Bureau of Local Government Finance Opinion

May 27, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned, thru the Regional Director, for Local Government Finance, Region XII, corner Corcuerra and Lim Sr. Streets, Cotabato City to the City Treasurer, Iligan City. This refers to the request for advice on the attached City Ordinance No. 2916, s. 1996 and Sangguniang Panlungsod Resolution No. 476, s. 1997, confirming the Implementing Rules and Regulations covering said Ordinance, promulgated by the Iligan City Investment Incentives and Promotions Board (ICIIPB). In this connection, hereunder are the comments/recommendations of this Department: 1. Art. 24 and 26 (1) Exemption from real property tax. "a) Exemption from real property tax of industrial/commercial building and improvements (in addition to existing present payment discounts). "b) Exemption from real property tax on equipment, machineries, and devices (other than those used for anti-pollution & environment protection and in addition to existing prompt payment discounts) without limit on the value or acquisition price thereof. Comments: Exemptions from real property tax are enumerated in Section 234 of the Code. LGUs do not have the authority to grant exemptions from real property taxes to those which are not expressly exempted by the governing law, otherwise, they will be exercising the power of amending Laws or Acts enacted by Congress. 2. Article 24(2) Exemption from business tax on gross sales/receipts. AEIcSa Comments: The grant of the incentives for a period of seven (7) to eight (8) years is not in conformity with Article 282 (b)(2)(ii) of the Implementing Rules and Regulations (IRR) implementing Section 192 of the Local Government Code (LGC) of 1991, quoted hereunder, therefore not enforceable. Thus, the Sangguniang Panlungsod should amend said ordinance by reducing the period of exemption to not more than one (1) year from the actual date the business started operations: "Art. 282. Authority to Grant Tax Exemption Privileges . (a) . . . "(b) Local sanggunians granting tax exemptions, tax incentives and tax reliefs may be guided by the following: "(1) . . . "(2) On the grant of tax incentives: "(ii) The grant of the tax incentive shall be for a definite period not exceeding one (1) calendar year; "xxx xxx xxx." 3. Article 17(b) "b) Exemption from payment of the Business Permit fee for a period of 5 years for preferred and 3 years for non-preferred registered enterprises, except regulatory fees, such as health, sanitary, fire inspection fees and the like. Comments: The Sanggunian Panlungsod should likewise amend the above Article by reducing the period of exemption to not more than one (1) year from the actual date the business started operations. On the basis of the foregoing, that office is hereby requested to inform the Sangguniang Panlungsod thereat that Ordinance No. 2916 and its IRR should be amended accordingly. It bears emphasis, however, that the foregoing views are expressed in line with the provisions of Article 287 of the IRR implementing the LGC and not a declaration of the illegality of the ordinance for reason that such function falls exclusively within the jurisdiction of the Department of Justice. HCaIDS Be guided accordingly. By authority of the Secretary: (SGD.) LORINDA M. CARLOS Executive Director Bureau of Local Government Finance