PHILIPPINE TAXES o Municipalities/ Cities within MM

 Tax on Business
 National Taxes o Barangays
o Governing Laws  Taxes
 Tariff and Customs Code  Sevice fees or charges
 National Internal Revenue Code  Barangay clearance
o Taxing Authorities  Other fees and charges
 Legislative Body o Common revenue-raising powers
 BIR  Service Fees and Charges
o BIR issuances & rulings  Public Utility Charges
 BOC  Toll Fees or Charges
o BOC issuances  Community Tax

 Local Taxes  Real Property Taxation

o Local Government Code of 1991 o Provinces/ Cities/ Municipalities in MM
 Local Ordinances  Tax on Land
o Legislative Body (Congress, Sanggunian)  Tax on Buildings
 LGUs (Province, City, Municipality)  Tax on Machineries
 DOF issuances Opinions  Tax on Improvements (affixed or attached to the real
 BLGF provides technical assistance in property)
interpretation of LGC
SECTION 193 Withdrawal of Tax Exemption Privileges
FUNDAMENTAL PRINCIPLES OF LOCAL TAXATION
1) “Unless otherwise provided in this Code, tax exemptions or incentives
Sec. 130, LGC granted to, or presently enjoyed by all persons, whether natural or juridical,
 Taxation shall be uniform in each LGU; including GOCCs, except:
 Taxes, fees, charges and other impositions shall: o Local water districts cooperatives duly registered under RA 6938;
o Be equitable and based as far as practicable on the taxpayer’s o Non-stock and non-profit hospitals;
ability to pay; o Non-stock and non-profit educational institutions
o Be levied and collected only for public purposes; are hereby withdrawn upon the effectivity of this Code.”
o Not be unjust, excessive, oppressive or confiscatory;
o Not to be contrary to law, public policy, national economic policy, or LIMITATIONS ON TAXING POWERS OF LGUs
in restraint of trade SECTION 133
 Collection of local taxes and fees shall in no case be let to any private
person. 1. Income of individuals and of corporations except income of banks and other
 Revenue collected shall inure solely to the benefit of the LGU levying the tax. financial institutions;
 Each LGU shall, as far as practicable, evolve a progressive system of 2. Documentary stamp tax;
taxation. 3. Estate tax and donor’s tax;
4. Customs duties, fees and other charges except wharfage fess on vessels
SCOPE OF TAXING POWER OF LGUs landing on wharf owned by the LGU;
5. Taxes, fees and charges upon goods carried into, or out of, or passing
 Local Government Taxation through their territorial jurisdictions;
o Provinces/ Cities/ Municipalities in Metro Manila 6. Taxes, fees or charges on agricultural and aquatic products when sold by
 Tax on Transfer of Real Property Ownership marginal farmers or fishermen;
 Tax on Business of Printing and Publication 7. Taxes on enterprises registered with the BOI for ITH years;
 Franchise Tax 8. Excise taxes on articles enumerated under the Tax Code, and taxes, fees or
 Tax on Sand, Gravel and Other Quarry Resources charges on petroleum products;
 Professional Tax 9. Percentage or VAT on sale or exchange of goods or services except as
 Amusement Tax provided in the LGC;
 Annual Fixed Tax for Delivery Truck or Van of 10. Taxes on the gross receipts of transportation contractors except as provided
Manufacturers, Producers, Wholesales of, Dealers, or in the LGC;
Retailers in Certain Products 11. Taxes on premiums paid by way of reinsurance or retrocession;

LOCAL BUSINESS TAX Page 1 of 8

12. Taxes, fees or charges for the registration of motor vehicles and for the
issuance of all kinds of licenses or permits for driving vehicles, except  Franchise tax on telecommunications
tricycles; o The “in lieu of all taxes” provision found in existing franchises is
13. Taxes, fees or other charges on Philippine products actually exported except withdrawn with the enactment of the 1991 LGC.
