Local governments in the Philippines have the power to levy taxes according to the 1987 Constitution and Local Government Code. This power is limited and must be exercised according to various principles like uniformity, equity, and public purpose. Taxes levied by local governments include real property tax, business permits, and community tax. While local governments have autonomy in taxing, there are limitations on taxing certain areas already covered by national laws like income tax. Local tax ordinances must be enacted through a process of public hearings and approvals. The revenues from local taxes inure solely to the local government that levied them, except in certain cases like the sharing of proceeds from quarry taxes.

1. LOCAL TAXATION
Basis/Foundation: Sec. 5, Article X of
the 1987 Constitution and Sec. 129 of
the Local Government Code

2. The fundamental principles of local taxation
are:
a. Uniformity;
b. Taxes, fees, charges and other
impositions shall be equitable and based on ability
to pay, for public purposes, not unjust, excessive,
oppressive or confiscatory, not contrary to law,
public policy, national economic policy or in
restraint of trade;
c. The levy and collection shall not be left
to any private person;
d. Inures solely to the local government
unit levying the tax;
e. The progressivity principle must be
observed. (Sec. 130, NIRC)

3. Scope of Local Taxation:
1. Local government taxation – covering the
imposition of license taxes, fees, and other
impositions, including community tax.
2. Real property taxation – a system of levy on
real property imposed on a country-wide basis
but authorizing, to a limited extent and within
certain parameters, LGU’s to vary the rates of
taxation.
Nature of the taxing power of LGUs
1. Not inherent but a direct grant
2. Limited
3. Legislative
4. Territorial

4. The LGU has the power to:
1. Create its own source of revenue
2. Levy taxes, fees, and charges
3. Prescribe penalties for the tax violations
4. Grant local tax exemptions
5. Adjust local tax rates
6. Residual powers
Local Taxing Authority –
•The power to tax in the local government is
vested and exercised by the Sanggunian.
•Every tax imposed must be levied pursuant to a
valid ordinance.

5. •The ultimate reference for local taxation is the
local ordinance.
•LGU’s may exercise the power to levy taxes,
fees, or charges on any bases or subject NOT
otherwise specifically enumerated in the LGC or
the taxed under the NIRC, or other applicable
laws (residual powers).
Enactment and Effectivity of Local Tax Ordinance:
1. Passage – due process & public hearing
2. Approval
3. Effectivity – publication and/or posting

6. Limitations on the Power to Tax (Secs. 186 and
133, LGC) –
Section 186, which gives a general view of the
limitations,
1. Those that already subject to tax under the
NIRC or other applicable laws cannot be taxed
again
2. Local taxes shall not be unjust, excessive,
confiscatory or contrary to national policy
3. No ordinance can be enacted without any prior
public hearing conducted for the purpose

7. Section 133, which enumerates specific instances
where an LGU cannot impose a tax.
They are:
1. Income tax,
-Except when levied on banks and other
financial institutions.
2. Documentary stamp tax
3. Taxes on estates, inheritance, legacies or other
acquisitions mortis causa,
-Except as otherwise provided.
4. Customs duties, registration of vessel and
wharfage on wharves, tonnage dues, and all other
kinds of customs fees, charges ad dues
-Except wharfage on wharves constructed
and maintained by the LGU.

8. 5. Taxes, fees and charges and other impositions
upon goods carried into or out of, or passing
through, the territorial jurisdictions of local
government units in the guise of charges for
wharfage, tolls for bridges or otherwise, or other
taxes, fees or charges in any form whatsoever
upon such goods or merchandise
-An ordinance imposing fees on goods and the
vehicles passing through a municipality for police
surveillance is invalid. It violates this limitation.
-It is irrelevant if the fees imposed are
actually for police surveillance, because any other
form of imposition on goods passing through the
territorial jurisdiction of the municipality is clearly
prohibited. (Palma v Municipality of Malangas)

