RPT

G.
R.No.154027Oct
ober24,
2005

SpousesRAMONandROSI TATAN, 
Pet
it
ioner
s,
vs.
GORGONIA BANTEGUI,Repr
esent
edbyGUADALUPEB.BAUTI STA;
andSpousesFLORANTEandFLORENCIAB.CAEDO,
 
Respondent
s.

DECISION

PANGANI J.
BAN,
  :

heauctionsaleofl andtosat i
sfyal
legeddel
inquenciesint hepay ment
ofrealestat
et axesder ogatesorimpingesonpr opertyright
sanddue
process.Thus,thest epsprescri
bedbyl awf
orthesal e,parti
cular
lythe
noti
cesofdelinquencyandofsal e,mustbefoll
owedst r
ictl
y.Fail
ureto
observethosest epsinvali
datesthesale.

TheCase

Befor
eusi saPet i
ti
onforRev
iew1 
underRul
e45oft heRul
esofCourt
,
2
assai
li
ngt heSeptember27,2001Deci si
on  andt
heJune18,2002
3
Resol
ution  oft
heCour
tofAppeals(CA)inCA- GRCVNo.51829.The
assai
ledDeci si
onr
eadsasfol
lows:

"
WHEREFORE,f
indi
ngnorev
ersi
bleerr
orinthejudgmentappeal
ed
4
f
rom,
thesamei
s AFFI
RMED,
withcost
sagai
nst[
petit
ioner
s].
"

The assailed Resol

uti
on deni
ed pet
it
ioner
s’ Mot
ion f
or
Reconsi
der
ation.

TheFact
s

Theant
ecedent
sar
erel
atedbyt
heCAasf
oll
ows:

"Thesubjectmatterofthecontrover
syisa232squar e-
meterlot
sit
uat
edatNo.37- ECalav
iteSt
.LaLoma,QuezonCi
ty,MetroManila.
Saidpieceofpropert
ywasr egi
ster
edi nt
henameof[ Respondent]
Gorgonia Bantegui(Banteguif
orbrevi
ty)
,marri
ed t
o JesusBay ot,
underTransferCerti
fi
cateofTit
le[
(TCT)
]No.47163oftheRegist
erof
DeedsofQuezonCi ty,i
ssuedonMay6,1959,andlat
erreconsti
tut
ed
under[TCT]No.28458.

"Banteguiacquir
edt hepr opertysometimei n1954andr ent
editt o
spouses Florant
e B.Caedo and Fl orencia B.Caedo ( Caedos for
brevit
y),whoresidedthereinunti
l1994.In1970, shel
eftfortheUnit
ed
StatesofAmer i
ca.Sher eturnedtot hePhi l
i
ppinesinJanuar y1988
andexecut edherspeci alpowerofat t
orney[,
]makingGuadal upeB.
Bautist
a( Bauti
staforbr evity)herrepresent
ati
v e,[
aft
erwhi ch]
,she
wentbackt otheUnitedSt ates.

"
Hertaxesonthesubjectpr
opertywerepai
d[,
]butonl
yunti
l1977.The
r
ealpropert
yt axes fr
om t he year1978 to 1983 amounti
ng to
₱3,
034.
99[,
]incl
usiv
eofpenalti
es,however
,werenotpai
d.

"Forfai
lur
eofBant eguito paysaidtaxes,the[c]
ity[
t]
reasurerof
QuezonCitysoldsaidproper
tyatpubli
caucti
onheldonNov ember21,
1984,tothespousesEdi l
ber
toandJosef i
naCapistr
ano(Capist
ranos
forbrevi
ty)
,fort hesum of₱10, 000.
00.TheCer ti
fi
cat
eofSal eof
Deli
nquentPr opert
y was subsequentlyissued i
nt hei
rf avoron
November26, 1984.

"Since the property was notredeemed wi t

hint he one ( 1)year
redempt ion per
iod,tit
leto sai
d proper
tywasconsol idat
ed tot he
Capi str
anosand[ TCT]No.361851wasi ssuedintheirnamesonJune
4,1987.TheCapi st
ranos,however
,didnott akepossessi onoft he
l
and[ orinf
orm]theCaedosaboutt hesaleorcollectedanyr entf
rom
them.They [,
]li
kewise[,
]di
dnotpayrealproper
tytaxesthereon.

"Thepr oper
tywasl at
ersoldonJune20,1988byt heCapistr
anost o
spouses Ev el
yn and Jesse Per eyra(Perey
ras f or br
evit
y )for
₱60,000.00.TheirTCTwascancelledandanew[ TCT]No.2059was
i
ssuedonJanuar y10,1989inthenameofthePer eyras,
whoal sodid
nott ake possessi
on ofthe propert
yin questi
on.They ,howev er
,
mortgaged the same t othe RuralBank ofI mus,Cav it
e,whi ch
[mortgage]wasannotatedontheti
tleoft
heproperty
.
"Thesetransfer
swer eunknownt oBanteguiandt heCaedos[,]despite
thefactthatEvel
ynPereyraisthedaughteroftheCaedos,ast hel att
er
didnotinformthem aboutanythingconcerni
ngt hesetr
ansact i
ons.All
thi
st i
me[,]theact
ualoccupant s,t
heCaedos,consi der
edt hemsel ves
astenantsofBant egui
,suchthattheypaidrentt oherunt
ilDecember
1993,whent heyhandedthewat erpumpaspay mentoftheirarrears.

"Bant
egui,onherpar t
,appliedf oradmi
nistr
ati
ver
econsti
tutionofher
ti
tl
e[,
]asi twasl ostinaf ir
e.Reconstit
utedTi
tl
eNo.28458was
subsequentl
yissuedinhername.Shel i
kewisepai
dtherealtytaxeson
thesubjectpropertyforthey ears1987to1989.The[c]
it
y[ t]r
easurer
ofQuezonCi ty,howev er
,refusedtoacceptherpaymentf orthey ear
1990.

"Meanwhile,onMay3,1990,sai dpr oper

tywasagai nsoldbyt he
PereyrastothespousesRamonandRosi taTan( Tansforbrevi
ty)f
or
₱350,000.00,wi
tht helat
terpayi
ngt heamountof₱300, 000.00tothe
RuralBank ofI mus,Cav i
tefort he rel
ease oft he mort
gage per
agreementbyt hepar t
ies.Theyli
kewi sepaidtheov er
duetaxesand
otherexpensesincurr
edbyt hePereyraspert
aini
ngtosaidmor t
gage.

"TheTans, l
iket hei rpredecessor s, didnottakeimmedi atepossession
oft heproper ty[ orinform]t heoccupant s(Caedos)oft heirti
tletothe
l
and.Towar dst hel att
erpar tof1990,howev er,theTans,t hrutheir
l
awy er
,informedt heCaedosoft hei rowner shi
pov erthepr opertyand
demandedt hatt heCaedosv acatet hepr operty.Theysubsequent ly
fi
ledanact ionf orej ectmentagai nstt heCaedosbef or
et heMuni cipal
TrialCourtofQuezonCi tyonJanuar y18,1991.OnOct ober31,1991,
theCour tr uledi nf avoroft heTans.TheCaedost heni nt
erposedan
appealonFebr uar y2,1992[ ,]whichwasr emandedt othesameCour t
forf ur
therpr oceedi ngs, andf orfailureoftheCaedost oappeardur i
ng
the hear i
ng oft he case,t heywer e declared in defaultand wer e
subsequent l
yej ect edf r
om t hepr oper t
yonFebr uary20,1994,when
thehouset hatt heyer ectedt hereonwasdemol ished.

"OnFebruary11,1992,Bantegui
,thr
uhersi
sterGuadalupeBautist
a,
andjoi
nedbyt hespousesCaedo[,
]fi
l
edaComplai
ntf orAnnul
mentof
Sal
e,Quiet
ingofTitl
e,I
njunct
ionandDamageswiththeRegionalTri
al
CourtofQuezonCi t
y.Thecompl ai
ntwasl ateramendedonMay14,
1992,i
mpleadingthespousesCapi str
anoandt he[c]
it
y[t
]reasur
erof
QuezonCit
yasco- defendant
s,anddel et
ing‘quiet
ingofti
tl
e’from t
he
5
pray
erandinsert
ing‘
reconveyance.
’
"

Aft
erthet r
ialcour
trender
editsDeci
sion6 
i
nfav
orofr
espondent
s,
pet
it
ioner
sappealedtotheCA.

Rul
i
ngoft
heCour
tofAppeal
s

Indecl aringthatpet it
ionerswer enotpur chasersingoodf ai
thandhad
no bet terr ightt ot he subj ectpr opertyt han thatofanyoft heir
predecessor s-in-interest,t he appel late cour t gavet he followi ng
reasons.  Fir
st,t he auct ion sal e was t ai nt
ed wi t
hi rr
egulari
ties:no
noticesofdel inquencyandofsal ewer esentt otheowner .
 Second,
theownercont inuedt opayr ealt
ytaxesont heproperty,evenaf tert he
dateoft hesal e.Shewoul dnothav edonesohadshebeenawar ethat
i
thadal r eadybeenauct ionedof f.
 Third,t heselli
ngpr i
cewasgr ossl y
i
nadequat e and,when v iewed t oget herwi tht he otherf act s and
cir
cumst ances, woul d r ender t he sal e itsel
fv oid.
 Fourth, t he
purchaser sf ailedt ot akepossessi onoft hepr operty,payt her eal
taxes,andi nf ormt hel esseesoft hepur chase.Asar esult
,thel atter
cont i
nuedt opayr entt ot heowner .Asst atedear l
ier
,theCAaf f i
rmed
thet r
ialcour t’sDeci si
on.
7
Hence,
thi
sPet
it
ion.

TheI
ssues

Pet
it
ioner
srai
set
hef
oll
owi
ngi
ssuesf
ort
heCour
t’
sconsi
der
ati
on:

"
I.

"TheHonorableCour
tofAppealser
redi
naffi
rmingthatthetaxsal
eof
Bantegui
’
spr oper
tywastaint
edwi t
hir
regul
ari
tiesthatrender
edthe
samenullandv oi
d.

"
II
.
"TheHonorableCourtofAppealser
redinaf
fi
rmi
ngt hatt
heResol
uti
on
oftheQuezonCi t
yRegionalTri
alCourt
,Br
anch85,confi
rmi
nginfav
or
oftheCapi
stranosthefinalbi
l
lofsaleoft
heaucti
onedproper
tyi
snot
concl
usi
ve.

"
II
I.

"TheHonorabl
eCourtofAppealsl
ikewi
seerredi
ndeclari
ngthatthe
peti
ti
oner
swerenotpurchaser
singoodfai
thandi
nnocentpur
chasers
forval
ue.

"
IV.

"TheHonorableCourtofAppealserr
edinaff
ir
mingthatpet
it
ioner
s
shoul
dpayr espondent
snominaldamagesof₱50,
000andatt
orney’
s
8
feesof₱50,
000."

Theforegoingmaybesummedupi
ntoonl
yonei
ssue:whet
hert
he
auct
ionsalewasval
i
d.

TheCour
t’
sRul
i
ng

ThePet
it
ionhasnomer
it
.

Sol
eIssue:

Whet
hert
heAuct
ionSal
eWasVal
id

Thet axsal
edidnotconf
ormt
otherequir
ementsprescr
ibedunder
Presi
denti
alDecr
ee (
PD)No.464,other
wise known as the Real
9
Propert
yTaxCode.

Fi
rst
,nonoti
ceofdel
inquencyorofsal
ewasgi ventoeit
herGor
goni
a
Bant
egui
,thedel
i
nquentowner;ort
oherrepr
esentat
ive.

Ont
heonehand,
Sect
ion65ofPD464pr
ovi
des:

"SECTI
ON 65.Not
ice ofdel
i
nquencyi
nthe pay
mentoft
he r
eal
proper
tyt
ax.—
"Upon the realpr oper
tyt axoranyi nstal
lmentt her
eofbecomi ng
deli
nquent,thexxxci tytreasur ershal
limmedi atel
ycausenot i
ceof
thefacttobepost edatt hemai nent r
anceoft hexxxcityhallandina
publi
candconspi cuouspl acei neachbar ri
ooft hexxxci tyast he
casemaybe.Thenot i
ceofdel inquencyshallalsobepubli
shedoncea
week f ort hree consecutive weeks,i n a newspaperofgener al
cir
culat
ionint hexxxci ty,ifanyt her
ebe,andannouncedbyacr ierat
themar ketplaceforatleastthreemar ketdays.

"Suchnot i
ceshal lspecifythedat euponwhi cht axbecamedel i
nquent,
and shal lst atet hatper sonalproper t
y may be sei zed to effect
payment .Itshal lalsost atethat,atanyt i
me,bef oret heseizureof
personalpr oper ty,paymentmaybemadewi thpenal t
yi naccordance
witht henextf ollowingsect i
on,andf urther,t
hatunl esst hetaxand
penaltiesbepai dbef oretheexpirati
onoft hey earforwhi chthetaxi s
due,ort he t ax shal lhav e been judici
all
y setasi de,t he ent i
re
deli
nquentr ealpr opertywi l
lbe sol d atpubl i
c auction,and that
thereaftert hef ulltit
let othepr opertywi l
lbeandr emai nwi tht he
purchaser ,subj ectonl ytother i
ghtofdelinquenttaxpayeroranyot her
personi nhi sbehal ftor edeem thesoldpr opertywithi
noney earfr
om
thedat eofsal e."

Ont
heot
herhand,
Sect
ion73ofPD464st
ates:

"
SECTI
ON73.Adv
ert
isementofsal
eofr
ealpr
oper
tyatpubl
i
cauct
ion.
—

"Aftertheexpi rat
ionoft hey earforwhi chthet axisdue,t hexxxci ty
treasurershal ladv ert
ise the sale atpubl i
c auct i
on oft he entir
e
delinquentrealpr opert
y,exceptr ealpropert
yment ionedinsubsect i
on
(a)ofSect ionf ortyhereof,tosat isfyallt
het axesandpenal ti
esdue
andt hecost sofsal e.Suchadv ert
isementshal lbemadebypost inga
noticef orthreeconsecut iveweeksatt hemai nent r
anceoft hexxx
cityorxxxhal li
nt hecaseofci ti
es,andinapubl icandconspi cuous
placei nbar r
ioordi stri
ctwher eint hepropert
yi ssi t
uated,inEngl i
sh,
Spani shandt helocaldialectcommonl yused,andbyannouncement
atleastt hr
eemar ketday satthemar ketbycri
er ,and,inthediscreti
on
oft hexxxci t
yt reasurer,bypubl i
cati
ononceaweekf ort hr
ee
consecut
iveweeksi
nanewspaperofgener
alci
rcul
ati
onpubl
i
shedi
n
thexxxcity.

"Thenot i
ce,publ icati
on,andannouncementbycr iershal lstat
et he
amountoft het axes,penal ti
esandcost sofsal e;t hedat e,hour,and
placeofsale,t henameoft het axpayeragai nstwhom t het axwas
assessed;and t he kind ornat ure ofpr oper ty and,i fland,its
approxi
mat ear eas,l otnumber ,andl ocationst atingthest r
eetand
blocknumber ,di stri
ctorbarrio,muni cipali
tyandt hepr ovinceorci t
y
wheret hepr oper tytobesol di ssituated.Copyoft henot i
ceshal l
fort
hwithbesentei therbyregisteredmai lorbymessenger ,orthrough
thebarri
ocapt ain, t
ot hedeli
nquentt axpay er,athi saddr essasshown
i
nt hetaxrollsorpr opert
ytaxr ecordcar dsoft hexxxci tywher ethe
propert
yislocat ed,orathi sr esidence,ifknownt osaidt r
easureror
barri
ocaptain:Pr ovided,howev er,Thatar eturnoft hepr oofofser vi
ce
underoathshal lbef i
l
edbyt heper sonmaki ngt heser v
icewi ththexx
xcitytr
easurerconcer ned.
"

Theauct ionsal eofrealproper t yf orthecoll

ectionofdel i
nquentt axes
i
s  i
n personam,not  i
nr em. 10
Although suf fi
cienti n pr oceedi ngs  i
n
rem  l
ikelandr egist
rat
ion,mer enot i
cebypubl icat i
onwi llnotsat isf y
ther equir
ement sofpr oceedings  inpersonam. 11
"
[P]ubl
icationoft he
noticeofdel i
nquency[ will
]notsuf fi
ce,consideringt hatthepr ocedur e
i
nt ax sales is i
n personam. " 12
I
ti s sti
l
lincumbentupon t he ci ty
treasurertosendt henot i
cedi rect l
yt othetaxpay er--ther egi st
ered
owneroft hepr opert
y- -inor dert o prot
ectt hel att
er’si nterest s.
Although pr eceded by pr operadv erti
sementand publ ication,an
13
auctionsaleisv oidabsentanact ualnoti
cetoadel inquentt axpay er.

Thesaleofl and"fort axdelinquencyisinderogat i

onofpropert
yrights
14
andduepr ocess[;]thepr escri
bedstepsmustbef oll
owedstri
ctl
y.
"  I
n
thepresentcase,not i
cesei t
herofdel inquencyorofsal ewer enot
giv
ent othedel inquentt axpay er
.Thosenot i
cesar emandatory,and
15
fai
lur
etoissuet hem i nvali
datesasale.
Becauseitwascl earlyincont r
aventi
onoft her equir
ementsundert he
l
awandj urisprudence, thesubsequentsal eofther ealpr
opert
ydidnot
makei t
spur chasert henewowner .
Acertif
icateoft i
tl
eundertheTor renssy stem servesasev i
denceof
anindefeasiblet it
letothepropertyinfavoroft hepersonwhosename
16
appearsoni t.  Whil
eitistruethatTr ansf erCerti
fi
catesofTi tl
ehav e
alr
eadybeeni ssuedi nthenamesoft hesubsequentpur chasers,they
shouldnonet hel essbeinval
idated.Consi der i
ngthef ai
lur
etoabi deby
themandat or yr equir
ementsofapr oceedi ng i
npersonam,nobet t
er
ti
tl
ethant hatoft heori
ginal
ownercanbeassumedbyt hetransfer
ees.

Besides,t
heincont
rover
ti
blenatureofacer ti
fi
cat eoft i
tl
eappl
iesonl y
whent heissueinvol
vedisthev alidi
tyoftheor iginalandnotoft he
tr
ansfer.Subsequentti
tl
esi ssued tot he prejudice oft he ri
ght
f ul
ownerwi l
lproducenol egaleffectswhatsoev er 17
.  Quodnull
um est ,
null
um produci
teff
ectum.Thatwhi chisanulli
typr oducesnoef fect
.18

Agr ossi nadequacyint hepri

ceisofnomomentei ther
.Itistruethat
thel owert hepr i
ce,theeasieritwillbef ortheownert o ef
fect
19
redempt ion;  butt
hefactremainst
hatwithoutt
hemandat orynoti
ces,
theregisteredownerwi llnev
erbegiventheopportunit
ytor edeem the
proper t
y,despi tethelapseofoney earfrom thedat et hesalei s
20
regi
st er
ed.

Mor eover
,f ai
l
ur etoasser towner shipov erapr opertyisindicati
veof
thedoubt fulv al
idit
yofi t
ssal e.Thei mmedi atepur chasersi nthe
presentcasenei thertookpossessi onnori nformedt heoccupant s(t
he
Caedos)oft he f ormer ’
s al l
eged acqui sit
ion oft he property.The
purchasersdi dnotev endemandr entoraskt hem tov acate,asa
resultofwhi ch t heCaedoscont inued to payr entt o Respondent
Bantegui.Indeed,r egi
st ered owner s havet he ri
ghtt o enj oy t
he
propertythattheyown, 21
i
ncludingthe  j
usutendi  
orther i
ghttor ecei
ve
22 23
from itwhateveritproduces,  l
i
keci vi
lfr
uit
s.

Second,onlyacopyoftheResolut
ionofBranch85oft heRegi
onal
Tri
alCour tofQuezonCit
y,conf
irmingthefinalbi
llofsal
etot he
Capistr
anos,hasbeensubmit
tedbyt heci
tyt r
easurert
oshow the
24
val
idit
yofthesal
e.

ThisResol
uti
onis,howev
er,i
nconcl
usi
ve.Wi
thgr
eatersi
gni
fi
canceis
the cat
egori
caland unr
efut
ed stat
ementinitthatthe "[
s]eal
ed
envelopecontai
ningacopyoft hepet i
tionaddressedtoGor goni a
25
Banteguix x x was r eturned to senderuncl ai
med x x x.
"  That
stat
ementdefinit
elyconf i
rmst hel ackofnot ices,wit
houtwhicht he
subsequentproceedingtosel lthepr opertyproducesnolegalef fect
.
"Noti
ceofsalet ot hedel i
nquentl andowner sandt othepubl i
c[ ,
]in
general[
,
]isanessent ialandi ndispensabl er
equirementoflaw,t he
26
non-f
ulfi
ll
mentofwhi chviti
atesthesal e.
"

Thir
d,Section80ofPD464pr ovi
dest hat"anybalanceofthepr oceeds
ofthesaleleftaft
erdeductingtheamountoft hetaxesand
penalt
iesdueandt hecostsofsal e,shallbereturnedtot heowneror
hi
sr epresentati
ve."Againcont raryt ot hemandat eoft hel aw,t he
bal
anceoft hepr oceedsfrom thet axsal ewasnotev enr etur nedto
RespondentBant eguiorherr epr esentati
v eaft
ert hei
ssuanceoft he
fi
nalbillofsal e.Thef ail
uretor eturnt heproceedsr einf
or cedt he
apparentir
regularit
ynotonlyintheconductoft het axsale,butal soin
i
tssubsequentdi spositi
on.

Fourth,peti
ti
oner
swer enotinnocentpurchasersforv
alue.Despit
e
thei
rawar enessofdef
ectsinthei
rti
tl
e,theystil
lfai
l
edtoinvest
igat
e
ortakethenecessar
yprecaut
ion.
27
Goodf ai
thisaquest ionofint ent
ion.  I
tconsi
stsi
nthepossessor
’s
beli
efthattheper sonfrom whom at hinghasbeenrecei
vedisits
28
ownerandcanconv eytit
le.  I
tisdet ermi
nedbyoutwardactsand
29
provenconduct
.

"Apur chaserofr ealest ateatt hetaxsaleobt ainsonl ysucht itleas

that hel d by t he t axpayer[
;] t he pr inciple of  cav eat
empt or appli
es. 30
"  Purchaserscannotcl oset heirey est of actst hat
shouldhav eputanyr easonabl epersonuponguar d,andt hencl aim
thatthey" actedi ngoodf ai
thunderthebel i
efthatther ewasnodef ect
31
i
nt he t i
tl
e."  I
fpet i
tioners do noti nvestigate ort ake pr ecaut ion
despiteknowi ngcer tainfacts,theycannotbeconsi der edingoodf aith.
Thedef enseofi ndefeasi bi
li
tyofaTor r
enst it
ledoesnotext endt oa
32
transfereewhot akest het i
tl
edespi t
eanot i
ceoft hef lawini t.  From
av endorwhodoesnothav eanyt itl
etobegi nwith,nor i
ghtispassed
toat ransferee.
Inthepr esentcase,t heexer ciseoft her i
ghtofpossessi onov erthe
property was at tempt ed by none of t he pur chasers, except
33
peti
ti
oner s.  Thel atter’
spr edecessor s- i
n-i
nterestdidnotdenyt hefact
thatrespondentspouses had cont i
nued t o stayi n and r entt he
propertyfrom RespondentBant egui ,itsregisteredowner .I
nf ormation
aboutt hepur chasewasnotatal lrelay edbyEv el
yn
Pereyra,asubsequentpur chaserandf ormerr esi
dent,tot heCaedos
34
who wer e herv eryown par ent s.  When " the land soldi si nt he
possession ofa per son ot hert han t he v endor,the pur chaseri s
requi
red t o go bey ond t he cer tifi
cat e oft itl
e and make i nquir
ies
35
concerningt her ight soft heact ual possessor ."

Furthermor e, nothing on t he r ecord shows t hat, asi de f rom

RespondentBant egui,t hepur chaserspaidr ealproper tyt axes,as
requir
edofev eryr egi
st eredpropertyowner .Thetaxonr ealpr oper t
y
36
foranyy earshallat t
acht o,becomedueandpay able  f
rom,andbe
the per sonal liabil
it
y of i ts "owner at t he begi nning of t he
37
year."  Cur i
ously,theci tygov ernmental l
owedRespondentBant egui
to cont inuepay ing r ealpr opertytaxesev en aft
ert her edempt ion
peri
odandt heconf i
rmat ionoft hef inalbil
lofsale.Mor eov er
,t he
recordsment i
onnopay mentofr ealpropert
ytaxesfrom 1984t o1986.

Finall
y,RespondentBanteguir emai nedi nconti
nuouspossessionof
theowner ’
sdupli
catecopyoft heCer t
if
icat
eofTi t
le.Shewasev en
all
owedt ounder
takeanadmi nistrati
vereconst
it
ut i
onofherf i
l
ecopy
afterit
sdest r
uct
ionbyf i
re.Accor dingl
y,theRegisterofDeedsissued
ar econstit
utedtit
leinhername,i nwhi chthepr opertyhadbeen
regist
eredasear lyas1959.Forr easonsknownonl ytotheall
eged
purchasers,noattemptwasev enmadet ohavet het i
tl
eimmediatel
y
cancelled.Iti
sbasicthatr egistrati
ondoesnotv estt i
tl
e,whi
chisa
mer eev i
denceoftit
let
oapr oper t
y.

Moreimpor tant,thereconstitutedti
tlewasal l
oweddespi tethefact
thatseveralTCTshad al r
eadybeenpr eviouslyi ssued inf av
orof
peti
ti
oners’pr edecessors-i
n-i
nterest
.Al t
hough r econst it
uti
on alone
38
neit
her conf i
rms nor adj udicat
es owner ship,  consi
deri
ng t he
surr
oundingci rcumstancesoft hiscase,theCour ther ebyconfir
ms
RespondentBant egui’
srightf
ul ownershi
poft hepr oper t
y.
Ent
it
lementt
oDamages

Ast het
rialandtheappellatecour t
shel
d,respondentsindeed
fai
ledtoof ferprooftoj usti
fyt heawardofact ualorcompensator
y
damages.Theact ualv
alueoft hehouseont hepr oper
tyattheti
meof
thedemol i
tionofthestructurewasnotest abli
shed.Onei sent
it
ledt
o
adequatecompensat i
ononl yf orpecuni
arylosst hathasbeenduly
39
proved.

Nomi naldamagesasgr ant

edbyt hel owercour tsi
nt heamountof
₱50,000maybeapl ausi
bleremedy ,however.Thesedamagesar e
j
ust i
fi
edespeci all
ywhencommonsensedi ctatesthatapecuni ary
l
oss has i ndeed been suf fer
ed,but i s incapabl
e of pr ecise
comput ation. They ar e adj
udicated, not f or t
he pur pose of
i
ndemni f yingrespondentsforanylosssuf f
ered,butforvi
ndicati
ngor
recognizing theirr i
ghtt o a propertythathas been v iolat
ed or
40
i
nv aded.

Last
ly,t
heawardbyt heappell
atecour
tof₱50, 000inattorney’
sf ees
al
so appear
sr easonabl
ebecause,bypet it
ioner
s’act,r espondents
41
werecompell
edtoincurexpensest
oprotectthei
rint
erest
.

WHEREFORE, t
hePet
it
ionisher
ebyDENIED,andtheassai
ledDeci
si
on
andResol
uti
onareAFFIRMED.Cost
sagainstpet
it
ioner
s.

SOORDERED.

G.
R.No.148014      December5,
2006

SPOUSES ANTONI O VIZARRA and BRENDA LOGATOC VIZARRA,

TOMAS VI
ZARRA, JESUS PASTORAL, and MIGUEL
RICAFRANCA,
 pet
it
ioner
s,
vs.
CONCHITAR.RODRI GUEZandEVELYNR.RODRI GUEZ,
 
respondent
s.
DECISION

TI J.
NGA,
  :
1
I
nt hisPetit
ionforReview onCer ti
orar i underRule45oft he1997
2
RulesofCivilPr
ocedur
e,petit
ioner
sassai ltheDeci
sion  dated30Apri
l
2001oft heCourtofAppeals,Ei
ghthDiv ision,i
nCA-G.R.CVNo.38286
3
which affi
rmed intotot he Decisi
on  dated 27 July 1991 oft he
RegionalTri
alCourt(
RTC)ofMar i
nduque, Branch38,i
nCi v
ilCaseNo.
84-2.

Theant ecedentf actsinv olvet wosepar atecasespr incipal lyinv ol

v i
ng
thesamepar cel sofl andandt hesamepar ti
esort hei rpr edecessor s-
i
n-inter est .Thef irstcase,t erminatedwaybacki n1977,i nv olvedan
action f orr ecov eryofpossessi on ofr ealpr oper t
ywher ei twas
event ual lyr uledt hatr espondentConchi taR.Rodr iguez( Conchi ta)i s
the owner of a par celof l and locat ed in Bangwai n,Tor r
ijos,
Mar induque, oneoft hesubj ectpr opert
iesoft hispet i
tion.Thesecond
case,now bef or eusf orrev i
ew,concer nsasubsequentt rialcour t
decision, r ender ed i n 1991, and enj oining pet i
tioner s f rom
appr opr iating t he f ruits t hereof, otherwise exer cising act s of
owner shi pov ert hel andpr ev i
ouslyawar dedt oConchi t
aandanot her
proper tyownedi ncommonbyr espondent sandwhi chwasusur ped
4
bypet iti
oner s.  Saiddeci si
onl ikewisenul l
ifi
edapur por tedsal eoft he
subjectpar celsofl and i nf avorofpet iti
oner s.Iti st hei ncident s
surroundi ngt hissal e,ar i
singasi tdidfrom al ev yandauct ionbyt he
Prov i
nci alAssessorofMar i
nduquef ornon- pay mentofr ealpr oper ty
taxes, thatpr ov idet hispet iti
onwi thsomeacademi ci nter est.

Thedet
ail
sfol
l
ow.
5
Thefi
rstcasest
emmedf r
om aComplaint f
il
edon31August1962
bef
orethethenCour
tofFi
rstI
nst
ance(CFI)ofBoac,Mar
induqueby
ManuelVi zar
r a(
Manuel )againstConchi ta.Thecompl aint
,docketed
as CivilCase No.1245,was f orrecov eryofpossessi on ofreal
pr
oper t
y .Manuelnar r
atedinhi scompl aintthathewast heownerof
anunr egisteredparcelofl andl ocatedatBar r
ioBangwain,Torri
j
os,
Marinduque.Att hetimeoft hei nsti
tuti
onoft hecompl aint
,thesubj
ect
l
othad noty etbeen sur veyed butt he alleged boundari
es were
6
embodi edi nTaxDeclarati
onNo.5206i nhi sname. 

Manuelf urtherasser t
edt hatin1937,heandConchi t
a'slatehusband,
Atty.Clement eRodr iguez( Att
y .Rodri
guez),all
egedlyenteredi nt
oa
bil
ateralwr i
ttenagr eemental lowingthel at
tertoent erthel andf or
purposesofl ocatingmi neraldepositstherei
n.Subsequently,butprior
totheJapaneseoccupat i
onper i
od,At t
y.Rodr i
guezhadst artedt o
rai
secat tl
eont hewest er
npor ti
onoft helandinstead,andhadev en
const r
ucted af enceont hesout hernsideofManuel 'sland.At ty
.
Rodriguezdi eddur i
ngt heJapaneseoccupat ion,buthiswidowi l
li
citl
y
ret
ainedpossessi onoft helandandappr opri
atedthefrui
tsoft hefruit
-
7
bearingtrees.

Answeri
ng the compl aint
,Conchi
ta assert
ed ownership overt he
57,
000squaremet er(sq.m.)pr
opert
y,whichwast hencover
edbyTax
8
Decl
arat
ionNo.4570  i
nthenameofherdeceasedf at
her,Vicente
Rosal
es.Sheaddedt haton12April
1950,Manuel had

ceasedt obet hel

awf
ulownerofmostoft helanddescr i
bedinTax
9
Declar
ation No.5206  when he voluntar
ily subdiv
ided the land
descri
bedunderTaxDecl arat
ionNo.5206bet weenhi m andhisseven
10
(7)chi
ldren,  whower
et heninpossessionoftheirrespecti
veshares
11
oftheland.

The di sput
e was r efer
red by the CFI to court-appoi
nted
commi ssi
onerswho then submitt
ed a r
epor
tascer
tai
ning,among
other
s,thatt
heboundariesofthel
andwere:

Onthenor
thernpartofthel
andisthepr
opert
yofManuel
Viz
arr
a,
ontheWest-brook;EastBrookandont heSout
hisBangwain
12
ri
ver
.
Thatpar t
icularconclusi
onpr ovedmat eri
altothedisposit
ionofthe
fi
rstcompl ai
nt.Foron 19 Nov ember1963,Manuelcaused t he
consoli
dationoft heeight(8)taxdecl ar
ati
onsoft heVizarr
asint
oa
si
ngleTaxDecl ar
ati
onNo.8494i nhi sname.Notably
,theboundari
es
as stat
ed i nt he new tax declarati
on were di
ffer
entf r
om those
13
ascert
ainedbyt hecommi ssioners.

On 16 Nov ember1977,t he CFIofMar i

nduque rul
ed i
nf avorof
Conchi t
a,f i
ndingt hatthel at
terwasi ndeedt hetr
ueowneroft he
disputedland.TheCFInot edthedi spar
ityoftheboundari
esofthet ax
declarati
onsManueli ni
ti
all
ypr esentedincourtand,howby" sl
eigh-
of-
the-handimpr ov i
sati
on,
"thel ocationoft heland,asindi
catedinthe
1963t axdecl arati
on,waschangedi nor dertoencompassConchi t
a's
14
property.

Afterthedeci si
onoft heCFIbecamef inalandexecut ory,awr itof
15 16
executi
on,  and,subsequentl
y,anali
aswr i
tofexecuti
on   wereissued
orderi
ngpet it
ionerstor ef
rai
nfrom ent
eringthedisput
edpr opert
y.In
theinter
im,Manueldi edandwassubst i
tutedbyhi sheirs,incl
uding
thepresentpet i
ti
oners.

Theni n1984,Conchi ta,j

oi nedbyherdaught erEv el
yn,fi
ledanact ion
forinjunctionanddamageswi t
hapr ayerf orawr itofpr eliminar y
i
njunction bef oret he RTC ofBoac,Mar i
nduque,Br anch 38.The
second case,docket ed as Ci vi
lCase No.84- 2,saw r espondent s
17
asserti
ngabsol uteowner shi pov ertwo( 2)parcelsofl and,  oneof
whichwast hesubj ectproper t
yinthefir
stcase,locatedatBangwai n,
Torrij
os, Mar induque. Ev en as Conchi t
a's owner ship was
acknowl edgedbyt heCFIi nt he1977deci si
onov eroneoft hepar cels
ofl and,i twas al leged t hatpet i
ti
oners,along witht wentyot her
persons, r epeat edly ent ered t he subject properti
es, har vested
coconut st obepr ocessedi ntocopr aandappr opri
atedt hef ruit
st o
18
themsel ves.

Petit
ioners,ontheot herhand,narr
atedthatthesubjectproperti
es
wereact uall
ypurchasedbypet i
ti
onerspousesAnt onioandBr enda
Vizarrafrom theprov i
nci
algovernmentofMar induqueinapubl i
c
aucti
onsal econduct
edon24Apr i
l1979,whichbecamef i
naloneyear
after
.Theypr esent
edi ncourttheFinal
Bil
lofSal eexecut edon14May
19
1980,ev i
dencingtheirclai
m ov ert
hesubjectpr operti
es.  I
tappeared
thattheauctionsalewasconduct edatthei nstanceoft hePr ovi
ncial
AssessorofMar i
nduque, f
orrealestat
etaxdel i
nquency .I nter
esti
ngly,
theauct i
onsal eresult
edf rom thefai
lur
eofManuelt opayt her eal
propertytaxes,event hought heCFIhadr uledthati twasConchi t
a
20
Rodriguezwhohadact uall
yownedoneoft hesubj ectproper ti
es.

On27Jul y1991,theRTCrender
editsassail
eddecisi
on,fi
ndingthat
theparcel
soflandindi
sput
ewer eownedbyr espondentConchi
ta.In
doingso,i
test
abli
shedthef
oll
owingscenar
io:

(a)I n 1963,Manuelsubdi vi
ded t he propert
y described in Tax
Declarat
ionNo.5206i ntoeight( 8)unequalparts,betweenhi mself
andhi schildren.Af ter
wards,butpr iortot herendit
ionoft heCFI
decisi
oni n1977, Manuelconsolidatedanewt hesubdivi
dedproperti
es
i
nt oonetaxdecl arat
ion(TaxDecl arat
ionNo.8494).Theboundar i
esas
stated i
nt hisnew t axdeclarati
on,howev er.had been altered t
o
encompasst hepr operti
esofConchi ta,ParcelNo.I,subjectofCi v
il
21
CaseNo.1245, andPar celNo.II
. 

(b)TaxDecl ar
ationNo.8494wasl aterrepl
acedbyTaxDecl arati
onNo.
195andsubsequent ly,TaxDecl arati
onNo.176,al linManuel'sname,
andagaini mproper l
yencompassi ngConchita'
sproperti
es.Manuel did
notpayf orthetaxesont hepr oper t
iessubjectofthetaxdeclarati
ons,
prompti
ngt hepr ovincialgov ernmentofMar i
nduquet osendnot ices
ofauctionsal et osel lthel otunderTaxDecl ar
ationNo.176.The
proper
ti
eswer et henpur chasedatt heauct i
onsal ebypet it
ioners
Antoni
oandBr endaVi zarr
a( Br enda),Antoni
obei ngagr andsonof
22
Manuel.

(c)Howev er,t
hepr operti
escov eredbyTaxDecl arati
onNo.176and
subsequentlysoldonauct ionbyt heprovincialgov ernmentincl
udethe
samepr oper t
ywhi chtheCFIhad det ermi ned in 1977 ast hatof
Conchit
a Rodr i
guez.Mor eover
,t he same pr operty and the ot
her
proper
tyal so subjectoft hiscasewer edecl ar
ed int henameof
Conchit
a'sdaught er,Evely n,i
nTaxDecl arat i
onNo.10178andTax
23
Declar
ati
on No. 9792.  The RTC consi dered t he f or
egoing as
 i
ndi
an  cium 
ofthe bad fait
h at
tendi
ng t
he act
s ofManueland
pet
it
ionersi
nseeki
ngtoobtai
nownershi
povert
hesubj
ectpr
oper
ti
es.

Pet
it
ioner
sappeal
edtheRTCDeci si
ont otheCour
tofAppeal
s.The
Cour
tofAppeal
sagreedwi
ththeconclusi
onsandaff
ir i
med ntot
o t
he
j
udgmentoft
heRTC.Hence,t
hispeti
ti
on.

Peti
tionerscomebefor
etheCour
tquestioningessent
ial
lythefi
ndings
offactsofbot hRTCandCAont heowner shi
poft hesubjectpar
cels
ofland.Petit
ioner
smaint
aint
hatthelandt heyenteredwer enotthe
properti
esofConchitaandaverthattheyhadboughtt hesamei n
goodf ai
th.

Brendal ikewiseadmi t
shav i
ngr ecei vedtwo( 2)not i
cesofdel inquency
sale ofdi ff
erentdat es—t he f irstone addr essed t o herhusband
Ant onio Vi zarr
a( Antoni o)and Concepci on Rodr i
guez( referri
ng to
respondentConchi ta),i nt he al ternati
ve;and t he second not i
ce
addr essed t o heruncl e,Ant ero Vi zarr
a( Ant ero)and Concepci on
Rodr iguez, i n t he al ter nati
v e. Howev er, she st ates that t he
respondent sdi dnotf orwar dthenot i
cestoConchi taRodriguezi nthe
bel i
eft hatt he latt
erwas f ur nished copi es oft he same by t he
prov i
nci alassessor '
sof fice.Iti sf urt
herclaimedt hatpetit
ionershad
consul tedAt ty.Eduar doMi r
afuent e( Att
y.Mirafuent e),t
heCFIcl erkof
cour t,regardingt hepr opr ietyofbi ddingtherein.At ty
.Mi r
afuentehad
saidt hatt hepr oper t
yt obeauct ionedof fcov eredt hesamel and
l
itigatedi nCi vi
lCaseNo.1245,buthenonet hel essgav ethem t hego-
24
signal topar ti
cipateint hebi ddi ng.

As a r ule,quest ions off acts are nott o be ent ertained int his
j
urisdiction.Bot ht heRTCandt heCour tofAppeal sar einagr eement
ast ot hepar ti
cularsoft hecase.I nsuchaci r
cumst ance,t her uleis
25
thatthei rfindingsont hef actswillnotbedi stur
bed.  TheCour ti
snot
at r
ieroff actsanddoesnotnor mal l
yunder takether e- exami nati
onof
theev idencepr esentedbyt hecontendingpar ti
esdur ingt het r
ialof
thecaseconsi deringthatthef i
ndingsoff actsoft heCour tofAppeal s
26
areconcl usiveandbi ndingont heCour t.

Thef
undament
ali
ssueoft
hiscaseconcer
nst
hei
dent
it
yoft
hel
andi
n
di
spute.Peti
tioner
swouldhaveusbel ievethatthel
andt heyhad
boughtattheaucti
onsal
edidnotcoverthesamelandthatt
heCFIof
Marinduqueadjudi
cat
edt
orespondentConchi
tawaybackin1977.

TheCour
tisnotper
suaded.

The ev
idence on r
ecordreveal
st hatthe quest
ioned aucti
on sal
e
i
ncl
udedt helandadjudi
cat
edt orespondentConchitabyt heCFIof
Mari
nduqueinCivi
lCase1245.

Notably,beforetheCFI ,Manuel,pet i
ti
oners'predecessor-
in-i
nterest,
presented two apparentl
ydifferentand conf li
cti
ng taxdecl arat
ion
certi
fi
cates i
.e.
,TaxDecl ar
ati
onNos.5206and8494bear ingt otall
y
diff
erentboundari
es.TheCFIofMar induquehadobser vedi
ni t
sr ul
ing
thatthiswaspar tofManuel '
sschemet oacqui retheowner shipofa
parcelofl andwhi chdidnotbel ongt ohim.TheCFIdeci si
on,not
havingbeencont estedbyManuelorhi sheirs,hasl ongbecomef i
nal
andexecut oryandi sthusbindingandconcl usi
veont hepetiti
oners
27
withregardtotheowner shi
pofPar celNo.I.

Petit
ioner sattemptedoncemor etot akethesamepr opertywhent hey
wer ef urnished a copyoft he not i
ce ofdel inquencysal e byt he
provincialassessor '
sof fi
ceoft helandi nquest i
onandPar celNo.II
bothcov eredbyTaxDecl arat
ionNo.176.I nevidentbadf ai
thBr enda
admi tt
edi nopencour tthatAnt erodidnotwantt opayt hedelinquency
taxast hel andi ncludedt herein,denomi natedasPar celNo.I ,had
alr
eadybeenadj udicatedt oConchi ta.Petiti
onersAnt onioandBr enda
hadknownt hattheybi df orthel andownedbyConchi t
aandt hatit
wasundeni ablythel andsubj ectofCi vi
lCaseNo.1245whi chwas
adjudicatedt oConchi ta.Brendaher selftestif
iedasfollows:

Q:Andy ouruncleAnteroVizarraalsot ol
dy out hathei snot
i
nterestedinpayi
ngt hebackt axesbecauset hatportionoft he
l
and ofManuelVi zar
ra was lostt o Conchita Rodriguez or
Concepcion Rodri
guezi n Ci
vi
lCaseNo.1245 and t hatMr s.
Rodriguezisinpossessionoft helandpubl i
clyandt hatshe
shouldpaythetaxes,doyourememberhav i
ngt ol
dAnt erointhat
manner ?
 A:Myuncletol
dmet hattheywouldnotpayt hetaxesbecause
theyl
ostt
hecasetoMr s.Rodr
iguez,sir
.Andt hepossessi
onof
thepr
oper
tywasint
hehandsofMr s.Rodri
guez.

Q:Andbecauseoft hoseinqui
ryofAtt
y.Mir
afuente,i
twasclear
toyourmindt hatt
hesubjectmatteroft
heauct i
onsal eist
hat
proper
tywhichwasl ostt
oConchitaRodr
iguezinCi v
ilCaseNo.
1245,i
sitnot?
28
A:
Yes,
sir
.

Mor eover
,byBr enda'
sownadmi ssion,t headdr esseesoft hef i
rst
l
ettersentbyt he provi
ncialassessor '
s offi
ce were herhusband,
AntonioVi zarr
aandConcepci onRodr i
guez,i ntheal ter
nati
ve.The
secondnot iceofdel i
nquencywasal sot ell
ing.Itwasaddr essedthis
ti
met oAnt er
oVi zarr
aandi nthealternat i
ve,ConcepcionRodr i
guez.
Thus, bytheactofsendi ngthenot i
cesofdel i
nquencysal etothetwo
parti
es,thepr ovi
ncialassessorofMar induquer ecognizedthatthere
was a si ngle parcelofl and clai
med by t wo persons.The onl y
explanati
onwhyt heprovi
ncialassessorsentt henoticetot hetwo
addressees was he was unsur e as t o who bet ween the two
29
addresseeswast heowneroft heland.

Parent heti
cal
ly
,when t he pr ovi
nci
alassessorf ailed to ser vea
separat enoti
cet oConchi t
a— t het r
ueandl awfulowner— t hather
l
andwast obeauct i
onedof fduet onon-paymentofr ealestat
et axes,
30
hev iolatedSect ion73   ofPr esi
dentialDecr eeNo.464,ot herwise
knownast heRealPr oper tyTaxCode,whi chpr ov i
dest hatacopyof
thenot iceshallfort
hwithbesentbyr egister
edmai l,orbymessenger
orthrought hebar ri
ocapt aint othedeli
nquentt axpay er,athisaddress
shownont hetaxr ecordcar dsorathi sresidence.Theauct i
onsal e,
ther
ef ore,wasnul landv oidf ornon-compliancewi tht hepr ovi
sionsof
31
theReal Pr
opertyTaxCodeonmandat orynoti
ce.

I
nanyev ent
,theauctioneeri
nanaucti
onsal edoesnotwar
rantt
hat
thebuyershall
,fr
om thet i
meofthesal
e, hav
eandenj
oythel
egaland
32
peacef
ulpossessionoft hepr
opert
ysol
d.
WeagreewiththefindingsoftheCourtofAppeal
sthatther
ewas
i
ndeedbadfai
thimputabletot
hepeti
ti
oner
s.I
nruli
ngso,t
heCourtof
Appeal
ssai
d:

Thegener alpi ctur eoft hiscaser eadi

lyshowst hebadf aithof
thedef endant -appel lees'r i
ghtf rom thev er ystartwhenManuel
Vizarra unscr upul ousl y sub- di
v i
ded and r e-consolidated
owner shi p oft he pr oper tyt hrough v ari
ous t ax decl arat i
ons
togetherwi t
ht heunexpl ainednon- pay mentofr eal est at
et axdue
thereon.Al ong wi t
ht his,t hereist heRTC' sf indi ng thatt he
defendant s-appel lantsdi dnotgi vethenot iceoft hedel inquency
saletot hepl aintiff
s- appel leesdespi tetheirknowl edget hatt he
proper tyoft hepl aintiffs-appelleeswer eaboutt obeauct ioned
off.Finally,thef actt hatdur ingthepubl icauct i
onsal e,t
her ewas
only one bi dder ,whi ch by no coi ncidence happened t o be
Antoni oVi zarra, therecoul dbenocl earershowi ngofdef endant s
33
-appellantsbadf aithi npur chasingt hesaidpr opert y.

Goodf aith,ort helackofi t,i

s,int helastanalysi
s,aquest ionof
i
ntention.Buti nascer t
aini
ngtheintent
ionbywhichonei sactuatedon
agivenoccasi on,courtsarenecessari
lycont
roll
edbyt heev i
denceas
totheconductandout wardactsbywhi chtheinwardmay ,withsafet
y,
bedet ermi ned.Soi tisthat'thehonestyofi ntent
ion,''
thehonest
l
awf ulintent,'whichconst i
tut
esgoodf ai
thimpli
esa' f
reedom from
knowledge and ci rcumstances which oughtt o puta per son on
34
i
nquiry.'

Inthi
scase, t
herewascl earl
ybadf ait
hi nt hepurport
edacquisi
tionof
peti
ti
oner spouses Ant onio and Br enda Vi zarr
a of the subject
proper
ti
es.Pet i
ti
onerswentt ogr eatlengt hsinabi dtomi sl
eadt hi
s
Courtandthelowercour tsthattheparcel soflandtheynowhav eti
tl
e
to were notthe pr operties ofConchi ta.Butt heyslipped in one
i
nstanceast heyadmi t
tedt hatthepr oper ti
estheypurchasedatt he
aucti
onsal eincludedt hesamel andt hatt hei
rgrandfatherlostto
Conchit
ainCivilCaseNo.1245.

Wedisagr
ee,however
,wit
ht hepronouncementoftheRTCandt
he
Cour
tofAppealsthatpet
it
ioner
shadt heobli
gat
iontoconv
eyt
he
noticeofdel i
nquencyt or espondents.Rat her,ther esponsibi
li
tyli
es
wi t
ht heprovi
nci
alassessor '
sof f
icetof urni
shcopi esoft henoti
cesto
thepar t
iesconcerned.Thus,t hepr ov i
ncialassessorshoul d have
givenacopyoft het wo( 2)not i
cesofdel i
nquencysal etoConchita.
Absentanyampl eev idencet hatthepr ov i
ncialassessordi dsoand
35
thatheobser vedther equisi
tessetouti nSect i
on73   ofPr
esident
ial
Decr eeNo.464,t heauct i
onsal eoft hedi sputedpar celsoflandi s
trul
ynul landvoidfornon-obser vanceoft hest atut
oryr equi
rementof
theReal Propert
yTaxCode.

Thefor
egoingnot
wit
hstandi
ng,theCourtfi
ndst
hattheawardofthe
RTCandtheCourtofAppeal
sf oract
ualandcompensat
orydamages
i
mproper.

RespondentConchi tastatedi
nopencour tthatpeti
ti
onersenter
edt he
subjectpr opertyev ery
time the harvestofcoconut sare due.She
fur
thercl ai
medt hatin1979,t hey earbeforepetit
ionersenter
edt he
l
andandappr opri
atedt othemselvesthef r
uitsther
eof,theharvestof
thel andwasnotl essthan2, 000ki l
os.Sheal sot esti
fi
edont he
amountofmoneyt hatcouldbey i
eldedfrom theharvestfr
om 1980t o
36
1986.

Theclai
ms,however
,ar
emar
kedl
ysel
f-
ser
ving,wi
thnar
yadocument
tosuppor
tthem.

Therul
eisthatevi
denceshouldbet akenofthedamagesclai
medand
thecourtshoul
ddeterminewhoar eent i
tl
edt osuchindemnit
y.The
powerofcour tsto gr
antdamages and at t
orney
'sfees demands
fact
ual
,legalandequit
ablejust
if
icati
ons,it
sbasiscannotbel ef
tto
37
specul
ati
onorconj
ecture.

Howev er
,t herei snoquest i
ont hatrespondent ssuffer
edpecuni ar
y
l
ossduet ot heact sofpeti
ti
onersandt hus,respondentsar eent i
tl
ed
todamages.Asbor neoutbyt herecor
dsoft hecase, peti
tionershave
conti
nuousl y ent er
ed the land and appr opr i
ated the f rui
tst o
themselvest ot heprej
udi
ceoft heri
ghtf
ulownerf r
om 20May1980t o
38
the present.  Hence,itis but equi t
able t hat respondent s be
remunerated f ort hei
rloss oft he earni
ngs due t ot he acts of
peti
ti
oners.Si ncethereisnosuf f
icientev i
dencet oprov eactualand
compensat ory damages, the Cour t hereby awar ds temperate
damages i nstead,which ar
e mor et han nomi nalbutl ess than
compensat ory damages,consideri
ng t hatrespondenthad i ndeed
suff
eredsomepecuni ar
ylossbutt heamountcannotbepr ovedwith
39
cert
aint
y.  TheamountofP90, 000.00i ssuf fi
cientandr easonable
underthe ci r
cumstances.In consonance t herewith,the award of
nominaldamagesi sherebydel
eted.

TheCourtal
socancel
stheawar
dformoraldamagesasther
ewasno
i
ndicat
iont
hatr
espondent
shadsuf
fer
edemot i
onal
hurtandi
njur
y.

Findi
ngbadfait
handfraudul
entactsonthepartofpeti
ti
oners,t
he
Courthereby i
mposes an incr
eased amountof P50,
000.00 as
exemplar
ydamages.

WHEREFORE,i
nv iew oftheforegoi
ng,theDeci
siondat
ed30Apr i
l
2001oft
heCourtofAppeals,
EighthDiv
isi
on,i
nCA-
G.R.CVNo.38286
i
sAFFIRMEDwit
hMODI FI
CATIONasf ol
lows:

1.Theawar
dofnomi
nal
andmor
aldamagesi
sher
ebyDELETED;

2. Petit
ioner
s are order
ed to joi
ntl
y and several
l
y pay
respondentsP90,
000.
00ast emper
atedamages,i
nl i
euofthe
awardofact ualandcompensat
orydamageswhichi sher
eby
DELETED;

3.Petit
ionersareli
kewiseorder
edtojoi
ntl
yandsev
eral
l
ypay
respondentsP50,
000.00asexemplar
ydamages.

Cost
sagai
nstpet
it
ioner
s.

SOORDERED.

G.
R.No.75082Januar
y31,
1989
JOSEF.PUZON, 
peti
ti
oner-
appel
l
ant
,
vs.
ALEJANDRA ABELLERA, subst i
tut
ed by TOMASA D.
DOMONDON, opposi
tor
-appel
l
ee.

DeGuzman,
Flor
endo&Apol
i
narLawOf
fi
cef
orpet
it
ioner
-appel
l
ant
.

Si
xtoA.DomondonandHect
orD.Domondonf
oropposi
tor
-appel
l
ee.

J.
PARAS,
  :

Thisisapet i
ti
onf orr ev
i cer
ew on  ti
or ari
 oft
hedecisionoft hethen
Fi
rstCivi
lCasesDiv i
sionoft heI
ntermedi ateAppel
l
ateCour t**inAC-
G.R.CV No.04690,dat ed 13 Mar ch 1986,affir
mi i
ng nt ot
o t
he
decisi
onofthet henCour tofFir
stInst anceofBaguioandBenguet ,
BranchIV,si
tt
ingasaLandRegi strat
ionCour t,i
nAdmi nist
rat
iveCase
No.2091.Iti
sthecont enti
onofpet i
ti
onert hat
:

THE HONORABLE APPELLATE COURT COMMI TTED

GRAVE AND REVERSI
BLE ERROR IN UPHOLDI NG THAT
LANDS WITHI
N THE BAGUIO TOWNSI TE RESERVATION
WHOSE TI TLES HAVE BEEN I SSUED I N CI VI
L
RESERVATI
ON CASE NO.1,G. L.
R.O.RECORD NO.211
PURSUANT TO REPUBLI
C ACT 931,AS AMENDED,ARE
NOTSUBJECTTOREALTYTAX.( Pet
iti
on,p.7,Rol
lo)

Theopposi tor-appel
lee( now deceasedandsubst it
utedbyheronl y
chil
dTomasaDomondon)wast heregisteredowneroft hel andi n
questi
on,at wo- hectarel otknownasLot1- Bsubdi visi
onpl an( LRC)
PSU-33174,Res.Sec.2,Km.3Asi nRoad,Bagui oCi t
yandcov eredby
TCTNo.8103.Thesai dlandwaspar tofabi ggertractofpubl icland
buttit
ledinaj udici
alr eopeni ngproceedingpur suanttot hepr ov i
sions
ofRA931,asamended,ent itl
ed"Anactt oaut hor
izet hefil
i
ngi nt he
court,undercer t
aincondi tions,ofcert
aincl ai
msoft it
lestopar celsof
l
andt hathavebeendecl aredpublicland,byv irt
ueofj udici
aldeci sions
renderedwi t
hint hef ortyy earsnextpr eceedingt heappr ovaloft hi
s
act
'(nowi
noper
ati
ve)
.

