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Republika ng Pilipinas
KAGAWARAN NG KATARUNGAN
Department of Justice
Manila

30 April 2020
Secretary Carlos G. Dominguez
Department of Finance
Roxas Blvd. cor. P. Ocampo Sr. St.
Manila

Dear Secretary Dominguez:

This has reference to your request for opinion on the authority of local
treasurers to assess, collect and audit the payment of business taxes under
Republic Act No. 7160, otherwise known as the Local Government Code of 1991
(LGC).

Background

By way of background, you stated that your request is being made in

connection with the letter and Position Paper of the National Association of
Business Permits and Licensing Officers (NABPLO), which was endorsed to your
Department by the Department of the Interior and Local Government (DILG).

In its letter, NABPLO stated that they "are deeply concerned with the
opinion issued by the Bureau of Local Government Finance of the DOF that
states that the function of business tax assessment should be transferred to the
City/Municipal Treasurers because allegedly 'tax assessment is an inherent
function of treasurers."' In its Paper, NABPLO elaborated on its position and
made the following conclusions:

• "The delegation by the city and municipal mayors of the function of

assessment of business taxes and fees to the BPLOs [Business
Permit and Licensing Offices] is A VALID AND LAWFUL
DELEGATION OF POWERS IN ACCORDANCE WITH THE
LOCAL GOVERNMENT CODE."

• "The function of assessment IS NOT AN INHERENT FUNCTION

of local treasurers. As much as the assessment of real property
tax is being performed by the Assessor's Office, that of the
busin~ss tax should be retained with the BPLO because to give
the assessment function to the Office of the Treasurer WOULD
GRANT ONE OFFICE THE POWERS TO ASSESS, COLLECT,
AND AUDIT WHICH IS A CLEAR VIOLATION OF THE SYSTEM
OF CHECKS AND BALANCES."
 • "The Revised Application Form and Standard Procedure attached
to the 2016 Joint Memorandum Circular are not only contrary to the
contents of the circular itself but also partakes·of a subtle attempt
to amend the Local Government Code."

Upon the other hand, it is your Department's view that the LGC specifically
authorizes the local treasurer to assess, collect and audit the payment of local
taxes, fees and charges.

Discussion

The following are the pertinent provisions of the LGC that need to be
considered with respect to the issue presented:

SECTION 170. Collection of Local Revenues by Treasurer.

-All local taxes. fees. and charges shall be collected by the provincial.
city. municipal. or barangay treasurer. or their duly authorized deputies.

The provincial, city or municipal treasurer may designate the

barangay treasurer as his deputy to collect local taxes, fees, or
charges. In case a bond is required for the purpose, the provincial, city
or municipal government shall pay the premiums thereon in addition to
the premiums of bond that may be required under this Code.
(underscoring supplied)

SECTION 171. Examination of Books of Accounts and

Pertinent Records of Businessmen by Local Treasurer. - The
provincial, city, municipal or barangay treasurer may, by himself or
through any of his deputies duly authorized in writing, examine the
books, accounts, and other pertinent records of any person,
partnership, corporation, or association subject to local taxes, fees and
charges in order to ascertain, assess, and collect the correct amount
of the tax. fee. or charge. Such examination shall be made during
regular business hours, only once for every tax period, and shall be
certified to by the examining official. Such certificate shall be made of
record in the books of accounts of the taxpayer examined.

In case the examination herein authorized is made by a duly authorized

deputy of the local treasurer, the written authority of the deputy
concerned shall specifically state the name, address, and business of
the taxpayer whose books, accounts, and pertinent records are to be
examined, the date and place of such examination, and the procedure
to be followed in conducting the same.

For this purpose, the records of the revenue district office of the Bureau
of Internal Revenue shall be made available to the local treasurer, his
deputy or duly authorized representative. (underscoring supplied)

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 OPINION NO. ------~.?..... ~$,
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SECTION 195. Protest of assessment. - When the local
treasurer or his duly authorized representative finds that correct taxes.
fees. or charges have not been paid. he shall issue a notice of
assessment stating the nature of the tax. fee. or charge, the amount of
deficiency, the surcharges. interests and penalties. Within sixty (60)
days from the receipt of the notice of assessment, the taxpayer may
file a written protest with the local treasurer contesting the assessment;
otherwise, the assessment shall become final and executory. The local
treasurer shall decide the protest within sixty (60) days from the time
of its filing. If the local treasurer finds the protest to be wholly or partly
meritorious, he shall issue a notice cancelling wholly or partially the
assessment. However, if the local treasurer finds the assessment to be
wholly or partly correct, he shall deny the protest wholly or partly with
notice to the taxpayer. The taxpayer shall have thirty (30) days from
the receipt of the denial of the protest or from the lapse of the sixty-day
period prescribed herein within which to appeal with the court of
competent jurisdiction otherwise the assessment becomes conclusive
and unappealable. (underscoring supplied)

