LOCAL GOVERNMENT TAXATION

1. ALEJANDRO B. TY AND MVR

PICTURE
TUBE
INC., petitioners, vs. THE
HON.
AURELIO C. TRAMPE, in his
capacity as Judge of the Regional
Trial Court of Pasig, Metro
Manila. THE HON. SECRETARY OF
FINANCE,
THE
MUNICIPAL
ASSESSOR OF PASIG AND THE
MUNICIPAL
TREASURER
OF
PASIG, respondents.

Facts:
The Assessor sent a notice of assessment
respecting certain real properties of petitioners
located in Pasig. Metro Manila in a letter dated 18
March
1994,
petitioners
through
counsel
"request(ed) the Municipal Assessor to reconsider
the subject assessments." Not satisfied, petitioners
filed with the Regional Trial Petition for Prohibition
with prayer for a restraining order and/or writ of
preliminary injunction to declare null and void the
new tax assessments and to enjoin the collection of
real estate taxes based on said assessments.
Respondent Judge denied the petition "for lack of
merit".
In disposing of the above issues against petitioners,
the court a quo ruled that the schedule of market
values and the assessments based thereon
prepared solely by respondent assessor are valid
and legal, they having been prepared in
accordance with the provisions of The Local
Government Code of 1991 (R.A. 7160). It held also
that said Code had effectively repealed the
previous law on the matter, P.D. 921, which
required,
in
the
preparation
of
said
schedule, joint action by all the city and municipal
assessors in the Metropolitan Manila area.
Issues:
1. Was PD 921 impliedly repealed by RA 7160?
Ruling:
1. Yes, it was repealed. R.A. 7160 has a repealing
provision (Section 534) and, if the intention of
the legislature was to abrogate P.D. 921, it
would have included it in such repealing clause,
as it did in expressly rendering of no force and
effect several other presidential decrees.
Hence, any repeal or modification of P.D.
921 can only be possible under par. (f) of said
Section 534, as follows:
"(f) All general and special laws,
acts,
city
charter,
decrees,
executive orders, proclamations
and administrative regulations,
part or parts thereof which are
inconsistent with any of the
provisions of the Code are hereby
repealed or modified accordingly."

By reading together and harmonizing these two

provisions, we arrive at the following steps in
the preparation of the said schedule, as follows:
1. The
assessor
in
each
municipality
or
city
in
the
Metropolitan Manila area shall
prepare his/her proposed schedule
of values, in accordance with Sec.
212, R.A. 7160.
2. Then, the Local Treasury and
Assessment District shall meet, per
Sec. 9, P.D. 921. In the instant
case,
that
district
shall
be
composed of the assessors in
Quezon City, Pasig, Marikina,
Mandaluyong
and
San
Juan,
pursuant to Sec. 1 of said P.D. In
this
meeting,
the
different
assessors shall compare their
individual assessments, discuss
and thereafter jointly agree and
produce a schedule of values for
their district, taking into account
the preamble of said P.D. that they
should
evolve
"a
progressive
revenue raising program that will
not unduly burden the taxpayers".
3. The schedule jointly agreed upon
by the assessors shall then be
published
in
a newspaper
of
general circulation and submitted
to the sanggunian concerned for
enactment by ordinance, per Sec.
212, R.A. 7160.
By this harmonization, both the preamble
of P.D. 921 decreeing that the real estate taxes
shall "not unduly burden the taxpayer" and the
"operative
principle
of
decentralization"
provided under Sec. 3, R.A. 7160 encouraging
local government units to "consolidate or
coordinate their efforts, services and resources"
shall be fulfilled. Indeed, the essence of joint
local action for common good so cherished in
the Local Government Code finds concrete
expression in this harmonization. L
SC:In view of the foregoing ruling, the question
may be asked: what happens to real estate tax
payments already made prior to it's promulgation
and finality? Under the law, 26 "the taxpayer may
file a written claim for refund or credit for taxes and
interests . . .."
2. PEPSI-COLA BOTTLING
COMPANY OF THE PHILIPPINES,
INC., plaintiff-appellant, vs. MU
NICIPALITY OF TANAUAN,
LEYTE, THE MUNICIPAL MAYOR,
ET AL., defendants-appellees.
Facts:

Pepsi-Cola
Bottling
Company
of
the
Philippines, Inc., filed a complaint with preliminary
injunction before the Court of First Instance of
Leyte to declare Section 2 of R.A. No. 2264, (known
as the Local Autonomy Act) unconstitutional as an
undue delegation of the taxing authority and
declare null and void Municipal Ordinance No. 23,
which levies and collects from soft drinks producers
and manufactures a tax of 1/16 of a centavo for
every bottle of soft drinks corked, and Municipal
Ordinance No. 27 which levies and collects on soft
drinks produced or manufactured within the
territorial jurisdiction a tax of one centavo on each
gallon of volume capacity. The trial court dismissed
the complaint and upheld the constitutionality of
Sec. 2 of R.A. No. 2264 and declared Municipal
Ordinances Nos. 27 valid and constitutional.
Appealed to the Court of Appeals, the case was
certified to the Supreme Court as involving pure
question of law.

when (1) the tax is for a public purpose; (2) the

rule on uniformity of taxation is observed; (3)
either the person or property taxed is within the
jurisdiction of the government levying the tax;
and (4) in the assessment and collection of
certain kinds of taxes notice and opportunity for
hearing are provided.
2.

The
plaintiff-appellant
submits
that
Ordinance Nos. 23 and 27 constitute double
taxation, because these two ordinances cover
the same subject matter and impose practically
the same tax rate. The thesis proceeds from its
assumption that both ordinances are valid and
legally enforceable. This is not so. As earlier
quoted, Ordinance No. 23, which was approved
on September 25, 1962, levies or collects from
soft drinks producers or manufacturers a tax of
one-sixteen (1/16) of a centavo for every bottle
corked, irrespective of the volume contents of
the bottle used. When it was discovered that
the producer or manufacturer could increase
the volume contents of the bottle and still pay
the same tax rate, the Municipality of Tanauan
enacted Ordinance No. 27, approved on
October 28, 1962, imposing a tax of one
centavo (P0.01) on each gallon (128 fluid
ounces, U.S.) of volume capacity. The difference
between the two ordinances clearly lies in the
tax rate of the soft drinks produced: in
Ordinance No. 23, it was 1/16 of a centavo for
every bottle corked; in Ordinance No. 27, it is
one centavo (P0.01) on each gallon (128 fluid
ounces, U.S.) of volume capacity. The
intention of the Municipal Council of
Tanauan in enacting Ordinance No. 27 is
thus clear: it was intended as a plain
substitute for the prior Ordinance No. 23,
and operates as a repeal of the latter, even
without words to that effect.
The limitation applies, particularly, to the
prohibition against municipalities and municipal
districts to impose "any percentage tax on
sales or other taxes in any form based
thereon nor impose taxes on articles subject
to specific tax, except gasoline, under the
provisions of the National Internal Revenue
Code." Ordinance No. 27 does not partake of
the nature of a percentage tax on sales, or
other taxes in any form based thereon. The tax
is levied on the produce (whether sold or not)
and not on the sales. The volume capacity of
the taxpayers production of soft drinks is
considered solely for purposes of determining
the tax rate on the products, but there is no set
ratio between the volume of sales and the
amount of the tax.

