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140. ANGELES CITY, Petitioner, vs. ANGELES CITY Within the period prescribed by law, AEC protested the
ELECTRIC CORPORATION and REGIONAL TRIAL COURT assessment claiming that:
BRANCH 57, ANGELES CITY, Respondents. [G.R. No.
(a) pursuant to RA 4079, it is exempt from paying local
166134. June 29, 2010]
business tax;
FACTS
(b) since it is already paying franchise tax on business,
On June 18, 1964, AEC was granted a legislative the payment of business tax would result in double
franchise under Republic Act No. (RA) 4079 to construct, taxation;
maintain and operate an electric light, heat, and power system
(c) the period to assess had prescribed because under the
for the purpose of generating and distributing electric light, heat LGC, taxes and fees can only be assessed and collected
and power for sale in Angeles City, Pampanga. Pursuant to
within five (5) years from the date they become due; and
Section 3-A thereof, AEC’s payment of franchise tax for gross
earnings from electric current sold was in lieu of all taxes, fees (d) the assessment and collection of taxes under the
and assessments. RRCAC cannot be made retroactive to 1993 or prior to its
effectivity.8
On January 1, 1992, RA 7160 or LGC of 1991 was
passed into law, conferring upon provinces and cities the power, On April 5, 2004, the City Treasurer levied on the real
among others, to impose tax on businesses enjoying franchise. properties of AEC.11 A Notice of Auction Sale12 was published
In accordance with the LGC, the Sangguniang Panlungsod of and posted announcing that a public auction of the levied
Angeles City enacted on December 23, 1993 Tax Ordinance No. properties of AEC would be held on May 7, 2004.
33, S-93, otherwise known as the Revised Revenue Code of This prompted AEC to file with the RTC, where the
Angeles City (RRCAC). petition for declaratory relief was pending, an Urgent Motion for
After appropriate amendment of the RRCAC in order to Issuance of Temporary Restraining Order and/or Writ of
ensure compliance with the provisions of the LGC, starting July Preliminary Injunction to enjoin Angeles City and its City
1995, AEC has been paying the local franchise tax to the Office Treasurer from levying, annotating the levy, seizing,
of the City Treasurer on a quarterly basis, in addition to the confiscating, garnishing, selling and disposing at public auction
national franchise tax it pays every quarter to the Bureau of the properties of AEC.
Internal Revenue (BIR). RTC: issued a TRO followed by an Order granting the issuance
On January 22, 2004, the City Treasurer issued a Notice of a Writ of Preliminary Injunction, conditioned upon the filing
of Assessment to AEC for payment of business tax, license fee of a bond in the amount of ₱10,000,000.00.
and other charges for the period 1993 to 2004 in the total
amount of ₱94,861,194.10.
Petitioner’s main argument is that the collection of taxes cannot
be enjoined by the RTC. Petitioner further reasons that since
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the levy and auction of the properties of a delinquent taxpayer XPN: when in the opinion of CTA the collection thereof may
are proper and lawful acts specifically allowed by the LGC, these jeopardize the interest of the government and/or the taxpayer.
cannot be the subject of an injunctive writ. Petitioner likewise
The situation is different in the case of the collection of local
insists that AEC must first pay the tax before it can protest the
taxes as there is no express provision in the LGC prohibiting
assessment. Finally, petitioner contends that the tax exemption courts from issuing an injunction to restrain local governments
claimed by AEC has no legal basis because RA 4079 has been from collecting taxes. Thus, in the case of Valley Trading Co.,
expressly repealed by the LGC. Inc. v. Court of First Instance of Isabela, Branch II, cited by the
Private respondent AEC claims that the issuance of the writ of petitioner, we ruled that:
injunction was proper since the tax assessment issued by the
Unlike the National Internal Revenue Code, the Local Tax
City Treasurer is not yet final, having been seasonably appealed Code31 does not contain any specific provision
pursuant to Section 19524 of the LGC. In any case, AEC
prohibiting courts from enjoining the collection of local
counters that the issue of whether it is liable to pay the assessed
taxes. Such statutory lapse or intent, however it may be
local business tax is a factual issue that should be determined viewed, may have allowed preliminary injunction where
by the RTC and not by the Supreme Court via a petition
local taxes are involved but cannot negate the procedural
for certiorari under Rule 65 of the Rules of Court.
rules and requirements under Rule 58.
Issue:
Nevertheless, it must be emphasized that although there
1. W/N RTC gravely abused its discretion in issuing the writ is no express prohibition in the LGC, injunctions enjoining the
of preliminary injunction enjoining Angeles City and its City collection of local taxes are frowned upon. Courts therefore
Treasurer from levying, selling, and disposing the properties should exercise extreme caution in issuing such injunctions.x
of AEC. There was no grave abuse of discretion on the part of the
2. W/N the collection of business taxes through levy at this RTC in issuing the writ of injunction.
time is premature. Petitioner, who has the burden to prove grave abuse of
RULING: discretion, failed to show that the RTC acted arbitrarily and
I. capriciously in granting the injunction. Neither was petitioner
able to prove that the injunction was issued without any factual
The LGC does not specifically prohibit an injunction enjoining or legal justification. In assailing the injunction, petitioner
the collection of taxes primarily relied on the prohibition on the issuance of a writ of
GR: NIRC expressly provides that no court shall have the injunction to restrain the collection of taxes. But as we have
authority to grant an injunction to restrain the collection of any already said, there is no such prohibition in the case of local
national internal revenue tax, fee or charge imposed by the taxes. Records also show that before issuing the injunction, the
code. RTC conducted a hearing where both parties were given the
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opportunity to present their arguments. During the hearing,

AEC was able to show that it had a clear and unmistakable legal
right over the properties to be levied and that it would sustain
serious damage if these properties, which are vital to its
operations, would be sold at public auction. As we see it then,
the writ of injunction was properly issued.
II.
Considering that AEC was able to appeal the denial of
its protest within the period prescribed under Section 195 of
the LGC, the collection of business taxes through levy at this
time is, to our mind, hasty, if not premature.
The issues of tax exemption, double taxation,
prescription and the alleged retroactive application of the
RRCAC, raised in the protest of AEC now pending with the RTC,
must first be resolved before the properties of AEC can be levied.
In the meantime, AEC’s rights of ownership and possession
must be respected.