Nagpasya ang Supreme Court (SC) na ang provincial, city, at municipal governments ay walang kapangyarihan na magpataw ng business taxes sa mga may-ari at operators ng land, air, at water transportation facilities ito man ay pampasahero, para sa freight, o for hire.
Ang desisyon ng SC, isinulat ni Justice Teresita J. Leonardo-de Castro, ay nagsasabing batay sa restrictions sa taxing powers ng local government units sa ilalim ng Local Government Code, “Section 21 (b) of the Manila Revenue Code, as amended was enacted ultra vires” (beyond the powers).
Tinukoy nito ang Section 133 (j) ng LGC “clearly and unambiguously proscribes LGUs from imposing any tax on the gross receipts of transportation contractors, persons engaged in the transportation of passengers or freight by hire, and common carriers by air, land, or water.”
Kaugnay nito, malinaw na ang “legislative intent in excluding from the taxing power of the local government units the imposition of business tax against common carriers is to prevent a duplication of the so-called ‘common carrier’s tax.’”
