REGEN VOLOSO| TAXATION II LOCAL & REAL PROPERTY TAX PROVIONS & CASE DIGEST Nov 7, 201482I. PRELIMINARY MATTERS

A. POWER TO TAX OF LOCAL GOVERNMENT UNITS

1. Sec. 5, Art. X, 1987 Constitution

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.

2. Sec. 129, LGC

Section 129. Power to Create Sources of Revenue. - Each local government unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units.

PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant, vs. MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant appellees. G.R. No. L-31156 February 27, 1976 | En Banc

FACTS: Pepsi-Cola Bottling Company filed a complaint with a preliminary injunction before the CFI to declare Sec. 2 of RA No. 2264 (Local Autonomy Act) unconstitutional as an undue delegation of taxing authority as well as to declare Ordinance Nos. 23 and 27, series of 1962, of the Municipality of Tanauan, Leyte, null and void. Ordinance No. 23 collects from soft drinks producers and manufacturers a tax of 1/16 of a centavo for every bottle of soft drink corked Ordinance No. 27 collects on soft drinks produced or manufactured within the territorial jurisdiction of the municipality a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity The tax imposed in both Ordinance Nos. 23 and 27 is denominated as municipal production tax CFI upheld the constitutionality of Sec. 2 of RA 2264 and declaring Ordinance Nos. 23 and 27 legal and constitutional Pepsi-Cola Bottling Company appealed to the CA which elevated the case to the SC

ISSUE: Whether Sec. 2 of RA 2264 is unconstitutional on the ground that it constitutes an undue delegation of power to tax.

HELD: NOThe power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent government, without being expressly conferred by the people. It is a power that is purely legislative and which the central legislative body cannot delegate either to the executive or judicial department of the government without infringing upon the theory of separation of powers. The exception, however, lies in the case of municipal corporations, to which, said theory does not apply. Legislative powers may be delegated to local governments in respect of matters of local concern. This is sanctioned by immemorial practice. By necessary implication, the legislative power to create political corporations for purposes of local self-government carries with it the power to confer on such local governmental agencies the power to tax. 9 Under the New Constitution, local governments are granted the autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides: "Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law." Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to enact and vest in local governments the power of local taxation.

The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's pretense, would not suffice to invalidate the said law as confiscatory and oppressive. In delegating the authority, the State is not limited to the exact measure of that which is exercised by itself. When it is said that the taxing power may be delegated to municipalities and the like, it is meant that there may be delegated such measure of power to impose and collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes.

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY, petitioner, vs. 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. G.R. No. 120082 | September 11, 1996 | 3D

FACTS: Mactan Cebu International Airport Authority (MCIAA) was created by virtue of RA No. 6958 to undertake the management and supervision of the Mactan International Airport in Cebu and the Lahug Airport in Cebu City and such other airports as may be established in Cebu Since the time of its creation, MCIAA enjoyed the privilege of exemption from payment of realty taxes in accordance with Sec. 14 of its Charter The Office of the Treasurer of Cebu City demanded payment for realty taxes on several parcels of land belonging to MCIAA MCIAA objected to such demand for payment claiming that it is exempt from payment of realty taxes citing Sec. 14 of its Charter MCIAA also asserted thatit is an instrumentality of the government performing governmental functions citing Sec. 133 of the LGC of 1991 which puts limitations on the taxing power of LGUs Respondent Cebu City refused to cancel MCIAAs realty tax account, insisting that MCIAA is a GOCC whose tax exemption has been withdrawn by virtue of Secs. 193 and 234 of the LGC As Cebu City was about to issue a warrant of levy against the properties of MCIAA, the latter was compelled to pay its tax account under protest and thereafter filed a petition for declaratory relief with the RTC RTC dismissed the MCIAAs petition MCIAA appealed to the SC

ISSUE: Whether Cebu City has power or authority to tax MCIAA, a GOCC.

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

Accordingly, the position taken by the petitioner is untenable. Reliance on Basco vs. Philippine Amusement and Gaming Corporation is unavailing since it was decided before the effectivity of the LGC. Besides, nothing can prevent Congress from decreeing that even instrumentalities or agencies of the Government performing governmental functions may be subject to tax. Where it is done precisely to fulfill a constitutional mandate and national policy, no one can doubt its wisdom.

MANILA ELECTRIC COMPANY, petitioner vs. PROVINCE OF LAGUNA and BENITO R. BALAZO, inhis capacity as Provincial Treasurer of Laguna, respondents. [GR No. 131359 | May 5, 1999 | 3D]FACTS: Certain municipalities of the province of Laguna issued resolution through their respective municipal councils granting franchise in favor of Manila Electric Company (MERALCO) for the supply of electric light, heat and power within the concerned areas. On September 12, 1991, Republic Act No. 7160, otherwise known as the Local Government Code of 1991, was enacted to take effect on January 1, 1992 enjoining local government units to create their own sources of revenue and to levy taxes, fees and charges, subject to the limitations expressed therein, consistent with the basic policy of local autonomy. Pursuant to the provisions of the Code, the province of Laguna enacted a franchise tax ordinance. On the basis of this ordinance, respondent Provincial Treasurer sent a demand letter to MERALCO for the corresponding tax payment. MERALCO paid the tax under protest A formal claim for refund was thereafter sent by MERALCO to the Provincial Treasurer of Laguna claiming that the franchise tax it had paid and continued to pay to the National Government pursuant to P.D. 551 already included the franchise tax imposed by the Provincial Tax Ordinance. The claim for refund of MERALCO was denied. In denying the claim, respondents relied on a more recent law, i.e., Republic Act No. 7160 or the Local Government Code of 1991, than the old decree invoked by petitioner. MERALCO filed with the RTC, a complaint for refund. RTC dismissed MERALCOs petition In the instant petition, MERALCO assailed the trial courts ruling contending that the franchise tax ordinance is violative of the non-impairment clause of the Constitution

ISSUE: Whether the franchise tax ordinance enacted by the Province of Laguna is valid.

HELD: YESPrefatorily, it might be well to recall that local governments do not have the inherent power to tax except to the extent that such power might be delegated to them either by the basic law or by statute. Presently, under Article X of the 1987 Constitution, a general delegation of that power has been given in favor of local government units. Thus: Sec. 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions, and duties of local officials, and all other matters relating to the organization and operation of the local units. Sec. 5. Each local government 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 1987 Constitution has a counterpart provision in the 1973 Constitution which did come out with a similar delegation of revenue making powers to local governments.

Under the regime of the 1935 Constitution no similar delegation of tax powers was provided, and local government units instead derived their tax powers under a limited statutory authority. Whereas, then, the delegation of tax powers granted at that time by statute to local governments was confined and defined (outside of which the power was deemed withheld), the present constitutional rule (starting with the 1973 Constitution), however, would broadly confer such tax powers subject only to specific exceptions that the law might prescribe.

Under the now prevailing Constitution, where there is neither a grant nor a prohibition by statute, the tax power must be deemed to exist although Congress may provide statutory limitations and guidelines. The basic rationale for the current rule is to safeguard the viability and self-sufficiency of local government units by directly granting them general and broad tax powers. Nevertheless, the fundamental law did not intend the delegation to be absolute and unconditional; the constitutional objective obviously is to ensure that, while 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.

