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LOCAL AND REAL PROPERTY TAXATION

Republic Act No. 7160, Local Government Code (LGC) of 1991, as amended

Implementing Rules and Regulations of the LGC

LOCAL TAXATION

I. PRELIMINARY MATTERS

a. Power to Tax of Local Government Units

i. Sec. 5 Art. X, 1987 Constitution (compare with 1935 and 1973 provisions)

1935 1973 1987

Section 18. All appropriation, revenue
or tariff bills, bills authorizing increase
of the public debt, bills of local
application, and private bills, shall
originate exclusively in the House of
Representatives, but the Senate may
propose or concur with amendments.
Section 5. Each local government unit
shall have the power to create its own
sources of revenue and to levy taxes,
subject to limitations as may be
provided by law.
Section 5. Each local government unit
shall have the power to create its own
sources of revenues and to levy taxes,
fees and charges subject to such
guidelines and limitations as the
Congress may provide, consistent
with the basic policy of local
autonomy. Such taxes, fees, and
charges shall accrue exclusively to the
local governments.

ii. Sec. 129, LGC

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.

iii. Direct or Delegated Authority?

Pepsi Cola Bottling vs. Municipality of Tanauan 69 SCRA 460

Mactan Cebu International Airport Authority vs. Marcos – GR No. 120082, Sept. 11, 1996

Manila Electric Company vs. Province of Laguna – GR No. 131359, May 5, 1999

NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003

City Government of Quezon City vs. Bayan Telecommunications – GR No. 162015, March 6, 2006

Film Development Council of the Philippines vs. Colon Heritage Realty, GR No. 203754 dated June 16, 2015.
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iv. Local Taxing Authority (Sec. 132)

1. Construction of Tax Ordinances (Sec. 5b)

Petron Corp. vs. Mayor Tobias Tiangco – GR No. 158881, April 16, 2008

v. Procedure for Approval of and Effectivity of Tax Ordinances (Sec. 187)

Hagonoy Market vs. Mun. Of Hagonoy GR No. 137621, Feb. 6, 2002

vi. Publication (Sec. 188)

b. Other Preliminary Matters

i. Residual Powers of LGUs -Power to Levy Other Taxes, Fees or Charges (Sec. 186)
ii. Doctrine of Pre-emption or Exclusionary Rule

Victorias Milling Co., Inc. vs. Municipality of Victorias – L-21183, September 27, 1968

II. GENERAL PROVISIONS

a. Scope of taxing powers (Sec. 128)

b. Fundamental Principles (Sec. 130)

Film Development Council of the Philippines vs. Colon Heritage Realty, GR No. 203754 dated June 16, 2015.

c. Definitions (Sec. 131)

d. Common Limitations

i. Income Tax

1. Correlate with Sec. 143 (f) ii. Documentary Stamp Tax

iii. Transfer Taxes

1. Correlate with Sec. 135 iv. Customs Duties

vi. Taxes, Fees and Charges on Goods Passing Through the Territorial Jurisdiction of LGUs
1. Correlate with Sec. 155

Panaligan vs. City of Tacloban – GR No. L-9319, September 27, 1957

Palma Development Corp vs. Municipality of Malangas – GR No. 152492,

October 16, 2003

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vii. TFC on products sold by marginal farmers of fishermen

1. Definition of Marginalized Fishermen (Sec. 122)

City of Cebu vs. IAC 144 SCRA 710

viii. Taxes on BOI-registered enterprises

ix. Excise taxes under the NIRC/TFC on Petroleum Products

Petron Corp. vs. Tiangco – GR No. 158881, April 16, 2008

Province of Bulacan vs. CA – GR No. 126232, November 27, 1998

Batangas City vs. Pilipinas Shell Petroleum Corporation – GR No. 187631 dated July 8, 2015.

x. Percentage taxes and VAT

Pepsi Cola Bottling vs. Municipality of Tanuan 69 SCRA 460

Matalin Coconut Co, Inc. vs. The Municipal Council of Malabang, Lanao del Sur, GR No. L-28138 August 13, 1986

Pelizloy Realty Corp., vs. Province of Benguet, GR No. 183137, April 10, 2013

xi. Taxes on transportation contractors and common carriers

First Philippine Industrial Corporation vs. CA – GR No. 125948, December 29, 1998

