Taxation Tax

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TAXATION II CASE
DIGESTS
LOCAL TAXATION & REAL PROPERTY
TAXATION
SUBMITTED TO:
ATTY. CHRISTINE ANGELICA ELVEA CARANTES
SUBMITTED BY:
ANTON JOHN VINCENT M. FRIAS
CZARINA ROSE S. GOROSPE
FRANCISCO S. ORALLO, JR.
TONIFRANZ F. SARENO
MAY 5, 2017
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TABLE OF CONTENTS
I. LOCAL TAXATION
NATURE OF THE LOCAL TAXING POWER............................7

City of San Pablo, Laguna, et al. v. Honorable Bienvenido Reyes and the
Manila Electric Company...............................................................................7
Manila Electric Company v. Province of Laguna and Benito R. Balazo..........8
Mactan Cebu International Airport Authority v. Hon. Ferdinand J. Marcos, et
al...................................................................................................................9
National Power Corporation v. City of Cabanatuan.....................................10
City Government of Quezon City v. Bayan Telecommunications, Inc..........11
THE PRINCIPLE OF PREEMPTION.....................................12
The Province of Bulacan, et al. v. The Court of Appeals and Republic
Cement Corporation....................................................................................12
First Philippine Industrial Corporation v. The Court of Appeals, et al..........13
Palma Development Corporation v. The Municipality of Malangas.............14
Batangas Power Corporation v. Batangas City and National Power
Corporation.................................................................................................15
Manila International Airport Authority v. Court of Appeals, et al.................16
Land Transportation Office v. City of Butuan...............................................17
Philippine Rural Electric Cooperatives Association, Inc., el al. v. The
Secretary of Interior and Local Government and the Secretary of Finance.18
Petron Corporation v. Mayor Tobias M. Tiangco...........................................19
Pelizloy Realty Corporation v. The Province of Benguet..............................20
City of Manila v. Hon. Angel Valera Colet, et al...........................................21
SPECIFIC TAXING POWERS OF LOCAL GOVERNMENT UNITS
....................................................................................22
Cement Corporation....................................................................................22
Philippine Basketball Association v. The Court of Appeals..........................23
Lepanto Consolidated Mining Corporation v. Hon. Mauricio B. Ambanloc...24
Smart Communications, Inc. v. The City of Davao......................................25
Quezon City and the City Treasurer of Quezon City v. ABS-CBN Broadcasting
Corporation.................................................................................................26
Romulo D. San Juan v. Ricardo L. Castro.....................................................27
Luz R. Yamane vs BA-Lepanto Condominium Corporation..........................28
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Ericsson Telecommunications, Inc, v. City of Pasig.....................................29
REMEDIES OF THE GOVERNMENT...................................30

Angeles City v. Angeles Electric Corporation..............................................30
REMEDIES OF THE TAXPAYER.........................................31
Franklin M. Drilon v. Alfredo Lim, et al........................................................31
Jardine Davies Insurance Brokers, Inc, v. Hon. Erna Aliposa.......................32
Luz R. Yamane vs BA-Lepanto Condominium Corporation..........................33
The City of Manila v. Hon. Caridad H. Grecia-Cuerdo and SM Mart, Inc., et al.
....................................................................................................................34
II. REAL PROPERTY TAXATION
FUNDAMENTAL PRINCIPLES SECTION 198, LGC.............36

Allied Banking Corporation, as Trustee for the Trust Fund of College
Assurance Plan Philippines, Inc. v. The Quezon City Government, et al.....36
PROPERTIES COVERED...................................................37
Caltex (Philippines) Inc. v. The Central Board of Assessment Appeals and
the City Assessor of Pasay..........................................................................37
Sta. Lucia Realty & Development, Inc. v. The City of Pasig.........................38
PROPERTIES EXEMPT.....................................................39
Manila International Airport Authority v. City of Pasay, et al.......................39
Lung Center of the Philippines v. Quezon City............................................40
Light Rail Transit Authority v. Central Board of Assessment Appeals..........41
National Power Corporation v. The Province of Quezon and the Municipality
of Pagbilao..................................................................................................42
National Power Corporation v. Central Board of Assessment Appeals, et al.
....................................................................................................................43
Philippine Fisheries Development Authority v. Central Board of Assessment
Appeals, et al..............................................................................................44
The City of Pasig v. Republic of the Philippines...........................................45
WHO ARE LIABLE FOR REAL PROPERTY TAXES?...............46
Testate Estate of Concordia T. Lim v., The City of Manila............................46
Government Service Insurance System v. The City Treasurer and City
Assessor of the City of Manila.....................................................................47
PROCEDURE IN REAL PROPERTY TAXATION.....................48
Jaime C. Lopez v. The City of Manila...........................................................48
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Antonio P. Callanta, et al. v. Office of the Ombudsman and the City

Government of Cebu...................................................................................50
REMEDIES OF THE GOVERNMENT...................................51
Manila Electric Company v. Nelia A. Barlis..................................................51
Antonio Talusan and Celia Talusan v. Herminigildo Tayag and Juan
Hernandez...................................................................................................52
REMEDIES OF THE TAXPAYER.........................................53
Franklin M. Drilon v. Alfredo Lim, et al........................................................53
Antonio Z. Reyes, et al. v. The Court of Appeals, et al................................54
Hagonoy Market Vendor Association v. The Municipality of Hagonoy.........55
Alejandro B. Ty v. Hon. Aurelio C. Trampe...................................................56
System Plus Computer College of Caloocan City v. Local Government of
Caloocan City, et al.....................................................................................57
Dr. Pablo R. Olivares, et al. v. Mayor Joey Marquez, et al............................58
Cagayan Robina Sugar Milling Co. v. The Court of Appeals, et al................59
National Power Corporation v. The Province of Quezon and The Municipality
of Pagbilao..................................................................................................63
Denis B. Habawel and Alexis F. Medina v. The Court of Tax Appeals...........64
FACTS:.........................................................................................................64
ISSUE:.........................................................................................................64
RULING:.......................................................................................................64
City Mayor of Quezon City, et al. v. Rizal Commercial Banking Corporation
....................................................................................................................65
Efren Aquino and Angelica Aquino v. Quezon City......................................66
National Housing Authority v. Iloilo City......................................................67
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LOCA
L
TAXA
TION
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4
LOCAL TAXATION
NATURE OF THE LOCAL TAXING POWER

(A Delegated Power)
City of San Pablo, Laguna, et al. v. Honorable Bienvenido Reyes and

the Manila Electric Company
G.R. No. 127708; 25 March 1999
FACTS:
The LGC authorized the province/city to impose a tax on business
enjoying a franchise at a rate not exceeding 50% of 1% of the gross annual
receipts for the preceding calendar year realized within its jurisdiction. Thus,
the Sangguniang Panlungsod of San Pablo enacted Ordinance 56 or the
Revenue Code of the City of San Pablo. It provides that a Franchise Tax at a
rate of 50% of 1% of the gross annual receipts shall be imposed on business
enjoying franchise. This shall include both cash sales and sales on account
realized during the preceding calendar year within the city.
Pursuant to such, the City Treasurer sent to Manila Electric Company

(MERALCO) a letter demanding payment of the aforesaid franchise tax. Thus,
from 1994-1996, MERALCO paid under protest. It subsequently filed an action
before the RTC to declare Ordinance No. 56 null and void.
ISSUE:
Is the local taxing power a delegated power?
RULING:
No.
The power to tax is primarily vested in 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 10 of the Constitution which provides that
each LGU shall have the power to create its own sources of revenue 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.
The important legal effect of Section 5 is that, henceforth, in

interpreting statutory provision on municipal fiscal powers, doubts will have
to be resolved in favor of municipal corporation.
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LOCAL TAXATION

(A Delegated Power)
Manila Electric Company v. Province of Laguna and Benito R. Balazo

G.R. No. 131359; 5 May 1999
FACTS:
Manila Electric Company (MERALCO) was granted a franchise by
several municipal councils and the National Electrification Administration to
operate an electric light and power service in the Province of Laguna.
Upon enactment of the LGC, the provincial government issued

Ordinance No. 01-92 imposing franchise tax. MERALCO paid under protest
and later claims for refund because of the duplicity with Section 1 of P.D. No.
551. The protest was, however, denied by the governor relying on a more
recent law, the LGC. AS such, MERALCO filed with the RTC a complaint for
refund, but was dismissed. Hence, this petition.
ISSUE:
Is the imposition of a franchise tax under Section 2.09 of Ordinance No.
01-92 violative of the non-impairment clause of the Constitution and Section
1 of P.D. No. 551?
RULING:
No.
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.
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.
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LOCAL TAXATION

(A Delegated Power)
Mactan Cebu International Airport Authority v. Hon. Ferdinand J.

Marcos, et al.
G.R. No. 120082; 11 September 1996
FACTS:
Mactan Cebu International Airport Authority (MCIAA) was created by
virtue of R.A. 6958. Section 1 thereof states that the authority shall be
exempt from realty taxes imposed by the National Government or any of its
political subdivisions, agencies and instrumentalities. However, the Treasurer
of Cebu City demanded payment for realty taxes from it. Thus, MCIAA filed a
declaratory relief before the RTC, which, however, dismissed the same. It
ruled that the LGC withdrew the tax exemption granted to GOCCs.
ISSUE:
Does the city of Cebu have the power to impose taxes on MCIAA?
RULING:
Yes.
Taxation is the rule and exemption is the exception, the exemption

may, thus, be withdrawn at the pleasure of the taxing authority. As to tax
exemptions or incentives granted to or presently enjoyed by natural or
juridical persons, including GOCCS, Section 193 of the LGC prescribes the
general rule, viz, they are withdrawn upon the effectivity of the LGC, except
those granted to local water districts, cooperatives, duly registered under
R.A. 6938, non- stock and nonprofit hospitals and educational institutions and
unless otherwise provided in the LGC.
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LOCAL TAXATION

(A Delegated Power)
National Power Corporation v. City of Cabanatuan

G.R. No. 149110; 9 April 2003
FACTS:
National Power Corporation (NAPOCOR) sells electric power to the
residents City of Cabanatuan (City). Pursuant to Section 37 of Ordinance No.
165-92, the City assessed the NAPOCOR a franchise tax amounting to
P808,606.41, representing 75% of 1% of the formers gross receipts for the
preceding year.
NAPOCOR, whose capital stock was subscribed and wholly paid by the
Philippine Government, refused to pay the tax assessment. It argued that the
City has no authority to impose tax on government entities. NAPOCOR also
contend that as a non-profit organization, it is exempted from the payment of
all forms of taxes, charges, duties or fees in accordance with Section 13 of
R.A. 6395.
The City, thus, filed a collection suit in the RTC, demanding that
NAPOCOR pay the assessed tax due, plus surcharge. The City alleged that its
exemption from local taxes has been repealed by Section 193 of the LGC.
ISSUE:
Does the City have the authority to issue Ordinance No. 165-92 and
impose an annual tax on businesses enjoying a franchise?
RULING:
Yes.
Section 137 of the LGC clearly states that the LGUs can impose
franchise tax notwithstanding any exemption granted by any law or other
special law. This particular provision of the LGC does not admit any
exception.
In City Government of San Pablo, Laguna v. Reyes, MERALCOs

exemption from the payment of franchise taxes was brought as an issue
before this Court. The same issue was involved in the subsequent case of
Manila Electric Company v. Province of Laguna. Ruling in favor of the local
government in both instances, the Court held that the franchise tax in
question is imposable despite any exemption enjoyed by MERALCO under
special laws.
Doubtless, the power to tax is the most effective instrument to raise

needed revenues to finance and support myriad activities of the local
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government units for the delivery of basic services essential to the promotion
of the general welfare and the enhancement of peace, progress, and
prosperity of the people.
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LOCAL TAXATION

(Extent of the Power of Congress in Local Taxation)
City Government of Quezon City v. Bayan Telecommunications, Inc.

G.R. No. 162015; 6 March 2006
FACTS:
Section 234 of the LGC provides that Except as provided herein, any
exemption from payment of real property tax previously granted to, or
enjoyed by, all persons, whether natural or juridical, including government-
owned-or-controlled corporations is hereby withdrawn upon effectivity of this
Code.
The Congress, however, enacted R.A. 7633, amending Bayan

Telecommunications, Inc.s (Bayantel) original franchise. Section 11 thereof
reiterated Section 14 (a) of the Bayantels original franchise, thus, retaining
the phrase exclusive of this franchise.
In 1993, the City Government of Quezon City, pursuant to Section 5,

Article X of the 1987 Constitution, in relation to Section 232 of the
LGC, enacted the Quezon City Revenue Code, imposing a real property tax
on all real properties in Quezon City and reiterating the withdrawal of
exemption from real property tax under Section 234 of the LGC.
Thereafter, deficiency tax notices were sent to Bayantel. Believing that

it is exempt, Bayantel did not pay the real property taxes indicated in the
deficiency tax assessments. However, the City Government argued that its
tax exemption was effectively withdrawn by the LGC.
ISSUE:
Can the City Government of Quezon City withdraw the real property
tax exemption granted to Bayantel by the Congress?
RULING:
No.
There is no dispute that the power of the Quezon City Government to

tax is limited by Section 232 of the LGC which expressly provides that a
province or city or municipality within the Metropolitan Manila Area may levy
an annual ad valorem tax on real property such as land, building, machinery,
and other improvement not hereinafter specifically exempted. Under this
law, the Legislature highlighted its power to thereafter exempt certain
realties from the taxing power of local government units. An interpretation
denying Congress such power to exempt would reduce the phrase not
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hereinafter specifically exempted as a pure jargon, without meaning

whatsoever. Needless to state, such absurd situation is unacceptable.
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THE PRINCIPLE OF PREEMPTION

Cement Corporation
G.R. No. 126232; 27 November 1998
FACTS:
Provincial Ordinance No. 3 or the Ordinance Enacting the Revenue
Code of the Bulacan Province was passed. Section 21 thereof imposes a tax
of 10% of the fair market value in the locality per cubic meter of ordinary
stores, sand, gravel, earth and other quarry resources, such but not limited
to marble, granite, volcanic cinders, basalt, tuff and rock phosphate,
extracted from public lands or from beds of seas, lakes, rivers, streams,
creeks and other public waters within its territorial jurisdiction.
Thus, the provincial treasurer of Bulacan assessed Republic Cement

Corporation (RCC) Php2,524,692.13 for extracting lime stones, shale and
silica from several parcels of private land in the Province during the third
quarter of 1992 until the second quarter of 1993. Believing that the province,
on the bases of the above-said ordinance, had no authority to impose taxes
on quarry resources extracted from private lands, RCC contested the same.
ISSUE:
Is Provincial Ordinance No. 3 valid to allow the Province to impose
taxes on ordinary stones, sand, gravel, earth, and other quarry resources?
RULING:
No.
The tax imposed by the Province is an excise tax, being a tax upon the
performance, carrying or an excise of an activity. Under Section 133 of the
LGC, a province may not, therefore, levy excise taxes on articles already
taxed by the NIRC.
The NIRC 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 NIRC. The province can,
however, impose a tax on stones, sand, gravel, earth and other quarry
resources extracted from public lands because it is expressly empowered to
do so under the local government code.
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First Philippine Industrial Corporation v. The Court of Appeals, et al.

