ALLIED THREAD CO., INC., AND KER & COMPANY, LTD., VS. HON.

CITY MAYOR OF MANILA et

al.
Facts.
On June 12, 1974, the Municipal Board of the City of Manila enacted Ordinance No. 7516 imposing on
manufacturers, importers or producers, doing business in the City of Manila, business taxes based on gross sales on a
graduated basis. The Mayor approved the said Ordinance on June 15, 1974. In due time, the same ordinance underwent
a series of amendments, to wit: on June 19, 1974, June 27, 1974, and finally on July 29, 1974. Ordinance No. 7516 as
amended, reads as follows:
"Sec. 1. Business Tax. - There is hereby imposed on the following business in the City of Manila an annual tax collectible
quarterly except on those for which fixed taxes are already provided for as follows:
A. On manufacturers, importers, or producers of any article of commerce of whatever kind or nature, including brewers,
distilled spirits and/or wines in accordance with the following schedule:
xxx xxx xxx
"PROVIDED HOWEVER, that for purposes of collection of this tax, manufacturers and producers maintaining or
operating branch or sales offices elsewhere shall record the sale in the branch or sales office making the sale and the tax thereon
shall accrue to the City of Manila if the branch of sales office is in Manila. In cases where there is no such branch or sales office in
the city, the sale shall be duly recorded in the principal office along with the sales made in the principal office. Sixty percent of all
sales recorded in the principal office shall be taxable by the City of Manila if the principal office is in Manila, while the remaining
forty percent shall be deemed as sales made in the factory and shall be taxable by the local government where the factory is located.

Petitioner in this case is engaged in the business of manufacturing sewing thread and yarn under duly registered marks
and labels. It operates its factory and maintains an office in Pasig, Rizal. In order to sell its products in Manila and in
other parts of the Philippines, petitioner Allied Thread Co., Inc. engaged the services of a sales broker, Ker &
Company, Ltd. (co-petitioner herein), the latter deriving commissions from every sale made for its principal. Petitioner
now assails the validity of the said ordinance on the following grounds: (1) Ordinance No. 7516, as amended, is not
valid nor enforceable as the same is contrary to Section 54 of PD. 426
1
(2) Lack of publication (3) That it should not be
subjected to the said Ordinance No. 7516 as amended, because it does not operate or maintain a branch office in
Manila and that its principal office and factory are located in Pasig, Rizal.

Issue. WON the assailed Tax Ordinance is valid.

Held.
The assailed ordinance is valid. On the first contention, there is no dispute that Ordinance No, 7516 was
enacted by the Municipal Board of Manila on June 12, 1974 and approved by the City Mayor on June 15, 1974. Fifteen
(15) days thereafter, or on July 1, 1974, the said ordinance became effective pursuant to Sec. 42 of the Local Tax Code.
It is clear therefore that Ordinance No. 7516 has fully conformed with P.D. No. 426 and Local Tax Regulation No. 1-
74 which require that "a local tax ordinance intended to take effect on July 1, 1974 should be enacted by the Local Chief
Executive not later than June 15,1974." The subsequent amendments to the basic ordinance did not in any way
invalidate it nor move the date of its effectivity. To hold otherwise would limit the power of the defunct Municipal
Board of Manila to amend an existing ordinance as exigencies require.
On the ground of publication, Section 43 of the Local Tax Code provides two modes of apprising the public of
a new ordinance, either, (a) by means of publication in a newspaper of general circulation or, (b) by means of posting of
copies thereof in the local legislative hall or premises and two other conspicuous places within the territorial jurisdiction
of the local government. Respondents, having complied with the second mode of notice. We are of the opinion that
there is no legal infirmity to the validity of Ordinance No. 7516 as amended.
On the last contention, Allied Thread Co., Inc. admits that it does business in the City of Manila through a
broker or agent, Ker & Company, Ltd. Doing business in the City of Manila is all that is required to fall within the
coverage of the Ordinance. It should be noted that Ordinance No. 7516 as amended imposes a business tax on
manufacturers, importers or producers doing business in the City of Manila. The tax imposition here is upon the

1
Which provides that (1) All existing tax ordinance of provinces, cities, municipalities and barrios shall be deemed ipso facto
nullified on June 30, 1974 (4) In view hereof, and considering the provisions of Section 54 of the Code, regarding the accrual of
taxes a local tax ordinance intended to take effect on July I, 1974 should be enacted by the Local Chief Executive not later than
June 15, 1974
performance of an act, enjoyment of a privilege, or the engaging in an occupation, and hence is in the nature of
an excise tax. The power to levy an excise upon the performance of an act or the engaging in an occupation does not
depend upon the domicile of the person subject to the excise, nor upon the physical location of the property and in
connection with the act or occupation taxed, but depends upon the place in which the act is performed or occupation
engaged in. Petition dismissed.
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.
Petitioners in this case assail the validity of the following ordinances
2
because they were promulgated without
previous public hearings thereby constituting deprivation of property without due process of law. On June 10, 1993,
respondent Secretary of Justice dismissed the appeal for having been filed out of time. Citing Section 187, R.A. No.
7160, he said: "It appears that the tax ordinances in question took effect on September 24, 1992, in the case of Tax
Ordinance No. 87, until October 22, 1992, in the case of Tax Ordinance Nos. 91 and 95, and until October 29, 1992, in
the case of Tax Ordinance Nos. 100 and 101, or more than thirty (30) days from the effectivity thereof when the appeal
was filed and received by this Department on May 21, 1993 and therefore not in accordance with the requirements
provided for under Section 187 of the Local Government Code of 1991. On appeal, the CA affirmed the decision.
Issue. WON the questioned tax ordinances are violative of the Constitution, considering the undisputed fact that no
public hearings were ever held on the ordinances before they were passed and approved as required by the Local
Government Code of 1991, thereby constituting as they do a deprivation of property without due process.
WON the wording of the law under Section 187 of the Local Government Code of 1991 that "any question on the
constitutionality x x x of tax ordinance x x x may be raised on appeal within thirty (30) days from the effectivity thereof
x x x" is a reductio ad absurdum, since if the tax ordinance is found to be unconstitutional, it will be considered as
never having become effective at all from the very beginning, for which reason the thirty-day appeal period cannot be
reckoned and cannot be enforced.
Decision.
The assailed ordinances are valid. Sec. 187 of R.A. 7160, provides 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.
Clearly, 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 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