9. 6. Taxes, fees, and charges on agricultural
products or aquatic products when sold by marginal
farmers or fishermen
7. Taxes on business enterprises certified to by
the Board of Investments as pioneer or non-
pioneer for a period of six (6) and four (4) years,
respectively from the date of registration
8. Section 133 (h) covers two distinct limitations:
•Excise taxes on articles enumerated under the
NIRC, and
•Taxes, fees or charges on petroleum products.
9. Percentage or VAT on sales, barters or
exchanges or similar transactions on goods or
services
-Except as otherwise provided

10. LGC authorized imposition:
a. Manufacturer
- Gross sales P6.5M or more
- Percentage tax – 37.5% of 1% based on the
preceding year’s sales
b. Wholesaler, Distributors, Dealers
- Sale or receipts for the preceding calendar
year P2M or more
- Percentage tax – 50% of 1% based on the
gross sales or receipts
c. Contractors
- Gross receipts P2M or more
- Percentage tax – 50% of 1% on their gross
receipts

11. 10. Taxes on the gross receipts of transportation
contractors and persons engaged in the
transportation of passengers or freight by hire
and common carriers by air, land or water
-Except as provided in the Code
11. Taxes on premiums paid by way of reinsurance
or retrocession
12. Taxes, fees or charges for the registration of
motor vehicles and for the issuance of all kinds of
licenses or permits for the driving thereof,
-Except tricycles
13. Taxes, fees, or other charges on Philippine
products actually exported,
-Except as otherwise provided

12. 14. Taxes, fees, or charges, on Countryside and
Barangay Business Enterprises and cooperatives
duly registered under R.A. No. 6810 and the
Cooperatives Code of the Philippines
15. Taxes, fees or charges of any kind on:
-the National Government,
-its agencies and instrumentalities,
-and local government units.
-Exception: In Section 234 (A), there is the
exception to the exemption clause which taxes the
national government when the beneficial use of its
real properties is given to a taxable entity. (More
on this when we reach real property tax)

13. Taxation power of the LGUs:
1. Common Revenue-Raising Powers of LGUs
- Sec. 153, LGC
- Sec. 154, LGC
- Toll fees or charges
2. Specific Power of LGU to impose taxes
Provinces
a. Tax on transfer of real property
ownership (Sec. 135)
b. Tax on business of printing and publication
c. Franchise tax (Sec. 137)
d. Tax on sand, gravel and other quarry
resources extracted from public land (Sec. 138)
e. Professional tax (Sec. 139)
f. Amusement tax (Sec. 140)

14. g. annual fixed tax for every delivery truck
or van of manufacturers or producers,
wholesalers of, dealers, or retailers in, certain
products. (Sec. 141)
Municipalities – may levy on those taxes, fees
and charges NOT otherwise levied by provinces.
a. Business taxes (Sec. 143)
b. Fees and charges
Cities – except as otherwise provided in the
LGC, the city may levy taxes, fees, and
charges which the province or municipality may
impose. (Sec. 151)

15. SITUS (Sec. 150):
1. When sale was made in a certain municipality or city
• If there is a branch where the sale was made, the
sale shall be recorded in the said branch, and the
tax shall accrue and be paid to the municipality (or
city) where the branch is located.
• If there is no branch where the sale was made, the
sale shall be recorded in the principal office and
taxes shall accrue and be paid to the municipality (or
city) where the principal office is located.
2. If there is no branch, and the company has a factory,
plants, plantations, etc
• 30% of sales – taxable where principal office is
located
• 70% of sales – taxable where factory, etc is located

16. 3. Sales allocation in case factories and
plantations located in different places
• 30% of sales – taxable where principal office
is located
• 70% distributed as follows:
- 60% taxable where factory is located
- 40% taxable where plantation is
located
4. In case there are 2 or more factories and
plantations located in different localities
• Prorate the 70% according to the volume of
production

