Local Gov't Tax

8/9/2019 Local Gov't Tax

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TAX DIGEST ASSIGNMENT # 9 LOCAL GOVT TAXATION A.M.+D.G. TAX II Atty. Mendoza

MANILA ELECTRIC COMPANY vs. PROVINCE OF LAGUNA

FACTS

Manila Elet!i Co"any $ME%ALCO& on 'a!io() date) $t*elate)t ein, -an(a!y 9/ 901& 2a) ,!anted 3!an*i)e) y'a!io() "(niialitie) o3 La,(na. On Set. 4 99/ %A 5678Loal Go'e!n"ent Code o3 998 $LGC& 2a) enated to taee:et on -an. 994 en;oinin, loal ,o'e!"ent (nit) to !eatet*ei! o2n )o(!e) o3 !e'en(e and to le'y ta


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ta& ei"ai!"ent la()e o3 t*e Con)tit(tion.

4. T*e Loal Go'e!n"ent Code o3 99 e)to and non>!oBt *o)ital) and ed(ational in)tit(tion)/a!e *e!ey 2it*d!a2n (on t*e e:eti'ity o3 t*i) Code.

T*e Code/ in addition/ ontain) a ,ene!al !eealin, la()e init) Setion 1 t*()?

1# in $# %IGEST GROUP

Ad Deum Per Excellentia


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@Setion 1. %eealin, Cla()e. < <


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o(!t) di)"i))al o3 t*ei! etition. T*e Co(!t/ in a !e)ol(tiondated -(ly 45/ 99/ !e3e!!ed t*e )a"e to t*e Co(!t o3Aeal). In t*e inte!i"/ t*e =!o'ine o3 (laan i))(ed a

2a!!ant o3 le'y a,ain)t %e(li Ce"ent/ alle,edly ea()eo3 it) (naid ta< liailitie). Ne,otiation) et2een %e(liCe"ent and etitione!) !e)(lted in an a,!ee"ent andmodusvivendi $te"o!a!y a,!ee"ent& on Dee"e! 4/ 99/2*e!ey %e(li Ce"ent a,!eed to ay (nde! !ote)t=/464/16.77/ 7 o3 t*e ta< a))e))ed y etitione!/ ine


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Po2e'e!/ in )ite o3 t*i)/ !o'ine o3 (laan i) )till!o*iited 3!o" i"o)in, ta


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t*e te!!ito!ial ;(!i)dition o3 t*e =*iliine). In Basco v.Phili!!ine (musements and Gaming Cor!oration/ t*i) Co(!t)()tained t*e on)tit(tionality o3 t*e de!ee and e'en ited

t*e eneBt) o3 t*e entity to t*e national eono"y a) t*et*i!d *i,*e)t !e'en(e>ea!ne! in t*e ,o'e!n"ent/ ne


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T*e etitione!) al)o )t!e)) t*at 2*en t*e Code e


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2*ate'e! !ea)on) it "ay on)ide! )(Kient. It i) )ettled t*atF(e)tion) !e,a!din, t*e 2i)do"/ "o!ality/ o! !atiiility o3)tat(te) a!e not add!e))ed to t*e ;(diia!y (t "ay e

!e)ol'ed only y t*e le,i)lati'e and e


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e not only !o*iited y t*e loal ,o'e!n"ent (nit in 3at/t*e !o*iition i) not only di)!etiona!y (t mandated ySetion 0 o3 t*e Code i3 t*e 2o!d 8)*all8 a) ()ed t*e!ein i)

to e ,i'en it) aeted "eanin,. Loal ,o'e!n"ent (nit)*a'e no2 no *oie (t to !e'ent and )(!e)) ,a"lin,/2*i* in t*e etitione!) 'ie2 inl(de) ot* le,al and ille,al,a"lin,. Jnde! t*i) on)t!(tion/ =AGCO% 2ill *a'e no "o!e,a"e) o3 *ane to !e,(late o! ent!alize a) t*ey "()t all e!o*iited y t*e loal ,o'e!n"ent (nit) (!)(ant to t*e"andato!y d(ty i"o)ed (on t*e" y t*e Code. In t*i))it(ation/ =AGCO% annot ontin(e to e