NATIONAL POWER CORPORATION, petitioner, vs. CITY OF CABANATUAN, respondent.[G.R. No. 149110 | April 9, 2003 | 3D]

FACTS: National Power Corporation (NPC) is a GOCC created under CA No. 120, as amended which sells electric power to the residents of Cabanatuan City Pursuant to Ordinance No. 165-42, the City of Cabanatuan assessed NPC of franchise tax NPC refused to pay the tax assessment arguing that respondent city has no authority to impose tax on government entities and that as a non-profit organization, it is exempted from the payment of all forms of taxes, charges or fees in accordance with its Charter The City of Cabanatuan filed a collection suit with the RTC demanding NPC to pay the assessed tax alleging that NPCs exemption from local taxes has been repealed by Sec. 193 of the LGC of 1991 RTC dismissed the case and ruled that the tax exemption privileges granted to NPC subsist despite the passage of the LGC CA reversed the RTCs order on the ground that Sec. 193, in relation to Sec. 137 and 151 of the LGC expressly withdrew the exceptions granted to NPC CA denied the NPCs MR NPC filed the instant petition for review

ISSUE: Whether local governments have power to tax instrumentalities of the national government such as NPC.

HELD: YESTaxes are the lifeblood of the government, for without taxes, the government can neither exist nor endure. A principal attribute of sovereignty, the exercise of taxing power derives its source from the very existence of the state whose social contract with its citizens obliges it to promote public interest and common good. The theory behind the exercise of the power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting the general welfare and well-being of the people.

In recent years, the increasing social challenges of the times expanded the scope of state activity, and taxation has become a tool to realize social justice and the equitable distribution of wealth, economic progress and the protection of local industries as well as public welfare and similar objectives. Taxation assumes even greater significance with the ratification of the 1987 Constitution. Thenceforth, the power to tax is no longer vested exclusively on Congress; local legislative bodies are now given direct authority to levy taxes, fees and other charges pursuant to Article X, section 5 of the 1987 Constitution, viz: Section 5.- Each Local Government unit shall have the power to create its own sources of revenue, to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees and charges shall accrue exclusively to the Local Governments.

Considered as the most revolutionary piece of legislation on local autonomy, the LGC effectively deals with the fiscal constraints faced by LGUs. It widens the tax base of LGUs to include taxes which were prohibited by previous laws such as the imposition of taxes on forest products, forest concessionaires, mineral products, mining operations, and the like. The LGC likewise provides enough flexibility to impose tax rates in accordance with their needs and capabilities. It does not prescribe graduated fixed rates but merely specifies the minimum and maximum tax rates and leaves the determination of the actual rates to the respective sanggunian.

THE CITY GOVERNMENT OF QUEZON CITY, AND THE CITY TREASURER OF QUEZON CITY, DR. VICTOR B. ENRIGA, Petitioners, vs. BAYAN TELECOMMUNICATIONS, INC., Respondent. [G.R. No. 162015 March 6, 2006]

FACTS: Bayantel is a legislative franchise holder under RA 3259 to establish and operate radio stations for domestic telecommunications, radiophone, broadcasting and telecasting RA 7160 or LGC of 1991 took effect on Jan. 1, 1992 After the LGC took effect, Bayantels original franchise was amended by RA 7633 containing the ff. tax provision: Sec. 11. The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate, buildings and personal property, exclusive of this franchise, as other persons or corporations are now or hereafter may be required by law to pay. xxx The government of Quezon City pursuant to Sec. 5, Art. X of the 1987 Constitution in relation to Sec. 232 of the LGC, enacted an ordinance known as the QC Revenue Code imposing real property tax on all real properties in QC and reiterating the withdrawal of exemption from real property tax under Sec. 234 of the LGC Quezon City issued new tax declarations for Bayantels real properties Bayantel sought the exclusion of its real properties in QC from taxable real properties which was denied Bayantel interposed an appeal with the LBAA and did not pay the real property taxes assessed by the QC As warrants of levy were issued against its properties, Bayantel withdrew its appeal with the LBAA and file with the RTC a petition for prohibition with application for TRO and/or writ of preliminary injunction RTC issued a TRO and declared that Bayantels real properties in QC are exempt from real estate taxation Petitioners elevated the case directly to the SC on pure questions of law

ISSUE: Whether Bayantels real properties in QC are exempt from real property taxes under the legislative franchise, as amended.

HELD: YESThe Court has taken stock of the fact that by virtue of Section 5, Article X of the 1987 Constitution, local governments are empowered to levy taxes. And pursuant to this constitutional empowerment, juxtaposed with Section 232 of the LGC, the Quezon City government enacted in 1993 its local Revenue Code, imposing real property tax on all real properties found within its territorial jurisdiction. And as earlier stated, the Citys Revenue Code, just like the LGC, expressly withdrew, under Section 230 thereof, supra, all tax exemption privileges in general. While the system of local government taxation has changed with the onset of the 1987 Constitution, the power of local government units to tax is still limited. As we explained in Mactan Cebu International Airport Authority: The power to tax is primarily vested in the Congress; however, in our jurisdiction, it may be exercised by local legislative bodies, no longer merely be virtue of a valid delegation as before, but pursuant to direct authority conferred by Section 5, Article X of the Constitution. Under the latter, the exercise of the power may be subject to such guidelines and limitations as the Congress may provide which, however, must be consistent with the basic policy of local autonomy.This new perspective is best articulated by Fr. Joaquin G. Bernas, S.J., himself a Commissioner of the 1986 Constitutional Commission which crafted the 1987 Constitution, thus: What is the effect of Section 5 on the fiscal position of municipal corporations? Section 5 does not change the doctrine that municipal corporations do not possess inherent powers of taxation. What it does is to confer municipal corporations a general power to levy taxes and otherwise create sources of revenue. They no longer have to wait for a statutory grant of these powers. The power of the legislative authority relative to the fiscal powers of local governments has been reduced to the authority to impose limitations on municipal powers. Moreover, these limitations must be "consistent with the basic policy of local autonomy." The important legal effect of Section 5 is thus to reverse the principle that doubts are resolved against municipal corporations. Henceforth, in interpreting statutory provisions on municipal fiscal powers, doubts will be resolved in favor of municipal corporations. It is understood, however, that taxes imposed by local government must be for a public purpose, uniform within a locality, must not be confiscatory, and must be within the jurisdiction of the local unit to pass.

In net effect, the controversy presently before the Court involves, at bottom, a clash between the inherent taxing power of the legislature, which necessarily includes the power to exempt, and the local governments delegated power to tax under the aegis of the 1987 Constitution.For sure, in Philippine Long Distance Telephone Company, Inc. (PLDT) vs. City of Davao, this Court has upheld the power of Congress to grant exemptions over the power of local government units to impose taxes. There, the Court wrote: Indeed, the grant of taxing powers to local government units under the Constitution and the LGC does not affect the power of Congress to grant exemptions to certain persons, pursuant to a declared national policy. The legal effect of the constitutional grant to local governments simply means that in interpreting statutory provisions on municipal taxing powers, doubts must be resolved in favor of municipal corporations.

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

3. LOCAL TAXING AUTHORITY (Sec. 132)

Sec. 132. Local Taxing Authority. - The power to impose a tax, fee, or charge or to generate revenue under this Code shall be exercised by the sanggunian of the local government unit concerned through an appropriate ordinance.

a. CONSTRUCTION OF TAX ORDINANCES (Sec. 5b)

Sec. 5. Rules of Interpretation. - In the interpretation of the provisions of this Code, the following rules shall apply: (a) xxx

(b)In case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer. Any tax exemption, incentive or relief granted by any local government unit pursuant to the provisions of this Code shall be construed strictly against the person claiming it.xxxxxxx(e) xxx

PETRON CORPORATION, petitioner, vs.MAYOR TOBIAS M. TIANGCO, and MUNICIPAL TREASURER MANUEL T. ENRIQUEZ of the MUNICIPALITY OF NAVOTAS, METRO MANILA, respondents.[G.R. No. 158881 | April 16, 2008 | 2D]

FACTS: Petron maintains a depot or bulk plant at the Navotas Fishport Complex in Navotas and is engaged in selling diesel fuels The municipality of Navotas assessed Petron of deficiency taxes relative to its sale of diesel with reference to Ordinance 92-03 or the New Navotas Revenue Code Petron filed with Navotas a letter-protestarguing that it was exempt from local business taxes in view of Art. 232(h) of the IRR of the LGC Respondent Municipal Treasurer denied the letter-protest Petron filed with the RTC a complaint for cancellation of assessment for deficiency taxes While the case was pending decision, respondents refused to issue business permit to Petron thus prompting Petron to file a supplemental complaint against respondents RTC dismissed Petrons complaint and ordered the payment of the assessed amount Petron filed the present petition raising pure questions of law Petron the business taxes on its sale of diesel fuel partakes of an excise tax Respondents the phrase taxes, fees or charges on petroleum products under Sec. 133(h) of the LGC pertains to the imposition of direct or excise taxes on petroleum products and not business taxes

ISSUE: How to construct a tax ordinance?

