THE COLLECTION OF LOCAL TAX ON CABLE TELEVISION IN METRO

MANILA: ISSUE OF PRACTICES AND REFORM

A Research Submitted
in Partial Fulfillment in the Requirements for the Degree
Master in Public Administration

By

Ricardo A. Lavendia Jr.

December 2017
 ACKNOWLEDGEMENT

This research would not have been possible foremost without the very
source of life and wisdom, our Almighty God, JEHOVAH.

Though only my name appears on the cover of this research, a great

many people have contributed to its production. I owe my gratitude to all those
people who have made this research possible and because of whom my master
degree study has been one that I will cherish forever.

To my advisor Professor, Roberto B. Catli for the continuous support in

attaining this thesis for the Degree Master in Public Administration, for his
patience, motivation, enthusiasm, and immense knowledge. His guidance helped
me in all the time of research and writing of this thesis. I could not have imagined
having a better advisor and mentor for this thesis.

Besides my advisor, I would like to thank the rest of my thesis committee:

Professor Norie L. Maniego, and Professor Antonius C. Umali, for their extreme
patience, encouragement, insightful comments, and hard questions.

I am thankful to the system staff who maintained the National Library, De

La Salle University’s Library and the Graduate School Library of Polytechnic
University of the Philippines (PUP).

Finally, I would like to thank my beloved wife: Maria Edel Tabile Lavendia
for assisting me in doing my research materials particularly in going to in and out
to the National Library, De La Salle University’s Library and Polytechnic
University of the Philippines (PUP).
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 ABSTRACT

Research Title : THE COLLECTION OF LOCAL TAX

ON CABLE TELEVISION IN METRO MANILA:
ISSUE OF PRACTICES AND REFORM

Researcher : Ricardo A. Lavendia Jr.

Degree : Master in Public Administration (MPA)

Institution : Polytechnic University of the Philippines

Year : 2017

Adviser : Professor Roberto B. Catli

The research evaluated the collection of local tax on cable television in

Metro Manila, with the aim of identifying how there is no uniformity in the
collection of a local tax to cable television as one kind or line of business.

The research focused on local business tax and franchise tax collected to
Cable Television as new business models like other similar businesses relating
to technologies of Communications. As such, it creates some challenges to local
tax systems that were designed with different business representations. In
Philippine setting likes in the international scenery, cable television, as a
taxpayer, is encountering the issue on collection practices of Local Government
Units (LGUs) in Metro Manila. The collection of local business tax and local
franchise tax is confusing between cable television and the local government
units (LGUs) in Metro Manila.

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 It is an elementary teaching in taxation that one line or kind of business
should be taxed uniformly because of the principle that similarly situated
taxpayers should be taxed similarly, which illustrates equity and fairness in
taxation.

The research shows the circumstances that a cable television: i) is a

holder of legislative franchise or National Telecommunications Commission’s
franchise, ii) has its physical presence through an office or a branch in the area;
and iii) it engages in the other line of business or activity other than cable
television, affect the way the local taxes are administered and enforced at the
local level, which if not addressed properly would result violation of basic
principles of taxation and contrary to law.

The research has relevance in terms of its practical and academic

contribution to state and local government fiscal matters because of local
taxation. The fiscal powers of national and local government always involved the
revenue-raising powers through taxation. The idea that local government units
play a significant role in carrying out a country’s fiscal goals through taxation is
well accepted but taxation should have its bound and limitation particularly its
compliance to equity, certainty, convenience, and efficiency. As agents of
development, it is a general contention that local governments should have the
adequate revenue sources and the capacity to raise such resources, and more
importantly, to decide on significant aspects of local tax administration. Providing
them with a clear policy of taxation is just one way of achieving the goal of fiscal
decentralization, to make local governments autonomous and self-sustaining
communities.

