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TAXATION II- Compilation of doctrines based on the syllabus of Atty.

Bobby Lock
PART IV- LOCAL AND REAL PROPERTY TAXATION
Republic Act No. 7160, Local Government Code (LGC) of 1991, as amended Implementing Rules and Regulations of the LGC
LOCAL TAXATION
I.

PRELIMINARY MATTERS
A. Power to Tax of Local Government Units
1. Sec. 5 Art. X, 1987 Constitution (compare with 1935 and
1973 provisions)
2. Sec. 129, LGC

Pepsi Cola Bottling vs. Municipality of Tanuan 69 SCRA 460
The power of taxation x x x may be delegated to local
governments in respect of matters of local concern. This is sanctioned
by immoral practice. By necessary implication, the legislative power to
create political corporations for purposes of local self-government
carries with it the power to confer on such local governmental agencies
the power to tax. x x x The plenary nature of the taxing power thus
delegated, contrary to plaintiff-appellant’s pretense, would not suffice
to invalidate the said law as confiscatory and oppressive. In delegating
the authority, the State is not limited to the exact meassure of that
which is exercised by itself. When it is said that the taxing power may
be delegated to municipalities and the like, it is meant taxes there may
be delegated such measure of power to impose and collect taxes as
the legislature may deem expedient. Thus, municipalities may be
permitted to tax subjects which for reasons of public policy the State
has not deemed wise to tax for more general purposes.
This is not to say though that the constitutional injunction
against deprivation of property without due process of law may be
passed over under the guise of the taxing power, except when the
taking of the property is in the lawful exercise of the taxing power, as
when (1) the tax is for a public purpose; (2) the rule on uniformity of
taxation is observed; (3) either the person or property taxed is within
the jurisdiction of the government levying the tax; and (4) in the
assessment and collection of certain kinds of taxes notice and
opportunity for hearing are provided.

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There is no validity to the assertion that the delegated authority
can be declared unconstitutional on the theory of double taxation. It
must be observed that the delegating authority specifies the limitations
and enumerates the taxes over which local taxation may not be
exercised. x x x Moreover, double taxation, in general, is not forbidden
by our fundamental law, since We have not adopted as part thereof the
injunction against double taxation found in the Constitution of the
United States and some states of the Union. Double taxation becomes
obnoxious only where the taxpayer is taxed twice for the benefit of the
same governmental entity or by the same jurisdiction for the same
purpose, but not in a case where one tax is imposed by the State and
the other by the city of municipality.
The tax of one centavo (P0.01) on each gallon (128 fluid
ounces, U.S.) of volume capacity on all soft drinks, produced or
manufactured, or an equivalent of 1½ centavos per case, cannot be
considered unjust and unfair. An increase in the tax alone would not
support the claim that the tax is oppressive, unjust and confiscatory.
Municipal corporations are allowed much discretion in determining the
rates of imposable taxes. This is in line with the constitutional policy of
according the widest possible autonomy to local governments in
matters of local taxation, an aspect that is given expression in the
Local Tax Code (PD No. 231, July 1, 1973). Unless the amount is so
excessive as to be prohibitive, courts will go slow in writing off an
ordinance as unreasonable.
The municipal license tax of P1,000.00 per corking machine
with five but not more than ten crowners x x x imposed on
manufacturers, producers, importers and dealers of soft drinks and/or
mineral waters x x x appears not to affect the resolution of the validity
of Ordinance No. 27. Municipalities are empowered to impose, not only
municipal license taxes upon persons engaged in any business or
occupation but also to levy for public purposes, just and uniform taxes. 


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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
The ordinance in question (Ordinance No. 27) comes within the
second power of a municipality.
Mactan Cebu International Airport Authority vs. Marcos – GR No.
120082, Sept. 11, 1996
As a general rule, the power to tax is an incident of sovereignty
and is unlimited in its range, acknowledging in its very nature no limits,
so that security against its abuse is to be found only in the
responsibility of the legislature which imposes the tax on the
constituency who are to pay it. Nevertheless, effective limitations
thereon may be imposed by the people through their Constitutions. Our
Constitution, for instance, provides that the rule of taxation shall be
uniform and equitable and Congress shall evolve a progressive system
of taxation. So potent indeed is the power that it was once opined that
“the power to tax involves the power to destroy.”
Verily, taxation is a destructive power which interferes with the
personal and property rights of the people and takes from them a
portion of their property for the support of the government. Accordingly,
tax statutes must be construed strictly against the government and
liberally in favor of the taxpayer. But since taxes are what we pay for
civilized society, or are the lifeblood of the nation, the law frowns
against exemptions from taxation and statutes granting tax exemptions
are thus construed stricissimi juris against the taxpayer and liberally in
favor of the taxing authority. A claim of exemption from tax payments
must be clearly shown and based on language in the law too plain to
be mistaken. Elsewise stated, taxation is the rule, exemption therefrom
is the exception. However, if the grantee of the exemption is a political
subdivision or instrumentality, the rigid rule of construction does not
apply because the practical effect of the exemption is merely to reduce
the amount of money that has to be handled by the government in the
course of its operations.
The power to tax is primarily vested in the 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.

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Under the latter, the exercise of the power may be subject to such
guidelines and limitations as the Congress may provide which,
however, must be consistent with the basic policy of local autonomy.
Manila Electric Company vs. Province of Laguna – GR No. 131359,
May 5, 1999
Prefatorily, it might be well to recall that local governments do
not have the inherent power to tax except to the extent that such
power might be delegated to them either by the basic law or by statute.
Presently, under Article X of the 1987 Constitution, a general
delegation of that power has been given in favor of local government
units.
Under the regime of the 1935 Constitution no similar delegation
of tax powers was provided, and local government units instead
derived their tax powers under a limited statutory authority. Whereas,
then, the delegation of tax powers granted at that time by statute to
local governments was confined and defined (outside of which the
power was deemed withheld), the present constitutional rule (starting
with the 1973 Constitution), however, would broadly confer such tax
powers subject only to specific exceptions that the law might prescribe.
Under the now prevailing Constitution, where there is neither a
grant nor a prohibition by statute, the tax power must be deemed to
exist although Congress may provide statutory limitations and
guidelines. The basic rationale for the current rule is to safeguard the
viability and self sufficiency of local government units by directly
granting them general and broad tax powers. Nevertheless, the
fundamental law did not intend the delegation to be absolute and
unconditional; the constitutional objective obviously is to ensure that,
while the local government units are being strengthened and made
more autonomous, the legislature must still see to it that (a) the
taxpayer will not be over-burdened or saddled with multiple and
unreasonable impositions; (b) each local government unit will have its
fair share of available resources; (c) the resources of the national

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
government will not be unduly disturbed; and (d) local taxation will be
fair, uniform, and just.
Indicative of the legislative intent to carry out the Constitutional
mandate of vesting broad tax powers to local government units, the
Local Government Code has effectively withdrawn, under Section 193
thereof, tax exemptions or incentives theretofore enjoyed by certain
entities. This law states: “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. No. 6938, non-stock and non-profit hospitals and
educational institutions, are hereby withdrawn upon the effectivity of
this Code. (Italics supplied for emphasis)
In the recent case of the City Government of San Pablo, etc., et
al. vs. Hon. Bienvenido V. Reyes, et al., the Court has held that the
phrase in lieu of all taxes “have to give way to the peremptory
language of the Local Government Code specifically providing for the
withdrawal of such exemptions, privileges,” and that “upon the
effectivity of the Local Government Code all exemptions except only as
provided therein can no longer be invoked by MERALCO to disclaim
liability for the local tax.” In fine, the Court has viewed its previous
rulings as laying stress more on the legislative intent of the amendatory
law —whether the tax exemption privilege is to be withdrawn or not—
rather than on whether the law can withdraw, without violating the
Constitution, the tax exemption or not.
While the Court has not too infrequently, referred to tax
exemptions contained in special franchises as being in the nature of
contracts and a part of the inducement for carrying on the franchise,
these exemptions, nevertheless, are far from being strictly contractual
in nature. Contractual tax exemptions, in the real sense of the term and
where the nonimpairment clause of the Constitution can rightly be
invoked, are those agreed to by the taxing authority in contracts, such

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as those contained in government bonds or debentures, lawfully
entered into by them under enabling laws in which the government,
acting in its private capacity, sheds its cloak of authority and waives its
governmental immunity. Truly, tax exemptions of this kind may not be
revoked without impairing the obligations of contracts. These
contractual tax exemptions, however, are not to be confused with tax
exemptions granted under franchises. A franchise partakes the nature
of a grant which is beyond the purview of the non impairment clause of
the Constitution. Indeed, Article XII, Section 11, of the 1987
Constitution, like its precursor provisions in the 1935 and the 1973
Constitutions, is explicit that no franchise for the operation of a public
utility shall be granted except under the condition that such privilege
shall be subject to amendment, alteration or repeal by Congress as
and when the common good so requires.
NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
In recent years, the increasing social challenges of the times
expanded the scope of state activity, and taxation has become a tool to
realize social justice and the equitable distribution of wealth, economic
progress and the protection of local industries as well as public welfare
and similar objectives. Taxation assumes even greater significance
with the ratification of the 1987 Constitution. Thenceforth, the power to
tax is no longer vested exclusively on Congress; local legislative
bodies are now given direct authority to levy taxes, fees and other
charges pursuant to Article X, section 5 of the 1987 Constitution.
City Government of Quezon City vs. Bayan Telecommunications –
GR No. 162015, March 6, 2006
The legislative intent expressed in the phrase “exclusive of this
franchise” cannot be construed other than distinguishing between two
(2) sets of properties, be they real or personal, owned by the
franchisee, namely, (a) those actually, directly and exclusively used in
its radio or telecommunications business, and (b) those properties
which are not so used. It is worthy to note that the properties subject of
the present controversy are only those which are admittedly falling
under the first category. To the mind of the Court, Section 14 of Rep.

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
Act No. 3259 effectively works to grant or delegate to local
governments of Congress’ inherent power to tax the franchisee’s
properties belonging to the second group of properties indicated
above, that is, all properties which, “exclusive of this franchise,” are not
actually and directly used in the pursuit of its franchise. As may be
recalled, the taxing power of local governments under both the 1935
and the 1973 Constitutions solely depended upon an enabling law.
Absent such enabling law, local government units were without
authority to impose and collect taxes on real properties within their
respective territorial jurisdictions. While Section 14 of Rep. Act No.
3259 may be validly viewed as an implied delegation of power to tax,
the delegation under that provision, as couched, is limited to
impositions over properties of the franchisee which are not actually,
directly and exclusively used in the pursuit of its franchise. Necessarily,
other properties of Bayantel directly used in the pursuit of its business
are beyond the pale of the delegated taxing power of local
governments. In a very real sense, therefore, real properties of
Bayantel, save those exclusive of its franchise, are subject to realty
taxes. Ultimately, therefore, the inevitable result was that all realties
which are actually, directly and exclusively used in the operation of its
franchise are “exempted” from any property tax. Bayantel’s franchise
being national in character, the “exemption” thus granted under
Section 14 of Rep. Act No. 3259 applies to all its real or personal
properties found anywhere within the Philippine archipelago.
With the LGC’s taking effect on January 1, 1992, Bayantel’s
“exemption” from real estate taxes for properties of whatever kind
located within the Metro Manila area was, by force of Section 234 of
the Code, expressly withdrawn. But, not long thereafter, however, or on
July 20, 1992, Congress passed Rep. Act No. 7633 amending
Bayantel’s original franchise. Worthy of note is that Section 11 of Rep.
Act No. 7633 is a virtual reenacment of the tax provision, i.e., Section
14, of Bayantel’s original franchise under Rep. Act No. 3259. Stated
otherwise, Section 14 of Rep. Act No. 3259 which was deemed
impliedly repealed by Section 234 of the LGC was expressly revived
under Section 14 of Rep. Act No. 7633. In concrete terms, the realty

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tax exemption heretofore enjoyed by Bayantel under its original
franchise, but subsequently withdrawn by force of Section 234 of the
LGC, has been restored by Section 14 of Rep. Act No. 7633.
Bayantel’s posture is well-taken. While the system of local
government taxation has changed with the onset of the 1987
Constitution, the power of local government units to tax is still limited.
As we explained in Mactan Cebu International Airport Authority: The
power to tax is primarily vested in the 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. Under
the latter, the exercise of the power may be subject to such guidelines
and limitations as the Congress may provide which, however, must be
consistent with the basic policy of local autonomy. (at p. 680; Emphasis
supplied.)
In Philippine Long Distance Telephone Company, Inc. (PLDT)
vs. City of Davao, 363 SCRA 522 (2001), this Court has upheld the
power of Congress to grant exemptions over the power of local
government units to impose taxes. There, the Court wrote: Indeed, the
grant of taxing powers to local government units under the Constitution
and the LGC does not affect the power of Congress to grant
exemptions to certain persons, pursuant to a declared national policy.
The legal effect of the constitutional grant to local governments simply
means that in interpreting statutory provisions on municipal taxing
powers, doubts must be resolved in favor of municipal corporations.
3. Local Taxing Authority (Sec. 132)
(1) Construction of Tax Ordinances (Sec. 5b)
Petron Corp. vs. Mayor Tobias Tiangco – GR No. 158881, April 16,
2008
Section 133 prescribes the limitations on the capacity of local
government units to exercise their taxing powers otherwise granted to
them under the LGC. Apparently, paragraph (h) of the Section

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
mentions two kinds of taxes which cannot be imposed by local
government units, namely: “excise taxes on articles enumerated under
the National Internal Revenue Code [(NIRC)], as amended”; and
“taxes, fees or charges on petroleum products.”
“[i]n case of doubt, any tax ordinance or revenue measure shall
be construed strictly against the local government unit enacting it, and
liberally in favor of the taxpayer.”
Congress has the constitutional authority to impose limitations
on the power to tax of local government units, and Section 133 of the
LGC is one such limitation. Indeed, the provision is the explicit
statutory impediment to the enjoyment of absolute taxing power by
local government units, not to mention the reality that such power is a
delegated power. To cite one example, under Section 133(g), local
government units are disallowed from levying business taxes on
“business enterprises certified to by the Board of Investments as
pioneer or non-pioneer for a period of six (6) and (4) four years,
respectively from the date of registration.”
Assuming that the LGC does not, in fact, prohibit the imposition
of business taxes on petroleum products, we would agree that the IRR
could not impose such a prohibition. With our ruling that Section 133(h)
does indeed prohibit the imposition of local business taxes on
petroleum products, however, the RTC declaration that Article 232 was
invalid is, in turn, itself invalid. Even absent Article 232, local
government units cannot impose business taxes on petroleum
products. If anything, Article 232 merely reiterates what the LGC itself
already provides, with the additional explanation that such prohibition
was “in line with existing national policy.”
4. Procedure for Approval of and Effectivity of Tax Ordinances
(Sec. 187)

