PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES,
INC., plaintiff-appellant
to declare Section 2 of Republic Act No.
2264,otherwise known as the Local Autonomy
Act,unconstitutional as an undue delegation of taxing
authority as well as to declare Ordinances Nos. 23 and
27, series of 1962, of the Municipality of Tanauan,
Leyte, null and void.
the ordinances covers same subject matter and the
production tax rates are practically the same
• Municipal Ordinance No. 23, of Tanauan,
Leyte, which was approved on September 25, 1962,
levies and collects “from soft drinks producers and
manufacturers a tax of one-sixteenth (1/16) of a
centavo for every bottle of soft drink corked.”
• On the other hand, Municipal Ordinance No.
27, which was approved on October 28, 1962, levies
and collects “on soft drinks produced or manufactured
within the territorial jurisdiction of this municipality a
tax of ONE CENTAVO (P0.01) on each gallon (128 fluid
ounces, U.S.) of volume capacity.”
MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY,
petitioner
• Petitioner MactanCebu International Airport
Authority (MCIAA) was created by virtue of RA 6958,
mandated to principally manage and control and
supervise Mactan International Airport. Under Section
14, it was granted an exemption to pay realty taxes
that may be imposed by the National Government or
any of its political subdivisions.
• The Office of the treasurer of Cebu City
demanded payment for real property taxes on several
parcels of land owned by petitioner.
MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL
MAYOR, ET AL., defendants-appellees
Legislative powers may be delegated to local
governments in respect of matters of local concern
• By necessary implication, the legislative power
to create political corporations for purposes of local
self-government carries with it the power to confer on
such local governmental agencies the power to tax.
• This is not to say though that the
constitutional injunction against deprivation of
property without due process of law may be passed
over under the guise of the taxing power, except when
the taking of the property is in the lawful exercise of
the taxing power, as when (1) the tax is for a public
purpose; (2) the rule on uniformity of taxation is
observed; (3) either the person or property taxed is
within the jurisdiction of the government levying the
tax; and (4) in the assessment and collection of certain
kinds of taxes notice and opportunity for hearing are
provided.
one tax is imposed by the State and the other by the
city or municipality.
The tax is levied on the produce(whether sold or not)
and not on the sales
HON. FERDINAND J. MARCOS, in his capacity as the
Presiding Judge of the Regional Trial Court, Branch 20,
Cebu City, THE CITY OF CEBU, represented by its Mayor,
HON. TOMAS R. OSMEA, and EUSTAQUIO B. CESA,
respondents
Elsewise stated, taxation is the rule, exemption
therefrom is the exception. However, if the grantee of
the exemption is a political subdivision or
instrumentality, the rigid rule of construction does not
apply because the practical effect of the exemption is
merely to reduce the amount of money that has to be
handled by the government in the course of its
operations.
• Respondent refused to cancel the said
assessment and insisted that petitioner is a GOCC
whose exemption was withdrawn by virtue of Section
193 and 234 of the LGC, to wit: Section 193. Unless
otherwise provided in this Code, tax exemptions or
incentives granted to, or presently enjoyed by all
persons whether natural or juridical, including
government-owned or controlled corporations, except
local water districts, cooperatives duly registered under
RA No. 6938, non-stock and non-profit hospitals and

MANILA ELECTRIC COMPANY, petitioner
MERALCO was granted franchise to supply electricity
for the various municipalities in Laguna. The LGC was
enacted, enjoining local government units to create
their own sources of revenue and to levy taxes, fees
and charges. Laguna enacted ordinance to collect
franchise tax. Meralco paid under protest contending
that P.D. 551 exempted it to pay other taxes aside from
the tax provided by P.D. 551. The SC held that the LGC
repealed and withdrew previously enacted statutes
and exemptions inconsistent with the Code. No
violation of non-impairment clause because franchises
are different from contractual tax exemptions. It can
be amended, altered and repealed by Congress.
NATIONAL POWER CORPORATION, plaintiff
• Petitioner is a government-owned and
controlled corporation created under Commonwealth
Act No. 120, as amended. For many years now,
petitioner sells electric power to the residents of
Cabanatuan City
The respondent assessed the petitioner a franchise tax
amounting to P808,606.41, representing 75% of 1% of
the latter’s gross receipts for the preceding year.
petitioner’s exemption from local taxes has been
repealed by section 193 of the LGC
THE CITY GOVERNMENT OF QUEZON CITY, AND THE
CITY TREASURER OF QUEZON CITY, DR. VICTOR B.
ENRIGA, petitioners
:Bayantel is legislative franchise holder to operate
radio stations. In 1992 Local Government Code took
educational institutions, are hereby withdrawn upon
the effectivity of this Code.
PROVINCE OF LAGUNA and BENITO R. BALAZO, in his
capacity as Provincial Treasurer of Laguna, respondents
Indeed, Article XII, Section 11, of the 1987 Constitution,
like its precursor provisions in the 1935 and the 1973
Constitutions, is explicit that no franchise for the
operation of a public utility shall be granted except
under the condition that such privilege shall be subject
to amendment, alteration or repeal by Congress as and
when the common good so requires.