2
Ordinance no. 87 (An ordinance imposing a municipal tax of fifty percent (50%) of one percent (1%) of the gross receipt on
business of printing and publication), Ordinance no. 91 (An ordinance imposing a transfer tax equivalent to fifty percent (50%) of
one percent (1%) of the total consideration on the sale, donation, barter or any other mode of transferring ownership or title of real
property situated in San Juan, Metro Manila, or its fair market value, whichever is higher), Ordinance no. 95 An ordinance
imposing fifty percent (50%) of one percent of (1%) for social housing tax on the assessed value of all real estate property in San
Juan, Metro Manila in excess of P50,000.00 value as provided in the New Urban Land Reform Law, also known as R.A. 7279,
Ordinance no. 100 An ordinance imposing new rates of business taxes of the Municipality of San Juan, Metro Manila, and
Ordinance no. 101 An ordinance levying an annual "Ad Valorem" tax on real property and an additional tax accruing to the special
education fund (SEF).
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. 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.
On the failure to conduct public hearings, as the court held in the case of Figuerres vs. Court of Appeals, the lack of
a public hearing is a negative allegation essential to petitioner's cause of action in the present case. Hence, as
petitioner is the party asserting it, she has the burden of proof. Since petitioner failed to rebut the presumption of
validity in favor of the subject ordinances and to discharge the burden of proving that no public hearings were
conducted prior to the enactment thereof, we are constrained to uphold their constitutionality or legality. Petitioners
have not proved in the case before us that the Sangguniang Bayan of San Juan failed to conduct the required public
hearings before the enactment of Ordinance Nos. 87, 91, 95, 100 and 101. Although the Sanggunian had the control of
records or the better means of proof regarding the facts alleged, petitioners are not relieved from the burden of proving
their averments. Proof that public hearings were not held falls on petitioners' shoulders.
In any event, for the purpose of securing certainty where doubt would be intolerable, it is a general rule that the
regularity of the enactment of an officially promulgated statute or ordinance may not be impeached by parol
evidence or oral testimony either of individual officers and members, or of strangers who may be interested in
nullifying legislative action. This rule supplements the presumption in favor of the regularity of official conduct
which we have upheld repeatedly, absent a clear showing to the contrary.
Note:
The court did not actually rule on the assigned errors of the petitioners, the petition was simply dismissed on the lack of
evidence to prove that no public hearings were held prior to the enactment of the assailed ordinances. On this regard, the
court noted that even if the Sanggunian had the control of records or the better means of proof regarding the facts alleged,
petitioners are not relieved from the burden of proving their averments. Further, the regularity of the ordinance cannot be
impeached by parol evidence, how then may the petitioners prove the absence of public hearings? But thats just me.
Assuming arguendo, the petitioners were able to prove the lack of public hearings; would the court declare the ordinances
unconstitutional notwithstanding the petition being filed out of time in accordance with the LGC?

COCA-COLA BOTTLERS PHILIPPINES, INC., v. CITY OF MANILA, LIBERTY M.TOLEDO City
Treasurer and JOSEPH SANTIAGO Chief, Licensing Division,
FACTS.
The City Mayor of Manila approved Tax Ordinance No. 7988(Repealing Ordinance No. 7794), otherwise known as
Revised Revenue Code of the City of Manila. Petitioner questions the constitutionality of Section 21 of Tax Ordinance
No. 7988. According to petitioner, Tax Ordinance No. 7988 is only a reproduction of 7794, hence, pursuant to Article
X, Sec. 5 of the 1987 Constitution, is illegal and unconstitutional. The DOJ issued a Resolution declaring Tax
Ordinance No. 7988 null and void pursuant to:

The Local Government Code of 1991 provides:
Section 188. Publication of Tax Ordinances and Revenue Measures. Within ten (10) days after their approval, certified true copies of
all provincial, city and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper
of local circulation; Provided, however, that in provinces, cities, and municipalities where there are no newspapers or local circulations the same
may be posted in at least two (2) conspicuous and publicly accessible places. (R.A. No. 7160) (stress supplied)

The Rules and Regulations Implementing the Local Government Code of 1991, insofar as pertinent, mandates:
Art. 277. Publication of Tax Ordinances and Revenue Measures. (a) within ten (10) days after their approval, certified true copies of
all provincial, city and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper
of local circulation provided that in provinces, cities and municipalities where there are no newspapers of local circulation, the same may be
posted in at least two (2) conspicuous and publicly accessible places.

Meanwhile, on the basis of the enactment of Tax Ordinance No. 8011(amending 7988), the City of Manila filed a
Motion for Reconsideration with the RTC of Manila, Branch 21, of its Decision, which the court a quo granted in the
herein assailed Order.

ISSUE: Whether or not Tax Ordinance No. 7988 is null and void and of no legal effect?

HELD.
YES. It is undisputed from the facts of the case that Tax Ordinance No. 7988 has already been declared by the
DOJ Secretary, in its Order, dated 17 August 2000, as null and void and without legal effect due to respondents failure
to satisfy the requirement that said ordinance be published for three consecutive days as required by law. Neither is
there quibbling on the fact that the said Order of the DOJ was never appealed by the City of Manila, thus, it had
attained finality after the lapse of the period to appeal.

Despite the nullity of Tax Ordinance No. 7988, the court a quo, in the assailed Order, dated 8 May 2002, went on to
dismiss petitioners case on the force of the enactment of Tax Ordinance No. 8011, amending Tax Ordinance No.
7988. Significantly, said amending ordinance was likewise declared null and void by the DOJ Secretary in a Resolution,
dated 5 July 2001, elucidating that [I]nstead of amending Ordinance No. 7988, [herein] respondent should have enacted another tax
measure which strictly complies with the requirements of law, both procedural and substantive. The passage of the assailed
ordinance did not have the effect of curing the defects of Ordinance No. 7988 which, any way, does not legally
exist. Said Resolution of the DOJ Secretary had, as well, attained finality by virtue of the dismissal with finality by this
Court of respondents Petition for Review on Certiorari in G.R. No. 157490 assailing the dismissal by the RTC of
Manila, Branch 17, of its appeal due to lack of jurisdiction in its Order, dated 11 August 2003.

Based on the foregoing, this Court must reverse the Order of the RTC of Manila, Branch 21, dismissing petitioners
case as there is no basis in law for such dismissal. The amending law, having been declared as null and void, in legal
contemplation, therefore, does not exist. Furthermore, even if Tax Ordinance No. 8011 was not declared null and void,
the trial court should not have dismissed the case on the reason that said tax ordinance had already amended Tax
Ordinance No. 7988. As held by this Court in the case of People v. Lim,
[12]
if an order or law sought to be amended is
invalid, then it does not legally exist, there should be no occasion or need to amend it.

China Banking Corporation v. Sps. Wenceslao & Marcelina Martir

FACTS.
Spouses Wenceslao and Marcelina Martir, executed real estate mortgages in favor of petitioner China Banking
Corporation over three parcels of land, as security for their credit line in the amount of P1,800,000.00.
[4]
The loan was
released in tranches, and for every amount released, respondents executed the corresponding promissory
note.Respondents failed to pay the monthly interests on the promissory notes, A final demand letter was sent through
registered mail to respondents by petitioners counsel. At that time, respondents total obligation amounted to
P1,705,000.00.

