G.R. No. 120051. December 10, 2014.

*  
  PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner, vs. HON. JUAN T.
CITY OF MANILA, HON. ALFREDO S. LIM, as Mayor of the City of Manila, and NABONG, JR., Presiding Judge, Regional Trial Court of Manila, Branch 32; THE CITY
ANTHONY Y. ACEVEDO, City Treasurer, petitioners, vs. HON. ANGEL VALERA OF MANILA; MAYOR ALFREDO LIM; VICE MAYOR LITO ATIENZA; SANGGUNIANG
COLET, as Presiding Judge, Regional Trial Court of Manila (Br. 43), and MALAYSIAN PANLUNGSOD, and CITY TREASURER ANTHONY ACEVEDO, respondents.
AIRLINE SYSTEM, respondents.
G.R. Nos. 121847-55. December 10, 2014.*
G.R. No. 121613.  December 10, 2014.*  
  MAERSK-FILIPINAS, INC., AMERICAN PRESIDENT LINES, SEA-LAND SERVICES, INC.,
MAERSK-FILIPINAS, INC., AMERICAN PRESIDENT LINES, LTD., FLAGSHIP TANKERS OVERSEAS FREIGHTERS SHIPPING, INC., DONGNAMA SHIPPING CO., LTD.,
CORP., CORE INDO MARITIME CORP., and CORE MARITIME CORP., FLAGSHIP TANKERS, CORE INDO MARITIME CORP., CORE MARITIME CORP., and
petitioners, vs. CITY OF MANILA, MAYOR ALFREDO LIM, VICE MAYOR LITO EASTERN SHIPPING LINES, INC., petitioners, vs. CITY OF MANILA, HON. MAYOR
ATIENZA,1 SANGGUNIANG PANLUNGSOD and CITY TREASURER ANTHONY ALFREDO S. LIM, HON. VICE MAYOR LITO ATIENZA, JR., SANGGUNIANG
ACEVEDO, respondents. PANLUNGSOD NG MAYNILA, and CITY TREASURER ANTHONY Y. ACEBEDO and
their agents or representatives, and HON. JUDGE JUAN C. NABONG, JR., Branch
  32, Regional Trial Court of Manila, respondents,
G.R. No. 121675. December 10, 2014.*
   
EASTERN SHIPPING LINES, INC., petitioner, vs. CITY COUNCIL OF MANILA, THE WILLIAM LINES, INC., NEGROS NAVIGATION CO., INC., LORENZO SHIPPING
MAYOR OF MANILA and THE CITY OF MANILA, respondents. CORPORATION, CARLOS A. GOTHONG LINES, INC., ABOITIZ SHIPPING
CORPORATION, ABOITIZ AIR TRANSPORT CORPORATION, ABOITIZ HAULERS, INC.,
SOLID SHIPPING LINES CORPORATION and PNOC SHIPPING & TRANSPORT
CORPORATION, intervenors.
G.R. No. 121704. December 10, 2014.*
 
WILLIAM LINES, INC., NEGROS NAVIGATION CO., INC., LORENZO SHIPPING
CORPORATION, CARLOS A. GOTHONG LINES, INC., ABOITIZ SHIPPING G.R. No. 122333. December 10, 2014.*
CORPORATION, ABOITIZ AIR TRANSPORT CORPORATION, ABOITIZ HAULERS, INC.,  
and SOLID SHIPPING LINES CORPORATION, petitioners, vs. REGIONAL TRIAL COSCO CONTAINER LINES and HEUNG-A SHIPPING CO., LTD., both represented by
COURT OF MANILA, BRANCH 32, CITY OF MANILA, MAYOR ALFREDO LIM, VICE their Resident Agent, Wallem Philippines Shipping, Inc.; DSR SENATOR LINES,
MAYOR LITO ATIENZA, SANGGUNIANG PANLUNGSOD, and CITY TREASURER COMPANIA SUD AMERICANA DE VAPORES S.A., and ARIMURA SANGYO
ANTHONY ACEVEDO, respondents. COMPANY, LTD., all represented by their Resident Agent, C.F. Sharp Shipping
Agencies, Incorporated; PACIFIC INTERNATIONAL LINES (PTE) LTD. and PACIFIC
EAGLE LINES (PTE) LTD., both represented by their Resident Agent, TMS Ship
Agencies, Inc.; COMPAGNIE MARITIME D’ AFFRETEMENT (CMA), represented by
G.R. Nos. 121720-28. December 10, 2014.* its Resident Agent, Inchcape Shipping Services; EVERETT ORIENT LINES, INC.,

1|Page
represented by its Resident Agent, Everett Steamship Corporation; YANGMING G.R. No. 124855. December 10, 2014.*
MARINE TRANSPORT CORP., represented by its Resident Agent, Sky International,  
Inc.; NIPON YUSEN KAISHA, represented by its Resident Agent, Fil-Japan Shipping DONGNAMA SHIPPING CO., LTD. and KYOWA SHIPPING LTD., herein represented
Corporation; HYUNDAI MER- by SKY INTERNATIONAL, INC.,

268 269
26 SUPREME COURT REPORTS VOL. 744, DECEMBER 10, 269
8 ANNOTATED 2014
City of Manila vs. Colet City of Manila vs. Colet

CHANT MARINE CO. LTD., represented by its Resident Agent, Citadel Lines; petitioners, vs. COURT OF APPEALS, CITY OF MANILA MAYOR ALFREDO LIM,
MALAYSIAN INTERNATIONAL SHIPPING CORPORATION BERHAD, represented by VICE MAYOR LITO ATIENZA, CITY COUNCIL OF MANILA, and CITY TREASURER
its Resident Agent, Royal Cargo Agencies, Inc.; BOLT ORIENT LINE, represented by ANTHONY ACEVEDO, respondents.
its Resident Agent, FILSOV Shipping Company, Inc.; MITSUI-O.S.K. LINES, LTD.,
represented by its Resident Agent, Magsaysay Agencies, Inc.; PHILS., MICRONESIA Remedial Law; Civil Procedure; Docket Fees; Denial of the petition for review
& ORIENT NAVIGATION CO. (PMSO LINE), represented by its Resident Agent, Van outright for failure to pay docketing and other fees within the prescribed period
Transport Company, Inc.; LLOYD TRIESTINO DI NAVIGAZIONE S.P.A.N. and was also directory and not mandatory upon the Court under Revised Circular No.
COMPAGNIE GENERALE MARITIME, both represented by their Resident Agent, 1-88.—The Court notes that Revised Circular No. 1-88, effective July 1, 1991,
F.E. Zuellig (M), Inc.; and MADRIGAL-WAN HAI LINES, petitioners, vs. CITY OF which was cited in the Resolution dated October 23, 1995 as basis for the
MANILA, MAYOR ALFREDO LIM, VICE MAYOR LITO ATIENZA, SANGGUNIANG dismissal of the Petition of Maersk, et al., also used the word “may” in the first
PANLUNGSOD and City Treasurer ANTHONY Y. ACEBEDO, respondents. paragraph thereof: (1) Payment of docketing and other fees.—Section 1 of Rule 45
requires that petitions for review be filed and the required fees paid within the
G.R. No. 122335. December 10, 2014.* prescribed period. Unless exempted by law or rule, such fees must be fully paid in
  accordance with this Circular; otherwise, the Court may deny the petition
SULPICIO LINES, INC., petitioner, vs. REGIONAL TRIAL COURT OF MANILA, BRANCH outright. The same rule shall govern petitions under Rule 65. (Emphasis supplied)
32, CITY OF MANILA MAYOR ALFREDO LIM, VICE MAYOR LITO ATIENZA, Hence, denial of the petition for review outright for failure to pay docketing and
SANGGUNIANG PANLUNGSOD and CITY TREASURER ANTHONY ACEVEDO, other fees within the prescribed period was also directory and not mandatory
respondents. upon the Court under Revised Circular No. 1-88.
Taxation; Delegation of Powers; It is already well-settled that although the
G.R. No. 122349. December 10, 2014.* power to tax is inherent in the State, the same is not true for the Local
  Government Units (LGUs) to whom the power must be delegated by Congress and
ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., in its own behalf and in must be exercised within the guidelines and limitations that Congress may
representation of its Members, petitioner, vs. CITY OF MANILA, MAYOR ALFREDO provide.—It is already well-settled that although the power to tax is inherent in
LIM, VICE MAYOR LITO ATIENZA, SANGGUNIANG PANLUNGSOD and CITY the State, the same is not true for the LGUs to whom the power must be
TREASURER ANTHONY ACEVEDO, respondents.
2|Page
delegated by Congress and must be exercised within the guidelines and must be operative, and the general enactment must be taken to affect only such
limitations that Congress may provide. cases within its general language as are not within the provisions of the particular
Same; Local Taxation; Among the common limitations on the taxing power enactment.—The omnibus grant of power to municipalities and cities under
of Local Government Units (LGUs)  is Section 133(j) of the Local Government Code Section 143(h) of the LGC cannot overcome the specific exception/exemption in
(LGC), which states that “[u]nless otherwise provided herein,” the taxing power of Section 133(j) of the same Code. This is in accord with the rule on statutory
LGUs shall not extend to “[t]axes on the gross receipts of transportation construction that specific provisions must prevail over general ones. A special and
contractors and persons engaged in the transportation of passengers or freight by specific provision prevails over a general provision irrespective of their relative
hire and common carriers by air, land or water, except as provided in this positions in the statute. Generalia specialibus non derogant. Where there is in the
Code[.]”—Among the common limitations on the taxing power of same statute a particular enactment and also a general one which in its most
comprehensive sense would include what is embraced in the former, the
270 particular enactment must be operative, and the general enactment must be
27 SUPREME COURT REPORTS taken to affect only such cases within its general
0 ANNOTATED
City of Manila vs. Colet  271
LGUs is Section 133(j) of the LGC, which states that “[u]nless otherwise VOL. 744, DECEMBER 10,  271
provided herein,” the taxing power of LGUs shall not extend to “[t]axes on the 2014
gross receipts of transportation contractors and persons engaged in the City of Manila vs. Colet
transportation of passengers or freight by hire and common carriers by air, land language as are not within the provisions of the particular enactment.
or water, except as provided in this Code[.]” Section 133(j) of the LGC clearly and Same; The Supreme Court (SC) strictly construes Section 21(B) of the Manila
unambiguously proscribes LGUs from imposing any tax on the gross receipts of Revenue Code, as amended, against the City of Manila and its public officials and
transportation contractors, persons engaged in the transportation of passengers liberally in favor of the transportation contractors, persons engaged in the
or freight by hire, and common carriers by air, land, or water. Yet, confusion arose transportation of passengers or freight by hire, and common carriers by air, land,
from the phrase “unless otherwise provided herein,” found at the beginning of or water.—The Court strictly construes Section 21(B) of the Manila Revenue Code,
the said provision. The City of Manila and its public officials insisted that said as amended, against the City of Manila and its public officials and liberally in favor
clause recognized the power of the municipality or city, under Section 143(h) of of the transportation contractors, persons engaged in the transportation of
the LGC, to impose tax “on any business subject to the excise, value-added or passengers or freight by hire, and common carriers by air, land, or water. Strictly
percentage tax under the National Internal Revenue Code, as amended.” And it assessed against the guidelines and limitations set forth in the LGC, Section 21(B)
was pursuant to Section 143(h) of the LGC that the City of Manila and its public of the Manila Revenue Code, as amended, was enacted ultra vires.
officials enacted, approved, and implemented Section 21(B) of the Manila Value-Added Tax; Expanded Value-Added Tax (E-VAT) Law Republic Act (RA)
Revenue Code, as amended. The Court is not convinced. Section 133(j) of the LGC No. 7716, more popularly known as the Expanded Value-Added Tax (E-VAT) Law,
prevails over Section 143(h) of the same Code, and Section 21(B) of the Manila which took effect after the Local Government Code (LGC) on May 28, 1994,
Revenue Code, as amended, was manifestly in contravention of the former. expressly amended the National Internal Revenue Code (NIRC) of 1977 and added
Statutory Construction; Statutes; Where there is in the same statute a to Section 115 of the latter on “Percentage tax on carriers and keepers of
particular enactment and also a general one which in its most comprehensive garages,” the following proscription: “The gross receipts of common carriers
sense would include what is embraced in the former, the particular enactment derived from their incoming and outgoing freight shall not be subjected to the

3|Page
local taxes imposed under RA No. 7160, otherwise known as the LGC of 1991.”—  
Republic Act No. 7716, more popularly known as the Expanded Value-Added Tax The Manila Revenue Code was enacted on June 22, 1993 by the City Council of
(E-VAT) Law, which took effect after the LGC on May 28, 1994, expressly amended Manila and approved on June 29, 1993 by then Manila Mayor Alfredo S. Lim (Lim).
the NIRC of 1977 and added to Section 115 of the latter on “Percentage tax on Section 21(B) of said Code originally provided:
carriers and keepers of garages,” the following proscription: “The gross receipts of Section 21. Tax on Businesses Subject to the Excise, Value-Added or
common carriers derived from their incoming and outgoing freight shall not be Percentage Taxes Under the NIRC.—
subjected to the local taxes imposed under Republic Act No. 7160, otherwise
known as the Local Government Code of 1991.” _______________

