Mactan Cebu International Airport Authority (MCIAA) vs.

Hon Ferdinand Marcos, in his capacity as RTC Judge

Facts: Petitioner MCIAA was created by virtue of RA 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 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 Sec 14 of its Charter. (Sec.14 provides for its Tax Exemptions –
the authority shall be exempt from realty taxes imposed by the National Government or any of its political
subdivisions, agencies and instrumentalities).
Mr. Eustaquio B. Cesa, OIC, 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 Kasabagan, Lahug, Cebu
City in the total amount of P2.2Million.
Petitioner objected to such demand for payment as baseless and unjustified, claiming exemption from
payment of realty taxes under Sec. 14 of RA 6958 It was also asserted that it is an instrumentality of the
government performing governmental functions, citing Section 133 of the Local Government Code of 1991
which put limitation on the taxing powers of the local government units:
Section 133. Common Limitations on the Taxing Powers of Local Government Units. -- Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not
extend to the levy of the following:
o) Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities,
and local government units. (underscoring supplied)
Respondent City refused to cancel and set aside petitioners realty tax account, insisting that the MCIAA is a
government-controlled corporation whose tax exemption privilege had been withdrawn by virtue of Section 193
and 234 of the LGC that took effect on Jan 1, 1992;
ISSUE: WHETHER MCIAA IS EXEMPTED FROM PAYMENT OF REALTY TAXES.

RULING: No. MCIAA is a “taxable person” under its Charter (RA 6958), and 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.
Since Republic Act 7160 or the Local Government Code (LGC) 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.”
With that repealing clause in the LGC, the tax exemption provided for in RA 6958 had been expressly
repealed by the provisions of the LGC. Therefore, MCIAA has to pay the assessed realty tax of its
properties effective after January 1, 1992 until the present.
National Power Corporation (NPC) VS. City of Cabanatuan,
FACTS: Petitioner is a government-owned and controlled corporation created under
Commonwealth Act No. 120, as amended.
For many years now, petitioner sells electric power to the residents of Cabanatuan City,
posting a gross income of P107,814,187.96 in 1992.7 Pursuant to section 37 of Ordinance
No. 165-92,8 the respondent assessed the petitioner a franchise tax amounting to
P808,606.41, representing 75% of 1% of the latter’s gross receipts for the preceding year.
Petitioner refused to pay the tax assessment arguing that the respondent has no authority to
impose tax on government entities. Petitioner also contended that as a non-profit
organization, it is exempted from the payment of all forms of taxes, charges, duties or fees in
accordance with sec. 13 of Rep. Act No. 6395, as amended.
The respondent filed a collection suit in the RTC, demanding that petitioner pay the
assessed tax due, plus surcharge. Respondent alleged that petitioner’s exemption from local
taxes has been repealed by section 193 of the LGC, which reads as follows:
“Sec. 193. Withdrawal of Tax Exemption Privileges.- Unless otherwise provided in this Code,
tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural
or juridical, including government owned or controlled corporations, except local water
districts, cooperatives duly registered under R.A. No. 6938, non-stock and non-profit
hospitals and educational institutions, are hereby withdrawn upon the effectivity of this
Code.”
RTC upheld NPC’s tax exemption. On appeal the CA reversed the trial court’s Order on the
ground that section 193, in relation to sections 137 and 151 of the LGC, expressly withdrew
the exemptions granted to the petitioner.
ISSUE: W/N the respondent city government has the authority to issue Ordinance No. 165-
92 and impose an annual tax on “businesses enjoying a franchise
HELD: YES. Taxes are the lifeblood of the government, for without taxes, the government
can neither exist nor endure. A principal attribute of sovereignty, the exercise of taxing power
derives its source from the very existence of the state whose social contract with its citizens
obliges it to promote public interest and common good. The theory behind the exercise of
the power to tax emanates from necessity;32 without taxes, government cannot fulfill its
mandate of promoting the general welfare and well-being of the people.
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,74 MERALCO’s 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.75 Ruling in favor of the local government
in both instances, we ruled that the franchise tax in question is imposable despite any
exemption enjoyed by MERALCO under special laws, viz:
“It is our view that petitioners correctly rely on provisions of Sections 137 and 193 of the LGC
to support their position that MERALCO’s tax exemption has been withdrawn. The explicit
language of section 137 which authorizes the province to impose franchise tax
‘notwithstanding any exemption granted by any law or other special law’ is all-encompassing
and clear. The franchise tax is imposable despite any exemption enjoyed under special laws.
Section 193 buttresses the withdrawal of extant tax exemption privileges. By stating that
unless otherwise provided in this Code, tax exemptions or incentives granted to or presently
enjoyed by all persons, whether natural or juridical, including government-owned or
controlled corporations except (1) local water districts, (2) cooperatives duly registered under
R.A. 6938, (3) non-stock and non-profit hospitals and educational institutions, are withdrawn
upon the effectivity of this code, the obvious import is to limit the exemptions to the three
enumerated entities. It is a basic precept of statutory construction that the express mention
of one person, thing, act, or consequence excludes all others as expressed in the familiar
maxim expressio unius est exclusio alterius. In the absence of any provision of the Code to
the contrary, and we find no other provision in point, any existing tax exemption or incentive
enjoyed by MERALCO under existing law was clearly intended to be withdrawn.