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Po2e'e!/ de)ite t*e legalityo3 t*e oenin, and oe!ation o3a a)ino in Ca,ayan de O!o City y !e)ondent =AGCO%/ I2i)* to !eite!ate "y 'ie2 t*at ,a"lin, in any 3o!" !(n)

o(nte! to t*e ,o'e!n"ent) o2n e:o!t) to !e>e)tali)* and!e)(!!et t*e iliino "o!al *a!ate! 2*i* i) ,ene!allye!ei'ed to e in a )tate o3 ontin(in, e!o)ion. It i) in t*eli,*t o3 t*i) ala!"in, e!)eti'e t*at I all (on ,o'e!n"entto a!e3(lly 2ei,* t*e ad'anta,e) and di)ad'anta,e) o3)ettin, ( "o!e ,a"lin, 3ailitie) in t*e o(nt!y. T*at t*e=AGCO% ont!i(te) ,!eatly to t*e o:e!) o3 t*e ,o'e!n"enti) not eno(,* !ea)on 3o! )ettin, ( "o!e ,a"lin, a)ino)ea()e/ (ndo(tedly/ t*i) 2ill not *el i"!o'e/ (t 2illa()e a 3(!t*e! dete!io!ation in t*e iliino "o!al *a!ate!.Iti) 2o!t* !e"e"e!in, in t*i) !e,a!d t*at/ & 2*at i) le,al i)

not al2ay) "o!al and 4& t*e end) do not al2ay) ;()ti3y t*e"ean).

%AVI%E0 5R.0J., on(!!in,?H*ile I on(! in a!t 2it* t*e "a;o!ity/ I 2i)*/ *o2e'e!/ toei"ai!"ent and eF(al !otetion la()e)o3 t*e Con)tit(tion/ 'iolati'e o3 t*e Loal Go'e!n"ent Code/and a,ain)t t*e State) national oliy dela!ed in =.D. No.069. Ao!din,ly/ t*e Co(!t o3 Aeal) doe) not *a'e;(!i)dition o'e! t*e nat(!e o3 t*e ation. E'en a))("in,arguendo t*at t*e a)e i) one 3o!!rohibition/ t*en/ (nde! t*i)Co(!t) e)tali)*ed oliy !elati'e to t*e *ie!a!*y o3 o(!t)/t*e etition )*o(ld *a'e een Bled 2it* t*e %e,ional T!ialCo(!t o3 Ca,ayan de O!o City. I Bnd no )eial o! o"ellin,!ea)on 2*y it 2a) not Bled 2it* t*e )aid o(!t. I do not 2i)*

to ente!tain t*e t*o(,*t t*at =%RCE do(ted a 3a'o!ale'e!dit t*e!e3!o"/ in 2*i* a)e t*e Blin, o3 t*e etition 2it*t*e Co(!t o3 Aeal) "ay *a'e een i"elled y tatialon)ide!ation). A di)"i))al o3 t*e etition y t*e Co(!t o3Aeal) 2o(ld *a'e een in o!de! (!)(ant to o(! dei)ion).

P6G vs. MUNICIPALITY OF 5UGNA

FACTS

= G i) a do"e)ti o!o!ation en,a,ed in t*e "an(3at(!e

o3 )oa/ edile oil/ "a!,a!ine and ot*e! )i"ila! !od(t)/ and3o! t*i) (!o)e "aintain) a 8ode,a8 in de3endantM(niiality 2*e!e it )to!e) o!a (!*a)ed in t*e"(niiality and t*e!e3!o" )*i) t*e )a"e 3o! it)"an(3at(!in, and ot*e! oe!ation).

S()eF(ently/ t*e M(niial Co(nil o3 -a,na enatedM(niial O!dinane No. 2*i* i"o)e) )to!a,e 3ee) to all




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e()e3(l o(ation) o! ente!!i)e) and $1&lien)e 3o! !e'en(e. It i) t*() (nnee))a!y/ to dete!"ine2*et*e! t*e )(;et )to!a,e 3ee i) a ta< 3o! !e'en(e (!o)e)o! a lien)e 3ee to !ei"(!)e de3endant M(niiality 3o!)e!'ie o3 )(e!'i)ion ea()e de3endant M(niiality i)a(t*o!ized not only to i"o)e a lien)e 3ee (t al)o to ta< 3o!!e'en(e (!o)e).