Subsequent ly,inacaseent i
tled Republ i
c,etal .v .Hon.Pi oR.Mar cos,
etal.,29SCRA517( 1969) ,Wedecl aredallt itl
esi ssuedunderRA931
nullandv oidsi ncet hesai dActwasappl icableonl yt oplacest hat
wer ecov eredbycadast r
alpr oceedi ngs,nott ot heCi tyofBagui o
whichwascov eredbyat ownsiter eservationunderCi vi
lReservation
CaseNo.1,G. L.R.O.Recor dNo.211f il
edbef oret heenact mentof
Cadast r
alActNo.2259on11Febr uary1913.Thi swasf oll
owedby
anothercaseal soent itl
ed Republ i
cv .Mar cos, 52SCRA238( 1973),
wher eWer eiteratedt heabov er ul
ing.Ther uli
ngi nt hesecasewas
subsequent lyenact edi ntolawasi ncor porat edinPr esidenti
alDecr ee
No.1271whi cht ookef f
ecton22December1977wi tht hetit
le"Anact
null
ify
ing decr ees ofr egistr
at i
on and cer tifi
cat esoft it
le covering
l
andswi thint heBagui oTownsi teReser v
at ionCaseNo.1,G. L.R.O.
RecordNo.211pur suantt oRepubl icActNo.931,asamended,but
consideri
ngasv alidcertaintitl
esofsuchl andst hatar ealienableand
disposableundercer tai
ncondi t
ionsandf orot herpur poses."Hence,
thelotinquest ionwasr evertedt othepubl icdomai n.

On10Oct ober1977,cer t
ainr ealpropertiesi nBagui oCi ty,whi ch
i
ncludedt wo( 2)proper t
iesoft heopposi t
or -appell
ee,oneofwhi chi s
thelandinv olvedinthisappeal ,wer eauctionedof f
.Allegedly,ther eal
propertytaxesont helandi nquestionforthey ears1971t o1977had
notbeenpai d.Hav i
ngbeenpr eviousl
yi nformedoft heschedul ed
aucti
onsal eoft axdel inquentpr operti
esi nBagui oCi t
y ,petit
ioner
Puzongai nedi nt
eresti nt hepr opertyinquest i
on.Heexami nedt he
ti
tl
eofsai dl andandal lot herdocument sev idencingtransactionsov er
thesame.Att heauctionsal epet i
ti
onerPuzonwasdecl ar
edwi nneri n
thebiddingov ert
hel otinquest ion,beingt hel onebidder,andpai dt o
theCityTreasur eratot alsum ofonl yP3,253. 95whi chincludedhi sbi d
andot herpet t
ysums.

Oney earaft ert

het axsale,peti
tionerPuzonwasgi venacerti
fi
cateof
saleovert hepar celofl andsoldt ohi m.Hewentt otheRegistryof
Deedsi nor dertoregistersaidcer t
if
icateandtosecureanewt it
lein
hisnamebutwasadv isedtof i
rstgot ocourtforanorderconfi
rming
saidsale.Hence, peti
ti
onerf i
ledt hi
ssuittoconsol
idat
ehisownership
ov
ert
hepr
oper
ty.

Inthemeant i
me,whi letryi
ngt oav ailoft hepr ovisionsofPD1271i n
opposi tor-
appellee'sbehal f,TomasaDomondonf oundoutt hatt he
two l ands oft he f ormerhad been auct ioned of ff oral leged t ax
deli
quenci esf ort hey ear
s1971t o1977,oneofwhi chi st hel and
purchasedbypet itionerPuzonDomondont henar rangedameet i
ng
witht hel att
ert odi scusst hemat terwi thhi m.Butwhent hel att
er
fai
led t o appear att he appointed t i
me and pl ace.Domondon
consigned wi tht he Cour tt he amountofP4, 780. 00 af terhav i
ng
veri
fiedt hatPuzonpai donlyP3, 252.95f orat wo- hect arel andwhi ch
couldhav ecommandedav erymuchhi gherpr i
ce.Shet henf il
edher
opposi ti
ont opet i
tionerPuzon' spet iti
onf orconsol idation.Thel ower
courtr uledinf avoroft hethenopposi tor,declaringnul landv oi
dt he
aforesai dauctionsal eandi ll
egaltheassessmentmade.Thi srul i
ng
wasaf f
ir
medbyt het henI ntermediat eAppel lateCour t(IAC) ,hence
thi
spr esentpet i
ti
on.Asst atedbyt hel owercour tandadopt edbyt he
IAC,t hei ssuesar e" whethert he( proper t
y)inv olv edher eincanbe
consider edtax( delinquent )and,if,so,hast herebeenav ali
dt axsal e
ofthesameast opl acet heCour tundernor ecour sebutt oconf ir
m
said( sale)andor dert he(tit
le)ther eoft r
ansf erredi nt henameof
petit
ionerJoseF.Puzon.. "(p.23,Rol l
o).

I
nconcludi
ngthattheassessment smadef ort
heyears1971t
o1977
werelegal
,peti
ti
onercontendst hatPD 1271i scur
ati
veinnat
ure.
Sect
ion1ofthesaidDecr
eest at
esi npar
t:

SECTION1.Al lor der

sanddeci sionsissuedbyt heCour tof
Fir
stInstanceofBagui oandBengueti nconnect i
onwi ththe
proceedi
ngsf orthereopeni ngofCi vi
lReservati
onCaseNo.
1,GLRORecor dNo.211,cov eri
ngl andswi t
hintheBagui o
TownsiteReser v
at i
on,anddecr eeingsuchl andsinf avorof
pri
vateindivi
dualsorent i
ties,ar eher ebydeclarednul land
voidandwi t
houtf orceandef fect;PROVI DED,HOWEVER
thatallcerti
fi
catesoft it
lesi ssuedonorbef oreJul y31,
1973shal lbeconsi deredv ali
dandt helandscov eredby
them shallbedeemedt ohav ebeenconv eyedinfeesi mple
to the r egi
stered owner s upon a showi ng of ,and
 compli
ancewit
h,t
hef
oll
owi
ngcondi
ti
ons.
..(
74O.
G.No.19,
pp-3583-
3584)
.

The pet i
ti
oner submi t
s t hat:' upon compl i
ance with certain
requi
r ementst het i
tl
essoi ssuedar evali
datedanddeemedt ohav e
beenconv eyedi nf eesimple.
..
.Thev al
i
dati
onoft heti
tl
eretr
oactst o
thev erydayt het i
tlewasor i
ginall
yissued'(
pp.45,Rollo)
.Weagr ee
withthepet i
tioner.Theint
entoft helawnecessaril
ymakessucht i
tles
vali
df rom,thet imet heywerei ssued.Theninth"wher
eas"clauseof
PD1271st ates:

WHEREAS,t here ar e holders oft i

tl
es who,bef orethe
promulgat
ionoft hedeci sionoft heSupremeCour tonJuly
31,1973,had act ed i n good f ai
th and rel
i
ed,al t
hough
mistakenl
y,ont hei ndefeasibi
li
tyoft or
renscert
if
icatesof
ti
tl
esandwhohadi ntroducedsubst anti
ali
mprovement son
thelandcov eredbyt hecer t
if
icat
es.(74O. G.No.19,p.
3583)

Thef oregoingnecessar i
lyimpl i
est hatt hei ntentoft hel aw i st o
recognizetheef fectsofcert
ainactsofowner shipdonei ngoodf ait
h
byper sonswi tht or
rensti
tl
esissuedi nt heirfav orbeforethecut -off
datestated,honest l
ybeli
evi
ngt hattheyhadv al
idlyacquiredthelands.
Andsuchwoul dbepossi bleonlybyv al
idatingallt hesaidtit
lesissued
before31 Jul y1973,ef fecti
veont heirr espect i
vedat esofi ssue.
Howev er,the v ali
dit
yoft hese tit
leswoul d notbecome oper ati
ve
unlessandaf tertheconditi
onsst at
edi nPD1271ar emet .Hence, the
phrase " upon a showi ng,and compl iance wi t
h,t he f ol
lowi ng
condit
ions,"(Sec.1,PD1271)

Whileitmaybear guedthatArt i
cle4oft heNew Ci v
ilCodepr ohi
bits
theretr
oacti
veappli
cati
onofl awsunl essexpr esslyprovi
dedt her
ei n,
suchruleal
lowssomeexcept i
ons.AsWehav ehel dinthecaseof Ni
  lo
v.CourtofAppeal
s,128SCRA519," ast at
uteoper atesprospecti
vel y
only and neverretr
oacti
vely
, unless t
he l egi
slati
vei nt
entt ot he
contr
aryismademani festei
therbyt heexpr esst er
msoft hestatute
orbynecessar yi
mpl i
cati
ons.
" Aspoi ntedoutabov e,PD 1271f al l
s
underoneoftheexcepti
ons.
Consi dering,howev er,thatdur ingthey ear
s1971- 1977t hel andin
questionwasst i
l
lpar toft hepubl icdomai n,theopposi t
or-appell
ee
couldnot ,inthosey ears,obv iousl
ybehel dl iabl
ef orrealpr opert
y
taxesov ert helandi nquest ion.Sincet hev al
i
dityofhert i
tl
ewoul d
takeef fectr et
roacti
velyonl yafterhavingcompl iedwi t
hthecondi ti
ons
seti nPD1271,onl yt hencoul dshebehel dliabl
ef ortaxesf orthe
periodst arti
ng1971t o1977.I twoul dbeabsur dt hentohol dthe
opposi tor-appell
eeliablef ortaxesov erapi eceofl andwhi chshedi d
notown( i
tbeingpubl i
cl and)oruse.Consequent l
y,thetaxsal ewas
premat ur elyconducted.Theopposi tor-appel
leeshoul dhavef i
rstbeen
givent heoppor t
unit
yt oset tl
et hetaxesassessedf orthey ears1971-
1977af terhav i
ngcompl iedwi thPD1271.

As t ot he v al
idi
ty oft he auct i
on sale,We r eiter
atet hati twas
premat urelyheld,hence, nullandv oi
dfortheabov ereasons.Buteven
ont heev idencepr esentedbyt heparti
es,assumi ngthatthesal ewas
properl
yandseasonabl yhel d,ithasbeencl earl
yshownbyt hetri
al
courtandt heIACt hattheopposi tor-
appell
eewasnotpr operlynoti
fi
ed.
Thehol dingoft het axsal edespitetheabsenceoft herequisi
tenoti
ce
wast antamountt oav iolati
onofhersubst ant
ialrighttoduepr ocess.
Ashel dbyt heIAC,

...Undert hesepr
ovi
sions(r
efer
ri
ngtoSecs.59,
65,73and
76ofPD464,t heRealPropert
yTaxCode)not i
cetothe
delinquentowneri
srequir
edasapr er
equi
sit
etoav al
i
dtax
sale.

Fail
uretonot
if
ytheregi
steredownershal
lvi
ti
atet
hesal
e.'
(Cabrer
av.Pr
ov.Tr
easur
er ,
75Phil
.780)

Taxsal
esar
eadmi
nist
rat
ivepr
oceedi
ngs.And-

Administr
ati
ve proceedings establi
shed fort he sale of
pri
vat
el andsfornon-pay mentoft axesbeinginper sonam
(Pant
aleonv.Santos,L-10289,July31,1957) ,
itisessential
thatt
herebeact ualnoticetothedel i
nquent,other
wi sethe
saleis nulland v oid although pr eceded by pr oper
adver
ti
sementorpubl icati
on."(Vi
venciov .Qui
ntos,CA- G.
R.
 No.44697,Jan.23,1975,72O.G.No.11,March15,1975.
)
(
Decisi
onoftheIAC, 13March1986,pp.27-
28,Rol
l
o)

Wedonotseet heabov efi

ndi
ngsoff actoft hetri
alcour
t,asadopt ed
bytheIAC,tobecont r
arytotheevidencepr esentednortai
ntedwi th
par
tial
i
ty ori ndiscr
eti
on.Hence,We accor dt hem greatr espect
(Pr
emierI
nsur anceandSuretyCorporati
onv .IAC,141SCRA432; Vda.
deRoxasv .I
AC, 143SCRA77; Republi
cv .I
AC, 144SCRA705) .

WHEREFORE, t
heappeal eddeci si
onsisher ebyMODIFI
EDaccordingly
,
thatisthelandshoul dr eall
ybeconsi deredownedbyt herespondent
andhert i
tl
et heretomustnotbedi sturbedBUTshemustpayt hereal
propert
yt axest hereon f ort he years1971- 1977.As tothe other
mat t
ersraised,Wef i
ndnor easont odev iatefr
om t
hefindi
ngsoft he
l
owercour tand, thus,AFFIRM t hesame.

SOORDERED.

G.
R.No.L-
46245May31,
1982

MERALCOSECURITI
ESINDUSTRI
ALCORPORATI
ON, pet
it
ioner
,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF
ASSESSMENTAPPEALSOFLAGUNA andPROVI NCIALASSESSOR
OFLAGUNA,r
espondent
s.

AQUI J.
NO,
  :

I
nt hisspecialciv
ilacti
onofcer t
iorar
i,MeralcoSecurit
iesIndustr
ial
Corporati
onassailsthedecisi
onoft heCentralBoardofAssessment
Appeals( composedoft heSecret
aryofFinanceaschai r
manandt he
Secretar
ies of Justice and LocalGov ernment and Communi ty
Developmentasmember s)dat
edMay6,1976,hol dingthatMer al
co
Secur
it
ies'
oil
pipel
i
nei
ssubj
ectt
oreal
tyt
ax.

Ther ecordrevealst hatpur

suantt o apipel
i
neconcessi onissued
undert hePet r
oleum Actof1949,Republ icActNo.387,Mer alco
Securit
ies i
nstal
led from Batangas t o Manil
a a pipel
i
ne sy stem
consist
ingofcy l
i
ndricalst
eelpipesjoi
nedtogetherandbur
iednotl ess
thanonemet erbelow thesurf acealongtheshoulderoft hepubl i
c
highway .The por t
ion passing t hr
ough Laguna is about t hirt
y
kil
omet er
slong.

Thepipesf orwhit
eoilproduct
smeasuref ourt
eeni nchesindiameter
bythi
rty-
sixfeetwit
hamaxi mum capacityof75,000barrel
sdaily
.The
pi
pesf orfuelandblackoilmeasuresi
xteeninchesbyf ort
y-ei
ghtfeet
wit
hamaxi mum capacit
yof100,000bar
relsdail
y .

Thepipesar
eembeddedi nthesoilandarefi
rmlyandsolidlywel
ded
toget
hersoast oprecl
udebr eakageordamaget her
etoandpr event
l
eakageorseepageoftheoil
.Thev al
vesareweldedtothepipessoas
tomakethepipeli
nesystem onesingl
epieceofpropertyf
rom endt o
end.

Inordertorepair
, r
epl
ace,r
emov eort r
ansfersegment soft
hepi pel
i
ne,
thepipeshav etobecol d-cutbymeansofar ot
aryhard-
met alpi
pe-
cutteraft
erdiggingorexcavatingt hem outoft hegroundwher ethey
areburied.Inpointswherethepi peli
net r
aversedriv
ersorcreeks,the
pipes werel ai
d beneatht he bed t her
eof.Hence,t he pipes are
permanent l
yatt
achedtothel and.

Howev er
,Mer alcoSecurit
iesnotesthatsegment soft hepipel
inecan
bemov edf r
om onepl acetoanotherasshowni nt hepermitissuedby
theSecr etaryofPubl i
cWor ksand Communi cat
ionswhi chpermi t
providesthatt hegovernmentreservestheri
ghtt orequir
etheremov al
ortransferoft hepi
pesbyandatt heconcessionair
e'sexpenseshould
theybeaf fectedbyanyr oadrepairori
mpr ov
ement .

Pur
suanttot heAssessmentLaw,Commonweal t
hActNo.470,t he
pr
ovinci
alassessorofLagunatr
eat
edthepipel
i
neasrealpr
oper
tyand
i
ssued Tax Declarat
ions Nos.6535-
6537,San Pedr
o;7473-7478,
Cabuy
ao;7967-
7971,Sta.Rosa;9882-
9885,Bi
ñanand15806-15810,
Cal
amba,cont
aini
ngtheassessedval
uesofpor
ti
onsoft
hepipeli
ne.

Meralco Secur
iti
es appeal
ed the assessment
st ot he Boar
d of
AssessmentAppealsofLagunacomposedoft heregist
erofdeedsas
chai
rmanandt heprovinci
alaudi
torasmember .Thatboardini t
s
deci
sionofJune18,1975upheldtheassessments(pp.47-
49,Roll
o).

Meralco Securi
ti
es br ought the case tot he CentralBoar
d of
AssessmentAppeal s.Asal r
eadyst at
ed,thatBoar d,composedof
Acti
ngSecr et
aryofFi nancePedr o M.Almanzoraschai rmanand
SecretaryofJusti
ceVi cent
eAbad Sant osand Secr etar
yofLocal
GovernmentandCommuni t
yDev el
opmentJoseRoñoasmember s,
rul
edt hatt
hepipel
i
nei ssubjecttorealt
ytax(p.40,Roll
o).

Acopyoft hatdeci
sionwasser vedonMeralcoSecur it
ies'counselon
August27,1976.Sect i
on 36 of the RealPr operty Tax Code,
President
ialDecree No.464,whi ch tookef f
ecton June1,1974,
providesthattheBoar d'
sdecisi
onbecomesf inalandexecut oryaft
er
thelapseoff i
ft
eenday sf r
om thedateofr eceiptofacopyoft he
decisionbytheappellant
.

UnderRuleII
Ioftheamendedr ul
esofprocedureoftheCentralBoard
ofAssessmentAppeal s(70O. G.10085),apartymayaskf orthe
reconsi
der
ati
on oft he Board'
s deci
si
on withi
nf i
fteen days af
ter
recei
pt.OnSeptember7,1976( theel
eventhday)
,Mer al
coSecurit
ies
fi
ledit
smotionforr
econsider
ati
on.

Secret
aryofFinanceCesarVi rataandSecr
etaryRoño( Secret
aryAbad
Santosabstai
ned)deni edthemot i
oninaresoluti
ondatedDecember
2,1976,acopyofwhi chwasr ecei
vedbyappellant
'scounselonMay
24,1977(p.4,Rol lo)
.OnJune6,1977,Mer alcoSecurit
iesfil
edthe
i
nstantpet
it
ionf orcer
tior
ari.

TheSolici
torGener
alcont
endsthatcert
ior
ariisnotproperi
nthiscase
becauset heBoardactedwithi
nitsjuri
sdicti
onanddi dnotgr avel
y
abuse its di
scr
eti
on and Meral
co Securi
ties was notdenied due
processoflaw.
MeralcoSecuri
ti
esexplai
nsthatbecauset heCour tofTaxAppeals
hasnoj uri
sdi
cti
ont orevi
ew thedecisionoft heCentralBoar
dof
AssessmentAppealsandbecausenoj udicialrev
iew oftheBoard'
s
deci
sion i
s provi
ded f
orint he RealPr opertyTaxCode,Mer alco
Securi
ti
es'
recoursei
stofi
leapeti
tionforcer t
ior
ari
.

Wehol dthatcerti
orariwaspr operlyavail
edofi nthiscase.Itisawr i
t
i
ssued bya super i
orcour tto an inferi
orcour t,board orof fi
cer
exer
cisingjudi
cialorquasi -
judi
cialfunct
ionswher ebyther ecordofa
part
icul
arcasei sorder edtobeel evatedforrev i
ew andcor rect
ionin
mattersoflaw(14C. J.S.121-122;14Am Jur .2nd777) .

Therul
ei sthatastoadminist
rat
iveagenci
esexercisi
ngquasi-judi
cial
powerthereisanunderl
yi
ngpoweri nthecourt
st oscrut
inizetheacts
ofsuchagenciesonquestionsoflawandjuri
sdicti
onev enthoughno
ri
ghtofrevi
ewi sgi
venbythestat
ute(73C.J.
S.506, not
e56) .

"Thepur poseofj udi

cialrevi
ew istokeept headmi nist
rati
veagency
withini
tsjurisdi
cti
onandpr otectsubstant
ialr
ightsofparti
esaf f
ected
byitsdecisions"(73C.J.S.507,See.165).Ther evi
ewi sapar tofthe
system ofchecksandbal anceswhi chisalimi
tationonthesepar at
ion
ofpower sandwhi chforestal
l
sar bi
trar
yandunj ustadj
udicat
ions.

Judicialrev
iewoft hedecisi onofanof fi
cialoradmi nistr
ati
veagency
exercisi
ng quasi-j
udi
cialf uncti
ons i s properi n cases ofl ack of
j
urisdicti
on,err
oroflaw,gr av eabuseofdi scret
ion,fraudorcol l
usion
orincaset headmi ni
str
ativedeci sioniscorrupt,
arbitr
ar yorcapri
cious
(MafincoTr adi
ngCor porationv s.Opl e,L-
37790,Mar ch25,1976,70
SCRA 139,158;SanMi guelCor porati
onv s.Secr et
ar yofLabor ,L-
39195, May16, 1975,64SCRA56, 60,Mun.Counci l
ofLemer yvs.Prov.
BoardofBat angas,56Phi l
.260, 268) .

TheCent r
alBoar dofAssessmentAppeal s,i nconfi
rmingtherul
ingof
the provi
ncialassessorand t he prov
inci alboard ofassessment
appealsthatMer al
co Securi
ti
es'pipel
ine i s subjecttorealt
yt ax,
reasoned outt hatthe pi
pes are machi ner yori mprovements,as
contemplatedintheAssessmentLawandt heReal Proper
tyTaxCode;
thattheydonotf al
lwit
hinthecategor
yofpr opertyexemptfrom realt
y
taxundert hoselaws;t hatarti
cles415and416oft heCivi
lCode,
defini
ngr ealandper sonalproperty
,havenoappl icationtothi
scase;
thatev enunderarticl
e415,t hesteelpi
pescanber egardedasr ealt
y
because t hey are constructi
ons adher
ed t ot he soi land things
attachedt othelandi naf i
xedmannerandt hatMer alcoSecuri
ti
esi s
notexemptf r
om realtyt
axundert hePetr
oleum Law( pp.36-
40)
.

MeralcoSecuri
ti
esinsiststhati
tspipeli
neisnotsubjecttorealt
ytax
becauseiti
snotr ealpropert
ywithi
nt hemeani ngofart
icl
e415.This
contenti
oni
snotsust ainabl
eunderthepr ovi
sionsoftheAssessment
Law, t
heRealPropert
yTaxCodeandt heCi v
ilCode.

Secti
on2oft heAssessmentLaw pr ov
idesthatt
her eal
tyt
axi
sdue
"on realpropert
y,includi
ng land,bui
ldi
ngs,machinery
,and ot
her
i
mpr ovements"notspeci f
ical
lyexemptedinsect
ion3t her
eof
.This
prov
isionisreproducedwi thsomemodi f
icat
ioni
ntheRealProper
ty
TaxCodewhi chprovides:

SEC.38. I
 nci
denceofRealPr opertyTax. — Thereshal lbe
l
evied,assessedandcol lectedi nallprovinces,ci
tiesand
municipali
ti
esanannual  adv alorem tax onr ealproperty,
suchasl and,bui
ldi
ngs,machi neryandot herimprovement s
aff
ixed or at t
ached t o realpr oper
ty not her einaft
er
specif
icall
yexempted. 
*

Iti
sincont
est
ablet
hatthepi
peli
neofMeral
coSecuri
ti
esdoesnotfall
withi
n anyoftheclassesofexemptrealproper
tyenumerated i
n
secti
on3oftheAssessmentLawandsecti
on40oftheRealPropert
y
TaxCode.

Pipeli
nemeansal i
neofpipeconnect edtopumps,v al
vesandcontrol
devicesforconveyi
ngliqui
ds,gasesorf i
nel
ydiv
idedsolids.I
tisali
ne
ofpiperunninguponori nt
heearth,carr
yingwi
thittherightt
otheuse
ofthesoili
nwhi chiti
splaced(Note21[10],
54C.J.
S.561) .

Ar
ticl
e 415[l
]and [3]provi
des that realpr
opert
y may consist
of
 const
ruct
ions ofal
lkinds adhered tothe soi
l
 and ev
ery
thi
ng
at
tachedtoani mmovabl
einaf ixedmanner,i
nsuchawayt hatit
cannotbe separat
ed t
heref
rom wi
thoutbr
eaki
ng t
he mat
eri
alor
deter
ior
ati
onoftheobj
ect.

Thepipeli
nesystem i
nquestioni sindubitablyaconst
ruct
ionadher
ing
tothesoil(
Exh.B,p.39,Rol
lo).Itisattachedt ot
helandinsuchaway
thatitcannotbeseparatedt herefr
om wi t
houtdismantl
i
ngthesteel
pipeswhichwereweldedtofor mt hepipeline.

I
nsofarast hepipel
ineusesval
ves,pumpsandcontr
oldevi
cesto
maintai
ntheflowofoil
,i
tisinasensemachi
ner
ywit
hinthemeani
ng
oft
heReal Proper
tyTaxCode.

I
tshouldbeborneinmindthatwhatarebeingcharact
eri
zedasreal
pr
opert
yarenotthesteelpi
pesbutthepipeli
nesystem asawhole.
Meral
coSecur
it
ieshasappar
entl
ytwopi
pelinesyst
ems.

Apipeli
nef orconv
eyi
ngpetroleum hasbeenr egardedasrealpr
oper t
y
fortaxpurposes(Mil
lerCountyHighway ,et
c.,Dist.vs.St
andar
dPi pe
LineCo.,19Fed.2nd3;BoardofDirectorsofRedRi verLeveeDi
st.No.
1ofLafay ett
eCounty
,Arkv s.R.F.C.,170Fed.2nd430;50C.J.750,
note86).

Theot hercontenti
onofMer al
coSecur iti
esi sthatt
hePetrol
eum Law
exempt sitf
rom thepaymentofr eal
tyt axes.Theall
egedexempti
onis
predicated on the fol
lowi
ng prov i
sionsoft hatlaw whi
ch exempt
Mer alcoSecur i
ti
esf r
om localtaxesandmakei tli
abl
efortaxesof
gener alappl
icati
on:

ART.102.  Work obl i

gations,t axes,r oy alti
es nott o be
changed.— Wor kobl igati
ons,speci alt axesandr oyal
ti
es
whichar ef i
xedbyt hepr ovisi
onsoft hisActorbyt he
concessionforanyoft heki ndsofconcessi onst owhich
thi
s Actr el
ates,ar e consi dered as i nher enton such
concessions aftert hey ar e grant ed,and shal lnotbe
i
ncreasedordecr easeddur ingthel ifeoft heconcessi onto
whichtheyappl y;norshal lanyot her speci altaxes 
orlevi
es
beappliedtosuchconcessi ons,norshal l0concessi onai
res
underthisActbesubj ectt oany  provinci al
,muni ci
palor
 otherlocalt axes orl evies;
 norshallany sal es t
ax be
chargedonanypet roleum pr oducedfrom theconcessi on
orporti
onther eof,manuf acturedbyt heconcessionai
reand
used in the wor king of hi s concession. All such
concessi
onaires, howev er,shallbesubj o 
ectt suchtaxesas
areofgener alappl ication i
naddi ti
ont otaxesandot her
l
ev i
esspeci
ficallyprov i
dedi nthisAct.

MeralcoSecur i
ti
esar guest hatthereal
tytaxisal ocaltaxorl evyand
notat axofgener alapplicati
on.Thisargumentisunt enabl ebecause
therealt
yt axhasal way sbeeni mposedbyt helawmaki ngbodyand
l
aterby t he Presidentoft he Phi
li
ppines inthe exer cise ofhis
l
awmaki ngpower s,asshowni nsecti
on342  etseq. oft heRev i
sed
Administr
ativeCode,ActNo.3995,Commonweal thActNo.470and
Presi
dentialDecreeNo.464.

Therealt
yt axisenfor
cedthr
oughoutthePhi l
i
ppinesandnotmer el
yin
aparti
cularmuni ci
pal
it
yorcitybuttheproceedsoft hetaxaccr
uet o
theprovi
nce,ci t
y,munici
pali
tyandbarriowher et her eal
tytax
edi s
sit
uat
ed( Sec.86,P.D.No.464).I
ncontrast,alocaltaxisimposedby
the municipalorci t
y counci
lby v i
rt
ue oft he LocalTax Code,
Presi
dentialDecr
eeNo.231,whichtookeffectonJul y1,1973(69O.G.
6197).

Wehol dt hattheCent ralBoardofAssessmentAppealsdidnotact

withgraveabuseofdi scret
ion,di
dnotcommi tanyerrorofl
aw and
actedwithinitsjur
isdictioninsustai
ningt
heholdi
ngoft hepr
ovi
ncial
assessorandt helocalboar dofassessmentappealsthatMer
alco
Securi
ti
es' pi
peli
nesy stem inLagunaissubj
ectt
orealt
ytax.

WHEREFORE,thequesti
oneddeci
sionandr
esol
uti
onar
eaf
fi
rmed.
Thepet
it
ioni
sdismi
ssed.Nocost
s.

SOORDERED.

G.
R.No.74679-
80Januar
y20,
1989
ROSITADEASI
S, 
pet
it
ioner
,
vs.
THE HONORABLE I NTERMEDIATE APPELLATE COURT and
CLEMENTEM.SORIANO, r
espondent
s.

JesusM.Naci
ongay
oandNat
ivi
dadT.Per
ezf
orpet
it
ioner
.

Er
nest
oL.Pi
nedaf
orpr
ivat
erespondent
.

MEDI  
J.
ALDEA, :

Thisi sapet i
tionf orrevi cer
ew on  t
iorari 
ofthedeci
sionrenderedby
theI nter
medi ateAppel lateCourt( now Cour tofAppeals)onApr i
l
16,1986,inAC- G. R.Nos.02408- 09,entit
led,"
CLEMENTEM.SORI ANO,
Petit
ioner-Appellant ,v
s.ROSI TA DE ASI S,Opposit
or-Appel
lee"and
"ROSITADEASI S, Peti
tioner-
Appell
ee, v
s.CLEMENTEM.SORI ANO, ET
AL.,Respondent s.CLEMENTEM.SORI ANO,Respondent-Appell
ant,
"
respectiv
ely.

Theant
ecedentf
act
sint
hei
nst
antcasesar
easf
oll
ows:

I
n1969,Rosi taDeAsi sboughtfrom Er nestoAr agonaparcelofland
wit
h an ar ea of674 squar emet er
sand l ocated atMendoza St .
,
BarangayPal t
ok,SanFr anci
sco DelMont e,QuezonCi ty.Transfer
Certi
ficat
eofTi t
leNo.112684cov eri
ngt hesai dlandandinthename
ofAr agonwascancel l
edandi nlieuther eofTr ansf
erCerti
fi
cateof
Ti
tl
eNo.146547i nthenameofDeAsi swasi ssuedbytheRegistr
yof
Deedsf orQuezonCity(p.34,Rol
lo)

In1970,DeAsi sbuil
tar esi
dent
ialhouseonsai
dpar
celofl
andand
star
tedresi
dingther
eat.

Foroner easonoranother,DeAsi snegl ect

edt osecureanew t ax
decl
arat
ioninherownnameov erthesamepar celofl
andimmediatel
y
aft
erthesaleandforsomet imet hereaft
er.Hence,therecordsi
nthe
Cit
yTreasurer'
sOff
iceofQuezonCi t
ycont i
nuedt oshowt hatAr
agon
wasthedecl ar
edownerthereof.Fort heyears1969t o1973,DeAsis
pai
dtherealest
atet
axesdueont
hel and,whi
chpayment
swer
edul
y
cov
eredbyrecei
ptsi
ssuedf
ort
heaccountofAragon.

OnSept ember29,1973,DeAsi sfil

edwi ththeOf f
iceoft heCi t
y
AssessorofQuezonCi tyaswornstatementont hecur r
entandf ai
r
mar ketv alueofherpar celofl
andcoveredbyTCT- 146547aswel las
ther esident i
alhousesheconstr
uctedthereon.Thi
swasmandat edby
President ialDecreeNo.76whichtookeffectonDecember6, 1972,as
abasi  
s,interali
a, 
forthepaymentofr ealproper
tytaxesbeginning
witht hecal endaryear1973.

DeAsi sagai
npaidther
ealest
atetaxdueonherlandfortheyear
1974,whichpay
mentwasdul
ycover
edbyarecei
ptf
ortheaccountof
Aragon.

OnAugust4,1977,DeAsi sf i
l
edwi tht heOf fi
ceoft heCityAssessor
ofQuezonCi tyher" SwornSt atementoft heTr ueCur r
entandFai r
Mar ketVal ue ofRealPr operti
es"as mandat ed by Sect i
on 6 of
President i
alDecr eeNo.464whi chtookef fectonJune1,1974.She
declaredt hatthel andinquest i
onaswel last hehouseconst r
ucted
thereonwer eherpr opert
ies.Thepar celofl andwi thanar eaof674
squar emet erswasdescr ibedasLotNo.2,Bl ockNo.79ofPsd- 1650
andl ocat edatMendozaSt .,SanFr anciscoDelMont e,QuezonCi ty;
resi
dent ial;coveredbyTi tl
eNo.146547andexi sti
ngTaxDecl arati
on
No.PD- 3833.Ther esi
dentialhousei nturnwasdescr i
bedasaone
andone- halfst oreywoodenhousewi t
haf loorar eaof200squar e
met ers;locatedat76MendozaSt .
,SanFr anci scoDelMont e,Quezon
City
; andcov eredbyexisti
ngTaxDecl arat
ionNo.PD- 5834.

OnMar ch11,1980,t heCityTreasurerofQuezonCi t

ysentalett
erto
Rosit
aDeAsi satMendozaSt r
eet,SanFranciscoDelMont e,Quezon
Cit
y,informinghert hatshehadbeendel inquentasofSept ember,
1979,inthepay mentofthereal
tytaxesforthey ears1975to1978for
herpropertydescri
bedasLotNo.2, BlockNo.79; recordedi
nPropert
y
I
ndexNo.6- 1562-
A;andwithTaxDecl ar
ati
onNo.PD- 5833.

Therealest
atet
axesdueonthepar
celofl
andforthey
ears1975and
1979werenotpaid.I
nvi
ewther
eof,
theOff
iceoftheCi
tyTreasur
erof
QuezonCit
ysenta" NoticeofSal eofDeli
nquentProper
ty"dat
edJuly
26,1980,to Ernesto Ar agon athisresidenceat39 Masbat eSt .
,
QuezonCit
y,beingthedel inquentt
axpayeronrecor
dinthesaidoff
ice,
wit
hthefol
lowingpar t
iculars:

STREET:
Mendoza

BARANGAY:
Pal
tok

LOT:
2

BLOCK:
79

AREA:
674squar
emet
ers

PROPERTYI
NDEXNO.6-
1562

TAXDECLARATI
ONNO.503

ASSESSEDVALUE:
P44,
480

YEARSDELI
NQUENT:
1975-
1979

TAXESDUE:
P3,
356.
05

PENALTI
ESDUE:
P777.
65

TOTAL:
P4,
133.
70

COSTS:
413.
37

The"notice"wasal soannouncedatt heFr i

scoPubl i
cMar ketbyt he
MarketCol l
ector
-I
n-ChargeonOct ober12,13and14, 1980, al
lregular
marketday s.Thesame" noti
ce"wasl ikewisepost edi nt heMar ket
Offi
ce,Veget abl
eSect i
on and Textil
eSect ion oft hesamepubl i
c
market located along Tol enti
no and Zamor a St reets,Bar angay
Damay an,QuezonCi ty,onOct ober12,13and14,1980,r espectiv
el y.
The"notice"wasf urtherpostedatt hemai nent r
anceoft heQuezon
Cit
yHal landont hebul l
eti
nboar doft heCi tyTreasur er'
sOf ficeof
QuezonCi tyonOct ober3,1980.Mor eover,t
he" noti
ce"waspubl i
shed
i
nt heTIMESJOURNAL,anewspaperofgener alci
rcul
ati
on,oncea
weekforthreeconsecuti
veweeksi nitsOctober6,13and20,1980
i
ssues.Thepubl
ishednoticedescr
ibedtheparcelofl
andaslocatedat
GomezSt r
eetandcov er
edbyTCT- 112684.Asecondper sonalnot
ice
wasservedonAragononOct ober30,1980.

OnNov ember12,1980,thel andi

nquesti
onwassol datpubli
cauct i
on
forP10,500.
00toCl ementeSor i
anowhowast hehighestbidder.A
Certi
fi
cateofSaleofDelinquentProper
tywasl at
erissuedtoSor i
ano
onNov ember14,1980,acopyofwhi chwassentt oAragon.On
December3,1980,a" NoticeofSoldRealPr opert
y"wasser vedon
Aragonathisaddressat39Masbat eSt.
,QuezonCity.

Someti
mel ater,
Sor i
anolearnedattheOffi
ceoftheRegist
erofDeeds
ofQuezonCi tythatthel
andhepur chasedwasactual
lyregi
ster
edin
thenameofDeAsi s.Forthwith,Sor
ianoappr
isedt
heCityTreasurer
's
Offi
ceregar
dingt hi
sfact
.

OnJanuar y7,1981,t heCityTr easurersentanot her" Not

iceofSol d
RealProper ty"toAr agonbutt hi
st i
meaddr essed" c/oRosi t
aDeAsi s
atNo.1447JoseAbadSant os,Mani la,"whi chwast headdr essofDe
Asisasi ndicatedonherTr ansferCer ti
ficateofTi tleNo.146547.The
noti
ce,howev er,wasr etur
nedst ampedwi t
ht henot ation"Unclai
med."
OnSept ember14,1981,wi ththeone- yearper i
odt or edeem aboutt o
expir
e,theCi tyTr easurersenta" FinalNot icet oExer cisetheRightof
Redempt ion"toAr agonandagai naddr essed" c/oRosi taDeAsi satNo.
1447 JoseAbad Sant os,Mani l
a."Agai n,t hisnot icewasr et
urned
"Uncl
aimed. "

Aftert he one-yearperiod wi thin which to exer cise the ri

ghtof
redempt i
onexpired,Sori
ano, onFebr uary5, 1982,wr oteal et
tertothe
CityTr easurerofQuezonCi tyrequest i
ngt hatthef inalbil
lofsal ebe
i
ssued i n hisf avorcov er
ing t he property purchased by hi m on
Nov ember12, 1980.Asidefrom t heof f
ici
alreceiptfort hebidpriceof
P10,500. 00,heencl osedwithhi slet
terthecer ti
fi
edt r
uecopyoft he
Transf erCerti
fi
cateof'ti
tl
eNo.146547( inthenameofRosi taDeAsi s)
witht hei nscr
ipti
onoft heCer t
ifi
cateofSal edat edJanuar y2,1981.
Soriano' srequestwasl aterr eferr
edt ot heCityAt torneyofQuezon
Citywho subsequent lymadeaf avor abl
erecommendati
onont he
basisofsubst antialcompliancewitht herequi
rementsofSect
ion73,
Presidenti
alDecr eeNo.464,ot herwiseknownast heRealPropert
y
TaxCode,andf ailur
eoft hedel i
nquentownert oredeem wit
hinthe
prescri
ptiveperi
od.Lat er
,aFi nalBi
llofSalewasissuedtoSori
anoon
May21, 1982.

OnJul y7, 1982, Sorianof il

edapet iti
onwi ththeCour tofFi rstI
nst ance
(now Regi onalTr ialCour t)ofQuezonCi tyseekingt hecancel l
at i
on
and/ ornullif
icationofTr ansferCer tif
icateofTi tl
eNo.146547oft he
Officeoft heRegi sterofDeedsofQuezonCi tyinthenameofRosi ta
DeAsi sandt hei ssuancet ohim ofanew cer tif
icat eoft i
tl
e,Thi s
petiti
onwasdocket edasCaseNo.Q- 2281andassi gnedt oBranch16
ofthesaidcour t.Later ,
onJul y22, 1982, DeAsi sfi
ledherownpet iti
on
pray i
ng fort he annul mentoft he auct ion sale on t he gr ound of
absenceofnot icewi tht hesamecour t
.Thi spetit
ionwasdocket edas
CaseNo.Q- 35783andassi gnedt oBr anch17oft hesai dcour t .De
Asisl i
kewi sedeposi tedt heamountofP13, 500.00r epr esenti
ngt he
valueoft her ealpr opertysol dt oSor iano,togetherwi t
hi nterests
thereonoft went y( 20)percent um f rom t hedat eoft hesal eon
Nov ember12,1980,upt ot hefil
ingoft hecasei ncour t
,pur suantt o
Sect i
on83ofPr esidentialDecr eeNo.464.Onmot ion,bot hcases
wer econsol i
dat edandpr oceedingswer ehel dbeforeBr anch16.

OnDecember12,1983,t
hetri
alcour
trender
edadeci
sionsust
aini
ng
t
hecl
aim ofDeAsi
s,thedi
sposi
ti
veport
ionofwhi
chr
eads:

WHEREFORE,
judgmenti
sher
ebyr
ender
ed:

a)di
smissi
ng,
forl
ackofmerit
,thepet
it
ionf
orcancel
lat
ion
ofTCTNo.146547andi
ssuanceofanewt i
tl
etoClemente
Sori
ano;

b)annull
ingtheCert
if
icat
eofSal eofDeli
nquentProper
tyto
Purchaser,dat
edNov ember14,1980,andt heFinalBil
lof
Sal
e, dat
edMay21, 1982,executedbytheCityTreasur
erof
QuezonCi tyi
nfav
orofClement eM.Soriano;
 c)order
ingt heRegisterofDeeds,QuezonCi t
y,tocancel
thei
nscript
ion,denomi nat
edas" Ent
ryNo.3443/T-146547
onTransferCerti
fi
cateofTi t
leNo.146547"oftheRegist
er
ofDeeds,QuezonCi t
y;

d)order
ing Rosit
a De Asi
st o pay and r
eimbur
se the
amountofP10,500.
00,pl
usi
nter
estther
eonasprovi
dedfor
byl
aw,toClement eM.Sori
anocomput edf
rom November
12,
1980unti
l f
ull
ypaid;

e)dismi
ssi
ngallcl
aimsfordamagesandat
tor
ney
'sf
eesby
bothpar
ti
es;andnopronouncementast
ocost
s.

SOORDERED(
p.26-
27,
Rol
l
o).

Notsat i
sfi
edwi ththedecisi
on,Sor
ianoappeal
edt other espondent
Court.OnApr i
l16,1986,t
hesaidcourtr
ender
editsdecisi
onr ever
sing
thatofthetr
ialcourt
,thedi
sposi
ti
veporti
onofwhichreads:

WHEREFORE,inv iew ofal

lthef or
egoing,thejudgment
appeal
edfrom shoul
dbe,asi ti
sher eby,REVERSEDand
setasi
de,
andanewoneent ered:

1.Di
smissi
ngthepeti
ti
onofappel
leeRosi
taDeAsi
sinCi
vi
l
CaseNo.Q-35783f
orlackofmeri
t;

2.Confir
mingasl egal
lyvali
dt heFinalDeedofSal
eissued
bytheCi t
yTr easur
er'
sOf fi
ceov erthelandinquest
ionto
appel
lantClementeSoriano;and

3.Dir
ecti
ngtheRegisterofDeedsofQuezonCi t
ytocause
thecancel
lat
ionofTCTNo.146547i nthenameofRosita
DeAsisand,inli
euthereof,t
oissueanewt i
tl
etotheland
cover
edtherebyt
oCl ementeM.Soriano,
marri
edtoEst
eli
ta
B.Sori
ano.

Nopr
onouncementast
ocost
s.

SOORDERED(
p.33,
Rol
l
o).
Hence,
thepr
esentpet
it
ion.

Themai nissueiswhetherornott heprov

isi
onsofSect i
on73of
President
ialDecr
eeNo.464,otherwi
seknownas" TheRealPr opert
y
TaxCode, "werecompli
edwi t
hi nthesaleatpublicaucti
onoft he
parceloflandownedbyDeAsisandcov er
edbyTransferCer
ti
fi
cateof
Tit
leNo.146547.

Sect
ion73ofPr
esi
dent
ial
Decr
eeNo.464pr
ovi
des:

SEC.73.  
Adver t
isementofsal eofr ealpr opertyatpubl i
c
auct i
on. —Af t
ert heexpi rati
onoft hey earforwhi cht het ax
i
sdue,t hepr ovincialorci tytreasur ershal ladvertiset he
saleatpubl icauct ionoft heent iredel i
nquentr ealpr operty,
exceptr ealproper tyment ionedinsubsect ion(a)ofSect ion
fortyher eof,tosat isfyal lthetaxesandpenal t
iesdueand
thecost sofsal e.Suchadv er
tisementshal lbemadeby
post i
nganot icef ort hreeconsecut i
v eweeksatt hemai n
entranceoft hepr ovincialbui l
di ng and ofal lmuni ci
pal
buildingsi nthepr ov i
nce, oratthemai nentranceoft heci t
y
ormuni cipalhal lint hecaseofci ti
es,andi napubl icand
conspi cuous pl ace i nt he barrio ordi st
rictwher eint he
proper tyi s situat ed,i n Engl i
sh,Spani sh and t he l ocal
dialectcommonl yused,and byannouncementatl east
three mar ketday s att he mar ketby cr i
erand,i nt he
discretionoft hepr ovi
nci alorci tytreasurer,bypubl i
cation
onceaweekf ort hreeconsecut iveweeksi nanewspaperof
gener alcirculati
onpubl ishedi nthepr ovi
nceorci t
y.

Thenot i
ce,publ i
cati
on,andannouncementbycr i
ershal l
stat
et heamountoft het axes,penaltiesandcostsofsal e;
thedat e,hour,andpl aceofsal e,thenameoft hetaxpayer
againstwhom t hetaxwasassessed; andtheki
ndornat ure
ofpr opertyand,ifland,itsappr oxi
mat ear
eas,lotnumber ,
andl ocati
onst ati
ngthest r
eetandbl ocknumber ,di
str
ictor
barri
o,muni ci
palit
yand t he province orcitywher et he
propertytobesol dissi t
uated.
 Copy oft he noti
ce shallf ort
hwith be sentei therby
regi
st ered mai
lorbymessenger ,ort hrough t hebar r
io
captain,t othe deli
nquentt axpayer,athi s address as
showni nthetaxroll
sorpr opertytaxr ecor
dcar dsoft he
muni cipal
it
yorcitywheret hepr opertyislocated,orathi s
resi
dence,i fknown t o saidt reasurerorbar ri
o capt ain;
Provided,howev er
,Thatar eturnoft hepr oofofser vice
underoat hshallbefil
edbyt heper sonmaki ngt heservice
withthepr ovi
nci
alorcit
yt r
easur erconcerned.'

I
nrever
singthedeci
sionoft
hetri
alcourt
,ther
espondentCour
tst
ated
i
nit
sdecisi
onofApril16,
1986,
thefoll
owing:

Aspreviousl
yment i
oned,t hecour  
taquo uphel
dDeAsi s'
cl
aim ofabsenceofnoti
ce, ther
ebytainti
ngtheauct
ionsal
e
pr
oceedingswithafataldefect.Insoruli
ng,thel
owercourt
st
ri
ctl
yconst r
uedtheapplicableprovi
sionsofSecti
on73of
P.
D.No.464andr easonedoutt hat
:

Quit
ecl earl
y,from theev i
denceadducedandf rom facts
undisputed,
t henoti
cesentbyt heCityTreasurerofQuezon
Cit
ywer enott ot hedeli
nquenttaxpayer
.Thenot i
ceswer e
sent to Ernesto Ar agon.Ernesto Aragon i s not t he
deli
nquentt axpayer;hehadsol dt hesubjectpr oper
tyt o
RositaDeAsi sasear lyas1969,andwas,t herefor
e,no
l
ongert heowneroft hesubj ectpropertywhen t het ax
deli
nquencyf ortheyears1975-1979wer eincur
red.

xxxxxxxxx

Inanat t
emptt ocorr
ecttheerr
or,theCi t
ytreasurer,upon
bei
ngi nfor
medbyCl ementeSorianot hatther egister
ed
owneroft hepr oper
tybepurchasedatpubl i
cauct ionis
Rosi
taDeAsi sunderTCTNo.146547, issuedanot herFinal
Noti
cet oExerci
seRightofRedempt i
ont oErnestoAr agon
c/oRositaDeAsis.

Theat
tempti
sfut
il
e.
Thenon- compli
ancewi thther equir
ement
sunderSect i
on
73ofP. D.464cannotbecor r
ectedbyanot i
cetoexerci
se
ri
ghtofr edemption,especial
lysowheni tisdi
rect
edt o
Ernest
oAr agon,
andonl yc/oRosi t
aDeAsis.

Wedisagree.Theper
ti
nentporti
onofSecti
on73,P.
D.464,
asregar
dsnot icet
odelinquenttaxpay
ersofr
ealt
yisas
fol
l
ows:

Copy oft he notice shal

lf ort
hwi th be sentei therby
regi
st ered mailorbymessenger ,ort hr
ough t hebar r
io
captain, t
ot he del i
nquent t axpay er
, 
at his address as
showni nt hetaxr ol
lsorpr opert ytaxrecordcar dsoft he
muni cipali
tyorci t
ywher ethepr oper t
yislocated,orathi s
resi
dence,i fknown t o saidt reasurerorbar ri
o capt ain,
provi
ded,howev er,t
hatar eturnoft hepr oofofser vice
underoat hshallbef i
l
edbyt heper sonmaki ngt heservice
withthepr ovinci
al,orcit
ytreasur erconcerned.

Contraryt ot he lowercour t'

si nsi
stence upon a st ri
ct
i
nterpretationoft heabov equot edpr ovision(i.
e.,Ernesto
Aragonwasnott he'delinquentt axpayer 'ashewasno
l
ongert heowneroft hel and),Wear eoft heview thata
substantialcompl ianceoft hesamei semi nentl
ywar ranted
bythepecul i
arcircumstancesoft hiscase.Appel leeRosita
DeAsi sshoul dnotbeper mi t
tedt oclaiml ackofduenot ice
ast ot he f actofdel i
nquency .We f ul
lyagr ee wit
ht he
senti
ment soft heappellant,expressedi npp.3and4ofhi s
bri
ef,that:

RositaDeAsi scannotv al
idlyraiset hei ssueofl ackof
propernoti
ce.Thel andinquestionispr opertyIdenti
fiedas
thesamel andsheboughtf rom Er nestoAr agonwhoi sthe
origi
nalowner .As t he pr
esentowneroft his propert
y
she knew t
hatthenameoft het axpay erofthislandisinthe
name ofEr nesto Aragon because she di d not
 r
equest
the t
ransf
er 
thereofinhernameast hepr esentowner .She
all
owedt heori
ginalownerEr nestoAr agon toremain asthe
appear ingt axpay erofherl andshepur chasedf r om hi m.In
sendi ngnot i
cest oEr nest oAr agon,theCi tyTr easur eris
simpl ycompl yi
ngwi tht her equir
ementoft hel aw whi ch
statesi nSec.73ofPD 464t hatnot icesshal lst at
et he
nameoft het axpay eragai nstwhom t het axwasassessed
andi nt hepr esentcasei tisErnestoAr agonagai nstwhom
thet axwasassessed bei ng theappear i
ng t axpay eras
shown i nt he taxr ollsorpr opertyt axr ecor d car dsof
Quezon Ci ty.De Asi s cannotcompl ai nt hatshe i st he
registeredownert hatt henot i
ceswer enotsentt oher.
She pai dpastt axesnoti nhernamebuti nt henameof
Ernest oAr agon.Fort het axdel i
nquencyoft hey ears1975-
1979shedi dnotbot hert opayt axesei therinhernameas
taxpay erori nt henameofEr nestoAr agon.Thi ssi mply
showsshehasf aultedinmanyway sthat heri
  nact ionsand
negligenceshoul dnotpr ejudi
cet hir
d- parti
es. '( Emphasi s
suppl i
ed)

In shor t,We f aul tappel l

ee de Asi sf ornegl i
gence i n
per mitti
ngherv endorEr nest o Ar agont or emai nast he
declaredowneroft helandi nt het axr ecor dsatt heCi t
y
Treasur er's Of fice. For t he y ear s 1969- 1974 she
i
nexpl icablyrefusedt odeclar eher sel fast henewownerof
thepr oper tyever ytimeshepai dt heannualt axont hel and.
Instead,shecont inuedpay i
ngt her eal tytaxesi nt hename
of Ar agon and di d notbot hert o enl ighten t he Ci t
y
Treasur er's Of f
ice on t he t rue si tuati
on of t he l and
whenev eri tissuedherar eceiptofpay menti nAr agon's
name.Consi deringt hatt heappel leehadact edpr ompt l
yin
secur i
ngacer t
ificateoft i
tl
ei nherownnamei mmedi atel
y
aftertheacqui sitionf rom Ar agon,Wewonderwhyshedi d
notexhi bitthesamedi li
genceandener gyint hemat terofa
simpl et ax'declar ati
on.Mor eov er,sheknewf oraf actt hat
shef ailedt opayt her ealt
yt axesf rom 1975t o1979.Thi s
situati
onal oneshoul dhav ewar nedherofani mpendi ng
reactionf rom t hegov ernmentandwoul dhav epr ompt ed
hert oinqui r
eatl eastaboutt hest at usoft hel andi nv iewof
herdel inquency .Thus,hernegl i
gencei sdeemedr eadinto
thesi tuat i
onpr ompt ingUst oconcl udet hatshehasnot
been v i
gi l
antorhas sl epton herdut i
es eitherbyher
negligence,f ollyori nat t
entionandmustt hereforebeart he
consequenceofheri nadv ertence.Ver i
ly,shecannotr i
ghtl
y
claim pr ejudiceinasmuchasi twasherowni nact i
onwhi ch
effectivelypr eventedt henot icesofdel inquencyf rom ever
reachingher .Herf ailuret oupdat et heland'staxr ecordsis
heral oneandsheshoul dt aket heconsequencesr esulti
ng
therefrom.I nthisconnect i
on,thel owercour tcrit
icizedthe
action ( orr at
her ,i nact i
on)oft he Ci t
yt reasurerwho
"withoutcount er-checki ng wi t
ht he RegisterofDeeds,
mer elyr eli
ed on t he r ecor d availabl
ei n his office and
assumed,al beitincor rectly,thatEr nestoAr agonwasst i
ll
ther egisteredowneroft hepar celoflandi nquestion."

Thiscriti
cism Wef indt obeunf air
.Ther eisnopar t
icular
dutyimposedbyt hel aw ont heCi t
yTr easurertocount er-
checkwi tht heRegi sterofDeedsont heowner shi
pofa
parcelofl andsubj ectt odelinquencytaxes.Hi sonl ydut y
underSect ion73ofPDNo.464i stosendt henot i
ceof
deli
nquencyt ot het axpay erathi saddressasshowni nhi s
taxr ol
ls.Thef actt hatRosi taDeAsi scont inued fora
numberofy earstopayt axesinAr agon'
snameal lthemor e
exoneratest heCi t
yTr easurerinhi sbeliefthatt helatter
wasst i
llthepropert axpay erofthelandinquest i
on.

Fur t
hermor e,ev engranti
ngt hatt hepersonalnot i
ceswer e
original
lysentt oAr agon'sresi denceatNo.39Masbat e
Street,itshoul dbepoi ntedoutt hatatleastt wo( 2)other
not i
ceswer eal sosentt oRosi t
aDeAsi s' addressofr ecord
at1447 Jose Abad Sant os St r
eet,which not ices were
returned " uncl aimed" because appar entl
y she had
transferredr esi
dencewi thout( again)bot her
ingt oupdate
theol daddr essi ndi
catedonhert r
ansf
ercer ti
ficateoftitl
e
att he Of fi ce oft he Regi sterofDeeds.Thi sf urt
her
mani festat
ion of negl ect on appel l
ee' s par t mer el
y
 rei
nfor
cesOurconvi
cti
onthatshecannotproper
lycl
aimt
o
havebeenpr
ejudi
cedthr
oughnofaultofherown.

