Tax Cases Set 2 LGC

G.R. No.
119122
August 8, 2000
PHILIPPINE
BASKETBALL
ASSOCIATION, petitioner,
vs.
COURT OF APPEALS, COURT OF TAX APPEALS, AND COMMISSIONER OF INTERNAL
REVENUE,respondents.
PURISIMA, J.:
At bar is a petition for review on certiorari under Rule 45 of the Rules of Court seeking a review of the
decision1 of the Court of Appeals in CA-G.R. SP No. 34095 which affirmed the decision of the Court of
Tax Appeals in C.T.A. Case No. 4419.
Add: 75% surcharge
1,795,181.89
20% interest (2 years)
1,675,503.10
P5,864,260.84
The facts that matter are as follows:

On June 21, 1989, the petitioner received an assessment letter from the Commissioner of Internal
Revenue (respondent Commissioner) for the payment of deficiency amusement tax computed thus:
Total Amount Due & Collectible
===========
Deficiency Amusement Tax
Total gross receipts 1987
P19,970,928.00
On July 18, 1989, petitioner contested the assessment by filing a protest with respondent Commissioner
who denied the same on November 6, 1989.
On January 8, 1990, petitioner filed a petition for review 2 with the Court of Tax Appeals (respondent
CTA) questioning the denial by respondent Commissioner of its tax protest.
===========
15% tax due thereon
2,995,639.20
Less: Tax paid
602,063.35
On December 24, 1993, respondent CTA dismissed petitioner's petition, holding:

"WHEREFORE, in all the foregoing, herein petition for review is hereby DISMISSED for lack of
merit and the Petitioner is hereby ORDERED to PAY to the Respondent the amount of
P5,864,260.84 as deficiency amusement tax for the year 1987 plus 20% annual delinquency
interest from July 22, 1989 which is the due date appearing on the notice and demand of the
Commissioner (i.e. 30 days from receipt of the assessment) until fully paid pursuant to the
provisions of Sections 248 and 249 (c) (3) of the Tax Code, as amended."3
Petitioner presented a motion for reconsideration 4 of the said decision but the same was denied by
respondent CTA in a resolution5 dated April 8, 1994. Thereafter and within the reglementary period for
interposing appeals, petitioner appealed the CTA decision to the Court of Appeals.
ALF
Deficiency amusement tax
P2,393,575.85
On November 21, 1994, the Court of Appeals rendered its questioned Decision, 6 affirming the decision
of the CTA and dismissing petitioner's appeal. Petitioner filed a Motion for Reconsideration of said
decision but to no avail. The same was denied by the Court of Appeals in a Resolution 7 dated January
31, 1995. Hence, this petition.
1wphi1.nt
Tax 1 law Page 1 of 20
Undaunted, petitioner found its way to this Court via the present petition, contending that:
"1. Respondent Court of Appeals erred in holding that the jurisdiction to collect amusement
taxes of PBA games is vested in the national government to the exclusion of the local
governments.
"2. Respondent Court of Appeals erred in holding that Section 13 of the Local Tax Code of
1973 limits local government units to theaters, cinematographs, concert halls, circuses and
other places of amusement in the collection of the amusement tax.
transferred to the local governments by virtue of the Local Tax Code; and BIR Ruling No. 231-86 which
held that "the jurisdiction to levy amusement tax on gross receipts from admission tickets to places of
amusement was transferred to local governments under P.D. No. 231, as amended." 8 Further, petitioner
opined that even assuming arguendo that respondent Commissioner revoked BIR Ruling No. 231-86,
the reversal, modification or revocation cannot be given retroactive effect since even as late as 1988
(BIR Memorandum Circular No. 8-88), respondent Commissioner still recognized the jurisdiction of local
governments to collect amusement taxes.
The Court is not persuaded by petitioner's asseverations.
"3. Respondent Court of Appeals erred in holding that Revenue Regulations No. 8-88 dated
February 19, 1988 is an erroneous interpretation of law.
The laws on the matter are succinct and clear and need no elaborate disquisition. Section 13 of the
Local Tax Code provides:
"4. Respondent Court of Appeals erred in giving retroactive effect to the revocation of Revenue
Regulations 8-88.
"SECTION 13. Amusement tax on admission. The province shall impose a tax on admission
to be collected from the proprietors, lessees, or operators of theaters, cinematographs, concert
halls, circuses and other places of amusement . . ."
"5. Respondent Court of Appeals erred when it failed to consider the provisions of P.D. 851 the
franchise of Petitioner, Section 8 of which provides that amusement tax on admission receipts
of Petitioner is 5%.
"6. Respondent Court of Appeals erred in holding that the cession of advertising and streamer
spaces in the venue to a third person is subject to amusement taxes.
"7. Respondent Court of Appeals erred in holding that the cession of advertising and streamer
spaces inside the venue is embraced within the term 'gross receipts' as defined in Section 123
(6) of the Tax Code.
"8. Respondent Court of Appeals erred in holding that the amusement tax liability of Petitioner
is subject to a 75% surcharge."
The issues for resolution in this case may be simplified as follows:
The foregoing provision of law in point indicates that the province can only impose a tax on admission
from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and
other places of amusement. The authority to tax professional basketball games is not therein included,
as the same is expressly embraced in PD 1959, which amended PD 1456 thus:
"SECTION 44. Section 268 of this Code, as amended, is hereby further amended to read as
follows:
'Sec. 268. Amusement taxes. There shall be collected from the proprietor, lessee
or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional
basketball games, Jai-Alai, race tracks and bowling alleys, a tax equivalent to:
'1. Eighteen per centum in the case of cockpits;
'2. Eighteen per centum in the case of cabarets, night or day clubs;
1. Is the amusement tax on admission tickets to PBA games a national or local tax? Otherwise put, who
between the national government and local government should petitioner pay amusement taxes?
'3. Fifteen per centum in the case of boxing exhibitions;
2. Is the cession of advertising and streamer spaces to Vintage Enterprises, Inc. (VEI) subject to the
payment of amusement tax?
'4. Fifteen per centum in the case of professional basketball games as envisioned in
Presidential Decree No. 871. Provided, however. That the tax herein shall be in lieu
of all other percentage taxes of whatever nature and description;
3. If ever petitioner is liable for the payment of deficiency amusement tax, is it liable to pay a seventyfive percent (75%) surcharge on the deficiency amount due?
'5. Thirty per centum in the case of Jai-Alai and race tracks; and
Petitioner contends that PD 231, otherwise known as the Local Tax Code of 1973, transferred the power
and authority to levy and collect amusement taxes from the sale of admission tickets to places of
amusement from the national government to the local governments. Petitioner cited BIR Memorandum
Circular No. 49-73 providing that the power to levy and collect amusement tax on admission tickets was
'6. Fifteen per centum in the case of bowling alleys of their gross receipts, irrespective
of whether or not any amount is charged or paid for admission. For the purpose of the
amusement tax, the term gross receipts' embraces all the receipts of the proprietor,
lessee or operator of the amusement place. Said gross receipts also include income
from television, radio and motion picture rights, if any. (A person or entity or
association conducting any activity subject to the tax herein imposed shall be similarly
liable for said tax with respect to such portion of the receipts derived by him or it.)
'The taxes imposed herein shall be payable at the end of each quarter and it shall be
the duty of the proprietor, lessee, or operator concerned, as well as any party liable,
within twenty days after the end of each quarter, to make a true and complete return
of the amount of the gross receipts derived during the preceding quarter and pay the
tax due thereon. If the tax is not paid within the time prescribed above, the amount of
the tax shall be increased by twenty-five per centum, the increment to be part of the
tax.
'In case of willful neglect to file the return within the period prescribed herein, or in
case a false or fraudulent return is willfully made, there shall be added to the tax or to
the deficiency tax, in case any payment has been made on the basis of the return
before the discovery of the falsity or fraud, a surcharge of fifty per centum of its
amount. The amount so added to any tax shall be collected at the same time and in
the same manner and as part of the tax unless the tax has been paid before the
discovery of the falsity or fraud, in which case, the amount so assessed shall be
collected in the same manner as the tax." (emphasis ours)
From the foregoing it is clear that the "proprietor, lessee or operator of . . . professional basketball
games" is required to pay an amusement tax equivalent to fifteen per centum (15%) of their gross
receipts to the Bureau of Internal Revenue, which payment is a national tax. The said payment of
amusement tax is in lieu of all other percentage taxes of whatever nature and description.
While Section 13 of the Local Tax Code mentions "other places of amusement", professional basketball
games are definitely not within its scope. Under the principle of ejusdem generis, where general words
follow an enumeration of persons or things, by words of a particular and specific meaning, such general
words are not to be construed in their widest extent, but are to be held as applying only to persons or
things of the same kind or class as those specifically mentioned. 9 Thus, in determining the meaning of
the phrase "other places of amusement", one must refer to the prior enumeration of theaters,
cinematographs, concert halls and circuses with artistic expression as their common characteristic.
Professional basketball games do not fall under the same category as theaters, cinematographs,
concert halls and circuses as the latter basically belong to artistic forms of entertainment while the
former caters to sports and gaming.
A historical analysis of pertinent laws does reveal the legislative intent to place professional basketball
games within the ambit of a national tax. The Local Tax Code, which became effective on June 28,
1973, allowed the province to collect a tax on admission from the proprietors, lessees, or operators
of theaters, cinematographs, concert halls, circuses and other places of amusement. On January 6,
1976, the operation of petitioner was placed under the supervision and regulation of the Games and
Amusement Board by virtue of PD 871, with the proviso (Section 8) that ". . . all professional basketball
games conducted by the Philippine Basketball Association shall only be subject to amusement tax of
five per cent of the gross receipts from the sale of admission tickets." Then, on June 11, 1978, PD 1456
came into effect, increasing the amusement tax to ten per cent, with a categorical referral to PD 871, to
wit, "[t]en per centum in the case of professional basketball games as envisioned in Presidential Decree
No. 871 . . ." Later in 1984, PD 1959 increased the rate of amusement tax to fifteen percent by making
reference also to PD 871. With the reference to PD 871 by PD 1456 and PD 1959, there is a recognition
under the laws of this country that the amusement tax on professional basketball games is a national,
and not a local, tax. Even up to the present, the category of amusement taxes on professional
basketball games as a national tax remains the same. This is so provided under Section 125 10 of the
1997 National Internal Revenue Code. Section 140 11 of the Local Government Code of 1992 (Republic
Act 7160), meanwhile, retained the areas (theaters, cinematographs, concert halls, circuses and other
places of amusement) where the province may levy an amusement tax without including therein
professional basketball games.
Likewise erroneous is the stance of petitioner that respondent Commissioner's issuance of BIR Ruling
No. 231-8612 and BIR Revenue Memorandum Circular No. 8-8813 both upholding the authority of the
local government to collect amusement taxes should bind the government or that, if there is any
revocation or modification of said rule, the same should operate prospectively.
It bears stressing that the government can never be in estoppel, particularly in matters involving taxes. It
is a well-known rule that erroneous application and enforcement of the law by public officers do not
preclude subsequent correct application of the statute, and that the Government is never estopped by
mistake or error on the part of its agents.14
Untenable is the contention that income from the cession of streamer and advertising spaces to VEI is
not subject to amusement tax. The questioned proviso may be found in Section 1 of PD 1456 which
states:
"SECTION 1. Section 268 of the National Internal Revenue Code of 1977, as amended, is
hereby further amended to read as follows:
'Sec. 268. Amusement taxes. There shall be collected from the proprietor, lessee
or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional
basketball games, Jai-Alai, race tracks and bowling alleys, a tax equivalent to:
xxx
xxx
xxx
of their gross receipts, irrespective of whether or not any amount is charged or paid for admission. For
the purpose of the amusement tax, the term gross receipts' embraces all the receipts of the proprietor,
lessee or operator of the amusement place. Said gross receipts also include income from television,
radio and motion picture rights, if any. (A person, or entity or association conducting any activity subject
to the tax herein imposed shall be similarly liable for said tax with respect to such portion of the receipts
derived by him or it.)" (emphasis ours)
The foregoing definition of gross receipts is broad enough to embrace the cession of advertising and
streamer spaces as the same embraces all the receipts of the proprietor, lessee or operator of the
amusement place. The law being clear, there is no need for an extended interpretation.15
The last issue for resolution concerns the liability of petitioner for the payment of surcharge and interest
on the deficiency amount due. Petitioner contends that it is not liable, as it acted in good faith, having
relied upon the issuances of the respondent Commissioner. This issue must necessarily fail as the
same has never been posed as an issue before the respondent court. Issues not raised in the court a
quo cannot be raised for the first time on appeal.16
For the purpose of the amusement tax, the term "gross receipts" embraces all the
receipts of the proprietor, lessee or operator of the amusement place. Said gross
receipts also include income from television, radio and motion picture rights, if any. A
person or entity or association conducting any activity subject to the tax herein
imposed shall be similarly liable for said tax with respect to such portion of the
receipts derived by him or it.
All things studiedly considered, the Court rules that the petitioner is liable to pay amusement tax to the
national government, and not to the local government, in accordance with the rates prescribed by PD
1959.
The taxes imposed herein shall be payable at the end of each quarter or month and it
shall be the duty of the proprietor, lessee or operator concerned, as well as any party
liable, within twenty (20) days after the end of each quarter, to make a true and
complete return of the amount of the gross receipts derived during the preceding
quarter and pay the tax due thereon. (Effective January 1, 1998)
WHEREFORE, the Petition is DENIED, and the Decisions of the Court of Appeals and Court of Tax
Appeals dated November 21, 1994 and December 24, 1993, respectively AFFIRMED. No
pronouncement as to costs.
1wphi1.nt
SO ORDERED.
11
Panganiban and Gonzaga-Reyes, JJ ., concur.

