CASES ON LOCAL TAXATION

1. MANDANAS VS. OCHOA G.R. NO. 199802 JULY 3, 2018

FACTS:

The fiscal autonomy guaranteed to local governments under Section 6, Article X of the 1987
Constitution means the power to create their own sources of revenue in addition to their equitable
share in the "national taxes" released by the National Government, as well as the power to allocate
their resources in accordance with their own priorities.

Pursuant to this Constitutional dictum, Congress enacted Republic Act No. 7160, otherwise known as
the Local Government Code (LGC). Sec. 284 of the LGC provides that LGUs shall have an allotment
equivalent to 40% of the the national internal revenue taxes.

The share of the LGUs, known as the Internal Revenue Allotment (IRA), has been regularly released to
the LGUs. According to the implementing rules and regulations of the LGC, the IRA is determined on
the basis of the actual collections of the National Internal Revenue Taxes (NIRTs) as certified by the
Bureau of Internal Revenue (BIR).

Two petitions were filed to challenge the base figure for the computation of the IRA.

In G.R. No. 199802, Cong. Hermilando Mandanas, et al., alleged that the NIRTs certified by the BIR
excluded the NIRTs collected by the Bureau of Customs, specifically excise taxes, value added taxes
(VATs), and documentary stamp taxes (DSTs). Such exclusion resulted in LGUs being deprived of
₱60,750,000,000.00 for FY 2012. Further, the petitioners argued that since this mistake in computation
was happening since 1992, then the National Government has effectively deprived LGUs of
₱438,103,906,675.73 in their IRA.

Meanwhile, in G.R. No. 208488, Cong. Enrique Garcia, Jr. sought the issuance of the writ of mandamus
to compel respondents to compute the just share of the LGUs on the basis of all national taxes. He
argued that the insertion by Congress of the words "internal revenue" in the phrase "national taxes"
found in Section 284 of the LGC caused the diminution of the base for determining the just share of the
LGUs, and should be declared unconstitutional.

ISSUE:

Whether or not Section 284 of the LGC is unconstitutional for being repugnant to Section 6, Article X of
the 1987 Constitution. -- YES.

HELD:

Section 6 of the Constitution mentions "national taxes" as the source of the just share of the LGUs while
Section 284 of the LGC ordains that the share of the LGUs be taken from "national internal revenue
taxes" instead. Congress thereby infringed the constitutional provision.

Although the power of Congress to make laws is plenary in nature, congressional lawmaking remains
subject to the limitations stated in the 1987 Constitution.

The phrase "national internal revenue taxes" in Section 284 is undoubtedly more restrictive than the
term "national taxes" written in Section 6 of the Constitution. As such, Congress has actually departed
from the letter of the 1987 Constitution stating that national taxes should be the base from which the
just share of the LGU comes. Such departure is impermissible. Verba legis non est recedendum (from
the words of a statute there should be no departure).
Equally impermissible is that Congress has also thereby curtailed the guarantee of fiscal autonomy in
favor of the LGUs under the 1987 Constitution.

What the phrase "national internal revenue taxes" as used in Section 284 of the LGC included are all the
taxes enumerated in Section 21 of the National Internal Revenue Code (NIRC), as amended by R.A. No.
8424, namely: income tax, estate and donor's taxes, VAT, other percentage taxes, excise taxes,
documentary stamp taxes, and such other taxes as may be imposed and collected by the BIR.

In view of the foregoing enumeration of what are the national internal revenue taxes, Section 284 of
the LGC has effectively deprived the LGUs from deriving their just share from other national taxes, like
the customs duties.

Moving forward, the BIR and the BOC are directed certify all national tax collections. This ruling, also
known as the "Mandanas Ruling," is to be applied prospectively.

