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G.R. No. 154092. July 14, 2005.

MOBIL PHILIPPINES, INC., petitioner, vs. THE CITY TREASURER OF MAKATI and the CHIEF OF THE
LICENSE DIVISION OF THE CITY OF MAKATI, respondents.

Taxation; While business taxes imposed in the exercise of police power for regulatory
purposes are paid for the privilege of carrying on a business in the year the tax was paid, income tax
is a tax on all yearly profits arising from property, professions, trades or offices, or as a tax on a
persons income, emoluments, profits and the likeit is a tax on income, whether net or gross
realized in one taxable year.

Prefatorily, it is necessary to distinguish between a business tax vis--vis an income tax.


Business taxes imposed in the exercise of police power for regulatory purposes are paid for the
privilege of carrying on a business in the year the tax was paid. It is paid at the beginning of the year
as a fee to allow the business to operate for the rest of the year. It is deemed a prerequisite to the
conduct of business. Income tax, on the other hand, is a tax on all yearly profits arising from
property, professions, trades or offices, or as a tax on a persons income, emoluments, profits and
the like. It is tax on income, whether net or gross realized in one taxable year. It is due on or before
the 15th day of the 4th month following the close of the taxpayers taxable year and is generally
regarded as an excise tax, levied upon the right of a person or entity to receive income or profits.

The respondent city treasurer erroneously treated the assessment and collection of business
tax as if it were income tax.For the year 1998, petitioner paid a total of P2,262,122.48 to the City
Treasurer of Makati as business taxes for the year 1998. The amount of tax as computed based on
petitioners gross sales for 1998 is only P1,331,638.84. Since the amount paid is more than the
amount computed based on petitioners actual gross sales for 1998, petitioner upon its retirement is
not liable for additional taxes to the City of Makati. Thus, we find that the respondent erroneously
treated the assessment and collection of business tax as if it were income tax, by rendering an
additional assessment of P1,331,638.84 for the revenue generated for the year 1998.
G.R. No. 158881. April 16, 2008.*

PETRON CORPORATION, petitioner, vs. MAYOR TOBIAS M. TIANGCO, and MUNICIPAL


TREASURER MANUEL T. ENRIQUEZ of the MUNICIPALITY OF NAVOTAS, METRO MANILA,
respondents.

Taxation; Local Government Code; Section 133 prescribes the limitations on the capacity of
local government units to exercise their taxing powers otherwise granted to them under the Local
Government Code (LGC); Two kinds of taxes which cannot be imposed by local government units.
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.

Same; Same; Excise Tax; 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.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 LGC 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.

Same; Same; Same; Starting in 1986, excise taxes in this jurisdiction refer exclusively to
specific or ad valorem taxes, imposed under the National Internal Revenue Code (NIRC).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 LGC. The palpable absurdity that ensues should the alternative
interpretation prevail all but strengthens this position.

Same; Same; Same; Congress has the constitutional authority to impose limitations on the
power to tax of local government units and Section 133 of the Local Government Code (LGC) is one
such limitation.Congress has the constitutional authority to impose limitations on the power to tax
of local government units, and Section 133 of the LGC 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 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.

Same; Same; Same; The prohibition with respect to petroleum products extends not only to
excise taxes thereon, but all taxes, fees and charges.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.

Same; Same; Same; Even absent Article 232, local government units cannot impose business
taxes on petroleum products.Assuming that the LGC 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 LGC itself already provides,
with the additional explanation that such prohibition was in line with existing national policy.
G.R. No. 125948. December 29, 1998.*

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, vs. COURT OF APPEALS,


HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in her official
capacity as City Treasurer of Batangas, respondents.

Contracts; Common Carriers; A common carrier is one who holds himself out to the public
as engaged in the business of transporting persons or property from place to place, for
compensation, offering his services to the public generally.There is merit in the petition. A
common carrier may be defined, broadly, as one who holds himself out to the public as engaged in
the business of transporting persons or property from place to place, for compensation, offering his
services to the public generally. Article 1732 of the Civil Code defines a common carrier as any
person, corporation, firm or association engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, offering their services to the
public.

Same; Same; Test for determining whether a party is a common carrier of goods.The test
for determining whether a party is a common carrier of goods is: 1. He must be engaged in the
business of carrying goods for others as a public employment, and must hold himself out as ready to
engage in the transportation of goods for person generally as a business and not as a casual
occupation; 2. He must undertake to carry goods of the kind to which his business is confined; 3. He
must undertake to carry by the method by which his business is conducted and over his established
roads; and 4. The transportation must be for hire.

Same; Same; The fact that petitioner has a limited clientele does not exclude it from the
definition of a common carrier.Based on the above definitions and requirements, there is no
doubt that petitioner is a common carrier. It is engaged in the business of transporting or carrying
goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who choose to employ its services, and transports the
goods by land and for compensation. The fact that petitioner has a limited clientele does not exclude
it from the definition of a common carrier.

Same; Same; Words and Phrases; The definition of common carriers in the Civil Code
makes no distinction as to the means of transporting, as long as it is by land, water or air.As
correctly pointed out by petitioner, the definition of common carriers in the Civil Code makes no
distinction as to the means of transporting, as long as it is by land, water or air. It does not provide
that the transportation of the passengers or goods should be by motor vehicle. In fact, in the United
States, oil pipe line operators are considered common carriers.

Same; Same; Taxation; Legislative intent in excluding from the taxing power of the local
government unit the imposition of business tax against common carriers is to prevent a duplication
of the so-called common carriers tax.It is clear that the legislative intent in excluding from the
taxing power of the local government unit the imposition of business tax against common carriers is
to prevent a duplication of the so-called common carriers tax. Petitioner is already paying three
(3%) percent common carriers tax on its gross sales/earnings under the National Internal Revenue
Code. To tax petitioner again on its gross receipts in its transportation of petroleum business would
defeat the purpose of the Local Government Code.
G.R. No. 131512. January 20, 2000.*

LAND TRANSPORTATION OFFICE [LTO], represented by Assistant Secretary Manuel F. Bruan,


LTO Regional Office, Region X represented by its Regional Director, Timoteo A. Garcia; and LTO
Butuan represented by Rosita G. Sadiaga, its Registrar, petitioners, vs. CITY OF BUTUAN, represented
in this case by Democrito D. Plaza II, City Mayor, respondent.

Local Government; Land Transportation and Traffic Code; Registration and licensing
functions are vested in the Land Transportation Office while franchising and regulatory
responsibilities had Land Transportation Office vs. City of Butuan been vested in the Land
Transportation Franchising and Regulatory Board.The Department of Transportation and
Communications (DOTC), through the LTO and the LTFRB, has since been tasked with
implementing laws pertaining to land transportation. The LTO is a line agency under the DOTC
whose powers and functions, pursuant to Article III, Section 4 (d) [1], of R.A. No. 4136, otherwise
known as Land Transportation and Traffic Code, as amended, deal primarily with the registration of
all motor vehicles and the licensing of drivers thereof. The LTFRB, upon the other hand, is the
governing body tasked by E.O. No. 202, dated 19 June 1987, to regulate the operation of public
utility or for hire vehicles and to grant franchises or certificates of public convenience (CPC).
Finely put, registration and licensing functions are vested in the LTO while franchising and regulatory
responsibilities had been vested in the LTFRB.

Same; Same; LGUs indubitably now have the power to regulate the operation of tricycles-
for-hire and to grant franchises for the operation thereof.LGUs indubitably now have the power to
regulate the operation of tricycles-for-hire and to grant franchises for the operation thereof. To
regulate means to fix, establish, or control; to adjust by rule, method, or established mode; to
direct by rule or restriction; or to subject to governing principles or laws. A franchise is defined to be
a special privilege to do certain things conferred by government on an individual or corporation, and
which does not belong to citizens generally of common right. On the other hand, to register means
to record formally and exactly, to enroll, or to enter precisely in a list or the like, and a drivers
license is the certificate or license issued by the government which authorizes a person to operate a
motor vehicle.

Same; Same; The power of LGUs to regulate the operation of tricycles and to grant
franchises for the operation thereof is still subject to the guidelines prescribed by the Department of
Transportation and Communications.It may not be amiss to state, nevertheless, that under Article
458 (a)[3-VI] of the Local Government Code, the power of LGUs to regulate the operation of tricycles
and to grant franchises for the operation thereof is still subject to the guidelines prescribed by the
DOTC. In compliance therewith, the Department of Transportation and Communications (DOTC)
issued Guidelines to Implement the Devolution of LTFRBs Franchising Authority over Land
Transportation Office vs. City of Butuan Tricycles-For-Hire to Local Government units pursuant to the
Local Government Code.
Same; Same; The newly delegated powers pertain to the franchising and regulatory powers
theretofore exercised by the Land Transportation Franchising and Regulatory Board and not to the functions of
the Land Transportation Office relative to the registration of motor vehicles and issuance of licenses for the
driving thereof.Such as can be gleaned from the explicit language of the statute, as well as the
corresponding guidelines issued by DOTC, the newly delegated powers pertain to the franchising and
regulatory powers theretofore exercised by the LTFRB and not to the functions of the LTO relative to the
registration of motor vehicles and issuance of licenses for the driving thereof. Clearly unaffected by the Local
Government Code are the powers of LTO under R.A. No. 4136 requiring the registration of all kinds of motor
vehicles used or operated on or upon any public highway in the country.
G.R. No. 155650. July 20, 2006.*

MANILA INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. COURT OF APPEALS, CITY OF


PARAAQUE, CITY MAYOR OF PARAAQUE, SANGGUNIANG PANGLUNGSOD NG PARAAQUE, CITY ASSESSOR
OF PARAAQUE, and CITY TREASURER OF PARAAQUE, respondents.

Manila International Airport Authority; Taxation; MIAAs Airport Lands and Buildings are exempt from
real estate tax imposed by local governments.We rule that MIAAs Airport Lands and Buildings are exempt
from real estate tax imposed by local governments. First, MIAA is not a government-owned or controlled
corporation but an instrumentality of the National Government and thus exempt from local taxation. Second,
the real properties of MIAA are owned by the Republic of the Philippines and thus exempt from real estate tax.

Same; Same; While there is no dispute that a government-owned or controlled corporation is not
exempt from real estate tax, MIAA is not a government-owned or controlled corporation; A government-
owned or controlled corporation must be organized as a stock or non-stock corporation, of which MIAA is
neither; MIAA is not a stock corporation because it has no capital stock divided into shares.There is no
dispute that a government-owned or controlled corporation is not exempt from real estate tax. However,
MIAA is not a government-owned or controlled corporation. Section 2(13) of the Introductory Provisions of the
Administrative Code of 1987 defines a government-owned or controlled corporation as follows: SEC. 2.
General Terms Defined.x x x x (13) Government-owned or controlled corporation refers to any agency
organized as a stock or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government directly or through its instrumentalities
either wholly, or, where applicable as in the case of stock corporations, to the extent of at least fifty-one (51)
percent of its capital stock: x x x. (Emphasis supplied) A government-owned or controlled corporation must be
organized as a stock or non-stock corporation. MIAA is not organized as a stock or non-stock corporation.
MIAA is not a stock corporation because it has no capital stock divided into shares.

