FDCP v.

Colon Heritage Realty Corporation

G.R. No. 203754/G.R. No. 204418, October 15, 2019
SC En Banc
Perlas-Bernabe, J.

Lessons Applicable: Doctrine of Operative Fact , Lifeblood theory

Laws Applicable:

FACTS:

 1993: Cebu City passed City Ordinance No. LXIX: Revised Omnibus Tax Ordinance of
the City of Cebu, Sections 42 and 43, Chapter XI of the Ordinance required proprietors,
lessees or operators of theaters, cinemas, concert halls, circuses, boxing stadia and
other places of amusement to pay amusement tax equivalent to 30% of the gross
receipts of the admission fees to the Office of the City Treasurer of Cebu City.
 June 7, 2002: Congress passed RA 9167 creating FDCP. Sections 13 and 14 thereof
provide that the amusement tax on certain graded films which would otherwise accrue to
the cities and municipalities in Metropolitan Manila and highly urbanized and
independent component cities in the Philippines during the period the graded film is
exhibited, should be deducted and withheld by the proprietors, operators or lessees of
theaters or cinemas and remitted to the FDCP which shall reward the same to producers
of the graded films.
 RTC: Granted Cebu City and CHRC separate petition for declaratory relief before the
RTC Cebu City which sought to declare Sections 13 and 14 of RA 9167 invalid and
unconstitutional.
ISSUE: W/N doctrine of operative fact in relation to the declaration of Sections 13 and 14 of RA 9167
as invalid and unconstitutional.

HELD: YES. The operative fact doctrine equally applies to the non-remittance by proprietors since
the law produced legal effects prior to the declaration of the nullity of Sections 13 and 14 of RA
9167.

 The operative fact doctrine recognizes the existence and validity of a legal provision prior
its being declared as unconstitutional and legitimizes otherwise invalid acts done
pursuant thereto because of considerations of practicality and fairness.
 In this regard, certain acts done pursuant to a legal provision which was just
recently declared as unconstitutional by the Court cannot be anymore undone
because not only would it be highly impractical to do so, but more so, unfair to
9’/,those who have relied on the said legal provision prior to the time it was struck
down.
 The right to receive the amusement taxes accrued the moment the taxes were deemed
payable under the provisions of the Omnibus Tax Ordinance of Cebu City.
 Taxes, once due, must be paid without delay to the taxing authority
 Taxes are the lifeblood of Government and their prompt and certain availability is
an imperious need. This flows from the truism that without taxes, the
government would be paralyzed for lack of the motive power to activate and
operate it.
 The prompt payment of taxes to the rightful authority, cannot be left to the whims
of taxpayers. To rule otherwise would be to acquiesce to the norm allowing
taxpayers to reject payment of taxes under the supposition that the law imposing
the same is illegal or unconstitutional. This would unduly hamper government
operations.
  [CASE DIGEST] MATALIN COCONUT, INC. v. MUNICIPAL
COUNCIL OF MALABANG (143 SCRA 404)
 FACTS

Pursuant to Sec. 2 of the Local Autonomy Act, the Municipal Council of Malabang in Lanao del
Sur enacted in 1966 Municipal Ordinance No. 45-46, which imposed a “police inspection fee” of
P.30 per sack of cassava starch or flour produced and shipped out of the municipality.

Matalin Coconut, Inc. challenged the validity of the ordinance and filed a petition for
declaratory relief, alleging that said ordinance was not only ultra vires for being violative of RA
2263, but also unreasonable, oppressive, and confiscatory.

RULING

The Supreme Court ruled in favor of Matalin Coconut, Inc.

The tax imposed under the ordinance in question is unjust and unreasonable.

The SC held that the pretention of the Municipal Council of Malabang that the police, aside
from counting the number of bags shipped out, is also inspecting the cassava flour starch
contained in the bags to find out if the said cassava flour starch is fit for human consumption
could not be given credence because, aside from the fact that said purpose is not so stated in
the ordinance in question, the policemen of said municipality are not competent to determine
if the cassava flour starch is fit for human consumption.

The further imposition of the tax of P0.30 per bag would also force the petitioner to close or
stop its cassava flour starch milling business, considering that it merely realizes a marginal
average profit of P0.40 per bag of cassava flour starch while it maintains a big labor force in its
operation.

The ordinance, therefore, has an adverse effect on the economic growth of the Municipality of
Malabang, in particular, and of the nation, in general, and is contrary to the economic policy of
the government.

PETRON CORP. V. TIANGCO,

G.R. NO. 158881, [APRIL 16,
2008], 574 PHIL 620-639
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.

Consolidated Cases of City of Manila, et al. vs. Hon. Colet G.R. No. 120051. December 10, 2014
Supreme Court En Banc, Leonardo-De Castro, J.

FACTS: The City of Manila, through its City Treasurer, began imposing and collecting the business tax
under Section 21(B) of the Manila Revenue Code (Code), as amended by Ordinance No. 7807
(Ordinance). Section 21 (B) of the Code imposed business tax on “transportation contractors, persons
who transport passenger or freight for hire, and common carriers by land, air or water” while the
Ordinance amended such by lowering the tax rate from 3% per annum to .5% per annum. Because they
were assessed and/or compelled to pay business taxes pursuant to Section 21(B) of the Manila Revenue
Code, as amended, before they were issued their business permits, several corporations, with principal
offices in Manila and operating as "transportation contractors, persons who transport passenger or freight
for hire, and common carriers by land, air or water," filed their respective petitions before the Manila RTC
against the City of Manila, Mayor Lim, Vice Mayor LitoAtienza (Atienza), the City Council of Manila
and City Treasurer Acevedo and questioned the constitutionality of Sec. 21 (B) for being contrary to the
Constitution and the Local Government Code, and asked for the refund of what they had paid as business
tax.
ISSUE: Whether or not Section 21(B) of the Manila Revenue Code, as amended by Ordinance No. 7807
is unconstitutional

RULING: Yes. Section 133(j) of the Local Government Code clearly and unambiguously proscribes
LGUs from imposing any tax on the gross receipts of transportation contractors, persons engaged in the
transportation of passengers or freight by hire, and common carriers by air, land, or water. Yet, confusion
arose from the phrase “unless otherwise provided herein,” found at the beginning of the said provision,
and the City of Manila anchors the validity of Sec. 21 (B) on said phrase.

[CASE DIGEST] PROVINCIAL ASSESSOR OF AGUSAN DEL SUR

vs. FILIPINAS PALM OIL PLANTATION, INC. (G.R. No. 183416)
October 5, 2016

Ponente: Leonen, J.
FACTS:

Filipinas Palm Oil Plantation Inc. (Filipinas) is a private organization engaged in palm oil plantation.
Prior to the passage of the Comprehensive Agrarian Reform Law (CARL) in 1988, Filipinas’ plantation
was in a 7,000-hectare property in Agusan del Sur owned by the National Development Company (NDC).
(A/N: No mention of the type of contractual relationship between the parties.) Harvested fruits from
oil palm trees were converted into oil through Filipinas’ milling plant in the middle of the plantation
area. Within the plantation, there were also three (3) plantation roads and a number of residential
homes constructed by Filipinas for its employees.

When the CARL was enacted in 1998, all lands belonging to NDC were transferred to CARL beneficiaries
who formed themselves as the merged NDC-Guthrie Plantations, Inc. - NDC-Guthrie Estates, Inc. (NGPI-
NGEI) Cooperatives.

On account of the change in ownership of the land where its plantation was located, Filipinas entered
into a lease contract agreement with NGPI-NGEI. Subsequently, the Provincial Assessor of Agusan del
Sur assessed Filipinas’ properties found within the plantation area and held the company liable for real
property taxes for the land itself, the low-cost housing units, the three roads, and the company’s road
equipment and mini haulers, which the Provincial Assessor considered as immovables.

Filipinas assailed the assessment before the Local Board of Assessment Appeals (LBAA), which later
ruled that Filipinas was indeed liable for realty tax albeit for a lesser amount, except for the low-cost
housing units, road equipment, and mini haulers, which the LBAA considered as movables vital to
Filipinas’ business.

Not satisfied with the LBAA’s ruling, Filipinas filed an appeal before the Central Board of Assessment
Appeals (CBAA).

CBAA: Filipinas should not be held liable to the Government for real property taxes on the lands owned
by NGPI-NGEI, a multi-purpose cooperative, nor should it be held liable for the real property taxes due
on the roads. Finally, the CBAA held that road equipment and haulers are not real properties and,
accordingly, Filipinas should not be held liable for real property tax thereon.

CA: Affirmed the CBAA’s ruling. The CA held that:

(a) Filipinas’ plantation, located in a land owned by NGPI-NGEI, a cooperative, cannot be subjected to
real property tax pursuant to Section 133(n) of the LGC.
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:

....

(n) Taxes, fees, or charges, on Countryside and Barangay Business Enterprises and cooperatives duly
registered under R.A. No. 6810 and Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No.
6938) otherwise known as the Cooperative Code of the Philippines.
The CA also held that pursuant to Section 234(d) of the LGC, duly registered cooperatives, like NGPI-
NGEI, are exempt from payment of real property taxes.
SECTION 234. Exemptions from Real Property Tax. — The following are exempted from payment of the
real property tax:
....
(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938.
The CA also held that the pertinent provisions “neither distinguishes nor specifies” that the exemption
only applies to real properties used by the cooperatives. It ruled that “[t]he clear absence of any
restriction or limitation in the provision could only mean that the exemption applies to wherever the
properties are situated and to whoever uses them” Therefore, the exemption privilege extends to
Filipinas as the cooperatives’ lessee.

(b) The roads within the plantation’s premises are also tax-exempt.

Although it is undisputed that the roads were built primarily for Filipinas’ benefit, the roads should be
tax-exempt since these roads were also being used by the cooperatives and the public.

Bislig Bay Lumber Company, Inc. v. Provincial Government of Surigao: “...it cannot be disputed that
the ownership of the road that was constructed by appellee belongs to the government by right
accession not only because it is inherently incorporated or attached to the timber land leased to
appellee but also because upon the expiration of the concession, said road would ultimately pass to the
national government.

In the second place, while the road was constructed by appellee primarily for its use and benefit, the
privilege is not exclusive, for, under the lease contract entered into by the appellee and the
government and by public in by the general... Since, as above shown, the road in question cannot be
considered as an improvement which belongs to appellee, although in part is for its benefit, it is clear
that the same cannot be the subject of assessment.”

