CITY OF IRIGA V CASURECO III claim any exemption from the payment of local taxes, including the subject
any exemption from the payment of local taxes, including the subject franchise
FACTS: CASURECO III is an electric cooperative duly organized and existing by virtue of
Presidential Decree (PD) 269,4 as amended, and registered with the National
Electrification Administration (NEA). It is engaged in the business of electric power
distribution to various end-users and consumers within the City of Iriga and the
municipalities of Nabua, Bato, Baao, Buhi, Bula and Balatan of the Province of
Camarines Sur, otherwise known as the "Rinconada area."5
Sometime in 2003, petitioner City of Iriga required CASURECO III to submit a report of its
gross receipts for the period 1997-2002 to serve as the basis for the computation of
franchise taxes, fees and other charges.6 The latter complied7 and was subsequently
assessed taxes.
On January 7, 2004, petitioner made a final demand on CASURECO III to pay the
franchise taxes due for the period 1998-2003 and real property taxes due for the period
1995-2003.8 CASURECO III, however, refused to pay said taxes on the ground that it is an
electric cooperative provisionally registered with the Cooperative Development
Authority (CDA),9 and therefore exempt from the payment of local taxes.10
ISSUE: Whether or not CASURECO is correct
HELD: No
RATIO: CASURECO III is not exempt from payment of franchise tax
PD 269, which took effect on August 6, 1973, granted electric cooperatives registered
with the NEA, like CASURECO III, several tax privileges, one of which is exemption from
the payment of "all national government, local government and municipal taxes and
fees, including franchise, filing, recordation, license or permit fees or taxes."22
On March 10, 1990, Congress enacted into law RA 6938,23 otherwise known as the
"Cooperative Code of the Philippines," and RA 693924 creating the CDA. The latter law
vested the power to register cooperatives solely on the CDA, while the former provides
that electric cooperatives registered with the NEA under PD 269 which opt not to
register with the CDA shall not be entitled to the benefits and privileges under the said
law.
On January 1, 1992, the LGC took effect, and Section 193 thereof withdrew tax
exemptions or incentives previously enjoyed by "all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts,
cooperatives duly registered under R.A. No. 6938, non-stock and non-profit hospitals
and educational institutions."25
Therefore, CASURECO III can no longer invoke PD 269 to evade payment of local taxes.
Moreover, its provisional registration with the CDA which granted it exemption for the
payment of local taxes was extended only until May 4, 1992. Thereafter, it can no longer
1
tax.1wphi1
In National Power Corporation v. City of Cabanatuan,29 the Court declared that "a
franchise tax is a tax on the privilege of transacting business in the state and exercising
corporate franchises granted by the state."30 It is not levied on the corporation simply
for existing as a corporation, upon its property or its income, but on its exercise of the
rights or privileges granted to it by the government.31 "It is within this context that the
phrase tax on businesses enjoying a franchise in Section 137 of the LGC should be
interpreted and understood
MCIAA V MARCOS
FACTS: Petitioner Mactan Cebu International Airport Authority (MCIAA) was created by
virtue of Republic Act No. 6958, mandated to principally undertake the economical,
efficient and effective control, management and supervision of the Mactan
International Airport in the Province of Cebu and the Lahug Airport in Cebu City
Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from
payment of realty taxes in accordance with Section 14 of its Charter:
Sec. 14. Tax Exemptions. -- The Authority shall be exempt from realty taxes imposed by
the National Government or any of its political subdivisions, agencies and
instrumentalities x x x.
On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officer-in-Charge, Office of the
Treasurer of the City of Cebu, demanded payment for realty taxes on several parcels of
land belonging to the petitioner.
ISSUE: whether or not MCIAA is exempted from local tax
HELD: No.
