G.R. No.

149110            April 9, 2003

NATIONAL POWER CORPORATION, petitioner,

vs.
CITY OF CABANATUAN, respondent
Facts:

Petitioner is a government-owned and controlled corporation created under Commonwealth Act No. 120, as amended. 4 It
is tasked to undertake the "development of hydroelectric generations of power and the production of electricity from
nuclear, geothermal and other sources, as well as, the transmission of electric power on a nationwide
basis."5 Concomitant to its mandated duty, petitioner has, among others, the power to construct, operate and maintain
power plants, auxiliary plants, power stations and substations for the purpose of developing hydraulic power and
supplying such power to the inhabitants.6

For many years now, petitioner sells electric power to the residents of Cabanatuan City, posting a gross income of
P107,814,187.96 in 1992.7 Pursuant to section 37 of Ordinance No. 165-92, 8 the respondent assessed the petitioner a
franchise tax amounting to P808,606.41, representing 75% of 1% of the latter's gross receipts for the preceding year. 9

Petitioner, whose capital stock was subscribed and paid wholly by the Philippine Government, 10 refused to pay the tax
assessment. It argued that the respondent has no authority to impose tax on government entities. Petitioner also
contended that as a non-profit organization, it is exempted from the payment of all forms of taxes, charges, duties or
fees11 in accordance with sec. 13 of Rep. Act No. 6395 --- "Sec.13. Non-profit Character of the Corporation; Exemption
from all Taxes, Duties, Fees, Imposts and Other Charges by Government and Governmental Instrumentalities.- 
The respondent filed a collection suit in the Regional Trial Court of Cabanatuan City. The trial court issued an
Order15 dismissing the case. It ruled that the tax exemption privileges granted to petitioner subsist despite the passage of
Rep. Act No. 7160 for the following reasons: (1) Rep. Act No. 6395 is a particular law and it may not be repealed by Rep.
Act No. 7160 which is a general law; (2) section 193 of Rep. Act No. 7160 is in the nature of an implied repeal which is not
favored; and (3) local governments have no power to tax instrumentalities of the national government.
On appeal, the Court of Appeals reversed the trial court's Order 17 on the ground that section 193, in relation to sections
137 and 151 of the LGC, expressly withdrew the exemptions granted to the petitioner.
The petitioner filed a Motion for Reconsideration on the Court of Appeal's Decision. This was denied by the appellate
court.
Petitioner, however, submits that it is not liable to pay an annual franchise tax to the respondent city government. It
contends that sections 137 and 151 of the LGC in relation to section 131, limit the taxing power of the respondent city
government to private entities that are engaged in trade or occupation for profit.
Petitioner also alleges that it is an instrumentality of the National Government, 25 and as such, may not be taxed by the
respondent city government. It cites the doctrine in Basco vs. Philippine Amusement and Gaming Corporation 26 where this
Court held that local governments have no power to tax instrumentalities of the National Government.
Petitioner contends that section 193 of Rep. Act No. 7160, withdrawing the tax privileges of government-owned or
controlled corporations, is in the nature of an implied repeal. A special law, its charter cannot be amended or modified
impliedly by the local government code which is a general law. Consequently, petitioner claims that its exemption from all
taxes, fees or charges under its charter subsists despite the passage of the LGC.
Finally, petitioner submits that the charter of the NPC, being a valid exercise of police power, should prevail over the LGC.
It alleges that the power of the local government to impose franchise tax is subordinate to petitioner's exemption from
taxation.
Held:

The petition is without merit.

The only way to shatter this culture of dependence is to give the LGUs a wider role in the delivery of basic services, and
confer them sufficient powers to generate their own sources for the purpose. To achieve this goal, section 3 of Article X of
the 1987 Constitution mandates Congress to enact a local government code that will, consistent with the basic policy of
local autonomy, set the guidelines and limitations to this grant of taxing powers.

One of the most significant provisions of the LGC is the removal of the blanket exclusion of instrumentalities and agencies
of the national government from the coverage of local taxation. Although as a general rule, LGUs cannot impose taxes,
fees or charges of any kind on the National Government, its agencies and instrumentalities, this rule now admits an
exception, i.e., when specific provisions of the LGC authorize the LGUs to impose taxes, fees or charges on the
aforementioned entities, viz:

"Section 133. Common Limitations on the Taxing Powers of the Local Government Units.- Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not
extend to the levy of the following:

1
 x   x   x

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

In view of the afore-quoted provision of the LGC, the doctrine in Basco vs. Philippine Amusement and Gaming
Corporation44 relied upon by the petitioner to support its claim no longer applies.

In the case at bar, section 151 in relation to section 137 of the LGC clearly authorizes the respondent city government to
impose on the petitioner the franchise tax in question.

In its general signification, a franchise is a privilege conferred by government authority, which does not belong to citizens
of the country generally as a matter of common right. 48 In its specific sense, a franchise may refer to a general or primary
franchise, or to a special or secondary franchise. The former relates to the right to exist as a corporation, by virtue of duly
approved articles of incorporation, or a charter pursuant to a special law creating the corporation. 49 The right under a
primary or general franchise is vested in the individuals who compose the corporation and not in the corporation
itself.50 On the other hand, the latter refers to the right or privileges conferred upon an existing corporation such as the
right to use the streets of a municipality to lay pipes of tracks, erect poles or string wires. 51 The rights under a secondary
or special franchise are vested in the corporation and may ordinarily be conveyed or mortgaged under a general power
granted to a corporation to dispose of its property, except such special or secondary franchises as are charged with a
public use.

Verily, to determine whether the petitioner is covered by the franchise tax in question, the following requisites should
concur: (1) that petitioner has a "franchise" in the sense of a secondary or special franchise; and (2) that it is exercising its
rights or privileges under this franchise within the territory of the respondent city government.

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. 57 As its secondary franchise,
Commonwealth Act No. 120, as amended, vests the petitioner the following 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.

Petitioner, however, insists that it is excluded from the coverage of the franchise tax simply because its stocks are wholly
owned by the National Government, and its charter characterized it as a "non-profit" organization.

These contentions must necessarily fail.

To stress, a franchise tax is imposed based not on the ownership but on the exercise by the corporation of a privilege to
do business. The taxable entity is the corporation which exercises the franchise, and not the individual stockholders. By
virtue of its charter, petitioner was created as a separate and distinct entity from the National Government. It can sue and
be sued under its own name,61 and can exercise all the powers of a corporation under the Corporation Code.
Petitioner was created to "undertake the development of hydroelectric generation of power and the production of
electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide
basis."66 Pursuant to this mandate, petitioner generates power and sells electricity in bulk. Certainly, these activities do not
partake of the sovereign functions of the government. They are purely private and commercial undertakings, albeit imbued
with public interest. The public interest involved in its activities, however, does not distract from the true nature of the
petitioner as a commercial enterprise, in the same league with similar public utilities like telephone and telegraph
companies, railroad companies, water supply and irrigation companies, gas, coal or light companies, power plants, ice
plant among others; all of which are declared by this Court as ministrant or proprietary functions of government aimed at
advancing the general interest of society.

We also do not find merit in the petitioner's contention that its tax exemptions under its charter subsist despite the
passage of the LGC.

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. 71 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. 72 It reads:

"Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-

2
 owned or controlled corporations, except local water districts, cooperatives duly registered under R.A. No.
6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the
effectivity of this Code." (emphases supplied)

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.

But this would be an exercise in futility. Section 137 of the LGC clearly states that the LGUs can impose franchise tax
"notwithstanding any exemption granted by any law or other special law." This particular provision of the LGC does not
admit any exception.

It is worth mentioning that section 192 of the LGC empowers the LGUs, through ordinances duly approved, to grant tax
exemptions, initiatives or reliefs.77 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.

G.R. No. 131359 May 5, 1999

MANILA ELECTRIC COMPANY, petitioner,

vs.
PROVINCE OF LAGUNA and BENITO R. BALAZO, in his capacity as Provincial Treasurer of Laguna, respondents.

Facts:

On various dates, certain municipalities of the Province of Laguna, including, Biñan, Sta. Rosa, San Pedro, Luisiana,
Calauan and Cabuyao, by virtue of existing laws then in effect, issued resolutions through their respective municipal
councils granting franchise in favor of petitioner Manila Electric Company ("MERALCO") for the supply of electric light,
heat and power within their concerned areas. MERALCO was likewise granted a franchise by the National Electrification
Administration to operate an electric light and power service in the Municipality of Calamba, Laguna.

Republic Act No. 7160, otherwise known as the "Local Government Code of 1991," was enacted to take effect on 01
January 1992 enjoining local government units to create their own sources of revenue and to levy taxes, fees and
charges, subject to the limitations expressed therein, consistent with the basic policy of local autonomy. Pursuant to the
provisions of the Code, respondent province enacted Laguna Provincial Ordinance No. 01-92, effective 01 January 1993,
providing, in part, as follows:

Sec. 2.09. Franchise Tax. — There is hereby imposed a tax on businesses enjoying a franchise, at a rate
of fifty percent (50%) of one percent (1%) of the gross annual receipts, which shall include both cash
sales and sales on account realized during the preceding calendar year within this province, including the
territorial limits on any city located in the province.

On the basis of the above ordinance, respondent Provincial Treasurer sent a demand letter to MERALCO for the
corresponding tax payment. Petitioner MERALCO paid the tax under protest. A formal claim for refund was thereafter sent
by MERALCO to the Provincial Treasurer of Laguna claiming that the franchise tax it had paid and continued to pay to the
National Government pursuant to P.D. 551 already included the franchise tax imposed by the Provincial Tax Ordinance.

The claim for refund of petitioner was denied in a letter signed by Governor Jose D. Lina relied on a more recent law,  i.e.
Republic Act No. 7160 or the Local Government Code of 1991, than the old decree invoked by petitioner.

Petitioner MERALCO filed with the Regional Trial Court of Sta. Cruz, Laguna, a complaint for refund, with a prayer for the
issuance of a writ of preliminary injunction and/or temporary restraining order, against the Province of Laguna and also
Benito R. Balazo in his capacity as the Provincial Treasurer of Laguna.
The trial court dismissed the complaint.

In the instant petition, MERALCO assails the above ruling and brings up the following issues; viz:

1. Whether the imposition of a franchise tax under Section 2.09 of Laguna Provincial Ordinance No. 01-92, insofar as
petitioner is concerned, is violative of the non-impairment clause of the Constitution and Section 1 of Presidential Decree
No. 551.

Held:

The petition lacks merit.

3
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, 6 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.

The Local Government Code of 1991 has incorporated and adopted, by and large, the provisions of the now repealed
Local Tax Code. The 1991 Code explicitly authorizes provincial governments, notwithstanding "any exemption granted by
any law or other special law, . . . (to) impose a tax on businesses enjoying a franchise."

Indicative of the legislative intent to carry out the Constitutional mandate of vesting broad tax powers to local government
units, the Local Government Code has effectively withdrawn under Section 193 thereof, tax exemptions or
incentives theretofore enjoyed by certain entities. This law states:

Sec. 193. Withdrawal of Tax Exemption Privileges — Unless otherwise provided in this Code, tax
exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local water districts, cooperatives duly
registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are
hereby withdrawn upon the effectivity of this Code. (Underscoring supplied for emphasis)

In the recent case of the City Government of San Pablo, etc., et al. vs. Hon. Bienvenido V. Reyes, et al., 13 the Court has
held that the phrase in lieu of all taxes "have to give way to the peremptory language of the Local Government Code
specifically providing for the withdrawal of such exemptions, privileges," and that "upon the effectivity of the Local
Government Code all exemptions except only as provided therein can no longer be invoked by MERALCO to
disclaim liability for the local tax." In fine, the Court has viewed its previous rulings as laying stress more on the legislative
intent of the amendatory law — whether the tax exemption privilege is to be withdrawn or not — rather than on whether
the law can withdraw, without violating the Constitution, the tax exemption or not.

While the Court has, not too infrequently, referred to tax exemptions contained in special franchises as being in the nature
of contracts and a part of the inducement for carrying on the franchise, these exemptions, nevertheless, are far from
being strictly contractual in nature. Contractual tax exemptions, in the real sense of the term and where the non-
impairment clause of the Constitution can rightly be invoked, are those agreed to by the taxing authority in contracts,

Truly, tax exemptions of this kind may not be revoked without impairing the obligations of contracts.  14 These contractual
tax exemptions, however, are not to be confused with tax exemptions granted under franchises. A franchise partakes
the nature of a grant which is beyond the purview of the non-impairment clause of the Constitution .15 Indeed,
Article XII, Section 11, of the 1987 Constitution, like its precursor provisions in the 1935 and the 1973 Constitutions, is
explicit that no franchise for the operation of a public utility shall be granted except under the condition that such
privilege shall be subject to amendment, alteration or repeal by Congress as and when the common good so
requires.

G.R. No. 120082 September 11, 1996

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner,

vs.
HON. FERDINAND J. MARCOS, in his capacity as the Presiding Judge of the Regional Trial Court, Branch 20,
Cebu City, THE CITY OF CEBU, represented by its Mayor HON. TOMAS R. OSMEÑA, and EUSTAQUIO B.
CESA, respondents.

Facts:

Petitioner Mactan Cebu International Airport Authority (MCIAA) was created by virtue of Republic Act No. 6958, mandated
to "principally undertake the economical, efficient and effective control, management and supervision of the Mactan
International Airport in the Province of Cebu and the Lahug Airport in Cebu City, . . . and such other Airports as may be
established in the Province of Cebu.

Since the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from payment of realty taxes in
accordance with Section 14 of its Charter.

However, Mr. Eustaquio B. Cesa, Officer-in-Charge, Office of the Treasurer of the City of Cebu, demanded payment for
realty taxes on several parcels of land belonging to the petitioner. Petitioner objected to such demand for payment as
baseless and unjustified, claiming in its favor the aforecited Section 14 of RA 6958 which exempt it from payment of realty
taxes. It was also asserted that it is an instrumentality of the government performing governmental functions, citing section
133 of the Local Government Code of 1991 which puts limitations on the taxing powers of local government units.

4
Respondent City refused to cancel and set aside petitioner's realty tax account, insisting that the MCIAA is a government-
controlled corporation whose tax exemption privilege has been withdrawn by virtue of Sections 193 and 234 of the Local
Governmental Code.