G.R. No. 125948; 29 December 1998
FACTS:
First Philippine Industrial Corporation (FPIC) is a grantee of a pipeline
concession under R.A 387 to contract, install and operate oil pipelines. It
applied for a mayors permit in Batangas City but before the permit could be
issued, the City Treasurer required it to pay a local tax based on its gross
receipts in 1993 pursuant to the LGC. The Treasurer assessed a business tax
on the FPIC.
FPIC paid under protests so as not to hamper its operations. The City
Treasurer denied the protest contending that FPIC cannot be considered
engaged in transportation business, thus, it cannot claim under Section
133(j) of the LGC. Thereafter, FPIC filed a claim for refund of the taxes it paid
averring that the imposition of said tax violates the LGC. However, such was
denied.
ISSUE:
Is the FPIC a common carrier so as not to hold it liable for the business
tax assessed?
RULING:
Yes.
FPIC is a common carrier as the definition of a common carrier makes

no distinction as to the means of transporting as long as it is by land, water
or air. It does not provide that the transportation should be by motor vehicle.
As such, it is exempt from business tax as provided for in Section 133(j) of
the LGC.
It is clear that the legislative intent in excluding from the taxing power
of the local government unit the imposition of business tax against common
carriers is to prevent a duplication of the so- called common carriers tax.
FPIC is already paying 3% common carriers tax on its gross sales under the
NIRC. To tax petitioner again on its gross receipts in its transportation of
petroleum business would defeat the purpose of the LGC.
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Palma Development Corporation v. The Municipality of Malangas

G.R. No. 152492; 16 October 2003
FACTS:
The Municipality of Malangas (Municipality) passed Municipal Revenue
Code No. 09, Series of 1993. Section 5G.01 thereof imposes fees surveillance
on all goods and all equipment harbored or sheltered in the premises of the
wharf and other within the jurisdiction of this municipality with a schedule.
The service fees were paid by Palma Development Corporation (Palma)

under protest. It contended that under the LGC, municipal governments did
not have the authority to tax goods and vehicles that passed through their
jurisdictions. Thereafter, before the RTC, Palma filed against the Municipality
of Malangas an action for declaratory relief assailing the validity of Section
5G.01 of the municipal ordinance.
ISSUE:
Is the imposition of the fees valid?
RULING:
NO.
Section 133(e) of the LGC 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).
As we see it, the disputed municipal ordinance, which provides for a

service fee for the use of the municipal road or streets leading to the wharf
and to any point along the shorelines within the jurisdiction of the
municipality and for police surveillance on all goods and all equipment
harbored or sheltered in the premises of the wharf and other within the
jurisdiction of this municipality, seems to fall within the compass of the
above cited provisions of the LGC
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Batangas Power Corporation v. Batangas City and National Power

Corporation
G.R. No. 152675; 28 April 2004
FACTS:
On 13 September 1992, Batangas Power Corporation (BPC) registered
itself with the Board of Investments (BOI) as a pioneer enterprise. On 23
September 1992, the BOI issued a certificate of registration to BPC as a
pioneer enterprise entitled to a tax holiday for a period of six years. The
construction of its power station in Batangas City was then completed. BPC
operated the station.
On 12 October 1998, Batangas City sent a letter to BPC demanding

payment of business taxes and penalties, commencing from the year 1994
as provided under the 1992 Batangas City Tax Code. BPC refused to pay,
citing its tax-exempt status under Section 133 (g) of the LGC. Thus, on 15
April 1999, the demand was modified to cover the years 1998-1999.
However, BPC still refused to pay the tax. It insisted that its 6-year tax
holiday commenced from the date of its commercial operation on16 July
1993, not from the date of its BOI registration in September 1992.
ISSUE:
Does the 6-year tax holiday of BPC commence from the date of its
commercial operation on 16 July 1993?
RULING:
No.
Sec. 133 (g) of the LGC, which proscribes LGUs from levying taxes on
BOI-certified pioneer enterprises for a period of six years from the date of
registration, applies specifically to taxes imposed by the local government,
like the business tax imposed by Batangas City on BPC in the case at bar.
Reliance of BPC on the provision of Executive Order No. 226, specifically
Section 1, Article 39, Title III, is clearly misplaced as the six-year tax holiday
provided therein which commences from the date of commercial operation
refers to income taxes imposed by the national government on BOI-
registered pioneer firms. Clearly, it is the provision of the LGC that should
apply to the tax claim of Batangas City against the BPC. The 6-year tax
exemption of BPC should thus commence from the date of BPCs registration
with the BOI on 16 July 1993 and end on 15 July 1999.
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Manila International Airport Authority v. Court of Appeals, et al.

G.R. No. 155560; 20 July 2006
FACTS:
Manila International Airport Authority (MIAA) operates the NAIA in
Paraaque City under EO 903. It administers the land, improvements, and
equipment within the NAIA Complex and its charter transferred to it 600
hectares of land including the runways and buildings. The charter further
provides that it cannot dispose of the without approval of the President.
Thereafter, the OGCC opined that the LGC withdrew the tax exemption from
real estate tax granted to MIAA.
MIAA, then, received Final Notices of Real Estate Tax Deliquency from
the City of Paraaque for the years 1992 to 2001. The City issued notices of
levy and warrants of distraint. The OGCc again opined that the MIAA charter
is proof that it is exempt from real estate tax. A petition for prohibition and
injunction was filed by MIAA with the CA which was denied as well as its
motion for reconsideration. Meanwhile, the City posted notices of auction
sale but a TRO was issued by the Court to enjoin the sale. Thus, this petition.
ISSUE:
Is MIAA exempt from real estate tax?
RULING:
Yes.
Under Section 133(o) of the LGC, local governments cannot tax the
national government. Considering that MIAA is a government
instrumentality, it falls under the coverage of Section 133(o). The power to
tax has only been delegated to the local governments. When local
governments invoke the power to tax on national government entities, it is
construed strictly against the local governments. Section 133 provides the
phrase, unless otherwise provided, which means that local governments
cannot tax national government instrumentalities unless the legislature
clearly intended to tax such government instrumentalities.
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Land Transportation Office v. City of Butuan

G. R. No. 131512; 20 January 2000
FACTS:
The Sangguniang Panglunsod of the City of Butuan enacted an
ordinance "Regulating the Operation of Tricycles-for-Hire, providing
mechanism for the issuance of Franchise, Registration and Permit, and
Imposing Penalties for Violations thereof and for other Purposes." The
ordinance provided for the payment of franchise fees for the grant of the
franchise of tricycles-for-hire, fees for the registration of the vehicle, and fees
for the issuance of a permit for the driving thereof.
The Land Transportation Office (LTO) explains that one of the functions
of the national government that, indeed, has been transferred to local
government units is the franchising authority over tricycles-for-hire of the
Land Transportation Franchising and Regulatory Board (LTFRB) but not, it
asseverates, the authority of LTO to register all motor vehicles and to issue
to qualified persons of licenses to drive such vehicles.
ISSUE:
Was the registration of tricycles given to LGU's, hence, the ordinance is
a valid exercise of police power?
RULING:
No.
The newly delegated powers to LGUs pertain to the franchising and

regulatory powers exercised by the LTFRB and not to the functions of the LTO
relative to the registration of motor vehicles and issuance of licenses for the
driving thereof. As such, the exercise of a police power must be through a
valid delegation. In this case, the police power of registering tricycles was
not delegated to the LGUs, but remained in the LTO.
The power over tricycles granted under Section 458(a)(3)(VI) of the

LGC to LGUs is the power to regulate their operation and to grant franchises
for the operation thereof. The exclusionary clause contained in the tax
provisions of Section 133(l) of the Local Government Code must not be held
to have had the effect of withdrawing the express power of LTO to cause the
registration of all motor vehicles and the issuance of licenses for the driving
thereof. These functions of the LTO are essentially regulatory in nature,
exercised pursuant to the police power of the State, whose basic objectives
are to achieve road safety by insuring the road worthiness of these motor
vehicles and the competence of drivers prescribed by R. A. 4136. Not
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insignificant is the rule that a statute must not be construed in isolation but
must be taken in harmony with the extant body of laws.
Philippine Rural Electric Cooperatives Association, Inc., el al. v. The

Secretary of Interior and Local Government and the Secretary of
Finance
G.R. No. 143076; 10 June 2003
FACTS:
A class suit was filed by the Philippine Rural Electric Cooperatives
Association, Inc., et al. (PHILRECA, et al.) in their own behalf and in behalf of
other electric cooperatives organized and existing under P.D. 269, against
the Secretary of Interior and Local Government and the Secretary of Finance,
through a Petition for Prohibition, contending that pursuant to the provisions
of P.D. 269 and the provision in the loan agreements, they are exempt from
payment of local taxes, including payment of real property tax.
With the passage of the LGC, however, they allege that their tax
exemptions have been invalidly withdrawn, in violation of the equal
protection clause and impairing the obligation of contracts between the
Philippine Government and the United States Government.
ISSUE:
Does the LGC unduly discriminate against electric cooperatives
organized and existing under P.D. 269 on the ground that it violated the
equal protection clause?
RULING:
No.
There is reasonable classification under the LGC to justify the different

tax treatment between electric cooperatives covered by P.D. 269 and electric
cooperatives under R.A. 6938.
Consequently, amendments to P.D. 269 were primarily geared to expand the
powers of the NEA over the electric cooperatives to ensure that loans
granted to them would be repaid to the government. In contrast,
cooperatives under R.A. 6938 are envisioned to be self-sufficient and
independent organizations with minimal government intervention or
regulation.
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Petron Corporation v. Mayor Tobias M. Tiangco

G.R. No. 158881; 16 April 2008
FACTS:
Petron Corporation (Petron) maintains a depot or bulk plant at the
Navotas Fishport Complex in Navotas. Through this depot, it has been
engaged in the selling of diesel fuels to vessels used in commercial fishing in
and around Manila Bay.
Consequently, Petron received a letter from the office of Navotas

Mayor Tobias Tiangco assessing Petron for its sale of diesel. Hence, in this
case, Petron directly assails the Decision of the RTC of Malabon which
dismissed its complaint for cancellation of the assessment made by the
municipality for deficiency taxes. Petron contends that the tax assessment is
ultra vires and void because pursuant to Section 133(h) of the LGC which
provides that taxes, fees or charges on petroleum products cannot be
imposed by local government units.
ISSUE:
Does Section 133(h) of the LGC precludes local government units from
imposing business taxes based on the sale of petroleum products?
RULING:
Yes.
The court held that the latter part of Section 133(h) which contained
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 said provision. The Court further stated that it
could have been a different matter if the Congress had, 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. Hence, 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).
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Pelizloy Realty Corporation v. The Province of Benguet

G. R. No. 183137; 10 APRIL 2013
FACTS:
The Provincial Board of Benguet passed Benguet Revenue Code of
2005. Section 59, Article X thereof provided the levy of 10 % amusement tax
on gross receipts from admissions to resorts, swimming pools, bath houses,
hot springs, and tourist spots.
Pelizloy Realty Corporation (Pelizloy) averred that the imposition of

10% amusement tax on gross receipts from the above activities is ultra vires.
It argued that Section 59, Article X thereof was in violation of the limitations
of the taxing power of local government units contained in Section 133 of the
LGC.
ISSUE:
Is the Province authorized to impose amusement taxes on admission
fees to swimming pools, resorts, bath house, and tourist spots for being
amusement places under the LGC?
RULING:
No.
Section 140 of the LGC states a clear exception to the general rule in
Section 133 (i). Section 140 expressly allows for the imposition by provinces
of amusement taxes on the proprietors, lessees, or operators or theaters,
concert halls, circuses, boxing stadia and other places of amusement.
However, resorts, swimming pools, etc. are not among those expressly
mentioned by Section 140. Under the principle of ejusdem generis, resorts,
swimming pools, etc. are not contemplated by the phrase other places of
amusement because the term is deemed to include only those kinds of
entertaining oneself by viewing the show or performances or those venues
primarily used to stage spectacles or hold public shows, exhibitions,
performances and other events meant to be viewed by an audience.
While it is true that resorts, swimming pools, etc. where people are
visually engaged, they are not primarily for their proprietors or operators to
actively display, stage or present shows and or performances. Thus, the
Province cannot collect amusement taxes from Pelizloy as the latter is not
within the contemplated definition of the phrase other places of
amusement.
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LOCAL TAXATION
City of Manila v. Hon. Angel Valera Colet, et al.

