DURAN, JOY ANN M.

5170091
3-E

REQUIREMENTS FOR THE COMPLETION OF TAXATION 2

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 AND GENERAL PROVISION

i. Power to Tax of Local Government Units
a. Sec. 5 Art. X, 1987 Constitution (compare with 1935 and 1973 provisions)
b. Sec. 129, LGC
POWER TO CREATE SOURCES OF REVENUE – Each local government unit shall
exercise its power to create its own sources of revenue and to levy taxes, fees, and charges
subject to the provisions herein, consistent with the basic policy of local autonomy. Such
taxes, fees and charges shall accrue exclusively to the local government units.

Cases:

1. PEPSI-COLA BOTTLING COMPANY vs. MUNICIPALITY OF TANAUAN, LEYTE

GR No. L-31156. February 27, 1976

Ruling:

The power of taxation is an essential and inherent attribute of sovereignty,

belonging as a matter of right to every independent government, without being
expressly conferred by the people.  It is a power that is purely legislative and which
the central legislative body cannot delegate either to the executive or judicial
department of the government without infringing upon the theory of separation of
powers. The exception, however, lies in the case of municipal corporations, to
which, said theory does not apply. Legislative powers may be delegated to local
governments in respect of matters of local concern.  This is sanctioned by
immemorial 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.  Under the
New Constitution, local governments are granted the autonomous authority to
create their own sources of revenue and to levy taxes. Section 5, Article XI provides:
"Each local government unit shall have the power to create its sources of revenue
and to levy taxes, subject to such limitations as may be provided by law."

The power of taxation 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. 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 measure 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.
2. MACTAN CEBU INTERNATIONAL AIRPORT VS FERDINAND J. MARCOS
G.R. No. 120082. September 11, 1996

Ruling:

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.

3. MANILA ELECTRIC COMPANY, petitioner, vs. PROVINCE OF LAGUNA

G.R. No. 131359. May 5, 1999

Ruling:

Local governments do not have the inherent power to tax except to the extent that
such power might be delegated to them either by the basic law or by statute.
Presently, under Article X of the 1987 Constitution, a general delegation of that
power has been given in favor of local government units.

Under the now prevailing Constitution, where there is neither a grant nor a
prohibition by statute, the tax power must be deemed to exist although Congress
may provide statutory limitations and guidelines. The basic rationale for the current
rule is to safeguard the viability and self-sufficiency of local government units by
directly granting them general and broad tax powers. Nevertheless, the fundamental
law did not intend the delegation to be absolute and unconditional; the
constitutional objective obviously is to ensure that, while the local government units
are being strengthened and made more autonomous, the legislature must still see to
it that:
a) the taxpayer will not be over-burdened or saddled with multiple and
unreasonable impositions;
b) each local government unit will have its fair share of available resources;
c) the resources of the national government will not be unduly disturbed;
and
d) local taxation will be fair, uniform, and just.

4. NATIONAL POWER CORPORATION vs CITY OF CABANATUAN

G.R. No. 149110. April 9, 2003

Ruling:

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 viz:

"Section 5.- Each Local Government unit shall have the power to create its own
sources of revenue, to levy taxes, fees and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local
autonomy. Such taxes, fees and charges shall accrue exclusively to the Local
Governments."

5. CITY GOVERNMENT OF QUEZON CITY vs. BAYAN TELECOMMUNICATIONS, INC.

 G.R. No. 162015. March 6, 2006

Ruling:

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 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.

In Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao, 363
SCRA 522 (2001), the 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.

6. FILM DEVELOPMENT COUNCIL OF THE PHILIPPINES vs. COLON HERITAGE

REALTY CORPORATION, G.R. No. 203754, June 16, 2015

Ruling:

The power of taxation, being an essential and inherent attribute of sovereignty,

belongs, as a matter of right, to every independent government, and needs no
express conferment by the people before it can be exercised. It is purely legislative
and, thus, cannot be delegated to the executive and judicial branches of government
without running afoul to the theory of separation of powers. It, however, can be
delegated to municipal corporations, consistent with the principle that legislative
powers may be delegated to local governments in respect of matters of local
concern. The authority of provinces, cities, and municipalities to create their own
sources of revenue and to levy taxes, therefore, is not inherent and may be exercised
only to the extent that such power might be delegated to them either by the basic
law or by statute.

Material to the case at bar is the concept and scope of local fiscal autonomy. In
Pimentel v. Aguirre, 336 SCRA 201 (2000), fiscal autonomy was defined as “the
power [of LGUs] to create their own sources of revenue in addition to their
equitable share in the national taxes released by the national government, as well as
the power to allocate their resources in accordance with their own priorities. It
extends to the preparation of their budgets, and local officials in turn have to work
within the constraints thereof.” With the adoption of the 1973 Constitution, and
later the 1987 Constitution, municipal corporations were granted fiscal autonomy
via a general delegation of the power to tax. Section 5, Article XI of the 1973
Constitution gave LGUs the “power to create its own sources of revenue and to levy
taxes, subject to such limitations as may be provided by law.” This authority was
further strengthened in the 1987 Constitution, through the inclusion in Section 5,
Article X thereof of the condition that “[s]uch taxes, fees, and charges shall accrue
exclusively to local governments.”

c. Local Taxing Authority (Sec. 132)

LOCAL TAXING AUTHORITY- The power to impose a tax, fee, or charge or to generate
revenue under this code shall be exercised by the sanggunian of the local government unit
concerned through an appropriate ordinance.
 Cases:

7. PETRON CORPORATION vs. MAYOR TOBIAS M. TIANGCO

G.R. No. 158881, April 16, 2008

Ruling:

This ability of local government units to impose business or other local taxes is
ultimately rooted in the 1987 Constitution. Section 5, Article X assures that "[e]ach
local government unit shall have the power to create its own sources of revenues
and to levy taxes, fees and charges," though the power is "subject to such guidelines
and limitations as the Congress may provide." There is no doubt that following the
1987 Constitution and the Code, the fiscal autonomy of local government units has
received greater affirmation than ever. Previous decisions that have been skeptical
of the viability, if not the wisdom of reposing fiscal autonomy to local government
units have fallen by the wayside.

Respondents cite the Court’s declaration in City Government of San Pablo v.

Reyes that following the 1987 Constitution the rule thenceforth "in interpreting
statutory provisions on municipal fiscal powers, doubts will have to be resolved in
favor of municipal corporations." Such policy is also echoed in Section 5(a) of the
Code, which states that "any provision on a power of a local government unit shall
be liberally interpreted in its favor, and in case of doubt, any question thereon shall
be resolved in favor of devolution of powers and of the lower local government
unit." But somewhat conversely, Section 5(b) then proceeds to assert that "in 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." And this
latter qualification has to be respected as a constitutionally authorized limitation
which Congress has seen fit to provide. Evidently, local fiscal autonomy should not
necessarily translate into abject deference to the power of local government units to
impose taxes.

d. Procedure for Approval of and Effectivity of Tax Ordinances (Sec. 187)

PROCEDURE FOR APPROVAL AND EFFECTIVITY OF TAX, ORDINANCES AND
REVENUE MEASURES; MANDATORY PUBLIC HEARINGS. - The procedure for approval
of local tax ordinances and revenue measures shall be in accordance with the provisions of
this Code: Provided, That public hearings shall be conducted for the purpose prior to the
enactment thereof: Provided, further, That any question on the constitutionality or legality
of tax ordinances or revenue measures may be raised on appeal within thirty (30) days
from the effectivity thereof to the Secretary of Justice who shall render a decision within
sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal
shall not have the effect of suspending the effectivity of the ordinance and the accrual and
payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30)
days after receipt of the decision or the lapse of the sixty-day period without the Secretary
of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings
with a court of competent jurisdiction.

Cases:

8. HAGONOY MARKET VENDOR ASSOCIATION vs. MUNICIPALITY OF HAGONOY,

BULACAN, G.R. No. 137621. February 6, 2002

Ruling:

The law requires that an appeal of a tax ordinance or revenue measure should be
made to the Secretary of Justice within thirty (30) days from effectivity of the
ordinance and even during its pendency, the effectivity of the assailed ordinance
shall not be suspended. In the case at bar, Municipal Ordinance No. 28 took effect in
October 1996. Petitioner filed its appeal only in December 1997, more than a year
 after the effectivity of the ordinance in 1996. Clearly, the Secretary of Justice
correctly dismissed it for being time-barred.

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.

e. Publication (Sec. 188)

PUBLICATION OF TAX ORDINANCES AND REVENUE MEASURES. - Within ten (10)
days after their approval, certified true copies of all provincial, city, and municipal tax
ordinances or revenue measures shall be published in full for three (3) consecutive days in
a newspaper of local circulation: Provided, however, That in provinces, cities and
municipalities where there are no newspapers of local circulation, the same may be posted
in at least two (2) conspicuous and publicly accessible places

ii. Other Preliminary Matters

a. Residual Powers of LGUs -Power to Levy Other Taxes, Fees or Charges (Sec. 186)
POWER TO LEVY OTHER TAXES, FEES OR CHARGES . - Local government units may
exercise the power to levy taxes, fees or charges on any base or subject not otherwise
specifically enumerated herein or taxed under the provisions of the National Internal
Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or
charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared
national policy: Provided, further, That the ordinance levying such taxes, fees or charges
shall not be enacted without any prior public hearing conducted for the purpose.

b. Doctrine of Pre-emption or Exclusionary Rule

Cases:

9. VICTORIAS MILLING CO., INC. vs. MUNICIPALITY OF VICTORIAS

G.R. No. L-21183, September 27, 1968

Ruling:

Ordinance No. 1, series of 1956, of the Municipality of Victorias, was promulgated

not in the exercise of the municipality's regulatory power but as a revenue measure
—tax on occupation or business.

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 same businesses or occupation" on which
"fixed internal revenue privilege taxes" are "regularly imposed by the Government".
 Ordinance No. 1 was approved by the municipality of Victorias on September 22,
1956 by way of an amendment to two municipal ordinances separately imposing
license taxes on operators of sugar centrals and sugar refineries. The changes were:
with respect to sugar centrals, by increasing the rates of license taxes; and so to
sugar refineries, by increasing the rates of license taxes as well as the range of
graduated schedule of annual output capacity.
 
In the absence of sufficient proof that license taxes are unreasonable, the
presumption of validity subsists. A cash surplus alone cannot stop a municipality
from enacting a revenue ordinance increasing license taxes in anticipation of
municipal needs. Discretion to determine the amount of revenue required for the
needs of the municipality is lodged with the municipal authorities. Judicial
intervention steps in only when there is a flagrant, oppressive and excessive abuse
of power by said municipal authorities.

Said Ordinance No. 1, series of 1956, is not discriminatory. The ordinance does not
single out Victorias as the only object of the ordinance. Said ordinance is made to
apply to any sugar central or sugar refinery which may happen to operate in the
municipality. So it is, that the fact that plaintiff is actually the sole operator of a
sugar central and a sugar refinery does not make the ordinance discriminatory.

iii. Scope of taxing powers (Sec. 128)

SCOPE. - The provisions herein shall govern the exercise by provinces, cities, municipalities,
and barangays of their taxing and other revenue-raising powers.

iv. Fundamental Principles (Sec. 130)

FUNDAMENTAL PRINCIPLES. - The following fundamental principles shall govern the
exercise of the taxing and other revenue-raising powers of local government units:
(a) Taxation shall be uniform in each local government unit;
(b) Taxes, fees, charges and other impositions shall:
(1) be equitable and based as far as practicable on the taxpayer's ability to pay;
(2) be levied and collected only for public purposes;
(3) not be unjust, excessive, oppressive, or confiscatory;
(4) not be contrary to law, public policy, national economic policy, or in the restraint
of
trade;
(c) The collection of local taxes, fees, charges and other impositions shall in no case be let
to any private person;
(d) The revenue collected pursuant to the provisions of this Code shall inure solely to the
benefit of, and be subject to the disposition by, the local government unit levying the
tax, fee, charge or other imposition unless otherwise specifically provided herein; and,
(e) Each local government unit shall, as far as practicable, evolve a progressive system of
taxation.

v. Common Limitations
a. Income Tax - Correlate with Sec. 143 (f)
b. Documentary Stamp Tax
c. Transfer Taxes - Correlate with Sec. 135
d. Customs Duties
e. Taxes, Fees and Charges (TFC) on Goods Passing Through the Territorial Jurisdiction of
LGUs - Correlate with Sec. 155

Cases:

10. PANALIGAN vs. CITY OF TACLOBAN – G.R. No. L-9319, September 27,
1957

Ruling:
 The Supreme Court affirmed the decision appealed from declaring the said
ordinance illegal.

Section 2287 of the Revised Administrative Code aforequoted, which takes away
from the municipal council (or board) the power to impose export taxes, remains to
be the rule on the matter.    While it is true that Section 14 (e) of Republic Act No.
760 confers on the Municipal Board the power “to fix the tariff of fees and charges
for all services rendered by the city, or any of its department, branches or officials,”
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 the 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.

In order that an act or ordinance imposing an excise or license tax may be sustained
as a valid exercise of the police power, it must be intended to promote or be
sufficiently related to the public health, morals, safety or welfare. 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, 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.

11. PALMA DEVELOPMENT CORP vs. MUNICIPALITY OF MALANGAS

G.R. No. 152492, October 16, 2003

Ruling:

The imposition of a service fee for police surveillance on all goods harbored or
sheltered in the premises of the municipal port of Malangas under Sec. 5G.01 of the
Malangas Municipal Revenue Code No. 09, series of 1993, is declared NULL AND
VOID for being violative of Republic Act No. 7160.

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).

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.”

f. TFC on products sold by marginal farmers of fishermen - Definition of Marginalized

Fishermen (Sec. 122)

Cases:
 12. CITY OF CEBU vs. IAC 144 SCRA 710

Ruling:

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.

g. Taxes on BOI-registered enterprises

h. Excise taxes under the NIRC/TFC on Petroleum Products

Cases:

13. PETRON CORP. vs. MAYOR TOBIAS TIANGCO – G.R. No. 158881, April
16, 2008

Ruling:

The subject assessment for deficiency taxes on petitioner is ordered CANCELLED.

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 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.

The current definition of an excise tax is that of a tax levied on a specific article,
rather than one “upon the performance, 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 can be reasonably presumed that if municipalities, cities and provinces were

authorized to impose business taxes on manufacturers and retailers of petroleum
products, the resulting losses to these enterprises would be passed on to the
consumers, triggering the chain of increases that normally accompany the increase
in oil prices. No similarly massive trigger effect would ensue upon the imposition of
business taxes on other commodities, including those already subject to excise
taxation under the NIRC.

It cannot be denied that subjecting petroleum products to business taxes apart from
the taxes already imposed by Congress in this age of deregulation would lead to the
same result had they been so taxed during the era of oil regulation – the increase of
oil prices.

14. PROVINCE OF BULACAN vs. CA – G.R. No. 126232, November 27, 1998
Ruling:
 Issues raised by petitioners are devoid of merit.

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.—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.