Mo!eo'e!/ t*e ()ine)) o3 (yin, and )ellin, and )to!in,o!a i) !oe!ty t*e )(;et o3 !e,(lation 2it*in t*e olieo2e! ,!anted to "(niialitie) (nde! )etion 4410 o3 t*e%e'i)ed Ad"ini)t!ati'e Code o! t*e 8,ene!al 2el3a!e la()e8

=G) a!,("ent t*at t*e i"o)ition o3 =7.7 e! 77 ilo) o3o!a )to!ed in a ode,a 2it*in de3endant) te!!ito!y i)




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eyond t*e o)t o3 !e,(lation and )(!'eillane i) not 2elltaen. A) en(niated in t*e a)e o3 Victorias +illing Co. vs.+unici!ality of Victorias/ "he cost of regulation cannot beta-en as a gauge, if the munici!ality really intended to enacta revenue ordinance. M(niial o!o!ation) a!e allo2ed2ide di)!etion in dete!"inin, t*e !ate) o3 i"o)ale lien)e3ee) e'en in a)e) o3 (!ely olie o2e! "ea)(!e). In t*ea)e at a!/ =G *a) not )(Kiently )*o2n t*at t*e !atei"o)ed y t*e F(e)tioned O!dinane i) o!e))i'e/e


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JSINESS O O=E%ATING TENEMENT POJSES&.y 'i!t(e o3t*e o!dinane in F(e)tion/ t*e aellant City olleted 3!o"aellee Villan(e'a/ 3o! t*e yea!) 967>96/ t*e )(" o3=/04.17/ and 3!o" ot*e! aellee)/ 3o! t*e )a"e yea!/ t*e)(" o3 =/15.77. Pene/ lainti:)>aellee) Bled ao"laint/ a,ain)t t*e City o3 Iloilo/ !ayin, t*at O!dinane e dela!ed 8in'alid 3o! ein, eyond t*e o2e!) o3 t*eM(niial Co(nil o3 t*e City o3 Iloilo to enat/ and(non)tit(tional 3o! ein, 'iolati'e o3 t*e !(le a) to(ni3o!"ity o3 ta


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*o()ei) deBned a) 8any *o()e o! (ildin,/ o! o!tion t*e!eo3/2*i* i) rented/ leased/ o! hired out to be occu!ied/ o! isoccu!ied,a) t*e *o"e o! !e)idene o3 t*!ee 3a"ilie) o! "o!eli'in, indeendently o3 ea* ot*e! and doin, t*ei! ooin, int*e !e"i)e) o! y "o!e t*an t2o 3a"ilie) (on any oo!/ )oli'in, and ooin,/ (t *a'in, a o""on !i,*t in t*e *all)/)tai!2ay)/ ya!d)/ 2ate!>lo)et)/ o! !i'ie)/ o! )o"e o3 t*e".8Tene"ent *o()e)/ ein, nee))a!ily o:e!ed 3o! !ent o! lea)ey t*ei! 'e!y nat(!e and e))ene/ t*e!e3o!e on)tit(te adistinct formo3 ()ine)) o! allin,/ )i"ila! to t*e *otel o!"otel ()ine))/ o! t*e oe!ation o3 lod,in, *o()e) o!oa!din, *o()e).

T*e lo2e! o(!t *a) inte!*an,ealy deno"inated t*e ta< in

F(e)tion a) a tene"ent ta< o! an aa!t"ent ta


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a"o(nt (on all e!)on)/ o! (on all e!)on) o3 a e!tainla))/ !e)ident 2it*in a )eiBed te!!ito!y/ 2it*o(t !e,a!d tot*ei! !oe!ty o! t*e o(ation) in 2*i* t*ey "ay een,a,ed. T*e!e3o!e/ t*e ta< in F(e)tion i) not o!e))i'e int*e "anne! t*e lo2e! o(!t (t) it. On t*e ot*e! *and/ t*e*a!te! o3 Iloilo City e"o2e!) it) "(niial oa!d to 8Baellant a,!eedto a!!an,e/ 2it*in it) aility to do )o/ in d!(" and aa,e3ato!ie) o2ned and oe!ated y it/ to "an(3at(!e/ )(lyando! Bll an) and d!(") 3o! Tide2ate!/ !o'ided t*e latte!!ei"(!)e) *e!ein lainti:>aellant 3o! all o)t and eaellant lien)e tao3>3ato!y a!,("ent ad'aned yetitione!) need) 3(!t*e! a!ti(lation. o! etitione!) in)i)tt*at !e)ondent) 3ato!y al)o )e!'e) t*e need) o3 anot*e!entity Q Tide2ate!. To e noted *e!e i) t*at o3 t*e tin an)