PETITIONS for review on certiorari of a decision of the Regional Trial Court of 2  On November 26, 2013, the City Council of Manila had already enacted
Manila, Br. 32. Ordinance No. 8331, otherwise known as the 2013 Omnibus Revenue Code of the
The facts are stated in the opinion of the Court. City of Manila.
  Tañada, Vivo & Tan for petitioners in G.R. Nos. 121847-55.
273
272 VOL. 744, DECEMBER 10, 273
27 SUPREME COURT REPORTS 2014
2 ANNOTATED City of Manila vs. Colet
City of Manila vs. Colet On any of the following businesses and articles of commerce subject to the
  Leonides F. Balmeo for petitioners in G.R. No. 121704. excise, value-added or percentage taxes under the National Internal Revenue
 Noel Montilla for petitioners in G.R. Nos. 121613, 122333 and 122349. Code, hereinafter referred to as NIRC, as amended, a tax of three percent
 Marilyn P. Cacho-Domingo for petitioners in G.R. No. 124855. (3%) per annum on the gross sales or receipts of the preceding calendar year is
 Ma. Dulce P. Manlapaz and Hector B. Holgado for Eastern Shipping Lines, Inc. hereby imposed:
 Leonides F. Balmeo and Arniel N. Bondoc for petitioner in G.R. No. 122335. x x x x
 Arthur D. Lim for petitioner in G.R. No. 122335. B) On the gross receipts of keepers of garages, cars for rent or hire driven by
 T.A. Tejada for respondents in G.R. No. 120051. the lessee, transportation contractors, persons who transport passenger or
freight for hire, and common carriers by land, air or water, except owners
  of bancas and owners of animal-drawn two-wheel vehicle.
LEONARDO-DE CASTRO, J.:
   
Before the Court are 10 consolidated Petitions, the issue at the crux of which Shortly thereafter, Ordinance No. 7807 was enacted by the City Council of
is the constitutionality and/or validity of Section 21(B) of Ordinance No. 7794 of Manila on September 27, 1993 and approved by Mayor Lim on September 29,
the City of Manila, otherwise known as the Revenue Code of the City of Manila 1993, already amending several provisions of the Manila Revenue Code. Section
(Manila Revenue Code), as amended by Ordinance No. 7807. 2 21 of the Manila Revenue Code, as amended, imposed a lower tax rate on the
  businesses that fell under it, and paragraph (B) thereof read as follows:
I Section 21. Tax on Business Subject to the Excise, Value-Added or
Antecedent Facts Percentage Taxes Under the NIRC.—On any of the following businesses and
4|Page
articles of commerce subject to the excise, value-added or percentage taxes MAS, believing that it was exempt from the municipal license tax or business
under the National Internal Revenue Code hereinafter referred to as NIRC, as tax, tendered, via Far East Bank and Trust Company (FEBTC) Check No. 06564
amended, a tax of FIFTY PERCENT (50%) OF ONE PERCENT (1%) per annum on the dated January 19, 1994, only the amount of P10,307.50 for the mayor’s permit
gross sales or receipts of the preceding calendar year is hereby imposed: and regulatory fees. The City Treasurer of Manila refused to accept FEBTC Check
x x x x No. 06564.
B) On the gross receipts of keepers of garages, cars for rent or hire driven by Consequently, on January 20, 1994, MAS instituted Civil Case No. 94-69052, to
the lessee, transportation contractors, persons who transport passenger or consign with the trial court the amount of P10,307.50 for mayor’s permit and
freight for hire, and common carriers by land, air or water, except owners regulatory fees; to challenge the assessment against it by the City Treasurer of
of bancas and owners of animal-drawn two-wheel vehicle. Manila in the amount of P1,100,000.00 for municipal license tax or business tax;
and to have Section 21(B) of the Manila
274 _______________
27 SUPREME COURT REPORTS
4 ANNOTATED 3  Rollo (G.R. No. 120051), p. 50.
City of Manila vs. Colet
275
The City of Manila, through its City Treasurer, began imposing and collecting
the business tax under Section 21(B) of the Manila Revenue Code, as amended, VOL. 744, DECEMBER 10, 275
beginning January 1994. 2014
  City of Manila vs. Colet
G.R. No. 120051 Revenue Code, as amended, on which said assessment for municipal license
  tax or business tax was based, be declared invalid or null and void. Civil Case No.
Malaysian Airline System (MAS) is a foreign corporation organized and existing 94-69052 was assigned to the Regional Trial Court (RTC) of Manila, Branch 43.
under the laws of Malaysia. It is licensed to engage in business in the Philippines On April 3, 1995, RTC-Branch 43 rendered a Decision 4 in favor of MAS. The
by the Securities and Exchange Commission (SEC), particularly in the airline dispositive portion of said Decision reads:
business which involves the transportation of passengers and cargo for hire. Its WHEREFORE, the foregoing disquisitions considered, judgment is hereby
principal office and place of business in the Philippines is located in the City of rendered in favor of the plaintiff against the defendants:
Manila. 1. Declaring the consignation valid and made in accordance with law;
As MAS was renewing its business permit for 1994, it was assessed by the City 2. Ordering defendants to issue to plaintiff the mayor’s permit or permit to
Treasurer of Manila on January 17, 1994 for the following taxes and fees: operate for 1994, the necessary certificates and official receipts evidencing
  payment of [plaintiff’s] liabilities for mayor’s permit fee and other regulatory fees
for 1994;
3. Declaring Section 21(B) of Ordinance No. 7794, as amended by Ordinance
No. 7807, of the City of Manila as invalid or null and void insofar as it imposes a
business tax on transportation contractors, persons engaged in the transportation
of passengers or freight by hire and common carriers by air, land or water, or that
  plaintiff is exempt from the tax imposed by said section 21(B); and

5|Page
 4. Declaring plaintiff’s obligation to the defendant City of Manila for mayor’s G.R. No. 121613
permit fee and other regulatory fees for 1994 as having been paid and  
extinguished without any liability for surcharges, interests or any additional Because they were assessed and/or compelled to pay business taxes pursuant
amount whatsoever. to Section 21(B) of the Manila Revenue Code, as amended, before they were
issued their business
_______________ _______________

4  Id., at pp. 48-56; penned by Judge Angel Valera Colet. 5  Id., at p. 56.
6  Id., at pp. 6-19.
276
7  Id., at pp. 10-11.
27 SUPREME COURT REPORTS
8  Id., at pp. 61-86.
6 ANNOTATED 9  Id., at pp. 91-96.
City of Manila vs. Colet
Not having been proven, the prayer for the payment of attorney’s fees is 277
denied. VOL. 744, DECEMBER 10, 277
No pronouncement as to costs.5 2014
City of Manila vs. Colet
 
permits for 1994, several corporations, with principal offices in Manila and
The City of Manila, Mayor Lim, and City Treasurer Anthony Y. Acevedo
operating as “transportation contractors, persons who transport passenger or
(Acevedo) filed with the Court a Petition for Review on Certiorari,6 assailing the
freight for hire, and common carriers by land, air or water,” filed their respective
Decision dated April 3, 1995 of RTC-Branch 43 in Civil Case No. 94-69052 based on
petitions before the Manila RTC against the City of Manila, Mayor Lim, Vice Mayor
pure questions of law. They assigned the following errors on the part of RTC-
Lito Atienza (Atienza), the City Council of Manila/Sangguniang Panlungsod ng
Branch 43:
Maynila, and City Treasurer Acevedo. Said petitions were separately docketed
4.1. That the trial court erred in declaring Section 21(B) of [the Manila
and raffled to different RTC Branches, to wit:
Revenue Code, as amended,] as invalid or null and void.
 
4.2. That the trial court erred in declaring the consignation valid and made in
accordance with law.7

 
The City of Manila, Mayor Lim, and City Treasurer Acevedo prayed in their
Petition that the Court (1) reverse and set aside the assailed RTC Decision; and (2)
affirm the constitutionality and validity of Section 21(B) of the Manila Revenue
Code, as amended. The Petition was docketed as G.R. No. 120051.
MAS filed its Comment,8 to which the City of Manila, Mayor Lim, and City
Treasurer Acevedo filed their Reply.9
 

6|Page
 the Aboitiz Group); Solid Shipping Lines Corp. (Solid Shipping); and PNOC Shipping
& Transport Corp. (PSTC).
Petitioner and intervenor corporations essentially sought the (1) declaration
of Section 21(B) of the Manila Revenue Code, as amended, as void/invalid for
being contrary to the Constitution and the Local Government Code (LGC) of 1991;
(2) refund of the business taxes that the petitioner and intervenor corporations
paid under protest; and (3) the issuance of a temporary restraining order (TRO),
writ of preliminary injunction, writ of prohibition, and/or writ of permanent
injunction to enjoin the implementation of Section 21(B) of the Manila Revenue
Code, as amended.
RTC-Branch 32 issued a TRO11 on January 14, 1994 in favor of petitioners
Maersk, APL, Flagship Tankers, CIMC, and CMC. The TRO was effective for 20 days
and ordered respondent City of Manila and local officials to cease and desist from
implementing Section 21(B) of the Manila Revenue Code, as amended, while the
prayer for a writ of preliminary injunction was scheduled for presentation of
 
evidence. On February 3, 1992, after hearing, RTC-Branch 32 issued an Order
All of the aforementioned cases were later consolidated before RTC-Branch
granting the prayer of petitioners Maersk, APL, Flagship Tankers, CIMC, CMC, and
32.
OFSI for the issuance of a Writ of Preliminary Injunction, 12 with the condition that
Several more corporations with principal offices in Manila and engaged in the
each of said petitioner corporations should post an injunction bond in the amount
same line of business as the above named petitioner corporations filed
of P50,000.00. The Writ of Preliminary Injunction enjoined respondent City of
petitions/complaints-in-interven-
Manila and local officials from: (1) imposing, enforcing, assessing, and collecting
_______________
the taxes under
10  Originally docketed as a special civil case. The pleadings did not indicate _______________
the original RTC Branch to which it was raffled. (See Rollo [G.R. No. 121675], pp.
11  Rollo (G.R. No. 121613), pp. 100-101.
135-151)
12  Id., at pp. 127-128.
278
279
27 SUPREME COURT REPORTS
VOL. 744, DECEMBER 10, 279
8 ANNOTATED
2014
City of Manila vs. Colet
City of Manila vs. Colet
tion in the pending cases, namely: William Lines, Inc. (William Lines); Negros
Section 21(B) of the Manila Revenue Code, as amended; and (2) denying to
Navigation Co., Inc. (Negros Navigation); Lorenzo Shipping Corp. (Lorenzo
petitioners Maersk, APL, Flagship Tankers, CIMC, CMC, and OFSI their business
Shipping); Carlos A. Gothong Lines, Inc. (Gothong Lines); Aboitiz Shipping Corp.,
permits and licenses for 1994. In another Order dated April 22, 1994, RTC-Branch
Aboitiz Air Transport Corp., and Aboitiz Haulers, Inc. (collectively referred to as

7|Page
32 granted the prayer of intervenor corporations for the issuance of a similar Writ Whether or not Section 21(B) of Ordinance No. 7794, otherwise known as the
of Preliminary Injunction. Revenue Code of the City of Manila, as amended by Section 1(G) of Ordinance No.
In its Decision13 dated August 28, 1995 in Civil Case Nos. 94-68861, 94-68862, 7807, is valid and constitutional.17
94-68863, 94-68919, 94-68936, 94-68939, 94-68940, 94-68941, and 94-69028,
RTC-Branch 32 upheld the power of the respondent City of Manila, as a local  
government unit (LGU), to levy the business tax under Section 21(B) of the Manila Meanwhile, Maersk, et al., also filed with RTC-Branch 32 a Motion to Stay or
Revenue Code, as amended, consistent with the basic policy of local autonomy. Restore Writ of Preliminary Injunction, presenting a Memorandum issued by City
Ultimately, RTC-Branch 32 decreed: Treasurer Acevedo already ordering the collection of the business tax under
WHEREFORE, the petitions, the supplemental petitions, and the petitions or Section 21(B) of the Manila Revenue Code, as amended. In an Order 18 dated
complaints-in-intervention in all these cases are DISMISSED. October 16, 1995, RTC-Branch 32 granted the Motion of Maersk, et al., after
All temporary restraining orders are cancelled, all writs of preliminary finding the same to be meritorious and in conformity with Rule 39, Section 4 of
injunction are recalled and dissolved, and the injunction bonds cancelled. 14 the Rules of Court, on the condition that Maersk, et al., would increase their
injunction bond from P50,000.00 each to P800,000.00 each, or for a total of
  P4,000,000.00. With this latest development, Maersk, et al., filed with the Court a
Maersk, APL, Flagship Tankers, CIMC, and CMC (collectively referred to herein Supplemental Petition and Motion praying for the confirmation of the RTC Order
as Maersk, et al.), filed a direct appeal before the Court. Initially, Maersk, et al., dated October 16, 1995 restoring the Writ of Preliminary Injunction and deletion
filed a motion for extension of time to file their petition for review on certiorari. of the name of RTC-Branch 32 from the caption of the Petition in G.R. No. 121613
Upon filing of said motion, they were assessed docket and legal fees in the as the trial court is not a necessary party.
amount of P420.00, which they fully paid. The motion for extension of time was On October 23, 1995 though, the Court issued a Resolution 19 in G.R. No.
granted by the Court in a Resolution 15 dated October 4, 1995. Within the 121613 in which it resolved as follows:
extended period, Maersk, et al., filed their Petition for Review on Certiorari with On the basis of the foregoing, the Court RESOLVED to DISMISS the petition for
prayer for issuance of a writ of preliminary review on certio-
_______________
_______________
13  Id., at pp. 35-87; penned by Presiding Judge Juan C. Nabong, Jr.
14  Id., at p. 87. 16  Id., at pp. 12-34.
15  Id., at p. 10. 17  Id., at p. 19.
18  Id., at p. 154.
280 19  Id., at pp. 156-157.
28 SUPREME COURT REPORTS
0 ANNOTATED 281
VOL. 744, DECEMBER 10, 281
City of Manila vs. Colet
2014
injunction and TRO,16 docketed as G.R. No. 121613, naming RTC-Branch 32,
the City of Manila, Mayor Lim, Vice Mayor Atienza, the Sangguniang Panlungsod City of Manila vs. Colet
ng Maynila, and City Treasurer Acevedo, as respondents. Maersk, et al.,
submitted for resolution by the Court a lone question of law, viz.:
8|Page
 rari for noncompliance with the above mentioned requirement no. 1, City of Manila vs. Colet
[Maersk, et al.,] having failed to remit the amount of P202.00 as payment for the Maersk, et al., in case the Court decided not to issue the TRO prayed for. In
balance of the prescribed legal fees. fact, when Maersk, et al., filed their motion for extension of time to file their
Accordingly, the supplemental petition and motion of [Maersk, et al.,] dated petition for review on certiorari, they fully paid the docket and legal fees as
October 17, 1995 praying that the lower court’s order restoring the Writ of computed by the cashier of the Court; and when they actually filed their Petition
Preliminary Injunction be confirmed and that the Regional Trial Court of Manila, for Review on Certiorari with prayer for issuance of a writ of preliminary
Branch 32, be deleted from the caption of the petition for not being a necessary injunction and TRO, they were not assessed and required to pay additional legal
party is NOTED WITHOUT ACTION. fees. In any event, Maersk, et al., had already deposited with the Cashier’s Office
of the Court the amount of P202.00. Maersk, et al., asserted that their case is
 
meritorious and that dismissal is discretionary for the appellate court and
Maersk, et al., filed a Motion for Reconsideration 20 of the foregoing Resolution
discretion must be exercised wisely and prudently, never capriciously, with a view
dated October 23, 1995 of the Court. Maersk, et al., argued that the dismissal of
to substantial justice. Consequently, Maersk, et al., prayed that the Court
their Petition by minute resolution would deprive them of their property rights on
reconsider its Resolution dated October 23, 1995 and give due course to and
mere technical grounds. Maersk, et al., had no intention of not paying the
squarely resolve their Petition and Supplemental Petition and Motion in G.R. No.
amount of P202.00, which consisted of sheriff’s fee of P200.00 and clerk’s
121613.
commission of P2.00, charged in connection with their prayer for the issuance of
Counsel for Maersk, et al., subsequently submitted a joint Memorandum 21 for
a preliminary injunction and TRO. While Maersk, et al., did include such a prayer
the petitioners in G.R. Nos. 121613, 122333, and 122349.
in their Petition, the same had already become moot and academic after RTC-
 
