Case Digest (G.R. No. 198529)
Facts:
In Manila Electric Company v. City of Muntinlupa and Nelia A. Barlis (G.R. No. 198529, decided February 9, 2021), petitioner Manila Electric Company (Meralco), a franchised public utility under R.A. 9209, challenged the imposition of a franchise tax by the then Municipality—and later City—of Muntinlupa under Section 25 of Municipal Ordinance No. 93-35 (MO 93-35). MO 93-35 took effect on January 1, 1994, imposing a levy of 50% of 1% of gross annual receipts on public utilities within municipal limits. On March 1, 1995, R.A. 7926 converted Muntinlupa into a highly urbanized city and by its Section 56 adopted existing municipal ordinances, including MO 93-35. In June and September of 1999 and 2001, City Treasurer Nelia Barlis demanded payment of franchise taxes from 1992 to 1999 and supporting certified statements of Meralco’s gross sales. Meralco sought a writ of preliminary injunction in the Regional Trial Court (RTC) of Pasig City, Branch 67, to declare Section 25 ultra vires an...Case Digest (G.R. No. 198529)
Facts:
- Parties and Background
- Manila Electric Company (Meralco) is a public utility corporation franchised under Republic Act No. 9209 to operate an electric distribution system in Metro Manila and adjacent provinces.
- The Municipality of Muntinlupa was converted into the Highly Urbanized City of Muntinlupa by Republic Act No. 7926, effective March 1, 1995.
- Municipal Ordinance and Tax Assessment
- Municipal Ordinance No. 93-35 (MO 93-35), the Revenue Code of the Municipality of Muntinlupa, took effect on January 1, 1994 and, under Section 25, imposed a franchise tax of 50% of 1% of gross annual receipts on public utilities.
- Section 56 of RA 7926 adopted all existing municipal ordinances of Muntinlupa as of March 1, 1995, to continue in force unless the new city council enacted otherwise.
- Pre-Litigation Correspondence
- On June 28, 1999, City Treasurer Nelia A. Barlis demanded Meralco’s payment of franchise taxes for 1992–1999 and requested certified statements of gross receipts.
- Meralco sought deferment of document submission, challenged the municipality’s taxing power and noted a pending Supreme Court decision in Manila Electric Co. v. Province of Laguna.
- Trial Court Proceedings
- Meralco filed a Petition with Prayer for a Writ of Preliminary Injunction before the RTC of Pasig City, Branch 67, to annul Section 25 of MO 93-35 as ultra vires and enjoin the City from enforcing it or demanding documents.
- In a September 19, 2003 Decision, the RTC declared Section 25 null and void ab initio for being beyond municipal powers under the Local Government Code and granted the injunction.
- Court of Appeals Decision
- The CA, in its January 31, 2011 Decision, agreed Section 25 was ultra vires as a municipal ordinance but held that Section 56 of RA 7926 cured the defect prospectively.
- The CA ordered Meralco to submit its gross‐receipts statements and pay franchise taxes only from March 1, 1995 onward.
- Petition for Review
- Meralco elevated the case to the Supreme Court via Petition for Review on Certiorari, contesting whether an ultra vires ordinance can be cured by a city-conversion statute.
Issues:
- Whether Section 25 of MO 93-35, enacted by a municipality, was ultra vires and void ab initio under the Local Government Code.
- Whether Section 56 of RA 7926, adopting municipal ordinances upon city conversion, cured the legal infirmity of Section 25.
- Whether Meralco’s obligation to pay franchise tax may be validly reckoned only from the cityhood effectivity date.
- Whether a municipality ever had authority to impose a franchise tax, given Sections 142, 134, 137, and 151 of RA 7160 (Local Government Code).
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)