Tax Pointers by Sir Baniqued
Tax Pointers by Sir Baniqued
Tax Pointers by Sir Baniqued
14. Know
how
the
Improperly
Accumulated
Earnings
Tax
in
Sec.
29
works
and
what
defenses
are
available
against
an
assessment
for
IAET.
15. Joint
ventures
between
landowner
and
real
estate
developer
for
construction
projects
no
longer
considered
an
exempt
joint
venture
by
BIR.
Now
taxable
as
a
corporation.
ESTATE
AND
DONOR’S
TAX
1. Basis
of
estate
tax
is
FMV
of
properties
at
the
time
of
death,
not
FMV
at
the
time
of
filing
of
the
tax
return.
2. Properties
“in
which
decedent
had
interest”
includible
in
gross
estate,
even
if
not
registered
in
decedent’s
name.
3. “Transfers
with
retained
interest”
includible
in
gross
estate,
if
interest
is
retained
for
life,
for
a
period
not
ascertainable
without
reference
to
death,
or
for
any
period
that
does
not
in
fact
end
before
death.
4. Claims
against
the
estate
existing
at
the
time
of
the
decedent’s
death
are
deductible
from
the
gross
estate
regardless
of
any
post-‐death
developments
such
as
when
a
claimant
subsequently
settled
for
a
lesser
amount
or
condoned
the
debt
altogether.
Dizon
case.
This
subsequent
development
does
not
preclude
the
heirs
from
claiming
a
deduction
for
the
entire
amount
of
the
obligation
prior
to
the
reduction
or
condonation.
5. Reciprocity
provision
in
Sec.
104
as
basis
for
exemption
from
estate
or
donor’s
tax
in
relation
to
non-‐resident
aliens.
Applies
only
to
intangibles.
6. Effect
of
renunciation
by
heirs
of
their
hereditary
share:
6.1 by
or
among
heirs
of
different
degree
–
renunciation
subject
to
donor’s
tax.
E.g.,
surviving
spouse
waiving
her
conjugal
share
in
favor
of
her
children
6.2 by
or
among
heirs
of
same
degree
–
renunciation
NOT
subject
to
donor’s
tax.
E.g.,
surviving
spouse
waiving
her
share
as
an
heir
(hereditary
share,
not
conjugal
share)
in
favor
of
her
children,
or
one
child
waiving
in
favor
of
all
the
siblings.
Exception
to
exception:
when
a
child
renounces
his
share
in
favor
of
one
or
more
specific
heirs,
in
which
case
donor’s
tax
applies.
7. Transfers
for
less
than
adequate
consideration
subject
to
donor’s
tax.
Similarly,
where
a
parent
buys
a
property
and
has
the
property
titled
in
the
name
of
his
child,
that
is
tantamount
to
a
donation
subject
to
donor’s
tax.
Same
when
shares
of
stock
are
sold
at
lower
than
book
value.
Philamcare
case.
8. Generally,
donative
intent
is
essential
before
a
transfer
may
be
considered
a
gift
subject
to
donor’s
tax.
Where
commercial,
business
or
compensatory
motive
is
the
overriding
consideration
for
the
supposed
“donor”,
there
is
no
gift
subject
to
donor’s
tax.
However,
see
Philamcare
case.
VALUE-‐ADDED
TAX
1. Know
the
concept
of
output
VAT,
input
VAT
and
VAT
payable.
2. Know
the
transactions
considered
“deemed
sale”
3. Transaction
incidental
to
conduct
of
trade
or
business
is
VATable.
E.g.,
sale
by
a
manufacturer
of
scrap
or
used
motor
vehicles
4. Funds
held
in
trust
or
earmarked
for
a
third
party
not
part
of
VATable
gross
receipts.
E.g.,
airfare
or
hotel
accommodation
and
land
tour
charges
collected
by
a
travel
agent
on
behalf
of
their
principals.
3
5. Even
transactions
not
entered
into
for
profit
but
merely
on
“reimbursement
basis”
are
VATable.
Commonwealth
Mgt.
&
Services
Corp.
6. Sales
to
PEZA-‐registered
enterprises
are
zero-‐rated.
PEZA
zone
considered
like
a
“foreign
territory’,
hence,
sales
to
enterprises
doing
business
there
considered
an
“export
sale”.
7. In
order
for
sale
of
services
to
foreign
persons
to
be
zero-‐rated,
the
foreign
person
must
be
doing
business
OUTSIDE
the
Philippines,
or,
if
not
engaged
in
business,
must
be
physically
outside
the
Phils,
and
consideration
is
in
foreign
currency
inwardly
remitted.
Burmeister,
Placer
Dome
cases
8. Know
the
transactions
exempt
from
VAT,
particularly
those
that
personally
impact
an
ordinary
person,
like
lease
of
apartments
or
residential
properties
and
sale
of
real
properties.
Note
the
new
thresholds,
P12,800,
P1,919,500,
P3,199,000
9. Note
that
transactions
that
are
exempt
from
VAT
under
Sec.
109(W)
because
less
than
the
P1,919,500
threshold
are
nonetheless
subject
to
the
3%
percentage
tax
under
Sec.
116.
10. Allocation
of
input
VAT
between
VATable
and
exempt
transactions.
11. Amortization
of
input
VAT
on
depreciable
goods
in
Sec
110
12. Final
withholding
VAT
on
transactions
with
government.
Understand
how
it
works.
13. Period
within
which
to
file
a
refund
or
tax
credit
claim
for
input
VAT
on
zero-‐
rated
transactions
under
Sec.
112.
The
120-‐30
day
rule.
Aichi
Forging,
Mirant,
San
Roque.
NOTE:
Compare
Sec.
112
with
Sec.
229
REMEDIES
1. Taxpayer
may
amend
his
tax
return
within
3
years
from
filing,
provided
he
has
not
yet
been
served
any
notice
for
audit
or
investigation.
2. What
constitutes
a
denial
of
taxpayer’s
protest?
Issuance
by
the
BIR
of
final
notice
before
seizure,
final
demand
letter,
filing
of
collection
case,
issuance
of
warrant
of
distraint
and
levy
or
garnishment,
etc.
3. Filing
of
MR
of
denial
of
protest
(i.e.,
Final
Decision
on
Disputed
Assessment]
does
not
toll
the
running
of
the
30-‐day
period
to
appeal
to
the
CTA.
4. Scope
of
jurisdiction
of
CTA.
Study
cases
or
matters
on
which
CTA
has
original
vs.
appellate
jurisdiction.
See
CTA
Charter.
5. Read
again
British
American
Tobacco,
Asia
International
Auctioneers,
and
Leal
re.
issue
on
whether
it
is
CTA
or
regular
courts
(e.g.,
RTC)
that
has
jurisdiction.
6. Adverse
rulings
of
the
CIR
are
appealable
to
the
DOF
Secretary.
Appeal
from
adverse
decision
of
the
DOF
Secretary,
in
turn,
is
to
the
Court
of
Tax
Appeals,
not
the
Office
of
the
President
or
the
Court
of
Appeals.
Philamcare
case
7. Period
to
appeal
to
the
CTA.
See
application
of
the
180-‐day
rule
in
RCBC
and
Lascona
cases.
8. Filing
of
an
MR
with
the
CTA
in
Division
jurisdictional
before
appealing
to
the
CTA
En
Banc.
Gelmart
Industries,
Marina
Sales,
Inc.
9. Prescriptive
period
for
refund
or
tax
credit
claims
–
2
years
from
payment.
Sec.
229.
Distinguish
from
input
VAT
refund
or
tax
credit
claims
relating
to
zero-‐
rated
sales
–
2
years
from
close
of
the
taxable
quarter
when
sales
were
made.
Sec.
112
10. Effect
of
supervening
event
on
period
to
file
refund
or
tax
credit
claim
–
none.
It
does
not
toll
the
running
of
the
period.
4
11. Proper
party
to
file
a
refund
or
tax
credit
claim.
Wander
Phils.,
Procter
&
Gamble,
Silkair
12. Taxes
not
subject
of
set-‐off.
13. Once
chosen
or
indicated
in
tax
return,
option
to
carryover
overpaid
tax
or
excess
withholding
tax
to
succeeding
taxable
year
or
claim
a
refund
or
tax
credit
is
irrevocable.
14. May
the
Gov’t
offset
deficiency
assessments
against
refund/tax
credit
claims
of
the
taxpayer?
No,
said
the
Supreme
Court
in
the
earlier
cases
of
Republic
v.
Mambulao
Lumber
Co.
and
Domingo
v.
Garlitos
because
the
offsetting
deprives
the
taxpayer
of
due
process
considering
that
the
deficiency
assessment
will
have
to
be
acted
upon
independently
of
the
refund
claim,
and
defenses
raised
by
the
taxpayer
will
have
to
be
addressed.
If
offsetting
were
automatically
allowed,
the
right
of
the
taxpayer
to
protest
the
assessment
is
rendered
nugatory.
Yes,
said
the
Supreme
Court,
however,
in
Commissioner
of
Internal
Revenue
v.
Cebu
Portland
Cement
Company
where
a
judgment
debt
representing
overpayment
of
ad
valorem
taxes
on
cement
produced
and
sold
by
the
taxpayer
that
the
CTA
ordered
the
Commissioner
of
Internal
Revenue
to
refund
to
the
taxpayer
was
offset
by
the
Commissioner
against
an
outstanding
sales
tax
deficiency
assessment
that
the
taxpayer
protested
but
which
protest
was
pending
resolution
by
the
Commissioner.
Permitting
the
offsetting,
the
Supreme
Court
explained,
“the
argument
that
the
assessment
cannot
as
yet
be
enforced
because
it
is
still
being
contested
loses
sight
of
the
urgency
of
the
need
to
collect
taxes
as
“the
lifeblood
of
the
government.”
The
Court
added,
“if
the
payment
of
taxes
could
be
postponed
by
simply
questioning
their
validity,
the
machinery
of
the
state
would
grind
to
a
halt
and
all
government
functions
would
be
paralyzed.”
Thus,
the
NIRC
provides
that
no
injunction
shall
be
granted
to
restrain
the
collection
of
taxes.
The
Court
also
reasoned
that
if
no
injunction
is
allowed,
except
as
provided
by
law
such
as
in
Republic
Act
No.
1125
(CTA
Charter),
in
judicial
proceedings,
more
so
where
the
challenge
to
an
assessment
is
still
in
the
administrative
level.
The
Court
even
mockingly
said,
“to
require
the
petitioner
to
actually
refund
to
the
private
respondent
the
amount
of
the
judgment
debt,
which
he
will
later
have
the
right
to
distrain
for
payment
of
its
sales
tax
liability
is
in
our
view
an
idle
ritual.”
15. Zonal
values
may
not
be
unilaterally
or
arbitrarily
changed
by
the
BIR
without
complying
with
the
legal
procedure
for
doing
the
same.
Thus,
where
the
existing
schedule
of
zonal
values
classifies
ALL
the
properties
in
one
locality
or
barrio
as
residential,
the
BIR
may
not
unilaterally
re-‐classify
a
property
therein
as
commercial
and
impose
higher
taxes
without
going
through
the
mandated
procedure
for
revision
of
zonal
values.
Aquafresh
Seafoods
16. BIR
may
inquire
into
bank
deposits
of
decedent’s
estate
or
persons
applying
for
compromise
on
the
ground
of
financial
incapacity
17. Whistleblowing
on
government
agencies
and
GOCCs
entitles
the
whistleblower
to
the
informer’s
reward.
Not
only
private
sector
is
covered.
18. Issuance
of
a
PAN
is
mandatory.
Non-‐compliance
renders
the
final
assessment
void.
19. Assessment
notice
need
not
be
received
within
the
3-‐year
prescriptive
period
for
as
long
as
it
was
released
or
mailed
within
the
said
period.
Collector
v.
Bautista
20. Assessment
notice
must
state
the
factual
and
legal
basis.
Otherwise,
void.
5
21. No
need
for
prior
assessment
notice
before
BIR
may
file
a
criminal
action
for
tax
evasion/fraud
or
non-‐filing
of
a
return.
Pascor
Realty,
Ungab
v.