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Hagonoy Market vs. Mun. of Hagonoy GR No. 137621, Feb. 6, 2002
Petitioner cannot gripe that there was practically no public
hearing conducted as its objections to the proposed measure were not
considered by the Sangguniang Bayan. To be sure, public hearings are
conducted by legislative bodies to allow interested parties to ventilate
their views on a proposed law or ordinance. These views, however, are
not binding on the legislative body and it is not compelled by law to
adopt the same. Sanggunian members are elected by the people to
make laws that will promote the general interest of their constituents.
They are mandated to use their discretion and best judgment in
serving the people. Parties who participate in public hearings to give
their opinions on a proposed ordinance should not expect that their
views would be patronized by their lawmakers.
5. Publication (Sec. 188)
B. Other Preliminary Matters
1. Residual Powers of LGUs -Power to Levy Other Taxes,
Fees or Charges (Sec. 186)
2. Doctrine of Pre-emption or Exclusionary Rule
Victorias Milling Co., Inc. vs. Municipality of Victorias – L-21183,
September 27, 1968
What can be said at most is that the national government has
preempted the field of percentage taxation. Section 1 of C. A. 472,
while granting municipalities power to levy taxes, expressly removes
from them the power to exact “percentage taxes”.
It is correct to say that preemption in the matter of taxation
simply refers to an instance where the national government elects to
tax a particular area, impliedly withholding from the local government
the delegated power to tax the same field. This doctrine primarily rests
upon the intention of Congress. Conversely, should Congress allow
municipal corporations to cover fields of taxation it already occupies,
then the doctrine of preemption will not apply.
In the case at bar, Section 4 (1) of C. A. 472 clearly and
specifically allows municipal councils to tax persons engaged in "the

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
same businesses or occupation" on which "fixed internal revenue
privilege taxes" are “regularly imposed by the Government”.
Double taxation has been otherwise described as "direct
duplicate taxation". For double taxation to exist, the same property
must be taxed twice, when it should be taxed but once. Double
taxation has been also def ined as taxing the same person twice by the
same jurisdiction for the same thing (Cf. Manila Motor Co., Inc. v.
Ciudad de Manila, 72 Phil. 336). In the case at bar, plaintiff's argument
on double taxation does not inspire assent. First. The two taxes cover
two different objects. Section 1 of the ordinance taxes a person
operating sugar centrals or engaged in the manufacture of centrifugal
sugar. While under Section 2, those taxed are the operators of sugar
refinery mills. One occupation or business is different from the other.
Second. The disputed taxes are imposed on occupation or business.
Both taxes are not on sugar. The amount thereof depends on the
annual output capacity of the mills concerned, regardless of the actual
sugar milled. Plaintiff's argument perhaps could make out a point if the
object of taxation here were the sugar it produces, not the business of
producing it.
II. GENERAL PROVISIONS
A. Scope of taxing powers (Sec. 128)
B. Fundamental Principles (Sec. 130)
C. Definitions (Sec. 131)
D. Common Limitations
1. Income Tax
(1) Correlate with Sec. 143 (f)
2. Documentary Stamp Tax
3. Transfer Taxes
(1) Correlate with Sec. 135
4. Customs Duties
5. Taxes, Fees and Charges (TFC) on Goods Passing
Through the Territorial Jurisdiction of LGUs
(1) Correlate with Sec. 155

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Panaligan vs. City of Tacloban – GR No. L-9319, September 27,
1957
A close scrutiny of the ordinances complained of reveals that
the fees therein imposed are not by reason of the services performed
by the Mayor or the Veterinary Officer, but as an imposition on every
head of the specified animals to be’ transported. The fact that the
ordinances in question make no reference to the purpose for which
they were enacted, and that such purpose was to preserve the public
health or welfare of the residents and people of the City of Tacloban, is
a clear indication that leads this Court to believe that the fees exacted
were not as a regulatory measure in the exercise of its police power,
but for the purpose of raising revenue under the guise of license or
inspection fees. An act or ordinance imposing a license or license tax
under the police power as a means of regulation is valid only when it is
within the limits of such power and is intended for regulation;
otherwise, it is invalid as where the license or tax is unnecessarily
imposed on an occupation or business not inherently subject to police
regulation (Southwest Utility Ice Co. vs. Liebmann, 52 F. 2d 349), for
an act or ordinance imposing a license or license tax for revenue
purposes, under the guise of a police or regulatory measure, is invalid
(Southern Fruit Co. vs. Porter, 199 S.E. 537).
Palma Development Corp vs. Municipality of Malangas – GR No.
152492, October 16, 2003
By express language of Sections 153 and 155 of RA No. 7160,
local government units, through their Sanggunian, may prescribe the
terms and conditions for the imposition of toll fees or charges for the
use of any public road, pier or wharf funded and constructed by them.
A service fee imposed on vehicles using municipal roads leading to the
wharf is thus valid. However, Section 133(e) of RA No. 7160 prohibits
the imposition, in the guise of wharfage, of fees—as well as all other
taxes or charges in any form whatsoever—on goods or merchandise. It
is therefore irrelevant if the fees imposed are actually for police
surveillance on the goods, because any other form of imposition on
goods passing through the territorial jurisdiction of the municipality is
clearly prohibited by Section 133(e).

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
Under Section 131 (y) of RA No. 7160, wharfage is defined as
“a fee assessed against the cargo of a vessel engaged in foreign or
domestic trade based on quantity, weight, or measure received and/or
discharged by vessel.” It is apparent that a wharfage does not lose its
basic character by being labeled as a service fee “for police
surveillance on all goods.”
Unpersuasive is the contention of respondent that petitioner
would unjustly be enriched at the former’s expense. Though the rules
thereon apply equally well to the government, for unjust enrichment to
be deemed present, two conditions must generally concur: (a) a
person is unjustly benefited, and (b) such benefit is derived at
another’s expense or damage. In the instant case the benefits from the
use of the municipal roads and the wharf were not unjustly derived by
petitioner. Those benefits resulted from the infrastructure that the
municipality was mandated by law to provide. There is no unjust
enrichment where the one receiving the benefit has a legal right or
entitlement thereto, or when there is no causal relation between one’s
enrichment and the other’s impoverishment.
6. TFC on products sold by marginal farmers of fishermen
(1) Definition of Marginalized Fishermen (Sec. 122)
City of Cebu vs. IAC 144 SCRA 710
Fish is an agricultural product and an inspection fee is not
allowed to be imposed thereon under the Local Tax Code, whether in
its original form or not.—The aforequoted provision prohibits a local
government from imposing an inspection fee on agricultural products
and fish is an agricultural product. Contrary to the claim of petitioners,
under Section 102 of City Ordinance No. 1 a fisherman selling his fish
within the city has to pay the inspection fee of P0.03 for every kilo of
fish sold. Furthermore, the imposition of the tax will definitely restrict
the free flow of fresh fish to Cebu City because the price of fish will
have to increase.

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A local government cannot impose a specific tax on a product,
like beer, which is already subject to a national specific tax as per P.D.
426.—This power to tax articles subject to specific tax which was
expressly granted to cities by the original provisions of section 24, was
deleted in the amendment. The said section 24, as it now reads,
merely grants the city the power to “levy any tax, fee or other
imposition not specifically enumerated or otherwise provided for” in the
Local Tax Code. The amendment evinces the intent of the lawmaker to
remove such taxing authority (on articles already subject to the
national specific tax) from the cities like Cebu City.
7. Taxes on BOI-registered enterprises
8. Excise taxes under the NIRC/TFC on Petroleum Products
Petron Corp. Vs. Mayor Tobias Tiangco – GR No. 158881, April 16,
2008
It is evident that Am Jur aside, the current definition of an
excise tax is that of a tax levied on a specific article, rather than one
“upon the perfor mance, carrying on, or the exercise of an activity.”
This current definition was already in place when the LGC was enacted
in 1991, and we can only presume that it was what the Congress had
intended as it specified that local government units could not impose
“excise taxes on articles enumerated under the [NIRC].” This
prohibition must pertain to the same kind of excise taxes as imposed
by the NIRC, and not those previously defined “excise taxes” which
were not integrated or denominated as such in our present tax law.
It is quite apparent, therefore, that our current body of taxation
law does not explicitly accommodate the traditional definition of excise
tax offered by Petron. In fact, absent any statutory adoption of the
traditional definition, it may be said that starting in 1986 excise taxes in
this jurisdiction refer exclusively to specific or ad valorem taxes
imposed under the NIRC. At the very least, it is this concept of excise
tax which we can reasonably assume that Congress had in mind and
actually adopted when it crafted the LGC. The palpable absurdity that

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ensues should the alternative interpretation prevail all but strengthens
this position.
The language of Section 133(h) makes plain that the prohibition
with respect to petroleum products extends not only to excise taxes
thereon, but all “taxes, fees and charges.” The earlier reference in
paragraph (h) to excise taxes comprehends a wider range of subjects
of taxation: all articles already covered by excise taxation under the
NIRC, such as alcohol products, tobacco products, mineral products,
automobiles, and such nonessential goods as jewelry, goods made of
precious metals, perfumes, and yachts and other vessels intended for
pleasure or sports. In contrast, the later reference to “taxes, fees and
charges” pertains only to one class of articles of the many subjects of
excise taxes, specifically, “petroleum products.” While local
government units are authorized to burden all such other class of
goods with “taxes, fees and charges,” excepting excise taxes, a
specific prohibition is imposed barring the levying of any other type of
taxes with respect to petroleum products.
Province of Bulacan vs. CA – GR No. 126232, November 27, 1998
In any case, the remaining issues raised by petitioner are
likewise devoid of merit, a province having no authority to impose
taxes on stones, sand, gravel, earth and other quarry resources
extracted from private lands.
The Court of Appeals erred in ruling that a province can impose
only the taxes specifically mentioned under the Local Government
Code. As correctly pointed out by petitioners, Section 186 allows a
province to levy taxes other than those specifically enumerated under
the Code, subject to the conditions specified therein. This finding,
nevertheless, affords cold comfort to petitioners as they are still
prohibited from imposing taxes on stones, sand, gravel, earth and
other quarry resources extracted from private lands. The tax imposed
by the Province of Bulacan is an excise tax, being a tax upon the
perfor-mance, carrying on, or exercise of an activity.

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It is clearly apparent from the above provision that the National
Internal Revenue Code levies a tax on all quarry resources, regardless
of origin, whether extracted from public or private land. Thus, a
province may not ordinarily impose taxes on stones, sand, gravel,
earth and other quarry resources, as the same are already taxed under
the National Internal Revenue Code. The province can, however,
impose a tax on stones, sand, gravel, earth and other quarry resources
extracted from public land because it is expressly empowered to do so
under the Local Government Code. As to stones, sand, gravel, earth
and other quarry resources extracted from private land, however, it
may not do so, because of the limitation provided by Section 133 of the
Code in relation to Section 151 of the National Internal Revenue Code.
9. Percentage taxes and VAT
Pepsi Cola Bottling vs. Municipality of Tanuan 69 SCRA 460
The imposition of “a tax of one centavo (P0.01) on each gallon
(128 flued ounces, U.S.) of volume capacity” on all soft drinks
produced or manufactured under Ordinance No. 27 does not partake
of the nature of a percentage tax on sales, or other taxes in any form
based thereon. The tax is levied on the produce (whether sold or not)
and not on the sales. The volume capacity of the taxpayer’s production
of soft drinks is considered solely for purposes of determining the tax
rate on the products, but there is no set ratio between the volume of
sales and the amount of the tax.
Nor can the tax levied be treated as a specific tax. Specific
taxes are those imposed on specified articles, such as distilled spirits,
wines, x x x cigars and cigarettes, matches, x x x bunker fuel oil, diesel
fuel oil, cinematographic films, playing cards, saccharine, opium and
other habit-forming drugs. Soft drinks is not one of those specified.
Matalin Coconut Co, Inc. vs. The Municipal Council of Malabang,
Lanao del Sur, GR No. L-28138 August 13, 1986
A fixed tax denominated as a “police inspection fee” of P.30 per
sack of cassava starch shipped out of the municipality is void where it

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
is not for a public purpose, just and uniform because the police do
nothing but count the number of cassava sacks shipped out.—
However, the tax imposed under the ordinance can be stricken down
on another ground. According to Section 2 of the abovementioned Act,
the tax levied must be “for public purposes, just and uniform” (Italics
supplied.) As correctly held by the trial court, the so-called “police
inspection fee” levied by the ordinance is “unjust and unreasonable.”
Pelizloy Realty Corp., vs. Province of Benguet, GR No. 183137,
April 10, 2013
In Commissioner of Internal Revenue v. Citytrust Investment
Phils., Inc., 503 SCRA 398 (2006), the Supreme Court defined
percentage tax as a “tax measured by a certain percentage of the
gross selling price or gross value in money of goods sold, bartered or
imported; or of the gross receipts or earnings derived by any person
engaged in the sale of services.” Also, Republic Act No. 8424,
otherwise known as the National Internal Revenue Code (NIRC), in
Section 125, Title V, lists amusement taxes as among the (other)
percentage taxes which are levied regardless of whether or not a
taxpayer is already liable to pay value-added tax (VAT).
Amusement taxes are fixed at a certain percentage of the gross
receipts incurred by certain specified establishments. Thus, applying
the definition in CIR v. Citytrust and drawing from the treatment of
amusement taxes by the NIRC, amusement taxes are percentage
taxes as correctly argued by Pelizloy. However, provinces are not
barred from levying amusement taxes even if amusement taxes are a
form of percentage taxes. Section 133 (i) of the LGC prohibits the levy
of percentage taxes “except as otherwise provided” by the LGC.

10. Taxes on transportation contractors and common carriers

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First Philippine Industrial Corporation vs. CA – GR No. 125948,
December 29, 1998
There is merit in the petition. A “common carrier” may be
defined, broadly, as one who holds himself out to the public as
engaged in the business of transporting persons or property from place
to place, for compensation, offering his services to the public generally.
Article 1732 of the Civil Code defines a “common carrier” as “any
person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public.”
The test for determining whether a party is a common carrier of
goods is: 1. He must be engaged in the business of carrying goods for
others as a public employment, and must hold himself out as ready to
engage in the transportation of goods for person generally as a
business and not as a casual occupation; 2. He must undertake to
carry goods of the kind to which his business is confined; 3. He must
undertake to carry by the method by which his business is conducted
and over his established roads; and 4. The transportation must be for
hire.
It is clear that the legislative intent in excluding from the taxing
power of the local government unit the imposition of business tax
against common carriers is to prevent a duplication of the so-called
“common carrier’s tax.” Petitioner is already paying three (3%) percent
common carrier’s tax on its gross sales/earnings under the National
Internal Revenue Code. To tax petitioner again on its gross receipts in
its transportation of petroleum business would defeat the purpose of
the Local Government Code.
City of Manila vs. Colet, GR No. 120051, December 10, 2014
Among the common limitations on the taxing power of LGUs is
Section 133(j) of the LGC, which states that “[u]nless otherwise
provided herein,” the taxing power of LGUs shall not extend to “[t]axes
on the gross receipts of transportation contractors and persons
engaged in the transportation of passengers or freight by hire and

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
common carriers by air, land or water, except as provided in this
Code[.]” Section 133(j) of the LGC clearly and unambiguously
proscribes LGUs from imposing any tax on the gross receipts of
transportation contractors, persons engaged in the transportation of
passengers or freight by hire, and common carriers by air, land, or
water. Yet, confusion arose from the phrase “unless otherwise provided
herein,” found at the beginning of the said provision. The City of Manila
and its public officials insisted that said clause recognized the power of
the municipality or city, under Section 143(h) of the LGC, to impose tax
“on any business subject to the excise, value-added or percentage tax
under the National Internal Revenue Code, as amended.” And it was
pursuant to Section 143(h) of the LGC that the City of Manilaand its
public officials enacted, approved, and implemented Section 21(B)
11. Taxes on premiums
12. TFC for registration of motor vehicles and issuance of
licenses for driving
(1) Correlate with Sec. 458 (3)(vi) of the LGC and Art.
99(a)(3)(vi) of the IRR of the LGC
LTO vs. City of Butuan – GR No. 131512, January 20, 2000
The Department of Transportation and Communications
(“DOTC”), through the LTO and the LTFRB, has since been tasked with
implementing laws pertaining to land transportation. The LTO is a line
agency under the DOTC whose powers and functions, pursuant to
Article III, Section 4 (d) [1], of R.A. No. 4136, otherwise known as Land
Transportation and Traffic Code, as amended, deal primarily with the
registration of all motor vehicles and the licensing of drivers thereof.
The LTFRB, upon the other hand, is the governing body tasked by
E.O. No. 202, dated 19 June 1987, to regulate the operation of public
utility or “for hire” vehicles and to grant franchises or certificates of
public convenience (“CPC”). Finely put, registration and licensing
functions are vested in the LTO while franchising and regulatory
responsibilities had been vested in the LTFRB.

