Dear Mariel(le): Here are the cases 1) Basco vs. PAGCOR, 1 ! Scra "# #) Pe$si Cola Bottli%& Co.

o' the Phil vs M(%ici$alit) o' Ta%a(a% * scra +*, -) C.R vs. Pili$i%as Shell Petrole(/ Cor$. GR 0o. 111+ !, *!1 SCRA #+1 +) Pa/2a%sa%& 3oalis)o% %& /&a Sa/aha%& Ma&sasa4a at Ma%&a&a5a sa 0)(&a% vs. E6ec(tive Secretar) ** scra P+ ") Co//issio%er o' .%ter%al Reve%(e vs. Petro% Cor$oratio% **1 SCRA !-" *)Matali% Coco%(t Co. .%c. vs. M(%ici$al Co(%cil o' Mala2a%& GR 0o. #11-1, 1- A(&(st 1 1* !) Ba&atsi%& vs. Ra/ire8 !+ SCRA -,* 1) Pe$si Cola Bottli%& Co. vs. Cit) o' B(t(a%, #+ SCRA !1 ) Procter a%: Ga/2le vs. M(%ici$alit) o' ;a&%a + SCRA 1 + 1,) Petro% vs. Pililia 1 1 SCRA 1# 11) Pro&ressive Develo$/e%t Cor$oratio% vs. <(e8o% Cit) GR 0o. -*,11 #+ A$ril 1 1 1#) Tatel vs. =iras +1 SCRA ! 1-) Peo$le vs. 0a8ario GR 0o ++1+- -1 A(&(st 1 11 1+) Ara2a), .%c. vs. C>. ** SCRA *1! 1") .lolio Bottlers, .%c. vs. Cit) o' .loilo GR 0o. "#,1 , 1 A(&(st 1 11 1*+ SCRA *,! 1*) Phili$$i%e Match Co., 9TD vs Cit) o' Ce2( 11 SCRA

CHESTER

ED7ARD

MAR.E9

9O7.E

;OH0

1) Basco vs. PAGCOR, 1 ! Scra "# G.R. No. 91649 May 14, 1991 ATTORNEYS HUMBERTO BASCO, EDILBERTO BALCE, SOCRATES MARANAN AND LORENZO SANCHEZ, $etitio%ers, vs. PHILIPPINE AMUSEMENTS AND GAMING CORPORATION (PAGCOR), res$o%:e%t. PARAS, J.:p A T= a: $ro(:l) a%%o(%ces: ?The %e5 PAGCOR @ res$o%:i%& thro(&h res$o%si2le &a/i%&.? B(t the $etitio%ers thi%4 other5ise, that is 5h), the) 'ile: the i%sta%t $etitio% see4i%& to a%%(l the Phili$$i%e A/(se/e%t a%: Ga/i%& Cor$oratio%

(PAGCOR) Charter @ PD 11* , 2eca(se it is alle&e:l) co%trar) to /orals, $(2lic $olic) a%: or:er, a%: 2eca(se @ A. .t co%stit(tes a 5aiver o' a ri&ht $reA(:icial to a thir: $erso% 5ith a ri&ht reco&%i8e: 2) la5. .t 5aive: the Ma%ila Cit) &over%/e%tBs ri&ht to i/$ose ta6es a%: lice%se 'ees, 5hich is reco&%i8e: 2) la5C B. >or the sa/e reaso% state: i% the i//e:iatel) $rece:i%& $ara&ra$h, the la5 has i%tr(:e: i%to the local &over%/e%tBs ri&ht to i/$ose local ta6es a%: lice%se 'ees. This, i% co%trave%tio% o' the co%stit(tio%all) e%shri%e: $ri%ci$le o' local a(to%o/)C C. .t violates the eD(al $rotectio% cla(se o' the co%stit(tio% i% that it le&ali8es PAGCOR @ co%:(cte: &a/2li%&, 5hile /ost other 'or/s o' &a/2li%& are o(tla5e:, to&ether 5ith $rostit(tio%, :r(& tra''ic4i%& a%: other vicesC D. .t violates the avo5e: tre%: o' the Cor) &over%/e%t a5a) 'ro/ /o%o$olistic a%: cro%) eco%o/), a%: to5ar: 'ree e%ter$rise a%: $rivati8atio%. ($. #, A/e%:e: Petitio%C $. !, Rollo) .% their Seco%: A/e%:e: Petitio%, $etitio%ers also clai/ that PD 11* is co%trar) to the :eclare: %atio%al $olic) o' the ?%e5 restore: :e/ocrac)? a%: the $eo$leBs 5ill as e6$resse: i% the 1 1! Co%stit(tio%. The :ecree is sai: to have a ?&a/2li%& o2Aective? a%: there'ore is co%trar) to Sectio%s 11, 1# a%: 1- o' Article .., Sec. 1 o' Article =... a%: Sectio% - (#) o' Article E.=, o' the $rese%t Co%stit(tio% ($. -, Seco%: A/e%:e: Petitio%C $. #1, Rollo). The $roce:(ral iss(e is 5hether $etitio%ers, as ta6$a)ers a%: $ractici%& la5)ers ($etitio%er Basco 2ei%& also the Chair/a% o' the Co//ittee o% 9a5s o' the Cit) Co(%cil o' Ma%ila), ca% D(estio% a%: see4 the a%%(l/e%t o' PD 11* o% the alle&e: &ro(%:s /e%tio%e: a2ove. The Phili$$i%e A/(se/e%ts a%: Ga/i%& Cor$oratio% (PAGCOR) 5as create: 2) virt(e o' P.D. 1,*!FA :ate: ;a%(ar) 1, 1 !! a%: 5as &ra%te: a 'ra%chise (%:er P.D. 1,*!FB also :ate: ;a%(ar) 1, 1 !! ?to esta2lish, o$erate a%: /ai%tai% &a/2li%& casi%os o% la%: or 5ater 5ithi% the territorial A(ris:ictio% o' the Phili$$i%es.? .ts o$eratio% 5as ori&i%all) co%:(cte: i% the 5ell 4%o5% 'loati%& casi%o ?Phili$$i%e To(rist.? The o$eratio% 5as co%si:ere: a s(ccess 'or it $rove: to 2e a $ote%tial so(rce o' reve%(e to '(%: i%'rastr(ct(re a%: socioFeco%o/ic $roAects, th(s, P.D. 15as $asse: o% ;(%e #, 1 !1 'or PAGCOR to '(ll) attai% this o2Aective. S(2seD(e%tl), o% ;(l) 11, 1 1-, PAGCOR 5as create: (%:er P.D. 11* to e%a2le the Gover%/e%t to re&(late a%: ce%trali8e all &a/es o' cha%ce a(thori8e: 2) e6isti%& 'ra%chise or $er/itte: 2) la5, (%:er the 'ollo5i%& :eclare: $olic) @ Sec. 1. Declaration of Policy. @ .t is here2) :eclare: to 2e the $olic) o' the State to ce%trali8e a%: i%te&rate all &a/es o' cha%ce %ot hereto'ore a(thori8e: 2) e6isti%& 'ra%chises or $er/itte: 2) la5 i% or:er to attai% the 'ollo5i%& o2Aectives: (a) To ce%trali8e a%: i%te&rate the ri&ht a%: a(thorit) to o$erate a%: co%:(ct &a/es o' cha%ce i%to o%e cor$orate e%tit) to 2e co%trolle:, a:/i%istere: a%: s($ervise: 2) the Gover%/e%t.

(2) To esta2lish a%: o$erate cl(2s a%: casi%os, 'or a/(se/e%t a%: recreatio%, i%cl(:i%& s$orts &a/i%& $ools, (2as4et2all, 'oot2all, lotteries, etc.) a%: s(ch other 'or/s o' a/(se/e%t a%: recreatio% i%cl(:i%& &a/es o' cha%ce, 5hich /a) 2e allo5e: 2) la5 5ithi% the territorial A(ris:ictio% o' the Phili$$i%es a%: 5hich 5ill: (1) &e%erate so(rces o' a::itio%al reve%(e to '(%: i%'rastr(ct(re a%: socioFcivic $roAects, s(ch as 'loo: co%trol $ro&ra/s, 2ea(ti'icatio%, se5era&e a%: se5a&e $roAects, T(l(%&a% %& Ba)a% Ce%ters, 0(tritio%al Pro&ra/s, Po$(latio% Co%trol a%: s(ch other esse%tial $(2lic servicesC (#) create recreatio% a%: i%te&rate: 'acilities 5hich 5ill e6$a%: a%: i/$rove the co(%tr)Bs e6isti%& to(rist attractio%sC a%: (-) /i%i/i8e, i' %ot totall) era:icate, all the evils, /al$ractices a%: corr($tio%s that are %or/all) $revale%t o% the co%:(ct a%: o$eratio% o' &a/2li%& cl(2s a%: casi%os 5itho(t :irect &over%/e%t i%volve/e%t. (Sectio% 1, P.D. 11* ) To attai% these o2Aectives PAGCOR is &ive% territorial A(ris:ictio% all over the Phili$$i%es. G%:er its CharterBs re$eali%& cla(se, all la5s, :ecrees, e6ec(tive or:ers, r(les a%: re&(latio%s, i%co%siste%t there5ith, are accor:i%&l) re$eale:, a/e%:e: or /o:i'ie:. .t is re$orte: that PAGCOR is the thir: lar&est so(rce o' &over%/e%t reve%(e, %e6t to the B(rea( o' .%ter%al Reve%(e a%: the B(rea( o' C(sto/s. .% 1 1 alo%e, PAGCOR ear%e: P-.+- Billio%, a%: :irectl) re/itte: to the 0atio%al Gover%/e%t a total o' P#." Billio% i% 'or/ o' 'ra%chise ta6, &over%/e%tBs i%co/e share, the Presi:e%tBs Social >(%: a%: Host CitiesB share. .% a::itio%, PAGCOR s$o%sore: other socioFc(lt(ral a%: charita2le $roAects o% its o5% or i% coo$eratio% 5ith vario(s &over%/e%tal a&e%cies, a%: other $rivate associatio%s a%: or&a%i8atio%s. .% its - 1H# )ears o' o$eratio% (%:er the $rese%t a:/i%istratio%, PAGCOR re/itte: to the &over%/e%t a total o' P*.# Billio%. As o' Dece/2er -1, 1 1 , PAGCOR 5as e/$lo)i%& +,+ + e/$lo)ees i% its %i%e ( ) casi%os %atio%5i:e, :irectl) s($$orti%& the livelihoo: o' >o(r Tho(sa%: >o(r H(%:re: 0i%et)F>o(r (+,+ +) 'a/ilies. B(t the $etitio%ers, are D(estio%i%& the vali:it) o' P.D. 0o. 11* . The) alle&e that the sa/e is ?%(ll a%: voi:? 'or 2ei%& ?co%trar) to /orals, $(2lic $olic) a%: $(2lic or:er,? /o%o$olistic a%: te%:s to5ar: ?cro%) eco%o/)?, a%: is violative o' the eD(al $rotectio% cla(se a%: local a(to%o/) as 5ell as 'or r(%%i%& co(%ter to the state $olicies e%(%ciate: i% Sectio%s 11 (Perso%al Di&%it) a%: H(/a% Ri&hts), 1# (>a/il)) a%: 1- (Role o' Io(th) o' Article .., Sectio% 1 (Social ;(stice) o' Article E... a%: Sectio% # (E:(catio%al =al(es) o' Article E.= o' the 1 1! Co%stit(tio%. This challe%&e to P.D. 0o. 11* :eserves a searchi%& a%: thoro(&h scr(ti%) a%: the /ost :eli2erate co%si:eratio% 2) the Co(rt, i%volvi%& as it :oes the e6ercise o' 5hat has 2ee% :escri2e: as ?the hi&hest a%: /ost :elicate '(%ctio% 5hich 2elo%&s to the A(:icial :e$art/e%t o' the &over%/e%t.? (State v. Ma%(el, #, 0.C. 1++C 9o8a%o v. Marti%e8, 1+* SCRA -#-). As 7e e%ter ($o% the tas4 o' $assi%& o% the vali:it) o' a% act o' a coFeD(al a%: coor:i%ate 2ra%ch o' the &over%/e%t 7e %ee: %ot 2e re/i%:e: o' the ti/eFho%ore: $ri%ci$le, :ee$l) i%&rai%e: i% o(r A(ris$r(:e%ce, that a stat(te is

$res(/e: to 2e vali:. Ever) $res(/$tio% /(st 2e i%:(l&e: i% 'avor o' its co%stit(tio%alit). This is %ot to sa) that 7e a$$roach O(r tas4 5ith :i''i:e%ce or ti/i:it). 7here it is clear that the le&islat(re or the e6ec(tive 'or that /atter, has overFste$$e: the li/its o' its a(thorit) (%:er the co%stit(tio%, 7e sho(l: %ot hesitate to 5iel: the a6e a%: let it 'all heavil), as 'all it /(st, o% the o''e%:i%& stat(te (9o8a%o v. Marti%e8, supra). .% Victoriano v. Elizalde Rope Workers' Union, et al, " SCRA "+, the Co(rt thr( Mr. ;(stice Jal:ivar (%:erscore: the @ . . . thoro(&hl) esta2lishe: $ri%ci$le 5hich /(st 2e 'ollo5e: i% all cases 5here D(estio%s o' co%stit(tio%alit) as o2tai% i% the i%sta%t cases are i%volve:. All $res(/$tio%s are i%:(l&e: i% 'avor o' co%stit(tio%alit)C o%e 5ho attac4s a stat(te alle&i%& (%co%stit(tio%alit) /(st $rove its i%vali:it) 2e)o%: a reaso%a2le :o(2tC that a la5 /a) 5or4 har:shi$ :oes %ot re%:er it (%co%stit(tio%alC that i' a%) reaso%a2le 2asis /a) 2e co%ceive: 5hich s($$orts the stat(te, it 5ill 2e ($hel: a%: the challe%&er /(st %e&ate all $ossi2le 2asisC that the co(rts are %ot co%cer%e: 5ith the 5is:o/, A(stice, $olic) or e6$e:ie%c) o' a stat(te a%: that a li2eral i%ter$retatio% o' the co%stit(tio% i% 'avor o' the co%stit(tio%alit) o' le&islatio% sho(l: 2e a:o$te:. (Da%%er v. Hass, 1 + 0.7. 2nd "-+, "- C S$(r2ec4 v. Statto%, 1,* 0.7. 2nd **,, **-C " SCRA **C see also e.&. Salas v. ;are%cio, +* SCRA !-+, !- K1 !,LC Peralta v. Co//issio% o% Electio%s, 1# SCRA -,, "" K1 !1LC a%: Heirs o' Or:o%a v. Re)es, 1#" SCRA ##,, #+1F#+# K1 1-L cite: i% Citi8e%s Allia%ce 'or Co%s(/er Protectio% v. E%er&) Re&(lator) Boar:, 1*# SCRA "#1, "+,) O' co(rse, there is 'irst, the $roce:(ral iss(e. The res$o%:e%ts are D(estio%i%& the le&al $erso%alit) o' $etitio%ers to 'ile the i%sta%t $etitio%. Co%si:eri%& ho5ever the i/$orta%ce to the $(2lic o' the case at 2ar, a%: i% 4ee$i%& 5ith the Co(rtBs :(t), (%:er the 1 1! Co%stit(tio%, to :eter/i%e 5hether or %ot the other 2ra%ches o' &over%/e%t have 4e$t the/selves 5ithi% the li/its o' the Co%stit(tio% a%: the la5s a%: that the) have %ot a2(se: the :iscretio% &ive% to the/, the Co(rt has 2r(she: asi:e tech%icalities o' $roce:(re a%: has ta4e% co&%i8a%ce o' this $etitio%. (3a$atira% %& /&a 0a&lili%&4o: sa Pa/ahalaa% %& Pili$i%as .%c. v. Ta%, 1*SCRA -!1) 7ith $artic(lar re&ar: to the reD(ire/e%t o' $ro$er $art) as a$$lie: i% the cases 2e'ore (s, 7e hol: that the sa/e is satis'ie: 2) the $etitio%ers a%: i%terve%ors 2eca(se each o' the/ has s(stai%e: or is i% :a%&er o' s(stai%i%& a% i//e:iate i%A(r) as a res(lt o' the acts or /eas(res co/$lai%e: o'. A%: eve% i', strictl) s$ea4i%& the) are %ot covere: 2) the :e'i%itio%, it is still 5ithi% the 5i:e :iscretio% o' the Co(rt to 5aive the reD(ire/e%t a%: so re/ove the i/$e:i/e%t to its a::ressi%& a%: resolvi%& the serio(s co%stit(tio%al D(estio%s raise:. .% the 'irst E/er&e%c) Po5ers Cases, or:i%ar) citi8e%s a%: ta6$a)ers 5ere allo5e: to D(estio% the co%stit(tio%alit) o' several e6ec(tive or:ers iss(e: 2) Presi:e%t <(iri%o altho(&h the) 5ere i%volvi%& o%l) a% i%:irect a%: &e%eral i%terest share: i% co//o% 5ith the $(2lic. The Co(rt :is/isse: the o2Aectio%

that the) 5ere %ot $ro$er $arties a%: r(le: that ?the tra%sce%:e%tal i/$orta%ce to the $(2lic o' these cases :e/a%:s that the) 2e settle: $ro/$tl) a%: :e'i%itel), 2r(shi%& asi:e, i' 5e /(st tech%icalities o' $roce:(re.? 7e have si%ce the% a$$lie: the e6ce$tio% i% /a%) other cases. (Associatio% o' S/all 9a%:o5%ers i% the Phili$$i%es, .%c. v. Sec. o' A&raria% Re'or/, 1!" SCRA -+-). Havi%& :is$ose: o' the $roce:(ral iss(e, 7e 5ill %o5 :isc(ss the s(2sta%tive iss(es raise:. Ga/2li%& i% all its 'or/s, (%less allo5e: 2) la5, is &e%erall) $rohi2ite:. B(t the $rohi2itio% o' &a/2li%& :oes %ot /ea% that the Gover%/e%t ca%%ot re&(late it i% the e6ercise o' its $olice $o5er. The co%ce$t o' $olice $o5er is 5ellFesta2lishe: i% this A(ris:ictio%. .t has 2ee% :e'i%e: as the ?state a(thorit) to e%act le&islatio% that /a) i%ter'ere 5ith $erso%al li2ert) or $ro$ert) i% or:er to $ro/ote the &e%eral 5el'are.? (E:( v. Ericta, -" SCRA +11, +1!) As :e'i%e:, it co%sists o' (1) a% i/$ositio% or restrai%t ($o% li2ert) or $ro$ert), (#) i% or:er to 'oster the co//o% &oo:. .t is %ot ca$a2le o' a% e6act :e'i%itio% 2(t has 2ee%, $(r$osel), veile: i% &e%eral ter/s to (%:erscore its allFco/$rehe%sive e/2race. (Phili$$i%e Associatio% o' Service E6$orters, .%c. v. Drilo%, 1*- SCRA -1*). .ts sco$e, everFe6$a%:i%& to /eet the e6i&e%cies o' the ti/es, eve% to a%tici$ate the '(t(re 5here it co(l: 2e :o%e, $rovi:es e%o(&h roo/ 'or a% e''icie%t a%: 'le6i2le res$o%se to co%:itio%s a%: circ(/sta%ces th(s ass(/i%& the &reatest 2e%e'its. (E:( v. Ericta, supra) .t 'i%:s %o s$eci'ic Co%stit(tio%al &ra%t 'or the $lai% reaso% that it :oes %ot o5e its ori&i% to the charter. Alo%& 5ith the ta6i%& $o5er a%: e/i%e%t :o/ai%, it is i%2or% i% the ver) 'act o' statehoo: a%: soverei&%t). .t is a '(%:a/e%tal attri2(te o' &over%/e%t that has e%a2le: it to $er'or/ the /ost vital '(%ctio%s o' &over%a%ce. Marshall, to 5ho/ the e6$ressio% has 2ee% cre:ite:, re'ers to it s(cci%ctl) as the $le%ar) $o5er o' the state ?to &over% its citi8e%s?. (Tri2e, A/erica% Co%stit(tio%al 9a5, -#-, 1 !1). The $olice $o5er o' the State is a $o5er coFe6te%sive 5ith sel'F$rotectio% a%: is /ost a$tl) ter/e: the ?la5 o' over5hel/i%& %ecessit).? (R(2i v. Provi%cial Boar: o' Mi%:oro, - Phil. **,, !,1) .t is ?the /ost esse%tial, i%siste%t, a%: illi/ita2le o' $o5ers.? (S/ith Bell M Co. v. 0atio%al, +, Phil. 1-*) .t is a :)%a/ic 'orce that e%a2les the state to /eet the a&e%cies o' the 5i%:s o' cha%&e. 7hat 5as the reaso% 2ehi%: the e%act/e%t o' P.D. 11* N P.D. 11* 5as e%acte: $(rs(a%t to the $olic) o' the &over%/e%t to ?re&(late a%: ce%trali8e thr( a% a$$ro$riate i%stit(tio% all &a/es o' cha%ce a(thori8e: 2) e6isti%& 'ra%chise or $er/itte: 2) la5? (1st 5hereas cla(se, PD 11* ). As 5as s(2seD(e%tl) $rove:, re&(lati%& a%: ce%trali8i%& &a/2li%& o$eratio%s i% o%e cor$orate e%tit) @ the PAGCOR, 5as 2e%e'icial %ot A(st to the Gover%/e%t 2(t to societ) i% &e%eral. .t is a relia2le so(rce o' /(ch %ee:e: reve%(e 'or the cash stra$$e: Gover%/e%t. .t $rovi:e: '(%:s 'or social i/$act $roAects a%: s(2Aecte: &a/2li%& to ?close scr(ti%), re&(latio%, s($ervisio% a%: co%trol o' the Gover%/e%t? (+th 7hereas Cla(se, PD 11* ). 7ith the creatio% o' PAGCOR a%: the :irect i%terve%tio% o' the Gover%/e%t,

the evil $ractices a%: corr($tio%s that &o 5ith &a/2li%& 5ill 2e /i%i/i8e: i' %ot totall) era:icate:. P(2lic 5el'are, the%, lies at the 2otto/ o' the e%act/e%t o' PD 11 *. Petitio%ers co%te%: that P.D. 11* co%stit(tes a 5aiver o' the ri&ht o' the Cit) o' Ma%ila to i/$ose ta6es a%: le&al 'eesC that the e6e/$tio% cla(se i% P.D. 11* is violative o' the $ri%ci$le o' local a(to%o/). The) /(st 2e re'erri%& to Sectio% 1- $ar. (#) o' P.D. 11* 5hich e6e/$ts PAGCOR, as the 'ra%chise hol:er 'ro/ $a)i%& a%) ?ta6 o' a%) 4i%: or 'or/, i%co/e or other5ise, as 5ell as 'ees, char&es or levies o' 5hatever %at(re, 5hether 0atio%al or 9ocal.? (#) Income and other ta es. @ a) >ra%chise Hol:er: 0o ta6 o' a%) 4i%: or 'or/, i%co/e or other5ise as 5ell as 'ees, char&es or levies o' 5hatever %at(re, 5hether 0atio%al or 9ocal, shall 2e assesse: a%: collecte: (%:er this 'ra%chise 'ro/ the Cor$oratio%C %or shall a%) 'or/ or ta6 or char&e attach i% a%) 5a) to the ear%i%&s o' the Cor$oratio%, e6ce$t a 'ra%chise ta6 o' 'ive ("O) $erce%t o' the &ross reve%(es or ear%i%&s :erive: 2) the Cor$oratio% 'ro/ its o$eratio%s (%:er this 'ra%chise. S(ch ta6 shall 2e :(e a%: $a)a2le D(arterl) to the 0atio%al Gover%/e%t a%: shall 2e i% lie( o' all 4i%:s o' ta6es, levies, 'ees or assess/e%ts o' a%) 4i%:, %at(re or :escri$tio%, levie:, esta2lishe: or collecte: 2) a%) /(%ici$al, $rovi%cial or %atio%al &over%/e%t a(thorit) (Sectio% 1- K#L). Their co%te%tio% state: herei%a2ove is 5itho(t /erit 'or the 'ollo5i%& reaso%s: (a) The Cit) o' Ma%ila, 2ei%& a /ere M(%ici$al cor$oratio% has %o i%here%t ri&ht to i/$ose ta6es (.car: v. Cit) o' Ba&(io, 1- Phil. 1!,C Cit) o' .loilo v. =illa%(eva, 1," Phil. --!C Sa%tos v. M(%ici$alit) o' Calooca%, ! SCRA *+-). Th(s, ?the Charter or stat(te /(st $lai%l) sho5 a% i%te%t to co%'er that $o5er or the /(%ici$alit) ca%%ot ass(/e it? (Me:i%a v. Cit) o' Ba&(io, 1# SCRA *#). .ts ?$o5er to ta6? there'ore /(st al5a)s )iel: to a le&islative act 5hich is s($erior havi%& 2ee% $asse: ($o% 2) the state itsel' 5hich has the ?i%here%t $o5er to ta6? (Ber%as, the Revise: K1 !-L Phili$$i%e Co%stit(tio%, =ol. 1, 1 1- e:. $. ++"). (2) The Charter o' the Cit) o' Ma%ila is s(2Aect to co%trol 2) Co%&ress. .t sho(l: 2e stresse: that ?/(%ici$al cor$oratio%s are /ere creat(res o' Co%&ress? (G%so% v. 9acso%, G.R. 0o. ! , , ;a%(ar) 11, 1 "!) 5hich has the $o5er to ?create a%: a2olish /(%ici$al cor$oratio%s? :(e to its ?&e%eral le&islative $o5ers? (As(%cio% v. Iria%tes, #1 Phil. *!C Mer:a%illo v. Ora%:ia, " SCRA "+1). Co%&ress, there'ore, has the $o5er o' co%trol over 9ocal &over%/e%ts (He2ro% v. Re)es, G.R. 0o. 1#+, ;(l) #, 1 ",). A%: i' Co%&ress ca% &ra%t the Cit) o' Ma%ila the $o5er to ta6 certai% /atters, it ca% also $rovi:e 'or e6e/$tio%s or eve% ta4e 2ac4 the $o5er. (c) The Cit) o' Ma%ilaBs $o5er to i/$ose lice%se 'ees o% &a/2li%&, has lo%& 2ee% revo4e:. As earl) as 1 !", the $o5er o' local &over%/e%ts to re&(late &a/2li%& thr( the &ra%t o' ?'ra%chise, lice%ses or $er/its? 5as 5ith:ra5% 2) P.D. 0o. !!1 a%: 5as veste: e6cl(sivel) o% the 0atio%al Gover%/e%t, th(s: Sec. 1. A%) $rovisio% o' la5 to the co%trar) %ot5ithsta%:i%&, the a(thorit) o' chartere: cities a%: other local &over%/e%ts to iss(e lice%se, $er/it or other

'or/ o' 'ra%chise to o$erate, /ai%tai% a%: esta2lish horse a%: :o& race trac4s, AaiFalai a%: other 'or/s o' &a/2li%& is here2) revo4e:. Sec. #. Herea'ter, all $er/its or 'ra%chises to o$erate, /ai%tai% a%: esta2lish, horse a%: :o& race trac4s, AaiFalai a%: other 'or/s o' &a/2li%& shall 2e iss(e: 2) the %atio%al &over%/e%t ($o% $ro$er a$$licatio% a%: veri'icatio% o' the D(ali'icatio% o' the a$$lica%t . . . There'ore, o%l) the 0atio%al Gover%/e%t has the $o5er to iss(e ?lice%ses or $er/its? 'or the o$eratio% o' &a/2li%&. 0ecessaril), the $o5er to :e/a%: or collect lice%se 'ees 5hich is a co%seD(e%ce o' the iss(a%ce o' ?lice%ses or $er/its? is %o lo%&er veste: i% the Cit) o' Ma%ila. (:) 9ocal &over%/e%ts have %o $o5er to ta6 i%str(/e%talities o' the 0atio%al Gover%/e%t. PAGCOR is a &over%/e%t o5%e: or co%trolle: cor$oratio% 5ith a% ori&i%al charter, PD 11* . All o' its shares o' stoc4s are o5%e: 2) the 0atio%al Gover%/e%t. .% a::itio% to its cor$orate $o5ers (Sec. -, Title .., PD 11* ) it also e6ercises re&(lator) $o5ers th(s: Sec. . Re!ulatory Po"er. @ The Cor$oratio% shall /ai%tai% a Re&istr) o' the a''iliate: e%tities, a%: shall e6ercise all the $o5ers, a(thorit) a%: the res$o%si2ilities veste: i% the Sec(rities a%: E6cha%&e Co//issio% over s(ch a''iliati%& e%tities /e%tio%e: (%:er the $rece:i%& sectio%, i%cl(:i%&, 2(t %ot li/ite: to a/e%:/e%ts o' Articles o' .%cor$oratio% a%: B)F9a5s, cha%&es i% cor$orate ter/, str(ct(re, ca$itali8atio% a%: other /atters co%cer%i%& the o$eratio% o' the a''iliate: e%tities, the $rovisio%s o' the Cor$oratio% Co:e o' the Phili$$i%es to the co%trar) %ot5ithsta%:i%&, e6ce$t o%l) 5ith res$ect to ori&i%al i%cor$oratio%. PAGCOR has a :(al role, to o$erate a%: to re&(late &a/2li%& casi%os. The latter role is &over%/e%tal, 5hich $laces it i% the cate&or) o' a% a&e%c) or i%str(/e%talit) o' the Gover%/e%t. Bei%& a% i%str(/e%talit) o' the Gover%/e%t, PAGCOR sho(l: 2e a%: act(all) is e6e/$t 'ro/ local ta6es. Other5ise, its o$eratio% /i&ht 2e 2(r:e%e:, i/$e:e: or s(2Aecte: to co%trol 2) a /ere 9ocal &over%/e%t. The states have %o $o5er 2) ta6atio% or other5ise, to retar:, i/$e:e, 2(r:e% or i% a%) /a%%er co%trol the o$eratio% o' co%stit(tio%al la5s e%acte: 2) Co%&ress to carr) i%to e6ec(tio% the $o5ers veste: i% the 'e:eral &over%/e%t. (MC C(lloch v. Marla%:, + 7heat -1*, + 9 E:. "! ) This :octri%e e/a%ates 'ro/ the ?s($re/ac)? o' the 0atio%al Gover%/e%t over local &over%/e%ts. ;(stice Hol/es, s$ea4i%& 'or the S($re/e Co(rt, /a:e re'ere%ce to the e%tire a2se%ce o' $o5er o% the $art o' the States to to(ch, i% that 5a) (ta6atio%) at least, the i%str(/e%talities o' the G%ite: States (;oh%so% v. Mar)la%:, #"+ GS "1) a%: it ca% 2e a&ree: that no state or political su#division can re!ulate a federal instrumentality in such a "ay as to prevent it from consummatin! its federal responsi#ilities , or even to seriously #urden it in the accomplishment of them. (A%tiea(, Mo:er% Co%stit(tio%al 9a5, =ol. #, $. 1+,, e/$hasis s($$lie:) Other5ise, /ere creat(res o' the State ca% :e'eat 0atio%al $olicies thr( e6ter/i%atio% o' 5hat local a(thorities /a) $erceive to 2e (%:esira2le

activities or e%ter$rise (si%& the $o5er to ta6 as ?a tool 'or re&(latio%? (G.S. v. Sa%che8, -+, GS +#). The $o5er to ta6 5hich 5as calle: 2) ;(stice Marshall as the ?$o5er to :estro)? (Mc C(lloch v. Mar)la%:, supra) ca%%ot 2e allo5e: to :e'eat a% i%str(/e%talit) or creatio% o' the ver) e%tit) 5hich has the i%here%t $o5er to 5iel: it. (e) Petitio%ers also ar&(e that the 9ocal A(to%o/) Cla(se o' the Co%stit(tio% 5ill 2e violate: 2) P.D. 11* . This is a $oi%tless ar&(/e%t. Article E o' the 1 1! Co%stit(tio% (o% 9ocal A(to%o/)) $rovi:es: Sec. ". Each local &over%/e%t (%it shall have the $o5er to create its o5% so(rce o' reve%(e a%: to lev) ta6es, 'ees, a%: other char&es su#$ect to such !uidelines and limitation as the con!ress may provide , co%siste%t 5ith the 2asic $olic) o% local a(to%o/). S(ch ta6es, 'ees a%: char&es shall accr(e e6cl(sivel) to the local &over%/e%t. (e/$hasis s($$lie:) The $o5er o' local &over%/e%t to ?i/$ose ta6es a%: 'ees? is al5a)s s(2Aect to ?li/itatio%s? 5hich Co%&ress /a) $rovi:e 2) la5. Si%ce PD 11* re/ai%s a% ?o$erative? la5 (%til ?a/e%:e:, re$eale: or revo4e:? (Sec. -, Art. E=..., 1 1! Co%stit(tio%), its ?e6e/$tio% cla(se? re/ai%s as a% e6ce$tio% to the e6ercise o' the $o5er o' local &over%/e%ts to i/$ose ta6es a%: 'ees. .t ca%%ot there'ore 2e violative 2(t rather is co%siste%t 5ith the $ri%ci$le o' local a(to%o/). Besi:es, the $ri%ci$le o' local a(to%o/) (%:er the 1 1! Co%stit(tio% si/$l) /ea%s ?:ece%trali8atio%? (... Recor:s o' the 1 1! Co%stit(tio%al Co//issio%, $$. +-"F+-*, as cite: i% Ber%as, The Co%stit(tio% o' the Re$(2lic o' the Phili$$i%es, =ol. .., >irst E:., 1 11, $. -!+). .t :oes %ot /a4e local &over%/e%ts soverei&% 5ithi% the state or a% ? imperium in imperio.? 9ocal Gover%/e%t has 2ee% :escri2e: as a $olitical s(2:ivisio% o' a %atio% or state 5hich is co%stit(te: 2) la5 a%: has s(2sta%tial co%trol o' local a''airs. .% a (%itar) s)ste/ o' &over%/e%t, s(ch as the &over%/e%t (%:er the Phili$$i%e Co%stit(tio%, local &over%/e%ts ca% o%l) 2e a% intra soverei!n su#division of one soverei!n nation , it ca%%ot 2e a% imperium i% imperio. 9ocal &over%/e%t i% s(ch a s)ste/ ca% o%l) /ea% a /eas(re o' :ece%trali8atio% o' the '(%ctio% o' &over%/e%t. (e/$hasis s($$lie:) As to 5hat state $o5ers sho(l: 2e ?:ece%trali8e:? a%: 5hat /a) 2e :ele&ate: to local &over%/e%t (%its re/ai%s a /atter o' $olic), 5hich co%cer%s 5is:o/. .t is there'ore a $olitical D(estio%. (Citi8e%s Allia%ce 'or Co%s(/er Protectio% v. E%er&) Re&(lator) Boar:, 1*# SCRA "- ). 7hat is settle: is that the /atter o' re&(lati%&, ta6i%& or other5ise :eali%& 5ith &a/2li%& is a State co%cer% a%: he%ce, it is the sole $rero&ative o' the State to retai% it or :ele&ate it to local &over%/e%ts. As !am#lin! is (s(all) a% offense a!ainst the %tate, le!islative !rant or e press charter po"er is !enerally necessary to empo"er the local corporation to deal "ith the su#$ect. . . . .% the a2se%ce o' e6$ress &ra%t o' $o5er to e%act, ordinance provisions on this su#$ect "hich are inconsistent "ith the state la"s are void. (9i&a% v. Ga:s:e%, Ala A$$. 1,! So. !-- E6F Parte Solo/o%, , Cals. ++,, #! PAC !"! 'ollo5i%& i% re Ah Io(, 11 Cal. ,

#" PAC !+, ## A/ St. Re$. #1,, 11 9RA +1,, as cite: i% Mc <(i%lla% =ol. - I#id, $. "+1, e/$hasis s($$lie:) Petitio%ers %e6t co%te%: that P.D. 11* violates the eD(al $rotectio% cla(se o' the Co%stit(tio%, 2eca(se ?it le&ali8e: PAGCOR @ co%:(cte: &a/2li%&, 5hile /ost &a/2li%& are o(tla5e: to&ether 5ith $rostit(tio%, :r(& tra''ic4i%& a%: other vices? ($. 1#, Rollo). 7e, li4e5ise, 'i%: %o vali: &ro(%: to s(stai% this co%te%tio%. The $etitio%ersB $ost(re i&%ores the 5ellFacce$te: /ea%i%& o' the cla(se ?eD(al $rotectio% o' the la5s.? The cla(se :oes %ot $recl(:e classi'icatio% o' i%:ivi:(als 5ho /a) 2e accor:e: :i''ere%t treat/e%t (%:er the la5 as lo%& as the classi'icatio% is %ot (%reaso%a2le or ar2itrar) (.tcho%& v. Her%a%:e8, 1,1 Phil. 11""). A la5 :oes %ot have to o$erate i% eD(al 'orce o% all $erso%s or thi%&s to 2e co%'or/a2le to Article ..., Sectio% 1 o' the Co%stit(tio% (DECS v. Sa% Die&o, G.R. 0o. 1 "!#, Dece/2er #1, 1 1 ). The ?eD(al $rotectio% cla(se? :oes %ot $rohi2it the 9e&islat(re 'ro/ esta2lishi%& classes o' i%:ivi:(als or o2Aects ($o% 5hich :i''ere%t r(les shall o$erate (9a(rel v. Misa, +- O.G. #1+!). The Co%stit(tio% :oes %ot reD(ire sit(atio%s 5hich are :i''ere%t i% 'act or o$i%io% to 2e treate: i% la5 as tho(&h the) 5ere the sa/e (Go/e8 v. Palo/ar, #" SCRA 1#!). ;(st ho5 P.D. 11* i% le&ali8i%& &a/2li%& co%:(cte: 2) PAGCOR is violative o' the eD(al $rotectio% is %ot clearl) e6$lai%e: i% the $etitio%. The /ere 'act that so/e &a/2li%& activities li4e coc4'i&hti%& (P.D ++ ) horse raci%& (R.A. -,* as a/e%:e: 2) RA 1-), s5ee$sta4es, lotteries a%: races (RA 11* as a/e%:e: 2) B.P. +#) are le&ali8e: (%:er certai% co%:itio%s, 5hile others are $rohi2ite:, :oes %ot re%:er the a$$lica2le la5s, P.D. 11* 'or o%e, (%co%stit(tio%al. .' the la5 $res(/a2l) hits the evil 5here it is /ost 'elt, it is %ot to 2e overthro5% 2eca(se there are other i%sta%ces to 5hich it /i&ht have 2ee% a$$lie:. (Go/e8 v. Palo/ar, #" SCRA 1#!) The eD(al $rotectio% cla(se o' the 1+ th A/e%:/e%t :oes %ot /ea% that all occ($atio%s calle: 2) the sa/e %a/e /(st 2e treate: the sa/e 5a)C the state /a) :o 5hat it ca% to $reve%t 5hich is :ee/e: as evil a%: sto$ short o' those cases i% 5hich har/ to the 'e5 co%cer%e: is %ot less tha% the har/ to the $(2lic that 5o(l: i%s(re i' the r(le lai: :o5% 5ere /a:e /athe/aticall) e6act. (Do/i%ica% Hotel v. Ari8o%a, #+ GS #*"1). A%e%t $etitio%ersB clai/ that PD 11* is co%trar) to the ?avo5e: tre%: o' the Cor) Gover%/e%t a5a) 'ro/ /o%o$olies a%: cro%) eco%o/) a%: to5ar: 'ree e%ter$rise a%: $rivati8atio%? s(''ice it to state that this is %ot a &ro(%: 'or this Co(rt to %(lli') P.D. 11* . .', i%:ee:, PD 11* r(%s co(%ter to the &over%/e%tBs $olicies the% it is 'or the E6ec(tive De$art/e%t to reco//e%: to Co%&ress its re$eal or a/e%:/e%t. The A(:iciar) :oes %ot settle $olic) iss(es. The Co(rt ca% o%l) :eclare 5hat the la5 is a%: %ot 5hat the la5 sho(l: 2e. G%:er o(r s)ste/ o' &over%/e%t, $olic) iss(es are 5ithi% the :o/ai% o' the $olitical 2ra%ches o' &over%/e%t a%: o' the $eo$le the/selves as the re$ositor) o' all state $o5er. (=al/o%te v. Bel/o%te, ;r., 1!, SCRA #"*).

O% the iss(e o' ?/o%o$ol),? ho5ever, the Co%stit(tio% $rovi:es that: Sec. 1 . The State shall re&(late or $rohi2it /o%o$olies 5he% $(2lic i%terest so reD(ires. 0o co/2i%atio%s i% restrai%t o' tra:e or (%'air co/$etitio% shall 2e allo5e:. (Art. E.., 0atio%al Eco%o/) a%: Patri/o%)) .t sho(l: 2e %ote: that, as the $rovisio% is 5or:e:, /o%o$olies are %ot %ecessaril) $rohi2ite: 2) the Co%stit(tio%. The state /(st still :eci:e 5hether $(2lic i%terest :e/a%:s that /o%o$olies 2e re&(late: or $rohi2ite:. A&ai%, this is a /atter o' $olic) 'or the 9e&islat(re to :eci:e. O% $etitio%ersB alle&atio% that P.D. 11* violates Sectio%s 11 (Perso%alit) Di&%it)) 1# (>a/il)) a%: 1- (Role o' Io(th) o' Article ..C Sectio% 1- (Social ;(stice) o' Article E... a%: Sectio% # (E:(catio%al =al(es) o' Article E.= o' the 1 1! Co%stit(tio%, s(''ice it to state also that these are /erel) state/e%ts o' $ri%ci$les a%:, $olicies. As s(ch, the) are 2asicall) %ot sel'Fe6ec(ti%&, /ea%i%& a la5 sho(l: 2e $asse: 2) Co%&ress to clearl) :e'i%e a%: e''ect(ate s(ch $ri%ci$les. .% &e%eral, there'ore, the 1 -" $rovisio%s 5ere %ot i%te%:e: to 2e sel'F e6ec(ti%& $ri%ci$les rea:) 'or e%'orce/e%t thro(&h the co(rts. The) 5ere rather :irectives a::resse: to the e6ec(tive a%: the le&islat(re. .' the e6ec(tive a%: the le&islat(re 'aile: to hee: the :irectives o' the articles the availa2le re/e:) 5as %ot A(:icial or $olitical. The electorate co(l: e6$ress their :is$leas(re 5ith the 'ail(re o' the e6ec(tive a%: the le&islat(re thro(&h the la%&(a&e o' the 2allot. (Ber%as, =ol. .., $. #) Ever) la5 has i% its 'avor the $res(/$tio% o' co%stit(tio%alit) (I( Co%& E%& v. Tri%i:a:, +! Phil. -1!C Salas v. ;are%cio, +1 SCRA !-+C Peralta v. Co/elec, 1# SCRA -,C A22as v. Co/elec, 1! SCRA #1!). There'ore, 'or PD 11* to 2e %(lli'ie:, it /(st 2e sho5% that there is a clear a%: (%eD(ivocal 2reach o' the Co%stit(tio%, %ot /erel) a :o(2t'(l a%: eD(ivocal o%e. .% other 5or:s, the &ro(%:s 'or %(llit) /(st 2e clear a%: 2e)o%: reaso%a2le :o(2t. (Peralta v. Co/elec, supra) Those 5ho $etitio% this Co(rt to :eclare a la5, or $arts thereo', (%co%stit(tio%al /(st clearl) esta2lish the 2asis 'or s(ch a :eclaratio%. Other5ise, their $etitio% /(st 'ail. Base: o% the &ro(%:s raise: 2) $etitio%ers to challe%&e the co%stit(tio%alit) o' P.D. 11* , the Co(rt 'i%:s that $etitio%ers have 'aile: to overco/e the $res(/$tio%. The :is/issal o' this $etitio% is there'ore, i%evita2le. B(t as to 5hether P.D. 11* re/ai%s a 5ise le&islatio% co%si:eri%& the iss(es o' ?/oralit), /o%o$ol), tre%: to 'ree e%ter$rise, $rivati8atio% as 5ell as the state $ri%ci$les o% social A(stice, role o' )o(th a%: e:(catio%al val(es? 2ei%& raise:, is ($ 'or Co%&ress to :eter/i%e. As this Co(rt hel: i% &itizens' 'lliance for &onsumer Protection v . Ener!y Re!ulatory (oard, 1*# SCRA "#1 @ Presi:e%tial Decree 0o. 1 "*, as a/e%:e: 2) E6ec(tive Or:er 0o. 1-! has, i% a%) case, i% its 'avor the $res(/$tio% o' vali:it) a%: co%stit(tio%alit) 5hich $etitio%ers =al/o%te a%: the 3MG have %ot overt(r%e:. Petitio%ers have %ot (%:erta4e% to i:e%ti') the $rovisio%s i% the Co%stit(tio% 5hich the) clai/ to have 2ee% violate: 2) that stat(te. This Co(rt, ho5ever, is %ot co/$elle: to s$ec(late a%: to i/a&i%e ho5 the assaile: le&islatio% /a) $ossi2l) o''e%:

so/e $rovisio% o' the Co%stit(tio%. The Co(rt %otes, '(rther, i% this res$ect that $etitio%ers have i% the /ai% $(t i% D(estio% the 5is:o/, A(stice a%: e6$e:ie%c) o' the esta2lish/e%t o' the OPS>, iss(es 5hich are %ot $ro$erl) a::resse: to this Co(rt a%: 5hich this Co(rt /a) %ot co%stit(tio%all) $ass ($o%. Those iss(es sho(l: 2e a::resse: rather to the $olitical :e$art/e%ts o' &over%/e%t: the Presi:e%t a%: the Co%&ress. Pare%theticall), 7e 5ish to state that &a/2li%& is &e%erall) i//oral, a%: this is $recisel) so 5he% the &a/2li%& resorte: to is e6cessive. This e6cessive%ess %ecessaril) :e$e%:s %ot o%l) o% the 'i%a%cial reso(rces o' the &a/2ler a%: his 'a/il) 2(t also o% his /e%tal, social, a%: s$irit(al o(tloo4 o% li'e. Ho5ever, the /ere 'act that so/e $erso%s /a) have lost their /aterial 'ort(%es, /e%tal co%trol, $h)sical health, or eve% their lives :oes %ot %ecessaril) /ea% that the sa/e are :irectl) attri2(ta2le to &a/2li%&. )am#lin! may have #een the antecedent ,#ut certainly not necessarily the cause. >or the sa/e co%seD(e%ces co(l: have 2ee% $rece:e: 2) a% over:ose o' 'oo:, :ri%4, e6ercise, 5or4, a%: eve% se6. 7HERE>ORE, the $etitio% is D.SM.SSED 'or lac4 o' /erit. SO ORDERED.

#) Pe$si Cola Bottli%& Co. o' the Phil vs M(%ici$alit) o' Ta%a(a% * scra +*, G.R. No. L !11"6 #$%&'a&y (), 19)6 PEPSI COLA BOTTLING COMPANY O# THE PHILIPPINES, INC., $lai%ti''F a$$ella%t, vs. MUNICIPALITY O# TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., :e'e%:a%t a$$ellees. %a#ido* %a#ido + 'ssociates for appellant, Provincial -iscal .oila /, Redona + 'ssistant Provincial -iscal (onifacio R /atol and 'ssistant %olicitor )eneral &onrado 0, 1imcaoco + %olicitor Enri2ue /, Reyes for appellees, MARTIN, J.: This is a% a$$eal 'ro/ the :ecisio% o' the Co(rt o' >irst .%sta%ce o' 9e)te i% its Civil Case 0o. -# +, 5hich 5as certi'ie: to Gs 2) the Co(rt o' A$$eals o% Octo2er *, 1 * , as i%volvi%& o%l) $(re D(estio%s o' la5, challe%&i%& the $o5er o' ta6atio% :ele&ate: to /(%ici$alities (%:er the 9ocal A(to%o/) Act (Re$(2lic Act 0o. ##*+, as a/e%:e:, ;(%e 1 , 1 " ). O% >e2r(ar) 1+, 1 *-, the $lai%ti''Fa$$ella%t, Pe$siFCola Bottli%& Co/$a%) o' the Phili$$i%es, .%c., co//e%ce: a co/$lai%t 5ith $reli/i%ar) i%A(%ctio% 2e'ore the Co(rt o' >irst .%sta%ce o' 9e)te 'or that co(rt to :eclare Sectio% # o' Re$(2lic Act 0o. ##*+. 1 other5ise 4%o5% as the 9ocal A(to%o/) Act, (%co%stit(tio%al as a% (%:(e :ele&atio% o' ta6i%& a(thorit) as 5ell as to :eclare Or:i%a%ces 0os. #- a%: #!, series o' 1 *#, o' the /(%ici$alit) o' Ta%a(a%, 9e)te, %(ll a%: voi:.

O% ;(l) #-, 1 *-, the $arties e%tere: i%to a Sti$(latio% o' >acts, the /aterial $ortio%s o' 5hich state that, first, 2oth Or:i%a%ces 0os. #- a%: #! e/2race or cover the sa/e s(2Aect /atter a%: the $ro:(ctio% ta6 rates i/$ose: therei% are $racticall) the sa/e, a%: seco%:, that o% ;a%(ar) 1!, 1 *-, the acti%& M(%ici$al Treas(rer o' Ta%a(a%, 9e)te, as $er his letter a::resse: to the Ma%a&er o' the Pe$siFCola Bottli%& Pla%t i% sai: /(%ici$alit), so(&ht to e%'orce co/$lia%ce 2) the latter o' the $rovisio%s o' sai: Or:i%a%ce 0o. #!, series o' 1 *#. M(%ici$al Or:i%a%ce 0o. #-, o' Ta%a(a%, 9e)te, 5hich 5as a$$rove: o% Se$te/2er #", 1 *#, levies a%: collects ?'ro/ so't :ri%4s $ro:(cers a%: /a%('act(rers a tai o' o%eFsi6tee%th (1H1*) o' a ce%tavo 'or ever) 2ottle o' so't :ri%4 cor4e:.? ( >or the $(r$ose o' co/$(ti%& the ta6es :(e, the $erso%, 'ir/, co/$a%) or cor$oratio% $ro:(ci%& so't :ri%4s shall s(2/it to the M(%ici$al Treas(rer a /o%thl) re$ort, o' the total %(/2er o' 2ottles $ro:(ce: a%: cor4e: :(ri%& the /o%th. ! O% the other ha%:, M(%ici$al Or:i%a%ce 0o. #!, 5hich 5as a$$rove: o% Octo2er #1, 1 *#, levies a%: collects ?o% so't :ri%4s $ro:(ce: or /a%('act(re: 5ithi% the territorial A(ris:ictio% o' this /(%ici$alit) a ta6 o' O0E CE0TA=O (P,.,1) o% each &allo% (1#1 'l(i: o(%ces, G.S.) o' vol(/e ca$acit).? 4 >or the $(r$ose o' co/$(ti%& the ta6es :(e, the $erso%, '(% co/$a%), $art%ershi$, cor$oratio% or $la%t $ro:(ci%& so't :ri%4s shall s(2/it to the M(%ici$al Treas(rer a /o%thl) re$ort o' the total %(/2er o' &allo%s $ro:(ce: or /a%('act(re: :(ri%& the /o%th. " The ta6 i/$ose: i% 2oth Or:i%a%ces 0os. #- a%: #! is :e%o/i%ate: as ?/(%ici$al $ro:(ctio% ta6.B O% Octo2er !, 1 *-, the Co(rt o' >irst .%sta%ce o' 9e)te re%:ere: A(:&/e%t ?:is/issi%& the co/$lai%t a%: ($hol:i%& the co%stit(tio%alit) o' KSectio% #, Re$(2lic Act 0o. ##*+L :eclari%& Or:i%a%ce 0os. #- a%: #! le&al a%: co%stit(tio%alC or:eri%& the $lai%ti'' to $a) the ta6es :(e (%:er the o't the sai: Or:i%a%cesC a%: to $a) the costs.? >ro/ this A(:&/e%t, the $lai%ti'' Pe$siFCola Bottli%& Co/$a%) a$$eale: to the Co(rt o' A$$eals, 5hich, i% t(r%, elevate: the case to Gs $(rs(a%t to Sectio% -1 o' the ;(:iciar) Act o' 1 +1, as a/e%:e:. There are three ca$ital D(estio%s raise: i% this a$$eal: 1. @ .s Sectio% #, Re$(2lic Act 0o. ##*+ a% (%:(e :ele&atio% o' $o5er, co%'iscator) a%: o$$ressiveN #. @ Do Or:i%a%ces 0os. #- a%: #! co%stit(te :o(2le ta6atio% a%: i/$ose $erce%ta&e or s$eci'ic ta6esN -. @ Are Or:i%a%ces 0os. #- a%: #! (%A(st a%: (%'airN 1. The $o5er o' ta6atio% is a% esse%tial a%: i%here%t attri2(te o' soverei&%t), 2elo%&i%& as a /atter o' ri&ht to ever) i%:e$e%:e%t &over%/e%t, 5itho(t 2ei%& e6$ressl) co%'erre: 2) the $eo$le. 6 .t is a $o5er that is $(rel) le&islative a%: 5hich the ce%tral le&islative 2o:) ca%%ot :ele&ate either to the e6ec(tive or A(:icial :e$art/e%t o' the &over%/e%t 5itho(t i%'ri%&i%& ($o% the theor) o' se$aratio% o' $o5ers. The e6ce$tio%, ho5ever, lies i% the case o' /(%ici$al cor$oratio%s, to 5hich, sai: theor) :oes %ot a$$l). 9e&islative

$o5ers /a) 2e :ele&ate: to local &over%/e%ts i% res$ect o' /atters o' local co%cer%. ) This is sa%ctio%e: 2) i//e/orial $ractice. * B) %ecessar) i/$licatio%, the le&islative $o5er to create $olitical cor$oratio%s 'or $(r$oses o' local sel'F&over%/e%t carries 5ith it the $o5er to co%'er o% s(ch local &over%/e%tal a&e%cies the $o5er to ta6. 9 G%:er the 0e5 Co%stit(tio%, local &over%/e%ts are &ra%te: the a(to%o/o(s a(thorit) to create their o5% so(rces o' reve%(e a%: to lev) ta6es. Sectio% ", Article E. $rovi:es: ?Each local &over%/e%t (%it shall have the $o5er to create its so(rces o' reve%(e a%: to lev) ta6es, s(2Aect to s(ch li/itatio%s as /a) 2e $rovi:e: 2) la5.? 7ithal, it ca%%ot 2e sai: that Sectio% # o' Re$(2lic Act 0o. ##*+ e/a%ate: 'ro/ 2e)o%: the s$here o' the le&islative $o5er to e%act a%: vest i% local &over%/e%ts the $o5er o' local ta6atio%. The $le%ar) %at(re o' the ta6i%& $o5er th(s :ele&ate:, co%trar) to $lai%ti''F a$$ella%tBs $rete%se, 5o(l: %ot s(''ice to i%vali:ate the sai: la5 as co%'iscator) a%: o$$ressive. .% :ele&ati%& the a(thorit), the State is %ot li/ite: * the e6act /eas(re o' that 5hich is e6ercise: 2) itsel'. 7he% it is sai: that the ta6i%& $o5er /a) 2e :ele&ate: to /(%ici$alities a%: the li4e, it is /ea%t that there /a) 2e :ele&ate: s(ch /eas(re o' $o5er to i/$ose a%: collect ta6es as the le&islat(re /a) :ee/ e6$e:ie%t. Th(s, /(%ici$alities /a) 2e $er/itte: to ta6 s(2Aects 5hich 'or reaso%s o' $(2lic $olic) the State has %ot :ee/e: 5ise to ta6 'or /ore &e%eral $(r$oses. 1+ This is %ot to sa) tho(&h that the co%stit(tio%al i%A(%ctio% a&ai%st :e$rivatio% o' $ro$ert) 5itho(t :(e $rocess o' la5 /a) 2e $asse: over (%:er the &(ise o' the ta6i%& $o5er, e6ce$t 5he% the ta4i%& o' the $ro$ert) is i% the la5'(l e6ercise o' the ta6i%& $o5er, as 5he% (1) the ta6 is 'or a $(2lic $(r$oseC (#) the r(le o% (%i'or/it) o' ta6atio% is o2serve:C (-) either the $erso% or $ro$ert) ta6e: is 5ithi% the A(ris:ictio% o' the &over%/e%t lev)i%& the ta6C a%: (+) i% the assess/e%t a%: collectio% o' certai% 4i%:s o' ta6es %otice a%: o$$ort(%it) 'or heari%& are $rovi:e:. 11 D(e $rocess is (s(all) violate: 5here the ta6 i/$ose: is 'or a $rivate as :isti%&(ishe: 'ro/ a $(2lic $(r$oseC a ta6 is i/$ose: o% $ro$ert) o(tsi:e the State, i.e., e6traterritorial ta6atio%C a%: ar2itrar) or o$$ressive /etho:s are (se: i% assessi%& a%: collecti%& ta6es. B(t, a ta6 :oes %ot violate the :(e $rocess cla(se, as a$$lie: to a $artic(lar ta6$a)er, altho(&h the $(r$ose o' the ta6 5ill res(lt i% a% i%A(r) rather tha% a 2e%e'it to s(ch ta6$a)er. D(e $rocess :oes %ot reD(ire that the $ro$ert) s(2Aect to the ta6 or the a/o(%t o' ta6 to 2e raise: sho(l: 2e :eter/i%e: 2) A(:icial i%D(ir), a%: a %otice a%: heari%& as to the a/o(%t o' the ta6 a%: the /a%%er i% 5hich it shall 2e a$$ortio%e: are &e%erall) %ot %ecessar) to :(e $rocess o' la5. 1( There is %o vali:it) to the assertio% that the :ele&ate: a(thorit) ca% 2e :eclare: (%co%stit(tio%al o% the theor) o' :o(2le ta6atio%. .t /(st 2e o2serve: that the :ele&ati%& a(thorit) s$eci'ies the li/itatio%s a%: e%(/erates the ta6es over 5hich local ta6atio% /a) %ot 2e e6ercise:. 1! The reaso% is that the State has e6cl(sivel) reserve: the sa/e 'or its o5% $rero&ative. Moreover, :o(2le ta6atio%, i% &e%eral, is %ot 'or2i::e% 2) o(r '(%:a/e%tal la5, si%ce 7e have %ot a:o$te: as $art thereo' the i%A(%ctio%

a&ai%st :o(2le ta6atio% 'o(%: i% the Co%stit(tio% o' the G%ite: States a%: so/e states o' the G%io%. 14 Do(2le ta6atio% 2eco/es o2%o6io(s o%l) 5here the ta6$a)er is ta6e: t5ice 'or the 2e%e'it o' the sa/e &over%/e%tal e%tit) 1" or 2) the sa/e A(ris:ictio% 'or the sa/e $(r$ose, 16 2(t %ot i% a case 5here o%e ta6 is i/$ose: 2) the State a%: the other 2) the cit) or /(%ici$alit). 1) #. The $lai%ti''Fa$$ella%t s(2/its that Or:i%a%ce 0o. #- a%: #! co%stit(te :o(2le ta6atio%, 2eca(se these t5o or:i%a%ces cover the sa/e s(2Aect /atter a%: i/$ose $racticall) the sa/e ta6 rate. The thesis $rocee:s 'ro/ its ass(/$tio% that 2oth or:i%a%ces are vali: a%: le&all) e%'orcea2le. This is %ot so. As earlier D(ote:, Or:i%a%ce 0o. #-, 5hich 5as a$$rove: o% Se$te/2er #", 1 *#, levies or collects 'ro/ so't :ri%4s $ro:(cers or /a%('act(rers a ta6 o' o%eFsi6tee% (1H1*) o' a ce%tavo 'or .ever) 2ottle cor4e:, irres$ective o' the vol(/e co%te%ts o' the 2ottle (se:. 7he% it 5as :iscovere: that the $ro:(cer or /a%('act(rer co(l: i%crease the vol(/e co%te%ts o' the 2ottle a%: still $a) the sa/e ta6 rate, the M(%ici$alit) o' Ta%a(a% e%acte: Or:i%a%ce 0o. #!, a$$rove: o% Octo2er #1, 1 *#, i/$osi%& a ta6 o' o%e ce%tavo (P,.,1) o% each &allo% (1#1 'l(i: o(%ces, G.S.) o' vol(/e ca$acit). The :i''ere%ce 2et5ee% the t5o or:i%a%ces clearl) lies i% the ta6 rate o' the so't :ri%4s $ro:(ce:: i% Or:i%a%ce 0o. #-, it 5as 1H1* o' a ce%tavo 'or ever) 2ottle cor4e:C i% Or:i%a%ce 0o. #!, it is o%e ce%tavo (P,.,1) o% each &allo% (1#1 'l(i: o(%ces, G.S.) o' vol(/e ca$acit). The i%te%tio% o' the M(%ici$al Co(%cil o' Ta%a(a% i% e%acti%& Or:i%a%ce 0o. #! is th(s clear: it 5as i%te%:e: as a $lai% s(2stit(te 'or the $rior Or:i%a%ce 0o. #-, a%: o$erates as a re$eal o' the latter, eve% 5itho(t 5or:s to that e''ect. 1* Plai%ti''Fa$$ella%t i% its 2rie' a:/itte: that :e'e%:a%tsFa$$ellees are o%l) see4i%& to e%'orce Or:i%a%ce 0o. #!, series o' 1 *#. Eve% the sti$(latio% o' 'acts co%'ir/s the 'act that the Acti%& M(%ici$al Treas(rer o' Ta%a(a%, 9e)te so(&ht t* co/$el co/$lia%ce 2) the $lai%ti''Fa$$ella%t o' the $rovisio%s o' sai: Or:i%a%ce 0o. #!, series o' 1 *#. The a'ore/e%tio%e: a:/issio% sho5s that o%l) Or:i%a%ce 0o. #!, series o' 1 *# is 2ei%& e%'orce: 2) :e'e%:a%tsFa$$ellees. Eve% the Provi%cial >iscal, co(%sel 'or :e'e%:a%tsFa$$ellees a:/its i% his 2rie' ?that Sectio% ! o' Or:i%a%ce 0o. #!, series o' 1 *# clearl) re$eals Or:i%a%ce 0o. #- as the $rovisio%s o' the latter are i%co%siste%t 5ith the $rovisio%s o' the 'or/er.? That 2ri%&s Gs to the D(estio% o' 5hether the re/ai%i%& Or:i%a%ce 0o. #! i/$oses a $erce%ta&e or a s$eci'ic ta6. G%:o(2te:l), the ta6i%& a(thorit) co%'erre: o% local &over%/e%ts (%:er Sectio% #, Re$(2lic Act 0o. ##*+, is 2roa: e%o(&h as to e6te%: to al/ost ?ever)thi%&, acce$ti%& those 5hich are /e%tio%e: therei%.? As lo%& as the te6t levie: (%:er the a(thorit) o' a cit) or /(%ici$al or:i%a%ce is %ot 5ithi% the e6ce$tio%s a%: li/itatio%s i% the la5, the sa/e co/es 5ithi% the a/2it o' the &e%eral r(le, $(rs(a%t to the r(les o' e clucion attehus a%: e ceptio firmat re!ulum in ca#isus non e cepti 19 The li/itatio% a$$lies, $artic(larl), to the $rohi2itio% a&ai%st /(%ici$alities a%: /(%ici$al :istricts to i/$ose ?a%) $erce%ta&e ta6 or other ta6es i% a%) 'or/ #ased thereon %or i/$ose ta6es o% articles s(2Aect

to specific ta e6ce$t &asoli%e, (%:er the $rovisio%s o' the 0atio%al .%ter%al Reve%(e Co:e.? >or $(r$oses o' this $artic(lar li/itatio%, a /(%ici$al or:i%a%ce 5hich $rescri2es a set ratio 2et5ee% the a/o(%t o' the ta6 a%: the vol(/e o' sale o' the ta6$a)er i/$oses a sales ta6 a%: is %(ll a%: voi: 'or 2ei%& o(tsi:e the $o5er o' the /(%ici$alit) to e%act. (+ B(t, the i/$ositio% o' ?a ta6 o' o%e ce%tavo (P,.,1) o% each &allo% (1#1 'l(i: o(%ces, G.S.) o' vol(/e ca$acit)? o% all so't :ri%4s $ro:(ce: or /a%('act(re: (%:er Or:i%a%ce 0o. #! :oes %ot $arta4e o' the %at(re o' a $erce%ta&e ta6 o% sales, or other ta6es i% a%) 'or/ 2ase: thereo%. The ta6 is levie: o% the $ro:(ce (5hether sol: or %ot) a%: %ot o% the sales. The vol(/e ca$acit) o' the ta6$a)erBs $ro:(ctio% o' so't :ri%4s is co%si:ere: solel) 'or $(r$oses o' :eter/i%i%& the ta6 rate o% the $ro:(cts, 2(t there is %ot set ratio 2et5ee% the vol(/e o' sales a%: the a/o(%t o' the ta6. (1 0or ca% the ta6 levie: 2e treate: as a s$eci'ic ta6. S$eci'ic ta6es are those i/$ose: o% s$eci'ie: articles, s(ch as :istille: s$irits, 5i%es, 'er/e%te: liD(ors, $ro:(cts o' to2acco other tha% ci&ars a%: ci&arettes, /atches 'irecrac4ers, /a%('act(re: oils a%: other '(els, coal, 2(%4er '(el oil, :iesel '(el oil, ci%e/ato&ra$hic 'il/s, $la)i%& car:s, sacchari%e, o$i(/ a%: other ha2itF'or/i%& :r(&s. (( So't :ri%4 is %ot o%e o' those s$eci'ie:. -. The ta6 o' o%e (P,.,1) o% each &allo% (1#1 'l(i: o(%ces, G.S.) o' vol(/e ca$acit) o% all so't:ri%4s, $ro:(ce: or /a%('act(re:, or a% eD(ivale%t o' 1FP ce%tavos $er case, (! ca%%ot 2e co%si:ere: (%A(st a%: (%'air. #+ a% i%crease i% the ta6 alo%e 5o(l: %ot s($$ort the clai/ that the ta6 is o$$ressive, (%A(st a%: co%'iscator). M(%ici$al cor$oratio%s are allo5e: /(ch :iscretio% i% :eter/i%i%& the reates o' i/$osa2le ta6es. #" This is i% li%e 5ith the co%st(tio%al $olic) o' accor:i%& the 5i:est $ossi2le a(to%o/) to local &over%/e%ts i% /atters o' local ta6atio%, a% as$ect that is &ive% e6$ressio% i% the 9ocal Ta6 Co:e (PD 0o. #-1, ;(l) 1, 1 !-). #* G%less the a/o(%t is so e6cessive as to 2e $rohi2itive, co(rts 5ill &o slo5 i% 5riti%& o'' a% or:i%a%ce as (%reaso%a2le. #! Rel(cta%ce sho(l: %ot :eter co/$lia%ce 5ith a% or:i%a%ce s(ch as Or:i%a%ce 0o. #! i' the $(r$ose o' the la5 to '(rther stre%&the% local a(to%o/) 5ere to 2e reali8e:. #1 >i%all), the /(%ici$al lice%se ta6 o' P1,,,,.,, $er cor4i%& /achi%e 5ith 'ive 2(t %ot /ore tha% te% cro5%ers or P#,,,,.,, 5ith te% 2(t %ot /ore tha% t5e%t) cro5%ers i/$ose: o% /a%('act(rers, $ro:(cers, i/$orters a%: :ealers o' so't :ri%4s a%:Hor /i%eral 5aters (%:er Or:i%a%ce 0o. "+, series o' 1 *+, as a/e%:e: 2) Or:i%a%ce 0o. +1, series o' 1 *1, o' :e'e%:a%t M(%ici$alit), (9 a$$ears %ot to a''ect the resol(tio% o' the vali:it) o' Or:i%a%ce 0o. #!. M(%ici$alities are e/$o5ere: to i/$ose, %ot o%l) /(%ici$al lice%se ta6es ($o% $erso%s e%&a&e: i% a%) 2(si%ess or occ($atio% 2(t also to lev) 'or $(2lic $(r$oses, A(st a%: (%i'or/ ta6es. The or:i%a%ce i% D(estio% (Or:i%a%ce 0o. #!) co/es 5ithi% the seco%: $o5er o' a /(%ici$alit). ACCORD.0G9I, the co%stit(tio%alit) o' Sectio% # o' Re$(2lic Act 0o. ##*+, other5ise 4%o5% as the 9ocal A(to%o/) Act, as a/e%:e:, is here2) ($hel: a%: M(%ici$al Or:i%a%ce 0o. #! o' the M(%ici$alit) o' Ta%a(a%, 9e)te, series

o' 1 *#, reF$eali%& M(%ici$al Or:i%a%ce 0o. #-, sa/e series, is here2) :eclare: o' vali: a%: le&al e''ect. Costs a&ai%st $etitio%erFa$$ella%t. SO ORDERED.