Reading together sections 137 and 193 of the LGC, we conclude that under the LGC the
local government unit may now impose a local tax at a rate not exceeding 50% of 1% of the
gross annual receipts for the preceding calendar based on the incoming receipts realized
within its territorial jurisdiction. The legislative purpose to withdraw tax privileges enjoyed
 under existing law or charter is clearly manifested by the language used on (sic) Sections
137 and 193 categorically withdrawing such exemption subject only to the exceptions
enumerated. Since it would be not only tedious and impractical to attempt to enumerate all
the existing statutes providing for special tax exemptions or privileges, the LGC provided for
an express, albeit general, withdrawal of such exemptions or privileges. No more
unequivocal language could have been used.”76 (emphases supplied)

Iloilo bottlers inc vs. city of Iloilo

FACTS: Plaintiff engages in the business of bottling soft drinks under the trade name of Pepsi Cola and 7-up
and selling the same to its customers, with a bottling plant situated at Barrio Ungca, Mun of Pavia, Iloilo which
is outside the jurisdiction of defendant.

The defendant enacted an ordinace No. 5 amended by No. 28,15, 45

Sec 1 Any person, firm or corporation engaged in the distribution,manufacture or bottling of coca-cola, pepsi
cola, tru orange, seven up and other soft drinks within the jurisdiction of the City of Iloilo shall pay a municipal
license tax of P.10 for every case of 24bottles. PROVIDED, HOWEVER, that softdrinks sold to the public at
not more than five (P0.05) centavos per bottle shall pay a tax of one and one half (P0.015) (centavos) per
case of twenty four bottles.

Section 1-A—For purposes of this Ordinance, all deliveries and/or dispatches emanating or made at the plant
and all goods or stocks taken out of the plant for distribution, sale or exchange irrespective (of) where it
would take place shall be covered by the operation of this Ordinance.

Santiago Syjuco, Inc. owned and operation a bottling plant at Muelle Loney St. Iloilo was doing business
under the name of 7-up bottling corp and bottled the sofdrinks pepsi cola and 7-up, due to financial losses
close the plant, and plaintiff operated it and closed it and transferred the operation in Barrio Ungca Mun of
Pavia, Iloilo.

From the enactment of the ordinace, the 7 up bottling under Santiago syjuco had been religiously paying
municipal license tax therefrom for bottlers because its plant is located at Muelle Loney St. City of Iloilo. But
the plaintiff stop paying when it transferred its operation outside the jurisdiction of the City of Iloilo.

Defendant demanded payment from the plaintiff the payment of the municipal license tax. The plaintiff
explained that it could not anymore be liable to pay the municipal license tax because its bottling plant was
not anymore in the City of Iloilo and since it itself sold its own products to its customers directly, it could no
longer be considered as distributor.

The defendant demanded from the plaintiff compliance of the ordinance in view that it was engaged in
distribution of the softdrinks in the city of Iloilo and demanded payment of back taxes from the time it
transferred its bottling plant to the Mun of Pavia Iloilo.

