LOCAL GOVERNMENT TAXATION the Local Government Code.
the Local Government Code. Such exception applies only if the beneficial use of real property
1. Mactan Cebu International Airport Authority (MCIAA) v. City of Lapu-Lapu, G.R. No.
181756, June 15, 2015
FACTS:
Petitioner, Mactan-Cebu International Airport Authority (MCIAA) was created by Congress under
Republic Act No. 6958. Upon its creation, petitioner enjoyed exemption from realty taxes imposed
by the National Government or any of its political subdivision. However, upon the effectivity of
the LGC the Supreme Court rendered a decision that the petitioner is no longer exempt from realty
estate taxes.
Respondent City issued to petitioner a Statement of Real Estate Tax assessing the lots comprising
the Mactan International Airport which included the airfield, runway, taxi way and the lots on
which these are built. Petitioner contends that these lots, and the lots to which they are built, are
utilized solely and exclusively for public purposes and are exempt from real property
tax. Petitioner based its claim for exemption on DOJ Opinion No. 50.
Respondent issued notices of levy on 18 sets of real properties of petitioners. Petitioner filed a
petition for Prohibition, TRO, and a writ of preliminary injunction with RTC Lapulapu which sought
to enjoin respondent City from issuing the warrant of levy against petitioner’s properties from
selling them at public auction for delinquency in realty tax obligations.
ISSUE:
Petitioner claimed before the RTC that it had discovered that respondent City did not pass any
ordinance authorizing the collection of real property tax, a tax for the special education fund (SEF),
and a penalty interest for its nonpayment. Petitioner argued that without the corresponding tax
ordinances, respondent City could not impose and collect real property tax, an additional tax for
the SEF, and penalty interest from petitioner.
RTC granted the writ of preliminary which was later on lifted upon motion by the respondents.
CA: Court of Appeals held that petitioner’s airport terminal building, airfield, runway, taxiway,
and the lots on which they are situated are not exempt from real estate tax reasoning as follows:
Under the Local Government Code (LGC for brevity), enacted pursuant to the constitutional
mandate of local autonomy, all natural and juridical persons, including government-owned or
controlled corporations (GOCCs), instrumentalities and agencies, are no longer exempt from local
taxes even if previously granted an exemption. The only exemptions from local taxes are those
specifically provided under the Code itself, or those enacted through subsequent legislation.
RULING:
MIAA is not a government-owned or controlled corporation under Section 2(13) of the
Introductory Provisions of the Administrative Code because it is not organized as a stock or non-
stock corporation. Neither is MIAA a government-owned or controlled corporation under Section
16, Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic
viability.
MIAA is a government instrumentality vested with corporate powers and performing essential
public services pursuant to Section 2(10) of the Introductory Provisions of the Administrative
Code. As a government instrumentality, MIAA is not subject to any kind of tax by local
governments under Section 133(o) of the Local Government Code. The exception to the
exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under
owned by the Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are
properties of public dominion. Properties of public dominion are owned by the State or the
Republic. As properties of public dominion owned by the Republic, there is no doubt whatsoever
that the Airport Lands and Buildings are expressly exempt from real estate tax under Section
234(a) of the Local Government Code. This Court has also repeatedly ruled that properties
of public dominion are not subject to execution or foreclosure sale.
Petitioner’s properties that are actually, solely and exclusively used for public purpose, consisting
of the airport terminal building, airfield, runway, taxiway and the lots on which they are
situated, EXEMPT from real property tax imposed by the City of Lapu-Lapu.
Thus, all real property tax assessments are VOID, including the additional tax for the special
education fund and the penalty interest, as well as the final notices of real property tax
delinquencies, issued by the City of Lapu-Lapu on petitioner’s properties, except the assessment
covering the portions that petitioner has leased to private parties. Likewise, the sale in public
auction of 27 of petitioner’s properties and the eventual forfeiture and purchase of the said
properties by respondent City of Lapu-Lapu is null and void as well as the corresponding
Certificates of Sale of Delinquent Property issued to respondent City of Lapu-Lapu.
2. Smart Communications, Inc. v. Municipality of Malvar, Batangas, G.R. No. 20442.
February 18, 2014
FACTS:
Smart constructed a telecommunications tower within the territorial jurisdiction of the Municipality.
The construction of the tower was for the purpose of receiving and transmitting cellular
communications within the covered area.
On 30 July 2003, the Municipality passed Ordinance No. 18, series of 2003, entitled "An Ordinance
Regulating the Establishment of Special Projects."
On 24 August 2004, Smart received from the Permit and Licensing Division of the Office of the
Mayor of the Municipality an assessment letter with a schedule of payment for the total amount
of P389,950.00 for Smart's telecommunications tower. Due to the alleged arrears in the payment
of the assessment, the Municipality also caused the posting of a closure notice on the
telecommunications tower.
On 9 September 2004, Smart filed a protest, claiming lack of due process in the issuance of the
assessment and closure notice. In the same protest, Smart challenged the validity of Ordinance
No. 18 on which the assessment was based. On 17 November 2004, Smart filed with RTC of
Batangas, an "Appeal/Petition" assailing the validity of Ordinance No. 18.
ISSUES:
1. Whether the CTA has jurisdiction over the present case
2. Whether the imposition of the fees in Ordinance No. 18 is ultra vires
RULING:
On whether the CTA has jurisdiction over the present case
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Smart contends that the CTA erred in dismissing the case for lack of jurisdiction. Smart maintains
that the CTA has jurisdiction over the present case considering the "unique" factual circumstances
involved. The CTA refuses to take cognizance of this case since it challenges the constitutionality
of Ordinance No. 18, which is outside the province of the CTA.
Jurisdiction is conferred by law. Republic Act No. 1125, as amended by Republic Act No. 9282,
created the Court of Tax Appeals. Section 7, paragraph (a), sub-paragraph (3) 15 of the law
vests the CTA with the exclusive appellate jurisdiction over "decisions, orders or
resolutions of the Regional Trial Courts in local tax cases originally decided or resolved
by them in the exercise of their original or appellate jurisdiction."
The question now is whether the trial court resolved a local tax case in order to fall within the
ambit of the CTA's appellate jurisdiction. This question, in turn, depends ultimately on whether
the fees imposed under Ordinance No. 18 are in fact taxes.
The fees imposed in Ordinance No. 18 are not taxes.
Since the main purpose of Ordinance No. 18 is to regulate certain construction activities of the
identified special projects, which included "cell sites" or telecommunications towers, the fees
imposed in Ordinance No. 18 are primarily regulatory in nature, and not primarily revenue-raising.
While the fees may contribute to the revenues of the Municipality, this effect is merely incidental.
In Progressive Development Corporation v. Quezon City, the Court declared that "if the
generating of revenue is the primary purpose and regulation is merely incidental, the
imposition is a tax; but if regulation is the primary purpose, the fact that incidentally
revenue is also obtained does not make the imposition a tax."
In Victorias Milling Co., Inc. v. Municipality of Victorias, the Court reiterated that the purpose and
effect of the imposition determine whether it is a tax or a fee, and that the lack of any standards
for such imposition gives the presumption that the same is a tax.
Contrary to Smart's contention, Ordinance No. 18 expressly provides for the standards which
Smart must satisfy prior to the issuance of the specified permits, clearly indicating that the fees
are regulatory in nature.
On whether the imposition of the fees in Ordinance No. 18 is ultra vires
Smart argues that the Municipality exceeded its power to impose taxes and fees as provided in
Book II, Title One, Chapter 2, Article II of the LGC. Smart maintains that the mayor's permit fees
in Ordinance No. 18 (equivalent to 1% of the project cost) are not among those expressly
enumerated in the LGC.
As discussed, the fees in Ordinance No. 18 are not taxes. Logically, the imposition does not appear
in the enumeration of taxes under Section 143 of the LGC. Moreover, even if the fees do not
appear in Section 143 or any other provision in the LGC, the Municipality is empowered to impose
taxes, fees and charges, not specifically enumerated in the LGC or taxed under the Tax Code or
other applicable law. Section 186 of the LGC, granting local government units wide
latitude in imposing fees, expressly provides:
Section 186. Power to Levy Other Taxes, Fees or Charges. — Local government units
may exercise the power to levy taxes, fees or charges on any base or subject not
otherwise specifically enumerated herein or taxed under the provisions of the
National Internal Revenue Code, as amended, or other applicable laws: Provided, That
the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to
declared national policy: Provided, further; That the ordinance levying such taxes, fees or charges
shall not be enacted without any prior public hearing conducted for the purpose.
Smart further argues that the Municipality is encroaching on the regulatory powers of the National
Telecommunications Commission (NTC). To repeat, Ordinance No. 18 aims to regulate the
"placing, stringing, attaching, installing, repair and construction of all gas mains, electric, telegraph
and telephone wires, conduits, meters and other apparatus" within the Municipality. The fees are
not imposed to regulate the administrative, technical, financial, or marketing operations of
telecommunications entities, such as Smart's; rather, to regulate the installation and maintenance
of physical structures — Smart's cell sites or telecommunications tower. The regulation of the
installation and maintenance of such physical structures is an exercise of the police
power of the Municipality. Clearly, the Municipality does not encroach on NTC's
regulatory powers.
The Court likewise rejects Smart's contention that the power to fix the fees for the issuance of
development permits and locational clearances is exercised by the Housing and Land Use
Regulatory Board (HLURB). Suffice it to state that the HLURB itself recognizes the local
government units' power to collect fees related to land use and development.
3. The City of Manila, etc. et al. v. Hon. Caridad H. Grecia-Cuerdo etc., et al, G.R. No.
175723. February 4, 2014.
FACTS:
Petitioner City of Manila, through its treasurer, petitioner Liberty Toledo, assessed taxes for the
taxable period from January to December 2002 against private. respondents. In addition to the
taxes purportedly due from private respondents, pursuant to Sections 14, 15, 16, 17 of the
Revised Revenue Code of Manila (RRCM), said assessment covered the local business taxes
petitioners were authorized to collect under Section 21 of the same Code. Because payment of
the taxes assessed was a precondition for the issuance of their business permits, private
respondents were constrained to pay the P19,316,458.77 assessment under protest.
On January 24, 2004, private respondents filed with the RTC of Pasay City the complaint
denominated as one for "Refund or Recovery of Illegally and/or Erroneously-Collected
Local Business Tax, Prohibition with Prayer to Issue TRO and Writ of Preliminary
Injunction" which was docketed as Civil Case No. 040019-CFM before public respondent's sala.
In the amended complaint, private respondents alleged that the provisions of the RRCM were
violative of the limitations and guidelines under Section 143 (h) of Republic Act No. 7160 [Local
Government Code] on double taxation. They further averred that petitioner city's Ordinance No.
8011 which amended pertinent portions of the RRCM had already been declared to be illegal and
unconstitutional by the Department of Justice.
RTC granted private respondent’s application for a writ of preliminary injunction and denied the
latter’s Motion for Reconsideration. CA dismissed petitioners' petition for certiorari holding that
it has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction over
private respondents' complaint for tax refund, which was filed with the RTC, is vested in the Court
of Tax Appeals (CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA
9282), it follows that a petition for certiorari seeking nullification of an interlocutory order issued
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 in the said case should, likewise, be filed with the CTA. Ca likewise denied petitioner’s Motion for
Reconsideration.
ISSUE:
Whether or not the CTA has jurisdiction over a special civil action for certiorari assailing an
interlocutory order issued by the RTC in a local tax case.
HELD:
YES.
On March 30, 2004, the Legislature passed into law Republic Act No. 9282 (RA 9282) amending
RA 1125 by expanding the jurisdiction of the CTA, enlarging its membership and elevating its rank
to the level of a collegiate court with special jurisdiction. Pertinent portions of the amendatory act
provides thus:
Sec. 7. Jurisdiction — The CTA shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
Xxx
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases
originally decided or resolved by them in the exercise of their original or jurisdiction;
Xxx
The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise of
original jurisdiction which must be expressly conferred by the Constitution or by law and cannot
be implied from the mere existence of appellate jurisdiction. While there is no express grant of
such power, with respect to the CTA, Section 1, Article VIII of the 1987 Constitution provides,
nonetheless, that judicial power shall be vested in one Supreme Court and in such lower courts
as may be established by law and that judicial power includes the duty of the courts of justice to
settle actual controversies involving rights which are legally demandable and enforceable, and to
determine whether or not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the Government.
4.
Indeed, in order for any appellate court, to effectively exercise its appellate
jurisdiction, it must have the authority to issue, among others, a writ of certiorari. In
transferring exclusive jurisdiction over appealed tax cases to the CTA, it can
reasonably be assumed that the law intended to transfer also such power as is deemed
necessary, if not indispensable, in aid of such appellate jurisdiction. This Court has held
as early as the case of JM Tuason v Jaramillo et al that "if a case may be appealed to a
particular court or judicial tribunal or body, then said court or judicial tribunal or body
has jurisdiction to issue the extraordinary writ of certiorari, in aid of its appellate
jurisdiction." This principle was affirmed in De Jesus v CA where the Court stated that "a court
may issue a writ of certiorari in aid of its appellate jurisdiction if said court has
jurisdiction to review, by appeal or writ of error, the final orders or decisions of the
lower court."
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition
lies with the CA, this Court would be confirming the exercise by two judicial bodies, the CA and
the CTA, of jurisdiction over basically the same subject matter — precisely the split-jurisdiction
situation which is anathema to the orderly administration of justice. Thus, the Court agrees
with the ruling of the CA that since appellate jurisdiction over private respondents'
complaint for tax refund is vested in the CTA, it follows that a petition for certiorari
seeking nullification of an interlocutory order issued in the said case should, likewise,
be filed with the same court. To rule otherwise would lead to an absurd situation where one
court decides an appeal in the main case while another court rules on an incident in the very same
case.
FALLO: Petition is DENIED.
Take Note:
1. The case was moot and academic. Court discovered that a Decision in the main case had
already been rendered by the RTC on August 13, 2007 which ordered the defendant to grant tax
refund or credit and enjoined it from collecting taxes under Sec. 21 of the RRCM. The decision
was already final and executory. Nevertheless, the Court found it necessary to resolve the issue
on jurisdiction.
2. Petitioners availed of the wrong remedy when they filed the instant special civil action for
certiorari under Rule 65 of the Rules of Court in assailing the Resolutions of the CA which dismissed
their petition filed with the said court and their motion for reconsideration of such dismissal. The
assailed Resolutions of the CA are in the nature of a final order as they disposed of the petition
completely. It is settled that in cases where an assailed judgment or order is considered final, the
remedy of the aggrieved party is appeal. Hence, in the instant case, petitioner should have
filed a petition for review on certiorari under Rule 45, which is a continuation of the
appellate process over the original case.
Considering that the present petition was filed within the 15-day reglementary period
for filing a petition for review on certiorari under Rule 45, that an error of judgment is averred,
and because of the significance of the issue on jurisdiction, the Court deems it proper and justified
to relax the rules and, thus, treat the instant petition for certiorari as a petition for review on
certiorari.
Coca-Cola Bottlers Philippines, Inc. vs. City of Manila et. al., G.R. No. 197561, April 7,
2014.
FACTS:
This case started when the RTC granted petitioner’s request for tax refund or credit assessed under Section
21 of the Revenue Code of Manila upon finding that there was double taxation in the imposition of local
business taxes. Thereafter, respondent is prohibited from collecting the tax under Section 21 of the
Revenue Code.
After the judgment has become final and executor, petitioner filed a writ of execution in the RTC. Aggrieved,
respondent filed a motion to quash the writ of execution on the ground that it will hamper the city’s ongoing
projects.
Petitioner reasons that both tax refund and tax credit involve public funds. Thus, pursuant to SC
Administrative Circular No. 10-2000, the enforcement or satisfaction of the assailed decision may still be
pursued in accordance with the rules and procedures laid down in Presidential Decree (P.D.) No. 1445,
otherwise known as the Government Auditing Code of the Philippines.
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 ISSUE:
Whether it is proper for the RTC to order the writ of execution for tax refund or credit under Section 21 of
the Revenue Code?
