G.R. No. 120051 - City of Manila vs. Colet

On June 22, 1993, the City Council of Manila enacted Ordinance No. 7794 (Revenue Code of Manila), approved by Mayor Lim on June 29, 1993. Section 21(B) imposed a 3% business tax on gross receipts of “keepers of garages, cars for rent or hire... transportation contractors, persons who transport passenger or freight for hire, and common carriers by land, air or water, except owners of bancas and animal-drawn two-wheel vehicles.”
On September 27, 1993, the Code was amended by Ordinance No. 7807 (approved September 29, 1993), reducing the rate to 50% of 1% on the same classes of business. Collection began January 1994.

In January 1994 MAS was assessed P1,100,000 for the business tax under Section 21(B) and P10,307.50 for permit fees. Believing itself exempt, MAS paid only the permit fee and filed for consignation and declaratory relief to invalidate Section 21(B).
On April 3, 1995, RTC-Branch 43 held Section 21(B) invalid insofar as it imposes a business tax on transportation contractors and common carriers and ordered issuance of MAS’s 1994 permit.

Various foreign and domestic shipping corporations (Maersk, APL, Sea-Land, Eastern Shipping, William Lines, Negros Navigation, Lorenzo Shipping, Gothong Lines, Aboitiz Group, Solid Shipping, PNOC, OFSI, Dongnama, Kyowa, etc.) filed suits (94-68861 to 94-69141) challenging Section 21(B) as unconstitutional and sought TROs, preliminary injunctions, and refunds.
RTC-32 issued TROs and writs of preliminary injunction in early 1994, conditioned on bonds.
On August 28, 1995, RTC-32 upheld the City’s power to levy the tax under Section 21(B), dissolved injunctions, and dismissed the petitions.

Appeals were filed directly with the Supreme Court (G.R. Nos. 121613, 121675, 121704, 121720-28, 121847-55, 122333, 122335, 122349, 124855). Two petitions were erroneously referred to the Court of Appeals (G.R. Nos. 122335, 122120).
Several procedural motions (motions for reconsideration, motions to withdraw, late fee payments, motions to restore injunctions) were resolved during consolidation.
By resolution of December 2, 1997, the Supreme Court consolidated all ten petitions for deliberation en banc.

Is Section 21(B) of Ordinance No. 7794, as amended by Ordinance No. 7807 (the 50% of 1% business tax on gross receipts of transportation contractors and common carriers), valid and constitutional under:

In G.R. No. 121675 (Eastern Shipping): if valid, are carriers liable on incoming freight, outgoing freight, or both?
In G.R. No. 120051 (MAS): validity of consignation and right to permit issuance without paying the contested tax.