Cusi
22. Failure
to
remit
to
the
BIR
taxes
withheld
may
not
be
compromised.
It
is
in
fact
a
felony.
23. Tax
obligations
are
purely
personal
to
the
corporation.
Its
stockholders
and
officers
are
not
liable
for
the
same.
Proton
Pilipinas.
However,
officers
and/or
employees
who
are
responsible
for
the
commission
of
a
criminal
violation
of
the
NIRC
by
the
corporation
may
be
held
criminally
liable.
E.g.
tax
evasion,
non-‐
filing
of
a
return,
etc.
24. Distinguish
deficiency
interest
[Sec.
249(A)
and
(B)]
from
delinquency
interest
[Sec.
249(C)].
Deficiency
interest
is
reckoned
from
the
date
prescribed
for
the
payment
of
the
deficiency
tax
until
full
payment
thereof.
On
the
other
hand,
delinquency
interest
is
computed
from
the
date
prescribed
in
the
Assessment
Notice
until
full
payment
thereof.
Under
Section
249(C)(3)
of
the
NIRC,
non-‐
payment
of
the
deficiency
tax
assessment
within
the
period
prescribed
for
its
payment
justifies
the
imposition
of
delinquency
interest
at
the
rate
of
20%
per
annum,
counted
from
the
date
prescribed
for
its
payment
in
the
demand
letter/assessment
notice
until
full
payment
is
made.
First
Lepanto
Taisho
Insurance
25. See
requisites
of
a
valid
waiver
of
the
statute
of
limitations.
Philippine
Journalists,
FMF
Dev.
Corp.,
CIR
v.
CA,
et.
al,
303
SCRA
614,
Acebedo
26. Effect
of
filing
an
amended
return
–
prescriptive
period
counted
from
filing
of
amended
return
27. Effect
of
filing
an
erroneous
return
–
as
if
no
return
was
filed,
thus,
10
yr
prescriptive
period
applies.
28. Effect
of
filing
by
Government
of
a
tax
return
on
behalf
of
taxpayer
–
as
if
no
tax
return
was
filed,
so
10-‐year
prescriptive
period
applies.
Tulio
29. Distinguish
prescriptive
period
to
assess
[Sec.
203]
from
prescriptive
period
to
collect
[Sec.
222].
30. Effect
of
request
for
reinvestigation
on
prescriptive
period
to
collect.
It
must
be
granted
in
order
for
it
to
toll
the
running
of
the
prescriptive
period.
BPI
cases.
LOCAL
TAXATION
[By
Prof.
C.
G.
Baniqued]
Extent
of
Taxing
Power
of
LGUs
Local
government
units
enjoy
wide
discretion
in
determining
the
rates
of
imposable
taxes,
subject
only
to
the
limitations
provided
in
the
LGC.
Thus,
unless
the
rate
of
tax
imposed
by
a
LGC
is
so
excessive
as
to
be
prohibitive,
the
courts
would
normally
be
reluctant
to
strike
it
down
as
confiscatory
or
oppressive.
According
to
local
government
units
the
widest
latitude
to
raise
revenues
to
meet
their
own
needs
and
finance
services
dispensed
to
their
constituents,
the
Supreme
Court
in
William
Lines,
Inc.
v.
City
of
Ozamis1
upheld
the
power
of
Ozamis
to
levy
a
gross
sales
tax
1
½
%
of
the
gross
freight
and
fares
of
the
cargo
and
passengers
shipped
or
transported
out
from
Ozamis
City
by
any
of
their
vessels,
ships
or
boats
plying
between
Ozamis
City
and
1
56
SCRA
590,
594
(1974)
6
other
ports.
The
Supreme
Court
also
dismissed
the
taxpayer’s
argument
that
the
tax
was
in
the
nature
of
an
export
tax
because
the
prohibition
pertains
only
to
export
of
a
product
to
a
foreign
country.2
Under
the
LGC,
“gross
sales
or
receipts”
includes
the
“total
amount
of
money
or
its
equivalent
representing
the
contract
price,
compensation
or
service
fees,
including
the
amount
charged
for
materials
supplied
with
the
services
and
deposits
or
advance
payments
actually
or
constructively
received
during
the
taxable
quarter
for
the
services
performed
or
to
be
performed
for
another
person
excluding
discounts
if
determinable
at
the
time
of
sales,
sales
return,
excise
tax,
and
value-‐added
tax
(VAT).”3
Thus,
only
income
arising
from
services
performed
or
to
be
performed
is
subject
to
local
business
tax.
Consequently,
foreign
exchange
gain,
dividends,
and
interest
income
of
the
taxpayer
do
not
form
part
of
gross
receipts
that
are
subject
to
local
business
tax.
Situs
of
Taxation
All
sales
shall
be
recorded
in
the
branch
or
sales
outlet
making
the
sale
or
transaction,
and
the
tax
thereon
shall
accrue
and
be
paid
to
the
city
or
municipality
where
such
branch
or
sales
outlet
is
located.4
In
cases
where
there
is
no
such
branch
or
sales
outlet
in
the
city
or
municipality
where
the
sale
or
transaction
is
made,
the
sale
shall
be
duly
recorded
in
the
principal
office
and
the
taxes
due
shall
accrue
and
be
paid
to
such
city
or
municipality.5
Thus,
sales
not
properly
recorded
and
taxed
in
a
branch
office
may
only
be
subjected
to
deficiency
business
taxes
in
the
city
or
municipality
where
such
branch
office
is
located
and
not
in
the
principal
office.
Incidental
Business
A
person
or
entity
that
is
already
taxed
by
a
local
government
unit
on
his
main
or
principal
business
may
not
be
further
taxed
for
engaging
in
an
activity
that
is
merely
incidental
to,
or
constitutes
an
integral
part
of,
the
main
business.6
In
Standard-‐Vacuum
Oil.
Co.
v.
Antigua,
etc.,
et.
al.,
plaintiff,
engaged
in
the
importation,
distribution
and
sale
of
gasoline,
kerosene
and
other
fuel
oils,
also
manufactured
5-‐gallon
tin
cans
used
as
containers
for
its
kerosene
and
other
petroleum
products
sold
in
small
towns
and
remote
barrios.
The
Supreme
Court
held
that,
being
already
subject
to
the
specific
tax
of
P0.02
and
P0.07
per
liter
of
kerosene
and
gasoline
sold
by
it,
respectively,
plaintiff
may
not
be
taxed
separately
for
the
manufacture
of
tin
cans
which
is
not
conducted
as
an
independent
business
but
rather
merely
as
an
incident
to
or
part
of
its
main
business.7
2
See
also
Procter
&
Gamble
Trading
Co.
v.
Municipality
of
Medina,
43
SCRA
130
(1972),
cited
in
Procter
&
Gamble
Philippine
Manufacturing
Corp.
v.
Municipality
of
Jagna,
94
SCRA
894,
904
(1979)
3
Sec.
131(n)
4
Sec.
150
5
Id.
6
Standard-‐Vacuum
Oil
Co.
v
Antigua,
etc.,
et.
al.,
96
Phil.
909,
913
(1955)
7
Id.
at
912,
citing
Smith,
Bell
&
Co.,
v.
Municipality
of
Zamboanga,
55
Phil.
466,
involving
a
company
engaged
in
the
purchase
and
sale
of
hemp
which
operated
a
7
One
should
distinguish
Standard
Vacuum
Oil
Co.,
however,
from
Municipality
of
Opon
v.
Caltex
(Phil.),
Inc. 8
where
roughly
15%
of
Caltex’s
total
production
of
tin
cans
was
delivered
to
a
third
party
on
cost-‐plus
basis
and
Caltex
paid
the
requisite
taxes
and
license
fees
corresponding
to
the
tin
cans
produced
and
delivered
for
such
third
party.
The
Supreme
Court
held
that
Caltex
may
not
be
taxed
separately
on
its
entire
production
or
output
of
tin
cans
but
rather
only
on
such
portion
of
it
as
it
contracted
to
produce
and
deliver
to
the
third
party.
The
85%
of
its
output
that
it
uses
for
its
own
purposes
as
containers
of
its
petroleum
products
for
sale
and
distribution
may
not
be
separately
taxed.9
Based
on
the
same
reasoning
above,
the
Supreme
Court
held
in
Manila
Press,
Inc.
v.
Sarmiento,10
that
a
printing
company,
that
is
already
taxed
as
such
printer,
may
not
be
separately
taxed
as
a
retail
dealer
of
paper,
stationeries
and
book
supplies
used
in
performing
its
printing
jobs
for
its
customers.
As
the
Court
explained
in
City
of
Manila
v.
Fortune
Enterprises,
Inc.,
“all
the
various
transactions
tending
to
better
accomplish
the
principal
end
in
view
must
be
treated
as
merely
incidental
to
the
principal
purpose
of
the
business,
in
the
absence
of
circumstances
evidencing
a
different
intent.”11
In
Ah
Nam
v.
City
of
Manila,
et.
al.12,
the
Court
also
held
that
the
sale
by
a
bakery
business
of
flour
bags
after
the
latter
are
emptied
of
their
contents
for
use
in
the
bakery
business
is
merely
incidental
to
the
latter
and
does
not
make
the
owner
of
the
bakery
business
a
dealer
of
used
bags
that
is
separately
subject
to
license
and
permit
fees
as
such
dealer
in
second-‐hand
goods.
Oppressive,
Excessive
and
Confiscatory
The
Supreme
Court
in
Procter
&
Gamble
Philippine
Manufacturing
Corp.
v.
Municipality
of
Jagna13
did
not
find
excessive
and
confiscatory
a
municipal
license
tax
or
fee
of
P0.10
per
100
kilos
of
copra
stored
by
P&G
PMC
in
a
bodega
within
the
local
government’s
territory.
Said
the
Supreme
Court,
“municipal
corporations
are
allowed
wide
motor
engine
used
for
bailing
hemp
for
shipment.
The
Court
struck
down
the
ordinance
that
levied
an
annual
license
fee
of
P100
for
every
motor
engine
used
for
bailing
hemp,
saying,
“a
company
that
has
already
paid
taxes
or
impost
for
the
operation
of
its
main
business
of
purchase
and
sale
of
hemp
may
not
be
further
taxed
for
its
possession
and
operation
of
a
motor
engine
to
bale
hemp
for
the
reason
that
the
bailing
of
hemp
is
connected
with,
incidental
to
and
part
of
plaintiff’s
business,
particularly
its
sale
and
shipment
of
said
commodity.”
8
22
SCRA
755
(1968)
9
Citing
the
cases
of
Standard
Vacuum
Oil
Company,
Fortune
Enterprises,
Inc.,
and
1060-‐1061.
11
Supra,
note
_
at
1061
12
109
Phil.
808,
811-‐812
(1960)
13
94
SCRA
894,
902-‐903
(1979)
8
discretion
in
determining
the
rates
of
imposable
license
fees
even
in
cases
of
purely
police
power
measures.”
Moreover,
the
Court
in
Procter
&
Gamble
noted
that
storing
copra
in
a
bodega
poses
some
hazard
to
public
safety
in
view
of
its
high
oil
content
which
can
give
rise
to
conflagration,
thus
the
Ordinance
itself
directs
the
authorities
to
put
such
bodegas
on
regular
surveillance.
The
Court
also
dismissed
the
taxpayer’s
argument
that
the
imposition
is
beyond
the
cost
of
regulation
and
surveillance.
The
Court
cited
its
decision
in
Victorias
Milling
Co.
v.
Municipality
of
Victorias14
that
“the
cost
of
regulation
cannot
be
taken
as
a
gauge,
if
the
municipality
really
intended
to
enact
a
revenue
ordinance.
For,
if
the
charge
exceeds
the
expense
of
issuance
of
a
license
and
costs
of
regulation,
it
is
a
tax.
And
if
it
is,
and
it
is
validly
imposed,
the
rule
that
license
fees
for
regulation
must
bear
a
reasonable
relation
to
the
expense
of
the
regulation
has
no
application.”
In
Punsalan,
et.
al.
v.