RULING:
There is no need for a writ of execution.
Tax refund / credit does not involve levying or garnishment of public funds
Under the first option (tax refund), any tax on income that is paid in excess of the amount due the
government may be refunded, provided that a taxpayer properly applies for the refund. On the other hand,
the second option works by applying the refundable amount against the tax liabilities of the petitioner in
the succeeding taxable years.
Hence, instead of moving for the issuance of a writ of execution relative to the aforesaid Decision, petitioner
should have merely requested for the approval of the City of Manila in implementing the tax refund or tax
credit, whichever is appropriate. In other words, no writ was necessary to cause the execution thereof,
since the implementation of the tax refund will effectively be a return of funds by the City of Manila in favor
of petitioner while a tax credit will merely serve as a deduction of petitioner’s tax liabilities in the future.
In fact, Section 252 (c) of the Local Government Code of the Philippines is very clear that "In the event
that the protest is finally decided in favor of the taxpayer, the amount or portion of the tax protested shall
be refunded to the protestant, or applied as tax credit against his existing or future tax liability." It was not
necessary for petitioner to move for the issuance of the writ of execution because the remedy has already
been provided by law.
Thus, under Administrative Order No. 270 prescribing rules and regulations implementing the Local
Government Code, particularly Article 286 thereof, the tax credit granted a taxpayer shall be applied to
future tax obligations of the same taxpayer for the same business, to wit:
ARTICLE 286. Claim for Refund or Tax Credit. — All taxpayers entitled to a refund or tax credit provided in
this Rule shall file with the local treasurer a claim in writing duly supported by evidence of payment (e.g.,
official receipts, tax clearance, and such other proof evidencing overpayment)within two (2) years from
payment of the tax, fee, or charge. No case or proceeding shall be entertained in any court without this
claim in writing, and after the expiration of two (2) years from the date of payment of such tax, fee, or
charge, or from the date the taxpayer is entitled to a refund or tax credit.
5. Government Service Insurance System vs. City Treasurer and City Assessor of the City
of Manila, G.R. No. 186242, December 23, 2009.
FACTS:
Petitioner GSIS owns or used to own two (2) parcels of land, one located at Katigbak 25th St.,
Bonifacio Drive, Manila (Katigbak property), and the other, at Concepcion cor. Arroceros Sts., also
in Manila (Concepcion-Arroceros property). Both the GSIS and the Metropolitan Trial Court (MeTC)
of Manila occupy the Concepcion-Arroceros property, while the Katigbak property was under lease.
The controversy started when the City Treasurer of Manila addressed a letter dated September
13, 2002 to GSIS President and General Manager Winston F. Garcia informing him of the unpaid
real property taxes due on the aforementioned properties for years 1992 to 2002, broken down
as follows: (a) PhP 54,826,599.37 for the Katigbak property; and (b) PhP 48,498,917.01 for the
Concepcion-Arroceros property. The letter warned of the inclusion of the subject properties in the
scheduled October 30, 2002 public auction of all delinquent properties in Manila should the unpaid
taxes remain unsettled before that date.
On September 16, 2002, the City Treasurer of Manila issued separate Notices of Realty Tax
Delinquency for the subject properties, with the usual warning of seizure and/or sale. On October
8, 2002, GSIS, through its legal counsel, wrote back emphasizing the GSIS exemption from all
kinds of taxes, including realty taxes, under Republic Act No. (RA) 8291.
ISSUES:
1. W/N GSIS under its charter is exempt from real property taxation.
2. Assuming that it is so exempt, W/N GSIS is liable for real property taxes for its properties leased
to a taxable entity; and
3. W/N the properties of GSIS are exempt from levy.
RULING:
1. GSIS is exempt from Real Property Tax.
First, full tax exemption is granted to GSIS through PD 1146. However, RA 7160 lifted GSIS tax
exemption from real properties. Lastly, full tax exemption is reenacted to GSIS through RA 8291.
Indeed, almost 20 years to the day after the issuance of the GSIS charter, i.e., PD 1146, it was
further amended and expanded by RA 8291 which took effect on June 24, 1997. Under it, the full
tax exemption privilege of GSIS was restored, the operative provision being Sec. 39 thereof, a
virtual replication of Sec. 33 of PD 1146.
Moreover, the real property taxes assessed and due from GSIS is considered paid already. While
recognizing the exempt status of GSIS owing to the reenactment of the full tax exemption clause
under Sec. 39 of RA 8291 in 1997, the ponencia in City of Davao appeared to have failed to take
stock of and fully appreciate the all-embracing condoning proviso in the very same Sec. 39 which,
for all intents and purposes, considered as paid any assessment against the GSIS as of the
approval of this Act.
2. GSIS is liable for real property taxes for its properties leased to a taxable entity under Beneficial
Use Doctrine.
The leased Katigbak property shall be taxable pursuant to the beneficial use principle under Sec.
234(a) of the LGC.
It is true that said Sec. 234(a), quoted below, exempts from real estate taxes real property owned
by the Republic, unless the beneficial use of the property is, for consideration, transferred to a
taxable person.
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of the
real property tax:
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 (a) Real property owned by the Republic of the Philippines or any of its political subdivisions
EXCEPT when the BENEFICIAL USE thereof has been granted, for consideration or otherwise, to
a taxable person.
Hence, taxable entity having beneficial use of leased property is liable for real property taxes
thereon.
3. The properties of GSIS are exempt from levy.
In light of the foregoing disquisition, the issue of the propriety of the threatened levy of subject
properties by the City of Manila to answer for the demanded realty tax deficiency is now moot
and academic. A valid tax levy presupposes a corresponding tax liability. Nonetheless, it will not
be remiss to note that it is without doubt that the subject GSIS properties are exempt from any
attachment, garnishment, execution, levy, or other legal processes.
WHEREFORE, the instant petition is hereby GRANTED. The November 15, 2007 Decision and
January 7, 2009 Order of the Regional Trial Court, Branch 49, Manila are REVERSED and SET
ASIDE. Accordingly, the real property tax assessments issued by the City of Manila to the
Government Service Insurance System on the subject properties are declared VOID, except that
the real property tax assessment pertaining to the leased Katigbak property shall be valid if served
on the Manila Hotel Corporation, as lessee which has actual and beneficial use thereof. The City
of Manila is permanently restrained from levying on or selling at public auction the subject
properties to satisfy the payment of the real property tax delinquency.
6. Team Pacific Corporation vs. Daza as Municipal Treasurer of Taguig, G.R. No. 167732,
July 11, 2012.
FACTS:
Petitioner Team Pacific Corporation (TPC) is a domestic corporation engaged in the business of
assembling and exporting semiconductor devices. TPC conducts its business in the then
Municipality of Taguig. Since the start of its operations, TPC had been paying local business taxes
assessed at one-half (1/2) rate pursuant to Section 75 (c) of Ordinance No. 24-93, otherwise
known as the Taguig Revenue Code.
When it renewed its business license in 2004, however, TPC's business tax for the first quarter of
the same year was assessed in the sum of P208,109.77 by respondent Josephine Daza. The
assessment was computed by Daza by applying the full value of the rates provided under Section
75 of the Taguig Revenue Code, instead of the one-half (1/2) rate provided under paragraph (c)
of the same provision.
On 19 January 2004, TPC filed a written protest with Daza, insisting on the one-half (1/2) rate on
which its business tax was previously assessed
Subsequent to its 13 April 2004 demand for the refund and/or issuance of a tax credit, TPC filed
its 15 April 2004 Rule 65 petition for certiorari before the RTC
1 2
Judicial function entails the power to determine what the law is and what the legal rights of the parties are, and then undertakes
to determine these questions and adjudicate upon the rights of the parties
On 25 June 2004, Daza filed her comment contending that the change in the administration in
the then Municipality of Taguig brought about the assessment and imposition of the correct
business tax on TPC. Not being an exporter of the essential commodities enumerated under the
provisions in question, it was argued that TPC is not entitled to the fifty (50%) percent business
tax exemption it had been granted in the previous years. Having supposedly denied the letter-
protest thru Atty. Miranda, Daza likewise faulted TPC for not filing its appeal in court within thirty
(30) days from receipt of the denial in accordance with Article 195 of the Local Government Code
RTC went on to render the herein assailed Order dated 5 April 2005, dismissing the
petition for lack of merit. While finding that the absence of proof of Atty. Miranda's denial of
TPC's letter-protest meant that the latter had thirty (30) days from the lapse of the sixty (60) days
prescribed under Article 195 of the Local Government Code within which to perfect its appeal, the
RTC ruled that, rather than the special civil action of certiorari provided under Rule 65
of the 1997 Rules of Civil Procedure, an ordinary appeal would have been the proper
remedy from the assessment complained against.
Without moving for the reconsideration, TPC filed the petition at bench on 28 April 2005, on pure
questions of law.
ISSUE:
Whether or not a Rule 65 petition for certiorari was the appropriate remedy from Daza's inaction
on TPC's letter-protest
RULING:
Court found that TPC erroneously availed of the wrong remedy in filing a Rule 65 petition
for certiorari to question Daza's inaction on its letter-protest.
Certiorari is available only if the following essential requisites concur: (1) it must be directed
against a tribunal, board, or officer exercising judicial or quasi-judicial functions; (2) the tribunal,
board, or officer must have acted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction; and, (3) there is no appeal nor any plain,
speedy, and adequate remedy in the ordinary course of law
Daza cannot be said to be performing a judicial1 or quasi-judicial function2 in assessing TPC's
business tax and/or effectively denying its protest as then Municipal Treasurer of Taguig. For this
reason, Daza's actions are not the proper subjects of a Rule 65 petition
for certiorari which is the appropriate remedy in cases where the tribunal, board, or
officer exercising judicial or quasi-judicial functions acted without or in grave abuse
of discretion amounting to lack or excess of jurisdiction and there is no appeal or any
plain, speedy, and adequate remedy in law. Narrow in scope and inflexible in
Quasi-judicial function, on the other hand, refers to the action and discretion of public administrative officers or bodies, which
are required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for
their official action and to exercise discretion of a judicial nature
5
 character, certiorari is an extraordinary remedy designed for the correction of errors of jurisdiction
and not errors of judgment. It is likewise considered mutually exclusive with appeal like the one
provided by Article 195 of the Local Government Code for a local treasurer's denial of or inaction
on a protest
Granted that a Rule 45 petition for review oncertiorari is the proper mode of appeal when the
issues raised are purely questions of law, TPC lost sight of the fact that, as amended by RA
No. 9282, paragraph c (2) [a], Section 7 of RA No. 1125 has vested the Court of Tax
Appeals (CTA) with the exclusive appellate jurisdiction over, among others, appeals
from the judgments, resolutions or orders of the RTC in tax collection cases originally
decided by them in their respective territorial jurisdiction. As amended by Section 9 of RA
No. 9282, Section 11 of RA No. 1125 likewise requires that the appeal be perfected within thirty
(30) days after receipt of the decision and shall be made by filing a petition for review under a
procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure.
TPC's erroneous availment of the wrong mode of appeal and direct resort to this Court instead of
the CTA both warrant the dismissal of the petition at bench. The rule is settled that the perfection
of an appeal in the manner and within the period fixed by law is not only mandatory but
jurisdictional and non-compliance with these legal requirements is fatal to a party's cause.
7. Republic of the Philippines represented by the Philippine Reclamation Authority vs.
City of Paranaque, G.R. No. 191109, July 18, 2012.
FACTS:
PRA reclaimed several portions of the foreshore and offshore areas of Manila Bay, including those
located in Parañaque City. On February 19, 2003, then Parañaque City Treasurer Liberato M.
Carabeo (Carabeo) issued Warrants of Levy on PRA's reclaimed properties (Central Business Park
andBarangay San Dionisio) located in Parañaque City based on the assessment for delinquent real
property taxes made by then Parañaque City Assessor Soledad Medina Cue for tax years 2001
and 2002. RTC issued an order denying PRA's petition for the issuance of a temporary restraining
order. PRA sent a letter to Carabeo requesting the latter not to proceed with the public auction of
the subject reclaimed properties on April 7, 2003. In response, Carabeo sent a letter stating that
the public auction could not be deferred because the RTC had already denied PRA's TRO
application. RTC rendered its decision dismissing PRA's petition. In ruling that PRA was not exempt
from payment of real property taxes, the RTC reasoned out that it was a GOCC under Section 3
of P.D. No. 1084. It was organized as a stock corporation because it had an authorized capital
stock divided into no par value shares. In fact, PRA admitted its corporate personality and that
said properties were registered in its name as shown by the certificates of title. Therefore, as a
GOCC, local tax exemption is withdrawn by virtue of Section 193 of Republic Act (R.A.) No. 7160
[Local Government Code (LGC)] which was the prevailing law in 2001 and 2002 with respect to
real property taxation. The RTC also ruled that the tax exemption claimed by PRA under E.O. No.
654 had already been expressly repealed by R.A. No. 7160 and that PRA failed to comply with the
procedural requirements in Section 206 thereof.
ISSUE:
WON PRA is exempt from payment of real property tax
RULING:
it is clear that a GOCC must be "organized as a stock or non-stock corporation" while an
instrumentality is vested by law with corporate powers. Likewise, when the law makes a
government instrumentality operationally autonomous, the instrumentality remains part of the
National Government machinery although not integrated with the department framework. When
the law vests in a government instrumentality corporate powers, the instrumentality does not
necessarily become a corporation. Unless the government instrumentality is organized as a stock
or non-stock corporation, it remains a government instrumentality exercising not only
governmental but also corporate powers.
Two requisites must concur before one may be classified as a stock corporation, namely: (1) that
it has capital stock divided into shares; and (2) that it is authorized to distribute dividends and
allotments of surplus and profits to its stockholders. If only one requisite is present, it cannot be
properly classified as a stock corporation. As for non-stock corporations, they must have members
and must not distribute any part of their income to said members.
In the case at bench, PRA is not a GOCC because it is neither a stock nor a non-stock corporation.
It cannot be considered as a stock corporation because although it has a capital stock divided into
no par value shares as provided in Section 7 of P.D. No. 1084, it is not authorized to distribute
dividends, surplus allotments or profits to stockholders. There is no provision whatsoever in P.D.
No. 1084 or in any of the subsequent executive issuances pertaining to PRA, particularly, E.O. No.
525, 5 E.O. No. 654 6 and EO No. 798 that authorizes PRA to distribute dividends, surplus
allotments or profits to its stockholders. PRA cannot be considered a non-stock corporation either
because it does not have members. A non-stock corporation must have members. Moreover, it
was not organized for any of the purposes mentioned in Section 88 of the Corporation Code.
Specifically, it was created to manage all government reclamation projects.
Clearly, respondent has no valid or legal basis in taxing the subject reclaimed lands managed by
PRA. On the other hand, Section 234 (a) of the LGC,in relation to its Section 133 (o), exempts
PRA from paying realty taxes and protects it from the taxing powers of local government units. It
is clear from Section 234 that real property owned by the Republic of the Philippines (the Republic)
is exempt from real property tax unless the beneficial use thereof has been granted to a taxable
person. In this case, there is no proof that PRA granted the beneficial use of the subject reclaimed
lands to a taxable entity. There is no showing on record either that PRA leased the subject
reclaimed properties to a private taxable entity. This exemption should be read in relation to
Section 133 (o) of the same Code, which prohibits local governments from imposing "[t]axes, fees
or charges of any kind on the National Government, its agencies and instrumentalities . . . ." The
Administrative Code allows real property owned by the Republic to be titled in the name of
agencies or instrumentalities of the national government. Such real properties remain owned by
the Republic and continue to be exempt from real estate tax. Indeed, the Republic grants the
beneficial use of its real property to an agency or instrumentality of the national government. This
happens when the title of the real property is transferred to an agency or instrumentality even as
the Republic remains the owner of the real property. Such arrangement does not result in the loss
of the tax exemption, unless "the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person."
The Court agrees with PRA that the subject reclaimed lands are still part of the public domain,
owned by the State and, therefore, exempt from payment of real estate taxes.