G.R. No. 120051; 10 December 2014
FACTS:
The Manila Revenue Code was enacted by the City Council of Manila.
Section 21(B) of the Manila Revenue Code provided that, a tax of 3% per
annum on the gross sales or receipts of the preceding calendar year is
hereby imposed on the gross receipts of keepers of garages, cars for rent or
hire driven by the lessee, transportation contractors, persons who transport
passenger or freight for hire, and common carriers by land, air or water,
except owners of bancas and owners of animal-drawn two-wheel vehicle.
Shortly thereafter, Ordinance No. 7807 was enacted by the City Council of
Manila which imposed a lower tax rate on the businesses from 3% to a tax of
50% of 1% per annum.
Various businesses that were covered by the ordinance assailed the

constitutionality of the ordinance. They claim that one of the common
limitations on the power to tax of LGUs is Section 133(j) of the LGC which
states that the taxing powers of the LGUs shall not extend to the
transportation business.
ISSUE:
Is the tax imposed by the ordinance valid?
RULING:
No.
Section 133(j) of the LGC clearly and unambiguously proscribes LGUs

from imposing any tax on the gross receipts of transportation contractors,
persons engaged in the transportation of passengers or freight by hire, and
common carriers by air, land, or water. Yet, confusion arose from the phrase
unless otherwise provided herein, found at the beginning of the said
provision.
In contrast, Section 143 of the LGC defines the general power of the
municipality to tax businesses within its jurisdiction. The omnibus grant of
power to municipalities and cities under Section 143(h) of the LGC cannot
overcome the specific exception/exemption in Section 133(j) of the same
Code. This is in accord with the rule on statutory construction that specific
provisions must prevail over general ones.
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LOCAL TAXATION
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LOCAL TAXATION

(Province)

Cement Corporation
G.R. No. 126232; 27 November 1998
FACTS:
Provincial Ordinance No. 3 or the Ordinance Enacting the Revenue
Code of the Bulacan Province was passed. Section 21 thereof imposes a tax
of 10% of the fair market value in the locality per cubic meter of ordinary
stores, sand, gravel, earth and other quarry resources, such but not limited
to marble, granite, volcanic cinders, basalt, tuff and rock phosphate,
extracted from public lands or from beds of seas, lakes, rivers, streams,
creeks and other public waters within its territorial jurisdiction.
Thus, the provincial treasurer of Bulacan assessed Republic Cement

Corporation (RCC) Php2,524,692.13 for extracting lime stones, shale and
silica from several parcels of private land in the Province during the third
quarter of 1992 until the second quarter of 1993. Believing that the province,
on the bases of the above-said ordinance, had no authority to impose taxes
on quarry resources extracted from private lands, RCC contested the same.
ISSUE:
Is Provincial Ordinance No. 3 valid to allow the Province to impose
taxes on ordinary stones, sand, gravel, earth, and other quarry resources?
RULING:
No.
The tax imposed by the Province is an excise tax, being a tax upon the
performance, carrying or an excise of an activity. Under Section 133 of the
LGC, a province may not, therefore, levy excise taxes on articles already
taxed by the NIRC.
The NIRC 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 NIRC. The province can,
however, impose a tax on stones, sand, gravel, earth and other quarry
resources extracted from public lands because it is expressly empowered to
do so under the local government code.
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LOCAL TAXATION

(Province)
Philippine Basketball Association v. The Court of Appeals

G.R. No. 119122; 8 August 2000
FACTS:
The CIR sent an assessment letter to the Philippine Basketball
Association (PBA) for the payment of deficiency amusement tax.
PBA contested the assessment by filing a protest with the CIR who
denied the same. The CTA likewise denied the petition. The decision of CTA
was appealed to CA who affirmed the decision of CTA thus dismissing PBAs
appeal.
PBA contends that P.D. 231, otherwise known as the Local Tax Code of
1973, transferred the power and authority to levy and collect amusement
taxes from the sale of admission tickets to places of amusement from the
national government to the local governments. PBA cited BIR Memorandum
Circular No. 49-73 providing that the power to levy and collect amusement
tax on admission tickets was transferred to the local governments by virtue
of the Local Tax Code; and BIR Ruling No. 231-86 which held that the
jurisdiction to levy amusement tax on gross receipts from admission tickets
to places of amusement was transferred to local governments under P.D. No.
231, as amended.
ISSUE:
To whom between the national government and local government
should PBA pay amusement taxes?
RULING:
PBA is liable to pay amusement tax to the National Government, and
not to the Local Government, in accordance with the rates prescribed by P.D.
1959. It is therein provided that the proprietor, lessee or operator of
professional basketball games is required to pay amusement tax equivalent
to 15% of the gross receipts to the BIR, which payment is a national tax. Said
payment of amusement tax is in lieu of all other percentage taxes of
whatever nature and description.
While Section 13 of the Local Tax Code mentions other places of

amusement, professional basketball games are definitely not within its
scope. Professional basketball games do not fall under the same category as
theaters, cinematographs, concert halls and circuses as the latter basically
belong to artistic forms of entertainment while the former caters to sports
and gaming.
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LOCAL TAXATION

(Province)
Lepanto Consolidated Mining Corporation v. Hon. Mauricio B.

Ambanloc
G.R. No. 180639; 29 June 2010
FACTS:
The national government issued to Lepanto Consolidated Mining
Company (Lepanto) a mining lease contract which granted it the right to
extract and use for its purposes all mineral deposits within the boundary
lines of its mining claim. Upon inquiry, the Mines and Geo-sciences Bureau of
the Department of Environment and Natural Resources (DENR) advised
Lepanto that under its contract, it does not need to get a permit to extract
and use sand and gravel from within the mining claim for its operational and
infrastructure needs. Based on this advice, Lepanto proceeded to extract and
remove sand, gravel, and other earth materials from the mining site.
As a consequence, Mauricio Ambanloc sent a demand letter to Lepanto

asking the latter to pay the province an amount of P1,901,893.00 as sand
and gravel tax for the quarry materials that it extracted from its mining site.
Thus, this appeal was filed by Lepanto stating that the tax on sand and
gravel applies only to commercial extractions. In this case, it extracted these
materials for use solely in its mining operations. It did not supply other users
for some profit. Hence, its extractions were not commercial and should not
be subject to provincial tax.
ISSUE:
Is Lepanto liable for the tax imposed by the Province of Benguet on the
sand and gravel that it extracted from within the area of its mining claim and
used exclusively in its mining operations?
RULING:
Yes.
The Supreme Court held that Paragraph 9 of its Mining Lease of

Contract merely declares that Lepantos extraction and use of mineral
deposits bears the consent of the national government; the contract did not
mention of any exemption from securing government permits. The view of
the Bureau of Mines and Geo-Sciences is only applicable to permits under
MRD-27. The Bureau has no authority to determine the applicability of local
32
LOCAL TAXATION
ordinances. An exemption from the requirements of the provincial

government should have a clear basis, whether in law, ordinance or even
from the contract itself. Unfortunately for Lepanto, it failed to show its
entitlement to such exemption.
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LOCAL TAXATION

(Province)
Smart Communications, Inc. v. The City of Davao

G.R. No. 155491; 16 September 2008
FACTS:
Smart Communications, Inc. (Smart) filed an action for declaratory
relief for the ascertainment of its rights and obligations under the Tax Code
of the City of Davao, particularly Section 1, Article 10 thereof.
Smart contends that its telecenter in Davao City is exempt from

payment of franchise tax to the City, on the ground that the power of the
City of Davao to impose a franchise tax is subject to statutory limitations
such as the in lieu of all taxes clause found in Section 9 of R.A. 7294 which
granted its franchise. Smart contends that the only taxes it may be made to
bear under its franchise are the national franchise tax, income tax, and real
property tax. It claims exemption from the local franchise tax because the in
lieu of taxes clause in its franchise does not distinguish between national and
local taxes.
ISSUE:
Is Smart liable to pay the franchise tax imposed by the City of Davao
despite of the in lieu of all taxes clause in Smarts franchise?
RULING:
Yes.
R.A. 7294 is not definite in granting exemption to Smart from local

taxation. Section 9 thereof imposes on Smart a franchise tax equivalent to
3% of all gross receipts of the business transacted under the franchise and
the said percentage shall be in lieu of all taxes on the franchise or earnings
thereof. R.A. 7294 does not expressly provide what kind of taxes Smart is
exempted from. It is not clear whether the in lieu of all taxes provision in the
franchise of Smart would include exemption from local or national taxation.
In this case, the doubt must be resolved in favor of the City. The in lieu
of all taxes clause applies only to national internal revenue taxes and not to
local taxes. If Congress intended the "in lieu of all taxes" clause in Smart's
franchise to also apply to local taxes, Congress would have expressly
mentioned the exemption from municipal and provincial taxes. However,
Congress did not expressly exempt Smart from local taxes. Congress used
the "in lieu of all taxes" clause only in reference to national internal revenue
taxes. The only interpretation, under the rule on strict construction of tax
exemptions, is that the "in lieu of all taxes" clause in Smart's franchise refers
only to national and not to local taxes.
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LOCAL TAXATION
32
LOCAL TAXATION

(Province)
Quezon City and the City Treasurer of Quezon City v. ABS-CBN

Broadcasting Corporation
G.R. No. 166408; 6 October 2008
FACTS:
ABS-CBN Broadcasting Corporation (ABS-CBN) had been paying local
franchise tax imposed by Quezon City. However, in view of the provision in
R.A. 9766 that it shall pay a franchise tax x x x in lieu of all taxes, the
corporation developed the opinion that it is not liable to pay the local
franchise tax imposed by Quezon City. ABS-CBN filed a written claim for
refund for local franchise tax paid to Quezon City for 1996 and for the first
quarter of 1997.
For failure to obtain any response from the Quezon City Treasurer, ABS-
CBN filed a complaint before the RTC in Quezon City seeking the declaration
of nullity of the imposition of local franchise tax by the City for being
unconstitutional.
ISSUE:
Does the phrase "in lieu of all taxes" indicated in the franchise of ABS-
CBN serve to exempt it from the payment of the local franchise tax imposed
by the City?
RULING:
No.
Section 8 of R.A. 7966 imposes on ABS-CBN a franchise tax equivalent

to 3% of all gross receipts of the radio/television business transacted under
the franchise and the franchise tax shall be "in lieu of all taxes" on the
franchise or earnings thereof. The "in lieu of all taxes" provision in the
franchise of ABS-CBN does not expressly provide what kind of taxes ABS-CBN
is exempted from. It is not clear whether the exemption would include both
local, whether municipal, city or provincial, and national tax.
As adverted to earlier, the right to exemption from local franchise tax must
be clearly established and cannot be made out of inference or implications
but must be laid beyond reasonable doubt. Verily, the uncertainty in the "in
lieu of all taxes" provision should be construed against ABS-CBN. ABS-CBN
has the burden to prove that it is in fact covered by the exemption so
claimed. ABS-CBN miserably failed in this regard.
32
LOCAL TAXATION

(Province)
Romulo D. San Juan v. Ricardo L. Castro

G.R. No. 174617; 27 December 2007
FACTS:
Romulo D. San Juan (San Juan), conveyed, by way of Deed of
Assignment, several real properties in Marikina City to the Saints and Angels
Realty Corporation (SARC), in exchange for 258,434 shares of stock therein
with a total par value of P2,584,340. San Juan then paid the transfer tax
based on the consideration stated in the Deed of Assignment.
Marikina City Treasurer Ricardo L. Castro (Castro) informed him,

however, that the tax due is based on the fair market value of the property.
In turn, San Juan in writing protested the basis of the tax due but Castro
responded on the negative. Thus, San Juan then filed before RTC a Petition
for Mandamus and Damages against Castro praying that he be compelled to
perform a ministerial duty, of accepting the payment of transfer tax based
on the actual consideration of the transfer/assignment. San Juan claims that
the intention of the law in Sec. 135 of the LGC does not automatically apply
the whichever is higher rule.
ISSUE:
Did the RTC err in dismissing the petition for mandamus?
RULING:
No.
For a petition for Mandamus to lie, there must be no other plain,

speedy and adequate remedy in the ordinary course of law. In this case, the
said condition was not satisfied. A taxpayer who disagrees with a tax
assessment made by a local treasurer may file a written protest as
prescribed by Section 195 of the LGC: The taxpayer shall have 30 days from
the receipt of the denial of the protest or from the lapse of the 60-period
prescribed herein within which to appeal with the court of competent
jurisdiction, otherwise the assessment becomes conclusive and
unappealable.
That San Juan protested in writing against the assessment of tax due
and the basis thereof is on record as in fact it was on that account that Mr.
Castro sent a letter which operated as a denial of San Juans written protest.
San Juan should thus have, in accordance with Section 195 of the LGC, either
appealed the assessment before the court of competent jurisdiction or paid
the tax and then sought a refund. He did not observe any of these remedies
32
LOCAL TAXATION
available to him, however. He instead opted to file a petition for mandamus

to compel Castro to accept payment of transfer tax as computed by him.
32
LOCAL TAXATION

(Municipality)
Luz R. Yamane vs BA-Lepanto Condominium Corporation

G.R. No. 154993; 25 October 2005
FACTS:
BA-Lepanto Condominium Corporation (BA-Lepanto) collects regular
assessments from its members for operating expenses, capital expenditures
on the common areas, and other special assessments as provided for in the
Master Deed with Declaration of Restrictions of the Condominium.
Consequently, it received a Notice of Assessment finding it liable to pay the
correct city business taxes, fees and charges, computed as totaling
P1,601,013.77 for the years 1995 to 1997.
BA-Lepanto responded with a written tax protest proceeding from the

premise that its tax liability arose from Section 3A.02(m) of the Makati
Revenue Code, the Corporation proceeded to argue that under both the
Makati Code and the LGC, business is defined as trade or commercial activity
regularly engaged in as a means of livelihood or with a view to profit. It was
submitted that BA-Lepanto, as a condominium corporation, was organized
not for profit, but to hold title over the common areas of the Condominium,
to manage the Condominium for the unit owners, and to hold title to the
parcels of land on which the Condominium was located. Neither was the
Corporation authorized, under its articles of incorporation or by-laws to
engage in profit-making activities. The assessments it did collect from the
unit owners were for capital expenditures and operating expenses.
ISSUE:
Can the City of Makati collect business taxes on condominium
corporations?
RULING:
No.
The word business is defined under Section 131(d) of the LGC as

trade or commercial activity regularly engaged in as a means of livelihood or
with a view to profit. This definition of business takes on importance, since
Section 143 allows local government units to impose local taxes on
businesses other than those specified under the provision. It is, thus,
imperative that in order that BA-Lepanto may be subjected to business taxes,
its activities must fall within the definition of business as provided in the
Local Government Code.
Even though the Corporation is empowered to levy assessments or

dues from the unit owners, these amounts collected are not intended for the
32
LOCAL TAXATION
incurrence of profit by the Corporation or its members, but to shoulder the

multitude of necessary expenses that arise from the maintenance of the
Condominium Project.
32
LOCAL TAXATION

(Municipality)
Ericsson Telecommunications, Inc, v. City of Pasig

G.R. No. 176667; 22 November 2007
FACTS:
Ericsson Telecommunications, Inc. (Ericsson) was assessed a business
tax deficiency for the years 1998 and 1999 amounting to P9,466,885.00 and
P4,993,682.00, respectively, based on its gross revenues as reported in its
audited financial statements for the years 1997 and 1998. Ericsson filed a
Protest, claiming that the computation of the local business tax should be
based on gross receipts and not on gross revenue.
The City of Pasig (City) issued another Notice of Assessment to

