INSERT MARGA
He did not say that in his judgment it was a bad law. What he found only was that it
DRILON VS. LIM
FACTS: The principal issue in this case is the constitutionality of Section 187 of
the Local Government Code reading as follows:
Procedure For Approval And Effectivity Of Tax Ordinances And Revenue
Measures; Mandatory Public Hearings. The procedure for approval of
local tax ordinances and revenue measures shall be in accordance with
the provisions of this Code: Provided, That public hearings shall be
conducted for the purpose prior to the enactment thereof; Provided,
further, That any question on the constitutionality or legality of tax
ordinances or revenue measures may be raised on appeal within thirty
(30) days from the effectivity thereof to the Secretary of Justice who shall
render a decision within sixty (60) days from the date of receipt of the
appeal: Provided, however, That such appeal shall not have the effect of
suspending the effectivity of the ordinance and the accrual and payment of
the tax, fee, or charge levied therein: Provided, finally, That within thirty
(30) days after receipt of the decision or the lapse of the sixty-day period
without the Secretary of Justice acting upon the appeal, the aggrieved
party may file appropriate proceedings with a court of competent
jurisdiction.
Pursuant thereto, the Secretary of Justice had, on appeal to him of four oil
companies and a taxpayer, declared Ordinance No. 7794, otherwise known as the
Manila Revenue Code, null and void for non-compliance with the prescribed
procedure in the enactment of tax ordinances and for containing certain provisions
contrary to law and public policy.1
In a petition for certiorari filed by the City of Manila, the Regional Trial Court of
Manila revoked the Secretary's resolution and sustained the ordinance, holding
inter alia that the procedural requirements had been observed. More importantly, it
declared Section 187 of the Local Government Code as unconstitutional because
of its vesture in the Secretary of Justice of the power of control over local
governments in violation of the policy of local autonomy mandated in the
Constitution and of the specific provision therein conferring on the President of the
Philippines only the power of supervision over local governments.
HELD: Section 187 of the Local Govt Code CONSTITUTIONAL. Section 187
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.
was illegal. All he did in reviewing the said measure was determine if the
petitioners were performing their functions in accordance with law, that is, with the
prescribed procedure for the enactment of tax ordinances and the grant of powers
to the city government under the Local Government Code. As we see it, that was
an act not of control but of mere supervision.
An officer in control lays down the rules in the doing of an act. If they are not
followed, he may, in his discretion, order the act undone or re-done by his
subordinate or he may even decide to do it himself. Supervision does not cover
such authority. The supervisor or superintendent merely sees to it that the rules
are followed, but he himself does not lay down such rules, nor does he have the
discretion to modify or replace them. If the rules are not observed, he may order
the work done or re-done but only to conform to the prescribed rules. He may not
prescribe his own manner for the doing of the act. He has no judgment on this
matter except to see to it that the rules are followed. In the opinion of the Court,
Secretary Drilon did precisely this, and no more nor less than this, and so
performed an act not of control but of mere supervision
DADOLE VS. COA
FACTS: In 1986, the RTC and MTC judges of Mandaue City started receiving
monthly allowances of P1,260 each through the yearly appropriation ordinance
enacted by the Sangguniang Panlungsod of the said city. In 1991, Mandaue City
increased the amount to P1,500 for each judge.
On March 15, 1994, the Department of Budget and Management (DBM)
issued the disputed Local Budget Circular No. 55 (LBC 55) which provided that:
2.3.2. In the light of the authority granted to the local government units under
the Local Government Code to provide for additional allowances and other
benefits to national government officials and employees assigned in their
locality, such additional allowances in the form of honorarium at rates not
exceeding P1,000.00 in provinces and cities and P700.00 in municipalities
may be granted subject to the following conditions:
a) That the grant is not mandatory on the part of the LGUs;
b) That all contractual and statutory obligations of the LGU including the
implementation of R.A. 6758 shall have been fully provided in the budget;
c) That the budgetary requirements/limitations under Section 324 and 325 of
R.A. 7160 should be satisfied and/or complied with; and
d) That the LGU has fully implemented the devolution of functions/personnel
in accordance with R.A. 7160.[3] (italics supplied)
 Acting on the DBM directive, the Mandaue City Auditor issued notices of
disallowance to herein petitioners, namely, Honorable RTC Judges Mercedes G.
Dadole, Ulric R. Caete, Agustin R. Vestil, Honorable MTC Judges Temistocles M.
