City of Iriga vs. Casureco 3

12/19/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 680
G.R. No. 192945. September 5, 2012.*
CITY OF IRIGA, petitioner, vs. CAMARINES SUR III

ELECTRIC COOPERATIVE, INC. (CASURECO III),
respondent.
Remedial Law; Courts; Court of Tax Appeals; Jurisdiction;

Republic Act No. (RA) 9282, which took effect on April 23, 2004,
expanded the jurisdiction of the Court of Tax Appeals (CTA) to
include, among others, the power to review by appeal decisions,
orders or resolutions of the Regional Trial Courts in local tax cases
originally decided or resolved by them in the exercise of their
original or appellate jurisdiction.—RA 9282, which took effect on
April 23, 2004, expanded the jurisdiction of the Court of Tax
Appeals (CTA) to include, among others, the power to review by
appeal decisions, orders or resolutions of the Regional Trial
Courts in local tax cases originally decided or resolved by them in
the exercise of their original or appellate jurisdiction.
_______________
* SECOND DIVISION.
237
VOL. 680, SEPTEMBER 5, 2012 237
City of Iriga vs. Camarines Sur III Electric Cooperative, Inc.

(CASURECO III)
Void Judgments; A void judgment has no legal or binding

force or efficacy for any purpose or at any place.—Considering that
RA 9282 was already in effect when the RTC rendered its decision
on February 7, 2005, CASURECO III should have filed its appeal,
not with the CA, but with the CTA Division in accordance with
the applicable law and the rules of the CTA. Resort to the CA was,
therefore, improper, rendering its decision null and void for want
of jurisdiction over the subject matter. A void judgment has no
legal or binding force or efficacy for any purpose or at any place.
Hence, the fact that petitioner’s motion for reconsideration from
www.central.com.ph/sfsreader/session/0000016f1dfd6d0e4cf689a0003600fb002c009e/t/?o=False 1/15
the CA Decision was belatedly filed is inconsequential, because a

void and non-existent decision would never have acquired finality.
Taxation; Cooperatives; Electric Cooperatives; The tax
privileges granted to electric cooperatives registered with National
Electrification Administration (NEA) under P.D. 269 were validly
withdrawn and only those registered with the Cooperative
Development Authority (CDA) under R.A. 6938 may continue to
enjoy the tax privileges under the Cooperative Code.—In
Philippine Rural Electric Cooperatives Association, Inc.
(PHILRECA) v. The Secretary, Department of Interior and Local
Government, 403 SCRA 558 (2003), the Court held that the tax
privileges granted to electric cooperatives registered with NEA
under PD 269 were validly withdrawn and only those registered
with the CDA under RA 6938 may continue to enjoy the tax
privileges under the Cooperative Code. Therefore, CASURECO III
can no longer invoke PD 269 to evade payment of local taxes.
Moreover, its provisional registration with the CDA which
granted it exemption for the payment of local taxes was extended
only until May 4, 1992. Thereafter, it can no longer claim any
exemption from the payment of local taxes, including the subject
franchise tax.
Same; Local Taxation; The power of the local government
units to impose and collect taxes is derived from the Constitution
itself which grants them “the power to create its own sources of
revenues and to levy taxes, fees and charges subject to such
guidelines and limitation as the Congress may provide.”—The
power of the local government units to impose and collect taxes is
derived from the Constitution itself which grants them “the power
to create its own sources of revenues and to levy taxes, fees and
charges subject to such guidelines and limitation as the Congress
may provide.” This
238
238 SUPREME COURT REPORTS ANNOTATED
City of Iriga vs. Camarines Sur III Electric Cooperative, Inc.

(CASURECO III)
explicit constitutional grant of power to tax is consistent with the

basic policy of local autonomy and decentralization of governance.
With this power, local government units have the fiscal
mechanisms to raise the funds needed to deliver basic services to
their constituents and break the culture of dependence on the
national government. Thus, consistent with these objectives, the
LGC was enacted granting the local government units, like
petitioner, the power to impose and collect franchise tax.
Same; Franchise Tax; Words and Phrases; A franchise tax is a