Upon the application of petitioner, the properties subject of the real estate mortgages were extrajudicially foreclosed
and sold at public auction for P2,400,000.00 with petitioner as the sole bidder.
Respondents filed a complaint for nullification of the foreclosure proceeding alleging non-compliance with the
jurisdictional requirements of publication, posting, registration, payment of filing fees and sheriff fees, and failure to
report the extrajudicial foreclosure proceedings and sale to the Executive Judge.

ISSUE. WON the extrajudicial foreclosure is void by reason of the failure to satisfy sufficient publication?

HELD.
YES. In this case, the Bank failed to comply with both the requirements of posting and publication. The
notice of extrajudicial foreclosure and sale was posted in the barangay hall and Hall of Justice of General Santos City for
only fourteen (14) days, i.e. from May 6 to May 20, 1998 in violation of the mandated twenty (20) day period. Likewise,
the publication in SUN STAR, a local newspaper, was not valid on the ground that said newspaper is not an accredited
newspaper of general circulation in General Santos City pursuant to P.D. No. 1079.
The requirements for posting and publication in extrajudicial foreclosure are set out in Act No. 3135, as amended:

Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or
city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week
for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

Presidential Decree 1079, the governing law at the time of the subject foreclosure, requires that notices shall be
published in newspapers or publications published, edited and circulated in the same city and/or province where the
requirement of general circulation applies.

Presidential Decree 1079 requires a newspaper of general circulation. A newspaper of general circulation is published
for the dissemination of local news and general information; it has a bona fide subscription list of paying subscribers; and
it is published at regular intervals. The newspaper must not also be devoted to the interest or published for the
entertainment of a particular class, profession, trade, calling, race or religious denomination. The newspaper need not
have the largest circulation so long as it is of general circulation.

Presidential Decree 1079, however, does not require accreditation. As held in Metrobank v. Peafiel,
[18]
the accreditation
by the presiding judge is not conclusive that a newspaper is of general circulation, as each case must be decided on its
own merits and evidence.

The accreditation of Maharlika Pilipinas by the Presiding Judge of the RTC is not decisive of whether it is a newspaper
of general circulation in Mandaluyong City. This Court is not bound to adopt the Presiding Judges determination, in
connection with the said accreditation, that Maharlika Pilipinas is a newspaper of general circulation. The court before
which a case is pending is bound to make a resolution of the issues based on the evidence on record.
CITY OF OLONGAPO v. THE STALLHOLDERS OF THE EAST BAJAC-BAJAC PUBLIC MARKET OF
OLONGAPO CITY, et al.
G.R. No. 135337, 19 October 2000, FIRST DIVISION, (Kapunan, J.)

Olongapo City Council enacted Ordinance No. 14 (Series of 1993), fixing the monthly rental fees for the different stalls
in the new public market. Respondents questioned its validity by filing an appeal to the Secretary of Justice under
Section 187 of the LG Code.

Grounds for their appeal, respondents alleged that the rates fixed therein are unjust, excessive, oppressive, confiscatory,
not equitable, not based as far as practicable on the market vendors' ability to pay, and contrary to declared national
policy; (2) was sought to be implemented despite lack of publication; and (3) did not comply with "the essence and
spirit of the public hearings."

The Secretary of Justice upheld the validity of Ordinance No. 14. Respondents moved for a reconsideration of the
Justice Secretary's Resolution but the Secretary of Justice refrained from taking action on respondents' MR apparently in
view of the pendency of a case filed in this Court questioning the validity of said Section 187.

On December 22, 1993, respondents filed before the RTC of Olongapo City an "action to declare void Olongapo City
Ordinance No. 14. The RTC, without trial, rendered a decision sustaining the validity of Ordinance No. 14. The CA
remanded the case to the RTC as to the question of the validity of the rates in the ordinance because it was a factual
issue that required the presentation of evidence.

ISSUE: Is the RTC, on appeal, limited only on reviewing what was presented during the proceedings before the
Secretary of Justice?

RULING:
NO. The nature of the action is determined by the allegations of the complaint or petition.
Consider, too, the circumstances under which respondents sought relief from the RTC. Perhaps doubting his
jurisdiction to entertain respondents' appeal as a result of the filing of Drilon vs. Lim, supra, the Justice Secretary issued a
Memorandum directing the Chief State Counsel to refrain from acting on or accepting appeals filed under Section 187
of the Local Government Code and to "inform the appellants (herein petitioners) to file their appeal directly with the
courts." The Chief State Counsel, complying with the Memorandum, advised in his letter to respondents to "file
their appeal with the court of competent jurisdiction," the "appeal" referring to an action to question the validity of the
subject ordinance. The Memorandum and the accompanying letter thus amounted to an abdication by the Secretary of
Justice of his jurisdiction over the appeal, as conferred by Section 187.
Accordingly, the action before the RTC cannot be deemed to be anything but an original action, and the
function of the trial court cannot be limited to reviewing the evidence adduced before the Secretary of Justice.
Petitioner maintains that trial is unnecessary in any case because all the court had to do was determine whether
the rates fixed in the assailed ordinance conform to Department of Interior and Local Government Memorandum
Circular No. 93-63, specifically the provision limiting the return of investment to 12 to 15% and that requiring a cost
recovery scheme. Presumably, this determination can be made, as both the Secretary of Justice and the RTC did, by a
mere examination of the documents submitted by petitioner.
However, it is precisely the accuracy of these documents that respondents are disputing. Consequently, respondents
may examine the officials who executed said documents. They may present their own evidence, both documentary
and testimonial, to prove that the figures in the documents are inaccurate. All these require a trial so that the
parties may properly ventilate their respective causes.

R. YAMANE, IN HER CAPACITY AS THE CITY TREASURER OF MAKATI CITY, PETITIONER, VS.
BA LEPANTO CONDOMINUM CORPORATION, RESPONDENT.

Respondent BA-Lepanto Condominium Corporation (the "Corporation") is a duly organized condominium
corporation constituted in accordance with the Condominium Act,

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

Respondent received a Notice of Assessment stated that the Corporation is "liable to pay the correct city business taxes,
fees and charges," computed as totaling P1,601,013.77 for the years 1995 to 1997.The Notice of Assessment was silent
as to the statutory basis of the business taxes assessed.

According to respondent, the Assessment has no basis as the Corporation is not liable for business taxes and surcharges
and interest thereon, under the Makati [Revenue] Code or even under the [Local Government] Code.
Proceeding from the premise that its tax liability arose from Section 3A.02(m) of the Makati Revenue Code, the
Corporation proceeded to argue that under both the Makati Code and the Local Government Code, "business" is
defined as "trade or commercial activity regularly engaged in as a means of livelihood or with a view to profit." It was
submitted that the Corporation, as a condominium corporation, was organized not for profit, but to hold title over the
common areas of the Condominium, to manage the Condominium for the unit owners, and to hold title to the parcels
of land on which the Condominium was located. Neither was the Corporation authorized, under its articles of
incorporation or by-laws to engage in profit-making activities. The assessments it did collect from the unit owners were
for capital expenditures and operating expenses.