17. 5. In case of route sales
• Made in a locality where a manufacturer,
producer, wholesaler, retailer or dealer has a
branch or sales office or warehouse, the sale
are recorded in the branch, sales office or
warehouse and the tax due thereon is paid to
the LGU where such branch, sales office or
warehouse is located
• Made in a locality where a manufacturer,
producer, wholesaler, retailer or dealer has no
branch, sales office or warehouse the sales
are recorded in the branch, sales office or
warehouse from where the route trucks
withdraw their products for sale

18. Barangays – may levy, to the exclusion of the
LGUs the following on those taxes, fees and
charges which shall exclusively accrue to them:
(a) Taxes - On stores or retailers with fixed
business establishments with gross sales or
receipts of the preceding calendar year of
Fifty thousand pesos (P50,000.00) or less, in
the case of cities and Thirty thousand pesos
(P30,000.00) or less, in the case of
municipalities, at a rate not exceeding one
percent (1%) on such gross sales or receipts.

19. (b) Service Fees or Charges - barangays may
collect reasonable fees or charges for services
rendered in connection with the regulation or
the use of barangay-owned properties or
service facilities such as palay, copra, or
tobacco dryers.
(c) Barangay Clearance - No city or municipality
may issue any license or permit for any business
or activity unless a clearance is first obtained
from the barangay where such business or
activity is located or conducted. For such
clearance, the sangguniang barangay may impose
a reasonable fee. The application for clearance
shall be acted upon within seven (7) working
days from the filing thereof. In the event that

20. the clearance is not issued within the said
period, the city or municipality may issue the
said license or permit.
(d) Other Fees and Charges - The barangay
may levy reasonable fees and charges:
(i) On commercial breeding of fighting cocks,
cockfights and cockpits;
(ii) On places of recreation which charge
admission fees; and
(iii) On billboards, signboards, neon signs, and
outdoor advertisements.

21. Summary of rules on distribution of tax proceeds
between LGUs
General Rule: Revenues shall inure solely to the
benefit of the LGU levying the tax.
Exceptions:
1. Tax on sand, gravel and other quarry resources
30% - Province
30% - Component city/municipality
40% - barangay (Sec. 138)
2. Amusement tax – shared equally by the province
and municipality (Sec. 140)
3. Community tax (in case the tax is collected by
barangay treasurer)
50% - municipality
50% - barangay

22. 3. Power to Levy Community Tax
Community tax - it is imposed on all inhabitants in
a community who are eighteen years old and
above as well as to juridical persons doing
business in the community or whose office or
establishment is located in the community.
-levied by cities or municipalities (Sec. 156
Community taxpayers:
1. Individuals
-18 yrs and above;
- regularly employed for at least 30
consecutive working days during any calendar
year;

23. - engaged in trade, business, or occupation; or
- owner of property with an aggregate assessed
value of P1,000 or more;
-required by law to file an ITR
2. Juridical persons
Exempt from community tax:
1. Diplomatic and consular representatives
2. Transient visitors when their stay in the
Philippines does not exceed 3 months
Community tax rates:
Individual – P5.00
Juridical Person – P500

24. Additional Community tax
Individual – P1.00 for every P1,000 of income
from business, exercise of profession or income
from property which in no case shall exceed
P5,000.
Juridical person – P2.00 for every P5,000 of:
• Assessed value of real property in the
Philippines
• Gross receipts or earnings from business in
the Philippines
which in no case shall exceed P10,000.

25. 4. Powers under Miscellaneous Provisions
a. Power to prescribe penalties for tax
violations and limitations thereon (Sec. 516)
Sanggunian
Fines = not less than P1,000 nor more than P5,000
Imprisonment = not less than 1 mo. nor more than
6 mos.
Sanguniang Barangay
Fines = not less than P100 nor more than P1,000
b. Power to adjust local tax rate (Sec. 191)
- should not be oftener than once every
5 years and in no case shall such adjustment
exceed 10% of the rates fixed under the
LGC.

