CITY OF MANILA, et. al. v. HON.
ANGEL VALERA construed strictly against the LGU enacting it
COLET, et. al.
G.R. No. 120051, G.R. No. 121613, G.R. No.
121675, G.R. No. 121704, G.R.
Nos. 121720-28, G.R. Nos. 121847-55, G.R. No.
122333, G.R. No. 122335, G.R.
No. 122349, G.R. No. 124855,
December 10, 2014, EN BANC, (Leonardo- De
Castro, J.)
The omnibus grant of power to municipalities
and cities under Section 143(h) of the LGC
cannot overcome the specific
exception/exemption in Section 133(j) of the
same Code.
The Manila Revenue Code was enacted by the
City Council of Manila.
Section 21(B) of said Code stated that, a tax of
three percent (3%) per annum on the gross
sales or receipts of the preceding calendar year
is hereby imposed on the gross receipts of
keepers of garages, cars for rent or hire driven
by the lessee, transportation contractors,
persons who transport passenger or freight for
hire, and common carriers by land, air or water,
except owners of bancas and owners of animal-
drawn two-wheel vehicle. Shortly thereafter,
Ordinance No. 7807 was enacted by the City
Council of Manila which imposed a lower tax
rate on the businesses from THREE PERCENT 3%
to a tax of FIFTY PERCENT (50%) of ONE
PERCENT (1%) per annum.
Various businesses that were covered by the
ordinance assailed the constitutionality of the
ordinance. They claim that one of the common
limitations on the power to tax of LGUs is
Section 133(j) of the Local Government Code
which states that the taxing powers of the LGUs
shall not extend to the transportation business.
It was further claimed that in case of any doubt,
any tax ordinance or revenue measure shall be
and liberally in favor of the taxpayer, for taxes,
being burdens, are not to be presumed beyond
what the applicable statute expressly and
clearly declares.
The City of Manila contended that it is
irrelevant which of Sections 133(j) and 143(h) of
the LGC is the special or general provision since
there is an exempting clause in Section 133,
that is, Unless otherwise provided herein,
which means that even if the businesses
enumerated therein are exempted from the
levy of local tax, if there is a provision to the
contrary, such as Section 143(h), the
Sanggunian concerned could still impose the
local tax. To rule otherwise and adopt the
construction put forward by the opposing
parties would render Section 143(h) of the LGC
a hollow provision.
ISSUE:
Is the tax imposed by the ordinance valid?
RULING:
No. Among the common limitations on the
taxing power of LGUs is
Section 133(j) of the LGC, which states that
unless otherwise provided herein, the
UST Law Review, Vol. LIX, No. 1, May 2015
taxing power of LGUs shall not extend to taxes
on the gross receipts of transportation
contractors and persons engaged in the
transportation of passengers or freight by hire
and common carriers by air, land or water,
except as provided in this Code. Section 133(j)
of the LGC clearly and unambiguously
proscribes LGUs from imposing any tax on the
gross receipts of transportation contractors,
persons engaged in the transportation of
passengers or freight by hire, and common
carriers by air, land, or water. Yet, confusion
arose from the phrase unless otherwise
provided herein, found at the beginning of the
said provision.
In contrast, Section 143 of the LGC defines the
general power of the municipality (as well as
the city, if read in relation to Section 151 of the
same Code) to tax businesses within its
jurisdiction. The omnibus grant of power to
municipalities and cities under Section 143(h) of
the LGC cannot overcome the specific
exception/exemption in Section 133(j) of the
same Code. This is in accord with the rule on
statutory construction that specific provisions
must prevail over general ones.
In the case at bar, the sanggunian of the
municipality or city cannot enact an ordinance
imposing business tax on the gross receipts of
transportation contractors, persons engaged in
the transportation of passengers or freight by
hire, and common carriers by air, land, or
water, when said sanggunian was already
specifically prohibited from doing so. Any
exception to the express prohibition under
Section 133(j) of the LGC should be just as
specific and unambiguous. Section 5(b) of the
LGC itself states that in case of doubt, any tax
ordinance or revenue measure shall be
construed strictly against the local government
unit enacting it, and liberally in favor of the
taxpayer.
ABAKADA Guro Party List vs. Ermita
G.R. No. 168056 September 1, 2005
FACTS:
Before R.A. No. 9337 took effect, petitioners
ABAKADA GURO Party List, et al., filed a petition
for prohibition on May 27, 2005 questioning the
constitutionality of Sections 4, 5 and 6 of R.A.