HELD:Respondents cite our declaration in City Government of San Pablo v. Reyes that following the 1987 Constitution the rule thenceforth in interpreting statutory provisions on municipal fiscal powers, doubts will have to be resolved in favor of municipal corporations. Such policy is also echoed in Section 5(a) of the Code, which states that [a]ny provision on a power of a local government unit shall be liberally interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of powers and of the lower local government unit. But somewhat conversely, Section 5(b) then proceeds to assert that [i]n case of doubt, any tax ordinance or revenue measure shall be construed strictly against the local government unit enacting it, and liberally in favor of the taxpayer.And this latter qualification has to be respected as a constitutionally authorized limitation which Congress has seen fit to provide. Evidently, local fiscal autonomy should not necessarily translate into abject deference to the power of local government units to impose taxes.

Congress has the constitutional authority to impose limitations on the power to tax of local government units, and Section 133 of the Code is one such limitation. Indeed, the provision is the explicit statutory impediment to the enjoyment of absolute taxing power by local government units, not to mention the reality that such power is a delegated power.

4. PROCEDURE FOR APPROVAL AND EFFECTIVITY OF TAX ORDINANCE (Sec. 187)

Sec. 187. Procedure for Approval and Effectivity of Tax, Ordinances and Revenue Measures; Mandatory Public Hearings. - The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice actingupon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

HAGONOY MARKET VENDOR ASSOCIATION, petitioner, vs. MUNICIPALITY OF HAGONOY, BULACAN, respondent.[G.R. No. 137621 | February 6, 2002 | 1D]

FACTS: Oct. 1, 1996 Sangguniang Bayan of Hagonoy, Bulacan enacted an ordinance which increased the stall rentals of market vendors in Hagonoy providing that it shall take effect upon approval Subject ordinance was posted from Nov. 4 to 25, 1996 Last week of Nov. 1997 HMVAs members were personally given copies of the approved ordinance Dec. 8, 1997 HMVAs president filed an appeal with the Secretary of Justice assailing the constitutionality of the tax ordinance claiming that it was unaware of the posting of the ordinance Municipality of Hagonoy, Bulacan opposed the appeal contending that the ordinance took effect on Oct. 6, 1996 and it was posted as required by law; hence, the appeal was already time-barred Secretary of Justice dismissed the appeal on the ground that it was filed out of time i.e., beyond thirty (30) days from the effectivity of the Ordinance on October 1, 1996, as prescribed under Section 187 of the 1991 LGC Citing the case of Taada vs. Tuvera, the date of effectivity of the subject ordinance retroacted to the date of its approval in October 1996, after the required publication or posting has been complied with, pursuant to Section 3 of said ordinance. HMVA appealed to the CA CA dismissed the appeal for being formally deficient as it was not accompanied by certified true copies of the assailed Resolutions of the Secretary of Justice

ISSUE: Whether the procedural requirements of public hearing and publication had been complied with.

HELD: YESThe applicable law is Section 187 of the 1991 Local Government Code which provides: SEC. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. - The procedure for the approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided, further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and accrual and payment of the tax, fee or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings.

In a last ditch effort to justify its failure to file a timely appeal with the Secretary of Justice, the petitioner contends that its period to appeal should be counted not from the time the ordinance took effect in 1996 but from the time its members were personally given copies of the approved ordinance in November 1997. It insists that it was unaware of the approval and effectivity of the subject ordinance in 1996 on two (2) grounds: first, no public hearing was conducted prior to the passage of the ordinance and, second, the approved ordinance was not posted. Petitioners bold assertion that there was no public hearing conducted prior to the passage of Kautusan Blg. 28 is belied by its own evidence. In petitioners two (2) communications with the Secretary of Justice, it enumerated the various objections raised by its members before the passage of the ordinance in several meetings called by the Sanggunian for the purpose. These show beyond doubt that petitioner was aware of the proposed increase and in fact participated in the public hearings therefor. The respondent municipality likewise submitted the Minutes and Report of the public hearings conducted by the Sangguniang Bayans Committee on Appropriations and Market on February 6, July 15 and August 19, all in 1996, for the proposed increase in the stall rentals.Petitioner cannot gripe that there was practically no public hearing conducted as its objections to the proposed measure were not considered by the Sangguniang Bayan. To be sure, public hearings are conducted by legislative bodies to allow interested parties to ventilate their views on a proposed law or ordinance. These views, however, are not binding on the legislative body and it is not compelled by law to adopt the same. Sanggunian members are elected by the people to make laws that will promote the general interest of their constituents. They are mandated to use their discretion and best judgment in serving the people. Parties who participate in public hearings to give their opinions on a proposed ordinance should not expect that their views would be patronized by their lawmakers.

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

The records is bereft of any evidence to prove petitioners negative allegation that the subject ordinance was not posted as required by law. In contrast, the respondent Sangguniang Bayan of the Municipality of Hagonoy, Bulacan, presented evidence which clearly shows that the procedure for the enactment of the assailed ordinance was complied with. Municipal Ordinance No. 28 was enacted by the Sangguniang Bayan of Hagonoy on October 1, 1996. Then Acting Municipal Mayor Maria Garcia Santos approved the Ordinance on October 7, 1996. After its approval, copies of the Ordinance were given to the Municipal Treasurer on the same day. On November 9, 1996, the Ordinance was approved by the Sangguniang Panlalawigan. The Ordinance was posted during the period from November 4 - 25, 1996 in three (3) public places, viz: in front of the municipal building, at the bulletin board of the Sta. Ana Parish Church and on the front door of the Office of the Market Master in the public market. Posting was validly made in lieu of publication as there was no newspaper of local circulation in the municipality of Hagonoy. This fact was known to and admitted by petitioner. Thus, petitioners ambiguous and unsupported claim that it was only sometime in November 1997 that the Provincial Board approved Municipal Ordinance No. 28 and so the posting could not have been made in November 1996was sufficiently disproved by the positive evidence of respondent municipality. Given the foregoing circumstances, petitioner cannot validly claim lack of knowledge of the approved ordinance. The filing of its appeal a year after the effectivity of the subject ordinance is fatal to its cause.

5. PUBLICATION (Sec. 188)

Sec. 188. Publication of Tax Ordinances and Revenue Measures. - Within ten (10) days after their approval, certified true copies of all provincial, city, and municipal tax ordinances or revenue measures shall be published in full for three (3) consecutive days in a newspaper of local circulation: Provided, however, That in provinces, cities and municipalities where there are no newspapers of local circulation, the same may be posted in at least two (2) conspicuous and publicly accessible places.

B. OTHER PRELIMINARY MATTERS

1. RESIDUAL POWERS OF LGUs POWER TO LEVY OTHER TAXES, FEES OR CHARGES (Sec. 186)

Sec. 186. Power To Levy Other Taxes, Fees or Charges. - Local government units may exercise the power to levy taxes, fees or charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive, confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not be enacted without any prior public hearing conducted for the purpose.