Melo and Vitug, JJ ., concur in the result.
SEC. 140. Amusement Tax.

(a) The province may levy an amusement tax to be collected from the proprietors,
lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and
other places of amusement at a rate of not more than thirty percent (30%) of the
gross receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by
their proprietors, lessees, or operators and the distributors of the cinematographic
films.
Footnotes:
SEC. 125. Amusement taxes. There shall be collected from the proprietor, lessee or
operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional basketball
games, Jai-Alai and race tracks, a tax equivalent to:
10
a) Eighteen percent (18%) in the case of cockpits;

b) Eighteen percent (18%) in the case of cabarets, night or day clubs;
c) Ten percent (10%) in the case of boxing exhibitions, provided, however, that boxing
exhibitions wherein World or Oriental Championships in any division is at stake shall
be exempt from amusement tax; provided, further, that at least one of the contenders
for World or Oriental Championship is a citizen of the Philippines and said exhibitions
are promoted by a citizen/s of the Philippines or by a corporation or association at
least sixty percent (60%) of the capital of which is owned by such citizens;
d) Fifteen percent (15%) in the case of professional basketball games as envisioned
in Presidential Decree No. 871; provided, however, that the tax herein shall be in lieu
of all other percentage taxes of whatever nature and description; and
e) Thirty percent (30%) in the case of Jai-Alai and race tracks of their gross receipts,
irrespective of whether or not any amount is charged for admission.
(c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions,
flower shows, musical programs, literary and oratorical presentations, except pop,
rock, or similar concerts shall be exempt from the payment of the tax herein imposed.
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and
conditions for the payment of tax. In case of fraud or failure to pay the tax, the
sangguniang panlalawigan may impose such surcharges, interests and penalties as it
may deem appropriate.
(e) The proceeds from the amusement tax shall be shared equally by the province
and the municipality where such amusement places are located.
G.R. No. 126232 November 27, 1998

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVES, and
MANUEL DJ SIAYNGCO in their capacity as PROVINCIAL GOVERNOR, PROVINCIAL
TREASURER,
PROVINCIAL
LEGAL
ADVISER, respectively,
petitioners,
vs.
THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION), REPUBLIC
CEMENT CORPORATION, respondents.
ROMERO, J.:
Before us is a petition for certiorari seeking the reversal of the decision of the Court of Appeals dated
September 27, 1995 declaring petitioner without authority to levy taxes on stones, sand, gravel, earth
and other quarry resources extracted from private lands, as well as the August 26, 1996 resolution of
the appellate court denying its motion for reconsideration.
The facts are as follows:
On June 26, 1992, the Sangguniang Panlalawigan of Bulacan passed Provincial Ordinance No. 3,
known as "An Ordinance Enacting the Revenue Code of the Bulacan Province." which was to take
effect on July 1, 1992. Section 21 of the ordinance provides as follows:
Sec. 21 Imposition of Tax. There is hereby levied and collected a tax of 10% of the
fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth
and other quarry resources, such, but not limited to marble, granite, volcanic cinders,
basalt, tuff and rock phosphate, extracted from public lands or from beds of seas,
lakes, rivers, streams, creeks and other public waters within its territorial jurisdiction
(Emphasis ours)
Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter dated November 11, 1993, assessed
private respondent Republic Cement Corporation (hereafter Republic Cement) P2,524,692.13 for
extracting limestone, shale and silica from several parcels of private land in the province during the third
quarter of 1992 until the second quarter of 1993. Believing that the province, on the basis of above-said
ordinance, had no authority to impose taxes on quarry resources extracted from private lands, Republic
Cement formally contested the same on December 23, 1993. The same was, however, denied by the
Provincial Treasurer on January 17, 1994. Republic Cement, consequently filed a petition for
declaratory relief with the Regional Trial Court of Bulacan on February 14, 1994. The province filed a
motion to dismiss Republic Cement's petition, which was granted by the trial court on May 13, 1993,
which ruled that declaratory relief was improper, allegedly because a breach of the ordinance had been
committed by Republic Cement.
On July 11, 1994, Republic Cement filed a petition for certiorari with the Supreme Court seeking to
reverse the trial court's dismissal of their petition. The Court, in a resolution dated July 27, 1994,
referred the same to the Court of Appeals, where it was docketed as CA G.R. SP No. 34915. The
appellate court required petitioners to file a comment, which they did on September 7, 1994.
warrant of levy. Furthermore, Republic Cement and petitioners agreed to limit the issue for resolution by
the Court of Appeals to the question as to whether or not the provincial government could impose
and/or assess taxes on quarry resources extracted by Republic Cement from private lands pursuant to
Section 21 of Provincial Ordinance No. 3. This agreement and modus vivendi were embodied in a joint
manifestation and motion signed by Governor Roberto Pagdanganan, on behalf of the Province of
Bulacan, by Provincial Treasurer Florence Chavez, and by Provincial Legal Officer Manuel Siayngco, as
petitioners' counsel and filed with the Court of Appeals on December 13, 1994. In a resolution dated
December 29, 1994, the appellate court approved the same and limited the issue to be resolved to the
question of whether or not the provincial government could impose taxes on stones, sand, gravel, earth
and other quarry resources extracted from private lands.
After due trial, the Court of Appeals, on September 27, 1995, rendered the following judgment:
WHEREFORE, judgment is hereby rendered declaring the Province of Bulacan under
its Provincial Ordinance No. 3 entitled "An Ordinance Enacting The Revenue Code of
Bulacan Province" to be without legal authority to impose and assess taxes on quarry
resources extracted by RCC from private lands, hence the interpretation of
Respondent Treasurer of Chapter II, Article D, Section 21 of the Ordinance, and the
assessment made by the Province of Bulacan against RCC is null and void.
Petitioners' motion for reconsideration, as well as their supplemental motion for reconsideration, was
denied by the appellate court on August 26, 1996, hence this appeal.
Petitioners claim that the Court of Appeals erred in:
1. NOT HAVING OUTRIGHTLY DISMISSED THE SUBJECT
PETITION ON THE GROUND THAT THE SAME IS NOT THE
APPROPRIATE REMEDY FROM THE TRIAL COURT'S GRANT
OF THE PRIVATE RESPONDENTS' (HEREIN PETITIONER)
MOTION TO DISMISS;
2. NOT DISMISSING THE SUBJECT PETITION FOR BEING
VIOLATIVE OF CIRCULAR 2-90 ISSUED BY THE SUPREME
COURT;
3. NOT DISMISSING THE PETITION FOR REVIEW ON THE
GROUND THAT THE TRIAL COURT'S ORDER OF MAY 13, 1994
HAD LONG BECOME FINAL AND EXECUTORY;
In the interim, the Province of 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 on December 12, 1994, whereby Republic Cement agreed to pay
under protest P1,262,346.00, 50% of the tax assessed by petitioner, in exchange for the lifting of the
4. GOING BEYOND THE PARAMETERS OF ITS APPELLATE