As the City of Cebu was about to issue a warrant of levy against the properties of petitioner, the latter was compelled to
pay its tax account "under protest" and thereafter filed a Petition for Declaratory Relief with the Regional Trial Court of
Cebu. MCIAA basically contended that the taxing powers of local government units do not extend to the levy of taxes or
fees of any kind on an instrumentality of the national government. Petitioner insisted that while it is indeed a government-
owned corporation, it nonetheless stands on the same footing as an agency or instrumentality of the national government
by the very nature of its powers and functions.

Respondent City, however, asserted that MACIAA is not an instrumentality of the government but merely a government-
owned corporation performing proprietary functions As such, all exemptions previously granted to it were deemed
withdrawn by operation of law.

The trial court dismissed the petition. Its motion for reconsideration having been denied by the trial court, petitioner filed
the instant petition based on the following assignment of errors.

Held:

There can be no question that under Section 14 of R.A. No. 6958 the petitioner is exempt from the payment of
realty taxes imposed by the National Government or any of its political subdivisions, agencies, and
instrumentalities. Nevertheless, since taxation is the rule and exemption therefrom the exception, the exemption
may thus be withdrawn at the pleasure of the taxing authority. The only exception to this rule is where the
exemption was granted to private parties based on material consideration of a mutual nature, which then
becomes contractual and is thus covered by the non-impairment clause of the Constitution. 23

The LGC, enacted pursuant to Section 3, Article X of the constitution provides for the exercise by local
government units of their power to tax, the scope thereof or its limitations, and the exemption from taxation.

Section 133 of the LGC prescribes the common limitations on the taxing powers of local government units as
follows:

Sec. 133. Common Limitations on the Taxing Power of Local Government Units. — Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall
not extend to the levy of the following:

Xxx

(o) TAXES, FEES, OR CHARGES OF ANY KIND ON THE NATIONAL

GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES, AND LOCAL
GOVERNMENT UNITS. (emphasis supplied)

Needless to say the last item (item o) is pertinent in this case. The "taxes, fees or charges" referred to are "of any kind",
hence they include all of these, unless otherwise provided by the LGC. The term "taxes" is well understood so as to need
no further elaboration, especially in the light of the above enumeration. The term "fees" means charges fixed by law or
Ordinance for the regulation or inspection of business activity, 24 while "charges" are pecuniary liabilities such as rents or
fees against person or property.

Section 234 of LGC provides for the exemptions from payment of real property taxes and withdraws previous exemptions
therefrom granted to natural and juridical persons, including government owned and controlled corporations, except as
provided therein.

Section 193 of the LGC is the general provision on withdrawal of tax exemption privileges. It provides:

Sec. 193. Withdrawal of Tax Exemption Privileges. — Unless otherwise provided in this code, tax
exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical,
including government-owned, or controlled corporations, except local water districts, cooperatives duly
registered under R.A. 6938, non stock and non profit hospitals and educational constitutions, are hereby
withdrawn upon the effectivity of this Code.

On the other hand, the LGC authorizes local government units to grant tax exemption privileges. Thus, Section
192 thereof provides:

Sec. 192. Authority to Grant Tax Exemption Privileges. — Local government units may, through
ordinances duly approved, grant tax exemptions, incentives or reliefs under such terms and conditions as
they may deem necessary.
5
Thus, reading together Section 133, 232 and 234 of the LGC, we conclude that as a general rule, as laid down in Section
133 the taxing powers of local government units cannot extend to the levy of inter alia, "taxes, fees, and charges of any
kind of the National Government, its agencies and instrumentalties, and local government units"; however, pursuant to
Section 232, provinces, cities, municipalities in the Metropolitan Manila Area may impose the real property tax except
on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the
beneficial used thereof has been granted, for consideration or otherwise, to a taxable person", as provided in item (a) of
the first paragraph of Section 234.

As to tax exemptions or incentives granted to or presently enjoyed by natural or juridical persons, including government-
owned and controlled corporations, Section 193 of the LGC prescribes the general rule, viz., they are withdrawn upon the
effectivity of the LGC, except upon the effectivity of the LGC, except  those granted to local water districts, cooperatives
duly registered under R.A. No. 6938, non stock and non-profit hospitals and educational institutions, and unless otherwise
provided in the LGC. The latter proviso could refer to Section 234, which enumerates the properties exempt from real
property tax. But the last paragraph of Section 234 further qualifies the retention of the exemption in so far as the real
property taxes are concerned by limiting the retention only to those enumerated there-in; all others not included in the
enumeration lost the privilege upon the effectivity of the LGC. Moreover, even as the real property is owned by the
Republic of the Philippines, or any of its political subdivisions covered by item (a) of the first paragraph of Section 234, the
exemption is withdrawn if the beneficial use of such property has been granted to taxable person for consideration or
otherwise.

Since the last paragraph of Section 234 unequivocally withdrew, upon the effectivity of the LGC, exemptions from real
property taxes granted to natural or juridical persons, including government-owned or controlled corporations, except as
provided in the said section, and the petitioner is, undoubtedly, a government-owned corporation, it necessarily follows
that its exemption from such tax granted it in Section 14 of its charter, R.A. No. 6958, has been withdrawn. Any claim to
the contrary can only be justified if the petitioner can seek refuge under any of the exceptions provided in Section 234, but
not under Section 133, as it now asserts, since, as shown above, the said section is qualified by Section 232 and 234.

If Section 234(a) intended to extend the exception therein to the withdrawal of the exemption from payment of real
property taxes under the last sentence of the said section to the agencies and instrumentalities of the National
Government mentioned in Section 133(o), then it should have restated the wording of the latter. Yet, it did not Moreover,
that Congress did not wish to expand the scope of the exemption in Section 234(a) to include real property owned by
other instrumentalities or agencies of the government including government-owned and controlled corporations is further
borne out by the fact that the source of this exemption is Section 40(a) of P.D. No. 646, otherwise known as the Real
Property Tax Code.

The crucial issues then to be addressed are: (a) whether the parcels of land in question belong to the Republic of
the Philippines whose beneficial use has been granted to the petitioner, and (b) whether the petitioner is a
"taxable person".

Section 15 of the petitioner's Charter provides:

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,
acrodrome 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.

The "airports" referred to are the "Lahug Air Port" in Cebu City and the "Mactan International AirPort in the
Province of Cebu",36 which belonged to the Republic of the Philippines, then under the Air Transportation Office
(ATO).37

It may be reasonable to assume that the term "lands" refer to "lands" in Cebu City then administered by the Lahug
Air Port and includes 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."38 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.

6
 Finally, even if the petitioner was originally not a taxable person for purposes of real property tax, in light of the
forgoing disquisitions, it had already become 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.

G.R. No. 118233 December 10, 1999

ANTONIO Z. REYES, ELISEO P. OCAMPO and EDITHA ARCIAGA-SANTOS, petitioners,

vs.
COURT OF APPEALS, HON. SECRETARY OF JUSTICE FRANKLIN DRILON and MAYOR JINGGOY ESTRADA
(JOSE EJERCITO) OF THE MUNICIPALITY OF SAN JUAN, METRO MANILA, respondents.

Facts:

The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances as follows:

Ordinance No. Title

87 An ordinance imposing a municipal tax of fifty percent (50%) of one percent (1%) of the gross receipt on business of
printing and publication

91 An ordinance imposing a transfer tax equivalent to fifty percent (50%) of one percent (1%) of the total consideration on
the sale, donation, barter or any other mode of transferring ownership or title of real property situated in San Juan, Metro
Manila, or its fair market value, whichever is higher

95 An ordinance imposing fifty percent (50%) of one percent (1%) for social housing tax on the assessed value of all real
estate property in San Juan, Metro Manila in excess of P50,000.00 value as provided in the New Urban Land Reform
Law, also known as R.A. 7279.

100 An ordinance imposing new rates of business taxes of the Municipality of San Juan Metro Manila

101 An ordinance levying an annual "Ad Valorem" tax on real property and an additional tax accruing to the special
education fund (SEF)

Petitioners filed an appeal with the Department of Justice assailing the constitutionality of these tax ordinances allegedly
because they were promulgated without previous public hearings thereby constituting deprivation of property without due
process of law.

Respondent Secretary of Justice dismissed the appeal for having been filed out of time. petitioners filed with the Court of
Appeals a petition for certiorari and prohibition. But respondent court affirmed the decision of the Secretary. The motion
for reconsideration filed by the petitioners was denied for lack of merit.

According to petitioners, respondent Secretary erred in declaring that they failed to file their appeal on time. Also, they
assail Municipal Ordinance Nos. 87, 91, 95, 100 and 101, for alleged failure of the Municipal Council of San Juan to
conduct mandatory public hearings.

Held:

Sec. 187 of R.A. 7160, cited by respondent Secretary, provides as follows:

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 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.

Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his
appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeals, 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

7
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. 5 For this reason the courts construct
these provisions of statutes as mandatory.

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.

On the second issue, petitioners allege that the Sangguniang Bayan of San Juan did not comply with the prescribed
procedure for enacting an ordinance because they failed to conduct public hearings.

Petitioners have not proved in the case before us that the Sangguniang Bayan of San Juan failed to conduct the required
public hearings before the enactment of Ordinance Nos. 87, 91, 95, 100 and 101. Although the Sanggunian had the
control of records or the better means of proof regarding the facts alleged, petitioner as not relieved from the burden of
proving their averments. 10 Proof that public hearings were not held falls on petitioner' shoulders. For failing to discharge
that burden, their petition was properly dismissed.

SECOND DIVISION

[G.R. No. 119172. March 25, 1999]

BELEN C. FIGUERRES, Petitioner, v. COURT OF APPEALS, CITY OF ASSESSORS OF MANDALUYONG, CITY

TREASURER OF MANDALUYONG, and SANGGUNIANG BAYAN OF MANDALUYONG, Respondents.

Facts:

Petitioner Belen C. Figuerres is the owner of a parcel of land. She received a notice of assessment from the municipal
assessor of the then Municipality of Mandaluyong.

The assessment was based on Ordinance Nos. 119 and 125, series of 1993, and Ordinance No. 135, series of 1994, of
the Sangguniang Bayan of Mandaluyong. Ordinance No. 119, series of 1993, which contains a schedule of fair market
values of the different classes of real property in the municipality. 2 Ordinance No. 125, series of 1993, which fixes the
assessment levels applicable to such classes of real property. 3 Finally, Ordinance No. 135, series of 1994, which
amended Ordinance No. 119, 6 by providing that only one third (1/3) of the increase in the market values applicable to
residential lands pursuant to the said ordinance.

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

Court of Appeals threw out the petition.

Held:

Exhaustion of administrative remedies

Section 187 of R.A. 7160 provides, that the taxpayer may question the constitutionality or legality of a tax ordinance on
appeal within thirty (30) days from effectivity thereof, to the Secretary of Justice. The petitioner after finding that his
assessment is unjust, confiscatory, or excessive, may bring the case before the Secretary of Justice for questions of
legality or constitutionality of the city ordinance.

Under Section 226 of R.A. 7160, an owner of real property who is not satisfied with the assessment of his property may,
within sixty (60) days from notice of assessment, appeal to the Board of Assessment Appeals.

Should the taxpayer question the excessiveness of the amount of tax, he must first pay the amount due, in accordance
with Section 252 of R.A. No. 7160. Then, he must request the annotation of the phrase paid under protest and accordingly
appeal to the Board of Assessment Appeals by filing a petition under oath together with copies of the tax declarations and
affidavits or documents to support his appeal.

In the case at bar, the legal questions raised by petitioner require, as will presently be shown, proof of facts for their
resolution. Therefore, the petitioners action in the Court of Appeals was premature, and the appellate court
correctly dismissed her action on the ground that she failed to exhaust available administrative remedies as
above stated.

8
Although R.A. No. 7160, 187 provides that an appeal to the Secretary of Justice 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, it likewise requires
the Secretary of Justice to render a decision within sixty (60) days from the date of receipt of the appeal , after which the
aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

Public hearings on tax ordinance

Petitioner Figuerres has not presented any evidence to show that no public hearings were conducted prior to the
enactment of the ordinances in question. On the other hand, the Municipality of Mandaluyong claims that public hearings
were indeed conducted before the subject ordinances were adopted, 10 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.

Considering the provisions of law that it is the duty of the provincial board to approve or disapprove ordinances adopted
by the municipal councils of the different municipalities, we will assume, in the absence of proof to the contrary, that the
law has been complied with. We have a right to assume that officials have done that which the law requires them to do, in
the absence of positive proof to the contrary.

As petitioner is the party asserting it, she has the burden of proof. 13 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.

SECOND DIVISION

G.R. No. 222886, October 17, 2018

HONORABLE LEILA M. DE LIMA, IN HER CAPACITY AS SECRETARY OF JUSTICE, Petitioner, v. CITY OF MANILA,

REPRESENTED BY MAYOR JOSEPH EJERCITO ESTRADA, Respondent.

Facts:

City Council of Manila passed Ordinance No. 8331, entitled "An Ordinance Enacting the 2013 Omnibus Revenue Code of
the City of Manila." The Ordinance took effect on December 9, 2013 and implemented by the City of Manila (respondent)
on January 2, 2014.5

Operators of retail businesses in the City of Manila filed an Appeal before Secretary of Justice Leila M. De Lima
(petitioner). Therein, the retail business operators claimed that Section 104 of Ordinance No. 8331, which imposed
percentage tax on gross sales of retailers from 1% to 3%, is unconstitutional for being violative of Section 5, Article X of
the Constitution, and illegal for being excessive and contrary to limitations set forth under Sections 130, 186, and 191 of
the Local Government Code of 1991 (LGC).

The petitioner issued a Resolution9 declaring Section 104 of Ordinance No. 8331 void for being contrary to Section 191 of
the LGC.

The respondent filed a Motion for Reconsideration. Without awaiting for the petitioner's action on its Motion, the
respondent filed a Petition for Review Ad Cautelam15 before the Regional Trial Court (RTC) of Manila. In its petition, the
respondent sought to annul the petitioner's Resolution for having been issued with grave abuse of discretion and to
declare Section 104 of Ordinance No. 8331 as valid and enforceable.

RTC issued an Order 16 treating the Petition for Review Ad Cautelam as a petition for certiorari under Rule 65 of the Rules
of Court.

After the parties filed their respective Comment and Reply, the RTC rendered its Decision dismissing the petition.

The Motion for Reconsideration of the Decision having been denied by the RTC through its Order the respondent elevated
the matter to the CA via certiorari on appeal.