Furthermore, the CA agreed with the CBAA that the roads constructed by Filipinas had become
permanent improvements on the land owned by NGPI-NGEI. Articles 440 and 445 of the Civil Code
provide that these improvements redound to the benefit of the land owner under the right of
accession:
Article 440. The ownership of property gives the right by accession to everything which is produced
thereby, or which is incorporated or attached thereto, either naturally or artificially.
Article 445. Whatever is built, planted or sown on the land of another and the improvements or
repairs made thereon, belong to the owner of the land, subject to the provisions of the following
articles.
(c) The road equipment and mini haulers are only movables and are therefore not subject to real
property tax.

The CA held that Section 199(o) of the LGC provides a definition of machinery subject to real property
taxation:
SECTION 199. Definition of Terms. — When used in this Title, the term:

....

(o) “Machinery” embraces machines, equipment, mechanical contrivances, instruments, appliances or

apparatus which may or may not be attached, permanently or temporarily, to the real property. It
includes the physical facilities for production, the installations and appurtenant service facilities,
those which are mobile, self-powered or self-propelled, and those not permanently attached to the
real property which are actually, directly, and exclusively used to meet the needs of the particular
industry, business or activity and which by their very nature and purpose are designed for, or
necessary to its manufacturing, mining.
The CA held that Section 199(o) of the LGC should be construed to include machineries covered by the
meaning of real properties provided for under Article 415(5) of the Civil Code:
Article 415. The following are immovable property:

....

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly
to meet the needs of the said industry or works[.]
Davao Sawmill Company v. Castillo: “Machinery that is movable by nature becomes immobilized only
when placed by the owner of the tenement, but not so when placed by a tenant or any other person
having a temporary right unless this person acts as an agent of the owner. Thus, the mini haulers and
other road equipment retain their nature as movables.”

In light of the CA’s ruling, the Provincial Assessor filed the instant Petition for Review.

RULING:

Petition partly granted. CA ruling affirmed with modification that the road equipment and the mini
haulers should be treated as immovables subject to real property taxes.

Whether the exemption privilege of NGPI-NGEI from payment of real property tax extends to Filipinas
as lessee of the parcel of land owned by cooperatives. – YES.

[Provincial Assessor]

Cooperatives cannot extend their exemption from real property tax to taxable persons (Mactan Cebu
International Airport Authority v. Ferdinand J. Marcos).

Sections 198, 199, 205, and 217 of the Local Government Code provide that real property taxes are
assessed based on actual use.

SECTION 198. Fundamental Principles. — The appraisal, assessment, levy and collection of real
property tax shall be guided by the following fundamental principles:

....

(b) Real property shall be classified for assessment purposes on the basis of its actual use[.]

....

SECTION 199. Definition of Terms. — When used in this Title, the term:

....

(b) “Actual Use” refers to the purpose for which the property is principally or predominantly utilized
by the person in possession thereof[.]

....

SECTION 205. Listing of Real Property in the Assessment Rolls. —

....

(d) Real property owned by the Republic of the Philippines, its instrumentalities and political
subdivisions, the beneficial use of which has been granted, for consideration or otherwise, to a
taxable person, shall be listed, valued and assessed in the name of the possessor, grantee or of the
public entity if such property has been acquired or held for resale or lease.

....

SECTION 217. Actual Use of Real Property as Basis for Assessment. — Real property shall be classified,
valued and assessed on the basis of its actual use regardless of where located, whoever owns it, and
whoever uses it.
Moreover, the exemption of cooperatives applies only when it is the cooperative that actually, directly,
and exclusively uses and possesses the properties.

[Filipinas]

The exemption of cooperatives from real property taxes extends to it as the lessee.
Under its lease agreement with NGPI-NGEI, Filipinas pays an Annual Fixed Rental, which includes the
payment of taxes. It claims that in case NGPI-NGEI is liable to the local government for real property
tax on the land, the tax should be taken from the Annual Fixed Rental. To make Filipinas pay real
property taxes on the leased land would be equivalent to assessing it twice for the same property.

[Supreme Court]

(a) CA ruling on exemption of cooperatives from real property tax affirmed. (See CA ratio above.)
Under Section 133(n) of the LGC, the taxing power of local government units shall not extend to the
levy of taxes, fees, or charges on duly registered cooperatives under the Cooperative Code.

NGPI-NGEI, as the owner of the land being leased by Filipinas, falls within the purview of the law.
Section 234 of the Local Government Code exempts all real property owned by cooperatives without
distinction. Nothing in the law suggests that the real property tax exemption only applies when the
property is used by the cooperative itself. Similarly, the instance that the real property is leased to
either an individual or corporation is not a ground for withdrawal of tax exemption.

SC’s ruling in Mactan is inapplicable; said ruling does not refer to the tax exemption extended to
cooperatives.

(b) The roads that Filipinas constructed within the leased area should not be assessed with real
property taxes.

SC’s ruling in Bislig Bay applicable in the instant case. (See Bislig Bay ruling in CA ratio above.)
Board of Assessment Appeals of Zamboanga del Sur v. Samar Mining Company: Reaffirmed Bislig Bay
doctrine: “The improvement is exempt from taxation because it is an integral part of the public land
on which it is constructed and the improvement is the property of the government by right of
accession. Under Section 3(a) of the Assessment Law, all properties owned by the government, without
any distinction, are exempt from taxation.”

The roads that Filipinas constructed became permanent improvements on the land owned by the NGPI-
NGEI by right of accession under the Civil Code.

Despite the land being leased by Filipinas when the roads were constructed, the ownership of the
improvement still belongs to NGPI-NGEI. As provided under Article 440 and 445 of the Civil Code, the
land is owned by the cooperatives at the time Filipinas built the roads. Hence, whatever is
incorporated in the land, either naturally or artificially, belongs to the NGPI-NGEI as the landowner.

Although the roads were primarily built for Filipinas’ benefit, the roads were also being used by the
members of NGPI and the public. Furthermore, the roads inured to the benefit of NGPI-NGEI as owners
of the land not only by right of accession but through the express provision in the lease agreement.
Filipinas’ claims that under its lease agreement with NGPI-NGEI, it pays an Annual Fixed Rental, which
includes the payment of taxes. As such, if NGPI-NGEI were liable to the local government for real
property tax on the land, the tax should be taken from the Annual Fixed Rental. But this proviso in the
lease agreement finds no use in light of the fact that by express provision of the Local Government
Code, NGPI-NGEI is exempted from payment of real property tax.

Whether Filipinas’ road equipment and mini haulers are movable properties and have not been
immobilized by destination for real property taxation. – NO.
[Provincial Assessor]

Section 199(o) of the LGC specifically covers Filipinas’ road equipment and mini haulers since these are
directly and exclusively used to meet the needs of Filipinas’ industry, business, or activity.
Article 415(5) of the Civil Code, which defines real property, should not be made to control the LGC, a
subsequent legislation that specifically defines “machinery” for taxation purposes.

[Filipinas]

The road equipment and mini haulers are movables by nature. Although there may be a difference
between the meaning of “machinery” under the Local Government Code arid that of immovable
property under Article 415(5) of the Civil Code, the controlling interpretation of Section 199(o) of [the
Local Government Code] is the interpretation of Article 415(5) of the Civil Code.

[Supreme Court]

Section 199(o) of the Local Government, which provides for a definition of machineries that are subject
to real property tax, prevails over Article 415(5) of the Civil Code. As between the Civil Code, a general
law governing property and property relations, and the Local Government Code, a special law granting
local government units the power to impose real property tax, then the latter shall prevail.
SECTION 199. Definition of Terms. — When used in this Title, the terra:

....

(o) “Machinery” . . . includes the physical facilities for production, the installations and appurtenant
service facilities, those which are mobile, self-powered or self-propelled, and those not permanently
attached to the real property which are actually, directly, and exclusively used to meet the needs of
the particular industry, business or activity and which by their very nature and purpose are designed
for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural
purposes [.]
Filipinas is engaged in palm oil plantation. Thus, it harvests fruits from palm trees for oil conversion
through its milling plant. By the nature of Filipinas’ business, transportation is indispensable for its
operations.

The Provincial Assessor is correct in claiming that the phrase “pertaining to physical facilities for
production” is comprehensive enough to include the road equipment and mini haulers as actually,
directly, and exclusively used by Filipinas to meet the needs of its operations in palm oil production.

Moreover, “mini-haulers are farm tractors pulling attached trailers used in the hauling of seedlings
during planting season and in transferring fresh palm fruits from the farm [or] field to the processing
plant within the plantation area.” The indispensability of the road equipment and mini haulers in
transportation makes it actually, directly, and exclusively used in the operation of Filipinas' business.

Under the definition provided in Section 199(o) of the Local Government Code, the road equipment and
the mini haulers are classified as machinery and are therefore subject to real property tax.

MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner,

vs.
COURT OF APPEALS, CITY OF PARAÑAQUE, CITY MAYOR OF PARAÑAQUE, SANGGUNIANG PANGLUNGSOD
NG PARAÑAQUE, CITY ASSESSOR OF PARAÑAQUE, and CITY TREASURER OF PARAÑAQUE, respondents.

GR No. 155650

July 20, 2006

FACTS:

Manila International Airport Authority (MIAA) is the operator of the Ninoy International Airport located
at Paranaque City. The Officers of Paranaque City sent notices to MIAA due to real estate tax
delinquency. MIAA then settled some of the amount. When MIAA failed to settle the entire amount, the
officers of Paranaque city threatened to levy and subject to auction the land and buildings of MIAA,
which they did. MIAA sought for a Temporary Restraining Order from the CA but failed to do so within
the 60 days reglementary period, so the petition was dismissed. MIAA then sought for the TRO with the
Supreme Court a day before the public auction, MIAA was granted with the TRO but unfortunately the
TRO was received by the Paranaque City officers 3 hours after the public auction.

MIAA claims that although the charter provides that the title of the land and building are with MIAA still
the ownership is with the Republic of the Philippines. MIAA also contends that it is an instrumentality of
the government and as such exempted from real estate tax. That the land and buildings of MIAA are of
public dominion therefore cannot be subjected to levy and auction sale. On the other hand, the officers
of Paranaque City claim that MIAA is a government owned and controlled corporation therefore not
exempted to real estate tax.

ISSUES:

1. Whether or not MIAA is an instrumentality of the government and not a government owned and
controlled corporation and as such exempted from tax.

2. Whether or not the land and buildings of MIAA are part of the public dominion and thus cannot be
the subject of levy and auction sale.