Municipal
Board
of
Manila,
et.
al.,15
two
lawyers,
a
doctor,
an
accountant,
a
dentist
and
a
pharmacist
filed
a
class
suit
that
assailed
the
validity
of
an
ordinance
of
the
city
of
Manila
that
levied
an
occupation
tax
(now
professional
tax),
in
an
amount
not
exceeding
P50
per
annum,
on
persons
engaged
in
the
various
professions
like
them.
They
argued
that
since
they
have
already
paid
their
occupation
tax
under
the
NIRC,
to
be
made
again
to
pay
another
occupation
tax
to
the
city
of
Manila
is
unjust
and
oppressive,
and
amounts
to
double
taxation.
The
Supreme
Court
ruled
in
Punsalan
dismissed
the
argument
about
double
taxation
because
one
tax
is
imposed
by
the
local
government,
city
of
Manila,
while
the
other
is
imposed
by
the
state.
Besides,
it
is
well-‐settled
that
double
taxation
is
not
per
se
illegal
or
unconstitutional.
Common
Limitations
on
Taxing
Powers
of
Local
Governments
Income
Taxes.
The
taxpayer
in
Progressive
Development
Corporation
v.
Quezon
City16
challenged
a
supervision
fee
or
license
tax
of
5%
(formerly
10%)
of
gross
receipts
from
market
stall
rentals
imposed
by
an
ordinance
on
owners
and
operators
of
public
markets
on
the
ground
that
it
partook
of
a
tax
on
income
which
the
LGU
may
not
impose.
The
Court,
after
expounding
on
the
distinction
between
a
license
fee
and
a
tax,
held
that
the
5%
tax
constitutes
not
a
tax
on
income
but
rather
a
license
tax
or
fee
for
the
regulation
of
the
business
in
which
the
taxpayer
was
engaged
in.
The
taxpayer,
said
the
Court,
failed
to
show
“that
the
tax
is
so
unreasonably
large
and
excessive
and
so
grossly
disproportionate
to
the
costs
of
the
regulatory
service
being
performed
by
the
respondent
as
to
compel
the
Court
to
characterize
the
imposition
as
a
revenue
measure
exclusively.”17
Besides,
the
Court
took
judicial
cognizance
of
the
fact
that
fresh
meat,
fish,
poultry
and
other
foodstuffs
are
sold
in
the
taxpayer’s
public
market,
which
requires
close
supervision
and
control
by
the
local
government
for
the
protection
of
the
health
of
the
public
by
insuring
that
sanitary
and
hygienic
conditions
are
at
all
times
observed
in
the
market.
The
Court
added
that
the
use
of
the
gross
amount
of
stall
rentals
as
basis
for
determining
the
amount
of
license
tax
to
be
14
25
SCRA
192
(1968),
citing
in
turn
Cu
Unjieng
v.
Patstone,
42
Phil.
818
(1922)
15
95
Phil.
46,
47-‐49
(1954)
16
172
SCRA
629
(1989)
17
Id.
at
638-‐639
9
paid
does
not
by
itself
make
the
license
tax
a
tax
on
income
that
the
local
government
is
prohibited
from
imposing.18
Excise
Taxes.
A
province
may
not
tax
or
levy
excise
taxes
on
articles
already
taxed
by
the
NIRC,
such
as
a
tax
on
quarry
resources
extracted
from
private
lands,
because
these
are
already
taxed
under
the
NIRC,
as
held
in
Province
of
Bulacan,
et.
al.
v.
Court
of
Appeals19.
However,
the
province
may
impose
a
tax
on
stones,
sand,
gravel,
earth,
and
other
quarry
resources
extracted
from
public
lands
or
from
the
beds
of
seas,
lakes,
rivers,
streams,
creeks,
and
other
public
waters
within
its
territorial
jurisdiction
because
it
is
expressly
authorized
to
do
so
by
Article
227
of
the
Local
Government
Code.
Notwithstanding
that
petroleum
products
are
already
subject
to
specific
tax
under
the
NIRC,
the
Supreme
Court
in
Philippine
Petroleum
Corp.
v.
Municipality
of
Pililla,
Rizal20
nevertheless
upheld
the
validity
of
an
ordinance
that
imposed
local
tax
and
mayor’s
permit
fee
on
the
business
of
manufacture
of
petroleum
products.
The
Court
explained
that
while
the
local
government
is
barred
from
levying
tax
on
petroleum
products,
the
tax
and
fee
in
question
are
levied
on
the
business
and
not
on
the
petroleum
products
themselves.21
Contrast
Philippine
Petroleum
Corp.
with
Petron
Corporation
v.
Tiangco22
where
the
Supreme
Court
explained
that
the
decision
in
Philippine
Petroleum
Corp.
was
rendered
at
a
time
when
there
was
yet
no
national
law
like
Section
133(h)
of
the
LGC
which
now
expressly
bars
local
government
units
from
imposing
“excise
taxes
on
articles
enumerated
under
the
National
Internal
Revenue
Code,
as
amended,
and
taxes,
fees
or
charges
on
petroleum
products”
[underscoring
supplied].
Article
232(h)
of
the
IRR,
in
fact,
now
expressly
provides
that
“in
line
with
existing
national
policy,
any
business
engaged
in
the
production,
manufacture,
refining,
distribution
or
sale
of
oil,
gasoline,
and
other
petroleum
products
shall
not
be
subject
to
any
local
tax
imposed
in
this
Article.”
Percentage
or
Sales/Value-‐Added
Taxes.
Section
133
of
the
LGC
provides
that
local
government
units
may
not
levy
“percentage
or
value-‐added
tax
(VAT)
on
sales,
barters
or
exchanges
or
similar
transactions
on
goods
or
services
except
as
otherwise
provided
herein.”
A
percentage
tax
is
“a
tax
measured
by
a
certain
percentage
of
the
gross
selling
price
or
gross
value
in
money
of
goods
sold,
bartered
or
imported;
or
of
the
gross
receipts
or
earnings
derived
by
any
person
engaged
in
the
sale
of
services.”23
Thus,
where
there
is
a
set
ratio
between
the
amount
of
the
local
tax
and
the
volume
of
sales,
it
is
more
likely
than
not
that
the
tax
partakes
the
nature
of
a
sales
or
percentage
tax
that
LGUs
are
barred
from
imposing.
18
Id.
at
639
19
299
SCRA
442,
456-‐457
(1998),
involving
Republic
Cement
Corporation.
20
198
SCRA
82,
89
(1991)
21
Id.
at
89.
22
551
SCRA
484
(2008)
23
Commissioner
of
Internal
Revenue
v.
Citytrust
Investment
Phils.,
Inc.,
503
SCRA
398,
414
(2006),
cited
in
Pelizloy
Realty
Corporation
v.
Province
of
Benguet,
G.R.
No.
183137,
April
10,
2013,
695
SCRA
491,
502;
see
also
Commissioner
of
Internal
Revenue
v.
Solidbank
Corporation,
G.R.
No.
148191,
Nov.
25,
2003,
416
SCRA
436
10
The
Supreme
Court
in
The
San
Miguel
Corporation
v.
The
Municipal
Council24
struck
down
an
ordinance
that
imposed
on
proprietors
or
operators
of
breweries
within
the
LGU’s
territorial
jurisdiction
a
graduated
quarterly
fixed
tax
based
on
the
gross
value
in
money
or
actual
market
value
at
the
time
of
removal
of
the
manufactured
articles
from
their
factories.
The
Supreme
Court
said
that
the
term
“gross
value
in
money”
of
goods
sold
is
synonymous
with
“gross
selling
price”
which
can
only
refer
to
the
“total
amount
of
money
or
its
equivalent
which
the
purchaser
pays
to
the
vendor
to
receive
or
get
the
goods.”
Citing
Marinduque
Iron
Mines
Agents,
Inc.
v.
Municipal
Council
of
the
Municipality
of
Hinabagan,
Samar25
the
Court
said,
“an
ordinance
providing
for
a
graduated
tax
based
on
either
“gross
output
or
sales”
violates
the
prohibition
on
municipalities
against
imposing
any
percentage
tax
on
sales,
or
other
taxes
in
any
form
based
thereon,
as
the
only
standard
provided
for
measuring
the
gross
output
is
its
peso
value,
as
determined
from
true
copies
of
receipts
and/or
invoices
that
the
taxpayer
is
required
to
submit
to
the
municipal
treasurer.”26
Moreover,
citing
its
decision
in
Laoag
Producers’
Cooperative
Marketing
Association,
Inc.
v.
Municipality
of
Laoag27,
where
the
Supreme
Court
considered
an
ordinance
that
imposed
a
“municipal
tax
or
inspection
fee
of
½
centavo
on
every
kilo
of
Virginia
leaf
tobacco,
garlic
and
onion
on
all
wholesale
dealers
and
vendors”
as
a
tax
based
on
sales,
the
Supreme
Court
rejected
the
LGU’s
argument
in
The
San
Miguel
Corporation
that
the
tax
is
not
a
sales
tax
because
it
is
imposed
at
the
time
of
removal
and
not
on
the
date
of
actual
sale.
The
Supreme
Court,
short
of
finding
the
said
argument
absurd,
noted
that
the
taxpayer,
in
the
end,
would
sell
the
beer
removed
from
the
factory
because,
by
the
very
nature
of
its
business,
it
has
no
alternative
but
to
sell
what
it
has
manufactured.
Similarly,
an
ordinance
enacted
by
the
Municipality
of
Dipolog
that
imposed
a
local
tax
of
fixed
amount
based
on
per
liter
of
gasoline,
lubricating
oil,
diesel
fuel
oil
or
per
gallon
can
of
kerosene
sold
and
distributed
by
the
retail
seller
was
considered
a
sales
tax,
which
is
beyond
the
power
of
the
municipality
to
levy.28
In
Pepsi-‐Cola
Bottling
Co.
of
the
Philippines,
Inc.
v.
Municipality
of
Tanauan,
Leyte29
the
municipality
levied
a
tax
of
P0.01
for
every
gallon
(128
fluid
ounces,
U.S.)
of
softdrinks
produced
or
manufactured
within
its
territorial
jurisdiction.
This
time,
the
Supreme
Court
bought
the
LGU’s
argument
that
the
tax
in
question
was
not
in
the
nature
of
a
percentage
tax
on
sales
because
the
tax
is
levied
on
the
produce
(whether
or
not
sold)
and
not
on
the
sales.
The
Court
added,
“there
is
no
set
ratio
between
the
volume
of
sales
and
the
amount
of
the
tax.” 30
Furthermore,
in
Ormoc
Sugar
Co.,
Inc.
v.
Municipal
Board
of
Ormoc
City 31 ,
the
Supreme
Court
ruled
that
a
tax
imposed
on
Ormoc
Sugar
Company
and
all
other
sugar
mills
at
the
rate
of
P0.20
per
picul
of
centrifugal
sugar
produced
and
locally
sold
or
sold
by
them
within
the
Philippines
and
1%
of
the
gross
sales
of
their
derivatives
and
by-‐products
is
not
24
52
SCRA
43
(1973)
25
11
SCRA
416,
421
(1954);
see
also
dissenting
opinion
of
Justice
Teehankee
in
Tatel
v.
Municipality
of
Virac,
48
SCRA
79,
97
(1972)
26
The
San
Miguel
Corporation
v.
The
Municipal
Council,
supra,
note
_
at
47
27
37
SCRA
594
28
Arabay,
Inc.
v.
Court
of
First
Instance
of
Zamboanga,
66
SCRA
617,
621
(1975)
29
69
SCRA
460,
465
(1976)
30
Id.
at
468
31
20
SCRA
739
(1967)
11
in
the
nature
of
a
percentage
tax
or
sales
tax,
absent
any
showing
that
it
is
so.32
Neither
is
a
police
inspection
fee
imposed
under
an
ordinance
at
the
rate
of
P.30
per
sack
of
cassava
starch
produced
and
shipped
out
of
a
municipality
because
it
is
not
based
on
sales.33
While
the
LGC
prohibits
local
government
units
from
imposing
percentage
or
value-‐
added
tax,
it
provides
for
exceptions.
