2.

Alejandro  Ty v. Hon.  Trampe &  Municipal  Assessor  of Pasig, G.R. No. 117577 dated
December  1, 1995   

TY VS TRAMPA
 
FACTS:
·        Petitioner Alejandro B. Ty is a resident of and registered owner  of lands and buildings in the
Municipality (now City) of Pasig,  while  petitioner  MVR  Picture  Tube,  Inc.  is  a corporation 
duly organized  and  existing  under  Philippine  laws  and  is  likewise  a registered owner of
lands and buildings in said Municipality.
·        Respondent Assessor sent a notice of assessment respecting certain real properties of
petitioners located in Pasig, Metro Manila
·        Petitioners   assail   the   legality   of   the Schedule   of   Market Values used as basis for the
new tax assessments being enforced by respondents Municipal Assessor and Municipal
Treasurer of Pasig.
·        Petitioners through counsel "request(ed) the Municipal Assessor to reconsider the subject
assessments. The schedule of market values and  the  assessments prepared solely    by
the municipal    assessor, in accordance  with  LGC  of  1991  (RA7160)  are  invalid
and  illegal because  the  said  Code did  not  effectively repeal the previous law on the matter
(PD 921). PD  921 was not expressly  repealed  nor impliedly repealed  by LGC  of  1991 (RA 
7160) and  is  therefore  the applicable statute
·        Respondents counters that PD 921 and LGC of 1991(RA 7160) are  clearly  & unequivocally 
incompatible  since  both  dwell  on the  same  subject  matter(preparation  of  schedule  of 
values  for real property in Metro Manila area)
·        Not  satisfied,  petitioners,  filed  with  the  RTC a  Petition  for  Prohibition  with  prayer  for 
a  restraining  order  and/or  writ  of preliminary  injunction  to  declare  null  and  void  the  new 
tax assessments  and  to  enjoin  the  collection  of  real  estate  taxes based on said assessments.
·        RTC: Denied petition. No mention of CA decision
 
ISSUE:  WON Republic Act No.  7160, otherwise  known  as  the  Local Government  Code  of 
1991,  repealed  the  provisions  of Presidential Decree No. 921
 
HELD:
We rule for the 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.
Presidential Decree No. 921 was promulgated on 12 April 1976, with the aim of, inter alia,
evolving "a progressive revenue raising program that will not unduly burden the tax payers . . . "
15
in Metropolitan Manila. Hence, it provided for the "administration of local financial services in
Metropolitan Manila" only, and for this purpose, divided the area into four Local Treasury and
Assessment Districts, regulated the duties and functions of the treasurers and assessors in the
cities and municipalities in said area and spelled out the process of assessing, imposing and
distributing the proceeds of real estate taxes therein.
Upon the other hand, Republic Act No. 7160, otherwise "known and cited as the Local
'Government Code of 1991'" 16 took effect on 01 January 1992 17. It declared "genuine and
meaningful local autonomy" as a policy of the state. Such policy was meant to decentralize
government "powers, authority, responsibilities and resources" from the national government to
the local government units "to enable them to attain their fullest development as self-reliant
communities and make them more effective partners in the attainment of national goals." 18 In the
formulation and implementation of policies and measures on local autonomy, ''(l)ocal
government units may group themselves, consolidate or coordinate their efforts, services and
resources for purposes commonly beneficial to them." 19
From the above, it is clear that the two laws are not co-extensive and mutually inclusive in their
scope and purpose. While R.A. 7160 covers almost all governmental functions delegated to local
government units all over the country, P.D. 921 embraces only the Metropolitan Manila area and
is limited to the administration of financial services therein, especially the assessment and
collection of real estate (and some other local) taxes

WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the

questioned Decision and Order of respondent Judge, DECLARING as null and void the
questioned Schedule of Market Values for properties in Pasig City prepared by respondent
Assessor, as well as the corresponding assessments and real estate tax increases based thereon;
and ENJOINING the respondent Treasurer from collecting the real estate tax increases made on
the basis of said Schedule and assessments. No costs.
3. Progressive Development  Corp.  v. Quezon City, GR L-36081 dated  April  24, 1989

Facts: The City Council of Quezon City adopted Ordinance 7997 (1969) where privately owned
and operated public markets to pay 10% of the gross receipts from stall rentals to the City, as
supervision fee. Such ordinance was amended by Ordinance 9236 (1972), which imposed a 5%
tax on gross receipts on rentals or lease of space in privately-owned public markets in Quezon
City. Progressive Development Corp., owner and operator of Farmer’s Market and Shopping
Center, filed a petition for prohibition against the city on the ground that the supervision fee or
license tax imposed is in reality a tax on income the city cannot impose.

Issue: Whether the supervision fee / license tax is a tax on income.

Held: The 5% tax imposed in Ordinance 9236 does not constitute a tax on income, nor a city
income tax (distinguished from the national income tax by the Tax Code) within the meaning of
Section 2 (g) of the Local Autonomy Act, but rather a license tax or fee for the regulation of
business in which the company is engaged. To be considered a license fee, the imposition must
relate to an occupation or activity that so engages the public interest in health, morals, safety and
development as to require regulations for the protection and promotion of such public interest;
the imposition must also bear a reasonable relation to the probable expenses of the regulation,
taking into account not only the costs of direct regulation but also its incidental consequences as
well. The gross receipts from stall rentals have been used only as a basis for computing the fees
or taxes due to the city to cover the latter’s administrative expenses. The use of the gross amount
of stall rentals, as basis for the determination of the collectible amount of license tax, does not by
itself convert or render the license tax into a prohibited city tax on income. For ordinarily, the
higher the amount of stall rentals, the higher the aggregate volume of foodstuffs and related
items sold in the privately owned market; and the higher the volume of goods sold in such
market, the greater extent and frequency of inspection and supervision that may be reasonably
required in the interest of the buying public.
 4. Tatel  v. Virac, GR 40243 dated March 11, 1992

FACTS:

·       It appears from the records that on the basis of complaints received from the residents of barrio
Sta. Elena on March 18, 1966 against the disturbance caused by the operation of the abaca
bailing machine inside the warehouse of petitioner which affected the peace and tranquility of
the neighborhood due to the smoke, obnoxious odor and dust emitted by the machine, a
committee was appointed by the municipal council of Virac to investigate the matter. The
committee noted the crowded nature of the neighborhood with narrow roads and the
surroundings residential houses, so much so that an accidental fire within the warehouse of
petitioner occasioned by a continuance of the activity inside the warehouse and the storing of
inflammable materials created a danger to the lives and properties of the people within the
neighborhood. 

·       Resultantly, Resolution No. 29 was passed by the Municipal Council of Virac on April 22,
1966 declaring the warehouse owned and operated by petitioner a public nuisance within the
purview of Article 694 of the New Civil Code. MR denied by the Municipal Council.

·       CFI Catanduanes – directed the petitioner to remove from the said warehouse all abaca and
copra and other inflammable articles stored therein. Hence, this present petition.

·       Respondent municipal officials contend that petitioner's warehouse was constructed in violation
of Ordinance No. 13, series of 1952, prohibiting the construction of warehouses near a block of
houses either in the poblacion or barrios without maintaining the necessary distance of 200
meters from said block of houses to avoid loss of lives and properties by accidental fire. 

·       On the other hand, petitioner contends that said ordinance is unconstitutional, contrary to the
due process and equal protection clause of the Constitution and null and void for not having been
passed in accordance with law. 

ISSUE: W/N Ordinance No. 13-1952 is constitutional and a valid exercise of powers by the
Municipal Council.

HELD: YES.

·       Ordinance No. 13, series of 1952, was passed by the Municipal Council of Virac in the exercise
of its police power. It is a settled principal of law that municipal corporations are agencies of the
State for the promotion and maintenance of local self-government and as such are endowed with
police powers in order to effectively accomplish and carry out the declared objects of their
creation.
·       [General Welfare Clause under the Administrative Code --- source of power] "The municipal
council shall enact such ordinance and make such regulations, not repugnant to law, as may be
necessary to carry into effect and discharge the powers and duties conferred upon it by law and
such as shall seem necessary and proper to provide for the health and safety, promote the
prosperity, improve the morals, peace, good order, comfort and convenience of the municipality
and the inhabitants thereof, and for the protection of property therein."

·       [Requisites of a valid ordinance] For an ordinance to be valid, it must not only be within the
corporate powers of the municipality to enact but must also be passed according to the procedure
prescribed by law, and must be in consonance with certain well established and basic principles
of a substantive nature. These principles require that a municipal ordinance (1) must not
contravene the Constitution or any statue (2) must not be unfair or oppressive (3) must no be
partial or discriminatory (4) must not prohibit but may regulate trade (5) must be general and
consistent with public policy, and (6) must not be unreasonable. Ordinance No. 13, Series of
1952, meets these criteria. 

·       In spite of its fractured syntax, basically, what is regulated by the ordinance is the construction
of warehouses wherein inflammable materials are stored where such warehouses are located at a
distance of 200 meters from a block of houses and not the construction per se of a warehouse.
The purpose is to avoid the loss of life and property in case of fire which is one of the primordial
obligation of government. 
The ambiguity therefore is more apparent than real and springs from simple error in grammatical
construction but otherwise, the meaning and intent is clear that what is prohibited is the
construction or maintenance of warehouses for the storage of inflammable articles at a distance
within 200 meters from a block of houses either in the poblacion or in the barrios. And the
purpose of the ordinance is to avoid loss of life and property in case of accidental fire which is
one of the primordial and basic obligation of any government."
   
11. Province  of Bulacan v. Court  of Appeals, GR  126232 dated November  27, 1998   

Facts: 
• Provincial Ordinance No. 3, known as "An ordinance Enacting the Revenue Code of the
Bulacan Province," took effect on July 1, 1992. Section 21 of the ordinance provides as follows:
• Section 21. Imposition of Tax. There is hereby levied and collected a tax of 10% of 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.
• Pursuant thereto, the Provincial Treasurer of Bulacan, assessed Republic Cement
Corporation 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.
Republic Cement formally contested the assessment but the same was denied by the Provincial
Treasurer.
• Republic Cement consequently filed a petition for declaratory relief with the Regional
Trial Court of Bulacan. The province filed a motion to dismiss the petition, which was granted
by the trial court which ruled that declaratory relief was improper, allegedly because a breach of
the ordinance had been committed by Republic Cement.
• Republic Cement filed a petition for certiorari with the Supreme Court, which referred
the same to the Court of Appeals.
• In the interim, the Province of Bulacan issued a warrant of levy against Republic Cement
due to its unpaid tax liabilities. Negotiations between the parties resulted in an agreement and
modus vivendi whereby Republic Cement agreed to pay under protest P1,262,346.00, 50% of the
tax assessed, in exchange for the lifting of the warrant of levy. In addition, they agreed to limit
the issue for resolution of the CA to the question as to whether or not the provincial government
could impose and/or assess taxes on stones, sand, gravel, earth and other quarry resources
extracted by Republic Cement from private lands.
• The Court of Appeals declared the assessment void and held that the Province of Bulacan
is without legal authority to impose and assess taxes on quarry resources extracted from private
lands. Motion for reconsideration was denied. Hence, this appeal.

Issues/ Ruling: 

1. WON A Province has authority to impose taxes on stones, sand, gravel, earth and
other quarry resources extracted from private land

YES, The pertinent provisions of the Local Government Code (LGC) are as follows: Sec. 134.
Scope of Taxing Powers. - Except as otherwise provided in this Code, the province may levy
only the taxes, fees, and charges as provided in this Article.

Sec. 138. Tax on Sand, Gravel and Other Quarry Resources. - The province may levy and collect
not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary
stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal
Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers,
streams, creeks, and other public waters within its territorial jurisdiction.
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 LGC,
subject to the conditions specified therein.

Nonetheless, provinces are still prohibited from imposing taxes on stones, sand, gravel, earth and
other quarry resources extracted from private lands.

2. WON LGUs can impose excise taxes on articles enumerated under the National Internal
Revenue Code

NO, 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.

The Local Government Code provides:  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 (h) Excise taxes on articles enumerated under the National Internal Revenue
Code, as amended, and taxes, fees or charges on petroleum products; 

Section 151 of the National Internal Revenue Code levies a tax on all quarry resources,
regardless of origin, whether extracted from public or private land. Thus, a province may not
ordinarily impose taxes on stones, sand, gravel, earth and other quarry resources, as the same are
already taxed under the National Internal Revenue Code. The province can, however, impose a
tax on stones, sand, gravel, earth and other quarry resources extracted from public land because it
is expressly empowered to do so under the Local Government Code. As to stones, sand, gravel,
earth and other quarry resources extracted from private land, however, it may not do so, because
of the limitation provided by Section 133(h) of the Code in relation to Section 151 of the
National Internal Revenue Code.