No. 9337, amending Sections 106, 107 and 108,
respectively, of the National Internal Revenue
Code (NIRC). Section 4 imposes a 10% VAT on
sale of goods and properties, Section 5 imposes
a 10% VAT on importation of goods, and Section
6 imposes a 10% VAT on sale of services and use
or lease of properties. These questioned
provisions contain a uniformp ro v is o
authorizing the President, upon
recommendation of the Secretary of Finance, to
raise the VAT rate to 12%, effective January 1,
2006, after specified conditions have been
satisfied. Petitioners argue that the law is
unconstitutional.
ISSUES:
1. Whether or not there is a violation of Article
VI, Section 24 of the Constitution.
2. Whether or not there is undue delegation of
legislative power in violation of Article VI Sec
28(2) of the Constitution.
3. Whether or not there is a violation of the due
process and equal protection under Article III
Sec. 1 of the Constitution.
RULING:
1. Since there is no question that the revenue
bill exclusively originated in the House of
Representatives, the Senate was acting within
its constitutional power to introduce
amendments to the House bill when it included
provisions in Senate Bill No. 1950 amending
corporate income taxes, percentage, and excise
and franchise taxes.
2. There is no undue delegation of legislative
power but only of the discretion as to the
execution of a law. This is constitutionally
permissible. Congress does not abdicate its
functions or unduly delegate power when it
describes what job must be done, who must do
it, and what is the scope of his authority; in our
complex economy that is frequently the only
way in which the legislative process can go
forward.
3. The power of the State to make reasonable
and natural classifications for the purposes of
taxation has long been established. Whether it
relates to the subject of taxation, the kind of
property, the rates to be levied, or the amounts
to be raised, the methods of assessment,
valuation and collection, the States power is
entitled to presumption of validity. As a rule,
the judiciary will not interfere with such power
absent a clear showing of unreasonableness,
discrimination, or arbitrariness.
Apostolic Prefect of Mt. Province vs Treasurer
of Baguio
71 phil. 547 Political Law Exemption From
Taxation Assessment
In 1937, an ordinance (Ordinance No. 137:
Special Assessment List, City of Baguio) was
passed in the City of Baguio. The said ordinance
sought to assess properties of property owners
within the defined city limits. The Apostolic
Prefect of Mt. Province (APMP), on the other
hand, is a religious corporation duly established
under Philippine laws. Pursuant to the
ordinance, it paid a total amount of P1,019.37
in protest. APMP later averred that it should be
exempt from the said special contribution since
as a religious institution, it has a constitutionally
guaranteed right not to be taxed including its
properties.
ISSUE: Whether or not APMP is exempt from
taxes.
HELD: No. In the first place, the ordinance was
in the nature of an assessment and not a
taxation.
The test of exemption from taxation is the use
of the property for purposes mentioned in the
Constitution. Based on Justice Cooleys words:
While the word tax in its broad meaning,
includes both general taxes and special
assessments, and in a general sense a tax is an
assessment, and an assessment is a tax, yet
there is a recognized distinction between them
in that assessment is confined to local
impositions upon property for the payment of
the cost of public improvements in its
immediate vicinity and levied with reference to
special benefits to the property assessed. The
differences between a special assessment and a
tax are that (1) a special assessment can be
levied only on land; (2) a special assessment
cannot (at least in most states) be made a
personal liability of the person assessed; (3) a
special assessment is based wholly on benefits;
and (4) a special assessment is exceptional both
as to time and locality. The imposition of a
charge on all property, real and personal, in a
prescribed area, is a tax and not an assessment,
although the purpose is to make a local
improvement on a street or highway. A charge
imposed only on property owners benefited is a
special assessment rather than a tax
notwithstanding the statute calls it a tax.
In the case at bar, the Prefect cannot claim
exemption because the assessment is not
taxation per se but rather a system for the
benefits of the inhabitants of the city.
PHILIPPINE AIRLINES, INC. v. EDU
G.R. No. L- 41383, August 15, 1988
FACTS:
The Philippine Airlines (PAL) is a corporation
engaged in the air transportation business
under a legislative franchise, Act No. 42739.
Under its franchise, PAL is exempt from the
payment of taxes.
Sometime in 1971, however, Land
Transportation Commissioner Romeo F. Elevate
(Elevate) issued a regulation pursuant to
Section 8, Republic Act 4136, otherwise known
as the Land and Transportation and Traffic
Code, requiring all tax exempt entities, among
them PAL to pay motor vehicle registration fees.
Despite PAL's protestations, Elevate refused to
register PAL's motor vehicles unless the
amounts imposed under Republic Act 4136
were paid. PAL thus paid, under protest,
registration fees of its motor vehicles. After
paying under protest, PAL through counsel,
wrote a letter dated May 19,1971, to Land
Transportation Commissioner Romeo Edu (Edu)
demanding a refund of the amounts paid. Edu
denied the request for refund. Hence, PAL filed
a complaint against Edu and National Treasurer
Ubaldo Carbonell (Carbonell).