RATIO: There can be no question that under Section 14 of R.A. No. 6958 the petitioner is
exempt from the payment of realty taxes imposed by the National Government or any
of its political subdivisions, agencies, and instrumentalities. Nevertheless, since taxation is
the rule and exemption therefrom the exception, the exemption may thus be withdrawn
at the pleasure of the taxing authority. The only exception to this rule is where the
exemption was granted to private parties based on material consideration of a mutual
nature, which then becomes contractual and is thus covered by the non-impairment
clause of the Constitution.[23]
The LGC, enacted pursuant to Section 3, Article X of the Constitution, provides for the
exercise by local government units of their power to tax, the scope thereof or its
limitations, and the exemptions from taxation.
Section 133 of the LGC prescribes the common limitations on the taxing powers of local
government units as follows:
SEC. 133. Common Limitations on the Taxing Power of Local Government Units. Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:
(o) TAXES, FEES OR CHARGES OF ANY KIND ON THE NATIONAL GOVERNMENT, ITS
AGENCIES AND INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS. (emphasis
supplied)
Section 193 of the LGC is the general provision on withdrawal of tax exemption
privileges. It provides:
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this Code,
tax exemptions or incentives granted to, or presently enjoyed by all persons, whether
natural or juridical, including government-owned or controlled corporations, except
local water districts, cooperatives duly registered under R.A. 6938, non-stock and non-
profit hospitals and educational institutions, are hereby withdrawn upon the effectivity
of this Code.
On the other hand, the LGC authorizes local government units to grant tax exemption
privileges. Thus, Section 192 thereof provides:
SEC. 192. Authority to Grant Tax Exemption Privileges.-- Local government units may,
through ordinances duly approved, grant tax exemptions, incentives or reliefs under
such terms and conditions as they may deem necessary.
The foregoing sections of the LGC speak of: (a) the limitations on the taxing powers of
local government units and the exceptions to such limitations; and (b) the rule on tax
exemptions and the exceptions thereto. The use of exceptions or provisos in these
sections, as shown by the following clauses:
(1) unless otherwise provided herein in the opening paragraph of Section 133;
(2) Unless otherwise provided in this Code in Section 193;
(3) not hereafter specifically exempted in Section 232; and
(4) Except as provided herein in the last paragraph of Section 234
As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical
persons, including government-owned and controlled corporations, Section 193 of the
LGC prescribes the general rule, viz., they are withdrawn upon the effectivity of the
LGC, except those granted to local water districts, cooperatives duly registered under
R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, and unless
otherwise provided in the LGC. The latter proviso could refer to Section 234 which
2
enumerates the properties exempt from real property tax. But the last paragraph of
Section 234 further qualifies the retention of the exemption insofar as real property taxes
are concerned by limiting the retention only to those enumerated therein; all others not
included in the enumeration lost the privilege upon the effectivity of the LGC. Moreover,
even as to real property owned by the Republic of the Philippines or any of its political
subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is
withdrawn if the beneficial use of such property has been granted to a taxable person
for consideration or otherwise.
Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of
the LGC, exemptions from payment of real property taxes granted to natural or juridical
persons, including government-owned or controlled corporations, except as provided in
the said section, and the petitioner is, undoubtedly, a government-owned corporation,
it necessarily follows that its exemption from such tax granted it in Section 14 of its
Charter, R.A. No. 6958, has been withdrawn.
The terms Republic of the Philippines and National Government are not
interchangeable. The former is broader and synonymous with Government of the
Republic of the Philippines which the Administrative Code of 1987 defines as the
corporate governmental entity through which the functions of government are
exercised throughout the Philippines, including, save as the contrary appears from the
context, the various arms through which political authority is made affective in the
Philippines, whether pertaining to the autonomous regions, the provincial, city,
municipal or barangay subdivisions or other forms of local government.[27] These
autonomous regions, provincial, city, municipal or barangay subdivisions are the
political subdivisions.[28]
On the other hand, National Government refers to the entire machinery of the central
government, as distinguished from the different forms of local governments.[29] The
National Government then is composed of the three great departments: the executive,
the legislative and the judicial.[30]
An agency of the Government refers to any of the various units of the Government,
including a department, bureau, office, instrumentality, or government-owned or
controlled corporation, or a local government or a distinct unit therein;[31] while an
instrumentality refers to any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law,
endowed with some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. This term includes regulatory
agencies, chartered institutions and government-owned and controlled
corporations.[32]
If Section 234(a) intended to extend the exception therein to the withdrawal of the
exemption from payment of real property taxes under the last sentence of the said
section to the agencies and instrumentalities of the National Government mentioned in
Section 133(o), then it should have restated the wording of the latter.