HELD:

1. MIAA is an instrumentality of the government vested with corporate powers and government
functions. Under the Local government code, government owned and controlled corporations are not
exempted from real estate tax. MIAA is not a government owned and controlled corporation, for to
become one MIAA should either be a stock or non stock corporation. MIAA is not a stock corporation for
its capital is not divided into shares. It is not a non stock corporation since it has no members.

2. The court held that the land and buildings of MIAA are part of the public dominion. Since the airport is
devoted for public use, for the domestic and international travel and transportation. Even if MIAA charge
fees, this is for support of its operation and for regulation and does not change the character of the land
and buildings of MIAA as part of the public dominion. As part of the public dominion the land and
buildings of MIAA are outside the commerce of man. To subject them to levy and public auction is
contrary to public policy. Unless the President issues a proclamation withdrawing the airport land and
buildings from public use, these properties remain to be of public dominion and are inalienable. As long
as the land and buildings are for public use the ownership is with the Republic of the Philippines.

Under the civil code, property may either be under public dominion or private ownership. Those under
public dominion are owned by the State and are utilized for public use, public service and for the
development of national wealth. The ports included in the public dominion pertain either to seaports or
airports. When properties under public dominion cease to be for public use and service, they form part
of the patrimonial property of the State.

Nursery Care Corporation vs Acevedo G.R. No. 180651 July 30, 2014

FACTS:  The City of Manila assessed and collected taxes from petitioners pursuant to:  Section 15
(Tax on Wholesalers, Distributors, or Dealers)  and Section 17 (Tax on Retailers) of the Revenue Code
of Manila.  At the same time, the City of Manila imposed additional taxes upon the petitioners pursuant
to:  Section 21 of the Revenue Code of Manila,4 as amended as a condition for the renewal of their
respective business licenses for the year 1999.  the petitioners formally requested the Office of the City
Treasurer for the tax credit or refund of the local business taxes paid under protest.6However, then City
Treasurer Anthony Acevedo (Acevedo) denied the request  On April 29, 1999, the petitioners filed their
respective petitions for certiorari in RTC of Manila who ruled that there was no double taxation  The CA
denied the petitioner’s appeal

ISSUE: Whether or not the petitioners were entitled to the tax credit or tax refund for the taxes paid by
reason of double Taxation.

RULING: Yes. The Collection of taxes pursuant to Section 21 of the Revenue Code of Manila constituted
double taxation  The court, deems it fitting and proper to adopt a liberal approach in order to render a
just and speedy disposition of the substantive issue at hand. Courts have the prerogative to relax
procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to
speedily put an end to litigation and the parties' right to due process.  In resolving the issue of double
taxation involving Section 21 of the Revenue Code of Manila, the Court is mindful of the ruling in City of
Manila v. Coca-Cola Bottlers Philippines, Inc.,37 which has been reiterated in Swedish Match
Philippines, Inc. v. The Treasurer of the City of Manila.38 In the latter, the Court has held: x x x [T]he
issue of double taxation is not novel, as it has already been settled by this Court in The City of Manila v.
CocaCola Bottlers Philippines, Inc.,in this wise: Petitioners obstinately ignore the exempting proviso in
Section 21 of Tax Ordinance No. 7794, to their own detriment.1âwphi1 Said exempting proviso was
precisely included in said section so as to avoid double taxation.



Double taxation means taxing the same property twice when it should be taxed only once; that is, "taxing
the same person twice by the same jurisdiction for the same thing." It is obnoxious when the taxpayer is
taxed twice, when it should be but once. Otherwise described as "direct duplicate taxation," the two taxes
must be imposed on the same subject matter, for the same purpose, by the same taxing authority, within
the same jurisdiction, during the same taxing period; and the taxes must be of the same kind or character.
Using the aforementioned test, the Court finds that there is indeed double taxation if respondent is
subjected to the taxes under both Sections 14 and 21 of Tax Ordinance No. 7794, since these are being
imposed: (1) on the same subject matter – the privilege of doing business in the City of Manila; (2) for the
same purpose – to make persons conducting business within the City of Manila contribute tocity
revenues; (3) by the same taxing authority – petitioner Cityof Manila; (4) within the same taxing
jurisdiction – within the territorial jurisdiction of the City of Manila; (5) for the same taxing periods – per
calendar year; and (6) of the same kind or character – a local business tax imposed on gross sales or
receipts of the business. Firstly, because Section 21 of the Revenue Code of Manila imposed the tax on a
person who sold goods and services in the course of trade or business based on a certain percentage ofhis
gross sales or receipts in the preceding calendar year, while Section 15 and Section 17 likewise imposed
the tax on a person who sold goods and services in the course of trade or business but only identified such
person with particularity, namely, the wholesaler, distributor or dealer (Section 15), and the retailer
(Section 17), all the taxes – being imposed on the privilege of doing business in the City of Manila in
order to make the taxpayers contributeto the city’s revenues – were imposed on the same subject matter
and for the same purpose. Secondly, the taxes were imposed by the same taxing authority (the City of
Manila) and within the same jurisdiction in the same taxing period (i.e., per calendar year). Thirdly, the
taxes were all in the nature of local business taxes. The taxes collected pursuant thereto must be refunded.

City of Davao, et. al. v. ARC Investors, Inc.

City of Davao, et. al. v. ARC Investors, Inc.

G.R. No. 249668

 July 13, 2022

Indeed, local government units have the power to impose LBT on the privilege
of doing business within their territorial jurisdictions. The term “doing
business” contemplates some “trade or commercial activity regularly engaged
in as a means of

livelihood or with a view to profit”

Whether ARCII is an NBFI subject to LBT under Section 143(f), in relation to

Section 151, of the LGC.

Under Section 143(f), the persons liable to pay LBT are banks or other
financial institutions by virtue of the nature of their business. LBT are imposed
on their gross receipts from “interest, commissions and discounts from lending
activities, income from financial leasing, dividends, rentals or property and
profit from exchange or sale of property, insurance premium.” In order to be
considered as an NBFI under the LGC, in relation to the NIRC and pertinent
banking laws and regulations, it must concur with all the necessary requisites
and parameters laid

down

The primary test for the distinction between a holding company and a financial
intermediary contemplates regularity of function.

The taxpayer earned dividends from its preferred shares of stocks in SMC and
interests on its money market placements. The City of Davao and its treasurer
assessed the taxpayer LBT equivalent to 0.55% of the dividends and interests
the latter earned for the third and fourth quarters of 2011.
The Supreme Court ruled that LBT cannot be imposed against the taxpayer.
The City of Davao assessed the taxpayer based on

Section 143(f), in relation to Section 131 (e) of the LGC. Under Section 143(f)
of the LGC, persons liable to pay LBT are banks or other financial institutions
by virtue of the nature of their business. LBT are imposed on their gross
receipts from "interest, commissions and discounts from lending activities,
income from financial leasing, dividends, rentals on property and profit from
exchange or sale of property, insurance premium.

The Court emphasizes that the primary test for the distinction between a
holding company and a financial intermediary contemplates regularity of
function, not on an isolated basis, with the end in mind for self-profit. Here, the
taxpayer’s placement of dividends derived from its SMC shares in the market
incidentally earning interests does not negate the corporation’s restricted
underlying purpose as a holding company.

ERICSSON
TELECOMMUNICATIONS, INC.
V. CITY OF PASIG, G.R. NO.
176667, [NOVEMBER 22, 2007],
563 PHIL 417-433
FACTS: Ericsson Telecommunications, Inc. (petitioner), a corporation
with principal office in Pasig City, is engaged in the design,
engineering, and marketing of telecommunication facilities/system. In
an Assessment Notice dated October 25, 2000 issued by the City
Treasurer of Pasig City, petitioner was assessed a business tax
deficiency for the years 1998 and 1999 amounting to P9,466,885.00
and P4,993,682.00, respectively, based on its gross revenues as
reported in its audited financial statements for the years 1997 and
1998. Petitioner filed a Protest dated December 21, 2000, claiming that
the computation of the local business tax should be based on gross
receipts and not on gross revenue.

The City of Pasig (respondent) issued another Notice of Assessment to

petitioner on November 19, 2001, this time based on business tax
deficiencies for the years 2000 and 2001, amounting to P4,665,775.51
and P4,710,242.93, respectively, based on its gross revenues for the
years 1999 and 2000. Again, petitioner filed a Protest on January 21,
2002, reiterating its position that the local business tax should be
based on gross receipts and not gross revenue.

Respondent denied petitioner’s protest and gave the latter 30 days

within which to appeal the denial. This prompted petitioner to file a
petition for review with the Regional Trial Court (RTC) of Pasig, Branch
168, praying for the annulment and cancellation of petitioner’s
deficiency local business taxes totaling P17,262,205.66.

Respondent and its City Treasurer filed a motion to dismiss on the

grounds that the court had no jurisdiction over the subject matter and
that petitioner had no legal capacity to sue. The RTC denied the
motion in an Order dated December 3, 2002 due to respondents’ failure
to include a notice of hearing. Thereafter, the RTC declared
respondents in default and allowed petitioner to present evidence ex-
parte.

ISSUE: WON THE BASIS IS THE GROSS RECEIPTS AND NOT THE
GROSS REVENUE.

HELD: YES. The law is clear. Gross receipts include money or its
equivalent actually or constructively received in consideration of
services rendered or articles sold, exchanged or leased, whether
actual or constructive. Revenue Regulations No. 16-2005 dated
September 1, 2005 defined and gave examples of “constructive
receipt”, to wit: STaIHc

SEC. 4. 108-4. Definition of Gross Receipts. — . . .

“Constructive receipt” occurs when the money consideration or its
equivalent is placed at the control of the person who rendered the
service without restrictions by the payor. The following are examples
of constructive receipts:

(1) deposit in banks which are made available to the seller of services
without restrictions;

(2) issuance by the debtor of a notice to offset any debt or obligation

and acceptance thereof by the seller as payment for services
rendered; and

(3) transfer of the amounts retained by the payor to the account of the
contractor.

There is, therefore, constructive receipt, when the consideration for

the articles sold, exchanged or leased, or the services rendered has
already been placed under the control of the person who sold the
goods or rendered the services without any restriction by the payor.

In contrast, gross revenue covers money or its equivalent actually or

constructively received, including the value of services rendered or
articles sold, exchanged or leased, the payment of which is yet to be
received. This is in consonance with the International Financial
Reporting Standards, which defines revenue as the gross inflow of
economic benefits (cash, receivables, and other assets) arising from
the ordinary operating activities of an enterprise (such as sales of
goods, sales of services, interest, royalties, and dividends), which is
measured at the fair value of the consideration received or receivable.