Ericsson, this time based on business tax deficiencies for the years 2000 and
2001, amounting to P4,665,775.51 and P4,710,242.93, respectively, based
on its gross revenues for the years 1999 and 2000. Again, Ericsson filed a
Protest, reiterating its position that the local business tax should be based on
gross receipts and not gross revenue.
The City assessed deficiency local business taxes on Ericsson based on

the latters gross revenue as reported in its financial statements, arguing
that gross receipts is synonymous with gross earnings/revenue, which, in
turn, includes uncollected earnings. Ericsson, however, contends that only
the portion of the revenues which were actually and constructively received
should be considered in determining its tax base.
ISSUE:
Should the local business tax be based on gross receipts and not gross
revenue?
RULING:
Local business tax should be based on gross receipts.
In Ericssons case, its audited financial statements reflect income or

revenue which accrued to it during the taxable period although not yet
actually or constructively received or paid. This is because Ericsson uses the
accrual method of accounting, where income is reportable when all the
events have occurred that fix the taxpayers right to receive the income, and
the amount can be determined with reasonable accuracy; the right to receive
income, and not the actual receipt, determines when to include the amount
in gross income.
The imposition of local business tax based on Ericssons gross revenue

will inevitably result in the constitutionally proscribed double taxation
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LOCAL TAXATION
taxing of the same person twice by the same jurisdiction for the same thing
inasmuch as Ericssons revenue or income for a taxable year will definitely
include its gross receipts already reported during the previous year and for
which local business tax has already been paid.
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LOCAL TAXATION
REMEDIES OF THE GOVERNMENT
Angeles City v. Angeles Electric Corporation

G.R. No. 166134; 29 June 2010
FACTS:
The City Treasurer of Angeles City issued a Notice of Assessment to
Angeles Electric Corporation (AEC) for payment of business tax, license fee
and other charges for the period 1993 to 2004 in the total amount of
P94,861,194.10. Within the period prescribed by law, AEC protested the
assessment. When the City Treasurer denied the protest, and ordered AEC to
settle its obligation, it filed with the RTC a petition praying for the issuance of
a TRO which was granted. The city government opposed on the ground that
per NIRC the collection of taxes cannot be enjoined.
ISSUE:
Can the collection of local government taxes be enjoined?
RULING:
Yes.
The prohibition on the issuance of a writ of injunction to enjoin the

collection of taxes applies only to national internal revenue taxes and not to
local taxes. There is no express provision in the LGC prohibiting courts from
issuing injunction to restrain local governments from collecting taxes.
Furthermore, when there is no other plain, speedy and adequate remedy
available to the AEC in the ordinary course of law except this application for
a temporary restraining order and/or writ of preliminary injunction to stop the
auction sale and/or to enjoin and/or restrain the City from levying, annotating
the levy, seizing, confiscating, garnishing, selling and disposing at public
auction the properties of AEC, or otherwise exercising other administrative
remedies against the AEC and its properties, justifies the move of the AEC in
seeking the injunctive reliefs sought for.
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LOCAL TAXATION
REMEDIES OF THE TAXPAYER

(Section 187, LGC)
Franklin M. Drilon v. Alfredo Lim, et al

G.R. No. 112497; 4 August 1994
FACTS:
Section 187 of the LGC states the procedure for the effectivity of tax
ordinances where mandatory public hearings must be done. It also provides
that questions on the constitutionality of such ordinances may be appealed
to the Secretary of Justice.
Pursuant to this, the validity of Ordinance No. 7794 or the Manila

Revenue Code was questioned. In declaring it null and void, Secretary
Franklin M. Drilon found out that there was non-compliance with the
prescribed procedure under Section 187 of the LGC. In a Petition for
Certiorari, the RTC of Manila sustained the validity of the ordinance and
declared Section 187 unconstitutional for giving the Secretary of Justice the
power of control over local governments, while the Constitution only confers
on the President the power of supervision over them.
ISSUE:
Is the appeal to the Secretary of Justice on the constitutionality of tax
ordinances legal?
RULING:
Yes.
Section 187 is constitutional as it merely authorizes the Secretary of

Justice to review only the constitutionality or legality of the tax ordinance
and, if warranted, to revoke it on either or both of these grounds. When he
alters or modifies or sets aside a tax ordinance, he is not also permitted to
substitute his own judgment for the judgment of the local government that
enacted the measure. Secretary Drilon did set aside the Manila Revenue
Code, but he did not replace it with his own version of what the Code should
be. He did not pronounce the ordinance unwise or unreasonable as a basis
for its annulment. This was an act not of control but of mere supervision.
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LOCAL TAXATION

(Section 187, LGC)
Jardine Davies Insurance Brokers, Inc, v. Hon. Erna Aliposa

G.R. No. 118900; 27 February 2003
FACTS:
Municipal Ordinance No. 92-072 or the Makati Revenue Code, which
provides for the schedule of real estate, business and franchise taxes in the
Municipality of Makati at rates higher than those in the Metro Manila Revenue
Code, was sought to be nullified since it was approved without previous
public hearings, in violation of the LGC and Art 276 of its implementing rules,
and that some of the provisions were unconstitutional.
In the meantime, Makati continued to implement the ordinance. Jardine

Davies Insurance Brokers, Inc. (Jardine) was assessed and billed by Makati. It
did not protest the assessment for its quarterly business taxes for the 2nd,
3rd, and 4th quarters. Makati issued the corresponding receipts in favor of
Jardine.
In 1994, Jardine wrote the municipal treasurer requesting the Makati

compute its business tax liabilities in accordance with the Metro Manila
Revenue Code and not under the ordinance considering that said ordinance
was already declared null and void.
ISSUE:
Is the filing of protest necessary before instituting action for refund of
its overpayments or for it to be credited for said overpayments?
RULING:
Yes.
In Reyes vs CA, the Court held that failure of a taxpayer to interpose

the requisite appeal to the Secretary of Justice is fatal to its complaint for a
refund.
Clearly, the requires that the dissatisfied taxpayer who questions the
validity or legality of a tax ordinance must file his appeal to the Secretary of
Justice, within 30 days from effectivity thereof. In case the Secretary decides
the appeal, a period also of 30 days is allowed for an aggrieved party to go
to court. But if the Secretary does not act thereon, after the lapse of 60 days,
a party could already proceed to seek relief in court. These 3 separate
periods are clearly given for compliance as a prerequisite before seeking
redress in a competent court. Such statutory periods are set to prevent
delays as well as enhance the orderly and speedy discharge of judicial
32
LOCAL TAXATION
functions. For this reason, the Courts construe these provisions of statutes as
mandatory.
32
LOCAL TAXATION

(Section 195, LGC)
Luz R. Yamane vs BA-Lepanto Condominium Corporation

G.R. No. 154993; 25 October 2005
FACTS:
BA-Lepanto Condominium Corporation (BA-Lepanto) collects regular
assessments from its members for operating expenses, capital expenditures
on the common areas, and other special assessments as provided for in the
Master Deed with Declaration of Restrictions of the Condominium.
Consequently, it received a Notice of Assessment finding it liable to pay the
correct city business taxes, fees and charges, computed as totaling
P1,601,013.77 for the years 1995 to 1997.
BA-Lepanto responded with a written tax protest proceeding from the

premise that its tax liability arose from Section 3A.02(m) of the Makati
Revenue Code, the Corporation proceeded to argue that under both the
Makati Code and the LGC, business is defined as trade or commercial activity
regularly engaged in as a means of livelihood or with a view to profit. It was
submitted that BA-Lepanto, as a condominium corporation, was organized
not for profit, but to hold title over the common areas of the Condominium,
to manage the Condominium for the unit owners, and to hold title to the
parcels of land on which the Condominium was located. Neither was the
Corporation authorized, under its articles of incorporation or by-laws to
engage in profit-making activities. The assessments it did collect from the
unit owners were for capital expenditures and operating expenses.
ISSUE:
Can the City of Makati collect business taxes on condominium
corporations?
RULING:
No.
The word business is defined under Section 131(d) of the LGC as

trade or commercial activity regularly engaged in as a means of livelihood or
with a view to profit. This definition of business takes on importance, since
Section 143 allows local government units to impose local taxes on
businesses other than those specified under the provision. It is, thus,
imperative that in order that BA-Lepanto may be subjected to business taxes,
its activities must fall within the definition of business as provided in the
Local Government Code.
Even though the Corporation is empowered to levy assessments or

dues from the unit owners, these amounts collected are not intended for the
32
LOCAL TAXATION
incurrence of profit by the Corporation or its members, but to shoulder the

multitude of necessary expenses that arise from the maintenance of the
Condominium Project.
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LOCAL TAXATION

(Judicial Remedies)
The City of Manila v. Hon. Caridad H. Grecia-Cuerdo and SM Mart,

Inc., et al.
GR 175723; 4 February 2014
FACTS:
The City of Manila, through its treasurer assessed taxes for the taxable
period from January to December 2002 against SM Mart, Inc., et al. (SM, et
al.). Since payment of the taxes assessed was a precondition for the issuance
of their business permits, they were constrained to pay the P19,316,458.77
assessment under protest. Thus, the complaint to recover the paid taxes with
prayer to issue TRO and preliminary injunction. The RTC dismissed the
complaint but with an order granting the injunction.
The CA affirmed such decision. It ruled that since appellate jurisdiction

SM, et al.'s complaint for tax refund, which was filed with the RTC, is vested
in the CTA, it follows that a Petition for Certiorari seeking nullification of an
interlocutory order issued in the said case should, likewise, be filed with the
CTA.
ISSUE:
Does the CTA have jurisdiction over a special civil action for certiorari
assailing an interlocutory order issued by the RTC in a local tax case?
RULING:
Yes.
While there is no express grant of such power, with respect to the CTA,
Section 1, Article VIII of the 1987 Constitution provides, nonetheless, that
judicial power shall be vested in one Supreme Court and in such lower courts
as may be established by law. On the strength of the above constitutional
provisions, it can be fairly interpreted that the power of the CTA is vested
with jurisdiction to issue writs of certiorari in these cases.
Moreover, Section 1 of RA 9282 states that the CTA shall be of the

same level as the CA and shall possess all the inherent powers of a court of
justice. Indeed, courts possess certain inherent powers which may be said to
be implied from a general grant of jurisdiction, in addition to those expressly
conferred on them.
33
REAL
PROP
ERTY
TAXA
TION
65
REAL PROPERTY TAXATION
FUNDAMENTAL PRINCIPLES SECTION 198, LGC
Allied Banking Corporation, as Trustee for the Trust Fund of College

Assurance Plan Philippines, Inc. v. The Quezon City Government, et
al.
G.R. No. 154126; 15 September 2006
FACTS:
Allied Banking Corporation (Allied) was, in accordance with Section 3 of
City Ordinance No. 357, required to pay P102,600.00 as quarterly real estate
tax (or P410,400.00 annually) under Tax Declaration No. D-102-03780 which
pegged the market value of the property at P38,000,000.00 the
consideration appearing in the Deed of Absolute Sale, and its assessed value
at P15,200,000.00.
In its written protest with the City Treasurer, Allied assailed Section 3 of
the ordinance as null and void. The Supreme Court in its decision ruled that
Quezon City exceeded its statutory authority when it enacted the proviso in
question. The provision is thus null and void ab initio for being ultra vires and
for contravening the provisions of the LGC, its implementing regulations and
the Local Assessment Regulations No. 1-92. As such, it acquired no legal
effect and conferred no rights from its inception.
Thus, Allied contends in its motion for clarification that the return of
the real property tax erroneously collected and paid is a necessary
consequence of this Court's finding that the proviso is invalid.
ISSUE:
Does the nullification of the proviso of the ordinance in question
warrants automatic payment of the tax erroneously collected?
RULING:
No.
Clearly, Allied Banking and all those similarly situated are entitled to a
tax refund/credit corresponding to the difference between the assessed value
based on the proviso and the assessed value based on the then prevailing
schedule of fair market values prepared by the City Assessor. It bears
stressing, however, that entitlement to a tax refund does not necessarily call
for the automatic payment of the sum claimed. The amount of the claim
being a factual matter, it must still be proven in the normal course and in
accordance with the administrative procedure for obtaining a refund of real
property taxes, as provided under the Local Government Code.
Under Section 253 of the Local Government Code, the claim for refund
or credit for taxes must be filed before the city treasurer who shall decide the
65
claim based on the tax declarations, affidavits, documents and other

documentary evidence to be presented by Allied.
PROPERTIES COVERED
Caltex (Philippines) Inc. v. The Central Board of Assessment Appeals

and the City Assessor of Pasay
G.R. No. L-50466; 31 May 1982
FACTS:
Caltex Philippines, Inc. (Caltex) loaned machines and equipment to gas
station operators under an appropriate lease agreement or receipt. The lease
contract stipulated that upon demand, the operators shall return to Caltex
the machines and equipment in good condition as when received, ordinary
wear and tear excepted. The lessor of the land, where the gas station is
located, does not become the owner of the machines and equipment
installed therein. Caltex retains the ownership thereof during the term of the
lease.
The City Assessor of Pasay City characterized the said items of gas
station equipment and machinery as taxable realty. However, the City Board
of Tax Appeals ruled that they are personalty. The Assessor appealed to the
Central Board of Assessment Appeals.
The Board held that the said machines are real property within the
meaning of Sections 3(k) & (m) and 38 of the Real Property Tax Code, P.D.
464, and that the Civil Code definitions of real and personal property in
Articles 415 and 416 are not applicable in this case.
ISSUE:
Should the pieces of gas station equipment and machinery
permanently affixed by Caltex to its gas station and pavement be subject to
realty tax?
RULING:
Yes.
The subject machines and equipment are taxable improvement and

machinery within the meaning of the Assessment Law and the Real Property
Tax Code, because the same are necessary to the operation of the gas
station and have been attached/affixed/embedded permanently to the gas
station site.
Improvements on land are commonly taxed as realty even though they

might be considered personalty. It is a familiar phenomenon to see things
65
classified as real property for purposes of taxation which on general principle

might be considered personal property.
PROPERTIES COVERED
Sta. Lucia Realty & Development, Inc. v. The City of Pasig

G.R. No. 166838; 15 June 2011
FACTAS:
Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the registered
owner of several parcels of land located in Pasig City. A parcel of these lands
was consolidated with another land situated in Cainta. The two combined lots
were subsequently partitioned into three, for which TCTs issued bear the
Cainta addresses.
Pasig City alleged that the taxes should be paid to it because the TCTs
are clear on their faces that the subject properties are situated in its
territorial jurisdiction. Sta. Lucia, on the other hand, argued that since 1913,
the real estate taxes for the lots covered by the above TCTs had been paid to
Cainta. Cainta, on the other hand, countered that it had been collecting the
real property taxes on the subject properties even before Sta. Lucia acquired
them. It further asseverated that the establishment of the boundary
monuments would show that the subject properties are within its metes and
bounds. It also insisted that there is a discrepancy between the locational
entries and the technical descriptions in the TCTs, which further supports the
need to await the settlement of the boundary dispute case it initiated.
ISSUE:
Should Sta. Lucia should continue paying its real property taxes to
Cainta, as it alleged to have always done, or to Pasig, as the location stated
in Sta. Lucias TCTs?
RULING:
Although it is true that Pasig is the locality stated in the TCTs of the
subject properties, both Sta. Lucia and Cainta aver that the metes and
bounds of the subject properties, as they are described in the TCTs, reveal
that they are within Caintas boundaries. This only means that there may be
a conflict between the location as stated and the location as technically
described in the TCTs. Thus, mere reliance on the face of the TCTs will not
65
suffice as they can only be conclusive evidence of the subject properties

locations if both the stated and described locations point to the same area.
The Antipolo RTC, wherein the boundary dispute case between Pasig
and Cainta is pending, would be able to best determine once and for all the
precise metes and bounds of both Pasigs and Caintas respective territorial
jurisdictions. The resolution of this dispute would necessarily ascertain the
extent and reach of each local governments authority, a prerequisite in the
proper exercise of their powers, one of which is the power of taxation.
In the meantime, to avoid further animosity, Sta. Lucia is directed to deposit
the succeeding real property taxes due on the subject properties, in an
escrow account with the Land Bank of the Philippines.
65
PROPERTIES EXEMPT
Manila International Airport Authority v. City of Pasay, et al.