8. Sta. Lucia Realty & Development, Inc. vs. City of Pasig, G.R. No. 166838, June 15,
2011.
6
FACTS:
Petitioner Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the registered owner of several
parcels of land with Transfer Certificates of Title (TCT) Nos. 39112, 39110 and 38457, all of which
indicated that the lots were located in Barrio Tatlong Kawayan, Municipality of Pasig (Pasig).
The parcel of land covered by TCT No. 39112 was consolidated with that covered by TCT No.
518403, which was situated in Barrio Tatlong Kawayan, Municipality of Cainta, Province of Rizal
(Cainta). The two combined lots were subsequently partitioned into three, for which TCT Nos.
532250, 598424, and 599131, now all bearing the Cainta address, were issued.
On November 28, 1995, Pasig filed a Complaint, docketed as Civil Case No. 65420, against Sta.
Lucia for the collection of real estate taxes, including penalties and interests, on the lots covered
by TCT Nos. 532250, 598424, 599131, 92869, 92870 and 38457, including the improvements
thereon (the subject properties).
Sta. Lucia, in its Answer, alleged that it had been religiously paying its real estate taxes to Cainta,
just like what its predecessors-in-interest did, by virtue of the demands and assessments made
and the Tax Declarations issued by Cainta on the claim that the subject properties were within its
territorial jurisdiction. Sta. Lucia further argued that since 1913, the real estate taxes for the lots
covered by the above TCTs had been paid to Cainta.
Decision to include the realty taxes due on the improvements on the subject lots:
ISSUE:
1) Whether the RTC and the CA were correct in deciding Pasig's Complaint without waiting for
the resolution of the boundary dispute case between Pasig and Cainta; and
2) Whether Sta. Lucia should continue paying its real property taxes to Cainta, as it alleged to
have always done, or to Pasig, as the location stated in Sta. Lucia's TCTs.
RULING:
The Local Government Unit entitled to Collect Real Property Taxes
Under Presidential Decree No. 464 or the "Real Property Tax Code," the authority to collect real
property taxes is vested in the locality where the property is situated
This requisite was reiterated in Republic Act No. 7160, also known as the 1991 the Local
Government Code
The only import of these provisions is that, while a local government unit is authorized under
several laws to collect real estate tax on properties falling under its territorial jurisdiction, it is
imperative to first show that these properties are unquestionably within its geographical
boundaries.
The importance of drawing with precise strokes the territorial boundaries of a local unit of
government cannot be overemphasized. The boundaries must be clear for they define the limits
of the territorial jurisdiction of a local government unit. It can legitimately exercise powers of
government only within the limits of its territorial jurisdiction. Beyond these limits, its acts are
ultra vires.
Clearly therefore, the local government unit entitled to collect real property taxes from Sta. Lucia
must undoubtedly show that the subject properties are situated within its territorial jurisdiction;
otherwise, it would be acting beyond the powers vested to it by law.
Certificates of Title as Conclusive Evidence of Location for levying taxes on a property that was
outside its territorial jurisdiction: The failure of the city officials of Tagaytay to verify if the property
is within its jurisdiction before levying taxes on the same constitutes gross negligence
It would be unfair to hold Sta. Lucia liable again for real property taxes it already paid simply
because Pasig cannot wait for its boundary dispute with Cainta to be decided.
Pasig RTC should have held in abeyance the proceedings in Civil Case No. 65420, in view of the
fact that the outcome of the boundary dispute case before the Antipolo RTC will undeniably affect
both Pasig's and Cainta's rights. In fact, the only reason Pasig had to file a tax collection case
against Sta. Lucia was not that Sta. Lucia refused to pay, but that Sta. Lucia had already paid,
albeit to another local government unit.
In the meantime, to avoid further animosity, Sta. Lucia is directed to deposit the succeeding real
property taxes due on the subject properties, in an escrow account with the Land Bank of the
Philippines
9. Republic of the Philippines (Department of Transportation and Communications) vs
City of Mandaluyong, G.R. No. 184879, February 23, 2011.
FACTS:
Republic, represented by DOTC entered into a Revised & restated Agreement to Build, Lease &
Transfer a Light Rail System for EDSA with Metro Rail, a foreign corporation. Under the BLT
Agreement, Metro Rail is responsible for the design, construction, equipping, completion, testing
& commissioning of EDSA MRT III. DOTC shall operate the same but ownership remains with
Metro Rail during the Revenue & Construction periods, and at the end of such period, Metro Rail
shall transfer to DOTC its title & all of its rights & interests therein. Metro Rail then assigned all
its rights and obligations to MRTC, a domestic corporation. Metro Rail turned over the EDSA MRT
III System to DOTC for operation.
Office of City Assessor of Mandaluyong issued a tax Declaration in the name of MRTC and
subsequently demanded payment of real property taxes under such tax declaration. Thereafter,
a Notice of Delinquency was sent to MRTC for deficiency of real property tax. City treasurer issued
& served a Warrant of Levy upon MRTC with Notices of Levy upon City Assessor & Registrar of
Deeds of Mandaluyong.
Republic filed a case for Declaration of Nullity of Real Property Tax Assessment & Warrant of Levy
with TRO alleging that since Metro Rail had transferred to DOTC the actual use, and operation of
EDSA MRT III System, MRTC doesn’t have actual use & possession as to subject it to payment of
real estate taxes. And notwithstanding the transfer, Republic isn’t liable because local gov’t units
are legally proscribed from imposing taxes of any kind on it and that Republic is exempted from
payment of RPT.
RTC denied applications for TRO and consequently, public auction was held. Real properties were
forfeited in favor of Mandaluyong City.
Respondent filed an ex parte petition for issuance of writ of possession which was granted by the
RTC. MRTC appealed this decision to the CA and Republic filed this instant case. Petitioner claimed
that since EDSA MRT properties are beneficially owned by DOTC, it should not have been assessed
for payment of RPT, being a governmental entity, it is exempt from payment of RPT and therefore,
no tax delinquency exist authorizing respondent to sell the properties through public auction.
ISSUE:
7
 WON RTC erred in issuing writ of possession.
RULING:
This case is between local government’s power to tax and national government’s privilege of tax
exemption. A writ of possession is a mere incident in the transfer of title. In this case, it stemmed
from exercise of alleged ownership by respondent over EDSA MRMT III properties by virtue of tax
delinquency sale.
The issue WON action sale should be enjoined is still pending before the CA. pending
determination, it is premature for respondent to have conducted the auction sale & caused the
transfer of title over the real properties to its name. Denial by RTC to issue an injunction/TRO
doesn’t automatically give respondent the liberty to proceed with actions sought to be enjoined.
It is premature for RTX to issue a writ of possession where ownership of subject properties is
derived from the auction sale, the validity of which is still being threshed out in the CA. RTC
should’ve held in abeyance the issuance of a writ of possession.
The writ issued is premature and has no force and effect.
10. Alejandro Ty v. Hon. Trampe,et al., G.R. No. 117577, December 1, 1995
FACTS:
Petitioner questioned the validity of the notice of assessment respecting certain real properties
owned by him which were located in Pasig City, Metro Manila. The said notice was issued solely
by respondent municipal assessor subjecting petitioner’s real properties pursuant to Section 212
of RA 7160 or the Local Government Code of the Philippines. According to respondents, said
Section of the LGC impliedly repealed P.D. 921. Quoting Section 9 of PD 921: “[t]he schedule of
values that will serve as the basis for the appraisal and assessment for taxation purposes of real
properties located within the Metropolitan Area shall be prepared jointly by the City Assessors of
the Districts…”.
A petition for prohibition was filed by petitioners at the RTC with a prayer to declare null and void
the new tax assessments and to enjoin the collection of real estate taxes based on said
assessments. Having received an unfavorable decision from the RTC, petitioners filed the present
Petition for Review directly to the Supreme Court.
ISSUES:
(1) Whether RA 7160 repealed the provisions of PD 921;
(2) Whether petitioners are required to exhaust administrative remedies prior to seeking judicial
relief; and
(3) Whether the new tax assessments are oppressive and confiscatory, and therefore
unconstitutional.
RULINGS:
(1st issue): NO
We rule for petitioners.
R.A. 7160 has a repealing provision (Section 534) and, if the intention of the legislature was to
abrogate P.D. 921, it would have included it in such repealing clause, as it did in expressly
rendering of no force and effect several other presidential decrees. Hence, any repeal or
modification of P.D. 921 can only be possible under par. (f) of said Section 534, as follows:
(f) All general and special laws, acts, city charter, decrees, executive orders, proclamations and
administrative regulations, part or parts thereof which are inconsistent with any of the provisions
of the Code are hereby repealed or modified accordingly.
The foregoing partakes of the nature of a general repealing provision. It is a basic rule of statutory
construction that repeals by implication are not favored. An implied repeal will not be allowed
unless it is convincingly and unambiguously demonstrated that the two laws are so clearly
repugnant and patently inconsistent that they cannot co-exist. This is based on the rationale that
the will of the legislature cannot be overturned by the judicial function of construction and
interpretation. Courts cannot take the place of Congress in repealing statutes. Their function is to
try to harmonize, as much as possible, seeming conflicts in the laws and resolve doubts in favor
of their validity and co-existence.
[…]
In the same vein, but in different words, this Court ruled in Gordon vs. Veridiano :
Courts of justice, when confronted with apparently conflicting statutes, should endeavor to
reconcile the same instead of declaring outright the invalidity of one as against the other. Such
alacrity should be avoided. The wise policy is for the judge to harmonize them if this is possible,
bearing in mind that they are equally the handiwork of the same legislature, and so give effect to
both while at the same time also according due respect to a coordinate department of the
government. It is this policy the Court will apply in arriving at the interpretation of the laws above-
cited and the conclusions that should follow therefrom.
[…]
Coming down to specifics, Sec. 9 of P.D. 921 requires that the schedule of values of real properties
in the Metropolitan Manila area shall be prepared jointly by the city assessors in the districts
created therein: while Sec. 212 of R.A. 7160 states that the schedule shall be prepared "by the
provincial, city and municipal assessors of the municipalities within the Metropolitan Manila Area
for the different classes of real property situated in their respective local government units for
enactment by ordinance of the sanggunian concerned. . . ."
It is obvious that harmony in these provisions is not only possible, but in fact desirable, necessary
and consistent with the legislative intent and policy. By reading together and harmonizing these
two provisions, we arrive at the following steps in the preparation of the said schedule, as follows:
1. The assessor in each municipality or city in the Metropolitan Manila area shall
prepare his/her proposed schedule of values, in accordance with Sec. 212, R.A.
7160.
2. Then, the Local Treasury and Assessment District shall meet, per Sec. 9, P.D. 921.
In the instant case, that district shall be composed of the assessors in Quezon City,
Pasig, Marikina, Mandaluyong and San Juan, pursuant to Sec. 1 of said P.D. In this
meeting, the different assessors shall compare their individual assessments,
discuss and thereafter jointly agree and produce a schedule of values for their
district, taking into account the preamble of said P.D. that they should evolve "a
progressive revenue raising program that will not unduly burden the taxpayers".
8
 3. The schedule jointly agreed upon by the assessors shall then be published in a
newspaper of general circulation and submitted to the sanggunian concerned for
enactment by ordinance, per Sec. 212, R.A. 7160.
By this harmonization, both the preamble of P.D. 921 decreeing that the real estate taxes shall
"not unduly burden the taxpayer" and the "operative principle of decentralization" provided under
Sec. 3, R.A. 7160 encouraging local government units to "consolidate or coordinate their efforts,
services and resources" shall be fulfilled. Indeed the essence of joint local action for common
good so cherished in the Local Government Code finds concrete expression in this harmonization.
How about respondents' claim that, with the express repeal of P.D. 464, P.D. 921 — being merely
a "supplement" of said P.D. — cannot "exist independently on its own"? Quite the contrary is true.
By harmonizing P.D. 921 with R.A. 7160, we have just demonstrated that it can exist outside of
P.D. 464, as a support, supplement and extension of R.A. 7160, which for this purpose, has
replaced P.D. 464.
Since it is now clear that P.D. 921 is still good law, it is equally clear that this Court's ruling in the
Mathay/Javier/Puyat-Reyes cases (supra) is still the prevailing and applicable doctrine. And,
applying the said ruling in the present case, it is likewise clear that the schedule of values
prepared solely by the respondent municipal assessor is illegal and void.
(2nd issue): NO
We do not agree. Although as a rule, administrative remedies must first be exhausted before
resort to judicial action can prosper, there is a well-settled exception in cases where the
controversy does not involve questions of fact but only of law. In the present case, the parties,
even during the proceedings in the lower court on 11 April 1994, already agreed "that the issues
in the petition are legal" , and thus, no evidence was presented in said court.
In laying down the powers of the Local Board of Assessment Appeals, R.A. 7160 provides in Sec.
229 (b) that "(t)he proceedings of the Board shall be conducted solely for the purpose of
ascertaining the facts . . . ." It follows that appeals to this Board may be fruitful only where
questions of fact are involved. Again, the protest contemplated under Sec. 252 of R.A. 7160 is
needed where there is a question as to the reasonableness of the amount assessed. Hence, if a
taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he is required
to "first pay the tax" under protest. Otherwise, the city or municipal treasurer will not act on his
protest. In the case at bench however, the petitioners are questioning the very authority and
power of the assessor, acting solely and independently, to impose the assessment and of the
treasurer to collect the tax. These are not questions merely of amounts of the increase in the tax
but attacks on the very validity of any increase.
(3rd issue): NOT DISPOSED BY THE COURT
Having already definitively disposed of the case through the resolution of the foregoing two issues,
we find no more need to pass upon the third. It is axiomatic that the constitutionality of a law,
regulation, ordinance or act will not be resolved by courts if the controversy can be, as in this
case it has been, settled on other grounds.
[…]
…ruling in Laurel vs. Garcia, where this Court held:
The Court does not ordinarily pass upon constitutional questions unless these questions are
properly raised in appropriate cases and their resolution is necessary for the determination of the
case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional question
although properly presented by the record if the case can be disposed of on some other ground
such as the application of a statute or general law (Siler v. Louisville and Nashville R. Co., 213
U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496 [1941]). (emphasis supplied)
In view of the foregoing ruling, the question may be asked: what happens to real estate tax
payments already made prior to its promulgation and finality? Under the law, "the taxpayer may
file a written claim for refund or credit for taxes and interests . . . ."
11. Coca-Cola Bottlers Phils. Inc. v. City of Manila, GR No. 156252, June 27, 2006
FACTS:
The City Mayor of Manila approved Tax Ordinance No. 7988 entitled, Revenue Code of the City of
Manila. Tax Ordinance No. 7988 amended certain sections of Tax Ordinance No. 7794 by
increasing the tax rates applicable to certain establishments operating within the territorial
jurisdiction of the City of Manila, including herein petitioner.
Aggrieved by said tax ordinance, petitioner filed a Petition before the (DOJ), against the City of
Manila and its Sangguniang Panlungsod, invoking Section 187 of the Local Government Code of
1991 (Republic Act No. 7160). Said Petition questions the constitutionality or legality of Section
21 of Tax Ordinance No. 7988.
DOJ Secretary Artemio G. Tuquero then issued a Resolution declaring Tax Ordinance No. 7988
null and void and without legal effect. The City of Manila failed to file a Motion for Reconsideration
nor lodge an appeal of said Resolution, thus, said Resolution of the DOJ Secretary declaring Tax
Ordinance No. 7988 null and void has lapsed into finality.
On 16 November 2000, Atty. Leonardo A. Aurelio wrote the Bureau of Local Government Finance
(BLGF) requesting in behalf of his client, Singer Sewing Machine Company, an opinion on whether
the Office of the City Treasurer of Manila has the right to enforce Tax Ordinance No. 7988 despite
the Resolution of the DOJ Secretary. Acting on said letter, the BLGF Executive Director issued an
Indorsement ordering the City Treasurer of Manila to cease and desist from enforcing Tax
Ordinance No. 7988.
