Special Education Fund shall be released to the
Local School Boards (e.g. Remote LGUs hiring teachers through the LCB,
3. Residential lots in subdivisions not under DepEd)
Provided, the ownership of which has been transferred to individual
owners, who shall be liable for the additional tax. In case of provinces, the proceeds shall be divided equally between the
provincial and municipal school boards
Exempt idle lands
Socialized Housing Tax
Section 238, LGC
Lands exempt by reason of force majeure, civil disturbance, natural RA 7279 (Urban Development and Housing Act of 1992)
calamity or any cause or circumstance which physically or legally
prevents improving, utilizing or cultivating the same. 0.5% of the assessed value of all lands in the urban areas in excess of
50,000 except those lands which are exempted from the coverage of RA
7279.
Summary of special levy rates by the LGUs Additional 1% Special Education Fund Tax
Special levy Rate Section 272, LGC
Special Education Fund Additional 1% of assessed value
Not exceeding 5% The proceeds of the additional 1% tax on real property accruing to the
Ad valorem on idle lands
of assessed value SEF shall be automatically released to the local school boards.
Not exceeding 60% of the Provided: In case of provinces – the proceeds shall be divided equally
Special assessment actual cost of the project or between the provincial and municipal school boards.
improvement.
Additional 0.5 % The proceeds shall be allocated for either:
Socialized Housing Tax 1. The operation and maintenance of public schools,
of assessed value
2. Construction and repair of school buildings
Atty: Strictly speaking special assessments are not taxes because it 3. Facilities and equipment
depends on whether or not a particular local government funded the 4. Educational research
improvement or not. 5. Purchase of books and periodicals, and sports development as
determined and approved by the Local School Board.
Important: These are added on top of the basic real property taxes.
Tax on idle lands
Illustration of Special rates:
Section 273, LGC
If province collects a basic rate of 1% of assessed value and it likewise
collects a Special Education Fund rate of 1%, the total assessed rate will Province or City
be 2%.
The proceeds of the additional real property tax on idle lands shall
accrue to the respective general fund of the province or city where the
Disposition of Proceeds land is located.
Basic Real Property Tax Municipality within the Metro Manila
Section 271, LGC The proceeds shall accrue equally to the Metropolitan Manila Authority
and the municipality where the land is located.
The proceeds of the basic real property tax, including interest thereon,
and proceeds from the use, lease or disposition, sale or redemption of
property acquired at a public auction in accordance with the provisions Special Assessments or Levy
of this Title by the province or city or a municipality within the
Section 274, LGC
Metropolitan Manila Area shall be distributed as follows:
The proceeds of the special levy on lands benefited by public works,
1. In the case of Province projects and other improvements shall accrue to the general fund of the
local government unit which financed such public works, projects or
(a) Province – 35% other improvements.
(b) Municipality where property is located – 40%
(c) Barangay where property is located – 25% Atty: If LGU did not finance such public work, etc, it cannot collect.
2. In the case of Cities

(a) City – 70%
(b) Component barangays of the city where the property is
located – 30% distributed among:
i. Barangay where property is located – 50%
ii. All other component barangays of the city – 50%
3. In the case of Municipalities within Metro Manila

(a) Metro Manila Authority – 35%
(b) Municipality – 35%
(c) Component barangays of the municipality where the property
is located – 35% distributed among:
i. Barangay where property is located – 50%
ii. All other component barangays of the municipality –
50%
4. In the case of Barangays

The share of each Barangay shall be released, without need of any
further action, directly to the Barangay treasurer on a quarterly
basis within 5 days after the end of each quarter and shall not be
subject to any lien or holdback for whatever purpose.
Tax Declaration v. Certificate of Title

Procedure in the administration of Real Property Tax
Question: Is a Tax Declaration an evidence of ownership?
Declaration of Real Property Tax
ANS: Yes, but it is not a conclusive evidence of ownership. It is merely
Section 202-203, LGC
prima facie, which may be rebutted by evidence to the contrary.
1. Declaration by the owner or administrator
Listing of Real Property in the Assessment Rolls
(a) Prepare a sworn statement declaring the true value of the
Section 205, LGC
property which shall be the current and fair market value of
the property. The local assessor must maintain an assessment roll wherein all real
(b) It must contain a sufficient description of the property to property, whether taxable or exempt, located within the territorial
enable the assessor or his deputy to identify the same for jurisdiction of the LGU, is listed.
assessment purposes
(c) The declaration must be filed with the assessor once every 3 Real property identification system
years during the period from January 1 to June 30.
Section 207, LGC
For newly-acquired property
All declarations of real property made under the provisions of this Title
The owner or the administrator must file in the assessor’s office shall be kept and filed under a uniform classification system to be
within 60 days from the date of transfer, a Sworn Statement established by the provincial, city or municipal assessor.
containing the:
1. Fair Market Value Appraisal and Valuation of Real Property
2. Description of the property
Section 201, LGC
For improvements of the property All real property, whether taxable or exempt, shall be appraised at the
current and fair market value prevailing in the locality where the
The owner or administrator must file within 60 days upon property is situated. The Department of Finance shall promulgate the
completion or occupation, whichever comes earlier, a Sworn necessary rules and regulations for the classification, appraisal, and
Statement containing the: assessment of real property pursuant to the provisions of this Code.
1. Fair Market Value
2. Description of the property Two properties involved:
1. Land
2. Declaration by any person acquiring real property or 2. Machineries
making improvements
The sworn statement declaring the true value of the property must For Land
be filed to the provincial, city or municipal assessor within 60 days
after the acquisition or upon completion or occupancy of the Section 213, LGC
improvement, whichever comes earlier.
The assessor of the city or province may summon the owner of the
3. Declaration by the Provincial or City or Municipal Assessor properties to be affected and may take their positions concerning the
property, its ownership, amount, nature and value.
When the person required to file the sworn declaration refuses or
fails to make such declaration, the provincial, city or municipal Atty: In the determination of the FMV, it’s not a “one-man-show” by
assessor shall declare the property in the name of the defaulting the assessor. The assessor may obligate other persons to aid him in
owner. No oath shall be required of such declaration. ascertaining the fair market value.
Persons who may aid the assessor in determining the FMV