tax on the privilege of transacting business in the state and
exercising corporate franchises granted by the state.—In National
Power Corporation v. City of Cabanatuan, 401 SCRA 259 (2003),
the Court declared that “a franchise tax is ‘a tax on the privilege of
transacting business in the state and exercising corporate
franchises granted by the state.’ ” It is not levied on the
corporation simply for existing as a corporation, upon its property
or its income, but on its exercise of the rights or privileges granted
to it by the government. “It is within this context that the phrase
tax on businesses enjoying a franchise in Section 137 of the LGC
should be interpreted and understood.”
Same; Same; Requisites That Must Concur in Order to be
Liable for Local Franchise Tax.—To be liable for local franchise
tax, the following requisites should concur: (1) that one has a
“franchise” in the sense of a secondary or special franchise; and
(2) that it is exercising its rights or privileges under this franchise
within the territory of the pertinent local government unit.
Same; Same; Franchise tax shall be based on gross receipts
precisely because it is a tax on business, rather than on persons or
property.—It should be stressed that what the petitioner seeks to
collect from CASURECO III is a franchise tax, which as defined,
is a tax on the exercise of a privilege. As Section 137 of the LGC
provides, franchise tax shall be based on gross receipts precisely
because it is a tax on business, rather than on persons or
property. Since it partakes of the nature of an excise tax, the situs
of taxation is the place where the privilege is exercised, in this
case in the City of Iriga, where CASURECO III has its principal
office and from where it operates, regardless of the place where its
services or products are delivered. Hence, franchise tax covers all
gross receipts from Iriga City and the Rinconada area.
239
VOL. 680, SEPTEMBER 5, 2012 239

City of Iriga vs. Camarines Sur III Electric Cooperative,
Inc. (CASURECO III)
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Ruben T. Almelor, Jr. for petitioner.
Glenn G. Hao for respondent.
PERLAS-BERNABE, J.:
The Court reiterates that a franchise tax is a tax levied
on the exercise by an entity of the rights or privileges
granted to it by the government.1 In the absence of a clear

and subsisting legal provision granting it tax exemption, a
franchise holder, though non-profit in nature, may validly
be assessed franchise tax by a local government unit.
Before the Court is a petition filed under Rule 45 of the
Revised Rules of Court seeking to set aside the February
11, 2010 Decision2 and July 12, 2010 Resolution3 of the
Court of Appeals (CA), which reversed the February 7,
2005 Decision of the Regional Trial Court (RTC) of Iriga
City, Branch 36 and ruled that respondent Camarines Sur
III Electric Cooperative, Inc. (CASURECO III) is exempt
from payment of local franchise tax.
The Facts
CASURECO III is an electric cooperative duly organized
and existing by virtue of Presidential Decree (PD) 269,4 as
_______________
1 National Power Corporation v. City of Cabanatuan, G.R. No. 149110,
April 9, 2003, 401 SCRA 259, 274.
2 Penned by Associate Justice Noel G. Tijam with Associate Justices
Apolinario D. Bruselas, Jr. and Ruben C. Ayson, concurring, Rollo, pp. 42-
55.
3 Id., at pp. 37-40.
4 Presidential Decree No. 269, Creating the “National Electrification
Administration” as a Corporation, Prescribing Its Powers and
240

Inc. (CASURECO III)
amended, and registered with the National Electrification

Administration (NEA). It is engaged in the business of
electric power distribution to various end-users and
consumers within the City of Iriga and the municipalities
of Nabua, Bato, Baao, Buhi, Bula and Balatan of the
Province of Camarines Sur, otherwise known as the
“Rinconada area.”5
Sometime in 2003, petitioner City of Iriga required
CASURECO III to submit a report of its gross receipts for
the period 1997-2002 to serve as the basis for the
computation of franchise taxes, fees and other charges.6
The latter complied7 and was subsequently assessed taxes.
On January 7, 2004, petitioner made a final demand on
CASURECO III to pay the franchise taxes due for the
period 1998-2003 and real property taxes due for the period
1995-2003.8 CASURECO III, however, refused to pay said

taxes on the ground that it is an electric cooperative
provisionally registered with the Cooperative Development
Authority (CDA),9 and therefore exempt from the payment
of local taxes.10
_______________
Activities, Appropriating the Necessary Funds Therefor and Declaring
a National Policy Objective for the Total Electrification of the Philippines
on an Area Coverage Service Basis, the Organization, Promotion and
Development of Electric Cooperatives to Attain the Said Objective,
Prescribing Terms and Conditions for their Operations, the Repeal of
Republic Act No. 6038, and for Other Purposes. It took effect on August 6,
1973.
5 Rollo, p. 43.
6 Id.
7 Records, p. 12.
8 Id., at p. 14.
9 On March 10, 1990, Congress enacted into law Republic Act No. 6938,
otherwise known as the “Cooperative Code of the Philippines” and
Republic Act No. 6939 creating the CDA. The latter law vested the power
to register cooperatives solely on the CDA while the former provides that
electric cooperatives registered with NEA under P.D. 269 which opt not
to register with the CDA shall not be
241
VOL. 680, SEPTEMBER 5, 2012 241