Despite the Resolution of the DOJ declaring Tax Ordinance No. 7988 null and void and the directive
of the BLGF that respondents cease and desist from enforcing said tax ordinance, respondents
continued to assess petitioner business tax for the year 2001 based on the tax rates prescribed
under Tax Ordinance No. 7988. Thus, petitioner filed a Complaint with the RTC of Manila, Branch
21, on 17 January 2001, praying that respondents be enjoined from implementing the
aforementioned tax ordinance.
During the pendency of the said case, the City Mayor of Manila approved on 22 February 2001
Tax Ordinance No. 8011 entitled, An Ordinance Amending Certain Sections of Ordinance No. 7988.
Said tax ordinance was again challenged by petitioner before the DOJ through a Petition
questioning the legality of the aforementioned tax ordinance on the grounds that (1) said tax
ordinance amends a tax ordinance previously declared null and void and without legal effect by
the DOJ; and (2) said tax ordinance was likewise not published upon its approval in accordance
with Section 188 of the Local Government Code of 1991.
9
 On 5 July 2001, then DOJ Secretary Hernando Perez issued a Resolution declaring Tax Ordinance
No. 8011 null and void and legally not existing.
The City of Manila appealed the DOJ Resolution, , denying its Motion for Reconsideration of the
Resolution nullifying Tax Ordinance No. 8011 before the RTC of Manila, Branch 17, but the same
was dismissed for lack of jurisdiction. Consequently, filed a Petition for Review on Certiorari to
the Supreme Court.
ISSUE:
WON Tax Ordinance No. 7988 is null and void.
RULING:
Yes, it is null and void.
Tax Ordinance No. 7988 has already been declared by the DOJ Secretary, as null and void and
without legal effect due to respondents failure to satisfy the requirement that said ordinance be
published for three consecutive days as required by law. Moreso, said Order of the DOJ was never
appealed by the City of Manila, thus, it had attained finality after the lapse of the period to appeal.
Furthermore, the RTC of Manila, reiterated the findings of the DOJ Secretary that respondents
failed to follow the procedure in the enactment of tax measures as mandated by Section 188 of
the Local Government Code of 1991, in that they failed to publish Tax Ordinance No. 7988 for
three consecutive days in a newspaper of local circulation. The said ordinance was published only
for one day in the 22 May 2000 issue of the Philippine Post in contravention of the unmistakable
directive of the Local Government Code of 1991.
Significantly, said amending ordinance was likewise declared null and void by the DOJ Secretary,
elucidating that[I]nstead of amending Ordinance No. 7988, [herein] respondent should have
enacted another tax measure which strictly complies with the requirements of law, both procedural
and substantive. The passage of the assailed ordinance did not have the effect of curing the
defects of Ordinance No. 7988 which, any way, does not legally exist. Said Resolution of the DOJ
Secretary had, as well, attained finality by virtue of the dismissal with finality
As held by this Court in the case of People v. Lim if an order or law sought to be amended is
invalid, then it does not legally exist, there should be no occasion or need to amend it.
12. City of Manila v. Coca-Cola, G.R. No. 181845, August 12, 2009
FACTS:
Tax Ordinances No. 7988 and No. 8011 of the City of Manila were later declared by the Court null
and void in Coca-Cola Bottlers Philippines, Inc. v. City of Manila 8 (Coca-Cola case) . However,
before the Court could declare Tax Ordinance No. 7988 and Tax Ordinance No. 8011 null and void
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. Respondent filed a protest with petitioner Toledo , who did not respond to the protest
of respondent. Respondent sought the cancellation of the assessment in the RTC.
The RTC granted the Motion for Reconsideration of respondent, decreed the cancellation and
withdrawal of the assessment against the latter, and barred petitioners from further
imposing/assessing local business taxes against respondent under Section 21 of Tax Ordinance
No. 7794, as amended by Tax Ordinance No. 7988 and Tax Ordinance No. 8011. The CTA also
dismissed the petition for review filed by the treasurer. The CTA First Division reasoned that the
Petition for Review of petitioners was not only filed out of time — it also failed to comply with the
provisions of Section 4, Rule 5; and Sections 2 and 3, Rule 6, of the Revised Rules of the CTA.
Petitioners thereafter filed a Petition for Review before the CTA en banc. The CTA en banc similarly
denied the petition
ISSUES/ HELD:
W/N the questioned assessment is valid- NO
Ratio: Contrary to the assertions of petitioners, the Coca-Cola case is indeed applicable to the
instant case. 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 cannot be taxed and assessed
under the amendatory laws — Tax Ordinance No. 7988 and Tax Ordinance No. 8011. 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.
It is apparent from a perusal of Section 143 of the LGC that when a municipality or city has already
imposed a business tax on manufacturers, etc. of liquors, distilled spirits, wines, and any other
article of commerce, 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. Section 143 (h) may be imposed only on businesses that are subject to excise tax, VAT, or
percentage tax under the NIRC, and that are "not otherwise specified in preceding paragraphs".
In the same way, businesses such as respondent's, 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.
13. Napocor v. City of Cabanatuan, G.R. No. 149110, April 9, 2003
FACTS:
NAPOCOR (NPC), the petitioner, is a government-owned and controlled corporation created under
Commonwealth Act 120. It 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.”
For many years now, NPC sells electric power to the resident Cabanatuan City, posting a gross
income of P107,814,187.96 in 1992. Pursuant to Sec. 37 of Ordinance No. 165-92, the respondent
assessed the petitioner a franchise tax amounting to P808,606.41, representing 75% of 1% of
the former’s gross receipts for the preceding year.
Petitioner, whose capital stock was subscribed and wholly paid by the Philippine Government,
refused to pay the tax assessment. It argued that the respondent has no authority to impose tax
on government entities. Petitioner also contend that as a non-profit organization, it is exempted
from the payment of all forms of taxes, charges, duties or fees in accordance with Sec. 13 of RA
6395 (law amending NPC Charter), as amended.
The respondent filed a collection suit in the RTC of Cabanatuan City, demanding that petitioner
pay the assessed tax, plus surcharge equivalent to 25% of the amount of tax and 2% monthly
interest. Respondent alleged that petitioner’s exemption from local taxes has been repealed by
10
Sec. 193 of RA 7160 (Local Government Code). The trial court issued an order dismissing the
case. On appeal, the Court of Appeals reversed the decision of the RTC and ordered the petitioner
to pay the city government the tax assessment.
ISSUES:
(1) Is the NAPOCOR excluded from the coverage of the franchise tax simply because its stocks
are wholly owned by the National Government and its charter characterized is as a “non-profit
organization”?
(2) Is the NAPOCOR’s exemption from all forms of taxes repealed by the provisions of the Local
Government Code (LGC)?
RULING:
(1) NO. To stress, a franchise tax is imposed based not on the ownership but on the exercise by
the corporation of a privilege to do business. The taxable entity is the corporation which exercises
the franchise, and not the individual stockholders. By virtue of its charter, petitioner was created
as a separate and distinct entity from the National Government. It can sue and be sued under its
own name, and can exercise all the powers of a corporation under the Corporation Code.
To be sure, the ownership by the National Government of its entire capital stock does not
necessarily imply that petitioner is no engaged in business.
(2) YES. One of the most significant provisions of the LGC is the removal of the blanket exclusion
of instrumentalities and agencies of the National Government from the coverage of local taxation.
Although as a general rule, LGUs cannot impose taxes, fees, or charges of any kind on the National
Government, its agencies and instrumentalities, this rule now admits an exception, i.e. when
specific provisions of the LGC authorize the LGUs to impose taxes, fees, or charges on the
aforementioned entities. The legislative purpose to withdraw tax privileges enjoyed under existing
laws or charter is clearly manifested by the language used on Sec 137 and 193 categorically
withdrawing such exemption subject only to the exceptions enumerated. Since it would be tedious
and impractical to attempt to enumerate all the existing statutes providing for special tax
exemptions or privileges, the LGC provided for an express, albeit general, withdrawal of such
exemptions or privileges. No more unequivocal language could have been used.
Sec. 137
Sec. 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special
law, the province may impose a tax on businesses 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 based on the incoming receipt, or realized, within its territorial jurisdiction.
In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one
percent (1%) of the capital investment. In the succeeding calendar year, regardless of when the
business started to operate, the tax shall be based on the gross receipts for the preceding calendar
year, or any fraction thereof, as provided herein.
Sec. 193
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.
14. Palma Devt. Corp. v. Municipality of Malangas, G.R. No. 152492, October 16, 2003
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 point for its goods. Malangas passed Municipal Revenue Code No. 09 where Section
5G.01 of which imposes fees on the goods that pass through the issuing municipality’s territory.
Accordingly, the service fees imposed by the ordinance were paid by Palma under protest. It
contended that under the Local Government Code of 1991, municipal governments did not have
the authority to tax goods and vehicles that passed through their jurisdictions. On the other hand,
the Municipality of Malangas defended that the fees on the ground that the LGC (Secs. 153 and
155) now provides for revenue-raising powers of LGUs
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
RULING:
1) No, Section 5G.01 of Municipal Revenue Code No. 09 is null and void for being in violation of
Republic Act No. 7160. The court held that although a municipality may impose a fee for the use
of a wharf, the LGC expressly prohibits imposing fees on goods that pass through the issuing
municipality’s territory.
By express language of Sections 153 and 155 of RA No. 7160, local government units, through
their Sanggunian, may prescribe the terms and conditions for the imposition of toll fees or charges
for the use of any public road, pier or wharf funded and constructed by them. A service fee
imposed on vehicles using municipal roads leading to the wharf is thus valid. However,
Section133(e) of RA No. 7160 prohibits the imposition, in the guise of wharfage, of
fees — as well as all other taxes or charges in any form whatsoever — on goods or
merchandise. It is therefore irrelevant if the fees imposed are actually for police surveillance on
the goods, because any other form of imposition on goods passing through the territorial
jurisdiction of the municipality is clearly prohibited by Section 133(e).
Further, the benefits from the use of the municipal roads and the wharf were not unjustly enriched
by the petitioner since those benefits resulted from the infrastructure that the municipality was
mandated by law to provide.
11
 2. No, the court ruled 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.
15. Smart Communications, Inc. v. City of Davao, G.R. No. 155491, July 21, 2009.
FACTS:
Smart filed a special civil action for declaratory relief for the ascertainment of its rights and
obligations under the Tax Code of the City of Davao which imposes 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 notwithstanding any
exemption granted by any law or other special law to such franchise.
Smart contends that its telecenter in Davao City is exempt from payment of franchise tax to the
City, on the following grounds: (a) the issuance of its franchise under Republic Act (R.A.) No.
7294http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/155491.
htm - _ftn5 subsequent to R.A. No. 7160 shows the clear legislative intent to exempt it from
the provisions of R.A. 7160; (b) Section 137 of R.A. No. 7160 can only apply to exemptions already
existing at the time of its effectivity and not to future exemptions; (c) the power of the City of
Davao to impose a franchise tax is subject to statutory limitations such as the in lieu of all
taxes clause found in Section 9 of R.A. No. 7294; and (d) the imposition of franchise tax by the
City of Davao would amount to a violation of the constitutional provision against impairment of
contracts.
In their answer, the City of Davao invoked the power granted by the Constitution to local
government units to create their own sources of revenue.
ISSUE:
Whether Smart is liable to pay the franchise tax imposed by the City of Davao.
RULING:
Yes, Smart is liable.
On “In lieu of all taxes“ Clause in RA 7294:
Smart is of the view that the only taxes it may be made to bear under its franchise are the national
franchise tax (now VAT), income tax, and real property tax. It claims exemption from the local
franchise tax because the in lieu of taxes clause in its franchise does not distinguish between
national and local taxes
R.A. No. 7294 is not definite in granting exemption to Smart from local taxation. Section 9 of R.A.
No. 7294 imposes on Smart a franchise tax equivalent to three percent (3%) of all gross receipts
of the business transacted under the franchise and the said percentage shall be in lieu of all taxes
on the franchise or earnings thereof.
R.A. No 7294 does not expressly provide what kind of taxes Smart is exempted from. It is not
16. Mobil Phil. Inc. v. City Treasurer of Makati, G.R. No. 154092, 14 July 2005
clear whether the “in lieu of all taxes” provision in the franchise of Smart would include exemption
from local or national taxation. What is clear is that Smart shall pay franchise tax equivalent to
three percent (3%) of all gross receipts of the business transacted under its franchise. But whether
the franchise tax exemption would include exemption from exactions by both the local and the
national government is not unequivocal.
In this case, the doubt must be resolved in favor of the City of Davao. The “in lieu of all taxes”
clause applies only to national internal revenue taxes and not to local taxes. It is clear that the “in
lieu of all taxes” clause apply only to taxes under the NIRC and not to local taxes. It is not even
applied to income tax, as shown in the provision itself, to wit:
 proviso in the first paragraph of Section 9, Smart's franchise states that the grantee shall
"continue to be liable for income taxes payable under Title II of the National Internal Revenue
Code."
 second paragraph of Section 9, speaks of tax returns filed and taxes paid to the
"Commissioner of Internal Revenue or his duly authorized representative in accordance with the
National Internal Revenue Code."
 same paragraph, declares that the tax returns "shall be subject to audit by the Bureau of
Internal Revenue."
If Congress intended the "in lieu of all taxes" clause in Smart's franchise to also apply to local
taxes, Congress would have expressly mentioned the exemption from municipal and provincial
taxes.
It should be noted that the “in lieu of all taxes” clause in R.A. No. 7294 has become functus
officio with the abolition of the franchise tax on telecommunications companies. Currently, Smart
along with other telecommunications companies pays the uniform 10% value-added tax. The VAT
on sale of services of telephone franchise grantees is equivalent to 10% of gross receipts derived
from the sale or exchange of services, as provided in R.A. No. 7716, as amended by the Expanded
Value Added Tax Law (R.A. No. 8241).
The franchise tax that the City of Davao may impose must comply with Sections 137 and 151 of
R.A. No. 7160. Thus, the local franchise tax that may be imposed by the City must not exceed
50% of 1% of the gross annual receipts for the preceding calendar year based on the income
on receipts realized within the territorial jurisdiction of Davao.
On the burden of grant to Tax exemptions:
Tax exemptions are never presumed and are strictly construed against the taxpayer and
liberally in favor of the taxing authority. They can only be given force when the grant is clear and
categorical. If the intention of the legislature is open to doubt, then the intention of the legislature
must be resolved in favor of the State.
On impairment of contracts:
There is no violation of Article III, Section 10 of the 1987 Philippine Constitution. The franchise of
Smart does not expressly provide for exemption from local taxes. Absent the express provision on
such exemption under the franchise, we are constrained to rule against it. Due to this ambiguity
in the law, the doubt must be resolved against the grant of tax exemption.
Moreover, Smarts franchise was granted with the express condition that it is subject to
amendment, alteration, or repeal. Contract Clause has never been thought as a limitation on the
exercise of the State’s power of taxation save only where a tax exemption has been granted for
a valid consideration.
12
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. 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. The trial court rules that the payments made by the petitioner
in 1998 are payments for the business taxes in 1997.
ISSUE:
Are the business taxes paid by petitioner in 1998, business taxes for 1997 or 1998?
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. 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 15th day of
the 4th 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
17. Yamane v. BA Lepanto Condo. Corp., G.R. No. 154993, October 25, 2005
FACTS:
On 15 December 1998, the BA Lepanto Condo. Corporation (the Corporation) received a Notice
of Assessment dated from the City Treasurer of Makati, Luz Yamane. The Notice of Assessment
stated that the Corporation is liable to pay the correct city business taxes, fees and charges,
computed as totaling P1,601,013.77 for the years 1995 to 1997. The Notice of Assessment was
silent as to the statutory basis of the business taxes assessed.
Proceeding from the premise that its tax liability arose from Section 3A.02(m) of the Makati
Revenue Code, the Corporation proceeded to argue that under both the Makati Code and the
Local Government Code, business is defined as trade or commercial activity regularly engaged in
as a means of livelihood or with a view to profit.
It was submitted that the Corporation, as a condominium corporation, was organized not for
profit, but to hold title over the common areas of the Condominium, to manage the Condominium
for the unit owners, and to hold title to the parcels of land on which the Condominium was located.