The trial court dismissed PAL's complaint. PAL
appealed to the Court of Appeals which in turn
certified the case to the Supreme Court.
ISSUE:
Whether or not motor vehicle
registration fees are considered as taxes.
RULING:
Yes. If the purpose is primarily revenue, or if
revenue is, at least, one of the real and
substantial purposes, then the exaction is
properly called a tax. Such is the case of motor
vehicle registration fees. The motor vehicle
registration fees are actually taxes intended for
additional revenues of the government even if
one fifth or less of the amount collected is set
aside for the operating expenses of the agency
administering the program.
G.R. No. 204429 February 18, 2014
SMART COMMUNICATIONS, INC., Petitioner,
vs.
MUNICIPALITY OF MALVAR, BATANGAS,
Respondent.
DECISION
CARPIO, J.:
The Case
This petition for review1 challenges the 26 June
2012 Decision2 and 13 November 2012
Resolution3 of the Court of Tax. Appeals (CTA)
En Banc.
Th e CTA En Banc affirmed the 17 December
2010 Decision4 and 7 April 2011 Resolution5 of
the CTA First Division, which in turn affirmed
the 2 December 2008 Decision6 and 21 May
2009 Order7 of the Regional Trial Court of
Tanauan City, Batangas, Branch 6. The trial
court declared void the assessment imposed by
respondent Municipality of Malvar, Batangas
against petitioner Smart Communications, Inc.
for its telecommunications tower for 2001 to
July 2003 and directed respondent to assess
petitioner only for the period starting 1 October
2003.
The Facts
Petitioner Smart Communications, Inc. (Smart)
is a domestic corporation engaged in the
business of providing telecommunications
services to the general public while respondent
Municipality of Malvar, Batangas (Municipality)
is a local government unit created by law.
In the course of its business, Smart constructed
a telecommunications tower within the
territorial jurisdiction of the Municipality. The
construction of the tower was for the purpose
of receiving and transmitting cellular
communications within the covered area.
On 30 July 2003, the Municipality passed
Ordinance No. 18, series of 2003, entitled "An
Ordinance Regulating the Establishment of
Special Projects."
On 24 August 2004, Smart received from the
Permit and Licensing Division of the Office of
the Mayor of the Municipality an assessment
letter with a schedule of payment for the total
amount of P389,950.00 for Smarts
telecommunications tower. The letter reads as
follows:
This is to formally submit to your good office
your schedule of payments in the Municipal
Treasury of the Local Government Unit of
Malvar, province of Batangas which
corresponds to the tower of your company built
in the premises of the municipality, to wit:
TOTAL PROJECT COST: PHP 11,000,000.00
For the Year 2001-2003
50% of 1% of the total project cost
Php55,000.00
Add: 45% surcharge 24,750.00
Php79,750.00
Multiply by 3 yrs. (2001, 2002, 2003)
Php239,250.00
For the year 2004
1% of the total project cost Php110,000.00
37% surcharge 40,700.00
==========
Php150,700.00
TOTAL Php389,950.00
Hoping that you will give this matter your
preferential attention.8
Due to the alleged arrears in the payment of the
assessment, the Municipality also caused the
posting of a closure notice on the
telecommunications tower.
On 9 September 2004, Smart filed a protest,
claiming lack of due process in the issuance of
the assessment and closure notice. In the same
protest, Smart challenged the validity of
Ordinance No. 18 on which the assessment was
based.
In a letter dated 28 September 2004, the
Municipality denied Smarts protest.
On 17 November 2004, Smart filed with
Regional Trial Court of Tanauan City, Batangas,
Branch 6, an "Appeal/Petition" assailing the
validity of Ordinance No. 18. The case was
docketed as SP Civil Case No. 04-11-1920.
On 2 December 2008, the trial court rendered a
Decision partly granting Smarts
Appeal/Petition. The trial court confined its
resolution of the case to the validity of the
assessment, and did not rule on the legality of
Ordinance No. 18. The trial court held that the
assessment covering the period from 2001 to
July 2003 was void since Ordinance No. 18 was
approved only on 30 July 2003. However, the
trial court declared valid the assessment
starting 1 October 2003, citing Article 4 of the
Civil Code of the Philippines,9 in relation to the
provisions of Ordinance No. 18 and Section 166
of Republic Act No. 7160 or the Local
Government Code of 1991 (LGC).10 The
dispositive portion of the trial courts Decision
reads:
WHEREFORE, in light of the foregoing, the
Petition is partly GRANTED. The assessment
dated August 24, 2004 against petitioner is
hereby declared null and void insofar as the
assessment made from year 2001 to July 2003
and respondent is hereby prohibited from
assessing and collecting, from petitioner, fees
during the said period and the Municipal
Government of Malvar, Batangas is directed to
assess Smart Communications, Inc. only for the
period starting October 1, 2003.