CA rendered the herein assailed Decision. CA held that the RTC committed reversible error in dismissing the Petition for
Review Ad Cautelam for lack of jurisdiction, considering that the LGC does not require the prior filing of a motion for
reconsideration before the Secretary of Justice nor the elevation of the case to the Office of the President.

Held:

The petition is partly meritorious.

9
The appeal before the RTC has been timely filed.

The Court in Reyes v. CA26 explained that Sec. 187 of the LGC sets forth "three separate periods" that are mandatory in
nature, in that compliance therewith is a prerequisite before an aggrieved party could seek relief from the courts. They are
as follows: first, an appeal questioning the constitutionality or legality of a tax ordinance or revenue measure must be filed
before the Secretary of Justice within 30 days from effectivity thereof. Then, from the receipt of the decision of the
Secretary of Justice, the aggrieved party has a period of 30 days within which to file an appeal before the courts.
However, when the Secretary of Justice fails to act on the appeal, after the lapse of  60 days, a party could already
proceed and seek relief in court.27

In Hagonoy Market Vendor Association v. Municipality of Hagonoy,28 the Court explained the importance of observing the
timeframe provided for under Section 187 of the LGC and emphasized that the same is not a mere technicality that can
easily be brushed aside by the parties.

Thus, it is essential that the validity of revenue measures is not left uncertain for a considerable length of time.
Hence, the law provided a time limit for an aggrieved party to assail the legality of revenue measures and tax ordinances.

The Court finds that the petitioner has acted upon the appeal when it issued an Order requiring the respondent to file its
Comment.

In this controversy, Ordinance No. 8331 of the respondent was passed by the City Council on November 26, 2013, and
subsequently published in the Manila Times and Manila Standard on December 6, 7, and 8, 2013. Herein involved retail
business operators filed an appeal questioning the constitutionality and legality of the subject ordinance before the
petitioner on January 6, 2014, within the 30-day period fixed by law. The petitioner then issued her Resolution on April 7,
2014, which the respondent received on April 15, 2014. The respondent then filed before the RTC a Petition for
Review Ad Cautelam assailing the Resolution dated April 7, 2014 of the petitioner on May 15, 2014.31

As the petition for review ad cautelam before the RTC assails the petitioner's Resolution dated April 7, 2014, the
applicable period in determining the timeliness of the appeal before the RTC is 30 days from the respondent's receipt of
the petitioner's resolution. With this, the appeal before the RTC has been timely filed, the action having been instituted
exactly 30 days from the respondent's receipt of the petitioner's resolution.

The petitioner argues that the remedy of  certiorari is not available

With respect to the Court, however, the remedies of certiorari and prohibition are necessarily broader in scope and reach,
and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction committed not only by a
tribunal, corporation, board or officer exercising judicial, quasi-judicial or ministerial functions but also to set
right, undo and restrain any act of grave abuse of discretion amounting to lack or excess of jurisdiction by any
branch or instrumentality of the Government, even if the latter does not exercise judicial, quasi-judicial or
ministerial functions. 

Thus, petitions for certiorari and prohibition are appropriate remedies to raise constitutional issues and to review and/or
prohibit or nullify the acts of legislative and executive officials.

Clearly therefore, the petitioner cannot claim that certiorari is not the proper remedy simply on the basis of the nature of
the power exercised by the Secretary of Justice.

Nevertheless, as will be elaborated further, while respondent's resort to the remedy of certiorari is proper the same has
been erroneously lodged before the RTC instead of the CA.

At any rate, the RTC cannot at first instance, rule upon the constitutionality or legality of tax ordinances and revenue
measures by virtue of the mandatory procedure set forth under Section 187 of the LGC, which vests upon the Secretary of
Justice the jurisdiction over the same.40

As a rule, appeals from the judgment or final rulings of quasi-judicial agencies are appealable to the CA  via  petition for
review under Rule 43 of the Rules of Court. While the enumeration of such agencies provided for under Section 1 of the
said Rule is not exclusive, the Court had the occasion to rule in Orosa v. Roa41 that the exclusion of the Department of
Justice (DOJ) from the list is a deliberate one, in consonance with the doctrine of exhaustion of administrative remedies.
In subsequent cases,44 however, the Court has been consistent in ruling that the remedy of a party from an adverse
resolution of the Secretary of Justice is a petition for  certiorari under Rule 65.

Contrary to the petitioner's submission, in the instant controversy, the evaluation of the appeal lodged by the retail
business operators involves an exercise of quasi-judicial power by the Secretary of Justice. In deciding the same, the
Secretary of Justice must ascertain the existence of factual circumstances specifically, whether Section 104 of Ordinance
No. 8331 was passed in accordance with the procedure and the limitations set forth by the LGC. And from there make a
conclusion as to the validity and applicability of the same to the retail business operators of Manila. 51

10
Considering that the subject matter of review is an exercise of quasi-judicial power by the Secretary of Justice,
the latter's decision on the legality or constitutionality of tax ordinances and revenue measures under Section
187 of the LGC is a proper subject of appeal through a petition for review under Rule 43. 52

When tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, may be elevated to the
courts through a special civil action for  certiorari under Rule 65, to correct errors of jurisdiction. The availability
of a special civil action for  certiorari under Rule 65 as a remedy is justified by the fact that the constitutionality of
a governmental act, in the form of Ordinance No. 8331 by the City Council of Manila, is questioned.

The proper venue for the foregoing actions however is the CA and not the RTC in accordance with Section 4,54 Rule 65
of the Rules of Court. In the consolidated cases of Association of Medical Clinics for Overseas Workers, Inc. (AMCOW) v.
GCC Approved Medical Centers Association, Inc., et al.,55 the Court emphasized that the "acts or omissions by
quasi-judicial agencies, regardless of whether the remedy involves a Rule 43 appeal or a Rule 65 petition
for certiorari, is cognizable by the CA."

The RTC was then correct in dismissing the petition for review ad cautelam, which by its nature is a petition for certiorari,
for having been filed before the wrong court. The CA, on the other hand, erred in ordering the case to be remanded to the
RTC as it has the power to take cognizance of the same.

The imposition of tax on retailers under Ordinance No. 8331 is partially invalid as it goes beyond the 10% limitation on
adjustment mandated by the LGC.

Local governments may impose tax provided that the same is less than, or equal to the rates therein provided. Any
corresponding increase thereafter would have to comply with the frequency and rate of adjustment provided for under
Section 191 of the LGC.

The Court in Mindanao Shopping Destination Corporation, et al. v. Hon. Rodrigo R. Duterte, et al.,56 ruled that the
application of Section 191 requires the concurrence of two elements: (1) there is a tax ordinance that already imposes a
tax in accordance with the provisions of the LGC; and (2) there is a second tax ordinance that made adjustment on the tax
rate fixed by the first tax ordinance.57

Anent the first requirement, the respondent has already imposed a tax in accordance with the provisions of the LGC when
it enacted Ordinance No. 7794 in 1993 and its amendment passed two months thereafter – Ordinance No. 7807.

The second element for the application of Section 191 is also met with the enactment of Ordinance No. 8331, which
amended the retail tax to be imposed.

Since the respondent has already exercised its taxing power under the LGC with the enactment of Ordinance No. 7807,
any subsequent increase would therefore have to comply with Section 191 which limits the amount of adjustment to not
more than ten percent (10%) of the rates fixed under the LGC and should be no more frequent than once every five (5)
years.

Clearly therefore, Ordinance No. 8331 is invalid insofar as it imposes more than the allowed adjustment for gross receipts
or sales amounting to Php 50,000.00 up to Php 400,000.00.

The option to increase the tax rates under the LGC arises every five (5) years reckoned from the enactment of the
ordinance sought to be adjusted. The decision of whether or not to exercise such option falls upon the LGU, through their
respective sanggunian taking into consideration the status of each industry balanced with the needs of their respective
territory.

In the event that the LGU fails to make such adjustment within the five (5)-year period, the option to increase the
prevailing ordinance remains open until such right is exercised, at which point, the five (5)-year period of limitation starts
to run again.

On the other hand, were the LGU decides to make such adjustment, the basis for the increase would be the prevailing tax
rate. Therefore, the increase is null and void as it imposes more than 2.20% tax rate on gross receipts on sales
amounting to Php 50,000.00 up to Php 400,000.00.

SECOND DIVISION

G.R. No. 118900. February 27, 2003

JARDINE DAVIES INSURANCE BROKERS, INC., Petitioner, v. HON. ERNA ALIPOSA, in her capacity as Presiding
Judge of Branch 150 of the Makati Regional Trial Court, CITY (previously Municipality) OF MAKATI and ROLANDO M.
CARLOS, in his capacity as Acting Treasurer of Makati, Respondents.

11
Facts:

Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code
for the schedule of real estate, business and franchise taxes in the Municipality of Makati at rates higher than those in the
Metro Manila Revenue Code.

Philippine Racing Club, Inc. (PRCI for brevity), a taxpayer of Makati, appealed to the Department of Justice (DOJ for
brevity) for the nullification of said ordinance, alleging that it was approved without previous public hearings and that some
of the ordinances provisions were unconstitutional.

Although required by the DOJ to comment on the appeal, respondent Makati failed to do so.

DOJ came out with a resolution 2 declaring null and void and without legal effect the said ordinance for having been
enacted in contravention of Section 187 of the Local Government Code of 1991 and its implementing rules and
regulations.3cräläwvirtualibräry

On August 19, 1993, respondent Makati sought a reconsideration of the ruling of the DOJ. Pending resolution of its
motion, said respondent filed a petition ad cautelam[4]  with the Regional Trial Court (RTC) of Makati.

In the meantime, respondent Makati continued to implement the ordinance. Petitioner Jardine Davies Insurance Brokers,
Inc. was assessed and billed by Makati the amount of P63,822.47 for taxes, fees and charges under the ordinance for the
second quarter of 1993. It was again billed by respondent Makati the same amount for the third quarter of 1993 and the
same amount for the fourth quarter of 1993. Petitioner did not protest the assessment for its quarterly business taxes for
the second, third and fourth quarters of 1993 based on said ordinance. Petitioner, in fact, paid the said amounts without
any protest. Respondent Makati issued the corresponding receipts in favor of petitioner. 6cräläwvirtualibräry

Petitioner wrote the municipal treasurer of Makati requesting that respondent Makati compute its business tax liabilities in
accordance with the Metro Manila Revenue Code and not under the ordinance considering that said ordinance was
already declared by the DOJ null and void. Petitioner likewise requested that respondent Makati credit the overpayment
for the second to fourth quarters of 1993 against its 1994 liabilities for 1994, or in the alternative, for Makati to refund the
said amount to petitioner.

Respondent Makati, through Maximo L. Paulino Jr., Acting Chief of its Municipal License Division, denied the request of
petitioner for tax credit/refund. Respondent Makati insisted that the questioned ordinance code was valid and enforceable
pending the final outcome of its petition ad cautelam  with the Regional Trial Court of Makati.

RTC rendered judgment granting the petition of Makati and declaring the ordinance valid. The DOJ issued a
memorandum to the Chief State Counsel directing the latter to refrain from accepting any appeal or to act on pending
appeals on the validity/constitutionality of the ordinance until the same shall have been finally resolved by courts of
competent jurisdiction.

When informed of the denial by respondent Makati of its letter-request, petitioner filed a complaint with the RTC of Makati
against respondents Makati and its Acting Municipal Treasurer. Petitioner alleged in its complaint that in view of the
resolution of the DOJ declaring the Makati Revenue Code null and void and without legal effect, the provisions of the
Metro Manila Revenue Code continued to remain in full force and effect; however, petitioner was assessed and billed by
respondent Makati for taxes, fees and charges at rates fixed in the ordinance despite the nullity thereof.

Respondents Makati and its Acting Municipal Treasurer filed a motion to dismiss 9 the complaint on the ground of
prematurity. They argued that petitioners cause of action was predicated on the appealed resolution of the DOJ, and
unless and until nullified by final judgment of a competent court, the ordinance remained in full force and effect.

Petitioner opposed the motion to dismiss of respondents, contending that its complaint was not predicated solely on the
invalidity and unconstitutionality of the ordinance but also on its claim that the ordinance took effect only in July 1, 1993
but Makati applied the ordinance effective April 1, 1993.

RTC issued an order granting the motion to dismiss of respondent and ordering the dismissal of the complaint. The trial
court issued an order11 denying the motion for reconsideration of petitioner.

Petitioner filed on February 20, 1995 a petition for review on certiorari under Rule 45 of the Rules of Court.

Held:

The petition has no merit.

The Court agrees with petitioner that as a general precept, a taxpayer may file a complaint assailing the validity of the
ordinance and praying for a refund of its perceived overpayments without first filing a protest to the payment of taxes due
under the ordinance.

12
In Reyes v. Court of Appeals,[14]  we ruled that failure of a taxpayer to interpose the requisite appeal to the Secretary of
Justice is fatal to its complaint for a refund:

Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his
appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeal, a
period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the
lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given
for compliance as a prerequisite before seeking redress in a competent court.

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.

Moreover, petitioner even paid without any protest the amounts of taxes assessed by respondents Makati and Acting
Treasurer as provided for in the ordinance. Evidently, the complaint of petitioner with the Regional Trial Court was merely
an afterthought.

SECOND DIVISION

G.R. No. 224825, October 17, 2018

CITY OF CAGAYAN DE ORO, Petitioner, v. CAGAYAN ELECTRIC POWER & LIGHT CO., INC.

(CEPALCO), Respondent.

Facts:

The petitioner, through its local legislative council, enacted Ordinance No. 9527-2005, 7 which imposed an annual Mayor's
Permit Fee of Five Hundred Pesos (P500.00) on every electric or telecommunications post belonging to public utility
companies operating in the city.

The respondent, Cagayan Electric Power & Light Co., Inc. (CEPALCO) is a public utility engaged in the distribution of
electric power and the owner of an estimated 17,000 utility poles erected within Cagayan de Oro City.

CEPALCO thus filed a Petition for Declaratory Relief with Damages & Prayer for Temporary Restraining Order &
Preliminary Injunction before the Cagayan RTC assailing the ordinance's validity. CEPALCO contended that the
imposition, in the guise of police power, was unlawful for violating the fundamental principle that fees, charges, and other
impositions shall not be unjust, excessive, oppressive, or confiscatory. 12 Additionally, CEPALCO argued that, assuming
the imposition was a valid regulatory fee, it violated the legislative franchise that specifically exempted the electricity
distributor from taxes or fees assessed by Cagayan de Oro City.

