LOCAL TAXATION (RA 7160)

BY: JAPOS, KRISTINE MAE

[GR No. 118233, December 10, 1999]

Antonio Reyes, Eliseo Ocampo and Editha Arciaga-Santos, petitioners
vs
Court of Appeals, Hon. Secretary of Justice Franklin Drilon and Mayor
Jinggoy Estrada (Jose Ejercito) of the Municipality of San Juan, Metro
Manila, respondents
DOCTRINE/PROVISION OF LAW DISCUSSED:
1. Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue
Measures; Mandatory Public Hearings. (RA 7160)
2. Presumption of validity in favor of an ordinance
FACTS:
The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances
on printing and publication, on the sale or transfer of real property, for social housing, imposed
new rates of business tax and an annual Ad valorem tax on real property (Ordinance No. 87, 91,
95, 100 and 101).
On May 21, 1993, petitioners filed an appeal with the Department of Justice assailing the
constitutionality of these tax ordinances allegedly because they were promulgated without
previous public hearings thereby constituting deprivation of property without due process of law.

DOJ’s DECISION: Dismissed the appeal for having been filed out of time.

Citing Section 187, R.A. No. 7160, DOJ said:

It appears that the tax ordinances in question took effect on September 24, 1992, in the case of Tax
Ordinance No. 87, until October 22, 1992, in the case of Tax Ordinance Nos. 91 and 95, and until October
29, 1992, in the case of Tax Ordinance Nos. 100 and 101, or more than thirty (30) days from the effectivity
thereof when the appeal was filed and received by this Department on May 21, 1993 and therefore not in
accordance with the requirements provided for under Section 187 of the Local Government Code of 1991.

Petitioners filed with the Court of Appeals a petition for certiorari and prohibition.

CA’s DECISION: CA affirmed the decision of the Secretary. A motion for reconsideration filed
by the petitioners was denied for lack of merit.

ISSUES:
1. Whether the petitioners made a timely appeal before the DOJ.
2. Whether the lack of mandatory public hearings prior to the enactment of the ordinances
renders the ordinances void.
SC’s DECISION:
Sec. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public
Hearings.
The procedure for approval of local tax ordinances and revenue measures shall be in accordance
with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior
to the enactment thereof: Provided further, That any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof
to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the
appeal: Provided, however, That such appeal not have the effect of suspending the effectivity of the
ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That
within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary
of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of
competent jurisdiction.

1. NO. The law clearly 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 Section 187 of the Local Government Code, the 3 separate periods are
given for compliance as a prerequisite before seeking redress in court. For this reason, the courts
construe these provisions as mandatory.
A municipal tax ordinance empowers a local government unit to impose taxes. The power
to tax is the most effective way or instrument to raise needed revenues to finance and support the
myriad activities of the local government units for delivery of basic services essential to the
promotion of general welfare and enhancement of peace, progress and prosperity of the people.
Consequently, any delay in implementing tax measures would be to the detriment of the public. It
is for this reason that protest over tax ordinance are required to be done within certain time
frames. In the instant case, it is our view that the failure of petitioners to appeal to the secretary
of justice within 30 days as required by section 187 of Republic Act No. 7160 is fatal to their
cause.

2. YES. Public hearings are required prior to the enactment imposing real property taxes as
stated in Section 187 of RA 7160. However, the lack of public hearings is a negative allegation.
Petitioner has the burden of proving that no public hearings were conducted. In this case,
petitioners have not proved that the Sangguniang Bayan of San Juan failed to conduct the
required public hearings before enacting said ordinances.
Furthermore, in accordance with the presumption of validity in favor of an ordinance,
their constitutionality or legality should be upheld in the absence of evidences showing that
procedure prescribed by law was not observed in their enactment. Hence, Supreme Court is
constrained to uphold their legality.

The petition was DISMISSED.

[G.R. No. 119172, March 25, 1999]

BELEN C. FIGUERRES, petitioner
vs
COURT OF APPEALS, CITY OF ASSESSORS OF
MANDALUYONG, CITY TREASURER OF MANDALUYONG, and
SANGGUNIANG BAYAN OF MANDADLUYONG, respondents

DOCTRINE/PROVISION OF LAW DISCUSSED:

1. Exhaustion of Administrative Remedies
2. Section 186, 187, 188, 212, 226, and 252 of RA 7160
3. Presumption of validity in favor of an ordinance

FACTS:
Belen C. Figuerres is the owner of a parcel of land located at Amarillo Street, Barangay
Mauway, City of Mandaluyong. In 1993, she received a notice of assessment from the municipal
assessor of the Municipality of Mandaluyong.
The assessment was based on a number of ordinances issued by the Sangguniang Bayan
of Mandaluyong. Ordinance No. 119 contains a schedule of fair market values of the different
classes of real property in the municipality. Ordinance No. 125 fixes the assessment levels
applicable to such classes of real property. Finally, Ordinance No. 135 amended Ordinance No.
119, by providing that only one third (1/3) of the increase in the market values applicable to
residential lands pursuant to the said ordinance shall be implemented in the years 1994, 1995,
and 1996.
Figuerres brought a prohibition suit in the CA against the Assessor, the Treasurer, and the
Sangguniang Bayan to stop them from enforcing the ordinances in question on the ground that
the ordinances were invalid for having been adopted allegedly without public hearings and prior
publication or posting and without complying with the implementing rules yet to be issued by the
Department of Finance.

CA’s DECISION:
CA dismissed the petition stating that the approval and determination by the Department
of Finance is not needed under the Local Government Code of 1991, since it is now the city
council of Mandaluyong that is empowered to determine and approve the ordinances.
Furthermore, the Finance Local Assessment Regulation No. 1-92 provides for the rules
relative to the conduct of general revisions of real property assessments pursuant to Sections 201
and 219 of the Local Government Code of 1991.
Aside from that, petitioner failed to exhaust the administrative remedies available to him
as provided for under Section 187 of R.A. No. 7160, before filing the instant petition with this
Court.

ISSUES:
1. Whether petitioner failed to exhaust administrative remedies.
2. Whether public hearings are required to be conducted prior to the enactment of an
ordinance imposing real property taxes

3. Whether there is a need for the publication of fair market values.

4. Whether there is non-compliance with regulations issued by the Department of

Finance.

SC’s DECISION:

1. YES. Where a remedy is available within the administrative machinery, this should be
resorted to before resort can be made to the courts, not only to give the administrative agency the
opportunity to decide the matter by itself correctly, but also to prevent unnecessary and
premature resort to courts.
With regard to questions on the legality of a tax ordinance, the remedies available to the
taxpayer are provided under Sections 187, 226, and 252 of R.A. 7160.
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.

Thus, aside from filing an appeal to the Secretary of Justice as provided in Section 187 of
RA 7160, the petitioner could have appealed to the Local Board of Assessment Appeals. The
decision of which is in turn appealable to the Central Board of Assessment Appeals as provided
under Sections 226 and 230 of the said law.

2. YES. R.A. No. 7160, Sec. 186 provides that an ordinance levying taxes, fees, or charges
“shall not be enacted without any prior public hearing conducted for the purpose.”
However, it is noteworthy that apart from her bare assertions, Figuerres has not presented
any evidence to show that no public hearings were conducted prior to the enactment of the
ordinances in question. On the other hand, the Municipality of Mandaluyong claims that public
hearings were indeed conducted before the subject ordinances were adopted, although it likewise
failed to submit any evidence to establish this allegation.
 In accordance with the presumption of validity in favor of an ordinance, their
constitutionality or legality should be upheld in the absence of evidence showing that the
procedure prescribed by law was not observed in their enactment.
Furthermore, the lack of a public hearing is a negative allegation essential to petitioner’s
cause of action in the present case. Hence, as petitioner is the party asserting it, she has the
burden of proof. Since petitioner failed to rebut the presumption of validity in favor of the subject
ordinances and to discharge the burden of proving that no public hearings were conducted prior
to the enactment thereof, we are constrained to uphold their constitutionality or legality.

3. YES. R.A. No. 7160, Sec. 212 which in part states:

. . . . The schedule of fair market values shall be published in a newspaper of general circulation
in the province, city, or municipality concerned, or in the absence thereof, shall be posted in the provincial
capitol, city or municipal hall and in two other conspicuous public places therein.

Hence, after the proposed schedule of fair market values of the different classes of real
property in a local government unit within Metro Manila has been published or posted in
accordance with Sec. 212 of R.A. No. 7160 and enacted into ordinances by the sanggunians of
the municipalities and cities concerned, the ordinances containing the schedule of fair market
values must themselves be published or posted in the manner provided by Sec. 188 of R.A. No.
7160.
Figuerres has not presented any evidence to show that the subject ordinances were not
disseminated in accordance with these provisions of R.A. No. 7160. On the other hand, the
Municipality of Mandaluyong presented a certificate of Williard S. Wong, Sanggunian Secretary
of the Municipality of Mandaluyong that “Ordinance No. 125, S-1993 . . . has been posted in
accordance with Section 59(b) of R.A. No. 7160. Thus, considering the presumption of validity
in favor of the ordinances and the failure of petitioner to rebut such presumption, we are
constrained to dismiss the petition in this case.

4. NO. Petitioner has not shown that the ordinances in this case were not enacted in accordance
with the applicable regulations of the Department of Finance. The Municipality of Mandaluyong
claims that, although the regulations are merely directory, it has complied with them. Hence, said
ordinances must be presumed to have been enacted in accordance with such regulations.

CA’s decision was AFFIRMED.

[GR No. 152492, October 16, 2003]
Palma Development Corporation, petitioner
vs
Municipality of Malangas, Zamboanga del Sur, respondent

DOCTRINE/PROVISION OF LAW DISCUSSED:

1. Section 153, 155 and 133 (E) of RA 7160

FACTS:
Petitioner Palma Development Corporation is engaged in milling and selling rice and
corn to wholesalers in Zamboanga City. It uses the municipal port of Malangas, Zamboanga del
Sur as transshipment port for its goods.
Municipal Revenue Code no. 09 series of 1993 was passed and approved on August 4,
1994. Section 5G.01 of the ordinance reads as follows:
Sec 56.01 Imposition of Fees. There shall be collected service fee for its use of the municipal
roads or streets leading to the wharf and to any point along the shorelines within the jurisdiction of the
municipality and for police surveillance on all goods and all equipment harboured or sheltered in the
premises of the wharf and other within the jurisdiction of the municipality [xxx]

The service fees imposed by section 5G.01 of the ordinance were paid by petitioner under
protest. It contended that under Republic Act No. 7160, otherwise known as the local
government code of 1991, municipal governments did not have authority to tax goods and
vehicles that passed through their jurisdictions.
Thereafter, before the Regional Trial Court of Pagadian City, petitioner filed against the
Municipality of Malangas an action for declaratory relief assailing the validity of section 5G.01
of the municipal ordinance.

RTC’s DECISION:
On validity of a municipal ordinance, the RTC directed respondent to secure the opinion
of the Office of the Solicitor General, Departments of Finance and Department of Justice.
As these opinions were still unavailable as of October 17, 1996, petitioners counsel filed,
without objection from respondent, a Manifestation seeking the submission of the case for
the RTCs decision on a pure question of law.
In due time, the trial court rendered its decision declaring the entire Municipal Revenue
Code No. 09 as ultra vires and, hence, null and void.

CA’s DECISION:
The municipal ordinance is valid.
The CA said that local government units already had revenue-raising powers as provided
under Sections 153 and 155 of RA No. 7160. It ruled as well that within the purview of these
provisions, Section 5G.01 is valid.
However, since both parties had submitted the case to the trial court for decision on a
pure question of law without a full-blown trial on the merits, the CA could not determine
whether the facts of the case were within the ambit of the aforecited sections of RA No.
7160. Thus, the CA held that the absence of such evidence necessitated the remand of the case
to the trial court.

ISSUES:
1. Whether Section 5G.01 of Municipal Revenue Code No.09 is valid.
2. Whether the remand of the case to the trial court is necessary.

SC’s DECISION:

1. NO. The imposition of a service fee for police surveillance on all goods harbored or sheltered
in the premises of the municipal port of Malangas under Sec. 5G.01 of Malangas Municipal
Revenue Code No. 09, series of 1993 is NULL AND VOID for being violative of Republic Act
7160.
By the express language of section 153 and 155 RA 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 7160 prohibits the imposition, in the guise of wharfage fees — as
well as other taxes or charges in any form whatsoever on goods or merchandise.
 It is therefore irrelevant if the fee 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.

2. NO. We rule against the remand. Not only is it frowned upon by the Rules of Court. 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.
It is therefore immaterial to the instant case whether the service fee on the goods is for
police surveillance or not, since the subject provision of the revenue ordinance is
invalid. Reception of further evidence to establish this fact would not legalize the imposition of
such fee in any way.
Furthermore, neither party disputes any of the other material facts of the case.