G.R. No. 163072; 2 April 2009
FACTS:
Manila International Airport Authority (MIAA) operates and administers
the Ninoy Aquino International Airport (NAIA) Complex under E.O. 903,
otherwise known as the Revised Charter of the Manila International Airport
Authority. Under Sections 3 and 22 thereof, approximately 600 hectares of
land, including the runways, the airport tower, and other airport buildings,
were transferred to MIAA. The NAIA Complex is located along the border
between Pasay City and Paraaque City.
MIAA received Final Notices of Real Property Tax Delinquency from the
City of Pasay for the taxable years 1992 to 2001. The City of Pasay, through
its City Treasurer, issued notices of levy and warrants of levy for the NAIA
Pasay properties. MIAA received the notices and warrants of levy on 28
August 2001.
ISSUE:
Are the NAIA Pasay properties of MIAA exempt from real property tax?
RULING:
Yes.
MIAA is not a government-owned or controlled corporation under

Section 2(13) of the Introductory Provisions of the Administrative Code
because it is not organized as a stock or non-stock corporation. Neither is
MIAA a government-owned or controlled corporation under Section 16,
Article XII of the 1987 Constitution because MIAA is not required to meet the
test of economic viability. MIAA is a government instrumentality vested with
corporate powers and performing essential public services pursuant to
Section 2(10) of the Introductory Provisions of the Administrative Code. As a
government instrumentality, MIAA is not subject to any kind of tax by local
governments under Section 133(o) of the Local Government Code. The
exception to the exemption in Section 234(a) does not apply to MIAA
because MIAA is not a taxable entity under the LGC. Such exception applies
only if the beneficial use of real property owned by the Republic is given to a
taxable entity.
65
PROPERTIES EXEMPT
Lung Center of the Philippines v. Quezon City

G.R. No. 144104; 29 June 2004
FACTS:
Lung Center of the Philippines (Lung Center) is a non-stock and non-
profit entity established by virtue of P.D. No. 1823. A big space in the ground
floor of the hospital is being leased to private parties, for canteen and small
store spaces, and to medical or professional practitioners who use the same
as their private clinics. Also, a big portion on the right side of the hospital is
being leased for commercial purposes to a private enterprise known as the
Elliptical Orchids and Garden Center.
When the City Assessor of Quezon City assessed both its land and
hospital building for real property taxes, the Lung Center of the Philippines
filed a claim for exemption on its averment that it is a charitable institution
with a minimum of 60% of its hospital beds exclusively used for charity
patients and that the major thrust of its hospital operation is to serve charity
patients. The claim for exemption was denied, finding that Lung Center of
the Philippines is not a charitable institution and that its properties were not
actually, directly and exclusively used for charitable purposes.
ISSUE:
Is the Lung Center of the Philippines a charitable institution within the
context of the Constitution, and therefore, exempt from real property tax?
RULING:
The Lung Center of the Philippines is a charitable institution. However, under

the Constitution, in order to be entitled to exemption from real property tax,
there must be clear and unequivocal proof that: (1) it is a charitable
institution; and (2) its real properties are ACTUALLY, DIRECTLY and
EXCLUSIVELY used for charitable purposes. While portions of the hospital are
used for treatment of patients and the dispensation of medical services to
them, whether paying or non-paying, other portions thereof are being leased
to private individuals and enterprises. Exclusive is defined as possessed and
enjoyed to the exclusion of others, debarred from participation or enjoyment.
If real property is used for one or more commercial purposes, it is not
exclusively used for the exempted purposes but is subject to taxation.
65
PROPERTIES EXEMPT
Light Rail Transit Authority v. Central Board of Assessment Appeals
G.R. No. 127316; 12 October 2000
FACTS:
The Light Rail Transit Authority (LRTA) is a GOCC primarily responsible
for the construction, operation, maintenance and/or lease of light rail transit
system in the Philippines. LRTA acquired real properties and installed various
kinds of machinery and equipment and facilities for the purpose of its
operations. It entered into a Contract of Management with the Meralco
Transit Organization (METRO) in which the latter undertook to manage,
operate and maintain the Light Rail Transit System owned by the LRTA
subject to the specific stipulations contained in said agreement, including
payments of a management fee and real property taxes.
The City Assessor of Manila assessed the real properties of LRTA,

consisting of lands, buildings, carriageways and passenger terminal stations,
machinery and equipment which he considered real property under the Real
Property Tax Code. LRTA paid its real property taxes on all its real property
holdings, except the carriageways and passenger terminal stations including
the land where it is constructed on the ground that the same are not real
properties under the Real Property Tax Code, and if the same are real
property, these are for public use/purpose, therefore, exempt from realty
taxation. This claim was denied by the City Assessor of Manila.
ISSUE:
May the real property taxes be assessed and collected?
RULING:
Yes.
Though the creation of the LRTA was impelled by public service, to

provide mass transportation to alleviate the traffic and transportation
situation in Metro Manila, its operation undeniably partakes of ordinary
business. It is clothed with corporate status and corporate powers in the
furtherance of its proprietary objectives. Indeed, it operates much like any
private corporation engaged in the mass transport industry. Given that it is
engaged in a service-oriented commercial endeavor, its carriageways and
terminal stations are patrimonial property subject to tax, notwithstanding its
claim of being a GOCC.
65
PROPERTIES EXEMPT
National Power Corporation v. The Province of Quezon and the
Municipality of Pagbilao
G.R. No. 171586; 15 July 2009
FACTS:
The National Power Corporation (NPC) entered into an Energy
Conversion Agreement (ECA) with Mirant Pagbilao Corporation (Mirant) on 9
November 1991. Mirant will build and finance a coal-fired thermal power
plant on the lots owned by the NPC in Pagbilao, Quezon. Among the
obligations undertaken by the NPC under the ECA was the payment of all
taxes that the government may impose on Mirant.
Subsequently, the Municipality of Pagbilao assessed Mirants real

property taxes on the power plant and its machineries in the total amount of
P1,538,076,000.00 for the period of 1997 to 2000. The Municipality of
Pagbilao furnished the NPC a copy of the assessment letter. The NPC
objected to the assessment against Mirant on the claim that it is entitled to
the tax exemptions provided in Section 234, paragraphs (c) and (e) of the
LGC.
ISSUE:
Can NPC use its tax exemption under the LGC against the Municipality?
RULING:
No.
To successfully claim exemption under Section 234(c) of the LGC, the

claimant must prove two elements:
1) the machineries and equipment are actually, directly, and exclusively

used by local water districts and GOCCs; and
2) the local water districts and GOCCs claiming exemption must be
engaged in the supply and distribution of water and/or the generation
and transmission of electric power.
As applied to the present case, the GOCC claiming exemption must be

the entity actually, directly, and exclusively using the real properties, and the
use must be devoted to the generation and transmission of electric power.
Neither the NPC nor Mirant satisfies both requirements. Although the
plants machineries are devoted to the generation of electric power, by the
NPCs own admission and as previously pointed out, Mirant a private
corporation uses and operates them. That Mirant operates the machineries
solely in compliance with the will of the NPC only underscores the fact that
65
NPC does not actually, directly, and exclusively use them. The machineries
must be actually, directly, and exclusively used by the GOCC for the
exemption under Section 234(c) to apply.
PROPERTIES EXEMPT
National Power Corporation v. Central Board of Assessment Appeals,
et al.
G.R. No. 171470; 30 January 2009
FACTS:
First Private Power Corporation (FPCC) entered into a BOT agreement
with National Power Corporation (NAPOCOR) for the construction of the
Power Plant in La Union. The BOT provided that Bauang Private Power
Corporation (BPCC) will be created and the obligations of FPCC shall be
performed by it. For a fee, the created BPCC will convert NAPOCOR's supplied
diesel into electricity and deliver it to NAPOCOR.
The OIC of the Municipal Assesssor's Office initially declared that the
machineries and equipment are tax exempt but the Provincial Assessors
cancelled such declaration so the municipal assessor issued notice of
assessments to BPCC which was received by BPCC on August 7, 1998.
NAPOCOR filed a petition to declare tax exemption. The LBAA denied it and
the CBAA dismissed the appeal. The CTA dismissed the petition for review
and stated that BPCC never contested the assessment; NAPOCOR was not
the registered owner of the machineries and equipment; BPCC owns the
machineries and equipment as per the BOT; and, the exemption under
Section 234(c) of the LGC does not apply to BPCC. Thus, this petition.
ISSUE:
Is BPCC exempt?
RULING:
No.
Section 234 (c) is clear and unambiguous. Exempt from real property
taxation are all machineries and equipment that are actually, directly, and
exclusively used for local water districts and government-owned and
controlled corporation engaged in the supply and distribution of water and/or
generation and transmission of electric power. Taxation is the rule and
exemption is the exception. The rule of strict construction was applied in this
case. The mere undertaking of NPC under the agreement that its shall be
responsible for the payment of all real estate taxes and assessments does
not justify the exemption. The privilege granted to NPC does not extend to
65
other entities. NPC admitted that the machineries and equipment were
owned by BPCC. BPCC had complete ownership based on the Agreement.
65
PROPERTIES EXEMPT
Philippine Fisheries Development Authority v. Central Board of
Assessment Appeals, et al.
G.R. No. 178030; 15 December 2010
FACTS:
Philippine Fisheries Development Authority (PFDA) owned the Iloilo
Fishing Port Complex (IFPC) which was on reclaimed land and consisted of a
breakwater, landing quay, water and fuel oil supply system, refrigeration
building, market hall and a municipal shed. Petitioner then leased portions of
the IFPC to private firms engaged in the fishing business. Iloilo city then
assessed the entire IFPC for Real Property Tax.
ISSUE:
Is the entirety of the IFPC subject to the Real Property Tax?
RULING:
No.
The Real Property Tax liability of the IFPC is only on portions leased out
to private entities. PFDA is not a GOCC but is actually an instrumentality of
the national government exempt from Real Property Tax. Given this, it will
only be subject to Real Property Tax on the portions of the IFPC which is
leased to private entities. It is not a GOCC since a GOCC must satisfy two
requirements: (i) capital stock divided into shares and (ii) authorized to
distribute dividends/profits. PFDA does have capital stock but the same is not
divided into shares and neither is it a non-stock corporation because it does
not have members.
65
PROPERTIES EXEMPT
The City of Pasig v. Republic of the Philippines
G.R. No. 185023; 24 August 2011
FACTS:
Mid-Pasig Land Development Corporation (MPLDC) owned two parcels
of land situated in Pasig City. Portions of the properties are leased to different
business establishments. In 1986, the registered owner of MPLDC, Jose Y.
Campos (Campos), voluntarily surrendered MPLDC to the Republic of the
Philippines.
Subsequently, the Pasig City Assessors Office sent MPLDC two notices
of tax delinquency for its failure to pay real property tax on the properties for
the period 1979 to 2001 totaling P256,858,555.86. Independent Realty
Corporations (IRC) President Ernesto R.Jalandoni(Jalandoni) and Treasurer
Rosario Razon informed the Pasig City Treasurer that the tax for the period
1979 to 1986 had been paid, and that the properties were exempt from tax
beginning 1987. In letters dated 10 July 2003 and 8 January 2004, the Pasig
City Treasurer informed MPLDC and IRC that the properties were not exempt
from tax.
ISSUE:
Did the lower courts err in ordering Pasig City to assess and collect real
property tax from the lessees of the properties?
RULING:
No.
Section 234(a) of Republic Act No. 7160 states that properties owned
by the Republic of the Philippines are exempt from real property tax except
when the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person.
In the present case, the parcels of land are not properties of public
dominion because they are not intended for public use, such as roads,
canals, rivers, torrents, ports and bridges constructed by the State, banks,
shores, roadsteads. Neither are they intended for some public service or for
the development of the national wealth. MPLDC leases portions of the
properties to different business establishments. Thus, the portions of the
properties leased to taxable entities are not only subject to real estate tax,
they can also be sold at public auction to satisfy the tax delinquency.
65
WHO ARE LIABLE FOR REAL PROPERTY TAXES?
Testate Estate of Concordia T. Lim v., The City of Manila