City of Manila vs. Colet, GR No. 120051, December 10, 2014

xii. Taxes on premiums

xiii. TFC for registration of motor vehicles and issuance of licenses for driving
1. Correlate with Sec. 458 (3)(vi) of the LGV and Art. 99(a)(3)(vi) of the IRR of the LGC

LTO vs. City of Butuan – GR No. 131512, January 20, 2000

xiv. Taxes, Fees, or Charges on Philippine Products Actually Exported;

1. Correlate with Sec. 143 (c) xiv. TFC on CBBEs under RA No. 6810 and RA 6983

xv. TFC on the National Government, its agencies and instrumentalities and LGUs Philippine Fisheries Dev’t Authority
vs. CA GR No. 169836, GR No. July 31, 2007

Mactan Cebu International Airport Authority vs. Marcos – GR No. 120082, Sept. 11, 1996
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MIAA vs. CA – GR No. 155650, July 20, 2006

(To be discussed together with Secs.232 and 234 on Real Property Tax)

III. TAXING AND OTHER REVENUE RASING POWERS OF LGUS

a. Provinces
i Local Transfer Tax (Sec. 135)
ii Business Tax on Printing and Publication (Sec. 136)
iii Franchise Tax (Sec. 137)

NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003

Quezon City vs. ABS-CBN GR No. 166408. October 6, 2008

City of Iriga vs. Camarines Sur III Electric Cooperative, Inc., GR No. 192945, September 5, 2012

Smart Communications vs. City of Davao – GR No. 155491, September 16, 2008

iv Tax on Sand, Gravel and Quarry Resources (Sec. 138)

Municipality of San Fernando vs. Sta. Romana L-GR No. 30159, Mar. 31, 1987

Province of Bulacan vs. CA – GR No. 126232, November 27, 1998

v Professional Tax (Sec. 139)

1. Definition of Professionals (Sec. 238 (f) IRR of the LGC)
2. Professional practices his profession in several places (Sec. 228 (b) IRR of LGC)

vi Amusement Tax (Sec. 140) as amended by RA No. 9640 dated May 21, 2009

Pelizloy Realty Corp., vs. Province of Benguet, GR No. 183137, April 10, 2013 (Compare with old case of PBA vs. CA GR
No. 119122, August 8, 2000)

Alta Vista Golf and Country Club vs. The City of Cebu, GR No. 180235 dated January 20, 2016

vii. Annual Fixed Tax on Delivery Trucks / Vans (Sec. 141)

b. Municipalities
i Business Taxes (Sec. 143)

Ericsson Telecommunication vs. City of Pasig GR No. 176667, November 22. 2007
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Yamane vs. BA Lepanto – GR No 154992, October 25, 2005

City of Manila vs. Coca Cola Bottlers, GR No. 181845, August 4, 2009

Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB Case No. 386

February 12, 2009 (read also case decided by the CTA Division)

Cagayan Electric Power and Light Co., Inc., vs. City of Cagayan de Oro, GR No. 191761, November 14, 2012.

1. Catch all provision – Sec. 143 (h)

2. Rates of Tax within Metropolitan Manila (Sec. 144)
3. Retirement of Business (Sec. 145)

Mobil Phils. vs. City Treasurer of Makati GR No. 154092, July 14, 2005

4. Business Tax on Holding Companies

Michigan Holdings, Inc. vs. City Treasurer of Makati, CTA EB Case No. 1093 dated June 17, 2015

5. Payment of Business Taxes (Sec. 146)

6. Situs of Tax (Sec. 150) – Where to pay business tax?

a. With Branch or Sales Outlet

b. No Branch Sales or Outlet
c. With Factories, Project Offices, Plants and Plantations
d. Plantation Located at a place other than the place where factory is located
e. Two (2) or more factories, project offices, plants or plantations in different localities
f. See also IRR for rules on rolling stores (See Art. 243 of the IRR of the LGC)

7. Fees and Charges (Sec. 147)

8. Others (Sec. 148 and Sec. 149)

c. Cities (Sec. 151)

d. Barangay
i Tax on retailers (Sec. 152 a)
ii Service Fees or Charges (Sec. 152 b)
iii Barangay Clearance (Sec. 152 c) iv. Other Fees (Sec. 152 b)

e. Common Revenue Raising Powers

i Service Fees and Charges (Sec. 154)
ii Public Utility Charges (Sec. 155)
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iii Toll Fees or Charges (Sec. 156)

f. Other Matters
i Public Hearings Necessary? (Art. 324 IRR of the LGC vs. Sec. 187)