CALLANTA V OMBUDSMAN
FACTS: It is alleged that a general revision of assessment was conducted by the Office
of the City Assessor in 1988 and sometime thereafter. Notices of assessment together
with the new tax declarations were subsequently sent to the property owners.
Thereafter, respondents, without the authority of the Local Board of Assessment
Appeals, reassessed the values of certain properties, in contravention of Sec. 30 of P.D.
464. The said assessment resulted in the reduction of assessed values of the properties x x
x.
ISSUE: Whether or not the City Assessor may reconsider real property assessment
HELD: NO
RATIO: Sec. 22, PD 464[14](now Sec. 220 of RA 7160), which reads:
Sec. 22. Valuation of Real Property. Upon the discovery of real property or during the
general revision of property assessments as provided in Section twenty-one of this Code
or at any time when requested by the person in whose name the property is declared,
the provincial or city assessor or his authorized deputy shall make an appraisal and
assessment in accordance with Section five hereof of the real property listed and
described in the declaration irrespective of any previous assessment or taxpayers
valuation thereon: Provided, however, That the assessment of real property shall not be
increased oftener once every five years in the absence of new improvements
increasing the value of said property or of any change in its use, except as otherwise
provided in this Code.
The instances referred to [under Sec. 22] are as follows:
1.) upon the discovery of real property;
2.) during the general revision of property assessments as provided in Section 21 of the
Code; and
3.) at anytime [sic] when requested by the person in whose name the property is
declared.
It is not disputed that the assessment/valuation involved herein were conducted by
virtue of the 1988 general revision of property assessments under No. 2 instance above.
After an assessment has been conducted, the assessor shall within thirty days issue a
written notice of such new or revised assessment to the persUnder the aforecited
procedure, the issuance of a notice of assessment by the local assessor shall be his last
action on a particular assessment. On the side of the property owner, it is this last action
which gives him [the] right to appeal to the Local Board of Assessment Appeals. The
above procedure also, does not grant the property owner the remedy of filing a motion
for reconsideration before the local assessor.
3
The act of herein petitioners in providing the corresponding notices of assessment the
chance for the property owners concerned to file a motion for reconsideration and for
acting on the motions filed is not in accordance with law and in excess of their authority
and therefore constitutes ultra vires acts.[16]
In the case at bar, the second instance gave rise to the revised assessed values for
which the property owners subsequently sought reconsideration. Sec. 30 of the same
Code is equally clear that the aggrieved owners should have brought their appeals
before the LBAA. Unfortunately, despite the advice to this effect contained in their
respective notices of assessment, the owners chose to bring their requests for a
review/readjustment before the city assessor, a remedy not sanctioned by the law. To
allow this procedure would indeed invite corruption in the system of appraisal and
assessment. on in whose name the property is declared.
While Sec. 23 requires the local assessor to certify to the finance secretary that the
general revision has been finished, such certification is, however, not the operative act
for the effectivity of the new assessments. This interpretation is bolstered by the fact that
under the Local Government Code of 1991,[20] Title Two, Book II of which has replaced
the Real Property Tax Code, there is no longer any provision requiring such certification.