Branch 32 issued the Order dated October 16, 1995 restoring and reinstating the
G.R. No. 121675
Writ of Preliminary Injunction in favor of Maersk, et al. In their Supplemental
 
Petition and Motion in G.R. No. 121613, Maersk, et al., was then only seeking the
Eastern Shipping was the petitioner in Civil Case No. 94-69028, which was
confirmation by the Court of the Order dated October 16, 1995 of RTC-Branch 32
consolidated with Civil Case Nos. 94-68861, 94-68862, 94-68863, 94-68919, 94-
and, in effect, withdrawing their prayer for the issuance of a writ of preliminary
68936, 94-68939, 94-68940, and 94-68941, before RTC-Branch 32.
injunction and TRO by the Court. Besides, Maersk, et al., submitted that the
Since the Decision dated August 28, 1995 of RTC-Branch 32 in the
sheriff’s fee of P200.00 and clerk’s commission of P2.00 were not part of the
consolidated cases was contrary to its interest, Eastern Shipping appealed the
“legal fees” required for perfecting an appeal from the decision of the Court of
same before the Court through a Petition for Review on Certiorari with Prayer for
Appeals or the RTC. The sheriff’s fee and clerk’s commission would merely be
Preliminary Injunction and/or Temporary Restraining Order, 22 with the City
“deposited” with the Court, which implied that said amounts would be
Council of Manila, the Mayor of Manila, and the City of Manila, as respondents. In
“refunded” to
its Petition, docketed as G.R. No.
_______________
_______________
20  Id., at pp. 160-179.
21  Id., at pp. 219-229.
282 22  Rollo (G.R. No. 121675), pp. 11-26.
28 SUPREME COURT REPORTS 283
2 ANNOTATED
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 VOL. 744, DECEMBER 10, 283 28 SUPREME COURT REPORTS
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City of Manila vs. Colet City of Manila vs. Colet
121675, Eastern Shipping raised pure questions of law and argued two William Lines, et al., paid under protest to the City of Manila the business
fundamental issues: taxes assessed against them for the first quarter of 1994, based on Section 21(B)
I. WHETHER OR NOT SECTION 21 OF [THE MANILA REVENUE CODE, AS of the Manila Revenue Code, as amended. They were intervenors in Civil Case
AMENDED,] IS VALID AND CONSTITUTIONAL. Nos. 94-68861, 94-68862, 94-68863, 94-68919, 94-68936, 94-68939, 94-68940,
II. IN THE REMOTE POSSIBILITY THAT THE QUESTIONED ORDINANCE IS 94-68941, and 94-69028, before RTC-Branch 32.
DECLARED VALID AND CONSTITUTIONAL, WHETHER OR NOT [EASTERN SHIPPING] William Lines, et al., challenged the Decision dated August 28, 1995 rendered
IS LIABLE TO PAY THE BUSINESS TAX BASED ON GROSS RECEIPTS DERIVED FROM by RTC-Branch 32 in said civil cases through a Petition for Review
INCOMING FREIGHTS ONLY OR OUTGOING FREIGHTS ONLY OR BOTH. 23 on Certiorari with Prayer for Issuance of a Preliminary Injunction and for a
Temporary Restraining Order,26 docketed as G.R. No. 121704. They identified as
  respondents the City of Manila, Mayor Lim, Vice Mayor Atienza, City Treasurer
The Office of the City Legal Officer, on behalf of the City of Manila, Mayor Lim, Acevedo, the Sangguniang Panlungsod ng Maynila, and RTC-Branch 32 Presiding
Vice Mayor Atienza, the City Council of Manila/Sangguniang Panlungsod ng Judge Juan C. Nabong, Jr. (Nabong). William Lines, et al., assigned three major
Maynila, and City Treasurer Acevedo, filed a joint Comment 24 on the Petitions in errors purportedly committed by RTC-Branch 32:
G.R. Nos. 121675, 121720-28, and 121847-55. Eastern Shipping later on filed its A. The RTC erred in failing to declare the aforecited Section 21(B) of [the
Memorandum.25 Manila Revenue Code, as amended, as] ultra vires and therefore null and void
  because such sections violate the Provisions of the LGC x x x.
G.R. No. 121704 x x x x
  B. The RTC erred in holding that Sec. 143(h) which is an omnibus grant of
William Lines, Negros Navigation, Lorenzo Shipping, Gothong Lines, the Aboitiz power couched in general terms is the exception referred or adverted to in
Group, and Solid Shipping (collectively referred to herein as William Lines, et al.) Section 133(j) of the LGC.
are duly organized domestic corporations principally engaged in the business of C. The RTC erred in holding that there are only four basic requirements for a
operating domestic shipping vessels for the transportation of cargoes and valid exercise of the power of the City of Manila to levy tax. 27
passengers, except Aboitiz Air Transport Corp., which is engaged in the
transportation of cargoes by air, and Aboitiz Haulers, Inc. which is engaged in the  
business of domestic freight and hauling by land. William Lines, et al., all have In their Memorandum,28 William Lines, et al., focused their discussion on the
principal addresses in Manila. following issues:
_______________ _______________

23  Id., at p. 15. 26  Rollo (G.R. No. 121704), pp. 14-44.

24  Id., at pp. 229-243. 27  Id., at pp. 19-21.
25  Id., at pp. 301-320.
285
284 VOL. 744, DECEMBER 10, 285
10 | P a g e
 2014 City of Manila vs. Colet
City of Manila vs. Colet to operate if said taxes were not paid. PSTC, by way of letters dated February
I. IS COMPLIANCE WITH THE GUIDELINES AND LIMITATIONS SET FORTH IN 21, 1994 and April 27, 1994, filed protests or claims for refund with the City
BOOK II TITLE I OF THE LOCAL GOVERNMENT [CODE] (LGC) NECESSARY FOR THE Treasurer of Manila, but the letters were not acted upon.
VALIDITY OF SEC. 21(B) OF [THE MANILA REVENUE CODE, AS AMENDED]? PSTC intervened in Civil Case Nos. 94-68861, 94-68862, 94-68863, 94-68919,
II. DID SEC. 21(B) OF [THE MANILA REVENUE CODE, AS AMENDED] VIOLATE 94-68936, 94-68939, 94-68940, 94-68941, and 94-69028 before RTC-Branch 32.
SUCH GUIDELINES AND LIMITATIONS OF THE LGC? Unsatisfied with the Decision dated August 28, 1995 rendered by RTC-Branch
III. IS SEC. 21(B) OF [THE MANILA REVENUE CODE, AS AMENDED,] 32 in the said civil cases, PSTC filed with the Court a Petition for Review
INVALID, ULTRA VIRES AND UNLAWFUL?29 on Certiorari with Prayer for Temporary Restraining Order and/or Preliminary
Injunction,30 against Presiding Judge Nabong of RTC-Branch 32, the City of Manila,
  Mayor Lim, Vice Mayor Atienza, City Treasurer Acevedo, and the Sangguniang
G.R. Nos. 121720-28 Panlungsod ng Maynila. In its Petition, docketed as G.R. Nos. 121720-28, PSTC
  maintained that RTC-Branch 32 erred thus:
PSTC is a government-owned and -controlled corporation engaged in the I
business of shipping, tinkering, lighterage, barging, towing, transport, and IN FAILING TO REALIZE AND CONSIDER THAT THE RESPONDENT CITY OF
shipment of goods, chattels, petroleum and other products, marine, and maritime MANILA, A MERE MUNICIPAL CORPORATION, HAS NO INHERENT POWER OF
commerce in general. TAXATION.
Pursuant to Section 21(B) of the Manila Revenue Code, as amended, PSTC was  
assessed by the City of Manila for business tax in the amount of P2,233,994.35, II
representing 50% of 1% of the gross receipts earned by PSTC in the year 1993 EVEN ASSUMING ARGUENDO THAT SUCH POWER IS CATEGORICALLY
which amounted to P446,798,871.87. The total amount of business tax due was GRANTED BY STATUTE, THE SAME IS SUBJECT TO SUCH GUIDELINES AND
payable in four equal parts every quarter of 1994. PSTC paid under protest on LIMITATIONS PROVIDED BY CONGRESS UNDER SECTION 133 OF THE LOCAL
January 19, 1994 the business tax for the first quarter of 1994 in the amount of GOVERNMENT CODE OF 1991 AND, AS TO WHICH, NONE WAS GIVEN TO
P558,498.59, and on April 20, 1994 the business tax for the second quarter of RESPONDENT CITY OF MANILA.
1994 in the amount of P558,498.59, evidenced by Municipal License Receipt Nos.
003483 and 0057675, respectively. PSTC claimed it had no other recourse but to _______________
pay to the City of Manila the assessed local business tax, considering the latter
had threatened to cancel its license 30  Rollo (G.R. Nos. 121720-28), pp. 13-49.
_______________
287
28  Id., at pp. 299-321. VOL. 744, DECEMBER 10, 287
29  Id., at p. 304. 2014
City of Manila vs. Colet
286 III
28 SUPREME COURT REPORTS IN FAILING TO REALIZE AND CONSIDER THAT AN ORDINANCE WHICH
6 ANNOTATED AMENDS, ENLARGES OR LIMITS THE PROVISIONS OF A STATUTE CONSTITUTES AN
11 | P a g e
UNCONSTITUTIONAL AND ILLEGAL DEROGATION OF LEGISLATIVE POWER, HENCE, Manila/Sangguniang Panlungsod ng Maynila, and City Treasurer Acevedo, filed a
THE ORDINANCE IS INVALID AND VOID AB INITIO. joint Comment on the Petitions in G.R. Nos. 121675, 121720-28, and 121847-55.
  PSTC filed its Memorandum,32 summing up its issues and arguments, to wit:
IV ISSUES SUBMITTED FOR RESOLUTION
IN FAILING TO REALIZE AND CONSIDER THAT THE RESPONDENT CITY OF  
MANILA’S [REVENUE CODE, AS AMENDED, PARTICULARLY SECTION 21(B) 1. WHETHER OR NOT SECTION 21(B) OF [THE MANILA REVENUE CODE, AS
THEREOF] WHICH IMPOSES 50% OF 1% OF THE GROSS SALES OR RECEIPT OF THE AMENDED,] IS VALID AND CONSTITUTIONAL.
NEXT PRECEDING YEAR, ON TOP OF THE NATIONAL INTERNAL REVENUE TAXES 2. IN THE NEGATIVE[,] WHETHER OR NOT RESPONDENTS CAN BE
ALREADY IMPOSED UNDER THE NATIONAL INTERNAL REVENUE CODE, IS COMPELLED TO REFUND THE TAXES WRONGFULLY AND ERRONEOUSLY
UNREASONABLE, UNJUST, UNFAIR OR OPPRESSIVE, CONFISCATORY, AND COLLECTED UNDER THE ASSAILED ORDINANCE.
CONTRAVENES THE CONSTITUTION OR STATUTE, HENCE, THE ORDINANCE IS  
INVALID AND NULL AND VOID AB INITIO. ARGUMENTS IN SUPPORT OF THE MEMORANDUM
   
V I. THE ASSAILED ORDINANCE IS A CLEAR USURPATION OF LEGISLATIVE
IN FAILING TO REALIZE AND CONSIDER THAT THE TAX IMPOSED UNDER POWER, HENCE, UNCONSTITUTIONAL AND VOID AB INITIO.
SECTION 21(B) OF [THE MANILA REVENUE CODE, AS AMENDED,] PARTAKES THE II. THE ASSAILED ORDINANCE IN ITSELF IS UNJUST, UNFAIR, OR EXCESSIVE,
NATURE OF A SALES TAX OR A PERCENTAGE TAX BEYOND THE TAXING POWER OF CONFISCATORY AND IN RESTRAINT OF TRADE AND IN EFFECT CONSTITUTES AN
THE RESPONDENT CITY OF MANILA TO IMPOSE, HENCE, UNENFORCEABLE BY UNLAWFUL TAKING OF PROPERTY WITHOUT DUE PROCESS OF LAW. 33
RESPONDENT CITY OFFICIALS.
  _______________
VI
IN FAILING TO REALIZE AND CONSIDER THAT [PSTC] IS SPECIFICALLY 31  Id., at pp. 21-22.
EXEMPTED FROM LOCAL GOVERNMENT TAXES IMPOSED UNDER THE LOCAL 32  Id., at pp. 283-299.
GOVERNMENT CODE OF 1991, PURSU- 33  Id., at p. 287.

