CITY OF PASIG, REPRESENTEDG.R. No. 185023BY THE CITY TREASURER andTHE CITY ASSESSOR,Petitioner,Present:,-versus-REPUBLIC OF THE PHILIPPINES,REPRESENTED BY THEPRESIDENTIAL COMMISSION ONGOOD GOVERNMENT,Promulgated:Respondent.August 24, 2011x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xD E C I S I O NEven as the Republic of the Philippines is now the owner of the properties in view of the voluntary surrender of MPLDC by its former registered owner, Campos, to the State, such transfer does not prevent a third party with a better right from claiming such properties in the proper forum. In the meantime, the Republic of the Philippines is the presumptive owner of the properties for taxation purposes.Section 234(a) of Republic Act No. 7160 states that properties owned by the Republic of the Philippines are exempt from real property tax except when the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person.Thus, the portions of the properties not leased to taxable entities are exempt from real estate tax while the portions of the properties leased to taxable entities are subject to real estate tax. The law imposes the liability to pay real estate tax on the Republic of the Philippines for the portions of the properties leased to taxable entities. It is, of course, assumed that the Republic of the Philippines passes on the real estate tax as part of the rent to the lessees.InPhilippine Fisheries Development Authority v. Central Board of Assessment Appeals,12the Court held:In the 2007 case ofPhilippine Fisheries Development Authority v. Court of Appeals,the Court resolved the issue of whether the PFDA is a government-owned or controlled corporation or an instrumentality of the national government.In that case, the City of Iloilo assessed real property taxes on the Iloilo Fishing Port Complex (IFPC), which was managed and operated by PFDA. The Court held that PFDA is an instrumentality of the government and is thus exempt from the payment of real property tax, thus:The Court rules that the Authority is not a GOCC but an instrumentality of the national government which is generally exempt from payment of real property tax. However, said exemption does not apply to the portions of the IFPC which the Authority leased to private entities. With respect to these properties, the Authority is liable to pay property tax. Nonetheless, the IFPC, being a property of public dominion cannot be sold at public auction to satisfy the tax delinquency.xxxxThis ruling was affirmed by the Court in a subsequent PFDA case involving theNavotasFishing Port Complex, which is also managed and operated by the PFDA. In consonance with the previous ruling,the Court held in the subsequent PFDA case that the PFDA is a government instrumentality not subject to real property tax except those portions of theNavotasFishing Port Complex that were leased to taxable or private persons and entities for their beneficial use.Similarly, we hold that as a government instrumentality, the PFDA is exempt from real property tax imposed on theLucenaFishing Port Complex, except those portions which are leased to private persons or entities.13(Emphasis supplied)InGovernment Service Insurance System v. City Treasurer of the City of Manila,14the Court held:xxxThe tax exemption the property of the Republic or its instrumentalities carries ceases only if, as stated in Sec. 234(a) of the LGC of 1991, beneficial use thereof has been granted, for a consideration or otherwise, to a taxable person.GSIS, as a government instrumentality, is not a taxable juridical person under Sec. 133(o) of the LGC.GSIS, however,lost in a sense that status with respect to theKatigbakproperty when it contracted its beneficial use to MHC, doubtless a taxable person. Thus, the real estate tax assessment ofPhp54,826,599.37 covering 1992 to 2002 over the subjectKatigbakproperty is valid insofar as said tax delinquency is concerned as assessed over said property.15(Emphasis supplied)InManila International Airport Authority v. Court of Appeals,16the Court held:xxxSection 234(a) of the Local Government Code states that real property owned by the Republic loses its tax exemption only if the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person.MIAA, as a government instrumentality, is not a taxable person under Section 133(o) of the local Government Code. Thus, even if we assume that the Republic has granted to MIAA the beneficial use of the Airport Lands and Buildings, such fact does not make these real properties subject to real estate tax.However,portions of the Airport Lands and Buildings that MIAA leases to private entities are not exempt from real estate tax. For example, the land area occupied by hangars that MIAA leases to private corporations is subject to real estate tax. In such a case, MIAA has granted the beneficial use of such land area for a consideration to a taxable person and therefore such land area is subject to real estate tax.17(Emphasis supplied)InLungCenterof the Philippines v. Quezon City,18the Court held:xxxWhile portions of the hospital are used for the treatment of patients and the dispensation of medical services to them, whether paying or non-paying, other portions thereof are being leased to private individuals for their clinics and a canteen. Further, a portion of the land is being leased to a private individual for her business enterprise under the business name Elliptical Orchids and GardenCenter. Indeed, the petitioners evidence shows that it collectedP1,136,483.45as rentals in 1991 andP1,679,999.28 for 1992 from the said lessees.Accordingly, we hold thatthe portions of the land leased to private entities as well as those parts of the hospital leased to private individuals are not exempt from such taxes. On the other hand, the portions of the land occupied by the hospital and portions of the hospital used for its patients, whether paying or non-paying, are exempt from real property taxes.19(Emphasis supplied)Article 420 of the Civil Code classifies as properties of public dominion those that are intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,roadsteads and those that are intended for some public service or for the development of the national wealth. Properties of public dominion are not only exempt from real estatetax,they are exempt from sale at public auction. InHeirs of MarioMalabananv. Republic,20the Court held that, It is clear that property of public dominion, which generally includes property belonging to the State, cannot be xxxsubject of the commerce of man.21InPhilippine Fisheries Development Authority v. Court of Appeals,22the Court held:xxx[T]he real property tax assessments issued by the City of Iloilo should be upheld only with respect to the portions leased to private persons.In case the Authority fails to pay the real property taxes due thereon, said portions cannot be sold at public auction to satisfy the tax delinquency. InChavez v. Public Estates Authorityit was held thatreclaimed lands are lands of the public dominion and cannot, without Congressional fiat, be subject of a sale, public or privatexxx.In the same vein, the port built by the State in the Iloilo fishing complex is a property of the public dominion and cannot therefore be sold at public auction. Article 420 of the Civil Code, provides:Article 420.The following things are property of public dominion:1.Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,roadsteads, and others of similar character;2.Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.The Iloilo fishing port which was constructed by the State for public use and/or public service falls within the term port in theaforecitedprovision. Being a property of public dominion the same cannot be subject to execution or foreclosure sale. In like manner, the reclaimed land on which the IFPC is built cannot be the object of a private or public sale without Congressional authorization.23(Emphasis supplied)InManila International Airport Authority,24the Court held:xxx[T]he Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties of public dominion. Properties of public dominion are owned by the State or the Republic. Article 420 of the Civil Code provides:Art. 420. The following things are property of public dominion:(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,roadsteads, and others of similar character;(2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.The term ports xxxconstructed by the Sate includes airports and seaports. The Airport Lands and Buildings of MIAA are intended for public use, and at the very least intended for public service. Whether intended for public use or public service, the Airport Lands and Buildings are properties of public dominion. As properties of public dominion, thetheAirport lands and Buildings are owned by the Republic and thus exempt from real estate tax under Section 234(a) of the Local Government Code.xxxxUnder Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use, are properties of public dominion and thus owned by the State or the Republic of the Philippines. Article 420 specifically mentions ports xxxconstructed by the State, which includes public airports and seaports, as properties of public dominion and owned by the Republic. As properties of public dominion owned by the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from real estate tax under Section 234(a) of the local Government Code.This Court has also repeatedly ruled that properties of public dominion are not subject to execution or foreclosure sale.25(Emphasis supplied)In the present case, the parcels of land are not properties of public dominion because they are not intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores,roadsteads. Neither are they intended for some public service or for the development of the national wealth. MPLDC leases portions of the properties to different business establishments. Thus, the portions of the properties leased to taxable entities are not only subject to real estate tax, they can also be sold at public auction to satisfy the tax delinquency.In sum, only those portions of the properties leased to taxable entities are subject to real estate tax for the period of such leases. Pasig City must, therefore, issue to respondent new real property tax assessments covering the portions of the properties leased to taxable entities. If the Republic of the Philippines fails to pay the real property tax on the portions of the properties leased to taxable entities, then such portions may be sold at public auction to satisfy the tax delinquency.