G.R. No. 90639; 21 February 1990
FACTS:
The late Concordia Lim obtained a real estate loan from the
Government Service Insurance System (GSIS), secured by a mortgage
constituted on two parcels of land with a three-story building thereon. When
Lim failed to pay the loan, the mortgage was extra-judicially foreclosed and
the subject properties sold at public auction. The GSIS, being the highest
bidder, bought the properties. Upon Lim's failure to exercise her right of
redemption, the titles to the properties were consolidated in favor of the
GSIS in 1977. However, pursuant to a Resolution of the Board of Trustees of
the GSIS, the estate of Lim was allowed to repurchase the foreclosed
properties. Thus, a Deed of Absolute Sale was executed.
The City Treasurer of Manila required the Estate to pay the real estate
taxes due on the properties for the years 1977, 1978 and the first quarter of
1979 in before the titles could be transferred to the Estate. The latter paid
the amount under protest.
ISSUE:
Is the estate liable for the unpaid real estate taxes?
RULING:
No.
The court held that the estate is not liable to pay the real property tax
due for the years 1977, 1978 and first quarter of 1979. The reason being is
that to impose the real property tax on the estate which was neither the
owner nor the beneficial user of the property during the designated periods
would not only be contrary to law but also unjust. The payments made by the
estate cannot be construed to be an admission of a tax liability since they
were paid under protest and were done only in compliance with one of the
requirements for the consummation of the sale as directed by the City
Treasurer of Manila. Hence, the tax assessed and collected from the plaintiff-
appellants is not valid and a refund by the City government is in order.
65
WHO ARE LIABLE FOR REAL PROPERTY TAXES?
Government Service Insurance System v. The City Treasurer and City

Assessor of the City of Manila
G.R. No. 186242; 23 December 2009
FACTS:
Government Service Insurance System (GSIS) is the owner of two
parcels of land, one is the Katigbak property, while the other as the
Concepcion-Arroceros Propety. Title to the Concepcion-Arroceros property
was transferred to the Judiciary in 2005 pursuant to Proclamation No 335.
both the GSIS and the MeTC of Manila occupy the Concepcion-Arroceros
property, while the Katigbak property was leased to Manila Hotel Corporation
(MHC).
In 2002, the City Treasurer of Manila sent a letter to the GSIS informing
it of the unpaid real property taxes due on the abovementioned properties
for the years 1992 until 2002. The said letter contained a warning that the
properties shall be included in the public auction scheduled in October 2002
for being delinquent should the unpaid taxes remain unsettled before that
date.
ISSUE:
Is GSIS liable for payment of real property taxes on the property it
leased to a taxable entity?
RULING:
No.
Section 133 and 234 of the LGC when taken together, allow the
Republic to grant the beneficial use of its properties to an agency or
instrumentality of the national government. Such grant does not necessarily
result in the loss of the tax exemption. The tax exemption the property of the
Republic or its instrumentality carries ceases only if, as stated in Sec 234 (a)
of the LGC, beneficial use thereof has been granted for a consideration or
otherwise, to a taxable person. The GSIS, as a government entity is not a
taxable juridical person under Sec 133 (o) of the LGC. However, the GSIS lost
that status with respect to the Katigbak property when it leased the same to
MHC, a taxable person. The assessment as regards the Katigbak property is
valid insofar as said tax delinquency is concerned over said property.
As declared in the case of Testate Estate of Concordia Lim, the unpaid

tax attaches to the property and is chargeable against the taxable person
who had actual or beneficial use and possession of it regardless of whether
he is theowner. Being in possession and actual use of the Katigbak property,
MHC is liable for the realty taxes assessed from 1992 to 2002.
65

65
PROCEDURE IN REAL PROPERTY TAXATION
Jaime C. Lopez v. The City of Manila

G.R. No. 127139; 19 February 1999
FACTS:
With the implementation of Manila Ordinance No. 7894, the tax on the
land owned by the Jaime C. Lopez (Lopez) was increased by five hundred
eighty percent (580%). With respect to the improvement on Lopezs
property, the tax increased by two hundred fifty percent (250%). As a
consequence of these increases, Lopez, filed a special proceeding for the
declaration of nullity of the City of Manila Ordinance No. 7894, for being
unjust, excessive, oppressive or confiscatory.
Later, Manila Ordinance No. 7905 took effect, reducing by fifty percent
(50%) the assessment levels (depending on the use of property, e.g.,
residential, commercial) for the computation of tax due. Despite the
amendment brought about by Manila Ordinance No. 7905, the controversy
proceeded. Among the arguments of the Lopez is that Section 212 of the LGC
was not followed, which prohibits the general revision of real property
assessment before the approval of the schedule of the fair market values.
Thus, the alleged revision of real property assessment in 1995 is illegal.
ISSUE:
Was there compliance with Section 212 of the LGC?
RULING:
Yes.
Based on the evidence presented by the parties, the steps to be

followed for the mandatory conduct of General Revision of Real Property
assessments, pursuant to the provision of Sec. 219 of the LGC are as follows:
1) The preparation of Schedule of Fair Market Values; and

2) The enactment of Ordinances:
a) levying an annual ad valorem tax on real property and an additional
tax accruing to the SEF;
b) fixing the assessment levels to be applied to the market values of
real properties;
c) providing necessary appropriation to defray expenses incident to
general revision of real property assessments; and
d) adopting the Schedule of Fair Market Values prepared by the
assessors.
The preparation of fair market values as a preliminary step in the

conduct of general revision was set forth in Section 212 of the LGC, to wit:
65
1) The city or municipal assessor shall prepare a schedule of fair market

values for the different classes of real property situated in their
respective Local Government Units for the enactment of an ordinance
by the sanggunian concerned; and
2) The schedule of fair market values shall be published in a newspaper of
general circulation in the province, city or municipality concerned or
the posting in the provincial capitol or other places as required by law.
It was clear from the records that the City Assessor, prepared the fair
market values of real properties and in preparation thereof, she considered
the fair market values prepared in the calendar year 1992. Upon that basis,
the City Assessors Office updated the schedule for the year 1995. In fact, the
initial schedule of fair market values of real properties showed an increase in
real estate costs, which ranges from 600% - 3,330% over the values
determined in the year 1979. However, after a careful study on the
movement of prices, Mrs. Laderas eventually lowered the average increase
to 1,020%. Thereafter, the proposed ordinance with the schedule of the fair
market values of real properties was published in the Manila Standard on
October 28, 1995 and the Balita on November 1, 1995.
Under the circumstances of this case, there was compliance with the
requirement provided under Sec. 212 of R.A. 7160.
65
PROCEDURE IN REAL PROPERTY TAXATION

(Valuation by Assessors)
Antonio P. Callanta, et al. v. Office of the Ombudsman and the City

Government of Cebu
G.R. Nos. 11525374; 30 January 1998
FACTS:
In several similarly worded lettercomplaints, the City simultaneously
filed criminal and administrative charges against the officers and staff of the
City Assessor's Office for violations of Section 106 of the Real Property Tax
Code for gross negligence or willful underassessment of real properties
within the city's taxing jurisdiction and for violation of Section 3 (e) of R.A.
3019, otherwise known as the AntiGraft and Corrupt Practices Act, for the
act of causing undue injury to the City Government by giving private persons
unwarranted benefits, advantages or preferences in the discharge of their
official and administrative functions through manifest partiality, evident bad
faith or gross inexcusable negligence by reassessing the real properties of
taxpayers without any authority whatsoever, thereby resulting in the
reduction of tax assessments to the prejudice of the city government
ISSUE:
Can the officials and employees of the Office of the City Assessor
reduce the new assessed values of real properties upon requests of the
affected property owners?
RULING:
No.
Callanta, et al. anchor the validity of their acts upon the absence of a
specific provision of law expressly prohibiting the assessor from making
adjustments or corrections in the assessment of real properties, and upon
the longstanding practice of the city assessor's office in making such
adjustments/corrections believed in good faith to be sanctioned under
Section 22 of PD 464.
This is bereft of any merit. Under the procedure, the issuance of a

notice of assessment by the local assessor shall be his last action on a
particular assessment. On the side of the property owner, it is this last action
which gives him the right to appeal to the Local Board of Assessment
Appeals. The above procedure also, does not grant the property owner the
remedy of filing a motion for reconsideration before the local assessor.
The act of Callanta, et al. in providing the corresponding notices of

assessment the chance for the property owners concerned to file a motion
for reconsideration and for acting on the motions filed is not in accordance
65
with law and in excess of their authority and therefore constitutes ultra vires
acts.
65

(Contents of the Assessment)
Manila Electric Company v. Nelia A. Barlis

G.R No. 114231; 1 February 2001
FACTS:
One of the notices sent to Manila Electric Company (MERALCO) by
Nelia Barlis (Barlis) specifically provides the following declaration:
Inaasahan po namin na di ninyo ipagwawalang bahala ang patal

astas na ito at ang pagbabayad ng nabangit
na buwis sa lalong madaling panahon. Ipinaaala-ala po lamang
ang sinomang magpabaya o magkautang ng buwis ng maluwat
ay isusubasta (Auction Sale) ng Pamahalaan ang inyong ari-arian
ng sang-ayon sa batas.
Subalit kung kayo naman po ay bayad na, ipakita lamang ang

katibayan ng pagbabayad (Official Receipt)at ipagwalang-bahala
ang patalastas na ito.
MERALCO questions the findings of the court that what was sent to it
by former Municipal treasurers were the tax assessment notices
contemplated by law and not mere collection notices.
ISSUE:
Is the notice sent by Barlis a valid notice of assessment?
RULING:
No.
A notice of assessment as provided for in the Real Property Tax Code

should effectively inform the taxpayer of the value of a specific property, or
proportion thereof subject to tax, including the discovery, listing,
classification, and appraisal of properties. The September 3, 1986 and
October 31, 1989 notices do not contain the essential information that a
notice of assessment must specify, namely, the value of a specific property
or proportion thereof which is being taxed, nor does it state the discovery,
listing, classification and appraisal of the property subject to taxation. In fact,
the tenor of the notices bespeaks an intention to collect unpaid taxes, thus
the reminder to the taxpayer that the failure to pay the taxes shall authorize
the government to auction off the properties subject to taxes or, in the words
of the notice, "Ipinaaala-ala po lamang, ang sino mang magpabaya o
magkautang ng buwis ng maluwat ay isusubasta (Auction Sale) ng
pamahalaan ang inyong ari-arian ng naaayon sa batas."
65

(Who is Entitled to the Notice of Assessment?)
Antonio Talusan and Celia Talusan v. Herminigildo Tayag and Juan

Hernandez
G.R. No. 133698; 4 April 2001
FACTS:
Antonio Talusan and Celia Talusan (Spouses Talusan) bought a property
covered by Condominium Certificate of Title No. 651, from its former owner,
Elias Imperial (Imperial), as evidenced by a Deed of Absolute Sale. On
October 15, 1985, the City Treasurer of Baguio City, wrote a letter to the
former owner Imperial informing him that the above described property
would be sold at public auction on December 9, 1985, in order to satisfy the
delinquent real estate taxes, penalties and cost of sale, and demanded
payment of the sum of P4,039.80, representing total taxes due and
penalties.
However, Imperial and his entire family emigrated to Australia in 1974.

The property was sold to Herminigildo Tayag (Tayag) for P4,400.00 without
any notice to the former owner thereof or to Spouses Talusan. A final bill of
sale was later issued in favor of Tayag. Spouses Talusan assert that the sale
violated P.D. 464 which requires publication and that he was never personally
notified of the same.
ISSUE:
Is the auction sale valid despite no notice and publication to the new
owner who failed to register the property in the Registry of Deeds?
RULING:
Yes.
In the present case, the notice of delinquency was sent by registered

mail to the permanent address of the registered owner in Manila. In that
notice, the city treasurer of Baguio City directed him to settle the charges
immediately and to protect his interest in the property. Under the
circumstances, we hold that the notice sent by registered mail adequately
protected the rights of the taxpayer, who was the registered owner of the
condominium unit.
For purposes of the real property tax, the registered owner of the
property is deemed the taxpayer. Hence, only the registered owner is
entitled to a notice of tax delinquency and other proceedings relative to the
tax sale. Not being registered owners of the property, petitioners cannot
claim to have been deprived of such notice. In fact, they were not entitled to
it.
65

65

(Section 187, LGC)
Franklin M. Drilon v. Alfredo Lim, et al

G.R. No. 112497; 4 August 1994
FACTS:
Section 187 of the LGC states the procedure for the effectivity of tax
ordinances where mandatory public hearings must be done. It also provides
that questions on the constitutionality of such ordinances may be appealed
to the Secretary of Justice.
Pursuant to this, the validity of Ordinance No. 7794 or the Manila

Revenue Code was questioned. In declaring it null and void, Secretary
Franklin M. Drilon found out that there was non-compliance with the
prescribed procedure under Section 187 of the LGC. In a Petition for
Certiorari, the RTC of Manila sustained the validity of the ordinance and
declared Section 187 unconstitutional for giving the Secretary of Justice the
power of control over local governments, while the Constitution only confers
on the President the power of supervision over them.
ISSUE:
Is the appeal to the Secretary of Justice on the constitutionality of tax
ordinances legal?
RULING:
Yes.
Section 187 is constitutional as it merely authorizes the Secretary of

Justice to review only the constitutionality or legality of the tax ordinance
and, if warranted, to revoke it on either or both of these grounds. When he
alters or modifies or sets aside a tax ordinance, he is not also permitted to
substitute his own judgment for the judgment of the local government that
enacted the measure. Secretary Drilon did set aside the Manila Revenue
Code, but he did not replace it with his own version of what the Code should
be. He did not pronounce the ordinance unwise or unreasonable as a basis
for its annulment. This was an act not of control but of mere supervision.
65

(Section 187, LGC)
Antonio Z. Reyes, et al. v. The Court of Appeals, et al.

