PHILIPPINE LAW ONLOCAL GOVERNMENT

TAXATION

2000 Edition

Annotated By

SOFRONIO B. URSAL

Published by:

GOOD GOVERNANCE BOOKS

19 Pine St., West FairviewQuezon City, Philippines

TABLE OF CONTENTS

INTRODUCTION 1THE LOCAL GOVERNMENT CODE OF 1991 2

THE CANDAZO BILL 4

PART ONE

LOCAL GOVERNMENT TAXATION

HISTORJCAL BACKGROUND OF LOCAL TAXATION 7Supervisory authority of the Department of Finance over local

government treasury and assessment services 10

BOOKII OF THE LOCAL GOVERNMENT CODE(Local Taxation and Fiscal Matters)

TITLE ONELOCAL GOVERNMENT TAXATION

CHAPTERIGENERAL PROVISIONS

SEC. 128. Scope 12The power to tax is the strongest of ail governmental powers 12Local Taxation distinguished from Internai Revenue Tax and

Real Property Tax 13Types of local taxes and other imposts which may be levied by LGUs 13Sources of local taxing powers 13Municipal corporations hâve no inhérent power to tax 14Congress can grant municipal corporations the power to tax 14The principle of local autonomy does not make LGUs sovereign 15SEC. 129. Power to Create Sources of Revenue 15SEC. 130. Fondamental Principes 16Limitations on the taxing powers of local governments 16(a) TAXATION SHALL BE UN1FORM 18

Meaning of the term "uniformity" 18Uniformity in each political subdivision 18(b-1 ) TAXATION SHALL BE EQUITABLE 19(b-2) TAXATION SHALL BE FOR PUBLIC PURPOSE 20An inhérent limitation 20Scope of term "public purpose" 20(b-3) TAXES MUST NOT BE UNJUST, EXCESSIVE, OPPRES-

SIVE, OR CONFISCATORY 20When is a tax unjust, excessive, oppressive or confiscatory 21The rule on "double taxation" 21(b-4) TAXES MUST NOT BE CONTRARY TO LAW, PUBLIC

POLICY, NATIONAL ECONOMIC POLICY, OR INRESTRAINT OF TRADE 22

When is a local tax contrary to national économie policy 22When taxes are in restraint of trade 23(c) COLLECTION OF TAXES NOT TO BE LET TO

ANY PRIVATE PERSON 23The Candazo Bill seeks to delete Par. (c) of Sec. 130 of the law 24(d) MONIES COLLECTED TO ENURE TO THE BENEFIT OF LGU 24(e) LGU TOEVOLVE A PROGRESSIVE SYSTEM OF TAXATION 24SEC. 131. Définition of Ternis 25Agricultural products: allowable transformation 30Agricultural by-products 30Fee as charges for services 30Income to be considered marginal farmer 30When an "agricultural product" is taxable 30SEC. 132. Local Taxing Authoriry 31Ordinance distinguished from Resolution 31How local taxing power is exercised 31Fixing of amount and rate of tax cannot be delegated 32Municipality no authority to condone taxes previously accrued 32Areas transferred to EPZA beyond jurisdiction of LGUs 32EPZA-registered entities subject to local business tax outside Zone 33Test ofavalid ordinance 33SEC. 133. Common Limitations on the Taxing Powers ofLocal Government Units 34Kinds of gênerai limitations to taxing powers of LGUs 35(a) Prohibition from imposing tax on INCOME 36Income tax on banks and other financial institutions 36Business tax on banks différent from income tax on banks 37

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Proposed amendments under the Candazo bill 38(b) Prohibition from imposing DOCUMENTARYSTAMP TAX 38(c) Prohibition from imposing tax on ESTATES, INHERITANCE,

GIFTS, ETC. 39(d) Prohibition from imposing CUSTOMS DUTIES, WHARFAGE

DUES, ETC. 39Nature of wharfage dues, and object of the limitation 39When local governments may impose wharfage dues 40Proposed amendment in the Candazo bill 40(e) Prohibition from imposing TAXES ON GOOD CARRIEDINTO

OROUTOFMUNICIPALLTIES 40Decided cases on locally imposed import-export tax 41(f) Prohibition from imposing TAXES ON AGRICULTURAL

AND AQUA TIC PRODUCTS 41When agricultural and acquatic products taxable 42Producers of agricultural, marine and fresh water products, taxable 42Deep-sea fishing companies now taxable by LGUs 42Municipalities may levy taxes on sugar centrais 42Proposed amendment in the Candazo bill 43(g) Prohibition from imposing taxes on REGISTERED PIONEER

OR NON-PIONEER BUSINESS ENTERPRISES 43Définition of "pioneer enterprise" and "non-pioneer enterprise" 43BOI-registered companies not exempt from permits, fées and charges 44Power génération projects may be granted by BOI pioneer status 44GUIDE IN IMPOSING BUSINESS TAX ON BOI-REGISTERED

ENTERPRISES (DOF LFC No. 5-93) 44Scope of exemption of pioneer and non-pioneer enterprises 44Procédure in applying for tax exemption privilège 45Procédure in imposing business tax on non-exempt BOI registered

Enterprises 45Deadline for availment of exemption in DOF guideline not mandatory 46(h) Prohibition from imposing EXCISE TAXES 46What is an "excise tax" 47Articles subject to excise taxes under the NIRC 47(i) Prohibition from PERCENTAGE OR VALUE-ADDED TAX 47What is a percentage tax 48Nature of the value-added tax 480) Prohibition from taxes on GROSS RECEIPTS OF

TRANSPORTATION CONTRACTORS 48Local units may tax tricycle opération 48

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LGUs may now tax transportation contractors 48(k) Prohibition from TAXES ON PREMIUMS PAID BY

REINSURANCE OR RETROCESSION 48(l) Prohibition from REGISTRA TION OF MOTOR VEHICLES

OR ISSUING LICENSES OR PERMITS 49LGUs hâve no authority to détermine if motor vehicles are safe 49LGUs may tax vehicles not within the définition of "motor vehicles" 49Vehicles mat are taxable by local governments 50Proposed amendment in the Candazo bill 50(m) Prohibition from taxes on PHILIPPINE EXPORTED PRODUCTS 50Privilège of engaging in business of exporting is taxable 51(m) Prohibition from imposing taxes on COUNTRYSIDE AND

BARANGAY BUSINESS ENTERPRISES & COOPERA TIVES 51What are "countryside and barangay business enterprises" 51Exemptions of coopératives, what it excludes 51Exemptions in the Omnibus Investments Code does not extend

to taxes imposed under the Local Tax Code 52Proposed amendment in the Candazo bill 52(n) Prohibition from taxes on NATIONAL GOVERNMENT, ITS

AGENCIESAND LOCAL GOVERNMENTS 52What are "property for public use" in local governments 53Carriageways and terminais of LRTA not exempt from realty tax 53Proposed amendment in the Candazo bill 54

CHAPTERHSPECIFIC PROVISIONS ON THE TAXING AND OTHER

REVENUE-RAISING POWER OF LGUS

Article One - Provinces

SEC. 134. Scope of Taxing Powers 55Taxing powers of provinces 55Taxes, fées and charges which provinces are specifically empowered

To impose under the Local Government Code 55Taxes, fées and charges which provinces may impose although not