Neither was the Corporation authorized, under its articles of incorporation or by-laws to engage
in profit-making activities. The assessments it did collect from the unit owners were for capital
expenditures and operating expenses.
Yamane denied the protest. Lepanto then appealed the denial to the RTC of Makati. RTC Makati
affirmed the decision of Yamane. Lepanto then filed a petition for review under Rule 42 with the
Court of Appeals. The Court of Appeals reversed the RTC.
ISSUE:
WON the City of Makati may collect business taxes on condominium corporations
RULING:
No. Condominium corporations are exempt from local business taxation.
The coverage of business taxation particular to the City of Makati is provided by the Makati
Revenue Code (Revenue Code), enacted through Municipal Ordinance No. 92-072, which is quite
specific as to the particular businesses covered by business taxes.
At no point has the City Treasurer been candid enough to inform the Corporation, the RTC, the
Court of Appeals, or this Court for that matter, as to what exactly is the precise statutory basis
under the Makati Revenue Code for the levying of the business tax on petitioner. All of the
pleadings submitted by the City Treasurer in all the antecedent judicial proceedings, as well as in
this present petition, and also the communications by the City Treasurer to the Corporation which
form part of the record do not have any citation made by the City Treasurer of any provision of
the Revenue Code which would serve as the legal authority for the collection of business taxes
from condominiums in Makati.
It is thus imperative that in order that the Corporation may be subjected to business taxes, its
activities must fall within the definition of business as provided in the Local Government Code.
And to hold that they do is to ignore the very statutory nature of a condominium corporation.
To enable the orderly administration over these common areas which are jointly owned by the
various unit owners, the Condominium Act permits the creation of a condominium corporation,
13
 which is specially formed for the purpose of holding title to the common area, in which the holders The law is clear, the provision specifically states that basis should be gross receipts.
of separate interests shall automatically be members or shareholders, to the exclusion of others,
in proportion to the appurtenant interest of their respective units.
Gross receipt vs gross revenue (discussion by court)
The particular Articles of Incorporation and By-Laws of Lepanto, and the documents unmistakably
hew to the limitations contained in the Condominium Act. Whatever capacity it may have pursuant
to its power to exercise acts of ownership over personal and real property is limited by its stated Gross receipts Gross revenue
corporate purposes, which are by themselves further limited by the Condominium Act. A include money or its equivalent covers money or its equivalent
condominium corporation, while enjoying such powers of ownership, is prohibited by law from actually or constructively received actually or constructively
transacting its properties for the purpose of gainful profit. in consideration of services received, including the value of
rendered or articles sold, services rendered or articles
Accordingly, and with a significant degree of comfort, the Supreme Court held that condominium exchanged or leased, whether sold, exchanged or leased, the
corporations are generally exempt from local business taxation under the Local Government Code, actual or constructive. (what you payment of which is yet to be
irrespective of any local ordinance that seeks to declare otherwise. really received, actual or received. (expected to be received)
constructive)

18. Ericsson Telecoms Inc. v. City of Pasig, G.R. No. 176667, November 22, 2007
Application to case
FACTS:
Ericsson Telecommunications, Inc., is engaged in the design, engineering, and marketing of In ericssons’ case, its audited financial statements reflect income or revenue which accrued to it
telecommunication facilities/system. The City Treasurer of Pasig City assessed Ericsson a business during the taxable period although not yet actually or constructively received or paid, because
tax deficiency for the years 1998 and 1999 based on its gross revenues as reported in its audited ericsson uses the accrual method of accounting, where income is reportable when all the events
financial statements for the years 1997 and 1998. Ericsson filed a Protest claiming that the have occurred that fix the taxpayers right to receive the income, and the amount can be
computation of the local business tax should be based on gross receipts and not on gross revenue. determined with reasonable accuracy; the right to receive income, and not the actual receipt,
The same issue happened for assessments made for the year 2000 and 2001. determines when to include the amount in gross
income.http://sc.judiciary.gov.ph/jurisprudence/2007/november2007/17666
ISSUE:
WON local business tax on contractors should be based on gross receipts or gross revenue? 7.htm - _ftn26

City of pasig: it should be based on gross revenues, since gross receipts is synonymous with
gross earnings/revenue, which, in turn, includes uncollected earnings
Ericsson: it should be based on gross receipts, only the portion of the revenues which were
actually and constructively received should be considered in determining its tax base.
The imposition of local business tax based on ericsson’s gross revenue will inevitably result in the
constitutionally proscribed double taxation taxing of the same person twice by the same
jurisdiction for the same thing inasmuch as petitioners revenue or income for a taxable year will
definitely include its gross receipts already reported during the previous year and for which local
business tax has already been paid.

RULING:
Ericsson won, should be based on gross receipts
19. Allied Thread Co., Inc. v. Manila, G.R. No. L-40296,21 Nov. 1984
Basis (law)
Section 143 (e) of LGC covering local business tax contractors and other independent contractors,
says: “The municipality may impose taxes on the following businesses: (e) On contractors and
other independent contractors, in accordance with the following schedule: With gross
receipts for the preceding calendar year in the amount of: Amount of Tax Per Annum”. The
provision specifically refers to gross receipts which is defined under Section 131 of the Local
Government Code, as follows:
FACTS:
Allied Thread Co. Inc. is engaged in the business of manufacturing sewing thread and yarn. It
operates its factory and maintains an office in Pasig, Rizal. In order to sell its products in Manila
and in other parts of the Philippines, it engaged the services of a sales broker, Ker & Co. Ltd., the
latter deriving commissions from every sale made for its principal. The City of Manila enacted
Ordinance 7516 imposing business taxes based on gross sales on a graduated basis on
manufacturers, importers or producers doing business in Manila. Allied Thread and Ker & Co.
alleged that said ordinance is invalid for being contrary to Section 54 of PD 426.

ISSUE:
“(n) Gross Sales or Receipts include the total amount of money or its equivalent representing the Whether or not Allied Thread is properly taxed in Manila.
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 HELD:
taxable quarter for the services performed or to be performed for another person excluding discounts Ordinance 7516, as amended, imposes a business tax on manufacturers, importers or producers
if determinable at the time of sales, sales return, excise tax, and value-added tax (VAT);” doing business in Manila. The tax imposition is upon the performance of an act, enjoyment of a
14
 privilege, or the engaging in an occupation, and hence is in the nature of an excise tax. The power
to levy an excise upon the performance of an act or the engaging in an occupation does not
depend upon the domicile of the person subject to the excise, nor upon the physical location of
the property and in connection with the act or occupation taxed, but depends upon the place in
which the act is performed or occupation engaged in. Thus, since Allied Thread sells its products
in the City of Manila through its broker, Ker & Co., it cannot escape the tax liability imposed by
Ordinance 7516, as amended.
20. Province of Bulacan v. CA, G.R. No. 126232, November 27, 1998
FACTS:
On June 26, 1992, the Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3,
known as "An ordinance Enacting the Revenue Code of the Bulacan Province”, which took effect
on July 1, 1992.
The ordinance allows the Province to collect taxes on the fair market value in the locality per cubic
meter of ordinary stones, sand, gravel, earth and other quarry resources, such, but not limited to
marble, granite, volcanic cinders, basalt, tuff and rock phosphate, extracted from public lands or
from beds of seas, lakes, rivers, streams, creeks and other public waters within its territorial
jurisdiction.
Due to the ordinance, Provincial treasurer assess Republic Cement Corporation for P2,524,692.13
for extracting limestone, shale and silica from several parcels of private land in the province
during the third quarter of 1992 until the second quarter of 1993. However, Republic Cement
Corporation believes that the province had no authority to impose taxes on quarry resources
extracted from private lands, hence, filed a declaratory relief to the RTC. The province filed a
motion for reconsideration which was granted by RTC. Republic Cement Corporation appealed
directly to SC, however, SC referred the case to CA. Under CA, it declared that the Province of
Bulacan had no authority to impose such taxes, thus the instant petition made by the Province to
SC.
ISSUE:
Whether or not the Province of Bulacan has the right to impose tax on private lands.
HELD:
No, it had no right to impose taxes.
According to the Supreme Court, the Court of Appeals erred in ruling that a province can impose
only the taxes specifically mentioned under the Local Government Code. As correctly pointed out
by petitioners, Section 186 allows a province to levy taxes other than those specifically enumerated
under the Code, subject to the conditions specified therein. However, such findings affords cold
comfort to petitioners as they are still prohibited from imposing taxes on stones, sand, gravel,
earth and other quarry resources extracted from private lands.
The tax imposed by the Province of Bulacan is an excise tax, being a tax upon the performance,
carrying on, or exercise of an activity. A province may not, therefore, levy excise taxes on articles
already taxed by the National Internal Revenue Code. Unfortunately for petitioners, the National
Internal Revenue Code provided the tax on all quarry resources, regardless of origin, whether
extracted from public or private land.
Thus, the province can, however, impose a tax on stones, sand, gravel, earth and other quarry
resources extracted from public land because it is expressly empowered to do so under the Local
Government Code. As to stones, sand, gravel, earth and other quarry resources
extracted from private land, however, it may not do so, because of the limitation
provided by Section 133 of the Code in relation to Section 151 of the National Internal
Revenue Code.
21. Angeles City v. Angeles City Electric Corp., GR No. 166134, 29 June 2010
“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”
FACTS:
1964 Respondent was granted a legislative franchise to run a power generation and distribution
facility in Angeles, Pampanga. Under its franchise, it pays franchise tax for gross earnings from
electric current sold in lieu of all taxes, fees and assessments. Later, 1992, the local government
code took effect conferring upon LGUs the power to impose tax on business enjoying franchise.
Thereafter, respondent has been paying local franchise tax to the Office of the City Treasurer in
addition to the national franchise tax it pays to the BIR. On Jan 22, 2004 the city treasurer issued
a notice of assessment to respondent for business tax, license fee and other charges for the period
1993 to 2004. Within the period prescribed by law, respondent protested the assessment which
was denied for lack of merit, on Feb. 17, 2004, by the City Treasurer. Aggrieved, respondent
appealed the denial of its protest to the RTC via Petition for Declaratory Relief. On April 5, 2004
the City Treasurer levied the real properties of respondent.
RTC issued a WPI against public respondents.
ISSUE:
Whether the RTC committed grave abuse of discretion in granting the WPI.
All other matters pertaining to the validity of the tax assessment and respondent’s tax exemption
must be left for the determination of the RTC where the main case is pending decision.
RULING:
The LGC does not specifically prohibit an injunction enjoining the collection of taxes
The NIRC provides, in line with the lifeblood doctrine, 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 except when in the opinion of the CTA the collection thereof may jeopardize
the interest of the government and/or the taxpayer.
The situation is different in the case of the collection of local taxes as there is no express provision
in the LGC prohibiting courts from issuing an injunction to restrain local governments from
collecting taxes.
No grave abuse of discretion was committed by the RTC
Two requisites must exist to warrant the issuance of a WPI, 1: the existence of a clear and
unmistakable right that must be protected and 2: an urgent and paramount necessity for the writ
to prevent serious damage. The requisites were satisfied as the levy of the properties would result
to loss of jobs and possible widespread blackouts in the area.
Finally, the court notes that the disputed tax assessment is not yet due and demandable in this
case. Considering that the respondent was able to appeal the denial of its protest within the period
prescribed under section 195 of the LGC, the collection of taxes through levy at this time is hasty,
if not premature. The issue of tax exemption, double taxation, prescription and the alleged
retroactive application of the local tax code of Angeles must first be resolved before the properties
15
 of the respondent can be levied. In the meantime, respondent’s rights of ownership and
possession must be respected.
22. Pelizloy Realty Corp. v. The Province of Benguet, GR No. 183137, April 10, 2013
FACTS:
On December 8, 2005, Respondent Province approved a tax ordinance, which contained a section
that sought to levy 10% amusement tax on gross receipts from admissions to “resorts, swimming
pools, bath houses, hot springs and tourist spots”. Petitioner, who owns Palm Grove Resort, filed
an appeal/petition to the Secretary of Justice alleging that it was an ultra vires act of the Province
to approve such tax ordinance.
For the failure of the Secretary of Justice to decide within sixty (60) days from receipt of the
appeal, Petitioner filed a Petition for Declaratory Relief and Injunction at the RTC-Benguet.
Petitioner argued that the Respondent exceeded its taxing powers, as provided for in the LGC:
“Section 133. Common Limitations on the Taxing Powers of Local Government Units . — Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities,
and barangays shall not extend to the levy of the following:
xxx xxx xxx
(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on
goods or services except as otherwise provided herein.”
Respondent challenged the petition, stating that it is within their power under Sec. 140
(amusement tax), and that the definition of “other forms of amusement” under such section
REAL PROPERTY TAXATION
encompasses resorts, swimming pools, bath houses, hot springs and tourist spots since the LGC
defines amusement under Sec. 131 as “a pleasurable diversion and entertainment. It is
synonymous to relaxation, avocation, pastime or fun.”
RTC dismissed the Petition stating that what the LGC prohibits is not the imposition by LGU’s of
percentage taxes in general but the “imposition and levy of percentage tax on sales, barters, etc
on goods and services only”. Hence the present appeal.
ISSUE:
Whether or not the 10% amusement tax on gross receipts from admission to resorts, swimming
pools, bath houses, hot springs and tourist spots is legal.
HELD:
Petition GRANTED; It is illegal only insofar as the resorts, swimming pools, bath houses, hot
springs and tourist spots are concerned.
Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a common
typifying characteristic in that they are all venues primarily for the staging of spectacles or the
holding of public shows, exhibitions, performances, and other events meant to be viewed by an
audience. Accordingly, 'other places of amusement' must be interpreted in light of the typifying
characteristic of being venues "where one seeks admission to entertain oneself by seeing or
viewing the show or performances" or being venues primarily used to stage spectacles or hold
public shows, exhibitions, performances, and other events meant to be viewed by an audience.
As defined in The New Oxford American Dictionary, 'show' means "a spectacle or display of
something, typically an impressive one"; while 'performance' means "an act of staging or
presenting a play, a concert, or other form of entertainment.” As such, the ordinary definitions of
the words 'show' and 'performance' denote not only visual engagement (i.e., the seeing or viewing
of things) but also active doing (e.g., displaying, staging or presenting) such that actions are
manifested to, and (correspondingly) perceived by an audience.
Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist
spots cannot be considered venues primarily "where one seeks admission to entertain oneself by
seeing or viewing the show or performances”. While it is true that they may be venues where
people are visually engaged, they are not primarily venues for their proprietors or operators to
actively display, stage or present shows and/or performances.
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to the
same category or class as theaters, cinemas, concert halls, circuses, and boxing stadia. It follows
that they cannot be considered as among the ‘other places of amusement' contemplated by
Section 140 of the LGC and which may properly be subject to amusement taxes.
Since the tax ordinance also sought to tax admission fees for boxing, the latter is not invalidated
as the power to tax it is expressly provided for under Sec. 140 of the LGC.
1. Mactan Cebu International Airport Authority (MCIAA) v. City of Lapu-Lapu, G.R. No.
181756, June 15, 2015
FACTS:
Petitioner, Mactan-Cebu International Airport Authority (MCIAA) was created by Congress under
Republic Act No. 6958. Upon its creation, petitioner enjoyed exemption from realty taxes imposed
by the National Government or any of its political subdivision. However, upon the effectivity of
the LGC the Supreme Court rendered a decision that the petitioner is no longer exempt from realty
estate taxes.
Respondent City issued to petitioner a Statement of Real Estate Tax assessing the lots comprising
the Mactan International Airport which included the airfield, runway, taxi way and the lots on
which these are built. Petitioner contends that these lots, and the lots to which they are built, are
utilized solely and exclusively for public purposes and are exempt from real property
tax. Petitioner based its claim for exemption on DOJ Opinion No. 50.