Same; Same; Manila International Airport Authority (MIAA) is not a non-stock corporation because it
has no members; Section 11 of the MIAA Charter which mandates MIAA to remit 20% of its annual gross
operating income to the National Treasury prevents it from qualifying as a non-stock corporation.MIAA is
also not a non-stock corporation because it has no members. Section 87 of the Corporation Code defines a
non-stock corporation as one where no part of its income is distributable as dividends to its members,
trustees or officers. A non-stock corporation must have members. Even if we assume that the Government is
considered as the sole member of MIAA, this will not make MIAA a non-stock corporation. Non-stock
corporations cannot distribute any part of their income to their members. Section 11 of the MIAA Charter
mandates MIAA to remit 20% of its annual gross operating income to the National Treasury. This prevents
MIAA from qualifying as a non-stock corporation.

Administrative Law; Manila International Airport Authority (MIAA) is a government instrumentality


vested with corporate powers to perform efficiently its governmental functions.Since MIAA is neither a stock
nor a non-stock corporation, MIAA does not qualify as a government-owned or controlled corporation. What
then is the legal status of MIAA within the National Government? MIAA is a government instrumentality
vested with corporate powers to perform efficiently its governmental functions. MIAA is like any other
government instrumentality, the only difference is that MIAA is vested with corporate powers. Section 2(10) of
the Introductory Provisions of the Administrative Code defines a government instrumentality as follows: SEC.
2. General Terms Defined.x x x x (10) Instrumentality refers to any agency of the National Government, not
integrated within the department framework, vested with special functions or jurisdiction by law, endowed
with some if not all corporate powers, administering special funds, and enjoying operational autonomy,
usually through a charter. x x x (Emphasis supplied)

Same; When the law vests in a government instrumentality corporate powers, the instrumentality
does not become a corporationunless the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only governmental but also corporate
powers.When the law vests in a government instrumentality corporate powers, the instrumentality does not
become a corporation. Unless the government instrumentality is organized as a stock or non-stock
corporation, it remains a government instrumentality exercising not only governmental but also corporate
powers. Thus, MIAA exercises the governmental powers of eminent domain, police authority and the levying
of fees and charges. At the same time, MIAA exercises all the powers of a corporation under the Corporation
Law, insofar as these powers are not inconsistent with the provisions of this Executive Order.

Same; When the law makes a government instrumentality operationally autonomous, the
instrumentality remains part of the National Government machinery although not integrated with the
department framework.Likewise, when the law makes a government instrumentality operationally
autonomous, the instrumentality remains part of the National Government machinery although not integrated
with the department framework. The MIAA Charter expressly states that transforming MIAA into a separate
and autonomous body will make its operation more financially viable.

Same; Manila International Airport Authority; Taxation; Local Government Code; A government
instrumentality like MIAA falls under Section 133(o) of the Local Government Code, which provision recognizes
the basic principle that local governments cannot tax the national government.A government
instrumentality like MIAA falls under Section 133(o) of the Local Government Code, which states: 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: x x x x (o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units. (Emphasis and italics supplied) Section 133(o) recognizes the
basic principle that local governments cannot tax the national government, which historically merely delegated
to local governments the power to tax. While the 1987 Constitution now includes taxation as one of the
powers of local governments, local governments may only exercise such power subject to such guidelines and
limitations as the Congress may provide.

Taxation; Local Government Code; Statutory Construction; When local governments invoke the power
to tax on national government instrumentalities, such power is construed strictly against local governments,
and when Congress grants an exemption to a national government instrumentality from local taxation, such
exemption is construed liberally in favor of the national government instrumentality.Section 133(o)
recognizes the basic principle that local governments cannot tax the national government, which historically
merely delegated to local governments the power to tax. While the 1987 Constitution now includes taxation as
one of the powers of local governments, local governments may only exercise such power subject to such
guidelines and limitations as the Congress may provide. When local governments invoke the power to tax on
national government instrumentalities, such power is construed strictly against local governments. The rule is
that a tax is never presumed and there must be clear language in the law imposing the tax. Any doubt whether
a person, article or activity is taxable is resolved against taxation. This rule applies with greater force when
local governments seek to tax national government instrumentalities. Another rule is that a tax exemption is
strictly construed against the taxpayer claiming the exemption. However, when Congress grants an exemption
to a national government instrumentality from local taxation, such exemption is construed liberally in favor of
the national government instrumentality. As this Court declared in Maceda v. Macaraig, Jr.: The reason for the
rule does not apply in the case of exemptions running to the benefit of the government itself or its agencies. In
such case the practical effect of an exemption is merely to reduce the amount of money that has to be
handled by government in the course of its operations. For these reasons, provisions granting exemptions to
government agencies may be construed liberally, in favor of non tax-liability of such agencies. There is,
moreover, no point in national and local governments taxing each other, unless a sound and compelling policy
requires such transfer of public funds from one government pocket to another.

Same; Same; Taxation; Local Government Code; There is also no reason for local governments to tax
national government instrumentalities for rendering essential public services to inhabitants of local
governments, the only exception being when the legislature clearly intended to tax government
instrumentalities for the delivery of essential services for sound and compelling policy considerations.There
is also no reason for local governments to tax national government instrumentalities for rendering essential
public services to inhabitants of local governments. The only exception is when the legislature clearly intended
to tax government instrumentalities for the delivery of essential public services for sound and compelling
policy considerations. There must be express language in the law empowering local governments to tax
national government instrumentalities. Any doubt whether such power exists is resolved against local
governments.

Manila International Airport Authority; The Airport Lands and Buildings of the MIAA are property of
public dominion and therefore owned by the State or the Republic of the Philippines.The Airport Lands and
Buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the
Philippines. The Civil Code provides: ARTICLE 419. Property is either of public dominion or of private
ownership. ARTICLE 420. The following things are property of public dominion: (1)Those intended for public
use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character; (2) Those which belong to the State, without being for public use,
and are intended for some public service or for the development of the national wealth. (Emphasis supplied)
ARTICLE 421. All other property of the State, which is not of the character stated in the preceding article, is
patrimonial property. ARTICLE 422. Property of public dominion, when no longer intended for public use or for
public service, shall form part of the patrimonial property of the State.

Same; Words and Phrases; The term ports in Article 420 (1) of the Civil Code includes seaports and
airportsthe MIAA Airport Lands and Buildings constitute a port constructed by the State.No one can
dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like roads, canals,
rivers, torrents, ports and bridges constructed by the State, are owned by the State. The term ports
includes seaports and airports. The MIAA Airport Lands and Buildings constitute a port constructed by the
State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of public
dominion and thus owned by the State or the Republic of the Philippines.

Same; Same; The Airport Lands and Buildings are devoted to public use because they are used by the
public for international and domestic travel and transportation; The charging of fees to the public does not
determine the character of the property whether it is of public dominion or not.The Airport Lands and
Buildings are devoted to public use because they are used by the public for international and domestic travel
and transportation. The fact that the MIAA collects terminal fees and other charges from the public does not
remove the character of the Airport Lands and Buildings as properties for public use. The operation by the
government of a tollway does not change the character of the road as one for public use. Someone must pay
for the maintenance of the road, either the public indirectly through the taxes they pay the government, or
only those among the public who actually use the road through the toll fees they pay upon using the road. The
tollway system is even a more efficient and equitable manner of taxing the public for the maintenance of
public roads. The charging of fees to the public does not determine the character of the property whether it is
of public dominion or not. Article 420 of the Civil Code defines property of public dominion as one intended
for public use. Even if the government collects toll fees, the road is still intended for public use if anyone
can use the road under the same terms and conditions as the rest of the public. The charging of fees, the
limitation on the kind of vehicles that can use the road, the speed restrictions and other conditions for the use
of the road do not affect the public character of the road.

Same; Taxation; Users Tax; Words and Phrases; The terminal fees MIAA charges passengers, as well
as the landing fees MIAA charges airlines, are often termed users tax; A users tax is more equitablea
principle of taxation mandated by the 1987 Constitution.The terminal fees MIAA charges to passengers, as
well as the landing fees MIAA charges to airlines, constitute the bulk of the income that maintains the
operations of MIAA. The collection of such fees does not change the character of MIAA as an airport for public
use. Such fees are often termed users tax. This means taxing those among the public who actually use a public
facility instead of taxing all the public including those who never use the particular public facility. A users tax is
more equitablea principle of taxation mandated in the 1987 Constitution.

Same; The Airport Lands and Buildings of MIAA, as properties of public dominion, are outside the
commerce of man.The Airport Lands and Buildings of MIAA are devoted to public use and thus are
properties of public dominion. As properties of public dominion, the Airport Lands and Buildings are outside
the commerce of man. The Court has ruled repeatedly that properties of public dominion are outside the
commerce of man. As early as 1915, this Court already ruled in Municipality of Cavite v. Rojas that properties
devoted to public use are outside the commerce of man, thus: According to article 344 of the Civil Code:
Property for public use in provinces and in towns comprises the provincial and town roads, the squares,
streets, fountains, and public waters, the promenades, and public works of general service supported by said
towns or provinces.

Same; Public Auctions; Property of public dominion, being outside the commerce of man, cannot be
the subject of an auction sale; Any encumbrance, levy on execution or auction sale of any property of public
dominion is void for being contrary to public policy.Again in Espiritu v. Municipal Council, the Court declared
that properties of public dominion are outside the commerce of man: x x x Town plazas are properties of
public dominion, to be devoted to public use and to be made available to the public in general. They are
outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties.
While in case of war or during an emergency, town plazas may be occupied temporarily by private individuals,
as was done and as was tolerated by the Municipality of Pozorrubio, when the emergency has ceased, said
temporary occupation or use must also cease, and the town officials should see to it that the town plazas
should ever be kept open to the public and free from encumbrances or illegal private constructions. (Emphasis
supplied) The Court has also ruled that property of public dominion, being outside the commerce of man,
cannot be the subject of an auction sale. Properties of public dominion, being for public use, are not subject to
levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or
auction sale of any property of public dominion is void for being contrary to public policy. Essential public
services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale.
This will happen if the City of Paraaque can foreclose and compel the auction sale of the 600-hectare runway
of the MIAA for non-payment of real estate tax.