Andi tmustber emember ed,asidefrom per sonalnot ices

astot heimpendi ngauct ionsal eofthel and,ot hernot ices
concer ni
ngt hesameev entwer epubl ishedandpost ed.
Truet hatt heseletternot iceswer eal soi nt henameof
Aragon,butal soincludedt herei
nwer et hedescr i
ptionand
l
ocat i
onoft heproper tyupf orsale.Consi der i
ngt hatt he
appelleehadboughtt hel andi nt
hef i
rstpl acef rom Er nest o
Aragon, hadpai dther ealtyt axesther
eoni nAr agon'sname
andt hent hereaft
erhadceasedt opaysucht axes,she
abov eallot herpeopl eshoul dhav ebeenputonguar dbya
noti
ceoft axdel i
nquencyaddr essedt oEr nest oAr agon.I n
short,not ice to Aragon was,undert he ci rcumst ances,
suff
icientnot i
cetoher ,ther ebyvali
datingt hepr oceedi ngs
conduct ed undert he publ i
c aucti
on sal e.Appel l
ee not
having r edeemed t he l and dur i
ng the l egalr edempt ive
peri
od of one y ear ,t he l egal owner ship became
consol i
dated i n appel lantCl emente Sor iano( pp.30- 33,
Roll
o) .

Thepet
it
ioni
simpr
essedwi
thmer
it
.

Presi
denti
alDecr eeNo.464ent i
tled"TheRealPr opert
yTaxCode" ,
tookeff
ectonJune1, 1974.Secti
on1t hereofexpr
esslyprovi
dest
hat
thesaidcode" shal
lgov er
nt heappr aisalandassessmentofr eal
proper
ty for pur poses of t axati
on by pr ovi
nces, citi
es and
munici
palit
ies,aswellasthelevy,col
lecti
onandadmi ni
str
ati
onofreal
proper
tytax."

Sect
ions6,
8,10,
57and58oft
hesameCodepr
ovi
de:

SEC. 6. Decl
arati
on of Real Pr opert
y by Owner or
Administ
rator
. 
—I tshal
lbet hedut yofallpersons,natural
orjur
idi
cal,owningoradmi ni
ster
ingrealproperty
,incl
uding
theimprovement sther
ein,wit
hinaci tyormuni cipal
i
ty,or
thei
rdulyauthori
zedrepresent
ati
v e,t
oprepare,orcauset o
beprepared,andfi
lewiththeprovi
ncialorci
tyassessor
,a
swornstatementdeclar
ingthetruevalueofthei
rpropert
y,
whetherpr evi
ousl
y declar
ed orundecl ar
ed,taxable or
exempt,whichshallbethecur
rentandf ai
rmarketval
ueof
thepropert
y,asdet
er mi
nedbythedeclarant
.

Suchdecl arati
onshal lcontainadescripti
onoft hepropert
y
suffi
cientindet ai
ltoenabl et heassessororhi sdeputyto
Identi
fyt hesamef orassessmentpur poses.Theswor n
declar
at i
onofr ealpropertyher ei
nreferr
edt oshallbefil
ed
withtheassessorconcer nedonceev er
yf iveyearsduri
ng
theper i
odfrom Januar yfirsttoJunethirt
ieth,commencing
withthecal endary ear1977,unl essrequiredearli
erbythe
SecretaryofFinance.'

SEC.8. Li
  sti
ngofRealPr opertyint heAssessmentRol l
s.—
Inev erypr ovi
nceand ci ty,ther
eshal lbepr epar
ed and
mai ntai
ned by t he pr ovi
ncial or ci ty assessor an
assessmentr ol
lwher einshallbel i
stedallrealpropert
y,
whet hertaxableorexempt ,locatedwi thi
nthepr ovi
nceor
cit
y.Realpr opert
yshallbel i
stedandv al
uedinthenameof
theowneroradmi ni
strat
or,orany onehav i
nglegalint
erest
i
nt hepr opert
y.

xxxxxxxxx

Theassessmentrollshal
lbeprepar
edinaccordancewith
rules and r
egul
ati
ons prescr
ibed by t
he Secret
ary of
Finance.

SEC. 10.  Real Property Identif

icati
on Sy st
em.  — Al l
declar
ationofr ealpropert
ymadeundert heprovisionsof
this Code shal lbe kept and f il
ed under a uni form
Identi
fi
cationsystem tobeest abli
shedbyt heprovincialor
cit
yassessor si
naccor dancewi ththerulesandregulations
tobepr escri
bedbyt heSecretaryofFinance.

 
SEC.57.Col
l
ect
ion oft
ax t
o be t
he r
esponsi
bil
i
ty of
 treasur
ers.—Thecol lecti
onofther ealpropertytaxandall
penalti
es accrui
ng t hereto,and the enforcementoft he
remediesprov i
dedf orint hi
sCodeoranyappl icabl
elaws,
shallbether esponsibil
ityofthetreasureroft heprovi
nce,
cityormunicipal
it
ywher ethepropertyi
ssituated.

SEC.58. Assessortofur nishtreasur
erwi t
hassessmentr ol
l.
— Thepr ovi
ncialorcityassessorshal lpr
epareandsubmi t
tothet r
easureroft hepr ovince,cit
yormuni cipal
ity
,onor
befor
et het hi
rty-
fi
rstdayofDecemberofeachy ear,an
assessmentr ollcontainingal i
stofal lper
sonst owhom
realpropert
ieshav ebeennewl yassessedorr eassessed
andthev al
ueofsucht axablepr oper
ties.

Itis cl earfrom t he f oregoi ng sect i

onst hati nt he appr aisaland
assessmentofr ealpr opertyaswel last hecol l
ectionoft het axesdue
thereon,t he f oll
owi ng st eps ar et o be t aken:Af tert he swor n
statementr equi r
ed i n Sect ion 6 shal lhav e been f il
ed wi tht he
prov i
ncialorci tyassessor ,thesameshal lbekeptandf i
ledundera
uniform I dentifi
cati
on sy stem est abl ished by hi m.The assessor
concer nedshal ltheni ncludet hepr oper tydecl aredint heassessment
rollbei srequiredt opr epar eandmai ntain.Onorbef orethe31stday
ofDecemberofeachy ear,thepr ov i
nci alorci tyassessorshal lsubmi t
tot hetreasureroft hepr ovince, cit
yormuni cipali
tyanassessmentr ol
l
cont ai
ningal istofal lper sonst owhom r ealproper ti
eshav ebeen
newl y assessed orr eassessed and t he v alue ofsuch t ax able
proper t
ies.Last l
y,ont hebasi soft heassessmentr oll,t
het r
easur er
concer ned shal lthen col lectt he r ealpr opertyt axes due and al l
penal t
iesaccr uingther eto.Par enthet ically,theCodedoesnotr equire
thatt heswor nst atementdecl ari
ngt het ruev al
ueofr ealpr operty
mustal sobef il
edwi tht hepr ov incial orci t
yt reasurerconcer ned.

I
nt hei
nstantcase, ther espondentCourtfaul
tsDeAsi sfornegli
gence
i
nper mit
tingherv endorEr nestoAr agontor emainast hedecl ared
owneroft helandi nt het axrecordsattheCityTreasurer'
sOfficeso
thatt
hesai dofficeshoul dnotbebl amedatallforsendi
ngt he"Notice
ofSaleofDel i
nquentPr operty"datedJuly26,1980andal ltheot her
noti
cesper tai
ningt heretotoAr agon.Thereis,howev er,substantial
evi
denceappear i
ngint her ecor
dsshowi ngt hatDeAsi sdi
dinf act
declar
et hepar celoflandi nhernamef ortaxati
onpurposesafter
payingther ealt
ytaxesduet hereonf orthey ears1969t o1974.As
earl
ierstat ed,DeAsis,onAugust4,1977,f il
edwiththeOffi
ceoft he
Cit
yAssessorofQuezonCi t
ya"Swor nSt atementoftheTrueCurrent
andFai rMar ketVal
ueofRealPr opert
ies'whereinshedescri
bedt he
parcelofl andi nquestionasLotNo.2,Bl ockNo.79,Psd- 1650,
si
tuatedatMendozaSt reet,SanFr anciscoDelMont e,QuezonCi ty
,
wit
hanar eaof674squar emeters;andcov er
edbyTi t
leNo.146547
andexistingTaxDecl arationNo.PD- 5833.

TheCi tyTreasur ercannotcl ai

mi gnor anceoft hef actt hatDeAsi s
wasal r
eadyt henewowneroft hel andandt hatt helatterhadal r
eady
declaredt hesamei nherownnamef ortaxationpur poses.Asear l
yas
mor et hanf ourmont hsbef oret heCi tyTr easurersentt he" Noticeof
SaleofDel i
nquentPr oper t
y"onJul y26,1980t oEr nestoAr agon,the
prev i
ousowneroft helandi nquest ion,hisof fi
ceal readyhaddef i
nit
e
i
nf ormat i
ont hatDeAsi swast henew ownert hereof.Thi si sclearly
shownbyt he" Not iceofDel i
nquency "dat edMar ch11,1980,sentt o
DeAsi swhi chcont ainedt hepar ti
cularsr egardingt hel andf rom the
samei nformat i
ongi v
enbyheri nt he" Swor nStatement "shef il
edwi t
h
theOf ficeoft heCi tyAssessoronAugust4, 1977, descr i
bingt heland
asLotNo.2ofBl ockNo.79, andcov eredbyTaxDecl arationNo.5833.
Iti
sal sost r
ikingt onot et hatthenot i
ceofdel i
nquencywasaddr essed
toDeAsi satMendozaSt reet,SanFr anciscoDelMont e,QuezonCi t
y,
andt hisaddr esscoul dhav ebeenobt ainedonl yf r
om t he" Sworn
Statement "shef i
ledwi tht heOf ficeoft heCi tyAssessoronAugust4,
1977.Wi thal lthesedat eonhand,whywast he" Not i
ceofSal eof
Del i
nquentPr oper ty"datedJul y26,1980st i
l
lsentt oEr nestoAr agon
i
nst eadofDeAsi swhoappear edt obet henew owneroft heland?
Ther ewasgr ossi neffi
ciencyi nt heOf fi
ceoft heCi tyTr easurerwi t
h
respectt othismat ter.

TherecordisclearthatafterSor i
anowasissuedt he"
Certi
fi
cat
eof
Sal
eofDel i
nquentPropert
y"onNov ember14,1980,hel
earnedatthe
Off
iceoftheRegisterofDeedsofQuezonCi t
ythatthepar
celofland
sol
dt o hi
m wasact ual
l
yr egi
stered i
nthenameofDeAsi sand
cov ered byTr ansf erCer t
ificate ofTi tl
e No.146547,af t
erwhi ch
Sor i
anoi nf ormedt heCi tyTr easurerr egardingt hi
sf act.Itcanbe
conceded t hatt heCi tyTr easur er,afterrecei v
ing thisi nformation,
caused t he exami nat ion oft he records f i
led in hi s office and
discov eredt hatDeAsi swast heact ualowneroft hel andi nquest i
on
asear l
yas1969anddecl aredt hesamef ortaxationpur posesasear ly
as1977.Thi siscl earf rom t he"Not i
ceofDel i
nquency "sentt oDeAsi s
atMendozaSt reetonMar ch11,1980.I nsteadofcal lingf orDeAsi s
(heraddr esswasal r eadyknown)t oshedl ightont het axdel i
nquency ,
theCi tyTr easur er,realizi
ngt hemi stakemadei nnot i
fyingAr agon, t
he
prev i
ousowner ,attempt edt ocur ethedef ectint henot icebysendi ng
onJanuar y7, 1981a" Not i
ceofSol dRealPr oper t
y"stilltoAragonbut
thist imeaddr essed " c/ o Rosi taDeAsi satNo.1447 JoseAbad
Sant os,Mani l
a",whi chwasr eturnedwi tht henot ati
on" Unclaimed.'
This was f ol
lowed by a ' Fi
nalNot i
ce to Exer cise t he Ri ghtof
Redempt ion"sentagai nt oAr agon" c/
oRosi t
aDeAsi satNo.1447
JoseAbadSant os,Mani la"onSept ember14,1981,whi chagai nwas
returnedf orbei nguncl aimed.

Weagr eewi
ththef indingofthet
ri
alcour
tupholdi
ngDeAsi s'cl
aim of
absenceofnot ice.I nasmuchassev er
alglar
ingirr
egular
it
ieswhich
i
mpai redthesubst antialri
ght
sofDeAsi satt
endedt heproceedi
ngs
l
eadingt ot
hei ssuanceoft heFinalBil
lofSale,theauct i
onsal e
proceedingi
sat otal null
i
ty.

ACCORDI NGLY,t hepet i

ti
onisher ebyGRANTED.Thedeci si
onoft he
Int
ermedi at
eAppel l
ateCour t(now Cour tofAppeal s)i sREVERSED
andt hedeci si
onoft heCour tofFi rstInstance(now RegionalTrial
Court)i s REINSTATED,butwi tht he MODI FICATION as regards
paragraph(d)ofthedisposit
ivepor t
ionthereofwhichshouldnowr ead
asfollows:(d)order
ingthatthemoneyal readydepositedwit
hthet r
ial
courtbyDeAsi sint
heamountofP13, 500.00shallbelongtoSori
ano,
conformablywi t
hSection83ofPr esidenti
al Decr
eeNo.464.

SOORDERED.
G.
R.No.191761       Nov
ember14,
2012

CAGAYANELECTRI
CPOWERANDLI GHTCO.
,INC.
,
 Pet
it
ioner
,
vs.
CITYOFCAGAYANDEORO,
 
Respondent
.

DECISION

CARPI
O,J.
  :

TheCase

G.R. No. 191761 i s a pet iti

on f or review1 assai
l
ing the
Decisionpr
2 
omulgated on 28 May 2009 as wel l as the
Resol uti
onpr3 
omulgat
edon24Mar ch2010byt heCour tofAppeal
s
(appel l
atecour t)inCA-G.R.CVNo.01105- Min.Theappel l
atecourt
affir
medt he8Januar y2007Deci sionofBr
4 
anch18oft heRegional
TrialCour tofMi samisOri
ental
(tr
ialcour t
)inCivi
lCaseNo.2005- 207.

Thet r
ialcour
tuphel
dt heval
i
dit
yoftheCit
yofCagayandeOro’
s
Ordi
nanceNo.9503-2005anddeniedCagayanEl
ect
ri
cPowerand
Li
ghtCo. ,Inc.
’s(CEPALCO)clai
m ofexempti
on f
rom t
he sai
d
ordi
nance.

TheFact
s

Theappel
l
atecour
tnar
rat
edt
hef
act
sasf
oll
ows:

OnJanuary10,2005,theSangguniangPanl ungsodofCagay andeOro

(Ci
tyCouncil
)passedOrdinanceNo.9503- 2005imposi ngataxonthe
l
easeorr ent
alofelectr
icand/ ortel
ecommuni cationposts,pol
esor
towersbypoleownerstoot herpol
euser sattenper cent(
10%)ofthe
annualr
entali
ncomeder i
vedf r
om suchleaseorr ental
.

TheCityCouncil
,inaletterdated15March2005,inf
ormedappell
ant
CagayanElectr
icPowerandLi ghtCompany,I
nc.(CEPALCO)
,through
i
tsPresidentandChiefOper at
ionManager
,Ms.ConsueloG.Tion,of
thepassageofthesubjectordi
nance.
On Sept ember30,2005,appel lantCEPALCO,pur por tedlyon pur e
questionofl aw,f il
edapet i
ti
onf ordeclaratoryr eliefassai li
ngt he
vali
dityofOr dinanceNo.9503- 2005bef oretheRegi onalTr i
alCourtof
Cagay andeOr oCi t
y ,Branch18, ont hegroundt hatthet axi mposedby
thedi sputedor di
nancei sinrealityat axoni ncomewhi chappel l
ee
CityofCagay andeOr omaynoti mpose,t hesamebei ngexpr essly
prohibit
edbySect ion133( a)ofRepubl i
cActNo.7160( R.
A.7160)
otherwise known as t he LocalGov er
nmentCode ( LGC)of1991.
CEPALCO ar gues t hat,assumi ng t he Cit
yCounci lcan enactt he
assailedor dinance,i tisneverthelessexemptf rom t hei mposi ti
onby
vir
tueofRepubl i
cActNo.9284( R.A.9284)pr ov i
dingf oritsfranchise.
CEPALCO f urthercl ai
ms exempl ary damages ofPhP200, 000.00
all
egingt hatt hepassageoft heor dinancemani festsmal i
ceandbad
fai
thoft her espondent -
appell
eet owar dsit
.

InitsAnswer ,appell
eer aisedt hef ol
lowingaf fir
mat i
vedef enses:(a)
theenactmentandi mpl ement ationoft hesubj ector dinancewasa
vali
d and l awfulexer cise ofi t
s power s pursuantt ot he 1987
Constit
uti
on,theLocalGov er
nmentCode,ot herappl i
cabl epr ovi
sions
oflaw,andper ti
nentj urisprudence;( b)non- exempt i
onofCEPALCO
becauseoft heexpr esswi t
hdr awaloft heexempt ionpr ovided by
Secti
on193oft heLGC;( c)thesubj ector di
nancei slegal l
ypr esumed
vali
d and const i
tut
ional ;( d)pr escript
ion ofr espondent -appell
ee’s
acti
onpur suanttoSect ion187oft heLGC;( e)f ail
ureofr espondent-
appell
ee t o exhaust admi nistrati
ve r emedi es under t he Local
GovernmentCode;( f
)CEPALCO’ sact i
onf ordecl ar
ator yreli
efcannot
prospersincenobr eachorv iol
at i
onoft hesubj ectordi nancewasy et
commi tt
edbyt heCity.5

Or
dinanceNo.9503-
2005r
eads:

ORDINANCE IMPOSI NG A TAX ON THE LEASE OR RENTAL OF

ELECTRIC AND/OR TELECOMMUNI CATI
ON POSTS, POLES OR
TOWERSBYPOLEOWNERSTOOTHERPOLEUSERSATTHERATEOF
TEN (10)PERCENT OF THE ANNUAL RENTAL INCOME DERIVED
THEREFROM AND FOROTHERPURPOSESBEI TORDAINED byt
he
Cit
yCouncil(
SangguniangPanl
ungsod)oft
heCi
tyofCagay
andeOro
i
nsessionassembledthat:
SECTION 1.-Wheneverusedi
nthi
sOr
dinance,t
hef
oll
owi
ngt
erms
shal
lbeconstr
uedas:

a.Electr
iccompani
esi
ncludeal
lpubl
i
cuti
li
tycompanieswhet
her
corporati
onorcooper
ati
veengagedint
hedi st
ri
but
ionandsale
ofelectr
ici
ty;

b.Telecommunication compani es r
eferto establi
shmentsor
enti
ti
esthatareholder
soff ranchisethr
oughanActofCongr ess
toengage,maint
ain,andoper atetel
ecommuni cati
ons,voi
ceand
data servi
ces, under existing Phili
ppi
ne l aws, rul
es and
regul
ati
ons;

c.PoleUseri ncl
udesanyperson,natur
alorjuri
dical
,incl
udi
ng
governmentagenciesandentit
iesthatuseandr entpolesand
towersfortheinst
all
ati
onofanycable,wir
es,ser
vicedropsand
otherat
tachments;

d.PoleOwnerincl
udesel
ect
ri
candt el
ecommuni
cati
oncompany
orcorporat
ionthatownspoles,t
owersandotheraccessor
ies
ther
eof.

SECTI ON2.-Thereshallbei mposedataxontheleaseorrentalof

electr
icand/ortel
ecommuni cati
onpost
s,polesort ower
sbypol e
owner stoot
herpoleuser
satt herat
eoft
en(10)per
centoftheannual
rentali
ncomederiv
edtheref
rom.

SECTI
ON3.-Thetaxi
mposedher
einshal
lnotbepassedonbypol
e
owner
stot
hebil
l
sofpol
euser
sinthef
orm ofaddedr
ental
rat
es.

SECTI ON4.( a)Poleowner shereindefi

nedengagedinthebusinessof
renti
ng t hei
rpost s,poles and/ort ower
s shallsecure a separ
ate
businessper mittheref
oraspr ov i
dedunderArti
cle(P),Secti
on62(a)
ofOr dinanceNo.8847- 2003,otherwi
seknownast heCagay andeOr o
CityRev enueCodeof2003.

(
b)Pert
inentpr
ovi
sionsofOrdinanceNo.8847-2003,cov
eri
ngsit
usof
t
hetax,paymentoftaxesandadmi ni
strat
iveprov
isi
onsshal
lapplyi
n
t
heimpositi
onofthetaxunderthi
sOrdinance.
SECTI
ON5.-Thi sOrdinanceshal
ltakeef
fectaft
er15daysfol
l
owi ng
i
tspubli
cati
oninal ocalnewspaperofgeneralci
rcul
ati
onf
oratleast
thr
ee(3)consecuti
veissues.

UNANI
MOUSLYAPPROVED.
6

Ordi
nance No.9503-
2005 was unani
mouslyappr
oved byt
he Ci
ty
Counci
lofCagayandeOroon10January2005.

TheTr
ial
Cour
t’
sRul
i
ng

On8Januar y2007,thetr
ialcourtrenderedi t
sDecision7 i
nf avorofthe
CityofCagay andeOro.Thet ri
alcour tidenti
fi
edt hreei ssuesforits
resol
uti
on:(1)whetherOrdinanceNo.9503- 2005isv alid;(2)whether
CEPALCOshoul dbeexempt edfrom tax;and( 3)whet herCEPALCO’ s
acti
onisbarredfornon-
exhaustionofadmi ni
strat
iveremedi esandfor
prescr
ipt
ion.

I
nr uli
ngf orthev al
idit
yofOr dinanceNo.9503- 2005,t hetrialcourt
rej
ected CEPALCO’ scl aim thatt heor dinancei san i mposi t
ion of
i
ncomet axpr ohibi
tedbySect ion133( a)oft heLocalGov er
nment
Code.Thet
8 
r
ialcour treasoned t hatsinceCEPALCO’ sbusi nessof
l
easingi t
spost stopoleuser siswhati sdirectl
yt axed,t hetaxi snot
upon t he income butupon t he pr i
vi
lege to engage i n business.
Moreov er
,Sect i
on143( h),i
nr elati
ont o Section151,oft heLocal
GovernmentCodeaut hor i
zesaci t
yt oimposet axes, feesandchar ges
onanybusi nesswhi chi snotspeci fi
edaspr ohibitedunderSect ion
143(a)t o(g)andwhi cht hecit
ycounci lmaydeem pr opert ot
ax.

Thetr ialcourtalsorej
ectedCEPALCO’ scl
aim ofexempt ionf r
om t ax.
Thet r i
alcour tnotedthatRepublicAct(R.A.)Nos.3247,3570 and
9  10 

6020,whi
11 
ch prev
iousl
y gr ant
ed CEPALCO’sf ranchise,expr essl y
stat
edt hatCEPALCOwoul dpayat hr
eepercentfr
anchiset axi nli
euof
al
lassessment sofwhat everauthor
it
y.Howev er
,therei snosi mi lar
provi
si oni nR.A.No.9284,whichgaveCEPALCOi tscurrentf r anchise.

Fi
nal
ly
,the tr
ialcourtf
ound t
hatCEPALCO’
s act
ion i
s bar
red by
pr
escr
ipt
ionasitfai
ledt
orai
seanappealt
otheSecret
aryofJust
ice
wit
hinthe t
hir
ty-
dayper
iod pr
ovi
ded i
n Sect
ion 187 oft
he Local
Gover
nmentCode.

Thedi
sposi
ti
vepor
ti
onoft
het
ri
alcour
t’
sdeci
sionr
eads:

WHEREFORE, iti
scrystalclearthatPet
iti
onerCEPALCOf ai
lednotonly
i
npr ovi
ngitsall
egati
onst hatCi t
yOrdinance9503-2005isil
legaland
contrar
ytolaw,andt hat[it]i
sexempt edf r
om theimpositi
onoft ax,
butalsoinconvinci
ngt heCour tthati
tsact i
oni
snotbar redfornon-
exhausti
onofadmi ni
strat
iver emedy[sic]andbyprescri
pti
on.Hence,
theinst
antpet
iti
onisDENI ED.

SOORDERED.
12

CEPALCOfi
ledabri
efwit
htheappel
l
atecour
tandr
aisedt
hef
oll
owi
ng
er
ror
softhetr
ial
court
:

A.Thel
owercourtmani
festl
yerredinconcl
udingthattheinst
ant
act
ioni
sbarredfornon-exhausti
onofadmi ni
str
ativ
er emedies
andbypr
escr
ipt
ion.

B.Thel owercour
tgravel
yerredi
nfi
ndi
ngthatOrdi
nanceNo.
9503-2005oft
heCityofCagay
andeOrodoesnotpar
takeoft
he
natur
eofanincometax.

C.Thelowercour
tgravel
yerredi
nfi
ndi
ngthatOr
dinanceNo.
9503-
2005oft
heCityofCagay
andeOr
oisval
id.

D.Thel
owercour
tseriousl
yer
redinfi
ndingt hather
einappel
l
ant
i
snotexempt
edfrom paymentofsai
dtax.13

TheAppel
l
ateCour
t’
sRul
i
ng

On 28 May2009,the appel
lat
e cour
trender
ed i
ts Deci
sion14 and
af
fi
rmedthet
ri
alcour
t’
sdecisi
on.

Theappel
lat
ecourtstat
edt hatCEPALCOfai
ledtofi
leati
melyappeal
totheSecret
aryofJust i
ce,anddi dnotexhaustit
sadminist
rat
ive
remedi
es.Theappel
latecourtagreedwit
hthetri
alcour
t’
srul
ingthat
theassai
ledordi
nanceisv al
idanddeclar
edthatthesubjectt
axi sa
l
icense t
ax forthe r
egulati
on ofbusiness i
n which CEPALCO is
engaged.Fi
nall
y,theappell
atecourtf
oundthatCEPALCO’ sclai
m of
taxexempti
onrestsonastrainedi
nter
pret
ati
onofR.A.No.9284.

I
naResol ution15 dated 24 Mar ch2010,theappell
atecourtdeni
ed
CEPALCO’s mot i
on f or reconsider
ati
on for l
ack of meri
t.The
resol
uti
on also deni ed CEPALCO’ s 3 August2009 suppl
emental
mot i
onforreconsi derat
ionforbeingfil
edoutoft
ime.

CEPALCOfi
ledt
hepr
esentpet
it
ionf
orr
evi
ewbef
oret
hisCour
ton27
May2010.

TheI
ssues

CEPALCOenumer
atedt
hef
oll
owi
ngr
easonsf
orwar
rant
ingr
evi
ew:

1.Inspit
eofit
spat enti
ll
egal
i
ty,aCityOrdi
nancepassedi
n
vi
olat
ionori
nexcessofthecit
y’sdel
egat
edpowertotaxwas
uphel
d;

2.Inacaseinv
olv
ingpurequesti
onsoflaw,t
heCourtofAppeal
s
sti
lli
nsi
stedonausel
essadmi ni
str
ati
veremedybef
oreresortt
o
thecour
tmaybemade; and

3.Recentl
egi sl
ati
onaf
fi
rmi
ngCEPALCO’
staxexempt
ionswas
di
sregar
ded.
16

I
naResol uti
ondated6Jul y2011, t
17 
hi
sCour tr
equir
edbothpart
iesto
discusswhethert
heamountoft axi mposedbySect i
on2ofOrdinance
No.9503-2005compl i
eswi t
horv iol
ates,ast hecasemaybe,t he
l
imi t
ati
onsetbySecti
on151,inrel
at iontoSections137and143(h)
,of
theLocalGovernmentCode.

TheCour
t’
sRul
i
ng

Fai
l
uret
oExhaustAdmi
nist
rat
iveRemedi
es

Or
dinanceNo.9503-
2005i
sal
ocalr
evenuemeasur
e.Assuch,t
he
Local
Gov
ernmentCodeappl
i
es.

SEC.187.Pr ocedur ef orAppr ovalandEf fect i

v i
tyofTaxOr dinances
andRev enueMeasur es;Mandat or
yPublicHear i
ngs.–Thepr ocedure
forappr ovalofl ocalt axor dinancesandr ev enuemeasur esshal lbein
accor dancewi t
ht hepr ov i
sionsoft hi
sCode:Pr ov i
ded,Thatpubl i
c
hearingsshal lbeconduct edf orthepur posepr i
ort ot heenact ment
thereof :Prov i
ded, further,Thatanyquest i
onont heconst it
utionali
tyor
l
egal i
tyoft axor di nancesorr evenuemeasur esmayber aisedon
appealwi thint hi
r ty( 30)day sf rom the ef fectivityther eoft ot he
Secret aryofJust i
cewhoshal lrenderadeci sionwi t hi
nsi xty( 60)days
from t hedat eofr ecei ptoft heappeal :Prov ided,howev er,Thatsuch
appealshal lnothav et heef fectofsuspendi ngt heef fectivi
tyoft he
ordinanceandt heaccr ualandpay mentoft het ax,f ee,orchar ge
l
ev i
ed t herein:Pr ov i
ded,f i
nally,Thatwi thint hir
ty( 30)day s aft
er
receiptoft hedeci sionort helapseoft hesi xt y-
dayper i
odwi thoutthe
Secret aryofJust iceact ingupont heappeal ,theaggr i
ev edpar tymay
fi
leappr opriateproceedi ngswi thacourtofcompet entjur i
sdicti
on.

SEC.188.Publ icati
onofTaxOr dinancesandRev enueMeasur es.–
Withinten( 10)day saft
ert heirapprov al,cert
if
iedt r
uecopi esofall
provinci
al,city
,andmuni cipalt axor di
nancesorr evenuemeasures
shallbepublishedi nful
lforthree(3)consecut i
veday sinanewspaper
oflocalci r
culation:Provi
ded,howev er,Thati nprov i
nces,citi
esand
muni ci
pali
ti
eswher etherear enonewspaper soflocalcircul
ati
on,t
he
samemaybepost edi natl eastt wo( 2)conspicuousandpubl i
cly
accessibl
epl aces.

TheSangguni angPanlungsodofCagay andeOroappr ovedOr dinance

No.9503- 2005 on 10 Januar y2005.Sect i
on 5 ofsai d ordinance
providedt hatt he"Ordi
nanceshal ltakeeff
ectafter15day sfollowing
i
tspubl i
cat i
oni nalocalnewspaperofgener alcirculati
onforatl east
three( 3)consecutiveissues."GoldStarDail
ypublishedOr dinanceNo.
9503- 2005on1t o3Febr uary2005.Or di
nanceNo.9503- 2005t hus
took ef fecton 19 Febr uar
y2005.CEPALCO f iled it
s petiti
on f or
declaratoryr eli
efbeforet heRegi onalTri
alCour ton30Sept ember
2005,cl earlybeyond t he 30-dayper i
od prov
ided i n Section 187.
CEPALCO di d notf il
e any t
hing beforethe Secr etar
y ofJust ice.
CEPALCO ignor
edourrul
inginReyesv .Cour
tofAppeal
s18 ont
he
mandator
ynatureoft
hest
atut
oryper
iods:

Clearl
y ,thel awr equiresthatt hedi ssati
sfi
edt axpay erwhoquest i
ons
thev alidit
yorl egal i
tyofat axor dinancemustf i
lehi sappealt ot he
Secretar yofJust i
ce,wi t
hin30day sf r
om ef fect i
vityt hereof.Incase
theSecr et
ar ydecidest heappeal ,aper i
odal soof30day sisallowed
foranaggr ievedpar tytogot ocour t.ButiftheSecr et arydoesnotact
thereon,af terthel apseof60day s,apar t
ycoul dal readypr oceedt o
seekr eliefincour t.Theset hreesepar ateper iodsar ecl earl
ygi v
enf or
compl ianceasapr er
equisitebef oreseeki ngr edr essi nacompet ent
court.Suchst atutoryperiodsar esett opr ev entdel aysaswel las
enhancet heor derl
yandspeedydi schargeofj udicialf uncti
ons.For
thi
sr eason t he cour ts const r
ue t hese prov isions ofst atut
es as
mandat ory.

A muni cipaltaxor dinance empower sa l ocalgov ernmentuni tt o

i
mposet axes.Thepowert ot axisthemostef f
ecti
vei nstr
umentt o
rai
seneededr evenuest ofinanceandsuppor tthemy ri
adact i
viti
esof
l
ocalgov ernmentuni tsfort hedeli
veryofbasi cservicesessent ialto
thepr omot i
onoft hegener alwel
fareandenhancementofpeace,
progress,andpr osper i
tyoft hepeople.Consequent ly,anydel ayi n
i
mpl ement i
ngt axmeasur eswoul dbetot hedet ri
mentoft hepubl ic.I
t
i
sf orthisreasont hatpr otestsovertaxor dinancesar er equi
redt obe
donewi thincertai
nt imef rames.Inthei nstantcase, i
tisourv iewt hat
thefail
ureofpet it
ioner stoappealtotheSecr etaryofJust i
cewi t
hin30
daysasr equiredbySec.187ofR. A.7160i sf ataltot
heircause.

Asi nRey es,CEPALCO’sf ail

uretoappealtotheSecretar
yofJusti
ce
withinthest atutoryperi
od of30 day sfrom theeffecti
vit
yofthe
ordinanceshoul dhavebeenf ataltoi
tscause.However,wer el
axt
he
applicat
ionofther ul
esinviewoft hemoresubst
anti
vemat ter
s.

Ci
tyofCagayandeOro’sPowert oCr
eateSour
cesofRev
enue
vi
s-a-
visCEPALCO’
sClaim ofExempti
on

Secti
on5,Arti
cleXofthe1987Consti
tut
ionprovi
dest
hat"
eachlocal
governmentunitshal
lhav
et hepowertocreateit
sownsourcesof
revenues and tolevyt axes,fees,and charges subjectt o such
guidel
inesandlimitat
ionsast heCongr essmaypr ovi
de,consistent
wit
ht hebasicpol
icyoflocalautonomy.Suchtaxes,
fees, andcharges
shallaccrue exclusi
velyt o the localgov er
nment .
" The Local
Gov er
nmentCodesuppl ementst heConsti
tut
ionwi t
hSect ions151
and186:

SEC.151.ScopeofTaxi ngPower s.‒Exceptasot her

wisepr ovidedin
thisCode,t hecit
ymayl ev ythetaxes,feesandchar geswhi cht he
provinceormuni cipali
tymayi mpose:Pr ovi
ded,howev er,Thatt he
taxes,f eesandchargesleviedandcol l
ectedbyhighl
yur banizedand
i
ndependentcomponentci tiesshal
laccruetothem anddi str
ibutedin
accor dancewit
hthepr ovi
sionsofthisCode.

Ther at
esoft axesthattheci t
ymayl evymayexceedthemaxi mum
rat
esal l
owedf ortheprovinceormuni ci
pal
i
tybynotmor ethanfift
y
percent(50%)exceptt
her atesofpr
ofessi
onalandamusementtaxes.

SEC.186.Powert o LevyOt herTaxes,FeesorChar ges.‒ Local

governmentuni t
s mayex erci
se t he powert ol evyt axes,f ees or
chargesonanybaseorsubj ectnotot herwisespecificall
yenumer ated
herei
nort axedundert heprovisionsoft heNat i
onalI nternalRev enue
Code,asamended,orot herappl i
cablelaws:Provided,Thatt hetaxes,
fees, or charges shal l not be unj ust
, excessi ve, oppr essive,
confiscat
oryorcontrarytodecl arednationalpoli
cy:Pr ov i
ded,further,
Thatt heordi
nancelev yi
ngsucht axes,fees,orchar gesshal lnotbe
enactedwithoutanypriorpubli
chear i
ngconduct edf orthepur pose.

Although CEPALCO does not quest i

on t he aut horit
y of t he
Sangguni angPanl ungsodofCagay andeOr ot oi mposeat axort o
enactar evenuemeasur e,CEPALCOi nsi
stst hatOr dinanceNo.9503-
2005i sani mpositionofani ncomet axwhi chispr ohibitedbySect ion
133(a) oft
19 
heLocalGov ernmentCode.Unf ortunatelyf orCEPALCO,
we agr ee wi ththe r ul
ing ofthe t ri
aland appel l
ate cour t
st hat
OrdinanceNo.9503- 2005i sat axonbusi ness.CEPALCO’ sactof
l
easi ngf oraconsi derati
ont heuseofi t
spost s,pol esort owerst o
otherpol eusersfallsundertheLocalGov ernmentCode’ sdef ini
ti
onof
business.Busi ness i s defi
ned by Sect ion 131( d) of the Local
GovernmentCodeas" tradeorcommer ci
alacti
vi
tyr
egul arl
yengaged
i
nasameansofl i
veli
hoodorwi thav i
ew toprofi
t.
"I nr el
ationto
Secti
on 131(d),Sect
20 
ion 143(h)of t
21 
he LocalGov er nment Code
provi
desthattheci tymayi mposet axes,fees,andchar gesonany
busi
nesswhichisnotspeci fi
edinSect i
on143( a)to(
g)andwhi
22 
chthe
sangguni
anconcer nedmaydeem pr opertotax.

I
ncontr
asttotheexpressstat
utor
yprovi
sionsontheCityofCagay an
deOro’
spowert ot ax,CEPALCO’sclai
m oft axexempt i
onoft he
i
ncomefrom i
tspol
esr el
iesonastrai
nedinter
pret
ati
on.Sect
23 
i
on1of
R.
A.No.9284addedSection9toR.A.No.3247,CEPALCO’ sfr
anchi
se:

SEC.9.TaxPr ovi
sions.‒Thegr antee,itssuccessorsorassi gns,shall
besubj ecttot hepay mentofal ltaxes,dut i
es,feesorchar gesand
otheri mposi t
ions appl icabl eto private el
ectri
c uti
liti
es undert he
Nat i
onal Int
ernalRev enueCode( NI
RC)of1997, asamended, theLocal
Gov ernmentCodeandot herappl i
cabl elaws:Provided,Thatnot hi
ng
hereinshal lbeconst ruedasr epealinganyspeci fict axexempt ions,
i
ncent ives,orpr ivi
legesgr ant
ed underanyr el
evantl aw:Pr ovided,
further,Thatallri
ghts,pr i
vileges,benefit
sandexempt ionsaccor dedto
existi
ng and f uture pr ivate electr
ic ut i
li
ti
es by t heirr espectiv
e
franchisesshal ll
i
kewi sebeext endedt ot hegrant
ee.

Thegr anteeshal lfil

ether et
urnwiththeci t
yorpr ov
incewhereits
faci
li
tyislocatedandpayt hetaxesduethereontotheCommi ssi
oner
of Internal Rev enue or his duly authorized r
epresent
ati
ve in
accordancewi tht heNIRCandt heretur
nshal lbesubj
ecttoauditby
theBureauofI nternalRev
enue.

The LocalGov ernmentCode wit

hdrew tax exempt ion pri
vi
leges
previ
ousl
ygi v
en to nat
uralorj
uri
dicalpersons,and gr anted local
governmentunit
sthepowertoi
mposef r
anchisetax,t
24 
hus:

SEC.137.Franchi
seTax.–Not withst
andinganyexempt iongr antedby
anyl aw orotherspeci
allaw,t hepr ovi
ncemayi mposeat axon
businessesenj
oyi
ngaf r
anchise,atar atenotexceedingf if
typer cent
(50%)ofone per cent(1%)oft he gross annualrecei pt
sf ort he
precedingcal
endaryearbasedont heincomingr eceipt,orr eali
zed,
wi
thi
nit
ster
ri
tor
ial
jur
isdi
cti
on.

xxxx

SEC.193.Wi thdr
awalofTaxExempt i
onPr iv
il
eges.–Unl essot herwise
prov i
dedi nt hi
sCode,t axexempt ionsori ncent i
vesgr antedt o,or
present l
yenjoyedbyallpersons,whethernat uralorj
uridical,including
gov ernment -owned orcont rol
led corporati
ons,exceptl ocalwat er
di
st ri
ct s,cooperati
vesdulyregi
ster
edunderR. A.No.6938,non- stock
and non- profithospit
als and educationali nsti
tut
ions,ar e her eby
withdr awnupont heeff
ecti
vit
yofthisCode.

SEC.534.Repeal
i
ngCl
ause.–xxx.

(f)Allgeneralandspeci
allaws,acts,ci
tychart
ers,decrees,execut
ive
orders,proclamati
onsandadmi nist
rati
veregul
ations,orpartorparts
thereofwhichar ei
nconsi
stentwithanyoft heprovisi
onsoft hi
sCode
areherebyr epeal
edormodi f
iedaccordi
ngl
y .

Itishor nbookdoct r
inethattaxexempt i
onsarestr
ict
lyconst
rued
agai
nstt heclaimant.Forthi
sreason,taxexempti
onsmustbebased
onclearl egalprovi
sions.Thesepar ateopini
oninPLDTv .Cit
yof
Davao i
25 
sapplicabl
etothepresentcase,thus:

Taxexempt ionsmustbecl earandunequivocal.Ataxpayercl aiminga

taxexempt i
onmustpoi nttoaspeci f
icprovi
sionoflawconf er r
ingon
thetaxpayer,inclearandpl ainterms,exempt i
onf rom acommon
burden.Anydoubtwhet herat axexemptionexist
sisr esolv
edagai nst
thetaxpayer.Taxexempt i
onscannotarisebymer eimpl i
cation,much
l
essbyani mpli
edre-enact
mentofar epealedtaxexempt ioncl ause.

CEPALCO’sclai
m ofexemptionunderthe"inli
euofal
ltaxes"cl
ause
mustfai
linl
ightofSect
ion193oft heLocalGover
nmentCodeaswell
asSecti
on9ofitsownfranchise.

Ordi
nanceNo.9503-
2005’sCompl
i
ancewi
th
t
heLocalGovernmentCode

I
nourResol
uti
ondat
ed6Jul
y2011, weaskedbot
26 
hpar
ti
est
odi
scuss
whethertheamountoft aximposedbySect i
on2ofOr di
nanceNo.
9503-2005 compl
ies wi
th orv i
olates,as t
he case may be,the
l
imitat
ionsetbySect
ion151,i
nrel
at i
ontoSecti
ons137and143(h)
,of
theLocalGover
nmentCode.

CEPALCOarguesthatOrdi
nanceNo.9503-2005shoul
dbeinval
i
dated
becauset
heCityofCagayandeOroexceededitsaut
hori
tyi
nenact
ing
i
t.CEPALCOarguedthus:

5.Thus,thetaxesi
mposableundereit
herSection137orSect
ion
143(h)arenotunbr i
dledbutarerestri
ctedast otheamount
whichmaybei mposed.Thisi
sthefi
rstli
mitat
ion.Fur
ther
more,i
f
i
tisacitywhichimposesthesame,itcanimposeonlyuptoone-
halfofwhattheprovi
nceormunici
palit
ymayi mpose.Thi
sisthe
secondli
mi t
ati
on.

6.Letus now exami ne Ordi

nance No.9503-
2005 ofthe
respondentCi
tyofCagay an de Orointheli
ghtofthe t
win
l
imitati
onsment
ionedabove.

7.Or dinanceNo.9503- 2005oftherespondentCit

yofCagayan
deOr oimposesat axont heleaseorrentalofel
ect
ri
cand/or
tel
ecommuni cat
ionpost s,pol
esort owersbypol eowner
st o
otherpol eusers"atther ateoften(10)percentoft
heannual
rentalincomeder i
vedtheref
rom."

8.Wi t
hrespecttoSect ion137,consi deringt hatt het axallowed
provinces"shallnotexceedf ift
yper cent( 50%)ofoneper cent
(1%)oft hegrossannualr eceiptsforthepr ecedi ngcal endary ear
basedont hei ncomingr eceipt,orrealized,wi thini tster
ritorial
j
ur i
sdicti
on,"t
het aximposedbyOr dinanceNo.9503- 2005"att he
rateoft en(10)per centoft heannualr ent alincomeder ived
therefrom"istoomuch.Ther eisawhal eofadi fferencebet ween
the allowable 50% of1% and t he 10% t axi mposed byt he
respondent.Toi l
lust
rate:assumi ngthatt hegr ossannualr eceipt
i
sPhp100,t hemaxi mum t axthatapr ov i
ncemayi mposeunder
Section137( 50%of1%)shal lbePhp0. 5oronl yf if
tycent avos.
Ther efor
e,themaxi mum t axthattheCi tymayi mposeshal lonl y
 beone-halfofthi
s,whichisPhp0.25oronlytwenty-
fi
vecentav
os.
Butthequest i
onedOr di
nancei mposesat axamountingto10%
ofthegrossannualr eceiptofPhp100,whi chisPhp10,orTen
Pesos.Thisawhoopi ng[sic]40ti
mesmor ethanthatall
owedfor
the pr
ovince!The v iol
ati
on made by respondentci t
y ofits
del
egatedt axi
ngauthori
tyisallt
oopatent
.

9.Wi t
hr espectto Sect i
on143( h),therateoft axwhicht he
muni cipal
it
ymayi mpose" shal lnotexceedtwoper cent(2%)of
grosssal esorrecei ptsoft hepr ecedingcal
endaryear.
"Ont he
otherhand,t hetaxi mposedbyOr dinanceNo.9503-2005is"at
ther at
eoft en(10)per centoft heannualrentali
ncomeder i
ved
therefr
om. "Again,i tis obv i
ous t hatthe respondentCity’
s
quest i
onedt axordinancei swayt oomuch.Usi ngthesamet ax
baseofPhp100t oillustrate,letuscomput e:

UnderSect ion 143(h)

,t he maxi mum t axt hata muni ci
pal itymay
i
mposei s2%ofPhp100,whi chisPhp2orTwoPesos.Ther ef ore,the
maxi mum taxthattheCitymayimposeshal lbeone-halfoft his, which
i
sPhp1orOnePeso.Butt hetaxunderOr dinanceNo.9503- 2005i s
Php10, orTenPesos.Thi si
sawhoopi ng[ sic]10timesmor et hant hat
all
owed f orthemuni cipal
ity
!Asi nt heear li
erinst
ancedi scussed
abov e,thev i
olat
ionmadebyt her espondentci t
yofi t
sdel egated
taxingauthori
tyisallt
oopat ent
.(
27 
Boldfacingandunder scoringi nt he
original
)

Thei nter
pret
ati
on oft heCi tyofCagay an deOr oisdiametri
call
y
opposedt othatofCEPALCO.TheCi tyofCagayandeOr opointsout
thatunderSecti
on151oft heLocalGovernmentCode,citi
esnotonly
havethepowert olevytaxes,feesandchargeswhichtheprov
incesor
municipal
it
iesmayi mpose, butthemaxi
mum r at
eoftaxesimposable
byci t
ies mayexceed t he maxi mum rate oftaxes i
mposable by
provi
ncesormuni cipali
ti
esbyasmuchas50%.TheCi t
yofCagay an
deOr ogoesont ostate:

6.Thus,Sect
ion30ofCi t
yofCagay
andeOr o’
sOrdi
nanceNo.
8847-
2003,other
wiseknownastheRevenueCodeofCagayan
deOro,imposesaf r
anchi
setaxonthegrossr
ecei
ptsreal
i
zed
from theprecedi
ngy earbyabusi nessenjoyi
ngaf ranchi
se,at
therateof75% of1%.Thei ncr
easeof25% ov ert
hatwhi chi s
prescri
bedunderSect i
on137oft heLGCi si naccor
dancewi th
Section151t hereofprescribingtheallowableincr
easeont he
rateoft axont hebusi nessesdul yidenti
fiedandenumer ated
underSection143oft heLGCort hosedefinedandcat egorized
i
nt heprecedi
ngsect i
onst hereof;

7.Sect ion143oft heLGCpr escribest her at

eoft axesont he
i
dent if
iedcat egor i
esofbusi nessenumer atedtherei
nwhi chwer e
determi nedt obeexi sti
ngatt het i
meofi tsenactment .Ont he
otherhand, Section151oft heLGCpr escribestheallowabl er ate
ofi ncrease ov ert he r at
e oft axes i mposed on busi nesses
i
dent if
iedunderSect ion143andt hepr ecedi ngsectionst hereof.
I
tis[ CityofCagay andeOr o’shumbl eopi nionthattheal lowabl e
rateofi ncreasepr ovidedunderSect i
on151oft heLGCappl ies
onlyt ot hose busi nesses i dentif
ied and enumer ated under
Section143t hereof.Thus,i tisrespect fullysubmittedbyCi t
yof
Cagay andeOr ot hatt he2%l i
mitationpr escr i
bedunderSect ion
143( h)appliesonl yt ot hetaxr atesont hebusi nessesi dent i
fied
thereunderanddoesnotappl yt ot hoset hatmayt hereaf terbe
deemed t axabl eunderSect i
on186 oft heLGC,suchast he
hereinassai ledOr dinanceNo.9503- 2005.Ont hesamev ein,itis
ther espectfulsubmi ssionofCi tyofCagay andeOr ot hatt he
l
imitationunderSect ion151oft heLGCl i
kewisedoesnotappl y
i
nourpar ti
cul arinst ance,ot herwisei twi llruncount ert ot he
i
ntentandpur poseofSect ion186oft heLGC;

8.Bei tstronglyemphasi zedher ethatCEPALCO i sdiffer

ently
sit
uated vis-
á-visther estoft hebusinessesi denti
fi
ed under
Secti
on143oft heLGC.Thei mposi t
ionofat ax"xxxont helease
orrentalofelectricand/ort el
ecommuni cat
ionspost s,polesor
towersbypol eowner stoot herpoleusersatt herateoften( 10%)
oftheannual rentali
ncomeder i
vedtherefrom"aspr ovidedunder
Secti
on2oft hequest ionedOr dinanceNo.9503- 2005i sbased
on a r easonable classif
icati
on,t o wi t
:(a)I ti s based on
substanti
aldisti
nctionswhi chmakear ealdiff
erence;(b)these
areger manetothepurposeoft helaw;( c)theclassi
fi
cat
ion
appli
esnotonlyt othepr esentconditi
onsbutal sot ofut
ure
conditi
ons whi
ch ar
e substantial
l
yi denti
caltot hose ofthe
present;and (d) t
he classif
icat
ion applies onl
yt ot hose
belongi
ngtothesameclass;

9.Fur thermore,Sect i
on 186 of t he LGC al l
ow [ sic]l ocal
governmentuni tstoexer ciset heirtaxi
ngpowert olevyt axes,
feesorchar gesonanybaseorsubj ectnotot her
wi sespecificall
y
enumer atedintheprecedingsect i
ons,mor epar t
icularl
ySect ion
143 thereof,orundert hepr ov i
sionsoft heNat ionalInternal
Revenue Code,as l ong as t hey ar e notunj ust ,excessi ve,
oppressive,confi
scat
oryorcont r
aryt odeclarednat i
onalpol i
cy .
Mor eover,a publi
chear i
ng isr equired beforet he Ordinance
l
ev y
ingsucht axes,f
eesorchar gescanbeenact ed;

10.I
tisrespect
full
ysubmittedbyCityofCagay andeOrothatthe
tax r
atei mposed underSect i
on 2 oft he her
ein assail
ed
Ordi
nancei snotunjust,excessi
ve,oppressiv
e,confi
scatoryor
cont
rarytoadeclarednati
onalpoli
cy;

11.A r eadingofSect ion143oft heLGC r evealst hatithas

neitherident i
fi
edt heoper at
ionofabusi nessengagedi nleasi
ng
norpr escr i
bedi t
st axrate.Mor eov er
, aLessor ,inanymanner ,i
s
noti ncludedamongt hosedef inedasCont ract orunderSect i
on
131( h)oft heLGC.Howev er,aLessor ,ini tsi ntendedgener al
applicationi nCityofCagay andeOr o(onewhor entsoutr eal
estat epr opert
ies),wasi dentif
ied,categorizedandi ncludedas
oneoft heexi st
ingbusi nessesoper ati
ngi nt heci t
y ,andthus
fal
li
ngundert hepr ovi
si onsofOr dinanceNo.8847- 2003( t
he
RevenueCodeofCagay andeOr o)and, t
her efore,imposedonl ya
taxr ateof2%ont hei
rgr ossannual r
eceipts;

12.Whi l
etheher ei
nassail
edOr dinancesimilar
lyident
if
iesthat
thebaseofthet aximposedt herei
narer ecei
ptsand/orrevenue
deri
vedf r
om rental
sofpol esandpost s,CEPALCO cannotbe
consider
ed undert he def
initi
on ofLessorundert he spiri
t,
essenceandi ntentofSection58( h)oft heRev enueCodeof
 CagayandeOr o,becauset hesamer efersonl yt o"RealEst ate
Lessors,RealEstateDeal ersandRealEst ateDev elopers."Thus,
CEPALCOshoul dbe,asi thasbeen,cat egor i
zedasa( Disti
nct )
Lessorwher eitenjoy snotonl yat r
emendousandsubst antial
edgebutal soanabsol uteadv ant ageinther entalofpol es, posts
and/or towerst o other t elecommuni cati
on and cabl e TV
compani esandt helikeov erandabov eal lothersinv iew ofi ts
apparentmonopol ybyal l
owingt heuseoft heirpoles,post s
and/ortower sby,leasingt hem outt o,telecommuni cationand
cable TV compani es oper ati
ng wi thint he ci t
yand subur bs.
Furt
hermor e,CEPALCOhasnei thercompet i
ti
oni nt hi
sf i
eldnor
doesitexpectonesi ncet herear enoot herper sonsorent it
ies
whoar eengagedi nthispar t
icularbusinessact i
vit
y;

xxxx28

CEPALCOi smi stakenwheni tst at

est hataci tycanimposeat axupt o
onlyone- halfofwhatt he pr ovi
nce orci tymayi mpose.A mor e
cir
cumspectr eadi ng oft he LocalGov ernmentCode coul d hav e
preventedt hiser ror.Sect ion151oft heLocal Gover
nmentCodest at es
that,subjectt ocer t ainexcept i
ons,aci t
ymayexceedby" notmor e
than50%"t het axr atesal lowedt opr ovi
ncesandmuni cipalit
ies.A
29 

provincemayi mposeaf ranchi set axatar ate"notexceeding50%of

1% oft hegr ossannualr ecei pts."Fol
30 
l
owi ngSect i
on151,aci t
ymay
i
mposeaf r
anchi set axofupt o0. 0075( or0. 75%)ofabusi ness’ gross
annual receiptsf ort hepr ecedi ngcal endary earbasedont hei ncomi ng
receipt,orrealized, wi t
hini t
st er r
it
or ialjur
isdicti
on.Amuni cipal i
tymay
i
mposeabusi nesst axatar at enotexceedi ng"twoper centofgr oss
sales orr eceipts."Fol
31 
lowi ng Sect i
on 151,a ci ty may i mpose a
businesst axofupt o0. 03( or3%)ofabusi ness’grosssal esor
receiptsoft hepr ecedi ngcal endary ear .

CEPALCO al soerredwheni tequat esSecti

on137’ s" gr
ossannual
receipt
s"with Ordinance No.9503- 2005’s"annualr ent
ali ncome."
Section2ofOr di
nanceNo.9503- 2005i mposes"at axont hel easeor
rentalofel
ectri
cand/ ort
elecommuni cati
onposts,polesort ower sby
poleownerst ootherpoleuser sattherateoften(10)per centoft he
annualrent
alincomeder i
vedt her
efr
om, "andnotonCEPALCO’ sgross
annualr eceipts.Thus, alt
hought hetaxrateof10%i sdefi
nit
elyhigher
thant hati mposabl ebyci ti
esasf r
anchi
seorbusi nesstax,thet ax
baseofannualr entalincomeof" el
ectr
icand/ortelecommunication
posts,pol esort ower sbypol eownerstootherpoleusers"i
sdef i
nit
ely
smallert hant hatusedbyci ti
esint hecomput at
ionoff r
anchiseor
busi
nesst ax.Inef f
ect,Or di
nanceNo.9503- 2005want sasl i
ceofa
smallerpi e.

