Mactan Cebu (MCIAA) vs.

Marcos
GR 120082 September 11, 1996 261 SCRA 667
Davide Jr., .: (CJ)
FACTS:
Mactan Cebu International Airport Authority (MCIAA) was created to principally undertake to economical, efficient
and effective control, management and supervision of the Mactan International Airport and such other airports as
may be established in the province of Cebu Section 14 of its charter excempts the Authority from payment of
realty taxes but in 1994, the City Treasurer demanded payment for realty taxes on several parcels of land
belonging to the other. MCIAA filed a petition in RTC contending that, by nature of its powers and functions, it has
the same footing of an agency or instrumentality of the national government. The RTC dismissed the petition
based on Section 193 & 234 of the local Government Code or R.A. 7160. Thus this petition.
ISSUE:
Whether or not the MCIAA is excempted from realty taxes?
RULING:
With the repealing clause of RA 7160 the tax exemption provided. All general and special in the charter of the
MCIAA has been expressly repeated. It state laws, acts, City Charters, decrees, executive orders, proclamations
and administrative regulations, or part of parts thereof which are inconsistent with any of the provisions of the Code
are hereby repeated or modified accordingly. Therefore the SC affirmed the decision and order of the RTC and
herein petitioner has to pay the assessed realty tax of its properties effective January 1, 1992 up to the present.

Manila Electric Company v. Province of Laguna (G.R. No. 131359. May 5, 1999)
FACTS:
MERALCO was granted a franchise by several municipal councils and the National Electrification
Administration to operate an electric light and power service in the Laguna. Upon enactment of
Local Government Code, the provincial government issued ordinance imposing franchise tax.
MERALCO paid under protest and later claims for refund because of the duplicity with Section 1
of P.D. No. 551. This was denied by the governor (Joey Lina) relying on a more recent law (LGC).
MERALCO filed with the RTC a complaint for refund, but was dismissed. Hence, this petition.
ISSUE:
Whether or not the imposition of franchise tax under the provincial ordinance is violative of the
non-impairment clause of the Constitution and of P.D. 551.
HELD:
No. There is no violation of the non-impairment clause for the same must yield to the inherent
power of the state (taxation). The provincial ordinance is valid and constitutional.
RATIO:

The Local Government Code of 1991 has incorporated and adopted, by and large, the provisions
of the now repealed Local Tax Code. The 1991 Code explicitly authorizes provincial governments,
notwithstanding any exemption granted by any law or other special law, . . . (to) impose a tax on
businesses enjoying a franchise. A franchise partakes the nature of a grant which is beyond the
purview of the non-impairment clause of the Constitution. Article XII, Section 11, of the 1987
Constitution, like its precursor provisions in the 1935 and the 1973 Constitutions, is explicit that
no franchise for the operation of a public utility shall be granted except under the condition that
such privilege shall be subject to amendment, alteration or repeal by Congress as and when the
common good so requires.

Pepsi-Cola Bottling Company v Tanauan (1976)

Pepsi-Cola Bottling Company of the Phils, Inc v Tanauan GR No. L-31156, February 27, 1976
FACTS:
Pepsi Cola Bottling Company commenced a complaint with preliminary injunction before the Court of First
Instance of
Leyte for the court to declare Section 2 of RA 2264 (Local Autonomy Act) unconstitutional as an undue
delegation of taxing authority as well as to declare Ordinances Nos 23 and 27 of municipality of Tanauan,
Leyte. Municipal Ordinance No. 23 (9/25/1962) levies and collects from softdrinks producers and
manufacturers a tax of 1/16 of a centavo for every bottle of softdrink corked. Municipal ordinance no. 27
(10/28/1962) levies and collects on softdrinks produced or manufactured within the territorial jurisdiction of
this municipality a tax of 1 centavo on each gallon of volume capacity. The taxes imposed are denominated
as municipal production tax. CFI-Leyte dismissed the complaint. Hence, this petition.
ISSUES:
1. Is Section 2 of RA 2264 an undue delegation of power, confiscatory and oppressive?
2. Do ordinances nos. 23 and 27 constitute double taxation and impose percentage or specific
taxes?
3. Are ordinance nos. 23 and 27 unjust and unfair?
RULING:
1. No. Under the New Constitution, local governments are granted the autonomous authority to create
their own sources of
revenue and to levy taxes. Section 5, Article XI provides: Each local government unit shall have
the power to create its sources of revenue and to levy taxes, subject to such limitations as may be
provided by law. Thus, legislative powers may be delegated to local governments in respect of
matters of local concern.
2. No. The intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is thus clear: it
was intended as a plain substitute for the prior ordinance no. 23 and operates as a repeal of the
latter, even without words to that effect. The tax is not a percentage tax as the volume capacity of
the taxpayers production of softdrinks is considered solely for purposes of determining the tax rate