Proof of exemption of Real Property from taxation
1. The person transferring the real property – may be summoned by
Section 206, LGC
the assessor to ascertain the FMV as provided in.
Any person by or for whom the real property is declared, who shall claim
tax exemption, shall file with the assessor together with sufficient 2. The Register of Deeds – has the duty to apprise or advise the
documentary evidence in support of such claim. This must be done assessor of the possible FMV.
within 30 days from the date of the declaration of the property. (Section
206) 3. Official issuing building permit or certificate of registration of
machinery – has the duty to also advise or apprise the assessor
Assessment of property subject to back taxes of the fair market value of the building and the machinery which
basically apprises the improvements.
Section 222, LGC
Real property declared for the first time shall be assessed for taxes for 4. Geodetic engineers – obligated to assist the assessor in
the period during which it would have been liable but in no case for computing the fair market value.
more than 10 years prior to the date of initial assessment.
Such taxes shall be computed on the basis of the applicable schedule of

values in force during the corresponding period.
Atty: Valuations are found in the tax declaration of the property.
Steps undertaken by the assessor and the local government 6. Timber Land
officials in determining the FMV
Forest, reserved area.
1. The owner of the property is summoned
2. The assessor prepares a schedule of FMV for different classes of 7. Special Land
property All lands, buildings and other improvements actually, directly and
3. The Sanggunian enacts through an ordinance the schedule of the exclusively used for hospital, cultural or scientific purposes, and
FMV those owned by local water districts and other GOCCs rendering
4. The schedule of the FMV is published in a newspaper of general essential public services in the supply and distribution of water
circulation in the PCM, or in absence thereof, shall be posted at the and electricity.
provincial capitol, city or municipal hall and two other conspicuous
public places.
For Machinery
Public hearing not required
How FMV of machineries determined
Public hearing is not a requirement before the Sanggunian can enact an
ordinance imposing this real property tax, provided there is publication 1. Brand new machinery
in the newspaper of general circulation in the locality; or the least, there
is posting in two conspicuous public places and in the provincial capitol, (a) Domestically purchased – acquisition cost only
city or the municipal hall. (b) Imported – acquisition cost includes freight, insurance,
bank and other duties
Important: This rule applies only to Basic RPT, Special Education Fund,
and Ad Valorem Tax on Idle Lands. In Special Assessment and Special 2. All other cases (not brand new) – Prorated on the remaining
Levy on Public Improvements, it is a requirement that a public hearing economic life divided by the estimated economic life multiplied
must be conducted. There has to have consultation and public hearing by the replacement or reproduction cost.
of the stakeholders to be affected.
Formula:
Classes of real property for assessment purposes
Section 215, LGC Economic life
----------------------------- X Replacement or reproduction cost
For purposes of assessment, real property shall be classified as Estimated economic life
residential, agricultural, commercial, industrial, mineral, or special. The
city or municipality within the Metropolitan Manila Area, through their Atty: When we talk of the economic life of the machinery, we are
respective Sanggunian, have the power to classify lands as residential, referring to the duration of the period of time where you expect
agricultural, commercial, industrial, mineral, timberland, or special in to have a return or to have a cash flow, the least, out of that
accordance with their zoning ordinances. particular investment [so the benefit is greater than the cost]
Atty: It is the Sanggunian, upon the recommendation of the assessor, TN: The useful life is not necessarily the economic life.
which decides for the classification.
Assessment of the Real Property Tax Payable
1. Commercial land
A land is considered a commercial land when it is devoted 1. Determine or compute the assessed value
principally for the object of profit and is not classified as
Assessed value – FMV multiplied with the assessment level.
agricultural, industrial, mineral, timber or residential land.
Section 199 (g), LGC
2. Agricultural Land
“Assessment level” is the percentage applied to the FMV to
(a) A land devoted principally on planting of trees, raising of
determine the taxable value of the property. The assessment levels
crops, livestock or poultry, etc. including inland fishing and
shall be fixed by ordinances of the Sanggunian at rates not
similar aquaculture activities and other agricultural exceeding those prescribed in Section 218.
activities
(b) Not classified as industrial, mineral, commercial, timber or Atty: The assessment level is already provided under the LGC
residential land depending on the classification of the land or property.
3. Residential Land 2. Determine the real property tax payable
When the property is principally devoted for habitation. After getting the assessed value, multiply it with the tax rates:
4. Mineral Land (a) Province – Not exceeding 1% of the assessed value
(b) Cities or municipalities within Metro Manila – Not exceeding
Land in which minerals, metallic or non-metallic, exist in sufficient
2% of the assessed value
quantity or grade to justify the necessary expenditures to extract
and utilize such minerals. (c) Special Education Fund – Not exceeding 1%
(d) Ad valorem tax on idle lands – Not exceeding 5%
5. Industrial Land
Land devoted principally in industrial activity, as capital
investment and not classified as residential, mineral, agricultural
or commercial, timber land.
General revisions of assessments and property classification B. Special levies