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LGUs indubitably now have the power to regulate the operation
of tricycles-for-hire and to grant franchises for the operation thereof.
“To regulate” means to fix, establish, or control; to adjust by rule,
method, or established mode; to direct by rule or restriction; or to
subject to governing principles or laws. A franchise is defined to be a
special privilege to do certain things conferred by government on an
individual or corporation, and which does not belong to citizens
generally of common right. On the other hand, “to register” means to
record formally and exactly, to enroll, or to enter precisely in a list or
the like, and a “driver’s license” is the certificate or license issued by
the government which authorizes a person to operate a motor vehicle.
It may not be amiss to state, nevertheless, that 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.”
Such as can be gleaned 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. Clearly unaffected by the Local
Government Code are the powers of LTO under R.A. No. 4136
requiring the registration of all kinds of motor vehicles “used or
operated on or upon any public highway” in the country.
13. Taxes, Fees, or Charges on Philippine Products Actually
Exported;
(1) Correlate with Sec. 143 (c)
14. TFC on CBBEs under RA No. 6810 and RA 6983

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
15. TFC on the National Government, its agencies and
instrumentalities and LGUs
Philippine Fisheries Dev’t Authority vs. CA GR No. 169836, GR No.
July 31, 2007
The MIAA case held that unlike GOCCs, instrumentalities of the
national government, like MIAA, are exempt from local taxes pursuant
to Section 133(o) of the Local Government Code. This exemption,
however, admits of an exception with respect to real property taxes.
Applying Section 234(a) of the Local Government Code, the Court
ruled that when an instrumentality of the national government grants to
a taxable person the beneficial use of a real property owned by the
Republic, said instrumentality becomes liable to pay real property tax.
Thus, while MIAA was held to be an instrumentality of the national
government which is generally exempt from local taxes, it was at the
same time declared liable to pay real property taxes on the airport
lands and buildings which it leased to private persons. It was held that
the real property tax assessments and notices of delinquencies issued
by the City of Pasay to MIAA are void except those pertaining to
portions of the airport which are leased to private parties.
The real property tax assessments issued by the City of Iloilo
should be upheld only with respect to the portions leased to private
persons. In case the Authority fails to pay the real property taxes due
thereon, said portions cannot be sold at public auction to satisfy the tax
delinquency. In Chavez v. Public Estates Authority, 384 SCRA 152 it
was held that reclaimed lands are lands of the public domain and
cannot, without Congressional fiat, be subject of a sale, public or
private.
Mactan Cebu International Airport Authority vs. Marcos – GR No.
120082, Sept. 11, 1996
Section 133 of the LGC prescribes the common limitations on
the taxing powers of local government units. Needless to say, the last
item (item 0 of Sec. 133 of the LGC) is pertinent to this case. The
“taxes, fees or charges” referred to are “of any kind;” hence, they

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include all of these, unless otherwise provided by the LGC. The term
“taxes” is well understood so as to need no further elaboration,
especially in light of the above enumeration. The term “fees” means
charges fixed by law or ordinance for the regulation or inspection of
business or activity, while “charges” are pecuniary liabilities such as
rents or fees against persons or property.
An “agency” of the Government refers to “any of the various
units of the Government, including a department, bureau, office,
instrumentality, or government-owned or controlled corporation, or a
local government or a distinct unit therein;” while an “instrumentality”
refers to “any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction
by law, endowed with some if not all corporate powers, administering
special funds, and enjoying operational autonomy, usually through a
charter. This term includes regulatory agencies, chartered institutions
and government-owned and controlled corporations.”
Accordingly, the position taken by the petitioner is untenable.
Reliance on Basco vs. Philippine Amusement and Gaming Corporation
is unavailing since it was decided before the effectivity of the LGC.
Besides, nothing can prevent Congress from decreeing that even
instrumentalities or agencies of the Government performing
governmental functions may be subject to tax. Where it is done
precisely to fulfill a constitutional mandate and national policy, no one
can doubt its wisdom.
MIAA vs. CA – GR No. 155650, July 20, 2006
A government instrumentality like MIAA falls under Section
133(o) of the Local Government Code, which states: 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: x x x x (o) Taxes, fees or
charges of any kind on the National Government, its agencies and
instrumentalities and local government units. (Emphasis and italics

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
supplied) Section 133(o) recognizes the basic principle that local
governments cannot tax the national government, which historically
merely delegated to local governments the power to tax. While the
1987 Constitution now includes taxation as one of the powers of local
governments, local governments may only exercise such power
“subject to such guidelines and limitations as the Congress may
provide.”
Section 133(o) recognizes the basic principle that local
governments cannot tax the national government, which historically
merely delegated to local governments the power to tax. While the
1987 Constitution now includes taxation as one of the powers of local
governments, local governments may only exercise such power
“subject to such guidelines and limitations as the Congress may
provide.” When local governments invoke the power to tax on national
government instrumentalities, such power is construed strictly against
local governments. The rule is that a tax is never presumed and there
must be clear language in the law imposing the tax. Any doubt whether
a person, article or activity is taxable is resolved against taxation. This
rule applies with greater force when local governments seek to tax
national government instrumentalities. Another rule is that a tax
exemption is strictly construed against the taxpayer claiming the
exemption. However, when Congress grants an exemption to a
national government instrumentality from local taxation, such
exemption is construed liberally in favor of the national government
instrumentality. As this Court declared in Maceda v. Macaraig, Jr.: The
reason for the rule does not apply in the case of exemptions running to
the benefit of the government itself or its agencies. In such case the
practical effect of an exemption is merely to reduce the amount of
money that has to be handled by government in the course of its
operations. For these reasons, provisions granting exemptions to
government agencies may be construed liberally, in favor of non
taxliability of such agencies. There is, moreover, no point in national
and local governments taxing each other, unless a sound and
compelling policy requires such transfer of public funds from one
government pocket to another.

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There is also no reason for local governments to tax national
government instrumentalities for rendering essential public services to
inhabitants of local governments. The only exception is when the
legislature clearly intended to tax government instrumentalities for the
delivery of essential public services for sound and compelling policy
considerations. There must be express language in the law
empowering local governments to tax national government
instrumentalities. Any doubt whether such power exists is resolved
against local governments.
Section 234(a) of the Local Government Code exempts from
real estate tax any “[r]eal property owned by the Republic of the
Philippines.” Section 234(a) provides: SEC. 234. Exemptions from
Real Property Tax.—The following are exempted from payment of
the real property tax: (a) Real property owned by the Republic of
the Philippines or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person; x x x. (Emphasis supplied) This
exemption should be read in relation with Section 133(o) of the same
Code, which prohibits local governments from imposing “[t]axes, fees
or charges of any kind on the National Government, its agencies and
instrumentalities x x x.” The real properties owned by the Republic are
titled either in the name of the Republic itself or in the name of
agencies or instrumentalities of the National Government. The
Administrative Code allows real property owned by the Republic to be
titled in the name of agencies or instrumentalities of the national
government. Such real properties remain owned by the Republic and
continue to be exempt from real estate tax.
The Republic may grant the beneficial use of its real property to
an agency or instrumentality of the national government. This happens
when title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real
property. Such arrangement does not result in the loss of the tax
exemption. Section 234(a) of the Local Government Code states that

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
real property owned by the Republic loses its tax exemption only if the
“beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person.” MIAA, as a government
instrumentality, is not a taxable person under Section 133(o) of the
Local Government Code. Thus, even if we assume that the Republic
has granted to MIAA the beneficial use of the Airport Lands and
Buildings, such fact does not make these real properties subject to real
estate tax.
By express mandate of the Local Government Code, local
governments cannot impose any kind of tax on national government
instrumentalities like the MIAA. Local governments are devoid of power
to tax the national government, its agencies and instrumentalities. The
taxing powers of local governments do not extend to the national
government, its agencies and instrumentalities, “[u]nless otherwise
provided in this Code” as stated in the saving clause of Section 133.
The saving clause refers to Section 234(a) on the exception to the
exemption from real estate tax of real property owned by the Republic.
The minority’s theory violates Section 133(o) of the Local
Government Code which expressly prohibits local governments from
imposing any kind of tax on national government instrumentalities.
Section 133(o) does not distinguish between national government
instrumentalities with or without juridical personalities. Where the law
does not distinguish, courts should not distinguish. Thus, Section
133(o) applies to all national government instrumentalities, with or
without juridical personalities. The determinative test whether MIAA is
exempt from local taxation is not whether MIAA is a juridical person,
but whether it is a national government instrumentality under Section
133(o) of the Local Government Code. Section 133(o) is the specific
provision of law prohibiting local governments from imposing any kind
of tax on the national government, its agencies and instrumentalities.
The saving clause in Section 133 refers to the exception to the
exemption in Section 234(a) of the Code, which makes the national
government subject to real estate tax when it gives the beneficial

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use of its real properties to a taxable entity. Section 234(a) of the
Local Government Code provides: SEC. 234. Exemptions from Real
Property Tax. —The following are exempted from payment of the
real property tax: (a) Real property owned by the Republic of the
Philippines or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person. x x x. (Emphasis supplied) Under
Section 234(a), real property owned by the Republic is exempt from
real estate tax. The exception to this exemption is when the
government gives the beneficial use of the real property to a taxable
entity. The exception to the exemption in Section 234(a) is the only
instance when the national government, its agencies and
instrumentalities are subject to any kind of tax by local governments.
The exception to the exemption applies only to real estate tax and not
to any other tax. The justification for the exception to the exemption is
that the real property, although owned by the Republic, is not devoted
to public use or public service but devoted to the private gain of a
taxable person.
There is no conflict whatsoever between Sections 133
and 193 because Section 193 expressly admits its subordination to
other provisions of the Code when Section 193 states “[u]nless
otherwise provided in this Code.” By its own words, Section 193 admits
the superiority of other provisions of the Local Government Code that
limit the exercise of the taxing power in Section 193. When a provision
of law grants a power but withholds such power on certain matters,
there is no conflict between the grant of power and the withholding of
power. The grantee of the power simply cannot exercise the power on
matters withheld from its power.
Since Section 133 prescribes the “common limitations” on the
taxing powers of local governments, Section 133 logically prevails over
Section 193 which grants local governments such taxing powers. By
their very meaning and purpose, the “common limitations” on the
taxing power prevail over the grant or exercise of the taxing power. If
the taxing power of local governments in Section 193 prevails over the

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
limitations on such taxing power in Section 133, then local
governments can impose any kind of tax on the national government,
its agencies and instrumentalities—a gross absurdity.
MIAA vs. City of Pasay – GR No. 163072, April 2, 2009
MIAA is not a government-owned or controlled corporation but
a government instrumentality which is exempt from any kind of tax
from the local governments. Indeed, the exercise of the taxing power of
local government units is subject to the limitations enumerated in
Section 133 of the Local Government Code. Under Section 133(o) of
the Local Government Code, local government units have no power to
tax instrumentalities of the national government like the MIAA. Hence,
MIAA is not liable to pay real property tax for the NAIA Pasay
properties.
City of Davao City vs. RTC – GR No. 127383, August 18, 2005
The Court, in ruling MCIAA non-exempt from realty taxes,
considered that Section 133 qualified the exemption of the National
Government, its agencies and instrumentalities from local taxation with
the phrase “unless otherwise provided herein.” The Court then
considered the other relevant provisions of the Local Government
Code.
Section 133 was not intended to be so absolute a prohibition on
the power of LGUs to tax the National Government, its agencies and
instrumentalities, as evidenced by these cited provisions which
“otherwise provided.” But what was the extent of the limitation under
Section 133? This is how the Court, in a discussion of far-reaching
consequence, defined the parameters in Mactan: The foregoing
sections of the LGC speak of: (a) the limitations on the taxing powers
of local government units and the exceptions to such limitations; and
(b) the rule on tax exemptions and the exceptions thereto. The use of
exceptions or provisos in these sections, as shown by the following
clauses: (1) “unless otherwise provided herein” in the opening
paragraph of Section 133; (2) “Unless otherwise provided in this Code”
in Section 193; (3) “not hereafter specifically exempted” in Section 232;

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and (4) “Except as provided herein” in the last paragraph of Section
234.
This Court, in Mactan, acknowledged that under Section 133,
instrumentalities were generally exempt from all forms of local
government taxation, unless otherwise provided in the Code. On the
other hand, Section 232 “otherwise provides” insofar as it allowed local
government units to levy an ad valorem real property tax, irrespective
of who owned the property. At the same time, the imposition of real
property taxes under Section 232 is in turn qualified by the phrase “not
hereinafter specifically exempted.” The exemptions from real property
taxes are enumerated in Section 234, which specifically states that
only real properties owned “by the Republic of the Philippines or any of
its political subdivisions” are exempted from the payment of the tax.
Clearly, instrumentalities or GOCCs do not fall within the exceptions
under Section 234.
The two conditionalities of Section 33 cannot bear relevance on
whether the Local Government Code removed the tax-exempt status of
the GSIS. The express withdrawal of all tax exemptions accorded to all
persons, natural or juridical, as stated in Section 193 of the Local
Government Code, applies without impediment to the present case.
Such position is bolstered by the other cited provisions of the Local
Government Code, and by the Mactan ruling.
Also worthy of note is that the Constitution itself promotes the
principles of local autonomy as embodied in the Local Government
Code. The State is mandated to ensure the autonomy of local
governments, and local governments are empowered to levy taxes,
fees and charges that accrue exclusively to them, subject to
congressional guidelines and limitations. The principle of local
autonomy is no mere passing dalliance but a constitutionally enshrined
precept that deserves respect and appropriate enforcement by this
Court.