Inc. (CASURECO III)
On March 15, 2004, petitioner filed a complaint for

collection of local taxes against CASURECO III before the
RTC, citing its power to tax under the Local Government
Code (LGC) and the Revenue Code of Iriga City.11 It
alleged that as of December 31, 2003, CASURECO III’s
franchise and real property taxes liability, inclusive of
penalties, surcharges and interest, amounted to Seventeen
Million Thirty-Seven Thousand Nine Hundred Thirty-Six
Pesos and Eighty-Nine Centavos (P17,037,936.89) and
Nine Hundred Sixteen Thousand Five Hundred Thirty-Six
Pesos and Fifty Centavos (P916,536.50), respectively.12
In its Answer, CASURECO III denied liability for the
assessed taxes, asserting that the computation of the
petitioner was erroneous because it included 1) gross
receipts from service areas beyond the latter’s territorial
jurisdiction; 2) taxes that had already prescribed; and 3)
taxes during the period when it was still exempt from local
government tax by virtue of its then subsisting registration
with the CDA.13
Ruling of the Trial Court
In its Decision dated February 7, 2005, the RTC ruled
that the real property taxes due for the years 1995-1999
had already prescribed in accordance with Section 19414 of
the LGC.
_______________
entitled to the benefits and privileges under the said law. (Emphasis
supplied)
10 Rollo, p. 43.
11 Records, p. 2.
12 Rollo, p. 44.
13 Records, p. 26.
14 Section 194, LGC: Periods of Assessment and Collection.—(a) Local
taxes, fees, or charges shall be assessed within five (5) years from the date
they became due. No action for the collection of such taxes, fees, or
charges, whether administrative or judicial, shall be instituted after the
expiration of such period: Provided, That, taxes, fees or charges which
have accrued before the effectivity of this Code
242

Inc. (CASURECO III)
However, it found CASURECO III liable for franchise

taxes for the years 2000-2003 based on its gross receipts
from Iriga City and the Rinconada area on the ground that
the “situs of taxation is the place where the privilege is
exercised.”15 The dispositive portion of the RTC Decision
reads:
WHEREFORE, in view of the foregoing, defendant is hereby

made liable to pay plaintiff real property taxes and franchise
taxes on its receipts, including those from service area covering
Nabua, Bato, Baao and Buhi for the years 2000 up to the present.
The realty taxes for the years 1995 and 1999 is hereby declared
prescribed. The City Assessor is hereby directed to make the
proper classification of defendant’s real property in accordance
with Ordinance issued by the City Council.
SO ORDERED.16
_______________
may be assessed within a period of three (3) years from the date they
became due.
(b) In case of fraud or intent to evade the payment of taxes, fees, or
charges, the same may be assessed within ten (10) years from discovery of
the fraud or intent to evade payment.
(c) Local taxes, fees, or charges may be collected within five (5) years
from the date of assessment by administrative or judicial action. No such
action shall be instituted after the expiration of said period: Provided,
however, that, taxes, fees or charges assessed before the effectivity of this
Code may be collected within a period of three (3) years from the date of
assessment.
(d) The running of the periods of prescription provided in the
preceding paragraphs shall be suspended for the time during which:
(1) The treasurer is legally prevented from making the assessment of
collection;
(2) The taxpayer requests for a reinvestigation and executes a waiver
in writing before expiration of the period within which to assess or collect;
and
(3) The taxpayer is out of the country or otherwise cannot be located.
15 CA Rollo, p. 11.
16 Rollo, p. 42.
243
VOL. 680, SEPTEMBER 5, 2012 243

