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Raymundo, Kenneth Q.
Local Government Taxation (continuation)
11. Asiatic Integrated Corporation v. Alikpala, 72 SCRA 285
BARREDO, J.:
and
WITNESSETH: That
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SUPPLEMENTARY CONTRACT
and
WITNESSETH THAT:
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ATTESTED:
ROMAN G. GARGANTIEL
Secretary to the Mayor
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SERAFIN LUZ CUI RAMON S. MENDOZA
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By the President:
APPROVED:
ATTESTED:
A Note:
amended contract
and
WITNESSETH THAT:
Paragraph I
Paragraph XV
PARAGRAPH I
PARAGRAPH II
ATTESTED:
The Honorable
The Municipal Board
Manila
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Now, in case G.R. No. L-37187, the petitioners filed on July 25,
1973. The decision impugned in these cases was rendered on
July 13, 1973. The petition in G.R. No. L-37248 was actually
filed on August 27, 1973, while that in G.R. No. L-37249 on
August 21,
1973. 1 Upon being required to comment on the petitions,
private respondents filed theirs on July 31, 1973 and
respondent Judge filed his own on August 3, 1973. 2 So it is
that some of the facts aforestated which gave rise to new
issues took place and were brought to the attention of the
Court after the original issues were already joined. Indeed,
they were never considered by the trial court. In view,
however, of the fact that they are material and relevant, if not
decisive, as they are indisputable, the Court will overlook the
resulting technicalities regarding the need for corresponding
supplemental pleadings. The matters of public interest herein
involved need to be promptly settled, and considering that
after all the new issues have no factual facets which would call
for a new trial and that they are purely legal, We do not see
any practical purpose that can be served by requiring the
return of these cases to the trial court. For these same reasons,
We can also pass over two other technical points: (1) the
apparent incompleteness of the judgement of the trial court,
the accounting ordered by it not having been rendered yet by
Asiatic and (2) the fact that some of the matters. We are to
resolve have not been passed upon by the lower court. Anyway,
for one thing, under the view We take of these cases, there
would not be need anymore for the ordered accounting. Withal,
as a matter of fact, the parties have fully presented there
respective positions in regard to all the issues without
suggesting the need for further proceedings in the court below.
II
XI
XII
And with respect to the vendors, neither the award of the stalls
nor the fixing of the fees to be paid by them are removed from
the city authorities. The contract does not empower the
corporation to interfere with any of these matters. Thus,
Paragraph XIV thereof provides:
XIV
III
B
The second issue raised by respondents relative to the alleged
invalidity of the contract in dispute, allegedly due to the fact
that it was not previously approved or authorized in an
ordinance passed by the municipal board, makes it imperative
for Us to consider certain facts which as earlier noted were not
only not before the trial court but were not even existing yet
during the first joining of the issues in this Court. We reiterate
that for the reasons stated in the first part of this opinion,
there is no legal impediment to Our taking said facts into
account, if only because they are indubitable and the issues
arising from them are purely of law which under the peculiar
circumstances of these cases it would be impractical and
dilatory, nay, prejudicial to the interests of justice to require
that they be first passed upon by the lower court.
To top it all, the issuance of P.D. 345 has been known by the
Municipal Board of Manila since the beginning of its
enforcement in November, 1973. If the Board were not
agreeable to the continued enforcement of the contract,
immediate steps would have been taken to make the decree
inoperative, which could have been easily done by the Board by
expressly disapproving the contract and continuing the reserve
for the sinking fund. But as it is, it is a matter of public
knowledge that the Board has not only failed to take such a
step; on the contrary, nowhere in their pleadings is there any
claim that the reversion directed by the decree has not been
done and that the corresponding appropriations therefrom
have not been made. Besides, respondents do not pretend that
in the approval of the budget ordinances for the fiscal years
1973-74 and 1974-75 the income of P500,000 and P550,000,
for the years 1973 and 1975, coming from Asiatic under the
contract were not used as basis for the estimate of incomes of
the City. There is absolutely no showing here that any of the
salaries, wages, insurance and other benefits due the market
employees under existing labor and other laws as well as
damages suffered by third parties, as contemplated in
Paragraph XI of the contract, has not been paid by Asiatic.
Neither is it alleged that Asiatic has not faithfully complied with
its liability, pursuant to Paragraph XII, for claims under the
Workmen's Compensation Act, the Minimum Wage Law, the
Eight-Hour Labor Law of the personnel assigned to the
markets. Considering that all these payment made by Asiatic
pursuant to the terms of the contract have accrued to the
benefit of the City without any protest on the part of the
Municipal Board, We cannot but conclude that in fact the said
Board has already acquiesced to the validation of the contract
by
P.D. 345.
As We see it, even if there could be some doubt that any of the
circumstances just discussed could be individually adequate in
law as a ratification or validation of the contract, assuming it
suffers from any congenital infirmity, verily, the combined
effect of all of them together cannot but lead to the inevitable
conclusion that there is more than enough legal basis for
upholding its validity. Incidentally, it is interesting to note that
while petitioners who, as already discussed earlier herein, have
no actionable interest in the contract in dispute annulled, the
Municipal Board, in whom rested the power to repudiate the
contract from the outset, were it really opposed to it, has been
significantly silent in the face of the material developments
above pointed out, thereby indicating that as far as it is
concerned, things may well be left as they are.
IV
Contract is grossly
disadvantageous to the City.
FY-1969-70 P1,609,899.96
FY-1970-71 1,657,668.85
FY-1971-72 1,455,932.95
JUDGMENT
IN VIEW OF ALL THE FOREGOING, the decision of the trial court
of July 13, 1973, subject of the petitions in G.R. Nos. L-37248
and L-37249, is set aside and the Management and Operating
Contract of December 28, 1972 between the City and Asiatic, as
supplemented on March 30, 1973 and amended on February 13,
1974 is hereby declared legal and valid. In consequence, the
prayer in G.R. No. L-37187 that the trial court be enjoined from
executing its decision annulling the said contract need not be
acted upon, the basis of the said execution being no longer
existent. No costs.
12. Matalin Coconut Co. v. Mun. Council of Malabang, 143 SCRA 404
YAP, J.:
On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur,
invoking the authority of Section 2 of Republic Act No. 2264, otherwise
known as the Local Autonomy Act, enacted Municipal Ordinance No.
45-46, entitled "AN ORDINANCE IMPOSING A POLICE INSPECTION FEE
OF P.30 PER SACK OF CASSAVA STARCH PRODUCED AND SHIPPED
OUT OF THE MUNICIPALITY OF MALABANG AND IMPOSING PENALTIES
FOR VIOLATIONS THEREOF." The ordinance made it unlawful for any
person, company or group of persons "to ship out of the Municipality of
Malabang, cassava starch or flour without paying to the Municipal
Treasurer or his authorized representatives the corresponding fee fixed
by (the) ordinance." It imposed a "police inspection fee" of P.30 per
sack of cassava starch or flour, which shall be paid by the shipper
before the same is transported or shipped outside the municipality.
Any person or company or group of individuals violating the ordinance
"is liable to a fine of not less than P100.00, but not more than
P1,000.00, and to pay Pl.00 for every sack of flour being illegally
shipped outside the municipality, or to suffer imprisonment of 20 days,
or both, in the discretion of the court.
After trial, the Court a quo rendered a decision declaring the municipal
ordinance in question null and void; ordering the respondent Municipal
Treasurer to refund to the petitioner the payments it made under the
said ordinance from September 27, 1966 to May 2, 1967, amounting
to P 25,500.00, as well as all payments made subsequently thereafter;
and enjoining and prohibiting the respondents, their agents or
deputies, from collecting the tax of P.30 per bag on the cassava flour
or starch belonging to intervenor, Purakan Plantation Company,
manufactured or milled in the Municipality of Balabagan, but shipped
out through the Municipality of Malabang.
After the promulgation of the decision, the Trial Court issued a writ of
preliminary mandatory injunction, upon motion of petitioner, requiring
the respondent Municipal Treasurer to deposit with the Philippine
National Bank, Iligan Branch, in the name of the Municipality of
Malabang, whatever amounts the petitioner had already paid or shall
pay pursuant to the ordinance in question up to and until final
termination of the case; the deposit was not to be withdrawn from the
said bank without any order from the court. On motion for
reconsideration by respondents, the writ was subsequently modified on
July 20, 1967, to require the deposit only of amounts paid from the
effectivity of the writ up to and until the final termination of the suit.
From the decision of the trial court, the respondents appealed to this
Court.
The main issue to be resolve in this case whether not Ordinance No.