In the same vein, we have said that the assessment is deemed made when the notice
to this effect is released, mailed or sent to the taxpayer for the purpose of giving effect
to said assessment.[22]
PHILRECA V SEC. OF DILG
FACTS: Under P.D. No. 269, as amended, or the National Electrification Administration
Decree, it is the declared policy of the State to provide the total electrification of the
Philippines on an area coverage basis the same being vital to the people and the
sound development of the nation.[1] Pursuant to this policy, P.D. No. 269 aims to
promote, encourage and assist all public service entities engaged in supplying electric
service, particularly electric cooperatives by giving every tenable support and
assistance to the electric cooperatives coming within the purview of the law.[2]
Accordingly, Section 39 of P.D. No. 269 provides for the following tax incentives to
electric cooperatives:
SECTION 39. Assistance to Cooperatives; Exemption from Taxes, Imposts, Duties, Fees;
Assistance from the National Power Corporation. Pursuant to the national policy
declared in Section 2, the Congress hereby finds and declares that the following
assistance to cooperative is necessary and appropriate:
(a) Provided that it operates in conformity with the purposes and provisions of this
Decree, cooperatives (1) shall be permanently exempt from paying income taxes, and
(2) for a period ending on December 31 of the thirtieth full calendar year after the date
of a cooperative's organization or conversion hereunder, or until it shall become
completely free of indebtedness incurred by borrowing, whichever event first occurs,
shall be exempt from the payment (a) of all National Government, local government
and municipal taxes and fees, including franchise, filing, recordation, license or permit
fees or taxes and any fees, charges, or costs involved in any court or administrative
proceeding in which it may be a party, and (b) of all duties or imposts on foreign goods
acquired for its operations, the period of such exemption for a new cooperative formed
by consolidation, as provided for in Section 29, to begin from as of the date of the
beginning of such period for the constituent consolidating cooperative which was most
recently organized or converted under this Decree: Provided, That the Board of
Administrators shall, after consultation with the Bureau of Internal Revenue, promulgate
rules and regulations for the proper implementation of the tax exemptions provided for
in this Decree.
From 1971 to 1978, in order to finance the electrification projects envisioned by P.D. No.
269, as amended, the Philippine Government, acting through the National Economic
Council (now National Economic Development Authority) and the NEA, entered into six
(6) loan agreements with the government of the United States of America through the
United States Agency for International Development (USAID) with electric cooperatives,
including petitioners ANECO, ILECO I and ISELCO I, as beneficiaries. The six (6) loan
agreements involved a total amount of approximately US$86,000,000.00. These loan
agreements are existing until today.
ISSUE: Whether or not there is a violation of the Equal Protection Clause
HELD: No
RATIO: A cooperative under R.A. No. 6938 is defined as:
[A] duly registered association of persons with a common bond of interest, who have
voluntarily joined together to achieve a lawful common or social economic end,
making equitable contributions to the capital required and accepting a fair share of the
risks and benefits of the undertaking in accordance with universally accepted
cooperative principles.[10]
Nowhere in P.D. No. 269, as amended, does it require cooperatives to make equitable
contributions to capital. Petitioners themselves admit that to qualify as a member of an
electric cooperative under P.D. No. 269, only the payment of a P5.00 membership fee is
required which is even refundable the moment the member is no longer interested in
getting electric service from the cooperative or will transfer to another place outside the
area covered by the cooperative.[13]
Another principle adhered to by the Cooperative Code is the principle of subsidiarity.
Pursuant to this principle, the government may only engage in development activities
where cooperatives do not posses the capability nor the resources to do so and only
upon the request of such cooperatives.[15]
Thus, Article 2 of the Cooperative Code provides:
4
Art. 2. Declaration of Policy. It is the declared policy of the State to foster the creation
and growth of cooperatives as a practical vehicle for prompting self-reliance and
harnessing people power towards the attainment of economic development and social
justice. The State shall encourage the private sector to undertake the actual formation
and organization to cooperatives and shall create an atmosphere that is conducive to
the growth and development of these cooperatives.
