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LOCGOV - X /Local Taxation - Coggle Diagram

- - - - Specific Taxes by the Local Government Units – Sec. 134-164
        
        Collection of Taxes – Sec. 165-171
        
        Civil Remedies – Sec. 172-185
        
        The provisions of this Chapter and the remedies provided hereon may be availed of for the collection of any delinquent local tax, fee, charge, or other revenue.
        
        Miscellaneous Provisions – Sec. 186-193
        
        Procedure for Approval of Tax Ordinance
        
        Taxpayer’s Remedies – Sec. 194-196
        
        Section 194. Periods of Assessment and Collection. -
        
        Period to Assess - 5 years from date they become due.
        
        . No action for the collection of such taxes, fees, or charges, whether administrative or judicial, shall be instituted after the expiration of such period
        
        XCPN - In case of fraud or intent to evade the payment of taxes, fees, or charges, the same may be assessed within ten (10) years from discovery of the fraud or intent to evade payment.
        
        Period of Collection -
        
        GR - Local taxes, fees, or charges may be collected within five (5) years from the date of assessment by administrative or judicial action. No such action shall be instituted after the expiration of said period
        
        XCPN - running of the periods of prescription provided in the preceding paragraphs shall be suspended for the time during which
        
        (1) The treasurer is legally prevented from making the assessment of collection;
        
        (2) The taxpayer requests for a reinvestigation and executes a waiver in writing before expiration of the period within which to assess or collect; and
        
        (3) The taxpayer is out of the country or otherwise cannot be located.
        
        Section 195. Protest of Assessment -
        
        When the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties
        
        Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the assessment shall become final and executory
        
        Period of Resolution - The local treasurer shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or partially the assessment.
        
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        Section 196. Claim for Refund of Tax Credit. -
        
        No case or proceeding shall be maintained in any court for the recovery of any tax, fee, or charge erroneously or illegally collected until a written claim for refund or credit has been filed with the local treasurer.
        
        No case or proceeding shall be entertained in any court after the expiration of two (2) years from the date of the payment of such tax, fee, or charge, or from the date the taxpayer is entitled to a refund or credit.
        
        Lien of LGU - Local taxes, fees, charges and other revenues constitute a lien, superior to all liens, charges or encumbrances in favor of any person, enforceable by appropriate administrative or judicial action, not only upon any property or rights therein which may be subject to the lien but also upon property used in business, occupation, practice of profession or calling, or exercise of privilege with respect to which the lien is imposed.
        
        The lien may only be extinguished upon full payment of the delinquent local taxes fees and charges including related surcharges and interest.
        
        Civil Remedies -
        
        (a) By administrative action thru distraint of goods, chattels, or effects, and other personal property of whatever character, including stocks and other securities, debts, credits, bank accounts, and interest in and rights to personal property, and by levy upon real property and interest in or rights to real property;
        
        (b) By judicial action.
        
        Either of these remedies or all may be pursued concurrently or simultaneously at the discretion of the local government unit concerned.
        
        Enumeration of Other Remedies -
        
        Section 175. Distraint of Personal Property
        
        Section 176. Levy on Real Property
        
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        Period and Manner of Payment 165 - Unless otherwise provided in this Code, the tax period of all local taxes, fees and charges shall be the calendar year. Such taxes, fees and charges may be paid in quarterly installments.
        
        When Accrued - Unless otherwise provided in this Code, all local taxes, fees, and charges shall accrue on the first (1st) day of January of each year. However, new taxes, fees or charges, or changes in the rates thereof, shall accrue on the first (1st) day of the quarter next following the effectivity of the ordinance imposing such new levies or rates.
        