on the products but there is no set ratio between volume of sales and amount of the tax. Nor can
the tax levied be treated as a specific tax. Softdrink is not one of those specified articles.
3. No. Municipal corporations are allowed much discretion in determining the rates of imposable
taxes. This is in line with the constitutional policy of according the widest possible autonomy to
local governments in matters of local taxation, an aspect that is given expression in the Local Tax
Code.
Ormoc Sugar Co. Inc. v Municipal Board of Ormoc City

Appeal from a decision of the Court of First Instance of Leyte, Fifth Branch, in a declaratory
relief proceeding to test the validity of a Municipal Ordinance of the City of Ormoc, which as
amended reads as follows:
SECTION 1. City Tax. There shall be paid to the City Treasurer on any and all
productions of centrifugal sugar (B-Sugar locally sold or sold within the Philippines a
city tax of Twenty Centavos (P0.20) per picul and one percentum (1%) on the gross
sale of its derivatives and by-products produced by the Ormoc Sugar Company,
Incorporated, or by any other sugar mills [sic] in Ormoc City.
The above amendatory ordinance was enacted on October 28, 1964 and took effect
immediately after approval. The lower court sustained its validity in its decision of January
28, 1965.
The appeal must fail and the decision of the lower court affirmed. The question before this
Court is one of power. From and after June 19, 1959, when the Local Autonomy Act was
enacted, the sphere of autonomy of a chartered city in the enactment of taxing measures
has been considerably enlarged. In the language of the statute:
SECTION 2. Taxation. Any provision of law to the contrary notwithstanding, all
chartered cities, municipalities and municipal districts shall have authority to impose
municipal license taxes or fees upon persons engaged in any occupation or
business, or exercising, privileges in chartered cities, municipalities or municipal
districts by requiring them to secure licenses at rates fixed by the municipal board or
city council of the city, the municipal council of the municipality, or the municipal
district council of the municipal district; to collect fees and charges for services
rendered by the city, municipality or municipal district; to regulate and impose
reasonable fees for services rendered in connection with any business, profession or
occupation being conducted within the city, municipality or municipal district and
otherwise to levy for public purposes, just and uniform taxes, licenses or
fees: Provided, That municipalities and municipal districts shall, in no case impose
any percentage tax on sales or other taxes in any form based thereon nor impose
taxes on articles subject to specific tax, except gasoline, under the provisions of the
National Internal Revenue Code x x x . .
In a number of decisions starting from City of Bacolod v. Gruet1 to Hodges v. Municipal
Board2 decided early this year, such broad taxing authority has been implemented and
vitalized by this Court.

The last mentioned-case, Hodges v. Municipal Board restated the controlling doctrine in this
wise:
No special difficulty attends the resolution of the main issue. Heretofore, we have
announced the doctrine that the grant of the power to tax to chartered cities under
Section 2 of the Local Autonomy Act is sufficiently plenary to cover "everything,
excepting those which are mentioned" therein, subject only to the limitation that the
tax so levied is for "public purposes, just and uniform" (Nin Bay Mining Company vs.
Municipality of Roxas, Province of Palawan, G.R. No. L-20125, July 20, 1965). There
is no showing, and we do not believe it is possible to show, that the tax levied, called
by any name, percentage tax or sales tax comes under any of the specific
exceptions listed in section 2 of the Local Autonomy Act. Not being excepted, it must
be regarded as coming within the purview of the general rule. As the maxim goes,
"Exceptio firmat regulam in casibus non exceptis." Since its public purpose, justness
and uniformity of application are not disputed, the tax so levied must be sustained as
valid.
1wph1.t

In the light of the above, it cannot be said that the ordinance suffers from a constitutional or
statutory infirmity as claimed in the first alleged error. Nor is petitioner-appellant any more
successful in its claim in the second assigned error that the ordinance suffers from the taint
of illegality, it being in restraint of trade. In the absence of a clear and specific showing that
there was a transgression of a constitutional provision or repugnancy to a controlling statute,
an objection of such a generalized character deserves but scant sympathy from this Court.
Considering the indubitable policy expressly set forth in the Local Autonomy Act, the
invocation of such a talismanic formula as "restraint of trade" without more no longer
suffices, assuming it ever did, to nullify a taxing ordinance, otherwise valid.
Wherefore, the judgment a quo is hereby affirmed. Without costs.