Same; Unless the President issues a proclamation withdrawing the Airport Lands and Buildings from
public use, these properties remain properties of public dominion and are inalienable.Before MIAA can
encumber the Airport Lands and Buildings, the President must first withdraw from public use the Airport Lands
and Buildings. Sections 83 and 88 of the Public Land Law or Commonwealth Act No. 141, which remains to
this day the existing general law governing the classification and disposition of lands of the public domain
other than timber and mineral lands, provide: x x x Thus, unless the President issues a proclamation
withdrawing the Airport Lands and Buildings from public use, these properties remain properties of public
dominion and are inalienable. Since the Airport Lands and Buildings are inalienable in their present status as
properties of public dominion, they are not subject to levy on execution or foreclosure sale. As long as the
Airport Lands and Buildings are reserved for public use, their ownership remains with the State or the Republic
of the Philippines.

Same; Trusts; MIAA is merely holding title to the Airport Lands and Buildings in trust for the
Republic.MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48,
Chapter 12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real properties
owned by the Republic.

Same; The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA
was not meant to transfer beneficial ownership of these assets from the Republic to MIAAthe Republic
remains the beneficial owner of the Airport Lands and Buildings.The transfer of the Airport Lands and
Buildings from the Bureau of Air Transportation to MIAA was not meant to transfer beneficial ownership of
these assets from the Republic to MIAA. The purpose was merely to reorganize a division in the Bureau of Air
Transportation into a separate and autonomous body. The Republic remains the beneficial owner of the
Airport Lands and Buildings. MIAA itself is owned solely by the Republic. No party claims any ownership rights
over MIAAs assets adverse to the Republic. The MIAA Charter expressly provides that the Airport Lands and
Buildings shall not be disposed through sale or through any other mode unless specifically approved by the
President of the Philippines. This only means that the Republic retained the beneficial ownership of the
Airport Lands and Buildings because under Article 428 of the Civil Code, only the owner has the right to x x x
dispose of a thing. Since MIAA cannot dispose of the Airport Lands and Buildings, MIAA does not own the
Airport Lands and Buildings. At any time, the President can transfer back to the Republic title to the Airport
Lands and Buildings without the Republic paying MIAA any consideration. Under Section 3 of the MIAA
Charter, the President is the only one who can authorize the sale or disposition of the Airport Lands and
Buildings. This only confirms that the Airport Lands and Buildings belong to the Republic.

Taxation; Local Government Code; Section 234(a) of the Local Government Code exempts from real
estate tax any real property owned by the Republic of the Philippines.Section 234(a) of the Local
Government Code exempts from real estate tax any [r]eal property owned by the Republic of the
Philippines. Section 234(a) provides: SEC. 234. Exemptions from Real Property Tax.The following are
exempted from payment of the real property tax: (a) Real property owned by the Republic of the Philippines or
any of its political subdivisions except when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person; x x x. (Emphasis supplied) This exemption should be read in relation with
Section 133(o) of the same Code, which prohibits local governments from imposing [t]axes, fees or charges of
any kind on the National Government, its agencies and instrumentalities x x x. The real properties owned by
the Republic are titled either in the name of the Republic itself or in the name of agencies or instrumentalities
of the National Government. The Administrative Code allows real property owned by the Republic to be titled
in the name of agencies or instrumentalities of the national government. Such real properties remain owned
by the Republic and continue to be exempt from real estate tax.

Manila International Airport Authority; Local Government Code; The Republic may grant the
beneficial use of its real property to an agency or instrumentality of the national government, an arrangement
which does not result in the loss of the tax exemption; MIAA, as a government instrumentality, is not a taxable
person under Section 133(o) of the Local Government Code.The Republic may grant the beneficial use of its
real property to an agency or instrumentality of the national government. This happens when title of the real
property is transferred to an agency or instrumentality even as the Republic remains the owner of the real
property. Such arrangement does not result in the loss of the tax exemption. Section 234(a) of the Local
Government Code states that real property owned by the Republic loses its tax exemption only if the
beneficial use thereof has been granted, for consideration or otherwise, to a taxable person. MIAA, as a
government instrumentality, is not a taxable person under Section 133(o) of the Local Government Code. Thus,
even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and Buildings,
such fact does not make these real properties subject to real estate tax.

Same; Same; Taxation; Portions of the Airport Lands and Buildings that MIAA leases to private entities
are not exempt from real estate tax.Portions of the Airport Lands and Buildings that MIAA leases to private
entities are not exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases
to private corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use of such
land area for a consideration to a taxable person and therefore such land area is subject to real estate tax. In
Lung Center of the Philippines v. Quezon City, 433 SCRA 119, 138 (2004), the Court ruled: Accordingly, we hold
that the portions of the land leased to private entities as well as those parts of the hospital leased to private
individuals are not exempt from such taxes. On the other hand, the portions of the land occupied by the
hospital and portions of the hospital used for its patients, whether paying or non-paying, are exempt from real
property taxes.

Same; Taxation; By express mandate of the Local Government Code, local governments cannot
impose any kind of tax on national government instrumentalities like the MIAA.By express mandate of the
Local Government Code, local governments cannot impose any kind of tax on national government
instrumentalities like the MIAA. Local governments are devoid of power to tax the national government, its
agencies and instrumentalities. The taxing powers of local governments do not extend to the national
government, its agencies and instrumentalities, [u]nless otherwise provided in this Code as stated in the
saving clause of Section 133. The saving clause refers to Section 234(a) on the exception to the exemption
from real estate tax of real property owned by the Republic.

Same; Same; The determinative test whether MIAA is exempt from local taxation is not whether
MIAA is a juridical person, but whether it is a national government instrumentality under Section 133(o) of the
Local Government Code.The minoritys theory violates Section 133(o) of the Local Government Code which
expressly prohibits local governments from imposing any kind of tax on national government instrumentalities.
Section 133(o) does not distinguish between national government instrumentalities with or without juridical
personalities. Where the law does not distinguish, courts should not distinguish. Thus, Section 133(o) applies
to all national government instrumentalities, with or without juridical personalities. The determinative test
whether MIAA is exempt from local taxation is not whether MIAA is a juridical person, but whether it is a
national government instrumentality under Section 133(o) of the Local Government Code. Section 133(o) is
the specific provision of law prohibiting local governments from imposing any kind of tax on the national
government, its agencies and instrumentalities.

Taxation; The saving clause in Section 133 of the Local Government Code refers to the exception to
the exemption in Section 234(a) of the Code, which makes the national government subject to real estate tax
when it gives the beneficial use of its real properties to a taxable entity; The exception to the exemption in
Section 234(a) is the only instance when the national government, its agencies and instrumentalities are
subject to any kind of tax by local governments.The saving clause in Section 133 refers to the exception to
the exemption in Section 234(a) of the Code, which makes the national government subject to real estate tax
when it gives the beneficial use of its real properties to a taxable entity. Section 234(a) of the Local
Government Code provides: SEC. 234. Exemptions from Real Property Tax.The following are exempted from
payment of the real property tax: (a) Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been granted, for consideration or otherwise,
to a taxable person. x x x. (Emphasis supplied) Under Section 234(a), real property owned by the Republic is
exempt from real estate tax. The exception to this exemption is when the government gives the beneficial use
of the real property to a taxable entity. The exception to the exemption in Section 234(a) is the only instance
when the national government, its agencies and instrumentalities are subject to any kind of tax by local
governments. The exception to the exemption applies only to real estate tax and not to any other tax. The
justification for the exception to the exemption is that the real property, although owned by the Republic, is
not devoted to public use or public service but devoted to the private gain of a taxable person.

Same; Statutory Construction; When a provision of law grants a power but withholds such power on
certain matters, there is no conflict between the grant of power and the withholding of power.There is no
conflict whatsoever between Sections 133 and 193 because Section 193 expressly admits its subordination to
other provisions of the Code when Section 193 states [u]nless otherwise provided in this Code. By its own
words, Section 193 admits the superiority of other provisions of the Local Government Code that limit the
exercise of the taxing power in Section 193. When a provision of law grants a power but withholds such power
on certain matters, there is no conflict between the grant of power and the withholding of power. The grantee
of the power simply cannot exercise the power on matters withheld from its power.

Same; Words and Phrases; By their very meaning and purpose, the common limitations on the
taxing power prevail over the grant or exercise of the taxing power.Since Section 133 prescribes the
common limitations on the taxing powers of local governments, Section 133 logically prevails over Section
193 which grants local governments such taxing powers. By their very meaning and purpose, the common
limitations on the taxing power prevail over the grant or exercise of the taxing power. If the taxing power of
local governments in Section 193 prevails over the limitations on such taxing power in Section 133, then local
governments can impose any kind of tax on the national government, its agencies and instrumentalitiesa
gross absurdity.

Administrative Law; The Administrative Law is the governing law defining the status and relationship
of government departments, bureaus, offices, agencies and instrumentalities.The third whereas clause of
the Administrative Code states that the Code incorporates in a unified document the major structural,
functional and procedural principles and rules of governance. Thus, the Administrative Code is the governing
law defining the status and relationship of government departments, bureaus, offices, agencies and
instrumentalities. Unless a statute expressly provides for a different status and relationship for a specific
government unit or entity, the provisions of the Administrative Code prevail.

Same; The government-owned or controlled corporations created through special charters are those
that meet the two conditions prescribed in Section 16, Article XII of the Constitution, regarding their creation
in the interest of common good and their being subject to the test of economic viability.The government-
owned or controlled corporations created through Manila International Airport Authority vs. Court of Appeals
special charters are those that meet the two conditions prescribed in Section 16, Article XII of the Constitution.
The first condition is that the government-owned or controlled corporation must be established for the
common good. The second condition is that the government-owned or controlled corporation must meet the
test of economic viability. Section 16, Article XII of the 1987 Constitution provides: SEC. 16. The Congress shall
not, except by general law, provide for the formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or established by special charters in the
interest of the common good and subject to the test of economic viability.

Same; The test of economic viability applies only to government-owned or controlled corporations
that perform economic or commercial activities and need to compete in the market placegovernment
instrumentalities vested with corporate powers and performing governmental or public functions need not
meet the test of economic viability.The Constitution expressly authorizes the legislature to create
government-owned or controlled corporations through special charters only if these entities are required to
meet the twin conditions of common good and economic viability. In other words, Congress has no power to
create government-owned or controlled corporations with special charters unless they are made to comply
with the two conditions of common good and economic viability. The test of economic viability applies only to
government-owned or controlled corporations that perform economic or commercial activities and need to
compete in the market place. Being essentially economic vehicles of the State for the common goodmeaning
for economic development purposesthese government-owned or controlled corporations with special
charters are usually organized as stock corporations just like ordinary private corporations. In contrast,
government instrumentalities vested with corporate powers and performing governmental or public functions
need not meet the test of economic viability. These instrumentalities perform essential public services for the
common good, services that every modern State must provide its citizens. These instrumentalities need not be
economically viable since the government may even subsidize their entire operations. These instrumentalities
are not the government-owned or controlled corporations referred to in Section 16, Article XII of the 1987
Constitution.