Boholst, Vicente C. Fanilag and Wilfredo A. Dagatan, in excess of the amount
authorized by LBC 55. Beginning October, 1994, the additional monthly
allowances of the petitioner judges were reduced to P1,000 each. They were also
asked to reimburse the amount they received in excess of P1,000 from April to
September, 1994. The petitioner judges filed with the Office of the City Auditor a
protest against the notices of disallowance. But the City Auditor treated the protest
as a motion for reconsideration and indorsed the same to the COA Regional Office
No. 7. In turn, the COA Regional Office referred the motion to the head office with
a recommendation that the same be denied.
On September 21, 1995, respondent COA rendered a decision denying petitioners
motion for reconsideration. The COA held that:
The issue to be resolved in the instant appeal is whether or not the City Ordinance
of Mandaue which provides a higher rate of allowances to the appellant judges
may prevail over that fixed by the DBM under Local Budget Circular No. 55 dated
March 15, 1994.
There being no statutory basis to grant additional allowance to judges in excess of
P1,000.00 chargeable against the local government units where they are
stationed, this Commission finds no substantial grounds or cogent reason to
disturb the decision of the City Auditor, Mandaue City, disallowing in audit the
allowances in question. Accordingly, the above-captioned appeal of the MTC and
RTC Judges of Mandaue City, insofar as the same is not covered by Circular
Letter No. 91-7, is hereby dismissed for lack of merit.
ISSUE: Whether or not Local Budget Circular No. 55 void for going beyond the
supervisory powers of the President.
HELD: YES
RATIO: Yes. Although the Constitution guarantees autonomy to local government
units, the exercise of local autonomy remains subject to the power of control by
Congress and the power of supervision by the President. Sec 4 Art X of 1987
Constitution: "The President of the Philippines shall exercise general supervision
over local governments. x x x" The said provision has been interpreted to exclude
the power of control.
In a more recent case, Drilon v. Lim,[v][9] the difference between control and
supervision was further delineated. Officers in control lay down the rules in
the performance or accomplishment of an act. If these rules are not followed,
they may, in their discretion, order the act undone or redone by their
subordinates or even decide to do it themselves. On the other hand,
supervision does not cover such authority. Supervising officials merely see to
it that the rules are followed, but they themselves do not lay down such rules,
nor do they have the discretion to modify or replace them. If the rules are not
observed, they may order the work done or redone, but only to conform to
such rules. They may not prescribe their own manner of execution of the
act. They have no discretion on this matter except to see to it that the rules
are followed.
LBC 55 provides that the additional monthly allowances to be given by a local
government unit should not exceed P1,000 in provinces and cities and P700 in
municipalities. Section 458, par. (a)(1)(xi), of RA 7160, the law that supposedly
serves as the legal basis of LBC 55, allows the grant of additional allowances to
judges when the finances of the city government allow. The said provision does
not authorize setting a definite maximum limit to the additional allowances granted
to judges. Thus, we need not belabor the point that the finances of a city
government may allow the grant of additional allowances higher than P1,000 if the
revenues of the said city government exceed its annual expenditures. Thus, to
illustrate, a city government with locally generated annual revenues of P40 million
and expenditures of P35 million can afford to grant additional allowances of more
than P1,000 each to, say, ten judges inasmuch as the finances of the city can
afford it.
Setting a uniform amount for the grant of additional allowances is an
inappropriate way of enforcing the criterion found in Section 458, par. (a)(1)(xi), of
RA 7160. The DBM over-stepped its power of supervision over local government
units by imposing a prohibition that did not correspond with the law it sought to
implement. In other words, the prohibitory nature of the circular had no legal basis.
B. INTERNAL REVENUE ALLOTMENT
INSERT EDU ALVAREZ CASE
PIMENTEL V. AGUIRRE (SEE ABOVE)
PROVINCE OF BATANGAS V. ROMULO (SEE ABOVE)
CSC V. DBM
Automatic release of approved annual appropriations to Civil Service
Commission, a constitutional commission which is vested with fiscal
autonomy, should thus be construed to mean that no condition to fund
releases to it may be imposed.
FACTS: The total funds appropriated by General Appropriations Act of 2002
(GAA) for Civil Service Commission (CSC) was P285,660,790.44. CSC
complains that the total funds released by Department of Budget and
Management (DBM) was only P279,853,398.14, thereby leaving an
unreleased balance of P5,807,392.30.
CSC contends that the funds were intentionally withheld by DBM on the
ground of their no report, no release policy. Hence, CSC filed a petition for
mandamus seeking to compel the DBM to release the balance of its budget for
fiscal year 2002. At the same time, it seeks a determination by this Court of the
extent of the constitutional concept of fiscal autonomy.
ISSUE: Whether or not DBMs policy, no report, no release is constitutional
HELD: DBMs act of withholding the subject funds from CSC due to revenue
shortfall is hereby declared unconstitutional.