-) C.R vs. Pili$i%as Shell Petrole(/ Cor$. GR 0o. 111+ !, *!1 SCRA #+1 G.R. No. 1**49) A,&-. (", (+1( COMMISSIONER O# INTERNAL RE/ENUE, Petitio%er, vs. PILIPINAS SHELL PETROLEUM CORPORATION, Res$o%:e%t. DEC.S.O0 /ILLARAMA, 0R., J.: Petitio%er Co//issio%er o' .%ter%al Reve%(e a$$eals the Decisio% 1 :ate: March #", #,, a%: Resol(tio%# :ate: ;(%e #+, #,, o' the Co(rt o' Ta6 A$$eals (CTA) E% Ba%c i% CTA EB 0o. +1". The CTA :is/isse: the $etitio% 'or revie5 'ile: 2) $etitio%er assaili%& the CTA >irst Divisio%Qs Decisio%- :ate: A$ril #", #,,1 a%: Resol(tio%+ :ate: ;(l) 1,, #,,1 5hich or:ere: $etitio%er to re'(%: the e6cise ta6es $ai: 2) res$o%:e%t Pili$i%as Shell Petrole(/ Cor$oratio% o% $etrole(/ $ro:(cts it sol: to i%ter%atio%al carriers. The 'acts are %ot :is$(te:. Res$o%:e%t is e%&a&e: i% the 2(si%ess o' $rocessi%&, treati%& a%: re'i%i%& $etrole(/ 'or the $(r$ose o' $ro:(ci%& /ar4eta2le $ro:(cts a%: the s(2seD(e%t sale thereo'." O% ;(l) 11, #,,#, res$o%:e%t 'ile: 5ith the 9ar&e Ta6$a)ers A(:it M .%vesti&atio% Divisio% .. o' the B(rea( o' .%ter%al Reve%(e (B.R) a 'or/al clai/ 'or re'(%: or ta6 cre:it i% the total a/o(%t o' P#1,,*+, #".1", re$rese%ti%& e6cise ta6es it alle&e:l) $ai: o% sales a%: :eliveries o' &as a%: '(el oils to vario(s i%ter%atio%al carriers :(ri%& the $erio: Octo2er to Dece/2er #,,1. S(2seD(e%tl), o% Octo2er #1, #,,#, a si/ilar clai/ 'or re'(%: or ta6 cre:it 5as 'ile: 2) res$o%:e%t 5ith the B.R coveri%& the $erio: ;a%(ar) to March #,,# i% the a/o(%t o' P+1,*1+,1#!. . A&ai%, o% ;(l) -, #,,-, res$o%:e%t 'ile: a%other 'or/al clai/ 'or re'(%: or ta6 cre:it i% the a/o(%t o'P-,,*"#,1 ,."" coveri%& :eliveries 'ro/ A$ril to ;(%e #,,#. * Si%ce %o actio% 5as ta4e% 2) the $etitio%er o% its clai/s, res$o%:e%t 'ile: $etitio%s 'or revie5 2e'ore the CTA o% Se$te/2er 1 , #,,- a%: Dece/2er #-, #,,-, :oc4ete: as CTA Case 0os. *!!" a%: *1- , res$ectivel). .% its :ecisio% o% the co%soli:ate: cases, the CTAQs >irst Divisio% r(le: that res$o%:e%t is e%title: to the re'(%: o' e6cise ta6es i% the re:(ce: a/o(%t o' P ",,1+,#1-.,,. The CTA >irst Divisio% relie: o% a $revio(s r(li%& re%:ere: 2) the CTA E% Ba%c i% the case o' ? Pilipinas %hell Petroleum &orporation v, &ommissioner of Internal Revenue ?! 5here the CTA also &ra%te: res$o%:e%tQs clai/ 'or re'(%: o% the 2asis o' e6cise ta6 e6e/$tio% 'or $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers o' 'orei&% re&istr) 'or their (se or co%s(/$tio% o(tsi:e the Phili$$i%es. Petitio%erQs /otio% 'or reco%si:eratio% 5as :e%ie: 2) the CTA >irst Divisio%.

Petitio%er elevate: the case to the CTA E% Ba%c 5hich ($hel: the r(li%& o' the >irst Divisio%. The CTA $oi%te: o(t the s$eci'ic e6e/$tio% /e%tio%e: (%:er Sectio% 1-" o' the 0atio%al .%ter%al Reve%(e Co:e o' 1 ! (0.RC) o' $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers s(ch as res$o%:e%tQs clie%ts. .t sai: that this Co(rtQs r(li%& i% Mace:a v. Macarai&, ;r. 1 is i%a$$lica2le 2eca(se sai: case o%l) $(t to rest the iss(e o' 5hether or %ot the 0atio%al Po5er Cor$oratio% (0PC) is s(2Aect to ta6 co%si:eri%& that 0PC is a ta6Fe6e/$t e%tit) /e%tio%e: i% Sec. 1-" (c) o' the 0.RC (1 !), 5hereas the $rese%t case i%volves the ta6 e6e/$tio% o' the sale o' $etrole(/ (%:er Sec. 1-" (a) o' the sa/e Co:e. >(rther, the CTA sai: that the r(li%& i% Phili$$i%e Acet)le%e Co., .%c. v. Co//issio%er o' .%ter%al Reve%(e li4e5ise 'i%:s %o a$$licatio% 2eca(se the $art) as4i%& 'or the re'(%: i% sai: case 5as the sellerF$ro:(cer 2ase: o% the e6e/$tio% &ra%te: (%:er the la5 to the ta6F e6e/$t 2()ers, 0PC a%: =oice o' A/erica (=OA), 5hereas i% this case it is the article or $ro:(ct 5hich is e6e/$t 'ro/ ta6 a%: %ot the i%ter%atio%al carrier. Petitio%er 'ile: a /otio% 'or reco%si:eratio% 5hich the CTA li4e5ise :e%ie:. He%ce, this $etitio% a%chore: o% the 'ollo5i%& &ro(%:s: . SECT.O0 1+1 O> THE 0AT.O0A9 .0TER0A9 RE=E0GE CODE EEPRESS9I SGB;ECTS THE PETRO9EGM PRODGCTS TO A0 EEC.SE TAE BE>ORE THEI ARE REMO=ED >ROM THE P9ACE O> PRODGCT.O0. .. THE O09I SPEC.>.C PRO=.S.O0 O> THE 9A7 7H.CH GRA0TS TAE CRED.T OR TAE RE>G0D O> THE EEC.SE TAEES PA.D RE>ERS TO THOSE CASES 7HERE GOODS 9OCA99I PRODGCED OR MA0G>ACTGRED ARE ACTGA99I EEPORTED 7H.CH .S 0OT SO .0 TH.S CASE. ... THE PR.0C.P9ES 9A.D DO70 .0 MACEDA =S. MACARA.G, ;R. A0D PH.9.PP.0E ACETI9E0E CO. =S. C.R ARE APP9.CAB9E TO TH.S CASE.1, The Solicitor Ge%eral ar&(es that the o2vio(s i%te%t o' the la5 is to &ra%t e6cise ta6 e6e/$tio% to i%ter%atio%al carriers a%: e6e/$t e%tities as 2()ers o' $etrole(/ $ro:(cts a%: %ot to the /a%('act(rers or $ro:(cers o' sai: &oo:s. Si%ce the e6cise ta6es are collecte: 'ro/ /a%('act(rers or $ro:(cers 2e'ore re/oval o' the :o/estic $ro:(cts 'ro/ the $lace o' $ro:(ctio%, res$o%:e%t $ai: the s(2Aect e6cise ta6es as /a%('act(rer or $ro:(cer o' the $etrole(/ $ro:(cts $(rs(a%t to Sec. 1+1 o' the 0.RC. Th(s, re&ar:less o' 5ho the 2()erH$(rchaser is, the e6cise ta6 o% $etrole(/ $ro:(cts attache: to the sai: &oo:s 2e'ore their sale or :eliver) to i%ter%atio%al carriers, as i% 'act res$o%:e%t averre: that it $ai: the e6cise ta6 o% its $etrole(/ $ro:(cts 5he% it ?5ith:re5 $etrole(/ $ro:(cts 'ro/ its $lace o' $ro:(ctio% 'or eve%t(al sale a%: :eliver) to vario(s i%ter%atio%al carriers as 5ell as to other c(sto/ers.?11 Sec. 1-" (a) a%: (c) &ra%ti%& e6e/$tio% 'ro/ the $a)/e%t o'

e6cise ta6 o% $etrole(/ $ro:(cts ca% o%l) 2e i%ter$rete: to /ea% that the res$o%:e%t ca%%ot $ass o% to i%ter%atio%al carriers a%: e6e/$t a&e%cies the e6cise ta6es it $ai: as a /a%('act(rer or $ro:(cer. As to 5hether res$o%:e%t has the ri&ht to 'ile a clai/ 'or re'(%: or ta6 cre:it 'or the e6cise ta6es it $ai: 'or the $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers, the Solicitor Ge%eral co%te%:s that Sec. 1-, (D) is e6$licit o% the circ(/sta%ces (%:er 5hich a ta6$a)er /a) clai/ 'or a re'(%: o' e6cise ta6es $ai: o% /a%('act(re: $ro:(cts, 5hich e6$ress e%(/eratio% :i: %ot i%cl(:e those e6cise ta6es $ai: o% $etrole(/ $ro:(cts 5hich 5ere eve%t(all) sol: to i%ter%atio%al carriers (e6$ressio (%i(s est e6cl(sio alteri(s). >(rther, the Solicitor Ge%eral asserts that co%trar) to the co%cl(sio% /a:e 2) the CTA, the $ri%ci$les lai: :o5% 2) this Co(rt i% Mace:a v. Macarai&, ;r. 1#a%: Phili$$i%e Acet)le%e Co. v. Co//issio%er o' .%ter%al Reve%(e 1- are a$$lica2le to this case. Res$o%:e%t /(st sho(l:er the e6cise ta6es it $revio(sl) $ai: o% $etrole(/ $ro:(cts 5hich it later sol: to i%ter%atio%al carriers 2eca(se it ca%%ot $ass o% the ta6 2(r:e% to the sai: i%ter%atio%al carriers 5hich have 2ee% &ra%te: e6e/$tio% (%:er Sec. 1-" (a) o' the 0.RC. Co%si:eri%& that res$o%:e%t 'aile: to $rove a% e6$ress &ra%t o' a ri&ht to a ta6 re'(%:, s(ch clai/ ca%%ot 2e i/$lie:C he%ce, it /(st 2e :e%ie:. O% the other ha%:, res$o%:e%t /ai%tai%s that si%ce $etrole(/ $ro:(cts sol: to D(ali'ie: i%ter%atio%al carriers are e6e/$t 'ro/ e6cise ta6, %o ta6es sho(l: 2e i/$ose: o% the article, to 5hich &oo:s the ta6 attaches, 5hether i% the ha%:s o' the sai: i%ter%atio%al carriers or the $etrole(/ /a%('act(rer or $ro:(cer. As these e6cise ta6es have 2ee% erro%eo(sl) $ai: ta6es, the) ca% 2e recovere: (%:er Sec. ## o' the 0.RC. Res$o%:e%t co%te%:s that co%trar) to $etitio%erQs assertio%, Sectio%s #,+ a%: ## a(thori8es res$o%:e%t to /ai%tai% a s(it or $rocee:i%& to recover s(ch erro%eo(sl) $ai: ta6es o% the $etrole(/ $ro:(cts sol: to ta6Fe6e/$t i%ter%atio%al carriers. As to the A(ris$r(:e%ce cite: 2) the $etitio%er, res$o%:e%t ar&(es that the) are %ot a$$lica2le to the case at 2ar. .t $oi%ts o(t that Mace:a v. Macarai&, ;r. is a% a:A(:icatio% o% the iss(e o' ta6 e6e/$tio% o' 0PC 'ro/ :irect a%: i%:irect ta6es &ive% the $assa&e o' vario(s la5s relati%& thereto. 7hat 5as $(t i% iss(e i% sai: case 5as 0PCQs ri&ht to clai/ 'or re'(%: o' i%:irect ta6es. Here, res$o%:e%tQs clai/ 'or re'(%: is %ot a%chore: o% the e6e/$tio% o' the 2()er 'ro/ :irect a%: i%:irect ta6es 2(t o% the ta6 e6e/$tio% o' the &oo:s the/selves (%:er Sec. 1-". Res$o%:e%t '(rther stresse: that i% Mace:a v. Macarai&, ;r., this Co(rt reco&%i8e: that i' 0PC $(rchases oil 'ro/ oil co/$a%ies, 0PC is e%title: to clai/ rei/2(rse/e%t 'ro/ the B.R 'or that $art o' the $(rchase $rice that re$rese%ts e6cise ta6es $ai: 2) the oil co/$a%) to the B.R. Phili$$i%e Acet)le%e Co. v. C.R, o% the other ha%:, i%volve: sales ta6, 5hich is a ta6 o% the tra%sactio%, 5hich this Co(rt hel: as :(e 'ro/ the seller eve% i' s(ch ta6 ca%%ot 2e $asse: o% to the 2()ers 5ho are ta6F e6e/$t e%tities. .% this case, the e6cise ta6 is a ta6 o% the &oo:s the/selves. 7hile i%:ee: it is the /a%('act(rer 5ho has the :(t) to $a) the sai: ta6, 2) s$eci'ic $rovisio% o' la5, Sec. 1-", the &oo:s are stri$$e: o' s(ch ta6 (%:er the circ(/sta%ces $rovi:e: therei%. Phili$$i%e Acet)le%e Co., .%c. v. C.R 5as

th(s %ot a%chore: o% a% e6e/$ti%& $rovisio% o' la5 2(t /erel) o% the ar&(/e%t that the ta6 2(r:e% ca%%ot 2e $asse: o% to so/eo%e. Res$o%:e%t '(rther co%te%:s that reD(iri%& it to sho(l:er the 2(r:e% o' e6cise ta6es o% $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers 5o(l: e''ectivel) :e'eat the $ri%ci$le o' i%ter%atio%al co/it) ($o% 5hich the &ra%t o' ta6 e6e/$tio% o% aviatio% '(el (se: i% i%ter%atio%al 'li&hts 5as 'o(%:e:. .' the e6cise ta6es $ai: 2) res$o%:e%t are %ot allo5e: to 2e re'(%:e: or cre:ite: 2ase: o% the e6e/$tio% $rovi:e: i% Sec. 1-" (a), res$o%:e%t avers that the /a%('act(rers or oil co/$a%ies 5o(l: the% 2e co%strai%e: to shi't the ta6 2(r:e% to i%ter%atio%al carriers i% the 'or/ o' a::itio% to the selli%& $rice. Res$o%:e%t cites as a% a%alo&o(s case Co//issio%er o' .%ter%atio%al Reve%(e v. To(rs S$ecialists, .%c. 1+ 5hich i%volve: the i%cl(sio% o' hotel roo/ char&es re/itte: 2) $art%er 'orei&% to(r a&e%ts i% res$o%:e%t TS.Qs &ross recei$ts 'or $(r$oses o' co/$(ti%& the -O co%tractorQs ta6. TS. o$$ose: the :e'icie%c) assess/e%t i%vo4i%&, a/o%& others, Presi:e%tial Decree 0o. -1, 5hich e6e/$ts 'orei&% to(rists 'ro/ $a)i%& hotel roo/ ta6. This Co(rt ($hel: the CTA i% r(li%& that 5hile C.R /a) clai/ that the -O co%tractorQs ta6 is i/$ose: ($o% a :i''ere%t i%ci:e%ce, i.e., the &ross recei$ts o' the to(rist a&e%c) 5hich he asserts i%cl(:es the hotel roo/ char&es e%tr(ste: to it, the e''ect 5o(l: 2e to i/$ose a ta6, a%: tho(&h :i''ere%t, it %o%etheless i/$oses a ta6 act(all) o% roo/ char&es. O%e 5a) or the other, sai: the CTA, it 5o(l: %ot have the e''ect o' $ro/oti%& to(ris/ i% the Phili$$i%es as that 5o(l: i%crease the costs or e6$e%ses 2) the a::itio% o' a hotel roo/ ta6 i% the overall e6$e%ses o' sai: to(rists. The i%sta%t $etitio% sD(arel) raise: the iss(e o' 5hether res$o%:e%t as /a%('act(rer or $ro:(cer o' $etrole(/ $ro:(cts is e6e/$t 'ro/ the $a)/e%t o' e6cise ta6 o% s(ch $etrole(/ $ro:(cts it sol: to i%ter%atio%al carriers. .% the $revio(s cases1" :eci:e: 2) this Co(rt i%volvi%& e6cise ta6es o% $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers, 5hat 5as o%l) resolve: is the D(estio% o' 5ho is the $ro$er $art) to clai/ the re'(%: o' e6cise ta6es $ai: o% $etrole(/ $ro:(cts i' s(ch ta6 5as either $ai: 2) the i%ter%atio%al carriers the/selves or i%cor$orate: i%to the selli%& $rice o' the $etrole(/ $ro:(cts sol: to the/. 7e have r(le: i% the sai: cases that the stat(tor) ta6$a)er, the local /a%('act(rer o' the $etrole(/ $ro:(cts 5ho is :irectl) lia2le 'or the $a)/e%t o' e6cise ta6 o% the sai: &oo:s, is the $ro$er $art) to see4 a ta6 re'(%:. Th(s, a 'orei&% airli%e co/$a%) 5ho $(rchase: locall) /a%('act(re: $etrole(/ $ro:(cts 'or (se i% its i%ter%atio%al 'li&hts, as 5ell as a 'orei&% oil co/$a%) 5ho li4e5ise 2o(&ht $etrole(/ $ro:(cts 'ro/ local /a%('act(rers a%: later sol: these to i%ter%atio%al carriers, have %o le&al $erso%alit) to 'ile a clai/ 'or ta6 re'(%: or cre:it o' e6cise ta6es $revio(sl) $ai: 2) the local /a%('act(rers eve% i' the latter $asse: o% to the sai: 2()ers the ta6 2(r:e% i% the 'or/ o' a::itio%al a/o(%t i% the $rice. E6cise ta6es, as the ter/ is (se: i% the 0.RC, re'er to ta6es a$$lica2le to certai% s$eci'ie: &oo:s or articles /a%('act(re: or $ro:(ce: i% the Phili$$i%es 'or :o/estic sales or co%s(/$tio% or 'or a%) other :is$ositio%

a%: to thi%&s i/$orte: i%to the Phili$$i%es. These ta6es are i/$ose: i% a::itio% to the val(eFa::e: ta6 (=AT).1* As to $etrole(/ $ro:(cts, Sec. 1+1 $rovi:es that e6cise ta6es attach to the 'ollo5i%& re'i%e: a%: /a%('act(re: /i%eral oils a%: /otor '(els as soo% as the) are i% e6iste%ce as s(ch: (a) 9(2ricati%& oils a%: &reasesC (2) Processe: &asC (c) 7a6es a%: $etrolat(/C (:) De%at(re: alcohol to 2e (se: 'or /otive $o5erC (e) 0a$htha, re&(lar &asoli%e a%: other si/ilar $ro:(cts o' :istillatio%C (') 9ea:e: $re/i(/ &asoli%eC (&) Aviatio% t(r2o Aet '(elC (h) 3erose%eC (i) Diesel '(el oil, a%: si/ilar '(el oils havi%& /ore or less the sa/e &e%erati%& $o5erC (A) 9iD(e'ie: $etrole(/ &asC (4) As$haltsC a%: (l) B(%4er '(el oil a%: si/ilar '(el oils havi%& /ore or less the sa/e &e%erati%& ca$acit). Be&i%%i%& ;a%(ar) 1, 1 , e6cise ta6es levie: o% locall) /a%('act(re: $etrole(/ $ro:(cts a%: i%:i&e%o(s $etrole(/ are reD(ire: to 2e $ai: 2e'ore their re/oval 'ro/ the $lace o' $ro:(ctio%.1! Ho5ever, Sec. 1-" $rovi:es: SEC. 1-". Petroleum Products %old to International &arriers and E empt Entities or '!encies, R Petrole(/ $ro:(cts sol: to the 'ollo5i%& are e6e/$t 'ro/ e6cise ta6: (a) .%ter%atio%al carriers o' Phili$$i%e or 'orei&% re&istr) o% their (se or co%s(/$tio% o(tsi:e the Phili$$i%es: Provi:e:, That the $etrole(/ $ro:(cts sol: to these i%ter%atio%al carriers shall 2e store: i% a 2o%:e: stora&e ta%4 a%: /a) 2e :is$ose: o' o%l) i% accor:a%ce 5ith the r(les a%: re&(latio%s to 2e $rescri2e: 2) the Secretar) o' >i%a%ce, ($o% reco//e%:atio% o' the Co//issio%erC (2) E6e/$t e%tities or a&e%cies covere: 2) ta6 treaties, co%ve%tio%s a%: other i%ter%atio%al a&ree/e%ts 'or their (se or co%s(/$tio%: Provi:e:, ho5ever, That the co(%tr) o' sai: 'orei&% i%ter%atio%al carrier or e6e/$t e%tities or a&e%cies e6e/$ts 'ro/ si/ilar ta6es $etrole(/ $ro:(cts sol: to Phili$$i%e carriers, e%tities or a&e%ciesC a%: (c) E%tities 5hich are 2) la5 e6e/$t 'ro/ :irect a%: i%:irect ta6es. Res$o%:e%t clai/s it is e%title: to a ta6 re'(%: 2eca(se those $etrole(/ $ro:(cts it sol: to i%ter%atio%al carriers are %ot s(2Aect to e6cise ta6, he%ce the e6cise ta6es it $ai: ($o% 5ith:ra5al o' those $ro:(cts 5ere erro%eo(sl) or ille&all) collecte: a%: sho(l: %ot have 2ee% $ai: i% the 'irst $lace. Si%ce the e6cise ta6 e6e/$tio% attache: to the $etrole(/ $ro:(cts the/selves, the /a%('act(rer or $ro:(cer is (%:er %o :(t) to $a) the e6cise ta6 thereo%. 7e :isa&ree. G%:er Cha$ter .. ?E6e/$tio% or Co%:itio%al Ta6F>ree Re/oval o' Certai% Goo:s? o' Title =., Sectio%s 1--, 1-!, 1-1, 1- a%: 1+, cover co%:itio%al

ta6F'ree re/oval o' s$eci'ie: &oo:s or articles, 5hereas Sectio%s 1-+ a%: 1-" $rovi:e 'or ta6 e6e/$tio%s. 7hile the e6e/$tio% 'o(%: i% Sec. 1-+ /a4es re'ere%ce to the %at(re a%: D(alit) o' the &oo:s /a%('act(re: (:o/estic :e%at(re: alcohol) 5itho(t re&ar: to the ta6 stat(s o' the 2()er o' the sai: &oo:s, Sec. 1-" :eals 5ith the ta6 treat/e%t o' a s$eci'ie: article ($etrole(/ $ro:(cts) i% relatio% to its 2()er or co%s(/er. Res$o%:e%tQs 'ail(re to /a4e this i/$orta%t :isti%ctio% a$$are%tl) le: it to /ista4e%l) ass(/e that the ta6 e6e/$tio% (%:er Sec. 1-" (a) ?attaches to the &oo:s the/selves? s(ch that the e6cise ta6 sho(l: %ot have 2ee% $ai: i% the 'irst $lace. O% ;(l) #*, 1 *, $etitio%er Co//issio%er iss(e: Reve%(e Re&(latio%s 1F *11 (?E6cise Ta6atio% o' Petrole(/ Pro:(cts?) 5hich $rovi:es: SEC. +. Ti/e a%: Ma%%er o' Pa)/e%t o' E6cise Ta6 o% Petrole(/ Pro:(cts, 0o%FMetallic Mi%erals a%: .%:i&e%o(s Petrole(/ R .. Petrole(/ Pro:(cts 6666 a) O% locall) /a%('act(re: $etrole(/ $ro:(cts The s$eci'ic ta6 o% $etrole(/ $ro:(cts locall) /a%('act(re: or $ro:(ce: i% the Phili$$i%es shall 2e $ai: 2) the /a%('act(rer, $ro:(cer, o5%er or $erso% havi%& $ossessio% o' the sa/e, a%: s(ch ta6 shall 2e $ai: 5ithi% 'i'tee% (1") :a)s 'ro/ :ate o' re/oval 'ro/ the $lace o' $ro:(ctio%. (G%:erscori%& s($$lie:.) Th(s, i' a% airli%e co/$a%) $(rchase: Aet '(el 'ro/ a% (%re&istere: s($$lier 5ho co(l: %ot $rese%t $roo' o' $a)/e%t o' s$eci'ic ta6, the co/$a%) is lia2le to $a) the s$eci'ic ta6 o% the :ate o' $(rchase. 1 Si%ce the e6cise ta6 /(st 2e $ai: ($o% 5ith:ra5al 'ro/ the $lace o' $ro:(ctio%, res$o%:e%t ca%%ot a%chor its clai/ 'or re'(%: o% the theor) that the e6cise ta6es :(e thereo% sho(l: %ot have 2ee% collecte: or $ai: i% the 'irst $lace. Sec. ## o' the 0.RC allo5s the recover) o' ta6es erro%eo(sl) or ille&all) collecte:. A% ?erro%eo(s or ille&al ta6? is :e'i%e: as o%e levie: 5itho(t stat(tor) a(thorit), or ($o% $ro$ert) %ot s(2Aect to ta6atio% or 2) so/e o''icer havi%& %o a(thorit) to lev) the ta6, or o%e 5hich is so/e other si/ilar res$ect is ille&al.#, Res$o%:e%tQs locall) /a%('act(re: $etrole(/ $ro:(cts are clearl) s(2Aect to e6cise ta6 (%:er Sec. 1+1. He%ce, its clai/ 'or ta6 re'(%: /a) %ot 2e $re:icate: o% Sec. ## o' the 0.RC allo5i%& a re'(%: o' erro%eo(s or e6cess $a)/e%t o' ta6. Res$o%:e%tQs clai/ is $re/ise: o% 5hat it :eter/i%e: as a ta6 e6e/$tio% ?attachi%& to the &oo:s the/selves,? 5hich /(st 2e 2ase: o% a stat(te &ra%ti%& ta6 e6e/$tio%, or ?the res(lt o' le&islative &race.? S(ch a clai/ is to 2e co%str(e: strictissi/i A(ris a&ai%st the ta6$a)er, /ea%i%& that the clai/ ca%%ot 2e /a:e to rest o% va&(e i%'ere%ce. 7here the r(le o' strict i%ter$retatio% a&ai%st the ta6$a)er is a$$lica2le as the clai/ 'or re'(%: $arta4es o' the %at(re o' a% e6e/$tio%, the clai/a%t /(st sho5 that he clearl) 'alls (%:er the e6e/$ti%& stat(te.#1 The e6e/$tio% 'ro/ e6cise ta6 $a)/e%t o% $etrole(/ $ro:(cts (%:er Sec. 1-" (a) is co%'erre: o% i%ter%atio%al carriers 5ho $(rchase: the sa/e 'or

their (se or co%s(/$tio% o(tsi:e the Phili$$i%es. The o%l) co%:itio% set 2) la5 is 'or these $etrole(/ $ro:(cts to 2e store: i% a 2o%:e: stora&e ta%4 a%: /a) 2e :is$ose: o' o%l) i% accor:a%ce 5ith the r(les a%: re&(latio%s to 2e $rescri2e: 2) the Secretar) o' >i%a%ce, ($o% reco//e%:atio% o' the Co//issio%er. O% ;a%(ar) ##, #,,1, or 'ive )ears a'ter the sale 2) res$o%:e%t o' the s(2Aect $etrole(/ $ro:(cts, the% Secretar) o' >i%a%ce Mar&arito B. Teves iss(e: Reve%(e Re&(latio%s 0o. -F#,,1 ?A/e%:i%& Certai% Provisio%s o' E6isti%& Reve%(e Re&(latio%s o% the Gra%ti%& o' O(tri&ht E6cise Ta6 E6e/$tio% o% Re/oval o' E6cisa2le Articles .%te%:e: 'or E6$ort or SaleHDeliver) to .%ter%atio%al Carriers or to Ta6FE6e/$t E%titiesHA&e%cies a%: Prescri2i%& the Provisio%s 'or Availi%& Clai/s 'or Pro:(ct Re$le%ish/e%t.? Sai: iss(a%ce reco&%i8e: the ?ta6 relie' to 5hich the ta6$a)ers are e%title:? 2) availi%& o' the 'ollo5i%& re/e:ies: (a) a clai/ 'or e6cise ta6 e6e/$tio% $(rs(a%t to Sectio%s #,+ a%: ## o' the 0.RCC or (#) a $ro:(ct re$le%ish/e%t. SEC. #. .MPOS.T.O0 O> EEC.SE TAE O0 REMO=A9 O> EEC.SAB9E ART.C9ES >OR EEPORT OR SA9EHDE9.=ERI TO .0TER0AT.O0A9 CARR.ERS A0D OTHER TAEFEEEMPT E0T.T.ESHAGE0C.ES. R S(2Aect to the s(2seD(e%t 'ili%& o' a clai/ 'or e6cise ta6 cre:itHre'(%: or $ro:(ct re$le%ish/e%t, all /a%('act(rers o' articles s(2Aect to e6cise ta6 (%:er Title =. o' the 0.RC o' 1 !, as a/e%:e:, shall $a) the e6cise ta6 that is other5ise :(e o% ever) re/oval thereo' 'ro/ the $lace o' $ro:(ctio% that is i%te%:e: 'or e6$ortatio% or saleH:eliver) to i%ter%atio%al carriers or to ta6F e6e/$t e%titiesHa&e%cies: Provi:e:, That i% case the sai: articles are li4e5ise 2ei%& sol: i% the :o/estic /ar4et, the a$$lica2le e6cise ta6 rate shall 2e the sa/e as the e6cise ta6 rate i/$ose: o% the :o/esticall) sol: articles. .% the a2se%ce o' a si/ilar article that is 2ei%& sol: i% the :o/estic /ar4et, the a$$lica2le e6cise ta6 shall 2e co/$(te: 2ase: o% the val(e a$$eari%& i% the /a%('act(rerQs s5or% state/e%t co%verte: to Phili$$i%e c(rre%c), as /a) 2e a$$lica2le. 6 6 6 6 (E/$hasis s($$lie:.) .% this case, ho5ever, the Solicitor Ge%eral has a:o$te: a $ositio% co%trar) to e6isti%& B.R re&(latio%s a%: r(li%&s reco&%i8i%& the ri&ht o' oil co/$a%ies to see4 a re'(%: o' e6cise ta6es $ai: o% $etrole(/ $ro:(cts the) sol: to i%ter%atio%al carriers. .t is ar&(e: that there is %othi%& i% Sec. 1-" (a) 5hich e6$licitl) &ra%ts e6e/$tio% 'ro/ the $a)/e%t o' e6cise ta6 i% 'avor o' oil co/$a%ies selli%& their $etrole(/ $ro:(cts to i%ter%atio%al carriers a%: that the o%l) clai/ 'or re'(%: o' e6cise ta6es a(thori8e: 2) the 0.RC is the $a)/e%t o' e6cise ta6 o% e6$orte: &oo:s, as e6$licitl) $rovi:e: i% Sec. 1-, (D), Cha$ter . (%:er the sa/e Title =.: (D) Cre:it 'or E6cise Ta6 o% Goo:s Act(all) E6$orte:. FF 7he% &oo:s locall) $ro:(ce: or /a%('act(re: are re/ove: a%: act(all) e6$orte: 5itho(t ret(r%i%& to the Phili$$i%es, 5hether so e6$orte: i% their ori&i%al state or as i%&re:ie%ts or $arts o' a%) /a%('act(re: &oo:s or $ro:(cts, a%) e6cise ta6

$ai: thereo% shall 2e cre:ite: or re'(%:e: ($o% s(2/issio% o' the $roo' o' act(al e6$ortatio% a%: ($o% recei$t o' the corres$o%:i%& 'orei&% e6cha%&e $a)/e%t: Provi:e:, That the e6cise ta6 o% /i%eral $ro:(cts, e6ce$t coal a%: co4e, i/$ose: (%:er Sectio% 1"1 shall %ot 2e cre:ita2le or re'(%:a2le eve% i' the /i%eral $ro:(cts are act(all) e6$orte:. Accor:i%& to the Solicitor Ge%eral, Sec. 1-" (a) i% relatio% to the other $rovisio%s o% e6cise ta6 a%: 'ro/ the %at(re o' i%:irect ta6atio%, /a) o%l) 2e co%str(e: as $rohi2iti%& the /a%('act(rersFsellers o' $etrole(/ $ro:(cts 'ro/ $assi%& o% the ta6 to i%ter%atio%al carriers 2) i%cor$orati%& $revio(sl) $ai: e6cise ta6es i%to the selli%& $rice. .% other 5or:s, res$o%:e%t ca%%ot shi't the ta6 2(r:e% to i%ter%atio%al carriers 5ho are allo5e: to $(rchase its $etrole(/ $ro:(cts 5itho(t havi%& to $a) the a::e: cost o' the e6cise ta6. 7e a&ree 5ith the Solicitor Ge%eral. .% Phili$$i%e Acet)le%e Co., .%c. v. Co//issio%er o' .%ter%al Reve%(e ## this Co(rt hel: that $etitio%er /a%('act(rer 5ho sol: its o6)&e% a%: acet)le%e &ases to 0PC, a ta6Fe6e/$t e%tit), ca%%ot clai/ e6e/$tio% 'ro/ the $a)/e%t o' sales ta6 si/$l) 2eca(se its 2()er 0PC is e6e/$t 'ro/ ta6atio%. The Co(rt e6$lai%e: that the $erce%ta&e ta6 o% sales o' /ercha%:ise i/$ose: 2) the Ta6 Co:e is :(e 'ro/ the /a%('act(rer a%: %ot 'ro/ the 2()er. Res$o%:e%t atte/$ts to :isti%&(ish this case 'ro/ Phili$$i%e Acet)le%e Co., .%c. o% &ro(%:s that 5hat 5as i%volve: i% the latter is a ta6 o% the tra%sactio% (sales) a%: %ot e6cise ta6 5hich is a ta6 o% the &oo:s the/selves, a%: that the e6e/$tio% so(&ht therei% 5as a%chore: /erel) o% the ta6Fe6e/$t stat(s o' the 2()er a%: %ot a s$eci'ic $rovisio% o' la5 e6e/$ti%& the &oo:s sol: 'ro/ the e6cise ta6. B(t as alrea:) state:, the la%&(a&e o' Sec. 1-" i%:icates that the ta6 e6e/$tio% /e%tio%e: therei% is co%'erre: o% s$eci'ie: 2()ers or co%s(/ers o' the e6cisa2le articles or &oo:s ($etrole(/ $ro:(cts). G%li4e Sec. 1-+ 5hich e6$licitl) e6e/$te: the article or &oo:s itsel' (:o/estic :e%at(re: alcohol) 5itho(t :(e re&ar: to the ta6 stat(s o' the 2()er or $(rchaser, Sec. 1-" e6e/$ts 'ro/ e6cise ta6 $etrole(/ $ro:(cts 5hich 5ere sol: to i%ter%atio%al carriers a%: other ta6Fe6e/$t a&e%cies a%: e%tities. Co%si:eri%& that the e6cise ta6es attaches to $etrole(/ $ro:(cts ?as soo% as the) are i% e6iste%ce as s(ch,? #-there ca% 2e %o o(tri&ht e6e/$tio% 'ro/ the $a)/e%t o' e6cise ta6 o% $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers. The sole 2asis the% o' res$o%:e%tQs clai/ 'or re'(%: is the e6$ress &ra%t o' e6cise ta6 e6e/$tio% i% 'avor o' i%ter%atio%al carriers (%:er Sec. 1-" (a) 'or their $(rchases o' locall) /a%('act(re: $etrole(/ $ro:(cts. P(rs(a%t to o(r r(li%& i% Phili$$i%e Acet)le%e, a ta6 e6e/$tio% 2ei%& e%Ao)e: 2) the 2()er ca%%ot 2e the 2asis o' a clai/ 'or ta6 e6e/$tio% 2) the /a%('act(rer or seller o' the &oo:s 'or a%) ta6 :(e to it as the /a%('act(rer or seller. The e6cise ta6 i/$ose: o% $etrole(/ $ro:(cts (%:er Sec. 1+1 is the :irect lia2ilit) o' the /a%('act(rer 5ho ca%%ot th(s i%vo4e the e6cise ta6 e6e/$tio% &ra%te: to its 2()ers 5ho are i%ter%atio%al carriers.

.% /aceda v, /acarai!* 3r,,#+ the Co(rt s$eci'icall) /e%tio%e: e6cise ta6 as a% e6a/$le o' a% i%:irect ta6 5here the ta6 2(r:e% ca% 2e shi'te: to the 2()er: O% the other ha%:, ?i%:irect ta6es are ta6es $ri/aril) $ai: 2) $erso%s 5ho ca% shi't the 2(r:e% ($o% so/eo%e else?. >or e6a/$le, the e6cise a%: ad valorem ta6es that the oil co/$a%ies $a) to the B(rea( o' .%ter%al Reve%(e ($o% re/oval o' $etrole(/ $ro:(cts 'ro/ its re'i%er) ca% 2e shi'te: to its 2()er, li4e the 0PC, 2) a::i%& the/ to the ?cash? a%:Hor ?selli%& $rice.? A% e6cise ta6 is 2asicall) a% i%:irect ta6. .%:irect ta6es are those that are :e/a%:e:, i% the 'irst i%sta%ce, 'ro/, or are $ai: 2), o%e $erso% i% the e6$ectatio% a%: i%te%tio% that he ca% shi't the 2(r:e% to so/eo%e else. State: else5ise, i%:irect ta6es are ta6es 5herei% the lia2ilit) 'or the $a)/e%t o' the ta6 'alls o% o%e $erso% 2(t the 2(r:e% thereo' ca% 2e shi'te: or $asse: o% to a%other $erso%, s(ch as 5he% the ta6 is i/$ose: ($o% &oo:s 2e'ore reachi%& the co%s(/er 5ho (lti/atel) $a)s 'or it. 7he% the seller $asses o% the ta6 to his 2()er, he, i% e''ect, shi'ts the ta6 2(r:e%, %ot the lia2ilit) to $a) it, to the $(rchaser as $art o' the $rice o' &oo:s sol: or services re%:ere:. #" >(rther, i% Mace:a v. Macarai&, ;r., the Co(rt r(le: that 2eca(se o' the ta6 e6e/$tio%s $rivile&es 2ei%& e%Ao)e: 2) 0PC (%:er e6isti%& la5s, the ta6 2(r:e% /a) %ot 2e shi'te: to it 2) the oil co/$a%ies 5ho shall $a) 'or '(el oil ta6es o% oil the) s($$lie: to 0PC. Th(s: .% vie5 o' all the 'ore&oi%&, the Co(rt r(les a%: :eclares that the oil co/$a%ies 5hich s($$l) 2(%4er '(el oil to 0PC have to $a) the ta6es i/$ose: ($o% sai: 2(%4er '(el oil sol: to 0PC. B) the ver) %at(re o' i%:irect ta6atio%, the eco%o/ic 2(r:e% o' s(ch ta6atio% is e6$ecte: to 2e $asse: o% thro(&h the cha%%els o' co//erce to the (ser or co%s(/er o' the &oo:s sol:. Beca(se, ho5ever, the 0PC has 2ee% e6e/$te: 'ro/ 2oth :irect a%: i%:irect ta6atio%, the 0PC /(st 2e hel: e6e/$te: 'ro/ a2sor2i%& the eco%o/ic 2(r:e% o' i%:irect ta6atio%. This /ea%s, o% the o%e ha%:, that the oil co/$a%ies 5hich 5ish to sell to 0PC a2sor2 all or $art o' the eco%o/ic 2(r:e% o' the ta6es $revio(sl) $ai: to B.R, 5hich the) co(l: shi't to 0PC i' 0PC :i: %ot e%Ao) e6e/$tio% 'ro/ i%:irect ta6es. This /ea%s also, o% the other ha%:, that the 0PC /a) re'(se to $a) that $art o' the ?%or/al? $(rchase $rice o' 2(%4er '(el oil 5hich re$rese%ts all or $art o' the ta6es $revio(sl) $ai: 2) the oil co/$a%ies to B.R. .' 0PC %o%etheless $(rchases s(ch oil 'ro/ the oil co/$a%ies R 2eca(se to :o so /a) 2e /ore co%ve%ie%t a%: (lti/atel) less costl) 'or 0PC tha% 0PC itsel' i/$orti%& a%: ha(li%& a%: stori%& the oil 'ro/ overseas R 0PC is e%title: to 2e rei/2(rse: 2) the B.R 'or that $art o' the 2()i%& $rice o' 0PC 5hich veri'ia2l) re$rese%ts the ta6 alrea:) $ai: 2) the oil co/$a%)Fve%:or to the B.R. #* (E/$hasis s($$lie:.) .% the case o' i%ter%atio%al air carriers, the ta6 e6e/$tio% &ra%te: (%:er Sec. 1-" (a) is 2ase: o% ?a lo%&Fsta%:i%& i%ter%atio%al co%se%s(s that '(el (se: 'or i%ter%atio%al air services sho(l: 2e ta6Fe6e/$t.? The $rovisio%s o' the 1 ++ Co%ve%tio% o' .%ter%atio%al Civil Aviatio% or the ?Chica&o Co%ve%tio%?, 5hich 'or/ 2i%:i%& i%ter%atio%al la5, reD(ires the co%tracti%& $arties %ot to char&e :(t) o% aviatio% '(el alrea:) o% 2oar: a%) aircra't that has arrive: i%

their territor) 'ro/ a%other co%tracti%& state. Bet5ee% i%:ivi:(al co(%tries, the e6e/$tio% o' airli%es 'ro/ %atio%al ta6es a%: c(sto/s :(ties o% a ra%&e o' aviatio%Frelate: &oo:s, i%cl(:i%& $arts, stores a%: '(el is a sta%:ar: ele/e%t o' the %et5or4 o' 2ilateral ?Air Service A&ree/e%ts.? #! 9ater, a Resol(tio% iss(e: 2) the .%ter%atio%al Civil Aviatio% Or&a%i8atio% (.CAO) e6$a%:e: the $rovisio% as to si/ilarl) e6e/$t 'ro/ ta6es all 4i%:s o' '(el ta4e% o% 2oar: 'or co%s(/$tio% 2) a% aircra't 'ro/ a co%tracti%& state i% the territor) o' a%other co%tracti%& State :e$arti%& 'or the territor) o' a%) other State.#1 Tho(&h i%itiall) ai/e: at esta2lishi%& (%i'or/it) o' ta6atio% a/o%& $arties to the treat) to $reve%t :o(2le ta6atio%, the ta6 e6e/$tio% %o5 &e%erall) a$$lies to '(el (se: i% i%ter%atio%al travel 2) 2oth :o/estic a%: 'orei&% carriers. O% A$ril #1, 1 !1, the% Presi:e%t >er:i%a%: E. Marcos iss(e: Presi:e%tial Decree (P.D.) 0o. 1-" : PRES.DE0T.A9 DECREE 0o. 1-" AME0D.0G SECT.O0 1-+ O> THE 0AT.O0A9 .0TER0A9 RE=E0GE CODE O> 1 !!. 7HEREAS, (%:er the $rese%t la5 oil $ro:(cts sol: to i%ter%atio%al carriers are s(2Aect to the s$eci'ic ta6C 7HEREAS, so/e co(%tries allo5 the sale o' $etrole(/ $ro:(cts to Phili$$i%e Carriers 5itho(t $a)/e%t o' ta6es thereo%C 7HEREAS, to 'oster &oo:5ill a%: 2etter relatio%shi$ 5ith 'orei&% co(%tries, there is a %ee: to &ra%t si/ilar ta6 e6e/$tio% i% 'avor o' 'orei&% i%ter%atio%al carriersC 0O7, THERE>ORE, ., >ERD.0A0D E. MARCOS, Presi:e%t o' the Phili$$i%es, 2) virt(e o' the $o5ers veste: i% /e 2) the Co%stit(tio%, :o here2) or:er a%: :ecree the 'ollo5i%&: Sectio% 1. Sectio% 1-+ o' the 0atio%al .%ter%al Reve%(e Co:e o' 1 !! is here2) a/e%:e: to rea: as 'ollo5s: ?Sec. 1-+. Articles s(2Aect to s$eci'ic ta6. S$eci'ic i%ter%al reve%(e ta6es a$$l) to thi%&s /a%('act(re: or $ro:(ce: i% the Phili$$i%es 'or :o/estic sale or co%s(/$tio% a%: to thi%&s i/$orte:, 2(t %ot to a%)thi%& $ro:(ce: or /a%('act(re: here 5hich shall 2e re/ove: 'or e6$ortatio% a%: is act(all) e6$orte: 5itho(t ret(r%i%& to the Phili$$i%es, 5hether so e6$orte: i% its ori&i%al state or as a% i%&re:ie%t or $art o' a%) /a%('act(re: article or $ro:(ct. ?HO7E=ER, PETRO9EGM PRODGCTS SO9D TO A0 .0TER0AT.O0A9 CARR.ER >OR .TS GSE OR CO0SGMPT.O0 OGTS.DE O> THE PH.9.PP.0ES SHA99 0OT BE SGB;ECT TO SPEC.>.C TAE, PRO=.DED, THAT THE COG0TRI O> SA.D CARR.ER EEEMPTS >ROM TAE PETRO9EGM PRODGCTS SO9D TO PH.9.PP.0E CARR.ERS. ?.% case o' i/$ortatio%s the i%ter%al reve%(e ta6 shall 2e i% a::itio% to the c(sto/s :(ties, i' a%).? Sectio% #. This Decree shall ta4e e''ect i//e:iatel). Co%trar) to res$o%:e%tQs assertio% that the a2ove a/e%:/e%t to the 'or/er $rovisio% o' the 1 !! Ta6 Co:es($$orts its $ositio% that it 5as %ot lia2le 'or

e6cise ta6 o% the $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers, 5e 'i%: that %o s(ch i%'ere%ce ca% 2e :ra5% 'ro/ the 5or:s (se: i% the a/e%:e: $rovisio% or its i%tro:(ctor) $art. >o(%:e: o% the $ri%ci$les o' i%ter%atio%al co/it) a%: reci$rocit), P.D. 0o. 1-" &ra%te: e6e/$tio% 'ro/ $a)/e%t o' e6cise ta6 2(t o%l) to 'orei&% i%ter%atio%al carriers 5ho are allo5e: to $(rchase $etrole(/ $ro:(cts 'ree o' s$eci'ic ta6 $rovi:e: the co(%tr) o' sai: carrier also &ra%ts ta6 e6e/$tio% to Phili$$i%e carriers. Both the earlier a/e%:/e%t i% the 1 !! Ta6 Co:e a%: the $rese%t Sec. 1-" o' the 1 ! 0.RC :i: %ot e6e/$t the oil co/$a%ies 'ro/ the $a)/e%t o' e6cise ta6 o% $etrole(/ $ro:(cts /a%('act(re: a%: sol: 2) the/ to i%ter%atio%al carriers. Beca(se a% e6cise ta6 is a ta6 o% the /a%('act(rer a%: %ot o% the $(rchaser, a%: there 2ei%& %o e6$ress &ra%t (%:er the 0.RC o' e6e/$tio% 'ro/ $a)/e%t o' e6cise ta6 to local /a%('act(rers o' $etrole(/ $ro:(cts sol: to i%ter%atio%al carriers, a%: a2se%t a%) $rovisio% i% the Co:e a(thori8i%& the re'(%: or cre:iti%& o' s(ch e6cise ta6es $ai:, the Co(rt hol:s that Sec. 1-" (a) sho(l: 2e co%str(e: as $rohi2iti%& the shi'ti%& o' the 2(r:e% o' the e6cise ta6 to the i%ter%atio%al carriers 5ho 2()s $etrole(/ $ro:(cts 'ro/ the local /a%('act(rers. Sai: $rovisio% th(s /erel) allo5s the i%ter%atio%al carriers to $(rchase $etrole(/ $ro:(cts 5itho(t the e6cise ta6 co/$o%e%t as a% a::e: cost i% the $rice 'i6e: 2) the /a%('act(rers or :istri2(torsHsellers. Co%seD(e%tl), the oil co/$a%ies 5hich sol: s(ch $etrole(/ $ro:(cts to i%ter%atio%al carriers are %ot e%title: to a re'(%: o' e6cise ta6es $revio(sl) $ai: o% the &oo:s.45"phi4 Ti/e a%: a&ai%, 5e have hel: that ta6 re'(%:s are i% the %at(re o' ta6 e6e/$tio%s 5hich res(lt to loss o' reve%(e 'or the &over%/e%t. G$o% the $erso% clai/i%& a% e6e/$tio% 'ro/ ta6 $a)/e%ts rests the 2(r:e% o' A(sti')i%& the e6e/$tio% 2) 5or:s too $lai% to 2e /ista4e% a%: too cate&orical to 2e /isi%ter$rete:,# it is %ever $res(/e:-,%or 2e allo5e: solel) o% the &ro(%: o' eD(it).-1 These e6e/$tio%s, there'ore, /(st %ot rest o% va&(e, (%certai% or i%:e'i%ite i%'ere%ce, 2(t sho(l: 2e &ra%te: o%l) 2) a clear a%: (%eD(ivocal $rovisio% o' la5 o% the 2asis o' la%&(a&e too $lai% to 2e /ista4e%. S(ch e6e/$tio%s /(st 2e strictl) co%str(e: a&ai%st the ta6$a)er, as ta6es are the li'e2loo: o' the &over%/e%t. -# 7HERE>ORE, the $etitio% 'or revie5 o% certiorari is GRA0TED. The Decisio% :ate: March #", #,, a%: Resol(tio% :ate: ;(%e #+, #,, o' the Co(rt o' Ta6 A$$eals E% Ba%c i% CTA EB 0o. +1" are here2) RE=ERSED a%: SET AS.DE. The clai/s 'or ta6 re'(%: or cre:it 'ile: 2) res$o%:e%t Pili$i%as Shell Petrole(/ Cor$oratio% are DE0.ED 'or lac4 o' 2asis. 0o $ro%o(%ce/e%t as to costs. SO ORDERED.

+) Pa/2a%sa%& 3oalis)o% %& /&a Sa/aha%& Ma&sasa4a at Ma%&a&a5a sa 0)(&a% vs. E6ec(tive Secretar) ** scra P+ G.R. No1. 14)+!6 !) A,&-. 1+, (+1(

P$2-2-o3$& O&4a3-5a2-o31, 3a6$.y7 PAMBANSANG 8OALISYON NG MGA SAMAHANG MAGSASA8A AT MANGGAGA9A SA NIYUGAN (P8SMMN), COCONUT INDUSTRY RE#ORM MO/EMENT (COIR), BU8LOD NG MALAYANG MAGBUBU8ID, PAMBANSANG 8ILUSAN NG MGA SAMAHANG MAGSASA8A (PA8ISAMA), CENTER #OR AGRARIAN RE#ORM, EMPO9ERMENT AND TRANS#ORMATION (CARET), PAMBANSANG 8ATIPUNAN NG MGA SAMAHAN SA 8ANAYUNAN (P8S8): P$2-2-o3$& L$4-1.a2o&7 REPRESENTATI/E LORETA ANN ROSALES: a3; P$2-2-o3$& I3;-<-;'a.1, 3a6$.y7 /IRGILIO /. DA/ID, 0OSE MARIE #AUSTINO, 0OSE CONCEPCION, ROMEO ROYANDOYAN, 0OSE /. ROMERO, 0R., ATTY. CAMILO L. SABIO, a3; ATTY. ANTONIO T. CARPIO, Petitio%ers, vs. E=ECUTI/E SECRETARY, SECRETARY O# AGRICULTURE, SECRETARY O# AGRARIAN RE#ORM, PRESIDENTIAL COMMISSION ON GOOD GO/ERNMENT, THE SOLICITOR GENERAL, PHILIPPINE COCONUT PRODUCERS #EDERATION, INC. (COCO#ED), a3; UNITED COCONUT PLANTERS BAN8 (UCPB),Res$o%:e%ts. 6FFFFFFFFFFFFFFFFFFFFFFF6 G.R. No. 14)*11 TEODORO 0. AMOR, &$,&$1$32-34 2>$ P$a1a32 A..-a3?$ o@ Sa6a& a3; L$y2$ (PASALEY), DOMINGO C. ENCALLADO, &$,&$1$32-34 A3-%a3 34 Ma41a1aAa a2 Ma344a4aBa 1a N-y'4a3 (AMMANI), a3; /IDAL M. PILIIN, &$,&$1$32-34 2>$ La4'3a Coa.-2-o3, Petitio%ers, vs. E=ECUTI/E SECRETARY, SECRETARY O# AGRICULTURE, SECRETARY O# AGRARIAN RE#ORM, PRESIDENTIAL COMMISSION ON GOOD GO/ERNMENT, THE SOLICITOR GENERAL, PHILIPPINE COCONUT PRODUCERS #EDERATION, UNITED COCONUT PLANTERS BAN8, Res$o%:e%ts. DEC.S.O0 ABAD, J.: These are co%soli:ate: $etitio%s to :eclare (%co%stit(tio%al certai% $resi:e%tial :ecrees a%: e6ec(tive or:ers o' the /artial la5 era relati%& to the raisi%& a%: (se o' cocoFlev) '(%:s. The >acts a%: the Case O% ;(%e 1 , 1 !1 Co%&ress e%acte: Re$(2lic Act (R.A.) *#*, 1 that esta2lishe: a Coco%(t .%vest/e%t >(%: (C. >(%:) 'or the :evelo$/e%t o' the coco%(t i%:(str) thro(&h ca$ital 'i%a%ci%&. # Coco%(t 'ar/ers 5ere to ca$itali8e a%: a:/i%ister the >(%: thro(&h the Coco%(t .%vest/e%t Co/$a%) (C.C)- 5hose o2Aective 5as, a/o%& others, to a:va%ce the coco%(t 'ar/ersQ i%terests. >or this $(r$ose, the la5 i/$ose: a lev) o' P,."" o% the coco%(t 'ar/erQs 'irst :o/estic sale o' ever) 1,, 4ilo&ra/s o' co$ra, or its eD(ivale%t, 'or 5hich lev) he 5as to &et a recei$t co%verti2le i%to C.C shares o' stoc4.+

A2o(t a )ear 'ollo5i%& his $rocla/atio% o' /artial la5 i% the co(%tr) or o% A(&(st #,, 1 !- Presi:e%t >er:i%a%: E. Marcos iss(e: Presi:e%tial Decree (P.D.) #!*,"5hich esta2lishe: a Coco%(t Co%s(/ers Sta2ili8atio% >(%: (CCS >(%:), to a::ress the crisis at that ti/e i% the :o/estic /ar4et 'or coco%(tF2ase: co%s(/er &oo:s. The CCS >(%: 5as to 2e 2(ilt ($ thro(&h the i/$ositio% o' a P1".,,Flev) 'or ever) 'irst sale o' 1,, 4ilo&ra/s o' co$ra reseca:a.* The lev) 5as to cease a'ter a )ear or earlier $rovi:e: the crisis 5as over. A%) re/ai%i%& 2ala%ce o' the >(%: 5as to revert to the C. >(%: esta2lishe: (%:er R.A. *#*,.! A )ear later or o% 0ove/2er 1+, 1 !+ Presi:e%t Marcos iss(e: P.D. "1#,1 creati%& a $er/a%e%t '(%: calle: the Coco%(t .%:(str) Develo$/e%t >(%: (C.D >(%:) to cha%%el 'or the (lti/ate :irect 2e%e'it o' coco%(t 'ar/ers $art o' the levies that the) 5ere alrea:) $a)i%&. The Phili$$i%e Coco%(t A(thorit) (PCA) 5as to $rovi:eP1,, /illio% as i%itial ca$ital o' the C.D >(%: a%:, therea'ter, &ive the >(%: at least P,.#, $er 4ilo&ra/ o' co$ra reseca:a o(t o' the PCAQs collectio% o' coco%(t co%s(/ers sta2ili8atio% lev). .% case o' the li'ti%& o' this lev), the PCA 5as the% to i/$ose a $er/a%e%t lev) o' P,.#, o% the 'irst sale o' ever) 4ilo&ra/ o' co$ra to 'or/ $art o' the C.D >(%:. Also, (%:er P.D. "1#, the Phili$$i%e 0atio%al Ba%4 (P0B), the% o5%e: 2) the Gover%/e%t, 5as to receive o% :e$osit, a:/i%ister, a%: (se the C.D >(%:.1, P.D. "1# a(thori8e: the P0B to i%vest the (%(se: $ortio% o' the C.D >(%: i% easil) co%verti2le i%vest/e%ts, the ear%i%&s o' 5hich 5ere to 'or/ $art o' the >(%:.11 .% 1 !" Presi:e%t Marcos e%acte: P.D. !"" 1# 5hich a$$rove: the acD(isitio% o' a co//ercial 2a%4 'or the 2e%e'it o' the coco%(t 'ar/ers to e%a2le s(ch 2a%4 to $ro/$tl) a%: e''icie%tl) reali8e the i%:(str)Qs cre:it $olic). 1- Th(s, the PCA 2o(&ht !#.#O o' the shares o' stoc4 o' >irst G%ite: Ba%4, hea:e: 2) Pe:roCoA(a%&co.1+ D(e to cha%&es i% its cor$orate i:e%tit) a%: $(r$ose, the 2a%4Qs articles o' i%cor$oratio% 5ere a/e%:e: i% ;(l) 1 !", res(lti%& i% a cha%&e i% the 2a%4Qs %a/e 'ro/ >irst G%ite: Ba%4 to G%ite: Coco%(t Pla%ters Ba%4 (GCPB).1" O% ;(l) 1+, 1 !* Presi:e%t Marcos e%acte: P.D. *1, 1* the Coco%(t .%:(str) Co:e, 5hich co%soli:ate: a%: co:i'ie: e6isti%& la5s relati%& to the coco%(t i%:(str). The Co:e $rovi:e: that s(r$l(ses 'ro/ the CCS >(%: a%: the C.D >(%: collectio%s, %ot (se: 'or re$la%ti%& a%: other a(thori8e: $(r$oses, 5ere to 2e i%veste: 2) acD(iri%& shares o' stoc4 o' cor$oratio%s, i%cl(:i%& the Sa% Mi&(el Cor$oratio% (SMC), e%&a&e: i% (%:erta4i%&s relate: to the coco%(t a%: $al/ oil i%:(stries. 1!GCPB 5as to /a4e s(ch i%vest/e%ts a%: eD(ita2l) :istri2(te these 'or 'ree to coco%(t 'ar/ers. 11 These i%vest/e%ts co%stit(te: the Coco%(t .%:(str) .%vest/e%t >(%: (C..>). P.D. *1 also $rovi:e: that the coco%(t lev) '(%:s (cocoFlev) '(%:s) shall 2e o5%e: 2) the coco%(t 'ar/ers i% their $rivate ca$acities. 1 This 5as reiterate: i% the PD 1+*1#, a/e%:/e%t o' ;(%e 11, 1 !1. .% 1 1,, Presi:e%t Marcos iss(e: P.D. 1* , #1 s(s$e%:i%& the collectio%s o' the CCS >(%: a%: the C.D >(%:. B(t i% 1 11 he iss(e: P.D. 11+1 ## 5hich revive: the collectio% o' coco%(t levies. P.D. 11+1 re%a/e: the CCS >(%:

i%to the Coco%(t .%:(str) Sta2ili8atio% >(%: (C.S >(%:). #- This >(%: 5as to 2e ear/ar4e: $ro$ortio%atel) a/o%& several :evelo$/e%t $ro&ra/s, s(ch as coco%(t h)2ri: re$la%ti%& $ro&ra/, i%s(ra%ce covera&e 'or the coco%(t 'ar/ers, a%: scholarshi$ $ro&ra/ 'or their chil:re%.#+ .% 0ove/2er #,,, the% Presi:e%t ;ose$h Estra:a iss(e: E6ec(tive Or:er (E.O.) -1#,#" esta2lishi%& a Sa&i$ 0i)(&a% Pro&ra/ 5hich so(&ht to $rovi:e i//e:iate i%co/e s($$le/e%t to coco%(t 'ar/ers a%: e%co(ra&e the creatio% o' a s(stai%a2le local /ar4et :e/a%: 'or coco%(t oil a%: other coco%(t $ro:(cts.#* The E6ec(tive Or:er so(&ht to esta2lish a P1F2illio% '(%: 2) :is$osi%& o' assets acD(ire: (si%& cocoFlev) '(%:s or assets o' e%tities s($$orte: 2) those '(%:s.#! A co//ittee 5as create: to /a%a&e the '(%: (%:er this $ro&ra/.#1 A /aAorit) vote o' its /e/2ers co(l: e%&a&e the services o' a re$(ta2le a(:iti%& 'ir/ to co%:(ct $erio:ic a(:its. # At a2o(t the sa/e ti/e, Presi:e%t Estra:a iss(e: E.O. -1-, -, 5hich create: a% irrevoca2le tr(st '(%: 4%o5% as the Coco%(t Tr(st >(%: (the Tr(st >(%:). This ai/e: to $rovi:e 'i%a%cial assista%ce to coco%(t 'ar/ers, to the coco%(t i%:(str), a%: to other a&riFrelate: $ro&ra/s. -1 The shares o' stoc4 o' SMC 5ere to serve as the Tr(st >(%:Qs i%itial ca$ital. -# These shares 5ere acD(ire: 5ith C.. >(%:s a%: co%stit(te: a$$ro6i/atel) #!O o' the o(tsta%:i%& ca$ital stoc4 o' SMC. E.O. -1- :esi&%ate: GCPB, thro(&h its Tr(st De$art/e%t, as the Tr(st >(%:Qs tr(stee 2a%4. The Tr(st >(%: Co//ittee 5o(l: a:/i%ister, /a%a&e, a%: s($ervise the o$eratio%s o' the Tr(st >(%:.-- The Co//ittee 5o(l: :esi&%ate a% e6ter%al a(:itor to :o a% a%%(al a(:it or as o'te% as %ee:e: 2(t it /a) also reD(est the Co//issio% o% A(:it (COA) to i%terve%e.-+ To i/$le/e%t its /a%:ate, E.O. -1- :irecte: the Presi:e%tial Co//issio% o% Goo: Gover%/e%t, the O''ice o' the Solicitor Ge%eral, a%: other &over%/e%t a&e%cies to e6cl(:e the #!O C..> SMC shares 'ro/ Civil Case ,,--, e%title: Re$(2lic o' the Phili$$i%es v. E:(ar:o CoA(a%&co, ;r., et al., 5hich 5as the% $e%:i%& 2e'ore the Sa%:i&a%2a)a% a%: to li't the seD(estratio% over those shares.-" O% ;a%(ar) #*, #,,1, ho5ever, 'or/er Presi:e%t Gloria Maca$a&alFArro)o or:ere: the s(s$e%sio% o' E.O.s -1# a%: -1-. -* This %ot5ithsta%:i%&, o% March 1, #,,1 $etitio%er or&a%i8atio%s a%: i%:ivi:(als 2ro(&ht the $rese%t actio% i% G.R. 1+!,-*F-! to :eclare E.O.s -1# a%: -1- as 5ell as Article ..., Sectio% " o' P.D. 1+*1 (%co%stit(tio%al. O% A$ril #+, #,,1 the other sets o' $etitio%er or&a%i8atio%s a%: i%:ivi:(als i%stit(te: G.R. 1+!111 to %(lli') Sectio% # o' P.D. !"" a%: Article ..., Sectio% " o' P.D.s *1 a%: 1+*1 also 'or 2ei%& (%co%stit(tio%al. The .ss(es Prese%te: The $arties s(2/it the 'ollo5i%& iss(es 'or a:A(:icatio%: Proce:(rall) R 1. 7hether or %ot $etitio%ersQ s$ecial civil actio%s o' certiorari (%:er R(le *" co%stit(te: the $ro$er re/e:) 'or their actio%sC a%: #. 7hether or %ot $etitio%ers have le&al sta%:i%& to 2ri%& the sa/e to co(rt. O% the s(2sta%ce R

-. 7hether or %ot the cocoFlev) '(%:s are $(2lic '(%:sC a%: +. 7hether or %ot (a) Sectio% # o' P.D. !"", (2) Article ..., Sectio% " o' P.D.s *1 a%: 1+*1, (c) E.O. -1#, a%: (:) E.O. -1- are (%co%stit(tio%al. The R(li%&s o' the Co(rt >irst. GCPB D(estio%s the $ro$riet) o' the $rese%t $etitio%s 'or certiorari a%: /a%:a/(s (%:er R(le *" o% the &ro(%: that there are %o o%&oi%& $rocee:i%&s i% a%) tri2(%al or 2oar: or 2e'ore a &over%/e%t o''icial e6ercisi%& A(:icial, D(asiFA(:icial, or /i%isterial '(%ctio%s. -! GCPB i%sists that the Co(rt e6ercises a$$ellate A(ris:ictio% 5ith res$ect to iss(es o' co%stit(tio%alit) or vali:it) o' la5s a%: $resi:e%tial or:ers. -1 B(t, as the Co(rt $revio(sl) hel:, 5here there are serio(s alle&atio%s that a la5 has i%'ri%&e: the Co%stit(tio%, it 2eco/es %ot o%l) the ri&ht 2(t the :(t) o' the Co(rt to loo4 i%to s(ch alle&atio%s a%:, 5he% 5arra%te:, ($hol: the s($re/ac) o' the Co%stit(tio%.- Moreover, 5here the iss(es raise: are o' $ara/o(%t i/$orta%ce to the $(2lic, as i% this case, the Co(rt has the :iscretio% to 2r(sh asi:e tech%icalities o' $roce:(re. +, Seco%:. The Co(rt has to ($hol: $etitio%ersQ ri&ht to i%stit(te these $etitio%s. The $etitio%er or&a%i8atio%s i% these cases re$rese%t coco%(t 'ar/ers o% 5ho/ the 2(r:e% o' the cocoFlevies attaches. .t is also $ri/aril) 'or their 2e%e'it that the levies 5ere i/$ose:. The i%:ivi:(al $etitio%ers, o% the other ha%:, Aoi% the $etitio%s as ta6$a)ers. The Co(rt reco&%i8es their ri&ht to restrai% o''icials 'ro/ 5asti%& $(2lic '(%:s thro(&h the e%'orce/e%t o' a% (%co%stit(tio%al stat(te. +1 This soFcalle: ta6$a)erQs s(it is 2ase: o% the theor) that e6$e%:it(re o' $(2lic '(%:s 'or the $(r$ose o' e6ec(ti%& a% (%co%stit(tio%al act is a /isa$$licatio% o' s(ch '(%:s.+# Besi:es, the 1 1! Co%stit(tio% accor:s to the citi8e%s a &reater $artici$atio% i% the a''airs o' &over%/e%t. .%:ee:, it $rovi:es 'or $eo$leBs i%itiative, the ri&ht to i%'or/atio% o% /atters o' $(2lic co%cer% (i%cl(:i%& the ri&ht to 4%o5 the state o' health o' their Presi:e%t), as 5ell as the ri&ht to 'ile cases D(estio%i%& the 'act(al 2ases 'or the s(s$e%sio% o' the $rivile&e o' 5rit o' ha#eas corpus or :eclaratio% o' /artial la5. These $rovisio%s e%lar&e the $eo$leQs ri&ht i% the $olitical as 5ell as the A(:icial 'iel:. .t &ra%ts the/ the ri&ht to i%ter'ere i% the a''airs o' &over%/e%t a%: challe%&e a%) act te%:i%& to $reA(:ice their i%terest. Thir:. >or so/e ti/e, :i''ere%t a%: co%'licti%& %otio%s ha: 2ee% 'or/e: as to the %at(re a%: o5%ershi$ o' the cocoFlev) '(%:s. The Co(rt, ho5ever, 'i%all) $(t a% e%: to the :is$(te 5he% it cate&oricall) r(le: i% Re$(2lic o' the Phili$$i%es v. COCO>ED+- that these '(%:s are %ot o%l) a''ecte: 5ith $(2lic i%terestC the) are, i% 'act, prima facie $(2lic '(%:s. Pri/a 'acie /ea%s a 'act $res(/e: to 2e tr(e (%less :is$rove: 2) so/e evi:e%ce to the co%trar). ++ The Co(rt 5as satis'ie: that the cocoFlev) '(%:s 5ere raise: $(rs(a%t to la5 to s($$ort a $ro$er &over%/e%tal $(r$ose. The) 5ere raise: 5ith the (se o' the $olice a%: ta6i%& $o5ers o' the State 'or the 2e%e'it o' the coco%(t i%:(str) a%: its 'ar/ers i% &e%eral. The COA revie5e: the (se o' the '(%:s.