Section
133
of
the
LGC
states
that
local
government
units
may
not
levy
“percentage
or
value-‐added
tax
(VAT)
on
sales,
barters
or
exchanges
or
similar
transactions
on
goods
or
services
except
as
otherwise
provided
herein.”
Among
the
exceptions
is
amusement
tax
that,
under
Section
140,
provinces
may
levy.
Amusement
taxes
are
evidently
in
the
nature
of
a
percentage
tax
in
that
they
are
fixed
at
a
certain
percentage
of
the
gross
receipts
derived
by
some
establishments.
In
Section
140
of
the
LGC,
the
amusement
tax
is
fixed
at
a
rate
of
not
more
than
30%
of
the
gross
receipts
from
admission
fees
charged
by
proprietors,
lessees,
or
operators
of
theaters,
cinemas,
concert
halls,
circuses,
boxing
stadia,
and
other
places
of
amusement.
In
Pelizloy
Realty
Corporation
v.
Province
of
Benguet34,
the
LGU
included
in
its
tax
ordinance
a
provision
levying
an
amusement
tax
of
10%
of
gross
receipts
from
admission
fees
to
resorts,
swimming
pools,
bath
houses,
hot
springs,
and
tourist
spots,
considering
such
venues
as
“other
places
of
amusement”
as
mentioned
in
Section
140
of
the
LGC.
The
petitioner
challenged
the
said
provision
of
the
ordinance
before
the
Secretary
of
Justice
within
30
days
from
the
effectivity
thereof
pursuant
to
Section
187
of
the
LGC
on
the
ground
that
it
levies
a
prohibited
percentage
tax.
Agreeing
that
the
said
tax
is
in
the
nature
of
a
percentage
tax,
the
Supreme
Court
went
on
to
determine
whether
the
imposition
falls
under
the
exception
pertaining
to
amusement
tax
as
the
respondent
LGU
contended.
Invoking
the
principle
of
ejusdem
generis,
the
Supreme
Court
held
that
resorts,
swimming
pools,
bath
houses,
hot
springs,
and
tourist
spots
do
not
belong
to
the
same
category
or
class
as
theaters,
cinemas,
concert
halls,
circuses,
and
boxing
stadia
and,
therefore,
may
not
be
considered
as
among
the
“other
places
of
amusement”
which
may
ne
subject
to
amusement
tax
under
Section
140
of
the
LGC.
The
Supreme
Court
also
noted
that
Section
131
of
the
LGC
defines
“amusement
places”
as
including
theaters,
cinemas,
concert
halls,
circuses
and
other
places
of
amusement
where
one
seeks
admission
to
entertain
oneself
by
seeing
or
viewing
the
show
or
performances.
Verily,
theaters,
cinemas,
concert
halls,
circuses,
and
boxing
stadia
are
imbued
with
a
common
characterisitic,
namely,
they
are
all
venues
primarily
for
the
staging
of
spectacles
or
the
holding
of
public
shows,
exhibitions,
performances,
and
other
events
meant
to
be
viewed
by
an
audience.
This
characteristic
obviously
does
not
apply
to
resorts,
swimming
pools,
bath
houses,
hot
springs,
and
tourist
spots.
Common
Carriers.
The
Supreme
Court
held
in
First
Philippine
Industrial
Corporation
v.
Court
of
Appeals 35
that
the
definition
of
“common
carriers”
makes
no
distinction
as
to
the
means
of
transporting,
as
long
as
it
is
by
land,
water,
or
air.
Neither
does
the
law
prescribe
that
the
transportation
of
the
passengers
or
goods
should
be
by
32
Id.
at
741
33
Matalin
Coconut
Co.,
Inc.
v.
Municipal
Council
of
Malabang,
Lanao
del
Sur,
143
moving
vehicles
or
vessels
either
by
land,
sea
or
water.
Thus,
a
pipeline
concessionaire
that
is
engaged
in
the
business
of
transporting
petroleum
products
from
the
Batangas
refineries,
via
pipelines,
to
Sucat
and
Pandacan
terminals
is
considered
a
common
carrier,
thus
exempt
from
local
tax
under
Section
133(j)
of
the
LGC.
The
Court
rejected
the
local
government’s
contention
that
the
term
“common
carrier”
refers
only
to
ordinary
carriers
such
as
trucks,
trains,
ships
and
the
like.36
Condominium
and
Homeowners’
Associations
Although
they
collect
condominium
or
homeowners’
association
dues,
condominium
corporations
are
not
liable
to
business
taxes,
fees
and
charges
since
they
may
not
be
considered
at
all
to
be
engaged
in
business.37
In
order
that
a
corporation
may
be
subjected
to
business
taxes,
its
activities
must
fall
within
the
definition
of
business
as
provided
in
the
Local
Government
Code.38
Absent
such
showing,
the
corporation
is
not
subject
to
tax.
The
liability
of
the
corporation
may
not
be
anchored
on
the
all-‐encompassing
or
catch-‐all
phrase
“et
cetera”
appearing
after
the
enumeration
of
the
class
of
businesses
subject
to
tax.39
Challenging
Tax
Ordinance
A
taxpayer
who
wishes
to
question
the
constitutionality
or
legality
of
a
tax
ordinance
or
revenue
measure
may
file
an
appeal
with
the
Secretary
of
Justice
within
thirty
(30)
days
from
the
effectivity
of
the
ordinance.
The
Secretary
of
Justice
has
sixty
(60)
days
from
the
date
of
receipt
of
the
appeal
within
which
to
decide.
The
taxpayer
may
appeal
the
decision
of
the
Secretary
of
Justice
to
a
court
of
competent
jurisdiction,
i.e.
Regional
Trial
Court,
within
thirty
(30)
days
from
receipt
of
the
decision
or
the
lapse
of
the
60-‐day
period
in
case
of
inaction
on
the
part
of
the
Secretary
of
Justice.40
The
appeal
to
the
Secretary
of
Justice
does
not,
however,
suspend
the
effectivity
of
the
ordinance.
Consequently,
the
LGU
may
enforce
the
same
and
collect
the
taxes
or
fees
levied
thereunder
even
while
the
appeal
is
pending
resolution.41
Appeal
to
Court
of
Competent
Jurisdiction
Regional
trial
courts
have
jurisdiction
to
review
denials
of
protest
by
local
treasurers
in
the
exercise
of
their
original
jurisdiction.
The
Tax
Court
recently
held
that
when
the
Regional
Trial
Court
entertains
an
appeal
from
a
decision
of
a
local
government
official,
such
as
the
municipal
treasurer,
pursuant
to
Section
195
of
the
LGC,
it
does
so
in
the
36
The
local
government
imposed
on
petitioner
business
tax
based
on
its
gross
note
41
Ibid.
13
exercise
of
its
original,
not
appellate,
jurisdiction.42
The
Tax
Court
explained
in
National
Transmission
Corporation
that
only
judgments
or
orders
rendered
by
a
lower
court
may
be
reviewed
on
appeal
by
the
Regional
Trial
Court.
Since
the
decision
of
the
municipal
treasurer
denying
a
protest
against
an
assessment
is
not
one
rendered
by
a
judicial
court,
the
Regional
Trial
Court
may
review
it
in
the
exercise
of
its
original
jurisdiction.43
Withdrawal
by
LGC
of
Incentives
Earlier
Granted
In
Mactan
Cebu
International
Airport
Authority
v.
Marcos 44 ,
the
Supreme
Court
affirmed
that,
indeed,
the
Authority
was
not
exempt
from
real
property
tax
since
its
earlier
exemption
granted
under
its
charter
has
been
repealed
or
withdrawn
by
express
provision
of
the
LGC.
Subsequently,
however,
in
Manila
International
Airport
Authority
v.
Court
of
Appeals45,
the
Supreme
Court
held
that
the
MIAA
is
not
a
government-‐owned
or
controlled
corporation
but
an
instrumentality
of
the
National
Government
and
thus
exempt
from
local
taxation.
Moreover,
the
Republic
of
the
Philippines
actually
owns
the
real
properties
of
MIAA
and
that
MIAA
is
merely
holding
title
thereto
in
trust
for
the
Republic
of
the
Philippines,
hence,
exempt
from
real
property
tax.
MIAA
cannot
be
a
GOCC
because
it
is
neither
a
stock
nor
a
non-‐stock
corporation.
Rather,
MIAA
is
a
government
instrumentality
vested
with
corporate
powers
to
perform
efficiently
its
governmental
functions.
The
withdrawal
by
the
LGC
of
incentives
earlier
granted
was
also
invoked
in
Manila
Electric
Company
v.
Province
of
Laguna46
where
the
Supreme
Court
affirmed
the
authority
of
the
Province
of
Laguna
to
impose
a
franchise
tax
on
Meralco
at
the
rate
of
50%
of
1%
of
its
gross
annual
receipts
notwithstanding
the
“in
lieu
of”
clause
in
the
charter
of
Meralco.
In
the
Meralco
case,
the
Supreme
Court
reiterated
the
principle
that
a
franchise
partakes
the
nature
of
a
grant,
which
is
not
covered
by
the
non-‐impairment
clause.
Contractual
tax
exemption,
in
the
real
sense
of
the
term
and
where
the
non-‐impairment
clause
of
the
Constitution
can
rightly
be
invoked,
are
those
agreed
to
by
the
taxing
authority
in
contracts,
such
as
those
contained
in
government
bonds
or
debentures,
lawfully
entered
into
by
them
under
enabling
laws
in
which
the
government,
acting
in
its
private
capacity,
sheds
its
cloak
of
authority
and
waives
its
governmental
immunity.
Truly,
tax
exemptions
of
this
kind
may
not
be
revoked
without
impairing
the
obligations
of
contracts.
These
contractual
tax
exemptions,
however,
are
42
National
Transmission
Corporation
v.
Municipal
Treasurer
of
Labrador,
Norte,
CTA
AC
No.
68
(RTC
Civ.
Case
No.
Q-‐09-‐64637),
Jan.
5,
2012
44
261
SCRA
667
(1996)
45
495
SCRA
591
(2006);
see
also
Manila
International
Airport
Authority
v.
City
of
hoists,
truck
hoists,
air
compressors
and
tireflators,
all
of
which
fixtures
are
necessary
to
the
operation
of
the
gasoline
station,
are
taxable
improvements
subject
to
real
property
tax.53
The
Court
rejected
Caltex’s
argument
that
under
Davao
Saw
Mill
Co.
v.
Castillo54
machinery
which
is
movable
in
nature
only
becomes
immobilized
when
placed
in
a
plant
by
the
owner
of
the
property
or
plant
but
not
when
so
placed
by
a
tenant
(such
as
Caltex),
a
usufructuary,
or
any
person
having
only
a
temporary
right,
unless
such
person
acted
as
the
agent
of
the
owner.
The
Court
distinguished
Caltex
from
Davao
Saw
Mill
Co.
in
that
the
latter
involved
the
issue
of
whether
the
machinery
mounted
on
foundations
of
cement
and
installed
by
the
lessee
on
leased
land
should
be
regarded
as
real
property
for
purposes
of
execution
of
a
judgment
against
the
lessee
and
not,
as
in
this
case,
for
purposes
of
imposing
the
realty
tax.55
Power
barges
are
also
considered
real
property.
In
Fels
Energy,
Inc.
v.
Province
of
Batangas56,
the
Supreme
Court
reasoned
that
under
Article
415(9)
of
the
Civil
Code,
“docks
and
structures
which,
though
floating,
are
intended
by
their
nature
and
object
to
remain
at
a
fixed
place
on
a
river,
lake,
or
coast
are
considered
immovable
property.”
The
Court
added,
“thus,
power
barges
are
categorized
as
immovable
property
by
destination,
being
in
the
nature
of
machinery
and
other
implements
intended
by
the
owner
for
an
industry
or
work
which
may
be
carried
on
in
a
building
or
on
a
piece
of
land
and
which
tend
directly
to
meet
the
needs
of
said
industry
or
work.”
Compare
the
above
cases,
however,
with
Board
of
Assessment
Appeals
v.
