Local Gov Tax Case Digest
Local Gov Tax Case Digest
Facts:
The Assessor sent a notice of assessment
respecting certain real properties of petitioners
located in Pasig. Metro Manila in a letter dated 18
March
1994,
petitioners
through
counsel
"request(ed) the Municipal Assessor to reconsider
the subject assessments." Not satisfied, petitioners
filed with the Regional Trial Petition for Prohibition
with prayer for a restraining order and/or writ of
preliminary injunction to declare null and void the
new tax assessments and to enjoin the collection of
real estate taxes based on said assessments.
Respondent Judge denied the petition "for lack of
merit".
In disposing of the above issues against petitioners,
the court a quo ruled that the schedule of market
values and the assessments based thereon
prepared solely by respondent assessor are valid
and legal, they having been prepared in
accordance with the provisions of The Local
Government Code of 1991 (R.A. 7160). It held also
that said Code had effectively repealed the
previous law on the matter, P.D. 921, which
required,
in
the
preparation
of
said
schedule, joint action by all the city and municipal
assessors in the Metropolitan Manila area.
Issues:
1. Was PD 921 impliedly repealed by RA 7160?
Ruling:
1. Yes, it was repealed. R.A. 7160 has a repealing
provision (Section 534) and, if the intention of
the legislature was to abrogate P.D. 921, it
would have included it in such repealing clause,
as it did in expressly rendering of no force and
effect several other presidential decrees.
Hence, any repeal or modification of P.D.
921 can only be possible under par. (f) of said
Section 534, as follows:
"(f) All general and special laws,
acts,
city
charter,
decrees,
executive orders, proclamations
and administrative regulations,
part or parts thereof which are
inconsistent with any of the
provisions of the Code are hereby
repealed or modified accordingly."
Pepsi-Cola
Bottling
Company
of
the
Philippines, Inc., filed a complaint with preliminary
injunction before the Court of First Instance of
Leyte to declare Section 2 of R.A. No. 2264, (known
as the Local Autonomy Act) unconstitutional as an
undue delegation of the taxing authority and
declare null and void Municipal Ordinance No. 23,
which levies and collects from soft drinks producers
and manufactures a tax of 1/16 of a centavo for
every bottle of soft drinks corked, and Municipal
Ordinance No. 27 which levies and collects on soft
drinks produced or manufactured within the
territorial jurisdiction a tax of one centavo on each
gallon of volume capacity. The trial court dismissed
the complaint and upheld the constitutionality of
Sec. 2 of R.A. No. 2264 and declared Municipal
Ordinances Nos. 27 valid and constitutional.
Appealed to the Court of Appeals, the case was
certified to the Supreme Court as involving pure
question of law.
The
plaintiff-appellant
submits
that
Ordinance Nos. 23 and 27 constitute double
taxation, because these two ordinances cover
the same subject matter and impose practically
the same tax rate. The thesis proceeds from its
assumption that both ordinances are valid and
legally enforceable. This is not so. As earlier
quoted, Ordinance No. 23, which was approved
on September 25, 1962, levies or collects from
soft drinks producers or manufacturers a tax of
one-sixteen (1/16) of a centavo for every bottle
corked, irrespective of the volume contents of
the bottle used. When it was discovered that
the producer or manufacturer could increase
the volume contents of the bottle and still pay
the same tax rate, the Municipality of Tanauan
enacted Ordinance No. 27, approved on
October 28, 1962, imposing a tax of one
centavo (P0.01) on each gallon (128 fluid
ounces, U.S.) of volume capacity. The difference
between the two ordinances clearly lies in the
tax rate of the soft drinks produced: in
Ordinance No. 23, it was 1/16 of a centavo for
every bottle corked; in Ordinance No. 27, it is
one centavo (P0.01) on each gallon (128 fluid
ounces, U.S.) of volume capacity. The
intention of the Municipal Council of
Tanauan in enacting Ordinance No. 27 is
thus clear: it was intended as a plain
substitute for the prior Ordinance No. 23,
and operates as a repeal of the latter, even
without words to that effect.
The limitation applies, particularly, to the
prohibition against municipalities and municipal
districts to impose "any percentage tax on
sales or other taxes in any form based
thereon nor impose taxes on articles subject
to specific tax, except gasoline, under the
provisions of the National Internal Revenue
Code." Ordinance No. 27 does not partake of
the nature of a percentage tax on sales, or
other taxes in any form based thereon. The tax
is levied on the produce (whether sold or not)
and not on the sales. The volume capacity of
the taxpayers production of soft drinks is
considered solely for purposes of determining
the tax rate on the products, but there is no set
ratio between the volume of sales and the
amount of the tax.
3.
Issues:
1. Is Section 2, Republic Act No. 2264 an
undue delegation of power, confiscatory and
oppressive?