Manila International Airport Authority; Administrative Law; The MIAA need not meet the test of
economic viability because the legislature did not create MIAA to compete in the market place.The MIAA
need not meet the test of economic viability because the legislature did not create MIAA to Manila
International Airport Authority vs. Court of Appeals compete in the market place. MIAA does not compete in
the market place because there is no competing international airport operated by the private sector. MIAA
performs an essential public service as the primary domestic and international airport of the Philippines.

Same; Words and Phrases; The terminal fees that MIAA charges every passenger are regulatory or
administrative fees and not income from commercial transactions.MIAA performs an essential public service
that every modern State must provide its citizens. MIAA derives its revenues principally from the mandatory
fees and charges MIAA imposes on passengers and airlines. The terminal fees that MIAA charges every
passenger are regulatory or administrative fees and not income from commercial transactions. Manila
International Airport Authority vs. Court of Appeals, 495 SCRA 591, G.R. No. 155650 July 20, 2006
G.R. No. 192945. September 5, 2012.*

CITY OF IRIGA, petitioner, vs. CAMARINES SUR III ELECTRIC COOPERATIVE, INC. (CASURECO III),
respondent.

Remedial Law; Courts; Court of Tax Appeals; Jurisdiction; Republic Act No. (RA) 9282, which took
effect on April 23, 2004, expanded the jurisdiction of the Court of Tax Appeals (CTA) to include, among others,
the power to review by appeal decisions, orders or resolutions of the Regional Trial Courts in local tax cases
originally decided or resolved by them in the exercise of their original or appellate jurisdiction.RA 9282,
which took effect on April 23, 2004, expanded the jurisdiction of the Court of Tax Appeals (CTA) to include,
among others, the power to review by appeal decisions, orders or resolutions of the Regional Trial Courts in
local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction.

Void Judgments; A void judgment has no legal or binding force or efficacy for any purpose or at any
place.Considering that RA 9282 was already in effect when the RTC rendered its decision on February 7,
2005, CASURECO III should have filed its appeal, not with the CA, but with the CTA Division in accordance with
the applicable law and the rules of the CTA. Resort to the CA was, therefore, improper, rendering its decision
null and void for want of jurisdiction over the subject matter. A void judgment has no legal or binding force or
efficacy for any purpose or at any place. Hence, the fact that petitioners motion for reconsideration from the
CA Decision was belatedly filed is inconsequential, because a void and non-existent decision would never have
acquired finality.

Taxation; Cooperatives; Electric Cooperatives; The tax privileges granted to electric cooperatives
registered with National Electrification Administration (NEA) under P.D. 269 were validly withdrawn and only
those registered with the Cooperative Development Authority (CDA) under R.A. 6938 may continue to enjoy
the tax privileges under the Cooperative Code.In Philippine Rural Electric Cooperatives Association, Inc.
(PHILRECA) v. The Secretary, Department of Interior and Local Government, 403 SCRA 558 (2003), the Court
held that the tax privileges granted to electric cooperatives registered with NEA under PD 269 were validly
withdrawn and only those registered with the CDA under RA 6938 may continue to enjoy the tax privileges
under the Cooperative Code. Therefore, CASURECO III can no longer invoke PD 269 to evade payment of local
taxes. Moreover, its provisional registration with the CDA which granted it exemption for the payment of local
taxes was extended only until May 4, 1992. Thereafter, it can no longer claim any exemption from the
payment of local taxes, including the subject franchise tax.

Same; Local Taxation; The power of the local government units to impose and collect taxes is derived
from the Constitution itself which grants them the power to create its own sources of revenues and to levy
taxes, fees and charges subject to such guidelines and limitation as the Congress may provide.The power of
the local government units to impose and collect taxes is derived from the Constitution itself which grants
them the power to create its own sources of revenues and to levy taxes, fees and charges subject to such
guidelines and limitation as the Congress may provide. This explicit constitutional grant of power to tax is
consistent with the basic policy of local autonomy and decentralization of governance. With this power, local
government units have the fiscal mechanisms to raise the funds needed to deliver basic services to their
constituents and break the culture of dependence on the national government. Thus, consistent with these
objectives, the LGC was enacted granting the local government units, like petitioner, the power to impose and
collect franchise tax.

Same; Franchise Tax; Words and Phrases; A franchise tax is a tax on the privilege of transacting
business in the state and exercising corporate franchises granted by the state.In National Power Corporation
v. City of Cabanatuan, 401 SCRA 259 (2003), the Court declared that a franchise tax is a tax on the privilege of
transacting business in the state and exercising corporate franchises granted by the state. It is not levied on
the corporation simply for existing as a corporation, upon its property or its income, but on its exercise of the
rights or privileges granted to it by the government. It is within this context that the phrase tax on businesses
enjoying a franchise in Section 137 of the LGC should be interpreted and understood.
Same; Same; Requisites That Must Concur in Order to be Liable for Local Franchise Tax.To be liable
for local franchise tax, the following requisites should concur: (1) that one has a franchise in the sense of a
secondary or special franchise; and (2) that it is exercising its rights or privileges under this franchise within the
territory of the pertinent local government unit.

Same; Same; Franchise tax shall be based on gross receipts precisely because it is a tax on business,
rather than on persons or property.It should be stressed that what the petitioner seeks to collect from
CASURECO III is a franchise tax, which as defined, is a tax on the exercise of a privilege. As Section 137 of the
LGC provides, franchise tax shall be based on gross receipts precisely because it is a tax on business, rather
than on persons or property. Since it partakes of the nature of an excise tax, the situs of taxation is the place
where the privilege is exercised, in this case in the City of Iriga, where CASURECO III has its principal office and
from where it operates, regardless of the place where its services or products are delivered. Hence, franchise
tax covers all gross receipts from Iriga City and the Rinconada area.
G.R. No. 180639. June 29, 2010.*

LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. HON. MAURICIO B. AMBANLOC, in his
capacity as the Provincial Treasurer of Benguet, respondent.

Taxation; Local Government Code (RA 7160); Local Taxation; The provincial revenue code provides
that the subject tax had to be paid prior to the issuance of the permit to extract sand and gravel; Persons who
applied for special permits needed to pay the tax, even though they did not extract materials for commercial
purposes.The provincial revenue code provides that the subject tax had to be paid prior to the issuance of
the permit to extract sand and gravel. Its Article D, Section 2, enumerates four kinds of permits: commercial,
industrial, special, and gratuitous. Special permits covered only personal use of the extracted materials and did
not allow the permitees to sell materials coming from his concession. Among applicants for permits, however,
only gratuitous permits were exempt from the sand and gravel tax. It follows that persons who applied for
special permits needed to pay the tax, even though they did not extract materials for commercial purposes.
Thus, the tax needed to be paid regardless of the applicability of the administrative and reportorial
requirements of that revenue code.

Same; Same; Same; Contract makes no mention of any exemption from securing government
permits.But this merely declares that Lepantos extraction and use of mineral deposits bears the consent of
the national government, in line with the principle that exploration of natural resources can only be done
under the control and supervision of the State. The contract makes no mention of any exemption from
securing government permits.

Same; Same; Same; Tax Exemptions; An exemption from the requirements of the provincial
government should have a clear basis, whether in law, ordinance, or even from the contract itself.Lepanto
invokes the Bureau of Mines and Geo-Sciences view that the mining company did not require it to get any of
the permits that Mines Administrative Order MRD-27 might require. But that Bureaus view applied only to
permits under MRD-27. The Bureau has no authority to determine the applicability of local ordinances.
Besides, even the Bureau itself states that the exemption from MRD-27 is not absolute as it shall not apply if
the sand and gravel were to be disposed of commercially. An exemption from the requirements of the
provincial government should have a clear basis, whether in law, ordinance, or even from the contract itself.
Unfortunately for Lepanto, it failed to show its entitlement to such exemption.

Same; Same; Same; The tax is an excise tax imposed on the privilege of extracting sand and gravel; It
is settled that provincial governments can levy excise taxes on quarry resources independently from the
national government.But in the cases where this principle has been applied, the taxes which were stricken
down were in the nature of business taxes. The reasoning behind those cases was that the incidental activity
could not be treated as a business separate and distinct from the main business of the taxpayer. Here the tax is
an excise tax imposed on the privilege of extracting sand and gravel. And it is settled that provincial
governments can levy excise taxes on quarry resources independently from the national government.
PROVINCE OF BULACAN vs. CA

FACTS

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." 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.

Pursuant thereto, the Provincial Treasurer of Bulacan, in a letter dated November 11, 1993, assessed
private respondent Republic Cement Corporation 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 but was denied by the Provincial Treasurer on January 17,
1994. Republic Cement consequently filed a petition for declaratory relief with the RTC 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. 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 (temporary agreement)
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 warrant of levy. CA ruled that Province
of Bulacan had no legal authority.

ISSUE

W/N 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? No, a
province may not levy excise taxes on articles already taxed by the National Internal Revenue Code.

RULING

First, with regard to the remedial issue. 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. However, the SC declared that under the
principle of estoppel, the petitioners can no longer attack the modus Vivendi approved by the CA.
Second and more importantly, is the issue on the validity of the ordinance. 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

The CA on the basis of Section 134, ruled that a province was empowered to impose taxes only on
sand, gravel, and other quarry resources extracted from public lands, its authority to tax being limited
by said provision only to those taxes, fees and charges provided in Article I, Chapter 2, Title 1 of Book
II of the Local Government Code. On the other hand, petitioners claim that Sections 129 and 186 of
the Local Government Code authorizes the province to impose taxes other than those specifically
enumerated under the Local Government Code. The CA 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.
However, in spite of this, province of Bulacan is 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. The 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

A province may not, therefore, levy excise taxes on articles already taxed by the National Internal
Revenue Code. The National Internal Revenue Code levies a tax on all quarry resources, regardless of
origin, whether extracted from public or private land. Thus, a province may not ordinarily impose taxes
on stones, sand, gravel, earth and other quarry resources, as the same are already taxed under the
National Internal Revenue Code. The province can, however, impose a tax on stones, sand, gravel,
earth and other quarry resources extracted from public land because it is expressly empowered to do
so under the Local Government Code. As to stones, sand, gravel, earth and other quarry resources
extracted from private land, however, it may not do so, because of the limitation provided by Section
133 of the Code in relation to Section 151 of the National Internal Revenue Code.
G.R. No. 183137. April 10, 2013.*

PELIZLOY REALTY CORPORATION, represented herein by its President, GREGORY K. LOY, petitioner, vs.
THE PROVINCE OF BENGUET, respondent.

