ATTY. ROBERT JAYSON A.
UY, CPA, JD
I. LOCAL GOVERNMENT CODE
1. NO. The proposed legislation is UNCONSTITUTIONAL. (4)
The 1987 Constitution emphatically vested local government units (LGUs) the power to
CREATE their own sources of revenues. LGUs, thus, are clothed with the authority to
impose taxes on businesses and/or properties within its territorial jurisdiction. Since said
power emanates from the Constitution, Congress cannot arbitrarily take the same away
from the LGUs without transgressing the Constitution.
Thus, foregoing told, the proposed legislation is INVALID for infracting the
Constitution.
2. NO. The elevator tax is an INVALID imposition. (5)
While local government units (LGUs) are vested by the Constitution with the power to
create their own sources of revenues, it is a basic tenet in law and jurisprudence that the
power of taxation belongs exclusively to the legislature. On other words, the power to tax
cannot be delegated to other branches of the government.
In this case, since the City Mayor of Makati is the chief local executive, and in no way
part of the legislative branch of the said city, he cannot, without an ordinance from the
Sangguniang Panlungsod, execute the above-mentioned imposition.
All told, the “elevator tax” is an invalid imposition.
3. YES. BATAS Law is liable to pay the assessed percentage business tax. (0)
The Constitution provides that each local government unit (LGU) is vested with the
authority to create its own sources of revenues. Thus, for as long as the imposition by an
LGU does not run afoul with the Local Government Code (LGC), that is, the imposition
is not prohibited by the LGC, LGUs are given the widest leeway to construct the
foundation of the sources of its revenues.
In this case, the imposition by the City of Valenzuela of a percentage business tax based
on BATAS Law’s gross receipts is an imposition sanctioned by law. Nowhere in the LGC
can it be found that said imposition is prohibited, forbidden, or outlawed.
Thus, foregoing considered, BATAS Law is liable to pay the assessed percentage
business tax.
4. The 1987 Constitution grants every local government unit (LGU) the power to create its
own sources of revenues. Although Congress set limitations to LGUs authority to tax, as
was enshrined in the Local Government Code (LGC), the same Code does not prohibit
LGUs from imposing tax on any sale or transfer of real property. Thus, by passing an
ordinance which imposes a tax on any sale or transfer of real property located within the
City of Maharlika at a rate of 50% of one percent, the City did not run afoul with the
limitations set in the LGC. The imposition is well within the four corners of its authority
to tax.
II. TAX REMEDIES
1. YES. I will dismiss the case.
Sec. 4 of the National Internal Revenue Code, as amended, provides that interpretations
made by the Commissioner of Internal Revenue of tax laws are first, reviewable by the
Secretary of Finance. Thus, as in this case, Mr. Eugenio should have appealed the
interpretation made by the CIR to the SOF. Consequently, should Mr. Eugenio find the
ruling of the SOF adverse on his part, it is only then that he seek judicial remedy. The
court of competent jurisdiction for this type of case, however, is the Court of Tax Appeals
pursuant to RA No. 1125, as amended. Simply put, the Regional Trial Court is not clothed
with jurisdiction to entertain the plea of Mr. Eugenio.
Abovementioned reason considered, as the RTC judge, I will dismiss the case for want of
jurisdiction.
2. Mr. Abcede’s contention is tenable.
It is a basic tenet in our laws and jurisprudence that the Bureau of Internal Revenue’s
authority to audit a particular taxpayer must be limited to a specific period, e.g. taxable
year, fiscal year, or semester. Once a particular period has been audited by any of the
authorized offices and any of the authorized personnel of the BIR for and in behalf of the
Commissioner of Internal Revenue, another office cannot whimsically and arbitrarily
conduct an investigation for purposes uncovering tax deficiencies on the same period.
Indubitably, therefore, the National Investigation Division went above and beyond the
authority granted to it by law when it issued another Letter of Authority for a taxable
year, i.e. 2009, which was already audited. Simply put, the LA issued by the NID is null
and void.
3.
