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Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-40296 November 21, 1984
ALLIED THREAD CO., INC., and KER & COMPANY, LTD.,
petitioners,
vs.
HON. CITY MAYOR OF MANILA, HON. CITY TREASURER OF
MANILA, HON. LORENZO RELOVA, in his capacity as Presiding
Judge, Branch II, CFI of Manila, respondents.
Antonio A. Nieva for petitioners.
Santiago F. Alidio, S.M. Artiaga, Jr. and Jose A. Perella for
respondents.
ABAD SANTOS, J.:
This is a Petition for Review challenging the decision of the then Court
of First Instance of Manila presided by then Judge, now Justice
Lorenzo Relova, which upheld the validity of Manila Ordinance No.
7516, as amended by Ordinance Nos. 7544, 7545 and 7556, and
adjudging petitioner Allied Thread Co., Inc. taxable thereunder
considering that its products are sold in Manila.
On June 12, 1974, the Municipal Board of the City of Manila enacted
Ordinance No. 7516 imposing on manufacturers, importer porters or
producers, doing business in the City of Manila, business taxes based
on gross sales on a graduated basis. The Mayor approved the said
Ordinance on June 15, 1974. In due time, the same ordinance
underwent a series of amendments, to wit: on June 19, 1974, by
Ordinance No. 7544 approved by the Mayor on the same date;
Ordinance No. 7545 enacted by the Municipal Board on June 20,
1974 and approved by the Mayor on June 27, 1974; and Ordinance
No. 7556, enacted by the Municipal Board on July 20, 1974 and
approved by the Mayor on July 29,1974. Ordinance No. 7516 as
amended, reads as follows:

Sec. 1. Business Tax. — There is hereby imposed on
the following business in the City of Manila an annual
tax collectible quarterly except on those for which fixed
taxes are already provided for as follows:
A. On manufacturers, importers, or producers of any
article of commerce of whatever kind or nature,
including brewers, distilled spirits and/or wines in
accordance with the following schedule:
xxx xxx xxx
PROVIDED HOWEVER, that for purposes of collection
of this tax, manufacturers and producers maintaining or
operating branch or sales offices elsewhere shall
record the sale in the branch or sales office making the
sale and the tax thereon shall accrue to the City of
Manila if the branch of sales office is in Manila. In
cases where there is no such branch or sales office in
the city, the sale shag be duly recorded in the principal
office along with the sales made in the principal office.
Sixty percent of all sales recorded in the principal office
shall be taxable by the City of Manila if the principal
office is in Manila, while the remaining forty percent
shall be deemed as sales made in the factory and shall
he taxable by the local government where the factory is
located.
In cases where a manufacturer or producer has
factories in Manila and in different localities, the forty
per cent sales allocation mentioned in the preceding
paragraph shall be appropriated among the City of
Manila and the localities where the factories are
situated in proportion to their respective volumes of
production during the period for which the tax is due.
The records show that petitioner Allied Id Co., inc. is engaged in the
business of manufacturing sewing thread and yarn under duly
registered marks and labels. It operates its factory and maintains an
office in Pasig, Rizal. In order to sell its products in Manila and in
other parts of the Philippines, petitioner Allied Thread Co., Inc.
engaged the services of a sales broker, Ker & Company, Ltd. (co-
petitioner herein), the latter deriving commissions from every sale
made for its principal.
Having been affected by the aforementioned Ordinance, being
manufacturers and sales brokers, on July 22, 1974, Allied Thread Co.,
Inc. and Ker & Co., Ltd. filed with the defunct Court of First Instance of
Manila, a petition for Declaratory Relief, contending that Ordinance
No. 7516, as amended, is not valid nor enforceable as the same is
contrary to Section 54 of Presidential Decree No. 426, as clarified by
Local Tax Regulation No. 1-74 dated April 8, 1974 of the Department
of Finance, reading as follows:
J. GENERAL PROVISIONS
1. All existing tax ordinance of provinces, cities,
municipalities and barrios shall be deemed ipso facto
nullified on June 30, 1974.
2. The local boards or councils should enact their
respective tax ordinances pursuant to the provisions of
the Local Tax Code, as amended by P.D. 426, to take
effect not earlier than July 1, 1974.
3. Pursuant to the provisions of Section 42 of the Code,
as amended by Section 18 of the said Decree, a local
tax ordinance shall go into effect on the 15th day after
approved by the local chief executives in accordance
with Section 41 of the Code. 4. In view hereof, and
considering the provisions of Section 54 of the Code,
regarding the accrual of taxes a local tax ordinance
intended to take effect on July 1, 1974 should be
enacted by the Local Chief Executive not later than
June 15, 1974. (Emphasis supplied)
Otherwise stated, petitioners assert that due to the series of
amendments to Ordinance No. 7516, the same Ordinance fell short of
the deadline set by Sec. 54 of P.D. No. 426 that "for an ordinance
intended to take effect on July 1, 1974, it must be enacted on or
before June 15, 1974." Necessarily, so it is asserted, the said
Ordinance No. 7516 as amended, is not valid nor enforceable.

Petitioners further contend that the questioned Ordinance did not
comply with the necessary publication requirement in a newspaper of
general circulation as mandated by Sec. 43 of the Local Tax Code.
Petitioner Allied Thread Co., Inc. also claims that it should not be
subjected to the said Ordinance No. 7516 as amended, because it
does not operate or maintain a branch office in Manila and that its
principal office and factory are located in Pasig, Rizal.
We agree with the decision of the then Court of First Instance of
Manila, upholding the validity of Ordinance No. 7516 as amended,
and finding petitioner Allied Thread Co., Inc. the proper subject
thereto.
There is no dispute that Ordinance No. 7516 was enacted by the
Municipal Board of Manila on June 12, 1974 and approved by the City
Mayor on June 15, 1974. Fifteen (15) days thereafter, or on July 1,
1974, the said ordinance became effective pursuant to Sec. 42 of the
Local Tax Code. It is clear therefore that Ordinance No. 7516 has fully
conformed with P.D. No. 426 and Local Tax Regulation No. 1-74
which require that "a local tax ordinance intended to take effect on
July 1, 1974 should be enacted by the Local Chief Executive not later
than June 15, 1974 ". The subsequent amendments to the basic
ordinance did not in any way invalidate it nor move the date of its
effectivity. To hold otherwise would limit the power of the defunct
Municipal Board of Manila to amend an existing ordinance as
exigencies require.
Petitioners complain that they were not fully apprised of the
enactment of Ordinance No. 7516 for the same was not duly
published in a newspaper of general circulation. Respondents argue
however, that copies of Ordinance No. 7516 and its amendments
were posted in public buildings, government offices, and public places
in lieu of publication in newspaper of general circulation.
We are persuaded that there was substantial compliance of the law
on publication. Section 43 of the Local Tax Code provides two modes
of apprising the public of a new ordinance, either, (a) by means of
publication in a newspaper of general circulation or, (b) by means of
posting of copies thereof in the local legislative hall or premises and
two other conspicuous places within the territorial jurisdiction of the
local government. Respondents, having complied with the second
mode of notice, We are of the opinion that there is no legal infirmity to
the validity of Ordinance No. 7516 as amended.
Finally, petitioner Allied Thread Co., Inc. claims exclusion from
Ordinance No. 7515 as amended on the ground that it does not
maintain an office or branch office in the City of Manila, where the
subject Ordinance only applies. This contention is devoid of merit.
Allied Thread Co., Inc. admits that it does business in the City of
Manila through a broker or agent, Ker & Company, Ltd. Doing
business in the City of Manila is all that is required to fall within the
coverage of the Ordinance.
It should be noted that Ordinance No. 7516 as amended imposes a
business tax on manufacturers, importers or producers doing
business in the City of Manila. The tax imposition here is upon the
performance of an act, enjoyment of a privilege, or the engaging in an
occupation, and hence is in the nature of an excise tax.
The power to levy an excise upon the performance of an act or the
engaging in an occupation does not depend upon the domicile of the
person subject to the excise nor upon the physical location of the
property and in connection with the act or occupation taxed, but
depends upon the place in which the act is performed or occupation
engaged in.
Thus, the gauge for taxability under the said Ordinance No. 7516 as
amended does not depend on the location of the office, but attaches
upon the place where the respective sale transaction(s) is perfected
and consummated. (See Koppel (Phil.) vs. Yatco, 77 Phil. 496 [1946])
Since Allied Thread Co., Inc. sells its products in the City of Manila
through its broker, Ker & Company, Ltd., it cannot escape the tax
liability imposed by Ordinance No. 7516 as amended.
WHEREFORE, the petition is hereby dismissed for lack of merit.
Costs against the petitioners.
SO ORDERED.
Fernando, C.J., Makasiar, Aquino, Concepcion, Jr., Melencio-Herrera,
Plana, Escolin, Gutierrez, Jr., De la Fuente, and Cuevas, JJ., concur.

Teehankee and Relova, JJ., took no part.
SUPREME COURT
Manila
EN BANC
G.R. No. 118233 December 10, 1999
ANTONIO Z. REYES, ELISEO P. OCAMPO and EDITHAARCIAGA-
SANTOS, petitioners,
vs.
COURT OF APPEALS, HON. SECRETARY OF JUSTICE
FRANKLIN DRILON and MAYOR JINGGOY ESTRADA(JOSE
EJERCITO) OF THE MUNICIPALITY OF SAN JUAN, METRO
MANILA, respondents.
R E S O L U T I O N
QUISUMBING, J.:
For review is the decision 1
of the Court of Appeals, dated August 3,
1994 and its resolution 2
dated December 8, 1994 in CA-G.R. SP No.
32473. Said decision dismissed the prohibition case brought by the
petitioner against respondent officials of the Municipality of San Juan
to stop the enforcement of Tax Ordinance Nos. 87, 91, 95, 100 and
101.
The factual antecedents are as follows:
The Sangguniang Bayan of San Juan, Metro Manila implemented
several tax ordinances as follows:
Ordinance No. Title
87 An ordinance imposing a municipal tax of fifty percent (50%) of one
percent (1%) of the gross receipt on business of printing and
publication
91 An ordinance imposing a transfer tax equivalent to fifty percent
(50%) of one percent (1%) of the total consideration on the sale,
donation, barter or any other mode of transferring ownership or title of
real property situated in San Juan, Metro Manila, or its fair market
value, whichever is higher
95 An ordinance imposing fifty percent (50%) of one percent (1%) for
social housing tax on the assessed value of all real estate property in
San Juan, Metro Manila in excess of P50,000.00 value as provided in
the New Urban Land Reform Law, also known as R.A. 7279.
100 An ordinance imposing new rates of business taxes of the
Municipality of San Juan Metro Manila
101 An ordinance levying an annual "Ad Valorem" tax on real property
and an additional tax accruing to the special education fund (SEF)
On May 21, 1993, petitioners 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.
On June 10, 1993, respondent Secretary of Justice dismissed the
appeal for having been filed out of time. Citing Section 187, R.A. No.
7160, he said:
It appears that the tax ordinances in question took
effect on September 24, 1992, in the case of Tax
Ordinance No. 87, until October 22, 1992, in the case
of Tax Ordinance Nos. 91 and 95, and until October
29, 1992, in the case of Tax Ordinance Nos. 100 and
101, or more than thirty (30) days from the effectivity
thereof when the appeal was filed and received by this
Department on May 21, 1993 and therefore not in
accordance with the requirements provided for under
Section 187 of the Local Government Code of 1991.