The no report, no release policy may not be validly enforced against offices
vested with fiscal autonomy is not disputed. Indeed, such policy cannot be
enforced against offices possessing fiscal autonomy without violating Article IX
(A), Section 5 of the Constitution, which provides that the Commission shall
enjoy fiscal autonomy and that their approved appropriations shall be
automatically and regularly released.
The Court held in the case of, Batangas v. Romulo, automatic release in
Section 6, Article X of the Constitution is defined as an automatic manner;
without thought or conscious intention. Being automatic, thus, connotes
something mechanical, spontaneous and perfunctory. As such the LGUs are
not required to perform any act to receive the just share accruing to them
from the national coffers.
By parity of construction, automatic release of approved annual
appropriations to petitioner, a constitutional commission which is vested with
fiscal autonomy, should thus be construed to mean that no condition to fund
releases to it may be imposed. This conclusion is consistent with the
Resolution of this Court which effectively prohibited the enforcement of a no
report, no release policy against the Judiciary which has also been granted
fiscal autonomy by the Constitution.
Furthermore, the Constitution grants the enjoyment of fiscal autonomy only to
the Judiciary, the Constitutional Commissions, of which petitioner is one, and
the Ombudsman. To hold that the CSC may be subjected to withholding or
reduction of funds in the event of a revenue shortfall would, to that extent,
place CSC and the other entities vested with fiscal autonomy on equal footing
with all others which are not granted the same autonomy, thereby reducing to
naught the distinction established by the Constitution.
FERRER V. BAUTISTA
FACTS: On October 17, 2011,1 respondent Quezon City Council enacted
Ordinance No. SP-2095, S-2011,2 or the Socialized Housing Tax of Quezon City.
Effective for five (5) years, the Socialized Housing Tax ( SHT ) shall be utilized by
the Quezon City Government for the following projects: (a) land purchase/land
banking; (b) improvement of current/existing socialized housing facilities; (c) land
development; (d) construction of core houses, sanitary cores, medium-rise
buildings and other similar structures; and (e) financing of public-private partners
hip agreement of the Quezon City Government and National Housing Authority (
NHA ) with the private sector. On the other hand, Ordinance No. SP-2235, S-
20135 was enacted on December 16, 2013 and took effect ten days after when it
was approved by respondent City Mayor. The proceeds collected from the garbage
fees on residential properties shall be deposited solely and exclusively in an
earmarked special account under the general fund to be utilized for garbage
collections.
Petitioner alleges that he is a registered co-owner of a 371-square-meter
residential property in Quezon City which is covered by Transfer Certificate of Title
(TCT ) No. 216288, and that, on January 7, 2014, he paid his realty tax which
already included the garbage fee in the sum of Php100.00.10
The instant petition was filed on January 17, 2014. We issued a TRO on February
5, 2014, which enjoined the enforcement of Ordinance Nos. SP-2095 and SP-2235
and required respondents to comment on the petition without necessarily giving
due course thereto.
ISSUE: Do the SHT and Garbage Collection Ordinance violate the constitution?
HELD: On SHT, the SHT charged by the Quezon City Government is a tax which
is within its power to impose. Aside from the specific authority vested by Section
43 of the UDHA, cities are allowed to exercise such other powers and discharge
such other functions and responsibilities as are necessary, appropriate, or
incidental to efficient and effective provision of the basic services and facilities
which include, among others, programs and projects for low-cost housing and
other mass dwellings.108 The collections made accrue to its socialized housing
programs and projects.
The tax is not a pure exercise of taxing power or merely to raise revenue; it is
levied with a regulatory purpose. The levy is primarily in the exercise of the police
power for the general welfare of the entire city. It is greatly imbued with public
interest. Removing slum areas in Quezon City is not only beneficial to the
underprivileged and homeless constituents but advantageous to the real property
owners as well. The situation will improve the value of the their property
investments, fully enjoying the same in view of an orderly, secure, and safe
community, and will enhance the quality of life of the poor, making them law-
abiding constituents and better consumers of business products.
The reasonableness of Ordinance No. SP-2095 cannot be disputed. It is not
confiscatory or oppressive since the tax being imposed therein is below what the
UDHA actually allows. As pointed out by respondents, while the law authorizes
LGUs to collect SHT on lands with an assessed value of more than 50,000.00,
the questioned ordinance only covers lands with an assessed value exceeding
100,000.00. Even better, on certain conditions, the ordinance grants a tax credit
equivalent to the total amount of the special assessment paid beginning in the
sixth (6th) year of its effectivity. Far from being obnoxious, the provisions of the
subject ordinance are fair and just.