G.R. No. 195909 September 26, 2012COMMISSIONER OF INTERNAL REVENUE,PETITIONER,vs.ST. LUKE'S MEDICAL CENTER, INC.,RESPONDENT.x - - - - - - - - - - - - - - - - - - - - - - - xG.R. No. 195960ST. LUKE'S MEDICAL CENTER, INC.,PETITIONER,vs.COMMISSIONER OF INTERNAL REVENUE,RESPONDENT.D E C I S I O NThe Court partly grants the petition of the BIR but on a different ground. We hold that Section 27(B) of the NIRC does not remove the income tax exemption of proprietary non-profit hospitals under Section 30(E) and (G). Section 27(B) on one hand, and Section 30(E) and (G) on the other hand, can be construed together without the removal of such tax exemption. The effect of the introduction of Section 27(B) is to subject the taxable income of two specific institutions, namely, proprietary non-profit educational institutions36and proprietary non-profit hospitals, among the institutions covered by Section 30, to the 10% preferential rate under Section 27(B) instead of the ordinary 30% corporate rate under the last paragraph of Section 30 in relation to Section 27(A)(1).Section 27(B) of the NIRC imposes a 10% preferential tax rate on the income of (1) proprietary non-profit educational institutions and (2) proprietary non-profit hospitals. The only qualifications for hospitals are that they must be proprietary and non-profit. "Proprietary" means private, following the definition of a "proprietary educational institution" as "any private school maintained and administered by private individuals or groups" with a government permit. "Non-profit" means no net income or asset accrues to or benefits any member or specific person, with all the net income or asset devoted to the institution's purposes and all its activities conducted not for profit."Non-profit" does not necessarily mean "charitable." In Collector of Internal Revenue v. Club Filipino Inc. de Cebu,37this Court considered as non-profit a sports club organized for recreation and entertainment of its stockholders and members. The club was primarily funded by membership fees and dues. If it had profits, they were used for overhead expenses and improving its golf course.38The club was non-profit because of its purpose and there was no evidence that it was engaged in a profit-making enterprise.39The sports club in Club Filipino Inc. de Cebu may be non-profit, but it was not charitable. The Court defined "charity" in Lung Center of the Philippines v. Quezon City40as "a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their minds and hearts under the influence of education or religion, by assisting them to establish themselves in life or [by] otherwise lessening the burden of government."41A non-profit club for the benefit of its members fails this test. An organization may be considered as non-profit if it does not distribute any part of its income to stockholders or members. However, despite its being a tax exempt institution, any income such institution earns from activities conducted for profit is taxable, as expressly provided in the last paragraph of Section 30.To be a charitable institution, however, an organization must meet the substantive test of charity in Lung Center. The issue in Lung Center concerns exemption from real property tax and not income tax. However, it provides for the test of charity in our jurisdiction. Charity is essentially a gift to an indefinite number of persons which lessens the burden of government. In other words, charitable institutions provide for free goods and services to the public which would otherwise fall on the shoulders of government. Thus, as a matter of efficiency, the government forgoes taxes which should have been spent to address public needs, because certain private entities already assume a part of the burden. This is the rationale for the tax exemption of charitable institutions. The loss of taxes by the government is compensated by its relief from doing public works which would have been funded by appropriations from the Treasury.42Charitable institutions, however, are not ipso facto entitled to a tax exemption. The requirements for a tax exemption are specified by the law granting it. The power of Congress to tax implies the power to exempt from tax. Congress can create tax exemptions, subject to the constitutional provision that "[n]o law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of Congress."43The requirements for a tax exemption are strictly construed against the taxpayer44because an exemption restricts the collection of taxes necessary for the existence of the government.The Court in Lung Center declared that the Lung Center of the Philippines is a charitable institution for the purpose of exemption from real property taxes. This ruling uses the same premise as Hospital de San Juan45and Jesus Sacred Heart College46which says that receiving income from paying patients does not destroy the charitable nature of a hospital.As a general principle, a charitable institution does not lose its character as such and its exemption from taxes simply because it derives income from paying patients, whether out-patient, or confined in the hospital, or receives subsidies from the government, so long as the money received is devoted or used altogether to the charitable object which it is intended to achieve; and no money inures to the private benefit of the persons managing or operating the institution.47For real property taxes, the incidental generation of income is permissible because the test of exemption is the use of the property. The Constitution provides that "[c]haritable institutions, churches and personages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation."48The test of exemption is not strictly a requirement on the intrinsic nature or character of the institution. The test requires that the institution use the property in a certain way, i.e. for a charitable purpose. Thus, the Court held that the Lung Center of the Philippines did not lose its charitable character when it used a portion of its lot for commercial purposes. The effect of failing to meet the use requirement is simply to remove from the tax exemption that portion of the property not devoted to charity.The Constitution exempts charitable institutions only from real property taxes. In the NIRC, Congress decided to extend the exemption to income taxes. However, the way Congress crafted Section 30(E) of the NIRC is materially different from Section 28(3), Article VI of the Constitution. Section 30(E) of the NIRC defines the corporation or association that is exempt from income tax. On the other hand, Section 28(3), Article VI of the Constitution does not define a charitable institution, but requires that the institution "actually, directly and exclusively" use the property for a charitable purpose.Section 30(E) of the NIRC provides that a charitable institution must be:(1) A non-stock corporation or association;(2) Organized exclusively for charitable purposes;(3) Operated exclusively for charitable purposes; and(4) No part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person.Thus, both the organization and operations of the charitable institution must be devoted "exclusively" for charitable purposes. The organization of the institution refers to its corporate form, as shown by its articles of incorporation, by-laws and other constitutive documents. Section 30(E) of the NIRC specifically requires that the corporation or association be non-stock, which is defined by the Corporation Code as "one where no part of its income is distributable as dividends to its members, trustees, or officers"49and that any profit "obtain[ed] as an incident to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized."50However, under Lung Center, any profit by a charitable institution must not only be plowed back "whenever necessary or proper," but must be "devoted or used altogether to the charitable object which it is intended to achieve."51The operations of the charitable institution generally refer to its regular activities. Section 30(E) of the NIRC requires that these operations be exclusive to charity. There is also a specific requirement that "no part of [the] net income or asset shall belong to or inure to the benefit of any member, organizer, officer or any specific person." The use of lands, buildings and improvements of the institution is but a part of its operations.There is no dispute that St. Luke's is organized as a non-stock and non-profit charitable institution. However, this does not automatically exempt St. Luke's from paying taxes. This only refers to the organization of St. Luke's. Even if St. Luke's meets the test of charity, a charitable institution is not ipso facto tax exempt. To be exempt from real property taxes, Section 28(3), Article VI of the Constitution requires that a charitable institution use the property "actually, directly and exclusively" for charitable purposes. To be exempt from income taxes, Section 30(E) of the NIRC requires that a charitable institution must be "organized and operated exclusively" for charitable purposes. Likewise, to be exempt from income taxes, Section 30(G) of the NIRC requires that the institution be "operated exclusively" for social welfare.However, the last paragraph of Section 30 of the NIRC qualifies the words "organized and operated exclusively" by providing that:Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code. (Emphasis supplied)In short, the last paragraph of Section 30 provides that if a tax exempt charitable institution conducts "any" activity for profit, such activity is not tax exempt even as its not-for-profit activities remain tax exempt. This paragraph qualifies the requirements in Section 30(E) that the "[n]on-stock corporation or association [must be] organized and operated exclusively for x x x charitable x x x purposes x x x." It likewise qualifies the requirement in Section 30(G) that the civic organization must be "operated exclusively" for the promotion of social welfare.Thus, even if the charitable institution must be "organized and operated exclusively" for charitable purposes, it is nevertheless allowed to engage in "activities conducted for profit" without losing its tax exempt status for its not-for-profit activities. The only consequence is that the "income of whatever kind and character" of a charitable institution "from any of its activities conducted for profit, regardless of the disposition made of such income, shall be subject to tax." Prior to the introduction of Section 27(B), the tax rate on such income from for-profit activities was the ordinary corporate rate under Section 27(A). With the introduction of Section 27(B), the tax rate is now 10%.In 1998, St. Luke's had total revenues ofP1,730,367,965 from services to paying patients. It cannot be disputed that a hospital which receives approximatelyP1.73 billion from paying patients is not an institution "operated exclusively" for charitable purposes. Clearly, revenues from paying patients are income received from "activities conducted for profit."52Indeed, St. Luke's admits that it derived profits from its paying patients. St. Luke's declaredP1,730,367,965 as "Revenues from Services to Patients" in contrast to its "Free Services" expenditure ofP218,187,498. In its Comment in G.R. No. 195909, St. Luke's showed the following "calculation" to support its claim that 65.20% of its "income after expenses was allocated to free or charitable services" in 1998.53REVENUES FROM SERVICES TO PATIENTSP1,730,367,965.00