SECTION 444. Chief Executive: Powers, Duties and

Compensation. - xxx (b) For the efficient, effective and economical
governance the purpose of which is the general welfare of the city and
its inhabitants pursuant to Section 16 of this Code, the municipal mayor
shall: xxx (3) Initiate and maximize the generation of resources and
revenues, and apply the same to the implementation of development
plans,- program objectives and priorities as provided for under Section
18 of this Code, particularly those resources and revenues
programmed for agro-industrial development and country-wide growth
and progress, and relative thereto, shall: xxx

(iii) Ensure that all taxes and other revenues of the municipality
are collected, and that municipal funds are applied in accordance with
law or ordinance to the payment of expenses and settlement of
obligations of the municipality;

(iv) Issue licenses and permits and suspend or revoke the same
for any violation of the conditions upon which said licenses or permits
had been issued. pursuant to law or ordinance (underscoring supplied)

SECTION 455. Chief Executive: Powers, Duties and

Compensation. - xxx (b) For the efficient, effective and economical
governance the purpose of which is the general welfare of the city and
its inhabitants pursuant to Section 16 of this Code, the city mayor shall:
xxx (3) Initiate and maximize the generation of resources and
revenues, and apply the same to the implementation of development
plans, program objectives and priorities as provided for under Section
18 of this Code, particularly those resources and revenues
programmed for agro-industrial development and countryside growth
and progress, and relative thereto, shall: xxx

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 OPINION NO......t.?. ... -::~s~ ioM.
(iii) Ensure that all taxes and other revenues of the city are
collected, and that city funds are applied to the payment of expenses
and settlement of obligations of the city, in accordance with law or
ordinance;

(iv) Issue licenses and permits and suspend or revoke the same
for any violation of the conditions upon which said licenses or permits
had been issued. pursuant to law or ordinance (underscoring supplied)

The Local Government Code grants

the local treasurer the power to assess,
collect and audit the payment of
local business taxes

It is a basic rule in statutory construction that because a statute is enacted

as a whole and not in parts or sections, the statute should be construed and given
effect as a whole. A provision or section which is unclear by itself may be made
clear by reading and construing it in relation to the whole statute. 1 In other words,
every part of a statute should be given effect because a statute is enacted as an
integrated measure and not as a hodgepodge of conflicting provisions. 2

It is also a basic rule in statutory construction that when the law is clear,
plain and free from ambiguity, it must be given its literal meaning without attempted
interpretation. 3 This plain-meaning rule or verba legis is derived from the maxim
index animi sermo est (speech is the index of intention) and rests on the valid
presumption that the words employed by the legislature in a statute correctly
express its intent and preclude the court from construing it differently. The
legislature is presumed to know the meaning of the words, to have used words
advisedly, and to have expressed its intent by the use of such words as are found
in the statute. Verba legis non est recedendum, or "from the words of a statute
there should be no departure. "4

Guided by these rules, and taking all the relevant provisions of the LGC
together, we reached the conclusion that by express provision of law, the local
treasurer is granted the power to assess (Section 171), collect (Section 170)
and audit (Section 195) the payment of local taxes, fees and charges,
including local business taxes. To rule that the local treasurer does not have the
power to assess local taxes, fees and charges, only to collect and audit their
payment, would render nugatory Section 171 which clearly and expressly
authorizes the local treasurer to examine the books of accounts and pertinent
records of any person, partnership, corporation, or association subject to local
taxes, fees and charges, once for every tax period, in order to assess and collect
the correct amount of the tax, fee, or charge.

1 Maddumba v. Ozaeta, 82 Phil. 345 (1948); Lopez v. El Hagar Filipino, 47 Phil. 249 (1925).
2 JMM Promotions & Management v. NLRC, 228 SCRA 129 (1993).
3 Ang v. Ang, G.R. No. 186993, 22 August 2012.
4 Trade and Investment Development Corporation of the Philippines v. Civil Service Commission,

G.R. No. 182249, 5 March 2013.

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"
OPINlON NO~ ·····~/?. .. ,s. iO.i:B
Assessment of local business taxes
cannot be delegated to the BPLO

With respect to the role of the city or municipal mayors in the collection of
taxes, Sections 444(b)(3)(iii) and 455(b)(3)(iii) of the LGC grant them the authority
to oversee and ensure that all taxes and other revenues of the city or municipality
are collected, so that these revenues can be applied to the payment of the
expenses and settlement of obligations of the city or municipality. This supervisory
authority does not include the power to transfer or delegate the assessment of local
business taxes to the Business Permit and Licensing Office (BPLO) because it
would violate Section 171 of the LGC, which expressly placed the authority to
assess such taxes to the local treasurers.

With respect to the issuance of business licenses and permits, Sections

444(b)(3)(iv) and 455(b)(3)(iv) of the LGC are clear that it is the mayor who shall
issue the same. This is understandable since these licenses and permits are
signed by the mayors or their designated representatives. 5 However, the
assessment and collection of the business taxes, charges and fees, relating
to the issuance of these licenses and permits, pertain to the local treasurer
by express provision of Sections 170 and 171 of the LGC.