Pending the determination of the ordinance's validity, the Cagayan RTC issued a writ of preliminary injunction.

The RTC's Ruling

The Cagayan RTC issued a Resolution dismissing the petition for declaratory relief due to CEPALCO's failure to exhaust
administrative remedies.

Aggrieved, CEPALCO elevated the case to the CA.18

The CA's Ruling

The CA promulgated the herein assailed decision granting CEPALCO's appeal. The CA declared the ordinance void for
being exorbitant and unreasonable. It held that, since the city failed to include a discussion on how the members of the
city council arrived at the amount of P500.00 per pole, CEPALCO could not be appraised of the logistics of and reasons
behind the imposition.

Whether or not CEPALCO should have exhausted administrative remedies by challenging Ordinance No. 9527-
2005 before the Secretary of Justice prior to instituting the present action

Held:

The purpose of an imposition will determine its nature as either a tax or a fee . If the purpose is primarily revenue,
or if revenue is at least one of the real and substantial purposes, then the exaction is properly classified as an
exercise of the power to tax.29 

On the other hand, if the purpose is primarily to regulate, then it is deemed an exercise of police power in the form
of a fee, even though revenue is incidentally generated. 30 
13
Stated otherwise, if generation of revenue is the primary purpose, the imposition is a tax but, if regulation is the
primary purpose, the imposition is properly categorized as a regulatory fee.3

In the case at bar, the CA, adhering to the course of action taken in Smart Communications, concluded that the Mayor's
Permit Fee serves a regulatory purpose. 33 The appellate court properly took into account the whereas clauses of the
ordinance, which read:

Whereas, it is for this reason that the City Government imposes some form of regulation thereon;

A cursory reading of the whereas clauses makes it is apparent that the purpose of the ordinance is to regulate the
construction and maintenance of electric and telecommunications posts erected within Cagayan de Oro City.

On account of the foregoing, it is clear that the ordinance in this case serves a regulatory purpose and is, hence, an
exercise of police power.

Thus, it can be concluded without argument that the ordinance imposes a fee since it was enacted pursuant to the
city's police power and serves to regulate, not to raise revenue.

Proceeding to the question of non-exhaustion, the Court rules that ordinances that impose regulatory fees do not
need to be challenged before the Secretary of Justice.

Section 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 x x x. (Emphasis and
underscoring supplied)

Section 187 of the Local Government Code, which outlines the administrative procedure for questioning the
constitutionality or legality of a tax ordinance or revenue measure, does not find application in cases where the
imposition is in the nature of a regulatory fee.

It can be gleaned from the provision that review by the Secretary of Justice is mandatory only when what is being
questioned is a tax ordinance or revenue measure. Section 187 does not require the same from parties who
assail ordinances imposing regulatory fees.

THIRD DIVISION

G.R. No. 152492. October 16, 2003

PALMA DEVELOPMENT CORPORATION, Petitioner, vs. MUNICIPALITY OF MALANGAS, ZAMBOANGA DEL

SUR, respondent.

Facts:

Petitioner Palma Development Corporation is engaged in milling and selling rice and corn to wholesalers in Zamboanga
City. It uses the municipal port of Malangas, Zamboanga del Sur as transshipment point for its goods. The port, as well as
the surrounding roads leading to it, belong to and are maintained by the Municipality of Malangas, Zamboanga del Sur.

The municipality passed Municipal Revenue Code No. 09, Series of 1993, which was subsequently approved by the
Sangguniang Panlalawigan of Zamboanga del Sur.

Section 5G.01. Imposition of fees. There shall be collected service fee for its use of the municipal road[s] or streets
leading to the wharf and to any point along the shorelines within the jurisdiction of the municipality and for police
surveillance on all goods and all equipment harbored or sheltered in the premises of the wharf and other within the
jurisdiction of this municipality.

Accordingly, the service fees imposed by Section 5G.01 of the ordinance was paid by petitioner under protest. It
contended that under Republic Act No. 7160, otherwise known as the Local Government Code of 1991, municipal
governments did not have the authority to tax goods and vehicles that passed through their jurisdictions. Thereafter,
before the Regional Trial Court (RTC) of Pagadian City, petitioner filed against the Municipality of Malangas an action for
declaratory relief assailing the validity of Section 5G.01 of the municipal ordinance.

RTC directed respondent to secure the opinion of the Office of the Solicitor General. The trial court likewise ordered that
the opinions of the Departments of Finance and of Justice be sought. As these opinions were still unavailable, petitioners

14
counsel filed, without objection from respondent, a Manifestation seeking the submission of the case for the RTCs
decision on a pure question of law.

In due time, the trial court rendered its Decision declaring the entire Municipal Revenue Code No. 09 as  ultra vires and,
hence, null and void.

Ruling of the Court of Appeals

The CA held that local government units already had revenue-raising powers as provided for under Sections 153 and 155
of RA No. 7160. It ruled as well that within the purview of these provisions -- and therefore valid -- is Section 5G.01.

However, since both parties had submitted the case to the trial court for decision on a pure question of law without a full-
blown trial on the merits, the CA could not determine whether the facts of the case were within the ambit of the aforecited
sections of RA No. 7160.

Petitioner argues that while respondent has the power to tax or impose fees on  vehicles using its roads, it cannot tax
the goods that are transported by the vehicles. The provision of the ordinance imposing a service fee for police
surveillance on goods is allegedly contrary to Section 133(e) of RA No. 7160. On the other hand, respondent maintains
that the subject fees are intended for services rendered, the use of municipal roads and police surveillance.

Held:

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).

As we see it, the disputed municipal ordinance, which provides for a service fee  for the use of the municipal road or
streets leading to the wharf and to any point along the shorelines within the jurisdiction of the municipality and for police
surveillance on all goods and all equipment harbored or sheltered in the premises of the wharf and other within the
jurisdiction of this municipality, seems to fall within the compass of the above cited provisions of R.A. No. 7160.

We note that Section 5G.01 imposes two types of service fees: 1) one for the use of the municipal roads and 2) another
for police surveillance on all goods and equipment sheltered in the premises of the wharf. The amount of service fees,
however, is based on the type of vehicle that passes through the road and the type of goods being transported.

While both parties admit that the service fees imposed are for the use of the municipal roads, petitioner maintains that the
service fee for police surveillance on goods harbored on the wharf is in the guise of a wharfage, [15a prohibited imposition
under Section 133(e) of RA No. 7160.

A remand is still unnecessary even if the service fee charged against the goods are for police surveillance, because
Section 133(e) of RA No. 7160 expressly prohibits the imposition of all other taxes, fees or charges in any form
whatsoever upon the merchandise or goods that pass through the territorial jurisdiction of local government units. It is
therefore immaterial to the instant case whether the service fee on the goods is for police surveillance or not, since the
subject provision of the revenue ordinance is invalid.

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.

G.R. No. 158881             April 16, 2008

PETRON CORPORATION, petitioner,
vs.
MAYOR TOBIAS M. TIANGCO, and MUNICIPAL TREASURER MANUEL T. ENRIQUEZ of the MUNICIPALITY OF
NAVOTAS, METRO MANILA, respondents.

Facts:

Petron maintains a depot or bulk plant at the Navotas Fishport Complex in Navotas. Through that depot, it has engaged in
the selling of diesel fuels to vessels used in commercial fishing in and around Manila Bay. 1  Petron received a letter from

15
the office of Navotas Mayor, respondent Toby Tiangco, wherein the corporation was assessed taxes "relative to the
figures covering sale of diesel declared by your Navotas Terminal from 1997 to 2001." 2  The computation sheets3 that
were attached to the letter made reference to Ordinance 92-03, or the New Navotas Revenue Code (Navotas Revenue
Code), though such enactment was not cited in the letter itself.

Petron duly filed with Navotas a letter-protest to the notice of assessment pursuant to Section 195 of the Code. It argued
that it was exempt from local business taxes in view of Art. 232(h) of the Implementing Rules (IRR) of the Code, as well as
a ruling of the Bureau of Local Government Finance of the Department of Finance the latter stating that sales of petroleum
fuels are not subject to local taxation. The letter-protest was denied by the Navotas Municipal Treasurer, respondent
Manuel T. Enriquez. Petron, through counsel, replied to the Mayor by another letter posing objections to the threat of
closure. The Mayor did not respond to this last letter. 6

Petron filed with the Malabon RTC a Complaint for Cancellation of Assessment for Deficiency Taxes with Prayer for the
Issuance of a Temporary Restraining Order (TRO) and/or Preliminary Injunction. The quested TRO was not issued by the
Malabon RTC upon manifestation of respondents that they would not proceed with the closure of Petron’s Navotas bulk
plant until after the RTC shall have decided the case on the merits. 7 However, while the case was pending decision,
respondents refused to issue a business permit to Petron, thus prompting Petron to file a Supplemental Complaint with
Prayer for Preliminary Mandatory Injunction against respondents. 8

Malabon RTC rendered its Decision dismissing Petron’s complaint and ordering the payment of the assessed amount.
Petron received a Closure Order from the Mayor, directing Petron to cease and desist from operating the bulk plant.
Petron sought a TRO from the Malabon RTC, but this was denied. 10 Petron also filed a motion for reconsideration of the
order of denial, but this was likewise denied.11

This Court issued a TRO, enjoining the respondents from closing Petron’s Navotas bulk plant or otherwise interfering in its
operations.

the core issues submitted by Petron, namely: first, is the challenged tax on sale of the diesel fuels an excise tax on an
article enumerated under the NIRC, thusly prohibited under Section 133(h) of the Code?; second, is the challenged tax
prohibited by Section 133(h) under the proviso, "taxes, fees or charges on petroleum products"? and; third, does Art.
232(h) of the IRR similarly prohibit the imposition of the challenged tax?

Held:

Section 133(h) provides two kinds of taxes which cannot be imposed by local government units: "excise taxes on
articles enumerated" under the NIRC, as amended; and "taxes, fees or charges on petroleum products." There is no
doubt that among the excise taxes on articles enumerated under the NIRC are those levied on petroleum products, per
Section 148 of the NIRC.

We first consider Petron’s argument that the "business taxes" on its sale of diesel fuels partakes of an excise
tax.

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.” It is quite apparent, therefore, that our current body of taxation law does not
explicitly accommodate the traditional definition of excise tax offered by Petron. We thus can assert with clear comfort that
excise taxes, as imposed under the NIRC, do not pertain to "the performance, carrying on, or exercise of an activity," at
least not to the extent of equating excise with business taxes.

We next consider whether the clause "taxes, fees or charges on petroleum products" in Section 133(h) precludes
local government units from imposing business taxes based on the sale of petroleum products.

The power of a municipality to impose business taxes derives from Section 143 of the Code that specifically enumerates
several types of business on which it may impose taxes, including manufacturers, wholesalers, distributors, dealers of any
article of commerce of whatever nature; 38 those engaged in the export or commerce of essential
commodities;39 retailers;40 contractors and other independent contractors;41 banks and financial institutions;42 and peddlers
engaged in the sale of any merchandise or article of commerce. 43 This obviously broad power is further supplemented by
paragraph (h) of Section 143 which authorizes the sanggunian to impose taxes on any other businesses not otherwise
specified under Section 143 which the sanggunian concerned may deem proper to tax.

Section 133(h) states that local government units "shall not extend to the levy of xxx taxes, fees or charges on petroleum
products."

We can concede that a tax on a business is distinct from a tax on the article itself, or for that matter, that a business tax is
distinct from an excise tax. However, such distinction is immaterial insofar as the latter part of Section 133(h) is
concerned, for the phrase "taxes, fees or charges on petroleum products" does not qualify the kind of taxes, fees or
charges that could withstand the absolute prohibition imposed by the provision.

The language of Section 133(h) makes plain that the prohibition with respect to petroleum products extends not only to
excise taxes thereon, but all "taxes, fees and charges."

16
While local government units are authorized to burden all such other class of goods with "taxes, fees and charges,"
excepting excise taxes, a specific prohibition is imposed barring the levying of any other type of taxes with respect to
petroleum products.

On the third issue

We no longer need to dwell on the arguments centering on Article 232 of the IRR. As earlier stated, the provision explicitly
stipulates that "in line with existing national policy, any business engaged in the production, manufacture, refining,
distribution or sale of oil, gasoline and other petroleum products shall not be subject to any local tax imposed on this
article [on business taxes]." The RTC went as far as to declare Article 232 as "invalid" on the premise that the prohibition
was not similarly warranted under the Code.

With our ruling that Section 133(h) does indeed prohibit the imposition of local business taxes on petroleum products,
however, the RTC declaration that Article 232 was invalid is, in turn, itself invalid. Even absent Article 232, local
government units cannot impose business taxes on petroleum products. If anything, Article 232 merely reiterates what the
Code itself already provides, with the additional explanation that such prohibition was "in line with existing national policy."

G.R. No. 125948 December 29, 1998

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,

vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in
her official capacity as City Treasurer of Batangas, respondents.

Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install and operate
oil pipelines. The original pipeline concession was granted in 1967 1 and renewed by the Energy Regulatory Board in
1992. 2

Petitioner applied for a mayor's permit with the Office of the Mayor of Batangas City. However, before the mayor's permit
could be issued, the respondent City Treasurer required petitioner to pay a local tax.The respondent City Treasurer
assessed a business tax on the petitioner. In order not to hamper its operations, petitioner paid the tax under protest.

Petitioner filed a letter-protest addressed to the respondent City Treasurer, the pertinent portion of which reads:

Please note that our Company (FPIC) is engaged in the business of transporting petroleum products. As
such, our Company is exempt from paying tax on gross receipts under Section 133 of the Local
Government Code of 1991 . . . .