OPERATING EXPENSES

Professional care of patientsP1,016,608,394.00

Administrative287,319,334.00

Household and Property91,797,622.00

P1,395,725,350.00

INCOME FROM OPERATIONSP334,642,615.00100%

Free Services-218,187,498.00-65.20%

INCOME FROM OPERATIONS, Net of FREE SERVICESP116,455,117.0034.80%

OTHER INCOME17,482,304.00

EXCESS OF REVENUES OVER EXPENSESP133,937,421.00

In Lung Center, this Court declared:"[e]xclusive" is defined as possessed and enjoyed to the exclusion of others; debarred from participation or enjoyment; and "exclusively" is defined, "in a manner to exclude; as enjoying a privilege exclusively." x x x The words "dominant use" or "principal use" cannot be substituted for the words "used exclusively" without doing violence to the Constitution and the law. Solely is synonymous with exclusively.54The Court cannot expand the meaning of the words "operated exclusively" without violating the NIRC. Services to paying patients are activities conducted for profit. They cannot be considered any other way. There is a "purpose to make profit over and above the cost" of services.55TheP1.73 billion total revenues from paying patients is not even incidental to St. Luke's charity expenditure ofP218,187,498 for non-paying patients.St. Luke's claims that its charity expenditure ofP218,187,498 is 65.20% of its operating income in 1998. However, if a part of the remaining 34.80% of the operating income is reinvested in property, equipment or facilities used for services to paying and non-paying patients, then it cannot be said that the income is "devoted or used altogether to the charitable object which it is intended to achieve."56The income is plowed back to the corporation not entirely for charitable purposes, but for profit as well. In any case, the last paragraph of Section 30 of the NIRC expressly qualifies that income from activities for profit is taxable "regardless of the disposition made of such income."Jesus Sacred Heart College declared that there is no official legislative record explaining the phrase "any activity conducted for profit." However, it quoted a deposition of Senator Mariano Jesus Cuenco, who was a member of the Committee of Conference for the Senate, which introduced the phrase "or from any activity conducted for profit."P. Cuando ha hablado de la Universidad de Santo Toms que tiene un hospital, no cree Vd. que es una actividad esencial dicho hospital para el funcionamiento del colegio de medicina de dicha universidad?x x x xR. Si el hospital se limita a recibir enformos pobres, mi contestacin seria afirmativa; pero considerando que el hospital tiene cuartos de pago, y a los mismos generalmente van enfermos de buena posicin social econmica, lo que se paga por estos enfermos debe estar sujeto a 'income tax', y es una de las razones que hemos tenido para insertar las palabras o frase 'or from any activity conducted for profit.'57The question was whether having a hospital is essential to an educational institution like the College of Medicine of the University of Santo Tomas. Senator Cuenco answered that if the hospital has paid rooms generally occupied by people of good economic standing, then it should be subject to income tax. He said that this was one of the reasons Congress inserted the phrase "or any activity conducted for profit."The question in Jesus Sacred Heart College involves an educational institution.58However, it is applicable to charitable institutions because Senator Cuenco's response shows an intent to focus on the activities of charitable institutions. Activities for profit should not escape the reach of taxation. Being a non-stock and non-profit corporation does not, by this reason alone, completely exempt an institution from tax. An institution cannot use its corporate form to prevent its profitable activities from being taxed.The Court finds that St. Luke's is a corporation that is not "operated exclusively" for charitable or social welfare purposes insofar as its revenues from paying patients are concerned. This ruling is based not only on a strict interpretation of a provision granting tax exemption, but also on the clear and plain text of Section 30(E) and (G). Section 30(E) and (G) of the NIRC requires that an institution be "operated exclusively" for charitable or social welfare purposes to be completely exempt from income tax. An institution under Section 30(E) or (G) does not lose its tax exemption if it earns income from its for-profit activities. Such income from for-profit activities, under the last paragraph of Section 30, is merely subject to income tax, previously at the ordinary corporate rate but now at the preferential 10% rate pursuant to Section 27(B).A tax exemption is effectively a social subsidy granted by the State because an exempt institution is spared from sharing in the expenses of government and yet benefits from them. Tax exemptions for charitable institutions should therefore be limited to institutions beneficial to the public and those which improve social welfare. A profit-making entity should not be allowed to exploit this subsidy to the detriment of the government and other taxpayers.1wphi1St. Luke's fails to meet the requirements under Section 30(E) and (G) of the NIRC to be completely tax exempt from all its income. However, it remains a proprietary non-profit hospital under Section 27(B) of the NIRC as long as it does not distribute any of its profits to its members and such profits are reinvested pursuant to its corporate purposes. St. Luke's, as a proprietary non-profit hospital, is entitled to the preferential tax rate of 10% on its net income from its for-profit activities.St. Luke's is therefore liable for deficiency income tax in 1998 under Section 27(B) of the NIRC. However, St. Luke's has good reasons to rely on the letter dated 6 June 1990 by the BIR, which opined that St. Luke's is "a corporation for purely charitable and social welfare purposes"59 and thus exempt from income tax.60In Michael J. Lhuillier, Inc. v. Commissioner of Internal Revenue,61the Court said that "good faith and honest belief that one is not subject to tax on the basis of previous interpretation of government agencies tasked to implement the tax law, are sufficient justification to delete the imposition of surcharges and interest."62

FIRST DIVISIONMOBIL PHILIPPINES, INC., Petitioner, - versus - G.R. No. 154092 Present: Davide, Jr.,C.J., (Chairman), Quisumbing, Ynares-Santiago, Carpio, and Azcuna,JJ.

THE CITY TREASURER OF MAKATI and the CHIEF OF THE LICENSE DIVISION OF THE CITY OF MAKATI, Respondents.Promulgated: July 14, 2005