The petition was GRANTED.

[G.R. No. 166408, October 6, 2008]

QUEZON CITY and THE CITY TREASURER OF QUEZON
CITY, petitioners,
vs
ABS-CBN BROADCASTING CORPORATION, respondent.

DOCTRINE/PROVISION OF LAW DISCUSSED:

1. Local Franchise Tax
2. CLAIMS for tax exemption must be based on language in law too plain to be mistaken. It
cannot be made out of inference or implication.

FACTS:
On May 3, 1995, ABS-CBN was granted the franchise to install and operate radio and
television broadcasting stations in the Philippines under R.A. No. 7966. Section 8 of R.A. No.
7966 provides the tax liabilities of ABS-CBN which reads:
 Section 8. Tax Provisions. - The grantee, its successors or assigns, shall be liable to pay the same
taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or
corporations are now hereafter may be required by law to pay. In addition thereto, the grantee, its
successors or assigns, shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of
the radio/television business transacted under this franchise by the grantee, its successors or assigns,
and the said percentage tax shall be in lieu of all taxes on this franchise or earnings thereof; Provided
that the grantee, its successors or assigns shall continue to be liable for income taxes under Title II of the
National Internal Revenue Code pursuant to Section 2 of Executive No. 72 unless the latter enactment is
amended or repealed, in which case the amendment or repeal shall be applicable thereto.

ABS-CBN had been paying local franchise tax imposed by Quezon City. However, in
view of the above provision in R.A. No. 9766 that it "shall pay a franchise tax x x x in lieu of all
taxes," the corporation developed the opinion that it is not liable to pay the local franchise tax
imposed by Quezon City. Consequently, ABS-CBN paid under protest the local franchise tax
imposed by Quezon City. ABS-CBN filed a written claim for refund for local franchise tax paid
to Quezon City.
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.

RTC’s DECISION:
RTC rendered judgment declaring as invalid the imposition on and collection from ABS-
CBN of local franchise tax paid pursuant to Quezon City Ordinance No. SP-91, S-93, after the
enactment of R.A. No. 7966, and ordered the refund of all payments made.
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). 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.

CA’s DECISION:
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. Petitioner
moved for reconsideration but was denied.

ISSUES:
1. Whether the petitioners-appellants raised purely legal issues before the Honorable Court of
Appeals
2. Whether the phrase “in lieu of all taxes” indicated in the franchise of respondent-appellee
(Section 8 of RA 7966) serves to exempt it from the payment of the local franchise tax imposed
by the petitioners-appellants.

SC’S DECISION:

1. YES. Section 2, Rule 50 of the Rules of Court provides that an appeal taken to the CA under
Rule 41 raising only questions of law is erroneous and shall be dismissed, issues of pure law not
being within its jurisdiction. Consequently, the dismissal by the CA of petitioners' appeal was in
order.
However, to serve the demands of substantial justice and equity, the Court opts to relax
procedural rules and rule upon on the merits of the case.
In Ong Lim Sing Jr. v. FEB Leasing and Finance Corporation,20 this Court stated:

Courts have the prerogative to relax procedural rules of even the most mandatory character,
mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties' right to
due process. In numerous cases, this Court has allowed liberal construction of the rules when to do so
would serve the demands of substantial justice and equity.

Thus, dismissal of appeals purely on technical grounds is frowned upon where the policy
of the court is to encourage hearings of appeals on their merits and the rules of procedure ought
not to be applied in a very rigid, technical sense. Rules of Procedure are used only to help secure,
not override substantial justice.

2. NO. The right to exemption from local franchise tax must be clearly established beyond
reasonable doubt and cannot be made out of inference or implications. He who claims an
exemption from his share of common burden must justify his claim that the legislature intended
to exempt him by unmistakable terms. For exemptions from taxation are not favored in law, nor
are they presumed. Taxation is the rule and exemption the exception, the intention to make an
exemption ought to be expressed in clear and unambiguous terms.
The “in lieu of all taxes” provision in the franchise of ABS-CBN does not expressly
provide what kind of taxes ABS-CBN is exempted from. It is not clear whether the exemption
would include both local, whether municipal, city or provincial, and national tax. What is clear is
that ABS-CBN shall be liable to pay three (3) percent franchise tax and income taxes under Title
II of the NIRC. The uncertainty of the “in lieu of all taxes” provision should be construed against
respondent who has the burden to prove that it is in fact covered by the exemption claimed.
 Furthermore, the same clause (in lieu of all taxes) in respondent’s franchise has become
ineffective with the abolition of the franchise tax on broadcasting companies with yearly gross
receipts exceeding P10 million as they are now subject to the VAT.

The petition was GRANTED.

By: JARALES, LOUIE J.

G.R.No.L-24942. March30, 1970.]

COTABATO LIGHT & POWER COMPANY, INCORPORATED, Petitioner-Appellee,

v.
THE CITY OF COTABATO, THE HONORABLE MAYOR OF COTABATO CITY, THE
HONORABLE BOARD MEMBERS OF COTABATO CITY and AUGUSTO PACIS, as
City
Treasurer, Respondents-Appellants.

FACTS:

Under Commonwealth Act No. 487, dated On June 18, 1939, Petitioner Cotabato Light
&
PowerCompany, Inc. was granted a legislative franchise to construct, maintain and
operate a
plant for the purpose of generating and distributing electric light, heat and power for
sale within the limits of the municipality (now city) of Cotabato for a period of twenty-five
(25) years.

On June 19, 1959, Congress enacted Republic Act No. 2264, otherwise known as the
Local Autonomy Act, under whose provisions chartered cities, municipalities and
municipal districts were granted broader powers to levy taxes and fees in their
respective jurisdictions.

Pursuant to Local Autonomy Act, Respondent, on October 3, 1962, enacted the said
city’s
Ordinance No. 7 entitled:"AN ORDINANCE IMPOSING LICENSE FEES ON THE
BUSINESS
OF SELLING ELECTRIC LIGHT HEAT AND POWER, PURSUANT TO THE
PROVISIONS OF
SECTION 2(d) OF REPUBLIC ACT NO. 2264.

Petitioner being engaged in the operation and sale of electric power, heat and light in
Cotabato City under its franchise, was advised by the Respondent treasurer of the city
of the
enactment of Ordinance No. 7 and, at the same time, requested to cooperate in the
implementation thereof.

The company hedged and called the attention of the City Treasurer to the term
"kilowatt" used
in the ordinance, and informed the said official that the ordinance did not pertain to it
because
the Cotabato Light &Power Company sells electricity not by the "kilowatts" but by the
"kilowatt
hours." Even after the treasurer of the city had subsequently advised it that the
"kilowatt"
referred to in the ordinance was intended to mean "kilowatt-hour" as reflected in
Resolution
No. 61, Series of 1963 of the Municipal Board of Cotabato City, however, the Cotabato
Light &
Power Company refused to pay and made it plain in its letter of September 1, 1964 that
it
could not comply with the ordinance because it believed the same to be ultra vires.

Petitioner filed the present action for declaratory relief before the court in view of the
insistence
of the officials of Cotabato City concerned to enforce the questioned ordinance against
it.
RTC:

The court declared null and void and ultra vires the said City’s Ordinance No. 7 —
imposing a
tax (denominated as a license fee in the Ordinance) on any person, company,
partnership or
corporation engaged in "the operation or manufacture or sale of electric light or electric
heat or
electric power" within the limits of Cotabato City — and enjoined the city official’s
concerned
from enforcing the Ordinance in question.

ISSUE:

Whether or not Ordinance No. 7 of the City of Cotabato is valid; and if so, whether or
not the
said ordinance can legally be enforced against the Cotabato Light & Power Company,
Incorporated; or

May a special law or charter be amended, altered or repealed by a general law, by

implication?

SC:

No on all points.

That question has been answered in the negative so many times that, except for the
fact that it has not been raised here before, it would scarcely be necessary to cite
authorities.

We hold that the clause "any provision of law to the contrary notwithstanding, all
chartered cities, municipalities and municipal districts shall have authority to impose
municipal license taxes or fees" found in Section 2 of Republic Act 2264, did not alter,
amend, nor repeal the terms and conditions of the appellee Cotabato Light & Power
Company’s franchise under which it was required to pay 2% of its gross earnings "in lieu
of any and all taxes of any kind, nature or description levied, established, or collected by
any authority whatsoever, municipal, provincial, or insular, now or in the future, . . . on
its franchise, rights, privileges, receipts, revenues and profits, from which taxes the
grantee is hereby expressly exempted."

Consequently, said terms and conditions exempt the Cotabato Light & Power Company
from
the operation of Ordinance No. 7, enacted by the City of Cotabato pursuant to the
provisions of
Section 2 of Republic Act 2264. Indeed, the soundness of our conclusion on this point is
strengthened by the fact that even after the Local Autonomy Act of 1959 was already in
force,
when Congress extended appellee’s franchise for another twenty-five years under
Republic
Act No. 3217 on June 17, 1961, the said franchise was again expressly made "subject
to the
terms and conditions established in Act No. 3636, as amended by C. A. No. 132" which
conclusively shows that the exemption of appellee from the imposition of taxes other
than its
franchise tax was not repealed, altered, or modified by the provision of the Local
Autonomy Act relied upon by appellants. In any event, another way of looking at the
matter is that such exemption was revived, if at all it had been repealed.

This is not to say that the legislature is without any prerogative to alter or modify the
terms of
any previously granted franchise, but the revision must, in the first place, conform with
the
express reservations made in the grant and, moreover, the intent to amend must be
evident, if
not specific.

Number 6

G.R. No. 127708. March 25, 1999]

CITY GOVERNMENT OF SAN PABLO, LAGUNA, CITY TREASURER OF SAN

PABLO,
LAGUNA, and THE SANGGUNIANG PANGLUNSOD OF SAN PABLO,
LAGUNA, petitioners,
vs.
HONORABLE BIENVENIDO V. REYES, in his capacity as Presiding Judge,
Regional Trial
Court, Branch 29, San Pablo City and the MANILA ELECTRIC
COMPANY, respondents.

FACTS:

Escudero Electric Services, through Act No. 3648, was granted a legislative franchise to
maintain and operate an electric light and power system in the City of San Pablo and
nearby
municipalities. Escuderos franchise was transferred to the Respondent MERALCO
under
Republic Act No. 2340.

On 11 September 1974, Presidential Decree No. 551 was enacted which Section 1
thereof
provides that any provision of law or local ordinance to the contrary notwithstanding, the
franchise tax payable by all grantees of franchise to generate, distribute and sell electric
current for light, heat and power shall be two percent (2%) of their gross receipts
received from
the sale of electric current and from transactions incident to the generation, distribution
and
sale of electric current.

On 1 January 1992, Republic Act No. 7160, otherwise known as the Local Government
Code
of 1991 (LGC) took effect which the same authorizes the province/city to impose a tax
on
business enjoying a franchise at a rate not exceeding fifty percent (50%) of one percent
(1%)
of the gross annual receipts for the preceding calendar year realized within its
jurisdiction.

On October 5, 1992, the Sangguniang Panglunsod of San Pablo City enacted

Ordinance No.
56, otherwise known as the Revenue Code of the City of San Pablo. Section 2.09
Article D of
said Ordinance provides that Franchise Tax is hereby imposed a tax on business
enjoying a
franchise, at a rate of fifty percent (50%) of one percent (1%) of the gross annual
receipts,
which shall include both cash sales and sales on account realized during the preceding
calendar year within the city.

Pursuant to the Section 2.09, the City Treasurer sent to Respondent a letter demanding
payment of the aforesaid franchise tax.

Aggrieved, Respondent filed an action before the Regional Trial Court to declare
Ordinance
No. 56 null and void insofar as it imposes the franchise tax and to claim for a refund of
the
taxes paid.
RTC:

The Court ruled in favor of Respondent MERALCO and upheld its argument that the
LGC did
not expressly or impliedly repeal the tax exemption/incentive enjoyed by it under its
charter.
Since Motion for Reconsideration was denied, Petitioners filed a petition before the
Supreme
Court raising pure questions of law

ISSUE:

Whether the City of San Pablo may impose a local franchise tax pursuant to the LGC
upon the
Manila Electric Company which pays a tax equal to two percent of its gross receipts in
lieu of
all taxes and assessments of whatever nature imposed by any national or local authority
on
savings or income.

SC:

Yes, the decision of the Regional Trial Court of San Pablo City is reversed and the
complaint of MERALCO is dismissed.

The Court views that Petitioners correctly rely on the provisions of Section 137 and 193
of the
LGC to support their position that MERALCOs tax exemption has been withdrawn. The
explicit
language of Section 137 which authorizes the province to impose franchise tax
notwithstanding any exemption granted by any law or other special laws" is all-
encompassing
and clear. The franchise tax is imposable despite any exemption enjoyed under special
laws.

Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that
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 1) local water districts, 2) cooperatives duly registered under R.A.
6938,
(3) non-stock and non-profit hospitals and educational institutions, are withdrawn upon
the
effectivity of this code, the obvious import is to limit the exemptions to the three
enumerated
entities. It is a basic precept of statutory construction that the express mention of one
person,
thing, act, or consequence excludes all others as expressed in the familiar maxim
expressio
unius est exlcusio alterius.

Reading together Sections 137 and 193 of the LGC, the Court concludes that under the
LGC
the local government unit may now impose a local tax at a rate not exceeding 50% of
1% of
the gross annual receipts for the preceding calendar year based on the incoming
receipts
realized within its territorial jurisdiction.

Accordingly in Mactan Cebu International Airport Authority vs. Marcos, this Court held
that
Section 193 of the LGC prescribes the general rule, viz., the tax exemptions or
incentives
granted to or presently enjoyed by natural or juridical persons are withdrawn upon the
effectivity of the LGC except with respect to those entities expressly enumerated.

The power to tax is primarily vested in Congress. However, in our jurisdiction, it may be
exercised by local legislative bodies, no longer merely by virtue of a valid delegation as
before,
but pursuant to direct authority conferred by Section 5, Article X of the Constitution.

Number 7.

G.R. No. 143867 March 25, 2003

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., petitioner,
vs.
CITY OF DAVAO and ADELAIDA B. BARCELONA, in her capacity as the City
Treasurer of Davao,respondents.

FACTS:
Petitioner PLDT paid a franchise tax equal to three percent (3%) of its gross receipts.
The franchise tax was paid "in lieu of all taxes on this franchise or earnings thereof"
pursuant to R.A. No. 7082 amending its charter, Act. No.3436.

On January 1, 1992, the exemption from "all taxes on this franchise or earnings thereof"
was subsequently withdrawn by R.A. No. 7160 (Local Government Code of 1991),
which at the same time gave local government units the power to tax businesses
enjoying a franchise on the basis of income received or earned by them within their
territorial jurisdiction.

Guided by the LGC of 1991, the City of Davao enacted Ordinance No. 519, Series of
1992, which in pertinent part provides:
Notwithstanding any exemption granted by any law or other special law, there is hereby
imposed a tax on businesses enjoying a franchise, at a rate of Seventy-five percent
(75%) of one percent (1%) of the gross annual receipts for the preceding calendar year
based on the income or receipts realized within the territorial jurisdiction of Davao City.

On March 16, 1995, meanwhile, Congress enacted R.A. No. 7925 (Public
Telecommunications Policy of the Philippines) which Section 23 thereof provides that
"Any advantage, favor, privilege, exemption, or immunity granted under existing
franchises, or may hereafter be granted, shall ipso facto become part of previously
granted telecommunications franchises and shall be accorded immediately and
unconditionally to the grantees of such franchises."

In January 1999, when PLDT applied for a mayor’s permit to operate its Davao Metro
Exchange, it was required to pay the local franchise tax for the first to the fourth quarter
of 1999 which then had amounted to P3, 681,985.72.

As a result, PLDT challenged the power of the city government to collect the local
franchise tax and demanded a refund of what it had paid as local franchise tax for the
year 1997 and for the first to the third quarters of 1998.

As recourse, PLDT filed a petition in the Regional Trial Court of Davao.

RTC:

PLDT’s petition was dismissed and claim for exemption under R.A. No. 7925 was
denied.
The trial court ruled that the LGC had withdrawn tax exemptions previously enjoyed by
persons and entities and authorized local government units to impose a tax on
businesses enjoying franchises within their territorial jurisdictions, notwithstanding the
grant of tax exemption to them.

SC Second Division:

The Supreme Court, through its Second Division, held that R.A. No. 7925, Section 23
cannot be so interpreted as granting petitioner exemption from local taxes because the
word "exemption," taking into consideration the context of the law, does not mean "tax
exemption."

ISSUE:

The question is whether, by virtue of R.A. No. 7925, Section 23, PLDT is again entitled
to exemption from the payment of local franchise tax.

SC:

No, Motion for reconsideration is DENIED and this denial is final.

The rule is that tax exemptions should be granted only by clear and unequivocal
provision of law "expressed in a language too plain to be mistaken." If, as PLDT
contends, the word "exemption" in R.A. No. 7925 means "tax exemption", then this
runabout way of granting tax exemption to PLDT is not a direct, "clear and unequivocal"
way of communicating the legislative intent.

Nor does the term "exemption" in Section 23 of R.A. No. 7925 mean tax exemption. The
term refers to exemption from certain regulations and requirements imposed by the
National Telecommunications Commission (NTC).

The fact is that after PLDT’s tax exemption by R.A. No. 7082 had been withdrawn by
the LGC, no amendment to re-enact its previous tax exemption has been made by
Congress. Considering that the taxing power of local government units under R.A. No.
7160 is clear and is ordained by the Constitution, petitioner has the heavy burden of
justifying its claim by a clear grant of exemption.

In City Government of San Pablo, Laguna v. Reyes, this Court held that the phrase "in
lieu of all taxes" found in special franchises should give way to the peremptory language
of Section 193 of the LGC specifically providing for the withdrawal of such exemption
privileges. Thus, the rule that a special law must prevail over the provisions of a later
general law does not apply as the legislative purpose to withdraw tax privileges enjoyed
under existing laws or charters is apparent from the express provisions of Sections 137
and 193 of the LGC.
Number 8

CAGAYAN ELECTRIC POWER AND LIGHT CO., INC. V. CITY OF CAGAYAN DE

ORO

FACTS:

On 10 January 2005, Respondent City Council of Cagayan de Oro passed an

Ordinance
imposing a tax on the lease or rental of electric and/or telecommunication posts, poles,
or
towers by pole owners to other pole users at ten percent (10%) of the annual rental
income
derived from such lease of rental. Necessary notice of the same was made by the City
Council
to Cagayan Electric Power and Light Company, Inc. (CEPALCO), through its President
and
Chief Operation Manager.

On September 30, 2005, aggrieved Petitioner CEPALCO, purportedly on pure question

of law,
filed a petition for declaratory relief assailing the validity of Ordinance before the
Regional
Trial Court of Cagayan de Oro City,on the ground that the tax imposed by the disputed
ordinance is in reality a tax on income which Respondent may not impose, the same
being
expressly prohibited by Section 133(a) of Republic Act No. 7160 (R.A. 7160) otherwise
known
as the Local Government Code (LGC) of 1991.

Petitioner asserted that it is exempt from the imposition by virtue of Republic Act No.
9284
(R.A. 9284) providing for its franchise.
Respondent. however, countered the followingdefenses: (a) the enactment and
implementation of the subject ordinance was a valid and lawful exercise of its powers
pursuant
to the 1987 Constitution, the Local Government Code, other applicable provisions of
law, and
pertinent jurisprudence; (b) non-exemption of CEPALCO because of the express
withdrawal of
the exemption provided by Section 193 of the LGC; (c) the subject ordinance is legally
presumed valid and constitutional; (d) prescription of respondent-appellee’s action
pursuant to
Section 187 of the LGC; (e) failure of respondent-appellee to exhaust administrative
remedies
under the Local Government Code; (f) CEPALCO’s action for declaratory relief cannot
prosper
since no breach or violation of the subject ordinance was yet committed by the City.

RTC:
Trial court rendered its Decision in favor of the Respondent City of Cagayan de Oro.

The trial court reasoned that since CEPALCO’s business of leasing its posts to pole
users is
what is directly taxed, the tax is not upon the income but upon the privilege to engage in
business. Moreover, Section 143(h), in relation to Section 151, of the Local
Government Code
authorizes a city to impose taxes, fees and charges on any business which is not
specified as
prohibited under Section 143(a) to (g) and which the city council may deem proper to
tax.

The trial court noted that Republic Act (R.A.) Nos. 3247, 357010 and 6020, which
previously
granted CEPALCO’s franchise, expressly stated that CEPALCO would pay a three
percent
franchise tax in lieu of all assessments of whatever authority. However, there is no
similar
provision in R.A. No. 9284, which gave CEPALCO its current franchise.

Finally, the trial court found that CEPALCO’s action is barred by prescription as it failed
to raise
an appeal to the Secretary of Justice within the thirty-day period provided in Section 187
of the
Local Government Code.
CA:

The Appellate Court affirmed the trial court’s Decision.

ISSUE:

Whether the Respondent’s Ordinance was passed in violation or in excess of the City’s
delegated power to tax.

SC:

Yes.

Ordinance No. 9503-2005’s Compliance with the Local Government Code

The Court disagrees with the City of Cagayan de Oro’s submission that Ordinance No.
9503
2005 is not subject to the limits imposed by Sections 143 and 151 of the Local
Government
Code. On the contrary, Ordinance No. 9503-2005 is subject to the limitation set by
Section
143(h). Section 143 recognizes separate lines of business and imposes different tax
rates for
different lines of business. The City of Cagayan de Oro’s imposition of a tax on the
lease of
poles falls under Section 143(h), as the lease of poles is CEPALCO’s separate line of
business
which is not covered by paragraphs (a) to (g) of Section 143. The treatment of the
lease of
poles as a separate line of business is evident in Section 4(a) of Ordinance No. 9503-
2005.

More importantly, because “any person, who in the course of trade or business x x x
leases
goods or properties x x x shall be subject to the valueadded tax,” the imposable tax rate
should not exceed two percent of gross receipts of the lease of poles of the preceding
calendar
year. Section 143(h) states that “on any business subject to x x x value-added x x x tax
under
the National Internal Revenue Code, as amended, the rate of tax shall not exceed two
percent
(2%) of gross sales or receipts of the preceding calendar year” from the lease of goods
or
properties. Hence, the 10% tax rate imposed by Ordinance No. 9503-2005 clearly
violates
Section 143(h) of the Local Government Code.

Finally, in view of the lack of a separability clause, we declare void the entirety of
Ordinance
No. 9503-2005 without prejudice to the re-enactment of a compliant Ordinance. Any
payment
made by reason of the tax imposed by Ordinance No. 95032005 should, therefore, be
refunded to CEPALCO.
Failure to Exhaust Administrative Remedies

Petitioner CEPALCO’s failure to appeal to the Secretary of Justice within the

statutory period of 30 days from the effectivity of the ordinance should have been fatal
to its cause. However, the Court relax the application of the rules in view of the more
substantive matters.

City of Cagayan de Oro’s Power to Create Sources of Revenue vis-a-vis

CEPALCO’s
Claim of Exemption

Section 5, Article X of the 1987 Constitution provides that “[e]ach 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.”

The Local Government Code withdrew tax exemption privileges previously given to
natural or
juridical persons, and granted local government units the power to impose franchise
tax.
BY: LAROGA, CHRISTINE L.

PROVINCE OF BULACAN V. CA & REPUBLIC CEMENT CORPORATION | GR NO.

126232 | NOV. 27, 1998

FACTS:

The provincial treasurer of Bulacan assessed for tax Republic Cement Corporation for
extracting limestone, shale and silica from several private lands pursuant to Sec. 21 of Provincial
Ordinance No. 3 that provides for the levy and collection of tax 10% of the fair market value of
ordinary stones, sand, gravel, earth and other quarry resources. Republic Cement contested
believing that the Province had no authority to impose taxes on quarry resources. It then filed a
petition for declaratory relief with the RTC.
The province filed a motion to dismiss which was granted by the trial court which ruled
that declaratory relief was improper because a breach of the ordinance had been committed.
Republic Cement filed a petition for certiorari with the Supreme Court seeking the
reversal of the dismissal. The Court subsequently referred the same to the CA which ruled that
the Province of Bulacan has no legal authority to impose taxes on quarry resources extracted by
Republic Cement from private lands and the assessment made is null and void.
Hence, this petition.

ISSUE:

Whether the Province of Bulacan has authority to impose taxes on stones, sand, gravel, earth and
other quarry resources extracted from private lands.

RULING:

No. The Province is prohibited from imposing taxes on stones, sand, gravel, earth and other
quarry resources extracted from private lands pursuant to Sec. 138 of the Local Government
Code in relation to Sec. 134 which provides that the province may only levy and collect tax if the
stones, sand, gravel, earth and other quarry materials are extracted from public lands.
Although Section 186 allows a province to levy taxes other than those specifically
enumerated under the Code, the Province is still prohibited to impose this tax because the
imposition is a form of an excise tax under Sec. 133(h) in relation to Sec. 151 of the LGC which
provides that the exercise of the taxing power of provinces shall not extend to imposition of
excise taxes on Mineral Products for the reason that it is already taxed by the NIRC.
It must also be noted that the tax imposed under Section 21 of the Ordinance is only a
reproduction of Sec. 138 of the LGC both apply to extractions on public lands.
 10. PHILIPPINE BASKETBALL ASSOCIATION V. CA | GR NO. 119122 | AUGUST 8,
2000

FACTS:

Philippine Basketball Association received an assessment from the Commission of Internal

Revenue for the payment of deficiency amusement tax. PBA contested the same by filing a
protest to the Commissioner who denied the same. PBA filed a petition for review with the Court
of Tax Appeals but the same was also denied, thereby raising their appeal to the CA. The CA
rendered its decision affirming the decision of the CTA.
Hence the present petition with the Supreme Court contending that the Local Government Code
transferred the power and authority to levy and collect amusement tax from the national
government to the local government. PBA also contended that the income from the cession of
steamer and advertising spaces to Vintage Enterprises Inc. (VEI) is not subject to amusement tax.