288 289
28 SUPREME COURT REPORTS VOL. 744, DECEMBER 10, 289
8 ANNOTATED 2014
City of Manila vs. Colet City of Manila vs. Colet
ANT TO SECTION 115 OF THE NATIONAL INTERNAL REVENUE CODE, AS G.R. Nos. 121847-55
AMENDED BY REPUBLIC ACT 7761.31  
OFSI is a domestic corporation engaged in business as a transportation
  contractor. It also represents, as a general agent in the Philippines, ZIM Israel
As mentioned previously, the Office of the City Legal Officer, on behalf of the Navigation Co., Ltd. and Gold Star Line, Hong Kong, which are engaged in the
City of Manila, Mayor Lim, Vice Mayor Atienza, the City Council of transport by common carrier of export/import goods to and from the Philippines.
Its offices are located in Intramuros, Manila.
12 | P a g e
 OFSI questioned the legality of Section 21(B) of the Manila Revenue Code, as WHETHER OR NOT SECTION 21(B) OF [THE MANILA REVENUE CODE, AS
amended, in a Petition for Declaratory Relief with Prayer for Preliminary AMENDED,] IS VALID AND CONSTITUTIONAL.
Injunction and/or Temporary Restraining Order, which was docketed as Civil Case WHETHER OR NOT A WRIT OF PRELIMINARY INJUNCTION AND/OR
No. 94-68919 and originally raffled to RTC-Branch 55. Civil Case No. 94-68919 was TEMPORARY RESTRAINING ORDER MAY BE ISSUED BY THE HONORABLE COURT. 35
eventually consolidated with Civil Case Nos. 94-68861, 94-68862, 94-68863, 94-
68936, 94-68939, 94-68940, 94-68941, and 94-69028 before RTC-Branch 32.  
During the pendency of said civil cases, OFSI paid under protest on January 20, In a subsequent Manifestation,36 OFSI informed the Court that RTC-Branch 32
1994 the business tax for the first quarter of 1994 amounting to P181,928.97. issued an Order dated October 26, 1995 granting its Motion to Restore Injunction
Pursuant to Section 196 of the Local Government Code (LGC), OFSI wrote the City Pending Appeal; reinstating and restoring the Writ of Preliminary Injunction lifted
Treasurer of Manila a letter dated March 1, 1994 claiming refund of the business on August 28, 1995; and requiring OFSI to post a bond in the increased amount of
tax it had paid. The letter was received by the City Treasurer’s Office of Manila on P300,000.00.
March 3, 1994. The City Treasurer’s Office of Manila had seven days from receipt A joint Comment on the Petitions in G.R. Nos. 121675, 121720-28, and
of the letter to refund the amount paid, but more than two months had passed 121847-55 was filed by the Office of the City Legal Officer, on behalf of the City of
and OFSI received no response from the City Treasurer. To avoid multiplicity of Manila, Mayor Lim,
suits, OFSI filed a Supplemental Petition in Civil Case No. 94-68919 to incorporate _______________
its claim for refund of the business tax it had paid for the first quarter of 1994.
Aggrieved by the Decision dated August 28, 1995 of RTC-Branch 32 in Civil 34  Rollo (G.R. Nos. 121847-55), pp. 10-26.
Case Nos. 94-68861, 94-68862, 94-68863, 94-68919, 94-68936, 94-68939, 94- 35  Id., at p. 16.
68940, 94-68941, and 94-69028, OFSI sought recourse from the Court by filing a 36  Id., at pp. 282-284.
Petition for Review by Certiorari with Prayer for the Issuance of a Preliminary 291
Injunction and/or Temporary Restraining
VOL. 744, DECEMBER 10, 291
290
2014
29 SUPREME COURT REPORTS
City of Manila vs. Colet
0 ANNOTATED
Vice Mayor Atienza, the City Council of Manila/Sangguniang Panlungsod ng
City of Manila vs. Colet
Maynila, and City Treasurer Acevedo.
Order,34 naming as respondents the City of Manila, Mayor Lim, Vice Mayor The Reply37 of OFSI was the last pleading filed in G.R. Nos. 121847-55.
Atienza, the City Council of Manila, City Treasurer Acevedo, and Presiding Judge  
Nabong of RTC-Branch 32. The Petition of OFSI, docketed as G.R. Nos. 121847-55, G.R. No. 122333
presented for consideration and resolution of the Court the following:  
Assignment of Errors After RTC-Branch 32 rendered its Decision in Civil Case Nos. 94-68861, 94-
THE RESPONDENT HONORABLE JUDGE ERRED IN HIS FINDING THAT SECTION 68862, 94-68863, 94-68919, 94-68936, 94-68939, 94-68940, 94-68941, and 94-
21(B) OF [THE MANILA REVENUE CODE, AS AMENDED,] IS VALID AND 69028 on August 28, 1995, upholding the constitutionality and validity of Section
CONSTITUTIONAL. 21(B) of the Manila Revenue Code, as amended, and lifting the Writs of
  Preliminary Injunction issued in said cases, the City of Manila and its officials
Legal Issues Involved in this Petition resumed the enforcement of the local business tax in question. City Treasurer
13 | P a g e
Acevedo issued a Memorandum dated September 7, 1995, instructing Oscar S. represented by their resident agent, F.E. Zuellig (M), Inc.; and Madrigal-Wan Hai
Dizon, Acting Chief, License Division, City Treasurer’s Office of Manila, to prepare Lines (collectively referred to herein as Cosco, et al.).
the complete staff work “for the collection of the unpaid taxes, plus interests” The Petition of Cosco, et al., was docketed as G.R. No. 122333. In their
imposed by Section 21(B) of the Manila Revenue Code, as amended, against Petition, Cosco, et al., presented for resolution of the Court the principal issue of
shipping companies and other common carriers. whether or not Section 21(B) of the Manila Revenue Code, as amended, is
A Petition for Prohibition with Temporary Restraining Order and/or constitutional. Cosco, et al., posited that Section 21(B) of the Manila Revenue
Preliminary Injunction38 was jointly filed before the Court by several foreign and Code, as amended, is unconstitutional and void ab initio because it was enacted
domestic corporations doing business in Manila as shipping companies and/or by the Sangguniang Panlungsod ng Maynila, which was presided over by Vice
common carriers, namely: Cosco Container Lines (Cosco) and Heung-A Shipping Mayor Atienza, approved by Mayor Lim, and implemented and enforced by City
Co., LTD., both represented by their resident agent, Wallem Philippines Shipping, Treasurer Acevedo, ultra vires and in violation of constitutional and statutory
Inc.; DSR Senator Lines, Compania Sud Americana de Vapores S.A., and Arimura limitations on the taxing power of LGUs. Hence, Cosco, et al., prayed for the
Sangyo Company, Ltd., all represented by their resident agent, C.F. Sharp Shipping issuance of a writ of prohibition to restrain, enjoin, and prohibit respondents City
Agencies, Inc.; Pacific International Lines (PTE) Ltd. and Pacific Eagle Lines (PTE) of Manila, Mayor Lim, Vice Mayor Atienza, Sangguniang Panlungsod, and City
Ltd., both represented by their resident agent, TMS Ship Agencies, Inc.; Treasurer Acevedo, from enforcing Section 21(B) of the Manila Revenue Code, as
_______________ amended.
293
37  Id., at pp. 295-304. VOL. 744, DECEMBER 10, 293
38  Rollo (G.R. No. 122333), pp. 3-24. 2014
292 City of Manila vs. Colet
29 SUPREME COURT REPORTS A joint Memorandum was filed on behalf of the petitioners in G.R. Nos.
121613, 122333, and 122349.
2 ANNOTATED
 
City of Manila vs. Colet
G.R. No. 122335
Compagnie Maritime D’ Affretement (CMA), represented by its resident  
Agent, Inchcape Shipping Services; Everett Orient Lines, Inc., represented by it Sulpicio Lines, Inc. (Sulpicio Lines) is a domestic corporation, holding office in
resident agent, Everett Steamship Corporation; Yangming Marine Transport Corp., North Harbor, Manila, whose principal business is the operation of domestic
represented by its resident agent, Sky International, Inc.; Nipon Yusen Kaisha, shipping vessels for the transportation of cargoes and passengers.
represented by its resident agent, Fil-Japan Shipping Corporation; Hyundai Sulpicio Lines and Gothong Lines jointly filed a complaint for declaratory relief
Merchant Marine Co., Ltd., represented by its resident agent, Citadel Lines; with prayer for the issuance of a writ of preliminary injunction, which was
Malaysian International Shipping Corporation Berhad, represented by its resident docketed as Civil Case No. 94-69141 and raffled to RTC-Branch 44. Sulpicio Lines
agent, Royal Cargo Agencies, Inc.; Bolt Orient Line, represented by its resident and Gothong Lines asked the trial court to determine the validity of Section 21(B)
agent, FILSOV Shipping Company, Inc.; Mitsui-O.S.K. Lines, Ltd., represented by its of the Manila Revenue Code, as amended, as well as the rights and duties of said
resident agent, Magsaysay Agencies, Inc.; Phils., Micronesia & Orient Navigation shipping companies thereunder. However, after being informed that Maersk
Co. (PMSO Line), represented by its resident agent, Van Transport Company, Inc.; already filed a similar case, i.e., Civil Case No. 94-68861 before RTC-Branch 32,
Lloyd Triestino di Navigazione S.P.A.N. and Compagnie Generale Maritime, both Gothong Lines decided to withdraw as complainant in Civil Case No. 94-69141 and

14 | P a g e
simply intervene in Civil Case No. 94-68861. As a result, Sulpicio Lines became the Acevedo, the Sangguniang Panlungsod ng Maynila, and Presiding Judge Nabong
sole complainant in Civil Case No. 94-69141. Sulpicio Lines then filed a Motion to of RTC-Branch 32. The appeal of Sulpicio Lines was docketed as G.R. No. 122335.
Consolidate Civil Case No. 94-69141 with Civil Case No. 94-68861 which was The assignment of errors in the Petition of Sulpicio Lines was the same as that
granted. in the Petition of William Lines, et al., in G.R. No. 121704, viz.:
On August 28, 1995, RTC-Branch 32 rendered a Decision in Civil Case Nos. 94- A. The RTC erred in failing to declare that the aforecited Section 21(B) of
68861, 94-68862, 94-68863, 94-68919, 94-68936, 94-68939, 94-68940, 94-68941, [the Manila Revenue Code, as amended, as] ultra vires and therefore null and
and 94-69028. Civil Case No. 94-69141 was not included in the caption of the void because such sections of the Ordinances of the City of Manila violate the
Decision, although the complaint of Sulpicio Lines was mentioned in the body of Provisions of the LGC x x x.
the same Decision.
Sulpicio Lines did not formally receive a copy of the aforementioned Decision _______________
dated August 28, 1995 of RTC-Branch 32 and was merely informed of the same by
the petitioners/intervenors in the other civil cases. This prompted Sulpicio Lines 39  Rollo (G.R. No. 122335), pp. 255-256.
to file with RTC-Branch 32 a Motion for Clarificatory Order seeking to verify if said 40  Id., at pp. 11-51.
Decision included and was 295
294
VOL. 744, DECEMBER 10, 295
29 SUPREME COURT REPORTS
2014
4 ANNOTATED
City of Manila vs. Colet
City of Manila vs. Colet
x x x x
binding on Sulpicio Lines. Acting on the Motion of Sulpicio Lines, RTC-Branch B. The RTC erred in holding that Sec. 143(h) which is an omnibus grant of
32 issued an Order39 on October 16, 1995, which reads: power couched in general terms is the exception referred or adverted to in
Although Civil Case No. 94-64191 is not included in the caption of the above Section 133(j) of the LGC.
Decision, the Decision against all the petitioners, intervenors, most specifically C. The RTC erred in holding that there are only four basic requirements for a
against intervenor Carlos A. Gothong Lines, Inc. is binding and enforceable against valid exercise of the power of the City of Manila to levy tax. 41
Sulpicio Lines, Inc. because Civil Case No. 94-64191 had been consolidated with
Civil Case No. 94-68861.  
WHEREFORE, the Decision and the dispositive portion of the Decision On January 31, 1996, the Court issued a Resolution 42 referring the Petition of
rendered on August 28, 1995, shall apply to and binds Sulpicio Lines, Inc. x x x. Sulpicio Lines in G.R. No. 122335 to the Court of Appeals for proper
determination and disposition pursuant to Section 9, paragraph 3 of Batas
  Pambansa Blg. 129, which granted the Court of Appeals “exclusive appellate
After Sulpicio Lines confirmed that the Decision dated August 28, 1995 of RTC- jurisdiction over all final judgments, decisions, resolutions, orders or awards of
Branch 32 in Civil Case Nos. 94-68861, 94-68862, 94-68863, 94-68919, 94-68936, Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
94-68939, 94-68940, 94-68941, and 94-69028, was also applicable to and binding commission.”
upon it, it filed with the Court a Petition for Review on Certiorari with Prayer for At the Court of Appeals, the Petition of Sulpicio Lines was docketed as C.A.-
Issuance of a Preliminary Injunction and for a Temporary Restraining G.R. S.P. No. 39973. In a Resolution 43 dated April 12, 1996, the appellate court
Order,40 against the City of Manila, Mayor Lim, Vice Mayor Atienza, City Treasurer directed the respondents City of Manila, Mayor Lim, Vice Mayor Atienza, City
15 | P a g e
Treasurer Acevedo, the Sangguniang Panlungsod ng Maynila, and Presiding Judge Shipping Co., Ltd., represented by its resident agent, Uni-Ship, Incorporated;
Nabong of RTC-Branch 32, to file their Comments. Hanjin Shipping Company, Ltd., represented by its resident agent, MOF Company,
In the meantime, Sulpicio Lines filed with the Court in G.R. No. 122335 a Inc.; Hapag-Lloyd A/G, represented by its resident agent, Hapag-Lloyd Phils., Inc.;
Motion for Reconsideration of the Resolution dated January 31, 1996 and for Kawasaki Kisen Kaisha, represented by its resident agent, Transmar Agencies, Inc.;
Consolidation.44 Sulpicio Lines prayed that the Resolution dated January 31, 1996 Knutsen Line, represented by its resident agent, AWB Trade International; Kyowa
of the Court in G.R. No. 122335 be withdrawn; that the Rollo of G.R. No. 122335 Line, represented by its resident agent, Sky International, Inc.; Neptune Orient
be transmitted back to the Court; and that G.R. No. 122335 be consolidated with Line, represented by its resident agent, Overseas Agency Services, Inc.; Orient
the other cases pending Overseas Container Line, represented by its resident agent, OOCL (Philippines),
_______________ Inc.; P&O Containers, Ltd., P&O Swire Containers and WILH Wilhelmsen Line A/S,
all represented by their resident agent, Soriamont Steamship Agencies; Regional
41  Id., at pp. 16-18. _______________
42  Id., at p. 266.
43  Id., at p. 269. 45  Rollo (G.R. No. 120051), pp. 100-102.
44  Id., at pp. 270-274.
297
296 VOL. 744, DECEMBER 10, 297
29 SUPREME COURT REPORTS 2014
6 ANNOTATED City of Manila vs. Colet
City of Manila vs. Colet Container Lines (Pte) Ltd., represented by its resident agent, South China Lines
before the Court En Banc questioning the Decision dated August 28, 1995 of Phils., Inc.; Senator Line Bremen Germany, represented by its resident agent, C.F.
RTC-Branch 32 which upheld the constitutionality and validity of Section 21(B) of Sharp & Company; Tokyo Senpaku Kaisha, Ltd., represented by its resident agent,
the Manila Revenue Code, as amended. Fil-Japan Shipping Corporation; Uniglory Line, represented by its resident agent,
After several copies of its Resolutions were returned unserved on the Don Tim Shipping Corporation; Wan Hai Lines, Ltd., represented by its resident
respondents in G.R. Nos. 122335, 122349, and 124855, the Court issued a agent, Eastern Shipping Agencies, Inc.; Westwind Line, represented by its resident
Resolution45 on December 2, 1997 dispensing with the filing of a Comment by the agent, Westwind Shipping Corporation; Zim Israel Navigation Co., Ltd.,
respondents in the three cases. represented by its resident agent, Overseas Freighters Shipping, Inc.; Eastern
  Shipping Lines, Inc.; Nedlloyd Lines, Inc.; Philippine President Lines, Ltd.; and Sea-
G.R. No. 122349 Land Service, Inc.
  After RTC-Branch 32 rendered its Decision dated August 28, 1995 in Civil Case
The Association of International Shipping Lines, Inc. (AISL) is a non-stock Nos. 94-68861, 94-68862, 94-68863, 94-68919, 94-68936, 94-68939, 94-68940,
domestic corporation the members of which are mostly foreign corporations duly 94-68941, and 94-69028, upholding the constitutionality and validity of Section
licensed to do business in the Philippines, specifically: American Transport Lines, 21(B) of the Manila Revenue Code, as amended; and City Treasurer Acevedo
Inc., represented by its resident agent, Anchor International Shipping Agency, issued the Memorandum dated September 7, 1995 ordering the collection of the
Inc.; Australian National Line, Fleet Trans International, and United Arab Shipping business tax under the questioned provision of the local tax ordinance, AISL, for
Co., all represented by their resident agent, Jardine Davies Transport; Dongnama itself and on behalf and for the benefit of its above named members, filed before