JURISDICTION IN RENDERING THE SEPTEMBER 27, 1995
DECISION;
5. HOLDING THAT PRIVATE RESPONDENT (HEREIN
PETITIONER) ARE ESTOPPED FROM RAISING THE
PROCEDURAL
ISSUE
IN
THE
MOTION
FOR
RECONSIDERATION;
6. THE INTERPRETATION OF SECTION 134 OF THE LOCAL
GOVERNMENT CODE AS STATED IN THE SECOND TO THE
LAST PARAGRAPH OF PAGE 5 OF ITS SEPTEMBER 27, 1995
DECISION;
7. SUSTAINING THE ALLEGATIONS OF HEREIN RESPONDENT
WHICH UNJUSTLY DEPRIVED PETITIONER THE POWER TO
CREATE ITS OWN SOURCES OF REVENUE;
8. DECLARING THAT THE ASSESSMENT MADE BY THE
PROVINCE OF BULACAN AGAINST RCC AS NULL AND VOID
WHICH IN EFFECT IS A COLLATERAL ATTACK ON PROVINCIAL
ORDINANCE NO. 3; AND
9. FAILING TO CONSIDER THE REGALIAN DOCTRINE IN
FAVOR OF THE LOCAL GOVERNMENT.
The issues raised by petitioners are devoid of merit. The number and diversity of errors raised by
appellants impel us, however, to discuss the points raised seriatim.
In their first assignment of error, petitioners contend that instead of filing a petition for certiorari with the
Supreme Court, Republic Cement should have appealed from the order of the trial court dismissing their
petition. CitingMartinez vs. CA, 1 they allege that a motion to dismiss is a final order, the remedy against which is
not a petition forcertiorari, but an appeal, regardless of the questions sought to be raised on appeal, whether of fact
or of law, whether involving jurisdiction or grave abuse of discretion of the trial court.
Petitioners' argument is misleading. While it is true that the remedy against a final order is an appeal,
and not a petition for certiorari, the petition referred to is a petition for certiorari under Rule 65. As stated
in Martinez, the party aggrieved does not have the option to substitute the special civil action
of certiorari under Rule 65 for the remedy of appeal. The existence and availability of the right of appeal
are antithetical to the availment of the special civil action of certiorari.
Republic Cement did not, however, file a petition for certiorari under Rule 65, but an appeal
by certiorari under Rule 45. Even law students know that certiorari under Rule 45 is a mode of appeal,
an appeal from the Regional Trial Court being taken in either of two ways (a) by writ of error (involving
questions of fact and law) and (b) bycertiorari (limited only to issues of law), with an appeal
by certiorari being brought to the Supreme Court, there being no provision of law for taking appeals
by certiorari to the Court of Appeals. 2 It is thus clearly apparent that Republic Cement correctly contested the
trial court's order of dismissal by filing an appeal by certiorari under Rule 45. In fact, petitioners, in their second
assignment of error, admit that a petition for review on certiorari under Rule 45 is available to a party aggrieved by an
order granting a motion to dismiss. 3 They claim, however, that Republic Cement could not avail of the same
allegedly because the latter raised issues of fact, which is prohibited, Rule 45 providing that "(t)he petition shall raise
only questions of law which must be distinctly set forth." 4 In this respect, petitioners claim that Republic Cement's
petition should have been dismissed by the appellate court, Circular 2-90 providing:
4. Erroneous Appeals. An appeal taken to either the Supreme Court or the Court of
Appeals by the wrong or inappropriate mode shall be dismissed.
xxx xxx xxx
d) No transfer of appeals erroneously taken. No transfers of appeals erroneously
taken to the Supreme Court or to the Court of Appeals to whichever of these Tribunals
has appropriate appellate jurisdiction will be allowed; continued ignorance or wilful
disregard of the law on appeals will not be tolerated.
Petitioners even fault the Court for referring Republic Cement's petition to the Court of Appeals,
claiming that the same should have been dismissed pursuant to Circular 2-90. Petitioners conveniently
overlook the other provisions of Circular 2-90, specifically 4b) thereof, which provides:
b) Raising factual issues in appeal by certiorari. Although submission of issues of
fact in an appeal by certiorari taken to the Supreme Court from the regional trial court
is ordinarily proscribed, the Supreme Court nonetheless retains the option, in the
exercise of its sound discretion and considering the attendant circumstances, either
itself to take cognizance of and decide such issues or to refer them to the Court of
Appeals for determination.
As can be clearly adduced from the foregoing, when an appeal by certiorari under Rule 45 erroneously
raises factual issues, the Court has the option to refer the petition to the Court of Appeals. The exercise
by the Court of this option may not now be questioned by petitioners.
As the trial court's order was properly appealed by Republic Cement, the trial court's May 13, 1994
order never became final and executory, rendering petitioner's third assignment of error moot and
academic.
Petitioners' fourth and fifth assignment of errors are likewise without merit. Petitioners assert that the
Court of Appeals could only rule on the propriety of the trial court's dismissal of Republic Cement's
petition for declaratory relief, allegedly because that was the sole relief sought by the latter in its petition
for certiorari. Petitioners claim that the appellate court overstepped its jurisdiction when it declared null
and void the assessment made by the Province of Bulacan against Republic Cement.
Petitioners gloss over the fact that, during the proceedings before the Court of Appeals, they entered
into an agreement and modus vivendi whereby they limited the issue for resolution to the question as to
whether or not the provincial government could impose and/or assess taxes on stones, sand, gravel,
earth and other quarry resources extracted by Republic Cement from private lands. This agreement
and modus vivendi were approved by the appellate court on December 29, 1994. All throughout the
proceedings, petitioners never questioned the authority of the Court of Appeals to decide this issue, an
issue which it brought itself within the purview of the appellate court. Only when an adverse decision
was rendered by the Court of Appeals did petitioners question the jurisdiction of the former.
Petitioners are barred by the doctrine of estoppel from contesting the authority of the Court of Appeals
to decide the instant case, as this Court has consistently held that "(a) party cannot invoke the
jurisdiction of a court to secure affirmative relief against his opponent and after obtaining or failing to
obtain such relief, repudiate or question that same jurisdiction." 5 The Supreme Court frowns upon the
undesirable practice of a party submitting his case for decision and then accepting the judgment, only if favorable,
and attacking it for lack of jurisdiction when adverse. 6
In a desperate attempt to ward off defeat, petitioners now repudiate the above-mentioned agreement
and modus vivendi, claiming that the same was not binding on the Province of Bulacan, not having
been authorized by theSangguniang Panlalawigan of Bulacan. While it is true that the Provincial
Governor can enter into contract and obligate the province only upon authority of the sangguniang
panlalawigan, 7 the same is inapplicable to the case at bar. The agreement and modus vivendi may have been
signed by petitioner Roberto Pagdanganan, as Governor of the Province of Bulacan, without authorization from
the sangguniang panlalawigan, but it was also signed by Manuel Siayngco, the Provincial Legal Officer, in his
capacity as such, and as counsel of petitioners.
It is a well-settled rule that all proceedings in court to enforce a remedy, to bring a claim, demand, cause
of action or subject matter of a suit to hearing, trial, determination, judgment and execution are within
the exclusive control of the attorney. 8 With respect to such matters of ordinary judicial procedure, the attorney
needs no special authority to bind his client. 9 Such questions as what action or pleading to file, where and when to
file it, what are its formal requirements, what should be the theory of the case, what defenses to raise, how may the
claim or defense be proved, when to rest the case, as well as those affecting the competency of a witness, the
sufficiency, relevancy, materiality or immateriality of certain evidence and the burden of proof are within the authority
of the attorney to decide. 10 Whatever decision an attorney makes on any of these procedural questions, even if it
adversely affects a client's case, will generally bind a client. The agreement and modus vivendi signed by petitioners'
counsel is binding upon petitioners, even if theSanggunian had not authorized the same, limitation of issues being a
procedural question falling within the exclusive authority of the attorney to decide.
In any case, the remaining issues raised by petitioner are likewise devoid of merit, a province having no
authority to impose taxes on stones, sand, gravel, earth and other quarry resources extracted from
private lands. The pertinent provisions of the Local Government Code are as follows:
Sec. 134. Scope of Taxing Powers. Except as otherwise provided in this Code, the
province may levy only the taxes, fees, and charges as provided in this Article.
Sec. 158. Tax on Sand, Gravel and Other Quarry Resources. The province may
levy and collect not more than ten percent (10%) of fair market value in the locality
per cubic meter of ordinary stones, sand, gravel, earth, and other quarry resources,
as defined under the National Internal Revenue Code, as amended, extracted
from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other
public waters within its territorial jurisdiction.
xxx xxx xxx (Emphasis supplied)
The appellate court, 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 provided in Article One, Chapter 2, Title
One of Book II of the Local Government Code. 11 On the other hand, petitioners claim that Sections 129 12 and
186 13 of the Local Government Code authorizes the province to impose taxes other than those specifically
enumerated under the Local Government Code.
The Court of Appeals erred in ruling that a province can impose only the taxes specifically mentioned
under the Local Government Code. 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. 14The Local Government Code provides:
Sec. 133. Common Limitations on the Taxing Powers of Local Government Units.
Unless otherwise provided herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to the levy of the following:
xxx xxx xxx
(h) Excise taxes on articles enumerated under the National Internal Revenue Code,
as amended, and taxes, fees or charges on petroleum products;
xxx xxx xxx
because of the limitation provided by Section 133 of the Code in relation to Section 151 of the National
Internal Revenue Code.
A province may not, therefore, levy excise taxes on articles already taxed by the National Internal
Revenue Code. Unfortunately for petitioners, the National Internal Revenue Code provides:
Sec. 151. Mineral Products.
Given the above disquisition, petitioners cannot claim that the appellate court unjustly deprived them of
the power to create their sources of revenue, their assessment of taxes against Republic Cement
being ultra vires, traversing as it does the limitations set by the Local Government Code.
(A) Rates of Tax. There shall be levied, assessed and collected on minerals,
mineral products and quarry resources, excise tax as follows:
Petitioners likewise aver that the appellate court' s declaration of nullity of its assessment against
Republic Cement is a collateral attack on Provincial Ordinance No. 3, which is prohibited by public
policy. 15 Contrary to petitioners' claim, the legality of the ordinance was never questioned by the Court of Appeals.
xxx xxx xxx
Rather, what the appellate court questioned was petitioners' assessment of taxes on Republic Cement on the basis
of Provincial Ordinance No. 3, not the ordinance itself.
(2) On all nonmetallic minerals and quarry resources, a tax of two

