Golden Ribbon Lumber Co., Inc. v.

City of Butuan
GR No. L-18534
24 December 1964
F A C T S: Golden Ribbon Lumber Co., Inc., a duly organized
domestic corporation, operated a lumber mill and lumber yard in
Butuan City. Pursuant to Ordinance No. 5, as amended by
Ordinance Nos. 9, 10, 47, and 49 of the said city, it paid the taxes
provided therein. Claiming that said ordinance, as amended, was
void, it later brought the present action to have it so declared; to
recover the amount paid, and to have appellants permanently
enjoined from enforcing said ordinance as amended.

PROGRESSIVE DEVELOPMENT CORPORATION v. QUEZON

CITY
G.R. No. L-36081, April 24, 1989

I S S U E: Whether or not Ordinance No. 5 falls within the Charter

of the City of Butuan.
H E L D: No. The tax imposed is and was really intended to be on
lumber sold and not a tax on, or, license fee for the privilege of
operating a lumber mill and/or a lumber yard. It violates RA 2264
as municipal corporations are prohibited from imposing charges of
taxes of such nature.
Appellants claim that the questioned tax is one on business or a
privilege tax for the operation of a lumber mill or a lumber yard is
without merit. The character or nature of a tax is determined by its
operation, practical results and incidents. Neither the original
ordinance in question nor the amendatory ones provide that
payment thereof is a condition precedent to the enjoyment of such
privilege or that its non-payment would result in the cancellation of
any previous license granted.
Lastly, the rule is well-settled that municipal corporations are
clothed with no power of taxation; that its charter or a statute must
clearly show an intent to confer that power or the municipal
corporation cannot assume and exercise it, and that any such
power granted must be construed strictly, any doubt or ambiguity
arising out from the terms of the grant to be resolved against the
municipality.

FACTS:
On December 24, 1969, the City Council of Quezon City
adopted Ordinance No. 7997, otherwise known as the Market Code
of Quezon City. Section 3 of said ordinance provides that privately
owned and operated public markets shall submit monthly to the
Treasurer's Office, a certified list of stallholders showing the
amount of stall fees or rentals paid daily by each stallholder, ... and
shall pay 10% of the gross receipts from stall rentals to the
City, ... , as supervision fee.
On July 15, 1972, Progressive Development Corporation
(Progressive), owner and operator of a public market known as the
"Farmers Market & Shopping Center" filed a Petition for Prohibition
with Preliminary Injunction against Quezon City on the ground that
the supervision fee or license tax imposed by the above-mentioned
ordinance is in reality a tax on income which Quezon City may not
impose, the same being expressly prohibited by Republic Act No.
2264, as amended, otherwise known as the Local Autonomy Act.
In its Answer, Quezon City, through the City Fiscal,
contended that it had authority to enact the questioned
ordinances, maintaining that the tax on gross receipts imposed
therein is not a tax on income.
The lower court ruled that the questioned imposition is not
a tax on income, but rather a privilege tax or license fee which

local governments, like Quezon City, are empowered to impose and

collect.
FACTS:

ISSUE:
Whether the tax imposed by Quezon City on gross receipts
of stall rentals is properly characterized as partaking of the nature
of an income tax.

RULING:
No. The tax imposed in the controverted ordinance
constitutes, not a tax on income, not a city income tax (as
distinguished from the national income tax imposed by the
National Internal Revenue Code) within the meaning of Section 2
(g) of the Local Autonomy Act, but rather a license tax or fee for
the regulation of the business in which Progressive is engaged.
While it is true that the amount imposed by the questioned
ordinances may be considered in determining whether the exaction
is really one for revenue or prohibition, instead of one of regulation
under the police power, it nevertheless will be presumed to be
reasonable.