Not specifically enumerated in the Local Government Code 56SEC. 135. Tax on Transfer of Real Property Ownership 57What is "fair market value" 57Rate of transfer tax if municipality has not passed new ordinance 57Computation of transfer tax in case of foreclosed real property 58

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Sale of land for socialized housing exempt from transfer tax 59Transfers of real property not subject to tax 59When to pay tax: distinction between date of exécution and date of

Registration of deed of sale 60Modes of transferring ownership 60Basis of tax rate: considération or fair market value 60Who shall pay the transfer tax, and when 61Duties of certain officers to ensure payment of transfer tax 61SEC. 136. Tax on Business of Printing and Publication 61Who are engaged in the business of printing 62Tax on the business of printing and publication of newspapers, etc. 62Publisher's receipts from sale of textbooks to DECS exempt from tax 62SEC. 137. Franchise Tax 63What is "annual gross receipts" 63Businesses which are beyond taxing jurisdiction of provinces 63Municipalities may grant franchises, but has no power to impose

Franchise tax 63NPC, a government corporation, is liable for franchise tax 64Certificates of public convenience, not franchise 64Capital investment as basis of franchise tax on newly started business 64Nature of "franchise" 65Not ail business enjoying franchise are liable to the tax 65Terms of franchises vary; some admit of franchise tax 65Transportation companies not subject to franchise tax 66Uncollected gross receipts are included in Computing franchise tax 66Existing franchises not affected by the Code and me new Constitution 67Proposed amendment in the Candazo bill 67SEC. 138. Tax on Sand, Gravel and Other Quarry Resources 67Quarry resources, what it include 68Importance of regulating extraction of sand in beaches 68How to détermine "fair market value" of sand, gravel, etc. 68Quarry resources; meaning of 69Contractors of government infrastructure projects are subject to

sand and gravel tax 69Power to impose sand and gravel fee belongs to the province and

not to the municipality 69Rules and régulations governing issuance of permits 69Preferential right of private landqwner 70SEC. 139. Professional Tax ' 70Rate of professional tax imposable by cities 71

Professionals who are subject to pay the professional tax 71Papers required to be presented by professionals when paying tax 71Procédure prescribed in collecting professional tax 72Time for paying professional tax 72Permit fées may not be imposed in addition to occupation tax 72Partnership among professionals subject to business tax as contracter 73Professionals in government need not pay tax; tax on practice of

two professions 73Proposed amendment in the Candazo bill 74SEC. 140. Amusement Tax 74Exemption from amusement tax, subject to DOF guidelines 74Rate of amusement tax imposable by cities 75How to compute the amusement tax payable by proprietors, etc. 75Municipalités may still impose business tax on places of amusement 75Limits to authority of city to impose amusement tax 76Suggested administrative provisions in imposing the amusement tax 76Who shall pay the amusement tax 77What constitute "other places of amusements" 77When athletic meets, benefit shows, etc. are tax exempt 77Guidelines in granting exemptions on paid admission 78Cockpits, race tracks, stadia subject to amusement tax on admission 80Différence between amusement tax on admission collected by local

governments and the amusement tax collected by the B.I.R. 80SEC. 141. Annnal Fixed Tax For Every Delivery Tnick or Van

of Manufacturer or Producers, Wholesalers of, Dealers,or Retailers in, Certain Products 81

Taxpayers subject to tax 81Taxpayers subject to tax in Sec. 141 may no longer be taxed under

Sec. 143(g)of the Code 81When tax should apply to operators of delivery trucks that merely

deliver goods for clients for a fee 82Proposed amendment in the Candazo bill 82

Article Two - Municipalities

SEC. 142. Scope of Taxing Powers 83Spécifie limitations on the taxing powers of municipalities 83Summary of taxing and other revenue-raising powers of municipalities 83Taxes and fées which municipalities may not impose 84

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SEC. 143. Tax on Business 84Level of local government that may impose business taxes 88Nature of graduated tax based on sales or receipts 89Scope of phrase "gross sales for the preceding calendar year" 89Local législative bodies may lower tax rates in gênerai 89Business tax based on "output" or "production", prohibited 89Proposed amendment in the Candazo bill 89(a) BUSINESS TAX ON MANUFACTURERS, ETC. 90Rates of tax on domestic sales of manufacturers, assemblers,

etc. différent from their export sales 90Manufacturers, assemblers, repackers, etc. in Sec. 143(a)not

taxable as wholesalers, distributors, etc. under Sec. 143(b) 90Pepsi-Cola Products Phils., Inc. is a manufacturer 91How to compute the manufacturers tax 91Manufacturers may tax sugar centrais but not tuba producers 91Municipalities and cities prohibited from taxing petroleum products

and excise taxes on articles already taxed in the NIRC 91May municipalities and cities impose "business taxes" on gasoline stations 92Producers of agricultural, marine and fresh water products are taxable 93A firm may be taxable both as "exporter" and "manufacturer" 94Company engaged in so-called "indirect export sales" is taxable 94Mère buying acti vity in one place not taxable under Sec. 143 of Code 94Business establishment with peddling outlets taxable

only under Sec. 141 of the Local Government Code 95(b) BUSINESS TAX ON WHOLESALERS, DISTRIBUTORS, OR

DEALERS IN ANY ARTICLE OF COMMERCE 95How to compute the business tax of a retailer selling both

essential and non-essential commodities 96(c) BUSINESS TAX ON EXPORTERS, AND MANUFACTURERS,

MILLERS, ETC., RETAJLERS OF ESSENTIAL COMMODITIES %Meaning of "exporter" for purposes of the business tax 96What is the rate of the business tax for "indirect exporters" 97Tax on business of exporting distinguished from tax on exported products 97Logging company in the export business is taxable 97Who may enjoy the reduced tax on sale of essential commodities 97Taxes on the business ofmillingrice and corn 98Additional tax on millers who also buy grains to sell after milling 98How to détermine gross receipts of rice and corn millers 98GUIDELINES IN IMPOSING BUSINESS TAX ON IMPORTERS 98Définition of "exporter", "export sales", and "subcontractors" 99

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When sales of export products to another deemed export sales 99Sales of local goods for use of Filipinos abroad are export sales 99Procédure of imposing business tax on exporters 100Non-separability of business enterprise registered with BOI 100Situs of business tax on exporters and allocation of sales for purposes

of paying the tax 100Transfer or relocation of the principal or branch office 102Port of loading alone is not sufficient to impose exporter's tax 102(d) BUSINESS TAX ON RETAILERS 102Guidelines on the exercise by cities, municipalities and barangays of

the power to impose business tax on retailers 102When barangays may impose business tax on retailers 103Différence a "retailer" and a "dealer" 103How to détermine taxes payable by a retailer who is also a wholesaler

dealing both in essential and non-essential commodities 103(e) BUSINESS TAXES ON CONTRACTORS AND

INDEPENDENTCONTRACTORS 104Partnership among professionals subject to business tax as contractors 104GUIDELINES IN IMPOSING BUSINESS TAX ON

CONSTRUCTION CONTRACTORS 104Taxable gross receipts of construction contractors 105Situs of business tax on construction contractors 105Contractors of government infrastructure projects are taxable 106(e) BUSINESS TAXES ON BANKS & OTHER

FINANCIAL INSTITUTIONS 106Taxes which cities and municipalities may levy on banks, etc. 107"Business tax" on banks distinguished from "income tax" on banks 107GUIDE IN IMPOSING TAX ON BANKS AND OTHER