As aptly stated by the RTC:

“[R]evenue from services rendered is recognized when services have

been performed and are billable.” It is “recorded at the amount
received or expected to be received.” (Section E [17] of the
Statements of Financial Accounting Standards No. 1).
In petitioner’s case, its audited financial statements reflect income or
revenue which accrued to it during the taxable period although not yet
actually or constructively received or paid. This is because petitioner
uses the accrual method of accounting, where income is reportable
when all the events have occurred that fix the taxpayer’s right to
receive the income, and the amount can be determined with
reasonable accuracy; the right to receive income, and not the actual
receipt, determines when to include the amount in gross income.

The imposition of local business tax based on petitioner’s gross

revenue will inevitably result in the constitutionally proscribed double
taxation — taxing of the same person twice by the same jurisdiction
for the same thing — inasmuch as petitioner’s revenue or income for a
taxable year will definitely include its gross receipts already reported
during the previous year and for which local business tax has already
been paid.

Thus, respondent committed a palpable error when it assessed

petitioner’s local business tax based on its gross revenue as reported
in its audited financial statements, as Section 143 of the Local
Government Code and Section 22 (e) of the Pasig Revenue Code
clearly provide that the tax should be computed based on gross
receipts.

MOBIL PHILIPPINES v. CITY TREASURER OF MAKATI, GR No. 154092, 2005-07-14

Facts:
Petitioner is a domestic corporation engaged in the manufacturing, importing, exporting and
wholesaling of petroleum products, while respondents are the local government officials of the City
of Makati charged with the implementation of the Revenue Code of the City of Makati, as... well as
the collection and assessment of business taxes, license fees and permit fees within said city.[3
Upon evaluation of petitioner's application, then OIC of the License Division, Ms. Jesusa E. Cuneta,
issued to petitioner, a billing slip[6] assessing the following taxes against petition
Petitioner subsequently filed a petition with the Regional Trial Court of Pasig City, Branch 268,
seeking the refund of business taxes erroneously collected by the City of Makati.
Issues:
Are the business taxes paid by petitioner in 1998, business taxes for 1997 or 1998?
Ruling:
he assailed Decision is hereby REVERSED and respondents City Treasurer and Chief of the License
Division of Makati City are ordered to REFUND to petitioner business taxes paid in the amount of
P1,331,638.84. Costs against... respondents.
Principles:
Business taxes imposed in the exercise of police power for regulatory purposes are paid for the
privilege of carrying on a business in the year the tax was paid. It is paid at the beginning of the year
as a fee to allow the business to operate for the rest of the... year. It is deemed a prerequisite to the
conduct of business.
Income tax, on the other hand, is a tax on all yearly profits arising from property, professions, trades
or offices, or as a tax on a person's income, emoluments, profits and the like. It is tax on income,
whether net or gross realized in one taxable year.[15] It is due on or before the 15th day of the 4th
month following the close of the taxpayer's taxable year and is generally regarded as an excise tax,
levied upon the right of a person or entity to receive income or profits.
The trial court erred when it said that the payments made by petitioner in 1998 are payments for
business tax incurred in 1997 which only accrued in January 1998. Likewise, it erred when it ruled
that petitioner was still liable for business taxes based on its gross... income/revenue for January to
August 1998.
Under the Makati Revenue Code, it appears that the business tax, like income tax, is computed based
on the previous year's figures. This is the reason for the confusion. A newly-started business is
already liable for business taxes (i.e. license fees) at the start of the quarter... when it commences
operations. In computing the amount of tax due for the first quarter of operations, the business'
capital investment is used as the basis. For the subsequent quarters of the first year, the tax is based
on the gross sales/receipts for the previous... quarter. In the following year(s), the business is then
taxed based on the gross sales or receipts of the previous year. The business taxes paid in the year
1998 is for the privilege of engaging in business for the same year, and not for having engaged in
business... for 1997.
Upon its transfer, petitioner was apparently subjected to Sec. 3A.11 par. (g) which states:
. . .
(g) Retirement of business.
. . .
For purposes thereof, termination shall mean that business operation are stopped completely.
. . .
(2) If it is found that the retirement or termination of the business is legitimate, [a]nd the tax due
therefrom be less than the tax due for the current year based on the gross sales or receipts, the
difference in the amount of the tax shall be paid before the business is... considered officially retired
or terminated.[17]
Based on this foregoing provision, on the year an establishment retires or terminates its business
within the municipality, it would be required to pay the difference in the amount if the tax collected,
based on the previous year's gross sales or receipts, is less than the... actual tax due based on the
current year's gross sales or receipts.
For the year 1998, petitioner paid a total of P2,262,122.48 to the City Treasurer of Makati[18] as
business taxes for the year 1998. The amount of tax as computed based on petitioner's gross sales for
1998 is only P1,331,638.84. Since the amount... paid is more than the amount computed based on
petitioner's actual gross sales for 1998, petitioner upon its retirement is not liable for additional taxes
to the City of Makati. Thus, we find that the respondent erroneously treated the assessment and
collection of business... tax as if it were income tax, by rendering an additional assessment of
P1,331,638.84 for the revenue generated for the year 1998

CRISANTO M. AALA v. REY T. UY, GR No. 202781, 2017-01-10

Facts:
Sangguniang Panlungsod of Tagum City passed City Ordinance No. 516, s-2011, entitled An
Ordinance Approving the New Schedule of Market Values, its Classification, and Assessment Level
of Real Properties in the City of Tagum... ordinance was approved by Mayor Rey T. Uy (Mayor Uy)
Sangguniang Panlalawigan of Davao del Norte's Committee on Ways and Means/Games and
Amusement issued a report dated February 1, 2012 declaring City Ordinance No. 516, s-2011 valid
Consequently, the Sangguniang Panlalawigan of Davao del Norte returned City Ordinance No. 516,
s-2011 to the Sangguniang Panlungsod of Tagum City for modification.
As a result of the amendments introduced to City Ordinance No. 516, s-2011, on March 19, 2012, the
Sangguniang Panlungsod of Tagum City passed City Ordinance No. 558, s-2012
The new ordinance was approved by Mayor Uy on April 10, 2012.
Engineer Crisanto M. Aala (Aala) and Colonel Jorge P. Ferido (Ferido), both residents of Tagum
City, filed before the Sangguniang Panlalawigan of Davao del Norte an Opposition/Objection to City
Ordinance No. 558, s-2012.[
Aala and Ferido asserted... the proposed ordinance divided Tagum City into different zones,
classified real properties per zone, and fixed its market values depending on where they were
situated... without taking into account the "distinct and fundamental differences ... and elements of
value"... of each property.
According to them, this was erroneous because real property should be classified, valued, and
assessed not according to its location but on the basis of actual use.
Moreover, they pointed out that the proposed ordinance imposed exorbitant real estate taxes, which
the residents of Tagum City could not afford to pay.
After the hearing,... Committee Report No.5... returned City Ordinance No. 558, s-2012 to the
Sangguniang Panlungsod of Tagum City
Sangguniang Panlungsod of Tagum City issued Resolution No. 808, s-2012 dated May 14, 2012,
requesting the Sangguniang Panlalawigan of Davao del Norte to reconsider its position on City
Ordinance No. 558, s-2012... angguniang Panlalawigan of Davao del Norte issued Resolution No.
428... declaring as invalid Sections III C 1, 2, and 3, Sections III D (1) and (2), and Sections G 1(b)
and 4(g) of City Ordinance No. 558, s-2012
However
Sangguniang Panlungsod of Tagum City passed Resolution No. 874, s-2012 declaring City
Ordinance No. 558, s-2012 as valid.
It argued
Sangguniang Panlalawigan of Davao del Norte failed to take action on City Ordinance No. 558, s-
2012 within 30 days from its receipt on April 12, 2012.
Hence,... City Ordinance No. 558, s-2012 enjoys the presumption of validity
Alarmed by the impending implementation of City Ordinance No. 558, s-2012, petitioners filed
before this Court an original action for Certiorari, Prohibition, and Mandamus on August 13, 2012
Issues:
whether this case falls under the exceptions to the doctrine on hierarchy of courts;... whether this case
falls under the exceptions to the rule on exhaustion of administrative remedies
Ruling:
The doctrine on hierarchy of courts is a practical judicial policy designed to restrain parties from
directly resorting to this Court when relief may be obtained before the lower courts.
The logic behind this policy is grounded on the need to prevent "inordinate demands upon the Court's
time and attention which are better devoted to those matters within its exclusive jurisdiction," as well
as to prevent the congestion of the Court's dockets.
for this Court to be able to "satisfactorily perform the functions assigned to it by the fundamental
charter[,]" it must remain as a "court of last resort
As expressly provided in the Constitution, this Court has original jurisdiction "over petitions for
certiorari, prohibition, mandamus, quo warranto, and habeas corpus.
However, this Court has emphasized in People v. Cuaresma[120] that the power to issue writs of
certiorari, prohibition, and mandamus does not exclusively pertain to this Court
Rather, it is shared with the Court of Appeals and the Regional Trial Courts.
The doctrine on hierarchy of courts is determinative of the appropriate venue where petitions for
extraordinary writs should be filed
Parties cannot randomly select the court or forum to which their actions will be directed
Consequently, this Court will not entertain direct resort to it when relief can be obtained in the lower
courts.[127] This holds especially true when questions of fact are raised.
In a fairly recent case, we summarized other well-defined exceptions to the doctrine on hierarchy of
courts. Immediate resort to this Court may be allowed when any of the following grounds are
present: (1) when genuine issues of constitutionality are raised that must be addressed immediately;
(2) when the case involves transcendental importance; (3) when the case is novel; (4) when the
constitutional issues raised are better decided by this Court; (5) when time is of the essence; (6) when
the subject of review involves acts of a constitutional organ; (7) when there is no other plain, speedy,
adequate remedy in the ordinary course of law; (8) when the petition includes questions that may
affect public welfare, public policy, or demanded by the broader interest of justice; (9) when the
order complained of was a patent nullity; and (10) when the appeal was considered as an
inappropriate remedy
None of the exceptions to the doctrine on hierarchy of courts are present in this case.
The doctrine of exhaustion of administrative remedies, like the doctrine on hierarchy of courts, is not
an iron-clad rule. It admits of several well-defined exceptions.