16 | P a g e
the Court a Petition for Prohibition with Temporary Restraining Order and/or the foregoing Decision of RTC-Branch 32. The Petition was docketed as G.R. No.
Preliminary Injunction46 against the City of Manila, Mayor Lim, Vice Mayor 122120. Instead of consolidating G.R. No. 122120 with the other pending cases
Atienza, City Treasurer Acevedo, and the Sangguniang Panlungsod ng Maynila. that challenge the constitutionality and validity of Section 21(B) of the Manila
The Petition of AISL, docketed as G.R. No. 122349, was substantially similar to the Revenue Code, as amended, the Court issued a Resolution dated October 23,
Petition of Cosco, et al., in G.R. No. 122333. 1995 referring the Petition in G.R. No. 122120 to the Court of Appeals for the
In its Resolution dated December 2, 1997, the Court dispensed with the filing following reason:
of a Comment by the respondents in G.R. Nos. 122335, 122349, and 124855. Considering that under Section 19 (sic), paragraph (1) of Batas Pambansa Blg.
_______________ 129, the Court of Appeals now exercises original jurisdiction to issue writs
of mandamus,
46  Rollo (G.R. No. 122349), pp. 3-22.
 299
298 VOL. 744, DECEMBER 10,  299
29 SUPREME COURT REPORTS 2014
8 ANNOTATED City of Manila vs. Colet
City of Manila vs. Colet prohibitions, certiorari, habeas corpus, and quo warranto, and auxiliary writs
The only other pleading in G.R. No. 122349 is a joint Memorandum filed on or processes, whether or not in aid of its appellate jurisdiction, the Court resolved
behalf of the petitioners in G.R. Nos. 121613, 122333, and 122349. to REFER this case to the Court of Appeals, for disposition. 47
 
G.R. No. 124855  
  The Petition for Certiorari of Dongnama and Kyowa was docketed as C.A.-G.R.
Dongnama and Kyowa are foreign corporations, organized and existing under S.P. No. 39188 before the Court of Appeals. The Court of Appeals rendered its
the laws of the Republic of Korea and Japan, respectively. Both shipping Decision48 in C.A.-G.R. S.P. No. 39188 on March 29, 1996, finding no merit in the
companies are doing business in the Philippines through their resident agent, Sky Petition of Dongnama and Kyowa as RTC-Branch 32 did not act with grave abuse
International, Inc. (Sky International), with office in Binondo, Manila. of discretion when it ruled in its Decision dated August 28, 1995 that Section
Dongnama and Kyowa, through Sky International, lodged a petition to declare 21(B) of the Manila Revenue Code, as amended, is valid and in clear conformity
unconstitutional Section 21(B) of the Manila Revenue Code, as amended, with with the law and the Constitution. In the end, the appellate court adjudged:
prayer for a writ of preliminary injunction and TRO, docketed as Civil Case No. 94- WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is hereby
68936 and initially raffled to RTC-Branch 47, but later consolidated with Civil Case DENIED for lack of merit.49
Nos. 94-68861, 94-68862, 94-68863, 94-68919, 94-68939, 94-68940, 94-68941,
 
and 94-69028 before RTC-Branch 32. On August 28, 1995, RTC-Branch 32
rendered its Decision in the consolidated civil cases upholding the Dongnama and Kyowa went back before the Court “by way of Petition for
Review on Certiorari under Rule 65 of the Rules of Court,” docketed as G.R. No.
constitutionality and validity of Section 21(B) of the Manila Revenue Code, as
amended. 124355, based on a lone assignment of error:
RESPONDENT COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
Dongnama and Kyowa then filed with the Court a Petition for Certiorari with
Urgent Prayer for Restraining Order, seeking the annulment or modification of ASSUMING JURISDICTION OVER SUPREME COURT G.R. NO. 122120 ENTITLED
“DONGNAMA SHIPPING CO. LTD., AND KYOWA SHIPPING LTD. HEREIN
17 | P a g e
REPRESENTED BY SKY INTERNATIONAL INC. V. HON. JUDGE JUAN C. NABONG JR., Dongnama and Kyowa eventually filed a Memorandum. 52
CITY OF MANILA, MAYOR ALFREDO LIM, VICE MAYOR LITO ATIENZA, CITY  
COUNCIL OF MANILA, AND CITY TREASURER ANTHONY Consolidation of the 10 Petitions
 
_______________ The foregoing 10 cases were consolidated at different times and stages. 53
_______________
47  Rollo (G.R. No. 124855), pp. 5-6, 106.
48  Id., at pp. 17-30, penned by Associate Justice Fermin A. Martin, Jr., with 50  Id., at pp. 7-8.
Associate Justices Fidel P. Purisima and Conchita Carpio-Morales, concurring. 51  Id., at p. 13.
49  Id., at p. 29. 52  Id., at pp. 104-113.
53  Resolutions dated October 23, 1995 (Rollo [G.R. No. 121613], pp. 180-
300
181); November 15, 1995 (Rollo [G.R. No. 120051], p. 97);
30 SUPREME COURT REPORTS
0 ANNOTATED 301
City of Manila vs. Colet VOL. 744, DECEMBER 10, 301
ACEVEDO” WHEN IN FACT AS PER SUPREME COURT’S RESOLUTION DATED 23 2014
OCTOBER 1995 IN RELATION [TO] SECTION 9, PARAGRAPH (1) BATAS PAMBANSA City of Manila vs. Colet
BLG. 129, THE ORIGINAL JURISDICTION PERTAINING TO THE COURT OF APPEALS  
REFERS TO THE ISSUANCE OF WRIT OF CERTIORARI, AMONG OTHERS AND NOT On December 2, 1997, the Court issued a Resolution 54 giving due course to the
TO PETITION FOR CERTIORARI ON THE GROUND OF GRAVE ABUSE OF DISCRETION Petitions and requiring the parties to simultaneously file their Memoranda within
WHICH THE HON. SUPREME COURT HAS EXCLUSIVE JURISDICTION. 50 20 days from notice.
Among the parties to the 10 Petitions, Maersk, et al.; Eastern Shipping;
 
William Lines, et al.; PSTC; Cosco, et al.; AISL; and Dongnama and Kyowa
Dongnama and Kyowa specifically prayed:
(petitioners in G.R. Nos. 121613, 121675, 121704, 121720-28, 122333, 122349,
1. That this petition be given due course;
and 124855, respectively) complied with the Resolution dated December 2, 1997
2. That the Decision dated 29 March 1996 be annulled and set aside pending
and submitted their Memoranda.
the resolution of the same to be decided together with other related cases by this
In a Resolution55 dated April 23, 2002, the Court resolved to consider the cases
Court;
submitted for deliberation.
3. That respondent’s Court of Appeals jurisdiction over the instant case be
The Court issued a Resolution56 on July 5, 2011 requiring the parties to the 10
limited to the issue on the propriety of the prayer for preliminary injunction and
cases to move in the premises.
restraining order in relation to the assailed Decision dated 28 August 1995 by
A copy of the Resolution dated July 5, 2011 was served upon and received by
RTC-Manila, Branch 32.51
Atty. Renato G. Dela Cruz (Dela Cruz), City Legal Officer of Manila, on behalf of the
  City of Manila, Mayor Lim, Vice Mayor Atienza, the City Council of
The Court, in a Resolution dated December 2, 1997, dispensed with the filing Manila/Sangguniang Panlungsod ng Maynila, and City Treasurer Acevedo, the
of a Comment by the respondents in G.R. Nos. 122335, 122349, and 124855. petitioners in G.R. No. 120051 and respondents in the other nine cases.

18 | P a g e
 Atty. Dela Cruz filed a Manifestation57 informing the Court that despite rendered moot and academic by the Decisions of the Court in Coca-Cola Bottlers
exerting effort, he could no longer locate the records for the 10 cases. The former Philippines, Inc. v. City of Manila 62 and City of Manila v. Coca-Cola Bottlers
lawyers who handled the cases had long ceased to be connected with the City of Philippines, Inc.63 (Coca-Cola cases), which declared with finality the
Manila and both were already deceased. Thus, Atty. Dela Cruz prayed that he be unconstitutionality of Section 21 of the Manila Revenue Code, as amended.
furnished copies of the petitions and pleadings in the cases and be given a fresh Atty. Dela Cruz likewise filed a Compliance with the Court’s Show Cause
period of 10 days from Resolution dated July 16, 2013. According to Atty. Dela Cruz, he already resigned
_______________ as City Legal Officer of Manila effective May 31, 2013. Still, Atty. Dela Cruz
explained:
 July 1, 1996 (Rollo [G.R. No. 124855], p. 88); and January 21, 1997 (Rollo [G.R. _______________
No. 120051], pp. 106-108).
54  Rollo (G.R. No. 120051), pp. 100-102; see also Resolution dated July 11, 58  Id., at pp. 291-292.
2000. (Id., at pp. 137-138.) 59  Id., at pp. 429-430.
55  Id., at pp. 142-143. 60  Id., at p. 524.
56  Id., at pp. 144-145. 61  Id., at pp. 538-543.
57  Id., at pp. 287-290. 62  526 Phil. 249; 493 SCRA 279 (2006).
63  612 Phil. 609; 595 SCRA 299 (2009).
302
30 SUPREME COURT REPORTS 303
2 ANNOTATED VOL. 744, DECEMBER 10, 303
City of Manila vs. Colet 2014
receipt thereof to submit his compliance with the Resolution dated July 5, City of Manila vs. Colet
2011. The Court granted Atty. Cruz’s prayer in a Resolution 58 dated April 24, 2012. c. Due to the multifarious duties that undersigned attended to and the many
Atty. Dela Cruz once more moved for an extension of time to comply with the legal problems that confronted the Mayor whom he had to assist in resolving
Resolution dated July 5, 2011, which the Court granted in a Resolution 59 dated them, he inadvertently overlooked the deadline set for submission of his
November 20, 2012. compliance of the Court’s directive which in fact lapsed without him having been
In a Resolution60 dated July 16, 2013, the Court took notice that Atty. Dela reminded by Atty. Karen Peralta of the unfulfilled obligation to this Honorable
Cruz failed to comply with the Resolution dated July 5, 2011 within the extended Court.
period which expired on November 8, 2012. Resultantly, the Court resolved to d. For this, he acknowledges that he was remiss in his duty to the Court and
require Atty. Dela Cruz to (a) show cause why he should not be disciplinarily dealt in delegating it to another.
with or held in contempt for such failure; and (b) comply with the Resolution [e.] Undersigned begs the Court’s clemency on his inability to submit the
dated July 5, 2011, both within 10 days from notice. pleading required of him and his fault in relying on his subordinate-lawyer to
Atty. Sitro G. Tajonera (Tajonera) of the Office of the City Legal Officer of assist him in complying with the Court’s directive.
Manila filed a Manifestation and Motion for Leave to Withdraw Petition in G.R. [f.] Undersigned assures the Court that henceforth, he shall not commit the
No. 12005161 dated August 12, 2013. Atty. Tajonera moved for the withdrawal of same mistake or any neglect of duty or lack of respect to the Court. 64
the Petition in G.R. No. 120051 on the ground that the issues therein had been
 
