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Complaints against Local Government

How do I file a complaint against a barangay official?

A barangay is the smallest unit of local government in the Philippines. It is headed by the Punong Barangay or Barangay Chairperson, or more colloquially known as the Barangay Captain or Kapitan. Aiding in their governance is the Sangguniang Barangay or the Barangay Council, composed of elected council members or Barangay Kagawad, including the chairman of the Sangguniang Kabataan. The barangay also has its own justice system through the Katarungang Pambarangay, which is handled by the Lupon Tagapamayapa. This is also usually headed by the Barangay Captain, with around ten (10) to twenty (20) other members. Essentially, these comprise the executive, legislative, and judicial branches at the barangay level. The powers and functions of the Punong Barangay, Sangguniang Barangay, and the Katarungang Pambarangay are all laid out in Title I, Book III of Republic Act No. 7160 (“R.A. No. 7160”), or the Local Government Code of 1991. Presently, over 42,000 barangays form part of the Liga ng mga Barangay sa Pilipinas or the League of Barangays in the Philippines.


Local government in the Philippines is divided into provinces and independent cities, component cities, and the barangays. These local governments units (“LGUs”) enjoy local autonomy, with the President merely exercising general supervision over the LGUs. These local government units are specifically under the control and supervision of the Department of Interior and Local Government (“DILG”).

In the hierarchy of local governments in the Philippines, barangays are grouped into either cities or municipalities, which in turn form provinces. Each unit of local government has their own local chief executive – the mayor or the governor – with its own legislative body – either the sanggunian bayan, sanggunian panlungsod, or sanggunian panlalawigan. This hierarchy becomes relevant particularly in the filing of disciplinary actions against elected officials.  


It is possible to file complaints against barangay officials for grounds specified under the law. Under Section 60 of R.A. No. 7160, an elective barangay official may be disciplined, suspended, or removed from office for any of the following reasons:

a)     Disloyalty to the Republic of the Philippines;

b)     Culpable violation of the Constitution;

c)     Dishonesty, oppression, misconduct in office, gross negligence, or dereliction of duty;

d)    Commission of any offense involving moral turpitude or an offense punishable by at least prision mayor;

e)     Abuse of authority;

f)      Unauthorized absence for fifteen (15) consecutive working days, except in the case of members of the sangguniang panlalawigan, sangguniang panlungsod, sangguniang bayan, and sangguniang barangay;

g)     Application for, or acquisition of, foreign citizenship or residence or the status of an immigrant of another country; and

h)     Such other grounds as may be provided in this Code and other laws.

The manner of filing a complaint against any elective barangay official is through a verified complaint filed before the sangguniang panlungsod or sangguniang bayan concerned.

In case preventive suspension is necessary when the evidence of guilt is strong, or given the gravity of the offense, or if there is great probability that the continuance in office of the respondent could influence the witnesses or pose a threat to the safety and integrity of the records and other evidence, the city or municipal mayor may impose such measure.


Within thirty (30) days after the end of the investigation, the sanggunian concerned shall render a decision. Afterwards, the decision of the sangguniang panlungsod or sangguniang bayan concerned– following the hierarchy – may be appealed to the sangguniang panlalawigan. The decisions of the latter may be appealed at the Office of President, whose decision shall be final and executory.

It is important to note, however, that only the proper judicial court may affect the removal of an elective official. In other words, the highest form of penalty that can be imposed by the local council is suspension as removal from one’s elective position rests solely within the powers of the judiciary. Should the sanggunian deem it necessary to remove the erring barangay official from office, it may resolve to file the appropriate complaint in court.

Receiving and Giving - Taxation of Prizes, Winnings, Gifts, and Donations.

Taxes are the lifeblood of the government, so they say. Thus, almost all activities can be subject to tax–receiving prizes and winnings included. However, the power of taxation is not without exemption as provided by law.

Thus, the 1997 National Internal Revenue Code (“NIRC”) was enacted to provide for all forms of national taxation by the Bureau of Internal Revenue (“BIR”) with supplemental application of the Local Government Code (“LGC”) for local taxes. It is also the BIR that issues revenue regulations (“RR”) and revenue memorandum orders (“RMO”) that provide for implementing rules and guidelines of the NIRC.

