Yamane vs. BA Lepanto

 G.R. No. 154993 October 25, 2005

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

vs.

BA LEPANTO CONDOMINUM CORPORATION, Respondent.

FACTS:

Respondent BA-Lepanto Condominium (Corporation) received a 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.

Corporation responded with a written tax protest addressed to the City Treasurer. It was evident in the protest that the Corporation was perplexed on the statutory basis of the tax assessment. Corporation argue that they are not liable for business taxes and surcharges and interest thereon, under the Makati [Revenue] Code or even under the [Local Government] Code as those do not contain any provisions on which the Assessment could be based. 

The protest was rejected by the City Treasurer. From the denial of the protest, the Corporation filed an Appeal with the Regional Trial Court (RTC) of Makati.

Makati RTC rendered a Decision dismissing the appeal for lack of merit. 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.

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. The appellate court reversed the RTC and declared that the Corporation was not liable to pay business taxes to the City of Makati.

In doing so, the Court of Appeals delved into jurisprudential definitions of profit, and concluded that the Corporation was not engaged in profit. For one, it was held that the very statutory concept of a condominium corporation showed that it was not a juridical entity intended to make profit, as its sole purpose was to hold title to the common areas in the condominium and to maintain the condominium.

The Court of Appeals likewise cited provisions from the Corporation’s Amended Articles of Incorporation and Amended By-Laws that, to its estimation, established that the Corporation was not engaged in business and the assessment collected from unit owners limited to those necessary to defray the expenses in the maintenance of the common areas and management the condominium.

Upon denial of City Treasurer's Motion for Reconsideration, the City Treasurer elevated the present Petition for Review under Rule 45.

It is argued that the Corporation is engaged in business, for the dues collected from the different unit owners is utilized towards the beautification and maintenance of the Condominium, resulting in "full appreciative living values" for the condominium units which would command better market prices should they be sold in the future. The City Treasurer likewise avers that the rationale for business taxes is not on the income received or profit earned by the business, but the privilege to engage in business. 

The City Treasurer also claims that the Corporation had filed the wrong mode of appeal before the Court of Appeals when the latter filed its Petition for Review under Rule 42. It is reasoned that the decision of the Makati RTC was rendered in the exercise of original jurisdiction, it being the first court which took cognizance of the case. Accordingly, with the Corporation having pursued an erroneous mode of appeal, the RTC Decision is deemed to have become final and executory.

ISSUES:

(1) 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."

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

RULING:

(1) In this case, the decision of the Makati RTC was rendered in the exercise of original jurisdiction. City Treasurer is correct as a matter of law, and that the proper remedy of the Corporation from the RTC judgment is an ordinary appeal under Rule 41 to the Court of Appeals. 

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,30 and this settled rule would be needlessly emasculated should we declare that the Corporation’s position is correct in law.

Be that as it may, characteristic of all procedural rules is adherence to the precept that they should not be enforced blindly, especially if mechanical application would defeat the higher ends that animates our civil procedure—the just, speedy and inexpensive disposition of every action and proceeding.

(2) No. What determines tax liability is the tax ordinance, the Local Government Code being the enabling law for the local legislative body. In this case, the careful examination of the record reveals a highly disconcerting fact. At no point has the City Treasurer been candid enough to inform the Corporation, the RTC, the Court of Appeals, or this Court for that matter, as to what exactly is the precise statutory basis under the Makati Revenue Code for the levying of the business tax on petitioner. The SC have examined all of the pleadings submitted by the City Treasurer in all the antecedent judicial proceedings, as well as in this present petition, and also the communications by the City Treasurer to the Corporation which form part of the record. Nowhere therein is there any citation made by the City Treasurer of any provision of the Revenue Code which would serve as the legal authority for the collection of business taxes from condominiums in Makati.

The fact that the Corporation did not fall within the enumerated classes of taxable businesses under either the Local Government Code or the Makati Revenue Code already forewarns that a clear demonstration is essential on the part of the City Treasurer on why the Corporation should be taxed anyway. "Full appreciative living values" is nothing but blather in search of meaning, and to impose a tax hinged on that standard is both arbitrary and oppressive.

Accordingly, and with a significant degree of comfort, SC hold that condominium corporations are generally exempt from local business taxation under the Local Government Code, irrespective of any local ordinance that seeks to declare otherwise. Nevertheless, SC ruled that still, we can note a possible exception to the rule. It is not unthinkable that the unit owners of a condominium would band together to engage in activities for profit under the shelter of the condominium corporation. Such activity would be prohibited under the Condominium Act, but if the fact is established, we see no reason why the condominium corporation may be made liable by the local government unit for business taxes.

There is no contemplation of business, no orientation towards profit in this case. Hence, the assailed tax assessment has no basis under the Local Government Code or the Makati Revenue Code, and the insistence of the city in its collection of the void tax constitutes an attempt at deprivation of property without due process of law.

WHEREFORE, the petition is DENIED. 

Additional Notes for Bar Exam:

The power of local government units to impose taxes within its territorial jurisdiction derives from the Constitution itself, which recognizes the power of these units "to create its own sources of revenue 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."

These guidelines and limitations as provided by Congress are in main contained in the Local Government Code of 1991 (the "Code"), which provides for comprehensive instances when and how local government units may impose taxes. The significant limitations are enumerated primarily in Section 133 of the Code, which include among others, a prohibition on the imposition of income taxes except when levied on banks and other financial institutions. None of the other general limitations under Section 133 find application to the case at bar.

China Banking vs. City Treasurer of Manila

 G.R. No. 204117               July 1, 2015

CHINA BANKING CORPORATION, Petitioner,

vs.

CITY TREASURER OF MANILA, Respondent.

FACTS:

CBC was assessed by City Treasurer of Manila of local business tax, business permits, and other fees. 

On January 15, 2007, CBC paid such 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 ₱154,398.50, on the ground that it is not liable of said additional business tax and the same constitutes double taxation.

City Treasurer of Manila acknowledged receipt of CBC 's payment under protest.