The B(rea( o' .%ter%al Reve%(e (B.R) treate: the/ as $(2lic '(%:s a%: the ver) la5s &over%i%& coco%(t levies reco&%i8e their $(2lic character. +" The Co(rt has also rece%tl) :eclare: that the cocoFlev) '(%:s are i% the %at(re o' ta6es a%: ca% o%l) 2e (se: 'or $(2lic $(r$ose. +* Ta6es are e%'orce: $ro$ortio%al co%tri2(tio%s 'ro/ $erso%s a%: $ro$ert), levie: 2) the State 2) virt(e o' its soverei&%t) 'or the s($$ort o' the &over%/e%t a%: 'or all its $(2lic %ee:s.+! Here, the cocoFlev) '(%:s 5ere i/$ose: $(rs(a%t to la5, %a/el), R.A. *#*, a%: P.D. #!*. The '(%:s 5ere collecte: a%: /a%a&e: 2) the PCA, a% i%:e$e%:e%t &over%/e%t cor$oratio% :irectl) (%:er the Presi:e%t.+1 A%:, as the res$o%:e%t $(2lic o''icials $oi%te: o(t, the $erti%e%t la5s (se: the ter/ lev),+ 5hich /ea%s to ta6,", i% :escri2i%& the e6actio%. O' co(rse, (%li4e or:i%ar) reve%(e la5s, R.A. *#*, a%: P.D. #!* :i: %ot raise /o%e) to 2oost the &over%/e%tQs &e%eral '(%:s 2(t to $rovi:e /ea%s 'or the reha2ilitatio% a%: sta2ili8atio% o' a threate%e: i%:(str), the coco%(t i%:(str), 5hich is so a''ecte: 5ith $(2lic i%terest as to 2e 5ithi% the $olice $o5er o' the State."1The '(%:s so(&ht to s($$ort the coco%(t i%:(str), o%e o' the /ai% eco%o/ic 2ac42o%es o' the co(%tr), a%: to sec(re eco%o/ic 2e%e'its 'or the coco%(t 'ar/ers a%: 'ar/ 5or4ers. The s(2Aect la5s are a4i% to the s(&ar lie%s i/$ose: 2) Sec. !(2) o' P.D. -11, "# a%: the oil $rice sta2ili8atio% '(%:s (%:er P.D. 1 "*,"- as a/e%:e: 2) E.O. 1-!."+ Res$o%:e%t GCPB s(&&ests that the cocoFlev) '(%:s are closel) si/ilar to the Social Sec(rit) S)ste/ (SSS) '(%:s, 5hich have 2ee% :eclare: to 2e %ot $(2lic '(%:s 2(t $ro$erties o' the SSS /e/2ers a%: hel: /erel) i% tr(st 2) the &over%/e%t."" B(t the SSS 9a5"* collects $re/i(/ co%tri2(tio%s. .t :oes %ot collect ta6es 'ro/ /e/2ers 'or a s$eci'ic $(2lic $(r$ose. The) $a) co%tri2(tio%s i% e6cha%&e 'or i%s(ra%ce $rotectio% a%: 2e%e'its li4e loa%s, /e:ical or health services, a%: retire/e%t $ac4a&es. The 2e%e'its accr(e to ever) SSS /e/2er, %ot to the $(2lic, i% &e%eral."! >(rther/ore, SSS /e/2ers :o %ot lose o5%ershi$ o' their co%tri2(tio%s. The &over%/e%t /erel) hol:s these i% tr(st, to&ether 5ith his e/$lo)erQs co%tri2(tio%, to a%s5er 'or his '(t(re 2e%e'its. "1 The cocoFlev) '(%:s, o% the other ha%:, 2elo%& to the &over%/e%t a%: are s(2Aect to its a:/i%istratio% a%: :is$ositio%. Th(s, these '(%:s, i%cl(:i%& its i%co/es, i%terests, $rocee:s, or $ro'its, as 5ell as all its assets, $ro$erties, a%: shares o' stoc4s $roc(re: 5ith s(ch '(%:s /(st 2e treate:, (se:, a:/i%istere:, a%: /a%a&e: as $(2lic '(%:s." 9astl), the cocoFlev) '(%:s are evi:e%tl) s$ecial '(%:s. .% )aston v, Repu#lic Planters (ank,*, the Co(rt hel: that the State collecte: sta2ili8atio% 'ees 'ro/ s(&ar /illers, $la%ters, a%: $ro:(cers 'or a s$ecial $(r$ose: to 'i%a%ce the &ro5th a%: :evelo$/e%t o' the s(&ar i%:(str) a%: all its co/$o%e%ts. The 'ees 5ere levie: 'or a s$ecial $(r$ose a%:, there'ore, co%stit(te: s$ecial '(%: 5he% collecte:. .ts character as s(ch '(%: 5as /a:e clear 2) the 'act that the) 5ere :e$osite: i% the P0B (the% a 5holl) o5%e: &over%/e%t 2a%4) a%: %ot i% the Phili$$i%e Treas(r). .% 6sme7a v, 6r#os,*1 the Co(rt hel: that the oil $rice sta2ili8atio% '(%: 5as a s$ecial '(%: /ai%l) 2eca(se this 5as se&re&ate: 'ro/ the &e%eral '(%: a%: $lace: i% 5hat the la5 re'erre: to as a

tr(st acco(%t. Iet it re/ai%e: s(2Aect to COA scr(ti%) a%: revie5. The Co(rt 'i%:s %o s(2sta%tial :isti%ctio% 2et5ee% these '(%:s a%: the cocoFlev) '(%:s, e6ce$t as to the i%:(str) the) each s($$ort. >o(rth. Petitio%ers i% G.R. 1+!111 assert that Sectio% # o' P.D. !"" a2ove is voi: a%: (%co%stit(tio%al 'or :isre&ar:i%& the $(2lic character o' cocoFlev) '(%:s. The s(2Aect sectio% $rovi:es: S$?2-o3 (. -inancial 'ssistance. 6 6 6 a%: si%ce the o$eratio%s, a%: activities o' the Phili$$i%e Coco%(t A(thorit) are all i% accor: 5ith the $rese%t social eco%o/ic $la%s a%: $ro&ra/s o' the Gover%/e%t, all collectio%s a%: levies 5hich the Phili$$i%e Coco%(t A(thorit) is a(thori8e: to lev) a%: collect s(ch as 2(t %ot li/ite: to the Coco%(t Co%s(/ersQ Sta2ili8atio% 9ev), a%: the Coco%(t .%:(str) Develo$/e%t >(%: as $rescri2e: 2) Presi:e%tial Decree 0o. "1# shall %ot 2e co%si:ere: or co%str(e:, (%:er a%) la5 or re&(latio%, s$ecial a%:Hor 'i:(ciar) '(%:s a%: :o %ot 'or/ $art o' the &e%eral '(%:s o' the %atio%al &over%/e%t 5ithi% the co%te/$latio% o' Presi:e%tial Decree 0o. !11. (E/$hasis o(rs) The Co(rt has, ho5ever, alrea:) $asse: ($o% this D(estio% i% Phili$$i%e Coco%(t Pro:(cers >e:eratio%, .%c. (COCO>ED) v. Re$(2lic o' the Phili$$i%es.*# .t hel: as (%co%stit(tio%al Sectio% # o' P.D. !"" 'or ?e''ectivel) a(thori8i%& the PCA to (tili8e $ortio%s o' the CCS >(%: to $a) the 'i%a%cial co//it/e%t o' the 'ar/ers to acD(ire GCPB a%: to :e$osit $ortio%s o' the CCS >(%: levies 5ith GCPB i%terest 'ree. A%: as there also $rovi:e:, the CCS >(%:, C.D >(%: a%: li4e levies that PCA is a(thori8e: to collect shall 2e co%si:ere: as %o%Fs$ecial or 'i:(ciar) '(%:s to 2e tra%s'erre: to the &e%eral '(%: o' the Gover%/e%t, /ea%i%& the) shall 2e :ee/e: $rivate '(%:s.? .:e%tical $rovisio%s o' s(2seD(e%t $resi:e%tial :ecrees li4e5ise :eclare: cocoFlev) '(%:s $rivate $ro$erties o' coco%(t 'ar/ers. Article ..., Sectio% " o' P.D. *1 rea:s: S$?2-o3 ". E emptions, The Coco%(t Co%s(/ers Sta2ili8atio% >(%: a%: the Coco%(t .%:(str) Develo$/e%t >(%: as 5ell as all :is2(rse/e%ts o' sai: '(%:s 'or the 2e%e'it o' the coco%(t 'ar/ers as herei% a(thori8e: shall %ot 2e co%str(e: or i%ter$rete:, (%:er a%) la5 or re&(latio%, as s$ecial a%:Hor 'i:(ciar) '(%:s, or as $art o' the &e%eral '(%:s o' the %atio%al &over%/e%t 5ithi% the co%te/$latio% o' P.D. 0o. !11C %or as a s(2si:), :o%atio%, lev), &over%/e%t '(%:e: i%vest/e%t, or &over%/e%t share 5ithi% the co%te/$latio% o' P.D. 1 1, the i%te%tio% 2ei%& that sai: >(%: a%: the :is2(rse/e%ts thereo' as herei% a(thori8e: 'or the 2e%e'it o' the coco%(t 'ar/ers shall 2e o5%e: 2) the/ i% their o5% $rivate ca$acities. (E/$hasis o(rs) Sectio% " o' P.D. 1+*1 2asicall) re$ro:(ces the a2ove $rovisio%, th(sR S$?2-o3 ". E6e/$tio%. @ The Coco%(t Co%s(/ers Sta2ili8atio% >(%: a%: the Coco%(t .%:(str) Develo$/e%t >(%:, as 5ell as all :is2(rse/e%ts as herei% a(thori8e:, 1>a.. 3o2 %$ ?o312&'$; o& -32$&,&$2$;, '3;$& a3y .aB o& &$4'.a2-o3, a1 1,$?-a. a3;Co& @-;'?-a&y @'3;1, o& a1 ,a&2 o@ 2>$ 4$3$&a. @'3;1 o@ 2>$ 3a2-o3a. 4o<$&36$32 5ithi% the co%te/$latio% o' P.D.

!11C 3o& a1 1'%1-;y, ;o3a2-o3, .$<y 4o<$&36$32 @'3;$; -3<$126$32, o& 4o<$&36$32 1>a&$ B-2>-3 2>$ ?o32$6,.a2-o3 o@ P.D. *9*, 2>$ -32$32-o3 %$-34 2>a2 1a-; #'3; a3; 2>$ ;-1%'&1$6$321 2>$&$o@ a1 >$&$-3 a'2>o&-5$; @o& 2>$ %$3$@-2 o@ 2>$ ?o?o3'2 @a&6$&1 1>a.. %$ oB3$; %y 2>$6 -3 2>$-& ,&-<a2$ ?a,a?-2-$1: Provi:e:, ho5ever, That the Presi:e%t /a) at a%) ti/e a(thori8e the Co//issio% o% A(:it or a%) other o''icer o' the &over%/e%t to a(:it the 2(si%ess a''airs, a:/i%istratio%, a%: co%:itio% o' $erso%s a%: e%tities 5ho receive s(2si:) 'or coco%(tF2ase: co%s(/er $ro:(cts 6 6 6. (E/$hasis o(rs) 0ota2l), the raisi%& o' /o%e) 2) lev) o% coco%(t 'ar/ $ro:(ctio%, a 'or/ o' ta6atio% as alrea:) state:, 2e&a% i% 1 !1 'or the $(r$ose o' :evelo$i%& the coco%(t i%:(str) a%: $ro/oti%& the i%terest o' coco%(t 'ar/ers. The (se o' the '(%: 5as e6$a%:e: i% 1 !- to i%cl(:e the sta2ili8atio% o' the :o/estic /ar4et 'or coco%(tF2ase: co%s(/er &oo:s a%: i% 1 !+ to :ivert $art o' the '(%:s 'or o2tai%i%& :irect 2e%e'it to coco%(t 'ar/ers. A'ter 'ive )ears or i% 1 !*, ho5ever, P.D. *1 :eclare: the cocoFlev) '(%:s $rivate $ro$ert) o' the 'ar/ers. P.D. 1+*1 reiterate: this :eclaratio% i% 1 !1. B(t %either $resi:e%tial :ecree act(all) t(r%e: over $ossessio% or co%trol o' the '(%:s to the 'ar/ers i% their $rivate ca$acit). The &over%/e%t co%ti%(e: to 5iel: (%:i/i%ishe: a(thorit) over the /a%a&e/e%t a%: :is$ositio% o' those '(%:s. .% a%) eve%t, s(ch :eclaratio% is voi:. There is o5%ershi$ 5he% a thi%& $ertai%i%& to a $erso% is co/$letel) s(2Aecte: to his 5ill i% ever)thi%& that is %ot $rohi2ite: 2) la5 or the co%c(rre%ce 5ith the ri&hts o' a%other. *- A% o5%er is 'ree to e6ercise all attri2(tes o' o5%ershi$: the ri&ht, a/o%& others, to $ossess, (se a%: e%Ao), a2(se or co%s(/e, a%: :is$ose or alie%ate the thi%& o5%e:.*+ The o5%er is o' co(rse 'ree to 5aive all or so/e o' these ri&hts i% 'avor o' others. B(t i% the case o' the coco%(t 'ar/ers, the) co(l: %ot, i%:ivi:(all) or collectivel), 5aive 5hat have %ot 2ee% a%: co(l: %ot 2e le&all) i/$arte: to the/. Sectio% # o' P.D. !"", Article ..., Sectio% " o' P.D. *1, a%: Article ..., Sectio% " o' P.D. 1+*1 co/$letel) i&%ore the 'act that cocoFlev) '(%:s are $(2lic '(%:s raise: thro(&h ta6atio%. A%: si%ce ta6es co(l: 2e e6acte: o%l) 'or a $(2lic $(r$ose, the) ca%%ot 2e :eclare: $rivate $ro$erties o' i%:ivi:(als altho(&h s(ch i%:ivi:(als 'all 5ithi% a :isti%ct &ro($ o' $erso%s. *" The Co(rt o' co(rse &ra%ts that there is %o har:Fa%:F'ast r(le 'or :eter/i%i%& 5hat co%stit(tes $(2lic $(r$ose. .t is a% elastic co%ce$t that co(l: 2e /a:e to 'it i%to /o:er% sta%:ar:s. P(2lic $(r$ose, 'or i%sta%ce, is %o lo%&er restricte: to tra:itio%al &over%/e%t '(%ctio%s li4e 2(il:i%& roa:s a%: school ho(ses or sa'e&(ar:i%& $(2lic health a%: sa'et). P(2lic $(r$ose has 2ee% co%str(e: as i%cl(:i%& the $ro/otio% o' social A(stice. Th(s, $(2lic '(%:s /a) 2e (se: 'or relocati%& ille&al settlers, 2(il:i%& lo5Fcost ho(si%& 'or the/, a%: 'i%a%ci%& 2oth (r2a% a%: a&raria% re'or/s that 2e%e'it certai% $oor i%:ivi:(als. Still, these (ses relieve volatile i%iD(ities i% societ) a%:, there'ore, i/$act o% $(2lic or:er a%: 5el'are as a 5hole. B(t the assaile: $rovisio%s, 5hich re/ove: the cocoFlev) '(%:s 'ro/ the &e%eral '(%:s o' the &over%/e%t a%: :eclare: the/ $rivate $ro$erties o'

coco%(t 'ar/ers, :o %ot a$$ear to have a color o' social A(stice 'or their $(r$ose. The lev) o% co$ra that 'ar/ers $ro:(ce a$$ears, i% the 'irst $lace, to 2e a 2(si%ess ta6 A(:&i%& 2) its ta6 2ase. The co%ce$t o' 'ar/ersF 2(si%ess/e% is i%co/$ati2le 5ith the i:ea that coco%(t 'ar/ers are victi/s o' social i%A(stice a%: so sho(l: 2e 2e%e'iciaries o' the ta6es raise: 'ro/ their ear%i%&s. .t 5o(l: alto&ether 2e :i''ere%t o' co(rse i' the la5s /e%tio%e: set a$art a $ortio% o' the cocoFlev) '(%: 'or i/$rovi%& the lives o' :estit(te coco%(t 'ar/ o5%ers or 5or4ers 'or their social a/elioratio% to esta2lish a $ro$er &over%/e%t $(r$ose. The s($$ort 'or the $oor is &e%erall) reco&%i8e: as a $(2lic :(t) a%: has lo%& 2ee% a% acce$te: e6ercise o' $olice $o5er i% the $ro/otio% o' the co//o% &oo:.** B(t the :eclaratio%s :o %ot :isti%&(ish 2et5ee% 5ealth) coco%(t 'ar/ers a%: the i/$overishe: o%es. A%: eve% i' the) :i:, the Gover%/e%t ca%%ot A(st e/2ar4 o% a $hila%thro$ic or&) o' i%or:i%ate :oleFo(ts 'or /otives $olitical or other5ise. *! Co%seD(e%tl), s(ch :eclaratio%s are voi: si%ce the) a$$ro$riate $(2lic '(%:s 'or $rivate $(r$ose a%:, there'ore, violate the citi8e%sQ ri&ht to s(2sta%tive :(e $rocess. *1 O% a%other $oi%t, i% stati%& that the cocoFlev) '(%: ?shall %ot 2e co%str(e: or i%ter$rete:, (%:er a%) la5 or re&(latio%, as s$ecial a%:Hor 'i:(ciar) '(%:s, or as $art o' the &e%eral '(%:s o' the %atio%al &over%/e%t,? P.D.s *1 a%: 1+*1 see4 to re/ove s(ch '(%: 'ro/ COA scr(ti%). This is also the 'a(lt o' Presi:e%t Estra:aQs E.O. -1# 5hich :eals 5ith P1 2illio% to 2e &e%erate: o(t o' the sale o' cocoF'(%: acD(ire: assets. Th(sR Sectio% ". 'udit of -und and %u#mission of Report. R The Co//ittee, 2) a /aAorit) vote, shall e%&a&e the services o' a re$(ta2le a(:iti%& 'ir/ to co%:(ct $erio:ic a(:its o' the '(%:. .t shall re%:er a D(arterl) re$ort o% all $erti%e%t tra%sactio%s a%: avail/e%ts o' the '(%: to the O''ice o' the Presi:e%t 5ithi% the 'irst three (-) 5or4i%& :a)s o' the s(ccee:i%& D(arter. (E/$hasis o(rs) E.O. -1- has a s(2sta%tiall) i:e%tical $rovisio% &over%i%& the /a%a&e/e%t a%: :is$ositio% o' the Coco%(t Tr(st >(%: ca$itali8e: 5ith the s(2sta%tial SMC shares o' stoc4 that the cocoF'(%: acD(ire:. Th(sR S$?2-o3 1!. Acco(%ti%&. @ 6 6 6 The >(%: 1>a.. %$ a';-2$; a33'a..y o& a1 o@2$3 a1 3$?$11a&y %y a3 $D2$&3a. a';-2o& ;$1-43a2$; %y 2>$ Co66-22$$. The Co//ittee 6ay also reD(est the Co//issio% o% A(:it to co%:(ct a% a(:it o' the >(%:. (E/$hasis o(rs) B(t, si%ce cocoFlev) '(%:s are ta6es, the $rovisio%s o' P.D.s !"", *1 a%: 1+*1 as 5ell as those o' E.O.s -1# a%: -1- that re/ove s(ch '(%:s a%: the assets acD(ire: thro(&h the/ 'ro/ the A(ris:ictio% o' the COA violate Article .EFD, Sectio% #(1)* o' the 1 1! Co%stit(tio%. Sectio% #(1) vests i% the COA the $o5er a%: a(thorit) to e6a/i%e (ses o' &over%/e%t /o%e) a%: $ro$ert). The cite: P.D.s a%: E.O.s also co%trave%e Sectio% # !, o' P.D. 1 1 (Provi:i%& 'or the Restr(ct(ri%& o' the Co//issio% o% A(:it), 5hich has the 'orce o' a stat(te.

A%: there is %o le&iti/ate reaso% 5h) s(ch '(%:s sho(l: 2e shiel:e: 'ro/ COA revie5 a%: a(:it. The PCA, 5hich i/$le/e%ts the cocoFlev) la5s a%: collects the cocoFlev) '(%:s, is a &over%/e%tFo5%e: a%: co%trolle: cor$oratio% s(2Aect to COA revie5 a%: a(:it. E.O. -1- s(''ers 'ro/ a% a::itio%al i%'ir/it). .ts title, ?Ratio%ali8i%& the Gse o' the Coco%(t 9ev) >(%:s 2) Co%stit(ti%& a S>(%: 'or Assista%ce to Coco%(t >ar/ersQ as a% .rrevoca2le Tr(st >(%: a%: Creati%& a Coco%(t Tr(st >(%: Co//ittee 'or the Ma%a&e/e%t thereo'? te%:s to /islea:. A$$are%tl), it i%te%:s to create a tr(st '(%: o(t o' the cocoFlev) '(%:s to $rovi:e eco%o/ic assista%ce to the coco%(t 'ar/ers a%:, (lti/atel), 2e%e'it the coco%(t i%:(str).!1 B(t o% closer loo4, E.O. -1- stra)s 'ro/ the s$ecial $(r$ose 'or 5hich the la5 raises cocoFlev) '(%:s i% that it $er/its the (se o' cocoFlev) '(%:s 'or i/$rovi%& $ro:(ctivit) i% other 'oo: areas. Th(s: S$?2-o3 (. P(r$ose o' the >(%:. @ The >(%: shall 2e esta2lishe: 'or the $(r$ose o' 'i%a%ci%& $ro&ra/s o' assista%ce 'or the 2e%e'it o' the coco%(t 'ar/ers, the coco%(t i%:(str), a3; o2>$& a4&- &$.a2$; ,&o4&a61 -32$3;$; 2o 6aD-6-5$ @oo; ,&o;'?2-<-2y, ;$<$.o, %'1-3$11 o,,o&2'3-2-$1 -3 2>$ ?o'32&y1-;$, ,&o<-;$ .-<$.->oo; a.2$&3a2-<$1, a3; ,&o6o2$ a32- ,o<$&2y ,&o4&a61. (E/$hasis o(rs) 6666 S$?2-o3 9. Gse a%: Dis$ositio% o' the Tr(st .%co/e. @ The Coco%(t Tr(st >(%: Co//ittee, o% a% a%%(al 2asis, shall :eter/i%e a%: esta2lish the a/o(%t co/$risi%& the Tr(st .%co/e. A'ter s(ch :eter/i%atio%, the Co//ittee shall ear/ar4, allocate a%: :is2(rse the Tr(st .%co/e 'or the 'ollo5i%& $(r$oses, %a/el): 6666 (:) T>-&2y ,$&?$32 (!+E) o@ 2>$ T&'12 I3?o6$ 1>a.. %$ '1$; 2o a11-12 a3; @'3; a4&-?'.2'&a..y &$.a2$; ,&o4&a61 'or the Gover%/e%t, as reaso%a2l) :eter/i%e: 2) the Tr(st >(%: Co//ittee, i/$le/e%te: 'or the $(r$ose o': (i) /a6i/i8i%& 'oo: $ro:(ctivit) i% the a&ric(lt(re areas o' the co(%tr), (ii) e%ha%ci%& the ($li't/e%t a%: 5ellF2ei%& o' the livi%& co%:itio%s o' 'ar/ers a%: a&ric(lt(ral 5or4ers, (iii) :evelo$i%& via2le i%:(stries a%: 2(si%ess o$$ort(%ities i% the co(%tr)si:e, (iv) $rovi:i%& alter%ative /ea%s o' livelihoo: to the :irect :e$e%:e%ts o' a&ric(lt(re 2(si%esses a%: e%ter$rises, a%: (v) $rovi:i%& 'i%a%cial assista%ce a%: s($$ort to coco%(t 'ar/ers i% ti/es o' eco%o/ic har:shi$ :(e to e6tre/el) lo5 $rices o' co$ra a%: other coco%(t $ro:(cts, %at(ral cala/ities, 5orl: /ar4et :islocatio% a%: si/ilar occ(rre%ces, i%cl(:i%& 'i%a%cial s($$ort to the ERAPQs Sa&i$ 0i)(&a% Pro&ra/ esta2lishe: (%:er E6ec(tive Or:er 0o. -1# :ate: 0ove/2er -, #,,,C 6 6 6. (E/$hasis o(rs) Clearl), E.O. -1- a2ove r(%s co(%ter to the co%stit(tio%al $rovisio% 5hich :irects that all /o%e) collecte: o% a%) ta6 levie: 'or a s$ecial $(r$ose shall 2e treate: as a s$ecial '(%: a%: $ai: o(t 'or s(ch $(r$ose o%l). !# Assisti%& other a&ric(lt(rall)Frelate: $ro&ra/s is 5a) o'' the cocoF'(%:Qs o2Aective o' $ro/oti%& the &e%eral i%terests o' the coco%(t i%:(str) a%: its 'ar/ers.

A 'i%al $oi%t, the E.O.s also tra%s&ress P.D. 1++", !- Sectio% 1+(#),!+ the 'irst $art 2) the $revio(sl) /e%tio%e: sectio%s o' E.O. -1- a%: the seco%: $art 2) Sectio% + o' E.O. -1# a%: Sectio%s * a%: ! o' E.O. -1-. E.O. -1- vests the $o5er to a:/i%ister, /a%a&e, a%: s($ervise the o$eratio%s a%: :is2(rse/e%ts o' the Tr(st >(%: it esta2lishe: (ca$itali8e: 5ith SMC shares 2o(&ht o(t o' cocoFlev) '(%:s) i% a Coco%(t Tr(st >(%: Co//ittee. Th(sR S$?2-o3 6. Creatio% o' the Coco%(t Tr(st >(%: Co//ittee. @ A Co66-22$$ -1 >$&$%y ?&$a2$; 2o a;6-3-12$&, 6a3a4$ a3; 1',$&<-1$ 2>$ o,$&a2-o31 o@ 2>$ T&'12 #'3;, chaire: 2) the Presi:e%t 5ith te% (1,) /e/2ers, as 'ollo5s: (a) 'o(r (+) re$rese%tatives 'ro/ the &over%/e%t sector, t5o o' 5ho/ shall 2e the Secretar) o' A&ric(lt(re a%: the Secretar) o' A&raria% Re'or/ 5ho shall act as =ice Chair/e%C (2) 'o(r (+) re$rese%tatives 'ro/ coco%(t 'ar/ersQ or&a%i8atio%s, o%e o' 5ho/ shall co/e 'ro/ a list o' %o/i%ees 'ro/ the Phili$$i%e Coco%(t Pro:(cers >e:eratio% .%c. (?COCO>ED?)C (c) a re$rese%tative 'ro/ the C..>C a%: (:) a re$rese%tative 'ro/ a %o%F&over%/e%t or&a%i8atio% (0GO) i%volve: i% a&ric(lt(ral a%: r(ral :evelo$/e%t. All :ecisio%s o' the Coco%(t Tr(st >(%: Co//ittee shall 2e :eter/i%e: 2) a /aAorit) vote o' all the /e/2ers. The Coco%(t Tr(st >(%: Co//ittee shall $er'or/ the '(%ctio%s a%: :(ties set 'orth i% Sectio% ! hereo', 5ith the s4ill, care, $r(:e%ce a%: :ili&e%ce %ecessar) (%:er the circ(/sta%ces the% $revaili%& that a $r(:e%t /a% acti%& i% li4e ca$acit) 5o(l: e6ercise. The /e/2ers o' the Coco%(t Tr(st >(%: Co//ittee shall 2e a$$oi%te: 2) the Presi:e%t a%: shall hol: o''ice at his $leas(re. The Coco%(t Tr(st >(%: Co//ittee is a(thori8e: to hire a:/i%istrative, tech%ical a%:Hor s($$ort sta'' as /a) 2e reD(ire: to e%a2le it to e''ectivel) $er'or/ its '(%ctio%s a%: res$o%si2ilities. (E/$hasis o(rs) S$?2-o3 ). >(%ctio%s a%: Res$o%si2ilities o' the Co//ittee. @ The Coco%(t Tr(st >(%: Co//ittee shall have the 'ollo5i%& '(%ctio%s a%: res$o%si2ilities: (a) set the i%vest/e%t $olic) o' the Tr(st >(%:C (2) esta2lish $riorities 'or assista%ce &ivi%& $re'ere%ce to s/all coco%(t 'ar/ers a%: 'ar/5or4ers 5hich shall 2e revie5e: $erio:icall) a%: revise: as %ecessar) i% accor:a%ce 5ith cha%&i%& co%:itio%sC (c) receive, $rocess a%: a$$rove $roAect $ro$osals 'or 'i%a%ci%& 2) the Tr(st >(%:C (:) ;$?-;$ o3 2>$ '1$ o@ 2>$ T&'12 #'3;F1 -3?o6$ o& 3$2 $a&3-341 -3?.';-34 @-3a. a?2-o3 o3 a,,.-?a2-o31 @o& a11-12a3?$, 4&a321 a3;Co& .oa31C (e) avail o' $ro'essio%al co(%sel a%: services 2) retai%i%& a% i%vest/e%t a%: 'i%a%cial /a%a&er, i' :esire:C (') @o&6'.a2$ 2>$ &'.$1 a3; &$4'.a2-o31 4o<$&3-34 2>$ a..o?a2-o3, '2-.-5a2-o3 a3; ;-1%'&1$6$32 o@ 2>$ #'3;C a%:

(&) $er'or/ s(ch other acts a%: thi%&s as /a) 2e %ecessar) $ro$er or co%:(cive to attai% the $(r$oses o' the >(%:. (E/$hasis o(rs) Sectio% + o' E.O. -1# :oes esse%tiall) the sa/e thi%&. .t vests the /a%a&e/e%t a%: :is$ositio% o' the assista%ce '(%: &e%erate: 'ro/ the sale o' cocoFlev) '(%:FacD(ire: assets i%to a Co//ittee o' 'ive /e/2ers. Th(s, Sectio% + o' E.O. -1# $rovi:es R Sectio% +. -undin!. R Assets acD(ire: thro(&h the coco%(t lev) '(%:s or 2) e%tities 'i%a%ce: 2) the coco%(t lev) '(%:s i:e%ti'ie: 2) the Presi:e%t 'or a$$ro$riate :is$osal or sale, shall 2e sol: or :is$ose: to &e%erate a /a6i/(/ '(%: o' O0E B.99.O0 PESOS (P1,,,,,,,,,,,,.,,) 5hich shall 2e /a%a&e: 2) a Co//ittee co/$ose: o' a Chair/a% a%: 'o(r (+) /e/2ers to 2e a$$oi%te: 2) the Presi:e%t 5hose ter/ shall 2e coFter/i%(s 5ith the Pro&ra/. 6 6 6 (E/$hasis o(rs) .% e''ect, the a2ove tra%s'ers the $o5er to allocate, (se, a%: :is2(rse cocoF lev) '(%:s that P.D. #-# veste: i% the PCA a%: tra%s'erre: the sa/e, 5itho(t le&islative a(thori8atio% a%: i% violatio% o' P.D. #-#, to the Co//ittees /e%tio%e: a2ove. A% e6ec(tive or:er ca%%ot re$eal a $resi:e%tial :ecree 5hich has the sa/e sta%:i%& as a stat(te e%acte: 2) Co%&ress. GCPB i%vo4es the $ri%ci$le o' se$ara2ilit) to save the assaile: la5s 'ro/ 2ei%& str(c4 :o5%. The &e%eral r(le is that 5here $art o' a stat(te is voi: as re$(&%a%t to the Co%stit(tio%, 5hile a%other $art is vali:, the vali: $ortio%, i' s(sce$ti2le to 2ei%& se$arate: 'ro/ the i%vali:, /a) sta%: a%: 2e e%'orce:. 7he% the $arts o' a stat(te, ho5ever, are so /(t(all) :e$e%:e%t a%: co%%ecte:, as co%:itio%s, co%si:eratio%s, or co/$e%satio%s 'or each other, as to 5arra%t a 2elie' that the le&islat(re i%te%:e: the/ as a 5hole, the %(llit) o' o%e $art 5ill vitiate the rest. .% 5hich case, i' so/e $arts are (%co%stit(tio%al, all the other $rovisio%s 5hich are th(s :e$e%:e%t, co%:itio%al, or co%%ecte: /(st co%seD(e%tl) 'all 5ith the/. !" B(t, &ive% that the $rovisio%s o' E.O.s -1# a%: -1-, 5hich as alrea:) state: i%vali:l) tra%s'erre: $o5ers over the '(%:s to t5o co//ittees that Presi:e%t Estra:a create:, the rest o' their $rovisio%s 2eca/e %o%Fo$eratio%al. .t is evi:e%t that Presi:e%t Estra:a 5o(l: %ot have create: the %e5 '(%:i%& $ro&ra/s i' the) 5ere to 2e /a%a&e: 2) so/e other e%tit). .%:ee:, he /a:e hi/sel' Chair/a% o' the Coco%(t Tr(st >(%: a%: le't to his :iscretio% the a$$oi%t/e%t o' the /e/2ers o' the other co//ittee. 9HERE#ORE, the Co(rt GRA0TS the $etitio% i% G.R. 1+!,-*F-!, PART9I GRA0TS the $etitio% i% G.R. 1+!111, a%: :eclares the 'ollo5i%& =O.D: a) E.O. -1#, 'or 2ei%& re$(&%a%t to Sectio% 1+(#) o' P.D. 1++", a%: Article .EFD, Sectio% #(1) o' the Co%stit(tio%C a%: 2) E.O. -1-, 'or 2ei%& i% co%trave%tio% o' Sectio% 1+(#) o' P.D. 1++", a%: Article .EFD, Sectio% #(1) a%: Article =., Sectio% # (-) o' the Co%stit(tio%. The Co(rt has $revio(sl) :eclare: Sectio% # o' P.D. !"" a%: Article ..., Sectio% " o' P.D.s *1 a%: 1+*1 (%co%stit(tio%al. SO ORDERED. ") Co//issio%er o' .%ter%al Reve%(e vs. Petro% Cor$oratio% **1 SCRA !-"

COMMISSIONER O# INTERNAL RE/ENUE, Petitio%er,

G. R. No. 1*""6* Prese%t:

F vers(s F

CARP.O, 3., Chair$erso%, BR.O0, PEREJ, SERE0O, a%: REIES, 33, Pro/(l&ate:: March #1, #,1#

PETRON CORPORATION, Res$o%:e%t.

D DECISION SERENO, J.:

This is a Petitio% 'or Revie5 o% Certiorari (%:er R(le +" o' the 1 ! R(les o' Civil Proce:(re 'ile: 2) the Co//issio%er o' .%ter%al Reve%(e (C.R) assaili%& the Decisio%K1L :ate: ,- Dece/2er #,,1 o' the Co(rt o' Ta6 A$$eals E% Ba%c (CTA E% Ba%c) i% CTA EB 0o. -11. The assaile: Decisio% reverse: a%: set asi:e the Decisio% K#L :ate: ,+ Ma) #,,! o' the Co(rt o' Ta6 A$$eals Seco%: Divisio% (CTA Seco%: Divisio%) i% CTA Case 0o. *+#-, 5hich or:ere: res$o%:e%t Petro% Cor$oratio% (Petro%) to $a) :e'icie%c) e6cise ta6es 'or the ta6a2le )ears 1 " to 1 1, to&ether 5ith s(rchar&es a%: :eli%D(e%c) i%terests i/$ose: thereo%. Res$o%:e%t Petro% is a cor$oratio% e%&a&e: i% the $ro:(ctio% o' $etrole(/ $ro:(cts a%: is a Boar: o' .%vest/e%t (BO.) R re&istere: e%ter$rise i% accor:a%ce 5ith the $rovisio%s o' the O/%i2(s .%vest/e%ts Co:e o' 1 1! (E.O. ##*) (%:er Certi'icate o' Re&istratio% 0os. 1 F1,-! a%: D "F1-*. K-L The Facts The CTA E% Ba%c i% CTA EB Case 0o. -11 a:o$te: the 'i%:i%&s o' 'act 2) the CTA Seco%: Divisio% i% CTA Case 0o. *+#-. Co%si:eri%& that

there are %o 'act(al iss(es i% this case, 5e li4e5ise a:o$t the 'i%:i%&s o' 'act 2) the CTA E% Ba%c, as 'ollo5s: As c(lle: 'ro/ the recor:s a%: as a&ree: ($o% 2) the $arties i% their ;oi%t Sti$(latio% o' >acts a%: .ss(es, these are the 'acts o' the case. D(ri%& the $erio: coveri%& the ta6a2le )ears 1 " to 1 1, $etitio%er (herei% res$o%:e%t Petro%) ha: 2ee% a% assi&%ee o' several Ta6 Cre:it Certi'icates (TCCs) 'ro/ vario(s BO.Fre&istere: e%tities 'or 5hich $etitio%er (tili8e: i% the $a)/e%t o' its e6cise ta6 lia2ilities 'or the ta6a2le )ears 1 " to 1 1. The tra%s'ers a%: assi&%/e%ts o' the sai: TCCs 5ere a$$rove: 2) the De$art/e%t o' >i%a%ceQs O%e Sto$ Sho$ .%terFA&e%c) Ta6 Cre:it a%: D(t) Dra52ac4 Ce%ter (DO> Ce%ter), co/$ose: o' re$rese%tatives 'ro/ the a$$ro$riate &over%/e%t a&e%cies, %a/el), the De$art/e%t o' >i%a%ce (DO>), the Boar: o' .%vest/e%ts (BO.), the B(rea( o' C(sto/s (BOC) a%: the B(rea( o' .%ter%al Reve%(e (B.R). Ta4i%& &ro(%: o% a BO. letter iss(e: o% 1" Ma) 1 1 5hich states that Sh):ra(lic oil, $e%etrati%& oil, :iesel '(els a%: i%:(strial &ases are classi'ie: as s($$lies a%: co%si:ere: the s($$liers thereo' as D(ali'ie: tra%s'erees o' ta6 cre:it,Q $etitio%er ac4%o5le:&e: a%: acce$te: the tra%s'ers o' the TCCs 'ro/ the vario(s BO.Fre&istere: e%tities. Petitio%erQs acce$ta%ce a%: (se o' the TCCs as $a)/e%t o' its e6cise ta6 lia2ilities 'or the ta6a2le )ears 1 " to 1 1, ha: 2ee% co%ti%(o(sl) a$$rove: 2) the DO> as 5ell as the B.RQs Collectio% Pro&ra/ Divisio% thro(&h its s(rre%:er a%: s(2seD(e%t iss(a%ce 2) the Assista%t Co//issio%er o' the Collectio% Service o' the B.R o' the Ta6 De2it Me/os (TDMs). O% ;a%(ar) -,, #,,#, res$o%:e%t Kherei% $etitio%er C.RL iss(e: the assaile: Assess/e%t a&ai%st $etitio%er 'or :e'icie%c) e6cise ta6es 'or the ta6a2le )ears 1 " to 1 1, i% the total a/o(%t o' !- ,,,-,,-*.-#, i%cl(sive o' s(rchar&es a%: i%terests, 2ase: o% the &ro(%: that the TCCs (tili8e: 2) $etitio%er i% its $a)/e%t o' e6cise ta6es have 2ee% ca%celle: 2) the DO> 'or havi%& 2ee% 'ra(:(le%tl) iss(e: a%: tra%s'erre:, $(rs(a%t to its EECOM Resol(tio% 0o. ,-F,"F . Th(s, $etitio%er, thro(&h letters :ate: A(&(st -1, 1 a%: Se$te/2er 1, 1 , 5as reD(ire: 2) the DO> Ce%ter to s(2/it co$ies o' its sales i%voices a%: :eliver) recei$ts sho5i%& the co%s(//atio% o' the sale tra%sactio% to certai% TCC tra%s'erors. .%stea: o' s(2/itti%& the :oc(/e%ts reD(ire: 2) the res$o%:e%t, o% >e2r(ar) #!, #,,#, $etitio%er 'ile: its $rotest letter to the SAssess/e%tQ o% the &ro(%:s, a/o%& others, that: a. The B.R :i: %ot co/$l) 5ith the reD(ire/e%ts o' Reve%(e Re&(latio%s 1#F i% iss(i%& the Tassess/e%tU letter :ate: ;a%(ar) -,, #,,#, he%ce, the assess/e%t /a:e a&ai%st it is voi:C

2. The assi&%/e%tHtra%s'er o' the TCCs to $etitio%er 2) the TCC hol:ers 5as s(2/itte: to, e6a/i%e: a%: a$$rove: 2) the co%cer%e: &over%/e%t a&e%cies 5hich $rocesse: the assi&%/e%t i% accor:a%ce 5ith la5 a%: reve%(e re&(latio%sC c. There is %o 2asis 'or the i/$ositio% o' the ",O s(rchar&e i% the a/o(%t o' 1" ,+*,, ,,.,, a%: i%terest $e%alties i% the a/o(%t o' #*,,*#,,--".-# a&ai%st itC :. So/e o' the ite/s i%cl(:e: i% the Sassess/e%tQ are alrea:) $e%:i%& liti&atio% a%: are s(2Aect o' the case e%title: SCo//issio%er o' .%ter%al Reve%(e vs. Petro% Cor$oratio%,Q C.A. GR SP 0o. ""--, (CTA Case 0o. "*"!) a%: he%ce, sho(l: %o lo%&er 2e i%cl(:e: i% the Sassess/e%tQC a%: e. The assess/e%t a%: collectio% o' alle&e: e6cise ta6 :e'icie%cies so(&ht to 2e collecte: 2) the B.R a&ai%st $etitio%er thro(&h the ;a%(ar) -,, #,,# letter are alrea:) 2arre: 2) $rescri$tio% (%:er Sectio% #,- o' the 0atio%al .%ter%al Reve%(e Co:e. O% #! March #,,#, res$o%:e%t, thro(&h Assista%t Co//issio%er E:5i% R. A2ella serve: a 7arra%t o' Distrai%t a%:Hor 9ev) o% $etitio%er to e%'orce $a)/e%t o' the !- ,,,-,,-*.-# ta6 :e'icie%cies. Res$o%:e%t alle&e:l) serve: the 7arra%t o' Distrai%t a%:Hor 9ev) a&ai%st $etitio%er 5itho(t 'irst acti%& o% its letterF$rotest. Th(s, co%str(i%& the 7arra%t o' Distrai%t a%:Hor 9ev) as the 'i%al a:verse :ecisio% o' the B.R o% its $rotest o' the assess/e%t, $etitio%er 'ile: the i%sta%t $etitio% 2e'ore this Ho%ora2le Co(rt Kre'erri%& to the CTA Seco%: Divisio%L o% A$ril #, #,,#. O% A$ril -,, #,,#, res$o%:e%t 'ile: his A%s5er, raisi%& the 'ollo5i%& as his S$ecial A''ir/ative De'e%ses: *. .% a $ostFa(:it co%:(cte: 2) the O%eFSto$ .%terFA&e%c) Ta6 Cre:it a%: D(t) Dra52ac4 Ce%ter (Ce%ter) o' the De$art/e%t o' >i%a%ce (DO>), $(rs(a%t to the Ce%terQs E6co/ Resol(tio% 0o. ,-F,"F , it 5as 'o(%: that TCCs iss(e: to Allia%ce Threa: Co., .%c., Allstar S$i%%i%&, .%c., Dia/o%: 3%itti%& Cor$., >i2er Tech%olo&) Cor$., >ilstar Te6tile .%:(strial Cor$., >9B .%ter%atio%al >i2er Cor$., ;a%te6 Phili$$i%es, .%c., ;i2te6 .%:(strial Cor$., Master Colo(r S)ste/ Cor$. a%: S$i%te6 .%ter%atio%al, .%c. 5ere 'ra(:(le%tl) o2tai%e: a%: 5ere 'ra(:(le%tl) tra%s'erre: to $etitio%er. As a res(lt o' sai: 'i%:i%&s, the TCCs a%: the Ta6 De2it Me/os (TDMs) iss(e: 2) the Ce%ter to $etitio%er a&ai%st sai: TCCs 5ere ca%celle: 2) the DO>C !. Prior to the ca%cellatio% o' the a'oresai: TCCs a%: TDMs, $etitio%er ha: (tili8e: the sa/e i% the $a)/e%t o' its e6cise ta6 lia2ilities. 7ith s(ch ca%cellatio%, the TCCs a%: TDMs have %o val(e i% /o%e) or /o%e)Qs 5orth

a%:, there'ore, the e6cise ta6es 'or 5hich the) 5ere (se: as $a)/e%t are %o5 :ee/e: (%$ai:C 1. The ca%cellatio% 2) the DO> o' the a'oresai: TCCs a%: TDMs has the $res(/$tio% o' re&(larit) ($o% 5hich res$o%:e%t /a) vali:l) rel)C . Petitio%er 5as i%'or/e: 2) the DO> o' the $ostFa(:it co%:(cte: o% the TCCs a%: 5as &ive% the o$$ort(%it) to s(2/it :oc(/e%ts sho5i%& that the TCCs 5ere tra%s'erre: to it i% $a)/e%t o' $etrole(/ $ro:(cts alle&e:l) :elivere: 2) it to the TCC tra%s'erors ($o% 5hich the TCC tra%s'ers 5ere a$$rove:, 5ith the a:/o%itio% that 'ail(re to s(2/it the reD(ire: :oc(/e%ts 5o(l: res(lt i% the ca%cellatio% o' the tra%s'ers. Petitio%er 5as also i%'or/e: o' the ca%cellatio% o' the TCCs a%: TDMs a%: the reaso% 'or their ca%cellatio%C 1,. Si%ce $etitio%er is :ee/e: %ot to have $ai: its e6cise ta6 lia2ilities, a $reF assess/e%t %otice is %ot reD(ire: (%:er Sectio% ##1 o' the Ta6 Co:eC 11. The letter :ate: ;a%(ar) #,, #,,# (sho(l: 2e ;a%(ar) -,, #,,#), :e/a%:i%& $a)/e%t o' $etitio%erQs e6cise ta6 lia2ilities e6$licitl) states the 2asis 'or sai: :e/a%:, i.e., the ca%cellatio% o' the TCCs a%: TDMsC 1#. The &over%/e%t is %ever esto$$e: 'ro/ collecti%& le&iti/ate ta6es :(e to the error co//itte: 2) its a&e%ts (=isa)as Ce2( Ter/i%al .%c., vs. Co//issio%er o' .%ter%al Reve%(e, 1- SCRA #"!C Atlas Co%soli:ate: Mi%i%& a%: Develo$/e%t Cor$oratio% vs. Co//issio%er o' .%ter%al Reve%(e, 1,# SCRA #+*). The acce$ta%ce 2) the B(rea( o' .%ter%al Reve%(e o' the TCCs 'ra(:(le%tl) o2tai%e: a%: 'ra(:(le%tl) tra%s'erre: to $etitio%er as $a)/e%t o' its e6cise ta6 lia2ilities t(r%e: o(t to 2e a /ista4e a'ter the $ostFa(:it 5as co%:(cte:. He%ce, sai: $a)/e%ts 5ere voi: a%: the e6cise ta6es /a) 2e vali:l) collecte: 'ro/ $etitio%er. 1-. As 'o(%: i% the $ostFa(:it, $etitio%er a%: the TCC tra%s'erors co//itte: 'ra(: i% the tra%s'er o' the TCCs 5he% the) /a:e a$$ear (sic) that the tra%s'ers 5ere i% co%si:eratio% 'or the :eliver) o' $etrole(/ $ro:(cts 2) $etitio%er to the TCCs tra%s'erors, 'or 5hich reaso% sai: tra%s'ers 5ere a$$rove: 2) the Ce%ter, 5he% i% 'act there 5ere %o s(ch :eliveriesC 1+. Petitio%er (se: the TCCs 'ra(:(le%tl) o2tai%e: a%: 'ra(:(le%tl) tra%s'erre: i% the $a)/e%t o' e6cise ta6es :eclare: i% its e6cise ta6 ret(r%s 5ith i%te%t to eva:e ta6 to the e6te%t o' the val(e re$rese%te: 2) the TCCs, there2) re%:eri%& the ret(r%s 'ra(:(le%tC 1". Si%ce $etitio%er 5il'(ll) 'ile: 'ra(:(le%t ret(r%s, it is lia2le 'or the ",O s(rchar&e a%: #,O a%%(al i%terest i/$ose: (%:er Sectio%s #+1 a%: #+ o' the Ta6 Co:eC

1*. Si%ce $etitio%er 5il'(ll) 'ile: 'ra(:(le%t ret(r%s 5ith i%te%t to eva:e ta6, the $rescri$tive $erio: to collect the ta6 is te% (1,) )ears 'ro/ the :iscover) o' the 'ra(: $(rs(a%t to Sectio% ### o' the Ta6 Co:eC a%: 1!. The case $e%:i%& i% the Co(rt o' A$$eals (CAFG.R. S$. 0o. ""--, KCTA Case 0o. "*"!L), a%: the case at 2ar have :isti%ct ca(ses o' actio%. The 'or/er i%volves the i%vali: tra%s'ers o' the TCCs to $etitio%er o% the theor) that it is %ot a D(ali'ie: tra%s'eree thereo', 5hile the latter i%volves the 'ra(:(le%t $roc(re/e%t o' sai: TCCs a%: the 'ra(:(le%t tra%s'ers thereo' to $etitio%er. Ho5ever, o% 0ove/2er 1#, #,,#, res$o%:e%t 'ile: a Ma%i'estatio% i%'or/i%& this Co(rt that o% Ma) # , #,,#, it ha: re:(ce: the a/o(%t o' :e'icie%c) e6cise ta6es to !#,, #-,##+.!+ as a res(lt o' its veri'icatio% that so/e o' the TCCs 5hich 'or/e: $art o' the ori&i%al TAssess/e%tU 5ere alrea:) i%cl(:e: i% a case $revio(sl) 'ile: 5ith this Co(rt. .% e''ect, the a/o(%t o' :e'icie%c) e6cise ta6es is reco/$(te: as 'ollo5s: T&a31@$&o& Allia%ce Threa: Co. .%c. Allstar S$i%%i%&, .%c. Dia/o%: 3%itti%& Cor$oratio% >i2er Tech%olo&) Cor$. >ilstar Te6tile Cor$. >9B .%ter%atio%al >i2er Cor$. ;a%te6 Phili$$i%es, .%c. ;i2te6 .%:(strial Cor$. Master Colo(r s)ste/ Cor$. S$i%te6 .%ter%atio%al .%c. To2a. Ba1-? TaD S'&?>a&4$ I32$&$12 To2a. 1#,,!1,1 *,,- ,+1 1*,1+!,# -+,#*"," #-.,, 1.", -.#1 #!.#1 -!,#*",-1 11,*-#,*"" + ,!11,+1 1,",*! ,+" ,.,, .,, *. " 1. " -*,!*+,"1 11,-1#,# + ,#*+,!" 1,+,+11,*!.,, .", 1.-" 1.1" #",-,,, 1 1#,*",,+"" -+,# ",*" !#,#+!,,# 1.,, .", ". , #.+, +,,!*!,!1 #,,-1-,1 1 "+,1,#,"" 11", "+,## -.,, .", ,.1* +.** #", -+,* 1#, *!,-+! -+, !!,#" !-,1! ,# ".,, .", !.1+ .*+ 1#,,-*,1 *,,11,, * 1",11#,"+ --,1**,1#.,, .,, !.#+ ".#+ 1",",*,-, !,!"-,1"1 #,,*1,,-1 +-,1* ,!! #.,, .,, ."# #."# --,---,"1*,***,!*1 ++,1##,1* +,1##,+! *.,, .,, !.,* 1.,* 1+, 1#,+, !,+"*,#,+ 1 ,""1,-* +1, #*, 1 1.,, .,, 1.!1 ,.!1 1(6,9"+,() !4+,+)(,4 )(+,9(!,( ("!,9++,"4). !."+ +4.(4 (4.)4 ++

D(ri%& the $e%:e%c) o' the case, 2(t a'ter res$o%:e%t ha: alrea:) s(2/itte: his >or/al O''er o' Evi:e%ce 'or this Co(rtQs co%si:eratio%, he 'ile: a% SGr&e%t Motio% to Reo$e% CaseQ o% A(&(st #+, #,,+ o% the &ro(%: that a::itio%al evi:e%ce co%sisti%& o' :oc(/e%ts $rese%te: to the Ce%ter i% s($$ort o' the TCC tra%s'erorQs clai/s 'or ta6 cre:it as 5ell as :oc(/e%t s($$orti%& the a$$licatio%s 'or a$$roval o' the tra%s'er o' the TCCs to $etitio%er, /(st 2e $rese%te: to $rove the 'ra(:(le%t iss(a%ce a%: tra%s'er o' the s(2Aect TCCs. Res$o%:e%t s(2/its that it is i/$erative o% his $art to :o so co%si:eri%& that, 5itho(t %ecessaril) a:/itti%& that the evi:e%ce $rese%te: i% the case o' Pili$i%as Shell Petrole(/ Cor$oratio% vs. Co//issio%er o' .%ter%al Reve%(e, to $rove 'ra(: is %ot clear a%: co%vi%ci%&, he /a) s(''er the sa/e 'ate that ha: 2e'alle% ($o% therei% res$o%:e%t 5he% this Co(rt hel:, a/o%& others, that Sthere is %o clear a%: co%vi%ci%& evi:e%ce that the Ta6 Cre:it Certi'icates (TCCs) tra%s'erre: to Shell ('or 2revit)) a%: (se: 2) it i% the $a)/e%t o' e6cise ta6es, 5ere 'ra(:(le%tl) iss(e: to the TCC tra%s'erors a%: 5ere 'ra(:(le%tl) tra%s'erre: to Shell.Q A% SO$$ositio% to Gr&e%t Motio% to Reo$e% CaseQ 5as 'ile: 2) $etitio%er o% Se$te/2er -, #,,+ co%te%:i%& that to s(stai% res$o%:e%tQs /otio% 5o(l: Ss/ac4 o' $roce:(ral :isor:er a%: s$a5% a reversio% o' the $rocee:i%&s. 7hile liti&atio% is %ot a &a/e o' tech%icalities, it is a tr(is/ that ever) case /(st 2e $rese%te: i% accor:a%ce 5ith the $rescri2e: $roce:(re to i%s(re a% or:erl) a:/i%istratio% o' A(stice.Q O% Octo2er +, #,,+, this Co(rt resolve: to &ra%t res$o%:e%tQs Motio% a%: allo5e: res$o%:e%t to $rese%t a::itio%al evi:e%ce i% s($$ort o' his ar&(/e%ts, 2(t :e'erre: the resol(tio% o' res$o%:e%tQs ori&i%al >or/al O''er o' Evi:e%ce (%til a'ter the res$o%:e%t has ter/i%ate: his $rese%tatio% o' evi:e%ce. S(2seD(e%t to this Co(rtQs Resol(tio%, res$o%:e%t the% 'ile: o% Octo2er #,, #,,+, a ReD(est 'or the .ss(a%ce o' S(2$oe%a D(ces Tec(/ to the E6ec(tive Director o' the Ce%ter or his :(l) a(thori8e: re$rese%tative, a%: o% Octo2er #1, #,,+, a S(2$oe%a A: Testi'ica%:(/ to Ms. Eli8a2eth R. Cr(8, also o' the Ce%ter. Petitio%er 'ile: a SMotio% 'or Reco%si:eratio% (Re: Resol(tio% :ate: Octo2er +, #,,+)Q o% Octo2er #!, #,,+, 5ith res$o%:e%t 'ili%& his SO$$ositio%Q o% 0ove/2er +, #,,+, a%: $etitio%er s(2seD(e%tl) 'ili%& its SRe$l) to O$$ositio%Q o% Dece/2er #,, #,,+. Petitio%erQs /otio% 5as :e%ie: 2) this Co(rt i% a Resol(tio% :ate: >e2r(ar) #1, #,," 'or lac4 o' /erit. O% March 11, #,,", $etitio%er 'ile: a% SGr&e%t Motio% to Revert Case to the >irst Divisio%Q 5ith res$o%:e%tQs SMa%i'estatio%Q 'ile: o% A$ril *, #,," stati%& that Sthe D(estio% o' 5hich Divisio% o' this Ho%ora2le Co(rt shall hear the i%sta%t case is a% i%ter%al /atter 5hich is 2etter le't to the so(%:

:iscretio% o' this Ho%ora2le Co(rt 5itho(t i%ter'ere%ce 2) a $art) liti&a%tQ. O% A$ril #1, #,,", this Co(rt :e%ie: the Motio% o' $etitio%er 'or lac4 o' /erit. O% 0ove/2er !, #,,", the Co(rt 'i%all) resolve: res$o%:e%tQs S>or/al O''er o' Evi:e%ceQ 'ile: o% Ma) !, #,,+ a%: SS($$le/e%tal >or/al O''er o' Evi:e%ceQ 'ile: o% A(&(st #", #,,". O% 0ove/2er ##, #,,", res$o%:e%t 'ile: a SMotio% 'or Partial Reco%si:eratio%Q o' the Co(rtQs Resol(tio% to a:/it E6hi2its -1 a%: -1FA o% the &ro(%: that he alrea:) s(2/itte: a%: o''ere: certi'ie: tr(e co$ies o' sai: e6hi2its, 5hich the Co(rt &ra%te: i% its Resol(tio% o% ;a%(ar) 1 , #,,*. Ho5ever, o% >e2r(ar) 1,, #,,*, res$o%:e%t 'ile: a SMotio% to A/e%: >or/al O''er o' Evi:e%ceQ $ra)i%& that he 2e allo5e: to a/e%: his 'or/al o''er si%ce so/e e6hi2its altho(&h attache: thereto 5ere i%a:verte%tl) %ot /e%tio%e: i% the >or/al O''er o' Evi:e%ce. Petitio%erQs SO$$ositio%Q 5as 'ile: o% March 1+, #,,*. This Co(rt &ra%te: res$o%:e%tQs /otio% i% the Resol(tio% :ate: A$ril #+, #,,* a%: co%si:eri%& that the $arties alrea:) 'ile: their res$ective Me/ora%:a, this case 5as the% co%si:ere: s(2/itte: 'or :ecisio%. O% Ma) 1*, #,,*, ho5ever, res$o%:e%t 'ile: a% SO/%i2(s Motio%Q $ra)i%& that this Co(rt ta4e A(:icial %otice o' the 'act that the TCCs iss(e: 2) the Ce%ter, i%cl(:i%& the TCCs i% this i%sta%t case, co%tai%e: the sta%:ar: S9ia2ilit) Cla(seQ a%: that the case 2e co%soli:ate: 5ith CTA Case 0o. *1-*, o% the &ro(%: that 2oth cases i%volve the sa/e $arties a%: co//o% D(estio%s o' la5 or 'act. A% SO$$ositio%HCo//e%t o% O/%i2(s Motio%Q 5as 'ile: 2) $etitio%er o% ;(%e #*, #,,*, a%: SRe$l) to O$$ositio%HCo//e%tQ 5as 'ile: 2) res$o%:e%t o% ;(l) 1!, #,,*. .% a Resol(tio% $ro/(l&ate: o% Se$te/2er 1, #,,*, this Co(rt &ra%te: res$o%:e%tQs /otio% o%l) i%so'ar as ta4i%& A(:icial %otice o' the 'act that each o' the :orsal si:e o' the TCCs co%tai%s the s(2Aect Slia2ilit) cla(seQ, 2(t :e%ie: res$o%:e%tQs /otio% to co%soli:ate co%si:eri%& that C.T.A. Case 0o. *1-* 5as alrea:) s(2/itte: 'or :ecisio% o% A$ril #+, #,,*. K+L The Ruling of the Court of Tax AppealsSecond Division (CTA Case o. !"#$% O% ,+ Ma) #,,!, the CTA Seco%: Divisio% $ro/(l&ate: a Decisio% i% CTA Case 0o. *+#-, the :is$ositive $ortio% o' 5hich rea:s: 9HERE#ORE, $re/ises co%si:ere:, the i%sta%t Petitio% 'or Revie5 is here2) DENIED 'or lac4 o' /erit. Accor:i%&l), $etitio%er isORDERED TO PAY the res$o%:e%t the re:(ce: a/o(%t o' SI= HUNDRED MILLION SE/EN HUNDRED SI=TY NINE THOUSAND THREE HUNDRED #I#TY

THREE AND 9"C1++ PESOS (P6++,)69,!"!.9"), re$rese%ti%& $etitio%erQs :e'icie%c) e6cise ta6es 'or the ta6a2le )ears 1 " to 1 1, reco/$(te: as 'ollo5s: T&a31@$&o& Allia%ce Threa: Co. .%c. Allstar S$i%%i%&, .%c. Dia/o%: 3%itti%& Cor$oratio% >i2er Tech%olo&) Cor$. >ilstar Te6tile Cor$. >9B .%ter%atio%al >i2er Cor$. ;a%te6 Phili$$i%es, .%c. ;i2te6 .%:(strial Cor$. Master Colo(r s)ste/ Cor$. S$i%te6 .%ter%atio%al .%c. To2a. Ba1-? TaD 1#,,!1,1 #-.,, -!,#*",-1 ,.,, -*,!*+,"1 !.,, #",-,,, 1 1.,, +,,!*!,!1 -.,, #", -+,* ".,, 1#,,-*,1 #.,, 1",",*,-, #.,, --,---,"*.,, 1+, 1#,+, 1.,, ("!,9++," 4).++ ("E (+E I32$&$12 To2a. S'&?>a&4$ -,,1 ,!, 1-,+"*,, #1,""+,*, ".!" !!.*1 *.+,-1*,-#!. +1,+1+,"! 11,,**,#, ", #.+* . * ,1 1,1+*. +1,,"-, * 1!,,, ,* !" ".# .,+ *,-#",##!. #1,"! ,!1 *,,#,",1" !" -.#" #.,, 1,,1 1, +". +",**1,! *,*#1,"# !" 1.1, ,."" *,+1-,*!-. # ,1+!,!1 *1,"**,,1 !" +.#1 -.,-,,, ,,+1. 1-,1!!,1# #1,###,-* ,, #.!, #.!, -,1!*,"!". 1!,1!",#* -*,""1,1+ ", *.#! -.!! 1,---,-1+. -!,-"1,1, ! ,,11,!# ,, ".11 ".11 -,!#1,1,#. 1*,# 1,*+ -+, - ,1" ,, ,." ,." 6!,4)",1! (*!,!9!,6 6++,)69,! 6.)" )+.(+ "!.9"

TCCs 5as co%si:ere: a co%tract e%tere: i%to 2) res$o%:e%t 5ith the C.R a%: s(2Aect to $ostFa(:it, K!L 5hich 5as co%si:ere: a s(s$e%sive co%:itio% &over%e: 2) Article 1111 o' the Civil Co:e.K1L >(rther, the CTA Seco%: Divisio% 'o(%: that the circ(/sta%ces $ertai%i%& to the iss(a%ce o' the s(2Aect TCCs a%: their tra%s'er to Petro% T2ri/ 5ith 'ra(:.UK L He%ce, the sai: co(rt co%cl(:e: that si%ce the TCCs (se: 2) Petro% 5ere 'o(%: to 2e s$(rio(s, res$o%:e%t 5as :ee/e: to have %ot $ai: its e6cise ta6es a%: o(&ht to 2e lia2le to the C.R i% the a/o(%t o' *,,,!* ,-"-. " $l(s #"O i%terests a%: #,O s(rchar&es. K1,L Petro% 'ile: a Motio% 'or Reco%si:eratio% K11L o' the Decisio% o' the CTA Seco%: Divisio%, 5hich :e%ie: the /otio% i% a Resol(tio% :ate: 1+ A(&(st #,,!.K1#L The co(rt reiterate: its co%cl(sio% that the TCCs (tili8e: 2) Petro% to $a) the latterQs e6cise ta6 lia2ilities :i: %ot res(lt i% $a)/e%t a'ter these TCCs 5ere 'o(%: to 2e 'ra(:(le%t i% the $ostFa(:it 2) the DO>. The CTA Seco%: Divisio% also a''ir/e: its r(li%& that Petro% 5as lia2le 'or a #"O late $a)/e%t s(rchar&e a%: #,O s(rchar&es (%:er Sectio% #+1 K1-Lo' the 0atio%al .%ter%al Reve%(e Co:e (0.RC) o' 1 !.K1+L A&&rieve:, Petro% a$$eale: the Decisio% to the CTA E% Ba%c thro(&h a Petitio% 'or Revie5, 5hich 5as :oc4ete: as CTA EB 0o. -11. .% its Petitio%, Petro% alle&e: that the Seco%: Divisio% erre: i% hol:i%& res$o%:e%t lia2le to $a) the a/o(%t o' *,,,!* ,-"-. " i% :e'icie%c) e6cise ta6es 5ith $e%alties a%: i%terests coveri%& the ta6a2le )ears 1 "F1 1. Petro% $ra)e: that the sai: Decisio% 2e reverse: a%: set asi:e, a%: that C.R 2e e%Aoi%e: 'ro/ collecti%& the co%teste: e6cise ta6 :e'icie%c) assess/e%t. K1"L The CTA E% Ba%c s(//e: ($ i%to o%e iss(e the &ro(%:s relie: ($o% 2) Petro% i% its Petitio% 'or Revie5, as 'ollo5s: 7hether or %ot the Seco%: Divisio% erre: i% hol:i%& $etitio%er lia2le 'or the a/o(%t o' *,,,!* ,-"-. " as :e'icie%c) e6cise ta6es 'or the )ears 1 "F 1 1, i%cl(:i%& s(rchar&es a%: i%terest, $l(s #"O s(rchar&e a%: #,O :eli%D(e%c) i%terest $er a%%(/ 'ro/ ;(%e #!, #,,# (%til the a/o(%t is '(ll) $ai:.K1*L The Ruling of the Court of Tax Appeals &n 'anc (CTA &' Case o. $((% O% ,- Dece/2er #,,1, the CTA E% Ba%c $ro/(l&ate: a Decisio%, 5hich reverse: a%: set asi:e the CTA Seco%: Divisio% o% ,+ Ma) #,,!. The 'or/er a2solve: Petro% 'ro/ a%) :e'icie%c) e6cise ta6 lia2ilit) 'or ta6a2le )ears 1 " to 1 1. .ts r(li%& i% 'avor o' Petro% 5as a%chore: o% this Co(rtQs $ro%o(%ce/e%ts i% Pilipinas %hell Petroleum &orp, v, &ommissioner

.% a::itio%, $etitio%er is ORDERED TO PAY the res$o%:e%t T9ENTY #I/E PERCENT (("E) LATE PAYMENT SURCHARGE AND T9ENTY PERCENT ((+E) DELIGUENCY INTEREST $er a%%(/ o% the a/o(%t o' SI= HUNDRED MILLION SE/EN HUNDRED SI=TY NINE THOUSAND THREE HUNDRED #I#TY THREE H 9"C1++ PESOS (6++,)69,!"!.9"), co/$(te: 'ro/ ;(%e #!, #,,# (%til the a/o(%t is '(ll) $ai:. SO ORDERED.K"L The CTA Seco%: Divisio% hel: Petro% lia2le 'or :e'icie%c) e6cise ta6es o% the &ro(%: that the ca%cellatio% 2) the DO> o' the TCCs $revio(sl) iss(e: to a%: (tili8e: 2) res$o%:e%t to settle its ta6 lia2ilities ha: the e''ect o' %o%$a)/e%t o' the latterQs e6cise ta6es. These ta6es corres$o%:e: to the val(e o' the TCCs Petro% (se: 'or $a)/e%t. The CTA Seco%: Divisio% r(le: that $a)/e%t ca% o%l) occ(r i' the i%str(/e%t (se: to :ischar&e a% o2li&atio% re$rese%ts its state: val(e.K*L .t '(rther r(le: that Petro%Qs acce$ta%ce o' the

of Internal Revenue(%hell),K1!L 5hich 'o(%: that the 'act(al 2ac4&ro(%: a%: le&al iss(es therei% 5ere si/ilar to those i% the $rese%t case. .% resolvi%& the iss(es, the CTA E% Ba%c a:o$te: the /ai% $oi%ts i% %hell, 5hich it D(ote: at le%&th as 2asis 'or :eci:i%& the a$$eal i% 'avor o' Petro%. The &ist o' the /ai% $oi%ts o' %hell cite: 2) the sai: co(rt is as 'ollo5s: a) The iss(e: TCCs are i//e:iatel) vali: a%: e''ective a%: are %ot s(2Aect to a $ostFa(:it as a s(s$e%sive co%:itio%K11L 2) A TCC is s(2Aect o%l) to the 'ollo5i%& co%:itio%s: i) PostFa(:it i% the eve%t o' a co/$(tatio%al :iscre$a%c) ii) A re:(ctio% 'or a%) o(tsta%:i%& acco(%t 5ith the B.R a%:Hor BOC iii) A revali:atio% o' the TCC i' %ot (tili8e: 5ithi% o%e )ear 'ro/ iss(a%ce or :ate o' (tili8atio%K1 L c) A tra%s'eree o' a TCC sho(l: o%l) 2e a BO.Fre&istere: 'ir/ (%:er the ./$le/e%ti%& R(les a%: Re&(latio%s o' E6ec(tive Or:er (E.O.) 0o. ##*. K#,L :) The lia2ilit) cla(se i% the TCCs $rovi:es o%l) 'or the soli:ar) lia2ilit) o' the tra%s'eree relative to its tra%s'er i% the eve%t it is a $art) to the 'ra(:. K#1L e) A tra%s'eree ca% rel) o% the Ce%terQs a$$roval o' the TCCsQ tra%s'er a%: s(2seD(e%t acce$ta%ce as $a)/e%t o' the tra%s'ereeQs e6cise ta6 lia2ilit). K##L ') A TCC ca%%ot 2e ca%celle: 2) the Ce%ter, as it 5as alrea:) ca%celle: a'ter the tra%s'eree ha: a$$lie: it as $a)/e%t 'or the latterQs e6cise ta6 lia2ilities. K#-L The CTA E% Ba%c also 'o(%: that Petro% ha: %o $artici$atio% i% or 4%o5le:&e o' the 'ra(:(le%t iss(a%ce a%: tra%s'er o' the s(2Aect TCCs. .% 'act, the $arties /a:e a Aoi%t sti$(latio% o% this /atter i% CTA Case 0o. *+#2e'ore the CTA Seco%: Divisio%.K#+L .% resolvi%& the iss(e o' 5hether the &over%/e%t is esto$$e: 'ro/ collecti%& ta6es :(e to the 'a(lt o' its a&e%ts, the CTA E% Ba%c D(ote: %hell as 'ollo5s: 7hile 5e a&ree 5ith res$o%:e%t that the State i% the $er'or/a%ce o' &over%/e%t '(%ctio% is %ot esto$$e: 2) the %e&lect or o/issio% o' its a&e%ts, a%: %o5here is this tr(er tha% i% the 'iel: o' ta6atio%, y$2 2>-1 ,&-3?-,.$ ?a33o2 %$ a,,.-$; 2o Bo&A -3I'12-?$ a4a-312 a3 -33o?$32 ,a&2y . K#"L (E/$hasis s($$lie:.) >i%all), the CTA E% Ba%c r(le: that Petro% 5as co%si:ere: a% i%%oce%t tra%s'eree o' the s(2Aect TCCs a%: /a) %ot 2e $reA(:ice: 2) a reF assess/e%t o' e6cise ta6 lia2ilities that res$o%:e%t has alrea:) settle:, 5he% :(e, 5ith the (se o' the TCCs. K#*LPetro% is th(s co%si:ere: to have %ot 'ra(:(le%tl) 'ile: its e6cise ta6 ret(r%s. Co%seD(e%tl), the assess/e%t iss(e: 2) the C.R a&ai%st it ha: %o le&al 2asis. K#!L The :is$ositive $ortio% o' the assaile: ,- Dece/2er #,,1 Decisio% o' the CTA E% Ba%c rea:s:

9HERE#ORE, the i%sta%t $etitio% 'or Revie5 is here2) GRANTED. Accor:i%&l), the Ma) +, #,,! Decisio% a%: A(&(st 1+, #,,! Resol(tio% o' the CTA Seco%: Divisio% i% CTA Case 0o. *+#- e%title:, T Petron &orporation* petitioner vs, &ommissioner of Internal Revenue* respondent U, are here2) RE/ERSED a%: SET ASIDE. .% a::itio%, the :e/a%: a%: collectio% o' the :e'icie%c) e6cise ta6es o' PETRON i% the a/o(%t o' *,,,!* ,-"-. " e6cl(:i%& $e%alties a%: i%terest coveri%& the ta6a2le )ears 1 " to 1 1 are here2) CANCELLEDa%: SET ASIDE, a%: res$o%:e%tF Co//issio%er o' .%ter%al Reve%(e is here2) EN0OINED 'ro/ collecti%& the sai: a/o(%t 'ro/ PETRON. SO ORDERED.K#1L The C.R /ove: 'or the reco%si:eratio% o' the CTA E% Ba%c Decisio%, 2(t the /otio% 5as :e%ie: i% a Resol(tio% :ate: 1+ A(&(st #,,!. K# L The )ssues The C.R a$$eale: the Decisio% o' the CTA E% Ba%c 2) 'ili%& a Petitio% 'or Revie5 o% Certiorari (%:er R(le +" o' the R(les o' Co(rt. K-,L Petitio%er assails the Decisio% 2) raisi%& the 'ollo5i%& iss(es: THE COGRT O> TAE APPEA9S COMM.TTED RE=ERS.B9E ERROR .0 HO9D.0G THAT RESPO0DE0T PETRO0 .S 0OT 9.AB9E >OR .TS EEC.SE TAE 9.AB.9.T.ES >ROM 1 " TO 1 1.

ARGGME0TS . THE CTA E0 BA0C ERRED .0 >.0D.0G THAT RESPO0DE0T PETRO0 7AS 0OT SHO70 TO HA=E PART.C.PATED .0 THE >RAGDG9E0T ACTS. THE >.0D.0G O> THE CTA SECO0D D.=.S.O0 THAT THE TAE CRED.T CERT.>.CATES 7ERE >RAGDG9E0T9I TRA0S>ERRED BI THE TRA0S>ERORFCOMPA0.ES TO RESPO0DE0T .S SGPPORTED BI SGBSTA0T.A9 E=.DE0CE. RESPO0DE0T 7AS .0=O9=ED .0 THE PERPETRAT.O0 O> >RAGD .0 THE TCCSQ TRA0S>ER A0D GT.9.JAT.O0. ..

RESPO0DE0T CA00OT =A9.D9I C9A.M THE R.GHT O> .00OCE0T TRA0S>EREE >OR =A9GE. AS ASS.G0EEHTRA0S>EREE O> THE TCCS, RESPO0DE0T MERE9I SGCCEEDED TO THE R.GHTS O> THE TCC ASS.G0ORSHTRA0S>ERORS. ACCORD.0G9I, .> THE TCCS ASS.G0ED TO RESPO0DE0T 7ERE =O.D, .T D.D 0OT AC<G.RE A0I =A9.D T.T9E O=ER THE TCCS. ... THE GO=ER0ME0T .S 0OT ESTOPPED >ROM CO99ECT.0G TAEES DGE TO THE M.STA3ES O> .TS AGE0TS. .= RESPO0DE0T .S 9.AB9E >OR #"O SGRCHARGE A0D #,O .0TEREST PER A00GM PGRSGA0T TO THE PRO=.S.O0S O> SECT.O0S #+1 A0D #+ O> THE 0.RC. MOREO=ER, S.0CE RESPO0DE0TQS RETGR0S 7ERE >A9SE, THE ASSESSME0T PRESCR.BES .0 TE0 (1,) IEARS >ROM THE D.SCO=ERI O> THE >A9S.TI THEREO> PGRSGA0T TO SECT.O0 ## O> THE SAME CODE.K-1L The Court*s Ruling 7e DENY the C.RQs Petitio% 'or lac4 o' /erit. Article #1 o' E.O. ##* :e'i%es a ta6 cre:it as 'ollo5s: ART.C9E #1. TTa6 cre:itU shall /ea% a%) o' the cre:its a&ai%st ta6es a%:Hor :(ties eD(al to those act(all) $ai: or 5o(l: have 2ee% $ai: to evi:e%ce 5hich a ta6 cre:it certi'icate shall 2e iss(e: 2) the Secretar) o' >i%a%ce or his re$rese%tative, or the Boar:, i' so :ele&ate: 2) the Secretar) o' >i%a%ce. The ta6 cre:it certi'icates i%cl(:i%& those iss(e: 2) the Boar: $(rs(a%t to la5s re$eale: 2) this Co:e 2(t 5itho(t i% a%) 5a) :i/i%ishi%& the sco$e o' %e&otia2ilit) (%:er their la5s o' iss(e are tra%s'era2le (%:er s(ch co%:itio%s as /a) 2e :eter/i%e: 2) the Boar: a'ter co%s(ltatio% 5ith the De$art/e%t o' >i%a%ce. The ta6 cre:it certi'icate shall 2e (se: to $a) ta6es, :(ties, char&es a%: 'ees :(e to the 0atio%al Gover%/e%tC Provi:e:, That the ta6 cre:its iss(e: (%:er this Co:e shall %ot 'or/ $art o' the &ross i%co/e o' the &ra%teeHtra%s'eree 'or i%co/e ta6 $(r$oses (%:er Sectio% # o' the 0atio%al .%ter%al Reve%(e Co:e a%: are there'ore %ot ta6a2le: Provi:e:, '(rther, That s(ch ta6 cre:its shall 2e vali: o%l) 'or a $erio: o' te% (1,) )ears 'ro/ :ate o' iss(a%ce. G%:er Article - (A) o' the O/%i2(s .%vest/e%t Co:e o' 1 1!, K-#L ta6 cre:its are &ra%te: to e%tities re&istere: 5ith the B(rea( o' .%vest/e%t (BO.) a%: are &ive% 'or ta6es a%: :(ties $ai: o% ra5 /aterials (se: 'or the /a%('act(re o' their e6$ort $ro:(cts.

A TCC is :e'i%e: (%:er Sectio% 1 o' Reve%(e Re&(latio% (RR) 0o. "F #,,,, iss(e: 2) the B.R o% 1" A(&(st #,,,, as 'ollo5s: B. Ta6 Cre:it Certi'icate @ /ea%s a certi'icatio%, :(l) iss(e: to the ta6$a)er %a/e: therei%, 2) the Co//issio%er or his :(l) a(thori8e: re$rese%tative, re:(ce: i% a B.R Acco(%ta2le >or/ i% accor:a%ce 5ith the $rescri2e: 'or/alities, ac4%o5le:&i%& that the &ra%teeFta6$a)er %a/e: therei% is le&all) e%title: a ta6 cre:it, the /o%e) val(e o' 5hich /a) 2e (se: i% $a)/e%t or i% satis'actio% o' a%) o' his i%ter%al reve%(e ta6 lia2ilit) (e6ce$t those e6cl(:e:), or /a) 2e co%verte: as a cash re'(%:, or /a) other5ise 2e :is$ose: o' i% the /a%%er a%: i% accor:a%ce 5ith the li/itatio%s, i' a%), as /a) 2e $rescri2e: 2) the $rovisio%s o' these Re&(latio%s. RR "F#,,, $rescri2es the re&(latio%s &over%i%& the /a%%er o' iss(a%ce o' TCCs a%: the co%:itio%s 'or their (se, revali:atio% a%: tra%s'er. G%:er the sai: re&(latio%, a TCC /a) 2e (se: 2) the &ra%tee or its assi&%ee i% the $a)/e%t o' its :irect i%ter%al reve%(e ta6 lia2ilit). K--L .t /a) 2e tra%s'erre: i% 'avor o' a% assi&%ee s(2Aect to the 'ollo5i%& co%:itio%s: 1) the TCC tra%s'er /(st 2e 5ith $rior a$$roval o' the Co//issio%er or the :(l) a(thori8e: re$rese%tativeC #) the tra%s'er o' a TCC sho(l: 2e li/ite: to o%e tra%s'er o%l)C a%: -) the tra%s'eree shall strictl) (se the TCC 'or the $a)/e%t o' the assi&%eeQs :irect i%ter%al reve%(e ta6 lia2ilit) a%: shall %ot 2e co%verti2le to cash.K-+L A TCC is vali: o%l) 'or 1, )ears s(2Aect to the 'ollo5i%& r(les: (1) it /(st 2e (tili8e: 5ithi% 'ive (") )ears 'ro/ the :ate o' iss(eC a%: (#) it /(st 2e revali:ate: therea'ter or 2e other5ise co%si:ere: i%vali:. K-"L The $rocessi%& o' a TCC is e%tr(ste: to a s$eciali8e: a&e%c) calle: the TO%eFSto$FSho$ .%terFA&e%c) Ta6 Cre:it a%: D(t) Dra52ac4 Ce%terU (TCe%terU), create: o% ,! >e2r(ar) 1 # (%:er A:/i%istrative Or:er (A.O.) 0o. ##*. .ts $(r$ose is to e6$e:ite the $rocessi%& a%: a$$roval o' ta6 cre:its a%: :(t) :ra52ac4s.K-*L The Ce%ter is co/$ose: o' a re$rese%tative 'ro/ the DO> as its chair$erso%C a%: the /e/2ers thereo' are re$rese%tatives o' the B(rea( o' .%vest/e%t (BO.), B(rea( o' C(sto/s (BOC) a%: B(rea( o' .%ter%al Reve%(e (B.R), 5ho are tas4e: to $rocess the TCC a%: a$$rove its a$$licatio% as $a)/e%t o' a% assi&%eeQs ta6 lia2ilit). K-!L A TCC /a) 2e assi&%e: thro(&h a Dee: o' Assi&%/e%t, 5hich the assi&%ee s(2/its to the Ce%ter 'or its a$$roval. G$o% a$$roval o' the :ee:, the Ce%ter 5ill iss(e a DO> Ta6 De2it Me/o (DO>FTDM), K-1L 5hich 5ill 2e (tili8e: 2) the assi&%ee to $a) the latterQs ta6 lia2ilities 'or a s$eci'ie: $erio:. G$o% s(rre%:er o' the TCC a%: the DO>FTDM, the corres$o%:i%& A(thorit) to Acce$t Pa)/e%t o' E6cise Ta6es (ATAPET) 5ill 2e iss(e: 2) the B.R Collectio% Pro&ra/ Divisio% a%: 5ill 2e s(2/itte: to the iss(i%& o''ice o' the B.R 'or acce$ta%ce 2) the Assista%t Co//issio%er o' Collectio% Service.

This act o' the B.R si&%i'ies its acce$ta%ce o' the TCC as $a)/e%t o' the assi&%eeQs e6cise ta6es. Th(s, it is a$$are%t that a TCC (%:er&oes a stri%&e%t $rocess o' veri'icatio% 2) vario(s s$eciali8e: &over%/e%t a&e%cies 2e'ore it is acce$te: as $a)/e%t o' a% assi&%eeQs ta6 lia2ilit). .% the case at 2ar, the C.R :is$(tes the r(li%& o' the CTA E% Ba%c, 5hich 'o(%: Petro% to have ha: %o $artici$atio% i% the 'ra(:(le%t $roc(re/e%t a%: tra%s'er o' the TCCs. Petitio%er 2elieves that there 5as s(2sta%tial evi:e%ce to s($$ort its alle&atio% o' a 'ra(:(le%t tra%s'er o' the TCCs to Petro%. K- L The C.R '(rther co%te%:s that res$o%:e%t 5as %ot a D(ali'ie: tra%s'eree o' the TCCs, 2eca(se the latter :i: %ot s($$l) $etrole(/ $ro:(cts to the co/$a%ies that 5ere the assi&%ors o' the s(2Aect TCCs.K+,L The C.R 2ases its co%te%tio%s o% the DO>Qs $ostFa(:it 'i%:i%&s stati%& that, 'or the $erio:s coveri%& 1 " to 1 1, Petro% :i: %ot :eliver '(el a%: other $etrole(/ $ro:(cts to the co/$a%ies (the tra%s'eror co/$a%ies) that ha: assi&%e: the s(2Aect TCCs to res$o%:e%t. Petitio%er '(rther alle&es that the 'i%:i%&s i%:icate that the tra%s'eror co/$a%ies co(l: %ot have ha: s(ch a hi&h vol(/e o' e6$ort sales :eclare: to the Ce%ter a%: /a:e the 2asis 'or the iss(a%ce o' the TCCs assi&%e: to Petro%. K+1L Th(s, the C.R i/$(&%s the CTA E% Ba%c r(li%& that res$o%:e%t 5as a tra%s'eree i% &oo: 'aith a%: 'or val(e o' the s(2Aect TCCs.K+#L 0ot 'i%:i%& /erit i% the C.RQs co%te%tio%, 5e a''ir/ the r(li%& o' the CTA E% Ba%c 'i%:i%& that Petro% is a tra%s'eree i% &oo: 'aith a%: 'or val(e o' the s(2Aect TCCs. >ro/ the recor:s, 5e o2serve that the C.R ha: %o alle&atio% that there 5as a :eviatio% 'ro/ the $rocess 'or the a$$roval o' the TCCs, 5hich Petro% (se: as $a)/e%t to settle its e6cise ta6 lia2ilities 'or the )ears 1 " to 1 1. The C.R D(otes the CTA Seco%: Divisio% a%: (r&es (s to a''ir/ the latterQs Decisio%, 5hich 'o(%: Petro% to have $artici$ate: i% the 'ra(:(le%t iss(a%ce a%: tra%s'er o' the TCCs. Ho5ever, a%) /erit i% the $ositio% o' $etitio%er o% this iss(e is %e&ate: 2) the ;oi%t Sti$(latio% it e%tere: i%to 5ith Petro% i% the $rocee:i%&s 2e'ore the sai: Divisio%. As correctl) %ote: 2) the CTA E% Ba%c, herei% $arties Aoi%tl) sti$(late: 2e'ore the Seco%: Divisio% i% CTA Case 0o. *+#- as 'ollo5s: 1-. That $etitio%er (Petro%) :i: %ot $artici$ate i% the $roc(re/e%t a%: iss(a%ce o' the TCCs, 5hich TCCs 5ere tra%s'erre: to Petro% a%: later (tili8e: 2) Petro% i% $a)/e%t o' its e6cise ta6es.K+-L

This sti$(latio% o' 'act 2) the C.R a/o(%ts to a% a:/issio% a%:, havi%& 2ee% /a:e 2) the $arties i% a sti$(latio% o' 'acts at $retrial, is treate: as a A(:icial a:/issio%. G%:er Sectio% +, R(le 1# o' the R(les o' Co(rt, a A(:icial a:/issio% reD(ires %o $roo'.K++L The Co(rt ca%%ot li&htl) set it asi:e, es$eciall) 5he% the o$$osi%& $art) relies ($o% it a%: accor:i%&l) :is$e%ses 5ith '(rther $roo' o' the 'act alrea:) a:/itte:. The e6ce$tio% $rovi:e: i% R(le 1# , Sectio% + is that a% a:/issio% /a) 2e co%tra:icte: o%l) 2) a sho5i%& that it 5as /a:e thro(&h a $al$a2le /ista4e, or that %o s(ch a:/issio% 5as /a:e. .% this case, ho5ever, e6ce$tio% to the r(le :oes %ot e6ist. 7e a&ree 5ith the $ro%o(%ce/e%t o' the CTA E% Ba%c that Petro% has %ot 2ee% sho5% or $rove% to have $artici$ate: i% the alle&e: 'ra(:(le%t acts i%volve: i% the tra%s'er a%: (tili8atio% o' the s(2Aect TCCs. Petro% ha: the ri&ht to rel) o% the Aoi%t sti$(latio% that a2solve: it 'ro/ a%) $artici$atio% i% the alle&e: 'ra(: $ertai%i%& to the iss(a%ce a%: $roc(re/e%t o' the s(2Aect TCCs. The Aoi%t sti$(latio% /a:e 2) the $arties co%seD(e%tl) o2viate: the o$$ort(%it) o' the C.R to $rese%t evi:e%ce o% this /atter, as %o $roo' is reD(ire: 'or a% a:/issio% /a:e 2) a $art) i% the co(rse o' the $rocee:i%&s. K+"L Th(s, the C.R ca%%ot %o5 2e allo5e: to cha%&e its sta%: a%: re%e&e o% that a:/issio%. Moreover, a close e6a/i%atio% o' the ar&(/e%ts $ro''ere: 2) the C.R i% their Petitio% calls 'or a reeval(atio% o' the s(''icie%c) o' evi:e%ce i% the case. The C.R see4s to $ers(a:e this Co(rt to 2elieve that there is s(2sta%tial evi:e%ce to $rove that Petro% co//itte: a /isre$rese%tatio%, 2eca(se the $etrole(/ $ro:(cts 5ere :elivere: %ot to the tra%s'eror 2(t to other co/$a%ies.K+*L Th(s, the TCCs assi&%e: 2) the tra%s'eror co/$a%ies to Petro% 5ere 'ra(:(le%t. Clearl), a recali2ratio% o' the s(''icie%c) o' evi:e%ce $rese%te: 2) the C.R is %ee:e: 'or a :i''ere%t co%cl(sio% to 2e reache:. The '(%:a/e%tal r(le is that the sco$e o' o(r A(:icial revie5 (%:er R(le +" o' the R(les o' Co(rt is co%'i%e: o%l) to errors o' la5 a%: :oes %ot e6te%: to D(estio%s o' 'act.K+!L .t is 2asic that 5here it is the s(''icie%c) o' evi:e%ce that is 2ei%& D(estio%e:, there is a D(estio% o' 'act. K+1L Evi:e%tl), the C.R :oes %ot $oi%t o(t a%) s$eci'ic $rovisio% o' la5 that 5as 5ro%&l) i%ter$rete: 2) the CTA E% Ba%c i% the latterQs assaile: Decisio%. Petitio%er a%chors it co%te%tio% o% the alle&e: e6iste%ce o' the s(''icie%c) o' evi:e%ce it ha: $ro''ere: to $rove that Petro% 5as i%volve: i% the $er$etratio% o' 'ra(: i% the tra%s'er a%: (tili8atio% o' the s(2Aect TCCs, a% alle&atio% that the CTA E% Ba%c 'aile: to co%si:er. 7e have co%siste%tl) hel: that it is %ot the '(%ctio% o' this Co(rt to a%al)8e or 5ei&h the evi:e%ce all over a&ai%, (%less there is a sho5i%& that the 'i%:i%&s o' the lo5er co(rt are totall) :evoi: o' s($$ort or are &lari%&l) erro%eo(s as to co%stit(te $al$a2le error or &rave a2(se o' :iscretio%.K+ L S(ch a% e6ce$tio% :oes %ot o2tai% i% the circ(/sta%ces o' this case.

The C.R clai/s that Petro% 5as %ot a% i%%oce%t tra%s'eree 'or val(e, 2eca(se the TCCs assi&%e: to res$o%:e%t 5ere voi:. Petitio%er 2ase: its alle&atio%s o% the $ostFa(:it re$ort o' the DO>, 5hich :eclare: that the s(2Aect TCCs 5ere o2tai%e: thro(&h 'ra(: a%:, th(s, ha: %o /o%etar) val(e. K",L The C.R a::s that the TCCs 5ere s(2Aect to a $ostFa(:it 2) the Ce%ter to co/$lete the $a)/e%t o' the e6cise ta6 lia2ilit) to 5hich the) 5ere a$$lie:. Petitio%er '(rther co%te%:s that the 9ia2ilit) Cla(se o' the TCCs /a4es the tra%s'eree or assi&%ee soli:aril) lia2le 5ith the ori&i%al &ra%tee 'or a%) 'ra(:(le%t act $erti%e%t to their $roc(re/e%t a%: tra%s'er. The C.R assails the co%trar) r(li%& o' the CTA E% Ba%c, 5hich co%'i%e: the soli:ar) lia2ilit) o%l) to the ori&i%al &ra%tee o' the TCCs. Th(s, $etitio%er 2elieves that the correct i%ter$retatio% o' the 9ia2ilit) Cla(se i% the TCCs /a4es Petro% a%: the tra%s'eror co/$a%ies or the ori&i%al &ra%tee soli:aril) lia2le 'or a%) 'ra(:(le%t act or violatio% o' the $erti%e%t la5s relati%& to the tra%s'ers o' the TCCs. K"1L 7e are %ot $ers(a:e: 2) the C.RQs $ositio% o% this /atter. The 9ia2ilit) Cla(se o' the TCCs rea:s: Both the TRA0S>EROR a%: the TRA0S>EREE shall 2e Aoi%tl) a%: severall) lia2le 'or a%) 'ra(:(le%t act or violatio% o' the $erti%e%t la5s, r(les a%: re&(latio%s relati%& to the tra%s'er o' this TAE CRED.T CERT.>.CATE. The sco$e o' this soli:ar) lia2ilit), as state: i% the TCCs, 5as clari'ie: 2) this Co(rt i% %hell, as 'ollo5s: The a2ove cla(se to o(r /i%: clearl) $rovi:es o%l) 'or the soli:ar) lia2ilit) relative to the tra%s'er o' the TCCs 'ro/ the ori&i%al &ra%tee to a tra%s'eree. There is %othi%& i% the a2ove cla(se that $rovi:es 'or the lia2ilit) o' the tra%s'eree i% the eve%t that the vali:it) o' the TCC iss(e: to the ori&i%al &ra%tee 2) the Ce%ter is i/$(&%e: or 5here the TCC is :eclare: to have 2ee% 'ra(:(le%tl) $roc(re: 2) the sai: ori&i%al &ra%tee. T>'1, 2>$ 1o.-;a&y .-a%-.-2y, -@ a3y, a,,.-$1 o3.y 2o 2>$ 1a.$ o@ 2>$ TCC 2o 2>$ 2&a31@$&$$ %y 2>$ o&-4-3a. 4&a32$$. A%) 'ra(: or 2reach o' la5 or r(le relati%& to the iss(a%ce o' the TCC 2) the Ce%ter to the tra%s'eror or the ori&i%al &ra%tee is the latterBs res$o%si2ilit) a%: lia2ilit). The tra%s'eree i% &oo: 'aith a%: 'or val(e /a) %ot 2e (%A(stl) $reA(:ice: 2) the 'ra(: co//itte: 2) the clai/a%t or tra%s'eror i% the $roc(re/e%t or iss(a%ce o' the TCC 'ro/ the Ce%ter. .t is %ot o%l) (%A(st 2(t 5ellF%i&h violative o' the co%stit(tio%al ri&ht %ot to 2e :e$rive: o' o%eBs $ro$ert) 5itho(t :(e $rocess o' la5. Th(s, a reF assess/e%t o' ta6 lia2ilities $revio(sl) $ai: thro(&h TCCs 2) a tra%s'eree i% &oo: 'aith a%: 'or val(e is (tterl) co%'iscator), /ore so 5he% s(rchar&es a%: i%terests are li4e5ise assesse:. A tra%s'eree i% &oo: 'aith a%: 'or val(e o' a TCC 5ho has relie: o% the Ce%terBs re$rese%tatio% o' the &e%(i%e%ess a%: vali:it) o' the TCC tra%s'erre: to it /a) %ot 2e le&all) reD(ire: to $a) a&ai% the ta6 covere: 2)

the TCC 5hich has 2ee% 2elate:l) :eclare: %(ll a%: voi:, that is, a'ter the TCCs have 2ee% '(ll) (tili8e: thro(&h settle/e%t o' i%ter%al reve%(e ta6 lia2ilities. Co%versel), 5he% the tra%s'eree is $art) to the 'ra(: as 5he% it :i: %ot o2tai% the TCC 'or val(e or 5as a $art) to or has 4%o5le:&e o' its 'ra(:(le%t iss(a%ce, sai: tra%s'eree is lia2le 'or the ta6es a%: 'or the 'ra(: co//itte: as $rovi:e: 'or 2) la5. K"#L (E/$hasis s($$lie:.) 7e also 'i%: that the $ostFa(:it re$ort, o% 5hich the C.R 2ase: its alle&atio%s, :oes %ot have the e''ect o' a s(s$e%sive co%:itio% that 5o(l: :eter/i%e the vali:it) o' the TCCs. 7e hel: i% Petron v, &IR (Petron),K"-L 5hich is o% all 'o(rs 5ith the i%sta%t case, that TCCs are vali: a%: e''ective 'ro/ their iss(a%ce a%: are %ot s(2Aect to a $ostFa(:it as a s(s$e%sive co%:itio% 'or their vali:it). O(r r(li%& i% Petron 'i%:s &(i:a%ce 'ro/ o(r earlier r(li%& i% %hell, 5hich cate&oricall) states that a TCC is vali: a%: e''ective ($o% its iss(a%ce a%: is %ot s(2Aect to a $ostFa(:it. The i/$licatio% o% the i%sta%t case o' the sai: earlier r(li%& is that Petro% has the ri&ht to rel) o% the vali:it) a%: e''ectivit) o' the TCCs that 5ere assi&%e: to it. .% 'i%all) :eter/i%i%& their e''ectivit) i% the settle/e%t o' res$o%:e%tQs e6cise ta6 lia2ilities, the vali:it) o' those TCCs sho(l: %ot :e$e%: o% the res(lts o' the DO>Qs $ostFa(:it 'i%:i%&s. 7e hel: th(s i% Petron: As correctl) $oi%te: o(t 2) Petro%, ho5ever, the iss(e a2o(t the i//e:iate vali:it) o' TCCs a%: the (se thereo' i% $a)/e%t o' ta6 lia2ilities a%: :(ties are %ot /atters o' 'irst i/$ressio% 'or this Co(rt. Ta4i%& i%to co%si:eratio% the :e'i%itio% a%: %at(re o' ta6 cre:its a%: TCCs, this Co(rtBs Seco%: Divisio% :e'i%itivel) r(le: i% the a'oresai: Pili$i%as Shell case that the $ost a(:it is %ot a s(s$e%sive co%:itio% 'or the vali:it) o' TCCs, th(s: Art. 1111 tells (s that the co%:itio% is s(s$e%sive 5he% the acD(isitio% o' ri&hts or :e/a%:a2ilit) o' the o2li&atio% /(st a5ait the occ(rre%ce o' the co%:itio%. Ho5ever, Art. 1111 :oes %ot a$$l) to the $rese%t case si%ce the $arties :i: 0OT a&ree to a s(s$e%sive co%:itio%. Rather, s$eci'ic la5s, r(les, a%: re&(latio%s &over% the s(2Aect TCCs, %ot the &e%eral $rovisio%s o' the Civil Co:e. A/o%& the a$$lica2le la5s that cover the TCCs are EO ##* or the O/%i2(s .%vest/e%ts Co:e, 9etter o' .%str(ctio%s 0o. 1-"", EO !*", RPF GS Militar) A&ree/e%t, Sec. 1,* (c) o' the Tari'' a%: C(sto/s Co:e, Sec. 1,* o' the 0.RC, B.R Reve%(e Re&(latio%s (RRs), a%: others. 0o5here i% the a'ore/e%tio%e: la5s :oes the $ostFa(:it 2eco/e %ecessar) 'or the vali:it) or e''ectivit) o' the TCCs. 0o5here i% the a'ore/e%tio%e: la5s is it $rovi:e: that a TCC is iss(e: s(2Aect to a s(s$e%sive co%:itio%. 666 666 666 . . . (T)he TCCs are i//e:iatel) vali: a%: e''ective a'ter their iss(a%ce. As a$tl) $oi%te: o(t i% the :isse%t o' ;(stice 9ovell Ba(tista i% CTA EB 0o. *+, this is clear 'ro/ the G(i:eli%es a%: i%str(ctio%s 'o(%: at the 2ac4 o' each TCC, 5hich $rovi:e:

1. This Ta6 Cre:it Certi'icate (TCC) shall e%title the &ra%tee to a$$l) the ta6 cre:it a&ai%st ta6es a%: :(ties (%til the a/o(%t is '(ll) (tili8e:, i% accor:a%ce 5ith the $erti%e%t ta6 a%: c(sto/s la5s, r(les a%: re&(latio%s. 666 666 666 +. To ac4%o5le:&e a$$licatio% o' $a)/e%t, the O%eFSto$FSho$ Ta6 Cre:it Ce%ter shall iss(e the corres$o%:i%& Ta6 De2it Me/o (TDM) to the &ra%tee. The a(thori8e: Reve%(e O''icerHC(sto/s Collector to 5hich $a)/e%tH(tili8atio% 5as /a:e shall acco/$lish the A$$licatio% o' Ta6 Cre:it at the 2ac4 o' the certi'icate a%: a''i6 his si&%at(re o% the col(/% $rovi:e:.? The 'ore&oi%& &(i:eli%es ca%%ot 2e clearer o% the vali:it) a%: e''ectivit) o' the TCC to $a) or settle ta6 lia2ilities o' the &ra%tee or tra%s'eree, as the) :o %ot /a4e the e''ectivit) a%: vali:it) o' the TCC :e$e%:e%t o% the o(tco/e o' a $ostFa(:it. .% 'act, i' 5e are to s(stai% the a$$ellate ta6 co(rt, it 5o(l: 2e a2s(r: to /a4e the e''ectivit) o' the $a)/e%t o' a TCC :e$e%:e%t o% a $ostF a(:it si%ce there is %o co%te/$latio% o' the sit(atio% 5herei% there is %o $ostFa(:it. Does the $a)/e%t /a:e 2eco/e e''ective i' %o $ostFa(:it is co%:(cte:N Or :oes the soFcalle: s(s$e%sive co%:itio% still a$$l) as %o la5, r(le, or re&(latio% s$eci'ies a $erio: 5he% a $ostFa(:it sho(l: or co(l: 2e co%:(cte: 5ith a $rescri$tive $erio:N Clearl), a ta6 $a)/e%t thro(&h a TCC ca%%ot 2e 2oth e''ective 5he% /a:e a%: :e$e%:e%t o% a '(t(re eve%t 'or its e''ectivit). O(r s)ste/ o' la5s a%: $roce:(res a2hors a/2i&(it). Moreover, i' the TCCs are co%si:ere: to 2e s(2Aect to $ostFa(:it as a s(s$e%sive co%:itio%, the ver) $(r$ose o' the TCC 5o(l: 2e :e'eate: as there 5o(l: 2e %o &(ara%tee that the TCC 5o(l: 2e ho%ore: 2) the &over%/e%t as $a)/e%t 'or ta6es. 0o i%vestor 5o(l: ta4e the ris4 o' (tili8i%& TCCs i' these 5ere s(2Aect to a $ostFa(:it that /a) i%vali:ate the/, 5itho(t $rescri2e: &ro(%:s or li/its as to the e6ercise o' sai: $ostFa(:it. The i%esca$a2le co%cl(sio% is that the TCCs are %ot s(2Aect to $ostFa(:it as a s(s$e%sive co%:itio%, a%: are th(s vali: a%: e''ective 'ro/ their iss(a%ce.
K"+L

&over%/e%t is %ot esto$$e: 'ro/ collecti%& 'ro/ Petro% the e6cise ta6 lia2ilities that ha: accr(e: to the latter as a res(lt o' the voi:a%ce o' these TCCs. Petitio%er ar&(es that the State sho(l: %ot 2e $reA(:ice: 2) the %e&lect or o/issio% o' &over%/e%t e/$lo)ees e%tr(ste: 5ith the collectio% o' ta6es.K""L 7e are %ot $ers(a:e: 2) the C.RQs ar&(/e%t. 7e reco&%i8e the 5ellFe%tre%che: $ri%ci$le that esto$$el :oes %ot a$$l) to the &over%/e%t, es$eciall) o% /atters o' ta6atio%. Ta6es are the %atio%Qs li'e2loo: thro(&h 5hich &over%/e%t a&e%cies co%ti%(e to o$erate a%: 5ith 5hich the State :ischar&es its '(%ctio%s 'or the 5el'are o' its co%stit(e%ts. K"*L As a% e6ce$tio%, ho5ever, this &e%eral r(le ca%%ot 2e a$$lie: i' it 5o(l: 5or4 i%A(stice a&ai%st a% i%%oce%t $art). K"!L Petro%, i% this case, 5as %ot $rove% to have ha: a%) $artici$atio% i% or 4%o5le:&e o' the C.RQs alle&atio% o' the 'ra(:(le%t tra%s'er a%: (tili8atio% o' the s(2Aect TCCs. Res$o%:e%tQs stat(s as a tra%s'eree i% &oo: 'aith a%: 'or val(e o' these TCCs has 2ee% esta2lishe: a%: eve% sti$(late: ($o% 2) $etitio%er.K"1L Res$o%:e%t 5as there2) $rovi:e: a/$le $rotectio% 'ro/ the a:verse 'i%:i%&s s(2seD(e%tl) /a:e 2) the Ce%ter. K" L Give% the circ(/sta%ces, the C.RQs i%vocatio% o' the %o%Fa$$lica2ilit) o' esto$$el i% this case is /is$lace:. O% the 'i%al iss(e it raise:, the C.R co%te%:s that a #"O s(rchar&e a%: a #,O i%terest $er a%%(/ /(st 2e i/$ose: ($o% Petro% 'or res$o%:e%tQs e6cise ta6 lia2ilities as /a%:ate: (%:er Sectio%s #+1 a%: #+ o' the 0atio%al .%ter%al Reve%(e Co:e (0.RC). K*,L Petitio%er co%si:ers the ta6 ret(r%s 'ile: 2) res$o%:e%t 'or the )ears 1 " to 1 1 as 'ra(:(le%t o% the 2asis o' the $ostF a(:it 'i%:i%& that the TCCs 5ere voi:. .t ar&(es that the $rescri$tive $erio: 5ithi% 5hich to la5'(ll) assess Petro% 'or its ta6 lia2ilities has %ot $rescri2e: (%:er Sectio% ### (a)K*1L o' the Ta6 Co:e. The C.R e6$lai%s that res$o%:e%tQs assess/e%t o% -, ;a%(ar) #,,# o' res$o%:e%tQs :e'icie%c) e6cise ta6 'or the )ears 1 " to 1 1 5as 5ell 5ithi% the te%F)ear $rescri$tio% $erio:. K*#L .% the li&ht o' the /ai% r(li%& i% this case, 5e a''ir/ the CTA E% Ba%c Decisio% 'i%:i%& Petro% to 2e a% i%%oce%t tra%s'eree 'or val(e o' the s(2Aect TCCs. Co%seD(e%tl), the Ta6 Ret(r%s it 'ile: 'or the )ears 1 " to 1 1 are %ot co%si:ere: 'ra(:(le%t. He%ce, the C.R ha: %o le&al 2asis to assess the e6cise ta6es or a%) $e%alt) s(rchar&e or i%terest thereo%, as res$o%:e%t ha: alrea:) $ai: the a$$ro$riate e6cise ta6es (si%& the s(2Aect TCCs. 9HERE#ORE, the C.RQs Petitio% is DENIED 'or lac4 o' /erit. The CTA E% Ba%c Decisio% :ate: ,- Dece/2er #,,1 i% CTA EB 0o. -11 is here2) A##IRMED in toto. 0o $ro%o(%ce/e%t as to costs. SO ORDERED.

.% a::itio%, %hell a%: Petron reco&%i8e: a% e6ce$tio% that hol:s the tra%s'ereeHassi&%ee lia2le i' $rove% to have 2ee% a $art) to the 'ra(: or to have ha: 4%o5le:&e o' the 'ra(:(le%t iss(a%ce o' the s(2Aect TCCs. As earlier /e%tio%e:, the $arties e%tere: i%to a Aoi%t sti$(latio% o' 'acts stati%& that Petro% :i: %ot $artici$ate i% the $roc(re/e%t or iss(a%ce o' those TCCs. Th(s, 5e a''ir/ the CTA E% Ba%cQs r(li%& that res$o%:e%t 5as a% i%%oce%t tra%s'eree 'or val(e thereo'. O% the iss(e o' esto$$el, $etitio%er co%te%:s that the TCCs, 5hich the Ce%ter ha: co%ti%(all) a$$rove: as $a)/e%t 'or res$o%:e%tQs e6cise ta6 lia2ilities, 5ere s(2seD(e%tl) 'o(%: to 2e voi:. Th(s, the C.R i%sists that the

*)Matali% Coco%(t Co. .%c. vs. M(%ici$al Co(%cil o' Mala2a%& GR 0o. #11-1, 1- A(&(st 1 1* G.R. No. L (*1!* A'4'12 1!, 19*6 MATALIN COCONUT CO., INC., $etitio%erFa$$ellee, vs. THE MUNICIPAL COUNCIL O# MALABANG, LANAO DEL SUR, AMIR M. BALINDONG a3; HAD0I PANGILAMUN MANALOCON, MUNICIPAL MAYOR a3; MUNICIPAL TREASURER O# MALABANG, LANAO DEL SUR, res$o%:e%tsFa$$ella%ts. PURA8AN PLANTATION COMPANY, i%terve%orFa$$ellee. YAP, J.: O% A(&(st #+, 1 **, the M(%ici$al Co(%cil o' Mala2a%&, 9a%ao :el S(r, i%vo4i%& the a(thorit) o' Sectio% # o' Re$(2lic Act 0o. ##*+, other5ise 4%o5% as the 9ocal A(to%o/) Act, e%acte: M(%ici$al Or:i%a%ce 0o. +"F+*, e%title: ?A0 ORD.0A0CE .MPOS.0G A PO9.CE .0SPECT.O0 >EE O> P.-, PER SAC3 O> CASSA=A STARCH PRODGCED A0D SH.PPED OGT O> THE MG0.C.PA9.TI O> MA9ABA0G A0D .MPOS.0G PE0A9T.ES >OR =.O9AT.O0S THEREO>.? The or:i%a%ce /a:e it (%la5'(l 'or a%) $erso%, co/$a%) or &ro($ o' $erso%s ?to shi$ o(t o' the M(%ici$alit) o' Mala2a%&, cassava starch or 'lo(r 5itho(t $a)i%& to the M(%ici$al Treas(rer or his a(thori8e: re$rese%tatives the corres$o%:i%& 'ee 'i6e: 2) (the) or:i%a%ce.? .t i/$ose: a ?$olice i%s$ectio% 'ee? o' P.-, $er sac4 o' cassava starch or 'lo(r, 5hich shall 2e $ai: 2) the shi$$er 2e'ore the sa/e is tra%s$orte: or shi$$e: o(tsi:e the /(%ici$alit). A%) $erso% or co/$a%) or &ro($ o' i%:ivi:(als violati%& the or:i%a%ce ?is lia2le to a 'i%e o' %ot less tha% P1,,.,,, 2(t %ot /ore tha% P1,,,,.,,, a%: to $a) Pl.,, 'or ever) sac4 o' 'lo(r 2ei%& ille&all) shi$$e: o(tsi:e the /(%ici$alit), or to s(''er i/$riso%/e%t o' #, :a)s, or 2oth, i% the :iscretio% o' the co(rt. The vali:it) o' the or:i%a%ce 5as challe%&e: 2) the Matali% Coco%(t, .%c. i% a $etitio% 'or :eclarator) relie' 'ile: 5ith the the% Co(rt o' >irst .%sta%ce o' 9a%ao :el S(r a&ai%st the M(%ici$al Co(%cil, the M(%ici$al Ma)or a%: the M(%ici$al Treas(rer o' Mala2a%&, 9a%ao :el S(r. Alle&i%& a/o%& others that the or:i%a%ce is %ot o%l) ultra vires*2ei%& violative o' Re$(2lic Act 0o. ##*+, 2(t also (%reaso%a2le, o$$ressive a%: co%'iscator), the $etitio%er $ra)e: that the or:i%a%ce 2e :eclare: %(ll a%: voi: a# initio* a%: that the res$o%:e%t M(%ici$al Treas(rer 2e or:ere: to re'(%: the a/o(%ts $ai: 2) $etitio%er (%:er the or:i%a%ce. The $etitio%er also $ra)e: that :(ri%& the $e%:e%c) o' the actio%, a $reli/i%ar) i%A(%ctio% 2e iss(e: e%Aoi%i%& the res$o%:e%ts 'ro/ e%'orci%& the or:i%a%ce. The a$$licatio% 'or $reli/i%ar) i%A(%ctio%, ho5ever, 5as :e%ie: 2) the trial co(rtC i%stea: res$o%:e%t M(%ici$al Treas(rer 5as or:ere: to allo5 $a)/e%t o' the ta6es i/$ose: 2) the or:i%a%ce (%:er $rotest. Clai/i%& that it 5as also a:versel) a''ecte: 2) the or:i%a%ce, P(ra4a% Pla%tatio% Co/$a%) 5as &ra%te: leave to i%terve%e i% the actio%. The

i%terve%or alle&e: that 5hile its cassava 'lo(r 'actor) 5as sit(ate: i% a%other /(%ici$alit), i.e., Bala2a&a%, 9a%ao :el S(r, it ha: to tra%s$ort the cassava starch a%: 'lo(r it $ro:(ce: to the seashore thro(&h the M(%ici$alit) o' Mala2a%& 'or loa:i%& i% coast5ise vesselsC that the e''ect o' the e%act/e%t o' Or:i%a%ce 0o. +"F+*, is that i%terve%or ha: to re'rai% 'ro/ tra%s$orti%& its $ro:(cts thro(&h the M(%ici$alit) o' Mala2a%& i% or:er to shi$ the/ 2) sea to other $laces. A'ter trial, the Co(rt a 2uo re%:ere: a :ecisio% :eclari%& the /(%ici$al or:i%a%ce i% D(estio% %(ll a%: voi:C or:eri%& the res$o%:e%t M(%ici$al Treas(rer to re'(%: to the $etitio%er the $a)/e%ts it /a:e (%:er the sai: or:i%a%ce 'ro/ Se$te/2er #!, 1 ** to Ma) #, 1 *!, a/o(%ti%& to P #",",,.,,, as 5ell as all $a)/e%ts /a:e s(2seD(e%tl) therea'terC a%: e%Aoi%i%& a%: $rohi2iti%& the res$o%:e%ts, their a&e%ts or :e$(ties, 'ro/ collecti%& the ta6 o' P.-, $er 2a& o% the cassava 'lo(r or starch 2elo%&i%& to i%terve%or, P(ra4a% Pla%tatio% Co/$a%), /a%('act(re: or /ille: i% the M(%ici$alit) o' Bala2a&a%, 2(t shi$$e: o(t thro(&h the M(%ici$alit) o' Mala2a%&. A'ter the $ro/(l&atio% o' the :ecisio%, the Trial Co(rt iss(e: a 5rit o' $reli/i%ar) /a%:ator) i%A(%ctio%, ($o% /otio% o' $etitio%er, reD(iri%& the res$o%:e%t M(%ici$al Treas(rer to :e$osit 5ith the Phili$$i%e 0atio%al Ba%4, .li&a% Bra%ch, i% the %a/e o' the M(%ici$alit) o' Mala2a%&, 5hatever a/o(%ts the $etitio%er ha: alrea:) $ai: or shall $a) $(rs(a%t to the or:i%a%ce i% D(estio% ($ to a%: (%til 'i%al ter/i%atio% o' the caseC the :e$osit 5as %ot to 2e 5ith:ra5% 'ro/ the sai: 2a%4 5itho(t a%) or:er 'ro/ the co(rt. O% /otio% 'or reco%si:eratio% 2) res$o%:e%ts, the 5rit 5as s(2seD(e%tl) /o:i'ie: o% ;(l) #,, 1 *!, to reD(ire the :e$osit o%l) o' a/o(%ts $ai: 'ro/ the e''ectivit) o' the 5rit ($ to a%: (%til the 'i%al ter/i%atio% o' the s(it. >ro/ the :ecisio% o' the trial co(rt, the res$o%:e%ts a$$eale: to this Co(rt. A /otio% to :is/iss a$$eal 'ile: 2) $etitio%erFa$$ellee, 5as :e%ie: 2) this co(rt i% its resol(tio% o' Octo2er -1, 1 *!. S(2seD(e%tl), res$o%:e%tsF a$$ella%ts 'ile: a /otio% to :issolve the 5rit o' $reli/i%ar) /a%:ator) i%A(%ctio% iss(e: 2) the trial co(rt o% ;(l) #,, 1 *!. This /otio% 5as also :e%ie: 2) this Co(rt o% ;a%(ar) 1,, 1 *1. O' the assi&%/e%ts o' error raise: 2) the a$$ella%ts i% their Brie', o%l) the 'ollo5i%& %ee: 2e :isc(sse:: (1) that the trial co(rt erre: i% a:A(:icati%& the /o%e) clai/ o' the $etitio%er i% a% actio% 'or :eclarator) relie'C a%: (#) that the trial co(rt erre: i% :eclari%& the /(%ici$al or:i%a%ce i% D(estio% %(ll a%: voi:. The res$o%:e%tsFa$$ella%ts /ai%tai% that it 5as error 'or the trial co(rt, i% a% actio% 'or :eclarator) relie', to or:er the re'(%: to $etitio%erFa$$ellee o' the a/o(%ts $ai: 2) the latter (%:er the /(%ici$al or:i%a%ce i% D(estio%. .t is the co%te%tio% o' res$o%:e%tsFa$$ella%ts that i% a% actio% 'or :eclarator) relie', all the co(rt ca% :o is to co%str(e the vali:it) o' the or:i%a%ce i% D(estio% a%: :eclare the ri&hts o' those a''ecte: there2). The co(rt ca%%ot :eclare the or:i%a%ce ille&al a%: at the sa/e ti/e or:er the re'(%: to $etitio%er o' the a/o(%ts $ai: (%:er the or:i%a%ce, 5itho(t reD(iri%& $etitio%er to 'ile a%

or:i%ar) actio% to clai/ the re'(%: a'ter the :eclarator) relie' A(:&/e%t has 2eco/e 'i%al. Res$o%:e%ts /ai%tai% that (%:er R(le *+ o' the R(les o' Co(rt, the co(rt /a) a:vise the $arties to 'ile the $ro$er $lea:i%&s a%: co%vert the heari%& i%to a% or:i%ar) actio%, 5hich 5as %ot :o%e i% this case. 7e 'i%: %o /erit i% s(ch co%te%tio%. G%:er Sec. * o' R(le *+, the actio% 'or :eclarator) relie' /a) 2e co%verte: i%to a% or:i%ar) actio% a%: the $arties allo5e: to 'ile s(ch $lea:i%&s as /a) 2e %ecessar) or $ro$er, i' 2e'ore the 'i%al ter/i%atio% o' the case ?a 2reach or violatio% o' a%...or:i%a%ce, sho(l: ta4e $lace.? .% the $rese%t case, %o 2reach or violatio% o' the or:i%a%ce occ(rre:. The $etitio%er :eci:e: to $a) ?(%:er $rotest? the 'ees i/$ose: 2) the or:i%a%ce. S(ch $a)/e%t :i: %ot a''ect the caseC the :eclarator) relie' actio% 5as still $ro$er 2eca(se the a$$lica2ilit) o' the or:i%a%ce to '(t(re tra%sactio%s still re/ai%e: to 2e resolve:, altho(&h the /atter co(l: also 2e threshe: o(t i% a% or:i%ar) s(it 'or the recover) o' ta6es $ai: (Shell Co. o' the Phili$$i%es, 9t:. vs. M(%ici$alit) o' Si$ocot, 9F1#*1,, March #,, 1 " ). .% its $etitio% 'or :eclarator) relie', $etitio%erFa$$ellee alle&e: that 2) reaso% o' the e%'orce/e%t o' the /(%ici$al or:i%a%ce 2) res$o%:e%ts it 5as 'orce: to $a) (%:er $rotest the 'ees i/$ose: $(rs(a%t to the sai: or:i%a%ce, a%: accor:i%&l), o%e o' the relie's $ra)e: 'or 2) the $etitio%er 5as that the res$o%:e%ts 2e or:ere: to re'(%: all the a/o(%ts it $ai: to res$o%:e%t M(%ici$al Treas(rer :(ri%& the $e%:e%c) o' the case. The i%cl(sio% o' sai: alle&atio% a%: $ra)er i% the $etitio% 5as %ot o2Aecte: to 2) the res$o%:e%ts i% their a%s5er. D(ri%& the trial, evi:e%ce o' the $a)/e%ts /a:e 2) the $etitio%er 5as i%tro:(ce:. Res$o%:e%ts 5ere th(s '(ll) a5are o' the $etitio%erBs clai/ 'or re'(%: a%: o' 5hat 5o(l: ha$$e% i' the or:i%a%ce 5ere to 2e :eclare: i%vali: 2) the co(rt. Res$o%:e%tsB co%te%tio%, i' s(stai%e:, 5o(l: i% e''ect reD(ire a se$arate s(it 'or the recover) o' the 'ees $ai: 2) $etitio%er (%:er $rotest. M(lti$licit) o' s(its sho(l: %ot 2e allo5e: or e%co(ra&e: a%:, i% the co%te6t o' the $rese%t case, is clearl) (%calle: 'or a%: (%%ecessar). The /ai% iss(e to 2e resolve i% this case 5hether %ot Or:i%a%ce 0o. +"F** e%acte: 2) res$o%:e%t M(%ici$al Co(%cil o' Mala2a%&, 9a%ao :el S(r, is vali:. The res$o%:e%tsFa$$ella%ts co%te%: that the /(%ici$alit) has the $o5er a%: a(thorit) to a$$rove the or:i%a%ce i% D(estio% $(rs(a%t to Sectio% # o' the 9ocal A(to%o/) Act (Re$(2lic Act 0o. ##*+). Si%ce the e%act/e%t o' the 9ocal A(to%o/) Act, a li2eral r(le has 2ee% 'ollo5e: 2) this Co(rt i% co%str(i%& /(%ici$al or:i%a%ces e%acte: $(rs(a%t to the ta6i%& $o5er &ra%te: (%:er Sectio% # o' sai: la5. This Co(rt has co%str(e: the &ra%t o' $o5er to ta6 (%:er the a2oveF/e%tio%e: $rovisio% as s(''icie%tl) $le%ar) to cover ?ever)thi%&, e6ce$ti%& those 5hich are /e%tio%e:? therei%, s(2Aect o%l) to the li/itatio% that the ta6 so levie: is for pu#lic purposes* $ust a%: uniform (0i% Ba) Mi%i%& Co/$a%) vs. M(%ici$alit) o' Ro6as, Provi%ce o' Pala5a%, 1+ SCRA **1C C.0. Ho:&es vs. M(%ici$al Boar:, .loilo Cit), et al., 1 SCRA #1). 7e a&ree 5ith the 'i%:i%& o' the trial co(rt that the a/o(%t collecte: (%:er the or:i%a%ce i% D(estio% $arta4es o' the %at(re o' a ta6, altho(&h

:e%o/i%ate: as ?$olice i%s$ectio% 'ee? si%ce its (%:e%ia2le $(r$ose is to raise reve%(e. Ho5ever, 5e ca%%ot a&ree 5ith the trial co(rtBs 'i%:i%& that the ta6 i/$ose: 2) the or:i%a%ce is a $erce%ta&e ta6 o% sales 5hich is 2e)o%: the sco$e o' the /(%ici$alit)Bs a(thorit) to lev) (%:er Sectio% # o' the 9ocal A(to%o/) Act. G%:er the sai: $rovisio%, /(%ici$alities a%: /(%ici$al :istricts are $rohi2ite: 'ro/ i/$osi%&? a%) $erce%ta&e ta6 on sales or other ta6es i% a%) 'or/ #ased thereon. ? The ta6 i/$ose: (%:er the or:i%a%ce i% D(estio% is %ot a $erce%ta&e ta6 o% sales or a%) other 'or/ o' ta6 2ase: o% sales. .t is a 'i6e: ta6 o' P.-, $er 2a& o' cassava starch or 'lo(r ?shi$$e: o(t? o' the /(%ici$alit). .t is %ot 2ase: o% sales. Ho5ever, the ta6 i/$ose: (%:er the or:i%a%ce ca% 2e stric4e% :o5% o% a%other &ro(%:. Accor:i%& to Sectio% # o' the a2ove/e%tio%e: Act, the ta6 levie: /(st 2e ?'or $(2lic $(r$oses, $ust a%: (%i'or/? (E/$hasis s($$lie:.) As correctl) hel: 2) the trial co(rt, the soFcalle: ?$olice i%s$ectio% 'ee? levie: 2) the or:i%a%ce is ?(%A(st a%: (%reaso%a2le.? Sai: the co(rt a D(o: ... .t has 2ee% $rove% that the o%l) service re%:ere: 2) the M(%ici$alit) o' Mala2a%&, 2) 5a) o' i%s$ectio%, is 'or the $olice/a% to veri') 'ro/ the :river o' the tr(c4s o' the $etitio%er $assi%& 2) at the $olice chec4$oi%t the %(/2er o' 2a&s loa:e: $er tri$ 5hich are to 2e shi$$e: o(t o' the /(%ici$alit) 2ase: o% the tri$ tic4ets 'or the $(r$ose o' co/$(ti%& the total a/o(%t o' ta6 to 2e collect (sic) a%: 'or %o other $(r$ose. The $rete%tio% o' res$o%:e%ts that the $olice, asi:e 'ro/ co(%ti%& the %(/2er o' 2a&s shi$$e: o(t, is also i%s$ecti%& the cassava 'lo(r starch co%tai%e: i% the 2a&s to 'i%: o(t i' the sai: cassava 'lo(r starch is 'it 'or h(/a% co%s(/$tio% co(l: %ot 2e &ive% cre:e%ce 2) the Co(rt 2eca(se, asi:e 'ro/ the 'act that sai: $(r$ose is %ot so state: i% the or:i%a%ce i% D(estio%, the $olice/e% o' sai: /(%ici$alit) are %ot co/$ete%t to :eter/i%e i' the cassava 'lo(r starch are 'it 'or h(/a% co%s(/$tio%. The '(rther $rete%tio% o' res$o%:e%ts that the tr(c4s o' the $etitio%er ha(li%& the 2a&s o' cassava 'lo(r starch 'ro/ the /ill to the 2o:e&a at the 2each o' Mala2a%& are escorte: 2) a $olice/a% 'ro/ the $olice chec4$oi%t to the 2each 'or the $(r$ose o' $rotecti%& the tr(c4 a%: its car&oes 'ro/ /olestatio% 2) (%:esira2le ele/e%ts co(l: %ot also 2e &ive% cre:e%ce 2) the Co(rt 2eca(se it has 2ee% sho5%, 2e)o%: :o(2t, that the $etitio%er has %ot as4e: 'or the sai: $olice $rotectio% 2eca(se there has 2ee% %o occasio% 5here its tr(c4s have 2ee% /oleste:, eve% 'or o%ce, 2) 2a: ele/e%ts 'ro/ the $olice chec4$oi%t to the 2o:e&a at the 2each, it is solel) 'or the $(r$ose o' veri')i%& the correct %(/2er o' 2a&s o' cassava 'lo(r starch loa:e: o% the tr(c4s o' the $etitio%er as state: i% the tri$ tic4ets, 5he% (%loa:e: at its 2o:e&a at the 2each. The i/$ositio%, there'ore, o' a $olice i%s$ectio% 'ee o' P.-, $er 2a&, i/$ose: 2) sai: or:i%a%ce is (%A(st a%: (%reaso%a2le. The Co(rt 'i%all) 'i%:s the i%s$ectio% 'ee o' P,.-, $er 2a&, i/$ose: 2) the or:i%a%ce i% D(estio% to 2e e6cessive a%: co%'iscator). .t has 2ee% sho5% 2) the $etitio%er, Matali% Coco%(t Co/$a%), .%c., that it is /erel) reali8i%& a /ar&i%al avera&e $ro'it o' P,.+,, $er 2a&, o' cassava 'lo(r starch shi$$e: o(t 'ro/ the M(%ici$alit) o' Mala2a%& 2eca(se the avera&e $ro:(ctio% is P1".*,

$er 2a&, i%cl(:i%& tra%s$ortatio% costs, 5hile the $revaili%& /ar4et $rice is P1*.,, $er 2a&. The '(rther i/$ositio%, there'ore, o' the ta6 o' P,.-, $er 2a&, 2) the or:i%a%ce i% D(estio% 5o(l: 'orce the $etitio%er to close or sto$ its cassava 'lo(r starch /illi%& 2(si%ess co%si:eri%& that it is /ai%tai%i%& a 2i& la2or 'orce i% its o$eratio%, i%cl(:i%& a 'orce o' sec(rit) &(ar:s to &(ar: its $ro$erties. The or:i%a%ce, there'ore, has a% a:verse e''ect o% the eco%o/ic &ro5th o' the M(%ici$alit) o' Mala2a%&, i% $artic(lar, a%: o' the %atio%, i% &e%eral, a%: is co%trar) to the eco%o/ic $olic) o' the &over%/e%t. Havi%& 'o(%: the or:i%a%ce i% D(estio% to 2e i%vali:, 5e 'i%: it (%%ecessar) to r(le o% the other errors assi&%e: 2) the a$$ella%ts. 7HERE>ORE, $etitio% is :is/isse:. The :ecisio% o' the co(rt a D(o is here2) a''ir/e:. 0o costs. SO ORDERED.