WHEREFORE, the instant appeal, having been filed
out of time, is hereby DISMISSED. 3
Undaunted, petitioners filed with the Court of Appeals a petition for
certiorari and prohibition (CA-G.R. SP No. 32473). But respondent
court affirmed the decision of the Secretary. On December 8, 1994,
the motion for reconsideration filed by the petitioners was denied for
lack of merit.
Hence, the present petition for review, raising the following questions:
1. Whether or not the questioned tax ordinances are violative of the
Constitution, considering the undisputed fact that no public hearings
were ever held on the ordinances before they were passed and
approved as required by the Local Government Code of 1991, thereby
constituting as they do a deprivation of property without due process;
2. Whether or not the wording of the law under Section 187 of the
Local Government Code of 1991 that "any question on the
constitutionality . . . of tax ordinance . . . may be raised on appeal
within thirty (30) days from the effectivity thereof . . ." is a reductio as
absurdum, since if the tax ordinance is found to be unconstitutional, it
will be considered as never having become effective at all from the
very beginning, for which reason the thirty-day appeal period cannot
be reckoned and cannot be enforced;
3. Whether or not the constitutionality of a tax ordinance, or any law
for that matter, can be questioned at any time despite the prescription
of a limited period within which to question it, as in case at bar; and
4. Whether or not the constitutionality of an ordinance or a law may be
questioned even if the question of constitutionality may not have been
originally or initially raised, or is not the lis mota of the case, if it
appears that a determination of the question of constitutionality is
necessary to a decision of the case.4
In our view, the pertinent issues for our resolution now are:
1. Whether or not the Court of Appeals erred in affirming the decision
of the Secretary of Justice who dismissed the prohibition suit, on the
ground that it was filed out of time?
2. Whether or not lack of mandatory public hearings prior to enacting
Municipal Ordinance Nos. 87, 91, 95, 100 and 101 render them void
on the ground of deprivation of property without due process?
3. Whether or not the constitutional validity of Sec. 187 of the Local
Government Code could be raised for the first time on appeal?
According to petitioners, respondent Secretary erred in declaring that
they failed to file their appeal on time. Also, they assail Municipal
Ordinance Nos. 87, 91, 95, 100 and 101, for alleged failure of the
Municipal Council of San Juan to conduct mandatory public hearings.
Because of this, they claim the ordinances are inoperative, as through
they were never passed. Consequently, no prescriptive thirty-day
period to question the validity of the ordinance could toll to bar their
appeal to the Department of Justice.
Sec. 187 of R.A. 7160, cited by respondent Secretary, provides as
follows:
Sec. 187 — Procedure for Approval and Effectivity of
Tax Ordinances and Revenue Measures; Mandatory
Public Hearings. — The procedure for approval of local
tax ordinances and revenue measures shall be in
accordance with the provisions of this Code: Provided,
That public hearings shall be conducted for the
purpose prior to the enactment thereof: Provided
further, That any question on the constitutionality or
legality of tax ordinances or revenue measures may be
raised on appeal within thirty (30) days from the
effectivity thereof to the Secretary of Justice who shall
render a decision within sixty (60) days from the date of
receipt of the appeal: Provided, however, That such
appeal 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.

Clearly, the law 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 appeals, 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 three 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 functions.5
For
this reason the courts construct these provisions of statutes as
mandatory. 6
A municipal tax ordinance empowers a local government unit to
impose taxes. The power to tax is the most effective instrument to
raise needed revenues to finance and support the myriad activities of
local government units for the delivery of basic services essential to
the promotion of the general welfare and enhancement of peace,
progress, and prosperity of the people. 7
Consequently, any delay in
implementing tax measures would be to the detriment of the public. It
is for this reason that protests over tax ordinances are required to be
done within certain time frames. In the instant case, it is our view that
the failure of petitioners to appeal to the Secretary of Justice within 30
days as required by Sec. 187 of R.A. 7160 is fatal to their cause.
On the second issue, petitioners allege that the Sangguniang Bayan
of San Juan did not comply with the prescribed procedure for enacting
an ordinance because they failed to conduct public hearings.
In Figurres vs. Court of Appeals, 8
where the municipality failed to
conduct public hearings prior to enacting the revisions on the
schedule of fair market values and assessment level of classes of real
estate properties, the Court said:
Petitioner is right in contending that public hearings are
required to be conducted prior to the enactment of an
ordinance imposing real property taxes. R.A. No. 7160,
Sec. 186, provides that an ordinance levying taxes,
fees, or charges "shall not be enacted without any prior
public hearing conducted for the purpose."
However, it is noteworthy that part from her bare
assertions, petitioner Figuerres has not presented any
evidence to show that no public hearings were
conducted prior not the enactment of the ordinances in
question. On the other hand, the Municipality of
Mandaluyong claims the public hearings were indeed
conducted before the subject ordinances were
adopted, although it likewise failed to submit any
evidence to establish this allegation. However, in
accordance with the presumption of validity in favor of
an ordinance, their constitutionality or legality should
be upheld in the absence of evidences showing that
procedure prescribed by law was not observed in their
enactment . . . .
Furthermore, the lack of a public hearings is a negative
allegation essential to petitioner's cause of action in the
present case. Hence, as petitioner is the party
asserting it, she has the burden of proof. Since
petitioner failed to rebut the presumption of validity in
favor of the subject ordinances and to discharge the
burden of proving that no public hearings were
conducted prior to the enactment thereof, we are
constrained to uphold their constitutionality or legality. 9
We find Figuerres instructive. Petitioners 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 Ordinance Nos.
87, 91, 95, 100 and 101. Although the Sanggunian had the control of
records or the better means of proof regarding the facts alleged,
petitioner as not relieved from the burden of proving their averments.
10
Proof that public hearings were not held falls on petitioner'
shoulders. For failing to discharge that burden, their petition was
properly dismissed.
In any event, for the purpose of securing certainty where doubt would
be intolerable, it is a general rules 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. 11
This rules supplements the presumption

in favor of the regularity of official conduct which we have upheld
repeatedly, absent a clear showing to the contrary.
Finally, on the validity of Section 187 of R.A. 7160, the Local
Government Code, we must stress that the constitutionality of an act
of Congress will not be passed upon by the Court unless at the first
opportunity that question is properly raised and presented in an
appropriate case, and is necessary to a determination of the case,
particularly where the issue of constitutionality is the very lis mota
presented. 12
The constitutional validity of a statutory provision should
not be entertained by the Court where it was not specifically raised
below, insisted upon, and adequately argued. 13
Moreover, given the
circumstances in this case, we find no genuine necessity to dwell on
the issue of constitutional invalidity of Section 187 in relation to issue
of valid enactment of the subject ordinances, as shown in the
foregoing discussion. Suffice it now to say that, having resolved the
first and second issues, we find no grave abuse of discretion nor
reversible error in the decision of respondent appellate court. Further
constitutional scrutiny of Section 187 is unwarranted.
WHEREFORE, the present petition is DISMISSED for lack of merit
and the assailed decision of the Court of Appeals is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza,
Panganiban, Purisima, Pardo, Buena, Gonzaga-Reyes, Ynares-
Santiago and De Leon, Jr., JJ., concur.
THE CITY OF MANILA, LIBERTY M.
TOLEDO, in her capacity as THE
TREASURER OF MANILA and
JOSEPH SANTIAGO, in his capacity
as the CHIEF OF THE LICENSE
DIVISION OF CITY OF MANILA,
G.R. No. 181845
Petitioners,
- versus -
COCA-COLA BOTTLERS
PHILIPPINES, INC.,
Respondent.
Present:
August 4, 2009
D E C I S I O N
CHICO-NAZARIO, J.:
This case is a Petition for Review on Certiorari under Rule 45
of the Revised Rules of Civil Procedure seeking to review and reverse
the Decision1[1] dated 18 January 2008 and Resolution2[2] dated 18

February 2008 of the Court of Tax Appeals en banc (CTA en banc) in
C.T.A. EB No. 307. In its assailed Decision, the CTA en banc
dismissed the Petition for Review of herein petitioners City of Manila,
Liberty M. Toledo (Toledo), and Joseph Santiago (Santiago); and
affirmed the Resolutions dated 24 May 2007,3[3] 8 June 2007,4[4]
and 26 July 2007,5[5] of the CTA First Division in C.T.A. AC No. 31,
which, in turn, dismissed the Petition for Review of petitioners in said
case for being filed out of time. In its questioned Resolution, the CTA
en banc denied the Motion for Reconsideration of petitioners.
Petitioner City of Manila is a public corporation empowered to
collect and assess business taxes, revenue fees, and permit fees,
through its officers, petitioners Toledo and Santiago, in their
capacities as City Treasurer and Chief of the Licensing Division,
respectively. On the other hand, respondent Coca-Cola Bottlers
Philippines, Inc. is a corporation engaged in the business of
manufacturing and selling beverages, and which maintains a sales
office in the City of Manila.
The case stemmed from the following facts:
Prior to 25 February 2000, respondent had been paying the
City of Manila local business tax only under Section 14 of Tax
Ordinance No. 7794,6[6] being expressly exempted from the business
tax under Section 21 of the same tax ordinance. Pertinent provisions
of Tax Ordinance No. 7794 provide:
Section 14. – Tax on Manufacturers,
Assemblers and Other Processors. – There is hereby
imposed a graduated tax on manufacturers,
assemblers, repackers, processors, brewers, distillers,
rectifiers, and compounders of liquors, distilled spirits,
and wines or manufacturers of any article of commerce
of whatever kind or nature, in accordance with any of
the following schedule:
x x x x
over P6,500,000.00 up to
P25,000,000.00 - - - - - - - - - - - - - - - - - - - --
P36,000.00 plus 50% of 1%
in
excess of P6,500,000.00
x x x x
Section 21. – Tax on Businesses Subject to the
Excise, Value-Added or Percentage Taxes under the
NIRC. – On any of the following businesses and
articles of commerce subject to excise, value-added or