1. [W]hen there is a violation of due process; (2) when the issue involved is purely a legal
question; (3) when the administrative action is patently illegal and amounts to lack or excess
of jurisdiction; (4) when there is estoppel on the part of the administrative agency concerned;
(5) when there is irreparable injury; (6) when the respondent is a department secretary whose
acts, as an alter ego of the President, bears the implied and assumed approval of the latter; (7)
when to require exhaustion of administrative remedies would be unreasonable; (8) when it
would amount to a nullification of a claim; (9) when the subject matter is a private land in
land case proceedings; (10) when the rule does not provide a plain, speedy and adequate
remedy; (11) when there are circumstances indicating the urgency of judicial intervention;
and unreasonable delay would greatly prejudice the complainant; (12) when no
administrative review is provided by law; (13) where the rule of qualified political agency
applies; and (14) when the issue of non-exhaustion of administrative remedies has been
rendered moot

In this case, however, the issues involved are not purely legal. There are factual issues that need to be
addressed for the proper disposition of the case. In other words, this case is still not ripe for
adjudication.To question the validity of the ordinance, petitioners should have first filed an appeal
before the Secretary of Justice. However, petitioners justify direct resort to this Court on the ground
that they are entangled in a "catch-22 situation."
They believe that filing an appeal before the Secretary of Justice would merely delay the process and
give the City Government of Tagum ample time to collect real property taxes.
The questioned ordinance was published in July 2012.
Had petitioners immediately filed an appeal, the Secretary of Justice would have had enough time to
render a decision. Section 187 of the Local Government Code of 1991 gives the Secretary of Justice
60 days to act on the appeal. Within 30 days from receipt of an unfavorable decision or upon inaction
by the Secretary of Justice within the time prescribed, aggrieved taxpayers may opt to lodge the
appropriate proceeding before the regular courts
The "catch-22 situation" petitioners allude to does not exist. Under Section 166 of the Local
Government Code of 1991, local taxes "shall accrue on the first (1st) day of January of each year
When the questioned ordinance was published in July 2012, the City Government of Tagum could
not have immediately issued real property tax assessments. Hence, petitioners had ample time within
which to question the validity of the tax ordinance

CITY OF CAGAYAN DE ORO, Petitioner, v. CAGAYAN ELECTRIC POWER & LIGHT CO., INC.
(CEPALCO), Respondent.
FACTS:

Petitioner, through its local legislative council, enacted Ordinance, 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.

Respondent, Cagayan Electric Power & Light Co., Inc. (CEPALCO) is a public utility engaged in the
distribution of electric power and the owner of utility poles erected within Cagayan de Oro City. The
ordinance entailed them to pay an annual Mayor's Permit Fee of P8,500,000.00.10.

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. 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.

RTC dismissed the petition for declaratory relief due to CEPALCO's failure to exhaust administrative
remedies.

Aggrieved, CEPALCO elevated the case to the CA.

The CA declared the ordinance void for being exorbitant and unreasonable. The appellate court
additionally held that the doctrine of exhaustion of administrative remedies was inapplicable considering
the case involved a regulatory fee and not a tax measure.

Hence, instant petition before this Court.

ISSUES:

(1) 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;

(2) Whether or not the amount of the Mayor's Permit Fee is excessive, unreasonable, and exorbitant.

RULING:

(1) No. The Court rules that ordinances that impose regulatory fees do not need to be challenged before
the Secretary of Justice.

In the case at bar, the ordinance imposes a fee since it was enacted pursuant to the city's police power
and serves to regulate, not to raise revenue.

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. Stated otherwise, the procedure found in Section 187 must be followed when an
ordinance imposes a tax; the institution of an action in court without complying with the requirements of
the provision will lead to the dismissal of the case on the ground of non-exhaustion of administrative
remedies. However, when an ordinance imposes a fee, direct recourse to the courts may be had without
prior protest before the Secretary of Justice. Simply put, fees are not subject to the procedure outlined
under Section 187.

(2) No. CEPALCO's failure to establish excessiveness, the Court rules in the negative. A judicious perusal
of the record fails to reveal anything definitively showing the ordinance’s unreasonable, excessive,
oppressive, or confiscatory nature; hence, because it enjoys the presumption of validity, the Court is
constrained to reverse the decision of the CA.

The presumption of validity is a corollary of the presumption of constitutionality, a legal theory of common-
law origin developed by courts to deal with cases challenging the constitutionality of statutes.

SMART COMMUNICATIONS v. MUNICIPALITY OF MALVAR, GR No. 204429, 2014-02-18

Facts:
petition for review[1] challenges the 26 June 2012 Decision[2] and 13 November 2012 Resolution[3]
of the Court of Tax Appeals (CTA) En Banc
CTA First Division, which in turn affirmed the
Order[7] of the Regional Trial Court of Tanauan
City, Batangas, Branch... trial court declared void the assessment imposed by respondent
Municipality of Malvar, Batangas against petitioner Smart Communicati
Petitioner Smart Communications, Inc. (Smart) is a domestic corporation engaged in the business of
providing telecommunications services to the general public while respondent Municipality of
Malvar, Batangas (Municipality) is a local government unit created by law.
Smart constructed a telecommunications tower within the territorial jurisdiction of the Municipality.
The construction of the tower was for the purpose of receiving and transmitting cellular
communications within the covered area.
Ordinance No. 18, series of 2003, entitled "An Ordinance Regulating the Establishment of Special
Projects."
Smart received from the Permit and Licensing Division of the Office of the Mayor of the
Municipality an assessment letter with a schedule of payment for the total amount of P389,950.00 for
Smart's telecommunications tower
Municipality also caused the posting of a closure notice on the telecommunications tower.
On 9 September 2004, Smart filed a protest, claiming lack of due process in the issuance of the
assessment and closure notic
Municipality denied Smart's protest.
Smart filed with Regional Trial Court of Tanauan City, Batangas, Branch 6, an "Appeal/Petition"
assailing the validity of Ordinance No. 18.
trial court held that the... assessment covering the period from 2001 to July 2003 was void since
Ordinance No. 18 was approved only on 30 July 2003
Smart filed a petition for review with the CTA First Division... denied the petition for review.
Smart filed a petition for review with the CTA En Banc, which affirmed the CTA First Division's
decision and resolution. The dispositive
Issues:
On whether the imposition of the fees in Ordinance No. 18 is ultra vires
Ruling:
The Court denies the petition.
The Court finds that the fees imposed under Ordinance No. 18 are not taxes.
the primary purpose of Ordinance No. 18 is to regulate the "placing, stringing, attaching, installing,
repair and construction of all gas mains, electric, telegraph and telephone wires, conduits, meters and
other apparatus" listed... therein,... purpose of the assailed Ordinance is to regulate the enumerated
activities particularly related to the construction and maintenance of various structures. The fees in
Ordinance No. 18 are not impositions on... the building or structure itself; rather, they are impositions
on the activity subject of government regulation, such as the installation and construction of the
structures.
the fees imposed in Ordinance No. 18 are primarily regulatory in nature, and not... primarily revenue-
raising. While the fees may contribute to the revenues of the Municipality, this effect is merely
incidental. Thus, the fees imposed in Ordinance No. 18 are not taxes.
Ordinance No. 18 expressly provides for the standards which Smart must satisfy prior to the issuance
of the specified permits, clearly indicating that the fees are regulatory in nature.
Ordinance No. 18 aims to regulate the "placing, stringing, attaching, installing, repair and
construction of all gas mains, electric, telegraph and telephone wires, conduits, meters and other
apparatus" within the M
The fees are not imposed to regulate... the administrative, technical, financial, or marketing
operations of telecommunications entities, such as Smart's; rather, to regulate the installation and
maintenance of physical structures Smart's cell sites or telecommunications tower. The regulation of
the installation and... maintenance of such physical structures is an exercise of the police power of
the Municipality.
An ordinance carries with it the presumption of validity. The question of reasonableness though is
open to judicial inquiry. Much should be left thus to the discretion of municipal authorities.
Significantly, Smart failed to cite any constitutional provision allegedly violated by respondent when
it issued Ordinance No. 18.
Settled is the rule that every law, in this case an ordinance, is presumed valid. To strike down a law
as unconstitutional, Smart has the burden to prove a clear and unequivocal breach of the Constitution,
which Smart miserably failed to do
Court DENIES the petition.
Principles:
Section 5, Article X of the 1987 Constitution provides that "[e]ach local government unit shall have
the power to create its own sources of revenues and to levy taxes, fees, and charges subject to such
guidelines and limitations as the Congress may provide, consistent with... the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government."
The LGC defines the term "charges" as referring to pecuniary liability, as rents or fees against
persons or property, while the term "fee" means "a charge fixed by law or ordinance for the
regulation or inspection of a business or activity."[19]

De Lima vs. City of Manila

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."

Operators of retail businesses filed an Appeal before Secretary of Justice Leila M. De Lima, petitioner
herein. They 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).

Petitioner issued a Resolution declaring Section 104 of Ordinance No. 8331 void for being contrary to
Section 191 of the LGC.

Respondent filed a Motion for Reconsideration of the petitioner's Resolution.

Without awaiting for the petitioner's action on its Motion, the respondent filed a Petition for Review Ad
Cautelam before the (RTC) of Manila on May 15, 2014. In its petition, the respondent sought to annul the
petitioner's Resolution dated April 7, 2014 for having been issued with grave abuse of discretion and to
declare Section 104 of Ordinance No. 8331 as valid and enforceable.

On May 19, 2014, the RTC issued an Order 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 on July 25,
2014 dismissing the petition in this wise for lack of jurisdiction. The Motion for Reconsideration was
likewise denied.
The respondent elevated the matter to the CA via certiorari on appeal. CA SET ASIDE the case and
REMANDED the same to the RTC Manila to conduct further proceedings. Motion for Reconsideration
were DENIED for lack of merit.

Hence, the instant petition for review on certiorari.

ISSUE:

Whether petition for certiorari under Rule 65 before the RTC is the proper remedy to question a decision
of the Secretary of Justice on the constitutionality of a tax ordinance.

RULING:

No. Petition for certiorari under Rule 65 before the RTC is not the proper remedy to question a decision of
the Secretary of Justice on the constitutionality of a tax ordinance.

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.

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.

In the same light, while it is true that when decision is tainted with grave abuse of discretion amounting to
lack or excess of jurisdiction, the case 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 will only be justified in this case if the proper venue was resorted to.
Thus, in the foregoing actions the proper venue is with the CA and not the RTC in accordance with
Section 4, Rule 65 of the Rules of Court.

