One of my professors in the college of law once said that “there are two things people cannot avoid: death and taxes”. When we buy things, we pay taxes through the value added tax. When we obtain documents from government agencies we are first asked to pay a certain fee. The list goes on and it is almost as if we really cannot avoid paying taxes and fees. The power to tax or collect fees is inherent in the state and it has often been stated in many Supreme Court decisions that taxes are the lifeblood of the government (“lifeblood doctrine”). This being so, the government strives to efficiently collect taxes to fund its public works, employees salaries and other expenses for the maintenance of governmental functions. When the Local Government Code came into effect, one of the powers granted to local government units is taxation. An LGU is permitted to enact tax ordinances that will authorize the collection of taxes to raise revenue or regulate an activity or require fees for services it renders. The question is, can the LGU waive or refuse tax collection in favor of certain individuals?

 Tax Exemption

There are very rare instances when the government can exempt certain sectors of society from the payment of taxes or fees. In relation to the Lifeblood Doctrine, “Tax exemptions are looked upon with disfavor” (Western Minolco Corp. v. Commissioner of Internal Revenue, 124 SCRA 121 [1983]). Said differently, the government can grant tax exemptions but most probably will not. For local governments, an exemption may only be granted through an ordinance duly enacted by its sangguniang bayan but must conform to what the Local Government Code and its IRR state. Article 282 of the IRR clearly provides: “The sanggunians granting tax exemptions, tax incentives and tax reliefs may be guided by the following: (1) On the grant of tax exemptions or tax reliefs: (i) Tax exemption or tax relief may be granted in cases of natural calamities, civil disturbance, general failure of crops, or adverse economic conditions such as substantial decrease in the prices of agricultural or agri-based products; (ii) The grant of exemption or relief shall be through an ordinance. (iii) Any exemption or relief granted to a type or kind of business shall apply to all business similarly situated; and (iv) Any exemption or relief granted shall take effect only during the next calendar year for a period not exceeding twelve (12) months as may be provided in the ordinance. In the case of shared revenues, the exemption or relief shall only extend to the LGU granting such exemption or relief.” Tax exemptions therefore can only be granted by the sanggunian under these conditions. Can the Mayor Grant Exemption?

No. In the case of Philippine Petroleum Corp. vs. Municipality of Pillila, the Supreme Court clarified that: “As to the authority of the mayor to waive payment of the mayor’s permit and sanitary inspection fees, the trial court did not err in holding that “since the power to tax includes the power to exempt thereof which is essentially a legislative prerogative, it follows that a municipal mayor who is an executive officer may not unilaterally withdraw such an expression of a policy thru the enactment of a tax.” The waiver partakes of the nature of an exemption…Thus, in the absence of a clear and express exemption from the payment of said fees, the waiver cannot be recognized. As already stated, it is the law-making body, and not an executive like the mayor, who can make an exemption.” (G.R. No. 90776 June 3, 1991). It is thus very clear that only the sanggunian isempowered to grant exemption and not even the mayor can grant the same through a waiver or some other way.


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