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MANILA ELECTRIC COMPANY v. CITY OF MUNTINLUPA

FACTS:

This case involves a dispute between the City of Muntinlupa and Manila Electric Company (Meralco) regarding the collection of franchise tax. Meralco argued that the power to impose and collect a franchise tax lies with the provinces and cities, based on the Local Government Code of 1991. Meralco filed a petition with the Regional Trial Court (RTC) of Pasig City, seeking a declaration that Section 25 of MO 93-35 is null and void and an injunction against the City of Muntinlupa from demanding the submission of its certified statement of gross sales/receipts. The RTC ruled in favor of Meralco, but the Court of Appeals reversed the decision. Meralco filed a petition for review before the Supreme Court to challenge the CA's decision.

The City of Muntinlupa argued that it can impose a franchise tax based on Section 137 of RA 7160 and the Implementing Rules and Regulations (IRR) of the said law. On the other hand, Meralco maintained that municipalities do not have the authority to impose a franchise tax, which is reserved for provinces and cities under RA 7160. The trial court declared MO 93-35 as ultra vires and null and void, enjoined the City of Muntinlupa from collecting the franchise tax, and dismissed the City's counterclaim for damages. The City of Muntinlupa appealed the decision to the Court of Appeals.

Meralco filed a Petition for Review on Certiorari challenging the validity of Section 25 of Municipal Ordinance 93-35. Both the trial court and the appellate court declared Section 25 null and void ab initio. Meralco also questioned whether Section 56 of RA 7926, which converted the municipality of Muntinlupa into a highly urbanized city, cured the earlier declaration of the nullity of the said section.

ISSUES:

RULING:

PRINCIPLES:

  • An ordinance which is incompatible with any existing law or statute is ultra vires, hence null and void.

  • A void ordinance cannot legally exist, have binding force and effect, or produce any legal effect.

  • Transitory provisions in a charter contemplate only those ordinances that are valid and legally existing at the time of its enactment.