No costs.
SO ORDERED.11
The trial court denied the motion for
reconsideration in its Order of 21 May 2009.
On 8 July 2009, Smart filed a petition for review
with the CTA First Division, docketed as CTA AC
No. 58.
On 17 December 2010, the CTA First Division
denied the petition for review. The dispositive
portion of the decision reads:
WHEREFORE, the Petition for Review is hereby
DENIED, for lack of merit. Accordingly, the
assailed Decision dated December 2, 2008 and
the Order dated May 21, 2009 of Branch 6 of
the Regional Trial Court of Tanauan City,
Batangas in SP. Civil Case No. 04-11-1920
entitled "Smart Communications, Inc. vs.
Municipality of Malvar, Batangas" are
AFFIRMED.
SO ORDERED.12
On 7 April 2011, the CTA First Division issued a
Resolution denying the motion for
reconsideration.
Smart filed a petition for review with the CTA En
Banc, which affirmed the CTA First Divisions
decision and resolution. The dispositive portion
of the CTA En Bancs 26 June 2012 decision
reads:
WHEREFORE, premises considered, the present
Petition for Review is hereby DISMISSED for lack
of merit.1wphi1
Accordingly, the assailed Decision dated
December 17, 2010 and Resolution dated April
7, 2011 are hereby AFFIRMED.
SO ORDERED.13
The CTA En Banc denied the motion for
reconsideration.
Hence, this petition.
The Ruling of the CTA En Banc
The CTA En Banc dismissed the petition on the
ground of lack of jurisdiction. The CTA En Banc
declared that it is a court of special jurisdiction
and as such, it can take cognizance only of such
matters as are clearly within its jurisdiction.
Citing Section 7(a), paragraph 3, of Republic Act
No. 9282, the CTA En Banc held that the CTA
has exclusive appellate jurisdiction to review on
appeal, decisions, orders or resolutions of the
Regional Trial Courts in local tax cases originally
resolved by them in the exercise of their
original or appellate jurisdiction. However, the
same provision does not confer on the CTA
jurisdiction to resolve cases where the
constitutionality of a law or rule is challenged.
The Issues
The petition raises the following arguments:
1. The [CTA En Banc Decision and Resolution]
should be reversed and set aside for being
contrary to law and jurisprudence considering
that the CTA En Banc should have exercised its
jurisdiction and declared the Ordinance as
illegal.
2. The [CTA En Banc Decision and Resolution]
should be reversed and set aside for being
contrary to law and jurisprudence considering
that the doctrine of exhaustion of
administrative remedies does not apply in [this
case].
3. The [CTA En Banc Decision and Resolution]
should be reversed and set aside for being
contrary to law and jurisprudence considering
that the respondent has no authority to impose
the so-called "fees" on the basis of the void
ordinance.14
The Ruling of the Court
The Court denies the petition.
On whether the CTA has jurisdiction over the
present case
Smart contends that the CTA erred in dismissing
the case for lack of jurisdiction. Smart maintains
that the CTA has jurisdiction over the present
case considering the "unique" factual
circumstances involved.
The CTA refuses to take cognizance of this case
since it challenges the constitutionality of
Ordinance No. 18, which is outside the province
of the CTA.
Jurisdiction is conferred by law. Republic Act
No. 1125, as amended by Republic Act No.
9282, created the Court of Tax Appeals. Section
7, paragraph (a), sub-paragraph (3)15 of the law
vests the CTA with the exclusive appellate
jurisdiction over "decisions, orders or
resolutions of the Regional Trial Courts in local
tax cases originally decided or resolved by them
in the exercise of their original or appellate
jurisdiction."
The question now is whether the trial court
resolved a local tax case in order to fall within
the ambit of the CTAs appellate jurisdiction
This question, in turn, depends ultimately on
whether the fees imposed under Ordinance No.
18 are in fact taxes.
Smart argues that the "fees" in Ordinance No.
18 are actually taxes since they are not
regulatory, but revenue-raising. Citing
Philippine Airlines, Inc. v. Edu,16 Smart
contends that the designation of "fees" in
Ordinance No. 18 is not controlling.
The Court finds that the fees imposed under
Ordinance No. 18 are not taxes.
Section 5, Article X of the 1987 Constitution
provides that "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
government."
Consistent with this constitutional mandate, the
LGC grants the taxing powers to each local
government unit. Specifically, Section 142 of
the LGC grants municipalities the power to levy
taxes, fees, and charges not otherwise levied by
provinces. Section 143 of the LGC provides for
the scale of taxes on business that may be
imposed by municipalities17 while Section
14718 of the same law provides for the fees and
charges that may be imposed by municipalities
on business and occupation.