Towards this end, the Government and all its branches, subdivisions, instrumentalities
and agencies shall ensure the provision of technical guidance, financial assistance and
other services to enable said cooperatives to develop into viable and responsive
economic enterprises and thereby bring about a strong cooperative movement that is
free from any conditions that might infringe upon the autonomy or organizational
integrity of cooperatives.
Further, the State recognizes the principle of subsidiarity under which the cooperative
sector will initiate and regulate within its own ranks the promotion and organization,
training and research, audit and support services relating to cooperatives with
government assistance where necessary.[16]
Accordingly, under the charter of the CDA, or the primary government agency tasked
to promote and regulate the institutional development of cooperatives, it is the
declared policy of the State that:
[g]overnment assistance to cooperatives shall be free from any restriction and
conditionality that may in any manner infringe upon the objectives and character of
cooperatives as provided in this Act.The State shall, except as provided in this Act,
maintain the policy of noninterference in the management and operation of
cooperatives.[17]
In contrast, P.D. No. 269, as amended by P.D. No. 1645, is replete with provisions which
grant the NEA, upon the happening of certain events, the power to control and take
over the management and operations of cooperatives registered under it.
The extent of government control over electric cooperatives covered by P.D. No. 269,
as amended, is largely a function of the role of the NEA as a primary source of funds of
these electric cooperatives. It is crystal clear that NEA incurred loans from various
sources to finance the development and operations of the electric cooperatives.
In contrast, cooperatives under R.A. No. 6938 are envisioned to be self-sufficient and
independent organizations with minimal government intervention or regulation.
Article 128 of the Cooperative Code provides that all cooperatives registered under
previous laws shall be deemed registered with the CDA upon submission of certain
requirements within one year. However, cooperatives created under P.D. No. 269, as
amended, are given three years within which to qualify and register with the CDA, after
which, provisions of P.D. No. 1645 which expand the powers of the NEA over electric
cooperatives, would no longer apply.[22]
Second, the classification of tax-exempt entities in the Local Government Code is
germane to the purpose of the law.
Thus, while each government unit is granted the power to create its own sources of
revenue, Congress, in light of its broad power to tax, has the discretion to determine the
extent of the taxing powers of local government units consistent with the policy of local
Manila International Airport Authority vs CA
GR No. 155650, July 20, 2006, 495 SCRA 591
Facts: Manila International Airport Authority (MIAA) is the operator of the Ninoy
International Airport located at Paranaque City. The Officers of Paranaque City sent
notices to MIAA due to real estate tax delinquency. MIAA then settled some of the
amount. When MIAA failed to settle the entire amount, the officers of Paranaque city
threatened to levy and subject to auction the land and buildings of MIAA, which they
did. MIAA sought for a Temporary Restraining Order from the CA but failed to do so
within the 60 days reglementary period, so the petition was dismissed. MIAA then sought
for the TRO with the Supreme Court a day before the public auction, MIAA was granted
with the TRO but unfortunately the TRO was received by the Paranaque City officers 3
hours after the public auction.
MIAA claims that although the charter provides that the title of the land and building
are with MIAA still the ownership is with the Republic of the Philippines. MIAA also
contends that it is an instrumentality of the government and as such exempted from
real estate tax. That the land and buildings of MIAA are of public dominion therefore
cannot be subjected to levy and auction sale. On the other hand, the officers of
Paranaque City claim that MIAA is a government owned and controlled corporation
therefore not exempted to real estate tax.
Issues:Whether or not MIAA is an instrumentality of the government and not a
government owned and controlled corporation and as such exempted from tax.
Whether or not the land and buildings of MIAA are part of the public dominion and thus
cannot be the subject of levy and auction sale.
Ruling: Under the Local government code, government owned and controlled
corporations are not exempted from real estate tax. MIAA is not a government owned
and controlled corporation, for to become one MIAA should either be a stock or non
stock corporation. MIAA is not a stock corporation for its capital is not divided into
shares. It is not a non stock corporation since it has no members. MIAA is an
instrumentality of the government vested with corporate powers and government
functions.