Simply, the CA is the court vested with exclusive original jurisdiction to entertain a petition for certiorari
under Rule 65 of the Rules of Court questioning the acts of quasi-judicial agencies. 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.
 SAN JUAN vs CASTRO G.R. No.
174617 December 27, 2007 assessment,
Local Government Code, Protest of
Assessment, Tax Remedies
OCTOBER 6, 2017

FACTS:

Petitioner, registered owners of real properties in Marikina City, with consent of his wife,
conveyed by deed of assignment, the properties to the Saints and Angels Realty Corp. (SARC),
by virtue of incorporations, in exchange for shares of stock therein with a par value of
P2,000,000.0, placed in San Juan’s name and the remaining par value in the name of his wife.
Respondents’ representatives went to the City Treasurer’s Office of Marikina to pay the transfer
tax based on the consideration stated in the deed of assignment. City Treasurer Castro informed
him however that the tax due is based on the fair market value of the property.

Petitioner protested the basis of the tax due. To which, the respondent replied stating that in cases
of transfer or real property not involving monetary consideration, it is certain that the fair market
value or the zonal value of the property is the basis of the tax rate.

Petitioner filed before the RTC of Marikina a petition for mandamus and damages against
respondent in his capacity as City Treasurer, among others, praying that respondent be
compelled to “perform a ministerial duty to accept payment of transfer tax based on the actual
consideration” of the transfer and assignment”, citing Section 135 of the LGC.

ISSUE:

When can a protest of assessment be availed of?

RULING:

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

SECTION 195. Protest of Assessment. – When the local treasurer or his duly authorized
representative finds that the correct taxes, fees, or charges have not been paid, he shall issue a
notice of assessment stating the nature of the tax, fee, or charge, the amount of deficiency, the
surcharges, interests and penalties. Within sixty (60) days from the receipt of the notice of
assessment, the taxpayer may file a written protest with the local treasurer contesting the
assessment; otherwise, the assessment shall become final and executory. The local treasurer
shall decide the protest within sixty (60) days from the time of its filing. If the local treasurer
finds the protest to be wholly or partly meritorious, he shall issue a notice cancelling wholly or
partially the assessment. However, if the local treasurer finds the assessment to be wholly or
partly correct, he shall deny the protest wholly or partly with notice to the taxpayer. The
taxpayer shall have thirty (30) days from the receipt of the denial of the protest or from the lapse
of the sixty-day (60) period prescribed herein within which to appeal with the court of competent
jurisdiction, otherwise the assessment becomes conclusive and unappealable.

That petitioner protested in writing against the assessment of tax due and the basis thereof is on
record as in fact it was on that account that respondent sent him the above-quoted July 15, 2005
letter which operated as a denial of petitioner’s written protest.

Petitioner should thus have, following the earlier above-quoted Section 195 of the Local
Government Code, either appealed the assessment before the court of competent jurisdiction[15]
or paid the tax and then sought a refund.

Petitioner did not observe any of these remedies available to him, however. He instead opted to
file a petition for mandamus to compel respondent to accept payment of transfer tax as computed
by him.

CITY OF MANILA v. COSMOS BOTTLING CORPORATION, GR No. 196681, 2018-06-27

Facts:
For the first quarter of 2007, the City of Manila assessed [Cosmos] local business taxes and
regulatory fees in the total amount of P1,226,781.05, as contained in the Statement of Account
[Cosmos] 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. [Cosmos]
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.
[Cosmos] also tendered payment of only P131,994.23 which they posit is the correct computation of
their local business tax for the first quarter of 2007. This payment was refused by the City Treasurer.
[Cosmos] also received a letter from the City Treasurer denying their protest,... [Cosmos] filed a
claim for refund of P1,094,786.82 with the Office of the City Treasurer raising the same grounds as
discussed in their protest.
[Cosmos] filed its complaint with the RTC of Manila praying for the refund or issuance of a tax
credit certificate in the amount of P1,094,786.82. The RTC in its decision ruled in favor of [Cosmos]
but denied the claim for refund.
The CTA Division essentially ruled that the collection by the City Treasurer of Manila of local
business tax under both Section 21 and Section 14 of the Revenue Code of Manila constituted double
taxation.[5] It also ruled that the City Treasurer cannot validly assess local business tax based on the
increased rates under Tax Ordinance Nos. 7988 and 8011 after the same have been declared null and
void.[6] Finally, the court held that Cosmos Bottling Corporation's (Cosmos) local business tax
liability for the calendar year 2007 shall be computed based on the gross sales or receipts for the year
2006.
Instead of filing a motion for reconsideration or new trial, the petitioners directly filed with the CTA
En Banc a petition for review[9] praying that the decision of the CTA Division be reversed or set
aside.
the CTA En Banc ruled that the direct resort to it without a prior motion for reconsideration or new
trial before the CTA Division violated Section 18 of Republic Act (R.A.) No. 1125,[10] as amended
by R.A. No. 9282 and R.A. No. 9503, and Section 1, Rule 8 of the Revised Rules of the CTA (CTA
Rules).
Issues:
Whether the CTA En Banc correctly dismissed the petition for review before it for failure of the
petitioners to file a motion for reconsideration or new trial with the CTA Division. Whether a
taxpayer who had initially protested and paid the assessment may shift its remedy to one of refund.
Ruling:
The filing of a motion for reconsideration or new trial before the CTA Division is an indispensable
requirement for filing an appeal before the CTA En Banc.
The CTA En Banc was correct in interpreting Section 18 of R.A. No. 1125, as amended by R.A.
9282 and R.A. No. 9503,... as requiring a prior motion for reconsideration or new trial before the
same division of the CTA that rendered the assailed decision before filing a petition for review with
the CTA En Banc. Failure to file such motion for reconsideration or new trial is cause for dismissal
of the appeal before the CTA En Banc.
Corollarily, Section 1, Rule 8 of the CTA Rules provides: Section 1. Review of cases in the Court en
banc. — In cases falling under the exclusive appellate jurisdiction of the Court en banc, the petition
for review of a decision or resolution of the Court in Division must be preceded by the filing of a
timely motion for reconsideration or new trial with the Division.
Clear it is from the cited rule that the filing of a motion for reconsideration or new trial is mandatory
– not merely directory – as indicated by the word "must."
The rules are clear. Before the CTA En Banc could take cognizance of the petition for review
concerning a case falling under its exclusive appellate jurisdiction, the litigant must sufficiently show
that it sought prior reconsideration or moved for a new trial with the concerned CTA division.
Procedural rules are not to be trifled with or be excused simply because their noncompliance may
have resulted in prejudicing a party's substantive rights. Rules are meant to be followed. They may be
relaxed only for very exigent and persuasive reasons to relieve a litigant of an injustice not
commensurate to his careless non-observance of the prescribed rules.
The rules are to be relaxed only in the interest of justice and to benefit the deserving.
After a cursory examination of the records of the case, we find that the petitioners, as determined by
the CTA Division, erroneously assessed and collected from Cosmos local business taxes for the first
quarter of 2007; thus, a refund is warranted.
We cannot help but sustain the ruling of the CTA Division that the City of Manila cannot validly
assess local business taxes under Ordinance Nos. 7988 and 8011 because they are void and of no
legal effect; the collection of local business taxes under Section 21 in addition to Section 14 of the
Revenue Code of Manila constitutes double taxation; and the 2007 local business tax assessed
against Cosmos should be computed based on the latter's gross receipts in 2006.
The collection of taxes under both Sections 14 and 21 of the Revenue Code of Manila constitutes
double taxation. While the City of Manila could impose against Cosmos a manufacturer's tax under
Section 14 of Ordinance No. 7794, or the Revenue Code of Manila, it cannot at the same time impose
the tax under Section 21 of the same code; otherwise, an obnoxious double taxation would set in.
[T]here is indeed double taxation if respondent is subjected to the taxes under both Sections 14 and
21 of Tax Ordinance No. 7794, since these are being imposed: (1) on the same subject matter — the
privilege of doing business in the City of Manila; (2) for the same purpose — to make persons
conducting business within the City of Manila contribute to city revenues; '(3) by the same taxing
authority — petitioner City of Manila; (4) within the same taxing jurisdiction — within the territorial
jurisdiction of the City of Manila; (5) for the same taxing periods per calendar year; and (6) of the
same kind or character — a local business tax imposed on gross sales or receipts of the business.
It is apparent from a perusal thereof that when a municipality or city has already imposed a business
tax on manufacturers, etc. of liquors, distilled spirits, wines, and any other article of commerce,
pursuant to Section 143(a) of the LGC, said municipality or city may no longer subject the same
manufacturers, etc. to a business tax under Section 143(h) of the same Code. Section 143(h) may be
imposed only on businesses that are subject to excise tax, VAT, or percentage tax under the NIRC,
and that are "not otherwise specified in preceding paragraphs." In the same way, businesses such as
respondent's, already subject to a local business tax under Section 14 of Tax Ordinance No. 7794
[which is based on Section 143(a) of the LGC], can no longer be made liable for local business tax
under Section 21 of the same Tax Ordinance
A taxpayer who had protested and paid an assessment may later on institute an action for refund.
First, even a cursory glance at the complaint filed by Cosmos would readily reveal that the action is
not just for the refund of its paid taxes but also one assailing the assessment in question.
It is, thus, totally misplaced to consider Cosmos as having abandoned its protest against the
assessment. By seasonably instituting the petition before the RTC, the assessment had not attained
finality.
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,... 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,[28] 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. Needless to say, there is nothing to prevent the taxpayer from paying the tax under protest or
simultaneous to a protest. There are compelling reasons why a taxpayer would prefer to pay while
maintaining a protest against the assessment For instance, a taxpayer who is engaged in business
would be hard-pressed to secure a business permit unless he pays an assessment for business tax
and/or regulatory fees. Also, a taxpayer may pay the assessment in order to avoid further penalties, or
save his properties from levy and distraint proceedings.
Where an assessment is to be protested or disputed, the taxpayer may proceed (a) without payment,
or (b) with payment[32] of the assessed tax, fee or charge. Whether there is payment of the assessed
tax or not, it is clear that the protest in writing must be made within sixty (60) days from receipt of
the notice of assessment; otherwise, the assessment shall become final and conclusive. Additionally,
the subsequent court action must be initiated within thirty (30) days from denial or inaction by the
local treasurer; otherwise, the assessment becomes conclusive and unappealable.
It must be understood, however, that in such latter case, the suit for refund is conditioned on the prior
filing of a written claim for refund or credit with the local treasurer. In this instance, what may be
considered as the administrative claim for refund is the letter-protest submitted to the treasurer.
Where the taxpayer had paid the assessment, it can be expected that in the same letter-protest, he
would also pray that the taxes paid should be refunded to him.[33] As previously mentioned, there is
really no particular form or style necessary for the protest of an assessment or claim of refund of
taxes. What is material is the substance of the letter submitted to the local treasurer. Equally
important is the institution of the judicial action for refund within thirty (30) days from the denial of
or inaction on the letter-protest or claim, not any time later, even if within two (2) years from the date
of payment (as expressly stated in Section 196). Notice that the filing of such judicial claim for
refund after questioning the assessment is within the two-year prescriptive period specified in Section
196. Note too that the filing date of such judicial action necessarily falls on the beginning portion of
the two-year period from the date of payment. Even though the suit is seemingly grounded on
Section 196, the taxpayer could not avail of the full extent of the two-year period within which to
initiate the action in court.
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 1s denominated as an appeal from assessment
and/or claim for refund of erroneously or illegally collected tax.
Under the circumstances, it is evident that Cosmos was fully justified in asking for the refund of the
assailed taxes after protesting the same before the local treasurer. Consistent with the discussion in
the premises, Cosmos may resort to, as it actually did, the alternative procedure of seeking a refund
after timely protesting and paying the assessment. Considering that Cosmos initiated the judicial
claim for refund within 30 days from receipt of the denial of its protest, it stands to reason that the
assessment which was validly protested had not yet attained finality.
WHEREFORE, the petition is DENIED for lack of merit. The 16 February 2011 and 20 April 2011
Resolutions of the Court of Tax Appeals En Banc in C.T.A. E.B. No. 702 are hereby AFFIRMED.
The 9 November 2010 Decision of the Court of Tax Appeals Third Division in C.T.A. AC No. 60 is
likewise AFFIRMED. SO ORDERED.
Principles:
In local taxation, an assessment for deficiency taxes made by the local government unit may be
protested before the local treasurer without necessity of payment under protest. But if payment is
made simultaneous with or following a protest against an assessment, the taxpayer may subsequently
maintain an action in court, whether as an appeal from assessment or a claim for refund, so long as it
is initiated within thirty (30) days from either decision or inaction of the local treasurer on the
protest.