Plaintiff paid under protest every quarter. And was force to pay back taxes under protest because of the
threat that plaintiff’s business might cancel the operation.

That plaintiff does not maintain any store or commercial establishment in the city of Iloilo from which it
distributes its products by delivery trucks, directly to its customers.

That plaintiff is already paying the National Government a percentage tax as manufacturer’s sales tax on all
the softdrinks, municipal license tax to the Municipality of Pavia and municipal licence for engaging in its
business to the municipality of Pavia.
The trial court decided in favor of Iloilo Bottlers, Inc. declaring the Corporation not liable under ordinance and
directing the city of Iloilo to pay P3,329. The city of Iloilo appealed.

ISSUE: WHETHER THE COMPANY MAY BE CONSIDERED ENGAGED IN THE DISTRIBUTION OF

SOFTDRINKS IN ILOILO CITY EVEN AFTER IT HAD TRANFERRED ITS BOTTLING PLAINT TO PAVIA,
SO AS TO BE WITHIN THE PURVIEW OF THE ORDINANCE.

RULING: This Court has always recognized that the right to manufacture implies the right to sell/distribute
the manufactured products. Hence, for tax purposes, a manufacturer does not necessarily become engaged
in the separate business of selling simply because it sells the products it manufactures. In certain cases,
however, a manufacturer may also be considered as engaged in the separate business of selling its
products.

To determine whether an entity engaged in the principal business of manufacturing, is likewise engaged in
the separate business of selling, its marketing system or sales operations must be looked into.

Under the first system, the manufacturer enters into sales transactions and invoices the sales at its main
office where purchase orders are received and approved before delivery orders are sent to the company's
warehouses, where in turn actual deliveries are made. No warehouse sales are made; nor are separate
stores maintained where products may be sold independently from the main office. The warehouses only
serve as storage sites and delivery points of the products earlier sold at the main office. Under the second
system, sales transactions are entered into and perfected at stores or warehouses maintained by the
company. Any one who desires to purchase the product may go to the store or warehouse and there
purchase the merchandise. The stores and warehouses serve as selling centers.

Entities operating under the first system are NOT considered engaged in the separate business of selling or
dealing in their products, independent of their manufacturing business. Entities operating under the second
system are considered engaged in the separate business of selling.

In the case at bar, the company distributed its softdrinks by means of a fleet of delivery trucks which went
directly to customers in the different places in lloilo province. Sales transactions with customers were entered
into and sales were perfected and consummated by route salesmen. Truck sales were made independently
of transactions in the main office. The delivery trucks were not used solely for the purpose of delivering
softdrinks previously sold at Pavia. They served as selling units. They were what were called, until recently,
"rolling stores". The delivery trucks were therefore much the same as the stores and warehouses under the
second marketing system. Iloilo Bottlers, Inc. thus falls under the second category above. That is, the
corporation was engaged in the separate business of selling or distributing soft-drinks, independently of its
business of bottling them.

The tax imposed under Ordinance No. 5 is an excise tax. It is a tax on the privilege of distributing,
manufacturing or bottling softdrinks. Being an excise tax, it can be levied by the taxing authority only when
the acts, privileges or businesses are done or performed within the jurisdiction of said authority Specifically,
the situs of the act of distributing, bottling or manufacturing softdrinks must be within city limits, before an
entity engaged in any of the activities may be taxed in Iloilo City.

As stated above, sales were made by Iloilo Bottlers, Inc. in Iloilo City. Thus, We have no option but to declare
the company liable under the tax ordinance.
 Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. City of Butuan
FACTS: Plaintiff is a domestic corporation. The defendants are the city of butuan, its mayor, municipal boards
and its city treasurer. Plaintiff — seeks to recover the sums paid by it to the City of Butuan — hereinafter referred
to as the City and collected by the latter, pursuant to its Municipal Ordinance No. 110, as amended by Municipal
Ordinance No. 122, both series of 1960, which plaintiff assails as null and void, and to prevent the enforcement
thereof.