3.

The tax cannot be considered unjust and

unfair. 24 An increase in the tax alone would
not support the claim that the tax is oppressive,

Issues:
1. Is Section 2, Republic Act No. 2264 an
undue delegation of power, confiscatory and
oppressive?
2. Do Ordinances Nos. 23 and 27 constitute
double taxation and impose percentage or
specific taxes?
3. Are Ordinances Nos. 23 and 27 unjust and
unfair?
Ruling:
1.
Legislative powers may be delegated to
local governments in respect of matters of local
concern. This is sanctioned by immemorial
practice. By
necessary
implication,
the
legislative power to create political corporations
for purposes of local self-government carries
with it the power to confer on such local
governmental agencies the power to tax.
The plenary nature of the taxing power thus
delegated, contrary to plaintiff-appellant's
pretense, would not suffice to invalidate the
said law as confiscatory and oppressive. In
delegating the authority, the State is not limited
to the exact measure of that which is exercised
by itself. When it is said that the taxing power
may be delegated to municipalities and the like,
it is meant that there may be delegated such
measure of power to impose and collect taxes
as the legislature may deem expedient. Thus,
municipalities may be permitted to tax subjects
which for reasons of public policy the State has
not deemed wise to tax for more general
purposes.
This is not to say though that the
constitutional injunction against deprivation of
property without due process of law may be
passed over under the guise of the taxing
power, except when the taking of the property
is in the lawful exercise of the taxing power, as

unjust and confiscatory. Municipal corporations

are allowed much discretion in determining the
rates of imposable taxes, except when the
amount is so excessive.
The constitutionality of Section 2 of Republic
Act No. 2264, otherwise known as the Local
Autonomy Act, as amended, is hereby upheld
and Municipal Ordinance No. 27 of the
Municipality of Tanauan, Leyte, series of 1962,
repealing Municipal Ordinance No. 23, same
series, is hereby declared of valid and legal
effect.

Facts:

3. [G.R. No. 156252. June 27,

2006.]COCA-COLA
BOTTLERS
PHILIPPINES,
INC., petitioner, vs.
CITY OF MANILA, LIBERTY M.
TOLEDO City Treasurer and
JOSEPH
SANTIAGO

Chief,
Licensing Division, respondents

City Mayor of Manila approved Tax

Ordinance No. 7988, otherwise known as "Revised
Revenue Code of the City of Manila" repealing Tax
Ordinance No. 7794 entitled, "Revenue Code of the
City of Manila." Tax Ordinance No. 7988 amended
certain sections of Tax Ordinance No. 7794 by
increasing the tax rates applicable to certain
establishments operating within the territorial
jurisdiction of the City of Manila, including herein
petitioner.
Aggrieved by said tax ordinance, petitioner
filed a Petition before the Department of Justice
(DOJ),questioning the legality of Section 21 of Tax
Ordinance 7988. Then DOJ Secretary Artemio G.
Tuquero issued a Resolution declaring Tax
Ordinance No. 7988 null and void and without legal
effect since it was not published in full for three (3)
consecutive days in a newspaper of local
circulation.
Issue:

Whether or not Tax Ordinance 7988 is null

and void
Ruling:
It is undisputed from the facts of the case
that Tax Ordinance No. 7988 has already been
declared by the DOJ Secretary as null and void and
without legal effect due to respondents' failure to
satisfy the requirement that said ordinance be
published for three consecutive days as required by
law. Neither is there quibbling on the fact that the
said Order of the DOJ was never appealed by the
City of Manila, thus, it had attained finality after the
lapse of the period to appeal. A
Furthermore, the RTC of Manila, reiterated
the findings of the DOJ Secretary that respondents
failed to follow the procedure in the enactment of
tax measures as mandated by Section 188 of The
Local Government Code of 1991, in that they failed

to publish Tax Ordinance No. 7988 for three

consecutive days in a newspaper of local
circulation. From the foregoing, it is evident that
Tax Ordinance No. 7988 is null and void as said
ordinance was published only for one day in the
22 May 2000 issue of the Philippine Post in
contravention of the unmistakable directive of The
Local Government Code of 1991.
Despite the nullity of Tax Ordinance No.
7988, the court a quo, in the assailed Orderwent on
to dismiss petitioner's case on the force of the
enactment of Tax Ordinance No. 8011, amending
Tax Ordinance No. 7988. Significantly, said
amending ordinance was likewise declared null and
void by the DOJ Secretary in a Resolution, dated 5
July 2001, elucidating that "[I]nstead of amending
Ordinance No. 7988, [herein] respondent should
have enacted another tax measure which strictly
complies with the requirements of law, both
procedural and substantive. The passage of the
assailed ordinance did not have the effect of
curing the defects of Ordinance No. 7988
which, any way, does not legally exist." Said
Resolution of the DOJ Secretary had, as well,
attained finality by virtue of the dismissal with
finality by this Court of respondents' Petition for
Review on Certiorari in G.R. No. 157490 assailing
the dismissal by the RTC of Manila, Branch 17, of its
appeal due to lack of jurisdiction in its Order, dated
11 August 2003.
4. The City of Manila vs Coca-Cola
Bottlers Phil Inc.
Facts:
Petitioner City of Manila is a public
corporation empowered to collect and assess
business taxes, revenue fees, and permit fees. On
the other hand, respondent Coca-Cola Bottlers
Philippines, Inc. is a corporation engaged in the
business of manufacturing and selling beverages,
and which maintains a sales office in the City of
Manila.Prior to 25 February 2000, respondent had
been paying the City of Manila local business tax
only under Section 14 of Tax Ordinance No.
7794, being expressly exempted from the business
tax under Section 21 of the same tax ordinance.
Petitioner City of Manila subsequently
approved on 25 February 2000, Tax Ordinance No.
7988, amending certain sections of Tax Ordinance
No. 7794, particularly: (1) Section 14, by increasing
the tax rates applicable to certain establishments
operating within the territorial jurisdiction of the
City of Manila; and (2) Section 21, by deleting
the proviso found therein, which stated "that all
registered businesses in the City of Manila that are
already paying the aforementioned tax shall be
exempted from payment thereof". Petitioner City of
Manila approved only after a year, on 22 February
2001, another tax ordinance, Tax Ordinance No.
8011, amending Tax Ordinance No. 7988.