The Province of Bulacan cannot claim that the appellate court unjustly deprived them of the
power to create their sources of revenue, their assessment of taxes against Republic Cement
being ultra vires, traversing as it does the limitations set by the Local Government Code.

No collateral attack on Provincial Ordinance No. 3 - The Province of Bulacan likewise aver
that the appellate court's declaration of nullity of its assessment against Republic Cement is a
collateral attack on Provincial Ordinance No. 3, which is prohibited by public policy. Contrary to
petitioners' claim, what the appellate court questioned was the assessment of taxes on Republic
Cement on the basis of Provincial Ordinance No. 3, not the ordinance itself.

 Furthermore, Section 21 of Provincial Ordinance No. 3 is practically only a reproduction of

Section 138 of the Local Government Code. A cursory reading of both would show that both
refer to ordinary sand, stone, gravel, earth and other quarry resources extracted from public
lands.
Tax statutes are construed strictissimi juris against the government -  The Province of
Bulacan may not invoke the Regalian doctrine to extend the coverage of their ordinance to
quarry resources extracted from private lands, for taxes, being burdens, are not to be presumed
beyond what the applicable statute expressly and clearly declares, tax statutes being construed
strictissimi juris against the government.

12. First Phil. Industrial  v. Court of Appeals, GR  125948 dated December  29, 1998 

G.R. No. 125948 December 29, 1998

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, 
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and
ADORACION C. ARELLANO, in her official capacity as City Treasurer of Batangas,
respondents.
 
FACTS:
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended,
to contract, install and operate oil pipelines which was renewed by the Energy Regulatory Board
in 1992.
 
Sometime in January 1995, petitioner applied for a mayor's permit but before it could be
issued, the respondent City Treasurer of Batangas required petitioner to pay a local tax based on
its gross receipts for the fiscal year 1993 pursuant to the Local Government Code. Thus,
petitioner was assessed a business tax based on the gross receipts for oil products pumped for
that fiscal year. In order not to hamper its operations, petitioner paid the tax under protest for the
first quarter of 1993. Subsequently, petitioner filed a letter-protest addressed to the respondent
City Treasurer which was denied by the latter.
 
Thus, petitioner filed before the RTC a complaint for tax refund with prayer for writ of
preliminary injunction against respondents City of Batangas claiming, among others, that it is
engaged in the business of transporting petroleum products and is therefore exempt from paying
tax on gross receipts under the LGC, and that the authority to impose tax "on contractors and
other independent contractors" under the LGC does not apply to transportation contractors. The
trial court dismissed the complaint stating that the tax exemption under the LGC on common
carriers does not apply to petitioner-plaintiff since it is not a common carrier. The CA affirmed.
 
ISSUE: Should petitioner’s claim for tax refund be granted?
 
RULING: YES. Petitioner is a "common carrier" and, therefore, exempt from the business tax
as provided for in Section 133 (j), of the Local Government Code.
 
Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm
or association engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public." 
 
Whereas, The test for determining whether a party is a common carrier of goods is:
1.     He must be engaged in the business of carrying goods for others as a public employment
and must hold himself out as ready to engage in the transportation of goods for person
generally as a business and not as a casual occupation;
2.     He must undertake to carry goods of the kind to which his business is confined
3.     He must undertake to carry by the method by which his business is conducted and over
his established roads; and
4.     The transportation must be for hire. 
 
Petitioner is engaged in the business of transporting or carrying goods, i.e. petroleum
products, for hire as a public employment. It undertakes to carry for all persons indifferently, that
is, to all persons who choose to employ its services, and transports the goods by land and for
compensation. The fact that petitioner has a limited clientele does not exclude it from the
definition of a common carrier.
 
It is clear that the legislative intent in excluding from the taxing power of the local
government unit the imposition of business tax against common carriers is to prevent a
duplication of the so-called "common carrier's tax."
 
Petitioner is already paying three (3%) percent common carrier's tax on its gross
sales/earnings under the National Internal Revenue Code. To tax petitioner again on its gross
receipts in its transportation of petroleum business would defeat the purpose of the Local
Government Code.

  
13. LTO  v.  City of Butuan, GR  131512 dated January 20, 2000   
LTO vs. City of Butuan
FACTS:
• Relying on the foregoing provisions of the law, the Sangguniang Panglungsod ("SP") of
Butuan, on 16 August 1992, passed SP Ordinance No. 916-92 entitled "An Ordinance Regulating
the Operation of Tricycles-for-Hire, providing mechanism for the issuance of Franchise,
Registration and Permit, and imposing Penalties for Violations thereof and for other Purposes."
The ordinance provided for, among other things, the payment of franchise fees for the grant of
the franchise of tricycles-for-hire, fees for the registration of the vehicle, and fees for the
issuance of a permit for the driving thereof.
• The Land Transportation Authority (LTO) questioned the validity of the subject
ordinance, arguing that the functions of registering motor vehicles and issuing permits or licenses
for the driving of the same have not been devolved by law upon any local government unit.
• Respondent city of Butuan asserts that one of the salient provisions introduced by the
local government code is in the area of local taxation which allows LGUs to collect registration
fees or charges along with, its view, the corresponding issuance of all kinds of licenses or
permits for the driving of tricycles.
• LTO explains that one of the functions of the national government that, indeed, has been
transferred to local government units is the franchising authority over tricycles-for-hire of the
Land Transportation Franchising and Regulatory Board ("LTFRB") but not, it asseverates, the
authority of LTO to register all motor vehicles and to issue to qualified persons of licenses to
drive such vehicles.
ISSUE: WoN respondent city of Butuan may issue license and permit and collect fees for the
operation of tricycle.
RULING: No.
LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant
franchises for the operation thereof. “To regulate” means to fix, establish or control; to adjust by
rule, method or established made; to direct by rule or restriction; or to subject to governing
principles of law. A franchise is defined to be a special privilege to do certain things conferred
by government on an individual or corporation and which does not belong to citizens generally
of common right. On the other hand, to register means to record formally and exactly, to enroll,
or to enter precisely in a list or the like, and a driver’s license is the certificate or license issued
by the government which authorizes a person to operate a motor vehicle.

The reliance made by the respondents on the broad taxing power of local government units,
specifically under section 133 of the local government code, is tangential. Police power and
taxation, along with eminent domain, are inherent powers of sovereignty which the state might
share with local government units by delegation or given under a constitutional or a statutory
fiat. All these inherent powers are for a public purpose and legislative in nature but the
similarities just about end there. The basic aim of police power is public good and welfare.
Taxation, in its case, focuses on the power of government to raise revenue in order to support its
existence and carry out its legitimate objectives. Although correlative to each other in many
respects, the grant of one does not necessarily carry with it the grant of the other. The two
powers are by tradition and jurisprudence separate and distinct powers, varying in their
respecting concepts, character, scopes, and limitations.
To construe the tax provisions of section 133 (1) indistinctively would result in the repeal to that
extent of LTOs regulatory power which evidently has not been intended. If it were otherwise, the
law could have just said so in section 447 and 458 of Book III of the local government code in
the same manner that the specific devolution of LTFRBs power on franchising of tricycles has
been provided. Repeal by implication is not favored. The power over tricycles granted under the
local government code to LGUs is the power to regulate their operation and to grant franchises
for the operation thereof. The government’s exclusionary clause contained in the tax provisions
of section 133 (1) of the local government code must be held to have had the effect of
withdrawing the express powers of LTO to cause the registration of all motor vehicles and the
issuance of license for the driving thereof. These functions of the LTO are essentially regulatory
in nature, exercised pursuant to the police power of the state, whose basic objectives are to
achieve road safety by insuring the road worthiness of these motor vehicles and the competence
of drivers prescribed by RA 4136. 
14. City Gov’t. of San Pablo v. Reyes, GR 127708 dated March 25, 1999  

 Facts: 
Act 3648 granted the Escudero Electric Service Company a legislative franchise to
maintain and operate an electric light and power system in the city of San Pablo and nearby
municipalities. Section 10 of said act provides:

In consideration of the franchise and rights hereby granted, the grantee shall
pay unto the municipal treasury of each municipality in which it is supplying electric
current to the public under this franchise, a tax equal to two percentum of the gross
earning from electric current sold or supplied under this franchise in each said
municipality. Said tax shall be due and payable quarterly and shall be in lieu of any
and all taxes of any kind nature or description levied, established or collected by any
authority whatsoever, municipal, provincial or insular, now or in the future, or its
pole wires, insulator, switches, transformers, and structures, installations,
conductors and accessories placed in and over and under all public property,
including public streets and highways, provincial roads, bridges and public squares,
and on its franchises, rights, privileges, receipts, revenues and profits from which
taxes the grantee is hereby expressly exempted.
Escudero’s franchise was transferred to the plaintiff MERALCO under RA
2340.
On October 5, 1992, the sangguniang panlungsod of San Pablo City enacted
ordinance no. 56 otherwise known as the Revenue Code of the City of San Pablo.
Pursuant to sec 2.09 article D of the said ordinance, the petitioner city treasurer sent
to private respondent a letter demanding payment of the aforesaid franchise tax.

Issue: Whether or not the city of San Pablo may impose a local franchise tax to MERALCO.

Held:   Yes. A general law cannot be construed to have repealed a special law by mere
implication unless the intent to repeal or alter is manifest and it must be convincingly
demonstrated that the two laws are so clearly repugnant and patently inconsistent that they
cannot co-exist.
It is our view that petitions correctly rely on the provisions of sections 137 and 193
of the LGC to support their position that MERALCO’s tax exemption has been withdrawn.
The explicit language of section 137 which authorizes the province to impose franchise tax
not withstanding any exemption granted by law or other special law is all encompassing
and clear. The franchise is imposable despite any exemption enjoyed under special law.
Sec 193 buttresses the withdrawal of extant tax exemption privileges. By stating
that unless otherwise provided in this code, tax exemptions or incentives granted to or
presently enjoyed all persons whether natural or juridical, including GOCCs except: 1.)
local water districts; 2.) Cooperatives duly registered under RA 6938; 3.) Non-stock and
non-profit hospitals and education institutions, are withdrawn upon the effectivity of this
code, the obvious import is to limit the exemptions to the 3 enumerated entities. It is a
basic precept of statutory construction that the express mention of one person, thing, act or
consequences excludes all others as expressed in the familiar maxim expressio unius est
exclusio alterus. In the absence of any provision of the code to the contrary, and we find no
other provision in point, any existing tax exemption or incentive enjoyed by the
MERALCO under the existing law was clearly intended to be withdrawn.

Reading together section 193 and 137 of the LGC conclude that under the LGC, the local
government unit may now impose a local tax at a rate not excluding 50% of 1% of the gross
annual receipts for the preceding calendar year based on the incoming receipts realized within its
territorial jurisdiction. The legislative purpose to withdraw tax privilege only enjoy and an
existing law or charter is clearly manifested by the language used in sections 137 and 193
categorically withdrawing such exemption subject only to the exceptions enumerated. Since it
would be not only 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.

It is true that the phrase “in lieu of all taxes” found in special franchises has been
held in several cases to exempt the franchise holder from payment of tax on its corporate
franchise imposed of the internal revenue code, as the charter is in the nature of a private
contract and the exemption is part of the inducement for the acceptance of the franchise,
and that the imposition of another franchise tax by the local authority would constitute an
impairment of contract between the government and the corporation. But these “magic
words” contained in the phrase “shall be in lieu of all taxes” have to give way to the
premptory language of the LGC specifically providing for the withdrawal of such
exemption privileges.
15. Meralco  v. Province  of  Laguna, GR 131359  dated May 5, 1999

Facts: 
In 1991, RA 7160, otherwise known as the “Local Government Code of 1991,” was enacted to
take effect on 01 January 1992 enjoining local government units to create their own sources of
revenue and to levy taxes, fees and charges, subject to the limitations expressed therein,
consistent with the basic policy of local autonomy. 
Pursuant to the provisions of the Code, respondent enacted an Ordinance imposing a tax on
businesses enjoying a franchise. Petitioner paid the tax under protest. 
A formal claim for refund was thereafter sent by the petitioner to the Provincial Treasurer
claiming that the franchise tax it had paid and continued to pay to the National Government.
Petitioner contended that the imposition of a franchise tax under the said Ordinance contravened
the provisions of P.D. 551. 
In 1995, the claim for refund of the petitioner was denied. In 1996, petitioner filed with the RTC
a complaint for refund, with a prayer for the issuance of a writ of preliminary injunction and/or
TRO, against the Respondent. The trial court dismissed the complaint. Hence this petition.

Issue: Whether or not the imposition of a franchise tax by the Province of Laguna to MERALCO
is violative of the non-impairment clause of the Constitution considering that under PD 551 the
franchise tax payable shall be 2% of gross receipts notwithstanding  any provision of law or local
ordinance to the contrary.