Issue: Whether the City of Makati may collect business taxes on condominium corporations.

Held:
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.

The most well-known mode of local government taxation is perhaps the real property tax, which is governed by Title II,
Book II of the Code, and which bears no application in this case. A different set of provisions, found under Title I of
Book II, governs other taxes imposable by local government units, including business taxes. Under Section 151 of the
Code, cities such as Makati are authorized to levy the same taxes fees and charges as provinces and municipalities. It is
in Article II, Title II, Book II of the Code, governing municipal taxes, where the provisions on business taxation
relevant to this petition may be found.

Section 143 of the Code specifically enumerates several types of business on which municipalities and cities may impose
taxes. Moreover, the local sanggunian is also authorized to impose taxes on any other businesses not otherwise specified
under Section 143 which the sanggunian concerned may deem proper to tax.
The coverage of business taxation particular to the City of Makati is provided by the Makati Revenue Code ("Revenue
Code"), it is quite specific as to the particular businesses which are covered by business taxes. Should the
comprehensive listing not prove encompassing enough, there is also a catch-all provision similar to that under the Local
Government Code, which provides:
(m) On owners or operators of any business not specified above shall pay the tax at the rate of two percent (2%) for
1993, two and one-half percent (2 %) for 1994 and 1995, and three percent (3%) for 1996 and the years thereafter of
the gross receipts during the preceding year.

The Revenue Code shows that while Section 3A.02(m) seems designed as a catch-all provision, Section 3A.02(f), which
provides for a different tax rate from that of the former provision, may be construed to be of similar import. While
Section 3A.02(f) is quite exhaustive in enumerating the class of businesses taxed under the provision, the listing, while it
does not include condominium-related enterprises, ends with the abbreviation "etc.", or "et cetera".

Certainly, we cannot be disposed to uphold any tax imposition that derives its authority from enigmatic and uncertain
words such as "et cetera." Yet we cannot even say with definiteness whether the tax imposed on the Corporation in this
case is based on "et cetera," or on Section 3A.02(m), or on any other provision of the Revenue Code.

The Condominium Act that a condominium corporation is precluded by statute from engaging in corporate activities
other than the holding of the common areas, the administration of the condominium project, and other acts necessary,
incidental or convenient to the accomplishment of such purposes. Neither the maintenance of livelihood, nor the
procurement of profit, fall within the scope of permissible corporate purposes of a condominium corporation under the
Condominium Act.

None of the corporate purposes are geared towards maintaining a livelihood or obtention of profit. Even though the
Corporation is empowered to levy assessments or dues from the unit owners, these amounts collected are not intended
for the incurrence of profit by the Corporation or its members, but to shoulder the multitude of necessary expenses
that arise from the maintenance of the Condominium Project.

Condominium corporations are generally exempt from local business taxation under the Local Government Code,
irrespective of any local ordinance that seeks to declare otherwise.



THE CITY GOVERNMENT OF QUEZON CITY, AND THE CITY TREASURER OF QUEZON CITY,
DR. VICTOR B. ENRIGA, PETITIONERS, VS. BAYAN TELECOMMUNICATIONS, INC.

FACTS.
Respondent Bayan Telecommunications, Inc.
[3]
(Bayantel) is a legislative franchise holder under Republic Act (Rep. Act)
No. 3259
[4]
to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and
telecasting.

Section 234 of the Local Government Code withdrew any exemption from realty tax granted to or enjoyed by all
persons, natural or juridical.

Thereafter, Congress enacted Rep. Act No. 7633, amending Bayantels original franchise. It provided that the same, its
successors or assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive
of this franchise, as other persons or corporations are now or hereafter may be required by law to pay.

Within the territorial boundary of Quezon City, Bayantel owned several real properties on which it maintained various
telecommunications facilities.

In 1993, the government of Quezon City, pursuant to the taxing power vested on local government units by Section 5,
Article X of the 1987 Constitution, in relation to Section 232 of the LGC, enacted City Ordinance No. SP-91, S-93,
otherwise known as the Quezon City Revenue Code (QCRC), imposing, under Section 5 thereof, a real property tax on
all real properties in Quezon City, and, reiterating in its Section 6, the withdrawal of exemption from real property tax
under Section 234 of the LGC. Furthermore, much like the LGC, the QCRC, under its Section 230, withdrew tax
exemption privileges in general.

Conformably with the Citys Revenue Code, new tax declarations for Bayantels real properties in Quezon City were
issued by the City Assessor. Bayantel wrote the office of the City Assessor seeking the exclusion of its real properties
in the city from the roll of taxable real properties. With its request having been denied, Bayantel interposed an appeal
with the Local Board of Assessment Appeals (LBAA). And, evidently on its firm belief of its exempt status, Bayantel
did not pay the real property taxes assessed against it by the Quezon City government.

On account thereof, the Quezon City Treasurer sent out notices of delinquency , followed by the issuance of several
warrants of levy against Bayantels properties preparatory to their sale at a public auction.

Threatened with the imminent loss of its properties, Bayantel immediately withdrew its appeal with the LBAA and
instead filed with the RTC of Quezon City a petition for prohibition with an urgent application for a
temporary restraining order (TRO) and/or writ of preliminary injunction.

In the eve of the public auction, the lower court issued a TRO, followed, after due hearing, by a writ of preliminary
injunction. RTC: declared exempt from real estate taxation the properties of Bayantel in QC. Denied petitioner's
motion for reconsideration having been denied. Petitioners elevated the case directly to the Supreme Court on pure
questions of law

ISSUE. WON Bayantel's real properties in Quezon City are exempt from real property taxes under its legislative
franchise.



HELD.
While the system of local government taxation has changed with the onset of the 1987 Constitution, the power of local
government units to tax is still limited. As we explained in Mactan Cebu International Airport Authority:


The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local
legislative bodies, no longer merely be virtue of a valid delegation as before, but pursuant to direct authority
conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to
such guidelines and limitations as the Congress may provide which, however, must be consistent with the basic policy
of local autonomy.