45-66 enacted by respondent Municipal Council of Malabang, Lanao del
Sur, is valid. The respondents-appellants contend that the municipality
has the power and authority to approve the ordinance in question
pursuant to Section 2 of the Local Autonomy Act (Republic Act No.
2264).
Since the enactment of the Local Autonomy Act, a liberal rule has been
followed by this Court in construing municipal ordinances enacted
pursuant to the taxing power granted under Section 2 of said law. This
Court has construed the grant of power to tax under the above-
mentioned provision as sufficiently plenary to cover "everything,
excepting those which are mentioned" therein, subject only to the
limitation that the tax so levied isfor public purposes,
just and uniform (Nin Bay Mining Company vs. Municipality of Roxas,
Province of Palawan, 14 SCRA 661; C.N. Hodges vs. Municipal Board,
Iloilo City, et al., 19 SCRA 28).
We agree with the finding of the trial court that the amount collected
under the ordinance in question partakes of the nature of a tax,
although denominated as "police inspection fee" since its undeniable
purpose is to raise revenue. However, we cannot agree with the trial
court's finding that the tax imposed by the ordinance is a percentage
tax on sales which is beyond the scope of the municipality's authority
to levy under Section 2 of the Local Autonomy Act. Under the said
provision, municipalities and municipal districts are prohibited from
imposing" any percentage tax on sales or other taxes in any
form based thereon. " The tax imposed under the ordinance in
question is not a percentage tax on sales or any other form of tax
based on sales. It is a fixed tax of P.30 per bag of cassava starch or
flour "shipped out" of the municipality. It is not based on sales.
However, the tax imposed under the ordinance can be stricken down
on another ground. According to Section 2 of the abovementioned Act,
the tax levied must be "for public purposes, just and uniform"
(Emphasis supplied.) As correctly held by the trial court, the so-called
"police inspection fee" levied by the ordinance is "unjust and
unreasonable." Said the court a quo:
The Court finally finds the inspection fee of P0.30 per bag,
imposed by the ordinance in question to be excessive and
confiscatory. It has been shown by the petitioner, Matalin
Coconut Company, Inc., that it is merely realizing a
marginal average profit of P0.40, per bag, of cassava flour
starch shipped out from the Municipality of Malabang
because the average production is P15.60 per bag,
including transportation costs, while the prevailing market
price is P16.00 per bag. The further imposition, therefore,
of the tax of P0.30 per bag, by the ordinance in question
would force the petitioner to close or stop its cassava flour
starch milling business considering that it is maintaining a
big labor force in its operation, including a force of security
guards to guard its properties. The ordinance, therefore,
has an adverse effect on the economic growth of the
Municipality of Malabang, in particular, and of the nation,
in general, and is contrary to the economic policy of the
government.
13. Prov. of Bulacan v. CA, G.R. No. 126232, Nov. 27, 1998
DECISION
ROMERO, J.:
xxxxxxxxx
(4) Quarry resources shall mean any common stone or
other common mineral substances as the Director of the
Bureau of Mines and Geo-Sciences may declare to be
quarry resources such as, but not restricted to, marl,
marble, granite, volcanic cinders, basalt, tuff and rock
phosphate; Provided, That they contain no metal or
metals or other valuable minerals in economically
workable quantities.
It is clearly apparent from the above provision that the National
Internal Revenue Code levies a tax on all quarry resources, regardless
of origin, whether extracted from public or private land.Thus, a
province may not ordinarily impose taxes on stones, sand, gravel,
earth and other quarry resources, as the same are already taxed
under the National Internal Revenue Code. The province can, however,
impose a tax on stones, sand, gravel, earth and other quarry
resources extracted from public land because it is expressly
empowered to do so under the Local Government Code. As to stones,
sand, gravel, earth and other quarry resources extracted from private
land, however, it may not do so, because of the limitation provided by
Section 133 of the Code in relation to Section 151 of the National
Internal Revenue Code.
Given the above disquisition, petitioners cannot claim that the
appellate court unjustly deprived them of the power to create their
sources of revenue, their assessment of taxes against Republic
Cement being ultra vires, traversing as it does the limitations set by
the Local Government Code.
Petitioners likewise aver that the appellate court's declaration of
nullity of its assessment against Republic Cement is a collateral attack
on Provincial Ordinance No. 3, which is prohibited by public
policy.[15] Contrary to petitioners' claim, the legality of the ordinance
was never questioned by the Court of Appeals. Rather, what the
appellate court questioned was petitioners' assessment of taxes on
Republic Cement on the basis of Provincial Ordinance No. 3, not the
ordinance itself.
Furthermore, Section 21 of Provincial Ordinance No. 3 is practically
only a reproduction of Section 138 of the Local Government Code. A
cursory reading of both would show that both refer to ordinary sand,
stone, gravel, earth and other quarry resources extracted from public
lands. Even if we disregard the limitation set by Section 133 of the
Local Government Code, petitioners may not impose taxes on stones,
sand, gravel, earth and other quarry resources extracted from private
lands on the basis of Section 21 of Provincial Ordinance No. 3 as the
latter clearly applies only to quarry resources extracted from public
lands. Petitioners may not invoke the Regalian doctrine to extend the
coverage of their ordinance to quarry resources extracted from private
lands, for taxes, being burdens, are not to be presumed beyond what
the applicable statute expressly and clearly declares, tax statutes
being construed strictissimi juris against the government.[16]
WHEREFORE, premises considered, the instant petition is
DISMISSED for lack of merit and the decision of the Court of Appeals
is hereby AFFIRMED in toto. Costs against petitioner.
SO ORDERED.
Narvasa, C.J. (Chairman), Kapunan, Purisima, and Pardo,
JJ., concur.
14. Phil. Petroleum Corp. v. Mun. of Pililla, G.R. No. 90776 June 3,
1991
PARAS, J.:
This is a petition for certiorari seeking to annul and set aside: (a) the
March 17, 1989 decision * of the Regional Trial Court, Branch 80,
Tanay, Rizal in Civil Case No. 057-T entitled, "Municipality of Pililla,
Rizal, represented by Mayor Nicomedes F. Patenia vs. Philippine
Petroleum Corporation", (PPC for short) upholding the legality of the
taxes, fees and charges being imposed in Pililla under Municipal Tax
Ordinance No. 1 and directing the herein petitioner to pay the amount
of said taxes, fees and charges due the respondent: and (b) the
November 2, 1989 resolution of the same court denying petitioner's
motion for reconsideration of the said decision.
On March 30, 1974, Presidential Decree No. 426 was issued amending
certain provisions of P.D. 231 but retaining Sections 19 and 19 (a)
with adjusted rates and 22(b).
On April 13, 1974, P.D. 436 was promulgated increasing the specific
tax on lubricating oils, gasoline, bunker fuel oil, diesel fuel oil and
other similar petroleum products levied under Sections 142, 144 and
145 of the National Internal Revenue Code, as amended, and granting
provinces, cities and municipalities certain shares in the specific tax on
such products in lieu of local taxes imposed on petroleum products.
Provincial Circular No. 6-77 dated March 13, 1977 was also issued
directing all city and municipal treasurers to refrain from collecting the
so-called storage fee on flammable or combustible materials imposed
under the local tax ordinance of their respective locality, said fee
partaking of the nature of a strictly revenue measure or service
charge.
After PPC filed its answer, a pre-trial conference was held on August
24, 1988 where the parties thru their respective counsel, after coming
up with certain admissions and stipulations agreed to the submission
of the case for decision based on documentary evidence offered with
their respective comments (Rollo, p. 41).
On March 17, 1987, the trial court rendered a decision against the
petitioner, the dispositive part of which reads as follows:
PPC moved for reconsideration of the decision, but this was denied by
the lower court in a resolution of November 2, 1989, hence, the
instant petition.
The Court resolved to give due course to the petition and required
both parties to submit simultaneous memoranda (June 21, 1990
Resolution; Rollo, p. 305).
The crucial issue in this case is whether or not petitioner PPC whose oil
products are subject to specific tax under the NIRC, is still liable to pay
(a) tax on business and (b) storage fees, considering Provincial
Circular No. 6-77; and mayor's permit and sanitary inspection fee unto
the respondent Municipality of Pililla, Rizal, based on Municipal
Ordinance No. 1.