percent (2%) based on the actual market value of the gross output
thereof at the time of removal, in case of those locally extracted or
produced; or the values used by the Bureau of Customs in
determining tariff and customs duties, net of excise tax and valueadded tax, in the case of importation.
xxx xxx xxx
(B) [Definition of Terms]. for purposes of this Section, the termxxx xxx xxx
Furthermore, Section 21 of Provincial Ordinance No. 3 is practically only a reproduction of Section 138
of the Local Government Code. A cursory reading of both would show that both refer to ordinary sand,
stone, gravel, earth and other quarry resources extracted from public lands. Even if we disregard the
limitation set by Section 133 of the Local Government Code, petitioners may not, impose taxes on
stones, sand, gravel, earth and other quarry resources extracted from private lands on the basis of
Section 21 of Provincial Ordinance No. 3 as the latter clearly applies only to quarry resources extracted
from public lands. Petitioners may not invoke the Regalian doctrine to extend the coverage of their
ordinance to quarry resources extracted from private lands, for taxes, being burdens, are not to be
presumed beyond what the applicable statute expressly and clearly declares, tax statutes being
construed strictissimi juris against the government. 16
WHEREFORE, premises considered, the instant petition is DISMISSED for lack of merit and the
decision of the Court of Appeals is hereby AFFIRMED in toto. Costs against petitioner.
(4) Quarry resources shall mean any common stone or other

common mineral substances as the Director of the Bureau of Mines
and Geo-Sciences may declare to be quarry resources such as, but
not restricted to, marl, marble, granite, volcanic cinders, basalt, tuff
and rock phosphate; Provided, That they contain no metal or
metals or other valuable minerals in economically workable
quantities.
It is clearly apparent from the above provision that the National Internal Revenue Code levies a tax
on all quarry resources, regardless of origin, whether extracted from public or private land. Thus, a
province may not ordinarily impose taxes on stones, sand, gravel, earth and other quarry resources, as
the same are already taxed under the National Internal Revenue Code. The province can, however,
impose a tax on stones, sand, gravel, earth and other quarry resources extracted from public land
because it is expressly empowered to do so under the Local Government Code. As to stones, sand,
gravel, earth and other quarry resources extracted from private land, however, it may not do so,
SO ORDERED.
Narvasa, C.J., Kapunan, Purisima and Pardo, JJ., concur.
Footnotes
12 Sec. 129. Power to Create Sources of Revenue. Each local government unit shall exercise its
power to create its own sources of revenue and to levy taxes, fees, and charges subject to the
provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges
shall accrue exclusively to the local government units.
13 Sec. 186. Power To Levy Other Taxes, Fees or Charges Local government units may exercise the
power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated
herein or taxed under the provisions of the National Internal Revenue Code, as amended, or other
applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive,
confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such
taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose.
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 of this municipality in the following schedule:
a) Vehicles and Equipment: rate of fee
G.R. No. 152492

October 16, 2003
PALMA
DEVELOPMENT
vs.
MUNICIPALITY OF MALANGAS, ZAMBOANGA DEL SUR, respondent.
DECISION
PANGANIBAN, J.:
1. Automatic per unit P10.00

CORPORATION, petitioner,
2. Ford Fiera P10.00

3. Trucks P10.00
xxxxxxxxx
In accordance with the Local Government Code of 1991, a municipal ordinance imposing fees on goods
that pass through the issuing municipalitys territory is null and void.
b) Other Goods, Construction Material products:
The Case
1. Bamboo craft P20.00
The Petition for Review1 before us assails the August 31, 2001 Decision2 and the February 6, 2002
Resolution3of the Court of Appeals (CA) in CA-GR CV No. 56477. The dispositive portion of the
challenged Decision reads as follows:
2. Bangus/Kilo 0.30
"UPON THE VIEW WE TAKE OF THIS CASE, THUS, the assailed Decision is VACATED and SET
ASIDE, and this case is ordered REMANDED to the court a quo for the reception of evidence of the
parties on the matter or point delineated in the final sentence above-stated."4
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The facts are undisputed. Petitioner Palma Development Corporation 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. The port, as well as the surrounding roads leading to it, belong
to and are maintained by the Municipality of Malangas, Zamboanga del Sur.
On January 16, 1994, the municipality passed Municipal Revenue Code No. 09, Series of 1993, which
was subsequently approved by the Sangguniang Panlalawigan of Zamboanga del Sur in Resolution No.
1330 dated August 4, 1994. Section 5G.01 of the ordinance 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
xxxxxxxxx
41. Rice and corn grits/sack 0.50"5
Accordingly, the service fees imposed by Section 5G.01 of the ordinance was paid by petitioner under
protest. It contended that under Republic Act No. 7160, otherwise known as the Local Government
Code of 1991, municipal governments did not have the authority to tax goods and vehicles that passed
through their jurisdictions. Thereafter, before the Regional Trial Court (RTC) of Pagadian City, petitioner
filed against the Municipality of Malangas on November 20, 1995, an action for declaratory relief
assailing the validity of Section 5G.01 of the municipal ordinance.
On the premise that the case involved the validity of a municipal ordinance, the RTC directed
respondent to secure the opinion of the Office of the Solicitor General. The trial court likewise ordered
that the opinions of the Departments of Finance and of Justice be sought. As these opinions were still
unavailable as of October 17, 1996, petitioners counsel filed, without objection from respondent, a
Manifestation seeking the submission of the case for the RTCs decision on a pure question of law.
In due time, the trial court rendered its November 13, 1996 Decision declaring the entire Municipal
Revenue Code No. 09 as ultra vires and, hence, null and void.
Ruling of the Court of Appeals
The CA held that local government units already had revenue-raising powers as provided for under
Sections 153 and 155 of RA No. 7160. It ruled as well that within the purview of these provisions -- and
therefore valid -- is Section 5G.01, which provides for a "service fee for the use of the municipal road 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 of this municipality."
However, since both parties had submitted the case to the trial court for decision on a pure question of
law without a full-blown trial on the merits, the CA could not determine whether the facts of the case
were within the ambit of the aforecited sections of RA No. 7160. The appellate court ruled that petitioner
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. Thus, the CA held that the absence of such
evidence necessitated the remand of the case to the trial court.
Hence, this Petition.6
Issues
Petitioner raises the following issues for our consideration:
"1. Whether or not the Court of Appeals erred when it ordered that the extant case be
remanded to the lower court for reception of evidence.
"2. Whether or not the Court of Appeals erred when it ruled that a full blown trial on the merits
is necessary and that plaintiff-appellee, now petitioner, has to adduce evidence to substantiate
its thesis that the assailed municipal ordinance, in fact, imposes fees on the movement of
goods within the jurisdiction of the defendant and that this imposition is merely in the guise of a
toll fee for the use of municipal roads and service fee for police surveillance.
"3. Whether or not the Court of Appeals erred when it did not rule that the questioned
municipal ordinance is contrary to the provisions of R.A. No. 7160 or the Local Government
Code of the Philippines."7
In brief, the issues boil down to the following: 1) whether Section 5G.01 of Municipal Revenue Code No.
09 is valid; and 2) whether the remand of the case to the trial court is necessary.
The Courts Ruling
The Petition is meritorious.
First Issue:
Validity of the Imposed Fees
Petitioner argues that while respondent has the power to tax or impose fees on vehicles using its roads,
it cannot tax the goods that are transported by the vehicles. The provision of the ordinance imposing a
service fee for police surveillance on goods is allegedly contrary to Section 133(e) of RA No. 7160,
which reads:
"Section 133. Common Limitations on the Taxing Powers of Local Government Units. Unless
otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:
xxxxxxxxx
e) Taxes, fees and charges and other impositions upon goods carried into and out of, or passing
through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls
for bridges or otherwise, or other taxes, fees or charges in any form whatsoever upon such goods or
merchandise;"
On the other hand, respondent maintains that the subject fees are intended for services rendered, the
use of municipal roads and police surveillance. The fees are supposedly not covered by the prohibited
impositions under Section 133(e) of RA No. 7160. 8 It further contends that it was empowered by the
express mandate of Sections 153 and 155 of RA No. 7160 to enact Section 5G.01 of the ordinance. The
pertinent provisions of this statute read as follows:
"Section 153. Service Fees and Charges. -- Local government units may impose and collect such
reasonable fees and charges for services rendered.
xxxxxxxxx
"Section 155. Toll Fees or Charges. -- The sanggunian concerned may prescribe the terms and
conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier
or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local
government unit concerned: Provided, That no such toll fees or charges shall be collected from officers
and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police
on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are
sixty-five (65) years or older.
1a\^/phi1.net
"When public safety and welfare so requires, the sanggunian concerned may discontinue the collection
of the tolls, and thereafter the said facility shall be free and open for public use."
Respondent claims that there is no proof that the P0.50 fee for every sack of rice or corn is a fraudulent
legislation enacted to subvert the limitation imposed by Section 133(e) of RA No. 7160. Moreover, it
argues that allowing petitioner to use its roads without paying the P0.50 fee for every sack of rice or
corn would contravene the principle of unjust enrichment.
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."
Unpersuasive is the contention of respondent that petitioner would unjustly be enriched at the formers
expense. Though the rules thereon apply equally well to the government, 9 for unjust enrichment to be
deemed present, two conditions must generally concur: (a) a person is unjustly benefited, and (b) such
benefit is derived at anothers expense or damage.10
In the instant case, the benefits from the use of the municipal roads and the wharf were not unjustly
derived by petitioner. Those benefits resulted from the infrastructure that the municipality was mandated
by law to provide.11There is no unjust enrichment where the one receiving the benefit has a legal right or
entitlement thereto, or when there is no causal relation between ones enrichment and the others
impoverishment.12
Second Issue:
Remand of the Case
Petitioner asserts that the remand of the case to the trial court for further reception of evidence is
unnecessary, because the facts are undisputed by both parties. It has already been clearly established,
without need for further evidence, that petitioner transports rice and corn on board trucks that pass
through the municipal roads leading to the wharf. Under protest, it paid the service fees, a fact that
respondent has readily admitted without qualification.
Respondent, on the other hand, is silent on the issue of the remand of the case to the trial court. The
former merely defends the validity of the ordinance, arguing neither for nor against the remand.
We rule against the remand. Not only is it frowned upon by the Rules of Court; 13 it is also unnecessary
on the basis of the facts established by the admissions of the parties. Besides, the fact sought to be
established with the reception of additional evidence is irrelevant to the due settlement of the case.
The pertinent portion of the assailed CA Decision reads:
"To be stressed is the fact that local government units now have the following common revenue raising
powers under the Local Government Code:
Section 153. Service Fees and Charges. -- Local government units may impose and collect such
reasonable fees and charges for services rendered.
xxxxxxxxx
Section 155. Toll Fees or Charges. -- The Sanggunian concerned may prescribe the terms and
conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier
or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local
government unit concerned: Provided, That no such toll fees or charges shall be collected from officers
and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police
on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are
sixty-five (65) years or older.
When public safety and welfare so requires, the Sanggunian concerned may discontinue the collection
of the tolls, and thereafter the said facility shall be free and open for public use. x x x
"As we see it, the disputed municipal ordinance, which provides for a service fee for the use of the
municipal road 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 of this municipality, seems to fall
within the compass of the above cited provisions of R.A. No. 7160. As elsewhere indicated, the parties
in this case, nonetheless, chose to submit the issue to the Trial Court on a pure question of law,
without a full-blown trial on the merits: consequently, we are not prepared to say, at this juncture, that
the facts of the case inevitably call for the application, and/or that these make out a clear-cut case within
the ambit and purview, of the aforecited section. The plaintiff, thus, has to adduce evidence to
substantiate its thesis that the assailed municipal ordinance, in fact, imposes fees on the movement of
goods within the jurisdiction of the defendant, and that this imposition is merely in the guise of a toll fee
for the use of municipal roads and service fee for police surveillance. Competent evidence upon this
score must, thus, be presented."14
We note that Section 5G.01 imposes two types of service fees: 1) one for the use of the municipal roads
and 2) another for police surveillance on all goods and equipment sheltered in the premises of the
wharf. The amount of service fees, however, is based on the type of vehicle that passes through the
road and the type of goods being transported.
1a\^/phi1.net
While both parties admit that the service fees imposed are for the use of the municipal roads, petitioner
maintains that the service fee for police surveillance on goods harbored on the wharf is in the guise of a
wharfage,15 a prohibited imposition under Section 133(e) of RA No. 7160.
Thus, the CA held that the case should be remanded to the trial court in order to resolve this factual
dispute. The appellate court noted that under Section 155 of RA No. 7160, municipalities apparently
now have the power to impose fees for the use of municipal roads.
Nevertheless, 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.
Furthermore, neither party disputes any of the other material facts of the case. From their respective
Briefs before the CA and their Memoranda before this Court, they do not dispute the fact that petitioner,
from its principal place of business, transports rice and corn on board trucks bound for respondents
wharf. The trucks traverse the municipal roads en route to the wharf, where the sacks of rice and corn
are manually loaded into marine vessels bound for Zamboanga City. Likewise undisputed is the fact that
respondent imposed and collected fees under the ordinance from petitioner. The former admits that it
has been collecting, in addition to the fees on vehicles, P0.50 for every sack of rice or corn that the
latter has been shipping through the wharf.16
The foregoing allegations are formal judicial admissions that are conclusive upon the parties making
them. They require no further proof in accordance with Section 4 of Rule 129 of the Rules of Court,
which reads:
"SEC. 4. Judicial admissions. An admission, verbal or written, made by a party in the course of the
proceedings in the same case, does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such admission was made."
Judicial admissions made by parties in the pleadings, in the course of the trial, or in other proceedings
in the same case are conclusive. No further evidence is required to prove them. Moreover, they cannot
be contradicted unless it is shown that they have been made through palpable mistake, or that they
have not been made at all.17
WHEREFORE, the Petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals
are hereby SET ASIDE. The imposition of a service fee for police surveillance on all goods harbored or
sheltered in the premises of the municipal port of Malangas under Sec. 5G.01 of the Malangas
Municipal Revenue Code No. 09, series of 1993, is declared NULL AND VOID for being violative of
Republic Act No. 7160.
SO ORDERED.
G.R. No. 152675