16
Respondent issued notices of levy on 18 sets of real properties of petitioners. Petitioner filed a
petition for Prohibition, TRO, and a writ of preliminary injunction with RTC Lapulapu which sought
to enjoin respondent City from issuing the warrant of levy against petitioner’s properties from
selling them at public auction for delinquency in realty tax obligations.
ISSUE:
Petitioner claimed before the RTC that it had discovered that respondent City did not pass any
ordinance authorizing the collection of real property tax, a tax for the special education fund (SEF),
and a penalty interest for its nonpayment. Petitioner argued that without the corresponding tax
ordinances, respondent City could not impose and collect real property tax, an additional tax for
the SEF, and penalty interest from petitioner.
RTC granted the writ of preliminary which was later on lifted upon motion by the respondents.
CA: Court of Appeals held that petitioner’s airport terminal building, airfield, runway, taxiway,
and the lots on which they are situated are not exempt from real estate tax reasoning as follows:
Under the Local Government Code (LGC for brevity), enacted pursuant to the constitutional
mandate of local autonomy, all natural and juridical persons, including government-owned or
controlled corporations (GOCCs), instrumentalities and agencies, are no longer exempt from local
taxes even if previously granted an exemption. The only exemptions from local taxes are those
specifically provided under the Code itself, or those enacted through subsequent legislation.
RULING:
MIAA is not a government-owned or controlled corporation under Section 2(13) of the
Introductory Provisions of the Administrative Code because it is not organized as a stock or non-
stock corporation. Neither is MIAA a government-owned or controlled corporation under Section
16, Article XII of the 1987 Constitution because MIAA is not required to meet the test of economic
viability.
MIAA is a government instrumentality vested with corporate powers and performing essential
public services pursuant to Section 2(10) of the Introductory Provisions of the Administrative
Code. As a government instrumentality, MIAA is not subject to any kind of tax by local
governments under Section 133(o) of the Local Government Code. The exception to the
exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under
the Local Government Code. Such exception applies only if the beneficial use of real property
owned by the Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are
properties of public dominion. Properties of public dominion are owned by the State or the
Republic. As properties of public dominion owned by the Republic, there is no doubt whatsoever
that the Airport Lands and Buildings are expressly exempt from real estate tax under Section
234(a) of the Local Government Code. This Court has also repeatedly ruled that properties
of public dominion are not subject to execution or foreclosure sale.
Petitioner’s properties that are actually, solely and exclusively used for public purpose, consisting
of the airport terminal building, airfield, runway, taxiway and the lots on which they are
situated, EXEMPT from real property tax imposed by the City of Lapu-Lapu.
Thus, all real property tax assessments are VOID, including the additional tax for the special
education fund and the penalty interest, as well as the final notices of real property tax
delinquencies, issued by the City of Lapu-Lapu on petitioner’s properties, except the assessment
covering the portions that petitioner has leased to private parties. Likewise, the sale in public
auction of 27 of petitioner’s properties and the eventual forfeiture and purchase of the said
properties by respondent City of Lapu-Lapu is null and void as well as the corresponding
Certificates of Sale of Delinquent Property issued to respondent City of Lapu-Lapu.
2. Lung Center of the Philippines v. Quezon City, GR No. 144104, June 29, 2004
FACTS:
Petitioner is a non-stock, non-profit entity established by virtue of PD No. 1823, seeks exemption
from real property taxes when the City Assessor issued Tax Declarations for the land and the
hospital building. Petitioner predicted on its claim that it is a charitable institution. The request
was denied, and a petition hereafter filed before the Local Board of Assessment Appeals of Quezon
City (QC-LBAA) for reversal of the resolution of the City Assessor. Petitioner alleged that as a
charitable institution, is exempted from real property taxes under Sec 28(3) Art VI of the
Constitution. QC-LBAA dismissed the petition and the decision was likewise affirmed on appeal by
the Central Board of Assessment Appeals of Quezon City. The Court of Appeals affirmed the
judgment of the CBAA.
ISSUE:
1. Whether or not petitioner is a charitable institution within the context of PD 1823 and the 1973
and 1987 Constitution and Section 234(b) of RA 7160.
2. Whether or not petitioner is exempted from real property taxes.
RULING:
1. Yes. The Court hold that the petitioner is a charitable institution within the context of the 1973
and 1987 Constitution. Under PD 1823, the petitioner is a non-profit and non-stock corporation
which, subject to the provisions of the decree, is to be administered by the Office of the President
with the Ministry of Health and the Ministry of Human Settlements. The purpose for which it was
created was to render medical services to the public in general including those who are poor and
also the rich, and become a subject of charity. Under PD 1823, petitioner is entitled to receive
donations, even if the gift or donation is in the form of subsidies granted by the government.
2. Partly No. Under PD 1823, the lung center does not enjoy any property tax exemption privileges
for its real properties as well as the building constructed thereon.
The property tax exemption under Sec. 28(3), Art. VI of the Constitution of the property taxes
only. This provision was implanted by Sec.243 (b) of RA 7160.which provides that in order to be
entitled to the exemption, the lung center must be able to prove that: it is a charitable institution
and; its real properties are actually, directly and exclusively used for charitable purpose.
Accordingly, the portions occupied by the hospital used for its patients are exempt from real
property taxes while those leased to private entities are not exempt from such taxes.
17
3. Manila International Airport Authority v. CA, GR No. 155650, July 20, 2006, En banc,
GR No. 163072, April 2, 2009
FACTS:
Petitioner Manila International Airport Authority (MIAA) operates and administers the Ninoy
Aquino International Airport (NAIA) Complex under Executive Order No.903 (EO 903), otherwise
known as the Revised Charter of the Manila International Airport Authority. Under Sections 3 and
22 of EO 903, approximately 600 hectares of land, including the runways, the airport tower, and
other airport buildings, were transferred to MIAA. The NAIA Complex is located along the border
between Pasay City and Parañaque City. MIAA received Final Notices of Real Property Tax
Delinquency from the City of Pasay for the taxable years 1992 to 2001. The City of Pasay, through
its City Treasurer, issued notices of levy and warrants of levy for the NAIA Pasay properties.
Thereafter, the City Mayor of Pasay threatened to sell at public auction the NAIA Pasay properties
if the delinquent real property taxes remain unpaid. MIAA filed with the Court of Appeals a petition
for prohibition and injunction with prayer for preliminary injunction or temporary restraining order.
The petition sought to enjoin the City of Pasay from imposing real property taxes on, levying
against, and auctioning for public sale the NAIA Pasay properties.
Court of Appeals:
Upheld the power of the City of Pasay to impose and collect realty taxes on the NAIA Pasay
properties. Sections 193 and 234 of Republic Act No.7160 or the Local Government Code withdrew
the exemption from payment of real property taxes granted to natural or juridical persons,
including government-owned or controlled corporations. Since MIAA is a government-owned
corporation, it follows that its tax exemption under Section 21 of EO 903 has been withdrawn
upon the effectivity of the Local Government Code.
ISSUE:
WON the NAIA Pasay properties of MIAA are exempt from real property tax – YES.
RULING:
1. MIAA is a government "instrumentality" that does not qualify as a "government-owned or
controlled corporation. Under Section 133(o) of the Local Government Code, local government
units have no power to tax instrumentalities of the national government. Therefore, MIAA is
exempt from any kind of tax from the local governments.
A government "instrumentality" may or may not be a "government-owned or controlled
corporation" (Section 2(10) of the Introductory Provisions of the Administrative Code of 1987). A
government-owned or controlled corporation must be "organized as a stock or non-stock
corporation." MIAA is not organized as a stock or non-stock corporation. It is not a stock
corporation because it has no capital stock divided into shares. It is also not a non-stock
corporation because it has no members. The Government cannot be considered as the sole
member of MIAA because non-stock corporations cannot distribute any part of their income to
their members. Section 11 of the MIAA Charter mandates MIAA to remit 20% of its annual gross
operating income to the National Treasury.
MIAA is like any other government instrumentality, but is vested with corporate powers to perform
efficiently its governmental functions. When the law vests in a government instrumentality
corporate powers, the instrumentality does not become a corporation.
2. The airport lands and buildings of MIAA are properties of public dominion intended for public
use, and as such are exempt from real property tax under Section 234(a) of the Local Government
Code.
4. Quezon City Govt v. BayanTel Corp., GR N0. 162015, March 6, 2006
FACTS
Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder under
Republic Act (R.A.) No. 3259 (1961) to establish and operate radio stations for domestic
telecommunications, radiophone, broadcasting and telecasting. Section 14 (a) of R.A. No. 3259
states: “The grantee shall be liable to pay the same taxes on its real estate, buildings and
personal property, exclusive of the franchise, xxx”.
In 1992, R.A. No. 7160, otherwise known as the “Local Government Code of 1991” (LGC) took
effect. Section 232 of the Code grants local government units within the Metro Manila Area the
power to levy tax on real properties. Barely few months after the LGC took effect, Congress
enacted R.A. No. 7633, amending Bayantel’s original franchise. The Section 11 of the amendatory
contained the following tax provision: “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, xxx“. In 1993, the government of Quezon City enacted an ordinance otherwise known
as the Quezon City Revenue Code withdrawing tax exemption privileges.
On January 7, 1999, Bayantel wrote the office of the City Assessor seeking the exclusion of its
real properties but the request having been denied, Bayantel interposed an appeal with the Local
Board of Assessment Appeals (LBAA). And, evidently on its firm belief of its exempt status,
Bayantel did not pay the real property taxes assessed against it by the Quezon City government.
On account thereof, the Quezon City Treasurer sent out notices of delinquency for the total
amount of P43,878,208.18, followed by the issuance of several warrants of levy against Bayantels
properties preparatory to their sale at a public auction set on July 30, 2002.
Threatened with the imminent loss of its properties, Bayantel immediately withdrew its appeal
with the LBAA and instead filed with the RTC of Quezon City a petition for prohibition with an
urgent application for a temporary restraining order (TRO) and/or writ of preliminary injunction,
thereat docketed as Civil Case No. Q-02-47292, which was raffled to Branch 227 of the court.
ISSUE
Whether or not Bayantels real properties in Quezon City are, under its franchise, exempt from real
property tax.
RULING
The lower court resolved the issue in the affirmative, basically owing to the phrase exclusive of
this franchise found in Section 11 of Bayantels amended franchise, Rep. Act No. 7633. To
petitioners, however, the language of Section 11 of Rep. Act No. 7633 is neither clear nor
unequivocal. The elaborate and extensive discussion devoted by the trial court on the meaning
and import of said phrase, they add, suggests as much. It is petitioners thesis that Bayantel was
in no time given any express exemption from the payment of real property tax under its
amendatory franchise.
There seems to be no issue as to Bayantels exemption from real estate taxes by virtue of the term
exclusive of the franchise qualifying the phrase same taxes on its real estate, buildings and
18
personal property, found in Section 14, supra, of its franchise, Rep. Act No. 3259, as originally
granted.
The legislative intent expressed in the phrase exclusive of this franchise cannot be construed other
than distinguishing between two (2) sets of properties, be they real or personal, owned by the
franchisee, namely,
(a) those actually, directly and exclusively used in its radio or telecommunications
business, and
(b) those properties which are not so used.
It is worthy to note that the properties subject of the present controversy are only those which
are admittedly falling under the first category.
To the mind of the Court, Section 14 of Rep. Act No. 3259 effectively works to grant or delegate
to local governments of Congress inherent power to tax the franchisees properties belonging to
the second group of properties indicated above, that is, all properties which, exclusive of this
franchise, are not actually and directly used in the pursuit of its franchise.
As may be recalled, the taxing power of local governments under both the 1935 and the 1973
Constitutions solely depended upon an enabling law. Absent such enabling law, local
government units were without authority to impose and collect taxes on real properties within
their respective territorial jurisdictions.
While Section 14 of Rep. Act No. 3259 may be validly viewed as an implied delegation of power
to tax, the delegation under that provision, as couched, is limited to impositions over properties
of the franchisee which are not actually, directly and exclusively used in the pursuit of its franchise.
Necessarily, other properties of Bayantel directly used in the pursuit of its business are beyond
the pale of the delegated taxing power of local governments. In a very real sense, therefore, real
properties of Bayantel, save those exclusive of its franchise, are subject to realty taxes.
Ultimately, therefore, the inevitable result was that all realties which are actually, directly and
exclusively used in the operation of its franchise are exempted from any property tax.
Bayantels franchise being national in character, the exemption thus granted under Section 14 of
Rep. Act No. 3259 applies to all its real or personal properties found anywhere within the Philippine
archipelago.
Section 14 of Rep. Act No. 3259 which was deemed impliedly repealed by Section 234 of the LGC
was expressly revived under Section 14 of Rep. Act No. 7633. In concrete terms, the realty tax
exemption heretofore enjoyed by Bayantel under its original franchise, but subsequently
withdrawn by force of Section 234 of the LGC, has been restored by Section 14 of Rep. Act No.
7633.
The Court has taken stock of the fact that by virtue of Section 5, Article X of the 1987
Constitution,local governments are empowered to levy taxes. And pursuant to this constitutional
empowerment, juxtaposed with Section 232 of the LGC, the Quezon City government enacted in
1993 its local Revenue Code, imposing real property tax on all real properties found within its
territorial jurisdiction. And as earlier stated, the City’s Revenue Code, just like the LGC, expressly
withdrew, under Section 230 thereof, supra, all tax exemption privileges in general.
The Quezon City Revenue Code which imposed real estate taxes on all real properties within the
citys territory and removed exemptions theretofore previously granted to, or presently enjoyed by
all persons, whether natural or juridical ., 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. Needless to state, such
absurd situation is unacceptable.
For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao, this
Court has upheld the power of Congress to grant exemptions over the power of local government
units to impose taxes. There, the Court wrote:
Indeed, the grant of taxing powers to local government units under the Constitution
and the LGC does not affect the power of Congress to grant exemptions to certain
persons, pursuant to a declared national policy. The legal effect of the constitutional grant to local
governments simply means that in interpreting statutory provisions on municipal taxing powers,
doubts must be resolved in favor of municipal corporations. (Emphasis supplied.)
As we see it, then, the issue in this case no longer dwells on whether Congress has the power to
exempt Bayantels properties from realty taxes by its enactment of Rep. Act No. 7633 which
amended Bayantels original franchise. The more decisive question turns on whether
Congress actually did exempt Bayantels properties at all by virtue of Section 11 of
Rep. Act No. 7633.
Admittedly, Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the LGC
has already withdrawn Bayantels former exemption from realty taxes, Congress opted to pass
Rep. Act No. 7633 using, under Section 11 thereof, exactly the same defining phrase exclusive
of this franchise which was the basis for Bayantels exemption from realty taxes prior to the
LGC.
In plain language, Section 11 of Rep. Act No. 7633 states that 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. The Court views this subsequent piece of legislation as an express and real
intention on the part of Congress to once again remove from the LGCs delegated
taxing power, all of the franchisees (Bayantels) properties that are actually, directly and
exclusively used in the pursuit of its franchise.
5. FELS Energy, Inc. v. Province of Batangas, G.R. No. 168557, February 16, 2007
These are two consolidated cases filed by FELS Energy, Inc. (GR No. 168557) and National Power
Corporation (GR No. 170628) since both petitions were dismissed on the ground of prescription.
FACTS:
On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3x30 MW
diesel engine power barges moored in Batangas for five years denominated as Energy Conversion
Agreement. Its Article 10 provides:
“NAPOCOR/NPC shall be responsible for the payment of (a) all taxes, import duties,
fees, charges and other levies imposed by the National Government of the Republic of the
19
 Philippines or any agency or instrumentality thereof to which POLAR may be or become subject
to or in relation to the performance of their obligations under this agreement (other than (i) taxes
imposed or calculated on the basis of the net income of POLAR and Personal Income Taxes of its
employees and (ii) construction permit fees, environmental permit fees and other similar fees and
charges) and (b) all real estate taxes and assessments, rates and other charges in respect of the
Power Barges.”
Polar assigned its rights to FELS which was initially opposed by NPC.
