LOCAL TAXATION AND REAL PROPERTY TAXATION ( FOR TAX REVIEW) PROF.

CABANEIRO OUTLINE
TOPICS FOR DISCUSSION:

1. Basis of local taxing powers - Section 5, Article X of the Philippine Constitution which makes local
government autonomous and independent of the National Government in terms of revenue raising
through collection and taxes and fees to make them self-sufficient but at the same time to see to it that
such taxing powers are properly rationalized and limited by law. Unlike the National Government, the
power of local governments to tax is not inherent in nature but more of a delegated authority.

2. Discussion of the fundamental principles governing local taxation (Sec. 130,LGC)

Section 130. Fundamental Principles. - The following fundamental principles shall govern the
exercise of the taxing and other revenue-raising powers of local government units:

(a) Taxation shall be uniform in each local government unit;

(b) Taxes, fees, charges and other impositions shall:
(1) be equitable and based as far as practicable on the taxpayer's ability to pay;
(2) be levied and collected only for public purposes;
(3) not be unjust, excessive, oppressive, or confiscatory;
(4) 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.

3. The local taxing power is exercisable by the Sangguniang Panlalawigan (Provinces), Sangguniang
Panglungsod (cities), Sangguniang Pangbayan (municipalities) & Barangay Council (for barangays) (Sec.
132 LGC)
Section 132. Local Taxing Authority. - 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.

4. What is a local tax ordinance?

Kinds
1. Those imposing a fee or tax specifically authorized by the LGC for the Local Government Units
to impose.
2. Those imposing a fee or tax not specifically enumerated under the LGC or taxed under the
provisions of the NIRC or other applicable laws (under its residual taxing power) (LGC, Sec. 186)
a. Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive,
confiscatory or contrary to declared national policy:
b. Provided, further, That the ordinance levying such taxes, fees or charges shall not be
enacted without any prior public hearing conducted for the purpose.
5. What are the requisites for a valid tax ordinance?
a. Filing of proposal;
b. Publication or posting;
Within 10 days from filing the same, it shall be posted for 3 consecutive days in a
newspaper of general circulation or shall be posted simultaneously in at least 2
conspicuous places within the territorial jurisdiction of the LGU ( LGC Sec 198)
c. Notification;
The Sanggunian shall cause the sending of written notices of the proposed ordinance
enclosing a copy to interested or affected parties operating or doing business within the
territorial jurisdiction of the LGU. The notice(s) hall specify the date(s) and venue of the
public hearing (DOMONDON, Vol. V, supra at 65)

d. Mandatory Public Hearing

The public hearing shall be held no less than 10 days from the time the notices were
sent out, posted or published (Onsuco v Malones, GR No. 182065, Oct. 27, 2009)

NOTE: While the Sanggunian are required to conduct public hearings prior to the
enactment of tax ordinances and revenue measures (LGC Secs. 186 and 187), the
National Legislature, on the other hand, has the discretion whther or not they would
conduct public hearings before the enactment of tax laws (SABABAN, supra at 9 Memaid
2016)

6. What taxes may be imposed by provinces, municipalities, cities and barangays? Who are the person
liable, the tax base, exceptions and time of payment. In case of provinces, they can impose professional
tax, the transaction taxes, the tax rate, tax base, exception, time of payment and place of payment.
Various illustrative problems will be discussed in this connection.
(Memaid 2016 page 262)

7. In case of municipalities, they may levy taxes, fees and charges not otherwise levied by provinces , but
they can impose taxes on various types of business (Sec. 143, LGC). What kind of businesses are taxable
by municipalities, the tax rate and the tax base?

8. What are the taxing powers of cities. (Sec. 151, LGC)? Read City of Manila vs. Coca Cola Bottlers Phil.
Inc, August 4, 2009). Read Super Grocers Inc. vs. Municipality of San Pedro, CTA AC No. 86, February, 25,
2013.

9. Distinguish Business Tax from Income Tax

10. Rates of Tax in Municipalities within Metro Manila area

11. Taxation of Condominium Corporations (Yamane vs. BA Lepanto Condominium Corp., October 25,
2009)

12. How business taxes paid? (Se. 146, LGC)

13. What is the Presumptive Income Level Approach Assessment (PILAA) . Read (First Planters Pawnshop
Inc. vs. City Treasurer of Pasay City, CTA EB No. 501, Dec. 10, 2010.
14. What is the situs of Business Tax (Sec. 150, LGC)
15. What are requirements for retirement of business (Sec. 145, LGC) Read the case of Mobil Philippines
Inc. vs. City Treasurer of Makati, July 14, 2005.

