Case Summary (G.R. No. 171557)
Factual Background
Under RA 4079, AEC’s franchise tax on gross earnings was expressly “in lieu of all taxes.” PD 551 maintained a 2% in-lieu franchise tax. The 1991 Local Government Code later authorized localities to impose business and franchise taxes. Angeles City adopted its Revised Revenue Code in 1993. AEC, through its chamber of commerce, sought amendment of allegedly oppressive provisions, but none ensued. From July 1995, AEC paid both national and local franchise taxes quarterly.
Assessment and Protest
On January 22, 2004, the City Treasurer issued a notice of assessment totaling approximately P94.9 million for business taxes, license fees and charges covering 1993–2004. AEC timely protested on grounds of:
1. Exemption under RA 4079;
2. Double taxation;
3. Prescription (five-year assessment period under LGC);
4. Illegal retroactive application of the Revised Revenue Code.
The City Treasurer denied the protest on February 17, 2004.
RTC Proceedings and Injunctive Relief
AEC appealed the denial via Petition for Declaratory Relief (deemed an appeal under Section 195, LGC) before RTC Branch 57. After the Treasurer levied AEC’s real properties and scheduled an auction for May 7, 2004, AEC filed an urgent motion for TRO and writ of preliminary injunction. RTC granted a TRO on May 4 and, upon posting of a P10 million bond, issued a preliminary injunction on May 28, 2004, enjoining the City and its Treasurer from levying, seizing, auctioning or disposing of AEC’s properties.
Issue on Certiorari
Whether the RTC gravely abused its discretion in issuing a preliminary injunction to restrain Angeles City and its Treasurer from levying upon and auctioning AEC’s properties for unpaid local business taxes.
Petitioner’s Contentions
• Courts cannot enjoin tax collection, citing Valley Trading Co. v. CFI of Isabela (1989).
• Levy and auction are lawful under the LGC’s collection procedures.
• AEC must first pay the assessed tax before challenging it.
• RA 4079’s exemption is repealed by the Local Government Code.
Respondent’s Contentions
• No grave abuse of discretion—RTC conducted due hearing and rule-bound exercise.
• Appeal under Section 195 of the LGC stays collection.
• Pantoja v. David allows injunctive relief against distraint and levy.
• Exemption and factual issues on liability should be resolved by the RTC in the main case.
Applicable Legal Principles on Injunctions
• National tax code bars injunctions against internal revenue collection; LGC contains no similar prohibition for local taxes.
• Rule 58, Rules of Court requires: (a) clear and unmistakable right; and (b) urgent necessity to prevent serious, irreparable harm.
• Injunctive relief is extraordinary and must preserve the status quo pending resolution on the merits.
Supreme Court Ruling
The petition for certiorari is dismissed. The Court found:
1. No express ban
Case Syllabus (G.R. No. 171557)
Factual Background
- On June 18, 1964, Angeles City Electric Corporation (AEC) was granted a legislative franchise under Republic Act No. 4079 to construct, maintain, and operate an electric light, heat, and power system in Angeles City, Pampanga.
- Section 3-A of RA 4079 provided that AEC’s franchise tax on gross earnings from electric current sold was in lieu of all taxes, fees, and assessments.
- Presidential Decree No. 551 (September 11, 1974) fixed the franchise tax of electric franchise holders at two percent of gross receipts, in lieu of all national and local taxes.
- Republic Act No. 7160 (Local Government Code) of January 1, 1992, empowered provinces and cities to impose taxes on businesses enjoying a franchise.
- On December 23, 1993, the Sangguniang Panlungsod of Angeles City enacted Tax Ordinance No. 33, S-93 (Revised Revenue Code of Angeles City, RRCAC).
- On February 7, 1994, Metro Angeles Chamber of Commerce and Industry Inc. (MACCI), including AEC, petitioned for reduction of RRCAC rates, alleging oppressive and confiscatory taxation, lack of proper publication, and absence of public hearings.
- The petition was elevated to the Bureau of Local Government Finance (BLGF), which issued a First Indorsement directing amendments to the RRCAC; no amendments were made.
- From July 1995, AEC paid the local franchise tax quarterly to the City Treasurer, in addition to national franchise tax to the Bureau of Internal Revenue.
Proceedings Before the City Treasurer
- January 22, 2004: City Treasurer issued a Notice of Assessment to AEC for business tax, license fees, and other charges from 1993 to 2004 totaling ₱94,861,194.10.
- AEC protested on grounds that it was exempt under RA 4079, that paying business tax would result in double taxation, that the five-year assessment period under the LGC had lapsed, and that the RRCAC could not apply retroactively to 1993.
- February 17, 2004: City Treasurer denied the protest for lack of merit and demanded immediate settlement of assessed liabilities.
Proceedings Before the Regional Trial Court
- AEC filed a Petition for Declaratory Relief (Civil Case No. 11401) as an appeal under Section 195 of the LGC.
- April 5, 2004: City Treasurer levied on AEC’s real properties.
- A