BANKING INSTITUTIONS 108What does "gross receipts" of banks include 108Income and receipts of banks excluded from taxing authority of LGUs 109Situs or place of payment of tax on banks 109Is PCIC, a government corporation, subject to business tax 109GUIDELINES IN IMPOSING BUSINESS TAX ON

INSURANCE COMPANIES 110Insurance companies included in term "other financial institutions" 110Rate of tax to be levied on gross receipts of insurance companies 110What constitutes "gross receipts" of insurance companies subject to tax 111Commissions and other earnings of insurance agents, insurance

brokers, and sales représentatives are not taxable 111

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Situs or place of payment of tax on insurance business 112GUIDE IN IMPOSING BUSINESS TAX ON FINANCING COMPANIES 112Businesses included in term "financing companies" 112What are covered in the "gross receipts" of financing companies 113Situs or place of payment of tax on financing companies 113COMMON PROVISIONS APPLICABLE TO BANKS AND

INSURANCE AND FINANCING COMPANIES 114Rates of business tax that my be impised on gross receipts of banks,

insurance companies, and financing companies 114Time of payment of tax on banks, insurance companies, etc. 114Non-separability of the business either of banking, insurance and

financing for purposes of the local tax 114Examination of books of accounts and pertinent records of banks,

Insurance companies, and financing companies 115(g) BUSINESS TAXES ON PEDDLERS 115Vehicles exempt from peddler's tax 115Distinction between the tax on delivery trucks and that on peddlers 115(h) BUSINESS TAX ON OTHER BUSINESSES NOTMENTIONED 116Production, refining or sale of gasoline or pertroleum products not

taxable by local units 116Building used as commercial stalls, bodegas, offices and résidence

classified as "shopping center" 116SEC. 144. Rates of Tax within the Metropolitan Manila Area 117Taxes which may be levied and collected by municipalities within MMA 118Effect of Local Government Code on taxing powers of MMC 118Power to impose local taxes within Métro Manila Area under the Code 119SEC. 145. Retirementof Business 119Meaning of "termination" in case of retirement of business; effect

of change of ownership, management, or name 119Guideline in acting on application for retirement or termination of business 120Payment of outstanding taxes before retirement 120Surrender of permit of retiring or terminating business 120Guidleine in Computing rate of tax payable by retiring business 120Illustrative example in Computing tax on retiring business 121SEC. 146. Payment of Business Taxes 121Rule in payment of taxes of two or more related or combined businesses 122Différent business establishments by same owner are taxable separately 122Businesses where "rule on non-separability of business" applies 122Establishments operating différent lines of businesses in différent

cities, how to compute tax in Sec. 146(c) of the Code 123

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Transfer of business head office from one city to another during theyear; which taxes to pay in both 123

Two or more businesses operated by the same person are subject toseparate taxes; how to compute tax 124

SEC. 147. Fées and Charges 125Distinction between "fee" and "charge" 125Nature of permit fées 126Nature of storage fées 126"Fee" distinguished from "tax" and "service charge" 126Fées and charges which municipalities may impose on businesses

and occupation 126Distinction between a fee and a tax 127Administrative requirements when issuing Fire Inspection Fee 127What is reasonable amount of Annual Fire Inspection Fee 127Security agency subject to mayor's permit in every municipality/city

where it maintains "detachment" 128Fées which the municipality may impose 128Mayor's permit fee imposed on persons and goods going out of

province is prohibited 128Inspection fee on fish is prohibited 129How to détermine reasonableness of a "permit fee" 129Authorityof municipality to impose licenses 130Illustrative cases on the issue of "reasonableness of fées" 130LGU's imposing permit fées must perform regulatory fonctions 131Power of local governments to regulate gambling, withdrawn 132Annual permit fee may be imposed on top of annual business fee 132Transportation contracter not subject to local permit fées 132Betamax operator charging sums to viewing public, subject to mayor's fee 133When mayor's permit may be revoked due to false application 133Mayor's permit fee on aliens declared unconstitutional 133Service charge collectible only if local unit owns or maintains the

facilities, unless imposed as a fee for registration 134Level of local government that may impose fées and charges 134Power to issue Building Permits, and requirements therefor 134Imposition of marriage fées and related issues 134SEC. 148. Fées for Sealing and Licensing of Weights and Measnres 134Ordinance providing rules for use of weights and measures; sanctions 13 5Importance in enforcing rules for sealing and licensing of weights

and measures 135Guide in formulating local ordinances imposing fées for sealing

and licensing of weights and measures 136Nature of fées for sealing weights and measures 136Use of the metric system 136Administrative régulations for the effective enforcement in the

sealing and licensing of weights and measures 13 7What constitute "short measuring" 137Local governments are urged to prescribe uniform amounts of fées

and date of renewal of license 13 7SEC. 149. Fishery Rentals, Fées and Charges 138Organizations and coopératives need not undergo public bidding for

fishery privilèges 139What is "muro-ami" and similar prohibited devices 139Effect of Sec. 149 of the Code on exisiting fishery laws 139Fishery privilèges which municipalities and cities hâve exclusive

authority to grant 140Who issues permits for fishery privilèges at Laguna Lake 140Operative provisions of P.D. No. 704 related to the authority of

local units to grant fishery privilèges 141Guide to the sanggunian in promulgating rules on the granting of

fishery privilèges 142Operators of fishponds may be required to pay 142Deep-sea fishing not subject to business tax 142A municipality may tax government-owned fishponds leased to

private individuals 143Fées on fishing vessels based on engine horsepower 143When to zonify municipal waters 143Fixing of minimum bids in public auctions for grant of fishery rights 143Restrictions on the gathering and/or culture of seaweeds 144SEC. 150. Situs of the Tax 144Définition of terms for purposes of the Situs of the Tax 145Procédure in allocating sales of manufacturers, producers, distributors,

etc. for purposes of determining the situs of the tax 146Situs of tax where company has principal office in one city while its

plantation and fartn office is located in another province 147Situs of tax where a company has an office in one municipality where

sales are made, and a warehouse in another as storage 148Principal office for administrative purposes in a municipality, but

factory and sales offices in a city 148Situs of tax of contracter with principal office in a city and a projeciOffice and stock area in a municipality 148

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Situs of tax rule in case of manufacturers or producers which engageThe services of independent contractors 149

Situs of tax where domestic sales transacted in one municipality whileexport sales made in another city 149

When is a warehouse not subject to business tax 150Locality which is the port of loading may or may not impose tax 150Situs of tax of manufacturer with principal office and factory in

One city, and sales outlets in two others 150Situs of tax of company with principal office in one city, with whare-

houses in various municipalities, and sales made therein and indifférent other places 150

Procédure in allocating sales made by route trucks, vans, etc. 151

Article Three - Cities

SEC. 151. Scope of Taxing Powers 153Rate and basis of percentage tax on business imposable by cities 153Rates of city taxes required to be uniform with those of the province 153Sharing of proceeds from tax on sand, gravel, etc. in highly urbanized cities 153Nature of "highly-urbanized city" 154Taxes and other impositions which cities may Ievy 154Mandatory taxes which cities hâve to impose 155

