Professional Documents
Culture Documents
and (b) storage fees, as well as mayor's permit and sanitary inspection fee, considering ( a) they are already subject to specific tax under the NIRC, and (b) Provincial Circular No. 677, issued by the Secretary of Finance which directed all city and municipal treasurers to refrain from collecting the socalled storage fee on flammable or combustible materials imposed under the local tax ordinance of their respective locality. FACTS: Tax: Unpaid business taxes, storage permit fee, mayors permit fee, sanitary inspection fee Philippine Petroleum Corporation (PPC) which manufactures lubricated oil basestock (petroleum product), maintains an oil refinery including 49 storage tanks for its petroleum products in Malaya, Pililla, Rizal. Under Section 142 of the National Internal Revenue Code of 1939, manufactured oils and other fuels are subject to specific tax. On June 1973, PD No. 231, otherwise known as the Local Tax Code was issued by former President Ferdinand E. Marcos, authorizing municipalities to impose on business, except on those for which fixed taxes are provided on manufacturers, importers or producers. On Dec. 1973, the Finance Secretary issued Provincial Circular No. 26-73 which directed all provincial, city and municipal treasurers to refrain from collecting any local tax imposed in old or new tax ordinances in the business of manufacturing, wholesaling, retailing, or dealing in petroleum products subject to the specific tax under the NIRC. Also, Provincial Circular No. 26 A-73 was issued to bolster the same. On June 1974, the Municipality of Pililla (MoP), Rizal enacted Municipal Tax Ordinance No. 1, (The Pililla Tax Code of 1974) which imposed a tax on business, except for those for which fixed taxes are provided in the Local Tax Code on manufacturers, etc., as well as mayor's permit, sanitary
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 1
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 2
FACTS: Tax: Real taxes. Mactan Cebu International Airport Authority (MCIAA) was created by virtue of Republic Act No. 6958, mandated to principally undertake the economical, efficient and effective control, management and supervision of Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from payment of realty taxes in accordance with Section 14 of its Charter: Sec. 14. Tax Exemptions. -- The Authority shall be exempt from realty taxes imposed by the National Government or any of its political subdivisions, agencies and instrumentalities x x x. In 1994, however, the 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 MCIAA. MCIAA objected to such demand for payment as baseless and unjustified. MCIAAs contention: Claims in its favor the aforecited Section 14 of RA 6958 which exempts it from payment of realty taxes. It further asserts that it is instrumentality of the government performing governmental functions, citing Section 133 of LGC which puts limitations on the taxing powers of local government units. Citys contention: MCIAA is not an instrumentality of the government but merely a government-owned corporation performing proprietary functions. As such, all exemptions previously granted to it were deemed withdrawn by operation of law, as provided under Sections 193 and 234 of LGC.
Topic: Power to Create Sources of Fund Ponente: Davide, J. Date: September 11, 1996 DOCTRINE: Since under Section 232 local government units have the power to levy real property tax, except those exempted therefrom under Section 234, then Section 232 must be deemed to qualify Section 133. As a general rule and as laid down by Section 133, the taxing powers of local government units cannot extend to the levy of, inter alia, taxes, fees and charges of any kind on the National Government, its agencies and instrumentalities, and local government units; however, pursuant to Section 232, provinces, cities, and municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person, as provided in item (a) of the first paragraph of Section 234. QUICK FACTS: RTC dismisses the petition for declaratory relief case filed by MCIAA. MCIAA contends that it enjoyed the privilege of exemption from payment of realty taxes in accordance with its Charter. It further asserts as reason the fact that it is an instrumentality of the government performing governmental functions, citing S ection 133 of LGC which puts limitations on the taxing powers of local government units.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 3
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 4
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 5
In the case at bar, section 151 in relation to section 137 of the LGC clearly authorizes the respondent city government to impose on the petitioner the franchise tax in question. RATIO: Doubtless, the power to tax is the most effective instrument to raise needed revenues to finance and support myriad activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people. As this Court observed in the Mactan case, "the original reasons for the withdrawal of tax exemption privileges granted to government-owned or controlled corporations and all other units of government were that such privilege resulted in serious tax base erosion and distortions in the tax treatment of similarly situated enterprises." With the added burden of devolution, it is even more imperative for government entities to share in the requirements of development, fiscal or otherwise, by paying taxes or other charges due from them. 4. CITY OF SAN PABLO V REYES Topic: Power to create Sources of Fund Ponente: Gonzaga-Reyes Date: 25 March 1999 DOCTRINE: Power to create sources of Fund: The power to tax is primarily vested in Congress. However, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely by virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 6
franchise to generate, distribute and sell electric current for light, heat and power shall be 2% of their gross receipts. RA 7160 (LGC) took effect in 1 Jan 92. It authorizes the province/city to impose a tax on business enjoying a franchise at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year realized within its jurisdiction. Ordinance 56 known as the Revenue Code of the City of San Pablo took effect on 30 Oct 1992. It imposes a tax on business enjoying a franchise at a rate of 50% of 1% of the gross annual receipts.. The City Treasurer then sent to MERALCO a letter demanding payment of the aforesaid franchise tax. The latter paid the tax under protest MERALCO filed an action with the RTC to declare Ordinance 56 null and void insofar as it imposes franchise tax upon MERALCO and to claim for refund. RTC ifo of MERALCO; LGC did not expressly or impliedly repeal the tax exemption/incentive enjoyed by it under its charter The Citys MR is denied. It filed a petition under R45 ROC to review RTC decision. MERALCOs contention (court did not expound on this) 1. in lieu of provision is not in the nature of an exemption; it refers to a commutative tax. 2. Non-impairment clause
Sec. 1. Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax payable by all grantees of franchise to generate, distribute and sell electric current for light, heat and power shall be two percent (2%) of their gross receipts received from the sale of electric current and from transactions incident to the generation, distribution and sale of electric current. Such franchise tax shall be payable to the Commissioner of Internal Revenue of his duly authorized representative on or before the
twentieth day of the month following the end of each calendar quarter or month as may be provided in the respective franchise or pertinent municipal regulation and shall, any provision of the Local Tax Code or any other law to the contrary notwithstanding, be in lieu of all taxes and assessments of whatever nature imposed by any national or local authority on earnings, receipts, income and privilege of generation, distribution and sale of electric current.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 7
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 8
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 9
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 10
TC IFO Iloilo Bottlers and ordered reimbursement of municipal taxes paid. CA Certified case to SC.