2. DOCTRINE OF PRE-EMPTION OR EXCLUSIONARY RULE

VICTORIAS MILLING CO., INC., plaintiff-appellant, vs.THE MUNICIPALITY OF VICTORIAS, PROVINCE OF NEGROS OCCIDENTAL, defendant-appellant.[G.R. No. L-21183 September 27, 1968 | En Banc]

FACTS: The municipality of Victorias, Negros Occidental enacted Ordinance No. 1, series of 1956 to amend two municipal ordinances: 1) with respect to sugar centrals, by increasing the rates of license taxes; and 2) as to sugar refineries, by increasing the rates of license taxes as well as the range of graduated schedule of annual output capacity Victorias Milling, the only operator of sugar central and sugar refinery within the municipality, questions the validity of the said ordinance and seeks refund of all license taxes paid and to be paid under protest on the ground, among others, that the national government has preempted the field of taxation with respect to sugar central or refineries The trial court declared the ordinance invalid Both parties appealed directly to the SC

ISSUE: Whether there is preemption in the case at bar.

HELD: NOPlaintiff argues that the municipality is bereft of authority to enact the ordinance in question because the national government "had preempted it from entering the field of taxation of sugar centrals and sugar refineries." Plaintiff seeks refuge in Section 189 of the National Internal Revenue Code which subjects proprietors or operators of sugar centrals or sugar refineries to percentage tax.

The implausibility of this position is at once apparent. We are not dealing here with percentage tax. Rather, we are concerned with a tax specifically for operators of sugar centrals and sugar refineries. The rates imposed are based on the maximum annual output capacity. Which is not a percentage. Because it is not a share. Nor is it a tax based on the amount of the proceeds realized out of the sale of sugar, centrifugal or refined.

What can be said at most is that the national government has preempted the field of percentage taxation. Section 1 of Commonwealth Act 472, while granting municipalities power to levy taxes, expressly removes from them the power to exact "percentage taxes".

It is correct to say that preemption in the matter of taxation simply refers to an instance where the national government elects to tax a particular area, impliedly withholding from the local government the delegated power to tax the same field. This doctrine primarily rests upon the intention of Congress. Conversely, should Congress allow municipal corporations to cover fields of taxation it already occupies, then the doctrine of preemption will not apply.

In the case at bar, Section 4(1) of Commonwealth Act 472 clearly and specifically allows municipal councils to tax persons engaged in "the same businesses or occupation" on which "fixed internal revenue privilege taxes" are "regularly imposed by the National Government." With certain exceptions specified in Section 3 of the same statute. Our case does not fall within the exceptions. It would therefore be futile to argue that Congress exclusively reserved to the national government the right to impose the disputed taxes. We rule that there is no preemption.

II. GENERAL PROVISIONS

A. SCOPE OF TAXING POWERS (Sec. 128)

Sec. 128. Scope. - The provisions herein shall govern the exercise by provinces, cities, municipalities, and barangays of their taxing and other revenue-raising powers.

B. FUNDAMENTAL PRINCIPLES (Sec. 130)

Section 130. Fundamental Principles. - The following fundamental principles shall governthe exercise of the taxing and other revenue-raising powers of local government units: (a) Taxation shall be uniform in each local government unit; (b) Taxes, fees, charges and other impositions shall: (1) be equitable and based as far as practicable on the taxpayer's ability to pay; (2) be levied and collected only for public purposes; (3) not be unjust, excessive, oppressive, or confiscatory; (4) not be contrary to law, public policy, national economic policy, or in the restraint of trade; (c) The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person; (d) The revenue collected pursuant to the provisions of this Code shall inure solely to the benefit of, and be subject to the disposition by, the local government unit levying the tax, fee, charge or other imposition unless otherwise specifically provided herein; and, (e) Each local government unit shall, as far as practicable, evolve a progressive system of taxation.

C. DEFINITIONS (Sec. 131)

Sec. 131. Definition of Terms. - When used in this Title, the term:(a) "Agricultural Product" includes the yield of the soil, such as corn, rice, wheat, rye, hay, coconuts, sugarcane, tobacco, root crops, vegetables, fruits, flowers, and their by-products; ordinary salt; all kinds of fish; poultry; and livestock and animal products, whether in their original form or not.

The phrase "whether in their original form or not" refers to the transformation of said products by the farmer, fisherman, producer or owner through the application of processes to preserve or otherwise to prepare said products for market such as freezing, drying, salting, smoking, or stripping for purposes of preserving or otherwise preparing said products for market;

(b) "Amusement" is a pleasurable diversion and entertainment. It is synonymous to relaxation, avocation, pastime, or fun; (c) "Amusement Places" include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show or performances; (d) "Business" means trade or commercial activity regularly engaged in as a means of livelihood or with a view to profit; (e) "Banks and other financial institutions" include non-bank financial intermediaries, lending investors, finance and investment companies, pawnshops, money shops, insurance companies, stock markets, stock brokers and dealers in securities and foreign exchange, as defined under applicable laws, or rules and regulations thereunder; (f) "Capital Investment" is the capital which a person employs in any undertaking, or which he contributes to the capital of a partnership, corporation, or any other juridical entity or association in a particular taxing jurisdiction; (g) "Charges" refers to pecuniary liability, as rents or fees against persons or property; (h) "Contractor" includes persons, natural or juridical, not subject to professional tax under Section 139 of this Code, whose activity consists essentially of the sale of all kinds of services for a fee, regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractor or his employees.

As used in this Section, the term "contractor" shall include general engineering, general building and specialty contractors as defined under applicable laws; filling, demolition and salvage works contractors; proprietors or operators of mine drilling apparatus; proprietors or operators of dockyards; persons engaged in the installation of water system, and gas or electric light, heat, or power; proprietors or operators of smelting plants, engraving, plating, and plastic lamination establishments; proprietors or operators of establishments for repairing, repainting, upholstering, washing or greasing of vehicles, heavy equipment, vulcanizing, recapping and battery charging; proprietors or operators of furniture shops and establishments for planing or surfacing and recutting of lumber, and sawmills under contract to saw or cut logs belonging to others; proprietors or operators of dry cleaning or dyeing establishments, steam laundries, and laundries using washing machines; proprietors or owners of shops for the repair of any kind of mechanical and electrical devices, instruments, apparatus, or furniture and shoe repairing by machine or any mechanical contrivance; proprietors or operators of establishments or lots for parking purposes; proprietors or operators of tailor shops, dress shops, milliners and hatters, beauty parlors, barbershops, massage clinics, sauna, Turkish and Swedish baths, slenderizing and building salons and similar establishments; photographic studios; funeral parlors; proprietors or operators of hotels, motels, and lodging houses; proprietors or operators of arrastre and stevedoring, warehousing, or forwarding establishments; master plumbers, smiths, and house or sign painters; printers, bookbinders, lithographers; publishers except those engaged in the publication or printing of any newspaper, magazine, review or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication and advertisements; business agents, private detective or watchman agencies, commercial and immigration brokers, and cinematographic film owners, lessors and distributors.

(i) "Corporation" includes partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), associations or insurance companies but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal, and other energy operations pursuant to an operating or consortium agreement under a service contract with the government. General professional partnership are partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business.