Article Four - Barangays

Rôle of the barangay governments 156Basic services and facilities of barangays 156SEC. 152. Scope of Taxing Powers 156Meaning of "commercial breeding" of fighting cocks 157Meaning of "places of récréation" 157Prescribed rates for fées and charges on billboards, signboards, néon

signs, and outdoor advertisements 157The taxing and other revenue-raising powers of barangays 158Barangays may impose business tax on sari-sari stores 159A "poblacion" is considered a barangay 160Are barangays authorized to impose "unspecified taxes" under Sec. 186 160Approval and review of barangay tax ordinances 160Publication of barangay tax ordinances 161Collection of revenues by, and bonding of, barangay treasurers 161Examination of books of accounts by barangay treasurers 162

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Appointaient, qualifications, and bonding of barangay treasurers 162Extent of cash accountability of barangay treasurers; schedule of bonds 162Duty of barangay treasurer pertaining to collection of revenues 163Other administrative provisions in the collection of barangay taxes 163What are the éléments of a "store" for purposes of the barangay tax 163Barangay clearance as prerequisite for engaging in any business 163Barangay fées on places of récréation 164Solicitation of monies, materials, and voluntary labor for spécifie

projects; and grants-in-aids, subsidies and contributions 164Authority to hold fund-raising activities for barangay projects 164Proposed amendment in the Candazo bill 165

Article FiveCommon Revenue-Raising Powers

Summary of common revenue-raising powers of provinces, cities,municipalities and barangays under the Code 166

SEC. 153. Service Fées and Charges 167Amount that may be imposed as fées or charges; capital investments

And gross sales/receipts prohibited as basis thereof 167Fées, license fées, service fées, and charges, distinguished 167SEC. 154. Public Utility Charges 168Candazo bill proposes to establish public utilities fund 169Limitations to net profits of public utilities 169Audit of local government public utilities 169Public services of local governments need not secure certificate

of public convenience 170Public utilities which may be operated by local governments 170Municipal governments may construct off-street parking 170Administrative provisions in the opération of public markets

and Slaughterhouses 171Features of the Market Code of Métro Manila 172Municipal public markets may be leased to and managed by private parties 172Kinds of imposable market fées 173Are LGUs authorized to collect market fées in private markets 173Market fées based by the kilo on fish sold 174What is considered "reasonable" market rental or fee 174Do "market premises" extend to municipal streets 175Procédure in adjudicating vacant market stalls or booths 175Public bidding not used in adjudicating stalls or booths 176

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Lessee to personally administer his stall 176Nationalization of public markets 176Extent of municipal control over public markets 176Municipality has no authority to collect market fées where land is

notownedbyit 177Appointaient and supervision of market sweepers 177Market stallholders acquire no vested rights over stalls 177When market stall occupants hâve right of first priority 177Sale of méat outside public markets 177City mayor alone cannot provide for the opening, opération and

closure of a public market 178Franchise to establish and operate markets and slaughterhouses 178A public market may be privately-owned and privately-operated 178What is a "corral" 179Rates of ante-mortem and post-mortem fées 179Tuition fées of vocational and technical schools operated by LGUs 179SEC. 155. Tool fées or Charges 179Définition and nature of "tolls" 180Toll rates, how determined 180

Article Six - Community Tax

SEC. 156. Community Tax 181Cities and municipalities mandated to impose community tax 181Community Tax replaces Résidence Tax 181Registered coopératives are exempt from community tax 181Basic features of the Community Tax 182Some administrative provisions to be considered when

drafting ordinance imposing community tax 183SEC. 157. Individuals Liable to Community Tax 184Basic and additional community tax in case of husband and wife 184Individuals liable to the community tax 184Rate of tax for individuals 185Income of rice millers subject to community tax 185Proposed amendment in the Candazo bill 185SEC. 158. Juridical Persons Liable to Community Tax 186Corporation liable to the community tax 186Rate of tax on corporations 186Proposed amendment in the Candazo bill 187

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SEC. 159. Exemptions 187Registered coopératives exempt from community tax 187Proposed amendment in the Candazo bill 187SEC. 160. Place of Payment 188Where corporation should pay their community tax 188Collecting community tax outside the jurisdiction of city or

municipality considered unlawful 188Liability for paying community tax other than place of résidence 188Taxpayer may pay community tax in city or municipality where he

is temporarily on sojourn 189Payment of tax thru mails 189SEC. 161. Time for Payment; Penalries for Delinquency 189Penalty for late payment of community tax 190SEC. 162. Community Tax Certificate 190SEC. 163. Présentation of Community Tax Certificate on

Certain Occasions 191When community tax certificates required to be presented 191SEC. 164. Printing of Community Tax Certificates and

Distribution ofProceeds 192Extent of authority of barangay treasurers to collect community tax 192Rules on the printing and distribution of community tax certificates 193Barangay treasurers may not directly réquisition community

tax certificate forms 193Barangay treasurers may not collect community tax of corporations 193Deputation of barangay treasurers are discretionary 194Securing community tax certificates from private printing

establishments, prohibited 194Accrual and distribution of proceeds of community tax 194

CHAPTERmCOLLECTION OF TAXES

SEC. 165. Tax Period and Manner of Payment 196What is a "tax period" 196Tax period does not apply to permit fées and public utility charges 196SEC. 166. Accrual of Tax 196Distinction between "accrual of tax" and 'lime for payment" 197SEC. 167. Time of Payment 197When local taxes, fées, and charges may be paid without penalty 197Extension of time of payment of tax without penalty 198

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SEC. 168. Surcharges and Penalties on Unpaid Taxes, FéesAnd Charges 198

Non-payment of lease of public market stalls 198Imposition and computation of surcharges and penalties 198When late payment of under-collection of tax is not subject to

surcharge and interest 199Imposition of surcharges and interests on unpaid tax is mandatory 199How to compute interests for late payment 200Surcharges and interests in case of extension 200SEC. 169. Interests and Other Unpaid Revenues 200What other "unpaid revenues" refer to; penalty for late or non-payment 201Only local treasurers or their deputies may collect local taxes 201Deputizing barangay treasurer to collect local taxes, fées or charges 201Who are authorized to collect taxes; bonding of barangay treasurers 201Supervision over local treasurers in tax collection efforts 202Supervisory powers of provincial treasurers over other treasury offices 202Neglect of officiais to collect tax is not estoppel 202Auditors négligent in supervising collectors 202Municipal treasurers as deputies of provincial treasurers 203Duty of collecting provincial taxes 203Who has authority to designate collecting officers 203Bonding of tax collectors and other accountable officers 203The Schedule of bonds 204Duty to notify Treasurer of the Philippine for bonding purposes 205Extent of liability of the fidelity fund 206Adjudication and payment of claims against the fidelity fund 206Bond where accountability is less than PhP2,000 207Accountable officers considered unsafe risks 207Collections must be acknowledged with officiai receipts; use of

mechanical devices 207LGUs may not design nor print their own officiai receipts 207Kinds of officiai receipt forms and their uses 208Tax collection procédures 209Acknowledging tax payments thru accountable forms 209How to accomplish the officiai receipt 209Collecting the tax where no proper officiai receipt is available 210Private checks in payment of taxes 210Warrants and checks receivables in payment for taxes 211Markings required on real property tax receipts 211

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Pénal liability for failure to issue officiai receipt 212Notice of loss of accountable forms required 212Unexplained possession of private checks with accountable officers 212Payment of tax thru the mails 213Crimes committed by tax collecting officers 213In malversation, indemnification of amount only extinguishes civil liability 213Accounting forms, reports, and transaction documents prescribed

to account for collections 214Préparation of taxpayer' s cards and list of delinquents 214When treasurers may commence collecting on new tax ordinance 214Additional requirements as pre-requisite to issuance of business licenses 215SEC. 171. Examination of Books of Accounrs and Pertinent