16. What are the requisites for imposition of fee or tax by LGC?

17. What are the requisites for the imposition of fee or tax not specifically enumerated under the LGC
(Residual Taxing Power)?

18. What is the principle of Pre-emption or Exclusionary Doctrine in Local Taxation?

19. What are the common limitations on the local taxing powers?
(a) LGUs cannot levy customs duties, registration fees of vessels, tonnage dues, wharfage on
wharves subject to certain exceptions;

(b) LGUs cannot impose taxes, fees and charges on countryside and barangays business
enterprise and on cooperatives duly registered under R.A. 6810 & R.A. 6938;

(c) LGUs cannot impose taxes, fees and charges on goods carried into, out of, or passing through
the territorial jurisdictions of local government units;

(d) LGUs cannot impose taxes on gross receipts of transportation contractors, common carriers
and other persons engaged in transportation of passengers for hire

(e) LGUs cannot impose taxes which are levied by the National Internal Revenue Code, unless
otherwise provided for by the LGC;

(f) LGUs cannot impose taxes imposed under the Tariff & Customs Code

(g) LGUs cannot imposition taxes which contravenes existing governmental policies or which are
violative of the fundamental principles of taxation;

(h) LGUs cannot impose taxes, fees and charges imposed under special laws.

20. Describe the common revenue-raising powers of local government units under Sections 153 to 155
of the LGC

21. Describe the taxing powers of Barangays, (Sec. 152, LGC) 22. What is the Community Tax? Who are
authorized to levy? Who are the persons liable? Who are exempted from paying the tax?

23. Since there is no imprisonment penalty under the Constitution for non-payment of Community Tax,
what is the assurance of people complying with it?

24. What are certain occasions when Community Tax Certificate is Required to be presented?

25. When may LGUs exercise its residual taxing powers (Sec. 186, LGC)

26. What are the limitations on the residual taxing powers?

27. Discuss the tax exemptions existing before the effectivity of the LGC? What are the exceptions?

28. What are prescriptive periods for the assessment and collection of local taxes?

29. What are remedies of local government units for tax delinquencies?

30. What are the remedies of the taxpayer if aggrieved by the local government units?

REAL PROPERTY TAXES

1. What are fundamental principles governing real property taxes?

2. What are real property taxes?

3. What are the theory of real property taxes?

4. What are the nature or characteristics of real property taxes?

5. What is the definition of real property?

6. Discuss Mindanao Bus Co. vs. City Assessor, September 29, 1962

7. Which local government units may levy real property taxes?

8. What are the rules as to imposition of real property taxes?

9. What is the extent of the taxing powers of local government units on imposition on real property
taxes?

10. Describe the procedure in the administration of real property tax

a) Declaration of real property

b) Listing of Real Property in the Assessment Rolls

c) Appraisal and Valuation of Real Property

d) Determination of fair market value for land, for machinery

e) Determination of assessed value and tax due (Sec. 218, LGC)

11. What is the basis for assessment of real property for realty tax purposes?

12. What is the meaning of assessment level?

13. Distinguish fair market value from assessed value.

14. How are real properties classified under the Real Property Tax Code for assessment purposes? (Sec.
215, LGC)

15. How are valuation of real property made?

16. Describe the procedure for the determination of real property tax due?

17. What are the rules for the payment and collection of real property tax?

18. What is the prescriptive rules for the collection of real property tax? (Sec. 270, LGC)

19. What are the grounds for the suspension of the running of the prescriptive periods for real property
tax collections? (Sec. 270, LGC)

20. What are the types of real property tax?

a. Basic real property tax

b. Special levies

c. Special Education Fund

d. Additional Ad Valorem on Idle Lands

e. What are not considered Idle Lands? f. What are the idle Lands exempt from the additional
levy?

21. What is the reason for imposing ad valorem taxes on Idle lands?

22. What are Special Assessments? 23. What are the properties exempted from real property tax ? (Sec.
234, LGC)

24. What are the remedies of the local government units for the collection of real property tax in case of
delinquency?

25. What are the remedies of the taxpayers in case they are aggrieved by the action of the local
government on enforcement of real property tax impositions?

26. What is the role of the Local Board of Assessment Appeals?

27. What is the role of the Central Board of Assessment Appeals?

ADDITIONAL CASES:

1. Mactan- Cebu International Airport Authority vs. LapuLapu City, (G.R. 181756-June 15, 2015)

2. Demaala vs. Commission on Audit (G.R. 199752- February 17, 2015)

3. City of Makati vs.Trans-Asia Power Generation Corp. ( CTA En Banc 1086-January 21, 2015)

4. National Grid Corp. of the Phil vs. CBAA, LBAA of Cabanatuan (CTA EnBanc 1052- January 28,
2015)