The term "resident foreign" when applied to a corporation means a foreign corporation not otherwise organized under the laws of the Philippines but engaged in trade or business within the Philippines;

(j) "Countryside and Barangay Business Enterprise" refers to any business entity, association, or cooperative registered under the provisions of Republic Act Numbered Sixty-eight hundred ten (R.A. No. 6810), otherwise known as "Magna Carta For Countryside And Barangay Business Enterprises (Kalakalan 20)"; (k) "Dealer" means one whose business is to buy and sell merchandise, goods, and chattels as a merchant. He stands immediately between the producer or manufacturer and the consumer and depends for his profit not upon the labor he bestows upon his commodities but upon the skill and foresight with which he watches the market;(l) "Fee" means a charge fixed by law or ordinance for the regulation or inspection of a business or activity; (m) "Franchise" is a right or privilege, affected with public interest which is conferred upon private persons or corporations, under such terms and conditions as the government and its political subdivisions may impose in the interest of public welfare, security, and safety;(n) "Gross Sales or Receipts" include the total amount of money or its equivalent representing the contract price, compensation or service fee, including the amount charged or materials supplied with the services and deposits or advance payments actually or constructively received during the taxable quarter for the services performed or to be performed for another person excluding discounts if determinable at the time of sales, sales return, excise tax, and value-added tax (VAT); (o) "Manufacturer" includes every person who, by physical or chemical process, alters the exterior texture or form or inner substance of any raw material or manufactured or partially manufactured product in such manner as to have been put in its original condition, or who by any such process alters the quality of any such raw material or manufactured or partially manufactured products so as to reduce it to marketable shape or prepare it for any of the use of industry, or who by any such process combines any such raw material or manufactured or partially manufactured products with other materials or products of the same or of different kinds and in such manner that the finished products of such process or manufacture can be put to a special use or uses to which such raw material or manufactured or partially manufactured products in their original condition could not have been put, and who in addition alters such raw material or manufactured or partially manufactured products, or combines the same to produce such finished products for the purpose of their sale or distribution to others and not for his own use or consumption; (p) "Marginal Farmer or Fisherman" refers to an individual engaged in subsistence farming or fishing which shall be limited to the sale, barter or exchange of agricultural or marine products produced by himself and his immediate family; (q) "Motor Vehicle" means any vehicle propelled by any power other than muscular power using the public roads, but excluding road rollers, trolley cars, street-sweepers, sprinklers, lawn mowers, bulldozers, graders, fork-lifts, amphibian trucks, and cranes if not used on public roads, vehicles which run only on rails or tracks, and tractors, trailers, and traction engines of all kinds used exclusively for agricultural purposes; (r) "Municipal Waters" includes not only streams, lakes, and tidal waters within the municipality, not being the subject of private ownership and not comprised within the national parks, public forest, timber lands, forest reserves or fishery reserves,but also marine waters included between two lines drawn perpendicularly to the general coastline from points where the boundary lines of the municipality or city touch the sea at low tide and a third line parallel with the general coastline and fifteen (15) kilometers from it. Where two (2) municipalities are so situated on the opposite shores that there is less than fifteen (15) kilometers of marine waters between them, the third line shall be equally distant from opposite shores of their respective municipalities; (s) "Operator" includes the owner, manager, administrator, or any other person who operates or is responsible for the operation of a business establishment or undertaking; (t) "Peddler" means any person who, either for himself or on commission, travels from place to place and sells his goods or offers to sell and deliver the same. Whether a peddler is a wholesale peddler or a retail peddler of a particular commodity shall be determined from the definition of wholesale dealer or retail dealer as provided in this Title; (u) "Persons" means every natural or juridical being, susceptible of rights and obligations or of being the subject of legal relations; (v) "Residents" refer to natural persons who have their habitual residence in the province, city, or municipality where they exercise their civil rights and fulfill their civil obligations, and to juridical persons for which the law or any other provisions creating or recognizing them fixes their residence in a particular province, city, or municipality. In the absence of such law, juridical persons are residents of the province, city, or municipality where they have their legal residence or principal place of business or where they conduct their principal business or occupation; (w) "Retail" means a sale where the purchaser buys the commodity for his own consumption, irrespective of the quantity of the commodity sold;(x) "Vessel" includes every type of boat, craft, or other artificial contrivance used, or capable of being used, as a means of transportation on water; (y) "Wharfage" means a fee assessed against the cargo of a vessel engaged in foreign or domestic trade based on quantity, weight, or measure received and/or discharged by vessel; and (z) "Wholesale" means a sale where the purchaser buys or imports the commodities for resale to persons other than the end user regardless of the quantity of the transaction.

D. COMMON LIMITATIONS

1. INCOME TAX

Section 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: (a) Income tax, except when levied on banks and other financial institutions;xxxxxx(o) xxx

a. CORRELATE WITH Sec. 143 (f)

Sec. 143. Tax on Business. - The municipality may impose taxes on the following businesses: (a) xxxxxxxxx(f) On banks and other financial institutions, at a rate not exceeding fifty percent (50%) of one percent (1%) on the gross receipts of the preceding calendar year derived from interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premium.xxxxxx(h) xxx

2. DOCUMENTARY STAMP TAX (Sec. 133 [b])

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: (a) xxx(b) Documentary stamp tax;xxxxxx(o) xxx

3. TRANSFER TAXES

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: (a) xxx(c) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa, except as otherwise provided herein;xxxxxx(o) xxx

a. CORRELATE WITH Sec. 135

Section 135. Tax on Transfer of Real Property Ownership.

(a) The province may impose a tax on the sale, donation, barter, or on any other mode of transferring ownership or title of real property at the rate of not more than fifty percent (50%) of the one percent (1%) of the total consideration involved in the acquisition of the property or of the fair market value in case the monetary consideration involved in the transfer is not substantial, whichever is higher. The sale, transfer or other disposition of real property pursuant to R.A. No. 6657 shall be exempt from this tax.

(b) For this purpose, the Register of Deeds of the province concerned shall, before registering any deed, require the presentation of the evidence of payment of this tax. The provincial assessor shall likewise make the same requirement before cancelling an old tax declaration and issuing a new one in place thereof, Notaries public shall furnish the provincial treasurer with a copy of any deed transferring ownership or title to any real property within thirty (30) days from the date of notarization.

It shall be the duty of the seller, donor, transferor, executor or administrator to pay the tax herein imposed within sixty (60) days from the date of the execution of the deed or from the date of the decedent's death.

4. CUSTOMS DUTIES

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: (a) xxxxxxxxx(d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges and dues except wharfage on wharves constructed and maintained by the local government unit concerned;xxxxxx(o) xxx

5. TAXES, FEES AND CHARGES (TFC) ON GOODS PASSING THROUGH THE TERRITORIAL JURISDICTION OF LGUs

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: (a) xxxxxxxxx(e) Taxes, fees, and charges and other impositions upon goods carried into or out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees, or charges in any form whatsoever upon such goods or merchandise;xxxxxx(o) xxx

a. CORRELATE WITH Sec. 155

Sec. 155. Toll Fees or Charges. - The sanggunian concerned may prescribe the terms and conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier, or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government unit concerned: Provided, That no such toll fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older.

When public safety and welfare so requires, the sanggunian concerned may discontinue the collection of the tolls, and thereafter the said facility shall be free and open for public use.

PALMA DEVELOPMENT CORPORATION, petitioner, vs. MUNICIPALITY OF MALANGAS, ZAMBOANGA DEL SUR, respondent.[G.R. No. 152492 | October 16, 2003 | 3D]

FACTS: Palma Development Corporation (PDC) is engaged in milling and selling rice and corn to wholesalers using the municipal port of Malangas, Zambaoanga del Sur as transshipment point for its goods The port, as well as the surrounding roads leading to it, belong to and are maintained by respondent municipality Respondent municipality passed an ordinance (Municipal Revenue Code No. 09)which provides for 1)service fee for its use of the municipal roads or streets leading to the wharf and to any point along the shorelines within the jurisdiction of the municipality and 2) for police surveillance on all goods and all equipment harbored or sheltered in the premises of the wharf and other within the jurisdiction of this municipality PDC paid the service fees imposed by the ordinance under protest PDC then filed against respondent municipality an action for declaratory relief before the RTC assailing the validity of the ordinance RTC ordinance is null and void CA reversed the RTCs decision and remanded the case to the trial court

ISSUES: 1. Whether the imposition of service fee for the use of municipal roads or streets leading to the wharf and to any point along the shorelines within the municipality of Malangas under the subject ordinance is valid.2. Whether the imposition of service fee for police surveillance on all goods harbored or sheltered in the premises of the municipal port of Malangas under the subject ordinance is valid.