Howev er,wedi sagr eewi tht heCi tyofCagay andeOr o’ssubmi ssion
thatOr di
nanceNo.9503- 2005i snotsubj ecttot hel i
mit
si mposedby
Sections143and151oft heLocalGov ernmentCode.Ont hecont rary,
OrdinanceNo.9503- 2005i ssubj ecttot hel i
mi t
ationsetbySect ion
143(h).Sect ion 143 r ecogni zes separ atel i
nes ofbusi ness and
i
mposesdi ff
erentt axr atesf ordi ff
erentl inesofbusi ness.Letus
supposet hatonei sabr ewerofl i
quorand,att hesamet ime,a
dist
ributorofar ti
clesofcommer ce.Thebr ewer ybusinessi ssubject
tot he rates establ i
shed i n Sect ion 143( a)whi l
et he di st
ri
bution
businessi ssubjectt other at esest abli
shedi nSect ion143( b).TheCi t
y
ofCagay andeOr o’si mposi ti
onofat axont heleaseofpol esf all
s
underSect i
on143( h),ast hel easeofpol esi sCEPALCO’ ssepar ate
l
ineofbusi nesswhi chi snotcov er
edbypar agraphs( a)t o(g)of
Section143.Thet reatmentoft hel easeofpol esasasepar ateli
neof
businessi sev i
denti nSect ion4( a)ofOr dinanceNo.9503- 2005.The
CityofCagay andeOr or equi r
edCEPALCO t oappl yforasepar ate
businessper mit.
1âwphi
1

Mor eimpor tantly,because" anyper son,whoi nthecour seoft r

adeor
businessxxxl easesgoodsorpr oper t
iesxxxshal lbesubjectt othe
val
ue- added t ax,
"t
32 
he imposabl et ax r ate should notexceed t wo
percentofgr ossr eceipt
soft hel easeofpol esoft hepr eceding
cal
endary ear.Sect ion143( h)st at est hat"onanybusi nesssubjecttox
xxv al
ue-addedxxxt axundert heNat ionalI
nternalRev enueCode, as
amended,t her ateoft axshal lnotexceedt woper cent( 2%)ofgr oss
sal
esorr eceiptsoft hepr ecedi ngcal endary ear"f r
om t heleaseof
goodsorpr operties.Hence,t he10% t axratei mposedbyOr dinance
No. 9503- 2005 cl early violates Sect i
on 143( h) of t he Local
Gov ernmentCode.
Finall
y,i
nviewofthelackofasepar abi
li
tyclause,wedecl
arev oi
dt he
entir
etyofOrdi
nanceNo.9503- 2005.Anypay mentmadebyr easonof
thet aximposedbyOr dinanceNo.9503- 2005should,ther
efore,be
refundedtoCEPALCO.Ourr ul
i
ng,however,i
smadewi t
houtprejudice
totheenactmentbytheCi t
yofCagay andeOr oofataxordi
nancet hat
compl i
eswiththel
imi
tssetbyt heLocalGovernmentCode.

WHEREFORE,weGRANTt hepet i
ti
on.TheDeci sionoftheCourtof
Appeal
sinCA-G. R.CVNo.01105- Minpromulgatedon28May2009
andtheResol
utionpromul
gatedon24Mar ch2010ar eREVERSEDand
SETASIDEOrdinanceNo.9503-2005isdeclar
edv oid.

SOORDERED.

G.
R.No.144486.Apr
il13,
2005

RADIO COMMUNI CATIONS OF THE PHI LI

PPINES, I NC.
(RCPI
),
 Pet
it
ioners,
vs.
PROVINCIAL ASSESOR OF SOUTH COTABATO, PROVI NCIAL
TREASUREROFSOUTHCOTABATO, MUNICI
PALASSESSOROFTUPI ,
SOUTH COTABATO,andMUNI CI
PALTREASUREROFTUPI ,SOUTH
COTABATO, Respondents.

DECISION

CARPI
O,J.
  :

TheCase

Thisisapeti
tionforrev
iew1 t
osetasidetheDeci si
on2 dated29Mar ch
2000oft heCour tofAppeal s("
appell
atecourt")inCA- G.R.SPNo.
47446.Theappellat
ecourtmodi f
iedtherul
ingoft heCent r
alBoardof
Assessment Appeals ( "
CBAA" ) and exempt ed pet i
ti
oner Radio
Communi cat
ionsoft hePhi li
ppi
nes,Inc.("RCPI "
)f rom pay i
ng real
propert
ytaxassessedonitsmachi ner
yandr adi
oequi pmentmount ed
onitsrel
aystati
ontowerasaccessor i
es.However ,theappel l
atecourt
hel
dRCPIli
ableforrealpr
opert
yt axoni
tsr
adi
ost
ati
onbui
l
ding,
machi
ner
yshed,andr
elayst
ati
ontower.

TheFact
s

I
n1957,Republi
cActNo.2036( "RA2036"
) gr
3 
ant
edRCPIafi
ft
y-y
ear
fr
anchi
se.Sect
ion14ofRA2036,asamendedbyRepubl i
cActNo.
4054("
RA4054")in1964,
reads:

Sec.14.I nconsi derati

onoft hef r
anchi seandr ightsher ebygr ant ed
andanypr ovi
sionofl awt ot hecont rarynot wi thst anding, thegr ant ee
shallpayt hesamet axesasar enowormayher eaf terber equi redby
l
aw  from ot heri ndi
viduals,copar t
ner ships,pr i
vat e,publ icorquasi -
publicassoci at
ions,cor porationsorj ointst ockcompani es, onr eal
estate,buildings andot herper sonalpr opertyexceptr adi oequi pment ,
machi neryandspar epar tsneededi nconnect ionwi tht hebusi nessof
thegr antee,whi chshal lbeexemptf rom cust omsdut i
es,t ar i
ffsand
othert axes,aswel last hose pr oper t
iesdecl ar ed exempti nt his
section.Inconsi derati
onoft hef r anchi se,at axequalt ooneandone-
halfpercent um ofal lgrossr ecei ptsf rom t hebusi nesst ransact ed
undert hisf r
anchi sebyt hegr anteeshal lbepai dt ot heTr easur erof
thePhi li
ppineseachy ear,withi nt enday saf tert heaudi tandappr ov al
oftheaccount saspr escribedi nt hisAct .
 Saidt axshal lbei nl i
euof
anyandal ltaxesofanyki nd, nat ureordescr iptionl ev i
ed, est ablished
orcol l
ectedbyanyaut horitywhat soev er,muni ci
pal ,pr ovinci alor
national,from whi chtaxest hegr ant eei sher ebyexpr esslyexempt ed.
(Emphasi ssuppl ied)

On10June1985,t hemuni cipaltreasurerofTupi,Sout hCot abato

assessedRCPIrealpropertytaxesf rom 1981to1985.Themuni
4 
ci
pal
tr
easurerdemandedt hatRCPIpay₱166, 810asrealpr opert
yt axon
i
tsr adi
o stat
ion buil
ding in BarangayKabl on,as wel las on its
machineryshed,radior el
ayst ati
ont owerandi t
saccessor ies,and
generat
ingset
s,basedont hef oll
owingtaxdeclar
ati
ons: 5

1. Tax Decl
arat
ion No.
- Radi
ost
ati
onbui
l
ding
7639
2. Tax Decl
arat
ion No.
- Machi
ner
yshed
7640
3. Tax Decl arati
on No. - Radio r el ay station t ower and
7641 accessor ies(100f eethigh)
4. Tax Decl arati
on No. - Two ( 2) units machi ner y[ l
ister
7642 generat i
ngset ]
RCPI pr otested t he assessment bef ore t he Local Boar d of
AssessmentAppeal s( "LBAA" )
.RCPIcl
6 
aimed t hatal li t
sassessed
properti
esar eper sonalpr oper tiesandt husexemptf rom t her eal
propertytax.Assumi ngt hatt heassessedpr operti
esar erealpr operty,
theyarest il
l exemptf rom r eal proper tytaxes.Sect ion3ofPr esidential
DecreeNo.464( "PD464" )st at est hatt obet axable,t hemachi ner y
shouldbeat t
achedt ot her ealest at
eandessent i
alformanuf acturi
ng,
commer cial,mining,i ndust rial,oragr i
culturalpurposes.RCPIcl aimed
that the assessed pr oper ti
es ar e not used f or manuf acturi
ng,
commer cial,mi ni
ng,i ndust ri
al,oragr iculturalpurposes.Besi des,t he
assessedpr oper t
iesar eat tachedt oabui l
dingonal otnotownedby
RCPI.

RCPIal sopointedoutt hatitsfranchiseexempt sRCPIf r

om " payi
ng
anyandal ltaxesofanyki nd,natureordescripti
oni nexchangef orit
s
paymentoft axequalt o oneand one- halfpercenton al lgross
receipt
sf rom the business conduct ed underi tsfranchise.
"RCPI
furt
herclaimedt hatanydev i
ati
onf rom i
tsfranchisewoul dviol
atethe
non-impair
mentofcont ractclauseoft heConst itut
ion.Finall
y,RCPI
statedthatthevalueofthepr opert
iesassessedhasdepr eci
atedsince
thei
racquisiti
oninthe1960s.

ThePr ov
inci
alAssessorofSouthCot abato("provi
ncialassessor"
)
opposedRCPI’scl
aimsonallpoi
nts.Theprovi
ncialassessorinsi
sted
thatt
heassessedproper
ti
esaresubj
ecttotherealpropert
ytax.

TheRul
i
ngoft
heLocal
Boar
dofAssessmentAppeal
s

I
ni tsDecisi
on7 dat
ed19May1995,t heLBAA ofKoronadal,South
Cotabat
oaf f
ir
medt henoti
cesofassessmentasvali
dandconsi st
ent
wit
ht helaw.Thepr oper
ti
escoveredbyTaxDecl ar
ati
onNos.7639,
7640,7641and7642ar erealpr
opert
iesforpur
posesofrealproper
ty
taxati
onunderPD 464.The" i
nl ieuofal ltaxes"cl ausei nRCPI’
s
franchi
sedoesnotexempti tsproper t
iesf r
om t her ealproper
tytax.
Finall
y,despi
tei t
spr ot
ests,RCPIdi dnotsubmi tev i
denceast othe
dateofacqui sit
ion,acquisi
ti
oncost ,andcondi ti
onoft heassessed
properti
est o supportitsclaim ofdepr eci
ation.TheLBAA,i nthe
absenceofcont rar
yevidence,rel
iedont hev ali
di t
yoft heNot i
ceof
Assessmentand on t he presumpt ion thatof fi
cialdut yhas been
regular
lyperformed.Thedi sposit
iv eportionoft heLBAA’ sdecisi
on
reads:

WHEREFORE,t heappell
antisherebyorder
edtopayt herealproper
ty
taxes,
incl
usi
veofallpenal
ti
es,surchar
gesandinter
estaccrui
ngasof
the date ofactualpayment,on t he pr
opert
ies cover
ed by Tax
Declar
ati
onNos.7639,7640,7641,and7642,ascomputed.

SOORDERED.
8

RCPIappealedtot heCBAA. RCPImai

9 
nt
ainedthatthe"i
nlieuofall
taxes"cl
auseinit
sf r
anchi
sef oreclosesthei mposi
ti
onoftaxesother
thanthefranchi
setax.RCPIal sor ei
terat
edi t
sargumentsbefor
et he
LBAA.Respondentassessor sr epeated thei
ropposit
ion t
o RCPI ’
s
appeal.

TheRul
i
ngoft
heCent
ral
Boar
dofAssessmentAppeal
s

InitsDecisi
on10 dated7Nov ember1996,t heCBAAdi smissedRCPI ’
s
appeal.TheCBAAhel dt hatRCPI’sli
abil
it
yf orthefranchisetaxdoes
notexemptRCPIf rom therealpropertytax.UnderRCPI ’sf r
anchi
se,
onlypersonalpr opertiessuchasr adio equipment,machi neryand
sparepartsareexemptf rom customsdut ies,tar
if
fsandot hertaxes.
TheCBAAr ul
edt hatRCPIwasl iableforther ealpropert
yt axont he
assessedproper t
ies.RCPIcoul dalsonoti nvokethenon- impairment
ofcont r
actclausesi ncenol egalrightofRCPIwasv iol
ated.The
disposi
ti
veport ionoft heCBAA’sdeci si
onreads:

WHEREFORE, t he Deci
sion r
endered by the Local Board of
AssessmentAppeal
softheProv
inceofSout
hCot abat
o,dat
ed19May
1995,is hereby AFFI
RMED and t he i
nstant appealis her
eby
DI
SMI
SSED.

SOORDERED.
11

TheRul
i
ngoft
heCour
tofAppeal
s

RCPIf i
led its petiti
on f
orr eview oft he CBAA r ul
ing bef orethe
appell
atecour t.Ini t
sDecisi
on12 dated29Mar ch2000,t heappel l
ate
courtmodi f
iedt heCBAAr uli
ng.Theappel lat
ecourtruledt hatSecti
on
14ofRA2036,asamendedbyRA4054,cl earl
yexempt sRCPIf r
om
tax on "radio equipment,machi nery,and spar e part
s needed i n
connecti
onwi thitsbusiness."Ther efore,RCPIisnotl iablef orreal
propert
yt axont hegener at
ingset s,andoni tsradior elaystati
on
tower and i ts accessori
es consi sti
ng of t wo uni ts of UHF
communi cationequi pment,powerdi str
ibuti
onunitboar ,andbat tery
charger
,whi char eactual
lyv ary i
ngt ypesofr adioequi pment .The
appell
atecour texplai
nedthus:

Thet oweruponwhi cht hesedi ff

erentt ypesofr adioequi pmentar e
mount edorat t
achedi s,howev er,subjecttor ealproper t
yt axsincea
toweri snotstri
ctl
yar adi
oequi pmentasi tonl yservesasasuppor t
forantennasorot hercommuni cati
onequi pmentmount edt hereonf or
thetransmissi
onandr ecepti
onofr adiosignals( Coll
ier’
sEncy clopedia,
Vol.22,p.127) .Norcoul di tbecl assif
iedasmachi nery,whi chi sa
combi nati
onofmechani caldevices(26Wor dsandPhr ases,p.7) ,for
withoutat t
achment st oit,at oweri smer elyast ructuredesi gned
pri
mar il
y withav i
ew t o elevati
on ( Webst er’
s New I nternational
Dicti
onaryoftheEngl i
shLanguage, 2ndEd. ,Unabridged) .

AsRCPI ’
staxexempt i
oncov ersonl yi t
sr adi
oequi pment ,machinery
,
andspar epartsessentialt
oitsbusi ness, iti
sliablef
orr ealtytaxonits
radi
ost ati
onbuildi
ng.Themachi neryshedi sl i
kewiset axableast he
samei saki ndofr ealpropertyf all
ingwi t
hint hecl assifi
cati
onof
buil
dingsorper manentst ructuresint endedt oshelterhumanbei ngs
ordomest i
canimals,ort or eceive,r etain,orconf inet hegoodsi n
whichaper sondeal s,ortohouset het oolsormachi neryheuses,or
theper sonsheempl oy sinhi sbusi ness( 5Wor dsandPhr ases,p.
877).
13
Thedi
sposi
ti
vepor
ti
onoft
heappel
l
atecour
t’
sdeci
sionr
eads:

WHEREFORE,t he decisi
on oft he CentralBoar d ofAssessment
Appealsis herebyMODI FI
ED.Pet i
ti
oneri s declar
ed exemptfrom
payi
ngt herealproper
tytaxesassesseduponi tsmachiner
yandradio
equipmentmount edasaccessor i
est oitsr elayt
ower .Thedeci
sion
assessi
ngt axesuponpet i
ti
oner’
sradiost ationbuildi
ng,machi
nery
shed,andrelayst
ationtoweris,
howev er
,AFFI RMED.14

RCPIfil
ed a parti
almot i
on forr econsi
der
ati
on,clai
ming thati t
s
exempti
onfrom realpr opert
yt axappl iestotheradiorel
ayst at i
on
tower
,the radio stat
ion building,and t he machi
nery shed.The
15 

appel
l
atecourtdeni
edt hemot i
on. 16

TheI
ssues

RCPIf
il
edit
speti
ti
onforrevi
ewbef
oret
hisCour
t.RCPIpr
esent
edt
he
fol
l
owi
ngissuesf
orresol
uti
on:

1.Theappell
atecour
ter
redwhenitexcludedRCPI
’stower
,rel
ay
st
ati
onbui
l
dingandmachi
ner
yshedf
rom t
axexempti
on;and

2.Theappell
atecour
terr edwheni
tdi
dnotresol
vetheissueofnul
l
ity
ofthet axdeclar
ati
onsand assessment
sduet o non-i
ncl
usi
on of
depreci
ati
onall
owance.
17

TheRul
i
ngoft
heCour
t

Exempt
ionf
rom RealPr
oper
tyTax

Respondent sasser tthatRCPInotonl ychangeditsargument s,RCPI

alsomadei ncorrectarguments.RCPIearl
iermaintai
nedt hatit
sr adi
o
relayst ati
ont ower,radiostati
onbuildi
ng,andmachi neryshedar e
per sonalproperti
esandar ethusnotsubjecttother ealpropertytax.
RCPInow ar guest hatitsradiorel
ayst ati
on tower,r adi
o stati
on
building,andmachi neryshedaretax-
exemptbecauseoft he"i
nlieuof
allt axes"clauseinitsfranchi
se,whichexemptsRCPIf rom ther eal
est atetax.
RCPIcontendst hatthe"i
nl i
euofal ltaxes"clauseini t
samended
fr
anchiseexemptsitfrom payi
ngalltaxesotherthanfranchi
setax.I
t
i
st husnol ongernecessaryt odeterminewhet herthetower,rel
ay
stat
ion bui
ldi
ng,and machi ner
y shed ar er adio equipment f
or
purposesofexemptionfr
om therealestatet
ax.

RCPIalsostatesthatl
egi
sl
ati
veenact
mentsduri
ngt hependencyof
thi
spetit
ioncausedittol
oseandthenregai
nit
st ax-exemptst
atus.
RCPIenumeratedthus:

Fir
st,CongresspassedtheLocalGover
nmentCodethatwi
thdrewall
thetaxexempt i
onsexi
sti
ngatthetimeofi
tspassage—i
ncl
udingthat
ofRCPI’s.

Second,Congr ess enacted t

he fr
anchise oftelecommuni cati
ons
companies,suchasI slacom,Bel
l,I
slandCountry,Isl
aTel,TeleTech,
MajorTelecoms,andSmar t,
witht
he"inli
euofall
taxes"proviso.

Thir
d,CongresspassedRA 7925ent it
led" AnActtoPr omoteand
GoverntheDevelopmentofPhi l
ippineTel ecommunicat
ionsandt he
Deli
very ofPubli
c Telecommuni cati
ons Ser vi
ces"which,through
Secti
on23,mandatedtheequali
tyoft reatmentofservi
ceprovi
dersin
thetel
ecommunicati
onsindust
ry.
18

Wear
enotper
suaded.

Asf oundbyt heappel l

atecour t,RCPI ’
sradiorelaystat i
ontower , r
adio
stati
onbui l
ding,andmachi neryshedar erealpropertiesandar et hus
subjecttother ealproper tytax.Sect ion14ofRA2036, asamendedby
RA 4054,st atest hat" [i]
nconsi der ationoft hef r
anchi seandr i
ghts
hereby gr anted and any pr ov i
sion of l aw t o t he cont rar
y
notwithst
anding, thegr anteeshal lpayt hesamet axesasar enowor
may her eafter be r equir
ed by l aw fr
om ot her i ndividuals,
copartnershi
ps, pr i
v ate, publ ic or quasi -
publi
c associ ati
ons,
corporati
onsorj ointst ockcompani es, 
onr ealestat e,buildings and
otherper sonalpr oper t
yxxx. "Thecl
19 
earl anguageofSect i
on14
statesthatRCPIshal lpayt her ealest atetax.
The" inl
i
euofal lt
axes"clauseinSection14ofRA2036,asamended
byRA4054, cannotexemptRCPIf rom therealestatet axbecause the
same Sect i
on 14 expresslystat es 
that 
RCPI "
shal lpayt he same
taxes xxx on 
realestate,buil
dings xxx. "The" inl i
euofal lt
axes"
clauseinthet hir
dsentenceofSect ion14cannotnegat et hefi
rst
sentenceofthesameSect ion14,whi chimposest her ealestatetax
onRCPI .TheCour tmustgi veeffecttobot hprovisionsoft hesame
Section14.Thismeanst hattherealest at
etaxisanexcept iontot he
"i
nl i
euofall
taxes"cl
ause.

Subsequentl egi sl
ationshav er adi
cal
lyamendedt he" inl i
euofal l
taxes"cl ause i nf ranchises ofpubl i
c uti
li
ties.As RCPIcor rectly
obser ves,theLocalGov ernmentCodeof1991  "
withdr ew allthet ax
exempt i
onsexi sti
ngatt het i
meofi tspassage— i ncl udingt hatof
RCPI ’s" 
withr espectt ol ocalt axesli
ket her ealpr oper tytax.Al so,
Republ icActNo.7716( "RA 7716" )aboli
shedt hef ranchiset axon
telecommuni cationscompani esef f
ectiv
e1Januar y1996.Tor epl ace
thef ranchiset ax,RA7716i mposeda10per centv al ue-added- taxon
telecommuni cationscompani esunderSect i
on102 oft
20 
heNat i
onal
InternalRev enueCode.Thepr esentstateofthel awont he"inlieuof
alltaxes"clausei nfranchisesoft el
ecommuni cationscompani eswas
summar izedasf oll
ows:

Theexi stinglegisl
ativepol i
cyiscl ear l
yagai nstther evi
valoft he" i
n
l
ieu of al ltaxes" cl ause inf ranchi ses of t elecommuni cati
ons
compani es.Af tertheVATont elecommuni cat
ionscompani est ook
effectonJanuar y1,1996,Congr ess  nev er agai
nincludedt he"inli
eu
of al lt axes" clause i n any t elecommuni cati
ons f ranchise it
subsequent lyapprov ed.Also,from Sept ember2000t oJul y2001,al l
thef ourt
eent el
ecommuni cati
onsf ranchi sesappr ovedbyCongr ess
uniformlyandexpr esslystatet hatt hef ranchiseeshal lbesubj ectto
alltaxesundert heNat ionalInt
er nal Rev enueCode, exceptt hespecifi
c
tax.Thef ol
lowingissubst ant
iallyt heuni formt axpr ovi
sioni nthese
fourteenfranchises:

TaxProvisi
ons.— Thegrantee,itssuccessorsorassigns,shal
lbe
subj
ecttothepaymentofalltaxes,duti
es,f
ees,orchar
gesandot her
i
mpositi
onsundert heNati
onalI nter
nalRevenueCodeof1997,as
amended,andot herappli
cablelaws:Pr ov
ided,Thatnothingher ei
n
shallbe const r
ued as r epeali
ng any specifi
ct ax exempt ions,
i
ncent i
vesorpr i
v i
l
eges granted underanyr el
evantlaw:Pr ovided,
fur
ther,Thatal
lri
ghts,pr
ivi
leges,
benefit
sandexempt i
onsaccor dedto
exi
sting and f
uturet el
ecommuni cati
ons enti
ti
es shal
llikewise be
extendedtothegrantee.

Thus,af ter t he i mposition of t he VAT on t elecommuni cations

compani es,Congr ess r efused t o grant any t ax exempt ion t o
tel
ecommuni cations compani es t hatsoughtnew f r
anchises f r
om
Congr ess,exceptt heexempt i
onf r
om specifictax.Mor eimpor tant l
y,
theuni formt axpr ovi
sioni nt hesenew f r
anchisesexpr esslyst ates
thatthef ranchi seeshal lpaynotonl yal ltaxes,exceptspeci fict ax,
undert heNat i
onalI nternalRev enueCode,butal soalltaxesunder
"otherappl icablel aws. "Oneoft he "ot
herappl i
cablel aws"
 istheLocal
Gov ernmentCodeof1991,whi chempower sl ocalgov ernment st o
i
mposeaf ranchi set axont elecommuni cationscompani es.Thi s,to
rei
terate, i
st heexi sti
nglegi sl
at i
v epoli
cy.
21

RCPIcannotal so i nv oke t he equal i

tyoft r
eat mentcl ause under
Sect i
on 23 of Republ ic Act No. 7925.The f 22 
r
anchi ses of
Smar t
,I
23 
sl acom,Tel
24 
eTech,Bel
25 
l
,Maj
26 
or Telecoms, I
27 
sland
Count ry ,andI
28 
slaTel ,al
29 
lexpr essl ydeclaret hatt hef ranchi seeshal l
payt her ealest at et ax,usi ngwor dssimi l
art oSect i
on14ofRA2036,
asamended.Thepr ov isi
onsoft hesesubsequentt elecommuni cat i
on
franchi ses i mposi ng t he r eal est ate t ax on f ranchi sees
only conf irm thatRCPIi ssubj ectt other ealest atet ax.Ot her wise,
RCPI wi ll st ick out l ike a sor e t humb, bei ng t he onl y
telecommuni cationscompanyexemptf rom t her ealest atet ax,in
mocker yoft hespi ri
tofequal i
tyoft r
eatmentt hatRCPIi sinv oki ng, not
toment iont hev iol
at i
onoft heconst i
tutionalr uleonuni for mi t
yof
taxation.

Itis an elementaryr ul
ei nt axat
ion thatexempt i
ons are st
ri ctl
y
construedagainstthet axpayerandl iberal
l
yinfav orofthet axi ng
authorit
y.Iti
sthet axpayer’
sdut yt
oj usti
fytheexempt i
onbywor ds
tooplaintobemi st
akenandt oocategor i
calt
obemi sint
erpr
eted.
30
Excl
usi
onofDepr
eci
ati
onAl
l
owance

RCPIcontendsthatthetaxdeclarati
onsandassessmentscoveri
ngit
s
radi
or el
aystati
ont ower,r
adiost at
ionbuil
ding,andmachi
neryshed
arev oid because the assessors did notconsiderdepreci
ati
on
all
owanceintheirassessments.

Wehav eexaminedtherecordsoft hi
scaseandf oundt hatRCPIrai
sed
befor
et heLBAAandt heCBAAt henul l
i
tyoft heassessment sduet o
thenon- i
nclusi
onofdepr eciat
ionallowance.Ther ef ore,RCPIdidnot
rai
set hisissueforthefirstti
me.Howev er,eveni fweconsi derthi
s
i
ssue,undert he RealPr operty Tax Code depr eci ati
on al
lowance
appli
esonl ytomachiner
yandnott orealpropert
y .
31

WHEREFORE,weDENYt hepeti
ti
on.WeAFFIRM t
heDeci
sionoft
he
Cour
tofAppeal
sinCA-
G.R.SPNo.47446dat
ed29Mar
ch2000.

SOORDERED.

G.
R.No.127708Mar
ch25,
1999

CITYGOVERNMENTOFSANPABLO,LAGUNA,CI TYTREASUREROF
SAN PABLO,LAGUNA andTHESANGGUNI ANG PANGLUNSOD OF
SANPABLO, LAGUNA, pet
it
ioners,
vs.
HONORABLEBI ENVENIDO V.REYES,i nhiscapaci
tyasPresi
ding
Judge,RegionalTri
alCour t
,Br anch 29,San Pabl
o Ci
tyand the
MANI LAELECTRICCOMPANY,  
respondent
s.

GONZAGA- J.
REYES,
  :

Thi
sisapetit
ionunderRul
e45oft heRulesofCour ttoreview ona
pur
equesti
onoflawthedecisi
onoftheRegionalTri
alCourt(RTC)of
SanPabl
o City,Br
anch29i nCivilCaseNo.SP- 4359(96),ent i
tl
ed
"Mani
l
aElect
ri
cCompanyv s.Ci
tyofSanPablo,Laguna,
CityTr easurer
ofSanPabl oLaguna,andt heSangguniangPangl unsodofSanPabl o
City
,Laguna."TheRTC decl ar
edt heimposit
ionofaf ranchi
set ax
underSection2.09Arti
cleDofOr dinanceNo.56ot her wi
seknownas
theRev enueCodeoft heCi tyofSanPabl oasi neffect
iveandv oid
i
nsof arastherespondentMERALCOi sconcernedf orbeingv i
olat
ive
ofActNo.3648,Republ i
cActNo.2340andPD551.TheRTCal so
grantedMERALCO' Sclaimf orrefundoffranchiset axespaidunder
protest.

Thef
oll
owi
ngant
ecedentf
act
sar
eundi
sput
ed:

ActNo.3648 gr ant
ed t
he Escuder
o El
ectr
ic Ser
vice Companya
l
egisl
ati
vef r
anchi
seto mai
ntai
nandoper at
eanel ectri
cl i
ghtand
powersy st
em intheCit
yofSanPabl oandnear bymuni ci
pal
it
ies.
Secti
on10ofActNo.3648provi
des:

...I nconsi der ati

onoft hef ranchiseandr i
ghtsher eby
grant ed,t hegr anteeshal lpayunt ot hemuni ci
palt reasur y
ofeachmuni cipali
tyi nwhi chi tissuppl yingel ectri
ccur rent
tot he publ ic undert hi
sf ranchise,a t ax equalt ot wo
percent um oft hegr ossear ningsf rom electri
ccur rentsol d
orsuppl i
edundert hisf r
anchi sei neachsai dmuni cipality.
Saidt axshal lbedueandpay ablequar terlyandshal lbei n
l
ieuofanyandal lt axesofanyki ndnat ureordescr i
ption
l
ev ied, establi
shedorcol l
ect edbyanyaut hor i
tywhat soev er,
muni cipal,provincialori nsul ar,nowori nt hef uture,oni ts
poles, wi r
es, i nsul ator, swi tches, t ransf ormer s, and
struct ures, installations, conduct or
s, and accessor i
es
placedi nandov erandunderal lpublicpr operty,incl uding
publ icst reet
sandhi ghway s,pr ovincialroads,br i
dgesand
publ ic squar es,and on i tsf ranchise,r i
ghts.pr iv i
leges,
recei pts,revenuesandpr ofitsf rom whi cht axest hegr antee
i
sher ebyexpr esslyexempt ed.

Escudero'
s fr
anchi
se was transf
err
ed to t he pl
aint
if
f(her
ein
respondent
)MERALCOunderRepubl
icActNo.2340.

Pr
esi
dent
ialDecr
eeNo.551wasenact
edonSept
ember11,1974.
Sect
ion1t
her
eofpr
ovi
dest
hef
oll
owi
ng:

Sec.1.Anypr ovisi
on ofl aw orlocalor dinance tothe
contrarynotwit
hst anding,thef r
anchiset axpay abl
ebyall
grantees off r
anchi se t o generate,di str
ibute and sel
l
el
ectric cur
rentf orl i
ght ,heatand powershal lbe t
wo
percent(2%)oft heirgr ossreceipt
sr eceivedf rom t
hesale
ofelectriccurr
entandf rom transactionsi ncidenttothe
generati
on,dist
ributionandsal eofelect r
iccur r
ent.

Suchf r
anchisetaxshal lbepay abl
etot heCommi ssionerof
Inter nalRevenueofhi sdulyaut hori
zedr epresent ati
veonor
bef or ethetwentiethdayoft hemont hf oll
owingt heendof
eachcal endarquar t
erormont hasmaybepr ovidedi nthe
respect i
vefranchiseorper ti
nentmuni cipalregul at
ionand
shal l,anyprov i
sionoft heLocalTaxCodeoranyot herl
aw
tot hecont rarynot withstanding,bei nlieuofal ltaxesand
assessment sofwhat evernat ureimposedbyanynat i
onal
or l ocalaut horit
y on ear nings,r eceipts,i ncome and
privilege ofgener ati
on,di str
ibuti
on and sal e ofel ectri
c
curr ent.

RepublicActNo.7160,ot herwiseknownast he" LocalGover

nment
Codeof1991"( herei
naft
erreferr
edt oasLGC)t ookeffectonJanuary
1,1992.ThesaidCodeaut hori
zestheprov i
nce/citytoimposeataxon
businessenjoyi
ngaf ranchiseatar at
enotexceedi ngf i
ft
ypercent
(50%)ofone per cent( 1%)oft he gross annualr ecei
ptsfort he
precedingcal
endaryearreal
izedwithi
nitsjuri
sdicti
on.

OnOct ober5,1992,t
heSangguniangPanglunsodofSanPabl oCity
enact
edOr di
nanceNo.56,other
wiseknownast heRevenueCodeof
theCityofSanPabl o.ThesaidOrdi
nancetookef f
ectonOctober30,
1992.
 1

Sec.2.
09,
Art
icl
eDofsai
dOr
dinancepr
ovi
des:

Sec.2.
09.Franchi
seTax— Ther
ei sher
ebyimposedatax
onbusinessenjoy
ingafr
anchi
se,atarateoff
if
typer
cent
 (
50%)ofoneper cent( 1%)oft hecrossannualrecei
pts,
whi
chshalli
ncl
udebot hcashsal esandsalesonaccount
r
eal
izedduri
ngt
hepr ecedingcal
endaryearwit
hint
hecit
y.

Pursuantt ot he above-quoted Secti

on 2.
09,the pet i
tionerCity
Treasurersenttopr i
vat
er espondentalet
terdemandingpay mentof
theaforesaidfranchi
set ax.From 1994to1996,pri
v at
er espondent
paid"underprotest
"atotalamountofP1,857,
711.
67. 
2

The pr
ivat
er espondentsubsequentlyfi
led thi
s acti
on beforethe
Regi
onalTrialCourttodeclar
eOr di
nanceNo.56nul landvoidinsof
ar
as iti mposes t he franchi
se t ax upon pr ivat
e respondent
MERALCO 3
 andtoclaimforarefundofthetaxespaid.

TheCourtruledi
nf av
orofMERALCOanduphel di
tsargumentthatthe
LGCdi dnotexpressl
yorimpli
edl
yrepealt
hetaxexemption/i
ncent
ive
enjoyedbyitunderit
schart
erThedisposi
ti
veport
ionoft hedeci
si
on
reads:

WHEREFORE,t heimpositi
onofaf ranchisetaxunderSec.
2.09, Arti
cleDofOr di
nanceNo.56ot herwiseknownast he
Rev enue Code oft he City ofSan Pabl o,is declar
ed
i
nef fectiv
e and nul land v oidinsof aras t he plai
nti
ff
MERALCOi sconcer nedforbeingofRepubl icAct.No.2340,
PD 551,andRepubl i
cActNo.7160anddef endantsare
order ed tor ef
und tot he plai
nti
fft he amountofONE
MI LLION EI GHT HUNDRED FI FTY SEVEN THOUSAND
SEVEN HUNDREDELEVEN &67/ 100( P1,857,
711.67)and
suchot heramount sasmayhav ebeenpai dbyt heplai
nti
ff
undersai dRev enueOrdi
nanceNo.56af t
erthef i
ll
i
ngofthe
compl ai
nt. 
4

SOORDERED.

I
tsmoti
onf orrecor
dsf orreconsi
der
ati
onhav i
ngbeendeniedbythe
t
ri
alcourt
. 
5
 t
hepetit
ionersfil
edtheinstantpeti
ti
onwi t
hthisCour
t
r
aisi
ngpurequesti
onofl awbasedonthef ol
l
owinggrounds:
 I
.RESPONDENT JUDGE GRAVELY ERRED I N
HOLDINGTHATACTNO.3648,REPUBLI CACT
NO2340ANDPRESI DENTI
ALDECREENO.551,
ASAMENDED,I NSOFARASTHEYGRANTTAX
I
NCENTIVES,PRIVI
LEGESANDI MMUNITIESTO
PRIVATE RESPONDENT, HAVE NOT BEEN
REPEALEDBYREPUBLI CACTNO.7160.

I
I.RESPONDENT JUDGE GRAVELY ERRED IN
RULI
NGTHATSECTI ON193OFREPUBLICACT
NO.7160 HAS NOT WI THDRAWN THE TAX
I
NCENTIVES, PRI
VILEGES AND I
MMUNI TI
ES
BEI
NG ENJOYED BY THE PRI VATE
RESPONDENTUNDERACTNO.3648REPUBLI C
ACTNO.2340ANDPRESI DENTI
ALDECREENO.
551ASAMENDED.

I
II
.RESPONDENT JUDGE GRAVELY ERRED I
N
HOLDING THAT THE FRANCHI SE TAX IN
QUESTION CONSTITUTESAN I
MPAI
RMENTOF
THECONTRACTBETWEENTHEGOVERNMENT
ANDPRI VATERESPONDENT.

Petit
ioners'posi t
ioni st hatRA7160( LGC)expressl
yr epealedActNo.
3648,Republ i
cActNo.2340andPr esi
dent i
alDecree551andt hat
pursuantt ot hepr ovi
si onsofSect i
ons137and193oft heLGC,t he
provinceorci t
ynow hast hepowert oimposeaf ranchiset axona
businessenj oyingaf ranchise.Petiti
onersr el
yonther uli
ngi nthecase
ofMact
  anCebuI nt er
nat i
onalAirportAut hori
tyvs.
 Mar cos 6
 wheret he
SupremeCour theldt hatt heexempt ionfrom realpropertytaxgr anted
toMact anCebuI nternationalAirportAut hori
tyunderi t
schar terhas
beenwi thdrawnupont heef f
ecti
vityoftheLGC.

I
naddi t
ion,t
hepetiti
oner
sciteinthei
rMemorandum datedDecember
8,1993anadmi ni
str
ati
veinter
pret
ati
onmadebyt heBur eauofLocal
Government Finance of the Depart
ment of Finance inits 3rd
i
ndorsementdat edFebruary15,1994t otheeffectthattheearli
er
rul
i
ngoft heDepartmentofFinancethathol
der
soff r
anchisewhich
contai
nthephrase" i
nlieuofallt  
axes"pr
oviso 
areexemptfrom the
paymentofanykindoft axi
snol ongerappl
icabl
eupontheeffect
ivit
y
oftheLGCi nview ofthewithdrawaloftaxexemptionpri
vi
legesas
provi
dedinSect
ions193and234t her
eof.

Wer
esol
vet
orev
erset
hecour
taquo.
 

Thepi vot
alissuei swhethertheCityofSanPabl
omayi mposealocal
franchi
setaxpur suanttotheLGCupont heMani
laElectri
cCompany
whi chpaysat axequaltot wopercentofi
tsgr
ossreceipt i
s nl
i
euof al
l
taxesandassessment sofwhat evernat
urei
mposedbyanynat ional
orlocalauthorit
yonsav ingsorincome.

I
tisnecessar
ytor
epr
oducet
heper
ti
nentpr
ovi
sionsoft
heLGC.

Sec. 137 —  Franchise Tax — Not withstandi

ng any
exempt iongr antedbyanyl aw orot herspeci allaw,the
province may i mpose a t ax on busi ness enjoy i
ng a
fr
anchi se,atar atenotexceedingf if
typer cent50%ofone
percent1%oft hegr ossannualreceiptsf orthepr ecedi
ng
calendary earbasedont hei
ncomi ngr eceipts,orreali
zed,
withinitster
ri
tor i
aljuri
sdi
cti
on....

Sec.151—  ScopeofTaxi ngPower s —Exceptasot herwise

provi
dedi nthi
sCode, t
heci t
y ,maylevythetaxes,fees,and
charges whi ch t he pr ovince or muni cipal
it
y may
i
mpose: Pr
  ov i
ded,
howev
  er, That t he taxes, fees and
charges levi
ed and collected by highly urbani
zed and
i
ndependentcomponentci t
iesshal laccruet othem and
dist
ribut
edinaccordancewi t
ht heprovisi
onsoft hi
sCode.

Theratesoft axesthatt
hecitymaylevymayexceedt he
maximum r at
esall
owedfortheprovi
nceormuni
cipal
it
yby
notmor et han fi
ft
ypercent(50%)exceptthe r
ates of
prof
essionalandamusementtaxes.

Sec.193 — Wit
hdr
awalofTax Exempti
on Pri
vi
leges 
—
Unlessot
her
wisepr
ovi
dedi
nthi
sCode,taxexemptionsor
 i
ncent i
vesgr antedt o,orpr esentl
yenjoyedbyallper sons,
whethernat uralorjuridical,i
ncludi
nggovernment-ownedor
control
led cor porations, except l ocal water distri
cts,
cooperati
vesdul yregi steredunderR. A.6938,non-st ock
andnon- profithospi talsandeducat i
onalinst
it
utions,are
herebywithdrawnupont heeffecti
vi
tyofthi
sCode.

Sec.534( f
)— RepealingClause— Al lgeneralandspecial
l
aw, act s, ci
ty char t
ers, decrees, execut i
ve orders,
procl
amat i
on and admi ni
strat
iver egulat
ions,orpar tor
partst hereofwhi ch arei nconsistentwi th any ofthe
provi
sionsoft hi
scodear eher ebyr epealedormodi fi
ed
accordingly.

Sec.534( f
),therepeal
ingclauseoftheLGC,pr ov i
desthatal
lgeneral
and speciall aws,act ,ci
ty chart
ers,decr ees,executiv
e orders,
proclamati
onsandadmi ni
strat
iver
egul ati
onsorpar t
st her
eofwhich
areinconsist
entwi thanyoft heprovisionsoft heCodear ehereby
repealedormodi f
iedaccor
dingly
.

Thisclausepartakesoft
henat ur
eofageneralrepeali
ngclause. 
7
 I
tis
cert
ainlynotanexpressrepeal
ingcl
ausebecausei tf
ail
stodesignat e
thespecifi
cactoractsidenti
fi
edbynumberort it
le,t
hatareintended
tober epeal
ed.
 8

Was t her
e an impl
ied r
epealby Republi
c ActNo.7160 ofthe
MERALCOf r
anchi
seinsof
arasthelat
teri
mposesa2%t ax"
inli
euof
al
ltaxesandassessmentsofwhat
evernatur
e"?

Wer
uleaf
fi
rmat
ivel
y.

Wear emi ndfuloft heest abli

shedr ul
et hatrepealsbyi mpl i
cat ionare
notfavoredasl awsar epr esumedt obepassedwi t
hdel i
ber ationand
ful
lknowl edgeofal ll awsexi sti
ng ont hesubj ect.A gener allaw
cannotbe const rued t o hav er epealed a speci allaw by mer e
i
mpl i
cati
onunl essthei ntentt orepealoral teri
smani f
est 
9
 andi tmust
be convincingly demonst rat
ed t hatt he t wo laws ar e so cl earl
y
repugnantandpat entlyinconsi stentthattheycannotco- exist. 
10
Iti
sourv i
ewt hatpeti
ti
onscor r
ectlyrel
yont heprov i
sionsofSections
137and193oft heLGCt osuppor ttheirpositi
ont hatMERALCO` stax
exemptionhasbeenwi t
hdrawn.Theexpl i
citlanguageofSect i
on137
which aut hori
zes t he pr ovince t o i mpose f ranchi
se t ax
"not
withst
andinganyexempt i
ongr antedbyanyl aw orot herspecial
l
aw"i sall
-encompassingandcl ear.Thef ranchiset axi simposable
despi
teanyexempt ionenjoyedunderspeci allaws.

Sec.193but tressest hewi thdr awalofext antt axexempt i

onpr i
vileges.
Byst atingt hatunl essot herwi sepr ov i
dedi nt hisCode, taxexempt ions
ori ncentivesgr antedt oorpr esentlyenj oy edbyal lper sonswhet her
natural or j ur i
dical,i ncludi ng gov er
nment -
owned or cont r
ol l
ed
corpor ati
ons except1)l ocalwat erdi strict
s,2)cooper atives dul y
registeredunderR. A.6938, (
3)non- stockandnon- profi
thospi t
al sand
educat ionali nst i
tuti
ons,ar ewi thdrawnupont heef f
ectivi
tyoft hi
s
code,t heobv i
ousi mpor tist ol i
mitt heexempt ionst ot het hree
enumer atedent it
ies.I tisabasi cpreceptofst at utoryconst ruction
thatt heexpr essment i
onofoneper son,t hi
ng,act ,orconsequence
excludesal lot hersasex pr essed i nt he f amiliarmaxi m expr essio
untusestexcl usioalterius.  
11
Intheabsenceofanypr ov i
sionoft he
Codet ot hecont rary,andwef i
ndnoot herpr ov i
sioni npoi nt,any
existing tax exempt ion ori ncentive enj oyed by MERALCO under
existinglawwascl earl
yintendedt obewi thdrawn.

Readi ngt ogetherSect ions137and193oft heLGC,weconcl udet hat

undert heLGCt hel ocalgov ernmentunitmaynowi mposeal ocalt ax
atar at enotexceedi ng50%of1%oft hegr ossannualr ecei
ptsfort he
precedi ng cal endary earbased on t he i ncoming r eceipt
sr ealized
withi
ni tst erri
torialjurisdi
ction.Thelegislati
vepur poset owithdr aw
taxpr ivilegesenj oyunderex isti
nglaworchar terisclear l
ymani f
est ed
by t he l anguage used i n Sections 137 end 193 cat egoricall
y
withdr awi ng such exempt i
on subject onl y to t he except ions
enumer at ed.Sincei twoul dbenotonl yt ediousandi mpract
icalt o
attemptt oenumer atealltheexisti
ngstatutesprovidingf orspecial t
ax
exempt ionsorpr ivil
eges,t heLGC pr ovided foran expr ess,al beit
gener al,wi t
hdrawalofsuch exempt ions orpr i
vil
eges.No mor e
unequi v ocallanguagecoul dhav ebeenused.
Iti strue t hatthe phr ase "i
nl ieu ofal lt axes"f ound i n speci al
franchiseshasbeenhel dinsev eralcasest oexemptt hef ranchise
holderf rom paymentoft axonitscor poratefranchi seimposedoft he
Inter
nalRev enueCode,ast hechar terisi nt henat ureofapr ivate
contractand t he exempt i
on is par toft he i nducementf ort he
acceptance oft he f r
anchise,and t hatt he imposi ti
on ofanot her
franchiset axbyt helocalauthori
tywoul dconst i
tuteani mpai rmentof
contractbet weent hegov ernmentandt hecor porati
on.  
12
Butthese
"magic wor ds"cont ained int he phr ase "shal lbe inl ieu ofal l
taxes''
  
13
havet ogi v
ewayt otheper emptoryl anguageoft heLGC
specifi
cal l
ypr ov
idingforthewithdr awalofsuchexempt i
onpr i
vil
eges.

Accor di
ngl yi Mact
n  anCebuI nternati
onalAirportAuthori
tyv s.
Mar cos.  
14
t
hi sCour theldthatSect i
on193oft heLGCpr escri
besthe
generalr ul e, v
iz.
,t he tax exempt i
on ori ncenti
ves,gr anted t
o or
presentlyenj oyedbynat ur
alorj uri
dicalpersonsar ewithdrawnupon
the ef f
ect i
v i
ty oft he LGC exceptwi thr espectt ot hose enti
ti
es
expresslyenumer ated.Int he same v ei
n,We musthol dt hatthe
expresswi t hdrawaluponef f
ectivi
tyoft heLGC ofal lexempt i
ons
exceptonl yaspr ovidedtherei
n,cannol ongerbei nvokedbyMer al
co
todisclaiml i
abili
tyforthelocaltax.

Pri
vater espondentsf ur
therargue t
hatt he "i
nl i
eu of "provisi
on
contai
nedi nPD551,Act .No.3648andRA2340doesnotpar takeof
the nature ofan exempt i
on,butisa" commut at
ivet ax".This
content
ionwasr aisedbutwasnotuphel din CagayanElectri
cPower
andLightCo. I
nc. v
s. Commissi
onerofInt
ernalRevenue  
15
wher
einthe
SupremeCour tstated:

...Congr
esscoul dimpairpeti
ti
oner'
slegi
slat
ivef r
anchise
bymakingitli
ableforincometaxfrom whichher etof
oreit
wasexempt edbyv ir
tueoft heexemptionprovidedf orin
sect
ion3ofitsfr
anchise...

...Republ
icActNo.5431,i
namendi ngsecti
on24oft he
TaxCodebysubj ecti
ngtoincomet axallcorporatetax
payer
snotexpr
esslyexempt
edtherei
nandinsection27of
the Code,had the eff
ect of wit
hdr
awing petiti
oner'
s
 exempt
ionf
rom i
ncomet
ax...

Pri
vater espondent '
si nvocat i
onoft henon- i
mpairmentclauseoft he
Constituti
on i s accor dingl y unav ail
ing.The LGC was enact ed in
pur
suanceoft heconst i
tut ionalpol i
cyt oensur eautonomyt olocal
government s16 
andt oenabl et hem t oattainfull
estdevelopmentas
sel
f-r
eliantcommuni t
ies.  
17
Thusi n MactanCebuI nt
ernati
onalAir
port
Authorityvs. Mar cos, supra,t hisCour tpointedout,i
nuphol di
ngt he
wit
hdr awaloft her ealestat et axexempt i
onpr evi
ousl
yenjoyedbyt he
MactanCebuI nternational Ai r
por tAut hori
ty,asfol
lows:

Not et hatasr epr oducedi nSect ion234( a)t hephr ase' '
and
any gov ernment -owned or cont roll
ed cor por ation so
exemptbyi t
schar ter "wasexcl uded.Thej ust i
f i
cat ionf or
thisrest r
ictedexempt i
oni nSect ion234( a)seemsobv i
ous:
tol i
mi tfur thert axexempt i
onpr ivil
eges,especi allyi nl ight
oft hegener alpr ovisiononwi thdrawaloft axexempt ion
privil
eges i n Sect i
on 193 and t he specialpr ov i
si on on
withdr awalofexempt i
onf rom pay mentofr ealpr oper t
y
taxesi nt hel astpar agr aphofSect ion234.Thesepol i
cy
consi derations ar e consi stentwi t
ht he St ate pol icy t o
ensur eaut onomyt olocalgov er nment sandt heobj ect iveof
the LGC t hatt heyenj oygenui ne and meani ngf ull ocal
autonomy t o enabl e t hem t o at t
ain t hei r f ullest
dev el
opmentassel f-reliantcommuni ti
esandmaket hem
effectivepar tnersi nt heat tainmentofnat ionalgoal s.The
powert ot axi st he mostef fect i
vei nstrumentt or aise
neededr ev enuest of inanceandsuppor tmy riadact iv i
t i
es
oflocalgov ernmentuni tsf ort hedel iveryofbasi cser vices
essent ialtot hepr omot ionoft hegener alwel fareandt he
enhancementofpeace,pr ogr ess,and pr osper ityoft he
peopl e.Itmayal sober elev antt or ecallthatt heor iginal
reasons f ort he wi thdr awaloft axexempt ion pr ivileges
grantedt ogov ernment -
ownedorcont roll
edcor por ations
andal lotheruni tsofgov er nmentwer et hatsuchpr i
v il
ege
resultedi nser ioust axbaseer osi onanddi stor tionsi nt he
taxt reatmentofsi mi larlysi tuat edent erprises,andt her e
 wasaneedf ortheseentit
iestosharei
ntherequir
ements
ofdevel
opment,fiscalorotherwi
se,bypayi
ngt hetaxes
andot
herchargesduef r
om them. 
18

TheCour
tther
einconcl
udedt
hat
:

not
hingcanpr eventCongressfrom decreeingt hateven
i
nstr
ument al
it
ies or agenci es of t he Gov er
nment
per
forminggov ernmentalf
unct
ionsmaybesubj ectt ot
ax.
Whereitisdonepr eci
selyt
oful
fil
laconsti
tuti
onalmandat e
andnati
onalpolicy,noonecandoubtit
swi sdom. 19

Thepowert otaxisprimar
il
yv estedi nCongr ess.However,i nour
j
uri
sdict
ion,itmaybeexerci
sedbyl ocallegi
slati
vebodi
es,nol onger
merel
ybyv i
rt
ueofav al
i
ddelegati
onasbef ore,butpur
suanttodi r
ect
aut
horit
yconf er
redbySecti
on5,Ar ticl
eXoft heConsti
tut
ion.
  
20
Thus
Art
icl
eX, Secti
on5oftheConsti
tuti
onr eads:

Sec.5—EachLocalGov er
nmentuni tshallhavethepower
tocreat
eitsownsour cesofr evenueandt ol ev
ytaxes,f
ees
andchargessubjecttosuchgui delinesandl i
mitat
ionsas
theCongressmaypr ovide,consistentwiththebasicpoli
cy
oflocalautonomy .Such t axes,f eesand chargesshall
accr
ueexclusi
vel
yt otheLocal Gov ernments.

Thei mportantlegaleffectofSecti
on5i st hathenceforth,in
i
nterpret
ing statut
ory provi
sion on muni
cipalfiscalpower s,
doubtswi l
lhavetoresol
v edi
nf av
orofmuni
cipalcorpor
ations. 
21

Ther eisf urtherbasi sforti

reconclusi
onthatthenon- impairmentof
cont r
actcl ausecannotbei nvokedt oupholdMer alco'
sexempt ion
from t hel ocalt ax.Escudero Elect
ricCo.wasor i
ginall
ygi vent he
l
egi sl
ativ
ef r
anchi seunderAct.3648t ooperateanel ectri
clightand
powersy stem int heCityofSanPabl oandnearbymuni cipali
ti
es.The
term oft hef r
anchi seunderAct.No.3648i saper iodoff if
tyy ears
from t heAct '
sappr ovali
n 1929.Thesai dl aw provided thatt he
franchisei sgr ant edupont heconditi
onthati tshallbesubj ectt o
amendment ,orrepealbyt heCongr essoftheUni t
edSt ates. 
22
 Under
the1935.  23
 t
he1973  24
 andthe1987  25
 Consti
tutions,nof ranchiseor
ri
ghtshal lbegr anted exceptundert hecondi t i
ont hatitshal lbe
subjecttoamendment ,alt
erationorrepealbyt heNat i
onalAssembl y
whent hepubl i
ci nt
er estsor equir
es.Wi thorwi thoutt hereservat i
on
clause,franchi sesar esubj ectt oalter at
ionst hroughar easonabl e
exerciseoft hepol i
cepower ;theyareal sosubj ecttoal ter
ationbyt he
powert otax, whichlikepol icepowercannotbecont ractedaway .
 26

Finall
y,whi l
et hemat teri
snotofcont r
oll
ingsignif
icance,theCourt
notest hatwher east heor i
ginalEscuderof r
anchiseexempt ed the
franchi
sehol derf r
om allt axeslevi
edorcol l
ected" now orint he
future"
  
27
t
hisphr aseisnot
iceablyomi t
tedinthecount erpar
tprov
ision
ofP. D.551;t hatsaidomi ssionisintendednott of orecl
osefuture
taxesmayr easonablybededucedbyst atut
oryconstructi
on.

WHEREFORE,t heinst
antpet
it
ioni
sGRANTED.Thedeci si
onoft he
RegionalTr
ialCourtofSan Pabl
o Ci
ty,appeal
ed f
rom is her
eby
rever
sedandsetasi deandthecomplai
ntofMERALCO i shereby
DISMISSED.

Nopr
onouncementast
ocost
s.

SOORDERED.

LGT

G.
R.No.L-
24756      
Oct
ober31,
1968

CITYOFBAGUI
O, 
plai
nti
ff-
appell
ee,
vs.
FORTUNATODELEON,  
defendant-
appel
l
ant
.

TheCit
yAtt
orneyf
orplai
nti
ff
-appel
l
ee.
For
tunat
odeLeonforandinhisownbehal
fasdef
endant
-appel
l
ant
.

J.
FERNANDO,
  :
Int hisappeal ,al owercour tdeci sionuphol di
ngt hev al
idit
yofan
1
ordinance  oftheCi t
yofBagui oimposi ngal icensef eeonanyper son,
fi
rm,ent i
tyorcor porationdoi ngbusi nessi nt heCi tyofBagui oi s
assai ledbydef endant -
appel lantFor tunat odeLeon.Hewashel dl i
abl e
as a r ealestat e dealerwi th a pr oper tyt her ein wor th mor et han
P10, 000,butnoti nexcessofP50, 000,andt her efor
eobl igatedt opay
undersuch or di
nance t he P50 annualf ee.Thati st he pr incipal
quest ion.Inaddi ti
on,t herehasbeenaf irm anduny ieldingi nsistence
bydef endant -
appellantoft hel ackofj urisdict i
onoft heCi tyCour tof
Bagui o,wher et he sui tor i
ginat ed,a compl ai
nthav ing been f i
l
ed
againsthi m byt heCi tyAt torneyofBagui of orhisf ailuret opayt he
amountofP300asl icensef eecov eri
ngt heper iodf rom t hef i
rst
quar terof1958t ot hef ourthquar terof1962,al legedl y,inspi t
eof
repeat eddemands.Norwasdef endant -appel lantagr eeabl et osucha
suitbei ngi nsti
tutedbyt heCi tyTr easur erwi thoutt heconsentoft he
May or ,whi chf orhim wasi ndispensabl e.Thel owercour twasofa
diff
er entmi nd.

Init
sdeci si
onofDecember19,1964,i tdecl
aredtheabov eor dinance
asamended,v ali
dandsubsi sti
ng,andhel ddefendant -
appellantliabl
e
forthef eest her
ei nprescribedasar ealestatedeal er.Hence,t hi
s
appeal.Assumet hevalidit
yofsuchor dinance,andt herewoul dbeno
question aboutt he liabil
it
y ofdef endant-
appellantf ort he abov e
l
icensef ee,itbei
ngshowni ntheparti
alsti
pulati
onoff acts,thathe
was" engagedi nther entalofhispropertyinBagui o"deriv
ingi ncome
ther
efrom dur i
ngt heperiodcoveredbyt hefir
stquar terof1958t othe
fourt
hquar terof1962.