26. c. Power to impose surcharges and interest
(Sec. 168)
-the Sanggunian may impose a surcharge
not exceeding 25% of the taxes, charges, or
fees not paid on time and an interest rate of
not more than 2% per month of unpaid tax,
charge, or fee including the surcharge
thereon, but in no case shall the same total
36 months.
d. Power to grant local tax exemptions (Sec.
192)
-not applicable to regulatory fees
-tax exemptions existing before the
effectivity of the LGC has been abolished
(Sec. 193)

27. LOCAL TAX REMEDIES:
Remedies of the LGU
I. Civil remedies to effect collection of taxes
A. Local government’s lien
B. Civil remedies
1. By administrative action
i. Distraint
ii. Levy
2. Judicial action
II.Judicial remedies
A. Court action
B. Declaratory relief
C. injunction

28. Court Jurisdictional Amount
MTC
ORIGINAL Principal amount does not exceed P300,000 or P400,000 in Metro Manila
RTC
ORIGINAL Principal amount exceeds P300,000 or P400,000 in Metro Manila
Provided, the amount is less than P1M
APPELATE All cases decided by the MTC, MeTC, MCTC, MTCC in their respective territorial
jurisdiction.
CTA DIVISION
ORIGINAL Principal amount is P1M or above.
APPELATE Over appeals from the judgments, resolutions, or orders of the RTC in tax
collection cases originally decided by them in their respective jurisdiction
CTA EN BANC
APPELATE 1. Decisions or resolutions over petitions for review of the Court in Divisions in
the exercise of its exclusive appelate jurisdiction over local taxes decided by
RTC
2. Decisions or resolutions over petitions for review of the RTC in the exercise
of its appelate jurisdiction over tax collection cases originally decided by
MTC, MeTC, MCTC, MTCC.

29. Remedies of the Taxpayer
I. Administrative
A. Before Assessment
1. Question the constitutionality
2. Declaratory relief
B. After Assessment
1. Protest
2. Claim for refund
3. Redemption
II.Judicial remedies
A. Court action
B. Declaratory relief
C. injunction

30. REAL PROPERTY
TAXATION

31. Fundamental Principles of Real Property Taxation:
1. Appraisal at current and fair market value;
2. Classification for assessment on the basis of
actual use;
3. Assessment on the basis of uniform
classification;
4. Appraisal, assessment, levy and collection shall
not be let to a private person;
5. Appraisal and assessment shall be equitable.
(Sec. 198, LGC)

32. Real property taxes – direct taxes imposed on the
privilege to use real property such as land,
building, machinery, and other improvements
unless specifically exempted.
Nature and Characteristics of Real Property Tax:
1. Direct tax
2. Indivisible single obligation
3. Ad valorem tax – tax base: assessed value
4. Local tax
5. Imposed on the use and not on the ownership
6. Progressive/proportionate in character

33. Policy of taxing real property
– Real property shall be classified, valued and
assessed on the basis of its actual use
regardless of where located, whoever owns it
and whoever uses it. (Sec. 217, LGC)
- Real properties shall be appraised at the
current and fair market value prevailing in the
locality where the property is situated and
classified for assessment purposes on the basis
of its actual use. (Allied Banking Corporation,
etc., v. Quezon City Government, et al., G. R.
No. 154126, October 11, 2005)

34. Actual use – refers to the purpose for which
the property is principally or predominantly
utilized by the person in possession thereof.
(Sec. 199b, LGC)
- The reasonable market value is determined by
the assessor in the form of a schedule of fair
market values. The schedule is then enacted by
the local sanggunian.
- Fair market value is the price at which a
property may be sold by a seller who is not
compelled to sell and bought by a buyer who is
not compelled to buy, taking into consideration
all uses to which the property is adopted and
might in reason be applied.