Also, province may not invoke the Regalian doctrine to extend the coverage of its
ordinance to quarry resources extracted from private lands, for taxes, being
burdens, are not to be presumed beyond what the applicable statute expressly and
clearly declares, tax statutes being construed strictissimi juris against the
government.—Section 21 of Provincial Ordinance No. 3 is practically only a
reproduction of Section 138 of the Local Government Code. A cursory reading of
both would show that both refer to ordinary sand, stone, gravel, earth and other
quarry resources extracted from public lands. Even if we disregard the limitation set
by Section 133 of the Local Government Code, petitioners may not impose taxes on
stones, sand, gravel, earth and other quarry resources extracted from private lands
on the basis of Section 21 of Provincial Ordinance No. 3 as the latter clearly applies
only to quarry resources extracted from public lands.

15. BATANGAS CITY vs. PILIPINAS SHELL PETROLEUM CORPORATION –

G.R. No. 187631 Dated July 8, 2015

Ruling:

The Court affirmed the CTA en banc’s decision which adopted in toto the RTC’s
ruling:
sustaining the imposition of business taxes by petitioners upon
the manufacture and distribution of petroleum products by
respondent. However, the RTC withheld the imposition of
Mayor’s Permit Fee in deference to the provisions of Section
147 of the LGC, in relation to Section 143(h) of the same Code,
which imposed a limit to the power of petitioners to collect the
said business taxes.

Power to tax is inherent in the State, the same is not true for local government units
(LGUs) because although the mandate to impose taxes granted to LGUs is categorical
and long established in the 1987 Philippine Constitution, the same is not all
encompassing as it is subject to limitations such as those set forth under Section 133
of the LGC.

Although petroleum products are subject to excise tax, the same is specifically
excluded from the broad power granted to local government units (LGUs) under
Section 143(h) of the Local Government Code (LGC) to impose business taxes.—
Section 133(h) clearly specifies the two kinds of taxes which cannot be imposed by
LGUs: (1) excise taxes on articles enumerated under the NIRC, as amended; and (2)
taxes, fees or charges on petroleum products. Indisputably, the power of LGUs to
impose business taxes derives from Section 143 of the LGC. However, the same is
subject to the explicit statutory impediment provided for under Section 133(h) of
the same Code which prohibits LGUs from imposing “taxes, fees or charges on
petroleum products.” It can, therefore, be deduced that although petroleum
 products are subject to excise tax, the same is specifically excluded from the broad
power granted to LGUs under Section 143(h) of the LGC to impose business taxes.

i. Percentage taxes and VAT

Cases:

16. PEPSI COLA BOTTLING vs. MUNICIPALITY OF TANUAN 69 SCRA 460

Ruling:

Municipalities are empowered to impose not only municipal license but just and
uniform taxes for public purposes. A municipal tax of P0.01 on each gallon of soft
drinks produced is not unfair or oppressive. 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.

A municipal ordinance which imposes a tax of P0.01 for every gallon of soft drinks
produced in the municipality does not partake of a percentage tax.—The imposition
of “a tax of one centavo (P0.01) on each gallon (128 fluid 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.

17. MATALIN COCONUT CO, INC. vs. THE MUNICIPAL COUNCIL OF MALABANG,
LANAO DEL SUR, G.R. No. L-28138, August 13, 1986

Ruling:

The Court agrees with the finding of the trial court that the amount collected under
the ordinance in question partakes of the nature of a tax, although denominated as
"police inspection fee" since its undeniable purpose is to raise revenue. However, it
cannot agree with the trial court's finding that the tax imposed by the ordinance is a
percentage tax on sales which is beyond the scope of the municipality's authority to
levy under Section 2 of the Local Autonomy Act.

The tax imposed under the ordinance in question is not a percentage tax on sales or
any other form of tax based on sales. It is a fixed tax of P.30 per bag of cassava starch
or flour "shipped out" of the municipality. It is not based on sales.

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" As correctly held by the trial court, the so-
called "police inspection fee" levied by the ordinance is "unjust and unreasonable."

Having found the ordinance in question to be invalid, the Court finds it unnecessary
to rule on the other errors assigned by the appellants.
 18. PELIZLOY REALTY CORP., vs. PROVINCE OF BENGUET, G.R. No. 183137, April
10, 2013

Ruling:

Amusement taxes are fixed at a certain percentage of the gross receipts incurred by
certain specified establishments. Thus, applying the definition in CIR v. City Trust
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.

Section 140 of the LGC provides: Amusement Tax. — (a) The province may levy an
amusement tax to be collected from the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia, and other places of
amusement at a rate of not more than thirty percent (30%) of the gross receipts
from admission fees.

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, 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.

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.

j. Taxes on transportation contractors and common carriers

Cases:

19. FIRST PHILIPPINE INDUSTRIAL CORPORATION vs. CA – G.R. No. 125948,

December 29, 1998

Ruling:

The respondent's argument that the term "common carrier" as used in Section 133
(j) of the LGC refers only to common carriers transporting goods and passengers
through moving vehicles or vessels either by land, sea or water, is erroneous.

As correctly pointed out by FPIC, the definition of "common carriers" in the Civil
Code makes no distinction as to the means of transporting, as long as it is by land,
water or air. It does not provide that the transportation of the passengers or goods
should be by motor vehicle. In fact, in the United States, oil pipe line operators are
considered common carriers.
 Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is
considered a "common carrier."

Article 86 thereof provides that: Pipe line concessionaire as common carrier. — A

pipe line shall have the preferential right to utilize installations for the
transportation of petroleum owned by him, but is obligated to utilize the remaining
transportation capacity pro rata for the transportation of such other petroleum as
may be offered by others for transport, and to charge without discrimination such
rates as may have been approved by the Secretary of Agriculture and Natural
Resources.

Republic Act 387 also regards petroleum operation as a public utility. Pertinent
portion of Article 7 thereof provides that everything relating to the exploration for
and exploitation of petroleum and everything relating to the manufacture, refining,
storage, or transportation by special methods of petroleum, is hereby declared to be
a public utility.

The Bureau of Internal Revenue likewise considers the petitioner a "common

carrier." In BIR Ruling No. 069- 83, it declared:
. . . since [petitioner] is a pipeline concessionaire that is engaged only in
transporting petroleum products, it is considered a common carrier under
Republic Act No. 387 . . . . Such being the case, it is not subject to withholding
tax prescribed by Revenue Regulations No. 13-78, as amended.

The legislative intent is to exclude 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." FPIC is already paying three
(3%) percent common carrier's tax on its gross sales/earnings under the National
Internal Revenue Code. To tax FPIC again on its gross receipts in its transportation
of petroleum business would defeat the purpose of the LGC.

20. CITY OF MANILA vs. COLET, G.R. No. 120051, December 10, 2014
Ruling:

Among the common limitations on the taxing power of LGUs is Section 133(j) of the
LGC which clearly and unambiguously proscribes LGUs from imposing anytax 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.

Section 133(j) of the LGC prevails over Section 143 (h) of the same Code. Section
143 of the LGC defines the general power of the municipality (as well as the city, if
read in relation to Section 151 of the LGC) to tax businesses within its jurisdiction.
While paragraphs (a) to (g) thereof identify the particular businesses and fix the
imposable tax rates for each, paragraph (h) is apparently the “catch-all provision”
allowing the municipality to impose tax “on any business, not otherwise specified in
the preceding paragraphs, which the sanggunian concerned may deem proper to
tax.”

The succeeding proviso of Section 143(h) of the LGC which says “Provided, That on
any business subject to the excise, value-added or percentage 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” is not a specific grant
of power to the municipality or city to impose business tax on the gross sales or
receipts of such a business. Rather, the proviso only fixes a maximum rate of
imposable business tax in case the business taxed under Section 143(h) of the LGC
happens to be subject to excise, value added, or percentage tax under the Tax Code.

The grant of power to municipalities and cities under Section 143(h) of the LGC
cannot overcome the specific exemption in Section 133(j) of the same Code. This is
 in accord with the rule on statutory construction that specific provision prevails
over general ones.

In case of any doubt, any tax ordinance or revenue measure shall be construed
strictly against the LGU enacting it, and liberally in favor of the taxpayer. The
legislative intent is to withhold from the LGUs the power to tax transportation
contractors, persons engaged in the transportation of passengers or freight by hire,
and common carrier by air, land or water in order to prevent a duplication of the
common carrier’s tax. RA No. 7716 (Expanded Value-Added Tax or the E-VAT Law)
expressly amended Section 115 (now Section 117) of the Tax Code on Percentage
Tax on carriers and keepers of garages, to state that “(t)he gross receipts of common
carriers derived from their incoming and outgoing freight shall not be subjected to
the local taxes imposed under the Local Government Code.”

k. Taxes on premiums
l. TFC for registration of motor vehicles and issuance of licenses for driving - Correlate with
Sec. 458 (3)(vi) of the LGV and Art. 99(a)(3)(vi) of the IRR of the LGC

Cases:

21. LTO vs. CITY OF BUTUAN – G.R. No. 131512, January 20, 2000
Ruling:

The registration and licensing functions are vested in the LTO pursuant to Art. 3 Sec
4(d), 10 of RA 4136-land Transportation and traffic Code) while the franchising and
regulatory responsibilities are vested in the LTFRB pursuant to EO No,. 202. Under
the Local Government Code Sec 458(8)(3)(VI), the LGU now have the power to
regulate ( to fix, establish or control, to adjust by rules and methods or establish
mode to direct by the rule or restriction; or to subject to governing principles and
laws) the operation of tricycle for hire and grant franchises thereof but they are still
subject to the guidelines prescribed by DOTC under Art 458(a) of RA 7160.

To construe the tax provisions of Section 133 (1) of the LGC indistinctively would
result in the repeal to that extent of LTO's regulatory power which evidently has not
been intended. If it were otherwise, the law could have just said so in Section 447
and 458 of Book III of the Local Government Code in the same manner that the
specific devolution of LTFRB's power on franchising of tricycles has been provided.
Repeal by implication is not favored.

LGUs indubitably now have the power to regulate the operation of tricycles-for-hire
and to grant franchises for the operation thereof, and not to issue registration.

m. Taxes, Fees, or Charges on Philippine Products Actually Exported - Correlate with Sec.
143 (c)
n. TFC on CBBEs under RA No. 6810 and RA 6983
o. TFC on the National Government, its agencies and instrumentalities and LGUs (To be
discussed together with Secs.232 and 234 on Real Property Tax)

Cases:

22. PHILIPPINE FISHERIES DEV’T AUTHORITY vs. CA, G.R. No. 169836, July 31,
2007

Ruling:

The court ruled that the authority is not a government owned and controlled
corporation but a government instrumentality which is generally exempt from
payment of real property taxes. However said exemption does not apply to the
portions of the Iloilo Fishing Port Complex which the authority leased to private
 entities. With respect to this properties, the authority is liable to pay real property
taxes.

In the MIAA case, petitioner Philippine Fisheries Development Authority was cited
as among the instrumentalities of the national government. Thus –
Some of the national government instrumentalities vested by law with
juridical personalities are: Bangko Sentral ng Pilipinas, Philippine Rice
Research Institute, Laguna Lake Development Authority, Fisheries
Development Authority, Bases Conversion Development Authority, Philippine
Ports Authority, Cagayan de Oro Port Authority, San Fernando Port
Authority, Cebu Port Authority, and Philippine National Railways.

In light of the foregoing, the Authority should be classified as an instrumentality of

the national government which is liable to pay taxes only with respect to the
portions of the property, the beneficial use of which were vested in private entities.
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.

Thus, 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 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.

23. MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY vs. MARCOS – G.R. No.
120082, Sept. 11, 1996

Ruling:

“Sec. 15. Transfer of Existing Facilities and Intangible Assets. — All existing public
airport facilities, runways, lands, buildings and other properties, movable or
immovable, belonging to or presently administered by the airports, and all assets,
powers, rights, interests and privileges relating on airport works or air operations,
including all equipment which are necessary for the operations of air navigation,
aerodrome control towers, crash, fire, and rescue facilities are hereby transferred to
the Authority: Provided, however, that the operations control of all equipment
necessary for the operation of radio aids to air navigation, airways communication,
the approach control office, and the area control center shall be retained by the Air
Transportation Office. No equipment, however, shall be removed by the Air
Transportation Office from Mactan without the concurrence of the Authority. The
Authority may assist in the maintenance of the Air Transportation Office
equipment.”

It may be reasonable to assume that the term “lands” refer to “lands” in Cebu City
then administered by the Lahug Air Port and included the parcels of land the
respondent City of Cebu seeks to levy on for real property taxes. This section
involves a “transfer” of the “lands,” among other things, to the petitioner and not
just the transfer of the beneficial use thereof, with the ownership being retained by
the Republic of the Philippines.

This “transfer” is actually an absolute conveyance of the ownership thereof because

the petitioner’s authorized capital stock consists of, inter alia, “the value of such real
estate owned and/or administered by the airports.” Hence, the petitioner is now the
owner of the land in question and the exception in Section 234(c) of the LGC is
inapplicable.
 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.

Finally, even if the petitioner was originally not a taxable person for purposes of real
property tax, in light of the foregoing disquisitions, it had already become, even if it
be conceded to be an “agency” or “instrumentality” of the Government, a taxable
person for such purpose in view of the withdrawal in the last paragraph of Section
234 of exemptions from the payment of real property taxes, which, as earlier
adverted to, applies to the petitioner.

24. MIAA vs. CA – G.R. No. 155650, July 20, 2006

Ruling:

The Court rules 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.

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:
(o) Taxes, fees or charges of any kind on the National Government, its
agencies and instrumentalities and local government units.

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; from
imposing "[t]axes, fees or charges of any kind on the National
Government, its agencies and instrumentalities

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.

However, 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 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.

25. MIAA vs. CITY OF PASAY – G.R. No. 163072, April 2, 2009
Ruling:
 In Manila International Airport Authority v. Court of Appeals (2006 MIAA case), the
Court already resolved the issue of whether the airport lands and buildings of MIAA
are exempt from tax under existing laws. The 2006 MIAA case originated from a
petition for prohibition and Injunction which MIAA filed with the Court of Appeals,
seeking to restrain the City of Parañ aque from imposing real property tax on,
levying against, and auctioning for public sale the airport lands and buildings
located in Parañ aque City. The only difference between the 2006 MIAA case and this
case is that the 2006 MIAA case involved airport lands and buildings located in
Parañ aque City while this case involved airport lands and buildings located in Pasay
City. The 2006 MIAA case and this case raised the same threshold issue: whether the
local government can impose real property tax on the airport lands, consisting
mostly of the runways, as well as the airport buildings, of MIAA.