Two decades later, the NIRC was amended by Republic Act No. 10963 (“R.A. No. 10963”), or the Tax Reform for Acceleration and Inclusion, otherwise known as the TRAIN Law, which introduced several changes in taxation to the Philippines. To date, the NIRC, as amended by the TRAIN Law, and other RRs lay down the tax treatment for different kinds of activities.

In the wake of the recent Tokyo 2020 Summer Olympics, our Filipino medallists received many gifts, donations, prizes, and awards from sponsors, government officials, local government units, and the national government. Now comes the question of whether or not these prizes, awards and winnings are taxable under the law.


Inclusions and Exclusions

As a general rule, any income received is subject to income tax. One’s taxable income means the gross income less allowable deductions. To arrive at the gross income —

or, an individual’s total income subject to tax before allowable deductions and other business expenses —there are inclusions and exclusions.

The law specifies the types of income that form part and those that are excluded from the computation of a taxpayer’s gross income. Inclusions, while subject to allowable deductions, are generally taxable income. The exclusions, on the other hand, may be subject to a different form of tax or be exempt from tax altogether.

Gross Income includes:

(1) Compensation for services, including but not limited to fees, salaries, wages, commission, and other similar items;

(2) Gross income derived from the conduct of trade or business or the exercise of a profession;

(3) Gains derived from dealings in property;

(4) Interests;

(5) Rents;

(6) Royalties;

(7) Dividends;

(8) Annuities;

(9) Prizes and winnings;

(10) Pensions; and

(11) Partner’s distributive share from the net income of the general professional partnership.

Exclusions from Gross Income are:

(1) Life Insurance;

(2) Amount received by insured as return of premium;

(3) Gifts, bequests, and devises;

(4) Compensation for injuries and sickness;

(5) Income exempt under treaty;

(6) Retirement benefits, pensions, gratuities, etc. ;

(7) Miscellaneous items (income derived by foreign government, income derived by the government or its political subdivisions, prizes and awards, prizes and awards in sports competition, 13th month pay and other benefits, GSIS, SSS, Medicare and other contributions, gains from sales of bonds, debentures, or other certificate of indebtedness, and gains from redemption of shares in mutual fund income).


Under the NIRC, as amended, gifts, bequests, and devises are excluded from gross income. Additionally, prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, or literary achievement are excluded from gross income.

This is subject to the condition that the recipient was selected without entering the contest or proceeding, and the recipient is not required to render future services as a condition to receiving the prize or award. The NIRC, as amended, further provides that all prizes and awards given to athletes in local and international sports competitions and tournaments, whether here or abroad, are excluded from gross income.

In the area of sports, Republic Act No. 10699 (“R.A. No. 10699”) —

or the National Athletes and Coaches Benefits and Incentives Act — provides cash incentives to athletes who have represented the country in international sports competitions and win gold, silver, and bronze medals. These are considered prizes and awards in sports competitions, which the law provides to be excluded from the gross income of the recipient athlete.

It should be noted that while prizes and winnings granted to athletes are excluded from gross income, they may be subject to 20% final tax on passive income, as provided under the TRAIN Law and the RR No. 8-2018. However, prizes and Philippine Charity Sweepstakes and Lotto winnings amounting to P10,000 or less are not subject to the 20% final tax. Essentially, prizes and winnings less than P10,000 are not taxed.

While gifts, bequests, and devises are excluded from gross income, the donor may be subject to donor’s tax. This shall apply to any gratuitous transfer of property between two or more persons whether the gift is direct or indirect, real or personal, tangible or intangible. The TRAIN Law has amended the rate for donor’s tax, which is now at 6% of the total amount of gifts in excess of P250,000 for donations made during the calendar year.

All told, there are different tax treatments for income, gifts, prizes, awards, and cash received. These are subject to different conditions and requirements imposed by the NIRC, as amended by the TRAIN Law, as well as other regulations issued by the BIR.

Tax Update for Businesses: CREATE Law

The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act is part of the Comprehensive Tax Reform Program that aims to aid small and micro businesses to ease their tax obligations.

These are its salient features:


I.        Lower Corporate Income Tax Rate


For domestic corporations, the new income tax rate is 25%, effective July 1, 2020.