ISSUE:

I. Whether the amusement tax on admission tickets to PBA games a national or local tax.
II. Whether the cession of advertising and streamer spaces to VEI subject to the payment of
amusement tax.

RULING

I. PD 1959 as amended provides that the proprietor, lessee or operator of professional basketball
games is required to pay an amusement tax equivalent to 15% of their gross receipts to the
Bureau of Internal Revenue, which payment is a national tax as contrasted from Sec. 13 of
the Local Tax Code which provides for the payment of amusement tax to the province to be
collected from the proprietors, lessees, or operators of theaters, cinematographs, concert, halls,
circuses and other places of amusement.
The authority to tax professional basketball games is not included in the latter because it does not
fall within the ambit of the phrase “other places of amusement” in Sec. 13 of the LGC.
The latter basically belongs to artistic forms of entertainment while PBA caters to sports
and gaming.
II. The cession of advertising and streamer to VEI is also subject to the payment of amusement
tax. Sec. 268 of the NIRC provides for the collection of taxes of the gross receipts from the
proprietors, lessee or operator of professional basketball game. The gross receipts provided is
broad enough to embrace the cession of advertising and steamer spaces as the same embraces all
the receipts of the proprietor, lessee or operator of the amusement place.
11. BATANGAS POWER CORPORATION V. BATANGAS CITY | GR No. 152675 | April
28, 2004

The National Power Corporation (NPC) with the hope of addressing the power outages
sought to attract investors by providing them incentives, one of which is the assumption of
payment of their taxes under the Build Operate and Transfer (BOT) Agreement. Consequently,
Enron Power Development Corporation entered into an agreement with NPC. Enron thereby
assigned its obligation under the BOT Agreement to Batangas Power Corporation (BPC) which
registered itself as a pioneer enterprise with the Board of Investments (BOI). The BOI issued a
certificate of registration to BPC entitling it to a tax holiday of 6 years for being a pioneer
enterprise.
Subsequently, Batangas City sent a letter to BPC demanding payment of business taxes
and penalties commencing from the year 1994. BPC refused to pay, citing its tax-exempt status
for 6 years as a pioneer enterprise under Section 133(g) of the LGC. The City treasurer
acknowledged the tax holiday it thereby modified its demand for payment from BPC only for the
years 1998 to 1999.
BPC still refused to pay insisting that its 6 year tax holiday commenced from the date of
its commercial operation on 1993 and not from its BOI registration on 1992. On the other hand,
the city insisted that their tax holiday has already expired, thus, the deadlock.
As a result, BPC filed a petition for declaratory relief before Makati RTC praying for a
ruling that it was not bound to pay the business taxes imposed on it by the city. It alleged that
under the BOT Agreement, NPC is responsible for the payment of such taxes but as NPC is
exempt from taxes, both BPC and NPC are not liable for its payment.
RTC dismissed the petition, hence, the petition for review on certiorari before the
Supreme Court.

ISSUES:
I. Whether BPC’s 6-year holiday commenced on the date of its BOI registration as a pioneer
enterprise.
II. Whether NPC’s tax exemption privileges under its Charter were withdrawn by Sec. 193 of
the LGC.

RULING:
I. Reliance of BPC on EO 226 is misplaced because it provides that the tax holiday for pioneer
enterprises which commences from the date of its commercial operation applies only to income
taxes as imposed by the national government. It must be noted that Sec. 133(g) of the LGC,
which proscribes local government units from levying taxes on BOI-certified pioneer enterprises
6 years from the date of registration, like the business tax imposed by Batangas City on BPC
in this case. Hence, the 6-year holiday has already expired.
II. In NPC v. City of Cabanatuan, the removal of the blanket exclusion of government
instrumentalities from local taxation is recognized. Sec. 193 of the LGC withdrew the
sweeping tax privileges previously enjoyed by the NPC under its Charter. Consequently, when
the NPC assumed the tax liabilities of the BPC under their BOT agreement, the LGC which
removed NPC’s tax exemption privileges had already been in effect. Thus, while BPC remains to
be the entity doing business in the said city, it is the NPC that is ultimately liable to pay said
taxes under their BOT agreement and the LGC.

12. PETRON CORPORATION V. TIANGCO | GR NO. 158881 | APRIL 16, 2008

FACTS:
Petron maintains a depot or bulk plant in Navotas. Through that depot, it has engaged in the
selling of diesel fuels. Navotas Mayor Tiangco assessed taxes to Petron. However, the latter
protested arguing that it was exempt from local business taxes. The protest was denied by the
Municipal Treasurer which was followed by a “Final Demand to Pay” from the mayor with a
threat of closure of Petron’s operation within Navotas should there be no payment.
Petron subsequently filed with the Malabon RTC a complaint for Cancellation of Assessment
for Deficiency Taxes with prayer for the issuance of a TRO and/or WPI. However, the petition is
dismissed. Its motion for reconsideration is likewise denied.

ISSUE:
Whether a local government unit is empowered under the LGC to impose business taxes on
persons or entities engaged in the sale of petroleum products.

RULING:
The controversy hinges on the correct interpretation of Section 133(h) of the LGC which
provides that: “xxx the taxing power of xxx cities xxx shall not extend to the levy of the
following: xxx (h) Excise taxes on articles enumerated under the NIRC, as amended, and taxes,
fees, or charges on petroleum products”. The paragraph mentions two kinds of taxes which
cannot be imposed by LGUs, namely: “excise taxes on articles enumerated under the NIRC” and
“taxes, fees or charges on petroleum products”
With the given provision the court determines whether the tax on sale of the diesel fuels an
excise tax or whether the tax is prohibited under the proviso “taxes, fees or charges on petroleum
product”
Petron argues that the “business taxes” on its sale of diesel fuels partake of an excise tax.
This contention is based from the American Jurisprudence which defines excise tax as a tax upon
the performance, carrying on, or exercise of some right, privilege, activity, calling or
occupation”. On the other hand, the NIRC of 1986 and thereafter carried over to NIRC of 1997
used and defined excise tax as applicable to goods manufactured or produced in the Philippines.
Both laws also categorize two different kinds of excise taxes: “specific tax” and “ad valorem
taxes”
Thus, Petron's argument concerning excise taxes is founded not on what the NIRC or the
Code actually provides, but on a non-statutory definition sourced from a legal paradigm that is
no longer applicable in this jurisdiction. Therefore, excise taxes as imposed under the NIRC do
not pertain to "the performance, carrying on, or exercise of an activity," which cannot be equated
to business taxes.
It is noteworthy that the clause "taxes, fees or charges on petroleum products" in Section
133(h) precludes local government units from imposing business taxes based on the sale of
petroleum products. The clause makes the distinction of business tax from excise tax immaterial
insofar as the clause does not qualify the kind of taxes, fees or charges on petroleum product.
The absence of the qualification leads to the conclusion that all sorts of taxes on petroleum
products, including business taxes, are prohibited on 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."

By: Lopez, Louie J.

Lepanto Consolidated Mining Company v Hon. Ambanloc

(GR No. 180639)
Jun. 29, 2010
FACTS
Respondent imposed upon petitioner a sand and gravel tax, by
virtue of the latter’s act of extracting the said materials from
within their mining claim. This was done due to the advice of
the Mines and Geo-sciences Bureau of the Department of
Environment and Natural Resources that a separate permit for
such extraction need not be obtained or applied for, since the
mining lease contract issued to petitioner by the national
government was sufficient. Petitioner sent a letter-protest to
respondent, who denied the same. In order to question such
assessment, petitioner filed a petition before the Regional Trial
Court, which rendered a decision in favor of respondent.
Petitioner then filed an appeal before the Court of Tax Appeals
which was then raffled to its Second Division, which affirmed
the ruling of the lower court. An appeal was made before the
CTA En Banc, which then dismissed the same, seeing as the
required number of votes could not be obtained, and thus
resulted in the affirmance of the Second Division’s decision.
Seeing as petitioner’s motion for consideration was also
dismissed, an appeal was made before the Supreme Court.
ISSUE
Whether or not petitioner is liable for the tax imposed by the
Province of Benguet on the sand and gravel that it extracted
from within the area of its mining claim and used exclusively in
its mining operations
RULING
Yes, petitioner is liable for the sand and gravel tax imposed by
respondent.
RATIO DECIDENDI
The Revised Benguet Revenue Code provides for the imposition
of a tax on sand and gravel extractions. Petitioner contends that
since the Code uses terms such as, "fair market value of the
resources," "quantity sold or disposed," "amount left in stock,"
"selling price," and "buyers’ information", it should be taken to
mean that the said tax should only be made to apply to
commercial extractions.
Article D, Section 2 of the Code provides for the 4 types of
permits: commercial, industrial, special, and gratuitous. Among
these permits, only gratuitous permits are exempt from the sand
and gravel tax. Thus, applicants for the other types of permits
necessarily had to pay the tax prior to the issuance of the
permits, and this includes those applying for special permits for
extraction for non-commercial purposes.
The mining lease contract granted to petitioner does provide for
any exemptions from the necessity of applying for certain
permits. Furthermore, the advice given by the Mines and Geo-
sciences Bureau applies only to permits under Mines
Administrative Order MRD-27, and does not include those
required by local ordinances.
Although companies taxed on its main business may no longer
be taxed for activities that are part of, incidental to, and
necessary to such main business, such taxes are in the nature of
business taxes. In this case, the tax imposed for the extractions
were in the nature of excise taxes on the privilege of extracting
sand and gravel. Thus, although the extractions were not
separate businesses of petitioner, the same principle cannot be
applied since the tax pertains to an excise tax, and not a business
tax.
Wherefore, the petition is denied, and the decision of the Court
of Tax Appeals is affirmed.

First Philippine Industrial Corporation v CA (GR No. 125948)

Dec. 29, 1998
FACTS
Petitioner operates oil pipelines by virtue of a pipeline
concession granted under RA 387. Upon its application for a
mayor’s permit, respondent City Treasurer required petitioner to
pay a local tax based on its gross receipts, in pursuance of the
provisions of the Local Government Code. Petitioner paid the
same under protest, contending in a letter-protest addressed to
said Treasurer that it is a common carrier, and is thus exempt
from the payment of such taxes by virtue of Section 133 of the
Local Government Code. The City Treasurer denied the protest,
thereby prompting petitioner to file a complaint for tax refund
with prayer for writ of preliminary injunction with the Regional
Trial Court of Batangas City. The lower court dismissed said
complaint, ruling that the petitioner is not a common carrier, but
rather a special carrier extending its services and facilities to a
single, specific or “special customer” under a “special contract.”
Petitioner then filed a petition for review before the Supreme
Court, the latter referring the case to the Court of Appeals for
adjudication. The appellate court affirmed the lower court’s
dismissal of petitioner’s complaint.
The petitioner’s motion for reconsideration having been denied,
it filed a petition before the Supreme Court, which was initially
denied but was then given due course after petitioner filed a
motion for reconsideration.
ISSUE
Whether or not petitioner is considered a common carrier, which
will thus make it eligible for the tax exemption
RULING
Yes, petitioner is a common carrier, and the exemption claimed
under the law is clear.
RATIO DECIDENDI
Art. 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association engaged in the business
of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the
public."
The Court also provided for the test to determine whether or not
a person is a common carrier, as follows:
1. He must be engaged in the business of carrying goods for
others as a public employment, and must hold himself out as
ready to engage in the transportation of goods for person
generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which
his business is confined;
3. He must undertake to carry by the method by which his
business is conducted and over his established roads; and
4. The transportation must be for hire.
The petitioner is correct in its contention that it is indeed a
common carrier, seeing as the law does not make any distinction
as to the manner by which the transporting is done, as long as it
is by land, water, or air, as clearly provided in the Civil Code
definition. Moreover, RA 387 (Petroleum Act of the Philippines)
and BIR Ruling No. 069-83 considers petitioner a common
carrier.
Therefore, as a common carrier, petitioner is exempt from the
business tax as provided for in Section 122(j) of the Local
Government Code, which limits the taxing power of local
government units over the gross receipts of common carriers.
Wherefore, the petition is granted, and the decision of
respondent Court of Appeals is hereby reversed and set aside.