percentage taxes under the National Internal Revenue
Code hereinafter referred to as NIRC, as amended, a
tax of FIFTY PERCENT (50%) of ONE PERCENT (1%)
per annum on the gross sales or receipts of the
preceding calendar year is hereby imposed:
(A) On persons who sell goods and services
in the course of trade or business; and those who
import goods whether for business or otherwise; as
provided for in Sections 100 to 103 of the NIRC as
administered and determined by the Bureau of Internal
Revenue pursuant to the pertinent provisions of the
said Code.
x x x x
(D) Excisable goods subject to VAT
(1) Distilled spirits
(2) Wines
x x x x
(8) Coal and coke
(9) Fermented liquor, brewers’ wholesale
price, excluding the ad valorem tax
x x x x
PROVIDED, that all registered businesses in
the City of Manila that are already paying the
aforementioned tax shall be exempted from payment
thereof.
Petitioner City of Manila subsequently approved on 25
February 2000, Tax Ordinance No. 7988,7[7] amending certain
sections of Tax Ordinance No. 7794, particularly: (1) Section 14, by
increasing the tax rates applicable to certain establishments operating
within the territorial jurisdiction of the City of Manila; and (2) Section
21, by deleting the proviso found therein, which stated “that all
registered businesses in the City of Manila that are already paying the
aforementioned tax shall be exempted from payment thereof.”
Petitioner City of Manila approved only after a year, on 22 February
2001, another tax ordinance, Tax Ordinance No. 8011, amending Tax
Ordinance No. 7988.
Tax Ordinances No. 7988 and No. 8011 were later declared by
the Court null and void in Coca-Cola Bottlers Philippines, Inc. v. City
of Manila8[8] (Coca-Cola case) for the following reasons: (1) Tax
Ordinance No. 7988 was enacted in contravention of the provisions of
the Local Government Code (LGC) of 1991 and its implementing rules
and regulations; and (2) Tax Ordinance No. 8011 could not cure the
defects of Tax Ordinance No. 7988, which did not legally exist.
However, before the Court could declare Tax Ordinance No.
7988 and Tax Ordinance No. 8011 null and void, petitioner City of
Manila assessed respondent on the basis of Section 21 of Tax
Ordinance No. 7794, as amended by the aforementioned tax

ordinances, for deficiency local business taxes, penalties, and
interest, in the total amount of P18,583,932.04, for the third and fourth
quarters of the year 2000. Respondent filed a protest with petitioner
Toledo on the ground that the said assessment amounted to double
taxation, as respondent was taxed twice, i.e., under Sections 14 and
21 of Tax Ordinance No. 7794, as amended by Tax Ordinances No.
7988 and No. 8011. Petitioner Toledo did not respond to the protest
of respondent.
Consequently, respondent filed with the Regional Trial Court
(RTC) of Manila, Branch 47, an action for the cancellation of the
assessment against respondent for business taxes, which was
docketed as Civil Case No. 03-107088.
On 14 July 2006, the RTC rendered a Decision9[9] dismissing
Civil Case No. 03-107088. The RTC ruled that the business taxes
imposed upon the respondent under Sections 14 and 21 of Tax
Ordinance No. 7988, as amended, were not of the same kind or
character; therefore, there was no double taxation. The RTC, though,
in an Order10[10] dated 16 November 2006, granted the Motion for
Reconsideration of respondent, decreed the cancellation and
withdrawal of the assessment against the latter, and barred petitioners
from further imposing/assessing local business taxes against
respondent under Section 21 of Tax Ordinance No. 7794, as
amended by Tax Ordinance No. 7988 and Tax Ordinance No. 8011.
The 16 November 2006 Decision of the RTC was in conformity with
the ruling of this Court in the Coca-Cola case, in which Tax Ordinance
No. 7988 and Tax Ordinance No. 8011 were declared null and void.
The Motion for Reconsideration of petitioners was denied by the RTC
in an Order11[11] dated 4 April 2007. Petitioners received a copy of
the 4 April 2007 Order of the RTC, denying their Motion for
Reconsideration of the 16 November 2006 Order of the same court,
on 20 April 2007.
On 4 May 2007, petitioners filed with the CTA a Motion for
Extension of Time to File Petition for Review, praying for a 15-day
extension or until 20 May 2007 within which to file their Petition. The
Motion for Extension of petitioners was docketed as C.T.A. AC No.
31, raffled to the CTA First Division.
Again, on 18 May 2007, petitioners filed, through registered
mail, a Second Motion for Extension of Time to File a Petition for
Review, praying for another 10-day extension, or until 30 May 2007,
within which to file their Petition.
On 24 May 2007, however, the CTA First Division already
issued a Resolution dismissing C.T.A. AC No. 31 for failure of
petitioners to timely file their Petition for Review on 20 May 2007.
Unaware of the 24 May 2007 Resolution of the CTA First

Division, petitioners filed their Petition for Review therewith on 30 May
2007 via registered mail. On 8 June 2007, the CTA First Division
issued another Resolution, reiterating the dismissal of the Petition for
Review of petitioners.
Petitioners moved for the reconsideration of the foregoing
Resolutions dated 24 May 2007 and 8 June 2007, but their motion
was denied by the CTA First Division in a Resolution dated 26 July
2007. The CTA First Division reasoned that the Petition for Review of
petitioners was not only filed out of time -- it also failed to comply with
the provisions of Section 4, Rule 5; and Sections 2 and 3, Rule 6, of
the Revised Rules of the CTA.
Petitioners thereafter filed a Petition for Review before the
CTA en banc, docketed as C.T.A. EB No. 307, arguing that the CTA
First Division erred in dismissing their Petition for Review in C.T.A. AC
No. 31 for being filed out of time, without considering the merits of
their Petition.
The CTA en banc rendered its Decision on 18 January 2008,
dismissing the Petition for Review of petitioners and affirming the
Resolutions dated 24 May 2007, 8 June 2007, and 26 July 2007 of the
CTA First Division. The CTA en banc similarly denied the Motion for
Reconsideration of petitioners in a Resolution dated 18 February 2008
Hence, the present Petition, where petitioners raise the
following issues:
I. WHETHER OR NOT PETITIONERS
SUBSTANTIALLY COMPLIED WITH
THE REGLEMENTARY PERIOD TO
TIMELY APPEAL THE CASE FOR
REVIEW BEFORE THE [CTA DIVISION].
II.
II. WHETHER OR NOT THE
RULING OF THIS COURT IN THE EARLIER
[COCA-COLA CASE] IS DOCTRINAL AND
CONTROLLING IN THE INSTANT CASE.
III. WHETHER OR NOT
PETITIONER CITY OF MANILA CAN STILL
ASSESS TAXES UNDER [SECTIONS] 14 AND
21 OF [TAX ORDINANCE NO. 7794, AS
AMENDED].
IV. WHETHER OR NOT THE
ENFORCEMENT OF [SECTION] 21 OF THE
[TAX ORDINANCE NO. 7794, AS AMENDED]
CONSTITUTES DOUBLE TAXATION.
Petitioners assert that Section 1, Rule 712[12] of the Revised
Rules of the CTA refers to certain provisions of the Rules of Court,
such as Rule 42 of the latter, and makes them applicable to the tax
court. Petitioners then cannot be faulted in relying on the provisions
of Section 1, Rule 4213[13] of the Rules of Court as regards the
period for filing a Petition for Review with the CTA in division. Section

1, Rule 42 of the Rules of Court provides for a 15-day period,
reckoned from receipt of the adverse decision of the trial court, within
which to file a Petition for Review with the Court of Appeals. The
same rule allows an additional 15-day period within which to file such
a Petition; and, only for the most compelling reasons, another
extension period not to exceed 15 days. Petitioners received on 20
April 2007 a copy of the 4 April 2007 Order of the RTC, denying their
Motion for Reconsideration of the 16 November 2006 Order of the
same court. On 4 May 2007, believing that they only had 15 days to
file a Petition for Review with the CTA in division, petitioners moved
for a 15-day extension, or until 20 May 2007, within which to file said
Petition. Prior to the lapse of their first extension period, or on 18 May
2007, petitioners again moved for a 10-day extension, or until 30 May
2007, within which to file their Petition for Review. Thus, when
petitioners filed their Petition for Review with the CTA First Division on
30 May 2007, the same was filed well within the reglementary period
for doing so.
Petitioners argue in the alternative that even assuming that
Section 3(a), Rule 814[14] of the Revised Rules of the CTA governs
the period for filing a Petition for Review with the CTA in division, still,
their Petition for Review was filed within the reglementary period.
Petitioners call attention to the fact that prior to the lapse of the 30-day
period for filing a Petition for Review under Section 3(a), Rule 8 of the
Revised Rules of the CTA, they had already moved for a 10-day
extension, or until 30 May 2007, within which to file their Petition.
Petitioners claim that there was sufficient justification in equity for the
grant of the 10-day extension they requested, as the primordial
consideration should be the substantive, and not the procedural,
aspect of the case. Moreover, Section 3(a), Rule 8 of the Revised
Rules of the CTA, is silent as to whether the 30-day period for filing a
Petition for Review with the CTA in division may be extended or not.
Petitioners also contend that the Coca-Cola case is not
determinative of the issues in the present case because the issue of
nullity of Tax Ordinance No. 7988 and Tax Ordinance No. 8011 is not
the lis mota herein. The Coca-Cola case is not doctrinal and cannot
be considered as the law of the case.
Petitioners further insist that notwithstanding the declaration of
nullity of Tax Ordinance No. 7988 and Tax Ordinance No. 8011, Tax
Ordinance No. 7794 remains a valid piece of local legislation. The
nullity of Tax Ordinance No. 7988 and Tax Ordinance No. 8011 does
not effectively bar petitioners from imposing local business taxes upon
respondent under Sections 14 and 21 of Tax Ordinance No. 7794, as
they were read prior to their being amended by the foregoing null and
void tax ordinances.
Petitioners finally maintain that imposing upon respondent
local business taxes under both Sections 14 and 21 of Tax Ordinance
No. 7794 does not constitute direct double taxation. Section 143 of
the LGC gives municipal, as well as city governments, the power to
impose business taxes, to wit:
SECTION 143. Tax on Business. – The
municipality may impose taxes on the following
businesses:

(a) On manufacturers, assemblers,
repackers, processors, brewers, distillers, rectifiers,
and compounders of liquors, distilled spirits, and wines
or manufacturers of any article of commerce of
whatever kind or nature, in accordance with the
following schedule:
x x x x
(b) On wholesalers, distributors, or dealers
in any article of commerce of whatever kind or nature
in accordance with the following schedule:
x x x x
(c) On exporters, and on manufacturers,
millers, producers, wholesalers, distributors, dealers or
retailers of essential commodities enumerated
hereunder at a rate not exceeding one-half (1/2) of the
rates prescribed under subsections (a), (b) and (d) of
this Section:
x x x x
Provided, however, That barangays shall have
the exclusive power to levy taxes, as provided under
Section 152 hereof, on gross sales or receipts of the
preceding calendar year of Fifty thousand pesos
(P50,000.00) or less, in the case of cities, and Thirty
thousand pesos (P30,000) or less, in the case of
municipalities.
(e) On contractors and other independent
contractors, in accordance with the following schedule:
x x x x
(f) On banks and other financial
institutions, at a rate not exceeding fifty percent (50%)
of one percent (1%) on the gross receipts of the
preceding calendar year derived from interest,
commissions and discounts from lending activities,
income from financial leasing, dividends, rentals on
property and profit from exchange or sale of property,
insurance premium.
(g) On peddlers engaged in the sale of any
merchandise or article of commerce, at a rate not
exceeding Fifty pesos (P50.00) per peddler annually.
(h) On any business, not otherwise
specified in the preceding paragraphs, which the
sanggunian concerned may deem proper to tax:
Provided, That on any business subject to the excise,
value-added or percentage tax under the National
Internal Revenue Code, as amended, the rate of tax
shall not exceed two percent (2%) of gross sales or
receipts of the preceding calendar year.
Section 14 of Tax Ordinance No. 7794 imposes local business
tax on manufacturers, etc. of liquors, distilled spirits, wines, and any
other article of commerce, pursuant to Section 143(a) of the LGC. On
the other hand, the local business tax under Section 21 of Tax
Ordinance No. 7794 is imposed upon persons selling goods and
services in the course of trade or business, and those importing goods
for business or otherwise, who, pursuant to Section 143(h) of the
LGC, are subject to excise tax, value-added tax (VAT), or percentage
tax under the National Internal Revenue Code (NIRC). Thus, there
can be no double taxation when respondent is being taxed under both
Sections 14 and 21 of Tax Ordinance No. 7794, for under the first, it is
being taxed as a manufacturer; while under the second, it is being
taxed as a person selling goods in the course of trade or business
subject to excise, VAT, or percentage tax.
The Court first addresses the issue raised by petitioners

concerning the period within which to file with the CTA a Petition for
Review from an adverse decision or ruling of the RTC.
The period to appeal the decision or ruling of the RTC to the
CTA via a Petition for Review is specifically governed by Section 11 of
Republic Act No. 9282,15[15] and Section 3(a), Rule 8 of the Revised
Rules of the CTA.
Section 11 of Republic Act No. 9282 provides:
SEC. 11. Who May Appeal; Mode of Appeal;
Effect of Appeal. – Any party adversely affected by a
decision, ruling or inaction of the Commissioner of
Internal Revenue, the Commissioner of Customs, the
Secretary of Finance, the Secretary of Trade and
Industry or the Secretary of Agriculture or the Central
Board of Assessment Appeals or the Regional Trial
Courts may file an Appeal with the CTA within thirty
(30) days after the receipt of such decision or ruling or
after the expiration of the period fixed by law for action
as referred to in Section 7(a)(2) herein.
Appeal shall be made by filing a petition for
review under a procedure analogous to that
provided for under Rule 42 of the 1997 Rules of
Civil Procedure with the CTA within thirty (30) days
from the receipt of the decision or ruling or in the case
of inaction as herein provided, from the expiration of
the period fixed by law to act thereon. x x x. (Emphasis
supplied.)
Section 3(a), Rule 8 of the Revised Rules of the CTA
states
SEC 3. Who may appeal; period to file petition.
– (a) A party adversely affected by a decision, ruling or
the inaction of the Commissioner of Internal Revenue
on disputed assessments or claims for refund of
internal revenue taxes, or by a decision or ruling of the
Commissioner of Customs, the Secretary of Finance,
the Secretary of Trade and Industry, the Secretary of
Agriculture, or a Regional Trial Court in the exercise
of its original jurisdiction may appeal to the Court by
petition for review filed within thirty days after receipt
of a copy of such decision or ruling, or expiration of the
period fixed by law for the Commissioner of Internal
Revenue to act on the disputed assessments. x x x.
(Emphasis supplied.)
It is crystal clear from the afore-quoted provisions that to
appeal an adverse decision or ruling of the RTC to the CTA, the
taxpayer must file a Petition for Review with the CTA within 30 days
from receipt of said adverse decision or ruling of the RTC.
It is also true that the same provisions are silent as to whether
such 30-day period can be extended or not. However, Section 11 of
Republic Act No. 9282 does state that the Petition for Review shall be
filed with the CTA following the procedure analogous to Rule 42 of
the Revised Rules of Civil Procedure. Section 1, Rule 4216[16] of
the Revised Rules of Civil Procedure provides that the Petition for
Review of an adverse judgment or final order of the RTC must be filed
with the Court of Appeals within: (1) the original 15-day period from

receipt of the judgment or final order to be appealed; (2) an extended
period of 15 days from the lapse of the original period; and (3) only for
the most compelling reasons, another extended period not to
exceed 15 days from the lapse of the first extended period.
Following by analogy Section 1, Rule 42 of the Revised Rules
of Civil Procedure, the 30-day original period for filing a Petition for
Review with the CTA under Section 11 of Republic Act No. 9282, as
implemented by Section 3(a), Rule 8 of the Revised Rules of the CTA,
may be extended for a period of 15 days. No further extension shall
be allowed thereafter, except only for the most compelling reasons, in
which case the extended period shall not exceed 15 days.
Even the CTA en banc, in its Decision dated 18 January 2008,
recognizes that the 30-day period within which to file the Petition for
Review with the CTA may, indeed, be extended, thus:
Being suppletory to R.A. 9282, the 1997 Rules
of Civil Procedure allow an additional period of fifteen
(15) days for the movant to file a Petition for Review,
upon Motion, and payment of the full amount of the
docket fees. A further extension of fifteen (15) days
may be granted on compelling reasons in accordance
with the provision of Section 1, Rule 42 of the 1997
Rules of Civil Procedure x x x.17[17]
In this case, the CTA First Division did indeed err in finding
that petitioners failed to file their Petition for Review in C.T.A. AC No.
31 within the reglementary period.
From 20 April 2007, the date petitioners received a copy of
the 4 April 2007 Order of the RTC, denying their Motion for
Reconsideration of the 16 November 2006 Order, petitioners had 30
days, or until 20 May 2007, within which to file their Petition for
Review with the CTA. Hence, the Motion for Extension filed by
petitioners on 4 May 2007 – grounded on their belief that the
reglementary period for filing their Petition for Review with the CTA
was to expire on 5 May 2007, thus, compelling them to seek an
extension of 15 days, or until 20 May 2007, to file said Petition – was
unnecessary and superfluous. Even without said Motion for
Extension, petitioners could file their Petition for Review until 20 May
2007, as it was still within the 30-day reglementary period provided for
under Section 11 of Republic Act No. 9282; and implemented by
Section 3(a), Rule 8 of the Revised Rules of the CTA.
The Motion for Extension filed by the petitioners on 18 May
2007, prior to the lapse of the 30-day reglementary period on 20 May
2007, in which they prayed for another extended period of 10 days, or
until 30 May 2007, to file their Petition for Review was, in reality, only
the first Motion for Extension of petitioners. The CTA First Division
should have granted the same, as it was sanctioned by the rules of
procedure. In fact, petitioners were only praying for a 10-day
extension, five days less than the 15-day extended period allowed by
the rules. Thus, when petitioners filed via registered mail their Petition
for Review in C.T.A. AC No. 31 on 30 May 2007, they were able to

comply with the reglementary period for filing such a petition.
Nevertheless, there were other reasons for which the CTA
First Division dismissed the Petition for Review of petitioners in C.T.A.
AC No. 31; i.e., petitioners failed to conform to Section 4 of Rule 5,
and Section 2 of Rule 6 of the Revised Rules of the CTA. The Court
sustains the CTA First Division in this regard.
Section 4, Rule 5 of the Revised Rules of the CTA requires
that:
SEC. 4. Number of copies. – The parties shall
file eleven signed copies of every paper for cases
before the Court en banc and six signed copies for
cases before a Division of the Court in addition to
the signed original copy, except as otherwise
directed by the Court. Papers to be filed in more than
one case shall include one additional copy for each
additional case. (Emphasis supplied.)
Section 2, Rule 6 of the Revised Rules of the CTA further
necessitates that:
SEC. 2. Petition for review; contents. – The
petition for review shall contain allegations showing the
jurisdiction of the Court, a concise statement of the
complete facts and a summary statement of the issues
involved in the case, as well as the reasons relied upon
for the review of the challenged decision. The petition
shall be verified and must contain a certification against
forum shopping as provided in Section 3, Rule 46 of
the Rules of Court. A clearly legible duplicate
original or certified true copy of the decision
appealed from shall be attached to the petition.
The aforesaid provisions should be read in conjunction with
Section 1, Rule 7 of the Revised Rules of the CTA, which provides:
SECTION 1. Applicability of the Rules of Court
on procedure in the Court of Appeals, exception. – The
procedure in the Court en banc or in Divisions in
original or in appealed cases shall be the same as
those in petitions for review and appeals before the
Court of Appeals pursuant to the applicable provisions
of Rules 42, 43, 44, and 46 of the Rules of Court,
except as otherwise provided for in these Rules.
As found by the CTA First Division and affirmed by the CTA en
banc, the Petition for Review filed by petitioners via registered mail on
30 May 2007 consisted only of one copy and all the attachments
thereto, including the Decision dated 14 July 2006; and that the
assailed Orders dated 16 November 2006 and 4 April 2007 of the
RTC in Civil Case No. 03-107088 were mere machine copies.
Evidently, petitioners did not comply at all with the requirements set
forth under Section 4, Rule 5; or with Section 2, Rule 6 of the Revised
Rules of the CTA. Although the Revised Rules of the CTA do not
provide for the consequence of such non-compliance, Section 3, Rule
42 of the Rules of Court may be applied suppletorily, as allowed by
Section 1, Rule 7 of the Revised Rules of the CTA. Section 3, Rule