Records of Businessmen by Local Treasurer 215Who may examine books of accounts and records of businessmen 216Time and frequency of examination 216Limitation as to tax period which may be examine 216Guidelines and forms to be used in examining books of accounts 217Extent of local treasurer's authority to examine books of accounts 217Prescribed forms to be used in examining books of accounts 217Are city mayors and their deputies authorized to examine books of

accounts of local taxpayers 218Books of accounts required to be kept 218Registration of books, records, and invoices before use 219Who are required to keep books of accounts 219Who are required to keep simplified set of bookkeeping records 219What are required to be recorded in the simplified set of bookkeeping records 219What are "records of inventories", and who shall keep them 220Who are required to issue invoices and receipts 220When public market vendors are required to issue invoices 221Use of cash register machines 221Books of account of market vendors 221Proposed amendment in the Candazo bill 221

CHAPTERIVCIVEL REMEDIES FOR COLLECTION OF REVENUES

SEC. 172. Application ofChapter 222Provisions on civil remédies need not be embodied by ordinance 222SEC. 173. Local Government's Lien 222What is a "tax lien", and how is it enforced 222

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Properties to which lien attaches 223SEC. 174. Civil Remédies 223Forms of civil remédies for the collection of delinquent local taxes 223How collection of tax through the courts is commenced 224Jurisdiction of the court; how determined 224Venue or place where court action to collect tax may be filed 224Fiscal need not be authorized to file suit 224Reliefs which may be allowed in légal actions 225SEC. 175. Distraintof Personal Property 225Personal properties exempt from civil remedy of distraint 227May local treasurers effect "constructive" distraint 227Procédure for the distraint of personal property 227Initial act that subjects personal property to distraint 228SEC. 176. Levy on Real Property 228Meaning of term "levy" 229Procédure when real property is levied for nonpayment of tax 229Initial act that subjects real property to levy 229SEC. 177. Penalty for Failnre to Issue and Exécute Warrant 229Penalty of treasurer who fails to enforce collection of delinquent tax 230Liability of city assessor for erroneously listing a property as

delinquent and demanding payment therefor 230SEC. 178. Advertisement and Sale 230Applicability of the provision 213SEC. 179. Rédemption of Property Sold 232Rights of the delinquent taxpayer over real property sold 232SEC. 180. Final Deed of Purchaser 233SEC. 181. Purchases of Property by the Local Government Units

for Want of Bidder 233When local unit may purchase property offered for sale 233Local officiais are prohibited from purchasing real property sold

for unpaid taxes 234SEC. 182. Resale of Real Estate Taken for Taxes, Fées, or Charges 234When LGU may sell forfeited property 234SEC. 183. Collection of Delinquent Taxes, Fées, Charges or

Other Revenues through Judicial Action 234SEC. 184. Further Distraint or Levy 235SEC. 185. Personal Property Exempt from Distraint or Levy 235

CHAPTERVMISCELLANEOUS PROVISIONS

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SEC. 186. Power to Levy other Taxes, Fées or Charges 37SEC. 187. Procédure for Approval and Effectiviry of Tax -

Ordinances and Revenue Measures; Manda tory Public Hearing 238Procédure for the enactment of tax ordinances 238Approval and veto of tax ordinance 240Grounds for veto of a tax ordinance 240Procédure for conducting public hearing of tax ordinances 240Penalties for violation of tax ordinances 241Authority of LGUs to adjust rates of taxes 241DOF has no power to review local tax ordinances under the Code 241Power to review tax ordinances under the Code 242Who détermines the legality or propriety of a local tax ordinance 242Numbering of tax ordinances 242How to appeal the legality of tax ordinances 243Effect of the appeal on the effectivity of the tax ordinance 243Procédure for approval, review, publication and effectivity of tax ordinances 243SEC. 188. Publication of Tax Ordinances and Revenue Measures 243Tax ordinances with pénal provisions; publication of 244Effectivity of tax ordinance; when payment commences 244Public hearing and publication necessary for validity of tax ordinance 244SEC. 189. Furnishing of Copies of Tax Ordinances and Revenue

Measures 244Public hearing and publication necessary for validity of tax ordinances 245Duty to submit copies of tax ordinances, and responsibility of local

treasurers to disseminate contents thereof 245SEC. 190. Attempt to Enforce Void or Suspended Tax Ordinances

and Revenue Measures 245Liability of officiais attempting to enforce tax ordinances deemed

rescinded, suspended, or declared illégal 245Duty of public officers to enforce ordinances; presumption of validity 245Presumption in fevor of validity of tax ordinances 146SEC. 191. Authority of Local Government Units to Adjust

Rates of Tax Ordinances 246Extent of authority of local units to adjust tax rates 246The Candazo bill amendatory proposai 247SEC. 192. Authority to Grant Tax Exemption Privilèges 247Local governments hâve no inhérent power to grant tax exemptions 247Tax exemption privilèges or incentives not applicable to regulatory fées 247Issuance of "tax exemption certificates" 247

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Guidelines in granting tax exemptions or tax reliefs 248Guideline in the grant of tax incentives 248Objectives and forms of tax exemptions 248Exemption from taxation is not favored 249Municipal council cannot condone taxes; tax exemption différentfrom condonation 249Rule on condonation of taxes already due 249Proposed changes in the Candazo bill 250SEC. 193. Withdrawal of Tax Exemption Privilèges 250Withdrawal of tax exemption privilèges; exemptions 250Tax exemption of coopératives does not extend to service charges 251National Housing Authority exempt from real property tax 251Scope of exemption from the realty tax granted to Local Water Districts 251Local taxes which shall continue to be collected on local water districts 252Tax exemption on EPZA-registered enterprises not withdrawn 252Proposed amendment in the Candazo bill 252

CHAPTERVITAXPAYER'S REMEDIES

Rule on prescription of taxes 253Assessment and collection of taxes now prescribe under the Code 253SEC. 194. Periods of Assessment and Collection 253Assessment distinguished from collection 254Prescription in the assessment and collection of local taxes 254Suspension in the running of the period of prescription 255Prescription does not run in the absence of a valid tax déclaration 255SEC. 195. Protest of Assessment 255Protest of assessment in Sec. 195 différent from assessment appeal in Sec. 226 256Assessment in Sec. 194 distinguished from that in Sec. 195 256Appeal from tax ordinance and protest against assessment,differentiated 257Effect of failure to protest assessment within prescribed period 257SEC. 1%. Claim for Refund of Tax Crédit 258Procédure for claiming refund or tax crédit 258Form of tax crédit mat may be granted 258When tax crédit may be refunded in cash 258Conditions précèdent for claiming tax refonds or crédits with the courts 258Délégation of taxing powers to administrative bodies 259Secretary of Finance to issue procédures for claiming refund or tax crédit 259

XX

PART TWOREAL PROPERTY TAXATION

INTRODUCTION

Historical Background 260Authorized local impositions on real property 260

CHAPTERIGENERAL PROVISIONS

SEC. 197. Scope 262"Appraisal" and "assessment" defined 262The term "assessmenf ' includes "appraisal" 262What is "real property" 262Certain "personal properties" classified as real property for taxation purposes 263Carriageways and passenger terminal stations are real property 264SEC. 198. Fundamental Principes 264(a) Appraisal at current and fair market value 264(b) Classification of real property for purposes of assessment 264(c) Uniformity in assessment in each political subdivision 265