The fair market value is not on a yearly basis but the Sanggunian may Deadline of payment depends on the ordinance imposing it (but
opt to revise it every 3 years as a rule. usually every January)
Section 219, LGC Interest on unpaid real property tax

The local assessor shall undertake a general revision of real property Section 255, LGC
assessments every 3 years.
In case of failure to pay the basic real property tax when due, shall
Date of effectivity of assessment or reassessment subject the taxpayer to the payment of interest at the rate of 2% per
month on the unpaid amount until the delinquent tax shall have been
Section 221, LGC fully paid. But the total interest on the unpaid tax shall not exceed 36
GR: All assessments or reassessments made after the 1st day of months.
January of any year shall take effect on the 1st day of the January of
the succeeding year. Atty: So it is 24% per annum.
XPNs: When the reassessment of real property was due to: Actual use of property as basis for assessment
1. Its partial or total destruction Section 217, LGC
2. A major change in its actual use
3. Any great and sudden inflation or deflation of real property values Real property shall be classified, valued and assessed on the basis of its
4. Gross illegality of the assessment when made actual use regardless of where located, whoever owns it, and whoever
5. Any other abnormal cause uses it.
Here, the assessment shall be made within 90 days from the date any Atty: Who has the responsibility to pay? The owner. But the basis
of such cause occurred, and shall take effect at the beginning of the whether the property is taxable or not, is the actual usage. Meaning, for
quarter next following the reassessment. example, if USC does not own the property where the school stands but
only borrowed from Ms. Ronulo, Ms. Ronulo does not have to pay the
Payment of Real Property Tax real property tax. However, it is not automatic. She has to get a
certificate of exemption.
Date of accrual
Question: Why is the government liable for paying tax for its beneficial
Section 246, LGC use of a property?
The real property tax for any year shall accrue on the first day of January ANS: As a general rule, the government shall not be subject to tax but
and from that date it shall constitute a lien on the property which shall only if it is exercising its governmental function. If the government is
be superior to any other lien, mortgage, or encumbrance of any kind exercising a proprietary function, then it can be subjected to tax (i.e.
whatsoever, and shall be extinguished only upon the payment of the
lease of land to a private entity)
delinquent tax.
Tax discount for prompt payment
Atty: It constitutes as a superior lien. Meaning, it attaches to the res or
the property and is not affected by change of ownership. Section 251, LGC
Notice of collection If the basic real property tax and the additional tax accruing to the
Special Education Fund (SEF) are paid in advance in accordance with
Section 249, LGC the prescribed schedule of payment as provided under Section 250, the
Sanggunian concerned may grant a discount not exceeding 20% of the
(a) On or before the 31st of January each year or on any date annual tax due.
prescribed, the local treasurer shall post the notice of the dates
when the tax may be paid without interest at a conspicuous and Atty: To encourage owners to pay on time or to pay in advance, there
publicly accessible place at the city or municipal hall. is this “promo” given by the government.
(b) Said notice shall likewise be published in a newspaper of (a) For advance payment – discount not exceeding 20% of the annual
general circulation in the locality once a week for 2 consecutive tax due may be granted
weeks.
(b) For prompt payment – discount not exceeding 10% of the annual
Manner of payment tax due may be granted.
A. Basic Real Property Tax Place of payment
It is paid in four (4) equal installments: Section 247, LGC