Held: No, there is no violation of the non-impairment clause for the same must yield to the
inherent power of the state (taxation). The provincial ordinance is valid and constitutional.

THE PROVINCIAL ORDINANCE IS VALID AND CONSTITUTIONAL.

The local governments do not have the inherent power to tax except to the extent that such power
might be delegated to them either by the basic law or by statute. Presently, under Article X of the
1987 Constitution, a general delegation of that power has been given in favor of local
government units. Under the now prevailing Constitution, where there is neither a grant nor a
prohibition by statute, the tax power must be deemed to exist although Congress may provide
statutory limitations and guidelines.

The basic rationale for the current rule is to safeguard the viability and self-sufficiency of local
government units by directly granting them general and broad tax powers. Nevertheless, the
fundamental law did not intend the delegation to be absolute and unconditional; the
constitutional objective obviously is to ensure that, while the local government units are being
strengthened and made more autonomous, the legislature must still see to it that (a) the taxpayer
will not be over-burdened or saddled with multiple and unreasonable impositions; (b) each local
government unit will have its fair share of available resources; (c) the resources of the national
government will not be unduly disturbed; and (d) local taxation will be fair, uniform, and just.
Indicative of the legislative intent to carry out the Constitutional mandate of vesting broad tax
powers to local government units, the Local Government Code has effectively withdrawn under
Section 193 thereof, tax exemptions or incentives theretofore enjoyed by certain entities. The
Code, in addition, contains a general repealing which all general and special laws, acts, city
charters, decrees, executive orders, proclamations and administrative regulations, or part or parts
thereof which are inconsistent with any of the provisions of this Code are hereby repealed or
modified accordingly. These policy considerations are consistent with the State policy to ensure
autonomy to local governments and the objective of the LGC that they enjoy genuine and
meaningful local autonomy to enable them to attain their fullest development as self-reliant
communities and make them effective partners in the attainment of national goals. The power to
tax is the most effective instrument to raise needed revenues to finance and support myriad
activities if 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.

THERE IS NO VIOLATION OF THE NON-IMPAIRMENT CLAUSE.

While the Court has, not too infrequently, referred to tax exemptions contained in special
franchises as being in the nature of contracts and a part of the inducement for carrying on the
franchise, these exemptions, nevertheless, are far from being strictly contractual in nature.
Contractual tax exemptions, in the real sense of the term and where the non-impairment clause of
the Constitution can rightly be invoked, are those agreed to by the taxing authority in contracts,
such as those contained in government bonds or debentures, lawfully entered into by them under
enabling laws in which the government, acting in its private capacity, sheds its cloak of authority
and waives its governmental immunity. Truly, tax exemptions of this kind may not be revoked
without impairing the obligations of contracts.

These contractual tax exemptions, however, are not to be confused with tax exemptions granted
under franchises. A franchise partakes the nature of a grant which is beyond the purview of the
non-impairment clause of the Constitution.15 Indeed, Article XII, Section 11, of the 1987
Constitution, like its precursor provisions in the 1935 and the 1973 Constitutions, is explicit that
no franchise for the operation of a public utility shall be granted except under the condition that
such privilege shall be subject to amendment, alteration or repeal by Congress as and when the
common good so requires.
16. Reyes v. CA, GR 118233 dated  December  10, 1999   

Facts: The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances –
87, 91, 95, 100 and 101. On May 21, 1993, petitioners filed an appeal with the Department of
Justice assailing the constitutionality of these tax ordinances allegedly because they were
promulgated without previous public hearings thereby constituting deprivation of property
without due process of law. However the same was dismissed.

Issue: Whether or not the assailed ordinances are valid.

Held: Yes. A municipal tax ordinance empowers a local government unit to impose taxes. The
power to tax is the most effective way or instrument to raise needed revenues to finance and
support the myriad activities of the local government units for delivery of basic services essential
to the promotion of general welfare and enhancement of peace, progress and prosperity of the
people. Consequently, any delay in implementing tax measures would be to the detriment of the
public. It is for this reason that protest over tax ordinance are required to be done within certain
time frames. In the instant case, it is our view that the failure of petitioners to appeal to the
secretary of justice within 30 days as required by section 187 of Republic Act No. 7160 is fatal
to their cause.

Petitioners have not proved in the case before us that the Sangguniang Bayan of San Juan failed
to conduct the required public hearings before the enactment of Ordinances 87, 95, 91, 100, and
101. Although the Sanggunian had the control of records or better means of proof regarding the
facts alleged, petitioners are not relieved from the burden of proving their averments. Proof that
public hearings were not held falls on the petitioner’s shoulders. For failing to discharge that
burden, their petition was properly dismissed.

For the purpose of securing certainty where doubt would be intolerable, it is a general rule that
the regularity of the enactment of an officially promulgated statute or ordinance may not be
impeached by parol evidence or oral testimony either of individual officers and members, or of
strangers who may be interested in nullifying legislative action. This rules supplements the
presumption in favor of the regularity of official conduct which we have upheld repeatedly,
absent a clear showing to the contrary.
17. Sec. Drilon v. Mayor Lim,  G.R.  No. 112497 dated August 4, 1994, Manila Tax
Ordinance

Facts:

Pursuant to Sec. 187 of the LGC, the Secretary of Justice ( Sec. Drilon) declared Ordinance No.
7794, otherwise known as the Manila Revenue Code, null and void for non-compliance with the
prescribed procedure in the enactment of tax ordinances and for containing certain provisions
contrary to law and public policy. A petition for certiorari was filed in the RTC of Manila.
 
Under the said section (Procedure For Approval And Effectivity Of Tax Ordinances And
Revenue Measures; Mandatory Public Hearings), it states that any question on the
constitutionality or legality of tax ordinances or revenue measures may be raised on appeal
within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a
decision within sixty (60) days from the date of receipt of the appeal.
 
Judge Rodolfo Palattao of the RTC of Manila declared Section 187 of the LGC unconstitutional
insofar as it empowered the Secretary of Justice to review tax ordinances and, inferentially, to
annul them. His conclusion was that the challenged section gave to the Secretary the power of
control and not of supervision only as vested by the Constitution in the President of the
Philippines which is violative of the taxing powers of local governments and the policy of local
autonomy in general.
 
Issue: Whether or not Sec. 187 of the Local Government Code is unconstitutional.

Ruling: NO.

Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of
the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he
alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own
judgment for the judgment of the local government that enacted the measure. Secretary Drilon
did set aside the Manila Revenue Code, but he did not replace it with his own version of what the
Code should be.
 
He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did
not say that in his judgment it was a bad law. What he found only was that it was illegal. All he
did in reviewing the said measure was determine if the petitioners were performing their
functions in accordance with law, that is, with the prescribed procedure for the enactment of tax
ordinances and the grant of powers to the city government under the Local Government Code. A
mere act of supervision.

The supervisor or superintendent merely sees to it that the rules are followed, but he himself does
not lay down such rules, nor does he have the discretion to modify or replace them. If the rules
are not observed, he may order the work done or re-done but only to conform to the prescribed
rules. He may not prescribe his own manner for the doing of the act. Secretary Drilon did
precisely this, and no more nor less than this, and so performed an act not of control but of mere
supervision.
18. Coca-Cola Bottlers Phils., Inc. v.  City of Manila, G.R. No. 156252 dated June 27, 2006
(validity of Manila Tax Ordinance) 
19. International  Container  Terminal Services, Inc. v. City of Manila, CTA A.C. No. 11
dated May 22, 2006 (Manila Tax Ordinance, Sec. 21(A)  –  Double Taxation)   

FACTS:

Petitioner ICTSI is a corporation duly organized and existing under the laws of the PH, with
place of business at North Harbor, Manila. Respondent City of Manila is a public corporation
created and existing pursuant to law; co-respondent City Council of Manila is the law-making
body of the City of Manila, vested by law with the power and authority to appropriate funds.

Petitioner is engaged in the business of servicing the stevedoring, arrastre and warehousing needs
of local and international shipping vessels in the PH. In the sale of these services, petitioner is
paying annually the City of Manila local business tax on contractors equivalent to 75% of 1% of
the gross receipts for the preceding calendar years, pursuant to Sec. 18 of Manila Ordinance No.
7794. Upon renewal of its business license for 1999, petitioner was additionally assessed by the
Office of the City Treasurer, another business tax in the amount of P6,244,250.00 for the year
1999 computed at 50% of 1% of the gross receipts in 1998 pursuant to Section 21 (A) of Manila
Ordinance No. 7794, as amended by Section 1 (G) of Manila Ordinance No. 7807.

ISSUE: WON the assessment of taxes by the City of Manila under Sections 18 and 21(a) of
Manila Ordinance No. 7794, as amended by Manila Ordinance No. 7807 constitutes double
taxation

HELD: YES.

Sec. 18 is a tax on contractors while Sec. 21(A) is a business tax on persons who sell goods and
services in the course of trade or business, and those who import goods whether for business or
otherwise. A contractor is a natural or juridical person that essentially sells all kinds of services
for a fee and it includes one engaged in arrastre services such as petitioner. And as a contractor,
petitioner was taxed under Section 18 of the subject Manila Ordinance. Additionally, it was also
held liable to pay business tax under Section 21 (A) for selling services in the course of its
business. Evidently, the taxes under Section 18 and Section 21 (A) similarly tax persons, natural
or juridical, engaged in the sale of services in the course of its business, which is a clear case of
double taxation.

In its strict sense (referred to as direct duplicate taxation or direct double taxation), double
taxation means- (a) taxing twice, . (b) by the same taxing authority, (c) within the same
jurisdiction or taxing district, (d) for the same purpose, (e) in the same year [taxing period], (f)
some of the property in the territory. Clearly, all these requisites are present in the case at bench.
20. Phil. Match Co. Ltd. v. City of Cebu, 81 SCRA 99 dated January 18, 1999 (situs of
payment of local business tax)

FACTS:

             This case is about the legality of the tax collected by the City of Cebu on sales of
matches stored by the Philippine Match Co., Ltd. in Cebu City but delivered to customers outside
of the City.

             Ordinance No. 279 of Cebu is "an ordinance imposing a quarterly tax on gross
sales or receipts of merchants, dealers, importers and manufacturers of any commodity doing
business" in Cebu City. It imposes a sales tax of one percent (1%) on the gross sales, receipts or
value of commodities sold, bartered, exchanged or manufactured in the city in excess of P2,000 a
quarter.

             Section 9 of the ordinance provides that, for purposes of the tax, "all deliveries of
goods or commodities stored in the City of Cebu, or if not stored are sold" in that city, "shall be
considered as sales" in the city and shall be taxable.

             The Philippine Match Co., Ltd., is engaged in the manufacture of matches. It
ships cases or cartons of matches from Manila to its branch office in Cebu City for storage, sale
and distribution within the territories and districts under its Cebu branch or the whole Visayas-
Mindanao region.

             The company does not question the tax on the matches consummated in Cebu
City. It assails the legality of the tax which the city treasurer collected on out-of- town deliveries
of matches, to wit: (1) sales of matches booked and paid for in Cebu City but shipped directly to
customers outside of the city; (2) transfers of matches to newsmen assigned to different agencies
outside of the city and (3) shipments of matches to provincial customers pursuant to salesmen's
instructions.

ISSUE:

             WON the City of Cebu can tax sales of matches which were perfected and paid
for in Cebu City but the matches were delivered to customers outside of the city.

RULING:

             Yes. The city can validly tax the sales of matches to customers outside of the city
as long as the orders were booked and paid for in the company's branch office in the city. Those
matches can be regarded as sold in the city, as contemplated in the ordinance, because the
matches were delivered to the carrier in Cebu City. Generally, delivery to the carrier is delivery
to the buyer (Art. 1523, Civil Code; Behn, Meyer & Co. vs. Yangco, 38 Phil. 602).

             The municipal board of Cebu City is empowered "to provide for the levy and
collection of taxes for general and purposes in accordance with law" (Sec. 17[a], Commonwealth
Act No. 58; Sec. 31[l], Rep. Act No. 3857, Revised Charter of Cebu city). The taxing power
validly delegated to cities and municipalities is defined in the Local Autonomy Act, Republic
Act No. 2264.

             The prohibition against the imposition of percentage taxes (formerly provided for
in section 1 of Commonwealth Act No. 472) refers to municipalities and municipal districts but
not to chartered cities. The taxing power of cities, municipalities and municipal districts may be
used (1) "upon any person engaged in any occupation or business, or exercising any privilege"
therein; (2) for services rendered by those political subdivisions or rendered in connection with
any business, profession or occupation being conducted therein, and (3) to levy, for public
purposes, just and uniform taxes, licenses or fees.