To summarize, MIAA is not a government-owned or controlled corporation under

Section 2(13) of the Introductory Provisions of the Administrative Code because it is
not organized as a stock or non-stock corporation. Neither is MIAA a government-
owned or controlled corporation under Section 16, Article XII of the 1987
Constitution because MIAA is not required to meet the test of economic viability.
MIAA is a government instrumentality vested with corporate powers and
performing essential public services pursuant to Section 2(10) of the Introductory
Provisions of the Administrative Code. As a government instrumentality, MIAA is
not subject to any kind of tax by local governments under Section 133(o) of the
Local Government Code. The exception to the exemption in Section 234(a) does not
apply to MIAA because MIAA is not a taxable entity under the Local Government
Code. Such exception applies only if the beneficial use of real property owned by the
Republic is given to a taxable entity. (Manila International Airport Authority vs.
Pasay G.R. No. 163072 April 02, 2009)

26. CITY OF DAVAO vs. RTC – G.R. No. 127383, August 18, 2005
Ruling:

SECTION 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;
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, non-profit or religious cemeteries and all lands, buildings,
and improvements actually, directly, and exclusively used for religious
charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively
used by local water districts and government-owned and controlled
corporations engaged in the distribution of water and/or generation and
transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided for
under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental
protection.

Except as provided herein, any exemption from payment of real property tax

previously granted to, or presently enjoyed by, all persons, whether natural or
juridical, including all government-owned or controlled corporations are hereby
withdrawn upon the effectivity of this Code.

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 government-
owned corporation, it necessarily follows that its exemption from such tax granted it
in Section 14 of its Charter, R.A. No. 6958, has been withdrawn.
II. TAXING AND OTHER REVENUE RAISING POWERS OF LGUs
i. Provinces
a. Local Transfer Tax (Sec. 135)
TAX ON TRANSFER OF REAL PROPERTY OWNERSHIP.
(a) The province may impose a tax on the sale, donation, barter, or on any other mode of
transferring ownership or title of real property at the rate of not more than fifty percent
(50%) of the one percent (1%) of the total consideration involved in the acquisition of the
property or of the fair market value in case the monetary consideration involved in the
transfer is not substantial, whichever is higher. The sale, transfer or other disposition of
real property pursuant to R.A. No. 6657 shall be exempt from this tax.

(b) For this purpose, the Register of Deeds of the province concerned shall, before
registering any deed, require the presentation of the evidence of payment of this tax. The
provincial assessor shall likewise make the same requirement before cancelling an old tax
declaration and issuing a new one in place thereof, Notaries public shall furnish the
provincial treasurer with a copy of any deed transferring ownership or title to any real
property within thirty (30) days from the date of notarization.

It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax
herein imposed within sixty (60) days from the date of the execution of the deed or from
the date of the decedent's death.

b. Business Tax on Printing and Publication (Sec. 136)

TAX ON BUSINESS OF PRINTING AND PUBLICATION. - The province may impose a tax
on the business of persons engaged in the printing and/or publication of books, cards,
posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature, at
a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts
for the preceding calendar year.

In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of
one percent (1%) of the capital investment. In the succeeding calendar year, regardless of
when the business started to operate, the tax shall be based on the gross receipts for the
preceding calendar year, or any fraction thereof, as provided herein.

The receipts from the printing and/or publishing of books or other reading materials
prescribed by the Department of Education, Culture and Sports as school texts or
references shall be exempt from the tax herein imposed.

c. Franchise Tax (Sec. 137)

FRANCHISE TAX. - Notwithstanding any exemption granted by any law or other special
law, the province may impose a tax on businesses enjoying a franchise, at the rate not
exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the
preceding calendar year based on the incoming receipt, or realized, within its territorial
jurisdiction.

In the case of a newly started business, the tax shall not exceed one-twentieth (1/20) of
one percent (1%) of the capital investment. In the succeeding calendar year, regardless of
when the business started to operate, the tax shall be based on the gross receipts for the
preceding calendar year, or any fraction thereon, as provided herein.

Cases:

27. NPC vs. CITY OF CABANATUAN, G.R. No. 149110, April 9, 2003
Ruling:

Sec. 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special
law, the province may impose a tax on businesses enjoying a franchise, at a rate not exceeding
fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding
calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.
 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.

Petitioner fulfills the first requisite. Commonwealth Act No. 120, as amended by Rep. Act
No. 7395, constitutes petitioner's primary and secondary franchises. It serves as the
petitioner's charter, defining its composition, capitalization, the appointment and the
specific duties of its corporate officers, and its corporate life span. As its secondary
franchise, Commonwealth Act No. 120, as amended, vests the petitioner powers which are
not available to ordinary corporations.

Petitioner also fulfills the second requisite. It is operating within the respondent city
government's territorial jurisdiction pursuant to the powers granted to it by
Commonwealth Act No. 120, as amended.

Fulfilling both requisites, petitioner is, and ought to be, subject of the franchise tax in
question.

28. QUEZON CITY vs. ABS-CBN, G.R. No. 166408. October 6, 2008
Ruling:

ABS-CBN's claims for exemption must fail on twin grounds:

First, Section 8 of R.A. No. 7966 which 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 failed to specify the taxes the company is sought to be exempted from. Neither did it
particularize the jurisdiction from which the taxing power is withheld.

A claim of tax exemption must be clearly shown and based on language in law too plain to
be mistaken. Otherwise stated, taxation is the rule, exemption is the exception. The burden
of proof rests upon the party claiming the exemption to prove that it is in fact covered by
the exemption so claimed. This, the respondent failed to do.

Second, the clause has become functus officio because as the law now stands, ABS-CBN is no
longer subject to a franchise tax. It is now liable for VAT under Expanded Value Added Tax
Law.

29. CITY OF IRIGA vs. CAMARINES SUR III ELECTRIC COOPERATIVE, INC., G.R. No.
192945, September 5, 2012

Ruling:

PD 269, which took effect on August 6, 1973 granted CASURECO III exemption from the
payment of "all national government, local government and municipal taxes and fees,
including franchise. On January 1, 1992, the LGC took effect, and Section 193 thereof
withdrew tax exemptions or incentives previously 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.

Therefore, CASURECO III can no longer invoke PD 269 to evade payment of local taxes.
Moreover, its provisional registration with the CDA (under R.A No. 9638) which granted it
exemption for the payment of local taxes was extended only until May 4, 1992. Thereafter, it
can no longer claim any exemption from the payment of local taxes, including the subject
franchise tax.
 30. SMART COMMUNICATIONS vs. CITY OF DAVAO – G.R. No. 155491, September
16, 2008 (Also read decision on Motion for Reconsideration dated July 21, 2009)

Ruling:

Section 9 of R.A No. 7294 imposes on Smart a franchise tax equivalent to three percent
(3%) of all gross receipts of the business transacted under the franchise and the said
percentage shall be in lieu of all taxes on the franchise or earnings thereof. It does not
expressly provide what kind of taxes Smart is exempted from. It is not clear whether the “in
lieu of all taxes” provision in the franchise of Smart would include exemption from local or
national taxation.

The uncertainty in the “in lieu of all taxes” clause in R.A No. 729 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 exempt from all kinds of franchise taxes —
whether local or national. However, Smart failed in this regard. 

In this case, the doubt must be resolved in favor of the City of Davao.

Ruling on the Motion for Reconsideration dated July 21, 2009:

In sum, the aforecited jurisprudence suggests that aside from the national franchise
tax, the franchisee is still liable to pay the local franchise tax, unless it is expressly
and unequivocally exempted from the payment thereof under its legislative
franchise. The "in lieu of all taxes" clause in a legislative franchise should
categorically state that the exemption applies to both local and national taxes;
otherwise, the exemption claimed should be strictly construed against the taxpayer
and liberally in favor of the taxing authority.

Republic Act No. 7716, otherwise known as the "Expanded VAT Law," did not
remove or abolish the payment of local franchise tax. It merely replaced the national
franchise tax that was previously paid by telecommunications franchise holders and
in its stead imposed a ten percent (10%) VAT in accordance with Section 108 of the
Tax Code. VAT replaced the national franchise tax, but it did not prohibit nor abolish
the imposition of local franchise tax by cities or municipalities.

The power to tax by local government units emanates from Section 5, Article X of
the Constitution which empowers them to create their own sources of revenues and
to levy taxes, fees and charges subject to such guidelines and limitations as the
Congress may provide. The imposition of local franchise tax is not inconsistent with
the advent of the VAT, which renders functus officio the franchise tax paid to the
national government. VAT inures to the benefit of the national government, while a
local franchise tax is a revenue of the local government unit.

The Court thus resolved to deny the motion for reconsideration, such denial being
final.

d. Tax on Sand, Gravel and Quarry Resources (Sec. 138)

TAX ON SAND, GRAVEL AND OTHER QUARRY RESOURCES. - The province may levy
and collect not more than ten percent (10%) of fair market value in the locality per cubic
meter of ordinary stones, sand, gravel, earth, and other quarry resources, as defined under
the National Internal Revenue Code, as amended, extracted from public lands or from the
beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial
jurisdiction.

The permit to extract sand, gravel and other quarry resources shall be issued exclusively
by the provincial governor, pursuant to the ordinance of the sangguniang panlalawigan.

The proceeds of the tax on sand, gravel and other quarry resources shall be distributed as
follows:
 (1) Province - Thirty percent (30%);
(2) Component City or Municipality where the sand, gravel, and other quarry
resources are extracted - Thirty percent (30%); and
(3) Barangay where the sand, gravel, and other quarry resources are extracted - Forty
percent (40%).

Cases:

31. MUNICIPALITY OF SAN FERNANDO vs. STA. ROMANA, G.R. No. L-30159, Mar.
31, 1987

Ruling:

Presidential Decree No. 231, enacting a Local Tax Code (for Provinces, Cities, Municipalities
and Barrios) which took effect on July 1, 1973 as later amended by Presidential Decree No.
426, dated March 30, 1974 provides:

Sec. 10. Sand and gravel tax. — The province may levy and collect a tax of not exceeding
seventy-five centavos per cubic meter of ordinary stones, sand, gravel earth and other
materials extracted from public and private lands of the government or from the beds of
seas, lakes, rivers, streams, creeks and other public waters within the jurisdiction of the
province.

Sec. 22 of the same Code provides that the municipality shall not levy taxes, fees, and charges
that the province or city is authorized to levy in this Code.

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.

32. PROVINCE OF BULACAN vs. CA – G.R. No. 126232, November 27, 1998
Ruling:

The NIRC 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 NIRC. The
province can, however, impose a tax on stones, sand, gravel, earth and other quarry
resources extracted from public lands because it is expressly empowered to do so under
Section 134 of Republic Act No. 7169 of 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 NIRC.

Given the above disquisition, petitioners cannot claim that the appellate court unjustly
deprived them of the power to create their sources of revenue, their assessment of taxes
against Republic Cement being ultra vires, traversing as it does the limitations set by the
local government code.

e. Professional Tax (Sec. 139)

PROFESSIONAL TAX. -
(a) The province may levy an annual professional tax on each person engaged in the
exercise or practice of his profession requiring government examination at such amount
and reasonable classification as the sangguniang panlalawigan may determine but shall
in no case exceed Three hundred pesos (P300.00).
(b) Every person legally authorized to practice his profession shall pay the professional tax
to the province where he practices his profession or where he maintains his principal office
in case he practices his profession in several places: Provided, however, That such person
 who has paid the corresponding professional tax shall be entitled to practice his profession
in any part of the Philippines without being subjected to any other national or local tax,
license, or fee for the practice of such profession.
(c) Any individual or corporation employing a person subject to professional tax shall
require payment by that person of the tax on his profession before employment and
annually thereafter.
(d) The professional tax shall be payable annually, on or before the thirty-first (31st) day
of January. Any person first beginning to practice a profession after the month of January
must, however, pay the full tax before engaging therein. A line of profession does not
become exempt even if conducted with some other profession for which the tax has been
paid. Professionals exclusively employed in the government shall be exempt from the
payment of this tax.
(e) Any person subject to the professional tax shall write in deeds, receipts, prescriptions,
reports, books of account, plans and designs, surveys and maps, as the case may be, the
number of the official receipt issued to him.

Definition of Professionals (Sec. 228 (f) IRR of the LGC)

The professionals subject to tax herein imposed are only those who have passed the bar
examinations, or any board or other examinations conducted by the Professional
Regulation Commission (PRC). For example, a lawyer who is also a Certified Public
Accountant (CPA) must pay the professional tax imposed on lawyers and that fixed for
CPAs, if he is to practice both professions.

Professional practices his profession in several places (Sec. 228 (b) IRR of LGC)
Every person legally authorized to practice his profession shall pay the professional tax to
the province where he practice his profession or where he maintains his principal office in
case he practices his profession in several places, provided, however, that such person who
has paid the corresponding professional tax shall be entitled to practice his profession in
any part the Philippines without being subjected to any other national or local tax, license,
or fee for the practice of such profession.

f. Amusement Tax (Sec. 140) as amended by RA No. 9640 dated May 21, 2009
AMUSEMENT TAX. - (a) The province may levy an amusement tax to be collected from
the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing
stadia, and other places of amusement at a rate of not more than ten percent (10%) of the
gross receipts from the admissions fees

(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their
proprietors, lessees, or operators and paid to the provincial treasurer before the gross
receipts are devided between said proprietors, lessees, or operators and the distributors of
the cinematographic films.

(c) The holding of operas, concerts, dramas, recitals, paintings, and art exhibitions, flower
shows, musical programs, literary and oratorical presentations, except pop, rock, or
similar concerts shall be exempt from the payment of the tax herein imposed.

(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions
for the payment of tax. In case of fraud or failure to pay the tax, the sangguniang
panlalawigan may impose such surcharges, interest and penalties as it may deem
appropriate.

(e) The proceeds from the amusement tax shall be shared equally by the province and the
municipality where such amusement places are located.

Cases:

33. PELIZLOY REALTY CORP., vs. PROVINCE OF BENGUET, G.R. No. 183137, April
10, 2013

Ruling:
 Section 140 of the LGC expressly allows the imposition by provinces of amusement taxes on
"the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, 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.

Section 131 (c) of the LGC already provides a clear definition: "Amusement Places" include
theaters, cinemas, concert halls, circuses and other places of amusement where one seeks
admission to entertain oneself by seeing or viewing the show or performances.

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.

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.

(Compare with old case of PBA vs. CA GR No. 119122, August 8, 2000)

Ruling:

Amusement tax on admission tickets to PBA games is considered national tax. Sec 13 of the
Local Tax Code only covers proprietors, lessees, or operators of theaters, cinematographs,
concert halls, circuses, and other places of amusement. There is no mention of any authority
to tax professional basketball games. Sec. 268 states that proprietor, lessee, or operator of
professional basketball games is required to pay amusement tax equivalent of 15% of their
gross receipts to the Bureau of Internal Revenue, which payment is a national tax.

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", 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.