On garbage collection, it violates equal protection clause, For the purpose of
garbage collection, there is, in fact, no substantial distinction between an occupant
of a lot, on one hand, and an occupant of a unit in a condominium, socialized
housing project or apartment, on the other hand. Most likely, garbage output
produced by these types of occupants is uniform and does not vary to a large
degree; thus, a similar schedule of fee is both just and equitable.159
The rates being charged by the ordinance are unjust and inequitable: a resident of
a 200 sq. m. unit in a condominium or socialized housing project has to pay twice
the amount than a resident of a lot similar in size; unlike unit occupants, all
occupants of a lot with an area of 200 sq. m. and less have to pay a fixed rate of
Php100.00; and the same amount of garbage fee is imposed regardless of
whether the resident is from a condominium or from a socialized housing project.
Indeed, the classifications under Ordinance No. S-2235 are not germane to its
declared purpose of "promoting shared responsibility with the residents to attack
their common mindless attitude in over-consuming the present resources and in
generating waste." Instead of simplistically categorizing the payee into land or floor
occupant of a lot or unit of a condominium, socialized housing project or
apartment, respondent City Council should have considered factors that could truly
measure the amount of wastes generated and the appropriate fee for its collection.
Factors include, among others, household age and size, accessibility to waste
collection, population density of the barangay or district, capacity to pay, and
actual occupancy of the property.
MACTAN CEBU IAA V MARCOS AND CITY OF CEBU
FACTS: Petitioner Mactan Cebu International Airport Authority (MCIAA) was
created by virtue of Republic Act No. 6958, mandated to principally undertake the
economical, efficient and effective control, management and supervision of the
Mactan International Airport in the Province of Cebu and the Lahug Airport in Cebu
City, and such other airports as may be established in the Province of Cebu. Since
the time of its creation, petitioner MCIAA enjoyed the privilege of exemption from
payment of realty taxes in accordance with Section 14 of its Charter.
On October 11, 1994, however, Mr. Eustaquio B. Cesa, Officer-in-Charge, Office
of the Treasurer of the City of Cebu, demanded payment for realty taxes on
several parcels of land belonging to the petitioner located at Barrio Apas and
Barrio Kasambagan, Lahug, Cebu City, in the total amount of P2,229,078.79.
Respondent City refused to cancel and set aside petitioners realty tax account,
insisting that the MCIAA is a GOCC whose tax exemption privilege has been
withdrawn by virtue of Sections 193 and 234 of the Local Government Code that
took effect on January 1, 1992.
As the City of Cebu was about to issue a warrant of levy against the properties of
petitioner, the latter was compelled to pay its tax account under protest and
thereafter filed a Petition for Declaratory Relief with the Regional Trial Court of
Cebu, Branch 20, on December 29, 1994. MCIAA basically contended that the
taxing powers of local government units do not extend to the levy of taxes or fees
of any kind on an instrumentality of the national government. Petitioner insisted
that while it is indeed a government-owned corporation, it nonetheless stands on
the same footing as an agency or instrumentality of the national government by the
very nature of its powers and functions.
Respondent City, however, asserted that MCIAA is not an instrumentality of the
government but merely a government-owned corporation performing proprietary
functions. As such, all exemptions previously granted to it were deemed withdrawn
by operation of law, as provided under Sections 193 and 234 of the Local
Government Code when it took effect on January 1, 1992.
The petition for declaratory relief was docketed as Civil Case No. CEB-16900. In
its decision of 22 March 1995, the trial court dismissed the petition in light of its
findings.
Petitioners claimed that its real properties assessed by respondent City
Government of Cebu are exempted from paying realty taxes in view of the
exemption granted under RA 6958 to pay the same (citing Section 14 of RA 6958).
However, RA 7160 expressly provides that All general and special laws, acts, city
charters, decrees [sic], executive orders, proclamations and administrative
regulations, or part of parts thereof which are inconsistent with any of the
provisions of this Code are hereby repealed or modified accordingly. (/f/, Section
534, RA 7160). With that repealing clause in RA 7160, it is safe to infer and state
that the tax exemption provided for in RA 6958 creating petitioner had been
expressly repealed by the provisions of the New Local Government Code of 1991.
So that petitioner in this case has to pay the assessed realty tax of its properties
effective after January 1, 1992 until the present.
ISSUE: : (a) whether the parcels of land in question belong to the Republic of the
Philippines whose beneficial use has been granted to the petitioner, and (b)
whether the petitioner is a taxable person.