HELD: 1. YES; 2. NOPetitioner argues that while respondent has the power to tax or impose fees on vehicles using its roads, it cannot tax the goods that are transported by the vehicles. The provision of the ordinance imposing a service fee for police surveillance on goods is allegedly contrary to Section 133(e) of RA No. 7160, which reads: Section 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following:x xxxxxxxxe)Taxes, fees and charges and other impositions upon goods carried into and out of, or passing through, the territorial jurisdictions of local government units in the guise of charges for wharfage, tolls for bridges or otherwise, or other taxes, fees or charges in any form whatsoever upon such goods or merchandise;

On the other hand, respondent maintains that the subject fees are intended for services rendered, the use of municipal roads and police surveillance. The fees are supposedly not covered by the prohibited impositions under Section 133(e) of RA No. 7160. It further contends that it was empowered by the express mandate of Sections 153 and 155 of RA No. 7160 to enact Section 5G.01 of the ordinance. The pertinent provisions of this statute read as follows:

Section 153. Service Fees and Charges. -- Local government units may impose and collect such reasonable fees and charges for services rendered.xxxxxxxxx Section 155. Toll Fees or Charges. -- The sanggunian concerned may prescribe the terms and conditions and fix the rates for the imposition of toll fees or charges for the use of any public road, pier or wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the local government unit concerned: Provided, That no such toll fees or charges shall be collected from officers and enlisted men of the Armed Forces of the Philippines and members of the Philippine National Police on mission, post office personnel delivering mail, physically-handicapped, and disabled citizens who are sixty-five (65) years or older.

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

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

The imposition of a service fee for police surveillance on all goods harbored or sheltered in the premises of the municipal port of Malangas under Sec. 5G.01 of the Malangas Municipal Revenue Code No. 09, series of 1993, is declared NULL AND VOID for being violative of Republic Act No. 7160.

6. TFC ON PRODUCTS SOLD BY MARGINAL FARMERS OR FISHERMEN

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: (a) xxxxxxxxx(f) Taxes, fees or charges on agricultural and aquatic products when sold by marginal farmers or fishermen;xxxxxx(o) xxx

a. DEFINITION OF MARGINALIZED FISHERMEN (Sec. 131[p])

Marginal Farmer or Fishermanindividual engaged in subsistence farming or fishing which shall be limited to the sale, barter or exchange of agricultural or marine products produced by himself and his immediate family (Sec. 131[p], 1991 LGC)

CITY OF CEBU and/or CITY COUNCIL OF THE CITY OF CEBU, composed of Hon. FLORENCIO S. UROT, RAYMUNDO A. CRYSTAL, BIENVENIDO B. TUDTUD, JOSE V. CUENCO, PABLO U. ABELLA, GEORGE M. BALADJAY, ARTURO L. ABELLANA, JESUS S. GABUYA and MARIO R. VELOSO, petitioners, vs. HON. INTERMEDIATE APPELLATE COURT, HON. CESAR VIRATA and HON. PEDRO M. ALMANZOR, in their capacities as Secretary and Acting Secretary, respectively, Department of Finance, respondents.[G.R. No. 70684 | October 10, 1986 | 2D]

FACTS: Pursuant to PD No. 231 or the Local Tax Code, the City Council of Cebu passed Ordinances I and II imposing, among others, fish inspection fees for every kilo of fish sold The ordinances were submitted to respondents Secretary and Acting Secretary of Finance for review The respondents ordered the suspension of some of the provisions of the ordinances Petitioners filed a petition for review and/or appeal in the CFI which nullified the said provisions On appeal, the IAC affirmed the decision of the CFI Petitioners filed the instant petition

ISSUE: Whether the imposition of an inspection fee of P0.03 for every kilo of fish sold is valid.

HELD: NOThe respondent court held that the final inspection fee under section 102 of City Tax Ordinance No. 1 is violative of section 5 (K) and section 2 (E) of the Local Tax Code for being contrary to law, public policy and/or in restraint of trade. Petitioners assail the aforesaid ruling pointing out that the said provision is not against the fishermen but rather against the traders and fish vendors, and that the rate of imposition is very minimal it being fixed at P0.03 per kilo of fish only.

This contention is not correct. Sec. 5 (K) of the Local Tax Code limits the taxing powers of Local governments as follows Sec. 5. Common limitation on the taxing powers of local government.- The exercise of the taxing powers of provinces, cities, municipalities and barrios shall not extend to the imposition of the following(K) Taxes or fees on agricultural products when sold by the farmers or producers thereof, whether in their original form or notThe aforequoted provision prohibits a local government from imposing an inspection fee on agricultural products and fish is an agricultural product. Contrary to the claim of petitioners, under Section 102 of City Ordinance No. 1 a fisherman selling his fish within the city has to pay the inspection fee of P0.03 for every kilo of fish sold. Furthermore, the imposition of the tax will definitely restrict the free flow of fresh fish to Cebu City because the price of fish will have to increase.

7. TAXES ON BOI-REGISTERED ENTERPRISES

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: (a) xxxxxxxxx(g) Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively from the date of registration;xxxxxx(o) xxx

8. EXCISE TAXES UNDER THE NIRC/TFC ON PETROLEUM PRODUCTS

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: (a) xxxxxxxxx(h) Excise taxes on articles enumerated under the national Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products;xxxxxx(o) xxx

PETRON CORPORATION, petitioner, vs.MAYOR TOBIAS M. TIANGCO, and MUNICIPAL TREASURER MANUEL T. ENRIQUEZ of the MUNICIPALITY OF NAVOTAS, METRO MANILA, respondents.[G.R. No. 158881 | April 16, 2008 | 2D]

FACTS: Petron maintains a depot or bulk plant at the NavotasFishport Complex in Navotas and is engaged in selling diesel fuels The municipality of Navotas assessed Petron of deficiency taxes relative to its sale of diesel with reference to Ordinance 92-03 or the New Navotas Revenue Code Petron filed with Navotas a letter-protest arguing that it was exempt from local business taxes in view of Art. 232(h) of the IRR of the LGC Respondent Municipal Treasurer denied the letter-protest Petron filed with the RTC a complaint for cancellation of assessment for deficiency taxes While the case was pending decision, respondents refused to issue business permit to Petron thus prompting Petron to file a supplemental complaint against respondents RTC dismissed Petrons complaint and ordered the payment of the assessed amount Petron filed the present petition raising pure questions of law Petron the business taxes on its sale of diesel fuel partakes of an excise taxciting the case of Philippine Petroleum Corporation v. Municipality of Pililia: A tax on business is distinct from a tax on the article itself. Respondents the phrase taxes, fees or charges on petroleum products under Sec. 133(h) of the LGC pertains to the imposition of direct or excise taxes on petroleum products and not business taxes

ISSUE: Whether the LGU is empowered under the LGC to impose business taxes on persons or entities engaged in the sale of petroleum products.

HELD: NOI. On Petrons argument that the business taxes on its sale of diesel duel partakes of an excise taxSection 133(h) of the LGC reads as follows: Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. - Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and Barangays shall not extend to the levy of the following:xxx(h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products;

Section 133(h) provides two kinds of taxes which cannot be imposed by local government units: excise taxes on articles enumerated under the NIRC, as amended; and taxes, fees or charges on petroleum products. There is no doubt that among the excise taxes on articles enumerated under the NIRC are those levied on petroleum products, per Section 148 of the NIRC.