That plaintiff's warehouse in the City of Butuan serves as a storage for its products the "Pepsi-Cola" soft drinks for
sale to customers in the City of Butuan and all the municipalities in the Province of Agusan. These "Pepsi-Cola
Cola" soft drinks are bottled in Cebu City and shipped to the Butuan City warehouse of plaintiff for distribution and
sale in the City of Butuan and all municipalities of Agusan. .
2. That on August 16, 1960, the City of Butuan enacted Ordinance No. 110 which was subsequently amended by
Ordinance No. 122 and effective November 28, 1960.
That Ordinance No. 110 as amended, imposes a tax on any person, association, etc., of P0.10 per case of 24
bottles of Pepsi-Cola and the plaintiff paid under protest the amount of P4,926.63 from August 16 to December 31,
1960 and the amount of P9,250.40 from January 1 to July 30, 1961.
4. That the plaintiff filed the foregoing complaint for the recovery of the total amount of P14,177.03 paid under
protest and those that if may later on pay until the termination of this case on the ground that Ordinance No. 110 as
amended of the City of Butuan is illegal, that the tax imposed is excessive and that it is unconstitutional.

5. That pursuant to Ordinance No. 110 as amended, the City Treasurer of Butuan City, has prepared a form to be
accomplished by the plaintiff for the computation of the tax.
That the Profit and Loss Statement of the plaintiff for the period from January 1, 1961 to July 30, 1961 of its
warehouse in Butuan City is incorporated herein
In this Profit and Loss Statement, the defendants claim that the plaintiff is not entitled to a depreciation of P3,052.63
but only P1,202.55 in which case the profit of plaintiff will be increased from P1,254.44 to P3,104.52. The plaintiff
differs only on the claim of depreciation which the company claims to be P3,052.62. This is in accordance with the
findings of the representative of the undersigned City Attorney who verified the records of the plaintiff.
7. That beginning November 21, 1960, the price of Pepsi-Cola per case of 24 bottles was increased to P1.92 which
price is uniform throughout the Philippines. Said increase was made due to the increase in the production cost of its
manufacture.

8. That the parties reserve the right to submit arguments on the constitutionality and illegality of Ordinance No. 110,
as amended of the City of Butuan in their respective memoranda.

Section 1 of said Ordinance No. 110, as amended, states what products are "liquors", within the purview thereof.
Section 2 provides for the payment by "any agent and/or consignee" of any dealer "engaged in selling liquors,
imported or local, in the City," of taxes at specified rates. Section 3 prescribes a tax of P0.10 per case of 24 bottles
of the soft drinks and carbonated beverages therein named, and "all other soft drinks or carbonated drinks." Section
3-A, defines the meaning of the term "consignee or agent" for purposes of the ordinance. Section 4 provides that
said taxes "shall be paid at the end of every calendar month." Pursuant to Section 5, the taxes "shall be based and
computed from the cargo manifest or bill of lading or any other record showing the number of cases of soft drinks,
liquors or all other soft drinks or carbonated drinks received within the month." Sections 6, 7 and 8 specify the
surcharge to be added for failure to pay the taxes within the period prescribed and the penalties imposable for
"deliberate and willful refusal to pay the tax mentioned in Sections 2 and 3" or for failure "to furnish the office of the
City Treasurer a copy of the bill of lading or cargo manifest or record of soft drinks, liquors or carbonated drinks for
sale in the City." Section 9 makes the ordinance applicable to soft drinks, liquors or carbonated drinks "received
outside" but "sold within" the City. Section 10 of the ordinance provides that the revenue derived therefrom "shall be
alloted as follows: 40% for Roads and Bridges Fund; 40% for the General Fund and 20% for the School Fund."

Plaintiff maintains that the disputed ordinance is null and void because: (1) it partakes of the nature of an import tax;
(2) it amounts to double taxation; (3) it is excessive, oppressive and confiscatory; (4) it is highly unjust and
discriminatory; and (5) section 2 of Republic Act No. 2264, upon the authority of which it was enacted, is an
unconstitutional delegation of legislative powers.
ISSUE: whether or not the tax in question, when considered in relation to the sales tax prescribed by Acts of
Congress, amounts to double taxation, on which we need not and do not express any opinion - double taxation, in
general, is not forbidden by our fundamental law.