Figuerres vs. CA, GR No. 119172, March 25, 1999

ii Authority to Adjust Tax Rates (Sec. 191)

Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB Case No. 386

February 12, 2009 (read also case decided by the CTA Division)

Mindanao Shopping Destination Corporation vs. Duterte, GR No. 211093 dated June 6, 2017

iii Authority to Grant Tax Exemptions (Sec. 192) iv. Withdrawal of Tax Exemption Privileges (Sec. 193)

PLDT vs. City of Davao GR No. 143867, August 22, 2001

NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003

v. Community Tax

1. Who may impose(Sec. 156)

2. Individuals Liable to pay (Sec. 157)
3. Juridical Persons Liable to Community Tax (Sec. 158)
4. Exemptions (Sec. 159)
5. Place of Payment (Sec. 160)
6. Time of Payment (Sec. 161)
7. Community Tax Certificate (Sec. 162)
8. Presentation of CTC on certain occasions (Sec. 163)

IV. COLLECTION OF TAXES AND REMEDIES

a. Collection of Taxes
i. Tax Period and Manner of Payment (Sec. 165)
ii. Accrual of Tax (Sec. 166)
iii. Time of Payment (Sec. 167) iv. Surcharges and Penalties (Sec. 168)

NPC vs. City of Cabanatuan, GR No. 177332 dated October 1, 2014

v. Interests on Other Unpaid Revenues (Sec. 169)

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vi. Collection of Local Revenues by Treasurer (Sec. 170)

vii. Examination of Books of Accounts and Pertinent Records (Sec. 171)

b. Remedies of the Government

i. Local Government’s Lien (Sec. 173)
ii. Civil Remedies (Sec. 174)
iii. Distraint (Sec. 175) iv. Levy of Real Property (Sec. 176)

v. Advertisement and Sale (Sec. 178)

vi. Redemption of Property Sold (Sec. 179)
vii. Purchase of Property by LGU for want of bidder (Sec. 181)
viii. Resale of Real Estate Tax for TFC
ix. Judicial Action (Sec. 183)
x. Further Distraint and Levy (Sec. 184) xi. Personal Property Exempt from Distraint or Levy (Sec. 185)

c. Taxpayer’s Remedies
i. Question Constitutionality of Ordinance (Sec. 187)

Drilon vs. Lim GR No. 111249, August 4, 1994

Cagayan Electric Power and Light Co., Inc., vs. City of Cagayan de Oro, GR No.191761, November 14, 2012.

Smart Communications, Inc. vs. Municipality of Malvar, GR No. 204429, GR No. 204429 dated February 18, 2014.

ii. Publication (Sec. 188)

Coca-Cola Bottlers vs. City of Manila - GR No. 156252, June 27, 2006

iii. Periods of Assessment and Collection (Sec. 194) iv. Protest of Assessment (Sec. 195)

San Juan vs. Castro – GR No. 174617, December 27, 2007

PLDT vs. City of Balanga, CTA EB Case No. 413, June 3, 2009

China Banking vs. City Treasurer of Manila, GR No. 204117 dated July 1, 2015 – (jurisdiction issue) v. Appeal to the
CTA

vi. Claim for Refund (Sec. 196)

Mindanao Shopping Destination Corp. Vs. Davao City, CTA AC No. 6, May 31, 2011

vii. Is injunction available?

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Angeles City vs. Angeles Electric Corporation, GR No. 166134 dated June 29, 2010.

REAL PROPERTY TAXATION

I. PRELIMINARY MATTERS

a. Definition of Real Property Tax

Villanueva vs. City of Iloilo, L-26521, December 28, 1968

b. Who should pay the real property tax?