Effect of squatters on land valuation 265(d) Private persons cannot perform assessment and tax collection 265(e) Appraisal and assessment shall be équitable 266SEC. 199. Définitions 266Machinery for gênerai purpose use, not considered machinery for taxation 268Residential machinery, what it includes 268Machineries which are not considered real property 268When sewing machines are exempt from realty tax 268SEC. 200. Administration of the Real Property Tax 269Historical background of the supervision of 1he Department of

Finance over local treasury and assessment services 269Opinion of Secretary of Finance that real property is not subject to

tax is not binding on Central Board of Assessment Appeals 270

CHAPTERHAPPRAISAL AND ASSESSMENT OF REAL PROPERTY

SEC. 201. Appraisal of Real Property 271Authority of the DOF to promulgate rules on real property assessment 271

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What is "fair market value" 271Principle of valuation 272Determining the fair market value of lands acquired by government 272SEC. 202. Déclaration of Real Property by the Owner or

Administrator 272DOF to prescribe form of Sworn Déclaration of Property Values 273Guidelines in declaring real property by owner or administrator 273Tax déclaration and receipts as évidence of ownership 274Buyer of real property must make new déclaration 274Duty of administrator of government property 274Tax déclaration is not conclusive of nature of property for zoning 274Appraisal and assessment are based on actual use irrespective of

previous assessment or taxpayer's valuation 275Forms to be used in declaring real property 275SEC. 203. Duty of Person Acquiring Real Property or Making

Improvement Thereon 27560-day period for filing sworn statement on newly acquired property 275SEC. 204. Déclaration of Real Property by the Assessor 276When local assessors are required to déclare real property 276Tax déclaration not signed is not valid 277Déclaration of real property for assessment purposes 277SEC. 205. Listing of Real Property in the Assessment Rolls 277What is an assessment roll 278Listing of undivided real property 278Liability of co-owners of undivided property to pay realty taxes 279Private properties of government are taxable in the naine of grantee or lessee 279Guidelines in preparing assessment roll 279SEC. 206. Proofof Exemption of Real Property from Taxation 279Taxpayer has burden of establishing exemption 280Tax exemption of religious institution 280SEC. 207. Real Property Identification System 280Rules establishing procédures for real property identification system 281Overview of the Real Property Tax System 281SEC. 208. Notification of Transfer of Real Property Ownership 282Duties of persons transferring ownership over real property 282Transfer of tax déclaration of land covered by land reform 283Transfer of tax déclaration oftitled lands 283SEC. 209. Duty of Registrar of Deeds to Appraise Assessor of

Real Property Listed in Registry 283When Registrar of Deeds required to subtnit abstract of Registry of Property 284

Documents required before Registrar of Deeds may register document oftransfer or encumbrance of real property 284

Effect of lack of tax clearance on registration of deeds 284Duty of registrar of deeds and notariés public to furnish assessor with

contracts conveying real property 284Duty of government officiais and private professionals to assist local assessor 285SEC. 210. Duty of Officiai Issuing Building Permit or Certificates

of Registration of Machinery to Transmit Copy to Assessor 285Submission of monthly summaries of building permits and certificates of

Registration of machinery 286Action required of local assessor to implement Sec. 210 286When tax on new building commences 287SEC. 211. Duty of Geodetic Engineers to Furnish Copy of Plans to Assessor287Duty of geodetic engineers extends to ail persons conducting land surveys 287Local assessors to keep list of geodetic engineers or surveyors 288SEC. 212. Préparation of Scheduk of Fair Market Values 288DOF to promulgate rules on préparation of schedule of market values 289Purpose and reason for Schedule of Values 289Schedule of fair market values is condition précèdent to gênerai revision

of property assessment 289Who prépares Schedule of Values within Métro Manila 290PROCEDURE IN PREPARING SCHEDULE OF VALUES 291When Schedule of Market Values required to be submitted to Sanggunian 291Duty to prépare Schedule of Fair Market Values 292Approaches in estimating values of real property 292

Analysis of Sales Transaction Method 293Income Capitalization Approach 294Reproduction Cost (New) Approach 294

Quantitative Analysis Method 295MARKET VALUES FOR LANDS 295Model Schedule of Base Unit Market Values for Residential, Commercial,

and Industrial Lands 295Sub-classification of residential, commercial and industrial lands 296Highly or fully developed residential subdivision 297Value factors as size, shape, topography, etc. modifies unit base values 297Depth influence and standard lot depth 297Procédure for translating lot values into value per square meters 298Use of Working Map for schedule of unit base market values for urban lands 298Establishing unit base market values for each sub-class of lands 299Grouping unit sales values by class 299

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How to compute the unit base market values of sub-class of land 299Computing unit base market values by income capitalization approach 299Corner influence 300How to set up Unit Value Map 301Classification of agricultural land 301CLASSIFICATION OF BUILDINGS 301Types of buildings 302Addition and déduction factors 303EXTRA ITEMS AS COMPONENT PARTS OF BUILDINGS 303Préparation of table of dépréciation 305SEC. 213. Authority of Assessor toTake Evidence 305SEC. 214. Amendment of Schedule of Fair Market Values 306Reasons for amending schedule of fair market values 306SEC. 215. Classes of Real Property for Assessment Purposes 306Classes of real property defined 307Building previously declared as residential may be reclassified as commercial 307Commercial establishments within vicinity improves classification of lands 307Déclaration of an area as commercial zone, an exercise of police power 308SEC. 216. Spécial Classes of Real Property 308Rules in the assessment of spécial classes of lands 308Rules in the assessment of lands for religious, charitable or educational purpose 309Rules in the assessment of lands owned by the Government or its subdivisions 309Privilèges of so-called spécial classes of real property 310SEC. 217. Actual Use of Real Property as Basis for Assessment 310"Actual use" as basis for taxing real property attaches even if user is

not the owner 310Rules in the assessment of lands 311Rules in the assessment of spécial classes of lands 312Rules for the assessment of buildings and other improvements 313SEC. 218. Assessment Levels 313Définitions of "assessment level" and "current or effective assessment level" 315Basis for Computing real property tax 316When assessment levels prescribed in the Code may be initially applied 316Assessment levels may be increased or decreased by the sanggunian 317Condom inium units, how assessed 317Prevailing market values to continue pending enactment of new schedules 318When may local sanggunians increase or decrease assessment levels 318Application of assessment level in Computing real property tax 318Rules for assessment of lands 318Vacant lands: how classified and assessed 318

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Lands located in areas of mixed land uses 319Agricultural lands convertible into urban subdivisions 319Assessment levels of minerai lands 319Lands used for récréation, how classified 320Spécial classes of lands in areas of mixed uses, how classified 320SEC. 219. General Revision of Assessments and Property Classification 320RULES IN CONDUCTING GENERAL REVISION OF REAL

PROPERTY ASSESSMENTS (DOF LAR No. 1 -92) 320Partial revision of assessment and property classification 320Purpose of gênerai revision of real property values 321When gênerai revision of real property assessment considered completed 321Who bears the cost of gênerai assessment revision 321When may local assessors classify, appraise and assess real property 321How are undeclared real property listed, classified, and valued 322How many years in back taxes shall newly discovered real property be liable 322When owners of real property may request for reassessment or revision

of assessment 322Effectivity of assessments upon the request of owners of real property 322When gênerai revision of assessment/property classification shall commence 323SEC. 220. Valuation of Real Property 323Liability for back taxes of undeclared real property found during gênerai