On March 27, 2007, CBC wrote a letter-reply to City Treasurer Letter dated February 8, 2007, reiterating that CBC already protested the additional assessment under Section 21 of the Manila Revenue Code in its Letter dated January 12, 2007. In the same Letter, CBC averred that pursuant to Section 195 of the Local Government Code ("LGC ''), City Treasurer had until March 16, 2007 within which to decide the protest, and considering that CBC received the Letter dated February 8, 2007, four days after the deadline to decide and City Treasurer did not even resolve the protest, CBC formally demanded the refund of the amount of ₱154,398.50, representing the business tax collected under Section 21 of the Manila Revenue Code.

On April 17, 2007, CBC filed a Petition for Review with the RTC of Manila raising the sole issue of whether or not respondent is subject to the local business tax imposed under Section 21 of the Manila Revenue Code.

CBC insisted on the invalidity of the City Treasurer’s assessment, this time, claiming that its petition for review filed with the RTC was timely filed. It explained that the 60-day period within which the City Treasurer should have acted on the protest, and the consequent 30-day period within which it had to appeal the inaction of the City Treasurer should have been reckoned not from January 15, 2007, when it filed its letter questioning the imposition and paid the assessed amount, but from March 27, 2007, the day it filed the letter reiterating its objection to the City Treasurer imposition of ₱154,398.50 and demanding the return of the said amount. With the reckoning point being March 27, 2007, CBC argued that the petition for review was filed well within the reglementary period because it had until June 25, 2007 to file the said appeal.

RTC rendered its decision granting the petition filed by CBC and ordered the City Treasurer to refund the amount of ₱154,398.50, representing the assessment paid by it under Section 21 of Manila Ordinance No. 7988, as amended by Tax Ordinance No. 8011.

RTC denied the motion for reconsideration filed by the City Treasurer.

Hence appeal to CTA Division, the latter reversed the decision of the RTC, effectively dismissing CBC’s protest against the disputed assessment. CBC sought reconsideration of the decision, but was denied by the CTA Division.

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

Hence, this petition.

ISSUE:

(1) Whether CBC claim for refund should be dismissed for being filed out of time.

(2) Whether RTC has jurisdiction over the case.

RULING:

(1) Yes. While it is true that CBC was able to properly file its protest against the assessment of the City Treasurer when it filed its letter on January 15, 2007, questioning the imposition while paying the assessed amount. In the said letter, the petitioner was unequivocal in its objection, stating that it took exception to the assessment made by the City Treasurer under Section 21 of the city’s revenue code, arguing that it was not liable to pay the additional tax imposed under the subject ordinance and that the imposition "constitute[d] double taxation" and, for said reason, invalid. Despite its objection, it remitted the total amount of ₱267,128.70 under protest "to avoid penalties/surcharges and any threat of closure."

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

SECTION 195. Protest of Assessment. -When the local treasurer or his duly authorized representative finds that correct taxes, fees, or charges have not been paid, he shall issue a notice of assessment 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.

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.

(2) None. CBC's claim is below the jurisdictional amount of the RTC anchored with Section 33(1), B.P. 129, thus 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.

WHEREFORE, the petition is DENIED.

NOTE:

JANUARY 15, 2007 file sya ng protest

APRIL 17, 2007 sya nag appeal sa RTC

Following sec. 195. 

Di nag act si Local Treasurer within 60 days. Thus, Dapat nag file na sya ng appeal 30days after the lapse of 60 days. Sa case nadelay sya ng 1 araw kasi april 17 na sya nagfile sa RTC. You do the math. Hehehe!

City Treasurer of Manila vs. Philippine Beverage Partners, Inc.

 G.R. No. 233556, September 11, 2019

CITY TREASURER OF MANILA, PETITIONER, v. PHILIPPINE BEVERAGE PARTNERS, INC., SUBSTITUTED BY COCA-COLA BOTTLERS PHILIPPINES, RESPONDENT.

FACTS:

Petitioner City Treasurer of Manila issued SOA to Philippine Beverage Partners, Inc. (respondent). The SOA showed that respondent is liable to pay petitioner local business taxes and regulatory fees.

Respondent protested the assessment arguing that Tax Ordinance Nos. 7988 and 8011, amending the Revenue Code of Manila (RCM), have been declared null and void. Respondent also argued that the collection of local business tax under Section 21 of the RCM in addition to Section 14 of the same code constitutes double taxation.

Petitioner issued a letter to respondent denying the latter's protest which respondent. Thus respondent paid the total amount stated in the SOA. Then, respondent filed a written claim for refund of erroneously/illegally collected tax with petitioner in the same amount paid. Further, respondent filed a Complaint for the Revision of SOA and for Refund or Credit of LBT Erroneously/Illegally Collected with the RTC of Manila.

RTC ordered the refund of the overpayment made by respondent. It held that respondent is already taxed under Section 14 of the RCM, thus, it should no longer be subjected to tax under Section 21 of the same Code.

Petitioner moved for reconsideration but the same was denied by the RTC.

Aggrieved, petitioner filed a Petition for Review with the CTA Second Division.

CTA Second Division affirmed the RTC ruling. 

Petitioner moved for reconsideration, but the same was denied by the CTA Second Division.

Undaunted, petitioner filed a Petition for Review before the CTA En Banc which was DENIED for lack of merit. Petitioner moved for reconsideration, but the same was denied by the CTA En Banc.

Hence, this Petition for Review on Certiorari.

ISSUE:

WHETHER A TAXPAYER  WHO  PROTESTED  AN ASSESSMENT MAY  LATER  ON  INSTITUTE  A  JUDICIAL ACTION FOR REFUND.

RULING:

YES. There are two conditions that must be satisfied in order to successfully prosecute an action for refund in case the taxpayer had received an assessment. One, pay the tax and administratively assail within 60 days the assessment before the local treasurer, whether in a letter-protest or in a claim for refund. Two, bring an action in court within thirty (30) days from decision or inaction by the local treasurer, whether such action is denominated as an appeal from assessment and/or claim for refund of erroneously or illegally collected tax.12 (Emphases supplied and citations omitted)

In this case, after respondent received the assessment on January 17, 2007, it protested such assessment on January 19, 2007. After payment of the assessed taxes and charges, respondent wrote petitioner another letter asking for the refund and reiterating the grounds raised in the protest letter. Then, on February 6, 2007, respondent received the letter denying its protest.