This new perspective is best articulated by Fr. Joaquin G. Bernas, S.J., himself a Commissioner of the 1986
Constitutional Commission which crafted the 1987 Constitution, thus:
What is the effect of Section 5 on the fiscal position of municipal corporations' Section 5 does not change the
doctrine that municipal corporations do not possess inherent powers of taxation. What it does is to confer
municipal corporations a general power to levy taxes and otherwise create sources of revenue. They no longer
have to wait for a statutory grant of these powers. The power of the legislative authority relative to the fiscal powers of
local governments has been reduced to the authority to impose limitations on municipal powers. Moreover, these
limitations must be "consistent with the basic policy of local autonomy." The important legal effect of Section 5 is
thus to reverse the principle that doubts are resolved against municipal corporations. Henceforth, in interpreting
statutory provisions on municipal fiscal powers, doubts will be resolved in favor of municipal corporations. It is
understood, however, that taxes imposed by local government must be for a public purpose, uniform within a locality,
must not be confiscatory, and must be within the jurisdiction of the local unit to pass
For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao,

this Court has upheld the power of
Congress to grant exemptions over the power of local government units to impose taxes. There, the Court wrote:

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. The
legal effect of the constitutional grant to local governments simply means that in interpreting statutory provisions on
municipal taxing powers, doubts must be resolved in favor of municipal corporations.
Rep. Act No. 7633 was enacted subsequent to the LGC. Perfectly aware that the LGC has already withdrawn Bayantel's
former exemption from realty taxes, Congress opted to pass Rep. Act No. 7633 using, under Section 11 thereof, exactly
the same defining phrase "exclusive of this franchise" which was the basis for Bayantel's exemption from realty taxes
prior to the LGC. In plain language, Section 11 of Rep. Act No. 7633 states that "the grantee, its successors or assigns
shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as
other persons or corporations are now or hereafter may be required by law to pay." The Court views this subsequent
piece of legislation as an express and real intention on the part of Congress to once again remove from the
LGC's delegated taxing power, all of the franchisee's (Bayantel's) properties that are actually, directly and exclusively
used in the pursuit of its franchise.


MACLARING M. LUCMAN, in his capacity as the Manager of the LAND BANK OF THE PHILIPPINES,
Marawi City, petitioner, vs. ALIMATAR MALAWI, et. al, respondents.

FACTS: The respondents were the incumbent barangay chairmen of their respective barangays prior to the 12 May
1997 barangay elections. The elections on 12 May 1997 in the aforesaid barangays resulted in a failure of elections.
Thereafter, the special elections held in these barangays likewise resulted in a failure of elections. Consequently,
respondents remained in office in a holdover capacity.
Beginning with the second quarter of 1997, LBP was selected as the government depository bank for the IRAs of the
abovementioned barangays. Respondents attempted to open their respective barangays' IRA bank accounts but were
refused by petitioner because respondents needed to show their individual certifications showing their right to continue
serving as Barangay Chairmen and the requisite Municipal Accountant's Advice giving respondents the authority to
withdraw IRA deposits. Respondents were eventually allowed to open accounts for their barangays except for Lomala
Cadar and Abdul Usman of barangays Mapantao-Ingud and Rangiran, respectively, because the accounts for these
barangays were previously opened by two persons who presented themselves as the duly proclaimed Barangay
Chairmen for these same barangays. In any event, all respondents were not allowed to withdraw the IRA funds from
the opened accounts, owing to the absence of the requisite Accountant's Advice.
Then on 4 August 1997, five (5) other persons presented themselves before petitioner as the newly proclaimed Punong
Barangays of the five barangays concerned, each of them presenting a certification of his election and another
Certification attesting, among others, to the revocation of the certification previously issued to respondents. Without
verifying the authenticity of the certifications presented by these third persons, petitioner proceeded to release the IRA
funds for the 2nd and 3rd quarters of 1997 to them.
Respondents thus filed a special civil action for Mandamus with Application for Preliminary Mandatory Injunction to
compel petitioner to allow them to open and maintain deposit accounts covering the IRAs of their respective barangays
and to withdraw therefrom.
The RTC rendered a Decision commanding petitioner to pay respondents, except respondent Alimatar Malawi who
failed to testify, the IRAs of their respective barangays "even without the Accountant's Advice." The Court of Appeals
affirmed the RTC's Decision in toto. Hence, this petition.
Petitioner argues that respondents have no cause of action against him since they failed to present valid certifications
showing their respective right to continue serving as Punong Barangay as well as the requisite Municipal Accountant's
Advice. Petitioner adds that respondents have no legal personality to institute the petition for mandamus in their own
names since the IRAs rightfully belong to the respective barangays and not to them and that their respective barangays
already received the claimed IRAs in this instant case.

ISSUE: 1. What is the cause of action alleged in the initiatory pleading filed by respondents before the trial court?
2. Are there indispensable parties which were not impleaded?

RULING:
1. By virtue of the deposits, there exists between the barangays as depositors and LBP a creditor-debtor relationship.
Fixed, savings, and current deposits of money in banks and similar institutions are governed by the provisions
concerning simple loan. In other words, the barangays are the lenders while the bank is the borrower. The relationship
being contractual in nature, mandamus is therefore not an available remedy since mandamus does not lie to enforce the
performance of contractual obligations.

2. The IRA funds for which the bank accounts were created belong to the barangays headed by respondents. The
barangays are the only lawful recipients of these funds. Consequently, any transaction or claim involving these funds
can be done only through the proper authorization from the barangays as juridical entities. The determination,
therefore, of whether or not the IRA funds were unlawfully withheld or improperly released to third persons can only
be determined if the barangays participated as parties to this action. These questions cannot be resolved with finality
without the involvement of the barangays. After all, these controversies involve funds rightfully belonging to the
barangays. Hence, the barangays are indispensable parties in this case. An indispensable party is defined as parties-in-
interest without whom there can be no final determination of an action.
In Arcelona, the Court also dwelt on the consequences of failure to include indispensable parties in a case, categorically
stating that the presence of indispensable parties is a condition for the exercise of juridical power41 and when an
indispensable party is not before the court, the action should be dismissed.
Clearly, this case was not initiated by the barangays themselves. Neither did the barangay chairmen file the suit in
representation of their respective barangays. Nothing from the records shows otherwise. On this score alone, the case
in the lower court should have been dismissed.
Even if the barangays themselves had filed the case, still it would not prosper. The case involves government funds and
as such, any release therefrom can only be done in accordance with the prevailing rules and procedures.
The Government Accounting and Auditing Manual (GAAM) provides for the basic requirements applicable to all
classes of disbursements that shall be complied with, to wit:

a) Certificate of Availability of Fund.Existence of lawful appropriation, the unexpended balance of which, free from
other obligations, is sufficient to cover the expenditure, certified as available by an accounting officer or any other
official required to accomplish the certificate. Use of moneys appropriated solely for the specific purpose for which
appropriated, and for no other, except when authorized by law or by a corresponding appropriating body.

b) Approval of claim or expenditure by head of office or his duly authorized representative.

c) Documents to establish validity of claim. Submission of documents and other evidences to establish the validity
and correctness of the claim for payment.

d) Conformity of the expenditure to existing laws and regulations.

e) Proper accounting treatment

This prescribed legal framework governing the release and disbursement of IRA funds to the respective barangays
disabuses from the notion that a barangay chairman, relying solely on his authority as a local executive, has the right to
demand physical possession of the IRA funds allocated by the national government to the barangay. The right to
demand for the funds belongs to the local government itself through the authorization of their Sanggunian.
WHEREFORE, premises considered, the petition is GRANTED. The assailed Decisions of the Court of Appeals and
the Regional Trial Court are REVERSED and SET ASIDE. The Petition for Mandamus filed before the Regional Trial
Court is ordered DISMISSED.