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
(To be discussed together with Secs.232 and 234 on Real Property
Tax)
III. TAXING AND OTHER REVENUE RASING POWERS OF LGUS
A. Provinces
1. Local Transfer Tax (Sec. 135)
2. Business Tax on Printing and Publication (Sec. 136)
3. Franchise Tax (Sec. 137)
NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
Section 131 (m) of the LGC defines a “franchise” as “a right or
privilege, affected with public interest which is conferred upon private
persons or corporations, under such terms and conditions as the
government and its political subdivisions may impose in the interest of
the public welfare, security and safety.” On the other hand, section 131
(d) of the LGC defines “business” as “trade or commercial activity
regularly engaged in as means of livelihood or with a view to profit.”
Petitioner claims that it is not engaged in an activity for profit, in as
much as its charter specifically provides that it is a “non-profit
organization.”
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.

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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 exercise its franchise. It is within this
context that the phrase “tax on businesses enjoying a franchise” in
section 137 of the LGC should be interpreted and understood. Verily, to
determine whether the petitioner is covered by the franchise tax in
question, the following requisites should concur: (1) that petitioner has
a “franchise” in the sense of a secondary or special franchise; and (2)
that it is exercising its rights or privileges under this franchise within the
territory of the respondent city government.
Quezon City vs. ABS-CBN GR No. 166408. October 6, 2008
Section 8 of R.A. No. 7966 imposes on ABS-CBN a franchise
tax equivalent to three (3) percent of all gross receipts of the radio/
television business transacted under the franchise and the franchise
tax shall be “in lieu of all taxes” on the franchise or earnings thereof.
The “in lieu of all taxes” provision in the franchise of ABS-CBN does
not expressly provide what kind of taxes ABSCBN is exempted from. It
is not clear whether the exemption would include both local, whether
municipal, city or provincial, and national tax. What is clear is that ABSCBN shall be liable to pay three (3) percent franchise tax and income
taxes under Title II of the NIRC. But whether the “in lieu of all taxes
provision” would include exemption from local tax is not unequivocal.
As adverted to earlier, the right to exemption from local franchise tax
must be clearly established and cannot be made out of inference or
implications but must be laid beyond reasonable doubt. Verily, the
uncertainty in the “in lieu of all taxes” provision should be construed
against ABS-CBN. ABSCBN has the burden to prove that it is in fact
covered by the exemption so claimed. ABS-CBN miserably failed in
this regard.

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
In its decision dated January 20, 1999, the RTC held that
pursuant to the “in lieu of all taxes” provision contained in Section 8 of
R.A. No. 7966, ABS-CBN is exempt from the payment of the local
franchise tax. The RTC further pronounced that ABS-CBN shall instead
be liable to pay a franchise tax of 3% of all gross receipts in lieu of all
other taxes. On this score, the RTC ruling is flawed. In keeping with the
laws that have been passed since the grant of ABS-CBN’s franchise,
the corporation should now be subject to VAT, instead of the 3%
franchise tax.
City of Iriga vs. Camarines Sur III Electric Cooperative, Inc., GR
No. 192945, September 5, 2012
The power of the local government units to impose and collect
taxes is derived from the Constitution itself which grants them “the
power to create its own sources of revenues and to levy taxes, fees
and charges subject to such guidelines and limitation as the Congress
may provide.” This explicit constitutional grant of power to tax is
consistent with the basic policy of local autonomy and decentralization
of governance. With this power, local government units have the fiscal
mechanisms to raise the funds needed to deliver basic services to their
constituents and break the culture of dependence on the national
government. Thus, consistent with these objectives, the LGC was
enacted granting the local government units, like petitioner, the power
to impose and collect franchise tax.
In National Power Corporation v. City of Cabanatuan, 401
SCRA 259 (2003), the Court declared that “a franchise tax is ‘a tax on
the privilege of transacting business in the state and exercising
corporate franchises granted by the state.’ ” 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. “It is within this context that the phrase tax on
businesses enjoying a franchise in Section 137 of the LGC should be
interpreted and understood.”

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To be liable for local franchise tax, the following requisites
should concur: (1) that one has a “franchise” in the sense of a
secondary or special franchise; and (2) that it is exercising its rights or
privileges under this franchise within the territory of the pertinent local
government unit.
Smart Communications vs. City of Davao – GR No. 155491,
September 16, 2008 (Also read decision on Motion for
Reconsideration dated July 21, 2009)
The “in lieu of all taxes” clause in Smart’s franchise is put in
issue before the Court. In order to ascertain its meaning, consistent
with fundamentals of statutory construction, all the words in the statute
must be considered. The grant of tax exemption by R.A. No. 7294 is
not to be interpreted from a consideration of a single portion or of
isolated words or clauses, but from a general view of the act as a
whole. Every part of the statute must be construed with reference to
the context.
The uncertainty in the “in lieu of all taxes” clause in R.A. No.
7294 on whether Smart is exempted from both local and national
franchise tax is construed strictly against Smart who is claiming the
exemption. Smart has the burden of proving that, aside from the
imposed 3% franchise tax, Congress intended it to be exempted from
all kinds of franchise taxes—whether local or national. However, Smart
failed in this regard. Tax exemptions are never presumed and are
strictly construed against the taxpayer and liberally in favor of the
taxing authority. They can only be given force when the grant is clear
and categorical. The surrender of the power to tax, when claimed,
must be clearly shown by a language that will admit of no reasonable
construction consistent with the reservation of the power. If the
intention of the legislature is open to doubt, then the intention of the
legislature must be resolved in favor of the State. In this case, the
doubt must be resolved in favor of the City of Davao. The “in lieu of all
taxes” clause applies only to national internal revenue taxes and not to
local taxes.

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock

4. Tax on Sand, Gravel and Quarry Resources (Sec. 138)
Municipality of San Fernando vs. Sta. Romana L-GR No. 30159,
Mar. 31, 1987
Under the above-quoted provisions of the Local Tax Code,
there is no question that the authority to impose the license fees in
dispute, properly belongs to the province concerned and not to the
Municipality of Luna which is specifically prohibited under Section 22 of
the same Code "from levying taxes, fees and charges that the province
or city is authorized to levy in this Code." On the other hand, the
Municipality of San Fernando cannot extract sand and gravel from the
Municipality of Luna without paying the corresponding taxes or fees
that may be imposed by the province of La Union.

under the Local Government Code. As to stones, sand, gravel, earth
and other quarry resources extracted from private land, however, it
may not do so, because of the limitation provided by Section 133 of the
Code in relation to Section 151 of the National Internal Revenue Code.
5. Professional Tax (Sec. 139)
(1) Definition of Professionals (Sec. 238 (f) IRR of the
LGC)
(2) Professional practices his profession in several
places (Sec. 228 (b) IRR of LGC)
6. Amusement Tax (Sec. 140) as amended by RA No. 9640
dated May 21, 2009
7. Annual Fixed Tax on Delivery Trucks / Vans (Sec. 141)

Province of Bulacan vs. CA – GR No. 126232, November 27, 1998
The Court of Appeals erred in ruling that a province can impose
only the taxes specifically mentioned under the Local Government
Code. As correctly pointed out by petitioners, Section 186 allows a
province to levy taxes other than those specifically enumerated under
the Code, subject to the conditions specified therein. This finding,
nevertheless, affords cold comfort to petitioners as they are still
prohibited from imposing taxes on stones, sand, gravel, earth and
other quarry resources extracted from private lands. The tax imposed
by the Province of Bulacan is an excise tax, being a tax upon the
perfor-mance, carrying on, or exercise of an activity.

PBA vs. CA GR No. 119122, August 8, 2000
The laws on the matter are succinct and clear and need no
elaborate disquisition. Section 13 of the Local Tax Code provides:
“Sec. 13. Amusement tax on admission.—The province shall impose a
tax on admission to be collected from the proprietors, lessees, or
operators of theaters, cinematographs, concert halls, circuses and
other places of amusement x x x.” The foregoing provision of law in
point 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, as the same is expressly embraced in PD 1959,
which amended PD 1456.

It is clearly apparent from the above provision that the National
Internal Revenue Code levies a tax on all quarry resources, regardless
of origin, whether extracted from public or private land. Thus, a
province may not ordinarily impose taxes on stones, sand, gravel,
earth and other quarry resources, as the same are already taxed under
the National Internal Revenue Code. The province can, however,
impose a tax on stones, sand, gravel, earth and other quarry resources
extracted from public land because it is expressly empowered to do so

While Section 13 of the Local Tax Code mentions “other places
of amusement,” professional basketball games are definitely not within
its scope. Under the principle of ejusdem generis, where general words
follow an enumeration of persons or things, by words of a particular
and specific meaning, such general words are not to be construed in
their widest extent, but are to be held as applying only to persons or
things of the same kind or class as those specifically mentioned. Thus,
in determining the meaning of the phrase “other places of amusement,”

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
one must refer to the prior enumeration of theaters, cinematographs,
concert halls and circuses with artistic expression as their common
characteristic. Professional basketball games do not fall under the
same category as theaters, cinematographs, concert halls and
circuses as the latter basically belong to artistic forms of entertainment
while the former caters to sports and gaming.
Untenable is the contention that income from the cession of
streamer and advertising spaces to VEI is not subject to amusement
tax. The questioned proviso may be found in Section 1 of PD 1456
which states: “SECTION 1. Section 268 of the National Internal
Revenue Code of 1977, as amended, is hereby further amended to
read as follows: ‘Sec. 268. Amusement taxes.—There shall be
collected from the proprietor, lessee or operator of cockpits, cabarets,
night or day clubs, boxing exhibitions, professional basketball games,
Jai-Alai, race tracks and bowling alleys, a tax equivalent to: x x x x x x
x x x of their gross receipts, irrespective of whether or not any amount
is charged or paid for admission. For the purpose of the amusement
tax, the term gross receipts’ embraces all the receipts of the proprietor,
lessee or operator of the amusement place. Said gross receipts also
include income from television, radio and motion picture rights, if any.
(A person, or entity or association conducting any activity subject to the
tax herein imposed shall be similarly liable for said tax with respect to
such portion of the receipts derived by him or it.)” (italics ours) The
foregoing definition of gross receipts is broad enough to embrace the
cession of advertising and streamer spaces as the same embraces all
the receipts of the proprietor, lessee or operator of the amusement
place. The law being clear, there is no need for an extended
interpretation.
Pelizloy Realty Corp., vs. Province of Benguet, GR No. 183137,
April 10, 2013
Evidently, Section 140 of the LGC carves a clear exception to
the general rule in Section 133 (i). Section 140 expressly allows for the
imposition by provinces of amusement taxes on “the proprietors,
lessees, or operators of theaters, cinemas, concert halls, circuses,

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boxing stadia, and other places of amusement.” However, resorts,
swimming pools, bath houses, hot springs, and tourist spots are not
among those places expressly mentioned by Section 140 of the LGC
as being subject to amusement taxes. Thus, the determination of
whether amusement taxes may be levied on admissions to resorts,
swimming pools, bath houses, hot springs, and tourist spots hinges on
whether the phrase ‘other places of amusement’ encompasses resorts,
swimming pools, bath houses, hot springs, and tourist spots.
As defined in The New Oxford American Dictionary, ‘show’
means “a spectacle or display of something, typically an impressive
one”; while ‘performance’ means “an act of staging or presenting a
play, a concert, or other form of entertainment.” As such, the ordinary
definitions of the words ‘show’ and ‘performance’ denote not only visual
engagement (i.e., the seeing or viewing of things) but also active doing
(e.g., displaying, staging or presenting) such that actions are
manifested to, and (correspondingly) perceived by an audience.
Considering these, it is clear that resorts, swimming pools, bath
houses, hot springs and tourist spots cannot be considered venues
primarily “where one seeks admission to entertain oneself by seeing or
viewing the show or performances”. While it is true that they may be
venues where people are visually engaged, they are not primarily
venues for their proprietors or operators to actively display, stage or
present shows and/or performances. Thus, resorts, swimming pools,
bath houses, hot springs and tourist spots do not belong to the same
category or class as theaters, cinemas, concert halls, circuses, and
boxing stadia. It follows that they cannot be considered as among the
‘other places of amusement’ contemplated by Section 140 of the LGC
and which may properly be subject to amusement taxes.
B. Municipalities
1. Business Taxes (Sec. 143)

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
Ericsson Telecommunication vs. City of Pasig GR No. 176667,
November 22. 2007
The above provision specifically refers to gross receipts which
is defined under Section 131 of the Local Government Code, as
follows: x x x x (n) “Gross Sales or Receipts” include the total amount
of money or its equivalent representing the contract price,
compensation or service fee, including the amount charged or
materials supplied with the services and the deposits or advance
payments actually or constructively received during the taxable quarter
for the services performed or to be performed for another person
excluding discounts if determinable at the time of sales, sales return,
excise tax, and value-added tax (VAT); x x x x The law is clear. Gross
receipts include money or its equivalent actually or constructively
received in consideration of services rendered or articles sold,
exchanged or leased, whether actual or constructive.
Revenue Regulations No. 16-2005 dated September 1, 2005
defined and gave examples of “constructive receipt,” to wit: SEC. 4.
108-4. Definition of Gross Receipts.—x x x “Constructive receipt”
occurs when the money consideration or its equivalent is placed at the
control of the person who rendered the service without restrictions by
the payor. The following are examples of constructive receipts: (1)
deposit in banks which are made available to the seller of services
without restrictions; (2) issuance by the debtor of a notice to offset any
debt or obligation and acceptance thereof by the seller as payment for
services rendered; and (3) transfer of the amounts retained by the
payor to the account of the contractor. There is, therefore, constructive
receipt, when the consideration for the articles sold, exchanged or
leased, or the services rendered has already been placed under the
control of the person who sold the goods or rendered the services
without any restriction by the payor.
Gross revenue covers money or its equivalent actually or
constructively received, including the value of services rendered or
articles sold, exchanged or leased, the payment of which is yet to be
received. This is in consonance with the International Financial

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Reporting Standards, which defines revenue as the gross inflow of
economic benefits (cash, receivables, and other assets) arising from
the ordinary operating activities of an enterprise (such as sales of
goods, sales of services, interest, royalties, and dividends), which is
measured at the fair value of the consideration received or receivable.
In petitioner’s case, its audited financial statements reflect
income or revenue which accrued to it during the taxable period
although not yet actually or constructively received or paid. This is
because petitioner uses the accrual method of accounting, where
income is reportable when all the events have occurred that fix the
taxpayer’s right to receive the income, and the amount can be
determined with reasonable accuracy; the right to receive income, and
not the actual receipt, determines when to include the amount in gross
income. The imposition of local business tax based on petitioner’s
gross revenue will inevitably result in the constitutionally proscribed
double taxation—taxing of the same person twice by the same
jurisdiction for the same thing—inasmuch as petitioner’s revenue or
income for a taxable year will definitely include its gross receipts
already reported during the previous year and for which local business
tax has already been paid. Thus, respondent committed a palpable
error when it assessed petitioner’s local business tax based on its
gross revenue as reported in its audited financial statements, as
Section 143 of the Local Government Code and Section 22(e) of the
Pasig Revenue Code clearly provide that the tax should be computed
based on gross receipts.
Yamane vs. BA Lepanto – GR No 154992, October 25, 2005
The most well-known mode of local government taxation is
perhaps the real property tax, which is governed by Title II, Book II of
the Code, and which bears no application in this case. A different set of
provisions, found under Title I of Book II, governs other taxes
imposable by local government units, including business taxes. Under
Section 151 of the Code, cities such as Makati are authorized to levy
the same taxes fees and charges as provinces and municipalities. It is
in Article II, Title II, Book II of the Code, governing municipal taxes,