Admittedly, the proffered definition of an excise tax as "a tax upon the performance, carrying on, or exercise of some right, privilege, activity, calling or occupation" derives from the compendium American Jurisprudence, popularly referred to as Am Jur, and has been cited in previous decisions of this Court, including those cited by Petron itself. Such a definition would not have been inconsistent with previous incarnations of our Tax Code, such as the NIRC of 1939, as amended, or the NIRC of 1977 because in those laws the term "excise tax" was not used at all. In contrast, the nomenclature used in those prior laws in referring to taxes imposed on specific articles was "specific tax." Yet beginning with the National Internal Revenue Code of 1986, as amended, the term "excise taxes" was used and defined as applicable "to goods manufactured or produced in the Philippines and to things imported." This definition was carried over into the present NIRC of 1997. Further, these two latest codes categorize two different kinds of excise taxes: "specific tax" which is imposed and based on weight or volume capacity or any other physical unit of measurement; and "ad valorem tax" which is imposed and based on the selling price or other specified value of the goods. In other words, the meaning of "excise tax" has undergone a transformation, morphing from the Am Jur definition to its current signification which is a tax on certain specified goods or articles.

The change in perspective brought forth by the use of the term "excise tax" in a different connotation was not lost on the departed author Jose Nolledo as he accorded divergent treatments in his 1973 and 1994 commentaries on our tax laws. Writing in 1973, and essentially alluding to the Am Jur definition of "excise tax," Nolledo observed: Are specific taxes, taxes on property or excise taxes In the case of Meralco v. Trinidad ([G.R.] 16738, 1925) it was held that specific taxes are property taxes, a ruling which seems to be erroneous. Specific taxes are truly excise taxes for the fact that the value of the property taxed is taken into account will not change the nature of the tax. It is correct to say that specific taxes are taxes on the privilege to import, manufacture and remove from storage certain articles specified by law. In contrast, after the tax code was amended to classify specific taxes as a subset of excise taxes, Nolledo, in his 1994 commentaries, wrote:1. Excise taxes, as used in the Tax Code, refers to taxes applicable to certain specified goods or articles manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported into the Philippines. They are either specific or ad valorem.2. Nature of excise taxes. They are imposed directly on certain specified goods. (infra) They are, therefore, taxes on property. (see Medina vs. City of Baguio, 91 Phil. 854.)

A tax is not excise where it does not subject directly the produce or goods to tax but indirectly as an incident to, or in connection with, the business to be taxed.

In their 2004 commentaries, De Leon and De Leon restate the Am Jur definition of excise tax, and observe that the term is synonymous with privilege tax and [both terms] are often used interchangeably. At the same time, they offer a caveat that [e]xcise tax, as [defined by Am Jur], is not to be confused with excise tax imposed [by the NIRC] on certain specified articles manufactured or produced in, or imported into, the Philippines, for domestic sale or consumption or for any other disposition.

It is evident that Am Jur aside, the current definition of an excise tax is that of a tax levied on a specific article, rather than one upon the performance, carrying on, or the exercise of an activity. This current definition was already in place when the Code was enacted in 1991, and we can only presume that it was what the Congress had intended as it specified that local government units could not impose excise taxes on articles enumerated under the [NIRC]. This prohibition must pertain to the same kind of excise taxes as imposed by the NIRC, and not those previously defined excise taxes which were not integrated or denominated as such in our present tax law.

It is quite apparent, therefore, that our current body of taxation law does not explicitly accommodate the traditional definition of excise tax offered by Petron. In fact, absent any statutory adoption of the traditional definition, it may be said that starting in 1986 excise taxes in this jurisdiction refer exclusively to specific or ad valorem taxes imposed under the NIRC.

Excise taxes, as imposed under the NIRC, do not pertain to the performance, carrying on, or exercise of an activity, at least not to the extent of equating excise with business taxes.

II. Whether the clause taxes, fees or charges on petroleum products in Section 133(h) precludes local government units from imposing business taxes based on the sale of petroleum products

The power of a municipality to impose business taxes derives from Section 143 of the Code that specifically enumerates several types of business on which it may impose taxes, including manufacturers, wholesalers, distributors, dealers of any article of commerce of whatever nature; those engaged in the export or commerce of essential commodities; retailers; contractors and other independent contractors; banks and financial institutions; and peddlers engaged in the sale of any merchandise or article of commerce. This obviously broad power is further supplemented by paragraph (h) of Section 143 which authorizes the sanggunian to impose taxes on any other businesses not otherwise specified under Section 143 which the sanggunian concerned may deem proper to tax.

Section 133(h) states that local government units shall not extend to the levy of xxx taxes, fees or charges on petroleum products. Respondents assert that the phrase taxes, fees or charges on petroleum products pertains to the imposition of direct or excise taxes on petroleum products, and not business taxes. If the phrase actually pertains to excise taxes, then it would be an exercise in utter redundancy, since the preceding phrase already prohibits the imposition of excise taxes on articles already subject to such taxes under the NIRC, such as petroleum products. There would be no sense on the part of the legislature to twice emphasize in the same sentence that excise taxes on petroleum products are beyond the pale of local government taxation.

It appears that this argument of respondents was fashioned on the basis of the pronouncement of the Court in Philippine Petroleum Corporation v. Municipality of Pililla, thus: xxx [W]hile Section 2 of P.D. 436 prohibits the imposition of local taxes on petroleum products, said decree did not amend Sections 19 and 19 (a) of P.D. 231 as amended by P.D. 426, wherein the municipality is granted the right to levy taxes on business of manufacturers, importers, producers of any article of commerce of whatever kind or nature. A tax on business is distinct from a tax on the article itself. Thus, if the imposition of tax on business of manufacturers, etc. in petroleum products contravenes a declared national policy, it should have been expressly stated in P.D. No. 436.

The dicta that "[a] tax on a business is distinct from a tax on the article itself" might at first blush somehow lend support to respondents position, yet that dicta has not since been reprised by this Court. It is likewise worth observing that Pililla did involve a tax ordinance that imposed business taxes on an enterprise engaged in the manufacture and storage of petroleum products.

Significantly, the legal milieu governing Pililla is vastly different from that existing at bar, to the extent that the earlier case could not be presently controlling.

At the time the taxes sought to be collected in Pililla were imposed, there was no national law in place similar to Section 133(h) of the Code that barred local taxes, fees or charges on petroleum products. There were circulars to that effect issued by the Finance Department, yet the Court could not validate such issuances since under the tax laws then in place no exemptions were given to manufacturers, wholesalers, retailers, or dealers in petroleum products. In fact, the Court tellingly observed that if the imposition of tax on business of manufacturers, etc. in petroleum products contravenes a declared national policy, it should have been expressly stated in P.D. No. 436. Such expression conspiciously missing in P.D. No. 436 is now found in Section 133(h).

In view of the difference in statutory paradigm between this case and Pililla, the latter case is severely diminished as applicable precedent at bar. The Court then was correct in observing that a mere administrative circular could not prohibit a local tax that is not otherwise barred under a national statute, yet in this case that conflict is not present since the Code explicitly prohibits the imposition of several classes of local taxes, including those on petroleum products.