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

To reiterate, respondent, after it had protested and paid the assessed tax, is permitted by law to seek a refund having fully satisfied the twin conditions for prosecuting an action for refund before the court.

Consequently, the CTA did not commit a reversible error when it allowed the refund in favor of respondent.

WHEREFORE, the petition is DENIED for lack of merit. 

NOTE:

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

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

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

Ledesma vs. CA

 G.R. No. 106646 June 30, 1993

JAIME LEDESMA, petitioner,

vs.

COURT OF APPEALS and RIZAL COMMERCIAL BANKING CORPORATION, respondents.

Ledesma, Saludo & Associates for petitioner.

Meer, Meer & Meer Law Office for private respondent.

FACTS:

On August 21, 1980, private respondent Rizal Commercial Banking Corporation filed Case No. 38287 in the then Court of First Instance of Rizal against petitioner to enforce the terms of Trust Receipt Agreement No. 7389 executed by them on April 1, 1974 but which petitioner had failed to comply with. As summons could not be served on the latter, said case was dismissed without prejudice on March 3, 1981.

On December 2, 1988, private respondent bank instituted Civil Case No. 88-2572 in the Regional Trial Court of Makati, Metro Manila, Branch 133, against petitioner on the same cause of action and subject matter.

Petitioner's motion to dismiss on the ground of prescription which was denied and judgment was rendered in favor of private respondent. Said judgment was affirmed by respondent Court and petitioner's motion for reconsideration thereof was denied.

Petitioner's petition for review on certiorari of the said judgment was denied  its present motion for reconsideration contending that the second action filed by private respondent bank had already prescribed.

ISSUE:

Whether the second action filed by private respondent bank had already prescribed.

RULING:

No. The Court ruled that the filing of the first action interrupted the running of the period, and then declared that at any rate, the second action was filed within the balance of the period remaining. 

Article 1155 of the Civil. Code provides that the prescription of an action, involving in the present case the 10-year prescriptive period for filing an action on a written contract under Article 1144(1) of the Code, is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.

The correct interpretations of Article 1155 of the Civil Code are reflected in and furnished by the doctrinal pronouncements in the case of Overseas Bank of Manila and Philippine National Railways Company.

Article 1155 has been interpreted in both case to mean that upon the cessation of the suspension of the prescriptive period, the full period of prescription commences to run anew. 

Petitioner is wrong in insisting that in case of the filing of an action, the prescriptive period is merely tolled and continues to run again, with only the balance of the remaining period available for the filing of another action. This postulation of petitioner, if we are to adopt it, would result in an absurdity wherein Article 1155 would be interpreted in two different ways, i.e., the prescriptive period is interrupted in case of an extrajudicial demand and a written acknowledgment of a debt, but it is merely tolled where an action is filed in court.

Hence, the present motion is hereby DENIED with FINALITY.

Iloilo Bottlers vs. City of Iloilo

 G.R. No. L-52019 August 19, 1988

ILOILO BOTTLERS, INC., plaintiff-appellee,

vs.

CITY OF ILOILO, defendant-appellant.

Efrain B. Trenas for plaintiff-appellee.

Diosdado Garingalao for defendant-appellant

FACTS:

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

Said tax ordinance imposes a tax on persons, firms, and corporations engaged in the business of:

1. distribution of soft-drinks

2. manufacture of soft-drinks, and

3. bottling of softdrinks within the territorial jurisdiction of the City of Iloilo.

Iloilo Bottlers, Inc. disclaims liability on two grounds: First, it contends that since it is not engaged in the independent business of distributing soft-drinks, but that its activity of selling is merely an incident to, or is a necessary consequence of its main or principal business of bottling, then it is NOT liable under the city tax ordinance. Second, it claims that only manufacturers or bottlers having their plants inside the territorial jurisdiction of the city are covered by the ordinance.

ISSUE:

Whether the Iloilo Bottlers, Inc. which had its bottling plant in Pavia, Iloilo, but which sold softdrinks in Iloilo City, is liable under Iloilo City tax Ordinance No. 5, series of 1960, as amended, which imposes a municipal license tax on distributors of soft-drinks.

RULING:

Yes. In the case at bar, the company distributed its softdrinks by means of a fleet of delivery trucks which went directly to customers in the different places in lloilo province. Sales transactions with customers were entered into and sales were perfected and consummated by route salesmen. Truck sales were made independently of transactions in the main office. The delivery trucks were not used solely for the purpose of delivering softdrinks previously sold at Pavia. They served as selling units. They were what were called, until recently, "rolling stores". The delivery trucks were therefore much the same as the stores and warehouses.

The tax imposed under Ordinance No. 5 is an excise tax. It is a tax on the privilege of distributing, manufacturing or bottling softdrinks. Being an excise tax, it can be levied by the taxing authority only when the acts, privileges or businesses are done or performed within the jurisdiction of said authority, the situs of the act of distributing, bottling or manufacturing softdrinks must be within city limits, before an entity engaged in any of the activities may be taxed in Iloilo City.

As stated above, sales were made by Iloilo Bottlers, Inc. in Iloilo City. Thus, it is correct to declare the company liable under the tax ordinance.

Petron vs. Tiangco

 G.R. No. 158881             April 16, 2008

PETRON CORPORATION, petitioner,

vs.

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

FACTS:

Petitioner Petron filed a Petition for Review on Certiorari under Rule 45 directly assailing the Decision of the (RTC) of Malabon which dismissed petitioner’s complaint for cancellation of assessment made by the then municipality (now City) of Navotas (Navotas) for deficiency taxes, and ordering the payment of P10,204,916.17 pesos in business taxes to Navotas.

In this case, the controversy hinges on the correct interpretation of Section 133(h) of the LGC, and the applicability of Article 232 (h) of the IRR.

Section 133(h) of the LGC reads as follows:

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

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

Article 232 of the IRR defines with more particularity the capacity of a municipality to impose taxes on businesses. The enumeration that follows is generally a positive list of businesses which may be subjected to business taxes, and paragraph (h) of Article 232 does allow the imposition of local business taxes "[o]n any business not otherwise specified in the preceding paragraphs which the sanggunian concerned may deem proper to tax," but subject to this important qualification, thus:

"xxx provided further, that in line with existing national policy, any business engaged in the production, manufacture, refining, distribution or sale of oil, gasoline and other petroleum products shall not be subject to any local tax imposed on this article.