34. ALTAVISTA GOLF AND COUNTRY CLUB vs. THE CITY OF CEBU, G.R. No.
180235 dated January 20, 2016

Ruling:

“Amusement places,” as defined in Section 131(c) of the Local Government Code

(LGC), “include theaters, cinemas, concert halls, circuses and other places of
amusement where one seeks admission to entertain oneself by seeing or viewing
the show or performance.”—“Amusement places,” as defined in Section 131(c) of
the Local Government Code, “include theaters, cinemas, concert halls, circuses and
other places of amusement where one seeks admission to entertain oneself by
seeing or viewing the show or performance.” The pronouncements of the Court in
Pelizloy Realty Corporation v. The Province of Benguet, 695 SCRA 491 (2013), are of
particular significance to this case. The Court, in Pelizloy Realty, declared null and
void the second paragraph of Article X, Section 59 of the Benguet Provincial Code,
 insofar as it imposes amusement taxes on admission fees to resorts, swimming
pools, bath houses, hot springs, and tourist spots. Applying the principle of ejusdem
generis, as well as the ruling in the Philippine Basketball Association v. Court of
Appeals, 337 SCRA 358 (2000), case, the Court expounded on the authority of local
government units to impose amusement tax under Section 140, in relation to
Section 131(c), of the Local Government Code.

Thus, a golf course cannot be considered as an amusement place and is therefore

not subject to amusement tax. According to Section 140 of the Local Government
Code on amusement tax, the province may levy an amusement tax to be collected
from the proprietors, lessees, or operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of amusement

g. Annual Fixed Tax on Delivery Trucks / Vans (Sec. 141)

ANNUAL FIXED TAX FOR EVERY DELIVERY TRUCK OR VAN OF MANUFACTURERS
OR PRODUCERS, WHOLESALERS OF, DEALERS, OR RETAILERS IN, CERTAIN
PRODUCTS. -
(a) The province may levy an annual fixed tax for every truck, van or any vehicle used by
manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution
of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products
as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers,
whether directly or indirectly, within the province in an amount not exceeding Five
hundred pesos (P500.00).

(b) The manufacturers, producers, wholesalers, dealers and retailers referred to in the
immediately foregoing paragraph shall be exempt from the tax on peddlers prescribed
elsewhere in this Code.

ii. Municipalities
a. Business Taxes (Sec. 143)

Cases:

35. ERICSSON TELECOMMUNICATION vs. CITY OF PASIG GR No. 176667,

November 22. 2007

Ruling:

“Gross receipts” includes those which are actually or constructively received.—In

Commissioner of Internal Revenue v. Bank of Commerce, 459 SCRA 638 (2005), the
Court interpreted gross receipts as including those which were actually or
constructively received, viz.: Actual receipt of interest income is not limited to
physical receipt. Actual receipt may either be physical receipt or constructive
receipt. When the depository bank withholds the final tax to pay the tax liability of
the lending bank, there is prior to the withholding a constructive receipt by the
lending bank of the amount withheld. From the amount constructively received by
the lending bank, the depository bank deducts the final withholding tax and remits
it to the government for the account of the lending bank. Thus, the interest income
actually received by the lending bank, both physically and constructively, is the net
interest plus the amount withheld as final tax. The concept of a withholding tax on
income obviously and necessarily implies that the amount of the tax withheld comes
from the income earned by the taxpayer. Since the amount of the tax withheld
constitutes income earned by the taxpayer, then that amount manifestly forms part
of the taxpayer’s gross receipts. Because the amount withheld belongs to the
taxpayer, he can transfer its ownership to the government in payment of his tax
liability. The amount withheld indubitably comes from income of the taxpayer, and
thus forms part of his gross receipts.

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.

36. YAMANE vs. BA LEPANTO – GR No 154992, October 25, 2005

Ruling:

Under the law, a condominium is an interest in real property consisting of a

separate interest in a unit in a residential, industrial or commercial building and an
undivided interest in common, directly or indirectly, in the land on which it is
located and in other common areas of the building. To enable the orderly
administration over these common areas which are jointly owned by the various
unit owners, the Condominium Act permits the creation of a condominium
corporation, which is specially formed for the purpose of holding title to the
common area, in which the holders of separate interests shall automatically be
members or shareholders, to the exclusion of others, in proportion to the
appurtenant interest of their respective units. The necessity of a condominium
corporation has not gained widespread acceptance, and even is merely permissible
under the Condominium Act. Nonetheless, the condominium corporation has been
resorted to by many condominium projects, such as the Corporation in this case.
Condominium corporations are generally exempt from local business taxation under
the Local Government Code, irrespective of any local ordinance that seeks to declare
otherwise.—Whatever capacity the Corporation may have pursuant to its power to
exercise acts of ownership over personal and real property is limited by its stated
corporate purposes, which are by themselves further limited by the Condominium
Act. A condominium corporation, while enjoying such powers of ownership, is
prohibited by law from transacting its properties for the purpose of gainful profit.
Accordingly, and with a significant degree of comfort, we hold that condominium
corporations are generally exempt from local business taxation under the Local
Government Code, irrespective of any local ordinance that seeks to declare
otherwise.

The assessment appears to be based solely on the Corporation's collection of

assessments from unit owners, such... assessments being utilized to defray the
necessary expenses for the Condominium Project and the common areas.

Hence, the assailed tax assessment has no basis under the Local Government Code
or the Makati Revenue Code.

37. CITY OF MANILA vs. COCA COLA BOTTLERS, GR No. 181845, August 4, 2009
Ruling:

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”; 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.—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.

It is apparent from a perusal of Section 143 of the Local Government Code—the very
source of the power of municipalities and cities to impose a local business tax—that
when a municipality or city has already imposed a business tax on manufacturers,
etc. of liquors, distilled spirits, wines, and any other article of commerce, pursuant to
Section 143(a) of the Local Government Code (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.

By virtue of the Coca-Cola case, Tax Ordinance No. 7988 and Tax Ordinance No.
8011 are null and void and without any legal effect. Therefore, respondent cannot
be taxed and assessed under the amendatory laws--Tax Ordinance No. 7988 and Tax
Ordinance No. 8011.

38. ALABANG SUPERMARKET CORPORATION vs. CITY OF MUNTINLUPA, CTA EB

Case No. 386 February 12, 2009 (read also case decided by the CTA Division)

Ruling:

The claim for refund of taxes paid was properly denied on the basis of lack of an
administrative claim for refund with the local treasurer during the 2 year period.

The reckoning periods for the filing of a claim for refund in Sec 196 of the LGC
should be interpreted so as to accomplish the evident purpose viz the settlement of
the rights of the taxpayer vis-a-vis the government, at the earliest opportunity. The
phrase “from the date the taxpayer becomes entitled to a refund or credit” in Sec
196 should not be interpreted to mean the finality of the decision of a court
declaring the tax measure void, even without a timely claim for refund. Otherwise,
claims for refund will be filed even after several years from payment of the tax due,
merely because the tax ordinance was declared void. And the filing of
administrative and judicial claims for refund shall be endless. This interpretation
would give the taxpayer, who was not able to question the legality or
constitutionality of the tax measure within the period provided in Section 187, the
right to instead file a claim for refund with the court under Section 196, absent the
filing of a timely administrative claim. In effect, the prescriptive periods provided
by law would be rendered naught and meaningless.

A taxpayer who believes that he has paid a tax imposed under a void ordinance
should timely exhaust administrative remedies before resorting to the filing of a
judicial claim or timely question its constitutionality and legality. Petitioner's
failure to file the appropriate administrative claim for refund for the period
December 16, 2000 to September 2002, cannot be countenanced. More so, since
it has been able to file a timely administrative claim for the 3% business tax it paid
covering January 2, 1999 to December 15, 2000. It is clearly aware of the
requirements for the filing of an administrative claim set forth by law. Its manifest
error cannot be cured at this point.

39. CAGAYAN ELECTRIC POWER AND LIGHT CO., INC., vs. CITY OF CAGAYAN DE
ORO, GR No. 191761, November 14,2012.

Ruling:
 CEPALCO is mistaken when it states that a city can impose a tax up to only one-half
of what the province or city may impose. A more circumspect reading of the Local
Government Code could have prevented this error. Section 151 of the Local
Government Code states that, subject to certain exceptions, a city may exceed by
“not more than 50%” the tax rates allowed to provinces and municipalities. A
province may impose a franchise tax at a rate “not exceeding 50% of 1% of the gross
annual receipts.” Following Section 151, a city may impose a franchise tax of up to
0.0075 (or 0.75%) of a business’ gross annual receipts for the preceding calendar
year based on the incoming receipt, or realized, within its territorial jurisdiction. A
municipality may impose a business tax at a rate not exceeding “two percent of
gross sales or receipts.” Following Section 151, a city may impose a business tax of
up to 0.03 (or 3%) of a business’ gross sales or receipts of the preceding calendar
year.

CEPALCO also erred when it equates Section 137’s “gross annual receipts” with
Ordinance No. 9503-2005’s “annual rental income.” Section 2 of Ordinance No.
9503-2005 imposes “a tax on the lease or rental of electric and/or
telecommunication posts, poles or towers by pole owners to other pole users at the
rate of ten (10) percent of the annual rental income derived therefrom,” and not on
CEPALCO’s gross annual receipts. Thus, although the tax rate of 10% is definitely
higher than that imposable by cities as franchise or business tax, the tax base of
annual rental income of “electric and/or telecommunication posts, poles or towers
by pole owners to other pole users” is definitely smaller than that used by cities in
the computation of franchise or business tax. In effect, Ordinance No. 9503-2005
wants a slice of a smaller pie.

However, we disagree with the City of Cagayan de Oro’s submission that Ordinance
No. 9503-2005 is not subject to the limits imposed by Sections 143 and 151 of
theLocal Government Code. On the contrary, Ordinance No. 9503-2005 is subject to
the limitation set by Section 143 (h). Section 143 recognizes separate lines of
business and imposes different tax rates for different lines of business. Let us
suppose that one is a brewer of liquor and, at the same time, a distributor of articles
of commerce. The brewery business is subject to the rates established in Section
143 (a) while the distribution business is subject to the rates established in Section
143 (b). The City of Cagayan de Oro’s imposition of a tax on the lease of poles falls
under Section 143 (h), as the lease of poles is CEPALCO’s separate line of business
which is not covered by paragraphs (a) to (g) of Section 143. The treatment of the
lease of poles as a separate line of business is evident in Section 4 (a) of Ordinance
No. 9503-2005. The City of Cagayan de Oro required CEPALCO to apply for a
separate business permit.

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
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.

b. Catch all provision – Sec. 143 (h)

On any business, not otherwise specified in the preceding paragraphs, which the
sanggunian concerned may deem proper to tax: Provided, That on any business subject to
the excise, value-added or percentage 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.

c. Rates of Tax within Metropolitan Manila (Sec. 144)

 RATES OF TAX WITHIN THE METROPOLITAN MANILA AREA. - The municipalities
within the Metropolitan Manila Area may levy taxes at rates which shall not exceed by
fifty percent (50%) the maximum rates prescribed in the preceding Section.

d. Retirement of Business (Sec. 145)

RETIREMENT OF BUSINESS. - A business subject to tax pursuant to the preceding
sections shall, upon termination thereof, submit a sworn statement of its gross sales or
receipts for the current year. If the tax paid during the year be less than the tax due on
said gross sales or receipts of the current year, the difference shall be paid before the
business is considered officially retired.

Cases:

40. MOBIL PHILS. vs. CITY TREASURER OF MAKATI, GR No. 154092, July 14,
2005

Ruling:

While 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, income tax 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 a tax on income, whether net or gross realized in one taxable year.—
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[18] 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 rendering an additional
assessment of P1,331,638.84 for the revenue generated for the year 1998.

e. Payment of Business Taxes (Sec. 146)

PAYMENT OF BUSINESS TAXES. -
(a) The taxes imposed under Section 143 shall be payable for every separate or distinct
establishment or place where business subject to the tax is conducted and one line of
business does not become exempt by being conducted with some other business for which
such tax has been paid. The tax on a business must be paid by the person conducting the
same.
(b) In cases where a person conducts or operates two (2) or more of the businesses
mentioned in Section 143 of this Code which are subject to the same rate of tax, the tax
shall be computed on the combined total gross sales or receipts of the said two (2) or more
related businesses.
(c) In cases where a person conducts or operates two (2) or more businesses mentioned in
Section 143 of this Code which are subject to different rates of tax, the gross sales or
receipts of each business shall be separately reported for the purpose of computing the tax
due from each business.

f. Situs of Tax (Sec. 150) – Where to pay business tax?

Cases:

41. SHELL CO vs MUN. OF SIPOCOT – 105 Phil. 1263

Ruling:

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 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.

42. PHIL. MATCH vs. CITY OF CEBU – L-30745 – Jan. 1888, 197778
Ruling:

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

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 out. skirts of the city through the purchase 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 validly delegated to cities and municipalities is defined in the
Local Autonomy Act, Republic Act No. 2264. Note that the prohibition against the
imposition of percentage taxes (formerly provided for in section 1 of
Commonwealth Act No. 472) refers to municipalities and municipal districts but not
to chartered cities. Note further that 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.

Applying that jurisdictional test to the instant case, it is at once obvious that sales of
matches to customers outside oil Cebu City, which sales were booked and paid for in
the company's branch office in the city, are subject to the city's taxing power. The
instant case is easily distinguishable from the Shell Company case where the price of
the oil sold was paid outside of the municipality of Sipocot, the entity imposing the
tax.

43. ILOILO BOTTLERS vs. CITY OF ILOILO GR No. 52019 – Aug. 18, 1988 (compare
with current LGC provisions and IRR provisions on rolling stores)

Ruling:

The Supreme Court has always recognized that the right to manufacture implies the
right to sell/distribute the manufactured products. Hence, for tax purposes, a
manufacturer does not necessarily become engaged in the separate business of
selling simply because it sells the products it manufactures. In certain cases,
however, a manufacturer may also be considered as engaged in the separate
business of selling its products.

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

is likewise engaged in the separate business of selling, its marketing system or sales
operations must be looked into.

In several cases 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

Under the second system, sales transactions are entered into and perfected at stores
or warehouses maintained by the company. Anyone 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 sold at Pavia. They served
as selling units. They were what were called, until recently, "rolling stores." The
delivery trucks were therefore much the same as the stores and warehouses under
the second marketing system Iloilo Bottlers, Inc. thus falls under the second
category above. That is, the corporation was engaged in the separate business of
selling or distributing soft-drinks, independently of its business of bottling them.
 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 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.

As stated above, sales were made by Iloilo Bottlers, Inc. in Iloilo City. Thus, We have
no option but to declare the company liable under the tax ordinance.

g. Fees and Charges (Sec. 147)

FEES AND CHARGES. - The municipality may impose and collect such reasonable fees and
charges on business and occupation and, except as reserved to the province in Section 139
of this Code, on the practice of any profession or calling, commensurate with the cost of
regulation, inspection and licensing before any person may engage in such business or
occupation, or practice such profession or calling.

h. Others (Sec. 148 and Sec. 149)

SECTION 148. FEES FOR SEALING AND LICENSING OF WEIGHTS AND MEASURES. -
(a) The municipality may levy fees for the sealing and licensing of weights and measures
at such reasonable rates as shall be prescribed by the sangguniang bayan.
(b) The sangguniang bayan shall prescribe the necessary regulations for the use of such
weights and measures, subject to such guidelines as shall be prescribed by the Department
of Science and Technology. The sanggunian concerned shall, by appropriate ordinance,
penalize fraudulent practices and unlawful possession or use of instruments of weights
and measures and prescribe the criminal penalty therefor in accordance with the
provisions of this Code. Provided, however, That the sanggunian concerned may authorize
the municipal treasurer to settle an offense not involving the commission of fraud before a
case therefor is filed in court, upon payment of a compromise penalty of not less than Two
hundred pesos (P200.00).