Taxation; The power to tax is an attribute of sovereignty, and as such, inheres in the State. Such,
however, is not true for provinces, cities, municipalities and barangays as they are not the sovereign; rather,
they are mere territorial and political subdivisions of the Republic of the Philippines.The power to tax is
an attribute of sovereignty, and as such, inheres in the State. Such, however, is not true for provinces, cities,
municipalities and barangays as they are not the sovereign; rather, they are mere territorial and political
subdivisions of the Republic of the Philippines. The rule governing the taxing power of provinces, cities,
municipalities and barangays is summarized in Icard v. City Council of Baguio: It is settled that a municipal
corporation unlike a sovereign state is clothed with no inherent power of taxation. The charter or statute must
plainly show an intent to confer that power or the municipality, cannot assume it. And the power when
granted is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the term used in granting
that power must be resolved against the municipality. Inferences, implications, deductionsall thesehave
no place in the interpretation of the taxing power of a municipal corporation.

Same; The power of a province to tax is limited to the extent that such power is delegated to it either
by the Constitution or by statute.The power of a province to tax is limited to the extent that such power is
delegated to it either by the Constitution or by statute. Section 5, Article X of the 1987 Constitution is clear on
this point: Section 5. Each local government unit shall have the power to create its own sources of revenues
and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide,
consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the
local governments.

Same; Constitutional Law; Per Section 5, Article X of the 1987 Constitution, 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.Per Section 5, Article X of the 1987 Constitution, 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. Nevertheless, such authority is subject to such guidelines and limitations as the Congress may
provide. In conformity with Section 3, Article X of the 1987 Constitution, Congress enacted Republic Act No.
7160, otherwise known as the Local Government Code of 1991. Book II of the LGC governs local taxation and
fiscal matters. Relevant provisions of Book II of the LGC establish the parameters of the taxing powers of LGUS
found below. First, Section 130 provides for the following fundamental principles governing the taxing powers
of LGUs: 1. Taxation shall be uniform in each LGU. 2. Taxes, fees, charges and other impositions shall: a. be
equitable and based as far as practicable on the taxpayers ability to pay; b. be levied and collected only for
public purposes; c. not be unjust, excessive, oppressive, or confiscatory; d. not be contrary to law, public
policy, national economic policy, or in the restraint of trade. 3. The collection of local taxes, fees, charges and
other impositions shall in no case be let to any private person. 4. The revenue collected pursuant to the
provisions of the LGC shall inure solely to the benefit of, and be subject to the disposition by, the LGU levying
the tax, fee, charge or other imposition unless otherwise specifically provided by the LGC. 5. Each LGU shall, as
far as practicable, evolve a progressive system of taxation.

Same; Percentage Tax; National Internal Revenue Code (R.A. No. 8424); Words and Phrases; In
Commissioner of Internal Revenue v. Citytrust Investment Phils. Inc., 503 SCRA 398 (2006), the Supreme Court
defined percentage tax as a tax measured by a certain percentage of the gross selling price or gross value in
money of goods sold, bartered or imported; or of the gross receipts or earnings derived by any person
engaged in the sale of services.In Commissioner of Internal Revenue v. Citytrust Investment Phils., Inc., 503
SCRA 398 (2006), the Supreme Court defined percentage tax as a tax measured by a certain percentage of the
gross selling price or gross value in money of goods sold, bartered or imported; or of the gross receipts or
earnings derived by any person engaged in the sale of services. Also, Republic Act No. 8424, otherwise known
as the National Internal Revenue Code (NIRC), in Section 125, Title V, lists amusement taxes as among the
(other) percentage taxes which are levied regardless of whether or not a taxpayer is already liable to pay
value-added tax (VAT).
Same; Same; Amusement Tax; Local Government Units; Provinces are not barred from levying
amusement taxes even if amusement taxes are a form of percentage taxes.Amusement taxes are fixed at a
certain percentage of the gross receipts incurred by certain specified establishments. Thus, applying the
definition in CIR v. Citytrust and drawing from the treatment of amusement taxes by the NIRC, amusement
taxes are percentage taxes as correctly argued by Pelizloy. However, provinces are not barred from levying
amusement taxes even if amusement taxes are a form of percentage taxes. Section 133 (i) of the LGC prohibits
the levy of percentage taxes except as otherwise provided by the LGC.

Same; Same; Same; Same; Section 140, Local Government Code (R.A. No. 7160) expressly allows for
the imposition by provinces of amusement taxes on the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of amusement. However, resorts, swimming
pools, bath houses, hot springs, and tourist spots are not among those places expressly mentioned by Section
140 of the Local Government Code as being subject to amusement taxes.Evidently, Section 140 of the LGC
carves a clear exception to the general rule in Section 133 (i). Section 140 expressly allows for the imposition
by provinces of amusement taxes on the proprietors, lessees, or operators of theaters, cinemas, concert halls,
circuses, boxing stadia, and other places of amusement. However, resorts, swimming pools, bath houses, hot
springs, and tourist spots are not among those places expressly mentioned by Section 140 of the LGC as being
subject to amusement taxes. Thus, the determination of whether amusement taxes may be levied on
admissions to resorts, swimming pools, bath houses, hot springs, and tourist spots hinges on whether the
phrase other places of amusement encompasses resorts, swimming pools, bath houses, hot springs, and
tourist spots.

Same; Same; Same; In Philippine Basketball Association v. Court of Appeals, 337 SCRA 358 (2000), the
Supreme Court had an opportunity to interpret a starkly similar provision or the counterpart provision of
Section 140 of the Local Government Code in the Local Tax Code then in effect.In Philippine Basketball
Association v. Court of Appeals, 337 SCRA 358 (2000), the Supreme Court had an opportunity to interpret a
starkly similar provision or the counterpart provision of Section 140 of the LGC in the Local Tax Code then in
effect. Petitioner Philippine Basketball Association (PBA) contended that it was subject to the imposition by
LGUs of amusement taxes (as opposed to amusement taxes imposed by the national government). In support
of its contentions, it cited Section 13 of Presidential Decree No. 231, otherwise known as the Local Tax Code of
1973, (which is analogous to Section 140 of the LGC).

Same; Same; Same; 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. It follows
that they cannot be considered as among the other places of amusement contemplated by Section 140 of the
Local Government Code and which may properly be subject to amusement taxes.As defined in The New
Oxford American Dictionary, show means a spectacle or display of something, typically an impressive one;
while performance means an act of staging or presenting a play, a concert, or other form of entertainment.
As such, the ordinary definitions of the words show and performance denote not only visual engagement
(i.e., the seeing or viewing of things) but also active doing (e.g., displaying, staging or presenting) such that
actions are manifested to, and (correspondingly) perceived by an audience. Considering these, it is clear that
resorts, swimming pools, bath houses, hot springs and tourist spots cannot be considered venues primarily
where one seeks admission to entertain oneself by seeing or viewing the show or performances. While it is
true that they may be venues where people are visually engaged, they are not primarily venues for their
proprietors or operators to actively display, stage or present shows and/or performances. Thus, 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. It follows that they cannot be considered as
among the other places of amusement contemplated by Section 140 of the LGC and which may properly be
subject to amusement taxes. Pelizloy Realty Corporation vs. Province of Benguet, 695 SCRA 491, G.R. No.
183137 April 10, 2013
G.R. No. 166134. June 29, 2010.*

ANGELES CITY, petitioner, vs. ANGELES ELECTRIC CORPORATION and REGIONAL TRIAL COURT BRANCH
57, ANGELES CITY, respondents.

Taxation; Injunction; Taxes being the lifeblood of the government should be collected promptly; No
court shall have the authority to grant an injunction to restrain the collection of any national internal revenue
tax, fee or charge imposed by the National Internal Revenue Code.A principle deeply embedded in our
jurisprudence is that taxes being the lifeblood of the government should be collected promptly, without
unnecessary hindrance or delay. In line with this principle, the National Internal Revenue Code of 1997 (NIRC)
expressly provides that no court shall have the authority to grant an injunction to restrain the collection of any
national internal revenue tax, fee or charge imposed by the code. An exception to this rule obtains only when
in the opinion of the Court of Tax Appeals (CTA) the collection thereof may jeopardize the interest of the
government and/or the taxpayer.

Same; Same; In the case of the collection of local taxes, there is no express provision in the Local
Government Code (LGC) prohibiting courts from issuing an injunction to restrain local governments from
collecting taxes.The situation, however, is different in the case of the collection of local taxes as there is no
express provision in the LGC prohibiting courts from issuing an injunction to restrain local governments from
collecting taxes. Thus, in the case of Valley Trading Co., Inc. v. Court of First Instance of Isabela, Branch II, 171
SCRA 501 (1989), cited by the petitioner, we ruled that: Unlike the National Internal Revenue Code, the Local
Tax Code does not contain any specific provision prohibiting courts from enjoining the collection of local taxes.
Such statutory lapse or intent, however it may be viewed, may have allowed preliminary injunction where local
taxes are involved but cannot negate the procedural rules and requirements under Rule 58.

Remedial Law; Injunction; Requisites to warrant the issuance of a writ of the preliminary injunction.
Two requisites must exist to warrant the issuance of a writ of preliminary injunction, namely: (1) the existence
of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the
writ to prevent serious damage.

Same; Same; As a rule, the issuance of preliminary injunction rests entirely within the discretion of
the court taking cognizance of the case and will not be interfered with, except where there is grave abuse of
discretion committed by the court.As a rule, the issuance of a preliminary injunction rests entirely within the
discretion of the court taking cognizance of the case and will not be interfered with, except where there is
grave abuse of discretion committed by the court. For grave abuse of discretion to prosper as a ground for
certiorari, it must be demonstrated that the lower court or tribunal has exercised its power in an arbitrary and
despotic manner, by reason of passion or personal hostility, and it must be patent and gross as would amount
to an evasion or to a unilateral refusal to perform the duty enjoined or to act in contemplation of law. In other
words, mere abuse of discretion is not enough.
G.R. No. 171033. August 3, 2010.*

CITY MAYOR, CITY TREASURER, CITY ASSESSOR, ALL OF QUEZON CITY, and ALVIN EMERSON S. YU,
petitioners, vs. RIZAL COMMERCIAL BANKING CORPORATION, respondent.

Local Government Code; Local Taxation; Real Estate Tax; From 1 January 1992 onwards, the proper
basis for the computation of the real property tax payable, including penalties or interests, if applicable, must
be Republic Act No. 7160.Section 78 of P.D. No. 464 provides for a one-year redemption period for
properties foreclosed due to tax delinquency, thus: Sec. 78. Redemption of real property after sale.Within
the term of one year from the date of the registration of the sale of the property, the delinquent taxpayer or
his representative, or in his absence, any person holding a lien or claim over the property, shall have the right
to redeem the same by paying the provincial or city treasurer or his deputy the total amount of taxes and
penalties due up to the date of redemption, the costs of sale and the interest at the rate of twenty per centum
on the purchase price, and such payment shall invalidate the sale certificate issued to the purchaser and shall
entitle the person making the same to a certificate from the provincial or city treasurer or his deputy, stating
that he had redeemed the property. From the foregoing, the owner or any person holding a lien or claim over
a tax delinquent property sold at public auction has one (1) year from the date of registration of sale to
redeem the property. However, since the passing of R.A. No. 7160, such is no longer controlling. The issue of
whether or not R.A No. 7160 or the Local Government Code, repealed P.D. No. 464 or the Real Property Tax
Code has long been laid to rest by this Court. Jurisdiction thrives to the effect that R.A. No. 7160 repealed P.D.
No. 464. From January 1, 1992 onwards, the proper basis for the computation of the real property tax payable,
including penalties or interests, if applicable, must be R.A. No. 7160.

