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TAX: Distinguishing Tax from Other

SMART v. Batangas
15 Exactions
G.R. No. 204429 18 Feb. 2014 J. Carpio Therese
Petitioners: Respondents:
SMART Communications, Inc. Municipality of Malvar, Batangas
Recit Ready Summary

SMART constructed a telecommunications tower within the territorial jurisdiction of the Municipality of Batangas.
Subsequently, the Municipality issued an ordinance (Ordinance No. 18) entitled “An Ordinance Regulating the
Establishment of Special Projects.” As such, Smart received an assessment for the payment of the amount of
P389,950 pursuant to the said ordinance. However, Smart failed to pay the said amount. Thus, the Municipality
issued a closure notice for the telecommunications tower. Smart is now protesting the assessment and is claiming
that there was a lack of due process in the issuance of the assessment and the closure notice.

The issue pertinent to our topic is W/N the fees imposed by Ordinance No. 18 are taxes – NO

The court held that the fees imposed ARE NOT TAXES but rather regulatory in nature. The purpose of the fees
imposed under the said ordinance had for its purpose the regulation of special projects.
(to regulate the placing, stringing, attaching, installing, repair and construction of all gas mains,
electric, telegraph and telephone wires, conduits, meters and other apparatus, and provide for
the correction, condemnation or removal of the same when found to be dangerous, defective
or otherwise hazardous to the welfare of the inhabitant[s])

The primary purpose of the fees is to regulate and not to raise revenues for the government. Thus, the CTA was
correct in dismissing the case for lack of jurisdiction because the latter only has jurisdiction over decisions, orders,
or resolutions of the RTC in local tax cases originally decided or resolved by them in the exercise of their original or
appellate jurisdiction.

The petition was denied.


Facts

1. Smart is a domestic corporation engaged in the business of providing telecommunications services to the
general public while respondent is a local government unit created by law.
2. Smart constructed a telecommunications tower within the territorial jurisdiction of the Municipality.
Subsequently, the Municipality passed Ordinance No. 18 series of 2003 entitled “An Ordinance
Regulating the Establishment of Special Projects”
3. Pursuant to Ordinance No. 18, Smart received an assessment for the payment of the total amount of
P389,950 for the telecommunications tower. Subsequently, Smart received a closure notice due to the
latter’s failure to pay the said amount.
4. Smart protested this assessment and claimed the lack of due process in the issuance of the assessment
and closure notice.

Procedural History

1. RTC: Smart filed an appeal assailing the validity of Ordinance no. 18; TC said that the assessment covering
2001 to July 2003 was void since the ordinance was approved only on July 30, 2003. However, the assessment
starting Oct. 1, 2003 was held valid.
2. CTA First division: Denied the petition for review and the motion for reconsideration
3. CTA En Banc: Affirmed CTA First division decision and resolution.
Issues Ruling
1. W/N the fees imposed by the Ordinance No. 18 are taxes 1. No
a. W/N the CTA has jurisdiction over the present case a. No
2. W/N the imposition of these in Ordinance No. 18 is ultra vires 2. No
3. W/N Ordinance No. 18 is valid and constitutional 3. Yes
Rationale

The fees imposed by Ordinance No. 18 are NOT taxes, thus the CTA does not have jurisdiction over the
present case

1
- CTA has exclusive appellate jurisdiction over decisions, orders, or resolutions of the RTC in local tax cases
originally decided or resolved by them in the exercise of their original or appellate jurisdiction. To determine
w/n CTA has jurisdiction, it must first be determined w/n the fees imposed by Ordinance No. 18 are
considered as taxes.
- The court held that the fees imposed ARE NOT TAXES but rather regulatory in nature.
o The purpose of the fees imposed under the said ordinance had for its purpose the regulation of
special projects.
 (to regulate the placing, stringing, attaching, installing, repair and construction of all gas
mains, electric, telegraph and telephone wires, conduits, meters and other apparatus, and
provide for the correction, condemnation or removal of the same when found to be
dangerous, defective or otherwise hazardous to the welfare of the inhabitant[s])
o The primary purpose of the fees is to regulate and not to raise revenues for the government.
- CTA correctly dismissed the petition for lack of jurisdiction.

The imposition of the fees under Ordinance No. 18 is NOT ultra vires
- LGC: Smart argues that permit fees in Ordinance No. 18 are not those expressly enumerated under Sec.
143 of the LGC
o The fees are not taxes. Thus, the imposition does not appear in the enumeration of taxes under
Sec. 143 of the LGC
- NTC: Smart claims that the fees imposed under Ordinance No. 18 should have been lodged with the NTC.
o The fees are not imposed to regulate the administrative, technical, financial, or marketing operations
of telecommunications entities, such as Smart’s; rather, to regulate the installation and maintenance
of physical structures · Smart’s cell sites or telecommunications tower.
o Municipality does not encroach on NTC’s regulatory powers.
- HLURB: Smart contends that the power to fix the fees for the issuance of development permits and
locational clearances is exercised by the Housing and Land Use Regulatory Board (HLURB).
o HLURB issued locational guidelines governing telecommunications infrastructure.
o Under Guideline No. VI: The Housing and Land Use Regulatory Board in the performance of its
functions shall collect the locational clearance fee based on the revised schedule of fees under the
special use project as per Resolution No. 622, series of 1998 or by the concerned LGUs subject to
EO 72.

Ordinance No. 18 is valid and constitutional


- Smart merely pleaded for the declaration of unconstitutionality without any argument or evidence to support
its plea.
- Smart failed to cite any constitutional provision allegedly violated by the respondent when it issued
Ordinance No. 18
- Smart has the burden to prove a clear and unequivocal breach of the Constitution, which Smart miserably
failed to do.

Disposition

The Court denied the petition.