ISSUE: WoN Iloilo Bottlers, Inc. distributes softdrinks within the jurisdiction of defendant City of Iloilo and is thus liable under Iloilo City tax Ordinance No. 5, series of 1960, as amended, which imposes a municipal license tax on distributors of soft-drinks. Note: The tax ordinance imposes a tax on persons, firms, and corporations engaged in the business of: (1) distribution of soft-drinks; (2) manufacture of soft-drinks, and; (3) bottling of softdrinks within the territorial jurisdiction of the City of Iloilo. There is no question that after it transferred its plant to Pavia, plaintiff no longer manufactured/bottled its softdrinks within Iloilo City. Thus, it cannot be taxed as one falling under the second or the third type of business. HELD: Yes. SC reversed CFI of Iloilo. The tax imposed under Ordinance No. 5 is an excise tax. Sales were made by Iloilo Bottlers, Inc. in Iloilo City. Thus, the company is liable under the tax ordinance. RATIO: For tax purposes, a manufacturer does not necessarily become engaged in the separate business of selling simply because it sells the products it manufactures. In certain cases, however, a manufacturer may also be considered as engaged in the separate business of selling its products.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.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 11
ISSUE: WON the ordinance is null and void HELD: YES. SC reversed TC and ordered the refund of the amount paid. RATIO: Only the first and fourth grounds were viewed by the SC with merit. Double taxation In general, it is not forbidden by our fundamental law. Excessive, oppressive and confiscatory No, considering that the tax will be less than P0.0042 per bottle. Unconstitutional delegation of legislative powers The general principle against delegation of legislative powers, in consequence of the theory of separation of powers is subject to one well-established exception, namely: legislative powers may be delegated to local governments to which said theory does not apply in respect of matters of local concern.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 12
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 13
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 14
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 15
ISSUE 2: WON the Ordinance violated uniformity of taxation HELD: It violated uniformity of taxation RATIO: It violated uniformity of taxation The Ordinance exacts the tax upon all motor vehicles operating within the City of Manila, without distinguishing between a motor vehicle for hire and one which is purely for private use. Neither does it distinguish between a motor vehicle registered in the City of Manila and one registered in another place but occasionally comes to Manila and uses its streets and public highways. The fact that they are benefited by their use they should also be made to share the corresponding burden. 9. ORMOC SUGAR COMPANY V ORMOC CITY Topic: Fundamental Principles Ponente: Bengzon, JP., J. Date: February 17, 1968 DOCTRINE: An ordinance taxing only one specific entity violates the equal protection clause. It is irrelevant that at the time of the passage of the ordinance, Ormoc Sugar is the only sugar central in the city because to be reasonable, the terms of the ordinance should be applicable to future conditions and should not be singular and exclusive as to exclude any subsequently established sugar central of the same class as Ormoc Sugar. QUICK FACTS: Ormoc Sugar Company, Inc. questions the constitutionality of the ordinance passed imposing a 1% municipal tax per export sale of products milled at Ormoc Sugar Company. FACTS:
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 16
HELD: Yes. SC Reversed CFI and ruled IFO Ormoc Sugar Company because the ordinance failed to meet the requisites for a reasonable classification in violation of the equal protection of the laws. RATIO: Equal protection clause applies only to persons or things identically situated and does not bar a reasonable classification of the subject legislation. Requisites for a reasonable classification: 1. substantial distinctions 2. distinction is germane to the purpose of the law 3. classification applies not only to present conditions but also to future conditions which are substantially identical to those of the present 4. classification applies only to those who belong to the same class In the case at bar, the ordinance taxes only centrifugal sugar produced and exported by the Ormoc Sugar Company and none other in violation of the equal protection clause. It is irrelevant that at the time of the passage of the ordinance, Ormoc Sugar is the only sugar central in the city because to be reasonable, the terms of the ordinance should be applicable to future conditions and should not be singular and exclusive as to exclude any subsequently established sugar central of the same class as Ormoc Sugar. MINOR ISSUE: WoN City of Ormoc has the power to issue the Ordinance? YES. Although Sec 2287 of the Revised Administrative Code denies from the municipal councils the power to impose an export tax, Sec 2 of RA 2264 (a later law) gave chartered cities, municipalities and municipal districts authority to levy for public purposes just and uniform taxes, licenses or fees, thus, repealing the former (NIN Bay Mining Co v Municipality of Roxas].
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 17
10. GASTON V REPUBLIC PLANTERS BANK Topic: Local Taxation Taxing Powers of LGUs Fundamental Principles Ponente: Melencio-Herrera, J. Date: March 15, 1988
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 18
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 19
While it is true that the amount imposed by the questioned ordinances may be considered in determining whether the exaction is really one for revenue or prohibition, instead of one of regulation under the police power, it nevertheless will be presumed to be reasonable. Local governments are allowed wide discretion in determining the rates of imposable license fees even in cases of purely police power measures, in the absence of proof as to particular municipal conditions and the nature of the business being taxed as well as other detailed factors relevant to the issue of arbitrariness or unreasonableness of the questioned rates. PDC has not shown that the rate of the gross receipts tax is so unreasonably large and excessive and so grossly disproportionate to the costs of the regulatory service being performed by the respondent as to compel the Court to characterize the imposition as a revenue measure exclusively. The lower court correctly held that the gross receipts from stall rentals have been used only as a basis for computing the fees or taxes due respondent to cover the latter's administrative expenses, i.e., for regulation and supervision of the sale of foodstuffs to the public. The use of the gross amount of stall rentals as basis for determining the collectible amount of license tax, does not by itself, upon the one hand, convert or render the license tax into a prohibited city tax on income. On the other hand, it has not been suggested that such basis has no reasonable relationship to the probable costs of regulation and supervision of the petitioner's kind of business. For, ordinarily, the higher the amount of stall rentals, the higher the aggregate volume of foodstuffs and related items sold in PDCs privately owned market; and the higher the volume of goods sold in such private market, the greater the extent and frequency of inspection and supervision that may be reasonably required in the interest of the buying public.
12. SISON V ANCHETA Topic: Taxing Power of LGUs Fundamental Priniciples Ponente: Fernando, C.J. Date: July 25, 1984 DOCTRINE: The power to tax is an attribute of sovereignty. It is the strongest of all the powers of of government. It is, of course, to be admitted that for all its plenitude, the power to tax is not unconfined. There are restrictions. The Constitution sets forth such limits. Adversely affecting as it does property rights, both the due process and equal protection clauses may properly be invoked to invalidate, in appropriate cases, a revenue measure. QUICK FACTS: Petitioner Antero Sison as taxpayer alleges that by virtue of Sec. 1 of BP 135 he would be unduly discriminated against by the imposition of higher rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income or salaried individual taxpayers. There is, therefore, a transgression of both the equal protection and due process clauses of the Constitution as well as of the rule requiring uniformity in taxation. FACTS: Tax: Tax on compensation income vs Tax on net income derived from business/profession Facts: Petitioner Sison is challenging the validity of Section I of BP Blg. 135 which amended Section 21 of the National Internal Revenue Code of 1977, which provides for rates of tax on citizens or residents on (a) taxable compensation income, (b) taxable net income, (c) royalties, prizes, and other winnings, (d) interest from bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements, (e) dividends and
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 21
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 22
ISSUE: WoN Ordinance is valid HELD: NO. Affirmed TC decision RATIO: 1) Police inspection fee partakes of the nature of a tax because its undeniable purpose is to raise revenue. 2) It is unjust and unreasonable. It has been proven that the only service rendered by the Municipality of Malabang, by way of inspection, is for the policeman to verify from the driver of the trucks of the petitioner passing by at the police checkpoint the number of bags loaded per trip which are to be shipped out of the municipality based on the trip tickets for the purpose of computing the total amount of tax to be collect (sic) and for no other purpose. The pretention of respondents that the police, aside from counting the number of bags shipped out, is also inspecting the cassava flour starch contained in the bags to find out if the said cassava flour starch is fit for human consumption could not be given credence by the Court because, aside from the fact that said purpose is not so stated in the ordinance
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 23
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 24
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 25
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 26
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 27
b. Ormoc Sugar Company assails the said ordinance as being in restraint of trade. In the absence of a clear and specific showing that a constitutional or statutory provision was violated, such allegation is unmeritorious. Considering the indubitable policy expressly set forth in the Local Autonomy Act, the invocation of such a talismanic formula as "restraint of trade" without more no longer suffices, assuming it ever did, to nullify a taxing ordinance, otherwise valid. 17. BAGATSING V RAMIREZ
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 28
Topic: LOCAL TAXATION; FUNDAMENTAL PRINCIPLES Ponente: Martin, J Date: Dec 17,1976 DOCTRINE: a general provision must give way to a particular provision. Special provision governs. This is especially true where the law containing the particular provision was enacted later than the one containing the general provision. The City Charter of Manila was promulgated on 18 June 1949 as against the Local Tax Code which was decreed on 1 June 1973 QUICK FACTS: The chief question to be decided in this case is what law shall govern the publication of a tax ordinance enacted by the Municipal Board of Manila, the Revised City Charter (R.A. 409, as amended), which requires publication of the ordinance before its enactment and after its approval, or the Local Tax Code (P.D. No. 231), which only demands publication after approval. FACTS: On 12 June 1974, the Municipal Board of Manila enacted Ordinance No. 7522, An ordinance regulating the operation of public markets and prescribing fees for the rentals of stalls and providing penalties for violation thereof and for other purposes. The Federation of Manila Market Vendors Inc. commenced civil case seeking the declaration of nullity of the said ordinance for the reason that (a) the publication requirement under the Revised Charter of the City of Manila has not been complied with; (b) the Market Committee was not given any participation in the enactment of the ordinance, as envisioned by RA 6039; (c) Section 3 (e) of the Anti-Graft and Corrupt Practices Act has been violated; and (d) the ordinance would violate PD 7 of 30 September 1972 prescribing the collection of fees and charges on livestock and animal products.