SECTION 149. FISHERY RENTALS, FEES AND CHARGES. -

(a) Municipalities shall have the exclusive authority to grant fishery privileges in the
municipal waters and impose rentals, fees or charges therefor in accordance with the
provisions of this Section.
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oysters, mussels or other aquatic beds
or bangus fry areas, within a definite zone of the municipal waters, as determined by
it: Provided, however, That duly registered organizations and cooperatives of
marginal fishermen shall have the preferential right to such fishery privileges:
Provided, further, That the sangguniang bayan may require a public bidding in
conformity with and pursuant to an ordinance for the grant of such privileges:
Provided, finally, That in the absence of such organizations and cooperatives or their
failure to exercise their preferential right, other parties may participate in the public
bidding in conformity with the above cited procedure.
(2) Grant the privilege to gather, take or catch bangus fry, prawn fry or kawag-kawag
or fry of other species and fish from the municipal waters by nets, traps or other
fishing gears to marginal fishermen free of any rental, fee, charge or any other
imposition whatsoever.
(3) Issue licenses for the operation of fishing vessels of three (3) tons or less for which
purpose the sangguniang bayan shall promulgate rules and regulations regarding the
issuances of such licenses to qualified applicants under existing laws.
Provided, however, That the sanggunian concerned shall, by appropriate ordinance,
penalize the use of explosives, noxious or poisonous substances, electricity, muro-ami,
and other deleterious methods of fishing and prescribe a criminal penalty therefor in
accordance with the provisions of this Code: Provided, finally, That the sanggunian
concerned shall have the authority to prosecute any violation of the provisions of
applicable fishery laws.
iii. Cities (Sec. 151)
SCOPE OF TAXING POWERS. - Except as otherwise provided in this Code, the city, may levy
the taxes, fees, and charges which the province or municipality may impose: Provided,
however, That the taxes, fees and charges levied and collected by highly urbanized and
independent component cities shall accrue to them and distributed in accordance with the
provisions of this Code.
The rates of taxes that the city may levy may exceed the maximum rates allowed for the
province or municipality by not more than fifty percent (50%) except the rates of professional
and amusement taxes.

iv. Barangay
a. Tax on retailers (Sec. 152 a)
On stores or retailers with fixed business establishments with gross sales of receipts of the
preceding calendar year of Fifty thousand pesos (P50,000.00) or less, in the case of cities
and Thirty thousand pesos (P30,000.00) or less, in the case of municipalities, at a rate not
exceeding one percent (1%) on such gross sales or receipts.

b. Service Fees or Charges (Sec. 152 b)

Barangays may collect reasonable fees or charges for services rendered in connection with
the regulations or the use of barangay-owned properties or service facilities such as palay,
copra, or tobacco dryers.

c. Barangay Clearance (Sec. 152 c)

No city or municipality may issue any license or permit for any business or activity unless a
clearance is first obtained from the barangay where such business or activity is located or
conducted. For such clearance, the sangguniang barangay may impose a reasonable fee.
The application for clearance shall be acted upon within seven (7) working days from the
filing thereof. In the event that the clearance is not issued within the said period, the city
or municipality may issue the said license or permit.

d. Other Fees (Sec. 152 d)

The barangay may levy reasonable fees and charges:
(1) On commercial breeding of fighting cocks, cockfights and cockpits;
(2) On places of recreation which charge admission fees; and
(3) On billboards, signboards, neon signs, and outdoor advertisements.

v. Common Revenue Raising Powers

a. Service Fees and Charges (Sec. 154)
Local government units may impose and collect such reasonable fees and charges for
services rendered.

b. Public Utility Charges (Sec. 155)

Local government units may fix the rates for the operation of public utilities owned,
operated and maintained by them within their jurisdiction.

c. Toll Fees or Charges (Sec. 156)

The sanggunian concerned may prescribe the terms and conditions and fix the rates for
the imposition of toll fees or charges for the use of any public road, pier, or wharf,
waterway, bridge, ferry or telecommunication system funded and constructed by the local
government unit concerned: Provided, That no such toll fees or charges shall be collected
from officers and enlisted men of the Armed Forces of the Philippines and members of the
Philippine National Police on mission, post office personnel delivering mail, physically-
handicapped, and disabled citizens who are sixty-five (65) years or older.

When public safety and welfare so requires, the sanggunian concerned may discontinue
the collection of the tolls, and thereafter the said facility shall be free and open for public
use.

vi. Other Matters

a. Public Hearings Necessary? (Art. 324 IRR of the LGC vs. Sec. 187)
Cases:

44. FIGUERRES vs. CA, GR No. 119172, March 25, 1999

Ruling:
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." L

However, it is noteworthy that apart from her bare assertions, petitioner has not
presented any evidence to show that no public hearings were conducted prior to the
enactment of the ordinances in question. On the other hand, the Municipality of
Mandaluyong claims that public hearings were indeed conducted before the subject
ordinances were adopted, although it likewise failed to submit any evidence to
establish this allegation. However, in accordance with the presumption of validity in
favor of an ordinance, their constitutionality or legality should be upheld in the
absence of evidence showing that the procedure prescribed by law was not
observed in their enactment.

The lack of a public hearing is a negative allegation to which the party asserting has
the burden of proof. It is 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.

45. ALABANG SUPERMARKET CORPORATION vs. CITY OF MUNTINLUPA, CTA EB

Case No. 386 February 12, 2009 (read also case decided by the CTA Division)

Ruling:

It should be noted that two reckoning periods are provided by law for the filing of a
case or proceeding, that is from the date of payment of the tax, and from the date the
taxpayer becomes entitled to the refund. However, petitioner's interpretation of the
phrase "from the date the taxpayer becomes entitled to the refund" is not
inconsonance with the intent of the law since Section 196 should not be read in
isolation, but in relation with other provisions of the LGC. As exhaustively discussed
by the Court in Division in its Resolution dated April 4, 2008, it held that:

Section 187 of the Local Government Code dictates the procedure for
questioning the constitutionality or legality of tax ordinances. It provides in
part that: 'any question on the constitutionality or legality of tax ordinances
or revenue measures may be raised on appeal within thirty (30) days from the
effectivity thereof to the Secretary of Justice who shall render a decision within
sixty (60) days from the date of the receipt of the appeal'. It further provides
that 'such appeal shall not have the effect of suspending the effectivity of the
ordinance and the accrual and payment of the tax, fee or charge levied therein.

A reading of Section 187 of the Local Government Code would show that the law
intends that questions on the legality or constitutionality of an ordinance or tax
measure be threshed out the soonest possible time. It should be raised within thirty
(30) days from approval and such appeal should be resolved within sixty (60) days
from receipt thereof. Section 187 states that any appeal on the legality or
constitutionality of the ordinance does not suspend its effectivity. Thus, before any
final declaration of its nullity, taxes accrue and should be paid accordingly.

In the same vein, the reckoning periods for the filing of a claim for refund in Section
196 of the Local Government Code should be interpreted so as to accomplish the
 evident purpose, viz., the settlement of the rights of the taxpayer vis-a-vis the
government, at the earliest opportunity. The phrase "from the date the taxpayer
becomes entitled to a refund or credit" in Section 196 should not be interpreted to
mean the finality of the decision of a court declaring the tax measure void, even
without a timely claim for refund. Otherwise, claims for refund will be filed even
after several years from payment of the tax due merely because the tax ordinance
was declared void. And the filing of administrative and judicial claims for refund
shall be endless. This interpretation would give the taxpayer, who was not able to
question the legality or constitutionality of the tax measure within the period
provided in Section 187, the right to instead file a claim for refund with the court
under Section 196, absent the filing of a timely administrative claim. In effect, the
prescriptive periods provided by law would be rendered naught and meaningless.

This could not have been the intention of lawmakers. A taxpayer who believes that
he has paid a tax imposed under a void ordinance should timely exhaust
administrative remedies before resorting to the filing of a judicial claim or timely
question its constitutionality and legality. Petitioner's failure to file the appropriate
administrative claim for refund for the period December 16, 2000 to September
2002, cannot be countenanced. More so, since it has been able to file a timely
administrative claim for the 3% business tax it paid covering January 2, 1999 to
December 15, 2000. It is clearly aware of the requirements for the filing of an
administrative claim set forth by law. Its manifest error cannot be cured at this
point.

46. MINDANAO SHOPPING DESTINATION CORPORATION vs. DUTERTE, GR No.

211093 dated June 6, 2017

Ruling:

We have not overlooked the fact that this Court is a court of special jurisdiction and
can only take cognizance of such matters as are clearly within its jurisdiction
provided under Section 7 of Republic Act (R.A.) No. 9282, amending R.A. No. 11 25,
otherwise known as the Law Creating the Court of Tax Appeals. Hence, this forum is
of the view that it would be judicious to not rule on the constitutionality, validity,
and/or effectivity of the subject ordinance.

The ruling of the Second Division of this Court in Synovate, Inc. vs. Pasig City, et. al,
is worth mentioning:
This Court will not be hasty in declaring a tax ordinance invalid or illegal, as it
is mindful of the well-etched dictum by the Supreme Court in People vs. Vera
that: "A becoming modesty of inferior courts demands conscious realization of
the position that they occupy in the interrelation and operation of the
integrated judicial system of the nation." Especially so, the power to determine
any question on the legality of tax ordinances, such as the Pasig Revenue Code
of 1992, is not within the province of this Court, but is primarily lodged on the
Secretary of Justice, pursuant to Section 187 of the LGC of 1991, and under
certain conditions, is vested with the courts of general jurisdiction or the
Regional Trial Courts. It must be emphasized that this Court is a court of
special jurisdiction and can only take cognizance of such matters as are
clearly within its jurisdiction.

The Pasig Revenue Code of 1992, including Section 77 (d) thereof, enjoys the
presumption of validity, unless declared otherwise. There being no contrary
declaration, respondent Mayor has the duty, inter alia, to "(e)nsure that all
taxes and other revenues of the city are collected" and "(i)ssue licenses and
permits and suspend or revoke the same for any violation of the conditions
upon which said licenses or permits had been issued, pursuant to law or
ordinance".

Furthermore, emphasis must be given to a well-entrenched rule which states that in

this jurisdiction, an ordinance is presumed to be valid unless declared otherwise by
 a Court in an appropriate proceeding where the validity of the ordinance is directly
put in issue.

b. Authority to Adjust Tax Rates (Sec. 191)

c. Authority to Grant Tax Exemptions (Sec. 192)

Cases:

47. PLDT vs. CITY OF DAVAO GR No. 143867, August 22, 2001
Ruling:

The Tax Code provision withdrawing the tax exemption was not construed as
prohibiting future grants of exemptions from all taxes. 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.

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. 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.

48. NPC vs. CITY OF CABANATUAN GR No. 149110, April 9, 2003

Ruling:

As a rule, tax exemptions are construed strongly against the claimant. Exemptions
must be shown to exist clearly and categorically, and supported by clear legal
provisions. In the case at bar, the petitioner's sole refuge is section 13 of Rep. Act
No. 6395 exempting from, among others, "all income taxes, franchise taxes and
realty taxes to be paid to the National Government, its provinces, cities,
municipalities and other government agencies and instrumentalities." However,
section 193 of the LGC withdrew, subject to limited exceptions, the sweeping tax
privileges previously enjoyed by private and public corporations. Contrary to the
contention of petitioner, Section 193 of the LGC is an express, albeit general, repeal
of all statutes granting tax exemptions from local taxes.

It is a basic precept of statutory construction that the express mention of one

person, thing, act, or consequence excludes all others as expressed in the familiar
maxim expressio unius est exclusio alterius. Not being a local water district, a
cooperative registered under R.A. No. 6938, or a non-stock and non-profit hospital
or educational institution, petitioner clearly does not belong to the exception. It is
therefore incumbent upon the petitioner to point to some provisions of the LGC that
expressly grant it exemption from local taxes.

It is also worth mentioning that section 192 of the LGC empowers the LGUs, through
ordinances duly approved, to grant tax exemptions, initiatives or reliefs. But in
 enacting section 37 of Ordinance No. 165-92 which imposes an annual franchise tax
"notwithstanding any exemption granted by law or other special law," the
respondent city government clearly did not intend to exempt the petitioner from the
coverage thereof.

d. Withdrawal of Tax Exemption Privileges (Sec. 193)

e. Community Tax
i. Who may impose (Sec. 156)
ii. Individuals Liable to pay (Sec. 157)
iii. Juridical Persons Liable to Community Tax (Sec. 158)
iv. Exemptions (Sec. 159)
v. Place of Payment (Sec. 160)
vi. Time of Payment (Sec. 161)
vii. Community Tax Certificate (Sec. 162)
viii. Presentation of CTC on certain occasions (Sec. 163)

III. COLLECTION OF TAXES AND REMEDIES

i. Collection of Taxes
a. Tax Period and Manner of Payment (Sec. 165)
b. Accrual of Tax (Sec. 166)
c. Time of Payment (Sec. 167)
d. Surcharges and Penalties (Sec. 168)

Cases:

49. NPC vs. CITY OF CABANATUAN, GR No. 177332 dated October 1, 2014
Ruling:

Section 168 of the Local Government Code categorically provides that the local
government unit may impose a surcharge not exceeding 25% of the amount of taxes,
fees, or charges not paid on time.

The surcharge is a civil penalty imposed once for late payment of a tax. Contrast this
with the succeeding provisions on interest, which was imposable at the rate not
exceeding 2% per month of the unpaid taxes until fully paid. The fact that the
interest charge is made proportionate to the period of delay, whereas the surcharge
is not, clearly reveals the legislative intent for the different modes in their
application.

Indeed, both the surcharge and interest are imposable upon failure of the taxpayer
to pay the tax on the date fixed in the law for its payment. The surcharge is imposed
to hasten tax payments and to punish for evasion or neglect of duty, while interest is
imposed to compensate the State "for the delay in paying the tax and for the
concomitant use by the taxpayer of funds that rightfully should be in the
government's hands.”

A surcharge regardless of how it is computed is already a deterrent. While it is true

that imposing a higher amount may be a more effective deterrent, it cannot be done
in violation of law and in such a way as to make it confiscatory. We find this
reasoning not compelling for us to deviate from the express provisions of Section
168 of the Local Government Code. When a law speaks unequivocally, it is not the
province of this court to scan its wisdom or its policy.

This court has steadfastly adhered to the doctrine that its first and fundamental duty
is the application of the law according to its plain terms, interpretation being called
for only when such literal application is impossible. Neither the court nor the City
has the power to modify the penalty.
 If the legislative intent was to make the 25% surcharge proportionate to the period
of delay, the law should have provided for the same in clear terms.