Assessment 324When owners may request for revision of property assessment 324Effectivity of canceled, reduced, or increased assessments 324SEC. 221. Date of Effectivity of Assessment or Reassessment 324Cancellation or réduction of assessments due to total or partial destruction 325Cancellation or réduction of assessments of properties affected by calamities 325Cancellation of tax déclaration of mothballed plant 326How assessment of destroyed properties are cancelled 326When does the tax on a new building commences 326SEC. 222. Assessment of Property Subject to Back Taxes 326Basis for Computing back taxes not exceeding ten years 327Classification and valuation of undeclared real property subject to back taxes 327Back taxes, when subject to penalties/interests 328Form of Notice of Assessment; exemption from postal charges 328SEC. 223. Notification of New or Revised Assessment 328Purpose of service of notice of assessment 329To whom and where notice of assessment shall be delivered 329When notice of assessment should be delivered 329SEC. 224. Appraisal and Assessment of Machinery 330

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Assessing newly acquired machinery 331Basis of establishing "assessed value" and "remaining value" of machinery 331SEC. 225. Dépréciation Allowance for Machinery 331Use of dépréciation rate tables 332

CHAPTERmASSESSMENT APPEALS

SEC. 226. Local Boardof Assessment Appeal 333Assessment appeal in Sec. 226 différent from protest of assessment in Sec. 195 333Boardsof Assessment Appeals in Métro Manila Area 333Appeals to Board of Assessment Appeals required only in questions of fact 334A party may be estopped from raising issue of jurisdiction on appeal 334Where to file assessment appeal, and form thereof 334SEC. 227. Organization, Powers, Dnties and Functions of the LocalBoard of Assessment Appeals 335Composition of the Local Board of Assessment Appeals in municipalities

within Métro Manila Area 335In LGUs without provincial/city/municipal engineer, or register of deeds,

prosecutor, who shall serve in the Local Board of Assessment Appeals 335Chairman and members of local boards need no appointments to assume posts 336SEC. 228. Meetings and Expenses of the Local Board of

Assessment Appeals 336SEC. 229. Action by the Local Boardof Assessment Appeals 336Findings of fact of Local Boards of Assessment Appeals are

respected by Central Board of Assessment Appeals 337Décisions of Local Boards based on mère administrative

communications lacks due process 337Appeals board may waive lack of proper assignment or error 338Local assessor may appeal décisions of local board of assessment appeals 338SEC. 230. Central Boardof Assessment Appeals 339Présent composition of Central Board of Assessment Appeals 340RULES OF PROCEDURE: CENTRAL BOARD OF ASSESSMENT APPEALS 340Jurisdiction of the Central Board 340What may be appealed, and who may appeal to nie Central Board 341How appeal is taken 341Transmission papers to Central Board upon appeal 341Appeal does not suspend collection of realty taxes 341Period within which to décide 341Décisions, orders, and entry thereof 342

XXVI

When décisions or orders become final and executory 342Rules ofPleadings 342Meetings of Central Board 342Scope of powers of the Central Board of Assessment Appeals 342Question of whether a building is residential or not is a factual détermination

which is for the lower courts to résolve 343SEC. 231. Effect of Appeal on the Payment of Real Property Tax 343

CHAPTERIVIMPOSITION OF REAL PROPERTY TAX

SEC. 232. Power to Levy Real Property Tax 345May an LGU refrain from imposing the real property tax 345When are improvements taxable 346SEC. 233. Rates of Levy 347Public hearing not required in enacting ordinance imposing basic

real property tax 347SEC. 234. Exemptions from Real Property Tax 347Real property sold in installment basis by a tax exempt government

corporation to~a private person is taxable 348Rule in interpreting tax exemption, incentive or tax relief privilèges 348Proof of exemption from realty tax 349Constitutional provisions on tax exemptions 349Meaning of phrase "exclusively used" 349Equipment used directly and exclusively by government corporation for

power génération and transmission, exempt from realty tax 349Scope of exemption from realty tax of property of local water districts 350What are political subdivisions 350Real property owned by POE A, DOLE are tax exempt 350Withdrawal of exemption of government corporations from local taxes 350Exemption subsists until transférée enjoys "bénéficiai use" of property 351Only patrimonial property of government are taxable 351EPZA registered enterprises liable for real property tax 352Non-profit cemeteries or burial grounds 352What are "charitable institutions" 352"Convents" defined; are exempt from the real property tax 352

CHAPTERVSPECIAL LEVTES ON REAL PROPERTY

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SEC. 235. Additional Levy on Real Property for the SpécialEducation Fund (SEF) 3 54

Is it mandatory for LGU to impose SEF but not the basic realty tax 354Exemption from the payment of SEF tax 354SEF: its purpose, source of income, and how expended 355SEC. 236. Additional Ad Valorem Tax on Idle Lands 355Accrual and payment of tax on idle lands 355SEC. 237. Idle Lands, Coverage 355SEC. 238. Idle Lands Exempt from Tax 356SEC. 239. Listing of Idle Lands by the Assessor 356SEC. 240. Spécial Levy by Local Government Units 357SEC. 241. Ordinance Imposing Spécial Levy 357SEC. 242. Publication of Proposed Ordinance Imposing Spécial Levy 358SEC. 243. Fixing the Amountof Spécial Levy 358SEC. 244. Taxpayer's Remédies Against Spécial Levy 358Appeals against spécial levies 359SEC. 245. Accrual of Spécial Levy 359

CHAPTERVICOLLECTION OF REAL PROPERTY TAX

SEC. 246. Date of Accrual of Tax 360Distinction between "accrual of tax" and "time for payment" 360Local government's lien 360SEC. 247. Collection of Tax 360Place where real property tax may be paid 361Responsibility of provincial treasurer 361Liability of treasurer for failure to accept payment 361Deputization of barangay treasurers to collect realty taxes 361Recording of payment of real property taxes 361Posting of real property tax payments 362SEC. 248. Assessor to Furnish Local Treasurer with Assessment Roll 362What is an assessment roll; form thereof 363SEC. 249. Notice of Time for Collection of Tax 363Notice of entitlement to tax discounts for prompt payment 363Provincial Treasurers no longer required to give notice of time to collect tax 363Publication of notice to collect tax in newspapers, when not mandatory 363Importance of sending individual tax bills by mail 364SEC. 250. Payment of Real Property Taxes in Installments 364Payment of real property taxes in installments 365

xxvui

Installment purchaser liable for realty taxes 365Delinquent taxes and penalties may be paid in installments 365Failure to pay first quarter installment 365How to compute real estate tax penalty for delinquency 366Realty tax payments are applied first to prior years delinquencies and penalties 366SEC. 251. Tax Discount for Advanced Prompt Payment 366Extent of discount on prompt and advanced payments 366Tax discounts on realty taxes paid before deadline 367Local sanggunian must specify extent of discount allowed 367"Advanced payment" distinguished from "prompt paymenf ' 367Property with outstanding delinquent tax for previous years not

eligible for tax discount 368SEC. 252. Payment Under Protest 368Payment of tax is precondition in protests questioning the reasonableness

of the assessment or amount of tax; but not when issue is authorityof the assessor 368