!) Ba&atsi%& vs. Ra/ire8 !+ SCRA -,* G.R. No. L 416!1 D$?$6%$& 1), 19)6 HON. RAMON D. BAGATSING, a1 Mayo& o@ 2>$ C-2y o@ Ma3-.a: ROMAN G. GARGANTIEL, a1 S$?&$2a&y 2o 2>$ Mayo&: THE MAR8ET ADMINISTRATOR: a3; THE MUNICIPAL BOARD O# MANILA, $etitio%ers, vs. HON. PEDRO A. RAMIREZ, -3 >-1 ?a,a?-2y a1 P&$1-;-34 0';4$ o@ 2>$ Co'&2 o@ #-&12 I312a3?$ o@ Ma3-.a, B&a3?> === a3; 2>$ #EDERATION O# MANILA MAR8ET /ENDORS, INC., res$o%:e%ts. %antia!o -, 'lidio and Restituto R, Villanueva for petitioners, 'ntonio 8, '#ad* 3r, for private respondent, -ederico ', (lay for petitioner for intervention, MARTIN, J.: The chie' D(estio% to 2e :eci:e: i% this case is 5hat la5 shall &over% the $(2licatio% o' a ta6 or:i%a%ce e%acte: 2) the M(%ici$al Boar: o' Ma%ila, the Revise: Cit) Charter (R.A. +, , as a/e%:e:), 5hich reD(ires $(2licatio% o' the or:i%a%ce 2e'ore its e%act/e%t a%: a'ter its a$$roval, or the 9ocal Ta6 Co:e (P.D. 0o. #-1), 5hich o%l) :e/a%:s $(2licatio% a'ter a$$roval. O% ;(%e 1#, 1 !+, the M(%ici$al Boar: o' Ma%ila e%acte: Or:i%a%ce 0o. !"##, ?A0 ORD.0A0CE REGG9AT.0G THE OPERAT.O0 O> PGB9.C MAR3ETS A0D PRESCR.B.0G >EES >OR THE RE0TA9S O> STA99S A0D PRO=.D.0G PE0A9T.ES >OR =.O9AT.O0 THEREO> A0D >OR OTHER PGRPOSES.? The $etitio%er Cit) Ma)or, Ra/o% D. Ba&atsi%&, a$$rove: the or:i%a%ce o% ;(%e 1", 1 !+. O% >e2r(ar) 1!, 1 !", res$o%:e%t >e:eratio% o' Ma%ila Mar4et =e%:ors, .%c. co//e%ce: Civil Case *!1! 2e'ore the Co(rt o' >irst .%sta%ce o' Ma%ila $resi:e: over 2) res$o%:e%t ;(:&e, see4i%& the :eclaratio% o' %(llit) o' Or:i%a%ce 0o. !"## 'or the reaso% that (a) the $(2licatio% reD(ire/e%t (%:er the Revise: Charter o' the Cit) o' Ma%ila has %ot 2ee% co/$lie: 5ithC

(2) the Mar4et Co//ittee 5as %ot &ive% a%) $artici$atio% i% the e%act/e%t o' the or:i%a%ce, as e%visio%e: 2) Re$(2lic Act *,- C (c) Sectio% - (e) o' the A%tiFGra't a%: Corr($t Practices Act has 2ee% violate:C a%: (:) the or:i%a%ce 5o(l: violate Presi:e%tial Decree 0o. ! o' Se$te/2er -,, 1 !# $rescri2i%& the collectio% o' 'ees a%: char&es o% livestoc4 a%: a%i/al $ro:(cts. Resolvi%& the acco/$a%)i%& $ra)er 'or the iss(a%ce o' a 5rit o' $reli/i%ar) i%A(%ctio%, res$o%:e%t ;(:&e iss(e: a% or:er o% March 11, 1 !", :e%)i%& the $lea 'or 'ail(re o' the res$o%:e%t >e:eratio% o' Ma%ila Mar4et =e%:ors, .%c. to e6ha(st the a:/i%istrative re/e:ies o(tli%e: i% the 9ocal Ta6 Co:e. A'ter :(e heari%& o% the /erits, res$o%:e%t ;(:&e re%:ere: its :ecisio% o% A(&(st # , 1 !", :eclari%& the %(llit) o' Or:i%a%ce 0o. !"## o' the Cit) o' Ma%ila o% the $ri/ar) &ro(%: o' %o%Fco/$lia%ce 5ith the reD(ire/e%t o' $(2licatio% (%:er the Revise: Cit) Charter. Res$o%:e%t ;(:&e r(le:: There is, there'ore, %o D(estio% that the or:i%a%ce i% D(estio% 5as %ot $(2lishe: at all i% t5o :ail) %e5s$a$ers o' &e%eral circ(latio% i% the Cit) o' Ma%ila 2e'ore its e%act/e%t. 0either 5as it $(2lishe: i% the sa/e /a%%er a'ter a$$roval, altho(&h it 5as $oste: i% the le&islative hall a%: i% all cit) $(2lic /ar4ets a%: cit) $(2lic li2raries. There 2ei%& %o co/$lia%ce 5ith the /a%:ator) reD(ire/e%t o' $(2licatio% 2e'ore a%: a'ter a$$roval, the or:i%a%ce i% D(estio% is i%vali: a%:, there'ore, %(ll a%: voi:. Petitio%ers /ove: 'or reco%si:eratio% o' the a:verse :ecisio%, stressi%& that (a) o%l) a $ostF$(2licatio% is reD(ire: 2) the 9ocal Ta6 Co:eC a%: (2) $rivate res$o%:e%t 'aile: to e6ha(st all a:/i%istrative re/e:ies 2e'ore i%stit(ti%& a% actio% i% co(rt. O% Se$te/2er #*, 1 !", res$o%:e%t ;(:&e :e%ie: the /otio%. >orth5ith, $etitio%ers 2ro(&ht the /atter to Gs thro(&h the $rese%t $etitio% 'or revie5 o% certiorari. 7e 'i%: the $etitio% i/$resse: 5ith /erits. 1. The ne us o' the $rese%t co%trovers) is the a$$are%t co%'lict 2et5ee% the Revise: Charter o' the Cit) o' Ma%ila a%: the 9ocal Ta6 Co:e o% the /a%%er o' $(2lishi%& a ta6 or:i%a%ce e%acte: 2) the M(%ici$al Boar: o' Ma%ila. >or, 5hile Sectio% 1! o' the Revise: Charter $rovi:es: Each proposed ordinance shall 2e $(2lishe: i% t5o :ail) %e5s$a$ers o' &e%eral circ(latio% i% the cit), a%: shall %ot 2e :isc(sse: or e%acte: 2) the Boar: (%til a'ter the thir: :a) 'ollo5i%& s(ch $(2licatio%. V V V Each approved ordinance V V V shall 2e $(2lishe: i% t5o :ail) %e5s$a$ers o' &e%eral circ(latio% i% the cit), 5ithi% te% :a)s a'ter its a$$rovalC a%: shall ta4e e''ect a%: 2e i% 'orce o% a%: a'ter the t5e%tieth :a) 'ollo5i%& its $(2licatio%, i' %o :ate is 'i6e: i% the or:i%a%ce. Sectio% +- o' the 9ocal Ta6 Co:e :irects: 7ithi% te% :a)s a'ter their approval, certi'ie: tr(e co$ies o' all $rovi%cial, cit), /(%ici$al a%: 2arrioordinances levyin! or imposin! ta es* fees or other char!es shall 2e $(2lishe: 'or three co%sec(tive :a)s i% a %e5s$a$er or $(2licatio% 5i:el) circ(late: 5ithi% the A(ris:ictio% o' the local &over%/e%t, or $oste: i% the local le&islative hall or $re/ises a%: i% t5o other co%s$ic(o(s $laces 5ithi% the territorial A(ris:ictio% o' the local &over%/e%t. .% either case,

co$ies o' all $rovi%cial, cit), /(%ici$al a%: 2arrio or:i%a%ces shall 2e '(r%ishe: the treas(rers o' the res$ective co/$o%e%t a%: /other (%its o' a local &over%/e%t 'or :isse/i%atio%. .% other 5or:s, 5hile the Revise: Charter o' the Cit) o' Ma%ila reD(ires $(2licatio% #efore the e%act/e%t o' the or:i%a%ce and after the a$$roval thereo' i% t5o :ail) %e5s$a$ers o' &e%eral circ(latio% i% the cit), the 9ocal Ta6 Co:e o%l) $rescri2es 'or $(2licatio% a'ter the a$$roval o' ? ordinances levyin! or imposin! ta es* fees or other char!es? either i% a %e5s$a$er or $(2licatio% 5i:el) circ(late: 5ithi% the A(ris:ictio% o' the local &over%/e%t or 2) $osti%& the or:i%a%ce i% the local le&islative hall or $re/ises a%: i% t5o other co%s$ic(o(s $laces 5ithi% the territorial A(ris:ictio% o' the local &over%/e%t. Petitio%ersB co/$lia%ce 5ith the 9ocal Ta6 Co:e rather tha% 5ith the Revise: Charter o' the Cit) s$a5%e: this liti&atio%. There is %o D(estio% that the Revise: Charter o' the Cit) o' Ma%ila is a special act si%ce it relates o%l) to the Cit) o' Ma%ila, 5hereas the 9ocal Ta6 Co:e is a &e%eral la5 2eca(se it a$$lies (%iversall) to all local &over%/e%ts. Blac4sto%e :e'i%es &e%eral la5 as a (%iversal r(le a''ecti%& the e%tire co//(%it) a%: s$ecial la5 as o%e relati%& to $artic(lar $erso%s or thi%&s o' a class. 1 A%: the r(le co//o%l) sai: is that a $rior s$ecial la5 is %ot or:i%aril) re$eale: 2) a s(2seD(e%t &e%eral la5. The 'act that o%e is s$ecial a%: the other &e%eral creates a $res(/$tio% that the s$ecial is to 2e co%si:ere: as re/ai%i%& a% e6ce$tio% o' the &e%eral, o%e as a &e%eral la5 o' the la%:, the other as the la5 o' a $artic(lar case. ( Ho5ever, the r(le rea:il) )iel:s to a sit(atio% 5here the s$ecial stat(te re'ers to a s(2Aect i% &e%eral, 5hich the &e%eral stat(te treats i% particular. The e6actl) is the circ(/sta%ce o2tai%i%& i% the case at 2ar. Sectio% 1! o' the Revise: Charter o' the Cit) o' Ma%ila s$ea4s o' ?or:i%a%ce? i% &e%eral, i.e., irres$ective o' the %at(re a%: sco$e thereo', "hereas, Sectio% +- o' the 9ocal Ta6 Co:e relates to ?or:i%a%ces lev)i%& or i/$osi%& ta6es, 'ees or other char&es? i% $artic(lar. .% re&ar:, there'ore, to or:i%a%ces i% &e%eral, the Revise: Charter o' the Cit) o' Ma%ila is :o(2tless :o/i%a%t, 2(t, that :o/i%a%t 'orce loses its co%ti%(it) 5he% it a$$roaches the real/ o' ?or:i%a%ces lev)i%& or i/$osi%& ta6es, 'ees or other char&es? i% $artic(lar. There, the 9ocal Ta6 Co:e co%trols. Here, as al5a)s, a &e%eral $rovisio% /(st &ive 5a) to a $artic(lar $rovisio%. ! S$ecial $rovisio% &over%s. 4 This is es$eciall) tr(e 5here the la5 co%tai%i%& the $artic(lar $rovisio% 5as e%acte: later tha% the o%e co%tai%i%& the &e%eral $rovisio%. The Cit) Charter o' Ma%ila 5as $ro/(l&ate: o% ;(%e 11, 1 + as a&ai%st the 9ocal Ta6 Co:e 5hich 5as :ecree: o% ;(%e 1, 1 !-. The la5F /a4i%& $o5er ca%%ot 2e sai: to have i%te%:e: the esta2lish/e%t o' co%'licti%& a%: hostile s)ste/s ($o% the sa/e s(2Aect, or to leave i% 'orce $rovisio%s o' a $rior la5 2) 5hich the %e5 5ill o' the le&islati%& $o5er /a) 2e th5arte: a%: overthro5%. S(ch a res(lt 5o(l: re%:er le&islatio% a (seless a%: .:le cere/o%), a%: s(2Aect the la5 to the re$roach o' (%certai%t) a%: (%i%telli&i2ilit). " The case o' &ity of /anila v, 0eotico 6 is o$$osite. .% that case, Teotico s(e: the Cit) o' Ma%ila 'or :a/a&es arisi%& 'ro/ the i%A(ries he s(''ere: 5he% he

'ell i%si:e a% (%covere: a%: (%li&hte: catch2asi% or /a%hole o% P. B(r&os Ave%(e. The Cit) o' Ma%ila :e%ie: lia2ilit) o% the 2asis o' the Cit) Charter (R.A. +, ) e6e/$ti%& the Cit) o' Ma%ila 'ro/ a%) lia2ilit) 'or :a/a&es or i%A(r) to $erso%s or $ro$ert) arisi%& 'ro/ the 'ail(re o' the cit) o''icers to e%'orce the $rovisio%s o' the charter or a%) other la5 or or:i%a%ce, or 'ro/ %e&li&e%ce o' the Cit) Ma)or, M(%ici$al Boar:, or other o''icers 5hile e%'orci%& or atte/$ti%& to e%'orce the $rovisio%s o' the charter or o' a%) other la5 or or:i%a%ce. G$o% the other ha%:, Article #11 o' the Civil Co:e /a4es cities lia2le 'or :a/a&es 'or the :eath o', or i%A(r) s(''ere: 2) a%) $erso%s 2) reaso% o' the :e'ective co%:itio% o' roa:s, streets, 2ri:&es, $(2lic 2(il:i%&s, a%: other $(2lic 5or4s (%:er their co%trol or s($ervisio%. O% revie5, the Co(rt hel: the Civil Co:e co%trolli%&. .t is tr(e that, i%so'ar as its territorial a$$licatio% is co%cer%e:, the Revise: Cit) Charter is a s$ecial la5 a%: the s(2Aect /atter o' the t5o la5s, the Revise: Cit) Charter esta2lishes a !eneral rule o' lia2ilit) arisi%& 'ro/ %e&li&e%ce i% &e%eral, re&ar:less o' the o2Aect thereo', 5hereas the Civil Co:e co%stit(tes a $artic(lar prescription'or lia2ilit) :(e to :e'ective streets i% $artic(lar. .% the sa/e /a%%er, the Revise: Charter o' the Cit) $rescri2es a r(le 'or the $(2licatio% o' ?or:i%a%ce? in !eneral, 5hile the 9ocal Ta6 Co:e esta2lishes a r(le 'or the $(2licatio% o' ?or:i%a%ce lev)i%& or i/$osi%& ta6es 'ees or other char&es in particular. .% 'act, there is %o r(le 5hich $rohi2its the re$eal eve% 2) i/$licatio% o' a s$ecial or s$eci'ic act 2) a &e%eral or 2roa: o%e. ) A charter $rovisio% /a) 2e i/$lie:l) /o:i'ie: or s($erse:e: 2) a later stat(te, a%: 5here a stat(te is co%trolli%&, it /(st 2e rea: i%to the charter %ot5ithsta%:i%& a%) $artic(lar charter $rovisio%. * A s(2seD(e%t &e%eral la5 si/ilarl) a$$lica2le to all cities $revails over a%) co%'licti%& charter $rovisio%, 'or the reaso% that a charter /(st %ot 2e i%co%siste%t 5ith the &e%eral la5s a%: $(2lic $olic) o' the state. 9 A chartere: cit) is %ot a% i%:e$e%:e%t soverei&%t). The state re/ai%s s($re/e i% all /atters %ot $(rel) local. Other5ise state:, a charter /(st )iel: to the co%stit(tio% a%: &e%eral la5s o' the state, it is to have rea: i%to it that &e%eral la5 5hich &over%s the /(%ici$al cor$oratio% a%: 5hich the cor$oratio% ca%%ot set asi:e 2(t to 5hich it /(st )iel:. 7he% a cit) a:o$ts a charter, it i% e''ect a:o$ts as $art o' its charter &e%eral la5 o' s(ch character. 1+ #. The $ri%ci$le o' e6ha(stio% o' a:/i%istrative re/e:ies is stro%&l) asserte: 2) $etitio%ers as havi%& 2ee% violate: 2) $rivate res$o%:e%t i% 2ri%&i%& a :irect s(it i% co(rt. This is 2eca(se Sectio% +! o' the 9ocal Ta6 Co:e $rovi:es that a%) D(estio% or iss(e raise: a&ai%st the le&alit) o' a%) ta6 or:i%a%ce, or $ortio% thereo', shall 2e re'erre: 'or o$i%io% to the cit) 'iscal i% the case o' ta6 or:i%a%ce o' a cit). The o$i%io% o' the cit) 'iscal is a$$eala2le to the Secretar) o' ;(stice, 5hose :ecisio% shall 2e 'i%al a%: e6ec(tor) (%less co%teste: 2e'ore a co/$ete%t co(rt 5ithi% thirt) (-,) :a)s. B(t, the $etitio% 2elo5 $lai%l) sho5s that the co%trovers) 2et5ee% the $arties is :ee$l) roote: i% a $(re D(estio% o' la5: 5hether it is the Revise: Charter o' the Cit) o' Ma%ila or the 9ocal Ta6 Co:e that sho(l: &over% the $(2licatio% o'

the ta6 or:i%a%ce. .% other 5or:s, the :is$(te is shar$l) 'oc(se: o% the a$$lica2ilit) o' the Revise: Cit) Charter or the 9ocal Ta6 Co:e o% the $oi%t at iss(e, a%: %ot o% the le&alit) o' the i/$ositio% o' the ta6. E6ha(stio% o' a:/i%istrative re/e:ies 2e'ore resort to A(:icial 2o:ies is %ot a% a2sol(te r(le. .t a:/its o' e6ce$tio%s. 7here the D(estio% liti&ate: ($o% is $(rel) a le&al o%e, the r(le :oes %ot a$$l). 11 The $ri%ci$le /a) also 2e :isre&ar:e: 5he% it :oes %ot $rovi:e a $lai%, s$ee:) a%: a:eD(ate re/e:). .t /a) a%: sho(l: 2e rela6e: 5he% its a$$licatio% /a) ca(se &reat a%: irre$ara2le :a/a&e. 1( -. .t is /ai%tai%e: 2) $rivate res$o%:e%t that the s(2Aect or:i%a%ce is %ot a ?ta6 or:i%a%ce,? 2eca(se the i/$ositio% o' re%tals, $er/it 'ees, tolls a%: other 'ees is %ot strictl) a ta6i%& $o5er 2(t a reve%(eFraisi%& '(%ctio%, so that the $roce:(re 'or $(2licatio% (%:er the 9ocal Ta6 Co:e 'i%:s %o a$$licatio%. The $rete%se 2ears its o5% /ar4s o' 'allac). Precisel), the raisi%& o' reve%(es is the $ri%ci$al o2Aect o' ta6atio%. G%:er Sectio% ", Article E. o' the 0e5 Co%stit(tio%, ?Each local &over%/e%t (%it shall have the $o5er to create its o5% so(rces o' reve%(e a%: to lev) ta6es, s(2Aect to s(ch $rovisio%s as /a) 2e $rovi:e: 2) la5.? 1! A%: o%e o' those so(rces o' reve%(e is 5hat the 9ocal Ta6 Co:e $oi%ts to i% $artic(lar: ?9ocal &over%/e%ts /a) collect 'ees or re%tals 'or the occ($a%c) or (se o' $(2lic /ar4ets a%: $re/ises V V V.? 14 The) ca% $rovi:e 'or a%: re&(late /ar4et sta%:s, stalls a%: $rivile&es, a%:, also, the sale, lease or occ($a%c) thereo'. The) ca% lice%se, or $er/it the (se o', lease, sell or other5ise :is$ose o' sta%:s, stalls or /ar4eti%& $rivile&es. 1" .t is a 'ee2le atte/$t to ar&(e that the or:i%a%ce violates Presi:e%tial Decree 0o. !, :ate: Se$te/2er -,, 1 !#, i%so'ar as it a''ects livestoc4 a%: a%i/al $ro:(cts, 2eca(se the sai: :ecree $rescri2es the collectio% o' other 'ees a%: char&es thereo% ?5ith the e6ce$tio% o' a%teF/orte/ a%: $ostF/orte/ i%s$ectio% 'ees, as 5ell as the :eliver), stoc4)ar: a%: sla(&hter 'ees as /a) 2e a(thori8e: 2) the Secretar) o' A&ric(lt(re a%: 0at(ral Reso(rces.? 16Clearl), eve% the e6ce$tio% cla(se o' the :ecree itsel' $er/its the collectio% o' the $ro$er 'ees 'or livestoc4. A%: the 9ocal Ta6 Co:e (P.D. #-1, ;(l) 1, 1 !-) a(thori8es i% its Sectio% -1: ?9ocal &over%/e%ts /a) collect 'ees 'or the sla(&hter o' a%i/als a%: the (se o' corrals V V V ? +. The %o%F$artici$atio% o' the Mar4et Co//ittee i% the e%act/e%t o' Or:i%a%ce 0o. !"## s($$ose:l) i% accor:a%ce 5ith Re$(2lic Act 0o. *,- , a% a/e%:/e%t to the Cit) Charter o' Ma%ila, $rovi:i%& that ?the /ar4et co//ittee shall 'or/(late, reco//e%: a%: a:o$t, su#$ect to the ratification of the municipal #oard* and approval of the mayor , $olicies a%: r(les or re&(latio% re$eali%& or /a%e:i%& e6isti%& $rovisio%s o' the /ar4et co:e? :oes %ot i%'ect the or:i%a%ce 5ith a%) &er/ o' i%vali:it). 1) The '(%ctio% o' the co//ittee is $(rel) reco//e%:ator) as the (%:erscore: $hrase s(&&ests, its reco//e%:atio% is 5itho(t 2i%:i%& e''ect o% the M(%ici$al Boar: a%: the Cit) Ma)or. .ts $rior acD(iesce%ce o' a% i%te%:e: or $ro$ose: cit) or:i%a%ce is %ot a co%:itio% si%e D(a %o% 2e'ore the M(%ici$al Boar: co(l: e%act s(ch or:i%a%ce. The %ative $o5er o' the M(%ici$al Boar: to

le&islate re/ai%s (%:ist(r2e: eve% i% the sli&htest :e&ree. .t ca% /ove i% its o5% i%itiative a%: the Mar4et Co//ittee ca%%ot :e/(r. At /ost, the Mar4et Co//ittee /a) serve as a le&islative ai:e o' the M(%ici$al Boar: i% the e%act/e%t o' cit) or:i%a%ces a''ecti%& the cit) /ar4ets or, i% $lai% 5or:s, i% the &atheri%& o' the %ecessar) :ata, st(:ies a%: the collectio% o' co%se%s(s 'or the $ro$osal o' or:i%a%ces re&ar:i%& cit) /ar4ets. M(ch less co(l: it 2e sai: that Re$(2lic Act *,- i%te%:e: to :ele&ate to the Mar4et Co//ittee the a:o$tio% o' re&(lator) /eas(res 'or the o$eratio% a%: a:/i%istratio% o' the cit) /ar4ets. Potestas dele!ata non dele!are potest. ". Private res$o%:e%t 2e5ails that the /ar4et stall 'ees i/$ose: i% the :is$(te: or:i%a%ce are :iverte: to the e6cl(sive $rivate (se o' the Asiatic .%te&rate: Cor$oratio% si%ce the collectio% o' sai: 'ees ha: 2ee% let 2) the Cit) o' Ma%ila to the sai: cor$oratio% i% a ?Ma%a&e/e%t a%: O$erati%& Co%tract.? The ass(/$tio% is o' co(rse sa::le: o% erro%eo(s $re/ise. The 'ees collecte: :o %ot &o :irect to the $rivate co''ers o' the cor$oratio%. Or:i%a%ce 0o. !"## 5as %ot /a:e 'or the cor$oratio% 2(t 'or the $(r$ose o' raisi%& reve%(es 'or the cit). That is the o2Aect it serves. The e%tr(sti%& o' the collectio% o' the 'ees :oes %ot :estro) the $(2lic $(r$ose o' the or:i%a%ce. So lo%& as the $(r$ose is $(2lic, it :oes %ot /atter 5hether the a&e%c) thro(&h 5hich the /o%e) is :is$e%se: is $(2lic or $rivate. The ri&ht to ta6 :e$e%:s ($o% the (lti/ate (se, $(r$ose a%: o2Aect 'or 5hich the '(%: is raise:. .t is %ot :e$e%:e%t o% the %at(re or character o' the $erso% or cor$oratio% 5hose i%ter/e:iate a&e%c) is to 2e (se: i% a$$l)i%& it. The $eo$le /a) 2e ta6e: 'or a $(2lic $(r$ose, altho(&h it 2e (%:er the :irectio% o' a% i%:ivi:(al or $rivate cor$oratio%. 1* 0or ca% the or:i%a%ce 2e stric4e% :o5% as violative o' Sectio% -(e) o' the A%tiFGra't a%: Corr($t Practices Act 2eca(se the i%crease: rates o' /ar4et stall 'ees as levie: 2) the or:i%a%ce 5ill %ecessaril) i%(re to the (%5arra%te: 2e%e'it a%: a:va%ta&e o' the cor$oratio%. 19 7e are co%cer%e: o%l) 5ith the iss(e 5hether the or:i%a%ce i% D(estio% is i%tra vires. O%ce :eter/i%e: i% the a''ir/ative, the /eas(re /a) %ot 2e i%vali:ate: 2eca(se o' co%seD(e%ces that /a) arise 'ro/ its e%'orce/e%t. (+ ACCORD.0G9I, the :ecisio% o' the co(rt 2elo5 is here2) reverse: a%: set asi:e. Or:i%a%ce 0o. !"## o' the Cit) o' Ma%ila, :ate: ;(%e 1", 1 !", is here2) hel: to have 2ee% vali:l) e%acte:. 0o. costs. SO ORDERED.

1) Pe$si Cola Bottli%& Co. vs. Cit) o' B(t(a%, #+ SCRA !1 G.R. No. L ((*14 A'4'12 (*, 196* PEPSI COLA BOTTLING CO. O# THE PHILIPPINES, INC., $lai%ti''F a$$ella%t, vs. CITY O# BUTUAN, MEMBERS O# THE MUNICIPAL BOARD, THE CITY MAYOR a3; THE CITY TREASURER, a.. o@ 2>$ CITY O# BUTUAN, :e'e%:a%tsFa$$ellees.

%a#ido* %a#ido and 'ssociates for plaintiff9appellant, 0he &ity 'ttorney of (utuan &ity for defendants9appellees, CONCEPCION, C.J.: Direct a$$eal to this Co(rt, 'ro/ a :ecisio% o' the Co(rt o' >irst .%sta%ce o' A&(sa%, :is/issi%& $lai%ti''Bs co/$lai%t, 5ith costs. Plai%ti'', Pe$siFCola Bottli%& Co/$a%) o' the Phili$$i%es, is a :o/estic cor$oratio% 5ith o''ices a%: $ri%ci$al $lace o' 2(si%ess i% <(e8o% Cit). The :e'e%:a%ts are the Cit) o' B(t(a%, its Cit) Ma)or, the /e/2ers o' its /(%ici$al 2oar: a%: its Cit) Treas(rer. Plai%ti'' @ see4s to recover the s(/s $ai: 2) it to the Cit) o' B(t(a% @ herei%a'ter re'erre: to as the Cit) a%: collecte: 2) the latter, $(rs(a%t to its M(%ici$al Or:i%a%ce 0o. 11,, as a/e%:e: 2) M(%ici$al Or:i%a%ce 0o. 1##, 2oth series o' 1 *,, 5hich $lai%ti'' assails as %(ll a%: voi:, a%: to $reve%t the e%'orce/e%t thereo'. Both $arties s(2/itte: the case 'or :ecisio% i% the lo5er co(rt ($o% a sti$(latio% to the e''ect: 1. That $lai%ti''Bs 5areho(se i% the Cit) o' B(t(a% serves as a stora&e 'or its $ro:(cts the ?Pe$siFCola? so't :ri%4s 'or sale to c(sto/ers i% the Cit) o' B(t(a% a%: all the /(%ici$alities i% the Provi%ce o' A&(sa%. These ?Pe$siF Cola Cola? so't :ri%4s are 2ottle: i% Ce2( Cit) a%: shi$$e: to the B(t(a% Cit) 5areho(se o' $lai%ti'' 'or :istri2(tio% a%: sale i% the Cit) o' B(t(a% a%: all /(%ici$alities o' A&(sa%. . #. That o% A(&(st 1*, 1 *,, the Cit) o' B(t(a% e%acte: Or:i%a%ce 0o. 11, 5hich 5as s(2seD(e%tl) a/e%:e: 2) Or:i%a%ce 0o. 1## a%: e''ective 0ove/2er #1, 1 *,. A co$) o' Or:i%a%ce 0o. 11,, Series o' 1 *, a%: Or:i%a%ce 0o. 1## are i%cor$orate: herei% as E6hi2its ?A? a%: ?B?, res$ectivel). -. That Or:i%a%ce 0o. 11, as a/e%:e:, i/$oses a ta6 o% a%) $erso%, associatio%, etc., o' P,.1, $er case o' #+ 2ottles o' Pe$siFCola a%: the $lai%ti'' $ai: (%:er $rotest the a/o(%t o' P+, #*.*- 'ro/ A(&(st 1* to Dece/2er -1, 1 *, a%: the a/o(%t o' P ,#",.+, 'ro/ ;a%(ar) 1 to ;(l) -,, 1 *1. +. That the $lai%ti'' 'ile: the 'ore&oi%& co/$lai%t 'or the recover) o' the total a/o(%t o' P1+,1!!.,- $ai: (%:er $rotest a%: those that i' /a) later o% $a) (%til the ter/i%atio% o' this case o% the &ro(%: that Or:i%a%ce 0o. 11, as a/e%:e: o' the Cit) o' B(t(a% is ille&al, that the ta6 i/$ose: is e6cessive a%: that it is (%co%stit(tio%al. ". That $(rs(a%t to Or:i%a%ce 0o. 11, as a/e%:e:, the Cit) Treas(rer o' B(t(a% Cit), has $re$are: a 'or/ to 2e acco/$lishe: 2) the $lai%ti'' 'or the co/$(tatio% o' the ta6. A co$) o' the 'or/ is e%close: here5ith as E6hi2it ?C?. *. That the Pro'it a%: 9oss State/e%t o' the $lai%ti'' 'or the $erio: 'ro/ ;a%(ar) 1, 1 *1 to ;(l) -,, 1 *1 o' its 5areho(se i% B(t(a% Cit) is i%cor$orate: herei% as E6hi2its ?D? to ?DF1? to ?DF"?. .% this Pro'it a%: 9oss State/e%t, the :e'e%:a%ts clai/ that the $lai%ti'' is %ot e%title: to a :e$reciatio% o' P-,,"#.*- 2(t o%l) P1,#,#."" i% 5hich case the $ro'it o' $lai%ti'' 5ill 2e i%crease: 'ro/ P1,#"+.++ to P-,1,+."#. The $lai%ti'' :i''ers

o%l) o% the clai/ o' :e$reciatio% 5hich the co/$a%) clai/s to 2e P-,,"#.*#. This is i% accor:a%ce 5ith the 'i%:i%&s o' the re$rese%tative o' the (%:ersi&%e: Cit) Attor%e) 5ho veri'ie: the recor:s o' the $lai%ti''. !. That 2e&i%%i%& 0ove/2er #1, 1 *,, the $rice o' Pe$siFCola $er case o' #+ 2ottles 5as i%crease: to P1. # 5hich $rice is (%i'or/ thro(&ho(t the Phili$$i%es. Sai: i%crease 5as /a:e :(e to the i%crease i% the $ro:(ctio% cost o' its /a%('act(re. 1. That the $arties reserve the ri&ht to s(2/it ar&(/e%ts o% the co%stit(tio%alit) a%: ille&alit) o' Or:i%a%ce 0o. 11,, as a/e%:e: o' the Cit) o' B(t(a% i% their res$ective /e/ora%:a. 666 666 6 6 64:"ph;4,7<t Sectio% 1 o' sai: Or:i%a%ce 0o. 11,, as a/e%:e:, states 5hat $ro:(cts are ?liD(ors?, 5ithi% the $(rvie5 thereo'. Sectio% # $rovi:es 'or the $a)/e%t 2) ?a%) a&e%t a%:Hor co%si&%ee? o' a%) :ealer ?e%&a&e: i% selli%& liD(ors, i/$orte: or local, i% the Cit),? o' ta6es at s$eci'ie: rates. Sectio% $rescri2es a ta6 o' P,.1, $er case o' #+ 2ottles o' the so't :ri%4s a%: car2o%ate: 2evera&es therei% %a/e:, a%: ?all other so't :ri%4s or car2o%ate: :ri%4s.? Sectio% -FA, :e'i%es the /ea%i%& o' the ter/ ?co%si&%ee or a&e%t? 'or $(r$oses o' the or:i%a%ce. Sectio% + $rovi:es that sai: ta6es ?shall 2e $ai: at the e%: o' ever) cale%:ar /o%th.? P(rs(a%t to Sectio% ", the ta6es ?shall 2e 2ase: a%: co/$(te: 'ro/ the car&o /a%i'est or 2ill o' la:i%& or a%) other recor: sho5i%& the %(/2er o' cases o' so't :ri%4s, liD(ors or all other so't :ri%4s or car2o%ate: :ri%4s receive: 5ithi% the /o%th.? Sectio%s *, ! a%: 1 s$eci') the s(rchar&e to 2e a::e: 'or 'ail(re to $a) the ta6es 5ithi% the $erio: $rescri2e: a%: the $e%alties i/$osa2le 'or ?:eli2erate a%: 5ill'(l re'(sal to $a) the ta6 /e%tio%e: i% Sectio%s # a%: -? or 'or 'ail(re ?to '(r%ish the o''ice o' the Cit) Treas(rer a co$) o' the 2ill o' la:i%& or car&o /a%i'est or recor: o' so't :ri%4s, liD(ors or car2o%ate: :ri%4s 'or sale i% the Cit).? Sectio% /a4es the or:i%a%ce a$$lica2le to so't :ri%4s, liD(ors or car2o%ate: :ri%4s ?receive: o(tsi:e? 2(t ?sol: 5ithi%? the Cit). Sectio% 1, o' the or:i%a%ce $rovi:es that the reve%(e :erive: there'ro/ ?shall 2e allote: as 'ollo5s: +,O 'or Roa:s a%: Bri:&es >(%:C +,O 'or the Ge%eral >(%: a%: #,O 'or the School >(%:.? Plai%ti'' /ai%tai%s that the :is$(te: or:i%a%ce is %(ll a%: voi: 2eca(se: (1) it $arta4es o' the %at(re o' a% i/$ort ta6C (#) it a/o(%ts to :o(2le ta6atio%C (-) it is e6cessive, o$$ressive a%: co%'iscator)C (+) it is hi&hl) (%A(st a%: :iscri/i%ator)C a%: (") sectio% # o' Re$(2lic Act 0o. ##*+, ($o% the a(thorit) o' 5hich it 5as e%acte:, is a% (%co%stit(tio%al :ele&atio% o' le&islative $o5ers. The seco%: a%: last o2Aectio%s are /a%i'estl) :evoi: o' /erit. .%:ee: @ i%:e$e%:e%tl) o' 5hether or %ot the ta6 i% D(estio%, 5he% co%si:ere: i% relatio% to the sales ta6 $rescri2e: 2) Acts o' Co%&ress, a/o(%ts to :o(2le ta6atio%, o% 5hich 5e %ee: %ot a%: :o %ot e6$ress a%) o$i%io% F :o(2le ta6atio%, i% &e%eral, is %ot 'or2i::e% 2) o(r '(%:a/e%tal la5. 7e have %ot a:o$te:, as $art thereo', the i%A(%ctio% a&ai%st :o(2le ta6atio% 'o(%: i% the Co%stit(tio% o' the G%ite: States a%: o' so/e States o' the G%io%. 1 The%,

a&ai%, the &e%eral $ri%ci$le a&ai%st :ele&atio% o' le&islative $o5ers, i% co%seD(e%ce o' the theor) o' se$aratio% o' $o5ers# is s(2Aect to o%e 5ellF esta2lishe: e6ce$tio%, %a/el): le&islative $o5ers /a) 2e :ele&ate: to local &over%/e%ts @ to 5hich sai: theor) :oes %ot a$$l) - @ i% res$ect o' /atters o' local co%cer%. The thir: o2Aectio% is, li4e5ise, (%te%a2le. The ta6 o' =P>,4> per case of 2? #ottles*= o' so't :ri%4s or car2o%ate: :ri%4s @ i% the $ro:(ctio% a%: sale o' 5hich $lai%ti'' is e%&a&e: @ or less tha% P,.,,+# $er 2ottle, is /a%i'estl) too s/all to 2e e6cessive, o$$ressive, or co%'iscator). The 'irst a%: the 'o(rth o2Aectio%s /erit, ho5ever, serio(s co%si:eratio%. .% this co%%ectio%, it is %ote5orth) that the ta6 $rescri2e: i% sectio% - o' Or:i%a%ce 0o. 11,, as ori&i%all) a$$rove:, 5as i/$ose: ($o% :ealers ?e%&a&e: i% selli%&? so't :ri%4s or car2o%ate: :ri%4s. Th(s, it 5o(l: see/ that the i%te%t 5as the% to lev) a ta6 ($o% the sale o' sai: /ercha%:ise. As a/e%:e: 2) Or:i%a%ce 0o. 1##, the ta6 is, ho5ever, i/$ose: o%l) ($o% ?a%) a&e%t a%:Hor co%si&%ee o' a%) $erso%, associatio%, $art%ershi$, co/$a%) or cor$oratio% e%&a&e: i% selli%& ... so't :ri%4s or car2o%ate: :ri%4s.? A%:, $(rs(a%t to sectio% -FA, 5hich 5as i%serte: 2) sai: Or:i%a%ce 0o. 1##: ... @ De'i%itio% o' the Ter/ Co%si&%ee or A&e%t. @ >or $(r$oses o' this Or:i%a%ce, a co%si&%ee o' a&e%t shall /ea% a%) $erso%, associatio%, $art%ershi$, co/$a%) or cor$oratio% 5ho acts i% the $lace o' a%other 2) a(thorit) 'ro/ hi/ or o%e e%tr(ste: 5ith the 2(si%ess o' a%other or to 5ho/ is co%si&%e: or shi$$e: %o less tha% 1,,,, cases o' har: liD(ors or so't :ri%4s ever) /o%th 'or resale, either retail or 5holesale. As a co%seD(e%ce, /ercha%ts e%&a&e: i% the sale o' so't :ri%4 or car2o%ate: :ri%4s, are %ot s(2Aect to the ta6, unless they are a!ents and@or consi!nees of another dealer* 5ho, i% the ver) %at(re o' thi%&s, /(st 2e o%e e%&a&e: i% 2(si%ess outside the Cit). Besi:es, the ta6 5o(l: %ot 2e a$$lica2le to s(ch a&e%t a%:Hor co%si&%ee, i' less tha% 1,,,, cases o' so't :ri%4s are co%si&%e: or shi$$e: to hi/ ever) /o%th. 7he% 5e co%si:er, also, that the ta6 ?shall 2e 2ase: a%: co/$(te: 'ro/ the car!o manifest or #ill of ladin! ... sho5i%& the %(/2er o' cases? @ %ot sol: @ 2(t ?received? 2) the ta6$a)er, the i%te%tio% to li/it the a$$licatio% o' the or:i%a%ce to so't :ri%4s a%: car2o%ate: :ri%4s 2ro(&ht i%to the Cit) 'ro/ o(tsi:e thereo' 2eco/es a$$are%t. =ie5e: 'ro/ this a%&le, the ta6 $arta4es o' the %at(re o' a% i/$ort :(t), 5hich is 2e)o%: :e'e%:a%tBs a(thorit) to i/$ose 2) e6$ress $rovisio% o' la5.+ Eve% ho5ever, i' the 2(r:e% i% D(estio% 5ere re&ar:e: as a ta6 o% the sale o' sai: 2evera&es, it 5o(l: still 2e i%vali:, as :iscri/i%ator), a%: he%ce, violative o' the (%i'or/it) reD(ire: 2) the Co%stit(tio% a%: the la5 there'or, si%ce o%l) sales 2) ?a&e%ts or co%si&%ees? o' outside :ealers 5o(l: 2e s(2Aect to the ta6. Sales 2) local :ealers, %ot acti%& 'or or o% 2ehal' o' other /ercha%ts, re!ardless of the volume o' their sales, a%: eve% i' the sa/e e6cee:e: those /a:e 2) sai: a&e%ts or co%si&%ees o' $ro:(cers or

/ercha%ts esta2lishe: o(tsi:e the Cit) o' B(t(a%, 5o(l: 2e e empt 'ro/ the :is$(te: ta6. .t is tr(e that the (%i'or/it) esse%tial to the vali: e6ercise o' the $o5er o' ta6atio% :oes %ot reD(ire i:e%tit) or eD(alit) (%:er all circ(/sta%ces, or %e&ate the a(thorit) to classi') the o2Aects o' ta6atio%. " The classi'icatio% /a:e i% the e6ercise o' this a(thorit), to 2e vali:, /(st, ho5ever, 2e reaso%a2le* a%: this reD(ire/e%t is %ot :ee/e: satis'ie: (%less: (1) it is 2ase: ($o% s(2sta%tial :isti%ctio%s 5hich /a4e real :i''ere%cesC (#) these are &er/a%e to the $(r$ose o' the le&islatio% or or:i%a%ceC (-) the classi'icatio% a$$lies, %ot o%l) to $rese%t co%:itio%s, 2(t, also, to '(t(re co%:itio%s s(2sta%tiall) i:e%tical to those o' the $rese%tC a%: (+) the classi'icatio% a$$lies eD(all) all those 5ho 2elo%& to the sa/e class. ! These co%:itio%s are %ot '(ll) /et 2) the or:i%a%ce i% D(estio%. 1 .%:ee:, i' its $(r$ose 5ere /erel) to lev) a 2(r:e% ($o% the sale o' so't :ri%4s or car2o%ate: 2evera&es, there is %o reaso% 5h) sales thereo' 2) sealers other tha% a&e%ts or co%si&%ees o' $ro:(cers or /ercha%ts esta2lishe: o(tsi:e the Cit) o' B(t(a% sho(l: 2e e6e/$t 'ro/ the ta6. 7HERE>ORE, the :ecisio% a$$eale: 'ro/ is here2) reverse:, a%: a%other o%e shall 2e e%tere: a%%(lli%& Or:i%a%ce 0o. 11,, as a/e%:e: 2) Or:i%a%ce 0o. 1##, a%: se%te%ci%& the Cit) o' B(t(a% to re'(%: to $lai%ti'' herei% the a/o(%ts collecte: 'ro/ a%: $ai: (%:er $rotest 2) the latter, 5ith i%terest thereo% at the le&al rate 'ro/ the :ate o' the $ro/(l&atio% o' this :ecisio%, i% a::itio% to the costs, a%: :e'e%:a%ts herei% are, accor:i%&l), restrai%e: a%: $rohi2ite: $er/a%e%tl) 'ro/ e%'orci%& sai: Or:i%a%ce, as a/e%:e:. .t is so or:ere:.

) Procter a%: Ga/2le vs. M(%ici$alit) o' ;a&%a + SCRA 1 + G.R. No. L (4(6" D$?$6%$& (*, 19)9 PROCTER H GAMBLE PHILIPPINE MANU#ACTURING CORPORATION, $lai%ti''Fa$$ella%t, vs. THE MUNICIPALITY O# 0AGNA, PRO/INCE O# BOHOL, :e'e%:a%tF a$$ellee. Picazo* '!caoili* %antayana* Reyes + 0ayao for appellant, 3oel P, 0ian!co and 3esus A, (orromeo for appellee, MELENCIO HERRERA, J.: A :irect a$$eal 2) $lai%ti'' co/$a%) 'ro/ the A(:&/e%t o' the Co(rt o' >irst .%sta%ce o' Ma%ila, Bra%ch =., ($hol:i%& the vali:it) o' Or:i%a%ce 0o. +, Series o' 1 "!, e%acte: 2) :e'e%:a%t M(%ici$alit), 5hich i/$ose: ?stora&e 'ees o% all e6$orta2le co$ra :e$osite: i% the 2o:e&a 5ithi% the A(ris:ictio% o' the M(%ici$alit) o' ;a&%a Bohol. Plai%ti''Fa$$ella%t is a :o/estic cor$oratio% 5ith $ri%ci$al o''ices i% Ma%ila. lt is a co%soli:ate: cor$oratio% o' Procter M Ga/2le Tra:i%& Co/$a%) a%: Phili$$i%e Ma%('act(ri%& Co/$a%), 5hich later 2eca/e Procter M Ga/2le

Tra:i%& Co/$a%), Phili$$i%es. .t is e%&a&e: i% the /a%('act(re o' soa$, e:i2le oil, /ar&ari%e a%: other si/ilar $ro:(cts, a%: 'or this $(r$ose /ai%tai%s a ?2o:e&a? i% :e'e%:a%t M(%ici$alit) 5here it stores co$ra $(rchase: i% the /(%ici$alit) a%: there'ro/ shi$s the sa/e 'or its /a%('act(ri%& a%: other o$eratio%s. O% Dece/2er 1-, 1 "!, the M(%ici$al Co(%cil o' ;a&%a e%acte: M(%ici$al Or:i%a%ce 0o. +, Series o' 1 "!, D(ote: herei%2elo5: A0 ORD.0A0CE .MPOS.0G STORAGE >EES O> A99 EEPORTAB9E COPRA DEPOS.TED .0 THE BODEGA 7.TH.0 THE ;GR.SDlCT.,0 O> THE MG0.C.PA9.TI O> ;AG0A BOHO9. Be it or:ai%e: 2) the M(%ici$al Co(%cil o' ;a&%a Bohol, that: SECT.O0 1. A%) $erso%, 'ir/ or cor$oratio% havi%& a :e$osit o' e6$orta2le co$ra i% the 2o:e&a, 5ithi% the A(ris:ictio% o' the M(%ici$alit) o' ;a&%a Bohol, shall $a) to the M(%ici$al Treas(r) a stora&e 'ee o' TE0 (P,.1,) CE0TA=OS >OR E=ERI HG0DRED (1,,) 4ilosC SECT.O0 #. All e6$orta2le co$ra :e$osite: i% the 2o:e&a 5ithi% the M(%ici$alit) o' ;a&%a Bohol, is $art o' the s(rveilla%ce a%: loo4o(t o' the M(%ici$al A(thoritiesC SECT.O0 -. A%) $erso%, 'ir/ or cor$oratio% 'o(%: violati%& the $rovisio% o' the $rece:i%& sectio% o' this Or:i%a%ce shall 2e $(%ishe: 2) a 'i%e o' %ot less tha% T7O HG0DRED (P #,,.,,) PESOS, %or /ore tha% >OGR HG0DRED (P+,,.,,) PESOS, or a% i/$riso%/e%t o' hot less tha% O0E MO0TH, %or /ore tha% THREE MO0THS, or 2oth 'i%es a%: i/$riso%/e%t at the :iscretio% o' the co(rt. SECT.O0 +. This Or:i%a%ce shall ta4e e''ect o% ;a%(ar) 1, 1 "1. APPRO=ED Dece/2er 1-,1 "!. (S&:.) TEODORO B. GA9ACAR M(%ici$al Ma)or 1 >or a $erio: o' si6 )ears, 'ro/ 1 "1 to 1 *-, $lai%ti'' $ai: :e'e%:a%t M(%ici$alit), alle&e:l) (%:er $rotest, stora&e 'ees i% the total s(/ o' 11+#,#*".1-, 2ro4e% :o5% as 'ollo5s: Procter M Ga/2le Tra:i%& Co. Procter M Ga/2le Phili$$i%e Ma%('act(ri%& Cor$.
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O% March -, 1 *+, $lai%ti'' 'ile: this s(it i% the Co(rt o' >irst .%sta%ce o' Ma%ila, Bra%ch =., 5herei% it $ra)e: that 1) Or:i%a%ce 0o. + 2e :eclare: i%a$$lica2le to it, or i% the alter. %ative, that it 2e $ro%o(%ce: ultra9vires a%: voi: 'or 2ei%& 2e)o%: the $o5er o' the M(%ici$alit) to e%actC a%: #) that :e'e%:a%t M(%ici$alit) 2e or:ere: to re'(%: to it the a/o(%t o' P+#,#*".15hich it ha: $ai: (%:er $rotestC a%: costs. >or its $art, :e'e%:a%t M(%ici$alit) ($hel: its $o5er to e%act the Or:i%a%ce i% D(estio%C D(estio%e: the A(ris:ictio% o' the trial Co(rt to ta4e co&%i8a%ce o' the actio% (%:er sectio% ++(h) o' the ;(:iciar) Act i% that it see4s to e%Aoi% the e%'orce/e%t o' a M(%ici$al Or:i%a%ceC a%: $lea:e: $rescri$tio% a%: laches 'or $lai%ti''Bs 'ail(re to ti/el) D(estio% the vali:it) o' the sai: Or:i%a%ce. A'ter the $arties ha: a&ree: to s(2/it the case 'or A(:&/e%t o% the $lea:i%&s, the trial Co(rt ($hel: its A(ris:ictio% as 5ell as :e'e%:a%t M(%ici$alit)Bs $o5er to e%act the Or:i%a%ce i% D(estio% (%:er sectio% ##-1 o' the Revise: A:/i%istrative Co:e, other5ise 4%o5% as the &e%eral 5el'are cla(se, a%: :eclare: that $lai%ti''Bs ri&ht o' actio% ha: $rescri2e: (%:er the "F )ear $erio: $rovi:e: 'or 2) Article 11+ o' the Civil Co:e. .% this a$$eal, $lai%ti'' i%ter$oses the 'ollo5i%& Assi&%/e%ts o' Error: . THE TR.A9 COGRT ERRED .0 HO9D.0G THAT ORD.0A0CE 0O. +, SER.ES O> 1 "!, E0ACTED BI THE DE>E0DA0T MG0.C.PA9.TI O> ;AG0A BOHO9, .S A =A9.D, 9EGA9 A0D E0>ORCEAB9E ORD.0A0CE AGA.0ST THE P9A.0T.>>. .. THE TR.A9 COGRT ERRED .0 HO9D.0G THAT PAIME0T O> THE TAE G0DER ORD.0A0CE 0O. +, SER.ES O> 1 "! 7AS 0OT DO0E G0DER PROTEST. ... THE TR.A9 COGRT ERRED .0 HO9D.0G THAT THE ACT.O0 O> THE P9A.0T.>> TO A00G9 A0D TO DEC9ARE ORD.0A0CE 0O. +, SER.ES O> 1 "! O> THE DE>E0DA0T HAS A9READI PRESCR.BED. .= A0D, >.0A99I, THE TR.A9 COGRT ERRED .0 0OT HO9D.0G ORD.0A0CE 0O. +. SER.ES O> 1 "! G9TRAF=.RES A0D =O.D A0D .0 0OT ORDER.0G THE RE>G0D O> TAEES PA.D THEREG0DER. ! .t is $lai%ti''Bs s(2/issio% that the s(2Aect Or:i%a%ce is i%a$$lica2le to it as it is %ot e%&a&e: i% the 2(si%ess or tra:e o' stori%& co$ra 'or others 'or co/$e%satio% or $ro'it a%: that the o%l) co$ra it stores is 'or its e6cl(sive (se i% co%%ectio% 5ith its 2(si%ess as /a%('act(rer o' soa$, e:i2le oil, /ar&ari%e a%: other si/ilar $ro:(ctsC that the lev) is i%te%:e: as a% ?e6$ort ta6? as it is collecte: o% ?e6$orta2le co$raB , a%:, there'ore, 2e)o%: the $o5er o' the M(%ici$alit) to e%actC a%: that the 'ee o' P,.1, 'or ever) 1,, 4ilos o' co$ra store: i% the 2o:e&a is e6cessive, (%reaso%a2le a%: o$$ressive a%: is i/$ose: /ore 'or reve%(e tha% as a re&(lator) 'ee.