Generally, tax statutes are construed strictly against the government and in favor of
the taxpayer. "[Statutes levying taxes or duties [are] not to extend their provisions
beyond the clear import of the language used"; and "tax burdens are not to be
imposed, nor presumed to be imposed beyond what the statute[s] expressly and
clearly [import]. . . ." Similarly, we cannot impose a penalty for non-payment of a tax
greater than what the law provides. To do so would amount to a deprivation of
property without due process of law.

e. Interests on Other Unpaid Revenues (Sec. 169)

f. Collection of Local Revenues by Treasurer (Sec. 170)
g. Examination of Books of Accounts and Pertinent Records (Sec. 171)

ii. Remedies of the Government

a. Local Government’s Lien (Sec. 173)
b. Civil Remedies (Sec. 174)
c. Distraint (Sec. 175)
d. Levy of Real Property (Sec. 176)
e. Advertisement and Sale (Sec. 178)
f. Redemption of Property Sold (Sec. 179)
g. Purchase of Property by LGU for want of bidder (Sec. 181)
h. Resale of Real Estate Tax for TFC
i. Judicial Action (Sec. 183)
j. Further Distraint and Levy (Sec. 184)
k. Personal Property Exempt from Distraint or Levy (Sec. 185)
iii. Taxpayer’s Remedies
a. Question Constitutionality of Ordinance (Sec. 187)

Cases:

50. DRILON vs. LIM GR No. 111249, August 4, 1994

Ruling:

The Court agreed with the trial court that the procedural requirements in the
enactment of Ordinance 7794 (Manila Revenue Code) have indeed been observed.
Notices of the public hearings were sent to interested parties. The minutes of the
hearings show that the proposed ordinances were published in the Balita and the
Manila Standard on April 21 and 25, 1993, respectively, and the approved ordinance
was published in the July 3, 4, 5, 1993 issues of the Manila Standard and in the July
6, 1993 issue of Balita. The only exceptions are the posting of the ordinance as
approved but this omission does not affect its validity, considering that its
publication in three successive issues of a newspaper of general circulation will
satisfy due process. It has also not been shown that the text of the ordinance has
been translated and disseminated, but this requirement applies to the approval of
local development plans and public investment programs of the local government
unit and not to tax ordinances.

51. CAGAYAN ELECTRIC POWER AND LIGHT CO., INC., vs. CITY OF CAGAYAN DE
ORO, GR No. 191761, November 14, 2012

Ruling:

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.

52. SMART COMMUNICATIONS, INC. vs. MUNICIPALITY OF MALVAR, GR No.

204429, GR No. 204429 dated February 18, 2014

Ruling:

As clearly stated in its whereas clauses, the primary purpose of Ordinance No. 18 is
to regulate the “placing, stringing, attaching, installing, repair and construction of all
gas mains, electric, telegraph and telephone wires, conduits, meters and other
apparatus” listed therein, which included Smart’s telecommunications tower.
Clearly, the purpose of the assailed Ordinance is to regulate the enumerated
activities particularly related to the construction and maintenance of various
structures. The fees in Ordinance No. 18 are not impositions on the building or
structure itself; rather, they are impositions on the activity subject of government
regulation, such as the installation and construction of the structures.

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.

b. Publication (Sec. 188)

Cases:

53. COCA-COLA BOTTLERS vs. CITY OF MANILA - GR No. 156252, June 27, 2006
Ruling:

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 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.

c. Periods of Assessment and Collection (Sec. 194)

d. Protest of Assessment (Sec. 195)

Cases:

54. SAN JUAN vs. CASTRO – GR No. 174617, December 27, 2007
 Ruling:

Under Section 195 of the Local Government Code, a taxpayer who disagrees with a
tax assessment made by a local treasurer may file a written protest thereof:

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 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 “mandamus 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.

55. PLDT vs. CITY OF BALANGA, CTA EB Case No. 413, June 3, 2009
Ruling:

In the instant case, PLDT was not only seeking for a review of the denial by the City
Treasurer of Balanga City of the tax protest of PLDT, but petitioner was also asking
the court to order respondents to perform specific acts, such as, to order
respondents to cancel the assessment, to amend the official receipts issued to
petitioner, and to enjoin respondents from imposing franchise and business taxes
against PLDT; in other words, petitioner PLDT seeks to control the acts of the City
Treasurer of Balanga City. Hence, the suit ought to be filed in the RTC of Balanga City
which has territorial jurisdiction over the City Treasurer of Balanga City. For it is the
RTC of Balanga City that has power to enforce its orders over the City Treasurer
ofBalanga City. Thus, the RTC of Balanga City, and not the RTC of Makati, therefore,
is the court of competent jurisdiction over the appeal from the denial by the local
City Treasurer of Balanga City of the tax protest of PLDT.

56. CHINA BANKING vs. CITY TREASURER OF MANILA, GR No. 204117 dated July
1, 2015 – (jurisdiction issue)

Ruling:

Clearly, with the passage of R.A. No. 9282, the authority to exercise either original or
appellate jurisdiction over local tax cases depended on the amount of the claim. In
cases where the RTC exercises appellate jurisdiction, it necessarily follows that
there must be a court capable of exercising original jurisdiction — otherwise there
would be no appeal over which the RTC would exercise appellate jurisdiction. The
Court cannot consider the City Treasurer as the entity that exercises original
jurisdiction not only because it is not a “court” within the context of Batas Pambansa
(B.P.) Blg. 129, but also because, as explained above, “B.P. 129 expressly delineates
the appellate jurisdiction of the Regional Trial Courts, confining as it does said
appellate jurisdiction to cases decided by Metropolitan, Municipal, and Municipal
Circuit Trial Courts.” Verily, unlike in the case of the CA, B.P. 129 does not confer
appellate jurisdiction on the RTC over rulings made by nonjudicial entities. The RTC
exercises appellate jurisdiction only from cases decided by the Metropolitan,
Municipal, and Municipal Circuit Trial Courts in the proper cases. The nature of the
 jurisdiction exercised by these courts is original, considering it will be the first time
that a court will take judicial cognizance of a case instituted for judicial action.

e. Appeal to the CTA

f. Claim for Refund (Sec. 196)

Cases:

57. ALABANG SUPERMARKET CORPORATION vs. CITY OF MUNTINLUPA, CTA EB

Case No. 386 February 12, 2009 (read also case decided by the CTA Division)

Ruling:

The Court in Division appropriately denied petitioner's claim for refund pertaining
to the period from December 16, 2000 to December 2002, due to petitioner's failure
to file an administrative claim for refund before the City Government of Muntinlupa
as required under Section 196 of the LGC prior to judicial recourse. No case or
proceeding may be entertained by any courts absent showing that petitioner has a
written claim for refund of erroneous or excessive payment of any tax, free or
charge filed with the local treasurer prior to its filing before any court.

58. MINDANAO SHOPPING DESTINATION CORP. vs. DAVAO CITY, CTA AC No. 6,
May 31, 2011

Ruling:

This case is a Petition for Review praying that the Decision dated July 14, 2009 and
the Order dated September 4, 2009 rendered by the Regional Trial Court of Davao
City, Branch 17 be reversed and set aside; and for the CTA to render a judgment
ordering the respondents to refund or issue a tax credit in favor of petitioners.

The CTA ruled that the RTC did not err in ruling that the RTC Case was "premature"
and that petitioners should have first awaited the outcome of the CA Case before
filing the RTC Case.

It is beyond cavil that the claim for refund lodged with the RTC is primarily hinged
on the alleged unconstitutionality and invalidity of the New Tax Ordinance, which is
the very same issue pending for determination by the CA. What claim for refund
would there be to speak about if in case CA sustains the constitutionality and/or
validity of the tax ordinance? Evidently, the claim for refund is afflicted with the vice
of prematurity.

The persistence of the petitioners in their claim for refund is due to their argument
that the two (2) year prescriptive period under Section 196 of the Local Government
Code is about to lapse. Section 196 of the Local Government Code provides as
follows:

SECTION 196. Claim for Refund of Tax Credit. -- No case or proceeding shall be
maintained in any court for the recovery of any tax, fee, or charge erroneously
or illegally collected until a written claim for refund or credit has been filed
with the local treasurer. No case or proceeding shall be entertained in any
court after the expiration of two (2) years from the date of the payment of
such tax, fee, or charge, or from the date the taxpayer is entitled to a refund or
credit.

From the above-cited provision, it may be fairly inferred that taxpayers judicially
claiming for refund of any local tax, fee, or charge must satisfy two essential
requirements: 1. A written claim for refund or credit must be filed with the local
treasurer; and 2. The case or proceeding must be filed within two (2) years [i] from
 the date of payment of tax, fee, or charge or [ii] from the date the taxpayer is entitled
to a refund or credit.

The above provision plainly declares, therefore, that prescription is not reckoned
only from the date of payment, but also from the "date the taxpayer is entitled to a
refund or credit."

Inasmuch as the law states in unequivocal terms that a case or proceeding shall be
entertained in any court if filed within two (2) years from the date of the payment of
such tax, fee, or charge, or from the date the taxpayer is entitled to a refund or
credit, the petitioners' judicial claim for refund or cred it may still be pursued within
two (2) years from the time the assailed ordinance is nullified or from the time the
decision nullifying the ordinance becomes fin al and executory, because it is only at
such time when the petitioners become entitled to a refund or credit or their claim
for refund is ripened for administrative and judicial determination.

g. Is injunction available?

Cases:

59. ANGELES CITY vs. ANGELES ELECTRIC CORPORATION, GR No. 166134 dated
June 29, 2010

Ruling:

Being a special civil action for certiorari, the issue in the instant case is limited to the
determination of whether the RTC gravely abused its discretion in issuing the writ
of preliminary injunction enjoining Angeles City and its City Treasurer from levying,
selling, and disposing the properties of AEC. All other matters pertaining to the
validity of the tax assessment and AEC’s tax exemption must therefore be left for the
determination of the RTC where the main case is pending decision.

Petitioner’s main argument is that the collection of taxes cannot be enjoined by the
RTC. Petitioner further reasons that since the levy and auction of the properties of a
delinquent taxpayer are proper and lawful acts specifically allowed by the LGC,
these cannot be the subject of an injunctive writ.

The Court found the petition bereft of merit and ruled that the LGC does not
specifically prohibit an injunction enjoining the collection of taxes.

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

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

Nevertheless, it must be emphasized that although there is no express prohibition in

the LGC, injunctions enjoining the collection of local taxes are frowned upon. Courts
therefore should exercise extreme caution in issuing such injunctions.

REAL PROPERTY TAXATION

I. PRELIMINARY MATTERS
i. Definition of Real Property Tax

Cases:

60. VILLANUEVA vs. CITY OF ILOILO, L-26521, December 28, 1968

Ruling:

A real estate tax is a direct tax on the ownership of lands and buildings or other
improvements thereon, not specially exempted, and is payable regardless of
whether the property is used or not, although the value may vary in accordance with
such factor. The tax is usually single or indivisible, although the land and building or
improvements erected thereon are assessed separately, except when the land and
building or improvements belong to separate owners. It is a fixed proportion of the
assessed value of the property taxed, and requires, therefore, the intervention of
assessors. It is collected or payable at appointed times, and it constitutes a superior
lien on and is enforceable against the property subject to such taxation, and not by
imprisonment of the owner.

The tax imposed by the ordinance in question does not possess the aforestated
attributes. 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 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.

It is within neither the letter nor the spirit of the ordinance that an additional real
estate tax is being imposed, otherwise the subject-matter would have been not
merely tenement houses. On the contrary, it is plain from the context of the
ordinance that the intention is to impose a license tax on the operation of tenement
houses, which is a form of business or calling. The ordinance, in both its title and
body, particularly sections 1 and 3 thereof, designates the tax imposed as a
"municipal license tax" which, by itself, 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." The imposition by the ordinance of a license tax on persons
engaged in the business of operating tenement houses finds authority in section 2 of
the Local Autonomy Act which provides that chartered cities have the authority to
impose municipal license taxes or fees upon persons engaged in any occupation or
business, or exercising privileges within their respective territories, and "otherwise
to levy for public purposes, just and uniform taxes, licenses, or fees."

ii. Who should pay the real property tax?

Cases:

61. BAGUIO vs. BUSUEGO, GR No. 29772, September 18, 1980

Ruling:

In line with the fundamental rule that tax-exempting provisions of law are to be
construed in strictissimi juris, the Court affirmed the decisions of the Baguio City
Court and Court of First Instance adjudging the defendant-appellant, an installment
purchaser of a parcel of land and its building and improvements within a housing
project belonging to the Government Service Insurance System (GSIS) liable to pay
realty taxes thereon from the time possession of such property was transferred to
him, although pending full payment of the purchase price the seller GSIS as a
government corporation exempt from the payment of taxes retains ownership and
title over the property.
 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
although 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, although 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 more was left to the GSIS except its right to receive full
payment of the purchase price. The fact that in the contract to sell the GSIS, although
aware of its own exemption from taxation stipulated and exacted from the
purchaser the payment of taxes amounts to an interpretation on its part that such
an immunity was not to be transmitted to a private person who becomes the
beneficial owner and user of the property. Verily, this interpretative regulation by
the administrative agency officially charged with the duty of administering and
enforcing Commonwealth Act 186 which contains the tax-exempting provision at
issue carries great weight in determining the operation of said provision.

The position taken by the GSIS is but in conformity with Section 40(a) of
Presidential Decree No. 464 entitled The Real Property Tax Code promulgated on
May 20, 1974 which reads as follows:
Sec. 40., Exemptions from Real Property Tax. — The exemptions shall be as
follows:
(a) Real property owned by the Republic of the Philippines or any of its
political subdivisions and any government-owned corporation so exempt
by its charter; Provided, however, That this exemption shall not apply to
real property of the above-named entitles the beneficial use of which has
been granted, for consideration or otherwise, to a taxable person.

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.

The end result is but in consonance with the established rule in taxation that
exemptions are held strictly against the taxpayer and liberally in favor of the taxing
authority.

62. NPC vs. PROVINCE OF QUEZON, GR No. 171586, July 15, 2009
Ruling:
The Court resolved in this petition for review on certiorari the question of whether
the National Power Corporation (NPC), as a government-owned and controlled
corporation, can claim tax exemption under Section 234 of the Local Government
Code (LGC) for the taxes due from the Mirant Pagbilao Corporation (Mirant) whose
tax liabilities the NPC has contractually assumed.

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 the present case, the NPC, contrary to its claims, is neither the owner nor the
possessor/user of the subject machineries. The NPC’s claim of tax exemptions is
completely without merit. To successfully claim exemption under Section 234(c) of
the LGC, the claimant must prove two elements:
a. the machineries and equipment are actually, directly, and exclusively
used by local water districts and government-owned or controlled
corporations; and
b. the local water districts and government-owned and controlled
corporations claiming exemption must be engaged in the supply and
distribution of water and/or the generation and transmission of electric
power.