INTERNATIONAL CONTAINER TERMINAL SERVICES v. CITY OF MANILA, GR No.

185622, 2018-10-17
Facts:
International Container, a corporation with its principal place of business in Manila, renewed its
business license for 1999. It was assessed for two (2) business taxes: one for which it was already
paying, and another for which it was newly assessed. It was already paying a local annual business
tax for contractors equivalent to 75% of 1% of its gross receipts for the preceding calendar year
pursuant to Section 18 of Manila Ordinance No. 7794. The newly assessed business tax was
computed at 50% of 1% of its gross receipts for the previous calendar year, pursuant to Section 21
(A) of Manila Ordinance No. 7794, as amended by Section 1(G) of Manila Ordinance No. 7807. It
paid the additional assessment, but filed a protest letter[9] dated July 15, 1999 before the City
Treasurer of Manila.
Issues:
whether or not Section 195 or Section 196 of the Local Government Code govern petitioner
International Container Terminal Services, Inc.'s claims for refund from the fourth quarter of 1999
onwards
Ruling:
If the taxpayer receives an assessment and does not pay the tax, its remedy is strictly confined to
Section 195 of the Local Government Code.[101] Thus, it must file a written protest with the local
treasurer within 60 days from the receipt of the assessment. If the protest is denied, or if the local
treasurer fails to act on it, then the taxpayer must appeal the assessment before a court of competent
jurisdiction within 30 days from receipt of the denial, or the lapse of the 60-day period within which
the local treasurer must act on the protest.[102] In this case, as no tax was paid, there is no claim for
refund in the appeal.[103] If the taxpayer opts to pay the assessed tax, fee, or charge, it must still file
the written protest within the 60-day period, and then bring the case to court within 30 days from
either the decision or inaction of the local treasurer. In its court action, the taxpayer may, at the same
time, question the validity and correctness of the assessment and seek a refund of the taxes it paid.
[104] "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."
On the other hand, if no assessment notice is issued by the local treasurer, and the taxpayer claims
that it erroneously paid a tax, fee, or charge, or that the tax, fee, or charge has been illegally collected
from him, then Section 196 applies.

YAMANE, vs. BA LEPANTO CONDOMINUM CORPORATION

G.R. No. 154993 October 25, 2005

Facts:

Respondent BA-Lepanto Condominium Corporation is a duly

organized condominium corporation constituted in accordance with
the Condominium Act, which owns and holds title to the common and
limited common areas of the BA-Lepanto Condominium (the
“Condominium”), situated in Paseo de Roxas, Makati City. Its
membership comprises the various unit owners of the Condominium.
The Corporation is authorized, under Article V of its Amended By-
Laws, to collect regular assessments from its members for
operating expenses, capital expenditures on the common areas, and
other special assessments as provided for in the Master Deed with
Declaration of Restrictions of the Condominium.

On 15 December 1998, the Corporation received a Notice of

Assessment dated 14 December 1998 signed by the City Treasurer.
The Notice of Assessment stated that the Corporation is “liable
to pay the correct city business taxes, fees and charges,”
computed as totaling ₱1,601,013.77 for the years 1995 to 1997.
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 dated 12 February 1999, addressed to the City Treasurer.
It was evident in the protest that the Corporation was perplexed
on the statutory basis of the tax assessment. It assert that
there has no basis as the Corporation is not liable for business
taxes and surcharges and interest thereon, under the Makati
[Revenue] Code or even under the Local Government Code

From the denial of the protest, the Corporation filed

an Appeal with the Regional Trial Court (RTC) of Makati. On 1
March 2000, the Makati RTC Branch 57 rendered
a Decision9 dismissing the appeal for lack of merit. Accepting
the premise laid by the City Treasurer, the RTC acknowledged, in
sadly risible language, the RTC concluded that the activities of
the Corporation fell squarely under the definition of “business”
under Section 13(b) of the Local Government Code, and thus
subject to local business taxation.11

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
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. 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. Persuaded by this contention, the Court of Appeals
reinstated the petition.

On 7 June 2002, the Court of Appeals Special Sixteenth Division

rendered the Decision and reversed the RTC decision and declared
that the Corporation was not liable to pay business taxes to the
City of Makati.

Issue:

Whether the City of Makati may collect business taxes on

condominium corporations.

Held:

No, because the condo corp existence is not intended for the
incurrence of profit but to shoulder the expenses for the
maintenance of the Condominium project.

Under Section 151 of the Local Government Code, cities such as

Makati are authorized to levy the same taxes fees and charges as
provinces and municipalities. In Article II, Title II, Book II of
the Local Government Code, governing municipal taxes, where the
provisions on business taxation relevant to this petition may be
found. Also, 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.

In the instant case, the assessment which 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. 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.

Hence, the collection of business taxes from condominiums in

Makati is void.