In this case, Malabon RTC declared Art. 232(h) of the IRR void because the Code purportedly does not contain a provision prohibiting the imposition of business taxes on petroleum products.

ISSUE:

Whether a local government unit is empowered under the Local Government Code (the LGC) to impose business taxes on persons or entities engaged in the sale of petroleum products.

RULING:

No. Under Section 133(h) the phrase "taxes, fees or charges on petroleum products" does not qualify the kind of taxes, fees or charges that could withstand the absolute prohibition imposed by the provision. The absence of qualification leads to the conclusion that all sorts of taxes on petroleum products, including business taxes, are prohibited by Section 133(h). Where the law does not distinguish, we should not distinguish.

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.

WHEREFORE, the Petition is GRANTED.

PLDT vs. City of Davao

 G.R. No. 143867            August 22, 2001

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., petitioner,

vs.

CITY OF DAVAO and ADELAIDA B. BARCELONA, in her capacity as the City Treasurer of Davao, respondents.

FACTS:

PLDT applied for a Mayor's Permit to operate its Davao Metro Exchange. Respondent City of Davao withheld action on the application pending payment by petitioner of the local franchise tax.

Petitioner protested the assessment of the local franchise tax and requested a refund of the franchise tax previously paid. Petitioner contended that it was exempt from the payment of franchise tax on the basis of Section 23 of RA 7925, PLDT as a telecommunications franchise holder becomes automatically covered by the tax exemption provisions of RA 7925, which took effect on March 16, 1995. Petitioner argued that they shall be exempt from the payment of franchise and business taxes imposable by LGUs under Sections 137 and 143, respectively, of the LGC, upon the effectivity of RA 7925 on March 16, 1995. 

Respondent City Treasurer of Davao, denied the protest and claim for tax refund of petitioner.

Thus, petitioner filed a petition in the RTC of Davao seeking a reversal of respondent City Treasurer's denial of petitioner's protest.

The RTC denied it and affirmed the City Treasurer's decision. 

The trial court held that, under Sec 137 and 143 of LGC, which took effect on January 1, 1992, those sections provides that all exemptions granted to all persons, whether natural and juridical, including those which in the future might be granted, are withdrawn unless the law granting the exemption expressly states that the exemption also applies to local taxes. 

Hence petition for review.

ISSUES:

(1) Whether RTC is correct in ruling that all exemptions granted to all persons, whether natural and juridical, including those which in the future might be granted are withdrawn unless the law granting the exemption expressly states that the exemption also applies to local taxes, as provided under sections 137 and 143 of LGC.

(2) Whether, after the withdrawal of its exemption by virtue of Sec. 137 of the LGC, petitioner has again become entitled to exemption from local franchise tax.

RULING:

(1) No. Sec. 137 does not state that it covers future exemptions. The Tax Code provision withdrawing the tax exemption was not construed as prohibiting future grants of exemptions from all taxes.

Indeed, the grant of taxing powers to local government units under the Constitution and the LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant to a declared national policy.

(2) No. Petitioner justifies its claim of tax exemption by strained inferences. It argues that because Smart and Globe are exempt from the franchise tax, it follows that it must likewise be exempt from the tax being collected by the City of Davao because the grant of tax exemption to Smart and Globe ipso facto extended the same exemption to it.

Tax exemptions are highly disfavored.

The tax exemption must be expressed in the statute in clear language that leaves no doubt of the intention of the legislature to grant such exemption. And, even if it is granted, the exemption must be interpreted in strictissimi juris against the taxpayer and liberally in favor of the taxing authority.

When exemption is claimed, it must be shown indubitably to exist. At the outset, every presumption is against it.

In this case, it does not appear that, in approving Sec. 23 of R.A. No. 7925, Congress intended it to operate as a blanket tax exemption to all telecommunications entities. Applying the rule of strict construction of laws granting tax exemptions and the rule that doubts should be resolved in favor of municipal corporations in interpreting statutory provisions on municipal taxing powers, thus, Sec. 23 of R.A. No. 7925 cannot be considered as having amended petitioner's franchise so as to entitle it to exemption from the imposition of local franchise taxes.

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.

City of Cagayan De Oro vs. Cagayan Electric Power

 G.R. No. 224825, October 17, 2018

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.

Alta Vista Golf vs. City of Cebu

 G.R. No. 180235

ALTA VISTA GOLF AND COUNTRY CLUB, Petitioner,

vs.

THE CITY OF CEBU, HON. MAYOR TOMAS R. OSMEÑA, in his capacity as Mayor of Cebu, and TERESITA C. CAMARILLO, in her capacity as the City Treasurer, Respondents.

FACTS:

Sangguniang Panlungsod of Cebu City enacted City Tax: Ordinance, otherwise known as the "Revised Omnibus Tax: Ordinance of the City of Cebu". Section 42 of the said tax ordinance provides that there shall be paid to the Office of the City Treasurer by the proprietors, lessees or operators of theaters, cinemas, concert halls, circuses and other similar places of entertainment, an amusement tax at the rate of thirty percent (30%), golf courses and polo grounds at the rate of twenty percent (20% ), of their gross receipts on entrance, playing green, and/or admission fees; xxx

Respondent Cebu City repeatedly attempted to collect from petitioner its deficiency business taxes, fees, and charges for 1998, a substantial portion of which consisted of the amusement tax on the golf course. Petitioner steadfastly refused to pay the amusement tax arguing that the imposition of said tax by Section 42 of the Revised Omnibus Tax Ordinance, as amended, was irregular, improper, and illegal. Petitioner reasoned that under the Local Government Code, amusement tax can only be imposed on operators of theaters, cinemas, concert halls, or places where one seeks to entertain himself by seeing or viewing a show or performance.

ISSUE:

Whether the Section 42 of such Ordinance imposing amusement tax to golf course was proper.

RULING:

NO. A golf course cannot be considered a place of amusement.