TC - Respondent Judge declared Ordinance No. 7522 null and void for non-compliance with the requirement of publication under the Revised City Charter. Petitioners moved for reconsideration of the adverse decision, stressing that (a) only a post-publication is required by the Local Tax Code; and (b) the Federation failed to exhaust all administrative remedies before instituting an action in court. When TC denied MR, petitioners brought the matter to Us through the present petition for review on certiorari. ISSUE: WoN Ordinance No. 7522 is valid HELD: Yes, Ordinance No. 7522 was validly enacted. RATIO: The Revised Charter of Manila requires publication before the enactment of the ordinance and after the approval thereof. On the other hand, the Local Tax Code only prescribes for publication after the approval of ordinances levying or imposing taxes, fees or other charges. The Revised Charter of the City of Manila is a special act since it relates only to the City of Manila, whereas the Local Tax Code is a general law because it applies universally to all local governments. A prior special law is not ordinarily repealed by a subsequent general law. The fact that one is special and the other general creates a presumption that the special is to be considered as remaining an exception of the general; one as a general law of the land and the other as the law of a particular case. However, the rule readily yields to a situation where the special statute refers to a subject in general, which the general statute treats in particular. This is exactly the circumstance obtaining in the present case. Section 17 of the Revised Charter of the City of Manila speaks of ordinance in general, i.e., irrespective of the nature and scope thereof, whereas, Section 43 of the
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 29
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 30
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 31
Topic: Local Taxation Taxing Powers of LGUs Common Limitations Ponente: Paras, J. Date: June 3, 1991 DOCTRINES: A tax on business is distinct from a tax on the article itself. Thus, if the imposition of tax on business of manufacturers, etc. in petroleum products contravenes a declared national policy, it should have been expressly stated in P.D. No. 436. QUICK FACTS: Phil Petroleum, based in Pililla, Rizal, a manufacturer of oil products, questions Municipal Ordinance No. 1 of Pililla which requires them to pay (a) tax on business and (b) storage fees, as well as mayor's permit and sanitary inspection fee, considering ( a) they are already subject to specific tax under the NIRC, and (b) Provincial Circular No. 677, issued by the Secretary of Finance which directed all city and municipal treasurers to refrain from collecting the socalled storage fee on flammable or combustible materials imposed under the local tax ordinance of their respective locality. ISSUE: WON PPC whose oil products are subject to specific tax under the NIRC, is still liable to pay tax on business? HELD: Yes, PPC is liable to pay unpaid business taxes.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 32
RATIO: While Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products, said decree did not amend Sections 19 and 19 (a) of P.D. 231 as amended by P.D. 426, wherein the municipality is granted the right to levy taxes on business of manufacturers, importers, producers of any article of commerce of whatever kind or nature. A tax on business is distinct from a tax on the article itself. Thus, if the imposition of tax on business of manufacturers, etc. in petroleum products contravenes a declared national policy, it should have been expressly stated in P.D. No. 436. P.D. No. 426 amending the Local Tax Code is deemed to have repealed Provincial Circular Nos. 26-73 and 26 A-73 issued by the Secretary of Finance when Sections 19 and 19 (a), were carried over into P.D. No. 426 and no exemptions were given to manufacturers, wholesalers, retailers, or dealers in petroleum products. The LGC states that: SEC. 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; xxx However, it should be noted that what is being levied in this case is the business itself and not the petroleum products. There is no question that Pililla's Municipal Tax Ordinance No. 1 imposing the assailed taxes, fees and charges is valid especially Section 9 (A) which
Topic: Local Taxation Fundamental Principles Ponente: Concepcion, C.J. Date: August 28, 1968 DOCTRINE: The general principle against delegation of legislative powers, in consequence of the theory of separation of powers is subject to one well-established exception, namely: legislative powers may be delegated to local governments. QUICK FACTS: Plaintiff, Pepsi-Cola Bottling Company of the Philippines, is a domestic corporation with offices and principal place of business in Quezon City. The defendants are the City of Butuan, its City Mayor, the members of its municipal board and its City Treasurer. Plaintiff seeks to recover the sums paid by it to the City of Butuan, pursuant to its Municipal Ordinance No. 110, as amended by Municipal Ordinance No. 122, both series of 1960, which plaintiff assails as null and void, and to prevent the enforcement thereof. FACTS: Pepsi Companys warehouse in the City of Butuan serves as a storage for its products the "Pepsi-Cola" soft drinks for sale to customers in the City of Butuan and all the municipalities in the Province of Agusan. These "Pepsi-Cola Cola" soft drinks are bottled in Cebu City and shipped to the Butuan City warehouse. Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case of 24 bottles of Pepsi-Cola and the plaintiff paid under protest.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 33
HELD: NO. DECISION: The general principle against delegation of legislative powers, in consequence of the theory of separation of powers is subject to one well-established exception, namely: legislative powers may be delegated to local governments to which said theory does not apply in respect of matters of local concern. ISSUE 3: WON the tax is excessive, oppressive and confiscatory. HELD: NO. DECISION: The tax of "P0.10 per case of 24 bottles," of soft drinks or carbonated drinks in the production and sale of which plaintiff is engaged or less than P0.0042 per bottle, is manifestly too small to be excessive, oppressive, or confiscatory. ISSUE 4: WON the tax is an import tax, hence, beyond the local governments authority to impose by express provision of law. HELD: YES. DECISION: Merchants engaged in the sale of soft drink or carbonated drinks, are not subject to the tax, unless they are agents and/or consignees of another dealer, who, in the very nature of things, must be one engaged in business outside the City.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 34
20. PEOPLE V NAZARIO Topic: Local Taxation; Common Limitations Ponente: Sarmiento, J. Date: 31 August 1988 DOCTRINE: A Statute, such as a Municipal Tax Ordinance, to be said to be vague must lack comprehensible standards that men of common intelligence must necessarily guess at its meaning and differ as to its application. It must be utterly vague on its face, that is to say, it cannot be clarified by either a saving clause or by construction. QUICK FACTS: Eusebio Nazario, charged with the crime of violation of a Pagbilao Municipal Ordinance taxing the operation of fishponds, argues that the said tax measure was (1) vague for not defining who managers and owners are, and hence void; (2) is an ex post facto law; and (3) does not apply to him because he is not a resident of Pagbilao. FACTS: Tax: Municipal Ordinance No. 4, series of 1955, as amended by Municipal Ordinance No. 15, series of 1965, and finally amended by Municipal Ordinance No. 12, series of 1966, requiring any owner or manager of fishponds in places within the territorial limits of Pagbilao, Quezon, shall pay a municipal tax in the amount of P3.00 per hectare of fishpond on part thereof per annum. Facts: Eusebio Nazario was charged with the crime of nonpayment of municipal tax on operators of fishponds for the years 1964, 1965 and 1966, in violation of Municipal Ordinance No. 4, series of 1955, as amended by Municipal Ordinance No. 15, series of 1965, and finally amended by Municipal Ordinance No. 12, series of 1966.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 35
CA not mentioned, except that the CA certified the appeal to the Supreme Court ISSUE: Are Municipal Ordinance No. 4, series of 1955, and its amendments, Municipal Ordinance No. 15, series of 1965 and Municipal Ordinance No. 12, series of 1966 vague and therefore void? HELD: No. SC Affirmed Trial Court. RATIO: In no way may the ordinances at bar be said to be tainted with the vice of vagueness. It is unmistakable from