Inc. (CASURECO III)
Only CASURECO III appealed from the RTC Decision,

questioning its liability for franchise taxes.
Ruling of the Court of Appeals
In its assailed Decision, the CA found CASURECO III to
be a non-profit entity, not falling within the purview of
“businesses enjoying a franchise” pursuant to Section 137
of the LGC. It explained that CASURECO III’s non-profit
nature is diametrically opposed to the concept of a
“business,” which, as defined under Section 131 of the LGC,
is a “trade or commercial activity regularly engaged in as a
means of livelihood or with a view to profit.” Consequently,
it relieved CASURECO III from liability to pay franchise
taxes.
Petitioner moved for reconsideration, which the CA
denied in its July 12, 2010 Resolution for being filed a day
late, hence, the instant petition.
Issues Before the Court
Petitioner raises two issues for resolution, which the
Court restates as follows: (1) whether or not an electric
cooperative registered under PD 269 but not under RA
693817 is liable for the payment of local franchise taxes;

and (2) whether or not the situs of taxation is the place
where the franchise holder exercises its franchise
regardless of the place where its services or products are
delivered.
CASURECO III, on the other hand, raises the
procedural issue that since the motion for reconsideration
of the CA Decision was filed out of time, the same had
attained finality.
The Court’s Ruling
The petition is meritorious.
_______________
17 Republic Act No. 6938 (March 10, 1990), an ACT TO ORDAIN A
COOPERATIVE CODE OF THE PHILIPPINES.
244

Inc. (CASURECO III)
Before delving into the substantive issues, the Court

notes the procedural lapses extant in the present case.
Proper Mode of Appeal from the
Decision of the Regional Trial
Court involving local taxes
RA 9282,18 which took effect on April 23, 2004, expanded
the jurisdiction of the Court of Tax Appeals (CTA) to
include, among others, the power to review by appeal
decisions, orders or resolutions of the Regional Trial Courts
in local tax cases originally decided or resolved by them in
the exercise of their original or appellate jurisdiction.19
Considering that RA 9282 was already in effect when
the RTC rendered its decision on February 7, 2005,
CASURECO III should have filed its appeal, not with the
CA, but with the CTA Division in accordance with the
applicable law and the rules of the CTA. Resort to the CA
was, therefore, improper, rendering its decision null and
void for want of jurisdiction over the subject matter. A void
judgment has no legal or binding force or efficacy for any
purpose or at any place.20 Hence, the fact that petitioner’s
motion for reconsideration from the CA Decision was
belatedly filed is inconsequential, because a void and non-
existent decision would never have acquired finality.21
_______________
18 Republic Act No. 9282 (March 30, 2004), AN ACT EXPANDING THE
JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS RANK TO THE
LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS
MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OF REPUBLIC ACT

NO. 1125, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT
OF TAX APPEALS, AND FOR OTHER PURPOSES.
19 Section 7(a)(3), RA 9282.
20 Roces v. House of Representatives Electoral Tribunal and Ang Ping,
G.R. No. 167499, September 15, 2005, 469 SCRA 681, 694.
21 Nazareno v. Hon. Court of Appeals, G.R. No. 111610, February 27,
2002, 378 SCRA 28, 36.
245
VOL. 680, SEPTEMBER 5, 2012 245

Inc. (CASURECO III)
The foregoing procedural lapses would have been

sufficient to dismiss the instant petition outright and
declare the decision of the RTC final. However, the
substantial merits of the case compel us to dispense with
these lapses and instead, exercise the Court’s power of
judicial review.
CASURECO III is not exempt from
payment of franchise tax
PD 269, which took effect on August 6, 1973, granted
electric cooperatives registered with the NEA, like
CASURECO III, several tax privileges, one of which is
exemption from the payment of “all national government,
local government and municipal taxes and fees, including
franchise, filing, recordation, license or permit fees or
taxes.”22
On March 10, 1990, Congress enacted into law RA
6938,23 otherwise known as the “Cooperative Code of the
Philip-
_______________
22 Presidential Decree No. 269 (August 6, 1973), Section 39. Assistance
to Cooperatives; Exemption from Taxes, Imposts, Duties, Fees; Assistance
from the National Power Corporation. Pursuant to the national policy
declared in Section 2, the Congress hereby finds and declares that the
following assistance to cooperative is necessary and appropriate:
(a) Provided that it operates in conformity with the purposes and
provisions of this Decree, cooperatives (1) shall be permanently exempt
from paying income taxes, and (2) x x x shall be exempt from the payment
(a) of all National Government, local government and municipal taxes and
fees, including franchise, filing, recordation, license or permit fees or taxes

and any fees, charges, or costs involved in any court or administrative
proceeding in which it may be a party, and (b) of all duties or imposts on
foreign goods acquired for its operations, x x x
(b) x x x
23 Republic Act No. 6938 (March 10, 1990), amended by Republic Act
9520, “AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES TO BE
KNOWN AS THE ‘PHILIPPINE COOPERATIVE CODE OF 2008.’ ”
245
VOL. 680, SEPTEMBER 5, 2012 245