as provided in the LGC; o However, if similar provision is found in franchises subsequent to
14. Taxes, fees or other charges on duly registered countryside and barangay the effectivity of 1991 LGC, said grantees are entitled to exemption
business enterprises and cooperatives; from local franchise tax (PLDT v. City of Davao, GR 143867, 25
15. Taxes, fees or other charges on the National Government, its agencies and March 2003).
instrumentalities and LGUs o The language of the law granting the franchise must be clear as to
the grant of exemption from said tax (Smart Communications,
 CASES Inc. v. The City of Davao and the Sangguniang Panlungsod of
Davao City, GR 155491, 16 September 2008; The City of
 Petron Corporation v. The Municipality of Navotas, GR 158881, 16 Iloilo v. Smart Communications, Inc. GR 167260, 27
April 2008 February 2009).
o LGUs are prohibited from extending the levy of any kind of “taxes,
fees or charges on petroleum products.”
 CASES
 MIAA v. City of Pasay, GR 163072, 2 April 2009
 City of Pasig v. Manila Electric Comapny, GR 181710, 7 March 2018
o The Manila International Airport Authority (MIAA) is a government
o Under the LGC of 1991, a municipality is bereft of authority to levy
instrumentality which is not subject to any kind of tax imposed by
and impose franchise tax on franchise holders within its territorial
LGUs.
jurisdiction. That authority belongs to provinces and cities only. A
o MIAA’s airport lands and buildings which are devoted to public use
franchise tax levied by a municipality is, thus, null and void.
are properties of public dominion owned by the Republic of the
 The nullity is not cured by the subsequent conversion of
Philippines, hence, exempt from real property tax. However, when
the municipality into a city.
MIAA leases its real property to a taxable person, the specific real
property leased becomes subject to RPT.
 Province of Cagayan v. PLDT, Inc., CTA AC 63, 15 September 2010
o Is PLDT Liable to pay franchise tax to the Province of Cagayan on
TAX ON TRANSFER OF REAL PROPERTY
gross receipts realized from the City of Tuguegarao?
 NO, PLDT is not liable to pay franchise tax to the Province
 Imposed on sale, donation, barter or any other mode of transferring
of Cagayan on gross receipts realized within the City of
ownership or title of real property.
Tuguegarao.
 Due within 60 days from the date of the execution of the deed or from the
 The province has the power to impose a tax on businesses
date of the decedent’s death.
enjoying a franchise within its territorial jurisdiction,
 Based on Fair Marker Value (FMV) or total consideration, whichever is higher.
excluding, however, the territorial limits of any city located
 Tax rate:
within the province. Section 151 of the LGC states that the
o Provinces – not to exceed 50% of 1%
city may levy taxes, fees and charges that the province or
o Cities/ municipalities within MM – not to exceed 75% of 1%
municipality may impose.
 Tax applies even in cases of mergers or consolidations.
LOCAL BUSINESS TAX
FRANCHISE TAX
 An excise tax as it is a tax on the privilege in business.
 Imposed by provinces and cities on businesses enjoying a franchise within its  Local business tax (LBT) is an annual tax.
territorial jurisdiction;  LBT is a tax for the current year based on the gross sales or receipts for the
 Imposed notwithstanding any exemption granted by any law or other special preceding year.