Petitioner PPC contends that: (a) Provincial Circular No. 2673 declared
as contrary to national economic policy the imposition of local taxes on
the manufacture of petroleum products as they are already subject to
specific tax under the National Internal Revenue Code; (b) the above
declaration covers not only old tax ordinances but new ones, as well as
those which may be enacted in the future; (c) both Provincial Circulars
(PC) 26-73 and 26 A-73 are still effective, hence, unless and until
revoked, any effort on the part of the respondent to collect the
suspended tax on business from the petitioner would be illegal and
unauthorized; and (d) Section 2 of P.D. 436 prohibits the imposition of
local taxes on petroleum products.
PC No. 26-73 and PC No. 26 A-73 suspended the effectivity of local tax
ordinances imposing a tax on business under Section 19 (a) of the
Local Tax Code (P.D. No. 231), with regard to manufacturers, retailers,
wholesalers or dealers in petroleum products subject to the specific tax
under the National Internal Revenue Code NIRC, in view of Section 22
(b) of the Code regarding non-imposition by municipalities of taxes on
articles, subject to specific tax under the provisions of the NIRC.
But P.D. No. 426 amending the Local Tax Code is deemed to have
repealed Provincial Circular Nos. 26-73 and 26 A-73 issued by the
Secretary of Finance when Sections 19 and 19 (a), were carried over
into P.D. No. 426 and no exemptions were given to manufacturers,
wholesalers, retailers, or dealers in petroleum products.
Each local government unit shall have the power to create its
own sources of revenues and to levy taxes, fees, and charges
subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy . . .
Provincial Circular No. 6-77 enjoining all city and municipal treasurers
to refrain from collecting the so-called storage fee on flammable or
combustible materials imposed in the local tax ordinance of their
respective locality frees petitioner PPC from the payment of storage
permit fee.
The storage permit fee being imposed by Pililla's tax ordinance is a fee
for the installation and keeping in storage of any flammable,
combustible or explosive substances. Inasmuch as said storage makes
use of tanks owned not by the municipality of Pililla, but by petitioner
PPC, same is obviously not a charge for any service rendered by the
municipality as what is envisioned in Section 37 of the same Code.
However, since the Local Tax Code does not provide the prescriptive
period for collection of local taxes, Article 1143 of the Civil Code
applies. Said law provides that an action upon an obligation created by
law prescribes within ten (10) years from the time the right of action
accrues. The Municipality of Pililla can therefore enforce the collection
of the tax on business of petitioner PPC due from 1976 to 1986, and
NOT the tax that had accrued prior to 1976.
SO ORDERED.
15. San Miguel Corp. v. Mun. Council of Mandaue, L-30761, July 11,
1973
ANTONIO, J.:
Within the time fixed for the payment of the license taxes
herein imposed, the taxpayers shall prepare and file with
the Municipal Treasurer, a sworn statement of the gross
value in money during the preceding quarter on the basis
of which the tax shall be assessed and collected. ... .
The basic Ordinance was No. 88, 1 which took effect on September 25,
1962, but this was amended by Ordinance No. 23 (January 1, 1967),
and by Ordinance No. 25 (January 1, 1968).
Petitioner contends that (1) the phrase "gross value in money or actual
market value" employed in the questioned ordinance clearly referred
to "sales or market price" of the articles or commodities manufactured
thereby indicating a manifest intent to impose a tax based on sales,
and (2) that to impose a tax upon the privilege of manufacturing beer,
when the amount of the tax is measured by the gross receipts from its
sales of beer, is the same as imposing a tax upon the product itself.
Respondents upon the other hand insist that the tax imposed in the
questioned ordinance (1) is not a percentage tax or a tax on the sales
of beer but is a tax on the privilege to engage in the business of
manufacturing beer, and the phrase "actual market value" was merely
employed as a basis for the classification and graduation of the tax
sought to be imposed; (2) that it is not a specific tax because it is not
a tax on the beer itself, but on the privilege of manufacturing beer;
and (3) that with conversion of Mandaue into a city on June 21, 1969,
the appeal has become moot, because the prohibition against the
imposition of any privilege tax on sales or other taxes in any form
based thereon, is applicable only to municipalities.
Well settled is the rule that in the absence of legislative intent to the
contrary, technical or commercial terms and phrases, when used in tax
statutes, are presumed to have been used in their technical sense or in
their trade or commercial meaning. Thus, the phrase "gross value in
money" has a well-defined meaning in our tax statutes. For instance,
the term "gross value in money" of articles sold, bartered, exchanged
or transferred, as used in Sections 184, 185 and 186 of the National
Internal Revenue Code, has been invariably used as equivalent to
"gross selling price" and has been construed as the total amount of
money or its equivalent which the purchaser pays to the vendor to
receive or get the goods. 4 It must be noted that the ordinance
specifically provides that the basis of the tax is the "gross value in
money or actual market value" of the manufactured article.
The phrase "actual market value" has been construed as the price
which an article "would command in the ordinary course of business,
that is to say, when offered for sale by one willing to sell, but not
under compulsion to sell, and purchased by another who is willing to
buy, but under no obligation purchase it, 5 or the price which the
property will bring in a fair market after fair and reasonable efforts
have been made to find a purchaser who will give the highest price for
it. 6 The "actual market value" of property, for purposes of taxation,
therefore means the selling price of the article in the course of
ordinary business.
MONTEMAYOR, J.:
The trial court held that the manufacture of tin cans by plaintiff
company to be used as containers of its gasoline, kerosene and other
fuel oils is an occupation by itself from which the plaintiff derives
benefit by not buying said tin cans from other persons who would
otherwise manufacture them; and that were the plaintiff exempted
from paying the tax on the cans manufactured and used for the
distribution of its commodity while others engaged in the manufacture
of tin cans are required to pay the tax, then the said tax ceases to be
just and uniform. Plaintiff is now appealing from the decision of the
trial court holding that the municipal ordinance was not only valid but
was also applicable to the plaintiff and that consequently, the amount
of the tax should not be refunded to it.
The case of Smith, Bell & Co. vs. Municipality of Zamboanga reported
in 554 Phil., 466, involved a company engaged in the purchase and
sale of hemp which operated a motor engine used for baling hemp for
shipment. The Municipality of Zamboanga enacted an ordinance
requiring of a license fee of P100 a year for every motor engine used
for baling hemp. The company objected to the payment of the fee
saying that the use of its motor engine was an incident to its business
of purchase and sale hemp. After paying the fee under protest. The
company brought an action to recover the same from the municipality.
This Tribunal affirming the judgment of the lower court which decided
in favor of the company said that a company that has already paid
taxes or impost for the operation of its main business of purchase and
sale of hemp may not be further taxed for it possession and operation
of a motor engine to bale hemp for the reason that the baling of hemp
is connected with, incidental to and part of plaintiff's business,
particularly its sale and shipment of said commodity.
In the case of Craig vs. Ballard & Ballard Co., 196 Sc. 238, it was held
that:
Pablo, Acting C.J., Bengzon, Reyes, A., Bautista Angelo and Labrador,
JJ., concur.
SYLLABUS
DECISION
BARRERA, J.:
"1. That the plaintiff is the owner and proprietor of two bakeries,
namely, the Liberty Bakery and the Panaderia Blumentritt situated at
1401 Sande St., Tondo, Manila, and 312 Pavia St., Tondo, Manila
respectively;
"2. That both bakeries are duly licensed and permitted to operate as
such and for this purpose, the plaintiff has paid the corresponding
municipal license and permit fees;
"3. That in the operation of said bakeries, the plaintiff makes periodic
importation and purchases of flour contained in cloth-bags for which
the plaintiff pays no additional amount apart from the price of the
flour;
"4. That the empty flour bags are not used by the plaintiff as an
ingredient or material in the making of bread and other bakery
products;
"5. That after the consumption of the flour, the empty flour bags left
with the plaintiff were sold by him inside said establishments under
invoices separate from those for the bread and other bakery products
sold thereat;
"6. That the plaintiff sold empty flour bags in his bakery at No. 1401
Sande St., Tondo, Manila during the period from the 2nd quarter of
1952 to the 3rd quarter of 1957, inclusive, and also in his bakery at
No. 312 Pavia St., Tondo, Manila, from the 3rd quarter of 1951 to the
3rd quarter of 1957, inclusive, for which the defendants are
demanding from him payment of the sums of P967.50 and P1,098.75,
respectively, or a total of P2,066.25, as municipal license and permit
fees, including penalties, for doing business as a dealer in second-
hand goods under Ordinances Nos. 2699 and 3000;
"7. That the plaintiff has refused to make payments of the amounts
demanded by defendants on the ground that his acts of disposing of
the empty flour bags do not make him a dealer in second- hand goods
within the purview of said city ordinances;
"8. That on April 28, 1958, the third-party defendant Mutual Security
Insurance Corporation and the plaintiff Ah Nam executed in favor of
the third-party plaintiff two (2) surety bonds, one for P1,098.75 and
the other for P967.50, whereby they bound themselves in each, jointly
and severally, to pay the third-party plaintiff the said amounts,
representing the license and permit fees, including penalties, assessed
and demanded by defendant City Treasurer from the plaintiff for the
latters business of second-hand dealer of empty flour bags, the same
being due upon judgment having been rendered herein holding
plaintiff Ah Nam liable for said municipal license and permit fees,
including penalties, . . .,
x x x
"13. That the amounts of license fees that the plaintiff had to pay in
accordance with Ordinance No. 3364 for operating his two bakeries are
the same, whether or not the sales of empty flour bags were added to
the sales of the bakery products. . . ."cralaw virtua1aw library
"Under said Sec. 752 of Ordinance No. 2699, in order that a person
can be legally required to pay the corresponding license, it should be
made to appear that he is a dealer.A dealer in the popular, and
therefore in the statutory sense of the word is not one who buys to
keep or makes to sell, but one who buys to sell again. (Norries v.