Keywords
Local government unit, cable television
 TABLE OF CONTENTS

TITLE PAGE………………………………………………….…….. i

CERTIFICATION/APPROVAL SHEET ………………………. ii

ACKNOWLEDGEMENT …………………………………………. iii

ABSTRACT ……………………………….……….………………. iv

TABLE OF CONTENTS ………………………….………………. v

LIST OF TABLES ……………..………………….……………….. vi

LIST OF FIGURES …………………………….………………….. vii

Chapter

1 THE PROBLEM AND ITS BACKGROUND

Introduction……………………………….. 1
Background of the Study………………… 3
Theoretical Framework………………….. 5
Conceptual Framework……………………… 8
Statement of the Problem……………………. 10
Scope and Limitations of the Study…………. 11
Significance of the Study……………………. 13
Definition of Terms…………………………. 14

2 REVIEW OF RELATED LITERATURE AND STUDIES

Foreign Literature……………………….………. 18
Foreign Studies………………………….……… 23
Local Literature…………………………………. 25
Local Studies……………………….…………… 30
Synthesis of the Reviewed Literature and studies..… 40

3 RESEARCH METHODOLOGY

Research Method Used……………………….… 35

Population Sample and Sampling Technique . 37
Data Gathering Procedures…………………………… 40
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4 REPRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA

Current Cable Television Tax Collection Practices

in each city/municipality in Metro Manila ………………… 41
Problems encountered in the tax collection practices
On cable television in Metro Manila……………… . 45
Proposed Action on the Result of the Study… 67

5 SUMMARY OF FINDING CONCLUSIONS AND RECOMMENDATIONS

Summary of Findings …………………………………. 73

Conclusions .…………………………………………… 75
Recommendations ………..…………………………… 78

References ….……………………………………………….…. 83

Appendix A (Local Government Code of 1991

Book II Local Taxation and Fiscal Matters
Title 1. Local Government Taxation
Sections 128 to 131(a) to (u), 132-147, 150 to 155)…. 89 - 102

Appendix B (Letter with structured questionnaire)……………. 103-108

Appendix C (Legislative/Congressional Franchises)………… 109

Appendix D (Issuances of National Telecommunications Commission,

Department of Finance, and
other related government agencies)…………………. 110

Curriculum Vitae…………………………………………………… 111

 LIST OF TABLES

Table Page

1 The List of LGUs (Cities and Municipalities)

and their Legal Basis to Business Tax and Franchise Tax 41

2 List of Specific and Related Provisions of Local Government

Code that authorizes collection of Local Business Tax 46

3 List of Cities and Municipalities, Declaration on Pro-forma

Application for Business Permit on Operating Branch or Sales
Outlet and recording of its sales in the locality 50

4 List of Cities and Municipalities, Declaration on Pro-forma

Application for Business Permit on Declaration on Engage
On Other Business Activity 51

5 List of Local Government Units, Cable Television Operators,

Whether or Not Engaged to Other line or kind of Business
In Locality 53

6 List of Specific and Related Provisions of Local Government

Code that authorize collection of Franchise Tax 54

7 List of Other Provisions of Local Government Code

that authorize collection of Local Business Tax
and Franchise Tax 56

8 List of Cable Television Operators with regard

To Legislative Franchise 57

9 List of Practices on the Declaration whether a Cable Television

Is a grantee or holder of legislative Franchise from Congress 60

10 List of Local Government Units, Cable Television Operators,

Whether or Not It has Physical Establishment in Locality and
Local Tax Collected 61

11 List of Latest Decisions of the Supreme Court affecting Local

Taxation in the Philippines 63

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12 Proposed Action Plan on Specific and Related Provisions
Of Local Government Code that authorize collection
Of Local Business Tax 68

13 Proposed Action Plan on Specific and Related Provisions

Of Local Government Code that authorize collection
Of Franchise Tax 69

14 Proposed Action Plan on Other Provisions of Local Government

Code affecting Local Business Tax and Franchise Tax 70

15 Proposed Action Plan on Local Government Unit’s Pro-forma

Application for Business Permit and its Application 71
 LIST OF FIGURES

Figure Page

1 Conceptualized Relationship of Variables 8

2 Maps of Cities and/or Municipalities that composed

Metro Manila 12

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