The /ai% D(estio% to :eter/i%e is 5hether :e'e%:a%t M(%ici$alit) 5as a(thori8e: to i/$ose a%: collect the stora&e 'ee $rovi:e: 'or i% the challe%&e: Or:i%a%ce (%:er the la5s the% $revaili%&. The vali:it) o' the Or:i%a%ce /(st 2e ($hel: $(rs(a%t to the 2roa: a(thorit) co%'erre: ($o% /(%ici$alities 2) Co//o%5ealth Act 0o. +!#, a$$rove: o% ;(%e 1*, 1 - , 5hich 5as the $revaili%& la5 5he% the Or:i%a%ce 5as e%acte: (Procter M Ga/2le Tra:i%& Co. vs. M(%ici$alit) o' Me:i%a, +- SCRA 1-, 11 !#L). Sectio% 1 thereo' rea:s: Sectio% 1. A /(%ici$al co(%cil or /(%ici$al :istrict co(%cil shall have the a(thorit) to i/$ose /(%ici$al lice%se ta6es ($o% $erso%s e%&a&e: i% a%) occ($atio% or 2(si%ess, or e6ercisi%& $rivile&es i% the /(%ici$alit) or /(%ici$al :istrict, 2) reD(iri%& the/ to sec(re lice%ses at rates 'i6e: 2) the /(%ici$al co(%cil, or /(%ici$al :istrict co(%cil, a%: to collect 'ees a%: char&es 'or services re%:ere: 2) the /(%ici$alit) or /(%ici$al :istrict a%: shall other5ise have $o5er to lev) 'or $(2lic local $(r$oses, a%: 'or school $(r$oses, i%cl(:i%& teachersB salaries, A(st a%: (%i'or/ ta6es other tha% $erce%ta&e ta6es a%: ta6es o% s$eci'ie: articles. G%:er the 'ore&oi%& $rovisio%, a /(%ici$alit) is a(thori8e: to i/$ose three 4i%:s o' lice%ses: (1) a lice%se 'or re&(latio% o' (se'(l occ($atio% or e%ter$risesC (#) lice%se 'or restrictio% or re&(latio% o' %o%F(se'(l occ($atio%s or e%ter$risesC a%: (-) lice%se 'or reve%(e. 4 .t is th(s (%%ecessar), as $lai%ti'' 5o(l: have (s :o, to :eter/i%e 5hether the s(2Aect stora&e 'ee is a ta6 'or reve%(e $(r$oses or a lice%se 'ee to rei/2(rse :e'e%:a%t M(%ici$alit) 'or service o' s($ervisio% 2eca(se :e'e%:a%t M(%ici$alit) is a(thori8e: %ot o%l) to i/$ose a lice%se 'ee 2(t also to ta6 'or reve%(e $(r$oses. The stora&e 'ee i/$ose: (%:er the D(estio% Or:i%a%ce is act(all) a /(%ici$al lice%se ta6 or 'ee o% $erso%s, 'ir/s a%: cor$oratio%s, li4e $lai%ti'', e6ercisi%& the $rivile&e o' stori%& co$ra i% a 2o:e&a 5ithi% the M(%ici$alit)Bs territorial A(ris:ictio%. >or the ter/ ?lice%se ta6? has %ot acD(ire: a 'i6e: /ea%i%&. .t is o'te% (se: i%:iseri/i%atel) to :esi&%ate i/$ositio%s e6acte: 'or the e6ercise o' vario(s $rivile&es. .% /a%) i%sta%ces, it re'ers to reve%(eF raisi%& e6actio%s o% $rivile&es or activities. " 0ot o%l) is the i/$ositio% o' the stora&e 'ee a(thori8e: 2) the &e%eral &ra%t o' a(thorit) (%:er sectio% 1 o' CA 0o. +!#. 0either is the stora&e 'ee i% D(estio% $rohi2ite: %or 2e)o%: the $o5er o' the /(%ici$al co(%cils a%: /(%ici$al :istrict co(%cils to i/$ose, as liste: i% sectio% - o' sai: CA 0o. +!#. 6 Moreover, the 2(si%ess o' 2()i%& a%: selli%& a%: stori%& co$ra is $ro$ert) the s(2Aect o' re&(latio% 5ithi% the $olice $o5er &ra%te: to /(%ici$alities (%:er sectio% ##-1 o' the Revise: A:/i%istrative Co:e or the ?&e%eral 5el'are cla(se?, 5hich 5e D(ote here(%:er: Sectio% ##-1. )eneral po"er of council to enact ordinances and make re!ulations. @ The /(%ici$al co(%cil shall e%act s(ch or:i%a%ces a%: /a4e s(ch re&(latio%s, %ot re$(&%a%t to la5, as /a) 2e %ecessar) to carr) i%to e''ect a%: :ischar&e the $o5ers a%: :(ties co%'erre: ($o% it 2) la5 a%: s(ch as shall see/ %ecessar) a%: $ro$er to $rovi:e 'or the health a%:

sa'et), $ro/ote the $ros$erit), i/$rove the /orals, $eace, &oo: or:er, co/'ort, a%: co%ve%ie%ce o' the /(%ici$alit) a%: the i%ha2ita%ts thereo', a%: 'or the $rotectio% o' $ro$ert) therei%. >or it has 2ee% hel: that a 5areho(se (se: 'or 4ee$i%& or stori%& co$ra is a% esta2lish/e%t li4el) to e%:a%&er the $(2lic sa'et) or li4el) to &ive rise to co%'la&ratio% 2eca(se the oil co%te%t o' the co$ra 5he% i&%ite: is :i''ic(lt to $(t (%:er co%trol 2) 5ater a%: the (se o' che/icals is %ecessar) to $(t o(t the 'ire. ) A%: as the Or:i%a%ce itsel' states, all e6$orta2le co$ra :e$osite: 5ithi% the /(%ici$alit) is ?$art o' the s(rveilla%ce a%: loo4o(t o' /(%ici$al a(thorities. Plai%ti''Bs ar&(/e%t that the i/$ositio% o' P,.1, $er 1,, 4ilos o' co$ra store: i% a 2o:e&a 5ithi% :e'e%:a%tBs territor) is 2e)o%: the cost o' re&(latio% a%: s(rveilla%ce is %ot 5ell ta4e%. As e%(%ciate: i% the case o' Victorias /illin! &o, vs, /unicipality of Victorias, supra, The cost o' re&(latio% ca%%ot 2e ta4e% as a &a(&e, i' the /(%ici$alit) reall) i%te%:e: to e%act a reve%(e or:i%a%ce. >or, Bi' the char&e e6cee:s the e6$e%se o' iss(a%ce o' a lice%se a%: costs o' re&(latio%, it is a ta6B. A%: i' it is, a%: it is vali:l) i/$ose:, Bthe r(le that lice%se 'ees 'or re&(latio% /(st 2ear a reaso%a2le relatio% to the e6$e%se o' the re&(latio% has %o a$$licatio%B. M(%ici$al cor$oratio%s are allo5e: 5i:e :iscretio% i% :eter/i%i%& the rates o' i/$osa2le lice%se 'ees eve% i% cases o' $(rel) $olice $o5er /eas(res. .% the a2se%ce o' $roo' as to /(%ici$al co%:itio%s a%: the %at(re o' the 2(si%ess 2ei%& ta6e: as 5ell as other 'actors releva%t to the iss(e o' ar2itrari%ess or (%reaso%a2le%ess o' the D(estio%e: rates, Co(rts 5ill &o slo5 i% 5riti%& o'' a% Or:i%a%ce. * .% the case at 2ar, a$$ella%t has %ot s(''icie%tl) sho5% that the rate i/$ose: 2) the D(estio%e: Or:i%a%ce is o$$ressive, e6cessive a%: $rohi2itive. Plai%ti''Bs aver/e%t that the Or:i%a%ce, eve% i' $res(/e: vali:, is i%a$$lica2le to it 2eca(se it is %ot e%&a&e: i% the 2(si%ess or occ($atio% o' 2()i%& or selli%& o' co$ra 2(t is o%l) stori%& co$ra i% co%%ectio% 5ith its /ai% 2(si%ess o' /a%('act(ri%& soa$ a%: other si/ilar $ro:(cts, a%: that to 2e co/$elle: to $a) the stora&e 'ees 5o(l: a/o(%t to :o(2le ta6atio%, :oes %ot i%s$ire asse%t. The D(estio% o' 5hether a$$ella%t is e%&a&e: i% that 2(si%ess or %ot is irreleva%t 2eca(se the stora&e 'ee, as $revio(sl) /e%tio%e:, is a% i/$ositio% o% the $rivile&e o' stori%& co$ra i% a 2o:e&a 5ithi% :e'e%:a%t /(%ici$alit) 2) $erso%s, 'ir/s or cor$oratio%s. Sectio% 1 o' the Or:i%a%ce i% D(estio% :oes %ot state that sai: $erso%s, 'ir/s or cor$oratio%s sho(l: 2e e%&a&e: i% the 2(si%ess or occ($atio% o' 2()i%& or selli%& co$ra. Moreover, 2) $lai%ti''Bs o5% a:/issio% that it is a co%soli:ate: cor$oratio% 5ith its tra:i%& co/$a%), it 5ill 2e har: to se&re&ate the co$ra it (ses 'or tra:i%& 'ro/ that it (tili8es 'or /a%('act(ri%&. Th(s, it ca% 2e sai: that $lai%ti''Bs $a)/e%t o' stora&e 'ees i/$ose: 2) the Or:i%a%ce i% D(estio% :oes %ot a/o(%t to :o(2le ta6atio%. >or :o(2le ta6atio% to e6ist, the sa/e $ro$ert) /(st 2e ta6e: t5ice, 5he% it sho(l: 2e ta6e: 2(t o%ce. Do(2le ta6atio% has also 2ee% :e'i%e: as ta6i%& the sa/e

$erso% t5ice 2) the sa/e A(ris:ictio% 'or the sa/e thi%&. 9 S(rel), a ta6 o% $lai%ti''Bs $ro:(cts is :i''ere%t 'ro/ a ta6 o% the $rivile&e o' stori%& co$ra i% a 2o:e&a sit(ate: 5ithi% the territorial 2o(%:ar) o' :e'e%:a%t /(%ici$alit). Plai%ti''Bs '(rther co%te%tio% that the stora&e 'ee i/$ose: 2) the Or:i%a%ce is act(all) i%te%:e: to 2e a% e6$ort ta6, 5hich is e6$ressl) $rohi2ite: 2) sectio% ##1! o' the Revise: A:/i%istrative Co:e, is 5itho(t /erit. Sai: $rovisio% rea:s as 'ollo5s: Sectio% ##1! ... .t shall %ot 2e i% the $o5er o' the /(%ici$al co(%cil to i/$ose a ta6 i% a%) 'or/ 5hatever ($o% &oo:s a%: /ercha%:ise carrie: i%to the /(%ici$alit), or o(t o' the sa/e, a%: a%) atte/$t to i/$ose a% i/$ort or e6$ort ta6 ($o% s(ch &oo:s i% the &(ise o' a% (%reaso%a2le char&e 'or 5har'a&e (se o' 2ri:&es or other5ise, shall 2e voi:. 666 666 666 7e have hel: that o%l) 5here there is a clear sho5i%& that 5hat is 2ei%& ta6e: is a% e6$ort to a%) 'orei&% co(%tr) 5o(l: the $rohi2itio% co/e i%to $la). 1+ 7he% the Or:i%a%ce itsel' s$ea4s o' ?e6$orta2le? co$ra, the /ea%i%& co%ve)e: is %ot e6cl(sivel) e6$ort to a 'orei&% co(%tr) 2(t shi$/e%t o(t o' the /(%ici$alit). The stora&e 'ee i/$(&%e: is %ot a ta6 o% e6$ort 2eca(se it is i/$ose: %ot o%l) ($o% co$ra to 2e e6$orte: 2(t also ($o% co$ra sol: a%: to 2e (se: 'or :o/estic $(r$oses i' store: i% a%) 5areho(se i% the M(%ici$alit) a%: the 5ei&ht thereo' is 1,, 4ilos or /ore. 11 Th(s 'i%:i%& the Or:i%a%ce i% D(estio% to 2e vali:, le&al a%: e%'orcea2le, 5e 'i%: it (%%ecessar) to :isc(ss the ascri2e: error that the Co(rt a 2uo erre: i% :eclari%& that a$$ella%t ha: %ot $ai: the ta6es (%:er $rotest. Ho5ever, 5e 'i%: /erit i% $lai%ti''Bs co%te%tio% that the lo5er Co(rt erre: i% r(li%& that its actio% has $rescri2e: (%:er Article 11+ o' the Civil Co:e, 5hich $rovi:es 'or a $erio: o' 'ive )ears 'or all actio%s 5hose $erio:s are %ot 'i6e: i% that Co:e. The case o' /unicipality of 6pon vs, &alte Phil., 1( is a(thorit) 'or the vie5 that the $erio: 'or $rescri$tio% o' actio%s to recover /(%ici$al lice%se ta6es is si6 )ears (%:er Article 11+"(#) o' the Civil Co:e. Th(s, $lai%ti''Bs actio% 2ro(&ht 5ithi% si6 )ears 'ro/ the ti/e the ri&ht o' actio% 'irst accr(e: i% 1 "1 has %ot )et $rescri2e:. 7HERE>ORE, a''ir/i%& the A(:&/e%t a$$eale:, 'ro/, 5e s(stai% the vali:it) o' Or:i%a%ce 0o. +, Series o' 1 "!, o' :e'e%:a%t M(%ici$alit) o' ;a&%a Bohol, (%:er the la5s the% $revaili%&. Costs a&ai%st $lai%ti''Fa$$ella%t. SO ORDERED.

0';4$, R$4-o3a. T&-a. Co'&2, B&a3?> )*, Mo&o34, R-5a., a3; PHILIPPINE PETROLEUM CORPORATION, res$o%:e%ts. -eli E, /endiola for petitioner, /akalintal* (arot* 0orres + I#arra for respondent Philippine Petroleum &orporation, REGALADO, J.: Petitio%er D(estio%s a%: see4s the %(lli'icatio% o' the resol(tio% o' res$o%:e%t Co(rt o' A$$eals i% CAFG.R. SP. 0o. #!",+ :ate: March -1, 1 #, :is/issi%& the $etitio% 'or havi%& 2ee% 'ile: 2) a $rivate co(%sel, as 5ell as its s(ccee:i%& resol(tio% :ate: ;(%e , 1 #, :e%)i%& $etitio%erBs /otio% 'or reco%si:eratio%. 1 The recor:s sho5 that o% March 1!, 1 1 , the Re&io%al Trial Co(rt o' Ta%a), Ri8al, Bra%ch 1,, re%:ere: A(:&/e%t i% Civil Case 0o. ,"!FT i% 'avor o' $lai%ti'', %o5 herei% $etitio%er M(%ici$alit) o' Pililla, Ri8al, a&ai%st :e'e%:a%t, %o5 herei% $rivate res$o%:e%t Phili$$i%e Petrole(/ Cor$oratio% (PPC, 'or short), or:eri%& therei% :e'e%:a%t to $a) sai: $lai%ti'' (1) the a/o(%t o' P",-,1,-1".,, re$rese%ti%& the ta6 o% 2(si%ess :(e 'ro/ the :e'e%:a%t (%:er Sectio% (A) o' M(%ici$al Ta6 Or:i%a%ce 0o. 1 o' sai: /(%ici$alit) 'or the $erio: 'ro/ 1 ! to 1 1-, i%cl(sive, $l(s s(ch a/o(%t o' ta6 as /a) accr(e (%til 'i%al :eter/i%atio% o' the caseC (#) stora&e $er/it 'ee i% the a/o(%t o' P-,-#1,!-,.,, :(e 'ro/ the :e'e%:a%t (%:er Sectio% 1,, $ara&ra$h J(1-) (2F1Fc) o' the sa/e /(%ici$al ta6 or:i%a%ce 'or the $erio: 'ro/ 1 !" to 1 1*, i%cl(sive, $l(s the a/o(%t o' sai: 'ee that /a) accr(e (%til 'i%al :eter/i%atio% o' the caseC (-) /a)orBs $er/it 'ee :(e 'ro/ the :e'e%:a%t (%:er Sectio% 1,, $ara&ra$h (P) (#) o' sai: /(%ici$al ta6 or:i%a%ce 'ro/ 1 !" to 1 1+, i%cl(sive, i% the a/o(%t o' P1#,1#,.,,, $l(s s(ch a/o(%t o' the sa/e 'ee as /a) accr(e (%til 'i%al :eter/i%atio% o' the caseC (+) sa%itar) i%s$ectio% 'ee i% the a/o(%t o' P1,,1,.,, 'or the $erio: 'ro/ 1 !" to 1 1+, $l(s the a/o(%t o' this 'ee that /a) accr(e (%til 'i%al :eter/i%atio% o' the caseC a%: (") the costs o' s(it. ( O% ;(%e -, 1 1, i% G.R. 0o. ,!!* this Co(rt a''ir/e: the a'oresai: A(:&/e%t, 5ith the /o:i'icatio% that 2(si%ess ta6es accr(i%& $rior to 1 !* are %ot to 2e $ai: 2) PPC 2eca(se the sa/e have $rescri2e:, a%: that stora&e 'ees are %ot also to 2e $ai: 2) PPC si%ce the stora&e ta%4s are o5%e: 2) PPC a%: %ot 2) the /(%ici$alit) a%:, there'ore, ca%%ot 2e the 2ases o' a char&e 'or service 2) the /(%ici$alit). ! This A(:&/e%t 2eca/e 'i%al a%: e6ec(tor) o% ;(l) 1-, 1 1 a%: the recor:s 5ere re/a%:e: to the trial co(rt 'or e6ec(tio%. O% Octo2er 1+, 1 1, i% co%%ectio% 5ith the e6ec(tio% o' sai: A(:&/e%t, Att). >eli6 E. Me%:iola 'ile: a /otio% i% 2ehal' o' $lai%ti'' /(%ici$alit) 5ith the Re&io%al Trial Co(rt, Bra%ch !1, Moro%&, Ri8al J 'or the e6a/i%atio% o' :e'e%:a%t cor$oratio%Bs &ross sales 'or the )ears 1 !* to 1 !1 a%: 1 1+ to 1 1 'or the $(r$ose o' co/$(ti%& the ta6 o% 2(si%ess i/$ose: (%:er the

1,) Petro% vs. Pililia 1 1 SCRA 1# G.R. No. 1+"9+9 0'3$ (*, 1994 MUNICIPALITY O# PILILLA, RIZAL, $etitio%er, vs. HON. COURT O# APPEALS, HON. ARTURO A. MARA/E, a1 P&$1-;-34

9ocal Ta6 Co:e, as a/e%:e:. O% Octo2er #1, 1 1, :e'e%:a%t cor$oratio% 'ile: a /a%i'estatio% to the e''ect that o% Octo2er 11, 1 1, Pililla Ma)or 0ico/e:es Pate%ia receive: 'ro/ it the s(/ o' P11,+"!, ,!.,, as '(ll satis'actio% o' the a2oveF/e%tio%e: A(:&/e%t o' the S($re/e Co(rt, as evi:e%ce 2) the release a%: D(itclai/ :oc(/e%ts e6ec(te: 2) sai: /a)or. Accor:i%&l), o% Octo2er -1, 1 1 the co(rt 2elo5 iss(e: a% or:er :e%)i%& $lai%ti'' /(%ici$alit)Bs /otio% 'or e6a/i%atio% a%: e6ec(tio% o' A(:&/e%t o% the &ro(%: that the A(:&/e%t i% D(estio% ha: alrea:) 2ee% satis'ie:. 4 Therea'ter, o% 0ove/2er #1, 1 1 Att). Me%:iola 'ile: a /otio% 'or reco%si:eratio% o' the co(rtBs a'oresai: or:er o' Octo2er -1, 1 1, clai/i%& that the total lia2ilit) o' :e'e%:a%t cor$oratio% to $lai%ti'' /(%ici$alit) a/o(%te: to P#+,1!*," .,,, 5hile the a/o(%t i%volve: i% the release a%: D(itclai/ e6ec(te: 2) Ma)or Pate%ia 5as o%l) P1#,!11,* #C a%: that the sai: /a)or co(l: %ot 5aive the 2ala%ce 5hich re$rese%ts the ta6es :(e (%:er the A(:&/e%t to the /(%ici$alit) a%: over 5hich A(:&/e%t the la5 'ir/ o' Att). Me%:iola ha: re&istere: t5o lie%s 'or alle&e: co%s(lta%c) services o' #"O a%: attor%e)sB 'ees o' #"O 5hich, 5he% D(a%ti'ie: a%: a::e:, a/o(%t to /ore tha% P1# /illio%. O% ;a%(ar) #1,1 #, the trial co(rt :e%ie: the a'oresai: /otio% 'or reco%si:eratio%. " O% >e2r(ar) 11, 1 #, Att). Me%:iola, a&ai% oste%si2l) i% 2ehal' o' herei% $etitio%er /(%ici$alit), 'ile: a $etitio% 'or certiorari 5ith (s, 5hich $etitio% 5e re'erre: to the Co(rt o' A$$eals 'or $ro$er :is$ositio% a%: 5as :oc4ete: therei% as CAFG.R. SP 0o. #!",+. 6 O% March #, 1 #, res$o%:e%t PPC 'ile: a /otio% D(estio%i%& Att). Me%:iolaBs a(thorit) to re$rese%t $etitio%er /(%ici$alit). ) Co%seD(e%tl), o% March -1, 1 # res$o%:e%t Co(rt o' A$$eals :is/isse: the $etitio% 'or havi%& 2ee% 'ile: 2) a $rivate co(%sel i% violatio% o' la5 a%: A(ris$r(:e%ce, 2(t 5itho(t $reA(:ice to the 'ili%& o' a si/ilar $etitio% 2) the M(%ici$alit) o' Pililla thro(&h the $ro$er $rovi%cial or /(%ici$al le&al o''icer. * Petitio%er 'ile: a /otio% 'or reco%si:eratio% 5hich 5as :e%ie: 2) the Co(rt o' A$$eals i% its resol(tio% o' ;(%e , 1 #. 9 Petitio%er is o%ce a&ai% 2e'ore (s 5ith the 'ollo5i%& assi&%/e%t o' errors: 1. .t is a% error 'or the Co(rt o' A$$eals to co%si:er $rivate res$o%:e%tBs %e5 iss(e raise: 'or the 'irst ti/e o% a$$eal, as it co(l: %o lo%&er 2e co%si:ere: o% a$$eal, 2eca(se it 5as %ever 2ee% (sic) raise: i% the co(rt 2elo5. #. .t is a% error 'or the Co(rt o' A$$eals i% :is/issi%& (sic) the i%sta%t $etitio% 5ith alter%ative re/e:) o' 'ili%& si/ilar $etitio% as it is a :e$art(re 'ro/ esta2lishe: A(ris$r(:e%ce. -. .t is a% error 'or the Co(rt o' A$$eals to r(le that the 'ili%& o' the i%sta%t $etitio% 2) the $rivate co(%sel is i% violatio% o' la5 a%: A(ris$r(:e%ce. 1+ 7e 'i%: the $rese%t $etitio% :evoi: o' /erit. The Co(rt o' A$$eals is correct i% hol:i%& that Att). Me%:iola has %o a(thorit) to 'ile a $etitio% i% 2ehal' o' a%: i% the %a/e o' the M(%ici$alit) o' Pililla. The /atter o' re$rese%tatio% o' a /(%ici$alit) 2) a $rivate attor%e) has 2ee% settle: i% Ramos vs. &ourt of 'ppeals* et al., 11 a%: reiterate:

i% Province of &e#u vs. Intermediate 'ppellate &ourt* et al., 1( 5here 5e r(le: that $rivate attor%e)s ca%%ot re$rese%t a $rovi%ce or /(%ici$alit) i% la5s(its. Sectio% 1*1- o' the Revise: A:/i%istrative Co:e $rovi:es: Sectio% 1*1-. Duty of fiscal to represent provinces and provincial su#divisions in liti!ation. @ The $rovi%cial 'iscal shall re$rese%t the $rovi%ce a%: a%) /(%ici$alit) or /(%ici$al :istrict thereo' i% a%) co(rt, e6ce$t i% cases 5hereo' ori&i%al A(ris:ictio% is veste: i% the S($re/e Co(rt or i% cases 5here the /(%ici$alit) or /(%ici$al :istrict i% D(estio% is a $art) a:verse to the $rovi%cial &over%/e%t or to so/e other /(%ici$alit) or /(%ici$al :istrict i% the sa/e $rovi%ce. 7he% the i%terests o' a $rovi%cial &over%/e%t a%: o' a%) $olitical :ivisio% thereo' are o$$ose:, the $rovi%cial 'iscal shall act o% 2ehal' o' the $rovi%ce. 7he% the $rovi%cial 'iscal is :isD(ali'ie: to serve a%) /(%ici$alit) or other $olitical s(2:ivisio% o' a $rovi%ce, a s$ecial attor%e) /a) 2e e/$lo)e: 2) its co(%cil. 1! G%:er the a2ove $rovisio%, co/$le/e%te: 2) Sectio% -, Re$(2lic Act 0o. ##*+, the 9ocal A(to%o/) 9a5, 14 o%l) the $rovi%cial 'iscal a%: the /(%ici$al attor%e) ca% re$rese%t a $rovi%ce or /(%ici$alit) i% their la5s(its. The $rovisio% is /a%:ator). The /(%ici$alit)Bs a(thorit) to e/$lo) a $rivate la5)er is e6$ressl) li/ite: o%l) to sit(atio%s 5here the $rovi%cial 'iscal is :isD(ali'ie: to re$rese%t it. 1" >or the a'ore/e%tio%e: e6ce$tio% to a$$l), the 'act that the $rovi%cial 'iscal 5as :isD(ali'ie: to ha%:le the /(%ici$alit)Bs case /(st a$$ear o% recor:. 16 .% the i%sta%t case, there is %othi%& i% the recor:s to sho5 that the $rovi%cial 'iscal is :isD(ali'ie: to act as co(%sel 'or the M(%ici$alit) o' Pililla o% a$$eal, he%ce the a$$eara%ce o' herei% $rivate co(%sel is 5itho(t a(thorit) o' la5. The s(2/issio% o' Att). Me%:iola that the e6ce$tio% is 2roa: e%o(&h to i%cl(:e sit(atio%s 5herei% the $rovi%cial 'iscal re'(ses to ha%:le the case ca%%ot 2e s(stai%e:. The 'iscalBs re'(sal to re$rese%t the /(%ici$alit) is %ot a le&al A(sti'icatio% 'or e/$lo)i%& the services o' $rivate co(%sel. G%li4e a $ractici%& la5)er 5ho has the ri&ht to :ecli%e e/$lo)/e%t, a 'iscal ca%%ot re'(se to $er'or/ his '(%ctio%s o% &ro(%:s %ot $rovi:e: 'or 2) la5 5itho(t violati%& his oath o' o''ice. .%stea: o' e%&a&i%& the services o' a s$ecial attor%e), the /(%ici$al co(%cil sho(l: reD(est the Secretar) o' ;(stice to a$$oi%t a% acti%& $rovi%cial 'iscal i% $lace o' the $rovi%cial 'iscal 5ho has :ecli%e: to ha%:le a%: $rosec(te its case i% co(rt, $(rs(a%t to Sectio% 1*! o' the Revise: A:/i%istrative Co:e.1) .t is also si&%i'ica%t that the lac4 o' a(thorit) o' herei% co(%sel, Att). Me%:iola, 5as eve% raise: 2) the /(%ici$alit) itsel' i% its co//e%t a%: o$$ositio% to sai: co(%selBs /otio% 'or e6ec(tio% o' his lie%, 5hich 5as 'ile: 5ith the co(rt a 2uo 2) the o''ice o' the Provi%cial Prosec(tor o' Ri8al i% 2ehal' o' sai: /(%ici$alit). 1* The co%te%tio% o' Att). Me%:iola that $rivate res$o%:e%t ca%%ot raise 'or the 'irst ti/e o% a$$eal his lac4 o' a(thorit) to re$rese%t the /(%ici$alit) is (%te%a2le. The le&alit) o' his re$rese%tatio% ca% 2e D(estio%e: at a%) sta&e

o' the $rocee:i%&s. .% the cases herei%2e'ore cite:, 19 the iss(e o' lac4 o' a(thorit) o' $rivate co(%sel to re$rese%t a /(%ici$alit) 5as o%l) raise: 'or the 'irst ti/e i% the $rocee:i%&s 'or the collectio% o' attor%e)Bs 'ees 'or services re%:ere: i% the $artic(lar case, a'ter the :ecisio% i% that case ha: 2eco/e 'i%al a%: e6ec(tor) a%:Hor ha: 2ee% :(l) e6ec(te:. >(rther/ore, eve% ass(/i%& that the re$rese%tatio% o' the /(%ici$alit) 2) Att). Me%:iola 5as :(l) a(thori8e:, sai: a(thorit) is :ee/e: to have 2ee% revo4e: 2) the /(%ici$alit) 5he% the latter, thro(&h the /(%ici$al /a)or a%: 5itho(t sai: co(%selBs $artici$atio%, e%tere: i%to a co/$ro/ise a&ree/e%t 5ith herei% $rivate res$o%:e%t 5ith re&ar: to the e6ec(tio% o' the A(:&/e%t i% its 'avor a%: therea'ter 'ile: $erso%all) 5ith the co(rt 2elo5 t5o $lea:i%&s e%title: a%: co%stit(tive o' a ?Satis'actio% o' ;(:&/e%t? a%: a ?Release a%: <(itclai/?. (+ A clie%t, 2) a$$eari%& $erso%all) a%: $rese%ti%& a /otio% 2) hi/sel', is co%si:ere: to have i/$lie:l) :is/isse: his la5)er. Herei% co(%sel ca%%ot $rete%: to 2e a(thori8e: to co%ti%(e re$rese%ti%& the /(%ici$alit) si%ce the latter is e%title: to :is$e%se 5ith his services at a%) ti/e. Both at co//o% la5 a%: (%:er Sectio% #*, R(le 1-1 o' the R(les o' Co(rt, a clie%t /a) :is/iss his la5)er at a%) ti/e or at a%) sta&e o' the $rocee:i%&s, a%: there is %othi%& to $reve%t a liti&a%t 'ro/ a$$eari%& 2e'ore the co(rt to co%:(ct his o5% liti&atio%. (1 The clie%t has also a% (%:o(2te: ri&ht to co/$ro/ise a s(it 5itho(t the i%terve%tio% o' his la5)er. (( Eve% the la5)ersB ri&ht to 'ees 'ro/ their clie%ts /a) %ot 2e i%vo4e: 2) the la5)ers the/selves as a &ro(%: 'or :isa$$rovi%& or hol:i%& i% a2e)a%ce the a$$roval o' a co/$ro/ise a&ree/e%t. The la5)ers co%cer%e: ca% e%'orce their ri&hts i% the $ro$er co(rt i% a% a$$ro$riate $rocee:i%& i% accor:a%ce 5ith the R(les o' Co(rt, 2(t sai: ri&hts /a) %ot 2e (se: to $reve%t the a$$roval o' the co/$ro/ise a&ree/e%t. (! The a$$rehe%sio% o' herei% co(%sel that it is i/$ossi2le that the /(%ici$alit) 5ill 'ile a si/ilar $etitio%, co%si:eri%& that the /a)or 5ho co%trols its le&islative 2o:) 5ill %ot ta4e the i%itiative, is %ot o%l) co%Aect(ral 2(t 5itho(t 'act(al 2asis. Co%trar) to his $rete%sio%s, there is $rese%tl) a /a%i'estatio% a%: /otio% $e%:i%& 5ith the trial co(rt 'ile: 2) the a'oresai: /(%ici$al /a)or 'or the 5ith:ra5al o' the ?Satis'actio% o' ;(:&/e%t? a%: the ?Release a%: <(itclai/? (4 $revio(sl) 'ile: i% the case therei% as earlier /e%tio%e:. 7HERE>ORE, the $etitio% at 2ar is DE0.ED 'or lac4 o' /erit a%: the A(:&/e%t o' res$o%:e%t Co(rt o' A$$eals is here2) A>>.RMED. SO ORDERED.

PROGRESSI/E DE/ELOPMENT CORPORATION, $etitio%er vs. GUEZON CITY, res$o%:e%t. 3alandoni* 8errera* Del &astillo + 'ssociates for petitioner,

11) Pro&ressive Develo$/e%t Cor$oratio% vs. <(e8o% Cit) GR 0o. -*,11 #+ A$ril 1 1 G.R. No. L !6+*1 A,&-. (4, 19*9

#ELICIANO, J.: O% #+ Dece/2er 1 * , the Cit) Co(%cil o' res$o%:e%t <(e8o% Cit) a:o$te: Or:i%a%ce 0o. ! !, Series o' 1 * , other5ise 4%o5% as the Mar4et Co:e o' <(e8o% Cit), Sectio% - o' 5hich $rovi:e:: Sec. -. %upervision -ee,9 Privately o"ned and operated pu#lic markets shall s(2/it /o%thl) to the Treas(rerBs O''ice, a certi'ie: list o' stallhol:ers sho5i%& the a/o(%t o' stall 'ees or re%tals $ai: :ail) 2) each stallhol:er, ... a%: shall pay 4>B of the !ross receipts from stall rentals to the Cit), ... , as supervision fee, -ailure to s(2/it sai: list a%: to pay the corres$o%:i%& a/o(%t 5ithi% the $erio: herei% $rescri2e: shall su#$ect the operator to the $e%alties $rovi:e: i% this Co:e ... i%cl(:i%& revocation of permit to operate, ... .1 The Mar4et Co:e 5as therea'ter a/e%:e: 2) Or:i%a%ce 0o. #-*, Series o' 1 !#, o% #- March 1 !#, 5hich rea:s: SECT.O0 1. 0here is here#y imposed a five percent CD BE ta on !ross receipts on rentals or lease of space in privately9o"ned pu#lic markets in Fuezon &ity, 666 666 666 SECT.O0 -. >or the e''ective i/$le/e%tatio% o' this Or:i%a%ce, o5%ers o' $rivatel) o5%e: $(2lic /ar4ets shall s(2/it ... a /o%thl) certi'ie: list o' stallhol:ers o' lessees o' s$ace i% their /ar4ets sho5i%& ... : a. %a/e o' stallhol:er or lesseeC 2. a/o(%t o' re%talC c. $erio: o' lease, i%:icati%& therei% 5hether the sa/e is o% a :ail), /o%thl) or )earl) 2asis. 666 666 666 SECT.O0 +. ... In case of consistent failure to pay the percenta!e ta for the CGE consecutive months* the &ity shall revoke the permit of the privately9 o"ned market to o$erate a%:Hor ta4e a%) other a$$ro$riate actio% or re/e:) allo5e: 2) la5 'or the collectio% o' the over:(e $erce%ta&e ta6 a%: s(rchar&e. 666 666 666 ( O% 1" ;(l) 1 !#, $etitio%er Pro&ressive Develo$/e%t Cor$oratio%, o5%er a%: o$erator o' a $(2lic /ar4et 4%o5% as the ?>ar/ers Mar4et M Sho$$i%& Ce%ter? 'ile: a Petitio% 'or Prohi2itio% 5ith Preli/i%ar) .%A(%ctio% a&ai%st res$o%:e%t 2e'ore the the% Co(rt o' >irst .%sta%ce o' Ri8al o% the &ro(%: that the s($ervisio% 'ee or lice%se ta6 i/$ose: 2) the a2oveF/e%tio%e: or:i%a%ces is i% realit) a ta6 o% i%co/e 5hich res$o%:e%t /a) %ot i/$ose, the sa/e 2ei%& e6$ressl) $rohi2ite: 2) Re$(2lic Act 0o. ##*+, as a/e%:e:. .% its A%s5er, res$o%:e%t, thro(&h the Cit) >iscal, co%te%:e: that it ha: a(thorit) to e%act the D(estio%e: or:i%a%ces, /ai%tai%i%& that the ta6 o%

&ross recei$ts i/$ose: therei% is %ot a ta6 o% i%co/e. The Solicitor Ge%eral also 'ile: a% A%s5er ar&(i%& that $etitio%er, %ot havi%& $ai: the te% $erce%t (1,O) s($ervisio% 'ee $rescri2e: 2) Or:i%a%ce 0o. ! !, ha: %o $erso%alit) to D(estio%, a%: 5as esto$$e: 'ro/ D(estio%i%&, its vali:it)C that the ta6 o% &ross recei$ts 5as %ot a ta6 o% i%co/e 2(t o%e i/$ose: 'or the e%Ao)/e%t o' the $rivile&e to e%&a&e i% a $artic(lar tra:e or 2(si%ess 5hich 5as 5ithi% the $o5er o' res$o%:e%t to i/$ose. .% its S($$le/e%tal Petitio% o' #- Se$te/2er 1 !#, $etitio%er alle&e: havi%& $ai: (%:er $rotest the 'ive $erce%t ("O) ta6 (%:er Or:i%a%ce 0o. #-* 'or the /o%ths o' ;(%e to Se$te/2er 1 !#. T5o (#) :a)s later, o% #" Se$te/2er 1 !#, $etitio%er /ove: 'or A(:&/e%t o% the $lea:i%&s, alle&i%& that the /aterial 'acts ha: 2ee% a:/itte: 2) the $arties. O% #1 Octo2er 1 !#, the lo5er co(rt :is/isse: the $etitio%, r(li%& ! that the D(estio%e: i/$ositio% is %ot a ta6 o% i%co/e, 2(t rather a $rivile&e ta6 or lice%se 'ee 5hich local &over%/e%ts, li4e res$o%:e%t, are e/$o5ere: to i/$ose a%: collect. Havi%& 'aile: to o2tai% reco%si:eratio% o' sai: :ecisio%, $etitio%er ca/e to (s o% the $rese%t Petitio% 'or Revie5. The o%l) iss(e to 2e resolve: here is 5hether the ta6 i/$ose: 2) res$o%:e%t o% &ross recei$ts o' stall re%tals is $ro$erl) characteri8e: as $arta4i%& o' the %at(re o' a% i%co/e ta6 or, alter%ativel), o' a lice%se 'ee. 7e 2e&i% 5ith the 'act that Sectio% 1#, Article ... o' Re$(2lic Act 0o. "-!, other5ise 4%o5% as the Revise: Charter o' <(e8o% Cit), a(thori8es the Cit) Co(%cil: 666 666 666 (2) To $rovi:e 'or the lev) a%: collectio% o' ta6es a%: other cit) reve%(es a%: a$$l) the sa/e to the $a)/e%t o' cit) e6$e%ses i% accor:a%ce 5ith a$$ro$riatio%s. (c) 0o ta * fi the license fee* and re!ulate the #usiness of the 'ollo5i%&: ... preparation and sale of meat* poultry* fish* !ame* #utter* cheese* lard ve!eta#les* #read and other provisions. 4 The sco$e o' le&islative a(thorit) co%'erre: ($o% the <(e8o% Cit) Co(%cil i% res$ect o' 2(si%esses li4e that o' the $etitio%er, is co/$rehe%sive: the &ra%t o' a(thorit) is %ot o%l)? KtoL re&(late? a%: ?'i6 the lice%se 'ee,? 2(t also ? to ta6? " Moreover, Sectio% # o' Re$(2lic Act 0o. ##*+, as a/e%:e:, other5ise 4%o5% as the 9ocal A(to%o/) Act, $rovi:es that: A%) $rovisio% o' la5 to the co%trar) %ot5ithsta%:i%&, all chartered cities* /(%ici$alities a%: /(%ici$al :istrictsshall have authority to impose municipal license ta es or fees upon persons en!a!ed in any occupation or #usiness* or e ercisin! privile!es in chartered cities , /(%ici$alities or /(%ici$al :istricts 2) reD(iri%& the/ to sec(re lice%ses at rates 'i6e: 2) the /(%ici$al 2oar: or cit) co(%cil o' the cit), the /(%ici$al co(%cil o' the /(%ici$alit), or the /(%ici$al :istrict co(%cil o' the /(%ici$al :istrictC to collect 'ees a%: char&es 'or service re%:ere: 2) the cit), /(%ici$alit) or /(%ici$al :istrictC to re&(late a%: i/$ose reaso%a2le 'ees 'or services

re%:ere: i% co%%ectio% 5ith a%) 2(si%ess, $ro'essio% or occ($atio% 2ei%& co%:(cte: 5ithi% the cit), /(%ici$alit) or /(%ici$al :istrict a%: other5ise to lev) 'or $(2lic $(r$oses A(st a%: (%i'or/ ta6es lice%ses or 'ees: ... 6 .t is %o5 settle: that Re$(2lic Act 0o. ##*+ co%'ers ($o% local &over%/e%ts 2roa: ta6i%& a(thorit) e6te%:i%& to al/ost ?ever)thi%&, e6ce$ti%& those 5hich are /e%tio%e: therei%,? $rovi:e: that the ta6 levie: is ?'or $(2lic $(r$oses, A(st a%: (%i'or/,? :oes %ot tra%s&ress a%) co%stit(tio%al $rovisio% a%: is %ot re$(&%a%t to a co%trolli%& stat(te. ) Both the 9ocal A(to%o/) Act a%: the Charter o' res$o%:e%t clearl) sho5 that res$o%:e%t is a(thori8e: to 'i6 the lice%se 'ee collecti2le 'ro/ a%: re&(late the 2(si%ess o' $etitio%er as o$erator o' a $rivatel)Fo5%e: $(2lic /ar4et. Petitio%er, ho5ever, i%sist that the ?s($ervisio% 'ee? collecte: 'ro/ re%tals, 2ei%& a ret(r% 'ro/ ca$ital i%veste: i% the co%str(ctio% o' the >ar/ers Mar4et, $racticall) o$erates as a ta6 o% i%co/e, o%e o' those e6$ressl) e6ce$te: 'ro/ res$o%:e%tBs ta6i%& a(thorit), a%: th(s 2e)o%: the latterBs co/$ete%ce. Petitio%er cites the sa/e Sectio% # o' the 9ocal A(to%o/) Act 5hich &oes o% to state: * ... Provi:e:, ho5ever, 0hat no city* /(%ici$alit) or /(%ici$al :istrict may levy or i/$ose a%) o' the 'ollo5i%&: 666 666 666 (&) Ta6es o% i%co/e o' a%) 4i%: 5hatsoeverC The ter/ ?ta6? 'reD(e%tl) a$$lies to all 4i%:s o' e6actio%s o' /o%ies 5hich 2eco/e $(2lic '(%:s. .t is o'te% loosel) (se: to i%cl(:e levies 'or reve%(e as 5ell as levies 'or re&(lator) $(r$oses s(ch that lice%se 'ees are 'reD(e%tl) calle: ta6es altho(&h license fee is a le&al co%ce$t :isti%&(isha2le 'ro/ ta H the 'or/er is i/$ose: i% the e6ercise o' $olice $o5er $ri/aril) 'or $(r$oses o' re&(latio%, 5hile the latter is i/$ose: (%:er the ta6i%& $o5er $ri/aril) 'or $(r$oses o' raisi%& reve%(es. 9 Th(s, i' the &e%erati%& o' reve%(e is the $ri/ar) $(r$ose a%: re&(latio% is /erel) i%ci:e%tal, the i/$ositio% is a ta6C 2(t i' re&(latio% is the $ri/ar) $(r$ose, the 'act that i%ci:e%tall) reve%(e is also o2tai%e: :oes %ot /a4e the i/$ositio% a ta6. 1+ To 2e co%si:ere: a lice%se 'ee, the i/$ositio% D(estio%e: /(st relate to a% occ($atio% or activit) that so e%&a&es the $(2lic i%terest i% health, /orals, sa'et) a%: :evelo$/e%t as to reD(ire re&(latio% 'or the $rotectio% a%: $ro/otio% o' s(ch $(2lic i%terestC the i/$ositio% /(st also 2ear a reaso%a2le relatio% to the $ro2a2le e6$e%ses o' re&(latio%, ta4i%& i%to acco(%t %ot o%l) the costs o' :irect re&(latio% 2(t also its i%ci:e%tal co%seD(e%ces as 5ell.11 7he% a% activit), occ($atio% or $ro'essio% is o' s(ch a character that i%s$ectio% or s($ervisio% 2) $(2lic o''icials is reaso%a2l) %ecessar) 'or the sa'e&(ar:i%& a%: '(rthera%ce o' $(2lic health, /orals a%: sa'et), or the &e%eral 5el'are, the le&islat(re /a) $rovi:e that s(ch i%s$ectio% or s($ervisio% or other 'or/ o' re&(latio% shall 2e carrie: o(t at the e6$e%se o' the $erso%s e%&a&e: i% s(ch occ($atio% or $er'or/i%& s(ch activit), a%: that %o o%e shall e%&a&e i% the occ($atio% or carr) o(t the activit) (%til a 'ee or char&e s(''icie%t to cover the cost o' the i%s$ectio% or s($ervisio% has 2ee% $ai:. 1( Accor:i%&l), a char&e o' a 'i6e: s(/ 5hich 2ears %o relatio% at all to

the cost o' i%s$ectio% a%: re&(latio% /a) 2e hel: to 2e a ta6 rather tha% a% e6ercise o' the $olice $o5er. 1! .% the case at 2ar, the ?>ar/ers Mar4et M Sho$$i%& Ce%ter? 5as 2(ilt 2) virt(e o' Resol(tio% 0o. !-", $asse: o% -, ;a%(ar) 1 *! 2) res$o%:e%tsBs local le&islative 2o:) a(thori8i%& $etitio%er to esta2lish a%: o$erate a /ar4et 5ith a $er/it to sell 'resh /eat, 'ish, $o(ltr) a%: other 'oo:st(''s. 14 The sa/e resol(tio% i/$ose: ($o% $etitio%er, as a co%:itio% 'or co%ti%(o(s o$eratio%, the o2li&atio% to ?a2i:e 2) a%: co/$l) 5ith the or:i%a%ces, r(les a%: re&(latio%s $rescri2e: 'or the esta2lish/e%t, o$eratio% a%: /ai%te%a%ce o' /ar4ets i% <(e8o% Cit).? 1" The ?>ar/ersB Mar4et a%: Sho$$i%& Ce%ter? 2ei%& a $(2lic /ar4et i% theB se%se o' a /ar4et o$e% to a%: i%viti%& the $atro%a&e o' the &e%eral $(2lic, eve% tho(&h $rivatel) o5%e:, $etitio%erBs o$eratio% thereo' reD(ire: a lice%se iss(e: 2) the res$o%:e%t Cit), the iss(a%ce o' 5hich, a$$l)i%& the sta%:ar:s set 'orth a2ove, 5as :o%e $ri%ci$all) i% the e6ercise o' the res$o%:e%tBs $olice $o5er. 16 The o$eratio% o' a $rivatel) o5%e: /ar4et is, as correctl) %ote: 2) the Solicitor Ge%eral, eD(ivale%t to or D(ite the sa/e as the o$eratio% o' a &over%/e%tFo5%e: /ar4etC 2oth are esta2lishe: 'or the re%:itio% o' service to the &e%eral $(2lic, 5hich 5arra%ts close s($ervisio% a%: co%trol 2) the res$o%:e%t Cit), 1) 'or the $rotectio% o' the health o' the $(2lic 2) i%s(ri%&, e.&., the /ai%te%a%ce o' sa%itar) a%: h)&ie%ic co%:itio%s i% the /ar4et, co/$lia%ce o' all 'oo: st(''s sol: therei% 5ith a$$lica2le 'oo: a%: :r(& a%: relate: sta%:ar:s, 'or the $reve%tio% o' 'ra(: a%: i/$ositio% ($o% the 2()i%& $(2lic, a%: so 'orth. 7e 2elieve a%: so hol: that the 'ive $erce%t ("O) ta6 i/$ose: i% Or:i%a%ce 0o. #-* co%stit(tes, %ot a ta on income* %ot a city i%co/e ta6 (as :isti%&(ishe: 'ro/ the national i%co/e ta6 i/$ose: 2) the 0atio%al .%ter%al Reve%(e Co:e) 5ithi% the /ea%i%& o' Sectio% # (&) o' the 9ocal A(to%o/) Act, 2(t rather a lice%se ta6 or 'ee 'or the re&(latio% o' the 2(si%ess i% 5hich the $etitio%er is e%&a&e:. 7hile it is tr(e that the a/o(%t i/$ose: 2) the D(estio%e: or:i%a%ces /a) 2e co%si:ere: i% :eter/i%i%& 5hether the e6actio% is reall) o%e 'or reve%(e or $rohi2itio%, i%stea: o' o%e o' re&(latio% (%:er the $olice $o5er, 1* it %evertheless 5ill 2e $res(/e: to 2e reaso%a2le. 9ocalB &over%/e%ts are allo5e: 5i:e :iscretio% i% :eter/i%i%& the rates o' i/$osa2le lice%se 'ees eve% i% cases o' $(rel) $olice $o5er /eas(res, i% the a2se%ce o' $roo' as to $artic(lar /(%ici$al co%:itio%s a%: the %at(re o' the 2(si%ess 2ei%& ta6e: as 5ell as other :etaile: 'actors releva%t to the iss(e o' ar2itrari%ess or (%reaso%a2le%ess o' the D(estio%e: rates. 19 Th(s: KAL% or:i%a%ce carries 5ith it the $res(/$tio% o' vali:it). The D(estio% o' reaso%a2le%ess tho(&h is o$e% to A(:icial i%D(ir). M(ch sho(l: 2e le't th(s to the :iscretio% o' /(%ici$al a(thorities. Co(rts 5ill &o slo5 i% 5riti%& o'' a% or:i%a%ce as (%reaso%a2le (%less the a/o(%t is so e6cessive as to 2e $rohi2itor), ar2itrar), (%reaso%a2le, o$$ressive, or co%'iscator). A r(le 5hich has &ai%e: acce$ta%ce is that 'actors releva%t to s(ch a% i%D(ir) are the

/(%ici$al co%:itio%s as a 5hole a%: the %at(re o' the 2(si%ess /a:e s(2Aect to i/$ositio%.(+ Petitio%er has %ot sho5% that the rate o' the &ross recei$ts ta6 is so (%reaso%a2l) lar&e a%: e6cessive a%: so &rossl) :is$ro$ortio%ate to the costs o' the re&(lator) service 2ei%& $er'or/e: 2) the res$o%:e%t as to co/$el the Co(rt to characteri8e the i/$ositio% as a reve%(e /eas(re e6cl(sivel). The lo5er co(rt correctl) hel: that the &ross recei$ts 'ro/ stall re%tals have 2ee% (se: o%l) as a 2asis 'or co/$(ti%& the 'ees or ta6es :(e res$o%:e%t to cover the latterBs a:/i%istrative e6$e%ses, i.e., 'or re&(latio% a%: s($ervisio% o' the sale o' 'oo:st(''s to the $(2lic. The (se o' the &ross a/o(%t o' stall re%tals as 2asis 'or :eter/i%i%& the collecti2le a/o(%t o' lice%se ta6, :oes %ot 2) itsel', ($o% the o%e ha%:, co%vert or re%:er the lice%se ta6 i%to a $rohi2ite: cit) ta6 o% i%co/e. G$o% the other ha%:, it has %ot 2ee% s(&&este: that s(ch 2asis has %o reaso%a2le relatio%shi$ to the $ro2a2le costs o' re&(latio% a%: s($ervisio% o' the $etitio%erBs 4i%: o' 2(si%ess. >or, or:i%aril), the hi&her the a/o(%t o' stall re%tals, the hi&her the a&&re&ate vol(/e o' 'oo:st(''s a%: relate: ite/s sol: i% $etitio%erBs $rivatel) o5%e: /ar4etC a%: the hi&her the vol(/e o' &oo:s sol: i% s(ch $rivate /ar4et, the &reater the e6te%t a%: 'reD(e%c) o' i%s$ectio% a%: s($ervisio% that /a) 2e reaso%a2l) reD(ire: i% the i%terest o' the 2()i%& $(2lic. Moreover, 5hat 5e starte: 5ith sho(l: 2e recalle: here: the a(thorit) co%'erre: ($o% the res$o%:e%tBs Cit) Co(%cil is not /erel) ?to re&(late? 2(t also e/2races the $o5er ?to ta6? the $etitio%erBs 2(si%ess. >i%all), $etitio%er ar&(es that res$o%:e%t is 5itho(t $o5er to i/$ose a &ross recei$ts ta6 'or reve%(e $(r$oses a2se%t a% e6$ress &ra%t 'ro/ the %atio%al &over%/e%t. As a &e%eral r(le, there /(st 2e a stat(tor) &ra%t 'or a local &over%/e%t (%it to i/$ose la5'(ll) a &ross recei$ts ta6, that (%it %ot havi%& the i%here%t $o5er o' ta6atio%. (1The r(le, ho5ever, 'i%:s %o a$$licatio% i% the i%sta%t case 5here 5hat is i%volve: is a% e6ercise o', $ri%ci$all), the re&(lator) $o5er o' the res$o%:e%t Cit) a%: 5here that re&(lator) $o5er is e6$ressl) acco/$a%ie: 2) the ta6i%& $o5er. ACCORD.0G9I, the Decisio% o' the the% Co(rt o' >irst .%sta%ce o' Ri8al, <(e8o% Cit), Bra%ch 11, is here2) A>>.RMED a%: the Co(rt Resolve: to DE0I the Petitio% 'or lac4 o' /erit. SO ORDERED.

1#) Tatel vs. =iras +1 SCRA ! G.R. No. L (91"9 No<$6%$& (4, 19)( CELESTINO TATEL, ET AL., $lai%ti''sFa$$ellees, vs. THE MUNICIPALITY O# /IRAC, ET AL., :e'e%:a%tsFa$$ella%ts. G.R. No. L (91"9 No<$6%$& (4, 19)( GUL# #IBERS CORPORATION, ET AL., $lai%ti''sFa$$ellees, vs. THE MUNICIPALITY O# /IRAC, ET AL., :e'e%:a%tsFa$$ella%ts.

3uanito /, Romano for plaintiffs9appellees, Rey ', 0e$ada for defendants9appellants, CONCEPCION, C.J.:p These t5o (#) cases 5ere Aoi%tl) trie: 2e'ore a%: :eci:e: 2) the Co(rt o' >irst .%sta%ce o' Cata%:(a%es, o5i%& to the i:e%tical iss(es raise: therei%, %a/el), the vali:it) o' t5o or:i%a%ces o' the M(%ici$alit) o' =irac, the herei% :e'e%:a%tFa$$ella%t. .% Case 0o. 9F# 1" @ Civil Case 0o. "11 o' the Co(rt o' >irst .%sta%ce o' Cata%:(a%es @ Celesti%o Tatel, et al., D(estio% the le&alit) o' Or:i%a%ce 0o. *, series o' 1 *", o' sai: /(%ici$alit), rea:i%& as 'ollo5s: ORD.0A0CE 0O. * A0 ORD.0A0CE .MPOS.0G MG0.C.PA9 9.CE0SE TAEES >OR THE EEERC.SE O> A99 BGS.0ESS, OCCGPAT.O0S A0D PR.=.9EGES 7.TH.0 THE MG0.C.PA9.TI O> =.RAC A0D >OR OTHER PGRPOSES. Be it or:ai%e: 2) the M(%ici$al Co(%cil asse/2le: i% sessio%C That SECT.O0 1 @ P(r$ose a%: Sco$e @ The $(r$ose o' this or:i%a%ce is to raise reve%(e i% the M(%ici$alit) o' =irac, Cata%:(a%es 2) i/$osi%& /(%ici$al lice%se ta6es o% all $erso%s e%&a&e: i% a%) 2(si%ess, occ($atio% or i% the e6ercise o' $rivile&e. SECT.O0 # @ 9ice%se Ta6 @ A /(%ici$al lice%se ta6 shall 2e i/$ose: ($o% $erso%s e%&a&e: i% 2(si%esses, occ($atio%s or $rivile&es as herei%a'ter $rovi:e:. SECT.O0 - @ A/o(%t o' ta6es o% 2(si%ess @ M(%ici$al lice%se ta6es o% 2(si%ess shall 2e collecte: as 'ollo5s: (a) Mercha%ts, SariFSari Store O5%ers, 7holesale or Retail Dealers o' &e%eral /ercha%:ise, $har/ace(tical $ro:(cts, rice a%: cor%, e6ce$t &asoli%e, etc. as $rovi:e: (%:er Re$(2lic Act 1+-" @ 7ith Ca$ital i%vest/e%t or $(rchases 'or the $revio(s )ear, 5hichever is hi&her, a/o(%ti%& to @ 0ot E6cee:i%& P1,,, @ @ P#,.,, $er a%%(/ 1,,1 @ #,,, @ +,.,, $er a%%(/ #,,1 @ -,,, @ *,.,, $er a%%(/ -,,1 @ +,,, @ 1,.,, $er a%%(/ +,,1 @ ",,, @ 1,,.,, $er a%%(/ ",,1 @ *,,, @ 1#,.,, $er a%%(/ *,,1 @ !,,, @ 1+,.,, $er a%%(/ !,,1 @ 1,,, @ 1*,.,, $er a%%(/ 1,,1 @ ,,, @ 11,.,, $er a%%(/ ,,1 @ 1,,,,, @ #,,.,, $er a%%(/ 1,,,,1 @ 11,,,, @ ##,.,, $er a%%(/ 11,,,1 @ 1",,,, @ #+,.,, $er a%%(/ >or ever) P1,,,, i% e6cess o' P1",,,, (sic)

Pa)a2le D(arterl) or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (2) Mercha%ts (2()ers a%: sellers) o' A2aca a%: Co$raC 7ith Ca$ital .%vest/e%t or $(rchases 'or the $revio(s )ear, 5hichever is hi&her, a/o(%ti%& to @ 0ot E6cee:i%& P1,,, @ @ P#,.,, $er a%%(/ 1,,1 @ #,,, @ +,.,, $er a%%(/ #,,1 @ -,,, @ *,.,, $er a%%(/ -,,1 @ +,,, @ 1,.,, $er a%%(/ +,,1 @ ",,, @ 1,,.,, $er a%%(/ ",,1 @ *,,, @ 1#,.,, $er a%%(/ *,,1 @ !,,, @ 1+,.,, $er a%%(/ !,,1 @ 1,,, @ 1*,.,, $er a%%(/ 1,,1 @ ,,, @ 11,.,, $er a%%(/ ,,1 @ 1,,,,, @ #,,.,, $er a%%(/ 1,,,,1 @ 11,,,, @ ##,.,, $er a%%(/ 11,,,1 @ 1",,,, @ #+,.,, $er a%%(/ >or ever) P1,,,, i% e6cess o' P1,,,,, (sic) Pa)a2le D(arterl) o% or 2e'ore the #,th o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (c) Pro$rietors or O$erators o' 2a4er) a%: other 'oo: $ro:(cts: 7ith Ca$ital .%vest/e%t or $(rchases 'or the $revio(s )ear, 5hichever is hi&her, a/o(%ti%& to @ 0ot E6cee:i%& P",,, @ @ P#,,.,, $er a%%(/ ",,1 @ 1,,,,1 @ #+,.,, $er a%%(/ 1,,,,1 @ 1",,,, @ -,,.,, $er a%%(/ 1",,,1 @ #,,,,, @ -*,.,, $er a%%(/ >or ever) P1,,,, i% e6cess o' P#,,,, @ P1,.,, $er a%%(/ Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith $e%alt) o' #,O 'or late $a)/e%t. (:) Pro$rietors or O$erators or /a%('act(rers o' hollo5F2loc4s or si/ilar $ro:(ctsC 7ith /achi%er) @ P1,,.,, $er a%%(/ 7itho(t /achi%er) @ ",.,, $er a%%(/ Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (e) O$erator o' 9(/2er Iar:: Class A @ 9(/2er )ar: 5itho(t /achi%er) 'or :e$osit o' /ore tha% #,, sD. /. P+,,.,, $er a%%(/. Class B @ 1",1 @ #,,, sD. / P-",.,, $er a%%(/ Class C @ 1,,1 @ 1",, sD. / P-,,.,, $er a%%(/ Class D @ ",1 @ 1,,, sD. / P#",.,, $er a%%(/ Class E @ 9ess tha% ",, sD. / P#,,.,, $er a%%(/

Class > @ 7itho(t a )ar: 2(t 5ith s$ace to 4ee$ alrea:) sa5e: l(/2er a%: 5ith o''ice to acce$t or:ers 'or l(/2er P1,,.,, $er a%%(/ Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O, 'or late $a)/e%t. (') 9(/2er )ar: 5ith /achi%er) shall $a) i% a::itio% to the 'ees $rescri2e: a2ove @ Over #,, H. P. P-,,.,, $er a%%(/ 1"1 @ #,, HP #",.,, $er a%%(/ 1,1 @ 1", HP #,,.,, $er a%%(/ "1 @ 1,, HP 1",.,, $er a%%(/ #* @ ", HP 1,,.,, $er a%%(/ @ #" HP 2elo5 ",.,, $er a%%(/ Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (&) Mercha%ts, 5holesale or retail :ealers o' l(/2er /aterials 5ith ca$ital i%vest/e%t or $(rchases 'or the $revio(s )ear, 5hichever is hi&her @ 0ot E6cee:i%&. P1,,, @ @ +,.,, $er a%%(/ 1,,1 @ #,,, @ 1,.,, $er a%%(/ #,,1 @ -,,, @ 1#,.,, $er a%%(/ -,,1 @ +,,, @ 1*,.,, $er a%%(/ +,,1 @ ",,, @ #,,.,, $er a%%(/ ",,1 @ *,,, @ #+,.,, $er a%%(/ *,,1 @ !,,, @ #1,.,, $er a%%(/ !,,1 @ 1,,, @ -#,.,, $er a%%(/ 1,,1 @ ,,, @ -*,.,, $er a%%(/ ,,1 @ 1,,,,, @ +,,.,, $er a%%(/ >or ever) P1,,,, i% e6cess o' P1,,,,, @ P1,.,, $.a. Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith $e%alt) o' #,O 'or late $a)/e%t. (h) Pro$rietors or O$erators o' '(r%it(re, 5i%:o5s a%: :oors @ Sash >actor) @ 7ith /achi%er) @ P1,.,, $er a%%(/ 7itho(t /achi%er) @ P+,.,, $er a%%(/. Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (1) Mercha%ts, 5holeFsale or retail :ealers o' ratta% a%: %i$a shi%&les 5ith a ca$ital i%vest/e%t or $(rchases 'or the $revio(s )ear, 5hichever is hi&her @ 0ot E6cee:i%& P",, P#,.,, $er a%%(/ ",1F1,,, +,.,, $er a%%(/ 1,,1F#,,, *,.,, $er a%%(/

#,,1F-,,, 1,.,, $er a%%(/ -,,1F+,,, 1,,.,, $er a%%(/ +,,1F",,, 1#,.,, $er a%%(/ ",,1F*,,, 1+,.,, $er a%%(/ *,,1F!,,, 1*,.,, $er a%%(/ !,,1F1,,, 11,.,, $er a%%(/ 1,,1F ,,, #,,.,, $er a%%(/ ,,1F1,,,,, ##,.,, $er a%%(/ >or ever) P1,,, i% e6cess o' P1,,,,, @ P1,.,, $. a. Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th, ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. PRO=.DED >GRTHER, that the $ro$rietors or o$erators /e%tio%e: (%:er a, 2, c, & a%: i% (%:er Sec. - o' this or:i%a%ce are reD(ire: to s(2/it a state/e%t o' their $(rchases 'ro/ ;a%(ar) to ;(%e, 1 *" o% or 2e'ore ;(l) 1,, 1 *" a%: to s(2/it their /o%thl) $(rchases o% or 2e'ore the 1,th :a) o' the s(2seD(e%t /o%ths 5hich sho(l: 2e (%:er oath i% a $rescri2e: 'or/ 'ro/ the O''ice o' the M(%ici$al Treas(rer, 5here the re$ort shall 2e s(2/itte:. SECT.O0 + @ =iolatio% o' a%) o' the $rovisio%s o' this Or:i%a%ce shall 2e $(%ishe: 2) a 'i%e o' P#,,.,, or i/$riso%/e%t o' si6 /o%ths or 2oth $e%alties at the :iscretio% o' the Co(rt. SECT.O0 " @ All or:i%a%ces the $rovisio%s o' 5hich are i%co%siste%t 5ith the $rovisio%s o' this or:i%a%ce are here2) re$eale:. SECT.O0 * @ This or:i%a%ce shall ta4e e''ect i//e:iatel) ($o% a$$roval. A$$rove: (%a%i/o(sl), ;(%e #1, 1 *". .% Case 0o. 9F# 1*, @ Civil Case 0o. "11 o' the Co(rt o' >irst .%sta%ce o' Cata%:(a%es G(l' >i2ers Cor$oratio%, et al., i/$(&% the vali:it) o' Or:i%a%ce 0o. ", series o' 1 **, o' the sa/e /(%ici$alit), 5hich is o' the 'ollo5i%& te%or: ORD.0A0CE 0O. " A0 ORD.0A0CE AME0D.0G SECT.O0 -(A) O> THE AME0DED ORD.0A0CE 0O. 1# SER.ES O> 1 *" .MPOS.0G MG0.C.PA9 9.CE0SE TAEES >OR THE EEERC.SE O> A99 BGS.0ESS, OCCGPAT.O0S A0D PR.=.9EGES 7.TH.0 THE MG0.C.PA9.TI O> =.RAC A0D >OR OTHER PGRPOSES. Be it or:ai%e: 2) the M(%ici$al Co(%cil asse/2le: i% sessio%C That @ SECT.O0 1 @ A/e%:i%& Sectio% -(a) o' a/e%:e: or:i%a%ce 0o. 1# series 1 *" to rea: as 'ollo5s: SECT.O0 - (a) o' a/e%:e: or:i%a%ce 0o. 1# series 1 *" as '(rther a/e%:e:. A/o(%t o' Ta6es o% 2(si%ess @ M(%ici$al lice%se ta6es o% 2(si%ess shall 2e collecte: as 'ollo5s: (a) Mercha%t, SariFSari store o5%ers, 5holesale or retail :ealers o' /ercha%:ise, $har/ace(tical $ro:(cts, rice a%: cor%, a2aca, co$ra, o$erators o' 2a4er) a%: other 'oo: $ro:(cts. Mercha%ts or 5holesale or retail

:ealers o' l(/2er /aterials, ratta% a%: %i$a shi%&les, 5holesale a%: retail :ealers o' liD(or or 'er/e%te: liD(or, 5holesale a%: retail :ealer o' to2acco. 7ith ca$ital i%vest/e%t or $(rchases 'or the $revio(s )ear, 5hichever is hi&her, a/o(%ti%& to @ (a) 0ot e6cee:i%&: P1,,,.,, P#,.,, $er a%%(/ 1,,1.,,F#,,,.,, +,.,, $er a%%(/ #,,1.,,F-,,,.,, *,.,, $er a%%(/ -,,1.,,F+,,,.,, 1,.,, $er a%%(/ +,,1.,,F",,,.,, 1,,.,, $er a%%(/ ",,1.,,F*,,,.,, 1#,.,, $er a%%(/ *,,1.,,F!,,,.,, 1+,.,, $er a%%(/ 1,,1.,,F ,,,.,, 11,.,, $er a%%(/ !,,1.,,F1,,,.,, 1*,.,, $er a%%(/ ,,1.,,F1,,,,,.,, ##,.,, $er a%%(/ a%: there shall 2e collecte:: P .,, $.a. i% e6cess o' P1,,,,, 'or ever) P1,,,, or 'ractio% thereo' ($ to P-,,,,,,.,,C P1.,, $.a. i% e6cess o' P-,,,,,, 'or ever) P1,,,, or 'ractio% thereo' ($ to P",,,,,,.,,C P!.,, $.a. i% e6cess o' P",,,,,, 'or ever) P1,,,, or 'ractio% thereo', 5hich a/o(%t shall %ot e6cee: the total o' P*,,,,.,, $er a%%(/ o% the 2(si%ess. Provi:e:, '(rther that these shall 2e the 2asis o' the lice%ses e''ective Octo2er 1, 1 ** 2ase: o% the i%vest/e%t or $(rchases last cale%:ar )ear 5hichever is hi&her a%: the lice%ses 'or the s(ccee:i%& )ears shall 2e 2ase: 'ro/ the i%vest/e%t or $(rchases 'or the $revio(s )ear 5hichever is hi&her. Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th o' ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (2) Pro$rietors or O$erators or Ma%('act(rers o' Hollo52loc4 or si/ilar $ro:(cts: 7ith Machi%er) ............................................... P1,,.,, $er a%%(/ 7itho(t Machi%er) ......................................... ",.,, $er a%%(/ Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th o' ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (c) O$erator o' 9(/2er Iar:: Class A @ 9(/2er )ar: 5itho(t /achi%er) 'or :e$osit o' /ore tha% #,,, sD. /. P+,,.,, $er a%%(/ Class B @ 1",1F#,,, sD. / -",.,, $er a%%(/ Class C @ 1,,1F1",, sD. /. -,,.,, $er a%%(/ Class D @ ",1F1,,, sD. /. #",.,, $er a%%(/ Class E @ 9ess tha% ",, sD. /. #,,.,, $er a%%(/ Class > @ 7itho(t a )ar: 2(t 5ith a s$ace to 4ee$ alrea:) sa5e: l(/2er a%: 5ith o''ice to acce$t or:er 'or l(/2er P1,,.,, $er a%%(/

Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th o' ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (:) 9(/2er )ar: 5ith /achi%er) shall $a) i% a::itio% to the 'ees $rescri2e: a2ove @ Over #,, H.P. P-,,.,, $er a%%(/ 1"1F#,, H.P. #",.,, $er a%%(/ 1,1F1", H.P #,,.,, $er a%%(/ "1F1,, H.P. 1",.,, $er a%%(/ #* F ", H.P. 1,,.,, $er a%%(/ Belo5 F #" H.P. ",.,, $er a%%(/ Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th o' ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. (e) Pro$rietors or O$erators o' '(r%it(re, 5i%:o5s a%: :oors @ Sash >actor) @ 7ith Machi%er) P1,.,, $. a. 7itho(t Machi%er) +,.,, $. a. Pa)a2le D(arterl) o% or 2e'ore the #,th :a) o' the /o%th o' ;a%(ar), A$ril, ;(l) a%: Octo2er o' the )ear 5ith a $e%alt) o' #,O 'or late $a)/e%t. SECT.O0 # @ Provi:e: '(rther that $ro$rietors or o$erators (%:er (a) Sectio% 1 hereo' shall s(2/it their /o%thl) $(rchases (%:er oath o% or 2e'ore the 1,th :a) o' the 'ollo5i%& /o%th to the M(%ici$al Treas(rer i% a $rescri2e: 'or/ 'ro/ the O''ice o' the M(%ici$al Treas(rer 5hich $(rchases or ca$ital i%veste: 'or the 5hole )ear 5hichever is hi&her shall 2e the 2asis o' a/o(%t to 2e collecte: as $rovi:e: (%:er (a) o' Sectio% . o' this or:i%a%ce. SECT.O0 - @ =iolatio% o' a%) o' the $rovisio%s o' this Or:i%a%ce shall s(''er a 'i%e o' %ot less tha% P",.,, %or /ore tha% P#,,.,, or i/$riso%/e%t o' %ot less tha% -, :a)s %or /ore tha% * /o%ths or 2oth 'i%e a%: i/$riso%/e%t at the :iscretio% o' the co(rt. SECT.O0 + @ Sho(l: a%) sectio% or $art o' this or:i%a%ce 2e :eclare: (%co%stit(tio%al, s(ch :eclaratio% shall %ot i%vali:ate the other $rovisio%s thereo'. SECT.O0 " @ All or:i%a%ces the $rovisio%s o' 5hich are i%co%siste%t 5ith the $rovisio%s o' this or:i%a%ce are here2) re$eale:. SECT.O0 * @ This a/e%:/e%t shall ta4e e''ect i//e:iatel) ($o% its a$$roval. A$$rove:, Se$te/2er -,, 1 **. Both or:i%a%ces 5ere assaile: ($o% the &ro(%: that the) $arta4e o' the %at(re o' a ta6 o% i/$orts or e6$orts a%: a ta6 o% $(rchases, as 5ell as :o(2le ta6atio%C that the) e''ect a% i%crease i% ta6es 2) /ore tha% ",O ?5itho(t the reD(isite a$$roval o' the Secretar) o' >i%a%ce that the ta6es i/$ose: are (%A(st, e6cessive a%: co%'iscator)C a%: that the i/$ositio% thereo' is ultra vires. Shortl) a'ter the 'ili%& o' the co/$lai%ts i% Case 0o. "11 o' the lo5er co(rt @ 9F# 1*, o' this Co(rt @ the trial co(rt, o% /otio% o' the $lai%ti''s, or:ere: the iss(a%ce o' a 5rit o' $reli/i%ar) i%A(%ctio% restrai%i%& the :e'e%:a%ts 'ro/ e%'orci%& Or:i%a%ce 0o. ", series o' 1 **, $e%:i%& the resol(tio% o' sai: case o% the /erits.

