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ISSUE:
Is
Sec.
21
(B)
of
the
Manila
Revenue
Code,
as
amended,
unconstitutional?
HELD:
Yes.
The
power
to
tax
is
not
inherent
in
LGUs
to
whom
the
power
must
be
delegated
by
Congress
and
must
be
exercised
within
the
guidelines
and
limitations
that
Congress
may
provide.
Sec.
5
of
Article
X
of
the
Constitution
granted
LGUs
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...
In
conformity
with
said
constitutional
provision,
the
Local
Govt
Code
was
enacted
by
Congress.
Sec.
130
of
the
LGC
provides
for
the
fundamental
principles
governing
the
taxing
powers
of
LGUs.
Sec.
133
provides
for
the
common
limitations
on
the
taxing
powers
of
LGUs.
Among
the
common
limitations
on
the
taxing
power
of
LGUs
is
Section
133(j)
of
the
LGC,
which
states
that
unless
otherwise
provided
herein,
the
taxing
power
of
LGUs
shall
not
extend
to
taxes
on
the
gross
receipts
of
transportation
contractors
and
persons
engaged
in
the
transportation
of
passengers
or
freight
by
hire
and
common
carriers
by
air,
land
or
water,
except
as
provided
in
this
Code.
Section
133(j)
of
the
LGC
clearly
and
unambiguously
proscribes
LGUs
from
imposing
any
tax
on
the
gross
receipts
of
transportation
contractors,
persons
engaged
in
the
transportation
of
passengers
or
freight
by
hire,
and
common
carriers
by
air,
land,
or
water.
Yet,
confusion
arose
from
the
phrase
unless
otherwise
provided
herein,
found
at
the
beginning
of
the
said
provision,
and
the
City
of
Manila
anchors
the
validity
of
Sec.
21
(B)
on
said
phrase.
However,
the
Court
is
not
convinced
with
the
Citys
contention.
Sec.
133(j)
of
the
LGC
prevails
over
Sec.
143(h)
of
the
same
Code,
and
Sec.
21(B)
of
the
Manila
Revenue
Code,
as
amended,
was
manifestly
in
contravention
of
the
former.
Sec.
133(j)
of
the
LGC
is
a
specific
provision
that
explicitly
withholds
from
any
LGU
the
power
to
tax
the
gross
receipts
of
transportation
contractors,
common
carriers,
etc.
(((((persons
engaged
in
the
transportation
of
passengers
or
freight
by
hire,
and
common
carriers
by
air,
land,
or
water.))))))))
In
contrast,
Sec.
143
of
the
LGC
defines
the
general
power
of
the
municipality
(as
well
as
the
city,
if
read
in
relation
to
Section
151
of
the
same
Code)
to
tax
businesses
within
its
jurisdiction.
The
succeeding
proviso
of
Section
143(h)
of
the
LGC,
viz.,
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,
is
not
a
specific
grant
of
power
to
the
municipality
or
city
to
impose
business
tax
on
the
gross
sales
or
receipts
of
such
a
business.
Rather,
the
proviso
only
fixes
a
maximum
rate
of
imposable
business
tax
in
case
the
business
taxed
under
Section
143(h)
of
the
LGC
happens
to
be
subject
to
excise,
value
added,
or
percentage
tax
under
the
NIRC.
The
omnibus
grant
of
power
to
municipalities
and
cities
under
Section
143(h)
of
the
LGC
cannot
overcome
the
specific
exception/exemption
in
Section
133(j)
of
the
same
Code.
In
the
case
at
bar,
the
sanggunian
of
the
municipality
or
city
cannot
enact
an
ordinance
imposing
business
tax
on
the
gross
receipts
of
transportation
contractors,
persons
engaged
in
the
transportation
of
passengers
or
freight
by
hire,
and
common
carriers
by
air,
land,
or
water,
when
said
sanggunian
was
already
specifically
prohibited
from
doing
so.
Such
construction
gives
effect
to
both
Sections
133(j)
and
143(h)
of
the
LGC.
Also,
Sec.
5(b)
of
the
LGC
itself,
on
Rules
of
Interpretation,
provides
that
in
case
of
doubt,
any
tax
ordinance
shall
be
construed
strictly
against
the
LGU
enacting
it,
and
liberally
in
favor
of
the
taxpayer.
Furthermore,
such
a
construction
is
pursuant
to
the
legislative
intent
to
exclude
from
the
taxing
power
of
the
LGU
the
imposition
of
business
tax
against
common
carriers
to
prevent
a
duplication
of
the
so-called
common
carriers
tax.