Same; Same; Same; Redemption Period; Statutory Construction; A general statute is one which
embraces a class of subjects or places and does not omit any subject or place naturally belonging to such class,
whereas a special statute, as the term is generally understood, is one which relates to particular persons or
things of a class or to a particular portion or section of the state only; In the present case, Republic Act No.
7160 is to be construed as a general law, while City Ordinance No. SP-91, S-93 is a special law, having
emanated only from Republic Act No. 7160 and with limited territorial application in Quezon City only. The
ordinance is explicit that the one-year redemption period should be counted from the date of the annotation
of the sale of the property at the proper registry. At first glance, this provision runs counter to that of Section
261 of R.A. No. 7160 which provides that the one year redemption period shall be counted from the date of
sale of the tax delinquent property. There is, therefore, a need to reconcile these seemingly conflicting
provisions of a general law and a special law. A general statute is one which embraces a class of subjects or
places and does not omit any subject or place naturally belonging to such class. A special statute, as the term is
generally understood, is one which relates to particular persons or things of a class or to a particular portion or
section of the state only. In the present case, R.A. No. 7160 is to be construed as a general law, while City
Ordinance No. SP-91, S-93 is a special law, having emanated only from R.A. No. 7160 and with limited
territorial application in Quezon City only. A general law and a special law on the same subject should be
accordingly read together and harmonized, if possible, with a view to giving effect to both. Where there are
two acts, one of which is special and particular and the other general which, if standing alone, would include
the same matter and thus conflict with the special act, the special must prevail, since it evinces the legislative
intent more clearly than that of the general statute and must be taken as intended to constitute an exception
to the rule. More so, when the validity of the law is not in question.

Same; Same; Same; Same; Same; To harmonize the provisions of the two laws and to maintain the
policy of the law to aid rather than to defeat the owners right to redeem his property, Section 14 (a),
Paragraph 7 of City Ordinance No. SP-91, S-93 should be construed as to define the phrase one (1) year from
the date of sale as appearing in Section 261 of Republic Act No. 7160, to mean one (1) year from the date of
the annotation of the sale of the property at the proper registrythe counting of the one (1) year
redemption period of property sold at public auction for its tax delinquency should be counted from the date
of annotation of the certificate of sale in the proper Register of Deeds.In giving effect to these laws, it is also
worthy to note that in cases involving redemption, the law protects the original owner. It is the policy of the
law to aid rather than to defeat the owners right. Therefore, redemption should be looked upon with favour
and where no injury will follow, a liberal construction will be given to our redemption laws, specifically on the
exercise of the right to redeem. To harmonize the provisions of the two laws and to maintain the policy of the
law to aid rather than to defeat the owners right to redeem his property, Section 14 (a), Paragraph 7 of City
Ordinance No. SP-91, S-93 should be construed as to define the phrase one (1) year from the date of sale as
appearing in Section 261 of R.A. No. 7160, to mean one (1) year from the date of the annotation of the sale of
the property at the proper registry. Consequently, the counting of the one (1) year redemption period of
property sold at public auction for its tax delinquency should be counted from the date of annotation of the
certificate of sale in the proper Register of Deeds.

Same; Same; Same; Same; Pleadings and Practice; The object of the pleadings is to draw the lines of
battle between the litigants and to indicate fairly the nature of the claims or defenses of both parties.The
issues in every case are limited to those presented in the pleadings. The object of the pleadings is to draw the
lines of battle between the litigants and to indicate fairly the nature of the claims or defenses of both parties.
Points of law, theories, issues and arguments should be brought to the attention of the trial court to give the
opposing party an opportunity to present further evidence material to these matters during judicial
proceedings before the lower court. Otherwise, it would be too late to raise these issues during appeal. A party
cannot, on appeal, change fundamentally the nature of the issue in the case. When a party deliberately adopts
a certain theory and the case is decided upon that theory in the court below, he will not be permitted to
change the same on appeal, because to permit him to do so would be unfair to the adverse party.

Same; Same; Same; Same; Same; Local officials cannot feign ignorance of a law that they have
promulgated in the exercise of local autonomy.As early as in its Memorandum to Serve as Draft Resolution,
respondent had brought Section 14 (a), Paragraph 7 of City Ordinance No. SP-91, S-93, or the Quezon City
Revenue Code of 1993, to the attention of petitioners. Respondent also reiterated the applicability of the
provision to his claim of redemption in its motion for reconsideration of the Order initially denying the petition
for mandamus. Petitioners were given every opportunity to counter respondents allegations, which it in fact
did by filing an Opposition to the motion for reconsideration. Since the inception of the petition in the lower
court, respondent has not changed its preposition that the one (1) year redemption period shall be counted
from the date of registration of the certificate of sale and not from the date of sale of the subject properties.
Citing the appropriate provision of the Quezon City Revenue Code of 1993 did not alter this, but on the
contrary, even buttressed its claim. Furthermore, petitioners cannot feign ignorance of a law that it has
promulgated in the exercise of its local autonomy. Nor can it be allowed to deny the applicability of Section 14
(a), Paragraph 7 of the Quezon City Revenue Code of 1993, while at the same time invoking that it has strictly
adhered to the Quezon City Revenue Code when it conducted the public auction of the tax delinquent
properties.
G.R. No. 167732. July 11, 2012.*

TEAM PACIFIC CORPORATION, petitioner, vs. JOSEPHINE DAZA in her capacity as MUNICIPAL
TREASURER OF TAGUIG, respondent.

Taxation; Appeals; A taxpayer dissatisfied with a local treasurers denial of or inaction on his protest
over an assessment has thirty (30) days within which to appeal to the court of competent jurisdiction.A
taxpayer dissatisfied with a local treasurers denial of or inaction on his protest over an assessment has thirty
(30) days within which to appeal to the court of competent jurisdiction. Under the law, said period is to be
reckoned from the taxpayers receipt of the denial of his protest or the lapse of the sixty (60) day period within
which the local treasurer is required to decide the protest, from the moment of its filing. This much is clear
from Section 195 of the Local Government Code.

Certiorari; Narrow in scope and inflexible in character, certiorari is an extraordinary remedy designed
for the correction of errors of jurisdiction and not errors of judgment.Daza cannot be said to be performing a
judicial or quasi-judicial function in assessing TPCs business tax and/or effectively denying its protest as then
Municipal Treasurer of Taguig. For this reason, Dazas actions are not the proper subjects of a Rule 65 petition
for certiorari which is the appropriate remedy in cases where a the tribunal, board, or officer exercising judicial
or quasi-judicial functions acted without or in grave abuse of discretion amounting to lack or excess of
jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in law. Narrow in scope and
inflexible in character, certiorari is an extraordinary remedy designed for the correction of errors of jurisdiction
and not errors of judgment. It is likewise considered mutually exclusive with appeal like the one provided by
Article 195 of the Local Government Code for a local treasurers denial of or inaction on a protest.

Taxation; Court of Tax Appeals; Jurisdiction; As amended by RA No. 9282, paragraph c (2) [a], Section
7 of RA No. 1125 has vested the Court of Tax Appeals (CTA) with the exclusive appellate jurisdiction over,
among others, appeals from the judgments, resolutions or orders of the Regional Trial Court (RTC) in tax
collection cases originally decided by them in their respective territorial jurisdiction.Granted that a Rule 45
petition for review on certiorari is the proper mode of appeal when the issues raised are purely questions of
law, TPC lost sight of the fact that, as amended by RA No. 9282, paragraph c (2) [a], Section 7 of RA No. 1125
has vested the Court of Tax Appeals (CTA) with the exclusive appellate jurisdiction over, among others, appeals
from the judgments, resolutions or orders of the RTC in tax collection cases originally decided by them in their
respective territorial jurisdiction. As amended by Section 9 of RA No. 9282, Section 11 of RA No. 1125 likewise
requires that the appeal be perfected within thirty (30) days after receipt of the decision and shall be made by
filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules
of Civil Procedure.
G.R. No. 166387. January 19, 2009.*

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. ENRON SUBIC POWER CORPORATION,


respondent.

Taxation; A taxpayer must be informed in writing of the legal and factual bases of the tax assessment
made against him.It is clear from the foregoing that a taxpayer must be informed in writing of the legal and
factual bases of the tax assessment made against him. The use of the word shall in these legal provisions
indicates the mandatory nature of the requirements laid down therein. We note the CTAs findings: In [this]
case, [the CIR] merely issued a formal assessment and indicated therein the supposed tax, surcharge, interest
and compromise penalty due thereon. The Revenue Officers of the [the CIR] in the issuance of the Final
Assessment Notice did not provide Enron with the written bases of the law and facts on which the subject
assessment is based. [The CIR] did not bother to explain how it arrived at such an assessment. Moreso, he
failed to mention the specific provision of the Tax Code or rules and regulations which were not complied with
by Enron.

Same; The advice of tax deficiency, given by the Commissioner of Internal Revenue (CIR) to an
employee of Enron, as well as the preliminary five-day letter, were not valid substitutes for the mandatory
notice in writing of the legal and factual bases of the assessment.The advice of tax deficiency, given by the
CIR to an employee of Enron, as well as the preliminary five-day letter, were not valid substitutes for the
mandatory notice in writing of the legal and factual bases of the assessment. These steps were mere
perfunctory discharges of the CIRs duties in correctly assessing a taxpayer. The requirement for issuing a
preliminary or final notice, as the case may be, informing a taxpayer of the existence of a deficiency tax
assessment is markedly different from the requirement of what such notice must contain. Just because the CIR
issued an advice, a preliminary letter during the pre-assessment stage and a final notice, in the order required
by law, does not necessarily mean that Enron was informed of the law and facts on which the deficiency tax
assessment was made.

Same; Tax Assessment; The law requires that the legal and factual bases of the assessment be stated
in the formal letter of demand and assessment notice.The law requires that the legal and factual bases of
the assessment be stated in the formal letter of demand and assessment notice. Thus, such cannot be
presumed. Otherwise, the express provisions of Article 228 of the NIRC and RR No. 12-99 would be rendered
nugatory. The alleged factual bases in the advice, preliminary letter and audit working papers did not
suffice. There was no going around the mandate of the law that the legal and factual bases of the assessment
be stated in writing in the formal letter of demand accompanying the assessment notice.