             The sales in the instant case were in the city and the matches sold were stored in
the city. The fact that the matches were delivered to customers, whose places of business were
outside of the city, would not place those sales beyond the city's taxing power. Those sales
formed part of the merchandising business being assigned to by the company in the city. In
essence, they are the same as sales of matches fully consummated in the city.
21. PLDT v.  City of Davao, G.R. No.  143867 dated March 25, 2003 (PLDT liable  to
franchise tax imposed by city)   
Facts: PLDT paid a franchise tax equal to three percent (3%) of its gross receipts. The franchise
tax was paid “in lieu of all taxes on this franchise or earnings thereof” pursuant to RA 7082. The
exemption from “all taxes on this franchise or earnings thereof” was subsequently withdrawn by
RA 7160 (LGC), which at the same time gave local government units the power to tax
businesses enjoying a franchise on the basis of income received or earned by them within their
territorial jurisdiction. The LGC took effect on January 1, 1992.
The City of Davao enacted Ordinance No. 519, Series of 1992, which in pertinent part provides:
Notwithstanding any exemption granted by law or other special laws, there is hereby imposed a
tax on businesses enjoying a franchise, a rate of seventy-five percent (75%) of one percent (1%)
of the gross annual receipts for the preceding calendar year based on the income receipts realized
within the territorial jurisdiction of Davao City.
Subsequently, Congress granted in favor of Globe Mackay Cable and Radio Corporation (Globe)
and Smart Information Technologies, Inc. (Smart) franchises which contained “in lieu of all
taxes” provisos.
In 1995, it enacted RA 7925, or the Public Telecommunication Policy of the Philippines, Sec. 23
of which provides that any advantage, favor, privilege, exemption, or immunity granted under
existing franchises, or may hereafter be granted, shall ipso facto become part of previously
granted telecommunications franchises and shall be accorded immediately and unconditionally to
the grantees of such franchises. The law took effect on March 16, 1995.
In January 1999, when PLDT applied for a mayor’s permit to operate its Davao Metro exchange,
it was required to pay the local franchise tax which then had amounted to P3,681,985.72. PLDT
challenged the power of the city government to collect the local franchise tax and demanded a
refund of what had been paid as a local franchise tax for the year 1997 and for the first to the
third quarters of 1998.

Issue: Whether or not by virtue of RA 7925, Sec. 23, PLDT is again entitled to the exemption
from payment of the local franchise tax in view of the grant of tax exemption to Globe and
Smart.

Ruling: No. The fact is that after petitioner’s tax exemption by R.A. No. 7082 had been
withdrawn by the LGC, no amendment to re-enact its previous tax exemption has been made by
Congress. Considering that the taxing power of local government units under R.A. No. 7160 is
clear and is ordained by the Constitution, petitioner has the heavy burden of justifying its claim
by a clear grant of exemption. Petitioner contends that because their existing franchises contain
“in lieu of all taxes” clauses, the same grant of tax exemption must be deemed to have become
ipso facto part of its previously granted telecommunications franchise. But the rule is that tax
exemptions should be granted only by a clear and unequivocal provision of law “expressed in a
language too plain to be mistaken” and assuming for the nonce that the charters of Globe and of
Smart grant tax exemptions, then this runabout way of granting tax exemption to PLDT is not a
direct, “clear and unequivocal” way of communicating the legislative intent.
Nor does the term “exemption” in Sec. 23 of RA 7925 mean tax exemption. The term refers to
exemption from regulations and requirements imposed by the National Telecommunications
Commission (NTC). For instance, RA 7925, Sec. 17 provides: The Commission shall exempt
any specific telecommunications service from its rate or tariff regulations if the service has
sufficient competition to ensure fair and reasonable rates of tariffs. Another exemption granted
by the law in line with its policy of deregulation is the exemption from the requirement of
securing permits from the NTC every time a telecommunications company imports equipment.
Tax exemptions should be granted only by clear and unequivocal provision of law on the basis of
language too plain to be mistaken.
22. Palma Development  Corp. v. Municipality of Malangas, G.R. No. 152492  

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. The port, as well as the surrounding roads leading to it,
belong to and are maintained by the Municipality of Malangas, Zamboanga del Sur. The
municipality passed Municipal Revenue Code No. 09, Series of 1993, which was subsequently
approved by the Sangguniang Panlalawigan of Zamboanga del Sur in Resolution No. 1330.
Accordingly, the service fees imposed by Section 5G.01 of the ordinance was paid by petitioner
under protest. It contended that under Republic Act No. 7160, otherwise known as the Local
Government Code of 1991, municipal governments did not have the authority to tax goods and
vehicles that passed through their jurisdictions. Thereafter, before the Regional Trial Court
(RTC) of Pagadian City, petitioner filed against the Municipality of Malangas on November 20,
1995, an action for declaratory relief assailing the validity of Section 5G.01 of the municipal
ordinance. The trial court rendered its November 13, 1996 Decision declaring the entire
Municipal Revenue Code No. 09 as ultra vires and, hence, null and void. The CA held that local
government units already had revenue-raising powers as provided for under Sections 153 and
155 of RA No. 7160. It ruled as well that within the purview of these provisions — and therefore
valid — is Section 5G.01, which provides for a "service fee for the use of the municipal road or
streets leading to the wharf and to any point along the shorelines within the jurisdiction of the
municipality" and "for police surveillance on all goods and all equipment harbored or sheltered
in the premises of the wharf and other within the jurisdiction of this municipality.” However,
since both parties had submitted the case to the trial court for decision on a pure question of law
without a full-blown trial on the merits, the CA could not determine whether the facts of the case
were within the ambit of the aforecited sections of RA No. 7160. Thus, the CA held that the
absence of such evidence necessitated the remand of the case to the trial court. Hence, this
Petition.

ISSUE/s:

 Whether the imposition of service fee is valid.

RULING/s:

         No. By the express language of section 153 and 155 RA 7160, local government units,
through their sanggunian, may prescribe the terms and conditions for the imposition of toll fees
or charges for the use of any public road, pier or wharf funded and constructed by them. A
service fee imposed on vehicles using municipal roads leading to the wharf is thus valid,
however, section 133 (e) of RA 7160 prohibits the imposition, in the guise of wharfage fees —
as well as other taxes or charges in any form whatsoever on goods or merchandise. It is therefore
irrelevant if the fee imposed are actually for police surveillance on the goods, because any other
form of imposition on goods passing through the territorial jurisdiction of the municipality is
clearly prohibited by section 133 (e).
 
 23. PLDT v.  Province of Laguna, G.R. No. 151899 dated August 16, 2005  

PLDT vs Laguna
 
Facts:
·        PLDT is a holder of a legislative franchise under Act No. 3436. The terms and conditions of its
franchise were later consolidated under Republic Act No. 7082, Section 12 of which embodies
the so-called “in lieu of all taxes clause”, where PLDT shall pay, a franchise tax equivalent to
3% of all its gross receipts.
·        The Province of Laguna, through its local legislative assembly enacted a provincial ordinance
imposing a franchise tax upon all businesses enjoying a franchise which includes PLDT.
·        The Department of Finance thru its Bureau of Local Government Finance, issued a ruling to
the effect that PLDT, among others, became exempt from local franchise tax.
 
Issue: Does RA No. 7925 (Public Telecommunications Policy Act of the Philippines) operate to
exempt PLDT to pay franchise tax?
 
Ruling:
 
No. To begin with, tax exemptions are highly disfavored. The reason for this was explained by
this Court in Asiatic Petroleum Co. v. Llanes, in which it was held:
. . . Exemptions from taxation are highly disfavored, so much so that they may almost be said to
be odious to the law. He who claims an exemption must be able to point to some positive
provision of law creating the right. . . As was said by the Supreme Court of Tennessee in
Memphis vs. U. & P. Bank (91 Tenn., 546, 550), ‘The right of taxation is inherent in the State. It
is a prerogative essential to the perpetuity of the government; and he who claims an exemption
from the common burden must justify his claim by the clearest grant of organic or statute law.’
Other utterances equally or more emphatic come readily to hand from the highest authority. In
Ohio Life Ins. and Trust Co. vs. Debolt (16 Howard, 416), it was said by Chief Justice Taney,
that the right of taxation will not be held to have been surrendered, ‘unless the intention to
surrender is manifested by words too plain to be mistaken.’ In the case of the Delaware Railroad
Tax (18 Wallace, 206, 226), the Supreme Court of the United States said that the surrender, when
claimed, must be shown by clear, unambiguous language, which will admit of no reasonable
construction consistent with the reservation of the power. If a doubt arises as to the intent of the
legislature, that doubt must be solved in favor of the State. In Erie Railway Company vs.
Commonwealth of Pennsylvania (21 Wallace, 492, 499), Mr. Justice Hunt, speaking of
exemptions, observed that a State cannot strip itself of the most essential power of taxation by
doubtful words. ‘It cannot, by ambiguous language, be deprived of this highest attribute of
sovereignty.’ In Tennessee vs. Whitworth (117 U.S., 129, 136), it was said: ‘In all cases of this
kind the question is as to the intent of the legislature, the presumption always being against any
surrender of the taxing power.’ In Farrington vs. Tennessee and County of Shelby (95 U.S., 379,
686), Mr. Justice Swayne said: ‘. . . When exemption is claimed, it must be shown indubitably to
exist. At the outset, every presumption is against it. A well-founded doubt is fatal to the claim. It
is only when the terms of the concession are too explicit to admit fairly of any other construction
that the proposition can be supported.’
The tax exemption must be expressed in the statute in clear language that leaves no
doubt of the intention of the legislature to grant such exemption. Even if it is granted, the
exemption must be interpreted in strictly against the taxpayer and liberally in favor of the taxing
authority. In approving Section 23 of 7925, Congress intended it to operate as a blanket tax
exemption to all telecommunications entities. Applying the rule of strict construction of laws
granting tax exemptions and the rule that doubts should be resolved in favor of municipal
corporations in interpreting statutory provisions on municipal taxing powers, we hold that the
law does not entitle exemption.
24. Yamane v. BA Lepanto Condo Corp., SC G.R. No. 154993 dated  October 25, 2005
(condominium  corporation is not business entity)   

Facts: Respondent BA-Lepanto Condominium Corporation  is a duly organized condominium

corporation constituted in accordance with the Condominium Act, which owns and holds title to
the common and limited common areas of the BA-Lepanto Condominium (the “Condominium”),
situated in Paseo de Roxas, Makati City. Its membership comprises the various unit owners of
the Condominium. The Corporation is authorized, under Article V of its Amended By-Laws, to
collect regular assessments from its members for operating expenses, capital expenditures on the
common areas, and other special assessments as provided for in the Master Deed with
Declaration of Restrictions of the Condominium.

On 15 December 1998, the Corporation received a Notice of Assessment dated 14 December

1998 signed by the City Treasurer. The Notice of Assessment stated that the Corporation is
“liable to pay the correct city business taxes, fees and charges,” computed as totaling
₱1,601,013.77 for the years 1995 to 1997. The Notice of Assessment was silent as to the
statutory basis of the business taxes assessed.

Through counsel, the Corporation responded with a written tax protest dated 12 February 1999,
addressed to the City Treasurer. It was evident in the protest that the Corporation was perplexed
on the statutory basis of the tax assessment. It assert that there has no basis as the Corporation is
not liable for business taxes and surcharges and interest thereon, under the Makati [Revenue]
Code or even under the Local Government Code

From the denial of the protest, the Corporation filed an Appeal with the Regional Trial Court
(RTC) of Makati. On 1 March 2000, the Makati RTC Branch 57 rendered a Decision9 dismissing
the appeal for lack of merit. Accepting the premise laid by the City Treasurer, the RTC
acknowledged, in sadly risible language, the RTC concluded that the activities of the
Corporation fell squarely under the definition of “business” under Section 13(b) of the Local
Government Code, and thus subject to local business taxation.11

From this Decision of the RTC, the Corporation filed a Petition for Review under Rule 42 of the
Rules of Civil Procedure with the Court of Appeals. Initially, the petition was dismissed outright
on the ground that only decisions of the RTC brought on appeal from a first level court could be
elevated for review under the mode of review prescribed under Rule 42. However, the
Corporation pointed out in its Motion for Reconsideration that under Section 195 of the Local
Government Code, the remedy of the taxpayer on the denial of the protest filed with the local
treasurer is to appeal the denial with the court of competent jurisdiction. Persuaded by this
contention, the Court of Appeals reinstated the petition.

On 7 June 2002, the Court of Appeals Special Sixteenth Division rendered the Decision and 
reversed the RTC decision and declared that the Corporation was not liable to pay business taxes
to the City of Makati.

Issue: Whether the City of Makati may collect business taxes on condominium corporations.

