Bureau of Local Government Finance Opinion

February 20, 1996 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The City Treasurer Makati City S i r : This refers to the letter dated September 7, 1995 of Atty. Rolando P. Navarro, Vice-President, Legal Services, Chemphil Specialty Chemicals Corp. (CSCC), requesting confirmation that Local Finance Circular No. 5-93 dated October 22, 1993 of the Department of Finance never became effective, binding or enforceable on the ground of lack of publication in the Official Gazette or in a newspaper of general circulation as mandated by law under Article 2 of the New Civil Code of the Philippines as amended by E.O. 200. Said request was made in view of the denial by that Office of the application for tax credit of CSCC. LLphil In this connection, enclosed for your reference and guidance is a copy of the letter of even date of the Bureau to Atty. Navarro, embodying the pertinent portion, quoted hereunder, of the letter dated April 24, 1995 to the City Legal Officer of Davao bearing on a similar query: ". . ., it may be stated that guidelines issued by this Department relative to the levy and administration of local taxes, fees and charges pursuant to Article 287 of the IRR are only intended to, among others: "(a) guide local elective officials in the enactment of local tax ordinances or revenue codes; "(b) local treasury offices in collecting taxes and other local impositions, as well as in determining or computing tax discounts or penalties and surcharges; and "(c) the taxpaying as to the proper interpretation and application of the law and rules governing local taxation." "Such guidelines, however, cannot, as they are not meant to, amend provisions of law, particularly the LGC of 1991. Accordingly, in reply to your query, it is the considered view of this Department that the 60-day period prescribed under LFC No. 5-93 abovementioned is only directory and not mandatory and, therefore, the failure of any business to observe the same will not render taxable what the law has expressly exempted from local taxation. Stated otherwise, said 60-day period is deemed to be not prescriptive." In addition thereto, this Bureau expressed the view that BOI registered enterprises became exempt only upon the promulgation of the LGC which took effect on January 1, 1992. PD 231, the law prevailing then, did not provide exemption for such enterprises. Hence, inasmuch as the law has no retroactive effect, this Bureau further expresses the view that CSCC should be exempt from the payment of business taxes only for the remainder of the four (4) years from the date of its registration with BOI. Accordingly, upon presentation to that Office of its BOI certification, which should be examined closely to determine and establish the eligibility of the company to such tax exemption, CSCC may be granted tax credits for the period from January 1, 1992 up to April 19, 1993, subject, however, to the provisions of Section 196 of the Code, as implemented under Article 286 of its Implementing Rules and Regulations (IRR). Be guided accordingly. Very truly yours, LORINDA M. CARLOS Executive Director