The Philippine Airlines (PAL) is a corporation engaged in the

air transportation business under a legislative franchise, Act No.
42739. Under its franchise, PAL is exempt from the payment of
taxes.
Sometime in 1971, however, Land Transportation
Commissioner Romeo F. Elevate (Elevate) issued a regulation
pursuant to Section 8, Republic Act 4136, otherwise known as the
Land and Transportation and Traffic Code, requiring all tax exempt
entities, among them PAL to pay motor vehicle registration fees.
Despite PAL's protestations, Elevate refused to register
PAL's motor vehicles unless the amounts imposed under Republic
Act 4136 were paid. PAL thus paid, under protest, registration fees
of its motor vehicles. After paying under protest, PAL through
counsel, wrote a letter dated May 19,1971, to Land Transportation
Commissioner Romeo Edu (Edu) demanding a refund of the
amounts paid. Edu denied the request for refund. Hence, PAL filed
a complaint against Edu and National Treasurer Ubaldo Carbonell
(Carbonell).

The trial court dismissed PAL's complaint. PAL appealed to

the Court of Appeals which in turn certified the case to the
Supreme Court.

ISSUE:
PHILIPPINE AIRLINES, INC. v. EDU
G.R. No. L- 41383, August 15, 1988

Whether or not motor vehicle registration fees

considered as taxes.

are

RULING:
Yes. If the purpose is primarily revenue, or if revenue is, at
least, one of the real and substantial purposes, then the exaction is
properly called a tax. Such is the case of motor vehicle registration
fees. The motor vehicle registration fees are actually taxes
intended for additional revenues of the government even if one
fifth or less of the amount collected is set aside for the operating
expenses of the agency administering the program.

THE CITY OF OZAMIZ, represented by the MAYOR,

MUNICIPAL BOARD, TREASURER, AUDITOR, petitionerappellant,
vs.
SERAPIO S. LUMAPAS and HON. GERONIMO R.
MARAVE, respondents-appellees.
J. Antonio; July 15, 1975
Taxation Distinguished from certain kinds of exactions
Short Version: Lumapas, a bus operator, opposed the imposition
of a parking fee by Ozamiz City on his buses that were temporarily
parked in Zulueta Street while waiting for passengers to board.
According to him, the charge was not a parking fee but a toll fee in
disguise. The local government cannot impose toll fees without the
approval of the president; and as a result, the ordinance imposing

parking fee is null and void. The Court held that the fee was a
parking fee and not a toll fee. It is within the Citys power to enact
such an ordinance by virtue of its police power. The parking fee
was ultimately for the publics safety and convenience. The City
may charge a fee to cover expenses of supervision and control.
Facts:

Lumapas is an operator of transportation buses for

passengers and cargoes, with Ozamiz City and Pagadian,
Zamboanga del Sur, as terminal points, by virtue of a
certificate of public convenience issued to him by the
Public Service Commission.

The Municipal Board of Ozamiz City enacted Ordinance 466

(An Ordinance Imposing Parking Fees for Every Motor
Vehicle Parked on any Portion of the Existing Parking Space
in the City of Ozamiz).
o Sec. 3 thereof defined parking as: "Parking" as
used in this ordinance shall be construed to mean,
when a motor vehicle of whatever kind is stopped
on any portion of the existing parking areas for the
purpose of loading and unloading passengers or
cargoes.

Lumapas paid P1,259 under protest and filed a complaint

against the City of Ozamiz for recovery of parking fees,
alleging that Ordinance 466 was ulta vires and prayed that
judgment be issued nullifying the ordinance.

City of Ozamiz asserted that the parking zone was

patrimonial in character; thus, the City was authorized by
Section 2308 (f) of the Revised Administrative Code, and
Section 15 (y) of the Charter of Ozamiz City (RA 321) to
impose parking fees.
o Also, the charter authorizes the Municipal Board to
regulate the use of streets which carries with it the
power to impose fees for its implementation;
o Pursuant to such power, the Municipal Board
passed said ordinance, the purpose of which is to
minimize accidents, to avoid congestion of traffic,
to enable the passengers to know the exact time of
the departure of trucks;
o Section 2 of the Local Autonomy Law (RA 2264)
likewise empowers the local governments to
impose taxes and fees, except those that are