Com., 27 Pa. 494; Com. v. Campbell, 33 Pa. 385; Bouviers Law
Dictionary, p. 775.) This definition has been adopted by the Supreme
Court in the case of City of Manila v. Bugsuk Lumber Co., 53 Off.
Gazette, 6111. Inasmuch as from the stipulation of facts, it clearly
appears that the plaintiff was selling only empty flour bags in his
bakery at No. 1401 Sande, Tondo, Manila, which contained the flour
used by him in connection with his bakery business, plaintiff can not
be considered as a dealer and, therefore, he is not liable to pay a
license under Ordinance No. 2699 as a dealer in second-hand goods. It
has not been shown that the plaintiff has been engaged in the
business of buying and selling of empty flour bags for it is admitted
that the empty flour bags sold by him are limited to those which
contained the flour used by him in his bakery business. Consequently,
the sale of empty flour bags was merely incidental to the business of
bakery in which the plaintiff is principally engaged. . . ."cralaw
virtua1aw library
Neither may appellee be obliged to pay the permit and license fees
required under Ordinance No. 3000 because, as heretofore stated, the
sale of the empty bags is not being carried as a separate or distinct
trade or enterprise, but merely as incident to the bakery business. As
a matter of fact, the sale of the flour bags depends on the volume of
consumption or use by appellees bakery business. Appellee does not
buy empty flour bags, independently of the flour he uses, for the
purpose of re-selling them, nor does he buy flour in order to get the
empty bags for sale, the main reason for the purchase being the utility
of the flour to the bakery business. That after attaining his purpose,
appellee finds some use for the empty bags, is certainly incidental only
to his bakery business. As under the ordinance the fees are imposed
on persons engaged in the trade or business of dealer, and as appellee
is not, in the real sense of the term, engaged in the business of buying
and selling used flour bags, the lower court committed no error in
exempting appellee from payment of the license and permit fees in
connection with the sale of such empty flour bags.
Endnotes:
DECISION
MENDOZA, J.:
Petitioners claim that Ordinance Nos. 119, 125 and 135 are null and
void since they were prepared without the approval and determination
of the Department of Finance is without merit.
....
....
Section 187 of R.A. 7160 provides, that the taxpayer may question the
constitutionality or legality of a tax ordinance on appeal within thirty
(30) days from effectivity thereof, to the Secretary of Justice. The
petitioner after finding that his assessment is unjust, confiscatory, or
excessive, may bring the case before the Secretary of Justice for
questions of legality or constitutionality of the city ordinance.
Under Section 226 of R.A. 7160, an owner of real property who is not
satisfied with the assessment of his property may, within sixty (60)
days from notice of assessment, appeal to the Board of Assessment
Appeals.
SYLLABUS
DECISION
CRUZ, J.:
The case goes back to March 14, 1977, when the Sangguniang Bayan
of Camalaniugan, Cagayan, unanimously adopted Resolution No. 9,
reading pertinently as follows:jgc:chanrobles.com.ph
"WHEREAS, the available funds for the construction of the said project
is far (sic) being adequate to finance its completion;
AGREEMENT
That I also agree to report weekly the total number of palay threshed
by me to the municipal treasurer and turn over the corresponding 1%
share of the municipality for the said project mentioned above.
____________________
Thresher/Owner/Operator
In a joint decision dated March 31, 1982, the trial court 1 upheld the
challenged measure. However, it dismissed the claims for damages of
both parties for lack of evidence.chanroblesvirtuallawlibrary
The petitioners now seek relief from this Court on the grounds
that:chanrob1es virtual 1aw library
x x x
While it would appear from the wording of the resolution that the
municipal government merely intends to "solicit" the 1% contribution
from the threshers, the implementing agreement seems to make the
donation obligatory and a condition precedent to the issuance of the
mayors permit. This goes against the nature of a donation, which is
an act of liberality and is never obligatory. 3
The only issue that has to be resolved in this case is whether or not
the petitioners are liable in damages to the private respondent for
having withheld from him the mayors permit and license because of
his refusal to comply with Resolution No. 9.cralawnad
It has been remarked that one purpose of this article is to end the
"bribery system, where the public official, for some flimsy excuse,
delays or refuses the performance of his duty until he gets some kind
of pabagsak." 7 Official inaction may also be due to plain indolence or
a cynical indifference to the responsibilities of public service. According
to Phil. Match Co. Ltd. v. City of Cebu, 8 the provision presupposes
that the refusal or omission of a public official to perform his official
duty is attributable to malice or inexcusable negligence. In any event,
the erring public functionary is justly punishable under this article for
whatever loss or damage the complainant has sustained.
In the present case, it has not even been alleged that the Mayor
Tuzons refusal to act on the private respondents application was an
attempt to compel him to resort to bribery to obtain approval of his
application. It cannot be said either that the mayor and the municipal
treasurer were motivated by personal spite or were grossly negligent
in refusing to issue the permit and license to Jurado.
The Court is convinced that the petitioners acted within the scope of
their authority and in consonance with their honest interpretation of
the resolution in question. We agree that it was not for them to rule on
its validity. In the absence of a judicial decision declaring it invalid, its
legality would have to be presumed (in fact, both the trial court and
the appellate court said there was nothing wrong with it). As executive
officials of the municipality, they had the duty to enforce it as long as
it had not been repealed by the Sangguniang Bayan or annulled by the
courts. 9
. . . As a rule, a public officer, whether judicial, quasi-judicial or
executive, is not personally liable to one injured in consequence of an
act performed within the scope of his official authority, and in line of
his official duty.chanrobles virtual lawlibrary
SO ORDERED.
20. Coca-Cola Bottlers Phils., Inc. vs. City of Manila (June 27, 2006)
DECISION
CHICO-NAZARIO, J.:
After a judicious scrutiny of the records of this case, in the light of the
pertinent provisions of the Local Government Code of 1991, this
Department finds for the petitioner.
Upon the other hand, the Rules and Regulations Implementing the
Local Government Code of 1991, insofar as pertinent, mandates:
It is clear from the above-quoted provisions of R.A. No. 7160 and its
implementing rules that the requirement of publication is MANDATORY
and leaves no choice. The use of the word "shall" in both provisions is
imperative, operating to impose a duty that may be enforced (Soco v.
Militante, 123 SCRA 160, 167; Modern Coach Corp. v. Faver 173 SE 2d
497, 499).
Its essence is simply to inform the people and the entities who may
likely be affected, of the existence of the tax measure. It bears
emphasis, that, strict observance of the said procedural requirement is
the only safeguard against any unjust and unreasonable exercise of
the taxing powers by ensuring that the taxpayers are notified through
publication of the existence of the measure, and are therefore able to
voice out their views or objections to the said measure. For, after all,
taxes are obligatory exactions or enforced contributions corollary to
taking of property.
xxxx
xxxx
The City of Manila failed to file a Motion for Reconsideration nor lodge
an appeal of said Resolution, thus, said Resolution of the DOJ
Secretary declaring Tax Ordinance No. 7988 null and void has lapsed
into finality.
xxxx
Be guided accordingly.6
Despite the Resolution of the DOJ declaring Tax Ordinance No. 7988
null and void and the directive of the BLGF that respondents cease and
desist from enforcing said tax ordinance, respondents continued to
assess petitioner business tax for the year 2001 based on the tax rates
prescribed under Tax Ordinance No. 7988. Thus, petitioner filed a
Complaint with the RTC of Manila, Branch 21, on 17 January 2001,
praying that respondents be enjoined from implementing the
aforementioned tax ordinance.
