* Fundamental Principles

* Limitations of the LGU’s power to tax

* Local Taxing Authority
* Limitations on the Power to Tax
* Procedure for the Effectivity of a Tax
Ordinance
* How to Assail a Tax Ordinance
* Taxes that Can Be Imposed by Specific LGUs
* Situs of Local Taxes
* Collection of Local Taxes
* Remedies of the LGU in case of Nonpayment
* Remedies of the Taxpayer (Protest, Refund)

*
* Taxation shall be uniform in each LGU
* Equitable and based on the taxpayer’s ability to pay
* Levied and collected only for public purpose
* Not contrary to law, public policy, national economic
policy, or in restraint of trade
* Not unjust, excessive, oppressive, or confiscatory
* Shall not be let to any private person

*
* LGUs: Provinces, Cities, Municipalities, Barangays
* Exercised by the Sanggunian
* Levied pursuant to a Valid Ordinance
* Otherwise, LGUs can impose taxes not taxed under NIRC
or in the LGC or other laws, provided:
* Not unjust, excessive,oppressive, etc
* There should be a prior public hearing

*
* EXCLUSIONARY RULE – LGUs cannot levy taxes specifically
taxed by NIRC

SPECIFIC LIMITATIONS
* Income taxes, except if taxed on banks
* Doc stamp tax
* Tolls
* Percentage tax, except as provided (i.e., amusement tax)
* Tax on transportation contractors

*
* PUBLIC HEARING
* Subject Matter should not be within limitations
* Not oppressive, unjust, excessive, confiscatory,
etc
* Within 10 days of enactment, there should be
PUBLICATION for 3 consecutive days in a
newspaper of local circulation, OR if no
newspaper, posting in at least 2 conspicuous
public places

*
* Appeal within 30 days from effectivity of
ordinance with the Secretary of Justice
* Secretary of Justice (SOJ) has 60 days to
render a decision
* File appropriate proceedings with court of
competent jurisdiction (RTC) within 30 days
after
* The 60 day period if SOJ failed to render a
decision, OR
* Receipt of decision (whichever comes earlier)

*
* CITY can impose taxes imposed by province or
municipality
* But, municipality cannot impose taxes imposed
by the province
* Province and City can impose Professional Tax
* Pay where you practice your profession. Eligible
to practice anywhere in the Philippines
* Amusement Tax – theatres, cinemas, concert
halls, circuses, boxing stadia, other places of
amusement

*
* Basis of Gross Sales/Receipts is in the branch
where the sale was made, not in the principal
office
* If no branch, then the LGU where the principal
office is located can collect the tax
* If no branch, but there is a factory in another
site, then 30% goes to the LGU of principal
office, 70% goes to the factory or plantation

*
* ACCRUES EVERY 1ST OF JANUARY, payable by
January 20, but may be paid quarterly

* PRESCRIPTION
* 5 years to assess (10 if due to fraud)
* 5 years to collect

*
* SUMMARY
* Distraint
* levy
* JUDICIAL
* MTC, RTC, CTA

*
 * PROTEST
* Written protest before the treasurer within 30 days from
notice of assessment
* Treasurer has 60 days to decide
* If treasurer failed to decide within 60 days, or if
treasurer decided within 60 day period, APPEAL within 30
days to court (MTC/RTC)
* Written protest is mandatory
* Payment under protest is not required

* REFUND
* 2 years from
* Date of payment, OR
* Date when Taxpayer becomes entitled to a refund

*
* XXIX.
* 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%)
* (A) If you are Atty. ELP, what advice will you give Doña Evelina so that she
can recover the subject local business taxes?

*
* 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. (D) is punishable by administrative penalty only.
* 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?
The City of Maharlika passed an ordinance imposing a
tax on any sale or transfer of real property located
within the city at a rate of fifty percent (50%) of one
percent (1%) of the total consideration of the
transaction. Jose sold a parcel of land in the city, which
he inherited from his deceased parents, and refused to
pay the aforesaid tax. He instead filed a case asking
that the ordinance be declared null and void since the
tax it imposed can only be collected by the national
government, as in fact he has paid the Bureau of
Internal Revenue (BIR) the required capital gains tax. If
you were the City Legal Officer of Maharlika, what
defenses would you raise to sustain the validity of the
ordinance? (5%)

*
* Kathang Isip, Inc. (Kii) is a domestic corporation engaged in the business of
manufacturing, importing, exporting, and distributing toys both locally and
abroad. Its principal office is located in Kalookan City, Philippines. It has 50
branches in different cities and municipalities in the country. When Kii applied for
renewal of its mayor's permit and licenses in its principal office in January this
year, Kalookan City demanded payment of the local business tax on the basis of
the gross sales reported by the corporation in its audited financial statements for
the preceding year. Kil protested, contending that Kalookan City may tax only the
sales consummated by its principal office but not the sales consummated by its
branch offices located outside Kalookan City.
* When Kalookan City denied the protest, Kil engaged the services of Atty. Kristeta
Kabuyao to file the necessary judicial proceedings to appeal the decision of
Kalookan City. Atty. Kabuyao is a legal expert, but resides in Kalibo, Aklan where
her husband operates a resort. She, however, practices in Metro Manila, including
Kalookan City. The counsel representing the city, in the case filed in Kalookan City
by KII, questioned the use of Atty. Kabuyao's Professional Tax Receipt (PTR) issued
in Aklan for a case filed in Kalookan City.
* (a) Is Kll's contention that Kalookan City can only collect local business taxes
based on sales consummated in the principal office meritorious? (2.5%)'
* (b) Is the Kalookan City counsel correct in saying that Atty. Kabuyao's PTR issued in
Aklan cannot be used in Kalookan? (2.5%)

*
KM Corporation, doing business in the City of Kalookan, has been a
distributor and retailer of clothing and household materials. It has
been paying the City of Kalookan local taxes based on Sections
15 (Tax on Wholesalers, Distributors or Dealers) and 17 (Tax on
Retailers) of the Revenue Code of Kalookan City (Code).
Subsequently, the Sangguniang Panlungsod enacted an ordinance
amending the Code by inserting Section 21 which imposes a tax on
"Businesses Subject to Excise, Value-Added and Percentage Taxes
under the National Internal Revenue Code (NIRC)," at the rate of 50%
of 1 % per annum on the gross sales and receipts on persons "who sell
goods and services in the course of trade or business." KM
Corporation paid the taxes due under Section 21 under protest,
claiming that (a) local government units could not impose a tax on
businesses already taxed under the NIRC and (b) this would amount
to double taxation, since its business was already taxed under
Sections 15 and 17 of the Code.
(a) May local government units impose a tax on businesses already
subjected to tax under the NIRC? (2.5%)
(b) Does this amount to double taxation? (2.5%)