1. On or before March 31
The collection of the real property tax shall be the responsibility of the
2. On or before June 30
city or municipal treasurer concerned. The city or municipal treasurer
3. On or before September 30
may deputize the Barangay treasurer to collect all taxes on real property
4. On or before December 30
located in the Barangay: Provided, that the Barangay treasurer is
properly bonded for the purpose:
Atty: In other local taxes, you also have the option to pay in 4
equal or quarterly installments like above. However, the deadline
of payment is not specified unlike in Real property tax.
Atty: You do not pay real property tax to a bank or any private individual and may only be extinguished upon payment of the tax and the
or entity. The same must be paid to any city or municipal treasurer related interests and expenses.
concerned. If a barangay treasurer is deputized for the purpose, a bond
is required to be posted by the latter. 2. Levy on Real Property
Period to collect Section 258, LGC
Section 270, LGC Upon the failure to pay the tax when due, the local treasurer shall
issue a warrant levying the real property subject to tax. The
The basic RPT and any other tax levied shall be collected within 5 years warrant shall include a duly authenticated certificate showing the
from the date they become due. No action for the collection of the tax, name of the owner or person having legal interest therein,
whether administrative or judicial, shall be instituted after the expiration description of the property, amount of the tax due and interest
of such period. thereon.
In case of fraud or intent to evade payment of the tax, such action may Atty: The warrant of levy may be issued on or before, or
be instituted for the collection of the same within 10 years from the simultaneous with the institution of the civil action for the collection
discovery of such fraud or intent to evade payment. of the delinquent tax.
Atty: The prescriptive period to collect is either 5 years or 10 years, (a) Warrant must be mailed or served to owner or person having
depending if there was a fraudulent intent to evade payment. legal interest in the property.
(a) Within 5 years from the date they become date. (b) Written notice of levy must be mailed or served to the
delinquent owner, the assessor and the Register of Deeds
Important: It is not 5 years from the day of assessment because where the property is located.
there is no assessment to speak of here. In RPT, the fair market
values are already laid down and the assessed value and tax rates (c) The Register of Deeds must annotate the levy on the tax
are already enumerated. declaration and certificate of title.
(b) Within 10 years from discovery of fraud or intent to evade 3. Sale of Real Property
payment
Within 30 days after service of the warrant of levy, the local
Suspension of the prescriptive period treasurer shall proceed to publicly advertise for sale or auction the
property as may be necessary to satisfy the tax delinquency and
Section 270, LGC expenses of sale.
The period of prescription within which to collect shall be suspended for
the time during which: (a) Posting a notice at the main entrance of the LGU and in a
publicly accessible and conspicuous place in the barangay
1. The local treasurer is legally prevented to collect tax. where the real property is located
(b) Publication once a week for 2 weeks in a newspaper of
2. The owner or property requests for reinvestigation and writes a general circulation.
waiver before expiration of period to collect.
The sale shall be held either at:
Atty: Unlike in NIRC that the BIR can be prevented by an (a) The main entrance of the provincial, city or municipal
injunction order from the CTA, the local treasurer may be building
prevented by the local courts or Secretary of DOJ. (b) On the property to be sold
(c) Any other place as specified in the notice of the sale.
3. The owner of property is out of the country or cannot be located.
Atty: Owner may exercise the right of pre-emption. If bid is not
Remedies enough, the property is forfeited in favor of the LGU (certificate
of forfeiture), but still subject to the 1 year right of redemption.
Remedies of LGUs for Collection of Real Property Tax
Judicial Remedies
Section 256, LGC
For the collection of the basic real property tax and any other tax levied Section 266, LGC
under this Title, the local government unit concerned may avail of the The local government unit concerned may enforce the collection of the
remedies by administrative action thru levy on real property or by basic real property tax or any other tax levied under this Title by civil
judicial action. action in any court of competent jurisdiction. The civil action shall be
filed by the local treasurer within the period prescribed in Section 270
Administrative remedies of this Code.
1. Local Government’s Lien

Section 257, LGC
The basic real property tax and any other tax levied constitutes a
lien on the property subject to tax, superior to all liens, charges or
encumbrances in favor of any person, irrespective of the owner or
possessor thereof, enforceable by administrative or judicial action,
Process under Section 252:

Taxpayer’s Remedies
1. Receipt of Assessment.
Administrative Remedies
2. Payment (indicate if you are paying under protest).
1. Protest as owner or with legal interest in the property
3. Within 30 days from payment, protest assessment to the
A. Protest by means of appeal directly to the Secretary of local treasurer of province, city or municipality who is
Justice given 60 days to decide.
Section 187, LGC 4. If treasurer’s decision unfavorable or does not act within
60 days, taxpayer has 30 days from the receipt of the
Any question on the constitutionality or legality of tax unfavorable decision or lapse of the 60-day period of
ordinances or revenue measures may be raised on appeal inaction by the treasurer, to appeal to the Local Board of
within 30 days from the effectivity thereof to the Secretary of Assessments Appeals (LBAA) which has 120 days to
Justice (SOJ) who shall render a decision within 60 days from decide.
the date of receipt of the appeal.
5. If LBAA decision is unfavorable or does not act on your
Such appeal shall not have the effect of suspending the appeal within 120 days, then you appeal to Central Board
effectivity of the ordinance and the accrual and payment of the of Assessments Appeals (CBAA) within 30 days from
tax, fee, or charge levied therein. decision or lapse of the 120 day period. The CBAA has no
mandatory period to decide.
If within thirty 30 days after receipt of the decision or the lapse
of the 60-day period without the SOJ acting upon the appeal, 6. If CBAA decision is unfavorable, appeal to CTA en banc
the aggrieved party may file appropriate proceedings with a (Not division) within 30 days. It is en banc because this is
court of competent jurisdiction. reviewing the decision of the CBAA in the exercise of
CBAA’s appellate jurisdiction.
Atty: This is a familiar provision. Section 187 is applicable to
local government taxes as well as real property taxes. TN: BIR has nothing to do with this.
Grounds: 7. If CTA’s decision is unfavorable, file a motion for
It is grounded on the impropriety of passing the ordinance or reconsideration.
not following any of the mandatory requirements or procedures
set by law like publication, posting or hearing. 8. If MR still unfavorable, Certiorari Rule 45 to Supreme
Court within 15 days.
B. Protest against the Real Property Tax Deficiency
Payment before protest
Section 252, LGC Unlike other types of protest, payment is required before
protest in Real Property Taxation. However, the same is
(a) No protest shall be entertained unless the taxpayer first applicable only if there is a valid assessment where the
pays the tax. There shall be annotated on the tax taxpayer merely does not agree with the computation or the
receipts the words "paid under protest". The protest in results. It is simply questioning the correctness of the
writing must be filed within 30 days from payment of the computation.
tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within Important: It is different if you question the validity of the
Metropolitan Manila Area, who shall decide the protest computation, like when you question the classification of the
within 60 days from receipt. land as residential and not as LGU classified commercial. Here,
you can file the protest directly. There is no need for payment
(b) The tax or a portion thereof paid under protest, shall be first.
held in trust by the treasurer concerned.
2. Tax Refund or Tax Credit
(c) In the event that the protest is finally decided in favor of
the taxpayer, the amount or portion of the tax protested Section 253, LGC
shall be refunded to the protestant, or applied as tax
credit against his existing or future tax liability. When an assessment of basic real property tax, or any other tax
levied is found to be illegal or erroneous and the tax is accordingly
(d) In the event that the protest is denied or upon the lapse reduced or adjusted, the taxpayer may file a written claim for
of the 60-day period prescribed in subparagraph (a), the refund or credit for taxes and interests with the provincial or city
taxpayer may avail of the remedies as provided for in treasurer within 2 years from the date the taxpayer is entitled to
Chapter 3, Title II, Book II of this Code. such reduction or adjustment.
The provincial or city treasurer shall decide the claim for tax refund
or credit within 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.
Atty: Example is when your property is classified as commercial

but later discovered that it was actually residential. Since you paid
higher tax, you may claim tax refund or credit.
(a) Where: To the local treasurer who has 60 days to decide. COURT OF APPEALS
(b) When: 2 years from date of payment
Composition
Judicial Remedies
Primary reference:
AM 5-11-07-CTA Revised Rules of the Court of Tax Appeals
1. Question the validity of a tax sale at public auction
Rule 2, Section 1
Section 267, LGC
The Court is composed of a presiding justice and 8 associate justices
No court shall entertain any action assailing the validity of any sale appointed by the President of the Philippines. In appropriate cases, the
at public auction until the taxpayer shall have deposited with the court shall sit en banc, or in 3 Divisions of 3 justices each, including the
court the amount for which the real property was sold, together presiding justice, who shall be the Chairperson of the First Division and
with interest of 2% per month from the date of sale to the time of the 2 most Senior Associate Justices shall be serve as Chairpersons of
the institution of the action. the Second Division and Third Divisions, respectively.
The amount so deposited shall be paid to the purchaser at the Composition (9)
auction sale if the deed is declared invalid but it shall be returned (a) 8 Associate Justices
to the depositor if the action fails. (b) 1 Presiding Justice
Neither shall any court declare a sale at public auction invalid by CTA can sit either:
reason of irregularities or informalities in the proceedings unless 1. En banc
the substantive rights of the delinquent owner of the real property 2. Divisions (3)
or the person having legal interest therein have been impaired.
Age requirement
Requirements: Maximum of 70 years old
(a) Deposited with the court the amount for which the real Office of the CTA
property was sold. Metro Manila
(b) Together with interest of 2% per month from the date of
sale to the time of the institution of the action. CTA Divisions
In what cases can you question the validity of an auction sale? 3 Divisions with 3 Justices each
(a) First division – headed by Presiding Justice
ANS: Although the law says that the court cannot declare a public (b) Second and Third divisions – headed by the most senior
auction invalid simply by reason of irregularities or informalities on associate justice
the conduct of the sale, the public auction is invalid when a
substantive right of the real property owner has been impaired. Quorum and voting
Atty: When you say substantive right, it includes irregularities such Section 4, Rule 2
as for example in levy, there is a need for public auction, posting The Chairperson of the Division or, if absent, the most senior member
of notices, warrant of levy, certificate of sale, and more. If any of shall preside over the sessions of the Court in Division. The attendance
these is violated, then you can question the validity. But then again, of at least 2 justices of the court shall be necessary to constitute a
if you question, you need to post a bond or deposit. quorum for its sessions in Divisions. The presence at the deliberation
and the affirmative vote of at least 2 justices shall be required for the
pronouncement of a judgement or final resolution of the Court Decision.
Atty: If there are only two justices present, the vote of one is not
enough. It has to be two.
CTA En Banc
Quorum and voting