Manila
Electric
Company57
where
Meralco’s
steel
towers
were
held
not
subject
to
realty
tax
because
the
steel
towers
were
regarded
as
poles
and
were
not
attached
to
any
land
or
building,
but,
instead,
were
attached
to
square
metal
frames
by
means
of
bolts
and
could
be
moved
from
place
to
place
when
unscrewed
and
dismantled.
Personal
or
movable
properties,
indeed,
may
not
pose
that
much
of
a
problem.
In
Mindanao
Bus
Co.
v.
City
Assessor 58 ,
the
Supreme
Court
held
that
tools
typewriters,
etc.
usually
found
and
used
in
hotels,
restaurants,
theatres,
etc.
are
merely
incidentals
and
are
not
and
should
not
be
considered
immobilized
by
destination,
for
these
businesses
can
continue
or
carry
on
their
functions
without
these
equipments.
Airline
companies
use
forklifts,
jeep-‐wagons,
pressure
pumps,
IBM
machines,
etc.
which
are
incidentals,
not
essentials,
and
thus
retain
their
movable
nature.
One
must,
therefore,
distinguish
those
movables
which
become
immobilized
by
destination
because
they
are
essential
and
principal
elements
in
the
industry
from
those
which
may
not
be
so
considered
immobilized
because
they
are
merely
incidental,
not
essential
and
principal.59
53
Caltex
(Phil.)
Inc.
v.
Central
Board
of
Assessment
Appeals,
114
SCRA
296,
301
(1982)
54
61
Phil.
709
55
Caltex
(Phil.)
Inc.
v.
Central
Board
of
Assessment
Appeals,
supra
56
516
SCRA
186,
204-‐205
(2007)
57
119
Phil.
328
58
116
Phil.
501
59
Mindanao
Bus
Co.
v.
City
Assessor
and
Treasurer,
6
Phil.
197
(1962)
16
Sta.
Lucia
Realty
&
Development,
Inc.
v.
City
of
Pasig,
G.R.
No.
166838,
June
15,
2011
652
SCRA
44,
55-‐57
61
Sta.
Lucia
Realty
&
Development,
Inc.
v.
City
of
Pasig,
supra,
note
_
at
54.
In
the
meantime,
the
Supreme
Court
directed
the
two
local
government
units
to
await
the
judgment
in
their
boundary
dispute
case
pending
before
a
Regional
Trial
Court
in
Antipolo
City.
The
Supreme
Court
also
directed
petitioner
Sta.
Lucia
to
deposit
the
succeeding
real
property
taxes
in
an
escrow
account
with
the
Land
Bank
of
the
Philippines.
62
196
SCRA
322,
328
(1991)
63
472
SCRA
303
(2005)
17
Assessment
of
Real
Property
Real
property
must
be
assessed
in
the
name
of
the
person
“owning
or
administering”
the
property.
A
tax
declaration
in
the
name
of
a
person
who
has
not
proven
any
successional
or
administrative
rights
to
the
property
owner’s
estate
is
null
and
void.64
In
City
Assessor
of
Cebu
City
v.
Association
of
Benevola
de
Cebu,
Inc.65,
the
Supreme
Court
held
that
a
5-‐story
medical
arts
center
building
(located
abo
ut
100
meters
away
from
the
main
hospital)
which
houses
the
doctors’
clinics
and
where
the
doctors
conduct
medical
check-‐up,
diagnosis,
treatment
and
care
of
their
patients
and
which
also
serves
as
a
specialized
out-‐patient
department
of
the
main
hospital
where
treatment
and
diagnosis
are
done
by
the
accredited
medical
specialists
in
their
respective
fields
of
anesthesia,
radiology,
pathology
and
more,
is
an
integral
part
of
the
main
hospital,
thus,
subject
to
the
special
assessment
level
of
10%
under
the
Cebu
City
Tax
Ordinance.
The
Court
added
that
the
mere
fact
that
the
doctors
hold
office
in
a
separate
building
and
that
the
hospital
charges
them
rent
do
not
transform
the
medical
arts
center
building
into
a
commercial
building
or
commercial
venture
that
would
thereby
render
it
subject
to
the
35%
assessment
level
applicable
to
commercial
buildings.
The
fact
remains,
according
to
the
Court,
that
the
doctors’
services
are
essential
to
the
over-‐all
operation
of
the
hospital
and
benefit
the
hospital’s
patients.
Exemptions
from
Real
Property
Tax
A
person
who
claims
to
be
exempt
from
real
property
tax
must
avail
of
the
exemption
provided
for
in
the
statute
and
submit
the
requirements
to
establish
that
it
is
exempt.
Section
206
of
the
LGC
states:
“Sec.
206.
Proof
of
Exemption
of
Real
Property
from
Taxation.
–
Every
person
by
or
for
whom
real
property
is
declared,
who
shall
claim
tax
exemption
for
such
property
under
this
Title
shall
file
with
the
provincial,
city
or
municipal
assessor
within
thirty
(30)
days
from
the
date
of
the
declaration
of
real
property
sufficient
documentary
evidence
in
support
of
such
claim
including
corporate
charters,
title
of
ownership,
articles
of
incorporation,
by-‐laws,
contracts,
affidavits,
certifications
and
mortgage
deeds,
and
similar
documents.
If
the
required
evidence
is
not
submitted
within
the
period
herein
prescribed,
the
property
shall
be
listed
as
taxable
in
the
assessment
roll.
However,
if
the
property
shall
be
proven
to
be
tax
exempt,
the
same
shall
be
dropped
from
the
assessment
roll.”
64
Cenido
v.
Apacionado,
et.
al.,
318
SCRA
688
(1999)
65
524
SCRA
128
(2007),
citing
Herrera
v.
Quezon
City
Board
of
Assessment
Appeals,
3
SCRA
186
(1961)
and
Abra
Valley
College,
Inc.
v.
Aquino,
162
SCRA
106
(1988)
18
Nonetheless,
pending
the
resolution
of
the
claim
for
exemption
of
the
property
owner,
it
is
incumbent
upon
the
latter
to
pay
the
assessed
real
property
tax
under
protest
as
prescribed
in
Section
252
of
the
LGC.66
Real
Property
Owned
by
the
Government.
Section
234
of
the
LGC
exempts
“real
property
owned
by
the
Republic
of
the
Philippines
or
any
of
its
political
subdivisions.”
In
National
Development
Company
v.
Cebu
City67,
the
Supreme
Court
interpreted
the
phrase
“property
owned
by
the
Republic
of
the
Philippines”
to
mean
property
owned
by
the
Government
and
by
its
agencies
which
do
not
have
separate
and
distinct
personalities.”
So,
once
it
is
established
that
a
property
is
owned
by
the
Government
or
by
its
unincorporated
agency,
the
exemption
applies
regardless
of
whether
the
property
is
used
by
the
Government
or
agency
for
sovereign
or
proprietary
purposes.
Thus,
a
public
land
reserved
by
the
President
for
warehousing
purposes
in
favor
of
the
National
Development
Company
(NDC),
a
government-‐owned
or
–controlled
corporation,
with
the
Government
retaining
ownership
of
the
property,
was
held
exempt
from
the
real
property
tax.
However,
the
improvement
(warehouse)
erected
by
NDC
on
the
property
was
held
taxable
because
the
improvement
did
not
belong
to
the
Government
but
to
NDC,
an
entity
that
has
a
personality
separate
and
distinct
from
the
Government
and
performs
purely
corporate,
proprietary
or
business
functions.
The
penultimate
paragraph
of
Section
234
states
that
“except
as
otherwise
provided
herein,
any
exemption
from
payment
of
real
property
tax
previously
granted
to,
or
presently
enjoyed
by,
all
persons,
whether
natural
or
juridical,
including
all
government-‐
owned
or
–controlled
corporations,
are
hereby
withdrawn
upon
the
effectivity
of
this
Code.”68
In
Mactan
Cebu
International
Airport
Authority
v.
Marcos69 ,
the
Supreme
Court
affirmed
an
assessment
issued
by
the
local
government
for
the
reason
that
the
Authority
was
not
exempt
from
real
property
tax
since
its
earlier
exemption
granted
under
its
charter
has
been
repealed
or
withdrawn
by
express
provision
of
the
LGC
as
mentioned
above.
The
above
case
also
defined
“Republic
of
the
Philippines”,
“National
Government”,
“agency”,
and
“instrumentality”.
Subsequently,
however,
in
Manila
International
Airport
Authority
v.
Court
of
Appeals70,
the
Supreme
Court
held
that
the
MIAA
is
not
a
government-‐owned
or
controlled
corporation
but
rather
an
instrumentality
of
the
National
Government,
thus
exempt
from
real
property
tax.
Moreover,
the
Court
also
reasoned
that
the
Republic
of
the
Philippines
66
Digital
Telecommunications
Philippines,
Inc.
v.
Cantos,
G.R.
No.
180200,
Nov.
25,
Laguna
v.
Court
of
Tax
Appeals
and
NWSA,
118
Phil.
227
(1963)
68
See
also
City
Government
of
San
Pablo,
Laguna
v.
Reyes,
et.
al.,
G.R.
No.
127708,
actually
owns
the
real
properties
of
MIAA
and
that
MIAA
is
merely
holding
title
thereto
in
trust
for
the
Republic
of
the
Philippines,
hence,
exempt
from
real
property
tax.
MIAA
cannot
be
a
GOCC
because
it
is
neither
a
stock
nor
a
non-‐stock
corporation.
Rather,
MIAA
is
a
government
instrumentality
vested
with
corporate
powers
to
perform
efficiently
its
governmental
functions.
Section
234
of
the
LGC,
however,
also
provides
that
the
exemption
of
real
property
owned
by
the
Republic
of
the
Philippines
or
any
of
its
political
subdivisions
does
not
apply
when
the
beneficial
use
thereof
has
been
granted,
for
consideration
or
otherwise,
to
a
taxable
person.”
Thus,
in
Philippine
Fisheries
Development
Authority
v.
Court
of
Appeals71,
the
Supreme
Court
held
that
the
portions
of
the
Iloilo
Fishing
Port
Complex
(IFPC)
leased
by
the
Philippine
Fisheries
Development
Authority
(PFDA)
to
private
firms
and
individuals
engaged
in
fishing
related
business
are
subject
to
real
property
tax.
The
Court
also
said
that
PFDA
is
not
a
government-‐owned
or
–controlled
corporation
but
an
instrumentality
of
the
national
government.
While
PFDA
is
not
exempt
from
real
property
tax
on
such
properties
leased
to
private
persons,
its
non-‐payment
of
the
real
property
taxes
due
on
such
properties
leased
out
to
private
persons
would
not
warrant
the
sale
of
such
properties
at
public
auction
since
the
properties
are
of
public
dominion
and,
as
such,
may
not
be
sold
at
public
auction
to
satisfy
the
tax
delinquency
of
the
PFDA.
Compare
the
Philippine
Fisheries
Development
Authority
case,
however,
with
GSIS
v.
City
Assessor
of
Iloilo
City72
where
the
Supreme
Court
upheld
the
validity
of
the
auction
sale
of
GSIS’s
properties
for
non-‐payment
of
real
estate
taxes.
In
the
GSIS
case,
the
real
properties
auctioned
were
titled
in
the
name
of
GSIS
but
c/o
another
person
to
whom
actual
use
or
beneficial
ownership
was
conveyed
by
GSIS,
prompting
the
Court
to
rule
that
such
properties
ceased
to
be
exempt
despite
the
blanket
exemption
in
the
GSIS
charter.
In
a
subsequent
case
also
involving
GSIS,
the
Supreme
Court
made
a
turn-‐around
and
made
up
for
its
earlier
adverse
ruling
against
GSIS.
In
GSIS
v.
City
Treasurer
of
the
City
of
Manila 73 ,
GSIS
leased
its
property
to
a
taxable
entity,
the
Manila
Hotel
Corporation.
Consequently,
pursuant
to
the
“beneficial
use”
principle,
the
City
of
Manila
assessed
GSIS
real
property
tax.
The
Supreme
Court
held
that
while
GSIS,
under
its
charter,
is
exempt
from
real
property
tax
and
considered
an
instrumentality74
of
the
national
government
[just
like
the
Manila
International
Airport
Authority],
its
property
that
is
leased
to
the
Manila
Hotel
Corporation
is
subject
to
real
property
tax.