HELD: PETITION DISMISSED. Reading together Sections 133, 232, and 234 of
the LGC, we conclude that as a general rule, as laid down in Section 133, the
taxing powers of local government units cannot extend to the levy of, inter alia,
taxes, fees and charges of any kind on the National Government, its agencies and
instrumentalities, and local government units; however, pursuant to Section 232,
provinces, cities, and municipalities in the Metropolitan Manila Area may impose
the real property tax except on, inter alia, real property owned by the Republic of
the Philippines or any of its political subdivisions except when the beneficial use
thereof has been granted, for consideration or otherwise, to a taxable person, as
provided in item (a) of the first paragraph of Section 234.
In short, the petitioner can no longer invoke the general rule in Section 133 that the
taxing powers of the local government units cannot extend to the levy of:
(o) taxes, fees or charges of any kind on the National Government, its agencies or
instrumentalities, and local government units.
It must show that the parcels of land in question, which are real property, are any
one of those enumerated in Section 234, either by virtue of ownership, character,
or use of the property. Most likely, it could only be the first, but not under any
explicit provision of the said section, for none exists. In light of the petitioners
theory that it is an instrumentality of the Government, it could only be within the
first item of the first paragraph of the section by expanding the scope of the term
Republic of the Philippines to embrace its instrumentalities and agencies. For
expediency, we quote:
(a) real property owned by the Republic of the Philippines, or any of its
political subdivisions except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person.
This view does not persuade us. In the first place, the petitioners claim that it is an
instrumentality of the Government is based on Section 133(o), which expressly
mentions the word instrumentalities; and, in the second place, it fails to consider
the fact that the legislature used the phrase National Government, its agencies and
instrumentalities in Section 133(o), but only the phrase Republic of the Philippines
or any of its political subdivisions in Section 234(a).
The terms Republic of the Philippines and National Government are not
interchangeable. The former is broader and synonymous with Government of the
Republic of the Philippines which the Administrative Code of 1987 defines as the
corporate governmental entity through which the functions of government are
exercised throughout the Philippines, including, save as the contrary appears from
the context, the various arms through which political authority is made affective in
the Philippines, whether pertaining to the autonomous regions, the provincial, city,
municipal or barangay subdivisions or other forms of local government. These
autonomous regions, provincial, city, municipal or barangay subdivisions are the
political subdivisions.
On the other hand, National Government refers to the entire machinery of the
central government, as distinguished from the different forms of local governments.
Section 15 of the petitioners Charter provides:
Sec. 15. Transfer of Existing Facilities and Intangible Assets. All existing
public airport facilities, runways, lands, buildings and other properties,
movable or immovable, belonging to or presently administered by the
airports, and all assets, powers, rights, interests and privileges relating on
airport works or air operations, including all equipment which are
necessary for the operations of air navigation, aerodrome control towers,
crash, fire, and rescue facilities are hereby transferred to the Authority:
Provided, however, that the operations control of all equipment necessary
for the operation of radio aids to air navigation, airways communication,
the approach control office, and the area control center shall be retained
by the Air Transportation Office. No equipment, however, shall be removed
by the Air Transportation Office from Mactan without the concurrence of
the Authority. The Authority may assist in the maintenance of the Air
Transportation Office equipment.
The airports referred to are the Lahug Air Port in Cebu City and the Mactan
International Airport in the Province of Cebu, which belonged to the Republic of the
Philippines, then under the Air Transportation Office (ATO).
It may be reasonable to assume that the term lands refer to lands in Cebu City
then administered by the Lahug Air Port and includes the parcels of land the
respondent City of Cebu seeks to levy on for real property taxes. This section
involves a transfer of the lands, among other things, to the petitioner and not just
the transfer of the beneficial use thereof, with the ownership being retained by the
Republic of the Philippines.
This transfer is actually an absolute conveyance of the ownership thereof because
the petitioners authorized capital stock consists of, inter alia, the value of such real
estate owned and/or administered by the airports. Hence, the petitioner is now the
owner of the land in question and the exception in Section 234(c) of the LGC is
inapplicable.
Moreover, the petitioner cannot claim that it was never a taxable person under its
Charter. It was only exempted from the payment of real property taxes. The grant
of the privilege only in respect of this tax is conclusive proof of the legislative intent
to make it a taxable person subject to all taxes, except real property tax.
Finally, even if the petitioner was originally not a taxable person for purposes of
real property tax, in light of the foregoing disquisitions, it had already become,
even if it be conceded to be an agency or instrumentality of the Government, a
taxable person for such purpose in view of the withdrawal in the last paragraph of
Section 234 of exemptions from the payment of real property taxes, which, as
earlier adverted to, applies to the petitioner.