35. - The criterion established by the statute
contemplates a hypothetical sale. Hence, the
buyers need not be actual and existing
purchasers. (Allied Banking Corporation, etc., v.
Quezon City Government, et al., G. R. No. 154126, October
11, 2005 citing Army and Navy Club, Manila v. Trinidad, 44
Phil. 383 )
-Unpaid realty taxes attach to the property
and is chargeable against the person who had
actual or beneficial use and possession of it
regardless of whether or not he is the owner.
(Manila Electric Company v. Barlis, G.R. No. 114231, May
18, 2001)

36. Administration of Real Property Tax:
LGUs responsible (Sec. 232)
1. Provinces
2. Cities
3. Municipalities in Metro Manila
Extent of Taxing Power
LGUs do not only have the power to levy real
estate taxes but they may also fix real estate
tax rates. However, the power to fix real
estate tax rates does not extend to
municipalities outside Metro Manila, since the
only local bodies authorized to fix tax rates
are the provincial board in the case of
province, and city council in the case of a city.

37. - public hearing shall be required before the
enactment of a local tax ordinance levying the
basic real property tax. (Figueres v. Court of
Appeals, et al., March 25, 1999) and (Reyes v. Estrada,
December 10,1999)
- while an LGU is authorize under several laws
to collect real estate tax on properties falling
under its territorial jurisdiction, it is imperative
to first show that these properties are
unquestionably within it geographical boundaries.
(Sta. Lucia Realty & Dev’t., Inc. v. City of Pasig, 15 June
2011)
- Proposed fair market values of real property in
a local government unit as well as the ordinance
containing the schedule must be published in full
for three (3) consecutive days in a newspaper

38. of local circulation, where available, within ten
(10) days of its approval, and posted in at
lease two (2) prominent places in the provincial
capitol, city, municipal or barangay hall for a
minimum of three (3) consecutive weeks.
(Figuerres v. Court of Appeals, et al,. G.R. No. 119172,
March 25, 1999)
Types of Real Property Tax
1. Basic real property tax
Formula: Market Value P xxx
Multiply: Assessment level (x%)
Assessed Value xxx
Multiply: Rate of tax (x%)
Real Property tax P xxx

39. Assessment level - is a fraction or a percentage
of the market value of the land to determine
the taxable value of the property. (Sec. 199g)
Land use Assessment Levels:
Residential 20%
Agricultural 40%
Commercial, Industrial and Mineral 50%
Timberland 20%
Special classes: cultural, scientific 15%
Hospital, and water districts 10%
2. Special levies
In addition to the basic real property tax,
special levies MAY be imposed by the same LGU
on real property.

40. a. Special Education Fund (SEF) – 1% additional
real estate tax to finance the Special Education
Fund (Sec. 235)
b. Additional ad valorem on Idle lands – not
exceeding 5% of to the assessed value of the
property. (Sec. 236)
c. For public works (Special Assessments) – on
lands specially benefited by public works,
projects, or improvements funded by the LGU.
i. Special levy shall not exceed 60% of the actual
cost of such projects and improvements, including
the cost acquiring land and such other real
property in connection therewith.
ii. Exception:
- lands exempt from basic real property tax
- remainder of the land portions donated the LGU
concerned for the construction of said projects.

41. d. Imposed by other laws
• Socialized Housing Tax (R.A. 7279) – LGUs
are authorized to imposed an additional one
half percent on the assessed value of all
lands in urban areas in excess of P50,000
except those lands which are exempted from
the coverage of R.A. 7279.
Property Subject to Real Property Tax
1. For Basic Property Tax and Special Levy for
the Special Education Fund:
a. Land
b. Building
c. Machinery
d. Other improvements not specifically
exempted (Sec. 232)

42. 2. For Special Levy on Idle Lands and Special Levy
on Public Works
- land only
Personal property under the civil law that may
be considered as real property for purposes of
taxes:
1. Underground tanks are essential to the conduct
of the business of a gasoline station without
which it would not be operational. (Caltex Phils., Inc.
v. Central Board of Assessment Appeals, et al., 114 SCRA
296)
2. Light Rail Transit (LRT) improvements such as
buildings, carriageways, passenger terminals
stations, and similar structures do not form
part of the public roads since the former are