2. Do Ordinances Nos. 23 and 27 constitute
double taxation and impose percentage or
specific taxes?
3. Are Ordinances Nos. 23 and 27 unjust and
unfair?
Ruling:
1.
Legislative powers may be delegated to
local governments in respect of matters of local
concern. This is sanctioned by immemorial
practice. By
necessary
implication,
the
legislative power to create political corporations
for purposes of local self-government carries
with it the power to confer on such local
governmental agencies the power to tax.
The plenary nature of the taxing power thus
delegated, contrary to plaintiff-appellant's
pretense, would not suffice to invalidate the
said law as confiscatory and oppressive. In
delegating the authority, the State is not limited
to the exact measure of that which is exercised
by itself. When it is said that the taxing power
may be delegated to municipalities and the like,
it is meant that there may be delegated such
measure of power to impose and collect taxes
as the legislature may deem expedient. Thus,
municipalities may be permitted to tax subjects
which for reasons of public policy the State has
not deemed wise to tax for more general
purposes.
This is not to say though that the
constitutional injunction against deprivation of
property without due process of law may be
passed over under the guise of the taxing
power, except when the taking of the property
is in the lawful exercise of the taxing power, as
Facts:
Chief,
Licensing Division, respondents
FACTS:
NAPOCOR, the petitioner, is a government-owned
and
controlled
corporation
created
under
Commonwealth Act 120. It is tasked to undertake
the development of hydroelectric generations of
power and the production of electricity from
nuclear, geothermal, and other sources, as well as,
the transmission of electric power on a nationwide
basis.
INC.
vs.
FACTS:
Petitioner Smart Communications, Inc. (SMART),
filed a special civil action for declaratory relief for
the ascertaining of its rights and obligations under
the Tax Code of the City of Davao, which imposes a
franchise tax on businesses enjoying a franchise
within its territorial jurisdiction. SMART avers that it
is exempt from the payment of the local franchise
tax to the city as provided under Sec. 9, and Sec.
23 of its legislative franchise.
ISSUE:
WON SMART is exempted from local franchise tax
under the in lieu of all taxes clause and the word
exemption under Sec. 9 and Sec. 23 respectively
of its legislative franchise.
RULING:
No.
Aside from the national franchise tax, the
franchisee is still liable to pay the local franchise
tax, unless it is expressly and unequivocally
exempted from the payment thereof under its
legislative franchise. The "in lieu of all taxes" clause
in a legislative franchise should categorically state
that the exemption applies to both local and
national taxes; otherwise, the exemption claimed
should be strictly construed against the taxpayer
and liberally in favor of the taxing authority.
The word "exemption" as used in Sec. 23 of the
legislative franchise refers or pertains merely to an
exemption
from
regulatory
or
reporting
requirements of the Department of Transportation
and Communication or the National Transmission
Corporation and not to an exemption from the
grantee's tax liability.
The "Expanded VAT Law", did not remove or abolish
the payment of local franchise tax. It merely
replaced the national franchise tax that was
previously paid by telecommunications franchise
FACTS:
Ericsson
Telecommunications,
Inc.
(petitioner), a corporation with principal
office in Pasig City, is engaged in the design,
engineering,
and
marketing
of
telecommunication facilities/system.
The City Treasurer of Pasig Cityissued two
Assessment Noticesto petitioner. It assessed
petitioner a business tax deficiency for the
years 1998 and 1999; and another for the
years 1999 and 2000. All were based on its
gross revenues as reported in its audited
financial statementsfor the years 1997 and
1998; and years 2000 and 2001.
Petitioner
filed
a
Protest
for
both
assessments, claiming that the computation
of the local business tax should be based
on gross receipts and not on gross revenue.
Respondent denied petitioner's protest and
gave the latter 30 days within which to
appeal the denial. This prompted petitioner
to file a petition for review with the
Regional Trial Court (RTC), praying for the
annulment and cancellation of petitioner's
deficiency local business taxes.
Respondent and its City Treasurer filed a
motion to dismiss on the grounds that the
court had no jurisdiction over the subject
matter and that petitioner had no legal
capacity to sue. The RTC denied the motion.
RTC canceled and set aside the assessments
made by respondent and its City Treasurer.
On appeal, the Court of Appeals (CA)
rendered its Decision: hereby ordered SET
ASIDE and a NEW ONE ENTERED dismissing
the plaintiff/appellee's complaint without
prejudice.The CA sustained respondent's
claim that the petition filed with the RTC
should have been dismissed due to
petitioner's failure to show that Atty. Maria
Theresa B. Ramos (Atty. Ramos), petitioner's
Manager for Tax and Legal Affairs and the
person who signed the Verification and
Certification of Non-Forum Shopping, was
duly authorized by the Board of Directors.