42 of the Rules of Court reads:
SEC. 3. Effect of failure to comply with
requirements. – The failure of the petitioner to comply
with any of the foregoing requirements regarding the
payment of the docket and other lawful fees, the
deposit for costs, proof of service of the petition, and
the contents of and the documents which should
accompany the petition shall be sufficient ground for
the dismissal thereof. (Emphasis supplied.)
True, petitioners subsequently submitted certified copies of the
Decision dated 14 July 2006 and assailed Orders dated 16 November
2006 and 4 April 2007 of the RTC in Civil Case No. 03-107088, but a
closer examination of the stamp on said documents reveals that they
were prepared and certified only on 14 August 2007, about two
months and a half after the filing of the Petition for Review by
petitioners.
Petitioners never offered an explanation for their non-
compliance with Section 4 of Rule 5, and Section 2 of Rule 6 of the
Revised Rules of the CTA. Hence, although the Court had, in
previous instances, relaxed the application of rules of procedure, it
cannot do so in this case for lack of any justification.
Even assuming arguendo that the Petition for Review of
petitioners in C.T.A. AC No. 31 should have been given due course by
the CTA First Division, it is still dismissible for lack of merit.
Contrary to the assertions of petitioners, the Coca-Cola case is
indeed applicable to the instant case. The pivotal issue raised therein
was whether Tax Ordinance No. 7988 and Tax Ordinance No. 8011
were null and void, which this Court resolved in the affirmative. Tax
Ordinance No. 7988 was declared by the Secretary of the Department
of Justice (DOJ) as null and void and without legal effect due to the
failure of herein petitioner City of Manila to satisfy the requirement
under the law that said ordinance be published for three consecutive
days. Petitioner City of Manila never appealed said declaration of the
DOJ Secretary; thus, it attained finality after the lapse of the period for
appeal of the same. The passage of Tax Ordinance No. 8011,
amending Tax Ordinance No. 7988, did not cure the defects of the
latter, which, in any way, did not legally exist.
By virtue of the Coca-Cola case, Tax Ordinance No. 7988 and
Tax Ordinance No. 8011 are null and void and without any legal
effect. Therefore, respondent cannot be taxed and assessed under
the amendatory laws--Tax Ordinance No. 7988 and Tax Ordinance
No. 8011.
Petitioners insist that even with the declaration of nullity of
Tax Ordinance No. 7988 and Tax Ordinance No. 8011, respondent
could still be made liable for local business taxes under both Sections
14 and 21 of Tax Ordinance No. 7944 as they were originally read,
without the amendment by the null and void tax ordinances.
Emphasis must be given to the fact that prior to the passage of

Tax Ordinance No. 7988 and Tax Ordinance No. 8011 by petitioner
City of Manila, petitioners subjected and assessed respondent only for
the local business tax under Section 14 of Tax Ordinance No. 7794,
but never under Section 21 of the same. This was due to the clear
and unambiguous proviso in Section 21 of Tax Ordinance No. 7794,
which stated that “all registered business in the City of Manila that are
already paying the aforementioned tax shall be exempted from
payment thereof.” The “aforementioned tax” referred to in said
proviso refers to local business tax. Stated differently, Section 21 of
Tax Ordinance No. 7794 exempts from the payment of the local
business tax imposed by said section, businesses that are already
paying such tax under other sections of the same tax ordinance. The
said proviso, however, was deleted from Section 21 of Tax Ordinance
No. 7794 by Tax Ordinances No. 7988 and No. 8011. Following this
deletion, petitioners began assessing respondent for the local
business tax under Section 21 of Tax Ordinance No. 7794, as
amended.
The Court easily infers from the foregoing circumstances that
petitioners themselves believed that prior to Tax Ordinance No. 7988
and Tax Ordinance No. 8011, respondent was exempt from the local
business tax under Section 21 of Tax Ordinance No. 7794. Hence,
petitioners had to wait for the deletion of the exempting proviso in
Section 21 of Tax Ordinance No. 7794 by Tax Ordinance No. 7988
and Tax Ordinance No. 8011 before they assessed respondent for the
local business tax under said section. Yet, with the pronouncement
by this Court in the Coca-Cola case that Tax Ordinance No. 7988 and
Tax Ordinance No. 8011 were null and void and without legal effect,
then Section 21 of Tax Ordinance No. 7794, as it has been previously
worded, with its exempting proviso, is back in effect. Accordingly,
respondent should not have been subjected to the local business tax
under Section 21 of Tax Ordinance No. 7794 for the third and fourth
quarters of 2000, given its exemption therefrom since it was already
paying the local business tax under Section 14 of the same ordinance.
Petitioners obstinately ignore the exempting proviso in Section
21 of Tax Ordinance No. 7794, to their own detriment. Said
exempting proviso was precisely included in said section so as to
avoid double taxation.
Double taxation means taxing the same property twice when it
should be taxed only once; that is, “taxing the same person twice by
the same jurisdiction for the same thing.” It is obnoxious when the
taxpayer is taxed twice, when it should be but once. Otherwise
described as “direct duplicate taxation,” the two taxes must be
imposed on the same subject matter, for the same purpose, by the
same taxing authority, within the same jurisdiction, during the
same taxing period; and the taxes must be of the same kind or
character.18[18]

Using the aforementioned test, the Court finds that there is
indeed double taxation if respondent is subjected to the taxes under
both Sections 14 and 21 of Tax Ordinance No. 7794, since these are
being imposed: (1) on the same subject matter – the privilege of doing
business in the City of Manila; (2) for the same purpose – to make
persons conducting business within the City of Manila contribute to
city revenues; (3) by the same taxing authority – petitioner City of
Manila; (4) within the same taxing jurisdiction – within the territorial
jurisdiction of the City of Manila; (5) for the same taxing periods – per
calendar year; and (6) of the same kind or character – a local
business tax imposed on gross sales or receipts of the business.
The distinction petitioners attempt to make between the taxes
under Sections 14 and 21 of Tax Ordinance No. 7794 is specious.
The Court revisits Section 143 of the LGC, the very source of the
power of municipalities and cities to impose a local business tax, and
to which any local business tax imposed by petitioner City of Manila
must conform. It is apparent from a perusal thereof that when a
municipality or city has already imposed a business tax on
manufacturers, etc. of liquors, distilled spirits, wines, and any other
article of commerce, pursuant to Section 143(a) of the LGC, said
municipality or city may no longer subject the same manufacturers,
etc. to a business tax under Section 143(h) of the same Code.
Section 143(h) may be imposed only on businesses that are subject
to excise tax, VAT, or percentage tax under the NIRC, and that are
“not otherwise specified in preceding paragraphs.” In the same
way, businesses such as respondent’s, already subject to a local
business tax under Section 14 of Tax Ordinance No. 7794 [which is
based on Section 143(a) of the LGC], can no longer be made liable
for local business tax under Section 21 of the same Tax Ordinance
[which is based on Section 143(h) of the LGC].
WHEREFORE, premises considered, the instant Petition for
Review on Certiorari is hereby DENIED. No costs. SO ORDERED.
FIRST DIVISION
[G.R. No. 135337. October 19, 2000]
THE CITY OF OLONGAPO, petitioner, vs. THE STALLHOLDERS OF
THE EAST BAJAC-BAJAC PUBLIC MARKET OF OLONGAPO CITY,
, respondents.
D E C I S I O N
KAPUNAN, J.:
On June 30, 1993, the Olongapo City Council enacted Ordinance No.
14 (Series of 1993), fixing the monthly rental fees for the different
stalls in the new public market. Respondents questioned the validity of
said ordinance by filing an appeal to the Secretary of Justice. The
appeal was made pursuant to Section 187 of the Local Government
Code,i[1] which states:
SEC. 187. Procedure for Approval and Effectivity of Tax Ordinances
and Revenue Measures; Mandatory Public Hearings. - The procedure
for approval of local tax ordinances and revenue measures shall be in
accordance with the provisions of this Code: Provided, That public
hearings shall be conducted for the purpose prior to the enactment
thereof: Provided, further, That any question on the constitutionality or
legality of tax ordinances or revenue measures may be raised on
appeal within thirty (30) days from the effectivity thereof to the
Secretary of Justice who shall render a decision within sixty (60) days
from the date of receipt of the appeal: Provided, however, That such
appeal shall not have the effect of suspending the effectivity of the