2. PETRON CORP. VS. TIANGCO, G.R. NO. 158881, APRIL 6, 2008

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. On 1 March
2002, Petron received a letter from 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.” The stated total amount due was P6,259,087.62, a figure derived
from the gross sales of the depot during the years in question. The
computation sheets 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
LGC, as well as a ruling of the Bureau of Local Government Finance of the
Department of Finance dated 31 July 1995, 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, in a
letter dated 8 May 2002. This was followed by a letter from the Mayor dated
15 May 2002, captioned “Final Demand to Pay”, requiring that Petron pay the
assessed amount within five (5) days from receipt thereof, with a threat of
closure of Petron’s operations within Navotas should there be no payment.
Petron, through counsel, replied to the Mayor by another letter posing
objections to the threat of closure.
ISSUE: 

WON PETROLEUM PRODUCTS MAY BE SUBJECTED TO BUSINESS TAX

HELD:

NO. The language of Section 133 (h) makes plain that the prohibition with
respect to petroleum products extends not only to excise taxes thereon, but all
“taxes, fees and charges.” The earlier reference in paragraph (h) to excise
taxes comprehends a wider range of subjects of taxation: all articles already
covered by excise taxation under the NIRC, such as alcohol products, tobacco
products, mineral products, automobiles, and such non-essential goods as
jewelry, goods made of precious metals, perfumes, and yachts and other
vessels intended for pleasure or sports. In contrast, the later reference to
“taxes, fees and charges” pertains only to one class of articles of the many
subjects of excise taxes, specifically, “petroleum products”.While local
government units are authorized to burden all such other class of goods with
“taxes, fees and charges”,excepting excise taxes, a specific prohibition is
imposed barring the levying of any other type of taxes with respect to
petroleum products.While Section 133 (h) does not generally bar the
imposition of business taxes on articles burdened by excise taxes under the
NIRC, it specifically prohibits local government units from extending the levy
of any kind of “taxes, fees or charges on petroleum products.” Accordingly, the
subject tax assessment is ultra vires and void.

3. FIRST PHILIPPINE INDUSTRIAL CORP. VS. COURT OF APPEALS, G.R. NO.

125948 DECEMBER 29, 1998

FACTS: 
FPIC 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]

In January 1995, FPIC 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 FPIC to pay a local tax based on its gross receipts for the
fiscal year 1993 pursuant to the LGC.[3] The respondent City Treasurer assessed a
business tax on the FPIC amounting to P956,076.04 payable in four installments based
on the gross receipts for products pumped at GPS-1 for the fiscal year 1993 which
amounted to P181,681,151.00. In order not to hamper its operations, FPIC paid the tax
under protest in the amount of P239,019.01 for the first quarter of 1993.
On January 20, 1994, FPIC filed a letter-protest[4] addressed to the respondent City
Treasurer, alleging exemption under Section 133 (j) of the LGC. City Treasurer denied
the protest contending that FPIC cannot be considered engaged in transportation
business, thus it cannot claim.[5]

"Section 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

(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."
On June 15, 1994, FPIC filed with the Regional Trial Court of Batangas City a
complaint[6] for tax refund with prayer for a writ of preliminary injunction against
respondents City of Batangas and City Treasurer.

Respondents argued that FPIC cannot be exempt from taxes under Section 133 (j) of
the LGC as said exemption applies only to "transportation contractors and persons
engaged in the transportation by hire and common carriers by air, land and water."
Respondents assert that pipelines are not included in the term "common carrier" which
refers solely to ordinary carriers such as trucks, trains, ships and the like. Respondents
further posit that the term "common carrier" under the said code pertains to the mode or
manner by which a product is delivered to its destination.[8]

On October 3, 1994, RTC ruled against FPIC. CA ruled against FPIC. Affirmed RTC.
MR denied.

ISSUES:

What is a common carrier?

1. Is FPIC, an oil pipeline operator, a common carrier?

2. Does Section 133 (j) of the LGC only refer to common carriers via land, water
and air AND via motor vehicle?
3. Does the law recognize pipeline operators as common carriers?
4. Why are common carriers exempt from local business tax?

HELD:

There is merit in the petition. WHEREFORE, the petition is

hereby GRANTED. The decision of the respondent Court of Appeals dated November
29, 1995 in CA-G.R. SP No. 36801 is REVERSED and SET ASIDE.
ISSUE [1]: A "common carrier" may be defined, broadly, as one who holds himself out
to the public as engaged in the business of transporting persons or property from place
to place, for compensation, offering his services to the public generally.