Held: No, because the condo corp existence is not intended for the incurrence of profit but to
shoulder the expenses for the maintenance of the Condominium project.
Under Section 151 of the Local Government Code, cities such as Makati are authorized to levy
the same taxes fees and charges as provinces and municipalities. In Article II, Title II, Book II of
the Local Government Code, governing municipal taxes, where the provisions on business
taxation relevant to this petition may be found. Also, nowhere therein is there 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.

In the instant case, the assessment which appears to be based solely on the Corporation’s
collection of assessments from unit owners, such assessments being utilized to defray the
necessary expenses for the Condominium Project and the common areas. There is no
contemplation of business, no orientation towards profit in this case. The assailed tax assessment
has no basis under the Local Government Code or the Makati Revenue Code, and the insistence
of the city in its collection of the void tax constitutes an attempt at deprivation of property
without due process of law.

Hence, the collection of business taxes from condominiums in Makati is void.

 25. Ericsson  Telecoms Inc. v. City of Pasig, G.R. No. 176667 dated  November   22, 2007  

FACTS:

·       Ericsson Telecommunications, Inc. (petitioner), a corporation engaged in the design,

engineering, and marketing of telecommunication facilities/system, was assessed twice by the
City Treasurer of Pasig City business tax deficiency for several years based on its gross revenues
as reported on its audited financial statements. Petitioner filed a Protest claiming that the
computation of the local business tax should be based on gross receipts and not on gross revenue.

·       Respondent denied petitioner's protest and gave the latter 30 days within which to appeal the
denial. This prompted petitioner to file a petition for review[1] with the Regional Trial Court
(RTC) of Pasig praying for the annulment and cancellation of petitioner's deficiency local
business taxes totaling P17,262,205.66.

·       Respondent and its City Treasurer filed a motion to dismiss on the grounds that the court had
no jurisdiction over the subject matter and that petitioner had no legal capacity to sue.

·       RTC – cancelled and set aside the assessments

·       CA – reversed the RTC. MR denied. Hence, this petition.

·       Respondent assessed deficiency local business taxes on petitioner based on the latter's gross
revenue as reported in its financial statements, arguing that gross receipts is synonymous with
gross earnings/revenue, which, in turn, includes uncollected earnings.

·       Petitioner, however, contends that only the portion of the revenues which were actually and
constructively received should be considered in determining its tax base.

ISSUE: Whether the local business tax on contractors should be based on gross receipts or gross
revenue. 

HELD: It must be based on gross receipts.

·       Insofar as petitioner is concerned, the applicable provision is subsection (e), Section 143 of the
same Code covering contractors and other independent contractors. Said provision specifically
refers to gross receipts which is defined under Section 131 of the Local Government Code, as
follows: (n) "Gross Sales or Receipts" include the total amount of money or its equivalent
representing the contract price, compensation or service fee, including the amount charged or
materials supplied with the services and the deposits or advance payments actually or
constructively received during the taxable quarter for the services performed or to be performed
for another person excluding discounts if determinable at the time of sales, sales return, excise
tax, and value-added tax (VAT).
·       The law is clear. Gross receipts include money or its equivalent actually or constructively
received in consideration of services rendered or articles sold, exchanged or leased, whether
actual or constructive. 

·       Receipt of income may be actual or constructive. We have held that the withholding process
results in the taxpayer's constructive receipt of the income withheld.

·       Article 531 of the Civil Code clearly provides that the acquisition of the right of possession is
through the proper acts and legal formalities established therefor. The withholding process is one
such act. There may not be actual receipt of the income withheld; however, as provided for in
Article 532, possession by any person without any power whatsoever shall be considered as
acquired when ratified by the person in whose name the act of possession is executed.

·       In our withholding tax system, possession is acquired by the payor as the withholding agent of
the government, because the taxpayer ratifies the very act of possession for the government.
There is thus constructive receipt. The processes of bookkeeping and accounting for interest on
deposits and yield on deposit substitutes that are subjected to FWT are indeed-for legal purposes-
tantamount to delivery, receipt or remittance.
·       "Constructive receipt" occurs when the money consideration or its equivalent is placed at the
control of the person who rendered the service without restrictions by the payor. The following
are examples of constructive receipts: (1) deposit in banks which are made available to the seller
of services without restrictions; (2) issuance by the debtor of a notice to offset any debt or
obligation and acceptance thereof by the seller as payment for services rendered; and (3) transfer
of the amounts retained by the payor to the account of the contractor.

·       Respondent committed a palpable error when it assessed petitioner's local business tax based on
its gross revenue as reported in its audited financial statements, as Section 143 of the Local
Government Code and Section 22(e) of the Pasig Revenue Code clearly provide that the tax
should be computed based on gross receipts.
The imposition of local business tax based on petitioner'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 petitioner's 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.

26. Lepanto  Consolidated Mining Company v. Hon. Mauricio  B. Ambaloc in his capacity as 
the Provincial Treasurer of  Benguet, G.R. No. 180639 dated June 29, 2010 

11. Province of Bulacan v. Court of Appeals, GR 126232 dated November 27, 1998

Facts: 
• Provincial Ordinance No. 3, known as "An ordinance Enacting the Revenue Code of the
Bulacan Province," took effect on July 1, 1992. Section 21 of the ordinance provides as follows:
• Section 21. Imposition of Tax. There is hereby levied and collected a tax of 10% of 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.
• Pursuant thereto, the Provincial Treasurer of Bulacan, assessed Republic Cement
Corporation 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.
Republic Cement formally contested the assessment but the same was denied by the Provincial
Treasurer.
• Republic Cement consequently filed a petition for declaratory relief with the Regional
Trial Court of Bulacan. The province filed a motion to dismiss the petition, which was granted
by the trial court which ruled that declaratory relief was improper, allegedly because a breach of
the ordinance had been committed by Republic Cement.
• Republic Cement filed a petition for certiorari with the Supreme Court, which referred
the same to the Court of Appeals.
• In the interim, the Province of Bulacan issued a warrant of levy against Republic Cement
due to its unpaid tax liabilities. Negotiations between the parties resulted in an agreement and
modus vivendi whereby Republic Cement agreed to pay under protest P1,262,346.00, 50% of the
tax assessed, in exchange for the lifting of the warrant of levy. In addition, they agreed to limit
the issue for resolution of the CA to the question as to whether or not the provincial government
could impose and/or assess taxes on stones, sand, gravel, earth and other quarry resources
extracted by Republic Cement from private lands.
• The Court of Appeals declared the assessment void and held that the Province of Bulacan
is without legal authority to impose and assess taxes on quarry resources extracted from private
lands. Motion for reconsideration was denied. Hence, this appeal.

Issues/ Ruling: 

1. WON A Province has authority to impose taxes on stones, sand, gravel, earth and other
quarry resources extracted from private land

YES, The pertinent provisions of the Local Government Code (LGC) are as follows: Sec. 134.
Scope of Taxing Powers. - Except as otherwise provided in this Code, the province may levy
only the taxes, fees, and charges as provided in this Article.

Sec. 138. Tax on Sand, Gravel and Other Quarry Resources. - The province may levy and collect
not more than ten percent (10%) of fair market value in the locality per cubic meter of ordinary
stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal
Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers,
streams, creeks, and other public waters within its territorial jurisdiction.

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 LGC,
subject to the conditions specified therein.

Nonetheless, provinces are still prohibited from imposing taxes on stones, sand, gravel, earth and
other quarry resources extracted from private lands.
2. WON LGUs can impose excise taxes on articles enumerated under the National Internal
Revenue Code

NO, 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.

The Local Government Code provides:  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 (h) Excise taxes on articles enumerated under the National Internal Revenue
Code, as amended, and taxes, fees or charges on petroleum products; 

Section 151 of the National Internal Revenue Code levies a tax on all quarry resources,
regardless of origin, whether extracted from public or private land. Thus, a province may not
ordinarily impose taxes on stones, sand, gravel, earth and other quarry resources, as the same are
already taxed under the National Internal Revenue Code. The province can, however, impose a
tax on stones, sand, gravel, earth and other quarry resources extracted from public land because it
is expressly empowered to do so under the Local Government Code. As to stones, sand, gravel,
earth and other quarry resources extracted from private land, however, it may not do so, because
of the limitation provided by Section 133(h) of the Code in relation to Section 151 of the
National Internal Revenue Code.

The Province of Bulacan cannot claim that the appellate court unjustly deprived them of the
power to create their sources of revenue, their assessment of taxes against Republic Cement
being ultra vires, traversing as it does the limitations set by the Local Government Code.

No collateral attack on Provincial Ordinance No. 3  The Province of Bulacan likewise aver that
the appellate court's declaration of nullity of its assessment against Republic Cement is a
collateral attack on Provincial Ordinance No. 3, which is prohibited by public policy. Contrary to
petitioners' claim, what the appellate court questioned was the assessment of taxes on Republic
Cement on the basis of Provincial Ordinance No. 3, not the ordinance itself.

 Furthermore, Section 21 of Provincial Ordinance No. 3 is practically only a reproduction of

Section 138 of the Local Government Code. A cursory reading of both would show that both
refer to ordinary sand, stone, gravel, earth and other quarry resources extracted from public
lands.

Tax statutes are construed strictissimi juris against the government -  The Province of Bulacan
may not invoke the Regalian doctrine to extend the coverage of their ordinance to quarry
resources extracted from private lands, for taxes, being burdens, are not to be presumed beyond
what the applicable statute expressly and clearly declares, tax statutes being construed
strictissimi juris against the government.
26. Lepanto Consolidated Mining Company v. Hon. Mauricio B. Ambaloc in his capacity as the
Provincial Treasurer of Benguet, G.R. No. 180639 dated June 29, 2010

Facts: 

• The national government issued to petitioner Lepanto Consolidated Mining Company

(Lepanto) a mining lease contract covering, among others, its "TIKEM" leased mining claim at
Sitio Nayak, Barrio Palasan (Suyoc), Municipality of Mankayan, Benguet. The contract granted
Lepanto the right to extract and use for its purposes all mineral deposits within the boundary
lines of its mining claim. 
• (DENR) advised Lepanto that, under its contract, it did not have to get a permit to extract
and use sand and gravel from within the mining claim for its operational and infrastructure
needs. Based on this advice, Lepanto proceeded to extract and remove sand, gravel, and other
earth materials from the mining site.
• Respondent Mauricio Ambanloc, the provincial treasurer of Benguet, sent a demand
letter to Lepanto, asking it to pay the province P1,901,893.22 as sand and gravel tax, for the
quarry materials that it extracted from its mining site from 1997 to 2000. Lepanto sent a letter-
protest to the provincial treasurer, but the latter denied the same, insisting on payment.
• Lepanto filed a petition with the Regional Trial Court (RTC) of Benguet to question the
assessment. [1] The RTC ruled that Lepanto was liable for the amount assessed, with interest at
the rate of 2 percent per month from the time the tax should have been paid. Lepanto appealed
the RTC decision to the Court of Tax Appeals (CTA) where it was raffled to its Second Division.
[2] The Second Division affirmed the ruling of the RTC with the modification that the interest of
2 percent per month shall not exceed 36 months.[3]
• Lepanto appealed the decision of the Second Division to the CTA En Banc.[4] Three
justices of the CTA voted to affirm the decision but three justices dissented. Because the needed
vote of four members could not be obtained, the En Banc dismissed the appeal, resulting in the
affirmance of the decision of the Second Division. Lepanto's motion for reconsideration met the
same fate, hence, this appeal.
• Lepanto claims that the tax on sand and gravel applied only to commercial extractions. In
its case, it extracted these materials for use solely in its mining operations. Lepanto did not
supply other users for some profit. Thus, its extractions were not commercial and should not be
subject to provincial tax.
• In addition, the Petitioner’s argument that when a company is taxed on its main business
it can no longer be taxable for engaging in an activity that is but part of, incidental to, and
necessary to such main business, was held to be inapplicable.

Issue: 

Whether or not Lepanto is liable for the tax imposed by the Province of Benguet on the sand and
gravel that it extracted from within the area of its mining claim and used exclusively in its
mining operations.

Ruling:
YES. The CTA erred in applying the provision of the Local Government Code (Section 138)
since the basis of Benguet province emanates from the Revised Benguet Revenue Code itself.
This notwithstanding, the provincial revenue measure still did not distinguish between
commercial and non-commercial extractions. 

The  Supreme  Court  found that under the Revised Benguet Revenue Code, only gratuitous
permits were exempt from the sand and gravel tax, and Lepanto’s permit was not a gratuitous
permit. Hence, Lepanto was liable to pay the provincial sand and gravel tax.