Thesour ceofauthorit
yforthechall
engedordi
nanceissuppl i
edby
Republi
c Act No. 329, amendi ng t he ci t
y char ter of
2
Baguio  empoweri
ngi ttofi
xthel
icensefeeandregul
ate"busi
nesses,
tr
adesandoccupat ionsasmaybeest abl
i
shedorpr act
icedinthe
Cit
y."

Unlessitcanbeshownt henthatsuchagrantofaut
horit
yisnotbroad
enought ojust
if
yt heenactmentoft heordi
nancenow assail
ed,the
decisi
on appeal
ed f r
om mustbe af f
ir
med.The t ask conf
ronti
ng
defendant-
appel
lant,t
heref
ore,wasf arfr
om easy.Whyhef ai
ledis
under
standable,consi
der
ingthatev
enacur sor
yr eadi
ngoftheabov
e
amendmentr eadil
ydiscl
osesthatt
heenactmentoft heordi
nancei
n
quest
ionfi
ndssuppor ti
nthepowerthusconfer
red.

Nori st hequest i
onr aisedbyhi m ast ot hev alidityt hereofnov elin
charact er.In Medi nav .Ci tyofBagui o, 
3
t
heef f
ectoft heamendat ory
sectioni nsof arasi twoul dexpandt hepr eviouspowerv est edbyt he
cit
ychar terwascl ar if
iedi nt heset er ms:" Appel l
ant sappar entlyhav e
i
nmi ndsect ion2553,par agr aph( c)oft heRev isedAdmi nistrat i
ve
Code,whi chempower st heCi tyofBagui omer elyt oi mposeal icense
feef ort hepur poseofr at ingt hebusi nesst hatmaybeest abl i
shedi n
theci ty.Thepowerast husconf err
edi sindeedl i
mi ted,asi tdoesnot
i
ncludet hepowert ol evyat ax.ButonJul y15, 1948, Republ icActNo.
329wasenact edamendi ngt hechar terofsai dci tyandaddi ngt oits
powert ol i
censet hepowert ot axandt or egul at
e.Andi ti spr ecisely
havingi nv iewt hi
samendmentt hatOr dinanceNo.99wasappr ov edi n
ordert oi ncr ease t he r ev enues oft he ci ty
.I n ouropi nion,t he
amendmentabov eadv er tedt oempower st heci tycounci lnotonl yt o
i
mposeal icensef eebutal sot ol ev yat axf orpur posesofr ev enue,
mor esowheni namendi ngsect ion2553( b) ,t
hephr ase' aspr ov ided
bylaw'hasbeenr emov edbysect i
on2ofRepubl icActNo.329.The
cit
ycounci lofBagui o,ther ef ore,hasnowt hepowert ot ax,t ol icense
andt or egulatepr ov idedt hatt hesubj ectsaf f
ect edbeoneoft hose
i
ncluded i n t he char ter .I n t his sense, t he or di
nance under
consi derationcannotbeconsi dered ultrav i
res whet heritspur posebe
tolev yat axori mposeal i
censef ee.Thet erminol ogyusedi sofno
consequence. "

Itwouldbeanundueandunwar r
antedemascul ati
onoft heabov e
powert husgr antedi fdef
endant-appellantwer etobesust ai
nedinhis
contenti
ont hatnosuchst at
utoryaut hor i
tyfortheenactmentoft he
chall
engedor dinancecouldbedi scernedf rom thelanguageusedi n
the amendat or yact .Thatis aboutal lthatneeds t o be sai
di n
upholdi
ngt hel owercour t
,consideringt hattheCityofBaguiowasnot
devoidofaut hor i
tyinenacti
ngthispar ticul
arordinance.Asment i
oned
at t he out set , however, defendant -
appell
ant likewi
se al l
eged
proceduralmi ssteps and asserted thatt he chall
enged ordi
nance
suf
feredf
rom cer
tai
nconst
it
uti
onali
nfi
rmi
ti
es.Tosuchpoi
ntsr
aised
byhim,weshal
lnowtur
n.

1.Defendant -
appellantmakesmuchoft heallegedl ackofj uri
sdiction
oftheCi tyCour tofBagui oi nt hesui tf orthecol lecti
onoft her eal
est
atedeal er'
sf eef rom himi nt heamountofP300.Hecont ended
befor
et hel owercour t,andi tishi scont entionnow,t hatwhi let he
amountofP300soughtwaswi thint hejurisdi
ct i
onoft heCit yCour tof
Baguiowher et hi
sact ionor i
ginat ed,sincet hepr i
ncipalissuewast he
l
egali
tyandconst i
tutionali
tyofthechal lengedor dinance, i
tisnotsuch
Cit
yCour tbuttheCour tofFirstInst ancet hathasor i
ginal j
urisdi
ction.

Ther ei sher eami sapprehensionoft heJudi ciar

yAct .TheCityCour t
hasj urisdiction.Onlyrecent l
y,onSept ember7,1968t obeexact ,we
rejected a cont enti
on si milar i n char act
er i n Nemenzo v .
Sabi l
lano. 
4
Thepl ai
ntif
fint hatcasef i
ledacl aimf orthepaymentof
his sal ary bef oret he Justice oft he Peace Cour tofPagadi an,
Zamboanga delSur .The quest ion ofj ur i
sdict
ion was rai
sed;t he
def endant May or asser t
ed t hat what was i n issue was t he
enf orcementoft hedeci si
onoft heCommi ssionofCi vi
lServi
ce;the
Just i
ceoft hePeaceCour twast huswi thoutjurisdi
cti
ontot rythe
case.The abov e plea wascur tlydi smi ssed byUs,aswhatwas
i
nv olvedwas" anor dinarymoneycl aim"andt heref
ore"withinthe
originaljurisdicti
onoft heJust iceoft hePeaceCour twhereitwas
fi
led,consi der i
ngt heamounti nv olved."Suchi sl
ikewisethesituati
on
her e.

Mor eover,in Cit
yofMani lav.BugsukLumberCo. 5
, asui
ttocoll
ect
fr
om adef endantt hi
sli
censefeecorrespondi
ngt otheyear
s1951and
1952wasf i
ledwi ththeMuni ci
palCour tofMani la,i
nview ofthe
amounti nv olv
ed.The t houghtt hatt he muni ci
palcourtlacked
j
urisdict
ionappar ent
lywasnotev eni nthemi ndsoft hepar
ti
esand
di
dnotr eceiveanyconsiderat
ionbythisCourt
.

Evi
dentl
y,t
hef earisent
ertainedbydef endant-
appellantthatwhenever
aconsti
tut
ionalquesti
onisr aised,i
tistheCour tofFirstInst
ancethat
shoul
dhav eor i
ginalj
uri
sdicti
onont hemat ter
.Itdoesnotadmi tof
doubt
,howev er,t
hatwhatconf er
sjuri
sdicti
onist heamountsetf orth
i
nthecomplai
nt.Her
e,t
hesum soughttober ecov
eredwascl
ear
ly
wi
thi
nthej
uri
sdi
cti
onoft
heCi
tyCourtofBagui
o.

Norcoul di tbepl ausi blymai nt ainedt hatt hev alidityofsuchor di

nance
beingopent oquest ionasadef enseagai nsti tsenf or cementf rom one
adv ersel yaf fected, themat tershoul dbeel ev atedt ot heCour tofFi rst
Instance.Fort heCi tyCour tcoul dr elyont hepr esumpt ionoft he
6
validityofsuchor di nance,  andt hemer ef act ,howev er,t hati nt he
answert osuchacompl aintaconst it
utionalquest ionwasr aiseddi d
notsuf f
icet ooustt heCi tyCour tofi tsjur isdict i
on.Thesui tremai ns
onef orcol l
ect i
on,t hel ackofv ali
ditybei ngonl yadef enset osuchan
attemptatr ecov ery.Si ncet heCi tyCour ti spossessedofj udicial
powerandi ti slikewi seaxi omat ict hatt hej udi cialpowerembr aces
the ascer tainmentoff act s and t he appl i
cat i
on oft he l aw,t he
Const i
tut ionast hehi ghestl awsuper sedinganyst atuteoror di
nance
i
nconf lictt herewi t
h,i tcannotbesai dt hataCi tyCour ti sber eftof
compet encet opr oceedont hemat ter.Int heexer ciseofsuchdel i
cat e
power ,howev er,theadmoni tionofCool eyoni nferiort ri
bunal si swel l
wor thr emember ing.Thus:" Itmustbeev identt oanyonet hatt he
powert odecl areal egislativeenact mentv oidi sonewhi cht hej udge,
consci ousoft hef al li
bil
ityoft hehumanj udgment ,wi l
lshr i
nkf r
om
exer cisingi nanycasewher ehecanconsci ent i
ousl yandwi t
hdue
7
regar dt odut yandof f
icialoat hdecl inet her esponsi bi
lity
."  Whi l
ei t
remai nsundoubt edt hatsuchapowert opassont hev al
idityofan
ordinanceal legedt oi nfri
ngecer t
ainconst itutionalr i
ghtsofal iti
gant
exists,st il
litshoul dbeexer cisedwi thduecar eandci r
cumspect i
on,
consi der ingnotonl yt hepr esumpt ionofv al iditybutal sot her elatively
modestr ankofaci tycour tint hej udicialhier archy .

2.To r epeatt hechal l

enged ordinancecannotbeconsi dered ul
tr
a
vires 
as therei s mor et han ampl e st
at utor
y aut hori
tyf or the
enactmentt hereof.Nonethel
ess,itsvali
dit
yonconst it
utionalgrounds
i
s chal l
enged because oft he allegat
ion t hatiti mposed doubl e
taxati
on,whi chisr epugnanttot heduepr ocesscl ause,andt hatit
violat
edther equi
rementofuni f
ormi t
y.Wedonotv i
ewt hemat terthus.

Astowhydoubletaxati
oni snotv i
olat
iveofdueprocess,Justi
ce
Hol
mesmadecleari
nt hi
slanguage:"
Theobject
iont
othet axat
ionas
doubl emaybel aiddownononesi de....The14t hAmendment[ t
he
duepr ocesscl ause]nomor efor bidsdoubl et axati
ont hani tdoes
doubl i
ngt heamountofat ax,shor tofconf i
scat i
onorpr oceedi ngs
8
unconst ituti
onalonot hergr ounds."Wi ththatdeci si
onr ender edata
ti
mewhenAmer icansov er
eigntyint hePhili
ppineswasr ecogni zed,it
possessesmor et hanj ustaper suasi veeffect.Tosome,i tdel i
vered
the coupdegr ace  t
othebogeyofdoubl etaxationasaconst itutional
bart ot heexerciseoft hetaxingpower .Itwouldseem t hought hatin
theUni tedSt ates,aswi t
hus,i t
sghostasnot edbyanemi nentcr i
ti
c,
9
sti
llstalkst hejuridi
calst at
e.Ina1947deci si
on,howev er,  wequot ed
10
withappr ovalt
hisexcer ptfrom al eadingAmer icandeci sion:  "
Wher e,
asher e, Congresshascl earl
yexpressedi t
sintent i
on,thest at utemust
besust ainedev ent houghdoubl et axationresult
s. "

Atanyr ate,ithas been expressl

yaf f
ir
med byus t hatsuch an
"argumentagainstdoubletaxat
ionmaynotbei nvokedwhereonet ax
i
si mposedbyt hestateandtheotherisi
mposedbyt hecit
y...
,i
tbeing
widelyrecognizedthatthereisnothinginher
ent
lyobnoxiousint he
requir
ementt hatli
censefeesortaxesbeexactedwi t
hrespectt
ot he
sameoccupat i
on,cal
li
ngoractivi
tybyboththestateandthepoli
ti
cal
11
subdivi
sionsthereof
."

Theabovewoul
dclearl
yindi
cat
ehowl
acki
ngi
nmer
iti
sthi
sar
gument
basedondoubl
etaxat
ion.

Now, astot hecl aimt hattherewasav iolat i

onoft her uleofunifor
mi t
y
establ
ishedbyt heconst it
ution.Accor dingt othechal lengedordinance,
arealestatedeal erwhol easespr oper tywor thP50,000orabov emust
payanannualf eeofP100.I fthepr oper t
yi swor thP10, 000butnot
overP50, 000,t henhepay sP50andP24i fthev alueislesst han
P10,000.On i t
sf ace,therefore,t he abov e ordinance cannotbe
assail
edasv iol
at i
veoft heconst i
tutionalr equir
ementofuni formity.
I Phi
n  l
ippineTr ustCompanyv .Yatco, 12
JusticeLaur el,speakingfor
theCour t
,st ated:"At axisconsi der eduni form wheni toperateswith
thesamef or ceandef fectinev erypl acewher et hesubj ectmaybe
found."

Ther
ewasnooccasi
oni
nthatcaset
oconsi
dert
hepossi
bleef
fecton
suchaconst it
utionalr equi rementwher ether ei sacl assif
icati
on.The
oppor tuni
ty came i n  East ern Theat ri
cal Co. v . Alfonso. 13
 Thus:
"Equal i
tyanduni formityi ntaxat i
onmeanst hatal ltaxablear ticlesor
kindsofpr oper t
yoft hesamecl assshal lbet axedatt hesamer ate.
Thet axingpowerhast heaut hor i
tyt omaker easonabl eandnat ural
classifi
cationsf orpur posesoft axati
on;. .
."Aboutt woy earsl ater,
Justice Tuason,speaki ng f ort his Cour ti n Manila Race Hor ses
TrainersAssn.v .Del aFuent e 14
i
ncorporatedt heabov eexcer pti nhi s
opinion and cont i
nued: " Taki ng ev erything i nto account ,t he
diff
erent i
ationagai nstwhi cht hepl ainti
ffscompl ainconf ormst ot he
practicaldictatesofj ust iceandequi tyandi snotdi scr i
minat or
ywi thi
n
themeani ngoft heConst ituti
on. "

Tosatisf
yt hisrequirementt hen,al lthatisneededashel dinanother
15
casedeci dedt woy earsl ater,
   i
st hatt hestat
uteoror dinancein
questi
on"appl i
esequal l
yt oallper sons, fi
rmsandcorporat
ionsplaced
i
nsimilarsituati
on."ThisCour tisonr ecor dasaccept
ingthev i
ewina
16
l
eadingAmer i
cancase   that"inequal i
tieswhichresul
tfr
om asi ngli
ng
outofonepar ti
cularcl assf ort axation orexempti
on infri
ngeno
17
consti
tut
ional l
i
mi t
ation.
"

I
ti st husappar entf r
om t heabovet hatinmucht hesamewayt hatthe
pleaofdoubl et axat i
oni sunavail
ing,t heall
egati
onthatt herewasa
violation of the pr i
nciple of uniformityisi nher
entlyl acking in
persuasi veness.Ther eisnoneedt opassupont heotheral legat
ions
toassai lthevalidit
yoft heabov eor dinance,i
tbeingmai ntainedthat
thel i
censef eest herei
ni mposed " isexcessive,unreasonabl eand
oppr essive"andt hatther eisafai
luretoobser vethemandat eofequal
prot ecti
on.A r eading oft he ordinance wi l
lreadi
lydiscl ose thei
r
i
nher entlackofpl ausibi
l
ity.

3.Thatwoulddi
sposeofalltheerror
sassigned,exceptthelastt
wo,
whichwould pr
edicat
eagr ievanceont hecompl ainthavi
ng been
st
artedbytheCityTreasur
err at
herthantheCityMay orofBaguio.
Theseal
legederr
ors,aswast hecasewiththeothersassigned,l
ack
merit
.

I
nmucht
hesamewayt
hatanactofadepar
tmentheadoft
he
nationalgov ernment ,perfor
medwi thinthel i
mitsofhi saut hority
,is
presumpt ivel
yt he act of t he Pr esi
dent unl ess repr obat ed or
18
disapprov ed,  simil
arlytheactoft heCi t
yTr easurer,whoseposi t
ionis
roughlyanal ogous,maybeassumedt ocar rythesealofappr ovalof
theCi t
yMay orunl essr epudi
atedorsetasi de.Thi sshouldbet hecase
consideringt hatsuchci tyoffi
cialiscal ledupont oseet oi tthat
revenuesduet heCi tyarecollected.Whenadmi ni
str
ativ
est epsar e
futi
le and unav ai
li
ng,gi ven t
he st ubbornness and obdur acyofa
taxpayer,conv incedi ngoodf ait
ht hatnot axwasdue,j udicialr emedy
mayber esor t
edt obyhi m.Itwoul dbear eflecti
onont hest at eoft he
l
awi fsuchf i
del itytodut ywouldbemetbycondemnat i
onr athert han
commendat i
on.

So,muchf ort heanal y t

icalappr oach.Theconcl usiont husr eached
has a r einforcementt hatcomes t oi tfrom t he funct i
onaland
pragmat i
ct est.I faci t
yt reasurerhast oawai tthenodf rom t heci ty
may orbef oreamuni cipalor di
nancei senf orced,t henoppor tunity
existsforf avor iti
sm and unduedi scriminati
on to comei nto pl ay.
What everv ali
dr easonmayexi stast owhyonet axpayeri st obe
accordedat r
eat mentdeni edanot her,thesuspi cioni sunav oidabl e
thatsuchamani fest
ationofof fi
cialf avorcouldhav ebeeni nducedby
unnamedbutnotunknownconsi deration.I
twoul dnotbegoi ngt oof ar
toasser tthatev endef endant-appel l
antwoul df i
ndnosat isfactioni n
such a sad st ate ofaf fai
rs.The mor e desirablel egaldoct ri
ne
therefor
e,ont heassumpt i
onthatachoi ceexists,i
sonet hatwoul ddo
awaywi t
hsucht emptationont hepar tofbot ht axpayerandpubl ic
offi
cialali
ke.

WHEREFORE,the l
owercourtdecisi
on ofDecember19,1964,i
s
her
ebyaf
fi
rmed.Costsagai
nstdef
endant
-appel
l
ant
.

G.
R.No.L-
4376      May22,
1953

ASSOCIATION OF CUSTOMS BROKERS,I

NC.and G.MANLAPI
T,
I
NC., 
pet
it
ioner
s-appel
l
ant
s,
vs.
THE MUNI CI
PALITY BOARD,THE CI
TY TREASURER,THE CI
TY
ASSESSOR and THE CI TY MAYOR, al
l of the Cit
y of
Manil
a, 
respondent
s-appel
l
ees.

Teoti
moA.Roj aforappel
l
ants.
CityFiscalEugenioAngelesandAssi
stantFi
scalEul
ogi
oS.Ser
rano
forappell
ees.

BAUTI J.
STAANGELO,
  :

Thi
sisapeti
ti
onfordecl
arat
oryr
eli
eft
otestt
heval
idi
tyofOr
dinance
No.3379passedbyt heMunici
palBoar
doft heCit
yofMani l
aon
March24,
1950.

TheAssoci ati
onofCust omsBr okers,Inc.,whichiscomposedofal l
brokersandpubl i
cser viceoper at or
sofmot orvehi
clesint heCityof
Mani l
a,andG.Manl apit,Inc.,amemberofsai dassociati
on,alsoa
publi
cser viceoperatoroft het rucksi nsaidCi t
y,chal
lengethev ali
dit
y
ofsaidor di nanceont hegr oundt hat( 1)whi l
eitlevi
esaso- call
ed
propertytaxi tisi
nreal it
yal icenset axwhi chisbeyondt hepowerof
theMuni cipalBoardoft heCi tyofMani la;(2)saidordi
nanceof fends
againstther uleofuniformi t
yoft axati
on;and( 3)itconsti
tutesdouble
taxati
on.

Therespondents,r
epresentedbythecit
yf i
scal,contendontheirpart
thatthechall
engedordinanceimposesapr opertytaxwhichiswithin
thepoweroft heCityofMani l
atoi mposeunderi tsRevisedCharter
[Sect
ion18( p)ofRepublicActNo.409],andthatt hetaxinquesti
on
does notv iol
atethe rule ofunif
ormity oft axati
on,nordoes i t
constit
utedoubl
etaxati
on.

Theissueshavingbeenjoi
ned,t
heCourtofFi
rstI
nstanceofManil
a
sust
ainedthev al
idi
tyoftheordi
nanceanddismi
ssedt hepet
it
ion.
Hencethisappeal
.

Thedi
sputedordi
nancewaspassedbytheMuni
cipalBoardoftheCi
ty
ofManil
aundertheauthor
it
yconfer
redbysect
ion18( p)ofRepubl
ic
ActNo.409.Sai
dsecti
onconfer
suponthemunici
palboardthepower
"t
otaxmot orandotherv ehi
clesoperati
ngwithi
ntheCit
yofMani lathe
prov
isionsofanyexi sti
nglaw t othecontr
arynotwit
hstanding.
"Itis
contendedthatthi
spoweri sbr oadenoughtoconferupont heCityof
Manilathepowert oenactanor di
nanceimposi
ngtheproper t
ytaxon
motorv ehi
clesoper
atingwithinthecit
yli
mit
s.

I
nt hedecidingtheissuebef
oreusi ti
snecessaryt
obeari nmi ndthe
perti
nentprovi
sionsoftheMotorVehiclesLaw,asamended,( ActNo.
3992)whichhasabear i
ngont hepoweroft hemuni
cipalcorporat
ion
toimposet axonmot orvehi
clesoper at
inginanyhighwayi nthe
Phil
ippi
nes.Theper ti
nentprov
isionsarecontai
nedinsection70( b)
whichprovideinpart:

Nof urtherfeesthanthosef i
xedinthisActshal lbeexactedor
demanded byanypubl i
chi ghway,bri
dgeorf erry,orfort he
exerciseoft heprof
essionofchauffeur,orfort heoperat
ionof
anymot orvehi
clebytheownert her
eof:Pr
  ovided,however,That
nothingi nthisActshal lbeconst r
uedt o exemptanymot or
vehiclefrom thepaymentofanyl awfulandequi t
ableinsular
,
l
ocal ormuni ci
palpr
opertytaximposedthereupon....

Not et hatundert he abov e section no f ees may be exact ed or

demandedf ort heoper ati
onofanymot orv ehi
cleot hert hant hose
thereinpr ovided,theonl yexcept i
onbeingt hatwhi chr efer
st ot he
proper tytaxwhi chmaybei mposedbyamuni ci
palcor por at
ion.This
provisioni sal l
-i
nclusiveint hatsenset hati tappliest o allmot or
vehicles.Int hi
ssense,t hispr ovisi
onshoul dbeconst ruedasl i
mi ti
ng
thebr oadgr antofpowerconf err
edupont heCi t
yofMani labyi t
s
Char t
ert oimposet axes.Whensect ion18ofsai dChar terprov i
des
thattheCi t
yofMani lacani mposeat axonmot orv ehiclesoper ati
ng
withini tsl i
mi t
,itcan onl yr efer
st o pr opertyt ax as a di ffer
ent
i
nterpr etati
onwoul dmakei trepugnanttot heMot orVehi cleLaw.

Comingnowtotheordi
nanceinquesti
on,wefindthatitst
itl
erefersto
i
tas" AnOrdi
nanceLev yi
ngaPr opertyTaxonAl lMot orVehicles
Oper
ati
ng Wit
hintheCi t
yofMani la"
,and thati ni t
ssect i
on 1 it
pr
ovi
desthatthetaxshouldbe1percent  adv al
orem perannum.I t
al
soprovi
desthatt
heproceedsofthetax"shallaccruetotheSt r
eets
andBr i
dgesFundsoft heCit
yandshal lbeexpendedexcl
usi
vel
yfor
therepai
r,maint
enanceandimpr ov
ementofi tsst
reet
sandbri
dges.
"
Consider
ingthewor di
ngusedi ntheor di
nanceintheli
ghtinthe
purposeforwhichthet axi
scr eat
ed,canweconsi dert
hetaxthus
i
mposedaspr opert
ytax,ascl
aimedbyr espondent
s?

Whileasar ul
ean  adv alorem t
axi sapr oper t
yt ax,andt hi
sr ul
ei s
supportedbysomeaut hor i
ti
es,t her ul
eshoul dnotbet akeni nits
absolutesensei fthenat ureandpur poseoft het axasgat heredf rom
thecontextshowt hatitisinef f
ectanexci seoral icenset ax.Thus, i
t
hasbeenhel dthat"Ifat axisi nitsnat ureanexci se,itdoesnot
becomeapr opertytaxbecausei tispr oportionedi namountt ot he
val
ueoft hepr opertyusedi nconnect ionwi tht heoccupat i
on,pr ivi
lege
oractwhi chi staxed.Ev eryexci senecessar ilymustf i
nall
yf allupon
andbepai dbypr opert
yandsomaybei ndir
ect l
yat axuponpr operty
;
butifitisr eallyi
mposedupont heper formanceofanact ,enj oyment
ofapr ivi
lege,ort heengagi nginanoccupat ion,itwi llbeconsi dered
anexcise."( 26R.C.L. ,
35- 36.)I
thasal sobeenhel dt hat

The char acteroft he t axas a pr opertyt axora l i

cense or
occupat iont axmustbedet erminedbyi tsi ncidents,andf r
om the
naturalandl egalef fectoft helanguageempl oyedi ntheactor
ordinance, andnotbyt henamebywhi chi tisdescr i
bed, orbythe
modeadopt edi nfixingitsamount .Ifitiscl earl
yapr oper t
ytax,i
t
willbesor egarded,ev enthoughnomi nallyandi nf ormiti sa
l
icenseoroccupat iont ax;and,ont heot herhand,i ft hetaxis
l
ev i
ed uponper sonsonaccountoft heirbusi ness,i twillbe
construed asa l i
censeoroccupat i
on tax,ev en though itis
graduat edaccor dingt ot hepropertyusedi nsuchbusi ness,oron
thegr ossr eceiptsoft hebusi ness.(37C. J.,172)

Theor dinancei nquesti

onf all
sundert hef oregoingr ules.Whil
ei t
ref
erstopr oper
tytaxandi ti
sf i adv
xed  alorem  yetwecannotr eject
theideat hatiti
smer el
ylevi
edonmot orvehicl
esoper atingwithi
nt he
Cit
yofMani lawiththemainpur poseofraisi
ngf undst obeexpended
excl
usivelyf ort he r
epair
,mai ntenance and i mprovementoft he
str
eetsandbr i
dgesi nsaidcity.Thisispr eciselywhatt heMot or
Vehicl
eLaw ( ActNo.3992)i ntendstopr event,forther easonthat,
undersai d Act ,muni ci
palcor porat
ion al ready parti
cipatei nthe
distr
ibuti
onoft hepr oceedst hatareraisedf orthesamepur poseof
repairi
ng,mai ntai
ning and impr ovi
ng br idges and publ i
c highway
(secti
on73oft heMot orVehi cl
eLaw) .Thi spr ohi
bit
ionisintendedto
preventdupl i
cationint heimpositionoff eesf orthesamepur pose.It
i
sf orthisreasont hatwebel ievethattheor dinanceinquest i
onmer el
y
i
mposesal icensef eealthoughundert hecl oakofan adv alorem t
ax
tocircumv entthepr ohibi
ti
onabov eadv ertedt o.

Itisal so ouropi niont hatt heor di

nancei nfri
ngest her ul eoft he
uniformi t
yoft axat i
onor dainedbyourConst i
tution.Not et hatt he
ordinanceexact sthet axuponal lmot orv ehiclesoper atingwi thi
nt he
CityofMani la.Itdoesnotdi stinguishbet weenamot orv ehiclef orhi re
andonewhi chi spur elyf orpr i
v ateuse.Nei therdoesi tdi stingui sh
betweenamot orv ehicler egisteredi nt heCi t
yofMani l
aandone
registeredinanot herpl acebutoccasi onal lycomest oMani l
aanduses
i
tsst reetsandpubl ichighway s.Thedi stinct i
oni si mpor tanti fwenot e
thattheor dinancei ntendst obur denwi tht het axonl ythoser egist ered
i
nt heCi tyofMani l
aasmaybei nfer redf rom t hewor d" oper at i
ng"
usedt herein.Thewor d" oper at
ing"denot esaconnot ationwhi chi s
akint o ar egist r
ation,f orundert heMot orVehi cleLaw no mot or
vehiclecanbeoper at
edwi t
houtpr eviouspay mentoft her egi stration
fees.Ther ei snopr etenset hattheor di nanceequal lyappl i
est omot or
vehicleswhocomet oMani l
aforat empor ar ystayorf orshor ter r
ands,
andi tcannotbedeni edt hatt heycont ri
but einnosmal ldegr eet ot he
deteriorati
onoft hest r
eet sandpubl i
chi ghway .Thef actt hatt heyar e
benef i
ted by t heiruse t hey shoul d al so be made t o shar et he
correspondi ng bur den.And y etsuch i s nott he case.Thi si s an
i
nequal ity whi ch we f ind i nt he or dinance,and whi ch r ender si t
offensivet otheConst i
tut i
on.

Wher
efor
e,rev
ersi
ngthedeci
sionappeal
edf
rom,weher
ebydecl
are
t
heordi
nancenul
landvoi
d.

G.
R.No.90776      June3,
1991
PHILI
PPINEPETROLEUM CORPORATI ON, 
peti
tioner
,
vs.
MUNICIPALI
TY OF PI LILLA, RIZAL, Represented by MAYOR
NICOMEDESF.PATENIA, 
respondent
.

Qui
ason,
Makal
i
ntal
,Bar
ot,
Tor
res&I
bar
raf
orpet
it
ioner
.

J.
PARAS,
  :

Thisi sapet i
ti
onf or cert
ior
ari 
seekingtoannulandsetasi de:(a)the
Mar ch17,1989 deci si
on * 
oft heRegionalTr ialCour t
,Branch80,
Tanay ,RizalinCivilCaseNo.057- Tentitl
ed,"Municipali
tyofPi li
l
la,
Rizal,represented byMay orNi comedes F.Pat eniav s.Phi l
ippi
ne
Petroleum Corporati
on" ,(PPCf orshort)upholdingthel egal
i
tyoft he
taxes,feesandchar gesbei ngimposedi nPi l
il
launderMuni cipalTax
OrdinanceNo.1anddi r
ecti
ngt heherei
npet i
tionertopayt heamount
ofsai dt axes,feesand char gesduet her espondent:and ( b)the
Nov ember2,1989r esoluti
onoft hesamecour tdenyingpetiti
oner'
s
mot ionforreconsi
der ati
onoft hesaiddecisi
on.

Theundi
sput
edf
act
soft
hecasear
e:

Peti
tioner,Phi li
ppine Petroleum Cor poration (PPC f orshor t)isa
businessent erpri
se engaged i nt he manuf actur
e ofl ubri
cated oil
basestock whi ch is a petroleum pr oduct ,wi thitsr ef
iner
y pl ant
si
tuated atMal aya,Pil
il
la,Rizal,conduct i
ng i tsbusinessact ivi
ties
wit
hint heterr i
tori
aljuri
sdict
ionoft heMuni cipal
ityofPili
ll
a,Rizaland
i
si ncont i
nuousoper ati
onupt othepr esent( Roll
o p.60).PPCowns
andmai nt
ainsanoi lref
ineryincludingf orty-ninestoragetanksf orits
petr
oleum pr oductsi nMal ay
a, Pil
il
l
a, Rizal(Rol l
o,p.12).

UnderSecti
on142oftheNat i
onalInt
ernalRevenueCodeof1939,
manufact
uredoi
l
sandotherf
uelsar
esubjecttospeci
fi
ctax.

OnJune28,1973,Pr
esi
dentialDecr
eeNo.231,ot
herwi
seknownas
t
heLocalTaxCodewasi ssuedbyf or
merPresi
dentFer
dinandE.
Marcosgov erningtheexer ci
sebyprovinces,citi
es,muni cipali
tiesand
barr
iosoft heirtaxi
ngandot herr
evenue-rai
singpower s.Sect i
ons19
and19( a)t hereof,provi
deamongot hers,that t
hemuni cipali
tymay
i
mposet axesonbusi ness,exceptont hosef orwhichf i
xedt axesar e
provi
dedon  manuf actur
ers,import
ersorpr oducer sofanyar ticl
eof
commer ceofwhat ev
erki ndornature,includingbr ewer s,dist i
l
ler
s,
rect
ifi
ers,r epackers,and compounder s ofl i
quors,dist i
ll
ed spi ri
ts
and/orwi nesinaccor dancewi t
htheschedulel i
stedtherein.

TheSecr et
aryofFinancei ssuedPr ovincialCi
r cularNo.26-73dated
December27,1973,di r
ected to allpr ovi
ncial,ci t
yand municipal
treasurer
st or ef
rai
nf r
om collecti
nganyl ocalt axi mposedinoldor
new t axordinancesint hebusi nessofmanuf act ur
ing,whol
esal
ing,
retai
li
ng,ordeal i
nginpet rol
eum pr oductssubj ectt othespeci
fi
ct ax
undert heNationalI
nternalRevenueCode( Roll
o, p.76).

Likewi se,Pr ovi

ncialCi r
cularNo.26A- 73dat edJanuary9,1973was
i
ssuedbyt heSecr et
aryofFinancei nstr
uctingal
lCityTreasurersto
refrai
nf rom col lecting any localtax i
mposed i ntax ordinances
enact edbef oreoraf t
ertheeffecti
vi
tyoftheLocalTaxCodeonJul y1,
1973,ont hebusi nessesofmanuf act
uring,
 whol
esal
ing,ret
aili
ng,or
deal i
ngi n,pet r
oleum pr oductssubjecttot hespeci
fi
ct axundert he
Nat i
onal InternalRev enueCode( Roll
o,p.79).

RespondentMuni cipal i
tyofPi lil
la,Rizal,t hroughMuni cipalCounci l
ResolutionNo.25,S- 1974enact edMuni ci
palTaxOr dinanceNo.1,S-
1974ot herwi seknownas" ThePi li
llaTaxCodeof1974"onJune14,
1974,whi cht ookef fectonJul y1,1974( Rol l
o,pp.181- 182).Sect i
ons
9and10oft hesai dor dinancei mposedat axonbusi ness,exceptf or
thosef orwhi chfixedt axesar epr ovidedi nt heLocalTaxCodeon
manuf act urers,impor ters, orproducer sofanyar ticl
eofcommer ceof
whatev er ki nd or nat ure,i ncluding br ewer s,di sti
llers,rectifi
ers,
repacker s,andcompounder sofl i
quor s,disti
lledspi ri
tsand/ orwi nes
i
naccor dancewi tht heschedul ef oundi nt heLocalTaxCode,aswel l
asmay or '
sper mit
,sani taryi nspectionf eeandst orageper mitfeefor
fl
ammabl e,combust ibleorexpl osivesubst ances( Roll
o,pp.183- 187),
whileSect i
on139oft hedi sputedor di
nancei mposedsur chargesand
i
nterestsonunpai dt axes, feesorchar ges( I
bid. ,
p.193) .
OnMarch30, 1974,President
ialDecr
eeNo.426wasi ssuedamendi
ng
cer
tai
npr ovi
sionsofP. D.231butr etai
ningSect
ions19and19( a)
wit
hadjustedratesand22( b)
.

OnApr i
l13,1974,P. D. 
436waspr omulgatedincreasingthespecifi
c
taxonlubri
catingoils,gasoline,bunkerfueloi
l
,dieselfueloi
landother
simil
arpetr
oleum pr oductsl evi
edunderSect i
ons142, 144and145of
the Nati
onalI nternalRev enue Code,as amended,and gr anting
provi
nces,ci
tiesandmuni cipal
iti
escertainsharesint hespeci
fi
ct ax
on such product s i
nl ieu ofl ocaltaxes imposed on pet r
oleum
product
s.

Thequesti
onedMuni cipalTaxOr di
nanceNo.1wasr evi
ewedand
appr
ovedbyt hePr ov
incialTreasurerofRizalonJanuary13,1975
(Rol
l
o,p.143) ,butwasnoti mplemented and/
orenforced bythe
Munici
pal
i
tyofPi l
i
ll
abecauseofi tshavingbeensuspendedupt onow
i
nv i
ewofProvinci
alCi
rcularNos.26-73and26A- 73.

ProvincialCir
cularNo.6-77dat edMar ch13,1977wasal soissued
di
rectingallcit
yandmuni cipaltr
easurerstor
efrai
nfr
om collect
ingthe
so-call
edstoragef eeonflammabl eorcombustibl
emat er
ial
simposed
undert helocaltaxor di
nanceoft hei
rrespecti
velocal
ity
,sai dfee
partakingofthenat ur
eofast ri
ctl
yrevenuemeasureorservicecharge.

OnJune3,1977,P.D.1158other
wiseknownast heNati
onalInt
ernal
Rev
enueCodeof1977wasenact ed,Sect
ion153ofwhichspecif
ical
ly
i
mposesspecif
ictaxonr ef
inedandmanuf act
uredminer
aloilsand
motorf
uel
s.

Enforci
ng the provisions oft he above-ment
ioned ordi
nance,the
respondentfi
l
edacompl aintonApril4,1986docketedasCi vi
lCase
No.057- TagainstPPC f orthecoll
ecti
onoft hebusinesstaxf r
om
1979t o1986;storageper mitfeesfr
om 1975t o1986;mayor'
spermit
andsanitaryi
nspect i
onf eesf r
om 1975t o1984.PPC,howev er
,have
alr
eadypaidthelast-namedf eesstart
ing1985(Roll
o,p.74)
.

Aft
erPPCfil
edit
sanswer,apre-
tri
alconfer
encewasheldonAugust
24,1988wher
ethepar
ti
esthruthei
rrespecti
vecounsel
,af
tercomi
ng
upwithcertainadmissi
onsandsti
pulat
ionsagreedtothesubmissi
on
ofthecasef ordeci
sionbasedondocumentaryevidenceof
fer
edwith
thei
rrespecti
vecomment s(Rol
l
o,p.41)
.

OnMar ch17,1987,thetri
alcourtrenderedadecisi
onagai
nstt
he
pet
it
ioner
,thedi
sposi
ti
vepartofwhichreadsasf
oll
ows:

WHEREFORE,pr emi sesconsi dered,t hisCour therebyr enders

j
udgmenti nf av oroft hepl ai
ntiff
sasagai nstt hedef endants
ther ebydi rect i
ng t hedef endant st o 1)payt hepl ai
ntiff
st he
amountofP5, 301,385. 00r epresentingt heTaxonBusi nessdue
from t hedef endant sunderSec.9 ( A)oft heMuni cipalTax
Or dinanceoft hepl aint i
ff
sf ort heper i
odf rom 1979t o1983
i
ncl usivepl ussuchamountoft axt hatmayaccr ueunt ilfi
nal
det ermination ofcase;2)t o payst or age permi tfee int he
amountofP3, 321, 730.00duef rom t hedef endantsunderSec.10,
par .z( 13)( b)( 1 C)oft heMuni ci
palTaxOr dinanceoft he
plaintif
fsf ort heper iodf r
om 1975t o1986i nclusiv
epl ussuch
amountoff eet hatmayaccr ueunt i
lfinaldet erminati
onofcase;
3)t opayMay or 'sPer mitFeeduef r
om t hedef endantsunderSec.
10,par .( P)( 2)oft heMuni ci
palTaxOr dinanceoft hepl aint
if
fs
from 1975t o1984i nclusiveint heamountofP12, 120.00pl us
suchamountoff eet hatmayaccr ueunt ilf
inaldeterminati
onof
thecase;and4)t opaysani taryinspect i
onf eei ntheamountof
P1, 010.00f ort heper i
odf r
om 1975t o1984pl ussuchamount
thatmayaccr ueunt ilfinaldet er
mi nationofcaseand5)t opay
thecost sofsui t.

Rol
SOORDERED.( l
o,pp.49-
50)

PPCmov edforr
econsi
der
ati
onoft
hedecisi
on,butt
hiswasdeniedby
thel
owercourti
naresol
uti
onofNovember2,1989,
hence,
theinstant
peti
ti
on.

TheCour tresolv
edt ogiveduecour setothepeti
ti
onandr equi
red
both part
ies t
o submi tsimul
taneous memoranda (
June 21,1990
Resol
ution;Rol
  lo,p.305).
PPCassi
gnst
hef
oll
owi
ngal
l
egeder
ror
s:

1.THE RTC ERRED I

N ORDERI
NG THE PAYMENT OF THE
BUSI
NESSTAXUNDERSECTION9( A)OFTHETAXORDINANCE
I
NTHELI GHTOFPROVINCI
ALCIRCULARSNOS.26-
73AND26
A-
73;
.

2.THERTCERREDINHOLDI
NGTHATPETI TIONERWASLIABLE
FORTHEPAYMENTOFSTORAGEPERMI TFEEUNDERSECTI ON
10Z(13)(
b)(1-
c)OFTHETAXORDINANCECONSI DERI
NGTHE
I
SSUANCEOFPROVINCI
ALCIRCULARNO.6-77;

3.THERTCERREDI
NFAI
LINGTOHOLDTHATRESPONDENTS
COMPUTATI
ONOFTAXLI
ABILI
TYHASABSOLUTELYNOBASI
S;

4.THERTCERREDINORDERI
NGTHEPAYMENTOFMAYOR'S
PERMI
TANDSANITARYI
NSPECTI
ONFEESCONSI
DERI
NGTHAT
THESAMEHASBEENVALIDLYANDLEGALLYWAI
VEDBYTHE
MAYOR;

5.THERTCERREDI NFAI LI
NGTOHOLDTHATTHETAXESAND
DUTIES NOT COLLECTED FROM PETITIONER PRI
OR TO THE
FI
VE( 5)YEARPERI OD FROM THEFILING OFTHISCASEON
APRIL4,1986HASALREADYPRESCRIBED.

Thecr uci
ali
ssueinthiscasei swhetherornotpetit
ionerPPCwhose
oilproductsaresubjecttospecif
ictaxundertheNIRC, i
sstil
lli
ableto
pay( a)t axonbusinessand( b)storagefees,consider
ingProvinci
al
CircularNo.6-77;
andmay or'
spermitandsanitar
yinspecti
onfeeunt o
the respondentMuni ci
pali
ty ofPili
ll
a,Rizal
,based on Muni ci
pal
OrdinanceNo.1.

Peti
ti
onerPPCcont endsthat
:(a)Prov i
nci
alCircularNo.2673decl
ar ed
ascontrarytonationaleconomicpol icytheimposi ti
onoflocalt
axes
onthemanuf actureofpetrol
eum pr oduct
sast heyarealr
eadysubject
tospeci
fictaxundert heNati
onal I
nternalRevenueCode; (
b)theabov e
decl
arat
ioncov ersnotonl yol
dt axor di
nancesbutnewones,aswel l
asthosewhi chmaybeenact edi nt hef ut
ur e;(c)bothProvi
nci al
Cir
culars(PC)26-73and26A- 73arestil
leffecti
ve,hence,unlessand
unti
lrevoked,anyeffor
tont hepartofther espondenttocol lectthe
suspendedt axonbusinessf r
om thepetit
ionerwoul dbei l
legaland
unauthori
zed;and(d)Secti
on2ofP. D.436pr ohi
bit
st hei
mposi t
ionof
l
ocaltaxesonpet r
oleum pr
oducts.

PCNo.26- 73andPCNo.26A- 73suspendedt heef fectivit

yofl ocal
taxordi
nancesimposingat axonbusi nessunderSect i
on19( a)oft he
LocalTaxCode( P.D.No.231), withregardtomanuf acturers,retai
lers,
wholesalersordealer
si npetroleum productssubjectt ot hespeci fi
c
taxundert heNati
onalInter
nalRev enueCodeNI RC, i
nv iewofSect ion
22(b)oft heCoderegardingnon- i
mposi t
ionbymuni cipali
tiesoft axes
onarti
cles,subj
ecttospecifi
ctaxundert heprovi
sionsoft heNI RC.

Therei sno questi

on thatPi l
i
ll
a'sMuni
cipalTaxOrdinanceNo.1
i
mposi ng t
heassailed taxes,feesand char
gesisv al
id especi
all
y
Secti
on 9 ( A)which accor di
ng tothe tri
alcour
t" was l i
ft i
ed n
tot
o and/ori
sal i
ter
alreproducti
onofSecti
on19(a)oftheLocalTax
CodeasamendedbyP. D.No.426."I
tconformswit
hthemandat eof
sai
dl aw.

ButP.D.No.426amendi ngtheLocalTaxCodei sdeemedt ohav e

repeal
edPr ovi
nci
alCircul
arNos.26-73and26A- 73issuedbyt he
Secret
aryofFinancewhenSect i
ons19and19( a)
,werecarr
iedov er
i
ntoP. D.No.426andnoexempt i
onsweregivent omanufactur
ers,
wholesal
ers,r
etai
ler
s,ordeal
ersi
npetrol
eum pr
oducts.

Well-sett
led isther ul
et hatadmi nist
rat
iveregulati
onsmustbei n
harmonywi tht he provi
sions oft he l
aw.I n case ofdiscr
epancy
betweent hebasiclaw andani mplementi
ngr ul
eorr egul
ati
on,the
for
mer pr evai
ls( ShellPhili
ppines,Inc.v .Cent ralBank of the
Phil
ippines,162SCRA628[ 1988]).Asaptl
yheldbyt hecourt
 aquo:

Necessaril
y,t
herecouldnotbeanyotherlogi
calconclusi
onthan
thattheframersofP.D.No.426r eal
lyandact ual
lyint
endedto
terminat
et he eff
ectiv
ity and/
orenforceabil
i
t y ofProvi
ncial
Circul
arsNos.26-73and26A- 73inasmuchascl earl
ythese
cir
cularsareincontravent
ionwithSec.19( a)ofP. D.426-
the
 amendat
orylaw toP. D.No.231.Thati nt
enti
ont oter
minat
eis
ver
yapparentandinfactiti
sexpressedinclearandunequi
vocal
ter
msintheeffect
ivi
tyandrepeal
i
ngcl auseofP.D.426...

Furthermor e,whileSect i
on2ofP. D.436pr ohibit
st heimpositi
onof
l
ocalt axes on pet roleum pr oducts,sai d decree did notamend
Sections19and19( a)ofP.D.231asamendedbyP. D.426,wherei
n
themuni ci
palit
yi sgr antedt her i
ghtt ol evytaxesonbusi nessof
manuf acturers,impor t
ers,producersofanyar ti
cleofcommer ceof
what everkindornat ure.Ataxonbusi nessisdisti
nctfrom ataxonthe
art
iclei tself. Thus,i ft he i mpositi
on of t ax on busi ness of
manuf acturers,etc.inpet rol
eum pr oductscont rav
enesadecl ar
ed
nati
onal policy,
itshouldhav ebeenexpr essl
ystatedinP.D.No.436.

Theexer ci
sebylocalgov ernmentsofthepowert otaxisordainedby
thepr esentConst i
tut
ion. Toal
1âwphi
1low t
hecontinuouseffecti
vit
yoft he
prohibiti
onsetf ort
hi nPC No.26- 73(1)woul dbet antamountt o
rest
rictingthei
rpowert otaxbymer eadmi ni
strat
ivei
ssuances.Under
Section5,Ar t
icl
eX oft he1987 Const i
tut
ion,onlyguideli
nesand
l
imitationsthatmaybeest abli
shedbyCongr esscandef i
neandl imi
t
suchpowerofl ocalgovernments.Thus:

Eachlocalgovernmentuni tshal
lhav ethepowert ocreat
eits
ownsour cesofr evenuesandt olevytaxes,fees,andcharges
subj
ecttosuchgui deli
nesandl i
mitati
onsast heCongressmay
prov
ide,consi
stentwiththebasi
cpol i
cyoflocalaut
onomy...

ProvincialCir
cul
arNo.6- 77enjoi
ningallcityandmunicipalt
reasurer
s
torefr ai
nf r
om col
l
ect i
ngt heso-cal
ledst oragefeeonf l
ammabl eor
combust i
blemater
ialsimposedi nthel ocalt axor
dinanceoft heir
respect i
velocal
i
tyfreespet i
ti
onerPPCf rom t hepay
mentofst or
age
permi tfee.

ThestoragepermitfeebeingimposedbyPi l
il
la'
staxordi
nancei sa
feeforthei nst
all
ati
on and keepi
ng instorageofanyf lammabl e,
combustibl
e orexplosi
ve substances.Inasmuch as sai
d st or
age
makesuseoft anksownednotbyt hemuni ci
pali
tyofPil
il
la,butby
peti
ti
onerPPC,same i s obv i
ously nota charge forany servi
ce
render
edbyt
hemuni
cipal
i
tyaswhati
senv
isi
onedi
nSect
ion37oft
he
sameCode.

Section 10 (
z)(13)ofPil
i
ll
a'
s Munici
palTax Ordi
nance No.1
prescri
bingaper
mitfeei
sapermi
tfeeall
owedunderSecti
on36of
theamendedCode.

Ast ot heaut hor i

tyoft hemay ort owai vepay mentoft hemay or's
permi tand sani taryi nspection f ees,t het ri
alcour tdid noter ri n
holdingt hat" sincet hepowert ot axi ncludest hepowert oex empt
thereofwhi chi sessent ial
lyal egi slati
vepr er
ogat i
ve,itf oll
owst hata
muni cipalmay orwho i san execut iveof fi
cermaynotuni laterally
withdrawsuchanexpr essionofapol i
cyt hrut heenact mentofat ax."
Thewai v erpar t
akesoft henat ureofanexempt ion.Itisananci entr ule
that exempt ions f r
om t axation ar e const r
ued  i
n st ri
ctissimi
j
ur i
s agai nstthet axpay erandl i
ber all
yinf av oroft het axingaut hor i
ty
(EssoSt andar dEast ern,Inc.v .Act ingCommi ssionerofCust oms,18
SCRA 488[ 1966] ).Taxexempt ionsar el ookeduponwi thdi sfav or
(West ernMi nol coCor p.v .Commi ssi
onerofI nternalRev enue,124
SCRA 121 [ 1983] ).Thus,i nt he absence ofa cl earand expr ess
exempt ion from t he pay mentofsai df ees,t he wai vercannotbe
recogni zed.Asal readyst ated,i tist hel aw- makingbody ,andnotan
execut i
v eliket hemay or,whocanmakeanexempt ion.UnderSect ion
36oft heCode,aper mitfeel i
ket hemay or '
sper mit,shal lber equired
beforeanyi ndi vidualorj uri
dicalent ityshal lengagei nanybusi nessor
occupat i
onundert hepr ovisi
onsoft heCode.

Howev er,sincet heLocalTaxCodedoesnotpr ov

idethepr escri
pti
ve
peri
odf orcol l
ecti
onofl ocaltaxes,Art
icle1143oft heCi vi
lCode
appli
es.Sai dl awpr ovidest hatanacti
onuponanobl i
gati
oncr eatedby
l
awpr escr i
beswi t
hint en( 10)yearsfr
om t heti
met herightofact i
on
accrues.TheMuni cipalit
yofPi l
il
lacantherefor
eenforcethecol l
ecti
on
ofthet axonbusi nessofpet i
ti
onerPPCduef rom 1976t o1986,and
NOTt het axthathadaccr uedpr i
orto1976.

PREMISESCONSI DERED, wi
ththeMODIFI
CATIONthatbusi
nesstaxes
accr
uingPRIORt o1976arenottobepaidbyPPC(becausethesame
haveprescr
ibed)andthatst
oragef
eesarenotal
sotobepaidbyPPC
(f
orthestoragetanksar
eownedbyPPCandnotbyt hemunici
pali
ty,
andtheref
orecannotbeachargeforser
vicebyt
hemuni
cipal
i
ty)
,the
assai
ledDECISI
ONi sher
ebyAFFI
RMED.

SOORDERED.

G.
R.No.127708Mar
ch25,
1999

CITYGOVERNMENTOFSANPABLO,LAGUNA,CI TYTREASUREROF
SAN PABLO,LAGUNA andTHESANGGUNI ANG PANGLUNSOD OF
SANPABLO, LAGUNA, pet
it
ioners,
vs.
HONORABLEBI ENVENIDO V.REYES,i nhiscapaci
tyasPresi
ding
Judge,RegionalTri
alCour t
,Br anch 29,San Pabl
o Ci
tyand the
MANI LAELECTRICCOMPANY,  
respondent
s.

GONZAGA- J.
REYES,
  :

Thisi sapet i
ti
onunderRul e45oft heRulesofCour tt or eview ona
purequest i
onofl awthedecisionoft heRegionalTr i
alCour t(RTC)of
SanPabl o Ci
ty,Branch29i nCiv i
lCaseNo.SP- 4359( 96) ,ent i
tl
ed
"Mani l
aElectr
icCompanyv s.CityofSanPabl o,Laguna, CityTr easurer
ofSanPabl oLaguna,andt heSangguni angPangl unsodofSanPabl o
City
,Laguna. "TheRTC decl ar
edt hei mposit
ionofaf ranchi set ax
underSect i
on2. 09Arti
cleDofOr dinanceNo.56ot her wiseknownas
theRev enueCodeoft heCi tyofSanPabl oasi neffectiveandv oid
i
nsof arast herespondentMERALCOi sconcernedf orbei ngv iol
ative
ofActNo.3648,Republ i
cActNo.2340andPD551.TheRTCal so
grantedMERALCO' Sclaimf orrefundoff ranchiset axespai dunder
protest.

Thef
oll
owi
ngant
ecedentf
act
sar
eundi
sput
ed:
ActNo.3648 gr ant
ed t
he Escuder
o El
ectr
ic Ser
vice Companya
l
egisl
ati
vef r
anchi
seto mai
ntai
nandoper at
eanel ectri
cl i
ghtand
powersy st
em intheCit
yofSanPabl oandnear bymuni ci
pal
it
ies.
Secti
on10ofActNo.3648provi
des:

...I nconsi der ati

onoft hef ranchiseandr i
ghtsher eby
grant ed,t hegr anteeshal lpayunt ot hemuni ci
palt reasur y
ofeachmuni cipali
tyi nwhi chi tissuppl yingel ectri
ccur rent
tot he publ ic undert hi
sf ranchise,a t ax equalt ot wo
percent um oft hegr ossear ningsf rom electri
ccur rentsol d
orsuppl i
edundert hisf r
anchi sei neachsai dmuni cipality.
Saidt axshal lbedueandpay ablequar terlyandshal lbei n
l
ieuofanyandal lt axesofanyki ndnat ureordescr i
ption
l
ev ied, establi
shedorcol l
ect edbyanyaut hor i
tywhat soev er,
muni cipal,provincialori nsul ar,nowori nt hef uture,oni ts
poles, wi r
es, i nsul ator, swi tches, t ransf ormer s, and
struct ures, installations, conduct or
s, and accessor i
es
placedi nandov erandunderal lpublicpr operty,incl uding
publ icst reet
sandhi ghway s,pr ovincialroads,br i
dgesand
publ ic squar es,and on i tsf ranchise,r i
ghts.pr iv i
leges,
recei pts,revenuesandpr ofitsf rom whi cht axest hegr antee
i
sher ebyexpr esslyexempt ed.

Escudero'
s fr
anchi
se was transf
err
ed to t he pl
aint
if
f(her
ein
respondent
)MERALCOunderRepubl
icActNo.2340.

Presi
dent
ialDecreeNo.551wasenact
edonSept
ember11,1974.
Secti
on1thereofpr
ovi
dest
hef
oll
owi
ng:

Sec.1.Anypr ovisi
on ofl aw orlocalor dinance tothe
contrarynotwit
hst anding,thef r
anchiset axpay abl
ebyall
grantees off r
anchi se t o generate,di str
ibute and sel
l
el
ectric cur
rentf orl i
ght ,heatand powershal lbe t
wo
percent(2%)oft heirgr ossreceipt
sr eceivedf rom t
hesale
ofelectriccurr
entandf rom transactionsi ncidenttothe
generati
on,dist
ributionandsal eofelect r
iccur r
ent.

Suchf
ranchi
set
axshal
lbepay
abl
etot
heCommi
ssi
onerof
 Inter nalRevenueofhi sdulyaut hor
izedr epresent ati
veonor
bef or ethetwentiethdayoft hemont hf oll
owingt heendof
eachcal endarquar t
erormont hasmaybepr ovidedi nthe
respect ivefranchiseorper ti
nentmuni cipalregul at
ionand
shal l,anyprov i
sionoft heLocalTaxCodeoranyot herl
aw
tot hecont rarynot withstanding,bei nlieuofal ltaxesand
assessment sofwhat evernat urei
mposedbyanynat i
onal
or l ocalaut horit
y on ear nings,r eceipts,i ncome and
privilege ofgener ati
on,di str
ibuti
on and sal e ofel ectri
c
curr ent.