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
where the provisions on business taxation relevant to this petition may
be found.
City of Manila vs. Coca Cola Bottlers, GR No. 181845, August 4,
2009
Petitioners obstinately ignore the exempting proviso in Section
21 of Tax Ordinance No. 7794, to their own detriment. Said exempting
proviso was precisely included in said section so as to avoid double
taxation. Double taxation means taxing the same property twice when
it should be taxed only once; that is, “taxing the same person twice by
the same jurisdiction for the same thing.” It is obnoxious when the
taxpayer is taxed twice, when it should be but once. Otherwise
described as “direct duplicate taxation,” the two taxes must be imposed
on the same subject matter, for the same purpose, by the same taxing
authority, within the same jurisdiction, during the same taxing period;
and the taxes must be of the same kind or character. Using the
aforementioned test, the Court finds that there is indeed double
taxation if respondent is subjected to the taxes under both Sections 14
and 21 of Tax Ordinance No. 7794, since these are being imposed: (1)
on the same subject matter—the privilege of doing business in the City
of Manila; (2) for the same purpose—to make persons conducting
business within the City of Manila contribute to city revenues; (3) by
the same taxing authority— petitioner City of Manila; (4) within the
same taxing jurisdiction—within the territorial jurisdiction of the City of
Manila; (5) for the same taxing periods—per calendar year; and (6) of
the same kind or character—a local business tax imposed on gross
sales or receipts of the business.
The distinction petitioners attempt to make between the taxes
under Sections 14 and 21 of Tax Ordinance No. 7794 is specious. The
Court revisits Section 143 of the LGC, the very source of the power of
municipalities and cities to impose a local business tax, and to which
any local business tax imposed by petitioner City of Manila must
conform. It is apparent from a perusal thereof that when a municipality
or city has already imposed a business tax on manufacturers, etc. of
liquors, distilled spirits, wines, and any other article of commerce,

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pursuant to Section 143(a) of the LGC, said municipality or city may no
longer subject the same manufacturers, etc. to a business tax under
Section 143(h) of the same Code. Section 143(h) may be imposed only
on businesses that are subject to excise tax, VAT, or percentage tax
under the NIRC, and that are “not otherwise specified in preceding
paragraphs.” In the same way, businesses such as respondent’s,
already subject to a local business tax under Section 14 of Tax
Ordinance No. 7794 [which is based on Section 143(a) of the LGC],
can no longer be made liable for local business tax under Section 21 of
the same Tax Ordinance [which is based on Section 143(h) of the
LGC].
Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB
Case No. 386 February 12, 2009 *
(read also case decided by the CTA Division) *
Cagayan Electric Power and Light Co., Inc., vs. City of Cagayan
de Oro, GR No. 191761, November 14, 2012.
Unfortunately for CEPALCO, we agree with the ruling of the trial
and appellate courts that Ordinance No. 9503-2005 is a tax on
business. CEPALCO’s act of leasing for a consideration the use of its
posts, poles or towers to other pole users falls under the Local
Government Code’s definition of business. Business is defined by
Section 131(d) of the Local Government Code as “trade or commercial
activity regularly engaged in as a means of livelihood or with a view to
profit.” In relation to Section 131(d), Section 143(h) of the Local
Government Code provides that the city may impose taxes, fees, and
charges on any business which is not specified in Section 143(a) to (g)
and which the sanggunian concerned may deem proper to tax.
More importantly, because “any person, who in the course of
trade or business x x x leases goods or properties x x x shall be
subject to the value-added tax,” the imposable tax rate should not
exceed two percent of gross receipts of the lease of poles of the
preceding calendar year. Section 143(h) states that “on any business

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
subject to x x x value-added x x x tax under the National Internal
Revenue Code, as amended, the rate of tax shall not exceed two
percent (2%) of gross sales or receipts of the preceding calendar year”
from the lease of goods or properties. Hence, the 10% tax rate
imposed by Ordinance No. 9503-2005 clearly violates Section 143(h)
of the Local Government Code.
(1) Catch all provision – Sec. 143 (h)
(2) Rates of Tax within Metropolitan Manila (Sec. 144)
(3) Retirement of Business (Sec. 145)
Mobil Phils. vs. City Treasurer of Makati GR No. 154092, July 14,
2005
Prefatorily, it is necessary to distinguish between a business tax
vis-à-vis an income tax. Business taxes imposed in the exercise of
police power for regulatory purposes are paid for the privilege of
carrying on a business in the year the tax was paid. It is paid at the
beginning of the year as a fee to allow the business to operate for the
rest of the year. It is deemed a prerequisite to the conduct of business.
Income tax, on the other hand, is a tax on all yearly profits arising from
property, professions, trades or offices, or as a tax on a person’s
income, emoluments, profits and the like. It is tax on income, whether
net or gross realized in one taxable year. It is due on or before the 15th
day of the 4th month following the close of the taxpayer’s taxable year
and is generally regarded as an excise tax, levied upon the right of a
person or entity to receive income or profits.
For the year 1998, petitioner paid a total of P2,262,122.48 to
the City Treasurer of Makati as business taxes for the year 1998. The
amount of tax as computed based on petitioner’s gross sales for 1998
is only P1,331,638.84. Since the amount paid is more than the amount
computed based on petitioner’s actual gross sales for 1998, petitioner
upon its retirement is not liable for additional taxes to the City of
Makati. Thus, we find that the respondent erroneously treated the
assessment and collection of business tax as if it were income tax, by

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rendering an additional assessment of P1,331,638.84 for the revenue
generated for the year 1998.
(4) Payment of Business Taxes (Sec. 146)
(5) Situs of Tax (Sec. 150) – Where to pay business
tax?
Shell Co vs. Mun. Of Sipocot – 105 Phil. 1263
Appeal from the decision of the Court of First Instance of
Manila in Civil Case No. 30513, whereby plaintiff-appellant Shell
Company of the Philippines, seeks judicial declaration on the scope of
Ordinance No. 3, series of 1956 of the Municipality of Sipocot,
Camarines Sur. The ordinance in question imposes a levy of an
additional tax not exceeding 25% of the rates fixed under Republic Act
1435, on manufactured oil sold or distributed within the limits of the
territorial jurisdiction of the Municipality of Sipocot. The decision is
assailed in so far as it sustains the imposition and collection of the
additional tax upon sales of manufactured oils and other petroleum
products stored in the Sipocot depot, for delivery outside the said
municipality. The evidence presented shows that the customers place
their orders either at the Sipocot depot, or at the main office of the
appellant company in Manila, depending on the volume of gas
intended to be purchased. The invoice is prepared in the meantime,
wherein, among other things, the place of delivery is stated. Said
invoice is given to the truck driver, who upon arrival at the destination,
is instructed to present the same to the customer, requiring the latter to
acknowledge receipt of the products delivered, in the condition upon
which they were received. Payment is made after delivery and
acceptance of the goods by the buyer. It is evident that delivery to the
carrier is not considered by the parties as amounting to a delivery to
the consumer within the meaning of Article 1423 of the Civil Code of
the Philippines; here the carrier is merely an agent of the appellant
company. Accordingly, these sales should not be subjected to
additional tax, being transactions effected outside the municipality's
territorial limits. Appellee questions the propriety of this action for
declaratory relief, contending that the issue had become moot on

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
account of the payments made by the company to the municipality
pursuant to the tax ordinance. This contention is incorrect for even if
payment was so made on any particular sales, uncertainty on the
applicability of the ordinance to future sales would still remain.
Phil. Match vs. City of Cebu – L-30745 – Jan. 1888, 197778
The city can validly tax the sales of matches to customers
outside of the city as long as the orders were booked and paid for in
the company’s branch office in the city. Those matches can be
regarded as sold in the city, as contemplated in the ordinance,
because the matches were delivered to the carrier in Cebu City.
Generally, delivery to the carrier is delivery to the buyer. A different
interpretation would defeat the tax ordinance in question or encourage
tax evasion through the simple expedient of arranging for the delivery
of the matches at the outskirts of the city although the purchases were
effected and paid for in the company’s branch office in the city. The
municipal board of Cebu City is empowered “to provide for the levy and
collection of taxes for general and special purposes in accordance with
law.”
The taxing power of cities, municipalities and municipal districts
may be used (1) “upon any person engaged in any occupation or
business, or exercising any privilege” therein; (2) for services rendered
by those political subdivisions or rendered in connection with any
business, profession or occupation being conducted therein, and (3) to
levy, for public purposes, just and uniform taxes, licenses or fees.
Iloilo bottlers vs. City of Iloilo GR No. 52019 – Aug. 18, 1988
(compare with current LGC provisions and IRR provisions on rolling
stores)
This Court has always recognized that the right to manufacture
implies the right to sell/distribute the manufactured products [See
Central Azucarera de Don Pedro v. City of Manila and Sarmiento, 97
Phil. 627 (1955); Caltex (Philippines), Inc. v. City of Manila and
Cudiamat, G.R. No. L-22764, July 28, 1969, 28 SCRA 840, 843.]
Hence, for tax purposes, a manufacturer does not necessarily become
engaged in the separate business of selling simply because it sells the

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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. In several cases [See Central Azucarera de Don Pedro v.
City of Manila and Sarmiento, supra; Cebu Portland Cement Co. v. City
of Manila and the City Treasurer, 108 Phil. 1063 (1960); Caltex
(Philippines), Inc. v. City of Manila and Cudiamat, supra], this Court
had occasion to distinguish two marketing systems: Under the first
system, the manufacturer enters into sales transactions and invoices
the sales at its main office where purchase orders are received and
approved before delivery orders are sent to the company’s
warehouses, where in turn actual deliveries are made. No warehouse
sales are made; nor are separate stores maintained where products
may be sold independently from the main office. The warehouses only
serve as storage sites and delivery points of the products earlier sold
at the main office. Under the second system, sales transactions are
entered into and perfected at stores or warehouses maintained by the
company. Any one who desires to purchase the product may go to the
store or warehouse and there purchase the merchandise. The stores
and warehouses serve as selling centers. Entities operating under the
first system are NOT considered engaged in the separate business of
selling or dealing in their products, independent of their manufacturing
business. Entities operating under the second system are considered
engaged in the separate business of selling.
In the case at bar, the company distributed its softdrinks by
means of a fleet of delivery trucks which went directly to customers in
the different places in Iloilo province. Sales transactions with
customers were entered into and sales were perfected and
consummated by route salesmen. Truck sales were made
independently of transactions in the main office. The delivery trucks
were not used solely for the purpose of delivering softdrinks previously

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
sold at Pavia. They served as selling units. They were what were
called, until recently, “rolling stores”. The delivery trucks were therefore
much the same as the stores and warehouses under the second
marketing system. Iloilo Bottlers, Inc. thus falls under the second
category above. That is, the corporation was engaged in the separate
business of selling or distributing softdrinks, independently of its
business of bottling them.
The tax imposed under Ordinance No. 5 is an excise tax. It is a
tax on the privilege of distributing, manufacturing or bottling softdrinks.
Being an excise tax, it can be levied by the taxing authority only when
the acts, privileges or businesses are done or performed within the
jurisdiction of said authority [Commissioner of Internal Revenue v.
British Overseas Airways Corp. and Court of Tax Appeals, G.R. Nos.
65773-74, April 30, 1987, 149 SCRA 395, 410.] Specifically, the situs of
The act of distributing, bottling or manufacturing softdrinks must be
within city limits, before an entity engaged in any of the activities may
be taxed in Iloilo City.
(a) With Branch or Sales Outlet
(b) No Branch Sales or Outlet
(c) With Factories, Project Offices, Plants and
Plantations
(d) Plantation Located at a place other than the
place where factory is located
(e) Two (2) or more factories, project offices, plants
or plantations in different localities
(f) See also IRR for rules on rolling stores (See Art.
243 of the IRR of the LGC)
(6) Fees and Charges (Sec. 147)
(7) Others (Sec. 148 and Sec. 149)
C. Cities (Sec. 151)
D. Barangay
1. Tax on retailers (Sec. 152 a)
2. Service Fees or Charges (Sec. 152 b)
3. Barangay Clearance (Sec. 152 c)

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4. Other Fees (Sec. 152 b)
E. Common Revenue Raising Powers
1. Service Fees and Charges (Sec. 154)
2. Public Utility Charges (Sec. 155)
3. Toll Fees or Charges (Sec. 156)
F. Other Matters
1. Public Hearings Necessary? (Art. 324 IRR of the LGC vs.
Sec. 187)
Figuerres vs. CA, GR No. 119172, March 25, 1999
Petitioner is right in contending that public hearings are
required to be conducted prior to the enactment of an ordinance
imposing real property taxes. R.A. No. 7160, §186 provides that an
ordinance levying taxes, fees, or charges “shall not be enacted without
any prior public hearing conducted for the purpose.”
The lack of a public hearing is a negative allegation essential to
petitioner’s cause of action in the present case. Hence, as petitioner is
the party asserting it, she has the burden of proof. Since petitioner
failed to rebut the presumption of validity in favor of the subject
ordinances and to discharge the burden of proving that no public
hearings were conducted prior to the enactment thereof, we are
constrained to uphold their constitutionality or legality.
In view of §§188 and 511(a) of R.A. No. 7160, an ordinance
fixing the assessment levels applicable to the different classes of real
property in a local government unit and imposing penal sanctions for
violations thereof (such as Ordinance No. 125) should be published in
full for three (3) consecutive days in a newspaper of local circulation,
where available, within ten (10) days of its approval, and posted in at
least two (2) prominent places in the provincial capitol, city, municipal,
or barangay hall for a minimum of three (3) consecutive weeks.
In the absence of proof that the ordinances were not enacted in
accordance with such regulations, said ordinances must be presumed
to have been enacted in accordance with such regulations

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
2. Authority to Adjust Tax Rates (Sec. 191)
Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB
Case No. 386 February 12, 2009 *
(read also case decided by the CTA Division)*
3. Authority to Grant Tax Exemptions (Sec. 192)
4. Withdrawal of Tax Exemption Privileges (Sec. 193)
PLDT vs. City of Davao GR No. 143867, August 22, 2001
The trial court held that, under these provisions, all exemptions
granted to all persons, whether natural and juridical, including those
which in the future might be granted, are withdrawn unless the law
granting the exemption expressly states that the exemption also
applies to local taxes. We disagree. Sec. 137 does not state that it
covers future exemptions. In Philippine Airlines, Inc. v. Edu, where a
provision of the Tax Code enacted on June 27, 1968 (R.A. 5431)
withdrew the exemption enjoyed by PAL, it was held that a subsequent
amendment of PAL’s franchise, exempting it from all other taxes except
that imposed by its franchise, again entitled PAL to exemption from the
date of the enactment of such amendment. The Tax Code provision
withdrawing the tax exemption was not construed as prohibiting future
grants of exemptions from all taxes.
Indeed, the grant of taxing powers to local government units
underthe Constitution and the LGC does not affect the power of
Congress to grant exemptions to certain persons, pursuant to a
declared national policy. The legal effect of the constitutional grant to
local governments simply means that in interpreting statutory
provisions on municipal taxing powers, doubts must be resolved in
favor of municipal corporations.
The tax exemption must be expressed in the statute in clear
language that leaves no doubt of the intention of the legislature to

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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.
NPC vs. City of Cabanatuan GR No. 149110, April 9, 2003
One of the most significant provisions of the LGC is the
removal of the blanket exclusion of instrumentalities and agencies of
the national government from the coverage of local taxation. Although
as a general rule, LGUs cannot impose taxes, fees or charges of any
kind on the National Government, its agencies and instrumentalities,
this rule now admits an exception, i.e., when specific provisions of the
LGC authorize the LGUs to impose taxes, fees or charges on the
aforementioned entities, viz.: “Section 133. Common Limitations on the
Taxing Powers of the 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: x x x (o) Taxes, fees, or charges of any kind on the National
Government, its agencies and instrumentalities, and local government
units.” (emphasis supplied)
5. Community Tax
(1) Who may impose(Sec. 156)
(2) Individuals Liable to pay (Sec. 157)
(3) Juridical Persons Liable to Community Tax (Sec.
158)
(4) Exemptions (Sec. 159)
(5) Place of Payment (Sec. 160)
(6) Time of Payment (Sec. 161)
(7) Community Tax Certificate (Sec. 162)
(8) Presentation of CTC on certain occasions (Sec.
163)
IV. COLLECTION OF TAXES AND REMEDIES
A. Collection of Taxes
1. Tax Period and Manner of Payment (Sec. 165)
2. Accrual of Tax (Sec. 166)

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
3.
4.
5.
6.
7.