19 | P a g e
 II The enactment of Section 21(B) of the Manila Revenue Code, as amended, is
Arguments of the Parties statutorily ingrained. It is based on the exempting clause at the beginning of
  Section 133, in conjunction with Section 143(h), of the LGC. The relevant
There is only one vital issue in all the 10 cases: Whether or not Section 21(B) provisions of the Code are reproduced below:
of the Manila Revenue Code, as amended, was in conformity with the SEC. 133. Common Limitations on the Taxing Powers of Local Government
Constitution and the laws and, therefore, valid. Units.—Unless otherwise provided herein, the exercise of the taxing powers of
There are two fundamental and opposing positions on the issue. Presented provinces, cities, municipalities, and barangays shall not extend to the levy of the
below are summaries of the arguments in support of each. following:
  x x x x
Section 21(B) of the Manila Revenue Code, as amended, was constitutional and (j) Taxes on the gross receipts of transportation contractors and persons
valid. engaged in the transportation of passengers or freight by hire and common
  carriers by air, land or water, except as provided in this Code;
The City of Manila, Mayor Lim, Vice Mayor Atienza, the Sangguniang SEC. 143. Tax on Business.—The municipality may impose taxes on the
Panlungsod ng Maynila, and City Treasurer following businesses:
_______________ x x x x
(h) On any business, not otherwise specified in the preceding paragraphs,
64  Rollo (G.R. No. 120051), pp. 556-557. which the sanggunian

304 305
30 SUPREME COURT REPORTS VOL. 744, DECEMBER 10, 305
4 ANNOTATED 2014
City of Manila vs. Colet City of Manila vs. Colet
Acevedo argued that Section 21(B) was constitutional and valid. RTC-Branch  concerned may deem proper to tax: Provided, That on any business subject
32, in its Decision dated August 28, 1995 in Civil Case Nos. 94-68861, 94-68862, to the excise, value-added or percentage tax under the National Internal
94-68863, 94-68919, 94-68936, 94-68939, 94-68940, 94-68941, and 94-69028, Revenue Code, as amended, the rate of tax shall not exceed two percent (2%) of
and the Court of Appeals, in its Decision dated March 29, 1996 in C.A.-G.R. S.P. gross sales or receipts of the preceding calendar year.
No. 39188, adopted the same position. The sanggunian concerned may prescribe a schedule of graduated tax rates
The 1987 Constitution granted LGUs the power to create their own sources of but in no case to exceed the rates prescribed herein. (Emphases supplied)
revenue and to levy taxes, fees, and charges subject to the guidelines and
limitations provided by Congress, consistent with the policy of local autonomy.  
This grant was reiterated in Section 129 of the LGC and the scope of tax powers of Inasmuch as “transportation contractors, persons who transport passenger or
a city such as Manila is described in Section 151 also of the LGC. Hence, the freight for hire, and common carriers by land, air or water,” are engaged in
Constitution and Congress, through the LGC, expressly granted LGUs the general business subject to excise, value added, or percentage tax under the National
power to tax. Internal Revenue Code (NIRC), as amended, then the City of Manila could lawfully
levy local business tax under Section 21(B) of the Manila Revenue Code, as
amended. It is irrelevant which of Sections 133(j) and 143(h) of the LGC is the
20 | P a g e
special or general provision since there is an exempting clause in Section 133, that  
is, “Unless otherwise provided herein,” which means that even if the businesses On the other end of the spectrum, MAS; Maersk, et al.; Eastern Shipping;
enumerated therein are exempted from the levy of local tax, if there is a provision William Lines, et al.; PSTC; OFSI; Cosco, et al.; Sulpicio Lines; AISL; and Dongnama
to the contrary, such as Section 143(h), the Sanggunian concerned could still and Kyowa, asserted that Section 21(B) of the Manila Revenue Code, as amended,
impose the local tax. As an alternative argument, Section 133(j) of the LGC is the was null and void because it violated the Constitution and the LGC. It was the
general provision on the limitations on the taxing power of the LGUs, while position affirmed by RTC-Branch 43 in its Decision dated April 3, 1995 in Civil Case
Section 143(h) of the LGC is the specific provision on the businesses which the No. 94-69052.
LGUs could tax; and per the rules of statutory construction, the latter prevails Under the Philippine system of government, the power of taxation, while
over the former. To rule otherwise and adopt the construction put forward by the inherent in the State in view of its sovereign prerogatives, is not inherent in
opposing parties would render Section 143(h) of the LGC a hollow decorative municipal corporations or LGUs. LGUs may exercise the power only if and to the
provision with no subject to tax. extent
Moreover, the business tax imposed by Section 21(B) of the Manila Revenue _______________
Code, as amended, complied with the limitations and conditions in the LGC for a
valid local tax: (1) The rate of tax did not exceed 2% of gross sales or receipts of 65  G.R. No. 112497, August 4, 1994, 235 SCRA 135, 144.
the preceding calendar year; (2) The tax is consistent with the
304 307
30 SUPREME COURT REPORTS VOL. 744, DECEMBER 10, 307
4 ANNOTATED 2014
City of Manila vs. Colet City of Manila vs. Colet
basic policy of local autonomy; (3) The tax is not unjust, excessive, oppressive, that it is delegated to them. One of the common limitations on the power to
confiscatory, or contrary to declared national policy; and (4) That a prior public tax of LGUs is Section 133(j) of the LGC, carried over from the Local Tax Code of
hearing was conducted for the purpose of enacting the Manila Revenue Code, as 1973.
amended. Section 133(j) expressly states that the taxing powers of the LGUs shall not
Section 21(B) of the Manila Revenue Code, as amended, also enjoyed the extend to the transportation business. Section 133(j) of the LGC is a special
presumption of constitutionality and validity. This presumption can only be provision, which prevails over Section 143(h) of the same Code, a general
overridden by overwhelming evidence to the contrary. In Drilon v. Lim,65 the Court provision. This interpretation would give effect to both Sections 133(j) and 143(h)
already declared the Manila Revenue Code as valid given that the procedural of the LGC, and contrary to the assertion of the City of Manila and its public
requirements for the enactment of the same had been observed. officials, would not render Section 143(h) useless, meaningless, and nugatory.
Lastly, taxes are the lifeblood of the nation. Tax exemptions are construed There are other businesses which the LGUs may tax under Section 143(h).
strictly against the taxpayer, and the burden is upon the person claiming Besides, in case of any doubt, any tax ordinance or revenue measure shall be
exemption from the tax to show a clear grant of exemption by organic law or construed strictly against the LGU enacting it and liberally in favor of the
statute. taxpayer, for taxes, being burdens, are not to be presumed beyond what the
  applicable statute expressly and clearly declares.
Section 21(B) of the Manila Revenue Code, as amended, was null and void for In addition, although Section 21(B) of the Manila Revenue Code, as amended,
being contrary to the Constitution and the LGC. imposed what was denominated as a “business tax,” in reality it was a percentage

21 | P a g e
or sales tax. Business tax is imposed on the privilege of doing business, though it  
may be computed as a percentage of gross sales. For business tax, there is no set Before delving into the merits of the 10 cases, there are pending incidents in
ratio between volume of sales and the amount of tax. Cities and municipalities three cases that first need to be addressed:
are given the power to impose business tax under Section 143(h) of the LGC. In (1) G.R. No. 120051: The City Legal Officer of Manila, as counsel for the City
contrast, percentage or sales tax is based on gross sales or receipts. The of Manila, Mayor Lim, and City Treasurer Acevedo, petitioners in G.R. No. 120051,
percentage bears a direct relationship to the sales or receipts generated by a filed a Manifestation and Motion for Leave to Withdraw Petition in G.R. No.
business, without regard for the extent of operation or size of the business. Cities 120051, on the ground that the issues therein had been rendered moot and
and municipalities may validly impose a tax on business, but consonant with the academic by the Decisions of the Court in the Coca-Cola cases, which declared
limitations on local taxation, they may not impose percentage or sales tax on top with finality the unconstitutionality of Section 21 of the Manila Revenue Code, as
of what is already imposed in the NIRC. Section 21(B) of the Manila Revenue amended.
Code, as amended, imposing on “transportation contractors, persons who 309
transport passenger or freight for hire, and common carriers by land, air or VOL. 744, DECEMBER 10, 309
water,” a tax of 50% of 1% of 2014
308 City of Manila vs. Colet
30 SUPREME COURT REPORTS The Court resolves to deny the motion to withdraw.
8 ANNOTATED There already had been an exchange of pleadings between the parties in G.R.
City of Manila vs. Colet No. 120051, i.e., Petition, Comment, and Reply. In a Resolution dated December
the gross sales or receipts from the preceding year on top of the national 2, 1997, the Court also already considered G.R. No. 120051 and all the other nine
taxes already imposed by the NIRC was unjust, unfair, excessive, confiscatory, and consolidated cases submitted for deliberation. At this stage, the decision to grant
in restraint of economic trade. or not to grant the motion to withdraw is fully within the discretion of the Court. 66
And finally, Section 21(B) of the Manila Revenue Code, as amended, violated The Court denies the motion to withdraw because the assertion by the City
the rule on uniformity in taxation. Uniformity in taxation should not be construed Legal Officer of Manila that the Coca-Cola cases already rendered the issues in
in a pure geographical sense, i.e., that the questioned tax was imposed with the G.R. No. 120051 moot and academic is erroneous. The Court did not declare in
same force and effect on all businesses located in Manila. Shipping companies the Coca-Cola cases that Section 21 of the Manila Revenue Code, as amended,
should be differentiated from other businesses. Aside from the risks and was unconstitutional. What the Court held in the two Coca-Cola cases was that
responsibilities the shipping companies shoulder, their services are not confined Ordinance Nos. 7988 and 8011 (approved by then Mayor Atienza on February 25,
within the territorial limits of Manila alone but extend to other parts of the world. 2000 and February 22, 2001, respectively), amending Section 21 of the Manila
It is not uniformity for the shipping companies to be classed and taxed under the Revenue Code, were null and void for (a) failure to comply with the publication
same category with other common carriers domiciled and plying Manila territory requirement for tax ordinances under Section 188 of the LGC; and (b) deletion of
24 hours a day. an exempting proviso found in Section 143(h) of the LGC and the prior Section 21
  of the Manila Revenue Code, which opened the door to the double taxation of
III Coca-Cola. Section 21 of the Manila Revenue Code, as it was amended by
Ruling of the Court Ordinance No. 7807, and more specifically, paragraph (B) thereof, was not the
  subject of a constitutional review by the Court in the Coca-Cola cases.
Resolution of pending incidents in several cases.

22 | P a g e
 As for Atty. Dela Cruz’s Compliance with the Court’s Show Cause Resolution, of Segovia v. Barrios, we ruled that where an appellant in good faith paid less
the Court finds the same satisfactory, although he is reminded to be more than the correct amount for the docket fee because that was the amount he was
conscientious of his duties as legal counsel in the future, despite the heavy required to pay by the clerk of court, and he promptly
volume of his work load.
_______________ _______________

66  See Bildner v. Roxas, 577 Phil. 118, 123; 554 SCRA 234, 239 (2008). 67  399 Phil. 327, 333-335; 345 SCRA 579, 584 (2000).