Accordingly, the position taken by the petitioner is untenable. Nothing can prevent
Congress from decreeing that even instrumentalities or agencies of the
Government performing governmental functions may be subject to tax. Where it is
done precisely to fulfill a constitutional mandate and national policy, no one can
doubt its wisdom.
SMART COMMUNICATIONS, INC vs. MUNICIPALITY OF MALVAR,
BATANGAS
FACTS: Petitioner Smart Communications, Inc. (Smart) is a domestic corporation
engaged in the business of providing telecommunications services to the general
public while respondent Municipality of Malvar, Batangas (Municipality) is a local
government unit created by law. In the course of its business, Smart constructed a
telecommunications tower within the territorial jurisdiction of the Municipality. The
construction of the tower was for the purpose of receiving and transmitting cellular
communications within the covered area.
On 30 July 2003, the Municipality passed Ordinance No. 18 entitled "An Ordinance
Regulating the Establishment of Special Projects." On 24 August 2004, Smart
received from the Permit and Licensing Division of the Office of the Mayor of the
Municipality an assessment letter with a schedule of payment for the total amount
of 389,950.00 for Smarts telecommunications tower. Due to the alleged arrears
in the payment of the assessment, the Municipality also caused the posting of a
closure notice on the telecommunications tower. On 9 September 2004, Smart
filed a protest, claiming lack of due process in the issuance of the assessment and
closure notice. In the same protest, Smart challenged the validity of Ordinance No.
18 on which the assessment was based. The Municipality denied Smarts protest.
Smart then filed with RTC of Tanauan City, Batangas. The trial court rendered a
Decision partly granting Smarts Appeal/Petition. The trial court confined its
resolution of the case to the validity of the assessment, and did not rule on the
legality of Ordinance No. 18. The issue was raised to the CTA. The CTA En Banc
dismissed the petition on the ground of lack of jurisdiction. The CTA En Banc
declared that it is a court of special jurisdiction and as such, it can take cognizance
only of such matters as are clearly within its jurisdiction.
ISSUE: WON the fees imposed under Ordinance No. 18 are taxes
HELD: NO. The Court finds that the fees imposed under Ordinance No. 18 are not
taxes.
Section 5, Article X of the 1987 Constitution provides that "each local
government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines
and limitations as the Congress may provide, consistent with the basic
policy of local autonomy. Such taxes, fees, and charges shall accrue
exclusively to the local government."
Consistent with this constitutional mandate, the LGC grants the taxing powers to
each local government unit. Specifically, Section 142 of the LGC grants
municipalities the power to levy taxes, fees, and charges not otherwise levied by
provinces. Section 143 of the LGC provides for the scale of taxes on business that
may be imposed by municipalities while Section 147 of the same law provides for
the fees and charges that may be imposed by municipalities on business and
occupation.
The LGC defines the term "charges" as referring to pecuniary liability, as rents or
fees against persons or property, while the term "fee" means "a charge fixed by
law or ordinance for the regulation or inspection of a business or activity."19
In this case, the Municipality issued Ordinance No. 18, which is entitled "An
Ordinance Regulating the Establishment of Special Projects," to regulate the
"placing, stringing, attaching, installing, repair and construction of all gas mains,
electric, telegraph and telephone wires, conduits, meters and other apparatus, and
provide for the correction, condemnation or removal of the same when found to be
dangerous, defective or otherwise hazardous to the welfare of the inhabitant[s]." It
was also envisioned to address the foreseen "environmental depredation" to be
brought about by these "special projects" to the Municipality.21 Pursuant to these
objectives, the Municipality imposed fees on various structures, which included
telecommunications towers.
As clearly stated in its whereas clauses, the primary purpose of Ordinance No. 18
is to regulate the "placing, stringing, attaching, installing, repair and construction of
all gas mains, electric, telegraph and telephone wires, conduits, meters and other
apparatus" listed therein, which included Smarts telecommunications tower.
Clearly, the purpose of the assailed Ordinance is to regulate the enumerated
activities particularly related to the construction and maintenance of various
structures. The fees in Ordinance No. 18 are not impositions on the building or
structure itself; rather, they are impositions on the activity subject of government
regulation, such as the installation and construction of the structures.
Since the main purpose of Ordinance No. 18 is to regulate certain construction
activities of the identified special projects, which included "cell sites" or
telecommunications towers, the fees imposed in Ordinance No. 18 are primarily
regulatory in nature, and not primarily revenue-raising. While the fees may
contribute to the revenues of the Municipality, this effect is merely incidental. Thus,
the fees imposed in Ordinance No. 18 are not taxes.