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 36
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 37
Topic: Ponente: Vitug, J. Date: 20 January 2000 DOCTRINE: (1) LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises4 for the operation thereof. "To regulate" means to fix, establish, or control; to adjust by rule, method, or established mode; to direct by rule or restriction; or to subject to governing principles or laws. 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. Nevertheless, under Article 458 (a)[3-VI] of the Local Government Code, the power of LGUs to regulate the operation of tricycles and to grant franchises for the operation thereof is still subject to the guidelines prescribed by the DOTC. In compliance therewith, the Department of Transportation and Communications ("DOTC") issued "Guidelines to Implement the Devolution of LTFRBs Franchising Authority over Tricycles-For-Hire to Local Government units pursuant to the Local Government Code." (2) The devolution of the functions of the DOTC, performed by the LTFRB, to the LGUs, as so aptly observed by the Solicitor General, is aimed at curbing the alarming increase of accidents in national highways involving tricycles. It has been the perception that local governments are in good position to achieve the end desired by the law-making body because of their proximity to the situation that can enable them to address that serious concern better than the national government.
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.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 38
ISSUE: WON the power of the Land Registration Office (now "LTO") to register tricycles and to issue licenses for the driving thereof has now devolved to LGUs. LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the operation thereof, but they are subject to the guidelines to be prescribed by the DOTC. HELD: The registration and licensing functions are vested in the LTO, while franchising and regulatory responsibilities are vested in the LTFRB. Under the LGC, certain functions of the DOTC were transferred to the LGUs, particularly in Sec. 458, which provides: Sec. 458. Powers, Duties, Functions and Compensation. xxx xxx xxx (3) Subject to the provisions of Book II of this Code, enact ordinances granting franchises and authorizing the issuance of permits or licenses, upon such conditions and for such purposes intended to promote the general welfare of the inhabitants of the city and pursuant to this legislative authority shall: xxx xxx xxx (VI) Subject to the guidelines prescribed by the Department of Transportation and Communications, regulate the operation of tricycles and grant franchises for the operation thereof within the territorial jurisdiction of the city. To regulate means to fix, establish or control, to adjust by rule, method or established mode. From the explicit language of the statute, as well as the corresponding guidelines issued by DOTC, the newly delegated powers pertain to the franchising and regulatory powers theretofore exercised by the LTFRB and not to the functions of the LTO relative to the registration of motor vehicles and issuance of licenses for the driving thereof .
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 39
To construe the tax provisions of Section 133(1) indistinctively would result in the repeal to that extent of LTO's 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 the LGC, in the same manner that the specific devolution of LTFRB's power on franchising of tricycles has been provided. Repeal by implication is not favored. The power over tricycles granted under Section 458(8)(3)(VI) of the LGC to LGUs is the power to regulate their operation and to grant franchises for the operation thereof. The exclusionary clause contained in the tax provisions of Section 133(1) of the LGC must not be held to have had the effect of withdrawing the express power of LTO to cause the registration of all motor vehicles and the issuance of licenses 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 R.A. 4136. Not insignificant is the rule that a statute must not be construed in isolation but must be taken in harmony with the extant body of laws. 23. (2) MACTAN CEBU INTL AIRPORT AUTHORITY V MARCOS, SUPRA 24. MIAA V CA AND CITY OF PARAAQUE Topic: Common Limitations Ponente: Carpio Date: 20 July 2006 DOCTRINE: When the law vests in a government instrumentality corporate powers, the instrumentality does
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 40
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 41
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 42
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 43
governments from imposing "[t]axes, fees or charges of any kind on the National Government, its agencies and instrumentalities
The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was merely to reorganize a division in the Bureau of Air Transportation into a separate and autonomous body. The Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any ownership rights over MIAA's assets adverse to the Republic. The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines." This only means that the Republic retained the beneficial ownership of the Airport Lands and Buildings
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 44
Justice to review tax ordinances and, inferentially, to annul them. He cited the familiar distinction between control and supervision, the first being "the power of an officer to alter or modify or set aside what a subordinate officer had done in the performance of his duties and to substitute the judgment of the former for the latter," while the second is "the power of a superior officer to see to it that lower officers perform their functions in accordance with law." 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. This was, in his view, a violation not only of Article X, specifically Section 4 thereof, and of Section 5 on the taxing powers of local governments, and the policy of local autonomy in general. ISSUE: WoN Section 187, LGC is unconstitutional. HELD: No. SC reversed RTC-Manila. 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. It was act not of control but of mere supervision. RATIO: When the DOJ Secretary alters or modifies or sets aside a tax ordinance, he is not permitted to substitute his own judgment for the judgment of the local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code. As we see it, that was an act not of control but of mere supervision.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 45
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 46
Tax: Assessment of real property Facts: Figuerres is the owner of a parcel of land located in Mandaluyong. In 1993, she received a notice of assessment, dated October 20, 1993, from the municipal assessor, stating that her lands assessed value is P265, 006.00. The assessment, effective in the year 1994, was based on Ordinance Nos. 119 and 125, series of 1993, and Ordinance No. 135, series of 1994. 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. Figuerres Contention: 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 (DOF). TC N/A. Direct to CA.
CA Figuerres lost. The approval and determination by the DOF is not needed under the LocGov Code of 1991, since it is now the city council of Mandaluyong that is empowered to determine and approve the aforecited ordinances. Regarding the claim that there is need for municipal ordinances to be published in the Official Gazette for their effectivity, such is bereft of merit because it is not a prerequisite. ISSUE: WON the ordinances are null and void HELD: NO. SC affirmed CA.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 47
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 48
Sec. 9. Franchise Tax.Any provision of special laws to the contrary notwithstanding, the province may impose a tax on businesses enjoying franchise, based on the gross receipts realized within its territorial jurisdiction, at the rate of not exceeding onehalf of one per cent of the gross annual receipts for the preceding calendar year...
6
In the case of newly started business, the rate shall not exceed three thousand pesos per year. Sixty per cent of the proceeds of the tax shall accrue to the general fund of the province and forty per cent to the general fund of the municipalities serviced by the business on the basis of the gross annual receipts derived therefrom by the franchise holder. In the case of a newly started business, forty per cent of the proceeds of the tax shall be divided equally among the municipalities serviced by the business. (Emphasis supplied.)