Same; Same; In view of the absence of a fair opportunity for Enron to be informed of the legal and
factual bases of the assessment against it, the assessment in question was void.We note that the old law
merely required that the taxpayer be notified of the assessment made by the CIR. This was changed in 1998
and the taxpayer must now be informed not only of the law but also of the facts on which the assessment is
made. Such amendment is in keeping with the constitutional principle that no person shall be deprived of
property without due process. In view of the absence of a fair opportunity for Enron to be informed of the
legal and factual bases of the assessment against it, the assessment in question was void. We reiterate our
ruling in Reyes v. Almanzor, et al., 196 SCRA 322 (1991): Verily, taxes are the lifeblood of the Government and
so should be collected without unnecessary hindrance. However, such collection should be made in
accordance with law as any arbitrariness will negate the very reason for the Government itself.
G.R. No. 175097. February 5, 2010.*

ALLIED BANKING CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, respondent.

Taxation; Assessment; Tax Protest; Pursuant to Section 228 of the National Internal Revenue Code
(NIRC), the proper recourse of petitioners was to dispute the assessment by filing an administrative protest
within 30 days from receipt thereof.In the instant case, petitioner timely filed a protest after receiving the
PAN. In response thereto, the BIR issued a Formal Letter of Demand with Assessment Notices. Pursuant to
Section 228 of the NIRC, the proper recourse of petitioner was to dispute the assessments by filing an
administrative protest within 30 days from receipt thereof. Petitioner, however, did not protest the final
assessment notices. Instead, it filed a Petition for Review with the CTA. Thus, if we strictly apply the rules, the
dismissal of the Petition for Review by the CTA was proper.

Same; Same; Same; Instant case is an exception to the rule on exhaustion of administrative
remedies.A careful reading of the Formal Letter of Demand with Assessment Notices leads us to agree with
petitioner that the instant case is an exception to the rule on exhaustion of administrative remedies, i.e.,
estoppel on the part of the administrative agency concerned.

Same; Same; Same; Court have time and again reminded the Commissioner of Internal Revenue (CIR)
to indicate in a clear and unequivocal language whether his action on a disputed assessment constitute his
final determination thereon in order for the taxpayer concerned to determined when his or her right to appeal
to tax count accrues.In this case, records show that petitioner disputed the PAN but not the Formal Letter of
Demand with Assessment Notices. Nevertheless, we cannot blame petitioner for not filing a protest against
the Formal Letter of Demand with Assessment Notices since the language used and the tenor of the demand
letter indicate that it is the final decision of the respondent on the matter. We have time and again reminded
the CIR to indicate, in a clear and unequivocal language, whether his action on a disputed assessment
constitutes his final determination thereon in order for the taxpayer concerned to determine when his or her
right to appeal to the tax court accrues. Viewed in the light of the foregoing, respondent is now estopped from
claiming that he did not intend the Formal Letter of Demand with Assessment Notices to be a final decision.

Same; Same; Same; It is the Formal Letter of Demand and Assessment Notice that must be
administratively protested or disputed within 30 days and not the Preliminary Assessment Notice (PAN).We
are not disregarding the rules of procedure under Section 228 of the NIRC, as implemented by Section 3 of BIR
Revenue Regulations No. 12-99. It is the Formal Letter of Demand and Assessment Notice that must be
administratively protested or disputed within 30 days, and not the PAN. Neither are we deviating from our
pronouncement in St. Stephens Chinese Girls School v. Collector of Internal Revenue, 104 Phil. 314 (1958)
that the counting of the 30 days within which to institute an appeal in the CTA commences from the date of
receipt of the decision of the CIR on the disputed assessment, not from the date the assessment was issued.
G.R. No. 178087. May 5, 2010.*

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. KUDOS METAL CORPORATION, respondent.

Civil Law; Doctrine of Estoppel; The doctrine of estoppel is predicated on, and has its origin in equity
which, broadly defined, is justice according to natural law and right. As such, the doctrine of estoppel cannot
give validity to an act that is prohibited by law or one that is against public policy.The doctrine of estoppel
cannot be applied in this case as an exception to the statute of limitations on the assessment of taxes
considering that there is a detailed procedure for the proper execution of the waiver, which the BIR must
strictly follow. As we have often said, the doctrine of estoppel is predicated on, and has its origin in, equity
which, broadly defined, is justice according to natural law and right. As such, the doctrine of estoppel cannot
give validity to an act that is prohibited by law or one that is against public policy. It should be resorted to
solely as a means of preventing injustice and should not be permitted to defeat the administration of the law,
or to accomplish a wrong or secure an undue advantage, or to extend beyond them requirements of the
transactions in which they originate. Simply put, the doctrine of estoppel must be sparingly applied.

G.R. No. 179343. January 21, 2010.*

FISHWEALTH CANNING CORPORATION, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE,


respondent.

Taxation; Administrative Protest; Motion for Reconsideration; A motion for reconsideration of the
denial of the administrative protest does not toll the 30-day period to appeal to the Court of Tax Appeals
(CTA).In the case at bar, petitioners administrative protest was denied by Final Decision on Disputed
Assessment dated August 2, 2005 issued by respondent and which petitioner received on August 4, 2005.
Under the above-quoted Section 228 of the 1997 Tax Code, petitioner had 30 days to appeal respondents
denial of its protest to the CTA. Since petitioner received the denial of its administrative protest on August 4,
2005, it had until September 3, 2005 to file a petition for review before the CTA Division. It filed one, however,
on October 20, 2005, hence, it was filed out of time. For a motion for reconsideration of the denial of the
administrative protest does not toll the 30-day period to appeal to the CTA.

G.R. No. 185371. December 8, 2010.*

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. METRO STAR SUPERAMA, INC., respondent.

Taxation; Court of Tax Appeals; Appeals; Court will not lightly set aside the conclusions reached by the
Court of Tax Appeals (CTA) which by the very nature of its functions has accordingly developed an exclusive
expertise on the resolution unless there has been an abuse or improvident exercise of authority.The general
rule is that the Court will not lightly set aside the conclusions reached by the CTA which, by the very nature of
its functions, has accordingly developed an exclusive expertise on the resolution unless there has been an
abuse or improvident exercise of authority. In Barcelon, Roxas Securities, Inc. (now known as UBP Securities,
Inc.) v. Commissioner of Internal Revenue, the Court wrote: Jurisprudence has consistently shown that this
Court accords the findings of fact by the CTA with the highest respect. In Sea-Land Service Inc. v. Court of
Appeals [G.R. No. 122605, 30 April 2001, 357 SCRA 441, 445-446], this Court recognizes that the Court of Tax
Appeals, which by the very nature of its function is dedicated exclusively to the consideration of tax problems,
has necessarily developed an expertise on the subject, and its conclusions will not be overturned unless there
has been an abuse or improvident exercise of authority. Such findings can only be disturbed on appeal if they
are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the Tax
Court. In the absence of any clear and convincing proof to the contrary, this Court must presume that the CTA
rendered a decision which is valid in every respect.

Same; Assessment; If the taxpayer denies ever having received an assessment from the Bureau of
Internal Revenue (BIR), it is incumbent upon the latter to prove by competent evidence that such notice was
indeed received by the addressee.Jurisprudence is replete with cases holding that if the taxpayer denies
ever having received an assessment from the BIR, it is incumbent upon the latter to prove by competent
evidence that such notice was indeed received by the addressee. The onus probandi was shifted to respondent
to prove by contrary evidence that the Petitioner received the assessment in the due course of mail. The
Supreme Court has consistently held that while a mailed letter is deemed received by the addressee in the
course of mail, this is merely a disputable presumption subject to controversion and a direct denial thereof
shifts the burden to the party favored by the presumption to prove that the mailed letter was indeed received
by the addressee (Republic vs. Court of Appeals, 149 SCRA 351).

Same; Same; Section 228 of the Tax Code clearly requires that the taxpayer must be informed that he
is liable for deficiency taxes through the sending of a Preliminary Assessment Notice (PAN).Section 228 of
the Tax Code clearly requires that the taxpayer must first be informed that he is liable for deficiency taxes
through the sending of a PAN. He must be informed of the facts and the law upon which the assessment is
made. The law imposes a substantive, not merely a formal, requirement. To proceed heedlessly with tax
collection without first establishing a valid assessment is evidently violative of the cardinal principle in
administrative investigations that taxpayers should be able to present their case and adduce supporting
evidence.

Same; Same; The sending of a Preliminary Assessment Notice (PAN) to taxpayer to inform him of the
assessment made is but part of the due process requirement in the issuance of a deficiency tax assessment,
the absence of which senders nugatory any assessment made by the tax authorities.It is clear that the
sending of a PAN to taxpayer to inform him of the assessment made is but part of the due process
requirement in the issuance of a deficiency tax assessment, the absence of which renders nugatory any
assessment made by the tax authorities. The use of the word shall in subsection 3.1.2 describes the
mandatory nature of the service of a PAN. The persuasiveness of the right to due process reaches both
substantial and procedural rights and the failure of the CIR to strictly comply with the requirements laid down
by law and its own rules is a denial of Metro Stars right to due process. Thus, for its failure to send the PAN
stating the facts and the law on which the assessment was made as required by Section 228 of R.A. No. 8424,
the assessment made by the CIR is void.

Same; Same; While taxes are the lifeblood of the government, the power to tax has its limits in spite
of all its plenitude.It is an elementary rule enshrined in the 1987 Constitution that no person shall be
deprived of property without due process of law. In balancing the scales between the power of the State to tax
and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights
of a citizen to due process of law and the equal protection of the laws on the other, the scales must tilt in favor
of the individual, for a citizens right is amply protected by the Bill of Rights under the Constitution. Thus, while
taxes are the lifeblood of the government, the power to tax has its limits, in spite of all its plenitude.
G.R. No. 187589. December 3, 2014.*

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. THE STANLEY WORKS SALES (PHILS.),
INCORPORATED, respondent.

Taxation; Assessment; Statute of Limitations; The period to assess and collect deficiency taxes may be
extended only upon a written agreement between the Commissioner of Internal Revenue (CIR) and the
taxpayer prior to the expiration of the three (3)-year prescribed period in accordance with Section 222(b) of
the National Internal Revenue Code (NIRC).The statute of limitations on the right to assess and collect a tax
means that once the period established by law for the assessment and collection of taxes has lapsed, the
governments corresponding right to enforce that action is barred by provision of law. The period to assess
and collect deficiency taxes may be extended only upon a written agreement between the CIR and the
taxpayer prior to the expiration of the three-year prescribed period in accordance with Section 222(b) of the
NIRC. In relation to the implementation of this provision, the CIR issued Revenue Memorandum Order (RMO)
No. 20-90 on 4 April 1990 to provide guidelines on the proper execution of the Waiver of the Statute of
Limitations.