EVELYN ONGSUCO and ANTONIA SALAYA, vs. HON. MARIANO M. MALONES, both in his private
and official capacity as Mayor of the Municipality of Maasin, Iloilo.

FACTS: Petitioners are stall holders at the Maasin Public Market. After a meeting with the stall holders, Sangguniang
Bayan of Maasin approved Municipal Ordinance No. 98-01, entitled "The Municipal Revised Revenue Code."
The Code contained a provision for increased rentals for the stalls and the imposition of goodwill fees in the amount of
P20,000.00 and P15,000.00 for stalls located on the first and second floors of the municipal public market, respectively.
The same Code authorized respondent to enter into lease contracts over the said market stalls, and incorporated a
standard contract of lease for the stall holders at the municipal public market.
Sangguniang Bayan of Maasin approved Resolution No. 68, series of 1998, moving to have the meeting declared
inoperative as a public hearing, because majority of the persons affected by the imposition of the goodwill fee failed to
agree to the said measure. However, Resolution No. 68, series of 1998, of the Sangguniang Bayan of Maasin was vetoed
by respondent on 30 September 1998. Respondent wrote a letter to petitioners informing them that they were
occupying stalls in the newly renovated municipal public market without any lease contract, as a consequence of which,
the stalls were considered vacant and open for qualified and interested applicants.
Petitioners filed a Petition for Prohibition/Mandamus, with Prayer for Issuance of Temporary Restraining Order
and/or Writ of Preliminary Injunction, against respondent. The RTC found that petitioners could not avail themselves
of the remedy of mandamus or prohibition. Because they failed to show a clear legal right to the use of the market stalls
without paying the goodwill fees and also on the ground of non-exhaustion of administrative remedies. This decision
was affirmed by the Court of Appeals.

ISSUES:
1. WON there was a need for the exhaustion of administrative remedies- NO
2. WON the imposition of the goodwill fees is valid- NO, it is defective due to lack of public hearings

RULING:
1. None. The rule on the exhaustion of administrative remedies is intended to preclude a court from arrogating unto
itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of
special competence. Thus, a case where the issue raised is a purely legal question, well within the competence; and the
jurisdiction of the court and not the administrative agency, would clearly constitute an exception.

2. The ordinance is void due to lack of public hearing. There is no dispute herein that the notices sent to petitioners
and other stall holders at the municipal public market were sent out, informing them of the supposed "public hearing"
to be held on 11 August 1998. Even assuming that petitioners received their notice, the "public hearing" was already
scheduled, and actually conducted, only five days later.
This contravenes Article 277 (b) (3) of the Implementing Rules and Regulations of the Local Government Code which
requires that the public hearing be held no less than ten days from the time the notices were sent out, posted, or
published.
When the Sangguniang Bayan of Maasin sought to correct this procedural defect through Resolution No. 68, series of
1998 vetoed the said resolution. Although the Sangguniang Bayan may have had the power to override respondent's
veto, it no longer did so.
The defect in the enactment of Municipal Ordinance No. 98 was not cured when another public hearing was held on 22
January 1999, after the questioned ordinance was passed by the Sangguniang Bayan and approved by respondent on 17
August 1998. Section 186 of the Local Government Code prescribes that the public hearing be held prior to the
enactment by a local government unit of an ordinance levying taxes, fees, and charges.
Since no public hearing had been duly conducted prior to the enactment of Municipal Ordinance No. 98-01, said
ordinance is void and cannot be given any effect. Consequently, a void and ineffective ordinance could not have
conferred upon respondent the jurisdiction to order petitioners' stalls at the municipal public market vacant.
PEPSI-COLA BOTTLING CO. OF THE PHILIPPINES, INC. v CITY OF BUTUAN

Plaintiff, Pepsi-Cola Bottling Company of the Philippines, is a domestic corporation with offices and principal place of
business in QuezonCity. The defendants are the City of Butuan, its City Mayor, the members of its municipal board
and its City Treasurer. Plaintiff seeks to recover P14,177.03 paid under protest to the City of Butuan pursuant to its
Municipal Ordinance No. 110, as amended by Municipal Ordinance No. 122, which plaintiff assails as null and void
because of the following: (1) it partakes of the nature of an import tax; (2) it amounts to double taxation; (3) it is
excessive, oppressive and confiscatory; (4) it is highly unjust and discriminatory; and (5) section 2 of Republic Act No.
2264, upon the authority of which it was enacted, is an unconstitutional delegation of legislative powers.

Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case of 24 bottles of
Pepsi Cola Section 9 makes the ordinance applicable to soft drinks, liquors or carbonated drinks "received outside" but
"sold within" the City.

ISSUE: Is the questioned ordinance invalid?

HELD:
YES. The first and the fourth objections merit, however, serious consideration. In this connection, it is noteworthy
that the tax prescribed in section 3 of Ordinance No. 110, as originally approved, was imposed upon dealers "engaged
in selling" soft drinks or carbonated drinks. Thus, it would seem that the intent was then to levy a tax upon the sale of
said merchandise. As amended by Ordinance No. 122, the tax is, however, imposed only upon "any agent and/or
consignee of any person, association, partnership, company or corporation engaged in selling x x soft drinks or
carbonated drinks." And, pursuant to section 3-A, which was inserted by said Ordinance No. 122:

" x x - Definition of the Term Consignee or Agent. - For purposes of this Ordinance, a consignee or agent shall mean
any person, association, partnership, company or corporation who acts in the place of another by authority from him
or one entrusted with the business of another or to whom is consigned or shipped no less than 1,000 cases of hard
liquors or soft drinks every month for resale, either retail or wholesale."

As a consequence, merchants engaged in the sale of soft drinks or carbonated drinks, are not subject to the tax, unless
they are agents and/or consignees of another dealer, who, in the very nature of things, must be one engaged in business
outside the City. Besides, the tax would not be applicable to such agent and/or consignee, if less than 1,000 cases of
soft drinks are consigned or shipped to him every month. When we consider, also, that the tax "shall be based and
computed from the cargo manifest or bill of lading x x showing the number of cases" - not sold - but "received" by the
taxpayer, the intention to limit the application of the ordinance to soft drinks and carbonated drinks brought into the
City from outside thereof becomes apparent. Viewed from this angle, the tax partakes of the nature of an import duty,
which is beyond defendant's authority to impose by express provision of law.