The LGC defines the term "charges" as referring
to pecuniary liability, as rents or fees against
persons or property, while the term "fee"
means "a charge fixed by law or ordinance for
the regulation or inspection of a business or
activity."19
In this case, the Municipality issued Ordinance
No. 18, which is entitled "An Ordinance
Regulating the Establishment of Special
Projects," to regulate the "placing, stringing,
attaching, installing, repair and construction of
all gas mains, electric, telegraph and telephone
wires, conduits, meters and other apparatus,
and provide for the correction, condemnation
or removal of the same when found to be
dangerous, defective or otherwise hazardous to
the welfare of the inhabitant[s]."20 It was also
envisioned to address the foreseen
"environmental depredation" to be brought
about by these "special projects" to the
Municipality.21 Pursuant to these objectives,
the Municipality imposed fees on various
structures, which included telecommunications
towers.
As clearly stated in its whereas clauses, the
primary purpose of Ordinance No. 18 is to
regulate the "placing, stringing, attaching,
installing, repair and construction of all gas
mains, electric, telegraph and telephone wires,
conduits, meters and other apparatus" listed
therein, which included Smarts
telecommunications tower. Clearly, the purpose
of the assailed Ordinance is to regulate the
enumerated activities particularly related to the
construction and maintenance of various
structures. The fees in Ordinance No. 18 are not
impositions on the building or structure itself;
rather, they are impositions on the activity
subject of government regulation, such as the
installation and construction of the
structures.22
Since the main purpose of Ordinance No. 18 is
to regulate certain construction activities of the
identified special projects, which included "cell
sites" or telecommunications towers, the fees
imposed in Ordinance No. 18 are primarily
regulatory in nature, and not primarily revenue-
raising. While the fees may contribute to the
revenues of the Municipality, this effect is
merely incidental. Thus, the fees imposed in
Ordinance No. 18 are not taxes.
In Progressive Development Corporation v.
Quezon City,23 the Court declared that "if the
generating of revenue is the primary purpose
and regulation is merely incidental, the
imposition is a tax; but if regulation is the
primary purpose, the fact that incidentally
revenue is also obtained does not make the
imposition a tax."
In Victorias Milling Co., Inc. v. Municipality of
Victorias,24 the Court reiterated that the
purpose and effect of the imposition determine
whether it is a tax or a fee, and that the lack of
any standards for such imposition gives the
presumption that the same is a tax.
We accordingly say that the designation given
by the municipal authorities does not decide
whether the imposition is properly a license tax
or a license fee. The determining factors are the
purpose and effect of the imposition as may be
apparent from the provisions of the ordinance.
Thus, "[w]hen no police inspection, supervision,
or regulation is provided, nor any standard set
for the applicant to establish, or that he agrees
to attain or maintain, but any and all persons
engaged in the business designated, without
qualification or hindrance, may come, and a
license on payment of the stipulated sum will
issue, to do business, subject to no prescribed
rule of conduct and under no guardian eye, but
according to the unrestrained judgment or
fancy of the applicant and licensee, the
presumption is strong that the power of
taxation, and not the police power, is being
exercised."
Contrary to Smarts contention, Ordinance No.
18 expressly provides for the standards which
Smart must satisfy prior to the issuance of the
specified permits, clearly indicating that the
fees are regulatory in nature.
These requirements are as follows:
SECTION 5. Requirements and Procedures in
Securing Preliminary Development Permit.
The following documents shall be submitted to
the SB Secretary in triplicate:
a) zoning clearance
b) Vicinity Map
c) Site Plan
d) Evidence of ownership
e) Certificate true copy of NTC Provisional
Authority in case of Cellsites, telephone or
telegraph line, ERB in case of gasoline station,
power plant, and other concerned national
agencies
f) Conversion order from DAR is located within
agricultural zone.
g) Radiation Protection Evaluation.
h) Written consent from subdivision association
or the residence of the area concerned if the
special projects is located within the residential
zone.
i) Barangay Council Resolution endorsing the
special projects.
SECTION 6. Requirement for Final Development
Permit Upon the expiration of 180 days and
the proponents of special projects shall apply
for final [development permit] and they are
require[d] to submit the following:
a) evaluation from the committee where the
Vice Mayor refers the special project
b) Certification that all local fees have been
paid.
Considering that the fees in Ordinance No. 18
are not in the nature of local taxes, and Smart is
questioning the constitutionality of the
ordinance, the CTA correctly dismissed the
petition for lack of jurisdiction. Likewise, Section
187 of the LGC,25 which outlines the procedure
for questioning the constitutionality of a tax
ordinance, is inapplicable, rendering
unnecessary the resolution of the issue on non-
exhaustion of administrative remedies.