We note that this power of the local treasurers to assess local taxes, fees
and charges, including business taxes, has been stated as a matter of fact in
several cases, such as in China Banking Corporation v. City of Manila 6 and Jardine
Davies Insurance Brokers, Inc. v. Aliposa. 7 This power is based on Section 171 of
the LGC. Upon the other hand, with respect to the power of local treasurers to
conduct audit under Section 195 of the LGC, we note that the amounts of
delinquent taxes stated in the notices of assessment issued by them have been
the subject also of several cases brought before the Supreme Court, such as in
City of Manila and Office of the City Treasurer of Manila v. Cosmos Bottling
Corporation 8 and Yamane v. BA Lepanto Condominium Corporation. 9 We further
note that the issue in these cases is not the power to assess or issue notices of
assessment by the local treasurers but the amount that they have assessed
against the taxpayer or whether the alleged taxpayer has the obligation to pay
business taxes. With this, it can be said therefore that the power to assess and the
power to audit the payment of local taxes, fees and charges are powers that remain
unquestionable and are taken as a matter of fact before the courts.

Doctrine of Separation of Powers is not violated

With respect to the existence of the powers to assess, collect and audit in
the Offices of the City or Municipal Treasurer, we find that this would not
necessarily violate the doctrine of separation of powers, as raised by NABPLO in

5 Paragraph 6.1.5.1, JMC No. 01, s. 2016, of DILG, DTI and DICT.
6
G.R. No. 204117, 1 July 2015.
7 G. R. No. 118900, 27 February 2003.
8
G.R. No.196681, 27 June2018.
9 G.R. No. 154993, 25 October 2005.

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 6 PINION /7 ~ ·s, 20~.
No. .............. . ·~11l
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its Position Paper. This doctrine means that legislation belongs to Congress,
execution to the executive, settlement of legal controversies to the judiciary. 10 This
doctrine allows for a system of checks and balances, such that no one branch of
the government is able to act without the cooperation of at least one of the other
branches. It also prevents the concentration of powers in one branch and thereby
avoid tyranny. 11 The assessment and collection taxes and the audit of delinquent
taxes belong to the Executive Branch. This being so, placing these powers in one
office in the Local Executive Branch, such as in the Offices of the City or Municipal
Treasurer would not violate the doctrine of separation of powers.

In fact, pursuant to the doctrine of separation of powers, a check on these

powers to asses, collect and audit of the Offices of the City or Municipal Treasurer
is provided in Sections 195 and 196 of the LGC. Under Section 195, the taxpayer
can protest the notice of assessment made by the local treasurer and if his protest
is denied, he can appeal the denial to the courts, while under Section 196, the
taxpayer can file a case in court "for the recovery of any tax, fee, or charge
erroneously or illegally collected."

We also note that in the national level, as pointed out in your letter, the
powers to assess, collect and audit payment of taxes also belong to one office in
the National Government, i.e., the Bureau of Internal Revenue (BIR) with respect
to national internal revenue taxes and the Bureau of Customs (BOC) with respect
to custom duties, with adequate checks on their powers because taxpayers can
resort to the courts pursuant to the pertinent provisions of the National Internal
Revenue Code and the Customs Modernization and Tariff Act.

Lastly, with respect to the Joint Memorandum Circular (JMC) No. 01, series
of 2016, of the DILG, Department of Trade and Industry (DTI) and Department of
Information and Communications Technology (DICT), entitled "Revised Standards
in Processing Business Permits and Licenses in All Cities and Municipalities", we
find that the Standard Steps provided in paragraph 6.3.1.1 thereof as well as in the
relevant annexes are in accordance with the LGC because Offices of the City or
Municipal Treasurer, as discussed above, have the power and authority to assess
and collect local business taxes under Sections 170 and 171 of LGC, while the role
of the Offices of the City or Municipal Mayor, through the BPLOs, under Sections
444(b)(3)(iv) and 455(b)(3)(iv) of the LGC is the issuance of business permits and
licenses signed by the City or Municipal Mayor. JMC No. 01, s. 2010, entitled
"Guidelines in Implementing the Standards in Processing Business Permits and
Licenses in all Cities and Municipalities" and invoked by NABPLO in its Position
Paper, is no longer controlling, as it has been superseded already by JMC No. 01,
s. 2016.

Conclusion

In sum, it is our opinion that the Offices of the City or Municipal Treasurer
have the power and authority to assess, collect and audit the payment of local
taxes, fees and charges, including local business taxes, as provided in Sections

10 Bernas, The 1987 Constitution of the Republic of the Philippines: A Commentary (1996 ed.), p.
603.
11 /d.

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I '

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.. ..... (Ii.a
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1-70, 171 and 195 of the LGC, while the powers of the Offices of the City or
Municipal Mayor under Sections 444(b)(3)(iii) and (iv) and 455(b)(3)(iii) and (iv) of
the LGC pertain only to generally overseeing that all taxes and other revenues of
the city or municipality are collected and the issuance of business permits and
licenses after payment of the required local taxes, fees and charges to the Offices
of the City or Municipal Treasurer.

Please be guided accordingly.

v~:
MENARDOl.GUEVARRA
Secretary