3. Validity of Local Tax Ordinance

Rules of Interpretation Affecting Local Tax Ordinances and Powers

Under Republic Act No. 7160, the interpretation of local powers and fiscal measures is governed by statutory construction rules favoring local autonomy, subject to distinct principles for revenue exactions¹. Any provision regarding a power of a local government unit must be liberally interpreted in its favor¹. In case of doubt, any question is resolved in favor of the devolution of powers and of the lower local government unit, and any fair and reasonable doubt regarding the existence of the power is interpreted in favor of the local government unit concerned¹. Furthermore, general welfare provisions are liberally interpreted to confer more powers upon local government units to accelerate economic development and upgrade the community's quality of life¹.

However, with respect to the validity and application of local tax measures, specific statutory rules of construction apply in favor of the taxpayer:

• Tax Ordinances and Revenue Measures: In case of doubt, any tax ordinance or revenue measure must be construed strictly against the enacting local government unit and liberally in favor of the taxpayer¹.
• Tax Exemptions and Reliefs: Any tax exemption, incentive, or relief granted by a local government unit pursuant to the provisions of the Code must be construed strictly against the person claiming it¹.
• Vested Rights and Prior Obligations: Rights and obligations existing on the date of effectivity of the Code arising out of contracts or any other source involving a local government unit continue to be governed by the original terms and conditions or the law in force when such rights vested¹.

Additionally, the exercise of legislative authority through ordinances is demarcated by territorial and statutory boundaries, such as the power of a sangguniang panlalawigan or sangguniang panlungsod to create or alter barangays by ordinance, whereas provinces, cities, and municipalities require an act of Congress².