As applied to the present case, the government-owned or controlled corporation

claiming exemption must be the entity actually, directly, and exclusively using the
real properties, and the use must be devoted to the generation and transmission of
electric power. Neither the NPC nor Mirant satisfies both requirements. Although
the plant’s machineries are devoted to the generation of electric power, by the NPC’s
own admission and as previously pointed out, Mirant – a private corporation – uses
and operates them. That Mirant operates the machineries solely in compliance with
the will of the NPC only underscores the fact that NPC does not actually, directly,
and exclusively use them. The machineries must be actually, directly, and
exclusively used by the government-owned or controlled corporation for the
exemption under Section 234(c) to apply.

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.

Lastly, from the points of view of essential fairness and the integrity of our tax
system, the Court finds it essentially wrong to allow the NPC to assume in its BOT
contracts the liability of the other contracting party for taxes that the government
can impose on that other party, and at the same time allow NPC to turn around and
say that no taxes should be collected because the NPC is tax-exempt as a
government-owned and controlled corporation. The Court cannot be a party to this
kind of arrangement; to allow it without congressional authority is to intrude into
the realm of policy and to debase the tax system that the Legislature established. It
will then also be grossly unfair to the people of the Province of Quezon and the
 Municipality of Pagbilao who, by law, stand to benefit from the tax provisions of the
LGC.

63. NPC vs. PROVINCE OF QUEZON, GR No. 171586, January 25, 2010 (Resolution)
Ruling:

The petitioner National Power Corporation (Napocor) filed the present motion for
reconsideration of the Court’s Decision of July 15, 2009, in which the Court denied
Napocor’s claimed real property tax exemptions.

Although Napocor insists that it is entitled to the tax exemptions and privileges
claimed, the primary issue for the Court to resolve, however, is to determine
whether Napocor has sufficient legal interest to protest the tax assessment because
without the requisite interest, the tax assessment stands, and no claim of exemption
or privilege can prevail.

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 the Court’s July 15, 2009 Decision explained.

Moreover, if Napocor truly believed that it was the owner of the subject
machineries, it should have complied with Sections 202 and 206 of the LGC which
obligates owners of real property to:
a. file a sworn statement declaring the true value of the real property,
whether taxable or exempt; and
b. file sufficient documentary evidence supporting its claim for tax
exemption.

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. The Court does 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.

Apart from Napocor’s failure to prove that it has sufficient legal interest, a further
review of the records revealed another basis for disregarding Napocor’s protest
against the assessment:
SEC. 206. Proof of Exemption of Real Property from Taxation. - Every person
by or for whom real property is declared, who shall claim tax exemption for
such property under this Title shall file with the provincial, city or municipal
assessor within thirty (30) days from the date of the declaration of real
property sufficient documentary evidence in support of such claim including
corporate charters, title of ownership, articles of incorporation, bylaws,
contracts, affidavits, certifications and mortgage deeds, and similar
documents. If the required evidence is not submitted within the period herein
prescribed, the property shall be listed as taxable in the assessment roll.
However, if the property shall be proven to be tax exempt, the same shall be
dropped from the assessment roll.

By providing that real property not declared and proved as tax-exempt shall be
included in the assessment roll, the above-quoted provision implies that the local
assessor has the authority to assess the property for realty taxes, and any
subsequent claim for exemption shall be allowed only when sufficient proof has
been adduced supporting the claim. Since Napocor was simply questioning the
correctness of the assessment, it should have first complied with Section 252,
particularly the requirement of payment under protest. Napocor’s failure to prove
 that this requirement has been complied with thus renders its administrative
protest under Section 226 of the LGC without any effect. No protest shall be
entertained unless the taxpayer first pays the tax.

For the foregoing reasons, the Court denies the petitioner’s motion for
reconsideration.

64. GSIS vs. CITY TREASURER AND ASSESSOR OF MANILA, GR No. 186242,
December 23, 2009

Ruling:

For review under Rule 45 of the Rules of Court on pure question of law are the
November 15, 2007 Decision and January 7, 2009 Order of the Regional Trial Court
(RTC), Branch 49 in Manila, in Civil Case No. 02-104827, a suit to nullify the
assessment of real property taxes on certain properties belonging to petitioner
Government Service Insurance System (GSIS).

The issues raised may be formulated in the following wise: first, whether GSIS under
its charter is exempt from real property taxation; second, assuming that it is so
exempt, whether GSIS is liable for real property taxes for its properties leased to a
taxable entity; and third, whether the properties of GSIS are exempt from levy.

The petition is meritorious.

The Court finds that GSIS enjoys under its charter full tax exemption. Pursuant to
Sec. 33 of PD 1146, GSIS enjoyed tax exemption from real estate taxes, among other
tax burdens, until January 1, 1992 when the LGC took effect and withdrew
exemptions from payment of real estate taxes privileges granted under PD 1146. RA
8291 restored in 1997 the tax exempt status of GSIS by reenacting under its Sec. 39
what was once Sec. 33 of P.D. 1146. Moreover, as an instrumentality of the national
government, it is itself not liable to pay real estate taxes assessed by the City of
Manila against its Katigbak and Concepcion-Arroceros properties.

Following the "beneficial use" rule, however, accrued real property taxes are due
from the Katigbak property, leased as it is to a taxable entity. But the corresponding
liability for the payment thereof devolves on the taxable beneficial user.

The Katigbak property cannot in any event be subject of a public auction sale,
notwithstanding its realty tax delinquency. This is the clear import of the third
paragraph of Sec. 39, RA 8291, which provides:
SEC. 39. Exemption from Tax, Legal Process and Lien. – x x x.
xxxx
The funds and/or the properties referred to herein as well as the benefits,
sums or monies corresponding to the benefits under this Act shall be exempt
from attachment, garnishment, execution, levy or other processes issued by the
courts, quasi-judicial agencies or administrative bodies including Commission
on Audit (COA) disallowances and from all financial obligations of the
members, including his pecuniary accountability arising from or caused or
occasioned by his exercise or performance of his official functions or duties, or
incurred relative to or in connection with his position or work except when his
monetary liability, contractual or otherwise, is in favor of the GSIS.

This means that the City of Manila has to satisfy its tax claim by serving the accrued
realty tax assessment on MHC, as the taxable beneficial user of the Katigbak
property and, in case of nonpayment, through means other than the sale at public
auction of the leased property.

iii. Fundamental Principles (Sec. 198)

iv. Important Definitions (Sec. 199)
a. Real Property for RPT Purposes (415 NCC)
b. Machineries

Cases:

65. MINDANAO BUS vs. CITY ASSESSOR AND TREASURER L-17870, Sept. 29, 1962
Ruling:

This is a petition for the review of the decision of the Court of Tax Appeals in C.T.A.
Case No. 710 holding that the petitioner Mindanao Bus Company is liable to the
payment of the realty tax on its maintenance and repair equipment consisting of
welder machine, boring machine, lathe machine, grinder, hydraulic press, battery
charger, and D-engine.

Respondents contend that said equipment, though movable, are immobilized by

destination, in accordance with paragraph 5 of Article 415 of the New Civil Code
which provides:
Art. 415. — The following are immovable properties:

xxx          xxx          xxx

(5) Machinery, receptacles, instruments or implements intended by the owner

of the tenement for an industry or works which may be carried on in a building
or on a piece of land, and which tend directly to meet the needs of the said
industry or works.

The Court ruled that said equipment may not be considered real estate within the
meaning of the above quoted Article.

For movable equipment to be immobilized in contemplation of the law, they must

first be "essential and principal elements" of an industry or works without which
such industry or works would be “unable to function or carry on the industrial
purpose for which it was established." We may here distinguish, therefore, those
movable which become immobilized by destination because they are essential and
principal elements in the industry, from those which may not be so considered
immobilized because they are merely incidental, not essential and principal.

The tools and equipment in question in this instant case are, by their nature, not
essential and principal elements of petitioner's business of transporting passengers
and cargoes by motor trucks. They are merely incidentals — acquired as movables
and used only for expediency to facilitate and/or improve its service. Even without
such tools and equipment, its business may be carried on, as petitioner has carried
on, without such equipment, before the war. The transportation business could be
carried on without the repair or service shop if its rolling equipment is repaired or
serviced in another shop belonging to another.

Aside from the element of essentiality, the above-quoted provision also requires
that the industry or works be carried on in a building or on a piece of land.  In the
case at bar, the equipment in question are destined only to repair or service the
transportation business, which is not carried on in a building or permanently on a
piece of land, as demanded by the law. Said equipment may not, therefore, be
deemed real property.

The Court thus ruled that the equipment in question are not subject to assessment
as real estate for the purposes of the real estate tax.

66. CALTEX PHILIPPINES, INC. vs. CBAA – GR No. 50466, May 31, 1982
Ruling:
 The said equipment and machinery, as appurtenances to the gas station building or
shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are
necessary to the operation of the gas station, for without them the gas station would
be useless, and which have been attached or affixed permanently to the gas station
site or embedded therein, are taxable improvements and machinery within the
meaning of the Assessment Law and the Real Property Tax Code.

67. MANILA ELECTRIC CO. vs. CBAA L-47943, May 31, 1982
Ruling:

While the two storage tanks are not embedded in the land, they may, nevertheless,
be considered as taxable improvements on the land, enhancing its utility and
rendering it useful to the oil industry. It is undeniable that the two tanks have been
installed with some degree of permanence as receptacles for the considerable
quantities of oil needed by Meralco for its operations.

For purposes of taxation, the term "real property" may include things which should
generally be regarded as personal property. It is a familiar phenomenon to see
things classed as real property for purposes of taxation which on general principle
might be considered personal property.

68. MANILA ELECTRIC COMPANY vs. THE CITY OF ASSESSOR AND CITY
TREASURER OF LUCENA CITY, GR No. 166102 dated August 5, 2015.

Ruling:

The Court finds that the transformers, electric posts, transmission lines, insulators,
and electric meters of MERALCO are no longer exempted from real property tax and
may qualify as "machinery" subject to real property tax under the Local Government
Code. Nevertheless, the Court declares null and void the appraisal and assessment of
said properties of MERALCO by the City Assessor in 1997 for failure to comply with
the requirements of the Local Government Code and, thus, violating the right of
MERALCO to due process.

As between the Civil Code, a general law governing property and property relations,
and the Local Government Code, a special law granting local government units the
power to impose real property tax, then the latter shall prevail. 

69. PROVINCIAL ASSESSOR OF AGUSAN DEL SUR vs. FILIPINAS PALM OIL, GR No.
183416 dated October 5, 2016.

Ruling:

The road equipment and the mini haulers should be assessed with real property
taxes. The exemption from real property taxes given to cooperatives applies
regardless of whether or not the land owned is leased. This exemption benefits the
cooperative's lessee. The characterization of machinery as real property is governed
by the Local Government Code and not the Civil Code

70. CAPITOL WIRELESS, INC. vs. PROVINCIAL TREASURER OF BATANGAS, GR No.

180110 dated May 30, 2016

Ruling:

Submarine or undersea communications cables are akin to electric transmission

lines which the Court has recently declared in Manila Electric Company v. City
Assessor and City Treasurer of Lucena City, as "no longer exempted from real
property tax" and may qualify as "machinery" subject to real property tax under the
Local Government Code. To the extent that the equipment's location is determinable
 to be within the taxing authority's jurisdiction, the Court sees no reason to
distinguish between submarine cables used for communications and aerial or
underground wires or lines used for electric transmission, so that both pieces of
property do not merit a different treatment in the aspect of real property taxation.
Both electric lines and communications cables, in the strictest sense, are not directly
adhered to the soil but pass through posts, relays or landing stations, but both may
be classified under the term "machinery" as real property under Article 415(5) of
the Civil Code for the simple reason that such pieces of equipment serve the owner's
business or tend to meet the needs of his industry or works that are on real estate.

Thus, absent any showing from Capwire of any express grant of an exemption for its
lines and cables from real property taxation, then this interpretation applies and
Capwire's submarine cable may be held subject to real property tax. The jurisdiction
or authority over such part of the subject submarine cable system lying within
Philippine jurisdiction includes the authority to tax the same, for taxation is one of
the three basic and necessary attributes of sovereignty, and such authority has been
delegated by the national legislature to the local governments with respect to real
property taxation. Tax exemptions arc strictly construed against the taxpayer
because taxes are considered the lifeblood of the nation.

c. Actual Use

Cases:

71. PATALINGHUG vs. CA, GR No. 104786, January 27, 1994

Ruling:

In the case at bar, the testimony of City Councilor Vergara shows that Mr. Tepoot's
building was used for a dual purpose both as a dwelling and as a place where a laundry
business was conducted. But while its commercial aspect has been established by the
presence of machineries and laundry paraphernalia, its use as a residence, other than
being declared for taxation purposes as such, was not fully substantiated.

The reversal by the Court of Appeals of the trial court's decision was based on Tepoot's
building being declared for taxation purposes as residential. It is the Court’s considered
view, however, that a tax declaration is not conclusive of the nature of the property for
zoning purposes. A property may have been declared by its owner as residential for real
estate taxation purposes but it may well be within a commercial zone. A discrepancy
may thus exist in the determination of the nature of property for real estate taxation
purposes vis-a-vis the determination of a property for zoning purposes.

In fact, a piece of land declared by a taxpayer as residential may be assessed by the

provincial or city assessor as commercial because its actual use is commercial.

d. Appraisal
e. Assessment
f. Assessed Value
v. Appraisal of Real Property (Sec. 201)

Cases:

72. SESBRENO vs. CBAA, 270 SCRA 263

Ruling:

Section 5 of PD 464 provides unequivocally that "(a)ll real property, whether

taxable or exempt, shall be appraised at the current and fair market value prevailing
in the locality where the property is situated."
 Acquisition cost cannot be and is not the sole basis of the current and fair market
value of a property. The current value of like properties and their actual or potential
uses, among others, are also considered.

It is a matter of plain common sense that a building with more floors has a higher
market value than one with fewer floors, provided that both are of the same
materials. Hence, the tax declaration of the building in question should have
accurately reflected its actual area and number of floors, these being necessary for
the accurate valuation thereof.

vi. Declaration of Real Property

a. By Owner or Administrator (Sec. 202)
b. In case improvements are made (Sec. 203)
c. By Assessor (Sec. 204)
d. Notification of Transfer of Real Property Ownership (Sec. 208)
vii. Assessment of Real Property
a. Preparation of Schedule of Fair Market Values (Sec. 212)

Cases:

73. LOPEZ vs. CITY OF MANILA, GR No. 127139 February 19, 1999
Ruling:

The preparation of fair market values as a preliminary step in the conduct of general
revision was set forth in Section 212 of R.A. 7160, to wit: (1) The city or municipal
assessor shall prepare a schedule of fair market values for the different classes of
real property situated in their respective Local Government Units for the enactment
of an ordinance by the sanggunian concerned. (2) The schedule of fair market values
shall be published in a newspaper of general circulation in the province, city or
municipality concerned or the posting in the provincial capitol or other places as
required by law.

The Court held that there was compliance with the requirement provided under Sec.
212 of R.A. 7160.