        When Paid - Unless otherwise provided in this Code, all local taxes, fees, and charges shall be paid within the first twenty (20) days of January or of each subsequent quarter, as the case may be. The sanggunian concerned may, for a justifiable reason or cause, extend the time for payment of such taxes, fees, or charges without surcharges or penalties, but only for a period not exceeding six (6) months
        
        Scope of Taxing Power of Provinces (134) - Limited to:
        
        Transfer of Real Property Ownership [Sec. 135, LGC]
        
        Business of Printing and Publication [Sec. 136, LGC]
        
        Franchise Tax [Sec. 137, LGC]
        
        Tax on Sand, Gravel and Other Quarry Resources [Sec. 138, LGC]
        
        Professional Tax [Sec. 139, LGC]
        
        Amusement Tax [Sec. 140, LGC]
        
        Annual Fixed Tax for every delivery truck or van [Sec 141, LGC]
        
        Scope of Taxing Power of Municipalities(134) - May levy taxes, fees and charges not otherwise levied by provinces [Sec. 142, LGC]
        
        Business Taxes (Sec. 143)
        
        (a) On manufacturers, assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines or manufacturers of any article of commerce of whatever kind or nature,
        
        (b) On wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature
        
        (c) On exporters, and on manufacturers , millers, producers, wholesalers, distributors, dealers or retailers of essential commodities
        
        (d) On retailers.
        
        (e) On contractors and other independent contractors
        
        (f) On banks and other financial institutions,
        
        (g) On peddlers engaged in the sale of any merchandise or article of commerce
        
        (h) On any business, not otherwise specified in the preceding paragraphs, which the sanggunian concerned may deem proper to tax
        
        Municipalities shall have the exclusive authority to grant fishery privileges in the municipal waters and impose rentals, fees or charges therefor (Sec. 149)
        
        Scope of Taxing Power of Cities (134) - May levy taxes, fees and charges which the province or municipality may impose [Sec. 151, LGC]
        
        Scope of Taxing Power of Barangays (134) -
        
        Taxes on stores or retailers
        
        Service fees or charges Barangay clearance
        
        Other fees and charges [Sec. 152, LGC]
        
        Community Tax (156-164) - Cities or municipalities may levy a community tax.
        
        Common Revenue Raising Powers (153-155) - LGUs may impose and collect:
        
        Service Fees and Charges (153) - such reasonable fees and charges for services rendered.
        
        . Public Utility Charges 154
        
        Section 155. Toll Fees or Charges
      - Governing Principles in Power to Create (130) - govern the exercise of the taxing and other revenue-raising powers of LGUs
        
        (a) Taxation shall be uniform in each local government unit;
        
        (b) Taxes, fees, charges and other impositions shall:
        
        be equitable and based as far as practicable on the taxpayer's ability to pay;
        
        be levied and collected only for public purposes;
        
        not be unjust, excessive, oppressive, or conﬁscatory;
        
        not be contrary to law, public policy, national economic policy, or in the restraint of trade;
        
        (c) The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person;
        
        (d) The revenue collected pursuant to the provisions of this Code shall inure solely to the beneﬁt of, and be subject to the disposition by, the local government unit levying the tax, fee, charge or other imposition unless otherwise speciﬁcally provided herein; and,
        
        (e) Each local government unit shall, as far as practicable, evolve a progressive system of taxation.
        
        How and by Whom Exercised (Sec. 133). — The power to impose a tax, fee, or charge or to generate revenue under this Code shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance.
    - - Section 129. Power to Create Sources of Revenue. - Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy.
        
        Such taxes, fees, and charges shall accrue exclusively to the local government units.
      - Residual Taxing Authority - LGUs may exercise the power to levy taxes, fees, or charges on ANY base or subject not otherwise speciﬁcally enumerated in the LGC or taxed under NIRC or other applicable laws.
        
        Where there is neither a grant nor a prohibition by statute, the tax power of LGUs must be deemed to exist although Congress may provide statutory limitations and guidelines. (Manila Electric Co v. Province of Laguna)
        
        Requisites:
        
        Not unjust, excessive, oppressive, conﬁscatory, or contrary to declared national policy;
        
        Pursuant to an ordinance enacted with public hearing conducted for the purpose [Sec. 186, LGC]; and
        
        Subject to the limitations provided under Section 133 of the LGC.
        
        Limitations on Taxing Authority of LGUs - This is the enumeration of all the taxes already imposed by the National Government.
        