On 28 November 2001, the RTC of Manila, Branch 21, rendered a
Decision in favor of petitioner, the decretal portion of which states:
The defendants did not follow the procedure in the enactment of Tax
Ordinance No. 7988. The Court agrees with plaintiffs contention that
the ordinance should first be published for three (3) consecutive days
in a newspaper of local circulation aside from the posting of the same
in at least four (4) conspicuous public places.
xxxx
During the pendency of the said case, the City Mayor of Manila
approved on 22 February 2001 Tax Ordinance No. 8011 entitled, "An
Ordinance Amending Certain Sections of Ordinance No. 7988." Said
tax ordinance was again challenged by petitioner before the DOJ
through a Petition questioning the legality of the aforementioned tax
ordinance on the grounds that (1) said tax ordinance amends a tax
ordinance previously declared null and void and without legal effect by
the DOJ; and (2) said tax ordinance was likewise not published upon
its approval in accordance with Section 188 of the Local Government
Code of 1991.
It bears stress, at the outset, that the subject ordinance was passed
and approved by the respondents principally to amend Ordinance No.
7988 which was earlier nullified by this Department in its Resolution
Dated August 17, 2000, also at the instance of the herein petitioner. x
xx
xxxx
x x x [T]he only logical conclusion, therefore, is that Ordinance No.
8011, subject herein, is also null and void, it being a mere amendatory
ordinance of Ordinance No. 7988 which, as earlier stated, had been
nullified by this Department. An invalid or unconstitutional law or
ordinance does not, in legal contemplation, exist (Manila Motors Co.,
Inc. vs. Flores, 99 Phil. 738). Where a statute which has been
amended is invalid, nothing, in effect, has been amended. As held in
People vs. Lim, 108 Phil. 1091:
xxxx
The City of Manila appealed the DOJ Resolution, dated 12 March 2002,
denying its Motion for Reconsideration of the Resolution nullifying Tax
Ordinance No. 8011 before the RTC of Manila, Branch 17, but the
same was dismissed for lack of jurisdiction in an Order, dated 2
December 2002. According to the trial court:
The case at bar revolves around the sole pivotal issue of whether or
not Tax Ordinance No. 7988 is null and void and of no legal effect.
However, respondents, in their Comment and Memorandum, raise the
procedural issue of whether or not the instant Petition has complied
with the requirements of the 1997 Rules on Civil Procedure; thus, the
Court resolves to first pass upon this issue before tackling the
substantial matters involved in this case.
Respondents also point out that the Petition was not properly verified
and certified because Nelson Empalmado, the Vice President for Tax
and Financial Services of Coca-Cola Bottlers Philippines, Inc. who
verified the subject Petition was not duly authorized to file said
Petition. Respondents assert that nowhere in the attached Secretarys
Certificate can it be found the authority of Nelson Empalmado to
institute the instant Petition. Thus, there being a lack of proper
verification, respondents contend that the Petition must be treated as
a mere scrap of paper, which has no legal effect as declared in Section
4, Rule 7 of the 1997 Rules of Civil Procedure.
It is undisputed from the facts of the case that Tax Ordinance No.
7988 has already been declared by the DOJ Secretary, in its Order,
dated 17 August 2000, as null and void and without legal effect due to
respondents failure to satisfy the requirement that said ordinance be
published for three consecutive days as required by law. Neither is
there quibbling on the fact that the said Order of the DOJ was never
appealed by the City of Manila, thus, it had attained finality after the
lapse of the period to appeal.
Despite the nullity of Tax Ordinance No. 7988, the court a quo, in the
assailed Order, dated 8 May 2002, went on to dismiss petitioners case
on the force of the enactment of Tax Ordinance No. 8011, amending
Tax Ordinance No. 7988. Significantly, said amending ordinance was
likewise declared null and void by the DOJ Secretary in a Resolution,
dated 5 July 2001, elucidating that "[I]nstead of amending Ordinance
No. 7988, [herein] respondent should have enacted another tax
measure which strictly complies with the requirements of law, both
procedural and substantive. The passage of the assailed ordinance did
not have the effect of curing the defects of Ordinance No. 7988 which,
any way, does not legally exist." Said Resolution of the DOJ Secretary
had, as well, attained finality by virtue of the dismissal with finality by
this Court of respondents Petition for Review on Certiorari in G.R. No.
157490 assailing the dismissal by the RTC of Manila, Branch 17, of its
appeal due to lack of jurisdiction in its Order, dated 11 August 2003.
Based on the foregoing, this Court must reverse the Order of the RTC
of Manila, Branch 21, dismissing petitioners case as there is no basis
in law for such dismissal. The amending law, having been declared as
null and void, in legal contemplation, therefore, does not exist.
Furthermore, even if Tax Ordinance No. 8011 was not declared null
and void, the trial court should not have dismissed the case on the
reason that said tax ordinance had already amended Tax Ordinance
No. 7988. As held by this Court in the case of People v. Lim,12 if an
order or law sought to be amended is invalid, then it does not legally
exist, there should be no occasion or need to amend it.13
SO ORDERED.
21. Reyes, et. al. v. CA, G.R. No. 118233, Dec. 10, 1999
[G.R. No. 118233. December 10, 1999]
RESOLUTION
QUISUMBING, J.:
CRUZ, J.:
In the exercise of this jurisdiction, lower courts are advised to act with
the utmost circumspection, bearing in mind the consequences of a
declaration of unconstitutionality upon the stability of laws, no less
than on the doctrine of separation of powers. As the questioned act is
usually the handiwork of the legislative or the executive departments,
or both, it will be prudent for such courts, if only out of a becoming
modesty, to defer to the higher judgment of this Court in the
consideration of its validity, which is better determined after a
thorough deliberation by a collegiate body and with the concurrence of
the majority of those who participated in its discussion. 5
In the case before us, Judge Rodolfo C. Palattao declared Section 187
of the Local Government Code unconstitutional insofar as it
empowered the Secretary of Justice to review tax ordinances and,
inferentially, to annul them. He cited the familiar distinction between
control and supervision, the first being "the power of an officer to alter
or modify or set aside what a subordinate officer had done in the
performance of his duties and to substitute the judgment of the former
for the latter," while the second is "the power of a superior officer to
see to it that lower officers perform their functions in accordance with
law." 6 His conclusion was that the challenged section gave to the
Secretary the power of control and not of supervision only as vested
by the Constitution in the President of the Philippines. This was, in his
view, a violation not only of Article X, specifically Section 4
thereof, 7 and of Section 5 on the taxing powers of local
governments, 8 and the policy of local autonomy in general.
We do not share that view. The lower court was rather hasty in
invalidating the provision.
An officer in control lays down the rules in the doing of an act. If they
are not followed, he may, in his discretion, order the act undone or re-
done by his subordinate or he may even decide to do it himself.
Supervision does not cover such authority. The supervisor or
superintendent merely sees to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion
to modify or replace them. If the rules are not observed, he may order
the work done or re-done but only to conform to the prescribed rules.
He may not prescribe his own manner for the doing of the act. He has
no judgment on this matter except to see to it that the rules are
followed. In the opinion of the Court, Secretary Drilon did precisely
this, and no more nor less than this, and so performed an act not of
control but of mere supervision.
To get to the bottom of this question, the Court acceded to the motion
of the respondents and called for the elevation to it of the said
exhibits. We have carefully examined every one of these exhibits and
agree with the trial court that the procedural requirements have
indeed been observed. Notices of the public hearings were sent to
interested parties as evidenced by Exhibits G-1 to 17. The minutes of
the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits B
and C show that the proposed ordinances were published in
the Balita and the Manila Standard on April 21 and 25, 1993,
respectively, and the approved ordinance was published in the July 3,
4, 5, 1993 issues of the Manila Standard and in the July 6, 1993 issue
of Balita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.
The only exceptions are the posting of the ordinance as approved but
this omission does not affect its validity, considering that its
publication in three successive issues of a newspaper of general
circulation will satisfy due process. It has also not been shown that the
text of the ordinance has been translated and disseminated, but this
requirement applies to the approval of local development plans and
public investment programs of the local government unit and not to
tax ordinances.
SO ORDERED.
Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr.,
Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and
Mendoza, JJ., concur.
DECISION
PUNO, J.:
III
The first and second assigned errors impugn the dismissal by the
Court of Appeals of its petition for review for petitioners failure to
attach certified true copies of the assailed Resolutions of the Secretary
of Justice. The petitioner insists that it had good reasons for its failure
to comply with the rule and the Court of Appeals erred in refusing to
accept its explanation.