Nonetheless,
GSIS
is
not
the
one
liable
for
71
528
SCRA
706
(2007),
citing
Manila
International
Airport
Authority
v.
Court
of
Appeals,
supra,
note
_
at
615;
see
also
Chavez
v.
Public
Estates
Authority,
384
SCRA
152,
202-‐203
(2002),
where
the
Supreme
Court
held
that
reclaimed
lands
are
lands
of
the
public
domain
and
cannot,
without
congressional
fiat,
be
subject
of
a
sale,
public
or
private.
72
493
SCRA
169,
174-‐176
(2006),
citing
City
of
Baguio
v.
Busuego,
100
SCRA
116
(1980)
73
609
SCRA
330
(2009)
74
It
is
doubtful
though
how
GSIS,
a
government-‐owned
and
–controlled
corporation,
can
be
considered
an
instrumentality
of
the
national
government
in
the
likes
of
Manila
International
Airport
Authority
and
Philippine
Fisheries
Development
Authority
20
the
tax
but
rather
the
beneficial
user
(i.e.
Manila
Hotel
Corporation).75
The
Court
said
that
the
City
of
Manila
must
issue
an
assessment
against
MHC,
which
has
not
been
impleaded
in
this
case.
Moreover,
the
property
of
GSIS
is
exempt
from
levy
under
its
charter,
even
in
case
of
non-‐payment
by
the
Manila
Hotel
of
the
assessment.
The
City
of
Manila,
therefore,
may
collect
the
assessed
tax
through
means
other
than
the
auction
sale
of
GSIS’s
leased
property.
Real
properties
owned
by
the
Social
Security
System
(SSS)
are
likewise
exempt
from
real
property
taxes,
regardless
of
whether
SSS
performs
proprietary
or
ministrant
functions.76
The
National
Power
Corporation
(NPC),
a
government-‐owned
and
–controlled
corporation,
also
enjoys
exemption
from
real
property
tax
under
its
charter.
However,
this
exemption
does
not
extend
to
NPC’s
BOT
contractor
and
neither
does
NPC’s
entitlement,
as
a
GOCC,
to
a
lower
assessment
level
of
10%
benefit
the
contractor.
Thus,
the
Supreme
Court
in
National
Power
Corporation
v.
Central
Board
of
Assessment
Appeals77
held
that
the
BOT
contractor
who
has
complete
ownership,
both
legal
and
beneficial,
of
the
power
plant,
including
the
machineries
and
equipment
used
therein,
subject
only
to
the
agreed
transfer
of
these
properties
without
cost
to
NPC
after
25
years,
is
the
actual,
direct
and
immediate
owner
of
the
machineries
and
equipment,
hence,
the
party
liable
for
the
real
property
tax.
An
undertaking
by
NPC
that
it
shall
be
responsible
for
the
payment
of
all
real
estate
taxes
and
assessments
would
nevertheless
not
exempt
the
contractor.
The
Supreme
Court
held
in
Fels
Energy,
Inc.
v.
Province
of
Batangas78
that
the
privilege
granted
to
NPC
cannot
be
extended
to
the
contractor.
Furthermore,
the
undertaking
to
pay
all
real
estate
taxes
and
assessments
is
a
covenant
between
NPC
and
the
contractor
and
it
does
not
bind
a
third
person
not
privy
thereto,
in
this
case
the
Province
of
Batangas.
Portions
of
real
properties
turned
over
to
the
Presidential
Commission
on
Good
Government
(PCGG)
by
a
self-‐confessed
crony
of
the
late
President
Ferdinand
E.
Marcos
that
are
leased
out
to
private
parties
or
business
establishments
are
subject
to
real
property
tax.
In
the
event
of
delinquency,
such
properties
may
be
sold
in
a
public
auction
because
they
are
not
considered
properties
of
public
dominion.79
Portions
of
the
hospital
and
land
owned
by
the
Lung
Center
of
the
Philippines
that
are
leased
to
private
persons
as
clinics
or
to
business
establishments
are
subject
to
real
property
tax
while
the
remaining
portions
of
the
land
and
hospital
occupied
by
the
Lung
Center
for
treatment
and
care
of
patients,
whether
paying
or
non-‐paying,
are
exempt.80
Auction
Sale
of
Delinquent
Properties
75
See
also
Republic
v.
City
of
Kidapawan,
477
SCRA
324,
333-‐337
(2005),
where
the
Supreme
Court
held
that
where
real
property
owned
by
the
government
is
leased
to
a
private
person
(i.e.
beneficial
user)
or
where
the
assessment
is
made
on
the
basis
of
the
actual
use
of
the
property,
the
personal
liability
for
the
tax
is
on
any
person
who
has
such
beneficial
or
actual
use
at
the
time
of
the
accrual
of
the
tax.
76
Social
Security
System
v.
City
of
Bacolod,
115
SCRA
412,
417
(1982)
77
577
SCRA
418,
434-‐438
(2009);
see
also
National
Power
Corporation
v.
Province
of
Quezon
and
Municipality
of
Pagbilao,
593
SCRA
47
(2009)
and
611
SCRA
71
(2010)
78
Supra,
note
_
at
207
79
City
of
Pasig
v.
Republic,
656
SCRA
271,
291-‐292
(2011)
80
Lung
Center
of
the
Philippines
v.
Quezon
City,
433
SCRA
119
(2004)
21
Real
properties
owned
by
the
Republic
of
the
Philippines
but
the
beneficial
use
of
which
is
granted
to
a
private
person,
by
consideration
or
otherwise,
may
not
be
levied
upon
or
sold
in
an
auction
sale
if
they
are
considered
“properties
of
public
domain
or
dominion”.
The
Civil
Code
defines
“properties
of
public
dominion”
as
“those
intended
for
public
use,
such
as
roads,
canals,
rivers,
torrents,
ports
and
bridges
constructed
by
the
State,
banks,
shores,
roadsteads,
and
others
of
similar
character”
as
well
as
“those
which
belong
to
the
State,
without
being
for
public
use,
and
are
intended
for
some
public
service
or
for
the
development
of
the
national
wealth.”
As
properties
of
public
dominion,
they
cannot
be
sold
at
public
auction
to
satisfy
a
real
property
tax
delinquency
of
either
the
private
person
who
has
beneficial
use
thereof
or
of
the
agency
or
instrumentality
of
Government
in
whose
name
the
properties
may
be
registered
or
titled.
Thus,
the
fishing
port
in
Philippine
Fisheries
Development
Authority
v.
Court
of
Appeals81
may
not
be
sold
at
public
auction.
The
same
is
true
with
the
reclaimed
lands
in
Chavez
v.
Public
Estates
Authority82
and
the
airport
land
and
buildings
in
Manila
International
Airport
Authority
v.
Court
of
Appeals83.
However,
where
the
properties
are
not
of
public
dominion,
they
may
be
levied
upon
and
sold
in
an
auction
sale,
even
though
owned
by
the
Republic
of
the
Philippines,
if
the
taxable
entities
who
are
granted
beneficial
use
or
possession
of
such
properties
do
not
pay
the
real
property
taxes
due
on
such
properties
or
portions
thereof
that
are
occupied
or
leased
by
such
taxable
entities.84
It
is,
therefore,
incumbent
upon
the
Government
to
see
to
it
that
real
property
taxes
due
on
such
properties
leased
to
taxable
entities
are
paid
fully
and
on
time
such
as
by
passing
them
on
to
the
lessees
and
adding
them
on
to
the
rental
invoices
to
the
latter
as
a
separate
item.
The
auction
sale
of
real
property
due
to
delinquency
is
an
action
in
personam,
not
in
rem.
The
local
treasurer
must
serve
a
notice
directly
to
the
delinquent
real
property
owner,
and
not
merely
by
publication.
Without
notice
to
the
delinquent
real
property
owner,
the
latter
might
not
have
an
opportunity
to
redeem
the
property
despite
the
lapse
of
one
year
from
the
date
the
sale
was
registered.
Moreover,
in
case
of
an
auction
sale,
the
balance
of
the
proceeds
from
the
sale,
after
deducting
the
amount
of
the
taxes
and
penalties
due
and
the
costs
of
sale,
should
be
returned
to
the
property
owner.
Thus,
failure
to
serve
a
notice
of
the
auction
sale
to
the
delinquent
property
owner
renders
the
auction
sale
null
and
void.
Consequently,
the
buyer
at
the
auction
sale
does
not
acquire
valid
title.85
Holding
of
the
auction
sale
without
the
requisite
notice
to
the
property
owner
is
a
denial
of
the
owner’s
right
to
due
process.86
81
Supra,
note
_
at,
_;
see
also
Philippine
Fisheries
Development
Authority
v.
Central
Board
of
Assessment
Appeals,
638
SCRA
644
(2010)
and
GSIS
v.
City
Treasurer
of
the
City
of
Manila,
supra,
note
_
at
_
82
Supra,
note
_
at
_
83
Supra,
note
_
at
_
84
City
of
Pasig
v.
Republic,
supra,
note
_
at
_
85
Tan
v.
Bantegui,
473
SCRA
663
(2005);
see
also
Vizarra
v.
Rodriguez,
509
SCRA
Corporation
v.
Central
Board
of
Assessment
Appeals,
et.
al.,
114
SCRA
260,
263
22
The
Supreme
Court
in
Aquino
v.
Quezon
City87
held
that
local
governments
need
not
even
post
or
publish
the
notice
of
delinquency
notwithstanding
the
provisions
of
Section
254
of
the
LGC.
It
is
sufficient
that
personal
service
was
done
on
the
delinquent
real
property
owner.
However,
if
the
property
owner
furnished
an
inadequate
address,
such
as
when
he
merely
wrote
“Butuan
City”
in
the
assessor’s
tax
rolls,
and
never
took
steps
to
correct
or
complete
it
all
this
time,
he
cannot
later
on
complain
that
he
did
not
receive
the
notice
of
delinquency
sent
to
his
last
known
address.
It
is
irrelevant
that,
in
all
likelihood,
he
would
not
be
receiving
any
notice
due
to
his
incorrect
or
inadequate
address.
After
all,
said
the
Court
in
Aquino
v.
Quezon
City,
nowhere
in
the
law
is
it
required
that
the
notice
must
actually
be
received
by
the
intended
recipient.88
Similarly,
if
the
property
owner
fails
to
amend
or
update
its
address
as
shown
in
the
tax
rolls
or
property
tax
records,
it
is
estopped
from
claiming
that
it
did
not
receive
a
copy
of
the
notice
of
assessment
or
tax
delinquency
that
the
assessor
or
treasurer
sent
to
the
address
on
file.89
See,
however,
the
earlier
case
of
De
Knecht
v.
Court
of
Appeals90
where
the
Supreme
Court
held
that
notices
and
publication,
as
well
as
the
legal
requirements
for
a
tax
delinquency,
are
mandatory
and
the
failure
to
comply
therewith
can
invalidate
the
sale.
It
is
important
that
if
a
real
property
is
sold
or
otherwise
transferred
to
another,
the
latter
must
apply
for
a
new
tax
declaration
in
his
name.
Otherwise,
in
the
event
of
delinquency
in
the
payment
of
real
property
taxes,
the
local
treasurer
would
naturally
send
the
notice
of
delinquency
to
the
previous
owner
and
to
the
latter’s
address
as
he
still
appears
to
be
the
owner
of
the
property
based
on
the
Tax
Declaration
on
record.
This
can
be
costly
to
the
new
owner
of
the
property
especially
if
the
property
has
been
sold
in
a
public
auction
to
the
highest
bidder
who
forthwith
applies
for
a
new
title
and
tax
declaration
in
his
name.91
Injunction
Against
Collection
of
Taxes
(1982);
De
Asis
v.
Intermediate
Appellate
Court,
169
SCRA
314,
323-‐324
(1989);
Cagayan
Electric
Power
and
Light
Co.,
Inc.
v.
City
of
Cagayan
De
Oro,
G.R.
No.
191761,
Nov.
14,
2012,
685
SCRA
609;
Moday
v.