        Income tax, except when levied on banks and other ﬁnancial institutions;
        
        Documentary stamp tax;
        
        Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided herein;
        
        Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges and dues except wharfage on wharves constructed and maintained by the local government unit concerned;
        
        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;
        
        Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or ﬁshermen;
        
        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;
        
        Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products;
        
        Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided herein;
        
        Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code;
        
        Taxes on premiums paid by way or reinsurance or retrocession;
        
        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;
        
        Taxes, fees, or other charges on Philippine products actually exported, except as otherwise provided herein;
        
        Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly registered under R.A. No. 6810 and Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known as the "Cooperative Code of the Philippines" respectively; and
        
        Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and local government units. [Sec 133, LGC]
        
        Tax Ordinances - The power to impose a tax, fee, or charge, or to generate revenue under this Code shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance. [Sec 132, LGC]
        
        Requirements for Validity of Tax Ordinances (181) -
        
        Public Hearing - A public hearing must be conducted prior to the enactment of a tax ordinance. [Sec 187, LGC]
        
        Publication - Within ten (10) days after the approval of the ordinance, certiﬁed true copies of all tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation.
        
        In provinces, cities and municipalities where there are no newspapers of local circulation, it must be posted in at least two (2) conspicuous and publicly accessible places. [Sec 188, LGC]
        
        Dissemination - Copies shall be furnished the respective local treasurers for public dissemination [Sec 189, LGC]
        
        Appeal from Validity of Tax Ordinance -
        
        Appeal to SoJ - Any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal:
        
        Effect of Appeal - Such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein:
        
        Recourse to the Courts - Within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.
        
        Substantial Compliance (Drilon v. Lim) - The only thing lacking was the posting of the ordinance as approved in prominent places in the city but this omission does not affect the validity of the ordinance. Despite the omission, there was substantial compliance. The publication in three successive issues of a newspaper of general circulation nwill satisfy due process.
        
        Withdrawal of Local Tax Exemption Privileges - Unless otherwise provided in the LGC, tax exemptions or incentives granted to, or enjoyed by all persons, whether natural or juridical, including government-owned or -controlled corporations were withdrawn upon the effectivity of the LGC [Sec 193, LGC]
        
        pertains only to those already existing when the LGC was enacted. The intention of the legislature was to remove all tax exemptions or incentives granted prior to the enactment of the Code (City of Iloilo v. Smart Communications)
        
        Exceptions to Withdrawal -
        
        Local water districts;
        
        Cooperatives duly registered under R.A. No. 6938;
        
        Non-stock and non-proﬁt hospitals; and
        
        Educational institutions [Sec. 193 and 234, LGC].
        
        Note Sec. 187 - Procedure for effectivity of the tax ordinances. Because appeal to SOJ within 30 days.
- - - - a. Local Board of Assessment Appeals (Sec. 226) - Any:
        
        owner or
        
        person having legal interest in the property
        
        who is not satisfied with the action of the provincial, city or municipal assessor in the assessment of his property may, within sixty (60) days from the date of receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of the provincial or city by filing a petition under oath in the form prescribed for the purpose, together with copies of the tax declarations and such affidavits or documents submitted in support of the appeal.
        
        b. Central Board of Assessment Appeals - The Board shall have appellate jurisdiction over all assessment cases decided by the Local Board of Assessment Appeals.
        
        Procedure for Appeal (Marques) -
        
        If the taxpayer/real property owner questions the excessiveness/reasonableness of the assessment, the taxpayer should first pay the tax due before his protest can be entertained
        
        If the local treasurer denies the protest or fails to act upon it within the 60-day period, then he may appeal or directly file a verified petition with the Local Board of Assessment Appeals (LBAA) within 60 days from the denial of the protest or receipt of the notice of assessment
        
        If the taxpayer is not satisfied with LBAA’s decision, he may elevate it to the Central Board of Assessment Appeals (CBAA), by filing a notice of appeal within 30 days from receipt
        
        If he is still not satisfied, he may file with CA a verified petition for review under Rule 43
        
        Doctrine of Primacy of ADministrative Remedies (Olivares v. Marques) - The LGC provides the administrative remedies available to a taxpayer/real property owner who is not satisfied with the assessment or reasonableness of the real property tax imposed.
        