"Amusement places," as defined in Section 131(c) of the Local Government Code, "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 performance."

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."

The purpose of the rule on ejusdem generis is to give effect to both the particular and general words, by treating the particular words as indicating the class and the general words as including all that is embraced in said class, although not specifically named by the particular words. This is justified on the ground that if the lawmaking body intended the general terms to be used in their unrestricted sense, it would have not made an enumeration of particular subjects but would have used only general terms.

Thus the SC ruled that a golf course cannot be considered a place of amusement. As petitioner asserted, people do not enter a golf course to see or view a show or performance. Petitioner also, as proprietor or operator of the golf course, does not actively display, stage, or present a show or performance. People go to a golf course to engage themselves in a physical sport activity, i.e., to play golf; the same reason why people go to a gym or court to play badminton or tennis or to a shooting range for target practice, yet there is no showing herein that such gym, court, or shooting range is similarly considered an amusement place subject to amusement tax. There is no basis for singling out golf courses for amusement tax purposes from other places where people go to play sports. This is in contravention of one of the fundamental principles of local taxation: that the "[t]axation shall be uniform in each local government unit."38 Uniformity of taxation, like the kindred concept of equal protection, requires that all subjects or objects of taxation, similarly situated, are to be treated alike both in privileges and liabilities.

Aala vs. Uy

 G.R. No. 202781

CRISANTO M. AALA, ROBERT N. BALAT, DATU BELARDO M. BUNGAD, CESAR B. CUNTAPAY, LAURA S. DOMINGO, GLORIA M. GAZMEN-TAN, and JOCELYN P. SALUDARES-CADAYONA, Petitioners,

vs.

HON. REY T. UY, in his capacity as the City Mayor of Tagum City, Davao del Norte, MR. ALFREDO H. SILAWAN, in his capacity as City Assessor of Tagum City, HON. DE CARLO L. UY, HON. ALLAN L. RELLON, HON. MARIA LINA F. BAURA, HON. NICANDRO T. SUAYBAGUIO, JR., HON. ROBERT L. SO, HON. JOEDEL T. CAASI, HON. OSCAR M. BERMUDEZ, HON. ALAN D. ZULUETA, HON. GETERITO T. GEMENTIZA, HON. TRISTAN ROYCE R. AALA, HON. FRANCISCO C. REMITAR, in their capacity as City Councilors of Tagum City, Davao del Norte, HON. ALFREDO R. PAGDILAO, in his capacity as ABC representative, and HON. MARIE CAMILLE C. MANANSALA, in her capacity as SKF representative, Respondents.

FACTS:

Petitioners assail the validity of City Ordinance No. 558, s-2012. They claim that the ordinance imposes exorbitant real estate taxes because of the Sangguniang Panlungsod's erroneous classification and valuation of real properties.

Petitioners are concerned residents of Tagum City who would be directly affected by the implementation of the questioned ordinance. Well-aware of the doctrines on the hierarchy of courts and exhaustion of administrative remedies, they beg this Court's indulgence to allow immediate and direct resort to it. According to petitioners, this case is exempt from the application of the doctrine on hierarchy of courts. They anchor their claim on the ground that the redress they desire cannot be obtained in the appropriate courts. Furthermore, petitioners assert that the issue they have raised is purely legal and that the case involves paramount public interest, which warrants the relaxation of the rule on exhaustion of administrative remedies. 

Respondents attack the propriety of the remedy of which petitioners have availed themselves. Respondents point out that the extraordinary remedy of certiorari is only directed against judicial and quasi-judicial acts. According to respondents, the Sangguniang Panlungsod of Tagum City exercised a legislative function in enacting the questioned ordinance and is, thus, beyond the scope of a petition for certiorari. Moreover, there is a plain, speedy, and adequate remedy available to petitioners under the law.  Citing Section 187 of the Local Government Code of 1991, respondents argue that petitioners should have exhausted administrative remedies by filing an appeal before the Secretary of Justice.

ISSUE:

Whether direct resort of the petitioner before the SC is correct.

RULING:

No. Under Section 187 of the Local Government Code of 1991, aggrieved taxpayers who question the validity or legality of a tax ordinance are required to file an appeal before the Secretary of Justice before they seek intervention from the regular courts. Section 187 of the Local Government Code of 1991 provides:

SECTION 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. - The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

In Reyes v. Court of Appeals, this Court declared the mandatory nature of Section 187 of the Local Government Code of 1991:

[T]he law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge of judicial functions. For this reason the courts construe these provisions of statutes as mandatory.

The same principle was reiterated in Jardine Davies Insurance Brokers, Inc. v. Aliposa. In Jardine, the then Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code, which provided for the schedule of "real estate, business, and franchise taxes . . . at rates higher than those in the Metro Manila Revenue Code." Under this ordinance, Jardine Davies Insurance Brokers, Inc. (Jardine) was assessed taxes, fees, and charges. Jardine believed that the ordinance was void. It filed before the Regional Trial Court a case seeking a refund for alleged overpayment of taxes. The trial court dismissed the complaint. Aggrieved, Jardine filed before this Court a Petition for review raising pure questions of law. Ruling on the Petition, this Court observed that Jardine essentially questioned the validity of the tax ordinance without filing an appeal before the Secretary of Justice, in violation of Section 187 of the Local Government Code of 1991.

The present 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.

In cases where the validity or legality of a tax ordinance is questioned, the rule that real property taxes must first be paid before a protest is lodged does not apply. Taxpayers must first receive an assessment before this rule is triggered. In Jardine, this Court ruled that prior payment under protest is not required.

The factual issues raised by petitioners could have been properly addressed by the lower courts had they adhered to the doctrines of hierarchy of courts and exhaustion of administrative remedies. 

Mactan Cebu International Airport Authority vs. Marcos

 G.R. No. 120082 September 11, 1996

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner,

vs.

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

FACTS:

Petitioner MCIAA enjoyed the privilege of exemption from payment of realty taxes in accordance with Section 14 of its Charter.

However, office of the Treasurer of the City of Cebu, demanded payment for realty taxes on several parcels of land belonging to the petitioner.