MERALCO, contended that the imposition of a
franchise tax under Section 2.09 of Laguna Provincial
Ordinance No. 01-92, insofar as it concerned
MERALCO, contravened the provisions of Section 1 of
P.D. 551 – in lieu of other taxes
• Sec. 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.
. The local government units are being strengthened
and made more autonomous, the legislature must still
see to it that (a) the taxpayer will not be over-burdened
or saddled with multiple and unreasonable impositions;
(b) each local government unit will have its fair share of
available resources; (c) the resources of the national
government will not be unduly disturbed; and (d) local
taxation will be fair, uniform, and just.
CITY OF CABANATUAN, defendant
Although as a general rule, LGUs cannot impose taxes,
fees or charges of any kind on the National
Government, its agencies and instrumentalities, this
rule now admits an exception, i.e. when specific
provisions of the LGC authorize the LGUs to impose
taxes, fees, and charges on the aforementioned
entities, viz.: Section 133 of the LGC.
As commonly used, a franchise tax is "a tax on the
privilege of transacting business in the state and
exercising corporate franchises granted by the state."
BAYAN TELECOMMUNICATIONS, INC., respondent
TheCourt views this subsequent piece of legislation as
an express and real intention on the part of Congress
effect. By virtue of Section 234 of the same Code, it
withdrew any exemption from realty tax heretofore
granted to or enjoyed by all persons, including
Bayantel. In July 1992, Congress passed Rep. Act No.
7633 amending Bayantel's original franchise. In
concrete terms, the realty tax exemption heretofore
enjoyed by Bayantel under its original franchise, but
subsequently withdrawn by force of Section 234 of the
LGC, has been restored by Section 14 of Rep. Act No.
7633. In 1993 Quezon City Revenue Code (QCRC) was
enacted, imposing a real property tax on all real
properties in Quezon City, and the withdrawal of
exemption from real property tax under Section 234 of
the LGC. New tax declarations for Bayantel's
realproperties in Quezon City were issued by the City
Assessor. Bayantel contends that they are exempted
from real estate tax. The Supreme Court ruled that
Bayantel is exempted from real estate taxes. TheCourt
views this subsequent piece of legislation as an express
and real intention on the part of Congress to once
again remove from the LGC's delegated taxingpower,
Bayantel's properties that are actually, directly
andexclusively used in the pursuit of its franchise.
PETRON CORPORATION , petitioner,
• Petron maintains a depot or bulk plant at the
Navotas Fishport Complex in Navotas. Through that
depot, it has engaged in the selling of diesel fuels to
vessels used in commercial fishing in and around
Manila Bay.
• Petron was assessed taxes "relative to the
figures covering sale of diesel declared by your Navotas
Terminal from 1997 to 2001 amounting to
P6,259,087.62, as derived from the gross sales of the
depot.
• The assessment was made by virtue of
Ordinance 92-03, or the New Navotas Revenue Code
(Navotas Revenue Code),though such enactment was
not cited in the letter itself.
HAGONOY MARKET VENDOR ASSOCIATION,
petitioner
VICTORIAS MILLING CO., INC., plaintiff-
appellant
AGUSTIN PANALIGAN et al, petitioner
to once again remove from the LGC's delegated
taxingpower, all of the franchisee's (Bayantel's)
properties that are actually, directly andexclusively
used in the pursuit of its franchise.
Indeed, the grant of taxing powers to local government
units under the Constitution and the LGC does not
affect the power of Congress to grant exemptions to
certain persons, pursuant to a declared national policy.
The legal effect of the constitutional grant to local
governments simply means that in interpreting
statutory provisions on municipal taxing powers,
doubts must be resolved in favor of municipal
corporations.
MAYOR TOBIAS M. TIANGCO,
and MUNICIPAL TREASURER MANUEL T. ENRIQUEZ of
the
MUNICIPALITY OF NAVOTAS, METRO MANILA,
respondents.
 A tax on a business is distinct from a tax on the
article itself,or for that matter, that a business tax
is distinct from an excise tax. However,
suchdistinction is immaterial insofar as the latter
part of Section 133 (h) is concerned, forthe phrase
"taxes, fees or charges on petroleum products"
does not qualify the kind oftaxes, fees or charges
that could withstand the absolute prohibition
imposed by theprovision.
While Section 133 (h) does not generally bar the
imposition of business taxes onarticles burdened by
excise taxes under the NIRC, it specifically prohibits
localgovernment units from extending the levy of any
kind of "taxes, fees or charges onpetroleum products."
MUNICIPALITY OF HAGONOY, BULACAN,
respondent
THE MUNICIPALITY OF VICTORIAS, PROVINCE
OF NEGROS OCCIDENTAL., defendant-
appellant
CITY OF TACLOBAN, respondent