ordinance and the accrual and payment of the tax, fee, or charge
levied therein: Provided, finally, That within thirty (30) days after
receipt of the decision or the lapse of the sixty-day period without the
Secretary of Justice acting upon the appeal, the aggrieved party may
file appropriate proceedings with a court of competent jurisdiction.
(Underscoring supplied.)
As grounds for their appeal, respondents alleged that the ordinance:
(1) violated Sections 130ii[2] and 186iii[3] of the Local Government
Code as the rates fixed therein are unjust, excessive, oppressive,
confiscatory, not equitable, not based as far as practicable on the
market vendors' ability to pay, and contrary to declared national
policy; (2) was sought to be implemented despite lack of publication;
and (3) did not comply with "the essence and spirit of the public
hearings."iv[4]
In a Resolution dated September 29, 1993, the Secretary of Justice
upheld the validity of Ordinance No. 14 (Series of 1993).
Respondents moved for a reconsideration of the Justice Secretary's
Resolution. The Secretary of Justice, however, refrained from taking
action on respondents' motion for reconsideration apparently in view
of the pendency of a casev[5] filed in this Court questioning the
validity of said Section 187. In a Letter dated November 23, 1993 and
addressed to counsel for respondents, Chief State Counsel Elmer T.
Bautista wrote:
With reference to your Motion for Reconsideration on the Resolution
of this Office dated September 29, 1993, upholding the
constitutionality and legality of Ordinance No. 14, s. 1993 of the City
of Olongapo, please be informed that in view of the adverse ruling of
the Regional Trial Court of Manila (Branch 33) dated October 26,
1993, and pending final determination by the Supreme Court on the
constitutionality of Section 187 of Republic Act No. 7160 (Local
Government Code of 1991), the Secretary of Justice deemed it
appropriate to refrain from taking action thereon in the meantime.
Per the Secretary's Memorandum dated November 5, 1993, copy
attached, you are, however, advised to file your appeal with the court
of competent jurisdiction.vi[6]
The contents of the "Secretary's Memorandum" referred to in the
above letter is reproduced below:
In view of the adverse ruling of the Regional Trial Court of Manila
(Branch 33) dated October 26, 1993, and pending final determination
by the Supreme Court of the constitutionality of Section 187 of
Republic Act No. 7160 (Local Government Code of 1991) which
empowers the Secretary of Justice to pass upon on appeal, the
legality and/or constitutionality of tax ordinances or revenue measures
adopted by local government units, you are hereby directed to refrain
from taking action on and/or accepting petitions/appeals filed in
accordance with said legal mandate, and inform the appellants thereto
to file their appeal directly with the courts.vii[7]
On December 22, 1993, respondents filed before the Regional Trial
Court (RTC) of Olongapo City an "action to declare void Olongapo
City Ordinance No. 14, s. of 1992 and for writ of prohibition."
The City of Olongapo moved for the dismissal of the petition on the
ground that it did not state a cause of action. The RTC, however, held
in abeyance the resolution of this motion until after trial on the merits
shall have been terminated, the ground relied upon by the City being
"not indubitable."viii[8]
At the pre-trial, the parties agreed to limit themselves to the following
issues: (1) whether the ordinance was void; and (2) whether the
proposed fees are equitable, justifiable and affordable.ix[9]
Thereafter, the City of Olongapo filed a Motion for Summary
Judgment. Finding there were no genuine issues as to any material
fact, the RTC granted the motion in an Order dated October 20, 1995.
On January 30, 1996, the RTC, without trial, rendered a decision
sustaining the validity of Ordinance No. 14 (Series of 1993). The
dispositive portion of the decision reads:
WHEREFORE, and the foregoing premises considered, the legality or
constitutionality of Ordinance No. 14, Series of 1993, enacted by the
City Council of Olongapo City on June 30, 1993 and which took effect
on July 7, 1993, is UPHELD.
The Complaint is DISMISSED.

SO ORDERED.x[10]
Respondents appealed to the Court of Appeals, assigning the
following errors:
(A.) THE LOWER COURT COMMITTED GRAVE AND
REVERSIBLE ERROR IN DECIDING THE CASE ON
SUMMARY JUDGMENT UNDER RULE 34 OF THE
RULES OF COURT.
(B.) THE LOWER COURT DID NOT ACCORD DUE
PROCESS TO THE APPELLANTS.
(C.) THE DECISION IS NOT JUSTIFIED BY THE
EVIDENCE.xi[11]
In its Decision dated August 31, 1998, the Court of Appeals held that
the issue of the ordinance's publication did not require any trial and
that the City had complied with the requirements of publication. It
declared:
As to the issue [of] whether or not the enactment of Ordinance No. 14,
Series of 1993 is void insofar as the procedural requirements of the
Local Government Code or R.A. 7160 on the approval of revenue
measures under Rules 187 and 188 thereof is concerned, we find that
the trial court did not err in finding that no genuine triable issue exists
that requires trial on the merits.
Exhibits "4", "4-A", "5", "6", "7", "8", "9" and "10" attached to the
Answer undisputedly show that proper publication, posting in public
places, and public hearings were complied with in accordance with
the requirements of the Local Government Code of 1991. We find no
genuine triable issue on this matter and therefore the trial court
committed no reversible error in rendering summary judgment
thereon. We agree with the RTC that the procedural requirements
have been met by the City Council of defendant Olongapo City in the
enactment of the subject ordinance. There were publications, posting
and public hearings as shown by the aforementioned exhibits of
defendants. The fact that appellants' views were not considered by
the City Council does not render the enactment of the ordinance
invalid.xii[12]
However, as regards the question of whether the market rental rates
were unjust, excessive, confiscatory and inequitable, the Court of
Appeals held that the same was a factual issue that required the
presentation of evidence. Consequently, it remanded the case to the
RTC for trial on this issue.
Aggrieved by the decision of the Court of Appeals, the City of
Olongapo brought the instant petition for review.
The nature of the proceedings conducted before the RTC is at issue
in this case.
Petitioner City of Olongapo submits that the RTC merely reviewed the
decision of the Secretary of Justice upholding the validity of
Ordinance No. 14 (Series of 1993). As such, the review by the RTC
was confined to the evidence presented in the administrative
proceedings. Petitioner, citing the cases of Santos vs.
Morenoxiii[13]and Taleon vs. Secretary of Public Works and
Communications,xiv[14] argues that evidence not presented before
the Secretary of Justice should not be admitted and considered by the
reviewing court. The RTC's function, according to petitioner, is limited
to determining whether there is evidence in the administrative record
substantial enough to support the findings therein; hence, the CA
erred in ordering the remand of the case for trial.
Respondents, on the other hand, contend that the petition filed in the
RTC was an original action. The Court of Appeals agreed with
respondents, holding that, based on the allegations of the complaint,
the case brought by respondents was an original case.
We find no error in this ruling for it is elementary that the nature of the
action is determined by the allegations of the complaint or
petition.xv[15] Respondents explicitly alleged in their petition that:
1. This is a petition to declare void the rates for market stalls at the
Pag-asa Public Market imposed under Ordinance No. 14 s. of 1992 of
the City of Olongapo for being unjust, excessive, oppressive,
confiscatory, and, contrary to declared national policy.xvi[16]
The petition alleged the same grounds for declaring the ordinance
void as those raised in the appeal to the Secretary of Justice, thus:

III. Grounds For Voiding Ordinance No. 46 s. of 1992
9. Ordinance No. 14, s. of 1993 violates Section 130, and, 186 of the
Local Government Code of 1991, because the rates therein fixed are
unjust, excessive, oppressive, confiscatory, not equitable and based
as far as practicable on the market vendors['] ability to pay, and,
contrary to declared national policy.
10. Ordinance No. 14, s. of 1993 is sought to be implemented already,
yet, as far as known to the appellants, it has not yet been published in
full for three (3) consecutive days in a newspaper of local circulation.
11. The essence and spirit of the public hearing was not complied
with.xvii[17]
Consider, too, the circumstances under which respondents sought
relief from the RTC. Perhaps doubting his jurisdiction to entertain
respondents' appeal as a result of the filing of Drilon vs. Lim, supra,
the Justice Secretary issued a Memorandum directing the Chief State
Counsel to refrain from acting on or accepting appeals filed under
Section 187 of the Local Government Code and to "inform the
appellants (herein petitioners) to file their appeal directly with the
courts." The Chief State Counsel, complying with the Memorandum,
advised in his letter to respondents to "file their appeal with the court
of competent jurisdiction," the "appeal" referring to an action to
question the validity of the subject ordinance. The Memorandum and
the accompanying letter thus amounted to an abdication by the
Secretary of Justice of his jurisdiction over the appeal, as conferred by
Section 187.
Accordingly, the action before the RTC cannot be deemed to be
anything but an original action, and the function of the trial court
cannot be limited to reviewing the evidence adduced before the
Secretary of Justice.
Nevertheless, petitioner maintains that trial is unnecessary in any
case because all the court had to do was determine whether the rates
fixed in the assailed ordinance conform to Department of Interior and
Local Government Memorandum Circular No. 93-63, specifically the
provision limiting the return of investment to 12 to 15% and that
requiring a cost recovery scheme. Presumably, this determination can
be made, as both the Secretary of Justice and the RTC did, by a mere
examination of the documents submitted by petitioner.
However, it is precisely the accuracy of these documents that
respondents are disputing. Consequently, respondents may examine
the officials who executed said documents. They may present their
own evidence, both documentary and testimonial, to prove that the
figures in the documents are inaccurate. All these require a trial so
that the parties may properly ventilate their respective causes. Thus,
the CA correctly ruled that:
The lower court based its conclusion that the market rates are just
and equitable in accordance with the Local Government Code on the
affidavits of one Loreto P. Azores, the City Treasurer of defendant and
member of the Local Finance Committee (p. 204, Original Records);
and Johnny B. Choa, City Budget Officer of defendant and the Officer
in Charge of the City Accountant's Office as well as a member of the
Local Finance Committee (p. 207, id.). In view of the complaint of
plaintiffs-appellants as to the equitableness, justifiability and
affordability of the market rates imposed, it behooved the trial court to
conduct trial on the merits which would involve, among others, the
cross-examination of said affiants so as to determine whether or not
the computation of the Local Finance Committee is based on facts or
mere estimates. Fundamental issues as to the details concerning the
issue of expenditures in constructing a public market place; the claim
of plaintiffs-appellants that the construction of the new public market
came from the Mt. Pinatubo Calamity Fund, at no cost to the City (p.
20, Brief for the Plaintiffs-Appellants); the actual cost of operations
and basis of computed revenue; the validity of the schedule of
personal services; the actual maintenance and operating expenses,
and others, that would be necessary in the determination of the
justness of the market rates, would require trial on the merits if proper
judgment is to be resolved by the court a quo.xviii[18]
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ.,
concur.