RULING: We have not adopted, as part thereof, the injunction against double taxation found in the Constitution
of the United States and of some States of the Union.1 Then, again, the general principle against delegation of
legislative powers, in consequence of the theory of separation of powers2 is subject to one well-established
exception, namely: legislative powers may be delegated to local governments — to which said theory does not
apply3 — in respect of matters of local concern.

The third objection is, likewise, untenable. The tax of "P0.10 per case of 24 bottles," of soft drinks or carbonated
drinks — in the production and sale of which plaintiff is engaged — or less than P0.0042 per bottle, is manifestly
too small to be excessive, oppressive, or confiscatory.

The first and the fourth objections merit, however, serious consideration. In this connection, it is noteworthy that
the tax prescribed in section 3 of Ordinance No. 110, as originally approved, was imposed upon dealers "engaged
in selling" soft drinks or carbonated drinks. Thus, it would seem that the intent was then to levy a tax upon the sale
of said merchandise. As amended by Ordinance No. 122, the tax is, however, imposed only upon "any agent
and/or consignee of any person, association, partnership, company or corporation engaged in selling ... soft drinks
or carbonated drinks." And, pursuant to section 3-A, which was inserted by said Ordinance No. 122:

... — Definition of the Term Consignee or Agent. — For purposes of this Ordinance, a consignee of agent shall
mean any person, association, partnership, company or corporation who acts in the place of another by authority
from him or one entrusted with the business of another or to whom is consigned or shipped no less than 1,000
cases of hard liquors or soft drinks every month for resale, either retail or wholesale.

As a consequence, merchants engaged in the sale of soft drink or carbonated drinks, are not subject to the
tax, unless they are agents and/or consignees of another dealer, who, in the very nature of things, must be one
engaged in business outside the City. Besides, the tax would not be applicable to such agent and/or consignee, if
less than 1,000 cases of soft drinks are consigned or shipped to him every month. When we consider, also, that
the tax "shall be based and computed from the cargo manifest or bill of lading ... showing the number of cases" —
not sold — but "received" by the taxpayer, the intention to limit the application of the ordinance to soft drinks and
carbonated drinks brought into the City from outside thereof becomes apparent. Viewed from this angle, the tax
partakes of the nature of an import duty, which is beyond defendant's authority to impose by express provision of
law.4

Even however, if the burden in question were regarded as a tax on the sale of said beverages, it would still be
invalid, as discriminatory, and hence, violative of the uniformity required by the Constitution and the law therefor,
since only sales by "agents or consignees" of outside dealers would be subject to the tax. Sales by local dealers,
not acting for or on behalf of other merchants, regardless of the volume of their sales, and even if the same
exceeded those made by said agents or consignees of producers or merchants established outside the City of
Butuan, would be exempt from the disputed tax.

It is true that the uniformity essential to the valid exercise of the power of taxation does not require identity or
equality under all circumstances, or negate the authority to classify the objects of taxation.5 The classification
made in the exercise of this authority, to be valid, must, however, be reasonable6 and this requirement is not
deemed satisfied unless: (1) it is based upon substantial distinctions which make real differences; (2) these are
germane to the purpose of the legislation or ordinance; (3) the classification applies, not only to present
conditions, but, also, to future conditions substantially identical to those of the present; and (4) the classification
applies equally all those who belong to the same class.7

These conditions are not fully met by the ordinance in question.8 Indeed, if its purpose were merely to levy a
burden upon the sale of soft drinks or carbonated beverages, there is no reason why sales thereof by sealers
other than agents or consignees of producers or merchants established outside the City of Butuan should be
exempt from the tax.