GR No. 118233; 10 December 1999
FACTS:
The Sangguniang Bayan of San Juan, Metro Manila implemented
several tax ordinances ordinances.
Subsequently, Antonio Reyes, et al. filed an appeal with the

Department of Justice assailing the constitutionality of these tax ordinances
allegedly because they were promulgated without previous public hearings
thereby constituting deprivation of property without due process of law.
However, the same was dismissed.
ISSUE:
Are the assailed ordinances valid?
RULING:
Yes.
Reyes, et al. have not proved in the case before us that the
Sangguniang Bayan of San Juan failed to conduct the required public
hearings before the enactment of Ordinances 87, 95, 91, 100, and 101.
Although the Sanggunian had the control of records or better means of proof
regarding the facts alleged, petitioners are not relieved from the burden of
proving their averments. Proof that public hearings were not held falls on the
petitioners shoulders. For failing to discharge that burden, their petition was
properly dismissed.
For the purpose of securing certainty where doubt would be

intolerable, it is a general rule that the regularity of the enactment of an
officially promulgated statute or ordinance may not be impeached by parol
evidence or oral testimony either of individual officers and members, or of
strangers who may be interested in nullifying legislative action. These rules
supplement the presumption in favor of the regularity of official conduct
which we have upheld repeatedly, absent a clear showing to the contrary.
65

(Section 187, LGC)
Hagonoy Market Vendor Association v. The Municipality of Hagonoy

G.R. No. 137621; 8 August 2001
FACTS:
The Sangguniang Bayan of Hagonoy, Bulacan, enacted an ordinance,
Kautusan Blg. 28, which increased the stall rentals of the market vendors in
Hagonoy. Article 3 provided that it shall take effect upon approval. The
subject ordinance was posted from November 4-25, 1996. In the last week of
November, 1997, the Hagonoy Market Vendor Associations (HMVA) members
were personally given copies of the approved Ordinance and were informed
that it shall be enforced in January, 1998. On December 8, 1997, the HMVAs
President filed an appeal with the Secretary of Justice assailing the
constitutionality of the tax ordinance. HMVA claimed it was unaware of the
posting of the ordinance.
The Municipality opposed, contended that the ordinance took effect on

October 6, 1996 and that the ordinance, as approved, was posted as
required by law. Hence, it was pointed out that HMVAs appeal, made over a
year later, was already time-barred. The Secretary of Justice dismissed the
appeal on the ground that it was filed out of time, specifically, beyond thirty
(30) days from the effectivity of the Ordinance on October 1, 1996, as
prescribed under Section 187 of the LGC. Citing the case of Taada vs.
Tuvera, the Secretary of Justice held that 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.
ISSUE:
Was the appeal made by the HMVA with the Secretary of Justice is
time-barred?
RULING:
Yes.
Section 187 of the LGC requires that an appeal of a tax ordinance or

revenue measure should be made to the Secretary of Justice within 30 days
from effectivity of the ordinance and even during its pendency, the
effectivity of the assailed ordinance shall not be suspended.
In the case at bar, Municipal Ordinance No. 28 took effect in October

1996. HMVA filed its appeal only in December 1997, more than a year after
the effectivity of the ordinance in 1996. Clearly, the Secretary of Justice
correctly dismissed it for being time-barred. At this point, it is apropos to
65
state that the timeframe fixed by law for parties to avail of their legal
remedies before a competent court is not a mere technicality that can be
easily brushed aside. The periods stated in Section 187 of the LGC are
mandatory. Ordinance No. 28 is a revenue measure adopted by the
Municipality to fix and collect public market stall rentals.

(Section 187, LGC)
Alejandro B. Ty v. Hon. Aurelio C. Trampe

G.R. No. 117577; 1 December 1995
FACTS:
The Municipal Assessor of Pasig sent a notice of assessment
concerning certain real properties owned by Alejandro B. Ty (Ty) located in
Pasig, Metro Manila. A similar notice for the same reason was also sent to
MVR Picture Tube. Inc. (MVR) located in Pasig, Metro Manila. In a dated 18
March 1994, Ty and MVR Picture Tube Inc. through counsel requested the
Municipal Assessor to consider the subject assessments.
Not satisfied, Ty and MVR on 29 March 1994 filed with the RTC of the
National Capital Judicial Region, Branch 163, presided over by Judge Aurelio
Trampe, a Petition for Prohibition with prayer for a restraining order or writ of
preliminary injunction to declare null and void the new tax assessment and
to enjoin the collection of real estate taxes based on said assessments. The
judge denied said petition.
ISSUE:
Are Ty and MVR required to exhaust administrative remedies prior to
seeking judicial relief?
RULING:
No.
Although as a rule, administrative remedies must first be exhausted

before resort to judicial action can prosper, there is a well-settled exception
in cases where the controversy does not involve questions of fact but only of
law. In the present case, the parties, even during the proceedings in the
lower court on 11 April 1994, already agreed "that the issues in the petition
are legal", and thus, no evidence was presented in said court.
In laying down the powers of the Local Board of Assessment Appeals,

R.A. 7160 provides in Sec. 229 (b) that "(t)he proceedings of the Board shall
be conducted solely for the purpose of ascertaining the facts . . . ." It follows
that appeals to this Board may be fruitful only where questions of fact are
65
involved. Again, the protest contemplated under Sec. 252 of R.A. 7160 is
needed where there is a question as to the reasonableness of the amount
assessed. Hence, if a taxpayer disputes the reasonableness of an increase in
a real estate tax assessment, he is required to "first pay the tax" under
protest. Otherwise, the city or municipal treasurer will not act on his protest.
In the case at bench however, the petitioners are questioning the very
authority and power of the assessor, acting solely and independently, to
impose the assessment and of the treasurer to collect the tax. These are not
questions merely of amounts of the increase in the tax but attacks on the
very validity of any increase.

(Appeal to the Board of Assessment Appeals)
System Plus Computer College of Caloocan City v. Local Government

of Caloocan City, et al.
G.R. No. 146382; 7 August 2003
FACTS:
Systems Plus Computer College of Caloocan City (Systems) requested
the City of Caloocan to extend tax exemption to the parcels of land claiming
that the same were being used actually, directly and exclusively for
educational purposes pursuant to Article VI, Section 28(3) of the 1987
Constitution. Such was denied on the ground that the subject parcels of land
were owned by Consolidated Assembly and Pair Management which derived
income therefrom in the form of rentals and other local taxes assumed by
the Systems. Hence, from the land owners' standpoint, the same were not
actually, directly and exclusively used for educational purposes.
ISSUE:
Will mandamus lie against public respondents?
RULING:
No.
Where administrative remedies are available, a petition for mandamus

does not lie. Under Section 226 of LGC, the remedy of appeal to the Local
Board of Assessment Appeals is available from an adverse ruling or action of
the provincial, city or municipal assessor in the assessment of property.
Systems cannot bypass the authority of the concerned administrative

agencies and directly seek redress from the courts even on the pretext of
raising a supposedly pure question of law without violating the doctrine of
exhaustion of administrative remedies. Hence, when the law provides for
remedies against the action of an administrative board, body, or officer, as in
65
the case at bar, relief to the courts can be made only after exhausting all
remedies provided therein. Otherwise stated, before seeking the intervention
of the courts, it is a precondition that petitioner should first avail of all the
means afforded by the administrative processes.
Besides, mandamus does not lie against the respondent City Assessor
in the exercise of his function of assessing properties for taxation purposes.
While its duty to conduct assessments is a ministerial function, the actual
exercise thereof is necessarily discretionary.
65

(Appeal to the Board of Assessment Appeals)
Dr. Pablo R. Olivares, et al. v. Mayor Joey Marquez, et al.

G.R. No. 155591; 22 September 2004
FACTS:
Dr. Pablo Olivares, et al. (Olivares, et al.) received a final notice of real
estate tax delinquency from the Paraaque City Treasurer. Olivares et al.
replied with a letter of protest, seeking reinvestigation on the following
grounds:
1) some of the taxes being collected have already prescribed and may no
longer be collected as provided in the LGC;
2) some properties have been doubly taxed/assessed;
3) some properties being taxed are no longer existent;
4) some properties are exempt from taxation as they are being used
exclusively for educational purposes; and
5) some errors are made in the assessment and collection of taxes due on
their properties.
Olivares et.al. filed a civil case for certiorari, prohibition, and

mandamus before the Paraaque RTC questioning the assessment and levy
made by the Paraaque City Treasurer on their properties.
ISSUES:
Did Olivares, et al. fail to exhaust administrative remedies?
RULING:
No.
Extraordinary remedies of certiorari, prohibition, and mandamus may

be resorted to only when there is no plain, speedy, and adequate remedy
available. Petitions for the issuance of these peremptory writs will not lie
where administrative remedies are available, in order to give the
administrative body an opportunity to correct the matter and prevent
unnecessary and premature recourse to the courts.
Section 252(a) of the LGC requires the payment of the tax under
protest. The protest in writing must be filed within 30 days from payment to
the LGU treasurer concerned, who shall decide the protest within 60 days
from receipt. If the protest is denied or unacted upon within the 60-day
period provided for, the taxpayers recourse is with the Local Board of
Assessment Appeals under the LGC and then to the Central Board of
Assessment Appeals (CBAA). From the CBAA, the dispute may then be taken
to the CA by filing a verified petition for review. Thus, recourse to the court
not proper in the case at bar.
65

65

(Protest of the Assessment)
Cagayan Robina Sugar Milling Co. v. The Court of Appeals, et al.

G.R. No. 122451; 12 October 2000
FACTS:
Asset Privatization Trust (APT) offered for sale all the foreclosed assets
and properties of Cagayan Sugar Corporation and it was acquired by
Cagayan Robina Sugar Milling Co. (Cagayan). The Provincial Assessor issued
a Notice of Assessment covering several machineries included therein, which
was appealed to the Local Board of Assessment Appeals (LBAA) on the
ground that it was excessive, erroneous, and unjust. Cagayan asked the
Assessor to reconsider his assessment, contending that it should not be
based on the APT-set selling price alone.
After deducting the value of properties not subject to tax, the LBAA
ordered the Provincial Assessor to make the necessary amendments. Thus,
Cagayan filed with the CBAA an Appeal of Assessment concerning the
decision of the LBAA. The LBAA and Provincial Assessor moved to dismiss it
as it was filed beyond the 30-day reglementary period, which was granted.
ISSUES:
Does the protest have merit?
RULING:
No.
Cagayan insists that its protest has merit, in view of a 1st Indorsement
Letter of the Deputy Executive Director of the Bureau of Local Government
Finance directing the Provincial Assessor of Cagayan to recompute the
market value of the machineries. However, said letter referred to the
protested assessment done by the Provincial Assessor. There was no
reference at all to the assessment of the machineries, which was done by the
LBAA, which revised and corrected the protested appraisal by the Provincial
Assessor. Said letter did not find erroneous the re-assessment done by the
LBAA, which was subsequently upheld by both the CBAA and the Court of
Appeals. Findings of fact of administrative agencies and quasi-judicial bodies,
which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only respect, but finality when
affirmed by the Court of Appeals.
65


GR No. 114231; 18 May 2001
FACTS:
The offices of the Municipal Assessor and Municipal Treasurer of
Muntinlupa, while reviewing records pertaining to the assessments and
collection of real property taxes, discovered that Manila Electric Company
(MERALCO) misdeclared and/or failed to declare for taxation purposes a
number of real properties, consisting of several equipment and machineries,
found in the said power plants.
A review of the deed of sale which MERALCO executed in favor of

NAPOCOR when it sold the power plants to the latter convinced the
municipal government of Muntinlupa of the misdeclaration/non- declaration
of the value of the said machineries and equipment. The municipal assessor
then declared and assessed the subject real properties for taxation purposes
and their corresponding tax declaration. With MERALCO ignoring the
assessments, the Municipal Treasurer issued warrants of garnishment.
MERALCO filed before the RTC a Petition for Prohibition with Prayer for
Writ of Preliminary Injunction and/or TRO praying that a TRO be issued to
enjoin the Municipal Treasurer of Muntinlupa from enforcing the warrants of
garnishment.
ISSUE:
Does the trial court acquire jurisdiction to entertain a Petition for
Prohibition absent MERALCOs payment, under protest, of the tax assessed?
RULING:
No.
Payment of the tax assessed under protest is a condition sine qua non
before the trial court could assume jurisdiction over the petition and failure
to do so, the RTC has no jurisdiction to entertain it.
The restriction upon the power of courts to impeach tax assessment

without prior payment, under protest, of the taxes assessed is consistent
with the doctrine that taxes are the lifeblood of the nation and as such their
collection cannot be curtailed by injunction or any like action; otherwise, the
state or, in this case, the LGU, shall be crippled in dispensing the needed
services to the people, and its machinery is gravely disabled.
65

65


G.R No. 114231; 1 February 2001
FACTS:
One of the notices sent to Manila Electric Company (MERALCO) by
Nelia Barlis (Barlis) specifically provides the following declaration:
Inaasahan po namin na di ninyo ipagwawalang bahala ang patal

astas na ito at ang pagbabayad ng nabangit
na buwis sa lalong madaling panahon. Ipinaaala-ala po lamang
ang sinomang magpabaya o magkautang ng buwis ng maluwat
ay isusubasta (Auction Sale) ng Pamahalaan ang inyong ari-arian
ng sang-ayon sa batas.
Subalit kung kayo naman po ay bayad na, ipakita lamang ang

katibayan ng pagbabayad (Official Receipt)at ipagwalang-bahala
ang patalastas na ito.
MERALCO questions the findings of the court that what was sent to it
by former Municipal treasurers were the tax assessment notices
contemplated by law and not mere collection notices.
ISSUE:
Is the notice sent by Barlis a valid notice of assessment?
RULING:
No.
A notice of assessment as provided for in the Real Property Tax Code

should effectively inform the taxpayer of the value of a specific property, or
proportion thereof subject to tax, including the discovery, listing,
classification, and appraisal of properties. The September 3, 1986 and
October 31, 1989 notices do not contain the essential information that a
notice of assessment must specify, namely, the value of a specific property
or proportion thereof which is being taxed, nor does it state the discovery,
listing, classification and appraisal of the property subject to taxation. In fact,
the tenor of the notices bespeaks an intention to collect unpaid taxes, thus
the reminder to the taxpayer that the failure to pay the taxes shall authorize
the government to auction off the properties subject to taxes or, in the words
of the notice, "Ipinaaala-ala po lamang, ang sino mang magpabaya o
magkautang ng buwis ng maluwat ay isusubasta (Auction Sale) ng
pamahalaan ang inyong ari-arian ng naaayon sa batas."
65