Time of Payment (Sec. 167)
Surcharges and Penalties (Sec. 168)
Interests on Other Unpaid Revenues (Sec. 169)
Collection of Local Revenues by Treasurer (Sec. 170)
Examination of Books of Accounts and Pertinent Records
(Sec. 171)
B. Remedies of the Government
1. Local Government’s Lien (Sec. 173)
2. Civil Remedies (Sec. 174)
3. Distraint (Sec. 175)
4. Levy of Real Property (Sec. 176)
5. Advertisement and Sale (Sec. 178)
6. Redemption of Property Sold (Sec. 179)
7. Purchase of Property by LGU for want of bidder (Sec. 181)
8. Resale of Real Estate Tax for TFC
9. Judicial Action (Sec. 183)
10. Further Distraint and Levy (Sec. 184)
11. Personal Property Exempt from Distraint or Levy (Sec. 185)
C. Taxpayer’s Remedies
1. Question Constitutionality of Ordinance (Sec. 187)
Drilon vs. Lim GR No. 111249, August 4, 1994
We stress at the outset that the lower court had jurisdiction to
consider the constitutionality of Section 187, this authority being
embraced in the general definition of the judicial power to determine
what are the valid and binding laws by the criterion of their conformity
to the fundamental law. Specifically, BP 129 vests in the regional trial
courts jurisdiction over all civil cases in which the subject of the
litigation is incapable of pecuniary estimation, even as the accused in a
criminal action has the right to question in his defense the
constitutionality of a law he is charged with violating and of the
proceedings taken against him, particularly as they contravene the Bill
of Rights. Moreover, Article X, Section 5 (2), of the Constitution vests in
the Supreme Court appellate jurisdiction over final judgments and
orders of lower courts in all cases in which the constitutionality or
validity of any treaty, international or executive agreement, law,

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presidential decree, proclamation, order, instruction, ordinance, or
regulation is in question.
Section 187 authorizes the Secretary of Justice to review only
the constitutionality or legality of the tax ordinance and, if warranted, to
revoke it on either or both of these grounds. When he alters or
modifies or sets aside a tax ordinance, he is not also permitted to
substitute his own judgment for the judgment of the local government
that enacted the measure. Secretary Drilon did set aside the Manila
Revenue Code, but he did not replace it with his own version of what
the Code should be. He did not pronounce the ordinance unwise or
unreasonable as a basis for its annulment. He did not say that in his
judgment it was a bad law. What he found only was that it was illegal.
All he did in reviewing the said measure was determine if the
petitioners were performing their functions in accordance with law, that
is, with the prescribed procedure for the enactment of tax ordinances
and the grant of powers to the city government under the Local
Government Code. As we see it, that was an act not of control but of
mere supervision.
An officer in control lays down the rules in the doing of an act. If
they are not followed, he may, in his discretion, order the act undone or
re-done by his subordinate or he may even decide to do it himself.
Supervision does not cover such authority. The supervisor or
superintendent merely sees to it that the rules are followed, but he
himself does not lay down such rules, nor does he have the discretion
to modify or replace them. If the rules are not observed, he may order
the work done or re-done but only to conform to the prescribed rules.
He may not prescribe his own manner for the doing of the act. He has
no judgment on this matter except to see to it that the rules are
followed. In the opinion of the Court, Secretary Drilon did precisely this,
and no more nor less than this, and so performed an act not of control
but of mere supervision.

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
Cagayan Electric Power and Light Co., Inc., vs. City of Cagayan
de Oro, GR No. 191761, November 14, 2012.
CEPALCO ignored our ruling in Reyes v. Court of Appeals on
the mandatory nature of the statutory periods: Clearly, the law requires
that the dissatisfied taxpayer who questions the validity or legality of a
tax ordinance must file his appeal to the Secretary of Justice, within 30
days from effectivity thereof. In case the Secretary decides the appeal,
a period also of 30 days is allowed for an aggrieved party to go to
court. But if the Secretary does not act thereon, after the lapse of 60
days, a party could already proceed to seek relief in court. These three
separate periods are clearly given for compliance as a prerequisite
before seeking redress in a competent court. Such statutory periods
are set to prevent delays as well as enhance the orderly and speedy
discharge of judicial functions. For this reason the courts construe
these provisions of statutes as mandatory. A municipal tax ordinance
empowers a local government unit to impose taxes. The power to tax
is the most effective instrument to raise needed revenues to finance
and support the myriad activities of local government units for the
delivery of basic services essential to the promotion of the general
welfare and enhancement of peace, progress, and prosperity of the
people. Consequently, any delay in implementing tax measures would
be to the detriment of the public. It is for this reason that protests over
tax ordinances are required to be done within certain time frames. In
the instant case, it is our view that the failure of petitioners to appeal to
the Secretary of Justice within 30 days as required by Sec. 187 of R.A.
7160 is fatal to their cause.

Since the main purpose of Ordinance No. 18 is to regulate
certain construction activities of the identified special projects, which
included “cell sites” or telecommunications towers, the fees imposed in
Ordinance No. 18 are primarily regulatory in nature, and not primarily
revenue-raising. While the fees may contribute to the revenues of the
Municipality, this effect is merely incidental. Thus, the fees imposed in
Ordinance No. 18 are not taxes.
Settled is the rule that every law, in this case an ordinance, is
presumed valid. To strike down a law as unconstitutional, Smart has
the burden to prove a clear and unequivocal breach of the
Constitution, which Smart miserably failed to do. In Lawyers Against
Monopoly and Poverty (LAMP) v. Secretary of Budget and
Management, 670 SCRA 373 (2012), the Court held, thus: To justify
the nullification of the law or its implementation, there must be a clear
and unequivocal, not a doubtful, breach of the Constitution. In case of
doubt in the sufficiency of proof establishing unconstitutionality, the
Court must sustain legislation because “to invalidate [a law] based on x
x x baseless supposition is an affront to the wisdom not only of the
legislature that passed it but also of the executive which approved it.”
This presumption of constitutionality can be overcome only by the
clearest showing that there was indeed an infraction of the
Constitution, and only when such a conclusion is reached by the
required majority may the Court pronounce, in the discharge of the
duty it cannot escape, that the challenged act must be struck down.
2. Publication (Sec. 188)

Smart Communications, Inc. vs. Municipality of Malvar, GR No.
204429, February 18, 2014.
Jurisdiction is conferred by law. Republic Act No. 1125, as
amended by Republic Act No. 9282, created the Court of Tax Appeals.
Section 7, paragraph (a), sub-paragraph (3) of the law vests the CTA
with the exclusive appellate jurisdiction over “decisions, orders or
resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or
appellate jurisdiction.”

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Coca-Cola Bottlers vs. City of Manila - GR No. 156252, June 27,
2006
The RTC of Manila, Branch 21, in its Decision dated 28
November 2001, reiterated the findings of the DOJ Secretary that
respondents failed to follow the procedure in the enactment of tax
measures as mandated by Section 188 of the Local Government Code
of 1991, in that they failed to publish Tax Ordinance No. 7988 for three
consecutive days in a newspaper of local circulation. From the

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
foregoing, it is evident that Tax Ordinance No. 7988 is null and void as
said ordinance was published only for one day in the 22 May 2000
issue of the Philippine Post in contravention of the unmistakable
directive of the Local Government Code of 1991.
3. Periods of Assessment and Collection (Sec. 194)
4. Protest of Assessment (Sec. 195)
San Juan vs. Castro – GR No. 174617, December 27, 2007
Under Section 195 of the Local Government Code which is
quoted immediately below, a taxpayer who disagrees with a tax
assessment made by a local treasurer may file a written protest
thereof: SECTION 195. Protest of Assessment.—When the local
treasurer or his duly authorized representative finds that the correct
taxes, fees, or charges have not been paid, he shall issue a notice of
assessment stating the nature of the tax, fee, or charge, the amount
deficiency, the surcharges, interests and penalties. Within sixty (60)
days from the receipt of the notice of assessment, the taxpayer may
file a written protest with the local treasurer contesting the assessment;
otherwise, the assessment shall become final and executory. The local
treasurer shall decide the protest within sixty (60) days from the time of
its filing. If the local treasurer finds the protest to be wholly or partly
meritorious, he shall issue a notice cancelling wholly or partially the
assessment. However, if the local treasurer finds the assessment to be
wholly or partly correct, he shall deny the protest wholly or partly with
notice to the taxpayer. The taxpayer shall have thirty (30) days from
the receipt of the denial of the protest or from the lapse of the
sixty-day (60) period prescribed herein within which to appeal
with the court of competent jurisdiction, otherwise the
assessment becomes conclusive and unappealable. (Emphasis
and italics supplied) That petitioner protested in writing against the
assessment of tax due and the basis thereof is on record as in fact it
was on that account that respondent sent him the above-quoted July
15, 2005 letter which operated as a denial of petitioner’s written
protest. Petitioner should thus have, following the earlier above-quoted
Section 195 of the Local Government Code, either appealed the

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assessment before the court of competent jurisdiction or paid the tax
and then sought a refund.
Petitioner did not observe any of these remedies available to
him, however. He instead opted to file a petition for mandamus to
compel respondent to accept payment of transfer tax as computed by
him. Mandamus lies only to compel an officer to perform a ministerial
duty (one which is so clear and specific as to leave no room for the
exercise of discretion in its performance) but not a discretionary
function (one which by its nature requires the exercise of judgment).
Respondent’s argument that “[m]andamus cannot lie to compel the
City Treasurer to accept as full compliance a tax payment which in his
reasoning and assessment is deficient and incorrect” is thus
persuasive.
PLDT vs. City of Balanga, CTA EB Case No. 413, June 3, 2009*
5. Appeal to the CTA
6. Claim for Refund (Sec. 196)
Alabang Supermarket Corporation vs. City of Muntinlupa, CTA EB
Case No. 386 February 12, 2009 *
(read also case decided by the CTA Division)*
Mindanao Shopping Destination Corp. Vs. Davao City, CTA AC No.
6, May 31, 2011*
7. Is injunction available?
Angeles City vs. Angeles Electric Corporation, GR No. 166134
dated June 29, 2010.
A principle deeply embedded in our jurisprudence is that taxes
being the lifeblood of the government should be collected promptly,
without unnecessary hindrance or delay. In line with this principle, the
National Internal Revenue Code of 1997 (NIRC) expressly provides

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
that no court shall have the authority to grant an injunction to restrain
the collection of any national internal revenue tax, fee or charge
imposed by the code. An exception to this rule obtains only when in the
opinion of the Court of Tax Appeals (CTA) the collection thereof may
jeopardize the interest of the government and/or the taxpayer.
The situation, however, is different in the case of the collection
of local taxes as there is no express provision in the LGC prohibiting
courts from issuing an injunction to restrain local governments from
collecting taxes. Thus, in the case of Valley Trading Co., Inc. v. Court of
First Instance of Isabela, Branch II, 171 SCRA 501 (1989), cited by the
petitioner, we ruled that: Unlike the National Internal Revenue Code,
the Local Tax Code does not contain any specific provision prohibiting
courts from enjoining the collection of local taxes. Such statutory lapse
or intent, however it may be viewed, may have allowed preliminary
injunction where local taxes are involved but cannot negate the
procedural rules and requirements under Rule 58.

REAL PROPERTY TAXATION
I. PRELIMINARY MATTERS
A. Definition of Real Property Tax
Villanueva vs. City of Iloilo, L-26521, December 28, 1968
"municipal license tax" means an imposition or exaction on the
right to use or dispose of property, to pursue a business, occupation, or
calling, or to exercise a privilege (51 Am. Jur. 59-60; 33 Am. Jur.
325-326).
In the case at bar, Ordinance No. 11, series of 1960, of the City
of Iloilo, which imposed a municipal license tax on tenement houses, is
valid and constitutional. The tax in question is not a real estate tax. The
tax imposed by the ordinance in question does not possess the
attributes of a real estate tax. It is not a tax on the land on which the
tenement houses are erected, although both land and tenement
houses may belong to the same owner. The tax is not a fixed

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proportion of the assessed value of the tenement houses, and does
not require the intervention of assessors or appraisers. It is not payable
at a designated time or date, and is not enforceable against the
tenement houses either by sale or distraint. Clearly, therefore, the tax
in question is not a real estate tax.
B. Who should pay the real property tax?
Baguio vs. Busuego, GR No. 29772, September 18, 1980
What is determinative was its rulings on the merits (not on the
nomenclature or classification of the contract), wherein it correctly held
that purchaser-appellant agreed to the contractual stipulation “to pay
and shoulder all taxes and assessments on the lot and building or
improvements thereon and insurance during the term of the contract.
In view of his acceptance of this condition, he is now estopped to deny
his liability to pay the taxes. And, on the other hand, when the GSIS
sold the property and imposed said condition, the agency altho exempt
from the payment of taxes clearly indicated that the property became
taxable upon its delivery to the purchaser” and that “the sole
determinative factor for exemption from realty taxes is the ‘use’ to
which the property is devoted. And where ‘use’ is the test, the
ownership is immaterial. (Martin on the Rev. Adm. Code, 1961, Vol. II,
p. 487, citing Apostolic Prefect of Mt. Province vs. Treasurer of Baguio
City, 71 Phil. 547). In the instant case, altho the property was still in the
name of the GSIS pending the payment of the full price its use and
possession was already transferred to the defendant.” Such
contractual stipulation that the purchaser on installments pay the real
estate taxes pending completion of payments, although the seller who
retained title is exempt from such taxes, is valid and binding, absent
any law to the contrary and none has been cited by appellant. Thus,
the delivery of possession by the seller GSIS to the purchaser was
clearly with the intention of passing to the latter the possession, use of
and control over said property, and all the other attributes of
ownership, short of the naked ownership, such that it included in said
transfer the incidental obligation to pay the taxes thereon, for nothing