SUPREME COURT
SECOND DIVISION
G.R. No. 154993 October 25, 2005
LUZ R. YAMANE, in her capacity as the CITY TREASURER OF
MAKATI CITY, Petitioner,
vs.
BA LEPANTO CONDOMINUM CORPORATION, Respondent.
D E C I S I O N
Tinga, J.:
Petitioner City Treasurer of Makati, Luz Yamane (City Treasurer),
presents for resolution of this Court two novel questions: one
procedural, the other substantive, yet both of obvious significance.
The first pertains to the proper mode of judicial review undertaken
from decisions of the regional trial courts resolving the denial of tax
protests made by local government treasurers, pursuant to the Local
Government Code. The second is whether a local government unit
can, under the Local Government Code, impel a condominium
corporation to pay business taxes.1
While we agree with the City Treasurer’s position on the first issue,
there ultimately is sufficient justification for the Court to overlook what
is essentially a procedural error. We uphold respondents on the
second issue. Indeed, there are disturbing aspects in both procedure
and substance that attend the attempts by the City of Makati to flex its
taxing muscle. Considering that the tax imposition now in question
has utterly no basis in law, judicial relief is imperative. There are fewer
indisputable causes for the exercise of judicial review over the
exercise of the taxing power than when the tax is based on whim, and
not on law.
The facts, as culled from the record, follow.
Respondent BA-Lepanto Condominium Corporation (the
"Corporation") is a duly organized condominium corporation
constituted in accordance with the Condominium Act,2
which owns
and holds title to the common and limited common areas of the BA-
Lepanto Condominium (the "Condominium"), situated in Paseo de
Roxas, Makati City. Its membership comprises the various unit
owners of the Condominium. The Corporation is authorized, under
Article V of its Amended By-Laws, to collect 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.
On 15 December 1998, the Corporation received a Notice of
Assessment dated 14 December 1998 signed by the City Treasurer.
The Notice of Assessment stated that the Corporation is "liable to pay
the correct city business taxes, fees and charges," computed as
totaling P1,601,013.77 for the years 1995 to 1997.3
The Notice of
Assessment was silent as to the statutory basis of the business taxes
assessed.
Through counsel, the Corporation responded with a written tax protest
dated 12 February 1999, addressed to the City Treasurer. It was
evident in the protest that the Corporation was perplexed on the
statutory basis of the tax assessment.
With due respect, we submit that the Assessment has no basis as the
Corporation is not liable for business taxes and surcharges and
interest thereon, under the Makati [Revenue] Code or even under the
[Local Government] Code.
The Makati [Revenue] Code and the [Local Government] Code do not
contain any provisions on which the Assessment could be based. One
might argue that Sec. 3A.02(m) of the Makati [Revenue] Code
imposes business tax on owners or operators of any business not
specified in the said code. We submit, however, that this is not
applicable to the Corporation as the Corporation is not an owner or
operator of any business in the contemplation of the Makati [Revenue]
Code and even the [Local Government] Code.4
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 Local Government
Code, "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 the Corporation, 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.5
The protest was rejected by the City Treasurer in a letter dated 4
March 1999. She insisted that the collection of dues from the unit
owners was effected primarily "to sustain and maintain the expenses
of the common areas, with the end in view [sic] of getting full
appreciative living values [sic] for the individual condominium
occupants and to command better marketable [sic] prices for those
occupants" who would in the future sell their respective units.6
Thus,
she concluded since the "chances of getting higher prices for well-
managed common areas of any condominium are better and more
effective that condominiums with poor [sic] managed common areas,"
the corporation activity "is a profit venture making [sic]".7
From the denial of the protest, the Corporation filed an Appeal with
the Regional Trial Court (RTC) of Makati.8
On 1 March 2000, the
Makati RTC Branch 57 rendered a Decision9
dismissing the appeal for
lack of merit. Accepting the premise laid by the City Treasurer, the
RTC acknowledged, in sadly risible language:
Herein appellant, to defray the improvements and beautification of the
common areas, collect [sic] assessments from its members. Its end
view is to get appreciate living rules for the unit owners [sic], to give
an impression to outsides [sic] of the quality of service the
condominium offers, so as to allow present owners to command better
prices in the event of sale.10
With this, the RTC concluded that the activities of the Corporation fell
squarely under the definition of "business" under Section 13(b) of the
Local Government Code, and thus subject to local business
taxation.11
From this Decision of the RTC, the Corporation filed a Petition for
Review under Rule 42 of the Rules of Civil Procedure with the Court
of Appeals. Initially, the petition was dismissed outright12
on the
ground that only decisions of the RTC brought on appeal from a first
level court could be elevated for review under the mode of review
prescribed under Rule 42.13
However, the Corporation pointed out in
its Motion for Reconsideration that under Section 195 of the Local
Government Code, the remedy of the taxpayer on the denial of the
protest filed with the local treasurer is to appeal the denial with the
court of competent jurisdiction.14
Persuaded by this contention, the
Court of Appeals reinstated the petition.15
On 7 June 2002, the Court of Appeals Special Sixteenth Division
rendered the Decision16
now assailed before this Court. The appellate
court reversed the RTC and declared that the Corporation was not
liable to pay business taxes to the City of Makati.17
In doing so, the
Court of Appeals delved into jurisprudential definitions of profit,18
and
concluded that the Corporation was not engaged in profit. For one, it
was held that the very statutory concept of a condominium corporation
showed that it was not a juridical entity intended to make profit, as its
sole purpose was to hold title to the common areas in the
condominium and to maintain the condominium.19
The Court of Appeals likewise cited provisions from the Corporation’s
Amended Articles of Incorporation and Amended By-Laws that, to its
estimation, established that the Corporation was not engaged in
business and the assessment collected from unit owners limited to
those necessary to defray the expenses in the maintenance of the
common areas and management the condominium.20
Upon denial of her Motion for Reconsideration,21
the City Treasurer
elevated the present Petition for Review under Rule 45. It is argued
that the Corporation is engaged in business, for the dues collected
from the different unit owners is utilized towards the beautification and
maintenance of the Condominium, resulting in "full appreciative living
values" for the condominium units which would command better
market prices should they be sold in the future. The City Treasurer
likewise avers that the rationale for business taxes is not on the
income received or profit earned by the business, but the privilege to
engage in business. The fact that the
Corporation is empowered "to acquire, own, hold, enjoy, lease,
operate and maintain, and to convey sell, transfer or otherwise
dispose of real or personal property" allegedly qualifies "as incident to
the fact of [the Corporation’s] act of engaging in business.22

The City Treasurer also claims that the Corporation had filed the
wrong mode of appeal before the Court of Appeals when the latter
filed its Petition for Review under Rule 42. It is reasoned that the
decision of the Makati RTC was rendered in the exercise of original
jurisdiction, it being the first court which took cognizance of the case.
Accordingly, with the Corporation having pursued an erroneous mode
of appeal, the RTC Decision is deemed to have become final and
executory.
First, we dispose of the procedural issue, which essentially boils down
to whether the RTC, in deciding an appeal taken from a denial of a
protest by a local treasurer under Section 195 of the Local
Government Code, exercises "original jurisdiction" or "appellate
jurisdiction." The question assumes a measure of importance to this
petition, for the adoption of the position of the City Treasurer that the
mode of review of the decision taken by the RTC is governed by Rule
41 of the Rules of Civil Procedure means that the decision of the RTC
would have long become final and executory by reason of the failure
of the Corporation to file a notice of appeal.23
There are discernible conflicting views on the issue. The first, as
expressed by the Court of Appeals, holds that the RTC, in reviewing
denials of protests by local treasurers, exercises appellate jurisdiction.
This position is anchored on the language of Section 195 of the Local
Government Code which states that the remedy of the taxpayer
whose protest is denied by the local treasurer is "to appeal with the
court of competent jurisdiction."24
Apparently though, the Local
Government Code does not elaborate on how such "appeal" should
be undertaken.
The other view, as maintained by the City Treasurer, is that the
jurisdiction exercised by the RTC is original in character. This is the
first time that the position has been presented to the court for
adjudication. Still, this argument does find jurisprudential mooring in
our ruling in Garcia v. De Jesus,25
where the Court proffered the
following distinction between original jurisdiction and appellate
jurisdiction: "Original jurisdiction is the power of the Court to take
judicial cognizance of a case instituted for judicial action for the first
time under conditions provided by law. Appellate jurisdiction is the
authority of a Court higher in rank to re-examine the final order or
judgment of a lower Court which tried the case now elevated for
judicial review."26
The quoted definitions were taken from the commentaries of the
esteemed Justice Florenz Regalado. With the definitions as beacon,
the review taken by the RTC over the denial of the protest by the local
treasurer would fall within that court’s original jurisdiction. In short, the
review is the initial judicial cognizance of the matter. Moreover,
labeling the said review as an exercise of appellate jurisdiction is
inappropriate, since the denial of the protest is not the judgment or
order of a lower court, but of a local government official.
The stringent concept of original jurisdiction may seemingly be
neutered by Rule 43 of the 1997 Rules of Civil Procedure, Section 1
of which lists a slew of administrative agencies and quasi-judicial
tribunals or their officers whose decisions may be reviewed by the
Court of Appeals in the exercise of its appellate jurisdiction. However,
the basic law of jurisdiction, Batas Pambansa Blg. 129 (B.P. 129),27
ineluctably confers appellate jurisdiction on the Court of Appeals over
final rulings of quasi-judicial agencies, instrumentalities, boards or
commission, by explicitly using the phrase "appellate jurisdiction."28
The power to create or characterize jurisdiction of courts belongs to
the legislature. While the traditional notion of appellate jurisdiction
connotes judicial review over lower court decisions, it has to yield to
statutory redefinitions that clearly expand its breadth to encompass
even review of decisions of officers in the executive branches of
government.
Yet significantly, the Local Government Code, or any other statute for
that matter, does not expressly confer appellate jurisdiction on the
part of regional trial courts from the denial of a tax protest by a local
treasurer. On the other hand, Section 22 of B.P. 129 expressly
delineates the appellate jurisdiction of the Regional Trial Courts,
confining as it does said appellate jurisdiction to cases decided by
Metropolitan, Municipal, and Municipal Circuit Trial Courts. Unlike in
the case of the Court of Appeals, B.P. 129 does not confer appellate
jurisdiction on Regional Trial Courts over rulings made by non-judicial
entities.
From these premises, it is evident that the stance of the City
Treasurer is correct as a matter of law, and that the proper remedy of
the Corporation from the RTC judgment is an ordinary appeal under
Rule 41 to the Court of Appeals. However, we make this
pronouncement subject to two important qualifications. First, in this
particular case there are nonetheless significant reasons for the Court