RepublicActNo.7160,ot herwiseknownast he" LocalGover

nment
Codeof1991"( herei
naft
erreferr
edt oasLGC)t ookeffectonJanuary
1,1992.ThesaidCodeaut hori
zestheprov i
nce/citytoimposeataxon
businessenjoyi
ngaf ranchiseatar at
enotexceedi ngf i
ft
ypercent
(50%)ofone per cent( 1%)oft he gross annualr ecei
ptsfort he
precedingcal
endaryearreal
izedwithi
nitsjuri
sdicti
on.

OnOct ober5,1992,t
heSangguniangPanglunsodofSanPabl oCity
enact
edOr di
nanceNo.56,other
wiseknownast heRevenueCodeof
theCityofSanPabl o.ThesaidOrdi
nancetookef f
ectonOctober30,
1992.
 1

Sec.2.
09,
Art
icl
eDofsai
dOr
dinancepr
ovi
des:

Sec.2.09.Fr anchiseTax— Therei sherebyi

mposedat ax
onbusi nessenj oyingaf r
anchi
se,atar at
eoff i
ft
yper cent
(50%)ofoneper cent( 1%)oft hecrossannualr eceipts,
whichshal li
ncludebot hcashsal esandsalesonaccount
real
izeddur i
ngt heprecedingcal
endaryearwit
hinthecity.

Pursuantt ot he above-quoted Secti

on 2.
09,the pet i
tionerCity
Treasurersenttopr i
vat
er espondentalet
terdemandingpay mentof
theaforesaidfranchi
set ax.From 1994to1996,pri
v at
er espondent
paid"underprotest
"atotalamountofP1,857,
711.
67. 
2

The pr
ivat
er espondentsubsequentl
yf i
l
ed thi
s acti
on beforethe
Regi
onalTri
alCourttodecl
areOrdinanceNo.56nullandvoidinsof
ar
as i
ti mposes the f
ranchi
se tax upon pr i
vat
e r
espondent
MERALCO 
3
 andt
ocl
aimf
orarefundoft
hetaxespai
d.

TheCourtruledi
nf av
orofMERALCOanduphel di
tsargumentthatthe
LGCdi dnotexpressl
yorimpli
edl
yrepealt
hetaxexemption/i
ncent
ive
enjoyedbyitunderit
schart
erThedisposi
ti
veport
ionoft hedeci
si
on
reads:

WHEREFORE,t heimpositi
onofaf ranchisetaxunderSec.
2.09, Arti
cleDofOr di
nanceNo.56ot herwiseknownast he
Rev enue Code oft he City ofSan Pabl o,is declar
ed
i
nef fectiv
e and nul land v oidinsof aras t he plai
nti
ff
MERALCOi sconcer nedforbeingofRepubl icAct.No.2340,
PD 551,andRepubl i
cActNo.7160anddef endantsare
order ed tor ef
und tot he plai
nti
fft he amountofONE
MI LLION EI GHT HUNDRED FI FTY SEVEN THOUSAND
SEVEN HUNDREDELEVEN &67/ 100( P1,857,
711.67)and
suchot heramount sasmayhav ebeenpai dbyt heplai
nti
ff
undersai dRev enueOrdi
nanceNo.56af t
erthef i
ll
i
ngofthe
compl ai
nt. 
4

SOORDERED.

I
tsmoti
onf orrecor
dsf orreconsi
der
ati
onhav i
ngbeendeniedbythe
t
ri
alcourt
. 
5
 t
hepetit
ionersfil
edtheinstantpeti
ti
onwi t
hthisCour
t
r
aisi
ngpurequesti
onofl awbasedonthef ol
l
owinggrounds:

I
.RESPONDENT JUDGE GRAVELY ERRED I N
HOLDINGTHATACTNO.3648,REPUBLI CACT
NO2340ANDPRESI DENTI
ALDECREENO.551,
ASAMENDED,I NSOFARASTHEYGRANTTAX
I
NCENTIVES,PRIVI
LEGESANDI MMUNITIESTO
PRIVATE RESPONDENT, HAVE NOT BEEN
REPEALEDBYREPUBLI CACTNO.7160.

I
I.RESPONDENT JUDGE GRAVELY ERRED I
N
RULI
NGTHATSECTI ON193OFREPUBLI CACT
NO.7160 HAS NOT WITHDRAWN THE TAX
 I
NCENTIVES, PRI
VILEGES AND I
MMUNI TI
ES
BEI
NG ENJOYED BY THE PRI VATE
RESPONDENTUNDERACTNO.3648REPUBLI C
ACTNO.2340ANDPRESI DENTI
ALDECREENO.
551ASAMENDED.

I
II
.RESPONDENT JUDGE GRAVELY ERRED I
N
HOLDING THAT THE FRANCHI SE TAX IN
QUESTION CONSTITUTESAN I
MPAI
RMENTOF
THECONTRACTBETWEENTHEGOVERNMENT
ANDPRI VATERESPONDENT.

Petit
ioners'posi t
ioni st hatRA7160( LGC)expressl
yr epealedActNo.
3648,Republ i
cActNo.2340andPr esi
dent i
alDecree551andt hat
pursuantt ot hepr ovi
si onsofSect i
ons137and193oft heLGC,t he
provinceorci t
ynow hast hepowert oimposeaf ranchiset axona
businessenj oyingaf ranchise.Petiti
onersr el
yonther uli
ngi nthecase
ofMact
  anCebuI nt er
nat i
onalAirportAut hori
tyvs.
 Mar cos 6
 wheret he
SupremeCour theldt hatt heexempt ionfrom realpropertytaxgr anted
toMact anCebuI nternationalAirportAut hori
tyunderi t
schar terhas
beenwi thdrawnupont heef f
ecti
vityoftheLGC.

Inaddi t
ion,thepeti
ti
onerscitei nt hei
rMemor andum datedDecember
8,1993anadmi ni
strat
iveinterpretati
onmadebyt heBur eauofLocal
Gov er nment Finance of t he Depar t
ment of Fi nance ini ts 3rd
i
ndor sementdat edFebr uary15,1994t otheef fectthattheear li
er
rul
ingoft heDepartmentofFi nancet hatholder
soff r
anchisewhi ch
cont aint hephrase" i
nlieuofal lt  
axes"pr
oviso 
areexemptf rom the
paymentofanyki ndoft axisnol ongerappl
icabl
eupont heeffect
ivit
y
oft heLGCi nview ofthewi thdrawaloft axexempt i
onpr i
vi
legesas
prov i
dedi nSect
ions193and234t her
eof.

Wer
esol
vet
orev
erset
hecour
taquo.
 

Thepi vot
ali
ssueiswhethertheCityofSanPabl
omayi mposealocal
franchi
setaxpursuanttotheLGCupont heMani
laElectri
cCompany
whi chpaysataxequalt
otwoper centofi
tsgr
ossreceipt i
s nl
i
euof al
l
taxesandassessment sofwhatev ernat
urei
mposedbyanynat ional
orl
ocal
aut
hor
it
yonsav
ingsori
ncome.

I
tisnecessar
ytor
epr
oducet
heper
ti
nentpr
ovi
sionsoft
heLGC.

Sec. 137 —  Franchise Tax — Not withstandi

ng any
exempt iongr antedbyanyl aw orot herspeci allaw,the
province may i mpose a t ax on busi ness enjoy i
ng a
fr
anchi se,atar atenotexceedingf if
typer cent50%ofone
percent1%oft hegr ossannualreceiptsf orthepr ecedi
ng
calendary earbasedont hei
ncomi ngr eceipts,orreali
zed,
withinitster
ri
tor i
aljuri
sdi
cti
on....

Sec.151—  ScopeofTaxi ngPower s —Exceptasot herwise

provi
dedi nthi
sCode, t
heci t
y ,maylevythetaxes,fees,and
charges whi ch t he pr ovince or muni cipal
it
y may
i
mpose: Pr
  ov i
ded,
howev
  er, That t he taxes, fees and
charges levi
ed and collected by highly urbani
zed and
i
ndependentcomponentci t
iesshal laccruet othem and
dist
ribut
edinaccordancewi t
ht heprovisi
onsoft hi
sCode.

Theratesoft axesthatt
hecitymaylevymayexceedt he
maximum r at
esall
owedfortheprovi
nceormuni
cipal
it
yby
notmor et han fi
ft
ypercent(50%)exceptthe r
ates of
prof
essionalandamusementtaxes.

Sec.193 —  Wi t
hdrawalofTax Exempt i
on Privil
eges —
Unlessother wisepr ov i
dedi nt hi
sCode,t axexempt ionsor
i
ncent i
vesgr antedt o,orpr esentl
yenj oyedbyallper sons,
whethernat uralorjuridical,i
ncludinggovernment-ownedor
control
led cor porations, except l ocal water distri
cts,
cooperati
vesdul yregi steredunderR. A.6938,non-st ock
andnon- profithospi talsandeducat i
onalinst
it
utions,are
herebywithdrawnupont heeffecti
v i
tyofthi
sCode.

Sec.534(f)— Repeal
ingClause— Al lgeneralandspecial
l
aw, acts, ci
ty char t
ers, decrees, executi
ve orders,
procl
amati
on and admi ni
strat
iveregulat
ions,orpar tor
partsther
eofwhi ch arei nconsi
stentwi t
h any oft he
 provi
sionsofthi
scodear
eher
ebyr
epeal
edormodi
fi
ed
accordingl
y.

Sec.534( f
),therepeal
ingclauseoftheLGC,pr ov i
desthatal
lgeneral
and speciall aws,act ,ci
ty chart
ers,decr ees,executiv
e orders,
proclamati
onsandadmi ni
strat
iver
egul ati
onsorpar t
st her
eofwhich
areinconsist
entwi thanyoft heprovisionsoft heCodear ehereby
repealedormodi f
iedaccor
dingly
.

Thisclausepartakesoft
henat ur
eofageneralrepeali
ngclause. 
7
 I
tis
cert
ainlynotanexpressrepeal
ingcl
ausebecausei tf
ail
stodesignat e
thespecifi
cactoractsidenti
fi
edbynumberort it
le,t
hatareintended
tober epeal
ed.
 8

Was t her
e an impl
ied r
epealby Republi
c ActNo.7160 ofthe
MERALCOf r
anchi
seinsof
arasthelat
teri
mposesa2%t ax"
inli
euof
al
ltaxesandassessmentsofwhat
evernatur
e"?

Wer
uleaf
fi
rmat
ivel
y.

Wear emi ndfuloft heest abli

shedr ul
et hatrepealsbyi mpl i
cat ionare
notfavoredasl awsar epr esumedt obepassedwi t
hdel i
ber ationand
ful
lknowl edgeofal ll awsexi sti
ng ont hesubj ect.A gener allaw
cannotbe const rued t o hav er epealed a speci allaw by mer e
i
mpl i
cati
onunl essthei ntentt orepealoral teri
smani f
est 
9
 andi tmust
be convincingly demonst rat
ed t hatt he t wo laws ar e so cl earl
y
repugnantandpat entlyinconsi stentthattheycannotco- exist. 
10

Iti
sourv i
ewt hatpeti
ti
onscor r
ectlyrel
yont heprov i
sionsofSections
137and193oft heLGCt osuppor ttheirpositi
ont hatMERALCO` stax
exemptionhasbeenwi t
hdrawn.Theexpl i
citlanguageofSect i
on137
which aut hori
zes t he pr ovince t o i mpose f ranchi
se t ax
"not
withst
andinganyexempt i
ongr antedbyanyl aw orot herspecial
l
aw"i sall
-encompassingandcl ear.Thef ranchiset axi simposable
despi
teanyexempt ionenjoyedunderspeci allaws.

Sec.193buttr
essest
hewit
hdrawalofext
anttaxexempti
onpri
vi
leges.
Bystati
ngthatunl
essot
her
wiseprovi
dedinthisCode,
taxexempti
ons
ori ncentivesgr antedt oorpr esentlyenj oy edbyal lpersonswhet her
natural or j uridical,i ncludi ng gov er
nment -owned or cont r
olled
corpor ati
ons except1)l ocalwat erdi strict
s,2)cooper atives dul y
registeredunderR. A.6938, (
3)non- stockandnon- profi
thospi t
al sand
educat ionalinst i
tuti
ons,ar ewi thdrawnupont heef f
ect
ivi
tyoft his
code,t heobv iousi mpor tist ol i
mitt heexempt ionstot het hree
enumer atedent it
ies.I tisabasi cpreceptofst atutoryconst ruction
thatt heexpr essment i
onofoneper son,t hi
ng,act ,orconsequence
excludesal lother sasex pr essed i nt he f amili
armaxi m expr essio
untusestexcl usioal terius.  
11
Intheabsenceofanypr ovi
sionoft he
Codet ot hecont rary,andwef i
ndnoot herprov i
sioninpoi nt,any
existing tax exempt ion ori ncentive enj oyed by MERALCO under
existinglawwascl earl
yintendedt obewi thdrawn.

Readi ngt ogetherSect ions137and193oft heLGC,weconcl udet hat

undert heLGCt hel ocalgov ernmentunitmaynowi mposeal ocalt ax
atar at enotexceedi ng50%of1%oft hegr ossannualr ecei
ptsfort he
precedi ng cal endary earbased on t he i ncoming r eceipt
sr ealized
withi
ni tst erri
torialjurisdi
ction.Thelegislati
vepur poset owithdr aw
taxpr ivilegesenj oyunderex isti
nglaworchar terisclear l
ymani f
est ed
by t he l anguage used i n Sections 137 end 193 cat egoricall
y
withdr awi ng such exempt i
on subject onl y to t he except ions
enumer at ed.Sincei twoul dbenotonl yt ediousandi mpract
icalt o
attemptt oenumer atealltheexisti
ngstatutesprovidingf orspecial t
ax
exempt ionsorpr ivil
eges,t heLGC pr ovided foran expr ess,al beit
gener al,wi t
hdrawalofsuch exempt ions orpr i
vil
eges.No mor e
unequi v ocallanguagecoul dhav ebeenused.

Iti strue t
hatt he phrase "i
nl ieu ofallt axes"f ound i n speci al
franchi
seshasbeenhel dinsev eralcasest oexemptt hef ranchise
holderfrom paymentoft axonitscor por
atefranchi seimposedoft he
Inter
nalRev enueCode,ast hechar terisint henat ureofapr ivate
contractand t he exempt i
on is par toft he i nducementf ort he
acceptance oft he fr
anchise,and t hatthe imposi ti
on ofanot her
franchi
setaxbyt helocalauthori
tywoul dconst i
tuteani mpai rmentof
contractbetweent hegov ernmentandt hecor porati
on.  
12
Butthese
"magic words"cont ained int he phrase "shal lbe inl ieu ofal l
taxes'
'
 13
 havetogivewaytotheperemptoryl
anguageoftheLGC
specif
ical l
yprov
idi
ngfort
hewi
thdr
awalofsuchexempti
onpr
ivi
l
eges.

Accor di
ngl yi Mact
n  anCebuI nternati
onalAirportAuthori
tyv s.
Mar cos.  
14
t
hi sCour theldthatSect i
on193oft heLGCpr escri
besthe
generalr ul e, v
iz.
,t he tax exempt i
on ori ncenti
ves,gr anted t
o or
presentlyenj oyedbynat ur
alorj uri
dicalpersonsar ewithdrawnupon
the ef f
ect i
v i
ty oft he LGC exceptwi thr espectt ot hose enti
ti
es
expresslyenumer ated.Int he same v ei
n,We musthol dt hatthe
expresswi t hdrawaluponef f
ectivi
tyoft heLGC ofal lexempt i
ons
exceptonl yaspr ovidedtherei
n,cannol ongerbei nvokedbyMer al
co
todisclaiml i
abili
tyforthelocaltax.

Pri
vater espondentsf ur
therargue t
hatt he "i
nl i
eu of "provisi
on
contai
nedi nPD551,Act .No.3648andRA2340doesnotpar takeof
the nature ofan exempt i
on,butisa" commut at
ivet ax".This
content
ionwasr aisedbutwasnotuphel din CagayanElectri
cPower
andLightCo. I
nc. v
s. Commissi
onerofInt
ernalRevenue 
15
 wher
einthe
SupremeCour tstated:

...Congr
esscoul dimpairpeti
ti
oner'
slegi
slat
ivef r
anchise
bymakingitli
ableforincometaxfrom whichher etof
oreit
wasexempt edbyv ir
tueoft heexemptionprovidedf orin
sect
ion3ofitsfr
anchise...

...Republ
icActNo.5431,i namendi ngsecti
on24oft he
TaxCodebysubj ecti
ngtoi ncomet axallcorporatetax
payer
snotexpresslyexemptedther
einandinsection27of
the Code,had t he eff
ect of withdr
awing petiti
oner'
s
exempti
onfrom i
ncomet ax...

Pri
vater espondent 'sinvocat i
onoft henon- i
mpairmentclauseoft he
Constituti
on i s accordingl y unav ail
ing.The LGC was enact ed in
pur
suanceoft heconsti
tut ionalpol i
cyt oensur eautonomyt olocal
government s 
16
andtoenabl et hem t oattainfull
estdevelopmentas
sel
f-r
eliantcommuni t
ies.  
17
Thusi n MactanCebuI nt
ernati
onalAir
port
Authorityvs. Mar cos,
 supra,t hisCour tpoint
edout ,i
nuphol di
ngt he
wit
hdr awaloft herealestat et axexempt i
onpr ev
iousl
yenjoyedbyt he
Mact
anCebuI
nter
nat
ional
Air
por
tAut
hor
it
y,asf
oll
ows:

Not et hatasr epr oducedi nSect ion234( a)t hephr ase' '
and
any gov ernment -owned or cont roll
ed cor por ation so
exemptbyi t
schar ter "wasexcl uded.Thej ust i
f i
cat i
onf or
thisrest r
ictedexempt i
oni nSect ion234( a)seemsobv i
ous:
tol i
mi tfur thert axexempt i
onpr ivileges,especi allyi nl ight
oft hegener alpr ov isiononwi thdr awaloft axexempt ion
privil
eges i n Sect ion 193 and t he speci alpr ov ision on
withdr awalofexempt i
onf rom pay mentofr ealpr oper t
y
taxesi nt hel astpar agr aphofSect ion234.Thesepol i
cy
consi derations ar e consi stentwi tht he St ate pol icy t o
ensur eaut onomyt ol ocalgov er nment sandt heobj ect iveof
the LGC t hatt heyenj oygenui ne and meani ngf ull ocal
autonomy t o enabl e t hem t o at t
ain t hei r f ullest
dev el
opmentassel f-reliantcommuni ti
esandmaket hem
effectivepar tnersi nt heat tainmentofnat ionalgoal s.The
powert ot axi st he mostef fect ivei nstrumentt or aise
neededr ev enuest of inanceandsuppor tmy riadact iv i
t i
es
oflocalgov ernmentuni tsf ort hedel iveryofbasi cser vices
essent ialtot hepr omot ionoft hegener alwel fareandt he
enhancementofpeace,pr ogr ess,and pr osper ityoft he
peopl e.Itmayal sober elev antt or ecallthatt heor iginal
reasons f ort he wi thdr awaloft axexempt ion pr i
vileges
grantedt ogov er nment -
ownedorcont roll
edcor por ations
andal lotheruni tsofgov er nmentwer et hatsuchpr i
v il
ege
resultedi nser ioust axbaseer osi onanddi stor tionsi nt he
taxt reatmentofsi mi larlysi tuat edent erprises,andt her e
wasaneedf ort heseent it
iest oshar ei nther equi rement s
ofdev elopment ,f iscalorot her wi se,bypay ingt het axes
andot herchar gesduef r
om t hem.  
18

TheCour
tther
einconcl
udedt
hat
:

not
hingcanpr ev
entCongressfrom decreei
ngt hateven
i
nstr
ument al
it
ies or agencies of t he Gov er
nment
per
forminggov er
nmentalf
unct
ionsmaybesubj ecttot
ax.
Whereitisdonepreci
selyt
oful
fil
laconsti
tuti
onalmandate
 andnat
ional
pol
i
cy,
noonecandoubti
tswi
sdom.
 19

Thepowert otaxisprimar
il
yv estedi nCongr ess.However,i nour
j
uri
sdict
ion,itmaybeexerci
sedbyl ocallegi
slati
vebodi
es,nol onger
merel
ybyv i
rt
ueofav al
i
ddelegati
onasbef ore,butpur
suanttodi r
ect
aut
horit
yconf er
redbySecti
on5,Ar ticl
eXoft heConsti
tut
ion.
 20
 Thus
Art
icl
eX, Secti
on5oftheConsti
tuti
onr eads:

Sec.5—EachLocalGov er
nmentuni tshallhavethepower
tocreat
eitsownsour cesofr evenueandt ol ev
ytaxes,f
ees
andchargessubjecttosuchgui delinesandl i
mitat
ionsas
theCongressmaypr ovide,consistentwiththebasicpoli
cy
oflocalautonomy .Such t axes,f eesand chargesshall
accr
ueexclusi
vel
yt otheLocal Gov ernments.

Thei mportantlegaleffectofSecti
on5i st hathenceforth,in
i
nterpret
ing statut
ory provi
sion on muni
cipalfiscalpower s,
doubtswi l
lhavetoresol
v edi
nf av
orofmuni
cipalcorpor
ations. 
21

Ther ei sf ur therbasi sf ort i

reconcl usi ont hatt henon- impai rmentof
cont ractcl ausecannotbei nvokedt ouphol dMer alco'sexempt i
on
from t hel ocalt ax.Escuder o Electri
cCo.wasor i
ginallygi v ent he
l
egi slativef ranchi seunderAct .3648t ooper ateanel ect ri
cl i
ghtand
powersy st em i nt heCi tyofSanPabl oandnear bymuni cipalit
ies.The
term oft hef ranchi seunderAct .No.3648i saper iodoff i
ftyy ears
from t heAct 'sappr ov alin 1929.Thesai dl aw pr ov i
ded t hatt he
franchi sei sgr ant edupont hecondi tiont hati tshal lbesubj ectt o
amendment ,orr epealbyt heCongr essoft heUni t
edSt ates.  
22
Under
the1935.   
23
the1973   24
andt he1987   25
Const i
tutions,nof r
anchi seor
ri
ghtshal lbegr ant ed exceptundert hecondi ti
ont hati tshal lbe
subj ectt oamendment ,alterationorr epealbyt heNat ionalAssembl y
whent hepubl ici nterestsor equires.Wi thorwi t
houtt her eser v at i
on
clause,f ranchi sesar esubj ectt oal ter at
ionst hroughar easonabl e
exer ciseoft hepol icepower ;theyar eal sosubj ecttoal terationbyt he
powert otax, whi chl i
kepol icepowercannotbecont ractedaway .
 26

Fi
nall
y,whil
ethemat
teri
snotofcont rol
l
ingsigni
fi
cance,t
heCour t
not
est hatwher
eastheori
ginalEscuder
of r
anchi
seexempt ed t
he
franchi
sehol derf r
om allt axeslev
iedorcollect
ed" now orint he
future"
  
27
t
hisphr aseisnot
iceablyomitt
edinthecounterpar
tprov
ision
ofP. D.551;t hatsaidomi ssioni
si nt
endednott oforecl
osefuture
taxesmayr easonablybededucedbyst atut
oryconst
ructi
on.

WHEREFORE,t heinst
antpet
it
ioni
sGRANTED.Thedeci si
onoft he
RegionalTr
ialCourtofSan Pabl
o Ci
ty,appeal
ed f
rom is her
eby
rever
sedandsetasi deandthecomplai
ntofMERALCO i shereby
DISMISSED.

Nopr
onouncementast
ocost
s.

SOORDERED.

G.
R.No.131512     Januar
y20,
2000

LAND TRANSPORTATI ON OFFI CE[ LTO]

,representedbyAssi st
ant
Secretary Manuel F. Br uan, LTO Regional Of fi
ce, Regi on X
representedbyi tsRegionalDir
ector,Ti
moteoA.Gar cia;andLTO
Butuanr epr
esentedbyRositaG.Sadiaga,i
tsRegistr
ar, 
pet i
ti
oners,
vs.
CITYOFBUTUAN,r epr
esentedinthiscasebyDemocr itoD.Pl azaII
,
CityMay or,
 
respondent
s.

VI J.
TUG,
  :

The1987Const itutionenunci atest hepol i

cyt hatt het erri
torialand
polit
icalsubdi visionsshal lenjoyl ocalautonomy .I
1 
nobedi encet othat
mandat e oft he f undament allaw,Republ icAct( "
R.A.")No.7160,
otherwiseknownast heLocalGov ernmentCode,expr
2 
essest hatthe
terri
tori
alandpol iticalsubdivisi
onsoft heSt at
eshal lenjoygenui ne
andmeani ngf ullocalaut onomyi nor dertoenabl et hem t oattainthei
r
ful
lestdev elopmentassel f-
reli
antcommuni t
iesandmaket hem mor e
effecti
vepar tner si nt heattainmentofnat ionalgoal s,andt hati ti
sa
basic ai m oft he St at
et o pr ov i
de fora mor er esponsiv e and
account ablel ocalgov ernmentst ructur
ei nsti
tutedt hroughasy st
em
ofdecent r
alizat i
onwher ebyl ocalgov ernmentuni t
sshal lbegi ven
mor
epower
s,aut
hor
it
y,r
esponsi
bil
i
tiesandr
esour
ces.

WhiletheConst it
uti
onseekstost
rengthenl
ocalunit
sandensur et
heir
vi
abili
ty,clearl
y,however,ithas neverbeen the i
ntenti
on ofthat
organic l aw t o create an i
mper ui
m i n i mperio 
and instal
l
an i
nfra sover
eign pol
it
icalsubdi
v i
sion i
ndependent of a single
sovereignstate.

TheCour tisaskedi nthisinst

ancet oresol
vet heissueofwhet her
undert hepresentsetupt hepoweroft heLandRegi strat
ionOffi
ce
("LTO")toregi
ster
,tri
cycl
esinpar t
icul
ar,aswellastoi ssueli
censes
forthedriv
ingther
eof,hasli
kewisedevolvedt
olocalgov ernmentuni
ts.

The Regi onalTr ialCour t(Branch 2)ofBut uan Ci t

yhel d3 t
hatt he
author i
tyt oregistertri
cycl
es,thegr antofthecorrespondingf r anchise,
thei ssuanceoft r
icycl
edr i
vers'license,andt hecol l
ectionoff ees
thereforhadal lbeenv est
edi ntheLocalGov ernmentUni ts( "LGUs").
Accor dingly,itdecreedt heissuanceofaper manentwr itofi nj uncti
on
againstLTO,pr ohibit
ingandenj oiningLTO,aswel lasitsempl oyees
andot herper sonsact i
ngini tsbehal f
,from (a)regist
eringt ri
cycl
es
and( b)i ssuingl i
censest odr i
versoft ri
cycl
es.TheCour tofAppeal s,
onappeal toit,
sust ai
nedthet r
ialcourt.
1âwphi
1.nêt

Theadv erser ul
i
ngsofbot ht hecour t
 aquo 
andt heappell
atecourt
promptedt heLTOt ofil
etheinstantpet i
ti
onforrevi cer
ewon  t
ior
ari
 t
o
annulandsetasi dethedecision,dat
4 
ed17Nov ember1997,ofthe
CourtofAppeal saffi
rmingtheper manenti nj
unctiv
ewritor
derofthe
RegionalTrial
Court(Branch2)ofBut uanCi
ty.

RespondentCit
yofBut uanassertsthatoneoft hesali
entpr
ovi
sions
i
nt r
oducedbyt heLocalGov ernmentCodei si ntheareaoflocal
taxati
onwhichallowsLGUst ocollectregistrat
ionfeesorcharges
alongwi t
h,i
ni t
sv iew,thecorrespondingi ssuanceofallki
ndsof
l
icensesorper
mi t
sforthedri
vi
ngoft ricy
cles.

The1987Const
it
uti
onpr
ovi
des:

Eachl
ocalgov
ernmentuni
tshal
lhav
ethepowert
ocr
eat
eit
s
 ownsour cesofr evenuesandt olevyt axes,fees,andcharges
subjectt osuchgui delinesandlimi
tationsast heCongressmay
provide, consi
stentwitht hebasi
cpolicyoflocalautonomy.Such
taxes,f ees,andchar gesshallaccrueexcl usi
velytothel ocal
gover nment s.
5

Sec.129andSect
ion133oft
heLocal
Gov
ernmentCoder
ead:

Sec.129. Powert oCr eateSour cesorRev enue.— Eachl ocal

governmentuni tshallexer cise it
s powert o cr
eateits own
sourcesofr evenueandt olevyt axes,fees,andchargessubject
totheprov i
sionsher ei
n,consistentwi t
ht hebasicpoli
cyoflocal
autonomy .Sucht axes,fees,andchar gesshallaccr
ueexclusi
vely
tothelocalgov er
nmentuni t
s.

Sec.133.CommonLi
  mitat
ionsont heTaxi ngPower sofLocal
GovernmentUnits.— Unless otherwise provi
ded herei
n,the
exer
ciseofthetaxi
ngpower sofprovi
nces,citi
es,munici
pali
ti
es,
andbarangaysshal
lnotext
endtot helevyofthefol
lowing:

xxx     xxx     
xxx

(l
)Taxes,f
eesorchar gesfortheregi
str
ati
onofmotorvehi
cles
andfortheissuanceofallkindsofli
censesorper
mit
sf ort
he
dri
vi
ngther
eof,excepttr
icy
cles.

Relyi
ng on t he f oregoing pr ovi
sions oft he l
aw,t he Sangguniang
Pangl ungsod ( "SP" )ofBut uan,on 16 August1992,passed SP
OrdinanceNo.916- 92ent it
led" AnOr dinanceRegul ati
ngtheOper ati
on
of Tr icycles-for-Hire,pr oviding mechani sm f or the issuance of
Franchi se,Regi strati
on and Per mi t,and i mposi ng Penalti
es for
Viol
at ionst hereofandf orotherPur poses. "Theor di
nancepr ovi
dedfor,
amongot hert hings, t
hepay mentoff ranchisefeesf orthegrantofthe
fr
anchi seoft r
icycles-for-
hire,feesf ort her egi
strati
onoft hev ehi
cle,
andf eesf ort hei ssuanceofaper mi tforthedr i
vingthereof.

Pet
it
ionerLTO expl
ainsthatoneofthefunct
ionsofthenati
onal
gov
ernmentthat,i
ndeed,hasbeent
ransf
err
edtolocalgov
ernment
unit
si sthefr anchi
singauthori
tyovert r
icycl
es-f
or-hi
reoft heLand
Transport
ati
onFr anchisi
ngandRegulatoryBoar d("
LTFRB" )butnot
,it
asseverat
es,theauthor i
tyofLTOtoregisteral
lmot orvehicl
esandto
i
ssuet oquali
fi
edper sonsofli
censestodrivesuchv ehi
cles.

Inordertosett
lethev ariantposi t
ionsoft hepar t
ies,theCityofBut uan,
repr
esentedbyi tsCi tyMay orDemocr it
oD.Pl aza,f i
ledon28June
1994 witht he trialcour ta pet i
ti
on f or" prohibit
ion,
 mandamus,
i
njuncti
on with a pray erf orpr eli
mi nar
yr estraini
ng or derex-
  parte"
seekingthedeclar
at i
onoft hev al
idit
yofSPOr dinanceNo.962- 93and
theprohi
biti
onoft heregi strationoft ri
cycles-for-hir
eandt hei
ssuance
ofli
censesforthedr i
vingt her eofbyt heLTO.

LTOopposedt
hepr
ayeri
nthepet
it
ion.

On20March1995,
thet
ri
alcour
trender
edar
esol
uti
on;
thedi
sposi
ti
ve
por
ti
onr
ead:

Inv iewoft hef oregoing,letaper manenti nj

uncti
vewri
tbei ssued
agai nstther espondentLandTr anspor tat
ionOffi
ceandtheot her
respondent s,pr ohibiti
ngandenj oiningt hem,thei
rempl oyees,
officers,at t
or ney'sorot herper sonsact inginthei
rbehal ffrom
forcingorcompel l
ingTr i
cy cl
est ober egist
eredwit
h,anddr ivers
to secur et heirl icenses f rom r espondent LTO or secur e
franchi sefrom LTFRBandf rom col lectingfeesther
eon.Itshoul d
beunder stoodt hatt her egistr
at i
on,f r
anchiseoftri
cyclesand
driver '
slicense/ permi tgrantedori ssuedbyt heCit
yofBut uan
arev al
idonl ywi t
hint heter r
it
oriallimitsofBut uanCit
y.

Nopr
onouncementast
ocost
s.6

Peti
ti
onersti
melymovedforar econsi
der ati
onoftheabover
esol
uti
on
butitwast o no av
ail.Peti
ti
onerst henappeal ed t
otheCourtof
Appeals.Init
snow assailed decisi
on,t heappellat
ecourt
,on 17
November1997,sust
ainedthetri
alcourt.Itr
uled:

WHEREFORE,t he pet
it
ion is hereby DI
SMISSED and the
quest
ioned per
manentinj
unct
ive writi
ssued by t
he cour
ta
 
 quo 
dat
edMar
ch20,
1995AFFI
RMED. 7

Comi
ngupt
othi
sCour
t,pet
it
ioner
srai
set
hissol
eassi
gnmentofer
ror
,
towi
t:

TheCour tofAppeal s[ has]erredi nsustai

ningtheval
i
dityoft
he
wr i
tofi njuncti
oni ssuedbyt het r
ialcour
twhi chenj
oinedLTO
from (1)registeri
ngt r
icycles-
for -hi
reand(2)issui
ngli
censesfor
thedr i
vingt hereofsincet heLocalGov er
nmentCodedev olv
ed
onlythef ranchisi
ngaut horit
yoft heLTFRB.Functi
onsoftheLTO
wer enotdev olvedtot heLGU' s.8

Thepet
it
ioni
simpr
essedwi
thmer
it
.

The Depar tmentofTr anspor tation and Communi cations9 (

"DOTC" ),
through t he LTO and t he LTFRB,has si nce been t asked wi t
h
i
mpl ement i
nglawsper taini ngt ol andt r
anspor t
ation.TheLTOi sal i
ne
agencyundert heDOTC whosepower sandf unctions,pur suantt o
ArticleIII,Secti
on4( d)[ 1],ofR.
10 
A.No.4136, otherwiseknownasLand
Transpor tati
onandTr af f
icCode,asamended,dealpr i
mar i
lywi ththe
regist r
ationofal lmot orv ehi clesandt hel i
censingofdr iverst hereof.
TheLTFRB, upont heot herhand, ist hegov erni
ngbodyt askedbyE. O.
No.202, dated19June1987, tor egul atetheoper ati
onofpubl i
cut il
it
y
or" forhi re"vehicl
esandt ogr antf ranchisesorcer tif
icat esofpubl i
c
conv enience( "
CPC" ).Fi
11 
nel yput ,r egistr
ationandl i
censi ngf unctions
arev estedi ntheLTOwhi lef ranchi singandr egulatoryr esponsi bil
iti
es
hadbeenv est
edi ntheLTFRB.

UndertheLocalGover
nmentCode,cer
tai
nfunct
ionsoft
heDOTC
weretr
ansf
err
edtotheLGUs,
thusl
y:

Sec.458.
 Power
s,Dut
ies,
Funct
ionsandCompensat
ion.—

xxx     xxx     
xxx

(3)Subjecttot hepr ovi

sionsofBookI Ioft hi
sCode,enact
ordi
nancesgr ant
ingfranchisesandaut hori
zi
ngt heissuanceof
permit
sorlicenses,uponsuchconditionsandf orsuchpurposes
i
ntendedtopr omotethegener alwel
fareoftheinhabit
antsofthe
 ci
tyandpur
suantt
othi
slegi
slat
iveaut
hor
it
yshal
l
:

xxx     xxx     
xxx

(VI)Subj
ectt otheguidel
inesprescri
bedbyt heDepartmentof
Transport
ati
onandCommuni cati
ons,
 r
egul
atet heoperati
onof
tri
cycl
esandgr antf
ranchi
sesfortheoperat
ion t
hereofwit
hint
he
terr
it
ori
aljur
isdi
cti
onofthecity.(
Emphasissupplied)
.

LGUsi ndubi tabl ynow hav et hepowert or egul atet heoper at

ionof
tri
cy cl es-f or-hir
eandt ogr antf ranchi sesf ort heoper ati
ont her eof."To
regul at e"meanst of i
x,est abl ish,orcont r ol;toadj ustbyr ule,met hod,
orest abl ishedmode;t odi rectbyr uleorr estrict i
on;ort osubj ectt o
gover ningpr inci plesorl aws.Af12 
r
anchi sei sdef inedt obeaspeci al
priv
i leget odocer tai
nt hingsconf err
edbygov er nmentonani ndivi
dual
orcor por ati
on,andwhi chdoesnotbel ongt oci ti
zensgener allyof
common r ight.On t
13 
he ot herhand," t
or egist er"means t or ecor d
formal lyandexact l
y,t oenr ol l,ort oent erpr eci selyi nal i
stort he
l
ike,anda"
14 
dri
v er 'slicense"i st hecer t
ificat eorl icensei ssuedbyt he
gover nment whi ch aut hor i
zes a per son t o oper ate a mot or
vehicl e.Thedev
15 
olutionoft hef unct i
onsoft heDOTC,per formedby
theLTFRB,t ot heLGUs,assoapt l
yobser vedbyt heSol i
cit
orGener al
,
i
sai medatcur bingt heal armi ngi ncreaseofacci dentsi nnat i
onal
highway si nv olv ingt ri
cycl es.I thasbeent heper ceptiont hatl ocal
gover nment sar ei ngoodposi t i
ont oachi evet heenddesi redbyt he
l
aw- maki ngbodybecauseoft hei rpr oximi tyt ot hesi tuati
ont hatcan
enabl et hem t oaddr esst hatser i
ousconcer nbet tert hant henat i
onal
gover nment .

I
tmaynotbeami sst ostate,nevertheless,thatunderArti
cle458( a)[
3-
VI]oftheLocalGov ernmentCode,t hepowerofLGUst or egulatet he
operationoft ri
cy clesandt ograntf ranchisesfortheoperationt hereof
i
sst il
lsubj ectt
ot hegui deli
nespr escribedbyt heDOTC.I ncompl i
ance
therewith,t he Depar tmentofTr ansportation and Communi cations
("DOTC" )issued" Guidel
inest oImpl ementt heDev ol
uti
onofLTFRBs
Franchising Aut hor i
tyov erTr i
cycles-For-Hireto LocalGov er nment
unitspur suanttot heLocalGov ernmentCode. "Pert
inentprovisionsof
theguidel i
nesst ate:
I
nl i
euoft heLandTransportat
ionFranchi
singandRegulat
ory
Board ( LTFRB) i n t he DOTC, t he Sangguni ang
Bayan/
Sangguni
ang Panglungsod (
SB/ SP)shallper
for
m t he
fol
l
owing:

(a)I
ssue,amend,rev
ise,r
enew,suspend,orcancelMTOP
and prescr
ibe t
he appropri
atet er
ms and condi t
ions
ther
efor
;

xxx     xxx     
xxx

Oper
ati
ngCondi
ti
ons:

1.Forsaf et
yreasons,no tricy
cles should operate on
nationalhi
ghway
sut i
li
zedby4wheelv ehi
clesgreaterthan
4t onsandwherenor malspeedexceed40KPH.Howev er,
theSB/ SPmayprovideexcepti
onsifthereisnoalternati
ve
route.

2. Zones must be wi thi

n t he boundar ies of the
muni ci
palit
y/ci
ty.However,
exist
ingzoneswi t
hinmorethan
one muni cipal
it
y/ci
tyshallbe mai ntained,provi
ded t
hat
operatorsservi
ngsaidzoneshall secureMTOP' sfr
om each
oft he muni ci
pali
ti
es/ci
ti
es having jurisdi
cti
on overthe
areascov eredbythezone.

3.A commoncol orfortri

cycl
es-
for
-hi
reoperat
inginthe
samezonemaybei mposed.Eachunitshallbeassi
gned
and bearan identi
fi
cati
on number,aside f
rom i
ts LTO
l
icensepl
atenumber .

4.Anoper atorwishingtostopservi
cecompl et
ely,orto
suspendser vicef
ormor ethanonemont h,shouldrepor
tin
writ
ingsucht erminati
onorsuspensi
ontot heSB/ SPwhich
ori
ginal
ly granted the MTOP priorthereto.Transferto
anotherzonemaybeper mitt
eduponapplicati
on.

5.TheMTOPshallbeval
i
df orthr
ee(3)y
ears,renewabl
e
fort
hesameper
iod.Tr
ansfertoanot
herzone,changeof
 ownershipofunitortr
ansf
erofMTOPshal
lbeconst
rued
as an amendment t o an MTOP and shal
lrequi
re
appr
opriateappr
ovaloft
heSB/SP.

6.Operat
orsshal
lempl
oyonl
ydr
iver
sdul
yli
censedbyLTO
fort
ri
cycl
es-f
or-
hir
e.

7.No t ri
cycl
e-f
or-hi
re shal
lbe all
owed to car
ry mor
e
passenger
sand/ orgoodsthani
tisdesi
gnedf
or.

8.At r
icy
cle-f
or-
hir
eshallbeall
owedtooperat
eli
keat axi
serv
ice,
 i
.e.
,serv
iceisr
enderedupondemandandwit
houta
fi
xedroutewithi
nazone.16

Suchascanbegl eanedf r
om t heexpl i
citlanguageoft hest at
ute,as
wellas t he correspondi ng gui deli
nes issued byDOTC,t he newly
delegatedpower sper t
aint othef r
anchisingandr egulatorypower s
theretof
oreexer cisedbyt heLTFRBandnott ot hefunctionsoft he
LTO r el
ati
v etot her egistrati
onofmot orv ehi
clesandi ssuanceof
l
icenses f orthe dr i
ving t hereof .Clear
ly unaf fect
ed by t he Local
Gov ernmentCode ar et he power s ofLTO underR. A.No.4136
requiri
ng the registr
ation ofal lkinds ofmot orv ehi
cles "used or
oper at
edonoruponanypubl ichi ghway"int hecount r
y.Thus—

Sec.5.Al
  lmotorvehiclesandot hervehicl
esmustberegistered.
—( a)Nomot orvehicleshallbeusedoroper at
edonoruponany
publi
chi ghwayoft hePhi l
ippi
nesunl esst hesameispr operly
regi
steredforthecurrentyearinaccordancewi tht
heprovisi
ons
ofthisAct(Art
icl
e1, ChapterII
,R.A.No.4136) .

TheCommi ssionerofLandTr ansportati

onandhi sdeput i
esar e
empower ed atany ti
me t o examine and i nspectsuch mot or
vehi
clestodetermi newhet hersaidvehiclesar eregist er
ed, orare
unsightl
y,unsafe,impr operl
ymar kedorequi pped,orot herwise
unfi
tt obeoper atedonbecauseofpossi bleexcessi vedamage
to highways,br idges and ot herinfrastruct ur
es.The LTO i
17 
s
additi
onall
y char ged wi t
h bei ng t
he cent ralreposi tory and
custodianofallrecordsofallmot orvehicles.18
 TheCourtsharest
heappr
ehensionoft
heSol
ici
torGenerali
fthe
abovefunct
ionsweretoli
kewisedevol
vetolocalgovernment
uni
ts;hest
ates:

Ifthet ri
cycl
eregi
strationf uncti
onofr espondentLTO is
decentral
ized,t
heincidenceoft heftoft r
icycl
eswillmost
certai
nlygoup,andst olent ri
cyclesregi
steredinonel ocal
governmentcouldber egister
edi nanotherwi thease.The
determinati
onofowner shipthereofwillalsobecomev ery
dif
ficul
t.

Fakedr i
ver'
slicenseswilll
ikewiseproli
ferate.Thisli
kely
scenari
ounf ol
dswher eat ricy
cledriver
,notqual if
iedby
peti
ti
onerLTO'st esti
ng,couldsecureal icensefrom one
munici
palit
y,andwhent hesamei sconfi
scated,couldjust
goanothermuni ci
pali
tyt
osecur eanot
herlicense.

Dev ol
uti
on wi l
lentailthe hir
ing ofaddi ti
onalpersonnel
charged withi nspecti
ng tri
cy cl
es forr oad worthi
ness,
testi
ngdriv
er s,anddocument at i
on.Revenuesr ai
sedfrom
tri
cycl
eregistrati
onmaynotbeenought omeetsal ari
esof
additi
onalper sonneland inci
dent alcostsf ortools and
equipment.
19

Ther eli
ancemadebyr espondent sont hebr oadt axi
ngpowerofl ocal
gov ernment uni ts,speci f
ically under Sect ion 133 of t he Local
Gov er nmentCode, i
st angent i
al.Policepowerandt axati
on, alongwi th
emi nentdomai n,arei nherentpower sofsov ereigntywhi cht heSt ate
mi ghtshar ewi thlocalgov er nmentuni tsbydel egati
ongi venundera
const ituti
onalorast atutoryf i
at.Allthesei nher entpower sar ef ora
publ i
cpur poseandl egislat
ivei nnat urebutt hesi mil
arit
iesj ustabout
endt here.Thebasi cai m ofpol icepoweri spubl icgoodandwel far e.
Taxat ion,i nitscase,f ocusesant hepowerofgov ernmentt or aise
revenuei nor dert osuppor ti tsexistenceandcar ryoutitsl egitimat e
object ives.Althoughcor relativ
et oeachot heri nmanyr espect s,t he
grantofonedoesnotnecessar i
lycarrywithi tthegr antoft heot her .
Thet wo power sar e,byt raditi
onandj urisprudence,separ at
eand
distinctpower s,v arying int heirr espective concept s,char act er,
scopesandl imitati
ons.Toconst ruet het axpr ov i
si onsofSect ion
133( 1)i ndisti
nct i
velywoul dr esul tint her epealt ot hatext entofLTO' s
regul ator ypowerwhi chev i
dent l
yhasnotbeeni ntended.I fitwer e
other wise,t hel awcoul dhav ej ustsai dsoi nSect i
on447and458of
BookI I
Ioft heLocalGov er nmentCodei nt hesamemannert hatt he
speci ficdev olutionofLTFRB' spoweronf r
anchi singoft ricycl
eshas
beenpr ov i
ded.Repealbyi mpl icationi snotf avor ed.Thepowerov
20 
er
tri
cy clesgr antedunderSect ion458( 8) (
3)(VI)oft heLocalGov ernment
Codet oLGUsi st hepowert or egulatet heiroper at ionandt ogr ant
franchi ses f or t he oper ation t her eof. The excl usi onar y clause
cont ained i nt he tax pr ov i
sions ofSect ion 133( 1)oft he Local
Gov er nmentCode mustnotbe hel dt o hav e had t he ef f
ectof
wi t
hdr awi ngt heexpr esspowerofLTOt ocauset her egi strati
onofal l
mot orv ehiclesandt hei ssuanceofl icensesf ort hedr iv
ingt hereof .
These f uncti
ons oft he LTO ar e essent i
allyr egul at oryi n natur e,
exer cisedpur suantt ot hepol icepoweroft heSt at e,whosebasi c
object ivesar et oachi ever oadsaf etybyi nsur i
ngt her oadwor thi
ness
oft hesemot orv ehicl
esandt hecompet enceofdr iver spr escri
bedby
R.A.4136.Noti nsignifi
canti st her ulet hatast atut emustnotbe
const r
uedi nisolationbutmustbet akeni nhar monywi tht heext ant
bodyofl aws.21

TheCour tcannotendt hisdeci

sionwi t
houtexpressingitsownser i
ous
concernov ertheseemi nglaxi
tyi nthegr antoff ranchi
sesf orthe
operati
onoft r
icy
cles-for
-hi
reandi nall
owingt heindi
scrimi
nat euseby
suchv ehiclesonpubl i
chighwaysandpr i
ncipalt
horoughfares.Senat
or
Aquil
inoC.Pi mentel,Jr.
,theprincipalauthorandsponsoroft hebill
thatev entuall
yhasbecomet obeknownast heLocalGov ernment
Code,hasapt l
yremar ked:

Tricycl
esar eapopularmeansoft ransport
ation,speci
all
yinthe
count r
ysi
de.Theyare,unfor
tunat
ely,bei
ngallowedt odri
vealong
highway sandprinci
palthor
oughfareswher et heyposehazards
tot hei
rpassengersari
singfrom potent
ialcolli
sionswi
thbuses,
carsandj eepney
s.

Theoper
ati
onoftri
cycl
eswit
hinamuni
cipal
it
ymayberegulated
bytheSangguni
angBayan.I
nthi
sconnecti
on,t
heSangguniang
concernedwoulddowel lt
oconsiderpr
ohibi
ti
ngt heoper
ati
onof
tr
icy
clesalongoracr osshighwaysinvi
tecoll
isionswit
hfast
er
andbiggervehi
clesandimpedetheflowoftr
affic.22

The need f or ensuring public saf et

y and conveni
ence to
commut ersandpedest riansali
keispar amount.I
tmightbewell
,
i
ndeed, forpubl
i
cof fi
cialsconcernedt opayheedtoanumberof
prov
isionsinourlawst hatcanwar rantinappropri
atecasesan
i
ncurrenceofcriminalandci v
ill
iabi
li
ties.Thus—

TheRev
isedPenal
Code—

Art
.208. Pr
  osecutionofof fenses;negl
  i
genceandt ol
erance.—
Thepenal tyof 
pr i
sioncor reccional 
i
ni t
smi nimum per iodand
suspensionshallbei mposeduponanypubl i
cof f
icer,oroffi
cer
ofthel aw,who,i nder el
i
cti
onoft hedut i
esofhi sof fi
ce,shal
l
malici
ously refrai
n f rom i nstit
uting prosecuti
on f or the
punishmentof v i
ol ators of the law,or shal lt oler
atet he
commi ssionofoffenses.

TheCi
vi
lCode—

Art
.27.Anyper sonsufferingmat eri
alormorallossbecausea
publi
cservantorempl oyeer ef
usesornegl ects,withoutjust
cause,to perf
orm his of fi
cialduty may fi
le an act i
on for
damagesandot herr
eliefagainstt helat
ter
,wi
thoutpr ej
udiceto
anydisci
pli
nar
yadministrati
veactionthatmaybet aken.1âwphi
1.nêt

Art.34.Whenamemberofaci t
yormuni cipalpolicefor ce
refusesorfail
st orenderaidorpr otect
iont
oanyper sonincase
ofdangert oli
feorpr operty
,suchpeaceof f
icershallbeprimar il
y
l
iablef ordamages,and t he cit
y ormuni cipal
i
ty shallbe
subsidi
aril
y r esponsibl
e t her
efor. The ci v
il action her ein
recognizedshal lbei ndependentofanycr i
mi nalproceedings,
andapr eponderanceofev i
denceshallsuffi
cet osuppor tsuch
action.

Ar
t.2189.Pr
ovi
nces,ci
ti
esandmuni
cipal
i
tiesshal
lbel
i
abl
efor
 damagesf ort hedeathof,orinj
uri
essuf
fer
edby,anypersonby
reason oft he defect
ive condi
ti
on ofr
oads,str
eets,bri
dges,
publi
cbui l
dings,andot herpubli
cworksundert
heircontrolor
supervi
sion.

TheLocal
Gov
ernmentCode—

Sec.24.Li
  abi
li
tyf
orDamages.— Localgover
nmentunit
sand
thei
roffi
cial
sarenotexemptfr
om l
i
abil
i
tyfordeat
horinj
uryt
o
personsordamagetoproper
ty.

WHEREFORE, t he assail
ed decision which enjoi
ns t
he Land
Transport
ati
onOf fi
cefrom requi
ri
ngt hedueregi
str
ati
onoftr
icy
cles
andal i
censeforthedr
ivingther
eofisREVERSEDandSETASIDE.

Nopr
onouncement
soncost
s.

Letcopi
esofthisdecisionbelikewisefurni
shedtheDepar
tmentof
Int
eri
orandLocalGovernments,theDepartmentofPubl
i
cWor ksand
Highwaysandt
heDepar tmentofTransport
ati
onandCommunicati
on.

SOORDERED

G.
R.No.L-
30761Jul
y11,
1973

THESANMI GUELCORPORATI
ON, 
pet
it
ioner
,
vs.
THE MUNICIPAL COUNCI
L,THE MAYOR,and THE MUNI
CIPAL
TREASUREROFTHEMUNI CI
PALI
TYOFMANDAUE,PROVINCEOF
CEBU,
 r
espondent
s.

Gadi
omaandJosuef
orpet
it
ioner
.

Act
ingCi
tyFi
scalLawr
enceA.Par
awanf
orr
espondent
s.
ANTONI
O,J.
  :

Petit
ionf orwr i
tof certi
orari
 t
or evi
ew thejudgmentoft heCour tof
Fir
stI nstanceofCebu, i
nCi vi
lCaseNo.R- 10631,upholdi
ngthev al
idit
y
ofOr dinanceNo.23, seri
esof1966, asamendedbyOr di
nanceNo.25,
seri
esof1967,oft heMuni cipali
tyofMandaue,Cebu,i mposing" a
graduat edquar ter
lyf i
xedt axbasedont hegrossv al
ueofmoneyor
actualmar ketval
ueatt het i
meofr emov aloft hemanuf actured
arti
cles f rom theirf actori
es orot hermanuf actur
e orpr ocessing
establishment s.
"

I
nenactingthesaidor
dinances,themuni ci
palcounci
lofMandaue
i
nvoked as basi
s ofi
ts authori
ty Republi
c ActNo.2264 (Local
Aut
onomyAct ).

The r
elev
antport
ion ofSect
ion 1,Ordi
nance No.23 (1966)
,as
amendedbyOr
dinanceNo.25(
1967),pr
ovi
desasfoll
ows:

SECTI ON 1.—  MunicipalLicenseTaxOnPr opri

etorsOr
Oper at
orsOf. .
.Brewer i
es,..
.Propr i
etor
soroper at
orsof. ..
brewer i
es,..
.wit
hinthet err
itori
alli
mitsoft hi
smuni cipalit
y
shallpayagr aduated quar ter
lyf i
xed taxbased on t he
grossv alueinmoneyoract ualmar ketvalueatt hetimeof
remov al,
ofthemanuf acturedar t
icl
esf r
om theirfact
ories...
during the precedi
ng quar teri n accordance wi tht he
fol
lowingschedules:..
.:

CLASSQUARTERLYLICENSETAX
P160.
00andP0.30for
QUARTERLYGROSSVALUE eachP1,
000.
00or
fr
acti
ont
hereofi
nexcess

1P37,
500.
00oroverofP37,
500.00gr
ossv al
ue.
2P31.
250.
00toP37,499.
99P158.00perquart
er
325,
000.
00to31,
249.99132.00""
420,
000.
00to24,
999.99105.00""
515.
000.
00to19,
999.9983.00""
612.
500.
00to14,
999.9963.00""
 710,
000.00to12,
499.9950.
00""
88,
750.00to9,
999.9942.
00""
97,
500.00to8,
749.9937.
00""
106,
500.00to7,
499.9931.
00""
115,
500.00to6,
499.9927.
00""
124,
500.00to5,
499.9923.
00""
133,
750.00to4,
499.9919.
00""
143,
000.00to3,
749.9916.
00""
152,
500.00to2,
999.9913.
00""
162,
000.00to2,
499.9911.
00""
171,
750.00to1,
999.999.
00""
181,
500.00to1,
749.998.
00""
191,
250.00to1,
499.997.
00""
20LessthanP1,
250.005.
00""

Thepert
inentpor
tionofSect
ion2ofOrdi
nanceNo.23whi
chwasnot
amendedbyOr di
nanceNo.25stat
es:

PaymentofMuni ci
palLi
censeTax.— Afixedt
axi
mposed
onthisor
dinancemustfir
stbepaidbefor
eanyper
soncan
engage i
n business and is pay
abl
ef oreach t
axabl
e
busi
ness;.
..

Thegraduatedfixedtaxpr ovi
dedi nthisordinanceshal lbe
paidattheOf f
iceoft heMuni ci
palTr easurerquar terl
y,on
orbeforethetwent i
ethofJanuary ,April
,JulyandOct ober
;
....Provi
dedfur t
her,Thatasr egardsbusi nessesal r
eady
operat
ingatthetimet hisordi
nancet akeseffect,t
het axfor
theini
ti
alquart
ershallbepai dpursuanttothepr ovisionsof
thisordi
nanceandshal lbebasedont hegr ossv aluein
moneydur i
ngthequar teri
mmedi atelypreceding,.
...