The provincial revenue code provides that the subject tax had to be paid prior to the issuance of
the permit to extract sand and gravel. Its Article D, Section 2, enumerates four kinds of permits:
commercial, industrial, special, and gratuitous. Special permits covered only personal use of the
extracted materials and did not allow the permits to sell materials coming from his concession.
Among applicants for permits, however, only gratuitous permits were exempt from the sand and
gravel tax. It follows that persons who applied for special permits needed to pay the tax, even
though they did not extract materials for commercial purposes. Thus, the tax needed to be paid
regardless of the applicability of the administrative and reportorial requirements of that revenue
code

In the Petitioner’s argument that when a company is taxed on its main business it can no longer
be taxable for engaging in an activity that is but part of, incidental to, and necessary to such main
business, was held to be inapplicable.  The Court said that the cases where the above principle
has been applied involved business taxes and thus the incidental activities could not be treated as
separate and distinct from the main business. Here the tax being imposed was an excise tax
levied on the privilege of extracting gravel and sand. Here the tax is an excise tax imposed on the
privilege of extracting sand and gravel. And it is settled that provincial governments can levy
excise taxes on quarry resources independently from the national government.

 
27. Angeles City v. Angeles City Electric Corporation and Regional  Trial  Court Branch
57, Angeles City, G.R. No. 166134 dated June 29, 2010 

FACTS:

In 1974, Presidential Decree No. 551 (PD 551) reduced the franchise tax of electric franchise
holders to “two percent (2%) of their gross receipts.”

In 1992, Republic Act No. 7160 or the Local Government Code (LGC) of 1991 was passed into
law, conferring upon provinces and cities the power to impose tax on businesses enjoying
franchise.

In accordance with the LGC, the Sangguniang Panlungsod of Angeles City enacted Tax
Ordinance No. 33, S-93, otherwise known as the Revised Revenue Code of Angeles City
(RRCAC).

In 2004, the Angeles City Treasurer issued a Notice of Assessment to AEC for payment of
business tax, license fee and other charges for the period 1993 to 2004 in the total amount of
P94,861,194.10. AEC protested the assessment claiming that since it is already paying franchise
tax on business, the payment of business tax would result in double taxation, and collection of
taxes under the RRCAC cannot be made retroactive to 1993 or prior to its effectivity. The City
Treasurer denied the protest.

AEC appealed the denial of its protest to the RTC of Angeles City via a Petition for Declaratory
Relief.

Meanwhile, the City Treasurer issued a Notice of Auction Sale on the real properties of AEC.
This prompted AEC to seek a Temporary Restraining Order (TRO) with the RTC. Upon posting
of the required bond by AEC, the RTC issued a Writ of Preliminary Injunction to enjoin Angeles
City and its City Treasurer from levying, selling and disposing at public auction the properties of
AEC.

Angeles City and its City Treasurer filed a "Motion for Dissolution of Preliminary Injunction”
which the RTC denied.

ISSUE: Whether the RTC gravely abused its discretion in issuing the writ of preliminary
injunction enjoining Angeles City and its City Treasurer from levying, selling, and disposing the
properties of AEC.

HELD: NO. There was no grave abuse of discretion committed by the RTC.

A principle deeply embedded in our jurisprudence is that taxes being the lifeblood of the
government should be collected promptly, without unnecessary hindrance or delay. In line with
this principle, the National Internal Revenue Code of 1997 (NIRC) expressly provides that no
court shall have the authority to grant an injunction to restrain the collection of any national
internal revenue tax, fee or charge imposed by the code. An exception to this rule obtains only
when in the opinion of the Court of Tax Appeals (CTA) the collection thereof may jeopardize the
interest of the government and/or the taxpayer.

The situation, however, is different in the case of the collection of local taxes as there is no
express provision in the LGC prohibiting courts from issuing an injunction to restrain local
governments from collecting taxes.

Unlike the National Internal Revenue Code, the Local Tax Code does not contain any specific
provision prohibiting courts from enjoining the collection of local taxes. Such statutory lapse or
intent, however it may be viewed, may have allowed preliminary injunction where local taxes are
involved but cannot negate the procedural rules and requirements under Rule 58.

In light of the foregoing, petitioner’s reliance on the above-cited case to support its view that the
collection of taxes cannot be enjoined is misplaced. The lower court’s denial of the motion for
the issuance of a writ of preliminary injunction to enjoin the collection of the local tax was
upheld in that case, not because courts are prohibited from granting such injunction, but because
the circumstances required for the issuance of writ of injunction were not present.

Nevertheless, it must be emphasized that although there is no express prohibition in the LGC,
injunctions enjoining the collection of local taxes are frowned upon. Courts therefore should
exercise extreme caution in issuing such injunctions.
28. Tiu v. CA, GR 127410 dated January 20, 1999   

Tiu vs CA
FACTS:
• RA 7227 (An Act Accelerating the Conversion of Military Bases into Other Productive
Uses) was passed into Law. Section 12 of which created the Subic Special Economic Zone and
granted special privileges such as tax exemptions and duty-free importation of raw materials,
capital and equipment to business enterprises and residents located and residing in said zones.
• On 10 June 1993, President Ramos issued EO 97-A, specifying the area within which the
tax- and duty-free privilege was operative.
• On 26 October 1994, Conrado L. Tiu, et. al., challenged before the Supreme Court the
constitutionality of EO 97-A for allegedly being violative of their right to equal protection of the
laws, inasmuch as the order granted tax and duty incentives only to businesses and residents
within the “secured area” of the Subic Special Economic Zone and denying them to those who
live within the Zone but outside such “fenced-in” territory.
• When the case was referred by the SC to the CA, the latter denied the petition. According
to the CA, there is no substantial difference between the provisions of EO 97-A and Section 12
of RA 7227, holding that EO 97-A cannot be claimed to be unconstitutional while maintaining
the validity of RA 7227; that the intention of Congress to confine the coverage of the SSEZ to
the secured area and not to include the entire Olongapo City and other areas rely on the
deliberations in the Senate; and that the limited application of the tax incentives is within the
prerogative of the legislature, pursuant to its “avowed purpose [of serving] some public benefit
or interest.
• Disagreeing with the CA, petitioner now comes before the SC for a petition for review.

ISSUE: WoN EO-97 is unconstitutional for being violative of equal protection of the laws.

RULING: No, EO-97 is constitutional.

The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable
classification. The classification occasioned by EO 97-A was not unreasonable, capricious or
unfounded. It was based, rather, on fair and substantive considerations that were germane to the
legislative purpose.
The constitutional rights to equal protection of the law is not violated by an executive order,
issued pursuant to law, granting tax and duty incentives only to the business and residents within
the “secured area” of the Subic Special Economic Zone and denying them to those who live
within the Zone but outside such “fenced-in” territory. The Constitution does not require
absolute equality among residents. It is enough that all persons under like circumstances or
conditions are given the same privileges and required to follow the same obligations. In short, a
classification based on valid and reasonable standards does not violate the equal protection
clause.
29. Iloilo Bottlers v. City  of Iloilo, GR L-52019 dated August  19, 1988 
  
Facts:
Iloilo Bottlers Inc. filed a complaint with the CFI of Iloilo for the recovery of the sum of
P3,329.20, which allegedly constituted payments of municipal license taxes under Iloilo City
Tax Ordinance No. 5 series of 1960 that the company paid under protest.
Among the arguments of Iloilo Bottlers Inc. were as follows:
- That it already closed its bottling plant at Muelle Loney, Iloilo City, and
transferred its bottling operations to its new plant in Barrio Ungca, Municipality of Pavia,
Province of Iloilo, which is outside the jurisdiction of the City of Iloilo
- That it could not anymore be liable to pay the municipal license fee
because its bottling plant (was) not anymore inside the City of Iloilo, and that moreover,
since it itself (sold) its own products to its (customers) directly, it could not be considered
as a distributor
- That the plaintiff does not maintain any store or commercial establishment
in the City of Iloilo from which it distributes its products, but by means of a fleet of
delivery trucks, plaintiff distributes its products from its bottling plant at Barrio Ungca
Municipality of Pavia, Iloilo, directly to its customers in the different towns of the
Province of Iloilo as well as the City of Iloilo;
- That the plaintiff is already paying the National Government a percentage
Tax on all the softdrinks it manufactures

The CFI rendered on January 26, 1973 a decision in favor of Iloilo Bottlers, Inc.
declaring the Corporation not liable under the ordinance. The City of Iloilo appealed to the Court
of Appeals which certified the case to this Court.

ISSUE: WON Iloilo Bottlers Inc. is liable is liable under Iloilo City tax Ordinance No. 5, series
of 1960, as amended, which imposes a municipal license tax on distributors of soft-drinks.

HELD: YES 
Iloilo Bottlers, Inc. disclaims liability on two grounds: 
1) Since it is not engaged in the independent business of distributing soft-drinks, but
that its activity of selling is merely an incident to, or is a necessary consequence of its main or
principal business of bottling, then it is NOT liable under the city tax ordinance. 
2) Only manufacturers or bottlers having their plants inside the territorial jurisdiction
of the city are covered by the ordinance.

The second ground is manifestly devoid of merit. It is clear from the ordinance that three
types of activities are covered: (1) distribution, (2) manufacture and (3) bottling of softdrinks. A
person engaged in any or all of these activities is subject to the tax.

The first ground, however, merits serious consideration.

To determine whether an entity engaged in the principal business of manufacturing, is

likewise engaged in the separate business of selling, its marketing system or sales operations
must be looked into.
 There are two marketing systems: Under the first system, the manufacturer enters into
sales transactions and invoices the sales at its main office where purchase orders are received and
approved before delivery orders are sent to the company's warehouses, where in turn actual
deliveries are made. No warehouse sales are made; nor are separate stores maintained where
products may be sold independently from the main office. The warehouses only serve as storage
sites and delivery points of the products earlier sold at the main office. Under the second system,
sales transactions are entered into and perfected at stores or warehouses maintained by the
company. Any one who desires to purchase the product may go to the store or warehouse and
there purchase the merchandise. The stores and warehouses serve as selling centers.

Entities operating under the first system are NOT considered engaged in the separate
business of selling or dealing in their products, independent of their manufacturing business.
Entities operating under the second system are considered engaged in the separate business of
selling.

In the case at bar, the company distributed its softdrinks by means of a fleet of delivery
trucks which went directly to customers in the different places in lloilo province. Sales
transactions with customers were entered into and sales were perfected and consummated by
route salesmen. Truck sales were made independently of transactions in the main office. The
delivery trucks were not used solely for the purpose of delivering softdrinks previously sold at
Pavia. They served as selling units. They were what were called, until recently, "rolling stores".
The delivery trucks were therefore much the same as the stores and warehouses under the second
marketing system. Iloilo Bottlers, Inc. thus falls under the second category above. That is, the
corporation was engaged in the separate business of selling or distributing soft-drinks,
independently of its business of bottling them.
30. Angeles v. Angeles Electric  Corp., GR  166134 dated June 29, 2010 

G.R. No. 166134               June 29, 2010

ANGELES CITY, Petitioner, 
vs.
ANGELES CITY ELECTRIC CORPORATION and REGIONAL TRIAL COURT
BRANCH 57, ANGELES CITY, Respondents.
 
FACTS:
On June 18, 1964, AEC was granted a legislative franchise under Republic Act No. (RA)
4079 to construct, maintain and operate an electric light, heat, and power system for the purpose
of generating and distributing electric light, heat and power for sale in Angeles City, Pampanga.
 
On September 11, 1974, Presidential Decree No. 551 (PD 551) reduced the franchise tax
of electric franchise holders to “two percent (2%) of their gross receipts.”
 
On January 1, 1992, RA 7160 or the Local Government Code (LGC) of 1991 was passed
into law, conferring upon provinces and cities the power to impose tax on businesses enjoying
franchise. In accordance with the LGC, the Sangguniang Panlungsod of Angeles City enacted the
Revised Revenue Code of Angeles City (RRCAC).
 
On January 22, 2004, the City Treasurer issued a Notice of Assessment to AEC for
payment of business tax, license fee and other charges for the period 1993 to 2004 which was
protested by the AEC. The protest of AEC was denied by the City Treasurer. 
 
On April 5, 2004, the City Treasurer levied on the real properties of AEC and published a
Notice of Auction Sale. This prompted AEC to file with the RTC an Urgent Motion for Issuance
of Temporary Restraining Order and/or Writ of Preliminary Injunction to enjoin Angeles City
and its City Treasurer from levying, annotating the levy, seizing, confiscating, garnishing, selling
and disposing at public auction the properties of AEC.
 
After due notice and hearing, the RTC issued a Temporary Restraining Order (TRO) and,
upon AEC’s posting of the required bond, the Writ of Preliminary Injunction. On August 5,
2004, Angeles City and its City Treasurer filed a "Motion for Dissolution of Preliminary
Injunction” which was denied by the RTC.
 