April 28, 2004
BATANGAS
POWER
vs.
BATANGAS CITY and NATIONAL POWER CORPORATION, respondents.
x--------------------x
G.R. No. 152771 April 28, 2004
NATIONAL
POWER
vs.
HON. RICARDO R. ROSARIO, in his capacity as Presiding Judge, RTC, Br. 66, Makati City;
BATANGAS CITY GOVERNMENT; ATTY. TEODULFO DEGUITO, in his capacity as Chief Legal
Officer, Batangas City; and BENJAMIN PARGAS, in his capacity as City Treasurer, Batangas
City, respondents.
DECISION
PUNO, J.:
Before us are two (2) consolidated petitions for review under Rule 45 of the Rules of Civil Procedure,
seeking to set aside the rulings of the Regional Trial Court of Makati in its February 27, 2002 Decision in
Civil Case No. 00-205.
The facts show that in the early 1990s, the country suffered from a crippling power crisis. Power
outages lasted 8-12 hours daily and power generation was badly needed. Addressing the problem, the
government, through the National Power Corporation (NPC), sought to attract investors in power plant
operations by providing them with incentives, one of which was through the NPCs assumption of
payment of their taxes in the Build Operate and Transfer (BOT) Agreement.
On June 29, 1992, Enron Power Development Corporation (Enron) and petitioner NPC entered into a
Fast Track BOT Project. Enron agreed to supply a power station to NPC and transfer its plant to the
latter after ten (10) years of operation. Section 11.02 of the BOT Agreement provided that NPC shall be
responsible for the payment of all taxes that may be imposed on the power station, except income taxes
and permit fees. Subsequently, Enron assigned its obligation under the BOT Agreement to petitioner
Batangas Power Corporation (BPC).
On September 13, 1992, BPC registered itself with the Board of Investments (BOI) as a pioneer
enterprise. On September 23, 1992, the BOI issued a certificate of registration 1 to BPC as a pioneer
enterprise entitled to a tax holiday for a period of six (6) years. The construction of the power station in
respondent Batangas City was then completed. BPC operated the station.
On October 12, 1998, Batangas City (the city, for brevity), thru its legal officer Teodulfo A. Deguito, sent
a letter to BPC demanding payment of business taxes and penalties, commencing from the year 1994
as provided under Ordinance XI or the 1992 Batangas City Tax Code.2 BPC refused to pay, citing its taxexempt status as a pioneer enterprise for six (6) years under Section 133 (g) of the Local Government
Code (LGC).3
On February 27, 2002, the Makati RTC dismissed the petition for injunction. It held that: (1) BPC is
liable to pay business taxes to the city; (2) NPCs tax exemption was withdrawn with the passage of
R.A. No. 7160 (The Local Government Code); and, (3) the 6-year tax holiday granted to pioneer
business enterprises starts on the date of registration with the BOI as provided in Section 133 (g) of
R.A. No. 7160, and not on the date of its actual business operations.15
On April 15, 1999, city treasurer Benjamin S. Pargas modified the citys tax claim 4 and demanded
payment of business taxes from BPC only for the years 1998-1999. He acknowledged that BPC
enjoyed a 6-year tax holiday as a pioneer industry but its tax exemption period expired on September
22, 1998, six (6) years after its registration with the BOI on September 23, 1992. The city treasurer held
that thereafter BPC became liable to pay its business taxes.
BPC and NPC filed with this Court a petition for review on certiorari16 assailing the Makati RTC decision.
The petitions were consolidated as they impugn the same decision, involve the same parties and raise
related issues.17
BPC still refused to pay the tax. It insisted that its 6-year tax holiday commenced from the date of its
commercial operation on July 16, 1993, not from the date of its BOI registration in September 1992. 5 It
furnished the city with a BOI letter 6 wherein BOI designated July 16, 1993 as the start of BPCs income
tax holiday as BPC was not able to immediately operate due to force majeure. BPC claimed that the
local tax holiday is concurrent with the income tax holiday. In the alternative, BPC asserted that the city
should collect the tax from the NPC as the latter assumed responsibility for its payment under their BOT
Agreement.
The matter was not put to rest. The city legal officer insisted 7 that BPCs tax holiday has already expired,
while the city argued that it directed its tax claim to BPC as it is the entity doing business in the city and
hence liable to pay the taxes. The city alleged that it was not privy to NPCs assumption of BPCs tax
payment under their BOT Agreement as the only parties thereto were NPC and BPC.
BPC adamantly refused to pay the tax claims and reiterated its position. The city was likewise
unyielding on its stand.9 On August 26, 1999, the NPC intervened. 10 While admitting assumption of
BPCs tax obligations under their BOT Agreement, NPC refused to pay BPCs business tax as it
allegedly constituted an indirect tax on NPC which is a tax-exempt corporation under its Charter.11
In G.R. No. 152771, the NPC contends:
RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR

EXCESS OF JURISDICTION WHEN IT ARBITRARILY AND CAPRICIOUSLY RULED THAT
PETITIONER NPC HAS LOST ITS TAX EXEMPTION PRIVILEGE BECAUSE SECTION 193 OF R.A.
7160 (LOCAL GOVERNMENT CODE) HAS WITHDRAWN SUCH PRIVILEGE DESPITE THE
SETTLED JURISPRUDENCE THAT THE ENACTMENT OF A LEGISLATION, WHICH IS A GENERAL
LAW, CANNOT REPEAL A SPECIAL LAW AND THAT SECTION 13 OF R.A. 6395 (NPC LAW) WAS
NOT SPECIFICALLY MENTIONED IN THE REPEALING CLAUSE IN SECTION 534 OF R.A. 7160,
AMONG OTHERS.
II
In view of the deadlock, BPC filed a petition for declaratory relief 12 with the Makati Regional Trial Court
(RTC) against Batangas City and NPC, praying for a ruling that it was not bound to pay the business
taxes imposed on it by the city. It alleged that under the BOT Agreement, NPC is responsible for the
payment of such taxes but as NPC is exempt from taxes, both the BPC and NPC are not liable for its
payment. NPC and Batangas City filed their respective answers.
On February 23, 2000, while the case was still pending, the city refused to issue a permit to BPC for the
operation of its business unless it paid the assessed business taxes amounting to close to P29M.
In view of this supervening event, BPC, whose principal office is in Makati City, filed a supplemental
petition13 with the Makati RTC to convert its original petition into an action for injunction to enjoin the city
from withholding the issuance of its business permit and closing its power plant. The city opposed on
the grounds of lack of jurisdiction and lack of cause of action. 14 The Supplemental Petition was
nonetheless admitted by the Makati RTC.