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
more was left to the GSIS except its right to receive full payment of the
purchase price.
Thus under this provision, while the GSIS may be exempt from
real estate tax the exemption does not cover property belonging to it
“where the beneficial use thereof has been granted for consideration or
otherwise to a taxable person.” There can be no doubt that under the
provisions of the contract in question, the purchaser to whose
possession the property had been transferred was granted beneficial
use thereof. It follows on the strength of the provision Sec. 40(a) of PD
464 that the said property is not exempt from the real property tax.
While this decree just cited was still inexistent at the time the taxes at
issue were assessed on the herein appellant, indeed its above quoted
provision sheds light upon the legislative intent behind the provision of
Commonwealth Act 186, pertaining to exemption of the GSIS from
taxes.
NPC vs. Province of Quezon, GR No. 171586, July 15, 2009
The liability for taxes generally rests on the owner of the real
property at the time the tax accrues. This is a necessary consequence
that proceeds from the fact of ownership. However, personal liability for
realty taxes may also expressly rest on the entity with the beneficial
use of the real property, such as the tax on property owned by the
government but leased to private persons or entities, or when the tax
assessment is made on the basis of the actual use of the property. In
either case, the unpaid realty tax attaches to the property but is
directly chargeable against the taxable person who has actual
and beneficial use and possession of the property regardless of
whether or not that person is the owner.
In Cariño v. Ofilado (217 SCRA 206 [1993]), we declared that
legal interest should be an interest that is actual and material, direct
and immediate, not simply contingent or expectant. The concept of the
directness and immediacy involved is no different from that required in
motions for intervention under Rule 19 of the Rules of Court that allow
one who is not a party to the case to participate because of his or her

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direct and immediate interest, characterized by either gain or loss from
the judgment that the court may render. In the present case, the NPC’s
ownership of the plant will happen only after the lapse of the 25-year
period; until such time arrives, the NPC’s claim of ownership is merely
contingent, i.e., dependent on whether the plant and its machineries
exist at that time. Prior to this event, the NPC’s real interest is only in
the continued operation of the plant for the generation of electricity.
On liability for taxes, the NPC indeed assumed responsibility for
the taxes due on the power plant and its machineries, specifically, “all
real estate taxes and assessments, rates and other charges in respect
of the site, the buildings and improvements thereon and the [power
plant].” At first blush, this contractual provision would appear to make
the NPC liable and give it standing to protest the assessment. The tax
liability we refer to above, however, is the liability arising from law that
the local government unit can rightfully and successfully enforce, not
the contractual liability that is enforceable between the parties to a
contract as discussed below. By law, the tax liability rests on Mirant
based on its ownership, use, and possession of the plant and its
machineries.
The NPC is neither the owner, nor the possessor or user of the
property taxed. No interest on its part thus justifies any tax liability on
its part other than its voluntary contractual undertaking. Under this
legal situation, only Mirant as the contractual obligor, not the local
government unit, can enforce the tax liability that the NPC contractually
assumed; the NPC does not have the “legal interest” that the law and
jurisprudence require to give it personality to protest the tax imposed
by law on Mirant.
NPC vs. Province of Quezon, GR No. 171586, January 25, 2010
(Resolution)
For the third argument, we relied on the Court’s rulings in
Baguio v. Busuego, 100 SCRA 116 (1980) and Lim v. Manila, 182
SCRA 482 (1990). In these cases, the Court essentially declared that
contractual assumption of tax liability alone is insufficient to make one

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
liable for taxes. The contractual assumption of tax liability must be
supplemented by an interest that the party assuming the liability had
on the property; the person from whom payment is sought must have
also acquired the beneficial use of the property taxed. In other words,
he must have the use and possession of the property—an element that
was missing in Napocor’s case.
We further stated that the tax liability must be a liability that
arises from law, which the local government unit can rightfully and
successfully enforce, not the contractual liability that is enforceable
only between the parties to the contract. In the present case, the
Province of Quezon is a third party to the BOT Agreement and could
thus not exact payment from Napocor without violating the principle of
relativity of contracts. Corollarily, for reasons of fairness, the local
government units cannot be compelled to recognize the protest of a
tax assessment from Napocor, an entity against whom it cannot
enforce the tax liability.
Legal interest is defined as interest in property or a claim
cognizable at law, equivalent to that of a legal owner who has legal title
to the property. Given this definition, Napocor is clearly not vested with
the requisite interest to protest the tax assessment, as it is not an entity
having the legal title over the machineries. It has absolutely no solid
claim of ownership or even of use and possession of the machineries,
as our July 15, 2009 Decision explained.

GSIS vs. City Treasurer and Assessor of Manila, GR No. 186242
December 23, 2009
The next query as to which between GSIS, as the owner of the
Katigbak property, or MHC, as the lessee thereof, is liable to pay the
accrued real estate tax, need not detain us long. MHC ought to pay. As
we declared in Testate Estate of Concordia T. Lim, “the unpaid tax
attaches to the property and is chargeable against the taxable person
who had actual or beneficial use and possession of it regardless of
whether or not he is the owner.” Of the same tenor is the Court’s
holding in the subsequent Manila Electric Company v. Barlis, 357
SCRA 832 (2001) and later in Republic v. City of Kidapawan, 477
SCRA 324 (2005). Actual use refers to the purpose for which the
property is principally or predominantly utilized by the person in
possession thereof. Being in possession and having actual use of the
Katigbak property since November 1991, MHC is liable for the realty
taxes assessed over the Katigbak property from 1992 to 2002.
C. Fundamental Principles (Sec. 198)
D. Important Definitions (Sec. 199)
1. Real Property for RPT Purposes (415 NCC)
2. Machineries
Mindanao Bus vs. City Assessor and Treasurer L-17870, Sept. 29,
1962
Caltex Philippines, Inc. vs. CBAA – GR No. 50466, May 31, 1982

While a real property owner’s failure to comply with Sections
202 and 206 does not necessarily negate its tax obligation nor
invalidate its legitimate claim for tax exemption, Napocor’s omission to
do so in this case can be construed as contradictory to its claim of
ownership of the subject machineries. That it assumed liability for the
taxes that may be imposed on the subject machineries similarly does
not clothe it with legal title over the same. We do not believe that the
phrase “person having legal interest in the property” in Section
226 of the LGC can include an entity that assumes another
person’s tax liability by contract.

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Manila Electric Co. vs. CBAA L-47943, May 31, 1982
BAA vs. Manila Electric Co., L-15334, January 31, 1964
3. Actual Use
Patalinghug vs. CA, GR No. 104786, January 27, 1994
4. Appraisal

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
5. Assessment
6. Assessed Value
E. Appraisal of Real Property (Sec. 201)
Sesbreno v. CBAA, 270 SCRA 263
F. Declaration of Real Property
1. By Owner or Administrator (Sec. 202)
2. In case improvements are made (Sec. 203)
3. By Assessor (Sec. 204)
4. Notification of Transfer of Real Property Ownership (Sec.
208)
G. Assessment of Real Property
1. Preparation of Schedule of Fair Market Values (Sec. 212)

5. Assessment Levels (Sec. 218)
6. General Revision of Assessments and Property
Classification (Sec. 219)
7. Valuation of Real Property (Sec. 220)
Allied Bank vs. Quezon City Government – GR No. 154126,
October 11, 2005
8. Date of Effectivity of Assessment or Reassessment (Sec.
221)
9. Assessment of Property Subject to Back Taxes (Sec. 222)
Sesbreno v. CBAA, 270 SCRA 263
10. Notification of New or Revised Assessment (Sec. 223)
11. Appraisal and Assessment of Machinery (Sec. 224)
12. Depreciation Allowance for Machinery (Sec. 225)

Lopez vs. City of Manila, GR No. 127139 February 19, 1999
2. Classes of Real Property for Assessment (Sec. 215)
3. Special Classes of Real Property (Sec. 216)
City Assessor of Cebu City vs. Association de Benevola de Cebu
– GR No. 152904, June 8, 2007
4. Actual Use as Basis for Assessment (Sec. 217)
Testate Estate of Concordia Lim vs. City of Manila – GR No.
90639, February 21, 1990)
Patalinghug vs. CA, GR No. 104786, January 27, 1994

H. Condonation of RPT
1. Condonation and Reduction of RPT (Sec. 276)
2. Condonation or Reduction of RPT by President (Sec. 277)

II. IMPOSITION OF REAL PROPERTY TAX
A. Power to Levy Real Property Tax (Sec. 232)
B. Rates of Levy (Sec. 233)
Allied Bank vs. Quezon City Government – GR No. 154126,
October 11, 2005
C. Exemptions from RPT (Sec. 234)
1. Proof of Exemption from RPT (Sec. 206)

LRTA vs. CBAA – GR No. 127316, October 12, 2000
Allied Banking Corporation vs. Quezon City Government – GR No.
154126, October 11, 2005

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Provincial Assessor of Marinduque vs. CA – GR No. 170532, April
4, 2009
2. Constitutional Provisions on RPT Exemption
(1) Sec. 28, Art. VI

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
Lung Center of the Philippines vs. QC – 433 SCRA 119
(2) Sec. 4(3), Art. XIV
Fels Energy, Inc. vs. Province of Batangas GR No. 168557,
February 16, 2007
Philippine Fisheries Dev’t Authority vs. CA GR No. 169836, GR No.
July 31, 2007
The Court rules that the Authority is not a GOCC but an
instrumentality of the national government which is generally exempt
from payment of real property tax. However, said exemption does not
apply to the portions of the IFPC which the Authority leased to private
entities. With respect to these properties, the Authority is liable to pay
real property tax. Nonetheless, the IFPC, being a property of public
dominion cannot be sold at public auction to satisfy the tax
delinquency.
On the basis of the parameters set in the MIAA case, the
Authority should be classified as an instrumentality of the national
government. As such, it is generally exempt from payment of real
property tax, except those portions which have been leased to private
entities.
Mactan Cebu International Airport Authority vs. Marcos – GR No.
120082, Sept. 11, 1996
Since taxation is the rule and exemption therefrom the
exception, the exemption may be withdrawn at the pleasure of the
taxing authority, the only exception being where the exemption was
granted to private parties based on material consideration of a mutual
nature, which then becomes contractual and thus covered by the nonimpairment clause of the Constitution—There can be no question that
under Section 14 of R.A. No. 6958 the petitioner is exempt from the
payment of realty taxes imposed by the National Government or any of
its political subdivisions, agencies, and instrumentalities. Nevertheless,

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since taxation is the rule and exemption therefrom the exception, the
exemption may thus be withdrawn at the pleasure of the taxing
authority. The only exception to this rule is where the exemption was
granted to private parties based on material consideration of a mutual
nature, which then becomes contractual and is thus covered by the
nonimpairment clause of the Constitution.
Since the last paragraph of Section 234 unequivocally
withdrew, upon the effectivity of the LGC, exemptions from payment of
real property taxes granted to natural or juridical persons, including
government-owned or controlled corporations, except as provided in
the said section, and the petitioner is, undoubtedly, a governmentowned corporation, it necessarily follows that its exemption from such
tax granted it in Section 14 of its Charter, R.A. No. 6958, has been
withdrawn. Any claim to the contrary can only be justified if the
petitioner can seek refuge under any of the exceptions provided in
Section 234, but not under Section 133, as it now asserts, since, as
shown above, the said section is qualified by Sections 232 and 234.
The justification for this restricted exemption in Section 234(a)
seems obvious: to limit further tax exemption privileges, especially in
light of the general provision on withdrawal of tax exemption privileges
in Section 193 and the special provision on withdrawal of exemption
from payment of real property taxes in the last paragraph of Section
234. These policy considerations are consistent with the State policy to
ensure autonomy to local governments and the objective of the LGC
that they enjoy genuine and meaningful local autonomy to enable them
to attain their fullest development as selfreliant communities and make
them effective partners in the attainment of national goals. The power
to tax is the most effective instrument to raise needed revenues to
finance and support myriad activities of 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. It may also be relevant to recall that the original reasons for the
withdrawal of tax exemption privileges granted to government-owned
and controlled corporations and all other units of government were that

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
such privilege resulted in serious tax base erosion and distortions in
the tax treatment of similarly situated enterprises, and there was a
need for these entities to share in the requirements of development,
fiscal or otherwise, by paying the taxes and other charges due from
them.
Moreover, the petitioner cannot claim that it was never a
“taxable person” under its Charter. It was only exempted from the
payment of real property taxes. The grant of the privilege only in
respect of this tax is conclusive proof of the legislative intent to make it
a taxable person subject to all taxes, except real property tax.

MIAA vs. CA – GR No. 155650, July 20, 2006
We rule that MIAA’s Airport Lands and Buildings are exempt
from real estate tax imposed by local governments. First, MIAA is not a
government-owned or controlled corporation but an instrumentality of
the National Government and thus exempt from local taxation. Second,
the real properties of MIAA are owned by the Republic of the
Philippines and thus exempt from real estate tax.
There is no dispute that a government-owned or controlled
corporation is not exempt from real estate tax. However, MIAA is not a
government-owned or controlled corporation. Section 2(13) of the
Introductory Provisions of the Administrative Code of 1987 defines a
government-owned or controlled corporation as follows: SEC. 2.
General Terms Defined.—x x x x (13) Government-owned or controlled
corporation refers to any agency organized as a stock or non-stock
corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government
directly or through its instrumentalities either wholly, or, where
applicable as in the case of stock corporations, to the extent of at least
fifty-one (51) percent of its capital stock: x x x. (Emphasis supplied) A
government-owned or controlled corporation must be “organized as a
stock or non-stock corporation.” MIAA is not organized as a stock or

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non-stock corporation. MIAA is not a stock corporation because it has
no capital stock divided into shares.
MIAA is also not a non-stock corporation because it has no
members. Section 87 of the Corporation Code defines a non-stock
corporation as “one where no part of its income is distributable as
dividends to its members, trustees or officers.” A non-stock corporation
must have members. Even if we assume that the Government is
considered as the sole member of MIAA, this will not make MIAA a
non-stock corporation. Nonstock corporations cannot distribute any
part of their income to their members. Section 11 of the MIAA Charter
mandates MIAA to remit 20% of its annual gross operating income to
the National Treasury. This prevents MIAA from qualifying as a nonstock corporation.
Since MIAA is neither a stock nor a non-stock corporation,
MIAA does not qualify as a government-owned or controlled
corporation. What then is the legal status of MIAA within the National
Government? MIAA is a government instrumentality vested with
corporate powers to perform efficiently its governmental functions.
MIAA is like any other government instrumentality, the only difference
is that MIAA is vested with corporate powers. Section 2(10) of the
Introductory Provisions of the Administrative Code defines a
government “instrumentality” as follows: SEC. 2. General Terms
Defined.––x x x x (10) Instrumentality refers to any agency of the
National Government, not integrated within the department framework,
vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter. x x x
(Emphasis supplied)
When the law vests in a government instrumentality corporate
powers, the instrumentality does not become a corporation. Unless the
government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not
only governmental but also corporate powers. Thus, MIAA exercises