law granted prior to 1 January 1992.  Tax rates
LGU Tax Base Tax Rate o Municipalities: Generally not to exceed 50% of 1%
Gross Receipts Not to exceed 50% of o Cities/ Municipalities within the Metropolitan Manila: generally not to
Provinces 1% exceed 75% of 1%
Capital Investment 1/20 of 1% o “Catch all” rate (Others): 2% for municipalities & 3% for cities and
Gross Receipts Not to exceed 75% of MM municipalities
Cities/ Municipalities
1%  8 business type clusters
within MM
Capital Investment 3/40 of 1% o Manufacturers
LOCAL BUSINESS TAX Page 2 of 8
 o Wholesalers and distributors of whatever kind or nature
o Exporters/ dealers of esential commodities Exporters, and manufacturers, At a rate not exceeding
o Retailers millers, producers, wholesalers, ½ of the rates
o Contractors distibutors, dealers, or retailers of prescribed under
o Banks and other financial institutions Sec. 143(c) essential commodities subsection (a), (b),
o Peddlers and (d) of this Section
o Others on gross sales or
 Exporters/ Deals with essential commodities receipts
o ‘Essential commodities’ under Section 143(c), LGC Sec. 143(d) Retailers Gross sales or receipts
 Rice and corn
 Wheat or cassava flour, meat, dairy products, locally o ‘gross sales or receipts’ include the total amount of money or its
manufactured, processed or preserved food, sugar, salt equivalent representing the contract price, compensation or service
and other agricultural, marine, and fresh water products fee, including the amount charged or materials supplied with the
whether in their original state or not services and deposits or advance payments actually or
 Cooking oil and cooking gas constructively received during the taxable quarter for the services
 Laundry soap, detergents, medicine performed or to be performed for another excluding:
 Agricultural implements, equipment and post-harvest  Discounts, if determinable at the time of sales;
facilities, fertilizers, pesticides, insecticides and other farm  Sales return;
inputs  Excise tax;
 Poultry feeds and other animal feeds  VAT
 School supplies
 Cement o Gross Receipts of construction contractors (DOF LFC 3-95)
 Computation  Shall be the amounts received by the principal contractor
o Classify the business. as the total contract price less the amount paid to a
o Group different activities according to clusters. subcontractor under a sbcontract agreement, if there is
 Each cluster has its own separate tax rate. any. The said sub-contractor, however, shall also be
 Different business activities are subject to different tax subject to the business tax imposed herein.
rates & should be separately reported.
o Determine gross sales/ receipts for all business activities within the Taxable Gross Receipts
same cluster and consolidate. Principal Gross receipts less payments to
o Compute the tax due for each cluster using the tax rate imposed by contrator subcontractors
the local tax ordinance. Subcontractor (of Gross receipts from principal contractor plus
 Tax due = (tax base) x (tax rate) ± penalty/ main conractor) gross receipts from other business activities
discount less payments to subcontractor
 Gross sales/ gross receipts Subcontractor (of Gross receipts from subcontractor (of
LGC Taxpayer Tax Base the principal contractor) less payments to other
Provision subcontractor) subcontractors, if any
Persons engaged in the printing Gross annual receipts
Sec. 136  Payment
and/ or publication of books
o Accrues January 1 of each year
Sec. 137 Business enjoying a franchise Gross annual receipts
Proprietors, lessess, or operators Gross receipts o Payable in:
Sec. 140  Annual – not later than January 20
of theaters
Manufacturers, assemblers, Goss sales or receipts  Quarterly – within 20 days of the first month of the quarter
repackers, processors, brewers, o Surcharge and penalties on unpaid taxes
distillers, rectifiers and  25% surcharge if not paid on time, plus
compounders of liquors, distilled  2% interest per month of the unpaid taxes, fess, and
Sec. 143(a) charges including surcharge (maximum of 36 months or
spirits, and wines or
manufacturers of any article of 72%)
commerce of whaterver kind or
nature  Situs Rule (Article 243(a)(3), IRR)
Section Wholesalers, distributors, or Gross sales or receipts
143(b) dealers in any article of commerce
LOCAL BUSINESS TAX Page 3 of 8
o Principal Office: head or main office appearing in the registration
documents submitted to the SEC, DTI or other appropriate
government agency
 Sales made by head or principal office
 30% - city or municipality where the principal
office is located;
 70% - city or municipality where the factory,
project office, plant, or plantation is located
 In case of a plantation located at a place other than the
place where the factory is located, the 70% shall be divided
as follows:
 60% - city or municipality where the factory is
located (if there are two or more factories, 60% is
divided pro-rata bawsed on volume of production)
 40% - city or municipality where the plantation is
located (if there are tow or more plantations, 40%
is divided pro-rata based on volume of production)
o Branch or sales office: a fixed place in a locality which conducts
operations of the business as an extension of the principal office;
includes places maintained for purposes of reservation and
collection of receivables
 Sales made by branches or sales outlets shall be recorded
in the branch or sales outlet making the sale.
