LIM VS. COLET, G.R. 120051, DEC.

10, 2014 -NININ

ISSUE: Is Section 21(B) of Manila City Ordinance No. 7794, aka Manila Revenue Code, as
amended, insofar as it imposes business tax on businesses already assessed with
percentage taxes, valid and constitutional?
RULING: No. Section 21(B) of the Manila Revenue Code, as amended, is null and void for
being in violation of the guidelines and limitations on the taxing powers of the LGUs under
the LGC. It is already well-settled that although the power to tax is inherent in the State, the
same is not true for the LGUs to whom the power must be delegated by Congress and must
be exercised within the guidelines and limitations that Congress may provide.
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 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 Manila and its public officials enacted, approved, and implemented Section 21(B) of the
Manila Revenue Code, as amended.
The Court is not convinced. Section 133(j) of the LGC prevails over Section 143(h) of the
same Code, and Section 21(B) of the Manila Revenue Code, as amended, was manifestly in
contravention of the former.