Inc. (CASURECO III)
pines,” and RA 693924 creating the CDA. The latter law

vested the power to register cooperatives solely on the
CDA, while the former provides that electric cooperatives
registered with the NEA under PD 269 which opt not to
register with the CDA shall not be entitled to the benefits
and privileges under the said law.
On January 1, 1992, the LGC took effect, and Section
193 thereof withdrew tax exemptions or incentives
previously enjoyed by “all persons, whether natural or
juridical, including government-owned or controlled
corporations, except local water districts, cooperatives duly
registered under R.A. No. 6938, non-stock and non-profit
hospitals and educational institutions.”25
In Philippine Rural Electric Cooperatives Association,
Inc. (PHILRECA) v. The Secretary, Department of Interior
and Local Government,26 the Court held that the tax
privileges granted to electric cooperatives registered with
NEA under PD 269 were validly withdrawn and only those
registered with the CDA under RA 6938 may continue to
enjoy the tax privileges under the Cooperative Code.
Therefore, CASURECO III can no longer invoke PD 269
to evade payment of local taxes. Moreover, its provisional
registration with the CDA which granted it exemption for
the payment of local taxes was extended only until May 4,
1992.
_______________
24 Republic Act 6939 (March 10, 1990), AN ACT CREATING THE
COOPERATIVE DEVELOPMENT AUTHORITY TO PROMOTE THE VIABILITY AND GROWTH

OF COOPERATIVES AS INSTRUMENTS OF EQUITY, SOCIAL JUSTICE AND ECONOMIC
DEVELOPMENT, DEFINING ITS POWERS, FUNCTIONS AND RESPONSIBILITIES,
RATIONALIZING GOVERNMENT POLICIES AND AGENCIES WITH COOPERATIVE
FUNCTIONS, SUPPORTING COOPERATIVE DEVELOPMENT, TRANSFERRING THE
REGISTRATION AND REGULATION FUNCTIONS OF EXISTING GOVERNMENT AGENCIES

ON COOPERATIVES AS SUCH AND CONSOLIDATING THE SAME WITH THE AUTHORITY,
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES.
25 Local Government Code, Section 193, emphasis supplied.
26 G.R. No. 143076, June 10, 2003, 403 SCRA 558.
247
VOL. 680, SEPTEMBER 5, 2012 247

Inc. (CASURECO III)
Thereafter, it can no longer claim any exemption from the

payment of local taxes, including the subject franchise tax.
Indisputably, petitioner has the power to impose local
taxes. The power of the local government units to impose
and collect taxes is derived from the Constitution itself
which grants them “the power to create its own sources of
revenues and to levy taxes, fees and charges subject to such
guidelines and limitation as the Congress may provide.”27
This explicit constitutional grant of power to tax is
consistent with the basic policy of local autonomy and
decentralization of governance. With this power, local
government units have the fiscal mechanisms to raise the
funds needed to deliver basic services to their constituents
and break the culture of dependence on the national
government. Thus, consistent with these objectives, the
LGC was enacted granting the local government units, like
petitioner, the power to impose and collect franchise tax, to
wit:
SEC. 137. Franchise Tax.—Notwithstanding any exemption

granted by any law or other special law, the province may impose
a tax on businesses enjoying a franchise, at a rate not exceeding
fifty percent (50%) of one percent (1%) of the gross annual receipts
for the preceding calendar year based on the incoming receipt, or
realized, within its territorial jurisdiction. xxx
SEC. 151. Scope of Taxing Powers.—Except as otherwise
provided in this Code, the city, may levy the taxes, fees, and
charges which the province or municipality may impose: Provided,
however, That the taxes, fees and charges levied and collected by
highly urbanized and independent component cities shall accrue
to them and distributed in accordance with the provisions of this
Code. The rates of taxes that the city may levy may exceed the
maximum rates allowed for the province or municipality by not
more than fifty percent (50%) except the rates of professional and
amusement taxes.
Taking a different tack, CASURECO III maintains that

it is exempt from payment of franchise tax because of its
nature
_______________
27 See Section 5, Article X, 1987 Constitution.
248