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -xDECISIONSimply stated, the issue is: Are the business taxes paid by petitioner in 1998, business taxes for 1997 or 1998?According to petitioner, the 1997 gross sales/revenue is merely the basis for the amount of business taxes due for the privilege of carrying on a business in the year when the tax was paid.For their part, respondents argue that since local taxes, which include business taxes, are paid either within the first twenty days of January of each year or of each subsequent quarter, as the case may be, what the taxpayer actually pays during the recorded calendar year is actually its business tax for the preceding year.Prefatorily, it is necessary to distinguish between a business taxvis--visan income tax.Business taxes imposed in the exercise of police power for regulatory purposes are paid for the privilege of carrying on a business in the year the tax was paid. It is paid at the beginning of the year as a fee to allow the business to operate for the rest of the year. It is deemed a prerequisite to the conduct of business.Income tax, on the other hand, is a tax on all yearly profits arising from property, professions, trades or offices, or as a tax on a persons income, emoluments, profits and the like. It is tax on income, whether net or gross realized in one taxable year.[15] It is due on or before the 15thday of the 4thmonth following the close of the taxpayers taxable year and is generally regarded as an excise tax, levied upon the right of a person or entity to receive income or profits.The trial court erred when it said that the payments made by petitioner in 1998 are payments for business tax incurred in 1997 which only accrued in January 1998. Likewise, it erred when it ruled that petitioner was still liable for business taxes based on its gross income/revenue for January to August 1998.Section 3A.04 of the Makati City Revenue Code states:Sec.3A.04.Computation of tax for newly-started business. In the case of newly-started business under Sec. 3A.02, (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), and (m) above, the tax shall be fixed by the quarter. The initial tax of the quarter in which the business starts to operate shall be two and one half percent (2 %) of one percent (1%) of the capital investment.In the succeeding quarter or quarters, in cases where the business opens before the last quarter of the year, the tax shall be based on the gross sales or receipt for the preceding quarter at one-half ( ) of the rates fixed therefor by the pertinent schedule in Section 3A.02, (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), and (m).In the succeeding calendar year, regardless of when the business started to operate, the tax shall be based on the gross sales or receipts for the preceding calendar year, or any fraction thereof as provided in the same pertinent schedules.[16]Under the Makati Revenue Code, it appears that the business tax, like income tax, is computed based on the previous years figures. This is the reason for the confusion. A newly-started business is already liable for business taxes (i.e. license fees) at the start of the quarter when it commences operations. In computing the amount of tax due for the first quarter of operations, the business capital investment is used as the basis. For the subsequent quarters of the first year, the tax is based on the gross sales/receipts for the previous quarter. In the following year(s), the business is then taxed based on the gross sales or receipts of the previous year. The business taxes paid in the year 1998 is for the privilege of engaging in business for the same year, and not for having engaged in business for 1997.Upon its transfer, petitioner was apparently subjected to Sec. 3A.11 par. (g) which states:. . .(g)Retirement of business.. . .For purposes thereof, termination shall mean that business operation are stopped completely.. . .(2) If it is found that the retirement or termination of the business is legitimate, [a]nd the tax due therefrom be less than the tax due for the current year based on the gross sales or receipts, the difference in the amount of the tax shall be paid before the business is considered officially retired or terminated.[17]Based on this foregoing provision, on the year an establishment retires or terminates its business within the municipality, it would be required to pay the difference in the amount if the tax collected, based on the previous years gross sales or receipts, is less than the actual tax due based on the current years gross sales or receipts.For the year 1998, petitioner paid a total ofP2,262,122.48 to the City Treasurer of Makati[18]as business taxes for the year 1998. The amount of tax as computed based on petitioners gross sales for 1998 is onlyP1,331,638.84. Since the amount paid is more than the amount computed based on petitioners actual gross sales for 1998, petitioner upon its retirement is not liable for additional taxes to the City of Makati. Thus, we find that the respondent erroneously treated the assessment and collection of business tax as if it were income tax, by rendering an additional assessment ofP1,331,638.84 for the revenue generated for the year 1998..G.R. No. 183137 April 10, 2013PELIZLOY REALTY CORPORATION, represented herein by its President, GREGORY K. LOY,Petitioner,vs.THE PROVINCE OF BENGUET,Respondent.D E C I S I O NThe power to tax "is an attribute of sovereignty,"7and as such, inheres in the State. Such, however, is not true for provinces, cities, municipalities and barangays as they are not the sovereign;8rather, they are mere "territorial and political subdivisions of the Republic of the Philippines".9The rule governing the taxing power of provinces, cities, muncipalities and barangays is summarized in Icard v. City Council of Baguio:10It is settled that a municipal corporation unlike a sovereign state is clothed with no inherent power of taxation. The charter or statute must plainly show an intent to confer that power or the municipality, cannot assume it. And the power when granted is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the municipality. Inferences, implications, deductions all these have no place in the interpretation of the taxing power of a municipal corporation.11[Underscoring supplied]Therefore, the power of a province to tax is limited to the extent that such power is delegated to it either by the Constitution or by statute. Section 5, Article X of the 1987 Constitution is clear on this point:Section 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. [Underscoring supplied]Per Section 5, Article X of the 1987 Constitution, "the power to tax is no longer vested exclusively on Congress; local legislative bodies are now given direct authority to levy taxes, fees and other charges."12Nevertheless, such authority is "subject to such guidelines and limitations as the Congress may provide".13In conformity with Section 3, Article X of the 1987 Constitution,14Congress enacted Republic Act No. 7160, otherwise known as the Local Government Code of 1991. Book II of the LGC governs local taxation and fiscal matters.Relevant provisions of Book II of the LGC establish the parameters of the taxing powers of LGUS found below.First, Section 130 provides for the following fundamental principles governing the taxing powers of LGUs:1. Taxation shall be uniform in each LGU.2. Taxes, fees, charges and other impositions shall:a. be equitable and based as far as practicable on the taxpayer's ability to pay;b. be levied and collected only for public purposes;c. not be unjust, excessive, oppressive, or confiscatory;d. not be contrary to law, public policy, national economic policy, or in the restraint of trade.3. The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person.4. The revenue collected pursuant to the provisions of the LGC shall inure solely to the benefit of, and be subject to the disposition by, the LGU levying the tax, fee, charge or other imposition unless otherwise specifically provided by the LGC.5. Each LGU shall, as far as practicable, evolve a progressive system of taxation.Second, Section 133 provides for the common limitations on the taxing powers of LGUs. Specifically, Section 133 (i) prohibits the levy by LGUs of percentage or value-added tax (VAT) on sales, barters or exchanges or similar transactions on goods or services except as otherwise provided by the LGC.As it is Pelizloys contention that Section 59, Article X of the Tax Ordinance levies a prohibited percentage tax, it is crucial to understand first the concept of a percentage tax.In Commissioner of Internal Revenue v. Citytrust Investment Phils. Inc.,15the Supreme Court defined percentage tax as a "tax measured by a certain percentage of the gross selling price or gross value in money of goods sold, bartered or imported; or of the gross receipts or earnings derived by any person engaged in the sale of services." Also, Republic Act No. 8424, otherwise known as the National Internal Revenue Code (NIRC), in Section 125, Title V,16lists amusement taxes as among the (other) percentage taxes which are levied regardless of whether or not a taxpayer is already liable to pay value-added tax (VAT).Amusement taxes are fixed at a certain percentage of the gross receipts incurred by certain specified establishments.Thus, applying the definition in CIR v. Citytrust and drawing from the treatment of amusement taxes by the NIRC, amusement taxes are percentage taxes as correctly argued by Pelizloy.However, provinces are not barred from levying amusement taxes even if amusement taxes are a form of percentage taxes. Section 133 (i) of the LGC prohibits the levy of percentage taxes "except as otherwise provided" by the LGC.Section 140 of the LGC provides:SECTION 140. Amusement Tax - (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty percent (30%) of the gross receipts from admission fees.(b) In the case of theaters of cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid to the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors of the cinematographic films.(c) The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and oratorical presentations, except pop, rock, or similar concerts shall be exempt from the payment of the tax herein imposed.(d) The Sangguniang Panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In case of fraud or failure to pay the tax, the Sangguniang Panlalawigan may impose such surcharges, interests and penalties.(e) The proceeds from the amusement tax shall be shared equally by the province and the municipality where such amusement places are located. [Underscoring supplied]Evidently, Section 140 of the LGC carves a clear exception to the general rule in Section 133 (i). Section 140 expressly allows for the imposition by provinces of amusement taxes on "the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement."However, resorts, swimming pools, bath houses, hot springs, and tourist spots are not among those places expressly mentioned by Section 140 of the LGC as being subject to amusement taxes. Thus, the determination of whether amusement taxes may be levied on admissions to resorts, swimming pools, bath houses, hot springs, and tourist spots hinges on whether the phrase other places of amusement encompasses resorts, swimming pools, bath houses, hot springs, and tourist spots.Under the principle of ejusdem generis, "where a general word or phrase follows an enumeration of particular and specific words of the same class or where the latter follow the former, the general word or phrase is to be construed to include, or to be restricted to persons, things or cases akin to, resembling, or of the same kind or class as those specifically mentioned."17The purpose and rationale of the principle was explained by the Court in National Power Corporation v. Angas18as follows:The purpose of the rule on ejusdem generis is to give effect to both the particular and general words, by treating the particular words as indicating the class and the general words as including all that is embraced in said class, although not specifically named by the particular words. This is justified on the ground that if the lawmaking body intended the general terms to be used in their unrestricted sense, it would have not made an enumeration of particular subjects but would have used only general terms. [2 Sutherland, Statutory Construction, 3rd ed., pp. 395-400].19In Philippine Basketball Association v. Court of Appeals,20the Supreme Court had an opportunity to interpret a starkly similar provision or the counterpart provision of Section 140 of the LGC in the Local Tax Code then in effect. Petitioner Philippine Basketball Association (PBA) contended that it was subject to the imposition by LGUs of amusement taxes (as opposed to amusement taxes imposed by the national government).1wphi1In support of its contentions, it cited Section 13 of Presidential Decree No. 231, otherwise known as the Local Tax Code of 1973, (which is analogous to Section 140 of the LGC) providing the following:Section 13. Amusement tax on admission. - The province shall impose a tax on admission to be collected from the proprietors, lessees, or operators of theaters, cinematographs, concert halls, circuses and other places of amusement xxx.Applying the principle of ejusdem generis, the Supreme Court rejected PBA's assertions and noted that:In determining the meaning of the phrase 'other places of amusement', one must refer to the prior enumeration of theaters, cinematographs, concert halls and circuses with artistic expression as their common characteristic. Professional basketball games do not fall under the same category as theaters, cinematographs, concert halls and circuses as the latter basically belong to artistic forms of entertainment while the former caters to sports and gaming.21[Underscoring supplied]However, even as the phrase other places of amusement was already clarified in Philippine Basketball Association, Section 140 of the LGC adds to the enumeration of 'places of amusement' which may properly be subject to amusement tax. Section 140 specifically mentions 'boxing stadia' in addition to "theaters, cinematographs, concert halls and circuses" which were already mentioned in PD No. 231. Also, 'artistic expression' as a characteristic does not pertain to 'boxing stadia'.In the present case, the Court need not embark on a laborious effort at statutory construction. Section 131 (c) of the LGC already provides a clear definition of amusement places:Section 131. Definition of Terms. - When used in this Title, the term:x x x(c) "Amusement Places" include theaters, cinemas, concert halls, circuses and other places of amusement where one seeks admission to entertain oneself by seeing or viewing the show or performances [Underscoring supplied]Indeed, theaters, cinemas, concert halls, circuses, and boxing stadia are bound by a common typifying characteristic in that they are all venues primarily for the staging of spectacles or the holding of public shows, exhibitions, performances, and other events meant to be viewed by an audience. Accordingly, other places of amusement must be interpreted in light of the typifying characteristic of being venues "where one seeks admission to entertain oneself by seeing or viewing the show or performances" or being venues primarily used to stage spectacles or hold public shows, exhibitions, performances, and other events meant to be viewed by an audience.As defined in The New Oxford American Dictionary,22show means "a spectacle or display of something, typically an impressive one";23while performance means "an act of staging or presenting a play, a concert, or other form of entertainment."24As such, the ordinary definitions of the words show and performance denote not only visual engagement (i.e., the seeing or viewing of things) but also active doing (e.g., displaying, staging or presenting) such that actions are manifested to, and (correspondingly) perceived by an audience.Considering these, it is clear that resorts, swimming pools, bath houses, hot springs and tourist spots cannot be considered venues primarily "where one seeks admission to entertain oneself by seeing or viewing the show or performances". While it is true that they may be venues where people are visually engaged, they are not primarily venues for their proprietors or operators to actively display, stage or present shows and/or performances.Thus, resorts, swimming pools, bath houses, hot springs and tourist spots do not belong to the same category or class as theaters, cinemas, concert halls, circuses, and boxing stadia. It follows that they cannot be considered as among the other places of amusement contemplated by Section 140 of the LGC and which may properly be subject to amusement taxes.At this juncture, it is helpful to recall this Courts pronouncements in Icard:The power to tax when granted to a province is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the term used in granting that power must be resolved against the province. Inferences, implications, deductions all these have no place in the interpretation of the taxing power of a province.25In this case, the definition of' amusement places' in Section 131 (c) of the LGC is a clear basis for determining what constitutes the 'other places of amusement' which may properly be subject to amusement tax impositions by provinces. There is no reason for going beyond such basis. To do otherwise would be to countenance an arbitrary interpretation/application of a tax law and to inflict an injustice on unassuming taxpayers.The previous pronouncements notwithstanding, it will be noted that it is only the second paragraph of Section 59, Article X of the Tax Ordinance which imposes amusement taxes on "resorts, swimming pools, bath houses, hot springs, and tourist spots". The first paragraph of Section 59, Article X of the Tax Ordinance refers to "theaters, cinemas, concert halls, circuses, cockpits, dancing halls, dancing schools, night or day clubs, and other places of amusement".1wphi1In any case, the issues raised by Pelizloy are pertinent only with respect to the second paragraph of Section 59, Article X of the Tax Ordinance. Thus, there is no reason to invalidate the first paragraph of Section 59, Article X of the Tax Ordinance. Any declaration as to the Province of Benguet's lack of authority to levy amusement taxes must be limited to admission fees to resorts, swimming pools, bath houses, hot springs and tourist spots.Moreover, the second paragraph of Section 59, Article X of the Tax Ordinance is not limited to resorts, swimming pools, bath houses, hot springs, and tourist spots but also covers admission fees for boxing. As Section 140 of the LGC allows for the imposition of amusement taxes on gross receipts from admission fees to boxing stadia, Section 59, Article X of the Tax Ordinance must be sustained with respect to admission fees from boxing stadia.WHEREFORE, the petition for review on certiorari is GRANTED. The second paragraph of Section 59, Article X of the Benguet Provincial Revenue Code of 2005, in so far as it imposes amusement taxes on admission fees to resorts, swimming pools, bath houses, hot springs and tourist spots, is declared null and void. Respondent Province of Benguet is permanently enjoined from enforcing the second paragraph of Section 59, Article X of the Benguet Provincial Revenue Code of 2005 with respect to resorts, swimming pools, bath houses, hot springs and tourist spots.SO ORDERED.

