Question

Taxation

The Sangguniang Bayan of the Municipality of San Isidro, Isabela enacted Municipal Tax Ordinance No. 2024-03, imposing a 1% municipal tax on the gross monthly receipts of all businesses engaged in the sale and distribution of petroleum products within its territorial jurisdiction. Petron Distribution Corp. (PDC), a petroleum distributor operating within the municipality, was assessed ₱480,000 in municipal taxes under this ordinance. PDC filed a written protest before the Municipal Treasurer, which was denied. PDC elevated the matter, arguing that the municipality is legally prohibited from imposing taxes on petroleum products under the Local Government Code. The municipality countered that its broad taxing powers under Sec. 142 of the LGC authorize it to tax all businesses operating within its jurisdiction. Is the municipal tax ordinance valid?

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