Petitioner objected to such demand for payment as baseless and unjustified, claiming in its favor the aforecited Section 14 of RA 6958 which exempt it from payment of realty taxes. It was also asserted that it is an instrumentality of the government performing governmental functions, citing section 133 of the Local Government Code of 1991 which puts limitations on the taxing powers of local government units.

Respondent City refused to cancel and set aside petitioner's realty tax account, insisting that the MCIAA is a government-controlled corporation whose tax exemption privilege has been withdrawn by virtue of Sections 193 and 234 of the Local Governmental Code that took effect on January 1, 1992.

As the City of Cebu was about to issue a warrant of levy against the properties of petitioner, the latter was compelled to pay its tax account "under protest" and thereafter filed a Petition for Declaratory Relief with the RTC of Cebu.

MCIAA contends that being an instrumentality of the National Government, respondent City of Cebu has no power nor authority to impose realty taxes upon it in accordance with the aforesaid Section 133 of the LGC, as explained in Basco vs. Philippine Amusement and Gaming Corporation.

Respondent City, however, asserted that MACIAA is not an instrumentality of the government but merely a government-owned corporation performing proprietary functions As such, all exemptions previously granted to it were deemed withdrawn by operation of law, as provided under Sections 193 and 234 of the Local Government Code when it took effect on January 1, 1992.

The trial court dismissed the petition. Its motion for reconsideration was denied as well by the trial court.

Hence, petitioner filed the instant petition.

ISSUE:

Whether MCIAA contention is correct that National Government of City of Cebu has no power nor authority to impose realty taxes upon it.

RULING:

NO. 

Section 133 of the LGC prescribes the common limitations on the taxing powers of local government units inter alia: 

×××

(o) TAXES, FEES, OR CHARGES OF ANY KIND ON THE NATIONAL GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES, AND LOCAL GOVERNMENT UNITS.

Among the "taxes" enumerated in the LGC is real property tax, which is governed by Section 232. It reads as follows:

Sec. 232. Power to Levy Real Property Tax. — A province or city or a municipality within the Metropolitan Manila Area may levy on an annual ad valorem tax on real property such as land, building, machinery and other improvements not hereafter specifically exempted.

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

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

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

Reading together Section 133, 232 and 234 of the LGC, we conclude that as a general rule, as laid down in Section 133 the taxing powers of local government units cannot extend to the levy of inter alia, "taxes, fees, and charges of any kind of the National Government, its agencies and instrumentalties, and local government units"; however, pursuant to Section 232, provinces, cities, municipalities in the Metropolitan Manila Area may impose the real property tax except on, inter alia, "real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial used thereof has been granted, for consideration or otherwise, to a taxable person", as provided in item (a) of the first paragraph of Section 234.

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

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

In short, the petitioner can no longer invoke the general rule in Section 133 that the taxing powers of the local government units cannot extend to the levy of:

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

National Power Corporation vs. City of Cabanatuan

 G.R. No. 149110            April 9, 2003

NATIONAL POWER CORPORATION, petitioner,

vs.

CITY OF CABANATUAN, respondent.

FACTS:

Pursuant to section 37 of Ordinance No. 165-92, the respondent assessed the petitioner a franchise tax.

Petitioner refused to pay the tax assessment. It argued that the respondent has no authority to impose tax on government entities. Petitioner also contended that as a non-profit organization, it is exempted from the payment of all forms of taxes, charges, duties or fees in accordance with sec. 13 of Rep. Act No. 6395, as amended. Petitioner further alleges that it is an instrumentality of the National Government, and as such, may not be taxed by the respondent city government. It cites the doctrine in Basco vs. Philippine Amusement and Gaming Corporation where SC held that local governments have no power to tax instrumentalities of the National Government.

Respondent filed a collection suit in the RTC of Cabanatuan City, demanding that petitioner pay the assessed tax due, plus a surcharge. Respondent alleged that petitioner's exemption from local taxes has been repealed by section 193 of Rep. Act No. 7160. The trial court issued an Order dismissing the case. 

On appeal, the CA reversed the trial court's Order on the ground that section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew the exemptions granted to the petitioner. The petitioner filed a Motion for Reconsideration on the Court of Appeal's Decision. This was denied by the appellate court.

Hence, instant petition for review.

ISSUE:

Wherher CA erred in reversing the trial court's Order on the ground that section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew the exemptions granted to the petitioner.

RULING:

No. In the case at bar, section 151 in relation to section 137 of the LGC clearly authorizes the respondent city government to impose on the petitioner the franchise tax in question.

Sec. 137. Franchise Tax. - Notwithstanding any exemption granted by any law or other special law, the province may impose a tax on businesses enjoying a franchise, at a rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.

x       x       x

Sec. 151. Scope of Taxing Powers.- Except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code.

The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes."

Ruling in favor of the local government. We ruled that the franchise tax in question is imposable despite any exemption enjoyed by MERALCO under special laws.

They correctly rely on provisions of Sections 137 and 193 of the LGC to support their position that MERALCO's tax exemption has been withdrawn. The explicit language of section 137 which authorizes the province to impose franchise tax 'notwithstanding any exemption granted by any law or other special law' is all-encompassing and clear. The franchise tax is imposable despite any exemption enjoyed under special laws.

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

Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that unless otherwise provided in this Code, tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations except (1) local water districts, (2) cooperatives duly registered under R.A. 6938, (3) non-stock and non-profit hospitals and educational institutions, are withdrawn upon the effectivity of this code, the obvious import is to limit the exemptions to the three enumerated entities. It is a basic precept of statutory construction that the express mention of one person, thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est exclusio alterius. In the absence of any provision of the Code to the contrary, and we find no other provision in point, any existing tax exemption or incentive enjoyed by MERALCO under existing law was clearly intended to be withdrawn.

Reading together sections 137 and 193 of the LGC, we conclude that under the LGC the local government unit may now impose a local tax at a rate not exceeding 50% of 1% of the gross annual receipts for the preceding calendar based on the incoming receipts realized within its territorial jurisdiction. 

The legislative purpose to withdraw tax privileges enjoyed under existing law or charter is clearly manifested by the language used on (sic) Sections 137 and 193 categorically withdrawing such exemption subject only to the exceptions enumerated. Since it would be not only tedious and impractical to attempt to enumerate all the existing statutes providing for special tax exemptions or privileges, the LGC provided for an express, albeit general, withdrawal of such exemptions or privileges. No more unequivocal language could have been used."