We agree.
In its Motion for Reconsideration before the Court of Appeals,[8] the
petitioner satisfactorily explained the circumstances relative to its
failure to attach to its appeal certified true copies of the assailed
Resolutions of the Secretary of Justice, thus:
To avoid being time-barred in the filing of the (p)etition, the same was
filed with the Court of Appeals as is.
24. California Mfg. Co., Inc. v. City of Las Pias, CTA AC No. 4, Sept.
28, 2005
CALIFORNIA MANUFACTURING G.R. No. 178461
COMPANY, INC.,
Petitioner,
Present:
YNARES-SANTIAGO, J.,
- versus - Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
THE CITY OF LAS PIAS and the HON.
RIZAL Y. DEL ROSARIO, Promulgated:
CITY TREASURER,
Respondents. June 22, 2009
x---------------------------------------------------------------------------------
---x
RESOLUTION
NACHURA, J.:
NOW, THEREFORE:
(Signed)
HON. HENRY C. MEDINA
Vice-Mayor & Presiding Officer
ATTESTED:
(Signed)
ATTY. JERRY A. TANCHUAN
Sangguniang Secretary
APPROVED:
(Signed)
HON. VERGEL A. AGUILAR
City Mayor
SO ORDERED.
25. Palma Development Corp. vs. Zamboanga Del Sur (Oct. 16, 2003)
DECISION
PANGANIBAN, J.:
The Case
The Facts
3. Trucks P10.00
xxxxxxxxx
2. Bangus/Kilo 0.30
xxxxxxxxx
Issues
xxxxxxxxx
e) Taxes, fees and charges and other impositions upon goods carried
into and out of, or passing through, the territorial jurisdictions of local
government units in the guise of charges for wharfage, tolls for bridges
or otherwise, or other taxes, fees or charges in any form whatsoever
upon such goods or merchandise;
On the other hand, respondent maintains that the subject fees are
intended for services rendered, the use of municipal roads and police
surveillance. The fees are supposedly not covered by the prohibited
impositions under Section 133(e) of RA No. 7160.[8] It further
contends that it was empowered by the express mandate of Sections
153 and 155 of RA No. 7160 to enact Section 5G.01 of the
ordinance. The pertinent provisions of this statute read as follows:
Section 153. Service Fees and Charges. -- Local government units may
impose and collect such reasonable fees and charges for services
rendered.
xxxxxxxxx
Respondent claims that there is no proof that the P0.50 fee for
every sack of rice or corn is a fraudulent legislation enacted to subvert
the limitation imposed by Section 133(e) of RA No. 7160. Moreover, it
argues that allowing petitioner to use its roads without paying
the P0.50 fee for every sack of rice or corn would contravene the
principle of unjust enrichment.
By express language of Sections 153 and 155 of RA No. 7160, local
government units, through their Sanggunian, may prescribe the terms
and conditions for the imposition of toll fees or charges for the use of
any public road, pier or wharf funded and constructed by them. A
service fee imposed on vehicles using municipal roads leading to the
wharf is thus valid. However, Section 133(e) of RA No. 7160 prohibits
the imposition, in the guise of wharfage, of fees -- as well as all other
taxes or charges in any form whatsoever -- on goods or
merchandise. It is therefore irrelevant if the fees imposed are actually
for police surveillance on the goods, because any other form of
imposition on goods passing through the territorial jurisdiction of the
municipality is clearly prohibited by Section 133(e).
Under Section 131(y) of RA No. 7160, wharfage is defined as a fee
assessed against the cargo of a vessel engaged in foreign or domestic
trade based on quantity, weight, or measure received and/or
discharged by vessel. It is apparent that a wharfage does not lose its
basic character by being labeled as a service fee for police surveillance
on all goods.
Unpersuasive is the contention of respondent that petitioner would
unjustly be enriched at the formers expense. Though the rules thereon
apply equally well to the government,[9]for unjust enrichment to be
deemed present, two conditions must generally concur: (a) a person is
unjustly benefited, and (b) such benefit is derived at anothers expense
or damage.[10]
In the instant case, the benefits from the use of the municipal
roads and the wharf were not unjustly derived by petitioner. Those
benefits resulted from the infrastructure that the municipality was
mandated by law to provide.[11] There is no unjust enrichment where
the one receiving the benefit has a legal right or entitlement thereto,
or when there is no causal relation between ones enrichment and the
others impoverishment.[12]
Second Issue:
Remand of the Case
Petitioner asserts that the remand of the case to the trial court for
further reception of evidence is unnecessary, because the facts are
undisputed by both parties. It has already been clearly established,
without need for further evidence, that petitioner transports rice and
corn on board trucks that pass through the municipal roads leading to
the wharf. Under protest, it paid the service fees, a fact that
respondent has readily admitted without qualification.
Respondent, on the other hand, is silent on the issue of the
remand of the case to the trial court. The former merely defends the
validity of the ordinance, arguing neither for nor against the remand.
We rule against the remand. Not only is it frowned upon by the
Rules of Court;[13]it is also unnecessary on the basis of the facts
established by the admissions of the parties.Besides, the fact sought
to be established with the reception of additional evidence is irrelevant
to the due settlement of the case.
The pertinent portion of the assailed CA Decision reads:
To be stressed is the fact that local government units now have the
following common revenue raising powers under the Local Government
Code:
Section 153. Service Fees and Charges. -- Local government units may
impose and collect such reasonable fees and charges for services
rendered.
xxxxxxxxx
26. Jardine Davies Insurance Brokers vs. Aliposa (February 27, 2003)
DECISION
CALLEJO, SR., J.:
(3) The imposition of the franchise tax is not within the scope of the
taxing powers of the Municipality of Makati (Sections 134, 137 and 142
of Republic Act No. 7160 and Articles 223, 226 and 231 of Rule XXX of
the Implementing Rules and Regulations of the Local Government
Code of 1991). and
(a) declaring null and void the DOJ Decision dated July 5, 1993; and
Anent the first assignment of errors, petitioner avers that its action
in the RTC was one for a refund of its overpayments governed by
Article 196 of the Local Government Code implemented by Article 286
of the Implementing Rules and Regulations of the Code and not one
involving an assessment for deficiency taxes governed by Section 195
of the said Code. Petitioner contends that it was not mandated to first
file a protest with respondents before instituting its action for a refund
of its overpayments or for it to be credited for said overpayments. For
its part, respondent Makati avers that petitioner was proscribed from
filing its complaint with the RTC and for a refund of its alleged
overpayment, petitioner having paid without any protest the taxes due
to respondent Makati under the ordinance. It is further asserted by
respondent Makati that until declared null and void by a competent
court, the ordinance was valid and should be enforced.
The petition has no merit.
The Court agrees with petitioner that as a general precept, a
taxpayer may file a complaint assailing the validity of the ordinance
and praying for a refund of its perceived overpayments without first
filing a protest to the payment of taxes due under the ordinance. This
was our ruling in Ty v. Judge Trampe:[13]
Clearly, the law requires that the dissatisfied taxpayer who questions
the validity or legality of a tax ordinance must file his appeal to the
Secretary of Justice, within 30 days from effectivity thereof. In case
the Secretary decides the appeal, a period also of 30 days is allowed
for an aggrieved party to go to court. But if the Secretary does not act
thereon, after the lapse of 60 days, a party could already proceed to
seek relief in court. These three separate periods are clearly given for
compliance as a prerequisite before seeking redress in a competent
court. Such statutory periods are set to prevent delays as well as
enhance the orderly and speedy discharge of judicial functions. For this
reason the courts construe these provisions of statutes as mandatory.
x-------------------------------------------
-------x
DECISION
The Facts
On June 25, 1997, for failure to obtain any response from the
Quezon City Treasurer, ABS-CBN filed a complaint before
the RTC in Quezon City seeking the declaration of nullity of the
imposition of local franchise tax by the City Government of Quezon
City for being unconstitutional. It likewise prayed for the refund of
local franchise tax in the amount of Nineteen Million Nine Hundred
Forty-Four Thousand Six Hundred Seventy-Two and 66/100 centavos
(P19,944,672.66) broken down as follows:
Quezon City argued that the in lieu of all taxes provision in R.A.
No. 9766 could not have been intended to prevail over a constitutional
mandate which ensures the viability and self-sufficiency of local
government units. Further, that taxes collectible by and payable to the
local government were distinct from taxes collectible by and payable to
the national government, considering that the Constitution specifically
declared that the taxes imposed by local government units shall accrue
exclusively to the local governments. Lastly, the City contended that
the exemption claimed by ABS-CBN under R.A. No. 7966 was
withdrawn by Congress when the Local Government Code (LGC) was
passed.[8] Section 193 of the LGC provides:
Quezon City insisted that the claim for refund must fail because of the
absence of a prior written claim for it.