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
the governmental powers of eminent domain, police authority and the
levying of fees and charges. At the same time, MIAA exercises “all the
powers of a corporation under the Corporation Law, insofar as these
powers are not inconsistent with the provisions of this Executive
Order.”
Likewise, when the law makes a government instrumentality
operationally autonomous, the instrumentality remains part of the
National Government machinery although not integrated with the
department framework. The MIAA Charter expressly states that
transforming MIAA into a “separate and autonomous body” will make
its operation more “financially viable.”
The Airport Lands and Buildings of MIAA are property of public
dominion and therefore owned by the State or the Republic of the
Philippines. The Civil Code provides: ARTICLE 419. Property is either
of public dominion or of private ownership. ARTICLE 420. The
following things are property of public dominion: (1) Those
intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks, shores, roadsteads, and
others of similar character; (2) Those which belong to the State,
without being for public use, and are intended for some public service
or for the development of the national wealth. (Emphasis supplied)
ARTICLE 421. All other property of the State, which is not of the
character stated in the preceding article, is patrimonial property.
ARTICLE 422. Property of public dominion, when no longer intended
for public use or for public service, shall form part of the patrimonial
property of the State.
No one can dispute that properties of public dominion
mentioned in Article 420 of the Civil Code, like “roads, canals, rivers,
torrents, ports and bridges constructed by the State,” are owned
by the State. The term “ports” includes seaports and airports. The
MIAA Airport Lands and Buildings constitute a “port” constructed by
the State. Under Article 420 of the Civil Code, the MIAA Airport Lands

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and Buildings are properties of public dominion and thus owned by the
State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use
because they are used by the public for international and domestic
travel and transportation. The fact that the MIAA collects terminal fees
and other charges from the public does not remove the character of
the Airport Lands and Buildings as properties for public use. The
operation by the government of a tollway does not change the
character of the road as one for public use. Someone must pay for the
maintenance of the road, either the public indirectly through the taxes
they pay the government, or only those among the public who actually
use the road through the toll fees they pay upon using the road. The
tollway system is even a more efficient and equitable manner of taxing
the public for the maintenance of public roads. The charging of fees to
the public does not determine the character of the property whether it
is of public dominion or not. Article 420 of the Civil Code defines
property of public dominion as one “intended for public use.” Even if
the government collects toll fees, the road is still “intended for public
use” if anyone can use the road under the same terms and conditions
as the rest of the public. The charging of fees, the limitation on the kind
of vehicles that can use the road, the speed restrictions and other
conditions for the use of the road do not affect the public character of
the road.
The Airport Lands and Buildings of MIAA are devoted to public
use and thus are properties of public dominion. As properties of public
dominion, the Airport Lands and Buildings are outside the commerce of
man. The Court has ruled repeatedly that properties of public dominion
are outside the commerce of man. As early as 1915, this Court already
ruled in Municipality of Cavite v. Rojas that properties devoted to public
use are outside the commerce of man, thus: According to article 344 of
the Civil Code: “Property for public use in provinces and in towns
comprises the provincial and town roads, the squares, streets,
fountains, and public waters, the promenades, and public works of
general service supported by said towns or provinces.”

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
Again in Espiritu v. Municipal Council, the Court declared that
properties of public dominion are outside the commerce of man: x x x
Town plazas are properties of public dominion, to be devoted to public
use and to be made available to the public in general. They are outside
the commerce of man and cannot be disposed of or even leased by
the municipality to private parties. While in case of war or during an
emergency, town plazas may be occupied temporarily by private
individuals, as was done and as was tolerated by the Municipality of
Pozorrubio, when the emergency has ceased, said temporary
occupation or use must also cease, and the town officials should see
to it that the town plazas should ever be kept open to the public and
free from encumbrances or illegal private constructions. (Emphasis
supplied) The Court has also ruled that property of public dominion,
being outside the commerce of man, cannot be the subject of an
auction sale. Properties of public dominion, being for public use, are
not subject to levy, encumbrance or disposition through public or
private sale. Any encumbrance, levy on execution or auction sale of
any property of public dominion is void for being contrary to public
policy. Essential public services will stop if properties of public
dominion are subject to encumbrances, foreclosures and auction sale.
This will happen if the City of Parañaque can foreclose and compel the
auction sale of the 600-hectare runway of the MIAA for non-payment of
real estate tax.
Before MIAA can encumber the Airport Lands and Buildings,
the President must first withdraw from public use the Airport Lands and
Buildings. Sections 83 and 88 of the Public Land Law or
Commonwealth Act No. 141, which “remains to this day the existing
general law governing the classification and disposition of lands of the
public domain other than timber and mineral lands,” provide: x x x
Thus, unless the President issues a proclamation withdrawing the
Airport Lands and Buildings from public use, these properties remain
properties of public dominion and are inalienable. Since the Airport
Lands and Buildings are inalienable in their present status as
properties of public dominion, they are not subject to levy on execution

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or foreclosure sale. As long as the Airport Lands and Buildings are
reserved for public use, their ownership remains with the State or the
Republic of the Philippines.
MIAA is merely holding title to the Airport Lands and Buildings
in trust for the Republic. Section 48, Chapter 12, Book I of the
Administrative Code allows instrumentalities like MIAA to hold title to
real properties owned by the Republic.
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 because under Article 428 of the Civil Code, only the “owner
has the right to x x x dispose of a thing.” Since MIAA cannot dispose of
the Airport Lands and Buildings, MIAA does not own the Airport Lands
and Buildings. At any time, the President can transfer back to the
Republic title to the Airport Lands and Buildings without the Republic
paying MIAA any consideration. Under Section 3 of the MIAA Charter,
the President is the only one who can authorize the sale or disposition
of the Airport Lands and Buildings. This only confirms that the Airport
Lands and Buildings belong to the Republic.

Portions of the Airport Lands and Buildings that MIAA leases to
private entities are not exempt from real estate tax. For example, the
land area occupied by hangars that MIAA leases to private
corporations is subject to real estate tax. In such a case, MIAA has

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
granted the beneficial use of such land area for a consideration to a
taxable person and therefore such land area is subject to real estate
tax. In Lung Center of the Philippines v. Quezon City, 433 SCRA 119,
138 (2004), the Court ruled: Accordingly, we hold that the portions of
the land leased to private entities as well as those parts of the hospital
leased to private individuals are not exempt from such taxes. On the
other hand, the portions of the land occupied by the hospital and
portions of the hospital used for its patients, whether paying or
nonpaying, are exempt from real property taxes.
MIAA vs. City of Pasay – GR No. 163072, April 2, 2009
A close scrutiny of the definition of “government-owned or
controlled corporation” in Section 2(13) will show that MIAA would not
fall under such definition. MIAA is a government “instrumentality” that
does not qualify as a “government-owned or controlled corporation.” As
explained in the 2006 MIAA case: “A government-owned or controlled
corporation must be “organized as a stock or non-stock corporation.”
MIAA is not organized as a stock or non-stock corporation. MIAA is not
a stock corporation because it has no capital stock divided into shares.
MIAA has no stockholders or voting shares. x x x”
The airport lands and buildings of MIAA are properties of public
dominion intended for public use, and as such are exempt from real
property tax under Section 234(a) of the Local Government Code.
However, under the same provision, if MIAA leases its real property to
a taxable person, the specific property leased becomes subject to real
property tax. In this case, only those portions of the NAIA Pasay
properties which are leased to taxable persons like private parties are
subject to real property tax by the City of Pasay.
Provincial Assessor of Marinduque vs. CA – GR No. 170532, April
4, 2009
NPC vs. Province of Quezon, GR No. 171586, July 15, 2009

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NPC vs. Province of Quezon, GR No. 171586, January 25, 2010
(Resolution)
GSIS vs. City Treasurer and Assessor of Manila, GR No. 186242
December 23, 2009
The foregoing exempting proviso, couched as it were in an
encompassing manner, brooks no other construction but that GSIS is
exempt from all forms of taxes. While not determinative of this case, it
is to be noted that prominently added in GSIS’ present charter is a
paragraph precluding any implied repeal of the tax-exempt clause so
as to protect the solvency of GSIS funds. Moreover, an express repeal
by a subsequent law would not suffice to affect the full exemption
benefits granted the GSIS, unless the following conditionalities are
met: (1) The repealing clause must expressly, specifically, and
categorically revoke or repeal Sec. 39; and (2) a provision is enacted
to substitute or replace the exemption referred to herein as an
essential factor to maintain or protect the solvency of the fund. These
restrictions for a future express repeal, notwithstanding, do not make
the proviso an irrepealable law, for such restrictions do not impinge or
limit the carte blanche legislative authority of the legislature to so
amend it. The restrictions merely enhance other provisos in the law
ensuring the solvency of the GSIS fund.
Apart from the foregoing consideration, the Court’s fairly recent
ruling in Manila International Airport Authority v. Court of Appeals, 495
SCRA 591 (2006), a case likewise involving real estate tax
assessments by a Metro Manila city on the real properties
administered by MIAA, argues for the non-tax liability of GSIS for real
estate taxes. There, the Court held that MIAA does not qualify as a
GOCC, not having been organized either as a stock corporation, its
capital not being divided into shares, or as a non-stock corporation
because it has no members. MIAA is rather an instrumentality of the
National Government and, hence, outside the purview of local taxation
by force of Sec. 133 of the LGC providing in context that “unless
otherwise provided,” local governments cannot tax national
government instrumentalities. And as the Court pronounced in Manila

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
International Airport Authority, the airport lands and buildings MIAA
administers belong to the Republic of the Philippines, which makes
MIAA a mere trustee of such assets. No less than the Administrative
Code of 1987 recognizes a scenario where a piece of land owned by
the Republic is titled in the name of a department, agency, or
instrumentality.
Thus read together, the provisions allow the Republic to grant
the beneficial use of its property to an agency or instrumentality of the
national government. Such grant does not necessarily result in the loss
of the tax exemption. The tax exemption the property of the Republic
or its instrumentality carries ceases only if, as stated in Sec. 234(a) of
the LGC of 1991, “beneficial use thereof has been granted, for a
consideration or otherwise, to a taxable person.” GSIS, as a
government instrumentality, is not a taxable juridical person under Sec.
133(o) of the LGC. GSIS, however, lost in a sense that status with
respect to the Katigbak property when it contracted its beneficial use to
MHC, doubtless a taxable person. Thus, the real estate tax
assessment of PhP 54,826,599.37 covering 1992 to 2002 over the
subject Katigbak property is valid insofar as said tax delinquency is
concerned as assessed over said property.
City of Pasig vs. Republic, GR No. 185023 dated August 24, 2011
Republic vs. City of Paranaque, GR No. 191109 dated July 28,
2012

2. Idle Lands Exempt from Tax (Sec. 238)
F. Special Levies (Sec. 240)
1. Ordinance Imposing Special Levy (Sec. 241)
2. Publication and Public Hearing (Sec. 242)
3. Fixing Amount of Special Levy (Sec. 243)
4. Taxpayers Remedies (Sec. 244)
5. Accrual of Special Levy (Sec. 245)
III. IMPOSITION OF REAL PROPERTY TAX
A. Date of Accrual (Sec. 246)
B. Notice of Time of Collection (Sec. 249)
C. Payment of RPT in Instalments(Sec. 250)
D. Tax Discount for Advanced Prompt Payment (Sec. 251)
IV. REMEDIES
A. Local Government Unit’s Remedies
1. Date of Accrual of Tax (Sec. 246)
2. LGU’s Lien (Sec. 257)
3. Interest on Unpaid RPT (Sec. 255)
4. Period to Collect (Sec. 270)
(1) Suspension of Period to Collect
5. Levy on Real Property (Sec. 258)
(1) Advertisement and Sale (Sec. 260)
Puzon vs. Abelera 169 SCRA 789
Spouses Tan vs. Bantequi GR No. 154027 October 24, 2005

Angeles University Foundation vs. City of Angeles, GR No.
189999 June 27, 2012
City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26,
2014
D. Additional Levy for SEF (Sec. 235)
E. RPT on Idle Lands (Sec. 236)
1. Coverage of Idle Lands (Sec. 237)

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6. Redemption of Property Sold (Sec. 261)
7. Purchase of Property by the Local Government Units for
Want of Bidder (Sec. 263)
8. Court Action for Collection (Sec. 266)
B. Taxpayer’s Remedies
1. Action Assailing Validity of Tax Sale (Sec. 267)
2. Action Involving Ownership (Sec. 268)

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
3. Payment under Protest (Sec. 252)

Allied Banking vs. Quezon City Government – GR No. 154126,
September 15, 2006 – Motion for Clarification of Decision

Ramie Textile vs. Mathay - 89 SCRA 586
Ty vs. Trampe – GR No. 117577, December 1, 1995
Olivarez vs. Marquez - 438 SCRA 679

5. Assessment Appeals
(1) Appeal with the LBAA (Sec. 226)

Camp John Hay Development Corp. vs. CBAA, GR No. 169234,
October 2, 2013. (include concurring opinion of Justice Carpio)

City Government of Quezon City vs. Bayan Telecommunications –
GR No. 162015, March 6, 2006
Petitioners argue that Bayantel had failed to avail itself of the
administrative remedies provided for under the LGC, adding that the
trial court erred in giving due course to Bayantel’s petition for
prohibition. To petitioners, the appeal mechanics under the LGC
constitute Bayantel’s plain and speedy remedy in this case. The Court
does not agree. With the reality that Bayantel’s real properties were
already levied upon on account of its nonpayment of real estate taxes
thereon, the Court agrees with Bayantel that an appeal to the LBAA is
not a speedy and adequate remedy within the context of the
aforequoted Section 2 of Rule 65. This is not to mention of the auction
sale of said properties already scheduled on July 30, 2002. Moreover,
one of the recognized exceptions to the exhaustion-of-administrative
remedies rule is when, as here, only legal issues are to be resolved. In
fact, the Court, cognizant of the nature of the questions presently
involved, gave due course to the instant petition. As the Court has said
in Ty vs. Trampe, 250 SCRA 500 (1995): x x x. Although as a rule,
administrative remedies must first be exhausted before resort to
judicial action can prosper, there is a well-settled exception in cases
where the controversy does not involve questions of fact but only of
law. x x x.

NPC vs. Municipal Government of Navotas, GR No. 192300 dated
November 24, 2014

Systems Plus Computer College of Caloocan vs. Local
Government of Caloocan, GR No. 146382. August 7, 2003

City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26,
2014
4. Refunds (Sec. 253)

Fels Energy, Inc. vs. Province of Batangas GR No. 168557,
February 16, 2007

NPC vs. Province of Quezon, GR No. 171586, July 15, 2009 same
Nor will NPC find solace in its claim that it utilizes all the power
plant’s generated electricity in supplying the power needs of its
customers. Based on the clear wording of the law, it is the machineries
that are exempted from the payment of real property tax, not the water
or electricity that these machineries generate and distribute.
Even the NPC’s claim of beneficial ownership is unavailing. The
test of exemption is the use, not the ownership of the machineries
devoted to generation and transmission of electric power. The nature
of the NPC’s ownership of these machineries only finds materiality in
resolving the NPC’s claim of legal interest in protesting the tax
assessment on Mirant. As we discussed above, this claim is inexistent
for tax protest purposes.
NPC vs. Province of Quezon, GR No. 171586, January 25, 2010
(Resolution) same

(2) Action by the LBAA (Sec. 229)

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TAXATION II- Compilation of doctrines based on the syllabus of Atty. Bobby Lock
(3) Appeal to the CBAA (Sec. 229)
(4) Appeal to the CTA En Banc
(5) Effect of Appeal on Payment of RPT (Sec. 231)

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