Moreover, Transportation contractors are not included in the enumeration of contractors under Section
131, Paragraph (h) of the Local Government Code. Therefore, the authority to impose tax "on contractors
and other independent contractors" under Section 143, Paragraph (e) of the Local Government Code
does not include the power to levy on transportation contractors.

the respondent City Treasurer denied the protest contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under Section 133 (j) of the Local Government Code. 5

Petitioner filed with the Regional Trial Court of Batangas City a complaint 6 for tax refund with prayer for writ of preliminary
injunction against respondents City of Batangas and Adoracion Arellano in her capacity as City Treasurer. In its complaint,
petitioner alleged,  inter alia, that: (1) the imposition and collection of the business tax on its gross receipts violates Section
133 of the Local Government Code; (2) the authority of cities to impose and collect a tax on the gross receipts of
"contractors and independent contractors" under Sec. 141 (e) and 151 does not include the authority to collect such taxes
on transportation contractors for, as defined under Sec. 131 (h), the term "contractors" excludes transportation
contractors; and, (3) the City Treasurer illegally and erroneously imposed and collected the said tax, thus meriting the
immediate refund of the tax paid.7

The respondents argued that petitioner cannot be exempt from taxes under Section 133 (j) of the Local Government Code
as said exemption applies only to "transportation contractors and persons engaged in the transportation by hire and
common carriers by air, land and water."

Trial court rendered a decision dismissing the complaint. We referred the case to the respondent Court of Appeals for
consideration and adjudication. Respondent court rendered a decision 11 affirming the trial court's dismissal of petitioner's
complaint.

Petitioner claims that the respondent Court of Appeals erred in holding that (1) the petitioner is not a common carrier or a
transportation contractor, and (2) the exemption sought for by petitioner is not clear under the law.
17
Held:

There is merit in the petition.

A "common carrier" may be defined, broadly, as one who holds himself out to the public as engaged in the business of
transporting persons or property from place to place, for compensation, offering his services to the public generally.

Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a "common carrier." Thus, Article
86 thereof provides that:

Art. 86. 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. (Emphasis
Supplied)

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.

From the foregoing disquisition, there is no doubt that petitioner is a "common carrier" and, therefore, exempt from the
business tax as provided for in Section 133 (j), of the Local Government Code, to wit:

Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. — Unless otherwise provided herein,
the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the
following:

x x x           x x x          x x x

(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or
freight by hire and common carriers by air, land or water, except as provided in this Code.

The legislative intent in excluding from the taxing power of the local government unit the imposition of business tax
against common carriers is to prevent a duplication of the so-called "common carrier's tax."

Petitioner is already paying three (3%) percent common carrier's tax on its gross sales/earnings under the
National Internal Revenue Code. 19 To tax petitioner again on its gross receipts in its transportation of petroleum
business would defeat the purpose of the Local Government Code.

G.R. No. 131512           January 20, 2000

LAND TRANSPORTATION OFFICE [LTO], represented by Assistant Secretary Manuel F. Bruan, LTO Regional
Office, Region X represented by its Regional Director, Timoteo A. Garcia; and LTO Butuan represented by Rosita
G. Sadiaga, its Registrar, petitioners,
vs.
CITY OF BUTUAN, represented in this case by Democrito D. Plaza II, City Mayor, respondents.

VITUG, J.:

Facts:

The Regional Trial Court (Branch 2) of Butuan City held 3 that the authority to register tricycles, the grant of the
corresponding franchise, the issuance of tricycle drivers' license, and the collection of fees therefor had all been vested in
the Local Government Units ("LGUs"). Accordingly, it decreed the issuance of a permanent writ of injunction against LTO,
prohibiting and enjoining LTO, as well as its employees and other persons acting in its behalf, from (a) registering tricycles
and (b) issuing licenses to drivers of tricycles. The Court of Appeals, on appeal to it, sustained the trial court.

18
Respondent City of Butuan asserts that one of the salient provisions introduced by the Local Government Code is in the
area of local taxation which allows LGUs to collect registration fees or charges along with, in its view, the corresponding
issuance of all kinds of licenses or permits for the driving of tricycles.

Sec. 129 and Section 133 of the Local Government Code read:

Sec. 129. Power to Create Sources or 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.

Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. — Unless otherwise provided
herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the
levy of the following:

xxx     xxx     xxx

(l) Taxes, fees or charges for the registration of motor vehicles and for the issuance of all kinds of licenses or
permits for the driving thereof, except tricycles.

Relying on the foregoing provisions of the law, the Sangguniang Panglungsod ("SP") of Butuan passed SP Ordinance No.
916-92 entitled "An Ordinance Regulating the Operation of Tricycles-for-Hire, providing mechanism for the issuance of
Franchise, Registration and Permit, and imposing Penalties for Violations thereof and for other Purposes." The ordinance
provided for, among other things, the payment of franchise fees for the grant of the franchise of tricycles-for-hire, fees for
the registration of the vehicle, and fees for the issuance of a permit for the driving thereof.

Petitioner LTO explains that one of the functions of the national government that, indeed, has been transferred to local
government units is the franchising authority over tricycles-for-hire of the Land Transportation Franchising and Regulatory
Board ("LTFRB") but not, it asseverates, the authority of LTO to register all motor vehicles and to issue to qualified
persons of licenses to drive such vehicles.

Trial court rendered a resolution where an injunctive writ is to be issued against LTO prohibiting forcing or compelling
Tricycles to be registered with, and drivers to secure their licenses from respondent LTO or secure franchise from LTFRB
and from collecting fees thereon.

Petitioners timely moved for a reconsideration of the above resolution but it was to no avail. Petitioners then appealed to
the Court of Appeals. In its now assailed decision, the appellate court sustained the trial court.

Held:

LGUs indubitably now have the power to regulate the operation of tricycles-for-hire and to grant franchises for the
operation thereof. "To regulate" means to fix, establish, or control; to adjust by rule, method, or established mode; to
direct by rule or restriction; or to subject to governing principles or laws. 12 A franchise is defined to be a special privilege
to do certain things conferred by government on an individual or corporation, and which does not belong to citizens
generally of common right.13 On the other hand, "to register" means to record formally and exactly, to enroll, or to enter
precisely in a list or the like,14 and a "driver's license" is the certificate or license issued by the government which
authorizes a person to operate a motor vehicle.15 

The devolution of the functions of the DOTC, performed by the LTFRB, to the LGUs, as so aptly observed by the Solicitor
General, is aimed at curbing the alarming increase of accidents in national highways involving tricycles. It has been the
perception that local governments are in good position to achieve the end desired by the law-making body because of
their proximity to the situation that can enable them to address that serious concern better than the national government.

the newly delegated powers pertain to the franchising and regulatory powers theretofore exercised by the LTFRB and
not to the functions of the LTO relative to the registration of motor vehicles and issuance of licenses for the
driving thereof. Clearly unaffected by the Local Government Code are the powers of LTO under R.A. No. 4136 requiring
the registration of all kinds of motor vehicles "used or operated on or upon any public highway" in the country.

The reliance made by respondents on the broad taxing power of local government units, specifically under Section 133 of
the Local Government Code, is tangential.

Police power and taxation, along with eminent domain, are inherent powers of sovereignty which the State might share
with local government units by delegation given under a constitutional or a statutory fiat. All these inherent powers are for
a public purpose and legislative in nature but the similarities just about end there. The basic aim of police power is public
good and welfare.

Taxation, in its case, focuses on the power of government to raise revenue in order to support its existence and carry
out its legitimate objectives. Although correlative to each other in many respects, the grant of one does not
necessarily carry with it the grant of the other. The two powers are, by tradition and jurisprudence, separate and
19
distinct powers, varying in their respective concepts, character, scopes and limitations. To construe the tax provisions of
Section 133(1) indistinctively would result in the repeal to that extent of LTO's regulatory power which evidently has not
been intended. If it were otherwise, the law could have just said so in Section 447 and 458 of 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. 20 The power over tricycles granted under Section 458(8)(3)(VI) of the
Local Government Code to LGUs is the power to regulate their operation and to grant franchises for the operation
thereof. The exclusionary clause contained in the tax provisions of Section 133(1) of the Local Government Code must
not be held to have had the effect of withdrawing the express power of LTO to cause the registration of all motor vehicles
and the issuance of licenses for the driving thereof. These functions of the LTO are essentially regulatory in nature,
exercised pursuant to the police power of the State, whose basic objectives are to achieve road safety by ensuring the
road worthiness of these motor vehicles and the competence of drivers prescribed by R.A. 4136. Not insignificant is the
rule that a statute must not be construed in isolation but must be taken in harmony with the extant body of laws.

[G.R. No. 127708. March 25, 1999]

CITY GOVERNMENT OF SAN PABLO, LAGUNA, CITY TREASURER OF SAN PABLO, LAGUNA, and THE
SANGGUNIANG PANGLUNSOD OF SAN PABLO, LAGUNA, Petitioners, v. HONORABLE BIENVENIDO V. REYES, in
his capacity as Presiding Judge, Regional Trial Court, Branch 29, San Pablo City and the MANILA ELECTRIC
COMPANY, Respondents.

Facts:

Act No. 3648 granted the Escudero Electric Services Company, a legislative franchise to maintain and operate an electric
light and power system in the City of San Pablo and nearby municipalities Section 10 of Act No. 3648 provides:

x x x In consideration of the franchise and rights hereby granted, the grantee shall pay unto the municipal treasury of each
municipality in which it is supplying electric current to the public under this franchise, a tax equal to two percentum of the
gross earnings from electric current sold or supplied under this franchise in each said municipality. Xxx

Escuderos franchise was transferred to the plaintiff (herein respondent) MERALCO under Republic Act No. 2340.

Presidential Decree No. 551 was enacted. Section 1 thereof provides the following:

Section 1. Any provision of law or local ordinance to the contrary notwithstanding, the franchise tax payable by all
grantees xxx shall be two percent (2%) of their gross receipts received from the sale of electric current and from
transactions incident to the generation, distribution and sale of electric current.

Republic Act No. 7160, otherwise known as the Local Government Code of 1991 (hereinafter referred to as the LGC) took
effect on January 1, 1992. The said Code authorizes the province/city to impose a tax on business enjoying a franchise at
a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year
realized within its jurisdiction.

The Sangguniang Panglunsod of San Pablo City enacted Ordinance No. 56, otherwise known as the Revenue Code of
the City of San Pablo. The said Ordinance took effect on October 30, 1992: 1cräläwvirtualibräry

Section 2.09 Article D of said Ordinance provides:

Sec. 2.09. Franchise Tax There is hereby imposed a tax on business enjoying a franchise, at a rate of fifty percent (50%)
of one percent (1%) of the gross annual receipts, which shall include both cash sales and sales on account realized
during the preceding calendar year within the city.

Pursuant to the above-quoted Section 2.09, the petitioner City Treasurer sent to private respondent a letter demanding
payment of the aforesaid franchise tax.

The private respondent subsequently filed this action before the Regional Trial Court to declare Ordinance No. 56 null and
void insofar as it imposes the franchise tax upon private respondent MERALCO 3 and to claim for a refund of the taxes
paid.

The Court ruled in favor of MERALCO.

Was there an implied repeal by Republic Act No. 7160 of the MERALCO franchise insofar as the latter impose a
2% tax in lieu of all taxes and assessments of whatever nature?

Held:

We rule affirmatively.

20
We are mindful of the established rule that repeals by implication are not favored as laws are presumed to be passed with
deliberation and full knowledge of all laws existing on the subject.

It is our view that petitioners correctly rely on the provisions of Section 137 and 193 of the LGC to support their position
that MERALCOs tax exemption has been withdrawn. The explicit language of Section 137 which authorizes the province
to impose franchise tax notwithstanding any exemption granted by any law or other special laws" is all-encompassing and
clear. The franchise tax is imposable despite any exemption enjoyed under special laws.

Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless otherwise provided in this
Code, tax exemptions or incentives granted to or presently enjoyed by all persons whether natural or juridical, including
government-owned or controlled corporations except 1) local water districts, 2) cooperatives duly registered under R.A.
6938, (3) non-stock and non-profit hospitals and educational institutions, are withdrawn upon the effectivity of this code,
the obvious import is to limit the exemptions to the three enumerated entities.

Reading together Sections 137 and 193 of the LGC, we conclude that under the LGC the local government unit may now
impose a local tax at a rate not exceeding 50% of 1% of the gross annual receipts for the preceding calendar year based
on the incoming receipts realized within its territorial jurisdiction. The legislative purpose to withdraw tax privileges enjoyed
under existing law or charter is clearly manifested by the language used in Section 137 and 193 categorically withdrawing
such exemption subject only to the exceptions enumerated. Since it would be not only tedious and impractical to attempt
to enumerate all the existing statutes providing for special tax exemptions or privileges, the LGC provided for an express,
albeit general, withdrawal of such exemptions or privileges. No more unequivocal language could have been used.

There is further basis for the conclusion that the non-impairment of contract clause cannot be invoked to uphold Meralco's
exemption from the local tax. Escudero Electric Co. was originally given the legislative franchise under Act. 3648 to
operate an electric light and power system in the City of San Pablo and nearby municipalities. The term of the franchise
under Act No. 3648 is a period of fifty years from the Acts approval in 1929. The said law provided that the franchise is
granted upon the condition that it shall be subject to amendment, or repeal by the Congress of the United States. 22 Under
the 1935,23 the 197324 and the 198725 Constitutions, no franchise or right shall be granted except under the condition
that it shall be subject to amendment, alteration or repeal by the National Assembly when the public interest so
requires. With or without the reservation clause, franchises are subject to alterations through a reasonable exercise of the
police power; they are also subject to alteration by the power to tax, which like police power cannot be contracted away.

Finally, while the matter is not of controlling significance, the Court notes that whereas the original Escudero franchise
exempted the franchise holder from all taxes levied or collected now or in the future 27 this phrase is noticeably omitted in
the counterpart provision of P.D. 551 that said omission is intended not to foreclose future taxes may reasonably be
deduced by statutory construction.

EN BANC

[G.R. No. 143867. March 25, 2003.]

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., Petitioner, v. CITY OF DAVAO and ADELAIDA B.
BARCELONA, in her capacity as the City Treasurer of Davao, Respondents.

RESOLUTION

MENDOZA, J.:

Facts:

Petitioner PLDT paid a franchise tax equal to three percent (3%) of its gross receipts. The franchise tax was paid "in lieu
of all taxes on this franchise or earnings thereof" pursuant to R.A. No. 7082 amending its charter, Act No. 3436. The
exemption from "all taxes on this franchise or earnings thereof" was subsequently withdrawn by R.A. No. 7160 (Local
Government Code of 1991), which at the same time gave local government units the power to tax businesses enjoying a
franchise on the basis of income received or earned by them within their territorial jurisdiction.

The pertinent provisions of the LGC state:chanrob1es virtual 1aw library

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. . . .