Ericsson Telecommunications, Inc. v City of Pasig (GR No.

176667)
Nov. 22, 2007
FACTS
Petitioner, engaged in the design, engineering, and marketing of
telecommunication facilities/systems, was assessed a business
tax deficiency by respondent, on the basis of its gross revenue. It
then filed a Protest, contending that the computation of the local
business tax should be based on its gross receipts, and not on its
gross revenue. Another Notice of Assessment for business tax
deficiencies for a different period was sent to petitioner, the
same still having been based on the latter’s gross revenue.
Another Protest was filed by petitioner, which was subsequently
denied by respondent. Petitioner thus filed a petition for review
before the Regional Trial Court of Pasig, praying for the
annulment and cancellation of petitioner’s deficiency local
business taxes. The petition having been granted, respondent
appealed the decision before the Court of Appeals, which
decided in favor of respondent.
Its motion for reconsideration having been denied, petitioner
filed before the Supreme Court a Petition for Review on
Certiorari under Rule 45 of the Rules of Court.
ISSUE
Whether or not respondent erred in assessing petitioner’s local
business tax on its gross revenue, instead of its gross receipts
RULING
Yes, respondent committed an error in the assessment of the
local business tax due of petitioner.
RATIO DECIDENDI
Subsection (e), Section 143 of the Local Government Code
provides that the municipality may impose taxes upon
contractors and other independent contractors based on their
gross receipts for the preceding calendar year. To be able to
properly apply this provision, a distinction must first be made
between gross receipts and gross revenue.
Gross receipts, as defined by Section 131 of the same Code,
“include the total amount of money or its equivalent
representing the contract price, compensation or service fee,
including the amount charged or materials supplied with the
services and the deposits or advance payments actually or
constructively received during the taxable quarter for the
services performed or to be performed for another person
excluding discounts if determinable at the time of sales, sales
return, excise tax, and value-added tax (VAT).” Simply put, it
includes money or its equivalent actually or constructively
received in consideration of services rendered or articles sold,
exchanged or leased, whether actual or constructive. The same
view was held in Commissioner of Internal Revenue v Bank of
Commerce, and in Commissioner of Internal Revenue v Bank of
the Philippine Islands.
On the other hand, gross revenue covers money or its equivalent
actually or constructively received, including the value of
services rendered or articles sold, exchanged or leased, the
payment of which is yet to be received.
In the given case, petitioner used the accrual method of
accounting, wherein income is reportable as soon as all the
events have occurred that fix the taxpayer's right to receive the
income, and the amount can be determined with reasonable
accuracy. Thus, their financial statements reflected income or
revenue which accrued to it during the taxable period although
not yet actually or constructively received or paid.
Therefore, by virtue of respondent’s act of taxing petitioner on
the basis of its gross revenue, there exists double taxation,
seeing as there is an imposition of the tax based on gross
revenue which will already have included its gross receipts, the
tax on which has already been paid during the previous year.
Wherefore, the petition is granted, and the decision of the
Regional Trial Court is reinstated.

Pelizloy Realty Corporation v Province of Benguet (GR No.

183137)
Apr. 10, 2013
FACTS
Petitioner owns Palm Grove Resort, which is designed for
recreation and which has facilities like swimming pools, a spa
and function halls. On Dec. 8, 2005, the Provincial Board of the
Province of Benguet approved Provincial Tax Ordinance No.
05-107, otherwise known as the Benguet Revenue Code of
2005. Section 59, Article X of said ordinance levied a ten
percent (10%) amusement tax on gross receipts from admissions
to "resorts, swimming pools, bath houses, hot springs and tourist
spots." Petitioner contended that the imposition of such tax was
an ultra vires act on the part of respondent, and thus filed an
appeal before the Secretary of Justice, who failed to act upon the
same. Having considered the same as an implied denial of the
appeal, petitioner filed a Petition for Declaratory Relief and
Injunction before the Regional Trial Court of La Trinidad,
Benguet, claiming that the percentage tax imposed was in
violation of limitation on the taxing powers of local government
units as provided for under Section 122 (i) of the Local
Government Code, and is thus void ab initio. However,
respondent contended that the phrase ‘other places of
amusement’ in Section 140 (a) of the LGC encompasses resorts,
swimming pools, bath houses, hot springs, and tourist spots
since "Article 220 (b) (sic)" of the LGC defines "amusement" as
"pleasurable diversion and entertainment x x x synonymous to
relaxation, avocation, pastime, or fun.”
The lower court deciding in favor of respondent, ruling that such
percentage tax falls under the exceptions provided by the LGC
itself, wherein what was prohibited was "imposition and levy of
percentage tax on sales, barters, etc., on goods and services
only.” Petitioner’s motion for reconsideration was denied, thus
prompting them to file a petition before the Supreme Court on
pure questions of law.
ISSUE
Whether or not Section 59, Article X of Provincial Tax
Ordinance No. 05-107, otherwise known as the Benguet
Revenue Code of 2005, levies a percentage tax.
Whether or not provinces are authorized to impose amusement
taxes on admission fees to resorts, swimming pools, bath houses,
hot springs, and tourist spots for being "amusement places"
under the Local Government Code.
RULING
No,
RATIO DECIDENDI
Section 131 (c) of the Local Government Code provides for the
definition of “amusement places”, which include theaters,
cinemas, concert halls, circuses and other places of amusement
where one seeks admission to entertain oneself by seeing or
viewing the show or performances. Applying the principles of
statutory construction, specifically the principle of ejusdem
generis, places such as resorts, swimming pools, bathhouses, hot
springs, and tourist spots cannot be considered as within the
purview of “amusement places.”
Wherefore, the petition is granted, and the second paragraph of
Section 59, Article X of the Benguet Provincial Revenue Code
of 2005, in so far as it imposes amusement taxes on admission
fees to resorts, swimming pools, bath houses, hot springs and
tourist spots, is declared null and void.

Maandig, Fritz B.
Date Submitted:
December 25, 2017

City of Manila vs Coca-cola Bottlers GR 181845

Facts:
 Petitioner City of Manila is a public corporation empowered to collect and
assess business taxes, revenue fees, and permit fees, through its officers.
Respondent Coca-Cola Bottlers Philippines, Inc. is a corporation engaged in the
business of manufacturing and selling beverages, and which maintains a sales
office in the City of Manila.

Prior to 25 February 2000, respondent had been paying the City of Manila
local business tax only under Section 14 of Tax Ordinance No. 7794,6 being
expressly exempted from the business tax under Section 21 of the same tax
ordinance.

Petitioner City of Manila subsequently approved on 25 February 2000, Tax

Ordinance No. 7988,7 amending certain sections of Tax Ordinance No. 7794,
particularly: (1) Section 14, by increasing the tax rates applicable to certain
establishments operating within the territorial jurisdiction of the City of Manila;
and (2) Section 21, by deleting the proviso found therein, which stated that all
registered businesses in the City of Manila that are already paying the
aforementioned tax shall be exempted from payment thereof

However, tax Ordinances No. 7988 and No. 8011 were later declared by the
Supreme Court (Coca-cola case) null and void (1) Tax Ordinance No. 7988 was
enacted in contravention of the provisions of the Local Government Code (LGC)
of 1991 and its implementing rules and regulations; and (2) Tax Ordinance No.
8011 could not cure the defects of Tax Ordinance No. 7988, which did not legally
exist.

However, before the Court could declare Tax Ordinance No. 7988 and Tax
Ordinance No. 8011 null and void, petitioner City of Manila assessed respondent
on the basis of Section 21 of Tax Ordinance No. 7794, as amended by the
aforementioned tax ordinances, for deficiency local business taxes, penalties, and
interest, in the total amount of P18,583,932.04, for the third and fourth quarters of
the year 2000.

Respondent Coca-Cola filed a protest with petitioner on the ground that the
said assessment amounted to double taxation.
On 14 July 2006, the RTC rendered a Decision In favor of the City of
Manila. The RTC ruled that the business taxes imposed upon the respondent under
Sections 14 and 21 of Tax Ordinance No. 7988, as amended, were not of the same
kind or character; therefore, there was no double taxation. However the RTC
reversed itself upon the Motion for Reconsideration of respondent Coca-cola.

The RTC decreed the cancelation and withdrawal of the assessment of the
City of Manila. The decision of the RTC was in conformity with the ruling of this
Court in the Coca-Cola case, in which Tax Ordinance No. 7988 and Tax
Ordinance No. 8011 were declared null and void.

Subsequently the motion of Reconsideration of the Petitioners was denied

hence their appeal to the Court of tax Appeal First Division. However when
Petitioners filed their appeal of petition for review, it was dismissed by the first
division for untimely filling of the appeal under the rules of the Court of Tax
Appeals.
The Petitioners then filed an appeal to the Court of Tax Appeals En Banc, in
which case the appeal was still denied as CTA en banc affirmed the decision of the
CTA first division, Hence this Petition to the Supreme Court.

Issue:
1. Whether or not there was timely appeal made by the Petitioners?
2. Whether or not the enforcement of Section 21 of Tax Ordinance No. 7794, as
amended, constitutes Double Taxation.
3. Whether or not the Assessment made by the City of Manila was proper?

Ruling:
1. On the issue of untimely Appeal
The Court ruled in favor of the City of Manila and decreed that there was a proper
timely appeal. The Court enunciated that under the ruled of the Court of Tax
appeals, the taxpayer must file a Petition for Review with the CTA within
30 days from receipt of said adverse decision or ruling of the RTC.
However, since the rules are silent as to whether the 30 days period can be
extended, the court ruled that applying Rule 42 of the Civil Procedure as
suppletory is proper, which allows a 15 days extension and another
extension subsequent to such 15 days but only for the most compelling
reasons.
 Thus the court ruled that, following by analogy Section 1, Rule 42 of
the Revised Rules of Civil Procedure, the 30-day original period for filing a
Petition for Review with the CTA under Section 11 of Republic Act No.
9282, as implemented by Section 3(a), Rule 8 of the Revised Rules of the
CTA, may be extended for a period of 15 days. No further extension shall be
allowed thereafter, except only for the most compelling reasons, in which
case the extended period shall not exceed 15 days.

In the case at Bar, when petitioners received the Copy of the Decision
of the RTC, the have from April 20, 2007 up to May 20, 2007 to file an
appeal, hence when they filed their appeal on May 4, the are within the
proper period of appeal and there was no need for a motion for extension
from the Petitioners.

Nevertheless, as correctly ruled by the CTA first division , there were

other reasons for which the CTA First Division dismissed the Petition for
Review of petitioners as petitioners failed to conform to Section 4 of Rule 5,
and Section 2 of Rule 6 of the Revised Rules of the CTA which provided for
a certain number of copies to file the case. Further the Court ruled that
failure to follow such prompted proper dismissal.
Moreover, the Court noted that Petitioners never offered an explanation for
their non-compliance with Section 4 of Rule 5, and Section 2 of Rule 6 of the
Revised Rules of the CTA. Hence, for having no justification the court cannot
relax the rule on procedure.

2. On the Issue of Double Taxation : There is Double Taxation if respondent

is subjected to Secctions 14 and 21 of Ordinance No. 7794.
The court ruled that petitioners obstinately ignore the
exempting proviso in Section 21 of Tax Ordinance No. 7794, to their own
detriment. Said exempting proviso was precisely included in said section so as
to avoid double taxation.

Double taxation means taxing the same property twice when it should be
taxed only once; that is, taxing the same person twice by the same jurisdiction
for the same thing. It is obnoxious when the taxpayer is taxed twice, when it
should be but once. Otherwise described as direct duplicate taxation, the two
taxes must be imposed on the same subject matter, for the same purpose, by
 the same taxing authority, within the same jurisdiction, during the same
taxing period; and the taxes must be of the same kind or character.[18]

In the case at bar, using the test, the Court finds that there is indeed
double taxation if respondent is subjected to the taxes under both Sections 14
and 21 of Tax Ordinance No. 7794, since these are being imposed: (1) on the
same subject matter the privilege of doing business in the City of Manila; (2)
for the same purpose to make persons conducting business within the City of
Manila contribute to city revenues; (3) by the same taxing authority petitioner
City of Manila; (4) within the same taxing jurisdiction within the territorial
jurisdiction of the City of Manila; (5) for the same taxing periods per calendar
year; and (6) of the same kind or character a local business tax imposed on
gross sales or receipts of the business.

The Court enunciated that in Section 143 of the LGC, it is clear that
when a municipality or city has already imposed a business tax on
manufacturers, pursuant to Section 143(a) of the LGC, said municipality or city
may no longer subject the same manufacturers, etc. to a business tax under
Section 143(h) of the same Code.

In the same way, businesses such as respondents, already subject to a local

business tax under Section 14 of Tax Ordinance No. 7794 [which is based on
Section 143(a) of the LGC], can no longer be made liable for local business tax
under Section 21 of the same Tax Ordinance [which is based on Section 143(h) of
the LGC].