On whether the imposition of the fees in
Ordinance No. 18 is ultra vire Smart argues that
the Municipality exceeded its power to impose
taxes and fees as provided in Book II, Title One,
Chapter 2, Article II of the LGC. Smart maintains
that the mayors permit fees in Ordinance No.
18 (equivalent to 1% of the project cost) are not
among those expressly enumerated in the LGC.
As discussed, the fees in Ordinance No.18 are
not taxes. Logically, the imposition does not
appear in the enumeration of taxes under
Section 143 of the LGC.
Moreover, even if the fees do not appear in
Section 143 or any other provision in the LGC,
the Municipality is empowered to impose taxes,
fees and charges, not specifically enumerated in
the LGC or taxed under the Tax Code or other
applicable law. Section 186 of the LGC, granting
local government units wide latitude in
imposing fees, expressly provides:
Section 186. Power To Levy Other Taxes, Fees
or Charges. - Local government units may
exercise the power to levy taxes, fees or
charges on any base or subject not otherwise
specifically enumerated herein or taxed under
the provisions of the National Internal Revenue
Code, as amended, or other applicable laws:
Provided, That the taxes, fees, or charges shall
not be unjust, excessive, oppressive,
confiscatory or contrary to declared national
policy: Provided, further, That the ordinance
levying such taxes, fees or charges shall not be
enacted without any prior public hearing
conducted for the purpose.
Smart further argues that the Municipality is
encroaching on the regulatory powers of the
National Telecommunications Commission
(NTC). Smart cites Section 5(g) of Republic Act
No. 7925 which provides that the National
Telecommunications Commission (NTC), in the
exercise of its regulatory powers, shall impose
such fees and charges as may be necessary to
cover reasonable costs and expenses for the
regulation and supervision of the operations of
telecommunications entities. Thus, Smart
alleges that the regulation of
telecommunications entities and all aspects of
its operations is specifically lodged by law on
the NTC.
To repeat, Ordinance No. 18 aims to regulate
the "placing, stringing, attaching, installing,
repair and construction of all gas mains,
electric, telegraph and telephone wires,
conduits, meters and other apparatus" within
the Municipality. The fees are not imposed to
regulate the administrative, technical, financial,
or marketing operations of telecommunications
entities, such as Smarts; rather, to regulate the
installation and maintenance of physical
structures Smarts cell sites or
telecommunications tower. The regulation of
the installation and maintenance of such
physical structures is an exercise of the police
power of the Municipality. Clearly, the
Municipality does not encroach on NTCs
regulatory powers.
The Court likewise rejects Smarts contention
that the power to fix the fees for the issuance of
development permits and locational clearances
is exercised by the Housing and Land Use
Regulatory Board (HLURB). Suffice it to state
that the HLURB itself recognizes the local
government units power to collect fees related
to land use and development. Significantly, the
HLURB issued locational guidelines governing
telecommunications infrastructure.1wphi1
Guideline No. VI relates to the collection of
locational clearance fees either by the HLURB or
the concerned local government unit, to wit:
VI. Fees
The Housing and Land Use Regulatory Board in
the performance of its functions shall collect
the locational clearance fee based on the
revised schedule of fees under the special use
project as per Resolution No. 622, series of
1998 or by the concerned LGUs subject to EO
72.26
On whether Ordinance No. 18 is valid and
constitutional
Smart contends that Ordinance No. 18 violates
Sections 130(b)(3)27 and 186 of the LGC since
the fees are unjust, excessive, oppressive and
confiscatory. Aside from this bare allegation,
Smart did not present any evidence
substantiating its claims. In Victorias Milling Co.,
Inc. v. Municipality of Victorias,28 the Court
rejected the argument that the fees imposed by
respondent therein are excessive for lack of
evidence supporting such claim, to wit:
An ordinance carries with it the presumption of
validity. The question of reasonableness though
is open to judicial inquiry. Much should be left
thus to the discretion of municipal authorities.
Courts will go slow in writing off an ordinance
as unreasonable unless the amount is so
excessive as to be prohibitive, arbitrary,
unreasonable, oppressive, or confiscatory. A
rule which has gained acceptance is that factors
relevant to such an inquiry are the municipal
conditions as a whole and the nature of the
business made subject to imposition.
Plaintiff, has however not sufficiently proven
that, taking these factors together, the license
taxes are unreasonable. The presumption of
validity subsists. For, plaintiff has limited itself
to insisting that the amounts levied exceed the
cost of regulation and the municipality has
adequate funds for the alleged purposes as
evidenced by the municipalitys cash surplus for
the fiscal year ending 1956.
