YAMANE vs. BA LEPANTO Condominium (GR No. 154993, Oc. !5, !

""5#
FACTS:
Petition Luz Yamane is the City Treasurer of Makati while Respondent A!Lepanto Condominium Corporation "the
#Corporation$% owns and holds title to the &ommon and limited &ommon areas of the A!Lepanto Condominium "the
#Condominium$%' situated in Paseo de Ro(as' Makati City)
The Corporation is authorized' under Arti&le * of its Amended y!Laws' to &olle&t re+ular assessments from its mem,ers for
operatin+ e(penses' &apital e(penditures on the &ommon areas' and other spe&ial assessments as pro-ided for in the Master
.eed with .e&laration of Restri&tions of the Condominium)
/n 01 .e&em,er 0223' the Corporation re&ei-ed a 4oti&e of Assessment si+ned ,y the City Treasurer whi&h states that the
Corporation is #lia,le to pay the &orre&t &ity ,usiness ta(es' fees and &har+es'$ for the years 0221 to 0225) The 4oti&e of
Assessment was silent as to the statutory ,asis of the ,usiness ta(es assessed)
The Corporation responded with a written ta( protest dated 06 Fe,ruary 0222' addressed to the City Treasurer) 7t was
e-ident in the protest that the Corporation was perple(ed on the statutory ,asis of the ta( assessment) Alle+in+ therein that'
The Makati 8Re-enue9 Code "MRC% and the 8Lo&al :o-ernment9 Code do not &ontain any pro-isions on whi&h the Assessment
&ould ,e ,ased) /ne mi+ht ar+ue that Se&) ;A)<6"m% of the Makati 8Re-enue9 Code imposes ,usiness ta( on owners or
operators of any ,usiness not spe&i=ed in the said &ode) This is not appli&a,le to the Corporation as the Corporation is not an
owner or operator of any ,usiness in the &ontemplation of the Makati 8Re-enue9 Code and e-en the 8Lo&al :o-ernment9
Code)
The protest was re>e&ted ,y the City Treasurer and ruled that the &olle&tion of dues from the unit owners was e?e&ted
primarily #to sustain and maintain the e(penses of the &ommon areas' with the end in -iew 8si&9 of +ettin+ full appre&iati-e
li-in+ -alues 8si&9 for the indi-idual &ondominium o&&upants and to &ommand ,etter marketa,le 8si&9 pri&es for those
o&&upants$ who would in the future sell their respe&ti-e units) Thus' she &on&luded sin&e the #&han&es of +ettin+ hi+her
pri&es for well!mana+ed &ommon areas of any &ondominium are ,etter and more e?e&ti-e that &ondominiums with poor 8si&9
mana+ed &ommon areas'$ the &orporation a&ti-ity #is a pro=t -enture makin+ 8si&9$@
The &orporation =led an Appeal ,efore the RTC' whi&h was dismissed) Sayin+ that the a&ti-ities of the Corporation fell
sAuarely under the de=nition of #,usiness$ under Se&tion 0;",% of the Lo&al :o-ernment Code' and thus su,>e&t to lo&al
,usiness ta(ation)
The Corporation =led a Petition for Review with the CA whi&h was initially dismissed outri+ht)
Bowe-er' on its MR' the Corporation pointed out that under Se&tion 021 of the Lo&al :o-ernment Code' the remedy of the
ta(payer on the denial of the protest =led with the lo&al treasurer is to appeal the denial with the &ourt of &ompetent
>urisdi&tion) CA reinstated the petition)
CA ! re-ersed the RTC and de&lared that the Corporation was not lia,le to pay ,usiness ta(es to the City of Makat) CA
&on&luded that the Corporation was not en+a+ed in pro=t) For one' it was held that the -ery statutory &on&ept of a
&ondominium &orporation showed that it was not a >uridi&al entity intended to make pro=t' as its sole purpose was to hold