Court
of
Appeals,
268
SCRA
586,
593
(1997);
Valbueco,
Inc.
v.
Province
of
Bataan,
G.R.
No.
173829,
June
10,
2013,
698
SCRA
57,
65-‐66
87
497
SCRA
497,
508
(2006),
citing
Talusan
v.
Tayag,
356
SCRA
263,
276-‐277
(2001)
88
Id.
at
510-‐511
89
Valbueco,
Inc.
v.
Province
of
Bataan,
G.R.
No.
173829,
June
10,
2013,
698
SCRA
57,
75
90
290
SCRA
223
(1998)
91
De
Asis
v.
Intermediate
Appellate
Court,
169
SCRA
314
(1989),
except
that
in
this
case,
there
was
a
finding
that
the
owner
did
in
fact
file
with
the
Assessor’s
Office
“Sworn
Statement
of
the
True
Current
and
Fair
Market
Value
of
Real
Properties”,
thus
putting
the
Assessor
and
the
Treasurer
on
notice
that
she
was
indeed
the
owner
of
the
property,
and,
therefore,
notice
of
delinquency
should
have
been
sent
to
her
at
the
address
she
indicated
in
the
Sworn
Statement.
23
Injunction
generally
does
not
lie
against
the
collection
of
taxes.
However,
it
may
be
issued
where
the
taxpayer
has
shown
a
clear
and
unmistakable
right
to
refuse
or
to
hold
in
abeyance
the
payment
of
taxes
such
as
in
the
instant
case
where
the
taxpayer
contested
the
assessment
on
the
ground
that
(1)
it
pertained
to
properties
that
have
been
previously
declared,
(2)
it
covers
more
than
ten
years
which
is
not
allowed
under
the
LGC,
(3)
the
FMV
or
replacement
cost
used
includes
items
which
should
be
properly
excluded,
(4)
prompt
payment
discounts
were
not
considered
in
determining
the
FMV,
and
(5)
the
revised
assessment
should
take
effect
only
the
following
year.
The
Supreme
Court
held
in
Talento
v.
Escalada92
that
the
resolution
of
these
issues
is
imperative
before
the
properties
of
the
taxpayer
are
sold
in
public
auction.
Appeal
Procedure
and
Jurisdiction
of
the
LBAA
The
LGC
provides
for
a
procedure
of
appeal
from
decisions
or
actions
of
the
local
assessor.
If
a
property
owner
is
dissatisfied
with
an
action
of
the
local
assessor,
such
as
when
he
finds
the
assessment
excessive
or
erroneous,
he
may
pay
the
tax
under
protest
and
then
file
with
the
local
treasurer
a
protest
in
writing
within
thirty
(30)
days
from
payment
of
the
tax.93
The
local
treasurer
has
sixty
(60)
days
from
receipt
of
the
protest
within
which
to
decide
the
same.94
If
the
local
treasurer
denies
the
protest
or
fails
to
act
on
it
within
the
60-‐day
period,
the
property
owner
may
appeal
by
verified
petition
to
the
Local
Board
of
Assessment
Appeals
within
sixty
(60)
days
from
receipt
of
denial
of
the
protest
or
receipt
of
the
assessment
notice.95
The
LBAA
has
one
hundred
twenty
(120)
days
from
receipt
of
the
appeal
within
which
to
decide
it.96
The
property
owner
or
the
local
assessor
who
is
not
satisfied
with
the
decision
of
the
LBAA
has
thirty
(30)
days
from
receipt
of
the
decision
within
which
to
appeal
to
the
Central
Board
of
Assessment
Appeals
(CBAA).97
While
the
above-‐described
appeal
procedure
looks
straightforward,
some
property
owners
bypass
the
LBAA
and
the
CBAA.
Worse,
some
property
owners
get
away
with
non-‐
payment
of
the
questioned
real
property
tax
during
the
pendency
of
the
protest
or
appeal
notwithstanding
the
clear
statutory
requirement
in
Section
252
that
“no
protest
shall
be
entertained
unless
the
taxpayer
first
pays
the
tax.”
It
is
quite
clear
from
Section
252
that
the
real
property
owner
must
first
pay
in
full
the
realty
tax
subject
of
the
assessment
before
filing
a
protest.98
What
is
not
clear
is
whether
it
is
only
the
amount
of
tax
outstanding
at
the
time
of
filing
of
the
protest
that
must
be
paid,
or
also
the
real
property
taxes
that
subsequently
fall
due
during
the
period
that
the
protest
is
pending
with
the
local
treasurer,
LBAA,
CBAA,
CTA
and,
eventually,
the
Supreme
Court.
In
City
of
Pasig
v.
Republic99,
the
92
Supra,
note
_
at
_
93
Section
252,
LGC
94
Id.
95
Section
226,
LGC
96
Section
229,
LGC
97
Id.
98
Camp
John
Hay
Development
Corporation
v.
Central
Board
of
Assessment
Appeals,
G.R.
No.
169234,
Oct.
2,
2013,
706
SCRA
547
(the
real
property
owner
questioning
the
assessment
should
first
pay
the
tax
due
before
his
protest
can
be
entertained
and
in
no
case
is
the
local
treasurer
obliged
to
entertain
the
protest
unless
the
tax
due
has
been
paid)
99
Supra,
note
_
at
_
24
taxpayer
made
only
a
partial
payment
under
protest
of
P2,000,000
out
of
a
total
assessment
of
P389,027,814.48,
prompting
the
Court
of
Appeals
to
point
this
out
as
one
of
the
grounds
for
the
dismissal
of
the
action,
but
the
Supreme
Court
reversed,
without
at
all
touching
such
and
other
procedural
issues. 100
Again,
in
City
Government
of
Quezon
City
v.
Bayan
Telecommunications101,
the
Supreme
Court
saw
nothing
wrong
with
the
non-‐payment
under
protest
of
the
tax
assessed,
even
lamenting
that
an
appeal
to
the
LBAA
would
have
required
payment
under
protest
of
the
amount
of
P43,878,208.18
which,
given
the
then
prevailing
Asian
financial
crisis,
would
have
been
difficult
to
raise.
It
is
also
not
clear
whether
the
tax
that
needs
to
be
paid
under
protest
refers
to
the
“real
property
tax”
itself
or
to
the
“real
property
tax”
plus
the
2%
monthly
“interest”
that
has
so
far
accrued
at
the
time
of
the
filing
of
the
protest.
In
Quimpo
v.
Mendoza102,
the
Supreme
Court
opined
that
what
needs
to
be
paid
under
protest
is
only
the
real
property
tax
itself
because
the
interest,
which
is
in
the
nature
of
a
penalty
or
surcharge,
is
not
a
“tax”
in
itself.
Bypassing
the
LBAA
or
the
CBAA,
for
that
matter,
is
not
without
some
precedent,
too.
As
early
as
in
the
1906
case
of
Roman
Catholic
Church
v.
Hastings
et.
al.103,
the
Supreme
Court
made
a
pronouncement
that
while
a
taxpayer
who
finds
an
assessment
excessive
or
erroneous
must
seek
redress
by
appeal
to
the
board
of
tax
appeals
as
a
board
of
review,
yet
where
the
tax
sought
to
be
collected
is
itself
illegal,
the
taxpayer
may
resort
to
the
courts.
In
City
Government
of
Quezon
City
v.
Bayan
Telecommunications,
Inc.104,
the
Supreme
Court
approved
of
the
property
owner’s
withdrawal
of
its
appeal
to
the
LBAA
and,
in
lieu
thereof,
filing
with
the
RTC
a
petition
for
prohibition
with
an
urgent
prayer
for
TRO
and/or
writ
of
preliminary
injunction.
The
Court
said,
considering
that
Bayantel’s
real
properties
were
already
levied
upon
on
account
of
the
delinquency,
an
appeal
to
the
LBAA
would
not
be
a
speedy
and
adequate
remedy
within
the
context
of
Section
2
of
Rule
65.
Besides,
an
appeal
to
the
LBAA
would
require
payment
under
protest
of
the
amount
of
P43,878,208.18
which,
given
the
then
prevailing
Asian
financial
crisis,
would
have
been
difficult
to
raise.
Compare
City
Government
of
Quezon
City
v.
Bayan
Telecommunications,
Inc.
with
the
earlier
case
of
Republic
v.
City
of
Kidapawan105
where
the
Supreme
Court
held
that
even
if
100
Id.
at
274
and
282.
101
484
SCRA
169
(2006)
102
107
SCRA
73,
84
(1981),
citing
Collector
of
Internal
Revenue
v.
Bautista,
G.R.
No.
where
the
property
owner
(Petron)
also
withdrew
its
appeal
earlier
filed
with
the
LBAA
and
subsequently
filed
with
the
RTC
a
petition
for
prohibition
with
prayer
for
the
issuance
of
a
TRO
and/or
preliminary
injunction.
Petron
was
allowed
to
post
a
surety
bond
equivalent
to
the
amount
of
the
assessment
but
its
petition
filed
with
the
Supreme
Court
under
Rule
65
was
dismissed
for
being
erroneous
(for
it
should
have
been
under
Rule
45)
and
filed
out
of
time.
105
477
SCRA
324,
337
(2005),
citing
Systems
Plus
Computer
College
of
Caloocan
City
v.
Local
Government
of
Caloocan
City,
408
SCRA
494,
499
(2003)
25
the
issue
raised
is
purely
a
question
of
law,
the
owner
should
have
still
followed
the
appeal
procedure
(to
LBAA
or
the
CBAA)
under
Sections
226
and
229
of
the
LGC,
instead
of
filing
a
petition
for
prohibition
with
prayer
for
TRO
and/or
preliminary
injunction
with
the
RTC
after
receiving
a
notice
from
the
treasurer
that
the
delinquent
property
would
be
sold
through
a
public
auction.
The
Supreme
Court
also
held
in
Camp
John
Hay
Development
Corporation
v.
Central
Board
of
Assessment
Appeals 106
that
a
claim
for
exemption
from
payment
of
real
property
tax
does
not
actually
question
the
assessor’s
authority
to
assess
and
collect
such
taxes
[which
may
be
the
subject
of
a
petition
for
certiorari,
prohibition,
or
mandamus
filed
with
the
Regional
Trial
Court]
but,
rather,
it
raises
a
question
as
to
the
reasonableness
or
correctness
of
the
assessment
by
the
local
assessor
[which
must
be
resolved,
at
the
first
instance,
in
the
level
of
the
LBAA
and
then
CBAA]
as
may
be
inferred
from
the
provisions
of
Section
206
of
the
LGC.
Under
Section
206,
a
real
property
that
is
not
declared
and
proved
as
tax-‐exempt
shall
be
included
in
the
assessment
roll,
hence
implying
that
that
the
local
assessor
has
the
authority
to
assess
such
property.
The
tax
due
and
that
is
being
challenged
may
be
paid
under
protest
either
in
cash
or
surety
bond.107
Effect
of
Motion
for
Reconsideration.
A
motion
for
reconsideration
of
the
assessor’s
decision
does
not
suspend
the
running
of
the
60-‐day
period
(from
receipt
of
the
notice
of
assessment)
within
which
to
appeal
to
the
LBAA.
A
motion
for
reconsideration
is
not
sanctioned
by
law.
Thus,
failure
to
promptly
file
an
appeal
to
the
LBAA
renders
the
assessment
of
the
local
assessor
final,
executory
and
demandable.108
The
assessment
notice
is
the
last
action
of
the
local
assessor
on
a
particular
assessment,
and
it
is
this
last
action
that
gives
the
owner
of
the
property
the
right
to
appeal
to
the
LBAA.109
The
procedure
laid
down
by
law
does
not
permit
the
filing
of
a
motion
for
reconsideration.
Otherwise,
explained
the
Court
in
Callanta
v.
Office
of
the
Ombudsman,
this
would
invite
corruption
where
values
of
real
property
may
be
initially
set
unreasonably
high
and
then
subsequently
reduced
upon
request
of
the
property
owner
in
an
illicit
or
covert
trade-‐off.
Proper
Party
to
Protest
or
Appeal
Assessment
Section
226
states
that
“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
province
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.”