For corporations with net taxable income not exceeding Five Million Pesos(P5,000,000) and with total assets not exceeding One Hundred Million Pesos(excluding the value of the land where the business is on), they shall be taxed at the lower rate of 20%, effective July 1, 2020.


For proprietary educational institutions and hospitals, the new income tax rate is 1%, effective July 1, 2020 to June 30, 2023.


II.      Lower Minimum Corporate Income Tax Rate


       From the higher rate of two percent (2%), the minimum corporate income tax rate of one percent (1%) is now imposed, effective July 1, 2020 until June 30, 2023.


III.   Regional Operating Headquarters to be Subject to Regular Corporate Income Tax


       Currently, regional operating headquarters pay an income tax of ten percent (10%).According to CREATE, effective January 1, 2022, regional operating headquarters shall be subject to the regular corporate income tax of 25%.


IV.    Higher Interest Income Tax for Resident Foreign Corporations


From seven and one-half percent (7.5%), CREATE now provides that interest income derived by a resident foreign corporation from a depository bank under the expanded foreign currency deposit system shall be subject to a final income tax at the rate of fifteen percent (15%) of such interest income, effective on April 11, 2021 or the effectivity of the CREATE law.


V.         Final Tax on Capital Gains from Sale of Shares of Stock Fixed


Whereas the tax code provides for tax rates of either five percent (5%) or ten percent (10%) corresponding thresholds of amount of net capital gains from sale of shares of stock nontraded in the stock exchange, CREATE fixes the final tax at the rate of fifteen percent (15%), effective on April 11, 2021 or the effectivity of the CREATE law.


VI.           No More Improperly Accumulated Earnings Tax


CREATE removed the imposition of improperly accumulated earnings tax on corporations.


VII.        Labor Training in Public Institutions as Deduction from Gross Income


CREATE provides for an additional deduction from taxable income of one-half (1/2) of the value of labor training expenses incurred for skills development of enterprise-based trainees enrolled in public education institutions duly covered by an apprenticeship agreement under the Labor Code. Such deduction shall not exceed ten percent (10%) of direct labor wage.


VIII.      No More Requirement of a Prior BIR Ruling for Tax-Free Exchanges


According to CREATE, a prior BIR confirmation or tax ruling shall not be required for purposes of availing the tax exemption in case of tax-free exchange of property in pursuance of a plan of reorganization under the tax code.


IX.           Increased VAT Exemption Threshold for Residential Lots and Dwelling


The VAT exempt sale transactions now cover residential lots valued at Two Million Five Hundred Thousand Pesos (P2,500,000.00) and below, and house and lot and other residential dwellings valued at Four million Two Hundred Thousand Pesos(P4,200,000.00) and below.


X.             More VAT Exempt Transactions


CREATE included the sale of or importation of the following items shall be exempt from VAT:

a.     Educational reading materials covered by the UNESCO Agreement on the Importation of Educational, Scientific and Cultural Materials;

b.    Prescription drugs and medicines for cancer, mental illness, tuberculosis, and kidney diseases;

c.     Materials needed for the production of PPEs for COVID-19 prevention; and

d.    Drugs, vaccines, and devices for the treatment of COVID-19.


XI.           Lower Rate of Percentage Tax


CREATE reduced the rate of percentage tax from three percent (3%) to one percent (1%).


XII.        Tax and Duty Incentives to Registered Enterprises upon Certain Conditions


a.     Income Tax Holiday (ITH) for a period of four to seven years;

b.    Special Corporate Income Tax (SCIT) Rate of five percent (5%);

c.     Enhanced Deductions (ED);

d.    Duty exemption on importation of capital equipment, raw materials, spare parts;

e.     Value-Added Tax (VAT) Exemption on importation and VAT zero-rating on local purchases.


With the passing of CREATE into law on March 26, 2021, more investments, employment, productivity, and overall economic growth should be expected. It is also hoped that with the passing of this law, the Philippines will be developed into aglobally competitive economy that welcomes investors from various industries inside and outside of the country.


This article was written by Atty. Jadea Ezra M.Capucion for King and Graido Law Office. She graduated with a Juris Doctor degree from the Ateneo De Manila University School of Law in 2016, and has been a practicing attorney since being admitted to the Philippine Bar in 2017.