ISSUE: Did the RTC gravely abused its discretion in issuing the writ of preliminary injunction?
 
RULING: NO.
It is true that taxes being the lifeblood of the government should be collected promptly, without
unnecessary hindrance or delay. As expressly provided in the NIRC, 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. However, this does not apply 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.
 
Unlike the National Internal Revenue Code, the Local Tax Code does not contain any specific
provision prohibiting courts from enjoining the collection of local taxes. Such statutory lapse or
intent, however it may be viewed, may have allowed preliminary injunction where local taxes are
involved but cannot negate the procedural rules and requirements under Rule 58.
 
The lower courts may deny the motion for the issuance of a writ of preliminary injunction to
enjoin the collection of the local tax, not because courts are prohibited from granting such
injunction, but because the circumstances required for the issuance of writ of injunction were not
present.
 
Nevertheless, it must be emphasized that although there is no express prohibition in the LGC,
injunctions enjoining the collection of local taxes are frowned upon. Courts therefore should
exercise extreme caution in issuing such injunctions. 
a. Lung Center  of the Philippines v.  Quezon City, G.R. No. 144104 dated  June 29, 2004
(Exemption based on actual use)   

Facts:
The petitioner Lung Center is a non-stock and non-profit entity.
It is the registered owner of a parcel of land. Erected in the middle lot is a hospital known as the
Lung Center of the Philippines. A big space at the ground floor is being leased to private parties,
for canteen and small store spaces, and to medical or professional practitioners who use the same
as their private clinics for their patients whom they charge for their professional services.
Almost one-half of the entire area on the left side of the building along Quezon Avenue is vacant
and idle, while a big portion on the right side, at the corner, is being leased for commercial
purposes to a private enterprise known as the Elliptical Orchids and Garden Center.
The petitioner accepts paying and non-paying patients. It also renders medical services to out-
patients, both paying and non-paying. Aside from its income from paying patients, the petitioner
receives annual subsidies from the government.
Both the land and the hospital building of the petitioner were assessed for real property taxes in
the amount of P4,554,860 by the City Assessor of Quezon City.
The petitioner filed a Claim for Exemption from real property taxes with the City Assessor,
predicated on its claim that it is a charitable institution. The petitioner’s request was denied.

Issue:
Whether the real properties of the petitioner are exempt from real property taxes

Ruling:
Those portions of its real property that are leased to private entities are not exempt from real
property taxes as these are not actually, directly and exclusively used for charitable purposes.

The settled rule in this jurisdiction is that laws granting exemption from tax are construed
strictissimi juris against the taxpayer and liberally in favor of the taxing power. Taxation is the
rule and exemption is the exception. The effect of an exemption is equivalent to an
appropriation. Hence, a claim for exemption from tax payments must be clearly shown and based
on language in the law too plain to be mistaken.

Section 2 of Presidential Decree No. 1823, relied upon by the petitioner, specifically provides
that the petitioner shall enjoy the tax exemptions and privileges: The Lung Center of the
Philippines shall be exempt from the payment of taxes, charges and fees imposed by the
Government or any political subdivision or instrumentality thereof with respect to equipment
purchases made by, or for the Lung Center.
It is plain as day that under the decree, the petitioner does not enjoy any property tax exemption
privileges for its real properties as well as the building constructed thereon. If the intentions were
otherwise, the same should have been among the enumeration of tax exempt privileges under
Section 2.

Section 28(3), Article VI of the 1987 Philippine Constitution provides, thus: Charitable
institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit
cemeteries, and all lands, buildings, and improvements, actually, directly and exclusively used
for religious, charitable or educational purposes shall be exempt from taxation.
The tax exemption under this constitutional provision covers property taxes only. What is
exempted is not the institution itself . . .; those exempted from real estate taxes are lands,
buildings and improvements actually, directly and exclusively used for religious, charitable or
educational purposes.”

In light of the changes in the Constitution, the petitioner cannot rely on our ruling in Herrera v.
Quezon City Board of Assessment Appeals which was promulgated on September 30, 1961
before the 1973 and 1987 Constitutions took effect.
Under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in order to be entitled to the
exemption, the petitioner is burdened to prove, by clear and unequivocal proof, that (a) it is a
charitable institution; and (b) its real properties are ACTUALLY, DIRECTLY and
EXCLUSIVELY used for charitable purposes.
b. Mactan Airport Authority v. Pres.  Marcos, G.R. No. 120082  dated  September 11, 1996
(Exemption from  real  property  tax lifted  by RA  7160, or the LGC)   

Facts:

Petitioner MCIAA was created by virtue of Republic Act No. 6958, mandated to "principally
undertake the economical, efficient and effective control, management and supervision of the
Mactan International Airport in the Province of Cebu and the Lahug Airport in Cebu City, . . .
and such other Airports as may be established in the Province of Cebu.
Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from
payment of realty taxes in accordance with Section 14 of its Charter.

Sec. 14. Tax Exemptions. — The authority shall be exempt from realty taxes
imposed by the National Government or any of its political subdivisions, agencies
and instrumentalities.

Mr. Cesa, Officer-in-Charge, Office of the Treasurer of the City of Cebu, demanded payment for
realty taxes on several parcels of land belonging to the petitioner. Petitioner objected to such
demand for payment as baseless and unjustified, claiming in its favor Section 14 of RA 6958
which exempts it from payment of realty taxes.
 
Respondent City refused to cancel and set aside petitioner's realty tax account, insisting that the
MCIAA is a government-controlled corporation whose tax exemption privilege has been
withdrawn by virtue of Sections 193 and 234 of the LGC.
 
Sec. 193. Withdrawal of Tax Exemption Privilege. — 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 RA No. 6938, non-stock, and non-profit hospitals and
educational institutions, are hereby withdrawn upon the effectivity of this Code.
Sec. 234. Exemptions from Real Property taxes. — . . .

(a) . . .

x x x           x x x          x x x

(c) . . .
Except as provided herein, any exemption from payment of real property tax
previously granted to, or presently enjoyed by all persons, whether natural or
juridical, including government-owned or controlled corporations are hereby
withdrawn upon the effectivity of this Code.

Issue: Whether or not Mactan Airport Authority is exempt from real property tax.

Ruling: NO. Petitioners exemption from such tax granted in Section 14 of its charter, R.A. No.
6958, has been withdrawn/ expressly repealed by the provisions of RA 7160 or the LGC.
 
There can be no question that under Section 14 of R.A. No. 6958, petitioner is exempt from the
payment of realty taxes imposed by the National Government or any of its political subdivisions,
agencies, and instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom
the exception, the exemption may thus be withdrawn at the pleasure of the taxing authority. The
only exception to this rule is where the exemption was granted to private parties based on
material consideration of a mutual nature, which then becomes contractual and is thus covered
by the non-impairment clause of the Constitution.
 
Section 234 of LGC provides for the exemptions from payment of real property taxes and
withdraws previous exemptions therefrom granted to natural and juridical persons, including
government owned and controlled corporations, except as provided therein. (exemptions are
based on the ownership, character, and use of the property)
 
Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges.
 
As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical
persons, including government-owned and controlled corporations, Section 193 of the LGC
prescribes the general rule: they are withdrawn upon the effectivity of the LGC, except upon the
effectivity of the LGC, except those granted to local water districts, cooperatives duly registered
under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, and unless
otherwise provided in the LGC.
 
The latter proviso could refer to Section 234, which enumerates the properties exempt from real
property tax. But the last paragraph of Section 234 further qualifies the retention of the
exemption in so far as the real property taxes are concerned by limiting the retention only to
those enumerated there-in; all others not included in the enumeration lost the privilege upon the
effectivity of the LGC. 
 
Moreover, even as the real property is owned by the Republic of the Philippines, or any of its
political subdivisions covered by item (a) of the first paragraph of Section 234, the exemption is
withdrawn if the beneficial use of such property has been granted to taxable person for
consideration or otherwise.
 
Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC,
exemptions from real property taxes granted to natural or juridical persons, including
government-owned or controlled corporations, except as provided in the said section, and the
petitioner is, undoubtedly, a government-owned corporation, it necessarily follows that its
exemption from such tax granted it in Section 14 of its charter, R.A. No. 6958, has been
withdrawn.
 
The petitioner cannot claim that it was never a "taxable person" under its Charter. It was only
exempted from the payment of real property taxes. The grant of the privilege only in respect of
this tax is conclusive proof of the legislative intent to make it a taxable person subject to all
taxes, except real property tax.
 
Even if the petitioner was originally not a taxable person for purposes of real property tax, in
light of the forgoing disquisitions, it had already become a taxable person for such purpose in
view of the withdrawal in the last paragraph of Section 234 of exemptions from the payment of
real property taxes, which applies to the petitioner.

c.  Manila International  Airport authority v. Court  of Appeals, G.R. No.  155650 dated July 20,
2006 (Exemption of  RPT of  MIAA)   
d. Quezon City Gov’t. v.  Bayantel  Corp., G.R. No. 162015  

FACTS:

Respondent Bayan Telecommunications, Inc. (Bayantel) is a legislative franchise holder under

R.A. 3259 to establish and operate radio stations for domestic telecommunications, radiophone,
broadcasting and telecasting.  Section 14(a) states: “The grantee shall be liable to pay the same
taxes on its real estate, buildings and personal property, exclusive of the franchise”. When the
LGC took effect in 1992, Sec. 232 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. 7633, amending Bayantel’s original franchise. Sec. 11 of RA 7633 states: “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”. In 1993, QC gov’t enacted an
ordinance otherwise known as the Quezon City Revenue Code withdrawing tax exemption
privileges.

ISSUE: WON Bayantel’s real properties in QC are exempt from RPT under its franchise

HELD: YES.

A clash between the inherent taxing power of the legislature, which necessarily includes the
power to exempt, and the local government’s delegated power to tax under the aegis of the 1987
Constitution must be ruled in favor of the former. The grant of taxing powers to LGUs 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.

The legislative intent expressed in the phrase “exclusive of this franchise” cannot be construed
other than distinguishing between two sets of properties, be they real or personal, owned by the
franchisee: (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 admittedly falling under the first category.

Since RA 7633 was enacted subsequent to the LGC, perfectly aware that the LGC has already
withdrawn Bayantel’s former exemption from realty taxes, the Congress using, Section 11
thereof with exactly the same defining phrase “exclusive of this franchise” is the basis for
Bayantel’s exemption from realty taxes prior to the LGC. In plain language, 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 LGC’s delegated taxing power, all of the franchisee’s (Bayantel’s)
properties that are actually, directly and exclusively used in the pursuit of its franchise.
e. Sta. Lucia Realty and Development, Inc. v. City of Pasig, G.R. No. 166838 dated June 15,
2011

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. 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. 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.

             TCT No. 39110 was also divided into two lots, becoming TCT Nos. 92869 and
92870. The lot covered by TCT No. 38457 was not segregated, but a commercial building owned
by Sta. Lucia East Commercial Center, Inc., a separate corporation, was built on it.

             Upon Pasig’s petition to correct the location stated in TCT Nos. 532250, 598424,
and 599131, the Land Registration Court, on June 9, 1995, ordered the amendment of the TCTs
to read that the lots with respect to TCT No. 39112 were located in Barrio Tatlong Kawayan,
Pasig City.

             On January 31, 1994, Cainta filed a petition for the settlement of its land
boundary dispute with Pasig before the RTC, Branch 74 of Antipolo City. This case, docketed as
Civil Case No. 94-3006, is still pending up to this date.

             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. The RTC ruled in favor of Pasig. Upon Pasig's motion for execution pending
appeal, the same was granted by the RTC. The CA ruled in favor of Sta. Lucia. Hence, this
petition.

ISSUES:

             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?

             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 petition is granted.

Authority of the local government unit to collect real property taxes

             The Court agrees with the CA that the resolution of the boundary dispute between
Pasig and Cainta would determine which local government unit is entitled to collect realty taxes
from Sta. Lucia.

             Under Sections 5 and 57 of 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 Sections 201 and 233 of 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.

             Needless to state, any uncertainty in the boundaries of local government units will
sow costly conflicts in the exercise of governmental powers which ultimately will prejudice the
people's welfare. This is the evil sought to be avoided by the Local Government Code in
requiring that the land area of a local government unit must be spelled out in metes and bounds,
with technical descriptions.

             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.

             Although it is true that Pasig is the locality stated in the TCTs of the subject
properties, both Sta. Lucia and Cainta aver that the metes and bounds of the subject properties, as
they are described in the TCTs, reveal that they are within Cainta’s boundaries. This only means
that there may be a conflict between the location as stated and the location as technically
described in the TCTs. Mere reliance therefore on the face of the TCTs will not suffice as they
can only be conclusive evidence of the subject properties’ locations if both the stated and
described locations point to the same area.