Section 3, Rule 2
The presiding justice or, if absent, the most senior justice in attendance
shall preside over the sessions of the Court en banc. The attendance of
5 justices of the Court shall constitute a quorum for its session en banc.
The presence at the deliberation and the affirmative vote of 5 members

of the Court en banc shall be necessary to reverse a decision of a
decision of a Division but only a simple majority of the justices present
to promulgate a resolution or decision in all cases.
Where the necessary majority vote cannot be had, the petition shall be
dismissed; in appealed cases, the judgement or order appealed from
shall stand affirmed; and on all incidental matters, the petition or motion
shall be denied.
Reversal and promulgation of rulings the Customs Law or other laws administered by the Bureau of
Customs.
(a) Reversal or modification of CTA en banc decision – presence and
affirmative vote of the absolute majority (whether absent or 5. Decisions of the Central Board of Assessment Appeals in the
present) exercise of its appellate jurisdiction over cases involving the
assessment and taxation of real property originally decided by the
(b) Decision in all cases (ordinary rulings) – simply majority of the provincial or city board of assessment appeals.
justices present
6. Decisions of the Secretary of Finance on customs cases elevated
Example: There are 9 justices, 4 absent, 5 present, so there is a to him automatically for review from decisions of the
quorum. Commissioner of Customs which are adverse to the Government
under Section 2315 of the Tariff and Customs Code.
Atty: If issue involves a reversal or modification of previous
decision, vote of absolute majority or 5 justices is needed. In this 7. Decisions of the Secretary of Trade and Industry, in the case of
case, all the signatures of the 5 justices present are required. If non-agricultural product, commodity or article, and the Secretary
issue is not reversal, only simple majority is required. In this case, of Agriculture in the case of agricultural product, commodity or
only 3 signatures of the 5 present is required. article, involving dumping and countervailing duties under Section
301 and 302, respectively, of the Tariff and Customs Code, and
Important: If absolute or simple majority vote is not achieved, safeguard measures under Republic Act No. 8800, where either
petition is dismissed. In appealed cases, the court order appealed party may appeal the decision to impose or not to impose said
stands affirmed. duties.
Jurisdiction of the Court of Tax Appeals (b) Jurisdiction over cases involving criminal offenses
Exclusive and original, or appellate jurisdiction 1. Exclusive original jurisdiction over all criminal offenses arising
from violations of the NIRC or TCC and other laws administered
by the BIR or BOC.
Atty: When the law says CTA, as a rule it means CTA in division.
Because there is a special provision for the CTA en banc. Provided, however, that offenses or felonies mentioned in this
paragraph where the principal amount of taxes and fees,
Section 1, Rule 4 exclusive of charges and penalties, claimed is less P1 Million or
where there is no specified amount claimed shall be tried by the
The Court shall exercise exclusive original jurisdiction over or appellate regular Courts and the jurisdiction of the CTA shall be appellate.
jurisdiction to review by appeal the cases specified in Republic Act No.
1125, Section 7, as amended by Republic Act No. 9282, Section 7. Any provision of law or the Rules of Court to the contrary
notwithstanding, the criminal action and the corresponding civil
Section 7, RA 9282 action for the recovery of civil liability for taxes and penalties shall
at all times be simultaneously instituted with, and jointly
(a) Exclusive appellate jurisdiction to review by appeal determined in the same proceeding by the CTA, the filing of the
criminal action being deemed to necessarily carry with it the filing
1. Decisions of the Commissioner of Internal Revenue in cases of the civil action, and no right to reserve the filling of such civil
involving disputed assessments, refunds of internal revenue action separately from the criminal action will be recognized.
taxes, fees or other charges, penalties in relation thereto, or other
matters arising under the National Internal Revenue or other laws 2. Exclusive appellate jurisdiction in criminal offense:
administered by the Bureau of Internal Revenue.
(a) Over appeals from the judgments, resolutions or orders of
2. Inaction by the Commissioner of Internal Revenue in cases the Regional Trial Courts in tax cases originally decided by
involving disputed assessments, refunds of internal revenue them, in their respected territorial jurisdiction.
taxes, fees or other charges, penalties in relations thereto, or
other matters arising under the National Internal Revenue Code (b) Over petitions for review of the judgments, resolutions or
or other laws administered by the Bureau of Internal Revenue, orders of the Regional Trial Courts in the exercise of their
where the National Internal Revenue Code provides a specific appellate jurisdiction over tax cases originally decided by
period of action, in which case the inaction shall be deemed a the Metropolitan Trial Courts, Municipal Trial Courts and
denial. Municipal Circuit Trial Courts in their respective jurisdiction.
Atty: Involves those cases where the CIR is given a specific (c) Jurisdiction over tax collection cases as herein provided:
period to act and does not act like
(a) 120 days for VAT refunds 1. Exclusive original jurisdiction in tax collection cases
(b) 180 days for refund or credit of erroneously collected involving final and executory assessments for taxes,
taxes fees, charges and penalties: Provided, however, That
collection cases where the principal amount of taxes
3. Decisions, orders or resolutions of the Regional Trial Courts in and fees, exclusive of charges and penalties, claimed
local tax cases originally decided or resolved by them in the is less than P1 Million shall be tried by the MTC,