Inc. (CASURECO III)
as a non-profit cooperative, as contemplated in PD 269,28

and insists that only entities engaged in business, and not
non-profit entities like itself, are subject to the said
franchise tax.
The Court is not persuaded.
In National Power Corporation v. City of Cabanatuan,29
the Court declared that “a franchise tax is ‘a tax on the
privilege of transacting business in the state and exercising
corporate franchises granted by the state.’ ”30 It is not
levied on the corporation simply for existing as a
corporation, upon its property or its income, but on its
exercise of the rights or privileges granted to it by the
government.31 “It is within this context that the phrase tax
on businesses enjoying a franchise in Section 137 of the
LGC should be interpreted and understood.”32
Thus, to be liable for local franchise tax, the following
requisites should concur: (1) that one has a “franchise” in
the sense of a secondary or special franchise; and (2) that it
is exercising its rights or privileges under this franchise
within the territory of the pertinent local government
unit.33
There is a confluence of these requirements in the case
at bar. By virtue of PD 269, NEA granted CASURECO III a
franchise to operate an electric light and power service for
a
_______________
28 Section 2. Declaration of National Policy.
x x x
Because of their non-profit nature, cooperative character and the heavy
financial burdens that they must sustain to become effectively established
and operationally viable, electric cooperatives, particularly, shall be given
every tenable support and assistance by the National Government, its
instrumentalities and agencies to the fullest extent of which they are

capable; x x x
29 G.R. No. 149110, April 9, 2003, 401 SCRA 259, 260.
30 Id., emphasis supplied.
31 Id.
32 Id.
33 Id.
249
VOL. 680, SEPTEMBER 5, 2012 249

Inc. (CASURECO III)
period of fifty (50) years from June 6, 1979,34 and it is

undisputed that CASURECO III operates within Iriga City
and the Rinconada area. It is, therefore, liable to pay
franchise tax notwithstanding its non-profit nature.
CASURECO III is liable for fran-
chise tax on gross receipts within
Iriga City and Rinconada area
CASURECO III further argued that its liability to pay
franchise tax, if any, should be limited to gross receipts
received from the supply of the electricity within the City of
Iriga and not those from the Rinconada area.
Again, the Court is not convinced.
It should be stressed that what the petitioner seeks to
collect from CASURECO III is a franchise tax, which as
defined, is a tax on the exercise of a privilege. As Section
13735 of the LGC provides, franchise tax shall be based on
gross receipts precisely because it is a tax on business,
rather than on persons or property.36 Since it partakes of
the nature of an excise tax,37 the situs of taxation is the
place where the privilege is
_______________
34 Records, p. 44.
35 Local Government Code, Section. 137. Franchise Tax.—Not-
withstanding any exemption granted by any law or other special law, the
province may impose a tax on businesses enjoying a franchise, at a rate
not exceeding fifty percent (50%) of one percent (1%) of the gross annual
receipts for the preceding calendar year based on the incoming receipt, or
realized, within its territorial jurisdiction. xxx
36 Commissioner of Internal Revenue v. Solidbank Corp., G.R. No.
148191, November 25, 2003, 416 SCRA 436, 463.
37 “Generally stated, an excise tax is one that is imposed on the
performance of an act, the engagement in an occupation, or the enjoyment
of a privilege; and the word has come to have a broader meaning that
includes every form of taxation not a burden laid directly on persons or
property.” (See Commissioner of Internal Revenue v. Solidbank Corp., G.R.
No. 148191, November 25, 2003, 416 SCRA 436, 463, citing Manila
Electric Company v. Vera, 97
250