Sec. 193. Withdrawal of Tax Exemption Privileges. — Unless otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or
-controlled corporations, except local water districts, cooperatives duly registered under R.A. No. 6938, non-stock and
non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.
21
Pursuant to these provisions, the City of Davao enacted Ordinance No. 519, Series of 1992, which in pertinent part
provides:chanrob1es virtual 1aw library

Notwithstanding any exemption granted by any law or other special law, there is hereby imposed a tax on businesses
enjoying a franchise, at a rate of Seventy-five percent (75%) of one percent (1%) of the gross annual receipts for the
preceding calendar year based on the income or receipts realized within the territorial jurisdiction of Davao City.

Subsequently, Congress granted in favor of Globe Mackay Cable and Radio Corp. (Globe) 2 and Smart Information
Technologies, Inc. (Smart) 3 franchises which contained "in lieu of all taxes" provisos. In 1995, it enacted R.A. No. 7925
(Public Telecommunications Policy of the Philippines), § 23 of which provides that "Any advantage, favor, privilege,
exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of
previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees
of such franchises." The law took effect on March 16, 1995.

In January 1999, when PLDT applied for a mayor’s permit to operate its Davao Metro Exchange, it was required to pay
the local franchise tax for the first to the fourth quarter of 1999. PLDT challenged the power of the city government to
collect the local franchise tax and demanded a refund of what it had paid as local franchise tax for the year 1997 and for
the first to the third quarters of 1998. For this reason, it filed a petition in the Regional Trial Court of Davao. However, its
petition was dismissed and its claim for exemption under R.A. No. 7925 was denied. The trial court ruled that the LGC had
withdrawn tax exemptions previously enjoyed by persons and entities and authorized local government units to impose a
tax on businesses enjoying franchises within their territorial jurisdictions, notwithstanding the grant of tax exemption to
them. Petitioner, therefore, brought this appeal.

The question is whether, by virtue of RA. No. 7925, § 23, PLDT is again entitled to exemption from the payment of local
franchise tax in view of the grant of tax exemption to Globe and Smart.

Held:

First. Petitioner contends that the legislative intent to promote the development of the telecommunications industry is
evident. Congress intended to automatically extend whatever tax exemption or tax exclusion has been granted to the
holder of a franchise enacted after the LGC to the holder of a franchise enacted prior thereto, such as PLDT.

The contention is untenable. An intent to grant tax exemption cannot even be discerned from the law. The records of
Congress are bereft of any discussion or even mention of tax exemption. Nor does the term "exemption" in § 23 of R.A.
No. 7925 mean tax exemption. The term refers to exemption from certain regulations and requirements imposed by the
National Telecommunications Commission (NTC).

Second. PLDT says that the policy of the law is to promote healthy competition in the telecommunications industry. 10
According to PLDT, the LGC did not repeal the "in lieu of all taxes" provision in its franchise but only excluded from it local
taxes, such as the local franchise tax. However, some franchises, like those of Globe and Smart, which contain "in lieu of
all taxes" provisions, were subsequently granted by Congress. The result is that while the holders of franchises granted
prior to January 1, 1992, when the LGC took effect, had to pay local franchise tax in view of the withdrawal of their local
tax exemption, those whose franchises were granted after January 1, 1992, because of the "in lieu of all taxes" provisions
contained therein, were exempted from such local tax.

If, by virtue of § 23, the tax exemption granted under existing franchises or thereafter granted is deemed applicable to
previously granted franchises (i.e., franchises granted before the effectivity of R.A. No. 7925 on March 16, 1995), then
those franchises granted after March 16, 1995, which do not contain the "in lieu of all taxes" clause, are not entitled to tax
exemption. The "in lieu of all taxes" provision in the franchises of Globe and Smart, which are relatively new entrants in
the telecommunications industry, cannot thus be deemed applicable to PLDT, which had virtual monopoly in the
telephone service in the country for a long time, without defeating the very policy of leveling the playing field of
which PLDT speaks.

Third. Petitioner argues that the rule of strict construction of tax exemptions does not apply to this case because the "in
lieu of all taxes" provision in its franchise is more a tax exclusion than a tax exemption.

This is contrary to the uniform course of decisions 16 of this Court which consider "in lieu of all taxes" provisions as
granting tax exemptions. As such, it is a privilege to which the rule that tax exemptions must be interpreted strictly against
the taxpayer and in favor of the taxing authority applies. Consequently, statutes in derogation of sovereignty, such as
those containing exemption from taxation, should be strictly construed in favor of the state. A state cannot be stripped of
this most essential power by doubtful words and of this highest attribute of sovereignty by ambiguous language.

Exemption is an immunity or privilege; it is freedom from a charge or burden to which others are subjected. Exclusion, on
the other hand, is the removal of otherwise taxable items from the reach of taxation. To construe otherwise the "in lieu of
all taxes" provision invoked is to be inconsistent with the theory that R.A. No. 7925, § 23 grants tax exemption because of
a similar grant to Globe and Smart.

22
Petitioner cites Cagayan Electric Power & Light Co., Inc. v. Commissioner of Internal Revenue 20 in support of its
argument that a "tax exemption" is restored by a subsequent law re-enacting the "tax exemption." It contends that by
virtue of R.A. No. 7925, its tax exemption or exclusion was restored by the grant of tax exemptions to Globe and Smart.

For petitioner’s claim for exemption is not based on an amendment to its charter but on a circuitous reasoning involving
inquiry into the grant of tax exemption to other telecommunications companies and the lack of such grant to others. 21
Surely, Congress could more clearly and directly have granted tax exemption to all franchise holders or amended
the charter of PLDT to again exempt it from tax if this had been its purpose.

The fact is that after petitioner’s tax exemption by R.A. No. 7082 had been withdrawn by the LGC, 22 no amendment to
re-enact its previous tax exemption has been made by Congress. Considering that the taxing power of local government
units under R.A. No. 7160 is clear and is ordained by the Constitution, petitioner has the heavy burden of justifying its
claim by a clear grant of exemption.

Tax exemptions should be granted only by clear and unequivocal provision of law on the basis of language too
plain. to be mistaken. 24 They cannot be extended by mere implication or inference.

Fourth. It is next contended that, in any event, a special law prevails over a general law and that the franchise of
petitioner giving it tax exemption, being a special law, should prevail over the LGC, giving local governments taxing
power, as the latter is a general law.

In City Government of San Pablo, Laguna v. Reyes, 28 this Court held that the phrase "in lieu of all taxes" found in special
franchises should give way to the peremptory language of § 193 of the LGC specifically providing for the withdrawal of
such exemption privileges. Thus, the rule that a special law must prevail over the provisions of a later general law does
not apply as the legislative purpose to withdraw tax privileges enjoyed under existing laws or charters is apparent
from the express provisions of §§ 137 and 193 of the LGC.

G.R. No. 126232 November 27, 1998

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVES, and MANUEL DJ

SIAYNGCO in their capacity as PROVINCIAL GOVERNOR, PROVINCIAL TREASURER, PROVINCIAL LEGAL
ADVISER, respectively, petitioners,
vs.
THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION), REPUBLIC CEMENT
CORPORATION, respondents.

Facts:

the  Sangguniang Panlalawigan  of Bulacan passed Provincial Ordinance No. 3, known as "An Ordinance Enacting the
Revenue Code of the Bulacan Province." which was to take effect on July 1, 1992. Section 21 of the ordinance provides
as follows:

Sec. 21 Imposition of Tax. There is hereby levied and collected a tax of 10% of the fair market value in
the locality per cubic meter of ordinary stones, sand, gravel, earth and other quarry resources, such, but
not limited to marble, granite, volcanic cinders, basalt, tuff and rock phosphate, extracted from  public
lands or from beds of seas, lakes, rivers, streams, creeks and other public waters within its territorial
jurisdiction (Emphasis ours)

Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter dated November 11, 1993, assessed private respondent
Republic Cement Corporation. Believing that the province, on the basis of above-said ordinance, had no authority to
impose taxes on quarry resources extracted from private lands, Republic Cement formally contested the same. The same
was, however, denied by the Provincial Treasurer.

Held:

The pertinent provisions of the Local Government Code are as follows:

Sec. 134. Scope of Taxing Powers. — Except as otherwise provided in this Code, the province may levy
only the taxes, fees, and charges as provided in this Article.

Sec. 158. 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.

xxx xxx xxx (Emphasis supplied)

23
The appellate court, on the basis of Section 134, ruled that a province was empowered to impose taxes only on sand,
gravel, and other quarry resources extracted from public lands, its authority to tax being limited by said provision only to
those taxes, fees and charges provided in Article One, Chapter 2, Title One of Book II of the Local Government
Code. 11 On the other hand, petitioners claim that Sections 129 12 and 186 13 of the Local Government Code authorizes the
province to impose taxes other than those specifically enumerated under the Local Government Code.

The Court of Appeals erred in ruling that a province can impose only the taxes specifically mentioned under the Local
Government Code. As correctly pointed out by petitioners, Section 186 allows a province to levy taxes other than those
specifically enumerated under the Code, subject to the conditions specified therein.

The tax imposed by the Province of Bulacan is an excise tax, being a tax upon the performance, carrying on, or exercise
of an activity. 14 The Local Government Code provides:

Sec. 133. — Common Limitations on the Taxing Powers of Local Government Units. — Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays
shall not extend to the levy of the following:

x x x           x x x          x x x

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

x x x           x x x          x x x

A province may not, therefore, levy excise taxes on articles already taxed by the National Internal Revenue Code.
Unfortunately for petitioners, the National Internal Revenue Code provides:

Sec. 151. — Mineral Products. —

(A) Rates of Tax. — There shall be levied, assessed and collected on minerals, mineral products and
quarry resources, excise tax as follows:

x x x           x x x          x x x

(2) On all nonmetallic minerals and quarry resources, a tax of two percent (2%) based on
the actual market value of the gross output thereof at the time of removal, in case of
those locally extracted or produced; or the values used by the Bureau of Customs in
determining tariff and customs duties, net of excise tax and value-added tax, in the case
of importation.

x x x           x x x          x x x

(B) [Definition of Terms]. — for purposes of this Section, the term-

x x x           x x x          x x x

(4) Quarry resources shall mean any common stone or other common mineral
substances as the Director of the Bureau of Mines and Geo-Sciences may declare to be
quarry resources such as, but not restricted to, marl, marble, granite, volcanic cinders,
basalt, tuff and rock phosphate;  Provided, That they contain no metal or metals or other
valuable minerals in economically workable quantities.

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.

PHILIPPINE BASKETBALL ASSOCIATION, petitioner,

vs.
COURT OF APPEALS, COURT OF TAX APPEALS, AND COMMISSIONER OF INTERNAL REVENUE, respondents.

PURISIMA, J.:

24
Facts:

The petitioner received an assessment letter from the Commissioner of Internal Revenue (respondent Commissioner) for
the payment of deficiency amusement tax. Petitioner contested the assessment by filing a protest with respondent
Commissioner who denied the same. Petitioner filed a petition for review 2 with the Court of Tax Appeals (respondent CTA)
questioning the denial by respondent Commissioner of its tax protest. Respondent CTA dismissed petitioner's petition.

Petitioner presented a motion for reconsideration 4 of the said decision but the same was denied by respondent CTA in a
resolution. Petitioner appealed the CTA decision to the Court of Appeals.

The Court of Appeals rendered its questioned Decision, 6 affirming the decision of the CTA and dismissing petitioner's
appeal. Petitioner filed a Motion for Reconsideration of said decision but to no avail. The same was denied by the Court of
Appeals in a Resolution.

1. Is the amusement tax on admission tickets to PBA games a national or local tax? Otherwise put, who between the
national government and local government should petitioner pay amusement taxes?

Held:

Section 13 of the Local Tax Code provides:

"SECTION 13. Amusement tax on admission. — The province shall impose a tax on admission to be collected
from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places
of amusement . . ."

The foregoing provision of law in point indicates that the province can only impose a tax on admission from the
proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement.
The authority to tax professional basketball games is not therein included, as the same is expressly embraced in PD
1959, which amended PD 1456 thus:

"SECTION 44. Section 268 of this Code, as amended, is hereby further amended to read as follows:

'Sec. 268. Amusement taxes. — There shall be collected from the proprietor, lessee or operator of cockpits, cabarets,
night or day clubs, boxing exhibitions, professional basketball games xxx

From the foregoing it is clear that the "proprietor, lessee or operator of . . . professional basketball games" is required to
pay an amusement tax equivalent to fifteen per centum (15%) of their gross receipts to the Bureau of Internal Revenue,
which payment is a national tax. The said payment of amusement tax is in lieu of all other percentage taxes of whatever
nature and description.

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.

G.R. No. 183137               April 10, 2013

PELIZLOY REALTY CORPORATION, represented herein by its President, GREGORY K. LOY, Petitioner,

vs.
THE PROVINCE OF BENGUET, Respondent.

Facts:

Petitioner Pelizloy Realty Corporation ("Pelizloy") owns Palm Grove Resort, which is designed for recreation and which
has facilities like swimming pools, a spa and function halls. The Provincial Board of the Province of Benguet approved
Provincial Tax Ordinance No. 05-107, otherwise known as the Benguet Revenue Code of 2005 ("Tax Ordinance").
Section 59, Article X of the Tax Ordinance levied a ten percent (10%) amusement tax on gross receipts from admissions
to "resorts, swimming pools, bath houses, hot springs and tourist spots."

It was Pelizloy's position that the Tax Ordinance's imposition of a 10% amusement tax on gross receipts from admission
fees for resorts, swimming pools, bath houses, hot springs, and tourist spots is an ultra vires act on the part of the
Province of Benguet. Thus, it filed an appeal/petition before the Secretary of Justice.

Held:

25
The power of a province to tax is limited to the extent that such power is delegated to it either by the Constitution or by
statute.

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:

SECTION 140. 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.

Under the principle of ejusdem generis, "where a general word or phrase follows an enumeration of particular and specific
words of the same class or where the latter follow the former, the general word or phrase is to be construed to include, or
to be restricted to persons, things or cases akin to, resembling, or of the same kind or class as those specifically
mentioned."

As defined in The New Oxford American Dictionary, 22 ‘show’ means "a spectacle or display of something, typically an
impressive one";23 while ‘performance’ means "an act of staging or presenting a play, a concert, or other form of
entertainment."24 As such, the ordinary definitions of the words ‘show’ and ‘performance’ denote not only visual
engagement (i.e., the seeing or viewing of things) but also active doing (e.g., displaying, staging or presenting) such that
actions are manifested to, and (correspondingly) perceived by an audience.

Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist spots cannot be
considered venues primarily "where one seeks admission to entertain oneself by seeing or viewing the show or
performances". While it is true that they may be venues where people are visually engaged, they are not primarily
venues for their proprietors or operators to actively display, stage or present shows and/or performances.

Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to the same category or
class as theaters, cinemas, concert halls, circuses, and boxing stadia. It follows that they cannot be considered
as among the ‘other places of amusement’ contemplated by Section 140 of the LGC and which may properly be
subject to amusement taxes.

G.R. No. L-52019 August 19, 1988

ILOILO BOTTLERS, INC., plaintiff-appellee,

vs.
CITY OF ILOILO, defendant-appellant.

Facts:

Iloilo Bottlers, Inc. filed a complaint praying for the recovery of the sum of P3,329.20, which amount allegedly constituted
payments of municipal license taxes under Ordinance No. 5 series of 1960, as amended, that the company paid under
protest.

The parties submitted a partial stipulation of facts, the material portions of which state:

2. That plaintiff is engaged in the business of bottling softdrinks under the trade name of Pepsi Cola And 7-up and selling
the same to its customers.

3. That defendant enacted an ordinance on January 11, 1960 known as Ordinance No. 5, Series of 1960 which ordinance
was successively amended by Ordinance No. 28, Series of 1960; Ordinance No. 15, Series of 1964; and Ordinance No.
45, Series of 1964; which provides as follows:

Section l. — Any person, firm or corporation engaged in the distribution, manufacture or bottling of coca-cola, pepsi cola,
tru-orange, seven-up and other soft drinks within the jurisdiction of the City of Iloilo, shall pay a municipal license tax of ten

26
(P0.10) centavos for every case of twenty-four bottles; PROVIDED, HOWEVER, that softdrinks sold to the public at not
more than five (P0.05) centavos per bottle shall pay a tax of one and one half (P0.015) (centavos) per case of twenty four
bottles.

xxx

13. That the plaintiff does not maintain any store or commercial establishment in the City of Iloilo from which it distributes
its products, but by means of a fleet of delivery trucks, plaintiff distributes its products from its bottling plant at Barrio
Ungca Municipality of Pavia, Iloilo, directly to its customers in the different towns of the Province of Iloilo as well as the
City of Iloilo;

14. That the plaintiff is already paying the National Government a percentage Tax of 71/t, as manufacturer's sales tax on
all the softdrinks it manufactures and is also paying the municipal license tax to the municipality of Pavia, Iloilo in the
amount of P l0,000.00 every year, plus a municipal license tax for engaging in its business to the municipality of Pavia in
its amount of P2,000.00 every year.

The court a quo rendered a decision in favor of Iloilo Bottlers, Inc. declaring the Corporation not liable under the
ordinance.

Iloilo Bottlers, Inc. disclaims liability. It contends that since it is not engaged in the independent business of distributing
soft-drinks, but that its activity of selling is merely an incident to, or is a necessary consequence of its main or principal
business of bottling, then it is NOT liable under the city tax ordinance.

Held:

This 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.

This Court had occasion to distinguish two marketing systems:

Under the first system, the manufacturer enters into sales transactions and invoices the sales at its main office where
purchase orders are received and approved before delivery orders are sent to the company's warehouses, where in turn
actual deliveries are made. No warehouse sales are made; nor are separate stores maintained where products may be
sold independently from the main office. The warehouses only serve as storage sites and delivery points of the products
earlier sold at the main office. Under the second system, sales transactions are entered into and perfected at stores or
warehouses maintained by the company. 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 lloilo province. Sales transactions with customers were entered into and sales were
perfected and consummated by route salesmen. Truck sales were made independently of transactions in the main office.
The delivery trucks were not used solely for the purpose of delivering softdrinks previously sold at Pavia. They
served as selling units. They were what were called, until recently, "rolling stores". The delivery trucks were therefore
much the same as the stores and warehouses under the second marketing system. Iloilo Bottlers, Inc. thus falls
under the second category above. That is, the corporation was engaged in the separate business of selling or distributing
soft-drinks, independently of its business of bottling them.

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.

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.

SECOND DIVISION

27
G.R. No. 233556, September 11, 2019

CITY TREASURER OF MANILA, PETITIONER, v. PHILIPPINE BEVERAGE PARTNERS, INC., SUBSTITUTED BY

COCA-COLA BOTTLERS PHILIPPINES, RESPONDENT.

Facts:

The petitioner City Treasurer of Manila (petitioner) issued a Statement of Account (SOA) to Philippine Beverage Partners,
Inc. (respondent). The SOA showed that respondent is liable to pay petitioner local business taxes and regulatory fees for
the first quarter of 2007.

Respondent protested the assessment through a letter, arguing that Tax Ordinance Nos. 7988 and 8011, amending the
Revenue Code of Manila (RCM), have been declared null and void. Respondent also argued that the collection of local
business tax under Section 21 of the RCM in addition to Section 14 of the same code constitutes double taxation.
Thereafter, respondent made a formal tender of payment to the City of Manila for local business tax and regulatory fees
for the first quarter of 2007, petitioner issued a letter to respondent denying the latter's protest.

Respondent filed a written claim for refund of erroneously/illegally collected tax with petitioner. Further, respondent filed a
Complaint for the Revision of SOA (Preliminary Assessment) and for Refund or Credit of LBT Erroneously/Illegally
Collected with the Regional Trial Court, Manila.

The Issues

I. WHETHER A TAXPAYER  WHO  PROTESTED  AN ASSESSMENT MAY  LATER  ON  INSTITUTE  A 

JUDICIAL ACTION FOR REFUND; AND

II. WHETHER THE ALLEGED DEFICIENCY TAXES OF RESPONDENT MAY BE USED TO OFFSET ITS
CLAIM FOR REFUND.

Held:

I. Petitioner contends that the assessment against respondent became final and executory when the latter
effectively abandoned its protest and instead sued in court for the refund of the assessed taxes and charges. The
foregoing argument is not novel. In fact, the case of City of Manila v. Cosmos Bottling Corporation11 (Cosmos)
finds application.

The Court has settled in Cosmos that a taxpayer facing an assessment issued by the local treasurer may protest it and
alternatively: (1) appeal the assessment in court, or (2) pay the tax, and thereafter, seek a refund. Thus, in Cosmos, the
Court declared:

Second, a taxpayer who had protested and paid an assessment is not precluded from later on instituting an
action for refund or credit.

The taxpayers' remedies of protesting an assessment and refund of taxes are stated in Sections 195 and 196 of the LGC,
to wit: Section 195. Protest of Assessment. Section 196. Claim for Refund of Tax Credit.

The first provides the procedure for contesting an assessment issued by the local treasurer; whereas, the second
provides the procedure for the recovery of an erroneously paid or illegally collected tax, fee or charge. Both Sections 195
and 196 mention an administrative remedy that the taxpayer should first exhaust before bringing the appropriate action in
court. In Section 195, it is the written protest with the local treasurer that constitutes the administrative remedy; while in
Section 196, it is the written claim for refund or credit with the same office. As to form, the law does not particularly
provide any for a protest or refund claim to be considered valid. It suffices that the written protest or refund is addressed to
the local treasurer expressing in substance its desired relief.

Obviously, the application of Section 195 is triggered by an assessment made by the local treasurer or his duly authorized
representative for nonpayment of the correct taxes, fees or charges. Should the taxpayer find the assessment to be
erroneous or excessive, he may contest it by filing a written protest before the local treasurer within the reglementary
period of sixty (60) days from receipt of the notice; otherwise, the assessment shall become conclusive. The local
treasurer has sixty (60) days to decide said protest. In case of denial of the protest or inaction by the local treasurer, the
taxpayer may appeal with the court of competent jurisdiction; otherwise, the assessment becomes conclusive and
unappealable. (Italics in the original)

On the other hand, Section 196 may be invoked by a taxpayer who claims to have erroneously paid a tax, fee or charge,
or that such tax, fee or charge had been illegally collected from him. The provision requires the taxpayer to first file a
written claim for refund before bringing a suit in court which must be initiated within two years from the date of payment.
By necessary implication, the administrative remedy of claim for refund with the local treasurer must be initiated also
within such two-year prescriptive period but before the judicial action.

28
Unlike Section 195, however, Section 196 does not expressly provide a specific period within which the local treasurer
must decide the written claim for refund or credit. It is, therefore, possible for a taxpayer to submit an administrative claim
for refund very early in the two-year period and initiate the judicial claim already near the end of such two-year period due
to an extended inaction by the local treasurer. In this instance, the taxpayer cannot be required to await the decision of
the local treasurer any longer, otherwise, his judicial action shall be barred by prescription. (Emphasis in the original)

Additionally, Section 196 does not expressly mention an assessment made by the local treasurer. This simply means that
its applicability does not depend upon the existence of an assessment notice. By consequence, a taxpayer may proceed
to the remedy of refund of taxes even without a prior protest against an assessment that was not issued in the first place.
This is not to say that an application for refund can never be precipitated by a previously issued assessment, for it is
entirely possible that the taxpayer, who had received a notice of assessment, paid the assessed tax, fee or charge
believing it to be erroneous or illegal. Thus, under such circumstance, the taxpayer may subsequently direct his
claim pursuant to Section 196 of the LGC.

Clearly, when a taxpayer is assessed a deficiency local tax, fee or charge, he may protest it under Section 195 even
without making payment of such assessed tax, fee or charge. This is because the law on local government taxation, save
in the case of real property tax, does not expressly require "payment under protest" as a procedure prior to
instituting the appropriate proceeding in court. This implies that the success of a judicial action questioning the validity
or correctness of the assessment is not necessarily hinged on the previous payment of the tax under protest.

The foregoing clearly shows that a taxpayer facing an assessment may protest it and alternatively:  (1) appeal the
assessment in court, or (2) pay the tax and thereafter seek a refund. 

(a)   Where no payment is made, the taxpayer's procedural remedy is governed strictly by Section  195. That is, in case of
whole or partial denial of the protest, or inaction by the local treasurer, the taxpayer's only recourse is to  appeal the
assessment with the court of competent jurisdiction. The appeal before the court does not seek a refund but only
questions the validity or correctness of the assessment. (Italics in the original)

(b)  Where payment was made, the taxpayer may thereafter maintain an action in court questioning the validity
and correctness of the assessment (Section 195, LGC) and at the same time seeking a refund of the taxes. In
truth, it would be illogical for the taxpayer to only seek a reversal of the assessment without praying for the refund of
taxes. Once the assessment is set aside by the court, it follows as a matter of course that all taxes paid under the
erroneous or invalid assessment are refunded to the taxpayer.

Simply put, there are two conditions that must be satisfied in order to successfully prosecute an action for refund
in case the taxpayer had received an assessment. One, pay the tax and administratively assail within 60 days the
assessment before the local treasurer, whether in a letter-protest or in a claim for refund.  Two, bring an action in
court within thirty (30) days from decision or inaction by the local treasurer, whether such action is denominated
as an appeal from assessment and/or claim for refund of erroneously or illegally collected tax .
In this case, after respondent received the assessment on January 17, 2007, it protested such assessment on January
19, 2007. After payment of the assessed taxes and charges, respondent wrote petitioner another letter asking for the
refund and reiterating the grounds raised in the protest letter. Then, on February 6, 2007, respondent received the letter
denying its protest.

Thus, on March 8, 2007, or exactly thirty (30) days from its receipt of the denial, respondent brought the action before the
RTC of Manila. Hence, respondent was justified in filing a claim for refund after timely protesting and paying the
assessment.

II.

As regards the second issue, Section 195 of the LGC provides that "When the local treasurer or his duly authorized
representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment stating
the nature of the tax, fee, or charge, the amount of deficiency, the surcharges, interests and penalties." Thus, suffice it to
say that the issuance of a notice of assessment is mandatory before the local treasurer may collect deficiency taxes from
the taxpayer.

To reiterate, respondent, after it had protested and paid the assessed tax, is permitted by law to seek a refund having fully
satisfied the twin conditions for prosecuting an action for refund before the court. Consequently, the CTA did not commit a
reversible error when it allowed the refund in favor of respondent.

LUZ R. YAMANE, in her capacity as the CITY TREASURER OF MAKATI CITY, Petitioner, v. BA

LEPANTO CONDOMINUM CORPORATION, Respondent

Facts:

Respondent BA-Lepanto Condominium Corporation (the "Corporation") is a duly organized

condominium corporation constituted in accordance with the Condominium Act. the Corporation
received a Notice of Assessment signed by the City Treasurer. The Notice of Assessment stated that

29
the Corporation is "liable to pay the correct city business taxes, fees and charges,".3 The Notice of
Assessment was silent as to the statutory basis of the business taxes assessed.

Through counsel, the Corporation responded with a written tax protest. It was evident in the protest
that the Corporation was perplexed on the statutory basis of the tax assessment.

The protest was rejected by the City Treasurer. She insisted that the collection of dues from the unit
owners was effected primarily "to sustain and maintain the expenses of the common areas, with the
end in view [sic] of getting full appreciative living values [sic] for the individual condominium
occupants and to command better marketable [sic] prices for those occupants" who would in the
future sell their respective units.6 Thus, she concluded since the "chances of getting higher prices for
well-managed common areas of any condominium are better and more effective that condominiums
with poor [sic] managed common areas," the corporation activity "is a profit venture making [sic]".7

From the denial of the protest, the Corporation filed an Appeal with the Regional Trial Court (RTC) of
Makati. Makati RTC rendered a Decision9 dismissing the appeal for lack of merit. From this Decision of
the RTC, the Corporation filed a Petition for Review under Rule 42 of the Rules of Civil Procedure with
the Court of Appeals. Initially, the petition was dismissed outright 12 on the ground that only decisions
of the RTC brought on appeal from a first level court could be elevated for review under the mode of
review prescribed under Rule 42.13 However, the Corporation pointed out in its Motion for
Reconsideration that under Section 195 of the Local Government Code, the remedy of the taxpayer
on the denial of the protest filed with the local treasurer is to appeal the denial with the court of
competent jurisdiction.14 Persuaded by this contention, the Court of Appeals reinstated the petition.15

The Court of Appeals Special Sixteenth Division rendered the Decision16 now assailed before this
Court. The appellate court reversed the RTC and declared that the Corporation was not liable to pay
business taxes to the City of Makati.