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 49
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 50
ISSUE: WoN National Power Corporation (NPC) liable to pay franchise tax to the City of Cabanatuan. HELD: YES. RATIO: In its general signification, a franchise is a privilege conferred by government authority, which does not belong to citizens of the country generally as a matter of common right. In its specific sense, a franchise may refer to a general or primary franchise, or to a special or secondary franchise. The former relates to the right to exist as a corporation, by virtue of duly approved articles of incorporation, or a charter pursuant to a special law creating the corporation. The right under a primary or general franchise is vested in the individuals who compose the corporation and not in the corporation itself. On the other hand, the latter refers to the right or privileges conferred upon an existing corporation such as the right to use the streets of a municipality to lay pipes of tracks, erect poles or string wires. The rights under a secondary or special franchise are vested in the corporation and may ordinarily be conveyed or mortgaged under a general power granted to a corporation to dispose of its property, except such special or secondary franchises as are charged with a public use. In section 131 (m) of the LGC, Congress unmistakably defined a franchise in the sense of a secondary or special franchise. This is to avoid any confusion when the word franchise is used in the context of taxation. As commonly used, a franchise tax is "a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state." It is not levied on the corporation simply for existing as a corporation, upon its property or its income, but on its exercise of the rights or privileges granted to it by the government. Hence, a corporation need not pay franchise tax from the time it ceased to do business and
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 51
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 52
SECTION 12. The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings, and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. In addition thereto, the grantee, its successors or assigns shall pay a
7 businesses transacted under this franchise by the grantee, its successors or assigns, and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof . . .
franchise tax equivalent to three percent (3%) of all gross receipts of the telephone or other telecommunications
SECTION 23. Equality of Treatment in the Telecommunications Industry. 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 franchise and shall be accorded immediately and unconditionally to the grantees of such franchises: Provided, however, That the foregoing shall neither apply to nor affect provisions of telecommunications franchises concerning territory covered by the franchise, the life span of the franchise, or the type of service authorized by the franchise.
8
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 53
There is no subsequent law clearly providing PLDT with exemption from local franchise tax. RATIO: Although RA 7925 was enacted, providing for equality in telecoms industry, subsequent to the LGC enactment, Sec 23 of RA 7925 is too general and there is nothing in its language nor in the proceedings of the HoR and the Senate which shows that it contemplates the grant of tax exemptions to all telecom entities, including those whose exemptions had been withdrawn by the LGC. Tax exemptions must be expressed in the statute in clear language that leaves no doubt of the intention of the legislature to grant such exemption. And, even if it is granted, the exemption must be interpreted in strictissimi juris against the taxpayer and liberally in favor of the taxing authority. NOTES: Power to impose franchise tax does not extend to future exemptions. Sec 137 of LGC 4 does not cover future exemptions. Although a provision in the later law withdrew the exemption enjoyed by a franchisee, a subsequent amendment of its franchise, exempting it from all other taxes except those imposed by its franchise, again entitles the franchisee to exemption from the date of enactment of such amendment. [PAL v EDU] Power of Congress to grant tax exemptions. 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. It simply means that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of municipal corporations. [Meralco v Laguna]
SECTION 137. Franchise Tax. Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction. In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of one percent (1%) of the capital investment. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross receipts for the preceding calendar year, or any fraction thereof, as provided herein. SECTION 193. Withdrawal of Tax Exemption Privileges . Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or -controlled corporations, except local water districts, cooperatives duly registered under R.A.
10
6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 54
1. Automatic per unit P10.00 2. Ford Fiera P10.00 3. Trucks P10.00 xxxxxxxxx b) Other Goods, Construction Material products: 1. Bamboo craft P20.00 2. Bangus/Kilo 0.30
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 55
"Section 153. Service Fees and Charges. -- Local government units may impose and collect such reasonable fees and charges for services rendered. xxxxxxxxx "Section 155. Toll Fees or Charges. -- The sanggunian concerned may prescribe the terms and conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government unit concerned: Provided, That no such toll fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older. "When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and thereafter the said facility shall be free and open for public use."
12
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 56
PLDT was a holder of a legislative franchise. Its franchise provided for the payment of 3% franchise tax in lieu of all taxes. The Local Government Code (LGC), however, was subsequently passed, which withdrew tax exemption privileges of all entities enjoying such privileges prior to the enactment of the said code (Section 193). The LGC also granted to provinces the power to impose franchise tax on businesses enjoying a franchise (Section 137) Invoking its authority under Section 137 of the Local Government Code, Laguna, through its local legislative assembly, enacted Provincial Ordinance No. 01-92, imposing a franchise tax upon all businesses enjoying a franchise, PLDT included. On January 28, 1998, PLDT, in compliance with the said ordinance, paid Laguna its local franchise tax liability for the year 1998 in the amount of P1,081,212.10. Prior to this, however, Congress passed RA 7925 or the Public Telecommunications Policy Act of the Philippines in 1995. Section 23 of the cited law provided that privileges enjoyed under existing franchises shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises. A 1998 ruling from the Bureau of Local Government Finance (BLGF) confirmed that PLDT was exempt from paying local franchise tax, deeming that the in lieu of all taxes clause of its franchise was restored to its franchise by virtue of RA 7925. On the basis of the BLGF ruling, PLDT refused to pay Laguna its local franchise tax liability for 1999. On December 22, 1999, it filed with the Office of the Provincial Treasurer a written claim for refund of the amount it paid as local franchise tax for 1998. With no refund having been made, PLDT instituted with the Regional Trial Court at Laguna a petition against the Province and its Provincial Treasurer
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 57
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 58
Likewise, the SC decided to exempt Piltel on its April 6, 2005 entry of judgment on its October 13, 2004 decision. On August 3, 2004, Branch 61 of the Makati Regional Trial Court (RTC) declared Smart exempt from paying the local franchise taxes charged by the Makati City Miscellaneous Taxes, Fees and Charges Division worth P196.227 million for calendar years 2000 and 2001, and P115.828 million for 1995, 1998 and 1999. These included surcharges and interests. The City of Makati elevated the case to the Court of Appeals, but no petition for review was filed within the prescribed period. RTC cited Section 9 of Republic Act 7294 or the Smart franchise, which stipulates that Smart should pay a franchise tax equivalent to 3 percent of all gross receipt of the business transacted under this franchise... and the said percentage shall be in lieu of all taxes on this franchise or earnings thereof. Provided, that the grantee, its successors or assigns shall continue to be liable for income taxes payable... The court added Smart is not covered by Section 137 of the Local Government Code or RA 7160, which states that notwithstanding any exemption by any law or other special law, the province may impose a tax on businesses enjoying a franchise, and by Section 193, which withdraws tax exemption privileges. The franchise of Smart or RA 7294 was enacted only on March 27, 1992 whereas the Local Government Code or RA 7160 was enacted on Sept. 12, 1991 and took effect on January 1, 1992, the court said. The revocations and withdrawals of tax exemptions under Section 193 of the Local Government Code clearly refer to those which were previously granted and/ or those presently
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 59
CA Affirmed RTC. Magat not exempt from paying franchise tax because LGC withdrew t he tax exemption provided under its charter. However, RTC had no basis in