        Under the doctrine of primacy of administrative remedies, an error in the assessment must be administratively pursued to the exclusion of ordinary courts whose decisions would be void for lack of jurisdiction.
      - Special Levies – Sec. 235-245
        
        Collection of Taxes – Sec. 246-270
        
        Disposition of Proceeds – Sec. 271-274
        
        Special Provisions – Sec. 275-283
        
        Idle Land -
      - Section 231. Effect of Appeal on the Payment of Real Property Tax. - Appeal on assessments of real property made under the provisions of this Code shall, in no case, suspend the collection of the corresponding realty taxes on the property involved as assessed by the provincial or city assessor, without prejudice to subsequent adjustment depending upon the final outcome of the appeal.
        
        Once assessed, no remedy of appealing to assessor directly. Instead, elevate to Board of Assessment appeals.
        
        JR - To avoid corruption;.
    - - Exemptions from Real Property Tax -
        
        Real property owned by the Republic of the Philippines or any of its political subdivisions, except when the beneﬁcial use thereof has been granted, for consideration or otherwise, to a taxable person;
        
        Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, nonproﬁt or religious cemeteries and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes;
        
        All machineries and equipment that are actually, directly and exclusively used by local water districts and government-owned or -controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power;
        
        All real property owned by duly registered cooperatives as provided for under R.A. No. 6938;
        
        Machinery and equipment used for pollution control and environmental protection
        
        Persons Exempted from LPT - LGUs cannot impose taxes, fees, and charges on
        
        Countryside and barangay business enterprises;
        
        Cooperatives duly registered under the Cooperative Code; and
        
        The National Government, its agencies and instrumentalities, and local government units [Sec 133(n)(o), LGC]
        
        Classification of Exemptions -
        
        Ownership
        
        Character
        
        Usage
        
        Ownership Exemptions -> Exemptions from real property taxes on the basis of ownership are real properties owned by: the Republic, (ii) a province, (iii) a city, (iv) a municipality, (v) a barangay, and (vi) registered cooperatives.
        
        Character Exemptions -> Exempted from real property taxes on the basis of their character are: (i) charitable institutions, (ii) houses and temples of prayer like churches, parsonages or convents appurtenant thereto, mosques, and (iii) non-proﬁt or religious cemeteries.
        
        Usage Exemptions - Exempted from real property taxes on the basis of the actual, direct and exclusive use to which they are devoted are:
        
        a. all lands, buildings and improvements which are actually directly and exclusively used for religious, charitable or educational purposes;
        
        b. all machineries and equipment actually, directly and exclusively used by LWDs or GOCCs engaged in the supply and distribution of water and/or generation and transmission of electric power; and
        
        c. All machinery and equipment used for pollution control and environmental protection.
        
        Persons Exempted from Local Taxation - The following cannot be taxed:
        
        Countryside and barangay business enterprises;
        
        Cooperatives duly registered under the Cooperative Code; and
        
        The National Government, its agencies and instrumentalities, and local government units [Sec 133(n)(o), LGC]
      - Taxation of Government Instrumentalities - Government instrumentalities are not liable to pay real property tax unless they are leased, or the beneﬁcial use over them is granted, to a taxable entity.
        
        GOCCS - No such tax exemption.
        
        The definition of "instrumentality" under Section 2(10) of the Introductory Provisions of the Administrative Code of 1987 uses the phrase "includes [...] government-owned or controlled corporations"
        
        which means that a government "instrumentality" may or may not be a "government- owned or controlled corporation."
        