43. constructed over the latter in such a way that
the flow of vehicular traffic would not be
impaired. The carriageways and terminals
serve a function different from the public
roads. Furthermore, they are not open to use
by the general public hence not exempt from
real property taxes. Even granting that the
national government owns the carriageways and
terminal stations, the property is not exempt
because their beneficial use has been granted
to LRTA a taxable entity. (Light Rail Transit
Authority v. Central Board of Assessment Appeals, et al.,
G. R. No. 127316, October 12, 2000)
3. Barges on which were mounted gas turbine
power plants designated to generate electrical

44. power, the fuel oil barges which supplied fuel
oil to the power plant barges, and the
accessory equipment mounted on the barges are
subject to real property taxes.(FELS Energy, Inc., v.
Province of Batangas, G. R. No. 168557, February 16,
2007)
Special classes of real property: Lands, buildings,
and improvements, ACTUALLY, DIRECTLY,AND
EXCLUSIVELY used for the following purpose:
1. Hospitals
2. Cultural and scientific purposes;
3. Owned and used by local water districts;
4. Owned and used by GOCCs rendering essential basic
services in the supply and distribution of water
and/or generation or transmission of electric power.

45. Properties exempt from Real Property Tax:
a.Real property owned by the Republic of the
Philippines or any of its political subdivisions
except when the beneficial use thereof has
been granted to a taxable person for a
consideration or otherwise (GSIS v. City Treasurer
and City Assessor of Manila 23 December 2009, PFDA v.
CBAA, 15 December 2010) ;
b. Charitable institutions, churches,
parsonages or convents appurtenant thereto,
mosques, non-profit or religious cemeteries, and
all lands, buildings and improvements actually,
directly and exclusively used for religious,
charitable and educational purposes . (Lung Center
of the Philippines v. Quezon City, et al., etc., June 29,
2004);

46. c. Machineries and equipment, actually, directly and
exclusively used by local water districts; and
government owned and controlled corporations engaged
in the supply and distribution of water and generation
and transmission of electric power (NPC v. Prov. Of Quezon
and Municipality of Pagbilao, 25 January 2010);
d. Real property owned by duly registered
cooperatives (R.A. 6938);
e. Machinery and equipment used for pollution
control and environmental protection (R.A. 7942).
Cases: (Manila International Airport Authority v. City of Pasay, et al.,
G. R. No. 163072, April 2, 2009 citing Manila International Airport
Authority v. Court of Appeals, et al., G. R. No. 155650, July 20, 2006
and National Power Corporation v. Central Board of Assessment
Appeals, et al., G, R. No. 171470, January 30, 2009)

47. Nature of a tax declaration
-As a rule, tax declarations or realty tax payments
of property are not conclusive evidence of ownership,
nevertheless, they are good indicia of possession in the
concept of owner.
-They constitute at least proof that the holder has
a claim of title over the property.
-The voluntary declaration of a piece of property for
taxation purposes manifests not only one’s sincere and
honest desire to obtain title to the property and
announces his adverse claim against the State and all
other interested parties, but also the intention to
contribute needed revenues to the government. Such
an act strengthens one’s bona fide claim of acquisition
of ownership. (Buenaventura, et al., v. Republic, March 2, 2007
citing Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago, 17
June 2003)

48. Procedure for refund of real property taxes based on
unreasonableness or excessiveness of amounts collected.
a. Payment under protest at the time of payment or
within thirty (30) days thereafter, protest being lodged
to the provincial, city or in the case of a municipality
within the Metro Manila Area the municipal treasurer.
b. The treasurer has a period of sixty (60) days from
receipt of the protest within to decide.
c. Within thirty (30) days from receipt of treasurer’s
decision or if the treasurer does not decide, within
thirty (30) days from the expiration of the sixty (60)
period for the treasurer to decide, the taxpayer should
file an appeal with the Local Board of Assessment
Appeals.
d. The Local Board of Assessment Appeals has 120 days
from receipt of the appeal within which to decide.