Tax Ordinances No. 7988 and No. 8011 were

later declared by the Court null and void in CocaCola Bottlers Philippines, Inc. v. City of Manila.
However, before the Court could declare Tax
Ordinance No. 7988 and Tax Ordinance No. 8011
null and void, petitioner City of Manila assessed
respondent on the basis of Section 21 of Tax
Ordinance No. 7794, as amended by the
aforementioned tax ordinances, for deficiency local
business taxes, penalties, and interest, in the total
amount of P18,583,932.04, for the third and fourth
quarters of the year 2000. Respondent filed a
protest on the ground that the said assessment
amounted to double taxation, as respondent was
taxed twice, i.e., under Sections 14 and 21 of Tax
Ordinance No. 7794, as amended by Tax
Ordinances No. 7988 and No. 8011.
Consequently, respondent filed with the
Regional Trial Court (RTC) of Manila, Branch 47, an
action for the cancellation of the assessment
against respondent for business taxes. The RTC
granted the Motion for Reconsideration of
respondent,
decreed
the
cancellation
and
withdrawal of the assessment against the latter,
and
barred
petitioners
from
further
imposing/assessing local business taxes against
respondent under Section 21 of Tax Ordinance No.
7794, as amended by Tax Ordinance No. 7988 and
Tax Ordinance No. 8011. The Decision of the RTC
was in conformity with the ruling of this Court in 3.
the Coca-Cola case, in which Tax Ordinance No.
7988 and Tax Ordinance No. 8011 were declared
null and void.
Issues:
1. Whether or not the ruling of this court in the
earlier [Coca-Cola case] is doctrinal and
controlling in the instant case
2. Whether or not petitioner City of Manila can
still assess taxes under Sections 14 and 21
of Tax Ordinance no. 7794, as amended
3. Whether or not the enforcement of Section
21 of the Tax ordinance no. 7794, as
amended constitutes double taxation
Ruling:
1. Yes. The Coca-Cola case is indeed applicable to the
instant case.By virtue of the Coca-Cola case, Tax
Ordinance No. 7988 and Tax Ordinance No. 8011
are null and void and without any legal effect.
Therefore, respondent cannot be taxed and
assessed under the amendatory laws Tax
Ordinance No. 7988 and Tax Ordinance No. 8011.
2. That prior to the passage of Tax Ordinance No.
7988 and Tax Ordinance No. 8011 by petitioner City
of Manila, petitioners subjected and assessed
respondent only for the local business tax
under Section 14 of Tax Ordinance No. 7794,
but never under Section 21 of the same. This
was due to the clear and unambiguous proviso in

Section 21 of Tax Ordinance No. 7794, which stated

that "all registered business in the City of Manila
that are already paying the aforementioned tax
shall be exempted from payment thereof". The
"aforementioned
tax"
referred
to
in
said provisorefers to local business tax. Stated
differently, Section 21 of Tax Ordinance No. 7794
exempts from the payment of the local business
tax imposed by said section, businesses that are
already paying such tax under other sections of the
same tax ordinance. The said proviso, however,
was deleted from Section 21 of Tax Ordinance No.
7794 by Tax Ordinances No. 7988 and No. 8011.
Following this deletion, petitioners began assessing
respondent for the local business tax under Section
21 of Tax Ordinance No. 7794, as amended.Yet,
with the pronouncement by this Court in the CocaCola case that Tax Ordinance No. 7988 and Tax
Ordinance No. 8011 were null and void and without
legal effect, then Section 21 of Tax Ordinance No.
7794, as it has been previously worded, with its
exempting proviso, is back in effect. Accordingly,
respondent should not have been subjected
to the local business tax under Section 21 of
Tax Ordinance No. 7794 for the third and fourth
quarters of 2000, given its exemption therefrom
since it was already paying the local business tax
under Section 14 of the same ordinance.
Yes. Double taxation means taxing the same
property twice when it should be taxed only once;
that is, "taxing the same person twice by the same
jurisdiction for the same thing". It is obnoxious
when the taxpayer is taxed twice, when it should
be but once. Otherwise described as "direct
duplicate taxation", the two taxes must be
imposed on the same subject matter, for
the same
purpose, by
the same
taxing
authority, within the same jurisdiction, during
the same taxing period; and the taxes must
be of the same kind or character.
Using the aforementioned test, the Court finds
that there is indeed double taxation if respondent is
subjected to the taxes under both Sections 14 and
21 of Tax Ordinance No. 7794, since these are
being imposed: (1) on the same subject matter
the privilege of doing business in the City of Manila;
(2) for the same purpose to make persons
conducting business within the City of Manila
contribute to city revenues; (3) by the same taxing
authority petitioner City of Manila; (4) within the
same taxing jurisdiction within the territorial
jurisdiction of the City of Manila; (5) for the same
taxing periods per calendar year; and (6) of the
same kind or character a local business tax
imposed on gross sales or receipts of the business.
5.
Facts:

Philippine Match Co. Ltd. vs. Cebu City

Cebu City imposed a quarterly tax (sales tax

of 1%) on gross sales or receipts of merchants,
dealers, importers and manufacturers or any
commodity doing business in Cebu City, through
Ordinance 279.
Section 9 of the Ordinance provided that, for
the purpose of the tax, all deliveries of goods or
commodities stored in Cebu City, or if not stored
are sold in that city shall be considered as sales in
the city and shall be taxable.

fact that the matches were delivered to customers,

whose places of business were outside of the city,
would not place those sales beyond the city's
taxing power. Those sales formed part of the
merchandising business being assigned on by the
company in the city. In essence, they are the same
as sales of matches fully consummated in the city.

The Philippine Match Co., Ltd., whose

principal office is in Manila, is engaged in the
manufacture of matches. Its factory is located at
Punta, Sta. Ana, Manila. It ships cases or cartons of
matches from Manila to its branch office in Cebu
City for storage, sale and distribution within the
territories and districts under its Cebu branch or
the whole Visayas-Mindanao region. Cebu City itself
is just one of the eleven districts under the
company's Cebu City branch office.

FACTS:
NAPOCOR, the petitioner, is a government-owned
and
controlled
corporation
created
under
Commonwealth Act 120. It is tasked to undertake
the development of hydroelectric generations of
power and the production of electricity from
nuclear, geothermal, and other sources, as well as,
the transmission of electric power on a nationwide
basis.