EXCESS OF JURISDICTION WHEN IT ARBITRARILY AND CAPRICIOUSLY OMITTED THE CLEAR
PROVISION OF SECTION 133, PARAGRAPH (O) OF R.A. 7160 WHICH EXEMPTS "NATIONAL
GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES" FROM THE IMPOSITION OF "TAXES,
FEES OR CHARGES OF ANY KIND."
III
EXCESS OF JURISDICTION WHEN IT ERRONEOUSLY AND CAPRICIOUSLY ADMITTED BPCs
SUPPLEMENTAL PETITION FOR INJUNCTION NOTWITHSTANDING THAT IT HAD NO
JURISDICTION OVER THE PARTY (CITY GOVERNMENT OF BATANGAS) SOUGHT TO BE
ENJOINED.
In G.R. No. 152675, BPC also contends that the trial court erred: 1) in holding it liable for payment of
business taxes even if it is undisputed that NPC has already assumed payment thereof; and, 2) in ruling
that BPCs 6-year tax holiday commenced on the date of its registration with the BOI as a pioneer
enterprise.
The issues for resolution are:
1. whether BPCs 6-year tax holiday commenced on the date of its BOI registration as a
pioneer enterprise or on the date of its actual commercial operation as certified by the BOI;
statutes granting exemptions from local taxes, withdrew the sweeping tax privileges previously
enjoyed by the NPC under its Charter. We explained the rationale for this provision, thus:
2. whether the trial court had jurisdiction over the petition for injunction against Batangas City;
and,
In recent years, the increasing social challenges of the times expanded the scope of state
activity, and taxation has become a tool to realize social justice and the equitable distribution of
wealth, economic progress and the protection of local industries as well as public welfare and
similar objectives. Taxation assumes even greater significance with the ratification of the 1987
Constitution. Thenceforth, the power to tax is no longer vested exclusively on Congress; local
legislative bodies are now given direct authority to levy taxes, fees and other charges pursuant
to Article X, section 5 of the 1987 Constitution, viz:
3. whether NPCs tax exemption privileges under its Charter were withdrawn by Section 193 of
the Local Government Code (LGC).
We find no merit in the petition.
On the first issue, petitioners BPC and NPC contend that contrary to the impugned decision, BPCs 6year tax holiday should commence on the date of its actual commercial operations as certified to by the
BOI, not on the date of its BOI registration.
We disagree. Sec. 133 (g) of the LGC, which proscribes local government units (LGUs) from levying
taxes on BOI-certified pioneer enterprises for a period of six years from the date of registration,
applies specifically to taxes imposed by the local government, like the business tax imposed by
Batangas City on BPC in the case at bar. Reliance of BPC on the provision of Executive Order No.
226,18 specifically Section 1, Article 39, Title III, is clearly misplaced as the six-year tax holiday
provided therein which commences from the date of commercial operation refers to income
taxes imposed by the national government on BOI-registered pioneer firms. Clearly, it is the
provision of the Local Government Code that should apply to the tax claim of Batangas City against the
BPC. The 6-year tax exemption of BPC should thus commence from the date of BPCs registration with
the BOI on July 16, 1993 and end on July 15, 1999.
Anent the second issue, the records disclose that petitioner NPC did not oppose BPCs conversion of
the petition for declaratory relief to a petition for injunction or raise the issue of the alleged lack of
jurisdiction of the Makati RTC over the petition for injunction before said court. Hence, NPC is estopped
from raising said issue before us. The fundamental rule is that a party cannot be allowed to participate
in a judicial proceeding, submit the case for decision, accept the judgment only if it is favorable to him
but attack the jurisdiction of the court when it is adverse.19
Finally, on the third issue, petitioners insist that NPCs exemption from all taxes under its Charter had
not been repealed by the LGC. They argue that NPCs Charter is a special law which cannot be
impliedly repealed by a general and later legislation like the LGC. They likewise anchor their claim of
tax-exemption on Section 133 (o) of the LGC which exempts government instrumentalities, such as the
NPC, from taxes imposed by local government units (LGUs), citing in support thereof the case of Basco
v. PAGCOR.20
We find no merit in these contentions. The effect of the LGC on the tax exemption privileges of the NPC
has already been extensively discussed and settled in the recent case of National Power Corporation
v. City of Cabanatuan.21 In said case, this Court recognized the removal of the blanket exclusion of
government instrumentalities from local taxation as one of the most significant provisions of the
1991 LGC.Specifically, we stressed that Section 193 of the LGC,22 an express and general repeal of all
Section 5.- Each Local Government unit shall have the power to create its own
sources of revenue, to levy taxes, fees and charges subject to such guidelines and
limitations as the Congress may provide, consistent with the basic policy of local
autonomy. Such taxes, fees and charges shall accrue exclusively to the Local
Governments.
This paradigm shift results from the realization that genuine development can be achieved only
by strengthening local autonomy and promoting decentralization of governance. For a long
time, the countrys highly centralized government structure has bred a culture of dependence
among local government leaders upon the national leadership. It has also "dampened the spirit
of initiative, innovation and imaginative resilience in matters of local development on the part of
local government leaders. The only way to shatter this culture of dependence is to give the
LGUs a wider role in the delivery of basic services, and confer them sufficient powers to
generate their own sources for the purpose. To achieve this goal, x x x the 1987 Constitution
mandates Congress to enact a local government code that will, consistent with the basic policy
of local autonomy, set the guidelines and limitations to this grant of taxing powers x x x."
To recall, prior to the enactment of the x x x Local Government Code x x x, various measures have been
enacted to promote local autonomy. x x x Despite these initiatives, however, the shackles of
dependence on the national government remained. Local government units were faced with the same
problems that hamper their capabilities to participate effectively in the national development efforts,
among which are: (a) inadequate tax base, (b) lack of fiscal control over external sources of income, (c)
limited authority to prioritize and approve development projects, (d) heavy dependence on external
sources of income, and (e) limited supervisory control over personnel of national line agencies.
Considered as the most revolutionary piece of legislation on local autonomy, the LGC effectively deals
with the fiscal constraints faced by LGUs. It widens the tax base of LGUs to include taxes which were
prohibited by previous laws x x x.
Neither can the NPC successfully rely on the Basco case23 as this was decided prior to the effectivity of
the LGC, when there was still no law empowering local government units to tax instrumentalities of the
national government.
Consequently, when NPC assumed the tax liabilities of the BPC under their 1992 BOT Agreement, the
LGC which removed NPCs tax exemption privileges had already been in effect for six (6) months. Thus,
while BPC remains to be the entity doing business in said city, it is the NPC that is ultimately liable to
pay said taxes under the provisions of both the 1992 BOT Agreement and the 1991 Local Government
Code.
IN VIEW WHEREOF, the petitions are DISMISSED. No costs.
SO ORDERED.
Quisumbing, Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.
Footnotes
"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."
Section 534, the repealing clause of the LGC, also states that all general and special laws,
acts, city charters, decrees, executive orders, proclamations and administrative regulations or
parts thereof inconsistent with the provisions of this Code are repealed or modified accordingly.
G.R. No. 158881