to overlook the procedural error and ultimately uphold the adjudication
of the jurisdiction exercised by the Court of Appeals in this case.
Second, the doctrinal weight of the pronouncement is confined to
cases and controversies that emerged prior to the enactment of
Republic Act No. 9282, the law which expanded the jurisdiction of the
Court of Tax Appeals (CTA).
Republic Act No. 9282 definitively proves in its Section 7(a)(3) that the
CTA exercises exclusive appellate jurisdiction to review on appeal
decisions, orders or resolutions of the Regional Trial Courts in local
tax cases original decided or resolved by them in the exercise of their
originally or appellate jurisdiction. Moreover, the provision also states
that the review is triggered "by filing a petition for review under a
procedure analogous to that provided for under Rule 42 of the 1997
Rules of Civil Procedure."29
Republic Act No. 9282, however, would not apply to this case simply
because it arose prior to the effectivity of that law. To declare
otherwise would be to institute a jurisdictional rule derived not from
express statutory grant, but from implication. The jurisdiction of a
court to take cognizance of a case should be clearly conferred and
should not be deemed to exist on mere implications,30
and this settled
rule would be needlessly emasculated should we declare that the
Corporation’s position is correct in law.
Be that as it may, characteristic of all procedural rules is adherence to
the precept that they should not be enforced blindly, especially if
mechanical application would defeat the higher ends that animates
our civil procedure—the just, speedy and inexpensive disposition of
every action and proceeding.31
Indeed, we have repeatedly upheld—
and utilized ourselves—the discretion of courts to nonetheless take
cognizance of petitions raised on an erroneous mode of appeal and
instead treat these petitions in the manner as they should have
appropriately been filed.32
The Court of Appeals could very well have
treated the Corporation’s petition for review as an ordinary appeal.
Moreover, we recognize that the Corporation’s error in elevating the
RTC decision for review via Rule 42 actually worked to the benefit of
the City Treasurer. There is wider latitude on the part of the Court of
Appeals to refuse cognizance over a petition for review under Rule 42
than it would have over an ordinary appeal under Rule 41. Under
Section 13, Rule 41, the stated grounds for the dismissal of an
ordinary appeal prior to the transmission of the case records are when
the appeal was taken out of time or when the docket fees were not
paid.33
On the other hand, Section 6, Rule 42 provides that in order
that the Court of Appeals may allow due course to the petition for
review, it must first make a prima facie finding that the lower court has
committed an error that would warrant the reversal or modification of
the decision under review.34
There is no similar requirement of a
prima facie determination of error in the case of ordinary appeal,
which is perfected upon the filing of the notice of appeal in due time.35
Evidently, by employing the Rule 42 mode of review, the Corporation
faced a greater risk of having its petition rejected by the Court of
Appeals as compared to having filed an ordinary appeal under Rule
41. This was not an error that worked to the prejudice of the City
Treasurer.
We now proceed to the substantive issue, on whether the City of
Makati may collect business taxes on condominium corporations.
We begin with an overview of the power of a local government unit to
impose business taxes.
The power of local government units to impose taxes within its
territorial jurisdiction derives from the Constitution itself, which
recognizes the power of these units "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."36
These guidelines and
limitations as provided by Congress are in main contained in the Local
Government Code of 1991 (the "Code"), which provides for
comprehensive instances when and how local government units may
impose taxes. The significant limitations are enumerated primarily in
Section 133 of the Code, which include among others, a prohibition on
the imposition of income taxes except when levied on banks and other
financial institutions.37
None of the other general limitations under
Section 133 find application to the case at bar.
The most well-known mode of local government taxation is perhaps
the real property tax, which is governed by Title II, Book II of the
Code, and which bears no application in this case. A different set of
provisions, found under Title I of Book II, governs other taxes
imposable by local government units, including business taxes. Under

Section 151 of the Code, cities such as Makati are authorized to levy
the same taxes fees and charges as provinces and municipalities. It is
in Article II, Title II, Book II of the Code, governing municipal taxes,
where the provisions on business taxation relevant to this petition may
be found.38
Section 143 of the Code specifically enumerates several types of
business on which municipalities and cities may impose taxes. These
include manufacturers, wholesalers, distributors, dealers of any article
of commerce of whatever nature; those engaged in the export or
commerce of essential commodities; contractors and other
independent contractors; banks and financial institutions; and
peddlers engaged in the sale of any merchandise or article of
commerce. Moreover, the local sanggunian is also authorized to
impose taxes on any other businesses not otherwise specified under
Section 143 which the sanggunian concerned may deem proper to
tax.
The coverage of business taxation particular to the City of Makati is
provided by the Makati Revenue Code ("Revenue Code"), enacted
through Municipal Ordinance No. 92-072. The Revenue Code remains
in effect as of this
writing. Article A, Chapter III of the Revenue Code governs business
taxes in Makati, and it is quite specific as to the particular businesses
which are covered by business taxes. To give a sample of the
specified businesses under the Revenue Code which are not
enumerated under the Local Government Code, we cite Section
3A.02(f) of the Code, which levies a gross receipt tax :
(f) On contractors and other independent contractors defined in Sec.
3A.01(q) of Chapter III of this Code, and on owners or operators of
business establishments rendering or offering services such as:
advertising agencies; animal hospitals; assaying laboratories; belt and
buckle shops; blacksmith shops; bookbinders; booking officers for film
exchange; booking offices for transportation on commission basis;
breeding of game cocks and other sporting animals belonging to
others; business management services; collecting agencies; escort
services; feasibility studies; consultancy services; garages; garbage
disposal contractors; gold and silversmith shops; inspection services
for incoming and outgoing cargoes; interior decorating services;
janitorial services; job placement or recruitment agencies; landscaping
contractors; lathe machine shops; management consultants not
subject to professional tax; medical and dental laboratories;
mercantile agencies; messsengerial services; operators of shoe shine
stands; painting shops; perma press establishments; rent-a-plant
services; polo players; school for and/or horse-back riding academy;
real estate appraisers; real estate brokerages; photostatic, white/blue
printing, Xerox, typing, and mimeographing services; rental of bicycles
and/or tricycles, furniture, shoes, watches, household appliances,
boats, typewriters, etc.; roasting of pigs, fowls, etc.; shipping
agencies; shipyard for repairing ships for others; shops for shearing
animals; silkscreen or T-shirt printing shops; stables; travel agencies;
vaciador shops; veterinary clinics; video rentals and/or coverage
services; dancing schools/speed reading/EDP; nursery, vocational
and other schools not regulated by the Department of Education,
Culture and Sports, (DECS), day care centers; etc.39
Other provisions of the Revenue Code likewise subject hotel and
restaurant owners and operators40
, real estate dealers, and lessors of
real estate41
to business taxes.
Should the comprehensive listing not prove encompassing enough,
there is also a catch-all provision similar to that under the Local
Government Code. This is found in Section 3A.02(m) of the Revenue
Code, which provides:
(m) On owners or operators of any business not specified above shall
pay the tax at the rate of two percent (2%) for 1993, two and one-half
percent (2 ½%) for 1994 and 1995, and three percent (3%) for 1996
and the years thereafter of the gross receipts during the preceding
year.42
The initial inquiry is what provision of the Makati Revenue Code does
the City Treasurer rely on to make the Corporation liable for business
taxes. Even at this point, there already stands a problem with the City
Treasurer’s cause of action.
Our careful examination of the record reveals a highly disconcerting
fact. At no point has the City Treasurer been candid enough to inform
the Corporation, the RTC, the Court of Appeals, or this Court for that
matter, as to what exactly is the precise statutory basis under the
Makati Revenue Code for the levying of the business tax on petitioner.
We have examined all of the pleadings submitted by the City

Treasurer in all the antecedent judicial proceedings, as well as in this
present petition, and also the communications by the City Treasurer to
the Corporation which form part of the record. Nowhere therein is
there any citation made by the City Treasurer of any provision of the
Revenue Code which would serve as the legal authority for the
collection of business taxes from condominiums in Makati.
Ostensibly, the notice of assessment, which stands as the first
instance the taxpayer is officially made aware of the pending tax
liability, should be sufficiently informative to apprise the taxpayer the
legal basis of the tax. Section 195 of the Local Government Code
does not go as far as to expressly require that the notice of
assessment specifically cite the provision of the ordinance involved
but it does require that it state the nature of the tax, fee or charge, the
amount of deficiency, surcharges, interests and penalties. In this
case, the notice of assessment sent to the Corporation did state that
the assessment was for business taxes, as well as the amount of the
assessment. There may have been prima facie compliance with the
requirement under Section 195. However in this case, the Revenue
Code provides multiple provisions on business taxes, and at varying
rates. Hence, we could appreciate the Corporation’s confusion, as
expressed in its protest, as to the exact legal basis for the tax.43
Reference to the local tax ordinance is vital, for the power of local
government units to impose local taxes is exercised through the
appropriate ordinance enacted by the sanggunian, and not by the
Local Government Code alone.44
What determines tax liability is the
tax ordinance, the Local Government Code being the enabling law for
the local legislative body.
Moreover, a careful examination of the Revenue Code shows that
while Section 3A.02(m) seems designed as a catch-all provision,
Section 3A.02(f), which provides for a different tax rate from that of
the former provision, may be construed to be of similar import. While
Section 3A.02(f) is quite exhaustive in enumerating the class of
businesses taxed under the provision, the listing, while it does not
include condominium-related enterprises, ends with the abbreviation
"etc.", or "et cetera".
We do note our discomfort with the unlimited breadth and the
dangerous uncertainty which are the twin hallmarks of the words "et
cetera." Certainly, we cannot be disposed to uphold any tax
imposition that derives its authority from enigmatic and uncertain
words such as "et cetera." Yet we cannot even say with definiteness
whether the tax imposed on the Corporation in this case is based on
"et cetera," or on Section 3A.02(m), or on any other provision of the
Revenue Code. Assuming that the assessment made on the
Corporation is on a provision other than Section 3A.02(m), the main
legal issue takes on a different complexion. For example, if it is based
on "et cetera" under Section 3A.02(f), we would have to examine
whether the Corporation faces analogous comparison with the other
businesses listed under that provision.
Certainly, the City Treasurer has not been helpful in that regard, as
she has been silent all through out as to the exact basis for the tax
imposition which she wishes that this Court uphold. Indeed, there is
only one thing that prevents this Court from ruling that there has been
a due process violation on account of the City Treasurer’s failure to
disclose on paper the statutory basis of the tax–that the Corporation
itself does not allege injury arising from such failure on the part of the
City Treasurer.
We do not know why the Corporation chose not to put this issue into
litigation, though we can ultimately presume that no injury was
sustained because the City Treasurer failed to cite the specific
statutory basis of the tax. What is essential though is that the local
treasurer be required to explain to the taxpayer with sufficient
particularity the basis of the tax, so as to leave no doubt in the mind of
the taxpayer as to the specific tax involved.
In this case, the Corporation seems confident enough in litigating
despite the failure of the City Treasurer to admit on what exact
provision of the Revenue Code the tax liability ensued. This is
perhaps because the Corporation has anchored its central argument
on the position that the Local Government Code itself does not
sanction the imposition of business taxes against it. This position was
sustained by the Court of Appeals, and now merits our analysis.
As stated earlier, local tax on businesses is authorized under Section
143 of the Local Government Code. The word "business" itself is
defined under Section 131(d) of the Code as "trade or commercial
activity regularly engaged in as a means of livelihood or with a view to
profit."45
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. Moreover,

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