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!od(e 3o! t*e e!iod 97>9/ 0.61 2e!e ()ed y!e)ondent .16 deli'e!ed to Tide2ate!. -(!i)!(dential)(o!t i) not 2antin, 3o! t*e dei)ion o3 t*e Co(!t o3Aeal) e)tali)*in, a di'idin, line et2een t*e tin an)"an(3at(!ed 3o! !e)ondent) o2n ()ine)) and t*o)e 3o!Tide2ate!.

o! t*e tin an) !od(ed 3o! Tide2ate! lien)e ta< 2a)o!!etly a))e))ed. (t 3o! t*o)e !od(ed y !e)ondent 3o!it) o2n ()e/ no lien)e ta< i) d(e/ ea()e t*e "an(3at(!et*e!eo3 i) 8inidental to8 and tend) 8to better accom!lish the!rinci!al end in view8 Q it) "ain ()ine)).

4. A !(le 2*i* *a) ea!ned aetane i) t*at t*e e!iod 3o!

!e)!ition o3 ation to !eo'e! "(niial lien)e ta51 !o'idin, t*at t*e o2e! tole'y and ollet a"()e"ent ta< on ad"i))ion tiet) 2a)t!an)3e!!ed to t*e loal ,o'e!n"ent) y 'i!t(e o3 t*e LoalTa< Code and I% %(lin, No. 41>06 2*i* *eld t*at 8t*e;(!i)dition to le'y a"()e"ent ta< on ,!o)) !eeit) 3!o"ad"i))ion tiet) to lae) o3 a"()e"ent 2a) t!an)3e!!ed toloal ,o'e!n"ent) (nde! =.D. No. 41/ a) a"ended.

RULING

Se. 1. A"()e"ent ta< on ad"i))ion. >T*e !o'ine )*alli"o)e a ta< on ad"i))ion to e olleted 3!o" t*e!o!ieto!)/ le))ee)/ o! oe!ato!) o3 t*eate!)/ine"ato,!a*)/ one!t *all)/ i!()e) and ot*e! lae) o3a"()e"ent


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T*e 3o!e,oin, !o'i)ion o3 la2 in oint indiate) t*at t*e!o'ine an only i"o)e a ta< on ad"i))ion 3!o" t*e!o!ieto!)/ le))ee)/ o! oe!ato!) o3 theaters,cinematogra!hs, concert halls, circuses and ot*e! lae) o3a"()e"ent. T*e a(t*o!ity to ta< !o3e))ional a)etall,a"e) i) not t*e!ein inl(ded.

Hit* t*e !e3e!ene to =D 05 y =D 6 and =D 99/ t*e!ei) a !eo,nition (nde! t*e la2) o3 t*i) o(nt!y t*at t*ea"()e"ent ta< on !o3e))ional a)etall ,a"e) i) anational/ and not a loal/ ta


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ISSUE

Ha) t*e aeal y t*e etitione! 2it* t*e Se!eta!y o3 -()tieti"e>a!!ed

RULING

YES. Setion 05 o3 t*e Loal Go't Code !eF(i!e) t*at ana!!ea' o) a ta& odinan-e o even*e +eas*e sho*'d,e +ade to the Se-eta o) 5*sti-e "ithin thit :$;a!!ed. At t*i)oint/ it i) a!oo) to )tate t*at t*e ti"e3!a"e BLeanto Condo"ini(" Co!o!ation $t*e@Co!o!ation& i) a d(ly o!,anized ondo"ini(" o!o!ationon)tit(ted in ao!dane 2it* t*e Condo"ini(" At/ 2*i*o2n) and *old) title to t*e o""on and li"ited o""ona!ea) o3 t*e A>Leanto Condo"ini(" $t*e @Condo"ini("&/)it(ated in =a)eo de %oLa2)/ to ollet !e,(la! a))e))"ent) 3!o" it) "e"e!) 3o!