G.R. No. 188500 July 24, 2013PROVINCE OF CAGAYAN, represented by HON. ALVARO T. ANTONIO, Governor, and ROBERT ADAP, Environmental and Natural Resources Officer,Petitioners,vs.JOSEPH LASAM LARA,Respondent.R E S O L U T I O NIn order for an entity to legally undertake a quarrying business, he must first comply with all the requirements imposed not only by the national government, but also by the local government unit where his business is situated. Particularly, Section 138(2) of RA 716026requires that such entity must first secure a governors permit prior to the start of his quarrying operations, viz:SECTION 138. Tax on Sand, Gravel and Other Quarry Resources. x x x.The permit to extract sand, gravel and other quarry resources shall be issued exclusively by the provincial governor, pursuant to the ordinance of the sangguniang panlalawigan. (Emphasis and underscoring supplied)x x x xIn connection thereto, the Sangguniang Panlalawigan of Cagayan promulgated Provincial Ordinance No. 2005-07, Article H, Section 2H.04 of which provides:SECTION 2H.04. Permit for Gravel and Sand Extraction and Quarrying. No person shall extract ordinary stones, gravel, earth, boulders and quarry resources from public lands or from the beds of seas, rivers, streams, creeks or other public waters unless a permit has been issued by the Governor (or his deputy as provided herein) x x x. (Emphasis and underscoring supplied)A plain reading of the afore-cited provisions clearly shows that a governors permit is a pre-requisite before one can engage in a quarrying business in Cagayan. Records, however, reveal that Lara admittedly failed to secure the same; hence, he has no right to conduct his quarrying operations within the Permit Area. Consequently, he is not entitled to any injunction.In view of the foregoing, the Court need not delve into the issue respecting the necessity of securing a mayors permit, especially since it is the main issue in another case, Civil Case No. 7049, which remains pending before the court a quo.WHEREFORE, the petition is GRANTED. Accordingly, the June 30, 2009 Decision of the Regional Trial Court of Tuguegarao City, Cagayan, Branch 5 in Civil Case No. 7077 is hereby REVERSED and SET ASIDE.SO ORDERED.