        Government "instrumentality" is broader than the term "government-owned or controlled corporation."
  - - - Internal Revenue Allotment – Sec. 284-286
        
        Allocation to LGUs 285 - LGU shares in the internal revenue shall be collected in the following manner:
        
        (a) Provinces - Twenty-three percent (23%);
        
        (b) Cities - Twenty-three percent (23%);
        
        (c) Municipalities - Thirty-four percent (34%); and
        
        (d) Barangays - Twenty percent (20%)
        
        Local Development Projects 286 -
        
        (a) The share of each local government unit shall be released, without need of any further action, directly to the provincial, city, municipal or barangay treasurer, as the case may be, on a quarterly basis within five (5) days after the end of each quarter, and which shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose.
        
        (b) Nothing in this Chapter shall be understood to diminish the share of local government units under existing laws.
        
        Rules and Regulations 288 - The Secretary of Finance, in consultation with the Secretary of Budget and Management, shall promulgate the necessary rules and regulations for a simplified disbursement scheme designed for the speedy and effective enforcement of the provisions of this Chapter.
        
        Formula for Allocation - the share of each province, city, and municipality shall be determined on the basis of the following formula:
        
        (a) Population - Fifty percent (50%);
        
        (b) Land Area - Twenty-five percent (25%); and
        
        (c) Equal sharing - Twenty-five percent (25%)
      - Proportionate Share of Taxes -
        
        GR - LGUs shall have a 40% share in the national taxes based on the collection of the third ﬁscal year preceding the current ﬁscal year [Sec 284(c), LGC]
        
        Exception - When the national government incurs an unmanageable public sector deﬁcit, the President is authorized to reduce the IRA to 30% [Sec 284(c), LGC]
        
        Requisites for Exception -
        
        Unmanageable public sector deﬁcit;
        
        Recommendation of the Secretaries of
        a. Finance
        b. Internal and Local Government, and
        c. Budget and Management; and
        
        Consultation with (a) heads of both Houses of Congress, and (b) presidents of the liga. [Sec 284, par 2, LGC]
        
        Scope of Phrase National Taxes -
        
        In Mandanas v. Ochoa, the SC nulliﬁed the phrase “share in the national internal revenue taxes” under Sec 284(c) and ruled that the IRA should be based on the “national taxes”
        
        Congress may therefore not exclude any type of national tax.
      - Automatic Release of LGU Shares (286) - The share of each LGU shall be released, without need of any further action, directly to the respective treasurer on a quarterly basis within ﬁve (5) days after the end of each quarter, and which shall not be subject to any lien or holdback that may be imposed by the national government for whatever purpose [Sec 286(a), LGC]
        
        Sec. 4 of A.O. 372, withholding 10% of the LGUs' IRA "pending the assessment and evaluation by the Development Budget Coordinating Committee of the emerging ﬁscal situation" is invalid and unconstitutional. The “temporary” nature of the retention by the national government does not matter. Any retention is prohibited (Pimentel v. Aguirre)
        
        Since under Sec. 6, Art X of the Constitution, only the just share of local governments is qualiﬁed by the words “as determined by law,” and not the release thereof, the plain implication is that Congress is not authorized by the Constitution to hinder or impede the automatic release of the IRA (ACORD v. Zamora)
    - - Share in the Development of Natural Resources - Sec. 289-294
        
        Credit Financing – Sec. 295-303
        
        Scope of Credit Financing Powers (297) - Generally, LGU has the power to contract loans from any governments, domestic private banks or other lending institutions.
        
        (a) A local government unit may contract loans, credits, and other forms of indebtedness with any government or domestic private bank and other lending institutions to ﬁnance the construction, installation, improvement, expansion, operation, or maintenance of public facilities, infrastructure facilities, housing projects, the acquisition of real property, and the implementation of other capital investment projects, subject to such terms and conditions as may be agreed upon by the local government unit and the lender. The proceeds from such transactions shall accrue directly to the local government unit concerned.
        
        (b) A local government unit may likewise secure from any government bank and lending institution short, medium and long-term loans and advances against security of real estate or other acceptable assets for the establishment, development, or expansion of agricultural, industrial, commercial, house ﬁnancing projects, livelihood projects, and other economic enterprises.
        
        (c) Government ﬁnancial and other lending institutions are hereby authorized to grant loans, credits, and other forms of indebtedness out of their loanable funds to local government units for purposes speciﬁed above.