TAXATION LAW REVIEW FINALS

BONUS QUESTIONS

Describe the nature of the following:

DOCUMENTARY STAMP TAX - is a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or
transfer of an obligation, right or property incident thereto.

EXCISE TAX - is a tax on the production, sale or consumption of a commodity in a country. It refers to an indirect type of taxation imposed on the
manufacture, sale or use of certain types of goods and products.

PERCENTAGE TAX - tax is a business tax imposed on persons or entities/transactions:

Who sell or lease goods, properties or services in the course of trade or business and are exempt from value-added tax (VAT) under Section 109
(w) of the National Internal Revenue Code, as amended, whose gross annual sales and/or receipts do not exceed Php 1,919,500 and who are not
VAT-registered; and

Engaged in the following industries/ transactions:

Cars for rent or hire driven by the lessee, transportation contractors, including persons who transport passengers for hire, and other domestic
carriers of passengers by land (except owners of animal-drawn two-wheeled vehicle) and keepers of garages

International air/shipping carriers doing business in the Philippines on their gross receipts derived from transport of cargo from the Philippines
to another country

Franchise grantees of –

radio and/or television broadcasting whose gross annual receipts for the preceding year do not exceed Php 10,000,000.00 and did not opt to
register as VAT taxpayers

gas and water utilities

radio and/or television broadcasting whose gross annual receipts for the preceding year do not exceed Php 10,000,000.00 and did not opt to
register as VAT taxpayers

gas and water utilities

Overseas dispatch, message or conversation transmitted from the Philippines, except those transmitted by the Philippine government, any
embassy and consular offices of a foreign government, public international organizations enjoying exemptions pursuant to an international
agreement and news messages to a bona fide correspondent furnishing general news service

Banks and non-bank financial intermediaries performing quasi-banking functions

Other non-bank financial intermediaries (including pawnshops)

Person, company or corporation (except purely cooperative companies or associations) doing life insurance business

Fire, marine or miscellaneous agents of foreign insurance companies

Proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball games, Jai-Alai and racetracks,
including videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music lounges

Winnings in horse races

Sale, barter or exchange of shares of stock listed and traded through the local stock exchange or through initial public offering
CASE

Petron Corporation vs Mayor Tobias Tiangco

G.R. No. 158881

Can local government unit is empowered under the Local Government Code (the LGC) to impose business taxes on persons or entities engaged
in the sale of petroleum products?

No. The controversy hinges on the correct interpretation of Section 133(h) of the LGC:

Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise
of the taxing powers of provinces, cities, municipalities, and Barangays shall not extend to the levy of the following:

xxx

(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on
petroleum products;

Section 133(h) states that local government units shall not extend to the levy of xxx taxes, fees or charges on petroleum products. Respondents
assert that the phrase taxes, fees or charges on petroleum products pertains to the imposition of direct or excise taxes on petroleum products,
and not business taxes. If the phrase actually pertains to excise taxes, then it would be an exercise in utter redundancy, since the preceding
phrase already prohibits the imposition of excise taxes on articles already subject to such taxes under the NIRC, such as petroleum products.
There would be no sense on the part of the legislature to twice emphasize in the same sentence that excise taxes on petroleum products are
beyond the pale of local government taxation.

The language of Section 133(h) makes plain that the prohibition with respect to petroleum products extends not only to excise taxes thereon,
but all taxes, fees and charges. The earlier reference in paragraph (h) to excise taxes comprehends a wider range of subjects of taxation: all
articles already covered by excise taxation under the NIRC, such as alcohol products, tobacco products, mineral products, automobiles, and such
non-essential goods as jewelry, goods made of precious metals, perfumes, and yachts and other vessels intended for pleasure or sports. In
contrast, the later reference to taxes, fees and charges pertains only to one class of articles of the many subjects of excise taxes, specifically,
petroleum products. While local government units are authorized to burden all such other class of goods with taxes, fees and charges, excepting
excise taxes, a specific prohibition is imposed barring the levying of any other type of taxes with respect to petroleum products.
 Batangas City vs. Pilipinas Shell Petroleum Corporation –

GR No. 187631

Whether a LGU is empowered under the LGC to impose business taxes on persons or entities engaged in the business of manufacturing and
distribution of petroleum products.

No. Among the common limitations on the taxing powers of LGUs under Section 133 of the LGC is paragraph (h) which states:

SECTION 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the
exercise of taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the
following:chanRoblesvirtualLawlibrary

XXXX

(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on
petroleum products.;13

From the foregoing, Section 133(h) clearly specifies the two kinds of taxes which cannot be imposed by LGUs: (1) excise taxes on articles
enumerated under the NIRC, as amended; and (2) taxes, fees or charges on petroleum products.

Indisputably, the power of LGUs to impose business taxes derives from Section 14314 of the LGC. However, the same is subject to the explicit
statutory impediment provided for under Section 133(h) of the same Code which prohibits LGUs from imposing "taxes, fees or charges on
petroleum products." It can, therefore, be deduced that although petroleum products are subject to excise tax, the same is specifically excluded
fromthe broad power granted to LGUs under Section 143(h) of the LGC to impose business taxes.

Additionally, Section 133(h) of the LGC makes plain that the prohibition with respect to petroleum products extends not only to excise taxes
thereon, but all "taxes, fees or charges." The earlier reference in paragraph 143(h) to excise taxes comprehends a wider range of subject of
taxation: all articles already covered by excise taxation under the NIRC, such as alcohol products, tobacco products, mineral products,
automobiles, and such non-essential goods as jewelry, goods made of precious metals, perfumes, and yachts and other vessels intended for
pleasure or sports. In contrast, the later reference to "taxes, fees and charges" pertains only to one class of articles of the many subjects of
excise taxes, specifically, "petroleum products." While LGUs are authorized to burden all such other class of goods with "taxes, fees and
charges," excepting excise taxes, a specific prohibition is imposed barring the levying of any other type of taxes with respect to petroleum
products.15chanrobleslaw

It is likewise irrefutable that the specific exemption provided under Section 133 of the LGC prevails over Section 143 of the same Code.

First, Section 133 of the LGC is a specific provision that explicitly withhold from LGUs the power to impose taxes, fees and charges on petroleum
products.

Strictly speaking, as long as the subject matter of the taxing powers of the LGUs is the petroleum products per se or even the activity or privilege
related to the petroleum products, such as manufacturing and distribution of said products, it is covered by the said limitation and thus, no levy
can be imposed.16chanrobleslaw

On the contrary, Section 143 of the LGC defines the general power of LGUs to tax businesses within its jurisdiction. Thus, the omnibus grant of
power to LGUs under Section 143(h) of the LGC cannot overcome the specific exception or exemption in Section 133(h) of the same Code. This is
in accord with the rule on statutory construction that specific provisions must prevail over general ones. A special and specific provision prevails
over a general provision irrespective of their relative positions in the statute. Generalia specialibus non derogant. Where there is in the same
statute a particular enactment and also a general one which in its most comprehensive sense would include what is embraced in the former, the
particular enactment must be operative, and the general enactment must be taken to affect only such cases within its general language as are
not within the provisions of the particular enactment.