3. On the Issue of was there Proper Assessment: The Tax Assessment is void.
The Court ruled that the Coca-Cola case is indeed applicable to the instant
case, hence when the Supreme court ruled that Tax Ordinance 7988 was null and
the passage of Tax Ordinance No. 8011, amending Tax Ordinance No. 7988, did
not cure the defects of the latter, which, in any way, did not legally exist. Thus, by
virtue of the Coca-Cola case, Tax Ordinance No. 7988 and Tax Ordinance No.
8011 are null and void and without any legal effect. Therefore, respondent cannot
be taxed and assessed under the amendatory laws--Tax Ordinance No. 7988 and
Tax Ordinance No. 8011.

Petitioners in the case at bar argue that even with the declaration of nullity of
Tax Ordinance No. 7988 and Tax Ordinance No. 8011, respondent could still be
made liable for local business taxes under both Sections 14 and 21 of Tax
Ordinance No. 7944 as they were originally read, without the amendment by the
null and void tax ordinances.

The Court did not agree with such argument, to which the court said that
emphasis must be given to the fact that prior to the passage of Tax Ordinance No.
7988 and Tax Ordinance No. 8011 by petitioner City of Manila, petitioners
subjected and assessed respondent only for the local business tax under Section 14
of Tax Ordinance No. 7794, but never under Section 21 of the same. This was due
to the clear and unambiguous proviso in Section 21 of Tax Ordinance No.
7794. The aforementioned tax referred to in said proviso refers to local business
tax. Thus, Section 21 of Tax Ordinance No. 7794 exempts from the payment of
the local business tax imposed by said section, businesses that are already paying
such tax under other sections of the same tax ordinance. The said proviso,
however, was deleted from Section 21 of Tax Ordinance No. 7794 by Tax
Ordinances No. 7988 and No. 8011. Following this deletion, petitioners began
assessing respondent for the local business tax under Section 21 of Tax Ordinance
No. 7794, as amended.

Thus, it is clear that the City of Manila was fully aware of the Tax
exemption of Coca-Cola bottlers, to which fact they themselves followed the rule.
By holding out until Section 21 was amended, before assessing the respondent,
they (City of Manila) recognized that the exemption was valid and subsisting .
However with the amendment being declared void, it is but proper that the
exemption is back in effect.
Mobil Phils vs Makati GR 154092
Facts:
Mobil Philippines Inc is a domestic corporation engaged in the
manufacturing, importing, exporting and wholesaling of petroleum products, while
respondents are the local government officials of the City of Makati charged with
the implementation of the Revenue Code of the City of Makati, as well as the
collection and assessment of business taxes, license fees and permit fees within
said city.
Prior to September 1998, petitioner’s principal office was in Makati City. On
August 20, 1998, petitioner filed an application with the City Treasurer of Makati
for the retirement of its business within the City of Makati as it moved its principal
place of business to Pasig City.
In its application, petitioner declared its gross sales/receipts as follows:
Gross Sales Receipts for Calendar Year 1997 P 453,799,493.29

Gross Sales Receipts for Calendar Year 1998 267,952,766.67

January to August

The OIC of the License Division issued a billing slip of business taxes
amounting to P 1,898,106.96 which the petitioner paid under protest on September
1998.
In 1999, petitioner filed a claim for refund but was denied on the ground that
petitioner was merely transferring and not retiring its business, and that the gross
sales realized while petitioner still maintained office in Makati from January 1 to
August 31, 1998 should be taxed in the City of Makati.
 Petitioner subsequently filed a petition with the Regional Trial Court of
Pasig City, Branch 268, seeking the refund of business taxes erroneously collected
by the City of Makati
The RTC ruled in favor of the City of Makati, stating that Considering
therefore that the business tax accrues only on the first day of January as provided
in Sec. 3A.07 and becomes payable within the first 20 days thereof or of each
subsequent quarter, the payments made by Mobil in the year 1998 are therefore
payments for the business tax for 1997 which accrued in January of 1998 and
became payable within the first 20 days of January or of each subsequent quarter.
Thus, upon retirement in August 1998, the taxes for said year which should accrue
in January 1999 [become] immediately payable before the application for
retirement can be approved.
Petitioner filed a Motion for Reconsideration which was denied in an Order
dated May 15, 2002, hence this appeal.

Issue: Whether or not the business taxes paid by petitioner in 1998 are business
taxes for 1997?
Ruling:
The trial court erred when it said that the payments made by petitioner in
1998 are payments for business tax incurred in 1997 which only accrued in January
1998.
The court made a pronouncement that there must clearly be a made a distinction
between business taxes and Income taxes.
Business taxes imposed in the exercise of police power for regulatory
purposes are paid for the privilege of carrying on a business in the year the tax was
paid. It is paid at the beginning of the year as a fee to allow the business to operate
for the rest of the year. It is deemed a prerequisite to the conduct of business.
Income tax, on the other hand, is a tax on all yearly profits arising from property,
professions, trades or offices, or as a tax on a person’s income, emoluments, profits
and the like. It is tax on income, whether net or gross realized in one taxable year.
It is due on or before the 15 th day of the 4 th month following the close of the
taxpayer’s taxable year .
Under the Makati Revenue Code, it appears that the business tax, like income tax,
is computed based on the previous year’s figures. In computing the amount of tax
due for the first quarter of operations, the business’ capital investment is used as
the basis. For the subsequent quarters of the first year, the tax is based on the gross
sales/receipts for the previous quarter. The business taxes paid in the year 1998 is
for the privilege of engaging in business for the same year, and not for having
engaged in business for 1997.
 Under the same Code, on the year an establishment retires or terminates its
business within the municipality, it would be required to pay the difference in the
amount if the tax collected, based on the previous year’s gross sales or receipts, is
less than the actual tax due based on the current year’s gross sales or receipts.
For the year 1998, petitioner paid a total of P2,262,122.48 to the City
Treasurer of Makati as business taxes for the year 1998. The amount of tax as
computed based on petitioner’s gross sales for 1998 is only P1,331,638.84.
Since the amount paid is more than the amount computed based on
petitioner’s actual gross sales for 1998, petitioner upon its retirement is not liable
for additional taxes to the City of Makati. Thus, the Court ruled that the respondent
erroneously treated the assessment and collection of business tax as if it were
income tax, by rendering an additional assessment of P1,331,638.84 for the
revenue generated for the year 1998. Therefore, respondents City Treasurer and
Chief of the License Division of Makati City are ordered to refund to petitioner
business taxes paid in the amount of P1,331,638.84.

Sps. Plaza vs Lustiva GR 172909

Facts:
The case involves a parcel of Land located in Butuan City. This land was
Awarded by the Court of Appeals , which became final and executor, to a Certain
Barbara, in exclusion of her other siblings. Subsequently Barbara and her
successors, the respondents of this case, came to possess and occupy the land.
Sometime two years after, one successor of the Sibling of Barbara, the
petitioner in this case, filed a Complaint for Injunction, Damages, Attorney’s Fees
with Prayer for the Issuance of the Writ of Preliminary Injunction and/or
Temporary Restraining Order against the respondents and the City Government of
Butuan.
 The petitioners contend that they acquired the land through Virginia Tuazon
who was the sole bidder and winner of a tax delinquency sale conducted by the
City of Butuan of the property.
The respondents, in their answer, hold that they were never delinquent to
play their taxes and that Tuazon is disqualified to bid in the auction as she is a
Government Employee. In addition, respondents contend that the petitioners
merely falsified the property tax declaration by inserting the name of the
petitioners’ father, making him appear as a co-owner of the auctioned land. Armed
with the falsified tax declaration, the petitioners, as heirs of their father,
fraudulently redeemed the land from Tuazon

the Regional Trial Court (RTC) of Butuan City, first ruled in favor of the
Petitioners but later, reconsidered its earlier order and denied the prayer for a Writ
of Preliminary Injunction, and ordered that the possession and occupation of the
land be returned to the respondents. The RTC ruled that there were irregularities in
the auction sale, one being that Tuazon as a government employee is disqualified
to enter into the sale.
By a petition for review on certiorari under Rule 65, the petitioners challenged the
RTC’s order before the CA.
While the petition for review on certiorari was pending before the CA, the
petitioners filed an action for specific performance8 against the City Government
of Butuan. But this case was later dismissed by the RTC

The CA affirmed the RTC’s ruling, on the ground that Tuazon was
disqualified; hence petitioner never obtained any proprietary rights and also found
the petitioners guilty of forum shopping, dismissed the case, and referred the case
to the Court and to the Integrated Bar of the Philippines for investigation and
institution of the appropriate administrative action. Likewise, the CA dismissed
also the petitioners motion for reconsideration, hence this petition to the Supreme
Court.
.
THE PARTIES’ ARGUMENTS
Petitioner argues that no falsification of the tax declaration occurred and further, in
the event that Tuazon is correctly judged as disqualified to bid then what is
applicable is Section 181 of the LGC of which in effect would treat the
circumstance as if there was no bidder at all and ipso facto the City Government of
Butuan becomes the direct purchaser of the land.
In addition, petitioners also raise Section 267 of the Local Government code, that
based on such provision respondents may not question the validity of the Public
auction for their failure to deposit the required amount under such section. .
Finally, the petitioners argue that they did not commit forum shopping, as the
reliefs prayed for in the present case and in the specific performance case are not
the same.
On the other hand, respondents argue that there would be no legal redemption
since the highest bidder was disqualified and further contends that Forum
Shopping was committed by the Petitioners when they filed a cases for specific
performance and that Petitioners cannot be granted preliminary injunction as they
fail to show proof that they are entitled to it.

Issues:
1. Whether or not Section 181 and 267 of the Local Government Code is applicable
as a defense?
2. Whether or not the Petitioners are entitled to a preliminary injunction?
3. Whether or not the forum shopping rule was violated by the petitioners?

1. On the issue of Section 181 and 267 of the Local Government Code
On this issue the Supreme court ruled in the negative. That both sections
are not applicable in the present case.
As regards to Section 181, it provides that The law authorizes the local
government unit to purchase the auctioned property only in instances where
"there is no bidder" or "the highest bid is insufficient, however a disqualified
bidder such as in this case of Tuazon is not among the authorized grounds by
the law and further, there is no showing that the Local Governnment of Butuan
took steps to purchase the property, hence the section does not apply.
As regards to Section 267, which provides that a deposit must first be
made in order to assail a validity of a Tax sale the court ruled that such section
finds no application in this case. The court enunciated that, although this
provision has been declared in a number of cases as jurisdictional - a condition
necessary for the court to entertain the action, nevertheless the court ruled that
that the provision relates to actions for annulment of tax sales of which in this
case does not apply because the suit filed by the petitioners was an action for
injunction and damages; the issue of nullity of the auction was raised by the
respondents themselves merely as a defense and in no way converted the action
to an action for annulment of a tax sale. The proviso only finds application for
initiatory pleadings that assail a tax sale.
2. The issue of Preliminary Injunction
 The court ruled that Preliminary Injuction should not be granted to
petitioners. The lower courts correctly found, Tuazon had no ownership to
confer to the petitioners despite the latter’s reimbursement of Tuazon’s
purchase expenses. Because they were never owners of the property, the
petitioners failed to establish entitlement to the writ of preliminary injunction.

3. The issue of Forum Shopping

The court ruled that the petitioners violated the rule in forum shopping.
The court explained that there are three ways forum shopping may be
committed one of which is through splitting of causes of action — filing
multiple cases based on the same cause of action but with different prayers —
the ground to dismiss being either litis pendentia or res judicata.
What applies in this case is the identity of the causes of action there
where filed in different cases. The cause of action in the present case (and the
main case) is the petitioners’ claim of ownership of the land when they bought
it, either from the City Government of Butuan or from Tuazon. On the other
hand, the specific performance case prayed that the City Government of Butuan
be ordered to issue the petitioners the certificate of sale grounded on the
petitioners’ ownership of the land when they had bought it, either from the City
Government of Butuan or from Tuazon.
While it may appear that the main relief prayed for in the present injunction case is
different from what was prayed for in the specific performance case, the cause of
action which serves as the basis for the reliefs remains the same — the petitioners’
alleged ownership of the property after its purchase in a public auction. Thus, it is
of the same case of action and further as the Court has held in the past cases, "there
is still forum shopping even if the reliefs prayed for in the two cases are different,
so long as both cases raise substantially the same issues.

WHEREFORE the Court denies the petition for review of the petitioners and
Affirms the Decision of the RTC and CA.