Inc. (CASURECO III)
exercised, in this case in the City of Iriga, where

CASURECO III has its principal office and from where it
operates, regardless of the place where its services or
products are delivered. Hence, franchise tax covers all
gross receipts from Iriga City and the Rinconada area.
WHEREFORE, the petition is GRANTED. The assailed
Decision dated February 11, 2010 and Resolution dated
July 12, 2010 of the Court of Appeals are hereby SET
ASIDE and the Decision of the Regional Trial Court of
Iriga City, Branch 36, is REINSTATED.
SO ORDERED.
Carpio (Chairperson), Brion, Del Castillo and Perez, JJ.,

concur.
Petition granted, judgment and resolution set aside.
Notes.—R.A. Nos. 8424 and 9282, even as they

expanded the jurisdiction of the Court of Tax Appeals
(CTA), did not change the jurisdiction of the CTA to
entertain an appeal only from a final decision or
assessment of the Commissioner, or in cases where the
Commissioner has not acted within the period prescribed
by the National Internal Revenue Code (NIRC). (Adamson
vs. Court of Appeals, 588 SCRA 27 [2009])
The imposition of local franchise tax is not inconsistent
with the advent of the Value Added Tax (VAT), which
renders functus officio the franchise tax paid to the
national government—VAT inures to the benefit of the
national government, while a local franchise tax is a
revenue of the local government unit. (Smart
Communications, Inc. vs. The City of Davao, 593 SCRA 304
[2009])
——o0o——
_______________
SCRA 352, October 22, 1975. See also State ex ref. Janes v. Brown, 148
NE 95, 96, May 19, 1925; Buckstaff Bath House Co. v. McKinley, 127 SW
2d 802, 806, April 10, 1939; and State v. Fields, 35 NE 2d 744, 749, July
15, 1938).
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12/19/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 680

G.R. No. 192945. September 5, 2012.*

CITY OF IRIGA, petitioner, vs. CAMARINES SUR III

Remedial Law; Courts; Court of Tax Appeals; Jurisdiction;

VOL. 680, SEPTEMBER 5, 2012 237

City of Iriga vs. Camarines Sur III Electric Cooperative, Inc.

Void Judgments; A void judgment has no legal or binding

the CA Decision was belatedly filed is inconsequential, because a

238 SUPREME COURT REPORTS ANNOTATED

City of Iriga vs. Camarines Sur III Electric Cooperative, Inc.

explicit constitutional grant of power to tax is consistent with the

Same; Franchise Tax; Words and Phrases; A franchise tax is a

VOL. 680, SEPTEMBER 5, 2012 239

PETITION for review on certiorari of the decision and

granted to it by the government.1 In the absence of a clear

240 SUPREME COURT REPORTS ANNOTATED

amended, and registered with the National Electrification

1995-2003.8 CASURECO III, however, refused to pay said

VOL. 680, SEPTEMBER 5, 2012 241

On March 15, 2004, petitioner filed a complaint for

242 SUPREME COURT REPORTS ANNOTATED

However, it found CASURECO III liable for franchise

WHEREFORE, in view of the foregoing, defendant is hereby

VOL. 680, SEPTEMBER 5, 2012 243

Only CASURECO III appealed from the RTC Decision,

693817 is liable for the payment of local franchise taxes;

COOPERATIVE CODE OF THE PHILIPPINES.

244 SUPREME COURT REPORTS ANNOTATED

Before delving into the substantive issues, the Court

MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OF REPUBLIC ACT

VOL. 680, SEPTEMBER 5, 2012 245

The foregoing procedural lapses would have been

fees, including franchise, filing, recordation, license or permit fees or taxes

KNOWN AS THE ‘PHILIPPINE COOPERATIVE CODE OF 2008.’ ”

VOL. 680, SEPTEMBER 5, 2012 245

pines,” and RA 693924 creating the CDA. The latter law

COOPERATIVE DEVELOPMENT AUTHORITY TO PROMOTE THE VIABILITY AND GROWTH

REGISTRATION AND REGULATION FUNCTIONS OF EXISTING GOVERNMENT AGENCIES

VOL. 680, SEPTEMBER 5, 2012 247

Thereafter, it can no longer claim any exemption from the

SEC. 137. Franchise Tax.—Notwithstanding any exemption

Taking a different tack, CASURECO III maintains that

248 SUPREME COURT REPORTS ANNOTATED

as a non-profit cooperative, as contemplated in PD 269,28

instrumentalities and agencies to the fullest extent of which they are

VOL. 680, SEPTEMBER 5, 2012 249

period of fifty (50) years from June 6, 1979,34 and it is

250 SUPREME COURT REPORTS ANNOTATED

exercised, in this case in the City of Iriga, where

Carpio (Chairperson), Brion, Del Castillo and Perez, JJ.,

Petition granted, judgment and resolution set aside.

Notes.—R.A. Nos. 8424 and 9282, even as they

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