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(2) G.R. No. 121613: In a Resolution dated October 23, 1995, the Court paid the balance, it is error to dismiss his appeal because —
dismissed the Petition of Maersk, et al., for the latter’s failure to deposit sheriff’s every citizen has the right to assume and trust that a public officer charged by
fee and clerk’s commission in the total amount of P202.00; and in light of said law with certain duties knows his duties and performs them in accordance with
dismissal, noted without action the Supplemental Petition and Motion of law. To penalize such citizen for relying upon said officer in all good faith is
Maersk, et al., praying for the confirmation of the Writ of Preliminary Injunction repugnant to justice.
restored by RTC-Branch 32 and deletion of RTC-Branch 32 from the caption of
 
G.R. No. 121613 for not being a necessary party. In their pending Motion for
The ruling in Segovia was applied by this Court in subsequent cases where an
Reconsideration of the Resolution dated October 23, 1995, Maersk, et al., prayed
appellant’s right to appeal was threatened by the mistake of public officers in
that the Court give due course to and squarely resolve their Petition and
computing the correct amount of docket fee. Respondents draw attention to Rule
Supplemental Petition and Motion.
41, §4 of the 1997 Rules of Civil Procedure which provides that the appellate
The Court resolves to grant the Motion for Reconsideration of Maersk, et al. It
court docket and other lawful fees must be paid in full to the clerk of the court
sets aside the Resolution dated October 23, 1995; reinstates the Petition of
which rendered the judgment or final order appealed from within the period for
Maersk, et al., in G.R. No. 121613; and gives due course to the Petition and
taking the appeal. They argue that this Rule has overruled the decision in Segovia.
Supplemental Petition and Motion of Maersk, et al., in the said case.
This contention is untenable. Rule 41, §4 must be read in relation to Rule 50,
Of particular relevance to the plight of Maersk, et al., herein is the following
§1(c) which provides that:
discussion of the Court in Ayala Land, Inc. v. Carpo:67
An appeal may be dismissed by the Court of Appeals, on its own motion or on
To be sure, the remedy of appeal is a purely statutory right and one who seeks
that of the appellee, on the following grounds:
to avail thereof must comply with the statute or rule. For this reason, payment of
x x x x
the full amount of the appellate court docket and other lawful fees within the
(c) Failure of the appellant to pay the docket and other lawful fees as
reglementary period is mandatory and jurisdictional. However, as we have ruled
provided in Section 4 of Rule 41.
in Aranas v. Endona, the strict application of the jurisdictional nature of the above
x x x x
rule on payment of appellate docket fees may be mitigated under exceptional
With the exception of §1(b), which refers to the failure to file notice of appeal
circumstances to better serve the interest of justice. As early as 1946, in the case
or the record on appeal within the period prescribed by these Rules, the grounds
23 | P a g e
enumerated in Rule 50, §1 are merely directory and not mandatory. This is plain for Review on Certiorari. The Motion did not yet indicate that the intended
from the use of the permissive “may” in the text of the statute. Despite the Petition would include a prayer for a TRO, so the receiving clerk did not assess
jurisdictional nature of the rule on payment of docket fee, therefore, the Maersk, et al., for sheriff’s fee and clerk’s commission. When Maersk, et al.,
appellate court still has the discretion to relax the rule in meritorious cases. The actually filed their Petition with prayer for the
ruling in Segovia is still 313
VOL. 744, DECEMBER 10, 313
312 2014
31 SUPREME COURT REPORTS
City of Manila vs. Colet
2 ANNOTATED
issuance of a writ of preliminary injunction and TRO, they were no longer
City of Manila vs. Colet assessed additional fees by the receiving clerk. Maersk, et al., found out about the
good law which the appellate court, in the exercise of its discretion, must deficiency in their legal fees upon their receipt of the Resolution dated October
apply in circumstances such as that in the present case where an appellant was, 23, 1995 already dismissing their Petition and noting without action their
from the start, ready and willing to pay the correct amount of docket fee, but was Supplemental Petition and Motion. Maersk, et al., immediately filed a Motion for
unable to do so due to the error of an officer of the court in computing the Reconsideration of said Resolution, and also deposited their balance of P202.00
correct amount. To hold otherwise would be unjust and unwarranted. (Citations with the Court.
omitted) Given the circumstances, Maersk, et al., cannot be faulted for their failure to
pay the required legal fees for such failure was clearly not a dilatory tactic nor
 
intended to circumvent the Rules of Court. On the contrary, the subsequent
The Court notes that Revised Circular No. 1-88, effective July 1, 1991, which
payment by Maersk, et al., of the P202.00 deficiency even before the Court had
was cited in the Resolution dated October 23, 1995 as basis for the dismissal of
passed upon their Motion for Reconsideration was indicative of their good faith
the Petition of Maersk, et al., also used the word “may” in the first paragraph
and willingness to comply with the Rules. 68
thereof:
Acting on the Supplemental Petition and Motion of Maersk, et al., the Court
(1) Payment of docketing and other fees.—Section 1 of Rule 45 requires that
further resolves to NOTE WITHOUT ACTION the prayer to confirm the Writ of
petitions for review be filed and the required fees paid within the prescribed
Preliminary Injunction restored by RTC-Branch 32 in light of the present
period. Unless exempted by law or rule, such fees must be fully paid in
judgment, and to GRANT the prayer to delete RTC-Branch 32 from the caption of
accordance with this Circular; otherwise, the Court may deny the petition
the case as it was not a necessary party.
outright. The same rule shall govern petitions under Rule 65. (Emphasis supplied)
(3) G.R. No. 122335: In a Resolution dated January 31, 1996, the Court
Hence, denial of the petition for review outright for failure to pay docketing referred the Petition of Sulpicio Lines to the Court of Appeals. There is a pending
and other fees within the prescribed period was also directory and not mandatory Motion for Reconsideration of the Resolution dated January 31, 1996 filed by
upon the Court under Revised Circular No. 1-88. Sulpicio Lines seeking the withdrawal of the Resolution dated January 31, 1996
In the exercise of its discretion, the Court determines that there was and transmittal of the Rollo of G.R. No. 122335 from the Court of Appeals back to
meritorious reason why Maersk, et al., paid docket and other legal fees within the the Court.
prescribed period, but short of the P202.00 for sheriff’s fee and clerk’s The Court resolves to grant the Motion for Reconsideration of Sulpicio Lines. It
commission. Maersk, et al., were already assessed and required to pay the docket sets aside the Resolution dated January
and legal fees when they filed their Motion for Extension of Time to File Petition _______________

24 | P a g e
 68  Yambao v. Court of Appeals, 399 Phil. 712, 720; 346 SCRA  141, 148 (2000). 315
VOL. 744, DECEMBER 10, 315
314 2014
31 SUPREME COURT REPORTS
City of Manila vs. Colet
4 ANNOTATED
their original Petition for Certiorari, docketed as G.R. No. 122120, to the Court
City of Manila vs. Colet of Appeals, where it was docketed as C.A.-G.R. S.P. No. 39188. The Resolution
31, 1996 and gives due course to the Petition of Sulpicio Lines in G.R. No. dated October 23, 1995 cited as basis for the referral Section 9, paragraph (1)
122335. of Batas Pambansa Blg. 129 which gave the Court of Appeals “[o]riginal
The Petition for Review on Certiorari of Sulpicio Lines, filed under Rule 42 of jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus,
the old Rules of Court, should not have been referred to the Court of Appeals. It is and quo warranto, and auxiliary writs or processes, whether or not in aid of its
true that under Section 9, paragraph (3) of Batas Pambansa Blg. 129, the Court of appellate jurisdiction.” The Court, however, will no longer address the propriety
Appeals has “(e)xclusive appellate jurisdiction over all final judgments, of the referral of the original Petition of Dongnama and Kyowa to the Court of
resolutions, orders or awards of Regional Trial Courts x x x.” However, Rule 42 of Appeals since said issue has become moot and academic after the appellate court
the old Rules of Court, then in effect, allowed an appeal straight from the RTC rendered its Decision in C.A.-G.R. S.P. No. 39188 on March 29, 1996. The Court
(formerly called Court of First Instance) to the Supreme Court when the appeal will simply treat the Petition in G.R. No. 124855 as an appeal of the Decision
raised pure questions of law: dated March 29, 1996 of the Court of Appeals in C.A.-G.R. S.P. No. 39188.
RULE 42  
APPEAL FROM COURTS OF FIRST INSTANCE Ruling on the merits of the 10 Petitions.
TO SUPREME COURT  
  The Court rules in favor of MAS; Maersk, et al.; Eastern Shipping; William
Section 1. Procedure.—The procedure of appeal to the Supreme Court from Lines, et al.; PSTC; OFSI; Cosco, et al.; Sulpicio Lines; AISL; and Dongnama and
Courts of First Instance shall be governed by the same rules governing appeals to Kyowa. Section 21(B) of the Manila Revenue Code, as amended, was null and void
the Court of Appeals, except as hereinafter provided. for being beyond the power of the City of Manila and its public officials to enact,
Section 2. Appeals on pure question of law.—Where the appellant states in approve, and implement under the LGC.
his notice of appeal or record on appeal that he will raise only questions of law, It is already well-settled that although the power to tax is inherent in the
no other question shall be allowed, and the evidence need not be elevated. State, the same is not true for the LGUs to whom the power must be delegated by
Congress and must be exercised within the guidelines and limitations that
 
Congress may provide. The Court expounded in Pelizloy Realty Corporation v. The
A cursory reading of the Petition for Review on Certiorari of Sulpicio Lines
Province of Benguet69 that:
would readily reveal that it appealed the Decision dated August 28, 1995 of RTC-
_______________
Branch 32 in Civil Case Nos. 94-68861, 94-68862, 94-68863, 94-68919, 94-68936,
94-68939, 94-68940, 94-68941, and 94-69028 based only on questions of law. The 69  G.R. No. 183137, April 10, 2013, 695 SCRA 491, 500-502.
Petition did not raise any question of fact and did not require the presentation or
elevation of evidence. 316
In G.R. No. 124855, Dongnama and Kyowa questioned the Resolution dated 31 SUPREME COURT REPORTS
October 23, 1995, which similarly referred
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6 ANNOTATED In conformity with Section 3, Article X of the 1987 Constitution, Congress
City of Manila vs. Colet enacted Republic Act No. 7160, otherwise known as the Local Government Code
The power to tax “is an attribute of sovereignty,” and as such, inheres in the of 1991. Book II of the LGC governs local taxation and fiscal matters.
State. Such, however, is not true for provinces, cities, municipalities Relevant provisions of Book II of the LGC establish the parameters of the
and barangays as they are not the sovereign; rather, they are mere “territorial taxing powers of LGUs found below.
and political subdivisions of the Republic of the Philippines.” First, Section 130 provides for the following fundamental principles governing
The rule governing the taxing power of provinces, cities, municipalities the taxing powers of LGUs:
and barangays is summarized in Icard v. City Council of Baguio: 1. Taxation shall be uniform in each LGU.
It is settled that a municipal corporation unlike a sovereign state is clothed 2. Taxes, fees, charges and other impositions shall:
with no inherent power of taxation. The charter or statute must plainly show an a. be equitable and based as far as practicable on the taxpayer’s ability to pay;
intent to confer that power or the municipality, cannot assume it. And the power b be levied and collected only for public purposes;
when granted is to be construed in strictissimi juris. Any doubt or ambiguity c. not be unjust, excessive, oppressive, or confiscatory;
arising out of the term used in granting that power must be resolved against the d. not be contrary to law, public policy, national economic policy, or in the
municipality. Inferences, implications, deductions — all these — have no place in restraint of trade.
the interpretation of the taxing power of a municipal corporation. 3. The collection of local taxes, fees, charges and other impositions shall in no
Therefore, the power of a province to tax is limited to the extent that such case be let to any private person.
power is delegated to it either by the Constitution or by statute. Section 5, Article 4. The revenue collected pursuant to the provisions of the LGC shall inure
X of the 1987 Constitution is clear on this point: solely to the benefit of, and be subject to the disposition by, the LGU levying the
Section 5. Each local government unit shall have the power to create its tax, fee, charge or other imposition unless otherwise specifically provided by the
own sources of revenues and to levy taxes, fees and charges subject to such LGC.
guidelines and limitations as the Congress may provide, consistent with the basic 5 Each LGU shall, as far as practicable, evolve a progressive system of taxation.
policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to Second, Section 133 provides for the common limitations on the taxing powers
the local governments. of LGUs. x x x. (Underscoring and citations omitted)
Per Section 5, Article X of the 1987 Constitution, “the power to tax is no longer
318
vested exclusively on Congress; local legislative bodies are now given direct
31 SUPREME COURT REPORTS
authority to levy taxes, fees and other charges.” Neverthe-
8 ANNOTATED
317 City of Manila vs. Colet
VOL. 744, DECEMBER 10, 317 Among the common limitations on the taxing power of LGUs is Section 133(j)
2014 of the LGC, which states that “[u]nless otherwise provided herein,” the taxing
City of Manila vs. Colet power of LGUs shall not extend to “[t]axes on the gross receipts of transportation
less, such authority is “subject to such guidelines and limitations as the contractors and persons engaged in the transportation of passengers or freight by
Congress may provide.” 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

26 | P a g e
engaged in the transportation of passengers or freight by hire, and common maximum rate of imposable business tax in case the business taxed under Section
carriers by air, land, or water. Yet, confusion arose from the phrase “unless 143(h) of the LGC happens to be subject to excise, value added, or percentage tax
otherwise provided herein,” found at the beginning of the said provision. The City under the NIRC.
of Manila and its public officials insisted that said clause recognized the power of The omnibus grant of power to municipalities and cities under Section 143(h)
the municipality or city, under Section 143(h) of the LGC, to impose tax “on any of the LGC cannot overcome the specific exception/exemption in Section 133(j) of
business subject to the excise, value-added or percentage tax under the National the same Code. This is in accord with the rule on statutory construction that
Internal Revenue Code, as amended.” And it was pursuant to Section 143(h) of specific provisions must prevail over general ones. 71 A special and specific
the LGC that the City of Manila and its public officials enacted, approved, and provision prevails over a general provision irrespective of their relative positions
implemented Section 21(B) of the Manila Revenue Code, as amended. in the statute. Generalia specialibus non derogant. Where there is in the same
The Court is not convinced. Section 133(j) of the LGC prevails over Section statute a particular enactment and also a general one which in its most
143(h) of the same Code, and Section 21(B) of the Manila Revenue Code, as comprehensive sense would include what is embraced in the
amended, was manifestly in contravention of the former. _______________
First, Section 133(j) of the LGC is a specific provision that explicitly withholds
from any LGU, i.e., whether the province, city, municipality, or barangay, the 70  SEC. 151. Scope of Taxing Powers.—Except as otherwise provided in this
power to tax the gross receipts of transportation contractors, persons engaged in Code, the city, may levy the taxes, fees, and charges which the province or
the transportation of passengers or freight by hire, and common carriers by air, municipality may impose: Provided, however, That the taxes, fees and charges
land, or water. levied and collected by highly urbanized and independent component cities shall
In contrast, Section 143 of the LGC defines the general power of the accrue to them and distributed in accordance with the provisions of this Code.
municipality (as well as the city, if read in rela- 71  Testate Estate of Amos G. Bellis v. Bellis, 126 Phil. 726, 732; 20 SCRA 358,
319 363 (1967).
VOL. 744, DECEMBER 10, 319
320
2014
32 SUPREME COURT REPORTS
City of Manila vs. Colet
0 ANNOTATED
tion to Section 15170 of the same Code) to tax businesses within its
City of Manila vs. Colet
jurisdiction. While paragraphs (a) to (g) thereof identify the particular businesses
and fix the imposable tax rates for each, paragraph (h) is apparently the “catch-all former, the particular enactment must be operative, and the general
provision” allowing the municipality to impose tax “on any business, not enactment must be taken to affect only such cases within its general language as
otherwise specified in the preceding paragraphs, which are not within the provisions of the particular enactment. 72
the sanggunian concerned may deem proper to tax[.]” In the case at bar, the sanggunian of the municipality or city cannot enact an
The succeeding proviso of Section 143(h) of the LGC, viz., “Provided, That on ordinance imposing business tax on the gross receipts of transportation
any business subject to the excise, value-added or percentage tax under the contractors, persons engaged in the transportation of passengers or freight by
National Internal Revenue Code, as amended, the rate of tax shall not exceed two hire, and common carriers by air, land, or water, when said sanggunian was
percent (2%) of gross sales or receipts of the preceding calendar year[,]” is not a already specifically prohibited from doing so. Any exception to the express
specific grant of power to the municipality or city to impose business tax on the prohibition under Section 133(j) of the LGC should be just as specific and
gross sales or receipts of such a business. Rather, the proviso only fixes a unambiguous.