Held:

Whether the RTC, in deciding an appeal taken from a denial of a protest by a local treasurer under
Section 195 of the Local Government Code, exercises "original jurisdiction" or "appellate jurisdiction."

the Local Government Code, or any other statute for that matter, does not expressly confer appellate
jurisdiction on the part of regional trial courts from the denial of a tax protest by a local treasurer. On
the other hand, Section 22 of 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. Unlike in the case of the Court of Appeals, B.P. 129 does
not confer appellate jurisdiction on Regional Trial Courts over rulings made by non-judicial entities.

From these premises, it is evident that the stance of the City Treasurer is correct as a matter of law,
and that the proper remedy of the Corporation from the RTC judgment is an ordinary appeal under
Rule 41 to the Court of Appeals. However, we make this pronouncement subject to two important
qualifications. First, in this particular case there are nonetheless significant reasons for the Court to
overlook the procedural error and ultimately uphold the adjudication of the jurisdiction exercised by
the Court of Appeals in this case. Second, the doctrinal weight of the pronouncement is confined to
cases and controversies that emerged prior to the enactment of Republic Act No. 9282, the law which
expanded the jurisdiction of the Court of Tax Appeals (CTA).

Republic Act No. 9282 definitively proves in its Section 7(a)(3) that the CTA exercises exclusive
appellate jurisdiction to review on appeal decisions, orders or resolutions of the Regional Trial Courts
in local tax cases original decided or resolved by them in the exercise of their originally or appellate
jurisdiction. Moreover, the provision also states that the review is triggered "by filing a Petition for
Review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil
Procedure."29

Republic Act No. 9282, however, would not apply to this case simply because it arose prior to the
effectivity of that law.

Indeed, we have repeatedly upheld and utilized ourselves'the discretion of courts to nonetheless take
cognizance of petitions raised on an erroneous mode of appeal and instead treat these petitions in

30
the manner as they should have appropriately been filed.32 The Court of Appeals could very well have
treated the Corporation's Petition for Review as an ordinary appeal.

Evidently, by employing the Rule 42 mode of review, the Corporation faced a greater risk of having
its petition rejected by the Court of Appeals as compared to having filed an ordinary appeal under
Rule 41. This was not an error that worked to the prejudice of the City Treasurer.

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

Section 143 of the Code specifically enumerates several types of business on which municipalities
and cities may impose taxes. These include manufacturers, wholesalers, distributors, dealers of any
article of commerce of whatever nature; those engaged in the export or commerce of essential
commodities; contractors and other independent contractors; banks and financial institutions; and
peddlers engaged in the sale of any merchandise or article of commerce. Moreover, the
local sanggunian is also authorized to impose taxes on any other businesses not otherwise specified
under Section 143 which the sanggunian concerned may deem proper to tax.

The coverage of business taxation particular to the City of Makati is provided by the Makati Revenue
Code ("Revenue Code"), enacted through Municipal Ordinance No. 92-072. The Revenue Code
remains in effect as of this writing.

Should the comprehensive listing not prove encompassing enough, there is also a catch-all provision
similar to that under the Local Government Code. This is found in Section 3A.02(m) of the Revenue
Code, which provides:

(m) On owners or operators of any business not specified above shall pay the tax at the rate of two
percent (2%) for 1993, two and one-half percent (2 '%) for 1994 and 1995, and three percent (3%)
for 1996 and the years thereafter of the gross receipts during the preceding year.

We have examined all of the pleadings submitted by the City Treasurer in all the antecedent judicial
proceedings, as well as in this present petition, and also the communications by the City Treasurer to
the Corporation which form part of the record. Nowhere therein is there any citation made by the
City Treasurer of any provision of the Revenue Code which would serve as the legal authority for the
collection of business taxes from condominiums in Makati.

Ostensibly, the notice of assessment, which stands as the first instance the taxpayer is officially
made aware of the pending tax liability, should be sufficiently informative to apprise the taxpayer the
legal basis of the tax. Section 195 of the Local Government Code does not go as far as to expressly
require that the notice of assessment specifically cite the provision of the ordinance involved but it
does require that it state the nature of the tax, fee or charge, the amount of deficiency, surcharges,
interests and penalties. In this case, the notice of assessment sent to the Corporation did state that
the assessment was for business taxes, as well as the amount of the assessment. There may have
been prima faciecompliance with the requirement under Section 195. However in this case, the
Revenue Code provides multiple provisions on business taxes, and at varying rates. Hence, we could
appreciate the Corporation's confusion, as expressed in its protest, as to the exact legal basis for the
tax.

Moreover, a careful examination of the Revenue Code shows that while Section 3A.02(m) seems
designed as a catch-all provision, Section 3A.02(f), which provides for a different tax rate from that
of the former provision, may be construed to be of similar import. While Section 3A.02(f) is quite
exhaustive in enumerating the class of businesses taxed under the provision, the listing, while it does
not include condominium-related enterprises, ends with the abbreviation "etc.", or "et cetera".

We do note our discomfort with the unlimited breadth and the dangerous uncertainty which are the
twin hallmarks of the words "et cetera."

The City Treasurer nonetheless contends that the collection of these assessments and dues are "with
the end view of getting full appreciative living values" for the condominium units, and as a result,
profit is obtained once these units are sold at higher prices. The Court cites with approval the two
counterpoints raised by the Court of Appeals in rejecting this contention. First, if any profit is
obtained by the sale of the units, it accrues not to the corporation but to the unit owner. Second, if

31
the unit owner does obtain profit from the sale of the corporation, the owner is already required to
pay capital gains tax on the appreciated value of the condominium unit.

The fact that the Corporation did not fall within the enumerated classes of taxable businesses under
either the Local Government Code or the Makati Revenue Code already forewarns that a clear
demonstration is essential on the part of the City Treasurer on why the Corporation should be taxed
anyway.

Still, the City Treasurer has not posited the claim that the Corporation is engaged in business
activities beyond the statutory purposes of a condominium corporation. 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.
There is no contemplation of business, no orientation towards profit in this case. Hence, the assailed
tax assessment has no basis under the Local Government Code or the Makati Revenue Code, and the
insistence of the city in its collection of the void tax constitutes an attempt at deprivation of property
without due process of law.

G.R. No. 204117, July 01, 2015

CHINA BANKING CORPORATION, Petitioner, v.  CITY TREASURER OF MANILA, Respondent.

Facts:

On the basis of the reported income of respondent CBC's Sto. Cristo Branch, Binondo, Manila,
respondent CBC was assessed by petitioner City Treasurer of Manila, consisting of local business tax,
business permits, and other fees for taxable year 2007.

respondent CBC paid the amount and protested, thru a Letter, the imposition of business tax under
Section 21 of the Manila Revenue Code on the ground that it is not liable of said additional business
tax and the same constitutes double taxation.

Petitioner acknowledged receipt of respondent CBC 's payment under protest of the assessed amount
and further informed respondent that she will await for respondent’s formal protest.

Respondent CBC wrote a letter-reply to [respondent's] petitioner’s Letter reiterating that respondent
already protested the additional assessment under Section 21 of the Manila Revenue Code in its
Letter. In the same Letter, respondent averred that pursuant to Section 195 of the Local Government
Code ("LGC ''), petitioner had until March 16, 2007 within which to decide the protest, and
considering that respondent received the Letter four days after the deadline to decide and petitioner
did not even resolve the protest, respondent formally demanded the refund representing the
business tax collected under Section 21 of the Manila Revenue Code.

Respondent CBC filed a Petition for Review with the RTC of Manila raising the sole issue of whether or
not respondent is subject to the local business tax imposed under Section 21 of the Manila Revenue
Code.
Regional Trial Court rendered its decision9 granting the petition filed by CBC and ordered the City
Treasurer to refund the amount, representing the assessment paid by it under Section 21 of Manila
Ordinance No. 7988,10 as amended by Tax Ordinance No. 8011. redarclaw

The RTC found that the City Treasurer had no basis to collect the amount because the Department of
Justice (DOJ) was of the opinion that Ordinance Nos. 7988 and 8011 were unconstitutional.

RTC resolved to deny the motion for reconsideration filed by the City Treasurer. 14 redarclaw

Decision of the CTA Division

CTA Division15reversed the decision of the RTC, effectively dismissing CBC’s protest against the
disputed assessment. Although the CTA Division dismissed the City Treasurer’s contention that CBC’s
petition for review should have been filed with the Metropolitan Trial Court (MeTC), nevertheless it
found that the RTC did not have jurisdiction over the said petition for because it was filed out of time.
The CTA Division noted that the petition for review was filed one (1) day beyond the reglementary
period allowed by Section 195 of the Local Government Code16 (LGC) to taxpayers who wished to
appeal a denial of a protest due to the inaction of the City Treasurer. Consequently, the CTA Division
32
ruled that the City Treasurer’s assessment against CBC had attained finality.

CBC sought reconsideration of the decision, but its motion was denied by the CTA Division.

CTA En Banc affirmed the ruling of the CTA Division in toto. CBC filed its motion for reconsideration
of the said decision but the CTA En Banc denied the same.

THE HONORABLE COURT OF TAX APPEALS GRAVELY ERRED IN DISREGARDING THE LAW
AND INTEREST OF SUBSTANTIAL JUSTICE BY REVERSING THE RULING OF THE TRIAL
COURT SOLELY BECAUSE OF ITS ASSUMED PRONOUNCEMENT THAT THE ORIGINAL
PETITION WAS FILED ONE (1) DAY BEYOND THE REGLEMENTARY PERIOD?

Held:

Protest validly filed

Under the current state of law, there can be no doubt that the law does not prescribe any formal
requirement to constitute a valid protest. To constitute a valid protest, it is sufficient if what has been
filed contains the spontaneous declaration made to acquire or keep some right or to prevent an
impending damage.27 Accordingly, a protest is valid so long as it states the taxpayer’s objection to
the assessment and the reasons therefor.

In this case, the Court finds that the City Treasurer’s contention that CBC was not able to properly
protest the assessment to be without merit. The Court is of the view that CBC was able to properly
file its protest against the assessment of the City Treasurer when it filed its letter on January 15,
2007, questioning the imposition while paying the assessed amount. In the said letter, the petitioner
was unequivocal in its objection, stating that it took exception to the assessment made by the City
Treasurer under Section 21 of the city’s revenue code, arguing that it was not liable to pay the
additional tax imposed under the subject ordinance and that the imposition “constitute[d] double
taxation” and, for said reason, invalid. Despite its objection, it remitted the total amount of
P267,128.70 under protest “to avoid penalties/surcharges and any threat of closure.”28 redarclaw

The Court, however, is of the view that the period within which the City Treasurer must act on the
protest, and the consequent period to appeal a “denial due to inaction,” should be reckoned from
January 15, 2007, the date CBC filed its protest, and not March 27, 2007. Consequently, the Court
finds that the CTA En Banc did not err in ruling that CBC had lost its right to challenge the City
Treasurer’s “denial due to inaction.” On this matter, Section 195 of the LGC is clear:

SECTION 195. Protest of Assessment. - When the local treasurer or his duly authorized
representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of
assessment. Within sixty (60) days from the receipt of the notice of assessment, the taxpayer may
file a written protest with the local treasurer contesting the assessment; otherwise, the assessment
shall become final and executory. The local treasurer shall decide the protest within sixty (60) days
from the time of its filing. If the local treasurer finds the protest to be wholly or partly meritorious, he
shall issue a notice canceling wholly or partially the assessment.

However, if the local treasurer finds the assessment to be wholly or partly correct, he shall deny the
protest wholly or partly with notice to the taxpayer. The taxpayer shall have thirty (30) days
from the receipt of the denial of the protest or from the lapse of the sixty (60)-day period
prescribed herein within which to appeal with the court of competent jurisdiction
otherwise the assessment becomes conclusive and unappealable.

Time and again, it has been held that the perfection of an appeal in the manner and within the period
laid down by law is not only mandatory but also jurisdictional.

RTC has no jurisdiction

At any rate, even if the Court considers CBC’s appeal from the “denial due to inaction” by the City
Treasurer to have been timely filed, the same must be dismissed because it was not filed with a court
of competent jurisdiction.

The Local Government Code, or any other statute for that matter, does not expressly confer
appellate jurisdiction on the part of regional trial courts from the denial of a tax protest by a local
treasurer. On the other hand, Section 22 of B.P. 129 expressly delineates the appellate
jurisdiction of the Regional Trial Courts, confining as it does said appellate jurisdiction to

33
cases decided by Metropolitan, Municipal, and Municipal Circuit Trial Courts. Unlike in the
case of the Court of Appeals, B.P. 129 does not confer appellate jurisdiction on Regional
Trial Courts over rulings made by non-judicial entities.32 redarclaw

Thus, although the Court in Yamane recognized that the RTC exercised its original jurisdiction over
cases decided by a local treasurer, it was quick to point out that with the advent of Republic Act
(R.A.) No. 9282, the jurisdiction of the RTC over such cases is no longer simply original and
exclusive.

From these premises, it is evident that the stance of the City Treasurer is correct as a matter of law,
and that the proper remedy of the Corporation from the RTC judgment is an ordinary appeal under
Rule 41 to the Court of Appeals. However, we make this pronouncement subject to two important
qualifications. First, in this particular case there are nonetheless significant reasons for the Court to
overlook the procedural error and ultimately uphold the adjudication of the jurisdiction exercised by
the Court of Appeals in this case. Second, the doctrinal weight of the pronouncement
is confined to cases and controversies that emerged prior to the enactment of Republic Act
No. 9282, the law which expanded the jurisdiction of the Court of Tax Appeals (CTA).

Republic Act No. 9282 definitively proves in its Section 7(a)(3) that the CTA exercises exclusive
appellate jurisdiction to review on appeal decisions, orders or resolutions of the Regional
Trial Courts in local tax cases original decided or resolved by them in the exercise of their
original or appellate jurisdiction. Moreover, the provision also states that the review is triggered
“by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the
1997 Rules of Civil Procedure.”

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 non-judicial
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.

The fact that the Metropolitan, Municipal, and Municipal Circuit Trial Courts exercise jurisdiction is
one that even petitioner CBC recognizes. As aptly pointed by the City Treasurer, in several claims
below the jurisdictional amount of the RTC, the petitioners had sought relief by filing their claim for
refund with the first level court.

In all, the Court finds that the claim of petitioner CBC for refund should be dismissed not only for
being filed out of time but also for not being filed before a court of competent jurisdiction.

34