With the introduction of assessment levels, tax rates could be maintained, although
tax payments can be made either higher or lower depending on their percentage
(assessment level) applied to the fair market value of property to derive its assessed
value which is subject to tax. Moreover, classes and values of real properties can be
given proper consideration, like assigning lower assessment levels to residential
properties and higher levels to properties used in business.

It is likewise necessary to stress that Manila Ordinance No. 7905 is favorable to the
taxpayers when it specifically states that the reduced assessment levels shall be
applied retroactively to January 1, 1996. The reduced assessment levels multiplied
by the schedule of fair market values of real properties, provided by Manila
Ordinance No. 7894, resulted to decrease in taxes. To that extent, the ordinance is
likewise, a social legislation intended to soften the impact of the tremendous
increase in the value of the real properties subject to tax. The lower taxes will ease,
in part, the economic predicament of the low and middle-income groups of
taxpayers. In enacting this ordinance, the due process of law was considered by the
City of Manila so that the increase in realty tax will not amount to the confiscation of
the property.

b. Classes of Real Property for Assessment (Sec. 215)

c. Special Classes of Real Property (Sec. 216)

Cases:
 74. CITY ASSESSOR OF CEBU CITY vs. ASSOCIATION DE BENEVOLA DE CEBU – GR
No. 152904, June 8, 2007

Ruling:

The Chong Hua Hospital Medical Arts Center is an integral part of the hospital. It is
definitely incidental to and reasonably necessary for the operations of Chong Hua
Hospital. Charging rentals for the offices used by its accredited physicians cannot be
equated to a commercial venture.

Given the foregoing arguments, The Court fails to see any reason why the CHHMAC
building should be classified as "commercial" and be imposed the commercial level
of 35% as it is not operated primarily for profit but as an integral part of CHH. The
CHHMAC, with operations being devoted for the benefit of the CHH’s patients,
should be accorded the 10% special assessment. The 10% special assessment
should be imposed for the CHHMAC building which should be classified as "special."

Section 217. Actual Use of Real Property as Basis for Assessment. - Real property
shall be classified, valued and assessed on the basis of its actual use regardless of
where located, whoever owns it, and whoever uses it.

d. Actual Use as Basis for Assessment (Sec. 217)

Cases:

75. TESTATE ESTATE OF CONCORDIA LIM vs. CITY OF MANILA – GR No. 90639,
February 21, 1990)

Ruling:

The Court ruled that the plaintiff-appellant is not liable to pay the real property tax
due for the years 1977, 1978 and first quarter of 1979. The clause in the Deed of
Sale cannot be interpreted to include taxes for the periods prior to April 11, 1979,
the date of repurchase.

The real estate taxes later assessed on the said properties for the years 1977, 1978
and the first quarter of 1979 were charged against the plaintiff-appellant even if the
latter was not the beneficial user of the parcels of land. In real estate taxation, 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.

To impose the real property tax on the estate which was neither the owner nor the
beneficial user of the property during the designated periods would not only be
contrary to law but also unjust. If plaintiff-appellant intended to assume the liability
for realty taxes for the prior periods, the contract should have specifically stated
"real estate taxes" due for the years 1977,1978 and first quarter of 1979. The
payments made by the plaintiff-appellant cannot be construed to be an admission of
a tax liability since they were paid under protest and were done only in compliance
with one of the requirements for the consummation of the sale as directed by the
City Treasurer of Manila.

Hence, the tax assessed and collected from the plaintiff-appellants is not valid and a
refund by the City government is in order.

76. PATALINGHUG vs. CA, GR No. 104786, January 27, 1994

77. LRTA vs. CBAA – GR No. 127316, October 12, 2000
78. ALLIED BANKING CORPORATION vs. QUEZON CITY GOVERNMENT – GR No.
154126, October 11, 2005
 e. Assessment Levels (Sec. 218)
f. General Revision of Assessments and Property Classification (Sec. 219)
g. Valuation of Real Property (Sec. 220)
• Allied Bank vs. Quezon City Government – GR No. 154126, October 11, 2005
h. Date of Effectivity of Assessment or Reassessment (Sec. 221)
i. Assessment of Property Subject to Back Taxes (Sec. 222)
• Sesbreno v. CBAA, 270 SCRA 263
j. Notification of New or Revised Assessment (Sec. 223)
• Manila Electric Company vs. The City of Assessor and City Treasurer of
Lucena City, GR No. 166102 dated August 5, 2015
k. Appraisal and Assessment of Machinery (Sec. 224)
l. Depreciation Allowance for Machinery (Sec. 225)
viii. Condonation of RPT
a. Condonation and Reduction of RPT (Sec. 276)
b. Condonation or Reduction of RPT by President (Sec. 277)

II. IMPOSITION OF REAL PROPERTY TAX

i. Power to Levy Real Property Tax (Sec. 232)
ii. Rates of Levy (Sec. 233)
• Allied Bank vs. Quezon City Government – GR No. 154126, October 11, 2005
iii. Exemptions from RPT (Sec. 234)
a. Proof of Exemption from RPT (Sec. 206)
• Provincial Assessor of Marinduque vs. CA – GR No. 170532, April 4, 2009
b. Constitutional Provisions on RPT Exemption
• Lung Center of the Philippines vs. QC – 433 SCRA 119
• 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
• Mactan Cebu International Airport Authority vs. Marcos – GR No. 120082, Sept. 11,
1996
• MIAA vs. CA – GR No. 155650, July 20, 2006
• Mactan-Cebu International Airport Authority vs. City of Lapu-Lapu – GR No. 181756
dated June 15, 2015
• Provincial Assessor of Marinduque vs. CA – GR No. 170532, April 4, 2009
• NPC vs. Province of Quezon, GR No. 171586, July 15, 2009
• 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
• City of Pasig vs. Republic, GR No. 185023 dated August 24, 2011
• Republic vs. City of Paranaque, GR No. 191109 dated July 28, 2012
• 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

• Provincial Assessor of Agusan del Sur vs. Filipinas Palm Oil, GR No. 183416 dated
October 5, 2016
iv. Additional Levy for SEF (Sec. 235)
v. RPT on Idle Lands (Sec. 236)
a. Coverage of Idle Lands (Sec. 237)
b. Idle Lands Exempt from Tax (Sec. 238)
vi. Special Levies (Sec. 240)
a. Ordinance Imposing Special Levy (Sec. 241)
b. Publication and Public Hearing (Sec. 242)
c. Fixing Amount of Special Levy (Sec. 243)
d. Taxpayers Remedies (Sec. 244)
e. Accrual of Special Levy (Sec. 245)
 III. COMPUTATION OF REAL PROPERTY TAX
i. Date of Accrual (Sec. 246)
ii. Notice of Time of Collection (Sec. 249)
iii. Payment of RPT in Instalments (Sec. 250)
iv. Tax Discount for Advanced Prompt Payment (Sec. 251)

IV. REMEDIES
i. Local Government Unit’s Remedies
a. Date of Accrual of Tax (Sec. 246)
b. LGU’s Lien (Sec. 257)
c. Interest on Unpaid RPT (Sec. 255)
d. Period to Collect (Sec. 270)- Suspension of Period to Collect
e. Levy on Real Property (Sec. 258) - Advertisement and Sale (Sec. 260)
• Puzon vs. Abelera 169 SCRA 789
• Spouses Tan vs. Bantequi GR No. 154027 October 24, 2005
f. Redemption of Property Sold (Sec. 261)
g. Purchase of Property by the Local Government Units for Want of Bidder (Sec. 263)
h. Court Action for Collection (Sec. 266)
ii. Taxpayer’s Remedies
a. Action Assailing Validity of Tax Sale (Sec. 267)
b. Action Involving Ownership (Sec. 268)
c. Payment under Protest (Sec. 252)
• Manila Electric Company vs. The City of Assessor and City Treasurer of Lucena City,
GR No. 166102 dated August 5, 2015.
• Ramie Textile vs. Mathay - 89 SCRA 586 Ty vs. Trampe – GR No. 117577, December 1,
1995
• Olivarez vs. Marquez - 438 SCRA 679
• NPC vs. Province of Quezon, GR No. 171586, July 15, 2009
• NPC vs. Province of Quezon, GR No. 171586, January 25, 2010 (Resolution)
• Camp John Hay Development Corp. vs. CBAA, GR No. 169234, October 2, 2013.
(include concurring opinion of Justice Carpio)
• NPC vs. Municipal Government of Navotas, GR No. 192300 dated November 24, 2014
• City of Lapu-Lapu vs. PEZA, GR No. 184203 dated November 26, 2014
• CE Casecnan Water and Energy Company, Inc. vs. The Province of Nueva Ecija, GR
No. 196278 dated June 17, 2015.
• NPC vs. Provincial Treasurer of Benguet, GR No. 209303 dated November 14, 2016
d. Refunds (Sec. 253)
• Allied Banking vs. Quezon City Government – GR No. 154126,
e. Assessment Appeals
i. Appeal with the LBAA (Sec. 226)
• City Government of Quezon City vs. Bayan Telecommunications – GR No.
162015, March 6, 2006
• Systems Plus Computer College of Caloocan vs. Local Government of Caloocan,
GR No. 146382. August 7, 2003
• Fels Energy, Inc. vs. Province of Batangas GR No. 168557, February 16, 2007
September 15, 2006 – Motion for Clarification of Decision
ii. Action by the LBAA (Sec. 229)

iii. Appeal to the CBAA (Sec. 229)

iv. Appeal to the CTA En Banc
v. Effect of Appeal on Payment of RPT (Sec. 231)

COURT OF TAX APPEALS

Republic Act 1125 The Act that Created the Court of Tax Appeals (CTA), as amended, and the Revised Rules of
the Court of Tax Appeals
I. Jurisdiction of the Court of Tax Appeals
i. Exclusive appellate jurisdiction over civil tax cases
a. Cases within the jurisdiction of the Court en banc
 b. Cases within the jurisdiction of the Court in divisions
ii. Criminal cases
a. Exclusive original jurisdiction
b. Exclusive appellate jurisdiction in criminal cases
II. Judicial Procedures
i. Judicial action for collection of taxes
a. Internal revenue taxes
b. Local taxes
1. Prescriptive period
ii. Civil cases
a. Who may appeal, mode of appeal, effect of appeal
1. Suspension of collection of tax
i. Injunction not available to restrain collection
2. Taking of evidence
3. Motion for reconsideration or New trial
b. Appeal to the CTA, en banc,
c. Petition for review on certiorari to the Supreme Court
iii. Criminal cases
a. Institution and prosecution of criminal actions
1. Institution on civil action in criminal action
b. Appeal and period to appeal
1. Solicitor General as counsel for the People and government officials sued in their
official capacity
c. Petition for review on certiorari to the Supreme Court
III. Taxpayer’s suit impugning the validity of tax measures or acts of taxing authorities
i. Taxpayer’s suit, defined
ii. Distinguished from citizen’s suit
iii. Requisites for challenging the constitutionality of a tax measure or act of taxing authority
a. Concept of locus standi as applied in taxation
b. Doctrine of transcendental importance
c. Ripeness for judicial determination

CUSTOMS MODERNIZATION AND TARIFF ACT (RA 10863)

I. Bureau of Customs
i. Functions of the BOC (Section 202, CMTA)
ii. Powers & Functions of the BOC Commissioner (Section 201, CMTA)
iii. Functions of Deputy Commissioners (http://customs.gov.ph/offices/)
II. Tariff Commission
i. Functions of the Tariff Commission (Section 1603, CMTA)
ii. Chief Officials of the TC (Section 1600, CMTA)
III. Importation
i. Importation (Section 102(z), CMTA)
ii. Exportation (Section 102(s), CMTA)
iii. Article subject to Duty (Section 204, CMTA)
iv. Liability for Duties & Taxes (Section 405, CMTA)
v. Importation Documents
a. Single Administrative Document
b. Bill of Lading/Airway Bill

c. Supplemental Declaration on Valuation

d. Discharge Port Survey
e. Tax Credit Certificate
f. Tax Debit Memo
g. Certificate of Origin
h. Other Documents Required by BOC
IV. Types of Importation
i. Freely Importable Goods (Section 116, CMTA)
ii. Regulated Importation (Section 117, CMTA)
iii. Prohibited Importation (Section 118, CMTA)
iv. Restricted Importation (Section 119, CMTA)
 V. Tariff Classification & Advance Ruling
i. Advance Ruling System
ii. CAO No. 3-2016 on Establishment of an Advance Ruling System for Valuation and Rules of Origin)
iii. Commission Order No. 2017-01 Procedure on Application for an Advance Ruling on Tariff
Classification related to Importation or Exportation of Goods
iv. Basis of Tariff Classification (ASEAN Harmonized Tariff Nomenclature (AHTN) 2017 effective 28
July 2017

VI. Tariff Valuation & Advance Ruling

i. Advance Ruling System
ii. CO No. 2017-01 on Procedure on Application for an Advance Ruling on Tariff Classification related
to Importation or Exportation of Goods
iii. Tariff Valuation Method (Section 701-706, CMTA)
a. Transaction Value System
b. Transaction Value of Identical Goods System
c. Transaction Value of Similar Goods
d. Deductive Value
e. Computed Value
f. Fallback Value
iv. Basic Computation of Customs Duties & Taxes
v. Basics of Importation
a. The nature of the product to be imported to the Philippines
b. The dutiable value of imported goods as basis of customs duty
c. The duty rate applicable to the product
d. The preferential tariff rate under Free Trade Agreement, if the goods is subject thereto
e. The taxability of the imported goods under the NIRC
VII. Special Types of Entry
i. Balikbayan boxes
ii. Postal Items
iii. Returning Residents/OFWs
VIII. ATRIG
i. Section 131, NIRC
ii. Section 172, NIRC
iii. Section 268(C), NIRC
iv. Revenue Regs. No. 2-2016
v. RMC 48-2002
IX. BOC Powers
i. Release & Limitations
ii. BOC Powers
a. Selectivity System (Section 420, CMTA)
b. Customs Formalities on Goods Declaration
Documentary Check
On-Intrusive Inspection
Physical Examination
c. Requirements for Search, Seizure & Arrest (Section 214, CMTA)
d. Complement of Exercise of Police Authority (Section 216-224, CMTA)
e. Customs Jurisdiction & Doctrine of Hot Pursuit (Section 300, CMTA)
f. Customs Control (Section 302-202, CMTA)
g. Forfeiture (Section 1115, CMTA)
h. Seizure or Release of Goods (Section 1116, CMTA)
X. Special Duties & Measures
i. Compulsory Acquisition (Section 709, CMTA)
ii. Marking Duty(Section 710, CMTA)
iii. Anti-Dumping Duty(Section 711, CMTA)
iv. Safeguard Measures(Section 712, CMTA)
v. Countervailing Duty(Section 713, CMTA)
vi. Discriminatory Measures(Section 714, CMTA)

2. Give at least three (3) questions from previous BAR EXAMS in relation to any of the topics discussed in
number 1 and provide for the Suggested Answer.

3. Give at least three (3) potential BAR EXAM questions in relation to any of the topics discussed in number 1
and provide for the Suggested Answer.

--------------------------x
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