G.R. No. 190818 June 5, 2013METRO MANILA SHOPPING MECCA CORP., SHOEMART, INC., SM PRIME HOLDINGS, INC., STAR APPLIANCES CENTER, SUPER VALUE, INC., ACE HARDWARE PHILIPPINES, INC., HEALTH AND BEAUTY, INC., JOLLIMART PHILS. CORP., and SURPLUS MARKETING CORPORATION,Petitioners,vs.MS. LIBERTY M. TOLEDO, in her official capacity as the City Treasurer of Manila, and THE CITY OF MANILA,Respondents.D E C I S I O NThe Courts RulingThe petition is bereft of merit.A. Respondents Petition forReview with the CTA DivisionPetitioners argue that the CTA Division erred in extending the reglementary period within which respondents may file their Petition for Review, considering that Section 3, Rule 833of the Revised Rules of the CTA (RRCTA) is silent on such matter. Further, even if it is assumed that an extension is allowed, the CTA Division should not have entertained respondents Petition for Review for their failure to comply with the filing requisites set forth in Section 4, Rule 534and Section 2, Rule 635of the RRCTA.Petitioners arguments fail to persuade.Although the RRCTA does not explicitly sanction extensions to file a petition for review with the CTA, Section 1, Rule 736thereof reads that in the absence of any express provision in the RRCTA, Rules 42, 43, 44 and 46 of the Rules of Court may be applied in a suppletory manner. In particular, Section 937of Republic Act No. 9282 makes reference to the procedure under Rule 42 of the Rules of Court. In this light, Section 1 of Rule 4238states that the period for filing a petition for review may be extended upon motion of the concerned party. Thus, in City of Manila v. Coca-Cola Bottlers Philippines, Inc.,39the Court held that the original period for filing the petition for review may be extended for a period of fifteen (15) days, which for the most compelling reasons, may be extended for another period not exceeding fifteen (15) days.40In other words, the reglementary period provided under Section 3, Rule 8 of the RRCTA is extendible and as such, CTA Divisions grant of respondents motion for extension falls squarely within the law.Neither did respondents failure to comply with Section 4, Rule 5 and Section 2, Rule 6 of the RRCTA militate against giving due course to their Petition for Review. Respondents submission of only one copy of the said petition and their failure to attach therewith a certified true copy of the RTCs decision constitute mere formal defects which may be relaxed in the interest of substantial justice. It is well-settled that dismissal of appeals based purely on technical grounds is frowned upon as every party litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the unacceptable plea of technicalities.41In this regard, the CTA Division did not overstep its boundaries when it admitted respondents Petition for Review despite the aforementioned defects "in the broader interest of justice."Having resolved the foregoing procedural matter, the Court proceeds to the main issue in this case.B. Petitioners claim for taxrefund/creditA perusal of Section 19642of the LGC reveals that in order to be entitled to a refund/credit of local taxes, the following procedural requirements must concur: first, the taxpayer concerned must file a written claim for refund/credit with the local treasurer; and second, the case or proceeding for refund has to be filed within two (2) years from the date of the payment of the tax, fee, or charge or from the date the taxpayer is entitled to a refund or credit.Records disclose that while the case or proceeding for refund was filed by petitioners within two (2) years from the time of payment,43they, however, failed to prove that they have filed a written claim for refund with the local treasurer considering that such fact although subject of their Request for Admission which respondents did not reply to had already been controverted by the latter in their Motion to Dismiss and Answer.To elucidate, the scope of a request for admission filed pursuant to Rule 26 of the Rules of Court and a partys failure to comply with the same are respectively detailed in Sections 1 and 2 thereof, to wit:SEC. 1. Request for admission. At any time after issues have been joined, a party may file and serve upon any other party a written request for the admission by the latter of the genuineness of any material and relevant document described in and exhibited with the request or of the truth of any material and relevant matter of fact set forth in the request. Copies of the documents shall be delivered with the request unless copies have already been furnished.SEC. 2. Implied admission. Each of the matters of which an admission is requested shall be deemed admitted unless, within a period designated in the request, which shall not be less than fifteen (15) days after service thereof, or within such further time as the court may allow on motion, the party to whom the request is directed files and serves upon the party requesting the admission a sworn statement either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters.Objections to any request for admission shall be submitted to the court by the party requested within the period for and prior to the filing of his sworn statement as contemplated in the preceding paragraph and his compliance therewith shall be deferred until such objections are resolved, which resolution shall be made as early as practicable. (Emphasis and underscoring supplied)Based on the foregoing, once a party serves a request for admission regarding the truth of any material and relevant matter of fact, the party to whom such request is served is given a period of fifteen (15) days within which to file a sworn statement answering the same. Should the latter fail to file and serve such answer, each of the matters of which admission is requested shall be deemed admitted.44The exception to this rule is when the party to whom such request for admission is served had already controverted the matters subject of such request in an earlier pleading. Otherwise stated, if the matters in a request for admission have already been admitted or denied in previous pleadings by the requested party, the latter cannot be compelled to admit or deny them anew. In turn, the requesting party cannot reasonably expect a response to the request and thereafter, assume or even demand the application of the implied admission rule in Section 2, Rule 26.45The rationale behind this exception had been discussed in the case of CIR v. Manila Mining Corporation,46citing Concrete Aggregates Corporation v. CA,47where the Court held as follows:As Concrete Aggregates Corporation v. Court of Appeals holds, admissions by an adverse party as a mode of discovery contemplates of interrogatories that would clarify and tend to shed light on the truth or falsity of the allegations in a pleading, and does not refer to a mere reiteration of what has already been alleged in the pleadings; otherwise, it constitutes an utter redundancy and will be a useless, pointless process which petitioner should not be subjected to.Petitioner controverted in its Answers the matters set forth in respondents Petitions for Review before the CTA the requests for admission being mere reproductions of the matters already stated in the petitions. Thus, petitioner should not be required to make a second denial of those matters it already denied in its Answers.1wphi1(Emphasis and underscoring supplied; citations omitted)Likewise, in the case of Limos v. Odones,48the Court explained:A request for admission is not intended to merely reproduce or reiterate the allegations of the requesting partys pleading but should set forth relevant evidentiary matters of fact described in the request, whose purpose is to establish said partys cause of action or defense. Unless it serves that purpose, it is pointless, useless and a mere redundancy. (Emphasis and underscoring supplied)Records show that petitioners filed their Request for Admission with the RTC and also served the same on respondents, requesting that the fact that they filed a written claim for refund with the City Treasurer of Manila be admitted.49Respondents, however, did not and in fact, need not reply to the same considering that they have already stated in their Motion to Dismiss and Answer that petitioners failed to file any written claim for tax refund or credit.50In this regard, respondents are not deemed to have admitted the truth and veracity of petitioners requested fact.Indeed, it is hornbook principle that a claim for a tax refund/credit is in the nature of a claim for an exemption and the law is construed in strictissimi juris against the one claiming it and in favor of the taxing authority.51Consequently, as petitioners have failed to prove that they have complied with the procedural requisites stated under Section 196 of the LGC, their claim for local tax refund/credit must be denied.WHEREFORE, the petition is DENIED. The September 8, 2009 Decision and January 4, 2010 Resolution of the Court of Tax Appeals En Bane in CT A E.B. No. 480 are hereby AFFIRMED.SO ORDERED.G.R. No. 173829 June 10, 2013VALBUECO, INC.,Petitioner,vs.PROVINCE OF BATAAN, represented by its Provincial Governor ANTONIO ROMAN;1EMMANUEL M. AQUINO,2in his official capacity as Registrar of the Register of Deeds of Balanga, Bataan; and PASTOR P. VICHUACO,3in his official capacity as Provincial Treasurer of Balanga, Bataan,Respondents.The petition lacks merit.While it has been ruled that the notices and publication, as well as the legal requirements for a tax delinquency sale under Presidential Decree No. 464 (otherwise known as the Real Property Tax Code),20are mandatory and that failure to comply therewith can invalidate the sale in view of the requirements of due process, We have equally held that the claim of lack of notice is a factual question.21In a petition for review, the Court can only pass upon questions of law; it is not a trier of facts and will not inquire into and review the evidence presented by the contending parties during the trial and relied upon by the lower courts to support their findings.22The issues raised in this petition undeniably involve only questions of fact. On this ground alone, it should be dismissed outright.Even if We dig deeper and scrutinize the entire case records, the same conclusion would be arrived at. Indeed, petitioner utterly failed to present preponderant evidence to support its allegations that the auction sale of the subject properties due to tax delinquency was attended by irregularities. The two witnesses it presented are neither competent nor convincing to attest with reasonable certainty that respondents failed to observe the procedural requirements of PD 464.23The Court is thus, satisfied with the factual findings of the trial court, as affirmed by the CA, and sees no reason to disturb the same.We cannot lend credence to the testimony of Gaudencio P. Juan, petitioners Forestry and Technical Consultant who claimed to have been an employee since 1964,24that no notice of tax delinquency, demand for tax payment or collection notice was received and that there was no publication and posting of notice of sale held. According to him, his duties and responsibilities include: bringing out some technical matters to the company (e.g., use of grazing lands) and preparing plans for implementation by the company (e.g., occupation of the area, the conversion of the area for pasture purposes);25land and boundary disputes between petitioner and owners of adjoining areas;26planning some other plans for the implementation in the area like reforestation and other forestry cases;27and planning preparation of reports, uses of the land for forestry and agricultural purposes.28These, however, have nothing to do with the duty of ensuring the prompt and timely settlement of petitioners realty taxes or of making any representation, for or in behalf of petitioner, with respondents in connection thereto. In fact, Juan categorically admitted that he is not the custodian of petitioners corporate records:Under Section 7338of PD 464 x x x notices of the sale at public auction may be sent to the delinquent taxpayer, either (i) at the address as shown in the tax rolls or property tax record cards of the municipality or city where the property is located or (ii) at his residence, if known to such treasurer or barrio captain. Plainly, Section 73 gives the treasurer the option of where to send the notice of sale. In giving the treasurer the option, nowhere in the wordings is there an indication of a requirement that notice must actually be received by the intended recipient. Compliance by the treasurer is limited to strictly following the provisions of the statute: he may send it at the address of the delinquent taxpayer as shown in the tax rolls or tax records or to the residence if known by him or the barrio captain.39In this case, it is reasonable to deduce that respondent Provincial Treasurer actually sent the notices at the address uniformly indicated in TCT No. 47377, 47378, 47379, 47380, 47381, 47382, 47385 and 47386, as well as in the tax declarations, which is 7th Floor, Bank of P.I. Bldg., Ayala Avenue, Makati, Rizal. The fault herein lies with petitioner, not with respondent Provincial Treasurer. It had a number of years to amend its address and provide a more updated and reliable one. By neglecting to do so, it should be aware of the chances it was taking should notices be sent to it. Respondent Provincial Treasurer cannot be faulted for presumably sending the notices to petitioners address indicated in the land titles and tax declarations of the subject properties.The principle We enunciated in Valencia v. Jimenez,40Camo v. Riosa Boyco,41and Requiron v. Sinaban42that there can be no presumption of regularity of any administrative action which results in depriving a taxpayer of his property through a tax sale does not apply in the case at bar. By and large, these cases cited by petitioner involved facts that are way too different from the one found in the instant case. More importantly, in the present case, respondent Province, through its witness, Josephine Espino, unequivocally attested that the procedural requisites mandated by PD 464 were definitely observed. During her presentation, Espino stated that she is a Local Treasury Operation Officer IV of the Provincial Treasurers Office since March 2000 and that she had previously served as Local Treasury Operations Officer and Local Revenue Collection Officer III of the Provincial Treasurers Office, being in charge of collecting taxes.43Under oath, she declared to have personal knowledge of the fact that notice of tax delinquency was sent by the Provincial Treasurers Office to petitioner. She could not, however, show any documentary proof mainly because the exclusive folder of petitioners properties are now missing despite exercise of all possible means to locate them in other property files.44Considering the long time that elapsed between the public sale held sometime in 1987 or 1988 and the presentation of her testimony in 2002, it is also understandable that Espino could no longer remember the minute details surrounding the notices, publication, and posting that respondent Provincial Treasurer observed relative to the auction sale of the subject properties.The Court, therefore, affirms the RTCs opinion that petitioner was not able to establish its cause of action for its failure to submit convincing evidence to establish a case and the CAs position that it must rely on the strength of its evidence and not on the weakness of respondents claim. Indeed, in Sapu-an v. Court of Appeals,45We held:The general rule in civil cases is that the party having the burden of proof must establish his case by a preponderance of evidence. By "preponderance of evidence" is meant that the evidence as a whole adduced by one side is superior to that of the other.In determining where the preponderance or superior weight of evidence on the issues involved lies, the court may consider all the facts and circumstances of the case, the witnesses manner of testifying, their intelligence, their means and opportunity of knowing the facts on which they are testifying, the nature of such facts, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility as far as the same may legitimately appear at the trial. The court may also consider the number of witnesses, although the preponderance is not necessarily with the greatest number.1wphi1It is settled that matters of credibility are addressed basically to the trial judge who is in a better position than the appellate court to appreciate the weight and evidentiary value of the testimonies of witnesses who have personally appeared before him.46What petitioner has accomplished is only to cast doubts by capitalizing on the absence of documentary evidence on the part of respondents. While such approach would succeed if carried out by the accused in criminal cases, plaintiffs in civil cases need to do much more to overturn findings of fact and credibility by the trial court, especially when the same had been affirmed by the CA. It must be stressed that overturning judgments in civil cases should be based on preponderance of evidence, and with the further qualification that, when the scales shall stand upon an equipoise, the court should find for the defendant.47The "equiponderance of evidence" rule states that when the scale shall stand upon an equipoise and there is nothing in the evidence which shall incline it to one side or the other, the court will find for the defendant.48Under this principle, the plaintiff must rely on the strength of his evidence and not on the weakness of the defendant's claim; even if the evidence of the plaintiff may be stronger than that of the defendant, there is no preponderance of evidence on his side if such evidence is insufficient in itself to establish his cause of action.49WHEREFORE, the petition is DENIED. The assailed October 24, 2005 Decision and July 18, 2006 Resolution of the Court of Appeals in CAG.R. CV No. 81191, which sustained the August 19,2003 Decision of the Regional Trial Court, Branch 1, Balanga City, Bataan dismissing the case are hereby AFFIRMED.