title to the &ommon areas in the &ondominium and to maintain the &ondominium)
Cpon denial of her MR' the City Treasurer ele-ated the present Petition for Review ) 7t is ar+ued that the Corporation is
en+a+ed in ,usiness' for the dues &olle&ted from the di?erent unit owners is utilized towards the ,eauti=&ation and
maintenan&e of the Condominium' resultin+ in #full appre&iati-e li-in+ -alues$ for the &ondominium units whi&h would
&ommand ,etter market pri&es should they ,e sold in the future) The City Treasurer likewise a-ers that the rationale for
,usiness ta(es is not on the in&ome re&ei-ed or pro=t earned ,y the ,usiness' ,ut the pri-ile+e to en+a+e in ,usiness)
The fa&t that the Corporation is empowered #to a&Auire' own' hold' en>oy' lease' operate and maintain' and to &on-ey
sell' transfer or otherwise dispose of real or personal property$ alle+edly Auali=es #as in&ident to the fa&t of 8the
CorporationDs9 a&t of en+a+in+ in ,usiness)

$%%&E: whether a lo&al +o-ernment unit &an' under the Lo&al :o-ernment Code' impel a &ondominium &orporation to pay ,usiness
ta(es) 4/

'EL()
There are dis&erni,le &onEi&tin+ -iews on the issue) T*+ =rst -iew' as e(pressed ,y the Court of Appeals' holds that the RTC'
in re-iewin+ denials of protests ,y lo&al treasurers' e(er&ises appellate >urisdi&tion) This position is an&hored on the lan+ua+e
of Se&tion 021 of the Lo&al :o-ernment Code whi&h states that the remedy of the ta(payer whose protest is denied ,y the
lo&al treasurer is #o ,--+,. with the &ourt of &ompetent >urisdi&tion)$ Apparently thou+h' the Lo&al :o-ernment Code does
not ela,orate on how su&h #appeal$ should ,e undertaken)
T*+ o*+/ vi+0' as maintained ,y the City Treasurer' is that the >urisdi&tion e(er&ised ,y the RTC is ori+inal in &hara&ter)
This is the =rst time that the position has ,een presented to the &ourt for ad>udi&ation) Still' this ar+ument does =nd
>urisprudential moorin+ in our rulin+ in Garcia v. De Jesus' where the Court pro?ered the followin+ distin&tion ,etween ori+inal
>urisdi&tion and appellate >urisdi&tion: #/ri+inal >urisdi&tion is the power of the Court to take >udi&ial &o+nizan&e of a &ase
instituted for >udi&ial a&tion for the =rst time under &onditions pro-ided ,y law) Appellate >urisdi&tion is the authority of a
Court hi+her in rank to re!e(amine the =nal order or >ud+ment of a lower Court whi&h tried the &ase now ele-ated for >udi&ial
re-iew)$
The Auoted de=nitions were taken from the &ommentaries of the esteemed Fusti&e Florenz Re+alado) Gith the de=nitions as
,ea&on' the re-iew taken ,y *+ RTC ov+/ *+ d+ni,. o1 *+ -/o+s 23 *+ .oc,. /+,su/+/ 0ou.d 1,.. 0i*in *,
cou/4s o/i5in,. 6u/isdicion. $n s*o/, *+ /+vi+0 is *+ inii,. 6udici,. co5ni7,nc+ o1 *+ m,+/) Moreo-er' la,elin+
the said re-iew as an e(er&ise of appellate >urisdi&tion is inappropriate' sin&e the denial of the protest is not the >ud+ment or
order of a lower &ourt' ,ut of a lo&al +o-ernment oH&ial)
/stensi,ly' the noti&e of assessment' whi&h stands as the =rst instan&e the ta(payer is oH&ially made aware of the pendin+
ta( lia,ility' should ,e suH&iently informati-e to apprise the ta(payer the le+al ,asis of the ta() Se&tion 021 of the Lo&al
:o-ernment Code does not +o as far as to e(pressly reAuire that the noti&e of assessment spe&i=&ally &ite the pro-ision of
