January 12, 1995

BUREAU OF LOCAL GOVERNMENT FINANCE OPINION

Mr. Cesar A. Ramos

301-C Antipolo Street
City of Mandaluyong

Sir:

This refers to your letters dated October 18 and 28, 1994, requesting opinion
on issues relative to the retirement and transfer of a business.

It is represented that your client is engaged in rendering and offering services

with offices in the City of Manila. Said offices, however, were transferred to the City
of Mandaluyong, thus, the corporation applied for business retirement from the City
of Manila which was approved in January, 1992. It also applied for Mayors Permit in
Mandaluyong which was granted also in January 1992.

Hence, the following queries:

1. Can we consider the Mayors Permit and License applied in

Mandaluyong as new? Since the Mayors Permit and License in
Manila has already been cancelled by virtue of the approved
retirement.

2. What would be the basis for the rates of local taxes in

Mandaluyong?

3. Assuming arguendo, that there will be findings of unpaid taxes

now and in the future, in Mandaluyong, will Section 168 of the
1991 Local Government Code apply?

4. Whether or not the City of Mandaluyong can impose

fines/penalties more than or exceeding twenty-five percent (25%)
and more than or exceeding two percent (2%)?

As to query No. 1 the answer is in the affirmative. Having ceased operations in

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the City of Manila, the business should be considered as newly-started in the
municipality (now City) of Mandaluyong, the same having transferred to another local
government unit or another taxing jurisdiction.

With respect to query No. 2, the tax due shall be based on the rates of taxes
imposed on newly-started businesses under the existing ordinances of Mandaluyong.
dctai

For query No. 3, the answer is also in the affirmative. Section 168 of the Code
provides:

"SEC. 168. Surcharges and Penalties on Unpaid Taxes, Fees, or

Charges. The sanggunian may impose a surcharge not exceeding twenty-five
percent (25%) of the amount of taxes, fees or charges not paid on time and an
interest at the rate not exceeding two percent (2%) per month of the unpaid
taxes, fees or charges including surcharges, until such amount is fully paid but
in no case shall the total interest on the unpaid amount or portion thereof exceed
thirty-six (36) months. . . ."

Finally, for query No. 4, the reply is "No". The law is clear that surcharges
shall not exceed twenty-five percent (25%) of the amount of unpaid taxes, fees or
charges. The rate of interest is pegged at two percent (2%) per month but which,
however, shall be limited to not more than thirty six (36) months reckoned from the
date obligation became due and payable. Stated otherwise, the maximum total interest
shall not exceed seventy two percent (72%) of the amount due.

We hope that this will clarify matters.

Very truly yours,

(SGD.) LORINDA M. CARLOS

Executive Director

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