 Taxes accrue and shall be paid in the city or municipality
where the said branch or sales outlet is located.
 Companies not maintaining branches or sales outlets shall
record the sale in the principal office
o Warehouse: a building utilized for the storage of products for sale
and from which goods or merchandise are withdrawn for delivery to
customers or dealers
 A warehouse that does not accept orders and/ or issues
sales invoices shall not be considered a branch or sales
office.
o DOF-BLGF Opinion dated 17 January 2002: SJCM’s principal
office and factory are located in Carmona, Cavite and its offices/
branches are in Mandaluyong, Parañaque, Las Piñas City and Cebu
City.
 RULING: All sales made in the sales outlet at SM Megamall
shall be recorded in Mandaluyong City where such outlet is
located and shall be taxable only by Mandaluyong. Same
rule applies with sales outlet in different localities.
 Carmona Cavite, where the factory and principal office are
located, shall have the authority to tax 100% of all sales
made in places where there is no branch or sales outlet and
which are recorded in the said principal office.
 All cities may collect the Mayor’s permit and other
regulatory fees.
o DOF-BLGF Opinion dated 12 February 2007
 MCC principal office in Caloocan City. Its products include
paper rolls and corrugated carton boxes.
 Manufacting plants in (1) Santo Tomas Batangas, which
manufacturers paper rolls of scrap carton boxes as raw
materials, and (2) Valenzuela City, where such paper rolls
undergo further processing to produce corrugated carton
boxes. No sales were made in the Valenzuela plant.
 All sales were made in the main office, but there is nothing
in the books of MCC in Caloocan City to determine the
gross sales in Batangas and Valenzuela plants.
 ISSUE: What is the correct amount of allocated sales to
each LGU?
 The pro-rated allocated should be:
a) Caloocan City – 30%
b) Batangas City – 35%
c) Valenzuela City – 35%
 CASES
 DLSU v. CIR, GR 198841, 9 November 2016
o When a non-stock, non-profit educational institution proves that it
uses its revenues actually, directly and exclusviely for educational
purposes, it shall be exempted from income tax, VAT, and LBT.
o On the other hand, when it also shows that is uses its assets in the
form of real property for educational purposes, it shall be exempted
from RPT.
Exporters/ Deals with Essential Commodities
 Steniel Mindanao Packaging Corporation v. City Treasurer of Davao
City, CTA AC 39, 27 November 2008
o A company that does not export its products but sells it to local
companies, which in turn utilize said products as inputs in the
manufacture of other products that are exported abroad, is locally
taxable as a manufacturer under Section 143(a), and not as an
exporter under Section 143(c), of the 1991 LGC.
Contractors
 Kepco Ilijan Corporation v. The City of Makati, CTA EB 453, 23 July
2009
o Whether Kepco Ilijan Corporation (KIC), in the process of selling
electricity, is a “contractor” or a “manufacturer” as defined under
the LGC and Makati City Tax Code.
 RULING: KIC is a “contractor” as defined under the LGC
and Makati City Tax Code
 An entity that operates, maintains, and manages a power
plant for the conversion of fuel into electricity is classified
as a ‘contractor’ and not a ‘manufacturer’ for local business
tax purposes.
Others
 The City of Manila v. Coca-Cola Bottlers Philippines, Inc. GR 181845,
4 August 2009
LOCAL BUSINESS TAX Page 4 of 8
 o May the City of Manila assess taxes under both Section 14
(manufacturer) and Section 21 (others) of Tax ordinance No. 7794,
as amended?
 RULING: NO. Coca-cola should not have been subjected to
the LBT under Section 21 of said ordinance since it was
already paying the LBT under Section 14 of the same
ordinance.
 There is double taxation if Coca-cola is subjected to taxes
under both Sections 14 and 21 of Tax Ordinance 7794,
since these are being imposed:
a) On the same subject matter – privilege of doing
business in Manila;
b) For the same purpose – to make persons conducting
business within Manila contribute to city revenues;
c) By the same taxing authority – City of Manila;
d) Within the same taxing jurisdiction – within Manila’s
territorial jurisdiction;
e) For the same taxing periods – per calendar year;
f) Of the same kind or character – LBT imposed on gross
sales or receipts of the business
Gross Sales/ Gross Receipts
 Ericsson Telecommunications, Inc. V. City of Pasig, GR 176667, 22
November 2007 (Third Division)
o Local business tax on contractors is based on ‘gross receipts’ and
not on ‘gross revenues’ as reported in the audited financial
statements.