G.R. No. 112497 August 4, 1994HON. FRANKLIN M. DRILON, in his capacity as SECRETARY OF JUSTICE,petitioner,vs.MAYOR ALFREDO S. LIM, VICE-MAYOR JOSE L. ATIENZA, CITY TREASURER ANTHONY ACEVEDO, SANGGUNIANG PANGLUNSOD AND THE CITY OF MANILA,respondents.We do not share that view. The lower court was rather hasty in invalidating the provision.Section 187 authorizes the Secretary of Justice to review only the constitutionality or legality of the tax ordinance and, if warranted, to revoke it on either or both of these grounds. When he alters or modifies or sets aside a tax ordinance, he is not also permitted to substitute his own judgment for the judgment of the local government that enacted the measure. Secretary Drilon did set aside the Manila Revenue Code, but he did not replace it with his own version of what the Code should be. He did not pronounce the ordinance unwise or unreasonable as a basis for its annulment. He did not say that in his judgment it was a bad law. What he found only was that it was illegal. All he did in reviewing the said measure was determine if the petitioners were performing their functions in accordance with law, that is, with the prescribed procedure for the enactment of tax ordinances and the grant of powers to the city government under the Local Government Code. As we see it, that was an act not of control but of mere supervision.An officer in control lays down the rules in the doing of an act. If they are not followed, he may, in his discretion, order the act undone or re-done by his subordinate or he may even decide to do it himself. Supervision does not cover such authority. The supervisor or superintendent merely sees to it that the rules are followed, but he himself does not lay down such rules, nor does he have the discretion to modify or replace them. If the rules are not observed, he may order the work done or re-done but only to conform to the prescribed rules. He may not prescribe his own manner for the doing of the act. He has no judgment on this matter except to see to it that the rules are followed. In the opinion of the Court, Secretary Drilon did precisely this, and no more nor less than this, and so performed an act not of control but of mere supervision.The case of Taule v. Santos9cited in the decision has no application here because the jurisdiction claimed by the Secretary of Local Governments over election contests in the Katipunan ng Mga Barangay was held to belong to the Commission on Elections by constitutional provision. The conflict was over jurisdiction, not supervision or control.Significantly, a rule similar to Section 187 appeared in the Local Autonomy Act, which provided in its Section 2 as follows:A tax ordinance shall go into effect on the fifteenth day after its passage, unless the ordinance shall provide otherwise: Provided, however, That the Secretary of Finance shall have authority to suspend the effectivity of any ordinance within one hundred and twenty days after receipt by him of a copy thereof, if, in his opinion, the tax or fee therein levied or imposed is unjust, excessive, oppressive, or confiscatory, or when it is contrary to declared national economy policy, and when the said Secretary exercises this authority the effectivity of such ordinance shall be suspended, either in part or as a whole, for a period of thirty days within which period the local legislative body may either modify the tax ordinance to meet the objections thereto, or file an appeal with a court of competent jurisdiction; otherwise, the tax ordinance or the part or parts thereof declared suspended, shall be considered as revoked. Thereafter, the local legislative body may not reimpose the same tax or fee until such time as the grounds for the suspension thereof shall have ceased to exist.That section allowed the Secretary of Finance to suspend the effectivity of a tax ordinance if,in his opinion, the tax or fee levied wasunjust, excessive,oppressive or confiscatory. Determination of these flaws would involve the exercise ofjudgmentordiscretionand not merely an examination of whether or not the requirements or limitations of the law had been observed; hence, it would smack of control rather than mere supervision. That power was never questioned before this Court but, at any rate, the Secretary of Justice is not given the same latitude under Section 187. All he is permitted to do is ascertain the constitutionality or legality of the tax measure, without the right to declare that, in his opinion, it is unjust, excessive, oppressive or confiscatory. He has no discretion on this matter. In fact, Secretary Drilon set aside the Manila Revenue Code only on two grounds, to with, the inclusion therein of certainultra viresprovisions and non-compliance with the prescribed procedure in its enactment. These grounds affected thelegality, not thewisdomorreasonableness, of the tax measure.The issue of non-compliance with the prescribed procedure in the enactment of the Manila Revenue Code is another matter.In his resolution, Secretary Drilon declared that there were no written notices of public hearings on the proposed Manila Revenue Code that were sent to interested parties as required by Art. 276(b) of the Implementing Rules of the Local Government Code nor were copies of the proposed ordinance published in three successive issues of a newspaper of general circulation pursuant to Art. 276(a). No minutes were submitted to show that the obligatory public hearings had been held. Neither were copies of the measure as approved posted in prominent places in the city in accordance with Sec. 511(a) of the Local Government Code. Finally, the Manila Revenue Code was not translated into Pilipino or Tagalog and disseminated among the people for their information and guidance, conformably to Sec. 59(b) of the Code.Judge Palattao found otherwise. He declared that all the procedural requirements had been observed in the enactment of the Manila Revenue Code and that the City of Manila had not been able to prove such compliance before the Secretary only because he had given it only five days within which to gather and present to him all the evidence (consisting of 25 exhibits) later submitted to the trial court.To get to the bottom of this question, the Court acceded to the motion of the respondents and called for the elevation to it of the said exhibits. We have carefully examined every one of these exhibits and agree with the trial court that the procedural requirements have indeed been observed. Notices of the public hearings were sent to interested parties as evidenced by Exhibits G-1 to 17. The minutes of the hearings are found in Exhibits M, M-1, M-2, and M-3. Exhibits B and C show that the proposed ordinances were published in theBalitaand the Manila Standard on April 21 and 25, 1993, respectively, and the approved ordinance was published in the July 3, 4, 5, 1993 issues of the Manila Standard and in the July 6, 1993 issue ofBalita, as shown by Exhibits Q, Q-1, Q-2, and Q-3.The only exceptions are the posting of the ordinance as approved but this omission does not affect its validity, considering that its publication in three successive issues of a newspaper of general circulation will satisfy due process. It has also not been shown that the text of the ordinance has been translated and disseminated, but this requirement applies to the approval of local development plans and public investment programs of the local government unit and not to tax ordinances.We make no ruling on the substantive provisions of the Manila Revenue Code as their validity has not been raised in issue in the present petition.WHEREFORE, the judgment is hereby rendered REVERSING the challenged decision of the Regional Trial Court insofar as it declared Section 187 of the Local Government Code unconstitutional but AFFIRMING its finding that the procedural requirements in the enactment of the Manila Revenue Code have been observed. No pronouncement as to costs.SO ORDERED.