5
Under the civil code, property may either be under public dominion or private
ownership. Those under public dominion are owned by the State and are utilized for
public use, public service and for the development of national wealth. The ports
included in the public dominion pertain either to seaports or airports. When properties
under public dominion cease to be for public use and service, they form part of the
patrimonial property of the State.
The court held that the land and buildings of MIAA are part of the public
dominion. Since the airport is devoted for public use, for the domestic and international
travel and transportation. Even if MIAA charge fees, this is for support of its operation
and for regulation and does not change the character of the land and buildings of
MIAA as part of the public dominion. As part of the public dominion the land and
buildings of MIAA are outside the commerce of man. To subject them to levy and public
auction is contrary to public policy. Unless the President issues a proclamation
withdrawing the airport land and buildings from public use, these properties remain to
be of public dominion and are inalienable. As long as the land and buildings are for
public use the ownership is with the Republic of the Philippines.
CITY ASSESSOR OF CEBU V ASSN. OF BENEVOLA DE CEBU
FACTS: Respondent Association of Benevola de Cebu, Inc. is a non-stock, non-profit
organization organized under the laws of the Republic of the Philippines and is the
owner of Chong Hua Hospital (CHH) in Cebu City. In the late 1990s, respondent
constructed the CHH Medical Arts Center (CHHMAC). Thereafter, an April 17, 1998
Certificate of Occupancy[7] was issued to the center with a classification of
Commercial [Clinic].
Petitioner City Assessor of Cebu City assessed the CHHMAC building under Tax
Declaration (TD) No. 97 GR-04-024-02529 as commercial with a market value of PhP
28,060,520 and an assessed value of PhP 9,821,180 at the assessment level of 35% for
commercial buildings, and not at the 10% special assessment currently imposed for CHH
and its other separate buildingsthe CHHs Dietary and Records Departments.
ISSUE: Whether or not CCHMAC is an integral part of CHH
HELD: yes
RATIO: It is undisputed that the doctors and medical specialists holding clinics in
CHHMAC are those duly accredited by CHH, that is, they are consultants of the hospital
and the ones who can treat CHHs patients confined in it. This fact alone takes away
CHHMAC from being categorized as commercial since a tertiary hospital like CHH is
required by law to have a pool of physicians who comprises the required medical
departments in various medical fields.
Based on these provisions, these physicians holding offices or clinics in CHHMAC, duly
appointed or accredited by CHH, precisely fulfill and carry out their roles in the hospitals
services for its patients through the CHHMAC. The fact that they are holding office in a
separate building, like at CHHMAC, does not take away the essence and nature of their
services vis--vis the over-all operation of the hospital and the benefits to the hospitals
patients. Given what the law requires, it is clear that CHHMAC is an integral part of CHH.
Moreover, the exemption in favor of property used exclusively for charitable or
educational purposes is not limited to property actually indispensable therefore (Cooley
on Taxation, Vol. 2, p. 1430), but extends to facilities which are incidental to and
reasonably necessary for the accomplishment of said purposes, such as, in the case of
hospitals, a school for training nurses, a nurses home, property use to provide housing
facilities for interns, resident doctors, superintendents, and other members of the hospital
staff, and recreational facilities for student nurses, interns and residents (84 C.J.S., 621),
such as athletic fields, including a farm used for the inmates of the institution (Cooley on
Taxation, Vol. 2, p. 1430).[25]
Verily, being an integral part of CHH, CHHMAC should be under the same special
assessment level of as that of the former.
Finally, respondents charge of rentals for the offices and clinics its accredited physicians
occupy cannot be equated to a commercial venture, which is mainly for profit.