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation,
firm or association engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering their services to the
public."

The test for determining whether a party is a common carrier of goods is:

1. He must be engaged in the business of carrying goods for others as a public

employment, and must hold himself out as ready to engage in the transportation of
goods for person generally as a business and not as a casual occupation;

2. He must undertake to carry goods of the kind to which his business is confined;

3. He must undertake to carry by the method by which his business is conducted and
over his established roads; and

4. The transportation must be for hire.[15]

ISSUE [2]: Based on the above definitions and requirements, there is no doubt that
FPIC is a common carrier. It is engaged in the business of transporting or carrying
goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry
for all persons indifferently, that is, to all persons who choose to employ its services,
and transports the goods by land and for compensation. The fact that FPIC has a
limited clientele does not exclude it from the definition of a common carrier.

ISSUE [3]: Also, respondent's argument that the term "common carrier" as used in
Section 133 (j) of the LGC refers only to common carriers transporting goods and
passengers through moving vehicles or vessels either by land, sea or water, is
erroneous.

As correctly pointed out by FPIC, the definition of "common carriers" in the Civil Code
makes no distinction as to the means of transporting, as long as it is by land, water or
air. It does not provide that the transportation of the passengers or goods should be by
motor vehicle. In fact, in the United States, oil pipe line operators are considered
common carriers.[17]

ISSUE [4]: Under the Petroleum Act of the Philippines (Republic Act 387), FPIC is
considered a "common carrier." (Article 86)
ISSUE [5]: The legislative intent is to exclude from the taxing power of the local
government unit the imposition of business tax against common carriers is to prevent a
duplication of the so-called "common carrier's tax."

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

4. CITY OF IRIGA VS. CAMSUR III ELECTRIC COOPERATIVE, G.R. NO. 192945
SEPTEMBER 5, 2012
FACTS:

CASURELCO III is an electric cooperative duly organized and existing by virtue of PD

269, as amended, and registered with the National Electric Administration (NEA). It is
engaged in the business of electric power distribution to various end-users and
consumers withing the City of Iriga and the municipalities of the Province of Camarines
Sur, otherwise known as the Rinconada area. Petitioner City of Iriga required
CASURELCO III to pay the franchise taxes due for the period of 1997-2002 to serve as
the basis for the computation of franchise taxes, fees and other charges. The latter
complied and was subsequently assessed taxes. Petitioner made a final demand on
CASURELCO III to pay to pay the franchise taxes and real property taxes due.
CASURELCO III, however, refused to pay said taxes due on the ground that it is an
electric cooperative provisionally registered with CDA, and therefore exempt from the
payment of local taxes, petitioner filed a complaint for the collection of local taxes
against CASURELCO III liable before the RTC, citing its power to ta under the LGC and
the Revenue Code of Iriga City. The RTC rued that the real property taxes had already
prescribed in accordance with sec. 194 of the LGC. However, it found out hat
CASURELCO III is liable for franchise taxes. CASURELCO III appealed the RTC
Decision, questioning its liability for franchise taxes, the CA affirmed the decision of
RTC because the CA found CASURELCO III to be non-profit entity.

ISSUE:

Whether CASURELCO III is liable for franchise taxes.

Ruling:

Yes, thus, t be liable for local franchise tax, the following requisites should concur: 1)
that one has a “franchise” in the sense of a secondary or special franchise; 2) that it is
exercising its rights or privileges, under this franchise within the territory of the pertinent
local government unit.
There is a confluence of these requirements in the case at bar, by virtue of PD 269,
NEA granted CASURELCO III a franchise to operate an electric light and power service
for a period of fifty (50) years, and it is disputed that CASURELCO III operates within
Iriga City and the Rinconada area. It is, liable to pay tax notwithstanding its non-profit
nature.