the ordinan&e in-ol-ed ,ut it does reAuire that it state the nature of the ta(' fee or &har+e' the amount of de=&ien&y'
sur&har+es' interests and penalties) 7n this &ase' the noti&e of assessment sent to the Corporation did state that the
assessment was for ,usiness ta(es' as well as the amount of the assessment) There may ha-e ,een prima facie&omplian&e
with the reAuirement under Se&tion 021) Bowe-er in this &ase' the Re-enue Code pro-ides multiple pro-isions on ,usiness
ta(es' and at -aryin+ rates) Ben&e' we &ould appre&iate the CorporationDs &onfusion' as e(pressed in its protest' as to the
e(a&t le+al ,asis for the ta() Referen&e to the lo&al ta( ordinan&e is -ital' for the power of lo&al +o-ernment units to impose
lo&al ta(es is e(er&ised throu+h the appropriate ordinan&e ena&ted ,y the sanggunian' and not ,y the Lo&al :o-ernment
Code alone) Ghat determines ta( lia,ility is the ta( ordinan&e' the Lo&al :o-ernment Code ,ein+ the ena,lin+ law for the
lo&al le+islati-e ,ody)
Moreo-er' a &areful e(amination of the Re-enue Code shows that while Se&tion ;A)<6"m% seems desi+ned as a &at&h!all
pro-ision' Se&tion ;A)<6"f%' whi&h pro-ides for a di?erent ta( rate from that of the former pro-ision' may ,e &onstrued to ,e
of similar import) Ghile Se&tion ;A)<6"f% is Auite e(hausti-e in enumeratin+ the &lass of ,usinesses ta(ed under the pro-ision'
the listin+' while it does not in&lude &ondominium!related enterprises' ends with the a,,re-iation #et&)$' or #et &etera$)
7n this &ase' the Corporation seems &on=dent enou+h in liti+atin+ despite the failure of the City Treasurer to admit on what
e(a&t pro-ision of the Re-enue Code the ta( lia,ility ensued) This is perhaps ,e&ause the Corporation has an&hored its
&entral ar+ument on the position that the Lo&al :o-ernment Code itself does not san&tion the imposition of ,usiness ta(es
a+ainst it) This position was sustained ,y the Court of Appeals' and now merits our analysis)
As stated earlier' lo&al ta( on ,usinesses is authorized under Se&tion 0I; of the Lo&al :o-ernment Code) The word
#,usiness$ itself is de=ned under Se&tion 0;0"d% of the Code as #trade or &ommer&ial a&ti-ity re+ularly en+a+ed in as a
means of li-elihood or with a -iew to pro=t)$ This de=nition of #,usiness$ takes on importan&e' sin&e Se&tion 0I; allows lo&al
+o-ernment units to impose lo&al ta(es on ,usinesses other than those spe&i=ed under the pro-ision) Moreo-er' e-en those
,usiness a&ti-ities spe&i=&ally named in Se&tion 0I; are themsel-es sus&epti,le to ,road interpretation) For e(ample' Se&tion
0I;",% authorizes the imposition of ,usiness ta(es on wholesalers' distri,utors' or dealers in any arti&le of &ommer&e of
whate-er kind or nature)
Still' the City Treasurer has not posited the &laim that the Corporation is en+a+ed in ,usiness a&ti-ities ,eyond the statutory
purposes of a &ondominium &orporation) The assessment appears to ,e ,ased solely on the CorporationDs &olle&tion of
assessments from unit owners' su&h assessments ,ein+ utilized to defray the ne&essary e(penses for the Condominium
Pro>e&t and the &ommon areas) There is no &ontemplation of ,usiness' no orientation towards pro=t in this &ase) Ben&e' the
assailed ta( assessment has no ,asis under the Lo&al :o-ernment Code or the Makati Re-enue Code' and the insisten&e of
the &ity in its &olle&tion of the -oid ta( &onstitutes an attempt at depri-ation of property without due pro&ess of law)