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 60
Topic: Amusement tax Ponente: Purisima, J. DOCTRINE: The NIRC provides that proprietor, lessee or operator of professional basketball games is required to pay an amusement tax equivalent to 15% of the gross receipts to the BIR, which payment is a national tax. The payment of amusement tax is in lieu of all other percentage taxes of whatever nature and description. QUICK FACTS: PBA received an assessment from CIR for the payment of deficiency amusement tax in the amount of P5.8 million. PBA contested the assessment but CIR denied. FACTS: TAX: Amusement tax on PBA game tickets. In 1989, PBA received an assessment from CIR for the payment of deficiency amusement tax in the amount of P5.8 million. PBA contested the assessment but CIR denied. PBA The Local Tax Code of 1973 transferred the power and authority to levy and collect amusement taxes from the sale of admission tickets to places of amusement from the national government to the local governments. CTA Dismissed PBAs petition for lack of merit. MR was also denied. CA Affirmed decision of CTA. MR was also denied. CA held that the jurisdiction to collect amusement taxes of PBA games is vested in the national government to the exclusion of local government. ISSUE: WON the amusement tax on admission tickets to PBA games a national tax.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 61
HELD: YES. The decisions of CA and CTA were affirmed. RATIO: Sec. 13 of the Local Tax Code indicates that the province can only impose a tax on admission from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement. The authority to tax professional basketball games is not therein included. On the other hand, the NIRC provides that proprietor, lessee or operator of professional basketball games is required to pay an amusement tax equivalent to 15% of the gross receipts to the BIR, which payment is a national tax. The payment of amusement tax is in lieu of all other percentage taxes of whatever nature and description. Professional basketball games are not within the scope of other places of amusement, as provided in the Local Tax Code. Professional basketball games do not fall under the same category as theaters, cinematographs, concert halls and circuses as the later basically belong to artistic forms of entertainment while the former caters to sports and gaming. History: Tax laws (PDs 871, 1456, 1959) recognize that amusement tax on professional basketball games is a national, not a local, tax. NIRC Sec. 125[10] retained this. LGC Sec. 140[11] granted authority to a province to levy amusement tax but without including professional basketball games. 35. LUZ YAMANE CORPORATION V BA LEPANTO CONDOMINIUM
Topic: Local Business Taxes; Taxpayers Remedies Ponente: Tinga, J. Date: 25 October 2005
(3) Local tax on businesses is authorized under Section 143 of the Local Government Code. The word business itself is defined under Section 131(d) of the Code as trade or commercial activity regularly engaged in as a means of livelihood or with a view to profit. This definition of business takes on importance, since Section 143 allows local government units to impose local taxes on businesses other than those specified under the provision. Moreover, even those business activities specifically named in Section 143 are themselves susceptible to broad interpretation. For example, Section 143(b) authorizes the imposition of business taxes on wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 62
Moreover, it was not authorized, under its articles of incorporation or by-laws to engage in profit-making activities.
The respondent BA-Lepanto Condominium Corporation (BALepanto) 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, situated in Makati City.
The City Treasurer denied the protest. The respondent filed an appeal to the RTC of Makati.
In this case, BA-Lepanto was assessed by the petitioner City Treasurer for PhP 1,601,013.77 as payment for city business taxes, fees and charges. The Notice of Assessment was silent as to the statutory basis of the business taxes assessed. BA-Lepanto protested the assessment.
RTC dismissed the appeal and held that the activities of BA-Lepanto fell under the definition of 'business' under Sec 13(b) of the LGC. From the decision of the RTC, the respondent filed a Petition for Review under Rule 42 of the Rules of Civil Procedure with the Court of Appeals.
BA-Lepanto Argues That The Assessment has no basis and that BA-Lepanto is not liable for business taxes and surcharges and interest thereon, under the Makati Revenue Code or even under the Local Government Code (LGC). Section 3A.02(m) of the Makati Revenue Code, which provides for imposition of business tax on owners or operators of any business not specified in the said code is not applicable since the corporation, as a condominium corporation, was organized not for profit, but to: (1) hold title over the common areas of the condominium
CA initially dismissed the petition outright but it subsequently reinstated the petition; held that the respondent is not liable to pay business taxes to the City of Makati because it is not a juridical entity intended to make profit, as its sole purpose was to hold title to the common areas in the condominium and to maintain the condominium.
Luz Yamane, City Treasurer of Makati Argues That (1) BA Lepanto filed the wrong mode of appeal before the Court of Appeals when the latter filed its Petition for Review under Rule 42.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 63
ISSUES 1:WON the respondent filed the wrong mode of appeal in the CA. In the case at bar, there are significant reasons for the Court to overlook the procedural error and ultimately uphold the adjudication of the jurisdiction exercised by the CA. Procedural rules should not be enforced blindly, especially if mechanical application would defeat the higher ends that animate our civil procedure: the just, speedy and inexpensive disposition of every action and proceeding.
HELD: YES, but the review taken by the RTC over the denial of the protest by the local treasurer would fall within that court's original jurisdiction so the proper remedy of the respondent corporation from the RTC judgment is an ordinary appeal under Rule 41 to the Court of Appeals.
RATIO: In Garcia v. De Jesus, the Court distinguished original jurisdiction and appellate jurisdiction thus: Original jurisdiction is the power of the Court to take judicial cognizance of a case instituted for judicial action for the first time under conditions provided by law. Appellate jurisdiction is the authority of a Court higher in rank to re-examine the final order or judgment of a lower Court, which tried the case now elevated for judicial review.
HELD: NO.
In this case, the review of the RTC is the initial judicial cognizance of the matter. Moreover, labeling the said review as an exercise of appellate jurisdiction is inappropriate, since the denial of the protest is not the judgment or order of a lower court, but of a local government official.
RATIO: Luz Yamane, the City Treasurer has not informed BA-Lepanto, the RTC, the CA, or even the SC, as to what exactly is the precise statutory basis under the Makati Revenue Code for the levying of the business tax. The notice of assessment, which stands as the first instance the taxpayer is officially made aware of the pending tax liability, should be sufficiently informative to apprise the taxpayer the legal basis of the tax.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 64
Sec. 195 of the LGC does not expressly require that the notice of assessment specifically cite the provision of the ordinance involved but it does require that it state the nature of the tax, fee or charge, the amount of deficiency, surcharges, interests and penalties. In this case, the notice of assessment sent to the respondent did state that the assessment was for business taxes, as well as the amount of the assessment. There may have been prima facie compliance with the requirement under Sec 195. However, the Revenue Code provides multiple provisions on business taxes, and at varying rates. Reference to the local tax ordinance is vital, for the power of local government units to impose local taxes is exercised through the appropriate ordinance enacted by the Sanggunian, and not by the LGC. However, the Court may not rule that there has been a due process violation since it was not raised by the BA-Lepanto. It has focused its argument on the position that the LGC does not sanction the imposition of business taxes against it.
The Court rejected the City Treasurers argument that the collection of assessments and dues by the respondent is with the end view of getting full appreciative living values' for the condominium units, and as a result, profit is obtained once these units are sold at higher prices. First, if any profit is obtained by the sale of the units, it accrues not to the corporation but to the unit owner. Second, if the unit owner does obtain profit from the sale of the corporation, the owner is already required to pay capital gains tax on the appreciated value of the condominium unit.
Sec. 143 allows local government units to impose local taxes on businesses other than those specified under the provision. The word 'business' itself is defined under Sec 131(d) of the Code as trade or commercial activity regularly engaged in as a means of livelihood or with a view to profit BA-Lepanto does not fall within the definition of business in the LGC and is thus exempt from local business taxation.