April 16, 2008
PETRON
vs.
MAYOR TOBIAS M. TIANGCO, and MUNICIPAL TREASURER MANUEL T. ENRIQUEZ of the
MUNICIPALITY OF NAVOTAS, METRO MANILA, respondents.
DECISION
TINGA, J.:
The novel but important issue before us is 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.
I.
The present Petition for Review on Certiorari under Rule 45 filed by petitioner Petron Corporation
(Petron) directly assails the Decision of the Regional Trial Court (RTC) of Malabon, Branch 74, which
dismissed petitioners 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. As the issues raised are pure questions of law, we need not dwell on the
facts at length.
Petron maintains a depot or bulk plant at the Navotas Fishport Complex in Navotas. Through that depot,
it has engaged in the selling of diesel fuels to vessels used in commercial fishing in and around Manila
Bay.1 On 1 March 2002, Petron received a letter from the office of Navotas Mayor, respondent Toby
Tiangco, wherein the corporation was assessed taxes "relative to the figures covering sale of diesel
declared by your Navotas Terminal from 1997 to 2001."2 The stated total amount due
was P6,259,087.62, a figure derived from the gross sales of the depot during the years in question. The
computation sheets3 that were attached to the letter made reference to Ordinance 92-03, or the New
Navotas Revenue Code (Navotas Revenue Code), though such enactment was not cited in the letter
itself.
Petron duly filed with Navotas a letter-protest to the notice of assessment pursuant to Section 195 of the
Code. It argued that it was exempt from local business taxes in view of Art. 232(h) of the Implementing
Rules (IRR) of the Code, as well as a ruling of the Bureau of Local Government Finance of the
Department of Finance dated 31 July 1995, the latter stating that sales of petroleum fuels are not
subject to local taxation. The letter-protest was denied by the Navotas Municipal Treasurer, respondent
Manuel T. Enriquez, in a letter dated 8 May 2002. 4 This was followed by a letter from the Mayor dated
15 May 2002, captioned "Final Demand to Pay," requiring that Petron pay the assessed amount within
five (5) days from receipt thereof, with a threat of closure of Petrons operations within Navotas should
there be no payment.5 Petron, through counsel, replied to the Mayor by another letter posing objections
to the threat of closure. The Mayor did not respond to this last letter.6
Thus, on 20 May 2002, Petron filed with the Malabon RTC a Complaint for Cancellation of Assessment
for Deficiency Taxes with Prayer for the Issuance of a Temporary Restraining Order (TRO) and/or
Preliminary Injunction. The quested TRO was not issued by the Malabon RTC upon manifestation of
respondents that they would not proceed with the closure of Petrons Navotas bulk plant until after the
RTC shall have decided the case on the merits. 7 However, while the case was pending decision,
respondents refused to issue a business permit to Petron, thus prompting Petron to file a Supplemental
Complaint with Prayer for Preliminary Mandatory Injunction against respondents.8
On 5 May 2003, the Malabon RTC rendered its Decision dismissing Petrons complaint and ordering the
payment of the assessed amount.9 Eleven days later, Petron received a Closure Order from the Mayor,
directing Petron to cease and desist from operating the bulk plant. Petron sought a TRO from the
Malabon RTC, but this was denied.10 Petron also filed a motion for reconsideration of the order of denial,
but this was likewise denied.11
On 4 August 2003, this Court issued a TRO, enjoining the respondents from closing Petrons Navotas
bulk plant or otherwise interfering in its operations.12
"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.
II.
As earlier stated, Petron has opted to assail the RTC Decision directly before this Court since the matter
at hand involves pure questions of law, a characterization conceded by the RTC Decision itself.
Particularly, 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;
Evidently, Section 133 prescribes the limitations on the capacity of local government units to exercise
their taxing powers otherwise granted to them under the LGC. Apparently, paragraph (h) of the Section
mentions two kinds of taxes which cannot be imposed by local government units, namely: "excise taxes
on articles enumerated under the National Internal Revenue Code [(NIRC)], as amended;" and "taxes,
fees or charges on petroleum products."
The power of a municipality to impose business taxes is provided for in Section 143 of the LGC. Under
the provision, a municipality is authorized to impose business taxes on a whole host of business
activities. Suffice it to say, unless there is another provision of law which states otherwise, Section 143,
broad in scope as it is, would undoubtedly cover the business of selling diesel fuels, or any other
petroleum product for that matter.
Nonetheless, 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:
Notably, the 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. 13 This
submission warrants close examination as well.
With all the relevant provisions of law laid out, we address the core issues submitted by Petron, namely:
first, is the challenged tax on sale of the diesel fuels an excise tax on an article enumerated under the
NIRC, thusly prohibited under Section 133(h) of the Code?; second, is the challenged tax prohibited by
Section 133(h) under the proviso, "taxes, fees or charges on petroleum products"? and; third, does Art.
232(h) of the IRR similarly prohibit the imposition of the challenged tax?
III.
As earlier observed, Section 133(h) provides two kinds of taxes which cannot be imposed by local
government units: "excise taxes on articles enumerated" under the NIRC, as amended; and "taxes, fees
or charges on petroleum products." There is no doubt that among the excise taxes on articles
enumerated under the NIRC are those levied on petroleum products, per Section 148 of the NIRC.
We first consider Petrons argument that the "business taxes" on its sale of diesel fuels partakes of an
excise tax, which if true, could invalidate the challenged tax solely on the basis of the phrase "excise
taxes on articles enumerated under the [NIRC]." To support this argument, it cites Cordero v.
Conda,14 Allied Thread Co. Inc. v. City Mayor of Manila,15 and Iloilo Bottlers, Inc. v. City of Iloilo,16 as
having explained that "an excise tax is a tax upon the performance, carrying on, or the exercise of an
activity."17 Respondents, on the other hand, argue that what the provision prohibits is the imposition of
excise taxes on petroleum products, but not the imposition of business taxes on the same. They
cite Philippine Petroleum Corporation v. Municipality of Pililia,18 where the Court had noted, "[a] tax on
business is distinct from a tax on the article itself."19
Petrons argument is fraught with far-reaching implications, for if it were sustained, it would mean that
local government units are barred from imposing business taxes on any of the articles subject to excise
taxes under the NIRC. These would include alcohol products,20 tobacco products,21 mineral
products22 automobiles,23 and such non-essential goods as jewelry, goods made of precious metals,
perfumes, and yachts and other vessels intended for pleasure or sports.24
Admittedly, the proffered definition of an excise tax as "a tax upon the performance, carrying on, or
exercise of some right, privilege, activity, calling or occupation" derives from the compendium American
Jurisprudence, popularly referred to as Am Jur,,25 and has been cited in previous decisions of this Court,
including those cited by Petron itself. Such a definition would not have been inconsistent with previous
incarnations of our Tax Code, such as the NIRC of 1939, 26 as amended, or the NIRC of 1977 27 because
in those laws the term "excise tax" was not used at all. In contrast, the nomenclature used in those prior
laws in referring to taxes imposed on specific articles was "specific tax." 28 Yet beginning with the
National Internal Revenue Code of 1986, as amended, the term "excise taxes" was used and defined as
applicable "to goods manufactured or produced in the Philippines and to things imported." 29 This
definition was carried over into the present NIRC of 1997. 30 Further, these two latest codes categorize
two different kinds of excise taxes: "specific tax" which is imposed and based on weight or volume
capacity or any other physical unit of measurement; and "ad valorem tax" which is imposed and based
on the selling price or other specified value of the goods. In other words, the meaning of "excise tax"
has undergone a transformation, morphing from the Am Jur definition to its current signification which is
a tax on certain specified goods or articles.
The change in perspective brought forth by the use of the term "excise tax" in a different connotation
was not lost on the departed author Jose Nolledo as he accorded divergent treatments in his 1973 and
1994 commentaries on our tax laws. Writing in 1973, and essentially alluding to the Am Jur definition of
"excise tax," Nolledo observed:
Are specific taxes, taxes on property or excise taxes
In the case of Meralco v. Trinidad ([G.R.] 16738, 1925) it was held that specific taxes
are property taxes, a ruling which seems to be erroneous. Specific taxes are truly
excise taxes for the fact that the value of the property taxed is taken into account will
not change the nature of the tax. It is correct to say that specific taxes are taxes on
the privilege to import, manufacture and remove from storage certain articles
specified by law.31
In contrast, after the tax code was amended to classify specific taxes as a subset of excise taxes,
Nolledo, in his 1994 commentaries, wrote:
1. Excise taxes, as used in the Tax Code, refers to taxes applicable to certain specified goods
or articles manufactured or produced in the Philippines for domestic sale or consumption or for
any other disposition and to things imported into the Philippines. They are either specific or ad
valorem.
2. Nature of excise taxes. They are imposed directly on certain specified goods. (infra) They
are, therefore, taxes on property. (see Medina vs. City of Baguio, 91 Phil. 854.)
A tax is not excise where it does not subject directly the produce or goods to tax but indirectly
as an incident to, or in connection with, the business to be taxed.32
In their 2004 commentaries, De Leon and De Leon restate the Am Jur definition of excise tax, and
observe that the term is "synonymous with privilege tax and [both terms] are often used
interchangeably."33 At the same time, they offer a caveat that "[e]xcise tax, as [defined by Am Jur], is not
to be confused with excise tax imposed [by the NIRC] on certain specified articles manufactured or
produced in, or imported into, the Philippines, for domestic sale or consumption or for any other
disposition."34
It is evident that Am Jur aside, the current definition of an excise tax is that of a tax levied on a specific
article, rather than one "upon the performance, carrying on, or the exercise of an activity." This current
definition was already in place when the Code was enacted in 1991, and we can only presume that it
was what the Congress had intended as it specified that local government units could not impose
"excise taxes on articles enumerated under the [NIRC]." This prohibition must pertain to the same kind
of excise taxes as imposed by the NIRC, and not those previously defined "excise taxes" which were
not integrated or denominated as such in our present tax law.
It is quite apparent, therefore, that our current body of taxation law does not explicitly accommodate the
traditional definition of excise tax offered by Petron. In fact, absent any statutory adoption of the
traditional definition, it may be said that starting in 1986 excise taxes in this jurisdiction refer exclusively
to specific or ad valorem taxes imposed under the NIRC. At the very least, it is this concept of excise tax
which we can reasonably assume that Congress had in mind and actually adopted when it crafted the
Code. The palpable absurdity that ensues should the alternative interpretation prevail all but
strengthens this position.
Thus, Petrons argument concerning excise taxes is founded not on what the NIRC or the Code actually
provides, but on a non-statutory definition sourced from a legal paradigm that is no longer applicable in
this jurisdiction. That such definition was referred to again in our 1998 decision in Province of Bulacan v.
Court of Appeals35 is ultimately of little consequence, and so is Petrons reliance on such ruling. The
Court therein had correctly nullified, on the basis of Section 133(h) of the Code, a province-imposed tax
"of 10% of the fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth
and other quarry resources xxx extracted from public lands," because it noted that under Section 151 of
the NIRC, all nonmetallic minerals and quarry resources were assessed with excise taxes of "two
percent (2%) based on the actual market value of the gross output thereof at the time of removal, in
case of those locally extracted or produced".36 Additionally, the Court also observed that the case had
emanated from an attempt to impose the said tax on quarry resources from private lands, despite the
clear language of the tax ordinance limiting the tax to such resources extracted from public lands. 37 On
that score alone, the case could have been correctly decided.
It is true that the Court had additionally reasoned in Province of Bulacan that "[t]he tax imposed by the
Province of Bulacan is an excise tax, being a tax upon the performance, carrying on, or exercise of an
activity." As earlier noted, such definition of excise tax however was not explicitly carried over into the
NIRC and was even superseded beginning with the 1986 amendments thereto. To insist on utilizing this
definition simply because it had been reiterated in Province of Bulacan, unnecessary as such reiteration
may have been to the resolution of that case, would have the unfortunate effect of infusing life into a
concept that is diametrically inconsistent with the present state of the law.
We thus can assert with clear comfort that excise taxes, as imposed under the NIRC, do not pertain to
"the performance, carrying on, or exercise of an activity," at least not to the extent of equating excise
with business taxes.
reality that such power is a delegated power. To cite one example, under Section 133(g), local
government units are disallowed from levying business taxes on "business enterprises certified to by
the Board of Investments as pioneer or non-pioneer for a period of six (6) and (4) four years,
respectively from the date of registration."
IV.
We next consider whether the clause "taxes, fees or charges on petroleum products" in Section 133(h)
precludes local government units from imposing business taxes based on the sale of petroleum
products.
The power of a municipality to impose business taxes derives from Section 143 of the Code that
specifically enumerates several types of business on which it may impose taxes, including
manufacturers, wholesalers, distributors, dealers of any article of commerce of whatever nature; 38 those
engaged in the export or commerce of essential commodities;39 retailers;40 contractors and other
independent contractors;41 banks and financial institutions;42 and peddlers engaged in the sale of any
merchandise or article of commerce.43 This obviously broad power is further supplemented by
paragraph (h) of Section 143 which authorizes the sanggunian to impose taxes on any other businesses
not otherwise specified under Section 143 which the sanggunian concerned may deem proper to tax.44
This ability of local government units to impose business or other local taxes is ultimately rooted in the
1987 Constitution. Section 5, Article X assures that "[e]ach local government unit shall have the power
to create its own sources of revenues and to levy taxes, fees and charges," though the power is
"subject to such guidelines and limitations as the Congress may provide." There is no doubt that
following the 1987 Constitution and the Code, the fiscal autonomy of local government units has
received greater affirmation than ever. Previous decisions that have been skeptical of the viability, if not
the wisdom of reposing fiscal autonomy to local government units have fallen by the wayside.
Respondents cite our declaration in City Government of San Pablo v. Reyes 45 that following the 1987
Constitution the rule thenceforth "in interpreting statutory provisions on municipal fiscal powers, doubts
will have to be resolved in favor of municipal corporations." 46 Such policy is also echoed in Section 5(a)
of the Code, which states that "[a]ny provision on a power of a local government unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of
devolution of powers and of the lower local government unit." But somewhat conversely, Section 5(b)
then proceeds to assert that "[i]n case of doubt, any tax ordinance or revenue measure shall be
construed strictly against the local government unit enacting it, and liberally in favor of the
taxpayer."47 And this latter qualification has to be respected as a constitutionally authorized limitation
which Congress has seen fit to provide. Evidently, local fiscal autonomy should not necessarily translate
into abject deference to the power of local government units to impose taxes.
Congress has the constitutional authority to impose limitations on the power to tax of local government
units, and Section 133 of the Code is one such limitation. Indeed, the provision is the explicit statutory
impediment to the enjoyment of absolute taxing power by local government units, not to mention the
Section 133(h) states that local government units "shall not extend to the levy of xxx taxes, fees or
charges on petroleum products." Respondents assert that the phrase "taxes, fees or charges on
petroleum products" pertains to the imposition of direct or excise taxes on petroleum products, and not
business taxes. If the phrase actually pertains to excise taxes, then it would be an exercise in utter
redundancy, since the preceding phrase already prohibits the imposition of excise taxes on articles
already subject to such taxes under the NIRC, such as petroleum products. There would be no sense
on the part of the legislature to twice emphasize in the same sentence that excise taxes on petroleum
products are beyond the pale of local government taxation.
It appears that this argument of respondents was fashioned on the basis of the pronouncement of the
Court inPhilippine Petroleum Corporation v. Municipality of Pililla, thus:48
xxx [W]hile Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products,
said decree did not amend Sections 19 and 19 (a) of P.D. 231 as amended by P.D. 426,
wherein the municipality is granted the right to levy taxes on business of manufacturers,
importers, producers of any article of commerce of whatever kind or nature. A tax on
business is distinct from a tax on the article itself. Thus, if the imposition of tax on
business of manufacturers, etc. in petroleum products contravenes a declared national policy,
it should have been expressly stated in P.D. No. 436.
The dicta that "[a] tax on a business is distinct from a tax on the article itself" might at first blush
somehow lend support to respondents position, yet that dicta has not since been reprised by this Court.
It is likewise worth observing that Pililla did involve a tax ordinance that imposed business taxes on an
enterprise engaged in the manufacture and storage of petroleum products.
Significantly, the legal milieu governing Pililla is vastly different from that existing at bar, to the extent
that the earlier case could not be presently controlling.
At the time the taxes sought to be collected in Pililla were imposed, there was no national law in place
similar to Section 133(h) of the Code that barred local "taxes, fees or charges on petroleum products."
There were circulars to that effect issued by the Finance Department, yet the Court could not validate
such issuances since under the tax laws then in place "no exemptions were given to manufacturers,
wholesalers, retailers, or dealers in petroleum products." 49 In fact, the Court tellingly observed that "if the
imposition of tax on business of manufacturers, etc. in petroleum products contravenes a declared
national policy, it should have been expressly stated in P.D. No. 436." 50 Such expression conspiciously
missing in P.D. No. 436 is now found in Section 133(h).
In view of the difference in statutory paradigm between this case and Pililla, the latter case is severely
diminished as applicable precedent at bar. The Court then was correct in observing that a mere
administrative circular could not prohibit a local tax that is not otherwise barred under a national statute,
yet in this case that conflict is not present since the Code explicitly prohibits the imposition of several
classes of local taxes, including those on petroleum products. The final and only straw Pililla provides
that respondents can still grasp at is the bare statement that "[a] tax on a business is distinct from a tax
on the article itself,"51 a sentence which could have been omitted from that decision without any effect.
We can concede that a tax on a business is distinct from a tax on the article itself, or for that matter, that
a business tax is distinct from an excise tax. However, such distinction is immaterial insofar as the latter
part of Section 133(h) is concerned, for 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. It would have been a different matter had Congress, in crafting Section 133(h), barred
"excise taxes" or "direct taxes," or any category of taxes only, for then it would be understood that only
such specified taxes on petroleum products could not be imposed under the prohibition. The absence of
such a 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.
V.
We no longer need to dwell on the arguments centering on Article 232 of the IRR. As earlier stated, the
provision explicitly stipulates 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 [on business taxes]." The RTC went as far as to
declare Article 232 as "invalid" on the premise that the prohibition was not similarly warranted under the
Code.
Assuming that the Code does not, in fact, prohibit the imposition of business taxes on petroleum
products, we would agree that the IRR could not impose such a prohibition. With our ruling that Section
133(h) does indeed prohibit the imposition of local business taxes on petroleum products, however, the
RTC declaration that Article 232 was invalid is, in turn, itself invalid. Even absent Article 232, local
government units cannot impose business taxes on petroleum products. If anything, Article 232 merely
reiterates what the Code itself already provides, with the additional explanation that such prohibition
was "in line with existing national policy."
VI.
We have said all that need be said for the resolution of this case, but there is one more line of argument
raised by respondents that deserves a remark. Respondents argue, "assuming... that the Oversight
Committee [that drafted the IRR] can legislate, that the "existing national policy" referred to in Article
232 had been superseded by Republic Act No. 8180, or the Oil Deregulation Law. Boiled down to its
essence, the argument is that since the oil industry is presently deregulated the basis for exempting
petroleum products from business taxes no longer exists.
Of course, the starting premise for this argument, that the IRR can establish a tax or an exemption, is
false and has been flatly rejected by this Court before. 52 The Code itself does not connect its prohibition
on taxation of petroleum products with any existing or future national oil policy, so the change in such
national policy with the regime of oil deregulation is ultimately of no moment. Still, we can divine the
reasoning behind singling out petroleum products, among all other commodities, as beyond the power
of local government units to levy local taxes.
Why the special concern over petroleum products? The answer is quite evident to all sentient persons.
In this age where unfortunately dependence on petroleum as fuel has yet no equally feasible
alternative, the cost of petroleum products, though fully controlled by private enterprise, remains an
area of public concern. To be blunt about it, there is an inevitable link between the fluctuation of oil
prices and the prices of every other commodity. The reality, indeed, is oil is a political commodity. Such
fact has received recognition from this Court. "[O]il [is] a commodity whose supply and price affect the
ebb and flow of the lifeblood of the nation. Its shortage of supply or a slight, upward spiral in its price
shakes our economic foundation. Studies show that the areas most impacted by the movement of oil
are food manufacture, land transport, trade, electricity and water." 53 "[T]he upswing and downswing of
our economy materially depend on the oscillation of oil."54 "Fluctuations in the supply and price of oil
products have a dramatic effect on economic development and public welfare."55
It can be reasonably presumed that if municipalities, cities and provinces were authorized to impose
business taxes on manufacturers and retailers of petroleum products, the resulting losses to these
enterprises would be passed on to the consumers, triggering the chain of increases that normally
accompany the increase in oil prices. No similarly massive trigger effect would ensue upon the
imposition of business taxes on other commodities, including those already subject to excise taxation
under the NIRC.
It may very well be that the policy of deregulation, which was not yet in effect at the time of the
enactment of the Local Government Code, has changed the complexion of the issue, for unlike before,
oil companies are free at will to increase oil prices, thus mitigating the similarly arbitrary consequences
that could develop if petroleum products were subject to local taxes. Still, it cannot be denied that
subjecting petroleum products to business taxes apart from the taxes already imposed by Congress in
this age of deregulation would lead to the same result had they been so taxed during the era of oil
regulation the increase of oil prices. We do not discount the authority of Congress to enact measures
that facilitate the increase in oil prices; witness the Oil Deregulation Law and the most recent Expanded
VAT Law. Yet these hard choices are presumably made by Congress with the expectation that the
negative effects of increased oil prices are offset by the other economic benefits promised by those new
laws (i.e., a more vibrant oil industry; increased government revenue).
The Court defers to the other branches of government in the formulation of oil policy, but when the
choices are made through legislation, the Court expects that the choices are deliberate, considering that
the stakes are virtually all-in. Herein, respondents may be bolstered by the constitutional and statutory
policy favoring local fiscal autonomy, but it would be utter indolence to reflexively affirm such policy
when the inevitable effect is an increase in oil prices. Any prudent adjudication should fully ascertain the
mandate of local government units to impose taxes on petroleum products, and such mandate should
be cast in so specific terms as to leave no dispute as to the legislative intendment to extend such power
in the name of local autonomy. What we have found instead, from the plain letter of the law is an explicit
disinclination on the part of the legislature to impart that particular taxing power to local government
units.
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. The Decision of the Regional Trial Court of Malabon City in
Civil Case No. 3380-MN is REVERSED and SET ASIDE and the subject assessment for
deficiency taxes on petitioner is ordered CANCELLED. The Temporary Restraining Order dated 4
August 2003 is hereby made PERMANENT. No pronouncement as to costs.
SO ORDERED.