The company does not question the tax on

the matches of matches consummated in Cebu
City, meaning matches sold and delivered within
the city.
Philippine Match Co. Ltd., questioned the
legality of the tax collected by the City of Cebu on
sales of matches stored by the company in Cebu
City but delivered to customers outside the city.
Issue:
Whether or not the City of Cebu can tax
sales of matches which were perfected and paid for
in Cebu City but were delivered to customers
outside the city
Held:

The city can validly tax the sales of matches

to customers outside of the city as long as the
orders were booked and paid for in the companys
branch office in the city. Those matches can be
regarded as sold in the city, as contemplated in the
ordinance, because the matches were delivered to
the carrier in Cebu City.
Generally, delivery to the carrier is delivery
to the buyer (Article 1523, Civil Code). A different
interpretation would defeat the tax ordinance in
question or encourage tax evasion through the
simple expedient of arranging for the delivery of
the matches at the outskirts of the city though the
purchases were effected and paid for in the
companys branch office in the city. The municipal
board of the city is empowered to provide for the
levy and collection of taxes for general and special
purposes in accordance with law.
The sales in the instant case were in the city
and the matches sold were stored in the city. The

6. NAPOCOR VS CITY OF CABANATUAN

For many years now, NAPOCOR sells electric power

to the resident Cabanatuan City, posting a gross
income of P107,814,187.96 in 1992. Pursuant to
Sec. 37 of Ordinance No. 165-92, the respondent
assessed the petitioner a franchise tax amounting
to P808,606.41, representing 75% of 1% of the
formers gross receipts for the preceding year.
Petitioner, whose capital stock was subscribed and
wholly paid by the Philippine Government, refused
to pay the tax assessment. It argued that the
respondent has no authority to impose tax on
government entities. Petitioner also contend that as
a non-profit organization, it is exempted from the
payment of all forms of taxes, charges, duties or
fees in accordance with Sec. 13 of RA 6395, as
amended.
The respondent filed a collection suit in the RTC of
Cabanatuan City, demanding that petitioner pay
the assessed tax, plus surcharge equivalent to 25%
of the amount of tax and 2% monthly interest.
Respondent alleged that petitioners exemption
from local taxes has been repealed by Sec. 193 of
RA 7160 (Local Government Code). The trial court
issued an order dismissing the case. On appeal, the
Court of Appeals reversed the decision of the RTC
and ordered the petitioner to pay the city
government the tax assessment.
Issue:
Whether NPC is liable to pay an annual franchise
tax to the City government
Held:
One of the most significant provisions of the LGC is
the removal of the blanket exclusion of
instrumentalities and agencies of the national
government from the coverage of local taxation.
Although as a general rule, LGUs cannot impose

taxes, fees or charges of any kind on the National

Government, its agencies and instrumentalities,
this rule now admits an exception, i.e., when
specific provisions of the LGC authorize the LGUs to
impose
taxes,
fees
or
charges
on
the
aforementioned entities.
As commonly used, a franchise tax is "a tax on the
privilege of transacting business in the state and
exercising corporate franchises granted by the
state." It is not levied on the corporation simply for
existing as a corporation, upon its property or its
income, but on its exercise of the rights or
privileges granted to it by the government. Hence,
a corporation need not pay franchise tax from the
time it ceased to do business and exercise its
franchise. It is within this context that the phrase
"tax on businesses enjoying a franchise" in section
137 of the LGC should be interpreted and
understood. Verily, to determine whether the
petitioner is covered by the franchise tax in
question, the following requisites should concur: (1)
that petitioner has a "franchise" in the sense of a
secondary or special franchise; and (2) that it is
exercising its rights or privileges under this
franchise within the territory of the respondent city
government.
NPC fulfills both requisites. To stress, a franchise
tax is imposed based not on the ownership but on
the exercise by the corporation of a privilege to do
business. The taxable entity is the corporation
which exercises the franchise, and not the
individual stockholders. By virtue of its charter,
petitioner was created as a separate and distinct
entity from the National Government. It can sue
and be sued under its own name, and can exercise
all the powers of a corporation under the
Corporation Code.
We also do not find merit in the petitioner's
contention that its tax exemptions under its charter
subsist despite the passage of the LGC.
As a rule, tax exemptions are construed strongly
against the claimant. Exemptions must be shown to
exist clearly and categorically, and supported by
clear legal provisions. In the case at bar, the
petitioner's sole refuge is section 13 of Rep. Act No.
6395 exempting from, among others, "all income
taxes, franchise taxes and realty taxes to be paid to
the National Government, its provinces, cities,
municipalities and other government agencies and
instrumentalities."
It is worth mentioning that section 192 of the LGC
empowers the LGUs, through ordinances duly
approved, to grant tax exemptions, initiatives or
reliefs.77 But in enacting section 37 of Ordinance
No. 165-92 which imposes an annual franchise tax
"notwithstanding any exemption granted by law or
other special law," the respondent city government
clearly did not intend to exempt the petitioner from
the coverage thereof.
Doubtless, the power to tax is the most effective
instrument to raise needed revenues to finance and

support myriad activities of the local government

units for the delivery of basic services essential to
the promotion of the general welfare and the
enhancement of peace, progress, and prosperity of
the people. As this Court observed in the Mactan
case, "the original reasons for the withdrawal of tax
exemption privileges granted to governmentowned or controlled corporations and all other units
of government were that such privilege resulted in
serious tax base erosion and distortions in the tax
treatment of similarly situated enterprises." With
the added burden of devolution, it is even more
imperative for government entities to share in the
requirements of development, fiscal or otherwise,
by paying taxes or other charges due from them.
7. PALMA DEVELOPMENT CORPORATION
VS.MUNICIPALITY
OF
MALANGAS,
ZAMBOANGA DEL SUR
FACTS:
Palma
Development
Corporation
was
engaged in milling and selling rice and corn to
wholesalers in Zamboanga City. It uses the
municipal port of Malangas, Zamboanga del Sur as
transshipment point for its goods. The port, as well
as the surrounding roads leading to it, belong to
and are maintained by the municipality. The conflict
started whenthe municipality passed a municipal
revenue imposing service fee for the use of the
municipality's roads leading to the wharf and to
any point along the shorelines within the
jurisdiction of the municipality, and for police
surveillance on all goods and equipments harbored
or sheltered in the premises of the wharf and
others within the jurisdiction of the municipality.
Such ordinance was assailed contending that
under the Local Government Code of 1991,
municipal governments did not have the authority
to tax goods and vehicles that passed through their
jurisdictions.
ISSUE: Whether or not the ordinance was valid.
RULING:
NO.By express language of Sections 153
and 155 of RA No. 7160, local government units,
through their Sanggunian, may prescribe the terms
and conditions for the imposition of toll fees or
charges for the use of any public road, pier or wharf
funded and constructed by them. A service fee
imposed on vehicles using municipal roads leading
to the wharf is thus valid. However, Section 133(e)
of RA No. 7160 prohibits the imposition, in the
guise of wharfage, of fees as well as all other
taxes or charges in any form whatsoever
on goods or merchandise. It is therefore irrelevant
if the fees imposed are actually for police
surveillance on the goods, because any other form
of imposition on goods passing through the

territorial jurisdiction of the municipality is clearly

prohibited by Section 133(e).
Moreover, under Section 131(y) of LGC,
wharfage is defined as "a fee assessed against the
cargo of a vessel engaged in foreign or domestic
trade based on quantity, weight, or measure
received and/or discharged by vessel." It is
apparent that a wharfage does not lose its basic
character by being labeled as a service fee "for
police surveillance on all goods."
8. SMART COMMUNICATIONS,
CITY OF DAVAO

INC.

vs.