enumerated therein, and parking fee is not among

the exceptions; and
o The word "parking" implies a stationary condition
and the parking fees provided for in Ordinance No.
466 are for the privilege of using the designated
parking area, which is owned by the City of
Ozamiz, as its patrimonial property.
Lumapas insisted that Ozamiz City had no power to impose
parking fees on motor vehicles parked on Zulueta Street,
which is property for public use.
o Because of this, Ordinance 466 imposing such fees
was null and void;
o The use of Zulueta Street as a parking place is only
incidental to the free passage of motor vehicles
and as such, the prohibition to impose taxes or
fees embodied in Section 59[b] of RA 4136 applies
to this case;
o Section 2308[f] of the Revised Administrative Code
and Section 15[y] of the Charter of Ozamiz City (RA
321) do not empower the City to impose parking
fees; and
o Since the power to impose parking fees is not
among those conferred by the Local Autonomy Act
on local government, said City cannot, therefore,
impose such parking fees.
Court rendered judgment declaring the parking fee was in
the nature of toll fees for the use of public road and made
in violation of Section 59[b] of RA 4136 (Land
Transportation and Traffic Code), there being no prior
approval by the President of the Philippines upon
recommendation of the Secretary of Public Works and
Communications.
Hence, the present appeal by certiorari.

Issue: Was Ozamiz City authorized to impose the tax? YES, by

virtue of the police power granted by its Charter.

Municipal corporations, being mere creatures of the law,

have only such powers as are expressly granted to them
and those which are necessarily implied or incidental to the
exercise thereof, and the power to tax is inherent upon the
State and it can only be exercised by Congress, unless
delegated or conferred by it to a municipal corporation.

Under Sec. 15[Y] of the Ozamiz City Charter (RA 321), the
municipal board has the power "to regulate the use of
streets, avenues, alleys, sidewalks, wharves, piers, parks,
cemeteries and other public places;" and in subsection [nn]
of the same section 15, the authority "to enact all
ordinances it may deem necessary and proper for the
sanitation and safety, the furtherance of prosperity and the
promotion of the morality, peace, good order, comfort,
convenience, and general welfare of the city and its
inhabitants, and such others as may be necessary to carry
into effect and discharge the powers and duties conferred
by this Charter."
o By this express legislative grant of authority, police
power is delegated to the municipal corporation to
be exercised as a governmental function for
municipal purposes.
o In the exercise of such power, a municipal
corporation can make all necessary and desirable
regulations which are reasonable and manifestly in
the interest of public safety and convenience.
o It is patent that the Municipal Board has been
clothed with full power to control and regulate the
streets for the purpose of promoting the public
health, safety and welfare through the ordinance.
By virtue of the statutory grant of authority, the City can
regulate the time, place, manner of parking in the streets
and public places.
The parking fee imposed is minimal in amount, the
maximum being only P1.00 a day for each passenger bus
and P1.00 for each cargo truck, the rates being lower for
smaller types of vehicles.
o This indicates that its purpose is not for revenue
but for regulation.
o By designating a specific place wherein passenger
and freight vehicles may load and unload
passengers and cargoes, benefits are accorded to
the city's residents in the form of increased safety
and convenience arising from the decongestion of
traffic.
The city may impose a fee sufficient in amount to include
the expense of issuing the license and the cost of
necessary inspection or police surveillance connected with
the business or calling licensed.

The fees charged are to cover the expenses for

supervision, inspection and control, to ensure the smooth
flow of traffic in the environs of the public market, and for
the safety and convenience of the public.

Issue: Does the ordinance charge a parking fee or a toll fee?

Parking fee, for the regulation of the use of Ozamizs
streets.

The buses stop on the extended portion of Zulueta Street

beside the public market. As soon as they were loaded,
they proceeded to the station where a toll clerk collected
the parking fee of P1.00 per bus once a day, before said
buses were allowed to proceed to their destination.
o Lumapas insists that this was not parking, but a toll
fee for the use of the street.
o Since toll fees require authorization from the
President, the City was not authorized to impose a
toll fee in the guise of a parking fee.
o "Parking" ordinarily implies "something more than
a mere temporary and momentary stoppage at a
curb for the purpose of loading or unloading
passengers or merchandize; it involves the idea of
using a portion of the street as storage space for
an automobile.

However, Section 3 of Ordinance No. 466 defines the word

'parking' to mean the stoppage of a motor vehicle of
whatever kind on any portion of the existing parking
areas for the purpose of loading and unloading passengers
or cargoes.