We can concede that a tax on a business is distinct from a tax on the article itself, or for that matter, that a business tax is distinct from an excise tax. However, such distinction is immaterial insofar as the latter part of Section 133(h) is concerned, for the phrase taxes, fees or charges on petroleum products does not qualify the kind of taxes, fees or charges that could withstand the absolute prohibition imposed by the provision. It would have been a different matter had Congress, in crafting Section 133(h), barred excise taxes or direct taxes, or any category of taxes only, for then it would be understood that only such specified taxes on petroleum products could not be imposed under the prohibition. The absence of such a qualification leads to the conclusion that all sorts of taxes on petroleum products, including business taxes, are prohibited by Section 133(h). Where the law does not distinguish, we should not distinguish.

The language of Section 133(h) makes plain that the prohibition with respect to petroleum products extends not only to excise taxes thereon, but all taxes, fees and charges. The earlier reference in paragraph (h) to excise taxes comprehends a wider range of subjects of taxation: all articles already covered by excise taxation under the NIRC, such as alcohol products, tobacco products, mineral products, automobiles, and such non-essential goods as jewelry, goods made of precious metals, perfumes, and yachts and other vessels intended for pleasure or sports. In contrast, the later reference to taxes, fees and charges pertains only to one class of articles of the many subjects of excise taxes, specifically, petroleum products. While local government units are authorized to burden all such other class of goods with taxes, fees and charges, excepting excise taxes, a specific prohibition is imposed barring the levying of any other type of taxes with respect to petroleum products.

THE PROVINCE OF BULACAN, ROBERTO M. PAGDANGANAN, FLORENCE CHAVEZ, and MANUEL DJ SIAYNGCO in their capacity as PROVINCIAL GOVERNOR, PROVINCIAL TREASURER, PROVINCIAL LEGAL ADVISE, respectively, petitioners, vs. THE HONORABLE COURT OF APPEALS (FORMER SPECIAL 12TH DIVISION), PUBLIC CEMENT CORPORATION, respondents.[G.R. No. 126232 | November 27, 1998 | 3D]

FACTS: The SangguniangPanlalawigan of Bulacan passed an ordinance levying taxes on stones, sand, gravel, earth and other quarry resources extracted from public lands Respondent Provincial Treasurer assessed Republic Cement for extracting limestone, shale and silica from several parcels private land in the province RCC contested the same but was denied by respondent Provincial Treasurer RCC filed a petition for declaratory relief with the RTC which ruled that the petition was improper because a breach of the ordinance had been committed by the former RCC filed a petition for certiorari with the SC which referred the case to the CA The Province of Bulacan issued a warrant of levy against Republic Cement RCCagreed to pay the assessed tax under protest in exchange for the lifting of the warrant of levy Petitioners and RCC agreed to limit the issued for resolution by the CA to the question as to whether the provincial government could impose &/or assess taxes on quarry resources extracted by Republic Cement from private lands CA province of Bulacan under its ordinancehas no legal authority to impose and assess taxes on quarry resources extracted by RCC from private lands; hence, the assessment made by the province against RCC is null and void

ISSUE: Whether the provincial government could impose and/or assess taxes on quarry resources extracted from private lands.

HELD: NOIn any case, the remaining issues raised by petitioner are likewise devoid of merit, a province having no authority to impose taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands. The pertinent provisions of the Local Government Code are as follows: Sec. 134. Scope of Taxing Powers. Except as otherwiseprovided 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.xxxxxxxxxThe Court of Appeals erred in ruling that a province can impose only the taxes specifically mentioned under the Local Government Code. As correctly pointed out by petitioners, Section 186 allows a province to levy taxes other than those specifically enumerated under the Code, subject to the conditions specified therein.This finding, nevertheless, affords cold comfort to petitioners as they are still prohibited from imposing taxes on stones, sand, gravel, earth and other quarry resources extracted from private lands. The tax imposed by the Province of Bulacan is an excise tax, being a tax upon the performance, carrying on, or exercise of an activity. 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:xxxxxxxxx (h) Excise taxes on articles enumerated under the National Internal Revenue Code, as amended, and taxes, fees or charges on petroleum products;xxxxxxxxxA province may not, therefore, levy excise taxes on articles already taxed by the National Internal Revenue Code. Unfortunately for petitioners, the National Internal Revenue Code provides: Sec. 151. Mineral Products. (A) Rates of Tax. There shall be levied, assessed and collected on minerals, mineral products and quarry resources, excise tax as follows:xxxxxxxxx (2) On all nonmetallic minerals and quarry resources, a tax of two percent (2%) based on the actual market value of the gross output thereof at the time of removal, in case of those locally extracted or produced; or the values used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax, in the case of importation.xxxxxxxxx (B) [Definition of Terms]. for purposes of this Section, the term-xxxxxxxxx (4) Quarry resources shall mean any common stone or other common mineral substances as the Director of the Bureau of Mines and Geo-Sciences may declare to be quarry resources such as, but not restricted to, marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate; Provided, That they contain no metal or metals or other valuable minerals in economically workable quantities.

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

9. PERCENTAGE TAXES AND VAT

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: (a) xxxxxxxxx(i) Percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided herein;xxxxxx(o) xxx

PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant, vs. MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant appellees. G.R. No. L-31156 February 27, 1976 | En Banc

FACTS: Pepsi-Cola Bottling Company filed a complaint with a preliminary injunction before the CFI to declare Sec. 2 of RA No. 2264 (Local Autonomy Act) unconstitutional as an undue delegation of taxing authority as well as to declare Ordinance Nos. 23 and 27, series of 1962, of the Municipality of Tanauan, Leyte, null and void. Ordinance No. 23 collects from soft drinks producers and manufacturers a tax of 1/16 of a centavo for every bottle of soft drink corked Ordinance No. 27 collects on soft drinks produced or manufactured within the territorial jurisdiction of the municipality a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity The tax imposed in both Ordinance Nos. 23 and 27 is denominated as municipal production tax CFI upheld the constitutionality of Sec. 2 of RA 2264 and declaring Ordinance Nos. 23 and 27 legal and constitutional Pepsi-Cola Bottling Company appealed to the CA which elevated the case to the SC

ISSUE: Whether Ordinance No. 27 imposes a percentage or a specific tax.

HELD: NOThe plaintiff-appellant submits that Ordinance No. 23 and constitute double taxation, because these two ordinances cover the same subject matter and impose practically the same tax rate. The thesis proceeds from its assumption that both ordinances are valid and legally enforceable. This is not so. As earlier quoted, Ordinance No. 23, which was approved on September 25, 1962, levies or collects from soft drinks producers or manufacturers a tax of one-sixteen (1/16) of a centavo for every bottle corked, irrespective of the volume contents of the bottle used. When it was discovered that the producer or manufacturer could increase the volume contents of the bottle and still pay the same tax rate, the Municipality of Tanauan enacted Ordinance No. 27, approved on October 28, 1962, imposing a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The difference between the two ordinances clearly lies in the tax rate of the soft drinks produced: in Ordinance No. 23, it was 1/16 of a centavo for every bottle corked; in Ordinance No. 27, it is one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is thus clear: it was intended as a plain substitute for the prior Ordinance No. 23, and operates as a repeal of the latter, even without words to that effect.

That brings Us to the question of whether the remaining Ordinance No. 27 imposes a percentage or a specific tax. Undoubtedly, the taxing authority conferred on local governments under Section 2, Republic Act No. 2264, is broad enough as to extend to almost "everything, accepting those which are mentioned therein." As long as the tax levied under the authority of a city or municipal ordinance is not within the exceptions and limitations in the law, the same comes within the ambit of the general rule, pursuant to the rules of exclucion attehus and exception firmat regulum in cabisus non excepti. The limitation applies, particularly, to the prohibition against municipalities and municipal districts to impose "any percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax except gasoline, under the provisions of the National Internal Revenue Code." For purposes of this particular limitation, a municipal ordinance which prescribes a set ratio between the amount of the tax and the volume of sale of the taxpayer imposes a sa