65


GR 114231; 29 June 2004
FACTS:
Manila Electric Company (MERALCO) filed a motion for leave to file a
motion for reconsideration of the April 15, 2002 Resolution, appending
thereto its motion for reconsideration.
MERALCO pointed out that the said notices did not contain the
assessors findings regarding the kind of real estate, area, unit value, market
value, actual use and assessment level; and, in the case of the machinery
attached to the land, the description of the machinery, date of operation,
original cost, depreciation, market value and assessment level.
Hence, the said notices could not be used as bases for filing an appeal
to the Local Board of Assessment Appeals under Section 30 of the Real
Property Tax Code, which clearly adverts to a written notice of assessment.
Thus, the petitioner contended, it could not be required to avail of the
prescribed administrative remedies in protesting an erroneous tax
assessment under the said Code.
ISSUE:
Are the notices of assessment issued by Barlis notices of assessment
under the Real Property Tax Code, thus, such has become final and executory
for the failure to appeal the same?
RULING:
No.
The notices of assessment issued by respondent are not notices of

assessment envisaged in Section 27 of P.D. No. 464. A notice of assessment
as provided for in the Real Property Tax Code (RPTC) should effectively inform
the taxpayer of the value of a specific property, or proportion thereof subject
to tax, including the discovery, listing, classification, and appraisal of
properties.
Here, the September 3, 1986 and October 31, 1989 notices do not
contain the essential information that a notice of assessment must specify,
namely, the value of a specific property or proportion thereof which is being
taxed, nor does it state the discovery, listing, classification and appraisal of
the property subject to taxation. Thus, the notices cannot become final and
executory when petitioner had not appealed the same.
65

National Power Corporation v. The Province of Quezon and The

Municipality of Pagbilao
G.R. No. 171586; 25 January 2010
FACTS:
National Power Corporation (NPC) is a GOCC that entered into an
Energy Conversion Agreement (ECA) under a build-operate-transfer (BOT)
arrangement with Mirant Pagbilao Corporation (Mirant). Under the
agreement, Mirant will build and finance a thermal power plant in Quezon,
and operate and maintain the same for 25 years, after which, Mirant will
transfer the power plant to the Province of Quezon without compensation.
NPC also undertook to pay all taxes that the government may impose on
Mirant. The Province then assessed Mirant real property taxes on the power
plant and its machineries.
ISSUES:
Can Petitioner file the protest against the real property tax
assessment?
RULING:
No.
The two entities vested with personality to contest an assessment are

(a) the owner or (b) the person with legal interest in the property. NPC is
neither the owner nor the possessor/user of the subject machineries even if
it will acquire ownership of the plant at the end of 25 years. The Court said
that legal interest should be an interest that is actual and material, direct
and immediate, not simply contingent or expectant. While the Petitioner
does indeed assume responsibility for the taxes due on the power plant and
its machineries, the tax liability referred to is the liability arising from law
that the local government unit can rightfully and successfully enforce, not
the contractual liability that is enforceable between the parties to a contract.
The local government units can neither be compelled to recognize the
protest of a tax assessment from the Petitioner, an entity against whom it
cannot enforce the tax liability.
65

(Remedies from a Denial of the Protest and Refund)
Denis B. Habawel and Alexis F. Medina v. The Court of Tax Appeals

G.R. No. 174759; 7 September 2011
FACTS:
Denis B. Habawel (Habawel) and Alexis F. Medina (Medina) were the
counsels of Surfield Development Corporation (Surfield) which sought the
refund of excess taxes paid.
After the City Government of Mandaluyong City denied its claim for
refund, Surfield initiated a special civil action for mandamus in the RTC. The
RTC, however, dismissed the petition. Thus, Surfield, represented by Habawel
and Medina, elevated the dismissal to the CTA via Petition for Review. The
CTA Division denied the petition for lack of jurisdiction and for failure to
exhaust the remedies
Habawel and Medina sought reconsideration in behalf of Surfield,

insisting that the CTA had jurisdiction pursuant to Section 7(a)(3) of R.A
9282.
ISSUE:
Does the CTA have jurisdiction over cases on refund of excess
payment?
RULING:
No.
The Court held that Section 7(a)(3) covers only appeals of the
decisions, orders or resolutions of the RTC in local tax cases originally
decided or resolved by them in the exercise of their original or appellate
jurisdiction. The provision is clearly limited to local tax disputes decided by
the RTC. In contrast, Section 7(a)(5) grants the CTA cognizance of appeals of
the decisions of the Central Board of Assessment Appeals in the exercise of
its appellate jurisdiction over cases involving the assessment and taxation of
real property originally decided by the provincial or city board of assessment
appeals.
In its resolution of 15 March 2006, therefore, the CTA Division

forthrightly explained why, contrary to the Habawel and Medinas urging,
Section 7(a)(3) was not applicable by clarifying that a real property tax,
being an ad valorem tax, could not be treated as a local tax.
65

(Redemption of Property Sold)
City Mayor of Quezon City, et al. v. Rizal Commercial Banking

Corporation
G.R. No. 171033; 3 August 2010
FACTS:
A parcel of land was acquired by Rizal Commercial Banking Corporation
(RCBC) through foreclosure of real estate mortgage when Spouses Naval
obtained a loan from it but failed to pay the loan contract. The corresponding
Certificates of Sale were issued in favor of RCBC. However, the certificates of
sale were allegedly registered only on 10 February 2004. Meanwhile, an
auction sale of tax delinquent properties was conducted by the City Treasurer
of Quezon City. Included in the properties that were auctioned was the parcel
of land foreclosed by RCBC. Alvin Yu was adjudged as the highest bidder.
Upon payment of the tax delinquencies, he was issued the Certificate of Sale
of Delinquent Property.
On, 10 June 2004, RCBC tendered payment for all of the assessed tax
delinquencies, interest, and other costs of the subject properties with the
Office of the City Treasurer, Quezon City. However, the Office refused to
accept said tender of payment. Thereafter, RCBC filed before the Office a
Petition for the acceptance of its tender of payment and for the subsequent
issuance of the certificate of redemption in its favor but to no avail. RCBC
argued that it had until 10 February 2005, or 1 year from the date of
registration of the certificate of sale on 10 February 2004, within which to
redeem the subject properties, pursuant to Section 78 of PD No. 464 or the
Real Property Tax Code or Section 14 (a), paragraph 7 of the Quezon City
Revenue Code (QCRC) of 1993.
ISSUE:
Did RCBC timely exercise its right to redeem the subject property?
RULING:
Yes.
The counting of the 1 year redemption period of property sold at public

auction for its tax delinquency should be counted from the date of
annotation of the certificate of sale in the proper Register of Deeds. Applying
the foregoing to the case at bar, from the date of registration of the
Certificate of Sale of Delinquent Property on 10 February 2004, RCBC had
until 10 February 2005 to redeem the subject properties. Hence, its tender of
payment of the subject properties tax delinquencies and other fees on 10
June 2004, was well within the redemption period, and it was manifest error
on the part of City officer to have refused such tender of payment.
65

65

(Judicial Remedy)
Efren Aquino and Angelica Aquino v. Quezon City

G.R. No. 137534; 3 August 2006
FACTS:
Efren Aquino and Angelica (Aquinos) withheld payment of the real
property taxes as a form of protest for the government of then President
Marcos. As a result of the nonpayment, their property was sold by Quezon
City at public auction to Aida Linao, the highest bidder. The Aquinos claimed
that they learned of the sale about 2 years later. They fixed as action for
annulment of title, reconveyance, and damages against the City.
Solomon Torrado (Torrado) owns a property located in Cubao, Quezon

City. According to his heirs, he paid taxes on the improvements on Lot 8 but
not on the lot itself because the Treasurer's Office could not locate the index
card for that property. For failure to pay real property taxes from 1976 to
1982, the City Treasurer sent a Notice of Intent to Sell to Torrado. The notice
was returned by reason of 'Insufficient Address. Next sent was a Notice of
Sale of Delinquent Property. This was sent to the same address and similarly
returned unclaimed. Thereafter, a public auction was held and the lot was
sold to Veronica Baluyot, who mortgaged the property to Spouses Uy who
then sold it to DNX Corporation for failure to pay the mortgaged debt. Also, a
Notice of Sold Property was subsequently sent to Torrado which was returned
unclaimed.
ISSUE:
Was there a failure on the part of the Quezon City Local Govt to satisfy
the notice requirements before selling the property for tax delinquency?
RULING:
No.
Definitely, there is no more logical way to construe the whole chapter

on 'Collection of Real Property Tax (Sections 56 to 85) than to stress that
while three methods are provided to enforce collection on real property
taxes, a notice of delinquency is a requirement regardless of the method or
methods chosen. It is incorrect for the respondents to claim that notice of
delinquency has limited application only to distraint of personal property.
They mistakenly lumped Section 65 exclusively with Sections 68 to 72 and, in
so doing, restricted its application from the other tax remedies. Section 65 is
to be construed together with Sections 66 and78 and all three operate in
reference to tax methods in general. Petitioners are correct in insisting that
two notices must be sent to the taxpayer concerned. Nevertheless, the City
65
still prevail because the Court is satisfied that the two-notice requirement
has been complied with by the Treasurer's Office.

(Judicial Remedy)
National Housing Authority v. Iloilo City

G.R. No. 172267; 20 August 2008
FACTS:
The National Housing Authority (NHA) filed a complaint for Annulment
of the Auction Sale conducted by Iloilo City. Such auction was due to non-
payment of realty taxes by NHA. However, NHA alleged that the sale was
done without notice to it being the registered owner thereof, in addition to
the fact that it is a tax- exempt agency of the government.
The defendants filed a motion to dismiss based on lack of jurisdiction,
among others. It averred that NHA failed to make a deposit as a jurisdictional
requisite before the court can assume jurisdiction over the suit. It said that it
cannot take refuge in its theory that it is exempt from making a deposit
because it is not a taxpayer.
ISSUE:
Does its tax- exempt status vests it with immunity as well from the
deposit requirement under Section 267 of the LGC?
RULING:
Yes.
The deposit is a requirement which must be satisfied before a court

can entertain any action assailing the validity of the public auction sale. The
deposit requirement, to be sure, is not a tax measure. As expressed in
Section 267 itself, the amount deposited shall be paid to the purchaser at the
auction sale if the deed is declared invalid; otherwise, it shall be returned to
the depositor.
Clearly, the deposit precondition is an ingenious legal device to

guarantee the satisfaction of the tax delinquency, with the local government
unit keeping the payment on the bid price no matter the final outcome of the
suit to nullify the tax sale. Thus, the requirement is not applicable if the
plaintiff is the government or any of its agencies as it is presumed to be
solvent, and more so where the tax exempt status of such plaintiff as basis of
the suit is acknowledged. In this case, NHA is indisputably a tax- exempt
65
entity whose exemption covers real property taxes and so its property should
not even be subjected to any delinquency sale. Perforce, the bond mandated
in Section 267, whose purpose it is to ensure the collection of the tax
delinquency should not be required of NHA before it can bring suit assailing
the validity of the auction sale.
NHA is liable neither for real property taxes nor for the bond
requirement in Section 267, it follows that any public auction sale involving
property owned by NHA would be null and void and any suit filed by the
latter questioning such sale should not be dismissed for failure to pay the
bond.

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4

NATURE OF THE LOCAL TAXING POWER............................7

Ericsson Telecommunications, Inc, v. City of Pasig.....................................29

REMEDIES OF THE GOVERNMENT...................................30

II. REAL PROPERTY TAXATION

FUNDAMENTAL PRINCIPLES SECTION 198, LGC.............36

Antonio P. Callanta, et al. v. Office of the Ombudsman and the City

NATURE OF THE LOCAL TAXING POWER

City of San Pablo, Laguna, et al. v. Honorable Bienvenido Reyes and

Pursuant to such, the City Treasurer sent to Manila Electric Company

The power to tax is primarily vested in Congress. However, in our

The important legal effect of Section 5 is that, henceforth, in

NATURE OF THE LOCAL TAXING POWER

Manila Electric Company v. Province of Laguna and Benito R. Balazo

Upon enactment of the LGC, the provincial government issued

Under the now prevailing Constitution, where there is neither a grant

NATURE OF THE LOCAL TAXING POWER

Mactan Cebu International Airport Authority v. Hon. Ferdinand J.

Taxation is the rule and exemption is the exception, the exemption

NATURE OF THE LOCAL TAXING POWER

National Power Corporation v. City of Cabanatuan

In City Government of San Pablo, Laguna v. Reyes, MERALCOs

Doubtless, the power to tax is the most effective instrument to raise

NATURE OF THE LOCAL TAXING POWER

City Government of Quezon City v. Bayan Telecommunications, Inc.

The Congress, however, enacted R.A. 7633, amending Bayan

In 1993, the City Government of Quezon City, pursuant to Section 5,

Thereafter, deficiency tax notices were sent to Bayantel. Believing that

There is no dispute that the power of the Quezon City Government to

hereinafter specifically exempted as a pure jargon, without meaning

THE PRINCIPLE OF PREEMPTION

The Province of Bulacan, et al. v. The Court of Appeals and Republic

Thus, the provincial treasurer of Bulacan assessed Republic Cement

The NIRC levies a tax on all quarry resources, regardless of origin,

THE PRINCIPLE OF PREEMPTION

First Philippine Industrial Corporation v. The Court of Appeals, et al.

FPIC is a common carrier as the definition of a common carrier makes

THE PRINCIPLE OF PREEMPTION

Palma Development Corporation v. The Municipality of Malangas

The service fees were paid by Palma Development Corporation (Palma)

Section 133(e) of the LGC prohibits the imposition, in the guise of

As we see it, the disputed municipal ordinance, which provides for a

THE PRINCIPLE OF PREEMPTION

Batangas Power Corporation v. Batangas City and National Power

On 12 October 1998, Batangas City sent a letter to BPC demanding

THE PRINCIPLE OF PREEMPTION

Manila International Airport Authority v. Court of Appeals, et al.

THE PRINCIPLE OF PREEMPTION

Land Transportation Office v. City of Butuan

The newly delegated powers to LGUs pertain to the franchising and

The power over tricycles granted under Section 458(a)(3)(VI) of the

THE PRINCIPLE OF PREEMPTION

Philippine Rural Electric Cooperatives Association, Inc., el al. v. The

There is reasonable classification under the LGC to justify the different

THE PRINCIPLE OF PREEMPTION

Petron Corporation v. Mayor Tobias M. Tiangco

Consequently, Petron received a letter from the office of Navotas

THE PRINCIPLE OF PREEMPTION

Pelizloy Realty Corporation v. The Province of Benguet

Pelizloy Realty Corporation (Pelizloy) averred that the imposition of

THE PRINCIPLE OF PREEMPTION

City of Manila v. Hon. Angel Valera Colet, et al.

Various businesses that were covered by the ordinance assailed the

Section 133(j) of the LGC clearly and unambiguously proscribes LGUs