27 | P a g e
 Second, the construction adopted by the Court gives effect to both Sections 11) Those who sell, barter, or exchange shares of stocks, taxed under Sec. 124-
133(j) and 143(h) of the LGC. In construing a law, care should be taken that every A of the NIRC.74
part thereof be given effect and a construction that could render a provision
inoperative should be avoided, and inconsistent provisions should be reconciled  
whenever possible as parts of a harmonious whole. 73 Thus, Section 143(h) of the LGC would not be “a hollow decorative provision
As pointed out by William Lines, et al., in their Petition, despite the prohibition with no subject to tax.” On the contrary, it would be Section 133(j) of the LGC
against LGUs imposing tax on the gross receipts of transportation contractors, which would become inoperative should the Court accept the construction
persons engaged in the transportation of passengers or freight by hire, and proffered by the City of Manila and its public officials, because then, there would
common carriers by air, land, or water, under Section 133(j) of the LGC, there are be no instance at all when the gross receipts of the transportation contractors,
still other multiple businesses subject to excise, value added, or percentage tax persons engaged in the transportation of passengers or freight by hire, and
under the NIRC, which the municipalities and cities can still tax pursuant to common carriers by air, land, or water, would not be subject to tax by the LGUs.
Section 143(h) of the LGC, such as: Third, Section 5(b) of the LGC itself, on Rules of Interpretation, provides:
1) Hotels and motels under Sec. 113 of the NIRC; _______________
2) Caterers, taxed under Sec. 114 of the NIRC;
74  Rollo (G.R. No. 121704), p. 25. Note that the cited provisions were from
_______________ the NIRC of 1977, as amended.

72  Commissioner of Customs v. Court of Tax Appeals, 232 Phil. 641, 645-646; 322
148 SCRA 693, 697 (1987). 32 SUPREME COURT REPORTS
73  Sajonas v. Court of Appeals, 327 Phil. 689, 708; 258 SCRA 79, 95 (1996). 2 ANNOTATED
City of Manila vs. Colet
321 SEC. 5. Rules of Interpretation.—In the interpretation of the provisions of
VOL. 744, DECEMBER 10, 321 this Code, the following rules shall apply:
2014 x x x x
City of Manila vs. Colet (b) In case of doubt, any tax ordinance or revenue measure shall be
3) Dealers in securities, taxed under Sec. 116 of the NIRC; construed strictly against the local government unit enacting it, and liberally in
4) Franchise holders, taxed under Sec. 117 of the NIRC; favor of the taxpayer. Any tax exemption, incentive or relief granted by any local
5) Senders of overseas dispatch, message or communication originating in the government unit pursuant to the provisions of this Code shall be construed
Philippines, taxed under Sec. 118 of the NIRC; strictly against the person claiming it[.]
6) Banks and nonbank financial intermediaries, taxed under Sec. 119 of the
NIRC;  
7) Finance companies, taxed under Sec. 120 of the NIRC; The Court strictly construes Section 21(B) of the Manila Revenue Code, as
8) Agents of foreign insurance companies, taxed under Sec. 122 of the NIRC; amended, against the City of Manila and its public officials and liberally in favor of
9) Amusement places, taxed under Sec. 123 of the NIRC; the transportation contractors, persons engaged in the transportation of
10) Winners in horse races, taxed under Sec. 124 of the NIRC; and passengers or freight by hire, and common carriers by air, land, or water. Strictly

28 | P a g e
assessed against the guidelines and limitations set forth in the LGC, Section 21(B) MR. AQUINO (A.). Thank you, Mr. Speaker.
of the Manila Revenue Code, as amended, was enacted ultra vires. Mr. Speaker, we would like to proceed to page 95, line 1. It states: “SEC. 121
And fourth, the construction adopted by the Court is in accordance with the (now Sec. 131). Common Limitations on the Taxing Powers of Local Government
consistent intention of the laws to withhold from the LGUs the power to tax Units.” . . .
transportation contractors, persons engaged in the transportation of passengers MR. AQUINO (A.). Thank you Mr. Speaker.
or freight by hire, and common carriers by air, land, or water. Still on page 95, subparagraph 5, on taxes on the business of transportation.
Even prior to Section 133(j) of the LGC, Section 5(e) of Presidential Decree No. This appears to be one of those being deemed to be exempted from the taxing
231, otherwise known as The Local Tax Code, as amended, already limited the powers of the local government units. May we know the reason why the
taxing powers of LGUs as follows: transportation business is being excluded from the taxing powers of the local
SEC. 5. Common limitations on the taxing powers of local government.—The government units?
exercise of the taxing powers of provinces, cities, municipalities and barrios shall
not extend to the imposition of the following: _______________
x x x x
(e) Taxes on the business of transportation contractors and persons engaged 75  360 Phil. 852, 863-864; 300 SCRA 661, 671-672 (1998).
in the transportation of 324
323 32 SUPREME COURT REPORTS
VOL. 744, DECEMBER 10, 323 4 ANNOTATED
2014 City of Manila vs. Colet
City of Manila vs. Colet MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section 121
passengers or freight by hire and common carries by air, land or water except (now Sec. 131), line 16, paragraph 5. It states that local government units may not
as otherwise provided in this Code, and taxes or fees for the registration of motor impose taxes on the business of transportation, except as otherwise provided in
vehicles and for the issuance of all kinds of licenses or permits for the driving this code.
thereof. Now, Mr. Speaker, if the Gentleman would care to go to page 98 of Book II,
one can see there that provinces have the power to impose a tax on business
  enjoying a franchise at the rate of not more than one-half of 1 percent of the
The Court, in First Philippine Industrial Corp. v. Court of Appeals,75 expounded gross annual receipts. So, transportation contractors who are enjoying a franchise
on the lawmakers’ reason for exempting the gross receipts of common carriers would be subject to tax by the province. That is the exception, Mr. Speaker.
from the taxing powers of the LGUs: What we want to guard against here, Mr. Speaker is the imposition of taxes by
From the foregoing disquisition, there is no doubt that petitioner is a local government units on the carrier business. Local government units may
“common carrier” and, therefore, impose taxes on top of what is already being imposed by the National Internal
exempt from the business tax as provided for in Section 133(j), of the Local Revenue Code which is the so-called “common carriers tax.” We do not want a
Government Code x x x duplication of this tax, so we just provided for an exception under Section 125
x x x x (now Section 137) that a province may impose this tax at a specific rate.
The deliberations conducted in the House of Representatives on the Local MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . .
Government Code of 1991 are illuminating:
29 | P a g e
 It is clear that the legislative intent in excluding from the taxing power of the restored by RTC-Branch 32 in light of the present judgment, and to GRANT the
local government unit the imposition of business tax against common carriers is prayer to delete RTC-Branch 32 from the caption of the case for not being a
to prevent a duplication of the so-called “common carrier’s tax.” necessary party; and
Petitioner is already paying three (3%) percent common carrier’s tax on its 3. In G.R. No. 122335: (a) to GRANT the Motion for Reconsideration of
gross sales/earnings under the National Internal Revenue Code. To tax petitioner Sulpicio Lines; (b) to SET ASIDE the Resolution dated January 31, 1996; and (c)
again on its gross receipts in its transportation of petroleum business would to GIVE DUE COURSE to the Petition of Sulpicio Lines.
defeat the purpose of the Local Government Code. (Citations omitted) 326
32 SUPREME COURT REPORTS
325 6 ANNOTATED
VOL. 744, DECEMBER 10, 325
City of Manila vs. Colet
2014
Furthermore, the Court hereby DECIDES:
City of Manila vs. Colet 1. To DECLARE Section 21(B) of the Manila Revenue Code, as amended, null
Consistent with the foregoing legislative intent, Republic Act No. 7716, more and void for being in violation of the guidelines and limitations on the taxing
popularly known as the Expanded Value-Added Tax (E-VAT) Law, which took powers of the LGUs under the LGC;
effect after the LGC on May 28, 1994, expressly amended the NIRC of 1977 and 2. In G.R. No. 120051: (a) to DENY the Petition of the City of Manila, Mayor
added to Section 115 of the latter on “Percentage tax on carriers and keepers of Lim, and City Treasurer Acevedo; and (b) to AFFIRM the Decision dated April 3,
garages,” the following proscription: “The gross receipts of common carriers 1995 of RTC-Branch 43 in Civil Case No. 94-69052; and
derived from their incoming and outgoing freight shall not be subjected to the 3. In G.R. Nos. 121613, 121675, 121704, 121720-28, 121847-55, 122333,
local taxes imposed under Republic Act No. 7160, otherwise known as the Local 122335, 122349, and 124855: (a) to GRANT the Petitions of Maersk, et al.;
Government Code of 1991.” Eastern Shipping; William Lines, et al.; PSTC; OFSI; Cosco, et al.; Sulpicio Lines;
  AISL; and Dongnama and Kyowa, respectively; (b) to REVERSE and SET ASIDE the
IV Decision dated August 28, 1995 of RTC-Branch 32 in Civil Case Nos. 94-68861, 94-
Dispositive Portion 68862, 94-68863, 94-68919, 94-68936, 94-68939, 94-68940, 94-68941, and 94-
  69028, and the Decision dated March 29, 1996 of the Court of Appeals in C.A.-
WHEREFORE, in view of the foregoing, the Court hereby RESOLVES: G.R. S.P. No. 39188; (c) to ORDER the City of Manila to refund to Maersk, et al.;
1. In G.R. No. 120051: (a) to DENY the Motion to Withdraw the Petition filed Eastern Shipping; William Lines, et al.; PSTC; OFSI; Cosco, et al.; Sulpicio Lines;
by the Office of the City Legal Officer on behalf of the City of Manila, Mayor AISL; and Dongnama and Kyowa the business taxes assessed and collected against
Atienza, and City Treasurer Acevedo; and (b) to DECLARE as SATISFACTORY the said corporations under Section 21(B) of the Manila Revenue Code, as amended;
Compliance submitted by Atty. Dela Cruz; and (d) to MAKE PERMANENT the Writs of Preliminary Injunction restored by
2. In G.R. No. 121613: (a) to GRANT the Motion for Reconsideration of RTC-Branch 32 during the pendency of the Petitions at bar.
Maersk, et al.; (b) to SET ASIDE the Resolution dated October 23, 1995; (c) SO ORDERED.
to REINSTATE the Petition of Maersk, et al.; (d) to GIVE DUE COURSE to the Sereno (CJ., Chairperson), Carpio, Velasco, Jr., Peralta, Del Castillo, Villarama,
Petition and the Supplemental Petition and Motion of Maersk, et al.; (e) as Jr., Mendoza, Reyes, Perlas-Bernabe and Leonen, JJ., concur.
regards the Supplemental Petition and Motion of Maersk, et al., to NOTE Brion, J., On Leave.
WITHOUT ACTION the prayer to confirm the Writ of Preliminary Injunction Bersamin, Perez and Jardeleza, JJ., On Official Leave.

30 | P a g e
 327
VOL. 744, DECEMBER 10, 327
2014
City of Manila vs. Colet
Motion to Withdraw Petition in G.R. No. 120051 denied; Motion for
Reconsideration of Maersk in G.R. No. 121613 granted, Resolution dated October
23, 1995 set aside, Petition of Maersk reinstated; Supplemental Petition and
Motion of Maersk given due course; Motion for Reconsideration of Sulpicio Lines
in G.R. No. 122335 granted, Resolution dated January 31, 1996 granted, Petition
given due course; Section 21(B) of Manila Revenue Code, declared as amended,
null and void; Petitions of Maersk, et al. in G.R. Nos. 121613, 121675, 121704,
121720-28, 121847-55, 122333, 122335, 122349, and 124855 granted, judgment
of RTC, Manila-Br. 32 dated August 28, 1995 and decision of Court of Appeals in
C.A.-G.R. S.P. No. 39188 dated March 29, 1996 reversed and set aside; City of
Manila ordered to refund to Maersk, et al. business taxes assessed and collected
under Section 21(B) Manila Revenue Code, as amended; and Writs of Preliminary
Injunction restored by RTC, Manila-Br. 32 made permanent.

Notes.—The power to tax is inherent in the State, such power being

inherently legislative, based on the principle that taxes are a grant of the people
who are taxed, and the grant must be made by the immediate representatives of
the people; and where the people have laid the power, there it must remain and
be exercised. (Commissioner of Internal Revenue vs. Fortune Tobacco
Corporation, 559 SCRA 160 [2008])
Legislative power cannot be delegated. Nonetheless, the general rule barring
delegation is subject to certain exceptions allowed in the Constitution. (Umali vs.
Commission on Elections, 723 SCRA 170 [2014])
——o0o——

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