.% :(e co(rse, therea'ter, sai: co(rt re%:ere: a :ecisio%, the :is$ositive $art o' 5hich 7e D(ote: 7HERE>ORE, i% vie5 o' the 'ore&oi%& co%si:eratio%s, the Co(rt here2) 'i%:s Sectio%s -(a), -(2) a%: -(i) o' Or:i%a%ce 0o. *, Series o' 1 *" (%:er D(estio% i% Civil Case 0o. "11 a%: Sectio% 1 o' Or:i%a%ce 0o. ", Series o' 1 ** (%:er D(estio% i% Civil Case 0o. "11, %(ll a%: voi:, as co%trar) to the $rovisio%s o' s(2sectio% - o' sectio% + o' Co//o%5ealth Act 0o. +!# a%: sectio% # o' Re$(2lic Act 0o. ##*+. G%less $(r&e: o' their i%'ir/it), the $rovisio%s are (%e%'orcea2le. .% Civil Case 0o. "11, the :e'e%:a%ts are here2) or:ere: to rei/2(rse to the $lai%ti''s the ta6es $ai: 2) the/ (%:er $rotest, as 'ollo5s: (1) Celesti%o Tatel ............................................. P-,*" .", (#) ;(a% Moli%a ................................................. -,--,.,, (-) A%& 3ee Hia% .............................................. -,+-#.,, (+) A%& Ba% Gio4 .............................................. ",+*+.,, (") Tio So% 3(a% .............................................. 1-+.,, (*) Be%%ie Co. ................................................... 1,*,+.,, .% Civil Case 0o. "11, the :e'e%:a%ts are or:ere: to rei/2(rse the ta6es $ai: 2) the $lai%ti''s also (%:er $rotest, as 'ollo5s: (1) G(l' >i2ers Cor$oratio% .............................. P#,1+".,, (#) ;(a% Moli%a .................................................. -,1+#.", (-) Celesti%o Tatel ............................................. -,,,,.,, (+) A%& Ba% Gio4 ............................................... #, "#.,, (") A%& 3ee Hia% ............................................... #,-+*.,, (*) Be%%ie Co. ..................................................... 1,#,1.,, (!) 9i( 9i/ ........................................................... +-".,, 5ith i%terest at the le&al rate 'ro/ the ti/e o' the 'ili%& o' the co/$lai%t ($ to 'i%al A(:&/e%t. The $reli/i%ar) i%A(%ctio% is here2) /a:e $er/a%e%t. 7ith costs a&ai%st the :e'e%:a%ts. SO ORDERED. He%ce, this a$$eal 2) the M(%ici$alit) o' =irac. The :ecisio% a$$eale: 'ro/ :eclare: sai: or:i%a%ces ille&al ($o% the &ro(%: that the) $rovi:e 'or a% i%crease i% ta6es 2) /ore tha% ",O 5itho(t the a$$roval o' the Secretar) o' >i%a%ce a%: that the) i/$ose ta6es o% articles s(2Aect to s$eci'ic ta6, as 5ell as over 'orest $ro:(cts. 7e are (%a2le to share this vie5. To 2e&i% 5ith, the $rovisio% o' Co//o%5ealth Act 0o. +!# reD(iri%& the $rior a$$roval o' the Secretar) o' >i%a%ce, 5he% a% or:i%a%ce i%creases 2) /ore tha% ",O /(%ici$al ta6es $rescri2e: i% $revio(s or:i%a%ces, has 2ee% i/$lie:l) re$eale: 2) Re$(2lic Act 0o. ##*+, 5hich vests i% /(%ici$al, cit) a%: /(%ici$al :istrict co(%cils a/$le :iscretio% to i/$ose ta6es a%: eve% /(%ici$al lice%se ta6es, a%:, i%stea: o' :e/a%:i%& sai: prior approval o' the Secretar) o' >i%a%ce to or:i%a%ces i%creasi%& ta6es 2) /ore tha% ",O o' the $revio(s rates, vests i% sai: o''icial %o /ore tha% the a(thorit) to suspend the e''ectivit) o' a%)

or:i%a%ce, 5ithi% 1#, :a)s a'ter its $assa&e, 5he%, i% his o$i%io%, the ta6es i/$ose: are ?(%A(st, e6cessive, o$$ressive or co%'iscator).? Moreover, the or:i%a%ces i% D(estio% :o %ot ta6 s$eci'ic &oo:s. The) i/$ose lice%se ta6es, or re&(late a%: ta6 those e%&a&i%& i% the 2(si%esses or occ($atio%s, or e6ercisi%& the $rivile&es, therei% e%(/erate:. The) cate&ori8e sai: 2(si%esses, occ($atio%s or $rivile&es o% the 2asis o' the %at(re thereo' @ s(ch as ?/ercha%ts, sariFsari store o5%ers, 5holesale a%: retail :ealers o' &e%eral /ercha%:ise,? /a%('act(rers o' hollo5F2loc4s or si/ilar $ro:(cts, l(/2er )ar:s, etc. @ or o' the $ro:(cts the) ha%:le @ s(ch as $har/ace(tical $ro:(cts, rice a%: cor%, a2aca a%: co$ra, '(r%it(re, ratta% a%: %i$a shi%&les, liD(or or to2acco. So/e o' these cate&ories are s(2Fclassi'ie:, :e$e%:i%& ($o% 5hether the 2(si%ess or occ($atio% 2ei%& ta6e: is (%:erta4e% 5ith or 5itho(t /achi%eries, or 5hether the l(/2er )ar: is /erel) 'or :e$osit, or 5itho(t a ?)ar:? $ro$erl), ?2(t 5ith s$ace to 4ee$ alrea:) sa5e: l(/2er a%: 5ith o''ice to acce$t or:ers 'or l(/2er.? Seco%:l), the lice%se ta6 $rescri2e: i% each cate&or) is &ra:(ate:, the a/o(%t thereo' 2ei%& :e$e%:e%t ($o% the ?ca$ital i%vest/e%t or $(rchases 'or the $revio(s )ear, 5hichever is hi&her.? The $o5er to i/$ose s(ch lice%se ta6es is e6$licitl) a(thori8e: i% Sectio% # o' Re$. Act 0o. ##*+, 5hich $rovi:es that: SEC. #. 0a ation. @ A%) $rovisio% o' la5 to the co%trar) %ot5ithsta%:i%&, all chartere: cities, /(%ici$alities a%: /(%ici$al :istricts shall have a(thorit) to i/$ose /(%ici$al lice%se ta6es or 'ees ($o% $erso%s e%&a&e: i% a%) occ($atio% or 2(si%ess or e6ercisi%& $rivile&es i% chartere: cities, /(%ici$alities or /(%ici$al :istricts 2) reD(iri%& the/ to sec(re lice%ses at rates 'i6e: 2) the /(%ici$al 2oar: or cit) co(%cil o' the cit), the /(%ici$al co(%cil o' the /(%ici$alit), or the /(%ici$al :istrict co(%cil o' the /(%ici$al :istrictC to collect 'ees a%: char&es 'or service re%:ere: 2) the cit), /(%ici$alit) or /(%ici$al :istrictC to re&(late a%: i/$ose reaso%a2le 'ees 'or services re%:ere: i% co%%ectio% 5ith a%) 2(si%ess, $ro'essio% or occ($atio% 2ei%& co%:(cte: 5ithi% the cit), /(%ici$alit) or /(%ici$al :istrict a%: other5ise to lev) 'or $(2lic $(r$oses, A(st a%: (%i'or/ ta6es, lice%ses or 'ees:Provided, That /(%ici$alities a%: /(%ici$al :istricts shall, i% %o case, i/$ose a%) $erce%ta&e ta6 o% sales or other ta6es i% a%) 'or/ 2ase: thereo% %or i/$ose ta6es o% articles s(2Aect to s$eci'ic ta6, e6ce$t &asoli%e, (%:er the $rovisio%s o' the 0atio%al .%ter%al Reve%(e Co:e: Provided* ho"ever, That %o cit), /(%ici$alit) or /(%ici$al :istrict /a) lev) or i/$ose a%) o' the 'ollo5i%&: (a) Resi:e%ce ta6C (2) Doc(/e%tar) sta/$ ta6C (c) Ta6es o% the 2(si%ess o' $erso%s e%&a&e: i% the $ri%ti%& a%: $(2licatio% o' a%) %e5s$a$er, /a&a8i%e, revie5 or 2(lleti% a$$eari%& at re&(lar i%tervals a%: havi%& 'i6e: $rices 'or s(2scri$tio% a%: sale, a%: 5hich is %ot $(2lishe: $ri/aril) 'or the $(r$ose o' $(2lishi%& a:vertise/e%tsC

(:) Ta6es o% $erso%s o$erati%& 5ater5or4s, irri&atio% a%: other $(2lic (tilities e6ce$t electric li&ht, heat a%: $o5erC (e) Ta6es o% 'orest $ro:(cts a%: 'orest co%cessio%sC (') Ta6es o% estates, i%herita%ces, &i'ts, le&acies, a%: other acD(isitio%s mortis causaC (&) Ta6es o% i%co/e o' a%) 4i%: 5hatsoeverC (h) Ta6es or 'ees 'or the re&istratio% o' /otor vehicles a%: 'or the iss(a%ce o' all 4i%:s o' lice%ses or $er/its 'or the :rivi%& thereo'C (i) C(sto/s :(ties re&istratio%, 5har'a&e o% 5harves o5%e: 2) the %atio%al &over%/e%t, to%%a&e a%: all other 4i%:s o' c(sto/s 'ees, char&es a%: :(esC (A) Ta6es o' a%) 4i%: o% 2a%4s, i%s(ra%ce co/$a%ies, a%: $erso%s $a)i%& 'ra%chise ta6C (4) Ta6es o% $re/i(/s $ai: 2) o5%ers o' $ro$ert) 5ho o2tai% i%s(ra%ce :irectl) 5ith 'orei&% i%s(ra%ce co/$a%iesC a%: (l) Ta6es, 'ees or levies, o' a%) 4i%:, 5hich i% e''ect i/$ose a 2(r:e% o% e6$orts o' Phili$$i%e 'i%ishe:, /a%('act(re: or $rocesse: $ro:(cts a%: $ro:(cts o' Phili$$i%e cotta&e i%:(stries. A ta6 or:i%a%ce shall &o i%to e''ect o% the 'i'tee%th :a) a'ter its $assa&e, (%less the or:i%a%ce shall $rovi:e other5ise: Provided* ho"ever, That the Secretar) o' >i%a%ce shall have a(thorit) to s(s$e%: the e''ectivit) o' a%) or:i%a%ce 5ithi% o%e h(%:re: a%: t5e%t) :a)s a'ter its $assa&e, i', i% his o$i%io%, the ta6 or 'ee therei% levie: or i/$ose: is (%A(st, e6cessive, o$$ressive, or co%'iscator), a%: 5he% the sai: secretar) e6ercises this a(thorit) the e''ectivit) o' s(ch or:i%a%ce shall 2e s(s$e%:e:. .% s(ch eve%t the /(%ici$al 2oar: or cit) co(%cil i% the case o' cities a%: the /(%ici$al co(%cil or /(%ici$al :istrict, co(%cil i% the case o' /(%ici$alities a%: /(%ici$al :istricts /a) a$$eal the :ecisio% o' the Secretar) o' >i%a%ce to the co(rt :(ri%& the $e%:e%c) o' 5hich case the ta6 levie: shall 2e co%si:ere: as $ai: (%:er $rotest. .t sho(l: 2e %ote: that, (%:er the $e%(lti/ate $ara&ra$h o' the 'ore&oi%& sectio%, the $o5er o' the Secretar) o' >i%a%ce is li/ite: to suspendin! or:i%a%ces i/$osi%& ta6es that he co%si:ers ?(%A(st, e6cessive, o$$ressive or co%'iscator),? a%: that the only D(ali'icatio% o' that $o5er is that it 2e e6ercise: 5ithi% 1#, :a)s a'ter the $assa&e o' the or:i%a%ce. 7hat is /ore, his actio% /a) 2e appealed to the co(rts o' A(stice, (%li4e the $o5er o' a$$roval or :isa$$roval &ive% to sai: o''icials (%:er Sectio% + o' Co/. Act 0o. +!#, rea:i%&: SEC. +. The a$$roval o' the Secretar) o' >i%a%ce shall 2e sec(re:: (1) 7he%ever the rates o' /(%ici$al lice%se ta6es 'i6e: or i/$ose: 2) or:i%a%ce o' the /(%ici$al co(%cil or /(%ici$al :istrict co(%cil 2) virt(e o' the $rovisio%s o' this Act e6cee: the rates o' 'i6e: i%ter%al reve%(e $rivile&e ta6es re&(larl) i/$ose: 2) the 0atio%al Gover%/e%t ($o% the sa/e 2(si%esses or occ($atio%, e6ce$t o% hotels, resta(ra%ts, ca'es, re'resh/e%t $arlors, race trac4s, a%: retail :ealers i% vi%o liD(ors a%: 'er/e%te: liD(ors, a%: a%) ta6 or 'ee o% liver) sta2les, &ara&es, a%: other $laces or

esta2lish/e%ts 5here $(2lic vehicles a%: other co%ve)a%ces are 4e$t 'or hireC (#) 7he%ever the rate o' 'i6e: /(%ici$al lice%se ta6es o% 2(si%esses %ot e6ce$te: i% this Act or other5ise covere: 2) the $rece:i%& $ara&ra$h a%: s(2Aect to the 'i6e: a%%(al ta6 i/$ose: i% sectio% o%e h(%:re: ei&ht)Ft5o o' the 0atio%al .%ter%al Reve%(e 9a5, is i% e6cess o' 'i't) $esos $er a%%(/C a%: (-) 7he%ever the /(%ici$al lice%se ta6 o% a%) 2(si%ess, occ($atio%, or $rivile&e the rate o' 5hich is %ot li/ite: a2ove is i%crease: 2) /ore tha% 'i't) per centum. 666 666 666 Co%si:eri%& that the $(r$ose o' Re$. Act 0o. ##*+ is to &ra%t /ore a(to%o/) to o(r local &over%/e%ts, 1 a%: that the o2Aect o' sectio% # thereo' is i:e%tical to that o' Co/. Act 0o. +!#, 7e are satis'ie: that the $rovisio%s o' the latter @ relie: ($o% 2) $lai%ti''sFa$$ellees herei% a%: a$$lie: 2) the lo5er co(rt @ have 2ee% re$eale: 2) the 9ocal A(to%o/) Act (Re$. Act 0o. ##*+). A%: this is 2or%e o(t 2) the state/e%ts /a:e o% the 'loor o' the Ho(se o' Re$rese%tatives, :(ri%& the co%si:eratio% o' the Bill 5hich later 2eca/e R.A. 0o. ##*+. Th(s: MR. IA0CHA: B(t is %ot the &e%tle/a% a5are o' the 'act that the ta6es 2ei%& i/$ose: (%:er this $ro$ose: /eas(re are $racticall) the sa/e ta6es that are %o5 2ei%& i/$ose: 2) the /(%ici$al co(%cilN MR. JOSA: 0o5, &e%tle/a% 'ro/ Sa/ar, the) are %ot. G%:er Co//o%5ealth Act +!#, these are %ot the sa/e ta6es. The $o5er o' the /(%ici$alit) to ta6 (%:er the $rese%t la5 is limited, 2(t this #ill removes the limitation, so that (%:er this a/e%:/e%t o' the Co//ittee the po"er to ta has #ecome very #road. MR. IA0CHA: .' the &e%tle/a% 'ro/ Ce2( rea:s sectio% -, he 5ill 'i%: that there is a li/itatio% to the ta6i%& $o5er o' the M(%ici$al Co(%cil 2ei%& $ro$ose: i% the a/e%:/e%t. MR. JOSA: Ies, 2(t i' the &e%tle/a% rea:s Co//o%5ealth Act +!#, to&ether 5ith that a/e%:/e%t, he 5ill reali8e that the $o5er o' ta6atio% &ive% (%:er this a/e%:/e%t has 2eco/e ver) 2roa:. MR IA0CHA: Precisel), 2eca(se the purpose of this la" is to !ive more local autonomy i' he 5ill %ot i%crease their 'i%a%ces, a%: the o%l) 5a) to i%crease the 'i%a%ces o' /(%ici$alities is to 2roa:e% a little 2it their $o5er o' ta6atio% so that the) 5ill %ot 2e 2(r:e%i%& the %atio%al &over%/e%t 2) as4i%& certai% thi%&s that the) ca%%ot :o the/selves. ( >(rther co%'ir/atio% o' O(r vie5 o% this $oi%t is s($$lie: 2) Provi%cial Circ(latio% 0o. #+, o' the Secretar) o' >i%a%ce @ the o''icer $ri%ci$all) char&e: 5ith the :(t) to e%'orce ta6 /eas(res, a%: 5hose vie5s thereo%, altho(&h /ai%l) $ers(asive, carr) /(ch 5ei&ht @ :ate: March -1, 1 *,, i% 5hich, re'erri%& to the e''ect o' sai: R.A. 0o. ##*+ ($o% his $o5er o' a$$roval (or :isa$$roval) (%:er C.A. 0o. +!#, sai: o''icial sai:: In lieu o' the $o5er o' a$$roval o' the rates o' /(%ici$al ta6es i% certai% i%sta%ces &ra%te: the Secretar) o' >i%a%ce (%:er Sec. + o' Co//o%5ealth

Act 0o. +!#, sai: o''icial is %o5 a(thori8e: to suspend the e''ectivit) o' a%) or:i%a%ce 5ithi% o%e h(%:re: a%: t5e%t) :a)s a'ter its $assa&e, i', i% his o$i%io%, the ta6 or 'ees therei% levie: or i/$ose: is (%A(st, e6cessive, o$$ressive or co%'iscator). 0either is there a%) /erit i% the theor) that the co%teste: or:i%a%ces i/$ose ta6es o% s$eci'ic &oo:s, or o% 'orest $ro:(cts, 5hich are e6cl(:e: 2) sectio% # o' R.A. 0o. ##*+ 'ro/ the &e%eral $o5er o' ta6atio% therei% &ra%te:, i%as/(ch as the rate o' ta6atio% i/$ose: i% sai: or:i%a%ces is :e$e%:e%t ($o% the ?ca$ital i%vest/e%t or $(rchases 'or the $revio(s )ear? @ 5hich, li4e5ise, re'lects the ?ca$ital .%vest/e%t? @ ?5hichever is hi&her.? .t is O(r co%si:ere: vie5 that the %at(re o' the 2(si%ess or occ($atio% ta6e:, a%: the a/o(%t i%veste: therei%, 5hich is, also, re'lecte: i% the ?$(rchases? @ %ot the ?sales? @ /a:e ?'or the $revio(s )ear? are reaso%a2le &ro(%:s 'or the classi'icatio% /a:e i% sai: or:i%a%ces a%: the &ra:(ate: ta6es i/$ose: therei%. 7HERE>ORE, the :ecisio% a$$eale: 'ro/ sho(l: 2e, as it is here2) reverse:, 5ith costs a&ai%st $lai%ti''sFa$$ellees herei%. .t is so or:ere:.

1-) Peo$le vs. 0a8ario GR 0o ++1+- -1 A(&(st 1 11 G.R. No. L 4414! A'4'12 !1, 19** THE PEOPLE O# THE PHILIPPINES, $lai%ti'', vs. EUSEBIO NAZARIO, acc(se:Fa$$ella%t. 0he %olicitor )eneral for plaintiff9appellee, 0eofilo Ra!odon for accused9appellant, SARMIENTO, J.: The $etitio%er 5as char&e: 5ith violatio% o' certai% /(%ici$al or:i%a%ces o' the /(%ici$al co(%cil o' Pa&2ilao, i% <(e8o% $rovi%ce. B) 5a) o' co%'essio% a%: avoi:a%ce, the $etitio%er 5o(l: a:/it havi%& co//itte: the acts char&e: 2(t 5o(l: clai/ that the or:i%a%ces are (%co%stit(tio%al, or, ass(/i%& their co%stit(tio%alit), that the) :o %ot a$$l) to hi/ i% a%) eve%t. The 'acts are %ot :is$(te:: This :e'e%:a%t is char&e: o' the cri/e o' =iolatio% o' M(%ici$al Or:i%a%ce i% a% i%'or/atio% 'ile: 2) the $rovi%cial >iscal, :ate: Octo2er , 1 *1, as 'ollo5s: That i% the )ears 1 *+, 1 *" a%: 1 **, i% the M(%ici$alit) o' Pa&2ilao, Provi%ce o' <(e8o%, Phili$$i%es, a%: 5ithi% the A(ris:ictio% o' this Ho%ora2le Co(rt, the a2oveF%a/e: acc(se:, 2ei%& the% the o5%er a%: o$erator o' a 'ish$o%: sit(ate: i% the 2arrio o' Pi%a&2a)a%a%, o' sai: /(%ici$alit), :i: the% a%: there 5ill'(ll), (%la5'(ll) a%: 'elo%io(sl) re'(se a%: 'ail to $a) the /(%ici$al ta6es i% the total a/o(%t o' THREE HG0DRED S.ETI T7O PESOS A0D S.ETI T7O CE0TA=OS (P-*#.*#), reD(ire: o' hi/ as 'ish$o%: o$erator as $rovi:e: 'or (%:er Or:i%a%ce 0o. +, series o' 1 "", as

a/e%:e:, i%s$ite o' re$eate: :e/a%:s /a:e ($o% hi/ 2) the M(%ici$al Treas(rer o' Pa&2ilao, <(e8o%, to $a) the sa/e. Co%trar) to la5. >or the $rosec(tio% the 'ollo5i%& 5it%esses testi'ie: i% s(2sta%ce as 'ollo5sC M.GGE9 >RA0C.A, - )ears o' a&e, /arrie:, 'ar/er a%: resi:e%t o' 9o$e8, <(e8o% @ .% 1 *# to 1 *!, . resi:e: at Pi%a&2a)a%a%, Pa&2ilao, <(e8o%. . 4%o5 the acc(se: as . 5or4e: i% his 'ish$o%: i% 1 *# to 1 *+. The 'ish$o%: o' 0a8ario is at Pi%a&2a)a%a%, Pa&2ilao, <(e8o%. . 5or4e: i% the cleari%& o' the 'ish$o%:, the co%str(ctio% o' the :i4es a%: the catchi%& o' 'ish. O% crossFe6a/i%atio%, this 5it%ess :eclare:: . 5or4e: 5ith the acc(se: ($ to March 1 *+. 0.CO9AS MACARO9AI, *" )ears o' a&e, /arrie:, co$ra /a4er a%: resi:e%t o' Pi%a&2a)a%a%, Pa&2ilao, <(e8o% @ . resi:e: at Pi%a&2a)a%a%, Pa&2ilao, <(e8o% si%ce 1 " ($ to the $rese%t. . 4%o5 the acc(se: si%ce 1 " 5he% he o$e%e: a 'ish$o%: at Pi%a&2a)a%a%, Pa&2ilao, <(e8o%. He still o$erates the 'ish$o%: ($ to the $rese%t a%: . 4%o5 this 'act as . a/ the 2arrio ca$tai% o' Pi%a&2a)a%a%. O% crossFe6a/i%atio%, this 5it%ess :eclare:: . ca/e to 4%o5 the acc(se: 5he% he 'irst o$erate: his 'ish$o%: si%ce 1 " . O% reF:irect e6a/i%atio%, this 5it%ess :eclare:: . 5as $rese%t :(ri%& the catchi%& o' 'ish i% 1 *! a%: the acc(se: 5as there. O% reFcross e6a/i%atio%, this 5it%ess :eclare:: . :o %ot re/e/2er the /o%th i% 1 *# 5he% the acc(se: ca(&ht 'ish. RODO9>O R. A9=AREJ, +" )ears ol:, /(%ici$al treas(rer o' Pa&2ilao, <(e8o%, /arrie: @ As M(%ici$al Treas(rer . a/ i% char&e o' ta6 collectio%. . 4%o5 the acc(se: eve% 2e'ore . 5as M(%ici$al Treas(rer o' Pa&2ilao. . have 5ritte% the acc(se: a letter as4i%& hi/ to $a) his ta6es (E6hi2it B). Sai: letter 5as receive: 2) the acc(se: as $er re&istr) ret(r% recei$t, E6hi2it BF1. The letter :e/a%:e: 'or $a)/e%t o' P-*#.,,, /ore or less, 2) 5a) o' ta6es 5hich he :i: %ot $a) ($ to the $rese%t. The 'or/er Treas(rer, Ce'eri%o Ca$arros, also 5rote a letter o' :e/a%: to the acc(se: (E6hi2it C). O% ;(%e #1, 1 *!, . se%t a letter to the >isher) Co//issio% (E6hi2it D), reD(esti%& i%'or/atio% i' acc(se: $ai: ta6es 5ith that o''ice. The Co//issio% se%t /e a certi'icate (E6hi2its DF1, DF# M DF-). The acc(se: ha: a 'ish$o%: lease a&ree/e%t. The ta6es (%$ai: 5ere 'or the )ears 1 *+, 1 *" a%: 1 **. O% crossFe6a/i%atio%, this 5it%ess :eclare:: . have :e/a%:e: the ta6es 'or -1.1, hectares. O% D(estio% o' the co(rt, this 5it%ess :eclare:: 7hat . 5as collecti%& 'ro/ the acc(se: is the 'ee o% 'ish$o%: o$eratio%, %ot re%tal. The $rosec(tio% $rese%te: as $art o' their evi:e%ce E6hi2its A, AF1, AF#, B, BF#, C, D, DF1, DF#, DF-, E, >, >F1 a%: the sa/e 5ere a:/itte: 2) the co(rt, e6ce$t E6hi2its D, DF1, DF# a%: DF- 5hich 5ere %ot a:/itte: 'or 2ei%& i//aterial.

>or the :e'e%se the acc(se: EGSEB.O 0AJAR.O, +1 )ears o' a&e, /arrie:, o5%er a%: &e%eral /a%a&er o' the J.P Ma%('act(ri%& E%ter$rises a%: resi:e%t o' +1,1 Ol: Sta. Mesa, Sa/$aloc, Ma%ila, :eclare: i% s(2sta%ce as 'ollo5s: . have live: i% Sta. Mesa, Ma%ila, si%ce 1 + . . 2() /) Resi:e%ce Certi'icates at Ma%ila or at Sa% ;(a%. .% 1 *+, 1 *" a%: 1 **, . 5as livi%& i% Ma%ila a%: /) 2(si%ess is i% Ma%ila a%: /) 'a/il) lives at Ma%ila. . %ever resi:e: at Pa&2ilao, <(e8o%. . :o %ot o5% a ho(se at Pa&2ilao. . a/ a lessee o' a 'ish$o%: locate: at Pa&2ilao, <(e8o%, a%: . have a lease a&ree/e%t to that e''ect 5ith the Phili$$i%e >isheries Co//issio% /ar4e: as E6hi2it 1. .% 1 *+, 1 *" a%: 1 **, the co%tract o' lease, E6hi2it 1, 5as still e6isti%& a%: e%'orcea2le. The Or:i%a%ces 0os. +, 1" a%: 1#, series o' 1 "", 1 *" a%: 1 **, 5ere tra%slate: i%to E%&lish 2) the .%stit(te o' 0atio%al 9a%&(a&e to 2etter (%:ersta%: the or:i%a%ces. There 5ere e6cha%&e o' letters 2et5ee% /e a%: the M(%ici$al Treas(rer o' Pa&2ilao re&ar:i%& the $a)/e%t o' the ta6es o% /) lease: 'ish$o%: sit(ate: at Pa&2ilao. There 5as a letter o' :e/a%: 'or the $a)/e%t o' the ta6es 2) the treas(rer (E6hi2it -) 5hich . receive: 2) /ail at /) resi:e%ce at Ma%ila. . a%s5ere: the letter o' :e/a%:, E6hi2it -, 5ith E6hi2it -FA. . reD(este: a% i%s$ectio% o' /) 'ish$o%: to :eter/i%e its co%:itio% as it 5as %ot the% i% o$eratio%. The M(%ici$al Treas(rer Alvare8 5e%t there o%ce i% 1 *! a%: he 'o(%: that it 5as :estro)e: 2) the t)$hoo% a%: there 5ere $ict(res ta4e% /ar4e: as E6hi2its +, +FA, +FB a%: +C. . receive: a%other letter o' :e/a%:, E6hi2it ", a%: . a%s5ere: the sa/e (E6hi2it "FA). . co$ie: /) re'ere%ce D(ote: i% E6hi2it "FA 'ro/ A:/i%istrative Or:er 0o. *, E6hi2it *. . receive: a%other letter o' :e/a%: 'ro/ To/as Or%e:o, Acti%& M(%ici$al Treas(rer o' Pa&2ilao, :ate: >e2r(ar) 1*, 1 **, E6hi2it !, a%: . a%s5ere: the sa/e 5ith the letter /ar4e: as E6hi2it !FA, :ate: >e2r(ar) #*, 1 **. . receive: a%other letter o' :e/a%: 'ro/ Treas(rer Alvare8 o' Pa&2ilao, E6hi2it 1, a%: . a%s5ere: the sa/e (E6hi2it 1FA). .% 1 *+, . 5e%t to Treas(rer Ca$arros to as4 'or a% a$$licatio% 'or lice%se ta6 a%: he sai: %o%e a%: he tol: /e A(st to $a) /) ta6es. . :i: %ot $a) 2eca(se ($ to %o5 . :o %ot 4%o5 5hether . a/ covere: 2) the Or:i%a%ce or %ot. The letters o' :e/a%: as4e: /e to $a) :i''ere%t a/o(%ts 'or ta6es 'or the 'ish$o%:. Beca(se (%:er Sec. #-, o' the Revise: A:/i%istrative Co:e, /(%ici$al ta6es la$se i' %ot $ai: a%: the) are collecti%& o% a la$se: or:i%a%ce. Beca(se (%:er the Ta6 Co:e, 'isher/e% are e6e/$te: 'ro/ $erce%ta&e ta6 a%: $rivile&e ta6. There is %o la5 e/$o5eri%& the /(%ici$alit) to $ass or:i%a%ce ta6i%& 'ish$o%: o$erators. The :e'e%se $rese%te: as $art o' their evi:e%ce E6hi2its 1, #, -, -FA, +, +FB, +FB, +FC, ", "FA, *, *FA, *FB, *FC, !, !FA, 1 a%: 1FA a%: the sa/e 5ere a:/itte: 2) the co(rt. >ro/ their evi:e%ce the $rosec(tio% 5o(l: 5a%t to sho5 to the co(rt that the acc(se:, as lessee or o$erator o' a 'ish$o%: i% the /(%ici$alit) o' Pa&2ilao, re'(se:, a%: still re'(ses, to $a) the /(%ici$al ta6es 'or the )ears 1 *+, 1 *" a%: 1 **, i% violatio% o' M(%ici$al Or:i%a%ce 0o. +, series o' 1 "", as

a/e%:e: 2) M(%ici$al Or:i%a%ce 0o. 1", series o' 1 *", a%: 'i%all) a/e%:e: 2) M(%ici$al Or:i%a%ce 0o. 1#, series o' 1 **. O% the other ha%:, the acc(se:, 2) his evi:e%ce, te%:s to sho5 to the co(rt that the ta6es so(&ht to 2e collecte: have alrea:) la$se: a%: that there is %o la5 e/$o5eri%& /(%ici$alities to $ass or:i%a%ces ta6i%& 'ish$o%: o$erators. The :e'e%se, 2) their evi:e%ce, trie: to sho5 '(rther that, as lessee o' a 'orest la%: to 2e co%verte: i%to a 'ish$o%:, he is %ot covere: 2) sai: /(%ici$al or:i%a%cesC a%: 'i%all) that the acc(se: sho(l: %ot 2e ta6e: as 'ish$o%: o$erator 2eca(se there is %o 'ish$o%: )et 2ei%& o$erate: 2) hi/, co%si:eri%& that the s($$ose: 'ish$o%: 5as (%:er co%str(ctio% :(ri%& the $erio: covere: 2) the ta6es so(&ht to 2e collecte:. >i%all), the :e'e%:a%t clai/s that the or:i%a%ce i% D(estio% is (ltra vires as it is o(tsi:e o' the $o5er o' the /(%ici$al co(%cil o' Pa&2ilao, <(e8o%, to e%actC a%: that the :e'e%:a%t clai/s that the or:i%a%ce i% D(estio% is a/2i&(o(s a%: (%certai%. There is %o D(estio% 'ro/ the evi:e%ces $rese%te: that the acc(se: is a lessee o' a $arcel o' 'orest la%:, 5ith a% area o' #!.1 1 hectares, 'or 'ish$o%: $(r$oses, (%:er >ish$o%: 9ease A&ree/e%t 0o. 1,**, e%tere: i%to 2) the acc(se: a%: the &over%/e%t, thro(&h the Secretar) o' A&ric(lt(re a%: 0at(ral Reso(rces o% A(&(st #1, 1 " . There is %o D(estio% 'ro/ the evi:e%ces $rese%te: that the #!.1 1 hectares o' la%: lease: 2) the :e'e%:a%t 'ro/ the &over%/e%t 'or 'ish$o%: $(r$oses 5as act(all) co%verte: i%to 'ish$o%: a%: (se: as s(ch, a%: there'ore :e'e%:a%t is a% o$erator o' a 'ish$o%: 5ithi% the $(rvie5 o' the or:i%a%ce i% D(estio%. 1 The trial Co(rt ( ret(r%e: a ver:ict o' &(ilt) a%: :is$ose: as 'ollo5s: =.E7ED .0 THE 9.GHT O> A99 THE >OREGO.0G, the Co(rt 'i%:s the acc(se: &(ilt) 2e)o%: reaso%a2le :o(2t o' the cri/e o' violatio% o' M(%ici$al Or:i%a%ce 0o. +, series o' 1 "", as a/e%:e: 2) Or:i%a%ce 0o. 1", series o' 1 *" a%: '(rther a/e%:e: 2) Or:i%a%ce 0o. 1#, series o' 1 **, o' the M(%ici$al Co(%cil o' Pa&2ilao, <(e8o%C a%: here2) se%te%ces hi/ to $a) a 'i%e o' P",.,,, 5ith s(2si:iar) i/$riso%/e%t i% case o' i%solve%c) at the rate o' P1.,, a :a), a%: to $a) the costs o' this $rocee:i%&. SO ORDERED. ! .% this a$$eal, certi'ie: to this Co(rt 2) the Co(rt o' A$$eals, the $etitio%er alle&es that: .. THE 9O7ER COGRT ERRED .0 0OT DEC9AR.0G THAT ORD.0A0CE 0O. +, SER.ES O> 1 "", AS AME0DED BI ORD.0A0CE 0O. 1", SER.ES O> 1 *", A0D AS >GRTHER AME0DED BI ORD.0A0CE 0O. 1#, SER.ES O> 1 **, O> THE MG0.C.PA9.TI O> PAGB.9AO, <GEJO0, .S 0G99 A0D =O.D >OR BE.0G AMB.GGOGS A0D G0CERTA.0. ... THE 9O7ER COGRT ERRED .0 0OT HO9D.0G THAT THE ORD.0A0CE .0 <GEST.O0, AS AME0DED, .S G0CO0ST.TGT.O0A9 >OR BE.0G EE POST >ACTO.

.... THE 9O7ER COGRT ERRED .0 0OT HO9D.0G THAT THE ORD.0A0CE .0 <GEST.O0 CO=ERS O09I O70ERS OR O=ERSEER O> >.SHPO0DS O> PR.=ATE O70ERSH.P A0D 0OT TO 9ESSEES O> PGB9.C 9A0DS. .=. THE 9O7ER COGRT ERRED .0 0OT >.0D.0G THAT THE <GEST.O0ED ORD.0A0CE, E=E0 .> =A9.D, CA00OT BE E0>ORCED BEIO0D THE TERR.TOR.A9 9.M.TS O> PAGB.9AO A0D DOES 0OT CO=ER 0O0F RES.DE0TS. 4 The or:i%a%ces i% D(estio% are Or:i%a%ce 0o. +, series o' 1 "", Or:i%a%ce 0o. 1", series o' 1 *", a%: Or:i%a%ce 0o. 1#, series o' 1 **, o' the M(%ici$al Co(%cil o' Pa&2ilao. .%so'ar as $erti%e%t to this a$$eal, the salie%t $ortio%s thereo' are herei%2elo5 D(ote:: Sectio% 1. A%) o5%er or /a%a&er o' 'ish$o%:s i% $laces 5ithi% the territorial li/its o' Pa&2ilao, <(e8o%, shall $a) a /(%ici$al ta6 i% the a/o(%t o' P-.,, $er hectare o' 'ish$o%: o% $art thereo' $er a%%(/. " 666 666 666 Sec. l (a). >or the co%ve%ie%ce o' those 5ho have or o5%ers or /a%a&ers o' 'ish$o%:s 5ithi% the territorial li/its o' this /(%ici$alit), the :ate o' $a)/e%t o' /(%ici$al ta6 relative thereto, shall 2e&i% a'ter the la$se o' three (-) )ears starti%& 'ro/ the :ate sai: 'ish$o%: is a$$rove: 2) the B(rea( o' >isheries. 6 666 666 666 Sectio% 1. A%) o5%er or /a%a&er o' 'ish$o%:s i% $laces 5ithi% the territorial li/its o' Pa&2ilao shall $a) a /(%ici$al ta6 i% the a/o(%t o' P-.,, $er hectare or a%) 'ractio% thereo' $er a%%(/ 2e&i%%i%& a%: ta4i%& e''ect 'ro/ the )ear 1 *+, i' the 'ish$o%: starte: o$erati%& 2e'ore the )ear 1 *+. ) The 'irst o2Aectio% re'ers to the or:i%a%ces 2ei%& alle&e:l) ?a/2i&(o(s a%: (%certai%.? * The $etitio%er co%te%:s that 2ei%& a /ere lessee o' the 'ish$o%:, he is %ot covere: si%ce the sai: or:i%a%ces s$ea4 o' ?o5%er or /a%a&er.? He li4e5ise /ai%tai%s that the) are va&(e i%so'ar as the) rec4o% the :ate o' $a)/e%t: 7hereas Or:i%a%ce 0o. + $rovi:es that $arties shall co//e%ce $a)/e%t ?a'ter the la$se o' three (-) )ears starti%& 'ro/ the :ate sai: 'ish$o%: is a$$rove: 2) the B(rea( o' >isheries.? 9 Or:i%a%ce 0o. 1# states that lia2ilit) 'or the ta6 accr(es ?2e&i%%i%& a%: ta4i%& e''ect 'ro/ the )ear 1 *+ i' the 'ish$o%: starte: o$erati%& 2e'ore the )ear 1 *+.? 1+ As a r(le, a stat(te or act /a) 2e sai: to 2e va&(e 5he% it lac4s co/$rehe%si2le sta%:ar:s that /e% ?o' co//o% i%telli&e%ce /(st %ecessaril) &(ess at its /ea%i%& a%: :i''er as to its a$$licatio%.? 11 .t is re$(&%a%t to the Co%stit(tio% i% t5o res$ects: (1) it violates :(e $rocess 'or 'ail(re to accor: $erso%s, es$eciall) the $arties tar&ette: 2) it, 'air %otice o' the co%:(ct to avoi:C a%: (#) it leaves la5 e%'orcers (%2ri:le: :iscretio% i% carr)i%& o(t its $rovisio%s a%: 2eco/es a% ar2itrar) 'le6i%& o' the Gover%/e%t /(scle. B(t the act /(st 2e (tterl) va&(e o% its 'ace, that is to sa), it ca%%ot 2e clari'ie: 2) either a savi%& cla(se or 2) co%str(ctio%. Th(s, i% &oates v, &ity of &incinnati, 1( the G.S. S($re/e Co(rt str(c4 :o5% a% or:i%a%ce that ha:

/a:e it ille&al 'or ?three or /ore $erso%s to asse/2le o% a%) si:e5al4 a%: there co%:(ct the/selves i% a /a%%er a%%o)i%& to $erso%s $assi%& 2).? 1! Clearl), the or:i%a%ce i/$ose: %o sta%:ar: at all ?2eca(se o%e /a) %ever 4%o5 i% a:va%ce 5hat Ba%%o)s so/e $eo$le 2(t :oes %ot a%%o) others.B ? 14 &oates hi&hli&hts 5hat has 2ee% re'erre: to as a ?$er'ectl) va&(e? 1" act 5hose o2sc(rit) is evi:e%t o% its 'ace. .t is to 2e :isti%&(ishe:, ho5ever, 'ro/ le&islatio% co(che: i% i/$recise la%&(a&e @ 2(t 5hich %o%etheless s$eci'ies a sta%:ar: tho(&h :e'ectivel) $hrase: @ i% 5hich case, it /a) 2e ?save:? 2) $ro$er co%str(ctio%. .t /(st '(rther 2e :isti%&(ishe: 'ro/ stat(tes that are a$$are%tl) a/2i&(o(s )et 'airl) a$$lica2le to certai% t)$es o' activities. .% that eve%t, s(ch stat(tes /a) %ot 2e challe%&e: 5he%ever :irecte: a&ai%st s(ch activities. .% Parker v, 1evy, 16 a $rosec(tio% ori&i%all) (%:er the G.S. G%i'or/ Co:e o' Militar) ;(stice ($rohi2iti%&, s$eci'icall), ?co%:(ct (%2eco/i%& a% o''icer a%: &e%tle/a%?), the :e'e%:a%t, a% ar/) o''icer 5ho ha: (r&e: his /e% %ot to &o to =iet%a/ a%: calle: the S$ecial >orces trai%e: to 'i&ht there thieves a%: /(r:erers, 5as %ot allo5e: to i%vo4e the voi: 'or va&(e%ess :octri%e o% the $re/ise that acce$te: /ilitar) i%ter$retatio% a%: $ractice ha: $rovi:e: e%o(&h sta%:ar:s, a%: co%seD(e%tl), a 'air %otice that his co%:(ct 5as i/$er/issi2le. .t is i%teresti%& that i% )onzales v, &ommission on Elections, 1) a :ivi:e: Co(rt s(stai%e: a% act o' Co%&ress (Re$(2lic Act 0o. +11, $e%ali8i%& ?the too earl) %o/i%atio% o' ca%:i:ates? 1* li/iti%& the electio% ca/$ai&% $erio:, a%: $rohi2iti%& ?$artisa% $olitical activities?), a/i: challe%&es o' va&(e%ess a%: over2rea:th o% the &ro(%: that the la5 ha: i%cl(:e: a% ?e%(/eratio% o' the acts :ee/e: i%cl(:e: i% the ter/s Belectio% ca/$ai&%B or B$artisa% $olitical activit)? 19 that 5o(l: s($$l) the sta%:ar:s. ?As th(s li/ite:, the o2Aectio% that /a) 2e raise: as to va&(e%ess has 2ee% /i%i/i8e:, i' %ot totall) set at rest.? (+ .% his o$i%io%, ho5ever, ;(stice Sa%che8 5o(l: stress that the co%:(ct so(&ht to 2e $rohi2ite: ?is %ot clearl) :e'i%e: at all.? (1 ?As 5or:e: i% R.A +11,, $rohi2ite: :isc(ssio% co(l: cover the e%tire s$ectr(/ o' e6$ressio% relati%& to ca%:i:ates a%: $olitical $arties.? (( He 5as (%i/$resse: 5ith the ?restrictio%s? >er%a%:oBs o$i%io% ha: relie: o%: ? BSi/$le e6$ressio%s o' o$i%io%s a%: tho(&hts co%cer%i%& the electio%B a%: e6$ressio% o' Bvie5s o% c(rre%t $olitical $ro2le/s or iss(esB leave the rea:er co%Aect(re, to &(ess5or4, ($o% the e6te%t o' $rotectio% o''ere:, 2e it as to the %at(re o' the (ttera%ce (Bsi/$le e6$ressio%s o' o$i%io% a%: tho(&htsB) or the s(2Aect o' the (ttera%ce (Bc(rre%t $olitical $ro2le/s or iss(esB).? (! The Co(rt li4e5ise ha: occasio% to a$$l) the ?2ala%ci%&Fo'Fi%terests? test, (4 i%so'ar as the stat(teBs 2a% o% earl) %o/i%atio% o' ca%:i:ates 5as co%cer%e:: ?The ratio%al co%%ectio% 2et5ee% the $rohi2itio% o' Sectio% ",FA a%: its o2Aect, the i%:irect a%: /o:est sco$e o' its restrictio% o% the ri&hts o' s$eech a%: asse/2l), a%: the e/2raci%& $(2lic i%terest 5hich Co%&ress has 'o(%: i% the /o:eratio% o' $artisa% $olitical activit), lea: (s to the co%cl(sio% that the stat(te /a) sta%: co%siste%tl) 5ith a%: :oes %ot o''e%:

the Co%stit(tio%.? (" .% that case, Castro 5o(l: have the 2ala%ce achieve: i% 'avor o' State a(thorit) at the ?e6$e%se? o' i%:ivi:(al li2erties. .% the G%ite: States, 5hich ha: a/$le i/$act o% CastroBs se$arate o$i%io%, the 2ala%ci%& test 'i%:s a close 4i%, re'erre: to as the ?less restrictive alter%ative ? (6 :octri%e, (%:er 5hich the co(rt searches 'or alter%atives availa2le to the Gover%/e%t o(tsi:e o' stat(tor) li/its, or 'or ?less :rastic /ea%s? () o$e% to the State, that 5o(l: re%:er the stat(te (%%ecessar). .% United %tates v, Ro#el, (* le&islatio% 5as assaile:, 2a%%i%& /e/2ers o' the (A/erica%) Co//(%ist Part) 'ro/ 5or4i%& i% a%) :e'e%se 'acilit). The G.S. S($re/e Co(rt, i% %(lli')i%& the stat(te, hel: that it i/$aire: the ri&ht o' associatio%, a%: that i% a%) case, a scree%i%& $rocess 5as availa2le to the State that 5o(l: have e%a2le: it to .:e%ti') :a%&ero(s ele/e%ts hol:i%& :e'e%se $ositio%s. (9 .% that eve%t, the 2ala%ce 5o(l: have 2ee% str(c4 i% 'avor o' i%:ivi:(al li2erties. .t sho(l: 2e %ote: that it is i% 'ree e6$ressio% cases that the res(lt is (s(all) close. .t is sai:, ho5ever, that the choice o' the co(rts is (s(all) %arro5e: 5here the co%trovers) i%volves sa), eco%o/ic ri&hts, !+ or as i% the 1evycase, /ilitar) a''airs, i% 5hich less $recisio% i% a%al)sis is reD(ire: a%: i% 5hich the co/$ete%ce o' the le&islat(re is $res(/e:. .% %o 5a) /a) the or:i%a%ces at 2ar 2e sai: to 2e tai%te: 5ith the vice o' va&(e%ess. .t is (%/ista4a2le 'ro/ their ver) $rovisio%s that the a$$ella%t 'alls 5ithi% its covera&e. As the act(al o$erator o' the 'ish$o%:s, he co/es 5ithi% the ter/ ? /a%a&er.? He :oes %ot :e%) the 'act that he 'i%a%ce: the co%str(ctio% o' the 'ish$o%:s, i%tro:(ce: 'ish 'ries i%to the 'ish$o%:s, a%: ha: e/$lo)e: la2orers to /ai%tai% the/. !1 7hile it a$$ears that it is the 0atio%al Gover%/e%t 5hich o5%s the/, !( the Gover%/e%t %ever share: i% the $ro'its the) ha: &e%erate:. .t is there'ore o%l) lo&ical that he sho(l:ers the 2(r:e% o' ta6 (%:er the sai: or:i%a%ces. 7e a&ree 5ith the trial co(rt that the or:i%a%ces are i% the character o' reve%(e /eas(res !! :esi&%e: to assist the co''ers o' the /(%ici$alit) o' Pa&2ilao. A%: o2vio(sl), it ca%%ot 2e the o5%er, the Gover%/e%t, o% 5ho/ lia2ilit) sho(l: attach, 'or o%e thi%&, ($o% the a%cie%t $ri%ci$le that the Gover%/e%t is i//(%e 'ro/ ta6es a%: 'or a%other, si%ce it is %ot the Gover%/e%t that ha: 2ee% /a4i%& /o%e) 'ro/ the ve%t(re. S(''ice it to sa) that as the act(al o$erator o' the 'ish$o%:s i% D(estio%, a%: as the reci$ie%t o' $ro'its 2ro(&ht a2o(t 2) the 2(si%ess, the a$$ella%t is clearl) lia2le 'or the /(%ici$al ta6es i% D(estio%. He ca%%ot sa) that he :i: %ot have a 'air %otice o' s(ch a lia2ilit) to /a4e s(ch or:i%a%ces va&(e. 0either are the sai: or:i%a%ces va&(e as to :ates o' $a)/e%t. There is %o /erit to the clai/ that ?the i/$ositio% o' ta6 has to :e$e%: ($o% a% (%certai% :ate )et to 2e :eter/i%e: (three )ears a'ter the Ba$$roval o' the 'ish$o%:B 2) the B(rea( o' >isheries, a%: ($o% a% (%certai% eve%t (i' the 'ish$o%: starte: o$erati%& 2e'ore 1 *+), also to 2e :eter/i%e: 2) a% (%certai% i%:ivi:(al or i%:ivi:(als.? !4 Or:i%a%ce 0o. 1", i% /a4i%& the ta6 $a)a2le ?a'ter the la$se o' three (-) )ears starti%& 'ro/ the :ate sai: 'ish$o%: is a$$rove: 2) the B(rea( o' >isheries,? !" is (%eD(ivocal a2o(t the :ate o' $a)/e%t, a%: its

a/e%:/e%t 2) Or:i%a%ce 0o. 1#, rec4o%i%& lia2ilit) there(%:er ?2e&i%%i%& a%: ta4i%& e''ect 'ro/ the )ear 1 *+ i' the 'ish$o%: starte: o$erati%& 2e'ore the )ear 1 *+ ,? !6 :oes %ot &ive rise to a%) a/2i&(it). .% either case, the :ates o' $a)/e%t have 2ee% :e'i%itel) esta2lishe:. The 'act that the a$$ella%t has 2ee% alle&e:l) (%certai% a2o(t the rec4o%i%& :ates @ as 'ar as his lia2ilit) 'or the )ears 1 *+, 1 *", a%: 1 ** is co%cer%e: @ $rese%ts a /ere $ro2le/ i% co/$(tatio%, 2(t it :oes %ot /a4e the or:i%a%ces va&(e. .% a::itio%, the sa/e 5o(l: have 2ee% at /ost a :i''ic(lt $iece o' le&islatio%, 5hich is %ot (%'a/iliar i% this A(ris:ictio%, 2(t har:l) a va&(e la5. As it sta%:s, the%, lia2ilit) 'or the ta6 accr(es o% ;a%(ar) 1, 1 *+ 'or 'ish$o%:s i% o$eratio% $rior thereto (Or:i%a%ce 0o. 1#), a%: 'or %e5 'ish$o%:s, three )ears a'ter their a$$roval 2) the B(rea( o' >isheries (Or:i%a%ce 0o. 1"). This is so si%ce the a/e%:ator) act (Or:i%a%ce 0o. 1#) /erel) &ra%te: a/%est) (%to ol:, :eli%D(e%t 'ish$o%: o$erators. .t :i: %ot re$eal its /other or:i%a%ces (0os. + a%: 1"). 7ith res$ect to %e5 o$erators, Or:i%a%ce 0o. 1" sho(l: still $revail. To the Co(rt, the or:i%a%ces i% D(estio% set 'orth e%o(&h sta%:ar:s that clari') i/a&i%e: a/2i&(ities. 7hile s(ch sta%:ar:s are %ot a$$are%t 'ro/ the 'ace thereo', the) are visi2le 'ro/ the i%te%t o' the sai: or:i%a%ces. The %e6t i%D(ir) is 5hether or %ot the) ca% 2e sai: to 2e e post facto /eas(res. The a$$ella%t ar&(es that the) are: ?A/e%:/e%t 0o. 1# $asse: o% Se$te/2er 1 , 1 **, clearl) $rovi:es that the $a)/e%t o' the i/$ose: ta6 shall ?2e&i%%i%& a%: ta4i%& e''ect 'ro/ the )ear 1 *+, i' the 'ish$o%: starte: o$erati%& 2e'ore the )ear 1 *+.B .% other 5or:s, it $e%ali8es acts or eve%ts occ(rri%& 2e'ore its $assa&e, that is to sa), 1 *+ a%: eve% $rior thereto.?!) The Co(rt 'i%:s %o /erit i% this co%te%tio%. As the Solicitor Ge%eral %otes, ?M(%ici$al Or:i%a%ce 0o. + 5as $asse: o% Ma) 1+, 1 "". !* He%ce, it ca%%ot 2e sai: that the a/e%:/e%t ((%:er Or:i%a%ce 0o. 1#) is 2ei%& /a:e to a$$l) retroactivel) (to 1 *+) si%ce the rec4o%i%& $erio: is 1 "" (:ate o' e%act/e%t). Esse%tiall), Or:i%a%ces 0os. 1# a%: 1" are i% the %at(re o' c(rative /eas(res i%te%:e: to 'acilitate a%: e%ha%ce the collectio% o' reve%(es the ori&i%all) act, Or:i%a%ce 0o. +, ha: $rescri2e:. !9 Moreover, the act (o' %o%F$a)/e%t o' the ta6), ha: 2ee%, si%ce 1 "", /a:e $(%isha2le, a%: it ca%%ot 2e sai: that Or:i%a%ce 0o. 1# i/$oses a retroactive $e%alt). As 5e have %ote:, it o$erates to &ra%t a/%est) to o$erators 5ho ha: 2ee% :eli%D(e%t 2et5ee% 1 "" a%: 1 *+. .t :oes %ot /ete o(t a $e%alt), /(ch less, a retros$ective o%e. The a$$ella%t assails, 'i%all), the $o5er o' the /(%ici$al co(%cil o' Pa&2ilao to ta6 ?$(2lic 'orest la%:.? 4+ .%)olden Ri##on 1um#er &o,* Inc, v, &ity of (utuan 41 5e hel: that local &over%/e%tsB ta6i%& $o5er :oes %ot e6te%: to 'orest $ro:(cts or co%cessio%s (%:er Re$(2lic Act 0o. ##*+, the 9ocal A(to%o/) Act the% i% 'orce. (Re$(2lic Act 0o. ##*+ li4e5ise $rohi2ite: /(%ici$alities 'ro/ i/$osi%& $erce%ta&e ta6es o% sales.) >irst o' all, the ta6 i% D(estio% is %ot a ta6 o% $ro$ert), altho(&h the rate thereo' is 2ase: o% the area o' 'ish$o%:s (?P-.,, $er hectare? 4(). Seco%:l),

'ish$o%:s are %ot 'orest la%:s, altho(&h 5e have hel: the/ to the a&ric(lt(ral la%:s. 4! B) :e'i%itio%, ?'orest? is ?a lar&e tract o' la%: covere: 5ith a %at(ral &ro5th o' trees a%: (%:er2(shC a lar&e 5oo:.? 44 (Accor:i%&l), eve% i' the challe%&e: ta6es 5ere :irecte: o% the 'ish$o%:s, the) 5o(l: %ot have 2ee% ta6es o% 'orest $ro:(cts.) The) are, /ore acc(ratel), $rivile&e ta6es o% the 2(si%ess o' 'ish$o%: /ai%te%a%ce. The) are %ot char&e: a&ai%st sales, 5hich 5o(l: have o''e%:e: the :octri%e e%shri%e: 2) )olden Ri##on 1um#er , 4" 2(t rather o% occ($atio%, 5hich is allo5e: (%:er Re$(2lic Act 0o. ##*+. 46 The) are 5hat have 2ee% classi'ie: as 'i6e: a%%(al ta6es a%: this is o2vio(s 'ro/ the or:i%a%ces the/selves. There is, the%, %o /erit i% the last o2Aectio%. 7HERE>ORE, the a$$eal is D.SM.SSED. Costs a&ai%st the a$$ella%t.