exercise of their original or appellate jurisdiction. Metropolitan Trial Court and RTC.
4. Decisions of the Commissioner of Customs in cases involving
liability for customs duties, fees or other money charges, seizure,
detention or release of property affected, fines, forfeitures or
other penalties in relation thereto, or other matters arising under
2. Exclusive appellate jurisdiction in tax collection appellate jurisdiction over criminal offenses mentioned in the
cases: preceding subparagraph; and
(a) Over appeals from the judgments, resolutions (h) Decisions, resolutions or orders of the Regional trial Courts in the
or orders of the Regional Trial Courts in tax exercise of their appellate jurisdiction over criminal offenses
collection cases originally decided by them, in mentioned in subparagraph.
their respective territorial jurisdiction.
CTA in Division
(b) Over petitions for review of the judgments,
resolutions or orders of the Regional Trial Section 3, Rule 4
Courts in the Exercise of their appellate
jurisdiction over tax collection cases originally Cases within the jurisdiction of the Court in Divisions. – The
decided by the Metropolitan Trial Courts, Court in Divisions shall exercise:
Municipal Trial Courts and Municipal Circuit
Trial Courts, in their respective jurisdiction. (a) Exclusive original or appellate jurisdiction to review by
appeal the following:
CTA En Banc Jurisdiction
(1) Decisions of the Commissioner of Internal Revenue in cases
Section 2, Rule 4 involving disputed assessments, refunds of internal revenue
taxes, fees or other charges, penalties in relation thereto, or
Cases within the jurisdiction of the Court en banc. – The Court other matters arising under the National Internal Revenue Code
en banc shall exercise exclusive appellate jurisdiction to review or other laws administered by the Bureau of Internal Revenue.
by appeal the following:
(2) Inaction by the Commissioner of Internal Revenue in cases
(a) Decisions or resolutions on motions for reconsideration or new involving disputed assessments, refunds of internal revenue
trial of the Court in Divisions in the exercise of its exclusive taxes, fees or other charges, penalties in relation thereto, or
appellate jurisdiction over: other matters arising under the NIRC or other laws administered
by the BIR, where the NIRC or other applicable law provides a
(1) Cases arising from administrative agencies – Bureau of specific period for action:
Internal Revenue, Bureau of Customs, Department of
Finance, Department of Trade and Industry, Department Provided, that in case of disputed assessments, the inaction of
of Agriculture; the CIR within the 180-day period under Section 228 of the NIRC
shall be deemed a denial for purposes of allowing the taxpayer
(2) Local tax cases decided by the Regional Trial Courts in to appeal his case to the Court and does not necessarily
the exercise of their original jurisdiction; and constitute a formal decision of the Commissioner of Internal
Revenue on the tax case;
(3) Tax collection cases decided by the Regional Trial Courts
in the exercise of their original jurisdiction involving final Provided, further, that should the taxpayer opt to await the final
and executory assessments for taxes, fees, charges and decision of the CIR on the disputed assessments beyond the one
penalties, where the principal amount of taxes and hundred eighty day-period abovementioned, the taxpayer may
penalties claimed is less than one million pesos; appeal such final decision to the Court under Section 3(a), Rule
8 of these Rules; and
(b) Decisions, resolutions or orders of the Regional Trial Courts in
local tax cases decided or resolved by them in the exercise of their Provided, still further, that in the case of claims for refund of
appellate jurisdiction; taxes erroneously or illegally collected, the taxpayer must file a
petition for review with the Court prior to the expiration of the
(c) Decisions, resolutions or orders of the Regional Trial Courts in tax 2-year period under Section 229 of the NIRC.
collection cases decided or resolved by them in the exercise of
their appellate jurisdiction; Atty: As far as the CTA is concerned, the lapse of the CIR’s given
period to decide is deemed a denial of the protest. So there is
(d) Decisions, resolutions or orders on motions for reconsideration or no problem even if the CIR would eventually render a decision
new trial of the Court in Division in the exercise of its exclusive beyond the period because the CTA already acquired
original jurisdiction over tax collection cases; jurisdiction.
(e) Decisions of the Central Board of Assessment Appeals (CBAA) in Important: This section affirms the rule that the 2 year period
the exercise of its appellate jurisdiction over cases involving the of prescription includes both administrative and judicial action.
assessment and taxation of real property originally decided by the
provincial or city board of assessment appeals; (3) Decisions, resolutions or orders of the Regional Trial Courts in
local tax cases decided or resolved by them in the exercise of
(f) Decisions, resolutions or orders on motions for reconsideration or their original jurisdiction.
new trial of the Court in Division in the exercise of its exclusive
original jurisdiction over cases involving criminal offenses arising (4) Decisions of the Commissioner of Customs in cases involving
from violations of the National Internal Revenue Code or the Tariff liability for customs duties, fees or other money charges, seizure,
and Customs Code and other laws administered by the Bureau of detention or release of property affected, fines, forfeitures of
Internal Revenue or Bureau of Customs; other penalties in relation thereto, or other matters arising under
the Customs Law or other laws administered by the Bureau of
(g) Decisions, resolutions or orders on motions for reconsideration or Customs.
new trial of the Court in Division in the exercise of its exclusive
(5) Decisions of the Secretary of Finance on customs cases elevated