On the constitutionality issue, Smart merely
pleaded for the declaration of
unconstitutionality of Ordinance No. 18 in the
Prayer of the Petition, without any argument or
evidence to support its plea. Nowhere in the
body of the Petition was this issue specifically
raised and discussed. Significantly, Smart failed
to cite any constitutional provision allegedly
violated by respondent when it issued
Ordinance No. 18.
Settled is the rule that every law, in this case an
ordinance, is presumed valid. To strike down a
law as unconstitutional, Smart has the burden
to prove a clear and unequivocal breach of the
Constitution, which Smart miserably failed to
do. In Lawyers Against Monopoly and Poverty
(LAMP) v. Secretary of Budget and
Management,29 the Court held, thus:
To justify the nullification of the law or its
implementation, there must be a clear and
unequivocal, not a doubtful, breach of the
Constitution. In case of doubt in the sufficiency
of proof establishing unconstitutionality, the
Court must sustain legislation because "to
invalidate [a law] based on xx x baseless
supposition is an affront to the wisdom not only
of the legislature that passed it but also of the
executive which approved it." This presumption
of constitutionality can be overcome only by
the clearest showing that there was indeed an
infraction of the Constitution, and only when
such a conclusion is reached by the required
majority may the Court pronounce, in the
discharge of the duty it cannot escape, that the
challenged act must be struck down.
WHEREFORE, the Court DENIES the petition.
MELECIO R. DOMINGO, as Commissioner of
Internal Revenue, petitioner,
vs.
HON. LORENZO C. GARLITOS, in his capacity as
Judge of the Court of First Instance of Leyte,
and SIMEONA K. PRICE, as Administratrix of
the Intestate Estate of the late Walter Scott
Price, respondents.
Office of the Solicitor General and Atty. G. H.
Mantolino for petitioner.
Benedicto and Martinez for respondents.
LABRADOR, J.:
This is a petition for certiorari and mandamus
against the Judge of the Court of First Instance
of Leyte, Ron. Lorenzo C. Garlitos, presiding,
seeking to annul certain orders of the court and
for an order in this Court directing the
respondent court below to execute the
judgment in favor of the Government against
the estate of Walter Scott Price for internal
revenue taxes.
It appears that in Melecio R. Domingo vs. Hon.
Judge S. C. Moscoso, G.R. No. L-14674, January
30, 1960, this Court declared as final and
executory the order for the payment by the
estate of the estate and inheritance taxes,
charges and penalties, amounting to
P40,058.55, issued by the Court of First Instance
of Leyte in, special proceedings No. 14 entitled
"In the matter of the Intestate Estate of the
Late Walter Scott Price." In order to enforce the
claims against the estate the fiscal presented a
petition dated June 21, 1961, to the court
below for the execution of the judgment. The
petition was, however, denied by the court
which held that the execution is not justifiable
as the Government is indebted to the estate
under administration in the amount of
P262,200. The orders of the court below dated
August 20, 1960 and September 28, 1960,
respectively, are as follows:
Atty. Benedicto submitted a copy of the
contract between Mrs. Simeona K. Price,
Administratrix of the estate of her late husband
Walter Scott Price and Director Zoilo Castrillo of
the Bureau of Lands dated September 19, 1956
and acknowledged before Notary Public
Salvador V. Esguerra, legal adviser in
Malacaang to Executive Secretary De Leon
dated December 14, 1956, the note of His
Excellency, Pres. Carlos P. Garcia, to Director
Castrillo dated August 2, 1958, directing the
latter to pay to Mrs. Price the sum
ofP368,140.00, and an extract of page 765 of
Republic Act No. 2700 appropriating the sum of
P262.200.00 for the payment to the Leyte
Cadastral Survey, Inc., represented by the
administratrix Simeona K. Price, as directed in
the above note of the President. Considering
these facts, the Court orders that the payment
of inheritance taxes in the sum of P40,058.55
due the Collector of Internal Revenue as
ordered paid by this Court on July 5, 1960 in
accordance with the order of the Supreme
Court promulgated July 30, 1960 in G.R. No. L-
14674, be deducted from the amount of
P262,200.00 due and payable to the
Administratrix Simeona K. Price, in this estate,
the balance to be paid by the Government to
her without further delay. (Order of August 20,
1960)
The Court has nothing further to add to its
order dated August 20, 1960 and it orders that
the payment of the claim of the Collector of
Internal Revenue be deferred until the
Government shall have paid its accounts to the
administratrix herein amounting to
P262,200.00. It may not be amiss to repeat that
it is only fair for the Government, as a debtor,
to its accounts to its citizens-creditors before it
can insist in the prompt payment of the latter's
account to it, specially taking into consideration
that the amount due to the Government draws
interests while the credit due to the present
state does not accrue any interest. (Order of
September 28, 1960)
The petition to set aside the above orders of the
court below and for the execution of the claim
of the Government against the estate must be
denied for lack of merit. The ordinary procedure
by which to settle claims of indebtedness
against the estate of a deceased person, as an
inheritance tax, is for the claimant to present a
claim before the probate court so that said
court may order the administrator to pay the
amount thereof. To such effect is the decision
of this Court in Aldamiz vs. Judge of the Court of
First Instance of Mindoro, G.R. No. L-2360, Dec.