ISSUES:
1. WON the RTC should have dismissed the
petition.
2. WONthe CA should have dismissed the
appeal of respondent as it has no
jurisdiction over the case since the appeal
involves a pure question of law.
3. Whether the local business tax on
contractors should be based on gross
receipts or gross revenue.
RULING
1. Time and again, the Court, under special
circumstances and for compelling reasons,
sanctioned substantial compliance with the
rule on the submission of verification and
certification against non-forum shopping. In
the present case, petitioner submitted a
Secretary's Certificate signed on May 6,
2002, whereby Atty. Ramos was authorized
to file a protest at the local government
level and to "sign, execute and deliver any
and all papers, documents and pleadings
relative to the said protest and to do and
perform all such acts and things as may be
necessary to effect the foregoing." The
subsequent submission of the Secretary's
Certificate and the substantial merits of the
petition, which will be shown forthwith,
justify a relaxation of the rule.
2. There is no dispute as to the veracity of the
facts involved in the present case. While
there is an issue as to the correct amount of
local business tax to be paid by petitioner,
its determination will not involve a look into
petitioner's audited financial statements or
documents, as these are not disputed;
rather, petitioner's correct tax liability will
be ascertained through an interpretation of
the pertinent tax laws. This, clearly, is a
question of law, and beyond the jurisdiction
of the CA. Section 2 (c), Rule 41 of the Rules
of Court provides that in all cases where
questions of law are raised or involved, the
appeal shall be to this Court by petition for
review on certiorari under Rule 45.Thus, as
correctly pointed out by petitioner, the
appeal before the CA should have been
dismissed, pursuant to Section 5 (f), Rule 56
of the Rules of Court, which provides:
Sec. 5. Grounds for dismissal of
appeal. The appeal may be
dismissed motuproprio or
on
motion of the respondent on the
following grounds:
xxxxxxxxx
(f) Error in the choice or mode of
appeal.
xxxxxxxxx
3. The dismissal of the appeal, in effect, would
have sustained the RTC Decision ordering
respondent to cancel the Assessment
Notices
issued
by
respondent,
and
therefore, would have rendered moot and
academic the 3rd issue.However, the higher
interest of substantial justice dictates that
this Court should resolve the same, to
evade further repetition of erroneous
the
FACTS:
On June 12, 1974, Municipal Board of the City of
Manila enacted Ordinance No. 7516 imposing on
manufacturers, importer porters or producers,
doing business in the City of Manila, business taxes
based on gross sales on a graduated basis. Mayor
approved it and same ordinance underwent a
series of amendments. Sec 1 of Ordinance No.
7616 reads:
FACTS:
14
Facts:
On January 22, 2004, the City Treasurer issued a
Notice of Assessment to Angeles Electric
Corporation (AEC) for payment of business tax,
license fee and other charges for the period 1993
to 2004. Within the period prescribed by law, AEC
protested the assessment. When the City Treasurer
denied the protest and ordered petitioner to settle
its obligation, petitioner filed with the RTC a
petition praying for the issuance of a TRO which
was granted. The City Government opposed on the
ground that under the NIRC the collection of taxes
cannot be enjoined.
Issue: WON the collection of local government
taxes can be enjoined.
Held:
The prohibition on the issuance of a writ of
injunction to enjoin the collection of taxes applies
only to national internal revenue taxes, and not to
local taxes.
Although the NIRC provides that no injunction shall
lie to restrain the collection of any national internal
revenue tax, no such similar provision is embodied
in the LGC with regards to injunction of the
collection of local government taxes.
But it must be emphasized that although there is
no express prohibition, injunctions enjoining the
collection of local taxes are still frowned upon. The
courts should thus exercise such with caution.
In this case, the requisites for injunction have been
satisfied as both sides were heard before the
issuance of the injunction. Petition for Certiorari is
DISMISSED.
15. PELIZLOY REALTY CORPORATION, vs. THE
PROVINCE OF BENGUET
Doctrine:
Resorts, swimming pools, bath houses, hot springs
and tourist spots do not belong to the same
category or class as theaters, cinemas, concert
halls, circuses, and boxing stadia. They may be
subject to amusement tax under the LGC.
Facts:
Petitioner ("Pelizloy") owns Palm Grove Resort,
which is designed for recreation and which has
facilities like swimming pools, a spa and function
halls. The Provincial Board of the Province of
Benguet approved Provincial Tax Ordinance No. 05107, otherwise known as the Benguet Revenue
Code of 2005. Section 59, Article X of the Tax
Ordinance levied a ten percent (10%) amusement
tax on gross receipts from admissions to "resorts,
swimming pools, bath houses, hot springs and
tourist spots. It was Pelizloy's position that the Tax
Ordinance's imposition of a 10% amusement tax on