 Gross receipts include money or its equivalent actually or
constructuvely received for services performed or to be
performed for another
 Gross revenue may include the value of services rendered
or articles sold, exchanged or leased, the payment of which
is yet to be received
 First Planters Pawnshop, Inc. v. City Treasurer of Pasay, CTA EB 501,
10 December 2010
o In computing the LBT, the City Treasurer cannot apply the
“presumptive income level assessment approach” (PILAA) if
the taxpayer submits sufficient proof of its income.
 The said method does not give the City Treasurer authority
to increase the gross sales or receipts of taxpayers when
computing the business tax due. The PILAA may be used
only if the taxpayer is unable to provide proof of its
income.
 The use of such method must be authorized by a duly
enacted ordinance.
 Honest Service Providers, Inc. v. The City of Makati, CTA AC 40, 29
May 2008
o Are direct expenses such as salaries and wages of janitors and
messengers and the janitorial cleaning materials used which are
charged to clients at cost without any element of profit, part of
gross receipts for LBT purposes?
 RULING: YES, under the definition of ‘gross receipts’ in
Section 131(n), LGC.
 The gross receipts of Honest Service is the fee received
from its clients despite the fact that said amount includes
the salaries and wages of the janiitors and messengers as
well as the amount of cleaning materials used.
Situs Rules
 Linberg Philippines, Inc. v. City of Makati, CTA EB 349, 11 November
2008
o In the ordinary course of business, particularly in the nature of a
BOT business, prior to the building and construction of any power
plant at any locality, the usual negotiations thereon, until the full
completion of the contract of BOT, is usually done in the principal
office. Naturally, this transaction is taxable as it is an exercise of a
business.
o Although the power plants, which are subject of petitioner’s contract
of BOT, are situated at different localities, still the act of financing
the construction and operation thereof, are considered as “doing
business” which appears to have been performed at petitioner’s
principal office in Makati City. It is therefor clear that the City of
Makati has jurisdiction to tax Linberg Philippines, Inc.
 Honest Service Providers, Inc. v. The City of Makati, CTA AC 40, 29
May 2008
o Are payments from clients outside Makati taxable by Makati
considering that Honest Services did not perform the services within
Makati (i.e. employees are working or assigned to clients located
outside Makati)?
 RULING: YES, payments from clients outside Makati City
are taxable by Makati as Honest Service has no sales outlet
of branch in any city or muunicipality other than Makati.
 Under Section 150 of the LGC, if there is no branch or sales
outlet in the city or municipality where the sale or
transaction is made, the sale shall be recorded in the
principal office, and taxes due shall accrue and be paid to
the city or municipality where the principal office is located.
 City of Makati v. Nippon Express Philippines Corp., CTA AC 76, 17
February 2012 & 30 April 2012 (MR)
o Makati City declared that Nippon failed to correctly pay LBT on sales
recorded in its branches located in its cities of Parañaque and Cebu.
Thus, it is liable for deficiency LBT on said sales to the City of Makati
where the head office is located.
o ISSUE: Is Makati authorized to assess/ collect deficiency LBT on
sales of Nippon’s branches that may not have been taxed in
Parañaque and Cebu?
 RULING: NO. A city has no authority to assess and collect
deficiency LBT on a taxpayer for sales or receipts that may
LOCAL BUSINESS TAX Page 5 of 8
 not have been properly taxed by other cities or o The last paragraph of Article 233 of IRR merely affirms the basis of
municipalities where branches or sales outlets are located. the reasonableness of the fees and charge by saying that no fee/
charge shall be based on capital investment or gross receipts of the
REGULATORY FEES person or business.
o NOTE: Affirmed in GR 187631, 8 July 2015.