Same; Same; Same; A waiver of the statute of limitations, whether on assessment or collection,
should not be construed as a waiver of the right to invoke the defense of prescription but, rather, an
agreement between the taxpayer and the Bureau of Internal Revenue (BIR) to extend the period to a date
certain, within which the latter could still assess or collect taxes due.To emphasize, the Waiver was not a
unilateral act of the taxpayer; hence, the BIR must act on it, either by conforming to or by disagreeing with the
extension. A waiver of the statute of limitations, whether on assessment or collection, should not be construed
as a waiver of the right to invoke the defense of prescription but, rather, an agreement between the taxpayer
and the BIR to extend the period to a date certain, within which the latter could still assess or collect taxes
due. The waiver does not imply that the taxpayer relinquishes the right to invoke prescription unequivocally.

Same; Same; Same; A statute of limitations on the assessment and collection of internal revenue
taxes was adopted to serve a purpose that would benefit both the taxpayer and the government.Although
we recognize that the power of taxation is deemed inherent in order to support the government, tax
provisions are not all about raising revenue. Our legislature has provided safeguards and remedies beneficial
to both the taxpayer, to protect against abuse; and the government, to promptly act for the availability and
recovery of revenues. A statute of limitations on the assessment and collection of internal revenue taxes was
adopted to serve a purpose that would benefit both the taxpayer and the government.

Same; Same; Same; The statute of limitations imposed by the Tax Code precisely intends to protect
the taxpayer from prolonged and unreasonable assessment and investigation by the Bureau of Internal
Revenue (BIR).Petitioners reliance on CIR v. Suyoc, 104 Phil. 819 (1958), (Suyoc) is likewise misplaced. In
Suyoc, the BIR was induced to extend the collection of tax through repeated requests for extension to pay and
for reinvestigation, which were all denied by the Collector. Contrarily, herein respondent filed only one Protest
over the assessment, and petitioner denied it 10 years after. The subsequent letters of respondent cannot be
construed as inducements to extend the period of limitation, since the letters were intended to urge petitioner
to act on the Protest, and not to persuade the latter to delay the actual collection. Petitioner cannot take
refuge in BPI v. CIR, 473 SCRA 205 (2005), either, considering that respondent and BPI are similarly situated.
Similar to BPI, this is a simple case in which the BIR Commissioner and other BIR officials failed to act promptly
in resolving and denying the request for reconsideration filed by the taxpayer and in enforcing the collection
on the assessment. Both in BPI and in this case, the BIR presented no reason or explanation as to why it took
many years to address the Protest of the taxpayer. The statute of limitations imposed by the Tax Code
precisely intends to protect the taxpayer from prolonged and unreasonable assessment and investigation by
the BIR.
G.R. No. 193100. December 10, 2014.*

SAMAR-I ELECTRIC COOPERATIVE, petitioner, vs. COMMISSIONER OF INTERNAL REVENUE,


respondent.

Taxation; Assessment; Section 203 of the National Internal Revenue Code (NIRC) sets the three (3)-
year prescriptive period to assess; Exceptions.While petitioner is correct that Section 203 sets the three-year
prescriptive period to assess, the following exceptions are provided under Section 222 of the NIRC of 1997,
viz.: SEC. 222. Exceptions as to Period of Limitation of Assessment and Collection of Taxes.(a) In the case of a
false or fraudulent return with intent to evade tax or of failure to file a return, the tax may be assessed, or a
proceeding in court for the collection of such tax may be filed without assessment, at any time within ten (10)
years after the discovery of the falsity, fraud or omission: Provided, That in a fraud assessment which has
become final and executory, the fact of fraud shall be judicially taken cognizance of in the civil or criminal
action for the collection thereof. (b) If before the expiration of the time prescribed in Section 203 for the
assessment of the tax, both the Commissioner and the taxpayer have agreed in writing to its assessment after
such time, the tax may be assessed within the period agreed upon. The period so agreed upon may be
extended by subsequent written agreement made before the expiration of the period previously agreed upon.
(c) Any internal revenue tax which has been assessed within the period of limitation as prescribed in paragraph
(a) hereof may be collected by distraint or levy or by a proceeding in court within five (5) years following the
assessment of the tax. (d) Any internal revenue tax, which has been assessed within the period agreed upon as
provided in paragraph (b) hereinabove, may be collected by distraint or levy or by a proceeding in court within
the period agreed upon in writing before the expiration of the five (5)-year period. The period so agreed upon
may be extended by subsequent written agreements made before the expiration of the period previously
agreed upon. (e) Provided, however, That nothing in the immediately preceding Section and paragraph (a)
hereof shall be construed to authorize the examination and investigation or inquiry into any tax return filed in
accordance with the provisions of any tax amnesty law or decree. (Emphasis supplied) In the case at bar, it was
petitioners substantial underdeclaration of withholding taxes in the amount of P2,690,850.91 which
constituted the falsity in the subject returns giving respondent the benefit of the period under Section
222 of the NIRC of 1997 to assess the correct amount of tax at any time within ten (10) years after the
discovery of the falsity, fraud or omission.

Remedial Law; Civil Procedure; Appeals; Courts will not interfere in matters which are addressed to
the sound discretion of the government agency entrusted with the regulation of activities coming under its
special and technical training and knowledge.We have consistently held that courts will not interfere in
matters which are addressed to the sound discretion of the government agency entrusted with the regulation
of activities coming under its special and technical training and knowledge. The findings of fact of these quasi-
judicial agencies are generally accorded respect and even finality as long as they are supported by substantial
evidence in recognition of their expertise on the specific matters under their consideration. In the case at
bar, petitioner failed to proffer convincing argument and evidence that would persuade us to disturb the
factual findings of the CTA First Division, as affirmed by the CTA EB. As such, we cannot but affirm the finding
of petitioners substantial underdeclaration of withholding taxes in the amount of P2,690,850.91 which
constituted the falsity in the subject returns.

Taxation; Assessment; In Commissioner of Internal Revenue v. Enron Subic Power Corporation, 576
SCRA 212 (2009), the Supreme Court (SC) held that the law requires that the legal and factual bases of the
assessment be stated in the formal letter of demand and assessment notice.In Commissioner of Internal
Revenue v. Enron Subic Power Corporation, 576 SCRA 212 (2009), we held that the law requires that the legal
and factual bases of the assessment be stated in the formal letter of demand and assessment notice, and that
the alleged factual bases in the advice, preliminary letter and audit working papers did not suffice.
G.R. No. 197515. July 2, 2014.*

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. UNITED SALVAGE AND TOWAGE (PHILS.),
INC., respondent.

Court of Tax Appeals; Jurisdiction; The Court of Tax Appeals (CTA) shall have the power to promulgate
rules and regulations for the conduct of its business, and as may be needed, for the uniformity of decisions
within its jurisdiction.Under Section 8 of Republic Act (R.A.) No. 1125, the CTA is categorically described as a
court of record. As such, it shall have the power to promulgate rules and regulations for the conduct of its
business, and as may be needed, for the uniformity of decisions within its jurisdiction. Moreover, as cases filed
before it are litigated de novo, party-litigants shall prove every minute aspect of their cases. Thus, no
evidentiary value can be given the pieces of evidence submitted by the BIR, as the rules on documentary
evidence require that these documents must be formally offered before the CTA. Pertinent is Section 34, Rule
132 of the Revised Rules on Evidence which reads: SEC. 34. Offer of evidence.The court shall consider no
evidence which has not been formally offered. The purpose for which the evidence is offered must be
specified.

Taxation; Section 228 of the Tax Code provides that the taxpayer shall be informed in writing of the
law and the facts on which the assessment is made.Indeed, Section 228 of the Tax Code provides that the
taxpayer shall be informed in writing of the law and the facts on which the assessment is made. Otherwise, the
assessment is void. To implement the aforesaid provision, Revenue Regulation No. 12-99 was enacted by the
BIR, of which Section 3.1.4 thereof reads: 3.1.4. Formal Letter of Demand and Assessment Notice.The formal
letter of demand and assessment notice shall be issued by the Commissioner or his duly authorized
representative. The letter of demand calling for payment of the taxpayers deficiency tax or taxes shall state
the facts, the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the
formal letter of demand and assessment notice shall be void. The same shall be sent to the taxpayer only by
registered mail or by personal delivery. x x x It is clear from the foregoing that a taxpayer must be informed in
writing of the legal and factual bases of the tax assessment made against him. The use of the word shall in
these legal provisions indicates the mandatory nature of the requirements laid down therein.

Same; The statute of limitations on assessment and collection of national internal revenue taxes was
shortened from five (5) years to three (3) years by virtue of Batas Pambansa (B.P.) Blg. 700.The statute of
limitations on assessment and collection of national internal revenue taxes was shortened from five (5) years
to three (3) years by virtue of Batas Pambansa Blg. 700. Thus, petitioner has three (3) years from the date of
actual filing of the tax return to assess a national internal revenue tax or to commence court proceedings for
the collection thereof without an assessment. However, when it validly issues an assessment within the three
(3)-year period, it has another three (3) years within which to collect the tax due by distraint, levy, or court
proceeding. The assessment of the tax is deemed made and the three (3)-year period for collection of the
assessed tax begins to run on the date the assessment notice had been released, mailed or sent to the
taxpayer.

Same; While taxes are the lifeblood of the government, the power to tax has its limits, in spite of all
its plenitude.We ought to reiterate our earlier teachings that in balancing the scales between the power of
the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the
constitutional rights of a citizen to due process of law and the equal protection of the laws on the other, the
scales must tilt in favor of the individual, for a citizens right is amply protected by the Bill of Rights under the
Constitution. Thus, while taxes are the lifeblood of the government, the power to tax has its limits, in spite
of all its plenitude. Even as we concede the inevitability and indispensability of taxation, it is a requirement in
all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. After
all, the statute of limitations on the collection of taxes was also enacted to benefit and protect the taxpayers,
as elucidated in the case of Commissioner of Internal Revenue v. Philippine Global Communication, Inc., 506
SCRA 427 (2006).
G.R. No. 171251. March 5, 2012.*

LASCONA LAND CO., INC., petitioner, vs. COMMIS-SIONER OF INTERNAL REVENUE, respondent.

Taxation; Taxpayers Remedies; Remedies of a taxpayer in case the Commissioner of Internal Revenue
fails to act on the disputed assessment within the 180-day period from date of submission of documents.In
RCBC v. CIR, 522 SCRA 144 (2007), the Court has held that in case the Commissioner failed to act on the
disputed assessment within the 180-day period from date of submission of documents, a taxpayer can either:
(1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day
period; or (2) await the final decision of the Commissioner on the disputed assessments and appeal such final
decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision.

Same; Taxes are the lifeblood of the government and so should be collected without unnecessary
hindrance.Taxes are the lifeblood of the government and so should be collected without unnecessary
hindrance. On the other hand, such collection should be made in accordance with law as any arbitrariness will
negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting
interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of
the common good, may be achieved. Thus, even as we concede the inevitability and indispensability of
taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with
the prescribed procedure. Lascona Land Co. Inc. vs. Commission of Internal Revenue, 667 SCRA 455, G.R. No.
171251 March 5, 2012