A condominium corporation is specially formed for the purpose of holding title to the common area, in which the holders of separate interests shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units. The Court The possible exception to the rule is when the unit owners elicited from the Condominium Act that a condominium of a condominium would band together to engage in corporation is precluded by statute from engaging in E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 65
With regard to the City Treasurers contention that the fact that the Corporation is engaged in business is evinced by the Articles of Incorporation, which specifically empowers the Corporation to acquire, own, hold, enjoy, lease, operate and maintain, and to convey, sell, transfer mortgage or otherwise dispose of real or personal property, the Court said that, [w]hatever capacity BA-Lepanto may have pursuant to its power to exercise acts of ownership over personal and real property is limited by its stated corporate purposes, which are by themselves further limited by the Condominium Act. A condominium corporation, while enjoying such powers of ownership, is prohibited by law from transacting its properties for the purpose of gainful profit.
PACKAGING
CITY
Topic: Municipalities: Local Business Taxes: LGC secs. 143146 Ponente: UY Date: November 27, 2008 DOCTRINE: The power of a municipality to impose business taxes derives from Sec 143 of the LGC that specifically enumerates several types of business on which it may impose taxes. Corollary thereto, the City of Davaos taxing power is provided under Art III, Sec 151 of same code. QUICK FACTS: Steneil claims to be an exporter and hence its sales should be subjected to tax rate provided for by sec 143 (c). City treasurer of Davao applied tax rate provided for in Sec 143(A) and not 143 (c). (exporter tax rate in Sec 143(c)= 1/2 of 37.5% of 1 % in contrast a to manufacturer in Sec 143 (a)= 37.5% of 1%). City of Davao affirmed by RTC and CTA. FACTS: Tax: see quick facts Steneil is a domestic corporation with business address in Bunawan, Davao City. It is engaged in the business of manufacturing and selling packaging materials, such as corrugated fiber board containers, cartons, and boxes. During taxable year 2004, Steneils total sales of its packaging materials to both export oriented and non-export oriented clientele amounted to Php 199, 419,195. Treating
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 66
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 67
TC - (1) dismissed petitioners appeal for lack of merit; (2) held that petitioner was properly classified as a contractor and not as a manufacturer, pursuant to Section 131 (h) of the LGC of 1991; (3) denied petitioners Motion for Reconsideration ISSUE: WoN petitioner, in selling electricity, is considered a contractor or a manufacturer, as defined under the Local Government Code and Makati City Tax Code
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 68
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 69
FACTS: Tax: Business tax on contractors and other independent contractors; definition of gross sales or receipts. Facts: Honest Service Providers, Inc. is a domestic corporation engaged in providing janitorial and messengerial services to clients within Metro Manila and nationwide. Petitioner has been faithfully securing its yea rly business permit and paying its local taxes due to respondent City of Makati. In January of 2005, when petitioner applied for a renewal of their business permit, the amount due was P817,248.48 which was far different from the previous years' business tax of around P50,000.00. Hence, petitioner was not able to renew its business permit. Due to the above assessment, petitioner's Accountant and Vice President visited the office of respondent City Treasurer, and they were informed that an examiner will be sent to petitioner's office for the verification of the records. Thereafter, a Letter of Authority No. LA-2006-00 I was issued, authorizing Revenue Examiner Felito A. Manrique to verify the records of petitioner. But instead of conducting an actual examination or verification of records, the Revenue Examiner requested copies of petitioner's Audited Financial Statements for years 2002 up to 2005. On February 27, 2006, petitioner received a copy of the Notice of Assessment dated February 22, 2006 demanding payment of P2,415,509.42 representing deficiency city business taxes, fees and charges for taxable period 20032005. On April 11 , 2006, petitioner responded with a written protest requesting for a reconsideration of the assessment. City of Makati and City Treasurer dismissed Honest's appeal for lack of merit. Petitioners Contention: NA
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 70
Respondents Contention: The assessment is oppressive/confiscatory and, therefore, violative of the right to due process of the taxpayer; b. The assessment is null and void because the basis of the assessment was not stated in the assessment; c. The assessment of the City of Makati failed to consider the taxes paid by the taxpayer: and d. The assessment failed to consider the direct costs representing reimbursements of salaries and contributions to the Government Agencies and taxes paid. TC - Dismissed Honest's Appeal for lack of merit. Gross sales or receipts', the same includes compensation or service fee, plus the amount charged or materials supplied with the services. ISSUE 1: WON Honesty should be taxed based on gross receipts. HELD: Yes. CTA Affirmed RTC. RATIO: The applicable provisions herein are Section 143(e) of the Local. Government Code (LGC) of 1991 in relation to its Section 151, and Sec. 3A.02(f) of the'Makati Revenue Code, covering contractor's tax. The pertinent portions of the provisions are quoted hereunder: SECTION 143. Tax on Business. - The municipality may impose taxes on the following businesses: XXX XXX XXX (e) On contractors and other independent contractors, in accordance with the gross receipts for the preceding calendar year XXX XXX ARTICLE III CITIES XXX
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 71
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 72
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 73
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 75
On March 7, 2003, Linberg received a Notice of Assessment for deficiency business taxes plus surcharges and interests covering the taxable years 2000, 2001 and 2002 in the aggregate amount of Php8,714,744.53. The alleged deficiency business taxes arose from respondent's reclassification of petitioner's business from a "holding or investment" company to a "contractor". Linberg filed a Letter Protest but this was denied by respondent City Treasurer. On July 3, 2003, Linberg assailed the denial of the protest before the RTC of Makati City. RTC dismissed the petition of Linberg for lack of merit. MR also denied. CTA On June 2007, CTA First Division partially granted the petition and reduced the deficiency taxes of Linberg to Php993,901.29. MR was filed but was denied by this division. Thus, this appeal. Linbergs Contention: (1) If petitioner is classified as a contractor, all if not substantially all, of the controlling or operative acts that constitute petitioner's sale of services, must be done in Makati City, whereas most of its power plants are located outside Makati; (2) it is not a contractor but a financing company because it does not perform services to its customers for a fee, as it merely finances the construction of the power plants for its customers through BOT arrangements. ISSUE: WON Linberg is a contractor thus liable to pay tax on sale of services? HELD: Yes, Linberg is a contractor and is liable to pay tax on sale of services. Decision of the CTA First Division affirmed.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 77
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 78
44. CENTRAL AZUCARERA DE DON PEDRO V CITY OF MANILA Topic: Local Business Taxes Ponente: Labrador Date: September 29 1955 DOCTRINE: The mere fact that it sells the sugar it manufactures does not thereby make it a dealer in sugar. The right to manufacture necessarily implies the right to sell the manufactured product at the manufactory. One who thus sells the liquors mentioned in the statute, manufactured by him, is not a "wholesaler' of liquors. The manufacturer becomes a dealer IF he carries on the business of selling goods or his products manufactured by him at a store or warehouse apart from his own shop or manufactory. QUICK FACTS: Central is engaged in milling and manufacturing sugar from sugar cane. It agreed to sell sugar to Kim Kee, Chua Yu & Co., and San Miguel and thereafter made deliveries partly in the Manila, partly in Pasay , and partly Batangas. The City of Manila assessed and collected from Central municipal tax on wholesale dealers. FACTS: Central is engaged in milling and manufacturing sugar from sugar cane, for which purpose it operates and maintains a sugar mill where sugar cane is processed, warehouses where manufactured sugar is stored, a main office in Manila and a branch office in Nasugbu, Batangas. It agreed to sell sugar to Kim Kee, Chua Yu & Co., Inc., and thereafter made deliveries. It also agreed to sell sugar to the San Miguel Brewery and also made deliveries. The sugar sold and delivered was taken from warehouses Central and was
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 79
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 80
In Central Azucarera Don Pedro vs. City of Manila, 97 Phil. 627, plaintiff sought recovery of a certain sum collected from it by defendants under the authority also of Ordinance No. 3420 as amended, the same ordinance involved in the present case. Although plaintiff there admittedly sold the sugar that it manufactured, this Court did not consider it a dealer.