 Regulation and delivery of services are the paramount objectives of
regulatory fees and service/ user charges.  Smart Communications, Inc. V. Municipality of Malvar, Batangas, GR
 Fees are set only at level that ensure full recovery of costs of issuing permit 204429, 18 February 2014
or license and surveillance. o Smart Communications, Inc. Is a domestic corporation engaged in
 Cannot use gross receipts or capitalization as basis for determining fees. the business of providing telecommunications services to the
general public while respondent Municipality of Malvar, Batangas is
 Mayor’s Permit a local government unit created by law.
o An annual fee o Smart constructed a telecommunications tower within the territorial
o Payable for every distinct business or place jurisdiction of the Municipality. The construction of the tower was for
o Paid to the Local Treasurer before business can lawfully start, or the purpose of receiving and transmitting cellular communications
within January 1-20, in case of renewal within the covered area.
o On 30 July 2003, the Municipality passed Ordinance No. 18, series
 Building permit, plumbing permit, electrical permit, mechanical permit, of 2003, entitled “An Ordinance Regulating the Establishment of
occupancy permit, plumbing inspection, mechanical inspection, electrical Special Projects.” Smart received from the Permit and Licensing
inspection, inspection fees, demolition, fire certification, sanitary permit, Division of the Office of the Mayor of the Municipality an assessment
zoning and land use letter with a schedule of payment for the total amount of P389,950
for Smart’s telecommunications tower.
 Business o Since the main purpose of Ordinance 18 is to regulate certain
o Mayor’s permit construction activities of the identified special projects, which
o Weights and measures included “cell sites” or telecommunications towers, the fees imposed
o Tricycle operations in Ordinance 18 are primarily regulatory in nature, and not primarily
o Sanitory inspection revenue-raising. While the fees may contribute to the revenues of
o Video tape rentals the Municipality, this effect is merely incidental. Thus, the fees
o Storage of flammable and combustible material imposed in Ordinance 18 are not taxes.
o In Progressive Development Corp. v. Quezon City, the Court
 Non-business declared that “if the generating of revenue is the primary purpose
o Marriage permit and solemnization and regulation is merely incidental, the imposition is a tax; but if
o Tax clearance fees regulation is the primary purpose, the fact that incidentally revenue
o Burial permit is also obtained does not make the imposition a tax.”
o Impounding/ Sales of Stray Animals o In Victorias Milling Co. v. Municipality of Victorias, the Court
o Exhumation/ Removal of Cadaver reiterated that the purpose and effect of the imposition determine
whether it is a tax or a fee, and that the lack of any standards for
o Police Clearance
such imposition gives the presumption that the same is a tax.
o Fiscal’s Clearance
o Fees on Holding Benefits Firearms Permit  City of CDO v. CEPALCO, GR 224825, 17 October 2018
o Registration of Large Cattle o Proceeding to the question of non-exhaustion, the Court rules that
ordinances that impose regulatory fees do not need to be challenged
before the Secretary of Justice.
 CASES
PEZA-registered enterprises
 Batangas City v. Pilipinas Shell Petroleum Corporation, CTA EB 350,
22 January 2009  Under 5% Preferential Gross Income Tax (GIT)
o Mayor’s permit must be reasonable and commensurate with the cost
regulation, inspection and licensing of business, i.e. proportionate/ o Exempt from local taxes including:
equal to the cost of issuing the license or permit and the expenses  Business taxes
incurred in the conduct of the necessary inspection or suveillance.  Real property taxes, except on lands owned by Ecozone
Developer
LOCAL BUSINESS TAX Page 6 of 8
  Other taxes, fees and charges imposed by LGUs
o 2% share from the 5% gross income earned shall accrue exclusively
to the municipal or city funds where the enterprise is located
o Exemption does not extend to service establishments in the
Ecozone, which do not enjoy incentives and are subject to national
and local taxes (S5, RA 8748)
 Under the Income Tax Holiday (ITH) Regime
o PEZA-registered export enterprises are exempt from payment of
local taxes while enoying ITH
o Zone registered enterprises shall be exempt from the payment of
any and all local government imposts, fees, licenses or taxes except
real estate taxes in addition to ITH incentive (Art. 78, Book VI, EO
226)
REGIONAL OPERATING HEADQUARTERS
 Art. 66, RA 8756 or The Omnibus Investment Code of 1987
o “Article 66. Exemption from all kinds of local taxes, fees or charges.