SO ORDERED.[9]
In its decision, the RTC ruled that the in lieu of all taxes provision
contained in Section 8 of R.A. No. 7966 absolutely excused ABS-
CBN from the payment of local franchise tax imposed under Quezon
City Ordinance No. SP-91, S-93. The intent of the legislature to
excuse ABS-CBN from payment of local franchise tax could be
discerned from the usage of the in lieu of all taxes provision and from
the absence of any qualification except income taxes. Had Congress
intended to exclude taxes imposed from the exemption, it would have
expressly mentioned so in a fashion similar to the proviso on income
taxes.
The RTC also based its ruling on the 1990 case of Province of Misamis
Oriental v. Cagayan Electric Power and Light Company, Inc.
(CEPALCO).[10] In said case, the exemption of respondent electric
company CEPALCO from payment of provincial franchise tax was
upheld on the ground that the franchise of CEPALCO was a special law,
while the Local Tax Code, on which the provincial ordinance imposing
the local franchise tax was based, was a general law. Further, it was
held that whenever there is a conflict between two laws, one special
and particular and the other general, the special law must be taken as
intended to constitute an exception to the general act.
The City of Quezon and its Treasurer filed a motion for reconsideration
which was subsequently denied by the RTC. Thus, appeal was made to
the CA. On September 1, 2004, the CA dismissed the petition
of Quezon City and its Treasurer. According to the appellate court, the
issues raised were purely legal questions cognizable only by the
Supreme Court. The CA ratiocinated:
xxxx
The first issue has earlier been categorized
in Province of Misamis Oriental v. Cagayan Electric and
Power Co., Inc. to be a legal one. There is no more
argument to this.
Issues
I.
Whether or not the phrase in lieu of all taxes indicated in
the franchise of the respondent appellee (Section 8 of RA
7966) serves to exempt it from the payment of the local
franchise tax imposed by the petitioners-appellants.
II.
Whether or not the petitioners-appellants raised factual
and legal issues before the Honorable Court of Appeals.[14]
Our Ruling
xxxx
The rates of taxes that the city may levy may exceed
the maximum rates allowed for the province or
municipality by not more than fifty percent (50%) except
the rates of professional and amusement taxes. (Emphasis
supplied)
In the case under review, the Philippine Congress enacted R.A. No.
7966 on March 30, 1995, subsequent to the effectivity of the LGC
on January 1, 1992. Under it,ABS-CBN was granted the franchise to
install and operate radio and television broadcasting stations in
the Philippines. Likewise, Section 8 imposed on ABS-CBN the duty of
paying 3% franchise tax. It bears stressing, however, that payment of
the percentage franchise tax shall be in lieu of all taxes on the said
franchise.[24]
Congress has the inherent power to tax, which includes the power to
grant tax exemptions. On the other hand, the power of Quezon City to
tax is prescribed by Section 151 in relation to Section 137 of the LGC
which expressly provides that notwithstanding any exemption granted
by any law or other special law, the City may impose a franchise
tax. It must be noted that Section 137 of the LGC does not prohibit
grant of future exemptions. As earlier discussed, this Court in City
Government of Quezon City v. Bayan Telecommunications,
Inc.[25] sustained the power of Congress to grant tax exemptions over
and above the power of the local governments delegated power to tax.
Taxes are what civilized people pay for civilized society. They are
the lifeblood of the nation. Thus, statutes granting tax exemptions are
construed stricissimi juris against the taxpayer and liberally in favor of
the taxing authority. A claim of tax exemption must be clearly shown
and based on language in law too plain to be mistaken. Otherwise
stated, taxation is the rule, exemption is the exception.[26] The burden
of proof rests upon the party claiming the exemption to prove that it is
in fact covered by the exemption so claimed.[27]
ABS-CBN cites the cases Carcar Electric & Ice Plant v. Collector
of Internal Revenue,[30] Manila Railroad v. Rafferty,[31] Philippine
Railway Co. v. Collector of Internal Revenue,[32] and Visayan Electric
Co. v. David[33] to support its claim that that the in lieu of all taxes
clause includes exemption from all taxes.
However, a review of the foregoing case law reveals that the
grantees respective franchises expressly exempt them from municipal
and provincial taxes. Said the Court in Manila Railroad v. Rafferty:[34]
In its decision dated January 20, 1999, the RTC held that
pursuant to the in lieu of all taxes provision contained in Section 8 of
R.A. No. 7966, ABS-CBN is exempt from the payment of the local
franchise tax. The RTC further pronounced that ABS-CBN shall instead
be liable to pay a franchise tax of 3% of all gross receipts in lieu of all
other taxes.
On this score, the RTC ruling is flawed. In keeping with the laws
that have been passed since the grant of ABS-CBNs franchise, the
corporation should now be subject to VAT, instead of the 3% franchise
tax.
On the other hand, radio and/or television companies with yearly gross
receipts exceeding P10,000,000.00 were subject to 10% VAT,
pursuant to Section 102 of the NIRC.
On January 1, 1998, R.A. No. 8424[39] was passed confirming the 10%
VAT liability of radio and/or television companies with yearly gross
receipts exceedingP10,000,000.00.
R.A. No. 9337 was subsequently enacted and became effective on July
1, 2005. The said law further amended the NIRC by increasing the rate
of VAT to 12%. The effectivity of the imposition of the 12% VAT was
later moved from January 1, 2006 to February 1, 2006.
The clause in lieu of all taxes does not pertain to VAT or any
other tax. It cannot apply when what is paid is a tax other than a
franchise tax. Since the franchise tax on the broadcasting companies
with yearly gross receipts exceeding ten million pesos has been
abolished, the in lieu of all taxes clause has now become functus
officio, rendered inoperative.
SO ORDERED.
28. Smart Communications, Inc. vs. The City of Davao (September 16,
2008; MR on July 21, 2009)
SMART COMMUNICATIONS, INC., G.R. No. 155491
Petitioner,
Present:
YNARES-SANTIAGO, J.,
- versus - Chairperson,
CHICO-NAZARIO,
NACHURA,
LEONARDO-DE CASTRO,* and
BERSAMIN,** JJ.
THE CITY OF DAVAO,
represented herein by its
Mayor Hon. RODRIGO DUTERTE,
and the SANGGUNIANG Promulgated:
PANLUNSOD OF DAVAO CITY,
Respondents . July 21, 2009
x---------------------------------------------------------------------------------
---x
RESOLUTION
NACHURA, J.:
On February 18, 2002, Smart filed a special civil action for declaratory
relief[3] for the ascertainment of its rights and obligations under the
Tax Code of the City ofDavao, which imposes a franchise tax on
businesses enjoying a franchise within the territorial jurisdiction
of Davao. Smart avers that its telecenter in Davao City is exempt from
payment of franchise tax to the City.
On July 19, 2002, the RTC rendered a Decision denying the petition.
Smart filed a motion for reconsideration, which was denied by the trial
court in an Order dated September 26, 2002. Smart filed an appeal
before this Court, but the same was denied in a decision dated
September 16, 2008. Hence, the instant motion for reconsideration
raising the following grounds: (1) the in lieu of all taxes clause in
Smarts franchise, Republic Act No. 7294 (RA 7294), covers local
taxes; the rule of strict construction against tax exemptions is not
applicable; (2) the in lieu of all taxes clause is not rendered ineffective
by the Expanded VAT Law; (3) Section 23 of Republic Act No.
7925[4] (RA 7925) includes a tax exemption; and (4) the imposition of
a local franchise tax on Smart would violate the constitutional
prohibition against impairment of the obligation of contracts.
xxx[5]
In ruling against the claim of PLDT, the Court cited the previous
decisions in PLDT v. City of Davao[12] and PLDT v. City of
Bacolod,[13] in denying the claim for exemption from the payment of
local franchise tax.
Republic Act No. 7716, otherwise known as the Expanded VAT Law, did
not remove or abolish the payment of local franchise tax. It merely
replaced the national franchise tax that was previously paid by
telecommunications franchise holders and in its stead imposed a ten
percent (10%) VAT in accordance with Section 108 of the Tax Code.
VAT replaced the national franchise tax, but it did not prohibit nor
abolish the imposition of local franchise tax by cities or municipaties.