FACTS:
Petitioner Smart Communications, Inc. (SMART),
filed a special civil action for declaratory relief for
the ascertaining of its rights and obligations under
the Tax Code of the City of Davao, which imposes a
franchise tax on businesses enjoying a franchise
within its territorial jurisdiction. SMART avers that it
is exempt from the payment of the local franchise
tax to the city as provided under Sec. 9, and Sec.
23 of its legislative franchise.
ISSUE:
WON SMART is exempted from local franchise tax
under the in lieu of all taxes clause and the word
exemption under Sec. 9 and Sec. 23 respectively
of its legislative franchise.
RULING:
No.
Aside from the national franchise tax, the
franchisee is still liable to pay the local franchise
tax, unless it is expressly and unequivocally
exempted from the payment thereof under its
legislative franchise. The "in lieu of all taxes" clause
in a legislative franchise should categorically state
that the exemption applies to both local and
national taxes; otherwise, the exemption claimed
should be strictly construed against the taxpayer
and liberally in favor of the taxing authority.
The word "exemption" as used in Sec. 23 of the
legislative franchise refers or pertains merely to an
exemption
from
regulatory
or
reporting
requirements of the Department of Transportation
and Communication or the National Transmission
Corporation and not to an exemption from the
grantee's tax liability.
The "Expanded VAT Law", did not remove or abolish
the payment of local franchise tax. It merely
replaced the national franchise tax that was
previously paid by telecommunications franchise

holders and in its stead imposed a ten percent

(10%) VAT in accordance with Section 108 of the
Tax Code. VAT replaced the national franchise tax,
but it did not prohibit nor abolish the imposition of
local franchise tax by cities or municipalities.
9.
MOBIL
PHILIPPINES,
INC., petitioner, vs.
THE
CITY
TREASURER OF MAKATI and the
CHIEF
OF
THE
LICENSE
DIVISION OF THE CITY OF
MAKATI, respondents.
FACTS:
Prior to September 1998, petitioners principal
office was located at Makati City. On August 20,
1998, petitioner filed an application with the City
Treasurer of Makati for the retirement of its
business within the City of Makati as it moved its
principal place of business to Pasig City. Upon
evaluation of petitioner's application, then OIC of
the License Division, Ms. Jesusa E. Cuneta, issued
to petitioner, a billing slip 6 assessing taxes against
petitioner in the total amount of P1,898,106.96 .
the assessed taxs were paid under protest by the
petitioner. Later, petitioner filed a claim for refund
on the ground that petitioner was merely
transferring and not retiring its business, and that
the gross sales realized while petitioner still
maintained office in Makati from January 1 to
August 31, 1998 should be taxed in the City of
Makati.
The RTC ruled in favour of the City of Makati saying
that the business tax accrues only on the first day
of January as provided in Sec. 3A.07 and becomes
payable within the first 20 days thereof or of each
subsequent quarter, the payments made by Mobil
in the year 1998 are therefore payments for the
business tax for 1997 which accrued in January of
1998 and became payable within the first 20 days
of January or of each subsequent quarter. Thus,
upon retirement in August 1998, the taxes for said
year which should accrue in January 1999 [become]
immediately payable before the application for
retirement can be approved (Ibid, (g), Sec. 3A.08).
The assessment of the Chief of the License Division
of Makati is therefore with legal basis and does not
constitute double taxation.
ISSUE:
Are the business taxes paid by petitioner in 1998,
business taxes for 1997 or 1998?
HELD:
The amount paid were the business taxes for 1998.
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.
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:
xxx xxx xxx
(g) Retirement of business.
xxx xxx xxx
For purposes thereof, termination
shall mean that business operation
are stopped completely.
xxx xxx xxx
(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.
10. Yamane vs. Lepanto Condo Corp
FACTS:
In 1998, BA Lepanto Condominium Corporation
(Lepanto) received a tax assessment in the amount
of P1.6 million from Luz Yamane, the City Treasurer
of Makati, for business taxes. Lepanto protested the
assessment as it averred that Lepanto, as a
corporation, is not organized for profit; that it
merely exists for the maintenance of the
condominium. Yamane denied the protest. Lepanto
then appealed the denial to the RTC of Makati. RTC
Makati affirmed the decision of Yamane. Lepanto
then filed a petition for review under Rule 42 with
the Court of Appeals. The Court of Appeals
reversed the RTC. Yamane now filed a petition for

review under Rule 45 with the Supreme Court.

Yamane avers that a.) Lepanto is liable for local
taxation because its act of maintaining the
condominium is an activity for profit because the
end result of such activity is the betterment of the
market value of the condominium which makes it
easier to sell it; that Lepanto is earning profit from
fees collected from condominium unit owners; and
that b.) Lepantos petition for review of the decision
of the RTC to the CA is erroneous because when the
RTC decided on the appeal brought to it by
Lepanto, the RTC was exercising its original
jurisdiction and not its appellate jurisdiction; that
as such, what Lepanto should have done is to file
an ordinary appeal under Rule 41.
ISSUE: Whether or not a RTC deciding an appeal
from the decision of a city treasurer on tax protests
is exercising original jurisdiction. Whether or not a
condominium corporation organized solely for the
maintenance of a condominium is liable for local
taxation.
HELD: 1.Yes. Although the LGC (Section 195)
provides that the remedy of the taxpayer whose
protest is denied by the local treasurer is to
appeal with the court of competent jurisdiction or
in this case the RTC (considering the amount of tax
liability is P1.6 million), such appeal when decided
by the RTC is still in the exercise of its original
jurisdiction and not its appellate jurisdiction. This is
because appellate jurisdiction is defined as 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.
Here, the City Treasurer is not a lower court. The
Supreme Court however clarifies that this ruling is
only applicable to similar cases before the passage
of Republic Act 9282 (effective April 2004). Under
RA 9282, the Court of Tax Appeals (CTA), not CA,
exercises exclusive appellate jurisdiction to review
on appeal decisions, orders or resolutions of the
Regional Trial Courts in local tax cases whether
originally decided or resolved by them in the
exercise of their original or appellate jurisdiction. 2.
No. Lepanto was not organized for profit. The fees it
was collecting from the condominium unit owners
redound to the owners themselves because the
fees collected are being used for the maintenance
of the condo. Further, it appears that the
assessment issued by Yamane did not state the
legal basis for the tax being imposed on Lepanto
it merely states that Makati is authorized to collect
business taxes under the Local Government Code
(LGC) but no other reference specific reference to
specific laws were cited.
11. [G.R. No. 176667. November 22,
2007.]
ERICSSON
TELECOMMUNICATIONS,