Tax Cases Set 2 LGC

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Tax Cases Set 2 LGC

Transféré par

Droits d'auteur :

Formats disponibles

G.R. No.

Add: 75% surcharge

20% interest (2 years)

The facts that matter are as follows:

Total Amount Due & Collectible

Deficiency Amusement Tax

Total gross receipts 1987

15% tax due thereon

Less: Tax paid

On December 24, 1993, respondent CTA dismissed petitioner's petition, holding:

Deficiency amusement tax

Tax 1 law Page 1 of 20

'3. Fifteen per centum in the case of boxing exhibitions;

Tax 1 law Page 2 of 20

Tax 1 law Page 3 of 20

Panganiban and Gonzaga-Reyes, JJ ., concur.

SEC. 140. Amusement Tax.

a) Eighteen percent (18%) in the case of cockpits;

G.R. No. 126232 November 27, 1998

Tax 1 law Page 4 of 20

Tax 1 law Page 5 of 20

4. GOING BEYOND THE PARAMETERS OF ITS APPELLATE

Tax 1 law Page 6 of 20

Tax 1 law Page 7 of 20

xxx xxx xxx

xxx xxx xxx

(2) On all nonmetallic minerals and quarry resources, a tax of two

(4) Quarry resources shall mean any common stone or other

Tax 1 law Page 8 of 20

G.R. No. 152492

1. Automatic per unit P10.00

2. Ford Fiera P10.00

b) Other Goods, Construction Material products:

1. Bamboo craft P20.00

Tax 1 law Page 9 of 20

Tax 1 law Page 10 of 20

Tax 1 law Page 11 of 20

G.R. No. 152675

Tax 1 law Page 12 of 20

In G.R. No. 152771, the NPC contends:

RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR

RESPONDENT COURT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR

Tax 1 law Page 13 of 20

Tax 1 law Page 14 of 20

G.R. No. 158881

Tax 1 law Page 15 of 20

Tax 1 law Page 16 of 20

Tax 1 law Page 17 of 20

Tax 1 law Page 18 of 20

Tax 1 law Page 19 of 20

Tax 1 law Page 20 of 20

Vous aimerez peut-être aussi