Even, however, if the burden in question were regarded as a tax on the sale of said beverages, it would still be invalid, as
discriminatory, and hence, violative of the uniformity required by the Constitution and the law therefor, since only sales
by "agents or consignees" ofoutside dealers would be subject to the tax. Sales by local dealers, not acting for or on
behalf of other merchants, regardless of the volume of their sales, and even if the same exceeded those made by said
agents or consignees of producers or merchants established outside the City of Butuan, would be exempt from the
disputed tax.

It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or equality
under all circumstances, or negate the authority to classify the objects of taxation. The classification made in the
exercise of this authority, to be valid, must, however, be reasonable and this requirement is not deemed satisfied unless:
(1) it is based upon substantial distinctions which make real differences; (2) these are germane to the purpose of the
legislation or ordinance; (3) the classification applies, not only to present conditions, but, also, to future conditions
substantially identical to those of the present; and (4) the classification applies equally all those who belong to the same
class.

These conditions are not fully met by the ordinance in question. Indeed, if its purpose were merely to levy a burden
upon the sale of soft drinks or carbonated beverages, there is no reason why sales thereof by dealers other than agents
or consignees of producers or merchants established outside the City of Butuan should be exempt from the tax.


PROVINCE OF BULACAN v. CA & REPUBLIC CEMENT CORPORATION
G.R. No. 126232, November 27, 1998, THIRD DIVISION (Romero, J.)

The Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3, known as "An ordinance
Enacting the Revenue Code of the Bulacan Province. Section 21 of the ordinance provides that There is hereby
levied and collected a tax of 10% of the fair market value in the locality per cubic meter of ordinary stones, sand, gravel,
earth and other quarry resources, such, but not limited to marble, granite, volcanic cinders, basalt, tuff and rock
phosphate, extracted from public lands or from beds of seas, lakes, rivers, streams, creeks and other public waters
within its territorial jurisdiction.

The Provincial Treasurer assessed Republic Cement Corporation for extracting limestone, shale and silica from
several parcels of private land in the province during the third quarter of 1992 until the second quarter of 1993.
Believing that the province had no authority to impose taxes on quarry resources extracted from private lands, Republic
Cement contested. Republic Cement filed a petition with the RTC but it ruled that the declaratory relief filed was
improper, allegedly because a breach of the ordinance had been committed by Republic Cement. Bulacan issued a
warrant of levy against Republic Cement, allegedly because of its unpaid tax liabilities. Negotiations between Republic
Cement and petitioners resulted in an agreement and modus vivendi whereby Republic Cement agreed to pay under
protest 50% of the tax assessed by petitioner, in exchange for the lifting of the warrant of levy.

ISSUE:

Did the CA unjustly deprive the Province of Bulacan the power to create their sources of revenue?

HELD:

NO. The CA, on the basis of Section 134, ruled that a province was empowered to impose taxes only on sand,
gravel, and other quarry resources extracted from public lands, its authority to tax being limited by said provision only
to those taxes, fees and charges. On the other hand, petitioners claim that Sections 129 and 186 of the LGC authorizes
the province to impose taxes other than those specifically enumerated under the LGC. The CA erred in ruling that a
province can impose only the taxes specifically mentioned under the LGC. As correctly pointed out by petitioners,
Section 186 allows a province to levy taxes other than those specifically enumerated under the Code, subject to the
conditions specified therein.

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

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

Given the above disquisition, petitioners cannot claim that the CA unjustly deprived them of the power to
create their sources of revenue, their assessment of taxes against Republic Cement being ultra vires, traversing as it does
the limitations set by the LGC.

PALMA DEVELOPMENT CORPORATION v. MUNICIPALITY OF MALANGAS, ZAMBOANGA DEL
SUR
FACTS.
Petitioner in this case is engaged in milling and selling rice and corn to wholesalers in Zamboanga City. It uses
the municipal port of Malangas, Zamboanga del Sur as transshipment point for its goods. On January 16, 1994, the
municipality passed Municipal Revenue Code No. 09, Series of 1993, wherein Section 5G.01 of which reads:
Section 5G..01. Imposition of fees. There shall be collected service fee for its use of the municipal road[s] or
streets leading to the wharf and to any point along the shorelines within the jurisdiction of the municipality and
for police surveillance on all goods and all equipment harbored or sheltered in the premises of the wharf and
other within the jurisdiction.
Petitioner paid under protest and contended that under the LGC, municipal government did not have the authority to
tax goods and vehicles that passed through their jurisdictions. Thereafter, they filed an action for declaratory relief
against the Municipality of Malangas. RTC declared the assailed ordinance as null and void for being ultra vires. CA
ruled that Palma still had to adduce evidence to substantiate its allegations that the assailed ordinance had imposed fees
on the movement of goods within the Municipality of Malangas in the guise of a toll fee for the use of municipal roads
and a service fee for police surveillance. Hence, the case was remanded to the RTC.

ISSUE. WON Section 5G.01 of the Municipal Revenue Code No. 09 is valid.

HELD.
NO. By express language of Sections 153 and 155 of RA No. 7160, local government units, through their
Sanggunian, may prescribe the terms and conditions for the imposition of toll fees or charges for the use of
any public road, pier or wharf funded and constructed by them. A service fee imposed on vehicles using municipal
roads leading to the wharf is thus valid. However, Section 133(e) of RA No. 7160 prohibits the imposition, in the
guise of wharfage, of fees -- as well as all other taxes or charges in any form whatsoever on goods or
merchandise. It is therefore irrelevant if the fees imposed are actually for police surveillance on the goods,
because any other form of imposition on goods passing through the territorial jurisdiction of the municipality
is clearly prohibited by Section 133(e).

Under Section 131(y) of RA No. 7160, wharfage is defined as a fee assessed against the cargo of a vessel engaged in
foreign or domestic trade based on quantity, weight, or measure received and/or discharged by vessel. It is apparent
that a wharfage does not lose its basic character by being labeled as a service fee for police surveillance on all goods.

NOTE: the case need not be remanded to the RTC because the facts sought to be established with the reception of
additional evidence is irrelevant to the due settlement of the case. A remand is still unnecessary even if the service fee
charged against the goods are for police surveillance, because Section 133(e) of RA No. 7160 expressly prohibits the
imposition of all other taxes, fees or charges in any form whatsoever upon the merchandise or goods that pass through
the territorial jurisdiction of local government units. It is therefore immaterial to the instant case whether the service
fee on the goods is for police surveillance or not, since the subject provision of the revenue ordinance is
invalid. Reception of further evidence to establish this fact would not legalize the imposition of such fee in any way.