106
Id.,
supra,
note
67
at
564;
see
also
Dr.
Olivares
v.
Mayor
Marquez,
438
SCRA
679,
National
Power
Corporation
v.
Province
of
Quezon
and
Municipality
of
Pagbilao,
G.R.
No.
171586,
Resolution
dated
25
January
2010,
611
SCRA
71,
94,
cited
Camp
John
Hay
Development
Corporation
v.
Central
Board
of
Assessment
Appeals,
supra.
107
Camp
John
Hay
Development
Corporation
v.
Central
Board
of
Assessment
In
National
Power
Corporation
v.
Province
of
Quezon
and
Municipality
of
Pagbilao110,
the
Supreme
Court
held
that
NAPOCOR,
which
assumed
the
real
property
tax
liability
of
Mirant,
the
owner
of
the
machineries
and
equipment
supplied
under
the
BOT
contract
for
the
construction
and
operation
of
a
power
plant,
is
not
the
“owner
or
person
having
legal
interest
in
the
property”
who
may
appeal
an
assessment
to
the
LBAA.
The
Court
said
that
“the
legal
interest
should
be
one
that
is
actual
and
material,
direct
and
immediate,
not
simply
contingent
or
expectant”
as
in
this
case
where
ownership
of
the
machineries
and
equipment
will
vest
in
NAPOCOR
only
at
the
end
of
the
fixed
term
of
the
project,
which
is
25
years.
Until
such
time,
NAPOCOR’s
claim
of
ownership
is
merely
contingent.
The
Supreme
Court
further
explained
in
National
Power
Corporation
that
while
NAPOCOR
indeed
assumed
responsibility
for
the
taxes
due
on
the
power
plant
and
its
machineries,
the
tax
liability
that
can
vest
in
the
taxpayer
the
personality
to
protest
the
assessment
is
that
which
arises
from
law
that
the
local
government
unit
can
enforce
against
the
taxpayer
and
not
the
contractual
liability
that
is
enforceable
between
the
parties
to
a
contract
as
in
this
case.111
The
Court
also
somewhat
rebuked
NAPOCOR
for
assuming
by
contract
the
tax
liability
of
the
contractor,
Mirant,
and
thereafter
turn
around
and
invoke
its
own
exemption
as
a
GOCC
against
the
local
government
unit
that
wants
to
tax
the
contractor.112
Challenging
an
Ordinance
As
a
general
rule,
a
taxpayer
may
file
a
complaint
assailing
the
validity
of
an
ordinance
and
praying
for
a
refund
of
its
perceived
overpayments
without
first
filing
a
protest
to
the
payment
of
taxes
due
under
the
ordinance.
As
held
in
Ty
v.
Judge
Trampe113,
where
petitioners
are
questioning
the
very
authority
and
power
of
the
assessor,
acting
solely
and
independently,
to
impose
the
assessment
and
of
the
treasurer
to
collect
the
tax,
these
are
not
questions
relating
to
the
reasonableness
of
an
increase
in
a
real
estate
tax
assessment
but
attacks
on
the
very
validity
of
any
increase.
Consequently,
the
petitioners
must
have
appealed
the
ordinance
to
the
Secretary
of
Justice
within
30
days
from
the
effectivity
of
the
ordinance.
Otherwise,
the
petitioners
could
not
now
seek
redress
in
court.114
In
Lopez
v.
City
of
Manila115,
the
Court
ruled
that
the
taxpayer
did
not
exhaust
administrative
remedies
when
he
filed
with
the
RTC
a
special
proceeding
for
the
declaration
of
nullity
of
the
City
of
Manila
Ordinance
prescribing
a
general
revision
of
the
valuation
of
real
properties
in
Manila,
with
prayer
for
preliminary
injunction
and
TRO.
The
Court
pointed
out
that
petitioner
could
have
questioned
the
ordinance
with
the
Secretary
of
Justice
within
30
days
from
its
effectivity,
or
he
could
have
appealed
to
the
LBAA
a
notice
of
assessment
on
his
property.
110
611
SCRA
71,
83-‐90
(2010)
and
593
SCRA
47,
57-‐
(2009)
111
593
SCRA
47,
61
(2009)
112
Id.
at
67
113
250
SCRA
500
(1995)
114
Jardine
Davies
Insurance
Brokers,
Inc.
v.
Aliposa,
et.
al.,
G.R.
No.
118900,
Feb.
27,
2002
115
Supra,
note
_
at
458-‐461
27
116
375
SCRA
570
(2002)
117
Id.
at
576-‐577
118
611
SCRA
71,
91-‐95
(2010)
119
Id.
at
94
120
250
SCRA
500
(1995)
121
The
case
of
Ty
v.
Trampe
involved
an
issue
of
whether
the
requirement
in
Pres.
Decree
No.
921
that
the
schedule
of
values
of
real
properties
in
the
Metro
Manila
area
shall
be
prepared
jointly
by
the
city
assessors
in
the
districts
created
therein
was
repealed
by
Section
212
of
the
LGC
which
provides
that
the
schedule
shall
be
prepared
by
the
provincial,
city
or
municipal
assessors
of
the
municipalities
within
the
Metro
Manila
area
for
the
different
classes
of
real
properties
situated
in
their
respective
local
government
units
for
enactment
into
an
ordinance
of
the
Sanggunian
concerned.
122
22
SCRA
1008,
1012
(1968)
123
Ibid.
28
124
438
SCRA
679,
686-‐687
(2004)
125
107
SCRA
73,
82-‐83
(1981)
126
Id.
at
82
127
Id.
at
83
128
Allied
Banking
Corporation
v.
Quezon
City
Government,
502
SCRA
113,
117-‐118
(2006)
29
In
Testate
Estate
of
Concordia
T.
Lim
v.
City
of
Manila129,
the
City
of
Manila
demanded
payment
from
the
property
owner
of
realty
taxes
on
two
parcels
of
land
earlier
foreclosed
by
the
GSIS
but
which
the
owner
bought
back
more
than
two
years
later,
the
non-‐payment
of
which
would
preclude
the
issuance
of
new
titles
in
the
name
of
the
owner/buyer.
The
back
taxes
that
owner
paid
under
protest
pertained
to
1977,
1978,
and
first
quarter
of
1979
during
which
time
GSIS
owned
the
property
but
leased
them
to
taxable
persons.
In
ordering
the
City
of
Manila
to
give
a
refund
to
the
property
owner,
the
Supreme
Court
ruled
that
the
taxes
are
payable
by
the
person
who
had
actual
or
beneficial
use
and
possession
of
the
property
regardless
of
whether
or
not
he
is
the
owner.
Unfortunately,
GSIS
was
held
exempt
and
its
lessees
for
the
period
in
question
who
should
have
borne
the
back
taxes
were
unknown
parties
and
never
impleaded.
Furthermore,
the
Court
ruled
that
the
RTC
had
jurisdiction
to
entertain
the
complaint
for
a
sum
of
money
and/or
recovery
of
real
estate
taxes
paid
under
protest.130
TARIFF
AND
CUSTOMS
CODE
[Prof.
C.
G.
Baniqued]
I. Basis
of
Assessment
of
Duty
A. Basis
of
dutiable
value
Sec.
201,
TCCP
-‐
Ad
Valorem
- (1)
Transaction
Value
(TV)
adjusted
by
adding
commissions,
brokerage
fees,
cost
of
containers,
cost
of
packing,
royalties
if
applicable,
freight,
insurance,
(2)
TV
of
identical
goods,
(3)
TV
of
similar
goods,
(4)
Deductive
Value,
(5)
Computed
Value,
and
(6)
Fall-‐Back
Value
-‐
In
case
of
doubt,
Collector
may
consider
reports
of
the
Revenue
Attache
or
Commercial
Attache
in
the
country
of
exportation.
B. Basis
of
dutiable
weight
Sec.
202,
TCCP
-‐
Specific
II. Special
Duties
A. Anti-‐Dumping
Duty
Sec.
301,
TCCP
- export
price
is
less
than
normal
value
in
country
of
origin
- material
injury
to
domestic
industry
- materially
retards
establishment
of
domestic
industry
producing
like
goods
B. Countervailing
Duty
Sec.
302,
TCCP
- government
subsidy/financial
contribution
(e.g.
grant,
loans,
foregone
revenues,
government
purchase
of
goods,
etc.)
- with
adverse
effects
as
in
dumping
duty
on
domestic
industry
C. Marking
Duty
129
182
SCRA
483,
487
(1990)
130
Id.
at
487
30
- both
the
import
entry
declaration
(IED)
and
import
entry
and
internal
revenue
declarations
(IERD)
must
be
filed
with
the
BOC
within
30
days
from
the
date
of
discharge
of
the
last
package
from
the
vessel
or
aircraft.
Otherwise,
the
goods
are
deemed
abandoned
in
favor
of
the
Government.
IV. Remedies
of
Government
A. Search,
seizure
and
arrest
Secs.
2202-‐2212,
TCCP
Secs.
2301-‐2306,
TCCP
- BOC,
PN,
and
BIR
may
seize
- In
case
of
seizure,
Collector
must
report
to
Commissioner
and
COA,
notify
owner,
owner
can
settle,
except
if
there
was
fraud,
by
paying
fine
of
20%-‐
80%
of
landed
cost
- BOC
may
search
stores,
warehouses,
vessels,
aircrafts,
vehicles,
beasts,
- BOC
may
also
remove
false
bottoms,
partitions,
WITHOUT
BEING
HELD
LIABLE
FOR
DAMAGES
Republic
v.
CFI
of
Manila,
Branch
XXII,
213
SCRA
222,
228-‐230
(1992)
Government
v.
Gale,
24
Phil.
95
Commissioner
v.Cloribel,
19
SCRA
234
(1967)
Auyong
Hian
v.
CA,
19
SCRA
10
(1967)
and
59
SCRA
110
(1974)
Ponce
Enrile
v.
Vinuya,
37
SCRA
381
(1971)
Papa
v.
Mago,
22
SCRA
857
(1968)
Mison
v.
Natividad,
213
SCRA
734,
744-‐745
(1992)
- in
all
of
the
above
7
cases,
the
SC
held
that
the
RTC
has
no
jurisdiction
over
seizure
and
forfeiture
proceedings.
Collector-‐Commissioner-‐CTA.
Thus,
RTC
may
not
issue
injunction
against
the
Collector.
The
mere
fact
that
the
complainant
in
the
RTC
case
alleges
ownership
over
the
vehicles
(20
chop-‐
chop
found
in
a
compound
in
San
Fernando,
Pampanga)
does
not
divest
the
Collector
(who
had
earlier
issued
a
warrant
of
seizure
and
detention)
of
jurisdiction.
Ownership
can
be
raised
as
a
defense
in
the
seizure
proceeding.
Asian
Terminals,
Inc.
v.
Bautista-‐Ricafort,
505
SCRA
748,
760-‐762
(2006)
- Collector
seized
72
second
hand
right
hand
drive
buses
imported
from
Japan.
He
issued
warrants
of
distraint
and
scheduled
them
for
auction
sale.
Importer
filed
a
replevin
suit
with
the
RTC,
which
granted
the
same
upon
filing
of
a
bond.
HELD:
The
RTC
has
no
jurisdiction.
Only
the
Collector
has
jurisdiction
to
determine
all
questions
relating
to
the
seizure
and
forfeiture
of
dutiable
goods.
Commissioner
of
Customs
v.
CA,
481
SCRA
109
(2006)
- Same
ruling
as
in
Asian
Terminals
but,
in
this
case,
the
vessel
itself
was
seized.
B. Impose
surcharges,
fines
and
forfeitures
Sec.
2307,
TCCP
Secs.
2501-‐2536,
TCCP
- SURCHARGE
- For
late
payment:
10%
if
10-‐day
delinquency,
25%
if
more
than
1
year
- For
unauthorized
withdrawal:
50%
of
unpaid
duties
and
taxes,
but
if
delinquency
lasts
more
than
1
year,
additional
25%
annually
- FOR
UNDERVALUATION,
MISCLASSIFICATION
AND
MISDECLARATION
- If
more
than
30%
difference,
forfeiture.
32