13
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 81
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 82
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 83
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 84
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 85
In 1997, ABS-CBN filed several written claim for refund for local franchise tax paid to QC for the periods 1996-1997 amounting to P14.2 million (not stated why they are initially just claiming for P14.2 million refund). When the QC government filed to respond to its claim, ABS-CBN filed a complaint before the QC RTC on Jun1997 seeking for the declaration of nullity of the imposition of local franchise tax for being unconstitutional and asked for refund of P19.9 million. QCs Contentions: 1. The "in lieu of all taxes" provision in RA No. 9766 could not have been intended to prevail over a constitutional mandate which ensures the viability and self-sufficiency of LGUs. 2. Taxes imposed by LGUs are distinct from taxes imposed by the national government since under the Constitution, it accrues exclusively to the LGU. 3. Exemption under RA 7966 was withdrawn by Congress when LGC was passed in view of Sec 193 of the Code. 15 ABS-CBNs Contention: RA 7966 clearly provides that ABSCBN shall pay a franchise tax x x x in lieu of all taxes including local franchise tax. TC IFO ABS-CBN holding that RA 7966 absolutely excused the company from payment of local franchise tax imposed under the QC Ordinance. 1. Special over general law. Further, law granting a franchise is a special while a local tax code is a general law and whenever there is a conflict between two laws, one special
Section 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or -controlled corporations, except local water districts, cooperatives duly registered under R.A. 6938, non-stock and nonprofit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.
15
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 86
Section 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized within its territorial jurisdiction. x x x xxxx Section 151. Scope of Taxing Powers. - Except as otherwise provided in this Code, the city may levy the taxes, fees and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and component cities shall accrue to them and distributed in accordance with the provisions of this Code. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 87
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 88
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 89
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 90
Tax: Business Tax Mobil Philippines filed an application with the City Treasurer of Makati for the retirement of its business in Makati as it moved its principal place of business to Pasig City. Mobil declared its gross sales/receipts for the yr 1997 (453M) and Jan-Aug 1998 (267M). The OIC of the License Division assessed almost 1.9M as business taxes. Mobil paid the amount under protest. Mobil filed a claim for refund but was denied on the ground that Mobil was merely transferring and not retiring its business, and that the gross sales realized while Mobil still maintained office in Makati from January 1 to August 31, 1998 should be taxed in the City of Makati. Mobil filed a petition with RTC of Pasig seeking the refund of business taxes erroneously collected by the City of Makati. Mobils Contention: The 1997 gross sales/revenue is merely the basis for the amount of business taxes due for the privilege of carrying on a business in the year when the tax was paid. Makati Citys Contention: Since local taxes, which include business taxes, are paid either within the first twenty days of January of each year or of each subsequent quarter, as the case may be, what the taxpayer actually pays during the recorded calendar year is actually its business tax for the preceding year. RTC IFO Makati City. In summary, the pertinent law provides that a person or entity doing business in the Municipality shall be subject to business tax. The tax shall be fixed by the quarter. The initial tax for the quarter in which a business starts to operate shall be two and one-half percent (2%) of one percent (1%) of its capital investment. Thereafter, the tax shall be computed based on the gross sales or receipts of the preceding quarter. In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross sales or receipts
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 91
previous years figures. This is the reason for the confusion. A newly-started business is already liable for business taxes (i.e. license fees) at the start of the quarter when it commences operations. In computing the amount of tax due for the first quarter of operations, the business capital investment is used as the basis. For the subsequent quarters of the first year, the tax is based on the gross sales/receipts for the previous quarter. In the following year(s), the business is then taxed based on the gross sales or receipts of the previous year. The business taxes paid in the year 1998 is for the privilege of engaging in business for the same year, and not for having engaged in business for 1997. Based on Sec. 3A.11 par.(g) 18, on the year an establishment retires or terminates its business within the municipality, it would be required to pay the difference in the amount if the tax collected, based on the previous years gross sales or receipts, is less than the actual tax due based on the current years gross sales or receipts. For the year 1998, Mobil paid a total of P2,262,122.48 to the City Treasurer of Makati as business taxes for the year 1998. The amount of tax as computed based on Mobils gross sales for 1998 is only P1,331,638.84. Since the amount paid is
In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross sales or receipts for the preceding calendar year, or any fraction thereof as provided in the same pertinent schedules. 18 Sec. 3A.11 par. (g) which states: . . . (g) Retirement of business. . . . For purposes thereof, termination shall mean that business operation are stopped completely. . . . (2) If it is found that the retirement or termination of the business is legitimate, [a]nd the tax due therefrom be less than the tax due for the current year based on the gross sales or receipts, the difference in the amount of the tax shall be paid before the business is considered officially retired or terminated.
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 92
DOCTRINE: In order that the lien (by virtue of a tax delinquency) may follow the personal property into the hands of a third party purchaser for value, it is essential that the latter should have notice, either actual or constructive. QUICK FACTS: Pujalte & Co. (Pujalte) was liable to the government for forest charges for timber removed from Mindanao forests. They used the timber to manufacture railroad ties. They used these ties to pay a debt to HSBC. Subsequently, Pujalte was declared by the CIR to be delinquent on the payment of forest charges. The CIR attempted to levy the railroad ties already assigned by Pujalte to HSBC. FACTS:
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 93
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 94
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 95
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 96
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 97
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 99
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 100
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 101
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 102
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 103
Letter of protest dated October 19, 2001 is not treated as a written claim for refund as settled in China Banking Corporation vs. City Treasurer of Manila. this Court declared that a written protest cannot be considered as a written claim for refund, and ruled that: The above letter (of protest) speaks for itself. The wordings of the letter are explicit and unequivocal that petitioner merely notified the respondent that it is paying under protest the amount representing the alleged local government tax and that they are presently instituting the appropriate legal actions to effect refund of any erroneous/excessive payment made. It is not the written claim for refund as contemplated under Section 196 of the Local Government Code. Having failed to comply with the requirements prescribed by Section 196, the complaint for refund was prematurely filed for failure to exhaust administrative remedies. Where the enabling statute indicates a procedure for administrative review, and provides a system of administrative appeal, or reconsideration, the courts, for reason of law, comity, and convenience, will not entertain a case unless the available remedies have been resorted to and the appropriate authorities have been given an opportunity to act and correct the errors committed in the administrative forum. The afore-quoted case squarely applies in the instant case. Respondents' letter dated October 19, 2001 disputing petitioners' assessments of local business taxes for the fourth (4th) quarter of year 2001, is merely a protest-letter, and should not be treated as a written claim for refund. In said letter, respondents did not categorically request for the refund of the amount they paid as local business taxes. Hence, respondents failed to comply with the requirements of Section 196 of R.A. No. 7160. There being no written claim for refund or credit filed with the petitioner local treasurer, the RTC did not acquire jurisdiction over respondents' refund claim. Thus, the RTC's decision granting respondents' claim
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 104
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 105
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 106
E2014: Arnel, Teph, Zoe, Azy, VJ, Marshall, Jayson, Shiree, Bern, Floyd, Rubb, Diega, Jessie, Macel, Rod, Bianca, Dotty, Raj, Bobby, Jasper, Leslie| 108