The operator of the North Expressway falls within the classification of a contractor subject to local business tax based on its gross receipts.

The taxpayer was granted by the government the concession to finance, design, rehabilitate, operate and maintain the North Luzon Expressway (NLEX). For maintaining and operating the NLEX, taxpayer charges toll fees on its users. The Municipality of Guiguinto, Bulacan assessed the taxpayer for local business tax on its toll plazas located in Tabang and Santa Rita and the district office in Santa Rita. The basis of the assessment is the gross revenue. The Court agreed that the toll plazas in Tabang and Santa Rita and the district office are considered branches liable to local business taxes. However, the Court cancelled the assessment on the ground that the basis is erroneous. According to the Court, since the business of the taxpayer is to maintain and operate NLEX for a fee, it falls within the classification of a “contractor” defined under Section 131(h) of the Local Government Code (“LGC”). As such, its liability as a contractor should be computed on the basis of Section 143(e) of the LGC, which imposes tax based on gross receipts. Accordingly, the Court cancelled the assessment which was based on gross revenue for lack of legal mooring. (Manila North Tollways Corporation vs. The Municipality of Guiguinto Bulacan, CTA AC No. 82, December 03, 2012)