ALTA VISTA GOLF AND COUNTRY CLUB v. THE CITY OF CEBU
FACTS: Petitioner is a non-stock and non-profit corporation operating a golf
course in Cebu City. On June 21, 1993, the Sangguniang Panlungsod of Cebu City
enacted City Tax Ordinance No. LXIX, otherwise known as the "Revised Omnibus
Tax Ordinance of the City of Cebu". Section 42 of the said tax ordinance on
amusement tax was amended to read as follows:
Section 42. Rate of Tax. - There shall be paid to the Office of the City
Treasurer by the proprietors, lessees or operators of theaters, cinemas,
concert halls, circuses and other similar places of entertainment, an
amusement tax at the rate of thirty percent (30%), golf courses and polo
grounds at the rate of twenty percent (20%), of their gross receipts on
entrance, playing green, and/or admission fees,
Petitioner was assessed deficiency business taxes, fees, and other charges for the
year 1998, in the total amount of P3,820,095.68, which included amusement tax
on its golf course amounting to P2,612,961.24 based on gross receipts of
P13,064,806.20.8. Through the succeeding years, respondent Cebu City
repeatedly attempted to collect from petitioner its deficiency business taxes, fees,
and charges for 1998. Petitioner steadfastly refused to pay the amusement tax
arguing that the imposition of said tax by Section 42 of the Revised Omnibus Tax
Ordinance, as amended, was irregular, improper, and illegal. He also cited the
case of PBA wherein it was held that basketball games do ot fall under the same
category as theaters, cinemas, etc. Petitioner reasoned that under the LGC,
amusement tax can only be imposed on operators of theaters, cinemas, concert
halls, or places where one seeks to entertain himself by seeing or viewing a show
or performance.
On October 11, 2005, respondent Camarillo sought to collect once more from
petitioner deficiency business taxes, fees, and charges for the year 1998, totaling
P2,981,441.52. Petitioner still disputed the amusement tax assessment on its golf
course for 1998 for being illegal. Petitioner then proposed that while the question
of the legality of the amusement tax on golf courses is still unresolved that Alta
Vista Golf and Country Club settle first the other assessments. They also
requested that pending resolution of the legality of the amusement tax imposition
on golf courses in the Revised Omnibus Tax Ordinance, Alta Vista Golf and
Country Club be issued the required Mayor's and/or Business Permit. Respondent
Camarillo rendered her ruling denying said Protest.
Petitioner was then served with a Closure Order issued by respondent City Mayor
Osmefia. According to the Closure Order, petitioner committed blatant violations of
the laws and Cebu City Ordinances: 1) Operating a business without a business
permit for five (5) years, 2) Nonpayment of deficiency on Business Taxes and
Fees, 3) Nonpayment of deficiency on Amusement Tax and the penalties relative
therewith.
Consequently, petitioner filed with the RTC. Petitioner argued that the Closure
Order is unconstitutional as it had been summarily issued in violation of its right to
due process; a city mayor has no power under the LGC to deny the issuance of a
business permit and order the closure of a business for nonpayment of taxes;
Section 42 of the Revised Omnibus Tax Ordinance, as amended, is null and void
for being ultra vires or beyond the taxing authority of respondent Cebu City, and
consequently, the assessment against petitioner for amusement tax for 1998
based on said Section 42 is illegal and unconstitutional; and assuming arguendo
that respondent Cebu City has the power to impose amusement tax on petitioner,
such tax for 1998 already prescribed and could no longer be enforced.
ISSUE: WON Section 42 of the Revised Omnibus Tax Ordinance, imposing
amusement tax on golf courses is null and void as it is beyond the authority of
respondent Cebu City to enact under the Local Government Code.
HELD: YES. "Amusement places," as defined in Section 131 (c) of the Local
Government Code, "include theaters, cinemas, concert halls, circuses and other
places of amusement where one seeks admission to entertain oneself by seeing or
viewing the show or performance."
The Court, in Pelizloy Realty, declared null and void the second paragraph of
Article X, Section 59 of the Benguet Provincial Code, in so far as it imposes
amusement taxes on admission fees to resorts, swimming pools, bath houses, hot
springs, and tourist spots. Applying the principle of ejusdem generis, as well as the
ruling in the PBA case, the Court expounded on the authority of local government
units to impose amusement tax under Section 140, in relation to Section 131(c), of
the Local Government Code, as follows:
Under the principle of ejusdem generis, "where a general word or phrase follows
an enumeration of particular and specific words of the same class or where the
latter follow the former, the general word or phrase is to be construed to include, or
to be restricted to persons, things or cases akin to, resembling, or of the same kind
or class as those specifically mentioned."

The purpose and rationale of the principle was explained by the Court in National
Power Corporation v. Angas as follows: The purpose of the rule on ejusdem
generis is to give effect to both the particular and general words, by treating the
particular words as indicating the class and the general words as including all that
is embraced in said class, although not specifically named by the particular words.