Respondents explanation on this point is well taken. First, CHHMAC is only for its
consultants or accredited doctors and medical specialists. Second, the charging of
rentals is a practical necessity: (1) to recoup the investment cost of the building, (2) to
cover the rentals for the lot CHHMAC is built on, and (3) to maintain the CHHMAC
building and its facilities. Third, as correctly pointed out by respondent, it pays the
proper taxes for its rental income. And, fourth, if there is indeed any net income from the
lease income of CHHMAC, such does not inure to any private or individual person as it
will be used for respondents other charitable projects.
CITY OF PASIGE V RP
FACTS: Mid-Pasig Land Development Corporation (MPLDC) owned two parcels of land,
Portions of the properties are leased to different business establishments.
In 1986, the registered owner of MPLDC, Jose Y. Campos (Campos), voluntarily
surrendered MPLDC to the Republic of the Philippines.
On 30 September 2002, the Pasig City Assessors Office sent MPLDC two notices of tax
delinquency for its failure to pay real property tax on the properties for the period 1979
to 2001totaling P256,858,555.
ISSUE: Whether or not the protions of the properties leased to different business
estabilishments are tax exempted
HELD: No
RATIO: Section 234(a) of Republic Act No. 7160 states that properties owned by the
Republic of the Philippines are exempt from real property tax except when the
6
beneficial use thereof has been granted, for consideration or otherwise, to a taxable
person. Thus, the portions of the properties not leased to taxable entities are exempt
from real estate tax while the portions of the properties leased to taxable entities are
subject to real estate tax.
In the present case, the parcels of land are not properties of public dominion because
they are not intended for public use, such as roads, canals, rivers, torrents, ports and
bridges constructed by the State, banks, shores, roadsteads. Neither are they intended
for some public service or for the development of the national wealth. MPLDC leases
portions of the properties to different business establishments. Thus, the portions of the
properties leased to taxable entities are not only subject to real estate tax, they can
also be sold at public auction to satisfy the tax delinquency.
In sum, only those portions of the properties leased to taxable entities are subject to real
estate tax for the period of such leases.
RURAL BANK OF MAKATI V MUN. OF MAKATI
FACTS: On November 19, 1990, the municipality lodged a complaint with the
Prosecutors Office, charging petitioners Esteban S. Silva, president and general
manager of the bank and Magdalena V. Landicho for violation of Section 21(a),
Chapter II, Article 3 in relation to Sections 105 and 169 of the Metropolitan Tax Code.
ISSUE: Whether or not the closure of petitioner bank is valid;
HELD: NO
RATIO: On the issue of the closure of the bank, we find that the bank was not engaged
in any illegal or immoral activities to warrant its outright closure. The appropriate
remedies to enforce payment of delinquent taxes or fees are provided for in Section 62
of the Local Tax Code, to wit:
SEC. 62. Civil Remedies. The civil remedies available to enforce payment of delinquent
taxes shall be by distraint of personal property, and by legal action. Either of these
remedies or both simultaneously may be pursued at the discretion of the proper
authority.
The payment of other revenues accruing to local governments shall be enforced by
legal action.[28]
Said Section 62 did not provide for closure. Moreover, the order of closure violated
petitioners right to due process, considering that the records show that the bank
exercised good faith and presented what it thought was a valid and legal justification
for not paying the required taxes and fees. The violation of a municipal ordinance does
not empower a municipal mayor to avail of extrajudicial remedies.[29] It should have
observed due process before ordering the banks closure.
SPS WONG V CITY OF ILOILO
FACTS: the respective estates of the Hodges spouses sold the property to Vicente Chan.
For some reason, however, Chan was not able to register the property in his name.
Subsequently, Chan passed away and his estate sold the same property to petitioners
Francisco and Joaquin Wong on September 29, 1967. Because the estate of Chan was
unable to produce the estate tax clearance and the owners duplicate of title,
petitioners were only allowed to annotate a notice of adverse claim on TCT No. T-7373
On January 3, 1991, respondent Iloilo City Treasurer Romeo Manikan issued a general
notice of delinquency in the payment of real estate taxes.