It should be stressed that what the petitioner seeks to collect from CASURELCO III is a
franchise tax, which as defined, is a tax on the exercise of a privilege. As Sec. 137 of
the LGC provides, franchise tax shall be based on gross receipts precisely because it is
a tax on business, rather than on person or property. Since it partakes the nature of an
excise tax, the situs of taxation is the place where the privilege is exercised, in this
case, in the City of Iriga, where CASURELCO has its principal office and from where it
operates, regardless of the place where its services or products are delivered. Hence,
franchise tax covers all gross receipts form Iriga City and the Riconada area.

5. CITY OF PASIG VS. MERALCO G.R. NO. 181710 MARCH 7, 2018

Under the LGC of 1999, a municipality is bereft of authority to levy and impose franchise
tax on franchise holders within its territorial jurisdiction. That authority belongs to the
provinces and cities only. A franchise tax levied by a municipality is, thus, null and void.
The nullity is not cured by the subsequent conversion on the municipality into a city.

Topic: Effects and application of laws; Acts executed against mandatory or prohibitory
laws.

FACTS:

In 1992, the Sangguniang Bayan of the Municipality of Pasig enacted Ordinance No. 25,
which imposed a franchise tax on all business venture operations carried out through a
franchise within the municipality. IN 1995, the Municipality of Pasig was converted into a
highly urbanized city by virtue of RA 7829 and in 2001, the Treasurer’s Office of the City
Government of Pasig informed MERALCO, a grantee of a legislative franchise, that it is
liable to pay taxes for the period of 1996 to 1999, pursuant to Mun. Ord. No. 25. The
City thereafter, on two separate occasions, demanded payment of the said tax exclusive
f penalties.

MERALCO protested the validity of the demand and subsequently instituted an action
before the RTC for the annulment of the said demand with prayer for a temporary
restraining order with a writ of preliminary injunction.

The RTC ruled in favor of the City if Pasig. Upon appeal, the CA reversed the RTC
ruling, the CA held that the LGC authorizes cities to levy a franchise tax. However, the
basis of the City of Pasig’s demand for payment of franchise tax was Sec. 32, Art. 3 of
Ord. No. 25 which was enacted at a time when Pasig was still a municipality and had no
authority to levy a franchise tax. The conversion of Pasig into a City din not rectify the
defect of the defect of the said ordinance. (San Miguel Corp. v. Municipal Council
(SMC) and Arabay, Inc. v. CFI of Zamboanga del Norte). Hence, this appeal.

ISSUE:

Whether Sec. 32 of Mun. Ord. No. 25 is void for being direct contravention with Sec.
142 of the LGC (prohibitory law). Yes

Whether the Municipality of Pasig can impose franchise taxes. No.

HELD:

No, unlike a city a Municipality is bereft of authority to levy tax, thus, the ordinance
enacted for that purpose is void. The conversion of the municipality into a city does nor
lend validity to the void ordinance. Neither does it authorize the collection of the tax
under said ordinance.

The LGC further provides that the power to impose a tax, fee or charge or to generate
revenue, shall be exercised by the Sanggunian of the LGU concerned through an
appropriate ordinance. However, the ordinance must pass the test of constitutionality
and the test of consistency with the prevailing laws. Otherwise, it shall be void.

It is not disuted that at the time the ordinance was enacted in 1992, the local
government of Pasig, then a municipality, had no authority to levy franchise tax. Art. 5 of
the Civil Code explicitly provides,” acts executed against provisions of mandatory or
prohibitory laws shal be void, except when law itself authorizes their validity”. Sec. 32 of
Mun. Ord. No. 25 is thus, void for being in direct contravention with Sec. 142 of the
LGC. Being void, it cannot be given any legal effect. An Assessment and collection
pursuant to the said ordinance is, perforce, legally infirm.

6. LEPANTO CONSOLIDATED VS. AMBANLOC G.R. NO. 180639 JUNE 29, 2010

FACTS:

Lepanto Consolidated Mining had a mining lease contract for a mining claim in Benguet. They
used the sand and gravel mined to construct and maintain concrete structures needed in its
mining operations such as a tailings dam, access roads, and offices. The provincial treasurer
of Benguet then asked Lepanto Consolidated Mining to pay sand and gravel tax for the quarry
materials extracted from the mining site. The counterargument was that the said tax applied
only to commercial extractions and since Lepanto did not supply other users for some profit,
the tax should not apply.