29, 1949, thus:
. . . a writ of execution is not the proper
procedure allowed by the Rules of Court for the
payment of debts and expenses of
administration. The proper procedure is for the
court to order the sale of personal estate or the
sale or mortgage of real property of the
deceased and all debts or expenses of
administrator and with the written notice to all
the heirs legatees and devisees residing in the
Philippines, according to Rule 89, section 3, and
Rule 90, section 2. And when sale or mortgage
of real estate is to be made, the regulations
contained in Rule 90, section 7, should be
complied with.1wph1.t
Execution may issue only where the devisees,
legatees or heirs have entered into possession
of their respective portions in the estate prior
to settlement and payment of the debts and
expenses of administration and it is later
ascertained that there are such debts and
expenses to be paid, in which case "the court
having jurisdiction of the estate may, by order
for that purpose, after hearing, settle the
amount of their several liabilities, and order
how much and in what manner each person
shall contribute, and may issue execution if
circumstances require" (Rule 89, section 6; see
also Rule 74, Section 4; Emphasis supplied.) And
this is not the instant case.
The legal basis for such a procedure is the fact
that in the testate or intestate proceedings to
settle the estate of a deceased person, the
properties belonging to the estate are under
the jurisdiction of the court and such
jurisdiction continues until said properties have
been distributed among the heirs entitled
thereto. During the pendency of the
proceedings all the estate is in custodia legis
and the proper procedure is not to allow the
sheriff, in case of the court judgment, to seize
the properties but to ask the court for an order
to require the administrator to pay the amount
due from the estate and required to be paid.
Another ground for denying the petition of the
provincial fiscal is the fact that the court having
jurisdiction of the estate had found that the
claim of the estate against the Government has
been recognized and an amount of P262,200
has already been appropriated for the purpose
by a corresponding law (Rep. Act No. 2700).
Under the above circumstances, both the claim
of the Government for inheritance taxes and
the claim of the intestate for services rendered
have already become overdue and demandable
is well as fully liquidated. Compensation,
therefore, takes place by operation of law, in
accordance with the provisions of Articles 1279
and 1290 of the Civil Code, and both debts are
extinguished to the concurrent amount, thus:
ART. 1200. When all the requisites mentioned
in article 1279 are present, compensation takes
effect by operation of law, and extinguished
both debts to the concurrent amount,
eventhough the creditors and debtors are not
aware of the compensation.
It is clear, therefore, that the petitioner has no
clear right to execute the judgment for taxes
against the estate of the deceased Walter Scott
Price. Furthermore, the petition for certiorari
and mandamus is not the proper remedy for
the petitioner. Appeal is the remedy.
The petition is, therefore, dismissed, without
costs.
COMMISSIONER OF IR VS CENTRAL LUZON
DRUG CORP
GR 148512 June 26, 2006
Azcuna, J.:
FACTS:
This is a petition for review under Rule 45 of
Rules of Court seeking the nullification of CA
decision granting respondents claim for tax
equal to the amount of the 20% that it
extended to senior citizens on the latters
purchases pursuant to Senior Citizens Act.
Respondent deducted the total amount of
Php219,778 from its gross income for the
taxable year 1995 whereby respondent did not
pay tax for that year reporting a net loss of
Php20,963 in its corporate income tax. In 1996,
claiming that the Php219,778 should be applied
as a tax credit, respondent claimed for refund in
the amount of Php150, 193.
ISSUE:
Whether or not the 20% discount granted by
the respondent to qualified senior citizens may
be claimed as tax credit or as deduction from
gross sales?
RULING:
Tax credit is explicitly provided for in Sec4 of
RA 7432. The discount given to Senior citizens is
a tax credit, not a deduction from the gross
sales of the establishment concerned. The tax
credit that is contemplated under this Act is a
form of just compensation, not a remedy for
taxes that were erroneously or illegally assessed
and collected. In the same vein, prior payment
of any tax liability is a pre-condition before a
taxable entity can benefit from tax credit. The
credit may be availed of upon payment, if any.
Where there is no tax liability or where a
private establishment reports a net loss for the
period, the tax credit can be availed of and
carried over to the next taxable year.