WHEREFORE, the decision appealed from is hereby reversed, and another one shall be entered annulling
Ordinance No. 110, as amended by Ordinance No. 122, and sentencing the City of Butuan to refund to plaintiff
herein the amounts collected from and paid under protest by the latter, with interest thereon at the legal rate from
the date of the promulgation of this decision, in addition to the costs, and defendants herein are, accordingly,
restrained and prohibited permanently from enforcing said Ordinance, as amended. It is so ordered.
ASSOCIATION OF CUSTOMS BROKERS, INC. AND G. MANLAPIT, INC., , VS. THE MUNICIPAL
BOARD, THE CITY TREASURER, THE CITY ASSESSOR AND THE CITY MAYOR, ALL OF THE CITY OF
MANILA

FACTS: The petitioner which is composed of all brokers and public service operators of motor vehicles in
the city of manila, and G. Manlapit Inc., is a member of said association, also a public service operator of
trucks in said city challenge the validity of Ordinace No. 3379 (Municipal Board of City of Manila) on the
ground of (1) while it levies a so-called property tax it is in reality a license tax which is beyond the power of
the Municipal Board of the City of Manila; (2) said ordinance offends against the rule of uniformity of
taxation; and (3) it constitutes double taxation.

Respondent contend that it is within the power of the City of Manila to impose under its Revised Charter
[Section 18 (p) of Republic Act No. 409 under the authority conferred by section 18 (p) of Republic Act No.
409. Said section confers upon the municipal board the power "to tax motor and other vehicles operating
within the City of Manila the provisions of any existing law to the contrary notwithstanding." It is contended
that this power is broad enough to confer upon the City of Manila the power to enact an ordinance imposing
a property tax on motor vehicles operating within the city limits.], and that the tax in question does not
violate the rule of uniformity of taxation, nor does it constitute double taxation.

CFI sustained the validity of the ordinance and dismissed the petition. Hence this appeal.

ISSUE: Whether the ordinance is valid.

RULING: NO. While it refers to property tax and it is fixed ad valorem yet we cannot reject the idea that it is
merely levied on motor vehicles operating within the City of Manila with the main purpose of raising funds to
be expended exclusively for the repair, maintenance and improvement of the streets and bridges in said
city. This is precisely what the Motor Vehicle Law (Act No. 3992) intends to prevent, for the reason that,
under said Act, municipal corporations already participate in the distribution of the proceeds that are raised
for the same purpose of repairing, maintaining and improving bridges and public highways (section 73 of
the Motor Vehicle Law). This prohibition is intended to prevent duplication in the imposition of fees for the
same purpose. It is for this reason that we believe that the ordinance in question merely imposes a license
fee although under the cloak of an ad valorem tax to circumvent the prohibition above adverted to.

It is also our opinion that the ordinance infringes the rule of uniformity of taxation ordained by our
Constitution. Note that the ordinance exacts the tax upon all motor vehicles operating within the City of
Manila. It does not distinguish between a motor vehicle for hire and one which is purely for private
use. Neither does it distinguish between a motor vehicle registered in the City of Manila and one registered
in another place but occasionally comes to Manila and uses its streets and public highways. The distinction
is important if we note that the ordinance intends to burden with the tax only those registered in the City of
Manila as may be inferred from the word "operating" used therein. The word "operating" denotes a
connotation which is akin to a registration, for under the Motor Vehicle Law no motor vehicle can be
operated without previous payment of the registration fees. There is no pretense that the ordinance equally
applies to motor vehicles who come to Manila for a temporary stay or for short errands, and it cannot be
denied that they contribute in no small degree to the deterioration of the streets and public
highways. The fact that they are benefited by their use they should also be made to share the
corresponding burden. And yet such is not the case. This is an inequality which we find in the ordinance,
and which renders it offensive to the Constitution.
Progressive Development Corporation vs. Quezon City
FACTS: The City Council of QC adopted ordinance no. 7997 “market Code of QC”, section 3 provided Sec. 3.
Supervision Fee.- Privately owned and operated public markets shall submit monthly to the Treasurer's Office,
a certified list of stallholders showing the amount of stall fees or rentals paid daily by each stallholder, ...
and shall pay 10% of the gross receipts from stall rentals to the City, ... , as supervision fee. Failure to submit
said list and to pay the corresponding amount within the period herein prescribed shall subject the operator
to the penalties provided in this Code ... including revocation of permit to operate.