INC., petitioner, vs. CITY OF

PASIG, represented by its City
Mayor, Hon. Vicente P. Eusebio,
et al., * respondent.

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.
The City Treasurer of Pasig Cityissued two
Assessment Noticesto petitioner. It assessed
petitioner a business tax deficiency for the
years 1998 and 1999; and another for the
years 1999 and 2000. All were based on its
gross revenues as reported in its audited
financial statementsfor the years 1997 and
1998; and years 2000 and 2001.
Petitioner
filed
a
Protest
for
both
assessments, claiming that the computation
of the local business tax should be based
on gross receipts and not on 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), praying for the
annulment and cancellation of petitioner's
deficiency local business taxes.
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.
RTC canceled and set aside the assessments
made by respondent and its City Treasurer.
On appeal, the Court of Appeals (CA)
rendered its Decision: hereby ordered SET
ASIDE and a NEW ONE ENTERED dismissing
the plaintiff/appellee's complaint without
prejudice.The CA sustained respondent's
claim that the petition filed with the RTC
should have been dismissed due to
petitioner's failure to show that Atty. Maria
Theresa B. Ramos (Atty. Ramos), petitioner's
Manager for Tax and Legal Affairs and the
person who signed the Verification and
Certification of Non-Forum Shopping, was
duly authorized by the Board of Directors.
ISSUES:
1. WON the RTC should have dismissed the
petition.
2. WONthe CA should have dismissed the
appeal of respondent as it has no
jurisdiction over the case since the appeal
involves a pure question of law.
3. Whether the local business tax on
contractors should be based on gross
receipts or gross revenue.

RULING
1. Time and again, the Court, under special
circumstances and for compelling reasons,
sanctioned substantial compliance with the
rule on the submission of verification and
certification against non-forum shopping. In
the present case, petitioner submitted a
Secretary's Certificate signed on May 6,
2002, whereby Atty. Ramos was authorized
to file a protest at the local government
level and to "sign, execute and deliver any
and all papers, documents and pleadings
relative to the said protest and to do and
perform all such acts and things as may be
necessary to effect the foregoing." The
subsequent submission of the Secretary's
Certificate and the substantial merits of the
petition, which will be shown forthwith,
justify a relaxation of the rule.
2. There is no dispute as to the veracity of the
facts involved in the present case. While
there is an issue as to the correct amount of
local business tax to be paid by petitioner,
its determination will not involve a look into
petitioner's audited financial statements or
documents, as these are not disputed;
rather, petitioner's correct tax liability will
be ascertained through an interpretation of
the pertinent tax laws. This, clearly, is a
question of law, and beyond the jurisdiction
of the CA. Section 2 (c), Rule 41 of the Rules
of Court provides that in all cases where
questions of law are raised or involved, the
appeal shall be to this Court by petition for
review on certiorari under Rule 45.Thus, as
correctly pointed out by petitioner, the
appeal before the CA should have been
dismissed, pursuant to Section 5 (f), Rule 56
of the Rules of Court, which provides:
Sec. 5. Grounds for dismissal of
appeal. The appeal may be
dismissed motuproprio or
on
motion of the respondent on the
following grounds:
xxxxxxxxx
(f) Error in the choice or mode of
appeal.
xxxxxxxxx
3. The dismissal of the appeal, in effect, would
have sustained the RTC Decision ordering
respondent to cancel the Assessment
Notices
issued
by
respondent,
and
therefore, would have rendered moot and
academic the 3rd issue.However, the higher
interest of substantial justice dictates that
this Court should resolve the same, to
evade further repetition of erroneous

interpretation of the law, 16 for

guidance of the bench and bar.

the

Respondent is authorized to levy business

taxes under Section 143 in relation to
Section 151 of the Local Government Code.
Insofar as petitioner is concerned, the
applicable provision is subsection (e),
Section 143 of the same Code covering
contractors
and
other
independent
contractors. The above provision specifically
refers to gross receipts which is defined
under Section 131 of the Local Government
Code, as follows:
xxxxxxxxx
(n) "Gross
Sales
or
Receipts"
include the total amount of money
or its equivalent representing the
contract price, compensation or
service fee, including the amount
charged or materials supplied with
the services and the deposits or
advance payments actually or
constructively received during the
taxable quarter for the services
performed or to be performed for
another person excluding discounts
if determinable at the time of sales,
sales return, excise tax, and valueadded tax (VAT);
xxxxxxxxx
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. There is 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.
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. 25
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 26
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. DIE
petition is GRANTED. SET ASIDE
(CA) and REINSTATED (RTC).

12.G.R. No. L-40296 November 21, 1984

ALLIED THREAD CO., INC., and KER &
COMPANY, LTD., petitioners, vs. HON. CITY
MAYOR OF MANILA, HON. CITY TREASURER OF
MANILA, HON. LORENZO RELOVA, in his
capacity as Presiding Judge, Branch II, CFI of
Manila, respondents.

