TOPIC:

Local and Property Taxation ; Franchise Tax (Sec. 137, LGC)

Doctrine: 

• As commonly used, a franchise tax is “a tax on the privilege of transacting business in the state and exercising corporate franchises granted by the state.

FACTS: 

Petitioner is a government-owned and controlled corporation which sells electric power to the residents of Cabanatuan City.  The City of Cabanatuan pursuant to section 37 of Ordinance No. 165-92, assessed the petitioner a franchise tax amounting to P808,606.41, representing 75% of 1% of the latter’s gross receipts for the preceding year.