49. e. The adverse decision of the Local Board of
Assessment Appeals should be appealed within thirty
(30) days from receipt to the Central Board of
Assessment Appeals.
f. The adverse decision of the Central Board of
Assessment Appeals shall be appealed to the Court of
Tax Appeals (En Banc) by means of a petition for
review within thirty (30) days from receipt of the
adverse decision.
g. The decision of the CTA may be the subject of a
motion for reconsideration or new trial after which an
appeal may be interposed by means of a petition for
review on certiorari directed to the Supreme Court on
pure questions of law within a period of fifteen (15)
days from receipt extendible for a period of thirty (30)
days.

50. Procedure for refund of real property taxes based on
validity of the tax measure or solutio indebeti.
a. Payment under protest not required, claim must be
directed to the local treasurer, within two (2) years from
the date the taxpayer is entitled to such reduction or
readjustment, who must decide within sixty (60) days
from receipt.
b. The denial by the local treasurer of the protest
would fall within the Regional Trial Court’s original
jurisdiction, the review being the initial judicial cognizance
of the matter. Despite the language of Section 195 of
the Local Government Code which states that the remedy
of the taxpayer whose protest is denied by the local
treasurer is “to appeal with the court of competent
jurisdiction,” labeling the said review as an exercise of

51. appellate jurisdiction is inappropriate since the denial of
the protest is not the judgment or order of a lower court,
but of a local government official. (Yamane , etc. v. BA
Lepanto Condominium Corporation, G. R. No. 154993,
October 25, 2005)
c. The decision of the Regional Trial Court should be
appealed by means of a petition for review directed to the
Court of Tax Appeals (Division).
d. The decision of the Court of Tax Appeals (Division)
may be the subject of a review by the Court of Tax
Appeals (en banc).
e. The decision of the Court of Tax Appeals (en banc)
may be the subject of a petition for review on certiorari
on pure questions of law directed to the Supreme Court.

52. BAR EXAMS QUESTIONS:
2010
1. What is the basis for the computation of business tax on contractors
under the Local Government Code? (2%)
2. How are retiring businesses taxed under the Local Government Code?
(2%)
3. On May 15, 2009, La Manga Trading Corporation received a deficiency
business tax assessment of P1,500,000.00 from the Pasay City Treasurer.
On June 30, 2009, the corporation contested the assessment by filing a
written protest with the City Treasurer.
On October 10, 2009, the corporation received a collection letter
from the City Treasurer, drawing it to file on October 25, 2009 an appeal
against the assessment before the Pasay Regional Trial Court (RTC).
Was the protest of the corporation filed on time? Explain. (3%)
Was the appeal with the Pasay RTC filed on time? Explain. (3%)

53. 4. Ferremaro, Inc., a manufacturer of handcrafted shoes, maintains its
principal office in Cubao, Quezon City. It has branches/sales offices in
Cebu and Davao. Its factory is located in Marikina City where most of its
workers live. Its principal office in Quezon City is also a sales office.
Sales of finished products for calendar year 2009 in the amount of P10
million were made at the following locations:
Cebu branch 25%
Davao branch 15%
Quezon City branch 60%
Total 100%
Where should the applicable local taxes on the shoes be paid? Explain.
(3%)

54. 5. XYZ Shipping Corporation is a branch of an international shipping line
with voyages between Manila and the West Coast of the U.S. The
company’s vessels load and unload cargoes at the Port of Manila, albeit
it does not have a branch or sales office in Manila. All the bills of lading
and invoices are issued by the branch office in Makati which is also the
company’s principal office.
The City of Manila enacted an ordinance levying a 2% tax on
gross receipts of shipping lines using the Port of Manila.
Can the City Government of Manila legally impose said levy on the
corporation? Explain. (3%)