– The regional or area headquarters and regional operating
headquarters of multinational companies shall be exempt from all
kinds of local taxes, fees or charges imposed by a local government
unit except real property tax on land improvements and
equipment.”
NEWLY STARTED BUSINESS
 Any person starting or establishing a business covered by tax ordinance of
LGU must firt get Mayor’s permit and pay the fee.
 Tax on newly started business based on capital investment is not authorized
by the 1991 LGC. The phrase “gross sales for the preceding year,” however,
does not mean gross sales for one complete year of 12 months, but also
contemplates situations where a business started to operate on a date other
than 1 January of the calendar year, and therefore, realized “gross sales: for
only a fraction of the year” (DOF-BLGF Opinion ddated 9 January 1997;
DOF-BLGF Opinion dated 9 March 2001).
RETIREMENT OF BUSINESS
 Sec. 145, LGC
o “Section 145. Retirement of Business. – A business subject to tax
pursuant to the preceding Sections shall, upon termination thereof,
submit a sworn statement of gross sales or receipts for the current
year. If the tax paid during the year be less than the tax due on said
gross sales or receipts of the current year, the difference should be
paid before the business is considered officially retired.”
 Mobil Philippines, Inc. v. The City Treasurer of Makati & The Chief of
the License Division of the City of Makati, GR 154092, 14 July 2005
o For the year 1998, Mobil paid a total of P2,262,122.48 to the City
Treasurer of Makati City as business taxes for the year 1998.
o The amount of tax as computed based on Mobil’s gross sales for
1998 is only P1,331,638.84. Since the amount paid is more than the
amount computed based on its actual gross sales for 1998, Mobil
upon its retirement is not liable for additional taxes to the City of
Makati.
o The assessment against Mobil for additional business taxes for
theyear 1998 is erroneous. Upon retirement of the business, a
taxpayer shall pay additional tax only if the tax paid during the year
is less than the tax due computed based on the gross sales or
receipts of the current year.
TAXPAYER’S REMEDIES
 Period of Assessment
o Within 5 years from date the tax becomes due
 Except in case of fraud or intent to evade payment of taxes
– 10 years from discovery
 Period of Collection
o Within 5 years from assessment date by administrative or judicial
action.
o No action shall be instituted after the expiration of said period.
 Periods suspended when:
o Treasurer is legally prevented from assessing or collecting;
o Taxpayer requests reinvestigation and executes waiver before
expiration;
o Taxpayer is outside the Philippines or cannot be located.
 Assessment Procedure (Sec. 195, LGC)
o Treasurer issues written notice of assessment
o Taxpayer may protest within 60 days from receipt of the notice;
otherwise, assessment shall become final and executory (California
Manufacturing Co., Inc. v. The City of Las Piñas, CTA EB 156,
22 February 2007)
o Treasurer to decide the protest within 60 days from filing
o In case of denial or lapse of the 60-day period within which to
appeal (inaction), taxpayer may appeal to court of competent
jurisdiction within 30 days from receipt of denial (SM Group of
Companies v. The City Treasurer of Manila, CTA AC 35, 31
October 2008).
 Angeles City v. Angeles City Electric Corporation and RTC Branch 57,
Angeles City, GR 166134, 29 June 2010
o Can the RTC issue a Temporary Restraining Order against the city’s
levy of real properties to collect business tax, which is the subject of
an appeal?
 RULING: YES. The prohibition on the issuance of a writ of
injunction to enjoin the collection of taxes applies only to
NIRT, and not to local taxes.
 In the collection of local taxes, there is no express
provision in the LGC prohibiting courts from issuing an
LOCAL BUSINESS TAX Page 7 of 8
injunction to restrain local governments from collecting
taxes.

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