ISSUE:
Is Lepanto liable for the tax imposed by Benguet on the sand and gravel that it extracted from
within the area of its mining claim used exclusively in its mining operations?

HELD:

YES. The CTA erred in applying the provision of the Local Government Code (Section 138)
since the basis of Benguet province emanates from the Revised Benguet Revenue Code itself.
This notwithstanding, the provincial revenue measure still did not distinguish between
commercial and non-commercial extractions.

In addition, the Petitioner’s argument that when a company is taxed on its main business it
can no longer be taxable for engaging in an activity that is but part of, incidental to, and
necessary to such main business, was held to be inapplicable. The Court said that the cases
where the above principle has been applied involved business taxes and thus the incidental
activities could not be treated as separate and distinct from the main business. Here the tax
being imposed was an excise tax levied on the privilege of extracting gravel and sand.

7. PELIZLOY REALTY CORP. VS. PROVINCE OF BENGUET, G.R. NO. 183137,

APRIL 10, 2013

FACTS:

Petitioner Pelizloy Realty Corporation owns Palm Grove Resort in Tuba, Benguet, which has facilities like
swimming pools, a spa and function halls.

In 2005, the Provincial Board of Benguet approved its Revenue Code of 2005. Section 59, the tax
ordinance levied a 10% amusement tax on gross receipts from admissions to "resorts, swimming pools,
bath houses, hot springs and tourist spots."

Pelizloy's posits that amusement tax is an ultra vires act. Thus, it filed an appeal/petition before the
Secretary of Justice. Upon the Secretary’s failure to decide on the appeal within sixty days, Pelizloy filed a
Petition for Declaratory Relief and Injunction before the RTC.

Pelizloy argued that the imposition was in violation of the limitation on the taxing powers of local
government units under Section 133 (i) of the Local Government Code, which provides that the exercise
of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of
percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or
services except as otherwise provided.

The Province of Benguet assailed the that the phrase ‘other places of amusement’ in Section 140 (a) of
the LGC encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots since Article
131 (b) of the LGC defines "amusement" as "pleasurable diversion and entertainment synonymous to
relaxation, avocation, pastime, or fun."

RTC rendered a Decision assailed Decision dismissing the Petition for Declaratory Relief and Injunction
for lack of merit. Procedurally, the RTC ruled that Declaratory Relief was a proper remedy. However, it
gave credence to the Province of Benguet's assertion that resorts, swimming pools, bath houses, hot
springs, and tourist spots are encompassed by the phrase ‘other places of amusement’ in Section 140 of
the LGC.

ISSUE:  W/N provinces are authorized to impose amusement taxes on admission fees to resorts,
swimming pools, bath houses, hot springs, and tourist spots for being "amusement places" under the
LGC.

RULING: NO.

Amusement taxes are percentage taxes. However, provinces are not barred from levying amusement
taxes even if amusement taxes are a form of percentage taxes. The levying of percentage taxes is
prohibited "except as otherwise provided" by the LGC. Section 140 provides such exception.

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 these places 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."

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

As defined in The New Oxford American Dictionary, ‘show’ means "a spectacle or display of something,
typically an impressive one"; while ‘performance’ means "an act of staging or presenting a play, a concert,
or other form of entertainment." 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.

PELIZLOY REALTY CORP. VS. PROVINCE OF BENGUET

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. It is located at Asin, Angalisan, Municipality of
Tuba, Province of Benguet. 
On December 8, 2005, 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.” Specifically, it provides the following:

Article Ten: Amusement Tax on Admission

Section 59. Imposition of Tax.— There is hereby levied a tax to be collected

from the proprietors, lessees, or operators of theaters, cinemas, concert halls,
circuses, cockpits, dancing halls, dancing schools, night or day clubs, and
other places of amusement at the rate of thirty percent (30%) of the gross
receipts from admission fees; and

A tax of ten percent (10%) of gross receipts from admission fees for
boxing, resorts, swimming pools, bath houses, hot springs, and tourist
spots is likewise levied.[Emphasis and underscoring supplied]

Section 162 of the Tax Ordinance provided that the Tax Ordinance shall take
effect on January 1, 2006.