Baguio vs. Busuego, GR No. 29772, September 18, 1980

NPC vs. Province of Quezon, GR No. 171586, July 15, 2009

NPC vs. Province of Quezon, GR No. 171586, January 25, 2010 (Resolution)

GSIS vs. City Treasurer and Assessor of Manila, GR No. 186242, December 23, 2009

c. Fundamental Principles (Sec. 198)

d. Important Definitions (Sec. 199)

i. Real Property for RPT Purposes (415 NCC)
ii. Machineries vs. 415 of the NCC

Caltex Philippines, Inc. vs. CBAA – GR No. 50466, May 31, 1982

Manila Electric Co. vs. CBAA L-47943, May 31, 1982

Manila Electric Company vs. The City of Assessor and City Treasurer of Lucena City, GR No. 166102 dated August 5,
2015.

Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No. 183416 dated October 5, 2016.

Capitol Wireless, Inc. vs. Provincial Treasurer of Batangas, GR No. 180110 dated May 30, 2016.

iii. Actual Use

Patalinghug vs. CA, GR No. 104786, January 27, 1994

iv. Appraisal

v. Assessment
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vi. Assessed Value

e. Appraisal of Real Property (Sec. 201)

Sesbreno v. CBAA, 270 SCRA 263

f. Declaration of Real Property

i. By Owner or Administrator (Sec. 202)
ii. In case improvements are made (Sec. 203)
iii. By Assessor (Sec. 204)
iv. Notification of Transfer of Real Property Ownership (Sec. 208)
g. Assessment of Real Property
i. Preparation of Schedule of Fair Market Values (Sec. 212)

Lopez vs. City of Manila, GR No. 127139 February 19, 1999

ii. Classes of Real Property for Assessment (Sec. 215)

iii. Special Classes of Real Property (Sec. 216)

City Assessor of CebuCity vs. Association de Benevola de Cebu – GR No. 152904, June 8, 2007

iv. Actual Use as Basis for Assessment (Sec. 217)

Testate Estate of Concordia Lim vs. City of Manila – GR No. 90639, February 21, 1990)

Patalinghug vs. CA, GR No. 104786, January 27, 1994

LRTA vs. CBAA – GR No. 127316, October 12, 2000

Allied Banking Corporation vs. Quezon City Government – GR No. 154126, October 11, 2005

v. Assessment Levels (Sec. 218)

vi. General Revision of Assessments and Property Classification (Sec. 219)
vii. Valuation of Real Property (Sec. 220)

Allied Bank vs. Quezon City Government – GR No. 154126, October 11, 2005

viii. Date of Effectivity of Assessment or Reassessment (Sec. 221)

ix. Assessment of Property Subject to Back Taxes (Sec. 222)

Sesbreno v. CBAA, 270 SCRA 263

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x. Notification of New or Revised Assessment (Sec. 223)

Manila Electric Company vs. The City of Assessor and City Treasurer of Lucena City, GR No. 166102 dated August 5,
2015.

xi. Appraisal and Assessment of Machinery (Sec. 224)

xii. Depreciation Allowance for Machinery (Sec. 225)
h. Condonation of RPT
i. Condonation and Reduction of RPT (Sec. 276)

ii. Condonation or Reduction of RPT by President (Sec. 277)

II. IMPOSITION OF REAL PROPERTY TAX

a. Power to Levy Real Property Tax (Sec. 232)

b. Rates of Levy (Sec. 233)

Allied Bank vs. Quezon City Government – GR No. 154126, October 11, 2005

c. Exemptions from RPT (Sec. 234)

i. Proof of Exemption from RPT (Sec. 206)

NPC vs. Province of Quezon, GR No. 171586, January 25, 2010 (Resolution)

Camp John Hay Development Corp. vs. CBAA, GR No. 169234, October 2, 2013. (Concurring opinion of Justice Carpio
only)

ii. Constitutional Provisions on RPT Exemption

1. Sec. 28, Art. VI

Lung Center of the Philippines vs. QC – 433 SCRA 119

2. Sec. 4(3), Art. XIV

Fels Energy, Inc. vs. Province of Batangas GR No. 168557, February 16, 2007

Philippine Fisheries Dev’t Authority vs. CA GR No. 169836, GR No. July 31, 2007

Mactan Cebu International Airport Authority vs. Marcos – GR No. 120082, Sept. 11, 1996
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MIAA vs. CA – GR No. 155650, July 20, 2006

Mactan-Cebu International Airport Authority vs. City of Lapu-Lapu – GR No. 181756 dated June 15, 2015