Thus, 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.

Furthermore, the doctrine in Basco vs. Philippine Amusement and Gaming Corporation relied upon by the petitioner to support its claim no longer applies. To emphasize, the Basco case was decided prior to the effectivity of the LGC, when no law empowering the local government units to tax instrumentalities of the National Government was in effect. However, as this Court ruled in the case of Mactan Cebu International Airport Authority (MCIAA) vs. Marcos, nothing prevents Congress from decreeing that even instrumentalities or agencies of the government performing governmental functions may be subject to tax. In enacting the LGC, Congress exercised its prerogative to tax instrumentalities and agencies of government as it sees fit. Thus, after reviewing the specific provisions of the LGC, this Court held that MCIAA, although an instrumentality of the national government, was subject to real property tax.

The instant petition is DENIED and the assailed Decision and Resolution of the CA are hereby AFFIRMED.

Jardine Davies vs. Aliposa

 G.R. No. 118900             February 27, 2003

JARDINE DAVIES INSURANCE BROKERS, INC., petitioner,

vs.

HON. ERNA ALIPOSA, in her capacity as Presiding Judge of Branch 150 of the Makati Regional Trial Court, CITY (previously Municipality) OF MAKATI and ROLANDO M. CARLOS, in his capacity as Acting Treasurer of Makati, respondents.

CASE SUMMARY:

Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code, which provided for the schedule of "real estate, business, and franchise taxes . . . at rates higher than those in the Metro Manila Revenue Code." Under this ordinance, Jardine Davies Insurance Brokers, Inc. (Jardine) was assessed taxes, fees, and charges. Jardine believed that the ordinance was void. It filed before the Regional Trial Court a case seeking a refund for alleged overpayment of taxes. The trial court dismissed the complaint. Aggrieved, Jardine filed before this Court a Petition for review raising pure questions of law. Ruling on the Petition, this Court observed that Jardine essentially questioned the validity of the tax ordinance without filing an appeal before the Secretary of Justice, in violation of Section 187 of the Local Government Code of 1991.

In cases where the validity or legality of a tax ordinance is questioned, the rule that real property taxes must first be paid before a protest is lodged does not apply. Taxpayers must first receive an assessment before this rule is triggered. In Jardine, this Court ruled that prior payment under protest is not required.

* Better to read the summary as discussed by Justice Leonen in the case of Aala vs. Uy! Thanks Justice Leonen!

FACTS:

Sangguniang Bayan of Makati enacted Municipal Ordinance No. 92-072, otherwise known as the Makati Revenue Code.

PRCI, a taxpayer of Makati, appealed to the DOJ for the nullification of said ordinance, alleging that it was approved without previous public hearings.

DOJ came out with a resolution declaring "null and void and without legal effect".

Respondent municipality of Makati sought a reconsideration of the ruling of the DOJ. Pending resolution of its motion, said respondent filed a petition ad cautelam with the (RTC) of Makati. Respondent alleged, inter alia, that public hearings were conducted before the approval of the ordinance and hence the ordinance was valid. 

In the meantime, respondent continued to implement the ordinance. Petitioner Jardine Davies Insurance Brokers, Inc. was assessed and billed by Municipality of Makati for taxes, fees and charges under the ordinance. Petitioner did not protest the assessment based on said ordinance, in fact, paid the said amounts without any protest. 

Thereafter, petitioner Jardine wrote the municipal treasurer of Makati requesting since the ordinance was already declared by the DOJ null and void petitioner Jardine requested the credit of the overpayment they made out of such ordinance.

However, petitioner jardine request for tax credit/refund was denied. Respondent insisted that the questioned ordinance code was valid and enforceable pending the final outcome of its petition ad cautelam with the RTC of Makati.

Upon knowledge of such, petitioner jardine filed a complaint with the RTC of Makati against respondents Makati and its Acting Municipal Treasurer praying the declaration as NULL AND VOID the Municipal Ordinance No. 92-072, (Makati Revenue Code) of the Municipality of Makati and ordering Defendants to refund or issue as tax credit in favor of Plaintiff.

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

RTC issued an order granting the motion to dismiss of respondent and ordering the dismissal of the complaint. The trial court further ruled that jardine cause of action, if any, had prescribed. Citing Sections 187 and 195 of the Local Government Code of 1991, the trial court ratiocinated that petitioner failed to file an opposition or protest to the written notice of assessment of Municipality of Makati for taxes, fees and charges at rates provided for in the ordinance within 60 days from the notice of said assessment as required by Section 195 of the Local Government Code. Hence, petitioner was barred from demanding a refund of its payment or that it be credited for said amounts.

Jardine filed with the trial court a motion for reconsideration of the order of dismissal however denied.

Hence instant petition for review on certiorari under Rule 45 of the Rules of Court.

ISSUE:

Whether petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code.

RULING:

Yes. Court agrees with the contention of respondents that petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code which reads:

Sec. 187-Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings.- The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people. Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that protests over tax ordinances are required to be done within certain time frames. In the instant case, it is our view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their cause.

Therefore, the petition is DENIED. The order of the Regional Trial Court dismissing the complaint of petitioner is AFFIRMED.

Reyes vs. Drilon

 G.R. No. 118233 December 10, 1999

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

vs.

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

FACTS:

The Sangguniang Bayan of San Juan, Metro Manila implemented several tax ordinances. Petitioners filed an appeal assailing the constitutionality of these tax ordinances alleged that they were promulgated without previous public hearings thereby constituting deprivation of property without due process of law.

Respondent Secretary of Justice dismissed the appeal for having been filed out of time, that more than thirty (30) days from the effectivity have lapsed when the appeal was filed and received by this Department.

Petitioners filed with the CA a petition for certiorari and prohibition, but respondent court affirmed the decision of the Secretary. The motion for reconsideration filed by the petitioners was denied for lack of merit.

Hence present petition for review.

ISSUES:

(1) Whether or not the Court of Appeals erred in affirming the decision of the Secretary of Justice who dismissed the prohibition suit, on the ground that it was filed out of time?