             The Antipolo RTC, wherein the boundary dispute case between Pasig and Cainta
is pending, would be able to best determine once and for all the precise metes and bounds of both
Pasig’s and Cainta’s respective territorial jurisdictions. The resolution of this dispute would
necessarily ascertain the extent and reach of each local government’s authority, a prerequisite in
the proper exercise of their powers, one of which is the power of taxation.
             In light of the foregoing, the 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
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.

             The decision and resolution of the Court of Appeals are set aside.
f. Napocor  v. Province of Lanao, GR  96700 dated November  19, 1996  
Facts: Petitioner National Power Corporation (NPC) is the owner of certain real properties
situated in Saguiaran, Lanao del Sur, more particularly described in Tax Declarations issued by
the Office of the Provincial Assessor of Lanao del Sur. Said properties comprise petitioner's
Agus II Hydroelectric Power Plant Complex. Petitioner was assessed real estate taxes on said
properties in the amount of one hundred fifty four million one hundred fourteen thousand eight
hundred fifty four pesos and eighty two centavos (P154,114,854.82) covering the period from
June 14, 1984 to December 31, 1989, allegedly because petitioner's exemption from realty taxes
had been withdrawn. Two demand letters were sent by the respondent provincial treasurer to the
petitioner for the payment of real property taxes due on the properties. With the second demand
letter issuing a warning that unless the obligation was settled, legal remedies would be resorted
to by the respondent province. Petitioner filed a protest alleging that it is exempt from tax
pursuant to Commonwealth Act 120, Sec 2 of RA 358 and RA 6395. 

Issue: Whether petitioner has ceased to enjoy its tax and duty exemption privileges, including its
exemption from payment of real property taxes.

Ruling: No. Although Section 1 of PD 1931 withdrew all tax exemptions presumably including
those of petitioner, Section 2 thereof authorized and empowered the President and/or the
Minister of Finance to restore the same to deserving entities. A resolution was issued, restoring
the tax exemption to the petitioner. The Court held that the exemption is not only legally
defensible, but also logically unassailable. The properties in question comprise the site of the
entire Agus II Hydroelectric Power Plant Complex, which generates and supplies relatively
cheap electricity to the island of Mindanao. These are government properties, wholly owned by
petitioner and devoted directly and solely for public service and utilized in the implementation of
the state policy of bringing about the total electrification of the country at the least cost to the
public, through the development of power from all sources to meet the needs of industrial
development and rural electrification. It can be noted, from RA 6395, PD 380 and PD 938, that
petitioner's non-profit character has been maintained throughout its existence, and that petitioner
is mandated to devote all its returns from capital investment and excess revenues from operations
to its expansion. On account thereof, and to enable petitioner to pay its indebtedness and
obligations and in furtherance of the state policy on electrification and power generation,
petitioner has always been exempted from taxes.

Consequently, the assessment and levy on (as well as the sale of) the properties of petitioner by
respondents were null and void for having been made in violation of Section 10 of P.D. 938 and
Section 40 (a) of the Real Property Tax Code. Section 40(a) of the Real Property Tax Code, PD
464, as amended, expressly exempts them from such tax. Said section provides: “Exemptions
from Real Property Tax. -- The exemption shall be as follows: (a) Real property owned by the
Republic of the Philippines or any of its political subdivisions and any government-owned
corporation so exempt by its charter. Provided, however, that this exemption shall not apply to
real property of the above named entities the beneficial use of which has been granted, for
consideration or otherwise, to a taxable person. 

 
g. Raul Sesbreno v. CBAA, GR 89252 dated May  24, 1993 

FACTS:

          On April 3, 1980, petitioner purchased from Estrella Benedicto Tan two (2) parcels of land
covered by Transfer Certificate of Title No. T-55917 issued by the Register of Deeds of Cebu
City. The conveyance included "a residential house of strong materials constructed on the lots
above-mentioned" located in Cebu City.  Thereafter, petitioner declared the real property
constructed on the said lots for purposes of tax assessment as a residential house of strong
materials with a floor area of sixty (60) square meters. Effective in the year 1980, the declared
property was assessed by Respondent City Assessor of Cebu City under Tax Declaration No. 02-
20454 at a market value of P60,000.00 and an assessed value of P36,900.00.  During a tax-
mapping operation conducted in February 1989, the field inspectors of the Cebu City Assessor
discovered that the real property declared has excess portion not declared by the petitioner that's
why when they re-assessed the property value, it increased to P499,860.00, of which the
petitioner protested for being "excessive and unconscionable". During a tax-mapping operation
conducted in February 1989, the field inspectors of the Cebu City Assessor discovered that the
real property declared and assessed under Tax Declaration No. 02-20454 was actually a
residential building consisting of four (4) storeys with a fifth... storey used as a roof deck. The
building had a total floor area of 500.20 square meters. The area for each floor was 100.04
square meters. The building was found to have been made of Type II-A materials.  The petitioner
claims that Respondent CBAA err in considering the issue of back taxes, the same being closely
related to an error properly raised. The Respondent CBAA applied Section 25 of PD 464 which
had authorized the imposition of back taxes. The petitioner claims that Section 25 of PD 464
"refers solely to real estate declared for the first time and does not apply to the area which, upon
revision, has been shown to be in excess of that which was formerly declared." The CBAA held
that the area in excess of that declared by the taxpayer was deemed declared for the first time
upon its discovery.

ISSUE/s:

1. Whether Respondent CBAA should have applied Section 24, instead of Section 25, of PD
464.
2. Whether Respondent CBAA should have computed the assessed value of the property
based on its market value as defined in paragraph n, Section 3 of PD 464.
3. Whether CBAA erred in refusing to apply Section 23 of PD 464.
4. Whether CBAA’s assessment is unconstitutional.
5. Whether the assessed building is covered by PD 20.

RULING/s:

1. No. Opposing the application of Section 25 of PD 464, petitioner posits that Respondent
CBAA "misread or misinterpreted" the same, specifically the phrases therein referring to
 "property declared for the first time" and "prior to the year of initial assessment" Without
expressly stating so, petitioner purports to argue that Section 25 is inapplicable because
the property in question has been declared for assessment as early as 1980 (and even
before that, by the prior owner), and not "for the first time" in 1989.     

Furthermore, if Section 24 is the only applicable provision in cases where a taxpayer has
eluded the payment of the correct amount of taxes for more than nine (9) years, as in this
case, Section 25 of PD 464 which requires the payment of back taxes will be rendered
superfluous and nugatory. Such interpretation could not have been intended by the law. It
is a familiar rule in statutory construction that "(t)he legal provision being therefore
susceptible of two interpretations, we adopt the one in consonance with the presumed
intention of the legislature to give its enactments the most reasonable and beneficial
construction, the one that will render them operative and effective and harmonious with
other provisions of law."   

2. No. The cited provision merely defines "market value." It does not in any way direct that
the market value as defined therein should be used as basis in determining the value of a
property for purposes of real property taxation. On the other hand, Section 5 of PD 464
provides unequivocally that "(a)ll real property, whether taxable or exempt, shall be
appraised at the current and fair market value prevailing in the locality where the
property is situated." 

Contrary to petitioner's contention, acquisition cost cannot be and is not the sole basis of
the current and fair market value of a property. The current value of like properties and
their actual or potential uses, among others, are also considered. 
It is a matter of plain common sense that a building with more floors has a higher market
value than one with fewer floors, provided that both are of the same materials. Hence, the
tax declaration of the building in question should have accurately reflected its actual area
and number of floors, these being necessary for the accurate valuation thereof.

3.   No. Petitioner claims that Respondent City Assessor of Cebu City has not yet completed
the general revision of property assessments for years 1981-1984 and has not yet
submitted the certification required by Section 23 of PD 464 to the Secretary of Finance;
hence, he may not yet be held liable to pay any assessment. This claim lacks merit. As
found by Respondent CBAA,  the questioned assessment had not been imposed pursuant
to a general revision of property assessments that had not yet taken effect. The 1981-
1984 Schedule of Values were approved by the Secretary (Minister) of Finance on May
22, 1984 (Exh. "17") and became finally effective on July 1, 1987 (See Memorandum
Circular No. 77 dated March 1, 1987). The tax declaration covering the aforesaid
assessment became effective on July 1, 1987.
3. No. When both Public Respondents CBAA and City Assessor imposed back taxes on
petitioner's property, they did not violate the rule that laws shall have only prospective
applicability. Respondents were only applying PD 464 which had been in effect since
1974. Besides, Section 25 of PD 464 is not penal in character; hence, it may not be
considered as an ex post facto law.
 3. No. Petitioner also claims that the assessed building is covered by PD 20; thus the
assessor should have used the "income approach," as enunciated in Reyes vs. Almanzor, 
in fixing the valuation of the property, instead of the "comparable sales approach." The
documents were never presented as documentary exhibits before the City Assessor of
Cebu City, Local Board of Assessment Appeal or CBAA. This Court, not being a trier of
facts, cannot consider these alleged evidence submitted for the first time in this special
civil action.

  
h. Antonio Callanta v.  Ombudsman, GR  115253-74 dated January 30, 1998 
  
i. Belen Figuerres v. CA,  GR  119172 dated March 25, 1999 

Doctrine: After the proposed schedule of fair market values of the different classes of real
property in a local government unit within Metro Manila, as prepared jointly by the local
assessors of the district to which the city or municipality belongs, has been published or posted
in accordance with §212 of R.A. No. 7160 and enacted into ordinances by the sanggunians of the
municipalities and cities concerned, the ordinances containing the schedule of fair market values
must themselves be published or posted in the manner provided by §188 of R.A. No. 7160

Facts: Belen C. Figuerres is the owner of a parcel of land located at Amarillo Street, Barangay
Mauway, City of Mandaluyong.  In 1993, she received a notice of assessment from the municipal
assessor of the Municipality of Mandaluyong.

The assessment was based on a number of ordinances issued by the Sangguniang Bayan of
Mandaluyong. Ordinance No. 119 contains a schedule of fair market values of the different
classes of real property in the municipality. Ordinance No. 125 fixes the assessment levels
applicable to such classes of real property. Finally, Ordinance No. 135 amended Ordinance No.
119, by providing that only one third (1/3) of the increase in the market values applicable to
residential lands pursuant to the said ordinance shall be implemented in the years 1994, 1995,
and 1996.

Figuerres brought a prohibition suit in the CA against the Assessor, the Treasurer, and the
Sangguniang Bayan to stop them from enforcing the ordinances in question on the ground that
the ordinances were invalid for having been adopted allegedly without public hearings and prior
publication or posting and without complying with the implementing rules yet to be issued by the
Department of Finance.

CA dismissed the petition stating that the approval and determination by the Department of
Finance is not needed under the Local Government Code of 1991, since it is now the city council
of Mandaluyong that is empowered to determine and approve the aforecited ordinances. 
Furthermore, the Finance Local Assessment Regulation No. 1-92 provides for the rules relative
to the conduct of general revisions of real property assessments pursuant to Sections 201 and 219
of the Local Government Code of 1991.

Issue/s:.

1. Whether or not public hearings are required to be conducted prior to the enactment of an
ordinance imposing real property taxes

2. Whether or not there is a need for the publication of fair market values.

Held:

1. Yes.  R.A. No. 7160, §186  provides that an ordinance levying taxes, fees, or charges “shall
not be enacted without any prior public hearing conducted for the purpose.”

However, it is noteworthy that apart from her bare assertions,  Figuerres has not presented any
evidence to show that no public hearings were conducted prior to the enactment of the
ordinances in question.  On the other hand, the Municipality of Mandaluyong claims that public
hearings were indeed conducted before the subject ordinances were adopted, although it likewise
failed to submit any evidence to establish this allegation. 

In accordance with the presumption of validity in favor of an ordinance, their constitutionality or

legality should be upheld in the absence of  evidence showing that the procedure prescribed by
law was not observed in their enactment.  

Furthermore, the lack of a public hearing is a negative allegation essential to petitioner’s cause of
action in the present case.  Hence, as petitioner is the party asserting it, she has the burden of
proof. Since petitioner failed to rebut the presumption of validity in favor of the subject
ordinances and to discharge the burden of proving that no public hearings were conducted prior
to the enactment thereof, we are constrained to uphold their constitutionality or legality.

2. Yes.   R.A. No. 7160, §212 which in part states:

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

Hence, after the proposed schedule of fair market values of the different classes of real property
in a local government unit within Metro Manila, as prepared jointly by the local assessors of the
district to which the city or municipality belongs, has been published or posted in accordance
with §212 of R.A. No. 7160 and enacted into ordinances by the sanggunians of the municipalities
and cities concerned, the ordinances containing the schedule of fair market values must
themselves be published or posted in the manner provided by §188 of R.A. No. 7160.