to him automatically for review from decisions of the
Commissioner of Customs adverse to the Government under
Section 2315 of the Tariff and Customs Code; and
(6) Decisions of the Secretary of Trade and Industry, in the case of

non-agricultural product, commodity or article, and the
Secretary of Agriculture, in the case of agricultural product,
commodity or article, involving dumping and countervailing
duties under Section 301 and 302, respectively, of the Tariff and
Customs Code, and safeguard measures under Republic Act No.
8800, where either party may appeal the decision to impose or
not to impose said duties.
(b) Exclusive jurisdiction over cases involving criminal offenses
(1) Original jurisdiction over all criminal offenses arising from

violations of the National internal Revenue Code or Tariff and
Customs Code and other laws administered by the Bureau of
Internal Revenue of the Bureau of Customs, where the principal
amount of taxes and fees, exclusive of charges and penalties,
claimed is one million pesos or more; and
(2) Appellate jurisdiction over appeals from the judgments,

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

executory assessments for taxes, fees, charges and penalties,
where the principal amount of taxes and fees, exclusive of
charges and penalties, claimed is one million pesos or more; and
(2) Appellate jurisdiction over appeals from the judgments,

resolutions or orders of the Regional Trial Courts in tax collection
cases originally decided by them within their respective territorial
jurisdiction.
Important: Before, the Rules of Court were not strictly followed in the
CTA. But with this Revised Rules of the CTA, it expressly provides that
the ROC apply suppletorily and that a petition for review will have to be
filed, the same procedures in Rules 42, 43 and 44 under the ROC will
have to be followed.

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TAXATION LAW II l Atty. Kim Aranas l For the exclusive use of EH 404 A.Y.

Sources of local funds

A. Not inherent but a direct grant. Power

B. Limited Section 516, LGC

Guide of Sanggunians in granting of tax exemption, tax reliefs and tax

On the grant of tax exemptions or tax reliefs

(d) Adverse economic conditions such as substantial decrease in

4. Public hearing – prior to the enactment of the tax ordinance.

5. Approval by the Local Chief Executive (LCE).

1. Service fees and charges

Exceptions: (Not subject to tax) B. On wholesalers, distributors, or dealers in any article of

F. Banks and other financial institutions. 30%: Principal place

SITUS OF LOCAL BUSINESS TAXES 5. Sale by routes, trucks, vans or vehicles

If Factory and Plantation are in different locations:

Example: Considering P1M sales being recorded at the Principal

Fees for sealing and licensing of weights and measures CITIES

Section 151, LGC

PRESENTATION OF COMMUNITY TAX CERTIFICATE SUMMARY OF RULES

Persons 1. Diplomatic and consular representatives

Place of Where individual resides, or where the principal

Accrues on the 1st day of January each year to

If unpaid within the prescribed period, an

Administrative matters in collection of local taxes Interests on other unpaid revenues

Tax period and manner of payment Section 169, LGC

Prescriptive period, when suspended 3. Levy of real property

(a) By administrative action thru distraint of goods, chattels, or Judicial remedies

2. Declaratory relief Section 179, LGC

Judicial Remedies Permanently attached v. temporarily attached

Permanently attached Temporarily attached

Things to remember in Local Taxation:

Special Levy on Idle Lands Imposing authority

Additional Ad Valorem Tax on Idle Lands. – A province or city, or a When imposed

Section 235, LGC

Basic Real Property Tax Municipality within the Metro Manila

2. In the case of Cities

3. In the case of Municipalities within Metro Manila

4. In the case of Barangays

Tax Declaration v. Certificate of Title

Persons who may aid the assessor in determining the FMV

Such taxes shall be computed on the basis of the applicable schedule of

Atty: Valuations are found in the tax declaration of the property.

General revisions of assessments and property classification B. Special levies

Section 219, LGC Interest on unpaid real property tax

A. Basic Real Property Tax Place of payment

It is paid in four (4) equal installments: Section 247, LGC

Period to collect Section 258, LGC

1. Local Government’s Lien

Process under Section 252:

Atty: Example is when your property is classified as commercial

Quorum and voting

The presence at the deliberation and the affirmative vote of 5 members

(5) Decisions of the Secretary of Finance on customs cases elevated

(6) Decisions of the Secretary of Trade and Industry, in the case of

(b) Exclusive jurisdiction over cases involving criminal offenses

(1) Original jurisdiction over all criminal offenses arising from

(2) Appellate jurisdiction over appeals from the judgments,

(c) Exclusive jurisdiction over tax collections cases

(1) Original jurisdiction in tax collection cases involving final and

(2) Appellate jurisdiction over appeals from the judgments,

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