Withi
nt heti
mef ixedforthepaymentoft heli
censetaxes
herei
nimposed,t hetaxpayersshal
lprepareandf i
lewith
theMuni ci
palTreasur
er,aswor nstat
ementoft hegross
val
ueinmoneydur i
ngtheprecedi
ngquarteronthebasisof
whichthetaxshallbeassessedandcol
lected..
...
ThebasicOrdinancewasNo.88,1
 whichtookeff
ectonSeptember25,
1962,butt
hiswasamendedbyOr dinanceNo.23(Januar
y1,1967),
andbyOrdinanceNo.25(Januar
y1, 1968).

Petit
ioner
,a domest i
c corpor at
ion engaged int he business of
manuf act
uri
ng beer and ot her products with a subsi di
ary
manuf act
uri
ngplantinMandaue,Cebu,si nceDecember ,1967,paid
thetaxesprescr
ibedintheaf oresaidordi
nance,pr
otestthus:P309.40
onJanuar y22,1968andP5, 171.80asofJul y18,1968,comput ed
respecti
vel
y" ont hebasisof70, 412and2, 203.
070casesofbeer
manuf act
uredandr emov edf rom saidMandauepl ant,multi
pli
edby
P7.60whi chist heprevail
i
ngmar ketpri
ce(wholesal
er'sprice)per
caseofbeeratthet i
meoft her emov al
".

Clai
mingthatitisadverselyaf
fect
edbyt heordi
nance,whichinits
vi
ewwasbey ondthepowerandauthori
tyofthemunici
pal
it
yt oenact
,
peti
ti
onerbroughtandactionintheCourtofFir
stInst
anceofCebu,
BranchVI,
fortheannul
mentofsaidordi
nance.

Pet i
ti
onercont endst hat( 1)thephr ase"grossv al
uei nmoneyor
actualmar ketv alue"empl oyedint hequest ionedor dinanceclearl
y
referr
edt o" salesormar ketpr i
ce"oft hear ti
clesorcommodi ti
es
manuf actur
edt her ebyi ndi
cat i
ngamani festintenttoi mposeat ax
basedonsal es,and( 2)thatt oimposeat axupont heprivi
l
egeof
manuf actur
ingbeer ,whent heamountoft het axi smeasuredbyt he
grossr ecei
ptsf rom itssalesofbeer ,isthesameasi mposingat ax
upont heproducti tsel
f.

Respondentsupont heot herhandi nsistthatthet axi mposedint he

questi
onedor di
nance( 1)isnotaper centagetaxorat axont hesales
ofbeerbuti sat axont hepr ivi
leget oengagei nt hebusinessof
manufacturi
ngbeer ,andt hephr ase"actualmar ketv alue"wasmer ely
employedasabasi sf orthecl assif
icati
onandgr aduat i
onofthet ax
soughttobei mposed;( 2)thatitisnotaspeci fi
ct axbecausei ti
snot
ataxont hebeeritself,
butont hepr ivi
legeofmanuf act ur
ingbeer;
and
(3)t
hatwi t
hconv ersionofMandauei ntoacityonJune21,1969,t he
appealhas become moot ,because t he prohibition againstt he
i
mposi t
ionofanypr ivi
leget axonsal esorot hert axesi nanyform
basedt
her
eon,
isappl
i
cabl
eonl
ytomuni
cipal
i
ties.

Whi leWehav eher etoforeannouncedt hedoct ri

net hatthegr antof
powert otaxt ochar ter
redci t
iesandmuni cipali
t i
esunderSect ion2of
theLocalAut onomyActi ssuf fi
cient
lypl enary ,
2
 itis,howev er,subj ect
tot heexcept ionsandl i
mi t
ati
onscont ainedi nt het wo( 2)prov isosof
thesamest atute.I
not herwor ds,themuni cipalcor porati
onshoul dnot
transcendt hel imit
at ionsimposedbyt hest atuteont hebasisofwhi ch
thepowert ot axi ssoughtt obeexer cised.Thus,Wehel di nt he
Mar induquecase, 3
 thatanor dinancepr ov i
dingf oragr aduat edt ax
basedonei t
her" gr ossout putorsal es"v i
olat est hepr ohibitionon
muni ci
pali
tiesagai nsti mposinganyper cent aget axonsal es,orot her
taxesi nanyf orm basedt hereon,ast heonl yst andar dprovidedf or
measur ingthegr ossout putisi t
spesov alue, asdet erminedf rom t rue
copi esofr eceiptsand/ orinv oi
cest hatt het axpay erisr equi redt o
submi ttothemuni cipaltreasurer.

Wear ethusconfi
ned t
othenar row i
ssueofwhet herornotthe
chal
l
engedordi
nancehastr
anscendedtheexcept
ionsandli
mit
ati
ons
i
mposedbysecti
on2ofRepubli
cAct2264.

Sect
ion2oft
heaf
oreci
tedst
atut
epr
ovi
des:

Provided,Thatmuni ci
pal
it
iesandmuni ci
paldi
str
ict
sshall
,
i
nnocase,i mposeanyper centagetaxonsalesorother
taxesi n anyf or
m based thereon nori
mposet axeson
arti
clessubjecttospeci
fi
ctax....

Section1ofOr dinanceNo.88oft heMuni ci

pali
tyofMandaue,as
amendedbyOr dinancesNos.23( 1967)and25( 1968)
,specif
icall
y
providest
hatthegr aduat
edquarter
lyt axshal
lbe"basedonthe gross
valueinmoneyoract ualmarketvalue att
hetimeofr emoval
,oft he
manuf act
uredpr oducts...f
rom t
heirfactor
ies..
.duri
ngthepreceding
calendaryear.
...

Wellsett
ledisther ul
ethati
nt heabsenceofl
egi
slati
veint
enttothe
contr
ary,techni
calorcommer cialt
ermsandphrases,whenusedi n
taxstat
utes,arepresumedtohav ebeenusedi
ntheirt
echni
calsense
orint heirtr
adeorcommer ci
almeani ng.Thus,thephrase" gr
ossv al
ue
i
nmoney "hasawel l
-defi
nedmeani ngi
nourt axstatutes.Forinst ance,
thet erm" grossvaluei nmoney "ofart
icl
essol d,bart
er ed,exchanged
ort r
ansf err
ed,asusedi nSect i
ons184,185and186oft heNat ional
Inter
nalRev enueCode,hasbeeni nvar
iablyused asequi v
alentt o
"grosssel l
ingpr i
ce"andhasbeenconst r
uedast het otalamountof
moneyori tsequi v
alentwhi cht hepurchaserpay st ot hev endort o
receive orgett he goods.4
 I
tmustbe not ed thatt he ordinance
speci f
icall
ypr ov
idest hatthebasi softhet axist he" grossv aluein
moneyoract ualmarketvalue"oft hemanuf act
uredarticle.

Thephr ase" act

ualmar ketv al
ue"hasbeenconst ruedast heprice
whichanar ti
cle"wouldcommandi nt heordinarycour seofbusi ness,
thatistosay ,whenof f
eredf orsal ebyonewi lli
ngt osell,butnotunder
compul siontosell,
andpur chasedbyanot herwhoi swi ll
i
ngt obuy,but
undernoobl igat
ionpur chasei t,
5
 orthepr i
cewhi cht hepr opert
ywi l
l
bri
ngi naf ai
rmar ketaft
erf airandr easonableef f
ortshav ebeenmade
tofindapur chaserwhowi l
lgivet hehighestpr i
cef orit.6
 The"actual
mar ketv al
ue"ofpr operty,forpur posesoft axation,theref oremeans
theselli
ngpr iceofthearti
cl einthecour seofor di
narybusi ness.

Consideringt hatthephr ase" grossvalueinmoney "isf oll

owedbyt he
words "oract ualmar ketv alue",itis evidentt hatt he latt
erwas
i
ntendedt oexpl ainandcl arif
yt heprecedingphr ase.Fort hewor d" or"
maybeusedast heequi valentof" t
hatist osay "andgi vesthatwhi ch
precedesi tt hesamesi gnifi
canceast hatwhi chf ollowsi t
.Iti snot
alwaysdi sjuncti
veandi ssomet i
mesi nterpretativeorexposi toryof
theprecedi ngwor d.7
 Cer
tai
nlyWecannotassumet hatt hephr ase" or
actualmar ketvalue"wasamer esurplusage,f oritser vest ocl arify
andexplai nt hemeani ngandi mportoft hepr ecedi ngphr ase.Inany
event,i
tist hedutyoft hecour t
s,sofarreasonabl ypr acti
cable,tor ead
andinterpr etastatuteast ogi veli
feandef fectt oitspr ovi
sions, soas
torenderi taharmoni ouswhol e.

Itisalsosi
gni
ficanttonote,t hatther
ei sasetr ati
obet weent he
amountofthetaxandt hevolumeofsales.Thusift
he" grossval
uei n
moneyoractualmar ketval
ue"oft hebeerremovedfrom thefactory
exceedsP37,
500.00perquar t
er,thetaxpayeri
sr equir
edt opaya
quar t
erl
ylicensetaxofP160. 00pl usP0.30f oreveryP1,000.00or
fracti
onoft heexcess.Inot herwor dsinexcessofP37, 500.00,the
taxpayerwillpayt
ot hemunicipali
tyacer t
ainamountoft axmeasur ed
byaper centageofthesales.Itistheref
oreevi
dentthatthechallenged
ordinancewasat ranspar
entat temptont hepartofthemunicipali
tyto
i
mposeat axbasedonsal es.

Althoughsect ion2oft heor dinancei nquest i

onpr ovidesinav ague
mannert hatt het axshal lbeassessedandcol lect edont hebasi sof
theswor nst atementoft hemanagerofaf i
rm orcor porati
on" ofthe
grossv al
uei nmoneydur ingt hepr ecedingquar ter,"inact ualpracti
ce
thequar terl
yt axl eviedupont hepet i
tioner,wascomput edont he
basisoft het ot almar ketoft hebeer ,perquar ter ,asshownbyt he
shippingmemor andum cer ti
fiedt obyt hest orekeeperoft heBur eau
Inter
nalRev enueassi gnedt ot hebr ewer y.Thust heamount ingt o
P309.40andP5, 171.80,paidbypet it
ionJanuar y22, 1968andJul y18,
1968,wer eact uall
ydet erminedr espect i
velyont hebasi sof70, 412
and2, 203.070casesmanuf act uredandr emov edf rom t heMandaue
plant,mul ti
pli
ed by P7. 60 whi ch ist he pr ev aili
ng mar ketpr i
ce
(wholesaler'
spr ice)percaseofbeer .

I Laoag Pr
n  oducers'Cooper ative Mar keting Associ ation,I nc.v s.
Muni cipal
it
y of Laoag, 8
 We hel dt hat the chal lenged or dinance
i
mposedat axbasedonsal es,althought heor dinancemer elyimposed
a" muni ci
palt axori nspect i
onf eeofonone- half( 1/2)cent avoon
everyki l
oofVi r
ginial eaft obacco,gar l
i
candoni ononal lwhol esale
dealersandv endors"because,i nitsappl i
cation,itdoesi mposeat ax
basedonsal es,asi tisbasedt henumberofki l
ossol dandpur chased
byhi m andwhent hewhol esalerorv endoraccumul ateshi sst ock,he
doessof oronlyonepur pose, t
osel lthesameatt heappr opr i
atet ime,
and" hecannotbyi tsv erynat ure,car r
yonhi sbusi nessunl esshesel ls
whathehasbought .
"Si mi larly,int hecaseatbar ,t heci rcumst ance
thatt hetaxi simposeduponpet i
tioneratt imeofr emov alf r
om t he
fact
or yofthemanuf act ur edbeer , andnotont hedat eofact ualsale, is
notofi mpor tantconsequencesi ncepet iti
onerwi l
l,int heend,sel lthe
beerr emov edf r
om t hef act ory,becausebyt henat ur eofi tsbusi ness,
i
thasnoal ternati
vebutt osel lwhati thasmanuf actured.
Wet heref
orehol
dthatthequest
ionedordi
nancei
mposedtaxbased
onsalesandt her
efor
ebeyondt heauthor
it
yofthemunicipal
i
tyto
enact.

Havingreachedt
hisconcl
usi
on,
itbecomesunnecessar
ytopassupon
theadditi
onalquesti
onposed,i.
e.,whet
herornott hechall
enged
ordi
nanceimposesataxonaproductsubj
ectt
ospecifi
ctax.

Respondent showev ercl ai

mt hatwi ththeconv ersionMandauei nt
oa
cit
ypur suanttoRepubl icActNo.5519,whi chwasappr ov edonJune
21,1969,t heissuehasal readybecomemoot ,si ncet hepr ohibiti
on
contained i n sect i
on 2 of Republ i
c Act 2264 appl i
es onl yt o
muni ci
pal i
ti
esandnott ochar t
er edciti
es.Thesamecont ent i
onhas
been r ejected i n City of Naga v .Cour t of Appeal s,
9
 and  Laoag
Producer s'Cooper ati
veMar ketingAssoci ati
on,Inc.v .Muni cipali
tyof
Laoag,supr a,wher e We r uled t hatt he l egali
ty ofan or dinance
depends upon t he poweroft he muni cipalit
yatt he t ime oft he
enactment t he chal l
enged or dinance.Si nce t he muni ci pali
ty of
Mandauehadnoaut horitytoenactt hesai dor di
nance, thesubsequent
approv alofRepubl icActNo.5519whi chbecameef fect i
veJune21,
1969,di dnotr emov et heor igi
nali nfi
rmi tyoft heor dinance.I ndeed
thereisnopr ovisioni ntheaf oreci t
edst atutewhi chi nv estsacur ati
ve
effectupont heor dinancesoft hemuni cipali
tywhi chwhenenact ed
wer ebey onditsst atutoryaut hority.

IN VIEW WHEREOF,t heappealedjudgmenti sher ebyreversedand

OrdinanceNo.23,seriesof1966,asamendedbyOr di
nanceNo.23,
seri
es of1966,whi ch became effect
ive January1,1968,oft he
Muni ci
pal
it
yofMandaue,Cebu,i sher ebydecl ar
ed nulland v oi
d.
Respondentsarealsoorderedtoref
undt hetaxespai dbyPet i
ti
oners
underthesaidor
dinance,wi
t hl
egali
nter
estthereon.Nocost s.

G.
R.No.L-
37684Sept
ember10,
1975
ARABAY,INC.,
 pet
iti
oner
,
vs.
THE COURT OF FI RST INSTANCE OF ZAMBOANGA DEL NORTE,
BRANCH II,THECI TYOFDI POLOG andEMI LI
O L.TAGAILO,inhis
capaci
tyasCityTreasur
eroftheCi
tyofDipol
og,etal
.,
 
respondent
s.

Domi
nguezLawOf
fi
cef
orpet
it
ioner
.

Assi
stantCi
tyFi
scalAr
qui
poL.Adr
iat
icof
orr
espondent
s.

J.
CASTRO,
  :

Bef or
eusi sapet iti
onforreviewoft hedecisionoftheCour
tofFir
st
InstanceofZamboangadelNor te,BranchII,dismi
ssingt
hecomplai
nt
oft hehereinpeti
tionerArabay,Inc.,forannulmentofataxordi
nance
oft heMuni ci
palCounci lofDi polog,ZamboangadelNor t
e,andfor
refundoft hetaxesithadpai dthereunder.OnDecember17,1965t he
Muni cipalCouncilofDi pol
ogenact edOr dinanceNo.19amendi ng
Sect i
onIofOr di
nanceNo.53ser iesof1964.Ast husamendedthe
saidSect i
onIreadsasf oll
ows:

Sect ion 1.Ther e shallbe charged fort he sel l

ing and
distribut i
on ofr ef i
ned and manuf act
ured mi ner aloils,
mot orand di eself uels,and petr
oleum based on t he
mont hlyal locati
onact ual
lydeli
ver
edanddi st
ributedand
i
nt ended f orsal e,in any mannerwhat soever,by t he
Company or suppl i
er to any person,f ir
m,ent i
ty,or
cor por ati
on,whet her as dealer of such r ef i
ned and
manuf actured mi neraloils,motorand di eself uels,and
pet roleum oras oper at
orofany st at
ion ther eof,the
followi ngt axpay ablemont hly
:

Gasol i
ne—P0. 01perlit
er
Lubricatingoi
ls—P0.01perlit
er
Diesel Fueloi
l
s¼cent avoperli
ter
Petroleum orP0.
05pergalloncan
keroseneor
 —P0.
02perhal
fgal
l
ont
in

Provi
ded,howev er
,thatretai
lsel
lerofnotmor
et han5
gall
oncansori tsequiv
alentshal
lbeexempt
edfrom the
provi
sionsoft
hisordi
nance.

Secti
on2.Thi
sOr
dinanceshal
ltakeef
fectonJanuar
y1,
1966.

OnJune21, 1969Republi
cActNo.5520wasapprov
ed.I
tpr
ovidedfor
thecreat
ionoftheCit
yofDipologfr
om t
hethenoft
heMuni
cipali
tyof
Dipol
og,totakeef
fectonJanuary1,
1970.

OnJul y28,1971t heAr abay,Inc.

,adi st
ri
butorofgas,oilandot her
petr
oleum product s,f il
ed wi ththe Cour t of Fir
st I
nstance of
Zamboanga delNor t
e a compl aintagainstthe City ofDi polog
contest
ingthevalidityoftheabov e-
ment i
onedSection1ofOr di
nance
No.53ont hegr oundt hatthesamei mposedasal estaxwhi chi s
beyondthepowerofamuni ci
pali
tytolevyunderSecti
on2ofRepubl i
c
ActNo.2264,ot her wiseknownast heLocalAutonomyActof1959.
SaidSecti
on2pr ov i
des:

SEC.2  Taxat i
on — Anypr ov i
sion ofl aw t ot hecont rary
notwi t
hst anding,allchar t
ered ci t
ies,muni cipaliti
es and
muni cipaldi st
ri
ctsshal lhaveaut horit
yt oi mposemuni cipal
l
icense t axes orf ees upon per sons engaged i n any
occupat ion or busi ness, or exer cising pr ivil
eges i n
chartered ci ti
es,muni ci
pali
ties ormuni cipaldi strict
s by
requiri
ng t hem t o secur elicensesatr atesf ixed byt he
muni cipalboar dorci tycounci loft heci t
y ,themuni cipal
counci loft hemunici pali
ty,orthemuni ci
paldi str i
ctcounci l
oft hemuni ci
paldist ri
ct;tocol l
ectf eesandchar gesf or
service r endered by t he city,muni ci pali
ty ormuni cipal
dist
rict;t or egul
ate and i mpose r easonabl ef ees f or
services r endered i n connect ion wi th any busi ness,
professionoroccupat i
onbei ngconduct edwi t
hi nt heci t
y,
muni cipalit
yormuni cipaldistri
ctandot herwi set ol evyf or
public pur poses,j ust and uni form t axes,l icenses or
 fees:
 Pr ovi
ded,Thatmuni ci
pali
tiesandmuni cipaldistr
icts
shall
,i nnocase,i mposeanyper centagetaxonsal esor
othertaxesi nanyform basedthereonnorimposet axeson
arti
clessubj ecttospecif
ictax,exceptgasoli
ne,undert he
provi
si ons oft he Nati
onalI nter
nalRev enue:Pr ov i
ded,
howev er ,Thatno cit
y,muni cipal
it
yormuni cipaldistri
ct
mayl ev yori mposeanyoft hef oll
owing:..
.( emphasi s
supplied)

OnAugust30,1972theArabay,I
nc.fi
l
edasuppl
ementalcompl
aint
whichpray
ed,amongothers,f
orar ef
undoft
het axesi
thadpai d
undert
heordi
nancei
nquest
ion.

OnOctober30,1972thepar
ti
esent
eredi
ntoast
ipul
ati
onoff
act
s
whi i
ch,
 nteral
i
a,st
ates:

2.Thatpl ainti
ff,pursuantt ot heabov eor dinance,paid
sal
est ax
esf orthesaleofDi eself ueloil
s,lubricat
ingoils,
petr
oleum,ker oseneandot herr elat
edpet r
oleum pr oducts,
tothedefendantCi t
yofDi polog,f r
om December ,1969t o
Jul
y,1972i nt het otalamountofFI VETHOUSANDFOUR
HUNDREDPESOS( P5,400.00).Aschedul eoft hepay ments
madebypl ainti
ffisher etoat tachedasAnnex" A"andi s
madeani ntegralparther eof.Howev er,
thepay ment smade
fr
om April
,1972t oJul y,
1972, int het ot
alamountofP69. 80
havebeenr efundedbydef endantCi tyofDipologt oplai
ntiff
.

WHEREFORE,ont hebasisoft heforegoingstipulat

ionof
fact
s and of the Memor andum of Ar gument st o be
submitt
edbythepart
ies,t
helatt
er,
through,thei
rrespecti
ve
counsel
s,her
ebysubmi tt
hecasef orthedet er
mi nat
ionof
thi
sHonor.

OnJanuary16,1973thecour taquorenderedjudgmentuphol
dingt he
val
idi
tyofthequesti
onedpr ovisi
onofOrdi
nanceNo.53,asamended,
essent
ial
l
yon t hegroundst hattheArabay,Inc.fai
l
ed to present
evi
dencethatthetaxpr ovi
sioninquest
ionimposedasal estax,and
thetaxprescr
ibedthereinwas,mor eov
er,notaspeci f
ictaxont he
pr
oduct
sthemsel
vesbutont
hepr
ivi
l
egeofsel
l
ingt
hem.

Thebasicissuesi nt hecaseatbarare:(1)whet herornotthe

quest
ionedt
axpr ovisi
onimposesasal
estax;and(2)ifi
timposesa
sal
es tax,whethert he Ar
abay,I
nc.is ent
it
led t
oat ax r
efund,
consi
deri
ngthatDipologi
snowacity
.

1.Itisset
tl
edrulei
nthisj
ur i
sdi
cti
onthatf
orpurposesofSect ion2of
the LocalAutonomyAct ,
 supr
a,a municipaltax ordinance which
prescri
besasetrati
obetweent heamountofthet axandthev ol
ume
ofsalesofthetaxpayeri
mposesasal estaxandi snullandvoidfor
beingbeyondt
hepowerofamuni ci
pal
it
ytoenact.1

In ourv iew,t he quest i

oned sect ion ofOr dinance No.53 oft he
Muni ci
palCounci lofDi pologlev iesasal est ax,notonl ybecauset he
characteroft heor dinanceasasal est axor dinancewasadmi t
tedby
thepar ti
esbel ow,butaswel lbecauset hephr aseologyoft hesai d
provisi
onr evealsincl eart ermst hei nt
entiont oi mposeat axont he
saleofoi l
,gasoli
neandot herpet roleum pr oduct s.Thus, theor di
nance
provides:"Thereshal lbechar gedf ort hesel li
nganddi st r
ibutionof
refi
nedandmanuf act uredoi l
s. ..basedont hemont hlyal location
actuall
ydel i
vered and di stri
but ed and i ntended f orsal e. ..byt he
Companyorsuppl iert oanyper son. ..whet herasdeal er. .
.oras
operatorofanyst at i
on. ..thef ollowi ngtaxpay abl emont hl
y :..
."Itis
quiteevidentfrom theset ermst hatt heamountoft hetaxt hatmaybe
coll
ectedi sdirectl
ydependentuponorbear sadi rectrelati
onshi pt o
thev olumeofsal eswhi cht heownerorsuppl ieroft hei temi zed
productsgener atesev erymont h.Theor dinancei nquest i
ont herefore
exactsat axbasedonsal es;i
tf ollowst hatt heMuni cipali
tyofDi polog
was notaut horized t o enactsuch an or dinance undert he local
AutonomyAct .

2.Theobligat
ionoft heCit
yofDipologt orefundthesum col lected
undert
hev oidprovisi
onsofanordinanceenactedwhileitwasst i
l
la
munici
pal
ity,i
snotopent odoubt.I SanMi
n  guelCorporat
ionv s.The
Munici
palCounci lofMandaue,Cebu, supr
a,theCour tordered,t he
ret
urntothet axpayeroft
hesumspai dunderanor di
nanceenact ed
undercir
cumst ancessimil
artot hecaseatbar ,and reject
ed t he
argumentt
hatt
hemuni ci
pal
i
tyofMandauehadi
nthemeant
imebeen
conver
tedi
ntoaci
ty.TheCourtsai
d:

Respondenthowev ercl aim thatwi tht he conv ersion of

Mandauei ntoaci typur suantt oRepubl i
cActNo.5519,
whi ch was appr oved on June 21,1969,t he issue has
alr
eadybecomemoot ,si ncet hepr ohibitioncont ainedi n
sect i
on 2 of Republ ic Act 2264 appl ies onl y t o
muni cipalit
ies and nott o char ter
ed ci ties.The same
cont enti
onhasbeenr ejectedi n Cit
yofNagav .Cour tof
Appeal s,and  Laoag Pr oducer s'Cooper at ive Mar keting
Associ ati
on,I nc.v s.Muni cipal
ityofLaoag,wher eWer uled
thatt helegalityofanor di nancedependsupont hepowerof
the muni ci
pal ity att he t ime oft he enact mentoft he
chal l
engedor dinance.Si ncet hemuni cipalityofMandaue
had no aut hor i
tyt o enact t he sai d or dinance,t he
subsequentappr ovalofRepubl i
c ActNo.5519 whi ch
becameef fect iveonJune21,1969,di dnotr emov et he
originali nfi
rmi ty oft he or di
nance.I ndeed t herei s no
prov i
sioni nt heaf orecitedst atutewhi chi nv estsacur ati
ve
effectupont heor dinancesoft hemuni cipal i
tywhi chwhen
enact edwer ebey ondi tsst atut
or yauthor ity.

TherightoftheArabay,I
nc.toarefundofthelocalsal
est axesi
thad
pai
dundert hequesti
onedor di
nancemaynot ,however,i
ncludet
hose
l
eviedoni tsgasol
inesales.Therelev  
antprovi
so ofSecti
on2oft he
LocalAutonomyActstates:

..
.Pr
  ovi
ded,Thatmuni ci
palit
ies and muni cipaldistr
ict
s
shall
,innocase,imposeanyper centagetaxonsal esor
othertaxes on ar
ti
cles subjectt o speci
fict except
ax,
 
gasoli
ne,underthe prov
isions oft he Nat i
onalInternal
RevenueCode:

xxxxxxxxx(
Emphasi
ssuppl
i
ed)

Undert
hefor ng 
egoi prov
iso 
ofSect
ion2ofR.A.2264,t
wocoursesof
act
ion i
nt he exer
cise of t
heirtaxi
ng powers are deni
ed to
muni cipalit
iesandmuni cipaldist r
icts,towi t,(
1)t olevyanysal estax
i
nwhat ev erf orm;and( 2)t olevyanyt axonar t
iclessubjecttospecifi
c
taxundert heNat i
onalI nt
er nalRev enueCode.I tisnotdiffi
cul
tt osee
thatt heset wopr ohibiti
onsov er l
api nt hesenset hatwhi l
et hefir
st
clause oft he said proviso forbids t he levyi
ng ofsal es taxes of
what ever f orm or gui se, t he second cl ause of t he
same  prov i
so  for
bidst helev yi
ngof" taxes"wi thoutanydi sti
ncti
onas
totheki ndoft ax,i.
e.'whet herper centaget ax,salestax,specif
ictaxor
l
icenset ax,al thought hisl att
erpr ohi
bitionappl iesonlytoal i
mited
classofar ticles,
 vi
z.,thosesubj ectt othespeci fi
ctaxundert heTax
Code.

Suchanov erl
apwoul dprobablycarr
yorconnotenol egalsigni
fi
cance
butfortheexclusi
onofgasol i
nefrom theprohi
biti
oncont ai
nedinthe
secondclauseoft hement i pr
oned  ovi
so.For,withtheexempt ionof
gasoli
nef r
om t hecoverageoft hesame,i tbecomesr el
evantto
deter
mine the effectwhich such exclusion has on the previ
ous
prohi
bit
ionagainstthel
evyingofthesalestax.

Inouropi nion,ar easonableandpr acti

calinterpr etationoft het erms
oft he  proviso i
nquest ionr esultsint heconcl usiont hatCongr ess,i n
excl udi ng gasol ine f rom t he gener al di sabilit
y i mposed on
muni cipalit
iesandmuni ci
paldi str
ictst oexactanyki ndoft axeson
articlessubj ecttospeci fi
edt axundert heTaxCode,del iberatelyand
i
nt ent ionall
y meant t o put i t withint he power of such l ocal
gov er nment st oimposewhat evertypeorf or m oft axest helattermay
deem pr opert olevyongasol i
neincludingasal est axoronei nt hat
form.Ther eisaf t
erallnocl earlydemonst r
ableandconv i
ncingr eason
whyt hel aw woul dallow muni ci
pali mposi ti
onoft axesongasol ine
andy etwi t
hholdsuchpoweri ftheimposi t
ionisi nt hef orm ofasal es
tax,wheni twasaknownf actatt het imeoft heenact mentoft he
LocalAut onomyActi n1959— andt hisstilli
st ruet ot hi
sday— t hat
gasol inei sofnopr ofi
tableuset othecompani eswhi chowni tunl ess
turnedov ertot heconsumi ngpubl icwhi ch, perforce, mustpayf ort he
ri
ghtt oobt ainthatcommodi ty.

ACCORDI
NGLY,
thejudgment
 aquo 
issetasi
de.TheCityofDipologi
s
her
ebyor
der
edtorefundtotheArabay,I
nc.thetaxesthelatt
erhas
paidunderSecti
on1ofOr dinanceNo.53,seri
esof1964,
asamended,
deducti
ngt her
efrom t
heamountr epr
esenti
ngthetaxespai
dbythe
Arabay,I
nc.onitsgasol
inesales.Nocosts

G.
R.No.118233December10,
1999

ANTONIO Z.REYES,ELISEO P.OCAMPO and EDITHA ARCIAGA-

SANTOS, pet
it
ioner
s,
vs.
COURT OF APPEALS,HON.SECRETARY OF JUSTI CE FRANKLI
N
DRILONandMAYORJI NGGOYESTRADA(
JOSEEJERCI TO)OFTHE
MUNI CI
PALITYOFSANJUAN,METROMANILA, 
respondents.

RESOLUTION

QUI
SUMBI J.
NG,
  :

Forrevi
ew ist
hedeci si
on 1
 oft
heCour tofAppeals,datedAugust3,
1994andi t
sresoluti
on2 
dat edDecember8,1994i nCA- G.
R.SPNo.
32473.Saiddeci
siondismi ssedt hepr ohi
bit
ioncasebr oughtbythe
peti
ti
oneragai
nstrespondentofficialsoftheMunicipal
i
tyofSanJuan
tostoptheenforcementofTaxOr di
nanceNos.87,91,95,100and
101.

Thef
act
ual
ant
ecedent
sar
easf
oll
ows:

TheSangguniang Bayan ofSan Juan,Met

ro Mani
l
aimpl
ement
ed
sev
eral
taxordinancesasfol
l
ows:

Or
dinanceNo.Ti
tl
e

87 An ordinance i
mposi ng a
munici
paltax off i
ft
y per cent
(50%)ofonepercent(
1%)oft he
gross r
ecei
pton busi ness of
 pr
int
ingandpubl
i
cat
ion

91 An or dinance i mposing a
transfert axequi valenttof i
f t
y
percent( 50%)ofone per cent
(1%)oft het ot alconsideration
ont hesal e,donat ion,barteror
anyot hermodeoft r
ansferring
owner ship or t i
tle of r eal
proper tysi t
uat ed in San Juan,
Met roMani l
a,ori t
sf ai
rmar ket
value,whichev erishigher

95Anor dinanceimposingf i
fty
percent( 50%)ofone per cent
(1%)f orsocialhousingtaxon
theassessed v al
ueofal lreal
estate propertyin San Juan,
Met r
o Mani l
a in excess of
P50,000.00v al
ueaspr ovi
dedi n
the New Ur ban Land Reform
Law, al
soknownasR. A.7279.

100Anordinanceimposingnew
rat
esofbusi nesstaxesofthe
Munici
pal
i
tyofSanJuanMet r
o
Manil
a

101 An or di
nance l
evying an
annual"AdValorem"t
axonr eal
proper
tyand an addit
ionaltax
accrui
ng t o t he speci al
educati
onfund(SEF)

OnMay21,1993,pet i
ti
onersfiledanappealwi ththeDepartmentof
Justi
ce assai
li
ng the consti
tutional
it
y of these tax ordi
nances
al
legedl
ybecause t
heywer e promulgated wi
thoutprev
iouspubl i
c
heari
ngs t
herebyconsti
tut
ing depr i
vat
ion ofpropert
ywi t
houtdue
pr
ocessofl
aw.

OnJune10,1993,r espondentSecr
etar
yofJusticedi
smissedthe
appealforhavi
ngbeenf i
ledoutofti
me.Cit
ingSecti
on187,R.
A.No.
7160,hesaid:

Itappearst hatthetaxor dinancesinquestiontookef f

ect
onSept ember24,1992,i nt hecaseofTaxOr di
nanceNo.
87,untilOct ober22,1992,i nthecaseofTaxOr dinance
Nos.91and95,andunt i
lOct ober29,1992,inthecaseof
TaxOr dinanceNos.100and101,ormor ethanthi
rty(30)
daysfrom t heeffect
ivi
tythereofwhent heappealwasf il
ed
and received byt hi
sDepar tmentonMay21,1993 and
ther
eforenoti naccordancewi t
htherequi
rementsprovided
forunderSect i
on187oft heLocalGov ernmentCodeof
1991.

WHEREFORE,t
heinstantappeal
,hav
ingbeenf
il
edoutof
t
ime,
isher
ebyDISMISSED.3

Undaunted,petit
ionersf i
led wi
ththe CourtofAppeal
s a petit
ion
for
 cert
iorar
i 
andpr ohibi
ti
on(CA-G.
R.SPNo.32473).Butrespondent
courtaffi
rmedthedeci si
onoftheSecret
ary
.OnDecember8,1994,the
mot i
onf orr
econsiderati
onfi
ledbythepeti
ti
oner
swasdeniedforlack
ofmer i
t.

Hence,
thepr
esentpet
it
ionf
orr
evi
ew,
rai
singt
hef
oll
owi
ngquest
ions:

1.Whet herornotthequest i
onedtaxordinances
arev i
olati
veoftheConst ituti
on,consi
deringthe
undisputed f
actt hatno publ icheari
ngswer e
everhel dont heor dinancesbef oretheywer e
passedandappr ovedasr equir
edbyt heLocal
Gov er
nmentCodeof1991,t her
ebyconst it
uti
ng
astheydoadepr ivat
ionofpr opertywi
thoutdue
process;

2.Whet
herornott
hewor
dingoft
hel
aw under
 Section187oft heLocalGov ernmentCodeof
1991t hat"anyquest ionontheconst it
utionali
ty.
..oft axor di
nance...mayber aisedonappeal
withint hir
ty( 30) day sf rom t he ef fecti
vit
y
thereof... "i
sa  reducti
oasabsur dum,si nceif
thetaxor di
nancei sfoundtobeunconst i
t uti
onal,
i
twi l
lbeconsi der edasnev erhav i
ngbecome
effecti
veatallfrom thev er
ybeginning,forwhi ch
reasont het hi
rty-dayappealper i
odcannotbe
reckonedandcannotbeenf orced;

3.Whet herornottheconst
itut
ional
i
tyofat ax
ordi
nance,oranyl aw fort
hatmat ter,canbe
questi
onedatanyt i
medespitethepr escri
pti
on
ofalimitedperi
odwit
hinwhi
cht oquestionit
,as
i
ncaseatbar ;and

4.Whet herornott he constit

uti
onali
tyofan
ordinanceoral aw maybequest i
onedev enif
thequest ionofconst i
tuti
onalit
ymaynothav e
beenor i
gi nal
lyorini
ti
all
yr ai
sed,orisnott he l
is
mot a of t he case, ifi t appears t hat a
determi nat i
on of t he questi
on of
constitutional i
tyisnecessar ytoadeci sionof
thecase. 4

I
nourv
iew,
theper
ti
nenti
ssuesf
orourr
esol
uti
onnowar
e:

1.Whet herornottheCourtofAppealserr
edin
aff
ir
mi ng the decisi
on of the Secr
etar
y of
Justi
cewhodi smissedtheprohi
bit
ionsui
t,on
thegroundthatitwasfil
edoutoft
ime?

2.Whet herornotlack ofmandat ory publi

c
hear
ingspriort
oenactingMunici
palOrdinance
Nos.87,91,95,100and101r enderthem void
onthegroundofdepr
ivati
onofproper
tywi t
hout
dueprocess?
 3.Whetherornott heconst
it
uti
onalval
i
dit
yof
Sec.187oftheLocalGov
ernmentCodecoul
dbe
rai
sedfort
hefir
stti
meonappeal?

Accordingt opeti
t i
oner
s,r
espondentSecr et
aryerredi ndeclari
ngt hat
theyfailedt ofil
et hei
rappealont ime.Also,theyassai lMuni cipal
Ordi
nanceNos.87,91,95,100and101,f orallegedf ail
ureoft he
MunicipalCouncilofSanJuant oconductmandat orypublichearings.
Becauseoft hi
s,theycl
aimtheordinancesareinoper ati
ve,asthrough
they wer e neverpassed.Consequent ly
,no pr escr i
pti
vet hi
rty-day
peri
odt oquest i
ont heval
idi
tyoftheor di
nancecoul dt ol
ltobart heir
appealtot heDepar t
mentofJust
ice.

Sec.187ofR.
A.7160,ci
tedbyr
espondentSecr
etar
y,pr
ovi
desas
fol
lows:

Sec.187—  Pr ocedur ef orAppr ov alandEf fectivi

tyofTax
Or di
nances and Rev enue Measur es; Mandat or y Publ i
c
Hear ings.— The pr ocedur ef orappr ov alofl ocalt ax
ordinancesandr ev enuemeasur esshal lbei naccor dance
wi tht he pr ov isions oft his Code: Pr
  ov ided,Thatpubl i
c
hear i
ngsshal lbeconduct edf ort hepur posepr iortot he
enact mentt her eof :Pr
  ov idedf urther ,Thatanyquest ionon
theconst i
tuti
onal i
tyorl egal ityoft axor di nancesorr ev enue
measur esmayber ai sedonappealwi thi nt hir
ty( 30)day s
from t heef f
ect ivi
tyt her eoft ot heSecr etar yofJust i
cewho
shallr enderadeci sionwi t
hi nsi xty( 60)day sf r
om t hedat e
ofr ecei ptoft he appeal : Prov ided, howev er,Thatsuch
appealnothav et heef fectofsuspendi ngt heef fectivi
tyof
theor dinanceandt heaccr ualandpay mentoft hetax ,fee,
orchar gel eviedt her ein: Prov ided,  fi
nally,Thatwi thi
nt hirt
y
(30)day saf t
err ecei ptoft hedeci si
onort hel apseoft he
sixty-dayper iod wi thoutt heSecr etaryofJust i
ceact i
ng
upont heappeal ,t heaggr iev edpar t
ymayf il
eappr opri
ate
proceedi ngswi thacour tofcompet entj ur i
sdi ct
ion.

Clear
ly,thel
awrequi
rest
hatt
hedissat
isf
iedt
axpayerwhoquesti
ons
thevalidi
tyorl
egal
it
yofataxor
dinancemustfil
ehisappealtothe
Secretar yofJust i
ce,within30day sf r
om ef fecti
vityt hereof.Incase
theSecr etarydecidestheappeal s, aperiodal soof30day sisallowed
foranaggr i
evedpar tytogot ocour t.Buti ftheSecr et arydoesnotact
ther
eon,af t
erthel apseof60day s,apar t
ycoul dalreadypr oceedt o
seekr eliefi
ncour t.Theset hreesepar ateper iodsar ecl earl
ygi v
enf or
compl ianceasapr er
equisitebef oreseeki ngr edressi nacompet ent
court.Suchst atutoryperiodsar esett opr eventdel aysaswel las
enhancet heor derl
yandspeedydi schar geofj udicialf uncti
ons.5
 For
thi
sr eason t he cour t
s const ructt hese pr ovisi
ons ofst atut
es as
mandat ory.
6

A muni cipaltaxor dinance empower sa l ocalgov ernmentuni tt o

i
mposet axes.Thepowert ot axisthemostef f
ecti
vei nstr
umentt o
rai
seneededr evenuest ofinanceandsuppor tthemy ri
adact i
viti
esof
l
ocalgov ernmentuni tsfort hedel i
veryofbasi cservicesessent ialto
thepr omot i
onoft hegener alwelfareandenhancementofpeace,
progress,andpr osper i
tyoft hepeople. 
7
 Consequent ly,anydel ayi n
i
mpl ement i
ngt axmeasur eswoul dbetothedet ri
mentoft hepubl ic.I
t
i
sf orthisreasont hatpr otestsov ertaxor dinancesar er equi
redt obe
donewi thincertaintimef rames.I ntheinst antcase, i
tisourv iewt hat
thefail
ureofpet it
ioner stoappeal totheSecr etaryofJust i
cewi t
hin30
daysasr equiredbySec.187ofR. A.7160i sf ataltot
heircause.

Onthesecondissue,
petit
ionersall
egethattheSangguniangBayanof
SanJuandidnotcompl ywi t
ht heprescr
ibedprocedureforenact
ing
anordi
nancebecausetheyfail
edtoconductpubli
chearings.

I Fi
n  gurr
es vs.Cour
  tofAppeal s,
8
 wher
ethe muni
cipal
ityfail
ed t
o
conductpubl i
c heari
ngs pr
iorto enacti
ng t
he revi
sions on t
he
scheduleoffai
rmarketval
uesandassessmentl
evel
ofclassesofreal
estateproper
ti
es,t
heCourtsai
d:

Petit
ionerisrightincontendingt hatpubl
icheari
ngsar e
requir
ed to beconduct ed pri
ortot heenactmentofan
ordi
nancei mposingrealpr
opertytaxes.R.
A.No.7160, Sec.
186,pr ovi
des thatan ordinance levy
ing t
axes,fees,or
charges "shal
lnotbe enact ed wi t
houtanypr i
orpubl ic
heari
ngconduct edforthepurpose.
"
 Howev er,iti
snot ewor thyt hatpar tfr
om herbar easser ti
ons,
peti
ti
onerFi guerres has notpr esent ed anyev i
dence to
showt hatnopubl ichear ingswer econduct edpr iornotthe
enactmentoft heor dinancesi nquest ion.Ont heot herhand,
theMuni cipali
tyofMandal uyongcl aimst hepubl i
chear i
ngs
wereindeedconduct edbef or
ethesubj ectordinanceswer e
adopted,al t
houghi tl ikewi sefailedt osubmi tanyev i
dence
toestablisht hisal l
egat i
on.Howev er,inaccor dancewi t
h
thepresumpt i
onofv al i
dityinf av orofanor dinance,their
consti
tutionali
tyorl egal i
tyshoul dbeuphel dint heabsence
ofev i
dencesshowi ngt hatpr ocedur epr escribedbyl aw
wasnotobser vedi nt heirenact ment....

Furthermor e,thel ackofapubl i

chearingsisanegat ive
all
egationessent i
alt opetit
ioner'
scauseofact i
onint he
presentcase.Hence,aspet iti
oneristhepartyasserti
ngi t,
shehast hebur denofpr oof.Sincepeti
ti
onerfailedtorebut
the pr esumpt i
on of v al
idit
yi nfavor of t he subject
ordinancesandt odi schar
get heburdenofpr ov i
ngthatno
publichear i
ngswer econduct ed pri
ort otheenact ment
thereof,wear econst rai
nedt oupholdtheirconstit
uti
onalit
y
orlegalit
y.9

Wef indFiguer r
esinstructiv
e.Petit
ionershavenotpr ov
edi nthecase
beforeust hatt heSangguni angBay anofSanJuanf ai
ledt oconduct
therequir
edpubl i
chear i
ngsbef oret heenact
mentofOr dinanceNos.
87,91,95,100and101.Al thoughtheSangguni anhadt hecont rolof
recor
dsort hebet t
ermeansofpr oofregardi
ngt hef actsalleged,
peti
ti
oner as not r eli
eved f r
om t he burden of pr ov i
ng t heir
averments.  
10
Pr
oof thatpubl i
c hear i
ngs were nothel df al
ls on
peti
ti
oner'shoul der
s.Forf ail
ingtodischar
gethatburden, t
heirpetiti
on
waspr operl
ydi smissed.

I
nanyev ent,forthepur
poseofsecur i
ngcer tai
ntywher edoubtwould
beint
oler
able,itisageneralrul
esthattheregulari
tyoftheenactment
of an offi
ciall
y promulgated st
atute or ordinance may notbe
i
mpeachedbypar olevi
denceoror alt est
imonyei therofindi
vi
dual
of
fi
cersand member s,orofst r
angerswho maybei nter
est
ed in
null
if
yinglegi
slati
veacti
on. 
11
 Thi
sr ulessuppl
ementst
hepresumpt
ion
i
nf avoroft her egul
ari
tyofof fi
cialconductwhichwehaveupheld
repeatedl
y,absentaclearshowi ngt othecont
rar
y.

Finally,on t he v al i
dit
y ofSect i
on 187 ofR. A.7160,t he Local
Gov ernmentCode,wemustst r
esst hattheconst i
tutional ityofanact
ofCongr esswi llnotbepasseduponbyt heCour tunl essatt hef ir
st
oppor tuni t
yt hatquest ion i
s proper l
yr aised and pr esent ed i n an
appr opr i
atecase,andi snecessar yt oadet erminati onoft hecase,
par t
icularly wher et he issue of const i
tutionalit
yi st he v eryl
 i
s
mot a pr esented.  
12
Theconst it
utionalv al
i
dit yofast at utorypr ov i
sion
shoul dnotbeent er t
ainedbyt heCour twher ei twasnotspeci fi
call
y
raisedbel ow,insi st edupon, andadequat elyar gued.  
13
Mor eov er ,given
theci rcumst ancesi nt hiscase,wef indnogenui nenecessi tyt odwel l
ont hei ssueofconst i
tuti
onalinvali
dityofSect ion187i nr elationt o
i
ssueofv ali
denact mentoft hesubj ector dinances,asshowni nt he
foregoi ngdi scussi on.Suf fi
ceitnow t osayt hat ,hav ingr esolv edt he
fi
rstandsecondi ssues,wef indnogr av eabuseofdi scretionnor
reversibl eerrorint hedecisionofr espondentappel l
at ecour t.Fur t
her
const i
tut i
onal scr ut i
nyofSect i
on187i sunwar ranted.

WHEREFORE,t hepresentpet
it
ioni
sDISMI
SSEDforlackofmer
itand
the assai
led deci
sion ofthe Cour
tofAppeal
si s AFFI
RMED.No
pronouncementast ocosts.

SOORDERED.

G.
R.No.L-
45355       Januar
y12,
1990

THE PROVI NCE OF MI SAMIS ORIENTAL, r

epr
esent
ed by i
ts
PROVINCIALTREASURER, 
pet
it
ioner
,
vs.
CAGAYAN ELECTRI C POWER AND LI GHT COMPANY, INC.
(CEPALCO),
 r
espondent
.
Jai
meA.Chavesforpet
it
ioner
.
Qui
ason,
Makali
ntal
,Bar
ot&Tor r
esf
orr
espondent
.

GRI
ÑO-
AQUI J.
NO,
  :

Theissuei nt hiscasei sal egalone:whet herornotacor porat

ion
whosef ranchiseexpressl
yprovidesthatt hepay mentofthe"f
ranchise
taxoft hree percent
um  ofthegr ossear ningsshallbei nli
euofal l
taxes and assessment s of what ever aut hori
ty upon privi
l
eges,
earni
ngs,i ncome,f ranchi
se,and pol es,wi res,tr
ansformers,and
i
nsulatorsoft hegrantee.
"( p.20,Rol
  lo),isexemptf rom payinga
provi
ncialfranchi
setax.

Cagay anEl ect

ri
cPowerandLi ghtCompany,Inc.(
CEPALCOf orshort
)
wasgr antedaf r
anchi
seonJune17,1961underRepubl icActNo.
3247t oi nstal
l
,operateandmaintai
nanelectri
cli
ght,heatandpower
system int heCityofCagayandeOr oanditssuburbs.Saidfranchi
se
wasamendedonJune21,1963byR. A.No.3570whi chaddedt he
muni ci
pal i
ti
es of Tagoloan and Opolt o CEPALCO' s sphere of
operation,andwasf urt
heramendedonAugust4,1969byR. A.No.
6020whi chext endeditsfi
eldofoperat
iont othemuni ci
palit
iesof
Vil
lanuev aandJasaan.

R.
A.Nos.3247,
3570and6020uni
for
mlypr
ovi
det
hat
:

Sec.3.I n consi deration oft he franchise and r i

ght s her eby
granted,thegr anteeshal lpayaf ranchiset axequalt othr ee per
centum  oft hegrossear ningsforelectri
ccur rentsol dundert his
fr
anchi se,ofwhi ch t wo  percentum  goes i ntot he Nat ional
Treasur y and one  percent um goes intot he treasur y oft he
Muni ci
palitiesofTagol oan,Opol,Vi ll
anuev a and Jasaan and
Cagay andeOr oCi ty,ast hecasemaybe:  Provided, Thatt hesai d
fr
anchi set axoft hree percent um ofthegr ossear nings shallbe
i
nl i
euofal ltaxesandassessment sofwhat ev eraut hori
tyupon
pri
vil
eges earnings, 
income,  fr
anchi se, 
and
 poles,
 
wires,
 t
ransf
ormers,
 and insul
ators ofthe gr
ant
ee f
rom
whichtaxesandassessment sthegr ant
eei sher
ebyexpr
essl
y
exempted. 
(Emphasissuppli
ed.)

OnJune28,1973,t
heLocalTaxCode(
P.D.No.231)waspr
omul
gat
ed,
Sect
ion9ofwhichprov
ides:

Sec.9. Fr
  anchise Tax.
—Anypr ovision ofspeciallawst ot he
contrar
ynot withstandi
ng,t
 he province mayi mpose a t axon
businesses enjoying f
ranchise,based on t he gross r
eceipts
real
ized withi
ni t
st er
rit
orialjuri
sdi ct
ion,atthe rate ofnot
exceedingone- hal
fofonepercentoft hegr
ossannualreceipts
fortheprecedingcalendaryear.

I
nt hecaseofnewl ystartedbusi ness,ther at
eshal lnotexceed
threet housandpesospery ear.Sixtypercentoft heproceedsof
thet axshal laccruetothegener alfundoft heprov i
nceandf ort
y
percentt othegener alfundoft hemuni ci
palit
iesser vi
cedbyt he
busi ness on t he basis oft he gross annualr eceipts deri
ved
therefrom byt hef r
anchisehol der.Inthecaseofanewl yst art
ed
busi ness,fortypercentoft hepr oceedsoft het axshal lbe
divided equal ly among t he muni ci
pali
ti
es ser v
iced by t he
busi ness.(Emphasi ssuppl i
ed.)

Pursuantt
her
eto,t
heProv
inceofMisami
sOrient
al(
her
einpet
it
ioner
)
enactedPr
ovi
ncial
Rev
enueOrdi
nanceNo.19,
whoseSecti
on12reads:

Sec.12.Fr
  anchiseTax. —Ther eshallbelevi
ed,coll
ect
edandpai d
onbusinessesenj oyingfranchisetaxofone- hal
fofonepercent
oftheirgrossannualr eceiptsf ortheprecedingcalendaryear
real
i
zed wi t
hint he t err
it
orialjurisdi
cti
on oft he provi
nce of
MisamisOr i
ental.( p.27,Rol
  lo.)

ThePr ov incialTreasurerofMisami sOr i

ent
aldemandedpay mentof
theprov incialfranchi
set axf
rom CEPALCO.Thecompanyr efusedto
pay,allegingt hatitisexemptf r
om al lt
axesexceptthefranchisetax
requi
red byR. A.No.6020.Nev er
thel
ess,inv i
ew oft he opi ni
on
renderedbyt hePr ovi
ncialFi
scal,uponCEPALCO' srequest,upholdi
ng
thel
egalityoftheRevenueOrdinance,CEPALCOpai
d underprotest
 on
May27, 1974t hesum ofP4,276.28andappeal
edthef i
scal
'srul
ingto
the Secretar
y ofJust i
ce who r ev
ersed i
tand ruled infavorof
CEPALCO.

On June 26,1976,the Secr

etary ofFinance i
ssued LocalTax
Regulat
ionNo.3-
75adopt
ingentir
elytheopini
onoftheSecretar
yof
Just
ice.

OnFebr uar
y16,1976,t heProvincefil
edintheCourtofFirstInst
ance
ofMi sami sOr i
entalacompl aintfordecl
arator
yrel
iefprayi
ng,among
others,thatt heCourtexer ci
sei t
spowert oconstr
ueP. D.No.231i n
relat
iont othef r
anchiseofCEPALCO( R.
A.No.6020) ,andtodecl ar
e
thef ranchi
seashav ingbeenamendedbyP. D.No.231.TheCour t
dismissed t he compl aintand or der
ed the Prov
ince tor etur
nt o
CEPALCOt hesum ofP4, 276.
28pai dunderprot
est.

ThePr
ovi
ncehasappeal
edt
othi
sCour
t,al
l
egi
ngt
hatt
hel
owercour
t
er
redi
nhol
dingt
hat
:

1)CEPALCO'
st axexempt
ionunderSecti
on3ofRepubl
i
cActNo.
6020wasnotamendedorr
epeal
edbyP.D.No.231;

2)theimposit
ionoftheprov
inci
alfr
anchi
set
axonCEPALCOwoul
d
subver
tthepurposeofP.
D.No.231;

3)CEPALCOi
sexemptf
rom pay
ingt
hepr
ovi
nci
alf
ranchi
set
ax;
and

4)pet
it
ionershoul
dref
undCEPALCO'
staxpay
mentofP4,
276.
28.

Wef
indnomer
iti
nthepet
it
ionf
orr
evi
ew.

Thereisnoprov i
sioni nP.D.No.231expr esslyorimpl i
edlyamendi ng
orrepeali
ngSect i
on3ofR. A.No.6020.Theper ceivedr epugnancy
betweenthetwost atutesshouldbev eryclearbeforet heCour tmay
holdthatt
heprioronehasbeenr epeal
edbyt helat
er ,
sincet her eisno
expressprovi
siont ot hatef
fect(ManilaRailroadCo.v s.Raf f
er t
y,40
Phil
.224).Ther ul
ei st hataspeci
alandl ocalstatuteappl icablet oa
part
icul
arcaseisnotr epeal
edbyal at
erst at
ut ewhichisgener alinit
s
terms,pr
ovi
sionsandappl i
cationeveniftheter
msofthegeneralact
arebroadenoughtoi ncl
udet hecasesint hespeci
all i
aw (d.
)unless
therei
smanifesti
ntenttorepealoralt
erthespeci
all
aw.

Republi
cAct sNos.3247,3570and6020ar especi all
awsappl i
cabl
e
onlyto CEPALCO,whi le P.
D.No.231 i s a generaltaxlaw.The
presumpti
oni sthatthespecialst
atutesareexceptionstothegeneral
l
aw( P.D.No.231)becauset heypertai
ntoaspeci alchar
tergrant
edto
meetapar t
icularsetofcondit
ionsandcircumstances.

Thefranchi
seofr espondentCEPALCO expr
esslyexemptsitfr
om
paymentof" al
ltaxesofwhat everaut
hori
ty"exceptthet ee 
hr per
cent
um (3%)taxonit
sgrossearni
ngs.

Inanearli
ercase,t hephrase"shal
lbeinli
euofal ltaxesandatany
ti
melevied,establ
ishedby,orcoll
ectedbyanyauthorit
y"f oundinthe
fr
anchi
seoft heVi say
anEl ect
ri
cCompanywashel dt oexemptt he
companyf r
om pay mentofthe5%t axoncorpor
atefranchisepr ov
ided
i
nSection259oft heInter
nalRevenueCode(VisayanEl ectri
cCo.v s.
Davi
d,49O. G.[No.4]1385).

Similarl
y,werul
edt hatt heprovi
sion:"shallbeinlieuofal
ltaxesof
ev er
yname and nat ure"int he franchise ofthe Mani
la Rai
lroad
(Subsection12,Sect
ion1, ActNo.1510)exempt stheManil
aRailroad
from paymentofi nt
ernalrevenuetaxf oritsimport
ati
onsofcoaland
oilunderActNo.2432andt heAmendat or
yAct softhePhili
ppine
Legislat
ure(Manil
aRai l
roadvs.Rafferty,
40Phi l
.224).