(2) Whether or not lack of mandatory public hearings prior to enacting Municipal Ordinance render them void on the ground of deprivation of property without due process?

RULING:

(1) No. CA did not erred in affirming the decision of the Secretary of Justice. As provided under Sec. 187 of R.A. 7160 the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeals, a period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. Courts construct these provisions of statutes as mandatory.

In the instant case, failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their cause.

(2) Yes. Petitioners are right in contending that public hearings are required to be conducted prior to the enactment of an ordinance imposing real property taxes. R.A. No. 7160, Sec. 186, provides that an ordinance levying taxes, fees, or charges "shall not be enacted without any prior public hearing conducted for the purpose."

However, in the case at bar petitioners failed to present any evidence to show that no public hearings were conducted prior not the enactment of the ordinances in question. On the other hand, the Municipality of Mandaluyong claims the public hearings were indeed conducted before the subject ordinances were adopted, although it likewise failed to submit any evidence to establish this allegation. However, in accordance with the presumption of validity in favor of an ordinance, their constitutionality or legality should be upheld in the absence of evidences showing that procedure prescribed by law was not observed in their enactment.

Egis Projects vs. The Secretary of Finance

EGIS PROJECTS S.A., Petitioner, 

- versus - 

THE SECRETARY OF FINANCE 

Uy, Casanova, Fa bon-Victorino, Mindaro-Grulla, Cotangco-Manalastas, and Ringpis-Lib an, JJ. and COMMISSIONER OF INTERNAL REVENUE, Respondents.

FACTS:

In its petition for review before the Court in Division petitioner alleges that it filed a Tax Treaty Relief Applications (TTRA) with Bureau of Internal Revenue - International Tax Affairs Division of the (BIR-ITAD) requesting confirmation that the dividends paid by MNTC to petitioner on July 16, 2010 are subject to a preferential tax rate of 10% under the RP-France Tax Treaty. 

In reply, respondent CIR issued BIR Ruling No. ITAD 2013-11, denying petitioner's TTRA since the TTRA was filed after the occurrence of the first taxable event in violation of RMO No. 72-2010.

Petitioner appealed to respondent Secretary of Finance for the review and reversal of the BIR ITAD ruling. In its appeal, petitioner also sought the revocation of the invalid provisions of RMO No. 72-2010.

Respondent Secretary of Justice then issued its ruling affirming the ruling of the respondent CIR. 

Hence, petitioner filed a petition for review before the Court in Division substantially questioning the mandatory requirement provided under RMO Nos. 72-2010 and 1-2000. 

Petitioner basically argues that respondents acted beyond their constitutional authority and the corresponding RMOs or its relevant provisions are not valid for being unconstitutional. Petitioner prays that judgment be rendered as follows: 

1. Reversing BIR Ruling No. ITAD 2013-11 and the DOF Ruling that affirmed the same; 

2. Revoking and nullifying RMO Nos. 72-2010 and 1-2000 or its relevant provisions for being unconstitutional since the same was issued beyond the CIR's rule-making powers; and 

3. Rendering judgment declaring Egis France to be entitled to the 10°/o preferential tax rate under the RP - France double tax treaty on dividends received from MNTC, regardless of the time when it filed the application for tax treaty relief. 

Based on the allegations in the petition for review, petitioner is substantially questioning the validity or constitutionality of BIR Ruling No. ITAD 2013-11 (including the DOF Ruling affirming the same) and RMO Nos. 72-2010 and 1-2000, which were issued by the BIR in the exercise of its quasi-legislative function, hence, beyond the jurisdiction of this Court.

ISSUE:

Whether Court in Division err when it dismissed petitioner's petition for review on the ground of lack of jurisdiction.

RULING:

No, Court in Division did not err when it dismissed petitioner's petition for review in CTA on the ground of lack of jurisdiction. 

The jurisdiction of the CTA is defined in R.A. No. 112523, as amended by R.A. No. 9282. Section 7 thereof provides in part: 

"Sec.7. Jurisdiction.- The CTA shall exercise: 

(a) Exclusive appellate jurisdiction to review by  appeal, as herein provided: 

(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue; 

(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial; 

XXX XXX XXX." 

In interpreting the above provisions, the Supreme Court, in the case of British American Tobacco us. Camacho (British American Tobacco case), held that the CTA's jurisdiction to resolve tax disputes in general excludes the power to rule on the constitutionality or validity of a law, rule or regulation, thus: 

"While the above statute confers on the CTA jurisdiction to resolve tax disputes in general, this does not include cases where the constitutionality of a law or rule is challenged. Where what is assailed is the validity or constitutionality of a law, or a rule or regulation issued by the administrative agency in the performance of its quasi-legislative function, the regular courts have jurisdiction to pass upon the same. The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of judicial review.

The CIR's power to make interpretative rules is specifically granted in the first paragraph Section 4 of 1997 NIRC which provides that the power to interpret provisions of tax laws is under the exclusive and original jurisdiction of the CIR, subject to review by the Secretary of Finance.

From the foregoing, BIR Rulings and RMOs fall under the quasi-legislative or rule-making powers of the CIR provided in the first paragraph of Section 4 of the NIRC of 1997, as amended, and not under the CIR's power to decide tax cases  including "other matters" arising under tax laws provided in the second paragraph of the same section. Since decisions of the CIR rendered in the exercise of her power to decide tax cases provided in the second paragraph of Section 4 of the NIRC of 1997, as amended, are the ones that (are subject to review, on appeal, to the CTA under Section 7(a)(1) of R.A. No. 112531, as amended by R.A. No. 9282, then BIR Rulings and RMOs does not fall under "other matters" to which the CTA has jurisdiction. Moreover, the decisions of the CIR on "other matters" that this Court is authorized to review, on appeal, provided in 

Section 7(a)(1) of R.A. No. 112532, as amended by R.A. No. 9282, were interpreted to include the following: 

1. Determination if the warrant of distraint and levy issued by the BIR is valid; 

2. Determination if the Waiver of Statute of Limitations was validly effected; and 

3. Determination of whether or not the BIR's right to collect taxes had already prescribed.