Manila Electric vs Province of Laguna GR131359

Facts:
MERALCO was granted franchise for the supply of electric light, heat and
power by certain municipalities of the Province of Laguna including, Biñan, Sta
Rosa, San Pedro, Luisiana, Calauan and Cabuyao. On 19 January 1983,
MERALCO was likewise granted a franchise by the National Electrification
Administration to operate an electric light and power service in the Municipality of
Calamba, Laguna.
Subsequently, on 12 September 1991, Republic Act No. 7160, otherwise
known as the “Local Government Code of 1991,” was enacted to take effect on 01
January 1992.Pursuant to the provisions of the Code, respondent province enacted
Laguna Provincial Ordinance providing for franchise tax at a rate of 50% of 1% of
the gross annual receipts.

Petitioner MERALCO paid the tax, which then amounted to

P19,520,628.42, under protest. A formal claim for refund was thereafter sent by
MERALCO to the Provincial Treasurer of Laguna claiming that the franchise tax it
had paid and continued to pay to the National Government pursuant to P.D. 551
already included the franchise tax imposed by the Provincial Tax Ordinance.
MERALCO contended that the imposition of a franchise tax under Section 2.09 of
Laguna Provincial Ordinance No. 01-92, insofar as it concerned MERALCO,
contravened the provisions of Section 1 of P.D. 551 which provides
“Any provision of law or local ordinance to the contrary notwithstanding, the
franchise tax payable by all grantees of franchises to generate, distribute and sell
electric current for light, heat and power shall be two per cent (2%) of their gross
receipts received from the sale of electric current and from transactions incident to
the generation, distribution and sale of electric current… Such franchise tax shall
be payable to the Commissioner of Internal Revenue or his duly authorized
representative.”

However, the claim for refund of petitioner was denied. In denying the claim,
respondents relied on a more recent law, i.e., Republic Act No. 7160 or the Local
Government Code of 1991, than the old decree invoked by petitioner.

This prompted, petitioner MERALCO to file with the RTC a complaint for
refund against the Province of Laguna and also Benito R. Balazo in his capacity as
the Provincial Treasurer of Laguna.
RTC dismissed the complaint holding that the power to tax exercised by
the province of Laguna was valid, binding, reasonable and enforceable.
Thus, the case was directly assailed by Petitioners to the Supreme Court,
contending that the Laguna Tax ordinance is invalid on the ground that
MERALCO is already paying tax under P.D 551 and that to apply and enforce the
tax ordinance would violate the non-impairment clause of contracts in the
constitution.
Issue
1. Whether or not the tax ordinance of Laguna applies to MERALCO?

Ruling:

The court ruled that the tax ordinance is valid and enforceable as against to
MERALCO.
In this case the court discussed that the nature of local governments, that
they do not have the inherent power to tax except to the extent that such power
might be delegated to them either by the basic law or by statute.

In the 1987 constitution, a general delegation of that power has been given
in favor of local government units as compared to the 1935 constitution having no
similar delegation. The law now is geared towards safeguarding the viability and
self-sufficiency of local government units by directly granting them general and
broad tax powers. However, the delegation to tax must see to it that (a) the
taxpayer will not be over-burdened or saddled with multiple and unreasonable
impositions; (b) each local government unit will have its fair share of available
resources; (c) the resources of the national government will not be unduly
disturbed; and (d) local taxation will be fair, uniform, and just.

The court ruled that the Local Government code prevails over P.D. 551, as
such, it is but a proper right granted by law to the Province of Laguna to impose
such tax to MERALCO. The reason being that 1991 Code explicitly authorizes
provincial governments, notwithstanding “any exemption granted by any law or
other special law, x x x (to) impose a tax on businesses enjoying a franchise.”
Indicative of the legislative intent to carry out the Constitutional mandate of
vesting broad tax powers to local government units, the Local Government Code
has effectively withdrawn under Section 193 thereof, tax exemptions or incentives
theretofore enjoyed by certain entities.
In defense however, MERALCO points out that it is no longer required to
pay the tax ordinance under the wordings of P.D. 552 “ any provision of the Local
Tax Code or any other law to the contrary notwithstanding, be in lieu of all taxes
and assessments of whatever nature imposed by any national or local authority on
earnings, receipts, income and privilege of generation, distribution and sale of
electric current.”
 The court in ruling against MERALCO pointed out that, jurisprudence has
held the phrase “in lieu of all taxes” have to give way to the peremptory
language of the Local Government Code specifically providing for the withdrawal
of such exemptions, privileges, and that upon the effectivity of the Local
Government Code all exemptions except only as provided therein can no longer be
invoked by MERALCO to disclaim liability for the local tax. The Court now put
more emphasis on legislative intent of the amendatory law.

In addition, the Local Government code has a general repealing clause of

which the Court further explained that , such repeal applies to entities who have
previously been under a tax exemption, the reason being that these policy
considerations are consistent with the State policy to ensure autonomy to local
governments and the objective of the LGC that they enjoy genuine and meaningful
local autonomy to enable them to attain their fullest development as self-reliant
communities and make them effective partners in the attainment of national goals
and that power to tax is the most effective instrument to raise needed revenues to
finance and support myriad activities of local government units for the delivery of
basic service essential to the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of the people

Finally, as regards to the contention of MERALCO that the non-impairment

clause will be violated, the court explained that the non-impairment violation only
applies to contracts made by entities to the government or those contained in
government bonds or debentures, lawfully entered into by them under enabling
laws in which the government but it is not applicable in contracts granted by
franchises, such as the case of MERALCO, hence in the case at bar, there is no
violation of the non-impairment of contracts rule under the constitution.

WHEREFORE, the instant petition of MERALCO is dismissed.

BY: MAGALLANES, KRYSTEL

NATIONAL POWER CORPORATION
V
CITY OF CABANATUAN
(G.R. No. 149110 April 9, 2003)
FACTS:
- Petitioner is a GOCC created under Commonwealth Act No.
120 that is tasked to undertake the “development of
hydroelectric generations of power and the production of
electricity from nuclear, geothermal and other sources, as well
as, the transmission of electric power on a nationwide basis”
- Petitioner NPC has been operating and selling electric power in
Cabanatuan City for many years, posting a gross income
P107,814,187.96 in 1992.
- Respondent assessed the NPC for franchise tax amounting to P
808, 606.41 representing 75% of 1% of the latter’s gross receipts
for the preceding year pursuant to Sec. 37 of Ordinance No.
165-92
- Petitioner refused to pay on the basis that it’s a government
entity whose capital stock was subscribed and paid wholly by
Phil. Government and that it is a non-profit organization which
is exempted from payment of all taxes, charges and duties
pursuant to Sec. 13 of Rep. Act No. 6395
- Respondent then filed a collection suit in the RTC of
Cabanatuan City alleging that petitioner’s tax exemption has
been repealed by Sec. 193 of Rep. Act No. 7160.
- RTC dismissed the case on the grounds that RA 6395 is a
particular law and it may not be repealed by RA 7160 which is a
general law. The court also relied on the ruling in the case of
Basco v PAGCOR.
- On the Court of Appeals, it reversed the trial court’s Order on
the ground that Sec.193 in relation to Sec. 137 and 151 of the
LGC, expressly withdrew the exemptions granted to the
petitioners. Petitioner filed a Motion for Reconsideration on the
CA’s decision but was denied by the appellate court.
ISSUES:
1. WoN petitioner National Power Corporation is liable for
franchise tax
2. WoN the statute granting exemption of NPC from all forms of
taxes has been repealed by the LGC.

RULING:
1. YES. NPC is liable for payment of franchise tax. The SC
discussed how taxes are the lifeblood of the government, for
without it the government can neither exist nor endure. A
franchise is a privilege conferred by the government authority
which does not belong to citizens as a matter of right. A
franchise tax is a tax on the privilege of transacting business in
the State and exercising corporate franchises granted by the
State. It is not levied on the corporation simply for existing as a
corporation but on its exercise of the rights or privileges granted
to it by the government. NPC’s contention that it is excluded
from franchise tax must necessarily fail by reason that a
franchise tax is not imposed on the basis of ownership but on the
exercise of a corporation of the privilege to do business. The
taxable entity is the corporation and not the individual
stockholders. NPC under its charter was created as a separate
and distinct entity from the Nat’l. Gov’t. It can sue and be sued
under its name and just because it’s entire capital stock is owned
by the Nat’l Gov’t. does not mean the petitioner is not engaged
in business.
2. YES. The statute granting exemption has been repealed.
Petitioner’s reliance on Sec. 13 of RA 6395 exempting it from
all forms of taxes would not prevail in this case. Sec. 193 of the
LGC withdrew, subject to limited exceptions, the sweeping tax
privileges previously enjoyed by private and public
corporations. Contrary to what petitioner contended, Sec. 193 of
the LGC is an express, albeit general, repeal of all statutes
granting tax exemptions from local taxes.
"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. No. 6938, non-
stock and non-profit hospitals and educational institutions,
are hereby withdrawn upon the effectivity of this Code."
Applying the legal maxim ‘expressio unius est exclusio alterius’,
not being a local water district, a cooperative registered
under RA 6938, or a non-stock and non-profit hospital or
educational institution, petitioner does not belong to the
exception.
The SC stated that “It is worth mentioning that section 192 of
the LGC empowers the LGUs, through ordinances duly
approved, to grant tax exemptions, initiatives or reliefs. 77

But in enacting section 37 of Ordinance No. 165-92 which

imposes an annual franchise tax "notwithstanding any
exemption granted by law or other special law," the
respondent city government clearly did not intend to
exempt the petitioner from the coverage thereof”
THE CITY OF GOVERNMENT OF QUEZON CITY
V
BAYAN TELECOMMUNICATIONS, INC.
(G.R. No. 162015 March 6, 2006)

FACTS:
- Respondent BAYANTEL is a legislative franchise holder
under RA 3259 to establish and operate radio stations for
domestic telecommunications, radiophone, broadcasting, and
telecasting
- The same statute granting the franchise to BAYANTEL also
provided;
SECTION 14. (a) The grantee shall be liable to pay the same
taxes on its real estate, buildings and personal property,
exclusive of the franchise, as other persons or corporations are
now or hereafter may be required by law to pay. (b) The
grantee shall further pay to the Treasurer of the Philippines
each year, within ten days after the audit and approval of the
accounts as prescribed in this Act, one and one-half per
centum of all gross receipts from the business transacted
under this franchise by the said grantee).
- Subsequently, the LGC of 1991 took effect where Sec. 232 of
the Code granted the local government units within Metro
Manila area the power to levy taxes on real properties. Sec. 234
of the same code also withdrew any exemption from realty tax
heretofore granted to or enjoyed by all persons, natural or
juridical
- After the LGC took effect, the Congress amended Bayantel’s
original franchise through RA 7633, that provided:
SEC. 11. The grantee, its successors or assigns shall be liable
to pay the same taxes on their real estate, buildings and personal
property, exclusive of this franchise, as other persons or
corporations are now or hereafter may be required by law to pay.
In addition thereto, the grantee, its successors or assigns shall
pay a franchise tax equivalent to three percent (3%) of all gross
receipts of the telephone or other telecommunications businesses
transacted under this franchise by the grantee, its successors or
assigns and the said percentage shall be in lieu of all taxes on
this franchise or earnings thereof. Provided, That the grantee, its
successors or assigns shall continue to be liable for income taxes
payable under Title II of the National Internal Revenue Code ….
xxx.
- BAYANTEL owns several real properties on which it
maintained telecommunications facilities in Quezon City
- The government of Quezon City enacted a City Ordinance
imposing real property tax on all real properties in QC.
- Bayantel sought for the exclusion of its real properties from tax
in the office of the City Assessor. Its request was denied, which
lead Bayantel to appeal with the Local Board of Assessment
Appeals (LBAA). Bayantel did not pay the taxes assessed on the
belief of its exclusion which resulted the City Treasurer to sent
out notices for delinquency, followed by several warrants of
levy against Bayantel’s properties preparatory to their sale at a
public auction on July 30, 2002
- Threatened by the imminent loss of its properties the Bayantel
withdrew its appeal before the LBAA and filed before the RTC
of Quezon City a petition for prohibition with an urgent
application for a TRO/or writ of preliminary. On the eve of the
set date of public auction, the trial court issued a TRO, followed
by a writ of preliminary injunction via its order of Aug. 20,
2002.
- The trial court declared the real estate properties and buildings
which have been used in the operation of Bayantel’s franchise to
be exempt from real estate taxation and the injunction ordered
on Aug. 20, 2002 was made permanent
- (there is no details about what happened to the case in the CA
because the case was directly elevated to the Supreme Court on
pure questions of law)
ISSUE:
WoN the BAYANTEL’s real properties in QC are exempt from
real property taxes under its legislative franchise
RULING:
YES, the SC ruled that this is a case where the realty tax
exemption heretofore enjoyed by Bayantel under its original
franchise, but subsequently withdrawn by force of Sec. 234 of
the LGC but then restored by Sec. 14 of RA 7633.
All realties which are actually, directly and exclusively used in
the operation of its franchise are exempted from any property
tax. Bayantel is only liable to pay the same taxes, as any other
persons or corporations on all its real or personal properties,
exclusive of its franchise. There can really be no dispute that the
power of the Quezon City Government to tax is limited by
Section 232 of the LGC which expressly provides that "a
province or city or municipality within the Metropolitan Manila
Area may levy an annual ad valorem tax on real property such as
land, building, machinery, and other improvement not
hereinafter specifically exempted." Under this law, the
Legislature highlighted its power to thereafter exempt certain
realties from the taxing power of local government units. An
interpretation denying Congress such power to exempt would
reduce the phrase "not hereinafter specifically exempted" as a
pure jargon, without meaning whatsoever.
The Congress is presumed to know all the laws it has enacted. In
this case it was presumed that it had knowledge that Sec. 232 of
the LGC withdrew Bayantel’s former exemption and that its
subsequent amendment of Bayantel’s franchise through RA
7633 exempted again the corporation by using the phrase
“exclusive of this franchise” which was the basis for Bayantel’s
exemption from realty taxes prior to the LGC. The Congress in
this case prevailed over local taxation.