CHINA BANKING CORPORATION v. CITY TREASURER OF MANILA, GR No. 204117, 2015-

07-01
Facts:
On January 2007, on the basis of the reported income of respondent CBC's Sto. Cristo Branch,
Binondo, Manila, amounting to P34,310,777.34 for the year ending December 31, 2006, respondent
CBC was assessed the amount of P267,128.70 by petitioner City Treasurer of
Manila, consisting of local business tax, business permits, and other fees for taxable year 2007
On January 15, 2007, respondent CBC paid the amount of P267,128.70 and protested, thru a Letter
dated January 12, 2007, the imposition of business tax under Section 21 of the Manila Revenue Code
in the amount of P154,398.50, on the ground that it is not liable of said additional... business tax and
the same constitutes double taxation.
On... n February 8, 2007, 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.
On March 27, 2007, respondent CBC wrote a letter-reply to [respondent's] petitioner’s Letter dated
February 8, 2007, reiterating that respondent already protested the additional assessment under
Section 21 of the Manila Revenue Code in its Letter dated January 12, 2007. 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 dated February 8, 2007, four days after the deadline... to decide and petitioner did
not even resolve the protest, respondent formally demanded the refund of the amount of
P154,398.50, representing the business tax collected under Section 21 of the Manila Revenue Code.
On April 17, 2007, respondent CBC filed a Petition for Review with the RTC of Manila, Branch 173,
entitled "China Banking Corporation vs. Hon. Liberty M. Toledo in her capacity as City Treasurer 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.
the Regional Trial Court, Branch 173, Manila (RTC), rendered its decision[9] granting the petition
filed by CBC and ordered the City Treasurer to refund the amount of P154,398.50, representing the
assessment paid by it under Section 21... of Manila Ordinance No. 7988,[10] as amended by Tax
Ordinance No. 8011.
RTC found that the City Treasurer had no basis to collect the amount of P154,398.50 because the
Department of Justice (DOJ) was of the opinion that Ordinance Nos. 7988 and 8011 were
unconstitutional. It also considered the decision in the case of Coca-Cola Bottlers
Philippines, Inc. v. City of Manila,[12] (Coca-Cola) and the Memorandum of Rafaelito M.
Garayblas,[13] Secretary of the then Mayor of Manila, noting the unconstitutionality of Ordinance
Nos. 7988 and 8011 and directing the City
Treasurer to cease and desist from assessing and collecting the imposed taxes under Section 21 of the
said ordinances.
the RTC resolved to deny the motion for reconsideration filed by the City Treasurer.[1... the CTA
Division[15] reversed 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 Code[16] (LGC) to
taxpayers who wished to appeal a denial of a protest due to the inaction of the City Treasurer.
Consequently, the CTA Division 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.[17]
Aggrieved, CBC elevated the matter to the CTA En Banc.
On appeal, the CTA En Banc affirmed the ruling of the CTA Division in toto, reiterating that the
petition for review was filed out of time. It explained that from January 15, 2007, the date when CBC
filed its protest, it had sixty (60) days or until March 16, 2007... to await the decision of the City
Treasurer. Considering that no action was taken by the City Treasurer, CBC had until April 16, 2007
or 30 days from March 16, 2007, (April 15, 2007 being a Sunday), within which to appeal the
inaction of the City Treasurer with the RTC, pursuant... to Section 195 of the LGC. Upon
examination, however, the CTA En Banc found that when CBC filed its petition for review before
the RTC, it was already one day late. Thus, it lost its right to appeal and the assessment, dated
January 11, 2007, became conclusive and... unappealable. The CTA En Banc then concluded that
CBC was precluded from interposing the defense of legality or validity of the assessment.
CBC filed its motion for reconsideration of the said decision but the CTA En Banc denied the same.
On January 30, 2013, the Court denied the petition.[18] Upon motion for reconsideration by CBC,
the Court reinstated the petition.[19] Eventually, it was given due course and the parties were
directed to file their respective... memoranda.[20]
Issues:
the jurisdiction of the RTC in entertaining the petition for review filed before it as well as the
timeliness of the filing of the petitioner’s appeal.
Ruling:
The petition lacks merit.
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.
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.
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. The failure to perfect an appeal as
required by the rules has the effect of defeating the right to appeal of a... party and precluding the
appellate court from acquiring jurisdiction over the case. At the risk of being repetitious, the Court
declares that the right to appeal is not a natural right nor a part of due process. It is merely a statutory
privilege, and may be exercised only in... the manner and in accordance with the provisions of the
law.[
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.
Explaining the nature of the jurisdiction of the RTC, the Court, in Yamane explained:
First, we dispose of the procedural issue, which essentially boils down to 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 question
assumes a measure of importance to this petition, for the adoption of the position of the City
Treasurer that the mode of review of the decision taken by the RTC is governed by Rule 41 of the
Rules of Civil Procedure means that the decision of the RTC... would have long become final and
executory by reason of the failure of the Corporation to file a notice of appeal.
There are discernible conflicting views on the issue. The first, as expressed by the Court of Appeals,
holds that the RTC, in reviewing denials of protests by local treasurers, exercises appellate
jurisdiction. This position is anchored on the language of Section 195 of the
Local Government Code which states that the remedy of the taxpayer whose protest is denied by the
local treasurer is “to appeal with the court of competent jurisdiction.” Apparently though, the Local
Government Code does not elaborate on how such “appeal” should be... undertaken.
The other view, as maintained by the City Treasurer, is that the jurisdiction exercised by the RTC is
original in character. This is the first time that the position has been presented to the court for
adjudication. Still, this argument does find jurisprudential mooring in our... ruling in Garcia v. De
Jesus, where the Court proffered the following distinction between original jurisdiction and appellate
jurisdiction: “Original jurisdiction is the power of the Court to take judicial cognizance of a case
instituted for judicial action for the first... time under conditions provided by law. Appellate
jurisdiction is the authority of a Court higher in rank to re-examine the final order or judgment of a
lower Court which tried the case now elevated for judicial review.”
With the definitions as beacon, the review taken by the RTC over the denial of the protest by the
local treasurer would fall within that court’s original jurisdiction. In short, the... review is the initial
judicial cognizance of the matter. Moreover, labelling the said review as an exercise of appellate
jurisdiction is inappropriate, since the denial of the protest is not the judgment or order of a lower
court, but of a local government official.
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.”
Republic Act No. 9282, however, would not apply to this case simply because it arose prior to the
effectivity of that law. To declare otherwise would be to institute a jurisdictional rule derived not
from express statutory grant, but from implication. The jurisdiction of a court... to take cognizance of
a case should be clearly conferred and should not be deemed to exist on mere implications, and this
settled rule would be needlessly emasculated should we declare that the Corporation’s position is
correct in law.[33]
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.
Indeed, in cases where the amount sought to be refunded is below the jurisdictional amount of the
RTC, the Metropolitan, Municipal, and Municipal Circuit Trial Courts are clothed with ample
authority to rule on such claims.
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 courts
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.
his Court is simply pointing out the rule that claims for refunds are the exception, rather than the rule,
and that each claim for refund, in order to be granted, must be proceeded in... accordance with the
manner set forth by law. After all, in every claim for refund of taxes paid, the burden is on the
taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or
credit.
This C... the petition is DENIED.
Principles:
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 stating the nature of the tax, fee or charge, the amount of... deficiency, the surcharges,
interests and penalties. Within sixty (60) days from the receipt of the notice of assessment, the
taxpayer may file a written protest with the local treasurer contesting the assessment; otherwise, the
assessment shall become final and executory. The... local treasurer shall decide the protest within
sixty (60) days from the time of its filing. If the local treasurer finds the protest to be wholly or partly
meritorious, he shall issue a notice 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.

ANGELES CITY V. ANGELES

ELECTRIC CORPORATION, G.R.
NO. 166134, [JUNE 29, 2010],
636 PHIL 43-57
FACTS: On June 18, 1964, AEC was granted a legislative franchise
under Republic Act No. (RA) 4079 to construct, maintain and operate
an electric light, heat, and power system for the purpose of generating
and distributing electric light, heat and power for sale in Angeles City,
Pampanga. Pursuant to Section 3-A thereof, AEC’s payment of
franchise tax for gross earnings from electric current sold was in lieu
of all taxes, fees and assessments.
On September 11, 1974, Presidential Decree No. (PD) 551 reduced the
franchise tax of electric franchise holders. Section 1 of PD
551 provided that:

SECTION 1. Any provision of law or local ordinance to the contrary

notwithstanding, the franchise tax payable by all grantees of
franchises to generate, distribute and sell electric current for light,
heat and power 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.
cIADTC

Such franchise tax shall be payable to the Commissioner of Internal

Revenue or his duly authorized representative on or before the
twentieth day of the month following the end of each calendar quarter
or month as may be provided in the respective franchise or pertinent
municipal regulation and shall, any provision of the Local Tax Code or
any other law to the contrary notwithstanding, be in lieu of all taxes
and assessments of whatever nature imposed by any national or local
authority on earnings, receipts, income and privilege of generation,
distribution and sale of electric current.

On January 1, 1992, RA 7160 or the Local Government Code (LGC) of

1991 was passed into law, conferring upon provinces and cities the
power, among others, to impose tax on businesses enjoying franchise.
In accordance with the LGC, the Sangguniang Panlungsod of Angeles
City enacted on December 23, 1993 Tax Ordinance No. 33, S-93,
otherwise known as the Revised Revenue Code of Angeles City
(RRCAC).

On February 7, 1994, a petition seeking the reduction of the tax rates

and a review of the provisions of the RRCAC was filed with
the Sangguniang Panlungsod by Metro Angeles Chamber of
Commerce and Industry Inc. (MACCI) of which AEC is a member. There
being no action taken by the Sangguniang Panlungsod on the matter,
MACCI elevated the petition to the Department of Finance, which
referred the same to the Bureau of Local Government Finance (BLGF).
In the petition, MACCI alleged that the RRCAC is oppressive,
excessive, unjust and confiscatory; that it was published only once,
simultaneously on January 22, 1994; and that no public hearings were
conducted prior to its enactment. Acting on the petition, the BLGF
issued a First Indorsement to the City Treasurer of Angeles City,
instructing the latter to make representations with the Sangguniang
Panlungsod for the appropriate amendment of the RRCAC in order to
ensure compliance with the provisions of the LGC, and to make a
report on the action taken within five days.

Thereafter, starting July 1995, AEC has been paying the local
franchise tax to the Office of the City Treasurer on a quarterly basis, in
addition to the national franchise tax it pays every quarter to the
Bureau of Internal Revenue (BIR).

ISSUE: whether the RTC gravely abused its discretion in issuing the
writ of preliminary injunction enjoining Angeles City and its City
Treasurer from levying, selling, and disposing the properties of AEC.

HELD: NO. A principle deeply embedded in our jurisprudence is that

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

The situation, however, is different in the case of the collection of

local taxes as there is no express provision in the LGC prohibiting
courts from issuing an injunction to restrain local governments from
collecting taxes. Thus, in the case of Valley Trading Co., Inc. v. Court
of First Instance of Isabela, Branch II, cited by the petitioner, we ruled
that: EHCa

Unlike the National Internal Revenue Code, the Local Tax Code does
not contain any specific provision prohibiting courts from enjoining the
collection of local taxes. Such statutory lapse or intent, however it
may be viewed, may have allowed preliminary injunction where local
taxes are involved but cannot negate the procedural rules and
requirements under Rule 58.

In light of the foregoing, petitioner’s reliance on the above-cited case

to support its view that the collection of taxes cannot be enjoined is
misplaced. The lower court’s denial of the motion for the issuance of a
writ of preliminary injunction to enjoin the collection of the local tax
was upheld in that case, not because courts are prohibited from
granting such injunction, but because the circumstances required for
the issuance of writ of injunction were not present.

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

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

No grave abuse of discretion was committed by the RTC

Section 3, Rule 58, of the Rules of Court lays down the requirements
for the issuance of a writ of preliminary injunction, viz.:

(a) That the applicant is entitled to the relief demanded, and the whole
or part of such relief consists in restraining the commission or
continuance of the acts complained of, or in the performance of an act
or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of the act or

acts complained of during the litigation would probably work injustice
to the applicant; or

(c) That a party, court, or agency or a person is doing, threatening, or

attempting to do, or is procuring or suffering to be done, some act or
acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the
judgment ineffectual.
Two requisites must exist to warrant the issuance of a writ of
preliminary injunction, namely: (1) the existence of a clear and
unmistakable right that must be protected; and (2) an urgent and
paramount necessity for the writ to prevent serious damage..

Guided by the foregoing, we find no grave abuse of discretion on the

part of the RTC in issuing the writ of injunction. Petitioner, who has
the burden to prove grave abuse of discretion, failed to show that the
RTC acted arbitrarily and capriciously in granting the injunction.
Neither was petitioner able to prove that the injunction was issued
without any factual or legal justification. In assailing the injunction,
petitioner primarily relied on the prohibition on the issuance of a writ
of injunction to restrain the collection of taxes. But as we have already
said, there is no such prohibition in the case of local taxes. Records
also show that before issuing the injunction, the RTC conducted a
hearing where both parties were given the opportunity to present their
arguments. During the hearing, AEC was able to show that it had a
clear and unmistakable legal right over the properties to be levied and
that it would sustain serious damage if these properties, which are
vital to its operations, would be sold at public auction. As we see it
then, the writ of injunction was properly issued. cEaSHC

A final note. While we are mindful that the damage to a taxpayer’s

property rights generally takes a back seat to the paramount need of
the State for funds to sustain governmental functions, this rule finds
no application in the instant case where the disputed tax assessment
is not yet due and demandable. Considering that AEC was able to
appeal the denial of its protest within the period prescribed under
Section 195 of the LGC, the collection of business taxes through levy
at this time is, to our mind, hasty, if not premature. The issues of tax
exemption, double taxation, prescription and the alleged retroactive
application of the RRCAC, raised in the protest of AEC now pending
with the RTC, must first be resolved before the properties of AEC can
be levied. In the meantime, AEC’s rights of ownership and possession
must be respected.