This is justified on the ground that if the lawmaking body intended the general
terms to be used in their unrestricted sense, it would have not made an
enumeration of particular subjects but would have used only general terms. [2
Sutherland, Statutory Construction, 3rd ed., pp. 395-400].
In PBA v. CA, the Supreme Court had an opportunity to interpret a starkly similar
provision or the counterpart provision of Section 140 of the LGC in the Local Tax
Code then in effect. Petitioner contended that it was subject to the imposition by
LGUs of amusement taxes (as opposed to amusement taxes imposed by the
national government). In support of its contentions, it cited Section 13 of
Presidential Decree No. 231, otherwise known as the Local Tax Code of 1973,
(which is analogous to Section 140 of the LGC) providing the following:
Section 13. Amusement tax on admission. The province shall impose a tax on
admission to be collected from the proprietors, lessees, or operators of theaters,
cinematographs, concert halls, circuses and other places of amusement xxx.
Applying the principle of ejusdem generis, the Supreme Court rejected PBA's
assertions and noted that:
[I]n determining the meaning of the phrase 'other places of amusement', one must
refer to the prior enumeration of theaters, cinematographs, concert halls and
circuses with artistic expression as their common characteristic. 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.
However, even as the phrase 'other places of amusement' was already clarified in
Philippine Basketball Association, Section 140 of the LGC adds to the enumeration
of 'places of amusement' which may properly be subject to amusement tax.
Section 140 specifically mentions 'boxing stadia' in addition to "theaters,
cinematographs, concert halls [and] circuses" which were already mentioned in PD
No. 231. Also, 'artistic expression' as a characteristic does not pertain to 'boxing
stadia'.
In the present case, the Court need not embark on a laborious effort at statutory
construction. Section 131 (c) of the LGC already provides a clear definition of
'amusement places': Indeed, theaters, cinemas, concert halls, circuses, and boxing
stadia are bound by a common typifying characteristic in that they are all venues
primarily for the staging of spectacles or the holding of public shows, exhibitions,
performances, and other events meant to be viewed by an audience. Accordingly,
'other places of amusement' must be interpreted in light of the typifying
characteristic of being venues "where one seeks admission to entertain oneself by
seeing or viewing the show or performances" or being venues primarily used to
stage spectacles or hold public shows, exhibitions, performances, and other
events meant to be viewed by an audience.
Considering these, it is clear that resorts, swimming pools, bath houses, hot
springs and tourist spots cannot be considered venues primarily "where one seeks
admission to entertain oneself by seeing or viewing the show or performances".
While it is true that they may be venues where people are visually engaged, they
are not primarily venues for their proprietors or operators to actively display, stage
or present shows and/or performances.
Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not
belong to the same category or class as theaters, cinemas, concert halls, circuses,
and boxing stadia. It follows that they cannot be considered as among the 'other
places of amusement' contemplated by Section 140 of the LGC and which may
properly be subject to amusement taxes.
In light of Pelizloy Realty, a golf course cannot be considered a place of
amusement. As petitioner asserted, people do not enter a golf course to see or
view a show or performance. Petitioner also, as proprietor or operator of the golf
course, does not actively display, stage, or present a show or performance. People
go to a golf course to engage themselves in a physical sport activity, i.e., to play
golf; the same reason why people go to a gym or court to play badminton or tennis
or to a shooting range for target practice, yet there is no showing herein that such
gym, court, or shooting range is similarly considered an amusement place subject
to amusement tax. There is no basis for singling out golf courses for amusement
tax purposes from other places where people go to play sports. This is in
contravention of one of the fundamental principles of local taxation: that the
"[taxation shall be uniform in each local government unit." Uniformity of taxation,
like the kindred concept of equal protection, requires that all subjects or objects of
taxation, similarly situated, are to be treated alike both in privileges and liabilities.
Respondents, however, cannot claim that Section 42 of the Revised Omnibus Tax
Ordinance, as amended, imposing amusement tax on golf courses, was enacted
pursuant to the residual power to tax of respondent Cebu City. A local government
unit may exercise its residual power to tax when there is neither a grant nor a
prohibition by statute; or when such taxes, fees, or charges are not otherwise
specifically enumerated in the Local Government Code, National Internal Revenue
Code, as amended, or other applicable laws. In the present case, Section 140, in
relation to Section 131(c), of the Local Government Code already explicitly and
clearly cover amusement tax and respondent Cebu City must exercise its authority
to impose amusement tax within the limitations and guidelines as set forth in said
statutory provisions.

INSERT MOPPET