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 on January 27, 2006.

ISSUE: WON THE PROVINCE HAS THE POWER TO IMPOSE

PERCENTAGE TAX.

WON THE SECOND PARAGRAPH MENTIONED IN THE ORDINANCE IS

BEYOND THE CONTEMPLATION OF THE POWER OF THE PROVINCE TO
IMPOSE AMUSEMENT TAXES.

HELD: YES. Amusement taxes are fixed at a certain percentage of the gross

receipts incurred by certain specified establishments. Thus, applying the
definition in CIR v. Citytrust and drawing from the treatment of amusement
taxes by the NIRC, amusement taxes are percentage taxes as correctly
argued by Pelizloy. However, provinces are not barred from levying
amusement taxes even if amusement taxes are a form of percentage taxes.
Section 133 (i) of the LGCprohibits 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.

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

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

(d) The Sangguniang Panlalawigan may prescribe the time, manner, terms
and conditions for the payment of tax. In case of fraud or failure to pay the tax,
the Sangguniang Panlalawigan may impose such surcharges, interests and
penalties.

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

Evidently, Section 140 of the LGC carves a clear exception to the general rule

in Section 133 (i). Section 140 expressly allows for the imposition by
provinces of amusement taxes on “the proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing stadia, and other places of
amusement.”
However, resorts, swimming pools, bath houses, hot springs, and tourist spots
are not among those places expressly mentioned by Section 140 of
the LGC as being subject to amusement taxes. Thus, the determination of
whether amusement taxes may be levied on admissions to resorts, swimming
pools, bath houses, hot springs, and tourist spots hinges on whether the
phrase ‘other places of amusement’ encompasses resorts, swimming pools,
bath houses, hot springs, and tourist spots.

Considering these, it is clear that resorts, swimming pools, bath houses, hot
springs and tourist spots cannot be considered venues primarily “where one
seeks admission to entertain oneself by seeing or viewing the show or
performances”.While it is true that they may be venues where people are
visually engaged, they are not primarily venues for their proprietors or
operators to actively display, stage or present shows and/or
performances.Thus, resorts, swimming pools, bath houses, hot springs and
tourist spots do not belong to the same category or class as theaters,
cinemas, concert halls, circuses, and boxing stadia. It follows that they cannot
be considered as among the ‘other places of amusement’ contemplated by
Section 140 of the LGC and which may properly be subject to amusement
taxes.

8. PBA VS. CA 337 SCRA 358

FACTS:

In June 21, 1989, petitioner received an assessment letter from the CIR for payment of
deficiency amusement tax. In July 18, 1989, petitioner files a protest with the
Commissioner who denied the same on November 6, 1989. In January 8, 199,
petitioner files for review with the CTA questioning the denial by the CIR of its tax
protest. The CTA dismissed the petition for lack of merit.

Petitioner then files a motion for reconsideration but was denied by CTA;
petitioner then appeals the decision to the CA. CA affirms the CTA decision, petitioner
files a motion for reconsideration but was denied by CA. Petitioner contends that PD
231, Local Tax Code of 1973, transferred power and authority to levy and collect
amusement taxes from sale of admission tickets of amusement from national
government to local government.

ISSUES-HELD:
 1. Whether Amusement tax on admission tickets to PBA games are considered
national or local tax.

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

2. Whether cession of advertising and streamer spaces

9. ANGELES CITY VS. ANGELES CITY ELECTRIC COOPERATIVE, G.R. NO.

166134 JUNE 29, 2010
10. CITY MAYOR OF QUEZON CITY VS. RCBC G.R. NO. 171033, AUGUST 3,
2010
11. YAMANE VS. B.A. LEPANTO CONDOMINIUM 474 SCRA 258
12. TEAM PACIFIC VS. DAZA G.R. NO. 167732, JULY 11, 2012