Because no one contested the said notice or settled the tax delinquency of the subject
property, the City Treasurer sent the notice of sale to the last known judicial
administrator of the estates of the Hodges.
On September 26, 1991, the property was sold at public auction wherein respondent
Melanie Uy was the highest bidder.
They asserted that the tax sale was void since the City Treasurer failed to inform them of
the tax sale as required by Section 73 of PD[8] 464[9] which provided:
Section 73. Advertisement of sale of real property at public auction.
ISSUE: Whether or not the auction was valid
HELD: Yes
RATIO: Section 83 of PD 464 states that the RTC shall not entertain any complaint
assailing the validity of a tax sale of real property unless the complainant deposits with
the court the amount for which the said property was sold plus interest equivalent to
20% per annum from the date of sale until the institution of the complaint. This provision
was adopted in Section 267 of the Local Government Code, albeit the increase in the
prescribed rate of interest to 2% per month.[18]
ANGELES CITY VS AEC
FACTS: On June 18, 1964, AEC was granted a legislative franchise under Republic Act
No. (RA) 4079[2] to construct, maintain and operate an electric light, heat, and power
system for the purpose of generating and distributing electric light, heat and power for
sale in Angeles City, Pampanga. Pursuant to Section 3-A thereof,[3] AECs payment of
franchise tax for gross earnings from electric current sold was in lieu of all taxes, fees and
assessments.
On September 11, 1974, Presidential Decree No. (PD) 551 reduced the franchise tax of
electric franchise holders. Section 1 of PD 551
On January 1, 1992, RA 7160 or the Local Government Code (LGC) of 1991 was passed
into law, conferring upon provinces and cities the power, among others, to impose tax
on businesses enjoying franchise.[4] In accordance with the LGC, the Sangguniang
Panlungsod of Angeles City enacted on December 23, 1993 Tax Ordinance No. 33, S-93,
otherwise known as the Revised Revenue Code of Angeles City (RRCAC).
ISSUE: Being a special civil action for certiorari, the issue in the instant case is limited to
the determination of whether the RTC gravely abused its discretion in issuing the writ of
preliminary injunction enjoining Angeles City and its City Treasurer from levying, selling,
and disposing the properties of AEC. All other matters pertaining to the validity of the tax
assessment and AECs tax exemption must therefore be left for the determination of the
RTC where the main case is pending decision.
HELD: We find the petition bereft of merit.
The LGC does not specifically prohibit an injunction enjoining the collection of taxes
RATIO: A principle deeply embedded in our jurisprudence is that taxes being the
lifeblood of the government should be collected promptly,[26] without unnecessary
hindrance[27] or delay.[28]In line with this principle, the National Internal Revenue Code
of 1997 (NIRC) expressly provides that no court shall have the authority to grant an
injunction to restrain the collection of any national internal revenue tax, fee or charge
imposed by the code.[29] An exception to this rule obtains only when in the opinion of
the Court of Tax Appeals (CTA) the collection thereof may jeopardize the interest of the
government and/or the taxpayer.[30]
The situation, however, is different in the case of the collection of local taxes as there is
no express provision in the LGC prohibiting courts from issuing an injunction to restrain
local governments from collecting taxes. Thus, in the case of Valley Trading Co., Inc. v.
Court of First Instance of Isabela, Branch II, cited by the petitioner, we ruled that:
Unlike the National Internal Revenue Code, the Local Tax Code[31] does not contain
any specific provision prohibiting courts from enjoining the collection of local taxes.
Such statutory lapse or intent, however it may be viewed, may have allowed preliminary
injunction where local taxes are involved but cannot negate the procedural rules and
requirements under Rule 58.[32]
As a rule, the issuance of a preliminary injunction rests entirely within the discretion of the
court taking cognizance of the case and will not be interfered with, except where there
is grave abuse of discretion committed by the court.[36]