FACTS:
On June 12, 1974, Municipal Board of the City of
Manila enacted Ordinance No. 7516 imposing on
manufacturers, importer porters or producers,
doing business in the City of Manila, business taxes
based on gross sales on a graduated basis. Mayor
approved it and same ordinance underwent a
series of amendments. Sec 1 of Ordinance No.
7616 reads:

Sec. 1.Business Tax. There is hereby

imposed on the following business in the
City of Manila an annual tax collectible
quarterly except on those for which fixed
taxes are already provided for as follows:
A.
On
manufacturers,
importers,
or
producers of any article of commerce of
whatever kind or nature, including brewers,
distilled spirits and/or wines in accordance
with the following schedule:
xxxxxxxxx
Allied is engaged in the business of manufacturing
sewing thread and yarn. For the sale of its products
in Manila and other parts of the Philippines, it
engaged the services of a sales broker, Ker &
Company, Ltd. Petitioners, being manufacturer and
sale broker, files for Declaratory Relief.
Claims:
a. Petitioners assert that due to the series of
amendments to Ordinance No. 7516, the
same Ordinance fell short of the deadline
set by Sec. 54 of P.D. No. 426 that "for an
ordinance intended to take effect on July 1,
1974, it must be enacted on or before June
15, 1974." Necessarily, so it is asserted, the
said Ordinance No. 7516 as amended, is not
valid nor enforceable;
b. Ordinance did not comply with the
necessary publication requirement in a
newspaper of general circulation as
mandated by Sec. 43 of the Local Tax Code,
hence, invalid and unenforceable;
c. Allied not be subjected to the said
Ordinance No. 7516 as amended, because it
does not operate or maintain a branch office
in Manila and that its principal office and
factory are located in Pasig, Rizal.
ISSUES:
a. Whether or not the Ordinance No. 7516 as
amended is valid.
b. Whether or not Allied is proper subject
thereto.
RULING:
a. Valid and Enforceable.
1. Ordinance No. 7516 was enacted on June
12, 1974; Approved by Mayor on June
15, 1974; Fifteen (15) days thereafter, or
on July 1, 1974, the said ordinance
became effective pursuant to Sec. 42 of
the Local Tax Code.
It is clear therefore that Ordinance No.
7516 has fully conformed with P.D. No.
426 and Local Tax Regulation No. 1-74

which require that "a local tax ordinance

intended to take effect on July 1, 1974
should be enacted by the Local Chief
Executive not later than June 15, 1974 ".
The subsequent amendments to the
basic ordinance did not in any way
invalidate it nor move the date of its
effectivity. To hold otherwise would limit
the power of the defunct Municipal
Board of Manila to amend an existing
ordinance as exigencies require.
2. There is substantial compliance of the
law on publication. Section 43 of the
Local Tax Code provides two modes of
apprising the public of a new ordinance,
either, (a) by means of publication in a
newspaper of general circulation or, (b)
by means of posting of copies thereof in
the local legislative hall or premises and
two other conspicuous places within the
territorial jurisdiction of the local
government. In this case at bar, copies
of Ordinance No. 7516 and its
amendments were posted in public
buildings, government offices, and public
places in lieu of publication in
newspaper of general circulation.
b. Allied is a proper subject thereto.
Allied admits that it does business in the City of
Manila through a broker or agent, Ker & Company,
Ltd. Doing business in the City of Manila is all that
is required to fall within the coverage of the
Ordinance.
It should be noted that Ordinance No. 7516 as
amended
imposes
a
business
tax
on
manufacturers, importers or producers doing
business in the City of Manila. The tax imposition
here is upon the performance of an act, enjoyment
of a privilege, or the engaging in an occupation,
and hence is in the nature of an excise tax.
The power to levy an excise upon the performance
of an act or the engaging in an occupation does not
depend upon the domicile of the person subject to
the excise nor upon the physical location of the
property and in connection with the act or
occupation taxed, but depends upon the place in
which the act is performed or occupation engaged
in.
Thus, the gauge for taxability under the said
Ordinance No. 7516 as amended does not depend
on the location of the office, but attaches upon the

place where the respective sale transaction(s) is

perfected and consummated. Since Allied sells its
products in the City of Manila through its broker,
Ker & Company, Ltd., it cannot escape the tax
liability imposed by Ordinance No. 7516 as
amended.

province, on the basis of above-said ordinance, had

no authority to impose taxes on quarry resources
extracted from private lands, Republic Cement
formally contested the same on December 23,
1993.
ISSUE:
Whether or not the Province of Bulacan can impose
taxes on stones, sand, gravel, earth and other
quarry resources extracted from private lands

13. G.R. No. 126232 November 27, 1998

HELD:
THE PROVINCE OF BULACAN, ROBERTO M.
PAGDANGANAN, FLORENCE CHAVES, and
MANUEL DJ SIAYNGCO in their capacity as
PROVINCIAL
GOVERNOR,
PROVINCIAL
TREASURER,
PROVINCIAL
LEGAL
ADVISER, respectively,
petitioners,
vs.
THE
HONORABLE
COURT
OF
APPEALS
(FORMER SPECIAL 12TH DIVISION), REPUBLIC
CEMENT CORPORATION, respondents.

FACTS:

On June 26, 1992, the Sangguniang Panlalawigan of

Bulacan passed Provincial Ordinance No. 3, known
as "An Ordinance Enacting the Revenue Code of
the Bulacan Province." which was to take effect on
July 1, 1992. Section 21 of the ordinance provides
as follows:
Sec. 21 Imposition of Tax. There is hereby levied
and collected a tax of 10% of the fair market value
in the locality per cubic meter of ordinary stones,
sand, gravel, earth and other quarry resources,
such, but not limited to marble, granite, volcanic
cinders, basalt, tuff and rock phosphate, extracted
from public lands or from beds of seas, lakes,
rivers, streams, creeks and other public waters
within its territorial jurisdiction (Emphasis ours)
Pursuant thereto, the Provincial Treasurer of
Bulacan, in a letter dated November 11, 1993,
assessed private respondent Republic Cement
Corporation
(hereafter
Republic
Cement)
P2,524,692.13 for extracting limestone, shale and
silica from several parcels of private land in the
province during the third quarter of 1992 until the
second quarter of 1993. Believing that the

Section 186 allows a province to levy taxes other

than those specifically enumerated under the Code,
subject to the conditions specified therein.
This finding, nevertheless, affords cold comfort to
petitioners as they are still prohibited from
imposing taxes on stones, sand, gravel, earth and
other quarry resources extracted from private
lands. The tax imposed by the Province of Bulacan
is an excise tax, being a tax upon the performance,
carrying on, or exercise of an activity.

14

The Local Government Code provides:

Sec. 133. Common Limitations on the Taxing

Powers of Local Government Units. Unless
otherwise provided herein, the exercise of the
taxing powers of provinces, cities, municipalities,
and barangays shall not extend to the levy of the
following:
xxx xxx xxx
(h) Excise taxes on articles enumerated under the
National Internal Revenue Code, as amended, and
taxes, fees or charges on petroleum products;
xxx xxx xxx

A province may not, therefore, levy excise taxes on

articles already taxed by the National Internal
Revenue Code. Unfortunately for petitioners, the
National Internal Revenue Code provides:
Sec. 151. Mineral Products.