SPOUSES EDUARDO and LETICIA MONTAO,Petitioners,-versus-ROSALINA FRANCISCO, THE CITY GOVERNMENT OF ILOILO, ROMEO V. MANIKAN, City Treasurer of Iloilo City, and ERLINDA C. ZARANDIN, Head of the Treasurers Enforcement Group,Respondents.G.R. No. 160380Present:YNARES-SANTIAGO,J.,Chairperson,CHICO-NAZARIO,VELASCO, JR.,NACHURA, andPERALTA,JJ.Promulgated:July 30, 2009

x---- ------------------------------------------------------------------------------------xInTalusan v. Tayag,[31]the Court held that for purposes of the collection of real property taxes, the registered owner of the property is considered the taxpayer.Hence, only the registered owner is entitled to a notice of tax delinquency and other proceedings relative to the tax sale.[32]In this case, theCourt of Appeals correctly held that the GSIS, as the registered owner of the subject property, was the taxpayer that was entitled to the notice oftax delinquency and that ofthe auction sale,as well as other related notices.It found that the GSIS was notdeprived ofits property without due process and that notice was regularly served.It pointed out that it had already upheld the validity of the assessment of the real property taxes upon GSISandthe auction sale proceedings inGSIS v. CityAssessorofIloilo City.[33]It is important to note that both the GSIS, as the registered owner of the subject property, and herein petitioners Spouses Montao separately questioned the validity of the auction sale of the subject property covered by TCT No. T-41681.The Court of Appeals mentioned in its Decision that there are two cases involving the same issue, namely, this action for declaration of nullity of sale and damages filed by the Spouses Montao, and the petition for annulment of judgment filed by the GSIS, docketed as CA-G.R. SP No. 51149, entitledGSIS v. City Assessor of Iloilo City,the Register of Deeds of Iloilo City and Rosalina Francisco (GSIS v. City Assessor of Iloilo City).InGSIS v. City Assessor of Iloilo City,the GSISassailed the Order dated April 29, 1993 of the RTC of Iloilo City, Branch 36 and the Order dated November 8, 1994 of theRTC of Iloilo, Branch 31 in regardto the petition of herein respondent Rosalina Francisco for the entry ofnew transfer certificates of title in her name, which included TCT No. T-41681 covering the subject parcel of land in this case.The GSIS claimed that the assessment of real property taxes on the parcels of land was void because it was exempt from all forms of taxes under its charter, Republic Act No. 8291. The GSIS also claimed that it had no notice of the proceedings in the assessment and levy of the taxes, as well as the sale of the properties at public auction; hence, its right to due process was violated.InGSIS v. City Assessor of Iloilo City,theCourtof Appeals upheld thefindingsofthelowercourts thatnoticesweresenttoGSIS and thebeneficial owners of the properties in question. It gave no credence to the arguments of GSIS and denied its petition.GSIS appealed the decision of the Court of Appeals before this Court viaapetition for review oncertiorari.In a Decision datedJune 27, 2006in G.R. No. 147192,[34]thisCourtdismissed the GSIS petition for review oncertiorariof the Decision of the Court of Appeals inCA-G.R. SP No. 51149 datedAugust 8, 2000.Hence, the finding of the Court of Appeals in regard to the validity of the auction sale proceedings of the subject propertyhas long been final.WHEREFORE,thepetitionisDENIED.The Decision datedApril 24, 2003and the Resolution datedAugust 20, 2003ofthe Court of Appeals in CA-G.R. CV No. 71004 areherebyAFFIRMED.SECOND DIVISION

TheCITYOFILOILO,Mr.ROMEO V.MANIKAN, in his capacity as the Treasurer of Iloilo City,Petitioners,-versus-SMARTCOMMUNICATIONS, INC. (SMART),Respondent.G.R. No. 167260Present:QUISUMBING,J., Chairperson,CARPIO MORALES,VELASCO, JR.,NACHURA,*andBRION,JJ.Promulgated:February 27, 2009

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THE COURTS RULINGSMART relies on two provisions of law to support its claim for tax exemption: Section 9 of SMARTs franchise and Section 23 of the Public Telecoms Act.After a review of pertinent laws and jurisprudence particularly ofSMART Communications, Inc. v. City of Davao,[4]a case which, except for the respondent, involves the same set of facts and issues we find SMARTs claim for exemption to be unfounded. Consequently, we find the petition meritorious.The basic principle in the construction of laws granting tax exemptions has been very stable.As early as 1916, in the case ofGovernment of the Philippine Islands v. Monte de Piedad,[5]this Court has declared that he who claims an exemption from his share of the common burden of taxation must justify his claim by showing that the Legislature intended to exempt him by words too plain to be beyond doubt or mistake.This doctrine was repeated in the 1926 case ofAsiatic Petroleum v. Llanes,[6]as well as in the case ofBorja v. Commissioner of Internal Revenue (CIR)[7]decided in 1961. Citing American jurisprudence, the Court stated inE. Rodriguez, Inc. v. CIR:[8]The right of taxation is inherent in the State. It is a prerogative essential to the perpetuity of the government; and he who claims an exemption from the common burden, must justify his claim by the clearest grant of organic or statute law xxx When exemption is claimed, it must be shown indubitably to exist. At the outset, every presumption is against it. A well-founded doubt is fatal to the claim; it is only when the terms of the concession are too explicit to admit fairly of any other construction that the proposition can be supported.In the recent case ofDigital Telecommunications, Inc. v. City Government of Batangas, et al.,[9]we adhered to the same principle when we said:A tax exemption cannot arise from vague inference...Tax exemptions must be clear and unequivocal.A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden.Any doubt whether a tax exemption exists is resolved against the taxpayer.The burden therefore is on SMART to prove that, based on its franchise and the Public Telecoms Act, it is entitled to exemption from the local franchise and business taxes being collected by the petitioner.Claim for Exemption underSMARTs franchiseSection 9 of SMARTs franchise states:Section 9.Tax provisions. The grantee, its successors or assigns shall be liable to pay the same taxes on their real estate buildings and personal property, exclusive of' this franchise, as other persons or corporations which are now or hereafter may be required by law to pay. In addition thereto,the grantee, its successors or assigns shall pay a franchise tax equivalent to three percent (3%) of all gross receipts of the business transacted under this franchise by the grantee, its successors or assigns and the said percentage shall bein lieu of all taxeson this franchise or earnings thereof:Provided, That the grantee, its successors or assigns shall continue to be liable for income taxes payable under Title II of the National Internal Revenue Code pursuant to Section 2 of Executive Order No. 72 unless the latter enactment is amended or repealed, in which case the amendment or repeal shall be applicable thereto.The grantee shall file the return with and pay the tax due thereon to the Commissioner of Internal Revenue or his duly authorized representative in accordance with the National Internal Revenue Code and the return shall be subject to audit by the Bureau of Internal Revenue.[Emphasis supplied.]The petitioner posits that SMARTs claim for exemption under its franchise is not equivocal enough to prevail over the specific grant of power to local government units to exact taxes from businesses operating within its territorial jurisdiction under Section 137 in relation to Section 151 of the LGC.More importantly, it claimed that exemptions from taxation have already been removed by Section 193 of the LGC:Section 193.Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this Code,tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical,including government-owned or controlled corporations, except local water districts, cooperatives duly registered under RA No. 6938, non-stock and non-profit hospitals and educational institutions,are hereby withdrawn upon the effectivity of this Code.[Emphasis supplied.]The petitioner argues, too, that SMARTs claim for exemption from taxes under Section 9 of its franchise is not couched in plain and unequivocal language such that it restored the withdrawal of tax exemptions under Section 193 above.It claims that if Congress intended that the tax exemption privileges withdrawn by Section 193 of RA 7160 [LGC] were to be restored in respondents [SMARTs] franchise, it would have so expressly provided therein and not merely [restored the exemption] by the simple expedient of including the in lieu of all taxes provision in said franchise.[10]We have indeed ruled that by virtue of Section 193 of the LGC, all tax exemption privileges then enjoyed by all persons, save those expressly mentioned, have been withdrawn effective January 1, 1992 the date of effectivity of the LGC.[11]The first clause of Section 137 of the LGC states the same rule.[12]However, the withdrawal of exemptions, whether under Section 193 or 137 of the LGC, pertains only to those already existing when the LGC was enacted.The intention of the legislature was to remove all tax exemptions or incentives grantedpriorto the LGC.[13]As SMARTs franchise was made effective onMarch 27, 1992 after the effectivity of the LGC Section 193 will therefore not apply in this case.But while Section 193 of the LGC will not affect the claimed tax exemption under SMARTs franchise, we fail to find a categorical and encompassing grant of tax exemption to SMART covering exemption frombothnational and local taxes:R.A. No 7294 does not expressly provide what kind of taxes SMART is exempted from. It is not clear whether the in lieu of all taxes provision in the franchise of SMART would include exemption from local or national taxation.What is clear is that SMART shall pay franchise tax equivalent