1+) Ara2a), .%c. vs. C>. ** SCRA *1! G.R. No. L !)6*4 S$,2$6%$& 1+, 19)" ARABAY, INC., $etitio%er, vs. THE COURT O# #IRST INSTANCE O# ZAMBOANGA DEL NORTE, BRANCH II, THE CITY O# DIPOLOG a3; EMILIO L. TAGAILO, -3 >-1 ?a,a?-2y a1 C-2y T&$a1'&$& o@ 2>$ C-2y o@ D-,o.o4, $2 a.., res$o%:e%ts. Domin!uez 1a" 6ffice for petitioner, 'ssistant &ity -iscal 'r2uipo 1, 'driatico for respondents, CASTRO, J.: Be'ore (s is a $etitio% 'or revie5 o' the :ecisio% o' the Co(rt o' >irst .%sta%ce o' Ja/2oa%&a :el 0orte, Bra%ch .., :is/issi%& the co/$lai%t o' the herei% $etitio%er Ara2a), .%c., 'or a%%(l/e%t o' a ta6 or:i%a%ce o' the M(%ici$al Co(%cil o' Di$olo&, Ja/2oa%&a :el 0orte, a%: 'or re'(%: o' the ta6es it ha: $ai: there(%:er. O% Dece/2er 1!, 1 *" the M(%ici$al Co(%cil o' Di$olo& e%acte: Or:i%a%ce 0o. 1 a/e%:i%& Sectio% . o' Or:i%a%ce 0o. "- series o' 1 *+. As th(s a/e%:e: the sai: Sectio% . rea:s as 'ollo5s: Sectio% 1. There shall 2e char&e: 'or the selli%& a%: :istri2(tio% o' re'i%e: a%: /a%('act(re: /i%eral oils, /otor a%: :iesel '(els, a%: $etrole(/ 2ase: o% the /o%thl) allocatio% act(all) :elivere: a%: :istri2(te: a%: i%te%:e: 'or sale, i% a%) /a%%er 5hatsoever, 2) the Co/$a%) or s($$lier to a%) $erso%, 'ir/, e%tit), or cor$oratio%, 5hether as :ealer o' s(ch re'i%e: a%: /a%('act(re: /i%eral oils, /otor a%: :iesel '(els, a%: $etrole(/ or as o$erator o' a%) statio% thereo', the 'ollo5i%& ta6 $a)a2le /o%thl): Gasoli%e @ P,.,1 $er liter 9(2ricati%& oils @ P,.,1 $er liter Diesel >(el oils X ce%tavo $er liter Petrole(/ or P,.," $er &allo% ca%

4erose%e or @ P,.,# $er hal' &allo% ti% Provi:e:, ho5ever, that retail seller o' %ot /ore tha% " &allo% ca%s or its eD(ivale%t shall 2e e6e/$te: 'ro/ the $rovisio%s o' this or:i%a%ce. Sectio% #. This Or:i%a%ce shall ta4e e''ect o% ;a%(ar) 1, 1 **. O% ;(%e #1, 1 * Re$(2lic Act 0o. ""#, 5as a$$rove:. .t $rovi:e: 'or the creatio% o' the Cit) o' Di$olo& 'ro/ the the% o' the M(%ici$alit) o' Di$olo&, to ta4e e''ect o% ;a%(ar) 1, 1 !,. O% ;(l) #1, 1 !1 the Ara2a), .%c., a :istri2(tor o' &as, oil a%: other $etrole(/ $ro:(cts, 'ile: 5ith the Co(rt o' >irst .%sta%ce o' Ja/2oa%&a :el 0orte a co/$lai%t a&ai%st the Cit) o' Di$olo& co%testi%& the vali:it) o' the a2oveF/e%tio%e: Sectio% 1 o' Or:i%a%ce 0o. "- o% the &ro(%: that the sa/e i/$ose: a sales ta6 5hich is 2e)o%: the $o5er o' a /(%ici$alit) to lev) (%:er Sectio% # o' Re$(2lic Act 0o. ##*+, other5ise 4%o5% as the 9ocal A(to%o/) Act o' 1 " . Sai: Sectio% # $rovi:es: SEC. # 0a ation @ A%) $rovisio% o' la5 to the co%trar) %ot5ithsta%:i%&, all chartere: cities, /(%ici$alities a%: /(%ici$al :istricts shall have a(thorit) to i/$ose /(%ici$al lice%se ta6es or 'ees ($o% $erso%s e%&a&e: i% a%) occ($atio% or 2(si%ess, or e6ercisi%& $rivile&es i% chartere: cities, /(%ici$alities or /(%ici$al :istricts 2) reD(iri%& the/ to sec(re lice%ses at rates 'i6e: 2) the /(%ici$al 2oar: or cit) co(%cil o' the cit), the /(%ici$al co(%cil o' the /(%ici$alit), or the /(%ici$al :istrict co(%cil o' the /(%ici$al :istrictC to collect 'ees a%: char&es 'or service re%:ere: 2) the cit), /(%ici$alit) or /(%ici$al :istrictC to re&(late a%: i/$ose reaso%a2le 'ees 'or services re%:ere: i% co%%ectio% 5ith a%) 2(si%ess, $ro'essio% or occ($atio% 2ei%& co%:(cte: 5ithi% the cit), /(%ici$alit) or /(%ici$al :istrict a%: other5ise to lev) 'or $(2lic $(r$oses, A(st a%: (%i'or/ ta6es, lice%ses or 'ees:Provided* 0hat municipalities and municipal districts shall* in no case* impose any percenta!e ta on sales or other ta es in any form #ased thereon nor impose ta es on articles su#$ect to specific ta * e cept !asoline* under the provisions of the Aational Internal RevenueH Provided* ho"ever , That %o cit), /(%ici$alit) or /(%ici$al :istrict /a) lev) or i/$ose a%) o' the 'ollo5i%&: ... (e/$hasis s($$lie:) O% A(&(st -,, 1 !# the Ara2a), .%c. 'ile: a s($$le/e%tal co/$lai%t 5hich $ra)e:, a/o%& others, 'or a re'(%: o' the ta6es it ha: $ai: (%:er the or:i%a%ce i% D(estio%. O% Octo2er -,, 1 !# the $arties e%tere: i%to a sti$(latio% o' 'acts 5hich, inter alia, states: #. That $lai%ti'', $(rs(a%t to the a2ove or:i%a%ce, $ai: sales ta6es 'or the sale o' Diesel '(el oils, l(2ricati%& oils, $etrole(/, 4erose%e a%: other relate: $etrole(/ $ro:(cts, to the :e'e%:a%t Cit) o' Di$olo&, 'ro/ Dece/2er, 1 * to ;(l), 1 !# i% the total a/o(%t o' >.=E THOGSA0D >OGR HG0DRED PESOS (P",+,,.,,). A sche:(le o' the $a)/e%ts /a:e 2) $lai%ti'' is hereto attache: as A%%e6 ?A? a%: is /a:e a% i%te&ral $art hereo'. Ho5ever, the $a)/e%ts /a:e 'ro/ A$ril, 1 !# to ;(l), 1 !#, i% the total a/o(%t o' P* .1, have 2ee% re'(%:e: 2) :e'e%:a%t Cit) o' Di$olo& to $lai%ti''.

7HERE>ORE, o% the 2asis o' the 'ore&oi%& sti$(latio% o' 'acts a%: o' the Me/ora%:(/ o' Ar&(/e%ts to 2e s(2/itte: 2) the $arties, the latter, thro(&h, their res$ective co(%sels, here2) s(2/it the case 'or the :eter/i%atio% o' this Ho%or. O% ;a%(ar) 1*, 1 !- the co(rt a D(o re%:ere: A(:&/e%t ($hol:i%& the vali:it) o' the D(estio%e: $rovisio% o' Or:i%a%ce 0o. "-, as a/e%:e:, esse%tiall) o% the &ro(%:s that the Ara2a), .%c. 'aile: to $rese%t evi:e%ce that the ta6 $rovisio% i% D(estio% i/$ose: a sales ta6, a%: the ta6 $rescri2e: therei% 5as, /oreover, %ot a s$eci'ic ta6 o% the $ro:(cts the/selves 2(t o% the $rivile&e o' selli%& the/. The 2asic iss(es i% the case at 2ar are: (1) 5hether or %ot the D(estio%e: ta6 $rovisio% i/$oses a sales ta6C a%: (#) i' it i/$oses a sales ta6, 5hether the Ara2a), .%c. is e%title: to a ta6 re'(%:, co%si:eri%& that Di$olo& is %o5 a cit). 1. .t is settle: r(le i% this A(ris:ictio% that 'or $(r$oses o' Sectio% # o' the 9ocal A(to%o/) Act, supra, a /(%ici$al ta6 or:i%a%ce 5hich $rescri2es a set ratio 2et5ee% the a/o(%t o' the ta6 a%: the vol(/e o' sales o' the ta6$a)er i/$oses a sales ta6 a%: is %(ll a%: voi: 'or 2ei%& 2e)o%: the $o5er o' a /(%ici$alit) to e%act. 1 .% o(r vie5, the D(estio%e: sectio% o' Or:i%a%ce 0o. "- o' the M(%ici$al Co(%cil o' Di$olo& levies a sales ta6, %ot o%l) 2eca(se the character o' the or:i%a%ce as a sales ta6 or:i%a%ce 5as a:/itte: 2) the $arties 2elo5, 2(t as 5ell 2eca(se the $hraseolo&) o' the sai: $rovisio% reveals i% clear ter/s the i%te%tio% to i/$ose a ta6 o% the sale o' oil, &asoli%e a%: other $etrole(/ $ro:(cts. Th(s, the or:i%a%ce $rovi:es: ?There shall 2e char&e: 'or the selli%& a%: :istri2(tio% o' re'i%e: a%: /a%('act(re: oils ... 2ase: o% the /o%thl) allocatio% act(all) :elivere: a%: :istri2(te: a%: i%te%:e: 'or sale ... 2) the Co/$a%) or s($$lier to a%) $erso% ... 5hether as :ealer ... or as o$erator o' a%) statio% ... the 'ollo5i%& ta6 $a)a2le /o%thl): ...? .t is D(ite evi:e%t 'ro/ these ter/s that the a/o(%t o' the ta6 that /a) 2e collecte: is :irectl) :e$e%:e%t ($o% or 2ears a :irect relatio%shi$ to the vol(/e o' sales 5hich the o5%er or s($$lier o' the ite/i8e: $ro:(cts &e%erates ever) /o%th. The or:i%a%ce i% D(estio% there'ore e6acts a ta6 2ase: o% salesC it 'ollo5s that the M(%ici$alit) o' Di$olo& 5as %ot a(thori8e: to e%act s(ch a% or:i%a%ce (%:er the local A(to%o/) Act. #. The o2li&atio% o' the Cit) o' Di$olo& to re'(%: the s(/ collecte: (%:er the voi: $rovisio%s o' a% or:i%a%ce e%acte: 5hile it 5as still a /(%ici$alit), is %ot o$e% to :o(2t. .% %an /i!uel &orporation vs, 0he /unicipal &ouncil of /andaue* &e#u* supra, the Co(rt or:ere:, the ret(r% to the ta6$a)er o' the s(/s $ai: (%:er a% or:i%a%ce e%acte: (%:er circ(/sta%ces si/ilar to the case at 2ar, a%: reAecte: the ar&(/e%t that the /(%ici$alit) o' Ma%:a(e ha: i% the /ea%ti/e 2ee% co%verte: i%to a cit). The Co(rt sai:: Res$o%:e%t ho5ever clai/ that 5ith the co%versio% o' Ma%:a(e i%to a cit) $(rs(a%t to Re$(2lic Act 0o. ""1 , 5hich 5as a$$rove: o% ;(%e #1, 1 * , the iss(e has alrea:) 2eco/e /oot, si%ce the $rohi2itio% co%tai%e: i% sectio% # o' Re$(2lic Act ##*+ a$$lies o%l) to /(%ici$alities a%: %ot to chartere: cities. The sa/e co%te%tio% has 2ee% reAecte: i% &ity of Aa!a v,

&ourt of 'ppeals, a%:1aoa! Producers' &ooperative /arketin! 'ssociation* Inc, vs, /unicipality of 1aoa! , 5here 7e r(le: that the le&alit) o' a% or:i%a%ce :e$e%:s ($o% the $o5er o' the /(%ici$alit) at the ti/e o' the e%act/e%t o' the challe%&e: or:i%a%ce. Si%ce the /(%ici$alit) o' Ma%:a(e ha: %o a(thorit) to e%act the sai: or:i%a%ce, the s(2seD(e%t a$$roval o' Re$(2lic Act 0o. ""1 5hich 2eca/e e''ective o% ;(%e #1, 1 * , :i: %ot re/ove the ori&i%al i%'ir/it) o' the or:i%a%ce. .%:ee: there is %o $rovisio% i% the a'orecite: stat(te 5hich i%vests a c(rative e''ect ($o% the or:i%a%ces o' the /(%ici$alit) 5hich 5he% e%acte: 5ere 2e)o%: its stat(tor) a(thorit). The ri&ht o' the Ara2a), .%c. to a re'(%: o' the local sales ta6es it ha: $ai: (%:er the D(estio%e: or:i%a%ce /a) %ot, ho5ever, i%cl(:e those levie: o% its &asoli%e sales. The releva%t proviso o' Sectio% # o' the 9ocal A(to%o/) Act states: ... Provided, That /(%ici$alities a%: /(%ici$al :istricts shall, i% %o case, i/$ose a%) $erce%ta&e ta6 o% sales or other ta6es o% articles s(2Aect to s$eci'ic ta6, e cept !asoline, (%:er the $rovisio%s o' the 0atio%al .%ter%al Reve%(e Co:e: 666 666 666 (E/$hasis s($$lie:) G%:er the 'ore&oi%& proviso o' Sectio% # o' R.A. ##*+, t5o co(rses o' actio% i% the e6ercise o' their ta6i%& $o5ers are :e%ie: to /(%ici$alities a%: /(%ici$al :istricts, to 5it, (1) to lev) a%) sales ta6 i% 5hatever 'or/C a%: (#) to lev) a%) ta6 o% articles s(2Aect to s$eci'ic ta6 (%:er the 0atio%al .%ter%al Reve%(e Co:e. .t is %ot :i''ic(lt to see that these t5o $rohi2itio%s overla$ i% the se%se that 5hile the 'irst cla(se o' the sai: proviso 'or2i:s the lev)i%& o' sales ta6es o' 5hatever 'or/ or &(ise, the seco%: cla(se o' the sa/e proviso 'or2i:s the lev)i%& o' ?ta6es? 5itho(t a%) :isti%ctio% as to the 4i%: o' ta6, i.e.B 5hether $erce%ta&e ta6, sales ta6, s$eci'ic ta6 or lice%se ta6, altho(&h this latter $rohi2itio% a$$lies o%l) to a li/ite: class o' articles, viz,, those s(2Aect to the s$eci'ic ta6 (%:er the Ta6 Co:e. S(ch a% overla$ 5o(l: $ro2a2l) carr) or co%%ote %o le&al si&%i'ica%ce 2(t 'or the e6cl(sio% o' &asoli%e 'ro/ the $rohi2itio% co%tai%e: i% the seco%: cla(se o' the /e%tio%e: proviso. >or, 5ith the e6e/$tio% o' &asoli%e 'ro/ the covera&e o' the sa/e, it 2eco/es releva%t to :eter/i%e the e''ect 5hich s(ch e6cl(sio% has o% the $revio(s $rohi2itio% a&ai%st the lev)i%& o' the sales ta6. .% o(r o$i%io%, a reaso%a2le a%: $ractical i%ter$retatio% o' the ter/s o' the proviso i% D(estio% res(lts i% the co%cl(sio% that Co%&ress, i% e6cl(:i%& &asoli%e 'ro/ the &e%eral :isa2ilit) i/$ose: o% /(%ici$alities a%: /(%ici$al :istricts to e6act a%) 4i%: o' ta6es o% articles s(2Aect to s$eci'ie: ta6 (%:er the Ta6 Co:e, :eli2eratel) a%: i%te%tio%all) /ea%t to $(t it 5ithi% the $o5er o' s(ch local &over%/e%ts to i/$ose 5hatever t)$e or 'or/ o' ta6es the latter /a) :ee/ $ro$er to lev) o% &asoli%e i%cl(:i%& a sales ta6 or o%e i% that 'or/. There is a'ter all %o clearl) :e/o%stra2le a%: co%vi%ci%& reaso% 5h) the la5 5o(l: allo5 /(%ici$al i/$ositio% o' ta6es o% &asoli%e a%: )et 5ithhol: s(ch $o5er i' the i/$ositio% is i% the 'or/ o' a sales ta6, 5he% it 5as a 4%o5% 'act at the ti/e o' the e%act/e%t o' the 9ocal A(to%o/) Act i%

1 " @ a%: this still is tr(e to this :a) @ that &asoli%e is o' %o $ro'ita2le (se to the co/$a%ies 5hich o5% it (%less t(r%e: over to the co%s(/i%& $(2lic 5hich, $er'orce, /(st $a) 'or the ri&ht to o2tai% that co//o:it). ACCORD.0G9I, the A(:&/e%t a 2uo is set asi:e. The Cit) o' Di$olo& is here2) or:ere: to re'(%: to the Ara2a), .%c. the ta6es the latter has $ai: (%:er Sectio% 1 o' Or:i%a%ce 0o. "-, series o' 1 *+, as a/e%:e:, :e:(cti%& there'ro/ the a/o(%t re$rese%ti%& the ta6es $ai: 2) the Ara2a), .%c. o% its &asoli%e sales. 0o costs.

1") .lolio Bottlers, .%c. vs. Cit) o' .loilo GR 0o. "#,1 , 1 A(&(st 1 11 1*+ SCRA *,! G.R. No. L "(+19 A'4'12 19, 19** ILOILO BOTTLERS, INC., $lai%ti''Fa$$ellee, vs. CITY O# ILOILO, :e'e%:a%tFa$$ella%t. Efrain (, 0renas for plaintiff9appellee, Diosdado )arin!alao for defendant9appellant, CORTES, J.: The '(%:a/e%tal iss(e i% this a$$eal is 5hether the .loilo Bottlers, .%c. 5hich ha: its 2ottli%& $la%t i% Pavia, .loilo, 2(t 5hich sol: so't:ri%4s i% .loilo Cit), is lia2le (%:er .loilo Cit) ta6 Or:i%a%ce 0o. ", series o' 1 *,, as a/e%:e:, 5hich i/$oses a /(%ici$al lice%se ta6 o% :istri2(tors o' so'tF:ri%4s. O% ;(l) 1#,1 !#, .loilo Bottlers, .%c. 'ile: a co/$lai%t :oc4ete: as Civil Case 0o. ,+* 5ith the Co(rt o' >irst .%sta%ce o' .loilo $ra)i%& 'or the recover) o' the s(/ o' P-,-# .#,, 5hich a/o(%t alle&e:l) co%stit(te: $a)/e%ts o' /(%ici$al lice%se ta6es (%:er Or:i%a%ce 0o. " series o' 1 *,, as a/e%:e:, that the co/$a%) $ai: (%:er $rotest. O% 0ove/2er 1",1 !#, the $arties s(2/itte: a $artial sti$(latio% o' 'acts, the /aterial $ortio%s o' 5hich state 666 666 666 #. That $lai%ti'' is e%&a&e: i% the 2(si%ess o' 2ottli%& so't:ri%4s (%:er the tra:e %a/e o' Pe$si Cola A%: !F($ a%: selli%& the sa/e to its c(sto/ers, 5ith a 2ottli%& $la%t sit(ate: at Barrio G%&ca M(%ici$alit) o' Pavia, .loilo, Phili$$i%es a%: 5hich is o(tsi:e the A(ris:ictio% o' :e'e%:a%tC -. That :e'e%:a%t e%acte: a% or:i%a%ce o% ;a%(ar) 11, 1 *, 4%o5% as Or:i%a%ce 0o. ", Series o' 1 *, 5hich or:i%a%ce 5as s(ccessivel) a/e%:e: 2) Or:i%a%ce 0o. #1, Series o' 1 *,C Or:i%a%ce 0o. 1", Series o' 1 *+C a%: Or:i%a%ce 0o. +", Series o' 1 *+C 5hich $rovi:es as 'ollo5s: Sectio% l. @ A%) $erso%, 'ir/ or cor$oratio% e%&a&e: i% the :istri2(tio%, /a%('act(re or 2ottli%& o' cocaFcola, $e$si cola, tr(Fora%&e, seve%F($ a%: other so't :ri%4s 5ithi% the A(ris:ictio% o' the Cit) o' .loilo, shall $a) a /(%ici$al lice%se ta6 o' te% (P,.1,) ce%tavos 'or ever) case o' t5e%t)F'o(r 2ottlesC PRO=.DED, HO7E=ER, that so't:ri%4s sol: to the $(2lic at %ot

/ore tha% 'ive (P,.,") ce%tavos $er 2ottle shall $a) a ta6 o' o%e a%: o%e hal' (P,.,1") (ce%tavos) $er case o' t5e%t) 'o(r 2ottles. Sectio% 1FA@>or $(r$oses o' this Or:i%a%ce, all :eliveries a%:Hor :is$atches e/a%ati%& or /a:e at the $la%t a%: all &oo:s or stoc4s ta4e% o(t o' the $la%t 'or :istri2(tio%, sale or e6cha%&e irres$ective (o') 5here it 5o(l: ta4e $lace shall 2e covere: 2) the o$eratio% o' this Or:i%a%ce. +. That $rior to Se$te/2er, 1 **, Sa%tia&o S)A(co .%c., o5%e: a%: o$erate: a 2ottli%& $la%t at M(elle 9o%e) Street, .loilo Cit), 5hich 5as :oi%& 2(si%ess (%:er the %a/e o' Seve%F($ Bottli%& Co/$a%) o' the Phili$$i%es a%: 2ottle: the so'tF:ri%4s Pe$siFCola a%: !F($C ho5ever so/eti/e o% Se$te/2er 1+,1 **, Sa%tia&o S)A(co, .%c., i%'or/e: all its e/$lo)ees that it (5as) closi%& its .loilo Pla%t :(e to 'i%a%cial losses a%: i% 'act close: the sa/e a%: later sol: the $la%t to the $lai%ti'' .loilo Bottlers, .%c. ". That therea'ter, $lai%ti'' o$erate: the sai: $la%t 2) 2ottli%& the so't :ri%4s Pe$siFCola a%: !F($C ho5ever, so/eti/e i% ;(l) 1 *1, $lai%ti'' close: sai: 2ottli%& $la%t at M(elle 9o%e), .loilo Cit), a%: tra%s'erre: its 2ottli%& o$eratio%s to its %e5 $la%t i% Barrio G%&ca, M(%ici$alit) o' Pavia, Provi%ce o' .loilo, a%: 5hich is o(tsi:e the A(ris:ictio% o' the Cit) o' .loiloC *. That 'ro/ the ti/e o' (the) e%act/e%t (o' the or:i%a%ce), the Seve% G$ Bottli%& Co/$a%) o' the Phili$$i%es (%:er Sa%tia&o S)A(co .%c., ha: 2ee% reli&io(sl) $a)i%& the :e'e%:a%t Cit) o' .loilo the a2oveF /e%tio%e: /(%ici$al lice%se ta6 :(e there'ro/ 'or 2ottler 2eca(se its 2ottli%& $la%t 5as the% still sit(ate: at M(elle 9o%e) St., .loilo Cit)C 2(t the $lai%ti'' sto$$e: $a)i%& the /(%ici$al lice%se ta6 (a'ter) Octo2er #1, 1 *1 (5he%) it tra%s'erre: its $la%t to Barrio G%&ca M(%ici$alit) o' Pavia, .loilo 5hich is o(tsi:e the A(ris:ictio% o' the Cit) o' .loiloC !. That so/eti/e o% ;(l) -1, 1 * , the :e'e%:a%t :e/a%:e: 'ro/ the $lai%ti'' the $a)/e%t o' the /(%ici$al lice%se ta6 (%:er the a2oveF/e%tio%e: or:i%a%ce, a 6ero6 co$) o' the sai: letter is attache: to the co/$lai%t as A%%e6 ?A? a%: /a:e a% i%te&ral $art hereo' 2) re'ere%ce. 1. That $lai%ti'' e6$lai%e: i% a letter to the :e'e%:a%t that it co(l: %ot a%)/ore 2e lia2le to $a) the /(%ici$al lice%se 'ee 2eca(se its 2ottli%& $la%t (5as) %ot a%)/ore i%si:e the Cit) o' .loilo, a%: that /oreover, si%ce it itsel' (sol:) its o5% $ro:(cts to its (c(sto/ers) :irectl), it co(l: %ot 2e co%si:ere: as a :istri2(tor i% li%e 5ith the :octri%es e%(%ciate: 2) the S($re/e Co(rt i% the cases o' Cit) o' Ma%ila vs. B(&s(4 9(/2er Co., 9F 1#"", ;(l) 11, 1 "!C Ma%ila Tra:i%& M S($$l) Co., .%c. vs. Cit) o' Ma%ila 9F1 #1"*, A$ril # , 1 " C Ce%tral A8(carera :e Do% Pe:ro vs. Cit) o' Ma%ila et al., G.R. 0o. 9!*! , Se$te/2er # ,1 ""C Ce2( Portla%: Ce/e%t vs. Cit) o' Ma%ila a%: Cit) Treas(rer o' Ma%ila, 9F1 +## ,;(l) #*,1 *,. A 6ero6 co$) o' the sai: letter is attache: as A%%e6 ?B? to the co/$lai%t a%: /a:e a% i%te&ral $art hereo' 2) re'ere%ce. As a res(lt o' the sai: letter o' the $lai%ti'', the :e'e%:a%t :i: %ot a%)/ore $ress the $lai%ti'' to $a) the sai: /(%ici$al lice%se ta6C . That so/eti/e o% ;a%(ar) #", 1 !#, the :e'e%:a%t :e/a%:e: 'ro/ the $lai%ti'' co/$lia%ce 5ith the sai: or:i%a%ce 'or 1 !# i% vie5 o' the 'act that it 5as e%&a&e: i% :istri2(tio% o' the so't:ri%4s i% the Cit) o' .loilo, a%: it '(rther

:e/a%:e: 'ro/ the $lai%ti'' $a)/e%t o' 2ac4 ta6es 'ro/ the ti/e it tra%s'erre: its 2ottli%& $la%t to the M(%ici$alit) o' Pavia, .loiloC 1,. That the $lai%ti'' :e/(rre: to the sai: :e/a%: o' the :e'e%:a%t raisi%& as its A(ris:ictio% the reaso% that its 2ottli%& $la%t is sit(ate: o(tsi:e the Cit) o' .loilo a%: as 2ottler co(l: %ot 2e co%si:ere: as :istri2(tor (%:er the sai: or:i%a%ce altho(&h it sells its $ro:(ct :irectl) to the co%s(/er, i% li%e 5ith the A(ris$r(:e%ce e%(%ciate: 2) the S($re/e Co(rt 2(t :(e to i%siste%ce o' the :e'e%:a%t, the $lai%ti'' $ai: o% A$ril #,, 1 !#, the 'irst D(arter $a)/e%t o' the /(%ici$al lice%ce ta6 i% the s(/ o' P-,-# .#,, (%:er $rotest, a%: therea'ter has 2ee% $a)i%& :e'e%:a%t ever) D(arter (%:er $rotestC 11. That o% ;(%e l", 1 !#,the :e'e%:a%t i%'or/e: the $lai%ti'' that it /(st $a) all the ta6es :(e si%ce ;(l), 1 *1 ($ to the last D(arter o' 1 !1, other5ise it shall 2e co%strai%e: to ca%cel the o$eratio% o' the 2(si%ess o' the $lai%ti'', a%: 2eca(se o' this threat, a%: so as %ot to occasio% :isr($tio% o' its 2(si%ess o$eratio%, the $lai%ti'' (%:er $rotest a&ree: to the $a)/e%t o' the 2ac4 ta6es, o% sta&&ere: 2asis, 5hich 5as acce:e: to 2) the :e'e%:a%tC 1#. That as co/$(te: 2) the $lai%ti'' the 'ollo5i%& are its so't:ri%4s sol: i% .loilo Cit) si%ce it tra%s'erre: its 2ottli%& $la%t 'ro/ the Cit) o' .loilo to Barrio G%&ca Pavia, .loilo i% ;(l) 1 *1, to 5it: 0o. o' Cases sol: SE=E0FGP PEPS.FCO9ATOTA9 TAE DGE 1 *1 ;(l to Dec - ,-+, + ,,*, 11,+,, P1,1+, 1 * ;a%. to Dec. 11,#+, 1!,**, 1*1, ,, 1*,1 , 1 !, ;a%. to Dec. ! ,-1 1 ,#11 1*1,*,, 1*,*,, 1 !1 ;a%. to Dec. 1,,*!, 11,+1, 1* ,1", 1*, 1" TOTA9 #1,,*-1+,+11 " ",,", P " ,"," 1-. That the $lai%ti'' :oes %ot /ai%tai% a%) store or co//ercial esta2lish/e%t i% the Cit) o' .loilo 'ro/ 5hich it :istri2(tes its $ro:(cts, 2(t 2) /ea%s o' a 'leet o' :eliver) tr(c4s, $lai%ti'' :istri2(tes its $ro:(cts 'ro/ its 2ottli%& $la%t at Barrio G%&ca M(%ici$alit) o' Pavia, .loilo, :irectl) to its c(sto/ers i% the :i''ere%t to5%s o' the Provi%ce o' .loilo as 5ell as the Cit) o' .loiloC 1+. That the $lai%ti'' is alrea:) $a)i%& the 0atio%al Gover%/e%t a $erce%ta&e Ta6 o' !1Ht, as /a%('act(rerBs sales ta6 o% all the so't:ri%4s it /a%('act(res as 'ollo5s: O.R. 0o. +*1- " F ;a%(ar), 1 !# Sales P1!,###. , O.R. 0o. "*1+!*! F >e2r(ar) ? ? 1!,,#+.11 O.R. 0o. ."*1+1!, F March ? ? 1!,"1 .1 O.R. 0o. "*1+1 1 F A$ril ? ? 11,!#*.!! O.R. 0o. "*1+1 ! F Ma) ? ? 1*,!1,. O.R. 0o. "*1+ -" F ;(%e ? ? 1+,! 1.#, O.R. 0o. "*1+ *! F ;(l) ? ? 1-, "#.,, O.R. 0o. "*1+ !- F A(&(st ? ? 1",!#*.1* O.R. 0o. "*B9+ F Se$te/2er ? ? 1 ,1" ."+ a%: is also $a)i%& the /(%ici$al lice%se ta6 to the /(%ici$alit) o' Pavia, .loilo i% the a/o(%t o' P l,,,,,.,, ever) )ear, $l(s a /(%ici$al lice%se ta6 'or

e%&a&i%& i% its 2(si%ess to the /(%ici$alit) o' Pavia i% its a/o(%t o' P#,,,,.,, ever) )ear. 666 666 666 KRollo, P. 1, (Recor: o% A$$eal, $$. #"F-1)L O% the 2asis o' the a2ove sti$(latio%s, the co(rt a D(o re%:ere: o% ;a%(ar) #*, 1 !- a :ecisio% i% 'avor o' .loilo Bottlers, .%c. :eclari%& the Cor$oratio% %ot lia2le (%:er the or:i%a%ce a%: :irecti%& the Cit) o' .loilo to $a) the s(/ o'B P-,-# .#,. The :ecisio% 5as a/e%:e: i% a% Or:er :ate: March 1", 1 !-, so as to i%cl(:e the a/o(%ts $ai: 2) the co/$a%) a'ter the 'ili%& o' the co/$lai%t. The Cit) o' .loilo a$$eale: to the Co(rt o' A$$eals 5hich certi'ie: the case to this Co(rt. The ta6 or:i%a%ce i/$oses a ta6 o% $erso%s, 'ir/s, a%: cor$oratio%s e%&a&e: i% the 2(si%ess o': 1. :istri2(tio% o' so'tF:ri%4s #. /a%('act(re o' so'tF:ri%4s, a%: -. 2ottli%& o' so't:ri%4s 5ithi% the territorial A(ris:ictio% o' the Cit) o' .loilo. There is %o D(estio% that a'ter it tra%s'erre: its $la%t to Pavia, .loilo $rovi%ce, .loilo Bottlers, .%c. %o lo%&er /a%('act(re:H2ottle: its so't:ri%4s 5ithi% .loilo Cit). Th(s, it ca%%ot 2e ta6e: as o%e 'alli%& (%:er the seco%: or the thir: t)$e o' 2(si%ess. The resol(tio% o' this case there'ore hi%&es o% 5hether the co/$a%) /a) 2e co%si:ere: e%&a&e: i% the :istri2(tio% o' so't:ri%4s i% .loilo Cit), eve% a'ter it ha: tra%s'erre: its 2ottli%& $la%t to Pavia, so as to 2e 5ithi% the $(rvie5 o' the or:i%a%ce. .loilo Bottlers, .%c. :isclai/s lia2ilit) o% t5o &ro(%:s: >irst, it co%te%:s that si%ce it is %ot e%&a&e: i% the i%:e$e%:e%t 2(si%ess o' :istri2(ti%& so'tF:ri%4s, 2(t that its activit) o' selli%& is /erel) a% i%ci:e%t to, or is a %ecessar) co%seD(e%ce o' its /ai% or $ri%ci$al 2(si%ess o' 2ottli%&, the% it is 0OT lia2le (%:er the cit) ta6 or:i%a%ce. Seco%:, it clai/s that o%l) /a%('act(rers or 2ottlers havi%& their $la%ts i%si:e the territorial A(ris:ictio% o' the cit) are covere: 2) the or:i%a%ce. The seco%: &ro(%: is /a%i'estl) :evoi: o' /erit. .t is clear 'ro/ the or:i%a%ce that three t)$es o' activities are covere:: (1) :istri2(tio%, (#) /a%('act(re a%: (-) 2ottli%& o' so't:ri%4s. A $erso% e%&a&e: i% a%) or all o' these activities is s(2Aect to the ta6. The 'irst &ro(%:, ho5ever, /erits serio(s co%si:eratio%. This Co(rt has al5a)s reco&%i8e: that the ri&ht to /a%('act(re i/$lies the ri&ht to sellH:istri2(te the /a%('act(re: $ro:(cts KSee Ce%tral A8(carera :e Do% Pe:ro v. Cit) o' Ma%ila a%: Sar/ie%to, ! Phil. *#! (1 "")C Calte6 (Phili$$i%es), .%c. v. Cit) o' Ma%ila a%: C(:ia/at, G.R. 0o. 9F##!*+, ;(l) #1, 1 * , #1 SCRA 1+,, 1+-.L He%ce, 'or ta6 $(r$oses, a /a%('act(rer :oes %ot %ecessaril) 2eco/e e%&a&e: i% the se$arate 2(si%ess o' selli%& si/$l) 2eca(se it sells the $ro:(cts it /a%('act(res. .% certai% cases, ho5ever, a /a%('act(rer /a) also 2e co%si:ere: as e%&a&e: i% the se$arate 2(si%ess o' selli%& its $ro:(cts.

To :eter/i%e 5hether a% e%tit) e%&a&e: i% the $ri%ci$al 2(si%ess o' /a%('act(ri%&, is li4e5ise e%&a&e: i% the se$arate 2(si%ess o' selli%&, its /ar4eti%& s)ste/ or sales o$eratio%s /(st 2e loo4e: i%to. .% several cases KSee Ce%tral A8(carera :e Do% Pe:ro v. Cit) o' Ma%ila a%: Sar/ie%to, supraC Ce2( Portla%: Ce/e%t Co. v. Cit) o' Ma%ila a%: the Cit) Treas(rer, 1,1 Phil. 1,*- (1 *,)C Calte6 (Phili$$i%es), .%c. v. Cit) o' Ma%ila a%: C(:ia/at, supraL, this Co(rt ha: occasio% to :isti%&(ish t5o /ar4eti%& s)ste/s: G%:er the 'irst s)ste/, the /a%('act(rer e%ters i%to sales tra%sactio%s a%: i%voices the sales at its /ai% o''ice 5here $(rchase or:ers are receive: a%: a$$rove: 2e'ore :eliver) or:ers are se%t to the co/$a%)Bs 5areho(ses, 5here i% t(r% act(al :eliveries are /a:e. 0o 5areho(se sales are /a:eC %or are se$arate stores /ai%tai%e: 5here $ro:(cts /a) 2e sol: i%:e$e%:e%tl) 'ro/ the /ai% o''ice. The 5areho(ses o%l) serve as stora&e sites a%: :eliver) $oi%ts o' the $ro:(cts earlier sol: at the /ai% o''ice. G%:er the seco%: s)ste/, sales tra%sactio%s are e%tere: i%to a%: $er'ecte: at stores or 5areho(ses /ai%tai%e: 2) the co/$a%). A%) o%e 5ho :esires to $(rchase the $ro:(ct /a) &o to the store or 5areho(se a%: there $(rchase the /ercha%:ise. The stores a%: 5areho(ses serve as selli%& ce%ters. E%tities o$erati%& (%:er the 'irst s)ste/ are 0OT co%si:ere: e%&a&e: i% the se$arate 2(si%ess o' selli%& or :eali%& i% their $ro:(cts, i%:e$e%:e%t o' their /a%('act(ri%& 2(si%ess. E%tities o$erati%& (%:er the seco%: s)ste/ are co%si:ere: e%&a&e: i% the se$arate 2(si%ess o' selli%&. .% the case at 2ar, the co/$a%) :istri2(te: its so't:ri%4s 2) /ea%s o' a 'leet o' :eliver) tr(c4s 5hich 5e%t :irectl) to c(sto/ers i% the :i''ere%t $laces i% lloilo $rovi%ce. Sales tra%sactio%s 5ith c(sto/ers 5ere e%tere: i%to a%: sales 5ere $er'ecte: a%: co%s(//ate: 2) ro(te sales/e%. Tr(c4 sales 5ere /a:e i%:e$e%:e%tl) o' tra%sactio%s i% the /ai% o''ice. The :eliver) tr(c4s 5ere %ot (se: solel) 'or the $(r$ose o' :eliveri%& so't:ri%4s $revio(sl) sol: at Pavia. The) serve: as selli%& (%its. The) 5ere 5hat 5ere calle:, (%til rece%tl), ?rolli%& stores?. The :eliver) tr(c4s 5ere there'ore /(ch the sa/e as the stores a%: 5areho(ses (%:er the seco%: /ar4eti%& s)ste/. .loilo Bottlers, .%c. th(s 'alls (%:er the seco%: cate&or) a2ove. That is, the cor$oratio% 5as e%&a&e: i% the se$arate 2(si%ess o' selli%& or :istri2(ti%& so'tF:ri%4s, i%:e$e%:e%tl) o' its 2(si%ess o' 2ottli%& the/. The ta6 i/$ose: (%:er Or:i%a%ce 0o. " is a% e6cise ta6. .t is a ta6 o% the $rivile&e o' :istri2(ti%&, /a%('act(ri%& or 2ottli%& so't:ri%4s. Bei%& a% e6cise ta6, it ca% 2e levie: 2) the ta6i%& a(thorit) o%l) 5he% the acts, $rivile&es or 2(si%esses are :o%e or $er'or/e: 5ithi% the A(ris:ictio% o' sai: a(thorit) KCo//issio%er o' .%ter%al Reve%(e v. British Overseas Air5a)s Cor$. a%: Co(rt o' A$$eals, G.R. 0os. *"!!-F!+, A$ril -,, 1 1!, 1+ SCRA - ", +1,.L S$eci'icall), the sit(s o' the act o' :istri2(ti%&, 2ottli%& or /a%('act(ri%& so't:ri%4s /(st 2e 5ithi% cit) li/its, 2e'ore a% e%tit) e%&a&e: i% a%) o' the activities /a) 2e ta6e: i% .loilo Cit).

As state: a2ove, sales 5ere /a:e 2) .loilo Bottlers, .%c. i% .loilo Cit). Th(s, 7e have %o o$tio% 2(t to :eclare the co/$a%) lia2le (%:er the ta6 or:i%a%ce. 7ith the 'ore&oi%& :isc(ssio%, it 2eco/es (%%ecessar) to :isc(ss the other iss(es raise: 2) the $arties. 7HERE>ORE, the a$$eale: :ecisio% is here2) RE=ERSED. The co/$lai%t i% Civil Case 0o. ,+* is or:ere: D.SM.SSED. 0o Costs. SO ORDERED.

1*) Phili$$i%e Match Co., 9TD vs Cit) o' Ce2( 11 SCRA G.R. No. L !+)4" 0a3'a&y 1*, 19)* PHILIPPINE MATCH CO., LTD., $lai%ti''Fa$$ella%t, vs. THE CITY O# CEBU a3; 0ESUS E. ZABATE, A?2-34 C-2y T&$a1'&$&, :e'e%:a%tsFa$$ellees. Pelaez* Pelaez + Pelaez for appellant, Aazario Pac2uiao* /etudio P, (elarmino + &eferino 3omuad for appellees, AGUINO, J.: This case is a2o(t the le&alit) o' the ta6 collecte: 2) the Cit) o' Ce2( o% sales o' /atches store: 2) the Phili$$i%e Match Co., 9t:. i% Ce2( Cit) 2(t :elivere: to c(sto/ers o(tsi:e o' the Cit). Or:i%a%ce 0o. #! o' Ce2( Cit) (a$$rove: 2) the /a)or o% March 1,, 1 *, a%: also a$$rove: 2) the $rovi%cial 2oar:) is ?a% or:i%a%ce i/$osi%& a D(arterl) ta6 o% &ross sales or recei$ts o' /ercha%ts, :ealers, i/$orters a%: /a%('act(rers o' a%) co//o:it) :oi%& 2(si%ess? i% Ce2( Cit). .t i/$oses a sales ta6 o' o%e $erce%t (1O) o% the &ross sales, recei$ts or val(e o' co//o:ities sol:, 2artere:, e6cha%&e: or /a%('act(re: i% the cit) i% e6cess o' P#,,,, a D(arter. Sectio% o' the or:i%a%ce $rovi:es that, 'or $(r$oses o' the ta6, ?all :eliveries o' &oo:s or co//o:ities store: i% the Cit) o' Ce2(, or i' %ot store: are sol:? i% that cit), ?shall 2e co%si:ere: as sales? i% the cit) a%: shall 2e ta6a2le. Th(s, it 5o(l: see/ that (%:er the ta6 or:i%a%ce sales o' /atches co%s(//ate: o(tsi:e o' the cit) are ta6a2le as lo%& as the /atches sol: are ta4e% 'ro/ the co/$a%)Bs stoc4 store: i% Ce2( Cit). The Phili$$i%e Match Co., 9t:., 5hose $ri%ci$al o''ice is i% Ma%ila, is e%&a&e: i% the /a%('act(re o' /atches. .ts 'actor) is locate: at P(%ta, Sta. A%a, Ma%ila. .t shi$s cases or carto%s o' /atches 'ro/ Ma%ila to its 2ra%ch o''ice i% Ce2( Cit) 'or stora&e, sale a%: :istri2(tio% 5ithi% the territories a%: :istricts (%:er its Ce2( 2ra%ch or the 5hole =isa)asFMi%:a%ao re&io%. Ce2( Cit) itsel' is A(st o%e o' the eleve% :istricts (%:er the co/$a%)Bs Ce2( Cit) 2ra%ch o''ice.

The co/$a%) :oes %ot D(estio% the ta6 o% the /atches o' /atches co%s(//ate: i% Ce2( Cit), /ea%i%& /atches sol: a%: :elivere: 5ithi% the cit). .t assails the le&alit) o' the ta6 5hich the cit) treas(rer collecte: o% o(tFo'F to5% :eliveries o' /atches, to 5it: (1) sales o' /atches 2oo4e: a%: $ai: 'or i% Ce2( Cit) 2(t shi$$e: :irectl) to c(sto/ers o(tsi:e o' the cit)C (#) tra%s'ers o' /atches to %e5s/e% assi&%e: to :i''ere%t a&e%cies o(tsi:e o' the cit) a%: (-) shi$/e%ts o' /atches to $rovi%cial c(sto/ers $(rs(a%t to sales/e%Bs i%str(ctio%s. The co/$a%) $ai: (%:er $rotest to the cit) t the s(/ o' P1#,1++.*1 as o%e $erce%t sales ta6 o% those three classes o' o(tFo'Fto5% :eliveries o' /atches 'or the seco%: D(arter o' 1 *1 to the seco%: D(arter o' 1 *-. .% $a)i%& the ta6 the co/$a%) acco/$lishe: the veri'ie: 'or/s '(r%ishe: 2) the cit) treas(rers o''ice. .t s(2/itte: a state/e%t i%:icati%& the 'o(r 4i%:s o' tra%sactio%s e%(/erate: a2ove, the total sales, a%: a s(//ar) o' the :eliveries to the :i''ere%t a&e%cies, as 5ell as the i%voice %(/2ers, %a/es o' c(sto/ers, the val(e o' the sales, the tra%s'ers o' /atches to sales/e% o(tsi:e o' Ce2( Cit), a%: the co/$(tatio% o' ta6es. Sales o' /atches 2oo4e: a%: $ai: 'or i% Ce2( Cit) 2(t shi$$e: :irectl) to c(sto/ers o(tsi:e o' the cit) re'er to or:ers 'or /atches /a:e i% the cit) 2) the co/$a%)Bs c(sto/ers, 2) /ea%s o' $erso%al or $ho%e calls, 'or 5hich sales i%voices are iss(e:, a%: the% the /atches are shi$$e: 'ro/ the 2o:e&a i% the cit), 5here the /atches ha: 2ee% store:, to the $lace o' 2(si%ess or resi:e%ces o' the c(sto/ers o(tsi:e o' the cit), :(l) covere: 2) 2ills o' la:i%& The /atches are (se: a%: co%s(/e: o(tsi:e o' the cit). Tra%s'ers o' /atches to sales/e% assi&%e: to :i''ere%t a&e%cies o(tsi:e o' the cit) e/2race eD(i$/e%ts o' /atches 'ro/ the 2ra%ch o''ice i% the cit) to the sales/e% ($rovi:e: 5ith $a%el cars) assi&%e: 5ithi% the $rovi%ce o' Ce2( a%: i% the :i''ere%t :istricts i% the =isa)as a%: Mi%:a%ao (%:er the A(ris:ictio% or s($ervisio% o' the Ce2( Cit) 2ra%ch o''ice. The shi$/e%ts are covere: 2) 2ills o' la:i%&. 0o sales i%voices 5hatever are iss(e:. The /atches receive: 2) the sales/e% co%stit(te their :irect cash acco(%ta2ilit) to the co/$a%). The sales/e% sell the /atches 5ithi% their res$ective territories. The) iss(e cash sales i%voices a%: re/it the $rocee:s o' the sales to the co/$a%)Bs Ce2( 2ra%ch o''ice. The val(e o' the (%sol: /atches co%stit(tes their stoc4 lia2ilit). The /atches are (se: a%: co%s(/e: o(tsi:e o' the cit). Shi$/e%ts o' /atches to $rovi%cial c(sto/ers $(rs(a%t to %e5s/e%s i%str(ctio%s e/2race or:ers, 2) letter or tele&ra/ se%t to the 2ra%ch o''ice 2) the co/$a%)Bs sales/e% assi&%e: o(tsi:e o' the cit). The /atches are shi$$e: 'ro/ the co/$a%)Bs 2o:e&a i% the cit) to the c(sto/ers resi:i%& o(tsi:e o' the cit). The sales/e% iss(e the sales i%voices. The $rocee:s o' the sale, 'or 5hich the sales/e% are acco(%ta2le are re/itte: to the 2ra%ch o''ice. As i% the 'irst a%: seco%:s o' tra%sactio%s a2oveF/e%tio%e:, the /atches are co%s(/e: a%: (se: o(tsi:e o' the cit).

The co/$a%) i% its letter o' A$ril 1", 1 *1 to the cit) treas(rer so(&ht the re'(%: o' the sales ta6 $ai: 'or o(tFo'Fto5% :eliveries o' /atches. .t i%vo4e: Shell Co/$a%) o' the Phili$$i%es, 9t:. vs. M(%ici$alit) o' Si$ocot, Ca/ari%es S(r, 1," Phil. 1#*-. .% that case sales o' oil a%: $etrole(/ $ro:(cts e''ecte: o(tsi:e the territorial li/its o' Si$ocot, 5ere hel: %ot to 2e s(2Aect to the ta6 i/$ose: 2) a% or:i%a%ce o' that /(%ici$alit). The cit) treas(rer :e%ie: the reD(est. His sta%: is that (%:er sectio% o' the or:i%a%ce all o(tFo'Fto5% :eliveries o' latches store: i% the cit) are s(2Aect to the sales ta6 i/$ose: 2) the or:i%a%ce. O% A(&(st 1#, 1 *- the co/$a%) 'ile: the co/$lai%t herei%, $ra)i%& that the or:i%a%ce 2e : voi: i%so'ar as it ta6e: the :eliveries o' /atches o(tsi:e o' Ce2( Cit), that the cit) 2e or:ere: to re'(%: to the co/$a%) the sai: s(/ o' P1#,1++.*1 as e6cess sales ta6 $ai:, a%: that the cit) treas(rer 2e or:ere: to $a) :a/a&es. A'ter heari%&, the trial co(rt s(stai%e: the ta6 o% the sales o' /atches 2oo4e: a%: $ai: 'or i% Ce2( Cit) altho(&h the /atches 5ere shi$$e: :irectl) to c(sto/ers o(tsi:e o' the cit). The lo5er co(rt hel: that the sai: sales 5ere co%s(//ate: i% Ce2( Cit) 2eca(se :eliver) to the carrier i% the cit) is :ee/e: to 2e a :eliver) to the c(sto/ers o(tsi:e o' the cit). B(t the trial co(rt i%vali:ate: the ta6 o% tra%s'ers o' /atches to sales/e% assi&%e: to :i''ere%t a&e%cies o(tsi:e o' the cit) a%: o% shi$/e%ts o' /atches to $rovi%cial c(sto/ers $(rs(a%t to the i%str(ctio%s o' the %e5s/e% .t or:ere: the :e'e%:a%ts to re'(%: to the $lai%ti'' the s(/ o' P1, #-."" as ta6es $ai: o(t the sai: o(tFo'Fto5% :eliveries 5ith le&al rate o' i%terest 'ro/ the res$ective :ates o' $a)/e%t. The trial co(rt characteri8e: the ta6 o% the other t5o tra%sactio%s as a ?stora&e ta6? a%: %ot a sales ta6. .t ass(/e: that the sales 5ere co%s(//ate: o(tsi:e o' the cit) a%:, he%ce, 2e)o%: the cit)Bs ta6i%& $o5er. The cit) :i: %ot a$$eal 'ro/ that :ecisio%. The co/$a%) a$$eale: 'ro/ that $ortio% o' the :ecisio% ($hol:i%& the ta6 o% sales o' /atches to c(sto/ers o(tsi:e o' the cit) 2(t 5hich sales 5ere 2oo4e: a%: $ai: 'or i% Ce2( Cit), a%: also 'ro/ the :is/issal o' its clai/ 'or :a/a&es a&ai%st the cit) treas(rer. The iss(e is 5hether the Cit) o' Ce2( ca% ta6 sales o' /atches 5hich 5ere $er'ecte: a%: $ai: 'or i% Ce2( Cit) 2(t the /atches 5ere :elivere: to c(sto/ers o(tsi:e o' the Cit). 7e hol: that the a$$eal is :evoi: o' /erit 2e/(se the cit) ca% vali:l) ta6 the sales o' /atches to c(sto/ers o(tsi:e o' the cit) as lo%& as the or:ers 5ere 2oo4e: a%: $ai: 'or i% the co/$a%)Bs 2ra%ch o''ice i% the cit). Those /atches ca% 2e re&ar:e: as sol: i% the cit), as co%te/$late: i% the or:i%a%ce, 2eca(se the /atches 5ere :elivere: to the carrier i% Ce2( Cit). Ge%erall), :eliver) to the carrier is :eliver) to the 2()er (Art. 1"#-, Civil Co:eC Beh%, Me)er M Co. vs. Ia%&co, -1 Phil. *,#). A :i''ere%t i%ter$retatio% 5o(l: :e'eat the ta6 or:i%a%ce i% D(estio% or e%co(ra&e ta6 evasio% thro(&h the si/$le e6$e:ie%t o' arra%&i%& 'or the

:eliver) o' the /atches at the o(t. s4irts o' the cit) thro(&h the $(rchase 5ere e''ecte: a%: $ai: 'or i% the co/$a%)Bs 2ra%ch o''ice i% the cit). The /(%ici$al 2oar: o' Ce2( Cit) is e/$o5ere: ?to $rovi:e 'or the lev) a%: collectio% o' ta6es 'or &e%eral a%: $(r$oses i% accor:a%ce 5ith la5? (Sec. 1!KaL, Co//o%5ealth Act 0o. "1C Sec. -1KlL, Re$. Act 0o. -1"!, Revise: Charter o' Ce2( cit)). The ta6i%& $o5er vali:l) :ele&ate: to cities a%: /(%ici$alities is :e'i%e: i% the 9ocal A(to%o/) Act, Re$(2lic Act 0o. ##*+ (Pe$siFCola Bottli%& Co. o' the Phili$$i%es, .%c. vs. M(%ici$alit) o' Ta%a(a%, 9e)te, 9F-11"*, >e2r(ar) #!, 1 !*, * SCRA +*,), 5hich too4 e''ect o% ;(%e 1 , 1 " a%: 5hich $rovi:es: SEC. #. 0a ation. @ A%) $rovisio% o' la5 to the co%trar) %ot5ithsta%:i%&, all chartere: cities, /(%ici$alities a%: /(%ici$al :istricts shall have a(thorit) to i/$ose /(%ici$al lice%se ta6es or 'ees ($o% $erso%s e%&a&e: i% a%) occ($atio% or 2(si%ess, or e6ercisi%& $rivile&es i% chartere: cities,. /(%ici$alities or /(%ici$al :istricts 2) reD(iri%& the/ to sec(re lice%ses at rates 'i6e: 2) the /(%ici$al 2oar: or cit) co(%cil o' the cit), the /(%ici$al co(%cil o' the /(%ici$alit), or the /(%ici$al :istrict co(%cil o' the /(%ici$al :istrictC to collect 'ees a%: char&es 'or services re%:ere: 2) the cit), /(%ici$alit) or /(%ici$al :istrictC to re&(late a%: i/$ose reaso%a2le 'ees 'or services re%:ere: i% co%%ectio% 5ith a%) 2(si%ess, $ro'essio% or occ($atio% 2ei%& co%:(cte: 5ithi% the cit), /(%ici$alit) or /(%ici$al :istrict a%: other5ise to lev) 'or $(2lic $(r$oses, A(st a%: (%i'or/ ta6es, lice%ses or 'eesC Provided, That /(%ici$alities a%: /(%ici$al :istricts shall, i% %o case, i/$ose a%) $erce%ta&e ta6 o% sales or other ta6es i% a%) 'or/ 2ase: thereo% %or i/$ose ta6es o% articles s(2Aect to s$eci'ic ta6, e6ce$t &asoli%e, (%:er the $rovisio%s o' the 0atio%al .%ter%atio%al Reve%(e Co:eC Provided* ho"ever, That %o cit), /(%ici$alit) or /(%ici$al :istricts /a) lev) or i/$ose a%) o' the 'ollo5i%&: (here 'ollo5s a% e%(/eratio% o' i%ter%al reve%(e ta6es) 666 666 666 V 0ote that the $rohi2itio% a&ai%st the i/$ositio% o' $erce%ta&e ta6es ('or/erl) $rovi:e: 'or i% sectio% 1 o' Co//o%5ealth Act 0o. +!#) re'ers to /(%ici$alities a%: /(%ici$al :istricts 2(t %ot to chartere: cities. (See 9ocal Ta6 Co:e, P.D. 0o. #-1. Mari%:(D(e .ro% Mi%es A&e%ts, .%c. vs. M(%ici$al Co(%cil o' Hi%a2a%&a% Sa/ar, 1#, Phil. +1-C Or/oc S(&ar Co., .%c. vs. Treas(rer o' Or/oc Cit), 9F#-! +, >e2r(ar) 1!, 1 *1, ## SCRA *,-). 0ote '(rther that the ta6i%& $o5er o' cities, /(%ici$alities a%: /(%ici$al :istricts /a) 2e (se: (1) ?($o% a%) $erso% e%&a&e: i% a%) occ($atio% or 2(si%ess, or e6ercisi%& a%) $rivile&e? therei%C (#) 'or services re%:ere: 2) those $olitical s(2:ivisio%s or re%:ere: i% co%%ectio% 5ith a%) 2(si%ess, $ro'essio% or occ($atio% 2ei%& co%:(cte: therei%, a%: (-) to lev), 'or $(2lic $(r$oses, A(st a%: (%i'or/ ta6es, lice%ses or 'ees (C. 0. Ho:&es vs. M(%ici$al Boar: o' the Cit) o' .loilo, 11! Phil. 1*+, 1*!. See sec. -1K#"1, Revise: Charter o' Ce2( Cit)).

A$$l)i%& that A(ris:ictio%al test to the i%sta%t case, it is at o%ce o2vio(s that sales o' /atches to c(sto/ers o(tsi:e oil Ce2( Cit), 5hich sales 5ere 2oo4e: a%: $ai: 'or i% the co/$a%)Bs 2ra%ch o''ice i% the cit), are s(2Aect to the cit)Bs ta6i%& $o5er. The i%sta%t case is easil) :isti%&(isha2le 'ro/ the %hell &ompany case 5here the $rice o' the oil sol: 5as $ai: o(tsi:e o' the /(%ici$alit) o' Si$ocot, the e%tit) i/$osi%& the ta6. O% the other ha%:, the r(li%& i% M(%ici$alit) o' ;ose Pa%&a%i2a%, Provi%ce o' Ca/ari%es 0orte vs. Shell Co/$a%) o' the Phili$$i%es, 9t:., 9F11-+ , ;(l) -,, 1 **, 1! SCRA !!1 that the $lace o' :eliver) :eter/i%es the ta6a2le sit(s o' the $ro$ert) to 2e ta6e: ca%%ot $ro$erl) 2e i%vo4e: i% this case. Re$(2lic Act 0o. 1+-", the la5 5hich e%a2le: the M(%ici$alit) o' ;ose Pa%&a%i2a% to lev) the sales ta6 i%volve: i% that case, s$eci'ies that the ta6 /a) 2e levie: ($o% oils ?:istri2(te: 5ithi% the li/its o' the cit) or /(%ici$alit)?, /ea%i%& the $lace 5here the oils 5ere :elivere:. That 'eat(re o' the 3ose Pan!ani#an case :isti%&(ishe: it 'ro/ this case. The sales i% the i%sta%t case 5ere i% the cit) a%: the /atches sol: 5ere store: i% the cit). The 'act that the /atches 5ere :elivere: to c(sto/ers, 5hose $laces o' 2(si%ess 5ere o(tsi:e o' the cit), 5o(l: %ot $lace those sales 2e)o%: the cit)Bs ta6i%& $o5er. Those sales 'or/e: $art o' the /ercha%:isi%& 2(si%ess 2ei%& assi&%e: o% 2) the co/$a%) i% the cit). .% esse%ce, the) are the sa/e as sales o' /atches '(ll) co%s(//ate: i% the cit). >(rther/ore, 2eca(se the sellers $lace o' 2(si%ess is i% Ce2( Cit), it ca%%ot 2e se%si2l) ar&(e: that s(ch sales sho(l: 2e co%si:ere: as tra%sactio%s s(2Aect to the ta6i%& $o5er o' the $olitical s(2:ivisio%s 5here the c(sto/ers resi:e: a%: acce$te: :eliver) o' the /atches sol:. The co/$a%) i% its seco%: assi&%/e%t o' error co%te%:s that the trial co(rt erre: i% %ot or:eri%& :e'e%:a%t acti%& cit) treas(rer to $a) e6e/$lar) :a/a&es o' P#,,,,, a%: attor%e)Bs 'ees. The clai/ 'or :a/a&es is $re:icate: o% articles 1 , #,, #1, #! a%: ### o' the Civil Co:e. .t is ar&(e: that the cit) treas(rer re'(se: a%: %e&lecte: 5itho(t A(st ca(se to $er'or/ his :(t) a%: to act 5ith A(stice a%: &oo: 'aith. The co/$a%) 'a(lts the cit) treas(rer 'or %ot 'ollo5i%& the o$i%io% o' the cit) 'iscals, as le&al a:viser o' the cit), that all o(tFo'Fto5% :eliveries o' /atches are %ot s(2Aect to sales ta6 2eca(se s(ch tra%sactio%s 5ere e''ecte: o(tsi:e o' the cit)Bs territorial li/its. .% re$l), it is ar&(e: 'or :e'e%:a%t cit) treas(rer that i% e%'orci%& the ta6 or:i%a%ce i% D(estio% he 5as si/$l) co/$l)i%& 5ith his :(t) as collector o' ta6es (Sec. ",, Revise: Charter o' Ce2( Cit)). Moreover, he ha: %o choice 2(t to e%'orce the or:i%a%ce 2eca(se accor:i%& to sectio% -"! o' the Revise: Ma%(al o' .%str(ctio% to Treas(rerBs ?a ta6 or:i%a%ce 5i% 2e e%'orce: i% accor:a%ce 5ith its $rovisio%s? (%til : ille&al or voi: 2) a co/$ete%t co(rt, or other5ise revo4e: 2) the co(%cil or 2oar: 'ro/ 5hich it ori&i%ate:. >(rther/ore, the Secretar) o' >i%a%ce ha: re/i%:e: the cit) treas(rer that a ta6 or:i%a%ce a$$rove: 2) the $rovi%cial 2oar: is o$erative a%: /(st 2e

e%'orce: 5itho(t $reA(:ice to the ri&ht o' a%) a''ecte: ta6$a)er to assail its le&alit) i% the A(:icial 'or(/. The 'iscals o$i%io% o% the le&alit) o' a% or:i%a%ce is /erel) a:visor) a%: has %o 2i%:i%& e''ect. Article #! o' the Civil Co:e $rovi:es that ?a%) $erso% s(''eri%& /aterial or /oral lose 2eca(se a $(2lic serva%t or e/$lo)ee re'(ses or %e&lects, 5itho(t A(st ca(se, to $er'or/ his o''icial :(t) /a) 'ile a% actio% 'or :a/a&es a%: other relie' a&ai%st the latter, 5itho(t $reA(:ice to a%) :isci$li%ar) a:/i%istrative actio% that /a) 2e ta4e%.? Article #! $res($$oses that the re'(se or o/issio% o' a $(2lic o''icial is attri2(ta2le to /alice or i%e6c(sa2le %e&li&e%ce. .% this case, it ca%%ot 2e sai: that the cit) treas(rer acte: 5il'(ll) or 5as &rossl) t i% %ot re'(%:i%& to the $lai%ti'' the ta6es 5hich it $ai: (%:er $rotest o% o(tFo'Fto5% sales o' /atches. The recor: clearl) reveals that the cit) treas(rer ho%estl) 2elieve: that he 5as A(sti'ie: (%:er sectio% o' the ta6 or:i%a%ce i% collecti%& the sales ta6 o% o(tFo'Fto5% :eliveries, co%si:eri%& that the co/$a%)Bs 2ra%ch o''ice 5as locate: i% Ce2( Cit) a%: that all o(tFo'Fto5% $(rchase or:er 'or /atches 5ere 'ille: ($ 2) the 2ra%ch o''ice a%: the sales 5ere :(l) re$orte: to it. The cit) treas(rer acte: 5ithi% the sco$e o' his a(thorit) a%: i% co%so%a%ce 5ith his 2o%a 'i:e i%ter$retatio% o' the ta6 or:i%a%ce. The 'act that his actio% 5as %ot co/$letel) s(stai%e: 2) the co(rts 5o(l: %ot hi/ lia2le 'or 7e have ($hel: his act o' ta6i%& sales o' /atches 2oo4e: a%: $ai: 'or i% the cit). ?As a r(le, a $(2lic o''icer, 5hether A(:icial ,D(asiFA(:icial or e6ec(tive, is %ot ) lia2le to o%e i%A(re: i% co%seD(e%ce o' a% act $er'or/e: 5ithi% the sco$e o' his o''icial a(thorit), a%: i% the li%e o' his o''icial :(t).? ?7here a% o''icer is i%veste: 5ith :iscretio% a%: is e/$o5ere: to e6ercise his A(:&/e%t i% /atters 2ro(&ht 2e'ore hi/. he is so/eti/es calle: a D(asiFA(:icial o''icer, a%: 5he% so acti%& he is (s(all) &ive% i//(%it) 'ro/ lia2ilit) to $erso%s 5ho /a) 2e i%A(re: as the res(lt or a% erro%eo(s or /ista4e% :ecisio%, ho5ever erro%eo(s his A(:&/e%t /a) 2e. $rovi:e: the acts co/$lai%e: o' are :o%e 5ithi% the sco$e o' the o''icerBs a(thorit) a%: 5itho(t /alice, or corr($tio%.? (*- A/ ;(r #%: ! 1, ! cite: i% Phili$$i%e Raci%& Cl(2, .%c. vs. Bo%i'acio, 1, Phil. #--, #+,F#+1). .t has 2ee% hel: that a% erro%eo(s i%ter$retatio% o' a% or:i%a%ce :oes %ot co%stit(te %or :oes it a/o(%t to 2a: 'aith that 5o(l: e%title a% a&&rieve: $art) to a% a5ar: 'or :a/a&es (Ca2(%&cal vs. Cor:ova% 1#, Phil. **!, "!#F -). That sal(tar) i% a::itio% to /oral te/$erate, liD(i:ate: or co/$e%sator) :a/a&es (Art. ### , Civil Co:e). Attor%e)Bs 'ees are 2ei%& clai/e: herei% as act(al :a/a&es. 7e 'i%: that it 5o(l: %ot 2e A(st a%: eD(ita2le to a5ar: attor%e)Bs 'ees i% this case a&ai%st the Cit) o' Ce2( a%: its (See Art. ##,1, Civil Co:e). 7HERE>ORE, the trial co(rtBs A(:&/e%t is a''ir/e:. 0o costs. SO ORDERED.

Thanks a lot. Study Hard. The secret of studying is in concentration and the secret of concentration is to be interested.
FAtt). Ace Millar