Provincial Assessor of Marinduque vs. CA – GR No. 170532, April 4, 2009

NPC vs. Province of Quezon, GR No. 171586, July 15, 2009

NPC vs. Province of Quezon, GR No. 171586, January 25, 2010 (Resolution)

GSIS vs. City Treasurer and Assessor of Manila, GR No. 186242December 23, 2009

City of Pasig vs. Republic, GR No. 185023 dated August 24, 2011

Republic vs. City of Paranaque, GR No. 191109 dated July 28, 2012

Angeles University Foundation vs. City of Angeles, GR No. 189999 June 27, 2012

City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26, 2014

Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No. 183416 dated October 5, 2016.

d. Additional Levy for SEF (Sec. 235)

e. RPT on Idle Lands (Sec. 236)
i. Coverage of Idle Lands (Sec. 237)
ii. Idle Lands Exempt from Tax (Sec. 238)
f. Special Levies (Sec. 240)
i. Ordinance Imposing Special Levy (Sec. 241)
ii. Publication and Public Hearing (Sec. 242)
iii. Fixing Amount of Special Levy (Sec. 243) iv. Taxpayers Remedies (Sec. 244)

v. Accrual of Special Levy (Sec. 245)

III. IMPOSITION OF REAL PROPERTY TAX

a. Date of Accrual (Sec. 246)

b. Notice of Time of Collection (Sec. 249)
c. Payment of RPT in Instalments(Sec. 250)
d. Tax Discount for Advanced Prompt Payment (Sec. 251)

IV. REMEDIES

a. Local Government Unit’s Remedies

i. Date of Accrual of Tax (Sec. 246)
ii. LGU’s Lien (Sec. 257)
iii. Interest on Unpaid RPT (Sec. 255) iv. Period to Collect (Sec. 270)
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1. Suspension of Period to Collect

v. Levy on Real Property (Sec. 258)

1. Advertisement and Sale (Sec. 260)

Puzon vs. Abelera 169 SCRA 789

Spouses Tan vs. Bantequi GR No. 154027 October 24, 2005

vi. Redemption of Property Sold (Sec. 261)

vii. Purchase of Property by the Local Government Units for Want of Bidder (Sec.

263) viii. Court Action for Collection (Sec. 266)

b. Taxpayer’s Remedies
i. Action Assailing Validity of Tax Sale (Sec. 267) ii. Action Involving Ownership (Sec. 268)

iii. Payment under Protest (Sec. 252)

Manila Electric Company vs. The City of Assessor and City Treasurer of Lucena City, GR No. 166102 dated August 5,
2015.

Ramie Textile vs. Mathay - 89 SCRA 586

Ty vs. Trampe – GR No. 117577, December 1, 1995

Olivarez vs. Marquez - 438 SCRA 679

NPC vs. Province of Quezon, GR No. 171586, July 15, 2009

NPC vs. Province of Quezon, GR No. 171586, January 25, 2010 (Resolution) Camp John Hay Development Corp. vs.
CBAA, GR No. 169234, October 2, 2013. (include concurring opinion of Justice Carpio)

NPC vs. Municipal Government of Navotas, GR No. 192300 dated November 24, 2014

City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26, 2014

CE Casecnan Water and EnergyCompany, Inc. vs. The Province of Nueva Ecija, GR No. 196278 dated June 17, 2015.

NPC vs. Provincial Treasurer of Benguet, GR No. 209303 dated November 14, 2016.

Capitol Wireless, Inc. vs. Provincial Treasurer of Batangas, GR No. 180110 dated May 30, 2016.

iv. Refunds (Sec. 253)

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Allied Banking vs. Quezon City Government – GR No. 154126, September 15, 2006 – Motion for Clarification of
Decision

v. Assessment Appeals

1. Appeal with the LBAA (Sec. 226)

City Government of Quezon City vs. Bayan Telecommunications – GR No. 162015, March 6, 2006

Systems Plus Computer College of Caloocan vs. Local Government of Caloocan, GR No. 146382. August 7, 2003

Fels Energy, Inc. vs. Province of Batangas GR No. 168557, February 16, 2007

2. Action by the LBAA (Sec. 229)

3. Appeal to the CBAA (Sec. 229)
4. Appeal to the CTA En Banc
5. Effect of Appeal on Payment of RPT (Sec. 231)