Thesamephr asefoundinthef r
anchiseoft hePhil
ippi
neRailwayCo.
(Sec.13,ActNo.1497)j ust
ifi
ed theexempt ion ofthePhi l
ippi
ne
Rail
wayCompanyf rom paymentoft het axonitscorporat
efranchi
se
underSecti
on259oft heInter
nalRev enueCode,asamendedbyR. A.
No.39( Phi
li
ppineRail
wayCo.v s.CollectorofInt
ernalRevenue,91
Phil
.35)
.

Thosemagi
cwor ds:"shal
lbeinli
euofal lt
axes"alsoexcusedthe
Cotabat
oLi
ghtandI cePlantCompanyfr
om thepay mentofthetax
i
mposedbyOrdinanceNo.7oft heCit
yofCot abat
o( Cot
abatoLi
ght
andPowerCo.v
s.Ci
tyofCot
abat
o,32SCRA231)
.

Sowast heexempt i
onuphel dinf avoroft heCar carElect r
icandI ce
PlantCompanywheni twasr equiredtopayt hecor poratef ranchise
taxunderSect i
on259oft heInternalRevenueCode,asamendedby
R.A.No.39 ( Car
carEl ect
ric& I ce Pl
antv s.Col l
ectorofI nt
ernal
Rev enue,53O. G.[No.4]1068) .Thi sCour tpointedoutt hatsuch
exempt ion is par
toft he inducementf ort he accept ance oft he
franchiseandt herenditi
onofpubl i
cser vicebyt hegr antee.Asa
char t
erisinthenatur eofapr i
vatecontract,theimpositionofanot her
franchise tax on t he corporati
on by t he l ocalaut hor i
ty woul d
const i
tuteanimpairmentoft hecont r
actbetweent hegov ernmentand
thecor porat
ion.

Recent
ly,t
hisCourtruledthatt
hefr
anchi
se(R.A.No.3843)oft
he
Li
ngayen GulfElectr
ic PowerCompany whi
ch prov
ided t
hatt
he
companyshallpay:

taxequalto2% perannum ofthegrossreceipts...andshallbe
i
nl i
euofanyandal lt
axes...nowori nthefuture...f
rom which
taxes...thegranteeisherebyexpresslyexemptedand...no
othertax...ot herthanthefranchi
set axof2% ont hegross
recei
pts as pr
ov i
ded forint he origi
nalf r
anchise shal
lbe
coll
ected.

exemptsthecompanyf rom payi

ngthefranchiset axunderSect
ion
259oftheNati
onalInt
ernalRevenueCode(Commi ssi
onerofI
nter
nal
Revenuevs.Li
ngayenGul fEl
ectri
cPowerCo. ,Inc.,G.
R.No.23771,
August4,
1988).

Ont heotherhand,theBal angaPowerPl antCompany ,ImusEl ectric

Company ,Inc.
,GuaguaEl ectr
icCompany ,Inc.wer esubj ect
edt ot he
5% taxon cor poratefr
anchi se underSect ion 259 oft he I
nt ernal
RevenueCode,asamended,becauseActNo.667oft hePhilippine
Commi ssionandtheordinanceorr esol
uti
onsgr anti
ngt heirr
espect ive
fr
anchisesdi dnotcontaint he" in-
li
eu-
of -
all-
taxes"clause( Bal anga
PowerPl antCo.v s.Commi ssionerofInt ernalRev enue,G.R.No.L-
20499,June30, 1965;I
musEl ectri
cCo.v s.Cour tofTaxAppeal s, G.R.
No.L-22421,March18,1967;GuaguaElectr
icLi
ghtv
s.Col
l
ect
orof
I
nter
nalRevenue,
G.R.No.L-
23611,Apr
il24,1967)
.

LocalTaxRegulati
onNo.3-75issuedbyt heSecr
etar
yofFinanceon
June 26,1976,has made itcr yst
alclearthatthe f
ranchise t
ax
provi
dedintheLocalTaxCode( P.D.No.231,Sec.9)mayonl ybe
i
mposed on compani es wi
thf r
anchises t
hatdo notcont ainthe
exempti
ngclause.Thusi
tprovi
des:

Thef ranchisetaxi
mposedunderl ocalt
axor
dinancepursuantto
Section9oft heLocalTaxCode,asamended,shallbecoll
ected
fr
om busi nesses holdi
ng franchi
se butnotf rom business
establishmentswhosef ranchi
secontai
nthe"i
n-l
ieu-
of-
all
-t
axes-
provi
so" .

Manil
aElect
ricCompanyv s.
 Vera,67SCRA351,ci
tedbyt hepet i
ti
oner
,
i
s notapplicabl
e her e because whatthe Governmentsoughtt o
i
mpose on Mer alco inthatcase was nota f ranchise tax but
compensat
a  ingt ax onthepoles,wir
es,t
ransf
ormer sandi nsulat
ors
whichi
timportedf orit
suse.

WHEREFORE,thepeti
ti
onforrev
iewisdeni
ed,andt
hedeci
sionoft
he
Cour
tofFi
rstI
nstancei
sherebyaff
ir
med i
ntot
o.Nocost
s.

SOORDERED.

G.
R.No.152492      Oct
ober16,
2003

PALMADEVELOPMENTCORPORATI
ON,
 pet
it
ioner
,
vs.
MUNICI
PALI
TYOFMALANGAS,ZAMBOANGADELSUR,
 
respondent
.

DECISION

PANGANI J.
BAN,
  :

I
naccor
dancewi
tht
heLocalGov
ernmentCodeof1991,amuni
cipal
or
dinanceimposi
ng feesongoodst hatpasst
hrought
hei
ssui
ng
munici
pal
it
y’st
err
it
oryisnul
landv
oid.

TheCase

The Petition forReview1 bef

ore us assail
st he August31,2001
Decisi
onandt
2 
heFebruary6,2002Resol ut
ionoft
3 
heCour tofAppeal
s
(CA)inCA- GRCVNo.56477.Thedi sposi
ti
vepor ti
onofthechall
enged
Decisi
onr eadsasfoll
ows:

"UPON THE VIEW WE TAKE OF THI S CASE,THUS,t he assai

l
ed
Decisi
on i
s VACATED and SET ASIDE,and this case is or
der
ed
REMANDED tot hecourt
 aquo 
fortherecept
ionofev i
denceofthe
part
iesonthematterorpoi
ntdel
ineat
edinthefinalsentenceabove-
stat
ed."
4

The assailed Resol

uti
on deni
ed pet
it
ioner
’s Mot
ion f
or
Reconsi
der
ation.

TheFact
s

Thefactsareundisputed.Peti
ti
onerPalmaDev el
opmentCor porat
ion
i
sengaged i nmi l
li
ng and sell
ing r
iceand cornto wholesalersin
ZamboangaCi ty
.Itusesthemuni ci
palportofMalangas,Zamboanga
delSurast r
ansshi
pmentpoi ntfori
tsgoods.Thepor t
,aswel lasthe
surr
oundingroadsleadingtoit,bel
ongtoandar emai nt
ainedbyt he
Munici
palit
yofMalangas,Zamboangadel Sur.

OnJanuary16,1994,themunici
pal
it
ypassedMuni
cipalRevenueCode
No.09,Seriesof1993,whi chwassubsequentl
yappr ovedbyt he
Sangguni
angPanlalawiganofZamboangadelSuri nResoluti
onNo.
1330datedAugust4,1994.Sect
ion5G.
01oftheor
dinancereads:

"Section5G. 01.
 I
mpositi
onoff ees.Thereshal lbecol l
ectedser v
ice
feefori tsuseoft hemuni cipalr oad[s]orstreet
sleadi
ngt ot hewharf
andt oanypoi ntalongt heshor el
ineswi t
hint hejur
isdi
ctionoft he
muni cipali
tyandforpoli
cesur veill
anceonal lgoodsandal lequipment
harbor edorshelteredint hepr emi sesoft hewhar fandot herwi t
hin
thejurisdict
ionofthismuni cipalit
yint hefol
lowingschedule:
 a)Vehi
clesandEqui
pment
:rat
eoff
ee

1.Aut
omat
icperuni
t₱10.
00

2.For
dFi
era₱10.
00

3.Tr
ucks₱10.
00

xxxxxxxxx

b)Ot
herGoods,
Const
ruct
ionMat
eri
alpr
oduct
s:

1.Bamboocr
aft₱20.
00

2.Bangus/
Kil
o0.
30

xxxxxxxxx

41.Ri
ceandcor
ngr
it
s/sack0.
50"
5

Accor dingly,the ser

vice fees i
mposed by Sect ion 5G.
01 oft he
ordinancewaspai dbypet i
ti
onerunderpr otest
.Itcontendedt hat
under Republ i
c Act No.7160,ot her
wi se known as t he Local
Gov ernmentCodeof1991,muni cipalgov ernmentsdidnothav et he
author i
tyt ot ax goods and v ehi cl
es thatpassed t hr
ough their
j
urisdictions.Thereaft
er,beforet he Regi onalTr i
alCourt( RTC)of
Pagadi anCi ty
,peti
ti
onerfi
ledagai nsttheMuni ci
pal
ityofMalangason
Nov ember20,1995,an act ion fordecl aratoryreli
efassaili
ng the
vali
dityofSect ion5G.
01oft hemuni ci
palordinance.

Ont hepremi sethatt hecasei nv ol

vedt hev al
idit
yofamuni cipal
ordinance,theRTCdi rect edrespondentt osecur etheopi nionoft he
Offi
ceoft heSol ici
torGener al
.Thet ri
alcourtl
ikewiseor deredthatthe
opinionsoft heDepartment sofFinanceandofJust icebesought .As
these opi nions wer e st il
lunav ail
able as of Oct ober 17,1996,
petiti
oner’
s counself iled,wi thoutobj ecti
on f r
om r espondent,a
Mani fest
ation seeking t he submi ssi
on oft he case f ort he RTC’s
decisiononapur equest ionoflaw.
I
nduet ime,thetri
alcourtrender
editsNovember13,1996Deci
si
on
decl
ari
ngtheentir
eMuni ci
palRevenueCodeNo.09asultr
avi
resand,
hence,
nullandvoi
d.

Rul
i
ngoft
heCour
tofAppeal
s

TheCAhel dt hatl ocalgover nmentuni tsalreadyhadr ev enue-

rai
sing
power saspr ovidedf orunderSect i
ons153and155ofRANo.7160.I t
rul
ed as wel lt hatwi t
hint he purview oft hese provisions -
-and
thereforev al
id- -isSection5G. 01,whichpr ovidesfora"ser vi
cefeefor
theuseoft hemuni cipalroadorst reetsl eadingtot hewhar fandt o
any poi nt al ong t he shor el
ines wi thint he juri
sdiction of the
muni cipali
ty"and " forpol ice surveill
ance on al lgoods and al l
equipmenthar boredorshel teredint hepr emi sesoft hewhar fand
otherwi thi
nt hej uri
sdicti
onoft hismuni cipal
ity.
"

Howev er,sincebot hpar t

ieshadsubmi ttedt hecaset ot het
rialcour
t
fordeci siononapur equestionoflawwi thoutaf ull
-bl
ownt r
ialonthe
mer i
ts, t
heCAcoul dnotdet erminewhet herthef actsofthecasewer e
withint heambi toft heaf orecit
ed sect i
onsofRA No.7160.The
appellatecour tr uledthatpet it
ionersti
llhadt oadduceev i
dencet o
substant i
atei t
sal legati
onst hattheassai ledor di
nancehadi mposed
feesont hemov ementofgoodswi thi
ntheMuni cipal
ityofMalangasin
thegui seofat ollfeefortheuseofmuni cipalroadsandaser vi
cefee
forpol i
cesur veil
lance.Thus,t heCAhel dt hatt heabsenceofsuch
evidencenecessi tatedtheremandoft hecaset ot het r
ial
court.

Hence,
thi
sPet
it
ion.
6

I
ssues

Pet
it
ionerr
aisest
hef
oll
owi
ngi
ssuesf
orourconsi
der
ati
on:

"
1.Whetherornott heCour
tofAppeal
ser
redwheni
torder
ed
t
hatthe extantcase be r
emanded t
othe l
owercour
tf or
r
ecept
ionofevidence.

"
2.Whetherornott
heCour
tofAppeal
serr
edwheni
trul
edthata
f
ullbl
ownt ri
alont hemer
it
sisnecessaryandt
hatplai
nti
ff
-
 appellee,nowpet it
ioner
, ‘
hastoadduceev i
dencet osubst ant
iate
i
tst hesisthattheassailedmunicipalordi
nance,infact,imposes
feesont hemov ementofgoodswi t
hinthej uri
sdict
ionoft he
defendantandt hatthi
simpositi
onismer el
yint heguiseofat ol
l
feef ortheuseofmuni ci
palroadsandser vicef eef orpolice
surveil
lance.’

"3.Whet herornottheCourtofAppealserredwhenitdi
dnotr
ule
thatt he questi
oned municipalordinance i
s cont
rar
ytot he
provisi
onsofR. A.No.7160ort heLocalGover
nmentCodeofthe
Phil
ippines."
7

I
nbr i
ef,t
hei ssuesboildownt othefoll
owing:1)whetherSect
ion
5G.01ofMuni ci
palRev
enueCodeNo.09i sval
id;and2)whet
herthe
remandofthecaset ot
hetri
alcour
tisnecessar
y.

TheCour
t’
sRul
i
ng

ThePet
it
ioni
smer
it
ori
ous.

Fi
rstI
ssue:

Val
i
dit
yoft
heI
mposedFees

Peti
ti
onerarguest hatwhi l
er espondenthas the powert otaxor
i
mposef eesonv ehiclesusingitsroads,i
tcannott axthegoodsthat
aretranspor
ted by t he vehicl
es.The pr ov
isi
on oft he or
dinance
i
mposi ngaservicef eeforpol i
cesur v
eil
l
anceongoodsi sall
egedly
cont
rarytoSect
ion133( e)ofRANo.7160, whichreads:

"Section133.CommonLi mit
ationsont heTaxi
ngPower sofLocal
Gov ernmentUni
ts.–Unl
essotherwi
sepr ovi
dedherei
n,theexer
ciseof
thet axi
ngpowersofprovi
nces,cit
ies,munici
pal
it
ies,andbarangays
shallnotext
endtothel
evyofthefoll
owing:

xxxxxxxxx

e)Taxes,f
eesandchargesandotherimposit
ionsupongoodscar
ried
i
ntoandoutof,orpassi
ngthrough,t
heterr
it
orialj
uri
sdi
cti
onsofl
ocal
governmentunitsinthe gui
se ofcharges f
orwharf
age,t
oll
sfor
bri
dgesorot herwi
se,orothertaxes,f
eesorchargesinanyfor
m
whatsoeveruponsuchgoodsormerchandi
se;
"

Ont heot herhand,respondentmai ntai

nsthatthesubj ectfeesare
i
ntendedf orser
v i
cesrendered,theuseofmunicipalroadsandpol i
ce
survei
ll
ance.Thef eesaresupposedl ynotcover
edbyt hepr ohi
bit
ed
i
mposi t
ionsunderSect i
on133( e)ofRANo.7160.I8 
tf
urt
hercontends
thatitwasempower edbytheexpr essmandateofSect ions153and
155ofRA No.7160t oenactSect i
on5G.01oft heordinance.The
perti
nentprovi
sionsofthi
sst at
utereadasfol
lows:

"Sect
ion153.Ser
viceFeesandCharges.-
-Localgov
ernmentuni
ts
may impose and col
l
ectsuch r
easonabl
efees and char
ges f
or
servi
cesr
ender
ed.

xxxxxxxxx

"Secti
on155.Tol lFeesorChar ges.--Thesangguni anconcer nedmay
prescri
bet heter msandcondi tionsandf i
xt her atesforthei mpositi
on
oftollf eesorchar gesf ortheuseofanypubl icr oad,pierorwhar f,
waterway ,br i
dge,f erryort elecommuni cation sy stem f unded and
construct edbyt hel ocalgovernmentuni tconcer ned:Prov i
ded,That
nosucht ollfeesorchar gesshal lbecol l
ectedf r
om of f
icersand
enli
stedmenoft heAr medFor cesoft hePhi li
ppinesandmember sof
the Phi li
ppine Nat ionalPol i
ce on mi ssion,postof fi
ce per sonnel
deli
veringmai l,physicall
y-
handicapped,anddi sabledciti
zenswhoar e
sixt
y-fi
ve( 65)yearsorol der
.
1a\
^/phi
1.net

"When publ
ic safet
y and welfar
e so r equir
es,the sangguni
an
concer
nedmaydi scont
inuethecoll
ect
ionoft hetol
l
s,andthereaf
ter
thesai
dfaci
l
ityshal
lbefreeandopenforpubli
cuse."

Respondentcl
aimsthatt
hereisnoproofthatthe₱0.50feeforevery
sackofriceorcornisafr
audulentl
egi
slat
ionenact
edt osubvertthe
l
imitat
ionimposedbySect i
on133(e)ofRA No.7160.Mor eover
,it
arguesthatall
owingpet
it
ionertouseitsr oadswit
houtpay i
ngt he
₱0.50feeforever
ysackofri
ceorcornwouldcontr
avenetheprinci
ple
ofunj
ustenr
ichment
.

Byexpr essl anguageofSect i

ons153and155ofRANo.7160,l ocal
gov ernmentuni ts,throughtheirSangguni an,maypr escri
bet het erms
andcondi t
ionsf ortheimposi t
ionoft ollf
eesorchar gesf ortheuseof
anypubl i
cr oad,pi erorwhar ffundedandconst ructedbyt hem.A
servicef eei mposedonv ehi
clesusi ngmuni ci
palroadsl eadingt ot he
whar fisthusv alid.Howev er,Secti
on133( e)ofRANo.7160pr ohibits
thei mposi tion,i
nt hegui seofwhar f
age,off ees--aswel lasallot her
taxesorchar gesi nanyf or
m what soev er--ongoodsormer chandi se.
Itist hereforeirrelevantifthef eesi mposedar eact uall
yf orpol ice
surv eill
anceont hegoods,becauseanyot herfor
m ofi mpositionon
goodspassi ngt hroughtheter r
it
orialjuri
sdicti
onoft hemuni cipalityis
clear l
ypr ohibit
edbySect i
on133( e).

UnderSect i
on131( y
)ofRANo.7160,whar f
ageisdefinedas" af
ee
assessed againstthe cargo ofa v esselengaged inf or
eign or
domest ict
radebasedonquantity
,weight,ormeasurerecei
vedand/or
dischargedbyvessel.
"Iti
sapparentt
hatawhar fagedoesnotloseits
basic charact
erby bei ng l
abeled as a service f
ee "forpoli
ce
surveil
l
anceonal l
goods."

Unper suasi
vei sthecont ent
ionofr espondentt hatpetiti
onerwould
unjustly be enri
ched att he f or
mer ’
s expense.Though t he r
ules
thereonapplyequal l
ywel ltothegov er
nment,f
9 
orunjustenri
chmentto
be deemed pr esent,two condi t
ions mustgener all
yconcur:(a)a
person is unjustly benefit
ed,and ( b)such benef i
tis deri
ved at
another’sexpenseordamage. 10

Inthei nstantcase,t hebenef i

tsfrom theuseoft hemuni ci
palroads
andt hewhar fwer enotunj ustlyderiv
edbypet it
ioner.Thosebenefi
ts
result
edf rom thei nf rastr
uct urethatthemuni ci
palit
ywasmandat ed
byl aw t o prov
ide. Ther
11 
ei sno unj ustenrichmentwher etheone
receivi
ngt hebenef i thasal egalrightorenti
tlementt heret
o,orwhen
thereisnocausalr el at
ionbet weenone’ senrichmentandt heother’
s
i
mpov eri
shment .
12

SecondI
ssue:
Remandoft
heCase

Petit
ionerassertsthatther emandoft hecaset ot hetri
alcour tfor
furt
herr ecepti
onofev i
dencei sunnecessary,becauset hef act
sar e
undisputedbybot hparti
es.Ithasal r
eadybeencl earl
yestabli
shed,
withoutneedf orfurt
herev i
dence,thatpeti
ti
onert ransport
sr i
ceand
cornonboar dtr
ucksthatpasst hr
ought hemuni ci
palroadsleadingt o
the whar f.Underpr otest,itpaidt he service fees,a f actt hat
respondenthasr eadi
lyadmittedwit
houtquali
ficati
on.

Respondent,ont
heot herhand,i
ssil
entontheissueofther
emandof
thecasetot hetr
ialcourt
.Thef or
mermer el
ydef endst
heval
i
dit
yof
theordi
nance,ar
guingneit
herfornoragai
nsttheremand.

Wer ul
eagai nsttheremand.Notonlyisitfrowneduponbyt heRules
ofCourt;i
13 
tisalsounnecessaryonthebasisoft hefact
sestabli
shed
byt headmi ssionsoft heparti
es.Besides,thef actsoughtto be
establ
i
shedwi t
ht herecept
ionofaddit
ionalevidenceisir
rel
evantto
thedueset t
lementofthecase.

Theper
ti
nentpor
ti
onoft
heassai
l
edCADeci
sionr
eads:

"
Tobest r
essedi
sthefactt
hatl
ocalgov
ernmentuni
tsnowhav
ethe
fol
l
owing common revenue r
aisi
ng powers under t
he Local
Gover
nmentCode:

‘
Section153.Servi
ceFeesandCharges.--Localgover
nmentunits
may i mpose and col
l
ectsuch r
easonabl
ef ees and char
ges 
for
ser
vicesrender
ed.

xxxxxxxxx

‘
Section155.TollFeesorCharges.-
-TheSanggunianconcer nedmay
prescri
betheter
msandcondi ti
onsandfixt
heratesf ort
hei mpositi
on
oftollfeesorcharges f
ortheuseofanypubl i
cr oad,pierorwhar f,
waterway,bri
dge,f er
ryort el
ecommunicat
ion system f unded and
construct
edbyt helocalgover
nmentunitconcerned:Prov i
ded,That
nosucht ol
lfeesorchar gesshallbecoll
ectedf rom of f
icer
sand
enli
stedmenoft heArmedFor cesofthePhi
li
ppinesandmember sof
the Phil
ippi
ne NationalPolice on missi
on,postoff
ice per
sonnel
deli
veri
ngmai l
,physical
l
y-handi
capped,anddisabl
edci
ti
zenswhoare
sixt
y-f
ive(65)y
earsorolder.

‘
When public safety and wel
far
e so r equir
es,the Sangguni
an
concer
nedmaydi sconti
nuethecoll
ect
ionoft hetol
l
s,andthereaf
ter
thesai
dfaci
l
ityshall
bef r
eeandopenforpubli
cuse.xxx’

"Asweseei t,t hedi sput edmuni cipalor dinance,whi chpr ovidesf ora
serv i
cef eef ort heuseoft hemuni cipalr oadorst reetsl eadingt ot he
whar fandt oanypoi ntal ongt heshor elineswi thinthej uri
sdictionof
the muni cipal ityand f orpol i
ce sur v eil
lance on al lgoods and al l
equi pmenthar bor edorshel teredi nt hepr emisesoft hewhar fand
otherwi thi
nt hej ur i
sdi ctionoft hi smuni cipali
ty,seemst of allwi thin
thecompassoft heabov eci ted pr ov i
sionsofR. A.No.7160.As
elsewher eindi cat ed,t hepar t
iesi nt hiscase,nonet heless,choset o
submi tthei ssuet ot heTr ialCour tona‘ pur equest i
onofl aw, ’without
af ull-bl
ownt rialont hemer i
ts:consequent l
y,wear enotpr epar edt o
say ,att hisj unct ure,t hatt hef actsoft hecasei nevitablycal lfort he
appl i
cation,and/ ort hatt hesemakeoutacl ear-cutcasewi thint he
ambi tandpur view, oft heaf oreci tedsect i
on.Thepl ainti
ff,thus, hast o
adduceev i
dencet osubst antiatei tst hesi st hattheassai l
edmuni cipal
ordinance, inf act ,imposesf eesont hemov ementofgoodswi thint he
j
ur i
sdi ct
ionoft hedef endant ,andt hatt hisi mposi ti
oni smer elyint he
guiseofat ollf eef ort heuseofmuni cipalr oadsandser vicef eef or
policesur veill
ance.Compet entev i
denceupont hisscor emust ,t hus,
bepr esented. "14

Wenot ethatSection5G.01imposest wotypesofserv

icefees:1)one
fort he use oft he municipalroads and 2)anot herforpol i
ce
surveil
lanceonal lgoodsandequipmentshel t
eredinthepremisesof
thewhar f.Theamountofser vi
cefees,however,i
sbasedont hetype
ofv ehi
clet hatpassesthroughtheroadandt hetypeofgoodsbei ng
transported. 1a\
^/phi
1.net

Whil
ebot
hpar t
iesadmitthattheservi
cefeesi
mposedarefort
heuse
ofthemunici
palroads,peti
ti
onermai nt
ainst
hattheserv
icefeef
or
pol
i
cesurv
eill
anceongoodshar boredonthewharfi
sinthegui
seofa
wharf
age, apr
15 
ohi
bit
edi
mposi
ti
onunderSect
ion133(
e)ofRA No.
7160.

Thus,theCAheldthatthecaseshouldber emandedt ot hetri

alcourt
i
nor dertoresol
vet
hisfact
ualdisput
e.Theappellatecour tnot
edt hat
underSecti
on155ofRANo.7160, muni
cipali
ti
esappar entl
ynowhav e
thepowertoimposefeesfortheuseofmuni ci
palroads.

Nev ert
heless,ar emandi ssti
llunnecessar yev eni ft heserv i
cef ee
charged agai nstt he goods ar ef orpol ice sur veill
ance,because
Section133( e)ofRANo.7160expr esslyprohibit
st hei mpositionofal l
othert axes,f ees orchar ges i
n any f orm what soev erupon t he
mer chandiseorgoodst hatpassthrought het erri
torialjuri
sdictionof
l
ocalgov ernmentuni t
s.I tisther
eforeimmat eri
altot heinstantcase
whet hertheser vi
cefeeont hegoodsi sf orpolicesur v ei
ll
anceornot ,
since the subj ectprov isi
on oft he revenue or dinance i si nval
i
d.
Recept i
onoff urtherevidencet oestabli
sht hi
sf actwoul dnotl egali
ze
theimposi ti
onofsuchf eeinanyway .

Furthermore,neitherpar tydi sputesanyoft heot hermat erialfactsof

the case.Fr om t hei
rr espect ive Br i
efs beforet he CA and t hei
r
Memor anda befor et his Cour t
,t heydo notdi sputet he f actthat
petiti
oner,from it spr i
ncipalpl aceofbusi ness,transpor tsr i
ceand
corn on boar dt rucks bound f orr espondent ’
s whar f.The t rucks
traversethemuni cipalr
oadsenr outetothewhar f,wheret hesacksof
ri
ceandcor nar emanual lyl oadedi nto mar i
nev esselsboundf or
ZamboangaCi ty.Li kewiseundi sputed ist hef actt hatr espondent
i
mposedandcol l
ect edfeesundert heordinancef rom pet itioner.The
formeradmi tsthati thasbeencol lecti
ng,inaddi tiont ot hef eeson
vehicles,₱0.50f orev erysackofr iceorcor nt hatthel atterhasbeen
shippingthrought hewhar f.
16

The foregoi
ng all
egat
ionsaref or
maljudi
cialadmissi
onsthatare
conclusi
veupont hepart
iesmakingt
hem.Theyr equi
renofurt
her
proofinaccordancewithSect
ion4ofRule129oftheRulesofCourt
,
whichreads:

"
SEC.4.Judi
cialadmi
ssi
ons.–Anadmi
ssi
on,v
erbalorwr
it
ten,made
byapartyinthecourseoftheproceedi
ngsi
nthesamecase,doesnot
requi
reproof.Theadmi ssi
onmaybecont radict
edonlybyshowing
thati
twasmadet hr
oughpalpablemist
akeorthatnosuchadmissi
on
wasmade. "

Judicialadmi ssi
onsmadebypar ti
esinthepl
eadi
ngs,i
nt hecour
seof
thetrial
,ori notherpr oceedi
ngsinthesamecaseareconcl usi
ve.No
fur
therev idencei srequiredtopr
ovethem.Moreover
,theycannotbe
contradict
edunl essitisshownt hattheyhavebeenmadet hr
ough
palpablemi stake,orthattheyhav
enotbeenmadeatall.
17

WHEREFORE,t hePet i
ti
oni sGRANTED.Theassai ledDeci sionand
Resoluti
on oft he CourtofAppeals are hereby SET ASI DE.The
i
mposi ti
on ofa ser vi
ce fee f
orpoli
ce surveil
lance on al lgoods
harbored orshelter
ed int he pr
emi
ses oft he muni cipalpor tof
MalangasunderSec.5G. 01oftheMalangasMuni cipalRev enueCode
No.09,ser i
esof1993,isdeclar
edNULLANDVOI Df orbeingv iol
ati
ve
ofRepublicActNo.7160.

SOORDERED.

G.
R.No.L-
6931      Apr
il30,
1955

STANDARD-VACUUM OI
LCOMPANY,  pl
aint
iff
-appel
l
ant
,
vs.
M.D. ANTIGUA, as Munici
pal Treasurer of Opon and t
he
MUNICIPALI
TYOFOPON, def
endant
s-appel
lees.

Ross,Selph,
CarrascosoandJandaf
orappel
l
ant.
Provi
ncialFi
scalJoseC.Bor romeoandAssist
antPr
ovi
nci
alFi
scal
AnaniasV.Maribaoforappel
l
ees.

J.
MONTEMAYOR,
  :

Thi
si sanact i
ontorecoverfrom theMunici
palTr
easurerofOpon,
Cebu,thesum ofP26,639.
50collect
edbysaidtownoff
ici
alfr
om t
he
pl
aint
if
f-appel
l
antStandard Vaccum Oi
lCompanyand pai d byt
he
l
atterunderpr
otest.Thefact
sinthi
scasearesi
mpleandnotdi
sputed.
Secti
on 1 ofCommonweal th Act472 known as t
he Muni
cipal
it
y
AutonomyActr eadsthus:

SECTI ON 1.A muni cipalcouncilormuni ci

paldi str
ictcouncil
shallhav eaut hori
tytoi mposemuni ci
pallicenset axesupon
personengagedi nanyoccupat i
onorbusi ness,orexer ci
sing
pri
vilegesi nt hemuni cipali
tyormuni ci
paldistr
ict,byr equi
ring
them t osecur el i
censesatr at
esf i
xedbyt hemuni cipalcouncil
,
ormuni cipaldistr
ictcouncil
;andt ocol l
ectfeeandchar ges,for
servicer enderedbyt hemuni ci
pali
tyormuni cipaldistri
ctand
shallot herwisehav epowert olevyforpubli
cl ocalpurposes,and
forschoolpur poses,i ncl
uding teacher'
s salaries,justand
uniform t axes ot hert han percentages taxes and t axes on
speci f
iedar t
icl
es.

Undertheaboverepr
oducedlegalpr ovi
sion,themunicipalcouncilof
OponpassedOr di
nanceNo.9ser i
esof1949,i mposingagr aduate
l
icensetaxonthebusinessofmanuf acturi
ngincansbasedont he
maximum outputcapaci
tyoft hef actor
y .Saidor
dinancewasdul y
approv
edbytheDepartmentofFinance.

The pl aint i
ff-appellantSt andard Vaccum Oi lCompany ,a f or
ei gn
corporat i
on dul yl icensed t ot ransactbusi ness i nt he Phi l
ippines,
havingi tspr incipalof fi
cei nheCi tyofMani l
aandwi thbranchof fi
cei n
theCi t
yofCebu, i
sengagedi nt hei mpor tati
on, distri
butionandsal eof
gasoline, keroseneandot herfuel oils.Someofi t
spr oduct s.especi ally
kerosenear epl acedi n5- gall
ont i
ncansandt hendi str
ibutedandsol d
thr
oughoutt hePhi lippines.Thecompany 'sbr anchi nCebuoper at es
andmai nt ai
nsanest abli
shmenti nt heMuni cipali
tyofOponknownas
OponTer mi nalwher ei tstorest hegasol ine,ker oseneandot herf uel
oil
si ti mpor tsf rom abr oadandwher ei tmanuf actures5- gallont i
n
cans.Togi veani deaoft heout putofi tstincanf actory,theev idence
shows t hat f or t he y ears 1950 and 1951 appel lant company
manuf act ured2, 796,911and2, 523, 975t i
ncans, respect i
vely,orat ot al
of5, 320, 886.Thi s willex pl
aint he r el
ativelyl arge amountoft ax
coll
ect edbyt hedef endantMuni cipal Treasur erfort woy ears.
Appel l
antcont endst hatt he muni ci
palor di
nance isnul land v oid
becauset hegr aduat edlicenset aximposedi ssaidt opar t
akeoft he
natureofaper cent ageorspeci f
ictax,bei
ngani ndi
rectper cent agetax
onspeci f
iedar ticl
es,namel y,t
het i
ncans,andsuchper centaget axis
outsidet hepower sofamuni cipalcorporati
ont oimposeundert he
abov e-cit
ed l egalpr ov i
sion;and t hatassumi ng thati ti s nota
percent agebutanoccupat iontax,sti
l
litdoesnotappl yt ot het i
ncan
factoryofpl aint i
ff-
appel lantbecausei tisnotabusi nessoper atedfor
profitbuti s mer elyi ncidentaltoi t
s mai n business ofi mpor t
ing
gasol i
ne,ker oseneandot herfueloilsandl aterplacingt hem i nt i
n
cansf ordi st
ribut i
onandsal e.

Thet rialcourthel dt hatt hemanuf act ureoft in cansbypl aintif

f
companyt obeusedascont ai
nersofitsgasol ine,keroseneandot her
fueloilsisanoccupat i
onbyi tselffrom whi cht hepl ai
ntif
fder ives
benefitbynotbuy ingsai dtincansf rom ot herper sonswhowoul d
otherwisemanuf acturet hem;andt hatwer et heplainti
ffexempt ed
from pay i
ng thet axont hecansmanuf actured and used f ort he
dist
ri
but i
onofi t
scommodi tywhileother sengagedi nthemanuf acture
oftincansar er equiredt opayt het ax,t hent hesai dtaxceasest obe
j
ustanduni f
orm.Pl aintif
fi snow appeal i
ngf r
om t hedecisionoft he
tri
alcourtholdingt hatt hemuni cipalor dinancewasnotonl yv ali
dbut
wasal soapplicablet ot hepl ai
nti
ffandt hatconsequent l
y,theamount
ofthet axshouldnotber efundedt oit
.

We ar e sat i
sfied thatt he gr aduated l
icense tax imposed byt he
ordinancei nquest i
oni sanoccupat i
ont ax,imposednotundert he
poli
ceorr egulatorypoweroft hemuni ci
palitybutbyv i
rtueofi t
st axing
powerf orpur posesofr evenue, andisinaccor dancewi tht helastpar t
ofsect ion1ofCommonweal thAct472.I tis,therefore,v alid.The
quest i
onnow t o bedet er minedi swhet heri tisappl icabl et ot he
plai
ntiffcorpor ati
on.Tous,i tisat hati
facompanymanuf act urest i
n
canst obesol dt othepubl icort ocompani esengagedi nthesal eand
dist
r i
butionoft heliquids,thensai dmanuf acturewouldbei mposedby
theor dinance.Howev er
,wher et hemanuf actureoft i
ncansasi nt he
presentcasei sconduct ednotasi ndependentbusi ness, andf orpr ofi
t
butmer elyasani ncidenttoorpar tofit
smai nbusiness,t heni tmay
notbeconsi deredasanoccupat ionorbusi nesswhi chmaybet axed
separately.Thepl aint if
fcompanyasal r
eadyst ated,i
sengagedi nt he
i
mpor tati
on,di stri
but ionandsal eofgasol i
ne,ker oseneandot herf uel
oil
sandi tisalreadypay ingthespecifictaxoft wocent av osandsev en
centavosperl iterofker oseneandgasol ine, r
espect i
vely, beingsol dby
i
t.Whi l
egasol inemaybesol danddi stri
but edtoi tsdeal ersandt ot he
publi
catgasol i
nest ationsandwi t
houtt heuseoft incanst hi
smay
notbedonewi thker oseneorpet r
oleum whi chi sbeingsol dnotonl yi n
smallt ownswhi chhav enoker osenest ati
onsbuti ndi st antbarrios;
hencet henecessi tyofpr ovi
dingsuitablecont ainerssuchas5- gal l
on
ti
ncans.Accor dingt ot hefindi
ngsoft het ri
alcour twhi chwemust
accepther e,becauset heappealwasmadedi rectlytot hisTr i
bunalon
purely quest i
ons of l aw,t he tin cans i n quest ion wer e not
manuf acturedbyt heappel l
antcompany" f
orsal etothepubl i
c,butf or
thepurposeofdi stribut i
ngitsproductswhi char ei nli
qui df orm."

ThecaseofSmi th,Bell&Co.  vs. Municipal i

tyofZamboangar epor ted
i
n554Phi l
.,466,i nvol
v edacompanyengagedi nthepur chaseand
saleofhempwhi choper atedamot orengi neusedf orbalinghempf or
shipment .The Muni cipali
ty ofZamboanga enact ed an or dinance
requir
ingofal icensef eeofP100ay earf orev erymot orengi neused
forbal i
nghemp.Thecompanyobj ectedt ot hepay mentoft hef ee
sayingt hattheuseofi tsmot orengi newasani ncidenttoi t
sbusi ness
ofpur chaseandsal ehemp.Af terpay i
ngt hef eeunderpr otest .The
companybr oughtanact iontorecovert hesamef rom t
hemuni ci pali
ty.
ThisTr i
bunalaf fi
r mingt hejudgmentoft hel owercour twhi chdeci ded
i
nf avoroft hecompanysai dt hatacompanyt hathasal readypai d
taxesori mpostf ortheoper at
ionofi tsmai nbusi nessofpur chase
andsal eofhempmaynotbef ur
thert axedf oritpossessi onand
operationofamot orengi netobal ehempf ort her easont hatt he
bali
ngofhempi sconnect edwi th,i
ncident altoandpar tofpl ai nti
ff'
s
business, par t
icularlyit
ssal eandshi pmentofsai dcommodi ty.

I
nthecaseofCr
ai v
g s.
 Bal
l
ard&Bal
l
ardCo.
,196Sc.238,i
twashel
d
t
hat:

Whereapersonorcor
por
ati
onisengagedi
nadisti
nctbusi
ness
and,asafeatur
ether
eof
,inanacti
vi
tymerel
yinci
dent
alwhich
 serv
esnoot herper
sonorbusi
ness,
theinci
dent
alandrest
ri
cted
acti
vi
tyisnottobeconsider
edasintendedtobeseparat
elyor
addit
ional
l
ytaxed.

Inconclusi
on,weholdthatwhenaper sonorcompanyi salready
taxedoni tsmai
nbusiness,i
tmaynotbef urthert
axedf ordoing
somethi
ngorengagi
nginanactiv
ityorworkwhichismerel
yapar tof
,
i
ncident
al t
oandi
snecessaryt
oit
smai nbusi
ness.

I
nv iew oft he foregoi
ng,t he decisi
on appeal
ed fr
om is hereby
r
eversed,andtheMuni ci
palTreasurerofOponCebu,i
sherebyordered
t
or etur
nt ot heplainti
ff
-appel
lantthesum ofP26, 639.
50,without
i
nter
est,butwithcosts.

G.
R.No.L-
33318 
  
  
  
  
  
  
December20,
1930

SMITH,BELL&CO. ,LTD.
, 
plai
nti
ff
-appel
lee,
vs.
THE MUNI CIPALI
TY OF ZAMBOANGA and CARLOS DOMI NGUEZ,
Munici
palTreasur
erofZamboanga, def
endant
s-appel
l
ant
s.

Att
orney
-Gener
alJar
anil
l
aforappel
l
ant
s.
Lor
enzoandJov enf
orappel
l
e.

STATEMENT

Plai
nti
ffi
sadomest i
ccor porati
on,withit
sprinci
paloff
iceintheCi t
y
of Manil
a and a br anch of f
ice in Zamboanga .The defendant
munici
pali
tyisamuni cipalcorporat
ionorgani
zedunderChapter64of
the Administ
rat
ive Code of 1917, and t he defendant Carlos
Dominguezisit
streasurer.

Plainti
ffal
l
egesthatonDecember2,1928,t hemuni ci
pali
tyenacted
ordinanceNo.226,ser
iesof1928,inandbywhi chli
censeorprivil
ege
taxes arei mposed upon persons,proper
ty,and t hings therei
n
specifi
ed,among which are machinesoper
ated bymot orfort he
bali
ngofhemp. Thatatallofsuchtimes,
theplaint
if
fhasbeenandi s
nowt heownerofamachi neforbal i
nghempoper atedbymot ori
nt he
muni ci
pali
ty of Zamboanga.That on December 27,1928,t he
def endantt r
easur ermade a demand upon t he pl ainti
fffort he
pay mentoft helicensef eefori
tsmachi ne,andt hreatenedt oenforce
pay ment .ThatOnJanuar y10,1929,andt oav oidcr iminalacti
on,
plaintif
f,underpr otestandclai
mi ngt hattheor dinancewasnul land
void,pai dthelicenseofP25f ort hef i
rstquarterof1929.Thaton
Mar ch30,1929,thedef endantt
reasur eragaindemandedt hepayment
oft hel i
censewhi cht heplai
nti
ff,forlikereasons,pai dunderpr otest
,
forwhi chplaint
if
fpr aysjudgmentagai nstthedefendant sforP50,with
i
nt erestandcost s,andthattheor di
nancebedecl arednul landvoid.

Foranswert
hedef
endantsmadeageneralandspeci
fi
cdeni
aland
prayt
hatt
hecompl
aintbedi
smi
ssed,
wit
hcosts.

October10,1929,t
hepar
ti
esent
eredi
ntot
hef
oll
owi
ngst
ipul
ati
onof
fact
s:

Plai
ntif
fanddef endant
si ntheabov e-ent
it
ledcause,byt hei
r
respecti
veundersi
gned att
orneys,herebyst i
pul
ateand agree
thatthefact
sinv
olvedinthi
sli
ti
gati
onar easfoll
ows:

1.Thatt hepersonal
it
yofeachandeveryoneoftheparti
esto
thi
sactiontosueandbesuedisasal
legedinpar
agraphsIandI
I
ofthecompl ai
ntherei
n,whi
chwasfi
ledbytheplai
nti
ffonJune
25,1929.

2.Thatont he14thdayofDecember ,1928,andcl aimingt

oact
undertheauthor
it
yofsection2625, l
etter(d)asamendedoft he
Admi ni
str
ati
ve Code of 1917, t he muni ci
pal counci
l of
Zamboanga duly enacted and approv ed ordi
nance No.226,
seri
esof1928,purporti
ngtoi mposel i
censeandpr i
vil
egetaxes
forand upon persons,businesses and pr oper
tyenumer ated
therei
n,andamongt hepr ovi
sionsofsai dor dinancearet he
foll
owing:

"SECTI
ON1.Noperson,f
ir
m,companyorcor
por
ati
onshal
l
commenceorest
ablishanybusi
nessorenj
oyanyofthe
 pri
vi
legesherei
nafterment ionedwithoutfir
stappl
yi
ngfor
thenecessaryauthorityfr
om t hemuni ci
palpr
esi
dentand
payi
ngt othemuni cipaltr
easur yt
het axesimposedupon
suchbusinessorpriv
ilege.

"SEC.2.
 Miscel
laneousli
censes.—Ther
eshallbecoll
ect
ed
adayt axpay ableinadv ancetothemunicipaltr
easury
befor
eenjoyingthepri
vi
legeofthel
i
censef
ort hefol
l
owing:

"
MACHI
NERI
ES:

"Foreachmot orengineforthedev el
opmentofhemp
per hor
se power annual
l
y
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
.P6.
00

"Foreachmot orengineforbali
nghempper
annum
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.
...
..100.
00

"Foreachengineforthepr oduct
ionoficeper
annum
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.
...
..120.
00

"Foreachmot orsawmi l
lperhorsepower
annuall
y
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.
.5.00

"Foreachmachi neforturni
ngoutrawmat
eri
alt
o
be used i n dy ing ski ns per annum
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.120.
00"

3.Thatsaid ordi
nance No.226 was dul
yappr ov
ed byt he
pr
ovinci
alboar
doft heProvi
nceofZamboanga,andtookef
fect
onthe1stdayofJanuar
y,1929.

4.Thatmanyy
ear
sbef
oret
hisy
ear(
1929)t
hepl
aint
if
fhasbeen
andissti
llengagedinthesaidmunici
pal
ityofZamboangaint
he
purchaseandsal eofhemp,hav i
ngallthetimedulypaidall
i
nternalrevenue taxes and impost
sf orconducti
ng and i
n
connecti
onwithsaidbusiness.

5.Thatasdeal
eri
nhemp, t
heplaint
if
fownsamachineoperat
ed
bymot orforbal
ing hemp,which machi
ne i
slocat
ed inthe
munici
pal
it
yofZamboanga.

6.Thatont he27t hdayofDecember ,1929,byv ir

tueoft he
provisionsofsai dor di
nanceNo.226,quot edi nparagraph2of
thi
sst i
pul ati
on,t hedef endantCar losDomi nguez,inhisof f
icial
capaci tyasmuni ci
paltr easurerofZamboanga,madedemand
upont hepl ainti
ffori tsr epresentativefort hepay mentoft he
l
icensef eeorpr i
v i
l
eget axpr escribedbysai dpr ov
isi
onsoft he
ordinancef ororuponpl ainti
ff'
smot orforbalinghemp,andsai d
defendantt hr eatenedt oenf orcepay mentofsai ddemandby
bri
ngi ngcr imi nalactionagai nstther epresentati
veofthepl ai
ntiff
forv i
olationoft heabov e- mentionedpr ovisi
onsoft heordinance,
i
fplaint i
ffwoul dnotmaket hepay mentdemanded.

7.Thatt oav oidthet hreat enedcri

minalacti
onment i
onedi nthe
nextpr ecedingpar agraphandonJanuar y10,1929,agai nstits
willandunderpr otest,decl ari
ngsaidl i
censeofpr i
v i
leget ax
i
ll
egali nthatt hepr ovisionsoft heordinancepr
escribingi tare
nulland v oid,the pl ainti
ff paidtot he defendant Car los
Domi nguezt heamountdemandedbyhi m,towit:P25f oror
uponsai dmachi neoft hepl aint
if
f,t
hesaidamountbei ngf orthe
fi
rstquar t
erof1929.

8.Thatont he30thdayofMar ch,1929,thedefendantmuni cipal

treasur
eragai nli
kewisedemandedf rom plai
nti
ffthepaymentof
theabov e-mentionedlicensefeeorpr iv
ilegetaxcorresponding
tot hesecondquar terofthey ear1929,andt heplai
ntif
fpaidon
Apr i
l9,1929,alsounderpr ot
estthesamel i
censefeeorprivi
lege
taxandi nthesameamount( P25)forsai
dquar ter
. l
awphi
1>net

9.Thatt
het
otalsum oft
heabov
epay
mentunderpr
otestmade
 byplainti
fftot he defendantisfift
ypesos (P50),Phil
i
ppine
cur
rency,and t he plai
ntif
fhas demanded oft he def
endant
munici
paltreasurerther efundofsaidamount,butherefused
andrefusestoretur
nsameoranypar tther
eoft
otheplai
nti
ff.

Thelowercourtrenderedj udgmentf ortheplainti

ffasprayedfori
nits
complai
nt,f
rom whi cht hedef endantsappeal edandcont endthatthe
courter
redinholdingt hatt hemuni cipalcorporati
onhasnoaut horit
y
toimposelicenset axesupont hepl aintif
fforitsmotormachi nefor
bal
inghemp,andi nhol dingt hattheor dinanceinquesti
oni snull
;and
voi
d,andindeny i
ngt hedef endants'mot i
onf oranewt r
ial.

J.
JOHNS,
  :

I
nit
sopi
niont
hel
owercour
tsay
s:

Thepowersofamunici
palcounci
ltoimposetaxesar
edef
ined
i
nsecti
ons2625and2628oftheAdmini
str
ati
veCode.

Thecour t
,af t
erst udy i
ngt hesesect ions,findst hat,althought he
defendantmuni cipalcor por at
ionmayi ssuel i
censes,f ixingt he
fees to be pai dt herefor,forpr ofessions,busi nesses,and
establi
shment scl assi f
iedi nsect i
on2625oft heAdmi nistr
ative
Code, subsect ion( d), t
hispowerdoesnot ,i
nt hej udgmentoft he
court,ext end t ot he est abli
shmentand oper ati
on ofst eam
engines,si nce subsect i
on ( c) of sai d sect ion 2625 onl y
authorizes t he def endant cor poration t o r egulate t he
establi
shmentand oper ati
on ofsuch st eam engi nes.I ft he
i
ntentionoft heLegi sl
aturehadbeendi ff
er ent,thatis,i fithad
i
ntended t hatmuni ci
paliti
es mi ght ,through t heirmuni cipal
councils,col l
ectl icenset axesf ort heest abl i
shmentofst eam
enginesment ionedi nsubsect i
on( c)oft heaf oresaidsect ion
2625,itwoul dhav ei ncludedt heseact i
viti
esi nsubsect i
on( d)of
thatsect i
on.

Wherefor
e,t
he cour
tbel i
eves thatthe defendantmunici
pal
cor
porati
onhasnoaut hor
itytoi mposelicensetaxesont he
pl
aint
if
fcompanyf
ortheestabl
ishmentini
tsof f
iceofamachine
 forbal
inghemp,andt hatordinanceNo.226ofthedefendant
munici
palcor porat
ionseri
esof1928,i nsofarasitimposes
suchalicensetax,i
snullandvoid.

I
nhi
sbr
ieff
ort
heappel
l
ant
stheAt
tor
ney
-Gener
alsay
s:

Weagr eewiththeabove-quotedobservat
ionsoft
helowercourt
.
It
,however,over
lookedtheexistenceofActNo.3422whichtook
effecton January 1,1928,t hatis one yearpriortot he
promulgat
ionofmuni ci
pal-
ordinanceNo.226,ser
iesof1928,of
Zamboanga.Sect i
on1ofsai dActssays:

"SECTION 1.A muni ci

palcounci lshal
lhav eaut hor
it
yt o
i
mposemuni cipallicenset axesuponper sonsengagedi n
anyoccupat ionorbusi ness,orexer ci
singpr iv
il
egesint he
municipalit
y,byr equi ri
ngthem t osecurel i
censesatr ates
fi
xed byt hemuni cipalcounci l
,and to col l
ectf eesand
chargesf orservicesr enderedbyt hemuni cipal
ity
,andshall
otherwisehav epowert ol
ev yforpubli
cl ocalpurposesjust
anduni formt axesot herthanper cent
aget axesandt axes
onspeci fi
edar t
icles:Pr
  ovided,etc.
"

TheAt
tor
ney
-Gener
alt
hensay
s:

Theabov equot edpr ov i

sionaut hori
zesamuni cipalcounci lto
i
mposed muni cipal l icense t axes upon per sons engaged
i
n any occupation orbusi ness,orexer ci
sing privi
legesi nt he
municipali
ty.Itist ruei tcont ainsapr ov
isoplacingitbey ondt he
poweroft hemuni cipalcounci ltoimposet axes,char ges,and
feesoncer tainbusi ness, occupationsandpr i
vi
legesenumer ated
ther
ein,butt he oper ationofamot ormachinef orbal i
nghemp  i
s
notoneoft hem.

Amongot
hert
hingsi
twasst
ipul
ated:

4.Thatmanyy earsbef
oret
hisy
ear(1929)thepl
aint
if
fhasbeen
andissti
llengagedint
hesai
dmunicipal
it
yofZamboangainthe
purchaseandsal eofhemp,havi
ngal ltheti
medul ypai
dall
 i
nternalrev
enue t
axes and impost
sforconduct
ing and i
n
connecti
onwit
hsai
dbusiness.

5.Thatasdeal
eri
nhemp, t
heplaint
if
fownsamachineoperat
ed
bymot orforbal
ing hemp,which machi
ne i
slocat
ed inthe
munici
pal
it
yofZamboanga.

Thati st osay ,thatiti

sagr eedt hatwhent heor di
nancewaspassed,
thepl aintiffwasengagedi nt hepur chaseandsal eofhempi nthe
muni cipalityofZamboanga,andt hatithaspai dalloft het axesand
i
mpost sf orthatbusi ness,andt hatitownsa" motorforbal i
nghemp,"
whichmachi nei slocatedinthemuni ci
pali
ty.Thatistosay ,themotor
oft hepl ainti
f fupon whi ch i
twasr equi
red to payt hel icenseis
connect edwi th,inci
dentalto,andapar tof,plai
nti
ff'
sbusi nessinthe
saleandpur chaseofhemp,andt hatithaspai dallt axest othe
gover nmentf ort heoperationandconductofi t
sbusi ness.I tmaybe
thatamot orisnotani ncidenttot hepurchaseofhemp, butev enso,i
t
mustbeconcededt hatiti sincidentaltot hesaleandshi ppingof
hemp.

Thepur poseandi ntentoftheordinanceisappar entuponi tsf ace.It

provi
dest hatnoper son,companyorcor porati
onshal lcommenceor
establish anybusi ness orenjoyanyoft he privi
leges her einafter
ment ionedwi thoutf i
rstappl
yi
ngf orthenecessar yaut hor i
tyfrom the
muni cipalpresidentandt hepay menttothemuni cipalt reasuryoft he
taxesi mposeduponsuchbusi nessorpriv
ilege,
andt hatt hereshallbe
coll
ect edadayt axpay abl
einadv ancebeforeenjoyingt hepr iv
ilegeof
theli
cense—

Foreachmot orengineforbali
nghempper
annum . .
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
P100.00.

Thati sto say ,to operat

eand enj oyitsbusinessi n Zamboanga,
plai
ntif
fisrequir
edtopayP100perannum asacondi tionpr ecedentt
o
theuseofi tsenginef orthebalingofhempi nconnect i
onwi thit
s
business.Again,i
tisconcededt hattheordi
nanceinquest i
onwasnot
approvedbyt heSecr et
aryoftheInteri
orandtheSecretar
yofFi nance,
andsect i
on2ofActNo.3422expr essl ypr ov i
dest hatwi thoutt he
appr ov aloft hatof ficial ,themuni cipalcounci lhasnoaut horityt o
i
mpose muni cipall icense t axes on a busi ness cov ered by t he
prov i
sionsoft hi ssect ion,i ft het axi sinexcessofP25perannum.
Agai n,t heAt torney -Gener alconcedest hatundersubsect i
on( d)of
sect i
on2625oft heAdmi nistrat i
veCode,t hemuni cipalcounci ldoes
nothav et hepowert ol evyt het axi nquest i
on,butcont endst hati t
doeshav et hepowerunderActNo.3422,whi chwenti ntoeffecton
Januar y1,1928,oney earpr iort ot hepassageoft heor dinancei n
quest ion.Theappel leecont endst hatActNo.3422doesnotr epeal
subsect ion( d)ofsect i
on2625, andt hati tisnowi nfor ceinMi ndanao
andSul u.Iti st ruet hatsect ion3r epealsnotonl ysect i
on2307oft he
Admi nist r
ativeCode,butal so" allact sorpar tsofact sinconsi stent
witht hepr ov isionsoft hisAct .
"Buti twi llbenot edt hatwhi l
especi fi
c
referencei smadet osect ion2307oft heAdmi nistrativ
eCode,no
referencewhat ev erismadet osubsect ion( d)ofsect ion2625oft he
Admi nist r
ativeCode,and,hence, itmustf oll
ow t hatifsubsect ion( d)
ofsect ion 2625 i sr epeal ed,i ti sr epeal ed byi mpl i
cation and by
i
mpl i
cat iononl y, andsuchr epeal sar enotf avoredbyt hecour ts.Agai n,
allgener all awsoft hePhi l
ippi neI slandsar enoti nf or ceanddonot
appl ytoMi ndanaoandSul u. Hence,i tfollowst hat,forsuchr eason,i f
theLegi slatur ehadi nt endedt or epealsubsect ion( d)ofsect i
on2625
oft heAdmi nist rativeCode, itwoul dhav eal somadespeci f
icrefer ence
i
nt her epeal ingcl auset ot hatsect i
on.

Allt
hingsconsi
der
ed,
thej
udgmentoft
hel
owercour
tisaf
fi
rmed,
wit
h
costs.Soorder
ed.