Market Code amended by Ordinance No. 9236 SECTION 1. There is hereby imposed a five percent (5 %) tax on gross receipts on
rentals or lease of space in privately-owned public markets in Quezon City. SECTION 3. For the effective implementation of this
Ordinance, owners of privately owned public markets shall submit ... a monthly certified list of stallholders of lessees of space in their
markets showing ... :

a. name of stallholder or lessee; b. amount of rental; c. period of lease, indicating therein whether the same is on a daily, monthly or
yearly basis. xxx xxx xxx SECTION 4. ... In case of consistent failure to pay the percentage tax for the (3) consecutive months, the
City shall revoke the permit of the privately-owned market to operate and/or take any other appropriate action or remedy allowed
by law for the collection of the overdue percentage tax and surcharge.

Petitioner Progressive Development Corporation, owner and operator of a public market known as the "Farmers Market &
Shopping Center" filed a Petition for Prohibition with Preliminary Injunction against respondent before the then Court of
First Instance of Rizal on the ground that the supervision fee or license tax imposed by the above-mentioned ordinances
is in reality a tax on income which respondent may not impose, the same being expressly prohibited by Republic Act No.
2264, as amended. Respondent contended that it had authority to enact the questioned ordinances, maintaining that the
tax on gross receipts imposed therein is not a tax on income. The Solicitor General also filed an Answer arguing that
petitioner, not having paid the ten percent (10%) supervision fee prescribed by Ordinance No. 7997, had no personality to
question, and was estopped from questioning, its validity; that the tax on gross receipts was not a tax on income but one
imposed for the enjoyment of the privilege to engage in a particular trade or business which was within the power of
respondent to impose. Petitioner paid under protest. The lower Court dismissed the case because the imposition is not a
tax on income but rather a privilege tax or license fee which loc gov are empowered to impose and collect. Hence this
petition for review.

ISSUE: whether the tax imposed by respondent on gross receipts of stall rentals is properly characterized as
partaking of the nature of an income tax or, alternatively, of a license fee.

RULING: Yes. We believe and so hold that the five percent (5%) tax imposed in Ordinance No. 9236 constitutes, not a tax
on income, not a city income tax (as distinguished from the national income tax imposed by the National Internal Revenue
Code) within the meaning of Section 2 (g) of the Local Autonomy Act, but rather a license tax or fee for the regulation of
the business in which the petitioner is engaged. While it is true that the amount imposed by the questioned ordinances
may be considered in determining whether the exaction is really one for revenue or prohibition, instead of one of
regulation under the police power, it nevertheless will be presumed to be reasonable. Local' governments are allowed
wide discretion in determining the rates of imposable license fees even in cases of purely police power measures, in the
absence of proof as to particular municipal conditions and the nature of the business being taxed as well as other detailed
factors relevant to the issue of arbitrariness or unreasonableness of the questioned rates. Thus:

[A]n ordinance carries with it the presumption of validity. The question of reasonableness though is open to judicial
inquiry. Much should be left thus to the discretion of municipal authorities. Courts will go slow in writing off an ordinance
as unreasonable unless the amount is so excessive as to be prohibitory, arbitrary, unreasonable, oppressive, or
confiscatory. A rule which has gained acceptance is that factors relevant to such an inquiry are the municipal conditions
as a whole and the nature of the business made subject to imposition.

Petitioner has not shown that the rate of the gross receipts tax is so unreasonably large and excessive and so grossly
disproportionate to the costs of the regulatory service being performed by the respondent as to compel the Court to
characterize the imposition as a revenue measure exclusively. The lower court correctly held that the gross receipts from
stall rentals have been used only as a basis for computing the fees or taxes due respondent to cover the latter's
administrative expenses, i.e., for regulation and supervision of the sale of foodstuffs to the public. The use of the gross
amount of stall rentals as basis for determining the collectible amount of license tax, does not by itself, upon the one
hand, convert or render the license tax into a prohibited city tax on income. Upon the other hand, it has not been
suggested that such basis has no reasonable relationship to the probable costs of regulation and supervision of the
petitioner's kind of business. For, ordinarily, the higher the amount of stall rentals, the higher the aggregate volume of
foodstuffs and related items sold in petitioner's privately owned market; and the higher the volume of goods sold in such
private market, the greater the extent and frequency of inspection and supervision that may be reasonably required in the
interest of the buying public. Moreover, what we started with should be recalled here: the authority conferred upon the
respondent's City Council is not merely "to regulate" but also embraces the power "to tax" the petitioner's business.