Accounting treatment of taxes paid under protest 369Distribution of 50% of the tax paid under protest, of doubtful validity 369Grounds for protesting real property tax 369Payment under protest as condition précèdent in judicial recourse 370Protest not necessary for refund in payment under mistake of law 370SEC. 253. Repayaient of Excessive Collections 370Creditable and/or refundable cases of tax overpayments 3 71When taxpayer is entitled to refund or crédit for taxes paid 3 71SEC. 254. Notice of Delinquency in the Payment of Real Property Tax 372Notice of delinquency in the payment of real property tax 372Four stages or types of notices of delinquency in payment of realty taxes 373SEC. 255. Interests on Unpaid Real Property Tax 374Basis for Computing 2% interest for delinquency 374Maximum penalty for realty tax delinquency under the Code 3 74SEC. 256. Remédies for the Collection of Real Property Tax 375There is only one administrative remedy for collecting realty taxes 375Nature of the administrative and judicial remédies for collecting the tax 376On the collection of delinquent taxes 3 76Remédies available to LGUs to enforce collection of the real property tax 376SEC. 257. Local Governments Lien 3 7 7

SEC. 258. Levy on Real Property 3 7 7

Requirernent for issuance of Warrants of Levy will improve collections 378Procédure in conducting levy proceedings on delinquent properties 378SEC. 259. Penalty for Failure to Issue and Exécute Warrant 379

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SEC. 260. Advertisement and Sale 379Procédure in advertising delinquent real property for sale 380Issuance and service of Warrant of Levy as prerequisite to advertisement

and sale of delinquent property 3 81Notices to delinquent landowners and the public are essential in auction sale 381Contents, form, and duration of advertisement 381SEC. 261. Rédemption of Property Sold 382Rights of taxpayer within one year from sale of delinquent property 382Liability of delinquent taxpayer where auction sale is declared null and void 383Inadequacy of price as ground for in validity of transaction 383Period of rédemption, and who can redeem 383SEC. 262. Final Deed to Purchaser 384Rights of purchaser of real estate in a tax sale 3 84SEC. 263. Purchase of Property by the Local Government Units

forWantofBidder 384When local treasurer may purchase property sold for tax delinquency 385Local officiais are prohibited from purchasing real property sold for unpaid tax 385SEC. 264. Resale of Real Estate Taken for Taxes, Fées or Charges 385SEC. 265. Further Distraint or Levy 385SEC. 266. Collection ofReal Property Through the Courts 386How collection of realty tax through courts is commenced 386Jurisdiction of court; how determined 386Venue or place where court action to collect tax may be filed 386Collection of real property tax though the courts 387SEC. 267. Action Assailing Validity of Tax Sale 387Court deposit équivalent to amount of property sold necessary for suits

assailing validity of tax sale 387Notice of sale to delinquent landowners and to the public, an essential and

indispensable requirement of law 388SEC. 268. Payment of Delinquent Taxes on Property Subject of

Controversy 388Collection of delinquent realty taxes on properties sequestered by PCGG 388Owner of land appropriated by city is relieved from paying tax 389SEC. 269. Treasurer to Certify Delinquencies Remaining Uncollected 389Practice where treasurer présumes property is delinquent unless taxpayer

can prove otherwise is unfair and of doubtful legality 390Yearly certificates of delinquencies now to be submitted to sanggunians 390SEC. 270. Periods within which to Collect Real Property Taxes 390Prescriptive period for the collection of real property taxes 391

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CHAPTERVTJDISPOSITION OF PROCEEDS

SEC. 271. Distribution ofProceeds 392Distribution of real property tax proceeds in provinces 393Distribution of real property tax proceeds in cities 393Distribution of real property tax proceeds in municipalities within MMA 393Automatic release of real property tax share to barangays 394Liability for withholding barangay share 394SEC. 272. Application ofProceeds of the additional One Percent SEF

Tax 394Application of additional 1% SEF tax, and allocation thereof 394SEC. 273. Proceeds ofthe Tax on Idle Lands 395Account treatment of proceeds from tax on idle lands 395Do municipalities share in proceeds of tax on idle lands 395SEC. 274. Proceeds ofthe Spécial Levy 395Account treatment of proceeds from spécial levies 396Spécial levies on lands benefited by public works projects by the National Govt 396May barangay collect spécial levies 396

CHAPTERVmSPECIAL PROVISIONS

SEC. 275. General Assessment Revision: Expenses Incident Thereto 397Share of barangay in the expenses ofthe gênerai assessment revision 397Sharing of revision expenses between the province and the municipalities,

and among the municipalities themselves 397SEC. 276. Condonation or Réduction of Real Property Tax and interests 397Condonation: its meaning, and implication on destroyed structures 398SEC. 277. Condonation or Réduction of Tax by the Président of

the Philippines 398SEC. 278. Duty of Registrar of Deeds and Notariés Public to Assist

the Provincial, City or Municipal Assessor 399Duties of Registrars of Deeds 399Duties of Notariés Public 399SEC. 279. Insurance Companies to Furnish Information 400SEC. 280. Fées in Court Actions 400SEC. 281. Fées in Registration of Papers or Documents on Sale of

Delinquent Real Property to Province, City or Municipality 400SEC. 282. Real Property Assessment Notices or Owner's Copies of

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Tax Déclaration to be Exempt from Postal Charges or Fées 400SEC. 283. Sale and Forfeiture before Effectivity of Code 401

PARTTHREESHARE OF LOCAL GOVERNMENTS ES THE NATIONAL TAXES

TITLETHREE(Of The Local Government Code)

SHARES OF LOCAL GOVERNMENTS INTHE PROCEEDS OF NATIONAL TAXES

CHAPTERL Allotmentof Internai Revenue

SEC. 284. Allotmentof Internai Revenue Taxes 402Scope or composition ofthe IRA of LGUs, the ARMM, and the COA 403Cost of devolved personal services 403"Unmanageable public sector déficit" as a factor in the downward adjustment

of internai revenue allotments for LGUs 403Increase in internai revenue allotment should not render LGUs complacent 405SEC. 285. Allocation to Local Government Units 405SEC. 286. Automatic Release of Shares 406A portion of the IRA may be assigned as security for loan 406Release of advice of allotment for IRA share 407Benchmark of IRA of LGUs 408Lien and holdback of internai revenue allotments to LGUs, prohibited 408SEC. 287. Local Development Projects 408POLICIES IN THE UTLIZATION OF THE TWENTY PERCENT (20%)

DEVELOPMENT FUND AND RELATED MATTERS 409General policies on the use ofthe 20% development fund 409Programs, projects and activities chargeable against me 20% development fund 410Preparing me Annual Investment Plans: from whom to seek assistance 411SEC. 288. Rules and Régulations 411

CHAPTERIISHARE OF LOCAL GOVERNMENT UNITS

IN THE NATIONAL WEALTH

Meaning ofthe term "national wealth" 412SEC. 290. Amountof Share of Local Government Units 412Collections ofthe national governments from the utilization and development

ofthe national wealth subject to local government sharing 412

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SEC. 291. Share ofthe Local Governments from any GovernmentAgency or Government-Owned or Controlled Corporation 413

SEC. 292. Allocation ofShares 413SEC. 293. Remittance ofthe Share of Local Government Units 414Share of local governments in national wealth to be automatically released 414SEC. 294. Development and Livelihood Projects 415Utilization of proceeds from share of national wealth 415What are local development projects 415

INDEX 416

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