The word "toll" when used in connection with highways

has been defined as a duty imposed on goods and
passengers travelling public roads.

The toll for use of a toll road is for its use in travelling
thereon, not for its use as a parking place for vehicles.

Considering that the buses are only charged the fee when
they stop on "any portion of the existing parking areas for
the purpose of loading or unloading passengers or
cargoes," the fees collected are actually in the nature of
parking fees and not toll fees for the use of Zulueta Street.
o This is clear from the facts which show that fees
were not exacted for mere passage thru the street
but for stopping in the designated parking areas
therein to unload or load passengers or cargoes.

It was not, therefore a toll fee for the use of public roads,
within the context of Section 59[b] of RA 4136, which
requires the authorization of the President of the
Philippines.

Dispositive: CFI reversed. Ordinance valid.

Philex Mining vs CIR (G.R. No. 125704 Aug 28, 1998)

That taxes cannot be subject to compensation for the simple
reason that the government and the taxpayer are not creditors
and debtors of each other. There is a material distinction between
a tax and debt. Debts are due to the Government in its corporate
capacity, while taxes are due to the Government in its sovereign
capacity.
Petitioner Philex Mining Corp. assails the decision of the Court of
Appeals promulgated on April 8, 1996 in CA-G.R. SP No. 36975
affirming the Court of Tax Appeals decision in CTA Case No. 4872
dated March 16, 1995
ordering it to pay the amount of
P110,677,668.52 as excise tax liability for the period from the 2nd
quarter of 1991 to the 2nd quarter of 1992 plus 20% annual
interest from August 6, 1994 until fully paid pursuant to Sections
248 and 249 of the Tax Code of 1977. The facts show that on
August 5, 1992, the BIR sent a letter to Philex asking it to settle its
tax liabilities for the 2nd, 3rd and 4th quarter of 1991 as well as
the 1st and 2nd quarter of 1992 in the total amount of
P123,821.982.52. In a letter dated August 20, 1992, Philex
protested the demand for payment of the tax liabilities stating that
it has pending claims for VAT input credit/refund for the taxes it

paid for the years 1989 to 1991 in the amount of P119,977,037.02

plus interest. Therefore these claims for tax credit/refund should be
applied against the tax liabilities. In reply, the BIR, in a letter dated
September 7, 1992, found no merit in Philex's position. Since these
pending claims have not yet been established or determined with
certainty, it follows that no legal compensation can take place.
Hence, the BIR reiterated its demand that Philex settle the amount
plus interest within 30 days from the receipt of the letter. Philex
was able to obtain its VAT input credit/refund not only for the
taxable year 1989 to 1991 but also for 1992 and 1994. In view of
the grant of its VAT input credit/refund, Philex now contends that
the same should, ipso jure, off-set its excise tax liabilities since
both had already become "due and demandable, as well as fully
liquidated;" hence, legal compensation can properly take place.
ISSUE: WoN Philexs contention is tenable
Held: No, Philexs contention is not tenable. In several instances
prior to the instant case, SC have already made the
pronouncement that taxes cannot be subject to compensation for
the simple reason that the government and the taxpayer are not

creditors and debtors of each other. There is a material distinction

between a tax and debt. Debts are due to the Government in its
corporate capacity, while taxes are due to the Government in its
sovereign capacity. We find no cogent reason to deviate from the
aforementioned distinction. Prescinding from this premise, in
Francia v. Intermediate Appellate Court, we categorically held that
taxes cannot be subject to set-off or compensation, thus: We
have consistently ruled that there can be no off-setting of taxes
against the claims that the taxpayer may have against the
government. A person cannot refuse to pay a tax on the ground
that the government owes him an amount equal to or greater than
the tax being collected. The collection of a tax cannot await the
results of a lawsuit against the government. The ruling in Francia
has been applied to the subsequent case of Caltex Philippines, Inc.
v. Commission on Audit, which reiterated that: a taxpayer may
not offset taxes due from the claims that he may have against the
government. Taxes cannot be the subject of compensation
because the government and taxpayer are not mutually creditors
and debtors of each other and a claim for taxes is not such a debt,
demand, contract or judgment as is allowed to be set-off.