oe!atin, e


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a) @t!ade o! o""e!ial ati'ity !e,(la!ly en,a,ed in a) a"ean) o3 li'eli*ood o! 2it* a 'ie2 to !oBt. It 2a) )("ittedt*at t*e Co!o!ation/ a) a ondo"ini(" o!o!ation/ 2a)o!,anized not 3o! !oBt/ (t to *old title o'e! t*e o""ona!ea) o3 t*e Condo"ini("/ to "ana,e t*e Condo"ini(" 3o!t*e (nit o2ne!)/ and to *old title to t*e a!el) o3 land on2*i* t*e Condo"ini(" 2a) loated. Neit*e! 2a) t*eCo!o!ation a(t*o!ized/ (nde! it) a!tile) o3 ino!o!ation o!y>la2) to en,a,e in !oBt>"ain, ati'itie). T*ea))e))"ent) it did ollet 3!o" t*e (nit o2ne!) 2e!e 3o!aital e


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not t*e ;(d,"ent o! o!de! o3 a lo2e! o(!t/ (t o3 a loal,o'e!n"ent oKial.!o" t*e)e !e"i)e)/ it i) e'ident t*at t*e )tane o3 t*e CityT!ea)(!e! i) o!!et a) a "atte! o3 la2/ and t*at t*e !oe!!e"edy o3 t*e Co!o!ation 3!o" t*e %TC ;(d,"ent i) ano!dina!y aeal (nde! %(le to t*e Co(!t o3 Aeal).Po2e'e!/ 2e "ae t*i) !ono(ne"ent )(;et to t2oi"o!tant F(aliBation). i!)t/ in t*i) a!ti(la! a)e t*e!e a!enonet*ele)) )i,niBant !ea)on) 3o! t*e Co(!t to o'e!loo t*e!oed(!al e!!o! and (lti"ately (*old t*e ad;(diation o3 t*e;(!i)dition e


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eni,"ati and (ne!tain 2o!d) )(* a) @et ete!a. Ret 2eannot e'en )ay 2it* deBnitene)) 2*et*e! t*e ta< i"o)edon t*e Co!o!ation in t*i) a)e i) a)ed on @et ete!a/ o! onSetion 1A.74$"&/ o! on any ot*e! !o'i)ion o3 t*e %e'en(eCode. A))("in, t*at t*e a))e))"ent "ade on t*eCo!o!ation i) on a !o'i)ion ot*e! t*an Setion 1A.74$"&/ t*e"ain le,al i))(e tae) on a di:e!ent o"le


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)oe o3 e!"i))ile o!o!ate (!o)e) o3 a ondo"ini("o!o!ation (nde! t*e Condo"ini(" At.

T*e Co(!t *a) eLa2)/ 2*i* en("e!ate t*ea!ti(la! e


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SAN 5UAN vs. CASTRO

FACTS%o"(lo D. San -(an/ !e,i)te!ed o2ne! o3 !eal !oe!tie) inMa!iina City on'eyed/ y Deed o3 A))i,n"ent/ t*e!oe!tie) to t*e Saint) and An,el) %ealty Co!o!ation$SA%C&/ t*en (nde! t*e !oe)) o3 ino!o!ation/ in e


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the -o*t o) -o+!etent *isdi-tion0 othe"ise theassess+ent ,e-o+es -on-'*sive and *na!!ea'a,'e.

T*at M!. San -(an !ote)ted in 2!itin, a,ain)t t*ea))e))"ent o3 ta< d(e and t*e a)i) t*e!eo3 i) on !eo!d a)in 3at it 2a) on t*at ao(nt t*at M!. Ca)t!o )ent *i" t*e -(ly/ 477 lette! 2*i* oe!ated a) a denial o3 M!. San -(an)2!itten !ote)t. M!. San -(an )*o(ld t*() *a'e/ in ao!dane2it* Se. 9 o3 t*e LGC/ eit*e! aealed t*e a))e))"ente3o!e t*e o(!t o3 o"etent ;(!i)dition o! aid t*e ta< andt*en )o(,*t a !e3(nd. Pe did not o)e!'e any o3 t*e)e!e"edie) a'ailale to *i"/ *o2e'e!. Pe in)tead oted to Blea etition 3o! "anda"() to o"el M!. Ca)t!o to aetay"ent o3 t!an)3e! ta< a) o"(ted y *i".

Manda"() lie) only to o"el an oKe! to e!3o!" a"ini)te!ial d(ty $one 2*i* i) )o lea! and )eiB a) tolea'e no !oo" 3o! t*e e

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