In 1995, FELS received real property tax assessment on the power barges from Batangas
Provincial Assessor amounting to P56, 184, 088.40 per annum. FELS referred it to NPC to remind
of its obligation to pay the taxes and gave NPC full power and authority to represent it in any
conference
NPC sought reconsideration of the assessor’s decision to asses the taxes but was denied and it
was advised to pay. Thus, NPC filed a petition with the Local Board of Assessment Appeals (LBAA)
contending that the barges were non-taxable items. Prov’l Assessor averred that the barges were
real property for purposes of taxation. Pending decision, Department of Finance rendered an
opinion that power barges are not real property subject to real property assessment.
LBAA denied the petition and ordered FELS to pay ruling that the power plant facilities, while they
may be classified as movable or personal property, are nevertheless considered real property for
taxation purposes because they are installed at a specific location with a character of permanency
and that it was private corp FELS that was being taxed and not NPC since privilege is only granted
to the latter and not to the former. Also, petition was ruled to have been filed out of time.
FELS appealed to the Central Board of Assessment Appeals (CBAA).
In 1996, Batangas City Provincial Treasurer issued a Notice of Levy and Warrant by Distraint over
the power barges, seeking to collect real property taxes officially served to FELS. It then filed a
Motion to Lift Levy and for CBAA to restrain Assessor from enforcing disputed assessment pending
appeal. CBAA rendered a decision finding the power barges exempt from real property tax since
these belong to NPC and as such covered by exemptions. Also, prescription did not preclude NPC
from pursuing its claim for tax exemption. However, real property tax assessment on FELS was
affirmed.
Upon separate appeals by FELS and NPC, CA ruled that the right to question the assessment of
the Provincial Assessor had already prescribed upon the failure of FELS to appeal the disputed
assessment to the LBAA within the period prescribed by law. Since FELS had lost the right to
question the assessment, the right of the Provincial Government to collect the tax was already
absolute.
ISSUES:
1. Whether or not the appeals filed before the LBAA have prescribed
2. Whether or not the power barges were real properties subject to real property tax
RULING:
1. Prescription
SC finds the petitions of FELS and NPC maintaining that the appeal before the LBAA was not time-
barred was bereft of merit. FELS argues that when NPC moved to have the assessment
reconsidered on September 7, 1995, the running of the period to file an appeal with the LBAA was
tolled. For its part, NPC posits that the 60-day period for appealing to the LBAA should be reckoned
from its receipt of the denial of its motion for reconsideration.
LGC: SECTION 226. Local Board of Assessment Appeals. – Any owner or person having
legal interest in the property who is not satisfied with the action of the provincial, city or municipal
assessor in the assessment of his property may, within sixty (60) days from the date of receipt of
the written notice of assessment, appeal to the Board of Assessment Appeals of the province or
city by filing a petition under oath in the form prescribed for the purpose, together with copies of
the tax declarations and such affidavits or documents submitted in support of the appeal.
The notice of assessment sent to FELS provided that from receipt, it may within 60 days appeal
to the Board of Assessment Appeals of the province through a petition but instead of appealing,
NPC opted to file a Motion for Reconsideration of assessor’s decision which is a remedy not
sanctioned by law.
The remedy of appeal to the LBAA is available from an adverse ruling or action of the provincial,
city or municipal assessor in the assessment of the property. It follows then that the determination
made by the respondent Provincial Assessor with regard to the taxability of the subject real
properties falls within its power to assess properties for taxation purposes subject to appeal before
the LBAA
Under Section 226, the last action of the local assessor on a particular assessment shall be the
notice of assessment; it is this last action which gives the owner of the property the right to appeal
to the LBAA. The procedure likewise does not permit the property owner the remedy of filing a
motion for reconsideration before the local assessor. Hence, whenever the local assessor sends a
notice to the owner or lawful possessor of real property of its revised assessed value, the former
shall no longer have any jurisdiction to entertain any request for a review or readjustment. The
appropriate forum where the aggrieved party may bring his appeal is the LBAA as provided by
law. It follows ineluctably that the 60-day period for making the appeal to the LBAA runs without
interruption
If the taxpayer fails to appeal in due course, the right of the local government to collect the taxes
due with respect to the taxpayer’s property becomes absolute upon the expiration of the period
to appeal. It also bears stressing that the taxpayer’s failure to question the assessment in the
LBAA renders the assessment of the local assessor final, executory and demandable, thus,
precluding the taxpayer from questioning the correctness of the assessment, or from invoking any
defense that would reopen the question of its liability on the merits
LBAA acted correctly when it dismissed the petitioners’ appeal for having been filed out of time;
the CBAA and the appellate court were likewise correct in affirming the dismissal.
With regard to FELS’ argument that assessor is completely misplaced as it is not a party to the
petition NPC filed, SC disagreed since FELS gave NPC full power and authority to represent it in
any proceeding on real property assessment so the court decision on NPC’s petition binds it by
virtue of res judicata which strongly indicates forum shopping since FELS and NPC filed separate
petitions.
2. Nature of Power Barges
The power barges are real property and are thus subject to real property tax.
20
 Tax assessments by tax examiners are presumed correct and made in good faith, with the
taxpayer having the burden of proving otherwise. Besides, factual findings of administrative
bodies, which have acquired expertise in their field, are generally binding and conclusive upon the
SC.
Article 415 (9) of the New Civil Code provides that "[d]ocks and structures which, though floating,
are intended by their nature and object to remain at a fixed place on a river, lake, or coast" are
considered immovable property. Thus, power barges are categorized as immovable property by
destination, being in the nature of machinery and other implements intended by the owner for an
industry or work which may be carried on in a building or on a piece of land and which tend
directly to meet the needs of said industry or work.
Also, it isn’t correct to say that the barges are exempt for these are actually, directly, and
exclusively used by NPC which is a GOCC. It is actually FELS which own the barges after it was
assigned by Polar. Notably, it is FELS which is being taxed as it is not exempt from tax.
The right of local government units to collect taxes due must always be upheld to avoid severe
tax erosion. This consideration is consistent with the State policy to guarantee the autonomy of
local governments and the objective of the Local Government Code that they enjoy genuine and
meaningful local autonomy to empower them to achieve their fullest development as self-reliant
communities and make them effective partners in the attainment of national goals.
The power to tax is the most potent instrument to raise the needed revenues to finance
and support myriad activities of the local government units for the delivery of basic services
essential to the promotion of the general welfare and the enhancement of peace, progress, and
prosperity of the people
6. NPC vs. Central Board of Assessment Appeals, GR No. 171470, January 30, 2009
FACTS:
First Private Power Corporation (FPPC) entered into a Build-Operate-Transfer (BOT) agreement
with NAPOCOR for the construction of the 215 Megawatt Bauang Diesel Power Plant. The BOT
Agreement provided, via an Accession Undertaking, for the creation of the Bauang Private Power
Corporation (BPPC) that will own, manage and operate the power plant/station, and assume
and perform FPPCs obligations under the BOT agreement. For a fee, BPPC will convert NAPOCORs
supplied diesel fuel into electricity and deliver the product to NAPOCOR.
The Officer-in-Charge of the Municipal Assessors Office of Bauang, La Union initially issued
Declaration of Real Property Nos. 25016 and 25022 to 25029 declaring BPPCs machineries and
equipment as tax-exempt. On the initiative of the Bauang Vice Mayor, the municipality questioned
before the Regional Director of the Bureau of Local Government Finance (BLGF) the declared tax
exemption; later, the issue was elevated to the Deputy Executive Director and Officer-in-Charge
of the BLGF, Department of Finance, who ruled that BPPCs machineries and equipment are subject
to real property tax and directed the Assessor’s Office to take appropriate action.
NAPOCOR filed a petition and asked that, retroactive to 1995, the machineries covered by the tax
declarations be exempt from real property tax under Section 234(c) of Republic Act No. 7160 (the
Local Government Code or LGC); and, that these properties be dropped from the assessment roll
pursuant to Section 206 of the LGC.
The LBAA denied NAPOCORs petition for exemption in a Decision dated October 26, 2001. It ruled
that the exemption provided by Section 234(c) of the LGC applies only when a government-owned
or controlled corporation like NAPOCOR owns and/or actually uses machineries and equipment for
the generation and transmission of electric power; in this case, NAPOCOR does not own and does
not even actually and directly use the machineries. It is the BPPC, a non-government entity, which
owns, maintains, and operates the machineries and equipment; using these, it generates
electricity and then sells this to NAPOCOR. Additionally, it ruled that the liability for the payment
of the real estate taxes is determined by law and not by the agreement of the parties; hence, the
provision in the BOT Agreement whereby NAPOCOR assumed responsibility for the payment of all
real estate taxes and assessments, rates, and other charges, in relation with the site, buildings,
and improvements in the BOT project, is an arrangement between the parties that cannot be the
basis in identifying who is liable to the government for the real estate tax.
ISSUE/S:
What are the real property tax implications of a Build-Operate-Transfer (BOT) agreement between
a government-owned and controlled corporation (GOCC) that enjoys tax exemption and a private
corporation? Specifically, under the terms of the BOT Agreement, can the GOCC be deemed the
actual, direct, and exclusive user of machineries and equipment for tax exemption purposes? If
not, can it pass on its tax-exempt status to its BOT partner, a private corporation, through the
BOT agreement?
RULING:
NAPOCOR denied.
Exempt from real property taxation are:
(a) All machineries and equipment;
(b) That are actually, directly, and exclusively used by;
(c) Local water districts and government-owned or controlled corporations engaged in
the supply and distribution of water and/or generation and transmission of electric power.
The records show that NAPOCOR, no less, admits BPPCs ownership of the machineries and
equipment in the power plant. Likewise, the provisions of the BOT agreement cited above clearly
show BPPCs ownership. Thus, ownership is not a disputed issue.
Rather than ownership, NAPOCORs use of the machineries and equipment is the critical issue,
since its claim under Sec. 234 (c) of the LGC is premised on actual, direct and exclusive use. To
support this claim, NAPOCOR characterizes the BOT Agreement as a mere financing agreement
where BPPC is the financier, while it (NAPOCOR) is the actual user of the properties.
A reading of the provisions of the parties BOT Agreement shows that it fully conforms to this
concept. By its express terms, BPPC has complete ownership both legal and beneficial of the
project, including the machineries and equipment used, subject only to the transfer of these
properties without cost to NAPOCOR after the lapse of the period agreed upon. As agreed upon,
BPPC provided the funds for the construction of the power plant, including the machineries and
equipment needed for power generation; thereafter, it actually operated and still operates the
power plant, uses its machineries and equipment, and receives payment for these activities and
the electricity generated under a defined compensation scheme. Notably, BPPC as owner-user is
responsible for any defect in the machineries and equipment.
Consistent with the BOT concept and as implemented, BPPC the owner-manager-operator of the
project is the actual user of its machineries and equipment. BPPCs ownership and use of the
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 machineries and equipment are actual, direct, and immediate, while NAPOCORs is contingent and,
at this stage of the BOT Agreement, not sufficient to support its claim for tax exemption. Thus,
the CTA committed no reversible error in denying NAPOCORs claim for tax exemption.
2. NAPOCOR argues that if no tax exemption will be recognized, the responsibility it assumed
carries practical implications that are very difficult to ignore. In fact, NAPOCORs supplemental
petition is anchored on these practical implications the alleged detriment to the public interest
that will result if the levy, sale, and transfer of the machineries and equipment were to be
completed. NAPOCORs reference is to the fact that the machineries and equipment have been
sold in public auction and the buyer the respondent Province will consolidate its ownership over
these properties on February 1, 2009.
We fully recognize these concerns. However, these considerations are not relevant to our
disposition of the issues in this case. We are faced here with the application of clear provisions of
law and settled jurisprudence to a case that, to our mind, should not be treated differently solely
because of non-legal or practical considerations. Significantly, local government real property
taxation also has constitutional underpinnings, based on Section 5 of Article X of the
Constitution, that we cannot simply ignore.
The right of local government units to collect taxes due must always be upheld to
avoid severe tax erosion. This consideration is consistent with the State policy to
guarantee the autonomy of local governments and the objective of the Local
Government Code that they enjoy genuine and meaningful local autonomy to
empower them to achieve their fullest development as self-reliant communities and
make them effective partners in the attainment of national goals.
In conclusion, we reiterate that the power to tax is the most potent instrument to raise
the needed revenues to finance and support myriad activities of the local government
units for the delivery of basic services essential to the promotion of the general
welfare and the enhancement of peace, progress, and prosperity of the people.
7. NPC v. Quezon Power, G.R. No. 171586, July 15, 2009
FACTS:
NPC entered into an Energy Conversion Agreement (ECA) with Mirant. The ECA provided for a
build-operate-transfer (BOT) arrangement between Mirant and the NPC. Mirant will build and
finance a coal-fired thermal power plant on the lots owned by the NPC in Pagbilao, Quezon for
the purpose of converting fuel into electricity, and thereafter, operate and maintain the power
plant for a period of 25 years. The NPC, in turn, will supply the necessary fuel to be converted by
Mirant into electric power, take the power generated, and use it to supply the electric power needs
of the country. At the end of the 25-year term, Mirant will transfer the power plant to the NPC
without compensation. According to the NPC, the power plant is currently operational and is one
of the largest sources of electric power in the country.
Among the obligations undertaken by the NPC under the ECA was the payment of all taxes that
the government may impose on Mirant.
The Municipality of Pagbilao assessed Mirants real property taxes on the power plant and its
machineries in the total amount of P1,538,076,000.00 for the period of 1997 to 2000. The
Municipality of Pagbilao furnished the NPC a copy of the assessment letter.
NPC objected to the assessment against Mirant on the claim that it (the NPC) is entitled to the tax
exemptions provided in Section 234, paragraphs (c) and (e) of the LGC.
NPC's claim for exemption was denied.
ISSUE:
Whether the National Power Corporation (NPC), as a government-owned and controlled
corporation, can claim tax exemption under Section 234 of the Local Government Code (LGC) for
the taxes due from the Mirant Pagbilao Corporation (Mirant) whose tax liabilities the NPC has
contractually assumed.
RULING:
A person legally burdened with the obligation to pay for the tax imposed on a property has legal
interest in the property and the personality to protest a tax assessment on the property.
The liability for taxes generally rests on the owner of the real property at the time the tax accrues.
This is a necessary consequence that proceeds from the fact of ownership. However, personal
liability for realty taxes may also expressly rest on the entity with the beneficial use of the real
property, such as the tax on property owned by the government but leased to private persons or
entities, or when the tax assessment is made on the basis of the actual use of the property. In
either case, the unpaid realty tax attaches to the property but is directly chargeable against the
taxable person who has actual and beneficial use and possession of the property regardless of
whether or not that person is the owner.
The NPCs contractual liability alone cannot be the basis for the enforcement of tax liabilities
against it by the local government unit. The NPC is neither the owner, nor the possessor or user
of the property taxed. No interest on its part thus justifies any tax liability on its part other than
its voluntary contractual undertaking. Under this legal situation, only Mirant as the contractual
obligor, not the local government unit, can enforce the tax liability that the NPC contractually
assumed; the NPC does not have the legal interest that the law and jurisprudence require to give
it personality to protest the tax imposed by law on Mirant.
NPCs claim of tax exemptions is completely without merit. To successfully claim exemption under
Section 234(c) of the LGC, the claimant must prove two elements:
a. the machineries and equipment are actually, directly, and exclusively used by local
water districts and government-owned or controlled corporations; and
b. the local water districts and government-owned and controlled corporations
claiming exemption must be engaged in the supply and distribution of water and/or the
generation and transmission of electric power.
The government-owned or controlled corporation claiming exemption must be the entity actually,
directly, and exclusively using the real properties, and the use must be devoted to the generation
and transmission of electric power. Neither the NPC nor Mirant satisfies both requirements.
Although the plants machineries are devoted to the generation of electric power, by the NPCs own
admission and as previously pointed out, Mirant a private corporation uses and operates them.
That Mirant operates the machineries solely in compliance with the will of the NPC only
underscores the fact that NPC does not actually, directly, and exclusively use them. The
machineries must be actually, directly, and exclusively used by the government-owned or
controlled corporation for the exemption under Section 234(c) to apply.