HON. FRANKLIN DRILON

V
MAYOR ALFREDO LIM, et al.
(G.R. No. 112497 August 4, 1994)
FACTS:
- Sec. 187 of the LGC provides for the procedure for approval
and effectivity of tax ordinances and revenue measures. Where
public hearings shall be conducted for the purpose prior to the
enactment thereof, any question on the constitutionality of the
tax ordinances or revenue measures may be raised on appeal
within 30 days from the effectivity to the Secretary of Justice
who shall render a decision within 60 days from receipt of the
appeal. Providing further that after the lapse of the period to
appeal or without the Secretary of Justice acting on the appeal,
the aggrieved party may file an appropriate proceeding with the
courts
- Pursuant to the above provision, the Sec. of Justice Franklin
Drilon received on appeal to him of four oil companies and a
taxpayer, declared Ordinance No. 7794 null and void for non-
compliance with the prescribed procedure in the enactment of
tax ordinances and for containing certain provisions contrary to
law.
- City of Manila filed a petition for certiorari in the RTC of
Manila where the court revoked the Secretary’s resolution and
sustained the ordinance. It also declared Sec. 187 of the LGC as
unconstitutional because it vested the Secretary of Justice the
power of control over local governments which is in violation of
the policy on local autonomy and the provision that conferred
the President of the Philippines the power of supervision over
local governments.
- (the case was not appealed to the CA but directly went to the
SC)
ISSUE:
WoN the Sec. 187 of the Local Government Code is
constitutional
RULING:
YES. The court finds Sec. 187 of the LGC constitutional. The
Supreme Court importantly stated that “Section 187 authorizes
the Secretary of Justice to review only the constitutionality or
legality of the tax ordinance and, if warranted, to revoke it on
either or both of these grounds. When he alters or modifies or
sets aside a tax ordinance, he is not also permitted to substitute
his own judgment for the judgment of the local government that
enacted the measure. Secretary Drilon did set aside the Manila
Revenue Code, but he did not replace it with his own version of
what the Code should be. He did not pronounce the ordinance
unwise or unreasonable as a basis for its annulment. He did not
say that in his judgment it was a bad law. What he found only
was that it was illegal. All he did in reviewing the said measure
was determine if the petitioners were performing their functions
in accordance with law, that is, with the prescribed procedure
for the enactment of tax ordinances and the grant of powers to
the city government under the Local Government Code. As we
see it, that was an act not of control but of mere supervision.”
The court distinguish control and supervision, that an officer in
control lays down the rules in the doing of an act and if they are
not followed, he may, in his discretion, order the act undone or
redone by his subordinate. Supervision does not cover that
authority. Supervisors merely sees to it that the rules are
followed, but he himself does not lay down the rules nor have
the discretion to modify them.
The court made no ruling on the substantive provisions of the
Manila Revenue Code as their validity has not been raised in
issue.

COCA-COLA BOTTLERS PHILIPINES, INC.,

V
CITY OF MANILA
(G.R. No. 156252 June 27, 2006)

FACTS:
- Petitioner is a corporation engaged in the business of
manufacturing and selling beverages and maintains a sales office
located in the City of Manila
- On February 25, 2000 the City Mayor of Manila approved Tax
Ordinance 7988 which increases the tax rates applicable to
certain establishments operating within the City of
Manila including the petitioner
- Aggrieved by such ordinance, petitioner filed a petition before
the Dept. of Justice (DOJ) questioning the constitutionality of
the ordinance. The DOJ Secretary Artemio Tuquero issues a
resolution declaring the ordinance null and void without legal
effect on the basis that the City Ordinance failed to comply with
the requirement of publication.
- The City of Manila failed to file a Motion for Reconsideration
nor lodge an appeal before the DOJ resolution has lapsed into
finality.
- Singer Sewing Machine wrote the Bureau of Local
Government Finance (BLGF) asking an opinion on whether ther
City Treasurer of Manila has the right to enforce the City
Ordinance 7988. BLGF issued an indorsement ordering the
Treasurer of Manila to cease and desist from enforcing the tax
ordinance.
- Despite the DOJ resolution and the cease and desist order
from the BLGF, the respondent City of Manila continued to
assess the petitioner of business tax for the year 2001 based on
the tax rates prescribed under the City Ordinance 7988
- Petitioner filed a complaint with the RTC of Manila to
enjoined the implementation of the ordinance. The RTC ruled in
favor of the petitioner stating that the respondents did not follow
he procedural requirements for the enactment of the Tax
Ordinance.
- Pending the litigation, the City Mayor of Manila approved Tax
Ordinance 8011 which amended the Tax Ordinance 7988. The
petitioner once again challenge the ordinance n the grounds that
it legally not existing as it Is trying to amend a tax ordinance
previously declared null and void and it was likewise not
published upon its approval in accordance with LGC.
- DOJ Secretary also passed a resolution declaring it null and
void. A motion for reconsideration by the respondent of such
resolution was denied.
- The Respondent on the basis of the enactment of Tax
Ordinance 8011 filed a MoR with the RTC of Manila and it was
granted
- (The proceedings of this case in the CA was not mentioned in
the case)
ISSUE:
WoN Tax Ordinance 7988 is null and void and of no legal effect

RULING:
YES. The SC reversed and set aside the order of the RTC
of Manila dismissing the petitioner’s case as there is no basis in
law for such dismissal. The amending law, having been already
declared null and void, in legal contemplation, does not exist.
Tax Ordinance 7988 which was declared a null and void for
failure to comply the requirement of publication cannot be
amended by Tax Ordinance 8011 because the former is non-
existent. The SC mentioned 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.”
It is undisputed that Tax Ordinance has already been
declared by the DOJ Secretary as null and void without legal
effect for failure of the respondents to satisfy the requirement
that said ordinance be published for three consecutive days. The
resolution by the DOJ Secretary has also reached finality as
respondents failed to file a MoR or an appeal on the said
resolution.
 By: Ronna Mariz V. Magdayao

25. Jardine Davies Insurance Brokers vs Aliposa

GR No. 118900 February 27, 2003

Facts: Pursuant to the Local Government Code of

1991, the then Sangguniang Bayan of Makati enacted
Municipal Ordinance No. 92-072, otherwise known as the
Makati Revenue Code, which provides, inter alia, for the
schedule of real estate, business and franchise taxes in the
Municipality of Makati at rates higher than those in the
Metro Manila Revenue Code. The Philippine Racing Club,
Inc. (PRCI), a taxpayer of Makati, appealed to the
Department of Justice (DOJ) for the nullification of said
ordinance, alleging that it was approved without previous
public hearings, in violation of the Local Government Code
and Article 276 of its Implementing Rules, and that some
of the ordinances provisions were unconstitutional. Although
required by the DOJ to comment on the appeal, respondent
Makati failed to do so. The DOJ came out with a
resolution declaring null and void and without legal effect
the said ordinance for having been enacted in contravention
of Section 187 of the Local Government Code of 1991 and
its implementing rules and regulations. Respondent Makati
sought a reconsideration of the ruling of the DOJ. In the
meantime, respondent Makati continued to implement the
ordinance. Petitioner Jardine Davies Insurance Brokers, Inc.
was assessed and billed by Makati for taxes, fees and
charges under the ordinance for the second, third and
fourth quarter of 1993. Petitioner did not protest the
assessment for its quarterly business taxes for the second,
third and fourth quarters of 1993. Petitioner, in fact, paid
the said amounts without any protest. Petitioner wrote the
municipal treasurer of Makati requesting that respondent
Makati compute its business tax liabilities in accordance
with the Metro Manila Revenue Code and not under the
ordinance considering that said ordinance was already
declared by the DOJ null and void. Petitioner likewise
requested that respondent Makati credit the overpayment for
the second to fourth quarters of 1993 against its liabilities
for 1994 or for Makati to refund the said amount to
petitioner. Respondent Makati denied the request of
petitioner for tax credit/refund. Hence, petitioner filed a
complaint against respondents.

RTC Ruling: Plaintiffs cause of action, if any, had

prescribed. Citing Sections 187 and 195 of the Local
Government Code of 1991, the trial court ratiocinated that
petitioner failed to file an opposition or protest to the
written notice of assessment of Makati for taxes, fees and
charges at rates provided for in the ordinance within 60
days from the notice of said assessment as required by
Section 195 of the Local Government Code. Hence,
petitioner was barred from demanding a refund of its
payment or that it be credited for said amounts.

Issue: Whether or not the Makati Revenue Code is valid.

Ruling: Yes. A municipal tax ordinance empowers a

local government unit to impose taxes. The power to tax is
the most effective instrument to raise needed revenues to
finance and support the myriad activities of local
government units for the delivery of basic services essential
to the promotion of the general welfare and enhancement of
peace, progress, and prosperity of the people. Consequently,
any delay in implementing tax measures would be to the
detriment of the public. It is for this reason that protests
over tax ordinances are required to be done within certain
time frames. In the instant case, it is our view that the
failure of petitioners to appeal to the Secretary of Justice
within 30 days as required by Sec. 187 of R.A. 7160 is
fatal to their cause. Moreover, petitioner even paid without
any protest the amounts of taxes assessed by respondents
Makati and Acting Treasurer as provided for in the
ordinance. Evidently, the complaint of petitioner with the
Regional Trial Court was merely an afterthought. Hence,
any protests over tax ordinances are required to be done
within certain time frames. Under Section 187 of the LGC,
dissatisfied taxpayers 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 of Justice decides the appeal, a period also of 30
days is allowed for the aggrieved party to go to court. But
if the Secretary of Justice does not, after a lapse of 60
days, a party could already proceed seeking relief in court.
These three (3) separate periods are clearly given for
compliance as a prerequisite before seeking redress in a
competent court. These are set to prevent delays as well as
enhance an orderly and speedy discharge of judicial
functions.
 26. Angeles City vs Angeles Electric Coop
GR No. 166134 June 29, 2010

Facts: AEC was granted a legislative franchise under

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,
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. 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. 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). A petition
seeking the reduction of the tax rates and a review of the
provisions of the RRCAC was filed with the Sangguniang
Panlungsod by Metro Angeles Chamber of Commerce and
Industry Inc. (MACCI) of which AEC is a member. There
being no action taken by the Sangguniang Panlungsod on
the matter, MACCI elevated the petition to the Department
of Finance, which referred the same to the Bureau of Local
Government Finance (BLGF). In the petition, MACCI
alleged that the RRCAC is oppressive, excessive, unjust
and confiscatory. During its proceedings, City Treasurer
issued a Notice of Assessment to AEC for payment of
business tax, license fee and other charges for the period
1993 to 2004. Within the period prescribed by law, AEC
protested the assessment. The City Treasurer denied the
protest for lack of merit and requested AEC to settle its
tax liabilities.

RTC Ruling: RTC issued a Temporary Restraining

Order (TRO) on May 4, 2004, followed by an Order dated
May 24, 2004 granting the issuance of a Writ of
Preliminary Injunction. Upon AECs posting of the required
bond, the RTC issued a Writ of Preliminary Injunction on
May 28, 2004, which was amended on May 31, 2004 due to
some clerical errors.
Issue: Whether or not an injunction be issued to enjoin
the collection of local taxes.
Ruling: Yes. The prohibition on the issuance of a writ
of injunction to enjoin the collection of taxes applies only
to national internal revenue taxes and not to local taxes.
The LGC does not specifically prohibit an injunction
enjoining the collection of taxes. A principle deeply
embedded in our jurisprudence is that taxes being the
lifeblood of the government should be collected promptly,
without unnecessary hindrance or delay. 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. 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. Nevertheless, it must be
emphasized that although there is no express prohibition in
the LGC, injunctions enjoining the collection of local taxes
are frowned upon. Courts therefore should exercise extreme
caution in issuing such injunctions.