55. 6. A inherited a two-storey building in Makati from his father, a real
estate broker in the ‘60s. A group of Tibetan monks approached A and
offered to lease the building in order to use it as a venue for their
Buddhist rituals and ceremonies. A accepted the rental of P1 million for
the whole year.
The following year, the City Assessor issued an assessment
against A for non-payment of real property taxes.
Is the assessor justified in assessing A’s deficiency real property taxes?
Explain. (3%)

56. 2014
1. The City of Liwliwa assessed local business taxes against Talin
Company. Claiming that there is double taxation, Talin Company filed a
Complaint for Refund or Recovery of Illegally and/or Erroneously-
collected Local Business Tax; Prohibition with Prayer to Issue Temporary
Restraining Order and Writ of Preliminary Injunction with the Regional
Trial Court (RTC). The RTC denied the application for a Writ of
Preliminary Injunction. Since its motion for reconsideration was denied,
Talin Company filed a special civil action for certiorari with the Court of
Appeals (CA). The government lawyer representing the City of Liwliwa
prayed for the dismissal of the petition on the ground that the same
should have been filed with the Court of Tax Appeals (CTA). Talin
Company, through its lawyer, Atty. Frank, countered that the CTA cannot
entertain a petition for certiorari since it is not one of its powers and
authorities under existing laws and rules.
Decide. (5%)

57. 2. In accordance with the Local Government Code (LGC), the
Sangguniang Panglungsod (SP) of Baguio City enacted Tax Ordinance No.
19, Series of 2014, imposing a P50.00 tax on all the tourists and
travellers going to Baguio City. In imposing the local tax, the SP reasoned
that the tax collected will be used to maintain the cleanliness of Baguio
City and for the beautification of its tourist attractions.
Claiming the tax to be unjust, Baguio Travellers Association (BTA),
an association of travel agencies in Baguio City, filed a petition for
declaratory relief before the Regional Trial Court (RTC) because BTA was
apprehensive that tourists might cancel their bookings with BTA’s
member agencies. BTA also prayed for the issuance of a Temporary
Restraining Order (TRO) to enjoin Baguio City from enforcing the local
tax on their customers and on all tourists going to Baguio City.
The RTC issued a TRO enjoining Baguio City from imposing the local tax.
Aggrieved, Baguio City filed a petition for certiorari before the Supreme
Court (SC) seeking to set aside the TRO issued by the RTC on the ground
that collection of taxes cannot be enjoined. Will the petition prosper?
(5%)

58. 3. Madam X owns real property in Caloocan City. On July 1, 2014, she
received a notice of assessment from the City Assessor, informing her of
a deficiency tax on her property. She wants to contest the assessment.
(4%)
(A) What are the administrative remedies available to Madam X in order
to contest the assessment and their respective prescriptive periods?
(B) May Madam X refuse to pay the deficiency tax assessment during
the pendency of her appeal?

59. 4. Doña Evelina, a rich widow engaged in the business of currency
exchange, was assessed a considerable amount of local business taxes
by the City Government of Bagnet by virtue of Tax Ordinance No. 24.
Despite her objections thereto, Doña Evelina paid the taxes.
Nevertheless, unsatisfied with said Tax Ordinance, Doña Evelina,
through her counsel Atty. ELP, filed a written claim for recovery of said
local business taxes and contested the assessment. Her claim was
denied, and so Atty. ELP elevated her case to the Regional Trial Court
(RTC).
The RTC declared Tax Ordinance No. 24 null and void and without legal
effect for having been enacted in violation of the public ation
requirement of tax ordinances and revenue measures under the Local
Government Code (LGC) and on the ground of double taxation. On
appeal, the Court of Tax Appeals (CTA) affirmed the decision of the RTC.
No motion for reconsideration was filed and the decision became final
and executory. (4%)

60. (A) If you are Atty. ELP, what advice will you give Doña Evelina so that
she can recover the subject local business taxes?
(B) If Doña Evelina eventually recovers the local business taxes, must the
same be considered as income taxable by the national government?