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Nor will NPC find solace in its claim that it utilizes all the power plants generated electricity in
supplying the power needs of its customers. Based on the clear wording of the law, it is the
machineries that are exempted from the payment of real property tax, not the water or electricity
that these machineries generate and distribute.
Even the NPCs claim of beneficial ownership is unavailing. The test of exemption is the use, not
the ownership of the machineries devoted to generation and transmission of electric power. The
nature of the NPCs ownership of these machineries only finds materiality in resolving the NPCs
claim of legal interest in protesting the tax assessment on Mirant. As we discussed above, this
claim is inexistent for tax protest purposes.
COURT OF TAX APPEALS
1. Duty Free vs CIR
FACTS:
Duty Free wanted to claim refund of taxes that it paid. It argued that as a tax-exempt
establishment under E.O. No. 46, it should not be subjected to the 1.1/2% expanded
withholding taxes on certain income payments that were withheld by credit card companies in
compliance with R.R. No. 6-94.
However, BIR opined that E.O. No. 93 dated 17 December 1986 withdrew all the tax and duty
incentives granted to government and public entities, including petitioner. Hence, respondent
denied the request of petitioner for a refund of the withholding tax on certain payments made
by credit card companies and remitted to the BIR.
The case then reached the CTA Special First Division and was then directly appealed by Duty
Free to the Supreme Court under Rule 45 of the Rules of Court.
ISSUE:
Is the mode of appeal of Duty Free proper?
RULING:
No. The petition is dismissed due to a procedural infirmity.
Clearly, this Court is without jurisdiction to review decisions rendered by a division of the CTA,
exclusive appellate jurisdiction over which is vested in the CTA en banc.
In this case, petitioner filed with this Court on 29 July 2011 the instant Petition from the denial
of its Motion for Reconsideration by the Special First Division of the CTA. At that time, R.A. 9282
was already in effect, and it evidently provides that the CTA en banc shall have exclusive
jurisdiction over appeals from the decision of its divisions. A party adversely affected by the
resolution of the CTA division may, on motion for reconsideration, file a petition for review with
the CTA en banc. Thereafter, the decision or ruling of the CTA en bancmay be elevated to this
Court.
Simply stated, no decision of the CTA division may be elevated to this Court under Rule 45 of
the 1997 Rules of Civil Procedure without passing through the CTA en banc.
In sum, this Court has no jurisdiction to review the Decision and Resolution rendered by the
Special First Division of the CTA. Thus, the instant Petition must fail.
2. The City of Manila, etc. et al. v. Hon. Caridad H. Grecia-Cuerdo etc., et al, G.R. No.
175723. February 4, 2014.
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FACTS:
Petitioner City of Manila, through its treasurer, petitioner Liberty Toledo, assessed taxes for the
taxable period from January to December 2002 against the private respondents. In addition to
the taxes purportedly due from private respondents pursuant to Section 14, 15, 16, 17 of the
Revised Revenue Code of Manila (RRCM), said assessment covered the local business taxes.
Private respondents were constrained to pay the P 19,316,458.77 assessment under protest.
On January 24, 2004, private respondents filed before the RTC of Pasay City the complaint
denominated as one for “Refund or Recovery of Illegally and/or Erroneously–Collected Local
Business Tax, Prohibition with Prayer to Issue TRO and Writ of Preliminary Injunction. The RTC
granted private respondents’ application for a writ of preliminary injunction.
Petitioners filed a Motion for Reconsideration but the RTC denied. Petitioners then filed a special
civil action for certiorari with the CA but the CA dismissed petitioners’ petition for certiorari holding
that it has no jurisdiction over the said petition. The CA ruled that since appellate jurisdiction over
private respondents’ complaint for tax refund, which was filed with the RTC, is vested in the Court
of Tax Appeals (CTA), pursuant to its expanded jurisdiction under Republic Act No. 9282 (RA
9282), it follows that a petition for certiorari seeking nullification of an interlocutory order issued
in the said case should, likewise, be filed with the CTA. Petitioners filed a Motion for
Reconsideration but the CA denied it in its Resolution hence, this petition
ISSUE:
Whether or not the CTA has jurisdiction over a special civil action for certiorari assailing an
interlocutory order issued by the RTC in a local tax case.
HELD:
The CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order
issued by the RTC in a local tax case. In order for any appellate court to effectively exercise its
appellate jurisdiction, it must have the authority to issue, among others, a writ of certiorari. In
transferring exclusive jurisdiction over appealed tax cases to the CTA, it can reasonably be
assumed that the law intended to transfer also such power as is deemed necessary, if not
indispensable, in aid of such appellate jurisdiction. There is no perceivable reason why the transfer
should only be considered as partial, not total.
Consistent with the above pronouncement, the Court has held as early as the case of J.M. Tuason
& Co., Inc. v. Jaramillo, et al. [118 Phil. 1022 (1963)] that “if a case may be appealed to a
particular court or judicial tribunal or body, then said court or judicial tribunal or body has
jurisdiction to issue the extraordinary writ of certiorari, in aid of its appellate jurisdiction.” This
principle was affirmed in De Jesus v. Court of Appeals where the Court stated that “a court may
issue a writ of certiorari in aid of its appellate jurisdiction if said court has jurisdiction to review,
by appeal or writ of error, the final orders or decisions of the lower court.
3. Smart Communications, Inc. v. Municipality of Malvar, Batangas, G.R. No. 20442.
February 18, 2014.
FACTS:
Smart constructed a telecommunications tower within the territorial jurisdiction of the Municipality.
The construction of the tower was for the purpose of receiving and transmitting cellular
communications within the covered area.
On 30 July 2003, the Municipality passed Ordinance No. 18, series of 2003, entitled "An Ordinance
Regulating the Establishment of Special Projects."
On 24 August 2004, Smart received from the Permit and Licensing Division of the Office of the
Mayor of the Municipality an assessment letter with a schedule of payment for the total amount
of P389,950.00 for Smart's telecommunications tower. Due to the alleged arrears in the payment
of the assessment, the Municipality also caused the posting of a closure notice on the
telecommunications tower.
On 9 September 2004, Smart filed a protest, claiming lack of due process in the issuance of the
assessment and closure notice. In the same protest, Smart challenged the validity of Ordinance
No. 18 on which the assessment was based. On 17 November 2004, Smart filed with RTC of
Batangas, an "Appeal/Petition" assailing the validity of Ordinance No. 18.
ISSUES:
1. Whether the CTA has jurisdiction over the present case
2. Whether the imposition of the fees in Ordinance No. 18 is ultra vires
RULING:
On whether the CTA has jurisdiction over the present case
Smart contends that the CTA erred in dismissing the case for lack of jurisdiction. Smart maintains
that the CTA has jurisdiction over the present case considering the "unique" factual circumstances
involved. The CTA refuses to take cognizance of this case since it challenges the constitutionality
of Ordinance No. 18, which is outside the province of the CTA.
Jurisdiction is conferred by law. Republic Act No. 1125, as amended by Republic Act No. 9282,
created the Court of Tax Appeals. Section 7, paragraph (a), sub-paragraph (3) 15 of the law
vests the CTA with the exclusive appellate jurisdiction over "decisions, orders or
resolutions of the Regional Trial Courts in local tax cases originally decided or resolved
by them in the exercise of their original or appellate jurisdiction."
The question now is whether the trial court resolved a local tax case in order to fall within the
ambit of the CTA's appellate jurisdiction. This question, in turn, depends ultimately on whether
the fees imposed under Ordinance No. 18 are in fact taxes.
The fees imposed in Ordinance No. 18 are not taxes.
Since the main purpose of Ordinance No. 18 is to regulate certain construction activities of the
identified special projects, which included "cell sites" or telecommunications towers, the fees
imposed in Ordinance No. 18 are primarily regulatory in nature, and not primarily revenue-raising.
While the fees may contribute to the revenues of the Municipality, this effect is merely incidental.
In Progressive Development Corporation v. Quezon City, the Court declared that "if the
generating of revenue is the primary purpose and regulation is merely incidental, the
imposition is a tax; but if regulation is the primary purpose, the fact that incidentally
revenue is also obtained does not make the imposition a tax."
In Victorias Milling Co., Inc. v. Municipality of Victorias, the Court reiterated that the purpose and
effect of the imposition determine whether it is a tax or a fee, and that the lack of any standards
for such imposition gives the presumption that the same is a tax.
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 Contrary to Smart's contention, Ordinance No. 18 expressly provides for the standards which
Smart must satisfy prior to the issuance of the specified permits, clearly indicating that the fees
are regulatory in nature.
On whether the imposition of the fees in Ordinance No. 18 is ultra vires
Smart argues that the Municipality exceeded its power to impose taxes and fees as provided in
Book II, Title One, Chapter 2, Article II of the LGC. Smart maintains that the mayor's permit fees
in Ordinance No. 18 (equivalent to 1% of the project cost) are not among those expressly
enumerated in the LGC.
As discussed, the fees in Ordinance No. 18 are not taxes. Logically, the imposition does not appear
in the enumeration of taxes under Section 143 of the LGC. Moreover, even if the fees do not
appear in Section 143 or any other provision in the LGC, the Municipality is empowered to impose
taxes, fees and charges, not specifically enumerated in the LGC or taxed under the Tax Code or
other applicable law. Section 186 of the LGC, granting local government units wide
latitude in imposing fees, expressly provides:
Section 186. Power to Levy Other Taxes, Fees or Charges. — Local government units
may exercise the power to levy taxes, fees or charges on any base or subject not
otherwise specifically enumerated herein or taxed under the provisions of the
National Internal Revenue Code, as amended, or other applicable laws: Provided, That
the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to
declared national policy: Provided, further; That the ordinance levying such taxes, fees or charges
shall not be enacted without any prior public hearing conducted for the purpose.
Smart further argues that the Municipality is encroaching on the regulatory powers of the National
Telecommunications Commission (NTC). To repeat, Ordinance No. 18 aims to regulate the
"placing, stringing, attaching, installing, repair and construction of all gas mains, electric, telegraph
and telephone wires, conduits, meters and other apparatus" within the Municipality. The fees are
not imposed to regulate the administrative, technical, financial, or marketing operations of
telecommunications entities, such as Smart's; rather, to regulate the installation and maintenance
of physical structures — Smart's cell sites or telecommunications tower. The regulation of the
installation and maintenance of such physical structures is an exercise of the police
power of the Municipality. Clearly, the Municipality does not encroach on NTC's
regulatory powers.
The Court likewise rejects Smart's contention that the power to fix the fees for the issuance of
development permits and locational clearances is exercised by the Housing and Land Use
Regulatory Board (HLURB). Suffice it to state that the HLURB itself recognizes the local
government units' power to collect fees related to land use and development.
4. CIR v. Toledo, Power, Inc., G.R. No. 183880, January 20, 2014.
FACTS:
Toledo Power, Inc. is engaged in the business of power generation and subsequent sale thereof
to NPC, CEBECO, Atlas Mining and Atlas Fertilizer, and is registered with BIR as VAT taxpayer.
Oct. 25, 2001 – Toledo filed with BIR RDO No. 83, its Quarterly VAT Return for 3rd quarter of 2001
Nov. 22, 2001 – filed an amended Quarterly VAT Return for same quarter of 2001 where Toledo
claims that it has unutilized input VAT in the amount of P5.9M
Jan. 25, 2002 – filed Quarterly VAT Return for 4th quarter of 2001 where Toledo claims unutilized
input VAT of P3.2M
The unutilized input VAT were incurred and accumulated from its domestic purchase of goods and
services, which are all attributable to its zero-rated sales of power generation services to those
enumerated (NPC, CEBECO, etc.), and was not utilized against any output VAT liability nor carried
over.
Sep. 30, 2003 –Toledo filed with BIR an administrative claim for refund or unutilized input VAT
for 3rd and 4th quarters
Oct. 24, 2003 – Since CIR has not ruled upon the administrative claim and in order to preserve
its right to file judicial claim, Toledo filed a Petition for Review for 3rd quarter
Jan. 22, 2004 – Filed another Petition for Review for 4th quarter
CIR failed to file memorandum within period given by Court. CTA First Division partially granted
Toledo’s refund claim and declared that it is entitled to P8.5M refund or tax credit.
CIR filed MR but it was denied. On appeal to CTA En Banc, CIR argued that Toledo failed to comply
with invoicing requirements to prove entitlement to refund or issuance of tax credit cert. He also
challenged jurisdiction of CTA First Division to entertain Toledo’s petition for review for failure to
comply with provisions of Sec. 112 (C) of Tax Code.
CTA En Banc affirmed decision with modification, lowering amount. It also denied CIR’s MR.
Hence, present petition.
ISSUES:
I. Whether Toledo complied with 120+30 day rule under Sec. 112 (C) of Tax Code
II. Whether Toledo sufficiently complied with invoicing requirements
RULING:
Doctrine on CTA (topic where case was assigned)
Court will not lightly set aside conclusions reached by CTA which, by the very nature of its function
of being dedicated exclusively to resolution of tax problems, has accordingly developed an
expertise on the subject, unless there has been an abuse or improvident exercise of authority.
Court accords findings of fact by CTA with highest respect. Its factual findings can only be
disturbed on appeal if they are supported by substantial evidence or there is a showing of gross
error or abuse on the part of Tax Court. Absence of clear and convincing proof to the contrary,
Court must presume that CTA rendered decision which is valid in every respect.
On issues raised
I. The judicial claim for 3rd quarter was filed prematurely, hence, cannot be entertained.
However, the judicial claim for 4th quarter falls under the exception since it was filed within
Dec. 10, 2003 – Oct. 6, 2010, therefore, can be entertained.
25
Compliance with 120+30 day rule under Section 112 is mandatory and jurisdictional.

Sec. 112 decrees that a VAT-registered person, whose sales are zero-rated or effectively zero-
rated, may apply for issuance of tax credit or refund creditable input tax due or paid attributable
to such sales within 2 years after the close of the taxable quarter when the sales were made.
From the date of submission of complete documents, CIR has 120 days to decide whether or not
to grant the claim for refund or issuance of tax credit certificate.

In case of full or partial denial of claim, or failure of CIR to act on application within given period,
taxpayer may, within 30 days from receipt of adverse decision or after expiration of 120 days,
appeal with CTA the decision or inaction of CIR.

If not followed, CTA will have no jurisdiction because there will be no “decision” or “deemed a
denial” decision of CIR for CTA to review.

Summary of rules:

1) An administrative claim must be filed with CIR within 2 years after the close of the
taxable quarter when the zero-rated or effectively zero-rated sales were made.
2) CIR has 120 days from date of submission of complete documents in support of
administrative claim within which to decide whether to grant a refund or issue a tax
credit certificate. The claim is filed in the later part of the 2-year period. If the 120-day
period expires without any decision from CIR, then administrative claim may be
considered to be denied by inaction.
3) Judicial claim must be filed with CTA within 30 days from receipt of CIR’s decision
denying administrative claim or from the expiration of 120-day period without any action
from CIR.
4) However, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its
issuance on Dec. 10, 2003 up to its reversal by this Court in Aichi on Oct. 6, 2010, as
an exception to the mandatory and jurisdictional 120+30 day periods.

In this case, Toledo filed admin claim on Sep. 30, 2003. CIR had 120 days or until Jan.
28, 2004 within which to decide on the claim but Toledo filed judicial claims on Oct. 24,
2003 for 3rd quarter and Jan. 22, 2004 for 4th quarter. Therefore, the judicial claims
were filed prematurely.

However, the judicial claim for 4th quarter can be entertained following the ruling in San
Roque case where Court said that compliance with 120+30 is not necessary when
judicial claims are filed between Dec. 10, 2003 to Oct. 6, 2010.

II. Toledo complied with invoicing requirements. Although words “zero-rated” were
merely stamped and not pre-printed, the same is sufficient compliance since the
imprinting of the word was required merely to distinguish sales subject to 10%
VAT, those that are subject to 0% VAT and exempt sales, to enable BIR to properly
implement and enforce the other VAT provisions of Tax Code.

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