The power to tax by local government units emanates from
Section 5, Article X of the Constitution which empowers them to create
their own sources of revenues and to levy taxes, fees and charges
subject to such guidelines and limitations as the Congress may
provide. The imposition of local franchise tax is not inconsistent with
the advent of the VAT, which renders functus officio the franchise tax
paid to the national government. VAT inures to the benefit of the
national government, while a local franchise tax is a revenue of the
local government unit.
WHEREFORE, the motion for reconsideration is DENIED, and
this denial is final.
SO ORDERED.
29. First Philippine Industrial Corp. vs. CTA (December 29, 1998)
DECISION
MARTINEZ, J.:
xxxxxxxxx
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. x
x x[18]
x----------------------------------------------------------------------------x
DECISION
TINGA, J.:
II.
xxx
Notably, the Malabon RTC declared Art. 232(h) of the IRR void
because the Code purportedly does not contain a provision prohibiting
the imposition of business taxes on petroleum products.[13] This
submission warrants close examination as well.
With all the relevant provisions of law laid out, we address the core
issues submitted by Petron, namely: first, is the challenged tax on sale
of the diesel fuels an excise tax on an article enumerated under the
NIRC, thusly prohibited under Section 133(h) of the Code?; second, is
the challenged tax prohibited by Section 133(h) under theproviso,
taxes, fees or charges on petroleum products? and; third, does Art.
232(h) of the IRR similarly prohibit the imposition of the challenged
tax?
III
IV.
Section 133(h) states that local government units shall not extend to
the levy of xxx taxes, fees or charges on petroleum products.
Respondents assert that the phrase taxes, fees or charges on
petroleum products pertains to the imposition of direct or excise taxes
on petroleum products, and not business taxes. If the phrase actually
pertains to excise taxes, then it would be an exercise in utter
redundancy, since the preceding phrase already prohibits the
imposition of excise taxes on articles already subject to such taxes
under the NIRC, such as petroleum products. There would be no sense
on the part of the legislature to twice emphasize in the same sentence
that excise taxes on petroleum products are beyond the pale of local
government taxation.
The dicta that [a] tax on a business is distinct from a tax on the article
itself might at first blush somehow lend support to respondents
position, yet that dicta has not since been reprised by this Court. It is
likewise worth observing that Pililla did involve a tax ordinance that
imposed business taxes on an enterprise engaged in the manufacture
and storage of petroleum products.
The language of Section 133(h) makes plain that the prohibition with
respect to petroleum products extends not only to excise taxes
thereon, but all taxes, fees and charges. The earlier reference in
paragraph (h) to excise taxes comprehends a wider range of subjects
of taxation: all articles already covered by excise taxation under the
NIRC, such as alcohol products, tobacco products, mineral products,
automobiles, and such non-essential goods as jewelry, goods made of
precious metals, perfumes, and yachts and other vessels intended for
pleasure or sports. In contrast, the later reference to taxes, fees and
charges pertains only to one class of articles of the many subjects of
excise taxes, specifically, petroleum products. While local government
units are authorized to burden all such other class of goods with taxes,
fees and charges, excepting excise taxes, a specific prohibition is
imposed barring the levying of any other type of taxes with respect to
petroleum products.
V.
Assuming that the Code does not, in fact, prohibit the imposition
of business taxes on petroleum products, we would agree that the IRR
could not impose such a prohibition. With our ruling that Section
133(h) does indeed prohibit the imposition of local business taxes on
petroleum products, however, the RTC declaration that Article 232 was
invalid is, in turn, itself invalid. Even absent Article 232, local
government units cannot impose business taxes on petroleum
products. If anything, Article 232 merely reiterates what the Code
itself already provides, with the additional explanation that such
prohibition was in line with existing national policy.
VI.
We have said all that need be said for the resolution of this case, but
there is one more line of argument raised by respondents that
deserves a remark. Respondents argue, assuming... that the Oversight
Committee [that drafted the IRR] can legislate, that the existing
national policy referred to in Article 232 had been superseded by
Republic Act No. 8180, or the Oil Deregulation Law. Boiled down to its
essence, the argument is that since the oil industry is presently
deregulated the basis for exempting petroleum products from business
taxes no longer exists.
Of course, the starting premise for this argument, that the IRR can
establish a tax or an exemption, is false and has been flatly rejected
by this Court before.[52] The Code itself does not connect its prohibition
on taxation of petroleum products with any existing or future national
oil policy, so the change in such national policy with the regime of oil
deregulation is ultimately of no moment. Still, we can divine the
reasoning behind singling out petroleum products, among all other
commodities, as beyond the power of local government units to levy
local taxes.
Why the special concern over petroleum products? The answer is quite
evident to all sentient persons. In this age where unfortunately
dependence on petroleum as fuel has yet no equally feasible
alternative, the cost of petroleum products, though fully controlled by
private enterprise, remains an area of public concern. To be blunt
about it, there is an inevitable link between the fluctuation of oil prices
and the prices of every other commodity. The reality, indeed, is oil is a
political commodity. Such fact has received recognition from this
Court. [O]il [is] a commodity whose supply and price affect the ebb
and flow of the lifeblood of the nation. Its shortage of supply or a
slight, upward spiral in its price shakes our economic
foundation. Studies show that the areas most impacted by the
movement of oil are food manufacture, land transport, trade,
electricity and water.[53] [T]he upswing and downswing of our
economy materially depend on the oscillation of oil.[54] Fluctuations in
the supply and price of oil products have a dramatic effect on
economic development and public welfare.[55]
SO ORDERED.
31. Pelizloy Realty Corp. vs. Province of Benguet (April 10, 2013)
DECISION
LEONEN, J.:
A tax of ten percent (10%) of gross receipts from admission fees for
boxing, resorts, swimming pools, bath houses, hot springs, and tourist
spots is likewise levied. [Emphasis and underscoring supplied]
Section 162 of the Tax Ordinance provided that the Tax Ordinance
shall take effect on January 1, 2006.
The appeal/petition was filed within the thirty (30)-day period from the
effectivity of a tax ordinance allowed by Section 187 of Republic Act
No. 7160, otherwise known as the Local Government Code (LGC).1 The
appeal/petition was docketed as MSO-OSJ Case No. 03-2006.
Under Section 187 of the LGC, the Secretary of Justice has sixty (60)
days from receipt of the appeal to render a decision. After the lapse of
which, the aggrieved party may file appropriate proceedings with a
court of competent jurisdiction.
xxx
The Province of Benguet assailed the Petition for Declaratory Relief and
Injunction as an improper remedy. It alleged that once a tax liability
has attached, the only remedy of a taxpayer is to pay the tax and to
sue for recovery after exhausting administrative remedies.2
Section 131. Definition of Terms. - When used in this Title, the term:
xxx
Aggrieved, Pelizloy filed the present petition on June 10, 2008 on pure
questions of law. It assailed the legality of Section 59, Article X of the
Tax Ordinance as being a (supposedly) prohibited percentage tax per
Section 133 (i) of the LGC.
Section 5. Each local government unit shall have the power to create
its own sources of revenues and to levy taxes, fees and charges
subject to such guidelines and limitations as the Congress may
provide, consistent with the basic policy of local autonomy. Such
taxes, fees, and charges shall accrue exclusively to the local
governments. [Underscoring supplied]
Second, Section 133 provides for the common limitations on the taxing
powers of LGUs. Specifically, Section 133 (i) prohibits the levy by LGUs
of percentage or value-added tax (VAT) on sales, barters or exchanges
or similar transactions on goods or services except as otherwise
provided by the LGC.
Thus, applying the definition in CIR v. Citytrust and drawing from the
treatment of amusement taxes by the NIRC, amusement taxes are
percentage taxes as correctly argued by Pelizloy.
The purpose and rationale of the principle was explained by the Court
in National Power Corporation v. Angas18as follows:
In the present case, the Court need not embark on a laborious effort
at statutory construction. Section 131 (c) of the LGC already provides
a clear definition of amusement places:
Section 131. Definition of Terms. - When used in this Title, the term:
xxx
Thus, resorts, swimming pools, bath houses, hot springs and tourist
spots do not belong to the same category or class as theaters,
cinemas, concert halls, circuses, and boxing stadia. It follows that they
cannot be considered as among the other places of amusement
contemplated by Section 140 of the LGC and which may properly be
subject to amusement taxes.
In this case, the definition of' amusement places' in Section 131 (c) of
the LGC is a clear basis for determining what constitutes the 'other
places of amusement' which may properly be subject to amusement
tax impositions by provinces. There is no reason for going beyond such
basis. To do otherwise would be to countenance an arbitrary
interpretation/application of a tax law and to inflict an injustice on
unassuming taxpayers.
SO ORDERED.