(A) Rates of Tax. There shall be levied, assessed

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

It is clearly apparent from the above provision that

the National Internal Revenue Code levies a tax
on all quarry resources, regardless of origin,
whether extracted from public or private land.
Thus, a province may not ordinarily impose taxes
on stones, sand, gravel, earth and other quarry
resources, as the same are already taxed under the
National Internal Revenue Code. The province can,
however, impose a tax on stones, sand, gravel,
earth and other quarry resources extracted from
public land because it is expressly empowered to
do so under the Local Government Code. As to
stones, sand, gravel, earth and other quarry
resources extracted from private land, however, it
may not do so, because of the limitation provided
by Section 133 of the Code in relation to Section
151 of the National Internal Revenue Code.

Given the above disquisition, petitioners cannot

claim that the appellate court unjustly deprived
them of the power to create their sources of
revenue, their assessment of taxes against
Republic Cement being ultra vires, traversing as it
does the limitations set by the Local Government
Code.
14. Angeles City vs. Angeles City Electric
Corporation and Regional Trial Court Branch
57, Angeles City
Doctrine:
The prohibition on the issuance of a writ of
injunction to enjoin the collection of taxes applies
only to national internal revenue taxes, and
not to local taxes.

Facts:
On January 22, 2004, the City Treasurer issued a
Notice of Assessment to Angeles Electric
Corporation (AEC) for payment of business tax,
license fee and other charges for the period 1993
to 2004. Within the period prescribed by law, AEC
protested the assessment. When the City Treasurer
denied the protest and ordered petitioner to settle
its obligation, petitioner filed with the RTC a
petition praying for the issuance of a TRO which
was granted. The City Government opposed on the
ground that under the NIRC the collection of taxes
cannot be enjoined.
Issue: WON the collection of local government
taxes can be enjoined.
Held:
The prohibition on the issuance of a writ of
injunction to enjoin the collection of taxes applies
only to national internal revenue taxes, and not to
local taxes.
Although the NIRC provides that no injunction shall
lie to restrain the collection of any national internal
revenue tax, no such similar provision is embodied
in the LGC with regards to injunction of the
collection of local government taxes.
But it must be emphasized that although there is
no express prohibition, injunctions enjoining the
collection of local taxes are still frowned upon. The
courts should thus exercise such with caution.
In this case, the requisites for injunction have been
satisfied as both sides were heard before the
issuance of the injunction. Petition for Certiorari is
DISMISSED.
15. PELIZLOY REALTY CORPORATION, vs. THE
PROVINCE OF BENGUET
Doctrine:
Resorts, swimming pools, bath houses, hot springs
and tourist spots do not belong to the same
category or class as theaters, cinemas, concert
halls, circuses, and boxing stadia. They may be
subject to amusement tax under the LGC.
Facts:
Petitioner ("Pelizloy") owns Palm Grove Resort,
which is designed for recreation and which has
facilities like swimming pools, a spa and function
halls. The Provincial Board of the Province of
Benguet approved Provincial Tax Ordinance No. 05107, otherwise known as the Benguet Revenue
Code of 2005. Section 59, Article X of the Tax
Ordinance levied a ten percent (10%) amusement
tax on gross receipts from admissions to "resorts,
swimming pools, bath houses, hot springs and
tourist spots. It was Pelizloy's position that the Tax
Ordinance's imposition of a 10% amusement tax on

gross receipts from admission fees for resorts,

swimming pools, bath houses, hot springs, and
tourist spots is an ultra vires act on the part of the
Province of Benguet. Pelizloy argued that Section
59, Article X of the Tax Ordinance imposed a
percentage tax in violation of the limitation on the
taxing powers of local government units (LGUs)
under Section 133 (i) of the LGC. Thus, it was null
and void ab initio.
On substantive grounds, the Province of Benguet
argued that the phrase other places of
amusement
in
Section
140
(a)
of
the
LGC encompasses resorts, swimming pools, bath
houses, hot springs, and tourist spots since "Article
220 (b) (sic)" of the LGC defines "amusement" as
"pleasurable diversion and entertainment x x x
synonymous to relaxation, avocation, pastime, or
fun."
Issue:
WON provinces are authorized to impose
amusement taxes on admission fees to resorts,
swimming pools, bath houses, hot springs, and
tourist spots for being "amusement places" under
the Local Government Code.
Ruling:
However, provinces are not barred from levying
amusement taxes even if amusement taxes are a
form of percentage taxes. Section 133 (i) of the
LGC prohibits the levy of percentage taxes "except
as otherwise provided" by the LGC.
Section 140 of the LGC provides:
SECTION 140. Amusement Tax - (a) The province
may levy an amusement tax to be collected from
the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and
other places of amusement at a rate of not more
than thirty percent (30%) of the gross receipts from
admission fees.
Evidently, Section 140 of the LGC carves a clear
exception to the general rule in Section 133 (i).
Section 140 expressly allows for the imposition by
provinces of amusement taxes on "the proprietors,
lessees, or operators of theaters, cinemas, concert
halls, circuses, boxing stadia, and other places of
amusement."
However, resorts, swimming pools, bath houses,
hot springs, and tourist spots are not among those
places expressly mentioned by Section 140 of the
LGC as being subject to amusement taxes. Thus,
the determination of whether amusement taxes
may be levied on admissions to resorts, swimming
pools, bath houses, hot springs, and tourist spots
hinges on whether the phrase other places of

amusement encompasses resorts, swimming

pools, bath houses, hot springs, and tourist spots.
Under the principle of ejusdem generis, "where a
general word or phrase follows an enumeration of
particular and specific words of the same class or
where the latter follow the former, the general
word or phrase is to be construed to include, or to
be restricted to persons, things or cases akin to,
resembling, or of the same kind or class as those
specifically mentioned."
In determining the meaning of the phrase 'other
places of amusement', one must refer to the prior
enumeration of theaters, cinematographs, concert
halls and circuses with artistic expression as their
common characteristic.
In the present case, the Court need not embark on
a laborious effort at statutory construction. Section
131 (c) of the LGC already provides a clear
definition of amusement places:
Section 131. Definition of Terms. - When used in
this Title, the term:
xxx
(c) "Amusement Places" include theaters, cinemas,
concert halls, circuses and other places of
amusement where one seeks admission to
entertain oneself by seeing or viewing the show or
performances
Considering these, it is clear that resorts,
swimming pools, bath houses, hot springs
and tourist spots cannot be considered
venues primarily "where one seeks admission
to entertain oneself by seeing or viewing the
show or performances". While it is true that they
may be venues where people are visually engaged,
they are not primarily venues for their proprietors
or operators to actively display, stage or present
shows and/or performances.
Thus, resorts, swimming pools, bath houses,
hot springs and tourist spots do not belong to
the same category or class as theaters,
cinemas, concert halls, circuses, and boxing
stadia. It follows that they cannot be
considered as among the other places of
amusement contemplated by Section 140 of
the LGC and which may properly be subject to
amusement taxes.