MANILA ELECTRIC COMPANY, petitioner vs. PROVINCE OF LAGUNA and BENITO R. BALAZO, in
his capacity as Provincial Treasurer of Laguna, respondents

Facts.
Several municipalities in Laguna issued resolutions through their municipal councils granting franchise in favor
of MERALCO for the supply of electric light, heat and power within the concerned areas. On September 12 1991, RA
7160, was enacted to take effect on January 1, 1992 enjoining local government units to create their own sources of
revenue and to levy taxes, fees and charges, subject to the limitations expressed therein, consistent with the basic policy
of local autonomy. Pursuant to the provisions of the Code, a franchise tax ordinance was enacted
3
. On the basis of
this ordinance, respondent Provincial Treasurer demanded MERALCO for the corresponding tax payment.
MERALCO paid the tax under protest. A formal claim for refund was thereafter sent by MERALCO to the Provincial
Treasurer of Laguna claiming that the franchise tax it had paid and continued to pay to the National Government
pursuant to P.D. 551 already included the franchise tax imposed by the Provincial Tax Ordinance.
The claim for refund of petitioner was denied by Gov. Jose Lina. Petitioner MERALCO filed with the Regional
Trial Court of Sta. Cruz, Laguna, a complaint for refund. The trial court dismissed the complaint. In the instant
petition, MERALCO assailed the trial courts ruling contending that the franchise tax ordinance is violative of the non-
impairment clause of the Constitution.
Issue. WON the provincial Government may validly tax MERALCO notwithstanding an older law granting
exemptions to the latter.
Held.
Yes, it might be well to recall that local governments do not have the inherent power to tax except to the extent
that such power might be delegated to them either by the basic law or by statute. Presently, under Article X of the 1987
Constitution, a general delegation of that power has been given in favor of local government units. The general rule
under the constitution is that where there is neither a grant nor a prohibition by statute, the tax power must be
deemed to exist although Congress may provide statutory limitations and guidelines. The basic rationale for the
current rule is to safeguard the viability and self-sufficiency of local government units by directly granting them general
and broad tax powers. Nevertheless, the fundamental law did not intend the delegation to be absolute and
unconditional; the legislature must see to it that (a) the taxpayer will not be over-burdened or saddled with multiple and
unreasonable impositions; (b) each local government unit will have its fair share of available resources, (c) the resources
of the national government will not be unduly disturbed; and (d) local taxation will be fair, uniform, and just.
The Court has viewed its previous rulings as laying stress more on the legislative intent of the amendatory law
whether the tax exemption privilege is to be withdrawn or not rather than on whether the law can withdraw,
without violating the Constitution, the tax exemption or not. While the Court has, not too infrequently, referred to tax
exemptions contained in special franchises as being in the nature of contracts and a part of the inducement for carrying
on the franchise, these exemptions, nevertheless, are far from being strictly contractual in nature. Contractual tax
exemptions, in the real sense of the term and where the non-impairment clause of the Constitution can rightly be
invoked, are those agreed to by the taxing authority in contracts, such as those contained in government bonds or
debentures, lawfully entered into by them under enabling laws in which the government, acting in its private capacity,
sheds its cloak of authority and waives its governmental immunity. Truly, tax exemptions of this kind may not be
revoked without impairing the obligations of contracts. These contractual tax exemptions, however, are not to be
confused with tax exemptions granted under franchises (such as the one granted to MERALCO). A franchise partakes
the nature of a grant which is beyond the purview of the non-impairment clause of the Constitution. Indeed, Article
XII, Section 11, of the 1987 Constitution, like its precursor provisions in the 1935 and the 1973 Constitutions, is
explicit that no franchise for the operation of a public utility shall be granted except under the condition that such
privilege shall be subject to amendment, alteration or repeal by Congress as and when the common good so requires.
Petition Dismissed.

3
Laguna Provincial Ordinance No. 01-92 - Sec. 2.09. Franchise Tax. There is hereby imposed a tax on businesses enjoying
a franchise, at a rate of fifty percent (50%) of one percent (1%) of the gross annual receipts, which shall include both cash sales and
sales on account realized during the preceding calendar year within this province, including the territorial limits on any city located
in the province.
ERICSSON TELECOMMUNICATIONS, INC., PETITIONER VS. CITY OF PASIG, RESPONDENT.

FACTS.
In an Assessment Notice, petitioner was assessed a business tax deficiency for the years 1998 and 1999 based
on its gross revenues as reported in its audited financial statements for the years 1997 and 1998. Petitioner filed a
Protest claiming that the computation of the local business tax should be based on gross receipts and not on gross
revenue. The City of Pasig, herein respondent, issued another Notice of Assessment to petitioner on November 19,
2001, this time based on business tax deficiencies for the years 2000 and 2001 based on its gross revenues for the years
1999 and 2000. Again, petitioner filed a Protest, reiterating its previous claim.
The RTC canceled and set aside the assessments made by respondent and its City Treasurer. The CA reversed
and set aside the complaint for lack of authority to sign the CNFS.
Hence, this petition. Respondent assessed deficiency local business taxes on petitioner based on the latters
gross revenue as reported in its financial statements, arguing that gross receipts is synonymous with gross
earnings/revenue, which, in turn, includes uncollected earnings. Petitioner, however, contends that only the portion of
the revenues which were actually and constructively received should be considered in determining its tax base.


ISSUE. WON the local business tax on contractors should be based on gross receipts

RULING.
YES. Insofar as petitioner is concerned, the applicable provision is subsection (e), Section 143 of the same
Code covering contractors and other independent contractors. The provision specifically refers to gross receipts which
is defined under Section 131 of the Local Government Code, as follows:
(n) Gross Sales or Receipts include the total amount of money or its equivalent representing the contract price,
compensation or service fee, including the amount charged or materials supplied with the services and the deposits or
advance payments actually or constructively received during the taxable quarter for the services performed or to be
performed for another person excluding discounts if determinable at the time of sales, sales return, excise tax, and
value-added tax (VAT);

The law is clear. Gross receipts include money or its equivalent actually or constructively received in
consideration of services rendered or articles sold, exchanged or leased, whether actual or constructive. There is
constructive receipt, when the consideration for the articles sold, exchanged or leased, or the services rendered has
already been placed under the control of the person who sold the goods or rendered the services without any restriction
by the payor.

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

The imposition of local business tax based on petitioners gross revenue will inevitably result in the
constitutionally proscribed double taxation taxing of the same person twice by the same jurisdiction for the same
thing inasmuch as petitioners revenue or income for a taxable year will definitely include its gross receipts already
reported during the previous year and for which local business tax has already been paid.
Thus, respondent committed a palpable error when it assessed petitioners local business tax based on its gross
revenue as reported in its audited financial statements, as Section 143 of the Local Government Code and Section 22(e)
of the Pasig Revenue Code clearly provide that the tax should be computed based on gross receipts.